Grieg Seafood
Annual Report 2022

Plain-text annual report

ANNUAL REPORT 2022 OUR ORGANIZATION GRIEG SEAFOOD FARMING We farm Atlantic salmon (Salmo salar) 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 transferred our first fish to sea in 2022. GRIEG SEAFOOD SALES We have our own integrated sales organization, with offices in Norway, Canada and the USA. 2 BERGEN (HQ) 1 3 4 1 2 3 4 ROGALAND FINNMARK BRITISH COLUMBIA NEWFOUNDLAND OUR VISION R OO T ED IN N AT UR E FAR MING T HE OCE AN F OR A BE T T ER FU T UR 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, we can 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. Harvested volume 2022 Harvested volume target 2023 Harvested volume target 2026 For more information on the Group structure, refer to Note 1 in the Group Accounts. PART 01 – OUR FOUNDATION 2 OUR VALUE CHAIN INP 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 OU T C O ME BREEDING FRESHWATER FARMING POST-SMOLT SEAWATER FARMING HARVESTING SALES AND DISTRIBUTION VALUE ADDED PROCESSING RETAIL / HORECA In Rogaland, we In all of our regions, As part of our post- The salmon live We have harvesting have a broodstock we have land based smolt strategy, we and grow in the sea plants in Rogaland operation where we RAS freshwater keep the salmon until they reach a and Finnmark. We breed for specific facilities, where the longer on land in all harvestable size of use a harvesting traits, such as strong eggs are hatched and regions to shorten 4–5 kg. health or resistance the salmon spend at the time in seawater, to sea lice and least the first year. reducing risk of diseases. biological challenges. In Rogaland, the average size of the smolt transferred to the sea in 2022 was 550 grams compared to 120 grams in 2015. vessel in BC. In Newfoundland, we aim to establish cooperation with a local plant. We have our own We have a small Our salmon is found global sales and share of VAP in in retail stores or market organization Norway and BC. on the menu at with local offices We will form closer restaurants or hotels. in the countries we partnerships in the Currently, we have farm salmon and in market and increase the HoReCa brand selected markets, the value of our Skuna Bay in Canada. to support growth salmon through VAP. and the downstream strategy. 1 500 000 HEALTHY MEALS PER DAY* *Based on our harvest volume in 2022, with 68% edible 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. PART 01 – OUR FOUNDATION 3 OUR BUSINESS OPPORTUNITY AQUACULTURE IN A SUSTAINABLE GLOBAL FOOD SYSTEM Food systems are responsible for 70% of the water extracted from nature, cause 60% 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 1.1 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. PART 01 – OUR FOUNDATION THE CHALLENGES WE MUST SOLVE • Ensuring co-existence with nature and other species • Improving fish welfare • Finding sustainable feed ingredients • Cutting carbon emissions • Recycle resources • Promoting human rights TOMORROW’S SUSTAINABLE GLOBAL FOOD SYSTEM • Healthy and nutritious food for nine 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 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 1.2 EDIBLE YIELD 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. 68% FARMED ATLANTIC SALMON 46% CHICKEN 52% PORK 38% LAMB FIGURE 1.3 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 5.92 BEEF Source: GSI 4 CONTENT OUR FOUNDATION OUR OPERATIONAL RESULTS OUR FINANCIAL RESULTS GRI HIGHLIGHTS KEY FINANCIAL FIGURES OUR SUSTAINABILITY SCOREBOARD CEO LETTER OUR 2026 BUSINESS STRATEGY OPERATIONAL FOCUS AREAS SUSTAINABLE FOUNDATION 7 8 9 10 11 13 16 PROFITABLE OPERATIONS GRIEG SEAFOOD ROGALAND GRIEG SEAFOOD FINNMARK GRIEG SEAFOOD BRITISH COLUMBIA GRIEG SEAFOOD NEWFOUNDLAND OUR CERTIFICATIONS SALES & MARKET CLIMATE ACTION SUSTAINABLE FEED INGREDIENTS PEOPLE 20 23 27 31 36 39 40 43 46 48 BOARD OF DIRECTORS’ REPORT CORPORATE GOVERNANCE GRIEG SEAFOOD GROUP ACCOUNTS GRIEG SEAFOOD ASA ACCOUNTS AUDITOR’S REPORT ALTERNATIVE PERFORMANCE MEASURES 55 70 79 118 132 135 GLOBAL REPORTING INITIATIVE (GRI) INDEX STAKEHOLDER DIALOGUE AUDITOR’S SUSTAINABILITY REPORT 139 146 147 HISTORY AND FUTURE 148 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. HIGHLIGHTS KEY FINANCIAL FIGURES OUR SUSTAINABILITY SCOREBOARD CEO LETTER OUR 2026 BUSINESS STRATEGY OPERATIONAL FOCUS AREAS SUSTAINABLE FOUNDATION 7 8 9 10 11 13 16 HIGHLIGHTS 2022 GROUP • Highest ever volume harvested in our current farming regions, a total of of 84 697 tonnes • Record high Operational EBIT of NOK 1 739 million, with Operational EBIT/kg of NOK 20.5, driven by the harvested volume and an exceptionally strong salmon market • Net profit after tax of NOK 1 154 million and earnings per share equal to NOK 10.3 • Good operational performance in our farming regions • Sales operations achieved key milestones of establishing processing partners and presence of own VAP products, and sold 6% of our harvested volume as VAP • Continued focus on certification for sustainable farming, a total of 29 of 40 eligible sites ASC certified, equivalent to 75% of budgeted net production • Ranked second by the Coller FAIRR Protein Producer Index of the world’s most- sustainable protein producers • Received a Leadership (A-) score for our transparency and actions related to climate change risks from CDP, the gold standard of environmental reporting • Recognized by CDP as a supplier engagement leader for raising the level of climate action across our value chain ROGALAND • Highest ever harvested volume of 28 387 tonnes • Operational EBIT/kg of NOK 26.6 • Good seawater production with a survival rate of 92% • Average weight of smolt when transferred to the sea of 550 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 • 44% reduction in biomass receiving sea lice treatments from 2021, with more than 50% of the pens from which fish were harvested did not receive sea lice treatments due to a successful combination of preventive measures and our post-smolt strategy • Total of five of 11 sites ASC certified (59% of budgeted net production) • No escapes • 66% of farms powered by renewable energy BRITISH COLUMBIA • Harvested volume of 20 286 tonnes • Operational EBIT/kg of NOK 13.3 • Good seawater production with a stable survival rate of 91% • Total of seven out of 11 eligible sites ASC certified (71% of budgeted net production) • Reduced use of sea lice treatments due to a successful combination of preventive measures and mechanical treatments • Respect the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) FINNMARK • Highest ever harvested volume of 36 024 tonnes • Operational EBIT/kg of NOK 25.7 • Good seawater production despite biological challenges, with a survival rate of 91% • Total of 17 of 18 active sites ASC certified (90% of budgeted net production) • 65% of farms powered by renewable energy NEWFOUND- LAND • Successful first transfer of two million fish to the sea, year-end biomass of 2 600 tonnes • Good seawater production, with high survival and no sea lice issues • Harvesting expected to commence late 2023 • Operational EBIT of NOK -114.7 million • Main priority is gradual development of the region to ensure biosecurity, fish health and profitability PART 01 – OUR FOUNDATION 7 KEY FINANCIAL FIGURES FIGURE 1.4 SALES REVENUE AND VOLUME BY MARKET Continental Europe UK North America Asia FIGURE 1.5 HARVEST VOLUME 2022 FIGURE 1.6 SALES REVENUE 2022 FIGURE 1.7 OPERATIONAL EBIT 2022 24% 26% 34% 33% 14% 47% 39% 43% 41% Rogaland Finmark British Columbia KEY FIGURES NOK MILLION Operational 2022 2021 * 2020 * 2019 * 2018 2017 2016 2015 2014 2013 Harvested volume (tonnes GWT) 84 697 75 601 71 142 71 700 74 623 62 598 64 727 65 398 64 736 58 061 Revenue/kg (NOK/kg) 1 Farming cost (NOK/kg) 1 Other costs incl. ownership and headquarters costs/kg (NOK) 1 Operational EBIT/kg 1 Financial Sales revenues Operational EBITDA 1 Operational EBIT1 EBIT (Earnings before interests and taxes) Profit/loss for the year Cash flow from operations Capital structure NIBD according to covenants requirement 1 NIBD/Harvest (NOK) 1,2 Equity % Gross investments 1,3 Profitability Return on Capital Employed (ROCE) 1 Dividend per share (NOK) Earnings per share (NOK) Total market value (Oslo Stock Exchange) 75.8 52.7 2.5 20.5 7 164 2 191 1 739 1 498 1 154 1 562 55.7 47.2 2.7 5.9 52.8 47.0 2.5 3.3 4 599 4 384 818 442 941 604 601 602 233 -57 -316 412 56.9 40.5 1.3 15.0 4 756 1 384 1 077 822 599 1 193 58.3 43.1 0.5 14.7 7 500 1 334 1 099 1 355 997 820 58.3 43.4 0.4 14.5 7 017 1 106 904 813 601 709 1 739 1 869 3 679 1 939 1 690 1 284 20.5 50% 679 23% 3.0 10.3 24.7 52% 570 6% 0.0 10.7 42.4 41% 979 3% 0.0 -4.8 27.0 46% 667 22.6 48% 733 20.5 47% 553 19% 22% 24% 4.0 5.6 4.0 8.8 4.0 5.0 59.1 39.7 1.4 18.0 6 545 1 342 1 168 1 683 1 222 953 906 14.0 47% 255 33% 1.5 10.7 42.2 37.7 3.8 0.7 39.4 35.2 -1.1 5.3 40.5 34.0 0.5 6.0 4 609 4 100 2 404 261 48 81 4 367 484 343 219 144 157 484 348 616 431 317 1 569 1 566 1 445 24.0 38% 322 1% 0.5 -0.1 24.2 42% 312 24.9 43% 164 10% 12% 0.0 1.3 0.0 3.9 8 917 9 427 9 643 15 666 11 423 8 068 9 123 3 462 3 182 2 736 *Ex. Shetland. The Shetland assets was sold 15 December 2021. Figures up to and including 2018 include Shetland, while 2019 to 2021 do not include Shetland. 1 See more information in the Alternative Performance Measures of this report. 2 Net interest-bearing liabilities according to covenant divided by last 12 months harvested volume. For 2020, last 12 months harvest include Shetland (as Shetland was not sold as at 31 December 2020, and NIBD as 31 December 2020 was impacted by our Shetland operations). 3 Incl. financial lease investments. (according to IFRS in force prior to 1 January 2019) PART 01 – OUR FOUNDATION 8 OUR SUSTAINABILITY SCOREBOARD The sustainability scoreboard is a set of some of the key performance indicators, 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. Cost leader in our operating regions HE ALT H Y OCE AN Harvest volume (tonnes GWT) 81 000 tonnes in 2022 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 Newfoundland Use of hydrogen peroxide (kg per tonne LWE)4) Minimize use of pharmaceutical treatments Rogaland Finnmark British Columbia5) Newfoundland Escape incidents Zero escape incidents Rogaland Finnmark British Columbia Newfoundland 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% Rogaland Finnmark British Columbia Newfoundland Lost time incident rate 7) Rogaland Finnmark British Columbia Newfoundland SU S TAIN A BLE F OOD P E OP LE L OC 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 some of the metrics that are not yet relevant due to first stocking to sea in 2022. 1) ROCE in 2019, 2020 and 2021 ex Shetland. 2) Number of sites certified and % of budgeted net production. 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 (2018 - 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. PART 01 – OUR FOUNDATION STATUS ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 2022 23% 48.2 47.3 9.1 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 84 697 75 601 71 142 71 700 62 699 5 (59%) 17 (90%) 7 (76%) 0 18 (100%) 12 (69%) 0 15 (80%) 11 (59%) 92% 91% 91% 0.0 6.8 34.8 0.0 1.7 0.8 0.2 0.0 0.0 6.5 12.8 0.0 0 92% 95% 92% 0.0 6.0 41.7 0.0 4.4 0.5 0.3 n/a 1.6 2.4 35.7 n/a 0 1 (2,878) 1 (4,352) 0 0 359 4 120 77% 84% 85% 5.6% 9.7% 6.4% 1.6% 25 21 9 0 2 (4) n/a 429 4 843 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 n/a 7.2 3.6 46.6 n/a 0 0 0 n/a 456 5 720 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 n/a 11.9 0.0 6.0 n/a 0 0 0 n/a 431 6 359 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 n/a 3.5 14.5 5.8 n/a 0 0 0 n/a 349 6 655 74% 86% 84% 4.7% 5.4% 1.8% n/a 24 18 38 n/a 85% (global) 85% (global) 84% (global) 79% (global) 89% (Norway) yes yes yes yes yes 9 CEO LETTER DEAR SHAREHOLDER 2022 was a historic year for Grieg Seafood. In our 30 years, we Our aim is to keep investing in innovation and new technologies have never achieved a higher Operational EBIT, seen a stronger to improve the industry and make it more profitable and market or harvested higher volumes in our existing farming sustainable, with a reduced footprint and greater fish welfare. In regions. I want to sincerely thank all of my colleagues in farming, Norway, our ability to deliver on this goal at the pace we would sales and support functions for their hard work and efforts like to see depends on how the suggested resource tax ends up. throughout the year. We hope the country’s parliament will amend the proposal and ensure that we will still be able to develop the industry in local In recent years, Grieg Seafood has reached several of our communities along the Norwegian coast also in the future. In BC, strategic milestones, with the aim of re-shaping the company for we have welcomed the “transition” of the salmon farming sector. future value creation. In 2020 and 2021, we repositioned Grieg In this process, the Government is working with the industry, Seafood to the geographies where we see the largest potential First Nations and other stakeholders to improve the sector’s for sustainable growth: we sold our Shetland operations, and performance, with a particular focus on reducing interactions established a new production region in Newfoundland in Eastern with wild salmon. Canada to complement our operations in Western Canada. In 2022, we transferred the first fish to sea farms in Newfoundland, We live in uncertain times, moving from one global crisis to and we plan to harvest the first fish during the autumn of 2023. another. Nobody can predict what the future holds. But I am From this year on, the move will allow us to serve the booming confident that food from the ocean will play an increasingly North American market with locally farmed salmon from both important role, especially if the seafood industry keeps Canadian Coasts, without relying on expensive and carbon innovating and improving. And we have no intention of doing intensive air freight. Similarly, we are positioned as a reliable anything but that. ANDREAS KVAME CEO supplier to the strong European market from our Northern and Southern production regions in Norway. Demand for salmon has soared since the Covid-19 pandemic ended, and the outlook seems bright, despite a more challenging economic situation in many countries. We see positive effects of having our own in-house sales organization, which enables production and sales to work in a more integrated fashion and increase the value created from our fish. Biology remains challenging in our production regions. We are working on measures on many levels to improve biological control. We are particularly focusing on measures to improve fish health and welfare. We have also invested heavily in post-smolt and digital tools to enable more preventative farming practices. During 2022, our belief in “post-smolt” production, a technology that enable us to shorten the time our fish spend in the ocean, has been strengthened. We have come furthest with our post- smolt strategy in Rogaland, with post-smolt investments both on land and in closed-containment facilities in the ocean. Here, we clearly see that post-smolt increases survival, strengthens sea lice control and reduces the number of sea lice treatment needed in the ocean phase. In other words, this technology is improving both profitability and sustainability. PART 01 – OUR FOUNDATION 10 OUR 2026 BUSINESS STRATEGY Our 2026 business strategy targets three key strategic objectives for continued business development. The development and application of increasingly sustainable farming practices underpins all areas of the strategy. GLOBAL GROWTH Ambition of a harvest volume of 120 000-135 000 tonnes by 2026 COST IMPROVEMENT Cost leader in our operating VALUE CHAIN REPOSITIONING Evolve from raw material supplier to regions strategic partner SU S TAIN A BILI T Y Towards 2026, we aim to achieve production growth, cost improvements and to reposition the company in the value chain. Sustainability is the foundation of all three focus areas. STATUS AND ACTIONS TAKEN IN 2022 1 GLOBAL GROWTH We aim for an annual harvest of 120 000-135 000 tonnes by 2026. Growth will mainly be driven by improved utilization of current operations, in addition to establishing Newfoundland as our new farming region. We will focus on post-smolt investments, target new licenses and seize opportunities within new technology. In some regions, there is also potential for continued improvement of site utilization. We also participate in new growth initiatives, M&As, joint ventures and greenfield projects, and seek cooperation with farmers in existing areas. STATUS • In 2022, we harvested 84 697 tonnes, the highest volume ever GOING FORWARD • We expect further growth to come from increased utilization harvested in our current farming regions. This constitutes of our seawater licenses by moving more growth to land an increase of 9 100 tonnes, or 12%, compared to 2021. through our post-smolt program. We have come far with our The increase in our Norwegian regions of 3 300 tonnes, or post-smolt strategy in Rogaland, and aim to increase post- 5% compared to 2021, is a result of improved utilization of smolt capacity in Finnmark and BC as well. the sites’ maximum allowable biomass (MAB). In BC, the • Better utilization of our seawater licenses, by improving harvested volume increased by 5 800 tonnes, or 40%, due to biosecurity, fish health, welfare and survival rates, is also local production arrangements. expected to secure on-growth and harvest volumes. Flexibility • We invested NOK 397 million in growth initiatives in 2022. is a requirement to achieve better utilization of our capacity, More than 50% of the investments were related to the and we are continuously looking for opportunities to secure preparation and digitalization of seawater locations in access to new locations. Newfoundland. We also invested NOK 80 million in new • Our Newfoundland region is expected to provide a harvest of seawater locations in Finnmark. Another key investment 15 000 tonnes in 2026. We successfully transferred our first was the installation of barrier systems in BC. These allow smolt to sea farms in 2022, and expect to harvest 5 000 tonnes us to protect the fish at sea during periods of challenging towards the end of 2023. conditions, which we expect will increase survival rates going • We have received four and a half development licenses for the forward. offshore concept “Blue Farm” and two development licenses • We increased our investment by NOK 90 million from a 37% to for a grow-out version of the closed containment facility 44% shareholding in Årdal Aqua, a land-based facility which FishGLOBE. The decision on whether to build these concepts is expected to produce 4 500 tonnes of post-smolt annually, depends on the final version of the new Norwegian resource with the potential to raise fish to harvestable size on land. tax. Construction commenced in August 2022. • Other major growth investments that we planned to initiate in Norway, such as a new post-smolt facility in Finnmark, were put on hold due to the proposed resource tax in the country. The final version of the proposal is expected to be adopted by the Norwegian parliament in 2023. 120 000 - 135 000 71 700 71 142 75 601 84 697 82 000 FIGURE 1.8 OUR GROWTH JOURNEY: HARVESTED TONNES GWT Rogaland Finnmark BC Newfoundland 2019 2020 2021 2022 2023E 2026E Due to the local production arrangements and larger farms on the West Cost of Vancouver Island (where we harvested from in 2022), the harvested volume vary every other year, regardless of the underlying biology. Measures are being done to equalize harvest volumes in BC, including securing new locations. Newfoundland Finnmark Rogaland BC PART 01 – OUR FOUNDATION 11 2 COST IMPROVEMENT 3 VALUE CHAIN REPOSITIONING 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 is essential in securing increased survival and reduced production costs. We will also drive performance improvements through continuous research and development, as well as through the utilization of new technologies. Our sales currently consist mainly of fresh, head-on gutted salmon. We aim to 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 raw material supplier to a strategic partner for selected customers is an important part of our value creation plan. Increasing our VAP share is also an important part of reducing our greenhouse gas emissions. STATUS • In recent years, we have been able to reduce farming costs GOING FORWARD • General cost inflation and biological events in 2022 will STATUS • Key milestones in 2022 were to establish processing GOING FORWARD • We aim to establish processing partners close to key markets through operational improvement initiatives. In 2022, industry increase our farming cost until the fish currently at sea are partnerships in Norway and Europe, launch our VAP and customers in the EU and the USA, targeting 20-30% share costs rose across the board, with feed prices, in particular, harvested. While the underlying biology is improving, we are products in selected markets and boost our VAP share to of our volume for VAP by 2026. In 2023, we aim to increase our increasing by approximately 40% in Norway and close to 20% launching an improvement program in 2023 to review all 5-10% of harvested volume. We are in line with our targeted VAP share to 8-12% of harvested volume. in BC. This impacted our farming cost (cost directly related aspects of our operations and identify areas where we can milestones, and have started processing salmon into fresh • We will continue to evaluate external opportunities to to production and harvest of salmon) in all regions in 2022. improve profitability and reduce costs. and frozen value added products with partners in Norway, strengthen our processing capacity. When adjusting for general inflation only, and not taking into • While our post-smolt strategy increases investment as well as conducting processing trials in other countries in • We aim to develop B2B brands going forward. Currently, we account the higher cost of feed, the increase in the farming expenditures and smolt costs, we expect it to reduce Europe. Furthermore, we have established the presence of have the successful Skuna Bay brand in the USA. cost is limited. In addition, biological events led to an increase operational expenditures and reduce costs related to in the cost of reduced survival of NOK 1.3/kg in Finnmark and mortality, disease outbreaks, sea lice treatments and fish our own VAP products in European, Asian and the US markets. 6% of our global harvested volume in 2022 was sold as VAP. CAD 0.4/kg compared to 2021. Adjusting for the change in handling. Our farming experience and our data analyses • We will continue to evaluate external opportunities to abnormal mortality, the underlying farming costs in Finnmark indicate that less time in the sea reduces the risk of biological strengthen our processing capacity, such as long-term and BC are reduced compared to 2022. challenges such as sea lice, winter ulcers and ISA. Farming cost/ kg 2021 2022 Rogaland (NOK) 44.6 48.2 Finnmark (NOK) 43.7 47.3 BC (CAD) 8.8 9.1 2022 inflation adjusted* 2022 adj for inflation* and abnormal mortality 45.6 44.7 8.6 44.6 42.2 8.1 *Adjusted to 2021, based on the consumer price index for all goods and services, according to the Statistics Norway. • In BC, we have had good results with digital monitoring and measures to mitigate the effects of harmful algae blooms, our main biological challenge in the region. The measures have contributed to a reduction in mortality related to algae blooms from 3.4% in 2019 to 1.15% in 2022. Additionally, we restructured our operations and closed down sites with historically higher farming cost per kg compared to other farms in the region. We expect this to contribute to reduced costs going forward. partnerships with third parties in Norway, North America and Europe, as well as the development of our existing internal processing infrastructure. PART 01 – OUR FOUNDATION 12 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, these focus areas strengthen our ocean farming. OPERATIONAL FOCUS AREAS LESS TIME AT SEA (POST- SMOLT) PREVENTIVE FARMING PRACTICES AND FISH WELFARE PRECISION FARMING (DATA- DRIVEN DECISION SUPPORT) 1 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 improve sea lice control 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. ACHIEVEMENTS 2022 • In Rogaland, where we are pioneering our post-smolt GOING FORWARD • We plan to boost post-smolt capacity in Rogaland by at least 5 strategy: 250 tonnes. In Finnmark, we target an increase of 3 000 — The average smolt transferred to the sea in 2022 weighed tonnes of post-smolt at our current freshwater facility in 550 grams compared to an average of 120 grams in 2015. Adamselv. Investment decisions have been postponed from — More than 50% of fish harvested were raised from 2022 to 2023, and will depend on the final outcome of the post-smolt (fish weighing more than 200 grams when resource rent tax proposed by the Norwegian government. transferred to sea). • Grieg Seafood Rogaland aims to increase the average smolt — Post-smolt in combination with preventive sea lice transfer weight to approximately 800 grams in 2025. measures can reduce production time at sea from an • In Newfoundland, we plan to start constructing a module in average of 18 months to 12 months. 2023, with a capacity of 1 400 tonnes post-smolt. — Our results so far demonstrate stable production of post- smolt up to 1 kg. — There are strong indications of improved biological control compared to standard smolt weight, with a significant reduction in sea lice treatments. Compared to 2021, we achieved a 44% reduction in biomass receiving sea lice treatments. More than 50% of the pens from which fish were harvested did not receive any sea lice treatment, up from 40% in 2021. PART 01 – OUR FOUNDATION 13 2 PREVENTION AND FISH WELFARE We pursue a systematic, long-term approach to fish health and welfare. The key is investment in 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 improved welfare, stronger growth, increased survival, high harvesting quality and lower costs. ACHIEVEMENTS 2022 • In BC, we have installed a combination of aeration/oxygen GOING FORWARD • To mitigate the future impact of the parasite Spironucleus generation systems and retractable barriers to keep harmful salmonicida (Spiro), which posed a challenge in Finnmark in algae outside and push clean and oxygenated water up to the 2022, we will invest NOK 70 million in UV treatment in 2023, fish during periods of harmful algae blooms or sub-optimal to secure the water intake to our freshwater facility. We have oxygen levels. The effect is increased survival and continued also initiated a project with academia to investigate and learn feeding and on-growth during challenging conditions, as well more about the parasite. as better sea lice control. Mortality related to harmful algae • Some of our numerous ongoing initiatives to improve fish blooms has been reduced from 3.4% in 2019 to 1.15% in 2022. health and welfare throughout the production cycle include • In Rogaland, due to post-smolt and the use of cleaner fish as the selection of roe with specific qualities related to sea a preventive method to control sea lice, more than 50% of the lice and diseases, feed customized for the various stages of pens of fish harvested did not receive any sea lice treatments the salmon’s life cycle, and vaccinations targeting specific in 2022. diseases: — We have enhanced our feed for use during the winter period, 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 smolt and post-smolt by conducting data analysis on historical production data to provide decision-making support. — 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 enable us to more systematically assess and improve fish welfare throughout our operations. PART 01 – OUR FOUNDATION 14 3 “PRECISION FARMING” - DATA-DRIVEN DECISION SUPPORT “Grieg Seafood Precision Farming” is our concept for digitalizing farming operations, where we apply advanced sensors, data analytics, artificial intelligence, and automation with the aim of supporting our farmers to take insight-based decisions before eventual negative impact occurs by utilizing prediction models based on data acquisition as early as possible in everyday operations. The aim is to work more preventatively, improve fish welfare, reduce our impact and improve our farming. We are gaining positive results by combining experience-based knowledge and data-based insight in our projects. 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. Read more about Precision Farming here. ACHIEVEMENTS 2022 • Our internal analysis team has continued with new data GOING FORWARD • We are setting up a project to identify the eFCR, bFCR and analyses to provide strategic and tactical decision-making growth rates for different smolt sizes looking at the whole support, aimed at mitigating biological challenges: production cycle (freshwater & seawater), including the — Analysis on contributing factors to Yellow mouth disease optimal smolt size given location, time of input and cost. in BC, where we have developed prediction models and • Increased focus on automatic and standardized data dashboard for visualization for potential outbreak of Yellow acquisition in the freshwater facilities will enable us to do mouth. The project is a collaboration with the University of performance analyses in our hatcheries as well as build early Alberta. The findings in the analysis have given input for warning capabilities for potential negative trends on water optimizing the production cycle at exposed sites in BC. quality parameters. — Analysis of the drivers behind unexpected mortality on • We are setting up integrated operation centers in both specific sites in Rogaland, by tracing the fish all the way Newfoundland and Finnmark as a continuation of our strategy back to the genetic providers. The results are to be further to strengthen our seawater production by enforcing the investigated. utilization of digital capabilities in the group. Both centers will — Analyzed reasons for harvest deviations in Finnmark and be built to the same design and with similar capabilities as we Rogaland, gaining more insight in optimized transfer of fish are running in Rogaland. throughout the production cycle. — Analysis to find markers in the data for where and why we experienced the outbreak of parasite Spironucleus salmonicida in Finnmark. Findings have initiated investment in risk mitigation initiatives in our freshwater facility. • We have developed machine learning models that can forecast growth, mortality, and the likelihood of treatments and diseases like PD and ISA occurring in populations at sea, several days in advance. • We have initiated a pilot project within democratization of data, that will enable production managers and biological planners to perform data analysis and gain databased insights including simple simulation capabilities. PART 01 – OUR FOUNDATION 15 SUSTAINABLE FOUNDATION OUR FIVE PILLARS AND MATERIAL TOPICS Grieg Seafood's business is based on sustainable operations. 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. The topics listed under each pillar is identified as important to our organization and our stakeholders, and is covered by group policies. The topics in red represents the list of material topics reported in line with the GRI standards. Find a combined overview of our pillars, targets and Group policies here. HEALTHY OCEAN SUSTAINABLE FOOD PROFIT & INNOVATION PEOPLE LOCAL COMMUNITIES • Fish health & • Safe and healthy • Profitable • Human rights • Local value welfare food • Protecting wild • Sustainable feed salmon (escape ingredients • Climate action • Recycling and waste management • Plastic pollution and sea lice control) • Protecting biodiversity & marine ecosystems (local emissions, medicine use, wildlife interaction) operations • Our market • Research, development and innovation • Responsible business conduct • Corporate governance • Embracing diversity • Creating creation • Indigenous relationships attractive jobs • Dialogue and • Keeping our engagement employees safe 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 L A I R E T A M PART 01 – OUR FOUNDATION 16 FINANCIAL IMPACT OF MATERIAL ESG TOPICS All material areas, as well as many significant ones, are covered by Group Policies, to ensure a systematic improvement efforts across the Group. While managing many of these risks is an ethical responsibility, it also supports our financial performance directly or indirectly. PILLAR MATERIAL AREA Fish health and welfare FINANCIAL IMPACT TARGET Mainly direct financial impact: Fish with good health and welfare grow well. Health and welfare is important to secure the highest possible harvest volume with the highest possible quality. Diseases and treatments on the other hand, are key cost drivers. 93% survival at sea by 2022 No use of antibiotics Protecting wild salmon - escape Mainly indirect financial impact: Escaped fish may interbreed with wild salmon in some of our farming regions. Escape events increase risk of stricter regulations and reduce the social license to operate needed to achieve growth. Zero escape incidents Healthy ocean Protecting wild salmon - sea lice control Mainly direct financial impact: Controlling sea lice through preventative methods is the most cost-efficient approach. Sea lice treatments are resource intensive and increase production cost. Average adult female sea lice below 0.5 in Norway / Average motile sea lice below 3.0 in BC Protecting biodiversity and marine ecosystems - local emission Mainly direct financial impact: Good sites that restore easily during the fallowing period between each production cycle are the most optimal for salmon production. They do not only have the lowest impact on the marine ecosystem, they also typically have the best fish health, welfare, growth and lowest cost. All sites restored to regulatory accepted level between each generation of fish. See sea lice control above. Mainly indirect financial impact: Impacting wild life around our farms increases risk of stricter regulations, and reduce the social license to operate needed to achieve growth. Mainly direct financial impact: If our product does not meet health and safety expectations, we risk losing confidence with our customers, leading to loss of revenues. No use of copper in nets. Minimize use of pharmaceutical treatments Zero dead marine animals. Number of dead birds in compliance with ASC. All our operations certified according to a Global Food Safety Initiative See more targets in the policy Protecting biodiversity and marine ecosystems - medicine use Protecting biodiversity and marine ecosystems - wild life interaction Safe and healthy food Sustain- able food PART 01 – OUR FOUNDATION LINK TO MANAGEMENT APPROACH Our impact and principles: fish health and welfare Policy for fish health Policy for fish welfare Policy for use of antibiotics Our impact and principles: co-existence with wild salmon Policy for protecting biodiversity Our impact and principles: co-existence with wild salmon, and co-existence with crustaceans Policy for sea lice control Our impact and principles: impact on nature Policy for protecting biodiversity Our impact and principles: co-existence with crustaceans Policy for protecting biodiversity Our impact and principles: co-existence with wild life Policy for protecting biodiversity Our impact and principles: Safe food Policy for food safety PILLAR MATERIAL AREA Sustainable feed ingredients FINANCIAL IMPACT Mainly indirect financial impact: Fish feed comprises approximately 40% of the farming cost. Ensuring access to a broad basket of potential feed ingredients that are accepted by the consumer is important to keeping costs down. Working proactively to improve the sustainability of salmon feed and ensure that it meets the requirements of the future consumer is key to ensure access to various feed ingredients and the lowest possible feed cost in the short, medium and longer term. Sustain- able food TARGET LINK TO MANAGEMENT APPROACH All marine ingredients, palm oil and Brazilian soy protein concentrate certified. GHG emissions from feed reduced by 30% from 2018 to 2030. See more targets in the policy Our impact and principles: sustainable feed ingredients, sustainable marine ingredients, zero deforestation Policy for sustainable feed Climate action Direct financial impact: Physical climate risks, such as increased water temperature in the ocean, may in the longer run cause financial impacts if they are not mitigated. 35% reduction of Scope 1, 2 and 3 by 2030 Our impact and principles: reducing carbon emissions Indirect financial impact: Efforts to reduce carbon emissions reduce transitional climate risks, such as impacts of future carbon taxes or regulations Responsible business conduct Mainly indirect financial impact: Strong corporate governance is essential to achieve our objectives. Breaches and non-compliances can lead to fines and lawsuits, impacting revenues and costs. No incidents of non- compliance Profit & innovation Corporate governance Human rights Mainly indirect financial impact: Promoting respect for human rights in our operations and supply chain supports our social license to operate, our reputation and attractiveness in the market, all of which underpin growth and price achievement 100% completion of Code of Conduct program. Human Rights Due Diligence. People Keeping our employees safe Mainly indirect financial impact: A safe workplace with good conditions is a prerequisite for good performance. Absence rate below 4.5% Local comm- unities Local value creation Mainly indirect financial impact: Contributing to the rural communities where we operate is key to our social license to operate, which underpins our growth ambitions and a prosperous industry. Collaborate and contribute to local community Indigenous relationships Mainly indirect financial impact: Respecting Indigenous people’s rights in the relevant regions is also key to our social license to operate. Policy for climate action TCFD report Code of Conduct Supplier Code of Conduct Policy for anti-money laundering Policy for anti-corruption Governing policies including Principles of Corporate Governance Our impact and principles: human rights Policy for human rights Our impact and principles: health and safety Policy for diversity Policy for gender equity Rogaland Finnmark British Columbia Newfoundland Our impact and principles: indigenous relationships 17 T H E S U S TAIN A B LE DE V E L OP MEN T GO AL 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. 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. G L OB A L SU S TA IN A BILI T Y I N I T I AT I V E S PAR T NER SHIP S AND C OLL A B OR AT ION Grieg Seafood has committed to several initiatives Collaboration and partnerships with researchers, peers, that set high standards for our farming operations and companies in our value chain, NGOs or other relevant value chain. Initiatives range from ocean stewardship actors is highly valued by Grieg Seafood. Only through to the climate, deforestation, and human rights. Read collaboration can we drive necessary change, and solve more about these initiatives here. the challenges we have in our industry and in our global food system. Read more about our partnerships here. PART 01 – OUR FOUNDATION 18 OUR OPERATIONAL RESULTS   We aim to create shared value for shareholders, employees, local communities and customers alike. OPERATIONAL RESULTS FROM OUR FARMING AND SALES ACTIVITIES PROFITABLE OPERATIONS GRIEG SEAFOOD ROGALAND GRIEG SEAFOOD FINNMARK GRIEG SEAFOOD BRITISH COLUMBIA GRIEG SEAFOOD NEWFOUNDLAND OUR CERTIFICATIONS SALES & MARKET RESULTS FROM SELECTED SUSTAINABILITY TOPICS Sustainability topics that are material to our farming operations are incorporated into the section above. Selected topics with indirect impact are covered below. CLIMATE ACTION SUSTAINABLE FEED INGREDIENTS PEOPLE 20 23 27 31 36 39 40 43 46 48 GR OUP FIN ANCI AL R E S ULT S 2022 PROFIT AND LOSS The Group harvested 84 697 tonnes GWT of Atlantic salmon in 2022, an increase of 12% compared to 75 601 in 2021. Our Norwegian regions contributed 76% (81%) of the volume harvested, while British Columbia accounted for 24% (19%). Total sales revenue for the year came to NOK 7 164 million, up NOK 2 565 million from NOK 4 599 million in 2021. Sales revenues from the Group’s farming regions totaled NOK 6 418 million in 2022, up NOK 2 207 million from NOK 4 211 million in 2021 (see Note 8 to the Group Accounts). The difference between the total sales revenue for the Group and sales revenues from farming regions is attributable to Elim/Other effects (see Note 8 to the Group Accounts), which includes the gross uplift on sales revenue for the Group generated by the sales organization. The increase in overall sales revenue is due to a record-high volume harvested in Rogaland and Finnmark of 64 411 tonnes GWT in 2022 compared to 61 154 in 2021, a 40% higher volume harvested in British Columbia, and an exceptionally strong market. The Group's aggregate price realization for the year came to NOK 75.8 per kg (NOK 55.7 per kg). By comparison, the average NQSALMON NOK/kg price for 2022 was NOK 82.0 per kg (57.3). Price realization was negatively impacted by fixed-price contracts for some of our Norwegian volume, as well as the lower price achieved for production grade volumes. The Group's farming cost for 2022 ended at NOK 52.7 per kg (NOK 47.2 per kg). Although the underlying cost level was good, costs have increased due to inflationary pressure on key production inputs, including feed. In Finnmark, costs increased towards the end of the year due to the parasite Spironucleus salmonicida (“Spiro”), which led to early harvesting and the culling of fish in certain pens. In total, our Norwegian farming regions contributed 69% (76%) of the farming cost, an increase of NOK 3.6 per kg in cost, from NOK 44.1 per kg in 2021 to NOK 47.7 per kg in 2022. Despite harvesting a 40% higher volume year- on-year, British Columbia had a farming cost of CAD 9.1 per kg, up CAD 0.4 per kg compared to CAD 8.8 per kg in 2021. The cost was significantly impacted by reduced survival at the freshwater stage, where the total cost recognized as abnormal mortality in the income statement was CAD 0.6 per kg, compared to CAD 0.2 per kg lat year. Raw materials and consumables, which consist mainly of the Group’s freshwater and seawater fish stocks, in addition to feed, ended at NOK 2 234 million, up NOK 495 million from the NOK 1 738 million recognized in 2021. Salaries and personnel expenses ended the year at NOK 696 million, an increase of NOK 118 million from NOK 577 million in 2021. The increase was partly driven by the farming regions, and partly by the synthetic option scheme to the management group and regional directors, as all members of Group management exercised options during the year. See the Group Accounts Note 17 for more information. Other operating expenses ended at NOK 2 087 million, up NOK 560 million compared to NOK 1 527 million in 2021. Operational EBIT (see Alternative Performance Measures) in 2022 ended at a record NOK 1 739 million (NOK 442 million), equivalent to an Operational EBIT of NOK 20.5 per kg (NOK 5.9 per kg). The increase was driven by exceptional price realization in all farming regions. The ROCE for 2022 ended at 23%, compared to 6% in 2021. EBIT (earnings before interests and taxes) came to NOK 1 498 million, up NOK 557 million compared to NOK 941 million in 2021. For a more detailed review of the Group’s financial performance in 2022, see the Board of Directors’ report. LEARN MORE ON OUR WEBSITE Our share, shareholders and dividends → FIGURE 2.1 KEY FIGURES GRIEG SEAFOOD GROUP NOK MILLION Sales revenues Operational EBITDA Operational EBIT EBIT (Earnings before interests and taxes) Harvest volume (tonnes GWT) Farming cost/kg (NOK) Operational EBIT/ kg (NOK) ROCE 2018 7 500 1 334 1 099 1 355 2019 4 756 1 384 1 077 822 2020 4 384 602 233 -57 2021 4 599 818 442 941 2022 7 164 2 191 1 739 1 498 74 623 71 700 71 142 75 601 84 697 43.1 14.7 22% 40.5 15.0 19% 47.0 3.3 3% 47.2 5.9 6% 52.7 20.5 23% 20 PROFITABLE OPERATIONS We aim to provide our shareholders with a competitive return on capital invested, with a ROCE target of 12%. With initiatives to reduce our environmental impact and improve fish welfare, we aim to increase harvest rates and reduce production costs. PART 02 – OUR OPERATIONAL RESULTS Shetland was sold 15 December 2021. The figures from 2019 to 2021 are ex. Shetland, as the assets was held for sale as from 2020 and presented as discontinued operations. 2018 figures have not been represented and include Shetland in its figures. FIGURE 2.2 TOTAL TAXES (INCOME AND PROPERTY TAX) PAID IN 2022 (NOK million) Norway Canada Total taxes paid 92 4 96 DI R E C T E C O NOMIC VAL UE GENER AT ED 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 2022, the economic value retained came to NOK 1 572 million, corresponding to an increase of about NOK 1 048 million compared to 2021. FIGURE 2.3 DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED NOK MILLION Value generated Revenues Total value generated Value distributed 2018 2019 2020 2021 2022 7 500 7 500 4 756 4 756 4 384 4 384 4 599 4 599 7 164 7 164 Salaries and personnel expenses 541 493 500 577 696 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 taxes and production fee Total value distributed 3 853 1 822 64 467 148 6 895 1 498 1 407 64 442 128 4 033 1 717 1 593 133 — 205 4 148 1 738 1 527 200 — 31 4 075 2 234 2 087 118 337 120 5 592 Total value retained 605 723 237 524 1 572 All figures compiled from the audited Group accounts. PART 02 – OUR OPERATIONAL RESULTS FIGURE 2.4 VALUE GENERATED IN 2022 Salaries and personell expenses Raw materials and consumables used Other operating expenses Net interest and other financial items Estimated taxation Value retained 10% 22% 2% 5% 2% 29% 31% 21 CR E AT I NG SH A R EHOL DE R VA L UE Our ambition is to create shareholder value and deliver control 51.1% of the outstanding shares as of 31 December competitive returns relative to comparable investment 2022. A further 4.5% was controlled by OM Holding AS and 2.6% alternatives. We engage with the investor community in an by Folketrygdfondet (the Norwegian National Insurance Fund) open, transparent and continuous dialogue. Building trust and at year-end 2022. Grieg Seafood ASA held a total of 1 351 811 awareness is critical to ensure that the information disclosed to treasury shares as of 31 December 2022. For a detailed the financial market, including current and potential investors, breakdown of our 20 largest shareholders, please see Note 18 of analysts and other stakeholders, provides the best possible basis the Group Accounts. for a correct valuation of Grieg Seafood. Grieg Seafood was listed on the Oslo Stock Exchange/Euronext The Board of Directors maintains that, as an average over time, on 21 June 2007, under the ticker GSF. We have only one class of dividends should correspond to 30-40% of the Group’s profit after shares, and all shares carry the same rights. As of 31 December tax, before fair value adjustment on biological assets (limited to 2022, the Company had 112 095 231 shares outstanding, at a 50 % by Green Bond agreement). At the same time, the Group’s nominal value of NOK 4.00 per share (excluding treasury shares). net interest-bearing debt per kg harvested salmon should Total ordinary shares as at 31 December 2022 was 113 447 042. remain below NOK 30, but can be exceeded in periods of growth As of 31 December 2022, we had 10 590 shareholders, with our 3.0 per share to shareholders, which correspond to 46% of the ten largest investors holding 66.7% of our shares, and the 20 net profit for FY 2021, before fair value adjustment of biological largest investors holding 73.0%. The number of shareholders assets. As at 31 December 2022, Grieg Seafood was in a solid increased during the year, from 9 938 at year-end 2021. financial position to execute strategic priorities and deliver a Norwegian-based shareholders own the majority of the shareholder return. The Board recommends that a dividend of Company’s shares, with Per Grieg Jr. and the Grieg family NOK 4.5 per share be distributed to shareholders. investments. In 2022, the Group distributed a dividend of NOK FIGURE 2.5 GEOGRAPHICAL OWNERSHIP (NUMBER OF SHARES) FIGURE 2.6 THE GRIEG SEAFOOD SHARE Norway UK EU USA KEY FIGURES GRIEG SEAFOOD SHARE 2018 2019 2020 2021 2022 Number of shares at year-end (incl. own shares) 111 662 000 111 662 000 113 447 042 113 447 042 113 447 042 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 116 144 510 72 001 397 99 831 798 85 769 401 86 797 490 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 10 590 35.8 343 073 283 718 Total market value OSE (NOK 1 000) 11 423 023 15 666 178 9 642 999 9 427 449 8 916 938 Share price at year-end (NOK) Average share price (NOK) Lowest closing price (NOK) Highest closing price (NOK) Dividend per share 102.3 92.2 66.2 131.9 4.0 140.3 118.0 96.8 146.8 4.0 85.0 99.1 66.3 144.9 — 83.1 84.4 73.2 95.6 — 78.6 108.1 63.0 154.0 3.0 PART 02 – OUR OPERATIONAL RESULTS 22 GRIEG SEAFOOD ROGALAND Grieg Seafood Rogaland farms salmon in the county of Rogaland on the west coast of Norway. In the region, we have seawater licenses with a maximum allowed biomass (MAB) of 17 800 tonnes. We have smolt and post-smolt facilities and also operate our own broodstock activity. All the salmon we harvest in this region is processed and packed at our own facility. 28 387 26.6 TONNES GWT HARVESTED OPERATIONAL EBIT/KG (NOK) OP ER AT ION AL R E SULT S A total of 28 387 tonnes was harvested in 2022, an increase of 6% freshwater phase to ensure a robust smolt, a preventive and compared to the 26 670 tonnes harvested in 2021. Sales revenues targeted approach to diseases and sea lice, the utilization of amounted to NOK 2 124 million in 2022, an increase of 48% new digital technologies and shortening the time our salmon compared to 2021 (NOK 1 431 million). The year-on-year increase spend at sea. Transferring larger and more robust smolt to our was driven mainly by higher spot prices and a higher harvested sea farms provides improved biological control compared to volume. The Nasdaq spot price in 2022 averaged NOK 82.0 per smolt of standard weight. This includes a higher survival rate, kg, compared to NOK 57.3 per kg in 2021. However, the sale of a lower feed conversion rate and a significant reduction in the 22% of our volume under fixed-price contracts, combined with number of sea lice treatments. Due to the use of post-smolt and quality downgrades, negatively impacted our price achievement cleaner fish, including wrasse, we have managed to minimize in 2022, which came to NOK 74.8 per kg, compared to NOK 53.7 both medical and mechanical sea lice treatments. In 2021, 40% per kg in 2021. The share of superior quality fish decreased from of the pens from which fish were harvested did not receive any 81% in 2021 to 77% in 2022, mainly due to occurrences of winter sea lice treatment, this increased to above 50% in 2022. This is a ulcers in the first half of the year. continuation of an ongoing trend, where the region has managed to minimize sea lice treatments (both medical and mechanical) Our freshwater production was good in 2022. We transferred in the season where wrasse are available (August–November). more than seven million smolt to the sea in 2022, with an Due to efforts to ensure robust fish health and good results from average weight of 550 grams, compared to 460 grams in 2021. vaccines, we have not used antibiotics in Rogaland for several The increase in the average weight of smolt is in line with our years. post-smolt strategy. The freshwater survival rate from our own facility was 93% in 2022, marginally down from 94% in In addition to sea lice, the main biological challenges in 2021. Unfortunately, we had an outbreak of Infectious Salmon Rogaland in 2022 were Pancreas Disease (PD), winter ulcers Anemia (ISA) at our land-based broodstock facility towards and Cardiomyopathy Syndrome (CMS). In addition to these the end of the year, as a result of which we euthanized our biological challenges, some of our sites were affected by a winter broodstock at the start of 2023. This will not impact our future storm at the start of the year. The cost of reduced survival (cost production and harvest volume target, as we have secured recognized as abnormal mortality in the income statement) external deliveries of eggs. The financial impact is also limited came to NOK 33.6 million in 2022 (NOK 1.2 per kg), compared due to our insurance coverage. to NOK 30.8 million in 2021 (NOK 1.2 per kg). The farming cost (the total cost of producing and harvesting our fish) ended at Overall, our seawater production performed well, despite some NOK 48.2 per kg in 2022, up from NOK 44.6 per kg in 2021. The biological challenges during the second half of the year. High industry experienced a general rise in costs in 2022. This applies seawater temperatures and high sea lice levels led to reduced growth during the autumn. Due to proactive and preventative measures, production stabilized at year end. The 12-month rolling survival rate for 2022 remained at the same level as in 2021, at 92%. We are working systematically to improve fish health and welfare. This includes a greater focus on the in particular to feed, whose price per kg has increased by almost 40% from 2021 to 2022, although electricity and fuel have also increased significantly. This impacted our farming cost towards the end of the year as we started to harvest fish impacted by the increases. However, due to improvements in underlying production, we managed to reduce the economic PART 02 – OUR OPERATIONAL RESULTS 23 feed conversion rate (eFCR, a measure of the feed utilization) We are committed to maintaining a good working environment from 1.43 in 2021 to 1.38 in 2022. Combined with the increased and keeping our employees safe. In 2022, the total absence rate production and harvest volume, this had a positive impact on feed for Rogaland was 5.6%, against a target of 4.5%. We monitor costs. The farming cost was additionally impacted by harvesting and follow up absence in accordance with our procedures from PD-affected sites, which increased the cost of handling fish, and guidelines. Read more about how we work to secure our SUSTAINABILITY SCOREBOARD including well boat costs. employees well-being and labor rights here. PILLAR KPI TARGET STATUS 2022 2021 2020 2019 2018 Due to our continued focus on escape prevention, we did not Aquaculture Stewardship Council (ASC) certification is an have any escape incidents in 2022. We also strive to minimize our important objective, as we believe it provides our customers and impact on local wildlife. In 2022, four birds got caught in our nets, consumers with assurance that we are operating in a responsible compared to 13 last year. We continue our efforts to reduce our manner and producing high-quality seafood certified to the impact. highest social and environmental standards. We aim to certify all sites in Rogaland according to ASC. We started the certification As part of our Climate Action Plan to reduce our carbon and audit process at the start of 2022, and had five sites ASC- emissions by 35% in 2030, we are connecting our sea farms to certified by the end of the year. This corresponds to 59% of the onshore power grid, thereby lowering our carbon emissions budgeted net production for the year. from diesel consumption. In Rogaland, 66% of our farms are powered by onshore electricity. Due to challenges in connecting the rest of the farms, we have ordered batteries which will enable diesel-electric power generation at three sites. The batteries will be installed in 2023. Read more about our work to reduce carbon emissions here. FIGURE 2.7 RESULTS NOK MILLION Harvest (tonnes GWT) Revenue (NOK million) 2018 2019 2020 2021 2022 16 293 25 217 23 043 26 670 28 387 959.6 1 538.9 1 263.1 1 430.9 2 123.7 Operational EBIT (NOK million) 219.6 568.2 292.3 242.0 754.6 Operational EBIT / kg (NOK) Farming cost / kg (NOK) 13.5 40.3 22.5 35.9 12.7 42.1 9.1 44.6 26.6 48.2 FIGURE 2.8 OPERATIONAL EBIT AND HARVEST Harvest (tonnes GWT) Operational EBIT/kg (NOK) ) T W G S E N N O T ( T S E V R A H 30 000 25 000 20 000 15 000 10 000 5 000 0 30 25 20 15 10 5 0 I O P E R A T O N A L E B T K G / I ( N O K ) PROFIT & INNOVATION HEALTHY OCEAN Harvest volume (tonnes GWT) 28 000 tonnes in 2022 Operational EBIT per kg (NOK) Farming cost per kg (NOK) Cost leader ASC certification (# of sites) All sites (11 eligible) by 2023 Survival rate in freshwater Survival rate in seawater 93% by 2022 Cost of reduced survival (NOK 1 000) Use of antibiotics (g per tonne LWE) * No use of antibiotics Use of hydrogen peroxide (kg per tonne LWE) * Minimize use of pharmaceutical treatments Sea lice treatments - in feed (g per tonne LWE) * Minimize use of pharmaceutical treatments Sea lice treatments - in bath (g per tonne LWE) * Minimize use of pharmaceutical treatments Escape incidents (# of fish) Zero escape incidents Dead birds Minimize impact on wildlife Dead marine mammals Minimize impact on wildlife SUSTAINABLE FOOD Carbon emissions (kgCO2e per tonne GWT) 35% reduction (from 2018) in total emissions by 2030 Scope 1 + 2 location based Scope 3 High quality product 93% superior share Biological feed conversion ratio (bFCR) Economic feed conversion ratio (eFCR) ● ● ● ● ● ● ● ● ● ● ● ● ● ● 28 387 26 670 23 043 25 217 16 293 26.6 48.2 5 93% 92% 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% 33 553 30 804 63 664 26 127 48 609 0.00 0.00 0.00 0.00 0.00 0.00 1.58 7.21 11.94 3.46 1.61 3.74 0.00 0.03 1.09 0.05 0.63 0.02 0.00 0.00 0 4 0 0 13 0 0 20 0 0 2 0 0 24 0 272 332 403 392 270 5 289 5 676 7 641 8 200 9 131 77% 81% 85% 75% 74% 1.24 1.26 1.22 1.17 1.33 1.38 1.43 1.44 1.28 1.52 PEOPLE Employees 175 162 165 157 145 Absence rate Below 4.5% ● 5.6% 3.0% 3.0% 3.5% 4.7% Lost time incident rate ** Turnover rate LOCAL COMMUNITIES Local procurement 25 11% 42 6% 9 n/a 15 n/a 52% 60% 64% 64% 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 or applicable. Please refer to Part 1 - Our pillars and material topics for a description of the general financial impact of each topic. 2018 2019 2020 2021 2022 PART 02 – OUR OPERATIONAL RESULTS 24 FIGURE 2.9 SURVIVAL RATE AT SEA, ROLLING 12 MONTHS FIGURE 2.10 MAIN CAUSES FOR REDUCED SURVIVAL IN SEAWATER IN 2022 FIGURE 2.12 SEA LICE LEVELS (ADULT FEMALES) 2018 2019 2020 2021 2022 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 0.5 Limit of adult female sea lice per fish per site Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Our sites in Rogaland are located in Norwegian production area 2 (PO2), which has a yellow light under Norway’s “traffic light” system (“yellow - moderate sea lice density", the current level of production capacity will be maintained). Sea lice counts are conducted by visual inspections, done by lifting a minimum of 20 salmon out of the water for each pen on a weekly or biweekly basis, depending on the seawater temperature. The number of sea lice on each fish is recorded in our systems, and this information is used to estimate the overall prevalence of sea lice in the population. 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 fjords. On average, we did not exceed the sea lice limits in 2022. 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. Target: 93% 95% 90% 85% 80% 75% 2018 2019 2020 2021 2022 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. The calculation of survival rate at sea 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". MAIN CAUSE NUMBER OF FISH TONNES OF FISH Infectious Virus Bacterial Gill infections Non-Infectious Life cycle Physical Treatments Total Abnormal seawater mortality write- down % 336 880 317 015 38 694 507 327 51 943 21 087 1 272 946 281 895 22% 957 788 149 1 323 99 74 3 390 848 25% FIGURE 2.11 MAIN CAUSES FOR REDUCED SURVIVAL IN SEAWATER (NUMBER OF FISH) Virus Life cycle Bacterial Physical Gill infections Treatments 600 000 500 000 400 000 300 000 200 000 100 000 0 2020 2021 2022 We perform a daily count and registration of dead fish. Laboratory analysis are undertaken to establish the main cause of mortality. Site-specific information about treatments and notifiable diseases are publicly available at Barentswatch. Life cycle Physical Treatments Gill infections Bacterial Virus Virus include Pancreas Disease (PD) and Cardiomyopathy Syndrome (CMS). PD is a contagious virus and transmits between fish and between pens. It is controlled mainly by management and biosecurity measures. We have vaccinated our fish to provide additional protection, and we have experienced a reduced impact of PD on fish health. CMS typically increases mortality late in the production cycle, causing high economic impact. CMS is controlled mainly through good husbandry and management practices, and we experience a lower impact of CMS in 2022 than last year. Bacterial infections include winter ulcers. In addition to being a welfare issue, the disease can lead to increased mortality and reduced quality at harvest. Our fish are vaccinated against the disease, however, high challenge pressure and presence of other strains or bacteria can also cause skin ulcers. The other categories relate to transport (physical), sea lice treatments, while life cycle includes a variety of causes. PART 02 – OUR OPERATIONAL RESULTS 25 Very poor Test not yet taken (new sites) how larger smolt (post smolt) will significantly reduce seawater operate, and we use local suppliers as often as we can. We hire FIGURE 2.13 USE OF COPPER FIGURE 2.14 RESTORED ECOSYSTEMS UNDER FARMS Copper-free antifouling solutions on nets 100% Remediated ecosystems under farms before a new generation of fish was transferred to the farms in 2022 100% of farms We did not use copper antifouling solutions in 2022. Restored to “very good” or “good” thresholds according to local regulations. FIGURE 2.15 RESULTS OF B-TEST Year 2022 2021 2020 Very good 75% 83% 83% Good 17% 17% 8% Poor 8% 0% 8% 0% 0% 0% 0% 0% 0% 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. Read more about our impact on nature here. Between each generation of fish, we allow the ecological system to rest and restore itself. In Norway, all farms are required to conduct independent seabed tests (B-test) at peak biomass production/max load, and undertake regular independent tests in the area around the farms (C-test). Local regulations impose fallowing periods after each generation to ensure the environment under and around the pen recover. The minimum fallowing period is at least two months, and longer if seabed test results indicate that is needed. Only when a farm has reached the threshold of restoration, may we transfer a new generation of fish to the site. If fallowing is not enough to improve seabed test results, additional measures, such as reducing production, is taken. In 2022, 92% of our sites received a very good or good score on seabed tests compared to 100% in 2021 (based on last B-test taken for each site that is part of our ongoing operations, either at peak biomass production/max load, or before restocking when the seabed has recovered). We have one site in Rogaland where the ecosystem takes longer to recover, and where we performed testing at peak biomass in 2020 and 2022. The site that received a poor score must fallow for longer. 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). 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. FIGURE 2.16 PROTECTING MARINE ECOSYSTEMS Impact assessments performed Operations in protected areas/areas of high biodiversity value Red list species impacted 100% of farms Two broodstock farms, total water surface area of 0.067km2 One specie (one bird) We perform environmental and social impact assessment for all of our farms. The assessment also include presence of cauliflower corals. These assessments are also part of the ASC certification process, which includes criteria to minimize environmental impact and preserve biodiversity. Two broodstock sites in Rogaland are located in Suldalsfjorden, a "national salmon fjord" category created by the Norwegian Parliament to protect wild salmon. These seawater farms 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). All site locations are available on our web site with GPS coordinates. FIGURE 2.17 IUCN RED LIST SPECIES Regionally extinct Critically endangered Endangered Vulnerable Lower risk: conservation dependent 0 14 35 104 92 Data deficient 40 Our impact assessments also include identification of species listed in the IUCN Red List and Norway’s national conservation list, Artsdatabanken, with habitats in areas where we operate. The International Union for Conservation of Nature (IUCN) ‘Red List of Threatened Species’ provides an inventory of the global conservation status of plant and animal species, and national conservation lists serve as authorities on the sensitivity of habitat in areas affected by our operations, and on the relative importance of these habitats from a management perspective. Our assessments have not identified that our activities pose a threat to any endangered plants or animal species. We keep track of red listed species impacted in areas affected by our operations as a part of the ASC-certification. In 2022, we had an incident with a black-backed gull, which according to Norway’s national conservation list is critically endangered. The bird got tangled in the anti-bird net due to loose strings. We have changed our procedures to ensure we keep our nets tight to avoid similar incidents. Each year we monitor beach areas in proximity to our active sites in Rogaland (the size of the beach areas varies and we do not keep track of this, only positioning in terms of coordinates). This is done to ensure that the algae and seagrass vegetation and other species is healthy, and not negatively impacted by our farming operations. Algae and seagrass can sequester carbon dioxide in its roots, and also provide nursery, refuge and foraging habitats for marine animals. In 2022, we conducted several assessments. The results showed no significant impact from our farming operations. We continue to monitor beach areas each year to keep track of changes and will implement protective measures if negative impact is detected. OP ER AT ION AL P R IOR I T I E S T O WAR DS 2026 L OC AL C OMM UNI T IE S We expect to harvest 29 000 tonnes in 2023, with an ambition We aim to be open and honest with local communities about to increase harvest to 35 000-40 000 in 2026 by improving the our production methods, our successes, and our remaining utilization of our seawater capacity. The key to achieving this, is challenges. We view it as our responsibility throughout all of our to reduce production time in the sea, which we expect to result four farming regions to engage in constructive dialogue with in improved biological performance and a higher utilization of all stakeholders and groups that are impacted by our activities. each site’s maximum allowable biomass (MAB). Read more about We create jobs and opportunities in the rural areas where we production time, reduce our impact and improve growth in sea local apprentices and support aquaculture schools and training in the operational focus area chapter in Part 1 of this report. In facilities. We sponsor sports and cultural activities, and we 2022, more than 50% of fish harvested were from post-smolt. We engage in monitoring and protection of the local environment. aim to increase this share to above 90% by 2026. We also provide a grievance mechanism for local communities We are well-positioned with land-based production, and aim negative impact on local communities, such as pollution of local to add at least 5 250 tonnes by increasing our post-smolt environment and violations of human rights. In 2022, we did not capacity. Our current freshwater facilities at Trosnavåg and identify any significant negative impact on local communities Hognaland have a production capacity of 1 200 tonnes smolt. from our operations. on our website. This enable us to identify and prevent potential equal to 52% of total purchases, spent on goods and services purchased from local suppliers in the county of Rogaland. NOK 890 million NOK 1.6 million  donated to local services and infrastructure projects, all of which are pro bono. We support cultural events for children and young people, to make participation in cultural activities affordable for those with few financial resources. In Stavanger, for instance, we supported Childern’s Mablis, a family festival in the woods. We also support sports clubs in the municipalities where we have farms. Our aim is to contribute to the health and social life of local children and young people. We also support organizations that engage in beach cleaning. NOK 11.5 million in direct support from the Norwegian Aquaculture Fund to the municipalities where we operate, based on the production fee of NOK 0.405/kg (gutted weight). Learn more about our relationships with our local community on our website, We also have a 33% shareholding in Tytlandsvik Aqua, with a current smolt production capacity of 4 500 tonnes (where Grieg Seafood Rogaland is entitled to 50% of the smolt). Tytlandsvik has planned an expansion of 1500 tonnes, increasing our post smolt share from Tytlandsvik to 3 000 tonnes. In addition, we use two closed-containment facilities in sea, FishGLOBE, to produce post-smolt. These facilities have a total capacity of 900 tonnes. Further, we have invested NOK 90 million in a 44% shareholding in Årdal Aqua, a land-based facility with the same design as Tytlandsvik Aqua. Årdal Aqua is expected to produce 4 500 tonnes of post smolt annually, with potential to raise fish to harvestable size on land. Construction commenced in August 2022. We have several projects to expand post-smolt production under planning. However, no new investment decisions for projects impacted by the proposed Norwegian resource tax announced in September 2022 will be taken until the final version of the tax regime has been adopted by the Parliament. Grieg Seafood will then assess how the final proposal will impact the company's strategy and investment plan. A joint venture aimed at developing a FishGLOBE for grow-out salmon, based on development licenses, is also on hold. A large part of our planned capital expenditures in 2022 has been affected by the resource tax proposal. In addition to the investment in Årdal Aqua, we spent NOK 40 million in growth investments in 2022, mainly related to seawater locations. We spent a total of NOK 66 million in maintenance investments. Another tool that will improve biology and drive growth, is our Precision Farming strategy. Read more about Precision Farming in our operational focus areas chapter in Part 1 of this report. PART 02 – OUR OPERATIONAL RESULTS 26 GRIEG SEAFOOD FINNMARK Grieg Seafood Finnmark farms salmon in Troms and Finnmark, the northernmost county in Norway. We have seawater licenses with a maximum allowed biomass (MAB) of 27 000 tonnes, including green licenses which are subject to stricter environmental standards. We also operate freshwater facilities. In general, the salmon we harvest are processed and packed at our local facility in Alta. 36 024 TONNES GWT HARVESTED 25.7 OPERATIONAL EBIT/KG (NOK) OP ER AT ION AL R E SULT S A total of 36 024 tonnes was harvested in 2022, an increase of 4% carried out during the year to prevent any surge in numbers. compared to the 34 484 tonnes harvested in 2021. Sales revenues A continued high sea lice level towards the end of the year amounted to NOK 2 629 million, an increase of 50% compared to necessitated several treatments, resulting in reduced feeding NOK 1 756 million in 2021.The year-on-year increase is mainly and growth. related to higher spot prices and a higher harvested volume, in addition to a higher share of superior quality product compared In addition, the parasite, Spironucleus salmonicida (“Spiro”) was to the year before. The Nasdaq average spot price in 2022 was detected in some fish in certain pens. This led to early harvesting NOK 82.0 per kg, compared to NOK 57.3 per kg in 2021. Our price and the culling of fish showing signs of ill health to protect fish achievement in 2022 was NOK 73.0 per kg (NOK 50.9 per kg in welfare. The source of the parasite is believed to be the water 2021). The price achieved was boosted by a somewhat higher intake to our freshwater facility at Adamselv. Water treatment average harvest weight compared to 2021, but depressed by the and disinfection measures are being implemented to reduce sale of 22% of our volume under fixed-price contracts, in addition future risks of Spiro entering the freshwater facility. We will also to downgrades. However, the superior quality share increased collaborate with research institutions to increase our knowledge from 82% in 2021 to 84% in 2022 due to lower impact from winter relating to Spiro. We aim to limit the impact of this incident on ulcers and no outbreak of ISA (Infectious Salmon Anemia). the future harvestable volume by transferring more smolt to Freshwater production at our own facility at Adamselv was good the main reason for the reduction in our 12-month survival rate during the year. We transferred a total of 10.8 million smolt from 95% in 2021 to 91% in 2022. The cost of reduced survival with an average weight of 180 grams to the sea in 2022. The (cost recognized as abnormal mortality in the income statement) freshwater survival rate decreased from 95% in 2021 to 90% in came to NOK 100.6 million in 2022 (NOK 2.8 per kg), compared to 2022 mainly due to technical incidents. There was no production NOK 53.1 million in 2021 (NOK 1.5 per kg). NOK 76.1 million (NOK sea farms and by optimizing production at our sites. Spiro was at our jointly owned Nordnorsk Smolt, due to the ongoing redesign of the freshwater facility, which is scheduled for completion in second half of 2023. 2.1 per kg) of the 2022 total relates to Spiro. This implies that costs related to abnormal mortality less the Spiro totaled NOK 24.5 million (NOK 0.7 per kg), which is an improvement compared to last year. The farming cost (the total cost of producing and Seawater production was somewhat challenging this year. Colder harvesting our fish) ended at NOK 47.3 per kg in 2022, up from seawater temperatures in the first half of the year negatively NOK 43.7 per kg in 2021. In addition to reduced survival and impacted growth at sea farms, and we experienced issues with early harvest of fish impacted by Spiro, the farming cost was winter ulcers. In the second half of the year, high seawater impacted by a general rise in cost. This applies in particular to temperatures increased sealice levels. Historically, Finnmark is a region with lower seawater temperatures which, combined with low interconnectivity between farming sites, helps to keep sea lice levels low. We use targeted preventive methods, such as sea lice skirts and cleaner fish (lump suckers), to ensure that the sea lice level remains low. Nevertheless, sea lice treatments were feed, whose prices increased by close to 40%. This impacted our farming cost towards the end of the year as we started to harvest fish impacted by the increases. Additionally, reduced growth due to the biological challenges increased our economic feed conversion rate (eFCR, a measure of the feed utilization) from 1.34 in 2021 to 1.40 in 2022. Overall, we are working to improve PART 02 – OUR OPERATIONAL RESULTS 27 survival rates through both general and targeted health and batteries on six feed barges, and have three more on order with welfare measures. Good results from vaccines and efforts to delivery in 2023. Read more about how we work to reduce our ensure robust fish health have eliminated the need of antibiotics carbon emissions here. for several years. However, we did use the antibiotic Florfenicol at the start of the year to safeguard the welfare of fish at selected We are committed to maintaining a good working environment pens impacted by sores. and keeping our employees safe. In 2022, the total absence rate for Finnmark was 9.70%, against a target of 4.5%. We are We have a continuous focus on escape prevention, as we regard monitoring and following up on absence in accordance with it as our responsibility to avoid interbreeding between our procedures and guidelines. Read more about how we work to farmed salmon and local wild salmon should an escape occur. secure our employees well-being and labor rights here. Unfortunately, we had an incident where a tear in a net pen led to the escape of fish. 2 878 fish has been reported as escaped, As in all our regions, Grieg Seafood Finnmark focuses on where of 19 were recaptured. We have changed our equipment improving fish welfare, achieving a high survival rate and working and improved our procedures to prevent this type of incident towards sustainable production. As a result of our efforts in the from happening again. We are also working on measures to area, all of our sites have been ASC certified. Due to a fish escape minimize our impact on local wildlife. Unfortunately, 20 birds got incident during the year, we have withdrawn our certification caught in our nets in 2022. We will continue our efforts to reduce at one site. At year-end, 17 out of 18 eligible sites were ASC this number. certified. This is equivalent to 90% of budgeted net production for the year. New sites must reach peak biomass to be considered As part of our Climate Action Plan to reduce our carbon for certification. emissions by 35% in 2030, we have connected our feed barges to the onshore power grid. In Finnmark, 65% of our farms are connected to the onshore grid. For sites that are not suitable for the provision of onshore power, we use diesel-electric batteries to reduce carbon emissions. In Finnmark, we have installed FIGURE 2.18 RESULTS FINNMARK Harvest (tonnes GWT) Revenue (NOK million) 2018 2019 2020 2021 2022 29 774 32 362 26 919 34 484 36 024 1 671.3 1 815.3 1 313.5 1 756.3 2 629.2 Operational EBIT (NOK million) 594.9 580.2 127.4 250.5 926.1 Operational EBIT / kg (NOK) Farming cost / kg (NOK) 20.0 35.6 17.9 37.7 4.7 44.1 7.3 43.7 25.7 47.3 FIGURE 2.19 OPERATIONAL EBIT AND HARVEST Harvest (tonnes GWT) Operational EBIT/kg (NOK) ) T W G S E N N O T ( T S E V R A H 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 30 25 20 15 10 5 0 I O P E R A T O N A L E B T K G I / ( N O K ) SUSTAINABILITY SCOREBOARD PILLAR KPI TARGET STATUS 2022 2021 2020 2019 2018 PROFIT & INNOVATION HEALTHY OCEAN Harvest volume (tonnes GWT) 33 000 tonnes in 2022 Operational EBIT per kg (NOK) Farming cost per kg (NOK) Cost leader ASC certification (# of sites) All sites (18 eligible) by 2023 Survival rate in freshwater Survival rate at sea 93% by 2022 Cost of reduced survival (NOK 1 000) Use of antibiotics (g per tonne LWE) * No use of antibiotics Use of hydrogen peroxide (kg per tonne LWE) * Minimize use of pharmaceutical treatments Sea lice treatments - in feed (g per tonne LWE) * Minimize use of pharmaceutical treatments Sea lice treatments - in bath (g per tonne LWE) * Minimize use of pharmaceutical treatments Escape incidents (# of fish) Zero escape incidents Dead birds Minimize impact on wildlife Dead marine mammals Minimize impact on wildlife SUSTAINABLE FOOD Carbon emissions (kgCO2e per tonne GWT) 35% reduction (from 2018) in total emissions by 2030 Scope 1 + 2 location based Scope 3 High quality product 93% superior share Biological feed conversion ratio (bFCR) Economic feed conversion ratio (eFCR) ● ● ● ● ● ● ● ● ● ● ● ● ● ● 36 024 34 484 26 919 32 362 29 774 25.7 47.3 17 90% 91% 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% 100 567 53 133 37 495 15 055 624 6.77 5.98 0.00 0.00 0.00 6.54 2.36 3.62 0.00 14.53 0.07 0.14 0.14 0.10 0.08 0.73 0.34 0.82 0.21 0.72 1 (2 878) 1 (4 352) 20 0 8 0 0 6 0 0 2 0 0 1 0 151 166 182 169 254 3 774 4 492 5 973 5 330 6 007 84% 82% 69% 86% 86% 1.23 1.21 1.20 1.14 1.12 1.40 1.34 1.35 1.21 1.17 PEOPLE Employees 282 262 257 256 247 Absence rate Below 4.5% ● 9.7% 8.7% 5.5% 4.9% 5.4% Lost time incident rate ** Turnover rate LOCAL COMMUNITIES Local procurement 21 16% 22 8% 28 n/a 22 n/a 28% 45% 60% 66% 18 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. Please refer to Part 1 - Our pillars and material topics for a description of the general financial impact of each topic. 