Andfjord Salmon Annual Report 2021

ANNUAL REPORT 2021

BEST OF TWOWORLDS

Annual Report 2021

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Introduction to Andfjord Salmon

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Letter from the CEO

Board of directors’ report

Corporate governance statement

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Income statement Balance sheet Indirect cash flow Notes to the accounts

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ESG report 2021

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Independent auditor’s report

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ANDFJORD SALMON AT A GLANCE

FLOW-THROUGH Uses a closed flow-through system, which combines the benefits of both traditional and land based aqua- culture while solving a number of traditional farming issues.

~90,000 TONNES INTOTAL Andfjord Salmon has acquired three locations, with a clear roadmap towards achieving a total capacity of ~90,000 tonnes (HOG).

GULF STREAM Strategically located at Andøya – with unique access to oxygen-rich seawater at stable temperatures. The unit is situated at a depth of 30 to 160 metres, depending on the season.

LOWENERGY FACILITIES Strategically located at Andøya – with unique access to oxygen-rich seawater at stable temperatures. The unit is situated at a depth of 30 to 160 metres, depending on the season.

FISH FRIENDLY & SUSTAINABLE

FIRST LOCATION Andfjord Salmon™ has been granted a licence for 10 000 tonnes MAB with potential production volume of 19 000 tonnes HOG at Kvalnes, Andøya.

Andfjord Salmon™ aims to build the world’s most fish-friendly and environmentally friendly facility for salmon, with the lowest possible energy consumption and cost.

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LETTER FROMTHE CEO

2021 was a year of substantial progress, culminating in meeting Andfjord Salmon’s most important operational milestone yet: The successful verification of the laminar water flow technology.

Our major focus in 2021 was the completion of our first pool at Kvalnes, Andøya, while we in parallel worked on the next build-out phases at Kvalnes. I am incredibly proud of the effort our team put in to successfully finalise the first pool and verify the flow-through technology during 2021. The weather gods were certainly not on our side during the winter and spring, with numerous storms, heavy winds and large swells that made installation difficult. However, our team persevered and brought all the main buildings blocks – pool, inlet and outline pipelines – together, despite certain challenges along the way. Creating long-term value As planned, our first pool was technically complete in the second quarter. Around the same time, a highly interesting opportunity emerged. It was an opportunity to purchase an additional 63,000 square meters of land area adjacent to our site at Kvalnes. This land area purchase unlocked an opportunity to initiate a further expansion at Kvalnes, with a possibility to increase production volume by approximately 50 percent, from today’s 12,600 tonnes HOG (Phase 2) to 19,000 tonnes HOG (Phase 3). The board of directors of Andfjord Salmon has constantly challenged the management to come up with new ideas and initiatives that can create long-term shareholder value. This opportunity was certainly in this category.

Bleiksøya.

Sustainability Our laminar water flow also provides numerous environ- mental and sustainability advantages. We have detailed these in Andfjord Salmon’s second sustainability report, which can be found on page 31 of this annual report. I hope you will take a few minutes to digest how we utilize ESG as guideposts to generate long-term value creation for both society and our shareholders. Our ambition is still to build the world’s most sustainable and fish-friendly aquaculture facility of its kind. Release of smolt in the second quarter 2022 will bring us another major step closer towards realizing this ambition. At the time of writing, we have started preparations for smolt release. The smolt is growing well and we are discussing the optimal time of release from a biological perspective. As I have said many times before, happy fish equals happy share- holders. We aim to demonstrate this in 2022.

and execution risk when developing the next pools.

Throughout the second half of the year, we conducted extensive testing of the pool functions with seawater. We were delighted that the tests provided us with the answers we wanted. Following the testing of pool funct­ ions, we started testing the laminar water flow technology installed at our first pool. In my view, the successful verification of the laminar water flow is, so far, the most important operational milestone in Andfjord Salmon’s history. Why? Because it confirms that we have been able to recreate wild salmon’s habitat on land. In the wild, salmon swims in laminar water flows in the ocean, similar to what we now have in our pool at Andøya. We also believe that the technology verification de-risks Andfjord Salmon’s business case significantly. This was also one of the reasons that Nutreco and Holmøy Group gave us when they chose to invest funds in Andfjord Salmon subsequent to year-end.

ume, there were numerous other benefits by initiating the Kvalnes Phase 3 build-out earlier than originally planned. We were able to benefit from lower construction costs and improved economies of scale earlier than planned and reduce biological risk during Phase 1 and 2 at Kvalnes. Pool party This alternative plan also involved shifting the release of smolt in the first pool to the second quarter of 2022, which provided another benefit: An even longer test period of the first pool, which will also be highly beneficial for the forthcoming construction and utilization of our other pools at Kvalnes. Simply because it can help us reduce time, costs In my view, the successful verification of the laminar water flow is, so far, the most important operational milestone in Andfjord Salmon’s history.

