Grieg Seafood
Annual Report 2021

Plain-text annual report

ANNUAL REPORT 2021 MAKING PROGRESS T HE O CE A N I S A N O P P O R T U NI T Y A ND A M Y S T ER Y. I T H A S T HE P O T EN T I A L T O P R O V IDE L O W IMPAC T F O O D F O R G ENER AT I O N S T O C O ME – IF W E D O I T R I G H T. R E SE A R CH , INN O VAT I O N A ND C O N T IN U O U S IMP R O V EMEN T W IL L HEL P U S G E T T HER E . After two challenging years of pandemic, we are proud to present the continued progress we have made on our journey of sustainable growth in 2021. We have used the year as an opportunity to adapt, change and improve. With the sales of our Shetland operations, we have narrowed our operational focus to the production regions with the best potential for profitable growth - Norway and Canada. With our new and integrated sales and market organization, we aim to increase the value of our salmon downstream. Through the dedication and hard work of our employees, we have improved our farming practices across our regions. Reducing our footprint and improving fish health and welfare will always be the key to success. Combining decades of experi- ence with new technologies, knowledge and data driven intelli- gence, we will create value for all stakeholders. That is how we farm the ocean for a better future. CONTENT PA R T 01 OUR FOUNDATION H I S T O R Y A N D F U T U R E O U R O R G A N I Z AT I O N 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 O U R S C O R E B O A R D C E O L E T T E R O U R 2 0 2 5 B U S I N E S S S T R AT E G Y O U R VA L U E C H A I N 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 O U R C E R T I F I C AT I O N S PA R T 0 2 OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM A Q U A C U LT U R E I N A S U S TA I N A B L E G L O B A L F O O D S Y S T E M H E A LT H Y O C E A N S U S TA I N A B L E F O O D P R O F I T & I N N O VAT I O N P E O P L E L O C A L C O M M U N I T I E S 0 5 0 6 0 7 0 8 0 9 10 11 15 16 17 19 2 2 3 3 4 4 67 76 PA R T 0 3 OUR FINANCIAL RESULTS B O A R D O F D I R E C 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 U A L A C C O U N T S 2 0 2 1 A U D I T O R ' S R E P O R T PA R T 0 4 TRANSPARENT SUSTAINABILITY REPORTING T R A N S PA R E N T R E P O R T I N G O N O U R P R O G R E S S G R I I N D E X S TA K E H O L D E R D I A L O G U E A U 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 8 1 96 10 3 161 16 5 16 6 174 17 5 OUR FOUNDATION Farming the ocean comes with a responsibility. We are dedicated to providing healthy seafood to people all over the world while reducing our footprint and improving fish welfare. People, partnerships, technologies and innovations will help us get there. This is our tiny way of making the world a better place. PA R T 0 1 H I S T O R Y A N D F U T U R E O U R O R G A N I Z AT I O N 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 O U R S C O R E B O A R D C E O L E T T E R O U R 2 0 2 5 B U S I N E S S S T R AT E G Y O U R VA L U E C H A I N 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 O U R C E R T I F I C AT I O N S 0 5 0 6 0 7 0 8 0 9 10 11 15 16 17 PA R T 0 1: O U R F O U N D AT I O N PA G E 5 HISTORY AND FUTURE The seafood industry Grieg Seafood The future 5000 B.C.E First fish farms reported in China. 1850 The first wild salmon hatcheries established in Norwegian salmon rivers. 1969 The brothers Ove and Sivert Grøntvedt transfer the first salmon smolt to sea pens at the island Hitra in Norway. 1970s Commercial salmon farming of chinook, coho and sockeye is established around Sechelt in British Columbia. 1973 The Norwegian parliament adopts a licensing system for the country's growing aquaculture industry, with the aim of strengthening local communities along the coast. Since then, salmon farms have contributed jobs and revenues to small, coastal communities. 1990s Fish vaccines are introduced. As a result, the salmon farming industry has significantly reduced its use of antibiotics. 1992 1992 Grieg Seafood Salmon (trading company) and Bioinvest (salmon farming investor) are established. 1998 1998 Grieg Seafood Rogaland is established. 2000s 2000s The Norwegian government launches the “green license” scheme, with stricter environmental standards. Grieg Seafood currently has eight green licenses. 2001 2001 Grieg Seafood acquires Scandic Marine Ltd. in British Columbia and establishes Grieg Seafood BC. 2006 2006 Grieg Seafood merges with the Volden Group and establishes Grieg Seafood Finnmark. 2007 2007 Grieg Seafood is listed on Oslo Stock Exchange. Grieg Seafood acquires Hjaltland Ltd in Shetland, the beginning of Grieg Seafood Shetland. Grieg Seafood starts implementing RAS technology in Rogaland. 2010 2010 Together with Bremnes Seashore, Grieg Seafood establishes the sales company Ocean Quality. 2013 The Norwegian government and the industry develop the standard NS9415 to ensure fish farms are technically safe and prevent the escape of farmed salmon. 2020 2020 Grieg Seafood acquires Grieg Newfoundland in Eastern Canada, and establishes Grieg Seafood Newfoundland. Grieg Seafood establishes its own sales and market organization, and the Ocean Quality partnership is dissolved. 2021 2021 Grieg Seafood disposes Grieg Seafood Shetland to focus operations on the regions with most growth potential, Norway and Canada. 2025 Grieg Seafood aims to have achieved global growth with a harvest of 130 000 tonnes, be cost competitive and have a stronger market position, confirming our position as a global protein producer. 2030 Grieg Seafood aims to have reduced total carbon emissions by 35%. 2050 Grieg Seafood aims to have reduced total carbon emissions by 100%. PA R T 0 1: O U R F O U N D AT I O N PA G E 6 OUR ORGANIZATION GRIEG SEAFOOD FARMING We farm Atlantic Salmon in Rogaland and Finnmark in Norway, and in British Columbia and Newfoundland in Canada. We have hatcheries, sea farms and processing plants. Newfoundland is a greenfield project, where we expect to transfer fish to sea mid-year 2022. GRIEG SEAFOOD SALES We have our own integrated sales and market organization, with sales offices in each country. OUR VISION R OO T ED I N N AT UR E FAR MING T HE O CE AN F OR A BE T T ER FU T U R E OUR VALUES OPEN We are open with each other. We share knowledge and ideas, and learn from each other. We meet new perspectives 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. We proactively 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. AMBITIOUS 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. CARING 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. For more information on the Group structure, refer to Note 1 in the Group Accounts. Shetland was sold as of 15 December 2021. As such, Shetland has been excluded from the majority of this report. PA R T 0 1: O U R F O U N D AT I O N PA G E 7 MAIN ACHIEVEMENTS GROUP • Highest ever harvest volume of 89 327 tonnes, or 75 601 tonnes ex Shetland • EBIT before production fee and fair value adjustment of NOK 442 million, with EBIT/kg of NOK 5.9 driven by the harvested volume and good prices • Strong operational performance, with increased seawater survival in all regions • Restructured our business with the sale of Shetland operations to narrow focus to the regions with greatest potential for profitable growth: Eastern and Western Canada, and Northern and Southern Norway • Fully operational sales and market organization, with value added processing as part of our downstream strategy • Continued focus on certification for sustainable farming, 62% of net production ASC certified • Ranked 2nd by the Coller FAIRR Protein Producer Index of the world’s most-sustainable protein producers • Received Leadership (A) score by the CDP for our transparency and actions related to climate change ROGALAND • Highest ever harvest volume of 26 670 tonnes • EBIT/kg of NOK 9.1 • Good seawater production with a survival rate of 92% • Average weight of smolt when transferred to sea increased to 460 grams, in line with our post-smolt strategy • No use of antibiotics due to efforts to ensure robust fish health and good results from vaccines. • Reduced use of sea lice treatments, where 40% of the pens of fish harvested in 2021 did not have any sea lice treatments due to successful use of preventive measures • No escapes • 66% of farms powered by renewable energy BRITISH COLUMBIA • Harvest volume of 14 448 tonnes • EBIT/kg of NOK 10.4 • Good seawater production with a high survival rate of 92% due to positive results from our algae mitigation system. Mortality related to algae blooms reduced from 3.4% in 2019 to 0.4% in 2021 • 12 out of 15 eligible sites ASC certified • Reduced use of sea lice treatments due to successful use of preventive measures • Committed to the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) FINNMARK • Highest ever harvest volume of 34 484 tonnes • EBIT/kg of NOK 7.3 • Good seawater production with a high survival rate of 95% due to systematic improvement of fish health and welfare measures • 100% ASC certified • Reduced use of sea lice treatments due to successful use of preventive measures • 65% of farms powered by renewable energy • Zero escaped farmed salmon found in a river monitoring project in the Alta river NEWFOUND- LAND • RAS facility fully operational, smolt capacity of 600 tonnes • Fish are healthy and growing well in freshwater facility • Aim to transfer between 2-3 million fish to sea during the spring and summer of 2022, with harvesting commencing in 2023 • Main priority is gradual development of the region to ensure biosecurity, fish health and profitability PA R T 0 1: O U R F O U N D AT I O N PA G E 8 KEY FIGURES FIGURE 1.1 HARVEST VOLUME 2021 FIGURE 1.2 SALES REVENUE 2021 FIGURE 1.3 EBIT* 2021 19% 46% 24% 35% 34% 42% Rogaland Finnmark British Columbia *EBIT before fair value adjustment of biological assets FIGURE 1.4 SALES REVENUE 2021 BY MARKET FIGURE 1.5 SALES VOLUME 2021 BY MARKET 4 599 SALES REVENUES MNOK 5.9EBIT/KG NOK 753NO. OF EMPLOYEES KEY FIGURES NOK MILLION Operational 2021 * 2020 * 2019 * 2018 2017 2016 2015 2014 2013 2012 Harvested volume (tonnes GWT) 75 601 71 142 71 700 74 623 62 598 64 727 65 398 64 736 58 061 70 000 Spot price of salmon (NOK/kg) 1 Group farming cost (NOK/kg) 2 EBIT/kg 2 Financial Sales revenues EBITDA 2 EBIT before fair value adj. 2 Profit/loss for the year Cash flow from operations Capital structure NIBD according to covenants requirement 2 NIBD/EBITDA 2 NIBD/Harvest (NOK) 2,3 Equity % Gross investments 2,4 Profitability Return on Capital Employed (ROCE) 2 Dividend per share (NOK) Earnings per share (NOK) Total market value (Oslo Stock Exchange) People 57.3 47.2 5.9 53.7 47.0 3.3 4 599 4 384 818 442 604 601 602 233 -316 412 57.2 40.5 15.0 4 756 1 384 1 077 599 1 193 59.2 43.1 14.7 7 500 1 334 1 099 997 820 59.2 43.4 14.5 7 017 1 106 904 601 709 1 869 3 679 1 939 1 690 1 284 n/a 30.9 41% 979 3% 0.0 -4.8 1.4 23.4 46% 667 1.3 22.6 48% 733 1.2 20.5 47% 553 19% 22% 24% 4.0 5.6 4.0 8.8 4.0 5.0 2.6 24.7 52% 570 6% 0.0 10.7 9 427 61.9 39.7 18.0 6 545 1 342 1 168 1 222 953 906 0.7 14.0 47% 255 33% 1.5 10.7 40.7 37.7 0.7 4 609 261 48 4 367 39.8 35.2 5.3 38.9 34.0 6.0 25.5 32.5 -2.7 4 100 2 404 2 050 484 343 144 157 484 348 431 317 1 569 1 566 1 445 6.3 24.0 38% 322 1% 0.5 -0.1 3.3 24.2 42% 312 3.0 24.9 43% 164 10% 12% 0.0 1.3 0.0 3.9 -30 -191 -147 203 1 530 -51.3 21.9 37% 190 -6% 0.0 -1.3 9 643 15 666 11 423 8 068 9 123 3 462 3 182 2 736 1 379 Continental Europe UK North America Asia Number of employees 753 950 822 769 707 654 681 686 626 640 *Ex. Shetland. The Shetland assets was sold 15 December 2021. Throughout 2020 and 2021 (up until the sale), the Shetland assets has been classified as assets held for sale and the income statement and cash flow of the Shetland assets has been presented as discontinued operations. The 2019 figures have been represented, while 2018 and earlier periods have not. In 2020, we sold all our shares in Ocean Quality, which throughout 2020 and up until the sale, for the part of Ocean Quality related to sale of fish from Bremnes Fryseri AS, was classified as assets held for sale and the income and cash flow presented as discontinued operations. The 2019 figures have been re-presented, while 2018 and earlier periods have not. See Note 5 for more information. Number of employees up to and including 2020 includes Shetland. 1 Average of weekly NQSALMON prices less 0.75/kg. 2 See more information in the Alternative Performance Measures of this report. 3 Net interest-bearing liabilities according to covenant divided by last 12 months harvest volume. 2021-2019 are excl. Shetland while prior periods include Shetland. The 2020 figure is calculated by subtracting NIBD by the book value of the Shetland assets as at 31 December 2021. 4 Incl. financial lease (according to IFRS in force prior to 1 January 2019) investments. 2021-2019 are excl. Shetland while prior periods include Shetland. PA R T 0 1: O U R F O U N D AT I O N OUR SCOREBOARD The sustainability scoreboard is a set of some of the key performance indicators for the Group´s five pillars, where we track our performance. The colors indicate Within target On track to meet our target Unsatisfactory result PILLAR KPI P R OFI T & INNO VAT ION Return on capital employed1) Farming cost per kg Rogaland (NOK) Finnmark (NOK) British Columbia (CAD) TARGET 12% p.a. NOK 40/kg in Norway and CAD 7/kg in BC in 2022 HE ALT H Y O CE AN Harvest volume (tonnes GWT) 77 000 tonnes in 2021 ASC certification2) All sites by 2023 Rogaland Finnmark British Columbia Survival rate at sea3) 93% by 2022 Rogaland Finnmark British Columbia Use of antibiotics (g per tonne LWE)4) No use of antibiotics Rogaland Finnmark British Columbia Newfoundland Sea lice treatments (g per tonne LWE)4) Minimize use of pharmaceutical treatments Rogaland Finnmark British Columbia Use of hydrogen peroxide (kg per tonne LWE)4) Minimize use of pharmaceutical treatments Rogaland Finnmark British Columbia5) Escape incidents Zero escape incidents Rogaland Finnmark British Columbia Carbon emission (kgCO2e per tonne GWT)6) 35% reduction (from 2018) in total emissions by 2030 High quality product Scope 1 + 2 location based Scope 3 Rogaland Finnmark British Columbia 93% superior share Absence rate Below 4.5% LTIR Rogaland Finnmark British Columbia Newfoundland 7) Rogaland Finnmark British Columbia Newfoundland SU S TAIN A BLE F OOD P EOP LE L O C AL C OMMUNI T IE S Workplace culture Above average score in Great Place to Work survey Support our local communities Collaborate and contribute to local community Newfoundland has been excluded from most of these metrics as they are not yet relevant due to no seawater production. 1) ROCE in 2019, 2020 and 2021 ex Shetland. 2) Number of sites certified and % of net production (budget). 3) 12 months rolling survival rate calculated according to the GSI standards. 4) Amount of active pharmaceutical ingredients (APIs) used (gr/kg) per tonne of fish produced (LWE). 5) As of 01.01.2021, the Government of Canada - Department of Fisheries and Oceans Canada (DFO) changed the calculation formula for the API of hydrogen peroxide from Paramove 50 from 1 L (Paramove 50) * 1.15 (density) * 0.45 (concentration) = 1 kg H2O2 to 1 L (Paramove 50) * 1.19 (density) * 0.49 (concentration) = 1 kg H2O2, which corresponds to the method used in Norway. Previous years (2017 - 2020) have not been recalculated. 6) All previous years have been recalculated due to the divestment of our Shetland operations. See also GRI 102-48 and our chapter on carbon emissions. 7) LTIR figures are not scored since an LTIR target has not been defined in order to avoid under-reporting of incidents. 2021 6% 44.6 43.7 8.8 2020 3% 42.1 44.1 8.0 2019 19% 35.9 37.7 8.3 2018 22% 40.3 35.6 7.4 PA G E 9 2017 REFERENCE page 83 page 83 24% 38.4 40.7 7.4 75 601 (89 327 incl Shetland) 71 142 (86 847 incl Shetland) 82 973 74 623 62 598 page 12 0 18 (100%) 12 (69%) 0 15 (80%) 11 (59%) 92% 95% 92% 0.0 6.0 41.7 0.0 4.4 0.5 0.3 1.6 2.4 35.7 0 1 (4352) 2 (4) 430 4 900 81% 82% 87% 3.0% 8.7% 5.6% 1.3% 42 22 6 5 90% 92% 90% 0.0 0.0 62.3 0.0 0.0 1.0 0.2 7.2 3.6 46.6 0 0 0 456 5 737 85% 69% 86% 3.0% 5.5% 6.8% n/a 9 28 36 n/a 0 10 n/a 93% 96% 88% 0.0 0.0 87.0 n/a 0.0 0.3 0.5 11.9 0.0 6.0 0 0 0 428 n/a 75% 86% 86% 3.5% 4.9% 2.0% n/a 15 22 35 n/a 0 4 n/a 92% 96% 88% 0.0 0.0 151.3 n/a 1.1 0.8 0.3 3.5 14.5 5.8 0 0 0 345 n/a 74% 86% 84% 4.7% 5.4% 1.8% n/a 24 18 38 n/a 85% (global) 84% (global) 79% (global) 89% (Norway) yes yes yes yes 0 2 n/a 91% 95% 93% 0.0 0.0 18.3 n/a 0.2 1.0 0.1 10.8 13.4 9.2 0 0 0 317 n/a 81% 78% 81% 3.2% 4.4% 0.9% n/a 11 24 16 n/a n/a yes page 17 page 23 page 24 page 26 page 26 page 27 page 39 page 34 page 75 page 75 page 72 page 78 STATUS ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● PA R T 0 1: O U R F O U N D AT I O N PA G E 10 CEO LETTER Dear Shareholder, 2021 was a year of contrasts. At the beginning, we were still in the Our ambitions on sustainability remain steadfast. While food from middle of the Covid-19 pandemic, with health and safety measures the ocean has a good starting point, we have several challenges in place throughout our operations and markets in lockdown. to solve to be a true solution in a future sustainable food system. We also experienced a challenging biological situation in several Grieg Seafood is committed to reducing our impact and improving regions. At the end of the year, the pandemic was in a new phase, fish welfare. During 2021, we made progress on certifying our with eased restrictions and increased demand for salmon. The farms according to the Aquaculture Stewardship Council (ASC) biological condition of our fish had improved significantly, with certification with 62 percent of our production now certified. We increased survival in all regions and better sea lice and disease were pleased to achieve second place on the Coller FAIRR Protein control. Altogether, we harvested more fish than we have ever Producer Index, which rates global protein producers according to done before in a single year. I want to sincerely thank all of my sustainability, as well as an A list rating by CDP for climate action. Grieg Seafood colleagues for pulling together and turning the Still, the majority of the work is ahead of us. We must continue to company around. roll up our sleeves and improve. During the year, we reached several milestones in our 2025 It is when times are tough that the truth about who we really are business strategy. With the sale of our Shetland operations, we emerges. Despite challenging times in 2020 and the beginning narrowed the company’s focus to the production countries where of 2021, we carried on all the way to the other side without we see the largest potential for profitable and sustainable growth: compromising on our values. That makes me proud, and I know Norway and Canada. With a healthy balance sheet, we are well it has made us stronger. While we cannot predict the future, we positioned to engage in growth opportunities in these regions. know that new uncertainties will continue to appear in a globalized Last year, our internal global sales organization also became world. As I am writing this letter, a terrible and heartbreaking operational. We are now able to work fully integrated between war is unfolding in Ukraine, and Europe suddenly find ourselves farming and sales, allowing us to improve our performance in the in a new geopolitical situation. What we least expected has sadly market. We are also making progress on our downstream strategy, become a reality. and we are currently delivering value added products from both our Norwegian and Canadian operations. This work will continue In 2022, Grieg Seafood is in a better shape than ever to adapt to the at full speed in 2022. unknowns, respond to changes and grasp the opportunities that lie ahead. In 2021, each region made progress towards our goals. Rogaland delivered strong biological results and continued to advance our post-smolt strategy, which reduces the time our fish spend in the ocean. For the first time, we harvested fish after only 10 months in the sea. Moreover, 40 percent of the pens harvested in Rogaland never needed any sea lice treatments, due to preventative measures. Finnmark significantly improved control over winter ulcers and disease throughout the year, and delivered a solid performance in the second half of 2021, marked by improved survival rates. British Columbia made further progress in controlling the impact of harmful algae blooms and low oxygen levels. With our locally developed mitigation systems, we reduced mortality caused by harmful algae from 3.4 percent in 2019 to 0.4 percent in 2021. Newfoundland, despite the postponed transfer of fish, is on track to start sea operations in the coming spring. PA R T 0 1: O U R F O U N D AT I O N PA G E 11 FIGURE 1.6 SUSTAINABILIT Y DRIVES RESULTS SUSTAINABILITY DRIVERS • Sea lice control and minimal sea lice medication • Escape control • Survival and disease control • Wildlife management • Lower carbon emissions • HSE, diversity and work satisfaction • Certifications • Local value creation SUCCESS FACTORS FINANCIAL TARGETS • License to operate • Higher volume • Superior quality • Competitive cost • Engaged employees • ROCE: 12% • Harvest: 90 000 tonnes in 2022, 130 000 tonnes in 2025 • Farming cost: NOK 40/kg and CAD 7/kg in 2022 • Preferred by customers and • NIBD/EBITDA: < 4.5 < consumers • Dividend: 30-40% of net profit Salmon farming is a long-term commitment, where sustainability and long-term profitability go hand in hand. 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. OUR 2025 BUSINESS STRATEGY Our 2025 strategy comprises three key strategic objectives for continued business development. Increasingly sustainable farming practices underpin all areas of the strategy. GLOBAL GROWTH Harvest volume of 130 000 tonnes by 2025 COST IMPROVEMENT Global growth Harvest volume of 130 000 tonnes by 2025 Improve competitiveness in each region Cost improvement Improve competitiveness in each region VALUE CHAIN REPOSITIONING Evolve from supplier to innovation partner Value chain repositioning Evolve from supplier to innovation partner SU S TAIN A BILI T Y SUSTAINABILITY Global growth, cost leadership and value chain repositioning are the key areas of business development towards 2025. Sustainability is the foundation of all areas of the strategy. To increase our harvest volume, we will focus on post-smolt investments, utilize our current licenses better, target new licenses, and seize opportunities afforded by new technology. We participate in new growth initiatives, M&As, joint ventures, and greenfield projects, and seek cooperation with farmers in existing areas. To be cost competitive in the regions where we farm, we continuously focus on operational performance. Biological control through preventative measures and fish health and welfare are essential in securing increased survival and reduce production costs. We will also drive performance improvements through continuous research and development, as well as through the utilization of new technologies. We will increase the value of our products through a stronger presence in the market, based on partnerships, category development and brand cultivation. Repositioning Grieg Seafood from a salmon supplier to an innovative partner for selected customers is an important part of our value creation plan. PA R T 0 1: O U R F O U N D AT I O N PA G E 12 S TAT U S A ND A C T IONS TAK EN IN 2021 GLOBAL GROWTH GLOBAL GROWTH 1 COST IMPROVEMENT COST IMPROVEMENT 2 STATUS • We harvested 75 601 tonnes of salmon excluding Shetland GOING FORWARD • We expect further growth to come from better utilization of our (89 327 tonnes including Shetland) in 2021. Our Norwegian farming regions delivered the highest ever harvest volume of 61 154 tonnes, an increase of 22% compared to 2020. This increase is a result of improved utilization of the sites’ seawater licenses by moving more growth to land through our post-smolt program. We are piloting post-smolt in Rogaland, and will increase post-smolt capacity also in Finnmark and BC. The expansion of the smolt facility in BC will be completed in maximum allowable biomass (MAB) and higher survival rate 2022. STATUS • As part of our aim to be cost competitive, we set a target for GOING FORWARD • Our cost improvement initiatives have developed according to our farming cost (directly related to production and harvest of plan. However, we have seen cost inflation particularly for feed salmon) of NOK 40/kg and CAD 7/kg in 2022, for our Norwegian ingredients and transport cost, with continued inflation in 2022. and BC operations, respectively. We will continue to benchmark our cost to our competitors’ to — The farming cost in Rogaland was NOK 44.6 per kg in 2021, ensure we have cost competitive targets. up from NOK 42.1 per kg in 2020. The farming cost was • While our post-smolt strategy increases investment • Better utilization of our seawater licenses by improving impacted by harvesting from sites affected by Pancreas expenditures and smolt cost, we expect it to reduce operational in seawater. In BC, the harvested volume decreased compared to 2020 due to the local production arrangements and larger farms on the West Cost of Vancouver Island compared to the East Coast, where we harvested from this year. As a consequence, the Group volumes also vary every other year, biosecurity, fish health, welfare and survival rates, is also expected to secure on-growth and harvest volumes. Flexibility is a requirement to achieve better utilization of our capacity, and we are continuously looking for opportunities to secure regardless of the underlying biology. Measures are being done access to new locations. to equalize harvest volumes, including securing new locations. • Our new region in Newfoundland is expected to provide a • With the sale of our Shetland operations, we have narrowed our operational focus to the regions with the greatest potential for profitable and competitive farming operations. Our Norwegian and Canadian regions have the greatest biological potential and are also in close proximity to our most important markets - Europe and the USA, respectively. • We spent NOK 480 million in investments related to growth initiatives in 2021. Close to 60% of the investments were in Newfoundland, with completion of the smolt facility and preparations of the seawater locations. Another main investment was the expansion of our smolt facility in BC, which will be key to secure access to high quality smolt. harvest of 15 000 tonnes in 2025, and has a long-term harvest potential of at least 45 000 tonnes. The first smolt will be transferred to the sea spring/summer of 2022. • We have received four and a half development licenses for the offshore concept “Blue Farm”. The concept is based on technology from the Norwegian oil and gas industry, and the aim is to implement the concept in exposed areas. The decision on whether to build the farm has not yet been taken. Disease (PD), which increased fish handling and well-boat expenditures and reduce costs related to mortality, disease costs. We are working systematically to improve fish health outbreaks, sea lice treatments and fish handling. Our farming and welfare through general health and welfare measures, experience and our data analyses indicate that reduced time in and all sites with PD will be harvested at the beginning of the sea will reduce the risk of biological challenges such as sea 2022. lice, Pancreas Disease (PD), winter ulcers and ISA. — The farming cost in Finnmark was NOK 43.7 per kg in 2021, • Rigorous focus on fish health and welfare measures has down from NOK 44.1 per kg in 2020. We have been less increased our survival rates. In BC, we have had good results impacted by challenges related to winter ulcers this year with digital monitoring and measures to mitigate the effects of due to improved management in this area. harmful algae blooms, our main biological challenge in BC. — In BC, the farming cost increased from CAD 8.0 per kg in 2020 to CAD 8.8 per kg in 2021, mainly due to a lower harvest volume. VALUE CHAIN REPOSITIONING VALUE CHAIN REPOSITIONING 3 SUSTAINABILITY SUSTAINABILITY 4 82 973 86 847 89 327 90 000 74 623 FIGURE 1.7 OUR GROWTH JOURNEY: HARVESTED TONNES GWT . department, and have started to process some salmon into fresh and frozen valued added products at external processing plants in both North America and Norway. • We will continue to evaluate both external opportunities to strengthen our processing capacity, such as long-term partnerships with third parties in Norway, North America and Europe, as well as development of existing internal processing infrastructure. 130 000 130 000 STATUS & ACTIONS • We have established our own sales and market organization, and have built a customer portfolio. Grieg Seafood's business is based on five pillars, covering environmental, social and governance (ESG) topics identified as important to our stakeholders. Our main sustainability drivers and • We have established a Value Added Product (VAP) sales results are presented in Part 02 of this report. PA R T 0 1: O U R F O U N D AT I O N PA G E 13 OPERATIONAL FOCUS AREAS To achieve sustainable growth and improve competitiveness, we focus on reducing the time fish spend at sea (post-smolt), improving fish welfare and providing data-driven decision support (“Precision Farming”) to our operations. Together, the focus areas strengthen our ocean farming. Read more about our operational focus areas here. OPERATIONAL FOCUS AREAS Less time at sea (post-smolt) Prevention and fish welfare “Precision Farming” - data-driven decision support LESS TIME AT SEA (POST-SMOLT) During the first stages of their life, salmon are raised in onshore freshwater hatcheries. In traditional salmon farming, fish are transferred to the sea when they have undergone the smoltification process, making them physiologically ready for life in saltwater. With our post-smolt strategy, we keep the fish longer on land or in closed facilities in the sea, shortening the time that they spend growing in open sea-pens by several months. Less time at sea will improve biological control, fish welfare, survival and quality because each salmon is less exposed to biological risks like sea lice, seaborne diseases or other unfavorable ocean conditions such as harmful algae or sub-optimal oxygen levels. Less exposure to these risks will also allow us to better utilize preventative methods and avoid expensive treatments. This will reduce our environmental impact as well as our production cost. Post-smolt also increases flexibility with regard to the transfer of smolt, allowing us to fallow sites for longer periods if necessary. The fish will be larger and more robust when entering the sea- growing phase, which we believe will increase health and welfare in and of itself. Post-smolt transfer also allows for a more efficient production cycle. It takes less time to reach harvestable size in the sea, which frees up capacity at farms to grow more salmon within existing licenses. The result is a lower environmental footprint per fish, better fish health and welfare, lower costs, and increased annual harvests. Altogether, we expect post-smolt transfer to reduce operational expenditure in the sea-growing phase, improve profitability and competitiveness, and provide opportunities for sustainable production growth. It strengthens our ocean-based salmon farming operations. Grieg Seafood is piloting our post-smolt strategy in Rogaland. We have also invested in post-smolt capacity in Finnmark, British Columbia and Newfoundland. As it takes two to three years to farm one salmon, it will take time before we have harvested enough generations of fish with a substantially shorter time at sea to draw final conclusions. We also need to learn how we can optimize welfare and fish farming with this new type of production cycle, and adjust accordingly. However, our experience so far indicates that results are meeting expectations. ACHIEVEMENTS 2021 • In Rogaland, where post-smolt is piloted on a regional level: — While our average smolt transferred to the sea in 2015 weighed 120 grams, the average smolt transferred to the sea in 2021 was 460 grams. — More than 50% of fish harvested were from post-smolt (fish weighing more than 200 grams when transferred to sea). — Reduction in sea lice treatments and reduced risk of PD for post-smolt fish that spend less than 12 months at sea. — Post-smolt with an average weight of approx 900 gr when transferred to the sea at the end of March had an average weight of 4.8 kg when harvested at the end of November. — By putting a second FishGlobe into operation, we increased our post-smolt capacity by 450 tonnes. GOING FORWARD • In Rogaland: — We have executed our post-smolt strategy gradually to utilize increased production capacity, and have tested batches of post-smolt together with batches of traditional smolt on farms. In 2021, we transferred post-smolt to one entire farm, which will be harvested at the beginning of 2022. Here, the seawater production time will be reduced by 100-150 days. — The expansion of Tytlandsvik Aqua, which will be completed in 2022, will add an additional capacity of 750 tonnes of post- smolt. Going forward, additional initiatives will be pursued, including Årdal Aqua, which is expected to provide at least 3 000 tonnes of post-smolt. — Grieg Seafood Rogaland aims to increase the average smolt transfer weight to approximately 800 grams in 2025. • In Finnmark, we target an increase of 4 000 tonnes of post- smolt by 2025 through various initiatives. • In BC, we will increase our smolt capacity from 500 tonnes to 900 tonnes in 2022 through our Gold River smolt facility. • Our RAS facility in Newfoundland includes a smolt module with a capacity of 1 500 tonnes. PA R T 0 1: O U R F O U N D AT I O N PA G E 14 PREVENTION AND FISH WELFARE We pursue a systematic, long-term approach to fish health and welfare. The key is investment and further development of preventive measures against seaborne hazards, such as sea lice, harmful plankton, jellyfish, low oxygen levels, infectious diseases and low seawater temperatures. Prevention will reduce handling and stress for the fish. It will also reduce our environmental footprint by, for instance, reducing the number of treatments needed. Moreover, prevention instead of handling reduces production costs. The result is stronger growth, high harvesting quality, increased survival rates and lower costs. ACHIEVEMENTS 2021 • In BC, we are fine-tuning our algae detection and mitigation system, which is becoming more effective every year as we learn how to use it. The system comprises long tarps around the pens and aeration/oxygen generation systems to keep harmful algae outside and push clean and oxygenated water up to the fish during periods of harmful algae blooms or sub-optimal oxygen levels. The effect is increased survival and continued feeding and on-growth during challenging conditions, as well as better sea lice control. • In Rogaland, we have had success with using cleaner fish as a preventive method to control sea lice. As a result, 40% of the pens of fish harvested did not receive any sea lice treatments in 2021. • In Finnmark, we have implemented measures to mitigate ISA and winter ulcers. We have vaccinated our smolt with an ISA vaccine, made changes to our smolt transfer strategy and shared experience with the Norwegian Veterinary Institute to increase the knowledge about the virus’ outbreaks. GOING FORWARD • Some of our numerous ongoing initiatives to improve fish health and welfare throughout the production cycle include selection of roe with specific qualities related to sea lice and diseases, feed customized for the various stages of the salmon’s life cycle, or vaccinations targeting specific diseases: — Tests with improved feed formulas in Finnmark, utilizing best available science, to strengthen health, welfare, robustness and quality. Examples of changes are increased levels of essential marine fat and a stronger vitamin mix. — Initiatives to optimize health, welfare and robustness of post-smolt. We are looking into how the vaccination program should be structured optimally for post-smolt, and what temperature profiles during the land-based phase is optimal for post-smolt production cycles. — Efforts to mitigate the negative impact mechanical sea lice treatments may have on fish health and welfare. Mortality caused by such treatments has been reduced, and we are working to reduce it further. — We have developed our own fish welfare indicators, based on the Fishwell research project, to be able to more systematically assess and improve fish welfare throughout our operations. “PRECISION FARMING” - DATA-DRIVEN DECISION SUPPORT “Grieg Seafood Precision Farming” is our concept for digitalizing • Further improvements and new capabilities have been farming operations, with the aim of providing strategic, tactical introduced in a dashboard for environmental monitoring and and operational decision support into our production processes. prediction of exposure to negative impacts at the site level. Experience-based knowledge has always been the foundation • The introduction of fully autonomous feeding by utilizing AI, of salmon farming. With advanced sensors, big data, artificial supported by fish behavior monitoring, environmental sensors, intelligence, and automation incorporated into our operations, pellet detection and real-time oxygen monitoring, has given the Precision Farming concept introduces data-driven decision improved biological performance in BC. support as an addition to existing knowledge and experience. Big data analyses on previously unknown connections between the fish and the environment provide insights for strategic decision- making. The use of digital tools and dashboards, providing real- time data on various farming parameters to operational centers as well as to farmers, aims to improve tactical and operational decisions. They also allow us to benchmark on new parameters and learn better from best practice. We aim to be able to predict negative events early, enabling us to apply preventative measures and improve management decisions. The result is expected to be increased growth, reduced environmental impact, improved fish welfare, increased productivity and lower costs. ACHIEVEMENTS 2021 • Our internal analysis team has conducted several new data and GOING FORWARD • Through data analysis, we aim to gain increased insight and knowledge of various challenges, such as Yellow mouth, one of the challenges we have in BC. • We are setting up a project to explore how to utilize our data from cameras, environmental sensors and other data sources to gain increased insight within biomass development, fish health, feed and feeding profiles. This includes implementing predicative methods focusing on providing data-driven decision support to the operators. • Increased focus on automatic and standardized data acquisition in the freshwater facilities will enable us to do performance analyses in our hatcheries as well as build early warning capabilities for potential negative trends on water quality parameters. regression analyses to provide strategic and tactical decision- • We are setting up an integrated operation center in our making support, aimed at mitigating biological challenges: Newfoundland region as we are starting up seawater — Developed prediction models for the optimized time to production. The center will be built to the same design and with transfer smolt to the sea, based on historical data from similar capabilities as we are running in Rogaland. Rogaland and Finnmark, to mitigate biological risk and to optimize production cycles. — Re-runs of the analysis of winter ulcers with new and updated data. Positive effects of the subsequent changes in the operational procedures have been identified. — By analyzing the development and historical trends of feed utilization, we have gained new insight about different feed types, including identifying which feed types are giving the best production results. We are also working with different appetite models to obtain improved feeding. — Lice treatment evaluation, by developing a tool for standard data acquisition and procedures for logging information when performing lice treatments. This will enable efficient data analysis and support the selection of the most efficient treatment method given current biological and environmental conditions. • High-definition biomass camera with video algorithms for real- time biomass calculation of weight and weight distribution, automatic lice counting and fish-health monitoring, have been implemented in both Rogaland and BC. PA R T 0 1: O U R F O U N D AT I O N PA G E 15 OUR VALUE CHAIN IN P U T NATURAL CAPITAL • Public natural resources: we lend sea areas for our sites and fresh water for our RAS facilities. • Privately owned natural resources: Plant-based and marine feed ingredients, and salmon eggs. TECHNOLOGICAL CAPITAL • Farming equipment and technology FINANCIAL CAPITAL • Trust and investment from investors • Access to capital HUMAN CAPITAL • People (experience, ideas, passion) • Culture • Corporate Governance POLITICAL/SOCIAL CAPITAL • Our License to Operate • Trusted among our key stakeholders • Favorable political conditions BREEDING FRESHWATER FARMING POST-SMOLT SEAWATER FARMING HARVESTING SALES AND DISTRIBUTION VALUE ADDED PROCESSING RETAIL / HORECA 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 to shorten the time in seawater, reducing risk of biological challenges. In Rogaland, the average size of the smolt transferred to the sea in 2021 was 460 grams compared to 120 grams in 2015. 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. We use a harvesting vessel in BC. In Newfoundland, we will have cooperation with a local plant. We have our own global sales and market organization with local offices in the countries we farm salmon, to support growth and the downstream strategy. We have a small share of VAP in Norway and BC. 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. Currently, we have the HoReCa brand Skuna Bay in Canada. OU T C O ME 1 600 000 HEALTHY MEALS PER DAY* *Based on our harvest volume for 2021 incl Shetland, with 68% yield from live weight, and servings of 125 grams. OUR BR ANDS SKUNA BAY Skuna Bay is our high-end HoReCa brand for the US market. Skuna Bay fish is preferred by some of America’s top chefs, and is regularly served at the James Beard Award. Read more here. PA R T 0 1: O U R F O U N D AT I O N PA G E 16 OUR APPROACH TO SUSTAINABLE BUSINESS 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 and contribute to a sustainable ocean economy. Our targets go beyond short-term profitability. Based on our materiality assessment, our five pillars show our commitment to sustainable and long-term value creation for all of our stakeholders. M AT ER I ALI T Y M AT R I X Together with our stakeholders, we have identified our most important risks and opportunities, based on our operations and geographical locations. The materiality matrix is the foundation of our five pillars. • Employee health & safety • Safe & healthy food • Fish health & welfare • Protecting wild salmon (escape & sea lice control) • Protecting biodiversity & marine ecosystems (local emissions, medicine use, wildlife interaction) • Low use of antibiotics • Carbon emissions • Plastics pollution • Sustainable feed ingredients (zero deforestation, sustainable marine ingredients, ESG assessment, novel ingredients) • Human rights, including labor rights • Profitable operations • Corporate governance • Responsible business conduct • Indigenous rights & partnerships • Value creation in rural areas S R A L L I P R U O T N E M N G I L A G D S S C I P O T HEALTHY OCEAN SUSTAINABLE FOOD PROFIT & INNOVATION PEOPLE LOCAL COMMUNITIES • Fish health & welfare • Safe and healthy • Profitable operations • Human rights • Local value creation • Protecting wild food salmon (escape and • Sustainable feed • Our market • Research, • Embracing diversity • Indigenous • Creating attractive relationships sea lice control) ingredients development and jobs • Protecting • Climate action innovation • Keeping our biodiversity & • Recycling and waste • Responsible business employees safe • Dialogue and engagement marine ecosystems management conduct (local emissions, medicine use, wildlife interaction) • Plastic pollution • Corporate governance S N O I S I C E D D N A S T N E M S S E S S A R E D L O H E K A T S N O E C N E U L F N I I L A R E T A M T N A C I F I N G S I E T A R E D O M • Fresh water use • Diversity • Visual & noise pollution • Recycling & waste • Transparency & stakeholder management dialogue • Circular economy • Community sponsorships • R&D/ innovation • Lifelong learning for employees MODERATE SIGNIFICANT MATERIAL SIGNIFICANCE OF ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS Grieg Seafood's business is based on five pillars, covering environmental, social and governance (ESG) topics identified as important to our stakeholders. The pillars are based on our materiality assessment. They help us steer towards long-term value creation for investors, customers, employees and local communities. Find a combined overview of our pillars, targets and Group policies here. 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. The materiality matrix is reviewed and updated annually. The Board of Directors has oversight of the materiality assessment. During 2021, we have strengthened our corporate governance on sustainability. All material areas in the materiality assessments are or will be covered by group policies, and progress is reviewed by the Board. For more information, please see the GRI index in Part 04 of this Annual Report. PA R T 0 1: O U R F O U N D AT I O N PA G E 17 OUR CERTIFICATIONS It is important for both local communities and customers to know that our farming practices are responsible. For reassurance, our farms are certified by independent bodies. To ensure that local communities, customers, and civil society can trust that we farm responsibly and to the highest standards, we certify our farms according to several recognized, third-party certifications. Read more about our certifications and their current status here. CERTIFICATE ASC TARGET 100% ASC certification (or compliance with ASC) for active and eligible sites by 2023. Newfoundland aims to certify when the seawater sites get into production. DESCRIPTION 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. The ASC label only appears on food from farms that have been independently assessed and certified as being environmentally and socially responsible. A Chain of Custody certification ensures that companies selling certified seafood have identification, segregation and traceability processes and procedures in place. GLOBALG.A.P Global Good Agricultural Practices (GLOBALG.A.P.) is a standard for both agriculture and aquaculture. The standard covers food safety, animal welfare, sustainability, employment, and traceability. 100% of farms in Norway GlobalG.A.P. certified (certification not relevant for Canada) GlobalG.A.P. certification provides assurance that food has been grown using recognized levels of quality and safety. It also ensures that it has been produced sustainably in a way that respects the health, the environment and the welfare and safety of workers and animals. The GLOBALG.A.P. The Chain of Custody Standard ensures that the product is sourced from GLOBALG.A.P. certified farms. GlobalG.A.P is particularly important for customers in Europe. BAP Best Aquaculture Practices (BAP) is an aquaculture standard that covers practices in all stages of the fish farming process. 100% of farms in BC BAP certified (certification not relevant for Norway). BAP certification helps to assure consumers that the seafood they buy is produced in a manner that is considerate of the animal’s welfare, the environment, workforce and community, food safety, and traceability. BAP is particularly important for customers in the United States. STATUS At year-end 2021, 18 sites (100% of net production) in Finnmark and 12 sites (69% of net production (budget)) in BC have received ASC certification. Grieg Seafood Rogaland will receive the first ASC certifications in 2022. Our sales and market organization in both Norway and Canada are ASC Chain of Custody certified. All our farms in Norway are certified. Our farms in Rogaland have been certified since 2008, and farms in Finnmark since 2016. Our sales and market organization in Norway is GlobalG.A.P. Chain of Custody certified. All our farms in BC have been certified since 2011. Our Newfoundland region is under establishment and is not yet delivering to market. OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM Reducing our footprint and improving fish health and welfare will always be key to success and our focus across all our regions. PA R T 0 2 A Q U A C U LT U R E I N A S U S TA I N A B L E G L O B A L F O O D S Y S T E M H E A LT H Y O C E A N S U S TA I N A B L E F O O D P R O F I T & I N N O VAT I O N P E O P L E L O C A L C O M M U N I T I E S 19 2 2 3 3 4 4 67 76 PA R T 0 2 : L E A D I N G W I T H S U S TA I N A B I L I T Y PA G E 19 AQUACULTURE IN A SUSTAINABLE GLOBAL FOOD SYSTEM Food systems are responsible for 70 percent of the water extracted from nature, cause 60 percent of biodiversity loss, and generate up to a third of human greenhouse gas emissions. A complete transformation of our global food system is needed during the next decades. We must provide healthy food for a growing population using fewer resources and with a lower impact. If we do it right, food from the ocean can play an important role. FIGURE 2.1 FEED CONVERSION RATIO Feed conversion ratio (FCR) measures the productivity of different protein production methods. A lower FCR represents a more efficient use of feed resources. TOMORROW’S SUSTAINABLE GLOBAL FOOD SYSTEM • Healthy and nutritious food for 9 billion people • Nature and biodiversity protected • Low carbon and low climate risk • Good animal welfare • A circular economy with resources recycled • Social and economic justice for producers in supply chains FARMED SALMON NUTRIENT PROFILE • Omega 3 fatty acids • Protein • Vitamin D, B12 and A • Iodine • Selenium • Minerals Research shows that eating seafood at least twice a week helps maintain a healthy heart and reduces the risk of cardiovascular diseases. Regular consumption of salmon can promote health and development across the lifespan. Read more here. Aquaculture has the potential to be an important part of the solution. 70% of the Earth is covered by ocean. Today, however, we obtain only about 2% of our food from the sea. While there are limits to the amount of wild fish that can be sustainably harvested, sustainable aquaculture can meet the increased demand for seafood in people’s diets. With a low carbon footprint, low feed conversion ratio, low land and fresh water consumption, and a high edible yield, farmed salmon continues to be one of the most eco-efficient forms of animal protein. In addition, farmed salmon is a nutritious food with numerous proven health benefits. Read more here. FIGURE 2.2 EDIBLE YIELD 68%FARMED ATLANTIC SALMON Edible yield measures how much of the animal is actually used for human consumption. Farmed Atlantic salmon has a high edible yield compared to other animal proteins. 46%CHICKEN 52%PORK 38%LAMB FIGURE 2.3 CARBON FOOTPRINT Farmed 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 SALMON 0.88 CHICKEN 1.30 PORK 5.92BEEF Source: GSI PA R T 0 2 : L E A D I N G W I T H S U S TA I N A B I L I T Y PA G E 2 0 THE CHALLENGES WE MUST SOLVE Though we have made great progress in finding more sustainable fish farming methods in recent decades, many challenges remain to be solved. For farmed salmon to be a part of a sustainable global food system, we must keep improving. 1. ENSURING CO-EXISTENCE WITH NATURE AND 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. IMPROVING FISH WELFARE 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 SUSTAINABLE FEED INGREDIENTS 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. CUTTING CARBON EMISSIONS While farmed salmon has a low carbon footprint compared to other animal proteins, our industry must do more to contribute to the Paris Climate Agreement’s goals. New technologies must be developed to cut emissions in our operations and value chain. 5. RECYCLE RESOURCES 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. 6. PROMOTING HUMAN RIGHTS As an industry with global supply chains both upstream and downstream, we have a responsibility to respect and promote human rights both in our own operations and in our value chains. T HE SU S TAI N A B LE DE V EL OP ME N T GO A L S The UN Sustainable Development Goals guide us towards a more sustainable food system. They highlight opportunities to grasp and challenges to solve - both in our farming operations and in our value chain. Read how Grieg Seafood aligns with the various SDGs here. GL OB AL SU S TAIN A B ILI T Y INI T I AT I V E S Grieg Seafood has committed to several initiatives that set high standards for our farming operations and value chain. Initiatives range from ocean stewardship to the climate, deforestation, and human rights. Read more about these initiatives here. R&D A C T I V I T Y R&D is inherent to delivering on our strategy and targets, such as improvements in fish welfare, sustainability, cost control and product quality. Read about our efforts here. PAR T NER SHIP S AN D C OLL A B OR AT IO N Collaboration and partnerships with researchers, peers, companies in our value chain, NGOs or other relevant actors is highly valued by Grieg Seafood. Only through collaboration can we drive necessary change, and solve the challenges we have in our industry and in our global food system. Read more about our partnerships here. OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM We advance a more sustainable global food system by continuously improving and by creating shared value for shareholders, local communities, employees and customers alike. HE A LT H Y OCE A N P E OP L E Farming salmon with practices that keep the fish and oceans Every single day, whether it is sunny, stormy or freezing cold, our healthy has a positive impact on our harvested volume, cost, fantastic employees are out there working hard in the hatcheries, quality, license to operate and employee engagement. on the farms or at the harvesting plants. Their passion and dedication drive Grieg Seafood forward. H U M A N R I G H T S E M B R A C I N G D I V E R S I T Y C R E AT I N G AT T R A C T I V E J O B S K E E P I N G O U R E M P L O Y E E S S A F E L OC A L C OMMUNI T IE S 6 8 7 0 7 2 74 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. R E L AT I O N S H I P S W I T H L O C A L C O M M U N I T I E S C O M M U N I T Y S U P P O R T 7 7 7 8 F I S H H E A LT H A N D W E L FA R E P R O T E C T I N G W I L D S A L M O N P R O T E C T I N G B I O D I V E R S I T Y & M A R I N E E C O S Y S T E M S S U S TA IN A BL E F OOD 2 3 2 5 2 8 We work to make our practices more sustainable along the entire value chain. Focus areas extend from safe and healthy food, traceability, and feed to carbon emissions and waste management. S A F E A N D H E A LT H Y 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 R E D U C I N G C A R B O N E M I S S I O N S WA S T E M A N A G E M E N T 3 4 3 6 3 9 4 2 P R OF I T & INNO VAT ION 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. E C O N O M I C P R O D U C T I V I T Y R O G A L A N D F I N N M A R K B R I T I S H C O L U M B I A N E W F O U N D L A N D S A L E S & M A R K E T T H E G R I E G S E A F O O D S H A R E S R E S P O N S I B L E B U S I N E S S C O N D U C T K E Y P E R F O R M A N C E I N D I C AT O R S A N D A N D A LT E R N AT I V E P E R F O R M A N C E M E A S U R E S 4 6 4 8 51 5 4 5 7 5 9 6 2 6 4 6 5 PA R T 0 2 : H E A LT H Y O C E A N PA G E 2 2 OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM HEALTHY OCEAN F I S H H E A LT H A N D W E L FA R E P R O T E C T I N G W I L D S A L M O N P R O T E C T I N G B I O D I V E R S I T Y & M A R I N E E C O S Y S T E M S 2 3 2 5 2 8 Farming salmon with practices that keep the fish and oceans healthy has a positive impact on our harvested volume, cost, quality, license to operate and employee engagement. 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 PA G E 2 3 FISH HEALTH AND WELFARE Ensuring the good health and welfare of the fish in our care is first and foremost an ethical responsibility. It is also the most important factor in achieving good growth, higher quality at harvest and lower costs. O U R AP P R O A CH T O F IS H HE ALT H AND W EL FAR E We are committed to improving the health and welfare of our fish. Good fish health and welfare implies that the highest possible number of fish thrive, grow, and survive to the end of their lifecycle. We have the same ethical responsibility to safeguard the good health and welfare of the cleaner fish in our care as our salmon. Our policies for fish health and welfare therefore apply equally to salmon and cleaner fish. Every region has implemented measures to fully comply with national fish health and welfare legislation. Every region also has a specific plan for preventive measures and treatments to secure fish health. Our fish health policy and our fish welfare policy follow the guidelines of the World Organization for Animal Health (OIE). OU R TAR GE T S Antibiotics No use of antibiotics Survival rate* Above 93% seawater survival rate by 2022 Above 95% seawater survival rate by 2025 *Survival reported in accordance with the standards of the Global Salmon Initiative (GSI) is defined as: (total # of mortalities in sea last 12 months / (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". We have also set targets for survival rates in fresh water. In the wild, only a small percentage of fertilized eggs survive and become adults. That is our biological starting point. Over the years, research has allowed us to improve the quality of breeding process, the eggs and survival rates, but we still experience mortality especially in the very early phase. We work systematically at the various stages in the lifecycle to improve survival rates. These targets can be found in our fish health and fish welfare policies. LEARN MORE ON OUR WEBSITE → → → Improving fish health and welfare Policies for fish health and welfare of salmon and cleaner fish Policy for the use of antibiotics OUR P R INCI P LE S F OR FI SH HE ALT H AND W E LFAR E FISH HEALTH transport, etc. • Minimize the pathogens (harmful micro organisms) entering — Monitoring welfare indicators during treatments in sea our farms. water for early detection of physical damage and rapid — Intake of healthy and robust roe and fish. implementation of measures. — Strict hygienic control of boats, feed, people, or any equipment taken into the farms. • Minimize the pathogens multiplying within the fish farm environment. — Daily removal of sick or dead fish. — Feed program targeted for each fish species and stage of the lifecycle. — Intake of fish with the physiology to thrive in the farm. — Intake of fish vaccinated with available and effective vaccines relevant for the area. — Continuous health monitoring and rapid implementation of necessary measures during disease outbreaks. • Minimize any environmental health risk to the fish. — Regular monitoring of water quality with respect to temperature, oxygenation, and salinity, based on local risks. In our freshwater facilities, we control and adjust these factors to ensure healthy growth conditions for the fish. — Monitoring of algae and jellyfish blooms in periods of risk. — Monitoring the seabed regularly to avoid sedimentary loading, and fallowing periods according to local environmental conditions. FISH WELFARE There is no universal definition of animal welfare, but we accept that every fish is an individual with a perception of life. We regard fish welfare as the quality of life as perceived by the animal itself. Our challenge is that we are not able to control each individual fish at any time, but treat all fish in one pen equally. Monitoring of fish behaviour and appetite in each pen is very important. We need to invest more resources to understand salmon farming in the light of population dynamic. We seek to fulfill “the five freedoms for animals under human control”: 1. Freedom from hunger, thirst, and malnutrition 2. Freedom from fear and distress 3. Freedom from discomfort 4. Freedom from pain, injury, and disease 5. Freedom to express normal patterns of behavior • Minimizing any discomfort to the fish during its lifetime at our farms: — Regular risk-based water monitoring for early detection of risk factors and rapid implementation of measures. — Careful handling of any live fish during treatments, grading, — Regular fish health checks for early detection of diseases and rapid implementation of measures. — We do not use/allow growth-promoting hormones in fish feed or other additives. • Ensuring that all live fish are anesthetized prior to killing. At harvest, the salmon is killed by electrical stunning or stunning, while cleaner fish and salmon not destined for consumption are killed by chemical anesthesia. There is still a lot to learn about fish welfare, including finding good ways to measure it more precisely. Welfare indicators such as mortality, appetite or daily feeding and environmental conditions are measured systematically. We are currently testing if these and other parameters can be performed automatically and accurately by camera sensor technology. CLEANER FISH Cleaner fish eat sea lice off the salmon and are used as a preventive measure to keep sea lice numbers low. In this way, they successfully help to reduce the number of delousing treatments salmon undergo. • Finnmark use farmed lump suckers as an addition to other sea lice control measures, to keep sea lice levels low without treatments. The aim is to reduce the number of cleaner fish used within some years and replace them with other sea lice control innovations if we find measures that are as effective. • Rogaland use wild wrasse and farmed lump suckers. Today, this is a key measure to keep sea lice levels low without treatments. In this region, we aim to improve effectiveness of the measure and reduce the number of cleaner fish used. Fishing quotas for wild cleaner fish are regulated by Norwegian Authorities. As cleaner fish are living animals in our care, they are also covered by our fish health and welfare policies. However, we recognize that fish health and welfare is not on a sufficient level as of today, and mortality rates are too high. We are working systematically to improve in this area. As a new species in aquaculture, it will take time to get to a sufficient health and welfare level. Some of our efforts are: • Only use cleaner fish on farms where we know they are effective. Farms with harsh conditions are not suitable for use of cleaner fish. • Use the type of cleaner fish that is best suited for the biological conditions, such as seasonal temperatures, on each farm. For instance, wild wrasse is only used during summer and autumn in Rogaland, as temperatures are too low in the winter. 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 PA G E 2 4 • Optimized vaccination programs. • Screening before release into the pens. • Specific feed in the pens, tailor-made for cleaner fish. • Tailor-made, artificial kelp forests in the pens where the cleaner fish can hide, avoid stress, rest, and sleep. • Improve harvesting practices of cleaner fish. • Register fish welfare and mortality on a daily basis. We are working systematically to improve our reporting routines, evaluate causes of mortality and to have better control of the loss of cleaner fish at sea. We recognize the ethical dilemma in using cleaner fish. Today, though, cleaner fish is an important and effective measure to keep sea lice levels low without treatments on specific farms. We are working both to improve the health and welfare of cleaner fish, but also to continuously evaluate other preventative sea lice control measures that are emerging. OU R AP P R O A CH T O A N T IBI O T IC S OUR P R INCIP LE S F OR AN T IBIO T IC S Resistance to antibiotics is a growing global challenge, and such risks increase with extensive use of antibiotics in animal protein production. We are committed to combating resistance to antibiotics. We are committed to preventing bacterial diseases by using available vaccines and biosecurity measures. We aim to avoid use of antibiotics when possible. In Norway, effective vaccines have reduced the use of antibiotics, however it has been used in a limited amount to secure the welfare of the fish when there are no other alternative treatment. RESULTS IN OUR REGIONS → Rogaland → Finnmark → British Columbia → Newfoundland • Antibiotics are used only as a last resort to treat bacterial diseases when fish health and fish welfare are threatened, and never as a growth-promotor. • All farming operations comply with the WHO Guidelines on Use of Medically Important Antimicrobials in Food Producing Animals. • Antibiotics on the WHO list of Critically Important Antimicrobials for Human Medicine categorized as “critically important” will not be used. • Antibiotics on the WHO list of Critically Important Antimicrobials for Human Medicine categorized as “highly important” or “important” can be used if fish welfare is threatened. • Antibiotics with low bio availability (oxytetracycline) will not be used. • Antibiotics must be prescribed by authorized fish health personnel and only drugs licensed as veterinary medicine will be used. • Withdrawal periods for medicine use are rigorously controlled and documented. • All prescriptions for antibiotics must be approved by central management in Grieg Seafood ASA. FIGURE 2.4 DENSIT Y IN THE PENS Our seawater pens are between 97.5% - 98.5% water and 2.5% - 1.5% fish biomass, providing space for the fish in our facilities to allow for comfort, natural behavior and a healthy growth cycle. PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G W I L D S A L M O N PA G E 2 5 PROTECTING WILD SALMON Salmon farming can potentially impact wild salmon if we do not use responsible farming practices. Keeping low levels of sea lice, avoiding escapes and avoiding diseases are key aspects to ensure co-existence. Grieg Seafood is working hard to avoid impacting wild salmon in all of our regions. PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G W I L D S A L M O N PA G E 2 6 SEA LICE CONTROL Controlling sea lice levels is one of the most important measures to protect both wild salmon and the health and welfare of farmed salmon. Sea lice treatments are expensive and resource intensive. We aim to keep sea lice levels low at all times. OUR AP P R O A CH We have an ethical responsibility to protect our salmon against health issues caused by sea lice. We also have a responsibility to reduce the risk of sea lice from salmon farms contaminating wild salmonids, especially during the smolt migration period. We also need to protect biodiversity and the ecosystems around our farms, and to minimize the impact from sea lice treatments. Every region has implemented measures to comply with national sea lice legislation. OUR P R INCI P LE S FIGURE 2.5 OUR APPROACH TO SE A LICE CONTROL 1. PREVENTION Genetics, post smolt, semi-closed containment, fallowing zones, skirt, shield 2. BIOLOGICAL REDUCTION Cleaner fish, laser, etc 3. TREATMENTS Medical/non- medical 1. When available, we use roe that has proven more resistant to sea lice. Post-smolt reduces the time at sea and reduces the exposure to sea lice, which improves sea lice control. We use sea lice skirts/shields, to prevent sea lice from entering the pens. 2. We use lump suckers and wrasse, which eat sea lice. Rogaland in particular has succeeded in using wrasse effectively. We use lump suckers at all green licenses in Finnmark. 3. We use mechanical treatments, such as fresh water, to avoid affecting environment. the The methods are selected when conditions are favorable. Only as a last resort do we use medical treatments. Grieg Seafood prefers to use preventive and biological sea lice • Non-medical treatments are preferred if they provide an measures rather than medical and non-medical treatments. acceptable level of fish welfare. A risk assessment must be Harvesting will always be considered when sea lice-infested fish performed prior to any treatment. The treatment’s effectiveness are close to harvestable weight. and the risk of side effects on fish and the environment should be evaluated. • Sea lice measures are based on IPM (Integrated Pest • Pharmaceuticals for sea lice treatments must be prescribed by Management) principles. A multifaceted approach will give authorized fish health personnel, and only medicines licensed improved results and reduce the risk of sea lice becoming for sea lice control should be used. resistant. • Withdrawal periods for medicine use are rigorously controlled • Minimize use of pharmaceutical treatment methods that and documented. discharge treatment water into the sea. Pharmaceutical lice treatments are acceptable in clean treatment systems, which purify the treatment water before it is discharged back into the ocean. LEARN MORE ON OUR WEBSITE → → Policy for sea lice control Co-existence with wild salmon RESULTS IN OUR REGIONS → → → Rogaland Finnmark British Columbia OUR TAR GE T S Sea lice level Rogaland and Finnmark* Average adult female sea lice below 0.5 Sea lice level BC** Average motile sea lice below 3.0 *At the green licenses in Finnmark, the limit is 0.25 adult female sea lice per fish, while during April and June, when wild salmon smolt migrate from the rivers and pass the salmon farms, the limit is 0.2 adult female sea lice per fish. **Pacific salmon species on the Canadian west coast have a higher tolerance for sea lice and for that reason we use separate KPI for British Columbia. PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G W I L D S A L M O N PA G E 2 7 ESCAPE CONTROL In areas where the wild salmon population is of the Atlantic species, escapes may cause interbreeding between farmed and wild salmon in the rivers, and interfere with the genetic uniqueness of the local wild salmon population. O U R AP P R O A CH OUR P R INCI P LE S • High technical standards at our sites. We have implemented • Regular inspections of vessels, moorings, and facilities to the technical minimum requirement set by the government, verify compliance. the NYTEK standard, at all facilities in Norway to avoid escapes • Inspections before and after harsh weather. during harsh weather. • We follow procedures to avoid escapes before, during and after operations, according to local conditions: • Our goal is that all employees attend courses on escape prevention at least every third to fifth year. New employees also receive risk and procedural training, and do not carry out work — Divers and/or a ROV are used before and after the transfer operation. or treatment of fish. — In Rogaland, divers are used during operations. — In Finnmark, a ROV is used during operations. — In British Columbia, we use double nets on all pens. A ROV is used to inspect the grow nets after each targeted two week cleaning cycle. We regard it as our responsibility to avoid interbreeding between with our Atlantic salmon. In Newfoundland, we use sterile fish, our farmed salmon and the local wild salmon populations. In which cannot interbreed with local wild fish. OUR TAR GE T Rogaland and Finnmark, our farmed salmon is of the same species as the wild salmon population (Atlantic salmon), and Grieg Seafood has zero tolerance for escapes from our farms in Escape Zero escape incidents interbreeding may happen should escapes occur. In BC, the wild all regions. salmon are of the Pacific salmon species, which cannot interbreed RESULTS IN OUR REGIONS → → → Rogaland Finnmark British Columbia PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G B I O D I V E R S I T Y & M A R I N E E C O S Y S T E M S PA G E 2 8 PROTECTING BIODIVERSITY & MARINE ECOSYSTEMS Protecting biological diversity is important for ensuring the survival of animals and plants, genetic diversity, and natural ecosystems. Natural ecosystems provide clean water and air, and contribute to food security and human health. It is our responsibility to protect nature and biodiversity wherever we operate. PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G B I O D I V E R S I T Y & M A R I N E E C O S Y S T E M S PA G E 2 9 PROTECTING MARINE ECOSYSTEMS We take special care to avoid impacting ecologically sensitive habitats. OU R AP P R O A CH We are increasing our awareness of nature and biodiversity risk, and we strive to learn more about and avoid impacting ecologically sensitive marine habitats. OUR P R INCI P LE S OUR TAR GE T S Impact on marine ecosystems Environmental and social impact assessment performed for 100% of farms • Our farms are located in legally and permitted zones for aquaculture development. • We perform environmental and social impact assessments of new land-based sites and seawater locations. • We do not set up new farms within the following locations: — existing federal parks, regional district parks, marine protected areas, and conservancies. — within any area where there is identified critical habitat for endangered species. • We comply with local and national legal requirements in regards to minimum distances where a farm can be located. • We monitor changes to legislation and perform annual revisions to the impact assessments. • All our farming operations are certified according to standards that take account of biodiversity. These standards, such as GlobalG.A.P., BAP and ASC, include criteria to minimize environmental impact and preserve biodiversity. OUR R E S ULT S Grieg Seafood follows national regulations in each country with Our impact assessments also include identification of IUCN red regards to operations in protected areas, and risk assessments list and national conservation list species present in our operating are conducted as part of the standard application process. We areas. The International Union for Conservation of Nature follow regulations to avoid impact on biodiversity and the marine (IUCN) ‘Red List of Threatened Species’ provides an inventory of environment beyond what is considered acceptable by the the global conservation status of plant and animal species, and authorities in the countries in which we operate. Certifications, national conservation lists serve as authorities on the sensitivity like the Aquaculture Stewardship Council (ASC), where impact of habitat in areas affected by our operations, and on the relative assessments are part of the certification program, help us raise importance of these habitats from a management perspective. Our the bar above regulatory limits. assessments have not identified that our activities pose a threat to any endangered plants or animal species. Please also read how We have performed environmental and social impact assessments we work to minimize impact on wildlife here. of all (100%) of our sites. Two broodstock sites in Rogaland and the harvesting plant in Finnmark are located in "national salmon Each region performs continuous monitoring of legislation fjords", a protection category created by the Norwegian Parliament revisions as well as annual revisions to the impact assessments. to protect wild salmon. Our two sites in Rogaland are located in Impact assessments are also part of the ASC certification program. Suldalsfjorden, using a total area of 0.054 km2. Our harvesting plant in Finnmark is located in Altafjorden, and uses 0.003 km2 of the seawater surface. These seawater farms and the harvesting plant were present prior to the establishment of the category, and became subject to certain restrictions as a result. We do have sites in the proximity of land nature reserves, but we do not have any other sites in or adjacent to protected areas or areas of high biodiversity value (areas defined as Special Areas of Conservation (SAC), Marine Protected Areas (MPA), High Conservation Value Areas (HCVA) or Federal Marine Protected Areas) expect for those mentioned above. All site locations available on our web site with GPS coordinates, please see links below. The regional maps can be matched with other maps, such as HCVA. LEARN MORE ON OUR WEBSITE → → → Our site locations in Rogaland Our site locations in Finnmark Our site locations in BC PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G B I O D I V E R S I T Y & M A R I N E E C O S Y S T E M S PA G E 3 0 INTERACTION WITH WILDLIFE OUR P R INCI P LE S Farms are often located in areas abundant with birdlife and marine mammals. We strive to avoid conflicts with wildlife. OU R AP P R O A CH We arrange operations and facilities in a way that minimizes our impact on local wildlife. • Potential conflicts with wild animals are evaluated when we consider new sites. • We aim to release any animal that gets stuck in our pens unharmed. • We generally only euthanize animals that are injured, and choose alternative ways to protect farms against intruders. Euthanizing animals must be approved by a manager and in some cases a regulator. We do not euthanize species listed on • Where relevant, we use equipment that minimizes the risk of injury to wildlife, such as bird nets, strong nets, anti-predator national red list conservation list. • Weapons are not allowed on our sites. equipment or electric fences. • We do not use Acoustic Deterrent Devices (ADDs) as some research indicates that they impact the navigation systems of certain marine mammals. OUR TAR GE T Wildlife interaction Minimize impact on wildlife LEARN MORE ON OUR WEBSITE → Co-existence with wild life RESULTS IN OUR REGIONS → → → Rogaland Finnmark British Columbia PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G B I O D I V E R S I T Y & M A R I N E E C O S Y S T E M S PA G E 3 1 ORGANIC EMISSIONS Organic emissions from salmon farming may impact the marine ecosystem in the ocean under or around the pens. For this reason, we give the environment time to recover between each generation of fish farmed. Our impact should never be irreversible. OU R AP P R O A CH As in all other types of food production, our farming operations leave a footprint through local emissions. Such emissions may be excess feed, feces from the fish or copper from fish nets. This impact should never be irreversible. Between each generation of fish, we allow the ecological system to rest and restore itself. OUR P R INCI P LE S OUR TAR GE T S • We choose sites with good currents and exchange of water. This ensures that fecal waste is dispersed rather than accumulating Seabed conditions All sites restored between each generation of fish farmed in one place, thus mitigating its negative impact. We move Copper 100% copper free nets away from sites that have less optimal conditions and increase production at sites with optimal conditions, which reduces our overall impact. • All farms are fallowed after each generation, allowing the environment to rest until it reaches regulated restoration thresholds. Only then may we transfer a new generation of salmon to the farm. Sites with optimal conditions recover quicker than sites with less optimal conditions. We monitor the seabed under and around our sea farms, and perform benthic testing during peak biomass. LEARN MORE ON OUR WEBSITE • All regions apply Area Based Management, where all farms in an entire fjord system are fallowed simultaneously, allowing a → Impact on nature larger marine ecosystem to rest at the same time. • We aim to reduce excess feed by using underwater cameras and transferring control of the feeding process to operational centers staffed by feeding experts. This enables us to stop feeding when the fish are replete. • We use copper-free antifouling solutions on our nets. PA R T 0 2 : H E A LT H Y O C E A N P R O T E C T I N G B I O D I V E R S I T Y & M A R I N E E C O S Y S T E M S PA G E 3 2 OU R R E SULT S Each country has its own scoring system for benthic tests of the if seabed test results indicate that is needed. Only when a farm seabed under fish farms, including their own threshold of when has reached the threshold of restoration, may we transfer a new a site is restored. The marine ecosystem under all farms are generation of fish to the site. If fallowing is not enough to improve restored through fallowing before a new generation of fish is seabed test results, additional measures, such as reducing transferred to the farm. production, is taken. In Norway, farms must conduct independent seabed tests (B In BC, regulations require us to conduct benthic tests at peak test) at peak biomass production/max load, and also undertake biomass at each farm, and fallow the farm after ended production regular independent tests in the area around the farms (C test). cycle until the seabed of the site reaches the regulated threshold Local regulations impose fallowing periods after each generation of remediation. The test must be accepted by the regulators and, to ensure the environment under and around the pen recover. since our farms are BAP certified farms, an independent third The minimum fallowing period is at least two months, and longer party. FIGURE 2.6 RESTORED ECOSYSTEMS UNDER FARMS Region Rogaland Finnmark Remediated ecosystems under farms before a new generation of fish was transferred in 2021 100% of farms* 100% of farms* British Columbia 100% of farms** *Restored to “very good” or “good” thresholds according to local regulations. **Threshold on hard bottom according to local regulations: Beggiatoa species, similar bacteria or marine worms does not cover 10% or more of any four segments of substrate. Threshold on soft bottom according to local regulations: Sulphide does not exceed 1 300 µM at 30 m and 700 µM at 125 m away from the cage edge along two transects. ROGALAND Grieg Seafood has partnered with other salmon farming companies in Rogaland to commission an independent environmental monitoring program, to ensure that the combined organic emissions from all the farms do not significantly impact the fjords. The program monitors the water quality and possible eutrophication in the Ryfylke fjord system. The results after ten years of monitoring show that the fjord system’s environmental condition is good. According to the Risk Report of Norwegian Fish Farming by the Institute of Marine Research, the risk of impact from organic waste from fish farming is low and the environmental ecosystem condition is good in Rogaland (the salmon production area PO2). 100% of our sites received a very good or good score on seabed tests in 2021, compared to 92% in 2020. Sites that receive a poor score must subsequently fallow for longer. Through our integrated operation center, we can develop specialized feeding expertise. We are working to reduce excess feeding by using underwater cameras, so that we can stop feeding when the fish are replete. FIGURE 2.7 ROGAL AND RESULTS OF B-TEST Year 2021 2020 Very good 83% 83% Good 17% 8% Poor 0% 8% Very poor Test not yet taken (new sites) 0% 0% 0% 0% FINNMARK According to the Risk Report on Norwegian Fish Farming by the 53% of our sites received a very good or good score on seabed tests Institute of Marine Research, the risk of impact from organic waste in 2021, slightly up from 52% in 2020. Longer fallowing periods from fish farming in Finnmark (the salmon production area PO12) is are in place for sites with poor scores, and a new generation will low and the environmental ecosystem condition is good. Compared not be stocked until the impact is reversed and the sites have met to Western Norway, there are far fewer fish farming operations in the regulated restoration thresholds. Access to new sites will also Finnmark, which reduces the overall risk. An environmental study reduce the organic impact. In addition, we are conducting digital of the organic impact of fish farming in the Alta fjord, published in analyses of the marine conditions at sites to understand how the 2017, showed low impact on the fjord system. Organic materials farms can hit the currents in the most optimal way, which reduces decompose more slowly in low seawater temperatures, and we the organic impact. We are subsequently working with local may need longer fallowing periods compared to Rogaland. authorities to adjust the farms accordingly. FIGURE 2.8 FINNMARK RESULTS OF B-TEST  Year 2021 2020 Very good Good 43% 26% 10% 26% Poor 19% 26% Very poor Sites with hard seabed (do not get a score) Test not yet taken (new sites) 5% 0% 14% 16% 10% 5% Based on last B-test taken per site, either at peak biomass production/max load, or before restocking when the seabed has recovered. BRITISH COLUMBIA The Aquaculture Activities Regulation, established under the substrate monitoring according to the Monitoring Standard. The Canadian Fisheries Act, sets exceedance limits for the benthic sites cannot be restocked if they exceed these limits. FIGURE 2.9 BC % OF SITES THAT ARE RESTORED Substrate Type Benthic exceedance thresholds at peak biomass or before re-stocking Compliance 2021 Hard Bottom Soft bottom * ASC Salmon standard. FIGURE 2.10 USE OF COPPER Region Rogaland Finnmark British Columbia Beggiatoa species, similar bacteria or marine worms does not cover 10% or more of any four segments of substrate. Sulphide does not exceed 1 300 µM at 30 m and 700 µM at 125 m away from the cage edge along two transects. Sulphide does not exceed 1 500 µM outside the Allowable Zone of Effect* 100% 100% 100% Copper-free antifouling solutions on nets 100% 100% 100% Finnmark had one pen with copper antifouling solution as part of a research project. PA R T 0 2 : S U S TA I N A B L E F O O D PA G E 3 3 OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM SUSTAINABLE FOOD S A F E A N D H E A LT H Y 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 R E D U C I N G C A R B O N E M I S S I O N S WA S T E M A N A G E M E N T 3 4 3 6 3 9 4 2 We work to make our practices more sustainable along the entire value chain. Focus areas extend from safe and healthy food, traceability, and feed to carbon emissions and waste management. 