2018 2019 2020 2021 2022 PART 02 – OUR OPERATIONAL RESULTS 28 FIGURE 2.20 SURVIVAL RATE AT SEA, ROLLING 12 MONTHS FIGURE 2.21 MAIN CAUSES FOR REDUCED SURVIVAL IN SEAWATER IN 2022 FIGURE 2.23 SEA LICE LEVELS (ADULT FEMALES) 2018 2019 2020 2021 2022 Target: 93% 100% 95% 90% 85% 80% 75% 2018 2019 2020 2021 2022 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. The calculation of survival rate at sea 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". MAIN CAUSE NUMBER OF FISH TONNES OF FISH Infectious Bacterial Parasite Virus Non-Infectious Life cycle Treatments Physical Total Abnormal seawater mortality write-down % 515 581 282 613 1 370 1 261 828 113 303 63 795 2 238 490 661 685 30% 1 072 198 1 1 636 282 148 3 337 817 24% 0.5 Limit of adult female sea lice per fish per site 0.25 Limit of adult female sea lice per fish per site on green licenses 0.2 Limit when wild salmon smolt migrate from the rivers and pass the salmon farms 0.5 0.4 0.3 0.2 0.1 0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 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. Sea lice counts are conducted by visual inspections, done by lifting a minimum of 20 salmon out of the water for each pen on a weekly or biweekly basis, depending on the seawater temperature. The number of sea lice on each fish is recorded in our systems, and this information is used to estimate the overall prevalence of sea lice in the population. On average, we did not exceed the sea lice limits in 2022. 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. FIGURE 2.22 MAIN CAUSES FOR REDUCED SURVIVAL IN SEAWATER (NUMBER OF FISH) Virus Life cycle Bacterial Physical Parasite Treatments 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 0 2020 2021 2022 We perform a daily count and registration of dead fish. Laboratory analysis are undertaken to establish the main cause of mortality. Site-specific information about treatments and notifiable diseases are publicly available at Barentswatch. Life cycle Physical Treatments Bacterial Parasite Virus Bacterial infections include winter ulcers. In addition to being a welfare issue, the disease can lead to increased mortality and reduced quality at harvest. Our fish are vaccinated against the disease, however, high challenge pressure and presence of other strains or bacterias can also cause skin ulcers. We have used antibiotics during the year to treat our fish from winter ulcers. The parasite Spironucleus salmonicida (“Spiro”) is a rare parasite that can lead to high mortality. The other categories relate to transport (physical), sea lice treatments, while life cycle includes a variety of causes. Mortality figures does not include culling of fish. In 2022, we culled fish showing signs of ill health from the parasite Spiro, that was detected in some fish in certain pens. The culling of 1.1 million fish/992 tonnes is included in the total write down related to abnormal mortality, refer to Note 9. PART 02 – OUR OPERATIONAL RESULTS 29 FIGURE 2.24 USE OF COPPER FIGURE 2.25 RESTORED ECOSYSTEMS UNDER FARMS Copper-free antifouling solutions on nets 100% Remediated ecosystems under farms before a new generation of fish was transferred to the farms in 2022 100% of farms Finnmark had one pen with copper antifouling solution as part of a research project in 2022. Restored to “very good” or “good” thresholds according to local regulations. FIGURE 2.26 RESULTS OF B-TEST Year 2022 2021 2020 Very good Good 62% 43% 26% 33% 10% 26% Poor 0% 19% 26% Very poor Sites with hard seabed (do not get a score) Test not yet taken (new sites) 5% 5% 0% 0% 14% 16% 0% 10% 5% 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. Read more about our impact on nature here. Between each generation of fish, we allow the ecological system to rest and restore itself. In Norway, all farms are required to conduct independent seabed tests (B-test) at peak biomass production/max load, and undertake regular independent tests in the area around the farms (C-test). Local regulations impose fallowing periods after each generation to ensure the environment under and around the pen recover. The minimum fallowing period is at least two months, and longer if seabed test results indicate that is needed. Only when a farm has reached the threshold of restoration, may we transfer a new generation of fish to the site. If fallowing is not enough to improve seabed test results, additional measures, such as reducing production, is taken. 95% of our sites received a very good or good score on seabed tests in 2022, up from 53% in 2021 (based on last B-test taken for each site that is part of our ongoing operations, either at peak biomass production/max load, or before restocking when the seabed has recovered). Longer fallowing periods are in place for sites with poor scores, and a new generation will not be stocked until the impact is reversed and the sites have met the regulated restoration thresholds. Access to new sites will also reduce the organic impact. In addition, we are conducting digital analyses of the marine conditions at sites to understand how the farms can hit the currents in the most optimal way, which reduces the organic impact. We are subsequently working with local authorities to adjust the farms accordingly. OP ER AT ION AL P R IOR I T I E S T O WAR DS 2026 Grieg Seafood Finnmark expects to harvest 28 000 tonnes in 2023. However, we aim to increase the volume harvested to 40 000-45 000 tonnes in 2026 by improving the utilization of our seawater capacity. The key to achieving this is to optimize our existing site structure, obtaining new sites and reducing production time at sea, which we expect to result in improved biological performance and a higher utilization of each site’s maximum allowable biomass (MAB). We currently farm smolt at our own facility in Adamselv. Eventually, smolt will also be produced at Nordnorsk Smolt, in which we have a 50% shareholding. We are targeting a capacity increase of 3 000 due to the proposed resource tax regime in Norway. Larger smolt will significantly reduce seawater production time, avoiding two winters at sea, while also providing increased flexibility in timing their transfer to seawater, as larger fish is more robust. Shorter time in sea will also decrease the fishes’ exposure to issues such as winter ulcers, sea lice and other biological challenges. Flexibility is a requirement to achieve better utilization of our capacity, and we are also continuously looking for opportunities to secure access to new locations. In 2022, we spent NOK 70 million in growth investments related to new sea sites and upgrades of onshore facilities, in addition to NOK 157 million in tonnes of post-smolt at Adamselv, with the smolt weighing on maintenance investments. average up to 500 grams. Construction was planned to start at the end of 2022, however the investment has been put on hold According to the Risk Report on Norwegian Fish Farming by the Institute of Marine Research, the risk of impact from organic waste from fish farming in Finnmark (the salmon production area PO12) is low and the environmental ecosystem condition is good. An environmental study of the organic impact of fish farming in the Alta fjord, published in 2017, showed low impact on the fjord system. L OC AL C OMM UNI T IE S FIGURE 2.27 PROTECTING MARINE ECOSYSTEMS Impact assessments performed Operations in protected areas/areas of high biodiversity value Red list species impacted 100% of farms One harvest site, total area of 0.003 km2 of the water surface Three species (15 birds) We perform environmental and social impact assessment for all of our farms. Such assessments are also part of the ASC certification process, which includes criteria to minimize environmental impact and preserve biodiversity. Our harvesting plant in Finnmark, where we have the fish ready to be harvested in one seawater pen, is located in Altafjorden, a "national salmon fjord" category created by the Norwegian Parliament to protect wild salmon. The harvesting plant was 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). All site locations are available on our web site with GPS coordinates. FIGURE 2.28 IUCN RED LIST SPECIES Regionally extinct Critically endangered Endangered Vulnerable Lower risk: conservation dependent 0 14 35 104 92 Data deficient 40 Our impact assessments also include identification of species listed in the IUCN Red List and Norway’s national conservation list, Artsdatabanken, with habitats in areas where we operate. The International Union for Conservation of Nature (IUCN) ‘Red List of Threatened Species’ provides an inventory of the global conservation status of plant and animal species, and national conservation lists serve as authorities on the sensitivity of habitat in areas affected by our operations, and on the relative importance of these habitats from a management perspective. Our assessments have not identified that our activities pose a threat to any endangered plants or animal species. We keep track of red listed species impacted in areas affected by our operations as a part of the ASC certification. In 2022, three different species listed as endangered or vulnerable on the national conservation list and/or IUCN red list was impacted at our operations. The three species was made up of 15 birds, whereas one Black-legged Kittiwake and six European Herring Gull was found in the anti-bird net, and eight Mew Gulls was retrieved from the pen or the anti-bird net. As a result of the incidents the anti-bird net was carefully controlled and tightened to prevent occurring incidents. As a part of our commitment to co-existence with wild salmon, the Alta river (total length of 47 km) and the Repparfjord river (total length of 100 km) in Finnmark are monitored in collaboration with the Norwegian Institute for Nature Research, the management of the Alta rivers, and the West Finnmark Hunting and Fishing Association. The objective is to investigate the impact of escaped farmed salmon from recreational fishing, and to evaluate the need for enhanced protective measures. In 2022, 453 shell samples was submitted from the Alta river, whereas only one sample (0.2%) was identified as escaped farmed salmon. In the Repparfjord river, two (0.2%) out of 854 shell samples submitted was identified as farmed salmon. Read more about these project here. We aim to be open and honest with local communities about our production methods, our successes, and our remaining challenges. We view it as our responsibility throughout all of our four farming regions to engage in constructive dialogue with all stakeholders and groups that are impacted by our activities. We create jobs and opportunities in the rural areas where we operate, and we use local suppliers as often as we can. We hire local apprentices and support aquaculture schools and training facilities. We sponsor sports and cultural activities, and we engage in monitoring and protection of the local environment. We also provide a grievance mechanism for local communities on our website. This enable us to identify and prevent potential negative impact on local communities This enable us to identify and prevent potential negative impact on local communities, such as pollution of local environment and violations of human rights. In 2022, we did not identify any significant negative impact on local communities from our operations. Finnmark has been home to the Sami people for millennia. We recognize that the Sami people have special rights, as acknowledged in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), and take particular care to avoid infringing them. We are in a process to understand how we can advance the Same culture in Finnmark. We continue our close dialogue with the Sami people and we did not identify any violations of their rights caused by our operations in 2022. NOK 474 million equal to 28% of total purchases, spent on goods and services purchased from local suppliers in the county of Troms and Finnmark. The reduction from a 45% share in local purchases last year is due to change of feed supplier. NOK 2.3 million donated to local services and infrastructure projects, all of which are pro bono. We support the local culture center, Perleporten, which offers several social activities and events. Amongst other clubs, we support the local sports club Bossekopp and The Alta Music Association. Bossekopp is located in Alta, where we have our local administration office and our harvesting plant. The Alta Music Association is the organizer of FESTIVALTA, which is an local festival for experiencing classic music surrounded by northern winter nature. We also 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. Additionally, we supported the construction of a safe and robust Sherpa trail to Storfjellet in the center of Honningsvåg. NOK 14.5 million in direct support from the Norwegian Aquaculture Fund to the municipalities where we operate, based on the production fee of NOK 0.405/kg (gutted weight). Learn more about our relationships with our local community on our website, PART 02 – OUR OPERATIONAL RESULTS 30 GRIEG SEAFOOD BRITISH COLUMBIA Grieg Seafood BC farms salmon on the east and west sides of Vancouver Island, and along the Sunshine Coast north of Vancouver. The company currently holds 21 farming licenses, including broodstock operations and land-based production of smolt. We process our BC salmon externally. 20 286 TONNES GWT HARVESTED 13.3 OPERATIONAL EBIT/KG (NOK) OP ER AT ION AL R E SULT S A total of 20 286 tonnes was harvested in 2022, 40% higher than Enteric Redmouth disease (ERM) and Salmonid Rickettsial in 2021 (14 448 tonnes). Harvesting volumes vary significantly Septicaemia (SRS) to safeguard the welfare of the fish. Our use every other year due to an imbalance in the number of farms of antibiotics is too high, and we are pursuing non-therapeutic and maximum allowable biomass (MAB) in the different means to manage diseases, such as vaccines and an adapted production areas on the East and West Coast of Vancouver diet. Infrastructure, such as the barrier system, might also aid Island. As a consequence, the region's volume varies every in reducing disease transmission. Our post-smolt strategy will other year, regardless of the underlying biological performance. enable us to have better control of the fishes’ environment for a Sales revenues for the year amounted to NOK 1 665 million, longer period. It will also make the fish more robust when they an increase of 63% compared to NOK 1 023 million in 2021. are transferred to the sea, and a shorter period at sea will reduce According to Urner Barry, the average spot price (farm-raised exposure to biological risks. This in turn will reduce the risk of salmon Seattle West Coast, fresh, whole fish) was NOK 84.1 disease outbreaks and the need for antibiotics. SRS has been a per kg in 2022, compared to NOK 68.5 per kg in 2021. Our price challenge in the shíshálh (Sechelt) farming area, and as we have achievement was NOK 82.1 per kg in 2022, compared to NOK 70.8 harvested the last fish and are closing down the area, we do not per kg in 2021. The price achievement was boosted by higher expect treatment related to SRS going forward. spot prices, but depressed by a lower average harvest weight and share of superior quality. The share of superior quality ended at BC has low sea lice levels during the important outmigration 85% in 2022, a reduction from 87% in 2021, which mainly relates period (when the juvenile and vulnerable wild salmon pass our to early maturation and the occurrence of winter ulcers at the farms on their way from the rivers to the ocean). However, the start of 2022. region is influenced by sea lice pressure each autumn, during the inmigration period when the adult wild salmon pass our Freshwater production was stable during the year. We farms on their way back to the rivers to spawn. Sea lice are then transferred a total of 4.8 million smolt, with an average weight transferred from the wild salmon to the farmed salmon, with of 110 grams, to the sea in 2022. The freshwater survival rate risk of multiplication within the farms. In BC, unlike Norway, the decreased from 85% in 2021 to 84% in 2022. We have taken steps wild salmon population greatly outnumbers the farmed salmon to ensure a higher quality roe going forward. population. Our barrier systems have shown potential to improve sea lice control significantly. When additional measures are Seawater production was stable in 2022. The 12-month survival needed, we carry out the type of treatment most appropriate to rate decreased from 92% in 2021 to 91% in 2022. The survival the biological situation. During 2022, medicinal sea lice treatment rate was impacted by a higher number of events of low oxygen with hydrogen peroxide and in-feed treatments were used to levels and algal blooms than in 2021. Despite prolonged periods reduce and maintain a stable sea lice level. We aim to reduce the of challenging environmental conditions, we managed to stabilize use of medicinal sea lice treatments through a combination of a survival due to our barrier and CO2L flow system. Mortality barrier system between the farmed salmon and the environment related to algal blooms have been reduced the last years due to our efforts relating to algae mitigation, digital monitoring and aeration systems, and came to 1.15% in 2022. We are constantly working to reduce the use of antibiotics. In 2022, the antibiotic Florfenicol was used to treat Yellowmouth, and use of the latest mechanical sea lice removal tool. The cost of reduced survival (cost recognized as abnormal mortality in the income statement) was NOK 90.7 million in 2022 (NOK 4.5 or CAD 0.6 per kg), compared to NOK 17.6 million in 2021 (NOK 1.2 or CAD 0.2 per kg). The cost was significantly PART 02 – OUR OPERATIONAL RESULTS 31 impacted by lower quality roe, leading to reduced survival at the flowpressors will reduce annual carbon emissions by 11 000 freshwater stage. The farming cost (the total cost of producing tCO2e per year. Read more about how we are working to reduce and harvesting our fish) increased from CAD 8.8 per kg (NOK our carbon emissions here. 60.4) in 2021 to CAD 9.1 per kg (NOK 68.8) in 2022, due to the increased cost of reduced survival. Towards year-end, we We are committed to maintaining a good working environment SUSTAINABILITY SCOREBOARD harvested the last fish from the shíshálh (Sechelt) farming area, and keeping our employees safe. In 2022, the total absence rate PILLAR KPI TARGET STATUS 2022 2021 2020 2019 2018 which has historically had a higher farming cost per kg compared for BC was 6.43%, against a target of 4.5%. We are monitoring to other farming areas, due to the small size of each farms. While and following up on absence in accordance with procedures we expect this to reduce our farming cost going forward, we see and guidelines. Read more about how we work to secure our increases due to the general cost inflation in the industry. This employees well-being and labor rights here. applies in particular to feed, whose price has increased by close to 20%. Obtaining ASC certification is an important signal that our salmon is a responsible choice, as ASC has strict requirements with In BC, the wild salmon are Pacific salmon species which cannot respect to minimizing fish farms’ impact on the environment interbreed with our Atlantic salmon. We did not have any escapes and supporting local communities. As part of discontinuing our from our sea farms in 2022. We continue our efforts to minimize farming operations in the Sechelt area, we withdrew the ASC our impact on other local wildlife. In 2022, six birds got caught in certification from five of the sites that were empty and inactive at our nets. We will continue striving to reduce our impact. year-end. We also have one more active site in 2022 than in 2021. As part of our Climate Action Plan to reduce our carbon ASC certified (corresponding to 71% of budgeted net production emissions by 35% in 2030, we exchanged our compressors with for the year). We expect to certify the remaining sites in 2023. At the end of 2022, a total of seven out of 11 eligible sites were flow technology, reducing our compressor energy usage and thereby our diesel consumption. It is estimated that the FIGURE 2.29 RESULTS BRITISH COLUMBIA Harvest (tonnes GWT) Revenue (NOK million) Operational EBIT (NOK million) Operational EBIT / kg (NOK) Farming cost / kg (NOK) Farming cost / kg (CAD) 2018 2019 2020 2021 2022 16 632 14 120 21 181 14 448 20 286 1 075.3 861.4 1 178.9 1 023.5 1 665.1 290.9 17.5 50.0 7.4 73.3 5.2 55.3 8.3 -7.4 -0.4 56.0 8.0 150.2 270.4 10.4 60.4 8.8 13.3 68.8 9.1 FIGURE 2.30 OPERATIONAL EBIT AND HARVEST Harvest (tonnes GWT) Operational EBIT/kg (NOK) ) T W G S E N N O T ( T S E V R A H 25 000 20 000 15 000 10 000 5 000 0 20 15 10 5 0 (5) 2018 2019 2020 2021 2022 I O P E R A T O N A L E B T K G / I PROFIT & INNOVATION HEALTHY OCEAN Harvest volume (tonnes GWT) 20 000 tonnes in 2022 Operational EBIT / kg (NOK) Farming cost per kg (CAD) Cost leader ASC certification (# of sites) All sites (11 eligible) by 2023 Survival rate in freshwater Survival rate at sea 93% by 2022 Cost of reduced survival (NOK 1 000) Use of antibiotics (g per tonne LWE) * No use of antibiotics Use of hydrogen peroxide (kg per tonne LWE) */ ** Minimize use of pharmaceutical treatments Sea lice treatments - in feed (g per tonne LWE) * Minimize use of pharmaceutical treatments Sea lice treatments - in bath (g per tonne LWE) * Minimize use of pharmaceutical treatments Escape incidents (# of fish) Zero escape incidents Dead birds Minimize impact on wildlife Dead marine mammals Minimize impact on wildlife SUSTAINABLE FOOD Carbon emissions (kgCO2e per tonne GWT) 35% reduction (from 2018) in total emissions by 2030 Scope 1 + 2 location based Scope 3 High quality product 93% superior share Biological feed conversion ratio (bFCR) Economic feed conversion ratio (eFCR) ● ● ● ● ● ● ● ● ● ● ● ● ● ● 20 286 14 448 21 181 14 120 16 632 13.3 10.4 -0.4 9.1 7 84% 91% 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% 90 728 17 617 66 082 73 327 88 454 34.75 41.67 62.32 87.00 151.26 12.83 35.66 46.62 6.01 5.83 0.17 0.30 0.22 0.52 0.32 0.00 0.00 0.00 0.00 0.00 0 6 0 741 2 439 85% 2 (4) 8 1 1 091 4 025 87% 0 12 1 0 14 0 0 0 0 769 3 276 86% 1 101 5 411 86% 597 5 376 84% 1.21 1.18 1.23 1.25 1.23 1.38 1.27 1.43 1.41 1.54 PEOPLE Employees 157 176 174 171 148 Absence rate Below 4.5% ● 6.4% 5.6% 6.8% 2.0% 1.8% Lost time incident rate *** Turnover rate LOCAL COMMUNITIES Local procurement 9 6 40% 30% 36 n/a 35 n/a 86% 84% 83% 83% 38 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 (2018 - 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. ( N O K ) Please refer to Part 1 - Our pillars and material topics for a description of the general financial impact of each topic. PART 02 – OUR OPERATIONAL RESULTS 32 FIGURE 2.31 SURVIVAL RATE AT SEA, ROLLING 12 MONTHS Orange line FIGURE 2.32 MAIN CAUSES FOR REDUCED SURVIVAL IN SEAWATER IN 2022 FIGURE 2.34 SEA LICE LEVELS (MOTILE SEA LICE ) 2018 2019 2020 2021 2022 8.0 6.0 4.0 2.0 0.0 3 Limit of motile sea lice per fish per site (March to June) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 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. Sea lice counts are conducted by visual inspections, done by lifting a minimum of 20 salmon out of the water for three pens on a weekly basis. The number of sea lice on each fish is recorded in our systems, and this information is used to estimate the overall prevalence of sea lice in the population. On average, we did not exceed the sea lice limits in 2022. Target: 93% MAIN CAUSE NUMBER OF FISH TONNES OF FISH Infectious Gill infections Bacterial Non-Infectious Life cycle Physical Treatments Total Abnormal seawater mortality write- down % 94 753 126 122 678 113 245 043 22 809 1 166 840 335 762 29% 261 221 1 358 484 54 2 379 751 32% 95% 90% 85% 80% 75% 2018 2019 2020 2021 2022 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. The calculation of survival rate at sea 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". FIGURE 2.33 MAIN CAUSES FOR REDUCED SURVIVAL IN SEAWATER (NUMBER OF FISH) Virus Life cycle Bacterial Physical Gill infections Treatments 800 000 600 000 400 000 200 000 0 2020 2021 2022 We perform a daily count and registration of dead fish. We undertake routine screening to determine the cause of mortality. Gill infections Life cycle Physical Treatments N/A Bacterial Virus Gill infections are in most cases complex and multifactorial, and the primary cause is unknown. Gill infections is a welfare issue, as well as being an important cause of mortality. Bacterial include Yellowmouth and Salmonid Rickettsial Septicaemia (SRS). Yellowmouth typically occurs during the first few weeks after transfer to the sea, and is controlled through therapeutic treatments using antibiotics. SRS is controlled through good husbandry and management practices. The other categories relate to transport (physical), sea lice treatments, while life cycle includes a variety of causes. PART 02 – OUR OPERATIONAL RESULTS 33 FIGURE 2.35 USE OF COPPER FIGURE 2.36 RESTORED ECOSYSTEMS UNDER FARMS Copper-free antifouling solutions on nets 100% Remediated ecosystems under farms before a new generation of fish was transferred to the farms in 2022 100% of farms We did not use copper antifouling solutions on our nets in BC in 2022. 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. FIGURE 2.37 % OF SITES THAT ARE RESTORED Substrate Type Benthic exceedance thresholds at peak biomass or before re-stocking Compliance 2022 Hard Bottom 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* Soft bottom * ASC Salmon standard. 100% 100% 100% 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. Read more about our impact on nature here. In BC, regulations require us to conduct benthic tests at peak biomass at each farm, and fallow the farm after ended production cycle until the seabed of the site reaches the regulated threshold of remediation. The test must be accepted by the regulators and, since our farms are BAP certified farms, an independent third party. The Aquaculture Activities Regulation, established under the Canadian Fisheries Act, sets exceedance limits for the benthic substrate monitoring according to the Monitoring Standard. The sites cannot be restocked if they exceed these limits. FIGURE 2.39 PROTECTING MARINE ECOSYSTEMS Impact assessments performed Operations in protected areas/areas of high biodiversity value Red list species impacted 100% of farms None None We perform environmental and social impact assessment for all of our farms. Such assessments are also part of the ASC certification process, which includes criteria to minimize environmental impact and preserve biodiversity. We do not have sites in the proximity of land nature reserves, nor do we have 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). All site locations are available on our web site with GPS coordinates. FIGURE 2.38 IUCN RED LIST SPECIES Regionally extinct Critically endangered Endangered Vulnerable Lower risk: conservation dependent 0 5 10 11 14 Data deficient 29 Our impact assessments also include identification of species listed in the IUCN Red List and BC’s national conservation list, Species at Risk Act (SARA), with habitats in areas where we operate. The International Union for Conservation of Nature (IUCN) ‘Red List of Threatened Species’ provides an inventory of the global conservation status of plant and animal species, and national conservation lists serve as authorities on the sensitivity of habitat in areas affected by our operations, and on the relative importance of these habitats from a management perspective. Our assessments have not identified that our activities pose a threat to any endangered plants or animal species. We keep track of red listed species impacted in areas affected by our operations as a part of the ASC-certification. No red list species was impacted in proximity of our operations in 2022. As wild salmon is an important part of the indigenous culture, we embrace the responsibility of not causing harm and has engaged in several wild salmon enhancement projects in BC, including the Oyster River Enhancement Society and Nootka Sound Watershed Society. The Oyster River Enhancement Society works on habitat restoration projects for natural spawning, rearing and overwintering of salmonids in the Oyster river (length of 15 km). Red more about the project here. The Nootka Sound Watershed Society works to protect, restore and enhance pacific salmonids and their habitat in Nootka Sound, Esperanza Inlet (52.2 km2)through sustainable, science-based practices. Read more about the projects and their habitat status assessments here. OP ER AT ION AL P R IOR I T I E S T O WAR DS 2026 Grieg Seafood BC expects to harvest 20 000 tonnes in 2023. We in BC is operated under agreements with First Nations. These aim to increase the volume harvested to 30 000-35 000 tonnes relationships are very important to us. The Truth & Reconciliation in 2026 both by developing current sites to utilize more of our Commission: Call to Action #92 provides us with guidance on our seawater capacity and developing new sites. Key initiatives to role in the reconciliation process. We are working to get better achieve our objective include the implementation of barrier at operating with respect for the culture of our First Nations systems to provide better biological control and higher survival partners in every way, to deepen our understanding and to rates. As part of the ongoing process of site restructuring, we provide shared opportunities. Read more about our journey of seek to develop sites that are well suited for salmon farming, reconciliation in BC here. and phase out older and smaller sites with more challenging biological conditions. By 2025, the Canadian Federal Government aims to have created a responsible plan to transition away from traditional open Access to high-quality smolt is also key to ensuring sustainable net-pen salmon farming in British Columbia, in order to reduce production growth. At the start of 2022, we completed the interactions with wild salmon. In June 2022, the Canadian expansion of our Gold River smolt facility, with smolt capacity Department of Fisheries and Oceans renewed all farming increasing from 500 tonnes to 800 tonnes. Further expansion of licenses for two years. During this period, the government our post-smolt capacity is under consideration. As from 2022, aims to develop the transition plan. Grieg Seafood welcome the we also have our own broodstock program, with the aim of transition process and the transition framework published. We becoming self-sufficient in high-quality eggs. Another key priority see the renewal of our licenses and the commitment to working to increase survival and harvest volume, is the use of digital together with us to develop a transition plan as a sign that monitoring and prediction technology. Harmful Algae Blooms Canada wants a thriving, sustainable salmon farming industry (HAB) and low-oxygen events represent significant biological in British Columbia. Grieg Seafood embraces new strategies risks in BC. However, mortality related to algae blooms has been and technologies to align with the government’s transition. This reduced the last years due to our successful efforts in the field includes, for example, keeping the fish longer on land and a of algae mitigation, digital monitoring and aeration systems. shorter time in the ocean, and introducing barriers around the Algae movements and oxygen levels are continuously monitored farms to limit interactions between the fish and the environment. and analyzed using high-grade real-time in-pen sensors, and Such technologies not only reduce our impact on wild salmon machine learning with predictive environmental software. We and the environment, but also improve biological control. We have installed aeration systems to enable feeding also during are working with all levels of governments, including Indigenous challenging situations, which increases survival during these governments, to find a path forward that works for our First periods. In combination with HAB and oxygen monitoring tools, Nations partners, our local communities, the government and we currently have barrier systems installed at three sites, industry. which will allow us to keep the barriers down year-round and to maintain oxygen levels. Our capital expenditures in 2022 reflect our growth initiatives. We spent approximately NOK 74 million primarily on barrier systems and the expansion of Gold River, in addition to NOK 59 million in regular maintenance investments. The United Nations Declarations on the Rights of Indigenous Peoples (UNDRIP), giving Indigenous peoples rights in their own traditional territory, is under implementation in BC. This is a process of reconciliation between the government, businesses and First Nations. The majority of our production PART 02 – OUR OPERATIONAL RESULTS 34 L O C A L C OMMUN I T IE S We aim to be open and honest with local communities about our production methods, our successes, and our remaining challenges. We view it as our responsibility throughout all of our four farming regions to engage in constructive dialogue with all stakeholders and groups that are impacted by our activities. We create jobs and opportunities in the rural areas where we operate, and we use local suppliers as often as we can. We hire include financial support, in-kind and employee knowledge sharing or participation. In 2022, we supported dozens of initiatives ranging from youth sports team funding to support for wild salmon restoration and enhancement. Throughout the year we have collected funds for local Food Banks, and during the holiday season we donated presents for children through the Campbell River Angel Tree Society and the John Howard local apprentices and support aquaculture schools and training Society’s KidStart program. facilities. We sponsor sports and cultural activities, and we engage in monitoring and protection of the local environment. We also provide a grievance mechanism for local communities on our website. This enable us to identify and prevent potential negative impact on local communities, such as pollution of local environment and violations of human rights. In 2022, we did not identify any significant negative impact on local communities from our operations. We are active in the communities in which we live and work through our sponsorship and donation program. Contributions In British Columbia, we farm in areas that belong to Indigenous peoples. These groups have special rights, as acknowledged in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), and Grieg Seafood takes particular care to avoid infringing them. The vast majority of our production is covered by agreements with First Nations, and we are pursuing agreements with others. These agreements are a layer of regulation requiring compliance and the details of these agreements are unique to each Nation. They ensure transparency and Nation oversight to our operations while providing economic and social benefits to each community. We are continuously working to be in compliance with the agreements. equal to 86% of total purchases, spent on goods and services purchased from local suppliers in BC. NOK 1 091 million NOK 0.6 million donated to local services and infrastructure projects, all of which are pro bono. We supported dozens of initiatives ranging from youth sports team funding to support for wild salmon restoration and enhancement. Throughout the year we have collected funds for local Food Banks, and during the holiday season we donated presents for children through the Campbell River Angel Tree Society and the John Howard Society’s KidStart program. Learn more about our relationships with our local community here, and our approach to the implementation of UNDRIP and our journey of reconciliation with Indigenous Peoples in British Columbia here. PART 02 – OUR OPERATIONAL RESULTS 35 OP ER AT ION AL R E SULT S In 2022, we successfully completed the first transfer of smolt As part of our Climate Action Plan to reduce our carbon to sea farms in our Newfoundland region. Production at our emissions by 35% in 2030, we invested in diesel-electric power on Recirculating Aquaculture System (RAS) freshwater facility in two of our feed barges in Newfoundland. We aim to have battery Marystown Marine Industrial Park, in Placentia Bay, remained packs on all the feed barges, which will reduce our carbon on track, with high survival rates. Two million smolt, with an emissions from diesel consumption. Read more about how we average weight of 100 grams, were transferred to two sea farms work to reduce our carbon emissions here. in Placentia Bay during the spring and summer of 2022. We are committed to maintaining a good working environment Our seawater licenses in Newfoundland require use of sterile and keeping our employees safe. In 2022, the total absence rate all-female salmon in order to eliminate the risk of genetic for Newfoundland was 1.59%, well below our target of 4.5%. We pollution of wild Atlantic salmon in case of escape. The salmon is are monitoring and following up on absence in accordance with of European broodstock, and we apply best practices from sterile procedures and guidelines. Read more about how we work to production across the globe in our operations. We have a year- secure our employees well-being and labor rights here. round supply of high-quality eggs, and we optimize the conditions during the freshwater phase, the times of the year when the fish We remain committed to developing our operations in are transferred to the sea, and the feed composition. Triploid Newfoundland and Labrador gradually and responsibly, and to salmon perform well in cold environments and do not mature. So meeting all regulatory requirements from the local provincial far, the fish have performed well biologically, with high survival and federal authorities. We are well prepared in terms of and growth at sea, and we have not experienced sea lice equipment, employees and knowledge of biological conditions, issues. We have not detected any sea lice on our fish. At year- and we will adjust our operations according to the experience end, the average weight of the fish was 1.3 kg. We have not had we gain from the first generations of fish. We are confident that any escape incidents or conflicts with wildlife, and our equipment we will be able to build a strong farming region in Newfoundland withstood harsh weather and storms. We are still in an early during the coming years and create jobs and value for our local phase and will expand the project gradually and in line with communities. biological developments. Harvesting is expected to commence towards the end of 2023. We expect to transfer more smolt to the sea during late spring or summer of 2023. We did not incur any costs related to reduced survival (cost recognized as abnormal mortality) in 2022. As we have not started harvesting, we do not have a farming cost in 2022. Most of our production cost is accounted as inventory, though, a portion is expensed directly to the income statement. EBIT for 2022 totaled NOK -114.7 million, compared to NOK -116.9 million in 2021. In 2022, we spent a total of NOK 210 million on our seawater locations, including equipment for digital monitoring. GRIEG SEAFOOD NEWFOUNDLAND Grieg Seafood Newfoundland is a greenfield project with long-term exclusive fish farming rights in Placentia Bay in Newfoundland and Labrador. We will develop the region gradually and responsibly, based on the biological development of our first generations of fish. PART 02 – OUR OPERATIONAL RESULTS 36 FIGURE 2.40 USE OF COPPER Copper-free antifouling solutions on nets 100% SUSTAINABILITY SCOREBOARD We did not use copper antifouling solutions on our nets in Newfoundland in 2022. PILLAR KPI TARGET STATUS 2022 2021 FIGURE 2.41 % OF SITES THAT ARE RESTORED Substrate Type Benthic exceedance thresholds at peak biomass or before re-stocking Compliance 2022 Hard Bottom Soft bottom Beggiatoa species or similar bacteria, marine worms or barren substrate does not cover 70% or more of the locations specified in the Monitoring Standard Sampling not complete due to sites not at peak biomass The mean concentration of free sulfide as calculated at the locations specified in the Monitoring Standard does not exceed 3 000 µM No primarily soft bottom sites active in 2022 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. Read more about our impact on nature here. No sediment or visual monitoring was required in 2022, in compliance with the Aquaculture Activities Regulations (AAR). Benthic monitoring will be completed in 2023 at a time close to peak feeding at each sea cage site that was active in 2022, in compliance with the Aquaculture Activities Regulations. The AAR states that sampling should be conducted during the period of actual or predicted maximum daily quantity of feed usage during the production cycle, which will occur in summer/fall 2023 for fish that were transferred to sea in 2022. FIGURE 2.42 PROTECTING MARINE ECOSYSTEMS Impact assessments performed Operations in protected areas/areas of high biodiversity value Red list species impacted 100% of farms Two farming sites, total area of 0.028km2 of water surface None We perform environmental and social impact assessment for all of our farms. Such assessments are also part of the ASC certification process, which includes criteria to minimize environmental impact and preserve biodiversity. According to Department of Fisheries and Oceans (DFO), we have sites located in an area in Placentia Bay (~7800 km2), which is classified as a “Ecologically and Biologically Significant Area” (EBSA). In order to receive licenses in this area, Grieg Seafood Newfoundland conducted an Environmental Impact Statement (EIS) Assessment which was reviewed by DFO and other regulators. Approval to operate in this area has been granted based on the assessment by both federal and provincial regulators. Our sites are located away from Important bird areas and proposed leatherback sea turtle critical habitat identified within the EBSA. FIGURE 2.43 IUCN RED LIST SPECIES Regionally extinct Critically endangered Endangered Vulnerable Lower risk: conservation dependent 0 3 4 6 5 Data deficient 10 Our impact assessments also include identification of species listed in the IUCN Red List and BC’s national conservation list, Species at Risk Act (SARA), with habitats in areas where we operate.. The International Union for Conservation of Nature (IUCN) ‘Red List of Threatened Species’ provides an inventory of the global conservation status of plant and animal species, and national conservation lists serve as authorities on the sensitivity of habitat in areas affected by our operations, and on the relative importance of these habitats from a management perspective. Our assessments have not identified that our activities pose a threat to any endangered plants or animal species. We keep track of red listed species impacted in areas affected by our operations as a part of the ASC-certification. No red list species was impacted in proximity of our operations in 2022. Together with Provincial and Federal regulators, we have implemented monitoring procedures and protective measures as a part of our commitment to co-existence with wild salmon in Newfoundland. In late spring and summer 2022, we monitored upstream migration of adult, wild Atlantic salmon on the Come-by-Chance River (with a length of 5.15 km). This was the second year the Come-by-Chance River was monitored, but the first year with Atlantic salmon in sea at the Red Island site. In 2022, there were no acute or suspected chronic releases of farmed salmon from the Red Island and Butler Island sea cage sites. PROFIT & INNOVATION HEALTHY OCEAN Operational EBIT (NOK million) Survival rate in freshwater 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) * No use of antibiotics Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments Minimize use of pharmaceutical treatments Escape incidents (# of fish) Zero escape incidents Dead birds Minimize impact on wildlife Dead marine mammals Minimize impact on wildlife SUSTAINABLE FOOD Carbon emissions (tCO2e) 35% reduction (from 2018) in total emissions by 2030 Scope 1 + 2 location based Scope 3 Biological feed conversion ratio (bFCR) Economic feed conversion ratio (eFCR) PEOPLE Employees Absence rate Lost time incident rate Turnover rate LOCAL COMMUNITIES Local procurement Below 4.5% ** ● ● ● ● ● ● ● ● ● ● -114.7 -116.9 85% 0 0 0 0 0 0 0 2 244 8 890 1.27 1.29 104 n/a 0 n/a n/a n/a n/a n/a n/a 2 066 735 n/a n/a 69 1.6% 1.3% 0 42% 37% 5 83% 44% * 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 not applicable as seawater production started mid-year 2022. Please refer to Part 1 - Our pillars and material topics for a description of the general financial impact of each topic. PART 02 – OUR OPERATIONAL RESULTS 37 P R I OR I T IE S T O WAR DS 2026 The US market is the world’s largest and fastest growing market for Atlantic salmon, but only a third of US demand is currently met by North American production. We already have a position in this market through our operations in British Columbia, where we have attained significant sales and market experience. With proximity to important markets on the US East Coast, our Newfoundland region significantly strengthens our US market exposure and opens for synergies with our existing operations, as we should be able to provide a more stable supply to the US market. Our high-end state-of-the-art RAS facility has technology employing 100% recirculation of water with minimal impact on the surrounding environment. The facility currently consists of a hatchery, nursery and a smolt unit with a capacity of 600 tonnes. We aim to construct an additional 1 400 tonnes of post-smolt capacity, depending on a successful first winter at sea. We have further options to expand, and we will gradually develop our operations to ensure biosecurity, fish health and profitability. We currently have 13 seawater licenses, each with an allowance of one million fish at first stocking, increasing to two million fish in subsequent stockings. In 2023, we expect to harvest 5 000 tonnes of salmon, increasing to 15 000 tonnes by 2026, which is possible with our current set up. We have also been awarded rights to develop the Bays West aquaculture area, with the potential to produce an additional 20 000 tonnes of salmon. With this possibility, we will have exclusive rights in two production areas, which will secure future flexibility. These areas will provide a long-term annual harvest potential of up to 65 000 tonnes. L OC AL C OMM UNI T IE S We aim to be open and honest with local communities about our production methods, our successes, and our remaining challenges. We view it as our responsibility throughout all of our four farming regions to engage in constructive dialogue with all stakeholders and groups that are impacted by our activities. We create jobs and opportunities in the rural areas where we operate, and we use local suppliers as often as we can. We hire local apprentices and support aquaculture schools and training facilities. We sponsor sports and cultural activities, and we engage in monitoring and protection of the local environment. We also provide a grievance mechanism for local communities on our website. This enable us to identify and prevent potential negative impact on local communities, such as pollution of local environment and violations of human rights. In 2022, we did not identify any significant negative impact on local communities from our operations. equal to 37% of total purchases, spent on goods and services purchased from local suppliers in Newfoundland. NOK 200 million NOK 0.4 million donated to local services and infrastructure projects, all of which are pro bono. We support the local YMCA, which has been part of life in Newfoundland and Labrador since 1854. It is a charity dedicated to strengthening the foundations of communities. They do this by nurturing the potential of children, teens, and young adults; promoting healthy living; and fostering social responsibility. YMCA offers programs of health and fitness, child care, employment enterprise and newcomer services. We also donated to the Burin Peninsula Health Care Foundation, a direct support of the local health care centers to improve the quality of care for patients and long term care residents. We have supported projects such as a garden gazebo for long-term care patients and getting 11 new mental health first aiders trained. Learn more about our relationships with our local community on our website. PART 02 – OUR OPERATIONAL RESULTS 38 OUR CERTIFICATIONS 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. Our farming operations in Rogaland, Finnmark and BC are businesses that hold these recognized certificates to access all certified according to BAP or GLOBALG.A.P. Both these corners of the global market. Processing partners in BC hold standards are recognized by the Global Food Safety Initiative equivalent certification for their operations. Read more about our (GFSI). Our sales and market organization is chain-of-custody certifications and their current status here. certified according to ASC and GlobalG.A.P. In 2022 we started the process of obtaining FSSC 22000 certification for our We experienced good demand for ASC-certified salmon in the processing plants in Rogaland and Finnmark. We expect both European market and are selling ASC-certified volumes with facilities to have the GFSI recognized certification in the Q1 a consistent market premium. Additionally, the FSSC 22000 2023. While GFSI does not provide food safety certification, it certification in Norway will allow access to new European recognizes a number of certification programs that meet the customers requiring processing plants to have GFSI-recognized GFSI benchmarking requirements. GFSI-recognized certification certifications. is a mark of the highest standards in food safety, allowing food CERTIFICATE DESCRIPTION TARGET STATUS 31.12.2022 ASC Aquaculture Stewardship Council (ASC) was founded in 2010 by the 100% ASC 75%* of our total World Wide Fund for Nature (WWF) and the IDH Sustainable Trade certification budgeted net production Initiative to establish global standards for sustainable seafood (or compliance volume is ASC-certified production. with ASC) for active and 17 sites (90% The ASC label only appears on food from farms that have been eligible sites by of budgeted net independently assessed and certified as being environmentally and 2023. production) in socially responsible. ASC-certified salmon farms minimize impacts Newfoundland Finnmark, on the local ecosystem to protect biodiversity. Farms are required aims to certify Seven sites (71% to measure various water parameters and remain within set limits. when its of budgeted net Farms are required to adhere to rigorous requirements to minimize seawater sites production) in BC, and disease outbreaks, keep sea lice levels low and can only use certain are eligible for Five sites (59% medicines under very strict conditions. Use of wild fish as an ingredient certification. of budgeted net for feed must be minimized and full traceability back to a responsibly production) in Rogaland managed source, preferably certified, must be ensured for both wild fish and soy. There are also strict social requirements. have received ASC certification. A Chain of Custody certification ensures that companies selling certified seafood have identification, segregation and traceability processes and procedures in place. Our sales and market organizations in Norway and Canada are ASC Chain of Custody certified. GLOBALG.A.P Global Good Agricultural Practices (GLOBALG.A.P.) is a standard for 100% of farms 100% of our farms (thus both agriculture and aquaculture. The standard covers food safety, in Norway 100% of our production animal welfare, sustainability, employment and traceability. GlobalG.A.P. volume) in Norway are GlobalG.A.P. certification provides assurance that food has been grown (certification Rogaland have been using recognized levels of quality and safety. It also ensures that it not relevant for certified since 2008, and has been produced sustainably in a way that respects the health, the Canada) farms in Finnmark since environment and the welfare and safety of workers and animals. 2016. certified certified. Our farms in 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. Our sales and market organization in Norway is GlobalG.A.P. Chain of Custody certified. BAP Best Aquaculture Practices (BAP) is an aquaculture standard that 100% of 100% of our farms (thus covers practices in all stages of the fish farming process. farms in BC 100% of our production BAP certification helps to assure consumers that the seafood they buy (certification certified since 2011. is produced in a manner that is considerate of the animal’s welfare, the not relevant for Our Newfoundland environment, workforce and community, food safety and traceability. Norway). region is under BAP certified volume) in BC have been BAP is particularly important for customers in the United States. establishment and is not yet delivering to market. FSSC 22000 FSSC 22000 is a certification scheme for Food Safety Management 100% of The processing plant in Systems that is aligned with the ISO Management System approach processing Finnmark was certified and the ISO Harmonized Structure. plants in Norway FSSC 22000 certified in December 2022, while the Rogaland plant’s certification audit is scheduled in Q1 2023. *Sites and production volume not included in the ASC-certification-% calculation is not eligible for ASC-certification due to inactive production or first production cycle not yet completed. PART 02 – OUR OPERATIONAL RESULTS 39 T HE GL OB AL S AL MON M AR K E T In 2022, the global volume of Atlantic salmon harvested Demand for farmed salmon both in the retail and HoReCa sectors decreased by approximately 1% compared to 2021, according was strong in 2022. However, due to the limited supply of salmon, to Kontali. A total of 2 578 500 tonnes GWT (gutted weight consumption decreased in most markets in 2022 compared to equivalent) was estimated to have been harvested globally in 2021. In contrast, consumption in the USA and China increased 2022, down from 2 606 580 tonnes in 2021. Chile contributed an by 3% and 5%, respectively. Supply to Russia decreased by 43%, increase in output of 29 880 tonnes, while most other salmon from 86 100 to 48 700 tonnes in 2022, due to the ongoing war producing countries saw their output fall. The UK experienced a against Ukraine. reduction of 29 880 tonnes, Norway a reduction of 14 850 tonnes and Canada a reduction of 9 450 tonnes (all figures in GWT). The average spot price for Norwegian salmon (NQSALMON, weekly average) for 2022 varied significantly during the year, Salmon exports from Norway fell by 2% in 2022 compared to depending on supply to the market. The same trend was 2021. The volume of fresh salmon exports decreased by 4%, observed in the North American market. The spot market price while exports of fresh salmon filet increased by 6% compared to stood at NOK 65.3 per kg at the beginning of the year. It increased 2021. The main export markets for salmon from Norway were to a peak above NOK 123 per kg towards the end of April, then Europe, which accounted for 74% of the volume, while Asia fell to the mid-50s at the end of August, before bouncing back. accounted for 16% and North America 6% (source: Norwegian The NQSALMON spot price closed the year at NOK 86.5 per Seafood Council). The total volume supplied by Canada decreased kg. The 12-month average NQSALMON for 2022 came to NOK by 7% in 2022 compared to 2021. 82.0 per kg, compared to NOK 57.3 in 2021. Spot salmon prices in the US market started the year at NOK 73.0 per kg, peaked at around NOK 106 per kg and ended the year at NOK 91.5 per kg. The average price came to NOK 84.1 per kg, up by NOK 19 per kg compared to 2021. FIGURE 2.44 GLOBAL HARVEST OF ATLANTIC SALMON IN 2022 FIGURE 2.45 GLOBAL CONSUMPTION OF ATLANTIC SALMON IN 2022 10% 15% 5% 6% 26% 53% 45% 11% 3% 4% 23% Norway Chile UK Canada Other EU & UK USA Brazil Russia Asia Other Source: Kontali Analyse AS 40 SALES & MARKET Grieg Seafood is part of a global salmon market, supplying 3.3% of the global volume of Atlantic salmon harvested in 2022. As part of our new strategy, we will reposition Grieg Seafood in the value chain and become an innovative partner for selected customers. PART 02 – OUR OPERATIONAL RESULTS OU R S AL E S & M AR K E T R E S ULT S   In 2022 we capitalized on the benefits of having a fully integrated OUR MARKETS global sales organization and reached our key milestones. We targeted 5-10% of our harvested volume for value added Grieg Seafood accounted for 3.3% of the global supply of Atlantic processing (VAP), to establish processing partnerships in salmon in 2022. Sales consisted mainly of fresh, head-on gutted Norway and Europe, as well as entry of our VAP products to salmon. We increased our share of value-added products (VAP) selected markets. We started processing salmon into fresh and from 4% in 2021 to 6% of our volume in 2022, in line with our frozen value added products with partners in Norway and doing strategy. processing trails in other countries in Europe. Further we have established a presence of our own VAP products in Europe, Continental Europe is by far our most important market, Asian and the US markets. 6% of our global harvested volume accounting for 63% (73%) of our harvested volume and in 2022 was sold as VAP. We aim to build on this development by contributing 58% of our sales revenue in 2022. North America optimizing biological performance and market timing through is our second largest market, and accounted for 26% (21%) of close collaboration between farming and sales, thereby securing our volume and 29% (27%) of our revenues in 2022. The market good price achievement. The sales organization of Grieg Seafood distribution of sales varies year on year, depending on the operates as one coherent unit across the global salmon market, volumes harvested across our regions. The main change in our and we expect to leverage this for both our Norwegian and sales distribution was a decrease to Continental Europe from Canadian origins. 65% in 2021 to 58% in 2022. This is primarily attributable to a growth in sales to the US market. We increased our harvested By a continued focus on sustainable farming practices and good volume by 5% from our Norwegian farming operations in 2022, fish health and welfare, we can provide the safe, healthy, tasty, while we harvested 40% more in our BC region compared to and high-quality product that our customers and consumers 2021. In 2022, 17% of sales were to airborne markets, while the demand. Through our food safety management system we ensure remainder was sold to European markets, with a strong focus that our products are safe throughout harvest, processing and on key markets in southern Europe. Our main export markets logistics on it’s way to the market. We are transparent about from Norway were Europe (82% of our volume), Asia (12%) and our farming and production methods and communicate our North America (6%). 3% of our volume of Norwegian origin was standards and results to our customers. All our products are sold as value added products. Approximately 21% of our salmon intended for human consumption. Read more about why our from BC was sold in Canada, while 76% was sold to the USA and salmon are healthy and nutritious here. 3% to Asia. 9% of our harvested salmon was processed and sold as value added products, while the Skuna Bay brand made up We have not had any product recalls for the last ten years, nor approximately 5% of the volume. We did not have any sales to did we have any in 2022. No serious incidents of food safety Russia or Belarus in 2022. See here for further details of sales non-conformities in regards to requirements in regulations or revenues by markets and products. voluntary codes have been reported in 2022. Our product is not banned from any markets. To manage possibly product recalls Our sales revenues amounted to NOK 7 164 million, an increase and serious incidents related to food safety, regular training is of NOK 2 565 million or 55.8% from 2021. The increase in sales performed. Read more about how we work with food safety on revenue is due to a combination of record-high harvest volume in our web site. our regions and an exceptionally strong market. Our harvested volume in 2022 was up 12% compared to 2021. The group's price achievement was NOK 75.8 per kg compared to NOK 55.7 per kg in 2021. By comparison, the average NQSALMON price for 2022 came to NOK 82.0 per kg compared to NOK 57.3 in 2021. The price realization was negatively impacted by contracts for some of our Norwegian volume, in addition to price achievement on production grade harvest volume. The total superior share came to 81% in 2021 compared to 82% in 2021. For more information on our harvested volume and sales performance, see the regional chapters in this report. FIGURE 2.46 NQSALMON WEEKLY AVERAGE (NOK/KG) Source: NASDAQ Salmon Index 2019 2020 2021 2022 2023 120 100 80 60 40 1 6 11 16 21 26 31 36 41 46 51 2019 2020 2021 2022 2023 FIGURE 2.47 URNER BARRY FARM RAISED SALMON SEATTLE WEST COAST, FRESH, WHOLEFISH (NOK/KG) 2019 2020 2021 2022 2023 120 100 80 60 40 PART 02 – OUR OPERATIONAL RESULTS 41 1 6 11 16 21 26 31 36 41 46 51 The Urner Barry 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. Prices for 2023 are not yet available due to limited supply of salmon to the west coast of the USA. 2019 2020 2021 2022 2023 M AR K E T E XP E C TAT IONS A ND OUR P R I OR I T I E S T O WA R DS 2026 The global harvest of Atlantic salmon in 2023 is expected to increase by 2%, or 51 800 tonnes, compared to 2022, and come to 2 916 800 tonnes, according to Kontali (figures in whole fish equivalent, WFE). The current harvest estimates indicate a significant difference between supply volumes in the first and second half of 2023, the same pattern as in 2022. With negative supply growth in the first half of the year and overall limited growth in 2023, combined with an outlook for continuing strong demand fueled by an increased focus on healthy food and sustainably produced proteins, we currently (at the time of publishing this report) believe in sustained strong market prices in 2023. However, current inflation reducing household purchasing power might impact demand from both the HoReCa (hotels, restaurants and catering) and retail segment. The current Fishpool forward price for 2023 is around NOK 95 per kg, and the 2024 forward price is around NOK 87 per kg, reflecting an optimistic market outlook. We aim to sell 20-50% of our Norwegian volume under fixed-price contracts. The contract market in the second half of 2022 was impacted by the proposed resource rent tax on salmon in Norway, however we saw signs of improvement in the beginning of 2023. At year-end 2022, our estimated contract share for 2023 was 15%. We aim to establish processing partners close to key markets and customers in the EU and the USA, targeting 20-30% share of our volume for VAP by 2026. In 2023, we aim to increase the share of VAP volume to 8-12% of our harvested volume. We will also continue to evaluate 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. We also aim to develop B2B brands going forward. Currently, we have the successful Skuna Bay brand in the USA. The US market is the world’s largest and fastest growing market for Atlantic salmon, but only a third of US demand is currently met by North American production. We already have a position in this market through our operations in British Columbia, where we have attained significant sales and market experience. With proximity to important markets on the US East Coast, our Newfoundland region significantly strengthens our US market exposure. The global demand for Atlantic salmon has been increasing, supported by growing demand for healthy food and an expanding middle class in developing countries. Global fish consumption has doubled since 1998, and a further 80% increase is projected by 2050. The trend appears to have been bolstered by increased interest in healthy eating triggered during the Covid-19 pandemic. We expect salmon prices to remain strong the next years, driven by low supply growth and good demand. FIGURE 2.48 OUR MARKETS BY SALES REVENUES FIGURE 2.49 OUR MARKETS BY HARVESTED VOLUME Continental Europe UK North America Asia PART 02 – OUR OPERATIONAL RESULTS 42 R EDUCING C AR B ON EMI S SIONS • In Rogaland and Finnmark, we are observing the benefits According to the High-Level Panel for a Sustainable Ocean of using electricity from onshore and battery packs instead Economy (Ocean Panel), food production from the sea may be of diesel generators alone, to operate a growing number of advantageous from a climate perspective, because the carbon production sites. footprint from production is low compared to terrestrial animal • Our preventative approach to sea lice control is expected to protein production (see Figure 1.3 in our Aquaculture in a reduce our carbon footprint, as the use of large vessels for sustainable global food system chapter). However, we recognize the application of delousing treatments also causes carbon that we must do more to cut carbon emissions from our farming emissions. In British Columbia, where sea lice challenges operations and supply chains. Direct carbon emissions from our production (Scope 1 & 2) account for 8% or 30 000 tCO2e of our total emissions. 92% or 346 000 tCO2e, of our emissions originate from our value chain (Scope 3), particularly those aspects linked historically have been substantial, the new semi-closed containment systems contribute not only to solving biological challenges but also to reducing carbon emissions. • We have tested out methods to chill the salmon after to fish feed and the transportation of salmon to our markets. harvesting, which makes it possible to avoid ice in packaging and reduce the carbon footprint per kilo of packed salmon. We Our climate action target is to reduce carbon emissions by 35% will invest in this equipment in the years to come. towards 2030, and by 100% in 2050, with 2018 as the baseline • Before making any investments, we evaluate their potential year. This reduction target is for Scope 1, 2 & 3. Our carbon carbon emissions and environmental impact. emission reduction targets are classified as well-below 2°C global warming, and aligned with the Paris Agreement. Our Since we are growth-oriented, and are targeting higher emission targets have been approved by the Science Based production and harvest volumes, we cannot exclude an increase Targets initiative (SBTi). More information can be found here. in our total emissions in the short run. Nevertheless, we will CLIMATE ACTION PLAN During 2022, we have developed our climate action plan, which continue to work towards reducing both relative and total emissions, and to achieve our reduction targets. The divestment of our Shetland operations in 2021 and the acquisition of the describes the measures and investments needed to reach our Newfoundland operations in 2020, where we are using state-of- climate targets. This plan stresses the importance of both the-art technology and where we are located closer to the large operational measures, that affect Scope 1 & 2, and supply US consumer market, are expected to contribute positively to chain measures in Scope 3. We need to reduce our operational those ambitions. fossil fuel consumption, purchase renewable electricity and set supplier requirements to be able to reduce our absolute emission level. We need to invest in the electrification of our sites and boats, commercialize the need for novel feed ingredients with lower emission factors and reduce our emissions from transportation. We work actively to develop emission reduction initiatives, and to improve data quality and reporting from our operations and suppliers. 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 2023 and beyond. LEARN MORE ON OUR WEBSITE → → Our policy for climate action Reducing carbon emissions CLIMATE ACTION While farmed salmon has a low carbon footprint compared to other animal proteins, our industry must do its part to achieve the goals set out in the Paris Agreement. New solutions must be developed to cut emissions in our operations and along our value chain. PART 02 – OUR OPERATIONAL RESULTS 43 GREENHOUSE GAS EMISSIONS In 2022, our total greenhouse gas (GHG) emissions decreased by 5%, or close to 20 000 tCO2e, compared to 2021. The decrease is mainly attributable to a reduction in our emission factors from feed in Scope 3. Feed emissions decreased by 19%, or close to 53 000 tCO2e compared to the year before, which secured an overall reduction in our Scope 3 emissions, despite an increase in Scope 2 emissions from 2021 to 2022. Seawater production resulted in a noticeable increase in Scope 3, due to the use of feed. As our operation continues to grow in Newfoundland, we are expecting an increase in emissions in the years to come. SCOPE 3 EMISSIONS The two most substantial contributors to Scope 3 emissions are downstream transportation and fish feed. Downstream in emissions from downstream transportation. The utilization of transportation accounts for 23% and fish feed for 61% of our total electricity from the power grid and battery packs has also helped emissions (25% and 66% of our Scope 3 emissions, respectively). to reduce emissions in Scope 1 and 2 by approximately 6%, or close to 2 000 tCO2e compared to 2021. As shown in Figure 2.50, our total emissions decreased by approximately 20 000 tCO2e in 2022. SCOPE 1 & SCOPE 2 EMISSIONS Our absolute Scope 1 and Scope 2 GHG emissions were reduced by 6%, or close to 2 000 tCO2e, in 2022 compared to 2021, while production increased by 12%. As a consequence, the emissions measured as kilograms of CO2 equivalents per tonne harvested decreased by 16%. In Rogaland, total emissions decreased by Downstream transportation In total, the percentage of air transport increased by 49% in 2022. There are various reasons for this development. Most importantly, air transport opportunities where reduced significantly by Covid-19 in 2021. In addition, the choice of transport mode is influenced by logistical restrictions, harvest 13% from 2021 to 2022, despite a 6% increase in the harvested schedules, availability and demand for certain sizes and qualities volume. As a consequence, emissions per tonne decreased by 18%. In Finnmark, the harvested volume increased by 4%. Total emissions decreased by 5%, mainly due to the implementation of fish, and prices. Due to the increase in air freight in 2022, we increased our transport emissions by 29 000 tCO2e. of an operational incentive program linked to the use of fuel and In general, downstream transportation is calculated as transport electricity. from the harvesting facility to the airport of departure to the destination country (capital) by air in tonne-kilometers (tkm). For Well-boat services make up a substantial proportion of our all sales from our Canadian operations (mostly delivered to the emissions, and whether we decide to provide these services North American market), transport was calculated to the state ourselves or outsource them to external service providers has capital in order to achieve an acceptable degree of precision. a considerable influence on our Scope 1 emissions. In Rogaland Value-added processing and details of the exact transportation and BC, well-boat emissions are included in Scope 1, while well- routes were not taken into consideration due to lack of data boat emissions in Finnmark are categorized as Scope 3 due to availability. With new technology, e.g. blockchain, we aim to contractual considerations. Finnmark’s Scope 3 emissions from well-boat activities in 2022 totaled 5 800 tCO2e. increase the level of detail in tracking the path our salmon takes from the harvesting facility to the final consumer in the years to come. We are open to collaboration projects and participated in In BC, total emissions decreased by 5%, despite an increase of a sustainability reporting-related workshop together with our 40% in the harvested volume. This caused relative emissions seafood logistics software provider in 2022. per tonne to decrease by 32%. Emissions are closely tied to seasonal environmental conditions, as there is an increase in aeration usage during the summer months. In 2022, the summer Fish feed Carbon emissions from fish feed are calculated on the basis of season arrived late in BC waters, which caused a reduction in the amount of feed used and the carbon emission factor of the diesel consumption related to aeration. Additionally, the RAS 34 feed products used. Our carbon emissions from fish feed are facility was completed, enabling us to consolidate and run less highly dependent on the different raw materials used in the feed, equipment. Seawater production volume has limited correlation as well as the life cycle assessments and methodology chosen with emissions, as generators often run at a similar capacity by our feed suppliers. More information about the composition regardless of the biomass. The volume harvested in BC varies of our feed can be found in our chapter on feed ingredients. Fish significantly every other year. While these fluctuations affect total feed carbon emission factors are calculated on the basis of life emissions only marginally, their primary impact is on relative cycle assessments (LCAs) and appear to be variable over time emissions. In Newfoundland, the first transfer of smolt to sea farms was successfully completed this summer. As a result, we expected an increase in Scope 1 emissions. However, production at the freshwater facility had been running on generators in 2021, and was completely connected to the power grid in 2022, keeping Scope 1 emissions stable. This corresponds to the increase PART 02 – OUR OPERATIONAL RESULTS and different between our suppliers. The reason for this is that data quality and transparency vary and increase in relation to the efforts made and resources allocated to those comprehensive analyses. OUR GREENHOUSE GAS ACCOUNTS FIGURE 2.50 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) Total GHG emissions Finnmark Scope 1 Scope 2 location based**** Total (Scope 1 + 2) Scope 3 Downstream transportation*** Fish feed Other*** Total (Scope 3) Total GHG emissions British Columbia Scope 1 Scope 2 location based Total (Scope 1 + 2) Scope 3 Downstream transportation Fish feed Other Total (Scope 3) Total GHG emissions Newfoundland 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) BRITISH COLUMBIA NEW- FOUNDLAND OTHER1 TOTAL EMISSIONS (tCO2e) RELATIVE EMISSIONS (kgCO2e / tonnes) *Baseyear 2018 2020 2021 2022 *Baseyear 2018 2020 2021 2022 3 939 456 4 395 8 875 8 519 420 331 9 295 8 850 7 433 287 7 720 58 454 67 529 40 567 86 257 102 202 104 470 4 065 6 330 6 350 54 409 89 472 6 248 148 776 176 061 151 387 150 129 153 171 185 356 160 237 157 849 7 134 420 7 554 4 123 5 122 776 591 4 899 5 713 4 948 496 5 444 52 971 19 489 13 963 21 739 115 949 132 864 131 286 101 894 9 921 8 432 9 645 12 323 178 841 160 785 154 894 135 956 186 395 165 684 160 607 141 400 9 143 15 609 15 129 14 509 783 673 629 513 270 403 332 272 9 131 9 401 7 641 8 044 5 676 6 008 5 289 5 561 254 182 166 151 6 007 6 260 5 973 6 155 4 492 4 657 3 774 3 925 9 926 16 282 15 758 15 022 597 769 1 091 741 5 376 5 973 3 276 4 044 4 025 5 115 2 439 3 180 n/a 91 143 111 n/a n/a 30 121 51 194 438 549 45 602 38 116 5 695 89 413 99 339 n/a n/a n/a n/a n/a n/a n/a n/a — 33 33 253 253 286 19 296 4 884 41 963 46 700 8 120 6 563 69 379 58 147 85 661 73 905 1 847 1 637 80 429 1 927 2 066 n/a n/a 643 643 n/a 212 523 735 12 097 29 934 7 454 49 485 64 507 1 572 672 2 244 n/a 8 427 463 8 890 2 570 2 801 11 134 — 26 26 60 60 86 1 14 15 2 12 14 991 991 1 006 4 470 4 470 4 484 20 216 30 454 30 408 28 464 1 692 1 975 1 994 1 980 Total Scope 1 + Scope 2 location based 21 908 32 429 32 402 30 444 349 456 429 359 Scope 3 TOTAL GROUP Downstream transportation Fish feed Other Total (Scope 3) Total GHG emissions Group 157 027 106 314 59 414 88 245 240 322 277 029 282 668 229 727 19 934 23 585 24 072 30 958 417 283 406 928 366 154 348 930 439 191 439 357 398 556 379 374 6 655 7 005 5 720 6 176 4 843 5 272 4 120 4 479 1 Grieg Seafood ASA (HQ) and our sales organizations in Norway and North America. *In 2022, improved data collection processes and calculation methods have enabled us to collect historic Scope 3 data to create comparable figures back to the baseline year. **This year, we discovered some errors in the interpretation of the data related to waste in Norway, which explains the change in Other Scope 3 emissions reported in 2020 and 2021. The quantifiable change for Rogaland is calculated to a reduction of 1 263 tCO2e in 2020 and 3 914 tCO2e in 2021. In Finnmark, the change resulted in an increase of 63 tCO2e for 2020 and an reduction of 354 tCO2e in 2021. ***In BC, we have moved emissions from downstream transportation to upstream transportation, as we have previously reported third-party transportation services from inbound logistics in downstream transportation. This explains the reduction in previously reported downstream data and the increase in other Scope 3 emissions from BC in 2020 and 2021, which includes upstream transportation. The quantifiable change shows that 1 237 tCO2e was moved from downstream transportation to other in 2020 and 937 tCO2e was moved from downstream transportation to other in 2021. ****In BC, we received a credit note from our electricity supplier in January 2022, concerning consumption in BC in Q3 2021. Thus, the 2021 Scope 2 figures have decreased from last year’s reported figures by 97 tCO2e. 44 Our feed-related emission factors decreased substantially from 2021 to 2022. There are two main reasons for this. In 2022, we have been able to acquire carbon emission data down to the specific feed product level, providing more accurate data on our actual carbon emission footprint from purchased feed. These improved calculative measures will make emission reductions visible across the industry. We have also required the data to be supplemented by a list of additional information, such as LCA database used, calculation methodology, data aggregation level and origin. In addition, changes in the use of raw materials and raw material suppliers have had an impact on the 2022 emissions. Towards the 2030 target Our climate target is set in line with SBTi, which requires a baseline year as starting point. In 2022, we have a total reduction in Scope 1, 2 and 3 of 14% from our 2018 baseline year, which shows that we are moving towards a 35% reduction in 2030. Despite Scope 1 and 2 emissions increasing by 39% due to growth in operations, the 17% reduction in Scope 3 emission keeps us on track to reach our target. Scope 3 challenges We strive to continuously improve our collection of Scope 3 emissions data. Some of the figures are only technical estimates of our actual emissions, calculated on the basis of science-based emission research. However, we deem the disclosure of our Scope 3 emissions to be 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. 