Martin Rasmussen CEO

In addition to the 50 percent increase in production vol-

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BOARDOF DIRECTORS’ REPORT

Credit risk The company is currently exposed to credit risk through the placement of surplus liquidity in Norwegian regulated banks. Customer receivables are limited in the current phase. GOING CONCERN The accounts have been prepared under the assumption that the company is a going concern. In accordance with Section 3-3a of the Norwegian Accounting Act, the board of directors confirms that the company fulfils the requirements necessary for it to continue to operate as a going concern. The board bases this on the company’s financial position, which is good. WORKING ENVIRONMENT The board of directors considers the company’s working environment to be good. No special measures have been implemented to improve the working environment. No sickness absence was registered in 2021, while sickness absence was 0.4% in 2020. FUTURE OUTLOOK The company holds a fish farming licence of 10,000 tonnes MAB and expects to reach yearly production volume of 19,000 tonnes (HOG) at Kvalnes. Andfjord Salmon has secured rights to coastal properties at Fiskenes and Breivik on Andøya, enabling a potential future production of 90,000 tonnes HOG. The company’s current licence will be used in its entirety at the company’s first production facilities at Kvalnes. Construction of the first pool, which has a production capacity of 1250 tonnes HOG, is complete and the first salmon smolt will be released during second quarter 2022. Scraping and excavation work in connection with the remaining 17,750 tonnes HOG at Kvalnes has been ongoing through 2021. The board considers the future prospects to be good. Successful release of smolt will be a major milestone and strengthen the company’s position significantly. At the same time as the company is working on developing the first location at Kvalnes, it is also working on regulation of the Fiskenes and Breivik sites and will apply for a license for 20,000 tonnes MAB (25,000 tonnes HOG) for each of the locations. There are also plans to further develop the Kvalnes site to add a further 20,000 tonnes HOG in the future.

Andfjord Salmon benefits from the well-developed salmon farming industry in the Vesterålen area, where the necessary infrastructure with sufficient capacity and expertise has already been established. This makes it possible to have a fully integrated value chain, from smolt production and salmon farming to sales and distribution to end customers. The company’s financial position and outlook is primarily dependent on the price of farmed salmon and the level of production costs. Historically, the market price of farmed salmon has been subject to market fluctuations. Andfjord Salmon’s flow-through concept requires low energy con- sumption. Due to the facilities’ unique location directly adjacent to the Gulf Stream, they have access to water at very favourable temperatures year-round. The facilities are also well located in terms of logistics and infrastruct­ ure and are situated close to each other on Andøya, en- abling cost-effective operations. The company is largely dependent on maintaining its current license and being awarded new licenses in order to develop the business in the future. CORPORATE GOVERNANCE Andfjord Salmon has prepared a report on corporate governance that is included in the annual report, which is available on the company’s website. Although the com- pany is not subject to the Norwegian Code of Practice for Corporate Governance, it aims to comply with the principles of the recommendations as the business transi- tions into an operational phase. The report on corporate governance sets out the company’s status in relation to the recommendations. GENDER EQUALITY AND DISCRIMINATION In 2021, 17 full-time equivalents were performed by em- ployees of the company. At the end of the year, the board consisted of seven members, of which two are females. It has been of major importance to secure the right com- petence and expertise during the company’s initial devel- opment phase, and many of the employees have been recruited from the aquaculture industry. The proportion of women among the employees is lower than desired, which is a concern for the company and something it focuses on when hiring. Based on an assessment of the size of the company, the number of employees and job categories, the board has not found it necessary to take further action with respect to gender equality at this time.

NATURE OF THE ENTERPRISE Andfjord Salmon is developing the aquaculture industry of the future, and has an ambition of building the most fish-friendly and sustainable aquaculture facility of its kind. The benefits of both sea and land-based salmon farming are combined to make the best of both worlds. The result is a high level of salmon welfare and sustainable production in Arctic waters. Andfjord Salmon is a Norwe- gian company that was established in Andøy municipality in 2014. The company is developing production facilities and operating premises on Andøya. The company has a license to farm 10,000 tonnes of maximum allowed biomass (MAB) and is in the first phase of development on fish farms at Kvalnes on Andøya to exploit the licence. Rights have also been secured for coastal properties at Fiskenes and Breivik on Andøya for further expansion. In total, the company plans future yearly production of 90,000 tonnes HOG. Yearly production under the current license at Kvalnes is expected to be 19 000 tonnes HOG when the build-out has been completed OVERVIEW OF THE ANNUAL FINANCIAL STATEMENTS Net profit before tax for 2021 was a loss of NOK 35.5 million, compared to a loss of NOK 19.2 million in 2020. In 2021, the company employed 17 full-time equivalents and labour costs amounted to NOK 17.4 million. Other operating expenses totalled NOK 15.8 million. The loss is in line with the board’s expectations for the current phase of the company. The company’s activities consist of the development and construction of land-based fish farms and the business is expected to generate its first sales income in 2023. Net cash flow from operations was NOK -20.6 million, while operating loss totalled NOK -34.5 million. The difference is mainly due to changes in accounts payable and ordinary depreciation. The company’s cash flow from investment activities was NOK -207.8 million, mainly re- lated to the development and construction of land-based

facilities for fish farming at Kvalnes. Net cash flow from financing activities was NOK 94.5 million in 2021. FINANCIAL RISK Liquidity risk The company has financed the construction of the first pool and related infrastructure, in addition to planning and groundwork related to the next phase of construction. At the end of the year, the company had a cash balance of NOK 14.9 million and current receivables of NOK 33.7 million. In addition, Andfjord Salmon had an unused cred- it facility of NOK 20 million which will be utilised in 2022. At the end of 2021 unpaid approved grants from public funding schemes totalled to NOK 6.1 million. The company’s growth strategy and future plans are capital intensive and dependent on future financing. The emphasis is on proving the concept with successful release of smolt and operations in the first pool. This will provide a good position for financing of further expansion on Andøya. Currency risk The company is currently exposed to currency risk to a small extent. Although some components for the devel- opment have been purchased in EUR, both costs and investments are primarily in NOK. The company will be increasingly exposed to currency risk once it starts oper- ating the fish farming facility and in the case of future fish sales. Currency hedging will be considered to reduce such exposure. Interest rate risk The company is to a small extent exposed to fluctuations in interest rate levels. Interest-bearing debt amounted to NOK 80 million at the end of the year, of which 50 million had fixed interest rate. Liquidity reserves are deposited on bank accounts and is thus exposed to interest rate fluctua- tions, however this has limited effect.

