Annual Report
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ANNUAL REPORT LERØY SEAFOOD GROUP ANNUAL REPORT 2016 2016 1 ANNUAL REPORT 2016 TABLE OF CONTENTS HISTORY 4 IMPORTANT EVENTS IN 2016 6 STRATEGIC EVENTS 8 KEY FIGURES FOR THE GROUP 10 ANNUAL STATEMENT BY THE GROUP CEO 12 LERØY SEAFOOD GROUP – BUSINESS OVERVIEW 15 CORPORATE GOVERNANCE 29 BOARD OF DIRECTORS’ STATEMENT REGARDING SALARY AND OTHER REMUNERATION OF EXECUTIVE PERSONNEL 40 ENVIRONMENT 42 BOARD OF DIRECTORS’ REPORT 77 RESPONSIBILITY STATEMENT FROM THE BOARD OF DIRECTORS AND CEO 86 INCOME STATEMENT 87 COMPREHENSIVE INCOME 88 BALANCE SHEET 89 STATEMENT OF CASH FLOW 91 CHANGE IN EQUITY 92 NOTES, LERØY SEAFOOD GROUP CONSOLIDATED 2016 93 ANNUAL REPORT LERØY SEAFOOD GROUP ASA 166 AUDITOR’S REPORT 184 ADDRESSES 190 FINANCIAL CALENDAR 2017 11.05.2017 PRESENTATION OF THE 1ST QUARTER 2017 24.08.2017 PRESENTATION OF THE 2ND QUARTER 2017 09.11.2017 PRESENTATION OF THE 3RD QUARTER 2017 27.02.2018 PRELIMINARY RESULT FOR THE YEAR 2017 23.05.2017 ANNUAL GENERAL MEETING LERØY SEAFOOD GROUP LERØY SEAFOOD GROUP 2 ANNUAL REPORT 2016 ANNUAL REPORT 2016 3 At the turn of the new millennium, large parts of the fish in the Sales & Distribution segment. This segment not farming industry were seriously undercapitalised and only sells its own production of salmon and trout, but suffering from the impact of a short-term perspective and also has a high level of sales activity in cooperation with a lack of risk management. This was not compatible with third parties, ensuring a wide product range for the Group the requirements placed on enterprises in the fish farming within seafood. In recent years, the Group has also made industry at that time. Lerøy Seafood Group had achieved a significant investments in processing facilities, in order to more solid position by August 2003, when they purchased take part in leading the “revolution” within the distribution Nye Midnor AS as it was then called – the company that of fresh seafood. These investments have been made in currently makes up the main share of Lerøy Midt AS. what is known as “fish-cuts”, processing facilities where The Group went on to acquire Lerøy Aurora AS in 2005, proximity to the customer is key. The distribution of fresh Fossen AS and the remaining shares in Hydrotech-Gruppen seafood requires quality throughout the entire organisation, AS in 2006, Lerøy Vest in 2007 via a business combination flexibility, continuity in supply and a high level of service. and a majority shareholding in Sjøtroll Havbruk AS in Today, the Group has a number of fish-cut facilities across 2010. The acquisition and demerger of Villa Organic were Europe, and sells its products to more than 70 markets conducted in 2014. The above-mentioned companies worldwide. The Sales & Distribution segment currently along with a number of minor acquisitions have, together employs 830 persons, 398 of whom work in Norway. with highly skilled local management, been developed via organic growth to form what is now one of the world’s Ever since its very foundation, the Group has taken a Elias Fjellstad on his way to the fishmarket in Bergen largest producers of Atlantic salmon and trout. The fish pioneering role within a number of areas in the Norwegian, farming segment employed 1,323 persons at the end and subsequently international, seafood industry. The of 2015 in Norway. main focus has always been on developing the markets for seafood. The Group has very frequently been the first to The Group has over time made substantial investments launch on new markets, or to commercialise new species HISTORY within the Processing segment (VAP). These investments of fish. One of the main goals for the Group is to be an in VAP (value-added processing) not only generate a wider innovator within seafood, and preferably in cooperation The Lerøy Seafood Group can trace its operations back to The potential for growth within fish farming in combination product range and open the door to new markets, but also with the end customer. This is important not only within the end of the 19th century, when the fisherman-farmer with increasing customer requirements necessitated provide more room for manoeuvre in relation to the sale product development, but also in other areas such as the Ole Mikkel Lerøen started selling live fish on the Bergen fish a radical change in the Group’s business concept and of own produced salmon and trout. The Group made their development of efficient logistics and distribution. market. This was fish he either had caught himself or bought strategy. The new strategy was extremely capital ambitions clear in 2002 with the investment in fish smoking This pioneering spirit is still very much alive in the Group. from other fishermen. The fish was hauled to market in intensive. Up