Annual Report

ANNUAL REPORT 2018 4 • This is SalMar 22 • Passion for Salmon 59 • Consolidated accounts SalMar 7 • Key Figures 24 • Sustainability and social 65 • Notes to the financial responsibility with HSE in focus statements 8 • Message from the CEO 29 • Corporate Governance 103 • Financial accounts SalMar ASA 11 • Historical development of the SalMar Group 36 • Executive management 109 • Notes to the financial statements SalMar ASA 12 • A new era in aquaculture 38 • Shareholder information 119 • Statement of responsibility 14 • The ABC of Salmon farming 40 • Board of Directors’ statement 121 • Auditor’s report 16 • SalMar’s operative segments 55 • Statement remuneration and other benefits payable 20 • SalMar’s tenets to senior executives SALMAR IS ONE OF THE WORLD’S LEADING PRODUCERS OF ATLANTIC SALMON

SalMar have significant farming operations in both Central and Northern Norway, as well as in Scotland through Scottish Sea Farms and in Iceland through Arnarlax Ehf. Passion SalMar also operate a comprehensive harvesting and VAP facility in Central Norway at the company’s headquarter at InnovaMar on Frøya and on Vikenco at Aukra. for – Passion for Salmon Salmon

Learn more about SalMar at www.salmar.no

3 4 SALMAR ANNUAL REPORT 2018 will beheldat Frøya. 24/26 inOslo,Norway. Theannualgeneral meeting will beheldat Hotel Continental inStortingsgaten at Tjuv presented at TheSalmoninStrandpromenaden 11 08.00 amCET. Results for 1st quarter 2019willbe the public.Thepresentations willtake placeat SalMar holdsquarterly presentations opento 3rd Quarter2019results 2nd Quarter2019results Annual General Meeting 1st Quarter2019results Annual report 2018 4th Quarter2018results holmen inOsloother quarterly presentations calendar 2019 Financial 14th November 2019 14th February2019 23rd August 2019 26th April2019 22nd May 2019 5th June2019 Passion for Salmon 5 70 110 Total balance Total Equity % Equity share

68 1 65 100 53,611 MAB tons 53,611 MAB 60 0% SalMars 42% share 90% 80% 70% 60% 50% 40% 30% 20% 10% Arnarlax Ehf Arnarlax Ehf 1 2,800 tons

100%

90 55 9,140

– * 1,000 tons gutted weight gutted – * 1,000 tons 15,136 1 2018

50 7,668

12,926

2017 6,681

70 13,402 2016 40 SalMars 50% share 60 13,700 tons 13,700 tons Scottish Sea Farms Ltd Sea Farms Ltd Scottish 1 500 Balance sheet and Equity NOK mill. and Equity Balance sheet 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 15,500 15,000 14,500 14,000 13,500 13,000 12,500 12,000 11,500 11,000 10,500 10,000 > 35 50 32 30 SalMar Nothern Norway SalMar Nothern and Finnmark Troms 33,406 MAB tons 33,406 MAB 40 25 Operating revenue Operating EBIT Operational

20 SalMar Nothern Norway SalMar Nothern 42,400 tons

30 3,461 11,343

2018

15 3,162

20 10,817

2017

10 2,432 9,030 2016 10 5 0 SalMar Central Norway SalMar Central & Romsdal and Møre Trøndelag SalMar Central Norway Central SalMar 100,100 tons 500 Operating revenue and Operational EBIT and Operational revenue Operating NOK mill. 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 11,000 10,500 10,000 > Geographical distribution of SalMar’s 100 wholly owned licenses in Norway pr. 31.12.2018: pr. in Norway licenses owned wholly 100 SalMar’s of distribution Geographical 0 > Harvest volume 2018 by geography, gutted weight pr. 31.12.2018 pr. gutted weight 2018 by geography, volume > Harvest 0 6 SALMAR ANNUAL REPORT 2018 100 > VALUE ADDEDPRODUCTS 2018– > VOLUME VALUE ADDEDPRODUCTS – 2016 2017 2018 > HARVEST VOLUME ANDVALUE ADDEDPRODUCTS 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 0 5 Portions Fillets Other 0 70.5 2016 0 45.2 1 2345 10 2030 14.0 1.4 5.0 87.5 2017 47.7 6 789 15.5 3.3 36.9 9.5 Other-Portions -Fillets 1,000tons –product weight 100.1 10 42.4 2018

1,000 tons –product weight 42.4 40 50 44.9 11 13.7 12 2.8 13 14 15 1,000 tons -gutted weight Harvest volume 16 Scottish SeaFarmsLtd (50%share) Arnarlax Ehf (42%share) SalMar NorthernNorway SalMar Central Norway 17 18 19 20 21 22 23 24 25 26 27.8 27 28 29 30 Passion for Salmon 7 23,51 2,651 3,342 9,030 2,364,5 13,402 20,24 2,298 2,856 1,222,5 12,926 10,817

39% 26% 37% 60% 59% 50% 31% 29% 27% 31,70 4,307 2,792 3,086 6,925 5,316 6,393 9,140 7,668 6,681 5,996 5,258 6,721 8,211 7,611 7,008 3,461 3,162 2,432 3,579 4,453 2018 2017 2016 2018 2017 2016 1,527,7 15,136 12,926 13,402 15,136 11,343

NOK mill.

NOK mill. assets EBIT profit margin assets share margin Net profit for the year for the profit Net Earnings per share Profit before tax before Profit Equity Profit Profit assets Total Equity Debt equity and debt Total Operating Operating bearing debt interest Net Current Current Operating Operating Non-current Non-current Balance sheet profit and operating revenues Operating revenues Operating Key figures Key Operational Operational 8 SALMAR ÅRSRAPPORT 2018 Atlantic salmoninalong-term perspective. and reinforce its position as the world’s leading producer of and sustainable aquaculture. Inthisway, Norway can retain areas of ocean could be opened up for environment-friendly If SalMar’s offshore fishfarming strategy succeeds, vast peratures andoceancurrents are optimal for thesalmon. in harshenvironments intheocean,where both seatem - designed deepwater fish farmisintended to bepositioned farm designedto beusedintheopenocean.Thespecially the “SmartFishFarm”concept. Thisistheworld’s first fish MariCulture wasawarded eight development licencesfor on theirown terms. InFebruary2019,SalMar’s subsidiary further out intheocean,where salmoncanbeproduced next phase of our strategy of farming fish in locations mising results boost ourconfidence as we embarkonthe of growth, andtheirqualitywasuniformly good. Suchpro- single delousingtreatment. Thefishhadan excellent rate the fish were inproduction, we didnot need to apply a called Frohavet off thecoast of Frøya.Over the15months Ocean Farm1facility, whichissituated inanarea of sea In 2018,SalMarcompleted the first production cycle at the Next step inouroffshore strategy the samelevel asCentral Norway managedin2018. hard work aheadof usinorder to continue performing at in seven production areas inNorway, andwe have alot of in fish health, welfare and growth. That said, we farm fish salmon. Allof thisresulted inasubstantial improvement efficient use of cleanerfishandtake excellent care ofour protect oursites from salmonlice,keep ournets clean,make period, can be attributed partlyto meticulously efforts to Central Norway inrecent years, following achallenging a row. Andwe did.Theturnaround we have achieved in to reduce production costs perkgfor thesecond year in costs. At thestart of 2018,we announcedourgoalwas be at withrespect to production quality, efficiency and that we have managedto return to thelevel we wishto from OceanFarm1.Theresults from thesegment shows strong improved biologicalperformance andcontributions Fish FarmingCentral Norway segment, andwasdueto increase of 5percent on2017.Thegrowth cameinthe SalMar harvested 142,500tonnes of salmonin2018,an Continued growth bution madebyourentire workforce. Another milestone was for salmon and high prices, and in part to the fantastic contri- thanks inpartto thecontinuation of strong globaldemand We posted thebest results intheGroup’s history in2018, A very goodyear for SalMar Message from theCEO from ourinvestments inNorthernNorway. InnovaNor will 2018. Over time,we expect to seesimilar positive effects tional performance andlower costs inCentral Norway in handle biologicalchallengesresulted inimproved opera recent years to boost ourcompetence andcapacityto in Senja.Thesubstantial investments we have madein processing plant InnovaNor in Lenvik and our smoltfacility hern Norway segment, includingthenew harvesting and 900 million. Thebiggest investments willcome intheNort growth. In2019,SalMarisplanningto invest almost NOK in future-oriented projects to buildaplatform for future dividends to ourshareholders andinvest considerable sums financial position, we are inaposition to both deliver solid With theprospect of strong earningsaheadandasound the oceanisright way to go. This strengthens ourbelief that farmingfishfurtheroutin offshore fishfarm,OceanFarm1,with very promising results. reached whenwe harvested thefirst salmon raised at our meet theenvironmental andbiologicalchallengesitfaces. to fierce competition. Thesector must invest heavily to vulnerable to changesintheeconomic cycle andsubject ture industry has,through itsshorthistory, proved to be and favourable foreign exchange rates, Norway’s aquacul- the sector. Despite several years withhighsalmonprices mised stable and predictable framework conditions for so-called Aquaculture Fundand,at thesametime,pro Norwegian parliament (Stortinget) decidedto set upthe rent tax–have become apoliticalissueshortlyafter the duction of new taxes and levies – including a resource For Norwegian fish farmers, it is worrying that the intro - Resource rent tax Norway to harvest fishonthe terms of thesalmon. give usthesameflexibility we have at InnovaMar in Central Investing innew growth - - - Furthermore, vast sums are being invested in land based fish farms in other countries, close to important markets for Norwegian salmon. Each year, Norway’s aquaculture sector pays billions of NOK in state and local government taxes and levies. The production of salmon forms the core of an important business cluster, employing around 34,000 people – many of them in remote locations along the Nor- wegian coast that are at risk of population decline. By its actions, the government will demonstrate if its ambition to make Norway the world’s leading seafood nation is serio- usly meant. New taxes and levies will help to weaken the Norwegian aquaculture sector’s competitiveness and wil- lingness to invest, allowing competitors in other countries to gain ground. The Norwegian authorities must as soon as possible, therefore, eliminate the uncertainty that has been created with regard to important framework conditions for the sector’s development in Norway. Passion for Salmon

9 10 SALMAR ANNUAL REPORT 2018 seven thousand tonnes. Butrealising thisgrowth potential produce almost three timesmore thanlast year’s outputof rations inNorway andScotland. Arnarlaxhaslicencesto the company canperform at thesamelevel asourope we are aware that muchwork remains to be done before landic aquaculture industry asawhole.At thesametime, We have great faithinthefuture of ArnarlaxandtheIce- mandatory offer for theremaining shares inthecompany. 54.2 percent. Inthisconnection, we have alsomadea Arnarlax. Following thistransaction, SalMarnow controls of theshares intheIcelandicsalmonfarmingcompany invested NOK180millionto acquire afurther12.3percent In mid-February2019,itwasannouncedthat SalMarhad Iceland culture, andhow we are required to behave at work. understanding of ourcore values andunderlyingcorporate SalMar School in 2019. This will enable us to create a shared this effort, we willputtheentire organisation through the bottom lineandmake usmore efficient. Asavitalpart of and processing activitieswillhave apositive impactonour and environment (HSE)routines, tailored to ourproduction injuries. We are convinced that effective health, safety sickness absencerate andthenumberof work-related the reporting of near-missincidents. We must reduce our her raise awareness of our safety routines and intensify safe andsound.To strengthen thisfocus SalMarshallfurt Everyone at SalMarshallcome homefrom work eachday Safety first and foremost - - harvested. Inaddition,we have ahugelydedicated team for asinglemonth inJuly, with17,000tonnes of salmon record for SalMar. AndInnovaMar set anew world record 40,500 tonnes of salmoninthefourth quarter isacompany and flexibility inhandlingthe volumes whenthey arrive. and Industry hasdemonstrated anexceptional efficiency lice levels down andreducing production costs, andsales organisation. Farminghasdoneanimpressive jobof keeping back onayear withstrong performances throughout the employees for alltheirhard work in2018.We canlook Finally, Iwould like to thankeachandevery oneof SalMar’s Thank you for your invaluable efforts! future value creation, jobsandsustainable food production. standing for theopportunitiesindustry canoffer for a great dealto doto winsociety’s confidence andunder- authorities. Arnarlax and other fish farmers on Iceland have farmers, itisimportant withpredictable policiesfrom the to create arobust andsustainable site structure. For fish analyses, theIcelandicaquaculture industry shouldaim interests, combined withcomprehensive environmental Through adialoguewiththeauthoritiesandwild-salmon access to additionalsuitablesites to improve itsbiosecurity. will require substantial investments insmoltfacilitiesand salmon we produce, withminimalfootprint. at theforefront for SalMar;maximisevalue creation onthe everyone elsecanconcentrate ondoingthework that are working inadministration andsupport,whomake sure that Olav-Andreas Ervik CEO The history of SalMar

SalMar was founded in February 1991 following the acquisition of a licence for the production of farmed salmon and a white fish harvesting/processing plant from a company that had gone into liquidation. These events took place during one of the most turbulent periods in the history of the Norwegian aquaculture industry, which sub-sequently also led to the collapse of the fishfarmers’ own sales organisation (Fiskeoppdretternes Salgslag AL) in November that same year. It was precisely this company’s failure, and the so-called salmon mountain, that helped lay the foundations for the secondary processing operations which are a cornerstone of the SalMar story. Up until then the vast majority of Norwegian salmon had been exported as fresh or frozen round gutted fish. This was the start of a major restruc-turing of the Norwegian aquaculture sector, which gradually led to a substantial increase in its level of industrialisation.

At the bottom of the next pages you can follow SalMar’s history until 2019. Passion for Salmon

11 12 SALMAR ANNUAL REPORT 2018 ing for thenext transfer of smoltto OceanFarm 1inthe out intheoceanisright way to go.We are now prepar- cycle reinforce ourconfidence that farming salmonfurther The promising biologicalresults from thefirst production single delousingtreatment. lice were observed, anditwasnot necessary to applya rate andthat itsqualitywasuniformly good. Few salmon confirm that the fish achieved an extremely good growth and endedinearly2019.After 15months at sea,we can lation’s first salmon started at the end of September 2018 Frohavet, off thecoast of Frøya.Harvesting of theinstal- The installation hasbeen situated inanarea of seacalled of benefit to thewholeindustry. of new andinnovative equipment technology that willbe ing project, which has involved the testing and development logical conditions andfish welfare. Itisalarge andchalleng Ocean Farm1isapilot project focusing particularlyonbio- Ocean Farm1’sfirst production cycle completed industries to realise both of thesefull-scalepilot projects. open-ocean aquaculture facility.Both companies are part The development licenceshave beengranted for aperiod ordinary production licencesiftheNorwegian Directorate of theSalMarGroup. SalMariscollaborating withother was granted eight licencesfor thedevelopment of an In 2016,theNorwegian directorate of fisheriesgran- of seven years. However, they may beconverted into centres of expertise intheaquaculture andoffshore ted thefirst eight aquaculture development licences to OceanFarmingAS. Earlyin2019,MariCulture AS of Fisheries’target criteria are met. in aquaculture A new era - ally from SalMar’s existing offshore installation, Ocean Farm Fisheries describesindetail how theconcept differs materi In itslicence-award letter, theNorwegian Directorate of surroundings. the way technology andbiologyinteract insuchexposed attempted before andanimportant aspectwillbeto test its harshweather conditions. Nothing similarhasever been miles off the coast of Trøndelag, an area well known for is to locate thefishfarminopenwater, 20–30nautical lation canbebuiltandputinto production. Theobjective design work remains to bedonebefore thevast new instal establishment of aquaculture intheopenocean.Substantial Fish Farmproject marksasubstantial step towards the The award of eight development licencesfor theSmart Next step –production intheopenocean initial transfer. number of measures basedonlessonslearnedfrom the summer of 2019.Inthisconnection, we will implement a - - Passion for Salmon 13 - World’s first offshore fish farm offshore first World’s Frohavet off the coast of Frøya. of coast the off Frohavet Ocean Farm 1 from its position in 1 from Ocean Farm Contributing to sustainable growth sustainable to Contributing R&D tasks relating to biological conditions and fish welfare. welfare. fish and conditions biological to relating tasks R&D in the development further will help promote As such, they it. It is to and the applied R&D relating sector aquaculture by the provided experience the operational that important of construction the industrial-scale to leads facilities pilot ocean-going fish farm. this type of SalMar considers that a precondition for sustainable growth growth sustainable for precondition a that considers SalMar in new operate is the ability to sector in the aquaculture provide and ocean currents sea temperatures where areas, fish. The the farming of for biological conditions optimal that the technology develop is to these projects purpose of signifi great of be also will They possible. this make will long-term industry’s aquaculture Norwegian the for cance as position Norway’s strengthen will and competitiveness fish farming. a global leader in offshore R&D Equipped for of a variety undertake equipped to are these projects Both - SalMar is founded in Frøya in Sør-Trøndelag following the acquisition of one licence for the production of farmed salmon and a of the production one licence for the acquisition of following in Frøya in Sør-Trøndelag SalMar is founded the processing primary business was The company’s liquidation. had gone into that a company from plant harvesting/processing led to which gradually sector, aquaculture the Norwegian of a major restructuring of the start salmon. This was frozen of industrialisation. of in its level increase a substantial 1991 VÅR HISTORIE VÅR allows fish to receive necessary treatments in a closed in a closed necessary treatments receive to fish allows no emissions. are which there from environment, combine important environmental aspects of open-net fish open-net aspects of environmental important combine The Smart Fish technology. farms with closed-containment impact environmental immune from Farm will be largely in it can be situated fish farms because caused by other where coast Norwegian whole the along area exposed any design At the same time, its flow. ocean currents the outer treatment of fish, the control and management of the unit, unit, the of management and control the fish, of treatment of transportation the for system advanced an as well as chambers. production surrounding to the eight fish linked the realise help to could technology equipment This new make ambition to and parliament’s government Norwegian will unit The nation. seafood leading world’s the Norway 1. It will withstand considerably more exposed conditions conditions exposed more considerably 1. It will withstand dif biggest the However, capacity. the twice have and the for column a closed central it will have is that ference BROODSTOCK The broodstock are the parent fish which provide the eggs and sperm (milt) required to produce new generations. The fertilised eggs take 60 days to hatch when placed in an incubator kept at eight degrees Celsius. SALMAR ANNUAL REPORT 2018 REPORT ANNUAL SALMAR

14 Passion for Salmon 15 - MARKET GROWTH SUPPLY CHAIN SUPPLY On-growing The farming of fish for human consumption takes place in place in takes consumption for human fish The farming of - flota by sea the in suspended nets enclosed large net-pens, require net-pens a solid anchorage, In addition to tion devices. the farmed prevent to measures cleaning and adequate regular by affected is net-pens the in Growth escaping. from fish sorted are fish the too Here quality. water and light feeding, and grow. develop as they & processing Harvesting are fish the first the marine net-pens, to transfer after A year wellboat by live transported The fish are harvesting. for ready in holding pens, kept the fish are There plant. the processing to The fish itself. the plant to transferred being carefully before and always equipment, killed and bled out using high tech are harvest After with applicable public regulations. in accordance processing. of degrees various ing the salmon is subject to Sales or frozen), salmon (fresh The fish is sold either as whole gutted other products, of range portions or a wide in individual fillets, the world. around markets to distributed which are SALES SMOLT TRACEABLE Acquisition of two licences for the production of farmed salmon in Central Norway. salmon in Central farmed of the production licences for two of Acquisition EGGS/FRY HARVESTING 1992 VÅR HISTORIE VÅR Smoltification in a life from fish transition the juvenile whereby The process is called smoltification. a sea-going existence to freshwater their to sheen silver a develop fish the process this During Their gills colour. bellies, while their backs turn a blue-green a smolt. fish turns into also change when the juvenile ready for initial feeding. The water temperature is kept at at is kept temperature The water initial feeding. for ready dim lighting to exposed Celsius, and the fry are 10-14 -degrees six weeks. for period lasts The initial feeding 24 hours a day. tanks. Well larger to and moved sorted the fry are grow As they before vaccinated are all the fish their “smoltification” ahead of marine net-pense. the fish farm’s to being shipped by wellboat yolk sac, which provides it with the sustenance it needs during it with the sustenance sac, which provides yolk and growth on the fish’s now From of life. weeks few its first will all depend on temperature. development Initial feeding sac has been absorbed, the fry can the yolk of When most now are a fish tank. They into the incubator from be moved The egg hatches when the eggshell cracks open, liberating the open, liberating when the eggshell cracks The egg hatches to a attached the fry is baby fish (fry) inside. When it hatches Eyed salmon eggs Eyed developed the eggs have in the incubator 25–30 days After clearly visible the salmon are of the eyes where the stage to inside the egg. black dots as two Fry Farming location Indre Bringenes in Mefjorden on Senja. Largest mountain on Senja in the background, Breitinden 1,001m

SalMar’s OPERATIVE SEGMENTS 2018

ROE/SMOLT PRODUCTION FISH FARMING No. of production facilities: CENTRAL NORWAY • 7 smolt facilities (Møre & Romsdal, Trøndelag) • 1 cleaner fish facility No. of licences: Production: 34.0 million smolt 68 (53,611 MAB tons) and 0.5 million lumpfish in 2018 Harvested volume in 2018: 100,100 tonnes gutted weight SALMAR ANNUAL REPORT 2018 REPORT ANNUAL SALMAR

16 SalMar’s OPERATIVE SEGMENTS 2018

FISH FARMING SALES AND PROCESSING NORTHERN NORWAY Volume sold: (Troms and Finnmark) approx.138,000 tonnes No. of licences: Value added products Passion 32 (33,406 MAB tons) (product weight): Harvested volume in 2018: approx. 42,000 tonnes for 42,400 tonnes gutted weight Salmon

17 ROE/SMOLT PRODUCTION FISH FARMING CENTRAL NORWAY

The segment’s facilities are distributed from Senja in the Central Norway is the region in which the SalMar Group first north to Sunnmøre in the south. Two of the facilities, established its business. Initially this was based on assets ac- Straumsnes Settefisk and Rauma Sætre AS, produce organic quired from a company which had gone into liquidation, and smolt. Rauma Eik produces prospective broodfish for SalMar which had one license for production of farmed salmon and a Genetics. The other facilities produce conventional smolt. harvesting and processing plant in Frøya that was designed Smolt vary in weight from 60-250 g. to handle white fish. Since then, both the Group and the segment have gone from strength to strength. The segment employs 77 people, many of whom are very experienced. A large proportion of the workforce are college- Today, SalMar’s Fish Farming Central Norway segment con- educated or have certificates of completed vocational trols 68 marine-phase production licenses where SalMar training. The segment’s staff are highly competent with Farming AS owns all of these licenses. The segment also regard to both day-to-day operations and development operates several R&D licenses in collaboration with other work/projects. The production of smolt is currently switching companies. to the use of recirculated water (RAS). SalMar currently has this in place at its facilities in Follafoss and Senja. Any new SalMar is currently the world’s largest producer of organic capacity built will employ RAS technology. salmon. In 2018, the company harvested a total of 9,000 tonnes gutted weight of organic salmon at the Vikenco AS The segment has started work to expand several facilities: processing plant in Aukra. • Increase in ouput from smolt facility in Follafoss, from 15 to 19 million smolt. The new section will go into The bulk of SalMar’s marine-phase fish farming operations operation in the autumn of 2019 are organized in SalMar Farming AS, and are located in central • Plan to increase output from smolt facility on Senja Norway, stretching from Sunnmøre to the Namdal coast. Fish where one wishes to double capacity from 14 to 28 Farming Central Norway is divided into three regions, south million smolt. (Møre & Romsdal), central (Frøya and Hitra) and north (Fosen • Increase in output of lumpfish from our facility in and North Trøndelag). At the close of 2018, the segment em- Langstein from 1.4 to 3.0 million smolt. ployed 377 people. The environmental conditions for salmon farming in this region are extremely good, with favorable sea SalMar is working hard to ensure the quality of the smolt temperatures all year round thanks to the Gulf Stream, a high it delivers. The success of these efforts is reflected in the water replacement rate and plenty of suitable locations. steadily increasing survival rate of the smolt after they have been transferred to the company’s sea farms At an early stage, SalMar decided to focus on the development and use of non-medicinal delousing methods. Fish Farming Central Europe has strengthened its lice control efforts throughout 2018 and has generally experienced lower lice numbers in the areas in which we have our operations. Our non-medicinal lice control methods also include preventive measures, such as the installation of protective “skirts” around the net pens and the use of cleaner fish.