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However, the company is keen to increase the share of female employees, both in senior positions and in the company in general. The company shall be a workplace where there is full gender equality between women and men, and it shall ensure that there is no discrimination based on gender. More information on the status of gender equality in the company can be found in the ESG report, which is part of the annual report available on the company’s website. THE NATURAL ENVIRONMENT The company does not pollute the natural environment to any significant extent in its current phase, but it has nevertheless implemented environmental measures in connection with the development at Kvalnes. Andfjord Salmon will focus on sustainable production at every level when the fish farm starts operating in 2022. It is a clear goal that the business shall have the smallest possible environmental footprint. Biological waste from the facility will be captured and refined as a commercial resource, limiting emissions from the facility. The company has for the second year in a row prepared a separate ESG report as part of the annual report, which contains a detailed account of how it works towards achieving sustainability goals. OTHER MATTERS The company has taken out insurance for the board

members and the general manager for their possible liability to the company and third parties, with an insurance sum of NOK 50 million. The Covid-19 pandemic presented daily challenges to the company’s activities in developing Kvalnes during 2021. Many different suppliers were involved at the site in con- nection with activities relating to pools, pipelines, ground- works, the operating centre and technical equipment, and a large number of people visited the construction site. Strict infection protection was therefore required. Some suppliers relied on the use of personnel from abroad, which led to practical challenges and additional costs during the period of the pandemic. The board of directors does not know of any other matters of importance to consider the company’s position and profit/loss, other than those presented in the annual financial statements and notes to the annual financial statements. No matters have arisen after the end of the financial year that have an impact on the board of directors’ assessment of the annual financial statements. DECLARATION BY THE BOARD OF DIRECTORS AND CEO OF ANDFJORD SALMON AS We hereby confirm that it is our sincere conviction that the financial statements for the period 1 January to 31

December 2021 have been prepared in accordance with the provisions and good accounting practices set out in the Norwegian Accounting Act, and that the information in the financial statements provides an accurate picture of the company’s and the group’s assets, liabilities, financial

position, and profit/loss as a whole. We hereby confirm that the annual report provides an accurate overview of the development, annual profit/loss and position of the compa- ny and the group, together with a description of the most important risks and uncertainties the enterprise is facing.

Kvalnes, Andøya, 7. April 2022

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Roger Mosand Chair of the board

Tore Traaseth Board member

Roy Bernt Pettersen Board member

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Bettina Flatland Board member

Knut Roald Holmøy Board member

Kim Marius Strandenæs Board member

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Gro Skaar Knutsen Board member

Martin Rasmussen CEO

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CORPORATE GOVERNANCE STATEMENT

by the Public Companies Act.

To discuss and evaluate goals, strategy and risk profile, the Board conducts an annual strategy meeting, where the main purpose is to set the long-term direction for the company. A further description of the company’s operations, goals, strategy, and risk profile is provided in the group’s annual report, which shows how the company’s operations and strategies are aligned with objectives defined in the Articles of Association. 3.EQUITY AND DIVIDENDS The company’s solidity is continuously assessed based on the company’s goals, strategies and risk profile. Total assets at the end of 2021 were NOK 480,4 million, and the company’s equity was NOK 323.3 million, equivalent to an equity-to-assets ratio of 66 percent. Andfjord Salmon aims to give shareholders a competitive long-term return. Based on Andfjord Salmon’s capital requirements for its ongoing development projects, it is unlikely that the Company will pay dividend on a regular basis in the near future. Shareholders’ return should there- fore primarily be realised through an increase in the value of their shares. However, dividends can be relevant in the future, when the circumstances permit it. The shareholders can give the Board the authority to increase the share capital or purchase the Company’s own shares at the Annual General Meeting. The General Meeting has given the Board authorisation to increase the Company’s share capital in order to finance the company’s business, in connection with acquisitions and mergers, and through share issues aimed at the company’s employees and board members. The current mandate is valid until the next Annual General Meeting however no longer than 30 June 2022. 4.EQUAL TREATMENT OF SHAREHOLDERS Equal treatment of all shareholders is a core governance principle. Andfjord Salmon has one class of shares and is listed on Euronext Growth Oslo under the ticker ANDF. Each share carries one vote at the General Meeting. In situations where normal preferential rights shall be de- viated from, the Company’s Board is proposed to prepare grounds for such a decision in accordance with the