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 PA G E 3 4 SAFE AND HEALTHY FOOD Our salmon is healthy and safe to eat. We are transparent about our farming methods and communicate our standards and results to our customers. OU R AP P R O A CH Customers and consumers can trust our products, our approach to food safety, and our food safety management systems. OUR P R INCI P LE S OUR TAR GE T S • Grieg Seafood’s products are produced, processed, packaged, labelled, and sold in a value chain that ensure a high level and Global Food Safety Initiative certification All operations 100% certified focus on protection of human health. • Based on scientific advice, data collection, analysis, and regulatory requirements Grieg Seafood deliver a seamless integrated approach to food safety and quality • Grieg Seafood has a fully integrated traceability system from roe to finished product, including fish feed. Our operation also keeps adequate records of raw material suppliers, and the ingredients they supply. • Grieg Seafood will advise customers to comfortably recognize that they are responsible for proper storage, handling, processing, or cooking of food after delivery. • Products originating from our processing plants have been handled under a competent Hazard Analysis Critical Control Point (HACCP)- and sanitary program. Grieg Seafood focuses on risk-based thinking to take advantage of opportunities and preventing unwanted results. • Zero residues of any medicines in our products. Quality share 93% superior share Medicine residue Zero residues Environmental contaminants No levels above limits set by authorities Foodborne bacteria No levels above limits set by authorities LEARN MORE ON OUR WEBSITE → Our policy for food safety 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 PA G E 3 5 OU R R E SULT S CERTIFICATIONS Our farming operations (except Newfoundland, which has not yet started production in sea) are certified according to the Global Food Safety Initiative (GFSI) through our BAP and GLOBALG.A.P. certifications. Our sales and market organization is chain-of- custody certified according to ASC and GlobalG.A.P. While GFSI does not provide food safety certification, it recognizes a number of certification programs that meet the GFSI benchmarking requirements. GFSI recognized certification is a mark of the highest standards in food safety, allowing food businesses that hold these certificates to access all corners of the global market. TRACEABILITY Each salmon has a CV with information about origin and production to ensure full traceability. The information includes details on the relevant fish group, farm and pen where it was grown, broodstock, roe, feed batches, certifications, vaccinations and medical treatments if relevant. Each fish box has a traceable LOT number. Going forward, we will assess blockchain services or equivalent measures aimed at improving traceability related to sustainability and food safety. PRODUCT RECALLS We maintain strict quality control at every stage of our farming operations to ensure the highest levels of food safety. Products originating from our processing plants have been handled through a HACCP- and sanitary program. We did not have any product recalls in 2021, and we are not banned from any markets. We have not had any product recalls for at least last ten years. However, we perform regular training on our procedures for managing product recalls. QUALITY SHARE OF OUR SALMON Diseases, winter ulcers and other biological issues may affect the quality of our product. 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. Downgraded salmon has external and/or internal faults or damage, and obtains a lower price in the market. In Norway, downgraded salmon is priced according to standard discount rates of NOK 1.5-2 per kg GWT for ordinary grade and NOK 5-15 per kg GWT for production grade, depending on the extent of the impairment. As other companies in the salmon farming industry may use other quality categories and criteria for grading their harvested salmon, the quality share may not be comparable between the companies. The superior share is calculated as a percentage of net biomass, excluding discards. See each regions scoreboard for results. ENVIRONMENTAL CONTAMINANTS FIGURE 2.11 ENVIRONMENTAL CONTAMINANTS AND LIMITS IN 2021 FOR SAMPLES OF GRIEG SE AFOOD SALMON Environmental contaminant Lead Mercury PCB 6 Dioxins PSDD/F TEQ excl LOQ EU limit 0.3 mg/kg 0.5 mg/kg 75 µg/kg 3.5 pg/g Samples Median Max Median Max Median Max Median Max Norway British Columbia < 0.050 mg/kg < 0.050 mg/kg < 0.050 mg/kg < 0.050 mg/kg 0.010 mg/kg 0.020 mg/kg 3.245 µg/kg 6.290 µg/kg 0.301 pg/g 0.354 pg/g 0.000 mg/kg 0.013 mg/kg 0.000 mg/kg 0.000 mg/kg 0.000 mg/kg 0.241 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 from areas where all of these contaminants can be a challenge. FIGURE 2.12 FOODBORNE BACTERIA - LISTERIA CONTAMINATION Region Rogaland Finnmark British Columbia *Number of samples of end product. Number of samples* 2020 Listeria detected (%) 2020 Number of samples* 2021 Listeria detected (%) 2021 1 184 429 138 0.0% 0.0% 0.7% 1 305 262 118 0.1% 0.4% 2.5% We test our salmon for Listeria on a regular basis. 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 or technical measures such as change of equipment set-up, or 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 on the fish or at the harvesting plant. The number of samples taken in Finnmark has been reduced in 2021 as there was no harvesting at our own plant during the first half year due to upgrading of the plant. We had one positive sample of Listeria in Rogaland and Finnmark in 2021, and in BC, three fish tested positive for Listeria. When we have a positive Listeria result, we ensure that the proper cleaning and disinfection procedures are followed and increase the level of disinfection if positive results continue. We also perform regular Listeria sampling at key points on the processing line to ensure food safety. Samples are taken regularly to show variations over time. QUALITY SHARE OF SALMON → Rogaland → Finnmark → British Columbia 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 PA G E 3 6 SUSTAINABLE FEED INGREDIENTS Fish feed is the most important and cost-intensive input factor in salmon farming. Feed ingredients should come from sustainable sources. We continuously work to reduce the impacts from our fish feed. OUR AP P R O A CH OUR P R INCI P LE S Input factors in fish feed, both marine ingredients and plant-based • Marine ingredients do not contribute to overfishing: ingredients, should come from sustainable sources. — No marine ingredients come from illegal, unreported, or unregulated fisheries. Ingredients with high-risk are certified by recognized certifications. — All marine ingredients from forage fisheries (excluding Today, fish meal and fish oil from fisheries and Brazilian soy byproducts) are certified by MSC or MarinTrust (including and palm oil are identified as ingredients of high-risk. To get a Fisheries Improver Programmes). fuller picture of the sustainability risks connected to feed, Grieg — We comply with the ASC standard for how much fish meal Seafood is currently risk assessing ingredients used according to and fish oil we have in our feed. environmental, social and governmental parameters. • Be a net producer of marine protein. The environmental impact from feed must be reduced. In addition, deforestation either directly or indirectly and we require the the aquaculture industry is expected to grow significantly during following: the coming decades, due to global population growth. As such, — Brazilian soy protein concentrate are certified according to novel types of feed ingredients are needed to be able to produce ProTerra or Round Table on Responsible Soy (segregated) salmon sustainably going forward. — Brazilian soy protein concentrate is supplied by Brazilian • Grieg Seafood is committed to ensure we do not contribute to FIGURE 2.13 FEED INGREDIENTS IN 2021 Fishoil This illustrates the average of raw material content in our feed used in Norway. In BC, the content is somewhat different as in general a larger part of protein from vegetable are replaced by poultry-bi product. We do not use palm oil in our feed. LEARN MORE ON OUR WEBSITE → → Supplier Code of Conduct Our feed approach vendors with a 2020 cut-off date, including a robust MRV system, for all of their soy bean business. This is important to mitigate indirect contribution to deforestation in this high-risk geography. — Palm oil is certified by Round Table on Sustainable Palm Oil. — Plant-based ingredients should not cause planting on peatlands or exploitation. — Grieg Seafood is committed to engage with stakeholders to promote awareness of moving towards zero deforestation. • Feed ingredients used by Grieg Seafood do not pose any risks to human health. Read more here. • Grieg Seafood will take part in commercializing novel feed ingredients. • Grieg Seafood is committed to work with stakeholders towards more sustainable feed with lower impact. • Feed suppliers are required by our Supplier Code of Conduct to minimize their environmental impact, to safeguard basic human rights and to behave responsibly. They are expected to identify and monitor their environmental impact, and to implement measures where needed. OUR TAR GE T S A ND A CHIE V EMEN T S Targets All marine ingredients (excluding byproducts) used are based on fisheries certified according to MSC or MarineTrust (including FIPs) Achievements 2021 Yes, for all regions for the full year FFDRo below 2.52 (ASC requirement) Yes, in all regions FFDRm below 1.20 (ASC requirement) All Brazilian soy protein concentrate certified according to ProTerra or segregated RTRS Yes, in all regions. The level is below 1.0, making us a net producer of marine protein Yes, in all regions using Brazilian soy protein concentrate All Brazilian soy protein concentrate supplied by Brazilian vendors with a 2020 cut-off date + robust MRV system Yes (in all regions using Brazilian soy protein concentrate). CJ Selecta, Caramuru and Imcopa are the Brazilian suppliers used All palm oil used certified according to Round Table on Sustainable Palm Oil Yes (in Newfoundland, the only region where we used a small amount, 0.3% of palm oil) 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 PA G E 3 7 OU R R E SULT S ZERO DEFORESTATION Grieg Seafood’s Brazilian soy protein concentrate vendors, CJ to the mitigation of sustainability linked risks in feed ingredients is needed. This is especially necessary as the seafood industry is Selecta, Imcopa and Caramuru, have as the first Brazilian soy looking at developing novel feed ingredients suitable for scale. We traders set a 2020 cut-off date for all of their soybean business in must ensure that a scale-up of these ingredients do not contribute the Cerrado, including a robust MRV system. With this move, they to new or unforeseen ESG risks, and that they are a good fit for a have set a new benchmark for sustainable supply chains globally. future sustainable food system. Grieg Seafood have engaged with these producers and applaud their leadership. Read more here. Grieg Seafood has initiated a project to evaluate environmental, social and governance risks in salmon feed ingredients in a Grieg Seafood participated in the CDP Forest program for the holistic manner. In the assessment we have included topics second time in 2021. CDP Forest provides a framework of action previously unexplored in-depth in relation to all ingredients, to measure and manage forest-related risks and opportunities, like land use and biodiversity, carbon footprint and climate risk, transparent reporting on progress, and commitment to proactive circularity, pollution, soil health, fresh water consumption, human action for the restoration of forest and ecosystem. We scored B on rights, governance risk and scalability. The goal of the project is to our work against deforestation. For more information, please visit increase transparency and traceability, to be able to benchmark CDP’s website here. GRIEG SEAFOOD FEED PROJECT - A HOLISTIC APPROACH TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) RISKS In the animal feed industry, the sustainability focus has mainly been on high-risk ingredients such as soy, palm oil, fish meal and fish oil. In the past, efforts to mitigate the risk of overfishing lead to less use of marine ingredients in salmon feed. Unfortunately, some of the alternatives introduced, like Brazilian soy, were later linked to new issues of concern, such as deforestation and conversion. To avoid repeating the mistakes of the past, a more holistic approach feed ingredients on material ESG aspects and have the ability to reduce risk and drive change throughout our supply chains. The assessment will also inform what novel ingredients we engage with. WWF US is our partner in the project. We work in close dialogue with our feed suppliers on this project and our aim is to release more information about the status of the project in 2022. FIGURE 2.14 VOLUME OF MARINE INGREDIENTS Volume of marine ingredients (tonnes) Forage fish 2020 Forage fish 2021 Trimmings 2020 Trimmings 2021 Fish meal Fish oil 7 062 8 697 6 726 7 123 2 244 2 689 3 154 5 999 Marine feed ingredients should come from sustainable sources. An overview of marine raw materials in our feed, including specie, country of origin and certification of each raw material, is available here. FIGURE 2.15 MARINE INGREDIENTS - FISH ME AL FFDRM ASC REQUIREMENT: 1.2 The forage fish dependency ratio (FFDRm) represents the amount of wild fish needed to produce sufficient fishmeal for one kilo farmed salmon. We use little fish meal in our feed. Our FFDRm figures shows a continuous reduction and that we were a net producer of marine protein in 2021 in all regions. Our FFDRm is well below the ASC limit. FIGURE 2.16 FISH OIL FFDRO ASC REQUIREMENT: 2.5 The forage fish dependency ratio (FFDRo) represents the amount of wild fish needed to produce sufficient fish oil for one kilo farmed salmon. We use low levels of fish oil in our feed, and we reduced the use of fish oil further in 2021 compared to 2020, and are well below ASC requirements. 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 PA G E 3 8 ADVOCACY TO PROMOTE MORE SUSTAINABLE FEED • We have taken part in the development of the new ASC feed standard, which was launched in 2021. NOVEL FEED INGREDIENTS Grieg Seafood will take part in commercializing novel feed ingredients. We are in dialogue with producers of such ingredients, like insect meal, and have previously engaged in projects aimed at • We are a member of the MarineTrust Governing Body transforming algae into feed. Based the outcome of our ESG feed Committee, to engage in the improvement of global fisheries. project outlined above, we will determine our approach to novel • We are member of a GRI task force for preparing a sector standard for agriculture, aquaculture and fisheries. ingredients. • We have excluded Cargill Aqua Nutrition from our Green Bond use of proceeds, until their mother company Cargill Inc. have reduced their soy related deforestation risk in Brazil. • Through the Global Salmon Initiative, we take part in the development of a new industry standard for carbon emissions from feed, which will allow us to benchmark and work more systematically to reduce carbon emissions from feed. FIGURE 2.17 BIOLOGICAL FEED CONVERSION RATIO (BFCR) The biological feed conversion ratio describes the amount of feed required to produce one kilo of farmed salmon. It is calculated as the total weight of feed divided by gross growth (incl. mortality). The ratio is an indicator of feed efficiency, reflecting how effective a feed strategy can be. The bFCR ratio is impacted by the ability of the fish to utilize the nutrients in the feed for growth. The ratio is also impacted by over- or underfeeding, causing feed spill or reduced growth, respectively. In 2021, we had a slight increase in the bFCR in Rogaland as biological challenges related to PD impacted fish appetite negatively, while BC had a positive development mainly due to mitigation of challenges related to algae and improved feeding control (less feed waste). 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 PA G E 3 9 REDUCING CARBON EMISSIONS While farmed salmon has a low carbon footprint compared to other animal proteins, our industry must do our part to achieve the Paris Agreement. New solutions must be developed to cut emissions in our operations and along our value chain. OUR AP P R O A CH According to the Intergovernmental Panel on Climate Change (IPCC), global warming may cause ecosystem imbalance, ocean acidification, extreme weather and social unrest. To fulfil the Paris Agreement and avoid the consequences of global warming, significant climate action by nations, businesses and individuals is needed in the coming years. According to the High-Level Panel for a Sustainable Ocean Economy (Ocean Panel), food production from the sea may be advantageous from a climate perspective, because the carbon footprint from production is low compared to terrestrial animal protein production (see also Figure 2.3 and our Aquaculture in a sustainable global food system chapter). However, we recognize that we must do more to cut greenhouse gas (GHG) emissions from our farming operations and supply chains. Direct emissions from our production (Scope 1 & 2) account for less than 10% of our total emissions. More than 90% of our emissions originate from our value chain (Scope 3), particularly those aspects linked to fish feed and the transportation of salmon from our harvesting plants to the markets. • Take part in R&D projects in regions where renewable energy sources are not available. • Encourage suppliers to take climate action through: — Setting GHG emission reduction targets in line with the Paris Agreement. — Conducting annual climate accounting. • Improve transparency and contribute to the development of robust GHG reporting standards that allow for comparison and benchmarking. • Do not engage in lobbying activities that run contrary to the fulfillment of the Paris Agreement on climate change. • Engage in carbon offset initiatives. OUR TAR GE T S GHG emission reduction 35% reduction of Scope 1, 2 and 3 by 2030 (from a 2018 base year) 100% reduction of Scope 1, 2 and 3 by 2050 We are working continuously to improve data quality and reporting from our operations and suppliers. By cutting GHG emissions, OUR R E S ULT S Grieg Seafood aims to be a part of the low carbon solution in a sustainable global food system. OUR P R INCI P LE S Our efforts to reduce our GHG emissions focus particularly on feed and transportation to market. We also work continuously to reduce GHG emissions from our production. • Reduce the GHG emissions from our feed. • Favor transportation methods with a low carbon footprint. — Grieg Seafood’s set-up allows for shorter transportation routes and limits use of air freight to our two main markets: − Main supply to Europe from Northern and Southern Norway − Main supply to the USA from Eastern and Western Canada — Eliminate unnecessary weight from transportation. — Preferred methods of transportation are train, ship, and low emission trucks. — Take part in R&D projects and help commercialize climate- friendly transportation methods suited for our transport routes. • Reduce the carbon footprint of our production, with the aim of eliminating our dependence on finite energy sources. Prefer renewable energy sources in regions where that is commercially available. THE SCIENCE BASED TARGET INITIATIVE Our greenhouse gas (GHG) emission reduction targets are classified as well-below 2°C (2030) and 1.5°C (2050), aligned with the Paris Agreement. Our emission targets have been approved by the Science Based Targets initiative, and can be found here. CDP For 2021, the CDP awarded Grieg Seafood an ‘A’ score for our climate disclosures and efforts to transition to a low-carbon future. Even though farmed fish already has a low carbon footprint compared to other animal proteins, our industry must still find ways to cut more emissions from our operations and supply chain. For more information, please visit CDP’s website here. LEARN MORE ON OUR WEBSITE → → Our policy for climate action Reducing carbon emissions 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 PA G E 4 0 GH G EM IS SION S E XP L AN AT I ONS SCOPE 1 & SCOPE 2 EMISSIONS Our absolute Scope 1 and Scope 2 GHG emissions remained unchanged compared to last year, while production increased by 6%. As a consequence, the emissions decreased by 6% measured as kilograms of C02 equivalents per tonne harvested. In Rogaland, total emissions decreased by 5% from 2020 to 2021, despite a 16% increase in harvested volume. As a consequence, emissions per tonne decreased by 18% from 2020 to 2021. In Finnmark, the harvested volume increased by 28%. Total emissions were increased by 17%, mainly due to an emission factor correction*. As in Rogaland, this shows that there is not a linear correlation between production volume and emissions. Well-boat services make up a substantial proportion of our emissions, and whether we decide to provide these services ourselves or outsource them to external service providers has a considerable influence on our Scope 1 emissions. In Rogaland, well-boat emissions are included in Scope 1, while well-boat emissions in Finnmark are categorized as Scope 3 due to contractual considerations. Finnmark’s Scope 3 emissions from well-boat activities in 2021 total almost 3 200 tCO2e. In BC, the 3% decrease in total emissions is attributable to a 32% decrease in harvested volume, which also caused relative emissions per tonne to rise by 43%. As described in our Strategy chapter, harvest volumes in BC vary significantly every other year. While these fluctuations affect total emissions only marginally, their primary impact is on relative emissions. Grieg Seafood Newfoundland was acquired in April 2020, and completed its first full-year greenhouse gas accounts in 2021. Newfoundland has not yet started up seawater production. However, the freshwater facility has been in operation throughout the year. Its emissions, mostly attributable to the use of heavy construction equipment and company vehicles, are still relatively low but expected to increase noticeably once the first smolt are transferred to the sea (expected mid-2022). Grieg Seafood Newfoundland’s emissions 99% of our other emissions displayed in Figure 2.18. SCOPE 3 EMISSIONS reasons for this development. Most importantly, we established our own sales organization in 2021, which involved building up an entirely new client base. This process has significantly influenced the mode of transport used for distribution. In addition, air transport opportunities where reduced significantly by Covid-19 in 2021 and it is assumable that the air transport percentage will increase again in 2022. Lastly, the choice of transport mode is influenced by logistical restrictions, harvest schedules, availability and demand for certain sizes and qualities of fish, and prices. In general, downstream transportation was calculated as transport from harvesting facility to airport of departure to destination country (capital) in tonne-kilometers (tkm). For all sales from our Canadian operations (mostly delivered to the North American market), transport was calculated to the state capital in order to achieve an acceptable degree of precision. Value- added processing and details of the exact transportation routes were not taken into consideration due to a lack of data. With our new sales organization and new technology, e.g. blockchain, we aim to increase the level of detail in regard to tracking the path our salmon takes from harvesting facility to the final consumer in the years to come. We are open to collaboration projects and participated, amongst others, in a sustainability reporting-related workshop led by our seafood logistics software provider in early 2022. Fish feed Our emissions from fish feed are highly dependent on the different feed materials used as well as the life cycle assessments and the methodology chosen by our feed suppliers. More information about the composition of our feed can be found in our chapter on feed ingredients. The fish feed emission factors are calculated based on life cycle assessments (LCAs) and appear to be variable over time and different between our suppliers. The reason for this is that data quality and transparency vary and increase with the efforts made and resources allocated to those comprehensive analyses. In 2021, we have seen a substantial decrease in carbon emissions from our deforestation certified soy protein concentrate (SPC) from ProTerra. The reduction originates from better and more accurate data sources allowing us to use less general emission data. By The two most substantial contributors to both Scope 3 and suppliers regularly, we actively contribute to the improvements overall emissions are downstream transportation and fish feed. and increase in accuracy that are necessary. Downstream transportation accounts for 15% and fish feed for 70% of our total emissions (16% and 76% of our Scope 3 emissions, respectively). As shown in Figure 2.18, our total Scope 3 challenges We work to continuously improve our Scope 3 emissions data emissions decreased by almost 40 000 tCO2e in 2021. This collection. Some of the figures are only technical estimates of substantial decrease is almost exclusively attributable to a shift in downstream transportation from air to road transport. Downstream transportation In Rogaland, the percentage of air transport was almost halved. In Finnmark, where air transport made up as little as 6% in 2020, this proportion was reduced to only 2% in 2021. There are various our actual emissions, calculated on the basis of science-based emission research. However, we deem the disclosure of our Scope 3 emissions an important step towards achieving awareness of those emissions and encouraging our suppliers to also conduct annual greenhouse gas accounting, even if data accuracy is an aspect we need to improve on. This will help us, our industry and all business sectors linked to our industry to improve in concert as we go forward. OUR GREENHOUSE GAS ACCOUNTS FIGURE 2.18 GREENHOUSE GAS EMISSIONS SCOPE 1 + 2 + 3 REGION Scope Scope 1 Scope 2 location based Total (Scope 1 + 2) Scope 3 ROGALAND Downstream transportation Fish feed Other Total (Scope 3) Total GHG emissions Rogaland Scope 1 Scope 2 location based Total (Scope 1 + 2) Scope 3 FINNMARK Downstream transportation Fish feed Other Total (Scope 3) Scope 1 Scope 2 location based Total (Scope 1 + 2) Scope 3 BRITISH COLUMBIA Downstream transportation Fish feed Other Total (Scope 3) TOTAL EMISSIONS (tCO2e) EMISSIONS (kgCO2e) / tonnes 2019 9 211 424 9 635 n/a n/a n/a n/a 9 635 4 779 696 5 475 n/a n/a n/a n/a 2020 8 875 420 9 295 2021 8 519 331 8 850 67 529 40 567 102 201 104 470 7 593 10 264 177 324 155 301 186 619 164 151 4 123 776 4 899 5 122 591 5 713 19 488 13 963 132 864 131 286 8 369 9 999 160 721 155 248 n/a n/a n/a n/a — 5 5 n/a n/a 5 28 857 1 810 30 667 n/a n/a n/a n/a 20 533 41 965 6 883 69 381 85 663 1 847 106 1 953 712 712 2 665 30 454 1 975 32 429 5 820 46 700 5 626 58 146 74 001 1 638 443 2 081 1 726 1 726 3 807 30 408 2 091 32 499 107 550 60 350 277 030 282 456 23 557 27 615 408 137 370 421 2019 2020 2021 382 403 332 n/a 382 7 695 8 099 5 823 6 155 169 182 166 n/a 169 5 970 6 152 4 502 4 668 n/a 1 101 3 276 4 044 4 025 5 122 428 456 430 n/a 428 5 737 6 193 4 900 5 330 Total GHG emissions British Columbia 15 552 Scope 1 Scope 2 location based Total (Scope 1 + 2) Scope 3 Other Total (Scope 3) Total GHG emissions Other Scope 1 (tCO2e) Scope 2 location based (tCO2e) Total Scope 1 + Scope 2 location based Scope 3 TOTAL GROUP Downstream transportation Fish feed Other Total (Scope 3) Total GHG emissions Group 30 667 440 566 402 920 * Newfoundland, Grieg Seafood ASA (HQ) and our Sales & Market organization Total GHG emissions Finnmark 5 475 165 620 160 961 14 867 15 609 15 129 685 673 726 15 552 16 282 15 855 1 101 769 1 097 requesting documented and auditable emission factors from our OTHER * 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 PA G E 41 REDUCING CARBON EMISSIONS The chief sustainable officer and our sustainability team which consists of members from each region work actively to develop emission reduction initiatives. Capturing the majority of 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 2022 and beyond. • In Rogaland and Finnmark, we are observing the benefits of using onshore electricity, battery packs or hybrid solutions instead of diesel generators to operate a growing number of production sites. • Our preventative approach to sea lice control is expected to reduce our carbon footprint, as the use of large vessels in treatments also causes greenhouse gas emissions (GHG). Especially in BC, where sea lice challenges historically have been most significant, the new semi-closed containment systems not only contribute to solving biological challenges but also to reducing GHG emissions. See BC’s ‘Operational priorities’ chapter for further details. • We have tested out methods to chill the salmon after harvesting, which made it possible to avoid ice in packaging and reduced the carbon footprint per kilo of packed salmon. We will invest in this equipment in the years to come. • Before making any investments, we evaluate their potential carbon emissions and environmental impact. Our Shetland operations, sold in December 2021, were excluded from our greenhouse gas accounts both for 2021 and historically in accordance with the Corporate Accounting and Reporting Standard. This divestment has led to a decrease in our historical absolute Scope 1 and Scope 2 GHG emissions of more than 10 000 tCO2e. It has also resulted in a base year recalculation, in which Scope 1 and Scope 2 GHG emissions for 2018 are reduced by approximately 12 500 tCO2e. Since we are growth-oriented, and are targeting higher production and harvest volumes, we cannot exclude an increase in our total emissions in the short run. Nevertheless, we will continue to work towards reducing both relative and total emissions, and to achieve the reduction targets we revised from relative to total in 2020. The divestment of our Shetland operations in 2021 and the acquisition of the Newfoundland operations in 2020, where we are using state-of-the-art technology and where we are located closer to the consumer market, are expected to contribute positively to those ambitions. GHG REPORTING STANDARD 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. We report on all seven greenhouse gases covered by the Kyoto Protocol (CO2, CH4, N2O, HFC, PCFs, SF6, NF3), which are converted to CO2e. 2018 is defined as our baseline year in accordance with SBTi guidance that companies should "choose the most recent year for which data is available as the base year". 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 hydrofluorocarbons (HFC) 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). Underlying data is collected from financial cost. 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 emissions in accordance with the GHG Protocol (market-based Scope 2 emissions can be found in the response field of GRI standard 305-2 in our GRI index). Location-based factors are from the International Energy Agency (IEA), using three-year rolling averages. For electricity consumed in Norway, Grieg Seafood applies the Nordic mix, since this is the most representative emission factor for Norway. This is because Norway is almost self-sufficient when it comes to electricity, while the bulk of the electricity imported to Norway comes from Sweden and Denmark (nve.no). The Nordic mix is calculated as a weighted average of the Swedish, Norwegian, Finnish and Danish factors. Underlying data is collected from financial cost and on-site meters. Scope 3 emissions are all other indirect emissions (not included in Scope 2) that occur in our value chain, including both upstream and downstream emissions. In 2020, we were able to significantly increase the level of detail of our data collection, and completed our GHG accounting for Scope 3 for the first time. Thus, 2021 is the first year with comparable Scope 3-figures. We mapped the emissions in our supply chain in a comprehensive analysis and identified the categories most relevant to Grieg Seafood. Upstream, we included (1) Purchased goods and services, (3) Fuel- and energy-related activities (not included in Scope 1 or Scope 2), (5) Waste generated in operations, and (6) Business travel. Downstream, we included (9) Downstream transportation and distribution, (12) End-of-life treatment of sold products and (15) Investments. The categories correspond to the 15 Scope 3 categories defined by the GHG Protocol. An overview of this process is presented in Figure 2.19. Underlying data is collected from production data, financial cost, suppliers or estimated based on production data. * Up until year-end 2020, we were using a Diesel emission factor containing the legally required amount of biodiesel for the diesel consumed in Finnmark and partly also Rogaland. However, this legal requirement applies only to diesel consumed by road traffic. Since, most of our diesel is consumed by our boats and on our seawater sites, we have used an emission factor not containing any biodiesel for our 2021 figures. For Rogaland, the emission factor containing biodiesel was not used that much and the difference was not significant. For Finnmark, however, this change in emission factor makes up a difference of about 1 100 tCO2e in Scope 1. Without this change, Finnmark’s Scope 1 and Scope 2 emissions would have decreased by 7%. FIGURE 2.19 SCOPE 3 MAPPING PER COMPANY Data collected and audited by PwC Data to be published in 2021 Scoped out Data not available Category Subcategory GSFR GSFF GSFBC GSFNL ASA GSF Norway GSF Sales NA Fish feed 1 Purchased goods and services Well-boat services Capital goods EPS boxes N/A Fuel-and-energy-related activities Well-to-Tank (WTT) Upstream transportation and distribution N/A 2 3 4 5 Waste generated in operations Business travel Employee commuting Upstream leased assets 6 7 8 9 Waste Air travel Employee mileage N/A N/A Downstream transportation and distribution Goods transportation 10 Processing of sold products 11 Use of sold products N/A N/A 12 End-of-life treatment of sold products Rest raw materials 13 Downstream leased assets 14 Franchises 15 Investments N/A N/A Nordnorsk Smolt Tytlandsvik Aqua FIGURE 2.20 DISTRIBUTION OF SCOPE 1 + 2 + 3 FIGURE 2.21 GREENHOUSE GAS EMISSIONS SCOPE 1 + 2 PA R T 0 2 : S U S TA I N A B L E F O O D W A S T E M A N A G E M E N T PA G E 4 2 WASTE MANAGEMENT Grieg Seafood aims to produce salmon in a way that reduces our consumption of resources and materials. A circular economy is essential to ensure sustainable food production in the future. OUR AP P R O A CH We do not pollute the environment where we farm salmon. Waste should be properly disposed, recycled where possible and fed back into the circular economy. Plastic waste in the ocean is harmful to the environment. Plastic slowly breaks down into smaller fragments, eventually turning into microplastics, which may impact ecosystems and wildlife negatively. Plastic materials used by Grieg Seafood should not end up in the ocean. It should be disposed properly and recycled where possible. USE OF FRESH WATER We use freshwater at our land-based facilities for smolt and post- smolt production. We also use freshwater at our harvesting plants for hygiene purposes. None of our facilities are located in areas of water scarcity and material fresh water risks. Still, we recognize the importance of minimizing the use of fresh water. OUR P R INCI P LE S FRESH WATER USE • We aim for a high water usage efficiency by utilizing technology to recirculate water in land-based fresh water facilities. All fresh water facilities have RAS technology, recycling at least 90 – 97% of fresh water used. Fresh water sourcing to the RAS facilities are based on permits from local authorities in line with local regulations. • We treat waste water from processing plants and fresh water facilities in accordance with local regulations. Our smolt facility in Newfoundland has zero discharge of water. • Assessing possible fresh water risks connected to our feed ingredients is included in the Grieg Seafood feed project. Read more here. BIOLOGICAL WASTE • Fish trimmings and dead fish from our farms are collected and used for animal feed, biofuel, or fertilizer, depending on quality. • Organic waste from our freshwater facilities is recycled and used for biofuel or fertilizer production. FARMING EQUIPMENT • Old farming equipment is safely removed and handled through recycling and waste management. • In Rogaland and Finnmark, we use traceable ropes that are marked “Grieg Seafood” or have a distinct color. PLASTICS • No plastics in the ocean. All plastic consumed is managed through proper waste collection and recycling. • Implement the 3 Rs throughout our production: Reduce, Re- use, Recycle. • Eliminate the use of plastics we do not need. • Strive to use plastics that are reusable, recyclable, or compostable. • Collaborate with the industry to develop improved plastic products and infrastructure for recycling. • Ensure sustainable use, waste collection and recycling of transport packaging materials. • Increase the amount of recycled plastic in the products we purchase from third parties, and reduce our demand for virgin plastic. • Phase out environmental toxins (SVHC) used in plastic products. • Use plastic products of high quality; focusing on longevity, reduced microplastic formation and wear resistance. OCEAN WASTE • All regions engage in annual beach clean-ups around our farms to remove ocean waste that have drifted onto the shores. LEARN MORE ON OUR WEBSITE → Our policy for ocean plastics PA R T 0 2 : S U S TA I N A B L E F O O D W A S T E M A N A G E M E N T PA G E 4 3 P R O JEC T S T O IMP R O V E PLASTIC PILOT PROJECT WITH BELLONA As part of Grieg Seafood’s partnership with the NGO Bellona, MATERIAL ACCOUNTING We have engaged Asplan Viak to help us establish materials Finnmark has piloted a project on plastics. The results of this accounting processes. By estimating our consumption of plastic initiative include: materials and comparing it to our waste management reports, we get an indication of how we are progressing with our materials • Mapping sources of plastics in our operations. At our sites, handling. The estimation for Finnmark’s plastic consumption was cages, moorings and ropes, nets, feeding tubes, sea lice skirts, carried out in line with an established methodology (FHF project and shelter for cleaner fish are the main sources of plastics. 901352). With this we aim to set key performance indicators for A typical site with ten cages made up of 90 x 90 meter pens plastic management that will be published in the future. contains approximately 360 000 kg of plastic. It is estimated that 0.5% of this, 1 800 kg, disappears. Measuring our consumption of plastic is a key part of our plastic • Developing plastics accounting, an overview of all plastics management. We are currently involved in several process to bought. The aim is to recycle all plastics and avoid loss. improve our data quality and monitor our plastic consumption. • Using separate containers to recycle plastics at sites, and We perform annual, internal material accounting for each region creating a culture for reducing the use of plastics and recycling and aim to establish digital accounting solutions in the future. what is used. The value of our waste increases with the data quality allowing • Working with suppliers to develop products that last longer and the waste to be utilized in higher valued processes. We collaborate are easier to recycle, such as sea lice skirts and artificial kelp closely with manufacturers and the industry to end ocean plastic forests for cleaner fish. waste. • Work with suppliers to develop return schemes. For instance, nets made of nylon can be reused in various textiles and As shown in the pie chart below, we have a better understanding carpets, or turned into other nylon products. of how the plastic material distribution is at a typical production site. We will use this information to improve our plastic Our pilot in Finnmark is now part of our daily routine. Rogaland are management. Feeding tubes are not included in this distribution. also collecting all their plastic waste and delivering it to a plastic waste handler that recycle all of our plastic waste. Rogaland has managed to improve the recycling rates and are working with RESEARCH COLLABORATION Grieg Seafood is a partner in the POCOplast project initiated in Bellona to improve documentation and traceability. The project will 2019. POCOplast is short for: “Pathways to sustainable use of be implemented in the Canadian regions as well. INCREASING RECYCLING We have established several agreements for closed-loop recycling of particular aquaculture products, like feed tubes, pens and worn hardened plastic (HDPE). The results show a high degree of recycled material quality and promising outcomes. We have also introduced plastic products produced of recycled materials, where the aim is to close the loop of our consumption of plastic. In post-consumer plastics in aquaculture”. The aim of the project is to increase the value of recycled plastics, by utilizing used plastic from the aquaculture industry in new products, thereby reducing the demand for new plastic. This will also increase knowledge of recyclability in the supply chain and reduce the loss of the material value that many high-value plastics exhibit today. NATIONAL ENGAGEMENT We are member of a task force run by the Norwegian Fishfarmers Rogaland we decided to use recycled plastic in our walkways used Association with mandate to make a proposal for a National Plastic around our pens. In Finnmark we have started using a new rope policy for the total industry. that is stronger and can be produced with used ropes. MOOC ON PLASTIC WASTE We have received funding from Norwegian Retailers’ Environment Fund to establish a massive open online course (MOOC) on plastic waste management in aquaculture. Together with Bellona and NTNU (Norwegian University of Science and Technology), we aim to provide the industry with e-learning and instructional videos on the importance of proper plastic handling. The first MOOC will be available in 2022. FIGURE 2.22 PL ASTIC WEIGHT DISTRIBUTION OF A PRODUCTION SITE IN GRIEG SE AFOOD FINNMARK Moorings Sea lice skirts Pens Pen rings (top & bottom) PA R T 0 2 : P R O F I T & I N N O VAT I O N PA G E 4 4 OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM PROFIT & INNOVATION P R O F I TA B L E O P E R AT I O N S G R I E G S E A F O O D R O G A L A N D G R I E G S E A F O O D F I N N M A R K G R I E G S E A F O O D B R I T I S H C O L U M B I A G R I E G S E A F O O D N E W F O U N D L A N D S A L E S & M A R K E T T H E G R I E G S E A F O O D S H A R E S R E S P O N S I B L E B U S I N E S S C O N D U C T K E Y P E R F O R M A N C E I N D I C AT O R S A N D A LT E R N AT I V E P E R F O R M A N C E M E A S U R E S 4 6 4 8 51 5 4 5 7 5 9 6 2 6 4 6 5 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. PA R T 0 2 : P R O F I T & I N N O VAT I O N P R E C I S I O N FA R M I N G PA G E 4 5 GR I EG SE A F OOD P R ECIS ION FAR MING When digitalizing salmon farming, we apply advanced sensors, data analytics, artificial intelligence, and automation, with the aim of supporting our farmers to take better decisions in everyday operations. The aim is to work more preventatively, improve fish welfare, reduce our impact and improve our farming. We are at the very beginning of understanding how we can apply digital tools to improve our farming operations. Today, everyday salmon farming is largely based on the experience of our very talented employees, in addition to the increasing body of scientific research and knowledge. Going forward, we believe digital tools and analytics will add to this decision making, for instance by predicting biological events ahead of time, allowing the farmer to apply stronger preventative measures. We call it Grieg Seafood Precision Farming. Read more about Precision Farming here. 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 O P E R AT I O N S PA G E 4 6 PROFITABLE OPERATIONS 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 P R INCI P LE S OUR TAR GE T • We aim to expand globally through growth and value chain innovation. Increasingly sustainable farming practices form the Return On Capital Employed (ROCE) ROCE of 12% very foundation of all areas of our strategy. • To achieve sustainable growth and improve competitiveness, we focus on reducing the time in sea, improving fish health and welfare, and increase our operational insight through digitalization. • Our investments reflect our growth strategy and the evolution of our position in the value chain, as well as our operational focus on post smolt, fish health and welfare and digitalization. • We aim to provide our shareholders with a competitive return on capital invested. OUR R E S ULT S PROFIT AND LOSS The Group harvested 75 601 tonnes GWT in 2021, up 4 459 tonnes GWT from 71 142 tonnes GWT in 2020. Both the 2021 and 2020 figures are exclusive of Shetland, which we sold to Scottish Sea Farms Ltd in 2021. Our Norwegian regions contributed 81% of the harvest volume in 2021, compared to 70% in 2020, while British Columbia accounted for 19% in 2021 compared to 30% in 2020. While both Rogaland and Finnmark increased their harvested volume, BC decreased due to local production region arrangements and larger farms with greater capacity on the West Cost of Vancouver Island compared to the East Coast. As a consequence, the region's volume varies every other year, regardless of the underlying biology. Total sales revenue for the year totaled NOK 4 599 million, up NOK 214 million from NOK 4 384 million in 2020. The sales revenue from our farming regions totaled NOK 4 211 million in 2021, up NOK 455 million from NOK 3 756 million in 2020 (see Note 8 of the Group Accounts). The increase in sales revenue for the Group is mainly due to a higher volume harvested by Rogaland and Finnmark compared to the year before. The Group's price achievement for 2021 was NOK 55.7 per kg, up NOK 2.9 per kg from NOK 52.8 per kg in 2020. By comparison, the average NQSALMON NOK/kg price for 2021 was 57.3, up NOK 3.6 per kg from NOK 53.7 per kg in 2020. The main reason for the deviation in price achievement when comparing to NQSALMON was quality downgrades in Rogaland and Finnmark. FIGURE 2.23 KEY FIGURES GRIEG SE AFOOD GROUP NOK MILLION Sales revenues EBITDA EBIT Harvest volume (tonnes GWT) Farming cost/kg (NOK) EBIT/ kg (NOK) ROCE 2017 7 017 1 106 904 62 598 43.4 14.5 24% 2018 7 500 1 334 1 099 74 623 43.1 14.7 22% 2019 4 756 1 384 1 077 71 700 40.5 15.0 19% 2020 4 384 602 233 71 142 47.0 3.3 3% 2021 4 599 818 442 75 601 47.2 5.9 6% The 2019 - 2021 figures are impacted by the held for sale- and discontinued operations-classification of Shetland and Ocean Quality. The figures for 2017 to 2018 is not re-presented (includes farming operations of Shetland, and sales activities attributable to Bremnes Fryseri). For more information, see Note 5 of the Group Accounts. 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 O P E R AT I O N S PA G E 47 DIRECT ECONOMIC VALUE GENERATED Taxes are important sources of government revenue. They are central to the fiscal policy and macroeconomic stability of countries and are acknowledged by the United Nations to as playing a vital role in achieving its Sustainable Development Goals. Furthermore, they are a key mechanism by which organizations contribute to the economies of the countries in which they operate, i.e. Norway and Canada for Grieg Seafood. By reporting our taxes paid country-by- country, we indicate our scale of activity and the contribution we make through tax in these jurisdictions. Living up to our obligation to comply with tax legislation and our responsibility to meet our stakeholders expectations with respect to good tax practice is extremely important to us. The information on the creation and distribution of economic value shall provide a basic indication of how we create wealth for our stakeholders. In addition, the components of the economic value generated and distributed sharpen Grieg Seafood’s economic profile, permit a different interpretation of the economic figures and outline the overall economic value retained from the Group’s ordinary operations during the year. In 2021, the economic value retained came to NOK 306 million, corresponding to a decrease of about NOK 124 million compared to 2020. The Group's farming cost for 2021 ended at NOK 47.2 per kg, up NOK 0.2 per kg from NOK 47.0 per kg in 2020. Our Norwegian farming regions contributed to 76% of the farming cost in 2021, compared to 65% in 2020, which materialized into an increase of NOK 0.9 per kg in cost, from NOK 43.2 per kg in 2020 to NOK 44.1 per kg in 2021. The positive year-on-year change in Finnmark was offset by higher costs in Rogaland compared to the year before. In addition, British Columbia has, on a 32% lower harvest volume year-on-year, realized a farming cost of CAD 8.8 per kg in 2021, up CAD 0.8 per kg from CAD 8.0 per kg in 2020. EBIT before production fee and fair value adjustments of biological assets in 2021 ended at NOK 442 million, up NOK 209 million from NOK 233 million in 2020, bringing EBIT per kg to NOK 5.9 for 2021, up NOK 2.6 per kg from NOK 3.3 per kg in 2020. The higher EBIT in 2021 compared to 2020 is primarily attributable to a 28% higher volume harvested in Finnmark, which ended at 34 484 tonnes GWT, in addition to the price achievement realized in 2021 by British Columbia. Finnmark’s EBIT/kg rose from NOK 4.7 in 2020 to NOK 7.3 in 2021, primarily due to higher price achievement. On margin, British Columbia performed well in 2021, with EBIT/kg increasing by NOK 10.7 per kg, from NOK -0.4 per kg in 2020 to NOK 10.4 per kg in 2021. We have a long-term goal of delivering a ROCE of at least 12% per year. Our EBIT performance is driven by a multitude of operational factors that affect both revenues and costs. Producing salmon takes two to three years from roe to harvest, and while the cost of a harvested fish accumulates through the production period, it does not impact the profit and loss statement (apart from through fair value adjustment and any write-down from abnormal mortality, if any) before the fish is harvested. Although EBIT per kg (before production fee and fair value adjustment of biological assets) is an important external benchmark 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. The ROCE for 2021 ended at 6%, below the target of 12% per year. The figure was primarily impacted by salmon market prices combined with higher operational cost, and an increased debt level to finance the Group’s growth investments. For a more detailed review of the Group’s financial performance in 2021, see the Board of Directors’ report. FIGURE 2.24 DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED NOK MILLION Value generated Revenues Value distributed Salaries and personnel expenses Operating cost Raw materials and consumables used Other operating expenses Payments to providers of capital Net interest and other financial items Paid dividends Payments to government Income tax expense Value retained All figures compiled from the audited Group accounts. FIGURE 2.25 VALUE GENERATED IN 2021 2017 2018 2019 2020 6 545 483 3 287 1 457 62 474 339 443 7 017 483 3 724 1 725 64 467 198 356 1 328 -144 -473 -468 64 462 67 1 819 4 384 500 1 717 1 593 133 — 12 430 2021 4 599 577 1 738 1 527 200 — 249 306 FIGURE 2.26 TOTAL TA XES (INCOME AND PROPERT Y TA X) PAID IN 2021 (NOK 1 000) Norway Canada Total taxes paid 10 842 3 988 14 830 PA R T 0 2 : P R O F I T & I N N O VAT I O N R O G A L A N D PA G E 4 8 GRIEG SEAFOOD ROGALAND Grieg Seafood Rogaland AS farms salmon in the county of Rogaland on the west coast of Norway. The company has 16* seawater licenses and two licenses for land- based production of smolt. We also operate our own broodstock activity in Erfjord, with four broodstock licenses. All the salmon we harvest in this region is processed and packed at our own facilities. * In addition, we operate one educational license with Rogaland County Council and two R&D licenses. 26 670 9.1 TONNES GWT HARVESTED EBIT/KG (NOK) OP ER AT ION AL R E S ULT S A total of 26 670 tonnes was harvested in 2021, an increase of 16% The farming cost ended at NOK 44.6 per kg in 2021, up from NOK compared to the 23 043 tonnes harvested in 2020. The increase is 42.1 per kg in 2020. The farming cost was impacted by harvesting due to better utilization of our sites’ maximum allowable biomass from PD-affected sites, which increased related fish handling and (MAB) and a higher survival rate in seawater. well boat costs, as well as the measures needed to handle the ISA outbreak at our broodstock facility. We are working systematically Sales revenue amounted to NOK 1 431 million in 2021, an increase to improve fish health and welfare through general health and of 13% compared to 2020 (NOK 1 263 million). The increase is welfare measures. These include a greater focus on the freshwater driven by a higher harvested volume compared to last year, though phase, a preventive and targeted approach to diseases and sea the figure was negatively impacted by quality cost. The Nasdaq lice, the utilization of new digital technologies and shortening the average spot price in 2021 was NOK 57.3 per kg, compared to time our salmon spend at sea. Our efforts increased the 12-month NOK 53.7 per kg in 2020. However, our price achievement in 2021 rolling survival rate from 90% in 2020 to 92% in 2021. A shorter of NOK 53.7 per kg was negatively impacted by the sale of 33% time at sea is also expected to reduce PD outbreaks going forward. of our volume under fixed-price contracts, in addition to quality Compared to several years ago, we have already seen a decline in downgrades. The share of superior quality fish decreased from the number of PD outbreaks. This can be attributed to vaccines 85% in 2020 to 81% in 2021, due to occurrences of winter ulcers as well as the past few years’ gradual reduction in the time our in the first half of the year and outbreaks of Pancreas Disease salmon spend at sea, although some biological variations may (PD). The PD situation has improved compared to previous years, occur. Shortening the time at sea is also a key part of our efforts to and at year-end two of our sites were affected by PD. Due to PD, reduce the need for sea lice treatments. In 2021, 40% of the pens we did not reach our target of a 93% superior share. with fish harvested did not receive any sea lice treatment. This is a continuation of an ongoing trend, where the region has managed Our freshwater production has been good in 2021. We transferred to minimize sea lice treatments (both medical and mechanical) in 7.5 million smolt to the sea in 2021, with an average weight of the season where wrasse is available (August–November). For our 460 grams, compared to 395 grams in 2020. We also transferred updated approach on the use of cleaner fish, please read here. We our largest ever batch of post-smolt to the sea, with an average aim to avoid using hydrogen peroxide whenever possible, but we did weight of 960 grams. Some fish from this batch were harvested need to use it during the first half of 2021 as a targeted and efficient after only ten months at sea, with an average weight of 4.8 kg. The measure to reduce high sea lice levels. However, the total amount remaining fish will be harvested at the start of 2022. This is the of hydrogen peroxide used during the year was substantially lower first batch that will have a production time at sea of less than 12 than in 2020. Due to efforts to ensure robust fish health and good months, and hence the first batch to run full-scale in accordance results from vaccines, we have not used antibiotics in Rogaland with our post-smolt strategy. The freshwater survival rate from for several years. Cost recognized as abnormal mortality in the our own facility was 94% in 2021, somewhat down from 95% in income statement (cost of reduced survival) was NOK 30.8 million 2020. Unfortunately, we had an outbreak of Infectious Salmon in 2021 (NOK 1.2 per kg), compared to NOK 63.7 million in 2020 Anemia (ISA) at our land-based broodstock facility towards the (NOK 2.8 per kg). end of the year. However, this will not impact our production as we have secured external deliveries of eggs. Our insurance covers most of the financial impact from the incident. Overall, our seawater production performed well, though it has been somewhat affected by the PD outbreak. The two remaining PD-affected sites will be fully harvested at the beginning of 2022. Due to continued focus on escape prevention, we did not have any escape incidents in 2021. We also work on measures to minimize our impact on local wildlife. In 2021, 13 birds got caught in our nets, compared to 20 last year. We are not content with reporting any dead birds, and will continue our effort to reduce this number. PA R T 0 2 : P R O F I T & I N N O VAT I O N R O G A L A N D PA G E 4 9 SUSTAINABILITY KPIs PILLAR KPI APPROACH TARGET 2021 2020 2019 2018 2017 PROFIT & INNOVATION HEALTHY OCEAN Harvest volume (tonnes GWT) EBIT per kg (NOK) Farming cost per kg (NOK) ASC certification (# of sites) Survival rate in freshwater Survival rate in seawater Cost of reduced survival (NOK 1 000) Use of antibiotics (g per tonne LWE) * Use of hydrogen peroxide (kg per tonne LWE) * Sea lice treatments - in feed (g per tonne LWE) * Sea lice treatments - in bath (g per tonne LWE) * Escape incidents (# of fish) Dead birds Dead marine mammals SUSTAINABLE FOOD Carbon emissions (kgCO2e per tonne GWT) Scope 1 + 2 location based Scope 3 High quality product Biological feed conversion ratio (bFCR) Economic feed conversion ratio (eFCR) PEOPLE Employees Absence rate Lost time incident rate Turnover rate LOCAL COMMUNITIES Local procurement Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ 30 000 tonnes in 2022 26 670 23 043 25 217 16 293 18 111 NOK 40/kg in 2022 All sites (11 eligible) by 2023 93% by 2022 9.1 44.6 0 94% 92% 12.7 42.1 0 95% 90% 22.5 35.9 0 93% 93% 13.5 40.3 0 90% 92% 21.7 38.4 0 94% 91% 30 804 63 664 26 127 48 609 35 988 No use of antibiotics 0.00 0.00 0.00 0.00 0.00 Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments Zero escape incidents Minimize impact on wildlife Minimize impact on wildlife 35% reduction (from 2018) in total emissions by 2030 1.58 7.21 11.94 3.46 10.79 3.74 0.00 0.03 1.09 0.15 0.63 0.02 0.00 0.00 0.00 0 13 0 0 20 0 0 2 0 332 403 5 823 7 695 382 n/a 0 24 0 256 n/a 0 20 0 230 n/a 81% 1.24 93% superior share 81% 85% 75% 74% 1.26 1.22 1.17 1.33 Below 4.5% ** 1.43 1.44 1.28 1.52 1.44 162 165 157 145 3.0% 3.0% 3.5% 4.7% 42 6% 9 n/a 15 n/a 60% 64% 64% 24 n/a n/a 148 3.2% 11 n/a n/a * Amount of active pharmaceutical ingredients (APIs) used (in gr or kg) per tonne of fish produced (LWE). ** An LTIR target has not been defined in order to avoid under-reporting of incidents. n/a: Data not available or applicable. General information on how we work systematically with the individual KPIs can be found in the report’s chapters linked in the ‘Approach’ column. FIGURE 2.27 RESULTS FOR ROGAL AND NOK MILLION Harvest (tonnes GWT) Sales revenues from sale of Atlantic salmon EBIT EBIT / kg (NOK) Farming cost / kg (NOK) 2017 2018 2019 2020 2021 18 111 16 293 25 217 23 043 26 670 1 150.2 393.1 21.7 38.4 959.6 219.6 13.5 40.3 1 538.9 1 263.1 1 430.9 568.2 292.3 242.0 22.5 35.9 12.7 42.1 9.1 44.6 FIGURE 2.28 EBIT AND HARVEST ROGAL AND PA R T 0 2 : P R O F I T & I N N O VAT I O N R O G A L A N D PA G E 5 0 OP E R AT I ON A L P R IOR I T IE S Grieg Seafood Rogaland harvested 26 670 tonnes of salmon in Another important tool that will improve biology and drive growth, 2021. Our goal is to harvest 30 000 tonnes in 2022, increasing to is our Precision Farming strategy. By using digitalization and 35 000 tonnes in 2025 by using more of our seawater capacity analytics in our farming operations, for instance by predicting and being cost competitive. The key to achieving this, is to reduce biological events ahead of time, allowing the farmer to apply production time in the sea, which will result in improved biological stronger preventative measures, we will ensure more efficient performance and a higher utilization of each site’s maximum feeding. This will lead to reduced cost and improved growth going allowable biomass (MAB). Larger smolt will significantly reduce forward. All Precision Farming initiatives, such as dashboards seawater production time, making the fish less exposed to issues on feed, production, fish health and welfare, are connected to such as sea lice and Pancreas Disease (PD). The average size of our integrated operational center, which monitors and controls the smolt transferred to the sea in 2021 was 460 grams, compared production and feeding operations at all our farms in Rogaland. to 120 grams in 2015. The transfer of larger smolt has produced Initiative to utilize video analytics with machine learning algorithms promising results, with the time the fish spend at sea reduced to automize biomass control and sea lice counts is ongoing, and from the previous norm of 18 months to less than 12 months. In will be expanded to new areas such as behavioural based fish 2021, we harvested from pens with post-smolt that have spent less welfare monitoring. than ten months at sea. In 2021, more than 50% of fish harvested were from post-smolt. We aim to increase this share to above 90% Aquaculture Stewardship Council (ASC) certification is an by 2024. important objective, as we believe it provides our customers and consumers with assurance that we are operating in a responsible Our freshwater facilities at Trosnavåg and Hognaland have a manner and producing high-quality seafood certified to the highest production capacity of 1 200 tonnes smolt. We also have a 33% social and environmental standards. We aim to certify all sites in shareholding in Tytlandsvik Aqua, which will be expanded from Rogaland according to ASC, with the first sites being certified in its current smolt production capacity of 3 400 tonnes to 4 500 2022. tonnes in 2022, with a further expansion to 6 000 tonnes in 2024. Grieg Seafood Rogaland is entitled to 50% of the volume from Our capital expenditures reflects our growth initiatives. In 2021 Tytlandsvik. We also use the sea-going closed-containment we spent NOK 43 million in growth investments, mainly related facility, FishGLOBE, to produce large smolt. In 2021, we doubled to broodstock upgrades. While our post-smolt initiatives increases our post-smolt production capacity from 450 to 900 tonnes when the production cost of smolt, we expect benefits such as reduced the second FishGLOBE was taken into use. We are planning to health cost and increased survival as the production time in sea is develop this technology further in a joint venture for grow-out reduced. To secure high quality smolt, we need high quality eggs salmon, with a globe ten times the current size. We have also from our broodstock. We also spent NOK 40 million in maintenance invested in Årdal Aqua, with a view to constructing a land-based investments. facility. The decision to start constructing will be taken in 2022. Årdal Aqua is expected to produce at least 3 000 tonnes of post- smolt annually. The aim is to increase production capacity further and to gradually raise fish to harvestable size on land. FIGURE 2.29 SURVIVAL RATE AT SE A IN ROGAL AND, ROLLING 12 MONTHS FIGURE 2.30 MAIN CAUSES FOR REDUCED SURVIVAL IN SE AWATER IN ROGAL AND IN 2021 MAIN CAUSE NUMBER OF FISH TONNES OF FISH Infectious Virus Bacterial Gill infections Non-Infectious Life cycle Treatments Physical Total Abnormal seawater mortality write-down % 281 506 350 049 91 457 057 33 422 37 075 1 159 200 967 416 83% 1 022 998 1 1 265 123 109 3 517 3 426 97% We report diseases, mortality, and other fish health indicators to the Norwegian authorities on a weekly basis. This is publicly available information, please see Barentswatch. FIGURE 2.31 SE A LICE LEVELS (ADULT FEMALES) IN ROGAL AND Our sites in Rogaland are located in Norwegian production area 2 (PO2), which has received a green light under Norway’s “traffic light” system (“green - low sea lice density"). The sea lice counts are calculated as the average number of adult female sea lice per month. Sea lice levels shall stay below the legal limit of 0.5 adult female per fish, or 0.2 during April and May when the wild salmon smolt migrate from the rivers and pass the fjordsWe report sea lice levels and sea lice treatments to the Directorate of Fisheries on a weekly basis. This is publicly available information, please see Barentswatch. PA R T 0 2 : P R O F I T & I N N O VAT I O N F I N N M A R K PA G E 5 1 GRIEG SEAFOOD FINNMARK 34 484 TONNES GWT HARVESTED 7.3 EBIT/KG (NOK) Grieg Seafood Finnmark AS farms salmon in Troms and Finnmark, the northernmost county in Norway. Of our 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 are processed and packed at our local facility in Alta. * In addition, we have one long-term rental agreement with Troms and Finnmark County Council for one license. OP ER AT ION AL R E S ULT S A total of 34 484 tonnes was harvested in 2021, an increase of 28% compared to the 26 919 tonnes harvested in 2020. This was due to better utilization of our sites’ maximum allowable biomass (MAB) and a higher survival rate in seawater. Sales revenue amounted to NOK 1 756 million, an increase of 34% compared to NOK 1 314 million in 2020. The increase is mainly related to a higher harvest volume and spot prices, in addition to a higher quality share compared to last year. The Nasdaq average spot price in 2021 was NOK 57.3 per kg, compared to NOK 53.7 per kg in 2020. Our price achievement in 2021 was NOK 50.9 per kg, positively impacted by the sale of 27% of our volume under fixed-price contracts, but suppressed by somewhat low average harvested weight and a superior quality share of 82% due to winter ulcers. Freshwater production at our own facility at Adamselv was good during the year. At our jointly owned Nordnorsk Smolt, a batch of smolt was unfortunately culled in the fourth quarter, due to an acute incident when the level of hydrogen sulfide became unstable. The company is working on improvements, including technical changes at the facility, to reduce the risk of similar events. This incident will have no significant impact on our harvest target going forward. We transferred a total of 10.1 million smolt with an average weight of 190 grams to the sea in 2021. The freshwater survival rate from our own facility improved from 89% in 2020 to 95% in 2021. Seawater production was impacted by issues related to winter ulcers during the first half of 2021, but improved significantly during the summer and autumn. The farming cost was NOK 43.7 per kg in 2021, down from NOK 44.1 per kg in 2020. We achieved a 12-month survival rate of 95% in 2021 compared to 92% in 2020, as we have seen reduced impact by winter ulcers. This is due to improved management of this challenge. We are working to improve survival rates through both general and targeted health and welfare measures. Good results from vaccines and efforts to ensure robust fish health have eliminated the need of antibiotics for several years. However, we used the antibiotic Profenicol at the start of the year to safeguard the welfare of fish at one sea farm severely impacted by winter ulcers. Cost recognized as abnormal mortality in the income statement was NOK 53.1 million in 2021 (NOK 1.5 per kg), compared to NOK 37.5 million in 2020 (NOK 1.4 per kg). NOK 15 million (NOK 0.4 per kg) of the 2021 total related to a chlorine spill at our harvesting facility in Alta in August, where we lost 96 000 (430 tonnes) fish ready for harvest. This implies that cost related to abnormal mortality less the chlorine spill totaled NOK 35.9 million (NOK 1.0 per kg), which is an improvement compared to the previous year. An independent environmental assessment of the chlorine spill was performed by a third party, which concluded that the spill had a limited local impact and that rapid recovery and recolonization of the seabed could be expected. The majority of the financial loss was covered by our insurance. Finnmark has low sea lice levels throughout the year. Generally, lower seawater temperatures in the region are an advantage, and the interconnectivity between the sites remains low. We use targeted preventive methods, such as sea lice skirts and cleaner fish, to ensure that the sea lice level is low. Nevertheless, sea lice treatments were carried out during the year to prevent any surge in numbers. We have a continuous focus on escape prevention. Despite this, however, the upper part of one pen was damaged at the start of the year, due to an avalanche, which unfortunately led to one escape incident. Based on recapture, we initially estimated that six salmon had escaped. When the pen was harvested later in the year, we noted a deviation of 4 352 fish between the number transferred to the sea and the number of fish harvested. According to procedure, this number was reported to the authorities as escaped fish. An extensive avalanche monitoring system was put in place following the event, and the farm was moved to a substantially less exposed location. We are also working on measures to minimize our impact on local wildlife. In 2021, eight birds got caught in our nets. PA R T 0 2 : P R O F I T & I N N O VAT I O N F I N N M A R K PA G E 5 2 SUSTAINABILITY KPIs PILLAR KPI APPROACH TARGET 2021 2020 2019 2018 2017 PROFIT & INNOVATION HEALTHY OCEAN Harvest volume (tonnes GWT) EBIT per kg (NOK) Farming cost per kg (NOK) ASC certification (# of sites) Survival rate in freshwater Survival rate at sea Cost of reduced survival (NOK 1 000) Use of antibiotics (g per tonne LWE) * Use of hydrogen peroxide (kg per tonne LWE) * Sea lice treatments - in feed (g per tonne LWE) * Sea lice treatments - in bath (g per tonne LWE) * Escape incidents (# of fish) Dead birds Dead marine mammals SUSTAINABLE FOOD Carbon emissions (kgCO2e per tonne GWT) Scope 1 + 2 location based Scope 3 High quality product Biological feed conversion ratio (bFCR) Economic feed conversion ratio (eFCR) PEOPLE Employees Absence rate Lost time incident rate Turnover rate LOCAL COMMUNITIES Local procurement Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ 38 000 tonnes in 2022 34 484 26 919 32 362 29 774 22 831 NOK 40/kg in 2022 All sites (18 eligible) by 2023 93% by 2022 7.3 43.7 18 95% 95% 4.7 44.1 15 89% 92% 17.9 37.7 10 87% 96% 20.0 35.6 4 89% 96% 15.4 40.7 2 86% 95% 53 133 37 495 15 055 624 16 965 No use of antibiotics 5.98 0.00 0.00 0.00 0.00 Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments 2.36 3.62 0.00 14.53 13.36 0.14 0.14 0.10 0.08 0.06 0.34 0.82 0.21 0.72 0.90 Zero escape incidents 1 (4 352) Minimize impact on wildlife Minimize impact on wildlife 35% reduction (from 2018) in total emissions by 2030 8 0 0 6 0 0 2 0 0 1 0 166 182 4 502 5 970 169 n/a 254 n/a 93% superior share 82% 69% 86% 86% 1.21 1.20 1.14 1.12 0 18 0 224 n/a 78% 1.16 Below 4.5% ** 1.34 1.35 1.21 1.17 1.29 262 8.7% 22 8% 257 5.5% 28 n/a 256 4.9% 22 n/a 45% 60% 66% 247 5.4% 18 n/a n/a 250 4.4% 24 n/a n/a * Amount of active pharmaceutical ingredients (APIs) used (in gr or kg) per tonne of fish produced (LWE). ** An LTIR target has not been defined in order to avoid under-reporting of incidents. n/a: Data not available. General information on how we work systematically with the individual KPIs can be found in the report’s chapters linked in the ‘Approach’ column. FINNMARK 2017 2018 2019 2020 2021 Harvest (tonnes GWT) 22 831 29 774 32 362 26 919 34 484 Revenue (NOK million) 1 265.2 1 671.3 1 815.3 1 313.5 1 756.3 EBIT (NOK million) 351.9 594.9 580.2 127.4 250.5 EBIT / kg (NOK) Farming cost / kg (NOK) 15.4 40.7 20.0 35.6 17.9 37.7 4.7 44.1 7.3 43.7 FIGURE 2.32 RESULTS FOR FINNMARK FIGURE 2.33 EBIT AND HARVEST FINNMARK PA R T 0 2 : P R O F I T & I N N O VAT I O N F I N N M A R K PA G E 5 3 OP E R AT I ON A L P R IOR I T IE S Grieg Seafood Finnmark harvested 34 484 tonnes of salmon in As in all our regions, Grieg Seafood Finnmark focuses on improving 2021. Our goal is to harvest 38 000 tonnes in 2022, increasing to fish welfare, achieving a high survival rate and working towards 45 000 tonnes in 2025 by using more of our seawater capacity, sustainable production. As a result of our efforts in the area, all of while still being cost competitive. The key to achieving this, is to our sites (18 out of 18 eligible sites) were ASC certified by the end reduce production time in the sea, which will result in improved of the year. This is equivalent to 100% of net production (budget) biological performance and a higher utilization of each site’s for the year. New sites must reach peak biomass to be considered maximum allowable biomass (MAB). We farm smolt at our own for certification. facility in Adamselv and at Nordnorsk Smolt, where we have 50% ownership. We target a capacity increase of 4 000 tonnes of post- In 2021, we spent NOK 45 million in growth investments related smolt by 2025. Larger smolt will significantly reduce seawater to upgrade of our processing facility and land sites, in addition production time, decreasing the fishes’ exposure to issues such to NOK 35 million in maintenance investments. Flexibility is a as winter ulcers and Infectious Salmon Anemia (ISA), which have requirement to achieve better utilization of our capacity, and we been the most pressing challenges in this region in the last two are also continuously looking for opportunities to secure access years. These conditions negatively impact fish welfare, harvesting to new locations. weight, quality and price achievement. During the year, we have implemented mitigating measures based on insights from the analyses we have performed. Such measures include changing the timing of when we transfer fish to the sea, altering the feed composition and vaccinating the fish against ISA before transfer to the sea. We have also improved the management and mitigation of winter ulcers. We have also entered into a partnership for value added processing capacity, to secure quality and sales margins as and when required, should such conditions appear. FIGURE 2.34 SURVIVAL RATE AT SE A IN FINNMARK, ROLLING 12 MONTHS FIGURE 2.35 MAIN CAUSES FOR REDUCED SURVIVAL IN SE AWATER IN FINNMARK IN 2021 MAIN CAUSE NUMBER OF FISH TONNES OF FISH Infectious Bacterial Virus Non-Infectious Life cycle Physical Treatments Total Abnormal seawater mortality write-down % 614 744 23 820 520 724 53 807 32 106 1 245 201 415 122 33% 1 982 26 895 114 53 3 072 1 571 51% We report diseases, mortality, and other fish health indicators to the Norwegian authorities on a weekly basis. This is publicly available information, please see Barentswatch. FIGURE 2.36 SE A LICE LEVELS (ADULT FEMALES) IN FINNMARK The sea lice counts are calculated as the average number of adult female sea lice per month. Sea lice levels shall stay below the legal limit of 0.5 adult female per fish. At the green licenses in Finnmark, the limit is 0.25 adult female sea lice per fish, while during April and June, when wild salmon smolt migrate from the rivers and pass the salmon farms, the limit is 0.2 adult female sea lice per fish. We report sea lice levels and sea lice treatments to the Directorate of Fisheries on a weekly basis. This is publicly available information, please see Barentswatch. PA R T 0 2 : P R O F I T & I N N O VAT I O N B R I T I S H C O L U M B I A PA G E 5 4 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 process our BC salmon externally. 14 448 TONNES GWT HARVESTED 10.4 EBIT/KG (NOK) OP ER AT ION AL R E S ULT S A total of 14 448 tonnes was harvested in 2021, 32% lower than in and a shorter period at sea will reduce exposure to biological 2020 (21 181 tonnes). Harvesting volumes vary significantly every risks. This in turn will reduce the risk of disease outbreaks and the other year in BC due to local production region arrangements and need for antibiotics. larger farms with greater capacity on the West Cost of Vancouver Island compared to the East Coast. As a consequence, the region's BC has low sea lice levels during the important outmigration period volume varies every other year, regardless of the underlying - when the juvenile and vulnerable wild salmon pass our farms biology. Measures are being implemented to stabilize yearly harvest volumes. on their way from the rivers to the ocean. However, the region is heavily influenced by sea lice pressure each autumn, during the inmigration period when the adult wild salmon pass our farms on Sales revenues for the year amounted to NOK 1 023 million, a their way back to the rivers to spawn. In BC, unlike Norway, the decrease of 13% compared to NOK 1 179 million in 2020. According wild salmon population greatly outnumbers the farmed salmon to Urner Barry, the average spot price (farm raised salmon Seattle population. We are using preventative methods to keep the levels West Coast, fresh, whole fish) was NOK 68.5 per kg in 2021, stable. When additional measures are needed, we carry out the compared to NOK 59.8 per kg in 2020. Our price achievement type of treatment most appropriate to the biological situation. was NOK 70.8 per kg in 2021, compared to NOK 55.7 per kg in During 2021, treatment with hydrogen peroxide as well as in- 2020. Higher spot prices and a somewhat increased quality share feed treatments were carried out to reduce and maintain a stable compared to last year contributed to the price achievement. The sea lice level. We have been able to achieve a higher efficacy at a share of superior quality has been gradually rising recent years, lower dose of both treatments. From 2022, we are introducing a and ended at 87% in 2021. locally developed barrier system between the farmed salmon and the environment, which has shown promising results to control Freshwater production was stable during the year, and the sea lice and harmful algae without using medicines in trials. freshwater survival rate improved from 78% in 2020 to 85% in As from 2022, we are also adding the latest mechanical sea lice 2021. We transferred a total of 5.4 million smolt with an average removal tool, which we expect to reduce our overall medication weight of 120 grams to the sea in 2021. and chemical use. Seawater production was good in 2021, and the 12-month survival Despite a continuous focus on escape prevention, we unfortunately rate increased from 90% in 2020 to 92% in 2021. In previous years, had two escape incidents during the year. One incident happened the survival rate has been impacted by incidents of low oxygen at our hatchery, where three small fish (fry) had gone through the levels and plankton blooms. However, it is steadily increasing water effluent screen. The fish were collected in a containment due to positive results from our algae mitigation system, which area before they entered the ocean, and would have no chance stabilizes the survival rate in periods of challenging environmental of survival at sea. Nevertheless, the incident was reported as an conditions. Mortality related to algae blooms was reduced from escape according to regulation. Corrective actions have been put in 3.4% in 2019, to 0.9% in 2020 and down to 0.4% in 2021, due to place to prevent this from happening again. At one of our sea sites, our efforts within algae mitigation, digital monitoring and aeration we lost one fish outside the farm containment structure during systems. The farming cost increased from CAD 8.0 per kg (NOK harvest. Mitigating actions, such as the proper use of catch nets, 56.0) in 2020 to CAD 8.8 per kg (NOK 60.4) in 2021, mainly due to a have been put in place. We also continue our efforts to minimize lower harvest volume. Cost recognized as abnormal mortality in the our impact on local wildlife. We regret to report that in 2021, eight income statement (cost of reduced survival) was NOK 17.6 million birds and one sea lion got caught in our nets. We are not content in 2021 (NOK 1.2 or CAD 0.2 per kg), compared to NOK 66.1 million with reporting any dead animals, and will continue striving to in 2020 (NOK 3.1 or CAD 0.5 per kg). reduce this number. In 2021, we reduced the use of antibiotics compared to the previous year. Nevertheless, the antibiotic Florfenicol was used to treat both Redmouth and Yellowmouth to safeguard the welfare of the fish. Our use of antibiotics is too high, and we are installing infrastructure that will allow us to lower water temperatures and salinity to help limit the transmission of diseases. We also pursue non-therapeutic means to manage disease, such as vaccines and an adapted diet. Our post-smolt strategy will enable us to have better control of the fish’s environment for a longer period. It will also make the fish more robust when they are transferred to sea, PA R T 0 2 : P R O F I T & I N N O VAT I O N B R I T I S H C O L U M B I A PA G E 5 5 SUSTAINABILITY KPIs PILLAR KPI APPROACH TARGET 2021 2020 2019 2018 PROFIT & INNOVATION HEALTHY OCEAN Harvest volume (tonnes GWT) EBIT / kg (NOK) Farming cost per kg (CAD) ASC certification (# of sites) Survival rate in freshwater Survival rate at sea Cost of reduced survival (NOK 1 000) Use of antibiotics (g per tonne LWE) * Use of hydrogen peroxide (kg per tonne LWE) */ ** Sea lice treatments - in feed (g per tonne LWE) * Sea lice treatments - in bath (g per tonne LWE) * Escape incidents (# of fish) Dead birds Dead marine mammals SUSTAINABLE FOOD Carbon emissions (kgCO2e per tonne GWT) Scope 1 + 2 location based Scope 3 High quality product Biological feed conversion ratio (bFCR) Economic feed conversion ratio (eFCR) PEOPLE Employees Absence rate Lost time incident rate Turnover rate LOCAL COMMUNITIES Local procurement Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ Ñ 22 000 tonnes in 2022 14 448 21 181 14 120 16 632 CAD 7/kg in 2022 All sites (15 eligible) by 2023 93% by 2022 10.4 -0.4 8.8 12 85% 92% 8.0 11 78% 90% 5.2 8.3 n/a 63% 88% 17.5 7.4 n/a 83% 88% 2017 9 600 12.5 7.4 n/a 81% 93% 17 617 66 082 73 327 88 454 17 395 No use of antibiotics 41.67 62.32 87.00 151.26 18.30 Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments Zero escape incidents Minimize impact on wildlife Minimize impact on wildlife 35% reduction (from 2018) in total emissions by 2030 2 (4) 8 1 0 12 1 0 14 0 1 097 769 1 101 93% superior share 87% 86% 4 025 3 276 1.18 1.23 n/a 86% 1.25 Below 4.5% *** 1.27 1.43 1.41 1.54 1.29 176 5.6% 6 30% 174 6.8% 36 n/a 171 2.0% 35 n/a 84% 83% 83% 148 1.8% 38 n/a n/a 150 0.9% 16 n/a n/a * Amount of active pharmaceutical ingredients (APIs) used (in gr or kg) per tonne of fish produced (LWE). ** As of 01.01.2021, the Government of Canada - Department of Fisheries and Oceans Canada (DFO) changed the calculation formula for the API of hydrogen peroxide from Paramove 50 from 1 L (Paramove 50) * 1.15 (density) * 0.45 (concentration) = 1 kg H2O2 to 1 L (Paramove 50) * 1.19 (density) * 0.49 (concentration) = 1 kg H2O2, which corresponds to the method used in Norway. Previous years (2017 - 2020) have not been recalculated. *** An LTIR target has not been defined in order to avoid under-reporting of incidents. n/a: Data not available. General information on how we work systematically with the individual KPIs can be found in the report’s chapters linked in the ‘Approach’ column. 