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". When structural changes, improved data collection methods or discovery of significant errors occur, the GHG Protocol supports recalculating the base year*. However, it is important to note that certain changes do not require recalculation, for example, changes involving facilities that did not exists in the base year, out/in-sourcing of activities previously reported under a different scope, and organic growth or contraction. *Grieg Seafood Shetland was divested in 2021, and is excluded from the base year and all current years. Additionally, the sales organization, Ocean Quality, was divested in 2020 and is thus excluded from the base year. Whereas Grieg Seafood Newfoundland was acquired in 2020, but did not exist before the acquiring year. Hence, it is is not included in 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 based on the purchased quantities of commercial fuels . 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 (the UK’s Department for Environment Food and Rural Affairs). 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, we apply 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 metered electricity consumption and invoices from electricity suppliers. 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 2021 we had the first year with comparable Scope 3 figures. However, in 2022 we managed to improve our data collection processes to the extent of calculating historic Scope 3 emission to achieve a comparable trend from the base year. We have 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), (4) Upstream transportation and distribution, (5) Waste generated in operations, and (6) Business travel. Downstream, we included (9) Downstream transportation and distribution, and (15) Investments. The categories correspond to the 15 Scope 3 categories defined by the GHG Protocol. Underlying data is collected from production data, financial cost or suppliers, or estimated based on production data. FIGURE 2.51 SCOPE 3 MAPPING PER REGION/UNIT Data collected Scoped out Data not available Category Subcategory Rogaland Finnmark BC Newfound- land ASA Sales Norway Sales NA 1 Purchased goods and services Fish feed Capital goods Well-boat services EPS boxes N/A Fuel and energy-related activities Well-to-Tank (WTT) Upstream transportation and distribution* Boat/truck transportation Waste generated in operations Waste Business travel Air travel Employee commuting** Employee mileage Public/private transportation Upstream leased assets N/A Downstream transportation and distribution Goods transportation Processing of sold products Use of sold products End-of-life treatment of sold products*** Downstream leased assets Franchises N/A N/A N/A N/A N/A 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Investments Nordnorsk Smolt**** Tytlandsvik Aqua * Upstream transportation and distribution was included in 2022. **We have estimated emissions related to employee commuting with the use of national statistics. *** End-of-life treatment of sold products was excluded in 2022, as ensilage has been identified as waste generated in operations.Thus, moved to waste generated in operations. ****Nordnorsk Smolt was scoped out in 2022, as there was no production this year. FIGURE 2.52 GREENHOUSE GAS EMISSIONS DEVELOPMENT FROM BASE YEAR (1000 tCO2e) Scope 1 + 2 (tCO2e) Scope 3 (tCO2e) The chart shows the last three years compared with the base year, and our development towards our 35% reduction target in 2030 439 439 399 379 285 2018 2020 2021 2022 2030 PART 02 – OUR OPERATIONAL RESULTS 45 SUSTAINABLE FEED INGREDIENTS We are conscious of the environmental and social risks that may be connected to feed ingredients and are committed to responsible sourcing. We are committed to reduce the impacts from our fish feed. As an industry, we also need to develop new feed ingredients in order to grow sustainably. T O WAR DS MOR E SU S TAIN A BLE FEED I NGR EDIEN T S  Grieg Seafood has identified and mitigated the most material risks related to our feed ingredients, such as overfishing and TRACEABILITY Feed traceability is a key concern in aquaculture, as it relies on deforestation. With a growing aquaculture sector, we need new depleted fish stocks or plant-based protein which is associated marine and protein-based feed ingredients in order to reduce the with natural ecosystem conversion. We are in close dialogue environmental and social impact in the years to come. with our feed suppliers concerning the sourcing of raw material, CERTIFICATIONS To ensure that our ingredients do not contribute to overfishing and we expect continuous improvements in our feed supply chains with respect to environmental, social and governance (ESG) risks. We require information on each ingredient and raw and deforestation, we require recognized certification of our material in the feed we buy, including the origin of all ingredients high-risk ingredients. Fish meal and fish oil from fisheries and used as well as how they were produced. This covers the entire Brazilian soy and palm oil are identified as high-risk ingredients. supply chain – from farm/boat to feed manufacturer. While we In 2022, all our marine ingredients (excluding trimmings) recognize that it will take time to provide the traceability needed in feed were based on fisheries certified according to the in all supply chains, we require continuous improvements every Marine Stewardship Council (MSC) or MarineTrust (including year. In 2022, we improved our level of traceability on our high- FIPs). As a member of MarinTrust Governing Body Committee risk ingredients. We were able to identify the vast majority of (GBC), we continuously work towards increasing the share of the species, origin and certification of forage fisheries used in certified fisheries across the industry. All Brazilian soy protein our feed. Additionally, we managed to trace soy to national and concentrate was certified according to ProTerra or Round Table regional level. on Responsible Soy (segregated). The only region where we used a small amount of palm oil (0.02% of the raw material content) was in Newfoundland. The palm oil used was certified according to Round Table on Sustainable Palm Oil. FIGURE 2.53 FEED INGREDIENTS IN 2022 Rapeseed oil Fishmeal Soy protein concentrate Wheat gluten Fishoil Beans and peas Wheat Guar Sunflower Micro ingredients This illustrates the average raw material content in our feed used in Norway and Newfoundland. In BC, the content is somewhat different, as, in general, a larger proportion of vegetable protein is replaced by animal-byproducts. Palm oil constituted 0.02% of the raw material ingredients in the feed used in Newfoundland. 5% 6% 7% 11% LEARN MORE ON OUR WEBSITE → → → Supplier Code of Conduct Sustainable feed policy Our feed approach 7% 4% 18% 17% 12% 13% PART 02 – OUR OPERATIONAL RESULTS 46 ZERO DEFORESTATION Our Brazilian soy protein concentrate vendors, CJ Selecta, NOVEL FEED INGREDIENTS The aquaculture industry is looking at developing novel feed Imcopa and Caramuru, were the first Brazilian soy traders to ingredients to mitigate sustainability-linked risks such as set a 2020 cut-off date for their entire soybean business in the deforestation and overfishing. We must ensure that a scale- Cerrado, and establish a robust MRV system. With this move, up of ingredients does not repeat the mistakes of the past by they have set a new benchmark for sustainable supply chains contributing to new or unforeseen ESG risks. As a member of the globally. We have engaged with these producers and applaud Global Roundtable on Marine Ingredients and the Global Salmon their leadership. Read more here. Initiative Climate Taskforce, we take part in commercializing novel feed ingredients that are a good fit for a future sustainable We participated in the CDP Forest program for the third time in food system. In 2021, we initiated a project to perform a holistic 2022. CDP Forest provides a framework of actions to measure evaluation of ESG risks relating to salmon feed ingredients in and manage forest-related risks and opportunities, transparent order to increase transparency and traceability, to enable us to reporting on progress, and commitment to work proactively benchmark feed ingredients on material ESG aspects and have FIGURE 2.54 TARGETS AND ACHIEVEMENTS 2022 Targets Achievements 2022 All marine ingredients (excluding trimmings) used are based on fisheries certified according to MSC or MarineTrust (including FIPs) Yes, in all regions for the full year FFDRo below 2.52 (ASC requirement) Yes, in all regions FFDRm below 1.20 (ASC requirement) Yes, in all regions. The level is below 1.0, making us a net producer of marine protein All Brazilian soy protein concentrate certified according to ProTerra or segregated RTRS 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 for the restoration of forests and ecosystems. We scored A- on the ability to reduce risk and drive change throughout our supply All palm oil used certified according to Round Table on Sustainable Palm Oil our work against deforestation related to soy and B related to chains. The project was adopted by GSI in 2022, where Grieg palm oil. Additionally, Grieg Seafood was acknowledged as a Seafood is a key member working for a common methodology of supplier engagement leader by CDP in recognition of our efforts ESG-evaluation in the industry. to measure and reduce climate risk within our supply chain. For more information, please visit CDP’s website here. FIGURE 2.55 VOLUME OF MARINE INGREDIENTS Yes (in Newfoundland, the only region where we used a small amount of palm oil) Volume of marine ingredients (tonnes) Forage fish 2021 Forage fish 2022 Trimmings 2021 Trimmings 2022 Fish meal Fish oil 6 726 7 123 10 107 8 280 3 154 5 999 5 394 5 316 Trimmings also referred to as co-products, are viable cut-offs (e.g. entrails, fins, scales, heads, and tails) from fishing-processing activities commonly not used for other consumption. Trimmings are often ground and dried into fishmeal. Marine feed ingredients should come from sustainable sources. An overview of marine raw materials in our feed, including species, country of origin and certification of each raw material, is available here. PART 02 – OUR OPERATIONAL RESULTS 47 OUR C OLLE A GUE S Under this scheme, they could receive one-on-one coaching from someone who spoke their native language over a period of six Grieg Seafood consists of people with different backgrounds, months. This was one of the initiatives we established post-covid genders, experiences, expertise and age. We have talented to develop our employees, both professionally and personally. employees range from teenage apprentices to people who will soon retire. We have people fresh from university, people with advanced degrees, people who have worked in the industry for HEALTH AND SAFETY In 2022, we once again conducted our now annual Great Place to multiple years, and people who have grown up with salmon and Work survey, and we are happy to say we kept our certification. are experts in their field through dedication and experience. You Not only does this confirm that our employees feel that Grieg can read more about our talented employees and their stories on Seafood is a great place to work, they also think it is a safe our website. DIVERSITY We consider diversity and equality one of the most important place to work. We have a zero accidents vision and are happy with the positive trend in 2022. All employees receive health and safety training when they join us, and are required to re-take the courses regularly. Employees have the possibility topics when it comes to living our culture. We are committed to to actively participate in and contribute to the development of being an equal opportunity employer. We aim to, and we have, their workplace safety through their employee representative. a diverse workforce consisting of 828 employees representing External health services provide health checks and advice to 28 nationalities and with a gender balance of 240 women (30%) employees. In some regions they are represented on our Health and 572 men (70%). A result of our work on gender balance and Safety committees. We provide a health-plan for employees, and equality is a score of 73 on the SHE Index, which we have ranging from dental and medical to counselling depending on participated in since 2019 in order to be transparent about the the region, and we offer a variety of health programs to the gender balance. employees (competitions, gym membership). We have a strong health and safety program to ensure our workers are protected In 2022, we had a special focus on the development of female and risks are minimized. We will never compromise on the health leaders and potential leaders, through the international program and safety of our employees. Through our Supplier Code of FiftyFifty as well as other local initiatives. FifityFifty is a think- Conduct, we expect the same from our suppliers. tank and networking collaboration between different companies, inciting internal projects to take place. Our participants had a focus on diversity, covering topics such as bias, awareness HUMAN RIGHTS We are committed to respecting fundamental rights in our training and what is acceptable in today’s modern work life. Grieg operations, our value chain, and in the communities where Seafood is a safe place to work for all, and we believe work like we operate. In 2022, the Norwegian Transparency Act entered this will only continue to highlight the Grieg Seafood values - into force. Grieg Seafood will operate in compliance with the Open, Ambitious and Caring. Norwegian Transparency Act and is committed to following the UN Guiding Principles on Business and Human Rights With a continued strong focus on recruitment, we select and (UNGPs). As part of this, we began conducting a human appoint the most suitable person for a position on the basis rights assessment in 2022. We are currently in the phase of of their skills, qualifications and aptitudes, from aquaculture determining the probability and intensity of risk for all relevant technicians to regional directors. A big part of our recruitment rights and rights-holders. In this phase of the assessment, we strategy is being an attractive employer and being visible where recognize that there are sub-suppliers in the feed supply chain the next generation of aquaculture talent is coming from. In 2022, which pose a significant risk with respect to the use of child we opened our brand-new educational barge at Teistholmen, labor or young workers in the production of raw materials, and Rogaland, in cooperation with Strand High School, which offers originate in high-risk geographies. A specific incident was tied a study program focusing on natural resources and biological to the extraction of guar beans in India. We are in the process of production. Grieg Seafood will operate the barge, where students mapping possible incidents and measures will be taken when the from Strand High School will have classes. We believe this is an assessment is final. The final assessment will be published on investment in the future generations of the aquaculture industry. our website no later than 30 June 2023. Additionally, some areas in our supply chain entail a particularly high risk of breaching We are committed to ensuring that all of our staff enjoy the human rights through forced or compulsory labor. Labor rights same opportunities, rights, and respect, regardless of their in the transportation industry is one such area of concern, background. 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. In addition to FiftyFifty, we therefore initiated a digital coaching program for our employees regardless of gender. where several controversies have been related to the question of adequate working conditions for truck drivers (so-called “social dumping”). 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. More information about our initiatives will be published here. PEOPLE 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. LEARN MORE ON OUR WEBSITE → → → → → → Our policy and grievance mechanisms for human rights Human rights in our operations and value chain Our policy for diversity Our policy for gender equity Embracing diversity Health and safety principles PART 02 – OUR OPERATIONAL RESULTS 48 OU R R E S ULT S SHE Index THREE IMPORTANT FACTORS THAT PAVE THE WAY FOR WORKFORCE EQUALITY 01. 02. 03. Bold leadership Top management have defined policies, strategies, goals and practices. Transparency A diverse leadership team that openly sets, shares and measures equality targets. An empowering environment One that trusts employees, respects individuals and offers equal opportunities. We received a score of 73 points (High score) in the SHE Index for 2022. The average score across Norwegian companies was 72. 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, diversity and inclusion. Our goal is to improve our 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 2022, Grieg Seafood has taken several steps to improve the gender balance. This includes appointing women to fill vacant management positions, drawing from both internal and external candidates, as well as appointing another female regional director. In 2022, 32% of our new hires were women. One of the tools we use for gender equity is performing annual evaluation of the salaries and benefits offered to our employees, by using the Kornferry methodology to benchmark our salaries. FIGURE 2.56 UNIONIZED EMPLOYEES (%) AT YEAR-END 2022 Rogaland Finnmark British Columbia Newfoundland ASA Sales & Market Share 34% 43% n/a n/a n/a n/a We accept and welcome labor union membership 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 membership of the United Federation of Trade Unions (Fellesforbundet) and The Norwegian Food and Allied Workers Union (NNN), the largest labor unions in our industry. Due to privacy and security laws, we do not have access to data on all types of memberships, such as associations of professionals and graduates. It is therefore presumed that the actual number of unionized employees is higher than depicted. We also accept and welcome collective bargaining, by union or employee representation. Any employee working in the same jobs as those covered by either of the above will receive the same working conditions and terms. FIGURE 2.57 CODE OF CONDUCT PROGRAM FIGURE 2.58 HARASSMENT INCIDENTS FIGURE 2.59 WHISTLEBLOWER CASES 92% 5 0 A total of five harassment incidents were reported in 2022. Grieg Seafood has zero tolerance for misconduct in the workplace, and all reports of harassment are dealt with in accordance with established procedures. However, for reasons of privacy protection, we are unable to comment specifically on the reported incidents. 92% (744) of our 812 employees (ex contractors) have completed our Code of Conduct program, broken down by 138 (19%) permanent and 13 (2%) temporary employees from Rogaland, 233 (31%) permanent and 28 (4%) temporary employees from Finnmark, 91 (12%) permanent and 4 (1%) temporary employees from Newfoundland, 147 (20%) permanent and 2 (0.4%) temporary employees from BC. Lastly, 80 (11%) permanent and 8 (1%) temporary employees from HQ and Sales. Seven (100%) of our Group Executive Team have completed the Code of Conduct program, all from Norway. Two out of six members (33%) of the Board of Directors from Norway, has received communication and training about our Group policies. Our Code of conduct program involves presentation and training on all of our principles. The Code of Conduct program is required to be completed every second year by all our employees FIGURE 2.60 HUMAN RIGHTS TRAINING FIGURE 2.61 NON-DISCRIMINATION TRAINING 31% 49% In 2022, 253 employees (31%) were given human rights training. This includes, but is not limited to, our Code of Conduct. Overall, 49% of our 812 employees (ex contractors) have completed a non-discrimination training course. 36% of our employees completed the course in 2022. This does not include our Code of Conduct program, which also includes a non- discrimination section. No cases was reported through our whistle blower channel in 2022. All employees have both the right and a responsibility to raise concerns. Such concerns should be reported immediately to line management, Group Management or the CHRO, or through our external whistleblower channel. All notifications through our external whistleblower channel are handled in a professional manner by EY. Depending on the content of the notification, it is logged either as an issue of information or as a whistleblower concern to be followed up. The CHRO receives a summary report from the operator of the whistleblower channel, and all reported incidents are reported to the CEO and Board of Directors. All reported incidents are investigated. Unless the whistleblower has chosen to remain anonymous, they will be kept adequately informed about the process and its outcome. We prohibit any retaliation against anyone for raising or helping to address a concern about violation of our policies. Our Supplier Code of Conduct requires suppliers to provide a safe and healthy environment for their workers and contractors, and minimize workers´ exposure to potential safety hazards. Furthermore, we expect our suppliers to adhere to all applicable laws and regulations. In 2022, we acquired an external whistleblower channel for our suppliers to report negative occupational health and safety impacts in business relationships. PART 02 – OUR OPERATIONAL RESULTS 49 FIGURE 2.62 GENDER BALANCE AT YEAR-END 2022 Female Female Male Male ROGALAND 23% 77% FINNMARK 25% 75% BRITISH COLUMBIA 32% 68% NEWFOUNDLAND 33% 67% ASA 41% 59% SALES & MARKET 54% 46% 0% 100% At year-end 2022, the Grieg Seafood Group had 812 employees (240 women and 572 men), including full-time and temporary workers but excluding contractors. Hence, women make up 30% of the workforce, while 70% are men. Management and support functions at Grieg Seafood ASA and the Sales & Market teams have the highest proportion of female employees. 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. The data provided is collected from the HR database in head-count at the end of the reporting period. FIGURE 2.63 GREAT PLACE TO WORK 85% FIGURE 2.64 APPRENTICESHIP PARTICIPATION AT YEAR-END FIGURE 2.65 APPRENTICESHIP ACHIEVEMENTS 33 24 Great Place to Work assesses and evaluates organizations and the practices that underpin workplace culture, based on the experience of employees. In 2022, we took part in the Great Place to Work survey for the fifth time in Norway, and for the fourth time globally. We are proud to announce that all our regions maintained the Great Place to Work certification in 2022. The Group achieved a total score of 85%, which is a continuance from 85% in 2021. The high score shows that Grieg Seafood is among the best companies to work for. 85% of our employees also confirmed that they feel a sense of pride when they look at what we have accomplish at Grieg Seafood. With a high participation rate, this certification is an enormous credit to the employees and their hard work and loyalty. At year-end 2022, a total of 33 employees were participating in an apprenticeship: seven in Rogaland, 25 in Finnmark and one in Newfoundland. British Columbia did not have any apprentices in 2022. In 2022, a total of 24 employees received their final certificate of apprenticeship: eight in Rogaland, 12 in Finnmark, and four in Newfoundland. In cooperation with the North Island College and Fleming College, Grieg Seafood British Columbia has established 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. PART 02 – OUR OPERATIONAL RESULTS 50 FIGURE 2.66 THE WORKFORCE AT YEAR-END Permanent Temporary Contractor Permanent Temporary Contractor FIGURE 2.68 TURNOVER RATE 100% 2021 2022 ROGALAND FINNMARK BRITISH COLUMBIA NEWFOUNDLAND ASA SALES & MARKET 0% 79% 84% 97% 96% 93% 83% 15% 5% 16% 0% 1% 1% 4% 0% 2% 5% 13% 4% 100% The compiled data is reported in head-count as of 31 December 2022. Overall, 87% (724 of 828) of our workers were permanent employees in 2022 (incl. contractors). We had some temporary employees, particularly seasonal workers in our processing facilities and apprentices at our 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, or in office roles, providing regular services as needed (mostly IT-related work). 0% 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. 83% 40% 42% 30% 11% 6% 16% 8% 23% 19% 14% 5% 0% 3% ROGALAND FINNMARK BRITISH COLUMBIA NEWFOUNDLAND * ASA SALES & MARKET GROUP 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. Turnover has increased in 2022 compared to 2021 due to a very competitive employee market. Grieg Seafood Newfoundland experienced a lower turnover in 2022 compared to 2021, but still high due to downsizing. We expect more stability in the future. The turnover in BC has been high, which has been common through all industries in this region, as it was challenging to attract candidates in a competitive market. We continue to support our good relationships with First Nations and local communities to 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. Part of this turnover is due to our commitment to respecting the First Nations request to cease operations in the Sechelt production area. FIGURE 2.67 THE WORKFORCE AT YEAR-END 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 Full-time Part-time Full-time Part-time Full-time Part-time 25 106 48 184 47 105 34 64 16 24 27 18 4 12 5 0 2 1 0 2 0 0 0 0 7 11 11 18 1 1 0 3 1 0 0 4 4 6 7 10 0 0 0 1 0 0 1 2 3 5 0 0 1 1 0 0 0 0 2 0 698 26 57 31 12 0 2 0 0 0 0 0 0 0 2 0 0 4 43 142 71 212 51 108 34 70 17 26 30 24 828 PART 02 – OUR OPERATIONAL RESULTS 51 FIGURE 2.69 FATALITIES 0 We had zero fatalities in 2022. FIGURE 2.70 ABSENCE RATE 10% Short-term 2021 Short-term 2022 Target Long-term 2021 Long-term 2022 5.7% 4.0% 5.1% 3.6% 3.6% 2.0% 1.3% 1.7% 0% ROGALAND FINNMARK 4.3% 2.2% 4.4% 1.2% BRITISH COLUMBIA 0.1% 1.5% 0.6% 0.8% 0.2% 0.3% NEWFOUNDLAND ASA 1.5% 0.8% 0.5% 0.5% SALES & MARKET 3.6% 2.4% 3.1% 0.5% GROUP In Rogaland, Sales & Market, Finnmark, British Columbia and Newfoundland, the absence rate has increased compared to the year before. The absence rate in Finnmark, British Columbia and Rogaland is above our target of 4.5%, mainly due to long-term illness. We continue to monitor the situation and implement actions to reduce the absence rate. 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 initiatives in this area are implemented in consultation with employee representatives. FIGURE 2.71 SAFETY INDICATORS Rogaland Finnmark British Columbia Newfoundland ASA Sales & Market * Hours worked (incl. overtime) Total work-related injuries Rate of work-related injuries** High-consequence work-related injuries Rate of High-consequence work-related injuries** 236 461 388 068 316 903 195 856 68 305 85 706 6 8 17 2 0 0 25 21 54 10 0 0 2 0 0 0 0 0 8 0 0 0 0 0 * Estimate based on number of employees and general annual working hours. **Rate of work-related injuries divided by the total number of hours worked (incl. overtime), multiplied by 1 000 000. Permanent and temporary employees are included in our incident data. Information on contractors is not currently available. 100% of our (828) employees are covered by health and safety systems, including contractors. We use occupational health and safety systems and standards in line with local regulations in each country. All of our health and safety procedures are internally audited and reviewed by management. As a part of our ASC, GAP and BAP certifications and ongoing certification processes all of our health and safety management procedures are certified by an external party. The administrative support department are not directly covered by an occupational health and safety management system, but are subject to occupational health services and represented by a a staff-elected safety representative. Health and safety incidents are registered in our systems and reviewed as part of our monthly HSE meetings. Our occupational health services provider helps to map and assess the risk of the work environment, including physical, organizational and psychosocial factors. Job risks in each department are formally evaluated and categorized using a risk matrix. Job hazard assessments are also carried out for non-routine jobs. 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 in 2022 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. 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 improvement and preventative initiatives are based on thorough evaluation of all accidents and near misses that are reported in our deviation system and are designed to reduce risk and prevent the reoccurrence of unwanted incidents. Mitigating measures may, for example, include servicing machinery, ordering new equipment, training employees, or changes in procedures and instructions. We always use required Personal Protective Equipment (PPE) to do our job as safely as possible, and our operations pose no known ill-health risks. FIGURE 2.72 H1-FACTOR/LTIR Rogaland Finnmark British Columbia Newfoundland ASA Sales & Market Group H1-factor/LTIR * Absence rate 2018 2019 2020 2021 2022 2018 2019 2020 2021 24 18 38 15 22 35 9 28 36 n/a n/a n/a 0 0 0 0 n/a n/a 0 0 24 42 22 6 5 0 0 25 21 9 0 0 0 4.7% 5.4% 1.8% n/a 0.1% 0.6% 3.5% 4.9% 2.0% n/a 3.1% 5.6% 6.8% n/a 0.3% 1.1% 0.5% 0.0% ** 16 13 3.3% ** 3.2% ** 4.9% ** 3.0% 8.7% 5.6% 1.3% 0.5% 0.9% 5.0% 2022 5.6% 9.7% 6.4% 1.6% 0.4% 2.2% 6.0% * H1-factor/LTIR: number of lost-time injuries divided by the total number of hours worked (incl. overtime from and including 2022), multiplied by 1 000 000. Permanent and temporary employees are included in our incident data. Information on contractors is not currently available. ** Including Shetland. In Rogaland, the number of LTI incidents in 2022 was substantially lower than the year before, mainly due to the countermeasures taken and risk assessments conducted in 2021. In Grieg Seafood BC, we have been working for several years to improve our openness and reporting in order 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 at the top of our agenda. In our quarterly Business Reviews with our regions, we always start the meetings by going through the HSE statistics. We conduct audits and inspections, execute both safety action plans and safety observations, and, if possible, assess the quality of observations and how actions are closed. We also conduct safety training and safety meetings. In order to avoid any under-reporting of incidents, no LTIR target has been defined. PART 02 – OUR OPERATIONAL RESULTS 52 OUR FINANCIAL RESULTS BOARD OF DIRECTORS’ REPORT CORPORATE GOVERNANCE GRIEG SEAFOOD GROUP ACCOUNTS GRIEG SEAFOOD ASA ACCOUNTS AUDITOR’S REPORT ALTERNATIVE PERFORMANCE MEASURES 55 70 79 118 132 135 B O AR D OF DIR E C 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 OUP E XE CU T I V E M AN A GEMEN T T E AM Our executive 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. PART 03 – OUR FINANCIAL RESULTS 54 BOARD OF DIRECTORS’ REPORT PART 03 – OUR FINANCIAL RESULTS BOARD OF DIRECTORS’ REPORT GRIEG SEAFOOD’S VISION AND AMBITIONS OPERATIONAL REVIEW FINANCIAL PERFORMANCE GROUP FINANCIAL STATEMENT FINANCIAL PERFORMANCE GRIEG SEAFOOD ASA RISK AND RISK MANAGEMENT CORPORATE AND SOCIAL RESPONSIBILITIES EVENTS AFTER THE REPORTING DATE OUTLOOK GOING CONCERN STATEMENT FROM THE BOARD OF DIRECTORS AND THE CEO 56 58 60 64 65 67 68 68 69 69 55 GR IEG SE AF OOD’S V ISION AND AM BI T IONS The Grieg Seafood Group is one of the world's leading salmon farmers. The Group has licenses for seawater farming and land- based smolt production in Finnmark and Rogaland in Norway, and British Columbia and Newfoundland in Canada. The Group's vision "Rooted in nature – farming the ocean for a better future", represents how the Group intends to make a difference and what it aims to accomplish. It also encompasses the foundation for the Group's operational development – a healthy ocean, sustainable food, profitable growth and innovation, good jobs for everyone, and local value creation. With its 2026 strategy, the Group aims to harvest 120 000-135 000 tonnes in 2026 at a competitive cost level, and to evolve from purely a commodity supplier to an innovation partner for selected customers. Sustainable farming practices are the foundation of Grieg Seafood’s operations. Achieving the lowest possible environmental impact and the best possible fish welfare are both an ethical responsibility and a prerequisite for long- term profitability. To achieve sustainable growth and improve competitiveness, the Group focuses on reducing the time fish spend at sea, improving fish health and welfare, and providing digital decision-making support to its farmers. TARGETS AND ACHIEVEMENTS Global growth, value chain repositioning and cost improvement are the key areas of the Group’s strategy to 2026. As part of the strategy, the Shetland operations were sold in 2021 to concentrate the Group’s focus on the regions with the greatest potential for profitable growth - Norway and Canada. An important project for Grieg Seafood is the development of Grieg Seafood Newfoundland, where we transferred salmon to the sea for the first time in 2022. We expect to start harvesting towards the end of 2023. The Group originally estimated a harvest volume of 90 000 tonnes in 2022. The actual harvest volume was impacted by a combination of expedited harvest to capitalize on a strong market and reduced growth at sea due to biological challenges. The harvest came in at 84 697 tonnes GWT - a record-high volume for Rogaland, Finnmark and British Columbia as a whole, with both Rogaland and Finnmark delivering their highest ever annual harvested volume. The market demand for farmed salmon both in the retail and HoReCa sectors was exceptionally strong in 2022, providing Grieg Seafood tailwind as biological challenges and cost inflation put pressure on our farming cost. The Board is pleased with this year’s performance, which is a result of the hard work, passion and dedication of our employees. MAIN ACHIEVEMENTS • Highest ever volume harvested in our current farming regions, a total of 84 697 tonnes • Record high Operational EBIT of NOK 1 739 million, with Operational EBIT/kg of NOK 20.5, driven by the harvested volume and an exceptionally strong salmon market • Net profit after tax of NOK 1 154 million and earnings per share equal to NOK 10.3 • Good operational performance in our farming regions • Sales operations achieved key milestones of establishing processing partners and presence of own VAP products, and sold 6% of our harvested volume as VAP • Continued focus on certification for sustainable farming, a total of 29 of 40 eligible sites ASC certified, equivalent to 75% of budgeted net production • Ranked second by the Coller FAIRR Protein Producer Index of the world’s most-sustainable protein producers • Received a Leadership (A-) score for our transparency and actions related to climate change risks from CDP, the gold standard of environmental reporting • Recognized by CDP as a supplier engagement leader for raising the level of climate action across our value chain 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 PART 03 – OUR FINANCIAL RESULTS 5656 2018 2019 2020 2021 2022 2023E PART 03 – OUR FINANCIAL RESULTSThe Group aims to be cost competitive. The industry experienced are needed to develop the Group's operations sustainably, and general cost inflation during 2022, including a sharp rise in sustainable operations are needed to safeguard long-term feed prices, which drove up the farming cost in all regions. In financial results and performance, and create or maintain value addition, biological challenges put pressure on the farming cost, for all stakeholders. That is why sustainable farming practices particularly in Finnmark, where the rarely occurring parasite form the very foundation of all areas of Grieg Seafood’s strategy. Spironucleus salmonicida (Spiro) impacted both the survival rate The Board was pleased to see that Grieg Seafood was rated and cost. 2nd on the Coller FAIRR Index, as one of the world’s most- sustainable protein producers. Grieg Seafood also received the Biological control is the main cost driver and the primary Leadership (A-) score from the CDP for its transparent reporting operational focus area. The Group has implemented several cost and actions related to climate change. The Group has climate improvement initiatives, in the area of research and development reduction targets approved by the Science Based Target initiative (R&D) and the utilization of new technologies, which, combined (SBTi), with the aim of reducing carbon emissions by 35% by 2030 with a higher harvested volume, are expected to reduce or and 100% by 2050. In 2022, the Group decreased total emissions stabilize the farming cost. by 5% compared to the year before. The decrease is mainly attributable to a reduction in the emission factors from feed in Creating shareholder value is a prerequisite for company growth Scope 3. Feed emissions decreased by 19% compared to the and survival, and Return on Capital Employed (ROCE) is the year before, which secured an overall reduction in the Scope 3 Group’s ultimate financial performance indicator (see Alternative emissions, despite an increase in emissions from downstream Performance Measures for definition). The ROCE for 2022 ended transportation. The absolute Scope 1 greenhouse gas (direct at 23%, compared to the ROCE target of 12% per year. This is emissions from company-owned and controlled resources) and mainly attributable to the exceptionally high salmon spot market Scope 2 (indirect emissions from the generation of purchased prices during the year. The sustainability scoreboard includes some of the key energy) emissions have been reduced by 6%, while production increased by 12%. Measured as kilograms of C02 equivalents per tonne harvested, emissions decreased by 16%. Scope 3 performance indicators (KPIs) for the Group. Sustainability and emissions (emissions that occur upstream and downstream in financial results go hand in hand. Good financial results the value chain) accounted for 92% of total emissions in 2022. Even though farmed Atlantic salmon already has a low carbon production for 2022 was ASC certified. The Group aims to certify footprint, more work needs to be done to reduce the impact from more sites in 2023. the global food system. Grieg Seafood has been recognized by CDP as a supplier engagement leader for raising the level of Production and harvest volumes depend on the number of smolt climate action across the value chain, and will continue to work transferred to the sea, and how well that fish performs in terms with its suppliers. of growth and survival. By effectively preventing and combating sea lice and health issues, and by understanding the salmon’s Salmon feed is the most important and cost-intensive input behavior, the Group’s farming regions have worked continuously factor in salmon farming. The industry needs to develop new to improve survival and growth rates. Grieg Seafood targeted feed ingredients in order to grow sustainably. Grieg Seafood has a survival rate of 93% for 2022. As biological issues negatively identified and mitigated the most material risks related to feed impacted the survival rate in 2022, none of the regions reached ingredients, overfishing and deforestation. To ensure that feed this target. The survival rate in Rogaland was unchanged at 92%, ingredients does not contribute to overfishing and deforestation, while BC decreased from 92% to 91% due to incidents of low Grieg Seafood requires recognized certification of its high-risk oxygen levels and algae blooms. In Finnmark, the parasite Spiro ingredients. Fish meal and fish oil from fisheries and Brazilian impacted survival, which decreased from 95% to 91% in 2022. soy and palm oil are identified as high-risk ingredients. Grieg To mitigate Spiro, Grieg Seafood will invest NOK 70 million in Seafood has been acknowledged by CDP Forest with an A-score UV treatment facilities in 2023 to secure the water intake to the for its work against deforestation related to soy and a B-score for freshwater facility in Finnmark. Grieg Seafood has also initiated a its work related to palm oil. project with academia to investigate and learn more about Spiro. In general, it is expected that the Group’s post-smolt program Aquaculture Stewardship Council (ASC) certification is an will further improve fish health and welfare, as it provides important objective for the Group, as it provides the market with better control of the fish’s environment for a longer period of assurance of responsible operations and production of high- time. Post-smolt makes the fish more robust before they are quality seafood certified to the highest social and environmental transferred to the sea farms, and reduces their exposure to standards. As at year-end, 75% of the Group’s budgeted net seaborne biological risks. Other initiatives to improve fish health and welfare include the selection of roe with specific qualities FIGURE 3.2 FARMING COST PER KG FIGURE 3.3 ROCE AND OPERATIONAL EBIT/KG Rogaland (NOK/kg) Finnmark (NOK/kg) British Columbia (CAD/kg) ROCE ROCE target (12%) Operational EBIT/kg NOK/kg g k / K O N 70.0 60.0 50.0 40.0 30.0 CAD/kg 10.0 C A D k g / 9.0 8.0 7.0 6.0 5.0 ROCE 30% 20% E C O R 10% 0% 2018 2019 2020 2021 2022 Rogaland (NOK/kg) Finnmark (NOK/kg) British Columbia (CAD/kg) PART 03 – OUR FINANCIAL RESULTS 2018 2019 2020 2021 2022 ROCE ROCE target (12%) Operational EBIT/kg Operational EBIT/kg 30 20 10 0 O p e r a t i o n a l I E B T / k g 5757 PART 03 – OUR FINANCIAL RESULTS related to sea lice and diseases, feed customized for the various was impacted by occurrences of winter ulcers early in the year, stages of the salmon’s lifecycle, and vaccinations to immunize while Finnmark had an improvement in quality share compared against specific diseases. to 2021. The Group’s post-smolt program, with reduced exposure to biological challenges in the sea, is expected to contribute to an Grieg Seafood managed to reduce the overall use of medical increased superior share going forward. sea lice treatments in 2022 due to its continued efforts to Grieg Seafood operates in many rural communities, and is grateful for their permission to farm salmon in their inlets and ROGALAND Grieg Seafood Rogaland harvested a record-high volume of fjords. The Group aims to create local jobs and opportunities, 28 387 tonnes in 2022, an increase of 6% compared to the use local suppliers, and engage in and support various local 26 670 tonnes harvested in 2021. Sales revenues amounted to projects and activities. Communities’ social license to operate NOK 2 124 million, compared to NOK 1 431 million in 2021. The is essential for sustainable growth. In British Columbia, Grieg increase was mainly driven by the exceptionally strong market use targeted preventive methods, such as sea lice skirts and Unfortunately, the Group reported one escape incident in 2022, Seafood is farming in areas that belong to indigenous peoples, in 2022 in addition to a higher harvested volume compared to the cleaner fish in Rogaland and Finnmark. Grieg Seafood BC uses in Finnmark. Management has taken steps to prevent similar while Finnmark has been home to the Sami people for millennia. previous year. In 2022, price achievement came to NOK 74.8 per a combination of a barrier system between the farmed salmon incidents from happening again. In addition to ensuring that Grieg Seafood recognizes that these groups have special rights, kg, up NOK 21.2 per kg from NOK 53.7 per kg in 2021. The price and the environment and use of the latest mechanical sea lice farms have high technical standards and that procedures are as acknowledged in the United Nations Declaration on the Rights achievement in 2022 was negatively impacted by the sale of 22% removal tool to keep sea lice levels down. The Group’s use of being followed, all employees regularly attend courses on escape of Indigenous Peoples (UNDRIP), and takes particular care to of the volume under fixed-price contracts, in addition to quality antibiotics also decreased compared to 2021. Management aims prevention. to avoid use of antibiotics when possible. In Norway, effective vaccines have reduced the use of antibiotics. However, limited The Group does not compromise on occupational health and amounts have been used to secure the welfare of the fish when safety, and follows up accidents and absence rates. The Group there are no other alternative treatments, which was the case in had two high-consequence work-related injuries in Rogaland, Finnmark and BC in 2022. Diseases, winter ulcers and other biological issues can affect the quality of the 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 2022, none of the regions reached this target. The quality of the salmon in both Rogaland and BC which are being followed up in accordance with established procedures and guidelines. The Group targets an absence rate of below 4.5%. The target was reached only in Newfoundland in 2022. Management has routines in place to monitor and follow up absence. The Group conducted the global Great Place to Work survey also in 2022. The Board is proud to report that all regions received their Great Place to Work certification. The total score of 85% for the Group was very satisfactory, and in line with last year, proving that Grieg Seafood is among the best companies to work for. avoid infringing them. OP ER AT ION AL R E V IE W downgrades. The share of superior quality fish decreased from 81% in 2021 to 77% in 2022, mainly due to occurrences of winter ulcers in the first half of the year. The freshwater production has been good in 2022. During the year, seven million smolt were transferred to the sea, with an In general, both freshwater and seawater production through average weight of 550 grams, in line with the post-smolt strategy. the year was good, however with some challenges to seawater Overall, the seawater production performed well, despite some production impacting the farming cost. For further details, see biological challenges during the second half of the year. High the separate regional chapters in Part 2 Profit & Innovation. seawater temperatures and high sea lice pressure led to reduced A summary for Rogaland, Finnmark, British Columbia, Newfoundland and the sales organization follows below. growth during the autumn. Due to proactive and preventative measures, production stabilized at year-end. The 12-month rolling survival rate for 2022 remained at the same level as in 2021, at 92%. FIGURE 3.4 SURVIVAL RATE AT SEA FIGURE 3.5 SUPERIOR SHARE OF SALMON Rogaland Finnmark British Columbia Target (93%) Rogaland Finnmark British Columbia Target (93%) Rogaland Finnmark British Columbia Target (93%) 100% 90% 80% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 100% 90% 80% 70% 60% Survival rate calculated as a rolling twelve month survival rate. Newfoundland not reported as at 31 December 2022 as fish were transferred to the sea in mid-year. Rogaland Finnmark British Columbia Target (93%) PART 03 – OUR FINANCIAL RESULTS 58 The farming cost ended at NOK 48.2 per kg in 2022, up NOK harvesting and the culling of fish showing signs of ill health 3.7 per kg from NOK 44.6 per kg in 2021. The rise was due to protect fish welfare. The source of the parasite is believed 87% in 2021. The lower superior share mainly relates to early Production at the freshwater facility has been on track, with high maturation and the occurrence of winter ulcers at the start of survival rates. Two million smolt, with an average weight of 100 in particular to feed, whose price has increased by almost to be the water intake at the freshwater facility at Adamselv. 2022. 40%, although electricity and fuel costs have also increased Measures related to water treatment and disinfection are being grams, were transferred to two sea farms during the spring/ summer of 2022. The seawater licenses in Newfoundland require significantly. implemented to reduce risk of Spiro entering the freshwater facility in future. Spiro has reduced our 12-month survival rate Operational EBIT for the year ended at NOK 755 million, from 95% in 2021 to 91% in 2022. compared to NOK 242 million in 2021. This corresponds to NOK Freshwater production was stable during the year, however, roe use of sterile all-female salmon in order to eliminate the risk quality impacted the number of smolt transferred to sea this of genetic pollution of wild Atlantic salmon in case of escape. year. Seawater production was stable in 2022. The 12-month So far, the fish have performed well biologically, with a high survival rate decreased from 92% in 2021 to 91% in 2022. The seawater survival rate and good growth, and the company has not 26.6 per kg in 2022, up NOK 17.5 per kg from NOK 9.1 per kg in The farming cost ended at NOK 47.3 per kg in 2022, up NOK 3.6 survival rate was impacted by incidents of low oxygen levels and experienced any sea lice issues. At year-end, the average weight 2021. per kg from NOK 43.7 per kg in 2021. The industry experienced algae blooms. However, Grieg Seafood BC managed to stabilize of the fish was 1.3 kg. Newfoundland expects to harvest the first a general rise in costs in 2022. This applies in particular to feed, survival in periods of challenging environmental conditions due batch of fish in late 2023. Read more about Grieg Seafood Rogaland’s operational priorities whose prices increased by almost 40%. Additionally, reduced to its barrier and CO2L flow systems. in the regional chapter in Part 2 Profit & Innovation. FIGURE 3.6 ROGALAND OPERATIONAL EBIT/KG YEAR-OVER-YEAR growth due to the biological challenges increased the economic feed conversion rate (eFCR, a measure of the feed utilization) from 1.34 in 2021 to 1.40 in 2022. The farming cost increased from CAD 8.8 per kg (NOK 60.4) in production cost has been accounted for as inventory (biological 2021 to CAD 9.1 per kg (NOK 68.8) in 2022, mainly due to the assets excluding fair value adjustment) in the balance sheet, lower survival rate and costs recognized as abnormal mortality although a portion has been expensed directly to the income As Newfoundland has not yet started harvesting, most of the 21.2 in 2021, up NOK 18.4 per kg from NOK 7.3 per kg in 2021. historically had a higher farming cost per kg compared to other Operational EBIT for 2022 ended at NOK 926 million, compared to in the income statement. Towards year-end, the last fish from statement. Operational EBIT for 2022 totaled NOK -114.7 million, NOK 251 million in 2021, which corresponds to NOK 25.7 per kg the shíshálh (Sechelt) farming area was harvested. The area has compared to NOK -116.9 million in 2021. 26.6 -3.7 Read more about Grieg Seafood Finnmark’s operational priorities closing down this farming area, which is expected to reduce the chapter in Part 2 Profit & Innovation. in the regional chapter in Part 2 Profit & Innovation. farming cost going forward. However, cost increases due to the farming areas due to the farms’ small size. Grieg Seafood is Read more about Grieg Seafood Newfoundland in the regional 9.1 OpEBIT/kg 2021 Sales revenue/ kg Farming cost/kg OpEBIT/kg 2022 Source: Group Accounts Note 8 FINNMARK Grieg Seafood Finnmark harvested a record-high volume of 36 024 tonnes in 2022, an increase of 4% compared to the 34 484 tonnes harvested in 2021. Sales revenues amounted to NOK 2 629 million, an increase of 50% compared to NOK 1 756 million in 2021. The increase was mainly driven by the exceptionally strong market in 2022 as well as a higher harvested volume. Finnmark FIGURE 3.7 FINNMARK OPERATIONAL EBIT/KG YEAR-OVER-YEAR 22.1 25.7 -3.6 7.3 general cost inflation is impacting the industry. This relates in particular to feed, whose price has increased by almost 20%. SALES & MARKET Grieg Seafood is on an exciting journey of growth, which In 2022, operational EBIT ended at NOK 270 million for British fully integrated global sales organization, the Group aims to Columbia, compared to NOK 150 million in 2021, which optimize biological performance and market timing through corresponds to NOK 13.3 per kg in 2022, up NOK 2.9 per kg from close collaboration between farming and sales, thereby securing involves building a stronger presence in the market. With a NOK 10.4 per kg in 2021. good price achievement. The downstream strategy is based on strategic partnerships, value added processing and brand Read more about Grieg Seafood British Columbia’s operational cultivation. While sales currently consist mainly of fresh, head-on priorities in the regional chapter in Part 2 Profit & Innovation. gutted salmon, the target is for Value Added Processing (VAP) FIGURE 3.8 BRITISH COLUMBIA OPERATIONAL EBIT/KG YEAR-OVER-YEAR to account for 20-30% share of the harvested volume by 2026. To this end, the Group aims to establish processing partners close to key markets and customers in the EU and the USA. Increasing the VAP share is also an important part of reducing OpEBIT/kg 2021 Sales revenue/ kg Farming cost/kg OpEBIT/kg 2022 11.2 CO2 emissions. also improved its superior share compared to the previous Source: Group Accounts Note 8 year, which impacted price achievement. Finnmark achieved an average price of NOK 73.0 per kg in 2022, up NOK 22.1 per kg from NOK 50.9 per kg in 2021. Price achievement was negatively BRITISH COLUMBIA Grieg Seafood British Columbia (BC) harvested 20 286 tonnes in impacted by the sale of 22% of the volume under fixed-price 2022, 40% more than in 2021 (14 448 tonnes). Harvesting volumes contracts, but positively impacted by somewhat higher average vary significantly every other year in BC due to local production harvest weight compared to last year. region arrangements and fewer farms on the West Coast of Vancouver Island compared to the East Coast. As a consequence, Freshwater production at Adamselv was good during the year. A the region's volume varies every other year, regardless of the total of 10.8 million smolt, with an average weight of 180 grams, underlying biology. were transferred to the sea in 2022. Seawater production was somewhat challenging this year. Colder seawater temperatures in the first half of the year negatively impacted growth at sea, in addition to issues with winter ulcers. In the second half of the year, high seawater temperatures increased sea-lice levels. In addition, the parasite, Spironucleus salmonicida (Spiro) was detected in some fish in certain pens. This has led to early Sales revenues for the year amounted to NOK 1 665 million, an increase of 63% compared to NOK 1 023 million in 2021. The strong market drove price achievement to NOK 82.1 per kg in 2022, up NOK 11.2 per kg compared to NOK 70.8 per kg in 2021. The improved price achievement was somewhat offset by a lower superior share, which ended at 85% in 2022, compared to 10.4 -8.3 13.3 OpEBIT/kg 2021 Sales revenue/ kg Farming cost/kg OpEBIT/kg 2022 Today, the Group has the successful Skuna Bay brand in the USA, and aims to develop B2B brands going forward. Key milestones in 2022 were to establish processing partnerships in Norway and Europe, introduce VAP products to selected markets and reach 5-10% of harvested volume for VAP. Grieg Seafood is in line with the targeted milestones, and have started processing with partners in Norway and conducting processing trials in other countries in Europe. Furthermore, the Group has established its own VAP products in European, Asian and the US markets, and sold 6% of the harvested volume as VAP in 2022. The Group aims to increase the share of VAP volume to 8-12% of the harvested Source: Group Accounts Note 8 volume in 2023. NEWFOUNDLAND Grieg Seafood Newfoundland is a greenfield project acquired in For more information on the sales organization and the markets, see the Sales & Market chapter in Part 2 Profit & Innovation. 2020. 2022 saw the successful first transfer of smolt to sea farms in Grieg Seafood Newfoundland. PART 03 – OUR FINANCIAL RESULTS 59 FI N A NCI AL P E R F OR M A NCE GROUP FINANCIAL STATEMENTS The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). PROFIT AND LOSS Sales revenue and harvested volume The Group harvested 84 697 tonnes GWT in 2022, an increase prices for North American salmon in Seattle and Chilean salmon in Miami. Market prices are correlated across regions, but significant short-term variations between markets are not uncommon. Market demand remained strong in 2022. Relative to 2021, it is estimated by Kontali Analyse that the global volume of Atlantic salmon harvested decreased by approximately 1%. However, due to a limited supply of salmon, consumption decreased in most markets in 2022 compared to 2021. The largest relative increases of 12% compared to 75 601 in 2021. The Norwegian regions in consumption were found in the USA, up 3%, and China, up 5%, contributed 76% (81%) of the harvested volume, while British while the demand in EU & the UK was down by 1%. Columbia contributed 24% (19%). The Group’s main product, fresh whole gutted Atlantic salmon, kg (NOK 55.7 per kg) on aggregate for its farming regions. By is traded largely as a commodity, and the prices achieved largely comparison, the average NQSALMON NOK/kg price for 2022 reflect a general market price. The prices achieved will, to some was NOK 82.0 per kg (57.3). The Group’s price realization The Group's price realization for the year was NOK 75.8 per FIGURE 3.9 SENSITIVITY ANALYSIS SALES REVENUE/KG The difference between the total sales revenue for the Group of NOK 7 164 million and sales revenue from farming regions of NOK 6 418 million is attributable to the Elim/Other effect (see Sales revenue/kg opEBIT/kg impact Note 8 to the Group Accounts), which includes the gross uplift on Actual for 2022 +/- 2.5 % +/- 5.0 % +/- 7.5 % +/- 10.0 % +/- 12.5 % 75.8 77.7 / 73.9 79.6 / 72.0 81.5 / 70.1 83.4 / 68.2 85.2 / 66.3 1.9 3.8 5.7 7.6 9.5 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. Newfoundland is not included in the sensitivity analysis as no fish had been harvested at year- end 2022. sales revenue for the Group generated by the sales organization. The Group’s primary market is Continental Europe. Sales to Continental Europe comprised 58% of sales revenue in 2022 (63% of volume sold), down from 65% of the sales revenue in 2021 (73% of volume sold). The USA and Canada, or North America, is the second largest market, and totaled 29% of sales revenue in 2022 (26% of volume sold), up from 27% of the sales revenue in 2021 (21% of volume sold). Sales to Asia accounted for 9% of the sales revenue in 2022 (6% of the volume), compared to 6% in 2021 (4% of volume). Even though salmon is regarded as a commodity, prices vary across geographical markets, with the (relatively) highest price/kg generated in Asia and North America. extent, deviate from the spot market price, based on quality, was negatively impacted by contracts for some of the Group’s Total sales revenue for the year came to NOK 7 164 million, sales contracts and the ability to place the salmon effectively Norwegian volume, in addition to price achievement on up NOK 2 565 million from NOK 4 599 million in 2021. The sales Grieg Seafood did not have sales to Russia in 2022 or 2021. Sales in the market. Price achievement is measured relative to the production grade harvest volume. The increase in sales revenue revenue from the Group’s farming regions totaled NOK 6 418 to Ukraine accounted for 0% of Grieg Seafood’s total revenue in relevant observed market price or reference price. There are for the Group is mainly due to exceptionally high market prices, million in 2022, up NOK 2 207 million from NOK 4 211 million in 2022, compared to 1% in 2021. several reference prices for salmon. In Norway, Fish Pool especially during the first half of the year, and higher harvest provides historic price information, as well as future salmon volume. derivative prices FCA Oslo as part of the NASDAQ Salmon Index (NQSALMON). In the USA, Urner Barry provides reference The sensitivity analysis below illustrates the impact changes in 2021 (see Note 8 to the Group Accounts). The increase in sales revenue is due to a combination of record-high harvest volume in Rogaland and Finnmark in 2022 compared to 2021, 40% higher harvest volume in British Columbia, and an exceptionally strong sales revenue/kg have on Operational EBIT/kg. market in 2022. PART 03 – OUR FINANCIAL RESULTS 60 FIGURE 3.10 SENSITIVITY ANALYSIS FARMING COST/KG FIGURE 3.11 FARMING COST the farming cost. In addition, costs related to harvesting and Actual for 2022 Farming cost Costs directly related to the production and harvesting of salmon comprise the farming cost. The inputs needed to raise a live salmon from roe to harvestable size account for the bulk of processing are included. Performance is tracked through the farming cost per kg of harvested salmon. Tracking the underlying drivers that influence the cost of salmon to be harvested in the future, such as survival, feeding and growth, is therefore vital. The regional Operational EBIT is calculated as sales revenue less the farming cost. See Note 8 to the Group Accounts and Alternative Performance Measures for more information. Until harvest, the production cost of the salmon is capitalized to inventory and included in the line item ‘biological assets’ in the balance sheet. The production cycle for a salmon, from roe -/+ 2.5 % -/+ 5.0 % -/+ 7.5 % -/+ 10.0 % -/+ 12.5 % Farming cost/kg opEBIT/kg impact 52.7 51.4 / 54.1 50.1 / 55.4 48.8 / 56.7 47.5 / 58.0 46.1 / 59.3 1.3 2.6 4.0 5.3 6.6 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. Newfoundland is not included in the sensitivity analysis as no fish had been harvested at year- end 2022. to harvest weight, is about three years, whereas the production In addition to purchase prices for inputs to production, cycle after smoltification is about 12-24 months. Working capital profitability is also influenced by how quickly the salmon grow requirement is, per generation, generally progressive throughout and how efficiently feed is converted into weight gain (feed the production cycle. Due to the long production cycle for Atlantic conversion rate). Water temperatures, biological conditions, salmon with a harvest weight of about 4-5 kg, the expensed farming practices and fish survival are key drivers for salmon farming cost through the income statement at the point of growth. Higher seawater temperatures increase growth, but Feed cost Admin Despreciation Smolt Salaries Other Feed cost Admin Depreciation Smolt Salaries Other 39% 41% 37% 37% 2018 2019 2020 2021 2022 4% 4% 12% 6% 33% 4% 5% 11% 6% 32% 4% 5% 12% 6% 36% 4% 5% 15% 6% 39% 4% 4% 14% 5% 33% 33% harvest reflects all costs for all past periods (if not previously also increase biological risks in the form of diseases, sea lice 0% 100% expensed as abnormal mortality). and algal blooms. This may in turn result in lost feeding days, lower growth and reduced survival. Through the introduction of Production cost capitalized to inventory (biological assets improved sensor technology, use of advanced imaging analysis excluding fair value adjustment, see Note 9 of the Group and other technologies, the Group is continuously improving the Accounts) comprises feed as well as health, treatment and ability to make informed decisions about feeding and protective fish welfare-related expenses. In addition, the production cost measures. capitalized to inventory includes salary, depreciation of fixed assets and administration costs that are allocated to production. Strong and healthy fish, combined with high feed quality and good Feed cost comprises the largest individual part of the production feeding practices, are the key to achieving a low production cost. cost. Farming performance is measured through the economic feed conversion rate, or eFCR, and relative growth indices (achieved In recent years, the industry has faced challenges with respect growth compared to own and feed supplier expectations). Feed to sea lice. This has caused an increase in costs directly related accounted for 39% of the total cost per kg harvested fish in 2022, to treatments and increased investments in equipment and an increase from 37% in 2021, primarily due to increased feed technologies. This development has had a noticeable impact on prices. At the same time, the economic feed conversion rate the relative allocation of cost factors, as well as the total cost (eFCR) increased from 1.35 in 2021 to 1.39 in 2022 for the Group. level in the industry. In terms of cost per kg, however, the loss The eFCR measures how much fish feed is used to produce one of harvested volumes has had a significantly larger impact than kilogram of live salmon (net of mortality). The main difference the direct cost increases. As production cost per kg has risen between eFCR and bFCR (biological feed conversion rate) is that in recent years, the directly variable cost of feed has become a bFCR does not adjust the production figure for mortality. smaller part of the total incurred cost per kg produced salmon. At the same time, other costs, such as salaries, health costs and Salmon growth, survival rates and the economic feed conversion maintenance, have become a larger share of the total. Although rate (eFCR), are strongly linked to fish health, disease and sea the industry has seen feed prices increase by up to 40% during lice. Treatments, fasting and reduced appetite negatively impact 2022, this has not been fully captured in the expensed farming growth, reduce our harvested volumes and increase the cost cost in 2022 and will continue to impact farming cost in 2023. per kg of harvested fish. In short, an efficient feed conversion is FIGURE 3.12 ECONOMIC FEED CONVERSION RATE Rogaland Finnmark Rogaland British Columbia Finnmark Newfoundland 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0 Grieg Seafood Group British Columbia Newfoundland Grieg Seafood Group The sensitivity analysis illustrates the impact changes in farming cost/kg have on the Operational EBIT/kg, expressed as percentage changes in the 2022 financials. crucial to being cost competitive. 2018 2019 2020 2021 2022 PART 03 – OUR FINANCIAL RESULTS 61 FIGURE 3.13 KEY FIGURES Rogaland Finnmark British Columbia Newfoundland Elim/Other 2022 28 387 36 024 20 286 — — 2021 26 670 34 484 14 448 — — Grieg Seafood Group 84 697 75 601 Source: Group Accounts, Note 8 Harvest volume GWT tonnes Operational EBIT/kg (NOK) Operational EBIT (NOK million) Finnmark had an increase in cost of reduced survival of NOK 1.3 The Group's farming cost for 2022 ended at NOK 52.7 per kg (NOK 47.2 per kg). The underlying cost has been good, however increasing due to inflation pressure on key input to production, EBIT Operational EBIT Operational EBIT (see Note 8 to the Group Accounts and including feed. In Finnmark, the farming cost has increased Alternative Performance Measures for more information) in 2022 towards the end of the year due to the parasite Spironucleus ended at a record-high of NOK 1 739 million (NOK 442 million), salmonicida (Spiro), which has led to early harvesting and the equivalent to NOK 20.5 per kg (NOK 5.9 per kg). The increase was culling of fish showing signs of ill health to protect fish welfare. driven by exceptional price realization in all farming regions. 2022 26.6 25.7 13.3 — — 20.5 2021 9.1 7.3 10.4 — — 5.9 2022 755 926 270 -115 -97 1 739 2021 242 251 150 -117 -84 442 per kg in 2022 compared to 2021. In total, the Norwegian farming The difference between Operational EBIT and the EBIT line regions contributed to 69% (76%) of the farming cost, an increase item presented in the income statement for 2022 relates to the of NOK 3.6 per kg in cost, from NOK 44.1 per kg in 2021 to NOK non-operational share of profit from associates, the production 47.7 per kg in 2022. British Columbia had, despite a 40% higher fee on the volume harvested in Norway, fair value adjustment harvest volume year-on-year, a farming cost of CAD 9.1 per kg, of the Group’s biological assets, impairment of tangible and up CAD 0.4 per kg compared to CAD 8.8 per kg in 2021. Biological intangible non-current assets, litigation and legal claims, and events led to an increase in cost of reduced survival of CAD 0.4/ decommissioning costs, as explained in the following. kg in BC compared to 2021. The salmon farming industry might be volatile, due to both biological and market conditions. The sensitivity analysis of 2022 illustrates the impact changes in eFCR has on the Operational EBIT/kg, calculated as percentage changes on the 2022 financials. FIGURE 3.14 SENSITIVITY ANALYSIS ECONOMIC FEED CONVERSION RATIO (EFCR) eFCR opEBIT/kg impact Actual for 2022 -/+ 2.5 % -/+ 5.0 % -/+ 7.5 % -/+ 10.0 % -/+ 12.5 % 1.39 1.36 / 1.43 1.32 / 1.46 1.29 / 1.50 1.25 / 1.53 1.22 / 1.57 0.5 1.0 1.6 2.1 2.6 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. Newfoundland is not included in the sensitivity analysis as no fish has been harvested at year-end 2022. 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 2 234 million, up NOK 495 million compared to NOK 1 738 million in 2021. Salaries and personnel expenses ended the year at NOK 696 million, an increase of NOK 118 million from NOK 577 million in 2021. The increase was partly driven by the farming regions, and partly by the synthetic option scheme to the management group and regional directors, as all members of Group management exercised options during the year. See the Group Accounts Note 17 for more information. Other operating expenses ended at NOK 2 087 million, up NOK 560 million compared to NOK 1 527 million in 2021. FIGURE 3.15 GRIEG SEAFOOD GROUP OPERATIONAL EBIT/KG YEAR-OVER-YEAR 20.1 0.2 20.5 -5.5 5.9 OpEBIT/kg 2021 Sales revenue/kg Farming cost/kg Other cost/kg OpEBIT/kg 2022 Source: Group Accounts, Note 8. Non-operational share of profit from associated companies, production fee and fair value adjustment of biological assets The share of profit from associated companies included in Operational EBIT ended at NOK -1 million for 2022 (NOK -1 million), see Note 8 to the Group Accounts. The share of profit from associated companies not included in Operational EBIT for 2022 was NOK 23 million, which related to a gain resulting from dilution through a capital issue in Årdal Aqua. In total, the share of profit from associated companies included in the income statement for 2022 was NOK 21 million, up from NOK -1 million in 2021. The production fee, calculated as NOK 0.405 per kg salmon harvested by the Norwegian regions, came to NOK 26 million in 2022 (NOK 24 million), while the fair value adjustment of biological assets impacted the Group positively by NOK 83 million in 2022, down NOK 440 million from NOK 523 million in 2021. PART 03 – OUR FINANCIAL RESULTS 62 Write-down of non-current tangible and intangible assets, litigation and legal claims, and decommission costs At the end of the year, Norwegian aquaculture licenses were EBIT presented in the income statement is provided in Note 8 of the Group Accounts. The reconciliation items between Operational EBIT and EBIT presented in the income statement are commented on above, see “Non-operational share of profit operations in 2022 came to NOK 1 154 million, up NOK 549 Biological assets measured at cost totaled NOK 2 896 million million from NOK 604 million in 2021. as at 31 December 2022, up NOK 417 million from NOK 2 479 million as at 31 December 2021. Measured relative to total In 2021, Grieg Seafood sold its Shetland assets, thus no impact assets, the accumulated capitalized cost of inventory contributed written down by NOK 47 million in the income statement (see from associated companies, production fee and fair value from discontinued operations was recognized for 2022. See Note 22% of the balance sheet as at 31 December 2022, compared to Note 10 to the Group Accounts). During the year, Grieg Seafood adjustment of biological assets” and “Write-down of non-current 6 for further details. The net profit from discontinued operations 23% as at 31 December 2021. Grieg Seafood’s biological assets decided to end production in the shíshálh (Sechelt) farming area tangible and intangible assets, litigation and legal claims, and in 2021 came to NOK 600 million, bringing the net profit for the are primarily fish at sea, which represented 94% of the book of British Columbia, negatively impacting the income statement decommission costs”. year for 2021 to NOK 1 205 million. with a write down of licenses and relevant seawater assets of NOK 93 million, in addition to site clean-up costs estimated at NOK 24 million (NOK 0 million). Total write-down not included in Operational EBIT in 2022 was NOK 140 million (NOK 0 million). The site clean-up costs are included in the financial statement NET FINANCIAL ITEMS, TAXES AND NET PROFIT FOR THE YEAR Net financial items Net financial items came to NOK -50 million in 2022, up NOK 37 FINANCIAL POSITION As at 31 December 2022, the book value of the Group's assets value of biological assets, excluding fair value adjustment, as at 31 December 2022. The comparable figure for 31 December 2021 was 93%. By weight, biological assets totaled 50 614 tonnes at year-end 2022, down 8 507 tonnes from 59 121 tonnes at year- totaled NOK 12 875 million, up NOK 2 161 million from NOK end 2021. Biological assets stocked at sea accounted for 99% 10 714 million as at 31 December 2021. The increase in the of this amount at year-end 2022 (99% as at year-end 2021). The line item "Decommissioning costs" (see Note 10 and 28 of million from NOK -87 million in 2021. Compared to 2021, the debt Group's balance sheet compared to 2021 was primarily due to the average live weight of the fish on aggregate (on land and at sea) the Group Accounts for more information). In 2022, the Group service cost in 2022 was lower than in 2021. This is primarily due refinanced syndicated debt in Q1 2022 and increased net working was 1.1 kg as at 31 December 2022, compared to 1.0 kg at year- recognized NOK 157 million (NOK 0 million) as litigation and legal to the refinanced loan facility in 2022 as well as the improved capital following the exceptionally strong market prices during end 2021. claims costs related to lawsuits in North America. The costs are leverage ratio of Grieg Seafood following the sale of Shetland at the first half of the year. included in the financial statement line item "Litigation and legal the end of last year. However, the lower debt service cost was As at 31 December 2022, Grieg Seafood was in a solid financial costs" and thus not included in the Group’s Operational EBIT (see offset by differences in net currency gains/losses compared to The Group's goodwill, licenses, other intangible assets, and position. The cash balance at the end of the year was NOK Note 28 of the Group Accounts for more information). 