• Point 12 – Remuneration of executive personnel: Andfjord Salmon has not established guidelines for the remuneration of executive personnel as the Company is not a public company governed by the Public Companies Act. • Point 14 – Take-overs: Due to the unpredictable nature of a takeover situation, the Company has decided not to implement detailed guidelines on take-over situations. In the event a takeover were to occur, the Board will act in accordance with applicable regulations as well as the general principles of the stock market if such a situation should occur. 2.BUSINESS Andfjord Salmon (ANDF) has developed an innovative and sustainable aquaculture concept for shore-based farming of Atlantic salmon. The company’s ambition is to build the world’s most sustainable and fish-friendly aqua- culture facility of its kind. Andfjord Salmon is a limited liability company organized under the laws of Norway and subject to the provisions of the Norwegian Limited Liability Companies Act. Andfjord Salmon’s purpose is currently defined in the Articles of Association as follows: The company’s business is to conduct land-based farming of fish and other matters that naturally coincide with this, including participating in other companies with similar activities, acquiring and divesting shares, or otherwise becoming interested in other businesses including provision of consulting services. Andfjord Salmon each year publishes a sustainability report where it presents the main social, societal, and environmental challenges Andfjord Salmon faces, and how the company approaches them. Following dialogue with the company’s key stakeholders, Andfjord Salmon has identified five priority areas – environment, occupational health and safety, supply chain transparency and control, local value creation, and working environment – that are integrated with the company’s business strategy, and concrete goals are each year defined to improve Andfjord Salmon’s performance within these areas.

The Board of Directors (“the Board”) is responsible for ensuring that Andfjord Salmon (or “the company”) is organised, managed and controlled in an appropriate and satisfactory manner in full compliance with applicable laws and regulations. The Board considers compliance with generally accepted corporate governance guidelines as an important prereq- uisite for long-term value creation. The company strives to ensure that its internal control mechanisms, organisation and management structures comply with good corporate governance principles. The Norwegian Code of Practice for Corporate Govern- ance (the “Code”) does not apply on Euronext Growth – Oslo. However, Andfjord Salmon has started to establish corporate governance systems and will seek to comply with the Code over time. The principal purpose of the Corporate Governance Code is to ensure (i) that listed companies implement corporate governance that clarifies the respective roles of shareholders, the board of directors and executive man- agement more comprehensively than what is required by legislation and (ii) effective management and control over activities with the aim of securing the greatest possible value creation over time in the best interest of companies, shareholders, employees and other parties concerned. The following statement explains how Andfjord Salmon addresses the 15 governance topics covered by the Code. 1. IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE The Board is aware of its responsibility for implementation of internal procedures and regulations to ensure that the company complies with applicable principles for good corporate governance in line with Norwegian and applic­ able international standards.

corporate governance and will seek to ensure that the Company complies with the requirements of section 3-3b of the Norwegian Accounting Act, which is available at www.lovdata.no, and The Norwegian Code of Practice for Corporate Governance (“NUES”), last revised 14 October 2021, is available at www.nues.no. If the Company deviates from NUES recommendation, Andfjord Salmon will ad- here to the “comply or explain” principle for each and every clause in the recommendation. According to Andfjord Salmon’s own evaluation, the com- pany deviates from the Corporate Governance Code on the following points: • Point 3 – Equity and dividends: The Board of the company has been, and is expected to be, provided with authorisations to acquire own shares and issue new shares. Not all of such authorisations have separate and specific purposes for each authorisation as the purposes of the authorisations shall be explained in the notices to the general meetings adopting the authorisations. • Point 6 – General Meetings: The Public Companies Act stipulates that at least 21 days’ notice must be given to call a general meeting of a listed company. As Andfjord Salmon is not a public limited liability company, but a private limited liability company, the Company adheres to the Companies Act which stipulates that at least 7 days’ notice must be given to call a general meeting. • Point 9 – The work of the Board of Directors: Andfjord Salmon has not yet developed procedures for how the board of directors and executive management shall handle agreements with related parties as this has not been a relevant topic for the company. The company aims to develop such a procedure in 2022. • Point 9 – The work of the Board of Directors: Andfjord Salmon does not have an audit committee as the company is not considered a large company or regulated

The Board of the Company is actively involved in good

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Norwegian Code of Practice for Corporate Governance and shall present these to the General Meeting. 5.SHARE AND NEGOTIABILITY All Andfjord Salmon shares carry equal rights and are freely negotiable. The Company’s articles of association do not contain any form of restriction on negotiability. 6.GENERAL MEETINGS The interest of the company’s shareholders is exercised at the General Meetings (GM). The Annual General Meeting is usually held between the end of April and beginning of June. The meeting for 2022 is scheduled on 28 April 2022. The General Meetings deal with and decide on the following matters: • Adoption of income statement and balance sheet. • Application of profit or coverage of deficit pursuant to the adopted income statement and balance sheet as well as distribution of dividends. • Election of board of directors. The general meeting shall elect the chairman of the board. • Other issues that pursuant to the provisions of the Norwegian laws and Articles of Association are to be treated by the General Meeting. All shareholders with known address registered in the Norwegian Central Securities Depository (VPS) will receive an invitation to the GM. The invitation is sent at least one week prior to the meeting. Other documents will be made available at Andfjord Salmon’s website. A shareholder may request a print of documents relating to matters to be dealt with at the GM. The deadline for shareholders to give notice of their intention to attend the meeting is one day prior to the meeting. Shareholders who are unable to attend the GM may vote by proxy. The proxy form is designed in such a way that voting instructions may be given for each item on the agenda. The chairperson of the Board, the chairperson of the nomination committee and the CEO are present at the GM, in addition to other Board members when appropriate. Andfjord Salmon has not deemed it necessary to require

the presence of all members of the Board at the GM.