35.66 46.62 6.01 5.83 9.17 0.30 0.22 0.52 0.32 0.14 0.00 0.00 0.00 0.00 0.00 FIGURE 2.37 RESULTS FOR BRITISH COLUMBIA 0 0 0 597 n/a 84% 1.23 0 0 0 702 n/a 81% 1.20 FIGURE 2.38 EBIT AND HARVEST BRITISH COLUMBIA BRITISH COLUMBIA Harvest (tonnes GWT) Revenue (NOK million) EBIT (NOK million) EBIT / kg (NOK) Farming cost / kg (NOK) Farming cost / kg (CAD) 2017 9 600 580.3 120.2 12.5 49.8 7.4 2018 2019 2020 2021 16 632 14 120 21 181 14 448 1 075.3 861.4 1 178.9 1 023.5 290.9 17.5 50.0 7.4 73.3 5.2 55.3 8.3 -7.4 -0.4 56.0 8.0 150.2 10.4 60.4 8.8 PA R T 0 2 : P R O F I T & I N N O VAT I O N B R I T I S H C O L U M B I A PA G E 5 6 OP E R AT I ON A L P R IOR I T IE S Grieg Seafood BC harvested 14 448 tonnes of salmon in 2021. By 2025, the Canadian federal government aims to have created Our goal is to harvest 22 000 tonnes in 2022, increasing to 35 000 a responsible plan to transition from the traditional open net-pen tonnes in 2025 mainly by securing high-quality, larger smolt and salmon farming in British Columbia. Grieg Seafood supports this increasing survival at sea, which will enable us to better utilize process. We embrace new strategies and technologies to align our seawater sites. Access to high-quality smolt is key to ensuring with the government’s transition, such as keeping the fish longer sustainable production growth. With the expansion of the Gold on land and a shorter time in the ocean, or by introducing barriers River smolt facility, Grieg Seafood BC will increase smolt capacity around the farms to limit interactions between the fish and the from 500 tonnes to 900 tonnes. The first smolt transfer from the environment. Such technologies not only reduce our impact on facility to sea farms will take place in the spring of 2022. wild salmon and the environment, but also improve our biological control. Grieg Seafood is committed to be a constructive partner Harmful Algae Blooms (HAB) and low oxygen events represent for the Government and Indigenous communities in the 2025 significant biological risks in BC, which may impact our survival transition process, and to find a path forward that works for all rate. However, mortality related to algae blooms is reduced due to stakeholders. our successful efforts within algae mitigation, digital monitoring and aeration systems. Algae movements and oxygen levels are Our capital expenditures reflects our growth initiatives. In 2021, we continuously monitored and analyzed using high-grade real-time spent NOK 105 million in growth investments mainly related to the in-pen sensors and machine learning with predictive environmental expansion of Gold River, in addition to NOK 26 million in regular data software. In addition, aeration systems have been installed maintenance investments. The smolt facility will be completed in to enable feeding also during challenging situations. We expect 2022, and secure BC access to high-quality smolt. FIGURE 2.39 SURVIVAL RATE AT SE A IN BRITISH COLUMBIA, ROLLING 12 MONTHS FIGURE 2.40 MAIN CAUSES FOR REDUCED SURVIVAL IN SE AWATER IN BRITISH COLUMBIA IN 2021 MAIN CAUSE Infectious Gill infections Bacterial Virus Non-Infectious Life cycle Treatments Total Abnormal seawater mortality write-down % NUMBER OF FISH TONNES OF FISH 52 907 172 248 7 676 671 589 36 376 940 796 89 274 9% 169 120 7 1 339 44 1 680 351 21% our efforts in the areas of algae mitigation and digital monitoring to increase survival and harvest volume, and reduce cost going forward, thereby ensuring we are cost competitive. Obtaining ASC certification is prioritized, as it is an important signal that our salmon is a responsible choice. ASC has strict requirements with respect to minimizing fish farms’ impact on the natural environment and supporting local communities. At the end of 2021, a total of 12 out of 15 eligible sites were ASC certified (corresponding to 69% of net production (budget))). We are committed to develop our operations in line with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). In BC, there is an ongoing process of reconciliation between the government, businesses and First Nations, which we support. Our main farming areas in BC are operated under agreements with the Indigenous Peoples who are the Rightsholders of those territories, and we are pursuing agreements with others. The Truth & Reconciliation Commission: Call to Action #92 provides us with guidance on our role in the reconciliation process. We are working to operate in ways that fully respect the culture of our First Nations partners, to deepen our understanding and to provide shared opportunities. Read more about our journey of reconciliation in BC here. In March 2022, the Coalition of First Nations for Finfish Stewardship launched the report: "The Reality Is: Salmon Farming is a path to self determination and reconciliation for many First Nations in coastal BC". Read more about the coalition and the report here. FIGURE 2.41 SE A LICE LEVELS (MOTILE SE A LICE ) IN BRITISH COLUMBIA The sea lice counts are calculated as the average number of motile sea lice per salmon. The limit as defined by the authorities is three motile sea lice per salmon in the period from March to June during the out-migration period, recognized as a vulnerable time for wild salmon migrating out to sea. PA R T 0 2 : P R O F I T & I N N O VAT I O N N E W F O U N D L A N D PA G E 5 7 GRIEG SEAFOOD NEWFOUNDLAND Grieg Seafood Newfoundland is a greenfield project located in Placentia Bay in Newfoundland. At year-end 2021, we had eight seawater licenses and one freshwater license. Additional seawater licenses have been applied for. S TAT U S Our Recirculating Aquaculture System (RAS) facility in Marystown EBIT for 2021 totaled NOK -116.9 million. We spent close to Marine Industrial Park, close to Placentia Bay, is fully operational. NOK 290 million in investments in the RAS facility and seawater We had expected to transfer the first smolt to sea summer of 2021, locations in Newfoundland in 2021. We are committed to however this transfer was postponed to 2022 due to suspicion of developing the project according to our long-term forecast and ISA. The financial impact of the postponement was not significant meeting all regulatory requirements from the authorities. We as the first generation contained few individuals compared to are well prepared with equipment, employees and knowledge of regular operations. The second generation of eggs was received in biological conditions, which enables us to provide a solid and safe the facility in April and July 2021. The production of this freshwater production. We are confident that we will be able to build a strong generation has been on track, with high survival rates. We plan farming region in Newfoundland over the coming years, realizing to transfer between two to three million fish to the sea during the synergies with our BC operations and creating jobs and value for spring and summer of 2022, with harvesting commencing in 2023. the local communities. Preparation is on schedule and our focus is on ensuring that all equipment and services needed for the seawater operations will be in place when the fish are transferred to the sea. We have also provided a group of employees destined for seawater operations with proper training at our other farms in Norway. Our seawater licenses in Newfoundland require use of sterile all- female salmon in order to eliminate the risk of genetic pollution of wild Atlantic salmon in case of escape. We base our operations on developed knowledge and experience about farming triploid salmon in both Norway and the UK. In accordance with best practice, we optimize the times of the year to transfer fish to the sea, the feed composition, and conditions during the freshwater phase. During the year, we were able to test the resilience of our seawater equipment when a Category 1 hurricane swept over eastern Newfoundland. The pen and equipment we have placed in one of our seawater sites sustained no damages. The RAS facility also withstood the hurricane winds with no damage. Power outages and other disturbances were handled by our backup system and caused no disruption to production. PA R T 0 2 : P R O F I T & I N N O VAT I O N N E W F O U N D L A N D PA G E 5 8 SUSTAINABILITY KPIs PILLAR KPI APPROACH TARGET PROFIT & INNOVATION HEALTHY OCEAN EBIT (NOK million) Use of antibiotics (g per tonne LWE) * SUSTAINABLE FOOD Carbon emissions (tCO2e) Scope 1 + 2 location based Scope 3 PEOPLE Employees Absence rate Lost time incident rate Turnover rate LOCAL COMMUNITIES Local procurement Ñ Ñ Ñ Ñ Ñ Ñ Ñ 2021 2020 -116.9 n/a No use of antibiotics 0.00 0.00 35% reduction (from 2018) in total emissions by 2030 Below 4.5% ** 2 066 1 927 735 69 1.3% 5 30% 642 73 n/a n/a n/a 44% 46% * Amount of active pharmaceutical ingredients (APIs) used (in gr or kg) per tonne of fish produced (LWE). ** An LTIR target has not been defined in order to avoid under-reporting of incidents. n/a: Data not available. Our Newfoundland region is currently in development, with no seawater production in 2021. We will report on more indicators going forward. As from 1 January 2021, Newfoundland has been reported as a region of the Group. See Note 8 of the Group Accounts. General information on how we work systematically with the individual KPIs can be found in the report’s chapters linked in the ‘Approach’ column. OP P OR T UNI T Y The US market is the world’s largest and fastest growing market eight seawater licenses, but additional licenses have been applied for Atlantic salmon, but only a third of US demand is currently met for. The sites and production areas chosen in Placentia Bay are by North American production. We already have a position in this at least 100 meters deep, have good currents and optimal oxygen market through our operations in British Columbia, where we have levels. There are no known algae issues in the area. Our seawater attained significant sales and market experience. With proximity sites have favorable biological conditions for salmon farming, with to important markets on the US East Coast, our Newfoundland environmental conditions like northern Norway. The sites are region significantly strengthens our US market exposure and exposed to high seas and will be equipped with state-of-the-art opens for synergies with our existing operations. technology and systems for harsh environments. 40-meter-deep Our high-end RAS facility in Marystown has technology employing layers of super-chilled or potentially warm water. close to 100% recirculation of water with no impact on the surrounding environment. The facility currently consists of a The project has a long-term annual harvest potential of 45 000 hatchery, nursery and a smolt unit with a capacity of 600 tonnes. tonnes. By using cutting-edge technologies at all stages of the We will gradually develop our operations, to ensure biosecurity, production process, our Newfoundland region will strengthen our fish health and profitability. position as a global leader in sustainable salmon farming. pens and underwater feeding will allow the fish to stay below We have long-term exclusive farming rights to the Placentia Bay area, an area which is highly isolated from other salmon farmers in the region. Long distances and low interconnectivity between sites lower the risk of biological contamination. We currently have PA R T 0 2 : P R O F I T & I N N O VAT I O N T H E S A L M O N M A R K E T PA G E 5 9 SALES & MARKET FIGURE 2.44 NQSALMON WEEKLY AVERAGE (NOK/KG) Grieg Seafood is part of a global salmon market, supplying 3.4% of the global volume of Atlantic salmon harvested in 2021. As part of our new strategy, we will reposition Grieg Seafood in the value chain and become an innovative partner for selected customers. 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 and consumers demand. FIGURE 2.42 GLOBAL ATL ANTIC SALMON HARVEST IN 2021* FIGURE 2.43 GLOBAL ATL ANTIC SALMON CONSUMPTION IN 2021* Source: NASDAQ Salmon Index FIGURE 2.45 URNER BARRY FARM RAISED SALMON SE AT TLE WEST COAST, FRESH, WHOLEFISH (NOK/KG) Norway Chile UK Canada Other EU & UK USA Brazil Russia Asia Other Source: Kontali Analyse AS The UB Farm Raised Salmon Seattle West Coast, Fresh, Wholefish shown above is a weekly average of all weight classes (4-6 lb, 6-8 lb, 8-10 lb, 10-12 lb,12-14 lb, 14-16 lb, 16-18 lb) in USD/lb, converted into NOK/kg using the weekly average of Norges Bank's daily exchange rate. PA R T 0 2 : P R O F I T & I N N O VAT I O N T H E S A L M O N M A R K E T PA G E 6 0 OUR SALES AND MARKET ORGANIZATION GLOBAL MARKET DEVELOPMENTS IN 2021 In 2021, Grieg Seafood established its own sales and market In 2021, the global volume of Atlantic salmon harvested increased organization. Until year-end 2020, our fish was sold through Ocean by approximately 7% compared to 2020, according to Kontali, Quality, the sales organization of Grieg Seafood and Bremnes continuing on a similar level as seen the last years. A total of Fryseri. As part of our strategy, we have embarked on a journey 2 603 520 tonnes GWT (gutted weight equivalent) was estimated to reposition Grieg Seafood in the value chain from being purely a to have been harvested globally in 2021, up from 2 440 620 tonnes supplier of farmed salmon from our regions to becoming a partner in 2020. The largest contributors to the increase were Norway and for selected customers in our main markets. the Faroe Islands, with an increase in output of 146 790 and 22 410 tonnes, respectively, while Chile experienced a reduction of 52 380 During the first months of 2021, our new sales organization tonnes. handled approximately 50% of our harvested salmon. As of April 2021, the organization handled 100% of our harvested volume. Our Market demand continued to be strong in 2021. It is estimated that new sales organization is built on a mix of experienced seniors consumption in all major markets increased in 2021. The largest from the seafood industry and juniors taking their first steps. We relative increases in consumption were found in the EU and the are developing our organization for the future and are committed UK, both up 8%, and the USA, up 13%. Total exports of salmon to achieving this through a focus on nurturing young talent as well from Norway in 2021 rose by 12% compared to 2020. Exports of as continuous development of our experienced seniors. fresh salmon (GWT) from Norway rose by 11% in 2021 compared to 2020. The main export markets were Europe, at 77%; Asia, at During autumn, we established our Value Added Product (VAP) 17%; and North America, at 3%. Exports of fresh filet from Norway sales department, which will be a key factor in increasing our in 2021 also increased significantly, up by 22% compared to 2020, VAP product portfolio both from the Company’s Norwegian and with the main volume increase to the US market. Volume supplied Canadian regions in the coming years. We have also entered into an by Canada increased by 3% in 2021 compared to 2020. The demand agreement on VAP capacity in Norway and commenced processing has been driven by supermarkets and grocery stores, in addition some of our Norwegian salmon into fresh and frozen valued-added to a recovery in the HoReCa (hotels, restaurant, catering) segment products towards year-end. The finished products are sold through towards the end of the year. Sales to the HoReCa market were our VAP sales department to European and overseas markets. low most of the year due to Covid-related restrictions, curfews Based on this market introduction, our sales organization secured and lockdowns in most markets. On the other hand, sales to the a pipeline of VAP products for delivery in 2022. We will continue to retail segment and home consumption have increased during the evaluate both external opportunities to strengthen our processing Covid-19 pandemic. capacity, such as long-term partnerships with third parties in Norway, North America and Europe, as well as the development of Salmon prices noted on NASDAQ Salmon Index (NQSALMON) existing internal processing infrastructure. varied significantly in the last year due to the waves of restrictions Read about our Chain of Custody certifications here. North American market. The spot market price stood at NOK 45.1 and lockdowns in Europe. The same trend was observed in the at the beginning of the year. It then fell to the low forties in the second week of 2021, before regaining strength. The spot market price according to NQSALMON closed the year at NOK 63.4 per kg. The 12-month average NQSALMON for 2021 came to NOK 57.3 per kg, compared to NOK 53.7 in 2020. Spot salmon prices in the US market started the year at NOK 59.6 per kg and ended the year at NOK 72.6 per kg, with an average price of NOK 68.5 per kg, up by NOK 12.1 per kg compared to 2020. PA R T 0 2 : P R O F I T & I N N O VAT I O N T H E S A L M O N M A R K E T PA G E 61 OUR MARKET DEVELOPMENT IN 2021 Grieg Seafood accounted for 3.4% of the global supply of Atlantic decreased from 29% in 2020 to 27% in 2021. In 2021, 13% of sales Our sales revenues amounted to NOK 4 599 million, an increase of The Russian invasion of Ukraine in February 2022 has already had salmon in 2021 (2.9% of the global supply excluding the volume done by our own sales organization was to airborne markets, and NOK 214 million or 4.9% from 2020. Our harvested volume in 2021 a global impact on food and food raw materials prices, though harvested in Shetland up to 15 December 2021, when the the remainder was sold to European markets, with a strong focus was up 6% compared to 2020, and while the 12-month average salmon demand has not yet been significantly affected. Further Shetland business was sold). Continental Europe is by far our on key markets in southern Europe. We did not have any sales to NQSALMON for 2021 came to NOK 57.3 per kg compared to NOK inflation in prices and distribution costs may impact demand going most important market, taking 73% of our harvested volume and Russia or Belarus in 2021. contributing 65% of our sales revenue in 2021. North America is 53.7 in 2020, the Group's price achievement was NOK 55.7 per kg forward. However as of the time of publishing this report, with the compared to NOK 52.8 per kg in 2020. In 2021, we had a fixed-price outlook for continuing strong demand and no supply growth in our second largest market, accounting for 21% of our volume and Sales in 2021 consisted mainly of fresh, head-on gutted salmon, contract share of 30% in Norway, in line with our targeted contract 2022, we believe market prices will rise going forward. At year- 27% of our revenues. The market distribution of sales varies year with a small share of fresh value-added products (representing rate of 20-50%. For more information on our harvest volume and end, the spot price for salmon, according to NQSALMON, was NOK on year, depending on the harvested volumes across our regions. approximately 4% of our volume). Processed products, including sales performance, see the regional chapters in this report. 63.4 per kg, and the average price in the first months of 2022 was The main change in our sales distribution was an increase to the Grieg Seafood brand Skuna Bay, sold to the North American Continental Europe from 45% in 2020 to 65% in 2021, mainly due market constituted approximately 9% of the volume from our BC to the 22% increase in harvested volume from our Norwegian operations. We experienced good demand for ASC certified salmon MARKET EXPECTATIONS around NOK 78 per kg. Spot salmon prices in the US market ended the year at NOK 72.6 per kg, and the average spot price for the first months in 2022 was around NOK 83 per kg. The Fishpool forward farming operations (the figures exclude sales from Shetland). In in the European market and sold ASC volumes with a stable The global harvest of Atlantic salmon in 2022 is expected to price for Q2 2022 is close to NOK 78 per kg, and forward prices for our BC region, we harvested 32% less volume in 2021 compared market premium. See here for further details of sales revenues by remain at a similar level to 2021, which came to 2 891 900 tonnes, the second half of 2022 are close to NOK 64 per kg. We aim to sell to 2020. However, due to exports from our Norwegian regions markets and products. to the USA, the volume sold to the North American market only according to Kontali. Due to the increase in maximum allowed 20-50% of our Norwegian volume under fixed-price contracts, and biomass (MAB) in Norway and good seawater conditions in the our estimated contract share for 2022 is 17% as ta year-end 2021. FIGURE 2.46 OUR MARKETS BY SALES REVENUES IN 2021 FIGURE 2.47 OUR MARKETS BY HARVESTED VOLUME IN 2021 second half of 2021, Norwegian salmon farmers are expected to harvest 8 500 tonnes more in 2022 than in 2021. Chile is expected to decrease its harvest in 2022 by approximately 3 500 tonnes, with the decrease concentrated in the first half of the year. Canada is expected to decrease its harvest by approximately 10 300 tonnes in 2022. The remaining salmon farming countries will increase their volume by approximately 4 400 tonnes. The Covid-19 pandemic has impacted the salmon market in the last two years, with a significant shift in demand, away from hotels, restaurants and catering (HoReCa), while the retail segment and home consumption have been boosted. Going into 2022, salmon demand is still impacted by the pandemic and partly characterized by volumes channelled from the HoReCa market to the retail segment. However, with global progress on vaccination against Covid-19 and the lifting of restrictions in many countries, the shift from HoReCa to retail is expected to be reversed to some extent. Nevertheless, we believe retail consumption may increase as consumers have become used to cooking salmon at home. Dietary megatrends fueled by increased focus on health and sustainability are expected to increase demand going forward, contributing to a strong salmon market. PA R T 0 2 : P R O F I T & I N N O VAT I O N G R I E G S E A F O O D ’ S S H A R E S PA G E 6 2 GRIEG SEAFOOD’S SHARES We aim to provide an attractive return to our shareholders and contribute to the correct pricing of our shares. To achieve this, we are proactive in disclosing reliable information about our operations. OUR P R INCIP LE S OUR SH AR E S A ND S H AR EHOLDER S T HE R E T UR N ON OUR S H A R E S • Our ambition is to create shareholder value and deliver Seafood was listed on the Oslo Stock Exchange on 21 June 2007, at 31 December 2020 to NOK 83.1 as at 31 December 2021. No competitive returns relative to comparable investment under the ticker GSF. We have only one class of shares, and all dividend has been paid out in 2020 and 2021 due the Covid-19 alternatives. shares carry the same rights. As of 31 December 2021, the pandemic and temporary amendments in the syndicated loan • We engage with the investor community in an open, transparent Company had 112 314 061 shares outstanding, at a nominal value arrangements from Q4 2020 through Q3 2021, in addition to an and continuous dialogue. Building trust and awareness is of NOK 4.00 per share (excluding treasury shares). Total ordinary extensive growth investment plan, including the freshwater facility critical to ensure that the information disclosed to the financial shares as at 31 December 2021 was 113 447 042. and seawater sites in Newfoundland and the Gold River hatchery Our shares are listed on the Oslo Stock Exchange/Euronext. Grieg Grieg Seafood’s share price decreased by 2.2% from NOK 85.0 as market, including current and potential investors, analysts in British Columbia. and other stakeholders, provides the best possible basis for a As of 31 December 2021, we had 9 938 shareholders, with our ten correct valuation of Grieg Seafood. largest investors holding 69.5% of our shares, and the 20 largest Grieg Seafood aims to provide shareholders with a competitive O U R TA R G E T Dividend 30-40% of the Group's net profit after tax before fair value adjustments investors holding 77.4%. The number of shareholders decreased return on invested capital through payment of dividends and share during the year, from 12 436 at year-end 2020. Norwegian-based price increases. The Board of Directors maintains that, as an shareholders own the majority of the Company’s shares, with Per average over time, dividends should correspond to 30-40% of the Grieg Jr. and the Grieg family controlling 53.2% of the outstanding Group’s profit after tax, adjusted for the effect of the changes in fair shares as of 31 December 2021. A further 4.7% was controlled by value of biological assets. As at 31 December 2021, Grieg Seafood the Norwegian National Insurance Fund (Folketrygdfondet) and was in a solid financial position to execute strategic priorities 4.3% by OM Holding AS at year-end 2021. Grieg Seafood ASA held and deliver a shareholder return. The Board recommends that a a total of 1 132 981 treasury shares as of 31 December 2021. For dividend of NOK 3.0 per share be distributed to shareholders. FIGURE 2.48 GEOGRAPHICAL OWNERSHIP IN 2020 & 2021 (NUMBER OF SHARES) In the period 2015 to 2019, we have had a dividend yield in the range of 1.6-5.5%. Over the preceding years, we have had a consistent pay-out ratio, only temporarily suspended due to Covid-19 pandemic measures. The total accumulated dividend per share since our initial public offering in 2007 is NOK 15.6 as at 31 December 2021. a detailed breakdown of our 20 largest shareholders, please see Note 18 in the Group Accounts. T HE LIQUIDI T Y OF OUR SH AR E S Since May 2016, the liquidity of our shares has increased significantly compared to previous years. This development was triggered by Mowi ASA realizing a set of old forward contracts, acquiring nearly 29 million shares in Grieg Seafood ASA, and immediately selling them in the market. Following this injection of shares into the open market, the Grieg Seafood share has been traded at a much higher volume. In 2021, a total of 86 million shares were traded, with a median of 265 456 shares per trading day, compared to a total of 100 million shares traded, with a median of 317 106 shares per trading day in 2020. 2021 2020 Norway UK EU USA Norway UK EU USA LEARN MORE ON OUR WEBSITE → Our share, shareholders and dividends  PA R T 0 2 : P R O F I T & I N N O VAT I O N G R I E G S E A F O O D ’ S S H A R E S PA G E 6 3 FIGURE 2.49 FIVE YE AR REL ATIVE SHARE PERFORMANCE Source data GSF Source OBSFX Source OBX FIGURE 2.50 DIVIDEND PAID Dividend paid Dividend paid per share FIGURE 2.51 KEY FIGURES KEY FIGURES GRIEG SEAFOOD SHARE 2017 2018 2019 2020 2021 Number of shares at year-end (incl. own shares) 111 662 000 111 662 000 111 662 000 113 447 042 113 447 042 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 143 109 533 116 144 510 72 001 397 99 831 798 85 769 401 4 433 40.7 570 158 486 933 5 124 42.1 466 444 411 341 4 968 33.7 289 162 240 801 12 436 37.5 396 158 317 106 9 938 28.5 340 355 265 456 Total market value OSE (NOK 1 000) 8 067 580 11 423 023 15 666 178 9 642 999 9 427 449 Share price at year-end (NOK) Average share price (NOK) Lowest closing price (NOK) Highest closing price (NOK) 72.3 71.5 58.0 85.1 102.3 92.2 66.2 131.9 140.3 118.0 96.8 146.8 85.0 99.1 66.3 144.9 83.1 84.4 73.2 95.6 PA R T 0 2 : P R O F I T & I N N O VAT I O N R E S P O N S I B L E B U S I N E S S C O N D U C T PA G E 6 4 RESPONSIBLE BUSINESS CONDUCT Business integrity is essential if we are to become a preferred provider of sustainably produced salmon. OUR AP P R O A CH OUR TAR GE T Grieg Seafood is committed to conducting its business ethically and with integrity throughout our operations and value chain. We promote and value transparency. We do not permit or tolerate engagement in any form of corruption or money laundering activities. Responsible business conduct No incidents of non-compliance with our anti- corruption and anti-money laundering policies OUR P R INCI P LE S OUR R E S ULT S • We do not accept any form of corruption, or improper payments (bribes) given or received to influence business and gain advantage. • We do not participate in any form of business conduct which involves money laundering. • We perform risk assessments of our operations and our value chain, and implement mitigating measures or controls to prevent corruption and money laundering activities. • We aim to know our trading partners, including our customers, by performing adequate integrity due diligence. • Our Supplier Code of Conduct states our expectations related to ethical principles, anti-bribery laws, anti-corruption and business conduct for our suppliers, subcontractors, and other business relationships. • We comply with applicable anti-corruption and anti-money laundering laws and regulations where we operate. • We adhere to the relevant standards set out in the United Nations Convention against Corruption. • We follow our principles anywhere in the world, regardless of local customs. INVESTIGATIONS 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. Two class-actions have been filed by direct and indirect customers in the USA and three class actions have been filed in Canada (none has yet been certified as a class action). Grieg Seafood is not aware of any anti-competitive behavior within the Group, neither in Norway, nor the EU, the USA or Canada. We are fully collaborating with European and American authorities in this matter and follow up the lawsuits in the USA and Canada accordingly. NON-COMPLIANCE Our risk assessments in 2021 did not uncover any high-risk activities that required specific mitigation actions. None of the countries where we operate were considered high-risk countries according to the Transparency International Corruption Perception Index. We did not experience any incidents of corruption or money- laundering activities in 2021. We had no corruption incidents that resulted in the termination or non-renewal of contracts with a business partner. LEARN MORE ON OUR WEBSITE → → Corporate Governance structure Anti-money laundering and anti-corruption policies FIGURE 2.52 NON-COMPLIANCE WITH L AWS AND REGUL ATIONS IN 2021 Area of non-compliance Description Fines (NOK) Number of non-monetary sanctions Dispute resolution mechanisms Environmental Social Economic n/a n/a n/a 0 0 0 0 0 0 None None None 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 PA G E 6 5 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 (APM) that we believe provide additional information when analyzing our operational and financial performance. The APMs used here have been defined by Grieg Seafood to supplement its financial statements. These non-IFRS financial measures could therefore deviate from similar APMs presented by other companies. EBITDA Definition and calculation Operating profit before amortization and depreciation, excluding production fee and fair value adjustment of biological assets. Unless otherwise specified, EBITDA before production fee and 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 (%), and NIBD/EBITDA. The EBITDA is included as a subtotal in the Group’s income statement. Reason for applying APM 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. EBIT (EBIT BEFORE PRODUCTION FEE AND FAIR VALUE ADJUSTMENT OF BIOLOGICAL ASSETS) Definition and calculation Operating profit before amortization and depreciation, production fee and fair value adjustment of biological assets. Unless otherwise specified, EBIT before production fee and 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/kg GWT, EBIT margin (%) and ROCE. The EBIT before production fee and fair value adjustment of biological assets is included as a subtotal in the Group’s income statement. REASON FOR APPLYING APM EBIT before production fee and fair value adjustment provides a more informative result as it does not consider country-specific taxation on harvest volume and 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. This EBIT metric is generally considered the industry measure for profitability. SALES REVENUE/KG (GWT) Definition and calculation The sales revenue/kg (GWT) metric is calculated as sales revenue from farming operations divided by harvested volume in kg gutted weight equivalent. Sales revenue/kg is included in the Group’s segment information (see Note 8 to the Group Accounts). See the segment information in addition to the reconciliation disclosed in this section. The per kg figure can be reconciled using the figures in the segment information of the Group. The metric is calculated by farming region, and for the Group as a whole. Sales revenue from farming operations equals the revenue directly attributable to the sale of Atlantic salmon, including the impact of fixed- price contracts. The sales revenue from farming operations also includes the margin generated by the sales department. For the Group, the sales revenue from farming operations equals the sum of the sales revenue from farming operations per farming region. It therefore excludes the sales revenue generated by the Elim/ Other item in the Group’s segment reporting (see Note 8 to the Group Accounts). Reason for applying APM Sales revenue/kg is a relative metric which ensures comparability between our farming regions and across time. The metric captures the price achievement generated by the Group and each farming region. FARMING COST/KG (GWT) Definition and calculation The farming cost/kg (GWT) metric is the sum of all costs directly related to the production and harvest of salmon, divided by the related harvest volume in kg gutted weight equivalent (GWT). Thus, at the regional level, farming costs equal operational costs. Other income is included in the farming cost metric as cost-reduction activities. Therefore, farming cost can be calculated as sales revenue from farming operations less EBIT. The farming cost/ kg is included in the Group’s segment information (see Note 8 operational profitability for the Group and each farming region. to the Group Accounts). See the segment information in addition EBIT/kg equals sales revenue/kg subtracted by farming cost/kg to the reconciliation disclosed in this section. The per kg figure and other costs incl. headquarter costs/kg. can be reconciled using the figures in the segment information of the Group. The metric is calculated by farming region, and for the Group as a whole. Group farming cost equals the sum of the regions’ farming costs, which excludes the net costs from the item Elim/Other in the Group’s segment reporting. Reason for applying APM Farming cost/kg is a relative metric which ensures comparability NET INTEREST-BEARING DEBT (NIBD) Definition and calculation Net interest-bearing debt (NIBD) comprises non-current and current debt to financial institutions and other interest-bearing liabilities, after deducting cash and cash equivalents. Amortized loan costs are not included in NIBD. between our farming regions and across time. The metric captures NIBD is calculated in three ways: the cost level of the farming operations. As Atlantic salmon is 1. NIBD includes all long-term and current debt to credit traded largely as a commodity, and the prices achieved largely reflect a general market price, the farming cost/kg captures the underlying operational profitability for the Group and each farming region. OTHER COSTS INCL. OWNERSHIP AND HEADQUARTERS COSTS/KG (GWT) Definition and calculation The Other costs incl. ownership and headquarters costs/kg (GWT) metric captures all costs and revenue not directly related to the production and harvesting of salmon. This includes costs deriving from activities conducted by the parent company and other Group institutions and other interest-bearing liabilities, incl. the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019. This NIBD metric is disclosed in Note 12 to the Group Accounts. This NIBD metric is included in the ROCE calculation. 2. NIBD includes all long-term and current debt to credit institutions and other interest-bearing liabilities, but is adjusted according to terms and conditions set out in the bank loan agreement. This NIBD metric is disclosed in Note 12 to the Group Accounts, and excludes the effect on NIBD of IFRS 16 compared to the IFRS in force prior to 1 January 2019, in addition to other adjustments made according to the loan agreement. This method of calculating NIBD is used in the companies not related to production, divided by the Group's calculation of NIBD/EBITDA. harvest volume. In addition, until the first harvest in Newfoundland 3. NIBD includes all long-term and current debt to credit is carried out, costs attributable to the Newfoundland region are included as other costs/kg. The Other costs incl. headquarters costs/kg is included in the Group’s segment information (see Note 8 to the Group Accounts), and is equal to the EBIT of elim/other and Newfoundland over the group harvest volume (GWT). The metric institutions and other interest-bearing liabilities but excludes the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019. This metric is calculated as NIBD according to bullet 1 above, subtracted by the effect of IFRS 16 as included in the adjustment to the covenant relating to NIBD in bullet 2 is calculated for the Group, and can be reconciled in the Group’s above. segment information. Reason for applying APM Other costs incl. headquarters costs/kg is a relative metric which A reconciliation of NIBD according to method 1 with the Financial Statements have been disclosed. The NIBD according to method 1 and 2 can be reconciled using the reconciliation for method 1 ensures comparability when assessing the Group’s cost level over below, and the NIBD note disclosures in Note 12 in the Group time. The metric captures the costs of the Group which are not Accounts. deemed directly attributable to farming operations. EBIT/KG (GWT) Definition and calculation The EBIT/kg (GWT), or EBIT/kg, metric is the EBIT before production fee and fair value adjustment of biological assets divided by harvested volume in kg gutted weight equivalent. The EBIT/kg is included in the Group’s segment information (see Note 8 of the Group Accounts). The per kg figure can be reconciled using the figures in the segment information of the Group. The metric is calculated by farming region and for the Group as a whole. Reason for applying APM EBIT/kg is a relative metric which ensures comparability between our farming regions and across time. The metric captures realized Reason for applying APM Net interest-bearing liabilities is a measure of the Group’s net debt and borrowing commitments. NIBD/EBITDA (NET INTEREST-BEARING LIABILITIES DIVIDED BY EBITDA ACCORDING TO LOAN AGREEMENT) Definition and calculation NIBD/EBITDA is calculated using the following inputs: – NIBD according to bullet 2 in the NIBD section of this APM disclosure – EBITDA excluding the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019 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 PA G E 6 6 Reason for applying APM NIBD/EBITDA captures the leverage ratio of the Group, by comparing the net borrowings of the Group, excluding the impact of lessee accounting, to the EBITDA before fair value adjustment of biological assets (excluding the impact of lessee accounting). EQUITY RATIO Definition and calculation Equity ratio is calculated in two ways: 1. Equity according to the Statement of Financial Position divided by total equity and liabilities according to the Statement of The metric provides a measure of the Group’s financial solidity, in Financial Position addition to being one if the financial covenants of the syndicated 2. Equity ratio according to loan agreements (both the syndicated loan agreement. NIBD/HARVEST (NET INTEREST-BEARING LIABILITIES DIVIDED BY HARVEST VOLUME IN KG GUTTED WEIGHT) Definition and calculation NIBD/harvest is calculated using NIBD according to methods 1-3 as described in the NIBD section of this APM disclosure. The applicable NIBD/harvest indicates which NIBD metric is used in the calculation. The NIBD/harvest is calculated in two ways: 1. NIBD divided by actual harvest volume in kg gutted weight in the last 12 months 2. NIBD divided by guided full-year harvest volume in kg gutted weight Reason for applying APM NIBD/Harvest captures the leverage of the Group measured by the harvest capacity and is utilized when optimizing the Group’s leverage ratio. Actual harvest volume in the last 12 months indicates the leverage ratio according to proven harvest capacity, while guided harvest volume indicates the leverage ratio according to business plans as the Group are targeting volume growth in an annual basis. RETURN ON CAPITAL EMPLOYED (ROCE) Definition and calculation Return on capital employed (ROCE) is calculated by comparing EBIT before fair value adjustment of biological assets (but including production fee), to capital employed. Capital employed is calculated on annual and quarterly bases, both as a quarter-to- date figure and a year-to-date figure. The quarter-to-date figure is annualized. Capital employed is defined as total equity excluding the equity component of the fair value adjustment of biological assets, plus net interest-bearing liabilities according to the NIBD calculation method 1, as described in the NIBD section of this APM disclosure. Capital employed for the reporting period is calculated as the average of the opening and closing balances. Reason for applying APM As the salmon farming industry is a capital-intensive line of business, ROCE is an important metric to measure the Group’s profitability relative to the investments made. The fair value adjustment of biological assets is excluded from the calculation, as this reflect estimated future gains or losses on fish not yet sold. bank loan agreement and the bond loan agreement) is calculated by dividing equity by total equity and liabilities. The equity, and total equity and liabilities, are calculated as in bullet 1 above, but excludes the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019 and its impact on equity, and on lease liabilities (and thus total equity and liabilities). Reason for applying APM Equity ratio captures the financial solidity of the Group. Furthermore, the equity-ratio according to calculation method 2 above is a covenant requirement for the Group. GROSS INVESTMENTS Definition and calculation Gross investments equal the Group’s capital expenditures (CAPEX) excluding the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019. Thus, the gross investment figure includes additions made on property, plant and equipment and intangible assets owned by the Group, together with long-term lease arrangements with credit institutions. Reason for applying APM The Group’s CAPEX monitoring shows that gross investments are in line with the CAPEX monitoring of the Group. Historically, leases which were recognized as financial leases under the IFRS in force prior to 1 January 2019 have accounted for a significant portion of the investments made in seawater assets (typically cages and seawater production equipment). Such leases are therefore included in the Group’s CAPEX monitoring procedures. The accounting impact of IFRS 16 (capitalized operational leases) is excluded from gross investments, as such leases are not treated as part of CAPEX. Operational leases, such as well-boat charters, are included in the Group’s operational budgets as running cost. A reconciliation of gross investments with the Financial Statements have been disclosed. RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES Below, the APMs derived in absolute figures are disclosed and reconciled to the Income Statement, Statement of Financial Position and Cash Flow Statement, respectively. The EBITDA and EBIT are disclosed on the Income Statement, and are thus indirectly reconciled on that statement. FIGURE 2.53 SALES REVENUE FARMING OPERATIONS, FARMING COST AND EBIT (NOK MILLION) 2021 Sales revenue farming operations Elim/Other Sales revenue EBIT farming operations Farming cost Elim/Other & Newfoundland EBIT 2020 Sales revenue farming operations Elim/Other Sales revenue EBIT farming operations Farming cost Elim/Other & Newfoundland Source Note 8 Note 8 Income Statement Note 8 Note 8 Note 8 Income Statement Source Note 8 Note 8 Income Statement Note 8 Note 8 Note 8 Rogaland Finnmark British Columbia 1 431 1 756 1 023 242 1 189 251 1 506 150 873 Rogaland Finnmark British Columbia 1 263 1 314 1 179 292 971 127 1 186 -7 1 186 EBIT Income Statement FIGURE 2.54 NIBD ACCORDING TO METHOD 1 (NOK MILLION) Borrowings Lease liabilities Non-current liabilities Current portion of borrowings Current portion of lease liabilities Current liabilities Loans to associates Cash and cash equivalents Amortized loan costs NIBD (method 1) Source Statement of Financial Position Statement of Financial Position Statement of Financial Position Statement of Financial Position Note 7 Statement of Financial Position Note 12 2021 2 381 578 2 959 54 178 233 2 928 -30 FIGURE 2.55 GROSS INVESTMENTS (NOK MILLION) Property, plant and equipment Intangible assets Additions according to the Cash Flow Statement Finance leases according to IFRS in force prior to 1 January 2019 Gross investments Source Cash Flow Statement Cash Flow Statement 2 291 3 931 2021 561 4 565 5 570 2020 760 159 919 59 979 Group 4 211 388 4 599 643 3 568 -200 442 Group 3 756 629 4 384 412 3 343 -179 233 2020 3 376 532 3 908 104 153 258 2 275 -43 PA R T 0 2 : P E O P L E PA G E 67 OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM PEOPLE H U M A N R I G H T S A N D E T H I C S E M B R A C I N G D I V E R S I T Y C R E AT I N G AT T R A C T I V E J O B S K E E P I N G O U R E M P L O Y E E S S A F E 6 8 7 0 7 2 74 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. PA R T 0 2 : P E O P L E H U M A N R I G H T S PA G E 6 8 HUMAN RIGHTS Respecting the rights and dignity of all human beings is the very basis of a civilized society. Human rights relevant to our operations range from labour rights and a ban on child labour in our supply chain to privacy rights. OU R AP P R O A CH Respecting human rights is a fundamental part of Grieg Seafood We recognize that we can contribute to the fulfilment of human Group’s corporate responsibility and is vital to the sustainable rights. We have a responsibility to prevent, mitigate, and address operation of our business. adverse human rights impacts in our own operations but we also use our leverage to promote respect for human rights in our value We are committed to respecting fundamental human rights in our chain. operations, our value chain, and in the communities where we operate. We use our influence to promote the fulfilment of human Our commitment is based on our company values, our Employee rights and always seek to avoid involvement, even indirectly, in Code of Conduct, and our Supplier Code of Conduct. their abuse. T R A NSP O R TAT ION AND R ISK S Some areas in our supply chain entail a particularly high risk of breaching human rights. One such area is labor rights in the transportation industry. Most of our salmon is transported by truck to European or North American markets. There are some particular risks connected to this part of our supply chain, which we are aware of and are working to mitigate. Read more about the “Safe trucking” project and other initiatives here. OUR P R INCI P LE S Our approach to human rights is based on the UN Guiding Principles on Business and Human Rights. We have a responsibility to protect, respect, support, and promote human rights in all our operating regions and throughout our value chain. We have committed to respecting all the nine UN internationally recognized conventions of human rights. The Human Rights that are most relevant to our operations and supply chains are: • The Universal Declaration of Human Rights. • The ILO Declaration on Fundamental Principles and Rights at Work. • The United Nations Convention on the Rights of the Child (UNCRC). • The United Nations Convention on the Elimination of Discrimination against Women (CEDAW). • The United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). • International Covenant on Economic, Social and Cultural Rights. • The Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises (OECD Guidelines). • The United Nations Global Compact. IN OUR SUPPLY CHAIN • We have our own Supplier Code of Conduct, which our suppliers IN OUR OWN OPERATIONS • Grieg Seafood welcomes and promotes unionization, collective bargaining, and other formal employee representation arenas appropriate to the business culture of each of our operating countries. All our employees have the right to join or not join a labour union. All employees have access to third-party representation regardless whether they are a union member or not. • We conduct our activities without discrimination, we treat our employees fairly and compensate fairly by offering competitive salary and benefit packages. We use the Kornferry methodology to benchmark our salaries yearly and ensure that we are paying market rates as a minimum. We pay the same rates for same type of work regardless of gender, culture or other origin. • We offer sick-pay to all our employees based on the national laws of the countries we operate in regardless of if they are permanent or temporary staff. We demand that our external hired staff and contractors have sick pay included in their contracts. • All our employees are offered good and reasonable working hours, in accordance with union agreements, to maintain a good work-life balance. • Everyone who is employed by us works here of their own free will in alignment with the ILO Declaration. • We have zero tolerance for bullying, unwanted sexual attention, or harassment. • We promote diversity with respect to employee gender, age, ethnicity, physical abilities, personality, skills, experiences and backgrounds. • We respect employees’ rights to privacy. The General Data are obligated to follow. Suppliers must abide by the same rules Protection Regulation (GDPR) became Norwegian law in 2018. as those we have laid down for our own employees. The GDPR provides assurance that personal information a • Grieg Seafood has implemented the UN Guiding Principles of company has a legitimate need to collect and use will not be Business and Human Rights. used for other purposes. Basically, it concerns the weighing of • Grievance mechanisms are available on our regional websites. interests. With the GDPR, the individuals’ rights are highlighted, • Grieg Seafood is a member of the Coalition for Responsible clarified and prioritized. Business. The Coalition calls for a Norwegian human rights law • We contribute to economic, social and cultural development for business, based on the United Nations Guiding Principles in the rural communities where we operate. Recognizing that on Business and Human Rights. The Coalition is comprised our operations are based on natural capital, belonging to local of Norwegian civil society, trade unions and businesses, and communities as a whole, we strive to minimize our impact and Grieg Seafood is a signatory. create shared opportunities. • We recognize the rights of indigenous peoples in our relevant production regions, as laid down in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), and we take particular care to avoid infringing such rights. OUR TAR GE T S Whistleblowing Code of Conduct Compensation Professional handling of harassment and whistleblowing cases 100% of employees completed the Code of Conduct program Annual evaluation of salaries and benefits to ensure fairness LEARN MORE ON OUR WEBSITE → → Our policy and grievance mechanisms for human rights Human rights in our operations and value chain PA R T 0 2 : P E O P L E H U M A N R I G H T S PA G E 6 9 OU R R E SULT S In 2021, we performed our annual evaluation of the salaries and We have conducted a first version of a human rights due diligence benefits of our employees, by using the Kornferry methodology to covering our operations and supply chain, and identified the main benchmark our salaries. risk areas. The assessment will be published on our web site. FIGURE 2.56 UNIONIZED EMPLOYEES (%) AT YE AR END 2021 Rogaland Finnmark British Columbia Newfoundland ASA Sales & Market Share 30% 39% 0% 0% 0% 0% We accept and welcome labour union memberships among employees. Grieg Seafood has established a good, collaborative relationship with our union representatives. This collaboration extends beyond periodic salary negotiation to a variety of internal improvement projects. The numbers reflect memberships of the United Federation of Trade Unions (Fellesforbundet) and The Norwegian Food and Allied Workers Union (NNN), the largest labour unions in our industry. Due to privacy and security laws, we do not have access to data on all types of memberships, such as association for professionals and graduates. It is therefore assumable that the actual number of unionized is higher than depicted. FIGURE 2.57 CODE OF CONDUCT PROGRAM FIGURE 2.58 HARASSMENT INCIDENTS FIGURE 2.59 WHISTLEBLOWER CASES 95% 2 1 95% of our 753 employees (ex contractors) have completed our Code of Conduct program. See also Figure 2.60 for more information on our Code of Conduct program. For the Group (excluding Shetland), two harassment incidents were reported in 2021. For reasons of privacy protection, those incidents are not commented further. For the Group (excluding Shetland), one case was reported through our whistle blower channel in 2021. For reasons of privacy protection, those incidents are not commented further. FIGURE 2.60 HUMAN RIGHTS TRAINING FIGURE 2.61 NON-DISCRIMINATION TRAINING 95% 57% In 2021, 719 employees (95%) were given human rights training. One completed Code of Conduct test corresponds to one hour of training. 57% of our 753 employees (ex contractors) have completed a non-discrimination training course (54% of our employees completed the course in 2021). This does not include our Code of Conduct program which also also includes a non-discrimination section. OUR EM P L O YEE S' R IGH T T O P R I VA C Y • Declarations of Consent • Right to access personal information • Right to erase personal information • Right to breach notification • Right to be informed • Right to correct erroneous information • Right to limited processing of information • Right to oppose processing of information • Right to transmit information to new employer 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 PA G E 7 0 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 AP P R O A CH Grieg Seafood is committed to being an equal opportunity employer. Having a diverse workforce is crucial for our organization and is part of our company culture. This means all our business units select and appoint the most suitable person for a position on the basis of their skills, qualifications, and aptitudes. Grieg Seafood is committed to supporting gender equity in the workplace. We aim to ensure that all our staff have the same opportunities, rights, and respect, regardless of their gender. To ensure fairness, strategies must often be available to compensate for historical and social disadvantages that prevent women and men from operating on a level playing field. Gender equity leads to gender equality, where there are equal rights, responsibilities, and opportunities for women and men. OUR P R INCI P LE S DIVERSITY We always: • Employ the most suitable person regardless of age. • Employ the most suitable person regardless of race or ethnicity. • Employ the most suitable person regardless of gender. • Employ the most suitable person regardless of political, religious, or sexual persuasion. • Employ the most suitable person regardless of national origin. • Employ people with disabilities provided they can safely perform the task in a competent manner and any changes to accommodation requirements are reasonable and do not create an undue hardship on the operation of our business. GENDER EQUITY We: • Ensure our workplace provides equitable opportunities for our male and female employees, and foster an organizational culture which supports gender equity. • Promote a family-friendly workplace for men and women through the following activities: — Parental leave options for both men and women. — Flexible working arrangements for staff. — Working from home options for staff. • Create an equitable, respectful, and enabling environment for men and women within the organization through the following activities: — Ensuring that there is gender representation in all cross- functional teams, interview and assessment panels. — Ensuring that gender equity exists with regards to remuneration of employees. We perform annual benchmarking of all female salaries to ensure fairness and equality through a third-party provider. — Seeking opportunities to encourage gender diversity in traditionally gender-typical positions historically filled by gender stereotypes. • Demonstrate gender equity social responsibility through the following community related activities: — Requiring our suppliers to support our principles through our Supplier Code of Conduct. — Ensuring senior representation on external networks that address gender equity issues. • Support external organizations that demonstrate gender equity. OUR TAR GE T S Gender equality 40% female representation in management positions by 2026 40% female representation at level 2, 3 and 4 by 2026 Education diversity* Employ the best candidates regardless of origin and culture Cultural diversity* Employ more candidates from other countries *To ensure our recruitment process is open and fair with regard to candidates with different backgrounds, from other industries, and regardless of origin and culture. LEARN MORE ON OUR WEBSITE → → → Our policy for diversity Our policy for gender equity Embracing diversity 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 PA G E 7 1 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 OUR R E S ULT S In 2022, we received a score of 73 points (High score) in the SHE index. The average score across Norwegian companies was 71. We have reported on the SHE Index since 2019 in order to be transparent about the gender balance in our organization. The SHE Index is a voluntary measurement of how companies perform on gender balance, gender equality policies and diversity and inclusion. Our goal is to improve gender balance and diversity to become a preferred employer. Change takes time, and we should pay more attention to the work being done to create greater diversity and inclusion. During 2021, Grieg Seafood has taken several steps to improve our gender balance. This includes filling vacant management positions with women both with internal and external candidates, as well as having our first female regional director. In 2021, 40% of our new hires were women. We have also pledged to support the International Organization for Women in the Seafood Industry. FIGURE 2.62 GENDER BAL ANCE AT YE AR-END 2021 At year end 2021, the Grieg Seafood Group had 753 employees (208 women and 545 men), including full-time and temporary workers but excluding contractors. Hence, women make up 28% of the workforce, while 72% are men. The ratio between male and female employees is similar across Rogaland, Finnmark, and BC. In Newfoundland, the share is higher due to focus on gender balance when the organization was set up. In addition to Newfoundland, the management and support functions at Grieg Seafood ASA and the Sales & Market teams have the highest proportion of female employees. For the group, 40% of our recruits were female in 2021. Employee data is registered in a dedicated HR database. Only HR personnel are allowed access to register employee data, which is reviewed regularly to ensure its continued quality. 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 PA G E 7 2 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 talent. O U R AP P R O A CH Our goal is to attract the best skills, and to be the preferred employer, regardless of industry. We have a fair and transparent recruitment process. We believe that a good working environment creates attractive jobs. We need to adapt to a fast-changing global environment, and we believe that a continuous development of our employees is the key to staying competitive and attractive. OU R P R INCIP LE S COMPENSATION • We comply with the laws and regulations related to employment protection, compensation, and working hours in the countries where we operate. • All our employees have written employment contracts. • We offer fair compensation. Our pay and benefits policies are based on a bi-annual survey to ensure that we always pay market rates or above for all jobs (there are some differences in the payment and benefit arrangements for temporary employees due to the number of hours worked). • All permanent employees are part of our annual bonus program. • Amongst others, we offer paid maternity and paternity leave and a competitive pension scheme. • We share our profits with our employees through our employee share purchase program. OU R TAR GE T Job satisfaction Above average in Great Place to Work survey EMPLOYEE DEVELOPMENT • We offer employees training and further education to support the development of necessary skills. • We offer aquaculture apprenticeships. • Through the use of new technology and digitalization, e.g. our Precision Farming scheme, we aim to offer untraditional and exciting positions. Sensor technology, big data, and analytics demand further development and training of our employees, and will also attract people with new skills to the industry. DIALOGUE AND CULTURE • We live by our values: Open, Ambitious, and Caring. • We hold quarterly feedback meetings to discuss important initiatives with our labour union representatives in order to encourage good and constructive dialogue. • 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 information across borders. OUR R E S ULT S FIGURE 2.63 GRE AT PL ACE TO WORK 2021 FIGURE 2.64 APPRENTICESHIP PARTICIPATION AT YE AR-END 2021 FIGURE 2.65 APPRENTICESHIP ACHIEVEMENTS IN 2021 85% 28 19 Great Place to Work assesses and evaluates organizations and the practices that underpin workplace culture, based on the experience of employees. In 2021, we took part in the Great Place to Work survey for the fourth time in Norway, and for the third time globally. We are proud to announce that all our regions maintained the Great Place to Work certification in 2021. The Group achieved a total score of 85%, which was very satisfactory and an improvement from 84% in 2020. The high score shows that Grieg Seafood is among the best companies to work for. 83% of our employees also confirmed that they feel a sense of pride when they look at what we have accomplish at Grieg Seafood, which is better than the best companies in the survey. With a record high participation, this certification is an enormous credit to the employees and their hard work and loyalty, in particular during a time of global pandemic. At year-end 2021, a total of 28 employees were participating in an apprenticeship, thereof nine in Rogaland, 12 in Finnmark, and seven in Newfoundland. British Columbia did note have any apprentices in 2021. In 2021, a total of 19 employees received their certificate of apprenticeship, thereof eight in Rogaland, ten in Finnmark, and one in Newfoundland. In cooperation with the North Island College and Fleming College, Grieg Seafood British Columbia has prepared the “Seawater Technician Advancement Program” (TAP). The program provides mandatory additional training for technicians, as well as further training for higher positions within aquaculture. The program has so far been a success. 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 PA G E 7 3 FIGURE 2.66 THE WORKFORCE AT YE AR-END 2021 FIGURE 2.68 TURNOVER RATE 2020 2021 Overall, 87% (670 of 773) of our workers are permanent employees. We have some temporary employees, particularly seasonal workers in our processing facilities and apprentices at the farms. 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 dedicated HR database. Only HR personnel are allowed access to register employee data, which is reviewed regularly to ensure its continued quality. * Excluding Grieg NL Development. In 2021, Grieg NL Development was closed. The first half of the year saw the conclusion of construction and commissioning of the first feed and smoltification units. Grieg NL Development ceased operations and the remaining construction and support staff were laid off. Since Grieg NL Development was a stand-alone sole purpose construction company, those employees were not included in the 2021 turnover figures. These figures are calculated based on the total number of permanent employees since it is only these employees who are meant to stay with the company permanently. Temporary employees and contractors have been excluded from these figures. As per GRI definition, employee turnover includes all employees who leave the organization voluntarily or due to dismissal, retirement, or death in service. In Rogaland and Finnmark, turnover in 2021 was fairly constant compared to 2020, while ASA and our Sales & Market organizations have a low turnover. FIGURE 2.67 THE WORKFORCE AT YE AR-END 2021 Region Rogaland Finnmark British Columbia Newfoundland ASA Sales & Market Total Female Male Female Male Female Male Female Male Female Male Female Male Permanent Temporary Contractor Total to attract candidates in a competitive market. We continue to support our good relationships with First Nations and local communities to Grieg Seafood BC has experienced high turnover this year, which has been common through all industries in this region, as it was challenging Full-time Part-time Full-time Part-time Full-time Part-time 24 100 41 178 43 124 28 34 13 24 19 18 5 12 5 1 0 0 0 1 0 0 0 0 3 16 8 19 3 3 5 1 0 0 1 3 0 2 5 5 3 0 0 0 1 0 1 4 5 8 0 0 1 1 0 1 0 0 1 0 646 24 62 21 17 0 0 0 0 0 0 0 0 0 3 0 0 3 37 138 59 203 50 128 33 37 14 27 22 25 773 help attract potential employees from the region. We also work closely with training institutions to offer employment to applicants that have chosen aquaculture as their desired career path. Through our commitment to supporting the Truth and Reconciliation process in Canada, employment priority goes to First Nations candidates who want to work in their traditional territories. Grieg Seafood Newfoundland experienced a large turnover in 2021. The cull of the first generation resulted in the layoff of the marine team and supporting staff as well as downsizing of the land-based staff complement in early fall. 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 PA G E 74 KEEPING OUR EMPLOYEES SAFE Accidents can be prevented through the development of adequate operating procedures, a safety-focused corporate culture, and by improving equipment quality. We never compromise on health and safety. SAFETY MANAGEMENT PRINCIPLES • All locations shall establish annual safety targets with action plans (what, who, when). • All locations shall have high standards of housekeeping. • All managers shall carry out safety walk-arounds (Walk - Observe - Communicate). • All employees shall participate in safety meetings on a regular basis. • The use of personal protective equipment and life jackets shall be mandatory for employees, contractors, and visitors. • A safety assessment shall be carried out for all jobs, equipment, and potentially hazardous materials. • Annual audits of HSE-related activities shall be conducted. • All regions shall have safety procedures, to help facilitate a safety focus throughout the organization. • A program for systematic and regular safety training shall be in place. • All accidents and near-misses shall be reported and investigated, including a root-cause analysis, and corrective actions implemented within a reasonable period of time. OUR AP P R O A CH We work systematically to safeguard our employees’ health, safety, and working environment. Our aim is to prevent and manage work-related injuries, illness, accidents, and fatalities. We have a zero-tolerance philosophy with respect to accidents. OUR P R INCI P LE S SYSTEMS, PROGRAMS, AND RISK ASSESSMENT • All aspects of work are covered by our health and safety systems. We use occupational health and safety systems and standards in line with local regulations in each country. HAZARD MANAGEMENT • Our occupational health services provider helps to map and assess the risk of the work environment, including physical, organizational and psychosocial factors and include areas such as: — help working out guidelines for work processes. — suggestions for preventative safety measures. — training and information about occupational health, industrial hygiene, ergonomics, external environment, chemicals, and general health and safety. — work environment evaluation and adaptation. — measurement of physical, chemical and biological factors. — help with following up workplace absenteeism. — help with conflict resolution and harassment. • Job risks in each department are formally evaluated and categorized using a risk matrix. Job hazard assessments are INCIDENT REVIEW • All incidents are recorded in our health and safety system, and also carried out for non-routine jobs. CREATING AN HSE CULTURE • All employees receive health and safety training when they join us, and are required to re-take the courses regularly. reviewed. After corrective action is taken, the result of the action is disseminated to the rest of the region for implementation. PROMOTING EMPLOYEE HEALTH • External health services provide health checks and advice to — As a general guide, employees are provided with appropriate employees. In some regions they are represented on our Health training on joining Grieg Seafood, joining specific and Safety committees. departments or transfer between posts. This is particularly • We provide a health-plan for employees, ranging from dental important when increased risks are identified due to and medical to counselling depending on the region. changes in tasks or responsibilities, changes in equipment • We offer a variety of health programs to the employees or technology, or changes in the system of work. (competitions, gym membership). — Formal orientation training are given to all new site employees to Grieg Seafood based on the position and are of responsibility and will include instruction on general health IN OUR SUPPLY CHAIN • Our Supplier Code of Conduct requires suppliers to provide a and safety provisions and any area specific hazards. safe and healthy environment for their workers and contractors, — Office staff are given an orientation on workplace safety and minimize workers´ exposure to potential safety hazards. during their onboarding process. Furthermore, we expect our suppliers to adhere to all • Employees have the possibility to actively participate in and applicable laws and regulations. contribute to the development of their workplace safety through their shop steward representing them. • We have dedicated HSE managers in each region, who are certified according to local laws. We perform annual HSE exercises to ensure that everyone knows what to do in case of an emergency. • All our staff have the right to stop any type of work or task if they feel unsafe or that they are not competent enough to carry out their duties. These routines are established in all our regions and all new employees are given the information about how these systems work and they can also report anonymously through their union representative, employee representative or our whistleblowing channel for major issues which is handled by an external partner EY. • We have a "no reprisal" policy when it comes to reporting health and safety issues. This is described in our Code of Conduct. OUR TAR GE T Absence rate Absence rate below 4.5% LEARN MORE ON OUR WEBSITE → Health and safety principles 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 PA G E 7 5 OU R R E SULT S In Norway, we commit to workers’ health, safety, and welfare by the use of the GLOBALG.A.P. GRASP module which is designed to assess social practices on the farms. GRASP provides the minimum compliance criteria for a good social management system and we are audited on regular basis from external parties. The QMS requirement addresses specific aspects of our workers' health, safety and welfare. Grieg Seafood BC has obtained an occupational health and safety management system certification named OSSE (Occupational Standard of Safety Excellence). The OSSE Certifications is granted to BC companies who have successfully developed and implemented a comprehensive health & safety management system and is coordinated by WorkSafeBC. Grieg Seafood Newfoundland has implemented an EHS (Environment, Health & Safety) system throughout its operations based on standard industry best practices and legislative requirements. FIGURE 2.70 ABSENCE RATE Target: 4.5% FIGURE 2.69 FATALITIES IN 2021 0 We had zero fatalities in 2021. FIGURE 2.71 SAFET Y INDICATORS IN 2021 Rogaland Finnmark British Columbia Newfoundland ASA Sales & Market ** Hours worked * Total work-related injuries High-consequence work-related injuries 214 291 347 947 309 344 207 050 66 663 38 464 10 14 23 1 0 0 0 5 0 1 0 0 * Excluding overtime. ** Estimate based on number of employees and general annual working hours. Health and safety incidents are registered in our systems and reviewed as part of our monthly HSE meetings. In BC, quality control of incident data is achieved through support from a third party (WorkSafeBC). Injuries are caused mainly by being struck by objects, handling equipment, crushing, cuts, slips, and falls. Risk assessments show that high-consequence injuries derive from being struck by an object, crushing and cuts. High-consequence injuries incurred in 2021 related to being struck by an object, falls and crushing. The injuries were assessed and reported to other sites to prevent similar accidents from happening. Our improvement initiatives are based on preventive measures and risk assessments on all accidents and near misses that are reported in our deviation system. Examples of measurements: service on machinery, ordering of new equipment’s, training of employees, change in procedures and instructions. FIGURE 2.72 H1-FACTOR/LTIR Rogaland Finnmark British Columbia Newfoundland ASA Sales & Market Group H1-factor/LTIR * Absence rate 2017 2018 2019 2020 2021 11 24 16 n/a 0 n/a n/a 24 18 38 n/a 0 0 15 22 35 n/a 0 0 n/a n/a 9 28 36 n/a 0 0 24 2017 3.2% 4.4% 0.9% n/a 1.0% n/a 2018 4.7% 5.4% 1.8% n/a 0.1% 2019 3.5% 4.9% 2.0% n/a 0.3% 0.6% 0.5% ** 42 22 6 5 0 0 16 3.2% ** 3.3% ** 3.2% ** 2020 3.1% 5.6% 6.8% n/a 1.1% 0.0% 4.9% 2021 3.0% 8.7% 5.6% 1.3% 0.5% 0.9% 5.0% In British Columbia, ASA and Rogaland, the absence rate has decreased compared to the year before, while in Finnmark and Sales & Market, the absence rate increased. The absence rate in Finnmark and British Columbia is above our target of 4.5%, mainly due to long-term sickness and Covid-19 implications. While the absence rate in British Columbia declined compared to 2020, we continue to monitor the situation and implement actions to reduce it further. In Finnmark, we have an ongoing process related to facilitating reduced work assignments and we are introducing training in absence follow-up for all employees. All in conjunction with employee representatives. * H1-factor/LTIR: number of lost-time injuries divided by the total number of hours worked (incl. overtime from and including 2020), multiplied by 1 000 000. Permanent and temporary employees are included in our incident data. Information on contractors is not currently available. ** including Shetland An LTIR target has not been defined in order to avoid under-reporting of incidents. In BC, the number of LTI incidents from 2020 decreased substantially. Countermeasures taken and risk assessments conducted in 2020 helped us to achieve this substantial reduction of LTI incidents. The WorkSafeBC framework which we use to compare ourselves with the industry average has been one of the tools used to decrease the number of LTI incidents. The relatively high number of work-related injuries is also referable to the improved reporting schemes. In Grieg Seafood BC we have for a couple of years been working on our openness and reporting to create a more mature safety performance culture. We implemented the BrainSafe program as a pilot project in BC. The intention is to roll this out to all our regions based on its success. Our ultimate goal is that people feel safe, that we have an open reporting culture and that HSE always are on top of our agenda. In our quarterly Business Reviews with our regions, we always start the meetings with going through the HSE statistics. We conduct audits, execution of inspections and execution of safety action plans as well as safety observations execution (and, if possible, quality of observations and closure of actions). We also participate in safety training and safety meetings. PA R T 0 2 : L O C A L C O M M U N I T I E S PA G E 76 OUR PROGRESS TOWARDS A SUSTAINABLE FOOD SYSTEM LOCAL COMMUNITIES R E L AT I O N S H I P S W I T H L O C A L C O M M U N I T I E S C O M M U N I T Y S U P P O R T 7 7 7 8 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. PA R T 0 2 : L O C A L C O M M U N I T I E S R E L AT I O N S H I P W I T H L O C A L C O M M U N I T I E S PA G E 7 7 RELATIONSHIPS WITH LOCAL COMMUNITIES Grieg Seafood operates in many rural communities across our regions. We are grateful to these local communities for giving us permission to farm salmon in their inlets and fjords. We need their social license to operate to achieve sustainable growth. OUR AP P R O A CH OUR P R INCI P LE S We earn our social license to operate first and foremost by • We create jobs and opportunities in the rural areas where we constantly striving to reduce our impact on the local environment operate. and overcome the practical challenges we face. We report on • We use local suppliers as often as we can. our efforts in these areas in the chapters Healthy Ocean and • We hire local apprentices and support aquaculture schools and Sustainable Food. training facilities. Secondly, we earn it by creating shared opportunities and • We engage in local environmental projects to mitigate impacts contributing to local value creation and vibrant local communities. from our operations. • We sponsor sports and cultural activities in our local Transparency, honesty, and open dialogue underpins our communities. relationships with local communities. Grieg Seafood aims to be • We support the implementation of UNDRIP in British Columbia. open and honest with local communities about our production We use the Truth and Reconciliation Commission’s “Call to methods, our successes, and our remaining challenges. We view Action” for businesses as guidance on how we can support it as our responsibility to engage in constructive dialogue with all the reconciliation process between Indigenous Peoples, the stakeholders and groups that are impacted by our activities. government and businesses in the province. In British Columbia, Grieg Seafood is farming in areas that belong how we can advance indigenous culture where we farm salmon. to indigenous peoples, while Finnmark has been home to the Sami • We provide a grievance mechanism for local communities on people for millennia. We recognize that these groups have special our regional websites. • In Finnmark, Grieg Seafood is also in a process to understand rights, as acknowledged in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), and take particular care to avoid infringing them. LEARN MORE ABOUT OUR RELATIONSHIPS WITH OUR LOCAL COMMUNITIES ON OUR WEBSITE → → → → Rogaland Finnmark British Columbia Newfoundland Learn more about our approach to the implementation of UNDRIP and our journey of reconciliation with Indigenous Peoples in British Columbia here. PA R T 0 2 : L O C A L C O M M U N I T I E S C O M M U N I T Y S U P P O R T PA G E 7 8 GRIEG SEAFOOD ROGALAND GRIEG SEAFOOD FINNMARK GRIEG SEAFOOD BRITISH COLUMBIA GRIEG SEAFOOD NEWFOUNDLAND ORGANIZATIONS We support organizations that engage in beach cleaning and SHERPA HIKING TRAIL We support the construction of a safe and robust Sherpa trail to EHATTESAHT FIRST NATION’S DOCK We have upgraded the Ehattesaht First Nation’s dock in Zeballos SPONSORSHIP OF LOCAL AQUARIUM As a valued member of the Mini Aquarium family, we sponsored reduce greenhouse gas emissions, such as Klimapartnere- Mount Tyven (the Thief), the mountain that “steals” the sun from in BC, which is used for transferring farmed fish. This investment the Petty Harbour Mini Aquarium for the 2021 season. This Stiftelsen Grønn by. Grønn by is a platform for cooperation between Hammerfest in the winter. has also contributed to the local community economy, fishing, sponsorship helped the Aquarium continue its mission of marine companies in the Stavanger region. water sports and nature tours. education through the winter. CULTURAL EVENTS We support cultural events for children and young people, to make LOCAL SPORTS CLUBS Amongst other clubs, we support the local sports clubs Bossekopp and Øksfjord IL. Both clubs offer local sports activities for all SPONSORSHIP AND DONATION PROGRAM We continued to support wild salmon enhancement and beach DONATION TO HEALTH CARE The Burin Peninsula Health Care Foundation held several events participation in cultural activities affordable for those with few ages. Bossekopp is located in Alta, where we have our local restorations projects in 2021, both financially and in-kind through during the year which we have supported, including the Smile financial resources. In Stavanger, for instance, we supported a administration office and our harvesting plant. Øksfjord IL is equipment donation and employee support. We also supported Cookie campaign and the Golf FORE Healthcare fundraisers. The boat called Svanå, where they teach the public about local coastal located in a small village and means a lot for the local community. local food banks in six communities on Vancouver Island and donations went directly to the local health care centers to improve culture. 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. FINNMARKSLØPET We sponsored Finnmarksløpet – the longest dog sled race in Europe. The 1 200 km race starts in Alta, with the course going all the way to the Russian border and back again. Competitors must tackle challenging terrain and harsh winter conditions. in the lower mainland region of BC, through financial support the quality of care for patients and long term care residents. and fish donations. Other donations include local First Nations organizations, supporting Elder programs in recognition of The Grace Sparks House provides safe, supportive accommodations Orange Shirt Day, which in 2021, was also the first National Truth to women and children who are fleeing family violence. We and Reconciliation Day. In December, we assisted two remote sponsored a family during the Christmas season and continue to Indigenous communities with home deliveries of supplies for support their initiatives by raising awareness against violence. Christmas dinner. Residents in these communities normally have to travel hours to the closest grocery stores. Several other community initiatives were also supported, including sporting events and the continued clean-up efforts in Nootka Sound where a sunken commercial cargo vessel was leaking oil. 162 employees 262 employees 176 employees 69 employees NOK 780 million  goods and services purchased from local suppliers in the county of Rogaland NOK 643 million goods and services purchased from local suppliers in the county of Troms and Finnmark NOK 890 million goods and services purchased from local suppliers in BC NOK 160 million goods and services purchased from local suppliers in Newfoundland 60% of total purchases were from local suppliers NOK 0.5 million donated to local cultural and sports activities 45% of total purchases were from local suppliers 84% of total purchases were from local suppliers 44% of total purchases were from local suppliers NOK 1.7 million donated to local infrastructure projects and sports activities NOK 2.9 million allocated to a local infrastructure project and our sponsorship and NOK 0.1 million donated to local cultural activities and health care initiatives donation program NOK 10.7 million direct support from the Norwegian Aquaculture Fund to the municipalities where we operate, based on the production fee of NOK 0.40/kg (gutted weight) NOK 13.8 million direct support from the Norwegian Aquaculture Fund to the municipalities where we operate, based on the production fee of NOK 0.40/kg (gutted weight) OUR FINANCIAL RESULTS By always improving our operational excellence, reflecting our holistic performance approach, we are driving sustainable value creation. PA R T 0 3 B O A R D O F D I R E C 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 U A L A C C O U N T S 2 0 2 1 A U D I T O R ’ S R E P O R T 8 1 96 10 3 161 PA R T 0 3 : S E C U R E F I N A N C I A L C A PA C I T Y PA G E 8 0 B O A R D OF DIR EC T OR S Our Board of Directors will provide leadership to the Company and deliver shareholder value over the long term. Find the presentation of our Board of Directors here. GR O UP M A N A GE MEN T T E AM Our management team is responsible for overseeing the Group’s day-to-day operations and working to realize our vision, values and targets. Find the presentation of our management team here. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 1 BOARD OF DIRECTORS’ REPORT G R I E G S E A F O O D ’ S V I S I O N A N D A M B I T I O N S C O V I D -19 O P E R AT I O N A L R E V I E W F I N A N C I A L P E R F O R M A N C E G R O U P F I N A N C I A L S TAT E M E N T F I N A N C I A L P E R F O R M A N C E G R I E G S E A F O O D A S A ( PA R E N T F I N A N C I A L S TAT E M E N T ) R I S K A N D R I S K M A N A G E M E N T C O R P O R AT E A N D S O C I A L R E S P O N S I B I L I T I E S P O S T- B A L A N C E S H E E T E V E N T S O U T L O O K G O I N G C O N C E R N S TAT E M E N T F R O M T H E B O A R D O F D I R E C T O R S A N D T H E C E O 8 2 8 5 8 5 8 6 9 1 9 2 9 3 94 94 94 9 5 PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 2 MAIN ACHIEVEMENTS • Highest ever harvest volume of 89 327 tonnes, or 75 601 tonnes ex Shetland • EBIT before production fee and fair value adjustment of NOK 442 million, with EBIT/kg of NOK 5.9 driven by the harvested volume and good prices • Strong operational performance, with increased seawater survival in all regions • Restructured our business with the sale of Shetland operations to narrow focus to the regions with greatest potential for profitable growth: Eastern and Western Canada, and Northern and Southern Norway • Fully operational sales and market organization, with value added processing as part of our downstream strategy • Continued focus on certification for sustainable farming, 62% of net production ASC certified • Ranked 2nd by the Coller FAIRR Protein Producer Index of the world’s most-sustainable protein producers • Received Leadership (A) score by the CDP for our transparency and actions related to climate change FIGURE 3.1 HARVEST VOLUME (1 000 TONNES GWT) Group ex. Shetland Shetland (Sold 15 December 2021) 90 80 70 60 50 40 30 20 10 0 2017 2018 2019 2020 2021 2022E GR IEG SE AF OOD’S V IS ION AND GR IEG S E AF OOD’S V ISI ON AND AMBI T I ONS AMBI T I ONS Another strategic milestone reached in 2021 was the establishment of an in-house sales and market organization as part of the downstream strategy. An impressive sales organization was in place within a short time, and a value added product (VAP) The Grieg Seafood Group is one of the world's leading salmon sales department was also established as an important first step farmers. The Group has licenses for seawater farming and land- towards repositioning the company in the market. based smolt production in Finnmark and Rogaland in Norway, and British Columbia and Newfoundland in Canada. Up until December The Group aims to be cost competitive. The farming cost per kg 2021, the Group also had farming and sales activities in Shetland. decreased in Finnmark, while the cost increased in Rogaland The operations in Shetland was sold 15 December 2021. and BC. Biological control is the main cost driver and the main operational focus area. The Group also has several cost The Group was established in 1992, and over the years has improvement initiatives, in the area of research and development grown into a leading industry player. The Group's vision "Rooted (R&D) and the utilization of new technologies, which, combined in nature – farming the ocean for a better future", represents with a higher harvest volume, are expected to reduce the farming how the Group intends to make a difference and what it aims to cost. However, rising global inflation is expected to increase the accomplish. It also encompasses the foundation for the Group's majority of the cost elements going forward. operational development – a healthy ocean, sustainable food, profitable growth and innovation, good jobs for everyone, and Creating shareholder value is a prerequisite for company growth local value creation. With its 2025 strategy, the Group aims to and survival, and Return on Capital Employed (ROCE) is the harvest 130 000 tonnes in 2025 at a competitive cost level, and Group’s ultimate financial performance indicator. The ROCE for to evolve from purely a commodity supplier to an innovation 2021 ended at 6%, below the target of 12% per year. This is mainly partner for selected customers. Sustainable farming practices attributable to salmon market prices combined with higher cost, are the foundation of Grieg Seafood’s operations. Achieving the and an increase in debt to finance the Group’s growth investments. lowest possible environmental impact and the best possible fish welfare are both an ethical responsibility and a prerequisite for The sustainability scoreboard includes some of the key long-term profitability. To achieve sustainable growth and improve performance indicators (KPIs) for the Group´s five pillars - competitiveness, the Group focuses on reducing the time fish Healthy ocean, Sustainable food, Profit & Innovation, People, spend at sea, improving fish health and welfare, and providing and Local Communities. Sustainability and financial results go digital decision-making support to its farmers. TARGETS AND ACHIEVEMENTS hand in hand. Good financial results are needed to develop the Group's operations sustainably, and sustainable operations are needed to safeguard long-term financial results and performance, and create or maintain value for all stakeholders. That is why sustainable farming practices form the very foundation of all areas of Grieg Seafood’s strategy. The Board was pleased to see Global growth, value chain repositioning and cost leadership are that Grieg Seafood was rated 2nd on the Coller FAIRR Protein the key areas of the Group’s strategy to 2025. Producer Index, as one of the world’s most-sustainable protein producers. Grieg Seafood also received the Leadership (A) score As part of the strategy, the Shetland operations were sold to from the CDP for its transparent reporting and actions related to concentrate the Group’s focus on the regions with greatest climate change. The Group has climate reduction targets approved potential for profitable growth - Norway and Canada. After several by the Science Based Target initiative (SBTi), with the overall aim improvement initiatives, the Shetland region was turned around of reducing carbon emissions by 100% by 2050. In 2021, the Group and delivered an overall profit for 2021. The sale strengthened the reduced total emissions by 9% compared to last year, mainly due Group’s financial position substantially, and will allow it to further to reduction in transport emissions. The absolute Scope 1 (direct pursue its growth strategy. An important project is the development emissions from company-owned and controlled resources) and of Grieg Seafood Newfoundland. Fish are currently growing well in Scope 2 (indirect emissions from the generation of purchased the freshwater facility. The first fish will be transferred to the sea energy) greenhouse gas emissions remained at the same level in mid-2022. The Group harvested 75 601 tonnes GWT (or 89 327 tonnes including Shetland) in 2021. Despite being somewhat below the original expectation of 80 000 tonnes for the year, due to biological challenges, the Board is pleased with this performance, which is a result of the hard work, passion and dedication of the employees. as last year, while production increased by 6%. Measured as kilograms of C02 equivalents per tonne harvested, emissions decreased by 6%. Scope 3 emissions (emissions that occur upstream and downstream in the value chain) accounted for 92% of total emissions. Even though farmed Atlantic salmon already has a low carbon footprint, more work needs to be done to reduce the impact from the global food system. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 3 Aquaculture Stewardship Council (ASC) certification is an Unfortunately, the Group reported three escape incidents in important objective for the Group, as it provides the market with 2021. Management has taken steps to prevent similar incidents assurance of responsible operations and production of high- from happening again. In addition to ensuring that farms have quality seafood certified to the highest social and environmental high technical standards and procedures are being followed, all standards. As at year-end, 62% of the Group’s net production employees regularly attend courses on escape prevention. was ASC certified. Finnmark managed to become 100% certified, while only three sites remain to be certified in BC. The Group will The Group does not compromise on occupational health and continue its focus on certification for sustainable farming, and safety, and follows up accidents and absence rates. The Group Rogaland will have its first sites certified in 2022. had no major incidents in 2021. The Group targets an absence Production and harvest volumes depend on the number of smolt Management has routines in place to monitor developments in this transferred to the sea, and how well that fish performs in terms area. The Group conducted the global Great Place to Work survey of growth and survival. By effectively preventing and combating also in 2021. The Board is proud to report that all regions received sea lice and health issues, and by understanding the salmon’s their Great Place to Work certification. The total score of 85% for behavior, the Group’s farming regions have worked continuously to the Group was very satisfactory, and an improvement from 84% improve survival and growth rates. The operational performance last year, proving that Grieg Seafood is among the best companies rate of below 4.5%, which was not reached in Finnmark and BC. in 2021 was good in all regions. Although the Group targets no use to work for. of antibiotics, they were used in Finnmark and BC during the year as the last resort to treat bacterial diseases and thereby safeguard Grieg Seafood operates in many rural communities, and is grateful the welfare of the fish. Due to the successful use of preventive for their permission to farm salmon in their inlets and fjords. measures, the Group managed to reduced its use of pharmaceutical The Group aims to create local jobs and opportunities, use local sea lice treatments compared to the previous year. Also, due to the suppliers, and engage in and support various local projects and systematic improvements of fish health and welfare measures, the activities. Communities’ social license to operate is essential for survival of fish improved in all regions. Finnmark reached a strong sustainable growth. 12-month survival rate of 95%, and Rogaland and BC reached 92%. It is expected that the Group’s post-smolt program will further improve fish health and welfare, as it provides better control of the fish’s environment for a longer period of time. Post-smolt makes the fish more robust before they are transferred to the sea farms, and reduces their exposure to seaborne biological risks. Other initiatives to improve fish health and welfare include the selection of roe with specific qualities related to sea lice and diseases, feed customized for the various stages of the salmon’s lifecycle, and vaccinations to immunize against specific diseases. Diseases, winter ulcers and other biological issues can affect the quality of salmon. A superior quality salmon gives a positive overall impression, with good meat quality and no external damage or faults, while downgraded salmon has external and/or internal faults or damage, and obtains a lower price in the market. The Group aims for 93% of its salmon to be graded as superior quality. As biological issues negatively impacted the quality of the fish harvested in 2021, none of the regions reached this target. The Group’s post-smolt program, with reduced exposure in the sea, and other initiatives to improve fish health and welfare, are expected to contribute to an increased superior share going forward. FIGURE 3.2 FARMING COST PER KG 45.0 Rogaland (NOK/kg) Finnmark (NOK/kg) British Columbia (CAD/kg) Target 9.0 FIGURE 3.3 ROCE AND EBIT/KG 30% EBIT/kg ROCE ROCE target 30 PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 4 FIGURE 3.4 SURVIVAL RATE AT SE A Rogaland Finnmark British Columbia Target FIGURE 3.5 SUPERIOR SHARE OF SALMON Rogaland Finnmark British Columbia Target PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 5 C O V ID -1 9 C O V ID -1 9 OP ER AT ION AL R E V IE W OP ER AT ION AL R E V IE W 2021 was another year with the Covid-19 pandemic. Grieg Seafood’s Grieg Seafood harvested a total of 75 601 tonnes of Atlantic priorities have been to protect employees, local communities, salmon in 2021, excluding Shetland, a 6% increase from 2020. partners and business operations, and to secure liquidity and As the volume harvested in Shetland (up until its sale on 15 financial strength. December 2021) was 13 726 tonnes in 2021 and 15 705 tonnes in 2020, a record-high volume of 89 327 tonnes was achieved in 2021, Since the outbreak of Covid-19, employee well-being has been the compared to 86 847 in 2020. number one priority for Grieg Seafood. Crisis management teams have been operational at head office and in each region. The Group Market demand remained strong in 2021. It is estimated that has followed the advice of the local authorities. Measures to lower consumption in all major markets increased in 2021. The largest the risk of transmission and safeguard business continuity have relative increases in consumption were found in the EU and the been in place. These include strict rules at production sites and UK, both up 8%, and the USA, up 13%. Demand has been driven harvesting facilities to limit physical contact and encourage social by supermarkets and grocery stores, in addition to recovery in the distancing. Working from home has been encouraged whenever HoReCa (hotels, restaurant, catering) segment towards the end of possible, and business travel has been restricted. the year. Despite the challenging circumstances, Grieg Seafood has been Sales revenues (excluding Shetland) for 2021 totaled NOK 4 599 able to maintain efficient operations throughout the year. The million, up NOK 214 million or 4.9% from NOK 4 384 million in pandemic has impacted the salmon market in the last two years, 2020. The average salmon spot price (NQSALMON weekly average with a significant shift in demand away from hotels, restaurants less distributor margin) for the year was NOK 3.6 per kg higher and catering (HoReCa), while the retail segment and home in 2021 than in 2020, up from NOK 53.7 per kg in 2020 to NOK consumption have been boosted. The overall demand for Atlantic 57.3 per kg in 2021. The NQSALMON price stood at NOK 63.4 per salmon has remained strong. Supply lines have remained largely kg as at 31 December 2021. Spot salmon prices in the US market open, though somewhat limited availability has made airfreight averaged NOK 68.5 per kg, up NOK 8.8 per kg from NOK 59.8 expensive. The bulk of the salmon supplied by the Group has per kg in 2020. The Urner Barry spot price (farm-raised salmon been shipped by truck from Norway to European markets, or from Seattle West Coast) stood at NOK 72.6 per kg as at 31 December Canada to the USA. The Group’s diversified geographical presence 2021. Fixed-price contracts accounted for 30% of the volume in has provided flexibility and reduced logistical challenges. Norway in 2021, in line with the Group’s targeted contract share of Due to higher market uncertainty, the risk of bad debts increased market, accounting for 65% of sales revenues in 2021, and 73% during the pandemic. Grieg Seafood has good routines for of the volume sold. The market distribution of sales varies year collecting and managing trade receivables, and has had an open on year, depending on the volumes harvested across the Group’s dialogue with customers. A significant portion of the sales volume regions. The main change in the sales distribution was an increase has been credit insured. The Group has not recorded any significant to Continental Europe, from 45% in 2020 to 65% in 2021, mainly 20-50%. Continental Europe is by far the Group’s most important loss on receivables in 2021. due to the 22% increase in harvested volume from the Group’s Norwegian farming operations. BC harvested 32% less volume Ensuring financial stability has been a priority for the Group. No in 2021 compared to 2020. However, due to exports from the dividend was distributed in 2021 due to risk related to the pandemic Norwegian regions to the USA, the volume sold to the North and commitments to growth investments. At the beginning of American market only decreased from 29% in 2020 to 27% in 2021. 2022, the Group refinanced its bank loans, and has a solid financial position. In general, freshwater production through the year was good. For further details, see the separate regional chapters in Part 2 Profit The Group did not receive any government grants or support & Innovation. The Group continues to follow its growth strategy concerning Covid-19 in 2021. and transferred 22 944 709 smolt to the sea during 2021. Seawater production has been good, with increased survival rates in all regions. The group farming cost ended at NOK 47.2 per kg in 2021, compared to NOK 47.0 per kg in 2020. Abnormal mortality totaled NOK 2.2 per kg in 2021, compared to NOK 2.5 per kg in 2020. Feed comprised 37% of the Group’s costs in 2021, similar to 2020. Feed prices are sensitive to changes in exchange rates, marine and vegetable raw material prices, seasonal variations, fish catches, and production. As at year-end 2021, it is expected that feed prices will rise. However, estimates are uncertain, especially due to the current situation in Ukraine, as Ukraine is one of the world’s FIGURE 3.6 ROGAL AND EBIT/KG YE AR-OVER-YE AR largest producers of wheat (a fish feed ingredient). As part of the Group’s strategy, Grieg Seafood has restructured its business and narrowed its operational focus to the regions with the greatest potential for sustainable and profitable production through the sale of its Shetland operations to Scottish Sea Farms Ltd. The transaction was finalized on 15 December 2021. The closing settlement is expected to be finalized in Q2 2022. In 2021, the Group established its own sales organization. All shares in the previous sales organization Ocean Quality AS were sold in 2020. For more information, see Note 5 to the Group’s consolidated financial statements. CONTINUED OPERATIONS Source: Group Accounts Note 8 ROGALAND Grieg Seafood Rogaland harvested 26 670 tonnes in 2021, an FINNMARK Grieg Seafood Finnmark harvested 34 484 tonnes in 2021, an increase of 16% compared to the 23 043 tonnes harvested in 2020. increase of 28% compared to the 26 919 tonnes harvested in 2020. Sales revenues amounted to NOK 1 431 million, compared to NOK Sales revenues amounted to NOK 1 756 million, an increase of 34% 1 263 million in 2020. The average spot price in 2021 was NOK compared to NOK 1 314 million in 2020. The increase is mainly 57.3 per kg, compared to NOK 53.7 per kg in 2020, while price related to higher harvest volume and spot prices, in addition to a achievement was NOK 53.7 per kg in 2021, down NOK 1.2 per kg higher quality share compared to last year. The average spot price from NOK 54.8 per kg in 2020. Price achievement in 2021 was in 2021 was NOK 57.3 per kg, compared to NOK 53.7 per kg in 2020. negatively impacted by the sale of 33 % of the volume under fixed- Finnmark achieved an average price of NOK 50.9 per kg in 2021, up price contracts, in addition to quality downgrades. The share of NOK 2.1 per kg from NOK 48.8 per kg in 2020. Price achievement superior quality fish decreased from 85% in 2020 to 81% in 2021, was positively impacted by the sale of 27% of the volume under due to occurrences of winter ulcers in the first half of the year and fixed-price contracts, but depressed by a somewhat low average outbreaks of Pancreas Disease (PD). harvested weight and a superior share of 82% due to winter ulcers. Freshwater production in Rogaland performed well in 2021. Freshwater production at the company's facility in Adamselv was 7.5 million smolt were transferred to the sea, with an average good during the year. A total of 10.1 million smolt with an average weight of 460 grams, compared to an average weight of 395 grams weight of 190 grams were transferred to the sea in 2021. Seawater on the smolt transferred to the sea in 2020. Seawater production production was impacted by issues related to winter ulcers during also performed well, though it has been somewhat affected by the first half of 2021, but improved significantly during the summer the PD outbreak. The efforts made in fish health and welfare have and fall. The farming cost was NOK 43.7 per kg in 2021, down NOK contributed to a 12-month rolling survival rate of 92% in 2021, up 0.4 per kg from NOK 44.1 per kg in 2020. A 12-month survival from 90% in 2020. Cost recognized as abnormal mortality in the rate of 95% was accomplished, compared to 92% in 2020, due to income statement (cost of reduced survival) was NOK 30.8 million a reduction in the impact of challenges related to winter ulcers. in 2021 (NOK 1.2 per kg), compared to NOK 63.7 million in 2020 Cost recognized as abnormal mortality in the income statement (NOK 2.8 per kg). The farming cost ended at NOK 44.6 per kg in was NOK 53.1 million in 2021 (NOK 1.5 per kg), compared to 2021, up NOK 2.4 per kg from NOK 42.1 per kg in 2020. The farming NOK 37.5 million in 2020 (NOK 1.4 per kg). cost was impacted by harvesting from PD-affected sites, which increased related fish handling and well-boat costs. EBIT before fair value adjustments ended at NOK 251 million, EBIT before fair value adjustment of biological assets for the year 7.3 per kg in 2021, up NOK 2.5 per kg from NOK 4.7 per kg in 2020. was NOK 242 million compared to NOK 292 million in 2020, which corresponds to NOK 9.1 per kg in 2021, down NOK 3.6 per kg from NOK 12.7 per kg in 2020. Please read more about Grieg Seafood Finnmark’s operational priorities in the regional chapter in Part 2 Profit & Innovation. compared to NOK 127 million in 2020, which correspond to NOK Please read more about Grieg Seafood Rogaland’s operational priorities in the regional chapter in Part 2 Profit & Innovation. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 6 FIGURE 3.7 FINNMARK EBIT/KG YE AR-OVER-YE AR In 2021, EBIT before production fee and fair value adjustment of the biological assets ended at NOK 150.2 million for BC, compared to NOK -7.4 million in 2020, which corresponds to NOK 10.4 per kg in 2021, up NOK 10.7 per kg from NOK -0.4 per kg in 2020. DISCONTINUED OPERATIONS market. Price achievement is measured relative to the relevant observed market price or reference price. There are several In 2020, the assets relating to the operations in Shetland were reference prices for salmon. In Norway, Fish Pool provides historic classified as held for sale, and the activity presented under price information, as well as future salmon derivative prices FCA discontinued operations. On 15 December 2021, the Shetland Oslo as part of the NASDAQ Salmon Index (NQSALMON). In the Please read more about Grieg Seafood BC’s operational priorities assets were sold to Scottish Sea Farms Ltd. In addition, all shares USA, Urner Barry provides reference prices for North American in the regional chapter in Part 2 Profit & Innovation. FIGURE 3.8 BRITISH COLUMBIA EBIT/KG YE AR-OVER-YE AR Source: Group Accounts Note 8 BRITISH COLUMBIA Grieg Seafood British Columbia (BC) harvested 14 448 tonnes in 2021, 32% lower than in 2020 (21 181 tonnes). Harvesting volumes vary significantly every other year in BC due to local production region arrangements and fewer farms on the West Coast of Vancouver Island compared to the East Coast. As a consequence, the region's volume varies every other year, regardless of the underlying biology. Measures are being implemented to stabilize yearly harvest volumes. Source: Group Accounts Note 8 NEWFOUNDLAND Grieg Seafood acquired a greenfield project in Newfoundland in Sales revenues for the year amounted to NOK 1 023 million, a 2020. As of year-end 2021, the freshwater facility at Grieg Seafood decrease of 13% compared to NOK 1 179 million in 2020. According Newfoundland is fully operational, with fish growing well. The first to Urner Barry, the average spot price (farm-raised salmon fish will be transferred to the sea in mid-2022. Read more about Seattle West Coast) was NOK 68.5 per kg in 2021, compared to Grieg Seafood Newfoundland in the regional chapter in Part 2 NOK 59.8 per kg in 2020. Price achievement in BC was NOK 70.8 Profit & Innovation. in Ocean Quality AS had been sold by year-end 2020, and the salmon in Seattle and Chilean salmon in Miami. Market prices are activities of Ocean Quality not related to the sale of fish produced correlated across regions, but significant short-term variations by Grieg Seafood were therefore presented under discontinued between markets are not uncommon. operations. See Note 5 in the Group Accounts for further details. FIN A NCI A L P ER F OR M A NCE FIN A NCI A L P ER F OR M A NCE GROUP FINANCIAL STATEMENTS The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). In 2021, Grieg Seafood sold Grieg Seafood Shetland Ltd, which compromises the UK farming and sales operations (the Shetland assets), to Scottish Sea Farms Ltd. The transaction was announced on 29 June 2021, and approval was received from the relevant competition authorities in the UK in December 2021. The transaction was finalized on 15 December 2021. However, the closing settlement is expected to be finalized in Q2 2022. Grieg Seafood classified the Shetland assets as assets held for sale in 2020 and throughout 2021 up until the sale. The operations in Shetland were presented as discontinued operations in 2020, and have been presented as such throughout 2021 up until the sale. For more information, see Note 5 to the Group Accounts. PROFIT AND LOSS The Group's price achievement for 2021 was NOK 55.7 per kg, up NOK 2.9 per kg from NOK 52.8 per kg in 2020. By comparison, the average NQSALMON NOK/kg price for 2021 was 57.3, up NOK 3.6 per kg from NOK 53.7 per kg in 2020. The sensitivity analysis below illustrates the impact changes in sales revenue/kg has on the EBIT/kg. FIGURE 3.9 SENSITIVIT Y ANALYSIS SALES REVENUE/KG 2021 Actual for 2021 +/- 2.5 % +/- 5.0 % +/- 7.5 % +/- 10.0 % +/- 12.5 % Sales revenue/kg EBIT/kg impact 55.7 57.1 / 54.3 58.5 / 52.9 59.9 / 51.5 61.3 / 50.1 62.7 / 48.7 n/a 1.4 2.8 4.2 5.6 7.0 The calculation is performed bottom-up, based on separate calculations for Rogaland, Finnmark and British Columbia, by analyzing incremental percentage changes in sales revenue, all other factors remaining unchanged. Total sales revenue for the year totaled NOK 4 599 million, up NOK 214 million from NOK 4 384 million in 2020. The sale revenue from the Group’s farming regions totaled NOK 4 211 million in 2021, up NOK 455 million from NOK 3 756 million in 2020 (see Note 8 per kg in 2021, compared to NOK 55.7 per kg in 2020. Higher spot prices and a somewhat increased quality share compared to last year contributed to the price achievement. The share of superior SALES & MARKET In 2021, Grieg Seafood established its own sales and market Sales revenue and harvested volume The Group harvested 75 601 tonnes GWT in 2021, up 4 459 tonnes quality has been gradually rising in recent years, and ended at 87% organization as part of the downstream strategy. Until year- GWT from 71 142 tonnes GWT in 2020. Both the 2021 and 2020 to the Group Accounts). The increase in sales revenue is primarily in 2021. end 2020, the fish was sold through Ocean Quality, the sales organization of Grieg Seafood and Bremnes Fryseri. During figures are exclusive of our operations in Shetland, which we due to a higher volume harvested by Rogaland and Finnmark sold to Scottish Sea Farms Ltd in 2021. The Norwegian regions compared to the year before. Freshwater production was stable during the year, and a total the first months of 2021, the new sales organization handled contributed 81% of the harvest volume in 2021, compared to 70% in of 5.4 million smolt with an average weight of 120 grams were approximately 50% of the Group’s harvested salmon. As of April transferred to the sea in 2021. Seawater production was good, and 2021, the organization handled 100% of the volume. During the fall, the 12-month survival rate increased from 90% in 2020 to 92% in a Value Added Product (VAP) sales department was established, 2021. In previous years, the survival rate has been impacted by as a key contributor to increase the VAP product portfolio in the incidents of low oxygen levels and plankton blooms. However, it is coming years. The Group has also entered into an agreement steadily increasing due to positive results from an algae mitigation on VAP capacity in Norway and, towards year-end, commenced 2020, while British Columbia accounted for 19% in 2021, compared The difference between the total sales revenue for the Group of to 30% in 2020. While both Rogaland and Finnmark increased NOK 4 599 million and sales revenue from farming regions of NOK their harvested volume, BC decreased due to local production 4 211 million is attributable to the item Elim/Other effect (see region arrangements and larger farms with greater capacity on Note 8 to the Group Accounts), which includes the gross uplift on the West Cost of Vancouver Island compared to the East Coast. sales revenue for the Group generated by the sales organization. As a consequence, the region's volume varies every other year, The change in revenue from Elim/Other (Note 8 to the Group system, which stabilizes the survival rate in periods of challenging processing salmon into fresh and frozen valued added products. regardless of the underlying biology. environmental conditions. The farming cost increased from CAD 8.0 per kg (NOK 56.0) in 2020 to CAD 8.8 per kg (NOK 60.4) in 2021, mainly due to a lower harvest volume. Cost recognized as abnormal mortality in the income statement (cost of reduced survival) was NOK 17.6 million in 2021 (NOK 1.2 per kg, or CAD 0.2 per kg), compared to NOK 66.1 million in 2020 (NOK 3.1 per kg, or CAD 0.5 per kg). For more information on the sales organization and the markets, see the Sales & Market chapter in Part 2 Profit & Innovation. The Group’s main product, whole gutted Atlantic salmon, is traded largely as a commodity, and the prices achieved largely reflect a general market price. The prices achieved will, to some extent, deviate from the spot market price, based on quality, sales contracts, and the ability to place the salmon effectively in the Accounts) from NOK 629 million in 2020 to NOK 388 million in 2021, is primarily due to lower sales of processed fish (fresh and frozen), which decreased by NOK 252 million (see Note 8 to the Group Accounts). The Group is building VAP capacity through its wholly owned sales organization. However, as the previous sales organization (Ocean Quality) had some VAP capacity (purchase of processed fish for resale as VAP), there has been a reduction in sales revenue from VAP in 2021 compared to 2020. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 7 The Group’s primary market is Continental Europe. Sales to Grieg Seafood did not have sales to Russia in 2021 or 2020. Sales to Continental Europe comprised 65% of sales revenue in 2021 (73% Ukraine accounted for 1% of Grieg Seafood’s total revenue in 2021, of volume sold), up from 45% of the sales revenue in 2020. The USA compared to 0% in 2020. and Canada, or North America, is the second largest market, and Farming cost Costs directly related to the production and harvesting of harvest weight of about 4-5 kg, the expensed farming cost through the income statement at the point of harvest reflects all costs for salmon constitute the farming cost. The inputs needed to raise all past periods (if not previously expensed as abnormal mortality). a live salmon from roe to harvestable size account for the bulk totaled 27% of sales revenue in 2021 (21% of volume sold), down As with VAP sales, the sale of fresh salmon in 2021 was affected of the farming cost. In addition, costs related to harvesting and Production cost capitalized to inventory (biological assets excluding from 29% of the sales revenue in 2020. The year-on-year changes by the fact that sales from Norway were carried out by the newly processing are included. Performance is tracked through the fair value adjustment) comprises feed as well as health, treatment reflect the 22% increase in harvested volume from the Norwegian established sales organization, while sales from Norway in farming cost per kg of harvested salmon. Tracking the underlying and fish welfare-related expenses. In addition, the production farming operations (excluding sales from Shetland), which is 2020 were handled by Sjór AS through the Ocean Quality sales drivers that influence the cost of salmon to be harvested in the cost capitalized to inventory includes salary, depreciation of fixed primarily sold in Europe, and the 32% lower harvest volume from partnership, which ceased at year-end 2020. The new sales future, such as survival, feeding and growth, is therefore vital. The assets and administration costs that are allocated to production. British Columbia. The decreased volume from British Columbia organization has not inherited customer lists from Sjór AS, regional EBIT is calculated as sales revenue less the farming cost. Feed cost comprises the largest individual part of the production to the USA and Canada was partly offset by sales of fish from and has therefore built new customer relationships under the See Note 8 to the Group Accounts and Alternative Performance cost. the Norwegian farming regions into the North America market. Grieg Seafood brand. This inherently impacts sales revenue by Measures for more information. Sales to Asia accounted for 6% of the sales revenue in 2021 (4% geographical and product mix composition, and thus comparability At year-end 2021, it is expected that global inflation will increase of the volume). Even though salmon is regarded as a commodity, with the 2020 figures. prices vary across geographical markets, with the (relatively) highest price/kg generated in Asia and North America. In addition, VAP sales to Europe were low in 2021, while VAP sales in North America - relative to sales volume - remained stable. These factors explain why sales to Continental Europe comprise 65% of the sales revenue but 73% of the volume sold. Until harvest, the production cost of the salmon is capitalized the salmon feed costs. Consensus estimates indicate an expected to inventory and included in the line item ‘biological assets’ in increase in the cost base (including feed) of NOK 2-5 per kg, which the balance sheet. The production cycle for a salmon, from roe would, for the 2021 financials, imply a change of approx. 4-11% in to harvest weight, is about three years, whereas the production farming cost per kg. The sensitivity analysis illustrates the impact cycle after smoltification is about 12-24 months. Working capital changes in farming cost/kg has on the EBIT/kg, expressed as requirement is generally progressive throughout the production percentage changes in the 2021 financials. cycle. Due to the long production cycle for Atlantic salmon with a FIGURE 3.10 GRIEG SE AFOOD SALES REVENUE AND VOLUME SOLD BY GEOGRAPHICAL MARKET FIGURE 3.11 FARMING COST SALES REVENUE 2021 VOLUME SOLD 2021 Continental Europe UK North America Asia PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 8 FIGURE 3.12 SENSITIVIT Y ANALYSIS FARMING COST/KG 2021 Salmon growth, survival rates and the economic feed conversion rate (eFCR), are strongly linked to fish health, disease and sea lice. Treatments, fasting and reduced appetite negatively impact Farming cost/kg EBIT/kg impact growth, reduce our harvested volumes and increase the cost per Actual for 2021 -/+ 2.5 % -/+ 5.0 % -/+ 7.5 % -/+ 10.0 % -/+ 12.5 % 47.2 46.0 / 48.4 44.8 / 49.6 43.7 / 50.7 42.5 / 51.9 41.3 / 53.1 n/a 1.2 2.4 3.5 4.7 5.9 The calculation is performed bottom-up, based on separate calculations for Rogaland, Finnmark and British Columbia, by analyzing incremental percentage changes in farming cost, all other factors remaining unchanged. kg of harvested fish. The Group's farming cost for 2021 ended at NOK 47.2 per kg, up NOK 0.2 per kg from NOK 47.0 per kg in 2020. The Norwegian farming regions contributed to 76% of the farming cost in 2021, compared to 65% in 2020, which materialized into an increase of NOK 0.9 per kg in cost, from NOK 43.2 per kg in 2020 to NOK 44.1 per kg in 2021. The positive year-on-year change in Finnmark was thus offset by higher costs in Rogaland compared to last year. In addition, British Columbia has, on a 32% lower harvest volume year-on-year, realized farming cost of CAD 8.8 per kg in 2021, In the recent years, the industry has faced challenges with respect up CAD 0.8 per kg from CAD 8.0 per kg in 2020. to sea lice. This has caused an increase in costs directly related to treatments and increased investments in equipment and The salmon farming industry might be volatile, due to both technologies. This development has had a noticeable effect on the biological and market conditions. The sensitivity analysis of relative allocation of cost factors, as well as the total cost level in 2021 illustrates the impact changes in eFCR has on the EBIT/kg, the industry. In terms of cost per kg, however, the loss of harvested calculated as percentage changes on the 2021 financials. volumes has had a significantly larger impact than the direct cost increases. As production cost per kg has risen in recent years, the directly variable cost of feed has become a smaller part of the total incurred cost per kg produced salmon. At the same time, other costs, such as salaries, health costs, and maintenance, have become a larger share of the total. In addition to purchase prices for inputs to production, profitability is also influenced by how quickly the salmon grow and how efficiently feed is converted into weight gain (feed conversion rate). Water temperatures, biological conditions, farming practices and fish survival are key drivers for salmon growth. Higher seawater temperatures increase growth, but also increase biological risks in the form of diseases, sea lice and algal blooms. This may in turn result in lost feeding days, lower growth and reduced survival. Through the introduction of improved sensor technology, use of advanced imaging analysis and other technologies, the Group is continuously improving the ability to make informed decisions about feeding and protective measures. FIGURE 3.13 SENSITIVIT Y ANALYSIS ECONOMIC FEED CONVERSION RATIO (EFCR) 2021 Actual for 2021 -/+ 2.5 % -/+ 5.0 % -/+ 7.5 % -/+ 10.0 % -/+ 12.5 % eFCR EBIT/kg impact 1.3 1.3 / 1.4 1.3 / 1.4 1.2 / 1.5 1.2 / 1.5 1.2 / 1.5 n/a 0.4 0.9 1.3 1.8 2.2 The calculation is performed bottom-up based on separate calculations for Rogaland, Finnmark and British Columbia, by analyzing incremental percentage changes in eFCR, all other factors remaining unchanged. Raw materials, salaries and other operating expenses Raw materials and consumables, which consist mainly of the Group’s freshwater and seawater fish stocks, in addition to feed, ended at NOK 1 738 million, up NOK 21 million compared Efficient feed conversion is crucial to being cost competitive. Feed to NOK 1 717 million in 2020. Salaries and personnel expenses accounted for 37% of the total cost per kg harvested fish in 2021, ended the year at NOK 577 million, an increase of NOK 77 million the same as in 2020. Strong and healthy fish, combined with high from NOK 500 million in 2020. The increase was partly driven feed quality and good feeding practices, are the key to achieving a by Newfoundland, which is preparing to transfer fish to the sea low production cost. Farming performance is measured through in 2022. Other operating expenses ended at NOK 1 527 million, the economic feed conversion rate, or eFCR, and relative growth down NOK 66 million compared to NOK 1 593 million in 2020. indices (achieved growth compared to own and feed supplier expectations). The eFCR measures how much fish feed is used to produce one kilogram of live salmon (net of mortality). The main difference between eFCR and bFCR (biological feed conversion rate) is that bFCR does not adjust the production figure for mortality. EBIT EBIT before production fee and fair value adjustments of biological assets in 2021 ended at NOK 442 million, up NOK 209 million from NOK 233 million in 2020. This brought EBIT per kg to NOK 5.9 per kg for 2021, up NOK 2.6 per kg from NOK 3.3 per kg in 2020. FIGURE 3.14 ECONOMIC FEED CONVERSION RATE FIGURE 3.15 GRIEG SE AFOOD GROUP EBIT/KG YE AR-OVER-YE AR Source: Group Accounts, Note 8 PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 8 9 FIGURE 3.16 KEY FIGURES Rogaland Finnmark British Columbia Newfoundland Elim/Other Harvest volume GWT tonnes EBIT/kg (NOK) EBIT (NOK million) 2021 26 670 34 484 14 448 — — 2020 23 043 26 919 21 181 — — 2021 9.1 7.3 10.4 — — 5.9 2020 12.7 4.7 -0.4 — — 3.3 2021 242 251 150 -117 -84 442 2020 292 127 -7 — -179 233 Grieg Seafood Group 75 601 71 142 Newfoundland (acquired in Q2 2020) is reported as a region in the segment information as from 2021. However, it is included in "Elim/Other" in 2020, when the region was under development. The higher EBIT in 2021 compared to 2020 is primarily attributable NOK 425 million. The closing settlement is expected to be finalized to the 28% increase in harvest volume from Finnmark, which in Q2 2022. See Note 5 to the Group Accounts for further details. ended at 34 484 tonnes GWT, as well as the price achievement in British Columbia. Combined with higher price achievement, The Group's goodwill, licenses, other intangible assets, and the increase in harvest volume boosted Finnmark’s EBIT/kg from property plant and equipment including right-of-use assets totaled NOK 4.7 in 2020 to NOK 7.3 in 2021. On margin, British Columbia NOK 5 636 million as at 31 December 2021, up NOK 418 million performed well in 2021, as EBIT/kg rose by NOK 10.7 per kg, from from 31 December 2020. Measured relative to total assets, these NOK -0.4 per kg in 2020 to NOK 10.4 per kg in 2021. assets contributed to 53% of the balance sheet as at 31 December 2021, compared to 49% as at 31 December 2020. Production fee and fair value adjustment of biological assets The production fee on the harvested volume (gutted weight) in Biological assets measured at cost totaled NOK 2 479 million as at 31 December 2021, up NOK 280 million from NOK 2 199 million Norway came to NOK 24 million in 2021. The Fair value adjustment (excluding Shetland) as at 31 December 2020. Measured relative of biological assets impacted the Group positively by NOK 523 to total assets, the accumulated capitalized cost of inventory million in 2021, up NOK 813 million from NOK 290 million in 2020. contributed to 23% of the balance sheet as at 31 December 2021, EBIT after production fee and fair value adjustment of biological compared to 21% as at 31 December 2020. The biological assets assets was NOK 941 million in 2021, up NOK 998 million from NOK of Grieg Seafood are primarily fish at sea, which was 93% of the -57 million in 2020. Financial items Net financial items came to NOK -87 million in 2021, up NOK 161 book value of biological assets, excluding fair value adjustment, as at 31 December 2021. The compared figure for 31 December 2020 was to 94%. In tonnes, the biological assets totaled 59 121 at year- end 2021, up 6 502 tonnes from 52 619 tonnes as at year-end 2020, million from NOK -248 million in 2020. Compared to 2020, the of which the biological assets stocked at sea accounted for 99% at debt service cost in 2021 was higher due to the NOK 1 500 million year-end 2021 (99% as at year-end 2020. The average live weight Green Bond issue in 2020. However, the higher debt service cost of the fish on land and at sea was 1.0 kg as at 31 December 2021, was offset by differences in net currency gains/losses compared compared to 1.1 kg at year-end 2020. The increase in the volume to 2020. Taxes and net profit Profit before tax in 2021 was NOK 854 million, which is an increase of biological assets at year-end 2021 compared to 31 December 2020 is in line with the Group’s overall strategy to increase Grieg Seafood’s annual harvest capacity. of NOK 1 158 million from NOK -304 million in 2020. The tax The cash balance at the end of the year was NOK 928 million, expense for 2021 came to NOK 249 million, compared to a tax up NOK 653 million from NOK 275 million as at 31 December 2020. expense of NOK 12 million in 2020. This brings net profit from Current assets (excluding fair value adjustment of biological assets) continuing operations in 2021 to NOK 604 million, up NOK 920 over current liabilities measured 3.5 as at 31 December 2021, million from NOK -316 million in 2020. In 2021, Grieg Seafood compared to 3.0 as at 31 December 2020. In addition, the Group sold its Shetland assets. Net profit from discontinued operations had undrawn credit facilities of NOK 885 million as at 31 December in 2021 came to NOK 600 million, up NOK 799 million from NOK 2021, compared to NOK 1 203 million as at 31 December 2020. The -199 million in 2020. In 2021, NOK 424 million of the net profit from change in undrawn liquidity is due to NOK 600 million of undrawn discontinued operations represents the gain (including recycling of bridge loan financing being included in the available credit as at accumulated OCI) from the sale of the Shetland assets. The closing year-end 2020, while the revolving credit facility limit was reduced settlement was expected to be finalized by the end of Q1 2022, from NOK 1 500 million as at 31 December 2020 to NOK 1 225 as communicated in Grieg Seafood’s report for Q4 2021. Due to million as at 31 December 2021. minor disagreements of the closing balance, the final settlement is postponed to Q2 2022. For more information on discontinued Total equity as at 31 December 2021 was NOK 5 563 million, operations and the sale of the Shetland assets, see Note 5 to the up NOK 1 192 million from NOK 4 371 million as at 31 December Group Accounts. FINANCIAL POSITION As at 31 December 2021, the book value of the Group's assets totaled NOK 10 714 million, up NOK 65 million from NOK 10 650 million as at 31 December 2020. On 15 December 2021, the Group completed the sale of its Shetland assets. In December 2021, the Group received, in cash, the preliminary purchase price of NOK 2 087 million. The settlement has been partly used to settle the bridge loan facility of NOK 600 million and the term loan facility of 2020. The equity ratio as at 31 December 2021 was 52% compared to 41% as at 31 December 2020. The Group’s increased equity and equity ratio are due to a combination of higher EBIT/kg compared to 2020 and differences in expected market prices after the reporting date, which result in fair value adjustment of biological assets as at 31 December 2021 of NOK 970 million, compared to NOK 347 million as at 31 December 2020. In addition, the sale of the Shetland assets impacting equity by NOK 341 million (gain/loss net of recycling of OCI). Furthermore, the Group used part of the preliminary settlement it received for the Shetland assets to pay off interest-bearing liabilities, which has affected the equity ratio. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 0 As at 31 December 2021, net interest-bearing liabilities (NIBD) (See Note 12 to the Group Accounts) was green (NOK 1 500 million Grieg Seafood aims to provide shareholders with a competitive 620 million of the negative cash flow from investment activities in excluding the effect of IFRS 16 totaled NOK 1 895 million, Green Bond), compared to 36% as at 31 December 2020. The return on invested capital through payment of dividends and 2020 derived from the acquisition of Grieg Newfoundland. Besides down NOK 1 784 million from NOK 3 679 million as at 31 December Green Bond matures in 2025, while the syndicated debt, as at 31 share price increases. The Board of Directors maintains that, as the NOK 620 million cash consideration for the shares in Grieg 2020. NIBD including the effects of IFRS 16 was NOK 2 291 million, December 2021, matures in Q1 2023. The increase in the relative an average over time, dividends should correspond to 30-40% of Newfoundland, differences in cash flow from investing activities down NOK 1 640 million from NOK 3 931 million as at 31 December share of green financing since 31 December 2020 was primarily the Group’s profit after tax, adjusted for the effect of fair value of are due to MAB capacity purchased in 2020 (NOK -159 million) 2020. The change in NIBD was primarily due to the completion of due to the impact that completion of the Shetland transaction had biological assets. As at 31 December 2021, Grieg Seafood was in under the government traffic light scheme, as well as the NOK the Shetland transaction, where the preliminary purchase price on the Group’s financial position and liquidity as at 31 December a solid financial position to execute strategic priorities and deliver -85 million impact on cash of the deconsolidation of Sjór (Ocean from Scottish Sea Farms was receved in December 2021 in cash 2021. Part of the cash consideration received from Scottish Sea shareholder return. The Board recommends that a dividend of Quality). In 2021, in addition to investments made in property, plant (see Note 5 to the Group Accounts). NIBD including the effect of Farms Ltd in December 2021 was utilized to settle syndicated NOK 3.0 per share be distributed to shareholders in the first half and equipment, the Group invested NOK 2.5 million in Årdal Aqua IFRS 16 relative to total assets measured 21% as at 31 December debt, reducing the gross interest-bearing liabilities. of 2022. 2021, compared to 37% as at 31 December 2020. NIBD excluding the effect of IFRS 16 divided by the last twelve months’ actual In Q1 2022, Grieg Seafood has finalized a refinancing of the Group's harvest volume (tonnes GWT) equalled NOK 25.1 per kg, or NOK syndicated financial liabilities, with an aggregate of NOK 3 200 21.1 per kg when measured over the Group's 2022 guided harvest million in five-year senior secured sustainability-linked loans and volume. credit facilities. This represents the completion of the funding process, since the bank loan as at 31 December 2021 matures The Group was in compliance with its financial covenants as at in February 2023. The new debt structure comprises a NOK 750 31 December 2021. As at 31 December 2021, the leverage ratio million term loan, an EUR 75 million term loan, a NOK 1 500 million NIBD/EBITDA was 2.6 and equity ratio according to covenant revolving credit facility and a NOK 200 million overdraft facility. See was 54%, compared to 43% as at 31 December 2020. As at Note 12 to the Group Accounts for more information. 31 December 2021, 47% of the gross interest-bearing liabilities CASH FLOW Net cash flow from operating activities in 2021 totaled NOK 601 million, up NOK 189 million from NOK 412 million in 2020. The higher cash flow from operating activities derives largely from a higher EBIT in 2021 compared to 2020, as the sum of timing differences, including tax payments, in 2021 was fairly similar to 2020. For the year, net cash flow from investing activities totaled NOK -560 million, up NOK 1 033 million from NOK -1 593 million in 2020. NOK AS and NOK 12.5 million in Nordnorsk Smolt AS (injection of new capital), a total of NOK 15 million for the year. Net cash flow from financing activities for the year totaled NOK -1 430 million, down NOK 2 909 million from NOK 1 478 million in 2020. In 2020, the Group issued the green bond, raising total proceeds of NOK 1 500 million. Besides the green bond issue, repayments on NOK and EUR term-loans of approx. NOK 100 million were made, with NOK 178 million in lease payments and NOK -133 million from net interests and other financial items. In 2021, the debt service expenses increased, impacting cash flow by NOK -200 million. Following the refinancing of the syndicated FIGURE 3.17 EQUIT Y-RATIO AND NIBD/HARVEST NIBD/Harvest calculated as NIBD according to covenant divided by last 12 months harvest volume PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 1 FIGURE 3.18 GROSS INVESTMENTS, HARVEST VOLUME TONNES GWT AND GROSS INVESTMENTS/KG EXCL. SHETL AND Cash payment made on the acquisition of Grieg Newfoundland of NOK 620 million is not included in the 2020 figure presented in the chart above. All figures in the chart above are exclusive of Shetland. The peak in 2020 (gross investments of NOK 13.8/kg) is largely attributable to capital investments in the freshwater facility in Newfoundland. The freshwater facility in Newfoundland was completed in 2021. loans in Q1 2022, debt service costs is expected to be positively in particular the green bond issue of NOK 1 500 million, which impacted by a lower margin. Lease payments totaled NOK 185 carries payable interest of approximately NOK 65 million per year million in 2021, while installments of NOK 528 million on loans (according to the interest rate as at 31 December 2021, see Note 3 were paid. This includes settlement of the NOK term loan facility. to the Group Accounts). The remaining differences are due to cash management by utilization of the revolving credit facility. At the end of the year, Grieg Seafood was in compliance with its financial covenants. The leverage ratio NIBD/EBITDA was The net change in cash and cash equivalents from continued measured at 2.6, well within the maximum allowable leverage operation for the year was NOK -1 389 million, down NOK 1 686 according to the loan agreement. At year-end, Grieg Seafood ASA million from NOK 298 million in 2020. In December 2021, a had an equity ratio of 48%, compared to 43% the year before. This preliminary cash settlement for the sale of Shetland of NOK 2 087 corresponds to a book value of equity of NOK 2 744 million in 2021 million was received. This is included as a NOK 2 040 million net compared to NOK 2 670 million in 2020. change in cash and cash equivalents from discontinued operations in the 2021 cash flow statement. The net change in cash and During the year, no dividend payments were made, as the Board cash equivalents from discontinued operations therefore rose by decided to postpone ordinary dividend for 2020 (as for 2019) due NOK 2 279 million from NOK -239 million in 2020. to the increased volatility and uncertainty caused by the Covid-19 As at 31 December 2021, the Group had a cash balance of Group. On 15 December 2021, Grieg Seafood Shetland was sold. A NOK 928 million, up NOK 653 million from NOK 275 million in 2020. cash consideration of NOK 2 087 million was received in December situation, combined with an extensive investment plan for the GR IEG SE AF OOD A S A GR IEG SE AF OOD A S A PROFIT FOR THE YEAR The parent company’s financial statements have been prepared in 2021, which was used to settle the NOK 600 million bridge loan and the NOK 425 million outstanding principal of the NOK term loan. Grieg Seafood ASA recorded a gain of NOK 143 million from the Shetland transaction. In February 2022, Grieg Seafood finalized a refinancing of the Group's syndicated financial liabilities, with an aggregate of NOK 3 200 million in five-year senior secured accordance with Norwegian accounting principles (NGAAP). sustainability-linked loans and credit facilities. The parent company recorded an operating loss of NOK 77 million The parent company´s net cash flow from operations in 2021 in 2021, compared to a loss of NOK 73 million in 2020. Grieg Seafood totaled NOK 147 million, compared to NOK -277 million in 2020. ASA is the holding company of the farming and sales operations in The difference in net cash flow from operations in 2021 from 2020 the Grieg Seafood Group. Grieg Seafood ASA is the employer of is primarily due to lower taxes paid in 2021, and differences in net Group management as well as centralized functions of the Group. working capital items. In line with the Group’s growth ambitions, these functions were enhanced during 2021, which materializes in a higher overhead, Cash flow from investing activities came to NOK 1 611 million (NOK primarily through payroll. -1 232 million in 2020). The difference from 2020 to 2021 for the net cash flow from investing activities is primarily due to the Shetland The company has a syndicated loan provided 50/50 by DNB and transaction being finalized on 15 December 2021, in connection Nordea. The financing agreement includes two term loans of NOK with the cash consideration of NOK 2 087 million in December 600 million and EUR 60 million, respectively; a revolving credit 2021. In 2020, on the other hand, Newfoundland was acquired and facility of NOK 1 250 million (down from NOK 1 500 million in green bond proceeds were distributed to applicable green projects 2020), alongside an overdraft facility of NOK 100 million. This has in the group companies. been refinanced in February 2022. In addition to bank loans, Grieg Seafood ASA has a green bond of NOK 1 500 million issued in 2020, Net cash flow from financing activities came to NOK -1 149 million, with maturity in 2025. At the end of the year, NOK 885 million of compared to NOK 1 687 million in 2020. The change in net cash flow the revolving credit facility and the overdraft facility was available from financing activities from 2020 to 2021 is primarily due to the for utilization. Group contributions from subsidiaries are included in net financial items in the amount of NOK 308 million in 2021 (NOK 100 million in 2020). green bond issue of NOK 1 500 million received in 2020, while net repayments of approx. NOK 1 100 million on revolving credit facility and term-loans were made in 2021. In addition, debt service costs were higher in 2021 due to the green bond issue and the temporary amendment to the term loan agreement with banks. Interest expenses from external financing increased in 2021. This is primarily due to increased external funding compared to 2020, As at 31 December 2021, available cash totaled NOK 793 million compared to NOK 184 million as at 31 December 2020. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 2 FINANCIAL RESULTS AND ALLOCATIONS – GRIEG SEAFOOD ASA The aim of the Group is to offer a competitive return on invested million. The book value of live fish at cost at year-end 2021 was The risk of cyber attacks are also relevant for the Group. Cyber NOK 2 479 million, or 23% of the balance sheet. Biological risks attacks may cause disruption in the ordinary course of operations, include oxygen depletion, diseases, viruses, bacteria, parasites, both within the Group and at third parties, as well as damage capital to its shareholders through a combination of dividends algae blooms, jelly fish and other contaminants. To reduce this and share price appreciation. The Group’s dividend policy is that risk, the Group focuses on improving fish health and welfare the dividend should, over time, average 30-40% of the Group's through several initiatives, including joint fallowing and area- net profit after tax before fair value adjustment of biological based management, switching from pharmaceutical to mechanical assets. At the same time, the Group’s net interest-bearing debt delousing treatment methods, and use of sensor technology to per kg harvested salmon should remain below NOK 30, but can reduce algae challenges. The Group’s post-smolt strategy, where be exceeded in periods of growth investments. At year end, the fish are grown to a larger size on land, thereby shortening the time and/or incapacitate critical infrastructure necessary to operate the Group’s freshwater and seawater sites. The outcome of a cyberattack may adversely impact fish welfare at affected sites, the Group’s reputation and financial performance. The cybersecurity risk is high on management’s agenda, and is addressed through securing the digital systems and infrastructure, as well as awareness and training, and strengthening the focus on securing financial position of Grieg Seafood ASA was solid, and the Board they spend in open sea pens, is an important part of the effort to remote access for employees and vendors. proposes that a dividend of NOK 3.0 per share be distributed to reduce biological risk. shareholders. Throughout the year, production at the Group’s freshwater and The parent company, Grieg Seafood ASA, recorded a profit after seawater locations has been good. Biological conditions have tax of NOK 407 million for 2021, which the Board proposes that the been stable, with increasing survival rates. As at year-end, Grieg Annual General Meeting allocate as follows: FIGURE 3.19 ALLOCATION OF PROFIT/LOSS FOR THE YE AR, GRIEG SE AFOOD ASA Seafood Rogaland had two sites infected by Pancreas Disease (PD), the fish at these sites will be harvested during Q1 2022. In Finnmark, measures have been taken to reduce the risk of winter ulcers and ISA, and the region experienced significantly lower impact from winter ulcers this year compared to last year. Provision for dividends Transfer to retained equity Total allocated NOK million 336.9 70.4 407.3 R I SK A ND R ISK M A N A GEMEN T R I SK AND R ISK M AN A GEMEN T 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. Some of the initiatives are joint fallowing and area-based management. The Group has initiated a digitalization process to facilitate operational improvements. The aim is to use sensor technology to reduce the algae challenges in BC in particular. The introduction of sensor The Group is exposed to risks in numerous areas, such as biological technology to monitor algal blooms enables the type of algae to be production, the effects of climate change, degradation of nature, determined at an early stage and the appropriate feeding response compliance risk, the risk of accidents, changes in salmon prices, selected. This is of vital importance as different types of algae have COMPLIANCE RISK Grieg Seafood is committed to conducting its business ethically and with integrity. The Group perform risk assessments of it’s operations and value chain, and has implemented mitigating measures and controls to prevent corruption and money laundering activities. The Group did not experience any incidents of corruption or money-laundering activities in 2021. The Group would adhere to any relevant sanctions related to Russia and Belarus. 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. Two class-actions have been filed by direct and indirect customers in the USA and three class actions have been filed in Canada (none has yet been certified as a class action). Grieg Seafood is not aware of any anti-competitive behavior within the Group, neither in Norway, nor the EU, the USA, or in Canada. The Group is fully collaborating with European and American authorities in this matter and follow up the lawsuits in the USA and Canada accordingly. FINANCIAL RISK MARKET RISK Salmon prices 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. The global harvest volume of Atlantic salmon in 2022 is not expected to increase compared to 2021. Combined with high demand, this is expected to drive prices. 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 therefore also supply. Grieg Seafood did not have sales to Russia in 2021. Sales to Ukraine accounted for 1% of Grieg Seafood’s total revenue in 2021. The Covid-19 pandemic and the measures implemented by authorities worldwide to deal with it, impacted global demand Financing risk The Group operates within an industry characterized by high for salmon and disrupted global supply chains in both 2020 and volatility, which entails financial risk. The Group’s business and 2021. Sales to the HoReCa market have been low most of the future plans are capital intensive. To the extent that sufficient year due to Covid-related restrictions, curfews and lockdowns in cash is not generated from operations in the long term, additional most markets. On the other hand, sales to the retail segment and funding needs to be raised to pursue its growth strategy and home consumption have increased during the Covid-19 pandemic. finance capital expenditures. Adequate sources of capital funding Continental Europe is the Group’s most important market, with might not be available when needed, or may only be available on and the risk of politically motivated trade barriers. The Covid-19 different effects on the salmon. In BC, mortality related to algae North America being the second largest market. Salmon spot unfavorable terms. pandemic has posed a risk to most of the Group's operational blooms was reduced from 3.4% in 2019, to 0.9% in 2020 and down prices have varied significantly over the last year, due to the areas during the year. The Group’s internal controls and risk to 0.4% in 2021, due to the efforts within algae mitigation, digital exposure are subject to continuous monitoring and improvement, and efforts to reduce risk in different areas have a high priority. monitoring and aeration systems. Management has established a framework for managing and The feed industry is characterized by large global suppliers eliminating most of the risks that could prevent the Group from operating under cost-plus contracts, and feed prices are accordingly attaining its goals. See the Group’s risk overview here. A summary directly linked to the global markets for fishmeal, vegetable meal, of some of these risks, in the context on the short- and medium animal proteins and fish/vegetable/animal oils, which are the main term, is included below ingredients in fish feed. While access to marine feed ingredients has increased, access to terrestrial feed ingredients continues to waves of restrictions and lockdowns both in Europe and North The Group renegotiated its syndicated bank loan agreement in America. The spot market price (NQSALMON) was NOK 45.1 at 2018, which will secure the working capital needed to achieve the the beginning of the year, and closed the year at NOK 63.4 per Group’s growth targets. The agreement matures in 2023. These kg. The 12-month average NQSALMON for 2021 came to NOK 57.3 facilities have been refinanced in Q1 2022, see Note 12 and 29 of per kg compared to NOK 53.7 in 2020. Spot salmon prices in the the Group Accounts. The Group also has a senior unsecured green US market started the year at NOK 59.6 per kg, and ended the year bond, with a drawdown of NOK 1 500 million. The bond matures on at NOK 72.6 per kg, with an average price of NOK 68.5 per kg, up 25 June 2025. In December 2021, Grieg Seafood sold its Shetland by NOK 12.1 per kg compared to 2020. For Norway, on aggregate assets. The transaction and the refinancing have significantly for the year, fixed-price contracts did not impact sales revenue/ improved the Group's financial flexibility. The members of the Board of Directors and the CEO are insured. be limited, and feed prices are expected to increase. At year-end kg. The volume sold under fixed-price contracts was 30% of the The insurance provides liability cover for members of the Board 2021, the expectation was that the cost of feed would increase, and of Directors and the CEO with respect to claims arising from consensus estimates indicated an expected increase in the cost harvested volume in Norway. The percentage was in line with the Financial and contractual hedging is a matter of constant targeted contract share of 20-50%. The Group does not have fixed- consideration, in combination with operational measures. decisions or actions they may take on behalf of Grieg Seafood ASA. base (incl. feed) of NOK 2-5 per kg, which would, based on the 2021 price contracts in BC. OPERATIONAL 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 3 449 million, of which the fair value adjustment was NOK 970 financials, imply a change of approx. 4-11% in farming cost per kg. In addition, the Ukraine crisis is predicted to lead to higher costs, due to the likelihood of significantly lower volumes of wheat being supplied to the market in 2022. The internal sales and market organization sells all of the Group’s fish. The Group also has a Value Added Product (VAP) sales department and has secured value-added processing capacity in Norway, as a step towards repositioning the company in the market. 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 the Group’s financing needs. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 3 Liquidity risk The Group has invested substantial amounts during the last financial institutions, transactions with customers, including trade Disclosures (TNFD), as a Taskforce Member. TNFD aims to develop Local Communities. These pillars define the Group’s focus areas. receivables, fixed contracts and loans to associates. The Group a risk management and financial disclosure framework on nature- They are founded on external expectations, based on dialogues year, such as the build-up of its biomass and the acquisition of has procedures to ensure that products are only sold to customers related risks, and will support organizations to report and act with stakeholders, and the company’s own goals and ambitions. Grieg Newfoundland. The Group utilizes factoring agreements to with satisfactory creditworthiness. The Group normally sells to on both their impacts and dependencies on nature. The finalized The Group has published an overview of their pillars, targets and finance its trade receivables. The trade financier purchases 100% new customers solely against presentation of a letter of credit framework is earmarked for release in late 2023. For further Group policies here. of the credit-insured trade receivables from the Norwegian sales or against advance payment, and credit insurance is used when information, visit the TNFD’s website. organization, transferring significant risk and control to the credit deemed necessary. insurer. The receivables purchased by the trade financier are derecognized from the Group’s statement of financial position. CLIMATE AND NATURE RISK The effects of climate change, such as extreme weather events, The Group’s liquidity reserve is monitored at group level, in fluctuating temperatures in seawater and a decline in biodiversity, collaboration with the operating companies. Management and the could have a significant financial impact in the coming decades. Board seek to maintain a high equity ratio (52% at 31 December Knowledge of the possible financial consequences of global 2021), to be well positioned to meet financial and operational warming, biodiversity loss, or even ecosystem collapse, and the challenges. Currency risk The Group is primarily impacted by currency exposure to CAD, USD, GBP and EUR. The production companies sell in local currencies integration of climate risk and nature risk, are an essential part of Grieg Seafood’s risk management strategy. Grieg Seafood aims to increase their understanding of climate and nature-related risks, in order to find solutions to reduce adverse impacts. The company’s reporting on corporate social responsibility is Inspired by background work on nature risk launched by WWF based on several standards, such as the Euronext guidance on Norway in 2019, and in order to support the adoption and ESG reporting, OECD guidelines for multinational enterprises, implementation of TNFD recommendations, Grieg Seafood joined the Global Reporting Initiative (GRI), the Global Salmon Initiative WWF Norway, Storebrand Asset Management and the Norwegian (GSI), and the Task Force on Climate-related Financial Disclosures Institute for Nature Research (NINA) in a pilot project to test a (TCFD), amongst others. Grieg Seafood is also committed to the UN framework for reporting on nature-related risks in the aquaculture Global Compact, and has signed the Sustainable Ocean Principles. sector. The aim is to demonstrate how a company can report on The Group’s sustainability strategy is described in Part 1, while the nature-related risks in a way that allows its investors to identify activities and results are presented in Part 2 of this Annual Report. potential risk exposure and engage with its portfolio company in an active, structured and informed way. The pilot report will be launched in 2022. RESEARCH AND DEVELOPMENT – ACHIEVING SUSTAINABLE GROWTH The main objectives of Grieg Seafood’s R&D activities are to to the sales organization, which hedges its transactions against Climate change is likely to present a range of challenges to the The salmon farming industry is regulated to avoid impact on create value, ensure sustainability and promote innovation in the currency fluctuations related to CAD/USD, EUR/NOK, GBP/EUR aquaculture industry. Grieg Seafood has mapped its climate- biodiversity and the marine environment. In addition, certifications company. The activities and priorities are anchored in the strategy and USD/NOK, and other currencies if required. related risks in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) like the Aquaculture Stewardship Council (ASC) help raise the and annual priorities. A continuous process of identifying the bar above regulatory limits. As of year end, 62% of the Group’s most important issues to be addressed forms the basis for R&D The currency exposure is continuously assessed against the for the third consecutive year. The risks identified include acute net production is ASC certified. Grieg Seafood acknowledges activities. A vital part of this is to ensure that results from the R&D volatility of the currencies. The remaining net exposure is physical risks caused by extreme weather events, such as damage that there are still challenges to overcome, and believes that projects can be implemented in the Group’s operations and thus monitored frequently. However, the Group may not be successful in to production facilities and infrastructure, increased employee preventive farming is key to reducing impact on both climate and create innovation and value. hedging against currency fluctuations and significant fluctuations accident rates and increased downtime due to harsh weather, nature. Several of the Group’s ongoing initiatives target climate may have a material adverse effect on the Group's financial results and higher risks of escapes due to structural impairment. The and nature-related challenges, such as shortening the time the The project portfolio covers all areas of Grieg Seafood work and business. The Group is also exposed to currency fluctuations Group also faces chronic physical risks, such as increased water fish spend at sea and are exposed to risks; using real-time ocean stream. The majority of projects are in fish health and welfare, on long-term lease agreements, primarily operational equipment temperature or extreme variations in water temperature. Overall, data, data analytics, machine learning and artificial intelligence to environmental documentation and impact, feed and feeding, including well boat charter hire. Lastly, the Group is also exposed the Group expect the impacts of climate-related risks to be better predict outcomes and implement mitigating actions early; as well as novel and improved production methods both in the to EUR, as part of its credit facility is in EUR. moderate in the short term, with no quantifiable impact as per year end 2021, but these impacts could become more severe in and experimenting with new farming technologies that create freshwater and the seawater phases of the production. An barriers between the fish and the natural environment, such as internal R&D strategy provides guidance in the process of project Part of the long-term loans to subsidiaries from Grieg Seafood the medium to long term. Any significant physical change is likely semi-closed sea-based systems, land-based farming and offshore prioritization and qualification to secure the project's relevance ASA are in the local currency and are regarded as net investments, to interfere with the Group’s current business model or damage farming. as there are no set plans for their repayment. The currency effect the facility infrastructure, both of which could be costly. Similarly, of these net investments is included in the Group's consolidated the transitional risks related to increased climate-change statement of other comprehensive income (OCI). Interest rate risk The Group is exposed to interest rate risk through its borrowing regulation or significant changes in consumer preferences could likely affect the bottom line and access to capital. On the other hand, Grieg Seafood is uniquely placed to mitigate these risks and take advantage of climate-related opportunities. To get a full C OR P OR AT E AND S O CI AL C OR P OR AT E AND S O CI AL R E SP ONSIBILI T Y R E SP ONSIBILI T Y and industry value. This comes in addition to the close contact with Grieg Seafood’s production regions to ensure the relevance and possible applicability of the planned endeavors. Annual meetings with the regions to map out R&D needs as well as quarterly meetings with the global functional team for R&D are established communication channels that will be further developed. Short descriptions of the ongoing projects are available in an internal activities, and to fluctuating interest rate levels in connection with overview over how these climate-related risks and opportunities Sustainability underpins Grieg Seafood’s operations – it is the project archive, and finalized projects and results are shared. The the financing of its activities in the various regions. The Group's may evolve and affect the Group, likelihood and impacts analyses license to operate and the motivation to perform. Sustainability global functional team for R&D are continually working together existing loans are at floating interest rates, but separate fixed-rate under different emission pathways and time horizons have been is also core business, driving results and generating value for all with the farming regions, facilitating the implementation of the contracts have been entered into to reduce interest rate risk. Grieg developed and will be regularly revised. The Group’s TCFD report stakeholders. Grieg Seafood’s overarching goal is to sustainably R&D results into the operations. Seafood’s policy is to have 20–50% of interest-bearing debt hedged including the climate-related scenario analysis is available here. through interest rate swap agreements. A given proportion shall be at floating rates, while consideration will be given to entering and exiting hedging contracts for the remainder. Credit risk Credit risk is managed at Group level. Credit risk arises from transactions involving derivatives and deposits in banks and The Group also acknowledge that biodiversity, diversity within and between species, and diversity of ecosystems, is declining globally faster than at any other time in human history. Nature and ecosystems provide the basic building blocks of the global economy, and biodiversity loss and ecosystem collapse will also affect the Group’s operations, supply chains and markets. In 2021, Grieg Seafood joined the Taskforce on Nature-related Financial produce food in the ocean. This is expressed in the company’s vision "Rooted in nature – farming the ocean for a better future", which demonstrates the Group’s commitment to corporate social responsibility and the desire to operate profitably and sustainably in a manner that conforms with fundamental ethical norms and respect for the individual, society as a whole, and the environment. Grieg Seafood’s sustainability strategy is built on the five pillars: Healthy ocean, Sustainable food, Profit & innovation, People, and EMPLOYEES To reach goals and to solve challenges, Grieg Seafood needs the best people, regardless of their gender or background. A good working environment is key to attracting and retaining the best talent. For the fourth time in Norway, and the third time globally, the Group participated in the Great Place to Work survey. The Board is proud to announce that all regions maintained the Great Place to Work certification in 2021. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 4 The majority of the Group’s employees, including managers, The remuneration report for Grieg Seafood ASA will be published cooking salmon at home. Dietary megatrends fueled by increased are men. In total, 753 people were employed at the Group as at at the time notice of the 2022 Annual General Meeting is issued. focus on health and sustainability are expected to increase demand 31 December 2021, of whom 208 were women and 545 were men. The Annual General Meeting is scheduled for 9 June 2022. going forward, contributing to a strong salmon market. The Group’s employment policy facilitates the recruitment and retention of qualified employees independent of gender. A good The Board wishes to thank all employees for their dedication, The Russian invasion of Ukraine in February 2022 has already had working environment is key to attracting and retaining the best efforts, and contributions in 2021. talent. Grieg Seafood annually monitors and report on gender balance, pay gaps, women in management positions and key roles through the SHE Index. In the last SHE Index, published in March CORPORATE GOVERNANCE Grieg Seafood ASA seeks to comply, where applicable, with the 2022, the Group received 73 points (High score), compared to an Norwegian Code of Practice for Corporate Governance, last revised average score across Norwegian companies of 71. on 17 October 2018. The Grieg Seafood Group follows NUES’s latest recommendations and has updated its existing rules and defined a global impact on food and food raw materials prices, though salmon demand has not yet been significantly affected. Further inflation in prices and distribution costs may impact demand going forward. However as of the time of publishing this report, with the outlook for continuing strong demand and no supply growth in 2022, the expectation is that market prices will rise going forward. The Group conducts yearly assessments of its pay structure to values in accordance with changes to the Norwegian Code of identify any pay gaps between men and women performing the Practice published in 2021. The company’s corporate governance same jobs. The non-administrative positions are covered by union policies and practices are disclosed in the "Corporate governance" For the past 25 years, literally all new fish volumes have come from aquaculture. Wild fishing has long had to cope with smaller catches, quotas and other regulatory restrictions. Since 1990, PRODUCTION At the time of issuing this report, the Group is experiencing good biological production in all regions. The farming operations are running as normal, and salmon is being harvested according to plan. The emphasis is on continued optimization of production, focusing on fish health and welfare. For 2022, Grieg Seafood expects a total harvest of 90 000 tonnes GWT. As at year-end 2021, Grieg Seafood expects cost inflation on raw materials and key input for production. However, it is uncertain how the Ukraine war will impact raw material supplies and the prices of inputs used in the salmon farming production. The potential impact of inflation on the Group’s cost base is kept under continuous scrutiny. FINANCIAL POSITION As at 31 December 2021, Grieg Seafood was in a solid financial agreements and there are no differences between women and section of this Annual Report, and on the Grieg Seafood website. the volume of farmed fish has multiplied more than six-fold, with position. In February 2022, Grieg Seafood finalized a refinancing men. The only differences that may occur are based on seniority, which is also regulated by the union agreements. The Group uses the Korn Ferry methodology to benchmark salaries and benefits against the market. Salaries that are not on the median level are P O S T-B AL ANCE SHEE T E V EN T S P O S T-B AL ANCE SHEE T E V EN T S salmon making up less than 2.5% of the volume. In line with the of the Group's syndicated financial liabilities, with an aggregate ongoing global megatrends relating to health and sustainability, of NOK 3 200 million in five-year senior secured sustainability- there has been growing interest in the health and potential linked loans and credit facilities.The sale of the Shetland assets in environmental benefits of sustainable aquaculture. Currently, December and the refinancing of the Group's syndicated financial adjusted according to the benchmark – both for women and men. In February 2022, Grieg Seafood finalized a refinancing of the Europe is the largest and most mature market for Atlantic salmon, liabilities have significantly improved the Group's financial The Group’s positions and pay structure are based on a matrix 200 million in five-year senior secured sustainability-linked loans however, countless ongoing initiatives to introduce salmon to a Board’s recommendation of a dividend of NOK 3.0 per share, where all positions are given a score/number based on their and credit facilities. This represents the completion of the funding larger number of new consumers across the globe. An increase in the Group aims to continue execution of its growth strategy. The responsibility, mandate and content. There is no gender-based process. The new debt structure comprises a NOK 750 million term consumption per capita in large markets and growing economies Group aims to invest NOK 750 million in 2022, where of growth discrimination in this matrix. Salaries are based on roles and loan, an EUR 75 million term loan, a NOK 1 500 million revolving such as the USA, Brazil, China and India is expected to contribute investment amounts to NOK 385 million. Group's syndicated financial liabilities, with an aggregate of NOK 3 consuming more per capita than other continents. There are, flexibility. In addition to deliver a shareholder return, with the responsibility, not on gender, culture or origin. The Group offers credit facility and a NOK 200 million overdraft facility. The NOK and to rising demand for Atlantic salmon over time. flexible working hours to office staff and seeks to ensure a good EUR term loans carry installments equal to a 12-year repayment work-life balance throughout its operations. The goal is to improve profile until balloon payment at five years. The revolving credit workplace diversity and become a preferred employer. facility matures at five years, while the overdraft facility is subject to annual renewal. The interest rate is three months NIBOR plus Human resources are managed locally in compliance with margin. The loan is linked to sustainability-linked KPIs, of which local rules and regulations, and in accordance with the Group’s the scoring impact the interest rate margin paid on the facilities. guidelines. The Group is working continuously to strengthen global The sole financial covenant for the new facilities is a minimum routines and guidelines for human resources and health and safety book value of equity ratio of 31%, excluding the effect of IFRS 16 throughout the Group, and actively seeks to reduce sick leave and compared to the IFRS in force prior to 1 January 2019. the number of health and safety incidents. All such incidents are registered and reviewed as part of monthly HSE meetings. The Group’s employee policy is described in detail in the People section OU T L OOK OU T L OOK of this Annual Report. MARKET EXPECTATIONS AND POSSIBILITIES Business integrity is essential for the Group, which has zero tolerance for fraud, corruption or other misconduct. In 2021, there The global harvest of Atlantic salmon in 2022 is expected to remain were no reported incidents of corruption. One whistleblowing case at a similar level to 2021. The Covid-19 pandemic has impacted was reported during the year, and the case was handled according the salmon market in the last two years, with a significant shift to procedures. To strengthen the corporate culture and encourage in demand away from hotels, restaurants and catering (HoReCa), employee loyalty, Grieg Seafood continues to give its employees while the retail segment and home consumption have been the opportunity to become company shareholders through the annual share program. The Norwegian Parliament has adopted new rules on the wage policy of listed public companies, which came into force in January 2021. New wage policy and reporting guidelines were approved by the Annual General Meeting of Grieg Seafood ASA on 2 June 2021. The guidelines for management remuneration are available here. boosted. Going into 2022, salmon demand is still impacted by the pandemic and partly characterized by volumes channelled from the HoReCa market to the retail segment. However, with global progress on vaccination against Covid-19 and the lifting of restrictions in many countries, the shift from HoReCa to retail is expected to be reversed to some extent. Nevertheless, retail consumption may increase as consumers have become used to GOING C ONCER N GOING C ONCER N 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. There is a consensus in the market that the existing coastal, open- pen aquaculture industry will achieve modest organic growth. This 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 experimental attempts to farm salmon, either offshore or on land, may supplement the traditional salmon farming industry with additional volumes in the longer term. Grieg Seafood has already invested in post-smolt, where we keep the fish longer on land before we transfer them to the sea, as an important step towards reducing the impact on nature. Grieg Seafood may also explore other technologies, such as offshore farming. In 2021, the Group received four and a half development licenses for the “Blue Farm” concept that it applied for in 2016. The concept is based on technology from the Norwegian oil and gas industry, and the aim is to eventually relocate these innovative farms offshore. Another technology Grieg Seafood will explore, is land-based salmon farming through the joint venture Årdal Aqua. Grieg Seafood believes that inshore farming will remain the backbone of the industry going forward. However, land-based and offshore farming are great supplements, and the Group looks forward to taking part in the development of these technologies. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 5 S TAT EMEN T FR OM T HE B O AR D O F S TAT EMEN T FR OM T HE B O AR D OF DIR EC T OR S AND CEO DIR EC T OR S AND CEO We hereby confirm that, to the best of our knowledge, the financial statements for the period from 1 January to 31 December 2021 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, 30 March 2022 The Board of Directors of Grieg Seafood ASA PER GRIEG JR. Chair TORE HOLAND Vice Chair NICOLAI HAFELD GRIEG Board Member MARIANNE RIBE Board Member KATRINE TROVIK Board Member ANDREAS KVAME CEO PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 6 CORPORATE GOVERNANCE In keeping with our vision of farming the ocean for a better future, Grieg Seafood demonstrates its commitment to corporate social responsibility by operating profitably and sustainably in a manner that conforms to fundamental ethical norms and respect for the individual, society as a whole and the environment. At the same time, we face risks to our business strategy, operational risks, and risks associated with the protection of our employees, assets, and reputation. Because our operations are clearly connected with a multitude of external expectations, we seek to maintain a regular dialogue with our stakeholders, as they are the basis for our social license to operate. Transparency and disclosure are vital in building trust, and by engaging in a dialogue with our stakeholders we are able to better understand the role we play in local communities and in society as a whole. GOVERNANCE STRUCTURE Grieg Seafood believes that strong corporate governance is an essential element in achieving our overall objectives and acting as a responsible organization. The Board of Directors is committed to sound corporate governance, and our governance structure helps enable the Board to fulfil its duties to our shareholders and ensure our long-term success. The Board exercises oversight and assesses relevant sustainability elements that have an impact on strategic, operational and financial matters, including the factors that constitute our major risks. The Audit Committee, which consists of two members of the Board of Directors, has been given a particular responsibility to monitor critical business risks and RISKS RELATED TO CLIMATE AND NATURE One of the many factors that could materially and adversely affect our business and financial results is the long-term effect of climate change and decline in biodiversity on general economic conditions and the salmon farming industry in particular. Changes in the supply of feed raw materials and requirements to cut carbon emissions and limit our impact on biodiversity could also affect us. More information on our risk management procedures, and risks related to the climate and nature in particular, is included in the Board of Directors’ report in the Annual Report. COMPLIANCE As salmon farming is a highly regulated industry, we are subject to strict standards for fish welfare, environmental impact, food production and production equipment. We must also comply with operational requirements related to the use of medicines and chemicals, biomass levels, sea lice levels, stock density, water quality, etc. We report regularly to public authorities on, for instance, biomass levels, sea lice levels, disease outbreaks and mortality rates for salmon and cleaner fish. We are also subject to regular inspections and audits by local, national and international stakeholder groups and authorities. See here for more information about our ASC certificates. CODE OF CONDUCT AND BUSINESS BEHAVIOR Our Values and Code of Conduct underpin the way we conduct address the quality and effectiveness of relevant risk-reducing ourselves and our approach to corporate social responsibility. Our measures. The Audit Committee reviews the Group’s governing Code of Conduct sets out the ethical principles and standards that policies annually and assesses our risk management quarterly. must be upheld by each and every employee, and any agent that We have an internal Sustainability Steering Committee to review acts on our behalf, including our Board of Directors. Through our and update our group policies on the basis of a holistic assessment Supplier Code of Conduct, we demonstrate that we expect no less of economic, environmental, social and governance (ESG) issues. from our supply chain. As part of our risk management process, Our group management team, consisting of eight senior executives we continuously assess all our operations for risks related to and representing all aspects of our operations, are the approval corruption. However, corruption is not considered a significant committee for these policies. The Board of Directors holds the risk and we have controls in place to minimize exposure to it. group management team accountable for following its strategies and policies, maintaining a high standard of ethical and responsible Grieg Seafood refrains from anti-competitive behavior, anti-trust business conduct, taking care of our employees and safeguarding and monopolistic practices, as this can severely affect consumer human rights, and assessing risks related climate change and the choice, pricing and other factors that are essential for efficient environment. The group management team convenes weekly. We salmon markets. For more information, see the Responsible also have quarterly business review meetings with our farming Business Conduct chapter in the Annual Report. and sales operations. In 2021, most of these meetings were held on digital platforms, which has worked well. We also have a dedicated, cross-functional Sustainability Team, led by the Chief Sustainability Officer, consisting of members of the group management team and employees with particular functional 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. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 7 CORPORATE GOVERNANCE PRINCIPLES Adopted by the Company’s Board of Directors on 20 April 2007, and updated on 30 March 2022. FIGURE 3.20 GRIEG SEAFOOD'S COMPLIANCE WITH THE NORWEGIAN CODE OF PR ACTICE FOR CORPOR ATE GOVERNANCE Section of the Norwegian Code of Practice for Corporate Governance Deviation from the Code of Practice 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Statement of corporate governance Activities Share capital and dividends Equal treatment of shareholders and transactions with related parties Negotiablility General Meeting Nomination Committee Corporate Assembly and Board of Directors - composition and independence Work of the Board of Directors Risk management and internal control Directors' fees Remuneration of executive personnel Information and communication Company takeovers Auditor No deviation No deviation No deviation No deviation No deviation One deviation, see below One deviation, see below No deviation No deviation No deviation No deviation No deviation No deviation No deviation No deviation 1. I MP LEMEN TAT ION AND R EP O R T I NG O N C OR P OR AT E G O V ER N A NC E 1. I MP LEM EN TAT ION AND R EP OR T ING ON C O R P O R AT E GO V E R N A NCE 1. I MP LEMEN TAT ION AND R EP O R T I NG O N C OR P OR AT E G O V ER N A NC E PRESENTATION OF CORPORATE GOVERNANCE Responsibility for ensuring that the Company has good corporate governance rests with the Board of Directors (the Board). The Board and management annually review Grieg Seafood Group’s corporate governance principles. 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 2021. 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 of Practice. This Annual Report offers a full account of the Company's principles for corporate governance, which is available here. Deviations from the Norwegian Code of Practice: None 2. BU SI NE S S 2. BU SI NE S S GRIEG SEAFOOD ASA 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. Find our Articles of Association here. GRIEG SEAFOOD ASA’S VISION AND OVERALL OBJECTIVES In keeping with Grieg Seafood’s vision “Rooted in nature - farming the ocean for a better future”, we demonstrate our commitment to corporate social responsibility by operating profitably and sustainably in a manner that conforms to fundamental ethical norms and respect for the individual, society as a whole and the environment. Through its five pillars, Grieg Seafood is committed to creating sustainable and long-term value. Sustainability is fundamental to the industry and strongly impacts our financial performance. Our 2025 strategy is rooted in our desire for sustainable salmon farming. Focus areas are global growth, cost competitiveness, and value chain repositioning. The Board is committed to sound corporate governance, and our governance structure helps enable the Board to fulfil its fiduciary duties to our shareholders and ensure our long-term success. The Board 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 Norwegian Code of Practice for Corporate Governance. This also applies to all companies controlled by the Group. To the extent possible, therefore, this statement of principle also applies to all companies within the Group. The Company has its own Code of Conduct, which all employees and contract workers must abide by. The Company also has its own Supplier Code of Conduct, which we expect all our suppliers to comply with. MANAGEMENT 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 CEO, and is exercised in accordance with prevailing company legislation. Deviations from the Norwegian Code of Practice: None PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 8 3. EQU I T Y AND DI V IDEN DS 3. EQU I T Y AND DI V IDENDS EQUITY 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 2021, the Company's consolidated equity totaled NOK 5 563 million, equivalent to 52% of total assets, and a debt-to- equity ratio of 0.9. The Board of Directors considers the current capital structure to be satisfactory in relation to the Company’s objectives, strategy, and risk profile. DIVIDEND 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 keep pace 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 pave the way for future growth and investment, and meet its desire to minimize capital costs. The Board 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, although a net interest-bearing debt per harvested kg of up to NOK 30 is considered reasonable, it may be exceeded in periods of growth-related investments. Based on this, the size of the dividend could be 4. EQU AL T R E AT MEN T OF S H AR EHOLDER S A ND T R ANS A C T I ONS W I T H 4. EQU AL T R E AT MEN T OF S H AR EHOLDER S A ND T R ANS A C T I ONS W I T H R EL AT ED PAR T IE S R EL AT ED PAR T IE S SHARE CLASS The Company has one class of shares, and all shares carry the same rights. As at 31 December 2021, the Company had 113 447 042 outstanding shares, including treasury shares. TREASURY SHARES 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 related parties shall be observed. As at 31 December 2021, the Company held 1 132 981 treasury shares. APPROVAL OF AGREEMENTS WITH SHAREHOLDERS AND OTHER RELATED PARTIES All non-immaterial transactions between the Company and a shareholder, board member, senior employee, or their related parties, shall be subject to valuation by an independent 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. The Board has approved an internal policy for the Company’s as of 3 February 2021. There have been no transactions with related parties in 2021. CAPITAL INCREASES Should shareholders’ preferential subscription right be waived, the Norwegian Code of Practice shall be observed. There have been no adjusted within the margin set out above. capital increases in 2021. In 2020 and 2021, the Company did not pay out any dividend due to the increased volatility and uncertainly caused by the Covid-19 situation, Deviations from the Norwegian Code of Practice: None combined with an extensive investment plan. BOARD AUTHORIZATIONS The Board can ask the Annual General Meeting (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 45 378 817, divided into not more than 11 344 704 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 may itself determine the amount of the share capital increase in each case. 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 Companies Act for an aggregate nominal amount not exceeding NOK 45 378 817. 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 2021, no shares have 5. S H A R E S AND NEGO T I A BILI T Y 5. S H A R E S AND NEGO T I A BILI T Y 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 6. GENER AL MEE T ING S 6. GENER AL MEE T ING S 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 been acquired pursuant to this authorization. the Board of Directors. This authorization remains in effect until the next AGM, but not later than 30 June 2022. Going forward, the Company will observe the Norwegian Code of Practice in respect of new proposals to authorize the Board to implement capital increases and acquire treasury shares. Deviations from the Norwegian Code of Practice: None The Company’s Annual General Meeting (AGM) shall be held each year before the end of June. The Board will assess whether the meeting is to be conducted physically or via a digital meeting platform. 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. From 2021, new guidelines are in accordance with the new Norwegian Public Limited Liability Companies Act, Section 6-16a and the regulations about guidelines and reporting for remuneration of executive personnel. The new guidelines for Grieg Seafood were adopted by the AGM in June 2021. Pursuant to Sections 6-16a and 6-16b of the Public Limited Liability Companies Act, the remuneration report must be approved by the AGM in 2022. 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. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 9 9 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. The members of the Nomination Committee are elected for a term of one year. At least 2/3 of the Nomination Committee’s members shall be independent of the Board, and may not be board members. The CEO cannot be a member of the Nomination Committee. The Nomination Committee shall have meetings with the directors, CEO and relevant shareholders. The Nomination Committee´s recommendations to the AGM must 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 each candidate’s impartiality, competence, age, education and professional experience. Upon proposal for re-election, the recommendation should include additional information about how long the candidate has been a board member, as well as details of their attendance at board meetings. Shareholders can vote on each individual matter, including on each individual candidate nominated for election. Shareholders unable to attend may vote by proxy. An authorization 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 CEO to vote on their behalf. All shareholders are entitled to submit proposals to the Nomination Committee for candidates 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. The Company will publish the minutes of General Meetings in accordance with the stock exchange regulations, in addition to making them Recommendations concerning candidates for the Nomination Committee itself should also include relevant information about the available for inspection at the Company’s registered offices. candidates. The Board’s chair, a member of the Nomination Committee and the CEO will attend 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 is also 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. Deviations from the Norwegian Code of Practice: GSF Group deviates from the Norwegian Code of Practice in one way. 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. Currently, 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. The Nomination Committee proposes candidates for election to the Board by the AGM. In 2021, Grieg Seafood Group held its AGM on 2 June as a digital meeting, as recommended due to Covid-19. 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 accordance 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 Nomination Committee attend as needed. 7. NOM I N AT ION C OMMI T T EE 7. NOM I N AT ION C OMMI T T EE On 13 February 2009, the AGM approved a resolution to establish a Nomination Committee. 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 set out in the Norwegian Code of Practice for Corporate Governance. The present Nomination Committee was elected at the AGM on 2 June 2021. Nomination Committee Elisabeth Grieg Yngve Myhre Marit Solberg Role Chair Member Member Considered independent Served since No Yes Yes 12.06.2018 07.06.2017 02.06.2021 Term expires AGM 2022 AGM 2022 AGM 2022 8. B O AR D OF DIR EC T OR S: 8. B O AR D OF DIR EC T OR S: C OMP O S I T I ON AND INDEP ENDENCE C OMP O S I T I ON AND INDEP ENDENCE NUMBER OF BOARD MEMBERS 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. The board members’ term of office is one year. Board members may be re-elected. INDEPENDENT BOARD MEMBERS As at 31 December 2021, the Board of Directors consisted of the following members: Name Per Grieg Jr. Tore Holand Nicolai Hafeld Grieg ** Marianne Ødegaard Ribe Katrine Trovik Role Chair Vice chair Board member Board member Board member Considered independent Served since Term expires 2021 Meeting attendance % of shares in GSF per 31.12.2021 No Yes No Yes Yes 20.05.2009 AGM 2022 12.06.2018 AGM 2022 04.11.2021 AGM 2022 14.05.2020 AGM 2022 14.05.2020 AGM 2022 100% 100% 40% 100% 100% 53.2* 0.0% 1.87% *** 0.0% 0.0% *Per Grieg Jr. and indirectly via the Grieg Group. **Nicolai Hafeld Grieg was elected as a board member at an Extraordinary General Meeting, because Sirine Fodstad resigned as a member of the Board before her term of office expired. He will serve for the remainder of Sirine Fodstad’s term of office. ***Nicolai Hafeld Grieg does not personally own shares in Grieg Seafood ASA. However, he does own shares indirectly through his private investment company Maneo Holding AS. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 10 0 The Company's annual report and the website provide information on board members’ backgrounds and expertise. An overview of board As at 31 December 2021, the Audit Committee consisted of: members’ shareholdings in the Company appears in Note 18 to the Group Accounts in the Annual Report. Deviations from the Norwegian Code of Practice: None. 9. T HE W OR K OF T HE B O AR D OF DIR EC T OR S 9. T HE W OR K OF T H E B O AR D OF DIR EC T OR S DUTIES AND ANNUAL PLAN The Norwegian Public Limited Liability Companies Act regulates the duties and workings of the Board of Directors. In addition, the Board has adopted supplementary rules of procedure covering the duties of the Board and the Group’s CEO, the division of labor between the Board and the CEO, the annual plan for the Board, notices of board proceedings, administrative procedures, minutes, board committees, transactions between the Company and 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, which is collectively 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 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 any 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 jointly assess each board member´s impartiality with respect to matters under consideration. INSTRUCTIONS 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 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 CEO have separate roles, and there is a clear division of responsibility between the two. The CEO is responsible for the Company’s group management 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 information, please see Note 23 to the Group Accounts in the Annual Report. Board´s Audit Committee Katrine Trovik Tore Holand Role Chair Member Considered independent Yes Yes REMUNERATION COMMITTEE 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 2021, the Remuneration Committee consisted of: Board's Remuneration Committee Per Grieg Jr Marianne Ødegaard Ribe Role Chair Member Considered independent No Yes 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 management team, review recruitment policies, career planning and management development plans, and prepare matters relating to other material employment issues with respect to executive management. At the AGM in 2021, new guidelines were approved. The Remuneration Committee monitors that remuneration is in line with the guidelines and will prepare a remuneration report which must be both audited by the Company’s auditor and approved by AGM in June 2022. In compliance with Section 6-16a of the Norwegian Public Limited Liability Companies Act, the new guidelines include the remuneration payable to board members. The committee shall hold discussions with the CEO concerning his/her financial terms of employment. The committee shall submit a recommendation to the Board concerning all matters relating to the CEO’s financial terms of employment. The committee shall also keep itself updated on and propose guidelines for determining the remuneration of the group management team in line with the new laws that come into force from 2021. The committee is also the advisory body for the 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, 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 MANAGEMENT AND INTERNAL 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 assessment quarterly, which is reviewed by the Audit Committee in The instructions for the Board and executive management were last revised by the Board on 20 September 2017. connection with quarterly reporting. The Audit Committee updates the Board after each meeting. ANNUAL ASSESSMENT 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 COMMITTEE 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 to exercise its supervisory responsibility 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 as well as the Company’s own guidelines. From 1 January 2021, a new Audit Act was implemented in Norway. The mandate for the Audit Committee was updated in 2021, in line with the principles and requirements of the new Act. Each year, the external auditor carries out a review of the internal control which is an element of financial reporting. The auditor’s review is submitted to the Audit Committee. Internal control means activities and procedures carried out by the Group to safeguard its resources 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 verify that the goals are achieved. The Group’s core values, external guidelines and corporate social responsibility constitute the external framework for internal control. The Group is decentralized, and considerable 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 operations, for all management teams, units, and departments. Risk management and internal control are designed to take account of this. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 10 1 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: 11. R EMUNER AT I ON OF T HE B O AR D OF DI R EC T OR S 11. R EMUNER AT I ON OF T HE B O AR D OF DI R EC T OR S • 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 financial control processes. There is an ongoing risk assessment of the main transaction processes, describing key controls and ensuring that these controls are in place. This means assessing 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 intended to reduce the likelihood of non-conformities with major economic consequences from arising. The Group categorizes its main risks as: strategic risk, operational risk, financial risk, compliance risk, and climate and nature risk. Management conducts continuous assessments of acute risks and scenarios for possible outcomes, such as the situation we have had for the last two years with the Covid-19 pandemic, and are currently witnessing with the Russian invasion of Ukraine. The Group’s greatest risk relates to biological development 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 Proposals concerning the remuneration of the Board are submitted by the Nomination Committee. The new guidelines approved by the AGM in June 2021 provided that remuneration to Board members shall be a fixed remuneration and not performance-based remuneration. Remuneration shall reflect the position’s complexity, responsibility and time spent, with remuneration reflecting the levels at comparable companies. 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 parent company and the Group. Deviations from the Norwegian Code of Practice: None. 12. R EMUNER AT I ON OF T HE GR OUP M AN A GEMEN T T E AM 12. R EMUNER AT I ON OF T HE GR OUP M AN A GEMEN T T E AM The objective of the new guidelines approved by the AGM in June 2021 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 new guidelines shall create a wage culture which promotes Grieg Seafood ASA’s long-term interests, business strategy and financial strength. The guidelines should also motivate "best practices" are implemented at all levels. Control routines have been prepared for employee working conditions, as well as for escape employees to work with a long-term perspective to achieve the Group´s goals. prevention, animal welfare, pollution, water resources and food safety. The long-term effect of changes in the climate and natural environment on general economic conditions could also have a material impact on the Group. The Group’s climate risk management has been mapped in accordance with the recommendations of the Task Force on • Ensuring that salaries and other remuneration are competitive and motivating for each executive and for everyone in executive Climate-related Financial Disclosures (TCFD). Management is also involved in a project to map risks related to the loss of nature, based on management. a similar framework as the TCFD. • Linking salaries and other remuneration to, among other things, the Company’s value creation, the Company’s stakeholders and The determination of salary and other remuneration payable to the Group’s executive personnel is based on the following guidelines: shareholders. The Group is exposed to the following financial risks: market risk (including foreign exchange risk, interest rate risk, and price risk), credit • Attracting, motivating and keeping an executive management team with qualifications that correspond to the Company’s size and risk and liquidity risk. The Group’s overall risk management plan focuses on the unpredictability of the capital markets and seeks to complexity. minimize any potentially negative effects on the Group’s financial results. The Group uses financial derivatives to hedge against some risks. • Developing competence and creating continuity in management. Risk management is undertaken at Group level and involves identifying, evaluating and hedging financial risk in close cooperation with the • Ensuring transparency and publishing management’s remuneration in the Company. Group’s operational units. The Group has 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 financial risk 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, group management reviews a set of Key Performance Indicators (KPIs) with each farming region and our sales and market organization. Some of the main KPIs are: number of smolt transferred to the sea, freshwater and seawater production, production cost, feed factor, harvested volume, harvest cost, farming cost and EBIT/kg. Analyses are made and measured against budget figures and forecasts. The performance data is summarized in a report submitted to the Board. Each quarter, group management holds meetings with the managements of each region. The aim of the meeting is to follow up the results achieved in relation to the strategies and goals that have been set. Deviations from the Norwegian Code of Practice: None. The principles used to determine salary and other forms of remuneration shall be simple and understandable to employees, shareholders and the public at large. The salary paid to the group management team in 2021 consists of a fixed and a variable element. A fixed basic salary is the main component of executive compensation and should be competitive, taking into consideration the industry and the individual’s qualifications, and ensuring effective operations to influence the Company’s strategic direction. The variable element depends on the budget being met and good financial results being achieved. The fixed salaries for executive management are evaluated annually using Grieg Seafood’s internal routines for salary adjustments. The Company´s Board approved the allocation of cash options based on the AGM´s resolution on the share and cash options program. The last approval granted by the AGM dates from 2 June 2021. Members of group management are included in the synthetic options program, see Note 17 to the Group Accounts in the Annual Report. The option agreements have been entered within the scope of the resolution adopted by the AGM. Minutes of this AGM can be accessed here. OPTION PROGRAM A synthetic option scheme has been established for executive management and regional directors. The Board desires that executive management and regional directors are shareholders through the option program. The Board believes this is a decisive tool for realizing its ambitions and building the Company, by allowing executive management and regional directors to take part in the Company’s dividends from growth and success. INCENTIVE PLAN Grieg Seafood ASA has also established an incentive plan that applies to all employees. Its aim is to stimulate goal achievement, while promoting good risk management, preventing excessive risk taking and contributing to the avoidance of conflicts of interest. Annual goal achievement and pay-outs from the incentive plan are regulated by the Remuneration Committee, which prepares the Board’s decision PA R T 0 3 : O U R F I N A N C I A L R E S U LT S PA G E 10 2 about a pay out if the incentive goals are achieved. Taking into consideration the Company’s financial position and risks and costs for the Company in terms of capital requirements and liquidity, the committee will decide if the payment of variable compensation under the incentive plan is acceptable. If the Company cannot achieve the financial results associated with the incentive plan, no bonus pay-out will be awarded. The variable salary cannot exceed six times the monthly salary. General schemes for the allocation of variable benefits, including bonus schemes and option programs, are determined by the Board according to the guidelines approved of the AGM. 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 must each year report to AGM that remuneration to executive personnel complies with the guidelines. 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 on remuneration comprising the synthetic SHAREHOLDER INFORMATION The Board shall ensure that information is provided on matters of importance for 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. Publication shall take place in a reliable and comprehensive manner, and by means of 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. options program. The guidelines and the remuneration report will be published on the Company’s website. Deviations from the Norwegian Code of Practice: None. SEVERANCE PAY Salary, other remuneration and key terms for the CEO are evaluated annually by the Remuneration Committee, which prepares the Board’s decision about remuneration to the CEO. The committee shall hold discussions with the CEO about financial terms annually and, at the latest, by the end of June each year. The Remuneration Committee presents its evaluation to the Board which makes the final decision. Salaries, other remuneration and important terms for the executive management team are evaluated by the CEO annually. The 14. TAK EO V ER S 14. TAK EO V ER S CHANGE OF CONTROL AND TAKEOVERS The Company has no established mechanisms which can prevent or avert takeover bids. Any such decision must be made by a General CEO is entitled to 12 months’ severance pay after termination of the employment relationship by the Company. The CEO is further entitled Meeting of shareholders and requires a majority of two-thirds of the votes cast and of the share capital represented. After a takeover bid has to full salary during sick leave lasting up to 12 months’ duration. become known, the Board will not use its authority 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 A severance pay agreement has also been established for the CFO, providing for 12 months’ severance pay after termination of the independent party and advise the shareholders whether to accept or reject the bid. Shareholders will be advised of any difference of views employment relationship by the Company. Deviations from the Norwegian Code of Practice: None. 13. INF O R M AT ION AND C OMMUNIC AT ION 13. INF OR M AT ION AND C OMMUNIC AT ION FINANCIAL INFORMATION 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 (Euronext) Code of Practice for IR, published on 1 July 2019. The Board of Directors has adopted an investor relations policy to clarify roles and responsibilities related to financial reporting and to regulate contact with shareholders and the investor market. This policy is based upon the key principles of transparency 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 Company’s website. 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 accord with the Norwegian Code of Practice. Deviations from the Norwegian Code of Practice: None. 15. A UDI T OR 15. A UDI T OR 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 independence and objectivity of the external 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. In addition, the Board has adopted a separate manual on the disclosure of information, which sets forth the Company's disclosure obligations Both the Company’s management and the auditor comply with guidelines issued by the Financial Supervisory Authority of Norway concerning and procedures. the extent to which the auditor may provide advisory services. The Company shall at all times provide its shareholders, the Oslo Stock Exchange (Euronext), 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 met. Financial reporting shall also contain realistic forecasts for the Group’s commercial and performance-related 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 published 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 Board invites the auditor to meetings which address 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 Group’s accounting principles, risk areas and internal control procedures. Moreover, each year the Board has a meeting with the auditor at which neither the 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 the Annual Report, showing the breakdown of the fee between auditing and other services. Deviations from the Norwegian Code of Practice: None. The Company shall be open and active with respect to investor relations, and shall hold regular presentations in connection with the announcement of its annual and interim results. Bergen, 30 March 2022 Grieg Seafood ASA PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 10 3 GRIEG SEAFOOD GROUP ACCOUNTS GR OUP A C C OUN T S 104 104 105 106 107 Income statement Comprehensive income statement Statement of financial position Statement of changes in equity Cash flow statement NO T E S 108 109 115 119 120 122 122 123 125 126 128 129 131 133 134 135 136 137 139 139 140 141 141 142 142 143 143 144 144 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 Non-current assets held for sale and discontinued operations Business combinations Investment in associates Segment information Biological assets and other inventories NOT E 10 Intangible assets NOT E 11 Property, plant and equipment incl. right-of-use assets 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 NOT E 2 9 Borrowings Leases Classifications of financial instruments Taxes Salaries and personnel expenses Share based payments 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 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 10 4 INC OM E S TAT EMEN T INC OM E S TAT E ME N T C OMP R EHENS I V E INC O ME S TAT EMEN T C OMP R EHENSI V E INC OME S TAT EMEN T GRIEG SEAFOOD GROUP NOK 1 000 NOTE 2021 2020 GRIEG SEAFOOD GROUP NOK 1 000 NOTE CONTINUING OPERATIONS Sales revenues Other income Other gains/losses Share of profit from associates Raw materials and consumables used Salaries and personnel expenses Other operating expenses EBITDA before fair value adjustment of biological assets Depreciation of property, plant and equipment and right-of-use assets Amortization of licenses and other intangible assets EBIT before fair value adjustment of biological assets Production fee Fair value adjustment of biological assets EBIT after fair value adjustment of biological assets Financial income Financial expenses Net financial items Profit before tax from continuing operations Income tax expense Net profit for the year from continuing operations DISCONTINUING OPERATIONS Net profit for the year from discontinued operations Net profit for the year ALLOCATED TO Controlling interests Non-controlling interests PROFIT AVAILABLE TO SHAREHOLDERS IN PARENT COMPANY Earnings per share from continuing operations (NOK) Diluted earnings per share from continuing operations (NOK) Earnings per share - total (NOK) Diluted earnings per share - total (NOK) 8 8 8 7 9 16/17 13/21/25 11/13 10 3/9 24 24 15 5 5 19 19 19 19 4 598 585 4 384 357 NET OTHER COMPREHENSIVE INCOME THAT MAY BE RECLASSIFIED TO PROFIT/LOSS IN SUBSEQUENT YEARS Net profit for the year Currency effect on investment in subsidiaries Currency effect on loans to subsidiaries Cash flow hedges Tax effect Recycle of accumulated OCI (sale of Shetland) Tax effect of recycle of accumulated OCI (sale of Shetland) 3 5 5 NET OTHER COMPREHENSIVE INCOME NOT TO BE RECLASSIFIED TO PROFIT/LOSS IN SUBSEQUENT YEARS Change in fair value of equity instruments Total other comprehensive income for the year, net of tax Total comprehensive income for the year ALLOCATED TO Controlling interests Non-controlling interests 70 745 -6 752 -1 486 -1 738 267 -577 434 -1 527 347 818 044 -368 482 -7 192 442 370 -24 463 523 036 940 944 125 233 -212 499 -87 266 853 678 -249 301 604 377 28 688 -4 786 3 350 -1 717 279 -499 546 -1 592 852 601 932 -360 178 -8 696 233 057 — -289 705 -56 648 103 -247 895 -247 792 -304 440 -11 557 -315 997 600 291 -198 823 1 204 668 -514 820 1 204 668 — -541 054 26 234 5.4 5.4 10.7 10.7 -2.8 -2.8 -4.8 -4.8 2021 1 204 668 42 112 32 222 — -7 089 -105 848 22 709 — -15 894 1 188 774 2020 -514 820 -50 298 -23 667 -786 5 380 — — -433 -69 804 -584 624 1 188 774 — -611 210 26 586 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 10 5 S TAT EM EN T OF FI N ANCI AL P O SI T ION S TAT E MEN T OF FIN ANCI AL P O S I T ION GRIEG SEAFOOD GROUP NOK 1 000 NOTE 31.12.2021 31.12.2020 GRIEG SEAFOOD GROUP NOK 1 000 NOTE 31.12.2021 31.12.2020 ASSETS Deferred tax assets Goodwill Licenses incl. warranty licenses Other intangible assets incl. exclusivity agreement Property, plant and equipment incl. right-of-use assets Indemnification assets Investments in associates 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 Assets held for sale Total assets 15 6/10 6/10/12 6/10/12 11/13 6 7 7/22 9/12 9/12 3/12/21 22 3/14 3/20 5 59 660 071 1 536 319 36 828 3 402 629 40 000 104 675 90 897 5 871 477 128 299 3 449 412 151 793 147 332 37 592 928 342 4 842 771 — 29 293 638 019 1 508 452 38 015 3 033 154 40 000 84 421 9 476 5 380 830 78 001 2 545 903 179 384 133 069 84 189 275 427 3 295 972 1 972 725 EQUITY AND LIABILITIES Share capital Treasury shares Contingent consideration (acquisition of Grieg Newfoundland AS) Other equity Retained earnings Total equity Deferred tax liabilities Share based payments Borrowings Lease liabilities Total non-current liabilities Current portion of borrowings Current portion of lease liabilities Share based payments Trade payables Tax payable Public duties payable 10 714 248 10 649 527 Derivatives and other financial instruments Other current liabilities Total current liabilities Liabilities directly associated with the assets held for sale Total liabilities Total equity and liabilities BERGEN, 30 MARCH 2022 GRIEG SEAFOOD ASA PER GRIEG JR. Chair MARIANNE RIBE Board Member TORE HOLAND Vice Chair KATRINE TROVIK Board Member NICOLAI HAFELD GRIEG ANDREAS KVAME Board Member CEO 18 18 6 15 17 12 12/13 12 12/13 17 3 15 3/14 26 5 453 788 -4 532 701 535 68 205 4 344 307 5 563 302 1 069 802 11 115 2 381 000 577 797 4 039 714 54 475 178 032 29 523 196 88 641 32 088 22 350 212 422 1 111 232 — 5 150 946 10 714 248 453 788 -4 686 701 535 84 401 3 135 880 4 370 918 908 958 491 3 376 178 531 644 4 817 272 104 435 153 195 2 411 562 848 14 791 21 867 14 346 94 616 968 509 492 829 6 278 609 10 649 527 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 10 6 S TAT E MEN T OF CH A NGE S IN EQUI T Y S TAT E MEN T OF CH ANGE S I N EQUI T Y TREASURY SHARES1 CONTINGENT CONS.2 OTHER EQUITY3 RETAINED EQUITY NON- CONTROLLING INTERESTS GRIEG SEAFOOD GROUP NOK 1 000 Equity at 01.01.2020 Profit for 2020 Other comprehensive income 2020 Total comprehensive income 2020 Contribution in kind Contingent consideration2 Sale of treasury shares to employees1 Establishment costs Grieg Seafood Norway AS Dividend Sale of subsidiary - derecognition of non-controlling interests4 Transactions with owners [in their capacity as owners] 2020 Total change in equity 2020 SHARE CAPITAL 446 648 — — — 7 140 — — — — — 7 140 7 140 -4 855 — — — — — 169 — — — 169 169 — — — — — 701 535 — — — — 701 535 701 535 701 535 154 559 3 487 859 — -541 054 -70 156 -70 156 — — — — — — — — -541 054 186 002 — 3 086 -13 — — 189 075 -70 156 -351 979 84 401 3 135 880 Equity at 31.12.2020 453 788 -4 686 Equity at 01.01.2021 Profit for 2021 Other comprehensive income 2021 Total comprehensive income 2021 Sale of treasury shares to employees1 Transactions with owners [in their capacity as owners] 2021 Total change in equity 2021 453 788 -4 686 701 535 84 401 3 135 880 — — — — — — — — — 154 154 154 — — — — — — — 1 204 668 -15 894 -15 894 — 1 204 668 — — 3 456 3 456 -15 894 1 208 124 Equity at 31.12.2021 453 788 -4 532 701 535 68 506 4 344 004 1 The recognized amount equals the nominal value of the parent company's holding of treasury shares 2 Contingent consideration related to the acquisition of Grieg Newfoundland AS, see Note 6. 3 Other equity, reclassified through OCI 4 Sale of Ocean Quality AS (Sjór AS) in 2020, see Note 5. TOTAL 4 140 843 -514 820 -69 804 -584 624 193 142 701 535 3 255 -13 -17 658 56 632 26 234 352 26 586 — — — — -17 658 -65 560 -65 560 -83 218 -56 632 — — — — — — — — — 814 701 230 076 4 370 918 4 370 918 1 204 668 -15 894 1 188 774 3 610 3 610 1 192 384 5 563 302 SPECIFICATION OF RETAINED EQUITY NOK 1 000 Book value at 01.01.2020 Changes in 2020 Changes in 2021 Book value at 31.12.2021 EFFECT OF SHARE-BASED REMUNERATION PURCHASE/ SALES OF TREASURY SHARES * ACCUMULATED INCOME LESS ACCUMULATED DIVIDEND 1 094 — — 1 094 -8 562 3 086 3 456 -2 020 3 495 326 -355 065 1 204 668 4 344 929 * The amount classified under "purchase of treasury shares" equals the cost price in excess of nominal value. See also Note 2. 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 Book value at 01.01.2020 Changes in 2020 Reclassification in 2020 Changes in 2021 Recycle of accumulated OCI (sale of Shetland)* Book value at 31.12.2021 *See Note 5 for more information. 396 -433 — — — -37 84 361 -50 298 -7 694 25 134 -80 513 -29 010 76 529 -18 461 — 42 111 -2 626 97 553 -6 728 -965 7 694 — — — TOTAL 3 487 858 -351 979 1 208 124 4 344 004 TOTAL 154 558 -70 157 — 67 244 -83 139 68 506 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 10 7 C A SH FL O W S TAT EMEN T C A SH FL O W S TAT E MEN T GRIEG SEAFOOD GROUP NOK 1000 EBIT after fair value adjustment of biological assets Depreciation and amortization Gain/loss on sale of property, plant and equipment Share of profit from associates 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 Net cash flow from operating activities - continued operations Proceeds from sale of property, plant and equipment Payments on purchase of property, plant and equipment Payments on purchase of intangible assets incl. licenses Payments on business combinations Accumulated cash acquired in business combinations Sale of subsidiary, deconsolidation of cash and cash equivalents Government grant Investment in associates and other invest. Net cash flow from investing activities - continued operations Revolving credit facility (net draw-down/repayment) Proceeds of long-term int. bearing debt Repayment long-term int. bearing debt Repayment lease liabilities Interests paid Other financial items Net cash flow from financing activities - continued operations Net change in cash and cash equivalents - continued operations Net change in cash and cash equivalents - discontinued operations Net change in cash and cash equivalents - total Cash and cash equivalents - 01.01. Currency translation of cash and cash equivalents Cash and cash equivalents - 31.12. NOTE 10/11 7 9 15 11 10 6 6 5 12 12 12 12/13 24 24 20 2021 940 944 375 674 -88 1 486 -523 036 -330 555 13 327 -39 652 159 654 10 624 -6 895 601 484 11 229 -561 041 -3 833 — — — 8 443 -15 000 -560 202 -556 222 39 147 -527 652 -184 925 -189 381 -11 021 -1 430 055 -1 388 773 2 040 350 651 577 275 427 1 339 928 342 2020 -56 648 368 874 4 786 -3 350 289 705 -83 434 166 467 75 674 -136 869 -7 888 -205 162 412 156 781 -760 089 -159 066 -620 464 30 628 -84 754 — 20 -1 592 944 364 135 1 527 493 -102 267 -177 931 -94 665 -38 268 1 478 498 297 710 -238 762 58 948 214 497 1 982 275 427 The Cash Flow Statement is presented for the Group’s continuing operations. See further information in Note 5, including information on net cash flows from operating-, investing- and financing activities from discontinued operations. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 10 8 NO T E 1 GENE R A L INF OR M AT ION NO T E 1 GE NE R AL INF OR M AT ION G R O U P L E G A L S T R U C T U R E All amounts in these financial statements with note disclosures Grieg Seafood Sales North America Inc. Grieg Seafood Sales are stated in NOK thousand unless otherwise specified. USA Inc (domiciled in the USA) is owned 100% by Grieg Seafood GRIEG SEAFOOD SALES USA INC. ÅRDAL AQUA AS (37.04%) Grieg Seafood ASA is an integrated Norwegian seafood company engaged in salmon farming and processing. Grieg Seafood ASA is Grieg Seafood Group comprised the following entities at 31 December 2021: a public limited company registered in Norway. Its head office is located at C. Sundtsgt. 17/19, Bergen, Norway. The Company was Grieg Seafood Sales Ltd (owned 100% by Grieg Seafood Norway listed on the Oslo Stock Exchange (Euronext) on 21 June 2007 and AS) is domiciled in the UK. Grieg Seafood Sales Ltd was not part has operations in Norway and Canada. Until 15 December 2021, of the Shetland disposal group, and the entity has been dormant we also had operations in Shetland in the UK. The consolidated throughout 2021. Grieg Seafood BC Ltd (and its 100% owned financial statements have been prepared in accordance with subsidiary Grieg Seafood Sales North America Inc) is domiciled in International Financial Reporting Standards (IFRSs) as adopted by British Columbia, Canada, while Grieg Seafood Newfoundland Ltd the EU, and were approved by the Board of Directors on 30 March (incl. the subsidiaries Grieg Marine NL Ltd and Grieg NL Nurseries 2022. Ltd) is domiciled in Newfoundland, Canada. Grieg Seafood Premium Brands Inc (domiciled in the USA) is owned 100% by In the following, "Group" describes information relating to the and owned by Grieg Seafood ASA. Norway AS. The remaining subsidiaries are domiciled in Norway Grieg Seafood Group, while "Company" refers to the parent company, Grieg Seafood ASA. Grieg Seafood Canada AS and Grieg Seafood Newfoundland AS are holding companies within the Group, and wholly own the In November 2020, we announced that the Board of Grieg Seafood production companies Grieg Seafood BC Ltd. (incl. subsidiaries) had decided to divest our investment and operations in Shetland, and Grieg Seafood Newfoundland Ltd (incl. it’s subsidiaries), as we wished to focus on our operations in Norway and Canada respectively. going forward. Grieg Seafood ASA sold 100% of the shares in Grieg Seafood Hjaltland Ltd on 15 December 2021 to Scottish Sea Grieg Seafood Rogaland AS has investments in two associated Farms Ltd. Grieg Seafood Hjaltland Ltd owned in turn 100 % of companies; Tytlandsvik Aqua AS (33.33%) and Årdal Aqua (37.04%), Grieg Seafood Shetland Ltd, which operated the Group's salmon while Grieg Seafood Finnmark owns 50% of Nordnorsk Smolt AS. farming (and as from 2021 related sales) operations. Grieg Seafood Shetland Ltd owned 100% of the (up until 15 December 2021) dormant company Isle of Skye Salmon Ltd. Grieg Seafood Hjaltland Ltd, together with Grieg Seafood Shetland Ltd and Isle of Skye Salmon Ltd, form the Shetland disposal group. The operations of the Grieg Seafood Hjaltland UK Ltd Group were, from Q4 2020 until their sale on 15 December 2021, classified as held for sale in the consolidated statement of financial position, and presented as discontinued operations in the consolidated income statement and consolidated cash flow statement of Grieg Seafood. The Shetland disposal group includes the prior reporting segment of Shetland UK, in addition to the UK sales operations. The Shetland disposal group was deconsolidated from the Group as of 15 December 2021. The financial position of the Shetland disposal group is therefore not included in Grieg Seafood’s consolidated statement of financial position at year-end 2021. For more information, see Note 5. GRIEG SEAFOOD ASA The Grieg Sefood Hjaltland Group was sold from Grieg Seafood ASA at 15 of December 2021 OWNER SHARE: 99% OWNER SHARE: 100% GRIEG SEAFOOD HJALTLAND LTD (REPORTED AT HELD FOR SALE THROUGH 2021) GRIEG SEAFOOD SHETLAND LTD (HELD FOR SALE) ISLE OF SKYE SALMON LTD (DORMANT) SOLD 15.12.2021 UK (HELD FOR SALE) GRIEG SEAFOOD NORWAY AS GRIEG SEAFOOD ROGALAND AS GRIEG SEAFOOD FINNMARK AS GRIEG SEAFOOD CANADA AS GRIEG SEAFOOD NEWFOUNDLAND AS GRIEG SEAFOOD SALES UK LTD TYLANDSVIK AQUA AS (33,33%) NORDNORSK SMOLT AS (50%) GRIEG SEAFOOD BC LTD GRIEG SEAFOOD NEWFOUNDLAND LTD GRIEG SEAFOOD SALES NORTH AMERICA INC GRIEG SEAFOOD PREMIUM BRANDS INC. GRIEG MARINE NL LTD GRIEG NL NURSERIES LTD S E G M E N T S T R U C T U R E T H R O U G H 2 0 21 GRIEG SEAFOOD ASA NOR NOR CAN CAN ROGALAND FINNMARK BRITISH COLUMBIA NEWFOUNDLAND SHETLAND GRIEG SEAFOOD ROGALAND AS GRIEG SEAFOOD NORWAY AS GRIEG SEAFOOD SALES USA INC. GRIEG SEAFOOD FINNMARK AS GRIEG SEAFOOD B.C. LTD GRIEG SEAFOOD NEWFOUNDLAND LTD GRIEG SEAFOOD SHETLAND LTD GRIEG SEAFOOD NORWAY AS GRIEG SEAFOOD SALES NORTH AMERICA INC GRIEG SEAFOOD SALES NORTH AMERICA INC GRIEG SEAFOOD SALES UK LTD GRIEG SEAFOOD SALES USA INC. GRIEG SEAFOOD SALES USA INC. GRIEG SEAFOOD SALES NORTH AMERICA INC GRIEG SEAFOOD SALES NORTH AMERICA INC PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 10 9 NO T E 2 A C C OUN T I NG P OLI CIE S NO T E 2 A C C OUN T ING P OLICIE S associate, including any other unsecured receivables towards the • Represents a separate major line of business or geographical entity, the Group does not recognize further losses, unless it has area of operation. incurred obligations or made payments on behalf of the associate. • Is part of a single coordinated plan to dispose of a separate If necessary, the associates’ financial statements are restated to major line of business or geographical area of operations, or; The principal accounting policies applied in the preparation Contingent consideration classified as equity shall not be achieve consistency with the Group’s accounting policies. • Is a subsidiary acquired exclusively with a view to resale. of these consolidated financial statements are set out below. remeasured and its subsequent settlement shall be accounted for These policies have been consistently applied to all the periods within equity. Other contingent considerations shall be measured At the end of each accounting period, the Group determines Discontinued operations are excluded from the results of presented, unless otherwise indicated. at fair value at each reporting date and changes in fair value shall whether there is any need to recognize an impairment of the continuing operations and are presented as a single amount as be recognized in the income statement. investment in the associate. In such cases, the impairment profit or loss after tax from discontinued operations in the income BASIS OF PREPARATION The consolidated financial statements have been prepared in Intragroup transactions, intercompany balances, and unrealized amount of the investment and its carrying value, and the difference amount is measured as the difference between the recoverable statement. accordance with International Financial Reporting Standards profits and losses between Group companies are eliminated. is recognized in the income statement together with share of profit Disclosures for the Group’s discontinued operations are provided (IFRS) as adopted by the EU. Reported figures from the subsidiaries are restated when this or loss in “Share of profit from associates”. in Note 5. All other notes to this consolidated financial statement is necessary to achieve consistency with the Group's accounting refer to the Group’s continuing operations, unless the note The consolidated financial statements have been prepared under policies. 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 preparation of financial statements in accordance with IFRS requires the use of CHANGES IN SHAREHOLDINGS IN SUBSIDIARIES WITHOUT LOSS OF CONTROL Transactions with non-controlling owners of subsidiaries that do In the event of any gains or losses on transactions between the explicitly states otherwise. 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 SEGMENT REPORTING Operating segments are reported in a manner consistent with for the asset that was the subject of the transaction. Accounting internal reporting to the chief operating decision-maker. The estimates. It also requires management to exercise its judgement not involve loss of control are treated as equity transactions. When policies of associates are changed when necessary to ensure chief operating decision-maker, who is responsible for allocating in the process of applying the company’s accounting policies. shares are purchased from non-controlling owners, the difference consistency with the accounting policies adopted by the Group. resources and assessing performance of the operating segments, Areas involving a higher degree of judgement or complexity, between the consideration and the proportionate percentage of Dilution gains and losses arising on investments in associates are has been identified as the group management. or areas where assumptions and estimates are material to the net assets recognized in the subsidiary’s statement of financial recognized in the income statement. consolidated financial statements are described in Note 4. position relating to such shares is recognized in the parent company’s owners’ equity. Gains or losses on disposals of non- In the event of a reduction in a shareholding in an associate NEW STANDARDS ADOPTED BY THE GROUP No new IFRS accounting standards have been implemented in 2021. See Note 27 for more information. 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. 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. 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 in profit or loss. Using this fair value as deemed cost, the interest is subsequently classified 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 to profit or loss. 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 amount recognized in the statement of financial position includes any implicit goodwill identified at the date of purchase. The Group’s share of its associates’ post-acquisition profits or losses is recognized in the income statement, the share of other comprehensive income is recognized in the consolidated statement of comprehensive income and both are added to the investment in associates in the statement of financial position. When the Group’s share of losses in an associate equals or exceeds its interest in the where the Group continues to exercise significant influence, only a proportionate share of amounts previously recognized in other comprehensive income is reclassified to profit or loss. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally 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 through a sale transaction rather than through continuing use. currency using the exchange rates in force at the transaction date. Non-current assets and disposal groups classified as held for sale Foreign exchange gains or losses resulting from the settlement are measured at the lower of their carrying amount and fair value of such transactions, are recognized in profit or loss. Translation less costs to sell. Costs to sell are the incremental costs directly differences on monetary items (assets and liabilities) that are attributable to the disposal of an asset (disposal group), excluding not denominated in the entity´s functional currency are also finance costs and income tax expense. recognized through profit or loss. The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group Group companies The income statements and statements of financial positions is available for immediate sale in its present condition. Actions of the Group entities (none of which has the currency of a required to complete the sale should indicate that it is unlikely that hyperinflationary economy) that have a functional currency significant changes to the sale will be made or that the decision different from the presentation currency are translated into the to sell will be withdrawn. Management must be committed to the presentation currency as follows: plan to sell the asset and the sale expected to be completed within one year from the date of the classification. • The statement of financial position is translated using the Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale. A disposal group qualifies as a discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and it: • closing rate at the end of the period. Income and expense items 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. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 110 When a foreign operation is sold, the exchange difference, which in Amortized licenses are tested for impairment only if there are permit scope. The Aquaculture Act is administered centrally by the Salmon farming companies can lease educational licenses from previous periods was recognized in other comprehensive income, indications that future earnings do not justify the asset’s carrying Ministry of Trade, Industry and Fisheries, with the Directorate of the educational institution. Part of the students’ training will then is not accrued. The accumulated exchange difference on the sale value. 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 Goodwill represents the excess of the cost of an acquisition over Fisheries as the supervisory authority. Regionally, several industry take place at these salmon farms. authorities jointly manage full administrative and supervisory responsibility within the regulating range of the Aquaculture Act. Harvesting pen licenses The county council is the regional administrative body, while the Licenses utilized for holding pens where live fish are kept prior to the fair value of the Group’s share of the net identifiable assets Directorate of Fisheries serves as appellate body in locality and harvesting. These relate to specific locations. Goodwill and fair value adjustments of assets and liabilities on the of the acquired entity at the date of acquisition. Goodwill on licensing matters. acquisition of a foreign entity are treated as assets and liabilities acquisitions of subsidiaries is classified as an intangible asset. Duration and renewal of the foreign entity and are translated using the closing currency Goodwill on the purchase of a share in an associate is included Seawater licenses The Ministry may in individual decisions or regulations specify rate at the balance sheet date. in “investments in associates”. Goodwill is tested annually for Each license for the farming of salmon in the sea is subject to a further provisions on the content of aquaculture licenses, including PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at historical cost less impairment and carried at cost less accumulated impairment production limit in the form of “maximum allowed biomass” (MAB) matters relating to scope and time limitations, see Section 5(2) losses. Impairment losses on goodwill are not reversed. Gains and at two levels, company and location level. The system means the of the Aquaculture Act. Nonetheless, the preparatory work for losses on the disposal of an entity include the carrying amount of license holder can at no time have a standing biomass (number of the Aquaculture Act specifies that licenses are normally granted depreciation and impairment losses. Historical cost includes goodwill relating to the entity sold. 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 which the goodwill arose. a separate asset when it is probable that future economic benefits associated with the improvement will flow to the Group and the LICENSES Fish-farming licenses with an indefinite useful life are not For the purpose of impairment testing, goodwill is allocated to of tonnes of fish is set, based on the location and environmental Grieg Seafood’s general fish farming and hatchery licenses are those cash-generating units or groups of cash-generating units conditions on the site. The normal size of a permit is 780 tonnes not time-limited under current regulations. After the reform in that are expected to benefit from the business combination in at the license level, with the exception of the county of Troms 2009, a number of licenses were time-limited, mainly for 15 years. kg of live fish in seawater) that exceeds the company level MAB. without a time limit. In connection with the approval of a locality, a maximum level and Finnmark where the permit is 945 tonnes. While the extent As no government practices have been established relating to of biomass a company can possess primarily depends on the type the renewal of broodstock licenses, the current understanding and number of licenses, the limitation at site level is primarily is that they will be renewed upon application. Expiration of dependent on the site’s environmental sustainability. See Section 15 licenses allows for application for renewal on demand. A license cost of the item can be reliably measured. All other repairs and amortized but reviewed for impairment annually, or more of the Salmon Allocation Regulation (“Laksetildelingsforskriften”). for harvesting pens is valid for ten years and must be renewed maintenance are recognized in the income statement during the frequently if there are indications that the carrying value may have financial period in which the costs are incurred. decreased. Norway also has green licenses, with stricter environmental approved harvesting facility. criteria. The sea lice limit is half that of regular licenses, with on expiration, provided that the license is still connected to an Land and buildings mainly comprise freshwater facilities and The Group considers the following licenses to have indefinite stricter criteria for escape prevention technologies and limits on Disposal and withdrawal offices. Land is not depreciated. Other operating assets are useful lives: the amount of medical treatment permitted per generation. All licenses can be transferred and mortgaged in accordance with 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 • Nets/cages/moorings 5–25 years • Other equipment 3–35 years Licenses granted with an indefinite useful life, where the company Hatchery licenses Section 19 of the Aquaculture Act. Transfers and mortgages must be recorded in a separate register (the Aquaculture Register). It is has no other contractual restrictions relating to the use of the Young salmon are defined as eggs, juveniles, parr or smolt to not permitted to rent out licenses or license capacity. license. Licenses granted with a finite useful life, but where be released at another location, see Section 4(f) of the Salmon the license holders can renew the licenses without incurring Allocation Regulation. Such licenses are not limited and thus Section 9 of the Aquaculture Act sets out the basis for withdrawal considerable expenses. subject to continuous application for new licenses or changes to of an aquaculture license. This states that there must be significant existing licenses. Pursuant to the regulations, annual production breaches of the terms of an aquaculture license before it can be Licenses with a finite useful life are amortized over their useful is limited to 15 million fish. revoked. The assets’ useful lives and residual values are estimated at each lives. These relate to water licenses for hatcheries and some balance sheet date and adjusted if necessary. In 2021 there has not been any changes of useful life relative to EU taxonomy or other specific seawater licenses. The following sections provide a R&D and broodstock licenses description of licenses relating to the Norway and Canada (BC) These licenses are not limited in number. The purpose of BC Grieg Seafood BC Ltd (GSF BC) has farms on both the west and climate regulations. This will will continuously be considered and segments. See Note 10 Intangible assets for an overview of the broodstock licenses is to produce roe and milt from salmon east coasts of Vancouver Island. In order to operate farms in British adjustments if necessary. number and types of licenses, as well as impairment testing. with improved and/or specific traits. The purpose of an R&D Columbia, Canada, the following three licenses must be in place: An asset’s carrying value is written down to its recoverable amount if the carrying value is greater than its estimated recoverable NORWAY The licensing regime for the production of salmon in Norway is bring the Norwegian aquaculture industry forward. Permits are 1. Aquaculture license – issued by the Department of Fisheries means tested, meaning that the applicant must demonstrate a and Oceans and the First Nations. amount. Gains and losses on disposals are recognized on a net enacted by the Norwegian Parliament through the Aquaculture need for the production of eggs, specific research projects or for 2. License of Occupation (Tenures) – issued by the Ministry of basis and represent the difference between the sales price and the Act. The Ministry of Trade, Industry and Fisheries grants permits educational purposes. Broodstock licenses include both a land Forest, Lands and Natural Resource Operations. license is to encourage important research projects that can 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. for aquaculture (licenses). All aquaculture operations are subject to licensing and no one can produce salmon without permission from the authorities, see Section 4 of the Aquaculture Act. The aquaculture permit allows the production of salmon in limited geographic areas within the current determined limitations of the and sea phase, i.e. broodfish and egg production are covered by the same licensing process. 3. Navigation Water Permit – issued by Transport Canada (Canadian public authority). Educational licenses Educational licenses in Norway are given to universities, colleges or high schools offering aquaculture-related courses of study. For restrictions regarding production quantity, see table in Note 10. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 111 Duration and renewal under AP 8 Site Utilization. If sites are not being utilized component, the Group initially measures a financial asset at its 1. Aquaculture license – duration of one year, renewal each year based on approved plans on file, they may not be renewed. fair value plus, in the case of a financial asset not at fair value Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are carried in In June 2018, the Government of British Columbia announced line method over the estimated useful life, as follows: • Financial assets at fair value through profit or loss is a formality. 2. License of Occupation – duration of 2–20 years. Renewal is applied for on expiration. OTHER INTANGIBLE ASSETS Acquired customer portfolios and computer software licenses 3. Navigation Water Permit – duration of five years, but possible are recognized in the statement of financial position at cost and to apply for renewal. New renewal process in Canada West amortized over their estimated useful lives. Customer portfolios are recognized in the statement of financial position at cost on the date of purchase. Amortization is calculated using the straight- 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 effective from June 2022. The authorities want to cooperate with companies that have licenses where production might conflict with the wild • 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 through profit or loss, transaction costs. The Group has financial the statement of financial position at fair value, with net changes assets classified as follows: in fair value recognized in the income statement. • Financial assets at amortized cost (debt instruments) This category includes derivative instruments and listed equity • Financial assets designated at fair value through OCI with no investments which the Group had not irrevocably elected to classify recycling of cumulative gains and losses upon derecognition at fair value through OCI. Dividends on listed equity investments (equity instruments) Financial assets measured at amortized cost The Group measures financial assets at amortized cost if both of the following conditions are met: 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 salmon and find alternative solutions, such as moving the licenses annually for impairment. Assets that are subject to amortization objective to hold financial assets in order to collect contractual (i.e., removed from the Group’s consolidated statement of financial to new areas. The process leading up to this decision is currently are reviewed for impairment whenever there are indications that cash flows and, position) when: under judicial review. Grieg Seafood BC has one site in this area. future earnings do not justify the carrying value. The production at Grieg Seafood’s farm in the Discovery Island • The contractual terms of the financial asset give rise on a. The rights to receive cash flows from the asset have expired, or specified dates to cash flows that are solely payments of b. The Group has transferred its rights to receive cash flows from area has been moved to other farms and harvest volumes for 2022 An impairment loss is recognized for the amount by which the principal and interest on the principal amount outstanding. the asset or has assumed an obligation to pay the received will not be impacted. The current agreements we have with First asset’s carrying value exceeds its recoverable amount. The cash flows in full without material delay to a third party under a Nations last until 2037 - 2045. See note 4 for more information. recoverable amount is the higher of an asset’s fair value less Financial assets at amortized cost are subsequently measured “pass-through” arrangement; and either NEWFOUNDLAND Grieg Seafood Newfoundland has exclusive farming rights costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for using the effective interest (EIR) method and are subject to i. the Group has transferred substantially all the risks and impairment. Gains and losses are recognized in profit or loss when rewards of the asset, or which there are separately identifiable cash flows (cash- the asset is derecognized, modified or impaired. • The financial asset is held within a business model with the part of a group of similar financial assets) is primarily derecognized to Placentia Bay. In order to operate aquaculture sites in generating units). Non-financial assets, other than goodwill, ii. the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred Newfoundland, Canada, the following approvals and licenses must that have suffered an impairment are reviewed for indicators The Group's financial assets at amortized cost includes trade control of the asset. be in place: of possible reversal of the impairment at each reporting date. receivables and other short-term deposit. Trade receivables that • Aquaculture License – issued by the Department of Fisheries Forestry and Agriculture • Lease License for Occupancy – issued by Crown Lands division of Department of Fisheries Forestry and Agriculture • Canadian Navigable Waters Act - issued by Transport Canada FINANCIAL INSTRUMENTS A financial instrument is any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity. The classification is performed in accordance with do not contain a significant financing component are measured at the transaction price determined under IFRS 15 Revenue from Impairment of financial assets The Group recognizes an allowance for expected credit losses Contracts with Customers. Equity instruments designated at fair value through OCI Upon initial recognition, the Group can elect to classify irrevocably (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 all the cash flows that the Group expects to receive, discounted • Water Use Approval – issued by Department of Environment, the substance of the contractual arrangement, and in line with the its equity investments as equity instruments designated at fair at an approximation of the original effective interest rate. ECLs Climate Change, and Municipalities definitions of a financial asset, a financial liability and an equity value through OCI when they meet the definition of equity under are recognized in two stages. For credit exposures for which instrument. IAS 32. The classification is determined on an instrument-by- there has not been a significant increase in credit risk since initial Duration and Renewal Aquaculture licenses are granted for a six-year term. Each year, Ordinary purchases and sales of investments are recognized on licensees must complete the validation process and abide by the trade-date, the date on which the Group commits to purchase the legislative references: Aquaculture Act and the Policy cross or sell the asset. All financial assets that are not stated at fair references as Aquaculture License Renewal AP 6, Annual reporting value through profit or loss are initially recognized at fair value AP 7 and site utilization. For renewal, licensees are required to plus transaction costs. instrument basis. recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a An equity instrument is any contract that evidences a residual 12-month ECL). For those credit exposures for which there has interest in the assets of an entity after deducting all of its liabilities. been a significant increase in credit risk since initial recognition, Gains and losses on these financial assets are never recycled to remaining life of the exposure, irrespective of the timing of the a loss allowance is required for credit losses expected over the profit or loss. Dividends are recognized as other income in the default (a lifetime ECL). income statement when the right of payment has been established, follow and comply with the requirements set out in AP 6 License Renewal. Licensees must abide by license conditions, policies and regulations at all times. Licenses may be suspended or cancelled if a breach occurs, or they may not be renewed. The timeline supports two production cycles and promotes longer-term Ensuring sites are being utilized and developed by license holders in accordance falls with approved plans on file with investment and stability. the department FINANCIAL ASSETS Financial assets are classified, at initial recognition, as except when the Group benefits from such proceeds as a recovery See the “Trade receivable” section in this note for specific subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. 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 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. 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. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 112 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 Financial liabilities at fair value through profit or loss 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 do not utilize the hedge accounting principles of IFRS 9. Non-hedge accounting The Group engage in short-term derivative contracts to hedge currency- and interest risk. Such contracts are recognized at fair value through profit or loss and presented as financial income/ financial expenses. NASDAQ FISH POOL SALE AND PURCHASE AGREEMENTS For the financial contracts entered into with 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 the 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 premise. Biological assets comprise of smolt and fish in the 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 9, see the tables “Status of biological assets” and “abnormal mortality – write down”. Roe, fry and smolt are kept onshore. When the fish are large enough to be transferred to the sea, they are classified in group 2) biomass in sea. The group 2 biological assets classification is further decomposed in Note 9 as “immature fish in sea, round weight < 4.60 kg” and “mature fish in sea, round < weight > 4.60 kg” – see the tables “Status of biological assets” < and “abnormal mortality – write down”. • 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 transferred to the 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 fair value of fish in the sea is estimated for each location. In accordance with the principle relating to highest and best use, the Industry Group considers that the fish have optimal harvest weight when they have a live weight of 4.60 kg, which corresponds to 4 kg gutted weight. Fish with a live weight of 4.60 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 in the market. Such expenses are also deemed immaterial. Incoming cash flow is calculated as a function of estimated volume Changes arising from physical delivery contracts are recognized multiplied by estimated price. For fish not ready for harvest, a as “fair value adjustment of biological assets”. The liability in the deduction is made to cover estimated residual costs to grow the statement of financial position is recognized as other current fish to harvestable weight. The cash flow is discounted monthly liabilities. by a discount rate. The discount rate comprises three main components: 1) the risk of incidents that influence cash flow, 2) Fish farming naturally comes with a certain level of loss of fish hypothetical license lease and 3) the time value of money. Please along the production cycle, and our budgets are typically produced refer to the Note 4 on significant accounting estimates for more with an inherent assumption of a 0.5-1% monthly mortality. The detailed information. losses associated with normal levels of survival are not directly recognized in the income statement. In periods where specific When estimating the actual accumulated cost at the respective abnormal incidents lead to reduced survival, we immediately seawater facility, direct costs (fish feed and similar) are allocated recognize write-downs of the biomass inventory to better reflect to each group of fish transferred to the sea at the same location. the actual biomass in the sea or on land. The write-down costs Financial costs are not included in the costs of production. are recorded in the income statement as they arise, under raw materials and consumables used. The sales price for fish in the sea is 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 TRADE RECEIVABLES Trade receivables arising from the trading of goods or services kg gutted weight. The volume on Fish Pool is limited, but Grieg within the ordinary operating cycle and under normal terms of Seafood’s opinion is that the observable forward prices must be payment are initially recognized at nominal value. Trade receivables seen as the best approach to a price for the sale of salmon. With with longer terms of payment are discounted to present value, and regard to foreign countries, the most relevant price information represents the Group’s unconditional right to consideration from available for the expected harvesting period is applied. For fish the customer. in the sea, the forward price in Norway is adjusted for historical differences in achieved prices between Norway and Canada. The price/net sales value is adjusted for quality differences Expected credit loss (ECL) on trade receivables For trade receivables, the Group applies a simplified approach in (superior, ordinary and prod.), and for logistics expenses and sales calculating ECLs. Therefore, the Group does not track changes commissions. Estimated harvesting expenses are deducted. in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. For receivables where the The volume (biomass) is based on the actual number of individuals credit risk has increased substantially after establishment, in the sea at the balance sheet date, adjusted to cover estimated a write-down shall be made for the expected credit loss over mortality up to harvest date and multiplied by the estimated the maturity of the receivables. The model for calculating loss harvest weight per individual at the time of harvest. The fish in sea allowance classifies the trade receivables into two groups: normal figure is adjusted for gutting waste, as the price is measured for risk and high-risk, based on their country of origin. Furthermore, gutted weight. Budgeted harvesting and freight costs are applied. the trade receivables are classified as credit-insured receivable Foreign currency forward contracts associated with the date of or not. The provision is the difference between nominal and harvesting are applied when translating the price into CAD. recoverable amount, which is the present value of estimated future cash flows, discounted at the original effective interest rate. The change in the fair value of biological assets is recognized Loss allowance is recognized as “other operating expenses” in the through profit or loss and presented as “fair value adjustment of income statement. biological assets”. Onerous contracts are contracts where the expenses of fulfilling Factoring agreements The Group is engaged in factoring agreements that cover financing the contracts are higher than the economic yield the company of outstanding receivables for the sales organization in Norway. The expects to gain by fulfilling the contracts. The Group enters into factoring agreement for Grieg Seafood Norway was established contracts related to future deliveries of salmon. As biological in 2021, and as such factoring arrangements for the Group assets are recognized at fair value, the fair value adjustments of were re-established in 2021. The Group previously had factoring the biological assets will be included in 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. arrangements through Sjór AS, which was sold at year-end 2020. The accounting treatment of the factoring arrangement for Grieg Seafood Norway is similar to the prior factoring arrangement, as the receivables purchased by the factoring company are derecognized from the statement of financial position. See the section “Derecognition of financial assets“ in this note for the related accounting principle. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 113 CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash in hand, bank deposits and 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. pension payment calculations are based on standard assumptions • it is more likely than not that an outflow of resources will be Cash refunds are given to the customer if the sold product is relating to the development of mortality and disability as well as required to settle the obligation; delivered with discrepancies compared to the agreed sales other factors such as age, years of service and remuneration. • the amount of the obligation can be reliably estimated. contract, or if the product is damaged. Generally, refunds are not Pension premiums are recognized in the income statement material. through operations as they arise. Restructuring provisions comprise lease termination penalties and SHARE CAPITAL Ordinary shares are classified as equity. Costs directly attributable SHARE-BASED REMUNERATION The Group operates a share-based management remuneration employee termination payments. Provisions are not recognized for Revenue is shown net of value added tax, returns, rebates and future operating losses. discounts and after eliminating intragroup sales. to the issue of new shares or options, net of tax, are shown in scheme with settlement in cash. Under the scheme, individual Where there are a number of similar obligations, the likelihood equity as a deduction, net of tax, from the proceeds. employees may buy shares shares proportionate to their annual that an outflow will be required in settlement is determined by Other revenue streams In addition to the sale of fresh and frozen salmon, the Group also BORROWINGS Borrowings are initially recognized at fair value when the funds for the grant of the options is recognized as an expense. The total recognized even if the likelihood of an outflow with respect to any made up a non-significant part of the total sales of Grieg Seafood. amount to be charged over the vesting period is calculated on the one item included in the same class of obligations may be small. Furthermore, the Group offers harvesting services to other salary. The fair value of the employee services received in exchange considering the class of obligations as a whole. A provision is sells roe, smolt and ensilage. Together, these have historically are received, net of transaction costs incurred. Borrowings are basis of the fair value of the options granted, excluding the impact Provisions are measured as the present value of the expenditures aquaculture companies in the event of surplus capacity, also subsequently stated at amortized cost applying the effective of any non-market vesting conditions (for example, profitability and expected to be required to settle the obligation, using a pre-tax historically being non-significant compared to the total revenue of interest method. Any difference between the proceeds (net of sales growth targets). Non-market vesting conditions are included discount rate that reflects the current market situation and the the Group. transaction costs) and the redemption value is recognized in the in assumptions about the number of options that are expected to income statement over the period of the borrowings. Borrowings vest. At each balance sheet date, the company revises its estimates risks specific to the obligation. The increase in the provision due to the change in value because of the passage of time is recognized are classified as current liabilities unless the Group has an of the number of options that are expected to be vested and as a financial expense. unconditional right to defer settlement of the liability for at least recognizes the impact of the revision relative to original estimates, 12 months after the reporting 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 reporting 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 Norwegian pension schemes meet the requirements of the Norwegian 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 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 throughout 2021. 