SalMar’s fish farms focus on cost-effective operation and maintain a high ethical standard with respect to animal hus- bandry. In order to contribute to SalMar reaching its goal of being the most cost-effective producer of farmed salmon, there is a continuous focus on sub-goals, such as achiev- ing the fastest possible growth with the lowest feed factor. The company was quick to introduce its own standards and ‘best practices’ in order to secure increased efficiency. This involves, among other things, concentrating marine-phase production at large, sustainable facilities stocked with the correct biomass volume and with a good environmental carrying capacity. SalMar is also working strategically to secure additional space so that we can take our share of future production growth. ORT 2018 REP ORT ANNUAL SALMAR

18 FISH FARMING NORTHERN NORWAY SALES AND PROCESSING

SalMar’s Fish Farming Northern Norway segment currently The Sales and Processing segment administers the Groups holds 33 licenses for the production of farmed salmon. These sales activities and onshore processing facilities. In 2018, comprise 1 green, 1 demonstration and 31 conventional li- the segment sold around 138,000 tonnes of salmon and censes. The segment has also had two R&D licenses under other fish-based products. Sales are focused in the markets shared operation in 2018. SalMar is the largest fish farming of Europe, Asia and the USA. The segment distributes salmon enterprise in Troms and Finnmark, with operations in 11 dis- to more than 50 different countries in all. SalMar attaches tricts, stretching from Harstad in southern Troms to Sør-Var- considerable importance to positioning itself close to its anger in Finnmark. Operationally, the segment’s activities are markets. The segment therefore has permanently staffed divided into three regions, Finnmark, North Troms and South sales offices in Japan, South Korea and Vietnam. Troms, which are each led by a regional manager. The segment harvests most of its output locally, and purchases har- InnovaMar is the SalMar Group’s main salmon harvesting and vesting services for the bulk of its volume in Skjervøy, Troms. processing facility, and is located at Nordskaget in Frøya, The segment’s administration is located at Finnsnes in Troms. in the heart of SalMar’s fish farming activities in Central Norway. InnovaMar is an ultra-modern building covering In 2017, the segment employed 154 full-time equivalents, some 17,500 m2 with an advanced equipment park for har- of whom 136 were full-time employees and 18 part-timers. vesting and filleting and has a capacity to harvest 75,000 The segment has focused systematically on enhancing the tonnes of salmon per year in one shift. 2018 has been char- expertise of its workforce and employs several apprentices. acterized by high activity and InnovaMar set world record for This has been made possible through a systematic effort a single month with a harvest volume of 17,000 tonnes in over several years and is an important aspect of our recruit- July. A significant portion of the harvested volume goes on ment and competence enhancement strategy. to further processing before being shipped to customers and consumers worldwide. Through innovative use of production Remote feeding has been an important area of focus in the technology, the quality of the final product is enhanced, segment. Work got properly underway in 2012 in Region costs are reduced and the working environment for staff is South, which was the first region to switch to 100 per cent improved. Through our ownership of Vikenco AS, we facilitate remote feeding. The network was gradually extended, and the harvesting of fish from Møre & Romsdal and the south- by 2014 all our sites were equipped with a remote feeding ern part of Central Norway. In 2018, Vikenco and InnovaMar capability. This means joint surveillance and control of all together produced around 42,000 tonnes of processed SalMar’s sites in South Troms and East Finnmark. The sea products, measured by product weight. farms are monitored even when there is no one physically on site, and the fish receive their meals over a larger part of the In 2018 the construction of a new harvesting and process- day. Data collection is more structured in the remote feeding ing plant in Northern Norway, InnovaNor, was approved. This center, which provides a better foundation for decision mak- is a significant step towards strengthening this region as an ing forward in time. important industrial engine in the company’s development. InnovaNor will provide the same flexibility we have with SalMar focused early on use of and development of non- InnovaMar in Central Norway to harvest fish on the terms of medicinal delousing methods for treatment of lice and has the biology, not the needs of external suppliers. Construction in Northern Norway through 2018 strengthened lice control start will take place in the summer of 2019 and the facility and generally experienced a lower lice levels in the areas will be put into use in the first half of 2021. we operate. The non-medicinal delousing methods includes preventive methods, such as the installation of protective “skirts” around the net pens and the use of cleaner fish.

It is possible to produce more salmon in Norway, and North- ern Norway has a considerable potential for further growth. This region has excellent environmental conditions for sustainable production, which we nurture through expertise and systematic improvement efforts. The expansion of SalMar’s smolt production, as well as the decision to build a harvesting

plant within the segment’s area of operation, underpin the Passion importance to the Group of both Fish Farming Northern Nor- way and the region as a whole. for Salmon

1995 Acquisition of Follasmolt AS in Verran, Nord-Trøndelag. Start of smolt production. Lease of Kjørsvik Settefisk’s hatchery in Aure, Møre & Romsdal. VÅR HISTORIE 20 SALMAR ANNUAL REPORT 2018 CULTURAL TENETS within thecompany sinceitsinception in1991.Although internal framework conditions, itremains firmlyanchored builds onthesuccessfactors that have beencultivated the company’s culture isaffected byboth external and SalMar’s corporate culture isconstantly evolving, and in afew overarching principles,inparticularastrong focus ongoodhusbandry, operational efficiency SalMar’s and safe food production. Passion for Salmon 21 attitudes towards, as well as respect and care for salmon, co- for and care as respect as well towards, attitudes succeed. production. Extension of the plant at Nordskaget in Frøya to increase processing capacity. • Kverva Holding AS becomes sole owner of SalMar. of sole owner becomes Holding AS capacity. • Kverva processing increase in Frøya to Nordskaget at the plant of Extension 1997 VÅR HISTORIE VÅR • WHAT WE DO TO DAY WE DO BETTER THAN YESTER DAY THAN YESTER DO BETTER WE DAY DO TO WE • WHAT the production of all stages at improvement demands continuous salmon producer cost-effective be the most To performance winning, where of a culture and develop the unknown into step daring to is about This tenet process. and celebrated. measured is both IS SATISFIED DOING IT FOR YOUARE THE PERSON UNTIL DONE • THE JOB IS NOT accordance in other, each of and demand high standards others of the expectations will meet we This means that by chain, and it is only in the production and ‘customers’ ‘suppliers’ many are There standards. SalMar own our with will we that with mutual respect each other treating • FOCUS ON THE SOLUTION • FOCUS up with solutions and contri- come help to position or place, has a duty of regardless SalMar, for who works Everyone solutions, implement will jointly we and systems, practices will challenge existing We processes. improvement to bute about, each other. not will talk to, and we THE SUCCESS OF US ALL IS VITALTO DAY DO TO • THE JOB WE and an personal attitudes develop than 1,000 people, it is vital to Although SalMar as a whole numbers more is familiar with our everyone vital that function. It is therefore me and my happens is up to what that understanding to salmon, and on our way passion for our common for each other support we and that and values, vision, objectives farmed salmon. supplier of all times the lowest-cost being at CARE • WE the right also develop must we succeed as a team To and but act with loyalty, ourselves think for must We and the environment. business associates customers, workers, engaged in food are we bear in mind that always DO WE EVERYTHING IN • SUSTAINABILITY the environment on safeguarding focus stronger an even developing the basis for form standards and moral High ethical but en- the environment, deplete shall not We of. custodians the temporary are we that and day, to in day work we that we and everything social responsibility, This is our shared generation. the next to pass it on unimpaired we that sure and in the future. today both public scrutiny up to stand do must 22 SALMAR ANNUAL REPORT 2018 VÅR HISTORIE 2000 of 49%of theshares in SenjaSjøfarmAS inTroms. At that timeSenja Sjøfarmhadnine production licencesanditsown hatchery. Total volume harvested: 11,000tonnes gutted weight. Establishment of operations outsideof Central Norway through theacquisition any growth must besustainable: environmentally, sociallyandfinancially. Today, SalMarisoneof theworld’s foremost producers of farmedsalmon. further growth isenormous.However, at SalMarwe are innodoubt that In 2014,to reinforce ourfocus ontheelements that have madeSalMar the company itistoday, we adopted anew visionthat willhenceforth Throughout itshistory company growth hasgonehandinwith The aquaculture industry isdeveloping rapidly, andthepotential for guide our steps; Salmon» for «Passion “Passion for Salmon” outstanding financialperformance. Although SalMar continues to pursue its stated aim of cost leadership, it is moving from a focus on outcomes to a focus on performance. We aim for excellence at all levels and in all aspects of our operation.

The new vision will underpin all activities and all actions -within SalMar. All decisions relating to production will be made on the basis of our passion for salmon. The fish will be farmed in conditions most conducive to their wellbeing. We believe that the best biological results will pave the way for the best financial results, and thus safeguard our position as the most cost-effective producer of farmed salmon in the world.

This new vision and ambition depend on the existence of a winning culture throughout the organisation. The source of SalMar’s corporate culture and the company’s cultural tenets is our shared passion for salmon. These tenets underpin our vision and describe the attitudes and conduct expected of all employees. Passion for Salmon

23 ORT 2018 REP ORT ANNUAL SALMAR

24 Sustainability and SOCIAL RESPONSIBILITY with HSE in focus

SalMar intends to secure long-term profitability and growth by operating all aspects of its fish farming and processing activities in a sustainable manner, and by acting as a responsible corporate citizen. For SalMar, sustainability means maintaining high ethical standards and helping to further raise awareness of the environment in which we work every day. We shall protect the environment and ensure it is managed in a way that will benefit future generations. Passion for Salmon

2001 Total volume harvested: 15,000 tonnes gutted weight. Establishment of operations outside Norway through Norskott Havbruk AS, a 50/50 joint venture with Lerøy Seafood Group. Norskott Havbruk AS is sole owner of Scottish Sea Farms Ltd, the UK’s second -largest salmon producer. VÅR HISTORIE 26 SALMAR ANNUAL REPORT 2018 third parties and customers, SalMar has developed its own statutory regulations and the sustainability requirements of In additionto beingmeasured andaudited inaccordance with SalMar Standard from SalMar’s website www.salmar.no. The code of conduct andcorporate tenets may beobtained page 4of SalMar’s sustainability report for 2018. SalMar School’s annual seminars.For further details, please see role in SalMar’s success. These issues are discussed at the commitment andpositive attitudes have always played akey dies anddevelops SalMar’s corporate culture. Theemployees’ the actionsof allemployees. Itisthe workforce that embo- describe desired behaviours andprovide ashared platform for A set of corporate tenets hasbeendrawn up.Thesetenets constitutes thevery foundation of SalMar’s HSEstrategy. in allaspectsof ourbusinessisanabsolute requirement, and wrongdoing orother causesfor concern. Ahighethical standard training programmes also highlight how employees canreport corporate culture anduphold thecompany’s integrity. Internal is intended to contribute towards thedevelopment of ahealthy corruption, theworking environment andcommunity relations, among other things,SalMar’s policiesonbusinessethics and known to allemployees. Thecode of conduct, whichcovers, SalMar’s code of conduct andsocialresponsibility hasbeenmade Code of conduct andsocialresponsibility available initsentirety from SalMar’s website www.salmar.no. summary of selected issues discussedinthat report, whichis The following text must therefore beseenasanoverarching lity andsocialresponsibility at SalMar, pleaseseethisreport. Initiative. For amore complete account of HSE, sustainabi report in compliance with the principles of the Global Reporting In 2018,SalMarcontinued to publishaseparate sustainability of ouroperations ontheenvironment. everything we dobearspublicscrutiny, andminimisetheimpact strive to fulfilour corporate social responsibilities, ensure that and as a custodian of financial and intellectual capital. We a producer of healthy food, auserof thenatural environment, social responsibilities: as an employer, an industrial processor, The Group isextremely aware of thediverse nature of its sustainable development inNorway. public debate, SalMarcontributes to important processes for plans. Byactively engaginginindustry organisations andthe public are well informed aboutitsoperations anddevelopment important to ensure that localdecision-makers andthegeneral farming must still be considered a young industry, and it is mation, as well as participate in planning processes. Salmon presence in localarenas for theexchange of views andinfor- several localprojects. Itisalsoimportant for SalMarto have a conditions for itsfish stocks. SalMarisactively engagedin the Group isableto operate at sites affording goodgrowing active sociallife outsideof work. For SalMar, itiscrucialthat have thenecessaryinfrastructure andopportunitiesfor an it is important that thelocalcommunities to which they belong fare of many smalltowns andrural districts. For ouremployees, gian coast, and therefore hasaninterest in the continuing wel SalMar hasapresence inlocalcommunities alongtheNorwe- - - In 2018, we continued to work on the development of our gement iscommitted to realising thegoalsthat have beenset. has drawn upitsown localsub-goalsandactionplans.Mana- overarching objectives, eachindividualdivisionanddepartment with associated activities andaction plans. Onthebasisof these priorities. SalMar has drawn up a set of overarching objectives, SalMar’s HSEactivitiesare basedonourvalues andstrategic Strategic approach to HSE ENVIRONMENT, HEALTH ANDSAFETY ORGANISATION, WORKING environment. or discrimination, avoids corruption andisconsiderate of the labour rights, opposesany form of childlabour, forced labour all areas of its business. This means that the company respects Universal Declaration of Human Rights byacting responsibly in SalMar fullysupportsandrespects theprinciplesset outinthe HUMAN RIGHTS see page21of SalMar’s sustainability report for 2018. which score highlyininternal audits.For furtherdetails, please ‘SalMar Standard’ designation is awarded to those departments processes are to bechecked by means of operational audits. The which the operation must comply, and describes how major work its operation. Thestandard contains alltherequirements with ‘SalMar Standard’ performance criteria for thevarious partsof courses, operational seminarsandtheSalMar School. All new employees receive HSEtraining through induction are allimportant initiatives to improve safety at work. meetings attended by staff health and safety representatives all staff, internal audits,healthandsafety inspections and lyses of allincidents andnon-conformances, thetraining of In additionto riskassessments, evaluations andthrough ana- discussion annuallybySalMarASA’s board of directors. on theworking environment andhumansafety, istabledfor reports. The issue of sustainability, with particular emphasis are shared across all departments in quality-assured weekly gement teams. Lessons learnedandimprovement measures systematic weekly andmonthly reviews bySalMar’s mana Activities relating to theenvironment are followed upthrough are reported, dealtwithandevaluated onanongoingbasis. have beendrawn upfor allemployees. Allnon-conformances part of theirjobdescriptions, andHSErulesregulations dures. Senior personnelhave environmental responsibility as contingency andactionplans,internal routines andproce wegian standard NS5814,andresult inthedrawing upof Risk assessments are carriedoutinaccordance withtheNor- in themonitoring andmanagement of risk. day-to-day management of thecompany, andisauseful aid non-conformances. Thesystem isanimportant tool inthe surveillance andcontrol of key figures andthe evaluation of ate arenas. Emphasisisplacedoncompetence enhancement, reporting functionthat isusedfor evaluation intheappropri- on creating andrefining auser-friendlysolutionwithclear is speciallyadapted to SalMar’s needs,andwe have focused overarching platform for corporate governance. The system - - Passion for Salmon 27 - - - slightly to 2.1 per cent in 2018, up from 2.0 per cent in 2017. 2.0 per cent in 2018, up from 2.1 per cent to slightly in harvesting work employees SalMar’s of proportion A large sickness absence rate the that and it is here and processing, 2018. in most and increased is highest preventive implement made to being are efforts Systematic - wor and workplaces adapt necessary, where and, measures individual employees. the needs of kloads to and information is presented on an ongoing basis on our website on an ongoing basis on our website is presented and information a fresh take is helping SalMar to This standard www.salmar.no. live further to still ourselves do things and stretch we how look at do. we in everything Sustainability our basic tenets: one of up to sustainability SalMar’s see page 36 of further details, For 2018. for report ENVIRONMENTAL RESPONSIBILITY ENVIRONMENTAL undesirable an having avoid to systematically works SalMar acti- This includes the day-to-day impact on its surroundings. and development, in research involvement its employees, ons of aut- and regulatory with government as collaboration as well and companies aquaculture other groups, horities, interest goods and services. suppliers of sustai SalMar’s please see pages 26–33 of further details, For 2018. for nability report (ASC) standard Council- Stewardship Aquaculture had achie- marine sites SalMar’s 2018, 20 of By the close of which standard, ASC with the in accordance certification ved sustainability stringent most the industry’s to is considered ensure is to standard the ASC of The main objective standard. with compliance and footprint carbon reduced a transparency, added value as provide as well social responsibilities, corporate certified. the companies to environ to demanding with regard is extremely standard The ASC - with sta communication environment, working burden, mental to is difficult standard The ASC and transparency. keholders to be devoted to resources substantial since it requires achieve, Openness on the detail. focus and a considerable preparation the standard, part of is an important performance to with regard Diversity and equality Diversity diversity to clear policies with respect has published The Group discrimi no accepts SalMar conduct. of code its in equality and members, customers board shareholders, employees, of nation age, gender nationality, ethnicity, of or suppliers on the grounds the of the individual is the cornerstone for Respect or religion. page 23 of please see further details, policies. For company’s 2018. for report sustainability SalMar’s ANTI-CORRUPTION No SalMar employee corruption. of no forms SalMar accepts any receive or give promise, offer, indirectly, or directly shall, in order remuneration benefit or bribe, unlawful or inappropriate As part or the company. themselves for advantage achieve to guidelines SalMar has adopted measures, its anti-corruption of been accused not has SalMar date, To gifts. to respect with corruption of form any to relating cases in any or involved of any of aware not are and management or bribery. The board in this respect. conduct of code the company’s of violations - - - Total volume harvested: 35,000 tonnes gutted weight. Divestment of operations SalMar does not consider to be core businesses, including t businesses, including be core to consider SalMar does not operations of Divestment weight. gutted 35,000 tonnes harvested: volume Total of salmon. and processing farming, harvesting business activities, core on focus herring, herring oil and fish meal. • Greater of he production 2005 VÅR HISTORIE VÅR rate below 4.5 per cent was not achieved. The overall sick overall The achieved. not was cent per 4.5 below rate compared 5.5 per cent, in 2018 came to ness absence rate rose sickness absence in 2017. Short-term with 4.7 per cent systematically with risk assessment and training to safeguard safeguard to training and with risk assessment systematically Sal- please see page 23 of further details, For its employees. 2018. for report sustainability Mar’s Sickness absence the sickness absence in focus was a strong As usual, there the sickness absence keeping the goal of 2018. However, nevertheless the most important sources of personal growth. personal of sources important most the nevertheless - sustaina SalMar’s please see page 24 of further details, For 2018. for bility report and injuries Accidents works The company work. place to be a safe to SalMar intends activities at SalMar mean that training and the correct compe and the correct training SalMar mean that activities at on the job and in the form both is given vital. Training are tences and professional follow-up Day-to-day courses. external of are co-workers of team within the individual’s development The SalMar School comprises a series of workshops for all all for workshops a series of The SalMar School comprises as well topics work-related on relevant which focus employees, - The SalMar School encoura and attitudes. as business ethics the By revitalising workforce. the entire ges and develops of the exchange ensure wishes to SalMar School, the Group divisions. the various between knowledge and experience operational day-to-day with the various The risks associated This has raised the quality of the training given, and ensures equ and ensures given, the training the quality of This has raised representatives, health and safety all staff for ally good training position. local or organisational their geographic of regardless representatives. health and safety have the Group All parts of in all carried out twice a year inspections are Health and safety inspe- safety and health 123 of total a 2018, In departments. areas important identified carried out. These have ctions were safety. further enhance workplace to be improved must that from any reprisals. The procedure for such notification is des- such notification for The procedure reprisals. any from which is available system, governance cribed in the corporate all employees. to developed we DNV, from with experts In 2017, in conjunction our staff for programme training and carried out a customised course). (a so-called 40-hour representatives health and safety Competence development Competence though initiatives HSE training receive employees new SalMar’s seminars operational courses, follow-up such as induction and training received have All employees and the SalMar School. causes for or other wrongdoing potential report to in how protected are whistleblowers internal that and know concern, ctive and user-friendly reporting solution. The system has now has now system solution. The reporting and user-friendly ctive the of management in the day-to-day tool an important become and management the monitoring aid in useful and is a company, in 2019 with platform this developing will continue risk. We of - mana performance for further opportunities the addition of units. the different and learning across gement Corporate governance platform governance Corporate - gover our corporate further develop to worked In 2018, we adapted is specially system (called EQS). The nance platform - an effe creating on focused have needs, and we SalMar’s to ORT 2018 REP ORT ANNUAL SALMAR

28 Corporate governance at SalMar ASA

SalMar ASA aims to maintain a high standard of corporate governance. Good corporate governance strengthens public confidence in the company and contributes to long-term value creation by regulating the reciprocal roles and responsibilities of shareholders, the board of directors and the company’s management, over and above that which is stipulated in legislation and other regulations. Passion for Salmon

Total volume harvested: 44,000 tonnes gutted weight. Kverva Holding AS sells 42.5% of the company’s shares to a limited number of Norwegian 2006 and international investors. • Acquisition of three new licenses in Nordmøre. • Acquisition of the remaining 51% of the shares in Senja Sjøfarm AS, making SalMar sole owner of the company. VÅR HISTORIE 30 SALMAR ANNUAL REPORT 2018 owned 42percent of theIcelandicaquaculture company Ar- tonnes of harvested fish. At theend of 2018,SalMaralso second largest producer of salmon,withacapacityof 30,000 turn owns 100 per cent of Scottish Sea Farms Ltd, the UK’s SalMar owned 50percent of Norskott Havbruk AS, whichin for marine production of Atlantic salmon in Norway. In addition, As of 31 December 2018,the company owned 100licences SalMar isoneof theworld’s largest producers of farmedsalmon. 2. THEBUSINESS Deviations from theCode: None respect to theCode in2018. statement describeshow SalMarhasconducted itselfwith this information isalsoavailable from www.salmar.no. This herence to corporate governance in its annualreport, and SalMar issues a comprehensive annualstatement of itsad- specific recommendations. an explanation ifithaschosenanalternative approach to explain’ principle,whichmeansthat thecompany must provide nues.no. Application of theCode isbasedonthe‘comply or issued on17 October 2018.TheCode may befound at www. up the Code. SalMar complies with the current code of practice, The Norwegian Corporate Governance Board (NUES) has drawn www.oslobors.no Norwegian), while theContinuing Obligations isavailable at Norwegian Accounting Act isavailable at www.lovdata.no (in of information required to beincludedinthestatement. The Code”). The Continuing Obligations also sets out an overview Norwegian Code of Practice for Corporate Governance (“the governance, covering every sectionof thelatest version of the ment of itsprinciplesandpractices withrespect to corporate gations requires listed companies to publishanannualstate - annually. Inaddition,OsloStock Exchange’s Continuing Obli- to disclosecertaincorporate governance related information the Norwegian Accounting Act, whichrequires thecompany Stock Exchange. Thecompany issubjectto Section3-3bof SalMar isaNorwegian publiclimited company listed ontheOslo annual assessment of itsprinciplesfor corporate governance. The company’s board andmanagement perform athorough ing that thecompany hasadequate corporate governance. SalMar’s board of directors hasoverall responsibility for ensur Compliance andregulations 1. CORPORATE GOVERNANCE • • • • • ing mainprinciples: Corporate governance at SalMarshallbebasedonthefollow-