At the Annual General Meeting on 6 May 2021 , the share- holders elected the following six members to the Board:

The Board is also responsible for ensuring that the interests of shareholders and other interested parties are safeguarded in a satisfactory manner. The Board has prepared and adopted rules and procedures for the Board of Directors. The Board has an annual plan for its work to ensure that all important issues and business areas are covered, emphasizing objectives, strategy, and implementation of the company’s business plan in particular. Andfjord Salmon has not yet developed procedures for how the board of directors and executive management shall handle agreements with related parties as this has not yet been a relevant topic for the company. The company aims to develop such a procedure in 2022. Andfjord Salmon does not have an audit committee as the company is not considered a large company or regulated by the Public Companies Act.

The general meeting is able to elect an independent chair- person for the general meeting. All shares carry an equal right to vote at General Meetings. Resolutions at GMs are normally passed by simple majority unless otherwise is required by Norwegian law. The minutes of the GM are made available on Andfjord Salmon’s website. 7. NOMINATION COMMITTEE Pursuant to Andfjord Salmon’s Articles of Association, the company shall have a nomination committee, which is elected by the general meeting. Andfjord Salmon’s nom- ination committee is called “election committee”, but is in this document referred to as “nomination committee”. The committee nominates candidates to chairperson, board members, any deputy members to the Board, and members of the nomination committee. Further, the nomination committee submits proposals to the general meeting regarding remuneration to the board and the nomination committee. Andfjord Salmon’s nomination committee currently con- sists of the following members, who have been elected for the period 2021 - 2023: Rode S. Rønning-Hansen (chair), Oddvar Fosse and Rita Karlsen. All members of the nomination committee are independent of the Board and the company’s executive personnel. The nomination committee does not include any executive per- sonnel or any member of the company’s board of directors. Information regarding the committee members and its procedures is available on the company’s website. Infor- mation about how input and proposals may be submitted to the committee is available on the company’s website. 8.BOARD OF DIRECTORS, COMPOSITION AND INDEPENDENCE Pursuant to Andfjord Salmon’s Articles of Association, the company’s Board shall consist of three to eight members. The current Board consists of seven members elected by the GM.

Roger Brynjulf Mosand Roy Bernt Pettersen Knut Roald Holmøy Bettina Flatland Kim Marius Strandenæs Tore Traaseth

Chairperson

Director Director Director Director Director

Further, Gro Skaar Knutsen was elected to the Board at an Extraordinary General Meeting on 13 October 2021. Andfjord Salmon strive to ensure that the Board has a composition necessary to safeguard the interest of the shareholders. The Board consider its composition to be diverse and competent with respect to expertise and ca- pacity related to the company’s objectives, main challenges and the common interest of all shareholders. The board consists of five men and two women. Roy Bernt Pettersen and Tore Traaseth are large share- holders in the company. Kim Marius Strandenæs is employed by UFI AS, which is a large shareholder in Andfjord Salmon. Bettina Flatland, Knut Roald Holmøy, Roger Brynjulf Mosand and Gro Skaar Knutsen are independent of the major shareholders and executive management. The Board does not include executive management. Information about each board member is available on the Company’ website. All board members apart from Kim Marius Strandenæs, Knut Roald Holmøy and Gro Skaar Knutsen own shares in the company. None of the board members hold share options. 9.THE WORK OF THE BOARD OF DIRECTORS The Board has the overall responsibility to oversee the organisation, operation and management of Andfjord Salmon, whilst the CEO is responsible for day-to-day management. This means that the Board is responsible for how to organize the company’s activities and estab- lishing systems in order to ensure that Andfjord Salmon operates in compliance with laws and regulations.

Andfjord Salmon does not have a remuneration committee.

The Board evaluates its own performance and expertise on an annual basis. The evaluation is submitted to the nomination committee. 10. RISK MANAGEMENT AND INTERNAL CONTROL The Board ensures that the Company has good internal control and appropriate systems for risk management in relation to the nature and extent of the company’s activities. Andfjord Salmon has developed and implemented a management framework and internal control systems that are deemed appropriate for the company’s size and operational maturity. The Board discusses and assesses the group’s risk expo- sures, systems, routines, and internal control to mitigate these risks on an annual basis. Internal control procedures, limiting authorisations, organisational changes and in- creased reporting are part of the improvements. Procedures have been established for the regular reporting of financial statements. Furthermore, management regu- larly reports to the Board on the progress of the company’s development and other operational processes.

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As part of ongoing risk management efforts, the Board and management carry out specific risk reviews of major investments and contracts. As part of the annual budget and strategy process, the Board and executive management conduct an annual review to discuss and identify external and internal oppor- tunities and threats for the group. In addition, the Board carries out a thorough review of the company’s financial status in the annual Directors’ Report. 11. REMUNERATION OF THE BOARD OF DIRECTORS Remuneration of the Board is determined by the GM, based on recommendation from the nomination com- mittee. The recommendation is normally linked to the Board members responsibilities, competence and time commitment, taking the company’s size and complexity into consideration. The remuneration is not linked to the company’s per- formance. There is no share option programme for the Board of Directors. Members of the Board, including companies with whom they are associated, are usually not given separate assign- ments by Andfjord Salmon in addition to their function as directors. Such assignments will be based on approval from the Board. The stipulation that members of the board of di- rectors should not undertake additional assignments for the company is based on the need for members of the board to be independent of the company’s executive personnel. Currently, board member Roy Bernt Pettersen is employed by Andfjord Salmon to work on certain development projects. However, Roy Bernt Pettersen is not a member of Andfjord Salmon’s management team and is therefore considered independent of the company’s executive personnel. As Pettersen is the co-founder of Andfjord Salmon, the Board considers is of value to all the company’s shareholders that he is actively engaged in the develop- ment of the company. Further, Kim Marius Strandenæs and Tore Traaseth, who both have extensive capital markets experience, have during the second half of 2021 supported the company’s administration with specialist competence and capacity related to Andfjord Salmon’s financing processes. The Board considers it of value to all sharehold- ers that Board members, who have in-depth knowledge of