2021. EBIT EBIT (Earnings before interests and taxes) ended at NOK 1 498 Taxes and net profit for the year Profit before tax in 2022 totaled NOK 1 448 million, which is an property plant and equipment including right-of-use assets 643 million, down NOK 286 million from NOK 928 million as at totaled NOK 6 205 million as at 31 December 2022, up NOK 31 December 2021. In 2022, approximately NOK 1 000 million of 569 million from NOK 5 636 million as at 31 December 2021. surplus cash has been invested in money market funds, which Measured relative to total assets, these assets contributed 48% largely explain the negative net cash flow of the year. Current million in 2022, up NOK 557 million from NOK 941 million in 2021. increase of NOK 594 million from NOK 854 million in 2021. The of the balance sheet as at 31 December 2022, compared to 53% assets (excluding fair value adjustment of biological assets) A reconciliation between Operational EBIT and the tax expense for 2022 came to NOK 294 million, compared to a tax as at 31 December 2021. expense of NOK 249 million in 2021. Net profit from continued over current liabilities measured 2.8 as at 31 December 2022, compared to 3.5 as at 31 December 2021. The lower ratio is FIGURE 3.16 EQUITY RATIO AND NIBD/HARVEST Equity ratio NIBD/Harvest Equity-ratio o i t a r - y t i u q E 55% 50% 45% 40% 35% PART 03 – OUR FINANCIAL RESULTS 2018 2019 2020 2021 2022 NIBD/Harvest calculated as NIBD according to covenant divided by last 12 months harvested volume. Equity ratio NIBD/Harvest NIBD/Harvest 45 43 40 38 35 33 30 28 25 23 20 63 / I N B D H a r v e s t due to installments on debt for the next twelve being higher For 2022, the net cash flow from investing activities totaled NOK than year-end 2021 and a higher tax payable at year-end 2022. -1 651 million (NOK -560 million), of which investments in non- Furthermore, the Group had undrawn credit facilities of NOK current tangible and intangible assets totaled NOK 564 million 1 700 million as at 31 December 2022, compared to NOK 885 (NOK 565 million). In addition, investments of NOK 112 million million as at 31 December 2021. The change in undrawn liquidity (NOK 15 million) have been made in associated companies. is due to the refinanced syndicated debt in Q1 2022. Total equity Finally, approximately NOK 1 000 million of surplus cash has as at 31 December 2022 came to NOK 6 486 million, up NOK 922 been invested in money market funds in 2022. million from NOK 5 563 million as at 31 December 2021. The equity-ratio as at 31 December 2022 was 50% compared to 52% The net cash flow from financing activities for 2022 was NOK as at 31 December 2021. -204 million (NOK -1 430 million). In 2022, a dividend of NOK 337 million (NOK 3.0 per share) was paid, in addition to shares being The Group's debt structure comprises sustainability-linked loans repurchased for NOK 30 million at the end of the year (of which with a NOK 750 million term loan, an EUR 75 million term loan, a 24 million were settled in cash before year-end). Furthermore, NOK 1 500 million revolving credit facility and a NOK 200 million the Group has repurchased bonds worth NOK 77 million during overdraft facility. As at 31 December 2022, net interest-bearing the year, of which NOK 50 million had been settled in cash by liabilities (NIBD) excluding the effect of IFRS 16 totaled NOK year-end 2022, with the remaining NOK 25 million paid in January 1 739 million, down NOK 157 million from NOK 1 895 million as 2023. Finally, the Group’s syndicated debt was refinanced in at 31 December 2021. NIBD including the effects of IFRS 16 was the first half of 2022, where the revolving credit facility and NOK 2 223 million, down NOK 68 million from NOK 2 291 million the outstanding EUR term loan under the previous finance as at 31 December 2021, which equals 17% of the Group’s assets arrangement was settled (in total, approximately NOK 865 as at 31 December 2022, compared to 21% as at 31 December million), offset by a drawdown of NOK and EUR term loans under 2021. Lastly, NIBD excluding the effect of IFRS 16 divided by the the new facility arrangement of approximately NOK 1 463 million. last twelve months’ actual harvest volume (tonnes GWT) equalled As the revolving credit facility and overdraft were undrawn at 31 NOK 20.5 per kg as at year-end 2022, compared to NOK 25.1 at December 2022, a total of NOK 1 700 million was available for year-end 2021, well below the long-term target of NOK 30 per kg. utilization by the Group. The Group was in compliance with its financial covenants as The net change in cash and cash equivalents for the 2022 was at 31 December 2022. As at 31 December 2022, the equity NOK -292 million (NOK -1 389 million from continued operations), ratio according to covenant was 52%, compared to 54% as at and as at 31 December 2022, the Group had a cash balance of 31 December 2021. As at 31 December 2022, 75% of gross NOK 643 million, down NOK 286 million from NOK 928 million as interest-bearing liabilities (See Note 12 to the Group Accounts) at 31 December 2021. were green or sustainability-linked, compared to 47% as at 31 December 2021. The increase in the share of green and sustainability-linked financing is primarily due to the sustainability-linked facility of NOK 3 200 million, which was refinanced with secured lenders in Q1 2022. GR IEG SE AF OOD A S A PROFIT FOR THE YEAR The parent company’s financial statements have been prepared Grieg Seafood aims to provide shareholders with a competitive in accordance with Norwegian accounting principles (NGAAP). return on invested capital through payment of dividends and share price increases. The Board of Directors maintains that, as Grieg Seafood ASA is the holding company of the farming and an average over time, dividends should correspond to 30-40% sales operations in the Grieg Seafood Group. In addition, the of the Group’s profit after tax, adjusted for the effect of the company is the employer of Group management as well as fair value of biological assets (limited to 50 % by Green Bond centralized functions of the Group. agreement). At the same time, the Group’s net interest-bearing debt per kg harvested salmon should remain below NOK 30, Total operating income for the year ended at NOK 288 million but can be exceeded in periods of growth investments. As at 31 in 2022, up NOK 190 million compared to NOK 98 million in December 2022, Grieg Seafood was in a solid financial position 2021. The company’s operating income has increased in 2022 to execute strategic priorities and deliver shareholder return. compared to 2021 primarily due to the establishment of a royalty The Board recommends that a dividend of NOK 4.5 per share be fee model within the Group in 2022, as well as adjustments made distributed to shareholders in the first half of 2023. on the management fee model compared to 2021. CASH FLOW The net cash flow from operating activities for 2022 totaled NOK 1 562 million (NOK 601 million). The higher cash flow from operating activities is attributable to exceptional price achievement by all our farming regions in 2022. Salaries and personnel expenses totaled NOK 118 million in 2022, up NOK 47 million compared to NOK 72 million in 2021. The company has issued options to executive management 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 FIGURE 3.17 GROSS INVESTMENTS, HARVEST VOLUME TONNES GWT AND GROSS INVESTMENTS/KG Gross investments Harvest volume GWT NOK MILLION 1 200 800 400 0 1 000 TONNES 1 0 0 0 T O N N E S 90 80 70 60 I I N O L L M K O N 2018 2019 2020 2021 2022 Gross investments Harvest volume GWT NOK/kg / g k K O N 15 10 5 2018 2019 2020 2021 2022 The cash payment of NOK 620 million made on the acquisition of Grieg Newfoundland 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. PART 03 – OUR FINANCIAL RESULTS 64 exercise date. The increase in personnel expenses is primarily Total equity at the end of 2022 stood at NOK 3 011 million, up Seafood ASA in order to facilitate the employees’ share-based due to costs from the synthetic option scheme, as all members of NOK 267 million compared to NOK 2 744 million in 2021. During incentive scheme. the management team exercised options during the year. the year, a dividend of NOK 3.0 per share, or NOK 337 million in Depreciation and amortization of non-current tangible and ASA had an equity ratio of 42%, compared to 48% the year before. compared to NOK 793 million as at 31 December 2021. total, was distributed to shareholders. At year-end, Grieg Seafood As at 31 December 2022, available cash totaled NOK 525 million, intangible assets ended at NOK 7 million, in line with the year At the end of the year, Grieg Seafood was in compliance with before. its financial covenants. Grieg Seafood ASA’s financial covenant is tied to the equity ratio (excl. the effect of IFRS 16) in the Other operating expenses totaled NOK 200 million in 2022, Grieg Seafood Group, which was 52% as at 31 December 2022 up NOK 102 million from NOK 97 million. In 2022, the Group compared to 54% at the end of 2021. recognized litigation and legal claims costs related to lawsuits in North America under other operating expenses. The increase The company has a syndicated sustainability-linked loan with in other operating expenses for the year is primarily due to the secured lenders totaling NOK 3 200 million, which compromises settlement paid in North America, for which a portion of the a NOK 750 million term loan, an EUR 75 million term loan, a settlement relates to Grieg Seafood ASA. See the Group Accounts NOK 1 500 million revolving credit facility and a NOK 200 million Note 28 for more information. overdraft facility. At the end of the year, NOK 1 700 million of the revolving credit facility and the overdraft facility was available for The parent company recorded an operating loss of NOK 37 utilization. The total amount outstanding on the syndicated debt million in 2022, compared to a loss of NOK 77 million in 2021. was NOK 1 474 million as at 31 December 2022 (excl. amortized Net financial items ended at NOK 1 053 million in 2022, up NOK NOK 1 424 million (excl. amortized loan costs), which matures in loan costs). The company also has a green bond issue of NOK 487 million from 2021. The higher net financial items are due June 2025. primarily to higher group contributions from subsidiaries in 2022 compared to 2021. Group contributions from subsidiaries Grieg Seafood ASA’s net cash flow from operations in 2022 are included in net financial items in the amount of NOK 995 totaled NOK -39 million, compared to NOK 147 million in 2021. million in 2022 (NOK 308 million in 2021). Interest expenses from The difference in net cash flow from operations between 2022 external financing decreased in 2022. This is primarily due to the and 2021 is due to higher income tax paid in 2022 compared to refinanced loan facility in 2022 as well as the improved leverage the year before and timing differences in net working capital. ratio of Grieg Seafood following the sale of Shetland at the end of 2021. Cash flow from investing activities came to NOK -575 million (NOK 1 611 million in 2021). The difference from 2021 to 2022 Profit before tax for Grieg Seafood ASA totaled NOK 1 016 million is primarily due to a cash surplus of approximately NOK 1 000 in 2022, up NOK 527 million from NOK 489 million in 2021. The million being invested in money market funds in 2022. tax expense in 2022 ended at NOK 222 million, compared to NOK 81 million in 2021, bringing net profit for the year to NOK 794 Net cash flow from financing activities came to NOK 346 million, million, up NOK 387 million from NOK 407 million in 2021. compared to NOK -1 149 million in 2021. The change in net cash flow from financing activities from 2021 to 2022 is primarily Total assets amounted to NOK 7 178 million at the end of 2022, due to the refinanced syndicated debt in Q1 2022, where the up NOK 1 501 million from NOK 5 677 million the year before. The revolving credit facility and the outstanding EUR term loan change in the book value of assets is primarily due to changes in under the previous finance arrangement was settled (in total, current assets and working capital items, including receivables approximately NOK 865 million), offset by a drawdown of NOK from subsidiaries. As Grieg Seafood ASA is the owner of the cash and EUR term loans under the new facility arrangement of pool arrangement, net cash flow from the subsidiaries part in approximately NOK 1 463 million. In addition, surplus cash has the group account impacts Grieg Seafood ASA’s working capital also been utilized to repurchase bonds. In total, approximately through changes in cash and cash equivalents and short-term NOK 77 million of the green bond loan was repurchased in 2022, receivables/liabilities to subsidiaries. of which NOK 50 million had been settled in cash by year-end 2022, with the remaining NOK 25 million paid in January 2023. The book value of investments in subsidiaries came to NOK As a consequence of the improved leverage subsequent to the 1 903 million, which is unchanged compared to the year before. Shetland transaction at the end of 2021, the debt service costs Long-term loans to subsidiaries amounted to NOK 798 million, up NOK 11 million from NOK 787 million due to changes in foreign exchange rates. In 2022, a cash surplus, generated by the combination of the sale of Shetland in late 2021, the refinanced syndicated debt in early 2022 and the strong salmon market in 2022, has been invested in money market funds, which had a book value of NOK 1 013 million as at 31 December 2022. in 2022 compared to 2021 were substantially lower. In 2022, a dividend of NOK 3 per share was paid to shareholders, equivalent to NOK 337 million in total. In December 2022, treasury shares worth NOK 30 million were repurchased, of which NOK 24 million was settled in cash by 31 December 2022, and the remainder settled in January 2023. Treasury shares are held by Grieg PART 03 – OUR FINANCIAL RESULTS FINANCIAL RESULTS AND ALLOCATIONS – GRIEG SEAFOOD ASA Our ambition is to create shareholder value and deliver competitive returns relative to comparable investment alternatives. The Group’s dividend policy is that the dividend should, over time, average 30-40% of the Group's net profit after tax before fair value adjustment of biological assets (limited to 50% by Green Bond agreement). At the same time, the Group’s net interest-bearing debt per kg harvested salmon should remain below NOK 30, although this may be exceeded in periods of growth investments. At year-end, the financial position of Grieg Seafood ASA was solid, and the Board proposes that a dividend of NOK 4.5 per share be distributed to shareholders. The parent company, Grieg Seafood ASA, recorded a profit after tax of NOK 794 million for 2022, which the Board proposes that the Annual General Meeting allocate as follows: FIGURE 3.18 ALLOCATION OF PROFIT/LOSS FOR THE YEAR, GRIEG SEAFOOD ASA NOK million Provision for dividends Transfer to retained equity Total allocated 504.1 290.0 794.1 R ISK AND R I SK M AN A GEMEN T The Group is exposed to risks in numerous areas, such as biological production, the effects of climate change, degradation of nature, compliance risk, the risk of accidents, changes in salmon prices, and the risk of politically motivated trade barriers. The Group’s internal controls and risk exposure are subject to continuous monitoring and improvement, and efforts to reduce risk in different areas have a high priority. Management has established a framework for managing and eliminating most of the risks that could prevent the Group from attaining its goals. OPERATIONAL RISK The greatest operational risk relates to biological developments within the Group’s smolt and marine aquaculture operations. The book value of live fish at cost at year-end was NOK 4 046 million, of which the fair value adjustment was NOK 1 150 million. The book value of live fish at cost at year-end 2022 was NOK 2 896 million, or 22% of the balance sheet. Biological risks include oxygen depletion, diseases, viruses, bacteria, parasites, algae blooms, jelly fish and other contaminants. To reduce this risk, the Group focuses on improving fish health and welfare through several initiatives, including joint fallowing and area-based management, switching from pharmaceutical to mechanical delousing treatment methods, and use of sensor technology to reduce algae challenges. The Group’s post-smolt strategy, where fish are grown to a larger size on land, thereby shortening the time they spend in open sea pens, is an important element of the effort to reduce biological risk. Throughout the year, the underlying biology, and freshwater and seawater production, have been good in all regions. In BC, freshwater production has been somewhat challenging, with reduced survival due to egg quality issues. This has impacted the number of smolt transferred to the sea this year, and might impact volume to be harvested in 2024. The Group has taken steps to ensure a higher quality of roe going forward. Infectious Salmon Anemia (ISA) was detected in the broodstock facility in Rogaland, and in the beginning of 2023, the broodstock was euthanized. This will not have any impact on smolt production or harvested volume going forward, as Grieg Seafood Rogaland is able to secure roe in the market. In Rogaland, high seawater temperatures and high sea lice pressure led to reduced growth during the autumn of 2022. In Finnmark, colder seawater temperatures in the first half of the year adversely impacted growth in the sea. In the second half of the year, high seawater temperatures increased sea-lice pressure. Finnmark continues to see the impact of the parasite Spironucleus salmonicida, which was detected in some of the pens with fish at sea farms in Finnmark in late 2022. Although mortality rates have been low, fish showing indications of illness have been culled out of concern for their welfare. This has impacted, and will continue to impact, the farming cost in Finnmark. The source of the parasite is believed to have been found, and measures to reduce the risk of such an event happening again are being implemented. Both freshwater and seawater production in Newfoundland continue See the Group’s risk overview here. A summary of some of these according to plan. risks, in the short and medium term, is included below. The members of the Board of Directors and the CEO are covered by Directors and Officers (D&O) insurance. The insurance provides liability cover for members of the Board of Directors and the CEO with respect to claims arising from decisions or actions they may take on behalf of Grieg Seafood ASA. 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 technology to monitor algal blooms enables the type of algae to be determined at an early stage 65 and the appropriate feeding response selected. This is of vital The Group’s has its own internal sales and market organization, The proposed tax will apply to commercial marine-phase salmon including industry and First Nations, are participating in the importance as different types of algae have different effects on including a value-added department. The Group has secured and trout aquaculture activity. Based on the proposal as per 28 process, which is expected to be concluded during 2023. Grieg the salmon. value-added processing capacity in both Norway and Canada to March 2023, the resource tax will have a rate of 35 % on profits Seafood supports the transition and it aligns with the Group’s reduce the risk of low price achievement on production grade generated by the marine-phase aquaculture activity, in addition to technological investments to improve biological control, such as The industry has experienced general cost inflation in 2022. This fish. Continental Europe is the Group’s most important market, regular corporate taxes. Grieg Seafood farms Atlantic salmon in post-smolt and barrier systems. The possibility of introducing applies in particular to feed, whose price has increased by close with North America as the second largest market. The Group both Norway and Canada, and the proposed Norwegian resource different types of licenses to advance improvements are to 40% in Norway and close to 20% in BC in 2022 compared to does not sell salmon to Russia due to the ongoing war against rent tax will not directly impact the Group’s operations in British discussed as a part of the transition strategy. It is expected that 2021. The feed industry is characterized by large global suppliers Ukraine. operating under cost plus contracts. Feed prices are therefore Columbia and Newfoundland, as they are subject to Canadian tax regular licenses will be incorporated into the strategy. Grieg legislation. The proposed resource rent tax will, however, directly Seafood is committed to working with the government and directly linked to the global markets for fishmeal, vegetable The Group targets a contract share of 20-50% for its Norwegian impact the operations in Rogaland and Finnmark, as the taxation Indigenous communities to find a viable path forward. meal, animal proteins and fish/vegetable/animal oils, which harvested volume. The estimated contract share for 2023 is of the sea farm operations in those regions may increase from are the main ingredients in fish feed. Access to terrestrial feed 15%. The contract market has been impacted by the proposed 22% to 57%, should the proposed resource tax be adopted in its In addition, farm tenures in BC are renewed by the province on a ingredients has improved due to good crops, while access to resource rent tax on salmon farming in Norway, although there current form. marine feed ingredients continues to be limited. The key drivers are signs of improvement going into 2023. The Group does not for the increased feed prices are inflationary pressure on the have contracts in BC. prices of the raw materials used in the production of fish feed, such as soy, wheat, canola, sunflower, corn, and fish meal and fish oil. In addition, Grieg Seafood’ feed cost over the year was COMPLIANCE RISK Grieg Seafood is committed to conducting its business ethically The Group has put all new growth investments in Norway, worth a the farm is located will not be renewed. Grieg Seafood supports total of approximately NOK 2.3 billion, on hold until a final version the implementation of the United Nations Declaration on the of the tax regime has been adopted. Once the final version of Rights of Indigenous Peoples (UNDRIP) into BC regulations, and the tax has been adopted, Grieg Seafood will assess how it will we are engaging in the ongoing process of reconciliation between regular basis. From 2022, farm tenures that are not accepted by the First Nation that is the rights-holder of the territory where affected by a fall in the value of the Norwegian Krone (NOK). The and with integrity. The Group performs risk assessments on its impact the company's strategy and plans. The proposed tax the government, First Nations and industries. In 2022, the inflation pressure is driven by supply limitations due to ripple operations and value chain, and has implemented mitigating may divert more of the Group’s investments to Canada. Overall, Coalition of First Nations for Finfish Stewardship was launched, effects of the Covid-19 pandemic as well as disturbances seen in measures and controls to prevent corruption and money salmon farming in Norway may lose competitiveness compared highlighting the positive role that the salmon farming industry the feed value chain (production and logistics) due to the war in laundering activities. The Group did not experience any incidents to aquaculture in other countries. With new technologies being can play as part of the reconciliation process. Grieg Seafood Ukraine. of corruption or money laundering activities in 2022. The Group adheres to all relevant sanctions related to Russia and Belarus. The risk of cyberattacks is relevant for the Group. Cyberattacks developed, where there is no reliance on a coastline with recognizes the First Nations as an additional level of government naturally tempered water, aquaculture investors may find it more where we operate, and we are working to ensure that our attractive to invest and develop the industry in places with lower production takes place under agreements with the rights-holders may cause disruption to the ordinary course of operations, both In February 2019, the European Commission launched an tax levels. within the Group and at third parties, as well as damage and/ investigation to explore potential anti-competitive behavior in of the territories where it is located. The vast majority of Grieg Seafood’s production are under long-term agreements with the or incapacitate critical infrastructure necessary to operate the Norwegian salmon industry. Grieg Seafood is one of the The proposal must be approved by the Norwegian parliament First Nations in those areas, and we are pursuing agreements the Group’s freshwater and seawater sites. The outcome of companies under investigation. At date, no decision has been before it can be incorporated into Norwegian tax law. The with more First Nations. See Note 4 of the Group Accounts for a cyberattack may adversely impact fish welfare at affected made by the European Commission. Grieg Seafood is not aware Parliament is expected to discuss the proposal and enact the law more information. sites, the Group’s reputation and financial performance. Grieg of any anti-competitive behavior within the Group, neither in before July 2023. Thus, the Parliament may still make changes Seafood are continuously working to strengthen our defense Norway, nor the EU, or Canada. Grieg Seafood rejects that there to the proposal which has now been published. The tax will be towards cyberattacks and other malicious attempt to disrupt is any basis for the claims and considers the complaints to be implemented with retrospective effect as from 1 January 2023. our infrastructure. Cybersecurity is high on management’s entirely unsubstantiated. agenda, and is addressed through securing the digital systems As the resource rent taxation is a proposal by the Norwegian FINANCIAL RISK Financing risk The Group operates within an industry characterized by high and infrastructure (incl. monitoring and analysis of all network Grieg Seafood had also been sued by indirect purchasers in the government, and was not incorporated into Norwegian tax law as volatility, which entails financial risk. The Group’s business and traffic in our infrastructure), as well as awareness and training, USA. In 2022, a settlement offer from the indirect purchaser at 31 December 2022, there has been no impact on the Group's future plans are capital intensive. To the extent that sufficient strengthening the focus on securing remote access for plaintiffs was accepted. In February 2023, the settlement was tax estimates recognized in the statement of financial position cash is not generated from operations in the long term, additional employees and vendors. Furthermore, we have procedures in finally approved by the court of Southern District of Florida. and income statement as at 31 December 2022. funding needs to be raised to pursue the Group’s growth strategy place for incident handling and strategic crisis management The settlement does not involve any admission of liability or should a cyber incident occur. MARKET RISK The global volume of Atlantic salmon harvested in 2023 is expected to increase by only 2% compared to 2022. With limited supply growth, combined with an outlook for continuing strong demand fueled by an increased focus on healthy food and sustainably produced proteins, the Group believes in sustained wrongdoing. Costs incurred and provisions for expected costs related to the lawsuits in North America have been expensed in 2022. See more information in Note 28 and Note 31 of the Group Accounts. POLITICAL RISK Norway On 28 September 2022, the Norwegian government proposed the Canada In British Columbia (BC), licenses are renewed by the federal and finance capital expenditures. Adequate sources of capital funding might not be available when needed, or may only be available on unfavorable terms. Financial and contractual Department of Fisheries and Oceans (DFO) on a regular basis, hedging is a matter of constant consideration, in combination with different length. In June 2022, all licenses were renewed with operational measures. Management draws up rolling for two years. The Canadian Government has launched a new liquidity forecasts, extending over five years. These forecasts are strategy for salmon farming in BC, to transition the sector from based on conservative assumptions for salmon prices and form traditional open-net pen practices into an improved industry the basis for calculating liquidity requirements. This forecast also (it does not specify what the industry should transition to). forms the basis for the Group’s financing needs. strong market prices in 2023. However, the current rate of introduction of a resource tax on farming of salmon and trout in The process was launched 29 June 2022, with the following inflation that is reducing household purchasing power might impact demand from both the HoReCa and retail sectors. The current Fishpool forward price for 2023 is around NOK 95 per kg, and the 2024 forward price is around NOK 87 per kg, reflecting an optimistic market outlook. Norway with effect from 1 January 2023 and on 28 March 2023 the Norwegian government presented a bill providing further details to the tax regime in addition to modifications made to the proposal communicated 28 September 2022. PART 03 – OUR FINANCIAL RESULTS objectives: Minimize or eliminate interactions between farmed and wild salmon, improve transparency on how the government assesses and responds to new scientific information, provide greater opportunities for collaborative planning and decision- making with First Nations partners and advance innovation and attracting investment to support the adoption of alternative production technologies in British Columbia. Stakeholders, In September 2022, and updated in March 2023 (see the section for Political Risk), the Norwegian government proposed the introduction of a resource rent tax on the farming of salmon and trout in Norway at an effective tax rate of 35% with effect from 1 January 2023. Available financing could be impacted by the proposed Norwegian resource rent tax regime, as - all else equal - less cash will be available to service debt and provide a return on investment for shareholders. 66 The Group renegotiated its syndicated bank loan agreement in Part of the long-term intercompany loans to subsidiaries in climate-change regulation or significant changes in consumer better predict outcomes and implement mitigating actions early; 2022, thereby securing the working capital needed to achieve the Group are in the local currency and are regarded as net preferences could affect the Group’s bottom line and access to and experimenting with new farming technologies that create the Group’s growth targets. The Group's new debt structure investments, as there are no set plans for their repayment. capital. On the other hand, Grieg Seafood is being uniquely placed barriers between the fish and the natural environment, such comprises sustainability-linked loans, including a NOK 750 The currency effect of these net investments is included in the to mitigate these risks and take advantage of climate-related as semi-closed sea-based systems, land-based farming and million term loan, an EUR 75 million term loan, a NOK 1 500 Group's consolidated statement of other comprehensive income opportunities. In 2022, the Group developed is Climate Action offshore farming. million revolving credit facility and a NOK 200 million overdraft (OCI). Plan, which describes the measures and investments needed facility. See Note 12 of the Group Accounts for more information. In addition, the Group has a senior unsecured green bond issue with an outstanding amount of NOK 1 424 million, which matures in June 2025. Interest rate risk The Group is exposed to interest rate risk through its borrowing activities, and to fluctuating interest rate levels in connection with the financing of its activities in the various regions. The to reach the climate targets (reducing carbon emissions by 35% The EU Taxonomy will enter into force as from 2023 in Norway. towards 2030, and 100% in 2050, with 2018 as a baseline year). As at 31 December 2022, the economic activities characteristic This plan stresses the importance of both operational measures of the seafood and aquaculture industries have not yet been that affect Scope 1 and 2, and supply chain measures in Scope 3. classified by the EU and Grieg Seafood will report on the EU The Group needs to reduce operational fossil fuel consumption, Taxonomy as from the Annual Report of 2023. As at 31 December 2022, the Group had NOK 2 223 million in Group's existing loans are at floating interest rates, but separate purchase renewable electricity and set supplier requirements net interest-bearing liabilities (NOK 1 739 million, excluding the fixed-rate contracts have been entered into to reduce interest to be able to reduce its absolute emissions. The Group needs to effect of IFRS 16), and an equity ratio of 50% compared to 52% as rate risk. Grieg Seafood’s policy is to have 20–50% of interest- at 31 December 2021. The equity-ratio according to the financial bearing debt hedged through interest rate swap agreements. A invest in electrification of its sites and boats, choose fish feed that has a lower emission factor and reduce emissions from C OR P OR AT E S OCI AL R E S P ONSIBILI T Y covenants was 52% compared to 54% as at 31 December 2021. given proportion shall be at floating rates, while consideration transportation. The largest direct source of emissions is from the See Note 12 of the Group Accounts for more information. will be given to entering and exiting hedging contracts for the Cash and cash equivalents at 31 December 2022 totaled NOK remainder. 643 million (NOK 928 million). In addition, NOK 1 013 million of surplus cash had been placed in money market funds with maturity of less than three months as at 31 December 2022. The Credit risk Credit risk is managed at Group level. Credit risk arises from Group had a solid financial foundation at year-end 2022. transactions involving derivatives and deposits in banks and Liquidity risk The Group has invested substantial amounts during the last few 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 fuel that powers the boats, use of well-boats, vehicles, and on- site electricity generators. Transitioning to equipment that will enable reduction in fossil fuel consumption will be done gradually through replacement investments, in addition to investments targeting growth. Before making any investments, the Group evaluates the potential carbon emissions and environmental impact of the investment. This is an integrated part of the Group’s CapEx process. To get a full overview over how these climate-related risks and opportunities may evolve and affect years. This includes the acquisition of Grieg Newfoundland and are sold only to customers with satisfactory creditworthiness. the Group, likelihood and impact analyses under different the build-up of biological assets in all regions. The Group utilizes The Group normally sells to new customers solely against emission pathways and time horizons have been developed and factoring agreements to finance its trade receivables in Norway. presentation of a letter of credit or against advance payment, and will be regularly revised. The Group’s TCFD report, including the The trade financier purchases credit-insured trade receivables credit insurance is used when deemed necessary. climate-related scenario analysis, is available here. (maximum NOK 500 million of outstanding receivables) from the Norwegian sales organization, transferring significant (95%) risk and control to the credit insurer. The receivables purchased by CLIMATE AND NATURE RISK The effects of climate change, such as extreme weather events, the trade financier are derecognized from the Group’s statement fluctuating seawater temperatures and a decline in biodiversity, of financial position. could have a significant financial impact in the coming decades. Knowledge of the possible financial consequences of global Monitoring of the Group’s liquidity reserve is carried out at group warming, biodiversity loss, or even ecosystem collapse, and level in collaboration with the operating companies. Management the integration of climate risk and nature risk as a separate and the Board seek to maintain a high equity ratio (50% at risk category, are an essential part of Grieg Seafood’s risk 31 December 2022), to be well positioned to meet financial management strategy. Grieg Seafood aims to increase its and operational challenges. The Group factors in the expected understanding of climate and nature-related risks, in order to outcome of, as well as different scenarios for, the Norwegian find solutions to reduce adverse impacts. resource rent tax proposed by the Norwegian government in the Group's liquidity projections and forecasts. The Group has mapped its climate-related risks, which is reported in accordance with the recommendations of the Currency risk The Group is primarily impacted by currency exposure to CAD, Task Force on Climate-related Financial Disclosures (TCFD). The Group has also prepared a climate-related scenario USD and EUR. The production companies sell in local currencies analysis, assessing the impact of transitional risks and physical to the sales organization, which hedges its transactions against risks. These risks and opportunities are included in the risk currency fluctuations related to CAD/USD, EUR/NOK and USD/ assessment as part of the Group’s regular forecast process. NOK, and other currencies if required. However, the Group may not be successful in hedging against currency fluctuations, and significant fluctuations may have a material adverse effect on the Group's financial results and business. Hedge accounting is not applied by the Group. Overall, the impacts of climate-related risks are expected to be moderate in the short term, with no quantifiable impact as per year-end 2022. However, these impacts could become more severe in the medium to long term. Any significant physical change is likely to interfere with the Group’s current business model or damage facility infrastructure, both of which could be costly. Similarly, the transitional risks related to increased PART 03 – OUR FINANCIAL RESULTS The Group also acknowledges 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. Grieg Seafood is a Member of the Taskforce on Nature-related Financial Disclosures (TNFD). TNFD aims to develop a risk management and financial disclosure framework on nature- related risks, and will support organizations to report and act on both their impacts and dependencies on nature. The finalized framework is earmarked for release in late 2023. For further information, visit the TNFD’s website. The salmon farming industry is regulated to avoid impact on biodiversity and the marine environment. In addition, certifications like the Aquaculture Stewardship Council (ASC) help raise the bar above regulatory limits. As of year-end, 75% of the Group’s budgeted net production was ASC certified. Grieg Seafood acknowledges that there are still challenges to overcome and believes that preventive farming is key to reducing the Group’s impact on both the climate and nature. Several of the Group’s ongoing initiatives target climate and nature-related challenges, such as shortening the time the fish spend at sea and are exposed to risks; using real-time ocean data, data analytics, machine learning and artificial intelligence to Grieg Seafood’s vision “Rooted in nature – farming the ocean for a better future” demonstrates the Group’s commitment to corporate responsibility by operating profitably and sustainably in a manner that conforms with fundamental ethical norms and respect for the individual, society and the environment. Sustainable operations underpin the Group’s license to operate and its strategy. In a long-term perspective, there is no contradiction between clean seas, healthy fish and financial profit. It is the Group’s task to make these aspects go hand in hand and contribute to a sustainable ocean economy. The targets go beyond short-term profitability. Read more about the Group’s foundation, value chain and strategy in Part 1 of this Annual Report. Grieg Seafood’s sustainability strategy is built on material topics and the five pillars: Healthy Ocean, Sustainable Food, Profit & Innovation, People, and Local Communities. These pillars are founded on external expectations, based on dialogues with stakeholders, and the company’s own goals and ambitions. The topics are covered by group policies. Find an overview of the pillars, targets and policies here. The five pillars are aligned with topics assessed as material according to the GRI standards. The GRI Index is included in Part 4 of this Annual Report. The Group has also prepared an overview of the material topics’ financial impacts, please refer to Part 1 of this report. The Group has a responsibility to protect biodiversity wherever it operates. The aim is to use farming methods that allow co- existence with other species, such as wild salmon, cod, shrimp, wild mammals and birds. The Group has targets to minimize its impact on biodiversity, and has adopted policies and operational procedures, as well as high technical standards on equipment, to reduce the risk of impact. Environmental impact assessments are performed prior to establishing new seawater sites as well as a part of the continuing ASC certification process. Please refer to the regional sections in Part 2 of this report for information relating to use of treatments and medicines, escape, wildlife interaction and local emissions. Along with the rest of the industry, the Group needs to develop 67 new feed ingredients in order to grow sustainably. The Group regions are regularly carried out to discuss R&D needs. Short workplace diversity and to be the preferred employer, regardless Business integrity is essential for the Group, which has zero does not produce its own fish feed, but set requirements for the descriptions of the ongoing projects are available in an internal of industry. A good working environment creates attractive jobs, tolerance for fraud, corruption or other misconduct. In 2022, feed suppliers to develop more sustainable feed. Input factors in project archive, and finalized projects and results are shared. and the Group has established and lives by the values: Open, there were no reported incidents of corruption and no reported fish feed, both marine ingredients and plant-based ingredients, The global functional team for R&D works continuously with the Ambitious and Caring. For the fifth time in Norway, and the whistleblowing cases. The whistleblower channel, operated should come from sustainable sources. Ingredients associated farming regions to facilitate the operational implementation of fourth time globally, the Group participated in the Great Place by EY, is available for the employees to report any unwanted with a high risk (fish meal and fish oil from fisheries, Brazilian the R&D results. soy and palm oil) are certified by recognized certification schemes. The Group has also committed to a deforestation statement. Read more about the Group’s work on sustainable EMPLOYEES AND HUMAN RIGHTS As an industry with global supply chains both upstream and to Work survey. The Board is proud to announce that all regions behavior and breaches of the Group’s Code of Conduct. The maintained the Great Place to Work certification in 2022. Group has established grievance mechanisms for external The Group also works systematically to safeguard its employees’ regional websites. No incidents involving infringement of the parties and local communities, available through the Group’s feed ingredients in Part 2 of this report. downstream, Grieg Seafood has a responsibility to respect and health, safety and working environment. The aim is to prevent rights of indigenous peoples were reported in 2022. promote human rights both at its own operations and in its work-related injuries, illness, accidents and fatalities. The While farmed salmon has a low carbon footprint compared to value chains. The Group has a Human Rights policy and Code of Group expects nothing less from its supply chain. Human The company’s reporting on corporate social responsibility is other animal proteins, the industry must do more to contribute Conduct in place, and adheres to various related global principles resources are managed locally in compliance with local rules based on several standards, such as the Euronext guidance on to the Paris Agreement’s climate goals. New technologies and practices. The Group also requires its suppliers to abide by and regulations, and in accordance with the Group’s guidelines. ESG reporting, the OECD Guidelines for Multinational Enterprises must be developed to cut emissions in our own operations and its Supplier Code of Conduct. In accordance with the Norwegian The Group is working continuously to strengthen global routines and the Global Reporting Initiative (GRI). Grieg Seafood is also value chain. The Group has a policy for climate action, and has Transparency Act, the Group will publish a transparency and guidelines for human resources and health and safety committed to the UN Global Compact, and has signed the set a Science Based Target for emission reduction. The Group statement based on the human rights assessment that was throughout the Group, and actively seeks to reduce sick leave Sustainable Ocean Principles. Corporate social responsibility undertakes climate accounting and performs a systematic performed in 2022. The transparency statement will be available and the number of health and safety incidents. All such incidents reporting is integrated in this Annual Report. assessment of its emissions, for Scope 1, 2 and 3. For more on www.griegseafood.com no later than 30 June 2023. are registered and reviewed as part of monthly HSE meetings. information on the Group’s climate action plan and emission Read more about how the Group is committed to safeguarding its The Board has assessed the Group’s achievements in relation reductions, see the climate action section in Part 2 of this report. To reach goals and solve challenges, Grieg Seafood needs the employees and the results of this work in the People section of to the above-mentioned topics as part of the sustainability The Group is grateful to the local communities for giving political, religious, or sexual persuasion. The Group embraces best people, regardless of their gender, age, ethnicity, origin, or this report. scoreboard, see “Targets and achievements” at the beginning of the Board of Director’s report. Overall, the Board is satisfied with permission to farm salmon in their fjords and inlets. In diversity and is committed to being an equal opportunity To strengthen the corporate culture and encourage employee the Group’s achievements and efforts in relation to corporate return, the Group not only does what it can to safeguard local employer. This is reflected in the Group’s Gender Equity policy loyalty, Grieg Seafood continues to give its employees the social responsibility and the management of the Group’s impact biodiversity and apply sustainable farming methods, but also and the Diversity policy. At year-end 2022, the majority of the opportunity to become company shareholders through the annual on the economy, environment and people in 2022. The Group aims to contribute to vibrant local communities in the rural Group’s employees, including managers, are men. The Group share-purchase program. Through this program, participants will continue working to reduce or minimize its impact on the areas in which it operates. See the end of each regional section aims to have 40% female representation in management receive a 30% discount on the purchase price of shares. The environment, to have a positive social impact and maintain strong for information on our contribution to local communities. positions and in positions such as supervisors, site managers maximum number of shares per employee in 2022 was 704. corporate governance. Grieg Seafood has a responsibility to engage in constructive and other administrative positions, by 2026. At year-end 2022, There is a lock-up period of 18 months for the shares. Primary dialogue with all stakeholders and groups that are impacted by the Group had 28% female representation in the Group executive insiders employed by Grieg Seafood ASA are also eligible under its activities. In British Columbia, Grieg Seafood is farming in team, while 50% of the regional directors were female. In total, the share program. areas that belong to indigenous peoples, while Finnmark has 812 people were employed at the Group as at 31 December 2022, long been home to the Sami people. Grieg Seafood recognizes of whom 240 (30%) were women and 572 (70%) were men. Grieg that these groups have special rights, as acknowledged in the Seafood annually monitors and reports on gender balance, pay The Group has guidelines for management remuneration, available here and the remuneration report for 2022 is United Nations Declaration on the Rights of Indigenous Peoples gaps, women in management positions and key roles through available here. (UNDRIP), and takes particular care to avoid infringing them. the SHE Index. In the last SHE Index, published in March 2023, RESEARCH AND DEVELOPMENT AS PART OF ACHIEVING SUSTAINABLE GROWTH The main objective of Grieg Seafood’s R&D activities is to create value, ensure sustainability and promote innovation in the Group. The activities and priorities are anchored in the Group’s strategy. A continuous process of identifying the most important issues to be addressed forms the basis for R&D activities. The project portfolio covers most areas of Grieg Seafood’s value chain. The majority of projects are related to fish health and welfare, environmental documentation and impact, nutrition and feeding, as well as novel and improved production methods both in the freshwater and the seawater phases of production. An internal R&D strategy provides guidance in the process of project prioritization and qualification to secure each project's relevance and industry value. Projects are aligned with the needs of the farming regions in order to ensure the relevance and potential applicability of the planned endeavors. Meeting with the farming the Group received 73 points (High score), compared to an average score across Norwegian companies of 72. The Group conducts annual assessments of its pay structure to identify any pay gaps between men and women performing jobs of equal value. Non-administrative positions are covered by labor union agreements and there are no differences between women and men. The only differences that may occur are based on seniority, which is also regulated by 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 adjusted according to the benchmark – both for women and men. The Group’s positions and pay structure are based on a matrix where all positions are given a score/number based on their responsibility, mandate and content. There is no gender- based discrimination in this matrix. Salaries are based on roles and responsibility, not on gender, cultural background or place of origin. The Group offers flexible working hours to office staff and seeks to ensure a good work-life balance throughout its operations. The goal is to attract the best skills, improve E V EN T S AF T ER T HE R EP OR T ING D AT E No significant events have taken place after the reporting date of 31 December 2022. OU T L OOK MARKET EXPECTATIONS AND POSSIBILITIES For the past 25 years, literally all new fish volumes have come The Board wishes to thank all employees for their dedication, efforts and contributions in 2022. CORPORATE GOVERNANCE Strong corporate governance is essential to achieving the Group’s objectives and acting as a responsible organization. from aquaculture. Wild fishing has long had to cope with smaller The Group’s governance system includes its vision, core values, catches, quotas and other regulatory restrictions. Since 1990, strategies, objectives, operational performance, impact on the the volume of farmed fish has multiplied more than six-fold, with economy, environment and people, and related risk, as well as salmon making up less than 2.5% of the volume. In line with the compliance with laws and regulations. Grieg Seafood ASA seeks ongoing global megatrends relating to health and sustainability, to comply, where applicable, with the Norwegian Code of Practice there has been growing interest in the health and potential for Corporate Governance issued by the Norwegian Corporate environmental benefits of sustainable aquaculture. Currently, Governance Board (NUES). The 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’s corporate governance policies and practices are disclosed in the Corporate Governance section of this report. Europe is the largest and most mature market for Atlantic salmon, consuming more per capita than other continents. There are, however, countless ongoing initiatives to introduce salmon to a larger number of new consumers across the globe. An increase in consumption per capita in large markets and growing economies such as the USA, Brazil, China and India is expected to contribute to rising demand for Atlantic salmon over time. PART 03 – OUR FINANCIAL RESULTS 68 S TAT EM EN T FR OM T HE B O AR D OF DIR E C T OR S AND CE O We hereby confirm that, to the best of our knowledge, the financial statements for the period from 1 January to 31 December 2022 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 2023 The Board of Directors of Grieg Seafood ASA According to Kontali, the global harvest of Atlantic salmon in 2023 is expected to increase by 2%, or 51 800 tonnes, compared PRODUCTION At the time of issuing this report, biological production is good to 2022, and come to 2 916 800 tonnes (figures in whole fish in Rogaland, British Columbia and Newfoundland. Infectious equivalent, WFE). With limited supply growth in 2023, combined Salmon Anemia (ISA) has been detected in one farm in Rogaland with an outlook for continuing strong demand fueled by an increased focus on healthy food and sustainably produced in March 2023. However, we do not expect that this will have a material impact on the production or the volume to be harvested proteins, the Group currently (at the time of publishing this in 2023. The biological situation at year-end in Finnmark was report) believe in sustained strong market prices in 2023. However, current inflationary pressure, which is reducing challenging, due to the parasite Spiro. This has continued into 2023. The Group’s farming operations are running as normal, and household purchasing power, might impact demand from both salmon is being harvested according to plan. The emphasis is the HoReCa (hotels, restaurants and catering) and retail sectors. on continued optimization of production, focusing on fish health The Board acknowledges that there is a natural and inherent and welfare. For 2023, Grieg Seafood expects to harvest a total uncertainty related to estimated future market demand, trends, of 82 000 tonnes GWT. The industry experienced a general rise in growth, and outlook in general. costs in 2022. This applies in particular to feed. The production cycle for a salmon, from roe to harvestable weight, is about three The US market is the world’s largest and fastest growing years. The production cost of fish is capitalized to inventory. market for Atlantic salmon, but only a third of US demand is At the point of harvest, therefore, the expensed farming cost currently met by North American production. The Group already recognized in the income statement reflects all costs for all has a position in this market through its operations in British past periods. Because of this, not all of the cost inflation impact Columbia, with significant sales and market experience. Grieg has been captured in the Operational EBIT for 2022. As a result, Seafood Newfoundland expects to harvest its first fish in late the farming cost for 2023 is expected to increase compared to 2023. With proximity to important markets on the US East Coast, 2022. The Group has initiated an improvement program aimed at the Newfoundland region significantly strengthens the Group’s optimizing production and reduce costs. US market exposure and opens for synergies with existing operations, as the Group should be able to provide a more stable supply to the US market. FINANCIAL POSITION As at 31 December 2022, Grieg Seafood was in a solid financial position, with NOK 643 million in cash and cash equivalents, as There is a consensus in the market that the existing coastal, well as NOK 1 013 million of surplus cash invested in money open-pen aquaculture industry will achieve modest organic market funds. In addition, the Group had NOK 1 700 million of growth. This will primarily be driven by the opening of new sites undrawn credit facilities as at 31 December 2022. and areas for sea farms, new and improved technologies and farming practices, and better cooperation both between industry players and with the public authorities. The industry needs stable regulatory conditions to be able to grow in a sustainable manner going forward. In Norway, the proposed resource rent GOING C O NCER N tax has generated a lot of uncertainty, especially since the details The Board is of the opinion that the financial statements give a concerning the taxation are still not clear and because the true and fair presentation of the Group’s assets and liabilities, proposed tax level is high. As a consequence, the Group has put financial position and financial results. Based on the above all new growth investments, worth a total of approximately NOK presentation of the Group’s results and financial position, and 2.3 billion, on hold until a final version of the tax regime has been in accordance with the Norwegian Accounting Act, the Board adopted. The proposed tax may divert the investments to British confirms that the annual financial statements have been Columbia and Newfoundland in Canada. Overall, salmon farming prepared on a going concern basis, and that the requirements for in Norway may lose competitiveness compared to aquaculture in so doing have been met. other countries. With new technologies being developed, where there is no reliance on a coastline with naturally tempered water, aquaculture investors may find it more attractive to invest and develop the industry in places with lower tax levels. PART 03 – OUR FINANCIAL RESULTS 69 COMPONENTS OF CORPORATE GOVERNANCE A sound corporate structure, with viable decision-making engagement. The CEO is also responsible for establishing rules for handling conflict of interest. processes, a clear division of responsibility and authority, The CEO delegates authority and responsibility to the group appropriate information and communication processes as well executive management team, from where responsibilities as remuneration and reward schemes, is key to Grieg Seafood cascade throughout the Group. The executive management team, being able to achieve its strategies and objectives. The main which consists of senior executives representing all aspects components of the Group’s corporate governance consist of of our operations, is responsible for establishing operational objectives and directions, structure, organizational planning and plans and targets, allocating resources to its members’ specific management as well as learning and improvement. Together functions and following-up their operational performance. with the external context, these components underpin our In 2022, the executive team consisted of the Chief Financial ability to create value and achieve goals. Our operations are Officer (CFO), the Chief Operational Officers (COO, responsible clearly connected with a multitude of external expectations. for our farming operations in Norway and Canada), the Chief We therefore seek to maintain a regular dialogue with our Commercial Officer (CCO, responsible for our sales function), stakeholders, as they are the basis for our social license to in addition to the supporting functions lead by Chief Technology operate. Transparency and disclosure are vital in building trust, Officer (CTO), the Chief Human Resource Officer (CHRO) and the and engaging in a dialogue with our stakeholders enables us to Global Communication Manager. The executive management better understand the role we play in local communities and in team is responsible for implementing group policies, monitoring society as a whole. GOVERNANCE STRUCTURE The shareholders are the owners of the company, and the their functions’ impacts on the economy, environment and people, managing related risks and securing compliance with laws and regulations. This also includes ensuring that our employees receive the proper training of policy commitments. General Meeting, which all shareholders are invited to attend, The CEO and the group executive management team together is the company’s highest decision-making body. The General engage with the Group’s stakeholders, which is key to be able Meeting provides instructions to the Nomination Committee, to grasp emerging opportunities for our business, and at the which safeguards shareholders’ interests by nominating board same time to understand and mitigate economic, environmental members. The Board of Directors has a supervisory role, and social risks. Results of stakeholder engagement is reported overseeing the conduct and management of Grieg Seafood. The to the Board as part of risk management procedures and Board’s responsibilities to ensure good corporate governance regular business updates in board meetings. See examples of include approving the vision, core values, strategies, objectives, stakeholder engagements in Part 4 of this report. plans, budgets and overall organization of the operations, monitoring operational performance and due diligence, and the The CEO has delegated the establishment of group policies company’s impact on the economy, environment and people, as to the Sustainability Steering Committee, which prepares and well as related risks, and verifying compliance with laws and updates them on the basis of a holistic assessment of economic regulations. and environmental, social and governance (ESG) issues (our materiality assessment). Relevant organizational functions The Board nominates board members to specific committees and expertise take part in preparing the policies. Our policies (Audit Committee and Remuneration Committee) to provide are approved by the CEO while our Board of Directors monitors counsel and advice or to handle tasks on the Board's agenda. compliance with the policies. Policies are presented to the group The Audit Committee members have a particular responsibility management team and the regional management team, and are for overseeing the integrated reporting process, the audit available to all employees through our internal risk management process, the company's system of risk management, internal system. We have a special focus on our Code of Conduct, where controls and compliance with laws and regulations. The role of our employees are required to complete a program every second the Remuneration Committee is to establish and maintain an year. In 2022, 92% of our employees completed the Code of appropriate rewards policy that attracts and motivates executives Conduct program. Our policies are available to the public through to achieve the long-term interests of shareholders. our website. The group policies contain a set of targets and The Board has delegated management of the Group’s overall in the sustainability scoreboard in the company’s quarterly operations and resources to the CEO. The CEO’s responsibilities and annual reports as part of the material topic they relate includes establishing a vision, core values, strategies, objectives, to. As such, the Board, and in particular the Audit Committee, plans and budgets for the Group. The CEO is also responsible for reviews and approves the Group’s performance with respect to Key Performance Indicators (KPIs), of which most are included establishing and approving group policies, and is accountable for the Group’s operational performance and its impacts on the economy, environment and people. In addition, the CEO is responsible for managing related risks and ensuring compliance with laws and regulations. The CEO acts as the main point of communication between the Board and the Group’s operations, and is the public face of the Group, responsible for stakeholder material topics, including the management of its impact on the economy, environment and people. Combined with the quarterly risk assessment and the review of the quarterly and annual report, the Audit Committee and the Board are advancing their knowledge on sustainable development. Additionally, the Board has been presented the climate action plan in 2022. CORPORATE GOVERNANCE Grieg Seafood believes that strong corporate governance is an essential element in achieving our overall objectives and acting as a responsible organization. Our vision “Rooted in nature – farming the ocean for a better future” demonstrates our commitment to corporate responsibility by operating profitably and sustainably in a manner that conforms with fundamental ethical norms and respect for the individual, society and the environment. PART 03 – OUR FINANCIAL RESULTS 70 RESPONSIBLE BUSINESS CONDUCT Our values and Code of Conduct underpin the way we conduct corruption incidents that resulted in the termination or non- renewal of contracts with a business partner. We will continue to ourselves and our approach to responsible business behavior. perform these risk assessments. Our Code of Conduct sets out the ethical principles and standards that must be upheld by each and every employee, and any Our policy set out our mechanisms for grievance and remediation agent that acts on our behalf, including our Board of Directors. of negative impacts, as well as for seeking advice and raising Through our Supplier Code of Conduct, we demonstrate that concerns. We aim to have an open and transparent dialogue with we expect no less from our supply chain. A large share of our all our stakeholders, and regularly invite stakeholders to our suppliers, in purchase value, have signed the Supplier Code of sites or meet with stakeholders. Our employees can raise any Conduct. Additionally, our Procurement policy provides global concerns about our business conduct, business relationships, or standards for how we source goods and services. Through our potential and actual negative impacts through our whistleblower Human Rights policy, we recognize that we can contribute to the channel. All reported incidents are investigated and reported fulfillment of human rights. We have a responsibility to prevent, to the CEO and Board of Directors. Employees can also mitigate, and address adverse human rights impacts in our own raise concerns through their line manager or HR functions, operations, but we also use our leverage to promote respect for through their labor unions. or relevant human rights tribunals. human rights in our value chain. Our approach to responsible Complaints by local communities or other stakeholders business conduct including human rights is based on the OECD can be raised through meetings or through the regional Guidelines for Multinational Enterprises, the OECD Due Diligence websites. In 2022, we did not receive any such concerns from Guidance for Responsible Business Conduct, the UN Convention our stakeholders, nor were any whistleblower cases reported, Against Corruption, the UN Guiding Principles on Business and and as such, we have not provided any remediation. While our Human Rights, the Universal Declaration of Human Rights, the policies set out our commitments related to the environment and ILO Declaration on Fundamental Principles and Rights at Work, social impacts, we recognize that we can improve our grievance the United Nations Convention on the Rights of the Child, the UN mechanisms and remediation processes. Convention on the Elimination of Discrimination against Women, the UN Declaration on the Rights of Indigenous Peoples, and the UN Global Compact. INVESTIGATIONS In February 2019, the European Commission launched an investigation to explore potential anti-competitive behavior in Our policies sets out guidelines and precautionary principles to the Norwegian salmon industry. Grieg Seafood is one of the enable adoption of precautionary measures. We are committed companies under investigation. At date, no decision has been to respecting fundamental human rights in our operations, our made by the European Commission. Grieg Seafood is not aware value chain, and in the communities where we operate. We of any anti-competitive behavior within the Group, neither in use our influence to promote the fulfilment of human rights Norway, nor the EU, or Canada. Grieg Seafood rejects that there and always seek to avoid involvement, even indirectly, in their is any basis for the claims and considers the complaints to be abuse. Please find the details of our commitment in the Human entirely unsubstantiated. Rights policy on our website. We also aim to conduct proper due diligence when engaging with third parties. During 2022, we have Grieg Seafood had also been sued by indirect purchasers in the developed our human rights due diligence, covering both our USA. In 2022, a settlement offer from the indirect purchaser own operations and our supply chain, in line with the Norwegian plaintiffs was accepted. In February 2023, the settlement was Transparency Act. It will be made public in June 2023. finally approved by the court of Southern District of Florida. The settlement does not involve any admission of liability or Our policies state that we do not permit or tolerate engagement wrongdoing. Costs incurred and provisions for expected costs in any form of corruption or money laundering activities. We related to the lawsuits in North America have been expensed also refrain from anti-competitive behavior, anti-trust and in 2022. For more information, see Note 28 and Note 31 to the monopolistic practices, as this can severely affect consumer Financial Statements. choice, pricing and other factors that are essential for efficient salmon markets. As part of our risk management process, we assess our operations for risks related to corruption and COMPLIANCE We aim to comply with all relevant laws and regulations in implement mitigating measures or controls to prevent corruption the regions in which we operate. Salmon farming is a highly and money laundering activities. According to Transparency regulated industry, and we are subject to strict standards for fish International/OECD, aquaculture is not assessed as an industry welfare, environmental impact, food production and production of high risk for corruption. Our risk assessments in 2022, which equipment. We must comply with operational requirements included all of our sales and farming operations, did not uncover any significant risks that required specific mitigation actions. None of the countries in which 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 2022. We had no 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 and disease outbreaks. We are also subject to regular inspections and audits by local, national and international stakeholder groups and authorities. PART 03 – OUR FINANCIAL RESULTS FIGURE 3.19 NON-COMPLIANCE WITH LAWS AND REGULATIONS IN 2022 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 In 2022, we did not receive any fines related to non-compliance, nor were any non-monetary sanctions imposed on us. Additionally, we did not have any significant instances of non-compliance (where significant is determined to be any instances, except charges related to delayed reporting to authorities). None None None 71 CORPORATE GOVERNANCE PRINCIPLES Adopted by the Company’s Board of Directors on 20 April 2007, and updated on 30 March 2023. FIGURE 3.20 GRIEG SEAFOOD'S COMPLIANCE WITH THE NORWEGIAN CODE OF PRACTICE FOR CORPORATE 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 Two deviations, see below Two deviations, see below One deviation, see below No deviation No deviation No deviation No deviation No deviation No deviation No deviation 1. IMP LEM EN TAT ION AND R EP OR T ING ON C OR P OR AT E GO V ER N ANCE PRESENTATION OF CORPORATE GOVERNANCE Responsibility for ensuring that the company has good corporate governance rests with the Board of Directors (the Board). The Board reviews the updates the Grieg Seafood Group’s corporate governance policy, which is part of the Group’s governing framework and forms the basis of this summary. Grieg Seafood´s principles for corporate governance are based on standards such as the Norwegian Code of Practice for Corporate Governance as recommended by the Norwegian Corporate Governance Board (NUES), the Institute of Internal Auditors Norway’s guidelines for governance, in addition to best practices from, for example, the Euronext guidance on ESG reporting, the OECD Guidelines for Multinational Enterprises and the Global Reporting Initiative (GRI). The company abides by the latest Norwegian Code of Practice for Corporate Governance as recommended by the Norwegian Corporate Governance Board (NUES), published 14 of October 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. Deviations from the Norwegian Code of Practice: None 2. BU SINE 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. GRIEG SEAFOOD ASA’S VISION, TARGETS AND STRATEGY 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 2026 strategy comprises three key strategic objectives for continued business development: global growth, cost improvement and value chain repositioning. Increasingly sustainable farming practices underpin all areas of the strategy. 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 PART 03 – OUR FINANCIAL RESULTS 72 3. EQU I T Y AND DI V IDEN DS 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 2022, the company's consolidated equity totaled NOK 6 486 million, equivalent to 50% of total assets and a debt-to- equity ratio of 1.0. 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 (limited to 50% by Green Bond agreement). 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 adjusted within the margin set out above. 4. EQU AL T R E AT M EN T OF SH AR EHOLDER S AND T R ANS A C T IO NS W I T H R EL AT ED PAR T I E S SHARE CLASS The company has one class of shares, and all shares carry the same rights. As at 31 December 2022, 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 2022, the Company held 1 351 811 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 company has adopted a policy for transactions with related parties/majority shareholders. There were no significant transactions with related parties in 2022. Day to day transactions with related parties have taken place under market conditions in accordance with arm's length principle, and are described in Note 25 to the Group Accounts. CAPITAL INCREASES Should shareholders’ preferential subscription right be waived, the Norwegian Code of Practice shall be observed. There were no capital increases in 2022. In 2022, the Group distributed a dividend of NOK 3.0 per share to shareholders, which corresponds to 46% of the net profit before fair Deviations from the Norwegian Code of Practice: None value adjustment of biological assets for the 2021 fiscal year. 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 the date from which the shares are to be traded ex-dividend. The Board has a general authorization to increase the company’s share capital through share subscriptions 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. In December 2022, the company acquired 385 000 treasury shares, see Note 18 to the Group Accounts. All the authorizations remain in effect until the next AGM, but not later than 30 June 2023. 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 5. SH AR 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 M EE T ING S The shareholders are the owners of the company, and the General Meeting is the company’s highest decision-making body. All shareholders are invited to attend the Annual General Meeting (AGM). With respect to the timing and facilitation of General Meetings, the Board of Directors will do its best to ensure that as many shareholders as possible may attend and exercise their rights, thereby making the General Meeting an effective forum for the views of shareholders and the Board of Directors. The company’s AGM shall be held each year before the end of June. The Board will assess whether the meeting is to be conducted physically as well as via a digital meeting platform. The AGM shall consider and, if thought fit, adopt the annual financial statements, the integrated annual report and proposed dividend, and the annual report on remuneration of executive personnel. It shall also decide other matters which under current laws and regulations pertain to the AGM. Guidelines in accordance with the Norwegian Public Limited Liability Companies Act, Section 6-16a, and the regulations about guidelines and reporting for remuneration of executive personnel 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 approved by the AGM. The remuneration guidelines must be reviewed and approved every four years or earlier in the event of significant changes. PART 03 – OUR FINANCIAL RESULTS 73 The Board may convene an Extraordinary General Meeting (EGM) at whatever time it deems necessary or when such a meeting is required under current laws or regulations. The company’s auditor and any shareholder or group of shareholders representing more than 5% of the company’s share capital may require the Board to convene an EGM. The Board must give at least 21 days’ notice that a General Meeting is to be held. During this period, the notice and documents pertaining to matters to be considered at the General Meeting shall be accessible on the company’s website. The same applies to the Nomination Committee’s recommendations. When documents are made available in this manner, the statutory requirements for distribution to shareholders do not apply. Nevertheless, a shareholder may ask to be sent physical documents concerning matters to be considered at the General Meeting. The deadline to register for attendance at the General Meeting is set by the Board in the notice, normally five days prior to the meeting’s scheduled date. Shareholders can vote on each individual matter, including on each individual candidate nominated for election. Shareholders unable to attend may vote by proxy. An 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. The Nomination Committee proposes candidates for election to the Board by the AGM. The company will publish the minutes of General Meetings in accordance with the stock exchange regulations, in addition to making them available for inspection at the company’s registered offices. The minutes of meetings are available here. The Board’s chair 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. A member of the Nomination Committee will attend the General Meeting if they are likely to be needed or are available. 