be independent of majorshareholders The majority of the members of the board of SalMar shall pendent of company management SalMar’s board of directors shallbeautonomous andinde- activities governmental bodiesandthepublicaboutcompany’s nication withitsstakeholders, includingitsshareholders, SalMar shallmaintain open,relevant andreliable commu- All shareholders shallbetreated equally between shareholders, theboard andmanagement SalMar shallhave acleardivisionof roles andresponsibilities - The company’s objectives andmainstrategies are furtherdis creation for shareholders. profiles for theGroup andensures that thesesupport value sale of farmedsalmon.The board of directors alsodefines risk production, marine-phase farming, harvesting, processing and article, SalMariscurrently engagedinbroodfish andsmolt orities have beendefined.Withintheframework of theabove developed itsown goalsinlinewiththese,andstrategic pri- shareholders andother stakeholders. Eachbusinessarea has strategies for theGroup to secure optimal value creation for its SalMar’s board of directors hasdrawn upclearobjectives and with similarorrelated objectives.” vestment activities, including participation in other companies directives from therelevant authorities,undertake general in activities related thereto. Thecompany may, inaccordance with and trading of alltypesof fishandshellfish, otherfinancial “The objective of thecompany isfishfarming,theprocessing of association: SalMar ASA’s objectives are definedinArticle2 of itsarticles business, whichisco-located withitsheadquarters inFrøya. Further, thecompany hasasubstantial secondary processing quarter, thecompany hadacontrolling ownership inArnarlax. further shares in this company and as of the end of the first narlax Ehf. During the first quarter of 2019, SalMar purchased tegrity. TheCode of Conduct isalsomeant to beatool for a healthy corporate culture andupholdthecompany’s in is to safeguard and develop the company’s values, create SalMar hasdrawn up aCode of Conduct, whose purpose company’s website www.salmar.no. on the SalMar culture, please see the annual report and the opportunities to develop themselves. For more information members of theworkforce withconstant stimulation and Group’s performance-oriented corporate culture provides all they shouldact.TheSalMarSchoolanddailyexposure to the fostering ashared awareness amongallemployees of how SalMar hasaset of tenets, describingdesired behaviours and producer of farmedsalmonintheworld. safeguard thecompany’s positionasthemost cost-effective sults will pave the way for the best financial results, andthus to theirwellbeing. SalMarbelieves that thebest biologicalre- for salmon.Thefishwillbefarmedin conditions most conducive relating to production willbemadeonthebasisof itspassion the Group’s vision:“Passion for Salmon”, meaningalldecisions Overarching allbusiness operations and actions at SalMar is work tasksandcontinuous improvement. focus onequality, quality, care for theenvironment, focus on anchored inafew overarching principles,inparticularastrong external andinternal framework conditions, itremains firmly in 1991.Althoughthecompany’s culture isaffected byboth have beencultivated withinthecompany sinceitsinception SalMar’s corporate culture builds on thesuccess factors that and socialresponsibility Corporate values, code of conduct website www.salmar.no. cussed intheannualreport andcanbefound onthecompany’s - - - Passion for Salmon 31 - - - authorisa three the board granted 5 June 2018 of The AGM buy one to capital, share the company’s increase tions, one to issue a convertible one to and shares, (treasury) back its own In the event of capital increases based on an authorisation issued based on an authorisation capital increases of In the event - share the existing where shareholders, of meeting by a general this will be provided for the reason be waived, will holders’ rights increase. capital the with connection in announcement public a in - employ of is required out what sets conduct of code SalMar’s confidentiality of interest, conflicts loyalty, to ees with respect undertaken pursuant to the authorisation to increase the the increase to the authorisation to pursuant undertaken increase capital the total capital, such that share company’s 10 per cent exceed not may combined authorisations both for capital. the share of the that authorisations the of purpose the from follows It preference shareholders’ existing waive need to may board - the authorisa of under the terms which is permitted rights, tions concerned. AGM, the next up until valid are authorisations board Both which will be held on 5 June 2019. None the Code: from Deviations OF TREATMENT 4. EQUAL SHAREHOLDERS AND TRANSACTIONS PARTIES RELATED WITH CLOSELY 561,003 treas owned 31 December 2018, SalMar ASA As at the company’s of 0.50 per cent for which accounts ury shares, shares treasury involving capital. Transactions share registered the at or otherwise exchange stock on the undertaken are prices. exchange stock prevailing par- with related transactions immaterial not of In the event by an provided valuations use of shall make ties, the company party. third independent loan. These were extensions of authorisations granted by the granted authorisations of extensions were loan. These each practice, of code the Norwegian in 2017. In line with AGM separately. was considered the authorisations of com the to increase the board allowed authorisation The first the through 2,832,000, NOK to up by capital share pany’s investments finance to shares 11,328,000 to up of issue cash issues and businesses through and the acquisition of in kind. contributions treasury acquire the board allowed authorisation The second share applicable of 10 per cent of a maximum up to shares with shares, 10,345,632 treasury up to words, capital: in other may NOK 2,586,408. The authorisation of face value a total with the in connection shares company purchase be used to and as senior management scheme for incentive share-based shareholders. existing to value returning a means of issue convertible to the board allows authorisation The third enabling the purpose of NOK 2,000,000,000 for up to loans for use such financial instruments to short notice, at the company, withconnection In requirement. financing overall its as part of authorisation, this to pursuant loans raised of the conversion NOK by up to be increased capital may share the company’s capital increases any of taken 2,832,000, though with account - May 2007. Acquisition of 2007. Acquisition on 8 May Exchange Stock on the Oslo floated SalMar shares weight. gutted 64,000 tonnes harvested: volume Total Salmon AS Arctic of Acquisition & Romsdal. licences) in Møre (two AS licences) and Henden Fiskeoppdrett (two AS Halsa Fiskeoppdrett Troms. licences) in Nordreisa, (four 2007 VÅR HISTORIE VÅR terms of its financial performance, 2018 was a very good year good very a was 2018 performance, financial its of terms to position financial SalMar’s considers The board SalMar. for for financial capacity sound, and the company’s be extremely be strong. is deemed to further growth authorisations Board normally time limited are the board to granted Authorisations AGM. the next only up until valid and are investments or the repayment of debt instead of being paid of instead debt of or the repayment investments (AGM) Meeting the Annual General out as dividend. Provided dividend. of annual payments make the aim is to approves, shares treasury the buyback of will also consider The company AGM. the by board the to granted limits the authorisation within for 2018, the board results financial Based on the year-end In per share. NOK 23 of a dividend of payment has proposed pany’s risk profile. Returns will be achieved through a combina a through will be achieved Returns risk profile. pany’s a of and the payment price development share positive tion of out surplus liquidity (funds pay plans to dividend. The company in operations) day-to-day the company’s necessary for not with reduction a capital of a dividend or by means of the form all times will at The company the shareholders. to distribution new should be used for liquidity the available whether consider per cent. The board considers SalMar’s capital structure to to capital structure SalMar’s considers The board per cent. and risk strategy objectives, the company’s to be appropriate profile. Dividend policy with a competitive shareholders provide to SalMar intends - the com consideration capital, taking into on invested return 3. EQUITY AND DIVIDEND Equity NOK equity totalled 31 December 2018, the company’s As at 60.4 of an equity ratio to 9,139.8 million, which corresponds working actively to safeguard fish welfare and prevent salmon and prevent welfare fish safeguard to actively working escaping. from This care’. is ‘We tenets important most the company’s One of of a high degree and ensures culture, SalMar the permeates and externally, internally both employees, among awareness operates. the company in which in the areas None Code: the from Deviations cial responsibilities: as an employer, an industrial processor, processor, industrial an employer, an as responsibilities: cial financial and of as a custodian food, healthy of a producer the natural as a user of least- capital, and – not intellectual - com the of is one control biological Increased environment. prerequisite is a material and areas focus important most pany’s things, is, among other company success. The long-term for for concern is covered by specific procedures, which also al- procedures, by specific is covered concern for external an through anonymously report to employees low company’s the from available is conduct of code The channel. www.salmar.no. website The Group local communities. in many SalMar has a presence so- its of nature the diverse of aware extremely is therefore self-assessment and for the further development of the the of the further development for and self-assessment bound are company the of All employees identity. company’s in the code guidelines laid down the ethical with comply to causes or other wrongdoing any of The reporting conduct. of 32 SALMAR ANNUAL REPORT 2018 the company’s website www.salmar.no. the company’s account manager Nordea Bank Norge AS, or via their attendance, usingtheform provided, bypost oremailto date of themeeting. Shareholders may sendnotification of in theinvitation thereto, nolessthanfive days prior to the tend ageneral meeting isstipulated bytheboard of directors The deadlinefor notification of shareholders’ intention to at- the general meeting. are alsoentitled to tabletheirown items for consideration by section 5-11of thePublicLimited Companies Act, shareholders take astandpoint onallmatters to beaddressed. Pursuant to all the documentation necessary to enable shareholders to at ageneral meeting bypost. Casedocuments must contain ask to be sent documents relating to matters to be discussed shareholders isnot applicable.Ashareholder may nevertheless way, the statutory requirement with respect to distribution to general meeting. Ifthedocuments are made available inthis must be included in or attached to the invitation to attend the ASA’s website. Thesameappliesto documents whichbylaw meeting of shareholders may bemadeavailable onSalMar documents relating to matters to beaddressed at ageneral In accordance withthecompany’s articlesof association, later than21days priorto thedate of themeeting. An invitation to attend theAGM oranEGMwillbeissuedno head office inFrøya. The 2019AGM willbeheldon5 June2019at thecompany’s municipality of Frøya. the endof Juneeachyear inOslo,Trondheim orKverva inthe of association, theAnnualGeneral Meeting must beheldby all shareholders. Pursuant to Article7of the company’s articles General meetings of shareholders are open for participation by Meeting of Shareholders. The company’s highest decision-making body is the General 6. GENERAL MEETINGOFSHAREHOLDERS Deviations from theCode: None insider trading are complied with. shares inthecompany, aslongtheregulations governing restrictions onany party’s abilityto own, trade orvote for Exchange, anditsarticlesof association donot contain any The company’s shares are freely transferable ontheOsloStock one vote. rights. Eachshare hasafacevalue of NOK0.25andcarries SalMar hasonlyoneclassof shares andallshares have equal 5. SHARESANDNEGOTIABILITY Deviations from theCode: None 29 to the2018financial statements. Any transactions withrelated partiesare discussedinNote have adutyto comply withthecompany’s code of conduct. agreement entered into bythecompany. Board membersalso if they, directly orindirectly, have amaterial interest inany of conduct states that allemployees must notify theboard and guidelinesfor trading inthecompany’s shares. Thecode 7. NOMINATION COMMITTEE Deviations from theCode: None shareholders inaccordance withstock exchange regulations. The company willpublishtheminutes of general meetings of to ensure independencewithrespect to thematters concerned. a different personwillbeselected to chairthemeeting inorder factions, orfor someother reason isnot deemedto beimpartial, agenda items where theChairof theBoard belongsto oneof the general meeting. In the event of any disagreement on individual considers theChairof the Board to bebest suited to chair the AS, themajorityshareholder of SalMar. Nevertheless, SalMar Chair of theBoard, Atle Eide,isamemberof theboard of Kverva will normallybechaired bytheChairof theBoard. Thepresent pany’s auditor willberepresented at thegeneral meetings, which The board of directors, theNomination Committee andthecom 5-6 of thePublicLimited Companies Act. Article 9of thecompany’s articlesof association andsection main issuesto bedealtwithbythe AGM are regulated by The board determines theagendafor themeeting, andthe holders to grant aproxy vote for eachindividualagendaitem. appointed bythecompany. Theproxy form alsoenablesshare votes eitherinpersonorthrough aproxy, includingaproxy Shareholders are entitled to make proposals andcast their contact shareholders andcompany directors. and diversity. To achieve thistheNomination Committee may interests andthecompany’s needfor competence, capacity tion Committee shouldsafeguard theshareholder community’s in the Code. Proposals for members of the board and Nomina- bodies, aswell asprinciplesfor corporate governance laiddown with respect to the composition of thecompany’s governing shall take into consideration relevant statutory requirements Nomination Committee. In its work, the Nomination Committee remuneration payable to themembersof theboard andthe of directors and Nomination Committee, as well as propose the the AGM withrespect to candidates for election to theboard The Nomination Committee shallmake arecommendation to • AnneKathrine Slungård (upfor electionin2019) • Endre Kolbjørnsen (upfor electionin2020) • BjørnWiggen,Chair(upfor electionin2019) prised thefollowing: As at 31 December2018,theNomination Committee com - meeting of 21 March 2007andupdated at theAGM in2014. work of the Nomination Committee was adopted at the board is determined bytheAGM. Aset of regulations governing the muneration payable to membersof theNomination Committee continuity, members’terms of office shallnot coincide. The re a term of two years. Membersmay bere-elected. To ensure tion Committee, including itschair, are elected bytheAGM for of management andtheboard. Themembersof theNomina- and themajorityof committee membersshallbeindependent the interests of shareholders asacommunity shallbeupheld, The Nomination Committee’s composition shall be such that ple, whoshallbeshareholders orshareholders’ representatives. the Nomination Committee shallcomprise atotal of three peo Article 8 of the company’s articles of association stipulates that - - - - Passion for Salmon 33 ------business activities. The work of the board is governed by a set of of by a set is governed the board of business activities. The work tasks and responsibilities, which describe the board’s regulations determines board the Furthermore, procedures. administrative including the overall and strategy, objectives overall the Group’s strategies and the business portfolio the Group’s of composition a has also prepared the individual business unit. The board of that team management the executive for instructions of set responsibilities. of authority and clarifies its duties, lines in practices working the board’s governing The regulations and the CEO individual directors how cludes guidelines for in which matters to respect with themselves should conduct stipula Among them is the interest. personal a have may they of assessment a conscious make must director each tion that possible any of the board impartiality and inform his/her own of interest. conflict and budgets and plans Group’s the approve shall board The are and budgets strategies targets, to relating shall. Proposals is normally Strategy by management. up and presented drawn pro budget the Group’s discussed during the autumn, ahead of an active shall play the board strategy, of cess. Within the area particularly with regard course, management’s in setting role changes. and/or operational restructuring organisational to its du perform as necessary to as often meets The board which 5 were of held 14 meetings, ties. In 2018, the board meetings board at rate attendance The overall by telephone. was 99 per cent. and work its own of an annual assessment makes The board in conducted this kind was last of An evaluation competence. February 2019. composition stipulated by applicable legislation and the regula applicable legislation by stipulated composition elected members are Board Exchange. the Oslo Stock tions of of An overview be re-elected. and may years two of a term for - avail is background and competence directors’ the individual www.salmar.no. website the company’s able from 31 De at as in SalMar members held shares the board None of cember 2018. the board of Independence it is able such that is composed directors of board SalMar’s The Chair of special interests. any of act independently to Kverva of the board a member of Eide is also Atle the Board, Moen while Helge majority shareholder, the company’s AS, deemed not therefore are These two AS. Kverva is CEO at deemed to are directors The remaining be independent. to business as material senior executives, of be independent In matters shareholders. largest company’s and the sociates is, or the Board in which the Chair of importance material of to is appointed director engaged, another has been, actively been have such matters No deliberations. chair the board’s 2018. during addressed None Code: the from Deviations OF DIRECTORS 9. THE BOARD the of the management for responsibility has overall The board and management day-to-day its and the supervision of Group - - - Total volume harvested: 65,000 tonnes gutted weight. Acquisition of one licence in Central Norway (Møre & Romsdal) and one in & Romsdal) (Møre Norway one licence in Central of Acquisition weight. gutted 65,000 tonnes harvested: volume Total in Troms. operations includes all SalMar’s now The Company AS. SalMar Nord is renamed • Senja Sjøfarm AS (Troms). Northern Norway AS. Seafood in Volstad the shares 34% of of • Acquisition 2008 VÅR HISTORIE VÅR sonable gender balance and that directors are independent independent are directors that and balance gender sonable Committee’s The Nomination the company. to with respect board to relating the requirements shall meet recommendation - Com the Nomination of the work governing The regulations shall be placed on ensuring that emphasis that state mittee carry to the necessary competence have the board members of to presented the matters of assessment out an independent business activities. the company’s and of it by management - rea is a there that on ensuring also be placed shall Emphasis including two employee representatives. Three of the com of Three representatives. employee including two employee one female including women, are directors pany’s the of 43 per cent comprise therefore Women representative. states Act Companies membership. The Public Limited board’s of on the board women three least should be at there that members. six and eight between has when the board directors 8. BOARD OF DIRECTORS, COMPOSITION COMPOSITION OF DIRECTORS, 8. BOARD AND INDEPENDENCE the association, articles of SalMar’s Article 5 of to Pursuant to to nine members, five shall comprise directors of board by is elected the Board The Chair of by the AGM. be elected itself. by the board while the Vice-Chair is elected the AGM, members, seven is made up of board current The company’s All shareholders are entitled to propose candidates for the the for candidates propose to entitled are All shareholders Committee. Nomination the to offices elected other or board - Com the Nomination to be submitted must Such proposals All AGM. the company’s prior to no less than six weeks mittee - Commit the Nomination by email to shall be sent proposals the company’s from available are details Contact chair. tee’s www.salmar.no. website None Code: the from Deviations recommendation shall accompany the invitation to attend the attend to invitation the accompany shall recommendation place. The takes the meeting before than 21 days no later AGM, about information shall contain recommendation committee’s including age, independence and competence, the candidates’ shall also notice If relevant, experience. and work education has been an elected long the candidate about how be given as company, for the assignments any company, of the officer that companies group other for assignments material as well significance. be of may Committee the Nomination to Proposals ble companies, and (b) on the scope of work and the amount amount and the work of scope the (b) on and companies, ble the to devote to expected are officers elected the effort of the company. task on behalf of AGM the to recommendation Committee’s Nomination The - can be communi it so that be published in good time, must place. The takes meeting the before shareholders the to cated - body. Rel governing in the individual and renewal continuity to willing are they whether be asked must candidates evant or deputy director. of director the office undertake with respect should base its recommendations The committee about the size on (a) information payable the remuneration to compara other in officers elected to paid remuneration the of The Nomination Committee draws up criteria for the selec the for up criteria draws Committee The Nomination Committee, Nomination and the board for candidates tion of The Nomination should be represented. sexes in which both for the requirements time, balance should, over Committee 34 SALMAR ANNUAL REPORT 2018 ganisation, performance and evaluation of the Group’s activities has internal controls which encompass systematic planning, or ment of itssmoltandmarine-phasefish stocks. The company The largest riskfacingSalMarrelates to thebiologicaldevelop- discussed at fortnightly management meetings. day operations. Material risksand any changesin themare is carriedoutbythelineorganisation andispartof day-to- ues, code of conduct andguidelinesfor socialresponsibility Follow-up and control of compliance with the company’s val- given to theuseof financialhedginginstruments. unit at headoffice, and,where appropriate, consideration is measures implemented. Financialriskismanagedbyacentral improvement opportunities are followed up and corrective supervision bytheAudit Committee. Non-conformances and to-day follow-up by management and process owners, and Internal control of financial reporting isachieved through day- equipment, aswell asthehandlingof thecompany’s biomass. includes acquisition,operation andmaintenance of fishfarming associated with operation of the Group’s divisions. This also ates inaccordance withallrelevant statutes andguidelines It istheCEO’s responsibility to ensure that thecompany oper accounts inthe2018annualreport. see theboard of directors’ report and note 2to thefinancial at all levels in the organisation. For further information, please risk). Theserisksare monitored andaddressed bymanagers and financialrisk(foreign exchange, credit andinterest rate and sea farms, as well as the risk of fish escaping therefrom, risk associated with thebiologicalsituation initshatcheries The most important risk factors for the company are biological executive management. the company are drawn up and are revised annually by SalMar’s subject. Specifictargets for theinternal control effort within with thelegislation andregulations to whichthecompany is timely andcorrect financial reporting, as well as compliance internal control are intended to ensure efficient operations, company’s systems andprocedures for riskmanagement and in relation to the regulations governing the business. The risk management andinternal control systems are adequate The board isresponsible for ensuringthat thecompany’s INTERNAL CONTROL 10. RISKMANAGEMENT AND Deviations from theCode: None • HelgeMoen • KjellStoreide, Chair the following: As at 31 December2018,theAudit Committee comprised with anoverall attendance rate of 100percent. the auditor. TheAudit Committee held5meetings in2018, management systems, andmaintain anongoingdialoguewith reporting process, monitor theGroup’s internal control andrisk tasks are to prepare theboard’s follow-up of thefinancial a board-appointed Audit Committee. Thecommittee’s main Pursuant to thePublicLimited Companies Act, SalMarhas Audit Committee - - The company’s seniorexecutive remuneration policyisbased provision, belaidbefore thecompany’s AGM eachyear. executives. Thisstatement will,inlinewiththesaidstatutory determination of salariesandother benefitspayable to senior Act, theboard of directors prepares astatement relating to the Pursuant to Section6-16aof thePublicLimited Companies 12. REMUNERATION TO SENIOREXECUTIVES Deviations from theCode: None included inthe2018annualreport. tors’ fees canbefound inNote 24to thefinancial statements share option element. Additional information relating to direc Directors’ fees are not performance-related and contain no time spent andthecomplexity of thebusiness. tors’ fees shall reflect theboard’s responsibilities, competence, payable to theboard of directors isapproved bytheAGM. Direc The Nomination Committee’s proposal for theremuneration 11. DIRECTORS’ FEES Deviations from theCode: None Please seetheannualreport for furtherdetails. tion, fish welfare, pollution, food safety andwater resources. the working environment andpersonalsafety, escapepreven- up shared objectives for its internal control activities relating to for continuous improvement. TheGroup has,for example, drawn in accordance withboth publicregulations anditsown ambitions Deviations from theCode: None included inthe2018annualreport. executives, canbefound inNote 24to thefinancial statements the salaryandbenefitspayable to theCEOand other senior The board’s statement, aswell asfurtherdetails relating to Company’s share price or that of other companies intheGroup. senior executives relating to shares orthedevelopments inthe the guidelines for remuneration and other benefits payable to year, andonaseparate vote, theAGM approved thepartof and other benefits to senior executives for the2018financial vote on the Board’s guidelines for the determination of salary programme for senior executive. The AGM held a consultative approved the establishment of a new share-based incentive able from thecompany’s website www.salmar.no. TheAGM was set forth asaseparate casedocument, whichisavail At the2018AGM, thestatement onexecutive remuneration scheme inlinewiththeboard’s authorisation. a performance-related bonusand ashare-based incentive scheme isdividedinto three andcomprises afixed salary, lines laid down in the statement. The current compensation tives are determined bythe CEO inaccordance with the guide CEO. Thesalaryandbenefitspayable to other senior execu- shall determine the salaryandother benefitspayable to the The statement refers to thefactthat theboard of directors with thenecessarycompetence. tive and motivating, inorder to attract and retain key personnel primarily ontheprinciplethat executive pay shouldbecompeti- - - - - Passion for Salmon 35 - - - 15. AUDITOR and is in by the AGM is appointed auditor The company’s directors of the board Each year SalMar ASA. of dependent the that the auditor from confirmation written shall receive objectivity and independence to respect with requirements been met. have of the execution up a plan for shall draw the auditor Each year, to made known their auditing activities, and the plan shall be The auditor Committee. and the Audit directors of the board and review annually to the audit committee with shall meet activities. control internal the company’s evaluate with each year one meeting least shall hold at The auditor the of which no representatives at directors, of the board the attends The auditor is present. management company’s are statements financial which the year-end at meeting board AGM. the company’s attends The auditor considered. payable remuneration the of AGM the inform shall board The services an auditing and other into down broken auditor, the to fees. the auditor’s approve shall The AGM component. than other work any up guidelines for has drawn The company or persons associated out by the auditor be carried auditing to with the auditor. None the Code: from Deviations The guidelines shall ensure that the interests of shareholders shareholders of the interests that shall ensure The guidelines equally. treated are all shareholders that and safeguarded, are op company that ensure guidelines shall help the Furthermore, will strive The board disturbed. unnecessarily not are erations to enable information will sufficient shareholders provide to specific bid. the to minds with respect up their make them to - state a will make has been made, the board bid If a takeover - a valu obtain to whether assess same time the and at ment an obtain will board The expert. an independent from ation member, board if a major shareholder, valuation independent - col party or any related team, the management member of who has recently or anyone party, such a related of laborator is either positions, the above-mentioned of held one or more bid. in the takeover interest the bidder or has a particular unless bid, takeover any prevent to seek not will board The of out justified is such action that the opinion of is board the shareholders. and the company’s the company for consideration other or adopt authorisations any exercise will not The board bid. This the takeover preventing the purpose of for measures meet general a of approval the with waived be may stipulation a bid has been announced. after shareholders ing of the company’s the sale of involve which, in reality, Transactions shareholders of meeting a general business shall be laid before approval. for None Code: the from Deviations - Total volume harvested: 77,000 tonnes gutted weight. Acquisition of the remaining 66% of the shares in Volstad Seafood AS, making AS, Seafood Volstad in the shares 66% of the remaining of Acquisition weight. gutted 77,000 tonnes harvested: volume Total the company. of SalMar sole owner 2009 VÅR HISTORIE VÅR March 2011, and on 29 March a meeting at by the board adopted in and manner professional a in act to undertakes board the and regulations. with applicable legislation accordance 14. ACQUISITION up guidelines with respect has drawn directors of The board The guidelines were bids, in line with the Code. takeover to stock market notice and updated on the Oslo Stock Exchange’s Exchange’s on the Oslo Stock and updated notice market stock The calendar is published before www.newsweb.no. website 31 December each year. None the Code: from Deviations media or other parties about the Group’s results and future and future results parties about the Group’s media or other parties in the all interested that ensure outlook. This is to equally. treated are market Financial calendar the publishes a financial calendar indicating SalMar Each year as as well reports, interim the Group’s of publication of dates publish its annual to expects when the company for the date from The calendar is available its AGM. of and the date report as a It is also distributed www. salmar.no. website the Group’s journalists in the final three weeks before publication of its publication weeks before in the final three journalists will hold no meetings the company During this period, results. the to no comments and will give or analysts with investors operational and financial performance in the previous quarter, quarter, in the previous financial performance and operational outlook and market the general of as an overview as well are These presentations prospects. future own company’s website. on the company’s also made available reports interim quarterly publish to continue will company The Such recommendation. Exchange’s in line with the Oslo Stock after than 60 days will be published no more results interim each quarter. the close of period Quiet and investors with analysts, SalMar will minimise its contacts The company holds investor presentations in association with association in presentations investor holds company The pres These results. interim and its year-end of publication the the Group’s of an overview all and provide open to are entations recommendations on the reporting of information to investors investors to information of on the reporting recommendations on 1 June 2017. The updated last websites, on companies’ an ‘IR Policy’, also adopted has, in line with the Code, company CEO and The website. the company’s from which is available in shareholders with communications for responsible are CFO meetings. general the period between Financial information information, thus providing the soundest possible foundation foundation possible soundest the thus providing information, shall have players All market the company. of a valuation for is published and all information the same information, access to the stock to sent All notices and English. Norwegian in both and website the company’s on made available are exchange www.newsweb.no. at including with the Oslo Børs IR code, comply SalMar seeks to 13. INFORMATION AND COMMUNICATION 13. INFORMATION relations Investor is analysts and investors shareholders, with Communication the that ensure to is objective The SalMar. priority for a high timely and correct receive and shareholders markets financial Executive MANAGEMENT ORT 2018 REP ORT ANNUAL SALMAR