Andfjord Salmon, can provide specific and clearly defined strategic and operation support to the company’s admin- istration, which remains small in size in line with the compa- ny’s objective of running a cost-effective operation. 12. SALARY AND OTHER REMUNERATION OF EXECUTIVE PERSONNEL The Board determines the principles applicable to the group’s policy for compensation of executive manage- ment. The Board is directly responsible for determining the CEO’s salary and other benefits. The CEO is, in consul- tation with the chairperson of the Board, responsible for determining the salary and other benefits for the group’s other senior executives. As Andfjord Salmon is not public company governed by the Public Companies Act, the company is not required to prepare guidelines for the remuneration of executive personnel. The Board’s view on management compensation is that it should be competitive and motivating, but not above observed market levels, and help ensure that the executive personnel and shareholders have convergent interests. 13. INFORMATION AND COMMUNICATION Andfjord Salmon’s reporting and communication policy takes into account the requirement for equal treatment of all stakeholders in the financial markets. The company has established guidelines for reporting of financial and other information. The purpose of these guidelines is to ensure that timely and correct information is made available to shareholders and other stakeholders. A financial calendar and other shareholder information is available on the company’s website. All information distributed to the company’s shareholders is published simultaneously to the company’s website and at Newsweb.no (Oslo Børs’ distribution channel). 14. TAKE-OVERS The company’s Articles of Association do not include de- fence mechanisms aimed towards take-over bids, nor are any other obstacles implemented with the objective of reducing the trade and/or transferability of the company’s shares. The shares are freely negotiable. Transparency and equal treatment of the shareholders are fundamental principles

the company adheres to. No additional principles have been established for how Andfjord Salmon will or should act with respect to takeover bids, but the Board will act in accordance with applicable regulations as well as the gen- eral principles of the stock market if such a situation should occur. 15. AUDITOR The external auditor is independent in relation to Andfjord Salmon and elected by the Annual General Meeting. The auditor’s fee is approved by the GM.

The auditor conducts a yearly meeting with the Board in connection with the review of the annual accounts. The company’s internal control systems and routines are addressed in the same meeting. The Board reviews the yearly audit plan with the auditor together with identified weaknesses and suggestions for improving the company’s internal control. It has not been deemed necessary by the Board to imple- ment additional guidelines regarding the use of the auditor for services other than auditing.

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INCOME STATEMENT

BALANCE SHEET

ANDFJORD SALMON AS

ANDFJORD SALMON AS

OPERATING INCOME AND OPERATING EXPENSES

ASSETS

Note

2021

2020

Note

2021

2020

FIXED ASSETS INTANGIBLE ASSETS Research and development Concessions, patents, licences and similar rights Total intangible assets PROPERTY, PLANT AND EQUIPMENT Land facilities for farming Machinery and plant Plots and other land Operating movable property, furniture, tools, other Total property, plant and equipment

Other income Total operating income

0 0

180 863 180 863

3 3 3

1 671 147 993 610 2 664 757

1 219 832 0 1 219 832

1, 9 3 1

Salary and personnel expenses Depreciantion of tangible and intangible fixed assets

17 402 069 1 229 217 15 829 035 34 460 322

10 342 618 370 704 9 085 586 19 798 909

Other operating expenses Total operating expenses

3 3 3 3 3, 7

405 053 040 16 241 106 6 174 383 1 519 322 428 987 851

218 810 019 670 477 3 822 693 538 366 223 841 555

Operating profit/loss

-34 460 322

-19 618 046

FINANCIAL INCOME AND EXPENSES

Other financial income Other financial expenses Net financial income/expenses

282 983 1 358 912 -1 075 929

838 273 409 703 428 570

LONG-TERM FINANCIAL ASSETS Other receivables Total long-term fixed assets

123 970 123 970

159 390 159 390

Profit/loss before tax

-35 536 250

-19 189 476

Total fixed assets

431 776 578

225 220 777

Net profit after tax

-35 536 250

-19 189 476

CURRENT ASSETS

Result for the year

-35 536 250

-19 189 476

RECEIVABLES Accounts receivables Other receivables Total receivables

BROUGHT FORWARD

0 33 673 118 33 673 118

226 078 17 383 243 17 609 321

6

Transferred from other equity Net brought forward

35 536 250 -35 536 250

19 189 476 -19 189 476

4

Cash and deposits

14 918 370

148 846 067

Total current assets

48 591 488

166 455 388

Total assets

480 368 067

391 676 165

18

19

ANNUAL REPORT 2021

ANNUAL REPORT 2021

BALANCE SHEET

INDIRECT CASH FLOW

ANDFJORD SALMON AS

ANDFJORD SALMON AS

EQUITY AND LIABILITIES

Note

2021

2020

Note

2021

2020

PAID-IN CAPITAL Share capital Own Shares Share premium reserve Total paid-in capital RETAINED EARNINGS Other equity Total retained earnings