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, at its sole discretion, whether the plan will be extended in the future, and the terms of the plan. 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; Contract assets A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group transfers goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is REVENUE RECOGNITION Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer recognized for the earned consideration that is conditional. The at an amount that reflects the consideration to which the Group Group’s consideration becomes unconditional at the point of expects to be entitled in exchange for those goods or services. delivery, and as the contracts generally hold one performance The Group’s revenue derives primarily from the sale of whole and obligation (fulfilled at the time of delivery), the Group does not hold processed fish and some roe, smolt and ensilage. Sales contracts material contract assets. As such, the Group does not disclose cover both spot sales and fixed-price deliveries. Revenue from further information on contract assets other than receivables with the sale of salmon is generally recognized upon delivery, as the an unconditional right to consideration. Group considers delivery as the point in time when control of the goods/service is transferred to the customer. Each sales contract – either for a spot sale or a fixed delivery – is considered as one Contract liabilities A contract liability is the obligation to transfer goods or services to performance obligation. Each week, the sale of fish is settled with a customer for which the Group has received consideration (or an the customer. The fixed-price delivery contracts that are entered amount of consideration is due) from the customer. If a customer into with customers, specify a per-week volume. pays consideration before the Group transfers goods or services to the customer, a contract liability is recognized when the payment The sales price is determined upon contract settlement and is is made. Contract liabilities are recognized as revenue when the based on available market price (for example Nasdaq prices Group fulfills the performance obligation(s) under the contract. including transport and margin, and the price is per kilogram). The See “revenue recognition” in this note for further details. price varies according to the quality of the salmon and its size, and the fish is mainly sold Delivery Duty Paid (DDP) to the customer. Payment is settled upon delivery, and the performance obligation DIVIDEND INCOME Dividend income from investments or equity instruments is related to the sale of fish is satisfied at delivery. That also applies recognized when the right to receive payment is established. to the fulfillment of physical delivery contracts. Dividend income from entities recognized under the equity method are not recognized but recorded as a reduction in the carrying The normal credit term of the Group’s sales transactions is 30 value of the investment. days. Based on the nature of the sale of fresh and frozen fish, the Group generally has no material contract liabilities. The Group does not generally engage in customer contracts where fulfillment of the performance obligation lies more than one year in the future. Therefore, the Group does not disclose further information on contract liabilities and related performance obligations. GOVERNMENT GRANTS Government grants are recognized when it is reasonably certain that the company will meet the conditions stipulated for the grants and that the grants will be received. Operating grants are recognized systematically during the grant period. Grants are deducted from PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 114 the cost which the grant is meant to cover. Investment grants are capitalized and recognized systematically over the asset’s useful Right-of-use assets The Group measures the right-of-use asset at cost, less any life. Investment grants are recognized either as deferred income accumulated depreciation and impairment losses, adjusted for or as a deduction of the asset’s carrying amount. any remeasurement of lease liabilities. The cost of the right-of- 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. 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. Lease liabilities 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. The lease payments included in the measurement comprise: • Fixed lease payments (including in-kind fixed payments), less any lease incentives receivable use asset comprises: • 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 assets on the financial statement line item “Property, plant and equipment incl. right-of- use assets”. The Group applies the depreciation requirements in IAS 16 Property, Plant and Equipment when 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 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. 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 • Variable lease payments that depend on an index or a rate, assets are capitalized during the period of time that is required initially measured using the index or rate in effect on the to complete and prepare the asset for its intended use. Other commencement date borrowing costs are expensed in the income statement. Lease payments generally also include any exercise price of a purchase option/payments of penalties for terminating a lease, CONTINGENT ASSETS AND LIABILITIES Contingent liabilities are defined as: provided that the Group is reasonably certain to exercise such an • possible obligations resulting from past events whose existence option. depends on future events, • obligations that are not recognized because it is not probable The lease liability is subsequently measured by increasing the that they will lead to an outflow of resources entailing financial carrying amount to reflect interest on the lease liability, reducing benefits from the company, the carrying amount to reflect the lease payments made and • obligations that cannot be measured with sufficient reliability. remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect adjustments in lease payments Contingent liabilities are not recognized in the annual financial due to an adjustment in an index or rate. statements apart from contingent liabilities resulting from the acquisition of an entity. Material contingent liabilities are disclosed, The Group presents its lease liability separately from other liabilities in the statement of financial position. with the exception of contingent liabilities where the probability of the liability crystallizing 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 cash and non-cash changes in the Group’s liabilities, which is included in Note 12. 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. EVENTS AFTER THE REPORTING PERIOD New information on the Group’s financial position at the close of the reporting period, which becomes known after the reporting period, is recognized in the annual accounts. Events after the reporting period which do not affect the Group’s financial position on the close of the reporting period but which will affect the company’s financial position in the future are disclosed if significant. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 115 NO T E 3 FIN ANCI A L R IS K M A N A GEMEN T NO T E 3 FIN ANCI AL R ISK M AN 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. Grieg Seafood aims to provide shareholders with a competitive return on invested capital through payment of dividends and share price increases. The Board of Directors maintains that, as an average over time, dividends should correspond to 30-40% of the Group’s profit after tax, adjusted for the effect of fair value of biological assets. As at 31 December 2021, Grieg Seafood was in a solid financial position to execute strategic priorities and deliver shareholder return. At 31 December 2021, the Group had net interest-bearing liabilities, including lease liabilities, of NOK 2 291 million, see Note 12. The Group’s funding is primarily a green bond issue of NOK 1 500 million issued in 2020, bank loans and leasing liabilities. At year-end 2021, 47% (2020: 36%) of our gross interest-bearing liabilities derived from green financing. The level of liabilities and alternative forms of funding are subject to constant evaluation. In Q1 2022, the Group's bank loans were refinanced, see Note 12 for more information. 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. As at 31 December 2021, the Group did not apply hedge accounting. Nor did it as at 31 December 2020. 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. IBOR reform The Group is exposed to the ongoing IBOR reform, as the Group has bank and bond loans, and engage in interest-rate swaps that are exposed to the NIBOR rate. The bank loans’ interest rate is 3M NIBOR plus a margin set per interest period according to a margin ratchet. The 3M NIBOR and the margin is set per interest period. The bond loan’s interest rate is 3M NIBOR plus a margin of 3.4 percentage points. 3M NIBOR is set per interest period. The Group monitors the IBOR reform and its potential impacts on the Group. As at 31 December 2021, the IBOR reform is not expected to significantly impact the Group. The information concerning our interest rate swaps disclosed below, explicitly states the swaps exposed to NIBOR. At the very end of this Note, we have disclosed the maturity profile on the bank loans and bond loan. See also Note 12 for more information on our interest-bearing liabilities. Our bank loan was refinanced in Q1 2022. The maturity profiles in this Note are forward looking as at 31 December 2021. The interest rate for the refinanced loan agreement is 3M NIBOR plus a margin set per interest period according to a margin ratchet. 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. PA R T 0 3 : O U R F I N A N C I A L 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 TRADE RECEIVABLES AND TRADE PAYABLES CURRENCY IN NOK 1 000 2021 Trade receivables Trade payables 2020 Trade receivables Trade payables NET INTEREST-BEARING LIABILITIES CURRENCY IN NOK 1 000 2021 NOK USD EUR GBP CAD JPY OTHER CURRENCIES TOTAL 44 591 64 959 23 912 — 18 907 -576 391 599 2 298 9 608 15 494 101 844 121 859 409 259 39 234 12 708 — 1 145 — — 18 291 139 736 — — — — 151 793 2 353 523 196 — — 179 384 562 848 NOK USD EUR GBP CAD JPY OTHER CURRENCIES TOTAL Cash and cash equivalents -22 537 44 252 58 346 750 778 94 238 Loans to associated companies Interest-bearing liabilities* 2 111 2 893 312 — — — — — — — 327 662 44 — — 3 223 928 342 — 2 111 — 3 220 974 Net interest-bearing liabilities 2 913 737 -44 252 -58 346 -750 778 233 424 -44 -3 223 2 290 520 2020 Cash and cash equivalents 309 278 33 717 603 -104 272 36 098 Loans to associated companies Interest-bearing liabilities* 1 910 3 567 768 — — — 533 985 — — — 106 466 Net interest-bearing liabilities 3 256 580 -33 717 533 383 104 272 70 368 — — — — 2 — 275 426 1 910 — 4 208 218 -2 3 930 882 *See Note 12 for more information on the Group’s net interest-bearing liabilities. 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. Subsidiaries participating in the agreement can utilize the group cash pool arrangement by going into overdraft on individual bank accounts provided that Group's total bank deposit is positive. Not all subsidiaries are part in the cash pool arrangement. The 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. At 31 December 2021, the net amount of bank deposits in the group account scheme amounted to NOK 787 million (2020: NOK 181 million). 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 bank loans have been refinanced in Q1 2022. See Note 12 for more information. In 2020, we issued a green bond totaling NOK 1 500 million through two tap issues. The bond matures in 2025, and is denominated in NOK. The holding companies in the Group extend current and non-current loans to the subsidiaries denominated in these companies’ functional currency. The non-current loans, with some exceptions, are considered to be equity in these companies, as no repayment of the principal amount outstanding is planned. The currency effect of loans is recognized under "currency effect on loans to subsidiaries" in the Other Comprehensive Income statement. The numerical effects for 2021 and 2020 are presented below. CURRENCY EFFECTS ON LOANS TO SUBSIDIARIES NOK 1 000 Currency effect Tax effect (22%) Currency effect - recycle accumulated of OCI (Sale of Shetland)* Tax effect (22 %) - recycle accumulated of OCI (Sale of Shetland)* Net effect recognized in equity through OCI *See Note 5 for more information. PA G E 116 2020 -23 667 5 207 — — -18 460 2021 32 222 -7 089 -103 223 22 709 -55 380 Sensitivity analysis A sensitivity of +/- 10% change in NOK foreign exchange rates against USD, CAD, GBP and EUR at the reporting date (all other factors remaining unchanged) would be expected to have the following effects on net interest-bearing liabilities (NOK 1 000). The numerical effects on net interest-bearing liabilities for year-end 2021 and 2020 are presented below. SENSITIVITY NOK 1 000 31.12.2021: Assets Liabilities Net interest-bearing liabilities 31.12.2020: Assets Liabilities Net interest-bearing liabilities 10 % change in FX-rate USD EUR GBP CAD -/+ -/+ -/+ -/+ -/+ -/+ -4 425 — 4 425 -3 372 — 3 372 -5 835 -42 452 -36 618 -60 -53 399 -53 338 -75 078 — 75 078 10 427 — -10 427 -9 424 -32 766 -23 342 -3 610 -10 647 -7 037 A depreciation of NOK versus USD/EUR/GBP/CAD will, in general, decrease the assets (which increases net interest-bearing liabilities), and decrease the liabilities, which reduces the net interest-bearing liabilities. FORWARD CURRENCY CONTRACTS Hedge accounting has been applied to foreign currency forward contracts relating to non-current physical delivery contracts in 2020. The effect on profit is recorded in other comprehensive income. As at 31 December 2020 and through the year to 31 December 2021, the Group did not apply hedge accounting. Value changes in current forward contracts affect profit and loss, as these contracts are recognized at fair value through profit and loss, see accounting policies (Note 2). FORWARD CURRENCY CONTRACTS AT FAIR VALUE THROUGH PROFIT AND LOSS SOLD EUR EUR USD Total AMOUNT CURRENCY IN 1 000 BOUGHT AMOUNT CURRENCY IN 1 000 WEIGHTED HEDGING RATE MARKET RATE MATURITY INTERVAL * 6 408 1 000 7 771 NOK NOK CAD 63 597 10 031 9 921 9.9246 1.2651 1.2767 9.9888 01.02.2022 - 31.12.2022 9.9888 01.01.2022 - 31.01.2022 1.2692 01.01.2022 - 28.02.2022 *Maturity specified as an interval for multiple contracts FORWARD CURRENCY CONTRACTS AT FAIR VALUE THROUGH PROFIT LOSS AMOUNT CURRENCY IN 1 000 BOUGHT AMOUNT CURRENCY IN 1 000 WEIGHTED HEDGING RATE MARKET RATE MATURITY INTERVAL * 3 710 5 502 GBP CAD 3 351 7 078 0.9031 1.2865 0.9047 1.2721 10.03.2021..12.01.2022 04.01.2021-05.02.2021 SOLD EUR USD Total MARKET VALUE NOK 1 000 31.12.2021 -1 149 42 404 -704 MARKET VALUE NOK 1 000 31.12.2020 69 532 601 *Maturity specified as an interval for multiple contracts PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 117 (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 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 2021, the Group had unrealized financial salmon contracts totaling independent of changes in market interest rates. The Group’s interest rate risk arises from borrowings. Borrowings at variable rates expose NOK -20.6 million. As at year-end 2021, the Group did not have any physical delivery contracts recognized as a liability. This was also true the Group to cash flow interest rate risk. Fixed-interest contracts are used to reduce this risk. The Group continuously monitors its interest at year-end 2020. rate exposure. The Group calculates the impact on profit and 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% lower (higher) throughout the year, all other factors remaining unchanged, the pre-tax profit would have increased (decreased) by NOK 38.5 million in 2021 and NOK 26.6 million in 2020, due to the floating rate of interest on loans and deposits. The sensitivity analysis is based on average net interest-bearing liabilities from our bank loans (term loans in NOK and EUR, as well as revolving credit facility) and bond loan during 2021 and 2020, irrespective of concluded Fair value of financial derivatives The carrying value of derivatives and other financial instruments as at 31 December 2021 and 31 December 2020 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. All the financial derivative instruments included in the table below are measured according to level 2 of the fair value hierarchy. For more information, see Note 14. interest rate swap agreements. SENSITIVITY NOK 1 000 Effect on profit before income tax CHANGE IN INTEREST RATE POINTS 2021 2020 FAIR VALUE OF FINANCIAL DERIVATIVES NOK 1 000 -/+1% +/-38 545 +/-26 577 Forward currency contracts at fair value through profit or loss The sensitivity table is for our bank and bond loans. A reduction in interest rates will increase the profit before tax. 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. The Group does not apply hedge accounting. 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 Group constantly evaluates whether these periods should be rolled over. INTEREST RATE SWAP PRINCIPAL NOK 1 000 FIXED RATE (%) BASIS OF FLOATING RATE MATURITY Fixed rate paid - floating rate received NOK 260 million Fixed rate paid - floating rate received NOK 200 million Fixed rate paid - floating rate received NOK 200 million Fixed rate paid - floating rate received NOK 200 million Fixed rate paid - floating rate received NOK 200 million Fixed rate paid - floating rate received NOK 200 million 1.28 1.61 1.35 1.07 0.71 0.72 Nibor 3 months 20.10.2021 Nibor 3 months 28.08.2023 Nibor 3 months 04.03.2024 Nibor 3 months 05.07.2024 Nibor 3 months 18.12.2024 Nibor 3 months 18.12.2024 Total Interest rate swap contracts assessed at market value excluding accrued interest INTEREST RATE DERIVATIVE CONTRACT PRINCIPAL RATE (%) MATURITY Interest rate derivative contract NOK 200 million 0.38/0.72 18.12.2024 Total CROSS CURRENCY INTEREST RATE SWAP PRINCIPAL MATURITY Cross-currency interest rate swap (NOK/EUR) NOK 200 million / EUR 23 million 25.06.2025 Interest rate option, floor Total NOK 250 million 25.06.2025 MARKET VALUE NOK 1 000 31.12.2021 MARKET VALUE NOK 1 000 31.12.2020 — -590 874 2 628 5 561 5 524 13 997 -1 867 -5 465 -4 402 -2 612 372 — -13 975 MARKET VALUE NOK 1 000 31.12.2021 MARKET VALUE NOK 1 000 31.12.2020 — — 310 310 MARKET VALUE NOK 1 000 31.12.2021 MARKET VALUE NOK 1 000 31.12.2020 22 327 233 22 560 6 692 423 7 115 (iii) Price risk Financial salmon price contracts allow the buyer and seller to agree prices and volumes for future delivery. As at 31 December 2021, 17% of the estimated harvest volumes in 2022 in Norway will be sold under fixed-price contracts. The total share of fixed-price contracts in 2021 was 30% for Norway. The financial contracts are presented gross in the balance sheet with changes in value recognized through profit/loss Forward currency hedging contracts at fair value through comprehensive income Cross-currency interest rate swap w/ interest rate floor- Interest rate swap agreements Financial salmon contract - purchase contracts Financial salmon contract - sales contracts* Total financial instruments at fair value** 2021 2020 ASSETS 446 — 22 560 14 587 — — 37 592 CURRENT LIABILITIES -1 149 — — -590 — -20 611 -22 350 ASSETS 601 — 7 115 682 — 75 792 84 189 CURRENT LIABILITIES — — — -14 346 — — -14 346 *As at year-end 2021, Grieg Seafood had NOK 13 million classified as current liabilities (see note Note 26) related to realized financial salmon contracts. This amount represents settled price contracts, not part of the fair value-derivative amount. As at year-end 2020, the comparable figure was NOK 27 million classified as a current receivable (see Note 22). **Measured according to level 2 of the fair value hierarchy. 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 Group 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. A factoring arrangement was re-established in 2021. At 31 December 2020, other than factoring liabilities classified as liabilities directly associated with the Shetland assets held for sale, the Group was not exposed to factoring liabilities. In 2021, the sale of fish was carried out by our wholly owned sales organization. Up until year-end 2020, all fish produced in the Group was sold to Ocean Quality Group, which in turn sold it to external customers. The sales company secures the bulk of its sales through credit insurance and bank guarantees. At year-end 2020, Ocean Quality AS had been deconsolidated and renamed Sjór AS. NOK 79 million of the Grieg Seafood Group’s trade receivables at year-end 2020 comprised intercompany receivables from the newly external Sjór AS. The book value of financial assets represents the maximum credit exposure. For further information about loss allowance, please refer to Note 21. MAXIMUM CREDIT RISK EXPOSURE NOK 1 000 Trade receivables Cash and cash equivalents Total III) LIQUIDITY RISK NOTE 21 20 2021 50 443 928 342 978 786 2020 146 347 275 427 421 774 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. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 118 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 and FAIR VALUE ESTIMATION a bank overdraft facility. The arrangement was refinanced in Q1 2022. For further information about the agreement and other non-current See Note 14 for information on classes of financial instruments measured at fair value, in addition to information on the fair value hierarchy. liabilities, see Note 12. The information below describes valuation techniques for fair value estimation used by Grieg Seafood, including leases and the fair value Management monitors the Group’s liquidity reserve, which comprises credit facilities (see Note 12) and cash and cash equivalents (Note 20), based on expected cash flows. This is generally carried out at Group level in cooperation with the operating companies. At year-end 2021, (I) FINANCIAL DERIVATIVE INSTRUMENTS adjustment of biological assets. the Group had undrawn credit facilities of NOK 885 million, in addition to cash reserves of NOK 928 million. The Group had an equity ratio The fair value of quoted financial assets classified as financial assets at fair value through OCI is determined by reference to published price of 52%, while equity ratio according to covenants was 54%. Bank loans have been refinanced in Q1 2022, significantly impacting available quotations in an active market. The fair value of financial instruments that are not traded in an active market is determined using valuation liquidity (see Note 12). The Group continuously monitors liquidity levels. Cash flow forecasts for all farming regions, sales and the Group are techniques (see Note 14). The Group uses different methods and makes assumptions based on market conditions at each reporting date. performed regularly, and simulation/stress tests of the liquidity risk carried out. The fair value of forward currency contracts is determined using the forward exchange rate at the end of the reporting period. The fair value of interest rate swaps is determined by the present value of future cash flows. The fair value of options is determined using option pricing The following table shows a breakdown of the Group’s non-derivative financial liabilities (including estimated interest payments), classified models. For all the above-mentioned derivatives, the fair value is confirmed by the financial institution with which the Group has entered into by maturity structure. The amounts in the table are undiscounted contractual cash flows. Note 12 shows the payment profile for the Group’s the contracts. The fair value of financial salmon price contracts is determined using forward prices from Fish Pool. non-current liabilities. 31.12.2021 NOK 1 000 Green bond loan installments Green bond loan interest - floating Non-current term-loan installments Term-loan interest - floating Non-current credit facility Interest non-current credit facility Other non-current liabilities Interest on other non-current liabilities < 3 M < — 15 840 24 972 2 248 — 2 330 4 873 912 3 M - 1 Y — Y 2 — Y 3 Y4 — 1 500 000 49 500 65 700 65 880 32 760 24 972 374 580 8 283 2 619 — 440 000 9 361 3 076 — — — — — — — — Y 5 > 5 YRS > TOTAL — — — — — — — 1 500 000 — 229 680 — 424 524 — 13 150 — 440 000 — 14 767 — 11 773 12 310 2 396 3 037 2 541 9 200 2 049 8 114 2 816 54 353 100 622 15 288 29 040 (II) TRADE RECEIVABLES, OTHER 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, as they are short term and entered into on “normal” terms and conditions. (III) CASH AND CASH EQUIVALENTS The carrying amount of cash and cash equivalents is approximately equal to fair value since these instruments have a short term to maturity. (IV) BANK- AND BOND LOAN The carrying amount of bank loans is assessed to be approximately equal to fair value because the floating interest rate is adjusted to reflect current conditions. The fair value of the bond loan is disclosed in Note 12. Lease liabilities (prior IAS 17 finance leases) 18 502 54 415 67 410 57 199 43 909 39 525 79 535 360 496 Interest on lease liabilities (prior IAS 17 finance leases) 2 523 6 831 7 420 5 752 4 357 3 178 3 596 33 658 (V) LEASES Lease liabilities (prior IAS 17 operational leases) 22 140 82 632 81 209 80 980 51 033 37 084 40 255 395 332 The fair value of financial assets and liabilities recognized at their carrying amount is calculated as the present value of estimated cash leases) Trade payables Other current liabilities Total liabilities KEY FOR TABLE M = Months Y = Year YRS = Years 3 453 9 209 9 298 6 030 3 621 2 084 4 127 37 823 523 196 36 603 — — — — — — — — — — — 523 196 — 36 603 657 593 247 600 1 066 123 230 692 1 646 928 92 801 197 153 4 138 891 31.12.2020 NOK 1 000 Green bond loan installments Green bond loan interest - floating Non-current term-loan installments Term-loan interest - floating Non-current credit facility Interest non-current credit facility Other non-current liabilities Interest on other non-current liabilities < 3 M < — 14 625 51 176 3 M - 1 Y — Y 2 — Y 3 — Y4 Y 5 > 5 YRS > TOTAL — 1 500 000 44 688 59 313 59 313 59 475 29 575 51 176 102 352 767 636 8 643 24 438 15 077 2 311 — 8 792 1 514 630 — — 996 646 26 281 17 441 569 1 833 2 820 2 625 2 819 7 281 2 503 — — — — — — — — 5 867 2 214 6 160 1 916 — 1 500 000 — 266 988 — 972 339 — 50 468 — 996 646 — 30 185 4 537 55 334 54 395 16 259 Lease liabilities (prior IAS 17 finance leases) 16 755 61 014 71 771 64 930 55 337 43 932 119 448 433 186 leases) 3 025 8 257 9 159 7 289 5 707 Lease liabilities (prior IAS 17 operational leases) 20 739 54 687 66 526 38 955 29 109 1 993 5 293 4 457 3 459 2 606 562 848 — — — — 690 740 278 234 351 539 1 953 141 160 314 1 594 231 200 654 5 228 853 4 348 7 354 946 — 6 771 44 555 34 284 251 653 5 429 24 182 — 562 848 leases) Trade payables Total liabilities KEY FOR TABLE M = Months Y = Year YRS = Years flows discounted by the interest rate that applies to corresponding liabilities and assets at the end of the reporting period. This applies to lease liabilities, see Note 13. (VI) BIOLOGICAL INVENTORIES Fish in the 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, the time value of money and the cost of contributory assets. 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 sales price +5 NOK/kg Changes in sales price -5 NOK/kg Changes in biomass volume +1% kg Changes in biomass volume -1% kg 2021 -130 357 158 916 62 677 -59 093 316 740 -289 634 37 936 -35 376 2020 -120 801 108 247 81 184 -54 322 304 472 -223 100 23 458 -23 458 Note that changes in harvest volume have a linear effect on the fair value of biological assets. Therefore, any change in 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. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 119 NO T E 4 A C C OUN T I NG E S T IM AT E S AND JUDGEMEN T S ACCOUNTING ESTIMATES AND ASSUMPTIONS Management is required to make estimates and assumptions In British Columbia, licenses are renewed by the federal Department of Fisheries and Oceans (DFO) on a regular basis, Island area has been moved to other farms and harvest volumes for 2022 will not be impacted. All in all, Grieg Seafood envisions Sales price Salmon sales prices are volatile. The sales price is based on that we will uphold our production volume in BC. The current forward prices and/or the most relevant pricing information agreements we have with First Nations last until 2037 - 2045. available for the period in which the fish is expected to be mature Even though the agreements cannot be said to be everlasting, the (ready for harvesting). Changes in price assumptions have the Group has nevertheless classified the licenses as having indefinite greatest impact on the fair-value estimate. The market price concerning the future, which affect the reported amounts with the next renewal in June 2022. The current Canadian federal lives, since finding the right depreciation profile is very difficult. constitutes the basis for calculating fair value for both mature and for assets and liabilities, as well as income and expenses for Government has in its mandate letter to the Minister of Fisheries, Given that it is desirable for both First Nations and the Group to immature fish. The forward prices for superior Norwegian salmon the accounting year in accordance with IFRS. Estimates and Ocean and Canadian Coast Guard stated that a responsible plan have close and good working relationships and that they want weighing 3-6 kg gutted weight from Nasdaq Fish Pool are applied. underlying assumptions are continuously evaluated and are based should be developed by 2025 in collaboration with Indigenous the Group to operate in the area, the Group’s best estimate is For fish ready for harvest, the forward price for the following on historical experience and other factors, including expectations communities and the BC Province, outlining how the industry will that the licenses will still be classified as having indefinite lives. month is applied. For fish not ready for harvest the forward price of future events that are believed to be probable under the transition from open-net pen in coastal BC. The mandate letter This will be continuously assessed. If the situation changes and for the month when the fish is expected to be harvested is applied. present circumstances. The final outcomes may deviate from does not define what the industry should transition to. Grieg the Group agrees not to use the option to extend the duration of The price is adjusted for export margin and clearing costs. This these estimates. Changes in accounting estimates are recognized Seafood supports the 2025 transition and have started introducing the agreement, the estimate of the remaining depreciation period accounts for both fish ready for harvest and not. in the period in which the estimates are changed. The Group is new technologies that moves away from traditional open net-pen must be re-evaluated. For further information, please see Note involved in claims and complaints related to the sale of goods on a practices, such as post smolt which increases the production time 10. continuous basis. As of year-end there were no material ongoing on land as well as robust barriers between the farmed fish and Volume Estimated harvest volume is based on the estimated number of fish issues. ESTIMATED IMPAIRMENT OF GOODWILL, LICENSES AND PROPERTY, PLANT AND EQUIPMENT The Group tests whether goodwill and licenses have suffered the environment. Grieg Seafood is committed to work with the government and Indigenous communities to find a viable path forward. In April 2020, Grieg Seafood acquired 99% of Grieg Newfoundland at the reporting date less estimated future mortality multiplied by AS, the holding company of the Canadian Grieg Newfoundland Ltd optimal harvest weight (4.60 kg). Actual harvest volume may differ Group. Grieg Newfoundland had eight approved farming licenses. from the estimated volume due to changes in biological conditions The licenses are granted for terms of six years. To renew the or due to special events, such as a mass mortality. The estimated In addition, farm tenures in BC are renewed by the province on a licenses, licensees must follow the Provincial Aquaculture policy number of fish is based on the number of smolt transferred to the any impairment on an annual basis, in accordance with the regular basis. From 2022, farm tenures that are not accepted by and procedures manual. As long as licenses follow and comply sea, and mortality is a given percentage of the fish in the sea. The accounting policy stated in Note 2. The recoverable amounts of the First Nation, who is the Rightsholder of the territory where the with the requirements, the license will be renewed. For this normal estimated harvest weight is assessed to be the live weight cash-generating units are generally determined on the basis of farm is located, will not be renewed. Grieg Seafood supports the reason, the licenses are classified as having indefinite lives and, of fish that results in a gutted weight of 4.0 kg. If there are any value-in-use calculations. These calculations require the use of implementation of the United Nations Declaration on the Rights as such, are not amortized. estimates of future cash flows from the cash-generating unit, and of Indigenous Peoples (UNDRIP) into BC regulations, and we are specific conditions at the reporting date resulting in the fish being harvested before they reach optimal weight, the estimated harvest the application of a discount rate to calculate the present value engaging in the ongoing process of reconciliation between the Grieg Seafood Newfoundland has the exclusive long-term right to weight is adjusted. Mortality during the period from the reporting of future cash flows. Expectations of future cash flows will vary government, First Nations and industries. In 2022, the Coalition of farm salmon in the Placentia Bay area. The fair value of the right date to the date when the fish reach harvest weight is estimated to over time. Changes in market conditions and expected cash flows First Nations for Finfish Stewardship was launched, highlighting to operate exclusively will be amortized when production in the be 1% of the number of incoming fish per month. can result in losses due to future value decreases. The value of the positive role that the salmon farming industry can play as a sea starts in the spring/summer of 2022 over the duration of the long-term growth in demand, changes in market competition, the part of the reconciliation process. Grieg Seafood recognizes the agreement. comments on tests relating to value impairment. Nation applied for another farm in the Clio Channel in their name, value of expected cash flow. Valuation is based on a variety of which Grieg Seafood will operate. We have three existing farms in premises, many of which are non-observable. The premises are this area, operating under agreement with Tlowitsis First Nation. divided into the four following categories: strength of the production stage in the value chain and thus also First Nations as an additional level of government where we expectations of the long-term profit margin are also of significance. operate, and we are working to ensure that our production is The different parameters could variously affect the value of the under agreements with the Rightsholders of the territories where licenses over time. Any changes in these critical assumptions will it takes place. Grieg Seafood’s main farming areas are under long- result in related write-downs, or the reversal of write-downs of term agreements with the First Nations of those areas, and we the value of licenses in accordance with the accounting policies are pursuing agreements with more Nations. In 2020 an additional described in Note 2. Please also refer to Note 10 for further farm under agreement was approved. In 2021, the Tlowitsis First CLASSIFICATION OF LICENSES A significant judgement is whether a license should be amortized One farm in the Discovery Island was removed after former Minister over its definite life, or whether it is deemed to have an indefinite life of Fisheries, Oceans and the Canadian Coast Guard, Bernadette and tested for impairment only. All licenses where the Group has Jordan, in 2020 announced she would not renew licenses in this no other contractual restrictions relating to the use of the licenses area, siting lack of social license. Grieg Seafood’s farm, which have indefinite lives and, as such, are not amortized. Also, licenses represented 4% of our production capacity or approximately 2 granted with a finite useful life, but where the license holder can renew the licenses without incurring considerable expenses are assessed as having 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 governments may change the way licenses are renewed. 600 GWT of our total annual harvest volume in BC, was not under agreement with the First Nations of the territory where it was placed. However, some of these Nations also stated that they were not sufficiently consulted before the Minister’s decision was made. The process leading up to this decision is currently under judicial review. The production at Grieg Seafood’s farm in the Discovery Discount rate The sales income and remaining expenses are allocated to the BIOLOGICAL ASSETS The Group’s biological assets comprise smolt and fish in the sea. same period in which the fish is harvested. The cash flows from all localities where the Group has fish in the sea will then be Biological assets are measured at fair values less costs to sell. distributed over the entire period it takes to farm the fish in the The measurement unit is the individual fish. However, for practical sea. With the current size of the smolt released and the frequency reasons, cash flows and estimates are carried out per locality. The of the smolt transfers, this period may be from 12 to 18 months. fair value model assessed by the Group calculates the net present The estimated future cash flow is discounted by a monthly rate, 1. Sales price 2. Production cost 3. Volume 4. Discount rate which is 5.0% for Rogaland and Finnmark, and 3.5% for British Columbia as of December 2021. The discount rate considers 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 reason for differentiating the discount factor at the regional level is the different prerequisites for biological production, which also requires a differentiation of For mature fish (ready for harvesting) at the balance sheet date, the recognized synthetic license rent. The risk adjustment shall uncertainty mainly involves realized prices and volume. For immature fish (not ready for harvesting), the level of uncertainty is higher. Price, volume, discount rate are the main uncertainty factors. However, uncertainty is also related to biological transformation and mortality prior to the harvest date for the fish. reflect the price discount a hypothetical buyer would demand as compensation for the risk assumed by investing in live fish rather than a different object. 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 price. The one thing all three factors have in common is that the sample space is asymmetrical. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 12 0 Due to limited access to licenses for the farming of 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 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS In 2021, we defined one disposal within the Grieg Seafood Group, buyer needs a license, locality and other permits required for such which has been classified as assets held for sale and presented production. However, in a hypothetical market for the purchase as a discontinued operation during the year. Grieg Seafood and sale of live fish, one must assume that this would be possible. Group’s activities have been divided into continuing operations In that scenario, a hypothetical buyer would claim a significant and discontinued operations. The disposal is “Shetland”, the discount to allocate a sufficient share of the returns to the buyer's assets of which had been divested by year-end 2021. In 2020, Grieg own licenses. It is difficult to create a model that would allow a Seafood Group had two disposal groups which were presented hypothetical annual lease cost to be derived from prices for sold as discontinued operations during the year. These were Shetland licenses as the curve in the model would be based on projections and “Ocean Quality AS” (Sjòr AS). At year-end 2020, Ocean Quality of future profit performance in the industry. was divested. All the note disclosures in the consolidated financial statements for 2020 and 2021 have been prepared for the Group’s A discount must be made for the time value of the tied-up capital continuing operations, unless otherwise explicitly stated in the linked to the share of the present value of the cash flow allocated to specific note disclosure. the biomass. The buyer who is investing in live fish rather than some other type of object, would claim compensation for the alternative On 29 June 2021, Grieg Seafood ASA entered into an agreement cost. The production cycle for salmon in the sea currently takes up with Scottish Sea Farms Ltd for the disposal of all shares in Grieg to 18 months. The cash flow will therefore extend over a similar Seafood Hjaltland UK Ltd, the holding company of Grieg Seafood period. Assuming a constant sales price throughout the period, the ASA’s Shetland business. On 8 December 2021, the Competition cash flow would decrease for each month, as costs are incurred and Markets Authority in the UK approved the transaction. The to farm the fish to harvest weight. The cost increases for every transaction was closed on 15 December 2021. On the closing month the fish are in the sea. As such, the effect of deferred cash date of the transaction, Grieg Seafood received a preliminary flow is lower than would be the case if the cash flow had been purchase price for the Shetland assets of NOK 2 087 million. The constant. This component is, however, deemed important due to preliminary purchase price has been calculated pursuant to a pre- the substantial value the stock of fish represents. Please refer to closing statement which was prepared in good faith and which set Note 2 and Note 9 for further information on the estimation and out, among other things, the net debt and net working capital of calculation of fish values. Estimating remaining cost The planned point of harvesting is assumed to be when the fish reaches a live weight of 4.60 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. Forecast production costs include provisions for estimated feed prices, the cost of lice treatments 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. Significant assumptions sensitivity The estimate of fair value of the biomass will always be based on uncertain assumptions, even though the Group has built expertise in assessing these factors. There are three 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. the Shetland assets. Grieg Seafood does not expect a significant adjustment from the preliminary purchase price. The final purchase price is expected to be finalized in Q2 2022. For more information on the Shetland disposal group, see Note 5. IMPACT FROM CHANGES IN CLIMATE  Climate plays an important role in our operations. The effects of climate change, such as extreme weather events, fluctuating temperatures in seawater and a decline in biodiversity, could have a significant 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. We aim to increase our understanding of how changes in climate may affect us, in order to find solutions to reduce adverse impacts. We have mapped our climate-related risks, which we report in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We have also prepared a climate-related scenario analysis, assessing the impact of transitional risks and physical risks. There is still much uncertainty relating to impact of climate changes, when such impacts will occur and where. These risks and opportunities are part of our risk assessment as part of our regular forecast process. Overall, the Group expect the impacts of climate-related risk to be moderate in the short term, with no quantifiable impact as per year ended 2021. NO T E 5 NON- CUR R EN T A S SE T S HELD F O R S AL E AND NO T E 5 NON- CUR R EN T A S S E T S HELD F OR S A LE A ND DI S C O N T INU E D DIS C ON T INUED OP ER AT I ONS OP ER AT IONS All note disclosures in these consolidated financial statements for According to the sales purchase agreement, the closing statement 2021 have been prepared with respect to the Grieg Seafood Group’s and the calculation of the final purchase price was expected to continuing operations, unless explicitly stated in the specific note be finalized by the end of Q1 2022, as communicated in Grieg disclosure. This Note 5 of the consolidated Grieg Seafood financial Seafood’s report for Q4 2021. Due to minor disagreements of the statements has been prepared for the Group's assets classified as closing balance, the final settlement is postponed to Q2 2022. held for sale and discontinued operations only. SHETLAND In November 2020, we announced our intention to divest our As at 31 December 2021, the calculation of the gain/loss from sale of the Shetland assets has been based on the preliminary purchase price. The preliminary gain after income tax resulting from the investment and operations in Shetland, as we wish to focus on sale of the Shetland assets is NOK 424 million. The preliminary our operations in Norway and Canada going forward. On 29 June gain has been calculated by deducting Grieg Seafood Group's book 2021, Grieg Seafood ASA entered into an agreement with Scottish value of the Shetland assets on the closing date and transaction Sea Farms Ltd for the disposal of all shares in Grieg Seafood costs from the sum of the preliminary purchase and the settlement Hjaltland UK Ltd, the holding company of Grieg Seafood ASA's of the Seller’s debt. In addition, the gain/loss calculation includes Shetland business (the "SPA"). The transaction was subject to recycling of accumulated OCI of NOK 106 million before tax and certain customary closing conditions, such as merger clearance. NOK 83 million after tax, whereas the tax expense of NOK 23 The UK Competition and Markets Authority (CMA) approved million relates to the tax position on the Seller’s debt. the transaction on 8 December 2021. Closing of the transaction occurred on 15 December 2021, at which time Grieg Seafood Hjaltland UK Ltd and Grieg Seafood Shetland Ltd (the Shetland assets/Shetland disposal group) were deconsolidated from the Grieg Seafood Group. The discontinued operations have been defined by Grieg Seafood as the farming and sales operations in Shetland. Thus, the discontinued operation in Shetland includes the prior reporting segment of Shetland UK and the UK sales operations. Certain invoiced intercompany services from Grieg Seafood ASA to Grieg Seafood Shetland have not been eliminated, and are included in the discontinued operations' result. These costs are considered directly associated with the assets held for sale, and will cease following finalization of the sales transaction. The enterprise value of the transaction was set to GBP 164 million, assuming a normalized net working capital and adjusted for net debt. On the closing date of the transaction, Grieg Seafood received a preliminary purchase price for the Shetland assets of NOK 2 087 million. In addition, Scottish Sea Farms Ltd settled a GBP intercompany long-term loan granted by Grieg Seafood ASA ("Seller’s debt"). The preliminary purchase price has been calculated pursuant to a pre-closing statement, which was prepared in good faith and set out the net debt and net working capital of the Shetland assets. The actual net debt and net working capital will be calculated in accordance with prevailing accounting principles and set out in a closing statement. PA R T 0 3 : O U R F I N A N C I A L 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 OCEAN QUALITY On 23 May 2020, we entered into an agreement with Bremnes Fryseri to dissolve the Ocean Quality sales partnership. The transaction was finalized at year-end 2020. See Note 5 of the 2020 Annual Report for more information on the Ocean Quality disposal group. CASH FLOWS FROM DISCONTINUED OPERATIONS (NOK 1 000) SHETLAND OCEAN QUALITY TOTAL 2021 2020 2021 2020 2021 PROFIT (LOSS) FROM DISCONTINUED OPERATIONS TOTAL (NOK 1 000) SHETLAND* OCEAN QUALITY TOTAL 2021 2020 2021 2020 2021 2020 Operating income Operating expenses 951 334 968 729 -775 822 -1 191 934 EBIT before fair value adjustment of biological assets 175 512 -223 205 Production fee Fair value adjustment of biological assets -5 219 75 697 -5 368 -97 039 EBIT after fair value adjustment of biological assets 245 990 -325 613 Net financial items Impairment loss recognized on the remeasurement to fair value less cost to sell Profit before tax from discontinued operations Income tax expense 1 902 -6 744 — — 247 893 -332 357 -71 280 100 838 Profit for the period from discontinued operations 176 613 -231 519 Gain on the sale of the subsidiary after income tax 423 678 — Net profit for the period from discontinued operations 600 291 -231 519 *Depreciation ceased from 1 October 2020, in accordance with IFRS 5. GAIN ON THE SALE OF THE SUBSIDIARY AFTER INCOME TAX (NOK 1 000) Sale/purchase price Transaction costs Recycling of accumulated OCI Total consideration Book value Gain on the sale of the subsidiary after income tax The recycled accumulated OCI in the gain/loss calculation consists of: Currency effect on investment in subsidiaries Currency effects on loans to subsidiaries Other gains and losses Tax effects Reserve of disposal group classified as held for sale — — — — — — — — — — — — — 3 084 108 951 334 4 052 837 -3 058 240 -775 822 -4 250 174 25 868 175 512 -197 337 — — 25 868 10 271 -5 219 75 697 -5 368 -97 039 245 990 -299 745 1 902 3 527 — — — 36 139 -8 476 27 663 5 033 32 696 247 893 -296 218 -71 280 92 362 176 613 -203 856 423 678 5 033 600 291 -198 823 TOTAL 2021 2 087 494 -26 950 83 139 2 143 683 1 720 004 423 678 3 261 103 223 -636 -22 709 83 139 2020 66 853 -875 — 65 978 60 945 5 033 — — — — — Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities Sum Cash discontinued operations cash and cash equivalents - other changes 145 228 2 041 801 -24 966 -77 905 -145 836 -118 796 2 041 193 -221 667 -842 -525 Net change in cash and cash equivalents from discontinued operations 2 040 350 -222 193 — — — — — — CLASSES OF ASSETS AND LIABILITIES OF THE DISPOSAL GROUP (NOK 1 000) Classes of assets and liabilities of the disposal group Deferred tax assets Intangible assets Property, plant and equipment Biological assets incl fair value Inventories Trade receivables and other receivables Cash and cash equivalents Assets directly related with the disposal group Non-current liabilities Current liabilities Liabilities directly associated with the disposal group Net assets directly associated with the disposal group The classes of assets and liabilities as per 31 December 2020 attributed to the Shetland assets, as Ocean Quality was sold 31 December 2020. AMOUNTS INCLUDED IN ACCUMULATED OCI ASSOCIATED WITH THE DISPOSAL GROUP (NOK 1 000) Currency effect on investment in subsidiaries Currency effects on loans to subsidiaries Other gains and losses Cash flow hedges Tax effects Accumulated other comprehensive income All accumulated OCI at year-end 2020 is related to Shetland. OTHER COMPREHENSIVE INCOME RELATED TO THE SHETLAND DISPOSAL GROUP FOR THE YEAR (NOK 1 000) Currency effect on investment in subsidiaries Currency effects on loans to subsidiaries Cash flow hedges Tax effects Sum 28 471 145 228 -43 632 2 041 801 -121 537 -1 366 -145 836 -120 161 -16 526 2 041 193 -238 193 -43 -842 -568 -16 569 2 040 350 -238 762 PA G E 12 1 2020 3 505 TOTAL 31.12.2020 81 681 556 577 719 626 449 867 24 448 139 627 899 1 972 725 212 686 280 143 492 829 1 479 897 31.12.2020 7 377 88 624 -636 — -19 497 75 868 2020 20 535 1 539 — — 22 074 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 12 2 NO T E 6 BU SI NE S S C OMBIN AT IONS NO T E 6 BU SINE S S C OMBI N AT IONS BUSINESS COMBINATIONS IN 2021 There were no business combinations in 2021. BUSINESS COMBINATIONS IN 2020 On 15 April 2020, Grieg Seafood ASA (GSF) completed the acquisition of Grieg Newfoundland AS (GNL). At the acquisition date, 99% of the shares were transferred, while the remaining 1% is subject to a put/call option accounted for as contingent consideration. GNL owns a fish farming business under development in Newfoundland, Canada. The text below summarizes the disclosures in the Newfoundland transaction provided in the 2020 Annual Report. Since the text below is a summary, please see the 2020 Annual Report for all information disclosed concerning the transaction and the purchase price allocation of the transaction consideration. TRANSACTION Grieg Newfoundland was a project initiated by the Grieg Group and Per Grieg Jr. in collaboration with their Canadian partner. Per Grieg Jr. is Chair of GSF’s Board of Directors and an owner of the Grieg Group. The transaction has been approved by the General Meeting in line with the section 3-8 of the Public Limited Liability Companies Act. The consideration is split into three parts - a net cash payment, completion shares and contingent consideration. The negotiated subscription price for completion shares was set at NOK 140.05, corresponding to a total contribution of NOK 250 million. As the market price per share was NOK 108.20 at closing, the value of the completion shares was NOK 193.1 million. CONTINGENT CONSIDERATION A continent consideration of NOK 702 million has been recognized. If certain production volumes are reached within the next ten years, additional payments are triggered. The additional amount becomes unconditional when GNL has reached a planned annual harvest volume of 15 000 tonnes, and the amount increases with volume until an annual harvest volume of 33 000 tonnes. The amount due is NOK 43 per kg for volumes between 15 000 and 20 000 tonnes, and NOK 55 per kg for volumes between 20 000 and 33 000 tonnes, with a 4% per annum inflation adjustment in the period 2023-2029. The contingent consideration is classified as equity. It is in GSF’s sole discretion to decide whether the expansion investments are carried out in line with the production plan. If further expansion of the post-smolt facilities are not constructed within ten years, the additional milestone payments will not be triggered. VALUATION OF LICENSES AND EXCLUSIVITY CONTRACT Aquaculture licenses are valued assuming an indefinite useful life. At the time of the transaction, GNL had been granted a long-term exclusive right to operate in Placentia Bay and received approval for 11 site holds in the area. For site holds with a fish farming license granted at the transaction date, valuation is based on expected volumes using reasonable income and cost assumptions to the amount of NOK 213.5 million value added per license. For three additional site holds, the seller has granted a warranty as to the value of the license. The compensation is capped at NOK 122.5 million. GNL has received a grant to operate in the production area in Placentia Bay, and an exclusivity agreement for 12 years plus an option of eight years. This means no one else can operate in this geographical area in this period, which is similar to a non-compete advantage. GOODWILL Intangible assets that do not meet the conditions for separate recognition are subsumed into goodwill. This includes the going concern- value of the performed construction activities up until the transaction, synergies between various components of the facilities as we have long-term exclusive rights to be the sole farmer in the Placentia Bay area. In addition, goodwill covers the licenses pending approval, as well as the expected synergies with current operations in British Columbia. Lastly, a portion of the goodwill reflects the difference between the fair value and nominal value of deferred tax liabilities, in particular for the licenses that are deemed to have indefinite useful life. TAX For valuation purposes and calculation of deferred tax liabilities, the tax rate is set to 30% which is the current tax rate in eastern Canada for private companies controlled by non-Canadians. SUMMARY OF BOOK VALUE, IDENTIFIED EXCESS VALUES AND THE FAIR VALUE AT THE TRANSACTION DATE OF 15 APRIL 2020 15.04.2020 NOK 1 000 Goodwill Licences (incl. warranty licenses) Property, plant and equipment Indemnification assets Other assets Deferred tax liabilities Other liabilities Equity Book value Excess value Fair value — 14 154 623 933 — 382 236 — 735 344 284 979 677 255 748 017 -493 230 40 000 — 88 436 — 883 605 677 255 762 171 130 702 40 000 382 236 88 436 735 344 1 168 584 NO T E 7 INV E S T MEN T IN A S S O CI AT E S NO T E 7 INV E S T MEN T IN A S S O CI 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 2021 and 2020, no investments were classified on a separate line after EBIT. In 2019, the Group, through Grieg Seafood Finnmark AS, 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%). Nordnorsk Smolt AS is located in Troms and Finnmark county, Norway. Production is approximately 900 tonnes of smolt per year. In December 2021, a capital increase was carried out, where both owners invested NOK 12.5 mill each. At 31 December 2021, Grieg Seafood Finnmark provided a long-term loan to Nordnorsk Smolt AS, amounting to NOK 2.1 million (NOK 1.9 million at December 2020), which is included in other non-current receivables. The interest is recognized under 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%). Tytlandsvik Aqua AS is located in Ryfylke in Rogaland, Norway. Through Tytlandsvik Aqua AS, the partners secure increased and improved access to post-smolt fish, with an annual production capacity of 3 400 tonnes, of which Grieg Seafood's share of the volume is 50%. On 15 January 2021, Grieg Seafood Rogaland invested NOK 2.5 million for an ownership interest of 37.04% in Årdal Aqua AS. The other shareholders are Vest Havbruk AS and Omfar AS. A share issue was carried out when Omfar became a co-owner of the company, and the other two shareholders were diluted from 50% to 37.04% ownership. The diluted effect related to the capital issue from Omfar AS is not recognized as a gain, but set aside as a liability until certain milestones have been reached, at which point a potential gain will be booked as the project depends on milestones. Hence a potential gain of NOK 6.7 million is deferred until all millstones are approved. At the same time, Grieg Seafood Rogaland entered into a post-smolt agreement with Årdal Aqua. Årdal Aqua is currently in the design development phase of a land-based farming facility in Rogaland, and the decision to start constructing will be taken in 2022. The investments in Tytlandsvik Aqua AS, Nordnorsk Smolt AS and Årdal Aqua AS are classified together on a separate line in the statement of financial position, and the share of profit is included in EBIT. Total recognized share of profit/loss from associates in 2021 was NOK -1.5 million and the total book value as at 31 December 2021 was NOK 105 million. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 12 3 ASSOCIATES CLASSIFIED AS OPERATIONS Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS Total associates classified as operations EQUITY INTEREST AT 31.12.2021 BOOK VALUE AT 01.01.2021 NOK 1 000 PROFIT/LOSS 2021 NOK 1 000 50.00 % 33.33% 37.04% 41 264 43 158 — 84 421 -6 053 4 929 -363 -1 486 CHANGES IN THE PERIOD, INCL. REPAID CAPITAL NOK 1 000 BOOK VALUE AT 31.12.2021 NOK 1 000 12 500 — 9 241 21 741 47 710 48 087 8 878 104 676 AT 31.12.2021 Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS Total ownership TIME OF INVESTMENT 01.07.2019 01.06.2017 15.01.2020 EQUITY INTEREST 50.00% 33.33% 37.04% EXCESS VALUE HATCHERY NOK 1 000 DEPRECIATION OF EXCESS VALUE NOK 1 000 BOOK VALUE OF EXCESS VALUE NOK 1 000 17 022 14 600 2 188 33 811 4 256 3 214 — 7 470 12 767 11 387 2 188 26 342 The share issue and shareholder agreement for Nordnorsk Smolt were signed on 30 June 2019. Excess value relating to the investment has NO T E 8 SEGMEN T INF OR M AT ION NO T E 8 SEGMEN T INF OR M AT ION Segment information is provided for the Group’s continuing operations. Information regarding the Group’s discontinued operations is disclosed in Note 5. The operating segments are identified on the basis of the reports which Group Management 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 one production segment: production of farmed salmon. Earnings from the Group’s sales companies is reported per producer. Geographically, management assesses the results of production in Rogaland – Norway, Finnmark – Norway and British Columbia – Canada. As from Q1 2021, production in Newfoundland - Canada is also included. In Q4 2020, Grieg Seafood defined the reporting segment Shetland – UK as part of the Shetland disposal group , which was classified as held for sale (see Note 5). The Shetland disposal group was sold to Scottish Sea Farms Ltd on 15 December 2021. Group Management evaluates the results from the segments based on EBIT before production fee and fair value adjustment of biological assets. The operating segments are divided geographically by country or region, based on the reporting applied by Group Management when assessing performance and profitability at a strategic level. been allocated to hatcheries under construction, based on provisional accounting figures from Nordnorsk Smolt AS on the acquisition date. The method of measurement excludes the effect of non-recurring costs, such as restructuring costs, legal costs on acquisition and The value added is amortized from the date of acquisition. amortization of goodwill and intangible assets when amortization is attributable to an isolated event which is not expected to recur. The measurement method also excludes the effect of share-based payments, as well as unrealized gains and losses on financial instruments, The share issue and shareholder agreement with Tytlandsvik Aqua AS were signed on 1 June 2017. Excess value relating to the investment and ownership costs. These gains/losses and costs are reported in the "Elim/Other" column in Grieg Seafood’s segment information. has been allocated to hatcheries under construction, based on provisional accounting figures from Tytlandsvik Aqua as at 31 December 2018. The fair value adjustment is amortized from the time the facility was completed and commissioned. Elim/Other items comprise, in addition to intercompany eliminations, the profit/loss from activities conducted by the parent company or Tytlandsvik Aqua AS, Nordnorsk Smolt and Årdal Aqua AS have the same financial year as the Group. The following table displays provisional financial information as at 31 December 2021 (100%). other Group companies not related to production. In the segment reporting, sales revenue at the regional level includes revenue from the sale of Atlantic salmon. At the regional level, other income includes the sale of by-products (such as ensilage), as well as income from the sale of smolt, fry and roe, and income from AT 31.12.2021 NOK 1 000 TOTAL ASSETS TOTAL LIABILITIES TOTAL EQUITY OPERATING INCOME PRE-TAX PROFIT/LOSS overcapacity of operational assets. At the Group level, such income is reclassified to sales revenue in the Elim/Other column in the Group's Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS 106 902 442 539 25 972 53 313 351 596 7 624 53 589 90 943 18 348 72 624 171 548 50 1 438 19 464 -979 ASSOCIATES CLASSIFIED AS OPERATIONS Nordnorsk Smolt AS Tytlandsvik Aqua AS Total associates classified as operations EQUITY INTEREST AT 31.12.2020 BOOK VALUE AT 01.01.2020 NOK 1 000 PROFIT/LOSS 2020 NOK 1 000 CHANGES IN THE PERIOD, REPAID CAPITAL NOK 1 000 BOOK VALUE AT 31.12.2020 NOK 1 000 50.00% 33.33% 42 433 38 638 81 071 -1 169 4 520 3 350 — — — 41 264 43 158 84 421 AT 31.12.2020 Nordnorsk Smolt AS Tytlandsvik Aqua AS Total ownership TIME OF INVESTMENT 01.07.2019 01.06.2017 EQUITY INTEREST 50.00% 33.33% EXCESS VALUE HATCHERY NOK 1 000 DEPRECIATION OF EXCESS VALUE NOK 1 000 BOOK VALUE OF EXCESS VALUE NOK 1 000 17 022 14 600 31 623 2 553 1 754 4 307 14 469 12 847 27 316 AT 31.12.2020 NOK 1 000 TOTAL ASSETS TOTAL LIABILITIES TOTAL EQUITY OPERATING INCOME PRE-TAX PROFIT/LOSS Nordnorsk Smolt AS Tytlandsvik Aqua AS 106 902 442 539 53 313 351 596 53 589 90 943 72 624 171 548 1 438 19 464 segment information. Other gains/losses in the segment information are included in the line "other income". This includes gains/losses from the sale of fixed assets and other equipment. Sales revenue/kg reported in the segment information is equal to the sum of the region’s sales revenue divided by the related harvest volume. Farming cost/kg reported in the segment information encompasses all costs directly related to the production and harvesting of salmon, divided by the related harvest volume. Thus, at the regional level, farming costs equal operational costs. Other income is included in the farming cost metric, where it is deemed to constitute cost reduction activities. Group farming cost is calculated on the basis of the Group’s farming operations, excluding ownership costs and costs from Group companies not related to production. Other costs, including ownership and headquarters costs/kg, reported in the segment information include all costs and revenue not directly related to the production and harvesting of salmon. This includes costs deriving from activities conducted by the parent company and other Group companies not related to production, divided by the Group's harvest volume. In addition, until the first harvest in Newfoundland is carried out, costs attributable to the Newfoundland region are included as other costs/kg. EBIT/kg reported in the segment information is equal to the EBIT before production fee and fair value adjustment of biological assets divided by the related harvest volume. The Group's revenues mainly comprise revenues from the sale of whole and processed fish and some ensilage. Sales revenues are recognized at the point in time when control of the fish has been transferred to the customer. This will normally be upon delivery. In 2021, the sale of whole fish (fresh and frozen) accounted for 95% (2020: 88%) of the Group's sales revenues (excluding other products), while processed fish accounted for 4 % (2020: 10 %). PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 12 4 2020 GEOGRAPHICAL SEGMENTS NOK 1 000 Sales revenues1 Other income2 Other gains/losses3 Share of profit from associates FARMING EUROPE FARMING NORTH AMERICA ELIM/ OTHER4 GRIEG SEAFOOD GROUP ROGALAND NORWAY FINNMARK NORWAY BC CANADA 1 263 088 1 313 549 1 178 931 78 439 136 4 520 76 028 -2 241 -1 169 16 770 -2 636 — 628 788 -142 549 -45 — 4 384 357 28 688 -4 786 3 350 Operating costs before depreciation and amortization -952 879 -1 113 980 -1 094 740 -648 079 -3 809 678 EBITDA before fair value adjustment of biological assets 393 304 272 187 98 324 4 384 357 100% Depreciation, amortization and reversals -101 005 -144 763 -105 749 -7 425 21 181 55.7 56.0 — -0.4 EBIT before fair value adjustment of biological assets 292 299 127 424 Harvest volume (tonnes GWT) 23 043 26 919 Sales revenue/kg (NOK) Farming cost/kg (NOK) Other costs incl. ownership and headquarters costs/ kg (NOK) EBIT/kg (NOK) Assets 54.8 42.1 — 12.7 48.8 44.1 — 4.7 2 023 442 2 996 414 1 455 341 Assets classified as held for sale — — — Total assets Liabilities Liabilities directly associated with the assets held for sale Total liabilities 1, 2, 3, 4See the footnotes under the 2021 table. 2 023 442 2 996 414 1 455 341 995 977 1 555 995 698 702 — — — 995 977 1 555 995 698 702 GROUP EBIT NOK 1 000 EBIT before fair value adjustment of biological assets Production fee (Note 26) Fair value adjustment of biological assets (Note 9) EBIT after fair value adjustment of biological assets Net financial items (Note 24) Profit before tax Income tax expense Profit for the year -161 884 -17 357 -179 242 — — — — — 2 201 605 1 972 725 4 174 330 2 535 106 492 829 3 027 935 2021 442 370 -24 463 523 036 940 944 -87 266 853 678 -249 301 604 377 601 932 -368 874 233 057 71 142 52.8 47.0 2.5 3.3 8 676 801 1 972 725 10 649 527 5 785 781 492 829 6 278 609 2020 233 057 — -289 705 -56 648 -247 792 -304 440 -11 557 -315 997 Fresh whole fish Frozen whole fish Fresh processed fish Frozen processed fish Other products Total 2021 GEOGRAPHICAL SEGMENTS NOK 1 000 Sales revenues1 Other income2 Other gains/losses3 Share of profit from associates SALES REVENUES FROM CONTRACTS WITH CUSTOMERS, BY GEOGRAPHICAL MARKET NOK 1 000 Continental Europe UK USA Canada Russia Asia Other markets Total Europe North America Total 2021 2020 2021 2020 2021 2021% 2020 2020% 2 968 604 1 964 336 114 887 401 378 — — — — 85 953 22 778 — 23 227 831 003 871 033 4 193 284 238 376 388 — — — 277 836 605 842 7 274 85 459 6 011 52 501 — — 2 968 604 114 887 916 957 307 016 — 285 111 6 011 3 476 069 3 051 476 1 122 516 1 332 881 4 598 585 65% 2% 20% 7% — 6% —% 100% 1 964 336 401 378 894 260 380 581 — 691 301 52 501 45% 9% 20% 9% —% 16% 1% SALES REVENUES FROM CONTRACTS WITH CUSTOMERS, BY DISTRIBUTED PRODUCTS NOK 1 000 Europe North America Total 2021 2020 2021 2020 2021 2020 3 429 432 2 740 344 955 179 1 107 890 4 384 611 3 848 234 — 287 — 46 351 3 287 — 19 — 3 306 173 250 166 380 220 947 166 666 394 197 24 412 110 182 508 449 167 3 858 508 46 800 24 579 114 040 3 476 069 3 051 476 1 122 516 1 332 881 4 598 585 4 384 357 FARMING EUROPE FARMING NORTH AMERICA ROGALAND NORWAY FINNMARK NORWAY BC CANADA NL CANADA ELIM/ OTHER4 GRIEG SEAFOOD GROUP 1 430 949 1 756 292 1 023 474 76 640 140 4 567 48 868 -52 -6 053 9 114 -6 839 — — 569 — — 387 870 -64 445 — — 4 598 585 70 745 -6 752 -1 486 -3 843 048 818 044 -375 674 442 370 75 601 55.7 47.2 2.7 5.9 -70 970 -12 590 -83 561 — — — — — — — — — — Operating costs before depreciation and amortization -1 167 414 -1 405 878 -781 973 -93 388 -394 395 EBITDA before fair value adjustment of biological assets 344 882 393 176 Depreciation, amortization and reversals -102 865 -142 640 243 776 -93 541 -92 819 -24 039 EBIT before fair value adjustment of biological assets 242 017 250 537 150 235 -116 858 Harvest volume (tonnes GWT) 26 670 34 484 14 448 Sales revenue/kg (NOK) Farming cost/kg (NOK) Other costs incl. ownership and headquarters costs/ kg (NOK) EBIT/kg (NOK) Assets Total assets Liabilities Total liabilities 53.7 44.6 — 9.1 50.9 43.7 — 7.3 70.8 60.4 — 10.4 2 181 546 3 076 166 2 057 524 2 487 713 911 299 10 714 248 2 181 546 3 076 166 2 057 524 2 487 713 911 299 1 088 328 1 502 171 1 018 999 1 948 082 -406 634 1 088 328 1 502 171 1 018 999 1 948 082 -406 634 10 714 248 5 150 946 5 150 946 1Sales revenues equal the Group's revenue from contracts with customers. 2Other income mainly relates to the settlement of insurance and other services not directly related to production. 3Other gains/losses includes items such as foreign currency and the sale of fixed assets and other equipment. 4Elim/Other includes bonus and share of profit from sales entities to Grieg Seafood farming entities/producers. Other items comprise the profit/loss from activities conducted by the parent company or other Group companies not related to production. Internal transactions between group companies are eliminated and included in the Elim/Other column. Sales revenue deriving from the sale of fish not produced by the Group is also included in Elim/Other. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 12 5 NO T E 9 BIOL OGIC AL A S S E T S AND O T HER INV EN T OR IE S Biological assets at 01.01. Biological assets classified as held for sale* 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 in connection with business acquisition Fair value adjustment at 31.12. Biological assets at 31.12. TONNES NOK 1 000 2021 52 619 N/A N/A 99 590 -5 534 -87 553 N/A N/A N/A 2020 67 614 -11 480 N/A 80 748 -4 844 2021 2020 2 545 903 N/A 22 840 3 428 102 -117 450 3 437 947 -641 389 1 442 3 407 539 -177 225 -79 419 -3 053 236 -3 121 283 N/A N/A N/A -347 227 N/A 970 480 -708 355 N/A 347 227 59 121 52 619 3 449 412 2 545 903 *This note has been prepared for the Group’s continued operation. In 2020, we classified our Shetland assets as held for sale and treated them as discontinued operations. The Shetland assets were sold on 15 December 2021. The impact of the held for sale classification is presented as a reconciliation item reconciling 1.1.2020 with 31.12.2020 in the table above. For more information, see Note 5. RECOGNIZED FAIR VALUE ADJUSTMENT Change in fair value adjustment of biological assets1 Currency adjustment of fair value adjustment of biological assets Change in physical detivery contracts relating to fair value adjustment of biological assets2 (Note 26) Change in fair value of financial derivatives from salmon (Fish Pool contracts)3 Total recognition of fair value adjustment of biological assets Recognized value adjustments of biological assets include: 1 Fair value adjustments of biological assets 2 Fair value (liability) change in loss-making contracts 3 Change in unrealized gains/losses from financial purchases/sales contracts (derivatives) from fish at Nasdaq Fish Pool 2021 623 253 -3 814 — -96 403 523 036 2020 -361 130 -16 508 — 87 933 -289 705 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. 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 on the basis of 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. See 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 Weighted price per kg GWT Source NORWAY NOK 64.91 BC CAD 10.28 Nasdaq Fish Pool Nasdaq Fish Pool 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 applied. 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. Estimated harvesting and logistics expenses are deducted. Forward exchange rates are used to translate prices into CAD in relation to the harvesting period. The estimated future cash flow is discounted by a monthly rate, which is assessed individually for each region. The discount factor reflects a combination of the cost of capital for the biomass, risk discounting and a synthetic license rent.The discount factor is differentiated at the regional level due to the different prerequisites for biological production. This is also the reason for differentiation of the recognized synthetic license rent. See the table below and the Note 4 for more information. DISCOUNT RATE PER REGION Rogaland Finnmark BC 2021 5.0% 5.0% 3.5% 2020 5.0% 5.0% 3.5% STATUS OF BIOLOGICAL ASSETS 2021 ex. Shetland Biological assets on land * Immature fish in sea, round weight < 4.60 kg < Mature fish in sea, round weight > 4.60 kg > Total 2020 ex. Shetland Biological assets on land * Immature fish in sea, round weight < 4.60 kg < Mature fish in sea, round weight > 4.60 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 28 522 28 266 1 292 58 080 19 617 26 933 1 498 48 048 539 51 944 6 638 59 121 699 43 419 8 500 52 619 164 959 2 080 957 233 018 2 478 934 139 360 1 795 414 263 902 2 198 676 — 873 626 96 854 970 480 — 321 444 25 782 347 227 164 959 2 954 583 329 872 3 449 412 139 360 2 116 858 289 684 2 545 903 Abnormal mortality - write-down Cost related to abnormal mortality will be immediately recognized in profit and loss, and presented as a "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. See the survival rate tables in the regional chapters for details of causes of mortality. ABNORMAL MORTALITY - WRITE-DOWN 2021 Biological assets on land Immature fish in sea, round weight < 4.60 kg < Mature fish in sea, round weight > 4.60 kg > Total 2020 ex. Shetland Biological assets on land Immature fish in sea, round weight < 4.60 kg < Mature fish in sea, round weight > 4.60 kg > Total NUMBER OF FISH 1 000 BIOLOGICAL ASSETS TONNES AVERAGE SIZE KG ACCRUED COST OF PRODUCTION NOK 1 000 1 176 957 515 2 648 1 714 1 104 227 3 045 186 2 678 2 670 5 534 1 184 2 610 1 050 4 844 0.16 2.80 5.18 2.09 0.69 2.36 4.63 1.59 18 565 44 098 54 787 117 450 40 066 97 392 39 766 177 224 PA R T 0 3 : O U R F I N A N C I A L 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 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 PURCHASED NOK 1 000 Inventories at 01.01. (inverted number) Raw materials and consumables purchased Inventories at 31.12. Total 2021 67 355 3 000 57 944 128 299 20 020 2021 -78 001 -1 788 565 128 299 -1 738 267 2020 65 857 4 176 7 968 78 001 5 518 2020 -177 841 -1 617 439 78 001 -1 717 279 The item raw materials and consumables mainly comprises feed, roe, recognition of extraordinary mortality and external purchases of fish by our sales company. NO T E 1 0 IN TA NGIBLE A S S E T S 2021 NOK 1 000 Book value at 01.01. Currency translation differences Additions Disposals Amortization Reclassifications Book value at 31.12. ACCUMULATED VALUES Acquisition cost Accumulated amortization Accumulated impairments Book value at 31.12. FISH FARMING LICENSES – INDEFINITE LIVES 1 493 419 28 767 41 — — — GOODWILL 638 019 22 053 — — — — 660 071 1 522 227 749 674 1 522 227 — -89 603 660 071 — — 1 522 227 FISH FARMING LICENSES – FINITE LIVES OTHER INTANGIBLE ASSETS 15 034 524 — — -1 466 — 14 092 44 397 -30 305 — 14 092 38 015 747 3 792 — -5 726 — 36 828 78 506 -41 678 — 36 828 TOTAL 2 184 486 52 090 3 833 — -7 192 — 2 233 218 2 394 804 -71 983 -89 603 2 233 218 FISH FARMING LICENSES – INDEFINITE LIVES FISH FARMING LICENSES – FINITE LIVES OTHER INTANGIBLE ASSETS* GOODWILL 109 526 -78 781 677 255 -69 981 — — — — 1 112 136 -477 867 762 171 -79 511 159 066 — — 17 425 638 019 1 493 419 727 622 1 493 419 — -89 603 638 019 — — 1 493 419 21 495 — — -86 — — -1 491 -4 885 15 034 43 094 -28 061 — 15 034 16 205 -26 38 720 -5 116 7 980 — -7 206 -12 542 38 015 73 917 -35 902 — 38 015 PA G E 12 6 TOTAL 1 259 360 -556 675 1 478 146 -154 694 167 046 — -8 696 — 2 184 486 2 338 052 -63 963 -89 603 2 184 486 2020 NOK 1 000 Book value at 01.01. Assets classified as held for sale1 Acquisition of business Currency translation differences Additions Disposals Amortization Reclassifications Book value at 31.12. ACCUMULATED VALUES Acquisition cost Accumulated amortization Accumulated impairments Book value at 31.12. See Note 2 for information on the useful economic life of assets, and Note 12 for information on assets pledged as security for financial liabilities. 1This Note has been prepared for the Group’s continued operations. In 2020, we classified our Shetland assets as held for sale and treated them as discontinued operations. The Shetland assets were sold on 15 December 2021. In addition, we sold all our shares in Ocean Quality AS in 2020, which also was treated as a discontinued operation. The impact of the held for sale classification is presented as a reconciliation item reconciling 01.01.2020 with 31.12.2020 in the table above. For more information, see Note 5. 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), which has regulated the industry since 2009. From 2022, farming companies need to obtain support from local First Nations in the area where the company has its licenses, together with the DFO. Each local First Nation establishes its own protocol and procedures for engaging with companies operating in its territory. Grieg Seafood BC is working with all the local First Nations in their areas of operations and has engaged positively with all of them. The new regulation will contribute to a more sustainable future for local communities and workers. See Note 4 for further information. NORWAY LICENSE CATEGORY* Seawater licences Green licences R&D permit Broodstock Smolt Harvesting pens Education Total TOTAL NUMBER CAPACITY TONNES CANADA - BC West Coast East Coast Total capacity Tonnes 38 500 20 500 59 000 The capacity in BC is merely theoretical capacity, as all locations cannot be utilized simultaneously. BC also has a license for broodstock and smolt 35 8 3 3 3 2 2 56 30 853 7 743 2 340 2 340 4 045 1 106 1 560 49 987 See Note 2 for information on the useful economic life of assets, and Note 12 for information on assets pledged as security for financial liabilities. * Finnmark and Rogaland lease education licenses from the Troms and Finnmark and Rogaland County Councils, respectively. Newfoundland currently holds eight licenses, with the aim to develop additional licenses as the project progresses. The regulations for salmon farming in Placentia Bay are based on the number of fish in the sea at any one site. Per license, there is a maximum of one million fish in the sea in the first generation, and a maximum of two million fish in the second generation. In addition, there are regulations related to fallowing and adherence to certain environmental indicators. See Note 4 for more information. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 12 7 IMPAIRMENT TESTING OF GOODWILL AND LICENSES No impairments of goodwill or licenses were recognized in 2021 or 2020. Goodwill and licenses with indefinite economic lives are subject Other comments/explanations on assumptions applied in impairment testing are presented below. 1. Budgeted EBITDA margin. The margin remains more stable for the Norwegian regions, and is assumed to increase for our overseas to an annual impairment test. Tests are performed more frequently where indications of impairment exist. Licenses with finite useful lives regions during the budget period. Increase in harvest volume is assumed in all regions towards 2024. are tested for impairment only if there are indications of a decline in value. The estimated value in use (VIU) is used as a basis for calculating 2. The growth rate for the harvest volume in the budget period (nominal growth rate) is measured against the 2021 volume. A corresponding the recoverable amount, except for Grieg Newfoundland where the fair value less cost of disposal (FVLCD) has been used as the basis for increase in output is assumed over time. the recoverable amount. Grieg Newfoundland was a new segment in 2020. As of year-end 2021, we have fish at our freshwater facility, which 3. Weighted required return on capital employed before and after tax. Cash flow forecasts are thus estimated after tax. In the calculation, will be transferred to the sea during the spring/summer of 2022. the return on capital employed is also after tax. CASH-GENERATING UNIT NOK 1 000 Rogaland Finnmark British Columbia (BC) Newfoundland Total value LOCATION Norway Norway Canada Canada BOOK VALUE OF RELATED GOODWILL BOOK VALUE OF LICENSES 20 463 — 10 337 629 271 660 071 253 636 397 218 161 635 723 830 1 536 319 TOTAL 274 099 397 218 171 972 1 353 101 2 196 390 Goodwill arises on the acquisition of the subsidiaries and is measured on the basis of a group of cash-generating units that are expected to benefit from the synergy effects in the overall segment. Annual impairment tests are carried out on goodwill and licenses. The recoverable amount is calculated on the basis of value-in-use, except for Grieg Newfoundland where the calculation is based on fair value less cost of disposal (FVLCD). These calculations use after 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. For Newfoundland, the period is 14 years based on the first harvest expected in 2023. During the first few years, the cash flow will be negative due to both low production and harvest volume as well as the building of biomass and growth investments. ASSUMPTIONS USED FOR ESTIMATING RECOVERABLE AMOUNT Rogaland Finnmark BC Newfoundland Budget period Increase in revenues in budget period EBITDA margin 1) EBITDA margin in terminal period Harvest growth – tonnes 2) Required rate of return before tax 3) Required rate of return after tax 3) Growth rate 4) 3 years 42% 3 years 45% 3 years 58% 14 years NA 27% -37% 30% - 39% 19% - 27% 0% - 38% 35% 23% 9% 7.0% 1% 39% 17% 9% 7.0% 1% 34% 62% 10% 7.1% 1% 38% NA 13.5% 9.5% 1% As stated above, the budget period/explicit period is three years for Rogaland, Finnmark and BC. Impairment tests are initially based on the Group’s rolling four-year projections, which are also used in connection with the Group's liquidity planning. Future price levels are estimated by using Fish Pool forward prices as a basis, adjusted for other considerations such as quality reductions and shipping costs.To test the Newfoundland operation for impairment, we estimated the FVLCD using a period of 14 years to reflect production at full capacity in the terminal year. Although production will increase at a slow pace in the first few years, it will pick up speed once the facilities are completed and more smolt are transferred to the sea. We target a harvest volume of 15 000 tonnes in 2025, which we aim to increase to 45 000 tonnes in 2035. 4. Weighted average growth rate used to extrapolate cash flows beyond the budget period. In the years after 2024, the annual reinvestment is assumed to be equal to annual depreciation. 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 2024 (2035 for Grieg Newfoundland). The increased harvest volume assumes an increase in utilization of existing production capacity and licenses, reflecting the Group's post-smolt strategy and operational improvements. We expect further growth to come from better utilization of our seawater licenses by moving more growth to land through our post-smolt program. We are piloting post-smolt in Rogaland, and will increase post-smolt capacity also in Finnmark and BC. The expansion of the smolt facility in BC will be completed in 2022. Better utilization of our seawater licenses by improving biosecurity, fish health, welfare and survival rates, is also expected to secure on-growth and harvest volumes. Flexibility is a requirement to achieve better utilization of our capacity, and we are continuously looking for opportunities to secure access to new locations. The assumptions in the terminal year are based on the budget, adjusted for inflation. The applied discount rates are after tax and reflect specific risks relating to the relevant operating segments. SENSITIVITY ANALYSIS The assessment of fair value less cost of disposal and value-in-use is sensitive to changes in the assumptions made, the most important of which are the discount rate and EBIT/kg. A sensitivity analysis has been carried out based on these assumptions for all groups of cost- generating units. An isolated increase in the discount rate by two percentage points would result in an estimated impairment for the Newfoundland operation of NOK 253 million, while a reduction of NOK 5 in EBIT/kg would entail an estimated impairment for Newfoundland of NOK 108 million. The other cost-generating units are not sensitive to equivalent changes in the same assumptions. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 12 8 NO T E 1 1 P R OP E R T Y, P L AN T AND EQUIP MEN T INCL. R IGH T- OF -U SE- A S SE T S 2021 NOK 1 000 Book value at 01.01. Currency translation differences Reclassification1 Grants received and other deductions to historic cost2 Additions3 Disposals Depreciation Book value at 31.12. ACCUMULATED VALUES Acquisition cost Accumulated depreciation Accumulated impairments Book value at 31.12. Of which book value of non-depreciable property RIGHT-OF-USE ASSETS Book value at 31.12 of right-of-use assets (see separate specification in Note 13) BUILDINGS/ PROPERTY PROD. PLANTS AND BARGES NETS, CAGES AND MOORINGS OTHER EQUIPMENT TOTAL 1 182 595 25 126 -132 195 -88 910 220 066 40 -37 436 1 169 285 1 436 555 -267 270 — 1 169 285 107 839 893 039 -16 908 112 098 — 187 024 -8 812 -101 422 1 065 018 1 826 839 -721 930 -39 891 1 065 018 510 212 34 232 2 798 — 89 446 -6 613 -100 574 529 502 1 281 384 -751 882 — 529 502 447 308 3 033 154 4 830 17 299 — 303 638 -5 201 -129 050 638 824 47 280 — -88 910 800 175 -20 587 -368 482 3 402 629 1 153 100 5 697 878 -514 276 -2 255 358 — -39 891 638 824 3 402 629 67 927 242 934 87 743 437 294 835 898 See Note 2 for information on useful economic lifetime of assets, and Note 12 for information on assets pledged as security for financial liabilities. See Note 13 for specification of the Group's right-of-use assets and further information on its leases. 1Reclassification primarily concern Newfoundland and asset categorization subsequent to the finalization of the first feed- and smolt facilities in Marystown, Newfoundland (Canada). 2Grants received and other deductions to historic cost. See Note 22 concerning investment tax credits. 3The Group leases vessels which are capitalized on the balance sheet as right-of-use assets. Some of these vessels are utilized in the development of the Newfoundland region. Some of the depreciation of right-of-use assets has been capitalized as pens, nets and moorings, and is not included in the income statement. 2020 NOK 1 000 Book value at 01.01. Assets classified as held for sale1 Acquisition of business2 Currency translation differences Reclassification Additions Disposals Reversals Depreciation Book value at 31.12 ACCUMULATED VALUES Acquisition cost Accumulated depreciation Accumulated impairments Book value at 31.12. Of which book value of non-depreciable property RIGHT-OF-USE ASSETS Book value at 31.12 of right-of-use assets (see separate specification in Note 13) BUILDINGS/ PROPERTY PROD. PLANTS AND BARGES NETS, CAGES AND MOORINGS OTHER EQUIPMENT TOTAL 663 171 -119 513 127 009 -39 811 26 770 566 316 -8 234 -33 114 1 182 595 1 418 736 -236 141 — 1 182 595 105 018 1 069 051 -173 687 1 849 1 422 -516 91 004 -1 435 -94 649 893 039 1 566 619 -633 689 -39 891 893 039 586 218 -116 490 695 4 846 80 135 355 -3 381 -97 111 510 212 1 165 973 -655 761 — 510 212 639 502 -212 615 1 148 -2 234 -26 333 227 188 -44 043 -135 304 447 309 2 957 943 -622 305 130 702 -35 778 — 1 019 864 -57 093 — -360 178 3 033 154 832 100 4 983 429 -384 961 -1 910 552 168 -39 723 447 308 3 033 154 77 659 260 832 105 232 297 732 741 454 See Note 2 for information on useful economic lifetime of assets, and Note 12 for information on assets pledged as security for financial liabilities. See Note 13 for specification of the Group's right-of-use assets and further information on its leases. 1This Note is prepared for the Group’s continued operation. In 2020, we have classified our Shetland assets as held for sale and treated as discontinued operations. The Shetland assets was sold 15 December 2021. In addition, we sold all our shares in Ocean Quality AS in 2020, which also was treated as discontinued operations. The impact of the held for sale classification is presented as a reconciliation item reconciling 1.1.2020 with 31.12.2020 in the table above. See more information in Note 5. 2Assets acquired in business combinations relate the the property, plant and equipment of Grieg Newfoundland. See more information in Note 6. PA R T 0 3 : O U R F I N A N C I A L 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 NO T E 1 2 B OR R O W ING S NON-CURRENT LIABILITIES AND FINANCE LEASE OBLIGATIONS (INTEREST-BEARING) NOK 1 000 Grieg Seafood ASA has a syndicated loan provided 50/50 by DNB and Nordea. The financing agreement includes two term loans of NOK 600 million and EUR 60 million, a revolving credit facility of NOK 1 225 million (2020: NOK 1 500 million), alongside overdraft facilities of NOK 100 million. Repayment profile of the NOK and EUR term-loans are semi-annual installments of NOK 25 million and EUR 2.5 million until balloon on maturity 28 February 2023. The drawdown rate of the EUR loan is 9.6691. In 2021, the NOK term loan of the financing agreement has been settled in full. In 2020, Grieg Seafood issued a green bond, through two tap issues, in the amount of NOK 1 500 million. The green bond (GSF01 G, listed at Euronext) matures on 25 June 2025. After the reporting date of 31 December 2021, Grieg Seafood has refinanced its syndicated loans. For more information, see below. Grieg Seafood was in compliance with its financial covenants as at 31 December 2021. Green bond 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) Other non-current liabilities Total NON-CURRENT LIABILITIES (NON-INTEREST BEARING) Subordinate loans Total Amortization effect of loans Total non-current liabilities The financial covenant of the syndicated loan agreements (as at 31 December 2021) is a minimum equity ratio of 35%, measured on Grieg CURRENT LIABILITIES (INTEREST-BEARING) NOK 1 000 Seafood’s consolidated book value. The equity ratio is calculated without the effect of IFRS 16. As at 31 December 2021, the Group had an Current portion of borrowings equity ratio (according to IFRS) of 52% (2020: 41%), while the equity ratio of the Grieg Seafood Group according to financial covenants was 54% (2020: 43%). In addition, there is a rolling 12-month NIBD/EBITDA leverage ratio requirement. Net interest-bearing debt (NIBD) is calculated in accordance with covenant requirements in the financing agreement. According to the agreement, factoring liabilities and IFRS 16 effects are not included in NIBD. The leverage ratio metric of NIBD/EBITDA is linked to our equity ratio requirement: if equity ratio is more than 40%, the maximum leverage ratio is 5.0, and if the equity ratio is equal to or less then 40%, the maximum leverage ratio is 4.5. NIBD/ EBITDA was not reported as a financial covenant from Q4 2020 through Q3 2021, pursuant to a temporary amendment to the syndicated loan agreement. NIBD/EBITDA was measured to 2.6 as at 31 December 2021, but will not be reported as a financial covenant in the refinanced agreement. See below for more information. In June 2020, we issued our first green bond issue, with a proceed of NOK 1 000 million. In November 2020, Grieg Seafood ASA issued the second tap of the senior unsecured green bond with an additional drawdown of NOK 500 million, bringing the total principal of the green bond issue to NOK 1 500 million. The bond matures on 25 June 2025 and is listed on Euronext (Oslo Stock Exchange) with ticker "GSF01 G". The green bond's financial covenant is an equity ratio requirement of at least 30%, measured consistently with the equity ratio covenants as defined in the Group’s syndicated loan agreement with secured lenders. The green bond framework is the basis for the use of proceeds, the evaluation and selection process for green projects, the management of green bond proceeds and for reporting connected to the green bond. The framework is aligned with the ICMA Green Bond Principles. Grieg Seafood will annually publish a green bond report, including an allocation and impact report, as long as there are green bond proceeds outstanding. The green bond report is to be verified with limited assurance by an external auditor. In addition to bank and bond loans, the Group's financing consists of lease agreements with credit institutions, in addition to the effect of IFRS 16 by capitalizing leases in the balance sheet (operational leases according to the IFRS in force prior to 1 January 2019). The Group had total unutilized credit facilities of NOK 885 million as at 31 December 2021 (2020: NOK 1 203 million). EVENT AFTER THE BALANCE SHEET DATE: In Q1 2022, Grieg Seafood finalized a refinancing of the Group's syndicated financial liabilities, with an aggregate of NOK 3 200 million in Current portion lease liabilities (prior IAS 17 finance leases) Current portion lease liabilities (prior IAS 17 operational leases) Total current liabilities (interest-bearing) NET INTEREST-BEARING LIABILITIES NOK 1 000 Total non-current interest-bearing liabilities (see above)* Total current interest-bearing liabilities (see above) Gross interest-bearing liabilities Cash and cash equivalents Loans to associates Net interest-bearing liabilities Lease liabilities (prior IAS 17 operational leases)** Non-current debt to the Province of Newfoundland and Labrador, Canada Net interest-bearing liabilities according to covenants *Green bond and non-current borrowings including syndicated term loan and revolving facility as presented above, are presented excluding amortized effect of loans. **Leasing liabilities that would, according to the IFRS in force prior to 1 January 2019, be classified as operational leases, are excluded from the net interest-bearing liabilities according to the covenant calculation. PAYMENT PROFILE NON-CURRENT LIABILITIES 31.12.2021 NOK 1 000 2022 2023 2024 2025 2026 LATER TOTAL Green bond Non-current loan Non-current revolving credit facility Lease liabilities (prior IAS 17 finance leases) Lease liabilities (prior IAS 17 operational leases) — — — 1 500 000 49 944 374 580 — 440 000 72 918 104 772 4 873 67 410 81 209 11 773 — — 57 199 80 980 12 310 — — 43 909 51 033 9 200 — — — 39 525 37 084 8 114 — 1 500 000 — — 79 535 40 255 54 353 424 524 440 000 360 496 395 332 100 622 five-year senior secured sustainability-linked loans and credit facilities. This represents the completion of the funding process. The new Other non-current liabilities debt structure comprises a NOK 750 million term loan, an EUR 75 million term loan, a NOK 1 500 million revolving credit facility and a NOK 200 million overdraft facility. The NOK and EUR term loans carry installments equal to a 12-year repayment profile until balloon payment at five years. The revolving credit facility matures at five years, while the overdraft facility is subject to annual renewal. The interest rate is three months NIBOR plus margin. The loan is linked to sustainability-linked KPIs, of which the scoring impact the interest rate margin paid on the facilities. The sole financial covenant for the new facilities is a minimum recognized equity ratio of 31%, excluding the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019. Total 232 507 974 972 150 489 1 604 141 84 723 174 142 3 220 974 PA G E 12 9 2020 1 500 000 869 988 996 646 355 417 176 226 52 312 2021 1 500 000 374 580 440 000 287 578 290 219 96 091 2 988 468 3 950 589 — — -29 671 2 958 797 2021 54 475 72 918 105 114 232 507 2021 2 988 468 232 507 3 220 974 928 342 2 111 2 290 520 -395 332 -26 487 1 868 701 — — -42 768 3 907 822 2020 104 435 77 769 75 426 257 630 2020 3 950 589 257 630 4 208 219 275 427 1 910 3 930 882 -251 653 — 3 679 230 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 13 0 PAYMENT PROFILE NON-CURRENT LIABILITIES 31.12.2020 NOK 1 000 2021 2022 2023 2024 2025 LATER TOTAL BOOK VALUE OF GROUP BORROWINGS BY CURRENCY NOK 1 000 31.12.2021 NOK GBP Green bond Non-current loan Non-current revolving credit facility Lease liabilities (prior IAS 17 finance leases) Lease liabilities (prior IAS 17 operational leases) Other non-current liabilities Total — — — — 1 500 000 — 1 500 000 Green bond 102 352 102 352 767 636 — 77 769 75 426 2 083 — 996 646 71 587 66 526 2 820 64 930 38 955 7 281 — — 55 337 29 109 5 867 — — — — 43 932 119 632 7 354 6 160 34 284 30 186 972 339 996 646 433 186 251 653 54 396 Non-current syndicated loan Syndicated loan - credit facility Lease liability (prior IAS 17 finance leases) Lease liability (prior IAS 17 operational leases) Other non-current and current liabilities 257 630 243 283 1 875 447 90 312 1 557 446 184 102 4 208 219 Amortization effect of loans 1 500 000 1 500 000 424 524 440 000 360 496 395 332 100 622 -29 671 — 440 000 357 942 170 846 — -29 671 — — — — — — — EUR — 424 524 — — — — — Total 3 191 303 2 439 117 — 424 524 USD CAD Other — — — — — — — — — — — 2 554 224 487 100 622 — 327 662 — — — — — — — — USD CAD Other — — — 3 319 48 753 54 394 — 106 466 — — — — — — — — 2021 3.76% 3.50% — — — — — — — — 2020 2.81% 1.59% BOOK VALUE OF GROUP BORROWINGS BY CURRENCY NOK 1 000 31.12.2020 NOK GBP 1 500 000 1 500 000 972 339 996 646 433 187 251 653 54 394 -42 768 475 000 960 000 429 868 202 899 — -42 768 — — — — — — — EUR — 497 339 36 646 — — — — 4 165 452 3 525 000 — 533 985 Green bond Non-current syndicated loan Syndicated loan - credit facility Lease liability (prior IAS 17 finance leases) Lease liability (prior IAS 17 operational leases) Other non-current and current liabilities Amortization effect of loans Total AVERAGE INTEREST RATE ON BANK- AND BOND LOAN Average interest rate (NOK) Average interest rate (EUR) The effect of interest rate swaps is not taken into account in calculating the average interest rate on borrowings and credit facilities. BOOK VALUE AND FAIR VALUE OF BORROWINGS NOK 1 000 Green bond Borrowings (non-current syndicated loan and credit facility, incl. current part of the non-current liability) Total BOOK VALUE FAIR VALUE 2021 1 500 000 864 524 2 364 524 2020 1 500 000 1 968 985 3 468 985 2021 1 500 000 864 524 2 364 524 2020 1 456 875 1 968 985 3 425 860 Book values in the table above are excluding the amortization effect of loan cost. The book value of borrowings (excluding the green bond) closely approximates to the fair value. Our green bond is listed on Oslo Børs (Euronext). Market price of the bond was 100% of par value at year-end 2021 (2020: 97.125%). NOK 1 000 Liabilities secured by mortgages/charges on assets* ASSETS PLEDGED AS SECURITY NOK 1 000 Licenses Property, plant and equipment * Trade receivables Inventories and biological assets excl. fair value of biological assets Assets classified as held for sale ** Total assets pledged as security 2021 1 248 889 2021 1 536 319 3 017 023 151 793 2 607 231 — 7 312 366 2020 2 407 926 2020 809 947 2 240 700 179 384 2 267 501 1 107 076 6 604 607 *Book value of liabilities secured by mortgage/charges on assets, and the property, plant and equipment does not include the book value of the effect of IFRS 16 (compared to the IFRS in force prior to 1 January 2019) on right-of-use and lease liability. **Part of the Shetland assets pledged as security. As for *, the book value of assets is exclusive of the effect of IFRS 16. Pledges also include shares in subsidiaries. The book value of these shares in the consolidated financial statements is NOK 0. DESCRIPTION OF LIABILITIES* Grieg Seafood ASA Green bond loan facility FIXED OR FLOATING INTEREST RATE** EFFECTIVE INTEREST RATE*** FINAL MATURITY (MTH/YEAR) CURRENT PORTION NOK 1 000 CURRENCY NON- CURRENT PORTION NOK 1 000 CURRENT PORTION NOK 1 000 NON- CURRENT PORTION NOK 1 000 2021 2020 NOK Floating Price grid 06/2025 — 1 500 000 — 1 500 000 NOK/EUR NOK/EUR Floating Price grid 02/2023 Floating Price grid 02/2023 49 944 — 374 580 440 000 102 352 — 869 988 996 646 Grieg Seafood Group Lease liability (prior IAS 17 finance leases) Lease liability (prior IAS 17 operational leases) Multiple Multiple Other non-current and current liabilities**** CAD Floating Floating Fixed 72 918 287 578 77 769 355 417 104 772 290 560 75 426 176 226 4 873 95 749 2 083 52 312 Total 232 507 2 988 467 257 630 3 950 589 * Excluding amortization effect of loans. ** See Note 3 concerning IBOR reform. *** Bank loans have been refinanced in Q1 2022. Interest rates are, in both the loan agreements as per 31 December 2021 (disclosed in this table), and in the refinanced loan agreements, based on 3M NIBOR plus margin, according to a margin ratchet/price grid. The green bond is based on 3M NIBOR plus a fixed margin of 3.4 percentage points. **** NOK 98.6 million of the NOK 100.6 million in other non-current and current liabilities is attributable to various loans provided by government agencies in Canada concerning the development of the Newfoundland region. These loans are recognized at present value, with a calculated interest charged to the income statement until maturity. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 13 1 LIABILITIES ARISING FROM FINANCING ACTIVITIES NO T E 13 LE A SE S CHANGE IN LIABILITIES ARISING FROM FINANCING ACTIVITIES NOK 1 000 LEASE LIABILITY BORROWINGS At 01.01.2020 Cash movements: Draw-down green bond Draw-down non-current syndicated NOK term loan incl. credit facility Draw-down other non-current loan Repayment non-current syndicated term loan (NOK and EUR) Repayment lease liability (prior IAS 17 finance leases) Repayment lease liability (prior IAS 17 operational leases) Loan cost Total cash movements Non-cash movements: Liabilities directly associated with the assets classified as held for sale Acquisition of business Draw-down lease liability (prior IAS 17 finance leases) Draw-down lease liability (prior IAS 17 operational leases) Non-cash movements (ex. foreign currency adjustments) Foreign currency adjustments Loan costs and net difference to nominal amount raised on green bond loan Total non-cash movements At 31.12.2020 At 01.01.2021 Cash movements: Revolving credit facility (net draw-down/repayment) Draw-down other non-current loan Repayment non-current syndicated term loan (NOK and EUR) Repayment other non-current loan Repayment lease liability (prior IAS 17 finance leases) Repayment lease liability (prior IAS 17 operational leases) Loan costs Total cash movements Non-cash movements: Draw-down lease liability (prior IAS 17 finance leases) Draw-down lease liability (prior IAS 17 operational leases) Non-cash movements (ex. foreign currency adjustments) Foreign currency adjustments Loan costs Total non-cash movements At 31.12.2021 831 993 1 761 508 — — — — -77 857 -100 074 — -177 931 -184 618 4 734 58 850 196 124 -39 084 -5 228 — 30 777 1 500 000 364 135 23 464 -102 267 — — -36 743 1 748 589 -98 890 32 758 — — 2 862 29 788 3 998 -29 484 TOTAL 2 593 501 1 500 000 364 135 23 464 -102 267 -77 857 -100 074 -36 743 1 570 658 -283 508 37 492 58 850 196 124 -36 222 24 561 3 998 1 294 THE GROUP AS A LESSEE This note has been prepared for the Group’s continued operations. For more information, see Note 5. The Group has several lease arrangements encompassing various offices, equipment and vehicles. Contracts are engaged with credit institutions for leases that would have been classified as finance leases according to the IFRS in force prior to 1 January 2019, as well as capitalized leases due to the effect of IFRS 16. Well-boats and workboats on time charters with a duration of more than one year contribute significantly to the effect of IFRS 16. Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non- lease components based on their relative stand-alone prices. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes. The leases are recognized in the respective Group companies in local currencies, and translated to the Group’s presentation currency at the balance sheet date. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for the Group’s leases, the lessee’s incremental borrowing rate is used. This is the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The Group reassesses the incremental borrowing rates applicable to new lease agreements on an annual basis. The applied rates for new leases as from 2021 ranged from 3.9% to 4.2% for buildings and properties, and 3.6% to 3.7% for other 684 839 3 480 613 4 165 453 assets. The applied rates for new leases as from 2020 ranged from 2.4% to 3.5% for buildings and properties, and 2.4% to 3.5% for other assets. 684 839 3 480 613 4 165 453 — — — — -77 662 -107 263 -556 222 39 147 -526 602 -1 050 — — — -3 895 -556 222 39 147 -526 602 -1 050 -77 662 -107 263 -3 895 The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Right-of-use assets are generally depreciated on a straight-line basis over the shorter of the asset's useful life and the lease term. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. 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 of less than USD 5 000, are considered low-value leases. The Group has also applied the practical expedient of short-term leases. Short term is defined as a lease term of 12 months or less at the commencement date. For low-value leases and short-term leases, the Group does not recognize lease liabilities -184 925 -1 048 623 -1 233 548 or right-of-use assets. These leases are recognized as operating expenses over the life of the contract. 4 804 249 437 -4 057 5 730 — 255 916 — — — -13 508 16 992 3 484 4 804 249 437 -4 058 -7 778 16 992 259 398 755 828 2 435 474 3 191 303 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 commencement whether it is reasonably certain to exercise the right of renewal. The Group's potential future lease payments not included in the lease liabilities related to extension options amounted to NOK 134 million (NOK 137 million at 31 December 2020). This note has been prepared for the Group’s continued operations. In 2020, we classified our Shetland assets as held for sale and treated them as discontinued operations. The Shetland assets were sold on 15 December 2021. In addition, we sold all our shares in Ocean Quality AS in 2020, which was also treated as a discontinued operation. The impact of the held for sale classifications in 2020, reconciling 1.1.2020 with 31.12.2020, is included as a non-cash movement. For more information, see Note 5. PA R T 0 3 : O U R F I N A N C I A L 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 THE EFFECT OF IFRS 16 The effect of IFRS 16 is attributable to the difference in accounting for the current IFRS compared to the IFRS in force prior to 1 January 2019. LEASE LIABILITY SUMMARY OF THE LEASE LIABILITIES NOK 1 000 The following two tables illustrate the effect IFRS 16 has had on the Group in 2021, with comparable figures for 2020. THE EFFECT OF IFRS 16 - STATEMENT OF FINANCIAL POSITION NOK 1 000 31.12.2021 31.12.2020 Right of use assets included in property, plant and equipment inclusive right-of-use assets Lease liabilities included in non-current lease liabilities Lease liabilities included in current lease liabilities THE EFFECT OF IFRS 16 - INCOME STATEMENT NOK 1 000 Other operating expenses EBITDA before fair value adjustment 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 385 606 290 219 105 114 2021 104 824 104 824 -97 374 7 450 — 7 450 -10 029 -2 579 244 692 176 226 75 426 2020 108 313 108 313 -103 343 4 970 — 4 970 -8 881 -3 911 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" in the statement of financial position. These leased assets include both assets that would be treated as financial leases according to the IFRS in force prior to 1 January 2019, as well as operational leases ("the effect of IFRS 16"). The effect of applying IFRS 16 is disclosed above. RIGHT-OF-USE ASSETS 2021 NOK 1 000 Book value at 01.01. Currency translation differences Additions Cancellation of lease and other changes Depreciation Book value at 31.12. BUILDINGS/ PROPERTY PROD. PLANTS AND BARGES NETS, CAGES AND MOORINGS OTHER EQUIPMENT 77 659 260 832 105 232 69 1 219 -17 -11 003 67 927 52 1 095 -2 014 -17 032 242 934 38 3 709 -4 592 -16 644 87 743 297 732 8 299 247 959 -20 308 -96 388 437 294 RIGHT-OF-USE ASSETS 2020 NOK 1 000 Book value at 01.01. Assets classified as held for sale, opening balance* Currency translation differences Additions Cancellation of lease and other changes Depreciation Book value at 31.12. BUILDINGS/ PROPERTY PROD. PLANTS AND BARGES NETS, CAGES AND MOORINGS OTHER EQUIPMENT 70 016 -27 966 -288 53 102 -8 234 -8 971 77 659 282 764 95 503 — 42 -1 854 -956 -19 164 260 832 — 8 31 595 -6 064 -15 810 105 232 417 224 -159 809 2 027 186 286 -43 629 -104 367 297 732 TOTAL 741 454 8 458 253 983 -26 931 -141 067 835 898 TOTAL 865 507 -187 775 1 789 269 128 -58 883 -148 311 741 454 *This note has been prepared for the Group’s continued operation. In 2020, we classified our Shetland assets as held for sale and treated them as discontinued operations. The Shetland assets were sold on 15 December 2021. The impact of the held for sale classification is presented as a reconciliation item, reconciling 1.1.2020 with 31.12.2020 in the table above. See more information in Note 5. PA G E 13 2 2020 831 993 -184 618 4 734 254 973 -177 931 -5 228 -39 084 684 839 2021 684 839 — — 254 242 -184 925 5 730 -4 057 755 828 Lease liabilities at 01.01. Assets classified as held for sale* Acquisition of business New leases recognized during the year Cash payments for the principal portion of the lease liability Currency exchange differences Cancellation of lease and other changes Total lease liabilities at 31.12. *Relates to the classification of the Group's Shetland assets as held for sale and discontinued operations, as well as the discontinued operations of Ocean Quality. For more information, see the footnote under this note’s 2020 right-of-use assets movement table, in addition to Note 5. MATURITY ANALYSIS - LEASE LIABILITIES NOK 1 000 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 liabilities at 31.12 Lease liabilities included in the statement of financial position at 31.12 Current portion Non-current portion MATURITY ANALYSIS - LEASE LIABILITIES NOK 1 000 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 liabilities at 31.12 Lease liabilities included in the statement of financial position at 31.12 Current portion Non-current portion 2021 FORMER IAS 17 FINANCIAL LEASE FORMER IAS 17 OPERATIONAL LEASE TOTAL LEASE LIABILITY 82 272 74 830 62 951 48 266 42 703 83 131 394 153 360 496 72 918 287 578 117 435 90 507 87 010 54 654 39 168 44 382 433 155 395 332 105 114 290 219 199 706 165 337 149 961 102 920 81 871 127 513 827 309 755 828 178 031 577 796 2020 FORMER IAS 17 FINANCIAL LEASE FORMER IAS 17 OPERATIONAL LEASE TOTAL LEASE LIABILITY 88 866 80 930 72 218 61 044 48 280 126 404 477 742 433 186 77 769 355 417 82 712 70 077 42 684 31 895 8 352 40 115 275 835 251 653 75 426 176 226 171 578 151 007 114 902 92 939 56 632 166 519 753 577 684 839 153 195 531 644 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 13 3 AMOUNTS RECOGNIZED IN PROFIT OR LOSS NOK 1 000 Interest on lease liabilities Foreign currency effect 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 NOK 1 000 Total cash outflow for leases 2021 -22 709 -5 112 -141 067 -5 446 -8 -174 343 2021 -207 634 2020 -22 717 1 035 -148 311 -17 898 -8 -187 901 2020 -200 648 NO T E 1 4 CL A S SI FIC AT ION S OF FIN ANCI AL INS T RUMEN T S FINANCIAL INSTRUMENTS AT 31.12.2021 NOK 1 000 FVPL 1) AMORTIZED COST FVOCI 2) TOTAL FINANCIAL ASSETS Other non-current receivables3 Trade receivables Other current receivables Derivatives4 Cash and cash equivalents Total financial assets FINANCIAL LIABILITIES Borrowings Lease liability (prior IAS 17 finance leases) Lease liability (prior IAS 17 operational leases) Share based payments5 Derivatives4 Trade payables Other current liabilities Total financial liabilities — — — 37 592 — 37 592 — — — 9 792 22 350 — — 2 111 151 793 12 592 — 928 342 1 094 837 2 435 475 360 496 395 332 — — 523 196 36 603 32 142 3 751 102 271 — — — — 271 — — — — — — — — 2 382 151 793 12 592 37 592 928 342 1 132 700 2 435 475 360 496 395 332 9 792 22 350 523 196 36 603 3 783 244 1 FVPL: Fair value through profit or loss. 2 FVOCI: Fair value through other comprehensive income. 3 Investments in non-listed shares (equity instruments). Measured at level 3. 4 Forward currency contracts, interest rate swap and financial salmon price contracts. Measured at level 2. See Note 3 for specification. 5 Synthetic option scheme. Measured at level 3. See Note 17 for more information. 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. FINANCIAL INSTRUMENTS AT 31.12.2020 NOK 1 000 FVPL 1) AMORTIZED COST FVOCI 2) TOTAL FINANCIAL ASSETS Other non-current receivables3 Trade receivables Other current receivables Derivatives4 Cash and cash equivalents Total financial assets FINANCIAL LIABILITIES Borrowings Lease liability (prior IAS 17 finance leases) Lease liability (prior IAS 17 operational leases) Share based payments5 Derivatives6 Trade payables Total financial liabilities — — — 84 189 — 84 189 — — — 2 842 14 346 — 17 188 2 484 179 384 38 160 — 275 427 495 454 3 480 613 433 186 251 653 — — 562 848 4 728 300 295 — — — — 295 — — — — — — — 2 778 179 384 38 160 84 189 275 427 579 937 3 480 613 433 186 251 653 2 842 14 346 562 848 4 745 487 1 FVPL: Fair value through profit or loss. 2 FVOCI: Fair value through other comprehensive income. 3 Investments in non-listed shares (equity instruments). Measured at level 3. 4 Forward currency contracts, interest rate swap and financial salmon price contracts. Measured at level 2. See Note 3 for specification. 5 Synthetic option scheme. Measured at level 3. See Note 17 for more information. 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. FAIR VALUE HIERARCHY The following of the Group’s financial instruments are not measured at fair value: cash and cash equivalents, accounts receivables, other current receivables and payables, bank loans, bond loans and leasing liabilities. See Note 3 for information on valuation techniques. The Group uses the following hierarchy of valuation techniques to determine and disclose the fair value of financial instruments: • Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities • Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly • Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data. For recurring level 3 measurements, transfers between the levels in the fair value hierarchy are evaluated when reassessing the categories of the financial instruments at the end of the period. During the 2021 reporting period, there were no changes in the fair value measurement which caused transfers between level 1 and level 2, and no transfers to or from level 3. 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 COUNTERPARTIES WITH NO EXTERNAL CREDIT RATING Group 1 Group 2 Group 3 Total trade receivables 2021 2020 12 996 100 854 37 943 151 793 81 717 64 319 33 348 179 384 PA R T 0 3 : O U R F I N A N C I A L 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 BANK DEPOSITS NOK 1 000 AAA AA A Total bank deposits 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. 2021 — 928 342 — 928 342 2020 — 275 427 — 275 427 Change in book value of deferred tax NOK 1 000 Balance sheet value at 01.01. Effect of discontinued operations* Currency conversion Effect of business combinations** Tax effect of OCI transactions (see Note 3) Other effects Change in deferred tax recognized in income in period Group 3 - existing customers/related parties (more than 6 months) with a history of one or more credit covenant breaches. All amounts due Changes to income in the period Net deferred tax liability at balance sheet date *See Note 5. **See Note 6. PA G E 13 4 2020 874 664 -66 839 -14 710 83 110 -5 380 4 455 — 4 365 879 665 2021 879 665 — 17 592 — 7 089 — -17 043 182 440 1 069 743 have been paid in full following the breaches. NO T E 1 5 TA XE S INCOME TAXES FOR THE YEAR IN THE INCOME STATEMENT Norway Aboard Tax on profits Norway Aboard Changes in deferred tax Total income taxes related to profit for the year Tax reconciliation between nominal and effective tax rates NOK 1 000 Profit before tax Taxes calculated at nominal tax rate Withholding tax Non-taxable income/loss from associated companies Effect of adjustment of income tax from previous years Effect of recognition of previously non-recognized tax assets Effect of non-recognition of losses and tax assets Other permanent differences Other effect not listed Total income tax expense Weighted average tax rate Tax payable book in financiale statement current liabilities NOK 1 000 Tax payable in Norway Tax payable aboard Total tax payable in the statement of financial position The nominal tax rate in Norway is 22%. The nominal tax rate for 2021 in Canada was 27% in BC and 30 % in Newfoundland. The nominal tax rate in Shetland, which relates to the Group’s assets classified as held for sale (Note 5), was 19%. The significant tax effect is attributable to a change in the tax rate and other permanent differences. TOTAL DEFERRED TAX ASSETS/LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION NOK 1 000 Deferred tax assets Deferred tax liabilities Net deferred tax 2021 59 -1 069 802 -1 069 743 2020 29 293 -908 958 -879 665 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 the UK can be offset. SPECIFICATION OF DEFERRED TAX AND BASIS FOR DEFERRED TAX/ TAX ASSETS NOK 1 000 Opening balance Non-current assets Current assets Debt (lease, other liabilities) Other effect (government grant/ investment tax credit) Tax losses carried forward Total temporary differences *See Note 5. **See Note 6. Tax loss carried forward are divided among the following jurisdictions: Tax losses carried forward in Norway Tax losses carried forward in Canada Tax losses carried forward in USA Total 2021 539 668 609 378 -15 790 -4 350 -59 162 1 069 743 2021 — -59 162 — -59 162 2020 245 590 687 327 -13 816 6 600 -46 035 879 666 2020 -22 136 -14 657 -3 816 -40 609 2021 99 682 -15 777 83 905 57 973 107 424 165 397 249 301 2021 853 678 226 472 7 049 327 -18 428 696 11 026 4 741 17 418 249 301 29.2% 2021 87 739 903 88 642 2020 -7 321 14 513 7 192 -1 228 5 593 4 365 11 557 2020 -304 440 -39 945 3 033 — — 56 962 -8 916 423 — 11 557 -3.8% 2020 279 14 513 14 792 PA R T 0 3 : O U R F I N A N C I A L 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 NO T E 1 6 S A L A R IE S AND P ER S ONNEL E XP ENSE 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 17) Pension costs Other personnel costs Total Average number of employees 2021 451 530 25 616 8 826 26 146 65 316 577 434 747 2020 393 390 24 838 -4 996 24 151 62 163 499 546 697 Share savings program Grieg Seafood established a share savings program for its employees in 2018, which was continued throughout 2021. Employees may invest up to NOK 25 000 per year. There is a three-year 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 via the 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. As at 31 December 2021, loans to employees related to the share savings program total NOK 2.7 million (2020: NOK 2.6 million). The total number of shares sold to employees was 38 513 in 2021 (2020: 42 193). Management remuneration In December 2019, the Norwegian Parliament adopted new rules on the wage policy of listed public companies, which came into force in January 2021. New wage policy and reporting guidelines were approved by the Annual General Meeting of Grieg Seafood ASA on 2 June 2021. The guidelines for management remuneration are available on Grieg Seafood ASA’s website. The remuneration report for Grieg Seafood ASA will be published at the time notice of the 2022 Annual General Meeting is issued. The Annual General Meeting is scheduled for 9 June 2022. REMUNERATION PAID TO GROUP MANAGEMENT IN 2021 NOK 1 000 SALARY BONUS RETAINED BONUS , NOT YET PAID OPTIONS EXERCISED DURING THE YEAR OTHER REMUNERATION CEO CFO CTO CHRO COO Farming Europe COO Farming North America CCO GCM 3 165 2 280 2 063 1 604 2 116 1 772 1 996 1 190 Total remuneration paid to Group Management 16 185 — — — — 75 — 161 — 236 540 313 241 216 203 244 350 119 2 226 — — — — — — — — — 250 115 116 117 113 — 115 121 947 Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 17. TOTAL 3 956 2 707 2 420 1 937 2 507 2 016 2 621 1 430 19 593 REMUNERATION PAID TO BOARD MEMBERS IN 2021 NOK 1 000 Per Grieg Jr.* Tore Holand** Sirine M. Fodstad(until 13 of August 2021) Marianne Ribe Katrine Trovik Nicolai Hafeld Grieg (from 4 of November 2021) Total remuneration including social security costs PA G E 13 5 TOTAL 479 371 205 308 342 — 1 706 *Payment of NOK 22 820 for service on the Remuneration Committee is included in the remuneration paid to Per Grieg Jr. and Marianne Ribe, while Sirine Fodstad received NOK 15 213 for the same. **Payment of NOK 57 050 for service on the Audit Committee is included in the remuneration paid to Tore Holand and Katrine Trovik. The amounts include social security costs. REMUNERATION PAID TO GROUP MANAGEMENT IN 2020 NOK 1 000 SALARY BONUS RETAINED BONUS, NOT YET PAID OPTIONS EXERCISED DURING THE YEAR OTHER REMUNERATION CEO CFO CTO CHRO COO Farming Europe COO Farming North America CCO GCM 2 841 2 173 1 996 1 574 1 996 1 825 525 1 035 Total remuneration paid to Group Management 13 965 — — — — — — — — — — — — — — — — — — 2 709 2 070 1 868 1 431 1 615 1 571 — — 11 264 118 101 101 106 78 78 81 96 759 TOTAL 5 668 4 344 3 965 3 111 3 689 3 474 606 1 131 25 987 In May 2020, Grieg Seafood announced changes to the Group Management structure, with the inclusion of COOs for farming in Europe and North America. In June, the Chief Commercial Officer was added to Grieg Seafood’s Group Management team. Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 17. The table has been amended compared to the annual report 2020. REMUNERATION PAID TO BOARD MEMBERS IN 2020 NOK 1 000 Per Grieg Jr.* Tore Holand** Sirine M. Fodstad* Marianne Ribe (from 14 May 2020)* Katrine Trovik (from 14 May 2020)** Asbjørn Reinkind (until 14 May 2020) Karin Bing Orgland (until 14 May 2020)** Solveig M.R. Nygaard (until 14 May 2020) Total remuneration including social security costs TOTAL 479 348 308 178 195 140 143 119 1 909 * Payment of NOK 22 820 for service on the Remuneration Committee is included in the remuneration paid to Per Grieg Jr. and Sirine Fodstad, while Marianne Ribe received NOK 11 410 for the same . **Payment for service on the Audit Committee is included in the remuneration paid to Tore Holand, Katrine Trovik and Karin Bing Orgland, in the amount of NOK 57 050, 28 525 and 23 770, respectively. The amounts include social security costs. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 13 6 Cash-based options available for settlement Weighted average exercise price on outstanding options (NOK per option) 2021 2 690 000 80.16 2020 2 790 000 80.26 NOK/OPTION AMOUNTS IN NOK 1 000 LISTED PRICE ON ALLOCATION CALCULATED VALUE PER OPTION ON ALLOCATION CALCULATED TOTAL VALUE ON ALLOCATION * TOTAL VALUE OF ALL OPTIONS AT 1.1.2021 CHANGE IN PROVISION CB-OB* EXERCISED OPTION 2021 ACC. COST RECOGNIZED IN EQUITY AT 31.12.2021 RECOGNIZED LIABILITY CASH SETTLEMENT AT 31.12.2021 — 78.96 78.96 78.96 78.96 78.96 78.96 78.96 78.96 78.96 83.00 83.00 83.00 83.00 83.00 — 4.35 6.34 5.82 7.20 6.04 5.87 5.87 6.13 7.04 2.26 2.79 2.79 2.38 2.35 — 1 480 1 078 989 720 604 999 999 1 042 3 519 906 557 557 475 — 56 41 37 27 23 38 38 39 132 467 316 296 247 — 1 352 868 803 573 488 810 810 842 2 788 -460 -313 -293 -243 1 880 15 805 1 085 2 842 -1 074 6 951 — — — — — — — — — — — — — — — — 6 887 — — — — — — — — — — — — — — 6 887 — 1 408 909 840 600 511 847 847 881 2 921 7 4 4 4 11 9 794 2021 Former employees with expired options OPTION CATEGORY Equity option CEO CFO CTO CHRO GCM COO Farming Europe COO Farming North America CCO Other options allocated in 2020 CEO CFO COO CHRO Other options allocated in 2017 Total Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash * Amounts exclude social security costs. NO T E 1 7 SH AR E B A S ED PAYMEN T S The Group has issued options to the Group Management team 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. Since 2009, an option scheme with settlement in cash has been established for Group Management and regional directors. The most recent allocation was in 2020, totaling 1 890 000 options. The final exercise date is 31 May 2024. The options have a term of two years, where 50% is vested each year. Employees joining the Group 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 and the measurement is according to level 3 of the fair value hierarchy (see Note 3 and Note 14). The table below shows the movement in outstanding options in 2020 and 2021. OVERVIEW 2021 (TOTAL OPTIONS) OPTION CATEGORY OUTSTANDING OPTIONS AT 31.12.2020 GRANTED OPTIONS EXERCISED OPTIONS EXPIRED/ CANCELLED OPTIONS OUTSTANDING OPTIONS AT 31.12.2021 OF WHICH CASH- SETTLED CEO CFO CTO CHRO GCM COO Farming Europa COO Farming North America CCO Others Total Cash settlement Cash settlement Cash settlement Cash settlement Cash settlement 540 000 270 000 270 000 200 000 100 000 Cash settlement 270 000 Cash settlement Cash settlement Cash settlement 270 000 170 000 700 000 2 790 000 — — — — — — — — — — — — — — — — — — — — OVERVIEW 2020 (TOTAL OPTIONS) OPTION CATEGORY OUTSTANDING OPTIONS AT 31.12.2019 GRANTED OPTIONS EXERCISED OPTIONS CEO CFO COO CHRO Others Total Cash settlement Cash settlement Cash settlement Cash settlement Cash settlement 400 000 200 000 200 000 132 712 677 492 340 000 170 000 170 000 100 000 1 110 000 1 610 204 1 890 000 48 271 36 881 33 287 25 509 108 763 252 711 — — — — — — — — 100 000 100 000 EXPIRED OPTIONS 151 729 63 119 66 713 7 203 168 730 457 494 ALLOCATION: YEAR - MONTH EXPIRY DATE: YEAR - MONTH STRIKE PRICE NOK PER SHARE AT 31.12.2021 STRIKE PRICE NOK PER SHARE AT 31.12.2020 2017 - 11 2020 - 12 2020 - 12 Total 2021 - 05 2023 - 05 2024 - 05 106.28 83.82 83.82 100.07 78.96 78.96 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 2 690 000 2 690 000 OUTSTANDING OPTIONS AT 31.12.2020 OF WHICH CASH- SETTLED 540 000 270 000 270 000 200 000 1 510 000 2 790 000 OPTIONS 2021 800 000 945 000 945 000 540 000 270 000 270 000 200 000 1 510 000 2 790 000 2020 900 000 945 000 945 000 2 690 000 2 790 000 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 13 7 NOK/OPTION AMOUNTS IN NOK 1 000 LISTED PRICE ON ALLOCATION CALCULATED VALUE PER OPTION ON ALLOCATION CALCULATED TOTAL VALUE ON ALLOCATION * TOTAL VALUE OF ALL OPTIONS AT 01.01.2020 CHANGE IN PROVISION CB-OB* EXERCISED OPTION 2020 ACC. COST RECOGNIZED IN EQUITY AT 31.12.2020 RECOGNIZED LIABILITY CASH SETTLEMENT AT 31.12.2020 2020 Former employees with expired options OPTION CATEGORY Equity option CEO CFO CTO CHRO GCM COO Farming Europe COO Farming North America CCO CEO CFO COO CHRO Other options allocated in 2020 Other options allocated in 2017 Total Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash — 78.96 78.96 78.96 78.96 78.96 78.96 78.96 78.96 83.00 83.00 83.00 83.00 78.96 83.00 — 4.35 6.34 5.82 7.20 6.04 5.87 5.87 6.13 2.26 2.79 2.79 2.38 7.04 2.35 * Amounts exclude social security costs. ACCRUED COSTS RELATED TO CASH OPTIONS NOK 1 000 Change in provisions Exercised options during the year Total costs excl. social security costs Social security costs Total costs incl. social security costs — 1 480 1 078 989 720 604 999 999 1 042 906 557 557 475 — — — — — — — — — — 56 41 37 27 23 38 38 39 — — — — — — — — — 4 007 2 505 2 688 1 891 -3 540 -2 188 -2 392 -1 645 2 709 2 070 1 868 1 431 3 519 — 132 — 1 880 15 805 8 557 19 648 -7 472 -16 806 6 103 14 181 6 887 — — — — — — — — — — — — — — 6 887 — 56 41 37 27 23 38 38 39 467 316 296 247 132 1 085 2 842 2021 6 951 — 6 951 973 7 924 2020 CLASSIFICATION IN FINANCIAL STATEMENTS -16 807 Other provisions for liabilities 14 181 Salaries and personnel expense / cash -2 626 -2 370 Public taxes payable -4 996 Salaries and personnel expense NO T E 18 S H AR E C AP I TAL A ND S H AR EHOL DE R I NF OR M AT ION As at 31 December 2021, the Company had 113 447 042 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. SHARE CAPITAL AND NUMBER OF SHARES 31.12.2021 NOMINAL VALUE PER SHARE (NOK) TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES Total Holdings of treasury shares Sale of treasury shares 2018-2020 Sale of treasury shares 2021 Total excl treasury shares 4.00 4.00 4.00 4.00 453 788 -5 000 314 154 449 256 113 447 042 -1 250 000 78 506 38 513 112 314 061 Treasury shares In June 2011, the Company purchased 1 250 000 treasury shares at NOK 14.40 per share. On 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. In 2020, Grieg Seafood ASA sold 42 193 shares at a sales price of NOK 77.16 per share, providing a gain of NOK 62.76 per share. In 2021, Grieg Seafood ASA sold 38 513 shares at a sales price of NOK 93.73 per share, providing a gain of NOK 79.33 per share. After the transactions the Company has 1 132 981 treasury shares. CHANGES IN SHARE CAPITAL Share capital 01.01.2020 Contribution in kind 20.04.2020 Share capital 31.12.2020 Share capital 01.01.2021 No transaction in 2021 1 January 2020 20 April 2020 n/a 1 January 2021 n/a Share capital per 31.12.2021 31 December 2021 NOMINAL VALUE PER SHARE (NOK) TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES 4.00 4.00 4.00 4.00 — 4.00 446 648 7 140 453 788 453 788 — 453 788 111 662 000 1 785 042 113 447 042 113 447 042 — 113 447 042 Cost relating to cash-based remuneration in 2021 totaled NOK 7 924 thousands. 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. Acquisition of Grieg Newfoundland On 20 April 2020, Grieg Seafood ASA's share capital was increased by 1 785 042 shares (nominal value of NOK 4 per share), from 111 662 000 shares to 113 447 042 shares. The share capital was thus increased by NOK 7 140 168, from NOK 446 648 000 to NOK 453 788 168. The share As at 31 December 2021, outstanding options with the right to cash settlement were stated at NOK 9 794 thousands excl. social security issue in the Company to shareholders Grieg Aqua AS, Kvasshøgdi AS, Knut Skeidsvoll and Ocean Choice International Ltd was related to the costs, of which NOK 29 thousands were classified as current liabilities. The book value of long term liabilities including social security cost Company’s acquisition of Grieg Newfoundland AS, which was completed on 15 April 2020. For more information, see Note 6. was NOK 11 115 thousands. ESTIMATES USED TO CALCULATE ALLOCATION OF OPTIONS 31.12.2021 31.12.2020 Anticipated volatility (%) Risk-free rate of interest (%) Estimated qualification period (years) 36.44% 1.13% 1.39 44.19% 0.34% 2.11 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. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 13 8 THE LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA Grieg Aqua AS Folketrygdfondet OM Holding AS Ystholmen Felles AS State Street Bank and Trust Comp (nominee) Clearstream Banking S.A. (nominee) BNP Paribas Securities Services (nominee) Ferd AS Six Sis AG (nominee) CACEIS Bank Spain SA (nominee) Banque Degroof Petercam Lux. SA (nominee) Grieg Seafood ASA JPMorgan Chase Bank, N.A., London (nominee) Kvasshøgdi AS Verdipapirfondet Pareto Investment State Street Bank and Trust Comp (nominee) State Street Bank and Trust Comp (nominee) Ronja Capital II AS Pictet & Cie (Europe) S.A. (nominee) Danske Invest Norge Vekst Total 20 largest shareholders Total others Total number of shares THE LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA Grieg Aqua AS Folketrygdfondet OM Holding AS Ystholmen Felles AS Clearstream Banking S.A. (nominee) State Street Bank and Trust Comp (nominee) Ronja Capital II AS Grieg Seafood ASA Six Sis AG (nominee) UBS Switzerland AG (nominee) JPMorgan Chase Bank, N.A., London (nominee) Banque Degroof Petercam Lux. SA (nominee) Verdipapirfondet Pareto Investment State Street Bank and Trust Comp (nominee) State Street Bank and Trust Comp (nominee) Ferd AS Svenska Handelsbanken AB (nominee) J.P. Morgan Bank Luxembourg S.A. (nominee) State Street Bank and Trust Comp (nominee) Danske Invest Norge Vekst Total 20 largest shareholders Other shareholders Total shares SHARES CONTROLLED BY BOARD MEMBERS AND GROUP MANAGEMENT BOARD OF DIRECTORS Per Grieg Jr. * Tore Holand (Skippergata 24 AS, and privately) Sirine Fodstad (resigned 13 August 2021) Marianne Ribe Katrine Trovik Nicolai Hafeld Grieg (board member from 4 November 2021) GROUP MANAGEMENT CEO CFO CTO COO Farming Europe COO Farming North America CHRO GCM CCO NO. OF SHARES SHAREHOLDING NO. OF SHARES SHAREHOLDING 31.12.2021 31.12.2021 31.12.2020 31.12.2020 60 356 985 2 000 — — — — 39 809 24 852 24 151 22 809 24 209 12 380 644 644 53.20% 0.00% —% —% —% —% 0.04% 0.02% 0.02% 0.02% 0.02% 0.01% 0.00% 0% 60 356 985 53.20% 2 000 — — — — 39 489 24 532 23 831 22 489 19 889 12 060 324 324 0% —% —% —% —% 0.03% 0.02% 0.02% 0.02% 0.02% 0.01% 0% 0% * THE SHARES OWNED BY THE FOLLOWING COMPANIES ARE CONTROLLED BY PER GRIEG JR. AND FAMILY Grieg Aqua AS Ystholmen Felles AS Kvasshøgdi AS Per Grieg jr. privately Thomas Willumsen Grieg Total shares 56 914 355 2 428 197 996 772 15 000 2 661 60 356 985 50.17% 56 914 355 50.17% 2.14% 0.88% 0.01% 0% 53.20% 2 928 197 496 772 15 000 2 661 60 356 985 2.58% 0% 0.01% 0% 53.20% On 30 December 2020, the board of Ystholmen Felles AS submitted a proposal to the company's general meeting to demerge the company, whereby 500 000 shares in Grieg Seafood ASA would be transferred from Ystholmen Felles AS to Kvasshøgdi AS, org.no. 921 020 961. The general meeting of Ystholmen Felles AS accepted the board's proposal. Per Grieg Jr. is the sole shareholder in Kvasshøgdi AS. Following the completion of the demerger, Per Grieg Jr. and the other shareholders own 2 428 197 shares in Grieg Seafood ASA through their ownership of Ystholmen Felles AS. In addition, Per Grieg Jr. owns 996 772 shares in Grieg Seafood ASA through his ownership of Kvasshøgdi AS. The demerger was effective from 4 March 2021. Nicolai Hafeld Grieg owns, indirectly, 1.87% of Grieg Seafood ASA through his ownership in Grieg Maturitas AS, the parent company of Grieg Aqua AS. NO. OF SHARES SHAREHOLDING 31.12.2021 56 914 355 31.12.2021 50.17% 5 312 207 4 917 957 2 428 197 1 867 464 1 711 386 1 634 500 1 456 453 1 380 743 1 212 652 1 164 795 1 132 981 1 035 915 996 772 916 000 883 362 862 797 755 004 646 320 561 000 4.68% 4.34% 2.14% 1.65% 1.51% 1.44% 1.28% 1.22% 1.07% 1.03% 1.00% 0.91% 0.88% 0.81% 0.78% 0.76% 0.67% 0.57% 0.49% 87 790 860 25 656 182 113 447 042 77.38% 22.62% 100.00% NO. OF SHARES SHAREHOLDING 31.12.2020 56 914 355 4 281 530 4 235 656 2 928 197 1 937 653 1 616 926 1 200 000 1 171 494 1 038 659 945 209 915 596 822 051 764 000 737 722 697 771 688 453 593 415 592 624 524 061 521 000 31.12.2020 50.17% 3.77% 3.73% 2.58% 1.71% 1.43% 1.06% 1.03% 0.92% 0.83% 0.81% 0.72% 0.67% 0.65% 0.62% 0.61% 0.52% 0.52% 0.46% 0.46% 83 126 372 30 320 670 113 447 042 73.27% 26.73% 100.00% PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 13 9 NO T E 1 9 E A R NING S P ER SH AR E AND DI V IDEND P ER SH AR E NO T E 20 C A SH A ND C A SH EQUI VALEN T S CASH AND CASH EQUIVALENTS NOK 1 000 Restricted deposits incl. employee tax deductions Other cash and bank deposits Total 2021 25 067 903 274 928 342 2020 27 219 248 208 275 427 The Group's currency and interest rate exposure is described in Note 3. See Note 3 and Note 12 for information on the Group’s available credit facilities. CALCULATION OF EARNINGS PER SHARE Profit / loss after tax continued operations (majority share) Profit / loss discontinued operations (majority share) Profit / loss after tax (majority share) Number of shares at 01.01 Effect of treasury shares (Note 18) Increase of share capital through contribution in kind (acquisition of Grieg Newfoundland) Sale of treasury shares to employees Number of outstanding shares at 31.12. Effect of the contribution in kind Effect of share options to employees Weighted average number of outstanding shares at 31.12. Diluted number of outstanding shares at 31.12. Earnings per share (NOK) Continued operations Discontinued operations Earnings per share - Total Diluted earnings per share (NOK) Continued operations Discontinued operations Earnings per share - Total Proposed dividend per share (NOK) 2021 604 377 600 291 1 204 668 113 447 042 -1 171 494 — 38 513 2020 -315 997 -225 057 -541 054 111 662 000 -1 213 687 1 785 042 42 193 112 314 061 112 275 548 — 33 870 112 280 191 112 280 191 537 958 37 569 111 700 021 111 700 021 5.4 5.3 10.7 5.4 5.3 10.7 3.00 -2.8 -2.0 -4.8 -2.8 -2.0 -4.8 0.00 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 14 0 NO T E 2 1 T R ADE R ECEI VA BLE S TRADE RECEIVABLES NOK 1 000 Gross amount of trade receivables* Trade receivables deducted** Loss allowance Trade receivables at 31.12. *At year-end 2020, none of the NOK 193 million in gross trade receivables were financed through a factoring agreement. **Trade receivables bought by the factoring company. The Group re-established a factoring arrangement in 2021. RECOGNIZED LOSSES NOK 1 000 Change in loss allowance Confirmed losses in the year Confirmed losses and change in loss allowance from operations classified as held for sale Amounts received for previously written off trade receivables Total recognized losses on receivables 2021 479 228 -312 469 -14 965 151 793 2021 1 427 — — — 1 427 2020 192 921 — -13 538 179 384 2020 9 915 508 4 063 — 14 486 Losses on receivables are classified as other operating expenses in the income statement. In the Group's expected credit loss (ECL) 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 consists of some receivables that have other types of security. The risk of loss is therefore considered low and no loss allowance is calculated for these receivables. The risk evaluation is based on our own experience and input from credit insurance companies. A loss allowance is calculated as a percentage 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. Around 5% credit risk also remains for the factored trade receivables. The aging analysis given below is therefore 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) 31.12.2021 TR Credit insured Regular/normal risk countries TR Unsecured TR Credit insured TR Unsecured High risk countries Total LOSS ALLOWANCE 31.12.2021 TR Credit insured Regular/normal risk countries TR Unsecured TR Credit insured TR Unsecured High risk countries Total NOK 1 000 425 546 52 289 555 126 792 4 344 5 238 (382) — 425 546 50 334 50 334 17 596 16 599 302 (1 131) 1 018 15 951 50 334 3 291 56 — 56 1 431 — 1 872 — — 4 — — 479 228 50 443 308 582 145 264 4 650 4 106 (12) 52 676 — — 3 291 56 15 951 479 228 — — — — — 52 50 334 — 56 50 443 — — — — — 11 304 — — 316 4 93 — — 98 11 31 — 57 1 029 1 100 12 333 14 859 — — 48 — — — 49 — 1 040 1 179 12 333 14 965 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) 31.12.2020 TR Credit insured Regular/normal risk countries TR Unsecured TR Credit insured TR Unsecured High risk countries Total LOSS ALLOWANCE 31.12.2020 TR Credit insured Regular/normal risk countries TR Unsecured TR Credit insured TR Unsecured High risk countries Total 54 797 8 219 29 038 23 553 756 — 1 451 — 54 797 138 124 138 128 57 937 21 794 44 520 358 11 744 1 770 138 124 — — — — — — — — — — — — — — — — — — 192 921 146 347 86 975 45 347 45 275 358 13 195 1 770 192 921 — — — — — 8 219 138 128 — — 146 347 — — — — — 7 — — — 7 — 6 — — 6 — 29 — — 29 1 574 — 1 581 614 11 309 11 958 — — — — — — 2 188 11 309 13 538 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 141 ACQUISITION OF GRIEG NEWFOUNDLAND AS IN 2020 The acquisition of Grieg Newfoundland AS (99%) was completed on 15 April 2020. Grieg Newfoundland AS was 39% owned by Grieg Kapital AS/Grieg Aqua AS (the owner of the majority of the shares in Grieg Seafood ASA), and 39% by Kvasshøgdi AS (owned by Per Grieg Jr., Chair of Grieg Seafood ASA’s Board of Directors). The remaining shares were owned by the local partner Ocean Choice International Ltd (19.5%) and Knut Skeidsvoll (2.5%). For more information, see Note 6. OTHER TRANSACTIONS WITH RELATED PARTIES The Group carries out transactions with companies controlled by Grieg Maturitas II AS, which is the parent company of Grieg Aqua AS, the majority owner of Grieg Seafood ASA. The ultimate parent company of Grieg Seafood ASA is Grieg Maturitas AS, the parent company of Grieg Maturitas II AS. The services provided 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 office rental agreement runs for a period of ten years. • The regions purchased cleaner fish from Rensefiskgruppen AS including subsidiaries, a company owned by Grieg Kapital AS. • Fuel is purchased from Eidsvaag AS, a company related to a board member of Grieg Seafood. • Algae monitoring services are purchased from Blue Planet AS, a company related to the regional director for Europe. The parent company provides a range of services to its subsidiaries. The services include administrative services and services relating to the provision of parent company non-current loans and current credit facilities to subsidiaries. Interest is charged on an arm's length basis. In addition, Grieg Seafood ASA engages in hedge contracts on behalf of subsidiaries. The arrangement is intended to reduce these companies' exposure to salmon prices. Agreements with the subsidiaries are priced on the basis of a "back-to-back" arrangement. The Group also purchases services relating to operations from other related parties and associates. The Board and Group Management are related parties. See Note 17 on share-based options and Note 18 on shares controlled by members of the Board and Group Management. All transactions, including both the sale and purchase of goods and services, are made on an arm’s length basis. NO T E 2 2 O T H ER NON- CU R R EN T R ECEI VA BLE S AND O T HER CUR R EN T R EC EI VA BLE S OTHER NON-CURRENT RECEIVABLES NOK 1 000 Investment tax credit* Loan to associated company Investments in shares Other non-current receivables Total Note 11 7 14 2021 81 575 2 111 271 6 940 90 897 2020 — 1 910 295 7 271 9 476 *Investment tax credit related to the freshwater facility in Newfoundland. The investment tax credit is recognized in line with a government grant. Investment tax credits are recognized when the qualifying property, plant and equipment are available for productive use, and are recorded as a direct decrease in property, plant and equipment. Investment tax credits are deferred and offset against future tax liability. OTHER CURRENT RECEIVABLES NOK 1 000 VAT receivable Prepaid expenses Realized gain on price contracts Other current receivables Total Note 3, 26 2021 57 594 43 490 — 46 247 147 332 2020 38 851 37 259 27 411 29 547 133 069 NO T E 23  R E L AT E D PAR T IE S 2021 NOK 1 000 Total related parties as shareholders Total related parties as associates Total 2020 NOK 1 000 Total related parties as shareholders Total related parties as associates Total This note contains information for the Group’s continued operations. OPERATING INCOME OPERATING EXPENSES NON-CURRENT BALANCES CURRENT BALANCES — 9 698 9 698 37 389 153 086 190 475 — 2 111 2 111 -15 915 -23 615 -39 530 OPERATING INCOME OPERATING EXPENSES NON-CURRENT BALANCES CURRENT BALANCES — 11 556 11 556 44 553 132 216 176 769 -7 1 910 1 903 -11 028 — -11 028 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 14 2 NO T E 24 FIN A NCI AL INC OME AND FIN ANCI AL E XP ENSE S NO T E 25 O T HER OP ER AT ING E X P ENS E S FINANCIAL ITEMS NOK 1 000 FINANCIAL INCOME Net change in fair value of derivatives Net currency gains Other financial income 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 Net financial items 2021 2020 OTHER OPERATING EXPENSES NOK 1 000 Transportation costs Maintenance costs Electricity and fuel Lease expenses 1) Outsourced services and audit fees Insurance IT expenses Marketing costs Other operating expenses 2) Other production-related costs 1, 3) Total other operating expenses 28 370 96 709 154 125 233 189 390 16 476 1 769 — — 4 864 212 499 -87 266 — — 103 103 97 383 21 498 2 206 24 518 98 714 3 577 247 895 -247 792 *Interest expenses on bank borrowings and leases includes recognized gains/losses from realized interest rate swaps of NOK 7 million in 2021 (2020: NOK 2 million). 2021 265 639 295 270 113 778 24 555 94 100 54 223 59 437 2 942 64 397 553 005 1 527 347 2020 355 994 256 442 92 157 14 938 101 686 47 920 53 079 5 517 101 148 563 971 1 592 852 1) Includes lease expenses and lease-related expenses, including the effect of IFRS 16. 2) Includes equipment, telephony/postage, office supplies, fees, travel costs and the like. 3) Production-related costs comprise harvesting costs including expenses for well-boat services, packaging material, diving services, vaccination, delousing, oxygen, and analyses and the like. BREAKDOWN OF TOTAL 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 2021 4 132 500 752 — 883 — 86 206 5 852 706 6 558 2020 2 646 560 362 — 668 473 296 342 3 971 1 374 5 346 Total audit fees disclosed in the table above are for the Group’s continued operations. The audit fee specification for 2021 includes fees paid to Advokatfirmaet PricewaterhouseCoopers AS (tax-related assistance) of NOK 38 000 (2020: NOK 338 000). PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 14 3 NO T E 2 6 O T HE R CUR R EN T LI A BILI T IE S OTHER CURRENT LIABILITIES NOK 1 000 Accrued expenses * Production fee (Norway)** Realized gain/loss on fixed-price contracts*** Other current liabilities Other current liabilities 2021 133 385 24 463 12 530 42 044 212 422 2020 83 559 — — 11 057 94 616 * Accrued expenses relate to other operating expenses, including accrued purchases, transportation costs, bonuses/discounts for buyers, accrued salaries, and insurance. ** As from 1 January 2021, a fixed rate of NOK 0.40/kg (gutted weight) is charged on fish harvested in Norway. The production fee is presented on a separate line item "Production fee" in the income statement, and included in “EBIT after production fee and fair value adjustment on biological assets”. The production fee in 2021 totaled NOK 10.7 million for Rogaland and NOK 13.8 million for Finnmark, in total NOK 24.5 million. The Norwegian production fee is accrued throughout the current year, and payable in 2022. *** See Note 3 and Note 22. NO T E 2 7 NE W A C C OU N T ING S TAND AR DS Lessees must apply the practical amendment retrospectively, recognizing the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the amendment is first applied. The extension of the amendment is effective for annual periods beginning on or after 30 June 2021, but earlier application is permitted. The Group has chosen to adopt this amendment early. The amendment has had no impact on the Grieg Seafood consolidated financial statement for 2021. 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. This list is not complete, and merely indicate standards, amendments and interpretation that could be relevant for Grieg Seafood. 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 statements are issued. Amendments to IAS 1 - Classification of Liabilities as Current or Non-Current The narrow-scope amendments to IAS 1 Presentation of Financial Statements clarify that liabilities are classified as either current or non- current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date (e.g. the receipt of a waver or a breach of covenant). The amendments also clarify what IAS 1 means when it refers to the ‘settlement’ of a liability. The amendments must be applied retrospectively and are effective for annual periods beginning on or after 1 January 2023. The Group does not intend to adopt the amendments early. As at 31 December 2021, the Group does not expect significant impacts from applying the amendment with effect from 1 January 2023. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURE OF NEW STANDARDS A) NEW AND AMENDED STANDARDS, AND INTERPRETATIONS - ADOPTED IN 2021 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate Benchmark Reform - Phase 2 In August 2020, the IASB issued Phase 2 of its project which amends IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies The IASB amended IAS 1 to require entities to disclose their material rather than their significant accounting policies. The amendments define what is ‘material accounting policy information’ and explain how to identify when accounting policy information is material. They further clarify that immaterial accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material and Measurement, IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases. Phase 2 finalizes IFRS’s accounting information. The amendments are effective for annual periods beginning on or after 1 January 2023, but earlier application is response to the ongoing reform of interbank offer rates (IBOR) and other interest rate benchmarks. permitted as long as this fact is disclosed. The Group does not intend to adopt the amendments early. It is not expected that the amendments The amendments complement Phase 1, issued in 2019, and focus on the effects on financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform. The Phase 2 amendments mainly consist of the following: a. Practical expedient for particular changes to contractual cash flows 2. Relief from specific hedge accounting requirements 3. Disclosure requirements Grieg Seafood does not apply hedge accounting, and our exposure to the IBOR reform is through the NIBOR rates on our bank loans, bond loan, and the interest-rate swaps made on NIBOR (sell floating/buy fixed interest rate). The amendments have had no impact on the Grieg Seafood consolidated financial statement for 2021 as NIBOR rates have not been replaced as at 31 December 2021. will significantly impact the disclosure of accounting policies by Grieg Seafood. Amendments to IAS 8 - Definition of Accounting Estimates The amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period. Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction The amendments to IAS 12 Income Taxes require companies to recognize deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. They will typically apply to transactions such as leases (on the part of the leesee) and decommissioning obligations, and will require the recognition of additional deferred tax assets and liabilities. Amendment to IFRS 16 - Covid-19-Related Rent Concessions In March 2021, the IASB issued Covid-19-Related Rent Concessions beyond 30 June 2021 to extend the relief period by another year. IFRS The amendment should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, entities should recognize deferred tax assets (to the extent that it is probable that they can be utilized) and deferred tax liabilities 16 Leases was amended to provide relief to lessees from applying the IFRS 16 guidance on lease modifications to rent concessions arising at the beginning of the earliest comparative period for all deductible and taxable temporary differences associated with: as a direct consequence of the Covid-19 pandemic. The amendment does not affect lessors. a. right-of-use assets and lease liabilities, and The amendment exempts lessees from having to consider individual lease contracts to determine whether rent concessions occurring as a direct consequence of the Covid-19 pandemic are lease modifications, and allows lessees to account for such rent concessions as if they were not lease modifications. It applies to Covid-19-related rent concessions that reduce lease payments due on or before 30 June 2022. 2. decommissioning, restoration and similar liabilities, and the corresponding amounts recognized as part of the cost of the related assets. The cumulative effect of recognizing these adjustments is recognized in retained earnings, or another component of equity, as appropriate. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 14 4 The amendments are effective for annual periods beginning on or after 1 January 2023. Decommissioning, restoration and similar liabilities are not relevant for Grieg Seafood. The Group is, however, a lessee in many lease arrangements, both through leases capitalized in the balance sheet through the effect of IFRS 16, and leases which would be classified as finance leases, according to the IFRS in force prior to 1 January 2019. Grieg Seafood does not expect that the amendment will impact the Group significantly. An assessment of the impact, if any, will be finalized by year-end 2022. OTHER STANDARDS, AMENDMENTS AND INTERPRETATIONS No other new standards, amendments and interpretations, not yet adopted at 31 December 2021, are expected to have a material impact on the Group’s consolidated financial statement. NO T E 29 P O S T-B AL ANCE SHEE T E V EN T S In Q1 2022, Grieg Seafood finalized a refinancing of the Group's syndicated financial liabilities, with an aggregate of NOK 3 200 million in five-year senior secured sustainability-linked loans and credit facilities. This represents the completion of the funding process. The new debt structure comprises a NOK 750 million term loan, an EUR 75 million term loan, a NOK 1 500 million revolving credit facility and a NOK 200 million overdraft facility. The NOK and EUR term loans carry installments equal to a 12-year repayment profile until balloon payment at five years. The revolving credit facility matures at five years, while the overdraft facility is subject to annual renewal. The interest rate is three months NIBOR plus margin. The loan is linked to sustainability-linked KPIs, of which the scoring impact the interest rate margin paid on the facilities. The sole financial covenant for the new facilities is a minimum recognized equity ratio of 31%, excluding the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019. NO T E 2 8 C ON T I NGE N T LI A BILI 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. Two class-actions have been filed by direct and indirect customers in the USA and three class actions have been filed in Canada (none has yet been certified as a class action). Grieg Seafood is not aware of any anti-competitive behavior within the Group, neither in Norway, nor the EU, the USA or Canada. We are fully collaborating with European and American authorities in this matter and follow up the lawsuits in the USA and Canada accordingly. There is no new information regarding the EU investigation, and Grieg Seafood considers it to be probable that the investigation will find 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 reasonably estimated, due to a lack of information. Consequently, no provision has been recognized in relation to either the EU and the US investigation, nor to any of the civil lawsuits. Approximately NOK 22 million (2020: NOK 27 million) was spent on legal fees related to the European Commission’s investigation in 2021. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 14 5 GRIEG SEAFOOD ASA ACCOUNTS A S A A C C OUN T S 146 147 148 148 Income statement Statement of financial position Statement of changes in equity Cash flow statement NO T E S 149 150 150 151 153 153 153 154 154 155 155 156 158 158 159 159 160 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 Share based payments Financial income and financial expenses Other current receivables/other current liabilities Bank deposits Short-term investments and financial instruments Investments in subsidiaries NOT E 10 Intangible assets NOT E 11 NOT E 12 NOT E 13 NOT E 14 NOT E 15 NOT E 16 NOT E 17 Property, plant and equipment Share capital and shareholder information Taxes Guarantees Related parties Net interest-bearing liabilities and pledges Post-balance sheet events PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 14 6 INC OM E S TAT E MEN 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 profit (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 2/15 3/4 10/11 3/15 5/15 5/15 13 2021 98 328 98 328 -71 533 -6 773 -97 123 -175 429 -77 101 752 632 -186 932 565 700 488 599 -81 257 407 342 336 942 — 70 400 407 342 2020 75 456 75 456 -48 276 -6 220 -93 985 -148 481 -73 024 252 069 -183 255 68 814 -4 210 15 826 11 615 — — 11 615 11 615 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 147 S TAT EM EN T OF FI N ANCI AL P O SI T ION GRIEG SEAFOOD ASA NOK 1 000 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 Short-term investments and financial instruments Bank deposits Total current assets Total assets NOTE 31.12.2021 31.12.2020 GRIEG SEAFOOD ASA NOK 1 000 NOTE 31.12.2021 31.12.2020 10 11/16 9/16 15/16 15/16 15/16 6/15 8 7 10 737 2 571 1 903 409 787 096 — 169 14 504 2 131 2 362 159 1 216 143 — 169 2 703 982 3 595 106 178 2 149 163 9 134 21 744 792 875 2 973 094 4 307 2 370 621 48 216 7 328 183 710 2 614 181 5 677 076 6 209 287 12 12 9 13 4 16 16 16 4 15 15 15/16 13 8 6/8/15 453 788 -4 532 226 468 701 535 1 366 671 2 743 930 10 151 11 115 21 267 1 476 376 808 533 2 284 909 49 944 51 336 942 24 709 — 102 111 76 686 4 628 751 31 148 626 970 2 933 146 5 677 076 453 788 -4 686 226 067 701 535 1 293 215 2 669 919 11 862 491 12 353 1 468 462 1 855 404 3 323 866 102 352 2 411 — 6 226 45 938 2 993 279 3 910 15 616 23 423 203 148 3 539 368 6 209 287 EQUITY AND LIABILITIES Share capital Treasury shares Other paid-in equity Contingent consideration (acquisition of Grieg Newfoundland AS) Other retained earnings Total equity Deferred tax Share based payments Total provisions Green bond loan Non-current loan Total non-current liabilities Current portion of non-current loan Share based payments Proposed dividend Trade payables Trade payables to Group companies Current liabilities to Group companies Tax payable Public duties payable Financial instruments Other current liabilities Total current liabilities Total liabilities Total equity and liabilities BERGEN, 30 March 2022 GRIEG SEAFOOD ASA PER GRIEG JR. Chair TORE HOLAND Vice Chair KATRINE TROVIK Board Member MARIANNE RIBE Board Member NICOLAI HAFELD GRIEG ANDREAS KVAME Board Member CEO PA R T 0 3 : O U R F I N A N C I A L 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 S TAT E MEN T OF CH ANGE S I N EQUI T Y C A S H FL O W S TAT EMEN T GRIEG SEAFOOD ASA NOK 1 000 Equity at 01.01.2020 Profit for the year 2020 Contingent consideration (Acquisition of Grieg Newfoundland)** Sale of treasury shares to employees Contribution in kind Other gains and losses recognized in equity Equity at 31.12.2020 Equity at Equity at 01.01.2021 Profit for the year 2021 Proposed dividend 2021 * Sale of treasury shares to employees Equity at 31.12.2021 SHARE CAPITAL 446 648 — — — 7 140 — 453 788 TREASURY SHARES OTHER PAID- IN EQUITY CONTINGENT CONS.* OTHER EQUITY TOTAL EQUITY -4 855 — — 169 — — 39 627 — — 439 186 001 — — — 1 279 035 1 760 455 11 615 11 615 701 535 — — — 2 647 — -83 701 535 3 255 193 142 -83 -4 686 226 067 701 535 1 293 215 2 669 919 GRIEG SEAFOOD ASA NOK 1 000 Profit before tax Recognized, not paid Group contributions Taxes paid Gain/loss sale of subsidiary Depreciation and amortization Change in trade receivables Change in trade payables Change in other accruals 453 788 -4 686 226 067 701 535 1 293 215 2 669 919 Items classified as investing or financing activities — — — — — 154 — — 401 — — — 407 342 407 342 -336 942 -336 942 3 055 3 610 453 788 -4 532 226 468 701 535 1 366 671 2 743 930 *Proposed dividend for 2021 is estimated at NOK 3.0 per share. **Contingent consideration related to the acquisition of Grieg Newfoundland AS. Grieg Seafood ASA acquired 99% of the shares in Grieg Newfoundland AS on the 20 April 2020. The book value of the investment in Grieg Seafood Newfoundland AS recognized by Grieg Seafood ASA equals the consideration in addition to capitalized transaction costs. The consideration is split into three parts - the net cash payment, the completion shares in Grieg Seafood ASA and contingent consideration. The negotiated subscription price for the completion shares was set at NOK 140.05, corresponding to a total contribution of NOK 250 million. As the market price per share was NOK 108.20 at closing, the value of the completion shares was NOK 193.1 million. See more information in Note 6 in the Group's financial statement for 2021. Currency translation differences Net cash flow from operating activities Dividend income Dividend income from Group companies - no cash effect Purchase of property, plant and equipment Purchase of intangible assets Purchase of shares (Grieg Newfoundland AS) Proceeds sale of subsidiary Payments/proceeds, loans to/from Group companies Paid-in capital establishment of new subsidiary Group contribution from subsidiaries Payments/proceeds on other loans Net cash flow from investing activities Change in overdraft facility (net draw-down/repayment) Revolving credit facility (net draw-down/repayment) Proceeds of long-term interest bearing debt Repayment of long-term interest-bearing debt Change in loans to/from Group companies Interest paid Sale of treasury shares to employees 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. CASH AND CASH EQUIVALENTS AT 31.12. CONSISTS OF: Restricted deposits Other bank deposits UNUTILIZED CREDIT FACILITIES AT 31.12.: Unutilized credit facilities at the year-end PA G E 14 8 2020 -4 210 -99 710 -180 954 -59 978 6 220 16 910 39 124 -81 038 57 759 28 534 -277 343 17 362 -17 342 -294 -3 944 -620 464 16 337 -1 485 134 -1 000 862 390 — -1 232 090 — 364 135 1 500 000 -102 267 — -75 120 — 1 686 748 177 315 6 395 183 710 2 163 181 546 NOTE 13 5 10/11 5 11 10 9 5 9 16 16 16 7 2021 488 599 -307 845 -6 560 -142 683 6 773 4 129 -27 455 65 451 142 168 -75 221 147 357 10 — -1 555 -1 892 — 601 433 913 306 — 99 710 — 1 611 012 — -557 126 — -523 346 99 117 -171 459 3 610 -1 149 203 609 165 183 710 792 875 2 564 790 312 885 000 1 203 000 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 14 9 NO T E 1 A C C OUN T I NG P OLI CIE S The annual financial statements have been prepared in accordance 000. Maintenance costs are recognized in the income statement with the Norwegian Accounting Act and generally accepted as operating expenses as they arise, while improvements and accounting principles in Norway. additions are added to the acquisition cost of the asset and depreciated at the same rate as the asset. The distinction between All amounts are stated in NOK thousand, unless otherwise maintenance and improvements is made based on the asset’s indicated. relative condition on the original purchase date. USE OF ESTIMATES Management has used estimates and assumptions that have SUBSIDIARIES Subsidiaries are valued at cost in the financial statement of affected assets, liabilities, revenues, expenses and information Grieg Seafood ASA (parent). Investments are recognized as the on potential liabilities in accordance with generally accepted cost of the shares adjusted for any minor impairments where accounting principles in Norway. REVENUE RECOGNITION 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 Revenue from the sale of goods is recognized at the time of are proposed in the subsidiary’s financial statements. If dividends/ PENSIONS The company’s pension schemes meet the requirements of TAXES The tax expense in the income statement consists of both tax the Norwegian Mandatory Occupational Pensions Act. The payable for the accounting period and changes in deferred tax. Company operates a defined contribution pensions scheme for Deferred tax is calculated at the relevant rate on temporary its employees. The premium is paid through operations and is differences between the value of assets and liabilities for tax expensed on an ongoing basis. Social security costs are charged purposes and any allowable loss to be carried forward at year- 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 from financial institutions and then lends these funds to its subsidiaries. The Company has set up a group account (cash pool) multi-currency account scheme in which Grieg Seafood ASA is the legal account holder. Deposits and loans are recognized as intercompany transactions. All subsidiaries that are part of the scheme (not all subsidiaries of the Group are part of the cash pool scheme) are jointly and severally liable to the financial institutions for the entire amount of the end in the financial statements. Temporary differences, both positive and negative, are offset within the same period. Deferred tax assets are recognized in the statement of financial position when it is more likely than not that the tax assets will be utilized. Deferred tax assets and deferred tax liabilities are presented net in the statement of financial position. Tax on paid group contributions is recognized as an increase in the purchase price of shares in other companies. Taxes payable and deferred taxes are recognized directly in equity to the extent that they relate to equity transactions (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. delivery. Revenue from the sale of services is recognized when group contributions materially exceed retained earnings after commitment under the scheme. the services are performed. The share of sales revenue associated acquisition, the excess amount is regarded as a reimbursement with future service is recognized in the statement of financial of invested capital and is deducted from the recognized cost in the position as accrued sales revenues and is transferred to income balance sheet. Dividends and group contributions received are at the time of execution. recognized as other financial income. CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS Assets intended for long-term ownership or use are classified as Contingent consideration is included in costs on the acquisition date of a subsidiary. The likelihood of payment and time value of money are considered when estimating the fair value of the non-current assets. Assets related to the normal operating cycle contingent consideration on the acquisition date. 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. IMPAIRMENT OF NON-CURRENT ASSETS Impairment tests are performed upon indication that the carrying FOREIGN CURRENCY The Company’s functional and presentational currency is the Norwegian Krone (NOK). Monetary items in a foreign currency are translated into NOK using the exchange rate applicable on the balance sheet date. Non-monetary items that are measured at their historical price expressed in a foreign currency are translated into NOK using the exchange rate applicable on the transaction date. Non-monetary items that are measured at their fair value expressed in a foreign currency are translated at the exchange rate applicable on the balance sheet date. Changes to exchange rates are recognized in the income statement as they occur during Current assets are valued at the lower of cost and fair value. amount of a non-current asset exceeds its estimated fair value. the accounting period. Current liabilities are recognized in the balance sheet at nominal The test is performed at the lowest level of non-current assets value. Non-current assets are valued at historical cost. Property, at which independent cash flows can be identified. If the carrying plant and equipment whose value will deteriorate is depreciated amount is higher than both the fair value less costs to sell and the on a straight-line basis over the asset’s estimated useful life. recoverable amount (net present value of future use/ownership), Non-current assets are written down to fair value where this is the asset is written down to the higher of fair value less costs to required by accounting rules. Nominal amounts are discounted if sell and the recoverable amount. Previous impairment charges the interest rate element is material. are reversed in a later period if the prerequisites for impairment CASH-BASED REMUNERATION The Company operates a share-based remuneration scheme with settlement in cash. Each employee is obliged to purchase shares relative to their annual salary. The company’s estimated liability is recognized as a current or non-current liability based on the estimated settlement date. The cost for the year is recognized in are no longer present (except for impairment of goodwill). the income statement. INTANGIBLE ASSETS Expenditure on intangible assets is recognized in the statement of financial position to the extent that a future economic benefit can TRADE AND OTHER RECEIVABLES Trade and other receivables are recognized in the statement of be identified as deriving from the development of an identifiable financial position at nominal value after a provision for bad debts. intangible asset and cost can be measured reliably. Otherwise, the The provision for bad debts is estimated based on an individual cost is expensed as it arises. Capitalized development costs are assessment of each material receivable. amortized over their useful life. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is recognized in the statement of CURRENT INVESTMENTS (shares and Current investments investments which are considered current assets) are carried at the lower of average financial position and depreciated on a straight-line basis over its acquisition cost and fair value at the balance sheet date. Dividends estimated useful life, providing the asset has an expected useful and other distributions received are recognized as other financial life of more than 3 years and a cost price of more than NOK 15 income. DERIVATIVES FORWARD CURRENCY CONTRACTS Realized gains (losses) on forward currency contracts are recognized in the income statement as a financial income (financial cost). The fair value of a forward currency contract is measured in its contracted currency and translated to NOK using the foreign exchange currency rate at the balance sheet date. INTEREST RATE SWAPS Interest rate swap contracts are measured according to the lowest of its acquisition cost and fair value at the balance sheet date. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 0 NO T E 2 OP ER AT ING INC OME OPERATING INCOME NOK 1 000 Administrative services – Group companies (Note 15) Administrative services - external* Other operating income Total operating income 2021 82 430 15 898 — 98 328 2020 75 413 43 75 456 * Administrative services to Grieg Seafood Shetland UK Ltd is presented as external income as the shares in the company was sold on 15 of December 2021. NO T E 3 S AL A R I E S, P ER S ONNEL AND O T H E R OP E R AT ING E XP ENS E S 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 2021 51 087 6 779 7 924 2 221 3 523 71 533 36 2020 38 678 6 692 -4 996 1 657 6 243 48 276 29 Pension scheme The Company has a pension scheme covering all employees at 31 December 2021. The pension scheme is funded and managed through an insurance company. Share savings plan Grieg Seafood established a share savings program for its employees in 2018, which was continued throughout 2021. See the consolidated financial statements Note 16 for further information. Management remuneration In December 2019, the Norwegian Parliament adopted new rules on the wage policy of listed public companies, which came into force in January 2021. New wage policy and reporting guidelines were approved by the Annual General Meeting of Grieg Seafood ASA on 2 June 2021. The guidelines for management remuneration are available on Grieg Seafood ASA’s website. The remuneration report for Grieg Seafood ASA will be published at the time notice of the 2022 Annual General Meeting is issued. The Annual General Meeting is scheduled for 9 June 2022. REMUNERATION PAID TO GROUP MANAGEMENT IN 2021 NOK 1 000 SALARY BONUS RETAINED BONUS, NOT YET PAID OPTIONS EXERCISED DURING THE YEAR OTHER BENEFITS CEO CFO CTO CHRO COO Farming Europe COO Farming North America CCO GCM 3 165 2 280 2 063 1 604 2 116 1 772 1 996 1 190 Total remuneration incl. social security costs 16 185 — — — — 75 — 161 — 236 540 313 241 216 203 244 350 119 2 226 — — — — — — — — — 250 115 116 117 113 — 115 121 947 Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 4. REMUNERATION PAID TO BOARD MEMBERS IN 2021 NOK 1 000 Per Grieg Jr.* Tore Holand** Sirine M. Fodstad (until 13 of August 2021)* Marianne Ribe* Katrine Trovik** Nicolai Hafeld Grieg (from 4 of November 2021) Total remuneration including social security costs TOTAL 3 956 2 707 2 420 1 937 2 507 2 016 2 621 1 430 19 593 TOTAL 479 371 205 308 342 — 1 706 *Payment for work performed on the Remuneration Committee of NOK 22 820 is included in the remuneration paid to Per Grieg Jr. and Marianne Ribe, and NOK 15 213 for Sirine Fodstad, **Payment for work performed on the Audit Committee is included in the remuneration paid to Tore Holand and Katrine Trovik amounting to NOK 57 050. The amounts include social security costs. REMUNERATION PAID TO GROUP MANAGEMENT IN 2020 NOK 1 000 SALARY BONUS RETAINED BONUS, NOT YET PAID OPTIONS EXERCISED DURING THE YEAR OTHER BENEFITS CEO CFO COO CHRO COO Farming Europa COO Farming North America CCO GCM 2 841 2 173 1 996 1 574 1 996 1 825 525 1 035 Total remuneration incl. social security costs 13 965 — — — — — — — — — — — — — — — — — — 2 709 2 070 1 868 1 431 1 615 1 571 — — 11 264 118 101 101 106 78 78 81 96 759 TOTAL 5 668 4 344 3 964 3 111 3 689 3 474 606 1 131 25 987 Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 4. The table has been amended compared to the annual report 2020. In May 2020, Grieg Seafood announced changes to the Group management structure, with inclusion of COOs for farming in Europe and North America. In June 2020, the Chief Commercial Officer was added to the Group management team of Grieg Seafood. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 1 REMUNERATION PAID TO BOARD MEMBERS IN 2020 NOK 1 000 Per Grieg jr. 1) Tore Holand 2) Sirine M. Fodstad 1) Marianne Ribe (from 14 May 2020), 1) Katrine Trovik (from 14 May 2020), 2) Asbjørn Reinkind (until 14 May 2020) Karin Bing Orgland (until 14 May 2020), 2) Solveig M.R. Nygaard (until 14 May 2020) Total remuneration including social security costs TOTAL 479 348 308 178 195 140 143 119 1 909 NO T E 4 SH AR E B A SED PAYMEN T S The Group has issued options to the Group Management team 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. Since 2009, an option scheme with settlement in cash has been established for Group Management and regional directors. The most recent allocation was in 2020, totaling 1 890 000 options. The final exercise date is 31 May 2024. The options have a term of two years, where 50% is vested each year. Employees joining the Group 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 in 2020 and 2021. *Payment for work performed on the Remuneration Committee of NOK 22 820 is included in the remuneration paid to Per Grieg Jr. , Sirine M. Fodstad and NOK 11 410 for Marianne Ribe. **Payment for work performed on the Audit Committee is included in the remuneration paid to Karin Bing Orgland and Tore Holand, amounting to NOK 25 673, 54 198 and 28 525, respectively. OVERVIEW 2021 (TOTAL OPTIONS) OPTION CATEGORY OUTSTANDING OPTIONS AT 31.12.2020 GRANTED OPTIONS EXERCISED OPTIONS EXPIRED OPTIONS OUTSTANDING OPTIONS AT 31.12.2021 OF WHICH CASH- SETTLED BREAKDOWN OF AUDITOR'S FEES NOK 1 000 Statutory audit Other certification services Tax advisory fee Other services Total 2021 1 991 730 38 41 2 800 2020 852 362 347 101 1 663 CEO CFO CTO CHRO GCM COO Farming Europa Cash settlement Cash settlement Cash settlement Cash settlement Cash settlement Cash settlement COO Farming North America Cash settlement The audit fee specification for 2021 include fees from Advokatfirmaet PricewaterhouseCoopers AS (tax-related assistance) of NOK 38 thousands. Other operating expenses 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. Two class-actions have been filed by direct and indirect customers in the USA and three class actions have been filed in Canada (none has yet been certified as a class action). Grieg Seafood is not aware of any anti-competitive behavior within the Group, neither in Norway, nor the EU, the USA or Canada. We are fully collaborating with European and American authorities in this matter and follow up the lawsuits in the USA and Canada accordingly. 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. Approximately NOK 22 million (2020: NOK 27 million) was spent on lawyer fees related to the EU commission investigation in 2021. 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 700 000 2 790 000 — — — — — — — — — — — — — — — — — — — — Cash settlement Cash settlement OPTION CATEGORY OUTSTANDING OPTIONS AT 31.12.2019 GRANTED OPTIONS EXERCISED OPTIONS Cash settlement Cash settlement Cash settlement Cash settlement 400 000 200 000 200 000 132 712 340 000 170 000 170 000 100 000 Cash settlement 677 492 1 110 000 1 610 204 1 890 000 48 271 36 881 33 287 25 509 108 763 252 711 CCO Others Total OVERVIEW 2020 (TOTAL OPTIONS) CEO CFO COO CHRO Others Total ALLOCATION: YEAR - MONTH EXPIRY DATE: YEAR - MONTH STRIKE PRICE NOK PER SHARE AT 31.12.2021 STRIKE PRICE NOK PER SHARE AT 31.12.2020 2017 - 11 2020 - 12 2020 - 12 Total 2021 - 05 2023 - 05 2024 - 05 106.28 83.82 83.82 100.07 78.96 78.96 Cash-based options available for settlement Weighted average exercise price on outstanding options (NOK per option) — — — — — — — — 100 000 100 000 EXPIRED OPTIONS 151 729 63 119 66 713 7 203 168 730 457 494 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 2 690 000 2 690 000 OUTSTANDING OPTIONS AT 31.12.2020 OF WHICH CASH- SETTLED 540 000 270 000 270 000 200 000 1 510 000 2 790 000 OPTIONS 2021 800 000 945 000 945 000 540 000 270 000 270 000 200 000 1 510 000 2 790 000 2020 900 000 945 000 945 000 2 690 000 2 790 000 2021 2 690 000 80.16 2020 2 790 000 80.26 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 2 NOK/OPTION AMOUNTS IN NOK 1 000 ACCRUED COST RELATED TO CASH OPTIONS NOK 1 000 Change in provisions Exercised options during the year Total cost excl. social security costs Social security costs Total cost incl. social security costs 2021 6 951 — 6 951 973 7 924 2020 CLASSIFICATION IN FINANCIAL STATEMENTS -16 807 Other provisions for liabilities 14 181 Salaries and personnel expense / cash -2 626 -2 370 Public taxes payable -4 996 Salaries and personnel expense Cost relating to cash-based remuneration in 2021 totaled NOK 7 924 thousands. 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 2021, outstanding options with the right to cash settlement were stated at NOK 9 794 thousands excl. social security costs, of which NOK 29 thousands were classified as current liabilities. Issued options are cancelled on termination of employment. The book value of long term liabilities incl. social security cost is NOK 11 115 thousands. ESTIMATES USED TO CALCULATE ALLOCATION OF OPTIONS 31.12.2021 31.12.2020 Anticipated volatility (%) Risk-free rate of interest (%) Estimated qualification period (years) 36.44% 1.13% 1.39 44.19% 0.34% 2.11 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. OPTION CATEGORY LISTED PRICE ON ALLOCATION CALCULATED VALUE PER OPTION ON ALLOCATION CALCULATED TOTAL VALUE ON ALLOCATION * TOTAL VALUE OF ALL OPTIONS AT 01.01.2021 CHANGE IN PROVISION CB-OB* EXERCISED OPTION 2021 ACC. COST RECOGNIZED IN EQUITY AT 31.12.2021 RECOGNIZED LIABILITY CASH SETTLEMENT AT 31.12.2021 Equity option Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash — 78.96 78.96 78.96 78.96 78.96 78.96 78.96 78.96 78.96 83.00 83.00 83.00 83.00 83.00 — 4.35 6.34 5.82 7.20 6.04 5.87 5.87 6.13 7.04 2.26 2.79 2.79 2.38 2.35 — 1 480 1 078 989 720 604 999 999 1 042 3 519 906 557 557 475 — 56 41 37 27 23 38 38 39 132 467 316 296 247 — 1 352 868 803 573 488 810 810 842 2 788 -460 -313 -293 -243 1 880 15 805 1 085 2 842 -1 074 6 951 — — — — — — — — — — — — — — — — 6 887 — — — — — — — — — — — — — — 6 887 — 1 408 909 840 600 511 847 847 881 2 921 7 4 4 4 11 9 794 2021 Former employees with expired options CEO CFO CTO CHRO GCM COO Farming Europe COO Farming North America CCO Other options allocated in 2020 CEO CFO COO CHRO Other options allocated in 2017 Total *Amounts exclude social security costs. NOK/OPTION AMOUNTS IN NOK 1 000 OPTION CATEGORY LISTED PRICEON ALLOCATION CALCULATED VALUE PER OPTION ON ALLOCATION CALCULATED TOTAL VALUE ON ALLOCATION * TOTAL VALUE OF ALL OPTIONS AT 01.01.2020 CHANGE IN PROVISION CB-OB* EXERCISED OPTION 2020 ACC. COST RECOGNIZED IN EQUITY AT 31.3.2021 RECOGNIZED LIABILITY CASH SETTLEMENT AT 31.3.2021 Equity option Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash — 79 79 79 79 79 79 79 79 79 83 83 83 83 83 — 4 6 6 7 6 6 6 6 7 2 3 3 2 2 — 1 480 1 078 989 720 604 999 999 1 042 3 519 906 557 557 475 — — — — — — — — — — 4 007 2 505 2 688 1 891 — 56 41 37 27 23 38 38 39 132 -3 540 -2 188 -2 392 -1 645 1 880 15 805 8 557 -7 472 19 648 -16 806 — — — — — — — — — — 2 709 2 070 1 868 1 431 6 103 14 181 6 887 — — — — — — — — — — — — — — 6 887 — 56 41 37 27 23 38 38 39 132 467 316 296 247 1 085 2 842 2020 Former employees with expired options CEO CFO CTO CHRO GCM COO Farming Europe COO Farming North America CCO Other options allocated in 2020 CEO CFO COO CHRO Other options allocated in 2017 Total *Amounts exclude social security costs. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 3 NO T E 5 F IN ANCI A L I NC OME AND FIN ANCI AL E XP ENSE S NO T E 6 O T HER CUR R EN T R EC EI VA BLE S/O T HER C UR R EN T LI A B IL I T I E S 2021 2020 OTHER CURRENT RECEIVABLES NOK 1 000 FINANCIAL ITEMS NOK 1 000 FINANCIAL INCOME Interest income from Group companies Gain/loss sale of subsidiary * 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 Financial expense Loan interest expenses Interest expense to Group companies Other interest expenses Unrealized value changes, derivatives, (Note 8) Realized value changes, derivatives 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 *GAIN/ LOSS SALE OF SUBSIDIARY: SALE OF GRIEG SEAFOOD SHETLAND LTD IN 2021 On 29 June 2021, Grieg Seafood ASA entered into an agreement with Scottish Sea Farms Ltd for the disposal of all shares in Grieg Seafood Hjaltland UK Ltd, the holding company of Grieg Seafood ASA's Shetland business. The transaction was subject to certain customary closing conditions, such as merger clearance. The Competition and Markets Authority (CMA) in the UK approved the transaction on 8 December 2021. The transaction was closed on 15 December 2021. The total gain for Grieg Seafood ASA is recognized at NOK 143 million. For more information, see also Note 5 to the Group’s consolidated financial statement for 2021. SALE OF OCEAN QUALITY AS (SJÓR AS) IN 2020 Grieg Seafood ASA sold its 60% stake in Ocean Quality AS (now named Sjór AS) to Bremnes Fryseri AS on 31 December 2020. Bremnes Fryseri AS held the non-controlling interest of 40% in Ocean Quality AS up until the transaction. The book value of Grieg Seafood ASA’s investment in Ocean Quality AS was NOK 6 million at the transaction date. The sale/purchase price was settled in cash and through a change of debtor on a liability Grieg Seafood ASA had from Ocean Quality AS. The gain from the transaction was NOK 60 million. 171 650 142 683 10 606 307 845 10 29 281 23 990 22 284 735 43 548 752 632 172 015 45 2 291 — 7 494 — — 3 048 2 039 — 186 932 565 700 67 914 59 978 254 99 710 17 362 6 761 — 89 — — 252 069 94 247 1 090 3 460 21 493 2 022 — 28 623 3 601 15 677 13 042 183 255 68 814 Prepaid expenses VAT Other current receivables to Sjór AS (before Ocean Quality AS) Realised gain on price contracts, receivable on counterpart Other current receivables Tax refund as a part of Corona tax measures Total other current receivables OTHER CURRENT LIABILITIES NOK 1 000 Accrued interest Other accrued expenses Other current liabilities Total other current liabilities NO T E 7 B ANK DEP O S I T S BANK DEPOSITS NOK 1 000 Restricted deposits relating to employees' tax deductions Other bank deposits Total 2021 7 489 1 616 — — — 28 9 134 2021 4 312 26 813 23 31 148 2020 4 162 1 740 16 940 18 316 458 6 600 48 216 2020 10 451 11 938 1 034 23 423 2021 2 564 790 312 792 875 2020 2 163 181 547 183 710 The Company has an overdraft facility of NOK 100 million. Available credit on the overdraft facility was NOK 100 million at year-end 2021 (2020: NOK 100 million). In addition, the Company has a revolving credit facility of which NOK 785 million was undrawn at year-end 2021 (2020: NOK 1 103 million). PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 4 NO T E 8 SHOR T-T E R M I NV E S T MEN T S AND FIN ANCI AL INS T RUMEN T S NO T E 9 INV E S T MEN T S IN SUB S IDI AR IE S SHORT-TERM INVESTMENTS AND FINANCIAL INSTRUMENTS NOK 1 000 Financial instruments current assets DNB Global Allokering Norway (number of shares 3 038, ownership 0.00%) Total 2021 21 178 566 21 744 2020 6 761 566 7 327 *Registered office: Oslo, Norway. Ownership percentage 0.00%. Numbers of shares: 3 038. Acquisition cost of NOK 630 000.. 2021 2020 FINANCIAL INSTRUMENTS Fair value Book value Fair value Book value Interest rate options bought floor NOK 250 000 3 NIBOR Maturity 25.06.2020 - 25.06.2025 233 — Cross currency interest rate swap (NOK/EUR), maturity in 2025, NOK 250 million / EUR 23 million (2020: maturity 10.03 - 31.12.2021) * 21 178 Financial instruments classified as current assets Interest rate swap contracts (five contracts for NOK 260 million, NOK 200 million, NOK 200 million, NOK 200 million and NOK 200 million maturing in 2021, 2023, 2024, 2024 and 2024, respectively **) Financial instruments classified as current liabilities 13 552 21 178 21 178 -751 -751 423 6 761 — 6 761 6 761 -15 008 -15 616 -15 616 * Financial instruments booked at fair value in according to accounting act § 5-8. Other financial instrument are booked at the lowest of historic cost and fair value. ** Amounts exclude accrued interest totalling NOK -161,5 thousand (2020: NOK -1 270 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 Unrealized changes on interest rate swaps Net unrealized gain/(loss) on financial instruments 2021 14 887 14 394 — 29 281 2020 -19 823 6 761 -1 670 -14 732 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. SUBSIDIARY Grieg Seafood Rogaland AS Grieg Seafood Canada AS Grieg Seafood Finnmark AS Grieg Seafood Norway AS Grieg Seafood Shetland Ltd * Grieg Newfoundland AS Total REGISTERED OFFICE COUNTRY REGISTERED OFFICE LOCATION OWNERSHIP/ VOTING SHARE Norway Norway Norway Bergen Bergen Alta Norway Bergen UK Shetland Norway Bergen 100 % 100 % 100 % 100 % —% 99 % EQUITY AT 31.12.2021 NOK 1 000 852 945 227 353 1 082 217 1 271 — PROFIT/ LOSS 2021 NOK 1 000 BOOK VALUE NOK 1 000 147 413 -13 142 979 13 850 — 223 497 297 112 400 481 1 000 — 104 858 -9 849 981 319 2 268 644 294 380 1 903 409 Equity and profit/loss are based on provisional financial statements, which have been prepared in accordance with local accounting standards. *GRIEG SEAFOOD SHETLAND LTD On 29 June 2021, Grieg Seafood ASA entered into an agreement with Scottish Sea Farms Ltd for the disposal of all shares in Grieg Seafood Hjaltland UK Ltd, the holding company of Grieg Seafood ASA's Shetland business. The transaction was subject to certain customary closing conditions such as merger clearance. The Competition and Markets Authority (CMA) in UK approved the transaction on 8 December 2021, and the transaction was finalized at the 15 December 2021. See more information in Note 5 of the group accounts. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 5 NO T E 10 IN TANGIBLE A S SE T S NO T E 11 P R OP ER T Y, P L AN T A ND EQUIP M EN T 2021 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 2020 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 14 504 1 892 -5 659 10 737 52 298 -41 561 10 737 3 - 10 years SOFTWARE 15 238 3 944 -4 678 14 504 50 381 -35 877 14 504 3 - 10 years 2021 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 2020 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 The company has operating lease agreements, which are not recognized in the balance sheet: 2021 ASSETS Buildings Other equipment Total lease amount charged There have been no changes in the lease agreements from 2020. PLANT, EQUIPMENT AND OTHER FIXTURES ETC. 2 131 1 555 -1 114 2 570 19 514 -16 942 2 571 3–5 years PLANT, EQUIPMENT AND OTHER FIXTURES ETC. 3 379 294 -1 542 2 131 17 959 -15 828 2 131 3–5 years DURATION Until 2028 3-5 years OPERATING LEASE EXPENSE 4 201 725 4 926 PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 6 NO T E 1 2 SH AR E C AP I TAL AN D SH AR EHOLDER INF OR M AT ION As at 31 December 2021, the Company had 113 447 042 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. SHARE CAPITAL AND NUMBER OF SHARES 31.12.2021 NOMINAL VALUE PER SHARE (NOK) TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES Total Holdings of treasury shares Sale of treasury shares 2018-2020 Sale of treasury shares 2021 Total excl treasury shares 4.00 4.00 4.00 4.00 453 788 -5 000 314 154 449 256 113 447 042 -1 250 000 78 506 38 513 112 314 061 Treasury shares In June 2011, the Company purchased 1 250 000 treasury shares at NOK 14.40 per share. On 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. In 2020, Grieg Seafood ASA sold 42 193 at a sales price of NOK 77.16 a share, providing a gain of NOK 62.76 a share. In 2021, Grieg Seafood ASA sold 38 513 shares at a sales price of NOK 93.73, providing a gain of NOK 79.33 a share. After the transactions the Company has 1 132 981 treasury shares. CHANGES IN SHARE CAPITAL Share capital 01.01.2020 Contribution in kind 20.04.2020 Share capital 31.12.2020 Share capital 01.01.2021 No transaction in 2021 1 January 2020 20 April 2020 n/a 1 January 2021 n/a Share capital per 31.12.2021 31 December 2021 NOMINAL VALUE PER SHARE (NOK) TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES 4.00 4.00 4.00 4.00 — 4.00 446 648 7 140 453 788 453 788 — 453 788 111 662 000 1 785 042 113 447 042 113 447 042 — 113 447 042 Acquisition of Grieg Newfoundland On 20 April 2020, Grieg Seafood ASA' share capital was increased by 1 785 042 shares (nominal value of NOK 4 per share), from 111 662 000 shares to 113 447 042 shares. The share capital was thus increased by NOK 7 140 168, from NOK 446 648 000 to NOK 453 788 168. The share issue in the Company to shareholders Grieg Aqua AS, Kvasshøgdi AS, Knut Skeidsvoll and Ocean Choice International Ltd was related to the Company’s acquisition of Grieg Newfoundland AS, which was completed on 15 April 2020. For more information, see Note 6 of the Group Accounts. THE LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA Grieg Aqua AS Folketrygdfondet OM Holding AS Ystholmen Felles AS State Street Bank and Trust Comp (nominee) Clearstream Banking S.A. (nominee) BNP Paribas Securities Services (nominee) Ferd AS Six Sis AG (nominee) CACEIS Bank Spain SA (nominee) Banque Degroof Petercam Lux. SA (nominee) Grieg Seafood ASA JPMorgan Chase Bank, N.A., London (nominee) Kvasshøgdi AS Verdipapirfondet Pareto Investment State Street Bank and Trust Comp (nominee) State Street Bank and Trust Comp (nominee) Ronja Capital II AS Pictet & Cie (Europe) S.A. (nominee) Danske Invest Norge Vekst Total 20 largest shareholders Total others Total number of shares NO. OF SHARES SHAREHOLDING 31.12.2021 56 914 355 31.12.2021 50.17% 5 312 207 4 917 957 2 428 197 1 867 464 1 711 386 1 634 500 1 456 453 1 380 743 1 212 652 1 164 795 1 132 981 1 035 915 996 772 916 000 883 362 862 797 755 004 646 320 561 000 4.68% 4.34% 2.14% 1.65% 1.51% 1.44% 1.28% 1.22% 1.07% 1.03% 1.00% 0.91% 0.88% 0.81% 0.78% 0.76% 0.67% 0.57% 0.49% 87 790 860 25 656 182 113 447 042 77.38% 22.62% 100.00% PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 7 NO. OF SHARES SHAREHOLDING NO. OF SHARES SHAREHOLDING NO. OF SHARES SHAREHOLDING 31.12.2020 50.17% SHARES CONTROLLED BY BOARD MEMBERS AND GROUP MANAGEMENT 31.12.2021 31.12.2021 31.12.2020 31.12.2020 THE LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA Grieg Aqua AS Folketrygdfondet OM Holding AS Ystholmen Felles AS Clearstream Banking S.A. (nominee) State Street Bank and Trust Comp (nominee) Ronja Capital II AS Grieg Seafood ASA Six Sis AG (nominee) UBS Switzerland AG (nominee) JPMorgan Chase Bank, N.A., London (nominee) Banque Degroof Petercam Lux. SA (nominee) Verdipapirfondet Pareto Investment State Street Bank and Trust Comp (nominee) State Street Bank and Trust Comp (nominee) Ferd AS Svenska Handelsbanken AB (nominee) J.P. Morgan Bank Luxembourg S.A. (nominee) State Street Bank and Trust Comp (nominee) Danske Invest Norge Vekst Total 20 largest shareholders Other shareholders Total shares 31.12.2020 56 914 355 4 281 530 4 235 656 2 928 197 1 937 653 1 616 926 1 200 000 1 171 494 1 038 659 945 209 915 596 822 051 764 000 737 722 697 771 688 453 593 415 592 624 524 061 521 000 3.77% 3.73% 2.58% 1.71% 1.43% 1.06% 1.03% 0.92% 0.83% 0.81% 0.72% 0.67% 0.65% 0.62% 0.61% 0.52% 0.52% 0.46% 0.46% 83 126 372 30 320 670 113 447 042 73.27% 26.73% 100.00% BOARD OF DIRECTORS Per Grieg Jr. * Tore Holand (Skippergata 24 AS, and privately) Sirine Fodstad (resigned 13 August 2021) Marianne Ribe Katrine Trovik Nicolai Hafeld Grieg (board member from 4 November 2021) GROUP MANAGEMENT CEO CFO CTO COO Farming Europe COO Farming North America CHRO GCM CCO 60 356 985 2 000 — — — — 39 809 24 852 24 151 22 809 24 209 12 380 644 644 53.20% 0.00% —% —% —% —% 0.04% 0.02% 0.02% 0.02% 0.02% 0.01% 0.00% 0.00% 60 356 985 53.20% 2 000 — — — — 39 489 24 532 23 831 22 489 19 889 12 060 324 324 —% —% —% —% —% 0.03% 0.02% 0.02% 0.02% 0.02% 0.01% 0.00% 0.00% * THE SHARES OWNED BY THE FOLLOWING COMPANIES ARE CONTROLLED BY PER GRIEG JR. AND FAMILY Grieg Aqua AS Ystholmen Felles AS Kvasshøgdi AS Per Grieg jr. privately Thomas Willumsen Grieg Total shares 56 914 355 2 428 197 996 772 15 000 2 661 60 356 985 50.17% 56 914 355 50.17% 2.14% 0.88% 0.01% 0.00% 53.20% 2 928 197 496 772 15 000 2 661 60 356 985 2.58% 0.44% 0.01% 0.00% 53.20% On 30 December 2020, the board of Ystholmen Felles AS submitted a proposal to the company's general meeting to demerge the company, whereby 500 000 shares in Grieg Seafood ASA would be transferred from Ystholmen Felles AS to Kvasshøgdi AS, org.no. 921 020 961. The general meeting of Ystholmen Felles AS accepted the board's proposal. Per Grieg Jr. is the sole shareholder in Kvasshøgdi AS. Following the completion of the demerger, Per Grieg Jr. and the other shareholders own 2 428 197 shares in Grieg Seafood ASA through their ownership of Ystholmen Felles AS. In addition, Per Grieg Jr. owns 996 772 shares in Grieg Seafood ASA through his ownership of Kvasshøgdi AS. The demerger was effective from 4 March 2021. Nicolai Hafeld Grieg owns, indirectly, 1.87% of Grieg Seafood ASA through his ownership in Grieg Maturitas AS, the parent company of Grieg Aqua AS. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 8 NO T E 1 3 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 Other permanent differences from gain of sales of share Unrealized value adjustments of share Change in financial derivatives Change in temporary differences Change in temporary differences from 2019 Group contribution received/provided Taxable income/loss Group contribution received Loss carry forward from 2020 Basis for tax expense for the year 22% (22%) tax payable Underprovision for tax previous year 22% (22%) tax payable 2021 488 599 -10 — -5 109 -142 680 — -29 281 76 489 — -307 845 80 163 307 845 -39 433 348 575 76 686 — 76 686 2020 -4 210 -17 362 521 1 459 -54 486 -165 14 732 -3 163 -1 267 -99 710 -163 651 99 710 — -63 941 — 279 279 BREAKDOWN OF DEFERRED TAX BASIS NO 1 000 CHANGE -2 711 -127 -7 924 -13 097 -56 469 3 839 -76 489 29 281 69 433 -30 000 -7 775 -1 711 -1 711 TEMPORARY DIFFERENCES Non-current assets Profit and loss account Cash-based options Non-current debt/amortized cost Revaluation account non-current liabilities Discount bond loan Net temporary differences Financial instruments Loss carryforward Profit from 2019 carryforward to cover loss in 2020 (Covid-19 refund) Basis for deferred tax in balance sheet 22% deferred tax Deferred tax assets/deferred tax liabilities in the balance sheet BREAKDOWN OF TAX CHARGE Tax payable Change in deferred tax, 22% (22%) Tax refund as a part of Covid-19 tax measures Tax effect of foreign tax not credited Norwegian tax Tax expense in income statement RECONCILIATION OF TAX EXPENSE Profit before tax Estimated tax 22% (22%) 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 NO T E 14 GU A R AN T EE S 2021 -332 508 -11 166 29 671 20 413 -13 377 25 717 20 426 — — 46 143 10 151 10 151 76 686 -1 711 39 6 242 81 257 488 599 -107 492 81 257 -26 235 -32 516 6 242 39 -26 235 2020 2 379 635 -3 242 42 768 76 882 -17 216 102 207 -8 855 -69 433 30 000 53 919 11 862 11 862 279 -11 221 -6 600 1 716 -15 826 -4 210 926 -15 826 -14 900 -16 616 1 716 — -14 900 Grieg Seafood ASA acted as a guarantor for Grieg Seafood Sales UK (formerly know as Ocean Quality UK Limited) and Grieg Seafood Sales North America Inc. (formerly known as 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. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 15 9 NO T E 1 5 R EL AT ED PAR T I E S 2021 NOK 1 000 OPERATING INCOME OPERATING EXPENSES FINANCIAL INCOME FINANCIAL EXPENSES NON- CURRENT RECEIVABLES TRADE RECEIVABLES CURRENT RECEIVABLES TRADE PAYABLES OTHER CURRENT LIABILITIES On 20 April 2020, a private placement was conducted, through which 1 785 042 new shares were issued to Grieg Aqua AS and Kvasshøgdi AS, in addition to the other owners, in part consideration for the shares in Grieg Newfoundland AS. The subscription price for each new share was set at NOK 140.05, corresponding to a total contribution-in-kind of NOK 250 million. For more information, see Note 6 and Note 23 to the Grieg Seafood consolidated financial statement for 2020. Total related parties – Group companies Total related parties – Shareholders Total related parties – Group companies Total related parties – Shareholders Total 98 328 -411 501 779 -45 787 096 178 2 149 163 — -102 111 Total 98 328 -13 658 501 779 — -13 247 — — -45 — 787 096 — 178 — 2 149 163 -127 -127 — -102 111 NO T E 16 NE T IN T ER E S T-BE AR ING LI A BI LI T IE S A ND P L ED GE S 2020 NOK 1 000 OPERATING INCOME OPERATING EXPENSES FINANCIAL INCOME FINANCIAL EXPENSES NON CURRENT RECEIVABLES TRADE RECEIVABLES CURRENT RECEIVABLES TRADE PAYABLES OTHER CURRENT LIABILITIES Grieg Seafood ASA has a syndicated loan provided 50/50 by DNB and Nordea. The financing agreement includes two term loans of NOK 600 million and EUR 60 million, a revolving credit facility of NOK 1 225 million (2020: NOK 1 500 million), alongside overdraft facilities of NOK 100 million. Repayment profile of the NOK and EUR term-loans are semi-annual installments of NOK 25 million and EUR 2.5 million until balloon on maturity 28 February 2023. The drawdown rate of the EUR loan is 9.6691. In 2021, the NOK term loan of the financing agreement has been settled in full. In 2020, Grieg Seafood issued a green bond, through two tap issues, in the amount of NOK 1 500 million. The green 75 413 -3 474 184 966 1 090 1 216 143 4 307 2 370 621 -45 750 -2 993 bond (GSF01 G, listed at Euronext) matures on 25 June 2025. — -13 452 — — — — — -188 — 75 413 -16 926 184 966 1 090 1 216 143 4 307 2 370 621 -45 938 -2 993 The financial covenants in the loan agreement are based on consolidated figures for the Grieg Seafood Group. The equity ratio is calculated without the effect of IFRS 16. As at 31 December 2021, the Group had an equity ratio (according to IFRS) of 52% (2020: 41%), while the equity ratio of the Grieg Seafood Group according to financial covenants was 54 % (2020: 43%). In addition, there is a rolling 12-month NIBD/EBITDA leverage ratio requirement. Net interest-bearing debt (NIBD) is calculated in accordance with covenant requirements in The Company carries out transactions with companies controlled by Grieg Maturitas II AS, which is the parent company of Grieg Aqua the financing agreement. According to the agreement, factoring liabilities and IFRS 16 effects are not included in NIBD. The leverage ratio AS, majority owner of Grieg Seafood ASA. Grieg Maturitas II AS is headquartered in C. Sundts gate 17/19, Bergen, Norway. Consolidated metric of NIBD/EBITDA is linked to our equity ratio requirement: if equity ratio is more than 40%, the maximum leverage ratio is 5.0, and financial statements, in which Grieg Seafood ASA is included may be obtained from the parent company. if the equity ratio is equal to or less then 40%, the maximum leverage ratio is 4.5. NIBD/EBITDA was not reported as a financial covenant from Q4 2020 through Q3 2021, pursuant to a temporary amendment to the syndicated loan agreement. NIBD/EBITDA was measured as at The services provided by these companies include: 31 December 2021. • 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. In June 2020, we issued our first green bond issue, with a proceed of NOK 1 000 million. In November 2020, Grieg Seafood ASA issued the second tap of the senior unsecured green bond with an additional drawdown of NOK 500 million, bringing the total principal of the green The parent company provides a range of services to the subsidiaries. The services include administrative services and services relating to bond issue to NOK 1 500 million. The bond matures on 25 June 2025 and is listed on Euronext (Oslo Stock Exchange) with ticker "GSF01 G". the provision of parent company non-current loans and current credit facilities to subsidiaries. Interest is charged on an arm's length basis. The green bond's financial covenant is an equity ratio requirement of at least 30%, measured consistently with the equity ratio covenants Grieg Seafood ASA sold all the shares in Grieg Seafood Hjaltland Ltd Group (including the Grieg Seafood Shetland Ltd) at 15 of December the evaluation and selection process for green projects, the management of green bond proceeds and for reporting connected to the green 2021. Transactions with Grieg Seafood Hjaltland Group for the year 2021 were all related-party transactions. At the year end Grieg Seafood bond. The framework is aligned with the ICMA Green Bond Principles. Grieg Seafood will annually publish a green bond report, including Hjaltland Group is not a part of Grieg Seafood Group. an allocation and impact report, as long as there are green bond proceeds outstanding. The green bond report is to be verified with limited as defined in the Group’s syndicated loan agreement with secured lenders. The green bond framework is the basis for the use of proceeds, Grieg Seafood ASA had sold all its shares in Sjór AS (previously known as Ocean Quality AS) as at 31 December 2020. Transactions with Ocean Quality AS for the year 2020 were all related-party transactions. However, Sjór AS was not part of the Grieg Seafood Group at year- end 2020. In 2020, Grieg Seafood recognized revenues of NOK 5 million in respect of administrative services provided to Sjór AS up until its exit from the Group. A dividend of NOK 17 million is included in financial income for 2020. assurance by an external auditor. EVENT AFTER THE BALANCE SHEET DATE: In Q1 2022, Grieg Seafood finalized a refinancing of the Group's syndicated financial liabilities, with an aggregate of NOK 3 200 million in five-year senior secured sustainability-linked loans and credit facilities. This represents the completion of the funding process. The new debt structure comprises a NOK 750 million term loan, an EUR 75 million term loan, a NOK 1 500 million revolving credit facility and a NOK Grieg Seafood ASA enters into hedging contracts on behalf of Grieg Seafood Rogaland AS and Grieg Seafood Finnmark AS. The arrangement 200 million overdraft facility. The NOK and EUR term loans carry installments equal to a 12-year repayment profile until balloon payment is intended to reduce these companies’ exposure to salmon prices. The agreements with the subsidiaries are priced on the basis of a “back- at five years. The revolving credit facility matures at five years, while the overdraft facility is subject to annual renewal. The interest rate is to-back” arrangement. The acquisition of Grieg Newfoundland AS (99%) was completed on 15 April 2020. Grieg Newfoundland AS was 39% owned by Grieg Kapital AS/Grieg Aqua AS (the owner of the majority of the shares in Grieg Seafood ASA), and 39% by Kvasshøgdi AS (owned by Per Grieg Jr, who chairs the Board of Grieg Seafood ASA). The remaining shares were owned by the local partner Ocean Choice International Ltd (19.5%) and Knut Skeidsvoll (2.5%). The up-front payment was based on an enterprise value of Grieg Newfoundland AS of NOK 539.1 million. NOK 250 million of the up-front payment was settled through issuance of new shares in the Company to the sellers of Grieg Newfoundland AS. three months NIBOR plus margin. The loan is linked to sustainability-linked KPIs, of which the scoring impact the interest rate margin paid on the facilities. The sole financial covenant for the new facilities is a minimum recognized equity ratio of 31%, excluding the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019. PA R T 0 3 : O U R F I N A N C I A L 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 PA G E 16 0 NON-CURRENT LIABILITIES (INTEREST-BEARING) NOK 1 000 Green bond 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 NET INTEREST-BEARING LIABILITIES NOK 1 000 Gross interest-bearing liabilities Unrestricted bank deposits Loans to subsidiaries Net interest-bearing liabilities 2021 1 500 000 374 580 440 000 -29 671 2020 1 500 000 869 988 996 646 -42 768 2 284 909 3 323 866 2021 — 49 944 — 49 944 2021 2 334 853 790 312 2 612 972 -1 068 431 2020 — 102 352 — 102 352 2020 3 426 218 181 547 3 474 445 -229 774 * At the end of 2021, the Company had a total revolving credit facility NOK 1 225 million and an overdraft facility NOK 100 million, which gives a total overdraft of NOK 1 325 million. As at the reporting date, NOK 885 million (2020: NOK 1 203 million) was available for utilization. MATURITY PROFILE - NON-CURRENT LIABILITIES NOK 1 000 2022 2023 2024 2025 2026 Later Total Green Bond Non-current loan Non-current revolving credit facility Total — 49 944 — — — 1 500 000 374 580 440 000 — — — — 49 944 814 580 — 1 500 000 — — — — — 1 500 000 — — 424 524 440 000 — 2 364 524 Figures included in the maturity profile table are nominal figures. Amortized cost is not included. LIABILITIES SECURED BY MORTAGE NOK 1 000 BOOK VALUE OF LIABILITIES SECURED BY MORTAGE 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 2021 2020 864 524 864 524 1 968 985 1 968 985 922 090 2 571 178 1 137 778 2 062 617 1 379 840 2 131 4 307 2 563 196 3 949 474 *The subsidiaries and the parent company have a joint and several liability against the credit institutions. See the consolidated financial statements Note 12 for further information about liabilities secured by mortgage. TYPE OF LIABILITY NOK 1 000 CURRENCY INTEREST RATE MATURITY CURRENT PART Green bond Syndicated non-current loan Syndicated non-current loan Syndicated loan revolving credit Syndicated loan revolving credit Overdraft facility Total NOK NOK EUR NOK EUR Floating Floating Floating Floating Floating Multiple Floating 06/2025 02/2023 02/2023 02/2023 02/2023 — — 49 944 — — — 2021 2020 NON- CURRENT PART 1 500 000 — 374 580 440 000 — — CURRENT PART NON- CURRENT PART — 1 500 000 50 000 52 352 — — — 425 000 444 988 960 000 36 646 — 49 944 2 314 580 102 352 3 366 634 CURRENCY EXPOSURE ON LOANS TO CREDIT INSTITUTIONS NOK 1 000 31.12.2021 NOK GBP EUR USD Other Green bond Syndicated non-current loan (NOK) Syndicated non-current loan (EUR) Syndicated loan revolving credit (non-current) (NOK) Syndicated loan revolving credit (non-current) (EUR) Overdraft facility Total AVERAGE INTEREST RATE ON BANK AND BOND LOAN Average interest rate (NOK) Average interest rate (EUR) 1 500 000 1 500 000 — 424 524 440 000 — — — 440 000 — — — — — — — — — — 424 524 — — — 2 364 524 1 940 000 — 424 524 — — — — — — — 2021 3.76% 3.50% — — — — — — — 2020 2.81% 1.59% The effect of interest rate swaps is not taken into account in calculating the average interest rate on borrowings and credit facilities. NO T E 17 P O S T-B AL ANCE SHEE T E V EN T S In Q1 2022, Grieg Seafood finalized a refinancing of the Group's syndicated financial liabilities, with an aggregate of NOK 3 200 million in five-year senior secured sustainability-linked loans and credit facilities. This represents the completion of the funding process. The new debt structure comprises a NOK 750 million term loan, an EUR 75 million term loan, a NOK 1 500 million revolving credit facility and a NOK 200 million overdraft facility. The NOK and EUR term loans carry installments equal to a 12-year repayment profile until balloon payment at five years. The revolving credit facility matures at five years, while the overdraft facility is subject to annual renewal. The interest rate is three months NIBOR plus margin. The loan is linked to sustainability-linked KPIs, of which the scoring impact the interest rate margin paid on the facilities. The sole financial covenant for the new facilities is a minimum recognized equity ratio of 31%, excluding the effect of IFRS 16 compared to the IFRS in force prior to 1 January 2019. PA R T 0 3 : O U R F I N A N C I A L R E S U LT S A U D I T O R ’ S R E P O R T PA G E 161 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 2021, 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 statement of financial position as at 31 December 2021, the income statement, comprehensive 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. In our opinion: • • • the financial statements comply with applicable statutory requirements, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, 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, and the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, 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. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with 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 the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in 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 Independent Auditor's Report - Grieg Seafood ASA accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 34 years from the election by the general meeting of the shareholders on 4 January 1988 for the accounting year 1988. 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 company’s business activities are largely unchanged compared to last year. We have not identified regulatory changes, transactions or events that qualified as new Key Audit Matters. Our areas of focus are therefore unchanged from 2020. 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 participates 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. Consequently, we have performed alternative audit procedures to obtain sufficient appropriate audit evidence regarding the existence and condition of the inventory. The group has established control procedures for measurement of both number of fish and biomass. However, a certain inherent risk of deviations exists in the measurement. 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 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. (2) PA R T 0 3 : O U R F I N A N C I A L R E S U LT S A U D I T O R ’ S R E P O R T PA G E 16 2 Independent Auditor's Report - Grieg Seafood ASA Independent Auditor's Report - Grieg Seafood ASA valuation; see more about this in the paragraph «Valuation of biological assets at fair value» below. See note 2 (Accounting policies) and note 9 (Biological assets and other inventories) for further information about measuring of biological assets. Valuation of biological assets at fair value The Group measures biological assets at fair value using the requirements in IAS 41. As per 31.12.2021, the book value of biological assets is MNOK 3 449, of which MNOK 2 479 is historical cost and MNOK 970 is value adjustment. Biological assets comprise about 32% 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 (Accounting policies) and note 9 (Biological assets and other inventories) for further information about valuation of biological assets at fair value. 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. 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, the expected monthly mortality rate and the discount rate applied. 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 9 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 The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report • • is consistent with the financial statements and contains the information required by applicable legal requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and true and fair view 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. (3) (4) PA R T 0 3 : O U R F I N A N C I A L R E S U LT S A U D I T O R ’ S R E P O R T PA G E 16 3 Independent Auditor's Report - Grieg Seafood ASA Independent Auditor's Report - Grieg Seafood ASA 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 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 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. 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 a true and fair view. 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 Audit Committee 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 Report on compliance with Regulation on European Single Electronic Format (ESEF) Opinion We have performed an assurance engagement to obtain reasonable assurance that the financial statements with file name gsf-2021-12-31-en.zip have been prepared in accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation on European Single Electronic Format (ESEF). In our opinion, the financial statements have been prepared, in all material respects, in accordance with the requirements of ESEF. Management’s Responsibilities Management is responsible for preparing, tagging and publishing the financial statements in the single electronic reporting format required in ESEF. This responsibility comprises an adequate process and the internal control procedures which management determines is necessary for the preparation, tagging and publication of the financial statements. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Bergen, 30 March 2022 PricewaterhouseCoopers AS Sturle Døsen State Authorised Public Accountant (5) (6) TRANSPARENT SUSTAINABILITY REPORTING PA R T 0 4 T R A N S PA R E N T R E P O R T I N G O N O U R P R O G R E S S G R I I N D E X S TA K E H O L D E R D I A L O U G E A U 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 0 0 0 0 0 0 0 0 PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G T R A N S PA R E N T R E P O R T I N G PA G E 16 5 TRANSPARENT REPORTING ON OUR PROGRESS This is an integrated report, and covers 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 CDP CLIMATE CHANGE CDP FORESTS FAIRR INDEX COLLER FAIRR PROTEIN PRODUCER INDEX SUSTAINALYTICS ESG RISK RATING DESCRIPTION CDP's climate change program aims to reduce companies' greenhouse gas emissions and mitigate climate change risk. CDP requests information on climate risks and low carbon opportunities via its online response system (ORS) once per year. Companies that disclose to CDP are scored using letter grades A to D-. CDP also collects information about the four agricultural commodities responsible for most deforestation, timber products, palm oil, cattle products and soy, where only palm oil and soy are relevant to Grieg Seafood. Data collection and rating work in the same way as for CDP Climate change. The Coller FAIRR Protein Producer Index constitutes the world's only comprehensive assessment of the 60 largest animal protein producers on critical material ESG risks. The methodology is based on an annual consultative process. All data used in the company analyses are publicly available. The ESG Risk Ratings by Sustainalytics measure a company's exposure to industry-specific material ESG risks and how well a company is managing those risks. The ESG Risk Ratings are categorized across five risk levels: negligible (0-10), low (10-20), medium (20- 30), high (30-40) and severe (40+). 2nd 29.0 - medium risk 2021 RESULT A COMMENT Grieg Seafood has engaged with CDP Climate change since 2018. Grieg Seafood has been on CDP’s A List (Leadership) in all four years of participation. B (Palm Oil) B (Soy) Grieg Seafood has reported on CDP Forests since 2020. Grieg Seafood is engaging with the index to better understand the concerns of our stakeholders and issues we should address in our reporting. In 2021, Grieg Seafood managed to improve it’s position substantially. We have been actively engaging with Sustainalytics during 2021 and managed to achieve a significant improvement in our overall rating, even though the industry’s general risk exposure has seen an increase. We will continue our dialogue with Sustainalytics to better understand the concerns and issues we should address in our reporting and to make sure our efforts are reflected in the ESG Risk Rating. Grieg Seafood started looking into the ESG Ratings’ methodology and criteria in 2020 and improved our score during 2021 from A (average) to AA (leader). Grieg Seafood has been engaging with The Governance Group since 2019. In 2021, Grieg Seafood maintained an A score for “excellent reporting in line with best practice”. This is our third annual report prepared in accordance with the GRI Standards. We will adopt the revised Universal Standards in 2022 and the Sector Standard for Agriculture, Aquaculture, and Fishing as soon as it is launched. MSCI ESG RATINGS THE GOVERNANCE GROUP - ESG 100 - THE OSLO STOCK EXCHANGE GRI GLOBAL REPORTING INITIATIVE AA MSCI ESG Ratings are designed to measure a company's resilience to long- term industry material environmental, social and governance (ESG) risks. MSCI uses a rules-based methodology to identify industry leaders and laggards according to their exposure to ESG risks and how well they manage those risks relative to peers. The ESG Ratings range from leader (AAA, AA), average (A, BBB, BB) to laggard (B, CCC). A- The Governance Group publishes the “ESG 100 - The Oslo Stock Exchange” report, assessing the 100 largest listed companies on the Oslo Stock Exchange based on commonly reported ESG topics and reporting practices from A (best) to E (no reporting or very incomplete reporting). Audited In 2016, GRI transitioned from providing guidelines to setting the first global standards for sustainability reporting – the GRI Standards. The GRI Standards have a modular structure and are the world’s most widely used sustainability reporting framework. The standards continue to be updated and added to. PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G T R A N S PA R E N T R E P O R T I N G G R I R E P O R T PA G E 16 6 INDEX /FRAMEWORK GSI GLOBAL SALMON INITIATIVE NUES NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES OSE OSLO STOCK EXCHANGE (or Euronext) TCFD TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES TNFD TASKFORCE ON NATURE-RELATED FINANCIAL DISCLOSURES EU SUSTAINABLE FINANCE TAXONOMY DESCRIPTION The Global Salmon Initiative (GSI) is a leadership effort established by global farmed salmon CEOs committed to helping feed the world in a healthier, more sustainable way through advancements in responsible salmon farming. Representing 40% of the global farmed salmon industry, GSI members recognize their ability – and responsibility – to drive positive change at scale. The Norwegian Corporate Governance Board (“NCGB” or “NUES”) issues the recommendation on corporate governance for companies listed in Norway. The OECD Guidelines for Multinational Enterprises are recommendations addressed by governments to multinational enterprises operating in or from adhering countries. They provide non-binding principles and standards for responsible business conduct in a global context consistent with applicable laws and internationally recognized standards. The Guidelines are the only multilaterally agreed and comprehensive code of responsible business conduct that governments have committed to promoting. The Euronext ESG Reporting Guidelines have been created to help listed companies in their interactions with investors and the wider ESG community, to help them understand how to address ESG issues as a key component of investor relations, as well as the main principles to consider when preparing an ESG report. The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information. The TNFD consists of various groups, which together make up the TNFD Alliance. At the centre sits the Taskforce, a group of 34 Taskforce Members. TNFD’s mission is to develop and deliver a risk management and disclosure framework for organizations to report and act on evolving nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. From 2022, the EU taxonomy will provide a classification system for which economic activities can be considered environmentally sustainable. It is expected that the EU taxonomy will be implemented in Norwegian law during 2022. 2021 RESULT Audited COMMENT We have reported to the GSI for several years. Please find more information in the annually issued GSI sustainability report. In compliance We adopted the Norwegian Code of Practice for Corporate Governance in 2007. – – – – - We adhere to principles and standards for responsible business conduct. We follow the Euronext guidance on ESG reporting. Our third TCFD report has been published in connection with this annual report. Climate-related scenario analysis is included in our TCFD report. Grieg Seafood has joined the TNFD as a Taskforce Member, alongside global financial institutions and businesses. As sea farmers, healthy oceans are at the heart of our operations, and understanding and addressing nature-related risks is important for us. The finalized framework is earmarked for release in late 2023. Grieg Seafood will be required to report according to the EU taxonomy. Aquaculture has not yet been included in the list of industries covered by the taxonomy, and there are no screening criteria available for any of our activities. We are constantly monitoring developments in this area. TRANSPARENT SUSTAINABILITY REPORTING 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 our website. REPORT QUALITY The quantitative information provided in this report, is mainly data we have retrieved from our production, logistics and financial systems. Where data has 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. As our Shetland operations was sold in December 2021, we have not had access to complete data for 2021, and have excluded Shetland from all of our sustainability reporting (in line with our financial reporting). EXTERNAL VERIFICATION 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 2021 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. MANAGEMENT APPROACH 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 a 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 implemented Group policies and targets aligned with our pillars and 2025 strategy. Our monthly key performance indicator (KPI) report, which is used both by operational management and the Board, is based on these policies and targets. Deviations from targets are followed up monthly, and action plans are implemented. We have a whistleblower channel, operated by EY, available for our employees and external parties to report any unwanted behavior and breaches of our Code of Conduct. PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G G R I R E P O R T PA G E 167 PILLAR MATERIAL TOPIC TOPIC DEFINITION AND BOUNDARIES MANAGEMENT APPROACH FOUNDATION Corporate governance HEALTHY OCEAN Fish health & welfare Strong corporate governance is essential in achieving our objectives and acting as a responsible organization. We need to ensure that all employees practice sound ethics and care for the environment and society as a whole. We expect nothing less from our suppliers through our Supplier Code of Conduct. 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. Protecting wild salmon (escape & sea lice control) Avoiding fish escape incidents is important to minimize our impact on wild salmon, as well as to protect our assets. 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, wild salmon carry sea lice, impacting our farms each autumn. Protecting biodiversity & marine ecosystems (local emissions, medicine use, wildlife interaction) We aim to keep emissions of feed and feces from all our open-net pens in line with regulations to minimize local emissions and avoid eutrophication. We aim to avoid using medicines to combat sea lice or diseases affecting our salmon, as it can impact the local environment. We aim to avoid impact on wild mammals and birds at all our seawater facilities. Low use of antibiotics We aim to avoid the use of antibiotics throughout our operations, as resistance to antibiotics is a growing global challenge. The risk increases with extensive use of antibiotics in animal protein production. Our governance system consists of our culture, management principles, risk and internal control framework, policies, procedures, etc. We adhere to our Corporate Governance Principles, 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. 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 include survival rate and causes for reduced survival. In all our regions, we have procedures in place, as well as high technical standards on equipment to avoid escapes. Any escape incident is an indicator that our measures are not effective, and require an investigation of our procedures. Our main goal is to keep the sea lice level below national limits. We have a policy for sea lice management and several approaches to keeping the sea lice level below the national limits. We adhere to local regulations, and report sea lice levels regularly to the appropriate authorities. We assess our sites and apply operating procedures to ensure that local emissions are below legal limits. Environmental monitoring programs and testing is the main approach to evaluate the effectiveness of our measures. 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 measure our results in terms of survival rates and fish quality. 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. We are committed to preventing bacterial diseases by using available vaccines and biosecurity measures. In Norway, effective vaccines have reduced our use of antibiotics to zero. We have a policy for the use of antibiotics. Use of antibiotics must be approved by headquarters, any use is registered and followed up regularly. CHOSEN UN SDGS 16, 17 14 14 14 12, 14 3, 12, 14 12 3 PILLAR MATERIAL TOPIC TOPIC DEFINITION AND BOUNDARIES MANAGEMENT APPROACH SUSTAINABLE FOOD Safe & healthy food Carbon emissions Plastics pollution Sustainable feed ingredients (zero deforestation, sustainable marine ingredients, ESG assessment, novel ingredients) PROFIT & INNOVATION Profitable operations Grieg Seafood has full traceability in our value chain (from roe to customer), including records of feed given to the salmon and treatments applied. We need to ensure that our fish meet rigorous food safety standards, in some cases even above and beyond official regulations, to meet customer expectations. To ensure future competitiveness and do our part in reaching the Paris Agreement, we must reduce our greenhouse gas emissions, while also working with upstream suppliers and downstream transportation to reduce our own and our supply chain’s footprint. We aim not to pollute the environment where we farm our salmon, and to improve the circular economy. We do not produce our own fish feed. Input factors in fish feed, both marine ingredients and plant-based ingredients, should come from sustainable sources. Ingredients with high-risk (fish meal and fish oil from fisheries, Brazilian soy and palm oil) are certified by recognized certification schemes. We are currently risk assessing ingredients used according to environmental, social and governmental parameters. We aim to create value for our stakeholders, in particular our shareholders, by focusing on sustainable production and improve our operations. Responsible business conduct Business integrity is essential for our business strategy. We have zero tolerance for all forms of fraud, corruption, facilitation payments, kickbacks, bribery or other misconduct in our own operations and in our supply chain. CHOSEN UN SDGS 3 3, 12, 13 3, 12, 13, 14, 17 12, 13, 17 We have a policy for food health and safety. 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. We have a policy for climate action. We have set a Science Based Target for reduction, and have improved our data collection for a more systematic assessment of our emissions, for Scope 1, 2 and 3. We have a policy for plastic in the ocean. 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. 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 sustainable sourcing of feed raw materials. We also have a deforestation statement. We have a 2025 strategy, with targets for growth and farming cost. We have a target for the return on capital employed, and strategies in place to ensure focus on particular areas. We communicate our results on a quarterly basis. Our Code of Conduct, Supplier Code of Conduct, and anti-money laundering and anti-corruption policies set out our principles for responsible business conduct. 5, 8 8, 16 PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G G R I R E P O R T PA G E 16 8 MATERIAL TOPIC TOPIC DEFINITION AND BOUNDARIES MANAGEMENT APPROACH GR I 102: GENER AL DI S C L O SUR E S 2016 RESPONSE OMISSION CHAPTER REFERENCE PAGE PILLAR PEOPLE Employee health & safety We aim to prevent accidents, and offer workplace conditions and other support to help ensure the health and safety of our employees. We expect the same from our supply chain. Human rights, including labor rights Respecting human rights is the basis for society, and also for our business and our supply chain. We work systematically to safeguard our employees, and have principles, systems, programs and risk assessments in place. CHOSEN UN SDGS 3, 4, 17 We have a Human Rights policy 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 LOCAL COMMUNITIES Indigenous rights & partnerships Respecting Indigenous people’s rights is essential, as we need their permission to farm salmon on their land. This applies in particular to our farming operations in Finnmark and BC. We aim for good relations and dialogue, and recognize the special rights of Indigenous peoples. We support the UNDRIP, which is under implementation in BC. 8, 16, 17 Value creation in rural areas Respecting and supporting local communities is essential for our license to operate. Our procurement policy states that we aim to use local suppliers. We engage in, and support, local projects. 2, 5, 8, 17 # DISCLOSURE DESCRIPTION ORGANIZATIONAL PROFILE Name of the 102-1 organization 102-2 102-3 102-4 102-5 Activities, brands, products, and services Location of the organization’s headquarters Location of operations Ownership and legal form 102-6 Markets served 102-7 Scale of the organization 102-8 Information on employees and other workers 102-9 Supply chain 102-10 Significant changes to the organization’s size, structure, ownership, or supply chain No No No No No No No No No Grieg Gaarden, C. Sundts gate 17/19, 5004 Bergen, Norway. Our main customer segment is HoReCa (hotels, restaurants and catering). The Grieg Seafood Group comprises 17 legal companies. We follow up our operations according to our farming regions, the headquarter and our sales operations. See also Note 1 for more information. Feed was our main supply category in 2021, comprising 45% of our cost. Our main feed suppliers are Skretting and BioMar. The divestment process for the Shetland assets initiated in 2020 was completed and the Shetland assets were sold as of December 15th, 2021. Therefore, Shetland has been scoped out in both this Annual Report and Global Reporting Initiative Index. Front page Part 1: Our value chain Part 2: Profit & Innovation - Sales & Market 15 60-61 Part 1: Our organization Part 3: Grieg Seafood Group accounts - Note 1 6 108 Part 2: Profit & Innovation - Sales & Market 60-61 Part 1: Our organization; Key figures; Our value chain 8; 15 Part 2: People - Creating attractive jobs, Our results Part 1: Our value chain 73 15 10 No Part 1: CEO letter 102-11 Precautionary Principle or approach We respect and adhere to the precautionary principle. 102-12 External initiatives 102-13 Membership of associations STRATEGY 102-14 Statement from senior decision-maker Membership in political organizations: Norwegian Seafood Federation, Norwegian Seafood Council, The Federation of European Aquaculture Producers, BC Salmon Farmers Association, Newfoundland Aquaculture Industry Association, and Canadian Aquaculture Industry Alliance. No No No Part 4: Global Reporting Initiative Index - Management approach 166 Part 4: Transparent reporting on our progress 165-166 No Part 1: CEO letter 10 PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G G R I R E P O R T PA G E 16 9 GR I 10 2 : GE NER A L DI S CL O SU R E S 2016 GR I 102: GENER AL DI S C L O SUR E S 2016 RESPONSE OMISSION CHAPTER REFERENCE PAGE RESPONSE OMISSION CHAPTER REFERENCE PAGE # 102-53 DISCLOSURE DESCRIPTION Contact point for questions regarding the report Chief Sustainability Officer: Tor Eirik Homme, tor.eirik.homme@ griegseafood.com. Group Communication Manager: Kristina Furnes, kristina.furnes@griegseafood. com. Global Finance Officer: Renete Kaarvik, renete.kaarvik@griegseafood. 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 sustainability 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 2021. No No No No Part 4: Global Reporting Initiative Index 166 Part 4: Global Reporting Initiative Index 168-173 Part 4: Global Reporting Initiative Index - External verification 166 # DISCLOSURE DESCRIPTION ETHICS AND INTEGRITY 102-16 Values, principles, standards, and norms of behavior 102-17 Mechanisms for advice and concerns about ethics GOVERNANCE 102-18 Governance structure Decision-making on economic, environmental, and social topics lies with the Group management team. STAKEHOLDER ENGAGEMENT List of stakeholder 102-40 groups 102-41 Collective bargaining agreements Unionized employees for Norway are disclosed. Labour unions in Canada are organized differently. Therefore, a group average is not disclosed. 102-42 102-43 102-44 Identifying and selecting stakeholders Approach to stakeholder 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 102-48 Restatements of information 102-49 Changes in reporting In accordance with the GHG Protocol, our sold Shetland operations have been removed from our greenhouse gas accounts for 2021 and all previous years. Comsequently, our base year emissions (2018) has been recalculated, as well. There have not been any significant changes to the material topics in relation to the Annual Report 2020. Some of our topics have been renamed or regrouped to correspond with the topics featured in our five pillars. 102-50 Reporting period January 1 - December 31, 2021 102-51 Date of most recent report 102-52 Reporting cycle The Annual Report 2020 is the previous most recent report and was published March 26, 2021. We report annually according the GRI Standards. Our quarterly reports include some of our sustainability metrics. Part 1: Our organization Part 2: Profit & Innovation - Responsible business conduct; People - Human rights Part 2: People - Human rights 6 68 68 Part 3: Board of Directors' report; Corporate Governance 81-95; 97 Part 4: Stakeholder dialogue Part 2: People - Human rights Part 4: Stakeholder dialogue Part 4: Stakeholder dialogue 174 69 174 174 Part 4: Global Reporting Initiative Index - Management approach; Stakeholder dialogue 166; 174 Part 3: Grieg Seafood Group accounts - Note 1 Part 1: Materiality matrix Part 4: Global Reporting Initiative Index - Management approach Part 1: Materiality matrix Part 4: Global Reporting Initiative Index - Report quality 108 16 166 16 166 No No No No No No No No No No No No No No No No PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G G R I R E P O R T PA G E 17 0 T OP I C-SP ECIFIC DIS CL O S UR E S # DISCLOSURE DESCRIPTION CORPORATE GOVERNANCE RESPONSE OMISSION CHAPTER REFERENCE PAGE GRI 103 MANAGEMENT APPROACH 2016 103-1 103-2 103-3 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach GRI INDICATORS 206-1 307-1 419-1 Legal actions for anti- competitive behavior, 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 GRIEG SEAFOOD INDICATORS Survival rate at sea Grieg Seafood Indicator 001 This Grieg Seafood indicator corresponds to the GSI indicator "Fish Mortality" which is defined as "12 months rolling mortality = (total # of mortalities in sea last 12 months / (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 No No Part 3: Corporate governance Part 4: Global Reporting Initiative Index - Management approach Part 3: Corporate governance Part 4: Global Reporting Initiative Index - Management approach Part 2: Profit & Innovation - Responsible business conduct, Results Part 3: Corporate governance Part 4: Global Reporting Initiative Index - Management approach Part 2: Profit & Innovation - Responsible business conduct, Results Part 2: Profit & Innovation - Responsible business conduct, Results Part 2: Profit & Innovation - Responsible business conduct, Results 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, Regional results Part 4: Global Reporting Initiative Index - Management approach 96-102 166-168 96-102 166-168 64 96-102 166-168 64 64 64 23-24 166-168 23-24 166-168 23 166-168 Part 2: Healthy Ocean - Fish health and welfare, Regional results 24 T OP IC-SP ECIFI C DIS CL O SUR E S # DISCLOSURE DESCRIPTION RESPONSE OMISSION CHAPTER REFERENCE Grieg Seafood Indicator 002 Main causes for reduced survival in seawater List of the main causes of reduced survival, with loss stated in number and tonnes of fish. PROTECTING WILD SALMON (ESCAPE & 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 Number of escape incidents and fish escaped Sea lice levels Grieg Seafood Indicator 003 Grieg Seafood Indicator 004 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)". This Grieg Seafood indicator corresponds to the GSI indicator "Sea lice counts" which is defined as "sea lice according to local action levels set by the authorities". No No No No No No Part 2: Healthy Ocean - Fish health and welfare, Regional results Part 2: Healthy Ocean - Protecting wild salmon - Sea lice control; Protecting wild salmon - Escape control Part 4: Global Reporting Initiative Index - Management approach Part 2: Healthy Ocean - Protecting wild salmon - Sea lice control; Protecting wild salmon - Escape control Part 4: Global Reporting Initiative Index - Management approach Part 2: Healthy Ocean - Protecting wild salmon - Sea lice control, Regional results; Protecting wild salmon - Escape control, Regional results Part 4: Global Reporting Initiative Index - Management approach Part 2: Healthy Ocean - Protecting wild salmon - Escape control, Regional results Part 2: Healthy Ocean - Protecting wild salmon - Sea lice control, Regional results PROTECTING BIODIVERSITY & MARINE ECOSYSTEMS (LOCAL EMISSIONS, MEDICINE USE, WILDLIFE INTERACTION) 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 304 BIODIVERISTY 2016 & GRIEG SEAFOOD INDICATORS 304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas No No No No Part 2: Healthy Ocean - Protecting biodiversity & marine ecosystems Part 4: Global Reporting Initiative Index - Management approach Part 2: Healthy Ocean - Protecting biodiversity & marine ecosystems Part 4: Global Reporting Initiative Index - Management approach Part 2: Healthy Ocean - Protecting biodiversity & marine ecosystems - Protecting marine ecosystems, Our results Part 4: Global Reporting Initiative Index - Management approach Part 2: Healthy Ocean - Protecting biodiversity & marine ecosystems - Protecting marine ecosystems, Our results Part 4: Global Reporting Initiative Index - Management approach PAGE 24 25-27 166-168 25-27 166-168 26-27 166-168 26 26 28-32 166-168 28-32 166-168 29 166-168 29 166-168 PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G G R I R E P O R T PA G E 17 1 T OP I C-SP ECIFIC DIS CL O S UR E S # DISCLOSURE DESCRIPTION RESPONSE OMISSION CHAPTER REFERENCE Environmental status of our sites Result of benthic monitoring according to local regulations. No Part 2: Healthy Ocean - Protecting biodiversity & marine ecosystems - Organic emissions, Our results T OP IC-SP ECIFI C DIS CL O SUR E S PAGE 32 # DISCLOSURE DESCRIPTION SUSTAINABLE FOOD SAFE & HEALTHY FOOD RESPONSE OMISSION CHAPTER REFERENCE PAGE Grieg Seafood Indicator 005 Grieg Seafood Indicator 006 Grieg Seafood Indicator 007 Grieg Seafood Indicator 008 Hydrogen peroxide treatments Active substances used for treatments Number of dead birds and marine mammals 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 kg) per tonne of fish produced (LWE)". This Grieg Seafood indicator corresponds to the GSI indicator "Sea lice treatments" which is defined as "the amount of active pharmaceutical ingredients (API) used (in gr) per tonne of fish produced (LWE)". 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. LOW USE OF ANTIBIOTICS 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 Use of antibiotics Grieg Seafood Indicator 009 This Grieg Seafood indicator corresponds to the GSI indicator "Antibiotic Use" which is defined as "the amount of active pharmaceutical ingredients (API) used (in g) per tonne of fish produced (LWE)". No No No No No No No Part 2: Healthy Ocean - Protecting wild salom - Sea lice control, Regional results 26 Part 2: Healthy Ocean - Protecting wild salmon - Sea lice control, Regional results 26 Part 2: Healthy Ocean - Protecting biodiversity & marine ecosystems - Interaction with wild life, Regional results 30 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, Regional results Part 4: Global Reporting Initiative Index - Management approach 24 166-168 24 166-168 24 166-168 Part 2: Healthy Ocean - Fish health and welfare, Regional results 24 166-168 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 416 CUSTOMER HEALTH AND SAFETY 2016 & GRIEG SEAFOOD INDICATOR Incidents of non- compliance concerning the health and safety impacts of products and services Level of environmental contaminants 416-2 Grieg Seafood Indicator 010 There have been no incidents of non- compliance concerning the health and safety impact of our salmon in 2021. The level of the environmental contaminants PCB, PCB-like dioxins and heavy metals, based on samples of our salmon. CARBON 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 305-1 305-2 Direct (Scope 1) GHG emissions Biogenic CO2 emissions (tCO2e) is not relevant for our operations. Energy indirect (Scope 2) GHG emissions The group's market-based Scope 2 GHG emissions amount to 10 616 tCO2e. 305-4 GHG emissions intensity No No No No No No No No No No No 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, Our results Part 4: Global Reporting Initiative Index - Management approach Part 2: Profit & Innovation - Responsible business conduct, Our results Part 2: Sustainable food - Safe and healthy food, Our results 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, Our results Part 4: Global Reporting Initiative Index - Management approach 34 166-168 34 166-168 35 166-168 64 35 39 166-168 39 166-168 39-41 166-168 Part 2: Sustainable food - Reducing carbon emissions, Our results Part 2: Sustainable food - Reducing carbon emissions, Our results 39-41 39-41 Part 2: Sustainable food - Reducing carbon emissions, Our results 39-41 PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G G R I R E P O R T PA G E 17 2 T OP I C-SP ECIFIC DIS CL O S UR E S RESPONSE OMISSION CHAPTER REFERENCE T OP IC-SP ECIFI C DIS CL O SUR E S # DISCLOSURE DESCRIPTION RESPONSE OMISSION CHAPTER REFERENCE # 305-5 DISCLOSURE DESCRIPTION Reduction of GHG emissions PLASTICS POLLUTION 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 No Part 2: Sustainable food - Reducing carbon emissions, Our results Part 2: Sustainable food - Waste management Part 4: Global Reporting Initiative Index - Management approach Part 2: Sustainable food - Waste management Part 4: Global Reporting Initiative Index - Management approach Part 2: Sustainable food - Waste management Part 4: Global Reporting Initiative Index - Management approach PAGE 39-41 42-43 166-168 42-43 166-168 42-43 166-168 GRIEG SEAFOOD INDICATOR Grieg Seafood Indicator 011 Measures taken to reduce the use of plastic in the production We will work to develop and measure relevant KPI(s) regarding waste management going forward. Yes Part 2: Sustainable food - Waste management 42-43 SUSTAINABLE FEED INGREDIENTS (ZERO DEFORESTATION, SUSTAINABLE MARINE INGREDIENTS, ESG ASSESSMENT, NOVEL 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 Forage fish dependancy ration (FFDR) Grieg Seafood Indicator 012 This Grieg Seafood indicator corresponds to the GSI indicator "Use of marine ingredients in feed", which is defined as "forage fish dependency ratio, calculated per calendar year". PROFIT & INNOVATION PROFITABLE OPERATIONS 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 No No No No 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, Our results Part 4: Global Reporting Initiative Index - Management approach 36 166-168 36 166-168 36 166-168 Part 2: Sustainable food - Sustainable feed ingredients, Our results 37-38 Part 2: Profit & Innovation - Profitable operations Part 4: Global Reporting Initiative Index - Management approach Part 2: Profit & Innovation - Profitable operations Part 4: Global Reporting Initiative Index - Management approach Part 2: Profit & Innovation - Profitable operations, Our results Part 4: Global Reporting Initiative Index - Management approach 46 166-168 46 166-168 46-47 166-168 GRI 201 ECONOMIC PERFORMANCE 2016 201-1 Direct economic value generated and distributed 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 205 ANTI-CORRUPTION 2016 205-1 205-3 Operations assessed for risks related to corruption Confirmed incidents of corruption and actions taken PEOPLE EMPLOYEE HEALTH & SAFETY GRI 103 MANAGEMENT APPROACH 2016 103-1 103-2 103-3 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach No No No No No No No No No PAGE 46-47 64 166-168 64 166-168 64 166-168 Part 2: Profit & Innovation - Profitable operations, Our results Part 2: People - Responsible business conduct Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Responsible business conduct Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Responsible business conduct, Our results Part 4: Global Reporting Initiative Index - Management approach Part 3: Corporate governance 96-102 Part 2: People - Responsible business conduct, Our results 64 Part 2: People - Keeping our employees safe Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Keeping our employees safe Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Keeping our employees safe, Our results Part 4: Global Reporting Initiative Index - Management approach 74 166-168 74 166-168 75 166-168 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. 403-2 403-3 403-4 Hazard identification, risk assessment, and incident investigation Occupational health services Worker participation, consultation, and communication on occupational health and safety No Part 2: People - Keeping our employees safe 74 No No No Part 2: People - Keeping our employees safe 74 Part 2: People - Keeping our employees safe 74 Part 2: People - Keeping our employees safe 74 PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G G R I R E P O R T PA G E 17 3 T OP I C-SP ECIFIC DIS CL O S UR E S T OP IC-SP ECIFI C DIS CL O SUR E S RESPONSE OMISSION CHAPTER REFERENCE PAGE # DISCLOSURE DESCRIPTION RESPONSE OMISSION CHAPTER REFERENCE PAGE # 403-5 403-6 403-7 DISCLOSURE DESCRIPTION Worker training on occupational health and safety Promotion of worker health Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 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. HUMAN RIGHTS, INCLUDING LABOR RIGHTS GRI 103 MANAGEMENT APPROACH 2016 103-1 103-2 103-3 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach GRI 412 HUMAN RIGHTS ASSESSMENT 2016 412-1 412-2 Operations that have been subject to human rights reviews or impact assessments In 2021, we have performed human rights due diligence in all of our own operations and for parts of our supply chain. Employee training on human rights policies or procedures LOCAL COMMUNITIES INDIGENOUS RIGHTS & PARTNERSHIPS 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 No No No No No Yes No No No Part 2: People - Keeping our employees safe 74 GRI 411 RIGHTS OF INDIGENOUS PEOPLES 2016 411-1 Incidents of violations involving rights of indigenous peoples In 2021, we did not have any incidents of violations involving rights of indigenous peoples. No VALUE CREATION IN RURAL AREAS 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 - Relationships with local communities Part 4: Global Reporting Initiative Index - Management approach Part 2: Local communities - Relationships with local communities Part 4: Global Reporting Initiative Index - Management approach Part 2: Local communities - Community support Part 4: Global Reporting Initiative Index - Management approach GRI 203 INDIRECT ECONOMIC IMPACTS 2016 & GRI 204 PROCUREMENT PRACTICES 2016 203-1 204-1 Infrastructure investments and services supported We supported infrastructure projects in Finnmark (pro bono) and British Columbia (commerical) in 2021. Proportion of spending on local suppliers No No Part 2: Local communities - Community support Part 2: Local communities - Community support 77 166-168 77 166-168 78 166-168 78 78 Part 2: People - Keeping our employees safe 74 Part 2: People - Keeping our employees safe 74 Part 2: People - Keeping our employees safe, Our results 75 Part 2: People - Human rights Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Human rights Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Human rights, Our results Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Human rights, Our results Part 4: Global Reporting Initiative Index - Management approach Part 2: People - Human rights, Our results Part 4: Global Reporting Initiative Index - Management approach Part 2: Local communities - Relationships with local communities Part 4: Global Reporting Initiative Index - Management approach Part 2: Local communities - Relationships with local communities Part 4: Global Reporting Initiative Index - Management approach Part 2: Local communities - Relationships with local communities Part 4: Global Reporting Initiative Index - Management approach 68 166-168 68 166-168 69 166-168 69 166-168 69 166-168 77 166-168 77 166-168 77 166-168 PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G S TA K E H O L D E R D I A L O G U E PA G E 174 STAKEHOLDER DIALOGUE Our value ‘Open’ guides our stakeholder dialogue. We aim to be open and honest about our performance and challenges, make it easy for our stakeholders to hold us accountable, and share how we work to improve. Engaging and collaborating with our stakeholders helps us understand and address our most material sustainability issues. Our stakeholders span our five pillars and gaining their trust is integral for our license to operate. Stakeholders are chosen according to the impact they have on our business, and the economic, environmental and social impact we have on the stakeholders. Stakeholder dialogue is also key to be able to grasp emerging opportunities for our business, and to understand and mitigate risk. We engage actively and continuously with our stakeholders, and always maintain an open door for stakeholder feedback. Stakeholders frequently contact us to discuss issues. We also engage stakeholders proactively on matters where we believe we can have significant impact, such as with feed suppliers. The continuous dialogue with our stakeholders provides the basis for the materiality matrix. Ultimately, our stakeholders help us deliver healthy food and make positive impacts throughout our value chain. STAKEHOLDER NATIONAL AUTHORITIES / REGULATORS KEY TOPIC • Sustainability challenges • Balanced regulation and long-term local value creation HOW WE ENGAGE ACTIONS 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. LOCAL AUTHORITIES / COMMUNITIES • 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 representatives are especially important. EXAMPLE We are committed to be a constructive partner for the Government and Indigenous communities in the 2025 transition process in BC, and to find a path forward that works for all stakeholders. Through our website, and in particular the regional websites, we aim to improve transparency and dialogue with our local communities. STAKEHOLDER STAKEHOLDER ORGANIZATIONS/ NON- GOVERNMENTAL ORGANIZATIONS KEY TOPIC • Sustainability challenges SHAREHOLDERS, INVESTORS, ASSET MANAGERS AND ANALYSTS • Long-term performance and returns, both on financial and sustainability- related parameters • How we utilize opportunities and mitigate risk HOW WE ENGAGE ACTIONS 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. 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 engaging with relevant indexes where we are rated, to make sure they give Grieg Seafood an accurate score. CUSTOMERS EMPLOYEES SUPPLIERS • Food safety • Health attributes • Quality • Certifications • Sustainability challenges • Health and safety • A good working environment • Personal development • Fish welfare and sustainability challenges • Our integrity • That we are a fair and predictable partner Customer surveys, frequent dialogue, audits, visits and trade fairs. Continuous dialogue and meetings, intranet, and employee surveys. Dialogue, meetings, conferences and correspondence. 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. 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. 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. EXAMPLE Together with WWF US, we have initiated a project to evaluate environmental, social and governance risks in salmon feed ingredients in a holistic manner. In 2021, we have completed most of our presentations and investor meetings as video conferences due to the Covid-19 pandemic. We have actively engaged with ESG raters, such as Sustainalytics and Coller FAIRR, to understand their assessments and also to provide feedback on how we work with various topics. 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 a daily basis to inform employees about developments, build culture, and cultivate engagement. We have quarterly meetings with our feed suppliers, where we discuss issues and developments. PA R T 0 4 : S U S TA I N A B I L I T Y R E P O R T I N G A U 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 PA G E 17 5 To the Board of Directors of Grieg Seafood ASAs Our Responsibility Independent Limited Assurance Report – Grieg Seafood ASA Report on Grieg Seafood’s sustainability reporting We have undertaken a limited assurance engagement 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 2021 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 2021. We have examined whether Grieg Seafood has developed a GRI Index for 2021 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 page 9 in the Annual Report for 2021. This table contains sustainability indicators that Grieg Seafood measures and controls. Grieg Seafood has defined the key performance indicators in the Scoreboard and the referenced pages therein, 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. Management’s Responsibility Management is responsible for Grieg Seafood’s Sustainability Reporting for 2021 and that the GRI Index for 2021 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 for 2021. Our independence and quality control We have complied with the independence and ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior. Our firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Our responsibility is to express a limited assurance conclusion on Grieg Seafood’s sustainability reporting based on our procedures. We conducted our limited assurance engagement in accordance with International Standard on Assurance Engagements 3000, Assurance engagements other than audits or review of historical financial information ("ISAE 3000"), issued by the International Auditing and Assurance Standards Board. Our work involves performing procedures to obtain evidence that Grieg Seafood’s GRI Index for 2021 and key performance indicators for sustainability are developed in accordance with GRI Standards Core 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 judgment, 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 for 2021 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 for 2021 and sustainability KPIs. Our procedures included 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 reported key performance indicators and controlling whether the calculation and estimation of the key performance indicators are accurate. The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether Grieg Seafood’s sustainability reporting is conducted, in all material respects, in accordance with the specified criteria. Limited Assurance Conclusion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that Grieg Seafood’s GRI Index for 2021 and sustainability key performance indicators presented in “Our Scoreboard” in the Annual Report for 2021 is not prepared, in all material respects, in accordance with the Global Reporting Initiative Standards Core Option and the definitions and explanations provided in relation to each KPI presented in “Our Scoreboard”. Bergen, March 30 2022 PricewaterhouseCoopers AS Hanne Sælemyr Johansen State authorised public accountant 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 (2) ANNUAL REPORT 2021 

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