36 Passion for Salmon 37 ULRIK STEINVIK Business Support • Director in the position as started Steinvik - Business Support in Au Director holds the Steinvik 2017. Mr. gust author- state title as Norwegian Berfore public accountant. ized joined SalMar in 2006 Steinvik with Arthur Andersen he served AS & Young and Ernst Norway 2006. 1998 to from the Norwegian from He graduated and Business Economics School of in 2002. Administration 13,882 • Born: 1974 • Shares: 3,904 • RSU-Rights: GUSTAV WITZØE GUSTAV Projects Strategic of • Director Prosjekter Strategiske of Witzøe is the co-founder Mr. in He holds a degree SalMar ASA. as years several engineering. After BEWI an engineer he co-founded - styro producing a company AS, the fish farming for boxes foam - Witzøe held the posi Mr. industry. BEWI of tion as managing director Witzøe 1990. Since Mr. until AS in 1991 he SalMar ASA founded experience has gained extensive in fish farming and processing. Mr Witzøe Born: 1953 • Shares: Kverva 93.02% of owns indirectly its subsidiary who through AS 52.46% owns AS Industrier Kverva Mr. in Salmar ASA. the shares of of Witzøe is also a boardmember None • RSU-Rights: AS Kverva FRODE ARNTSEN FRODE Processing • Director, and Sales the position as took Arntsen and Sales Processing Director, on 1 December 2017. He has a the Norwegian from background as a lec- and is educated Military, He has within management. turer industry in the seafood worked since 2010, and has previously positions at held senior/director and HitraMat Midnor, Lerøy Midt. Lerøy 736 • Born: 1970 • Shares: 2,794 • RSU-Rights: TROND TUVSTEIN TROND Financial Officer • Chief new as was appointed Tuvstein 2013. Tuvstein October CFO Investor of as Head served from in SalMar ASA Relations October January 2012 until knows therefore 2013. Tuvstein SalMar and the aquaculture both is Tuvstein Mr. well. industry having certified public accountant, in degree a Master’s completed the at and Auditing Accounting - Econom School of Norwegian ics and Business Administration Tuvstein Mr. (NHH) in Bergen. from experience has extensive He has industry. the accounting held leading positions in auditors and PricewaterhouseCoopers among others. Systemrevisjon, 21,047 • Born: 1972 • Shares: 4,824 • RSU-Rights: Total volume harvested: 79,000 tonnes gutted weight. Acquisition of 75.54% of Rauma Gruppen AS. Broodfish, two hatcheries and hatcheries two Broodfish, Rauma Gruppen AS. 75.54% of of Acquisition weight. gutted 79,000 tonnes harvested: volume Total Islands Faeroe in the listed of the shares of 23.29% Acquisition Romsdal). • & (Møre Norway fish farming licenses in Central eight AS. Settefisk of • Acquisition P/f. Bakkafrost company 2010 VÅR HISTORIE VÅR Bekken took over as COO Farming as COO over took Bekken has on 4 June 2018. Mr Bekken sector in the seafood worked - since 1991. He has held a vari positions in the executive of ety SalMar is joining Before industry. Farming at of 2014, he was COO Salmon (NRS). From Royal Norway June 2018, Mr Bekken 2014 until SalMar at was managing director Farming AS. 3,715 • Born: 1967 • Shares: 3,274 • RSU-Rights: ROGER BEKKEN ROGER Farming • COO OLAV-ANDREAS ERVIK OLAV-ANDREAS & CEO • President in the position Ervik started Mr. Farming ASA´s SalMar as head of 2014. Before division August Ervik held the position as this Mr. Manager in SalMar Farm- General Ervik has held various Mr. ing AS. within the positions in companies including salmon farming industry, SeaFarms Scottish Midnor, Lerøy Hydrotech. and Lerøy 12,217 • Born: 1976 • Shares: 4,824 • RSU-Rights: 38 SALMAR ANNUAL REPORT 2018 100 200 300 400 500 600 SalMars 20largest shareholders Shareholder information 0 TOTAL Total no.of shares Shareholders 5,082 Other shareholders Total 20largest shareholders SalMar ASA AB SiciLow Vol EquPortf State Street BankandTrust Comp JPMorgan ChaseBank,N.A.,London Old Westbury Large CapStrategies Fund The Bankof New York MellonSA/NV JPMorgan ChaseBank,N.A.,London JPMorgan ChaseBank,N.A.,London J.P. Morgan BankLuxembourg S.A. The Bankof New York MellonSA/NV Invesco Funds Clearstream BankingS.A. J.P. Morgan BankLuxembourg S.A. State Street BankandTrust Comp LIN AS Euroclear BankS.A./N.V. State Street BankandTrust Comp State Street BankandTrust Comp Folketrygdfondet Kverva Industrier AS NAME

January

February

March

April

May Shareholding 31.12.18 June 113,299,999 113,299,999 84,341,388 28,958,611 59,436,137

July 1,111,621 1,119,712 1,129,973 1,153,536 1,174,620 1,363,891 2,186,226 2,474,294 5,948,899 561,003 587,338 593,491 650,673 653,647 718,085 787,110 787,419 942,394 961,319

August

September 2018 October Shareholding (%) 100.00%

November 74.44% 25.56% 52.46% 0.50% 0.52% 0.52% 0.57% 0.58% 0.63% 0.69% 0.69% 0.83% 0.85% 0.98% 0.99% 1.00% 1.02% 1.04% 1.20% 1.93% 2.18% 5.25% 2017

December Passion for Salmon 39 2019 2019 quarter 14 Results 3rd Results NOVEMBER 2019 2019 quarter 23 AUGUST Results 2nd Results CFO Trond Tuvstein Trond 5 JUNE 2019 General Meeting Ordinary [email protected] Telephone: +47,918 53,139 Telephone: MAY 2019 2019 IR-contact in SalMar IR-contact 22 quarter Technical information Technical Account operator is Nordea Bank. is Nordea operator Account Results 1st Results Financial calendar 2019 Share price development Share with each share having a face value of NOK 0.25. of value a face having with each share can include your e-mail in our news distribution list. distribution e-mail in our news can include your The company’s VPS number is ISIN NO 001-0310956. VPS number is ISIN The company’s Runar Sivertsen The company’s ticker on the Oslo Stock Exchange is SALM. Exchange on the Oslo Stock ticker The company’s Relations Investor Head of [email protected] Telephone: +47,960 97,000 Telephone: 2018 2019 APRIL December 2018 the company had approx. 5,080 shareholders. had approx. 31 December 2018 the company As at 26 December 2018 SalMar ASA had 113,299,999 shares outstanding, shares had 113,299,999 ASA 31 December 2018 SalMar As at Annual Report At year-end the share price was NOK 428.00 valuing SalMar at NOK 48,492 million NOK 48,492 SalMar at was NOK 428.00 valuing price the share year-end At Total volume harvested: 104,000 tonnes gutted weight. Completion of the world’s most innovative and efficient salmon harvesting and salmon harvesting and efficient innovative most the world’s of Completion weight. gutted 104,000 tonnes harvested: volume Total Krifo of • Acquisition & Romsdal). (Møre Norway licences in Central with two Laks AS Bringsvor of • Acquisition – InnovaMar. plant processing on Myhre by Yngve as CEO and is replaced down steps Inge Nordhammer • Leif (Trøndelag). Norway with one licence in Central AS Havbruk the shares a further 1.5% of of • Acquisition & Romsdal). (Møre Norway licenses in Central with four Villa Miljølaks AS of 6 June. • Acquisition 24.8%. to shareholding total bringing SalMar’s P/f, in Bakkafrost Share price per 01.01.2018 was NOK 246.80 thus valuing SalMar at NOK 27,962 million. NOK 27,962 SalMar at valuing was NOK 246.80 thus per 01.01.2018 price Share Norway. The annual general meeting will be held at Frøya. Changes will be communicated. will be held at meeting annual general The Norway. company’s website, the Oslo Stock Exchange’s www.newsweb.no site and through news agencies. news and through site www.newsweb.no Exchange’s the Oslo Stock website, company’s in Oslo other quarterly presentations will be held at Hotel Continental in Stortingsgaten 24/26 in Oslo, in Stortingsgaten Continental Hotel will be held at presentations quarterly in Oslo other Results for 1st quarter 2019 will be presented at The Salmon in Strandpromenaden 11 at Tjuvholmen 11 at The Salmon in Strandpromenaden at 2019 will be presented quarter 1st for Results 2011 If you would like to subscribe to news from SalMar, please send an e-mail to [email protected] so that we so that [email protected] please send an e-mail to SalMar, from news subscribe to to like would If you CET. 08.00 am CET. place at will take The presentations the public. open to presentations SalMar holds quarterly Communication with shareholders, investors and analysts is a high priority for SalMar. The objective is to ensure is to The objective SalMar. is a high priority for and analysts investors with shareholders, Communication foundation for a valuation of the company. All notices sent to the stock exchange are made available on both the on both made available are exchange the stock to sent All notices the company. of a valuation for foundation 2019 2018 14 quarter FEBRUARY that the financial market and shareholders receive -correct and timely information, thus providing the -soundest possible the -soundest providing thus and timely information, -correct receive and shareholders the financial market that Results 4th Results VÅR HISTORIE VÅR BOARD OF DIRECTOR’S STATEMENT 2018 ORT 2018 REP ORT MAR ANNUAL SAL

40 Passion for Salmon 41 Trine L. Danielsen Trine Board the Member of Man- Ms. Danielsen, Senior Project - has exten AS, Blue Planet ager at and politics both in experience sive - employ Her previous aquaculture. Timar Group AS, ers include CAC as She also served AS. and EWOS Hjelmeland Municipality of Mayor 2011–2015. Danielsen between SalMar of on the board has served since 5 June 2018. ASA Margrethe Hauge Margrethe the Board Member of H&O Ms. Hauge is a partner at which provides AS, Industrier business development strategic services and change management Until companies. international to at 2018, Ms Hauge was employed Man- Global Inc as Regional MRC with responsibility aging Director and Germany. region the Nordic for held executive She has previously TTS positions at management Group and Kverneland ASA Group as a her career and started ASA, AS. Seafood with Hydro trainee Hauge has a master’s Margrethe administration in business degree Mannheim of the University from on the and has served in Germany, - com of a wide variety of boards and voluntary enterprises mercial She has been a organisations. SalMar of the board member of since 6 June 2017. ASA Brit Elin Soleng representative Employee in SalMar Ms. Soleng has worked 2013 when she joined since March SalMar in the finance department employee. as an administrative experience Soleng has previous positions from, administrative from and Marine Harvest among others, Nutreco. Geir Berg representative Employee at has been employed Berg Mr. 2013. He has SalMar since March Fish Manager been Production Mr. year. that of Farming since May of experience years’ has 20 Berg and in the public sector working the private from 10 years around joining SalMar he Before sector. was an airport manager with held has previously Berg Mr. Avinor. - and administra operational both busi- of positions in a variety tive ness sectors. Kjell A. Storeide the Board Member of the of is a graduate Storeide Mr. - Econom School of Norwegian ics and Business Administration to From1990 (NHH) in Bergen. co- 2004 he was the CEO and Mr. Gruppen AS. Stokke of owner several is chairman of Storeide in Norway. companies industrial board joined SalMar’s Storeide Mr. in February 2008. directors of Total volume harvested: 116,100 tonnes gutted weight.Acquisition of 10 licenses in Northern Norway (Finnmark) from Villa Artic AS. • Acquisition of of • Acquisition Villa Artic AS. (Finnmark) from 10 licenses in Northern Norway of weight.Acquisition gutted 116,100 tonnes harvested: volume Total 25.21%. to shareholding total bringing SalMar’s P/f, in Bakkafrost additional shares 2012 Helge Moen the Board Member of Mr. Moen holds the position as Mr. Moen has AS. CEO in Kverva the from experience extensive finance and corporate investment employers Previous industry. First AS, include CentraKlaveness Fonds. Securities and Midt-Norge Moen also holds and has held a board non-executive number of such as positions in companies AS Group Steinsvik AS, Pelagia Moen has served and Pharmaq AS. since SalMar ASA of on the board 06.06.2017. Atle S. Eide Atle the Board Chairman of Mr. Eide holds the position as Mr. From senior partner in HitecVision. he was the CEO 2007 2003 to and one ASA Marine Harvest of Fish ASA. Pan its predecessors of - experi work previous Eide’s Mr. ence includes the CEO position and unlisted listed a number of of held Eide has also Mr. companies. board non-executive a number of such as positions in companies Cermaq and Bank, Acta, Fokus as the has served Eide NRS. Mr. since Chair in SalMar ASA Board 06.06.2017. VÅR HISTORIE VÅR SalMar has completed yet another strong financial year. The company’s good biological performance continued in 2018, resulting in a further decrease in production costs and increase in harvested volumes. Combined with good price achievement by the Sales division, this resulted in the highest Operational EBIT in SalMar’s history.

SalMar harvested a total of 142,500 tonnes in 2018, and generated operating revenues of NOK 11.3 billion. This represents a 5 per cent increase in both volume and revenues compared with 2017. The Group expects the volume harvested in Norway to increase by a further 2,500 tonnes in 2019. ORT 2018 REP ORT ANNUAL SALMAR

42 Passion for Salmon 43 - - fish price of NOK 55.78 per per NOK 55.78 of price . SalMar has decided to build a new new build a to . SalMar has decided replaces Trond Tuvstein, who announced in January 2019 in January 2019 who announced Tuvstein, Trond replaces than seven more his position after leave to he wished that (50) Sæther Romuld Trine the company. service to of years posi- executive a number of from experience has extensive oil service, business consultancy tions within the seafood, and Norwegian both for worked having and auditing sectors, production sector. production CEO in as SalMar’s over Ervik took Olav-Andreas CEO. New Olav- resignation. voluntary Williksen’s Trond April 2018, after the aqua of experience than 20 years’ has more Ervik Andreas his Before in 2012. initially joined SalMar and industry, culture executive Farming in 2014, he was chief as COO appointment posi- In addition, he has held executive SalMar Farming AS. of owned (50 per cent Seafarms Scottish Midnor, Lerøy tions at a as his career began Ervik Hydrotech. Lerøy and Salmar) by of experience front-line him practical, given which has farmer, the salmon farming industry. date sheet the balance after Events Arnarlax. On 14 February 2019, SalMar agreed all of Bid for NOK a price of at in Arnarlax AS 3,268,670 shares purchase to of consideration a total to This corresponds 55.00 per share. the of cent per 42.0 owned already SalMar million. 179.8 NOK its shareholding brought and the purchase shares company’s 2019, as a consequence On 13 March cent. 54.2 per up to the remaining for SalMar made an offer the transaction, of a at Arnarlax in shares 12,181,761 salmon of farmer and producer is the largest Arnarlax AS share. Ehf. subsidiary Arnarlax its wholly owned in Iceland through COO appointed been has Romuld Sæther Trine CFO. New She 2019. 1 July from effect with ASA, SalMar at CFO & goals will continue to underpin SalMar’s strategic foundations. strategic underpin SalMar’s to goals will continue in 2018 events Important at the raised salmon the first of Ocean Farm 1. Harvesting in an fish farm Ocean Farm 1, which is located offshore pilot at Frøya, started of the coast off sea called Frohavet, of area The 2019. early in ended and 2018 September of end the high quality. Few and a uniform growth strong fish achieved apply to necessary and it was not observed salmon lice were represent results The promising delousing treatments. any further out to areas open up new to in the work a milestone terms. own salmon can be farmed on its sea, where plant harvesting New The project Troms. in Lenvik, plant and processing harvesting to move This is an important has been dubbed InnovaNor. engine in industrial as an important the region strengthen the same will provide InnovaNor development. the Group’s at its Group has fish as the harvest to and capacity flexibility will work Construction Norway. facility in Central InnovaMar 2019, and the facility is scheduled in the summer of start starts of 2021. When it half in the first operation go into to has SalMar and workforce, substantial a need will it operating, opened a dialogue with Senja Upper Second already therefore food industrial region’s the to recruitment boost to School ary These two goals have remained unchanged over many years, years, many over unchanged remained goals have These two - a leading posi SalMar has maintained that ensured and have these come, to In the years salmon industry. tion in the global - Total volume harvested: 128,000 tonnes -gutted weight. Acquisition of minority shares in SalMar Rauma AS. • Acquisition of 50.4% of of • Acquisition in SalMar Rauma AS. minority shares of Acquisition weight. -gutted 128,000 tonnes harvested: volume Total 14.9% remaining of 14.9%. • Divestment holding approximately share New P/f. in Bakkafrost • Divestment AS. in Villa Organic the shares P/f. in Bakka-frost SalMar has no shares the transaction • Following P/f. in Bakkafrost shares of Norwegian public limited company, whose whose company, limited public Norwegian 2013 On the sales and processing side, we will optimise the yield will optimise side, we On the sales and processing possible price. we derive from our salmon in order to achieve the best the best achieve to our salmon in order from derive we On the farming side, we will produce our fish at the lowest at the lowest our fish will produce On the farming side, we efficiency. operational the best by having cost

VÅR HISTORIE VÅR Our business operations have two clearly defined strategic strategic clearly defined two have Our business operations foundations: underpin our strategic which objectives, 1. 2. aquaculture company, driven by our vision: “Passion for Salmon”. for by our vision: “Passion driven company, aquaculture leadership. This will be position is cost strategic SalMar’s chain, with significant value a focused by operating achieved and efficiency activities. Operational emphasis on upstream our strategy. of the cornerstones form innovation owned 42 per cent of Arnarlax Ehf, Iceland’s largest producer producer largest Iceland’s Arnarlax Ehf, of 42 per cent owned farmed salmon. of - reg The Group’s in Frøya, Trøndelag. SalMar is headquartered is 7266 Kverva. address istered foundation Ambition and strategic best be the world’s ambition to clearly expressed It is SalMar’s substantial harvesting and processing capacity and processing harvesting a substantial has Group The in Aukra. in Frøya and Vikenco InnovaMar at (through Farms Ltd Sea Scottish of cent per 50 owns SalMar of producer largest second UK’s the AS), Havbruk Norskott SalMar indirectly the year, the close of farmed salmon. At the first eight development licences ever awarded by the by the awarded ever licences development eight the first Ocean Farm installation offshore SalMar’s to went Directorate research the Group’s to testament an important 1 is therefore was In February 2019, the Group efforts. and development the Smart licences for development a further eight awarded MariCulture in its shareholding through Fish Farm concept, (51 per cent). AS Directorate of Fisheries. The purpose of these licences is to these licences is to Fisheries. The purpose of of Directorate - changes in produc desired sustainability, increased promote creation value overall increased and innovation methods, tion companies aquaculture encourage In short: to in the industry. The threshold technology. and sustainable in new invest to that fact The high. is licence development a granted being for and 32 in Northern Norway (Troms and Finnmark). In addition, and (Troms and 32 in Northern Norway licence in Troms demonstration SalMar has one time-limited has also The Group Norway. in Central and one R&D licence 10 licences. to relating agreements operational R&D/joint to be in Norway company the first In 2016, SalMar was by the Norwegian licences so-called development awarded The Group is one of the world’s largest and most efficient efficient and most largest the world’s is one of The Group along integrated is vertically salmon, and Atlantic of producers to harvest roe and smolt broodfish, chain from value the entire 2018, SalMar had the close of and sales. At ing, processing salmon Atlantic of the production 100 licences for of a total Trøndelag), Romsdal, & (Møre Norway Central in 68 Norway: in Business and strategy Business a is ASA SalMar ticker the under Exchange Stock on the Oslo quoted are shares SALM. 44 SALMAR ANNUAL REPORT 2018 Atlantic salmonin2018,up5percent on2017.Thevalue of Norway exported around 1,208,000tonnes round weight of Total, globalsupply Oher countries Faeroes UK North America Chile Norway in 1,000tonnes WFE Supply of Atlantic salmon the total supplyin 2018. increased itsoutputandaccounted for around 52percent of Norway, the world’s largest producer of farmed salmon, also salmon in2016,supplyincreased inboth 2017and2018. Following a 7percent decrease intheglobalsupplyof Atlantic Supply, exports andprice of Atlantic salmon Market conditions seafood nation. parliament’s ambitionto make Norway theworld’s leading technology could helprealise theNorwegian government and eight surrounding production chambers.Thisnew equipment advanced system for thetransportation of fishlinked to the fish, the control andmanagement of theunit,as well asan that itwillhave a sealedcentral column for thetreatment of have twicethecapacity.However, thebiggest difference is 1. Itwillwithstand considerably more exposed conditions and differs from SalMar’s existing offshore fishfarmOceanFarm Directorate of Fisheriesdescribesindetail how theconcept Fish Farmconcept. Initslicence-award letter, theNorwegian MariCulture willnow proceed withtheplanningof theSmart sidiary MariCulture AS wasgranted eight development licences. Seafoods/Havfisk. board andchairof theauditcommittee at theformer Aker of theauditcommittee at Bakkafrost, anda memberof the Fish (now partof MOWI), a memberof theboard andchair tions withintheseafood sector. ShehasbeenCFO at Pan Business Administration (NHH),andhasheldvarious posi accountant from theNorwegian Schoolof Economics and and chairing their audit committees. She is a of experience of servingontheboards of listed companies international companies. Inaddition,Romuld hasa great deal SalMar solddirectly to 47different countries in2018.Europe decreased theirimports by17percent overall. per cent. ThemainAsianmarkets (Vietnam/China/Hong Kong) while France increased itsimports of Norwegian salmonby8 increased itsimportsof Norwegian salmonby14percent, Norway exports 75percent of itsvolume to theEU.Poland the samein2018asyear before. the factthat theaverage priceof Atlantic salmonwasmuch Norway’s salmon exports also rose by5per cent, which reflects New development licences.InFebruary2019,SalMar’s sub was themost important destination, withPoland, Lithuania 2,294 1,208 2017 104 177 161 564 80 2,420 1,253 2018 154 164 679 98 72 certified public Change -11% -13% 20% -5% 5% 2% 4% - - for regulating the growth of the aquaculture industry in order In 2017, the Norwegian government introduced a and NorthernNorway. SalMar’s 100 licences are located in the regions Central Norway Framework conditions an increase in salmon prices measured in NOK and vice versa. NOK against therespective trading currencies could leadto NOK strengthened by0.5percent. Any weakening of the 0.6 percent and5percent respectively. Against theGBP, the gian currency (NOK)weakened against theEURandUSDby From thecloseof 2017until thecloseof 2018,theNorwe- with NOK59.93perkgtheyear before. Salmon Index) for 2018cameto NOK59.97perkg,compared at NOK48.91perkg.Theaverage priceof salmon(NASDAQ 65.73 per kg. The year’s lowest price was recorded in week 34 at NOK55.56per kgandendedwithsalmonpricesof NOK at thebeginning of theyear. 2018started withsalmonprices start of theyear until May, whenitfell backto levels observed The priceof Atlantic salmon(NASDAQ) rose sharplyfrom the third largest export destination. were discontinued in 2014, North America has become the gapore asthelargest singlemarkets. Sincesalesto Russia important destination wasAsia,withVietnam, JapanandSin- and Sweden asthelargest singlemarkets. Thesecond most have beencharacterised byunpredictability, particularlywith To date, framework conditions for salmonfarming inIceland European market. about customs dutiesandtariffs for Scottish salmoninthe However, theongoingBrexit negotiations create uncertainty grow from its present outputlevel of around 170,000tonnes. ties have expressed thewishthat theaquaculture sector will ficiency, smallereconomies of scale).TheScottish authori- has in turn contributed to a has led to more challenging regulations than in Norway, which pressure from specialinterests (NGOs,organised anglers,etc) remained relatively constant over several years. Considerable Framework conditions for salmonfarminginScotland have be publishedintheautumnof 2019. yellow andoneasgreen. A new assessment isexpected to across three production zones, two of whichwere definedas sified asgreen. Thelicenceslocated inCentral Norway extend extend across four production zones, allof whichwere clas- yellow andtwo red. SalMar’s licencesinNorthernNorway autumn of 2017,eight of these were designated green, three In Norway, there are currently 13production zones. Inthe new licencesand increased capacityat existing licences. capacity adjusted by 6 per cent. Growth is divided between or reduced inscale.Growth isassessedevery other year, and yellow zones, while production in red zones must be halted Growth ispermitted ingreen zones, growth isputonholdin production zones are designated asbeinggreen, yellow orred. tion zones. Thesystem iscalledthe“traffic light system”, since growth cap, environmental indicators and division into produc Under thissystem, growth iscontrolled bymeansof variable to safeguard its environmental sustainability and stability. higher level of costs (lower ef- new system - Passion for Salmon 45 - - - - to the increased volume harvested and lower production costs. production lower and harvested volume the increased to its of measure important most SalMar’s is EBIT Operational underly of the results under IFRS, since it shows performance associated not items Specific period. the during operations ing vested heavily to increase its competence and capacity to deal and capacity to its competence increase to heavily vested salmon to relating with biological challenges, particularly those in the biological situation that in 2018 show lice. The results with improved, has segment Norway Central Farming Fish the see to expects company The costs. reduced correspondingly time. over segment Northern Norway in the similar results bio to relating costs of 2016, the level the end of Up until an increased of was rising, partly as a result logical production as well capacity, capability and treatment response emergency has 2017 and 2018, the Group Through costs. as higher feed per kg. costs in production a reduction achieved NOK 1,040.4 million in of costs had payroll The SalMar Group 929.1 million in 2017. The number with NOK 2018, compared by 4 per cent rose in the Group (FTEs) equivalents full-time of 1,479 FTEs 2017 to the close of at 1,427 FTEs in 2018, from 2018. of the close at the has increased programme ongoing investment SalMar’s time. This explains over assets operating the Group’s of value 2017. with compared 2018 in depreciation of level higher the 3,460.8 NOK of EBIT Operational an made Group SalMar The NOK 3,162.2 million in 2017. with million in 2018, compared attributable largely is, as described above, The improvement - com Norway, in tonnes 142,500 harvested SalMar 2018, In represents in 2017. This also tonnes with 135,200 pared share Including SalMar’s 5 per cent. of increase a year-on-year and Arnar (50 per cent) Havbruk Norskott the output from of to came volume harvested total the Group’s cent), lax (42 per 2018. 159,000 in NOK in 2018 came to salmon (NASDAQ) price of The average which in 2017, the average up from 60.00 per kg, marginally the price of years, previous NOK 59.90 per kg. As in came to at NOK 79.90 peaking year, the through salmon fluctuated price of recorded its lowest to 19 and sinking per kg in week 34. NOK 48.90 per kg in week in 2018 harvested volume total SalMar’s of 39 per cent Around con of these terms The contracts. was sold under fixed-price Overall, than 12 months. more for last but normally vary, tracts line in was contracts fixed-price these under achieved price the as a whole. This was the year for price (NASDAQ) with the spot in 2017, when the contract achievement than the price better sent The volume price achievement. average reduced portfolio the same practically in 2018 was at processing secondary for Furthermore, in total. tonnes 52,000 approx. 2017, in as level to the European fish sold of the proportion SalMar increased sales of 61 per cent in 2018. Overall, including Norway, market, figure The corresponding in Europe. customers been to have 2017 was 58 per cent. for in 2018, which improve to continued Biological performance time, SalMar has in- Over costs. production in lower resulted - special tax on salmon on tax special Total volume harvested: 154,800 tonnes gutted weight. Yngve Myhre steps down as CEO and is replaced by Leif Inge Nordhammer on Inge Nordhammer by Leif as CEO and is replaced down steps Myhre Yngve weight. gutted 154,800 tonnes harvested: volume Total of in 2011. • Acquisition down he stepped until 15 years a period of CEO for as SalMar’s served previously 20 January. Nordhammer licenses. 8 green 2014 resource rent tax on the aquaculture sector. The The sector. aquaculture the on tax rent resource