CASH FLOWS FROMOPERATING ACTIVITIES Profit/ loss before income taxes Depreciation Change in accounts receivable

2 2

35 934 400 -5 000 287 523 727 323 453 127

35 791 900 0 318 345 305 354 137 205

-35 536 250 1 229 217 226 078 19 901 000 -6 440 997 -20 620 952

-19 189 476 370 704 -226 078 25 643 718 -12 773 552 -6 174 684

Change in trade creditors Changes in other accruals Net cash flows from operating activities

2

-180 000 -180 000

0 0

CASH FLOWS FROM INVESTMENT ACTIVITIES Proceeds from the sale of fixed assets

670 477 208 490 915 -207 820 439

0 165 276 082 -165 276 082

Total equity

323 273 127

354 137 205

Purchase of property, plant and equipment Net cash flows from investment activities

NON-CURRENT LIABILITIES Liabilities to financial institutions Other non-current liabilities Total non-current liabilities

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of new long-term liabilities Paid in capital Net cash flows from financing activities Net change in cash and cash equivalents Cash and cash equivalents at the start of the period Cash and cash equivalents at the end of the period

7, 10 6

39 478 187 59 191 509 98 669 696

0 4 078 176 4 078 176

89 841 520 4 672 173 94 513 693 -133 927 697 148 846 067 14 918 370

0 226 516 497 226 516 497 55 065 731 93 780 337 148 846 067

CURRENT LIABILITIES Trade payables Current tax liabilities Other current liabilities Total current liabilities

49 689 856 1 246 151 7 489 236 58 425 243

29 788 856 723 106 2 948 823 33 460 785

Total liabilities

157 094 939

37 538 961

EQUITY ANDFJORD SALMON AS

NOTES TO THE ACCOUNTS

Total equity and liabilities

480 368 067

391 676 165

Share capital

Own shares

Share premium

Other equity

Total equity

Kvalnes, Andøya, 07.04.2022 The board of Andfjord Salmon AS

As at 31.12.2020 As at 01.01.2021

35 791 900 35 791 900

0 0

318 345 305 318 345 305

0 0

354 137 205 354 137 205 4 857 173 -185 000 -35 536 250 0 323 273 127

Roger Mosand Chairman of the board

Roy Bernt Pettersen Member of the board

Tore Traaseth Member of the board

Capital increase Purchase own shares Result for the year Loss coverage As at 31.12.2021

142 500

4 714 673

-5 000

-180 000 -35 536 250 35 536 250 -180 000

-35 536 250 287 523 727

35 934 400

Bettina Flatland Member of the board

Knut Roald Holmøy Member of the board

Kim Marius Strandenæs Member of the board

Gro Skaar Knutsen Member of the board

Martin Rasmussen General Manager

20

21

ANNUAL REPORT 2021

ANNUAL REPORT 2021

ANDFJORD SALMON AS

NOTES TO THE ACCOUNTS

ANDFJORD SALMON AS

NOTES TO THE ACCOUNTS

ACCOUNTING PRINCIPLES

NOTE 1 SALARY COSTS AND BENEFITS, REMUNERATION TO THE CHIEF EXECUTIVE, BOARD AND AUDITOR

The annual accounts have been prepared in conformity with the provisions of the Accounting Act and good accounting practice.

SALARY COSTS

2021

2020

TAX The tax charge in the profit and loss account consists of tax payable for the period and the change in deferred tax. Deferred tax is calculated at the tax rate at 22 % on the basis of tax-reducing and tax-increasing temporary differences that exist between accounting and tax values, and the tax loss carried forward at the end of the accounting year. Taxincreasing and tax-reducing temporary differences that reverse or may reverse in the same period are set off and entered net. The net deferred tax receivable is entered on the balance sheet to the extent that it is likely that it can be utilised. LEASING A difference is made between financial and operational leasing. Plant and equipment financed through financial leasing is accounted for under Property, plant and equipment. The counter entry is made under long-term debt. The lease payment is divided between the interest cost and instalments on the debt. Operational leasing is expensed as an operating cost based on the invoiced lease rent. CLASSIFICATION AND VALUATION OF FIXED ASSETS Fixed assets consist of assets intended for long-term ownership and use. Fixed assets are valued at acquisition cost less depreciation and write- downs. Long-term liabilities are entered on the balance sheet at the nominal amount at the time of the transaction. Plant and equipment is capitalised and appreciated over the economic lifetime of the asset. Significant items of plant and equipment that consist of several material components with different lifetimes are broken down in order to establish different depreciation periods for the different components. Direct maintenance of plant and equipment is expensed on an ongoing basis under operating costs, while additions or improvements are added to the asset’s cost price and depreciated in line with the asset. Plant and equipment is written down to the recoverable amount in the event of a fall in value that is not expected to be temporary. The recoverable amount is the higher of the net sales value and the value in use. Value in use is the present value of future cash flows related to the asset. The write-down is reversed when the basis for the write-down is no longer present. CLASSIFICATION AND VALUATION OF CURRENT ASSETS Current assets and short-term liabilities consist normally of items that fall due for payment within one year of the balance sheet date, as well as items related to the stock cycle. Current assets are valued at the lower of acquisition cost and fair value. Short-term liabilities are entered on the balance sheet at the nominal amount at the time of the transaction. RESEARCH AND DEVELOPMENT Expenses on research and development are capitalised to the extent one cannot identify a future economic benefit related to the development of an identifiable intangible asset and where the acquisition cost can be measured reliably. In the opposite case such costs are expensed as incurred. Capitalised research and development is depreciated on a straight line basis over its economic lifetime. PENSION LIABILITIES – DEFINED CONTRIBUTION SCHEME The cost of a defined contribution pension scheme corresponds to the premium paid to the insurance company for the period. CASH FLOW STATEMENT The cash flow statement has been prepared using the indirect method. Cash and cash equivalents consist of cash, bank deposits and other short-term, liquid investments.