7. NOMIN 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 of the shareholders by nominating board members according to principles set out in the Norwegian Code of Practice for Corporate Governance. The present Nomination Committee was elected at the AGM on 9 June 2022. Nomination Committee Elisabeth Grieg Yngve Myhre Marit Solberg Role Chair Member Member Considered independent Served since Term expires No Yes Yes 12.06.2018 07.06.2017 02.06.2021 AGM 2023 AGM 2023 AGM 2023 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. None of the members of the Nomination Committee are company executives. 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. 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. 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. In 2022, Grieg Seafood Group held its AGM on 9 June as a digital meeting. 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 is present. Other board members and members of the Nomination Committee and Audit Committee attend as needed. Recommendations concerning candidates for the Nomination Committee itself should also include relevant information about the candidates. 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. 8. B O AR D OF DI R E C T OR S: C OM P O SI T ION AND INDEP ENDENCE BOARD MEMBERS Pursuant to Article 6 of its Articles of Association, the company’s Board of Directors comprises up to seven members, all elected by the General Meeting. Board members are chosen based on their competence and experience representing the company’s need of expertise in various fields. At least 40% of the board members must be of each gender. The Board’s chair is elected by board members. The chair is not an executive in the company. 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 but is not a member of the Board. The CEO is only entitled to vote on board decisions if he or she is an elected member of the Board. PART 03 – OUR FINANCIAL RESULTS 74 ELECTION PERIOD All board members are elected at the AGM, for a one-year term of office. Board members may be re-elected. 9. T HE W OR K OF T HE B O AR D OF DIR E C T OR S INDEPENDENT BOARD MEMBERS As at 31 December 2022, the Board of Directors consisted of the following non-executive members (whereof 50% men and women): Name Per Grieg Jr. Tore Holand Role Chair Vice chair Marianne Ødegaard Ribe Board member Katrine Trovik Nicolai Hafeld Grieg Board member Board member Ragnhild Janbu Fresvik Board member Considered independent Served since Term expires 2022 meeting attendance % of shares in GSF per 31.12.2022 No Yes Yes Yes No No 20.05.2009 AGM 2023 12.06.2018 AGM 2023 14.05.2020 AGM 2023 14.05.2020 AGM 2023 04.11.2021 AGM 2023 09.06.2022 AGM 2023 100% 100% 100% 100% 100% 46% 51.06% * 0.00% 0.00% 0.00% 1.87% ** 0.0% *Per Grieg Jr. and indirectly via the Grieg Group. ** Indirectly through a private investment company Maneo Holding AS. Ragnhild Janbu Fresvik is defined as not independent of Grieg Seafood ASA because she is employed by Grieg Maturitas AS, the largest shareholder of Grieg Seafood ASA via Grieg Aqua AS. Grieg Seafood ASA has three board members defined as not independent. The Board works on the basis that there may be cases where one or more of its members may be insiders. This is followed up by ensuring that this is clarified before the meeting is held. A board member or members who are not independent must refrain from participating in the relevant matter. Board members’ qualifications are wide-ranging, with the relevant competencies relevant to the impacts of the Grieg Seafood. Two of the members have extensive knowledge within salmon farming, having both served on boards and been employed in the industry for several years. Five board members have a finance background, whereof three have work within banking and financial institutions, and also innovation and marketing. One board member is currently engaged in the development of new business opportunities related to the energy transition within the maritime segment, where part of this knowledge can be applicable to Grieg Seafood’s business. The average age of the elected board members is 56. Board members are not included in share option programs as Board members are only elected for one year at a time while the share option program runs over a longer period. The company’s website provide information on board members’ backgrounds, expertise as well as quarterly updated board members’ shareholdings in the company. Deviations from the Norwegian Code of Practice: GSF Group deviates from the Norwegian Code of Practice in one way. 1. The majority of the members elected to the board of directors by shareholders should be independent of the company’s executive personnel and its main business connections. The Board of Grieg Seafood has 50% independent members. 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, handling of conflicts of interests, transactions between the company and shareholders, and confidentiality. The Board’s main task is to safeguard the shareholders' interests. The Board has a supervisory role, overseeing the conduct and management of Grieg Seafood. The Board’s responsibilities to ensure good corporate governance include approving the vision, core values, strategies, objectives, plan and budgets. It also includes approving the overall organization of the operations, including an efficient and value-creating management structure. The Board also monitors the Group’s operational performance and financial position, and its impacts on the economy, environment and people, as well as related risks, and verifies compliance. The Board shall initiate any investigations it considers necessary to perform its duties, or 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, procedural matters relating to board meetings, including attendance and schedule, separate entries in the board 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 Board of directors has delegated the management of the Group’s overall operation and resources to the CEO. The Board underlines that special care must be exercised in matters relating to financial reporting and the remuneration of the executive management team. The instructions for the Board and executive management were last revised by the Board on 20 September 2017. CONFLICT OF INTEREST Board members and the Group’s executive management team shall inform the Board if they have any significant interest in a transaction to which the company is a party. Any such conflicts of interest must be registered by the administration and disclosed in the annual report. Please refer to Note 25 to the Group Accounts in the Annual Report 2022. The Group has adopted a policy that sets out Grieg Seafood’s principles for interaction with the Group’s majority shareholder, with the aim of ensuring equal treatment of all shareholders. 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. ANNUAL ASSESSMENT Each year, the Board shall carry out an assessment of its work, including its performance in overseeing the conduct and management of the Company in the previous year. The assessment is based on the results of a questionnaire completed anonymously by each member of the Board and the executive management team. The latest assessment, completed in the autumn of 2022, did not uncover any need for changes to the composition of the Board or organizational practices. PART 03 – OUR FINANCIAL RESULTS 75 AUDIT COMMITTEE The Board has set up a sub-committee, Audit Committee, comprising a minimum of two and a maximum of three members with relevant Internal control comprises activities and procedures carried out to safeguard the Group’s resources and those of its customers, and to financial and operational background and experience, elected from among the Board’s members, and has drawn up a mandate for its realize its goals through appropriate operations. The achievement of these goals requires systematic strategy development and planning, work. The mandate was last updated in 2021. 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 internal control system is designed to provide reasonable assurance that the Group’s goals will be achieved. Such The Audit Committee has a particular responsibility for overseeing the integrated financial and sustainability reporting process, the goals include targeted, efficient, and appropriate operations, reliable internal and external reporting, as well as compliance with laws and audit process, the company's system of risk management, internal controls and compliance with laws and regulations. The Audit regulations, including internal policies and principles. Committee reviews the Group’s quarterly and annual reports before they are put to the full Board for final approval. In 2022, the Audit Committee held seven meetings, in accordance with its annual plan. The Audit Committee also carries out an annual assessment of is The Board has a responsibility to ensure that the Group has proper risk management and such internal control as is required by work, including its performance in overseeing the conduct, impact and management of all risk areas, as well as its own composition. The statute. The Audit Committee has been given a particular responsibility to monitor critical business risks and address the quality and Group’s external auditor participates in all Audit Committee meetings. As at 31 December 2022, the Audit Committee consisted of one woman and one man: effectiveness of relevant risk-reducing measures. Management performs a risk assessment quarterly, which is reviewed by the Audit Committee in connection with quarterly reporting. The Audit Committee informs the Board after each meeting. Considered independent Served since 2022 meting attendance Each year, the external auditor carries out a review of the Group’s performance of internal control relevant for financial reporting. The Board´s Audit Committee Katrine Trovik Tore Holand Role Chair Member Yes Yes 14.05.2020 13.06.2019 86% 100% 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 2022, the Remuneration Committee consisted of one woman and one man: Board's Remuneration Committee Per Grieg Jr. Marianne Ødegaard Ribe Role Chair Member Considered independent Served since No Yes 13.06.2009 14.05.2020 The role of the Remuneration Committee is to have an appropriate reward policy that attracts and motivates executives to achieve the long-term interests of shareholders. The Remuneration Committee assists and facilitates the Board’s decision-making in matters related to the remuneration of the executive management team It also reviews recruitment policies, career planning and management development plans, and prepares matters relating to other material employment issues with respect to executive management. The Remuneration Committee monitors that remuneration is in line with guidelines approved by the AGM, and prepares a remuneration report which must be both audited by the company’s auditor and approved by AGM. 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 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 Governance is intended to provide a means by which management and other employees can contribute to the achievement of the company’s objectives, plan for sound internal control and risk management, support efficient and effective operations with the required level of monitoring and reporting, and establish effective independent control and assurance. Risk management is part of governance and involves identifying the types of risk exposure the company faces, measuring these potential risks, proposing means to hedge, insure or mitigate the risks, and estimating the impact of various risks and opportunities on the future earnings. Internal control represents a subset of the broader risk management activities. auditor’s review is submitted to the Audit Committee. Grieg Seafood has established risk management principles based on the COSO Enterprise Risk Management (COSO ERM) framework, which is the most widely used risk management framework. Based on this, a described and quantified risk appetite and risk tolerance level have been established. Risk management processes are established at all relevant levels of the Group, including strategic and operational levels. Day-to-day implementation of risk management and risk assessment are a line management responsibility, with ultimate responsibility lying with the Board and executive management. Risks are attributed to risk owners according to the functional matrix of the organization. Risk owners decide, manage and accept risk exposure and identify and ensure implementation of adequate controls to close any risk gaps. The company follows the “three lines model” to implement roles responsible for risk management, internal control and assurance activities. The Group categorizes its main risks as: strategic risk, operational risk, financial risk, compliance risk, political risk and climate and nature risk. Management conducts continuous assessments of acute risks and scenarios for possible outcomes. The Group’s greatest risk relates to biological development during the production of smolt in freshwater facilities and production in open net pens in seawater. The Group works continuously and systematically to develop processes that safeguard animal welfare and reduce disease and mortality, and ensure that "best practices" are implemented at all levels. Control routines have been prepared for employee working conditions, as well as for escape prevention, animal welfare, pollution, water resources and food safety. The Group is exposed to the following 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 plan focuses on the unpredictability of the capital markets and seeks to minimize any potentially negative effects on the Group’s financial results. The Group uses financial derivatives to hedge against some risks. Risk management is undertaken at group level and involves identifying, evaluating and hedging financial risk in close cooperation with the 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, executive management reviews a set of Key Performance Indicators (KPIs) for the Group’s farming and sales and marketing operations. Example of KPIs include the number of smolt transferred to the sea, freshwater and seawater production, production cost, feed factor, harvested volume, farming cost and Operational EBIT/kg. Analyses are made and measured against budget figures and forecasts, aligned with the overall strategy of the Group. The performance data is summarized in a report submitted to the Board. Each quarter, the Group’s executive management holds meetings with the managements of each region. The aim of such meetings 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. PART 03 – OUR FINANCIAL RESULTS 76 11. R EMU N ER AT ION OF T HE B O AR D OF DIR E C T OR S 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 executive 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 into within the scope of the Proposals concerning the remuneration of the Board are submitted by the Nomination Committee. The guidelines approved by the AGM resolution adopted by the AGM. Minutes of this AGM can be accessed here. state that remuneration to board members shall be a fixed remuneration and not performance-related. 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-purchase programs. OPTION PROGRAM A synthetic option scheme has been established for executive management and regional directors. The Board wishes executive management and regional directors to become 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 Board remuneration is shown in the financial statements of both the parent company and the Group. dividends from growth and success. Deviations from the Norwegian Code of Practice: None. 12. R EMU N ER AT ION OF T HE GR OUP E XE CU T I V E T E AM 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. Taking into consideration the company’s financial position, risks and costs, as well as its capital requirements and liquidity, the committee will decide if the payment The objective of the guidelines approved by the AGM for salary and other remuneration payable to executive employees within the Group of variable compensation under the incentive plan is acceptable. If so, the committee will submit a recommendation to the Board, which is both to attract people with the required competence and retain key personnel. The guidelines shall create a wage culture which makes the final decision. If the company cannot achieve the financial results associated with the incentive plan, no bonus pay-out will promotes the company’s long-term interests, business strategy and financial strength. The guidelines should also motivate employees to be awarded. The bonus is a function of the number of fixed monthly salaries (maximum six month) and the individual’s level within the work with a long-term perspective to achieve the company´s goals. organization." The determination of salary and other remuneration payable to the Group’s executive management team is based on the following General schemes for the allocation of variable benefits, including bonus schemes and option programs, are determined by the Board guidelines: • Ensuring that salaries and other remuneration are competitive and motivating for each executive. 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. Each year, the Board must report to AGM that remuneration to executive personnel complies with the guidelines. The Board´s statement on • Linking salaries and other remuneration to, among other things, the company’s value creation, the company’s stakeholders and management remuneration is a separate item on the AGM’s agenda. The AGM votes separately on guidelines to the Board and on shareholders. remuneration comprising the synthetic options program. The guidelines and the remuneration report will be published on the company’s • Attracting, motivating and retaining an executive management team with qualifications that correspond to the company’s size and website. complexity. • Developing competence and creating continuity in management. • Ensuring transparency and publishing management’s remuneration in the company. SHARE PURCHASE PROGRAM The Company’s share purchase program aims to stimulate co-ownership and a sense of common interest with the Company. The Board can decide annually that all employees, including executive management, shall be offered shares at a discount. All permanent employees The principles used to determine salary and other forms of remuneration shall be simple and understandable to employees, who have been employed for at least six months at Grieg Seafood ASA or a wholly owned subsidiary are included in this program. Minor shareholders and the public at large. changes in qualifications to this program may be approved by the Remuneration Committee. Salaries, other remuneration and important terms for the executive management team are evaluated by the CEO annually. Salary, other remuneration and key terms for the CEO are evaluated annually by the Remuneration Committee, which prepares a recommendation SEVERANCE PAY The CEO and the CFO are entitled to 12 months’ severance pay after termination of the employment relationship by the company. The for the Board’s decision on remuneration to the CEO. The committee shall hold discussions with the CEO about financial terms annually CEO is further entitled to full salary during sick leave lasting up to 12 months. 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. Deviations from the Norwegian Code of Practice: None. The salary paid to the members of the Group’s executive management team in 2022 consisted 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 achieve the company’s strategic aims. The variable element depends on good financial results being achieved as well as company or personal goals and priorities, based on a pre-defined set of key performance indicators (KPIs). As an example, in 2022, one of the personal goals of members of the executive management team included establishing a climate action plan towards 2030. 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. Each year, the Board must 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 options program. The guidelines and the remuneration report will be published on the company’s website. PART 03 – OUR FINANCIAL RESULTS 77 13. I NF OR M AT ION AN D C OM MUNIC AT ION 14. TAK E O V ER S FINANCIAL INFORMATION The guidelines for reporting financial and other information to the stock market are defined within the framework established by CHANGE OF CONTROL AND TAKEOVERS The company has not established mechanisms which can prevent or avert takeover bids. Any such decision must be made by a General securities and accounting legislation and the rules and regulations of the stock exchange. The company also complies with the Oslo Stock Meeting of shareholders and requires a majority of two-thirds of the votes cast and of the share capital represented. After a takeover Exchange (Euronext) Code of Practice for IR, published on 1 March 2021. bid has 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 The Group’s investor relations policy clarifies roles and responsibilities related to financial reporting, and regulates contact with a competent independent party and advise the shareholders whether to accept or reject the bid. Shareholders will be advised of any shareholders and the investor market. This policy is based upon the key principles of transparency and equal treatment of market difference of views among board members in the Board’s statements on the takeover bid. participants to ensure they receive accurate, clear, relevant, complete and balanced information about performance and outlook. The IR policy is available on the company’s website. The company shall at all times provide its shareholders, the Oslo Stock Exchange At its meeting on 13 October 2015, the Board adopted some core principles for how it will act in the event of any takeover bid. These core (Euronext), and other stakeholders (through the Oslo Stock Exchange information system) with timely information. The Board shall principles are in accordance with the Norwegian Code of Practice. ensure that the company’s quarterly reports give a correct and complete picture of the Group’s financial and operational position, and whether the Group’s operational and strategic objectives are being met. Deviations from the Norwegian Code of Practice: None. In addition, the Board has adopted a separate policy on the disclosure of inside information, which sets forth the company's disclosure obligations and procedures. The company shall be open and active with respect to investor relations, and shall hold regular presentations in connection with the 15. A UDI T OR announcement of its interim results. The company publishes all information on its own website and through stock exchange/press Through its Audit Committee, the Board seeks to collaborate fully and transparently with the Company’s auditor. Each year, the Audit releases. Quarterly reports, annual reports and stock exchange/press releases are published on the company’s website in accordance Committee obtains confirmation that the auditor meets the requirements of the Norwegian Auditing Act concerning the independence with the company’s financial calendar. The presentation of each quarter’s results is available as a webcast. and objectivity of the external auditor. 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 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. place in a reliable and comprehensive manner, and by means of information channels which ensure that everyone has equal access to the Both the company’s management and the auditor comply with guidelines issued by the Financial Supervisory Authority of Norway information. concerning the extent to which the auditor may provide advisory services. All information shall be provided in English. The company has procedures to ensure that this is done. The Board of Directors’ The Board invites the auditor to the meeting which address the annual financial statements. The auditor attends all meetings with the communication with shareholders and other stakeholders is delegated to the Board’s chair, or other appointed persons in specific cases. Audit Committee to consider quarterly reports and other relevant matters, and has at least one meeting a year to report on the Group’s The Board’s chair shall ensure that the shareholders’ views are communicated to the entire Board. accounting principles, risk areas and internal control procedures. Moreover, each year the Board has a meeting with the auditor at which Deviations from the Norwegian Code of Practice: None. neither the CEO nor anyone else from company management is present. 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. Bergen, 30 March 2023 Grieg Seafood ASA PART 03 – OUR FINANCIAL RESULTS 78 GRIEG SEAFOOD GROUP ACCOUNTS GR OUP A C C OUN T S 80 Income statement 80 81 82 82 Comprehensive income statement Statement of financial position Statement of changes in equity Cash flow statement NO T E S 83 84 90 94 95 96 97 98 99 101 103 104 106 107 108 109 110 111 113 113 113 114 114 114 115 115 115 116 116 116 117 117 NOTE 1 General information NOTE 2 Accounting Policies NOTE 3 Financial risk management NOTE 4 Accounting estimates and judgments NOTE 5 Climate-related risk NOTE 6 Discounted operations NOTE 7 Investment in associates NOTE 8 Segment information and revenue from contracts with customers NOTE 9 Biological assets and other inventories NOTE 10 Intangible assets NOTE 11 Property, plant and equipment incl. right-of-use assets NOTE 12 Borrowings NOTE 13 Leases NOTE 14 Classification of financial instruments NOTE 15 Taxes NOTE 16 Salaries and personnel expenses NOTE 17 Share-based payments NOTE 18 Share capital and shareholder information NOTE 19 Earnings per share and dividend per share NOTE 20 Cash and cash equivalents NOTE 21 Investment in money market funds NOTE 22 Trade receivables NOTE 23 Other non-current receivables NOTE 24 Other current receivables NOTE 25 Related parties NOTE 26 Financial income and financial expenses NOTE 27 Other operating expenses NOTE 28 Litigation and legal claims, and decommissioning costs NOTE 29 Other current liabilities NOTE 30 New accounting standards, amendments and interpretations NOTE 31 Contingent liabilities NOTE 32 Events after the reporting date PART 03 – OUR FINANCIAL RESULTS 79 INC OME S TAT E ME N T GRIEG SEAFOOD GROUP NOK 1 000 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 Depreciation property, plant and equipment and right-of-use assets Amortization licenses and other intangible assets Write-down of tangible and intangible non-current asset Production fee Fair value adjustment of biological assets Litigation and legal claims Decommissioning costs EBIT (Earnings before interest and taxes) 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 CONTINUING AND DISCONTINUING OPERATIONS Net profit for the year ALLOCATED TO 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) NOTE 2022 2021 GRIEG SEAFOOD GROUP NOK 1 000 NOTE 2022 2021 Net profit for the year 1 153 779 1 204 668 C OM P R EHENSI V E INC OME S TAT EMEN T 3 3 6 6 109 335 24 792 -5 454 — — 42 112 32 222 -7 089 -105 848 22 709 128 673 -15 894 1 282 452 1 188 774 1 282 452 1 188 774 8 8 8 7 9 7 163 956 4 598 585 NET OTHER COMPREHENSIVE INCOME THAT MAY BE RECLASSIFIED TO PROFIT/LOSS IN SUBSEQUENT YEARS 31 490 13 393 21 096 70 745 -6 752 -1 486 Currency effect on investment in subsidiaries Currency effect on loans to subsidiaries Tax effect -2 233 655 -1 738 267 Recycled accumulated OCI related to sale of Shetland 16/17 -695 577 -577 434 Tax effect of recycled accumulated OCI related to sale of Shetland 13/22/27 -2 087 310 -1 527 347 Total other comprehensive income for the year, net of tax Total comprehensive income for the year ALLOCATED TO Controlling interests 11/13 10 10/11 3/9 28 28 26 26 15 6 19 19 19 19 -434 641 -16 706 -140 074 -26 350 83 412 -157 065 -24 382 -368 482 -7 192 — -24 463 523 036 — — 1 497 586 940 944 121 609 -171 553 -49 944 125 233 -212 499 -87 266 1 447 642 853 678 -293 863 1 153 779 -249 301 604 377 — 600 291 1 153 779 1 204 668 1 153 779 1 204 668 10.3 10.3 10.3 10.3 5.4 5.4 10.7 10.7 PART 03 – OUR FINANCIAL RESULTS 80 S TAT EME N T OF F IN A NCI AL P O SI T ION GRIEG SEAFOOD GROUP NOK 1 000 NOTE 31.12.2022 31.12.2021 GRIEG SEAFOOD GROUP NOK 1 000 NOTE 31.12.2022 31.12.2021 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 Investments in money market funds Cash and cash equivalents Total current assets Total assets 15 10 10/12 10/12 11/13 7 7/23 9/12 9/12 3/12/22 24 3/14 21 3/20 — 691 094 59 660 071 EQUITY AND LIABILITIES Share capital Treasury shares 1 463 710 1 536 319 Contingent consideration (acquisition of Grieg Newfoundland AS) 14 689 36 828 4 035 590 3 402 629 40 000 216 624 17 935 40 000 104 675 90 897 6 479 642 5 871 477 240 172 128 299 4 045 800 3 449 412 259 137 157 060 37 988 1 012 848 642 719 151 793 147 332 37 592 — 928 342 6 395 723 4 842 771 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 12 875 365 10 714 248 Derivatives and other financial instruments Other current liabilities Total current liabilities Total liabilities Total equity and liabilities BERGEN, 30 MARCH 2023 18 18 15 17 12 453 788 -5 407 701 535 197 180 5 138 612 6 485 708 453 788 -4 532 701 535 68 205 4 344 307 5 563 302 1 041 101 1 069 802 6 756 11 115 2 838 809 2 381 000 12/13 653 650 577 797 4 540 316 4 039 714 12 12/13 17 3 15 3/14 29 141 968 226 910 589 717 498 353 191 55 963 64 928 288 293 54 475 178 032 29 523 196 88 641 32 088 22 350 212 422 1 849 341 1 111 232 6 389 657 5 150 946 12 875 365 10 714 248 PER GRIEG JR. CHAIR TORE HOLAND VICE CHAIR KATRINE TROVIK BOARD MEMBER MARIANNE RIBE BOARD MEMBER NICOLAI HAFELD GRIEG BOARD MEMBER RAGNHILD JANBU FRESVIK BOARD MEMBER ANDREAS KVAME CEO PART 03 – OUR FINANCIAL RESULTS 81 S TAT EME N T OF C H A NGE S I N EQUI T Y GRIEG SEAFOOD GROUP NOK 1 000 SHARE CAPITAL TREASURY SHARES1 CONTINGENT CONS.2 OTHER EQUITY3 RETAINED EQUITY NON- CONTROLLING INTERESTS 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 -16 197 303 -16 197 1 204 971 — — 3 456 3 456 -16 197 1 208 427 Equity at 31.12.2021 453 788 -4 532 701 535 68 205 4 344 307 Equity at 01.01.2022 Profit for 2022 Other comprehensive income 2022 Total comprehensive income 2022 Sale of treasury shares to employees1 Purchase of treasury shares Dividend Transactions with owners [in their capacity as owners] 2022 Total change in equity 2022 453 788 -4 532 701 535 68 205 4 344 307 — — — — — — — — — — — 385 -1 260 — -875 -875 — — — — — — — — — 1 153 779 128 976 -303 128 976 1 153 476 — — — — 6 510 -28 739 -336 942 -359 171 128 976 794 305 Equity at 31.12.2022 453 788 -5 407 701 535 197 180 5 138 612 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. 3 Other equity, reclassified through OCI. — — — — — — — — — — — — — — — — — — TOTAL 4 370 918 1 204 668 -15 894 1 188 774 3 610 3 610 1 192 384 5 563 302 5 563 302 1 153 779 128 673 1 282 452 6 895 -29 999 -336 942 -360 046 922 406 6 485 708 SPECIFICATION OF RETAINED EQUITY NOK 1 000 Book value at 01.01.2021 Changes in 2021 Changes in 2022 EFFECT OF SHARE-BASED REMUNERATION PURCHASE/ SALES OF TREASURY SHARES * ACCUMULATED INCOME LESS ACCUMULATED DIVIDEND TOTAL 1 094 — — -5 476 3 456 3 140 261 3 135 880 1 204 668 1 208 124 -22 229 816 839 794 610 Book value at 31.12.2022 1 094 -24 249 5 161 767 5 138 612 * 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 Book value at 01.01.2021 Changes in 2021 Recycle of accumulated OCI (sale of Shetland in 2021)* Changes in 2022 Book value at 31.12.2022 *See Note 6 for more information. PART 03 – OUR FINANCIAL RESULTS CHANGES IN FAIR VALUE OF EQUITY INSTRUMENTS CURRENCY EFFECT ON LOANS TO SUBSIDIARIES CURRENCY EFFECT ON INVESTMENT IN SUBSIDIARIES -37 — — — -37 26 370 25 134 -80 513 19 338 -9 672 58 068 42 111 -2 626 109 336 206 888 TOTAL 84 401 67 244 -83 139 128 674 197 180 C A SH FL O W S TAT EMEN T GRIEG SEAFOOD GROUP NOK 1000 EBIT (Earnings before interest and taxes) Depreciation, amortization and write-down of non-current assets 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 Government grant Investment in money market funds 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 Repurchase of own shares Paid dividends 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 21 12 12 12 12/13 26 26 20 2022 1 497 586 591 422 -5 535 -21 096 -83 412 -529 150 -117 071 194 302 133 514 -4 359 -93 865 1 562 336 17 112 -561 916 -2 581 9 119 -1 000 224 -112 212 -1 650 702 -440 000 1 463 423 -522 146 -225 468 -140 002 21 898 -24 400 -336 942 -203 637 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 -292 003 -1 388 773 — 2 040 350 -292 003 928 342 6 380 642 719 651 577 275 427 1 339 928 342 82 NO T E 1 GE NE R AL I NF OR M AT I ON Grieg Seafood ASA is an integrated Norwegian seafood company engaged in farming of Atlantic salmon. The Group’s integrated In the following, "Group" describes information relating to the sales organization sell the farmed salmon from our regions Grieg Seafood Group, while "Company" refers to the parent to the market, primarily as fresh head-on gutted, but also company, Grieg Seafood ASA. processed through external processing partners. Grieg Seafood Grieg Seafood. The Shetland disposal group includes the prior reporting segment of Shetland UK, in addition to the UK sales To be able to correctly calculate and report the proposed operations. The Shetland disposal group was deconsolidated resource rent tax in Norway as from 2023 (see Note 15), Grieg from the Group as of 15 December 2021. The financial position Seafood has considered it necessary to reorganize the ownership of the Shetland disposal group is therefore not included in Grieg of aquaculture licenses in Norway into separate commercial Seafood’s consolidated statement of financial position at year- and non-commercial aquaculture licenses by legal entities. As end 2021. The Group received a preliminary cash settlement such, Grieg Seafood Rogaland Sjø AS has been established as in December 2021. However, settlement was not finalized until a subsidiary (100%) of Grieg Seafood Rogaland AS, and Grieg ASA is a public limited company registered in Norway. Its head In November 2020, we announced that the Board of Grieg Seafood February 2023. For more information, see Note 6. Seafood Finnmark Sjø AS as a subsidiary (100%) of Grieg Seafood office is located at C. Sundtsgt. 17/19, Bergen, Norway. The had decided to divest our investment and operations in Shetland, Company was listed on the Oslo Stock Exchange (Euronext) on as we wished to focus on our operations in Norway and Canada 21 June 2007 and has operations in Norway and Canada. Until 15 going forward. Grieg Seafood ASA sold 100% of the shares in December 2021, the Company also had operations in Shetland Grieg Seafood Hjaltland Ltd on 15 December 2021 to Scottish Sea Grieg Seafood Group comprised the following entities at 31 December 2022: Finnmark AS. The commercial aquaculture licenses in Norway are owned by Grieg Seafood Rogaland Sjø AS and Grieg Seafood Finnmark Sjø AS. These four entities are all domiciled in Norway. in the UK. The ultimate parent company of Grieg Seafood ASA is Farms Ltd. In turn, Grieg Seafood Hjaltland Ltd owned 100 % of Grieg Seafood Sales Ltd (owned 100% by Grieg Seafood Norway The remaining subsidiaries are domiciled in Norway and owned Grieg Maturitas AS, the parent company of Grieg Maturitas II AS, Grieg Seafood Shetland Ltd, which operated the Group's salmon AS) is domiciled in the UK. Grieg Seafood Sales Ltd was not by Grieg Seafood ASA. which in turn own 100 % of Grieg Aqua AS, which owns 50.17% of farming (and as from 2021 related sales) operations. Grieg part of the Shetland disposal group, and the entity has been Grieg Seafood ASA. Seafood Shetland Ltd owned 100% of the (up until 15 December 2021) dormant company Isle of Skye Salmon Ltd. Grieg Seafood dormant throughout 2021-2022. Grieg Seafood BC Ltd. (and its Grieg Seafood Canada AS and Grieg Seafood Newfoundland AS 100% owned subsidiary Grieg Seafood Sales North America Inc) are holding companies within the Group, and wholly own the The consolidated financial statements as per 31 December 2022 Hjaltland Ltd, together with Grieg Seafood Shetland Ltd and is domiciled in British Columbia, Canada, while Grieg Seafood production companies Grieg Seafood BC Ltd. (incl. subsidiaries) for the period 1 January to 31 December have been prepared in Isle of Skye Salmon Ltd, form the Shetland disposal group. The Newfoundland Ltd (incl. the subsidiaries Grieg Marine NL Ltd and and Grieg Seafood Newfoundland Ltd (incl. subsidiaries), accordance with International Financial Reporting Standards operations of the Grieg Seafood Hjaltland UK Ltd Group were, Grieg NL Nurseries Ltd) is domiciled in Newfoundland, Canada. respectively. (IFRSs) as adopted by the EU, and were approved by the Board of from Q4 2020 until their sale on 15 December 2021, classified as Grieg Seafood Premium Brands Inc (domiciled in the USA) is Directors on 30 March 2023. held for sale in the consolidated statement of financial position, and presented as discontinued operations in the consolidated owned 100% by Grieg Seafood Sales North America Inc. Grieg Grieg Seafood Rogaland AS has investments in three associated Seafood Sales USA Inc (domiciled in the USA) is owned 100% by companies; Tytlandsvik Aqua AS (33.33%), Årdal Aqua (44.44%) All amounts in these financial statements with note disclosures income statement and consolidated cash flow statement of Grieg Seafood Norway AS. and Nextseafood AS (50.00%), while Grieg Seafood Finnmark has are stated in NOK thousand unless otherwise specified. an investment (50.00%) in Nordnorsk Smolt AS. G R O U P L E G A L S T R U C T U R E 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 2 2 GRIEG SEAFOOD ASA OWNER SHARE: 99% GRIEG SEAFOOD ASA GRIEG SEAFOOD NORWAY AS GRIEG SEAFOOD SALES UK LTD GRIEG SEAFOOD SALES USA INC. GRIEG SEAFOOD ROGALAND AS GRIEG SEAFOOD FINNMARK AS GRIEG SEAFOOD CANADA AS GRIEG SEAFOOD NEWFOUNDLAND AS GRIEG SEAFOOD ROGALAND SJØ AS GRIEG SEAFOOD FINNMARK SJØ AS GRIEG SEAFOOD BC LTD GRIEG SEAFOOD NEWFOUNDLAND LTD TYTLANDSVIK AQUA AS (33,33%) NORDNORSK SMOLT AS (50%) ÅRDAL AQUA AS (44.44%) NEXTSEAFOOD AS (50%) GRIEG SEAFOOD SALES NORTH AMERICA INC GRIEG SEAFOOD PREMIUM BRANDS INC. GRIEG MARINE NL LTD GRIEG NL NURSERIES LTD The Grieg Sefood Hjaltland Group was sold from Grieg Seafood ASA on 15 of December 2021. The companies were reported at help for sale through 2021. PART 03 – OUR FINANCIAL RESULTS NOR NOR CAN CAN ROGALAND FINNMARK BRITISH COLUMBIA NEWFOUNDLAND GRIEG SEAFOOD ROGALAND AS GRIEG SEAFOOD ROGALAND SJØ AS GRIEG SEAFOOD NORWAY AS GRIEG SEAFOOD SALES USA INC. GRIEG SEAFOOD FINNMARK AS GRIEG SEAFOOD FINNMARK SJØ AS GRIEG SEAFOOD NORWAY AS GRIEG SEAFOOD SALES USA INC. GRIEG SEAFOOD SALES NORTH AMERICA INC. GRIEG SEAFOOD SALES NORTH AMERICA INC. GRIEG SEAFOOD BC LTD GRIEG SEAFOOD NEWFOUNDLAND LTD GRIEG SEAFOOD SALES NORTH AMERICA INC GRIEG SEAFOOD SALES NORTH AMERICA INC 83 NO T E 2 A C C OUN T I NG P OL ICI E S The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise indicated. BASIS OF PREPARATION The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The consolidated financial statements have been prepared under the historical cost convention, modified for biological assets, equity instruments and financial assets/liabilities (including derivative instruments) at fair value through profit or loss. The preparation of financial statements in accordance with IFRS requires the use of estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. Areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are material to the consolidated financial statements are described in Note 4. NEW STANDARDS ADOPTED BY THE GROUP No new IFRS accounting standards have been implemented in 2022. See Note 30 for more information concerning relevant amendments and interpretations. 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. PART 03 – OUR FINANCIAL RESULTS Contingent consideration classified as equity shall not be remeasured and its subsequent settlement shall be accounted for within equity. Other contingent considerations shall be measured at fair value at each reporting date and changes in fair value shall be recognized in the income statement. Intragroup transactions, intercompany balances, and unrealized profits and losses between Group companies are eliminated. Reported figures from the subsidiaries are restated when this is necessary to achieve consistency with the Group's accounting policies. CHANGES IN SHAREHOLDINGS IN SUBSIDIARIES WITHOUT LOSS OF CONTROL Transactions with non-controlling owners of subsidiaries that do not involve loss of control are treated as equity transactions. When shares are purchased from non-controlling owners, the difference between the consideration and the proportionate percentage of net assets recognized in the subsidiary’s statement of financial position relating to such shares is recognized in the parent company’s owners’ equity. Gains or losses on disposals of non-controlling owners are similarly recognized in equity. DIVESTMENT OF SUBSIDIARIES When the Group no longer has control, any residual ownership interest is measured at fair value with changes in value recognized 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 associate, including any other unsecured receivables towards the entity, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. If necessary, the associates’ financial statements are restated to achieve consistency with the Group’s accounting policies. At the end of each accounting period, the Group determines TRANSACTIONS AND BALANCE SHEET ITEMS Foreign currency transactions are translated into the functional currency using the exchange rates in force at the transaction date. Foreign exchange gains or losses resulting from the settlement of such transactions, are recognized in profit or loss. Translation differences on monetary items (assets and liabilities) that are not denominated in the entity´s functional currency are whether there is any need to recognize an impairment of the also recognized through profit or loss. investment in the associate. In such cases, the impairment amount is measured as the difference between the recoverable amount of the investment and its carrying value, and the GROUP COMPANIES The income statements and statements of financial positions difference is recognized in the income statement together with of the Group entities (none of which has the currency of a share of profit or loss in “Share of profit from associates”. hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the In the event of any gains or losses on transactions between the presentation currency as follows: 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 • The statement of financial position is translated using the closing rate at the end of the period. for the asset that was the subject of the transaction. Accounting • Income and expense items are translated at average policies of associates are changed when necessary to ensure consistency with the accounting policies adopted by the Group. Dilution gains and losses arising on investments in associates are recognized in the income statement. 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. In the event of a reduction in a shareholding in an associate where the Group continues to exercise significant influence, only When a foreign operation is sold, the exchange difference, which a proportionate share of amounts previously recognized in other in previous periods was recognized in other comprehensive comprehensive income is reclassified to profit or loss. DISCONTINUED OPERATIONS Discontinued operations are excluded from the results of income, is not accrued. The accumulated exchange difference on the sale of the foreign operation is hence reversed in other comprehensive income. Gains or losses on the sale are recognized on a basis of zero exchange difference in the net continuing operations and are presented as a single amount profit on ordinary activities. as profit or loss after tax from discontinued operations in the income statement. Goodwill and fair value adjustments of assets and liabilities on the acquisition of a foreign entity are treated as assets and Disclosures for the Group’s discontinued operations are provided liabilities of the foreign entity and are translated using the in Note 6. All other notes to this consolidated financial statement closing currency rate at the balance sheet date. refer to the Group’s continuing operations, unless the note explicitly states otherwise. SEGMENT INFORMATION Operating segments are reported in a manner consistent PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at historical cost less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the with internal reporting to the chief operating decision-maker. asset. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating Improvements are recognized in the asset’s carrying amount segments, has been identified as the group management. FOREIGN CURRENCY TRANSLATION The financial statements of each of the Group’s entities are generally measured using the currency of the economic area in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Norwegian Kroner (NOK), which is the parent company’s functional and presentation currency. or as a separate asset when it is probable that future economic benefits associated with the improvement will flow to the Group and the cost of the item can be reliably measured. All other repairs and maintenance are recognized in the income statement during the financial period in which the costs are incurred. 84 Land and buildings mainly comprise freshwater facilities, • Licenses granted with a finite useful life, but where the harvesting plants and offices. Land is not depreciated. Other license holders can renew the licenses without incurring operating assets are depreciated in accordance with the straight- considerable expenses. line method so that the cost, or remeasured value, is written down to residual value over its expected useful economic life as Licenses with a finite useful life are amortized over their useful follows: • Buildings/real estate 10–50 years lives, and tested for impairment if there are indications that future earnings do not justify the asset’s carrying value. Such • Plants, barges, onshore power supply 5–30 years licenses relate to water licenses for hatcheries and some specific • Nets/cages/moorings 5–25 years • Other equipment 3–35 years seawater licenses. The following sections provide a description of licenses in Norway and Canada. See Note 10 Intangible assets for an overview of the licenses. The assets’ useful lives and residual values are estimated at each balance sheet date and adjusted if necessary. In 2022 there has not been any changes to the estimated useful life of the Group’s Norway The licensing regime for the production of salmon in Norway is property, plant and equipment as a consequence of climate- enacted by the Norwegian Parliament through the Aquaculture Hatchery licenses Section 9 of the Aquaculture Act sets out the basis for withdrawal Young salmon are defined as eggs, juveniles, parr or smolt to of an aquaculture license. This states that there must be be released at another location, see Section 4(f) of the Salmon significant breaches of the terms of an aquaculture license Allocation Regulation. Such licenses are not limited and thus before it can be revoked. subject to continuous application for new licenses or changes to existing licenses. Pursuant to the regulations, annual production is limited to 15 million fish. Broodstock and R&D licenses These licenses are not limited in number. The purpose of BC Grieg Seafood BC Ltd (GSF BC) has farms on both the west and east coasts of Vancouver Island. To operate farms in British Columbia, Canada, the following three licenses must be in place: broodstock licenses is to produce roe and milt from salmon with 1. Aquaculture license – issued by the Department of Fisheries improved and/or specific traits. Broodstock licenses include and Oceans and the First Nations. both a land and sea phase, i.e. broodfish and egg production are 2. License of Occupation (Tenures) – issued by the Ministry of covered by the same licensing process. The purpose of an R&D Forest, Lands and Natural Resource Operations. license is to encourage important research projects that can 3. Navigation Water Permit – issued by Transport Canada related risk. Act. The Ministry of Trade, Industry and Fisheries grants permits for aquaculture (licenses). All aquaculture operations are subject bring the Norwegian aquaculture industry forward. Permits are (Canadian public authority). means tested, meaning that the applicant must demonstrate a An asset’s carrying value is written down to its recoverable to licensing, and no one can produce salmon without permission need for the production of eggs, specific research projects or for For restrictions regarding production quantity, see table in Note amount if the carrying value is greater than its estimated from the authorities, see Section 4 of the Aquaculture Act. recoverable amount. Gains and losses on disposals are recognized on a net basis as “other gains and losses” in the The aquaculture permit allows the production of salmon income statement and represent the difference between the in limited geographic areas within the current determined sales price and the carrying value. limitations of the permit scope. The Aquaculture Act is INTANGIBLE ASSETS Intangible assets that arise internally within the Group are not recognized. GOODWILL Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets administered centrally by the Ministry of Trade, Industry and Fisheries, with the Directorate of Fisheries as the supervisory authority. Regionally, several industry authorities jointly manage full administrative and supervisory responsibility within the regulating range of the Aquaculture Act. The county council is the regional administrative body, while the Directorate of Fisheries serves as appellate body in locality and licensing matters. educational purposes. Educational licenses 10. Duration and renewal Educational licenses in Norway are given to universities, colleges 1. Aquaculture license – duration of one year, renewal each year or high schools offering aquaculture-related courses of study. is a formality. Salmon farming companies can lease educational licenses from 2. License of Occupation – duration of 2–20 years. Renewal is the educational institution. Part of the students’ training will then applied for on expiration. take place at these salmon farms. 3. Navigation Water Permit – duration of five years, but possible Harvesting pen licenses Licenses utilized for holding pens where live fish are kept prior to New renewal process in Canada West harvesting. These relate to specific locations. In British Columbia, licenses are renewed by the federal to apply for renewal. Department of Fisheries and Oceans (DFO) on a regular basis, were the next renewal should have been in June 2022. This of the acquired entity at the date of acquisition. Goodwill on Seawater licenses Duration and renewal acquisitions of subsidiaries is classified as an intangible asset. Each license for the farming of salmon in the sea is subject to Goodwill on the purchase of a share in an associate is included a production limit in the form of “maximum allowed biomass” in “investments in associates”. Goodwill is tested annually for (MAB) on both company and location/seawater site level. The impairment and carried at cost less accumulated impairment system means the license holder can at no time have a standing losses. Impairment losses on goodwill are not reversed. Gains biomass (number of kg of live fish in seawater) that exceeds and losses on the disposal of an entity include the carrying the company level MAB, in addition that no location can have a amount of goodwill relating to the entity sold. standing biomass that exceeds the seawater site’s MAB. When The Ministry may in individual decisions or regulations specify has been put on hold because of the current Canadian federal further provisions on the content of aquaculture licenses, Government has in its mandate letter to the Minister of Fisheries, including matters relating to scope and time limitations, see Ocean and Canadian Coast Guard stated that a transition plan Section 5(2) of the Aquaculture Act. Nonetheless, the preparatory should be developed by 2025 in collaboration with Indigenous work for the Aquaculture Act specifies that licenses are normally communities and the BC Province, outlining how the industry will granted without a time limit. transition from open-net pen in coastal BC. See Note 4 for more information. a seawater site is approved, a maximum level of tonnes of fish Grieg Seafood’s general fish farming and hatchery licenses are For the purpose of impairment testing, goodwill is allocated to is set, based on the location and environmental conditions those cash-generating units or groups of cash-generating units on the site. The normal size of a permit is 780 tonnes at the that are expected to benefit from the business combination in license level ex. the county of Troms and Finnmark, while the which the goodwill arose. LICENSES Fish-farming licenses with an indefinite useful life are not normal size of a permit in Troms and Finnmark is 945 tonnes. While the extent of biomass a company can possess primarily depends on the type and number of licenses, the limitation at site level is primarily dependent on the site’s environmental not time-limited under current regulations. After the reform in 2009, a number of licenses were time-limited, mainly for Newfoundland Grieg Seafood Newfoundland has exclusive farming rights to 15 years. As no government practices have been established Placentia Bay. To operate aquaculture sites in Newfoundland, relating to the renewal of broodstock licenses, the current Canada, the following approvals and licenses must be in place: understanding is that they will be renewed upon application. Expiration of licenses allows for application for renewal on • Aquaculture License – issued by the Department of Fisheries demand. A license for harvesting pens is valid for ten years and Forestry and Agriculture amortized but reviewed for impairment annually, or more sustainability. See Section 15 of the Salmon Allocation Regulation must be renewed on expiration, provided that the license is still • Lease License for Occupancy – issued by Crown Lands division frequently if there are indications that the carrying value may (“Laksetildelingsforskriften”). connected to an approved harvesting facility. of Department of Fisheries Forestry and Agriculture have decreased. The Group considers the following licenses to have indefinite useful lives: • Licenses granted with an indefinite useful life, where the company has no other contractual restrictions relating to the use of the license. PART 03 – OUR FINANCIAL RESULTS Norway also has green licenses, with stricter environmental criteria. The sea lice limit is half that of regular licenses, with stricter criteria for escape prevention technologies and limits on the amount of medical treatment permitted per generation. Disposal and withdrawal All licenses can be transferred and mortgaged in accordance with Section 19 of the Aquaculture Act. Transfers and mortgages must be recorded in a separate register (the Aquaculture Register). It is not permitted to rent out licenses or license capacity. • Canadian Navigable Waters Act - issued by Transport Canada • Water Use Approval – issued by Department of Environment, Climate Change, and Municipalities 85 Duration and renewal Ordinary purchases and sales of investments are recognized on • The financial asset is held within a business model with Aquaculture licenses are granted for a six-year term. Each the trade-date, the date on which the Group commits to purchase the objective to hold financial assets in order to collect FINANCIAL LIABILITIES Financial liabilities are classified, at initial recognition, as year, licensees must complete the validation process and abide or sell the asset. All financial assets that are not stated at fair contractual cash flows and, amortized cost (loans and borrowings), or as financial liabilities by the legislative references: Aquaculture Act and the Policy value through profit or loss are initially recognized at fair value • The contractual terms of the financial asset give rise on at fair value through profit or loss. cross references as Aquaculture License Renewal AP 6, Annual plus transaction costs. reporting AP 7 and site utilization. For renewal, licensees are required to follow and comply with the requirements set out in AP 6 License Renewal. Licensees must abide by license FAIR VALUE HIERARCHY The following of the Group’s financial instruments are not specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortized cost are subsequently measured Financial liabilities at amortized cost (loans and borrowings) After initial recognition, interest-bearing loans and borrowings conditions, policies, and regulations at all times. Licenses may measured at fair value: cash and cash equivalents, accounts using the effective interest (EIR) method and are subject to are subsequently measured at amortized cost using the EIR be suspended or cancelled if a breach occurs, or they may not be receivables, other current receivables and payables, bank loans, impairment. Gains and losses are recognized in profit or loss method. Gains and losses are recognized in profit or loss when renewed. bond loans and leasing liabilities. See Note 3 for information on when the asset is derecognized, modified or impaired. the liabilities are derecognized as well as through the EIR valuation techniques. amortization process. The timeline supports two production cycles and promotes The Group's financial assets at amortized cost includes trade longer-term investment and stability. Ensuring sites are being The Group uses the following hierarchy of valuation techniques to receivables and other short-term deposit. Trade receivables that Amortized cost is calculated by taking into account any discount utilized and developed by license holders in accordance with determine and disclose the fair value of financial instruments: do not contain a significant financing component are measured or premium on acquisition and fees or costs that are an integral approved plans on file with the department falls under AP 8 Site • Level 1: Quoted (unadjusted) prices in active markets for at the transaction price determined under IFRS 15 Revenue from part of the EIR. The EIR amortization is included as finance costs Utilization. If sites are not being utilized based on approved plans identical assets or liabilities Contracts with Customers. in the income statement. on file, they may not be renewed. OTHER INTANGIBLE ASSETS Acquired customer portfolios and computer software licenses • Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are carried in Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include • Level 3: Techniques which use inputs that have a significant the statement of financial position at fair value, with net changes financial derivative contracts. Derivatives are initially recognized are recognized in the statement of financial position at cost and effect on the recorded fair value that are not based on in fair value recognized in the income statement. at fair value on the date a derivative contract is entered into, and amortized over their estimated useful lives. Customer portfolios observable market data. are recognized in the statement of financial position at cost on the date of purchase. Amortization is calculated using the For recurring level 3 measurements, transfers between the Derivatives are initially recognized at fair value on the date a derivative contract is entered into, and are subsequently stated straight-line method over the estimated useful life, as follows: levels in the fair value hierarchy are evaluated when reassessing at fair value on an ongoing basis. The category also include the are subsequently stated at fair value on an ongoing basis. Derecognition of financial liabilities A financial liability is derecognized when the obligation under the the categories of the financial instruments at the end of the Group’s investments in debt instruments and money market liability is discharged or cancelled or expires. When an existing • Computer software 3–10 years period. During the 2022 reporting period, there were no changes funds. IMPAIRMENT OF NON-FINANCIAL ASSETS Assets with an indefinite useful life are not amortized but are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever there are in the fair value measurement which caused transfers between level 1 and level 2, and no transfers to or from level 3. Derecognition of financial assets A financial asset (or, where applicable, a part of a financial 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 FINANCIAL ASSETS Financial assets are classified, at initial recognition, as asset or part of a group of similar financial assets) is primarily recognition of a new liability. The difference in the respective derecognized (i.e., removed from the Group’s consolidated carrying amounts is recognized in the income statement. indications that future earnings do not justify the carrying value. subsequently measured at amortized cost, fair value through statement of financial position) when: other comprehensive income (OCI), and fair value through profit a. The rights to receive cash flows from the asset have expired, or An impairment loss is recognized for the amount by which the or loss. asset’s carrying value exceeds its recoverable amount. The b. The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received HEDGING Hedge accounting The Group do not utilize the hedge accounting principles of IFRS recoverable amount is the higher of an asset’s fair value less The classification of financial assets at initial recognition depends cash flows in full without material delay to a third party under a 9. costs to sell and value in use. For the purposes of assessing on the financial asset’s contractual cash flow characteristics “pass-through” arrangement; and either impairment, assets are grouped at the lowest levels for which and the Group’s business model for managing them. With the i. the Group has transferred substantially all the risks and there are separately identifiable cash flows (cash-generating exception of trade receivables that do not contain a significant rewards of the asset, or Non-hedge accounting The Group engage in short-term derivative contracts to hedge units). Non-financial assets, other than goodwill, that have financing component, the Group initially measures a financial ii. the Group has neither transferred nor retained substantially all currency- and interest risk. Such contracts are recognized at fair suffered an impairment are reviewed for indicators of possible asset at its fair value plus, in the case of a financial asset not at the risks and rewards of the asset, but has transferred control value through profit or loss and presented as financial income/ reversal of the impairment at each reporting date. fair value through profit or loss, transaction costs. The Group has of the asset. financial expenses. FINANCIAL INSTRUMENTS A financial instrument is any contract that gives rise to a financial financial assets classified as follows: • Financial assets at amortized cost (debt instruments) Impairment of financial assets The Group recognizes an allowance for expected credit losses FISH POOL SALE AND PURCHASE AGREEMENTS For the financial contracts entered into with Fish Pool, changes • Financial assets designated at fair value through OCI with no (ECLs) for all debt instruments not held at fair value through in unrealized gains and losses on the sale and purchase asset for one entity and a financial liability or equity instrument recycling of cumulative gains and losses upon derecognition profit or loss. ECLs are based on the difference between the agreements are recognized net in the income statement as a for another entity. The classification is performed in accordance with the substance of the contractual arrangement, and in line with the definitions of a financial asset, a financial liability and an equity instrument. (equity instruments) • Financial assets at fair value through profit or loss Financial assets measured at amortized cost The Group measures financial assets at amortized cost if both of the following conditions are met: contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. 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. See the “Trade receivable” section in this note for specific accounting principles on expected credit loss on trade receivables. PART 03 – OUR FINANCIAL RESULTS 86 INVENTORIES Inventories are stated at the lower of cost and net realizable and payable fees for completion, constitutes the cash flow. No deductions are made for sales expenses, as these are not value. Cost is determined using the first-in, first-out (FIFO) observable in the market. Such expenses are also deemed method. The net realizable value is the estimated sales price less immaterial. the estimated costs of completion and sale. BIOLOGICAL ASSETS The accounting treatment of live fish by enterprises applying Incoming cash flow is calculated as a function of estimated volume multiplied by estimated price. For fish not ready for estimated expenses required to fulfil the contract. This implies that the Group may experience loss-making (onerous) contracts CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash in hand, bank deposits according to IAS 37 even if the contract price for physical delivery and other short-term highly liquid investments with original contracts is higher than the actual production cost for the maturities of three months or less. The overdraft facility is products. If that occurs, a provision is made for the estimated included in current borrowings in the statement of financial negative value. position. IFRS is regulated by IAS 41 Agriculture. IAS 41 comprises a grow the fish to harvestable weight. The cash flow is discounted as “fair value adjustment of biological assets”. The liability in the harvest, a deduction is made to cover estimated residual costs to Changes arising from physical delivery contracts are recognized SHARE CAPITAL Ordinary shares are classified as equity. Costs directly hierarchy of methods for the measurement of biological assets at monthly by a discount rate. The discount rate comprises three statement of financial position is recognized as other current attributable to the issue of new shares or options, net of tax, are level 3. The basic principle is that such assets shall be measured main components: 1) the risk of incidents that influence cash liabilities. shown in equity as a deduction, net of tax, from the proceeds. at fair value less costs to sell. Fair value is defined in IFRS 13 flow, 2) hypothetical license lease and 3) the time value of as “the price that would be received to sell an asset or paid to money. See Note 4 on significant accounting estimates for more Fish farming naturally comes with a certain level of loss of transfer a liability in an orderly transaction between market information. participants at the measurement date”. According to IFRS 13, the highest and best use of the biological asset establishes the When estimating the actual accumulated cost at the respective valuation premise. seawater facility, direct costs (fish feed and similar) are allocated to each group of fish transferred to the sea at the same location. Biological assets comprise of smolt and fish in the sea. The Financial costs are not included in the costs of production. fish are divided into two main groups, depending on the stage of fish along the production cycle, and our budgets are typically BORROWINGS Borrowings are initially recognized at fair value when the funds produced with an inherent assumption of a 0.5-1% monthly are received, net of transaction costs incurred. Borrowings are mortality. The losses associated with normal levels of survival subsequently stated at amortized cost applying the effective are not directly recognized in the income statement. In periods interest method. Any difference between the proceeds (net of where specific abnormal incidents lead to reduced survival, we transaction costs) and the redemption value is recognized in the immediately recognize write-downs of the biomass inventory to income statement over the period of the borrowings. Borrowings better reflect the actual biomass in the sea or on land. The write- are classified as current liabilities unless the Group has an the life cycle. At the earliest stage of the life cycle, the fish are The sales price for fish in the sea is based on the forward price down costs are recorded in the income statement as they arise, unconditional right to defer settlement of the liability for at least classified in group 1) roe, fry and smolt. Group 1 biological assets from Fish Pool. Fish Pool is a marketplace for financial purchase included in the financial statement line item “raw materials and 12 months after the reporting date. is disclosed as “biological assets on land” in Note 9. and sale agreements for superior Norwegian Salmon size 3-6 consumables used”. When the fish are large enough to be transferred to the sea, they but Grieg Seafood’s opinion is that the observable forward are classified in group 2) biomass in sea. The group 2 biological prices must be seen as the best approach to a price for the 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”. sale of salmon. Regarding foreign countries, the most relevant price information available for the expected harvesting period is applied. For fish in the sea, the forward price in Norway is adjusted for historical differences in achieved prices between kg head-on gutted weight. The volume on Fish Pool is limited, TRADE RECEIVABLES Trade receivables arising from the trading of goods or services INCOME TAX EXPENSE AND DEFERRED TAX Income tax expense consists of the tax payable and changes to within the ordinary operating cycle and under normal terms deferred tax. of payment are initially recognized at nominal value. Trade receivables with longer terms of payment are discounted to Deferred tax is provided for in full at nominal value, using the present value and represents the Group’s unconditional right to liability method, on temporary differences arising between the • Fish onshore (smolt) are recognized at accumulated cost. The Norway and Canada. The price/net sales value is adjusted for consideration from the customer. best estimate of fair value is the accumulated cost because quality differences (superior, ordinary and production grade), of very little biological transformation. This assessment and for logistics expenses and sales commissions. Estimated must be seen in the light of the fact that smolt are currently harvesting expenses are deducted. EXPECTED CREDIT LOSS (ECL) ON TRADE RECEIVABLES For trade receivables, the Group applies a simplified approach 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 transferred to the sea at a stage when their weight is still in calculating ECLs. For receivables where the credit risk has realized, or the deferred income liability is settled. Deferred tax relatively low. The volume (biomass) is based on the actual number of increased substantially after establishment, a write-down shall assets are recognized to the extent that it is probable that future • For fish in sea, the fair value is calculated by applying a cash- individuals in the sea at the balance sheet date, adjusted to cover flow based present value model. estimated mortality up to harvest date and multiplied by the estimated harvest weight per individual at the time of harvest. The fair value of fish in the sea is estimated for each location. The fair value estimate for the fish in sea figure is adjusted be made for the expected credit loss over the maturity of the taxable income will be available, from which the temporary receivables. The model for calculating loss allowance classifies differences can be deducted. Deferred tax is calculated on the trade receivables into two groups: normal risk and high- temporary differences arising on investments in subsidiaries risk, based on their country of origin. Furthermore, the trade and associates, except where the timing of the reversal of for gutting waste, as the price is measured for gutted weight. receivables are classified as credit-insured receivable or not. the temporary difference is controlled by the Group and it is In accordance with the principle relating to highest and best use, Budgeted harvesting and freight costs are applied. Foreign The provision is the difference between nominal and recoverable probable that the temporary difference will not be reversed in the Grieg Seafood considers that the fish have optimal harvest weight currency forward contracts associated with the date of harvesting amount, which is the present value of estimated future cash foreseeable future. when they have a live round weight of 4.60 kg, which corresponds are applied when translating the price to CAD. flows, discounted at the original effective interest rate. Loss to 4.00 kg gutted weight. Fish with a live round weight of 4.60 kg allowance is recognized as “other operating expenses” in the Taxes payable and deferred taxes are recognized directly in or more are classified as ready for harvest (mature fish), while The change in the fair value of biological assets is recognized income statement. equity to the extent that they relate to equity transactions. fish that have still not achieved this weight are classified as not in the income statement as “fair value adjustment of biological ready for harvest (immature fish). assets”. 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 Onerous contracts are contracts where the expenses of fulfilling the contracts are higher than the economic yield the company expects to gain by fulfilling the contracts. The Group enters from time to time into contracts for future deliveries of salmon. As biological assets are recognized at fair value, the fair value adjustments of the biological assets will be included in the FACTORING AGREEMENTS The Group is engaged in factoring agreements that cover financing of outstanding receivables for the sales organization in Norway. 