position on the matter. The government has decided that that decided has government The matter. the on position VÅR HISTORIE VÅR The Group generated consolidated operating revenues of NOK of revenues operating consolidated generated The Group with NOK 10,817.2 million 11,342.6 million in 2018, compared 5 per cent. of increase a year-on-year in 2017. This represents section 3-3a of the Norwegian Accounting Act. With reference With reference Act. Accounting the Norwegian section 3-3a of forecasts well as and financial position, as results Group’s the to as continuation for required ahead, the conditions the years for In the opinion exist. to confirmed hereby are a going concern financial position is good. the Group’s directors, of the board of statement income Consolidated - should nev deliberations Commission’s Tax the Aquaculture with no change in its mandate. as before, ertheless continue Financial performance Going concern been prepared for 2018 have statements The annual financial to pursuant SalMar is a going concern that on the assumption tion of a of tion taken yet has not Folkeparti, Kristelig partner, coalition fourth a based on the aquaculture sector’s strong profitability over over profitability strong sector’s based on the aquaculture those achieved exceeded have in which returns years, several set was commission sector An aquaculture sectors. in other the examine to 2018 September in government the by up 2019. by November publish its report issue. It is scheduled to 2019, the annual conferences the spring of during However, partners (Høyre, coalition governing the four out of three of the imposi- reject decided to and Venstre) Fremskrittspartiet other Norwegian salmon producers. However, trade restric trade However, producers. salmon Norwegian other in 2014 the Crimean conflict of in the wake tions introduced Norwegian closed to remains the Russian market mean that fish farmers. tax rent Resource assess decided to government In April 2018, the Norwegian tax rent a resource the imposition of propose and potentially This was 2020. from effect with sector on the aquaculture had applied. SalMar’s InnovaMar harvesting plant in Frøya was plant harvesting InnovaMar had applied. SalMar’s the despite by the ban. However, the facilities affected one of waiting SalMar is still Trøndelag, imports from opening up of the Chinese authorities. from final approval for and SalMar for market important an previously was Russia small proportion of the market for for market the of a small proportion for accounts China still the country’s to attributable largely salmon. This is Norwegian se- from salmon Norwegian of importation the on ban 2015 improve to long been underway have Efforts regions. lected and in July 2018 China revoked the Chinese market, access to they which to counties Norwegian those for restrictions the also considering the introduction of a of introduction the considering also and growth Arnarlax’s for uncertainty creates farming, which is engaged in ahead. Arnarlax years in the plans investment dialogue with the authorities with and constructive an active of membership its through primarily issues, these to respect SFS. organisation the Icelandic fisheries markets to Access regard to already issued licences and taxation. Politicians and Politicians and taxation. issued licences already to regard how debate to continue organisations special interest various inshore which and grow to allowed be should sector the much are The Icelandic authorities access to. should be given it sites 46 SALMAR ANNUAL REPORT 2018 in licence-related maximumallowable biomass (MAB)for a total property, plant and equipment. SalMaracquired 2,886tonnes of NOK 946.0 millionwas invested inintangible assets and tures of NOK758.0millionin2017.During theyear, a total NOK 833.8millionintheperiod,compared withnet expendi- Net expenditures withrespect to investing activitiestotalled 249.6 millionmore thanin2017. NOK 672.8millionincorporation taxin2018,whichisNOK biomass andstocks of finishedgoods.In addition, SalMarpaid by NOK 602.6 million, the bulk of which relates to increased million in2017.Through 2018,SalMar’s working capitalrose of NOK2,781.6millionin2018,compared withNOK3,374.4 SalMar achieved a positive cashflow from operating activities Consolidated cashflow million, compared withNOK2,297.8millionin2017. SalMar’s net profit for 2018asa wholetotalled NOK 3,579.2 attributed to thehighertaxbase. NOK 314.9millionhigherthanin2017,whichcanlargely be tax expense for 2018cameto NOK873.3million.Thisis 4,452.6 million,upfrom NOK2,856.2millionin2017.The million, suchthat theGroup madea profit before tax of NOK Net financial items for 2018 therefore came to NOK 107.0 up from NOK107.0millionin2017. SalMar’s financial expenses totalled NOK116.1millionin2018, with negative effects totalling NOK49.1 millionin2017. positive intheamount of NOK1.9millionin2018,compared to salesinforeign currencies. Foreign exchange effects were The changeislargely dueto foreign exchange effects linked 9.1 millionin2018,compared withNOK38.0millionin2017. Interest income andnet other financialitems totalled NOK NOK 208.9million. Havbruk andArnarlax.Thecorresponding figure for 2017was NOK 252.9million,thebulkof whichderived from Norskott SalMar’s share of theprofits from theseinvestments came to holding gives ita significant influence,performed wellin2018. SalMar’s associates, iecompanies over whichSalMar’s share- 2018, upfrom NOK2,792.2milliontheyear before. SalMar madeanoperating profit of NOK4,306.6millionin profits bya total of NOK89.0million. unrealised effect of forward currency contracts decreased losses, the fair value of financial salmon derivatives and the calculating fairvalue. Changesinprovisions for contract-related of 2018thanat itsstart, aswell aschangesinthemethod of largely attributable to higherpriceexpectations at theclose of thebiomassboosted profits byNOK934.8million,andis sions for contract-related losses.Thechangeinthefairvalue financial salmonpricederivatives (Fish Pool), as well asprovi- currency contracts relating to future contract deliveries and in thevalue of thebiomass,unrealised effects of forward NOK 370.0million.Fairvalue adjustments comprise changes in 2018.In2017,fairvalue adjustments decreased profits by Fair value adjustments boosted profits byNOK845.8million the consolidated financial statements. with underlyingoperations are presented onseparate linesin ing credit facilitiesrose byNOK500million,whileterm loans a dividend totalling NOK 2,147.2million.Debt relating to roll- 2,716.6 million in2017.In2017, SalMar paidits shareholders 1,890.2 millionin2018,compared withexpenditures of NOK Net expenditures from financing activities totalled NOK 112.5 millionto thecompany. issue inJuly2018.Inthisconnection, SalMarcontributed NOK way for furthergrowth inIceland,Arnarlaxcarriedouta share Norskott Havbruk. To strengthen itscapitalbaseandpave the In 2018,SalMar received NOK242.2million in dividendsfrom investments of NOK260.7million. equipment parkalongtheentire value chainresulted intotal relating to OceanFarm1were alsomade.Maintenance of the million innecessaryimprovement andmodification investments at the Senja hatchery cost NOK 33.0 million in 2018. NOK 56.9 Senja, aswell astheplanninganddesignof additionalcapacity of the projects relating to cleaner fish and the hatchery in 106.4 millionwasinvested inthisproject in2018.Completion production capacity at the Follafoss facility. A planned. In2018,construction work got underway to expand the expansion of theGroup’s smoltcapacityhas proceeded as zones 10–13. Theinvestment programme associated with tonnes in production zone 7, and 2,315 tonnes in production Fisheries. The additional capacity breaks down as follows: 571 auction organised bytheNorwegian Ministry of Trade and of NOK453.6million,through fixed-price allocations andan tional investments inArnarlaxthrough a share issue,as well than at thesamepoint in2017 andisdueprimarilyto addi- million at thecloseof 2018.Thisis NOK 134.6millionmore The Group’s non-current financial assets totalled NOK1,215.5 reduced byNOK13.3millioncompared with2017. the year’s investments. Theoverall value hastherefore been of property, plant andequipment in2018washigher than high level of investment over several years, thedepreciation 3,591.5 millionat thecloseof 2018.Asa consequence of the The bookvalue of property, plant andequipment totalled NOK this amount. of fish farming licences accounts for NOK 2,957.5 million of NOK 3,404.0millionat thecloseof 2018.Thebookvalue The Group recognised intangible assets in the amount of associated withtheacquisition of additionalMABcapacity. million in2018.Thisislargely attributable to the increase The value of theGroup’s intangible assets rose byNOK479.0 since thecloseof 2017. to NOK 15,135.6 million, an increase of NOK 2,209.3 million As at 31 December2018,SalMar’s total balancesheet came Consolidated balance sheet NOK 3,563.3million. year. Unuseddrawing rights at thecloseof theyear totalled and cashequivalents to NOK239.6millionat thecloseof the million in2018,whichincreased theGroup’s holdingsof cash In total, thisgave SalMara positive net cashflow of NOK57.7 105.1 million. to cover net interest andfinancial expenses totalled NOK were reduced byNOK136.7millionduringtheyear. Payments total of NOK Passion for Salmon 47 - - - 21.6 28.8 2017 2017 5,198.5 1,891.5 2,864.8 1,376.1 rather challeng- rather total of 100,100 100,100 of total 25.3 27.2 2018 2018 5,962.0 2,533.3 2,645.0 1,153.9 very good year in terms of both both of terms in year good very Operating revenue Operating EBIT Operational weight gutted kg Per EBIT (NOK) Operational revenue Operating EBIT Operational gutted weight kg Per EBIT (NOK) Operational a was 2018 results financial strong Despite Reporting segments Reporting Norway Central Fish Farming ing year for Fish Farming Northern Norway. The segment The segment Fish Farming Northern Norway. for ing year capacity and knowledge have enabled it to control lice num- control enabled it to have capacity and knowledge than in previous treatments delousing bers and apply fewer with disease mortality associated It has also reduced years. the sea in 2017 to Fish transferred thereof. and the treatment in 2018. production the segment’s the bulk of for accounted 2017 has had in the spring of transferred The generation 2018 also repre cycle. production a particularly favourable whose Farm 1 facility, Ocean the pilot for a milestone sents of the the end towards out of fish was harvested cohort first with been positive, have biological results The project’s year. no was there and levels lice low quality, good growth, strong the entire throughout a single delousing treatment need for period. production a harvested Norway Central Farming Fish repre in 2017. This with 87,500 tonnes compared tonnes, the the year, the close of At 14 per cent. of an increase sents of the start less than at biomass was 5 per cent segment’s 95,000 tonnes harvest to this segment 2018. SalMar expects the with 2018 is due to compared in 2019. The decrease Ocean Farm 1. from volumes absence of Northern Norway Fish Farming NOK million NOK million fish farm largest the Group’s Norway, Fish Farming Central For a was 2018 segment, ing operating segment’s The performance. financial and biological while 2018, 2017 to from by 15 per cent increased revenues 34 per cent. by a substantial EBIT rose Operational in by 17 per cent rose weight EBIT per kg gutted Operational by a reduction be explained the same period, which can largely by SalMar is sold All the salmon produced costs. in production On prices (NASDAQ). market to equivalent prices at internally in the price of an increase has achieved the segment average, cost production The kg. per 0.10 NOK of salmon harvested its by been reduced on average, biomass has, the harvested of with 2017. NOK 3.60 per kg compared to efforts Systematic 2018 was a good year. Operationally, capability, response emergency segment’s the strengthen - Total volume harvested: 150,000 tonnes gutted weight. Principle approval of the ocean farming pilot. • Completion of acquisition that ensures an ensures acquisition that of • Completion the ocean farming pilot. of Principle approval weight. gutted 150,000 tonnes harvested: volume Total Arnarlax Hf. Icelandic farming company in the the shares of 22.91% of stake indirect 2015 VÅR HISTORIE VÅR bearing debt of NOK 367.6 million, an increase in interest-free interest-free in increase an million, 367.6 NOK of debt bearing in equity an increase as NOK 369.9 million, as well liabilities of and financial solvency The Group’s NOK 1,471.7 million. of during 2018. strengthened therefore position have residual balance on the term loan which is scheduled to be be loan which is scheduled to balance on the term residual in June 2019. it matures before refinanced to pay expects for 2018, the Group profit taxable Based on its tax. NOK 690.7 million in corporation Group’s the of value the in increase million 2,209.3 NOK The in interest- an increase to can be attributed in 2018 assets in connection which interest-bearing debt totalled NOK 211.0 NOK totalled debt which interest-bearing in connection leasing has ordinary Group The the year. the close of million at as a leasing NOK 28.6 million, as well to liabilities amounting whose houses InnovaMar, the building that for agreement it is classified as a financing agreement. means that nature 314.8 NOK totals leasing liability this year, the of close the At totals debt on interest-bearing instalment year’s million. Next the which comprises NOK 635.7 million, NOK 600.0 million of financing agreement covers operating credit facilities, term term facilities, credit operating covers financing agreement had Group the means and framework, acquisition an and loans 2018. the close of NOK 4,000 million at of rights drawing total of certain financing arrangement, this primary to addition In financing agreements, their own subsidiaries have the Group’s Net interest-bearing debt (interest-bearing debt less cash and debt (interest-bearing debt interest-bearing Net the close of 1,527.7 million at NOK totalled cash equivalents) 2017. In the close of NOK 1,222.5 million at up from the year, borrow of the three two refinanced 2018, SalMar ASA March which its primary financing agreement to ing facilities related banks. The Nordic of with a consortium into has been entered provision of NOK 6.7 million had been made to cover uncer- cover 6.7 million had been made to NOK of a provision credit to respect with risk own SalMar’s including claims, tain insurance. 9,139.8 NOK equity totalled 2018, the Group’s the close of At 2017. The the close of NOK 7,688.1 million at million, up from 2017 the close of at 59.3 per cent has risen from equity ratio 2018. the close of at 60.4 per cent to close of 2018, the Group changed the method used to calculate calculate to used method changed the 2018, the Group close of detail more in described is This biomass. the of value fair the statement. the financial to in the notes start the NOK 501.1 million at from rose receivables Trade year-end, close. At the NOK 630.1 million at to the year of million at the close of the year. This is NOK 1,170.1 million million This is NOK 1,170.1 the year. the close of million at stocks in tonnes, Measured 2017. close of the at than more the start 2018 than at the close of higher at 3 per cent were by increased biomass the producing of cost The the year. of came costs production Total per cent. NOK 235.3 million or 8 the biomass of adjustment NOK 3,269.9 million. Fair value to is NOK 2,035.7 million, which came to the year of the close at the At the year. of the start than at NOK 934.8 million more as the fact that the Group’s share of net profits for 2018 is profits net of share Group’s the that as the fact by associates. the dividend payable higher than NOK 5,305.6 at valued were assets biological The Group’s 48 SALMAR ANNUAL REPORT 2018 ple, more extensive useof overtime hada negative impacton cost-optimal output from an industrial perspective. For exam from oneperiodto thenext have made itdifficult to achieve cycle, andsubstantial fluctuations inthe volume harvested Operations at InnovaMar dependonthebiologicalproduction in 2018,anincrease of 19,000tonnes compared with2017. Around 140,000tonnes of fish were harvested at InnovaMar provided satisfactory margins. price achievement. Fishdisposedof inthespot market have improvement on2017, whencontracts reduced theaverage the spot price(NASDAQ) for theyear asa whole.Thisisan contracts have resulted in a price achievement in line with sold underfixed-price contracts. Overall, thesefixed-price In 2018,around 39percent of thevolume harvested was cost base. decrease isattributable largely to anincrease inthesegment’s million in2018,compared withNOK47.8millionin2017.The 11,432.0 millionin2018.Operational EBITtotalled NOK12.8 ing revenues rose from NOK10,924.8millionin2017to NOK price achievement andincreased harvested volumes, operat- house producers at themarket price.Asa result of better Group’s harvested volume, which it buys from SalMar’s in- NOK million Sales andProcessing the segment to harvest 50,000tonnes in2019. 17 percent larger thanat the start of 2018. SalMarexpects 2017. At thecloseof theyear, thesegment’s biomass was Fish Farming Northern Norway harvested 42,400 tonnes in access to new sites. increase inMABvolumes at existing sites, aswell asgaining been undertaken to optimise production byapplyingfor an expected to beseenover time.A restructuring process has biological situation, withanassociated reduction incosts, is and capacityto dealwithbiological challenges.Animproved also invested heavily inthisregion to boost itscompetence 2018 beinglower thanin2017.Inrecent years, SalMarhas This isthemain reason for the volume of fish harvested in kept longer at sea to maximise their production potential. with increased MABvolumes, thishasenabledthefish to be the springof 2017beinglongerthan anticipated. Combined resulted intheproduction timefor fishtransferred to seain Lower thanplannedgrowth through thewinter andsummer with 2017. tion inmargin bysecuringa priceriseof NOK2.40compared and goodpriceachievement hashelped to dampenthereduc kg gutted weight. At thesametime,highweights at harvest attributable to a NOK4.00increase inproduction costs per in 2018,down from NOK28.80in2017.Thereduction is Operational EBITperkggutted weight cameto NOK27.20 while itsOperational EBITfell by16percent. experienced a reduction inoperating revenues of 8percent, This segment isresponsible for placingandsellingtheentire Operational EBIT Operating revenues 11,432.0 2018 -12.8 10,924.8 2017 47.8 - - harvested decreasing from 31,000 tonnes in 2017 to 27,500 in thecompany’s operating structure, resulted inthevolume Biological challengesat theendof 2017,aswell aschanges in 2018,compared withNOK2,088.0millionin2017. generated gross operating revenues of NOK2,057.0million 2018 wasa goodyear for Norskott Havbruk. Thecompany cent of thebusiness. Scotland, the Orkneys and Shetland. SalMar controls 50 per skott Havbruk engages in the farming of salmon in mainland Through its wholly owned subsidiary Scottish Sea Farms, Nor Norskott Havbruk Associates and saves onfreight charges. the customer, enablesby-products to bedealtwithefficiently Norway. Itincreases thequalityof theproduct that issoldto rect to process a a a negative contribution to thesegment’s overall results. From to make a profit in2018.Thisbusinesshastherefore made have madeitdifficult for thesecondary processing business Variable accessto raw materials andvolatile salmonprices sea farmsto beoptimised. value for SalMarasa whole,sinceitenablesproduction at the costs in2018.However, theplant’s flexibility hascreated added 60.2 millionin2017. an Operational EBITof NOK 78.9million,compared withNOK in 2017to NOK400.4millionin2018.Thecompany made rate of attrition. Gross revenues fell from NOK625.4million year for thecompany, inparticulardueto diseaseanda high of sustainable aquaculture inIceland.2018wasa challenging Arnarlax isa young company that isleadingthedevelopment a controlling interest. Arnarlax still furtherinthefirst quarter of 2019,andnow has mentioned, above, SalMarhasincreased itsshareholding in Arnarlax aswell astheacquisitionof subscription rights. As its shareholding from 34 per cent through a cent of thecompany at thecloseof 2018,having increased Arnarlax farmssalmoninIceland.SalMarcontrolled 42per Arnarlax 272.8 millionin2017. tax cameto NOK265.0millionin2018,compared withNOK financial income. SalMar’s share of the company’s profit after and fair value adjustment of the biomass being recognised as 50 percent share of thecompany’s profit orloss after tax Norskott Havbruk isrecognised asanassociate, withSalMar’s expects to harvest some30,000tonnes in2019. attributable to higherpriceachievement. Norskott Havbruk in 2018,a riseof NOK2.50perkgfrom 2017.Thisislargely Operational EBITperkggutted weight cameto NOK24.10 the NOK669millionachieved in2017. tional EBIT of NOK 661 million in 2018, only slightly below a reduction incosts thecompany therefore madeanOpera - sured highweight at harvest, goodpriceachievement and tonnes in2018.However, soundunderlyingoperations en strategic point of view, SalMar nevertheless believes it is cor relatively large portion of the raw material in share issue in - - - Passion for Salmon 49 - - good year for the company’s company’s the for year good February 2016, SalMar was awarded the first eight aquaculture development aquaculture eight the first awarded On 28 February 2016, SalMar was weight. gutted 129,600 tonnes harvested: volume Total 34 per cent to Arnarlax Ehf company in the Icelandic aquaculture shareholding its indirect • SalMar increased Ocean Farming AS. licences for Inge Leif as CEO from be taking over Williksen would Trond announced that 2016, the board acquisitions. • On 11 May a series of through two over spread than 17 years, more held the position for having down, step to leave had himself requested Nordhammer Mr. Nordhammer. 2016. up the position on 14 November Williksen took periods. • Mr. 2016 VÅR HISTORIE VÅR bearing debt. Current liabilities total NOK 4,934.0 million, of million, of NOK 4,934.0 liabilities total Current bearing debt. NOK 2,593.0 million, for account which dividend provisions comprise receivables of dividend/group contributions from from contributions dividend/group of receivables comprise cash and cash had holdings of subsidiaries. The company Equity 2018. the close of NOK 12.4 million at of equivalents NOK 2,558.0 million, which 31 December 2018 totalled as at Non-current 30 per cent. of an equity ratio to corresponds interest- NOK 1,100.0 million and comprise liabilities total association with the financing arrangements. with association in NOK 8,592.0 million a total worth assets had SalMar ASA non- Of this amount, 2018. the close of at its balance sheet for NOK 5,793.0 million, accounted financial assets current subsidiaries. loans to which comprised NOK 3,163.8 million of NOK 2,774.0 million and largely totalled receivables Current total of NOK 2,527.9 million in dividends/ NOK 2,527.9 of subsidiaries, with a total In addition, the company being recognised. contributions group investments its from dividends in million 242.2 NOK recognised manages the SalMar ASA Havbruk. Norskott in the associate NOK recognised and arrangements primary financing Group’s Interest subsidiaries. to loans on income interest in 110.9 in incurred NOK 49.8 million were to amounting expenses resources are employed by this company. In 2018, it employed it employed In 2018, by this company. employed are resources equivalents. 31.5 full-time of a total of NOK 2,747.6 year for the profit made a net SalMar ASA with NOK 2,395.2 million in 2017. million in 2018, compared in subsidiar investments from derive its revenues The bulk of a was 2018 associates. and ies income. SalMar’s share of the company’s net loss came to NOK to loss came net the company’s of share SalMar’s income. 11.7 million in 2018. statements financial company’s The parent year for the the profit of and allocation ad and is a shareholding SalMar ASA, company, The parent administrative and management Group entity. ministrative from January 2019. Hembre has previously worked at SalMar at worked has previously January 2019. Hembre from - senior posi several from expertise deal of and brings a great tions within the SalMar Group. share with SalMar’s as an associate, Arnarlax EhF is recognised fair (and tax after loss or profit company’s the of cent) per (42 as financial recognised being the biomass) of adjustment value Arnarlax expects to harvest around 10,000 tonnes of salmon of 10,000 tonnes around harvest to Arnarlax expects the of the harvesting 2018, of quarter in 2019. In the fourth has generation This underway. got generation 2017 company’s than the one before. status biological a better demonstrated CEO with effect new as Arnarlax’s was appointed Bjørn Hembre ture still reflects the fact that it is in an early development development early in an it is that the fact reflects still ture the optimise being made to are efforts phase. Systematic level. a competitive to down bring costs to structure operating by affected severely was a whole as year the for outcome The the winter In addition, one specific site. at performance weak Norway. in Iceland, as it was in 2018 was particularly cold of total of 6,700 tonnes in 2018, 3,000 tonnes 6,700 of a total harvested The company before. year less than the tonnes NOK 11.80, came to weight per kg gutted EBIT Operational - struc cost in 2017. The company’s with NOK 6.20 compared 50 SALMAR ANNUAL REPORT 2018 has invested heavily in a biological delousing is an extremely important measure. SalMar With respect to thelicesituation, theuseof cleanerfish for Our operating procedures are designedto reduce biologicalrisk. and production in closed units are strategic projects in SalMar. spend at sea for example through the transfer of larger smolt biological risk.Measures to reduce thelengthof timethefish bust salmon is another important preventive measure to reduce Selective breeding andthe genetic development of a more ro projects, could leadto new andbetter locations being used. operationalised through the Ocean Farm and Smart Fish Farm the volumes involved. SalMar’s offshore fishfarming strategy, in areas that have the capacity needed to sustainably produce measure. For SalMar, it is important that production take place Access to suitableproduction locations isa crucialpreventive fare of itsfish. tinuously makes operational assessments to protect thewel- activities designed to limit damage to its stocks. SalMar con - including lice,whichencompasses preventive measures and SalMar takes a holistic, strategic approach to biologicalrisk, lice situation. the methods usedandintensify itsefforts to dealwiththe forced SalMar, along with the rest of the industry, to change and greater prevalence of medicinallyresistant lice.Thishas ated withtheincreasingly widespread presence of salmonlice years, the aquaculture industry has faced challenges associ- the inherent biological risk will always be present. In recent risk-reducing measures, thenature of theindustry issuchthat and seafarms.Even thoughSalMardevelops andimplements logical development of itsfish stocks, at both itshatcheries SalMar’s most important operational riskrelates to thebio Operational risk of day-to-day operations. code of conduct, iscarriedoutinthelineorganisation aspart factors, aswell ascompliance withtheGroup’s values and guidelines for group entities. Follow-up and control of risk ates incompliance withallrelevant legislation andoperating It is the CEO’s responsibility to ensure that the Group oper- in accordance withqualityandcertification standards. emphasis onthecontrol andfollow upof production facilities portant riskfactors inallbusinessareas, andplacesparticular The Group hassystems androutines inplaceto monitor im- Risk management is a Risks andriskmanagement serve of NOK2,529.7million. At thecloseof theyear, thecompany hada distributable re- - - - proposes thefollowing allocation of theyear’s profit: NOK 23.00pershare for the2018financial year. Theboard The board of directors is proposing payment of a for NOK2,023.6million. while group contributions payable to subsidiariesaccounts Total Transferred to other equity Dividend provision key function of the management team. dedicated cleaner fishproduction facil NOK 2,747.6million NOK 2,593.0million NOK 154.6million dividend of - - - Foreign exchange risk considered appropriate. financial hedginginstruments are employed where they are Financial riskismanagedbya central unitat headoffice, and areas are followed upandremedial measures implemented. board’s Audit Committee. Non-conformances andimprovement pervision, the process owners’ follow-up and monitoring by the reporting iscarriedoutthrough management’s day-to-day su The follow-up of internal controls associated with financial Financial risk of resistance. tion must beappliedprudently to prevent thedevelopment with any form of biologicalproduction. However, suchmedica It willalways benecessaryto usemedication inconnection also collects theliceto prevent reproduction. built upintheform of mechanicaldelousingequipment that past couple of years, a substantial delousingcapacityhasbeen thermore, SalMarhasgoodaccessto wellboat capacity.Inthe reinforced withtherealisation of theInnovaNor project. Fur- at InnovaMar enables us to respond effectively. This willbe ity to dealwithbiologicalchallenges. Ourharvesting capacity Over time,SalMarhasbuiltupan effective response capabil- operating procedures. tion against various fishdiseasesisalsoa key aspectof our lice entering thenet-pens intheform of liceskirts.Vaccina- investments have beenmadeinmeasures to prevent salmon ity at Langstein inTrondheimsfjord. Furthermore, substantial growth indemandhasbeenrelatively stable, whilegrowth in ing companies ordirectly to theconsumer. For several years, most of thefishharvested issoldimmediately to process The globalsalmonmarket islargely a fresh-fish market, where 79.90 perkg,measured weekly. of Atlantic salmonfluctuated between NOK48.90and quarterly andmonthly perspective. In2018,thespot price salmon priceshave beenhighlyvolatile seeninanannual, correlated with movements in the price of salmon. Historically, prices. TheGroup’s profitability andcashflows are strongly directly andindirectly affected bydevelopments in salmon SalMar’s entire businessisrelated to salmon,andistherefore Price risk est rates. which meansthat theGroup isaffected bychangesininter - The borrowing portfolio iscurrently at floating interest rates, Interest rate risk described inNote 11to thefinancial statements. is, moreover, inNOK.Useof forward currency contracts is and salariesare paidlargely inNOK.Allinterest-bearing debt the Group’s costs is,however, more limited, sinceinputfactors as hedging instruments. Foreign exchange exposure linked to the contract isentered into. TheGroup usesforward contracts on thetransaction date, whilecontract salesare hedgedwhen nancial risk for the Group. Sales in foreign currencies are hedged exchange rates therefore represent both a direct andindirect- fi accounts settled largely inEUR,USD,GBP andJPY. Changes in The bulk of the Group’s output is sold internationally, with - - - Passion for Salmon 51 - - - million smolt. However, the most important difference is that it will have it will have is that difference important the most However, control fish, the of the treatment for column a sealed central system as an advanced the unit, as well of and management surrounding to the eight fish linked of the transportation for planning and design work chambers. Considerable production fish farm can be built new this vast be done before to remain initiate better and more comprehensive research into these these into research comprehensive more and better initiate conditions. issues under large-scale to be awarded was the first In 2016, the Ocean Farm project authorities. licences by the Norwegian special development foot environmental the operation’s reduce is to The objective aqua the to an answer provide and welfare fish improve print, 1 – the Farm Ocean sites. suitable of shortage sector’s culture in Frohavet in on site fish farm – arrived offshore first world’s end to an came cycle production first Its 2017. of autumn the as 2019. Ocean Farm 1 has been constructed of the start at test which has been designed to installation, a full-scale pilot fish farming of aspects technological and biological the both the first of 2018, harvesting In September in open waters. fish The underway. got facility the at raised be to generation and their quality was uniformly growth, strong had achieved and it was not been observed, salmon lice have good. Few - The experi apply a single delousing treatment. necessary to thebe could the project from deriving solutions new and ence seafood, of production in the sustainable era a new of start be used worldwide. potentially and could MariCulture subsidiary its through SalMar, 2019, of start the At its Smart for licences development eight granted was AS, towards step This marks an important Fish Farm project. fish farming in the open ocean. The of the establishment exposed more considerably planned fish farm will withstand 1. Farm Ocean of the capacity twice have will and conditions busy working day. day. working in a busy results research safeguard to way best influence opportunity to and the research, the to Proximity sources important are focus of area its and planning its both SalMar. for motivation of fields of in a wide range R&D activities SalMar’s The scale of to SalMar continued in 2018. During the year, was substantial projects Development control. and lice welfare on fish focus great and plant, processing secondary the at conducted were and control optimisation on feed emphasis has been placed assesses continuously the sea farms. In addition, SalMar at long-term more establish and aims to processes work its own supply industry. with the and a closer cooperation projects includes genetics and breeding of field the in efforts SalMar’s sub SalmoBreed with Benchmark Holding plc’s a collaboration SalMar is Genetics. SalMar venture, the joint through sidiary, a solid foundation this model has created see that pleased to in the years the Rauma strain of the further development for in other synergies also offer may this work ahead, and that on. SalMar is focusing that areas of its R&D activities in the area In 2018, SalMar expanded provider. feed main its with collaboration in feeding and feed basic on focus greater for need a substantial sees SalMar ensure can we how and fed are fish the how of knowledge throughout conditions optimal enjoys population the entire to goal expressed clearly SalMar’s is It cycle. production the - September 2017, Ocean Farm 1 arrived at its destin-ation in Frohavet, off in Frohavet, its destin-ation at 2017, Ocean Farm 1 arrived On 5 September weight. gutted 151,000 tonnes harvested: volume Total – capacity 20 completed facility in Senja was production smolt • The new coast the Trøndelag 2017 VÅR HISTORIE VÅR personnel specifically to organising and assisting R&D environ and assisting to organising personnel specifically while production efforts, in such collaborative involved ments the to with regard experienced increasingly becoming are staff various R&D environments, including partnerships relating to to including partnerships relating environments, R&D various of R&D licences. The scale and professionalism of the operation and continues activities has increased development important but be a professional, to SalMar it is important do so. For to ongoing trials of the outcomes such that demanding partner, the reflect protocols and plans while as possible, as relevant are has allocated fish farming. SalMar commercial of practicalities Research and development Research partnerships with SalMar has engaged in active years, many For day funding requirement. The Group prepares rolling cash- rolling prepares Group The requirement. funding day at all liquidity it has sufficient that to ensure forecasts flow is maintained structure financing a flexible times. Furthermore, are facilities lines. Unused credit credit established through Cash Flow. of on the Statement described in the comments and profits future for its prospects equity ratio, The Group’s liquidity risk is the Group’s facilities mean that credit current be low. to considered group due to similarities in the credit risk they risk they in the credit similarities due to a group be considered represent. Liquidity risk meet be able to will not the Group Liquidity risk is the risk that fall due. as they its financial obligations equivalents cash cash, sufficient have to is objective SalMar’s its day-to- meet facilities to credit or short and medium-term The Group does not have any significant credit risk associated risk associated credit significant any have does not The Group which may or counterparties with an individual counterparty under fixed-price contracts in 2018. contracts under fixed-price risk Credit resources the financial having not a counterparty The risk of low, been considered has, historically, his obligations meet to been small. have debts bad from losses resulting and SalMar’s only made sales are that ensure has guidelines to The Group payment had material previously not who have customers to defined exceed sums do not outstanding and that problems, - counter out whenever is taken insurance limits. Credit credit be low. deemed to party risk is not volume. The impact of the Group’s fixed-price contracts is is contracts fixed-price Group’s the of impact The volume. statements. financial segment’s this in recognised therefore was sold volume Group’s the of 39 per cent Approximately lice and outbreaks of disease are all factors which, directly which, directly all factors are disease of lice and outbreaks - a conse and thus supply. As growth fish affect or indirectly, occur in supply may variations substantial quence, relatively demand, stable relatively time. With of within short periods instability. price in considerable this can result con- fixed-price its output through SalMar sells a portion of such contracts up guidelines for has drawn The Group tracts. and It is the Sales salmon price volatility. to limit exposure to harvested Group’s the entire which sells segment Processing - In ad year. to year from substantially more varied supply has of defined by the number volumes planned output dition to external by a number of is also affected supply smolt released, salmon of spread the in sea temperatures, Fluctuations factors. 52 SALMAR ANNUAL REPORT 2018 of returning value to existing shareholders. stock option schemesfor seniormanagement andasa means may beusedto purchase company shares inconnection with 10 percent of theoutstanding share capital.Theauthorisation total holdingof treasury shares doesnot at any timeexceed company’s own (treasury) shares inanamount suchthat the The AGM alsoauthorised theboard of directors to acquire the the authorisation. shareholders. Sucha move isallowable undertheterms of tors may needto waive thepreference rights of existing Given thepurposeof theauthorisation, theboard of direc incentive programmes. as well asto reward senior executives participating in ongoing of businesses through cash issuesand contributions in kind, 11,328,000 shares to financeinvestments andtheacquisition share capitalbyupto NOK2,832,000through theissueof The authorisation allows the board to increase the company’s an extension of theonegranted bythe2017AGM. increase thecompany’s share capital.Theauthorisation was At theAGM on5 June2018,theboard wasauthorisedto 428.00 pershare. on 28 December, thelast day of trading in2018,wasNOK tween NOK 193.70 and NOK 510.00 per share. The price In 2018, SalMar’s shares were traded at prices varying be Shares andshareholders This report isalsoavailable from theGroup’s website. corporate sustainability report for 2018hasbeenpublished. a anti-corruption and the external environment, are describedin labour rights, theworking environment, equality, discrimination, in thearea of socialresponsibility, includinghumanrights, from theGroup’s website www.salmar.no. SalMar’s activities ethics andcorporate socialresponsibility. Theseare available board of directors hasdrawn upguidelinescovering business Pursuant to section3-3cof theNorwegian Accounting Act, the among other things,theSalMarSchool. ment opportunitiesfor managersandemployees through, environment (HSE), as well as provide professional develop- ures andprocesses associated withhealth,safety andthe workplace. TheGroup works continuously to enhancemeas- As anemployer, SalMaraimsto provide a safe anddeveloping that itismanagedina way that benefitsfuture generations. erate every day. We willprotect theenvironment andensure even greater awareness of theenvironment inwhichwe op- maintaining highmoral standards, aswell as contributing to sustainability meansdoingbusinessinanethical mannerand and byactingasa responsible corporate citizen. For SalMar, through sustainable aquaculture andprocessing activities, It isSalMar’s goalto secure long-term profitability andgrowth and socialresponsibility Organisation, sustainability unit intheopenoceanoff theTrøndelag coast. and putinto operation. Theobjective isto eventually site the separate section of this annual report. In addition, a separate - - SalMar acquired notreasury shares in2018. shares or0.5percent. 2019 AGM, whichwillbeheldon5 June2019. All authorisations granted to the board remain valid until the number of shares inthecompany. both authorisations may not exceed 10percent of thetotal thorisation to increase the company’s share capital,such that NOK 2,832,000,andmust beseeninthecontext of theau- The capitalincrease resulting from conversion may not exceed authorisation applies to an overall loan of NOK 2,000,000,000. instruments aspartof itsoverall financing at shortnotice. The ible loanto enablethecompany to make useof suchfinancial In addition,theboard wasauthorisedto take outa convert- up more detailed guidelines. should not exceed 300,000.Theboard wasauthorisedto draw that themaximumnumberof shares underthe2018scheme year may not exceed onewholeyear’s salary.Itwasdecided of the shares released under the programme in an individual the achievement of certain performance criteria. The value with theaccrualof 2/3of thoseentitlements dependent on entitlements equivalent to nomore thanhalfa year’s salary, determined each year. An employee may be awarded share programme, inwhichawards andperformance criteria are share-based incentive schemeisintended to beanannual Entitlements are accruedover a three-year period.Thenew tles participating employees to receive shares free of charge. incentive scheme for senior executives. The programme enti- The board wasalsoauthorisedto introduce a new share-based representative. of theboard membersare women, including oneemployee by theshareholders andtwo employee representatives. Three The Group’s board of directors comprises five memberselected of theannualreport. These principlesare discussedindetail ina separate chapter the Norwegian Code of Practice for Corporate Governance. listed ontheOsloStock exchange andthecurrent version of corporate governance, day-to-day obligations of a company cluding Section3-3bof theNorwegian Accounting Act on mendations to whicha publiclimited company- issubject,in SalMar complies withthelegislation, regulations andrecom- Corporate governance rights withrespect to shares. ers that limitthepossibilityof trading inorexercising voting company isnot aware of any agreements between sharehold the transferability of thecompany’s shares. Furthermore, the The articlesof association contain nostipulations limiting was the20 per cent of theshares. Asat 31 December2018,SalMarASA The company’s 20largest shareholders own a total of 74.44 Director, Strategic Projects. who isalsoa memberof group management inhiscapacityas Industrier AS iscontrolled by SalMar’s founder Gustav Witzøe, which owns 52.46percent of thecompany’s shares. Kverva SalMar ASA hasonemainshareholder, Kverva Industrier AS, th largest shareholder witha holdingof 561,003 - Passion for Salmon 53 - - - - SalMar’s share of the volume harvested by Norskott Havbruk Havbruk Norskott by harvested volume the of share SalMar’s to cost NOK 167 million. In addition, work on the planning and NOK 167 million. In addition, work cost to in open operation Smart Fish Farm designed for design of invest to SalMar expects In total, ocean will also continue. NOK 900 million in 2019. around Farm projects will be key milestones. will be key Farm projects in salmon farming, factor cost important Feed is the most costs. production total of 50 per cent around for accounting prices in changes significant of indications no are there far, So with 2018. 2019 compared for its of price the cost expects SalMar means that All in all, this achieved be on a par with that in 2019 to biomass harvested in 2018. Investments invest its ongoing maintenance/upgrade SalMar will continue NOK 272 around invest to and expects programme, ment its sea farms. to in activities related million in 2019, largely promote to investments SalMar plans several Furthermore, the Capacity at chain in 2019. value along the entire growth capacity expand plans to is being expanded, hatchery Follafoss for find a location to efforts up and being drawn in Senja are this In total, underway. are Norway in Central hatchery a new NOK 90 million in 2019. Within the Sales cost to is expected a new establish to is underway work segment, and Processing - in Senja. Invest (InnovaNor) plant and processing harvesting InnovaMar. capacity at increase will also be made to ments on this in be spent to NOK 327 million is expected of A total closed-containment a new 2019. In the fish farming segment, fish and post-smolt of the production facility will be built for All this is expected farming will be established. for site a new (50 per cent) in 2019 is expected to be approx. 15,000 tonnes. 15,000 tonnes. be approx. to in 2019 is expected (50 per cent) in 2019. tonnes 10,000 harvest to expects Arnarlax In Iceland, in the shares of 50 per cent than more owns SalMar now Arnarlax. be will the volume of cent 45 per around that expected It is half. in the second rest with the half-year, first in the harvested under 2019 is just for rate the contract writing time of the At contract The harvested. volume expected the of per cent 30 sta relatively will remain price and volume average portfolio’s the above slightly price average the with 2019, through ble price. forward Fish Pool present and under control. is stable Norway in Central The lice situation - its compe increase to heavily time, SalMar has invested Over challenges in the best handle biological and capacity to tence in 2018, and the bio paid off have These efforts possible way. is good. The Norway Central Fish Farming for logical situation good, is generally Fish Farming Northern Norway for situation A high challenges in certain areas. but SalMar has experienced in the time ahead. be maintained will preparedness of level facil its harvesting at preparedness of SalMar has a high level can be handled in compliance events extraordinary so that ity, being made to continuously are Efforts with the regulations. In sites. production and best sustainable the most develop Fish Smart and Farm Ocean the of realisation the context, this - 6% 2% 0% 4% 6% larger larger 16% 22%