Salaries Employment tax Pension costs Other benefits Total

14 501 649 824 148 1 569 818 506 454 17 402 069

8 619 054 452 260 1 164 438 106 867 10 342 618

Average number of man-years

17

10

PENSION LIABILITIES The company is liable to maintain an occupational pension scheme under the Mandatory Occupational Pensions Act. The company’s pension schemes satisfy the requirements of this Act.

REMUNERATION TO LEADING PERSONNEL

2021 Pension costs

Salary

Board remuneration

Other remuneration

Total

Martin Rasmussen, CEO Roger Brynjulf Mosand, Chairman Roy Bernt Pettersen, Board member Knut Roald Holmøy, Board member Tore Traaseth, Board member Bettina Flatland, Board member Kim Marius Strandenæs, Board member Gro Skaar Knutsen, Board member Berit Pettersen, Deputy member

1 334 699 0 1 202 933

0 32 303

203 808 0 169 332

20 968 721 7 656 0 0 0 2 922 956 10 000

1 559 475 33 024 1 613 770 125 000 125 000 125 000 127 922 956 16 579

233 849 125 000 125 000 125 000 125 000 0 6 579

0 0 0 0 0 0

0 0 0 0 0 0

In addition to their roles as board members, Tore Traaseth and Kim Strandenæs have advised the company in relation to financing. For this, they have received fees through the limited companies Skagerak Vekst AS (Tore Traaseth) and KS Invest AS (Kim Strandenæs). Fees in 2021 were NOK 170 000 to Skagerak Vekst AS and NOK 100 000 to KS Invest AS.

22

23

ANNUAL REPORT 2021

ANNUAL REPORT 2021

AUDITOR Remuneration to the auditor is distributed as follows:

OWNERSHIP STRUCTURE The largest shareholders in % at year end:

ANDFJORD SALMON AS

NOTES TO THE ACCOUNTS

2021

2020

Ordinary

Owner interest

Share of votes

Statutory audit Other assurance services Tax advice Other non-audit services Total

176 840 15 320 0 0 192 160

70 000 29 890 50 910 222 962 373 762

Andfjord Holding AS KG Investment Comp AS Middelborg Invest AS Skagerak Vekst AS Karstein Gjersvik DNB Markets Aksjehandel/-analyse OG Invest AS Traaseth Property AS Verdipapirfondet DNB SMB Blue Marine Invest AS Sirius AS Pershing LLC Euro TV AS Blinksmark AS Sparebank 1 Markets AS Okeakos Blue AS Omniverse AS

7 026 000 3 000 000 2 650 636 2 309 999 1 390 309 1 294 797 1 123 800 1 106 967 787 481 763 080 596 800 526 984 526 822 497 000 435 119 380 039 27 122 330 1 061 411 838 086 807 000 8 812 070 35 934 400

19,6 8,3 7,4 6,4 3,9 3,6

19,6 8,3 7,4 6,4 3,9 3,6

NOTE 2 SHAREHOLDERS

3,1 3,1 3,0 2,3 2,2 2,2

3,1 3,1 3,0 2,3 2,2 2,2

THE SHARE CAPITAL IN ANDFJORD SALMON AS OF 31.12 CONSISTS OF:

Total

Face value

Entered

2,1 1,7 1,5 1,5 1,4 1,2 1,1 75,6

2,1 1,7 1,5 1,5 1,4 1,2 1,1 75,6

Ordinary shares Total

35 934 400 35 934 400

1,00

35 934 400 35 934 400

NorNet AS Hermia AS Total >1% ownership share

Total other Total number of shares

24,4 100,0

24,4 100,0

SHARES AND OPTIONS OWNED BY THE DIRECTORS OF THE BOARD AND THE GENERAL MANAGER:

Name

Position

Ordinary

Martin Rasmussen, Mer Marin AS Roger Brynjulf Mosand Roy Bernt Pettersen, Andfjord Holding AS Tore Traaseth, Skagerak Vekst AS Knut Roald Holmøy, Eidsfjord Sjøfarm AS Bettina Flatland Kim Strandenæs, UFI AS and UFI Capital AS

CEO Chairman

125 000 30 000

Board member Board member Board member Board member Board member

7 026 000 2 309 999 66 400 56 700 1 738 597

UFI AS owns 1 708 597 shares through future agreement.

OWN SHARES During first half of the year, the company has bought back 5.000 shares at a price of NOK 37 per share. This was a repurchase of shares that were originally subscribed to during the share offering made to company employees.

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