to 1997, the Group had been a family-owned capacity in Sweden (Lerøy Smøgen). They went on in 2005 corfs behind Ole Mikkel Lerøen’s rowing boat from the island operation. In 1997, a private placing with financial investors to invest in a processing facility for whitefish in Bulandet 2016 will go down as one of the most important years in of Lerøy to the fish market in Bergen, a journey that could was carried out for the first time. The purpose of the placing (Bulandet Fiskeindustri) in order to further expand their the company’s long history. Lerøy Seafood Group acquired take between six and twelve hours, depending on prevailing was to develop the Group throughout the entire value product range. In 2006, the Group expanded its high-value 100% of the shares in Havfisk ASA (a shipowning company winds and currents. chain, and participate in the future consolidation of the fish processing plant for trout and salmon on the island of with trawlers) and 100% of the shares in Norway Seafoods farming industry. The initial step of what was to become a Osterøy (Lerøy Fossen). The Group’s acquisition of 50.1% Group AS. These are two of the largest companies in Over time, Ole Mikkel Lerøen’s operations gradually came to number of major investments within fish farming occurred of the shares in the Dutch seafood company Rode Beheer Europe within wild catches and processing of whitefish include retail sales in Bergen, the sale of live shellfish and in 1999, when the company acquired a minority interest BV Group took place in 2012. The Group has subsequently respectively. With this investment, the Group has a budding export business. In 1939, two of his employees, in what was then Hydrotech-Gruppen AS. In the summer gone on to expand capacity at all its existing plants. gained the opportunity to embark on a new and exciting Hallvard Lerøy sr. and Elias Fjeldstad, established a of 2001, Norskott Havbruk AS was founded with the sole The framework conditions for industrial development development, whereby wild catches and processing wholesaler and seafood export company – Hallvard Lerøy purpose of acquiring Golden Sea Products, now Scottish Sea in Norway are increasingly unsatisfactory, resulting in of whitefish shall be integrated into the Group’s well- AS. In time, the company invested in a facility where they Farms Ltd. in the UK. a trend whereby production is outsourced from Norway established value chain. Lerøy Seafood Group is now a fully could receive pelagic and whitefish and carry out fish to countries with low production costs. integrated company, having achieved control of the entire farming. Poor results and insufficient capitalisation in the The Group was listed on the Oslo Stock Exchange in June value chain for a full range of seafood products – from the late 1980s and early 1990s forced the company to close 2002, providing access to the capital market for the Despite this trend, Lerøy Seafood Group has invested sea to the consumer. down its facility for receipt of fish and sell its shareholdings Group and thereby strategic financial room to manoeuvre. heavily in Norway, most recently with the development at that time in fish farming in order to safeguard their core Sufficient access to capital and expertise have been critical and doubling in capacity of the plant on the island of At the start of 2017, the seafood corporation Lerøy Seafood operation: wholesale and exports. In 1994, the company factors in the development of the Group from a wholesaler/ Osterøy outside Bergen in 2014. The VAP segment currently Group has a unique position for further growth carried out a last emergency share issue and started the seafood exporter to the current global and fully integrated employs 510 persons, 176 of these work in Norway. and development. process of re-establishing a healthy business. At that time, seafood corporation. The Group’s ambition to increase demand for seafood in the company’s equity was valued at NOK 20 million, prior the form of new products for new markets has constantly to an issue worth NOK 5 million. been the driving force behind the Group’s investments LERØY SEAFOOD GROUP LERØY SEAFOOD GROUP 4 ANNUAL REPORT 2016 ANNUAL REPORT 2016 5 The new well boat, Seihav, was christened in Austevoll on 8 October 2016, and the ceremony was then celebrated with a procession to Bergen and a meal in the city. IMPORTANT EVENTS IN 2016 • 2016 will now go down in the record books as one smolt to and from cages and slaughtering plants. during the first half of 2017. By that time, they 50%. Direct delivery from well boat to factory of the most exciting years in the history of Lerøy In addition, Seihav has the capacity for fish sorting are expected to have an average weight of 5 kg. will improve fish health and increase the rate Seafood Group ASA.