Change 74 690 164 178 120 2019 1,328 2,554 Total volume harvested 159,000 tonnes gutted weight including share from Scotland and Iceland. • Harvesting from Ocean Farm 1 – from and Iceland. • Harvesting Scotland from including share weight gutted 159,000 tonnes harvested volume Total Trond after new CEO in April 2018 over as took Ervik 2018. • Olav-Andreas in September started fish farm – offshore first the worlds resignation. voluntary Williksen’s 2018 period of two years. Furthermore, Trine L. Danielsen was was Danielsen L. Trine Furthermore, years. two of period VÅR HISTORIE VÅR total of of a total harvest to SalMar expects by 3 per cent. increased in 2019. in Norway 145,000 tonnes higher volume in 2019 than in a higher volume harvest to SalMar expects a has SalMar that fact the to primarily due is This 2018. start the at farms sea its at salmons individual of number have stocks Overall, before. than it had one year 2019 of Supply of Atlantic salmon in Atlantic Supply of WFE 1,000 tonnes before. At 323,600 tonnes, Chile’s biomass was 3 per cent cent per 3 was biomass Chile’s tonnes, 323,600 At before. in biomass overall The before. months 12 was it than higher the close of at 45,500 tonnes at was estimated the Faeroes on year. year up 11 per cent the year, Analyse) indicate 2019 (Kontali for forecasts Provisional The largest 6 per cent. around in supply of a global increase its output increase to which expects is Norway, contributor (74,600 tonnes). by 6 per cent Outlook outlook Market biomass of had a standing 2018, Norway the close of At at 770,600 tonnes up from weight, round 782,900 tonnes the the close of 2017. In the UK, the biomass at the close of than the year more 20 per cent 99,700 tonnes, at stood year Information relating to the competence and background of of and background the competence to relating Information website SalMar’s from is available members board various the www.salmar.no. as a mem was re-elected Kolbjørnsen Endre the same AGM, At years. two a period of for Committee the Nomination ber of new board member, while Gustav Magnar Witzøe while Gustav member, board as a new proposed Helge Moen. Witzøe as the personal deputy for was proposed through in SalMar ASA the majority shareholder is indirectly The AS. Kverva and thereby AS in Kvarv interest his ownership linked is Witzøe that positive it deems Committee Nomination for elected were candidates Both ASA. SalMar of the board to years. two a period of Bergjord had to be replaced. She had resigned her seat because seat her resigned had She replaced. be to had Bergjord with remaining was incompatible a job that she had taken and Storeide Both directors. of board SalMar ASA’s a member of were they that Committee the Nomination Moen had notified for the board to re-elected were and both seeking re-election, a Changes in the board’s composition in the board’s Changes 2018, 5 June on (AGM) meeting general annual ASA’s SalMar At and Helge Moen by Kjell Storeide held on the board the seats Log Therese member addition, board election. In up for were Norway Chile North America UK Faeroes Other countries Total, global supply Total, Outlook for SalMar and its associates Outlook for 54 SALMAR ANNUAL REPORT 2018 Trondheim, 10 April2019 sides, theboard considers theGroup’s outlookto bebright. of future circumstances, both onthemarket andproduction Although considerable uncertainty attaches to anassessment well positioned to achieve. The board isof theopinionthat thisissomething SalMaris leading aquaculture companies, withgoodprofitability in2019. SalMar Group aimsto retain itsstanding asoneof theworld’s Based onitsstrong competitive andfinancialposition,the communities. for itsshareholders, employees, customers andaffected local continue to managetheseresources inthebest possibleway affords excellent natural fish farming conditions. SalMar will industry. Norway ingeneral, andcentral Norway inparticular, Mar has built up a By meansof hard work anddedication over many years, Sal- The board’s assessment Trine L.Danielsen Board member Atle S.Eide Chair strong position in a Employee representative Kjell A.Storeide Brit ElinSoleng growing aquaculture Vice-Chair success isbased. their dedicated efforts, onwhichtheSalMarGroup’s enduring The board would like to thankallthecompany’s employees for the organisation istherefore a key focus area for theGroup. in ourquest for furthersuccess.Continuous development of company. SalMar’s employees are ourmost important resource realising ourambitionof beingtheworld’s best aquaculture Salmon”, isthelodestone that guidesusonourway towards fundamental to theentire business,andourvision,“Passion for The SalMarculture, expressed through ourcorporate tenets, is financial capacity for furthergrowth remains strong. a NOK 23.00pershare dividend.Intheboard’s opinion,SalMar’s position to besound,andistherefore proposing payment of good year for SalMar. Theboard considers SalMar’s financial From thepoint of view of financial results, 2018wasa very Employee representative Board member Helge K.Moen Geir Berg Olav-Andreas Ervik Margrethe Hauge Board member CEO Statement regarding

the determination of salary and other benefits payable to senior executives of SalMar ASA for 2019 Passion for Salmon