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. PART 03 – OUR FINANCIAL RESULTS 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 87 Seafood Rogaland AS and Grieg Seafood Finnmark AS have a contractual early retirement pension scheme (AFP). The financial PROVISIONS Provisions (e.g. environmental improvements, restructuring Cash refunds are given to the customer if the sold product is The lease payments included in the measurement comprise: delivered with discrepancies compared to the agreed sales • Fixed lease payments (including in-kind fixed payments), less commitments associated with this scheme are included in the costs and legal claims) are recognized when: contract, or if the product is damaged. Generally, refunds are not any lease incentives receivable Group’s pension expenses. The AFP early retirement scheme • the Group has a present legal or constructive obligation as a material. follows the rules for public sector AFP, and both companies result of past events; • Variable lease payments that depend on an index or a rate, initially measured using the index or rate in effect on the are members of the Norwegian Confederation of Trade Unions • it is more likely than not that an outflow of resources will be Revenue is shown net of value added tax, returns, rebates and commencement date (LO)/the Confederation of Norwegian Enterprise (NHO) scheme. required to settle the obligation; discounts and after eliminating intragroup sales. The pension payment calculations are based on standard • the amount of the obligation can be reliably estimated. assumptions relating to the development of mortality and disability as well as other factors such as age, years of service Provisions are not recognized for future operating losses. OTHER REVENUE STREAMS In addition to the sale of fresh and frozen salmon, the Group Lease payments generally also include any exercise price of a purchase option/payments of penalties for terminating a lease, provided that the Group is reasonably certain to exercise such an and remuneration. Pension premiums are recognized in the also sells roe, smolt and ensilage. Harvesting (processing) for option. income statement through operations as they arise. Where there are a number of similar obligations, the likelihood external companies are performed if overcapacity on our own SHARE-BASED REMUNERATION The Group operates a share-based management remuneration that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect scheme with settlement in cash. Under the scheme, individual to any one item included in the same class of obligations may employees may buy shares proportionate to their annual salary. be small. Provisions are measured as the present value of the harvesting plants. Together, these have historically made up a The lease liability is subsequently measured by increasing the non-significant part of the total sales of Grieg Seafood. carrying amount to reflect interest on the lease liability, reducing DIVIDEND INCOME Dividend income from investments or equity instruments is the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect adjustments in lease payments The fair value of the employee services received in exchange for expenditures expected to be required to settle the obligation, recognized when the right to receive payment is established. due to an adjustment in an index or rate. the grant of the options is recognized as an expense. The total using a pre-tax discount rate that reflects the current market Dividend income from entities recognized under the equity amount to be charged over the vesting period is calculated based situation and the risks specific to the obligation. The increase in method are not recognized but recorded as a reduction in the The Group presents its lease liability separately from other on the fair value of the options granted, excluding the impact the provision due to the change in value because of the passage carrying value of the investment. liabilities in the statement of financial position. of any non-market vesting conditions (for example, profitability of time is recognized as a financial expense. and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the company REVENUE RECOGNITION Revenue from contracts with customers is recognized when GOVERNMENT GRANTS Government grants are recognized when it is reasonably certain Right-of-use assets The Group measures the right-of-use asset at cost, less any that the company will meet the conditions stipulated for the accumulated depreciation and impairment losses, adjusted for revises its estimates of the number of options that are expected control of the goods or services are transferred to the customer grants and that the grants will be received. Operating grants any remeasurement of lease liabilities. The cost of the right-of- to be vested and recognizes the impact of the revision relative at an amount that reflects the consideration to which the Group are recognized systematically during the grant period. Grants use asset comprises: to original estimates, if any, in the income statement. The expects to be entitled in exchange for those goods or services. are deducted from the cost which the grant is meant to cover. • The amount of the initial measurement of the lease liability Black and Scholes option pricing model is used for valuation. The Group’s revenue derives primarily from the sale of whole and Investment grants are capitalized and recognized systematically recognized, The company´s obligations are recognized under non-current processed fish. Sales contracts cover both spot sales and fixed- over the asset’s useful life. Investment grants are recognized • Any lease payments made at or before the commencement liabilities if the latest possible redemption date is more than one price deliveries. Revenue from the sale of salmon is generally either as deferred income or as a deduction of the asset’s date, less any incentives received, and year into the future. recognized upon delivery, as the Group considers delivery as the carrying amount. • Any initial direct costs incurred by the Group. SHARE SAVINGS PROGRAM Grieg Seafood established a share savings program for its 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 performance obligation. employees in 2018 and it was continued throughout 2022. It is Each week, the sale of fish is settled with the customer. LEASES IDENTIFYING A LEASE At the inception of a contract, The Group assesses whether the The Group presents its right-of-use assets on the financial statement line item “Property, plant and equipment incl. right-of- use assets”. the Board's intention that the plan shall be a continuing part of The fixed-price delivery contracts that are entered into with contract is, or contains, a lease. A contract is, or contains, a lease the company's employee incentive scheme. The Board shall, customers, specify a per-week volume. if the contract conveys the right to control the use of an identified The Group applies the depreciation requirements in IAS 16 however, have the right to decide, at its sole discretion, whether asset for a period of time in exchange for consideration. Property, Plant and Equipment when depreciating the right-of- the plan will be extended in the future, and the terms of the plan. The sales price is determined upon contract settlement and is TERMINATION BENEFITS Termination benefits are payable when employment is based on available market price (for example Nasdaq prices including transport and margin, and the price is per kilogram). The price varies according to the quality of the salmon and its RECOGNITION OF LEASES AND EXEMPTIONS At the lease commencement date, the Group recognizes a 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 lease liability and corresponding right-of-use asset for all lease IAS 36 Impairment of Assets to determine whether the right-of- terminated by the Group before the normal retirement date, size, and the fish is mainly sold Delivery Duty Paid (DDP) to the agreements in which it is the lessee, except for short-term use asset is impaired and to account for any impairment loss or whenever an employee accepts voluntary redundancy in customer. Payment is settled upon delivery, and the performance leases (defined as 12 months or less) and lease agreements identified. exchange for these benefits. The Group recognizes termination obligation related to the sale of fish is satisfied at delivery. That where the leased asset is of low value. benefits when it is demonstrably committed to either terminating also applies to the fulfillment of physical delivery contracts. the employment of current employees according to a detailed formal plan without the possibility of withdrawal or providing The normal credit term of the Group’s sales transactions is 30 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. 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. 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. 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. PART 03 – OUR FINANCIAL RESULTS 88 BORROWING COSTS Borrowing costs incurred during the construction of operating Contingent liabilities acquired through the purchase of The Group has prepared an overview of cash and non-cash operations (an acquisition) are recognized at fair value even if it changes in the Group’s liabilities, which is included in Note 12. assets are capitalized during the period of time that is required is not probable that the liability will become unconditional. The EVENTS AFTER THE REPORTING DATE New information on the Group’s financial position at the close of the reporting period, which becomes known after the reporting to complete and prepare the asset for its intended use. Other assessment of probability and fair value is subject to constant Changes in financial assets are disclosed if cash flows have been, period, is recognized in the annual accounts. Events after borrowing costs are expensed in the income statement. review. Subsequent measurement is at the higher of the amount or will be, included in the cash flow from financing activities. This the reporting period which do not affect the Group’s financial initially recognized (less any amount recognized as revenue) and may be the case, for instance, for assets pledged as security for position on the close of the reporting period but which will affect the amount according to the general provision-measurement financial liabilities. the company’s financial position in the future are disclosed if CONTINGENT ASSETS AND LIABILITIES Contingent liabilities are defined as: • possible obligations resulting from past events whose rules. existence depends on future events, Contingent assets are not recognized in the statement of EARNINGS PER SHARE Earnings per share are calculated by allocating the profit for the significant. • obligations that are not recognized because it is not probable financial position, but are disclosed if it is likely that a benefit will year to the Company’s shareholders based on a weighted average that they will lead to an outflow of resources entailing accrue to the Group. financial benefits from the company, • obligations that cannot be measured with sufficient reliability. CASH FLOW STATEMENT The Group’s cash flow statement shows the overall cash flow Contingent liabilities are not recognized in the annual financial broken down into operating, investing and financing activities statements apart from contingent liabilities resulting from using the indirect method. The cash flow statement illustrates the acquisition of an entity. Material contingent liabilities are the effect of the various activities on cash and cash equivalents. disclosed, with the exception of contingent liabilities where the probability of the liability materializing is remote. 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. PART 03 – OUR FINANCIAL RESULTS 89 NO T E 3 FIN ANCI AL R IS K 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 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 the fair value of biological assets (limited to 50 % by Green Bond agreement). At the same time, the Group’s net interest-bearing debt per kg harvested salmon should remain below NOK 30, but can be exceeded in periods of growth investments. As at 31 December 2022, Grieg Seafood was in a solid financial position to execute strategic priorities and deliver shareholder return. At 31 December 2022, the Group had net interest-bearing liabilities, including lease liabilities, of NOK 2 223 million, see Note 12. The Group’s funding is primarily a green bond issue of NOK 1 500 million issued in 2020 (with NOK 1 424 million currently outstanding, as bonds have been repurchased throughout 2022), sustainability-linked bank loans and leasing liabilities. At year-end 2022, 75% (2021: 47%) of our gross interest-bearing liabilities derived from green or sustainability-linked financing. The level of liabilities and alternative forms of funding are subject to constant evaluation. FINANCIAL RISK FACTORS The Group is exposed to a number of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the volatility of the financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses financial derivatives to reduce certain risks. As at 31 December 2022 (31 December 2021), the Group does not apply hedge accounting. 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 engages in interest-rate swaps, which are exposed to the the relevant IBOR rate. The bank loans, which are denominated in NOK and EUR, carry an interest rate which is based on the 3M IBOR plus a margin set per interest period based on a margin ratchet. The 3M IBOR and the margin is fixed per interest period. The bond loan’s interest rate, which is denominated in NOK, is 3M NIBOR plus a margin of 3.4 percentage points. 3M NIBOR is fixed per interest rate period. The Group monitors the IBOR reform and its potential impacts on the Group. As at 31 December 2022, 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 of the bank loans and bond loan. See also Note 12 for more information on our interest-bearing liabilities. I) MARKET RISKS (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk relating to various currencies, 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. PART 03 – OUR FINANCIAL RESULTS 90 TRADE RECEIVABLES AND TRADE PAYABLES CURRENCY IN NOK 1 000 2022 Trade receivables Trade payables 2021 Trade receivables Trade payables NOK USD EUR GBP CAD JPY OTHER CURRENCIES TOTAL 214 681 17 207 23 901 1 517 1 911 556 910 1 044 12 590 174 143 587 44 591 64 959 23 912 — 18 907 391 599 2 298 9 608 15 494 101 844 — — -576 — -81 259 137 3 193 717 498 — 151 793 2 353 523 196 NET INTEREST-BEARING LIABILITIES CURRENCY IN NOK 1 000 2022 NOK USD EUR GBP CAD JPY OTHER CURRENCIES TOTAL Cash and cash equivalents 284 965 88 647 87 485 41 877 134 040 209 5 496 642 719 Money market funds Loans to associated companies Interest-bearing liabilities* 1 012 848 8 300 2 678 379 — — — — — 755 679 — — — — — 452 331 — — — — 1 012 848 — 8 300 — 3 886 390 Net interest-bearing liabilities 1 372 266 -88 647 668 194 -41 877 318 292 -209 -5 496 2 222 522 2021 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 Net interest-bearing liabilities 2 913 737 -44 252 -58 346 -750 778 233 424 44 — — -44 3 223 928 342 — 2 111 — 3 220 974 -3 223 2 290 520 *See Note 12 for more information on the Group’s net interest-bearing liabilities. The Group has a group account scheme (cash pool agreement), in which Grieg Seafood ASA, the parent company, is the legal account holder. Subsidiaries party to the agreement can utilize the group cash pool arrangement and overdraft individual bank accounts (currencies), provided that Group's total bank deposit is positive. Not all subsidiaries are part of 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 2022, the net amount of bank deposits in the group account scheme amounted to NOK 524 million (2021: NOK 787 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 managed primarily through borrowings denominated in the relevant foreign currencies. The base currency of the syndicated bank loan is split into NOK 750 million and EUR 75 million. Since a substantial portion of the Group's sales revenues are denominated in EUR, the EUR loan acts as a natural, economical hedge on foreign currency translation rate fluctuations. In 2020, we issued our first green bond, worth a total of NOK 1 500 million, through two tap issues. Throughout 2022, the Group has repurchased NOK 77 million of the green bond. The outstanding amount of the bond loan was NOK 1 424 million at year-end 2022. 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 currencies. The non-current loans, with some exceptions, are considered to be equity in these companies, as there is no planned repayment of the principal amount outstanding. The currency effect of loans is recognized under "currency effect on loans to subsidiaries" in the Other Comprehensive Income (OCI) statement. The numerical effects for 2022 and 2021 are presented in the table below. PART 03 – OUR FINANCIAL RESULTS CURRENCY EFFECTS ON LOANS TO SUBSIDIARIES NOK 1 000 Currency effect Tax effect (22%) Currency effect - recycled accumulated OCI related to sale of Shetland* Tax effect (22 %) - recycled accumulated OCI related to sale of Shetland* Net effect recognized in equity through OCI *See Note 6 for more information. 2022 24 792 -5 454 — — 19 338 2021 32 222 -7 089 -103 223 22 709 -55 380 Sensitivity analysis A depreciation (appreciation) of 10% in the rate of exchange between the NOK and the 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 for net interest-bearing liabilities for year-end 2022 and 2021 are presented below. SENSITIVITY NOK 1 000 10 % CHANGE IN FX-RATE USD EUR GBP CAD 2022 Assets Liabilities Net interest-bearing liabilities 2021 Assets Liabilities Net interest-bearing liabilities -/+ -/+ -/+ -/+ -/+ -/+ -8 865 — 8 865 -4 425 — 4 425 -8 749 -75 568 -66 819 -5 835 -42 452 -36 618 -4 188 — 4 188 -75 078 — 75 078 -13 404 -45 233 -31 829 -9 424 -32 766 -23 342 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 The Group does not apply hedge accounting. Value changes in current forward contracts affect profit or loss, as these contracts are recognized at fair value through profit or loss, see accounting policies (Note 2). FORWARD CURRENCY CONTRACTS AT FAIR VALUE THROUGH PROFIT AND LOSS SOLD EUR USD USD Total AMOUNT CURRENCY IN 1 000 BOUGHT AMOUNT CURRENCY IN 1 000 WEIGHTED HEDGING RATE MARKET RATE MATURITY INTERVAL * MARKET VALUE NOK 1 000 31.12.2022 2 600 3 518 415 NOK NOK CAD 27 376 37 091 561 10.5291 10.5433 1.3515 10.5180 01.01.2023 - 03.01.2023 9.8573 03.01.2023 - 29.12.2023 1.3538 06.01.2023 - 03.02.2023 29 2 721 -9 2 741 *Maturity specified as an interval for multiple contracts FORWARD CURRENCY CONTRACTS AT FAIR VALUE THROUGH PROFIT AND LOSS AMOUNT CURRENCY IN 1 000 BOUGHT AMOUNT CURRENCY IN 1 000 WEIGHTED HEDGING RATE MARKET RATE MATURITY INTERVAL * MARKET VALUE NOK 1 000 31.12.2021 SOLD EUR EUR USD Total *Maturity specified as an interval for multiple contracts 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 -1 149 9.9888 01.01.2022 - 31.01.2022 1.2692 01.01.2022 - 28.02.2022 42 404 -704 91 As at 31 December 2022, the Group had financial salmon contracts for 2022 totaling NOK -64.9 million (2021: NOK -20.6 million), of which all were sales contracts. Fair value of financial derivatives The carrying value of derivatives and other financial instruments as at 31 December 2022 and 31 December 2021 is shown in the table below. 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 the section on the “Fair value estimation” below, as well as Note 14. (ii) Interest rate risk Since the Group has no significant interest-bearing assets apart from bank deposits and money market funds, its income and operating cash flows are largely independent of changes in market interest rates. The Group’s interest rate risk arises from borrowings. Borrowings at variable rates expose the Group to cash flow interest rate risk. Fixed-interest contracts are used to reduce this risk. The Group continuously monitors its interest rate exposure. The Group calculates the impact on profit or loss of a defined interest rate change. The same change in the interest rate is used for all currencies in each simulation. The scenarios are only run for liabilities that represent major interest-bearing positions. Sensitivity calculations show the following expected values: If the interest rate had been 1% lower (higher) throughout the year, all other factors remaining unchanged, the pre-tax profit would have increased (decreased) by NOK 28.3 million in 2022 and NOK 38.5 million in 2021 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, including revolving credit facility) and bond loan during 2022 and 2021, irrespective of concluded interest rate swap agreements. SENSITIVITY NOK 1 000 Effect on profit before income tax The sensitivity table is for our bank and bond loans. A reduction in interest rates will increase profit before tax. Total financial instruments at fair value** CHANGE IN INTEREST RATE POINTS 2022 2021 Interest rate swap agreements -/+1% +/- 28 257 +/-38 545 Financial salmon contract - sales contracts* FAIR VALUE OF FINANCIAL DERIVATIVES NOK 1 000 Forward currency contracts at fair value through profit or loss Cross-currency interest rate swap w/ interest rate floor-option 2022 2021 ASSETS 2 749 — 35 238 — 37 988 CURRENT LIABILITIES 9 — — 64 920 64 928 ASSETS 446 22 560 14 587 — 37 592 CURRENT LIABILITIES 1 149 — 590 20 611 22 350 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 loan-related, variable-rate 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. INTEREST RATE SWAP PRINCIPAL NOK 1 000 FIXED RATE (%) BASIS OF FLOATING RATE MATURITY 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 1.61 1.35 1.07 0.71 0.72 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 MARKET VALUE NOK 1 000 31.12.2022 MARKET VALUE NOK 1 000 31.12.2021 2 670 5 018 7 627 9 963 9 961 -590 874 2 628 5 561 5 524 Total 35 238 13 997 Interest rate swap contracts assessed at market value, excluding accrued interest 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 The cross currency interest-rate swap contract was settled in 2022, see Note 26. NOK 250 million 25.06.2025 MARKET VALUE NOK 1 000 31.12.2022 MARKET VALUE NOK 1 000 31.12.2021 — — — 22 327 233 22 560 (iii) Price risk Financial salmon price contracts allow the buyer and seller to agree prices and volumes for future delivery. The Group uses financial contracts to hedge the sales price for the volume harvested by our two Norwegian regions, Rogaland and Finnmark. As at 31 December 2022, the estimated contract share for the Norwegian harvest volume is 15% for the full-year 2023. We target a contract share of 20-50% of our Norwegian volume. Although the contract market has been impacted by the proposed resource rent tax on salmon farming in Norway, we see signs of improvement going into 2023. In 2022, fixed-price contracts accounted for 22% of the volume harvested in our Norwegian regions. The financial contracts are presented gross in the balance sheet, with changes in value recognized through profit/loss as part of the fair value adjustment of biological assets. As biological assets are recognized at fair value, the expected costs to meet contract terms will be included in the fair value adjustment. *In addition, as at year-end 2022, Grieg Seafood had NOK 31 million (2021: NOK 13 million) classified as current liabilities (see note Note 29) related to realized financial salmon contracts. This amount represents settled price contracts, not part of the fair value-derivative amount. **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 sales companies secure the bulk of the sales through credit insurance and bank guarantees. 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. For customers who have a reliable track record with the Group, sales up to certain previously agreed levels are permitted without any security. The Group utilizes a factoring arrangement for sales transactions entered into by the Norwegian sales organization. The book value of financial assets represents the maximum credit exposure. For further information about loss allowance, please refer to Note 22. MAXIMUM CREDIT RISK EXPOSURE NOK 1 000 Trade receivables Cash and cash equivalents Total III) LIQUIDITY RISK NOTE 22 20 2022 64 283 642 719 707 002 2021 50 443 928 342 978 785 The Group adopts a prudent approach to liquidity risk management, which includes maintaining sufficient cash and marketable securities, securing funding through sufficient credit facilities and maintaining the ability to close market positions when considered appropriate. Due to the dynamic underlying nature of the business, the Group aims to secure flexibility through available credit lines. The Group maintains a sustainability-linked financing agreement through a syndicate comprising DNB and Nordea. The agreement is on aggregate NOK 3 200 billion, and consists of two term loans of NOK 750 million and EUR 75 million, a revolving credit facility of NOK 1 500 million and an overdraft facility of NOK 200 million. As at year-end 2022, both the revolving credit facility and the overdraft facility is unutilized. The outstanding debt on the two term loans amounts to NOK 1 474 million, of which NOK 128 million is installments due the next 12 months from the reporting date. Management monitors the Group's liquidity reserve, which comprises a bond and loan facility (see Note 12), cash and cash equivalents (Note 20), and short-term money market investments (Note 21), based on expected cash flows. This is generally carried out at Group level in cooperation with the operating companies. Available financing could be impacted by the proposed Norwegian resource rent tax regime, as - all else equal - less cash will be available to service debt and provide a return on investment for shareholders. PART 03 – OUR FINANCIAL RESULTS 92 Management and the Board seek to maintain a high equity ratio (50% at 31 December 2022), to be well positioned to meet financial and operational challenges. The Group factors in the expected outcome, as well as different scenarios relating to, the resource rent tax proposed by the Norwegian government (see political risk above) in the Group's liquidity projections and forecasts. 31.12.2021 NOK 1 000 Green bond loan installments < 3 M — 3 M - 1 Y — Y 2 — At year-end 2022, the Group had undrawn credit facilities of NOK 1 700 million (2021: NOK 885 million), in addition to cash reserves of NOK 643 million (2021: NOK 928 million). In 2022, a cash surplus of approximately NOK 1 000 million has been placed in money market funds. In total, the Group’s free liquidity, calculated as the sum of bank deposits, undrawn credit facilities and the short-term investment in money market funds, stood at NOK 3 356 billion at 31 December 2022 (2021: NOK 1 813 million). As at 31 December 2022, the equity ratio was 50% (2021: 52%), while the equity ratio (ex. the effect of IFRS 16), which is measured according to covenants, was 52% (2021: 54%). The Group is continuously monitoring the liquidity levels. Cash flow forecasts for all farming regions, sales and the Group are performed regularly, and simulation/stress testing of the liquidity risk is carried out. The following table shows a breakdown of the Group’s non-derivative financial liabilities (including estimated interest payment), classified by maturity structure. The amounts in the table are undiscounted contractual cash flows (however for lease liabilities the undiscounted cash flows are according to the estimated lease component of the contract, and the total undiscounted amount equals the principal and the interests) . Note 12 shows the payment profile for the Group’s non-current liabilities. 31.12.2022 NOK 1 000 Green bond loan installments < 3 M — 3 M - 1 Y — Y 2 Y 3 — 1 423 500 Green bond loan interest - floating 23 070 72 094 95 951 47 713 Y4 — — Y 5 > 5 YRS TOTAL — — — 1 423 500 — 238 829 Non-current syndicated term-loan installments 64 106 64 106 128 211 128 211 128 211 961 584 — 1 474 429 Syndicated loan interest - floating 10 860 31 273 38 412 34 470 30 638 7 007 — 152 661 Other non-current liabilities 4 829 12 609 14 471 12 615 12 860 13 770 61 285 132 439 Green bond loan interest - floating 15 840 49 500 65 700 65 880 32 760 Non-current syndicated term-loan installments 24 972 24 972 374 580 Syndicated loan interest - floating 2 248 8 283 2 619 Non-current syndicated credit facility Interest non-current syndicated credit facility Other non-current liabilities — 2 330 4 873 — 440 000 9 361 3 076 — 11 773 12 310 Interest on other non-current liabilities 912 2 396 3 037 2 541 Y 3 Y4 Y 5 > 5 YRS TOTAL — 1 500 000 — — — — — — — — 9 200 2 049 — — — — — — — 1 500 000 — 229 680 — 424 524 — 13 150 — 440 000 — 14 767 8 114 54 353 100 622 2 816 15 288 29 040 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 Lease liabilities (prior IAS 17 operational leases) 22 140 82 632 81 209 80 980 51 033 37 084 40 255 395 332 Interest on lease liabilities (prior IAS 17 operational leases) 3 453 9 209 9 298 6 030 3 621 2 084 4 127 37 823 Trade payables Other current liabilities Total liabilities 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 KEY FOR TABLE M = Months Y = Year YRS = Years FAIR VALUE ESTIMATION See Note 14 for information on classes of financial instruments measured at fair value, in addition to information on the fair value hierarchy. The information below describes valuation techniques for fair value estimation used by Grieg Seafood, including leases and the Interest on other non-current liabilities 961 2 720 3 161 2 671 3 004 2 765 9 257 24 539 fair value adjustment of biological assets. Lease liabilities (prior IAS 17 finance leases) 24 606 68 702 79 970 65 520 59 691 52 892 105 684 457 065 Interest on lease liabilities (prior IAS 17 finance leases) 3 982 10 910 12 291 10 017 8 092 6 274 8 885 60 451 Lease liabilities (prior IAS 17 operational leases) 46 854 118 836 146 350 73 925 67 558 44 220 31 302 529 046 (I) FINANCIAL DERIVATIVE INSTRUMENTS The fair value of quoted financial assets classified as financial assets at fair value through OCI is determined by reference to published price quotations in an active market. The fair value of financial instruments that are not traded in an active market is determined Interest on lease liabilities (prior IAS 17 operational leases) 5 059 12 137 12 586 7 369 4 657 2 356 936 45 100 using valuation techniques (see Note 2). The Group uses different methods and makes assumptions based on market conditions at Trade payables Other current liabilities Total liabilities 717 498 76 585 — — — — — — — — — — — 717 498 — 76 585 978 411 393 387 531 404 1 806 012 314 711 1 090 869 217 349 5 332 143 each reporting date. 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 models. For all the above-mentioned derivatives, the fair value is confirmed by the financial institution with which the Group has entered into the contracts. The fair value of financial salmon price contracts is determined using forward prices KEY FOR TABLE M = Months Y = Year YRS = Years from Fish Pool. (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 LOANS 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. (V) LEASES The fair value of financial assets and liabilities recognized at their carrying amount is calculated as the present value of estimated cash 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. PART 03 – OUR FINANCIAL RESULTS 93 (VI) BIOLOGICAL INVENTORIES farmed and wild salmon, improve transparency on how the government assesses and responds to new scientific information, provide Fish in the sea is measured at estimated fair value. Consequently, the value of biological inventories is likely to vary more than the value greater opportunities for collaborative planning and decision-making with First Nations partners and advance innovation and attracting of inventories based on cost. The estimated fair value varies for a number of reasons, including volatility in the price of Atlantic salmon, investment to support the adoption of alternative production technologies in British Columbia. Stakeholders, including industry and First factors relating to production, changes in harvesting schedules and changes in the composition of inventories. Grieg Seafood considers Nations, are participating in the process, which is expected to be concluded during 2023. Grieg Seafood supports the transition, and it three components to be key parameters for valuation: price, estimated harvest biomass volume and the applied monthly discount aligns with the Group’s technological investments to improve biological control, such as post-smolt and barrier systems. The possibility 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 of introducing different types of licenses to advance improvements are discussed as a part of the transition strategy. It is expected that contributory assets. The following table is a sensitivity analysis, showing the change in the fair value of the biological assets, and hence regular licenses will be incorporated into the strategy. Grieg Seafood is committed to working with the government and Indigenous the Group’s profit before tax, in the event of changes in these parameters. communities to find a viable path forward. 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 2022 2021 -175 527 -130 357 207 074 69 555 -68 073 357 629 158 916 62 677 -59 093 316 740 -325 903 -289 634 54 202 -53 427 37 936 -35 376 NO T E 4   A C C OUN T I NG E S T IM AT E S AND JUDGMEN T S ACCOUNTING ESTIMATES AND ASSUMPTIONS Management is required to make estimates and assumptions concerning the future, which affect the reported amounts for assets and liabilities, as well as income and expenses for the accounting year in accordance with IFRS. Estimates and underlying assumptions are In addition, farm tenures in BC are renewed by the province on a regular basis. From 2022, farm tenures that are not accepted by the First Nation that is the rights-holder of the territory where the farm is located will not be renewed. Grieg Seafood supports the implementation of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) into BC regulations, and we are engaging in the ongoing process of reconciliation between the government, First Nations and industries. In 2022, the Coalition of First Nations for Finfish Stewardship was launched, highlighting the positive role that the salmon farming industry can play as part of the reconciliation process. Grieg Seafood recognizes the First Nations as an additional level of government where we operate, and we are working to ensure that our production takes place under agreements with the rights-holders of the territories where it is located. The vast majority of Grieg Seafood’s production are under long-term agreements with the First Nations in those areas, and we are pursuing agreements with more First Nations. The current agreements we have with First Nations last until 2037-2045. Even though the agreements cannot be said to be everlasting, the Group has nevertheless classified the licenses as having indefinite lives, based on the lack of sufficient relevant factors to change the principle at this point. Work on the transition plan has not been completed, and based on the experience we have with the work so far, it is not considered reasonable to change estimates regarding the economic life of the aquaculture licenses in BC. Given that it is desirable for both First Nations partners and the Group to have close and good working relationships, and that they want the Group to operate in the area, the Group’s best estimate is that the licenses will still be classified as having indefinite lives. This will be continuously assessed. If the situation changes and the Group agrees not to use the option to extend the duration of the agreement, the estimate of the remaining depreciation period must be re-evaluated. For further information, please see Note 10. continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed Grieg Seafood Newfoundland has 13 approved farming licenses. The licenses are granted for terms of six years. To renew the licenses, to be probable under the present circumstances. The final outcomes may deviate from these estimates. Changes in accounting estimates licensees must follow the Provincial Aquaculture Policy and Procedures Manual. As long as licenses follow and comply with the are recognized in the period in which the estimates are changed. The Group is involved in claims and complaints related to the sale of requirements, the license will be renewed. For this reason, the licenses are classified as having indefinite lives and, as such, are not goods on a continuous basis. As of year-end there were no material ongoing issues concerning claims and complaints related to the sale amortized. of goods, besides what’s referred to in Note 28 and Note 31. ESTIMATED IMPAIRMENT OF GOODWILL, LICENSES AND PROPERTY, PLANT AND EQUIPMENT The Group tests whether goodwill and licenses have suffered any impairment on an annual basis, in accordance with the accounting policy stated in Note 2. The recoverable amounts of cash-generating units are generally determined on the basis of value-in-use calculations. These calculations require the use of estimates of future cash flows from the cash-generating unit, and the application of a Grieg Seafood Newfoundland has the exclusive long-term right to farm salmon in the Placentia Bay area. The fair value of the right to operate exclusively is amortized over the duration of the agreement. BIOLOGICAL ASSETS The Group’s biological assets comprise smolt and fish in the sea. Biological assets are measured at fair values less costs to sell. The discount rate to calculate the present value of future cash flows. Expectations of future cash flows will vary over time. Changes in market measurement unit is the individual fish. However, for practical reasons, cash flows and estimates are carried out per locality. The fair conditions and expected cash flows can result in losses due to future value decreases. The value of long-term growth in demand, changes value model assessed by the Group calculates the net present value of expected cash flow. Valuation is based on a variety of premises, in market competition, the strength of the production stage in the value chain and thus also expectations of the long-term profit margin many of which are non-observable. The premises are divided into the following four categories: are also of significance. The different parameters could variously affect the value of the licenses over time. Any changes in these critical 1. Sales price assumptions will result in related write-downs, or the reversal of write-downs of the value of licenses in accordance with the accounting 2. Estimated remaining production cost policies described in Note 2. Please also refer to Note 10 for further comments on tests relating to value impairment. 3. Volume 4. Discount rate CLASSIFICATION OF LICENSES A significant judgment is whether a license should be amortized over its definite life, or whether it is deemed to have an indefinite life and For mature fish (ready for harvesting) on the reporting date, uncertainty mainly involves realized prices and volume. For immature fish (not ready for harvesting), the level of uncertainty is higher. Price, volume and discount rate are the main uncertainty factors. However, tested for impairment only. All licenses where the Group has no other contractual restrictions relating to the use of the licenses have uncertainty is also related to biological transformation and mortality prior to the harvest date for the fish. indefinite lives and, as such, are not amortized. Also, licenses 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. Local governments may, moreover, change the way licenses are renewed. In British Columbia (BC), licenses are renewed by the federal Department of Fisheries and Oceans (DFO) on a regular basis, with different length. In June 2022, all licenses were renewed for two years. The Canadian Government has launched a new strategy for salmon farming in BC, to transition the sector from traditional open-net pen practices into an improved industry (it does not specify what the industry should transition to). The process was launched 29 June 2022, with the following objectives: Minimize or eliminate interactions between Sales price Salmon sales prices are volatile. The sales price is based on forward prices and/or the most relevant pricing information available for the period in which the fish is expected to be mature (ready for harvesting). Changes in price assumptions have the greatest impact on the fair-value estimate. The market price constitutes the basis for calculating fair value for both mature and immature fish. The forward prices for superior Norwegian salmon weighing 3-6 kg gutted weight from Fish Pool are applied. For fish ready for harvest, the forward price for the following month is applied. For fish not ready for harvest, the forward price for the month when the fish is expected to be harvested is applied. The price is adjusted for export margin and clearing costs. This accounts for both fish ready for harvest and not. PART 03 – OUR FINANCIAL RESULTS 94 Estimating remaining production cost The planned point of harvesting is assumed to be when the fish reaches a live round 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. Volume Estimated harvest volume is based on the estimated number of fish on the reporting date, less estimated future mortality multiplied by optimal harvest weight (4.60 kg round weight). Actual harvest volume may differ from the estimated volume due to changes in biological conditions or due to special events, such as a mass mortality. The estimated number of fish is based on the number of smolt transferred to the sea, and mortality is a given percentage of the fish in the sea. The normal estimated harvest weight is assessed to be the live round weight of fish that results in a gutted weight of 4.0 kg. If there are any specific conditions at the reporting date resulting in the fish being harvested before they reach optimal weight, the estimated harvest weight is adjusted. Mortality during the period from the reporting date to the date when the fish reach harvest weight is estimated to be 1% of the number of opening balance of fish per month in the forecast period. Discount rate The sales revenue and remaining expenses are allocated to the 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 distributed over the entire period it takes to farm the fish in the sea. With the current size of the smolt released and the frequency of the smolt transfers, this period may be from 12 to 18 months. The estimated future cash flow is discounted by a monthly rate, which is 5.0% for Rogaland and Finnmark, and 3.5% for British Columbia and Newfoundland as of 31 December 2022. 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 rate at the regional level is the different prerequisites for biological production, which also requires a differentiation of the recognized synthetic license rent. The risk adjustment shall reflect the price discount a hypothetical buyer would demand as compensation for the risk assumed by investing in live fish rather than a different 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. 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 buyer needs a license, locality and other permits required for such production. However, in a hypothetical market for the purchase and sale of live fish, one must assume that this would be possible. In that scenario, a hypothetical buyer would claim a significant discount to allocate a sufficient share of the returns to the buyer's own licenses. It is difficult to create a model that would allow a hypothetical annual lease cost to be derived from prices for sold licenses as the curve in the model would be based on projections of future profit performance in the industry. A discount must be made for the time value of the tied-up capital linked to the share of the present value of the cash flow allocated to the biomass. The buyer who is investing in live fish rather than some other type of object, would claim compensation for the alternative cost. The production cycle for salmon in the sea currently takes up to 18 months. The cash flow will therefore extend over a similar period. Assuming a constant sales price throughout the period, the cash flow would decrease for each month, as costs are incurred to farm the fish to harvest weight. The cost increases for every month the fish are in the sea. As such, the effect of deferred cash flow is lower than would be the case if the cash flow had been constant. This component is, however, deemed important due to the substantial value the stock of fish represents. Please refer to Note 2 and Note 9 for further information on the estimation and calculation of fish values. Significant assumptions sensitivity The estimate of fair value of the biomass will always be based on uncertain assumptions, even though the Group has built up 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. NO T E 5 CLIM AT E-R EL AT ED R ISK IMPACT ON FINANCIAL REPORTING AND ESTIMATES AS AT 31 DECEMBER 2022 As at 31 December 2022, there has been no material impact identified on financial reporting judgments and estimates. The Group recognizes the ever-changing risks related to climate change and will regularly assess these risks against judgments and estimates made in the preparation of the Group’s financial statements. CLIMATE-RELATED RISK 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 decades ahead. Knowledge of the possible financial consequences of global warming, biodiversity loss, or even ecosystem collapse, and the integration of climate risk and nature risk as a separate risk category, are an essential part of Grieg Seafood’s risk management strategy. Grieg Seafood aims to increase its understanding of climate and nature- related risks, in order to find solutions to reduce adverse impacts. Grieg Seafood has mapped its climate-related risks, which the Group reports in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Grieg Seafood has also prepared a climate-related scenario analysis, assessing the impact of transitional risks and physical risks. These risks and opportunities are included in the Group’s risk assessment as part of Grieg Seafood’s regular forecast process. The results from the TCFD scenario analysis are summarized below. Overall, Grieg Seafood expects the impacts of climate-related risks to be moderate in the short term, with no quantifiable impact as per year-end 2022, but these impacts could become more severe in the medium to long term. Any significant physical change is likely to interfere with the Group’s current business model or damage the Group’s facility infrastructure, both of which could be costly. Similarly, the transitional risks related to increased climate-change regulation or significant changes in consumer preferences could affect the Group’s bottom line and access to capital. On the other hand, the Group sees Grieg Seafood as being uniquely placed to mitigate these risks and take advantage of climate-related opportunities. CLIMATE-RELATED SCENARIO ANALYSIS The scenario analysis helps Grieg Seafood to understand the potential impact of climate change on the Group’s core business in the future, and is used to stress-test the Group’s strategical and financial planning. Grieg Seafood has performed a thorough assessment of the impact on the Group’s salmon production of 2C and 4C of global warming. Grieg Seafood aims to meet the Paris Agreement criteria to keep global warming below 2C, compared to pre-industrial levels. The Group is currently increasing its production volume, and the assessments for 2030 and 2050 are based on our 2026 business strategy and the targeted production volumes. 2C of global warming In this scenario, Grieg Seafood assumes that the Paris Agreement targets will be met. The Group assumes production of 2026 target volumes until 2030. How the Group’s production will change towards 2050 is difficult to predict, but many initiatives and forecasts look towards the ocean and aquaculture to provide more food for the future. With 2C of global warming, Grieg Seafood’s business is well positioned to seize opportunities for sustainable growth. Main impacts from the scenario: – – – – – Higher risk from transitional risks Carbon taxing Initiatives to reduce deforestation increase cost of raw feed materials Increased cost of procured aquaculture equipment Policies and legislation that restrict production 4C of global warming In this scenario, Grieg Seafood sees the need to differentiate our products to prove their value with respect to sustainability. This comes with an increased cost and risk of lower earnings potential. Meeting the Group’s Paris Agreement targets may adversely impact Grieg Seafood’s margins compared to our competitors, and the Group must base its business viability on specific customer groups. Main impacts from the scenario: – – – Temperature increases and daily temperature variations may increase events that are stressful for the salmon More frequent extreme weather events increase the personnel risk (HSE) associated with operating exposed sites More droughts and floods reduce the production of land-based feed ingredients, which increases feed cost PART 03 – OUR FINANCIAL RESULTS 95 MANAGING PHYSICAL RISKS AND OPPORTUNITIES NO T E 6 DIS C ON T INUED OP ER AT I ONS Assessing the impact of increased seawater temperature The analysis shows that Grieg Seafood expects increased risks and costs related to global warming. 4C is a vastly greater threat than 2C. However, the risks associated with global warming indicate a shift towards the necessity of alternating sites, increasing post-smolt The decision to divest Shetland was made in 2020, and the income and expenses from the Shetland activity has been presented as In December 2021, Shetland was sold to Scottish Sea Farms Ltd, and deconsolidated from the Grieg Seafood Group in December 2021. discontinued operations of the Grieg Seafood Group (as well as the Shetland assets being classified as assets held for sale as from 2020 production on land and investing in heavy equipment at those sites which are exposed to harsh weather. This is in line with the Group’s until the sale in 2021). For more information, see the 2021 Annual Report of Grieg Seafood. current strategy, where large concrete production vessels, and overlay protected work boats have been introduced to our fleet recent years. Together with increased personnel training, education and specialization, communication investments and Grieg Seafood’s focus The discontinued operations was defined by Grieg Seafood as the farming and sales operations in Shetland. The discontinued operation in on improving its smolt facilities, we believe that Grieg Seafood is prepared to meet the challenges it will face in the future. The issue of Shetland included the prior reporting segment of Shetland UK and the UK sales operations. lice and their implications for the Group’s future production is associated with high levels of uncertainty and varies between regions. The future effects of increased seawater temperature on lice levels in the Group’s regions, cannot be predicted without performing a The enterprise value of the transaction with Scottish Sea Farms Ltd. was set to GBP 164 million, assuming a normalized net working comprehensive analysis. This is a topic Grieg Seafood will further pursue in the future. Reducing carbon emission In 2022, Grieg Seafood developed a Climate Action Plan, which describes the measures and investments needed to reach the Group’s capital and adjusted for net debt. On the closing date of the transaction, in December 2021, 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 climate targets (reducing our carbon emissions by 35% towards 2030, and 100% in 2050, with 2018 as a baseline year). This plan stresses and net working capital will be calculated in accordance with prevailing accounting principles and set out in a closing statement. the importance of both operational measures, which affect Scope 1 and 2, and supply chain measures in Scope 3. Grieg Seafood needs to reduce its operations’ fossil fuel consumption, purchase renewable electricity and set supplier requirements to be able to reduce its At year-end last year, 31 December 2021, the calculation of the gain/loss from sale of the Shetland assets was based on the preliminary absolute emissions. The Group needs to invest in the electrification of sites and boats, choose fish feed that has a lower emission factor purchase price. The preliminary gain after income tax resulting from the sale of the Shetland assets is NOK 424 million. The preliminary and reduce emissions from transportation. Fish feed is our largest single source of GHG emissions (Scope 3). We are committed to gain was calculated by deducting Grieg Seafood Group's book value of the Shetland assets on the closing date and transaction costs from continually challenging our fish feed suppliers on the carbon emission from their production of the fish feed. The Group’s largest direct the sum of the preliminary purchase and the settlement of the Seller’s debt. In addition, the gain/loss calculation included recycling of source of emissions is from the fuel that powers our boats, including well-boats, vehicles, and on-site electricity generators. accumulated OCI of NOK 106 million before tax and NOK 83 million after tax, whereas the tax expense of NOK 23 million related to the tax position on the Seller’s debt. As the Climate Action Plan is staged in 2030 and 2050 targets, the Group’s current efforts are focused on actionable measures to meet the 2030 target. Actionable measures to meet the 2050 target will be set when we are closer to the calender year of 2030. According to the sales purchase agreement, the closing statement and the calculation of the final purchase price was to be performed We are working closely with our fish feed suppliers and focus on sustainable fish feed ingredients. In addition, the Group expects that new technology will enable it to reduce its carbon emissions from freight transport. subsequent to the closing date of the transaction. FINAL PURCHASE PRICE In February 2023, the closing statement and the calculation of the final purchase price has been finalized. Grieg Seafood had, as at year- The transitioning to equipment that enables the Group to reduce its fossil fuel consumption, in order to meet the Group’s 2030 Climate end 2021, estimated approximately NOK 7.5 million in receivables on Scottish Sea Farms Ltd. The estimate was also included in the gain/ Action Plan target, is an important part of Grieg Seafood’s Climate Action Plan for the 2030 carbon emission target. The transitioning of loss calculation of 2021. In February 2023, there was no material deviation between the estimated receivable on Scottish Sea Farms Ltd. operating equipment will be carried out gradually through replacement investments, in addition to investments targeting growth. Before at 31 December 2022, and the actual received payment of the final part of the transaction settlement for the sale of Shetland. making any investments, the Group evaluates their potential carbon emissions and environmental impact. This is an integrated part of Grieg Seafood’s CapEx process. As at 31 December 2022, the Group’s action plan for reducing carbon emissions has not had any material impact on our accounting estimates for the useful life of property, plant and equipment, or materially impacted the Group’s value-in-use calculations. This is due to the gradual replacement of equipment which generally has a useful life shorter than the timeframes for the Group’s climate action targets. PART 03 – OUR FINANCIAL RESULTS PROFIT (LOSS) FROM DISCONTINUED OPERATIONS TOTAL (NOK 1 000) Operating income Operating expenses Operational EBIT Production fee Fair value adjustment of biological assets EBIT (Earnings before interest and taxes) 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 Profit for the period from discontinued operations Gain on the sale of the subsidiary after income tax Net profit for the period from discontinued operations TOTAL 2022 2021 — — — — — — — — — — — — — 951 334 -775 822 175 512 -5 219 75 697 245 990 1 902 — 247 893 -71 280 176 613 423 678 600 291 96 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 CASH FLOWS FROM DISCONTINUED OPERATIONS (NOK 1 000) Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities Total Cash discontinued operations cash and cash equivalents - other changes Net change in cash and cash equivalents from discontinued operations TOTAL 2022 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 TOTAL 2022 2021 — — — — — — 145 228 2 041 801 -145 836 2 041 193 -842 2 040 350 NO T E 7 INV E S T MEN T IN A S S OCI AT E S Associates that are closely related to the Group's operations and included in the Group’s value chain are classified on a separate line in EBIT when the relevant associates operate in the same position in the value chain as the Group. All investments in associates in 2022 and 2021 are closely related. See Note 8 regarding the associated companies included in the segment information. agreement with Årdal Aqua AS. The share capital from Omfar AS and the post-smolt agreement were consequently recognized as income with a dilution gain of NOK 22.6 million. In 2021, the dilution of NOK 6.7 million was not recognized as a gain, but set aside as a liability until certain milestones which the project depends on had been reached. The milestones were approved in 2022 and the dilution gain of NOK 6.7 million was recognized together with the dilution gain of NOK 15.8 million for 2022, a total of NOK 22.6 million. The total gain has been presented as a separate item below Operational EBIT in the Group’s segment reporting (see Note 8). The share of profit from associates in the income statement is presented at the gross amount. In October 2022, there was a capital increase of NOK 150 million in Årdal Aqua AS, of which Grieg Seafood Rogaland AS contributed NOK 90 million. After the capital increase, Grieg Seafood Rogaland AS increased its shareholding to 44.44%. In addition, Grieg Seafood Rogaland AS has provided an interest-bearing loan of NOK 6 million to Årdal Aqua AS. Construction of Årdal Aqua AS’s land-based farming and post-smolt facility has started. Production is expected to commence in 2024, with a capacity of 4 500 tonnes. In January 2022, Grieg Seafood Rogaland AS invested NOK 7.6 million to acquire an ownership interest of 50% in Nextseafood AS. Nextseafood AS is co-owned with Havbrukskompaniet AS, and aims to explore and realize the closed-containment system known as FishGLOBE V6. FishGLOBE AS was awarded two development licenses (1 560 tonnes MAB) in 2019. As at year-end 2022, Grieg Seafood Rogaland AS has provided a long-term, interest-free loan to FishGLOBE AS, an affiliated company of Nextseafood AS, in the amount of NOK 8.6 million. INVESTMENT IN ASSOCIATES Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS Nextseafood AS Total AT 31.12.2022 Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS Nextseafood AS Total ownership EQUITY INTEREST AT 31.12.2022 BOOK VALUE AT 01.01.2022 NOK 1 000 PROFIT/LOSS 2022 NOK 1 000 CHANGES IN THE PERIOD, INCL. REPAID CAPITAL NOK 1 000 BOOK VALUE AT 31.12.2022 NOK 1 000 50.00% 33.33% 44.44% 50.00% 47 710 48 087 8 878 — 104 675 -8 658 7 864 21 915 -26 21 096 — — 83 254 7 600 90 854 39 053 55 951 114 047 7 574 216 624 TIME OF INVESTMENT EQUITY INTEREST EXCESS VALUE HATCHERY NOK 1 000 DEPRECIATION OF EXCESS VALUE NOK 1 000 BOOK VALUE OF EXCESS VALUE NOK 1 000 01.07.2019 01.06.2017 15.01.2020 31.01.2022 50.00% 33.33% 44.44% 50.00% 17 022 14 600 17 634 — 49 257 5 958 4 674 — — 10 632 11 064 9 926 17 634 — 38 625 The share issue and shareholder agreement relating to Nordnorsk Smolt AS were signed on 30 June 2019. Excess value relating to the investment has been allocated to hatcheries under construction, based on provisional accounting figures from Nordnorsk Smolt AS on The Group owns, through Grieg Seafood Finnmark AS, a 50% interest in Nordnorsk Smolt AS, together with SalMar ASA (50%). Nordnorsk the acquisition date. The value added is amortized from the date of acquisition. Smolt AS is located in Troms and Finnmark County in Northern Norway. The annual production is approximately 900 tonnes of smolt per year. There is currently no production of smolt at Nordnorsk Smolt AS due to an ongoing redesign of the facility, which is scheduled for The share issue and shareholder agreement relating to Tytlandsvik Aqua AS were signed on 1 June 2017. Excess value relating to the completion in Q2 2023. In December 2021, a capital increase was carried out, whereby both owners invested NOK 12.5 million each. At investment has been allocated to hatcheries under construction, based on provisional accounting figures from Tytlandsvik Aqua AS as at 31 December 2022, Grieg Seafood Finnmark AS provided a long-term loan to Nordnorsk Smolt AS of NOK 2.3 million (NOK 2.1 million at 31 December 2018. The fair value adjustment is amortized from the time the facility was completed and commissioned. December 2021), which is included in other non-current receivables. The accrued interest is recognized under current receivables. The excess value relating to the Årdal Aqua AS investment has been allocated to hatcheries under construction. The facility is expected to The Group owns, through Grieg Seafood Rogaland AS, a 33.33% interest in Tytlandsvik Aqua AS, together with Bremnes Seashore AS be completed in 2024, and depreciation of the excess value will start when its completed. (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 4 500 tonnes, 50% of which falls to Grieg Seafood Rogaland. Through Grieg Seafood Rogaland AS, the Group owns a 44.44% interest in Årdal Aqua AS, together with Vest Havbruk AS and Omfar AS. Omfar AS was brought in as a co-owner of the company through two private placement share issues. The other two shareholders were diluted first from 50% to 37.04% and then to 33.33% ownership. At the same time, Grieg Seafood Rogaland AS entered into a post-smolt Tytlandsvik Aqua AS, Nordnorsk Smolt, Årdal Aqua AS and Nextseafood AS have the same financial year as the Group. The following table displays provisional financial information at 31 December 2022 (100%). PART 03 – OUR FINANCIAL RESULTS 97 AT 31.12.2022 NOK 1 000 TOTAL ASSETS TOTAL LIABILITIES TOTAL EQUITY OPERATING INCOME PRE-TAX PROFIT/LOSS Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS Nextseafood AS 91 295 623 770 220 614 15 149 36 227 485 682 3 665 — 55 068 138 088 216 949 15 149 195 322 999 — — -13 911 34 631 -1 449 -45 INVESTMENT IN ASSOCIATES EQUITY INTEREST AT 31.12.2021 BOOK VALUE AT 01.01.2021 NOK 1 000 PROFIT/LOSS 2021 NOK 1 000 CHANGES IN THE PERIOD, REPAID CAPITAL NOK 1 000 BOOK VALUE AT 31.12.2021 NOK 1 000 Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS Total AT 31.12.2021 Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS Total ownership 50.00% 33.33% 37.04% 41 264 43 158 — 84 421 -6 053 4 929 -363 -1 486 12 500 — 9 241 21 741 47 711 48 087 8 878 104 675 TIME OF INVESTMENT EQUITY INTEREST EXCESS VALUE HATCHERY NOK 1 000 DEPRECIATION OF EXCESS VALUE NOK 1 000 BOOK VALUE OF EXCESS VALUE NOK 1 000 01.07.2019 01.06.2017 15.01.2020 50.00% 33.33% 37.04% 17 022 14 600 2 188 33 811 4 256 3 214 — 7 470 12 766 11 386 2 188 26 341 AT 31.12.2021 NOK 1 000 TOTAL ASSETS TOTAL LIABILITIES TOTAL EQUITY OPERATING INCOME PRE-TAX PROFIT/LOSS Nordnorsk Smolt AS Tytlandsvik Aqua AS Årdal Aqua AS 93 076 518 466 25 972 24 097 408 353 7 624 68 979 110 113 18 348 57 636 216 387 50 -11 169 24 802 -979 NO T E 8 SEGME N T I NF OR M AT I ON AND R E V ENUE FR OM C ON T R A C T S W I T H CU S T OM ER S SEGMENT INFORMATION 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 sales companies in the Group are reported per producer. Geographically, management assesses the results of production in Rogaland – Norway, Finnmark – Norway, British Columbia – Canada, and Newfoundland – Canada. Group management evaluates the results from the segments based on Operational EBIT. 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. The method by which Operational EBIT is calculated excludes the effect of non-recurring costs, such as restructuring costs, legal costs on acquisition and impairment of goodwill and intangible assets, when impairment is attributable to an isolated event which is not expected to recur. Furthermore, the measurement method for Operational EBIT includes, but is not reported per region, the effect of share-based payments, as well as unrealized gains and losses on financial instruments. These gains/losses and costs are reported in the "Elim/Other" column in the segment information. Costs or gains which relate to prior years and not to the current operation of Grieg Seafood, are not included as Operational EBIT, as such costs are not considered meaningful for the comparability of the Group's results from one period to another. See Alternative Performance Measures for more information. Elim/Other items comprise, in addition to intercompany eliminations, the profit/loss from activities conducted by the parent company or other Group companies not geared to production. In the segment reporting, sales revenue at the regional level includes revenue from the sale of Atlantic salmon. At the PART 03 – OUR FINANCIAL RESULTS regional level, other income includes the sale of byproducts (such as ensilage), as well as income from the sale of smolt, fry and roe. At the Group level, such income is reclassified to sales revenue in the "Elim/Other"column in the Group's segment information. Other income also includes, at both the regional and Group level, rental income and income from overcapacity of operational assets. Other gains/losses, such as gains/losses from the sale of fixed assets and other equipment, are included in the line “other gains/losses” in the segment information. Associated companies that are closely related to the Group's operations and included in the Group’s value chain, for example when the relevant associates operate in the same position in the value chain as the Group, are included in the Group's operational EBITDA and Operational EBIT. Otherwise, the profit from associates is excluded and presented as share of profit from associates (non-operational) in the Group’s segment information. RECONCILIATION OF OPERATIONAL EBIT WITH EBIT IN THE INCOME STATEMENT NOK 1 000 2022 2021 Sales revenues Other income Other gains/losses Share of profit from associates (operational) Raw materials and consumables used Salaries and personnel expenses Other operating expenses Operational EBITDA Depreciation property, plant and equipment Amortization licenses and other intangible assets Operational EBIT Share of profit from associates (non-operational) Production fee Fair value adjustment of biological assets Write-down of non-current assets (non-operational) Litigation and legal claims Decommissioning costs 7 163 956 4 598 585 31 490 13 393 -1 463 70 745 -6 752 -1 486 -2 233 655 -1 738 267 -695 577 -577 434 -2 087 310 -1 527 347 2 190 834 -434 641 -16 706 1 739 486 22 558 -26 350 83 412 -140 074 -157 065 -24 382 818 044 -368 482 -7 192 442 370 — -24 463 523 036 — — — EBIT (Earnings before interest and taxes) 1 497 586 940 944 2022 GEOGRAPHICAL SEGMENTS NOK 1 000 Sales revenues Other income Other gains/losses Share of profit from associates FARMING NORWAY FARMING CANADA ELIM/OTHER GRIEG SEAFOOD GROUP ROGALAND FINNMARK BRITISH COLUMBIA NEW- FOUNDLAND 2 123 671 2 629 226 1 665 105 81 137 -1 954 7 195 18 619 11 965 -8 658 8 649 -4 475 — — 321 — — 745 954 -77 237 7 858 — 7 163 956 31 490 13 393 -1 463 Operating costs before depreciation and amortization -1 356 928 -1 579 017 -1 279 079 -40 576 -760 943 -5 016 543 Operational EBITDA 853 121 1 072 136 390 200 -40 254 -84 368 2 190 834 Depreciation, amortization and reversals -98 536 -145 997 -119 789 -74 474 Operational EBIT 754 585 926 139 270 411 -114 728 Harvest volume (tonnes GWT) 28 387 36 024 20 286 Sales revenue/kg (NOK) Farming cost/kg (NOK) Other costs incl. ownership and headquarters costs/ kg (NOK) Operational EBIT/kg (NOK) Total assets Total liabilities 74.8 48.2 — 26.6 73.0 47.3 — 25.7 82.1 68.8 — 13.3 — — — — 2 920 718 3 422 148 1 913 438 3 116 131 1 502 930 12 875 365 1 236 330 1 610 495 692 878 2 735 606 114 349 6 389 657 98 -12 552 -96 920 — — — — -451 347 1 739 486 84 697 75.8 52.7 2.5 20.5 2021 GEOGRAPHICAL SEGMENTS NOK 1 000 Sales revenues Other income Other gains/losses Share of profit from associates FARMING NORWAY FARMING CANADA ELIM/OTHER GRIEG SEAFOOD GROUP ROGALAND FINNMARK BRITISH COLUMBIA NEW- FOUNDLAND 1 430 949 1 756 292 1 023 474 76 640 48 868 140 4 567 -52 -6 053 9 114 -6 839 — — 569 — — 387 870 -64 445 — — 4 598 585 70 745 -6 752 -1 486 Operating costs before depreciation and amortization -1 167 414 -1 405 878 -781 973 -93 388 -394 395 -3 843 048 Operational EBITDA 344 882 393 176 243 776 -92 819 -70 970 Depreciation, amortization and reversals -102 865 -142 640 -93 541 -24 039 Operational EBIT 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) Operational EBIT/kg (NOK) Total assets 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 1 088 328 1 502 171 1 018 999 1 948 082 -406 634 5 150 946 -12 590 -83 561 — — — — 818 044 -375 674 442 370 75 601 55.7 47.2 2.7 5.9 SALES REVENUES FROM CONTRACTS WITH CUSTOMERS, BY GEOGRAPHICAL MARKET NOK 1 000 NORWAY* CANADA* TOTAL 2022 2021 2022 2021 2022 2022% 2021 2021% Continental Europe 4 152 843 2 968 604 4 152 843 58% 2 968 604 UK USA Canada Asia Other markets Total — — — — 247 295 114 887 247 295 181 659 85 953 1 323 551 831 003 1 505 210 87 722 22 778 466 935 284 238 554 657 584 914 277 836 67 028 7 274 651 943 52 008 6 011 — — 52 008 3% 21% 8% 9% 1% 114 887 916 957 307 016 285 111 6 011 65% 2% 20% 7% 6% —% 5 306 441 3 476 069 1 857 515 1 122 516 7 163 956 100% 4 598 585 100% *Sum of revenue from contracts with customers generated by the farming and sales organization, net of intercompany eliminations. Grieg Seafood did not have any sales to Russia in 2022 or in 2021. SALES REVENUES FROM CONTRACTS WITH CUSTOMERS, BY DISTRIBUTED PRODUCTS NOK 1 000 Fresh whole fish Fresh processed fish Frozen processed fish Other products and services Total NORWAY* CANADA* TOTAL 2022 2021 2022 2021 2022 2021 5 149 017 3 429 432 1 805 633 955 179 6 954 650 4 384 611 57 142 53 373 287 — 46 909 46 351 51 588 166 380 108 729 166 666 10 284 508 449 53 383 508 47 193 46 800 5 306 441 3 476 069 1 857 515 1 122 516 7 163 956 4 598 585 Sales revenue/kg reported in the segment information is equal to the sum of sales revenues from the regions divided by the related harvest volume. Group sales revenue is calculated based on the Group’s farming operations, excluding sales revenue from Group companies not geared to production. *Sum of revenue from contracts with customers generated by the farming and sales organization, net of intercompany eliminations. Farming cost/kg reported in the segment information encompasses all costs directly related to the production and harvest of salmon, divided by the related harvest volume. Thus, at the regional level, farming cost equals operational costs. Other income is included in the farming cost metric as representing cost reduction activities. Group farming cost is calculated based on the Group’s farming operations, excluding ownership costs and costs from Group companies not geared to production. Other costs incl. ownership and headquarters costs/kg reported in the segment information include all costs and revenue not directly related to the production and harvest of salmon, such as costs deriving from activities conducted by the parent company and other Group companies not geared to production, divided by the Group's harvest volume. In addition, until the first harvest in Newfoundland is carried out, net costs attributable to the Newfoundland region are included as other costs/kg. Operational EBIT/kg reported in the segment information is equal to Operational EBIT divided by the related harvest volume. See Alternative Performance Measures for more information on the non-IFRS measures relating to sales revenue/kg, farming cost/kg, other costs incl. ownership and headquarters costs/kg and Operational EBIT/kg. SALES REVENUES FROM CONTRACTS WITH CUSTOMERS The Group's revenues mainly comprise revenues from the sale of whole fresh Atlantic salmon, in addition to processed Atlantic salmon. The Group’s revenue stream also comprises some ensilage (byproduct from the harvesting of Atlantic salmon), in addition to sales of smolt and and third-party harvesting if the Group has overcapacity at its facilities. 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 2022, the sale of fresh whole Atlantic salmon totaled 97% (2021: 95%) of the Group's sales revenues (excluding other products), while processed fish accounted for 2% (2021: 4%). PART 03 – OUR FINANCIAL RESULTS NO T E 9 BIOL OGIC AL A S SE T S AND O T HER I NV EN T OR I E S Biological assets at 01.01. Currency translation differences Increase due to production Decrease due to abnormal mortality/loss Decrease due to sales Fair value adjustment at 01.01. Fair value adjustment at 31.12. Biological assets at 31.12. TONNES NOK 1 000 2022 59 121 N/A 93 134 -3 455 2021 2022 2021 52 619 3 449 412 2 545 903 N/A 36 945 22 840 99 590 -5 534 4 348 288 3 428 102 -224 924 -117 450 -98 186 -87 553 -3 743 033 -3 053 236 N/A N/A N/A N/A -970 480 -347 227 1 149 591 970 480 50 614 59 121 4 045 800 3 449 412 RECOGNIZED FAIR VALUE ADJUSTMENT Change in fair value adjustment of biological assets1 Change in physical delivery contracts relating to fair value adjustment of biological assets2 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 Fish Pool 2022 129 331 -1 610 -44 309 83 412 2021 619 439 — -96 403 523 036 99 In accordance with IAS 41, biological assets are measured at fair value, unless the fair value cannot be measured reliably. Broodstock (classified as inventory and not biological assets) 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 based on the same forward prices used for the fair value calculation of biological assets. Changes in the value of salmon-related financial derivatives are recognized in the balance sheet under derivatives and other financial Abnormal mortality - write-down Cost related to abnormal mortality will be immediately recognized in profit or loss, and presented as "decrease due to abnormal mortality/loss" in the table for opening-to-closing balance reconciliation as disclosed above. Normal mortality is classified as part of the production cost. The classification of mortality only affects the note presentation, and not the fair value calculation. In Rogaland, the main causes of abnormal mortality at sea in 2022 were sea lice treatment, pancreas disease (PD), winter ulcers and cardiomyopathy syndrome (CMS). In Finnmark, Spironucleus salmonicida (Spiro) and winter ulcers were the main causes. In BC, algae/ instruments. Financial derivatives are calculated at market value. See Note 3 for further information. low oxygen levels, SRS and lice treatment were the main causes for the abnormal mortality. 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 BRITISH COLUMBIA NEWFOUNDLAND Spiro was detected in some fish in certain pens in Finnmark. This led to the early harvesting and culling of fish showing signs of ill health in order to protect fish welfare. Spiro in Finnmark is also the main reason the average size of the fish recorded under abnormal mortality is lower in 2022 compared to 2021. Newfoundland did not have abnormal mortality at its sea farms in 2022. We incurred costs related to both mortality and abnormal mortality at our freshwater facilities in Finnmark and BC. Lower quality roe significantly impacted BC’s NOK 84.06 CAD 12.83 CAD 11.66 freshwater production, leading to reduced survival recognized as abnormal mortality. Fish Pool Fish Pool Fish Pool Forward prices from Fish Pool 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 British Columbia and Newfoundland is based on the forward price in Norway, adjusted for historical differences in price levels between Norway and Canada. 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 rate reflects a combination of the cost of capital for the biological assets, risk adjustment (the risk related to volume, cost and price of the biological assets) and a synthetic license rent. The discount rate is differentiated to take account of each region’s different prerequisites for biological production, which also results in a differentiation of the recognized synthetic license rent. See the table below for the applied discount rates per region, and see Note 4 for more information. DISCOUNT RATE PER REGION Rogaland Finnmark British Columbia Newfoundland* *Newfoundland fish stocked at sea for the first time in 2022. 2022 5.0% 5.0% 3.5% 3.5% 2021 5.0% 5.0% 3.5% N/A STATUS OF BIOLOGICAL ASSETS 2022 Biological assets on land * Immature fish at sea, round weight < 4.60 kg Mature fish at sea, round weight > 4.60 kg Total 2021 Biological assets on land * Immature fish at sea, round weight < 4.60 kg Mature fish at 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 17 680 26 562 1 648 45 890 28 522 28 266 1 292 58 080 547 41 614 8 453 50 614 539 51 944 6 638 59 121 181 569 2 370 985 343 655 — 181 569 934 708 214 883 3 305 693 558 537 2 896 209 1 149 591 4 045 800 164 959 2 080 957 233 018 — 164 959 873 626 96 854 2 954 583 329 872 2 478 934 970 480 3 449 412 In 2021, the main causes of abnormal mortality were pancreas disease and sea lice treatment in Rogaland, winter ulcers and a chlorine accident at the harvesting plant in Finnmark, and low oxygen levels in BC. ABNORMAL MORTALITY - WRITE-DOWN 2022 Biological assets on land Immature fish in sea, round weight < 4.60 kg Mature fish in sea, round weight > 4.60 kg Total 2021 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 3 116 2 290 85 5 491 1 176 957 515 2 648 47 2 994 414 3 455 186 2 678 2 670 5 534 0.02 1.31 4.89 0.63 0.16 2.80 5.18 2.09 11 034 154 694 16 983 182 710 18 565 44 098 54 787 117 450 The abnormal mortality in 2022 includes the culling of fish in Finnmark due to Spiro. The write-down in 2022 was significantly impacted by lower quality roe in BC (see the opening-to-closing balance reconciliation at the start of this note). Roe is not included in this table. In 2022, the write-down due to lower quality roe in BC came to NOK 42 million, bringing total write-down for 2022 to NOK 225 million. 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 2022 105 585 41 219 93 368 240 172 507 2022 -128 299 -2 345 528 240 172 2021 67 355 3 000 57 944 128 299 20 020 2021 -78 001 -1 788 565 128 299 -2 233 655 -1 738 267 PART 03 – OUR FINANCIAL RESULTS 100 NO T E 10 IN TANGIBL E A S S E T S 2022 NOK 1 000 Book value at 01.01. Currency translation differences 31 023 Reclassifications1 Additions Amortization Impairment2 Book value at 31.12. ACCUMULATED VALUES Acquisition cost Accumulated amortization Accumulated impairments Book value at 31.12. FISH FARMING LICENSES – INDEFINITE LIVES FISH FARMING LICENSES – FINITE LIVES OTHER INTANGIBLE ASSETS GOODWILL 660 071 1 522 227 14 092 -4 439 124 845 7 380 -11 103 — 36 828 1 483 -20 687 2 669 -5 603 TOTAL 2 233 218 78 627 — 10 048 -16 706 — -135 693 50 560 -104 159 — — -135 693 — -130 752 — — — — — -89 603 691 094 691 094 1 332 936 130 775 14 689 2 169 493 780 697 1 463 687 173 274 -42 499 — 61 944 2 479 602 -47 255 -89 754 — -220 355 1 332 936 130 775 14 689 2 169 493 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. 1The reclassification primarily concerns licenses in Newfoundland that has been considered as having finite economic life and subject to amortization. In addition, the reclassification lite item relate to other intangible assets reclassified to indefinite licenses following formal approval of license application in Newfoundland. 2For information concerning he impairment of aquaculture licenses in 2022 see Note 28. 2021 NOK 1 000 Book value at 01.01. FISH FARMING LICENSES – INDEFINITE LIVES GOODWILL FISH FARMING LICENSES – FINITE LIVES OTHER INTANGIBLE ASSETS* TOTAL 638 019 1 493 419 15 034 38 015 2 184 486 Currency translation differences 22 053 28 767 Additions Amortization Book value at 31.12. ACCUMULATED VALUES Acquisition cost Accumulated amortization Accumulated impairments Book value at 31.12. — — 41 — 660 071 1 522 227 749 674 1 522 227 — -89 603 660 071 — — 1 522 227 524 — -1 466 14 092 44 397 -30 305 — 14 092 747 3 792 -5 726 36 828 52 090 3 833 -7 192 2 233 218 78 506 2 394 804 -41 678 — -71 983 -89 603 36 828 2 233 218 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. LICENSES The tables below provide an overview of the Group’s licenses. See Note 2 for further information on licenses. NORWAY NORWAY LICENSE CATEGORY TOTAL NUMBER CAPACITY TONNES Seawater licenses Green licenses 1 R&D permit Broodstock Smolt Harvesting pens Education 2 Total licenses in production Visitor center for fish farming 3 Total 35 30 853 8 3 3 3 2 2 56 1 57 7 743 2 340 2 340 4 045 1 106 1 560 49 987 780 50 767 1 Of which four green licenses are converted. 2 Finnmark and Rogaland lease education licenses from the Troms and Finnmark and Rogaland County Councils, respectively. 3 Finnmark has a license for a visitor center for fish farming. The center is under construction, and expected to be completed in 2024. The license cannot be utilized before the visitor center is constructed. 