55 56 SALMAR ANNUAL REPORT 2018 other seniorexecutives, andmay issue more specificguide- shall exercise general oversight of theremuneration paidto other benefitspayable to other senior executives. Theboard efits payable to theCEO.TheCEOdetermines thesalaryand The board of directors determines thesalaryandother ben- 2. meeting’s minutes. for deviating from theguidelinesmust benoted intheboard by theboard. Intheevent of any suchdecision,thereason binding, though any deviations therefrom must be decided are bindingontheboard. Theremaining guidelinesare not The guidelinesinclause3“Share-based incentive schemes” for approval. based incentive schemes”, whichwillbesubmitted to theAGM for aconsultative vote, withtheexception of clause3“Share- SalMar ASA’s AnnualGeneral Meeting (AGM) on5 June2019 sections 6-16aand5-6(3),theguidelineswillbesubmitted to ASA on 10 statement wasapproved bytheboard of directors of SalMar termed “seniorexecutives”) inthe2019financial year. The the Company’s CEO andother seniorexecutives (collectively the determination of salaryandother benefitspayable to issued thefollowing statement containing guidelinesfor Act, theboard of directors of SalMarASA (theCompany) has Pursuant to section6-16aof thePublicLimited Companies 1. DECISION-MAKING AUTHORITY INTRODUCTION April 2019. In accordance with the provisions of • on thefollowing mainprinciples: The Company’s seniorexecutive remuneration policyisbased 3. • out anannualassessment of theschemeanddetermines is determined bythe board of directors. Theboard carries SalMar hasabonusschemefor group management that Bonus and level of responsibility. in themarket, andshallreflect theindividualposition’s duties tion package. Basicsalary shallcorrespond to thegoingrate Basic salaryisthemainelement intheexecutive’s compensa - Basic salary senior executives. up thefollowing remuneration structure for the company’s On thebasisof thesemainprinciples,theboard hasdrawn the board of directors for approval. specific guidelines,aproposal therefor shallbesubmitted to remuneration to seniorexecutives that exceeds suchmore dition to thosepresented below. IftheCEOwishesto offer lines for theremuneration of other seniorexecutives inad- Executive salariesshallbecompetitive Executive salariesshallbemotivating 2019 FINANCIAL YEAR GUIDELINES FOR REMUNERATION INTHE Passion for Salmon 57 REMUNERATION POLICY FOR THE 2018 POLICY FOR REMUNERATION YEAR FINANCIAL Pension schemes Pension in the Group’s participate management group Members of - contribu The scheme is a defined pension scheme. general the Man- in stipulated tion plan and lies within the framework Act. Pensions Occupational datory pay and severance Notice period a 6-month serve must In principle, senior executives on the position, cases, and depending In selected notice. of be paid. may 12 months 6 to of pay severance Benefits-in-kind and above over benefits-in-kind offer shall not The Company in comparable senior executives for normal these which are companies. remuneration of elements Other variable - of not may the Company above, stipulated that In addition to - in the remunera elements variable any senior executives fer their supplement that or special benefits receive tion they basic salary. 4. policy for remuneration senior executive The Company’s year has been carried out in accordance the 2018 financial on 5th AGM by the 2018 adopted for with the statement June 2018. of the bonus criteria for the coming year. Variable salary in- salary Variable year. coming the for the bonus criteria the of 33% exceed not under the scheme may crements salary. Within this framework, basic individual executive’s an overall on the basis of determined individual bonuses are and development performance, contribution, of assessment achieved. results schemes incentive Share-based - execu senior for scheme incentive SalMar has a share-based was approved such programme The first in the Group. tives encompasses on 4 June 2014. The programme by the AGM within individuals senior positions and key of incumbents receive to the employee entitles The programme the Group. a three- accrues over This entitlement charge. of free shares share be awarded may period. The individual employee year - salary. Ac 6 months’ of the equivalent worth entitlements depends on the achievement the entitlements 2/3 of crual of of the shares value The criteria. performance predefined of year individual an in programmes various the under released salary. one full year’s exceed not may - be con scheme shall incentive the that is The intention The annual programmes. of tinued with the establishment as it deems nec- these annual programmes will adjust board to will be submitted each individual programme and essary, in are programmes three of A total approval. for the AGM in 2019. effect Consolidated accounts SalMar 2018 ORT 2018 REP ORT ANNUAL SALMAR

58 Consolidated accounts SalMar 2018 Passion for Salmon

59 60 SALMAR ANNUAL REPORT 2018 Diluted earningsper share Earnings pershare Shareholders inSalMarASA Non-controlling interests Allocation of theyear’s total comprehensive income: Shareholders inSalMarASA Non-controlling interests Allocation of theyear’s net profit: Total comprehensive income for theyear Cash-flow hedging,tax effect Gross cash-flow hedging before tax Translation differences insubsidiaries Translation differences anditems of comprehensive income inassociates Items whichmay subsequently bereclassified to profit &loss COMPREHENSIVE INCOME Profit/loss for the year Tax Profit/loss before tax Net financialitems Financial expenses Interest expenses Interest income FINANCIAL ITEMS Income from investments inassociates Operating profit/loss Fair value adjustments Operational EBIT Total operating expenses Other operating expenses Write-downs of PP&E Depreciation of PP&Eandintangible assets Payroll costs Cost of goodssold Total operating revenues Other operating revenues Sales revenues OPERATING REVENUES ANDOPERATING EXPENSES NOK 1000 Consolidated FinancialStatements 12, 21,24,26 19, 24,25 11, 23 NOTE 4, 5 4, 5 28 28 18 873,343 17 14 6 6 9 8

11,342,554 11,301,338 3,578,495 3,579,225 4,452,568 4,306,642 3,460,812 7,881,743 3,567,683 3,568,413 1,768,036 1,040,438 4,585,491 -107,007 116,101 845,831 487,778 252,933 10,964 10,812 10,812 41,216 -5,627 31.60 31.70 4,898 1,871 2018 0 0 0

10,817,238 10,755,452 2,331,566 2,297,798 2,856,201 2,792,213 3,162,227 7,655,011 2,307,750 2,273,983 1,584,825 4,722,474 -144,953 -370,015 106,961 414,686 929,100 558,402 208,941 -15,152 41,743 49,100 11,109 23,816 23,816 61,786 20.18 20.24 3,637 3,540 3,926 2017 Passion for Salmon 61 393 2017 1,379 55,284 259,050 501,112 242,866 177,098 260,195 446,465 743,978 4,135,523 1,023,796 1,030,052 2,314,523 2,478,510 4,394,573 5,315,649 1,080,852 7,610,597 3,604,770 2,924,975 12,926,246

394 7,324 18,812 459,934 630,061 289,416 239,596 256,604 919,477 5,305,616 1,188,971 1,100,269 2,234,617 2,957,486 5,765,550 6,924,623 1,215,500 8,210,941 3,591,490 3,403,951 15,135,564

9 4 446,465 10 5,20 5, 20 5, 20 4, 20 2018 NOTE 13, 20 13, 20 10, 12, 20 10, 11, 12 10, 15, 17 10, 12, 19 10, 12, 24 NOK 1000 inventory Total RECEIVABLES receivables Trade Other receivables receivables Total Bank deposits, cash & cash equivalents assets current Total ASSETS TOTAL Biological assets Other inventory Investments in shares & other securities & other in shares Investments fund assets Pension Other receivables financial assets non-current Total assets non-current Total ASSETS CURRENT in associates Investments property real Land, buildings & other movables & operating equipment Plant, etc vehicles, Vessels, & equipment plant property, Total ASSETS FINANCIAL NON-CURRENT assets intangible Total & EQUIPMENT PLANT PROPERTY, etc Licences, patents, Goodwill ASSETS INTANGIBLE ASSETS NON-CURRENT Balance Sheet Balance Consolidated 31 December ASSETS 62 SALMAR ANNUAL REPORT 2018 Trondheim, 10 April2019 TOTAL EQUITYANDLIABILITIES Total liabilities Total current liabilities Other current liabilities Public charges payable Tax payable Trade payables Debt to credit institutions CURRENT LIABILITIES Total non-current liabilities Leasing liabilitiesandother non-current liabilities Debt to credit institutions Deferred tax NON-CURRENT LIABILITIES LIABILITIES Total equity NON-CONTROLLING INTERESTS Total retained earnings Other equity RETAINED EARNINGS Total paid-inequity Other paid-inequity Share premium fund Treasury shares Share capital PAID-IN EQUITY EQUITY EQUITY ANDLIABILITIES 31 December Consolidated BalanceSheet Trine L.Danielsen Board member Atle S.Eide Chair NOK 1000 Employee representative Kjell A.Storeide Brit ElinSoleng Vice-Chair 2, 5,10,17,20 2, 10,17,20 2, 10,17,20 10, 11,22 Employee representative 10, 17 NOTE Board member Helge K.Moen 18 18 16 Geir Berg 6 91,729

15,135,564 5,995,721 3,435,174 2,560,548 9,139,842 8,450,748 1,194,760 1,541,431 8,450,748 597,365 500,919 300,591 690,717 329,190 153,895 415,286 748,188 689,927 28,325 2018 -140 Olav-Andreas Ervik Margrethe Hauge Board member CEO 12,926,246 5,258,118 2,739,897 2,518,221 7,668,128 7,022,449 1,248,975 1,362,222 7,022,449 557,610 404,125 170,716 672,448 344,972 114,188 415,286 243,633 811,027 28,325 88,069 2017 -189 Passion for Salmon 63 0 0 162 243 2017 3,540 3,933 -4,000 -8,069 38,650 11,109 22,211 94,661 46,141 28,515 -10,239 273,715 161,015 370,015 205,849 106,961 418,612 177,098 -100,158 -106,961 -937,084 -110,359 -208,941 -423,223 -757,994 4,085,559 2,856,201 3,374,435 -1,365,967 -1,289,592 -2,716,600

0 0 0 0 210 -281 4,839 3,788 -4,980 57,657 70,837 39,707 -15,793 -54,215 177,098 500,000 242,200 105,137 487,778 239,596 -105,137 -136,670 -114,429 -945,997 -112,152 -436,195 -845,831 -252,933 -672,778 -833,809 3,563,293 4,452,568 2,781,642 -2,147,176 -1,890,175

9 9 8 5 5 8 9 17 17 17 17 17 14 18 4, 5 4, 5 2018 NOTE 24, 25 NOK 1000 effects exchange Foreign Payment of dividend of Payment interests Exit non-controlling Other changes financing activities from cash flow Net in bank deposits, cash & cash equivalents change Net 1 Jan as at Bank deposits, cash & cash equivalents 31 Dec as at Bank deposits, cash & cash equivalents rights Unused drawing TNOK 126,202. for funds account TNOK 239,596, restricted of cash & cash equivalents total Of the Group’s further details 15 for See Note in overdraft change Net received Interest paid Interest borrowings long-term New borrowings long-term of Repayment Net cash flow from investing activities investing from cash flow Net FINANCING ACTIVITIES: FROM FLOW CASH Lending to third parties third to Lending Payment for puchase of shares and other securities and other shares puchase of for Payment associates Dividend from subsidiaries - cash effect Exit of assets PP&E and intangible puchase of for Payments receivables Change in trade payables Change in trade PP&E of sale from Receipts assets Change in inventory/biological items time-limited Change in other activities operating from cash flow Net ACTIVITIES: INVESTING FROM FLOW CASH Change in fair value Loss/gain on sale of PP&E on sale of Loss/gain paid Interest Loss/gain on exit of subsidiaries of on exit Loss/gain and write-downs Depreciation expenses to charged Options associates from profit/loss of Share Profit before tax before Profit paid in the period Tax ACTIVITIES: OPERATING FROM FLOW CASH Statement of Cash Flow of Statement Consolidated 31 December 64 SALMAR ANNUAL REPORT 2018 Equity asat 1Jan2018 2018 Cach flow headging,net after tax Translation differences insubsidiaries Translation differences inassociates COMPREHENSIVE INCOME 2017 NOK 1000 Statement Equity of Net profit for the year Award of options TRANSACTIONS WITHSHAREHOLDERS Total comprehensive income for theyear Total comprehensive income Total comprehensive income Translation differences insubsidiaries Translation differences inassociates COMPREHENSIVE INCOME Award of options TRANSACTIONS WITHSHAREHOLDERS Total comprehensive income for theyear Options redeemed Deferred taxonoptions Options Deferred taxonoptions redeemed Payment of dividend Payment of dividend Total transactions withshareholders Exit non-controlling interests Exit non-controlling interests Equity asat 31Dec2017 Other changes

Total transactions withshareholders Other changes Equity asat 31Dec2018 Equity asat 1Jan2017 Net profit for the year

NOTE NOTE 25 25 25 18 25 18 16 16 9 9

Share Share 28,325 28,325 28,325 28,325 capital capital Share Share 0 0 Treasury premium Treasury premium shares shares -189 -189 -140 -246 57 48 57 48 415,286 415,286 415,286 415,286 fund fund 0 0 114,188 114,188 153,895 85,673 28,515 39,707 28,515 39,707 paid-in paid-in equity equity Other Other differences differences Translation Translation 10,649 47,588 46,858 41,743 45,283 45,283 -5,627 7,109 3,540 4,898 -730 -730 0 0 -1,347,788 -2,138,356 -1,354,664 -2,139,384 7,011,800 6,974,861 6,062,254 8,403,890 2,273,983 2,262,467 3,568,413 3,568,413 Distribut. Distribut. -11,516 -11,516 reserve reserve -2,980 -4,000 -4,980 3,151 162 851 -57 -48 0

Non-cont. Non-cont. interests interests -18,179 -18,179 88,070 88,070 82,433 91,729 23,816 23,816 10,812 10,812 -8,820 -7,152 0,162 1,668 0 0 0 0 -1,365,967 -2,147,176 -1,344,270 -2,106,781 7,668,128 7,668,128 6,680,832 9,139,842 2,297,798 2,331,566 3,579,225 3,578,495 -11,516 41,743 33,767 28,515 39,707 -5,627 -2,980 -4,000 -4,980 equity equity 3,540 4,898 3,151 2,518 -730 Total Total 0 0 Passion for Salmon 65 2018 statements to the financial the to NOTES Total Total equity equity interests interests Non-cont. Non-cont. reserve reserve Distribut. Distribut. Translation Translation differences differences Other Other equity equity paid-in paid-in fund fund shares shares premium Treasury premium Treasury Share Share capital capital Share Share NOTE NOTE

2018

2017 66 SALMAR ANNUAL REPORT 2018 If theGroup hasa majorityof thevoting rights inanentity, being classified as goodwill. The entity perspective is applied in at fair value on the date of acquisition, with any excess value that the acquired company’s assets andliabilitiesare reported excluded from consolidation whencontrol isceded.Thismeans from the date onwhichtheGroup achieves control, andare tion of businesscombinations. Subsidiaries are consolidated The acquisitionmethod isusedinconnection with therecogni- group companies have beeneliminated. accounts. Allmaterial transactions andbalancesbetween transactions inallthecompanies included intheconsolidated in accordance with uniform accounting principles for similar The consolidated financial statements have beenprepared ASA hada majorityof voting rights inall itssubsidiaries. or more of the controlling elements. As at 31 December, SalMar circumstances indicate that changeshave taken placeinone investment. A reassessment isperformed whenfactsand or other agreements. Theassessment isperformed for each options controlled bytheGroup andshareholder agreements the shareholder structure and its relative strength, as well as includes assessingthesize of itsshareholding, itsvoting share, Group hascontrol over theentity inwhichithasinvested. This all relevant factsandcircumstances to evaluate whether the not holda majorityof thevoting rights, theGroup considers substantiate thispresumption, and where the Group does the entity ispresumed to bea subsidiaryof theGroup. To when, theGroup: controls anentity inwhichithasinvested when,andonly and itssubsidiariesasat 31 December. TheGroup therefore The consolidated financial statements include SalMar ASA Consolidation principles • • accounting items, whichare recognised at fairvalue: ciples of historic cost, withtheexception of thefollowing The consolidated financial statements are basedontheprin- approved bytheEU. the International Accounting Standards Board that have been in accordance withIFRSandinterpretations determined by The consolidated financial statements have been drawn up Principles underlyingthefinancial statements periods presented unlessotherwise indicated. below. Theseprinciplesare appliedinthesameway inallthe tion of theconsolidated financial statements are presented The most important accounting principles used in the prepara directors on10 April2019. financial statements were formally approved bytheboard of company’s headoffice islocated inFrøya.The consolidated company’s shares are traded ontheOsloStock Exchange. The SalMar ASA is registered and domiciled in Norway, and the General Note 1 Derivatives (Note 11) Biological assets (Note 13) - - -

to influenceits return. ment intheentity, and is exposed to orentitled to a has control over theentity, has theopportunityto exercise itscontrol over theentity – Accounting principles variable return on its invest - - may mean that amounts which have previously been recognised Group haddivested theunderlyingassets andliabilities.This hensive income relating to thiscompany are treated asifthe Amounts whichwere previously recognised inother compre- associated company, jointly controlled entity orfinancialasset. cost infuture accounting periods,eitherasaninvestment inan profit andloss.Fair value subsequently represents acquisition ing ismeasured at fairvalue, withchangesrecognised through When the Group no longer has control, any remaining sharehold value of assets orliabilities. acquisition of assets inexisting subsidiarieswillnot affect the liabilities onthedate theGroup wasformed isutilised.Later When shares are acquired in stages, thevalue of the assets and capitalised andcalculated usinga nominal,undiscounted taxrate. these differences are reversed infuture periods.Deferred taxis ties leadto anincrease ordecrease infuture taxpayable when to whichidentifiable excess values ascribed to assets andliabili income in profit and loss. Deferred tax is capitalised to the extent assets exceeds theamount paid,thedifference istreated as per cent. In thosecaseswhere thefairvalue of theacquired whether to recognise only the controlling owner’s share or 100 exception is goodwill, where for each acquisition it is optional connection withacquisitions where control is established. The Group’s share of sumsrecognised directly inequityunderlying attributed to the investment’s book value. Correspondingly, the associate isrecognised intheGroup’s comprehensive income and ment. TheGroup’s share of other comprehensive income inthe in profit andloss attributed to thebook value of theinvest The Group’s share of theprofit/loss from associates is recognised the date of purchase. capitalised amount includesany implicitgoodwillidentified on loss in subsequent periods is taken to income or expenses. The its purchase at acquisitioncost, andtheGroup’s share of profit/ the equitymethod. Theinvestment isrecognised onthe date of Investments inassociates are recognised inaccordance with 20–50 percent of thevoting rights. Significant influencenormally exists where the Group has Group hassignificant influence,but not control orjoint control. tities over whose financialoroperational management the The Group hasinvestments inassociates. Associates are en- Associates correspondingly inequity. the saleof shares to non-controlling interests isrecognised in theparent company’s equity.Gainsandlossesderivingfrom of thebookvalue of thesubsidiary’s net assets isrecognised between theconsideration paidandtheshares’ relative share chase of shares from non-controlling interests, thedifference recognised asequitytransactions. Inconnection withthepur Transactions withnon-controlling interests insubsidiariesare under group equity. to non-controlling interests ispresented ona separate line Group’s net profit for the year. The share of equity attributable controlling interests ispresented ona separate lineafter the The share of theprofit orloss after tax attributable to non- Non-controlling interests in other comprehensive income are reclassified to profit andloss. - - - - Passion for Salmon 67 - - change change straight line over the asset’s estimated period of use. of period estimated asset’s the over line straight generally a generally give not does (if the average rate exchange the actual rate, the transaction of estimate reasonable is used). rate transaction The profit and loss account is translated at the average average at the is translated and loss account The profit effect on the balance sheet date. on the balance sheet effect The balance sheet is translated at the exchange rate in in rate the exchange at is translated The balance sheet Translation differences are recognised in comprehensive comprehensive in recognised are differences Translation separate item under equity. item specified as a separate and are income

R&D costs are recognised at acquisition cost, less accumulated less accumulated acquisition cost, at recognised are R&D costs depre are Capitalised R&D costs and write-downs. depreciation in a ciated less ac acquisition cost, at capitalised nuclei are Breeding and write-downs. depreciation cumulated - In con time limited. and are cost capitalised at Licences are subject to not licences are nection with normal operations, derivatives are classified as current assets or current liabilities or current assets classified as current are derivatives further details. 11 for See Note in the balance sheet. com- of group and balance sheet and loss account The profit with a functional currency panies (none with hyperinflation) thus: translated are currency than the presentation other a) b) c) assets Intangible capitalised individually are purchased are that assets Intangible in connection acquired assets Intangible cost. acquisition at ac- capitalised at are a business entity of with the purchase met. are posting separate for when the criteria quisition cost - depre are lifespan economic a limited with assets Intangible to down written are assets Intangible systematically. ciated do benefits financial expected the if value recoverable their costs. production remaining and any their book value cover not to charged are and development research to relating Costs capitalised when are accrue. R&D costs they as expenses Capitalised met. are revenues future to relating criteria specific to hedge future deliveries. Operating profit/loss is reported before before reported is profit/loss Operating deliveries. future hedge to Group’s the show to order in biomass the of adjustment value fair during the period. sales performance underlying Currencies Nor- in presented are statements financial The consolidated company’s the parent (NOK), which is both kroner wegian currency. presentation and the Group’s functional currency NOK at into translated are currencies foreign in Transactions exchange foreign place. Realised takes the time the transaction of and translation the settlement from gains/losses deriving on in effect rate the at currencies in foreign items monetary and loss. in profit recognised are date the balance sheet that items monetary on differences exchange foreign Any on cur- or entity in a foreign investment the net part of are hedging are cash-flow constitute positions deemed to rency income. comprehensive in other recognised is calculated hedging instruments currency of The fair value contracts price for the market at date on the balance sheet value and Changes in the fair profile. with a similar maturity profit in recognised are such instruments of effect realised the meet do not when they financial item and loss as a net a is exception The accounting. hedge for requirements been which have contracts currency forward of in the fair value in recognised are These deliveries. future hedge to into entered Financial value adjustments. for fair and loss on the line profit - - - separate line under operating profit/loss, along with the unreal the with along profit/loss, operating under line separate a change in the unrealised and any contracts Fish Pool of ised value into been entered have that contracts currency forward of value payment within 12 months are classified as current assets. assets. current as classified are months 12 within payment Liabilities assets. classified as non-current are Other assets payment for due fall or cycle production the of part form which Other liabilities. current as classified are months 12 within classified as non-current. liabilities are is classified as debt on long-term instalment year’s The next liability. a current on presented are biological assets of Changes in the fair value ments, which are reported and administered as such internally. as such internally. and administered reported are which ments, separately. reports segment In addition, a Sales & Processing principles Classification cash and bank deposits. of consist Liquid assets or fall due for cycle the production part of form which Assets responsible for the allocation of resources and the evaluation evaluation the and resources of allocation the for responsible man- earnings, is defined as group segments’ the operating of business activities: the farming has two Group The agement. and on the one hand, and its processing and trout salmon of is divided into The fish farming segment sale on the other. and Fish Farming Norway Fish Farming Central regions: two seg separate as defined are two These Norway. Northern asset’s book value, and are taken to income through reduced reduced through income to taken and are book value, asset’s depreciation. future reporting Segment are as they in the same way reported are segments Operating decision-making highest the company’s to internally reported which is decision-making body, highest bodies. The company’s Dividend is taken to income when the shareholders’ right to receive receive to right when the shareholders’ income to Dividend is taken Meeting. General a dividend has been authorised by the Annual grants Government with together periodised and classified are grants Operating or the expense augment to intended are they the revenue the reduce grants Investment reduce. to intended are they will normally occur when the product or service is delivered. The or service is delivered. will normally occur when the product with each indi- agreed the terms depends on delivery of date net. is 30 days time granted The normal credit vidual customer. If an investment ceases to be an associate, such that the the such that be an associate, ceases to If an investment shareholding remaining no longer applies, the equity method fair value. at is measured with customers contract from Revenue the sale of to relates with customers contracts from Revenue - prod as whole fish or as further processed salmon and trout, the over when control income to taken are ucts. Such revenues and in the customer, to or service has been transferred product for receive to expects the Group what reflects that an amount the customer to control of or service. The transfer the product Should indications of impairment arise, the book value of the of value arise, the book impairment of Should indications recog is value in impairment Any down. written is investment the financial in associates from profit/loss of nised in the share the losses exceeds of share the Group’s When statements. to down written is its book value in an associate, investment recognised. no further losses are and zero, investments is presented in the Group’s statement of equity. of statement the Group’s in presented is investments associates with with transactions gains associated Unrealised the business. of share Group’s the to in proportion eliminated are 68 SALMAR ANNUAL REPORT 2018 value of the future cash flows which the asset will generate. of net salespriceandvalue inuse.Value inuseisthepresent down to recoverable value. The recoverable value is the higher pairment isnot expected to betemporary, theasset iswritten a non-current asset islower thanitsbookvalue andtheim- whether to write down itsvalue. Iftherecoverable value of of anasset cannot berecovered, anassessment ismadeof If thesituation orcircumstances indicate that thebookvalue is charged to expenses whenthefacilitiesare ready for use. Facilities underconstruction are not depreciated. Depreciation tion method employed, are reassessed annually. and equipment, aswell asthedepreciation periodanddeprecia depreciated separately. Thescrap value of theproperty, plant components with varying lifespans, these components are estimated residual value. Ifanasset comprises significant economic lifespan of theasset, takinginto consideration its Depreciation is assigned in a eration, andiscalculated onthebasisof itseconomic lifespan. mences from thedate onwhichtheasset goesinto normalop - or gainposted to profit andloss.Ordinary depreciation com- sold ordivested, thebookvalue isderecognised andany loss on buildingloansispartof acquisitioncost. Whenassets are cost, lessaccumulated depreciation andwrite-downs. Interest Property, plant andequipment are capitalisedat acquisition Property, plant &equipment down first andthen other assets as required. value of thecashflow-generating entity, goodwilliswritten market risk.Ifthecalculated value inuseislower thanthebook a rate of interest before taxwhichtakes account of relevant the expected rate of inflation. Cash flows are discounted by forecasts. Cashflows after three years are assumed to equal flows for thenext three years basedonapproved budgets and dertaken. Value inuseiscalculated byestimating future cash reference ismadeto similartransactions that have beenun- and value inuse.Whenassessingthesalesvalue of licences, Recoverable value isthehigherof fairvalue, lesssalescosts to whichseparate andindependent cashflows may beascribed. entities theassets are grouped according to thelowest level are assigned. To identify the Group’s cash flow-generating flow-generating entities to whichthelicencesandgoodwill an assessment of therecoverable value of eachof thecash acquisition. Write-downs are performed in accordance with ties orthosegroups whichare expected to benefitfrom the these are assignedto relevant cashflow-generating enti When assessingtheneedto write down licencesandgoodwill, is recognised at historic cost. of associates isincludedundershares inassociates. Goodwill intangible assets, whilegoodwillderivingfrom theacquisition deriving from thepurchase of subsidiariesisincludedunder ence is recognised as goodwill in the balance sheet. Goodwill that exceeds thevalue of theindividualassets, thediffer When another businessentity istaken over for a consideration to expenses over theperiod of thelease. are classified as an intangible asset. Leasing costs are charged are deemedto confer a right-to-use anintangible asset and Prepaid leasingcosts associated withpartnershipagreements leasing agreements iscapitalisedasanintangible asset. value identified in connection withtheacquisition of licence preciated, butare tested annuallyfor impairment. Any excess relinquishment requirements. Licencesare therefore not de- straight line over the expected - - - Subsequent measurement of financialassets is at amortised - following conditions have beenmet: The Group measures financialassets at amortised cost ifthe Financial assets measured at amortisedcost 2017 wasrecognised through other comprehensive income. for thefairvalue of a capitalisedasset. Thehedgingeffect in the Group had derivatives designated as a hedging instrument at fair value through other comprehensive income. In 2017, hedging instruments recognised at fairvalue orfinancialassets The Group does not currently have any derivatives earmarked as - - The Group classifiesitsfinancialassets in two categories: be addediffinancialassets are measured at amortised cost. cial assets are recognised at fair value. Transaction costs may management of itsfinancialassets. At initial recognition, finan cash flows, andwhichbusiness modeltheGroup applies to the pends onthenature of theasset’s contractually determined The classification of financialassets atinitial recognition de- uity investments, trade receivables and cash & cash equivalents. The Group’s financialassets comprise: derivatives, unlisted eq - nised if: or a portionof a group of similarfinancialassets) isderecog- A financialasset (or, if relevant, a portionof a financialasset Derecognition of financialassets when theirfairvalue isnegative. sets when their fair value is positive and as financial liabilities Derivatives are recognised in the balance sheet as financial as subsequently measured at fairvalue. value olnthedate thecontract wasentered into, andare also equity instrument. Such instruments are recognised at fair Pool contracts). Thiscategory alsoincludestheGroup’s unlisted interest rate swapagreements andsalmonpricehedging(Fish risk. Theinstruments usedare forward currency contracts, The Group makes useof derivatives to hedgeitsunderlying changes invalue through profit andloss Financial instruments measured at fairvalue with with IFRS15Revenue from Contracts withCustomers. element are measured at thetransaction priceinaccordance Trade receivables whichdonot have a substantial financing tised cost includetrade receivables andother current deposits. modified orwritten-down. TheGroup’s financialassets atamor recognised inprofit andlosswhentheasset isderecognised, cost and is subject to loss provisions. Gains and losses are - Financial assets liability orequityinstrument onthepartof another. nancial asset onthepartof oneundertakinganda financial A financialinstrument isany contract that gives rise to a fi- Financial instruments