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. WEST COAST OF VANCOUVER ISLAND EAST COAST OF VANCOUVER ISLAND TOTAL CAPACITY Total - Of which relates to Sechelt 38 500 0 17 500 11 000 56 000 11 000 The capacity in BC is merely theoretical capacity, as all locations cannot be utilized simultaneously. BC also has a license for broodstock and smolt. In 2022, the licenses for Sechelt farming area has been written down (see the section for “Write-down of tangible and intangible non-current assets” below). Grieg Seafood formally holds the licenses as at year-end 2022, however we have decommissioned our farming operations at the sites. CANADA - NEWFOUNDLAND Newfoundland currently holds 13 seawater licenses and one freshwater license, 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. WRITE-DOWN OF TANGIBLE AND INTANGIBLE NON-CURRENT ASSETS In 2022, Grieg Seafood has recorded write-down of tangible and intangible non-current assets totalling NOK 140 million. The write-down is related to reorganization of ownership structure of licenses, and decommissioning of farming operations. In 2022, Grieg Seafood has reorganized the ownership of commercial aquaculture licenses in Norway, as the Group considered it necessary to separate Norwegian commercial and non-commercial aquaculture licenses by legal entities to be able to correctly calculate and report the resource rent tax proposed by the Norwegian government. As the licenses have been sold intra-group to the estimated fair value, a write-down of NOK 47 million has been recorded in the income statement of Grieg Seafood for the part of book value exceeding PART 03 – OUR FINANCIAL RESULTS 101 the estimated fair value, estimated as the fair value less cost of disposals (fair value hierarchy level 3) for one specific commercial aquaculture license in our region Rogaland, Norway. The fair value has been estimated using a combination of valuation techniques, incl. used available information in the market (action prices, stock prices) and discounted cash flow model for a standard commercial aquaculture license. Grieg Seafood has in 2022 discontinued production in the shíshálh (Sechelt) farming area in British Columbia (BC), which negatively impacted the income statement with a write down of commercial aquaculture licenses by NOK 88 million (recoverable amount of NOK 0 million), in addition to the write-down of related seawater production equipment and -assets by NOK 4 million, in total NOK 93 million. At year-end 2022, all fish in the Sechelt farming area has been harvested. WRITE-DOWN ON TANGIBLE AND INTANGIBLE NON-CURRENT ASSETS NOK 1 000 Commercial aquaculture licenses in Rogaland, Norway Commercial aquaculture licenses in British Columbia, Canada Non-current tangible assets in British Columbia, Canada Total write-down - Of which total write-down of intangible non-current assets NOTE 11 2022 47 242 88 451 4 382 140 074 135 693 2021 — — — — — IMPAIRMENT TESTING OF GOODWILL AND LICENSES As at year-end 2022, except for the write-down of non-current tangible and intangible assets for the specific events as disclosed above, no impairments of goodwill or licenses were recognized in 2022. Goodwill and licenses with indefinite economic lives are subject to an annual impairment test. Tests are performed more frequently where indications of impairment exist. Licenses with finite useful lives are tested for impairment only if there are indications of a decline in value. The estimated value in use (VIU) is used as a basis for calculating the recoverable amount, except for Grieg Newfoundland where the fair value less cost of disposal (FVLCD) has been used as basis for recoverable amount. Grieg Newfoundland was acquired in 2020 and reported as a segment as from 2021. During 2022, the first transfer of smolt to sea was successfully completed. The first harvest is expected to commence late 2023. CASH-GENERATING UNIT NOK 1 000 Rogaland Finnmark British Columbia (BC) Newfoundland Total value LOCATION Norway Norway Canada Canada 20 463 — 10 441 660 190 691 094 206 394 397 218 88 999 771 099 TOTAL 226 857 397 218 99 441 1 431 289 BOOK VALUE OF RELATED GOODWILL BOOK VALUE OF LICENSES ASSUMPTIONS USED FOR ESTIMATING RECOVERABLE AMOUNT ROGALAND FINNMARK BC NEWFOUNDLAND Budget period Increase in revenues in budget period 3 years 5% 3 years 14% 3 years 76% 13 years NA Operational EBITDA margin 1) 29% -34% 34% - 39% 28% - 34% 0% -36% Operational 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) 30% 2% 11% 8.2% 1% 39% 8% 11% 8.2% 1% 33% 54% 11% 8.3% 1% 36% NA 14.2% 10.0% 1% 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 13 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 2026, which we aim to increase to 45 000 tonnes in 2035. The notes for the table “Assumptions used for estimating recoverable amount” (above) are presented below: 1. Budgeted Operational EBITDA margin: The margin remains more stable for the Norwegian regions, and is assumed to increase for our overseas regions during the budget period. Increase in harvest volume is assumed in all regions towards 2025. 2. The growth rate for the harvest volume in the budget period (nominal growth rate) is measured against the 2022 volume. A corresponding increase in output is assumed over time. 3. Weighted required return on capital employed before and after tax. Cash flow forecasts are thus estimated after tax. In the calculation, the return on capital employed is also after tax. 4. Weighted average growth rate used to extrapolate cash flows beyond the budget period. In the years after 2025, the annual reinvestment is assumed to be equal to annual depreciation. OPERATIONAL EBITDA MARGIN IN THE BUDGET AND TERMINAL PERIOD The budgeted Operational EBITDA margin is based on past performance, expected cost of production and expected market developments. An increase in gutted weight output is assumed towards 2025 (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 have come far with our post-smolt strategy in Rogaland, and will increase post-smolt capacity also in Finnmark and BC. The expansion of the smolt facility in BC was 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 1 463 710 2 154 804 is a requirement to achieve better utilization of our capacity, and we are continuously looking for opportunities to secure access to new locations. 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 13 years based on the first harvest expected in 2023. During the first few years, the cash flow will be negative due to low production and harvest volume, in addition to capital allocated to building of biomass and growth investments. 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 Operational 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 operations of NOK 225 million, while a reduction of NOK 6 in Operational EBIT/kg for the entire budget period and terminal would entail an estimated impairment for Newfoundland of NOK 79 million. The other cost-generating units are not sensitive to equivalent changes in the same assumptions. See Alternative Performance Measures for more information on Operational EBIT, Operational EBIT/kg and Operational EBITDA. PART 03 – OUR FINANCIAL RESULTS 102 2021 NOK 1 000 Book value at 01.01. Currency translation differences Reclassification Grants received Additions Disposals Depreciation Book value at 31.12 ACCUMULATED VALUES Acquisition cost Accumulated depreciation Accumulated impairments Book value at 31.12. 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 1 065 018 510 212 447 308 3 033 154 34 232 2 798 — 89 446 -6 613 -100 574 529 502 4 830 47 280 17 299 — — -88 910 303 638 800 175 -5 201 -20 587 -129 050 -368 482 638 824 3 402 629 1 786 948 1 281 384 1 153 100 5 657 987 -721 930 -751 882 -514 276 -2 255 358 — — — — 1 065 018 529 502 638 824 3 402 629 — — — 107 839 NO T E 11 P R OP ER T Y, P L A N T AND EQUIP MEN T INCL. R IGH T- OF-U SE- A S SE T S BUILDINGS/ PROPERTY PROD. PLANTS AND BARGES NETS, CAGES AND MOORINGS OTHER EQUIPMENT TOTAL 1 169 285 1 065 018 529 502 638 824 3 402 629 15 431 21 046 775 393 178 -5 889 8 944 -747 — 180 331 -3 160 17 390 15 501 70 762 — 24 76 464 256 922 936 879 -2 803 -12 121 -108 632 -106 867 -177 416 -434 641 -113 -4 065 603 938 -204 -4 382 748 238 4 035 590 Book value at 31.12. 1 302 600 1 380 814 2022 NOK 1 000 Book value at 01.01. Currency translation differences Reclassification Grants received and other deductions to historic cost1 Additions2 Disposals Depreciation Impairment3 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) 28 997 -35 799 75 664 106 449 -269 -41 726 — 1 611 916 -309 317 — 1 302 600 113 016 2 178 260 1 439 973 1 320 913 6 551 062 Of which book value of non-depreciable property -797 339 -832 197 -572 483 -2 511 335 RIGHT-OF-USE ASSETS -107 1 380 814 — -3 838 603 938 — -192 -4 137 748 238 4 035 590 — 113 016 Book value at 31.12 of right-of-use assets (see separate specification in Note 13) 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. 66 622 292 209 72 302 547 010 978 143 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. 1Grants received and other deductions to historic cost, of which NOK -86 million relates to the reversal of Investment Tax Credit (ITC) carried over from 31 December 2021 in Newfoundland (see Note 23) and NOK 9 million relates to government grants received in 2022 in Newfoundland. 2The 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. 3Impairment in 2022 is related to the Sechelt farming area in British Columbia, Canada. See Note 10 and 28 for more information. PART 03 – OUR FINANCIAL RESULTS 103 NO T E 12 B OR R O W ING S Grieg Seafood ASA has a syndicated loan provided by DNB and Nordea. The syndicated financing from secured lenders of Grieg Seafood consists of an aggregate of NOK 3 200 million in five-year senior secured sustainability-linked loans and credit facilities. The 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. As at year-end 2022, both the revolving credit facility and the overdraft facility is unutilized. The outstanding debt on the two term loans amounts to NOK 1 474 million, of which NOK 128 million is installments due the next 12 months from the reporting date. The financing carries floating interest rates, calculated as the relevant three month IBOR plus the applicable margin per interest period. The financial covenant of the facility is a minimum equity-ratio requirement of 31%, measured excl. the effect of IFRS 16. In addition to the senior secured facility, the Group also has a green bond (GSF01 G, listed at Euronext), which matures in June 2025. The outstanding amount of the bond loan was NOK 1 424 million at the end of 2022. The bond carries a coupon rate of three months NIBOR + 3.4% p.a. The bond's financial covenant is an equity ratio requirement of minimum 30%, measured consistent with the Group’s equity- ratio financial covenants as defined in its syndicated loan agreement with secured lenders. Grieg Seafood ASA was in compliance with its financial covenant at 31 December 2022. At 31 December 2022, the Group had an equity ratio of 50% (2021: 52%) while the equity ratio according to financial covenant was 52%, compared to 54% at 31 December 2021. In addition to bank- and bond loan, the Group's financing consists of lease agreements with credit institutions, in addition to the effect of IFRS 16 by capitalizing leases on the balance sheet (operational leases according to IFRS in force prior to 1 January 2019). Total unutilized credit facilities of the Group amount to NOK 1 700 million as at 31 December 2022 (2021: NOK 885 million). 2022 2021 1 423 500 1 346 218 — 318 198 335 452 94 144 1 500 000 374 580 440 000 287 578 290 219 96 091 NON-CURRENT LIABILITIES NOK 1 000 NON-CURRENT LIABILITIES (INTEREST BEARING) 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 Amortization effect of loans Total non-current liabilities CURRENT LIABILITIES (INTEREST-BEARING) NOK 1 000 Current portion of borrowings Current portion lease liabilities (prior IAS 17 finance leases) Current portion lease liabilities (prior IAS 17 operational leases) 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 Investments in money market funds Loans to associates Net interest-bearing liabilities Lease liabilities (prior IAS 17 operational leases)** Net interest-bearing liabilities ex. the effect of IFRS 16 2022 3 517 512 368 878 3 886 390 642 719 1 012 848 8 300 2 222 522 -483 946 1 738 576 2021 2 988 468 232 507 3 220 974 928 342 — 2 111 2 290 520 -395 332 1 895 188 *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 31.12.2022 NOK 1 000 2023 2024 2025 2026 2027 LATER TOTAL Green bond — — 1 423 500 — — — 1 423 500 Non-current syndicated term-loan 128 211 128 211 128 211 128 211 961 584 — 1 474 429 Lease liabilities (prior IAS 17 finance leases) 78 416 67 679 55 503 51 599 46 618 96 799 396 614 Lease liabilities (prior IAS 17 operational leases) 148 494 133 764 66 556 62 901 41 864 30 366 483 946 Other non-current liabilities* 13 757 11 310 9 944 9 856 11 004 52 029 107 900 Total 368 878 340 965 1 683 714 252 568 1 061 071 179 194 3 886 390 *NOK 107.8 million 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. PAYMENT PROFILE NON-CURRENT LIABILITIES 31.12.2021 NOK 1 000 2022 2023 2024 2025 2026 LATER TOTAL Green bond Non-current syndicated term-loan Non-current syndicated revolving credit facility — — — 1 500 000 49 944 374 580 — 440 000 — — — — — — — — 1 500 000 — — 424 524 440 000 3 517 512 2 988 468 Lease liabilities (prior IAS 17 finance leases) 72 918 67 410 57 199 43 909 39 525 79 535 360 496 -25 053 3 492 459 2022 141 968 78 416 148 494 368 878 -29 671 2 958 797 2021 54 475 72 918 105 114 232 507 Lease liabilities (prior IAS 17 operational leases) 104 772 81 209 80 980 51 033 37 084 40 255 395 332 Other non-current liabilities* 4 873 11 773 12 310 9 200 8 114 54 353 100 622 Total 232 507 974 972 150 489 1 604 141 84 723 174 142 3 220 974 *NOK 98.6 million 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. NOK 1 000 Liabilities secured by mortgages/charges on assets* *See the comment below the table for assets pledged as security. 2022 2021 1 899 364 1 248 889 ASSETS PLEDGED AS SECURITY NOK 1 000 2022 2021 Licenses Property, plant and equipment * Trade receivables Inventories and biological assets excl. fair value of biological assets Total assets pledged as security 1 463 709 3 562 816 259 137 3 136 381 8 422 043 1 536 319 3 017 023 151 793 2 607 231 7 312 366 *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. Pledges also include shares in subsidiaries. The book value of these shares in the consolidated financial statements is NOK 0. PART 03 – OUR FINANCIAL RESULTS 104 BOOK VALUE OF GROUP BORROWINGS BY CURRENCY NOK 1 000 Green bond Non-current syndicated term-loan 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 BOOK VALUE OF GROUP BORROWINGS BY CURRENCY NOK 1 000 Green bond Non-current syndicated term-loan Non-current syndicated revolving 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) 31.12.2022 NOK 1 423 500 1 423 500 EUR — 1 474 429 718 750 755 679 396 614 396 087 483 946 140 042 107 900 — -25 053 -25 053 — — — — CAD — — 527 343 904 107 900 — 3 861 337 2 653 326 755 679 452 331 31.12.2021 NOK 1 500 000 1 500 000 EUR — 424 524 — 424 524 440 000 440 000 360 496 357 942 395 332 170 846 100 622 — -29 671 -29 671 — — — — — CAD — — — 2 554 224 487 100 622 — 3 191 303 2 439 117 424 524 327 662 2022 4.61% 1.77% 2021 3.76% 3.50% The effect of interest rate swaps is not taken into account in calculating the average interest rate on borrowings and credit facilities. BOOK VALUE FAIR VALUE BOOK VALUE AND FAIR VALUE OF BORROWINGS NOK 1 000 2022 2021 2022 2021 Green bond 1 423 500 1 500 000 1 414 532 1 500 000 Borrowings (non-current syndicated loan and credit facility, incl. current part of the non-current liability) Total 1 474 429 2 897 929 864 524 1 474 429 864 524 2 364 524 2 888 961 2 364 524 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). Our green bond is listed on Oslo Børs (Euronext). Market price of the bond was 99.37% of par value at year-end 2022 (2021: 100%). CHANGE IN LIABILITIES ARISING FROM FINANCING ACTIVITIES NOK 1 000 LEASE LIABILITY BORROWINGS TOTAL LIABILITIES ARISING FROM FINANCING ACTIVITIES 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 At 01.01.2022 Cash movements: Revolving credit facility (net draw-down/repayment) Draw-down non-current syndicated term-loan (NOK and EUR) 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 31.12.2022 684 839 3 480 613 4 165 454 — — — — -77 662 -107 263 -556 222 -556 222 39 147 39 147 -526 602 -526 602 -1 050 — — -1 050 -77 662 -107 263 -3 895 — -3 895 -184 925 -1 048 623 -1 233 548 4 804 249 437 -4 058 5 730 — 255 914 — — — -13 508 16 992 3 484 4 804 249 437 -4 058 -7 778 16 992 259 398 755 828 2 435 474 3 191 303 755 828 2 435 474 3 191 303 — — — — -78 879 -146 589 — -225 468 114 926 140 975 83 397 10 902 — 350 200 -440 000 -440 000 1 463 423 1 463 423 -469 288 -469 288 -52 857 — — -11 854 489 423 — — -21 177 60 584 16 471 55 879 -52 857 -78 879 -146 589 -11 854 263 956 114 926 140 975 62 220 71 486 16 471 406 079 880 560 2 980 777 3 861 338 PART 03 – OUR FINANCIAL RESULTS 105 NO T E 13 LE A SE S THE GROUP AS A LESSEE The Group has several lease arrangements; various offices, equipment and vehicles. Contracts are engaged both with credit institutions, RIGHT-OF-USE ASSETS 2022 NOK 1 000 Book value at 01.01. Currency translation differences Additions for leases that would be classified as finance leases according to IFRS in force prior to 1 January 2019, as well as capitalized leases due Cancellation of lease and other changes to the effect of IFRS 16. Well-boats and workboats charted in time charters with a duration of more than one year contributes 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, the lessee’s incremental borrowing rate is used, being 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 for new lease agreements annually. The applied incremental borrowing rates for new leases as from 2022 ranged from 4.7% - 4.8% for buildings and properties, and 3.9% - 4.2% for other assets. The applied rates for new leases as from 2021 ranged from 3.9% - 4.2% for buildings and properties, and 3.6% - 3.7% for other assets. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the Depreciation Book value at 31.12. 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. LEASE LIABILITY SUMMARY OF THE LEASE LIABILITIES NOK 1 000 Lease liabilities at 01.01. New leases recognized during the year lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is Cash payments for the principal portion of the lease liability reassessed and adjusted against the right-of-use asset. Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. 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 lower than USD 5 000, are Currency exchange differences Cancellation of lease and other changes Total lease liabilities at 31.12. considered low value leases. The Group has also applied the practical expedient for short-term leases. Short term is defined as a lease MATURITY ANALYSIS - LEASE LIABILITIES NOK 1 000 term of 12 month or less at the commencement date. For low-value leases and short-term leases, the Group does not recognize lease liabilities or right-of-use assets. These leases are recognized as operating expenses over the life of the contract. Some of the Group's agreements have extension options which may by exercised during the last period of the lease term. The Group assesses at the commencement whether it is reasonably certain to exercise the renewal right. The Group's potential future lease payments not included in the lease liabilities related to extension options is NOK 267 million (NOK 134 million at 31 December 2021). 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- 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 assets" in the statement of financial position. These leased assets include both assets that would be treated as financial leases according Lease liabilities included in the statement of financial position at 31.12 to the IFRS in force prior to 1 January 2019, as well as operational leases ("the effect of IFRS 16"). Current portion Non-current portion PART 03 – OUR FINANCIAL RESULTS BUILDINGS/ PROPERTY PROD. PLANTS AND BARGES NETS, CAGES AND MOORINGS OTHER EQUIPMENT 67 927 1 760 10 036 -1 399 -11 703 66 622 242 934 26 69 549 -743 -19 556 292 209 87 743 43 8 058 -7 792 -15 749 72 302 437 294 13 220 251 807 -14 915 -140 396 547 010 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 TOTAL 835 898 15 048 339 450 -24 849 -187 404 978 143 TOTAL 741 454 8 458 253 983 -26 931 -141 067 835 898 2021 684 839 254 242 -184 925 5 730 -4 058 755 828 2022 755 828 255 901 -225 468 10 902 83 397 880 560 2022 FORMER IAS 17 FINANCIAL LEASE FORMER IAS 17 OPERATIONAL LEASE TOTAL LEASE LIABILITY 93 308 79 970 65 520 59 691 52 892 105 684 457 065 396 614 78 416 318 198 165 690 146 648 73 925 67 558 44 220 31 302 529 344 483 946 148 494 335 452 258 998 226 618 139 445 127 249 97 112 136 986 986 408 880 560 226 910 653 650 106 MATURITY ANALYSIS - LEASE LIABILITIES NOK 1 000 2021 FORMER IAS 17 FINANCIAL LEASE FORMER IAS 17 OPERATIONAL LEASE TOTAL LEASE LIABILITY NO T E 14 CL A S SIFIC AT ION OF FIN ANCI AL INS T R UM EN T S FINANCIAL INSTRUMENTS AT 31.12.2022 NOK 1 000 FVPL 1 AMORTIZED COST FVOCI 2 TOTAL 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 AMOUNTS RECOGNIZED IN PROFIT OR LOSS NOK 1 000 Interest on lease liabilities Foreign currency effect Depreciation right-of-use assets Income from subleasing of right-of-use assets Expenses relating to short-term leases Expenses relating to leases of low-value assets, excl. short-term leases of low-value assets Total NOK 1 000 Total cash outflow for leases 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 2022 -33 613 3 746 -187 404 31 261 -40 530 -1 -226 543 2022 -259 081 199 706 165 337 149 961 102 920 81 871 127 513 827 309 755 828 178 032 577 797 2021 -22 709 -5 112 -141 067 14 591 -5 446 -8 -159 752 2021 -207 634 FINANCIAL ASSETS Other non-current receivables3 Trade receivables Other current receivables Investment in money market fund4 Derivatives5 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 payments6 Derivatives5 Trade payables Other current liabilities Total financial liabilities — — — 1 012 848 37 988 — 1 050 836 — — — 6 510 64 928 — — 16 900 259 137 8 863 — — 642 719 927 618 2 980 777 396 614 483 946 — — 717 498 76 585 71 439 4 655 420 271 — — — — — 17 171 259 137 8 863 1 012 848 37 988 642 719 271 1 978 725 — — — — — — — — 2 980 777 396 614 483 946 6 510 64 928 717 498 76 585 4 726 859 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 Derivatives5 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 payments6 Derivatives5 Trade payables Other current liabilities Total financial liabilities — — — 37 592 — 2 111 151 793 12 592 — 928 342 271 — — — — 2 382 151 793 12 592 37 592 928 342 37 592 1 094 837 271 1 132 700 — — — 9 792 22 350 — — 2 435 475 360 496 395 332 — — 523 196 36 603 32 142 3 751 102 — — — — — — — — 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 Investments in money market funds. Measured at level 2. See Note 3 for specification. 5 Forward currency contracts, interest rate swap and financial salmon price contracts. Measured at level 2. See Note 3 for specification. 6 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. PART 03 – OUR FINANCIAL RESULTS 107 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 BANK DEPOSITS NOK 1 000 AAA AA A Total bank deposits 2022 2021 742 251 123 7 272 259 137 2022 — 12 996 100 854 37 943 151 793 2021 — 642 719 928 342 — — 642 719 928 342 TAX PAYABLE BOOK IN FINANCIAL STATEMENT CURRENT LIABILITIES NOK 1 000 Tax payable in Norway Tax payable aboard Total tax payable in the statement of financial position CHANGE IN BOOK VALUE OF DEFERRED TAX NOK 1 000 Balance sheet value at 01.01. Currency conversion Tax effect of OCI transactions (see Note 3) Change in deferred tax recognized in income in period Changes to income in the period Net deferred tax liability at balance sheet date 2022 286 586 66 605 353 191 2022 1 069 743 30 467 5 454 -27 453 -37 111 2021 87 739 903 88 641 2021 879 665 17 592 7 089 -17 043 182 440 1 041 101 1 069 743 The nominal tax rate in Norway is 22%. The nominal tax rate for 2022 in Canada was 27% in British Columbia (BC) and 30% in Newfoundland. TOTAL DEFERRED TAX ASSETS/LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION NOK 1 000 2022 — 2021 59 -1 041 101 -1 069 802 -1 041 101 -1 069 743 Group 1 - new customers/related parties (less than 6 months). Group 2 - existing customers/related parties (more than 6 months) with no history of credit covenant breaches. Group 3 - existing customers/related parties (more than 6 months) with a history of one or more credit covenant breaches. All amounts due have been paid in full following the breaches. Deferred tax assets Deferred tax liabilities Net deferred tax NO T E 15 TA XE S INCOME TAXES FOR THE YEAR IN THE INCOME STATEMENT NOK 1 000 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 effects not listed above Total income tax expense Weighted average tax rate PART 03 – OUR FINANCIAL RESULTS 2022 263 084 59 422 322 506 116 873 -145 516 -28 643 293 863 2022 1 447 642 286 185 6 085 -4 641 -27 453 -4 187 37 189 24 714 -24 029 293 863 20.3% 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% The following tables provide a breakdown of deferred tax. The tax effects of taxable and deductible temporary differences are shown separately. The Norwegian and Canadian parts of the Group each have a net deferred tax position. Deferred tax assets linked to tax losses are offset against deferred tax liabilities in the tax jurisdictions where acceptable. SPECIFICATION OF DEFERRED TAX AND BASIS FOR DEFERRED TAX/DEFERRED TAX ASSETS NOK 1 000 Non-current assets Current assets Debt (lease, other liabilities) Other effect (government grant/ investment tax credit) Tax losses carried forward Total temporary differences TAX LOSS CARRIED FORWARD ARE DIVIDED AMONG THE FOLLOWING JURISDICTIONS NOK 1 000 Tax losses carried forward in Norway Tax losses carried forward in Canada Tax losses carried forward in USA Total 2022 572 722 617 349 1 493 — -150 461 2021 539 668 609 378 -15 790 -4 350 -59 162 1 041 101 1 069 743 2022 — -150 461 — -150 461 2021 — -59 162 — -59 162 PROPOSED RESOURCE RENT TAX IN NORWAY On 28 September 2022, and modified 28 March 2023, the Norwegian government proposed the introduction of a resource rent tax on the farming of salmon and trout in Norway at an effective tax rate of 35% with effect from 1 January 2023. The proposal must be approved by the Norwegian parliament before it can be incorporated into Norwegian tax law. As the resource rent taxation is a proposal by the Norwegian government, and was not incorporated into Norwegian tax law as at 31 December 2022, there has been no impact on the Group's tax estimates recognized in the statement of financial position and income statement as at 31 December 2022. 108 NO T E  16 S A L AR IE S A ND P ER S ONNEL E XP ENSE S REMUNERATION PAID TO BOARD MEMBERS IN 2022 NOK 1 000 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 2022 533 629 38 635 30 399 29 069 63 844 2021 451 530 25 616 7 924 26 146 66 218 695 577 577 434 718 703 Share savings program Grieg Seafood established a share savings program for its employees in 2018, which has continued throughout 2022. Each year has its own set of terms and conditions concerning how much each employee can invest in the program that year. In addition, each year has it’s set of terms for the lock-up period. The saved amount is deducted from the monthly net salary and used to purchase Grieg Seafood shares on behalf of the employees. The purchase will be made from transfer of Grieg Seafood's treasury shares or bought in the market. The purchase price and the number of shares acquired by the company will be reported in accordance with the applicable regulations. At 31 December 2022, loan to employees related to the share savings program equals NOK 4.9 million (2021: NOK 2.7 million). The total shares sold to employees was 96 150 in 2022 (2021: 38 513). Management remuneration The guidelines for management remuneration are available on Grieg Seafood ASA’s website. The remuneration to the Group Executive Operational Management Team is disclosed below. In addition to the executive operational management team (Chief Executive Officer, the Chief Financial Officer, the Group’s Chief Operating Officers, and the Chief Commercial Officer), the Group Management include the support functions of the Chief Technology Officer (CTO), the Chief Human Resource Officer (CHRO) and the Global Communication Manager. REMUNERATION PAID TO GROUP EXECUTIVE OPERATIONAL MANAGEMENT TEAM 2022 NOK 1 000 SALARY BONUS Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada until June 2022)** Erik Holvik (Chief Commercial Officer) 3 644 2 349 2 066 1 802 2 247 1 007 612 321 -26 483 Total remuneration 12 109 2 397 RETAINED BONUS , NOT YET PAID OPTIONS EXERCISED DURING THE YEAR — — — — — — 4 540 3 202 2 917 2 917 3 070 16 644 OTHER REMUNERATION* TOTAL 2 954 12 144 120 332 47 123 6 282 5 637 4 740 5 923 3 576 34 726 *The CEO has in 2022 received a one-time payment in arrears for pension benefits. **Grant Cumming was appointed as COO Farming Canada in Q1 2023. Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 17. Per Grieg jr.1 Tore Holand2 Marianne Ribe1 Katrine Trovik2 Nicolai Hafeld Grieg Ragnhild Fresvik (from 9 of June 2022) Total remuneration including social security costs 1 Payment for work performed on the Remuneration Committee of NOK 25 673 is included in the remuneration paid to Per Grieg jr. and Marianne Ribe. 2 Payment for work performed on the Audit Committee is included in the remuneration paid to Tore Holand and Katrine Trovik, amounting to NOK 68 460. The amounts include social security costs. REMUNERATION PAID TO GROUP EXECUTIVE OPERATIONAL MANAGEMENT TEAM IN 2021 NOK 1 000 SALARY BONUS RETAINED BONUS, NOT YET PAID OPTIONS EXERCISED DURING THE YEAR OTHER REMUNERATION Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada) Erik Holvik (Chief Commercial Officer) Total remuneration 3 165 2 280 2 116 1 772 1 996 11 328 — — 75 — 161 236 540 313 203 244 350 1 650 — — — — — — 250 115 113 — 115 593 Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 17. The 2021 table has been represented to include only the Group Executive Operational Management Team. REMUNERATION PAID TO BOARD MEMBERS IN 2021 NOK 1 000 Per Grieg jr.1 Tore Holand2 Sirine M. Fodstad (until 13 of August 2021)1 Marianne Ribe1 Katrine Trovik2 Nicolai Hafeld Grieg (from 4 of November 2021) Total remuneration including social security costs 1 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. 2 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. TOTAL 516 401 328 372 308 183 2 107 TOTAL 3 956 2 707 2 507 2 016 2 621 13 807 TOTAL 479 371 205 308 342 — 1 706 PART 03 – OUR FINANCIAL RESULTS 109 NO T E 17 SH A R E-B A S ED PAY MEN T S The company has issued options to the executive 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 the management and regional directors. The most recent allocation was in 2020, totalling 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 taken on after the initial allocation of options are allocated options on taking up employment. 2017 - 11 2020 - 12 2020 - 12 Total 2021 - 05 2023 - 05 2024 - 05 — 88.99 88.99 106.28 83.82 83.82 ALLOCATION: YEAR - MONTH EXPIRY DATE: YEAR - MONTH STRIKE PRICE NOK PER SHARE AT 31.12.2022 STRIKE PRICE NOK PER SHARE AT 31.12.2021 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 2 and Note 3). The table below shows the movement in outstanding options in 2022 and 2021. Cash-based options available for settlement Weighted average exercise price on outstanding options (NOK per option) OPTIONS 2022 — 64 898 710 118 775 016 2022 775 016 78.96 2021 800 000 945 000 945 000 2 690 000 2021 2 690 000 80.16 OVERVIEW 2022 (TOTAL CASH-SETTLED OPTIONS) Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada until June 2022) Erik Holvik (CCO) Others Total OUTSTANDING OPTIONS AT 31.12.2021 GRANTED OPTIONS EXERCISED OPTIONS EXPIRED/ CANCELLED OPTIONS OUTSTANDING CASH-SETTLED OPTIONS AT 31.12.2022 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 2 690 000 — — — — — — — — — — 310 236 189 201 181 698 150 989 60 738 183 168 183 168 104 212 416 863 1 780 273 — — — — — — 86 832 — 47 877 134 709 229 764 80 799 88 302 49 011 39 262 86 832 — 65 788 135 260 775 016 OVERVIEW 2021 (TOTAL CASH-SETTLED OPTIONS) Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (COO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada) Erik Holvik (CCO) Others Total OUTSTANDING OPTIONS AT 31.12.2020 GRANTED OPTIONS EXERCISED OPTIONS EXPIRED/ CANCELLED OPTIONS OUTSTANDING CASH-SETTLED OPTIONS AT 31.12.2021 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 700 000 2 790 000 — — — — — — — — — — — — — — — — — — — — — — — — — — — — 100 000 100 000 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 2 690 000 LISTED PRICE ON ALLOCATION CALCULATED VALUE PER OPTION ON ALLOCATION CALCULATED TOTAL VALUE ON ALLOCATION * TOTAL VALUE OF ALL OPTIONS AT 01.01.2022 CHANGE IN PROVISION CB-OB* EXERCISED OPTION 2022 ACC. COST RECOGNIZED IN EQUITY AT 31.12.2022 RECOGNIZED LIABILITY CASH SETTLEMENT AT 31.12.2022 AMOUNTS IN NOK 1 000 — 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 1 880 15 802 — 244 -240 -177 -158 — 2 541 2 202 1 883 1 210 -157 1 773 -193 1 917 — 1 408 909 840 600 511 847 847 881 -847 -274 2 921 -1 451 7 4 4 4 -7 -4 -4 -4 1 917 3 070 9 628 1 999 999 999 999 6 887 — — — — — — — — — — — — — — — 1 652 669 663 442 354 654 — 606 1 469 — — — — — 11 -11 2 998 9 792 -3 282 34 137 6 887 6 510 2022 Former employees with expired options** Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada until June 2022) Erik Holvik (CCO) Other options allocated in 2020 Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Other options allocated in 2017 Total * Amounts exclude social security costs. ** The option category for the line item “Former employees with expired contracts” is equity options. All the other options in this table are options with settlement in cash. PART 03 – OUR FINANCIAL RESULTS 110 AMOUNTS IN NOK 1 000 NO T E 18 SH AR E C AP I TAL AND SH AR EHOLDER I NF OR M AT I ON 2021 Former employees with expired options** Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Europe) Roy Tore Rikardsen (COO Farming North America) Erik Holvik (CCO) Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (COO) Kathleen O. Mathisen (CHRO) Other options allocated in 2020 Other options allocated in 2017 Total 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 — 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 — 1 480 1 078 989 720 604 999 999 1 042 906 557 557 475 3 519 1 880 15 802 — 56 41 37 27 23 38 38 39 467 316 296 247 132 1 085 2 842 — 1 352 868 803 573 488 810 810 842 -460 -313 -293 -243 2 788 -1 074 6 951 — — — — — — — — — — — — — — — — 6 887 — — — — — — — — — — — — — — 6 887 — 1 408 909 840 600 511 847 847 881 7 4 4 4 2 921 11 9 792 * Amounts exclude social security costs. ** The option category for the line item “Former employees with expired contracts” is equity options. All the other options in this table are options with settlement in cash. 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 2022 -3 282 34 137 30 855 -456 30 399 2021 CLASSIFICATION IN FINANCIAL STATEMENTS 6 951 Other provisions for liabilities — Salaries and personnel expense / cash 6 951 973 Public taxes payable 7 924 Salaries and personnel expense Cost relating to cash-based remuneration in 2022 totaled NOK 30 399 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 2022, outstanding options with the right to cash settlement were stated at NOK 6 510 thousands excl. social security costs, of which NOK 589 thousands were classified as current liabilities. The book value of long-term liabilities including social security cost was NOK 6 756 thousands. ESTIMATES USED TO CALCULATE ALLOCATION OF OPTIONS Anticipated volatility (%) Risk-free rate of interest (%) Estimated qualification period (years) 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. 2022 58.29% 3.12% 1.11 2021 36.44% 1.13% 1.39 As at 31 December 2022, 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 31.12.2022 NOMINAL VALUE PER SHARE (NOK) TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES Total Holdings of treasury shares Total excl treasury shares 4.00 4.00 4.00 453 788 -5 407 448 381 113 447 042 -1 351 811 112 095 231 Treasury shares In 2011, Grieg Seafood ASA purchased 1 250 000 treasury shares at NOK 14.40 per share. As from 2018, the treasury shares have been sold to employees for the share savings program. In 2022, 96 150 shares were sold to employees through the share savings program at an average price of NOK 71.0958. In December 2022, Grieg Seafood purchased 385 000 shares at a weighted average price of NOK 77.76 per share of which 314 980 have been settled within year-end. As at 31 December 2022, the company has 1 351 811 treasury shares. THE LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA Grieg Aqua AS OM Holding AS Folketrygdfondet Ystholmen Felles AS State Street Bank and Trust Comp (Nominee) State Street Bank and Trust Comp (Nominee) Morgan Stanley & Co. Int. Plc. (Nominee) Clearstream Banking S.A. (Nominee) Grieg Seafood ASA JPMorgan Chase Bank, N.A., London (Nominee) Gåsø Næringsutvikling AS Kvasshøgdi AS Ferd AS State Street Bank and Trust Comp (Nominee) DZ Privatbank S.A. (Nominee) J.P. Morgan SE (Nominee) Danske Invest Norge Vekst Six Sis AG (Nominee) J.P. Morgan SE (Nominee) DNB Bank ASA (Broker) Total 20 largest shareholders Total others Total number of shares NO. OF SHARES SHAREHOLDING 31.12.2022 31.12.2022 56 914 355 50.17% 5 110 982 2 939 985 1 923 197 1 717 439 1 692 877 1 470 346 1 376 622 1 351 811 1 136 470 1 116 323 996 772 924 407 724 407 698 518 687 236 540 000 534 229 526 442 482 561 4.51% 2.59% 1.70% 1.51% 1.49% 1.30% 1.21% 1.19% 1.00% 0.98% 0.88% 0.81% 0.64% 0.62% 0.61% 0.48% 0.47% 0.46% 0.43% 82 864 979 30 582 063 73.04% 26.96% 113 447 042 100.00% PART 03 – OUR FINANCIAL RESULTS 111 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 Other shareholders Total shares NO. OF SHARES SHAREHOLDING 31.12.2021 31.12.2021 56 914 355 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 77.38% 22.62% 113 447 042 100.00% SHARES CONTROLLED BY BOARD MEMBERS AND GROUP MANAGEMENT BOARD OF DIRECTORS Per Grieg Jr. Tore Holand (Skippergata 24 AS, and privately) Marianne Ribe Katrine Trovik Nicolai Hafeld Grieg (board member from 4 November 2021) * Ragnhild Janbu Fresvik (board member from 9 June 2022) GROUP MANAGEMENT Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Alexander Knudsen (COO Farming Norway) Kathleen O. Mathisen (CHRO) Kristina Furnes (Global Communications Manager) Erik Holvik (CCO) 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 NO. OF SHARES SHAREHOLDING NO. OF SHARES SHAREHOLDING 31.12.2022 31.12.2022 31.12.2021 31.12.2021 57 926 127 2 000 — — — — 40 513 25 556 24 855 23 513 15 074 4 711 8 831 51.06% 0.00% —% —% —% —% 0.04% 0.02% 0.02% 0.02% 0.01% 0.00% 0.01% 60 356 985 2 000 — — — — 39 809 24 852 24 151 22 809 12 380 644 644 53.20% 0.00% —% —% —% —% 0.04% 0.02% 0.02% 0.02% 0.01% 0.00% 0.00% 56 914 355 50.17% 56 914 355 50.17% — 996 772 15 000 — —% 0.88% 0.01% —% 2 428 197 996 772 15 000 2 661 2.14% 0.88% 0.01% 0.00% 57 926 127 51.06% 60 356 985 53.20% *Nicolai Hafeld Grieg owns, indirectly, 1.87% (2021: 1.87%) of Grieg Seafood ASA through his ownership in Grieg Maturitas AS, the parent company of Grieg Aqua AS. PART 03 – OUR FINANCIAL RESULTS 112 NO T E 19 E AR N ING S P E R S H A R E AND DI V IDEND P ER SH AR E NO T E 20 C A SH AND C A S H EQUI VALEN T S 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) Repurchased shares Sale of treasury shares to employees Number of outstanding shares at 31.12. Effect of share repurchased Effect of shares sold to employees Weighted average number of outstanding shares at 31.12. Diluted average 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 DIVIDENDS Proposed dividend per share (NOK)* Distributed dividend to owners during the year per share (NOK) 2022 1 153 779 — 2021 604 377 600 291 CASH AND CASH EQUIVALENTS NOK 1 000 Restricted deposits incl. employee tax deductions* Other cash and bank deposits 1 153 779 1 204 668 Total 2022 1 000 641 719 642 719 2021 25 067 903 274 928 342 113 447 042 113 447 042 -1 132 981 -1 171 494 -314 980 96 150 — 38 513 112 095 231 112 314 061 307 473 -92 989 — -33 870 112 309 715 112 280 191 112 309 715 112 280 191 10.3 0.0 10.3 10.3 0.0 10.3 2022 4.5 3.0 5.4 5.3 10.7 5.4 5.3 10.7 2021 3.0 0.0 *The change in the line item "restricted deposits incl. employee tax deductions" 2022 compared to 2021 is due to bank guarantee covering the employee tax deductions in 2022 (and going forward), compared to 2021 where the employee tax deductions were held on a tax deduction bank account. 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. NO T E 21 INV E S T MEN T IN MONE Y M AR K E T FUNDS INVESTMENT IN MONEY MARKET FUNDS NOK 1 000 NOTE Investment in money market funds Unrealized gain/loss Total investment in money market funds 2022 1 000 224 12 624 1 012 848 Unrealized fair value gains (losses) recognized in the income statement 26 12 624 2021 — — — — In 2022, the Group has temporarily placed surplus liquidity funds in money market funds. The Group does not invest directly in bonds or securities, but through units in established money market funds. At year-end, the Group had investments placed in a portfolio of three Norwegian money market funds. All three funds in the investment portfolio are money market funds that invest in bonds and securities with short time to maturity in the Norwegian market. *Proposed dividend per share (NOK) is proposed by the Board of Directors, and - as per the date of this Annual Report - not yet approved by the Annual General Meeting of Grieg Seafood. PART 03 – OUR FINANCIAL RESULTS 113 NO T E 22 T R ADE R E CE I VA BL E S TRADE RECEIVABLES NOK 1 000 Gross amount of trade receivables Trade receivables deducted* Loss allowance Trade receivables at 31.12. *Trade receivables bought by the factoring company. RECOGNIZED LOSSES NOK 1 000 Change in loss allowance Confirmed losses in the year Total recognized losses on receivables 2022 690 226 -416 053 -15 036 259 137 2022 71 33 104 2021 479 228 -312 469 -14 965 151 793 2021 1 427 — 1 427 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 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 Regular/normal risk countries High risk countries Total TR Credit insured 425 546 52 289 555 126 792 4 344 5 238 TR Unsecured 50 334 50 334 17 596 16 599 302 -1 131 TR Credit insured TR Unsecured 3 291 56 — 56 1 431 1 872 — — — 4 — — 479 228 50 443 308 582 145 264 4 650 4 106 -382 1 018 -12 52 676 — 425 546 15 951 50 334 — — 3 291 56 15 951 479 228 LOSS ALLOWANCE 31.12.2021 TR Credit insured TR Unsecured TR Credit insured TR Unsecured Regular/normal risk countries High risk countries Total — — — — — 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 NO T E 23 O T HER NON- CUR R EN T R E CEI VA BLE S receivables rather than total receivables less the factored receivables. For more information about credit risk, refer to Note 3. OTHER NON-CURRENT RECEIVABLES NOK 1 000 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) 31.12.2022 Regular/normal risk countries High risk countries Total TR Credit insured 615 863 — 486 463 121 035 6 332 TR Unsecured 59 939 61 444 33 057 1 550 10 898 TR Credit insured 11 583 — TR Unsecured 2 841 2 839 5 399 2 839 5 732 2 474 — 381 601 — — 1 616 36 615 863 60 13 773 59 939 -22 — — — 11 583 2 841 690 226 64 283 527 757 128 319 17 704 982 1 655 13 809 690 226 LOSS ALLOWANCE 31.12.2022 TR Credit insured TR Unsecured TR Credit insured TR Unsecured Regular/normal risk countries High risk countries Total — — — — — — 271 61 444 — 2 839 64 283 8 3 2 283 8 — 16 — 25 316 — 12 — 328 79 — — — 79 512 36 1 223 — — — 13 773 13 780 — — 31 2 512 13 809 15 036 Investment tax credit* Loan to associated company Investments in shares Other non-current receivables Total NOTE 11 7 14 2022 — 16 900 271 764 17 935 2021 81 575 2 111 271 6 940 90 897 *Investment tax credit, related to the freshwater facility in Newfoundland, has been derecognized from the statement of financial position as at 31 December 2022 as Newfoundland is in a net deferred tax position. Investment tax credits are deferred and offset against future tax liability. The derecognition has been carried out as a balance sheet entry, by reversing the credit entry to the acquisition cost of the property, plant and equipment booked as at 31 December 2021 and by reversing the non-current receivable related to the investment tax credit booked as at 31 December 2021, see Note 11. The investment tax credit was in 2021 booked in line with a government grant, as a direct decrease in property, plant and equipment. NO T E 24 O T HER CUR R EN T R E CEI VA BLE S OTHER CURRENT RECEIVABLES NOK 1 000 VAT receivable Prepaid expenses Other current receivables Total 2022 87 431 44 113 25 515 2021 57 594 43 490 46 247 157 060 147 332 PART 03 – OUR FINANCIAL RESULTS 114 NO T E 25  R E L AT ED PAR T IE S NO T E 26 FIN ANCI AL I NC OME AND FIN ANC I AL E XP ENSE S 2022 NOK 1 000 Total related parties as shareholders Total related parties as associates Total 2021 NOK 1 000 Total related parties as shareholders Total related parties as associates Total OPERATING INCOME OPERATING EXPENSES NON-CURRENT BALANCES CURRENT BALANCES — — — 33 742 168 353 202 095 — 16 650 16 650 -1 906 -40 879 -42 785 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 The Grieg Seafood Group carries out, in the normal course of business, 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. These transactions relate to: • 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. • Grieg Seafood ASA purchases services from Grieg Investor AS. FINANCIAL ITEMS NOK 1 000 FINANCIAL INCOME Other interest income Realized gain/loss on cross currency interest rate swap incl. option Unrealized gain (loss) on investment in money market fund Net change in fair value of derivatives Net currency gains Other financial income Total financial income FINANCIAL EXPENSE Interest expense on external borrowings and leases * Amortized establishment cost Other interest expenses Other financial expenses Total Net financial items 2022 2021 11 893 35 740 12 624 21 453 38 205 1 693 — — — 28 370 96 709 154 121 609 125 233 151 410 16 471 — 3 672 171 553 -49 944 189 390 16 476 1 768 4 865 212 499 -87 266 • The regions purchased cleaner fish from Rensefiskgruppen AS including subsidiaries, a company owned by Grieg Kapital AS. *Interest expenses on bank borrowings and leases includes recognized gains/losses from realized interest rate swaps of NOK 5 million in 2022 (2021: NOK 7 million). Furthermore, the Group is also purchases goods and services from associated companies, including companies affiliated with the Group through managerial positions in Grieg Seafood and the related party. These transactions relate to: • Purchase of smolt from the associated company Tytlandsvik Aqua AS, which is owned 33.33% by Grieg Seafood Rogaland AS. • Purchase of smolt from the associated company Nordnorsk Smolt AS, which is owned 50.00% by Grieg Seafood Finnmark AS. • Interest-bearing loan provided to Årdal Aqua AS, which is owned 44.44% by Grieg Seafood Rogaland AS. • Interest-bearing loan provided to Nordnorsk Smolt AS, which is owned 50.00% by Grieg Seafood Finnmark AS. • Non-interest bearing loan provided to an affiliated company of NextSeafood AS, which is owned 50.00% by Grieg Seafood Rogaland AS. • Fuel is purchased from Eidsvaag AS, which is affiliated with Grieg Seafood through a board member of Grieg Seafood being the Chair of Board of Directors of the affiliated company. • Algae monitoring services are purchased from Blue Planet AS, which is affiliated with Grieg Seafood through Grieg Seafood COO Norway being the Chair of the Board of Directors of the affiliated company. 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 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 27 O T HER OP ER AT ING E XP ENS E S OTHER OPERATING EXPENSES NOK 1 000 Transportation costs Maintenance costs Electricity and fuel Lease expenses1 Outsourced services and audit fees Insurance IT expenses Marketing costs Other operating expenses2 Other production-related costs1,3 Total other operating expenses 2022 497 679 327 031 177 902 60 490 107 318 66 512 77 298 6 642 119 311 647 128 2021 265 639 295 270 113 778 24 555 94 100 54 223 59 437 2 942 64 397 553 005 2 087 310 1 527 347 1Includes lease expenses and lease-related expenses, including the effect of IFRS 16. 2Includes equipment, telephony/postage, office supplies, fees, travel costs and the like. 3Production-related costs comprise harvesting costs including expenses for well-boat services, packaging material, diving services, vaccination, delousing, oxygen, and analyses and the like. PART 03 – OUR FINANCIAL RESULTS 115 BREAKDOWN OF TOTAL AUDITOR'S FEES NOK 1 000 2022 2021 NO T E 29 O T HER C UR R EN T LI A BILI T IE S 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 3 049 1 128 783 — 764 124 26 — 4 622 1 252 5 873 4 132 500 752 — 883 — 86 206 5 852 706 6 558 OTHER CURRENT LIABILITIES NOK 1 000 Accrued expenses1 Production fee (Norway)2 Realized gain/loss on fixed-price contracts3 Other current liabilities4 Other current liabilities 2022 150 241 7 987 30 930 99 135 2021 133 385 24 463 12 530 42 044 288 293 212 422 1 Accrued expenses relate to other operating expenses, including accrued purchases, transportation costs, bonuses/discounts for buyers, accrued salaries, and insurance. 2 Production fee charged by NOK 0.405/kg (NOK 0.400/kg in 2021) of harvested volume (gutted weight) in Rogaland and Finnmark in Norway. For 2021, the production fee was payable in 2022 as 2021 was the first year harvested volume in Norway was charged with a fixed production fee. As from 2022, the production fee is settled throughout the year. The production fee is presented on a separate financial statement line item in the income statement ("Production fee"). 3 See Note 3. 4 Includes NOK 25 million related to repurchased bonds. The repurchase was finalized in 2022 but settled in cash in 2023. In addition, NOK 28 million related to litigation and claims is accrued at year-end 2022, see Note 28. NO T E 30 NE W A C C OUN T ING S TAND AR DS , AM ENDMEN T S AN D IN T ER P R E TAT I ONS CHANGES IN ACCOUNTING POLICIES AND DISCLOSURE OF NEW STANDARDS The audit fee specification for 2022 include fees from Advokatfirmaet PricewaterhouseCoopers AS of NOK 26 thousands (2021: NOK 38 thousands). In 2021, the figures are disclosed for the Group's continued operations (see Note 6), thus do not include Shetland. A) NEW AND AMENDED STANDARDS, AND INTERPRETATIONS - ADOPTED IN 2022 NO T E 28 LI T IG AT ION AN D L EG AL CL AIMS, AND DE C OMMIS SIONING C O S T S LITIGATION AND LEGAL CLAIMS Grieg Seafood had also been sued by indirect purchasers in the USA. In 2022, a settlement offer from the indirect purchaser plaintiffs was accepted. In February 2023, the settlement was finally approved by the court of Southern District of Florida. The settlement does not involve any admission of liability or wrongdoing. Costs incurred and provisions for expected costs related to the lawsuits in North America in total of NOK 157 million have been expensed in 2022, of which NOK 129 million were used at year end. The remaining NOK 28 million are accrued as other current liability in the Statement of Financial Position. The total amount of NOK 157 million for the year is reported on the financial statement line item "Litigation and legal claims". See also Note 31. DECOMMISSIONING COSTS Grieg Seafood has in 2022 discontinued production in the shíshálh (Sechelt) farming area of British Columbia. At year-end, all fish from the farming area of Sechelt has been harvested. The Group is required to decommission the sites and at year-end the Group has accrued a total of NOK 24 million of clean-up costs. The costs are reported on the financial statement line item "Decommissioning costs". See also Note 10. The accounting policies adopted are consistent with those of the previous financial year, except for the amendments to IFRS which have been implemented by the Group during the current financial year. Below we have listed the amendments in IFRS which have been applicable for the Group’s 2022 financial statements, as well as the effect of the amendments. In the section below new and amended standards and interpretations that have been implemented for the first time in 2022 are stated (no new IFRS standards implemented in 2022). This section is however not a complete summary of changes in IFRS, and merely a summary of changes that are relevant for Grieg Seafood. Amendments to IAS 37 - Onerous Contracts, Costs of Fulfilling a Contract A onerous contract is a contract under which the unavoidable cost of meeting the obligations under the contract costs exceed the economic benefits expected to be received under that contract. The amendments clarify that for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contract activities. The effect of the adoption has not had any effects for the 2022 financial statement compared with prior year’s accounting policies. Annual Improvements 2018-2020 Cycle Issued May 2020, effective from 1 January 2022 IFRS 9 Financial Instruments - Fees in the ’10 per cent’ test for derecognition of financial liabilities The amendment clarifies the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. In 2022, Grieg Seafood refinanced its syndicated arrangement with secured lenders. The amendment in IFRS 9 has had no effect on the Group’s financial statement in 2022 compared with prior year’s accounting policies. IAS 41 Agriculture - Taxation in fair value measurements The amendment, which removed the requirement in IAS 41.22 to exclude cash flows for taxation when measuring the fair value of biological assets has had no effect on the Group’s financial statement in 2022 compared with prior year’s accounting policies as the Group’s methodology for fair value measurement of biological assets at sea is unaffected by the change. PART 03 – OUR FINANCIAL RESULTS 116 B) NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS - NOT YET ADOPTED NO T E 31 C ON T INGEN T LI A BI LI T IE S Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group. This section is not a complete summary of all changes in IFRS not yet adopted as at 31 December 2022. 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. Generally, the Group does not aim to early-adopt, if available, changes to IFRS. This section does provide a summary of the most relevant new standards, amendments and interpretations for Grieg Seafood, that are not yet adopted. These are: – – Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions as to the Group’s financial position and -results. Both of the amendments listed above are effective as from 1 January 2023, and both will have an impact on the note disclosures of the Group in 2023 and beyond. For 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. At date, no decision has been made by the European Commission. Grieg Seafood is not aware of any anti-competitive behavior within the Group, neither in Norway, nor the EU, or Canada. Grieg Seafood rejects that there is any basis for the claims and considers the complaints to be entirely unsubstantiated. See also Note 28. NO T E 32 E V EN T S AF T ER T HE R EP OR T ING D AT E more information concerning these two amendments in IFRS, see the sections below. There has not been any significant events after the balance sheet date of 31 December 2022. 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 accounting information. The amendments are effective for annual periods beginning on or after 1 January 2023, but earlier application is permitted as long as this fact is disclosed. The Group has not early-adopted the amendment. It is not expected that the amendments will materially impact the substance of the disclosed accounting policies of Grieg Seafood in 2023 compared with prior years. Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction The amendments to IAS 12 Income Taxes narrow the scope of the initial recognition exemption of IAS 12.15 and IAS 12.24 and specifically require companies to recognize deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. The most relevant part of the amendment for Grieg Seafood is leases. The Group has 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. Deferred tax is as at 31 December 2022 recognized for leases according to the net approach. Because of the amendment to IAS 12, Grieg Seafood will be required to recognize both a deferred tax asset and deferred tax liability on the initial recognition of a lease. While these qualify for offsetting in the statement of financial position, the notes to the financial statements need to disclose the gross amounts. The amendments are effective for annual periods beginning on or after 1 January 2023. The amendment is applied by the modified retrospective approach, meaning the beginning of the earliest comparative period presented (for 2023, that is 1.1.2022). Thus, Grieg Seafood does not expect that the amendment to IAS 12 will impact the statement of financial position of the Group, but the change will impact the granularity of the note disclosure to the consolidated financial statement, with impact to the 2022 comparable note disclosures in the 2023 financial statements. OTHER STANDARDS, AMENDMENTS AND INTERPRETATIONS No other new standards, amendments and interpretations, not yet adopted at 31 December 2022, are expected to have a material impact on the Group’s consolidated financial statement. PART 03 – OUR FINANCIAL RESULTS 117 GRIEG SEAFOOD ASA ACCOUNTS A S A A C C OUN T S 119 Income statement 120 121 121 Statement of financial position Statement of changes in equity Cash flow statement NO T E S 122 NOTE 1 Accounting policies 123 123 123 124 125 125 126 126 126 127 127 129 130 131 131 131 NOTE 2 Related parties NOTE 3 Operating income NOTE 4 Salaries, personnel and other operating expenses NOTE 5 Financial income and financial expenses NOTE 6 Taxes NOTE 7 Software, and property, plant and equipment NOTE 8 Investments in subsidiaries NOTE 9 Other current receivables NOTE 10 Short-term investments and derivatives NOTE 11 Bank deposits NOTE 12 Share capital and shareholder information NOTE 13 Net interest-bearing liabilities and pledges NOTE 14 Share-based payments NOTE 15 Other current receivables NOTE 16 Guarantees NOTE 17 Events after the reporting date PART 03 – OUR FINANCIAL RESULTS 118 INC OME S TAT E ME N 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 Transferred to other equity Total appropriations NOTE 2/3 4/14 7 2/4 2/5 2/5 6 2022 288 015 288 015 -118 348 -6 984 -199 548 -324 879 2021 98 328 98 328 -71 533 -6 773 -97 123 -175 429 -36 865 -77 101 1 269 129 -216 521 1 052 608 1 015 743 -221 666 794 077 504 120 289 957 794 077 752 632 -186 932 565 700 488 599 -81 257 407 342 336 942 70 400 407 342 PART 03 – OUR FINANCIAL RESULTS 119 S TAT EME N T OF F IN A NCI AL P O SI T ION GRIEG SEAFOOD ASA NOK 1 000 NOTE 31.12.2022 31.12.2021 ASSETS Deferred tax assets Software Property, plant and equipment Investments in subsidiaries Loan to Group companies 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 6 7 7/13 8/13 2/13 2/13 2/13 2/9 10 11 14 192 8 357 1 207 — 10 737 2 571 1 903 409 1 903 409 797 907 169 787 096 169 2 725 241 2 703 982 180 989 178 2 715 580 2 149 163 18 281 1 013 415 524 823 9 134 21 744 792 875 4 453 087 2 973 094 7 178 328 5 677 076 GRIEG SEAFOOD ASA NOK 1 000 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 Trade payables Trade payables to Group companies Current liabilities to Group companies Tax payable Public duties payable Financial instruments Accrued dividend Other current liabilities Total current liabilities Total liabilities Total equity and liabilities NOTE 31.12.2022 31.12.2021 12 12 6 14 13 13 13 14 2 2 2 6 10 2/15 453 788 -5 407 227 477 701 535 1 633 390 3 010 783 — 6 756 6 756 1 408 523 1 336 142 453 788 -4 532 226 468 701 535 1 366 671 2 743 930 10 151 11 115 21 267 1 476 376 808 533 2 744 665 2 284 909 128 211 672 5 432 8 526 412 125 243 039 9 586 — 504 120 104 414 1 416 125 49 944 51 24 709 — 102 111 76 686 4 628 751 336 942 31 148 626 970 4 167 547 2 933 146 7 178 328 5 677 076 PER GRIEG JR. CHAIR TORE HOLAND VICE CHAIR KATRINE TROVIK BOARD MEMBER MARIANNE RIBE BOARD MEMBER NICOLAI HAFELD GRIEG BOARD MEMBER RAGNHILD JANBU FRESVIK BOARD MEMBER PART 03 – OUR FINANCIAL RESULTS 120 ANDREAS KVAME CEO S TAT EME N T OF C H A NGE S I N EQUI T Y C A SH FL O W S TAT EMEN T GRIEG SEAFOOD ASA NOK 1 000 Equity at 01.01.2021 Profit for the year 2021 Sale of treasury shares to employees Accrued dividend at year-end 2021* SHARE CAPITAL TREASURY SHARES OTHER PAID- IN EQUITY CONTINGENT CONS.** OTHER EQUITY TOTAL EQUITY 453 788 -4 686 226 067 701 535 1 293 215 2 669 919 — — — 154 — 401 — — 407 342 407 342 3 055 3 610 -336 942 -336 942 Equity at 31.12.2021 453 788 -4 532 226 468 701 535 1 366 671 2 743 930 Equity at Equity at 01.01.2022 453 788 -4 532 226 468 701 535 1 366 671 2 743 930 Profit for the year 2022 Sale of treasury shares to employees Purchase of treasury shares Accrued dividend at year-end 2022* — — — — — 385 -1 260 — — 1 009 — — — — — — 794 077 794 077 5 501 6 895 -28 739 -29 999 -504 120 -504 120 Equity at 31.12.2022 453 788 -5 407 227 477 701 535 1 633 390 3 010 783 *Accrued dividend is allocated as at 31 December and not yet authorized by the Annual General Meeting (AGM). The accrued dividend for year-end 2022 is estimated at NOK 4.5 per share. The dividend is to be paid out to shareholders in 2023, provided that the dividend is authorized by the AGM. ** Contingent consideration related to the acquisition of Grieg Seafood Newfoundland AS. PART 03 – OUR FINANCIAL RESULTS 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 Items classified as investing or financing activities Currency translation differences Net cash flow from operating activities Dividend income Purchase of property, plant and equipment Purchase of intangible assets Proceeds sale of subsidiary Payments/proceeds, loans to/from Group companies Group contribution from subsidiaries Investment in money market funds Net cash flow from investing activities 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 Paid dividends Repurchase of own shares 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 NOTE 6 5 7 5 7 5 10 13 13 13 11 2022 1 015 742 -995 291 -79 658 — 6 984 -180 811 -10 751 40 515 119 249 44 961 -39 061 10 -659 -2 581 — 121 030 307 845 -1 000 224 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 — -574 579 1 611 012 -440 000 1 463 423 -520 788 310 014 -108 349 -336 942 -24 400 2 631 -557 126 — -523 346 99 117 -171 459 — — 3 610 345 588 -1 149 203 -268 052 792 875 524 823 1 000 523 823 609 165 183 710 792 875 2 564 790 312 1 700 000 885 000 121 NO T E 1 A C C OUN T I NG P OL ICI E S The annual financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway. All amounts are stated in NOK thousand, unless otherwise indicated. USE OF ESTIMATES Management has used estimates and assumptions that have affected assets, liabilities, revenues, expenses and information on potential liabilities in accordance with generally accepted accounting principles in Norway. REVENUE RECOGNITION Revenue from the sale of goods is recognized at the time of delivery. Revenue from the sale of services is recognized when the services are performed. The share of sales revenue associated with future service is recognized in the statement of financial position as accrued sales revenues and is transferred to income at the time of execution. CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS Assets intended for long-term ownership or use are classified as non-current assets. Assets related to the normal operating cycle are classified as current assets. Receivables are classified as current assets if they are expected to be repaid within 12 months of the transaction date. Similar criteria are applied to liabilities. Current assets are valued at the lower of cost and fair value. Current liabilities are recognized in the balance sheet at nominal value. Non-current assets are valued at historical cost. Property, plant and equipment whose value will deteriorate is depreciated on a straight-line basis over the asset’s estimated useful life. Non-current assets are written down to fair value where this is required by accounting rules. Nominal amounts are discounted if the interest rate element is material. INTANGIBLE ASSETS Expenditure on intangible assets is recognized in the statement of financial position to the extent that a future economic benefit can be identified as deriving from the development of an identifiable intangible asset and cost can be measured reliably. Otherwise, the cost is expensed as it arises. Capitalized development costs are amortized over their useful life. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is recognized in the statement of financial position and depreciated on a straight-line basis over its estimated useful life, providing the asset has an expected useful life of more than 3 years and a cost price of more than NOK 15 000. Maintenance costs are recognized in the income statement as operating expenses as they arise, while improvements and contributions materially exceed retained earnings received from charged based on the pension premium paid. additions are added to the acquisition cost of the asset and depreciated at the same rate as the asset. The distinction between maintenance and improvements is made based on the asset’s relative condition on the original purchase date. SUBSIDIARIES Subsidiaries are recognized at cost in the financial statement of Grieg Seafood ASA (parent). Group contributions paid to subsidiaries, net of tax, are recognized as an increase in the cost of the shares. Dividends and group contributions from subsidiaries to Grieg Seafood ASA are recognized in the same year in the Company’s financial statement as when recognized in the subsidiary’s financial statements. If dividends/group the investment in the subsidiary after acquisition, the excess amount is regarded as a reimbursement of invested capital and is deducted from the recognized cost of investment in the subsidiary in the statement of financial position of Grieg Seafood ASA. Dividends and group contributions received are recognized in the income statement as other financial income. 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 contingent consideration on the acquisition date. IMPAIRMENT OF NON-CURRENT ASSETS Impairment tests are performed upon indication that the carrying amount of a non-current asset exceeds its estimated fair value. The test is performed at the lowest level of non-current assets at which independent cash flows can be identified. If the carrying amount is higher than both the fair value less costs to sell and the value in use (net present value of future use/ownership), the asset is written down to the higher of fair value less costs to sell and the value in use. Previous impairment charges are reversed CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash in hand, bank deposits and other short-term highly liquid investments with original DERIVATIVES FORWARD CURRENCY CONTRACTS Realized gains (losses) on forward currency contracts are maturities of three months or less. The overdraft facility is recognized in the income statement as a financial income included in current borrowings in the statement of financial (financial cost). The fair value of a forward currency contract is position. PENSIONS The company’s pension schemes meet the requirements of the Norwegian Mandatory Occupational Pensions Act. The measured in its contracted currency and translated to NOK using the foreign exchange currency rate at the reporting date. INTEREST RATE SWAPS Interest rate swap contracts are measured according to the Company operates a defined contribution pensions scheme for lowest of its acquisition cost and fair value at the reporting date. its employees. The pension premium is paid through operations and is expensed on an ongoing basis. Social security costs are GROUP ACCOUNT SCHEME – DEPOSITS AND LOANS Grieg Seafood ASA operates as an internal bank for its TAXES The tax expense in the income statement consists of both tax payable for the accounting period and changes in deferred tax. Deferred tax is calculated at the relevant rate on temporary differences between the value of assets and liabilities for tax purposes and any allowable loss to be carried forward at subsidiaries. Grieg Seafood ASA borrows funds from financial year-end in the financial statements. Temporary differences, institutions and then lends these funds to its subsidiaries. The both positive and negative, are offset within the same period. Company has set up a multi-currency group account (cash Deferred tax assets are recognized in the statement of financial pool) scheme in which Grieg Seafood ASA is the legal account position when it is more likely than not that the tax assets will holder. Deposits and loans from the subsidiaries which are part be utilized. Deferred tax assets and deferred tax liabilities are of the group account scheme are recognized as intercompany presented net in the statement of financial position. Tax on group transactions. All subsidiaries that are part of the scheme (not all contributions is recognized as an increase in the purchase price subsidiaries of the Group are part of the group account scheme) of shares in other companies. Taxes payable and deferred taxes are jointly and severally liable to the financial institutions for the are recognized directly in equity to the extent that they relate entire amount of the commitment under the scheme. to equity transactions (offset against tax payable if the group 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 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 the reporting date. Non-monetary items that are measured indirect method. Cash and cash equivalents include cash, bank at their historical price expressed in a foreign currency are deposits and other short-term highly liquid investments which in a later period if the prerequisites for impairment are no longer translated into NOK using the exchange rate applicable on the entail no appreciable exchange rate risk, and which mature present (except for impairment of goodwill). transaction date. Non-monetary items that are measured at within three months of the purchase date. TRADE AND OTHER RECEIVABLES Trade and other receivables are recognized in the statement of their fair value expressed in a foreign currency are translated at the exchange rate applicable on the reporting date. Changes to exchange rates are recognized in the income statement as they financial position at nominal value after a provision for bad debts. occur during the accounting period. The provision for bad debts is estimated based on an individual assessment of each material receivable. CURRENT INVESTMENTS Current investments (shares and investments which are considered current assets) are carried at the lower of acquisition cost and fair value at the reporting date. Dividends and other distributions received are recognized as other financial income. Investments in money market funds are measured at fair value in the Company’s statement of financial position. Unrealized gains (losses) are presented as financial income (-expense) in the income statement. SHARE-BASED PAYMENTS The Company operates a share-based remuneration scheme for the Group management of the Grieg Seafood Group, which all are employees of Grieg Seafood ASA. The share-based option scheme is a synthetic option scheme with settlement in cash. Each member of the scheme is, in addition, 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 the income statement. PART 03 – OUR FINANCIAL RESULTS 122 NO T E 2 R EL AT ED PAR T IE S NO T E 4 S AL AR IE S, P ER S ONNEL AND O T HER OP ER AT I NG E XP EN S E S 2022 NOK 1 000 OPERATING INCOME OPERATING EXPENSES FINANCIAL INCOME FINANCIAL EXPENSES NON- CURRENT RECEIVABLES TRADE RECEIVABLES CURRENT RECEIVABLES TRADE PAYABLES OTHER CURRENT LIABILITIES Total related parties – Group companies Total related parties – Shareholders 287 954 -2 185 1 109 243 -2 958 797 907 180 989 2 715 580 -8 526 -412 125 — -12 409 — — — — — -5 500 — Total 287 954 -14 594 1 109 243 -2 958 797 907 180 989 2 715 580 -14 026 -412 125 2021 NOK 1 000 OPERATING INCOME OPERATING EXPENSES FINANCIAL INCOME FINANCIAL EXPENSES NON- CURRENT RECEIVABLES TRADE RECEIVABLES CURRENT RECEIVABLES TRADE PAYABLES OTHER CURRENT LIABILITIES Total related parties – Group companies Total related parties – Shareholders 98 328 -411 501 779 -45 787 096 178 2 149 163 — -102 111 — -13 247 — Total 98 328 -13 658 501 779 — -45 — 787 096 — 178 — 2 149 163 -127 -126 — -102 111 The company carries out, in the normal course of business, 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. Grieg Maturitas II AS is headquartered in C. Sundts gate 17/19, Bergen, Norway. Consolidated financial statements, in which Grieg Seafood ASA is included may be obtained from the parent company. The transactions with Grieg Maturitas II AS and subsidiaries relate to ICT-related services and other functions such as catering, reception, etc., are provided by Grieg Group Resources AS on an arm’s length basis. In addition, 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. Lastly, Grieg Seafood ASA purchases services from Grieg Investor AS. Grieg Seafood ASA provides a range of services to the subsidiaries of the Grieg Seafood Group. 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. Grieg Seafood ASA enters into hedging contracts on behalf of Grieg Seafood Rogaland AS and Grieg Seafood Finnmark AS. The arrangement is intended to reduce these companies’ exposure to salmon prices. The agreements with the subsidiaries are priced on the basis of a “back-to-back” arrangement. NO T E 3 OP E R AT ING I NC OME OPERATING INCOME NOK 1 000 Administrative services – Group companies (Note 2) Administrative services - external* Royalty fee - Group companies (Note 2)** Other operating income Total operating income 2022 141 622 — 146 332 61 288 015 2021 82 430 15 898 — — 98 328 * 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. ** A royalty fee model has been established in the Grieg Seafood Group as from 2022. SALARIES AND PERSONNEL EXPENSES NOK 1 000 Wages and salaries Social security costs Share options for directors and key personnel (Note 14) Pension costs – defined contribution scheme Other personnel costs Total Average number of employees 2022 68 263 13 122 30 399 2 523 4 041 118 348 39 2021 51 087 6 779 7 924 2 221 3 523 71 533 36 Pension scheme The Company has a pension scheme covering all employees at 31 December 2022. 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 has continued throughout 2022. Each year has its own set of terms and conditions concerning how much each employee can invest in the program that year. In addition, each year has it’s set of terms for the lock-up period. The saved amount is deducted from the monthly net salary and used to purchase Grieg Seafood shares on behalf of the employees. The purchase will be made from transfer of Grieg Seafood's treasury shares or bought in the market. The purchase price and the number of shares acquired by the company will be reported in accordance with the applicable regulations. At 31 December 2022, loan to employees related to the share savings program equals NOK 4.9 million (2021: NOK 2.7 million). The total shares sold to employees was 96 150 in 2022 (2021: 38 513). Management remuneration The guidelines for management remuneration are available on Grieg Seafood ASA’s website. The remuneration to the Group Executive Operational Management Team is disclosed below. In addition to the executive operational management team (Chief Executive Officer, the Chief Financial Officer, the Group’s Chief Operating Officers, and the Chief Commercial Officer), the Group Management include the support functions of the Chief Technology Officer (CTO), the Chief Human Resource Officer (CHRO) and the Global Communication Manager. REMUNERATION PAID TO GROUP EXECUTIVE OPERATIONAL MANAGEMENT TEAM IN 2022 NOK 1 000 SALARY BONUS Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada until June 2022)** Erik Holvik (Chief Commercial Officer) 3 644 2 349 2 066 1 802 2 247 1 007 612 321 -26 483 Total remuneration 12 109 2 397 RETAINED BONUS, NOT YET PAID OPTIONS EXERCISED DURING THE YEAR OTHER REMUN- ERATION* 2 954 120 332 47 123 TOTAL 12 144 6 282 5 637 4 740 5 923 4 540 3 202 2 917 2 917 3 070 16 644 3 576 34 726 — — — — — — *The CEO has in 2022 received a one-time payment in arrears for pension benefits. **Grant Cumming was appointed as COO Farming Canada in Q1 2023. Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 14. PART 03 – OUR FINANCIAL RESULTS 123 REMUNERATION PAID TO BOARD MEMBERS IN 2022 NOK 1 000 Per Grieg Jr.1 Tore Holand2 Marianne Ribe1 Katrine Trovik2 Nicolai Hafeld Grieg Ragnhild Fresvik (from 9 June 2022) Total remuneration TOTAL 516 401 328 372 308 183 2 108 1The amounts include social security costs. Payment for work performed on the Remuneration Committee of NOK 25 673 is included in the remuneration paid to Per Grieg jr. and Marianne Ribe. 2 Payment for work performed on the Audit Committee is included in the remuneration paid to Tore Holand and Katrine Trovik, amounting to NOK 68 460. The amounts include social security costs. Commission. Grieg Seafood is not aware of any anti-competitive behavior within the Group, neither in Norway, nor the EU, or Canada. Grieg Seafood rejects that there is any basis for the claims and considers the complaints to be entirely unsubstantiated. Grieg Seafood had also been sued by indirect purchasers in the USA. In 2022, a settlement offer from the indirect purchaser plaintiffs was accepted. In February 2023, the settlement was finally approved by the court of Southern District of Florida. The settlement does not involve any admission of liability or wrongdoing. Costs incurred and provisions for expected costs related to the lawsuits in North America have been expensed in the Grieg Seafood Group in 2022, and allocated towards the relevant entities of which a portion has been allocated to Grieg Seafood ASA. The costs are reported as “other operating expenses” in Grieg Seafood ASA. See also Note 28 of the Group Accounts. NO T E 5 FIN ANCI AL I NC OME AND FIN ANC I AL E XP ENSE S REMUNERATION PAID TO GROUP EXECUTIVE OPERATIONAL MANAGEMENT TEAM IN 2021 NOK 1 000 SALARY BONUS RETAINED BONUS, NOT YET PAID OPTIONS EXERCISED DURING THE YEAR OTHER BENEFITS Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada) Erik Holvik (Chief Commercial Officer) Total remuneration 3 165 2 280 2 116 1 772 1 996 11 329 — — 75 — 161 236 540 313 203 244 350 1 650 — — — — — — 250 115 113 — 115 593 Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement. See Note 14. The 2021 table has been represented to include only the Group Executive Operational Management Team. REMUNERATION PAID TO BOARD MEMBERS IN 2021 NOK 1 000 Per Grieg jr.1 Tore Holand2 Sirine M. Fodstad (until 13 August 2021)1 Marianne Ribe1 Katrine Trovik2 Nicolai Hafeld Grieg (from 4 November 2021) Total remuneration TOTAL 3 956 2 707 2 507 2 016 2 621 13 807 TOTAL 479 371 205 308 342 — 1 705 1Payment 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. 2Payment 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. BREAKDOWN OF AUDITOR'S FEES NOK 1 000 Statutory audit Other certification services Tax advisory fee Other services Total 2022 1 063 783 — 26 2021 1 991 730 38 41 1 872 2 800 FINANCIAL ITEMS NOK 1 000 FINANCIAL INCOME Interest income from Group companies Gain/loss sale of subsidiary * Other interest finance income Realized gain/loss on cross currency interest rate swap incl. option Unrealized gain (loss) on investment in money market fund Other financial income Group contributions from subsidiaries Dividend Unrealized value changes, derivatives (Note 8) Unrealized currency change, non-current EUR term loan Realized 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 Realized value changes, derivatives Unrealized currency change, non-current EUR term loan Other financial expenses Net realized currency losses Total Net financial items 2022 2021 103 141 7 924 8 378 35 740 12 624 1 668 171 650 142 683 10 606 — — — 995 290 307 845 10 751 — 2 624 10 811 317 89 849 1 269 129 10 29 281 23 990 — 22 284 735 43 548 752 632 130 239 172 015 2 958 188 21 178 58 396 3 562 — 216 521 1 052 608 45 2 291 7 494 — 3 048 2 039 186 932 565 700 The audit fee specification for 2022 from the company’s auditor include fees from Advokatfirmaet PricewaterhouseCoopers AS (tax-related assistance) of NOK 26 thousands (NOK 38 thousands). In addition, the company has expensed NOK 93 thousands in 2022 related to tax advise and other certification services from other audit firms than the company’s selected auditor. 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. At date, no decision has been made by the European *Sale of 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 closed on 15 December 2021. The gain for Grieg Seafood ASA is recognized at NOK 151 million, in total, of which NOK 143 million recognized as a preliminary gain in 2021, and NOK 7.6 million recognized in 2022 in relation to the closing of the settlement. For more information, see also Note 6 to the Group Accounts for 2022. PART 03 – OUR FINANCIAL RESULTS 124 NO T E 6 TA XE S BASIS FOR TAX PAYABLE NOK 1 000 Profit before tax Dividends recognized in profit or loss Net other permanent differences Other permanent differences from gain of sales of share Unrealized of adjustments of investment in money funds Change in financial derivatives Change in temporary differences Group contribution received/provided Taxable income/loss Group contribution received Loss carry forward Basis for tax expense for the year 22% (22%) tax payable 2022 1 015 743 -10 -1 118 -7 924 -12 624 20 426 90 227 -995 290 109 431 995 290 — 1 104 721 243 039 2021 488 599 -10 -5 109 -142 680 — -29 281 76 489 -307 845 80 163 307 845 -39 433 348 575 76 686 PART 03 – OUR FINANCIAL RESULTS BREAKDOWN OF DEFERRED TAX BASIS NOK 1 000 CHANGE 2022 2021 TEMPORARY DIFFERENCES Non-current assets Profit and loss account Provisions for liabilities Cash-based options Non-current debt/amortized cost Revaluation account non-current liabilities Discount bond loan Net temporary differences Financial instruments Basis for deferred tax in balance sheet Deferred tax assets/deferred tax liabilities in the balance sheet BREAKDOWN OF TAX CHARGE Tax payable Change in deferred tax, 22% (22%) Change in payable tax from last year 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 -3 360 -101 -69 310 3 738 -4 618 -20 413 3 838 -90 227 -20 426 -110 653 -24 343 -3 692 407 -69 310 -7 428 25 053 — -9 539 -64 510 — -64 510 -14 192 243 039 -24 343 — 2 971 221 666 1 015 743 -223 464 221 666 -1 797 -4 769 2 971 — -1 797 -332 508 — -11 166 29 671 20 413 -13 377 25 718 20 426 46 144 10 151 76 686 -1 711 39 6 242 81 257 488 599 -107 492 81 257 -26 235 -32 516 6 242 38 -26 235 NO T E 7 S OF T WAR E, AND P R OP ER T Y, P L AN T AND EQUIP MEN T 2022 NOK 1 000 Book value at 01.01. Additions Amortization/depreciation Book value at 31.12. ACCUMULATED VALUES Acquisition cost Accumulated amortization/depreciation Book value at 31.12. Economic life (amortization/depreciation schedule) SOFTWARE OTHER EQUIPMENT 10 737 2 581 -4 961 8 357 2 571 659 -2 023 1 207 54 879 20 173 -46 522 -18 965 8 357 1 207 3 - 10 years 3–5 years 125 2021 NOK 1 000 Book value at 01.01. Additions Amortization/depreciation Book value at 31.12. ACCUMULATED VALUES Acquisition cost Accumulated amortization/depreciation Book value at 31.12. Economic life (amortization/depreciation schedule) SOFTWARE OTHER EQUIPMENT 14 504 1 892 -5 659 10 737 2 131 1 555 -1 114 2 571 52 298 19 514 -41 561 -16 942 10 737 2 571 3 - 10 years 3–5 years The company has operating lease agreements, which are not recognized in the statement of financial position: 2022 ASSETS Buildings Other equipment Total lease amount charged DURATION Until 2028 3-5 years OPERATING LEASE EXPENSE 4 385 207 4 592 NO T E 8 INV E S T MEN T S I N SUB SIDI AR IE S SUBSIDIARY Grieg Seafood Rogaland AS Grieg Seafood Canada AS Grieg Seafood Finnmark AS Grieg Seafood Sales AS* Grieg Seafood Newfoundland AS Total REGISTERED OFFICE COUNTRY REGISTERED OFFICE LOCATION OWNERSHIP/ VOTING SHARE EQUITY AT 31.12.2022 NOK 1 000 PROFIT/ LOSS 2022 NOK 1 000 BOOK VALUE NOK 1 000 Norway Bergen Norway Bergen Norway Alta Norway Bergen Norway Bergen 100 % 100 % 100 % 100 % 99 % 880 534 227 343 1 008 310 139 117 129 590 405 589 -56 559 425 142 334 223 497 297 112 400 481 1 000 19 671 981 319 2 384 894 1 126 962 1 903 409 *Grieg Seafood Sales AS changed its legal name from Grieg Seafood Norway AS on the 14 March 2023. Equity and profit/loss are based on provisional financial statements, which have been prepared in accordance with local accounting standards. NO T E 9 O T HE R CUR R EN T R E CEI VA BLE S OTHER CURRENT RECEIVABLES NOK 1 000 Prepaid expenses VAT * Estimated remaining purchase price for the sale of Shetland Other current receivables Tax refund as a part of Corona tax measures Total other current receivables *Grieg Seafood ASA is the parent company in jointly registered VAT for the Norwegian entities of the Grieg Seafood Group. 2022 7 539 2 934 7 624 184 — 2021 7 489 1 616 — — 28 18 281 9 134 NO T E 10 SHOR T-T ER M INV E S T M EN T S AND DER I VAT I V E S SHORT-TERM INVESTMENTS AND FINANCIAL INSTRUMENTS NOK 1 000 Investment in money market funds including unrealized gain* Financial derivative instruments Other financial assets Total 2022 1 012 848 — 566 1 013 415 2021 — 21 178 566 21 744 *In 2022, the company has temporarily placed surplus liquidity funds in money market funds. The company does not invest directly in bonds or securities, but through units in established money market funds. At year-end, the company had investments placed in a portfolio of three Norwegian money market funds. All three funds in the investment portfolio are money market funds that invest in bonds and securities with short time to maturity in the Norwegian market. FINANCIAL DERIVATIVE INSTRUMENTS FAIR VALUE BOOK VALUE FAIR VALUE BOOK VALUE 2022 2021 Interest rate options1 Cross currency interest rate swap1,2 Interest rate swap contracts3 Financial derivative instruments classified as current assets Interest rate swap contracts3,4 Financial derivative instruments classified as current liabilities — — 35 238 35 238 — — — — — — — — 233 21 178 14 587 35 998 -751 -751 — 21 178 — 21 178 -751 -751 1The cross currency interest-rate swap contract has been settled in 2022. The realized gain on the cross currency interest rate swap incl. option was NOK 36 million, see Note 5. 2Financial instruments booked at fair value in according to accounting act § 5-8. 3See specification below. 4The interest rate swap contract classified as current liabilities in 2021 included accrued interests of NOK 162 thousands. SPECIFICATION ON INTEREST RATE SWAP PRINCIPAL NOK 1 000 FIXED RATE (%) BASIS OF FLOATING RATE MATURITY MARKET VALUE NOK 1 000 31.12.2022 MARKET VALUE NOK 1 000 31.12.2021 Fixed rate paid - floating rate received NOK 200 million 1.61 Nibor 3 months 28.08.2023 Fixed rate paid - floating rate received NOK 200 million 1.35 Nibor 3 months 04.03.2024 Fixed rate paid - floating rate received NOK 200 million 1.07 Nibor 3 months 05.07.2024 Fixed rate paid - floating rate received NOK 200 million 0.71 Nibor 3 months 18.12.2024 Fixed rate paid - floating rate received NOK 200 million 0.72 Nibor 3 months 18.12.2024 2 670 5 018 7 627 9 963 9 961 -590 874 2 628 5 561 5 524 Total 35 238 13 997 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 gain/loss on money market funds Net unrealized gain/(loss) on financial instruments Realized gain/loss on cross currency interest rate swap incl option Realized value change, derivatives Net realized gain/(loss) on financial instruments 2022 751 — 12 624 13 375 35 740 -21 178 14 562 2021 14 887 14 394 — 29 281 — -7 494 -7 494 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. PART 03 – OUR FINANCIAL RESULTS 126 NO T E 11 B A NK DE P O SI T S BANK DEPOSITS NOK 1 000 Restricted deposits relating to employees' tax deductions Other bank deposits Total 2022 1 000 523 823 524 823 2021 2 564 790 312 792 875 The change in the line item "restricted deposits incl. employee tax deductions" 2022 compared to 2021 is due to bank guarantee covering the employee tax deductions in 2022 (and going forward), compared to 2021 where the employee tax deductions were held on a tax deduction bank account. Grieg Seafood ASA has a guarantee relating to employees’ tax deductions on total NOK 6 million at the end of 2022. THE LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA Grieg Aqua AS OM Holding AS Folketrygdfondet Ystholmen Felles AS State Street Bank and Trust Comp (Nominee) State Street Bank and Trust Comp (Nominee) Morgan Stanley & Co. Int. Plc. (Nominee) Clearstream Banking S.A. (Nominee) Grieg Seafood ASA The company has an overdraft facility of NOK 200 million. Available credit on the overdraft facility was NOK 200 million at year-end 2022 JPMorgan Chase Bank, N.A., London (Nominee) (2021: NOK 100 million). In addition, the company has a revolving credit facility of which NOK 1 500 million was undrawn at year-end 2022 (2021: NOK 785 million). See Note 13 for more information. NO T E 12 SH A R E C A P I TA L AN D SH AR EHOLDER INF OR M AT ION As at 31 December 2022, 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 31.12.2022 NOMINAL VALUE PER SHARE (NOK) TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES Total Holdings of treasury shares Total excl treasury shares 4.00 4.00 4.00 453 788 -5 407 448 381 113 447 042 -1 351 811 112 095 231 Treasury shares In 2011, Grieg Seafood ASA purchased 1 250 000 treasury shares at NOK 14.40 per share. As from 2018, the treasury shares have been sold to employees for the share savings program. In 2022, 96 150 shares were sold to employees through the share savings program at an average price of NOK 71.0958. In December 2022, Grieg Seafood purchased 385 000 shares at a weighted average price of NOK 77.76 per share of which 314 980 have been settled within year-end. As at 31 December 2022, the company has 1 351 811 treasury shares. Gåsø Næringsutvikling AS Kvasshøgdi AS Ferd AS State Street Bank and Trust Comp (Nominee) DZ Privatbank S.A. (Nominee) J.P. Morgan SE (Nominee) Danske Invest Norge Vekst Six Sis AG (Nominee) J.P. Morgan SE (Nominee) DNB Bank ASA (Broker) Total 20 largest shareholders Total others Total number of shares NO. OF SHARES SHAREHOLDING 31.12.2022 31.12.2022 56 914 355 50.17% 5 110 982 2 939 985 1 923 197 1 717 439 1 692 877 1 470 346 1 376 622 1 351 811 1 136 470 1 116 323 996 772 924 407 724 407 698 518 687 236 540 000 534 229 526 442 482 561 4.51% 2.59% 1.70% 1.51% 1.49% 1.30% 1.21% 1.19% 1.00% 0.98% 0.88% 0.81% 0.64% 0.62% 0.61% 0.48% 0.47% 0.46% 0.43% 82 864 979 30 582 063 73.04% 26.96% 113 447 042 100.00% PART 03 – OUR FINANCIAL RESULTS 127 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 Other shareholders Total shares NO. OF SHARES SHAREHOLDING 31.12.2021 31.12.2021 56 914 355 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 77.38% 22.62% 113 447 042 100.00% SHARES CONTROLLED BY BOARD MEMBERS AND GROUP MANAGEMENT BOARD OF DIRECTORS Per Grieg Jr. Tore Holand (Skippergata 24 AS, and privately) Marianne Ribe Katrine Trovik Nicolai Hafeld Grieg (board member from 4 November 2021) * Ragnhild Janbu Fresvik (board member from 9 June 2022) GROUP MANAGEMENT Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Alexander Knudsen (COO Farming Norway) Kathleen O. Mathisen (CHRO) Kristina Furnes (Global Communications Manager) Erik Holvik (CCO) 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 NO. OF SHARES SHAREHOLDING NO. OF SHARES SHAREHOLDING 31.12.2022 31.12.2022 31.12.2021 31.12.2021 57 926 127 2 000 — — — — 40 513 25 556 24 855 23 513 15 074 4 711 8 831 51.06% 0.00% —% —% —% —% 0.04% 0.02% 0.02% 0.02% 0.01% 0.00% 0.01% 60 356 985 2 000 — — — — 39 809 24 852 24 151 22 809 12 380 644 644 53.20% 0.00% —% —% —% —% 0.04% 0.02% 0.02% 0.02% 0.01% 0.00% 0.00% 56 914 355 50.17% 56 914 355 50.17% — 996 772 15 000 — —% 0.88% 0.01% —% 2 428 197 996 772 15 000 2 661 2.14% 0.88% 0.01% 0.00% 57 926 127 51.06% 60 356 985 53.20% *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. PART 03 – OUR FINANCIAL RESULTS 128 NO T E 13 NE T IN T ER E S T-B E A R ING LI A BILI T IE S AND P LEDGE S Grieg Seafood ASA has a syndicated loan provided by DNB and Nordea. The syndicated financing from secured lenders of Grieg Seafood consists of an aggregate of NOK 3 200 million in five-year senior secured sustainability-linked loans and credit facilities. The 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 financing carries floating interest rates, calculated as the relevant three month IBOR plus the applicable margin per interest period. The financial covenant of the facility is a minimum equity-ratio requirement of 31%, measured excl. the effect of IFRS 16. In addition to the senior secured facility, the Group also has a green bond (GSF01 G, listed at Euronext), which matures in June 2025. The bond carries a coupon rate of three months NIBOR + 3.4% p.a. The bond's financial covenant is an equity ratio requirement of minimum 30%, measured consistent with the Group’s equity-ratio financial covenants as defined in its syndicated loan agreement with secured lenders. LIABILITIES SECURED BY MORTGAGE NOK 1 000 BOOK VALUE OF LIABILITIES SECURED BY MORTGAGE 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 2022 2021 1 474 429 1 474 429 864 524 864 524 1 903 409 922 090 1 207 180 989 2 420 009 4 505 613 2 571 178 1 137 778 2 062 617 Grieg Seafood ASA was in compliance with its financial covenant at 31 December 2022. At 31 December 2022, the Group had an equity ratio of 50% (2021: 52%) while the equity ratio according to financial covenant was 52%, compared to 54% at 31 December 2021. *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. Total unutilized credit facilities of Grieg Seafood ASA was NOK 1 700 million as at 31 December 2022 (2021: NOK 885 million). NON-CURRENT LIABILITIES NOK 1 000 NON-CURRENT LIABILITIES (INTEREST BEARING) Green bond Non-current syndicated loan Non-current revolving credit facility Total Amortization effect of loans Total non-current liabilities CURRENT LIABILITIES (INTEREST-BEARING) NOK 1 000 Current portion of non-current borrowing Total NET INTEREST-BEARING LIABILITIES NOK 1 000 Gross interest-bearing liabilities Unrestricted bank deposits Investments in money market funds Loans to subsidiaries Net interest-bearing liabilities 2022 2021 1 423 500 1 346 218 — 1 500 000 374 580 440 000 2 769 718 2 314 580 -25 053 -29 671 2 744 665 2 284 909 2022 128 211 128 211 2021 49 944 49 944 2022 2021 2 897 929 2 364 524 523 823 1 012 848 2 420 009 790 312 — 2 612 972 -1 058 750 -1 038 760 TYPE OF LIABILITY NOK 1 000 CURRENCY 2022 2021 INTEREST RATE MATURITY CURRENT PART NON- CURRENT PART CURRENT PART Green bond Syndicated non-current loan Syndicated non-current loan Syndicated loan revolving credit Total NOK NOK EUR NOK Floating 06/2025 — 1 423 500 Floating 03/2027 Floating 03/2027 Floating 02/2023 62 500 65 711 — 656 250 689 968 — — — 49 944 — NON- CURRENT PART 1 500 000 — 374 580 440 000 CURRENCY EXPOSURE ON LOANS TO CREDIT INSTITUTIONS NOK 1 000 Green bond Syndicated non-current loan (NOK term loan) Syndicated non-current loan (EUR term loan) Total CURRENCY EXPOSURE ON LOANS TO CREDIT INSTITUTIONS NOK 1 000 Green bond Syndicated non-current loan (EUR term loan) Syndicated loan revolving credit facility (non-current) (NOK) Total 128 211 2 769 718 49 944 2 314 580 31.12.2022 NOK 1 423 500 1 423 500 718 750 718 750 EUR — 755 679 — 755 679 2 897 929 2 142 250 755 679 31.12.2021 NOK 1 500 000 1 500 000 EUR — 424 524 — 424 524 440 000 440 000 — 2 364 524 1 940 000 424 524 2022 4.61% 1.77% 2021 3.76% 3.50% MATURITY PROFILE - NON-CURRENT LIABILITIES NOK 1 000 2023 2024 2025 2026 2027 LATER TOTAL AVERAGE INTEREST RATE ON BANK AND BOND LOAN Green Bond — — 1 423 500 — — 1 423 500 Syndicated debt - NOK and EUR term loans 128 211 128 211 128 211 128 211 961 584 — 1 474 429 Average interest rate (NOK) Average interest rate (EUR) Total 128 211 128 211 1 551 711 128 211 961 584 — 2 897 929 The effect of interest rate swaps is not taken into account in calculating the average interest rate on borrowings and credit facilities. Figures included in the maturity profile table are nominal figures. Amortized cost is not included. PART 03 – OUR FINANCIAL RESULTS 129 NO T E 14 SH A R E-B A S ED PAY MEN T S The company has issued options to the management group and regional directors. The options’ strike price is the stock market price on the date of issue, rising by 0.5% per month until the exercise date. Since 2009, an option scheme with settlement in cash has been established for the management and regional directors. The most recent allocation was in 2020, totalling 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 taken on after the initial allocation of options are allocated options on taking up employment. The Black & Scholes option pricing model is used to calculate the market value. A brokerage firm is used to perform the calculations. The table below shows the movement in outstanding options in 2022 and 2021. OVERVIEW 2022 (TOTAL OPTIONS) Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada until June 2022) Erik Holvik (CCO) Others Total OVERVIEW 2021 (TOTAL OPTIONS) Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (COO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada) Erik Holvik (CCO) Others Total OUTSTANDING OPTIONS AT 31.12.2021 GRANTED OPTIONS EXERCISED OPTIONS EXPIRED/ CANCELLED OPTIONS OUTSTANDING CASH-SETTLED OPTIONS AT 31.12.2022 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 2 690 000 — — — — — — — — — — 310 236 189 201 181 698 150 989 60 738 183 168 183 168 104 212 416 863 1 780 273 — — — — — — 86 832 — 47 877 134 709 229 764 80 799 88 302 49 011 39 262 86 832 — 65 788 135 260 775 016 OUTSTANDING OPTIONS AT 31.12.2020 GRANTED OPTIONS EXERCISED OPTIONS EXPIRED/ CANCELLED OPTIONS OUTSTANDING CASH-SETTLED OPTIONS AT 31.12.2021 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 700 000 2 790 000 — — — — — — — — — — — — — — — — — — — — — — — — — — — — 100 000 100 000 540 000 270 000 270 000 200 000 100 000 270 000 270 000 170 000 600 000 2 690 000 ALLOCATION: YEAR - MONTH EXPIRY DATE: YEAR - MONTH STRIKE PRICE NOK PER SHARE AT 31.12.2022 STRIKE PRICE NOK PER SHARE AT 31.12.2021 2017 - 11 2020 - 12 2020 - 12 Total 2021 - 05 2023 - 05 2024 - 05 0.00 88.99 88.99 106.28 83.82 83.82 Cash-based options available for settlement Weighted average exercise price on outstanding options (NOK per option) OPTIONS 2022 — 64 898 710 118 775 016 2021 800 000 945 000 945 000 2 690 000 2022 2021 775 016 2 690 000 78.96 80.16 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 01.01.2022 CHANGE IN PROVISION CB-OB* EXERCISED OPTION 2022 ACC. COST RECOGNIZED IN EQUITY AT 31.12.2022 RECOGNIZED LIABILITY CASH SETTLEMENT AT 31.12.2022 — 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 — 244 -240 -177 -158 — 2 541 2 202 1 883 1 210 -157 1 773 -193 1 917 — 1 408 909 840 600 511 847 847 881 -847 -274 2 921 -1 451 7 4 4 4 -7 -4 -4 -4 1 917 3 070 9 628 1 999 999 999 999 2 998 34 137 1 880 15 802 11 -11 9 792 -3 282 6 887 — — — — — — — — — — — — — — — 1 652 669 663 442 354 654 — 606 1 469 — — — — — 6 887 6 510 2022 Former employees with expired options** Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Norway) Roy Tore Rikardsen (COO Farming Canada until June 2022) Erik Holvik (CCO) Other options allocated in 2020 Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Other options allocated in 2017 Total *Amounts exclude social security costs. **The option category for the line item “Former employees with expired contracts” is equity options. All the other options in this table are options with settlement in cash. PART 03 – OUR FINANCIAL RESULTS 130 NO T E 15 O T HER C UR R EN T LI A BILI T IE S OTHER CURRENT LIABILITIES NOK 1 000 Accrued interest Other accrued expenses1 Other current liabilities2 Total other current liabilities 2022 1 977 43 710 58 728 104 414 2021 4 312 26 813 23 31 148 1Includes a liability related to a realized loss on fixed-price contracts of NOK 31 million (NOK 13 million). See also Note 2. 2Includes NOK 25 million related to repurchased bonds. The repurchase was finalized in 2022 but settled in cash in 2023. In addition, NOK 28 million related to litigation and claims is accrued at year-end 2022, see Note 4 as well as Note 28 of the Group Accounts. NO T E 16 GU AR AN T EE S Grieg Seafood ASA acted as a guarantor for Grieg Seafood Sales North America Inc. and Grieg Seafood Sales UK in connection with sales contracts with customers. The total guaranteed amounts are USD 3 000 000 and EUR 250 000. Grieg Seafood ASA acted as a guarantor for Fiskehav SA. Total amount is NOK 7 million. The guarantee expires 9 September 2023. NO T E 17 E V EN T S AF T ER T HE R EP OR T ING D AT E There has not been any significant events after the balance sheet date of 31 December 2022. NOK/OPTION AMOUNTS IN NOK 1 000 LISTED PRICEON 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 — 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 1 880 15 802 — 56 41 37 27 23 38 38 39 132 467 316 296 247 1 085 2 842 — 1 352 868 803 573 488 810 810 842 2 788 -460 -313 -293 -243 -1 074 6 951 — — — — — — — — — — — — — — — — 6 887 — — — — — — — — — — — — — — 6 887 — 1 408 909 840 600 511 847 847 881 2 921 7 4 4 4 11 9 792 2021 Former employees with expired options** Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (CTO) Kathleen O. Mathisen (CHRO) Kristina Furnes (Group Communication Manager) Alexander Knudsen (COO Farming Europe) Roy Tore Rikardsen (COO Farming North America) Erik Holvik (CCO) Other options allocated in 2020 Andreas Kvame (CEO) Atle Harald Sandtorv (CFO) Knut Utheim (COO) Kathleen O. Mathisen (CHRO) Other options allocated in 2017 Total *Amounts exclude social security costs. **The option category for the line item “Former employees with expired contracts” is equity options. All the other options in this table are options with settlement in cash. ACCRUED COSTS 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 2022 -3 282 34 137 30 855 -456 30 399 2021 CLASSIFICATION IN FINANCIAL STATEMENTS 6 951 Other provisions for liabilities — Salaries and personnel expense / cash 6 951 973 Public taxes payable 7 924 Salaries and personnel expense Cost relating to cash-based remuneration in 2022 totaled NOK 30 399 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 2022, outstanding options with the right to cash settlement were stated at NOK 6 510 thousands excl. social security costs, of which NOK 589 thousands were classified as current liabilities. A total of NOK 83 thousand related to social security is classified as current liabilities, bringing the total amount of current liabilities related to the share-based payments to NOK 672 thousands. Issued options are cancelled on termination of employment. The book value of long term liabilities incl. social security cost is NOK 6 756 thousands. ESTIMATES USED TO CALCULATE ALLOCATION OF OPTIONS Anticipated volatility (%) Risk-free rate of interest (%) Estimated qualification period (years) 2022 58.29% 3.12% 1.11 2021 36.44% 1.13% 1.39 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. PART 03 – OUR FINANCIAL RESULTS 131 PART 03 – OUR FINANCIAL RESULTS 132 PWC PART 03 – OUR FINANCIAL RESULTS 133 PWC PART 03 – OUR FINANCIAL RESULTS 134 ALTERNATIVE PERFORMANCE MEASURES We believe that our financial statements only partially reflect the and taxes) of the income statement. Operational EBITDA is a underlying performance of our operations, and as such some non-IFRS financial measure, calculated by adding depreciation of the financial information presented in this Annual Report and amortization of licenses and other intangible assets to contains alternative performance measures (APM). The APMs Operational EBIT. represented are important key performance indicators for how the management of Grieg Seafood monitors operational and The litigation and legal claim costs resulting from prior years, financial performance on regional and group level. Therefore, costs incl. impairment resulting from phasing out production we believe that the APMs disclosed provide additional, useful at the shíshálh (Sechelt) farming area of British Columbia, the information when analyzing Grieg Seafood and our business write-down of commercial aquaculture licenses in Rogaland, activity. Norway, and dilution gain from a capital issue in Årdal Aqua (which is not operational at date), are items which are considered APMs are non-IFRS financial measures. These measures are isolated events which are not expected to reoccur. As such, not intended to substitute, or to be superior to, any measure of Grieg Seafood do not consider these costs informative or the IFRS. The APMs used by the Group have been defined by Grieg comparability of the Group's results from one period to the Seafood to supplement our financial reporting and the APMs other. These costs are excluded as the Group believe such costs could therefore deviate from, or otherwise not being directly impacts the comparability of the operating performance of Grieg comparable to, similar APMs disclosed by other companies. Seafood, given the non-recurring nature of these costs. AMENDED PRINCIPLES FOR OPERATIONAL EBITDA AND OPERATIONAL EBIT SINCE ANNUAL REPORT 2021 As from 2022, "EBIT before production fee and fair value adjustment of biological assets" has been renamed "Operational EBIT". As such, "EBIT/kg" has been renamed "Operational EBIT/kg". In line with this, "EBIT after production fee and fair value adjustment of biological assets" is renamed as "EBIT". Furthermore, Operational EBITDA and Operational EBIT are from 2022 excluded from the income statement, as these APM's are available in the Group's segment reporting. Operational EBIT is a non-IFRS financial measure calculated by adding production fee and fair value adjustment of biological assets, and other non-operational items (incl. costs and impairment of phasing out seawater production sites) to the financial statement line item EBIT (earnings before interests APM DEFINITION AND CALCULATION REASON FOR APPLYING APM Operational EBIT and operational EBIT/kg (GWT) Operational EBIT is calculated by adding production fee and fair value adjustment of biological assets, in addition to isolated non-operational events, such as costs (incl. impairment) of closing down sites, legal claims- and litigation costs and other non-operational items to the financial statement line item EBIT (Earnings before interests and taxes) of the income statement. Operational EBIT is reported in the Group's segment reporting (see Note 8), where a reconciliation with EBIT of the income statement is included. The Operational EBIT/kg (GWT), or Operational EBIT/kg, metric is the operational EBIT divided by harvested volume in kg gutted weight equivalent. The metric is calculated per farming region, for Norway and Canada, and for the Group as a whole. Operational EBIT/kg equals sales revenue/kg subtracted by farming cost/kg and other costs incl. headquarter costs/kg. The metric is reported in the Group's segment information (see Note 8), and calculated using solely figures included in the segment information. Operational EBIT (and operational EBIT/kg) is defined by Grieg Seafood. The APM could therefore deviate, or otherwise not being directly comparable with, similar measures provided by other companies, as the calculation of Operational EBIT and/or Operational EBIT/kg could be different. Operational EBIT% Operational EBITDA Operational EBITDA% ROCE Operating EBIT% is calculated by dividing operational EBIT by sales revenue as reported in the segment reporting (see Note 8). Operating EBIT% is reported per region, in addition to Group level of Grieg Seafood. Operational EBITDA is calculated by adding depreciation (and write-down) of property, plant and equipment, and amortization of licenses and intangible assets to Operational EBIT. Operational EBITDA is reported in the Group's segment reporting (see Note 8), where a reconciliation with EBIT of the income statement is included. Operating EBITDA% is calculated by dividing Operational EBITDA by sales revenue as reported in the segment reporting (see Note 8). Operating EBITDA% is reported per region, in addition to Group level of Grieg Seafood. Operational EBIT and Operational EBIT/kg is used by management, analyst, investors and is generally considered the industry-measure for profitability and is used to assess our performance. Operational EBIT has been defined by Grieg Seafood and exclude items as described. We exclude these items from our Operational EBIT as we believe that these items impact the usefulness and comparability of our operational- and financial performance from one period to the other, as these items have a non-operational or non-recurring nature. Operational EBIT provides a more informative result as it does not consider country-specific taxation on harvest and do not include expected future (unrealized) gains or losses on fish not yet sold. In addition, isolated events not expected to reoccur, such as litigation and legal claim costs that arise from prior years as well as costs (incl. impairment) and phasing out seawater sites, are not considered relevant for the current operation of the Group, are not useful information when analyzing the current operation of Grieg Seafood. Profit from associated companies that are closely related to the Group's operations and included in the Group's value chain, for when the relevant associated company operate in the same position in the value chain as the Group, are included in the Group's Operational EBIT. Otherwise, such share of profit is excluded from the Operational EBIT of the Group. Operational EBIT/kg is a relative metric which ensures comparability between our farming regions and across time. The metric captures operational profitability for the Group and each farming region. Operating EBIT% is used by management to assess operational performance per region as well as for the Group. Operational EBITDA provides a more informative result, as it does not consider the items with non-operational and/ or non-recurring nature as described for Operational EBIT. Furthermore, it excludes the impact accounting estimates of depreciation and amortization has on our profitability. Operating EBITDA% is used by management to assess operational performance per region as well as for the Group. Return on capital employed (ROCE) is calculated by comparing Operational EBIT incl. 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 excl. 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. 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. ROCE is used by management to measure the return on capital employed. ROCE is not impacted by capital structure, that is whether the financing is through equity or debt. The fair value adjustment of biological assets is excluded from the calculation, both in Operational EBIT and as part of capital employed, as this reflect estimated future gains or losses on fish not yet sold and this is not considered useful information by the Group when assessing whether invested capital yields competitive return. PART 03 – OUR FINANCIAL RESULTS 135 APM Equity ratio NIBD NIBD/Harvest DEFINITION AND CALCULATION REASON FOR APPLYING APM APM DEFINITION AND CALCULATION REASON FOR APPLYING APM Equity ratio is calculated in two ways: (i) Equity according to the Statement of Financial Position divided by total equity and liabilities according to the Statement of Financial Position, (ii) Equity according to loan agreements is calculated by dividing equity by total equity and liabilities, ex. the impact of IFRS 16. The metric is reported as a key figure of the Group. 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.Equity-ratio is, together with NIBD and NIBD/harvest, useful to assess the financial robustness and -flexibility of the capital structure of the Group. NIBD includes all long-term and current debt to NIBD includes all long-term and current debt to 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. NIBD is calculated in three ways: 1. credit 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. 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. 3. NIBD includes all long-term and current debt to credit 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 above. The metric is reported as a key figure of the Group, and also reported in Note 12 of the quarterly report. In 2022, the Group has investments in money market funds. Maturity of the investment is less than three months. The Group has deducted the investment in money market funds in the NIBD calculation as from 2022. 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. weight in the last 12 months 2. gutted weight. NIBD divided by actual harvest volume in kg gutted NIBD divided by guided full-year harvest volume in kg The metric is reported as a key figure of the Group. Net interest-bearing liabilities is a measure of the Group’s net debt and borrowing commitments, and, together with equity- ratio and NIBD/harvest, useful to assess the financial robustness and -flexibility of the capital structure of the Group. 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. NIBD/harvest is, together with equity-ratio and NIBD, useful to assess the financial robustness and -flexibility of the capital structure of the Group. Gross investment Sales revenue/kg (GWT) Farming cost/kg (GWT) Other costs incl. ownership and headquarter costs/kg (GWT) Gross investment is equal to 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. The metric is reported as a key figure of the Group. The sales revenue/kg (GWT) metric is calculated as sales revenue from farming operations divided by harvested volume in kg gutted weight equivalent. The metric is calculated per farming region, for Norway and Canada, 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 contracts, incl. the margin generated by the sales department. The term "sales revenue from sale of Atlantic salmon" is also used by the Group. Group sales revenue from farming operations equals the sum of the sales revenue from farming operations per farming region according to the segment information. Sales revenue/ kg is reported in the Group's segment information (see Note 8), and calculated using solely figures included in the segment information. 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, using the segment information, sales revenue from farming operations less operational EBIT, divided by harvest volume. The metric is calculated per farming region, for Norway and Canada, and for the Group as a whole. Group farming cost equals the sum of the regions’ farming costs. Farming cost/kg is reported in the Group's segment information (see Note 8), and calculated using solely figures included in the segment information. 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 companies not related to production, divided by the Group's harvest volume. In addition, until the first harvest in Newfoundland is carried out, net costs attributable to the Newfoundland region are included as other costs/kg. The metric is calculated for the Group, and is reported in the Group's segment information (see Note 8), and calculated using solely figures included in the segment information. The Group’s CAPEX monitoring shows that gross investments are in line with the CAPEX monitoring of the Group. The accounting impact of IFRS 16 (capitalized operational leases) is excluded from gross investments, as such leases are not treated as part of CAPEX. Sales revenue from farming operation is calculated as the directly attributable revenue from sale of Atlantic salmon, and is in line with our segment reporting. For the Group, sales revenue is adjusted for income from sale of bi-products (smolt, fry, roe, ensilage) as such income are assessed as considered as cost reduction activities for our farming operation. Sales revenue/kg is a relative metric which ensures comparability between our farming regions and across time. The metric captures the price achievement- and -realization generated by the Group and each farming region. Farming cost/kg is a relative metric which ensures comparability between our farming regions and across time. The metric captures the cost level of the farming operations. As Atlantic salmon is traded largely as a commodity, and the prices achieved largely reflect a general market price, the farming cost/kg captures the operational profitability for the Group and each farming region. Other costs incl. headquarters costs/kg is a relative metric which ensures comparability when assessing the Group’s cost level over time. The metric captures the costs of the Group which are not deemed directly attributable to farming operations. The net costs of Newfoundland is included in the other cost incl. ownership and headquarter costs/kg until first harvest. This because the farming cost is characterized by the expense of the cumulated cost to inventory incl. direct cost of harvest at the point of harvest. Until harvest, production costs are capitalized as biological assets in the balance sheet. Therefore, to be comparable with our other farming regions, it is not useful to include Newfoundland as part of the farming cost of the Group, until the region is at the point of first harvest. PART 03 – OUR FINANCIAL RESULTS 136 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 3.21 SALES REVENUE FARMING OPERATIONS, FARMING COST AND OPERATIONAL EBIT (NOK MILLION) 2022 Sales revenue farming operations Elim/Other & Newfoundland - revenue Sales revenue Farming cost Elim/Other & Newfoundland - cost Source Note 8 Note 8 Income Statement Note 8 Note 8 Operating EBIT Income Statement Rogaland Finnmark British Columbia Group 2 124 2 629 1 665 1 369 1 703 1 395 Operational EBIT farming operations Note 8 755 926 270 2021 Sales revenue farming operations Elim/Other & Newfoundland - revenue Sales revenue Farming cost Elim/Other & Newfoundland - cost Source Note 8 Note 8 Income Statement Note 8 Note 8 Operational EBIT Income Statement Rogaland Finnmark British Columbia 1 431 1 756 1 023 1 189 1 506 873 Operational EBIT farming operations Note 8 242 251 150 Source Statement of Financial Position Statement of Financial Position Statement of Financial Position Statement of Financial Position Note 12 Statement of Financial Position Statement of Financial Position Note 12 2022 2 839 654 3 492 142 227 369 8 643 1 013 -25 2 223 FIGURE 3.22 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 Investments in money market funds Amortized loan costs NIBD (method 1) FIGURE 3.23 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 PART 03 – OUR FINANCIAL RESULTS 6 418 746 7 164 4 467 958 1 739 1 951 Group 4 211 388 4 599 3 568 588 442 643 2021 2 381 578 2 959 54 178 233 2 928 0 -30 2 291 Source 2022 2021 Cash Flow Statement Cash Flow Statement 562 3 564 115 679 561 4 565 5 570 137 GRI REPORTING Our integrated report covers our progress with respect to all of our pillars and material topics. 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. GLOBAL REPORTING INITIATIVE (GRI) INDEX STAKEHOLDER DIALOGUE AUDITOR’S SUSTAINABILITY REPORT 139 146 147 GLOBAL REPORTING INITIATIVE INDEX This report has been prepared in accordance with the GRI Standards 2021. We follow the GRI Standards to report our impacts on the economy, environment and people, including human rights, allowing for greater transparency and accountability. For more information on our approach to corporate social responsibility and transparency, see our website. MANAGEMENT OF MATERIAL TOPICS With our vision of farming the ocean for a better future, we The list is reviewed by our Board of Directors. The materiality review process resulted in changes from last period in terms demonstrate our commitment to corporate responsibility of mapping and terminology from the applied sector standard. by operating profitably and sustainably in a manner that Except from plastic pollution and profitable operations, all of the conforms with fundamental ethical norms and respect for the material topics listed in 2021 is covered also in 2022. The reason individual, the environment and society as a whole. We apply the for excluding profitable operations from the materiality list is precautionary principle as our strategy for approaching issues explained by the GRI terminology directing focus towards impact of potential harm when scientific knowledge is lacking. We aim on the economy, environment, and people, including impacts on to collaborate and take part in research to develop and test human rights. The exclusion of plastic pollution is explained new solutions. In pursuit of our vision, we will face risks and by the outcome of the detailed impact assessment and the opportunities. Our risk management is clearly connected with a comparison of impact level to the other material topics. We still multitude of stakeholder expectations, and the topics we have consider these topics as significant and cover our impact related identified as material. to these topics in our Annual Report 2022 and on our website. The Board exercises oversight of strategic, operational and financial matters, including the nature and extent of major risks. EXTERNAL VERIFICATION To ensure the quality of our report and the information (both The Board and the CEO have delegated responsibility to the quantitative and qualitative) provided, it is reviewed and verified various business areas and functions, ensuring that operational internally. To ensure high data quality and to enhance the responsibility is an integral part for all management teams and credibility of our sustainability reporting, it has been assured by units and departments. We have implemented Group policies and our independent auditor, PwC. Our GRI Index provides further targets aligned with our pillars and 2026 strategy. Both monthly information about the audit performed, where “A” refers to key performance indicator (KPI) report, which is used both by assurance that the disclosures are presented according to operational management and the Board, and our published the GRI Standards (2021). “B” refers to assurance that the quarterly reports, are based on these policies and targets. quantitative sustainability disclosures, referred to from the GRI Deviations from targets are followed up and action plans are Index, are calculated, estimated and reported in accordance with implemented. We have a whistleblower channel, operated by EY, the criteria defined in GRI or the GRI index. Reference is made to available for our employees to report any unwanted behavior and the auditor’s statement on sustainability reporting. breaches of our Code of Conduct. We also provide a grievance mechanism for local communities on our regional websites. DETERMINING MATERIAL TOPICS The materiality assessment is fundamental to our holistic and REPORTING SCOPE AND BOUNDARY The scope of our sustainability metrics provided in this report includes the environmental, social, and governance performance that has been deemed material to Grieg Seafood's operations for integrated reporting. Together with our stakeholders, we have the calendar year ended December 31, 2022. The metrics covers identified our current and future positive and negative impact on our global operations and includes all wholly-owned subsidiaries. the environment, economy and people, including human rights. It does not include any associated companies or joint ventures, The topics listed under each pillar is identified as important to as we do not have management control of these companies. As our organization and our stakeholders, and is covered by group such, all entities consolidated into the Grieg Seafood Group’s policies. The highlighted topics represents the list of material financial statement are included in our sustainability data. As topics reported in line with the GRI standards. Find a combined our Shetland operations was sold in December 2021, we have overview of our pillars, targets and Group policies here. excluded Shetland from our sustainability data in general to REVIEWING MATERIAL TOPICS The annual materiality review process is based on a revision of existing material topics, in addition to an assessment of the likely material topics proposed by the new sector standard, GRI 13: Agriculture, aquaculture and fishing sectors 2022. In 2022, ensure comparable data. Newfoundland started its seawater production in the middle of 2022, and as such, not all metrics are available for a full year. DATA QUALITY We have implemented internal controls to ensure the accuracy we completed a detailed impact assessment, where identified and completeness of the data included in this report. Any and assessed sustainability topics were reviewed in light of our limitations or exclusions to our reporting are disclosed negative and positive impact on the environment, economy and throughout this report. The quantitative information provided people. In order to be able to prioritize the impacts for reporting based on their significance, a materiality assessment impact rating tool was used, with severity and likelihood as key concepts. Read more about the stakeholders whose views have informed the process here. The revision resulted in the list of material topics represented in bold under our pillars. in this report, is mainly data we have retrieved from our production-, logistics-, human resource- 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. PART 04 – GRI REPORTING 139 GRI CONTENT INDEX The GRI content index refers to where information about each disclosure is presented in our 2022 Annual Report, 2022 Remuneration Report or company website. Statement of use Grieg Seafood has reported in accordance with the GRI Standards for the period 01.01.2022 to 12.31.2022 GRI 1 used GRI 1: Foundation 2021 GRI 13: Agriculture, Aquaculture and Fishing Sectors 2022 Applicable GRI Sector Standard DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE GRI 2: GENERAL DISCLOSURES 2021 THE ORGANIZATION AND ITS REPORTING PRACTICES 2-1 2-2 2-3 2-4 2-5 Organizational details Entities included in the organization’s sustainability reporting Our greenhouse gas emissions are reported in accordance with the Corporate Accounting and Reporting Standard, developed by the Greenhouse Gas Protocol Initiative, using the operational approach. Reporting period, frequency and contact point In our integrated sustainability and financial report, we report annually according to the GRI Standards. Contact points: 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. Part 03 - Our financial results, Note 1 General information Part 02 - Our operational results - GHG reporting standard; Part 03 - Our financial results, Note 1 General information Part 03 - Our financial results, Note 1 General information Restatements of information Restatement of information has been made to the climate accounting 2022. External assurance The Chief Sustainability Officer seeks external assurance of sustainability reporting according to GRI Standards, climate accounting and sustainability KPIs. Our sustainability reporting has been assured by our independent auditor PwC. Part 02 - Our operational results, Our greenhouse gas accounts Part 04 - GRI reporting, Auditor’s sustainability report ACTIVITIES AND WORKERS 2-6 Activities, value chain and other business relationships Feed was our main supply category in 2022, comprising 39% of our cost. Other relevant business relationship is our investment associates 2-7 Employees We do not have any non-guaranteed hours employees Part 01 - Our foundation, Our value chain; Part 03 - Our financial results, Note 7 Investment in associates Part 02 - Our operational results, People: The workforce at year-end 2022 2-8 Workers who are not employees We define workers who are not employees as contractors. Data reported on contractors are compiled in headcount, similarly to our employees Part 02 - Our operational results, People: The workforce at year-end 2022 NO NO NO NO NO NO NO NO A A A A A A A A DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE GOVERNANCE 2-9 2-10 2-11 2-12 2-13 2-14 Governance structure and composition Nomination and selection of the highest governance body Chair of the highest governance body Role of the highest governance body in overseeing the management of impacts Delegation of responsibility for managing impacts Role of the highest governance body in sustainability reporting 2-15 Conflicts of interest 2-16 2-17 2-18 Communication of critical concerns Collective knowledge of the highest governance body Evaluation of the performance of the highest governance body 2-19 Remuneration policies The remuneration policy does not have any stated principles on sign-on bonuses, recruitment incentive payments or clawbacks NO NO NO NO NO NO NO NO NO NO NO Part 03 - Our financial results, Corporate governance principles: 8. Board of directors: composition and independence; Webpage - Board of Directors Part 03 - Our financial results, Corporate governance principles: 7. Nomination committee Part 03 - Our financial results, Corporate governance principles: 8. Board of directors: composition and independence Part 03 - Our financial results, Corporate governance: Governance structure Part 03 - Our financial results, Corporate governance: Governance structure Part 03 - Our financial results, Corporate governance: Governance structure Part 03 - Our financial results, Corporate governance principles: 9. The work of the Board of directors: Conflict of interest Part 03 - Our financial results, Corporate governance: Responsible business conduct Part 03 - Our financial results, Corporate governance: Governance structure Part 03 - Our financial results, Corporate governance principles: 9. The work of the Board of Directors, Annual assessment Webpage - Executive Remuneration policy Part 03 - Our financial results, Corporate governance principles: 12. Remuneration of executive personnel A A A A A A A A A A A PART 04 – GRI REPORTING 140 DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE MATERIAL TOPICS DISCLOSURE RESPONSE LOCATION OMISSION 91.3 % voted for the Remuneration report 2021 2-20 2-21 Process to determine remuneration Annual total compensation ratio STRATEGY, POLICIES AND PRACTICES 2-22 Statement on sustainable development strategy 2-23 Policy commitments 2-24 Embedding policy commitments 2-25 2-26 2-27 2-28 Processes to remediate negative impacts Mechanisms for seeking advice and raising concerns Compliance with laws and regulations Membership associations STAKEHOLDER ENGAGEMENT 2-29 2-30 Approach to stakeholder engagement Collective bargaining agreements Grieg Seafood do not hold any significant role in membership associations. However, we are member of several industry associations and engage in collaboration and partnerships with researchers, peers, companies in our value chain, NGOs and other relevant actors Unionized employees for Norway are disclosed. Labor unions in Canada are organized differently. Therefore, a group average is not disclosed. Part 02 - Our operational results, People: Unionized employees (%) at year end 2022 Remuneration Report - Remuneration of executive personnel: Fixed pay- salary; Governance: Review of the Remuneration Report Remuneration Report -Comparative information on the remuneration paid in the last five years Part 03 - Our financial results, Board of Directors report: Main Achievements, Targets and achievements Part 03 - Our financial results, Corporate governance: Governance structure; Responsible business conduct Part 03 - Our financial results, Corporate governance: Governance structure; Responsible business conduct Part 03 - Our financial results, Corporate governance: Responsible business conduct Part 03 - Our financial results, Corporate governance: Responsible business conduct Part 03 - Our financial results, Corporate governance: Compliance Webpage - Partnerships and collaboration Part 04 - GRI reporting, Stakeholder dialogue NO NO NO NO NO NO NO NO NO NO NO A A A A A A A A A A A GRI 3: MATERIAL TOPICS 3-1 3-2 Process to determine material topics List of material topics ANIMAL HEALTH AND WELFARE 3-3 Management of material topics Additional sector disclosures Percentage of production volume certified to third-party animal health and welfare standards We refer to ASC-certification as the animal health and welfare standard. The percentage is calculated as total budgeted production volume from ASC certified sites divided by total budgeted production volume from ASC eligible sites. Sites and production volume not included in the ASC- certification-% calculation is not eligible for ASC-certification due to inactive production or first production cycle not yet completed. Survival rate at sea Main causes for reduced survival in seawater List of the main causes of reduced survival, with loss stated in number and tonnes of fish. 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)". GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE A A NO NO Part 04 - GRI reporting, Global reporting initiative index: Determining material topics, Reviewing material topics Part 1 - Our foundation, Our 2026 Business strategy, 4 Sustainability; Part 04 - GRI reporting, Global reporting initiative index: Reviewing material topics Webpage - Fish health and welfare, Cleaner fish health and welfare; Webpage - Group policies, Fish welfare of salmon and cleaner fish, Fish health of salmon and cleaner fish; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, Our certifications Part 01 - Our foundation. Our sustainability scoreboard Part 02 - Our operational results, Grieg Seafood Rogaland-, Grieg Seafood Finnmark-, Grieg Seafood BC-, Grieg Seafood Newfoundland - Main causes of reduced survival in seawater Part 1 - Our foundation, Our sustainability scoreboard NO 13.11.1 A NO 13.11.2 A, B NO 13.11.3 A, B NO A, B NO A, B PART 04 – GRI REPORTING 141 DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE BIODIVERSITY 3-3 Management of material topics Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas Significant impacts of activities, products and services on biodiversity Habitats protected or restored IUCN Red List species and national conservation list species with habitats in areas affected by operations Information on species of aquatic organisms, juvenile seeds stocks and fishing products in feed Number of escape incidents and fish escaped Sea lice levels 304-1 304-2 304-3 304-4 Additional sector disclosures Grieg Seafood Indicator 003 Grieg Seafood Indicator 004 NO 13.3.1 A NO 13.3.2 A, B NO 13.3.3 A NO 13.3.4 A NO 13.3.5 A, B NO 13.3.6 A, B NO NO A, B A, B Webpage - Wild salmon, Wildlife, White fish, Crustaceans, Impact on nature; Webpage - Group policies, Protecting biodiversity; Part 01 - Our foundation, Our sustainability scoreboard; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, Grieg Seafood Rogaland-, Grieg Seafood Finnmark-, Grieg Seafood BC-, Grieg Seafood Newfoundland - Protecting marine ecosystems Webpage - Wild salmon, Wildlife, White fish, Crustaceans, Impact on nature Part 02 - Our operational results, Grieg Seafood Rogaland-, Grieg Seafood Finnmark-, Grieg Seafood BC-, Grieg Seafood Newfoundland - Restored ecosystem under farms; Protecting marine ecosystems Part 02 - Our operational results, Grieg Seafood Rogaland-, Grieg Seafood Finnmark-, Grieg Seafood BC-, Grieg Seafood Newfoundland- Protecting marine ecosystems Webpage - Sustainable marine ingredients; Part 01 - Our foundation, Our organization, Our value chain; Part 02 - Our operational results, Sustainable feed ingredients: Volume of marine ingredients Part 1 - Our foundation, Our sustainability scoreboard Part 02 - Our operational results, Grieg Seafood Rogaland-, Grieg Seafood Finnmark-, Grieg Seafood BC - Sea lice levels In each regional chapter we refer to the IUCN Red List and the relevant national conservation list online, filtered on the area where we operate in order to see species with habitats in these areas sorted by extinction risk. 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". Grieg Seafood Indicator 005 Environmental status of our sites 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 FOOD SAFETY 3-3 Management of material topics 416-1 416-2 Additional sector disclosures Assessment of the health and safety impacts of product and service categories Incidents of non-compliance concerning the health and safety impacts of products and services Percentage of production volume from sites certified to internationally recognized food safety standards Number of recalls issued for food safety reasons and the total volume of products recalled Environmental status of our sites is a result of benthic monitoring tests under and around our sites according to local regulations, as explained under the presentation of the B-test results and %-of sites that are restored in the regional chapters we refer to. 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)". Part 02 - Our operational results, Grieg Seafood Rogaland-, Grieg Seafood Finnmark - Results of B-test. Grieg Seafood BC-, Grieg Seafood Newfoundland - % of sites that are restored Part 1 - Our foundation, Our sustainability scoreboard Part 1 - Our foundation, Our sustainability scoreboard 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. Part 02 - Our operational results, Grieg Seafood Rogaland-, Grieg Seafood Finnmark-, Grieg Seafood BC-, Grieg Seafood Newfoundland - Sustainability KPIs NO A, B NO NO NO A, B A, B A, B As all of our products is appropriated human consumption, the health and safety impacts are constantly tested as a part of our certification processes. We refer to Global G.A.P and B.A.P as internationally recognized food safety standards. 100% of production volume in Norway are Global G.A.P certified. 100% of our production volume in BC are B.A.P certified. Our Newfoundland region is under establishment and is not yet delivering to market Webpage - Safe food; Webpage - Group policies, Food safety; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, Our certifications NO 13.10.1 A NO 13.10.2 A Part 02 - Our operational results, Sales & market: Our sales & market development in 2022 NO 13.10.3 A, B Part 02 - Our operational results, Our certifications NO 13.10.4 A, B Part 02 - Our operational results, Sales & market: Our sales & market development in 2022 NO 13.10.5 A, B PART 04 – GRI REPORTING 142 DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE EMISSIONS 3-3 Management of material topics 305-1 Direct (Scope 1) GHG emissions Biogenic CO2 emissions (tCO2e) is not relevant for our operations. 305-2 305-3 305-4 305-5 305-6 305-7 Energy indirect (Scope 2) GHG emissions Other indirect (Scope 3) GHG emissions GHG emissions intensity Reduction of GHG emissions Emissions of ozone-depleting substances (ODS) Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions The group's market-based Scope 2 GHG emissions amount to 11 613 tCO2e. Biogenic CO2 emissions (tCO2e) is not relevant for our operations. Grieg Seafood does not have emissions from ODS. We do not have any significant air emissions. CLIMATE ADAPTATION AND RESILIENCE 3-3 Management of material topics No direct cost is taken in 2022 to manage climate related risks or opportunities 201-2 Financial implications and other risks and opportunities due to climate change FOOD SECURITY 3-3 Management of material topics Webpage - Reducing carbon emission; Webpage - Group polices, Climate action; Part 02 - Our operational results, Climate action: Climate action plan; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, Climate action: GHG emissions - Scope 1 & Scope 2 emissions Part 02 - Our operational results, Climate action: GHG emissions - Scope 1 & Scope 2 emissions Part 02 - Our operational results, Climate action, GHG emissions - Scope 3 Part 02 - Our operational results, Climate action: GHG reporting standard Part 02 - Our operational results, Climate action: GHG emissions, GHG reporting standard TCFD-report; Part 02 - Our operational results: Reducing carbon emission, Climate action plan; Part 04 - GRI reporting, Stakeholder dialogue Part 03 - Our financial results, Note 5 Climate- related risk NO 13.1.1 A NO 13.1.2 A, B NO 13.1.3 A, B NO 13.1.4 A, B NO 13.1.5 A, B NO 13.1.6 A, B NO 13.1.7 A, B NO 13.1.8 A NO 13.2.1 A NO 13.2.2 A, B Our commitment and lessons learned related to food security and providing healthy food with lower impact is explained through our actions taken and targets described in polices related to sustainable feed and climate action Webpage - Blue food in a transformed food system; Webpage - Group policies, Sustainable feed, Climate action; Part 04 - GRI reporting, Stakeholder dialogue NO 13.9.1 A NATURAL ECOSYSTEM CONVERSION 3-3 Management of material topics SUPPLY CHAIN TRACEABILITY 3-3 Management of material topics Additional sector disclosures Level of traceability Improvements projects related to certification ANTI-CORRUPTION 3-3 Management of material topics 205-1 205-2 Operations assessed for risks related to corruption Communication and training about anti- corruption policies and procedures 205-3 Confirmed incidents of corruption and actions taken Our Code of Conduct program involves guidelines and procedures for anti- corruption. The disclosure requirements is met with one minor exemption, a large share of our suppliers in purchase value has signed the Supplier Code of Conduct. We are not able to provide the exact number and percentage, nor break down by region. We will work to systemize this data going forward. Webpage - Zero deforestation and conversion; Webpage - Group polices, Sustainable feed; Part 04 - GRI reporting, Stakeholder dialogue Webpage - Continuous improvement in our value chain; Sustainable feed ingredients; Sustainable marine ingredients; Zero deforestation and conversion Webpage- Group polices, Sustainable feed; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, Sustainable feed ingredients: Traceability Part 02 - Our operational results, Sustainable feed ingredients: Certifications Webpage - Anti-corruption policy; Part 03 - Our financial results, Corporate governance: Responsible business conduct; Part 04 - GRI reporting, Stakeholder dialogue Part 03 - Our financial results, Corporate Governance: Responsible business conduct NO 13.4.1 A NO 13.23.1 A NO 12.23.2 NO 13.23.4 NO 13.26.1 A A A NO 13.26.2 A, B Part 02 - Our operational results, People: Code of conduct program YES, point c. 13.26.3 A, B Part 03 - Our financial results, Corporate governance: Responsible business conduct NO 13.26.4 A, B PART 04 – GRI REPORTING 143 DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE EMPLOYEE HEALTH AND SAFETY 3-3 Management of material topics 403-1 403-2 403-3 403-4 403-5 Occupational health and safety management system Hazard identification, risk assessment, and incident investigation Occupational health services Worker participation, consultation, and communication on occupational health and safety Worker training on occupational health and safety 403-6 Promotion of worker health 403-7 403-8 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships Workers covered by an occupational health and safety management system 403-9 Work-related injuries Webpage - Health and safety; Part 02 - Operational results, People: Health and safety, Our results; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, People: Safety indicators in 2022 NO 13.19.1 A NO 13.19.2 Part 02 - Our operational results, People: Safety indicators in 2022 NO 13.19.3 Part 02 - Our operational results, People: Safety indicators in 2022 Part 02 - Our operational results, People: Our colleagues, Health and safety Part 02 - Our operational results, People: Our colleagues, Health and safety Part 02 - Our operational results, People: Our colleagues, Health and safety Part 02 - Our operational results, People: Safety indicators in 2022 NO 13.19.4 NO 13.19.5 NO 13.19.6 NO 13.19.7 NO 13.19.8 A A A A A A A Part 02 - Our operational results, People: Safety indicators in 2022 NO 13.19.9 A, B Part 02 - Our operational results, People: Safety indicators 2022 YES, point b. 13.19.10 A, B The disclosure requirements is met with one minor exemption, 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. FORCED OR COMPULSORY LABOR 3-3 Management of material topics 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor CHILD LABOR 3-3 Management of material topics 408-1 Operations and suppliers at significant risk for incidents of child labor RIGHTS OF INDIGENOUS PEOPLE 3-3 Management of material topics 411-1 Incidents of violations involving rights of indigenous peoples Additional sector disclosure Location of operations LOCAL COMMUNITIES 3-3 Management of material topics We report on our efforts in local communities in all of the regional chapters. Webpage - Human rights; Group policies - Human rights; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, People: Our colleagues, Human rights NO 13.16.1 A NO 13.16.2 A NO 13.17.1 A NO 13.17.2 A NO 13.14.1 A NO 13.14.2 A, B NO 13.14.3 A NO 13.12.1 A Webpage - Human rights; Group policies - Human rights; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, People: Our colleagues, Human rights Webpage - BC, Indigenous people; Finnmark, Aquaculture in Sami areas; Part 04 - GRI reporting, Stakeholder dialogue Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood BC - Local communities; Part 03 - Our financial results, Corporate social responsibility: Corporate governance Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood BC - Local communities Part 01 - Our foundation, Our sustainability scoreboard; Sustainable foundation: Financial impact of material topics; Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood Rogaland-, Grieg Seafood BC-, Grieg Seafood Newfoundland; Part 04 - GRI reporting, Stakeholder dialogue 403-10 Work-related ill health We have no incidents of work-related ill health Part 02 - Our operational results, People: Safety indicators in 2022 NO 13.19.11 A, B PART 04 – GRI REPORTING 144 DISCLOSURE RESPONSE LOCATION OMISSION GRI SECTOR STANDARD REF.NO. EXTERNAL ASSURANCE NO 13.12.2 A NO 13.12.3 A NO 13.22.1 A 413-1 413-2 Operations with local community engagement, impact assessments, and development programs Operations with significant actual and potential negative impacts on local communities ECONOMIC INCLUSION 3-3 Management of material topics 201-1 203-1 Direct economic value generated and distributed Infrastructure investments and services supported 203-2 Significant indirect economic impacts Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood Rogaland-, Grieg Seafood BC-, Grieg Seafood Newfoundland - Local communities Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood Rogaland-, Grieg Seafood BC-, Grieg Seafood Newfoundland -Local communities Part 01 - Our foundation, Our sustainability scoreboard; Sustainable foundation: Financial impact of material topics; Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood Rogaland-, Grieg Seafood BC-, Grieg Seafood Newfoundland - Local communities; Part 04 - GRI reporting, Stakeholder dialogue Part 2 - Our operational results, Profitable operations: Direct economic value generated and distributed Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood Rogaland-, Grieg Seafood BC-, Grieg Seafood Newfoundland -Local communities Part 02 - Our operational results, Grieg Seafood Finnmark-, Grieg Seafood Rogaland-, Grieg Seafood BC-, Grieg Seafood Newfoundland -Local communities; Webpage - UNSDG Salmon farming has a range of significant indirect economic impacts that can affect local and regional economies in terms of economic activity, such as purchasing equipment and feed, as well as creating employment opportunities. We describe the significance of our indirect economic impacts in the context of UNSDGs and zero hunger. TOPICS IN THE APPLICABLE GRI SECTOR STANDARD DETERMINED AS NOT MATERIAL TOPIC EXPLANATION GRI 13: AGRICULTURE, AQUACULTURE AND FISHING SECTORS 2022 Soil health Pesticides use Soil health is determined as not material as a result of the detailed impact assessment. The scope of impact is limited to the countries where our feed suppliers source vegetable raw materials. Hence, the overall severity of the impacts is assessed to be moderate. Pesticides use is determined as not material as a result of the detailed impact assessment. The severity is assessed as moderate as the use of pesticide in crop production is regulated and the scope is limited to tier-two suppliers. The approach to sea lice control is discussed under animal health and welfare, as the use of delousing chemicals is defined as medicine or disinfectant which is readily dissolvable, and not a pesticide. Water and effluents Water and effluents is determined as not material as a result of the detailed impact assessment. Grieg Seafood does not operate in water scarce areas. The nutrient build-up from fish feces is likely, however the scope is limited to local impact and restoration of sea beds allows remediation. Waste Waste is determined as not material as a result of the detailed impact assessment. In the comparison of impact level to the other material topics, waste is considered to be significant. Land and resource rights Land and resource rights is determined as not material as a result of the detailed impact assessment. The possession of farming licenses to operate ensures predictability and accountability of land and resource rights. Non-discrimination and equal opportunity Non-discrimination and equal opportunities is determined as not material as a result of the detailed impact assessment. The severity is high, however the likelihood is limited by human rights regulation. Freedom of association and collective bargaining Freedom of association and collective bargaining is determined as not material as a result of the detailed impacts assessment. Grieg Seafood ensures freedom of association and collective bargaining for its employees. The likelihood is limited through regulations from ILO. Employment practices Employment practices is determined as not material as a result of the detailed impact assessment. The scope is limited to our direct operations, whereas the severity is determined to moderate. NO 13.22.2 A, B Living income and living wage Living income and living wage is determined as not material as a result of the detailed impact assessment, as the scale is low and impacts concerning living income and wage is possible to counteract. Thus, the severity is determined to be moderate. NO 13.22.3 A, B NO 13.22.4 A Public policy Public policy is determined as not material as a result of the detailed impact assessment, as the scale is low and the impact is easy to counteract, the severity is determined to be moderate. Anti-competitive behavior Anti-competitive behavior is determined as not material, as a result of the detailed impact assessment, as there is no documented indication of impact on the economy, environment and people. PART 04 – GRI REPORTING 145 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 MATERIAL TOPIC HOW WE ENGAGE ACTIONS EXAMPLE • All sustainability Meetings, site We have an open dialogue with We are challenges visits, and all official authorities where committed to be a • In particular correspondence. we operate, and collaborate on constructive partner balanced regulation and long-term local value creation all aspects. We welcome their for the government efforts to enforce regulations and and Indigenous engage in constructive dialogue. communities in the 2025 transition process in BC, and to find a path forward that works for all stakeholders. LOCAL AUTHORITIES / COMMUNITIES • All sustainability Dialogue with We recognize public concern Through our website, challenges special interest for the oceans, invite visitors and in particular the • In particular local groups locally, to our farms and participate regional websites, value creation, open meetings, in the public debate about we aim to improve indigenous site visits, and salmon farming. We try to find transparency and relationships dialogue through solutions to accommodate other dialogue with our local and co-existence with other local interests mainstream media and digital channels. communities. local interests. In areas with Indigenous populations, consent, dialogue and relations with Indigenous representatives are especially important. PART 04 – GRI REPORTING STAKEHOLDER STAKEHOLDER MATERIAL TOPIC HOW WE ENGAGE ACTIONS EXAMPLE • All sustainability Correspondence, We collaborate with and Together with WWF ORGANIZATIONS/ NON- challenges meetings, media seek advice from actors US, we have initiated GOVERNMENTAL ORGANIZATIONS SHAREHOLDERS, INVESTORS, ASSET MANAGERS AND ANALYSTS and social media. that constructively seek to a project to evaluate improve the industry. That environmental, social includes several environmental and governance organizations and research risks in salmon feed institutions. ingredients in a holistic manner. • All sustainability Quarterly We make every effort to maintain In 2022, we hosted a challenges, and presentations, a continuous, open, and honest Capital Market Day how we utilize roadshows, dialogue about our strategy and in Rogaland, which opportunities and meetings, frequent results. We have also started included visits to our mitigate risk dialogue, capital engaging with relevant indexes sites. • In particular market days, and where we are rated, to make We have actively long-term engagement with sure they give Grieg Seafood an engaged with ESG performance and relevant indexes. accurate score. returns, both on financial and sustainability- related parameters raters, such as Sustainalytics and Coller FAIRR, to understand their assessments and also to provide feedback on how we work with various topics. CUSTOMERS • All sustainability Customer surveys, We have frequent dialogues with We have engaged in challenges frequent dialogue, our customers. We supply them Cerrado Manifesto • In particular audits, visits and with material for dialogue with Signatories of Support, safe and healthy trade fairs. their own stakeholders, and which aims to halt food, including certifications and transparency participate in initiatives where deforestation in the our customers are present. Brazilian Cerrado. Many of our customers are also signatories to the initiative. EMPLOYEES • Keeping our Continuous dialogue Frequent dialogue on all levels We use Workplace on employees safe and meetings, and initiatives for training, a daily basis to inform • Fish health intranet, and education, and development. employees about employee surveys. We also engage in dialogue developments, build with trade unions and employee culture, and cultivate representatives. Focus on engagement. developing a culture in line with our values. and welfare, and all other sustainability challenges • Significant topics include embracing diversity and creating attractive jobs SUPPLIERS • Responsible Dialogue, meetings, Ensuring that they comply with We have quarterly business conduct • Local value creation conferences and correspondence. 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. meetings with our feed suppliers, where we discuss issues and developments. 146 PART 04 – GRI REPORTING 147 HISTORY AND FUTURE 5000 B.C.E First fish farms reported in China. 1850 The first wild salmon hatcheries 1969 The brothers Ove and Sivert Grøntvedt 1970s Commercial salmon farming of chinook, 1973 The Norwegian parliament adopts 1990s Fish vaccines are introduced. As a established in Norwegian salmon rivers. transfer the first salmon smolt to sea coho and sockeye is established around a licensing system for the country's result, the salmon farming industry pens at the island Hitra in Norway. Sechelt in British Columbia. growing aquaculture industry, with the has significantly reduced its use of aim of strengthening local communities antibiotics. along the coast. Since then, salmon farms have contributed jobs and revenues to small, coastal communities. 2007 Grieg Seafood is listed on Oslo Stock 2006 Grieg Seafood merges with the Volden 2001 Grieg Seafood acquires Scandic Marine 2000s The Norwegian government launches 1998 Grieg Seafood Rogaland is established. Exchange. Group and establishes Grieg Seafood Ltd. in British Columbia and establishes the “green license” scheme, with stricter Grieg Seafood acquires Hjaltland Ltd in Finnmark. Grieg Seafood BC. Shetland, the beginning of Grieg Seafood Shetland. Grieg Seafood starts implementing RAS technology in Rogaland. environmental standards. Grieg Seafood currently has eight green licenses. 1992 Grieg Seafood Salmon (trading company) and Bioinvest (salmon farming investor) are established. 2010 Together with Bremnes Seashore, Grieg 2013 The Norwegian government and the 2020 Grieg Seafood acquires Grieg 2021 Grieg Seafood disposes Grieg Seafood 2026 Grieg Seafood aims to have achieved 2030 Grieg Seafood aims to have reduced total Seafood establishes the sales company industry develop the standard NS9415 Newfoundland in Eastern Canada, and Shetland to focus operations on the global growth with a harvest of 120 000- carbon emissions by 35%. Ocean Quality. to ensure fish farms are technically establishes Grieg Seafood Newfoundland. regions with most growth potential, 135 000, be cost competitive and have a safe and prevent the escape of farmed Grieg Seafood establishes its own sales Norway and Canada. salmon. and market organization, and the Ocean Quality partnership is dissolved. stronger market position, confirming our position as a global protein producer. Industry Grieg Seafood The future 2050 Grieg Seafood aims to have reduced total carbon emissions by 100%. PART 04 – GRI REPORTING 148 ANNUAL REPORT 2022 

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