purpose isto receive contractually determined cashflows, and the financialasset isbeing kept ina businessmodelwhose the contractual terms for the financial asset give rise to cash Financial assets measured at fairvalue withchangesinvalue through profit andloss. on certaindates. flows solely comprising payments of interest and principal Financial assets measured at amortisedcost. financial asset expires, or The contractual entitlement to receive cashflows from the - - - - Passion for Salmon 69 - - cost-reducing factor in the calculation. the in factor cost-reducing

separate cost element in he calculation, compensation compensation calculation, he in element cost separate The risk of incidents that affect the cash flow. affect that incidents The risk of leasing costs. and site licence fees Synthetic money. of The time value In the growth model used in 2017, the best estimate of the fairthe of estimate best the 2017, in model used growth the In under 1 kg is accumulated of weight fish with a live of value than more of weight fish with a live harvestable while for cost, expected to the biomass is set of adjustment 4 kg the fair value the weight 1 kg and 4 kg live between of For fish profit/loss. net over is equally distributed at harvest profit/loss expected net the biomass is calculated of period. The fair value the growth theon class weight relevant the for price market of basis the on Group’s sites and which, in the Group’s assessment, provides a sen provides assessment, Group’s and which, in the sites Group’s fish. to harvestable smolt – from the fish for curve sible growth in the risk involved of account take must The risk adjustment at 18 months average fish. A fish spends on in live investing the time until a sea farm, and the risk will be higher the longer and price risk will costs increased Biological risk, the risk of harvest. The present be recognised. to elements important be the most licence fees for compensation model includes a theoretical value in the factor discount the as a surplus to leasing costs and site a being of instead model, assumptions the various of description detailed a more For accounting used in the model, see the section “Important and evaluations”. estimates the calculation for model as described above value The present - has been applied with ef biological assets of value the fair of year, 2017 financial For the year. the 2018 financial from fect and nature a technical model was used. The change is of a growth change ina as treated model is a new to the switch the impact of for 2018, pursuant statements in the annual financial estimates for 2018. and loss in profit recognised 8, and the effect IAS to statements. the financial 13 to see Note further details, For value is discounted to present value on the balance sheet sheet balance the on value present to discounted is value each site. at the biomass for is estimated value Present date. biomass the estimated as calculated are cash flows Incoming at be achieved to the price expected multiplied by harvest at is harvest at biomass (volume) The estimated the same time. fish held individual of the number on the basis of calculated expected for adjusted date, sheet in sea farms on the balance weight and multiplied by the estimated harvest mortality until Fish using the is calculated The price at harvest. the fish of that date harvesting estimated the for price forward Pool are prices Forward date. on the balance sheet was in effect harvesting, as well as supplement, exporter an for adjusted is made In addition, an adjustment sales and carriage costs. quality. Price in fish differences expected of account take to level. a the site made are adjustments that costs estimated are costs production remaining Estimated fish the farming of necessary for presume person would a rational of In the model, instead weight. a harvestable reach they up until a being the discount is included in leasing costs and site licence fees for the biomass. of the fair value reduces and thereby factor, dis using a monthly the biomass is calculated of The fair value harvesting last second the on based flow cash the of counting is intended factor plan. The discount in the harvesting month components: main three reflect to 1. 2. 3. all the for an average on the basis of is set factor The discount - financial asset, but at but asset, financial cash-based present value model. The The model. value present cash-based the Group has neither transferred nor retained the bulk of the bulk of retained nor transferred has neither the Group but has with the asset, associated the risk and benefits the asset. over control transferred the Group has transferred the bulk of the risk and benefits risk the of bulk the transferred has Group the or with the asset, associated The Group has transferred the contractual entitlement to to entitlement the contractual has transferred The Group and either receive cash flows from the financial asset or retains the the retains or asset financial the from flows cash receive a from flows cash the receive to right a counterparty, to these transfers to pledges time same the less estimated remaining production costs until the fish is the fish is until costs production remaining less estimated when A fish is harvestable the individual site. at harvestable harvesting for required weight estimated the reached has it and plans. The estimated budgets company’s specified in the cleaner fish are valued at historic cost. Historic cost is deemed cost Historic cost. at historic valued cleaner fish are due to these assets, for fair value of estimate be the best to little biological conversion. sea farms the Group’s held at biological assets of The fair value a using calculated is revenues, estimated on the basis of is calculated value present tors not drawn from observable markets. Changes in value are are Changes in value markets. observable from drawn not tors in profit value adjustments and classified under fair recognised of understanding a better provide to and loss. This is intended and smolt fry, Roe, goods. of the sale on profit/loss Group’s the signment of inventory costs. Net realisation value is estimated is estimated value realisation Net costs. inventory of signment fish held Live costs. finishing and sales sales price, less variable fair value. at recognised in sea farms are Biological assets Agricul- 41 by IAS regulated is accounted is fish live way The are such assets 13 is that rule under IFRS The general ture. are assets Biological less sales costs. fair value at measured on fac- 3, ie based level with valuation in accordance valued Inventory consists of feed, packaging materials, roe, fry, live fish live fry, roe, materials, packaging feed, of consists Inventory - feed, packag of Stocks fish. held in sea farms and processed at the valued fish are smolt and processed roe, ing materials, goods price of The cost value. realisation and net cost of lower cost. in-house is the full production produced as- the periodic with connection in used is principle FIFO The in an effective hedging arrangement. Derivatives are initially are Derivatives hedging arrangement. in an effective at recognised liabilities are and Loans fair value. at recognised costs. transaction attributable directly for adjusted fair value value is nega financial liabilities when their fair are Derivatives same way purposes in the accounting for treated and are tive, assets. are that as derivatives Inventory cific assessment of each individual customer. The Group measures measures The Group of each individual customer. cific assessment each losses over credit expected on the basis of its loss provision loss. expected based on a 12-month and not period, reporting Financial liabilities classified as loans initial recognition, at Financial liabilities are, as hedging instruments earmarked and liabilities, or derivatives provision for expected losses on all losses on all expected for a provision has made The Group through value fair at classified not are that instruments debt and loss. profit a spe- the basis of losses on credit expected measures The Group a) b) losses on financial assets for Provisions - 70 SALMAR ANNUAL REPORT 2018 as a reduction inequity(allocated to theparent company’s shares, includingany transaction costs –lesstaxisrecognised the parent company, theconsideration paidfor suchtreasury in equity, lesstax.Ifa group company purchases shares in directly related to equitytransactions are recognised directly Ordinary shares are classifiedasequity. Transaction costs Share capitalandshare premium to ‘Fairvalue adjustments’. biomass. Theimpactonprofit andloss for the year isposted which forms thebasisfor anestimation of thefairvalue of the of theGroup to sellharvestable fish at a lower pricethanthat to fixed-price contracts resulting inanobligation onthepart built-in derivative elements. A provision ismadewithrespect Group’s normalbusinessactivities.Thecontracts contain no and deliveries associated withthecontracts form partof the an ongoingbasis.Thecontracts involve physical settlement, The Group enters into salescontracts for salmonproducts on Fixed-price contracts plus costs incurred inconnection withtheirrecapture. corresponds to thefullproduction cost of theescapedfish, In theevent of escapedfish,theamount charged to expenses incurred inconnection withtheclean-upandclosure of thesite. comprises the full production cost of the culled stock, plus costs of theregulatory authorities,theamount charged to expenses In connection withthecullingof salmonstocks at theorders - - to thefollowing specific events: SalMar’s assessment of exceptional biologicalevents relates line inprofit andloss. The Group classifies exceptional biological events ona separate Exceptional biologicalevents were recognised in2017or2018. biological events. Nocosts relating to incident-based mortality which would indicate presentation onthelinefor exceptional cost of goodssold,unless themortalityisdueto circumstances Directly recognised incident-based mortalityisincludedinthe number of fish,andismade at thesite level. eral periodsexceeds 5percent. Theassessment relates to the incident, or if mortality caused by the same incident over sev - period, have a 3percent mortalityrate causedbyanindividual Incident-based mortalityisrecognised at sites which,inone Principles for recognition of incident-based mortality the financialrisk relating to thefish. as theGroup’s own fish,sincetheGroup assumesthebulk of Biomass farmedunderpartnershipagreements isrecognised Partnership agreements to volume, costs andpriceasthenew, present value model. growth modelmakes useof thesameassumptions relating available for theperiodinwhichfishwillbeharvested. The nal forward pricesand/orthemost relevant priceinformation for qualityvariations. Thesalespricesusedare basedonexter ing costs andtrimmingswastage. Themarket priceisadjusted balance sheet date, corrected for sales costs, including harvest

bers of salmon tory authorities The cullingof entire salmonstocks at theorders theregula Individual incidents involving theescapeof substantial num - - - - The Group hasa defined-contribution pensionscheme for its Pensions counting andtaxable values of licences. Deferred taxiscalculated onthedifference between theac- tax assets and liabilities are presented net in thebalancesheet. will allow theasset to beutilised,candocumented. Deferred when theprobability that a taxable income willbemade,which end of thefinancial year. Deferred taxassets are capitalised and taxvalues, aswell asany taxlosscarriedforward at the ed onthebasisof temporary differences between accounting Deferred taxinthebalancesheet isa nominalamount calculat tax authoritiesonthebalancesheet date. tax legislation andregulations issued,orlargely issued,bythe Tax payable for theperiodiscalculated inaccordance withthe comprehensive income ortaken directly to equity. In thiscasetaxisincludedinthenet amount posted inother other comprehensive income orare taken directly to equity. in profit andlossunlessit refers to items whichare posted in income) andchangesinnet deferred tax.Tax isrecognised and comprises taxpayable (taxontheyear’s direct taxable The tax expense is matched against the profit/loss before tax Tax company’s shareholders. is recognised asanincrease inequityallocated to theparent direct marginal transaction costs andassociated taxeffects, shares are subsequently sold,theconsideration received, less shareholders) until theshares are cancelledorresold. Iftreasury over theexpected accrualperiod. Employer’s national insurance contributions are recognised tablishment of theschemeuntil theoptions are fullyvested. paid-in equity. The accrual period is the period from the es- the options’ accrualperiod,witha corresponding increase in The value thusset isposted to profit andlossperiodically over interest, expected dividendandvesting period. are theshare priceonthedate of theaward, volatility, risk-free data when calculating the value of these RSU entitlements basis of a Monte-Carlo simulation. The most important input entitlements that are at market terms is calculated on the RSU entitlements willberedeemed. Thefairvalue of theRSU being met istaken into account whenassessinghow many award wasmade.Theprobability of theperformance criteria not at market terms isset astheshare priceonthedate the are awarded. Thefairvalue of theRSUentitlements that are The fair value of RSU entitlements isset onthedate they a cost inprofit andloss. in return for theRSUentitlements granted isrecognised as fair value of theservicesentities received from employees for equityinstruments (RSUentitlements) intheGroup. The the companies receive servicesfrom theemployees inreturn The Group operates a share-based incentive schemeinwhich Share-based incentives Group hasnofurtherpayment liability. contributions. Oncethecontributions have beenpaidin,the the contribution may berefunded orusedto reduce future contributions are recognised as an asset to the extent that when the liability to make such contributions accrues. Prepaid employees. Contributions are recognised aspayroll costs asand - Passion for Salmon 71 - - - fish farming business. This cost is reflected in the size of the of size the in reflected is cost This business. farming fish of control, no later than 12 months after the acquisition took the acquisition took after than 12 months no later control, of further details. for 7 ‘Business combinations’ place. See Note monthly discount factor. The discount factor comprises comprises factor The discount factor. discount ed by a monthly above). assets biological on section the (see elements several leas and site licence fee a synthetic mentioned, As previously in the model instead factor the discount is added to ing cost factor as a cost-reducing account into these being taken of salmon engage in the farming of to In order in the calculation. such infrastructure access to have it is necessary to and trout, a licence in today’s price for The market as licences and sites. in a hypothetical be assumed that is high, and it could market use to attached cost be a considerable would there market, operate the licences necessary to and this infrastructure of a discretionary considerable and will be subject to rate discount judgement. acquisition at Fair value the acquired price of with an acquisition, the cost In connection the opening balance in such that be allocated must entity the of value fair the estimated reflects accounts the Group’s at the fair value determine and liabilities. To assets acquired the fair determine used to are methods acquisition alternative in Value market. is no active which there for assets of value assets identifiable to which can be attributed that of excess as goodwill. balance sheet in the and liabilities is recognised the exceeds entity equity in the acquired of If the fair value as recognised is immediately paid, the excess consideration with business price in connection cost of The allocation income. with re is obtained information changes if new combinations assumption and takeover of date on the value the fair to spect number of assumptions that require require that assumptions on a number of is based The valuation assumptions The key judgement. discretionary considerable rate. price and the discount costs, volume, to relate of is based on the number harvest at volume The estimated and growth estimated for adjusted farms, sea the at held fish to the sea transferred were time the fish the mortality from harvested The actual volume harvest. for ready are they until biological of as a result volume the estimated from deviate may - biological develop to with regard Uncertainty developments. the period and therefore harvest of the date affect may ments the model. in discounting for at fish of prices underpin the measurement market Expected price forward the Fish Pool considers The industry fair value. price for prices. The market market of estimate be the best to relatively for the capacity demonstrated fish has historically seasons. and between to period period from fluctuations large with the size change in accordance The price will, moreover, of At the same time, the date at harvest. the fish and quality of fish. the of will depend on the biological development harvest - remain the estimated to attaches uncertainty Considerable such as challenges Biological harvest. to costs ing production In costs. fish-related will affect disease and lice infestation important other the price of to will attach addition, uncertainty such as feed. input factors, discount are for the individual site cash flows future Expected - - accounting principle for biological assets. principle for accounting Live fish are measured at fair value in accordance with IAS 41. with IAS value in accordance at fair measured fish are Live described under the are fair value calculating The principles for on historical experience and other factors deemed relevant deemed relevant factors and other experience on historical made. These are the time the evaluations at and probable liabilities and the assets of the book value affect evaluations Estimates sources. based on other is not the valuation where results may values and and final continuously reviewed are estimates Changes in accounting these estimates. from differ included in the period in which the changes occur. are sig- greatest be of deemed to and estimates The evaluations follows: as are the Group for nificance the biomass of adjustment Fair value requires that management make evaluations, estimates and as and estimates evaluations, make management that requires principles accounting of application the affect that sumptions and liabilities in the balance sheet, assets of and the book value for the financial expenses and revenue for as figures as well based are and their underlying assumptions Estimates year. breakdown of the of a breakdown shows cash flow of statement The Group’s and financing investing operating, into cash flow overall Group’s impact the individual activity’s shows activities. The statement the acquisition and deriving from Cash flow on liquid assets. activities. under investing businesses is presented sale of and evaluations estimates accounting Important with IFRS in accordance the financial accounts of Preparation on the balance sheet date which is received after the balance the after which is received date on the balance sheet state financial the year-end in recognised been has date sheet affect which do not date the balance sheet after Events ments. date, financial position on the balance sheet the company’s position financial future the company’s but which will affect if material. reported are cash flow of Statement ent with similar assets which are owned by the Group. Leasing Leasing by the Group. owned which are with similar assets ent are leasing agreements operational to with respect payments and to profit posted expenses and are classified as operating the contract. of the term line over loss in a straight date the balance sheet after Events financial position the company’s regarding information New bulk of the financial risk and control to the company (finan- company to the control the financial risk and bulk of as property, the balance sheet in recognised cial leasing) are is liability leasing corresponding the and equipment, and plant of value the present liabilities at included under non-current systematically depreciated is asset The payments. leasing the less paid, leasing amount the by liability is reduced the and - period is consist The depreciation cost. interest a calculated result of of place as a result will take a financial settlement that not) be reliably can question in the amount that and liability, that balance sheet on each reviewed are Provisions quantified. for the liability. estimate the best reflects and the level date, contracts Leasing the which transfer terms leased on which are assets Operating Provisions company and only when, the when, is recognised A provision from deriving self-imposed) or (legal liability a constructive has than likely (more is probable and it occurred, which has an event 72 SALMAR ANNUAL REPORT 2018 Total liabilities Trade payables Interest onshort-term debt Short-term credit facilities Interest onfinancialleasingagreements Financial leasingagreements Interest onlong-term debt Long-term debt Maturity Maturity structure for financialliabilitiesas at 31Dec2018 USD, EUR,GBPandJPY. 277,523,000). TheGroup’s most important currencies are the Group’s profit before taxbyNOK289,143,000(2017: NOK 2018, a10%fallinthevalue of theNOKwould alter the Given thefinancialinstruments in effect on31 December The useof forward currency contracts isdescribedinNote 11. through theuseof forward contracts andcurrency accounts. and assets denominated inforeign currencies ispartlyhedged operations. Theforeign exchange riskassociated withrevenues assets andliabilities,net investments inforeign business change riskarisesfrom future trading transactions, capitalised evant withrespect to theUSD,EUR,GBPandJPY. Foreign ex- exchange riskinseveral currencies. Thisriskisparticularlyrel- The Group operates internationally, andisexposed to foreign Foreign exchange risk 6,752,000), allother variables remaining constant. would reduce theGroup’s profit byNOK8,837,000(2017: effect on31 December2018,a0.5%riseintherate of interest capitalised at amortisedcost. Given thefinancialinstruments in that theGroup isaffected bychangesininterest rates. Loans are ing portfolio iscurrently at floating interest rates, whichmeans loans expose theGroup to fairvalue interest rate risk.Theborrow effect oncashequivalents whichearnfloating interest. Fixed-rate for theGroup’s cashflow, whichispartly reduced bytheopposite Borrowing at floating interest rates represents an interest rate risk The Group’s interest rate riskderives from long-term borrowings. independent of changesinmarket rates. profit/loss andcashflow from operating activities are largely Since theGroup hasnomaterial interest-bearing assets, its Interest rate risk Market risk derivatives, for thepurposeof speculation. does not make useof financialinstruments, includingfinancial company hascertainforward currency contracts. Thecompany to day-to-day businessoperations. For hedgingpurposesthe receivables, trade payables, etc, whichare ascribabledirectly dition, thecompany hasfinancialinstruments suchastrade ing capitalfor investment inthecompany’s business.Inad The Group hasbankloansraised for thepurposeof provid makes useof financialderivatives to hedgeagainst certainrisks. basis anddraws upguidelinesfor dealingwiththem.TheGroup company’s management assesses these risks on an ongoing of financialrisk:market risk,credit riskandliquidityrisk.The Through itsactivities, theGroup isexposed to various kinds Financial risk Note 2 – Financial riskmanagement 3,462,106 1,194,760 1,311,027 112,484 443,463 343,794 55,584 Total 995 2,004,567 1,194,760 112,484 621,100 41,691 14,328 19,209 - - - 2019 995 Liquidity risk sheet date. SeeNote 12. responds to the Group’s receivables portfolio on the balance is insured. Thegross credit riskonthebalancesheet date cor- exceed fixed credit limits. Part of the total accounts receivable rial payment problems, andthat outstanding balancesdonot are madeonlyto customers that have not previously hadmate in thecredit risk.TheGroup hasguidelinesto ensure that sales terparties whichmay beconsidered agroup due to similarities material credit riskrelating to individualcounterparties orcoun losses dueto baddebts have beensmall.TheGroup hasno to meet theirobligations isconsidered low, since,historically, The riskthat counterparties donot have thefinancial strength JPY EUR (Figures in1,000) effect ontheGroup’s profit before tax: rencies asat 31 December2018would have hadthefollowing A 10%reduction intheexchange rate for eachof thesecur- 17 for details of thematurity structure. in thetableare undiscounted contractual cashflows. SeeNote liabilities classifiedbymaturity structure. Thefigures presented The tablebelow details theGroup’s non-derivative financial available credit facilities. ments intheshortterm. SeeNote 17for details of theGroup’s or medium-term credit facilitiesto meet itsborrowing require Group’s objective isto have sufficient cash,cashequivalents ing limitsorspecificborrowing conditions (if relevant). The of Cash Flow), suchthat the Group does not infringe borrow - flexibility in the form of unused credit facilities (see Statement operational liabilities, as well as at all times having adequate ensure that theGroup has sufficient cashequivalents to meet tors rolling forecasts of the Group’s liquidity requirements to are drawn uponaregular basisandtheAccounts Dept moni- its financialobligations asthey falldue.Cashflow forecasts Liquidity riskisthethat theGroup willnot beableto meet USD GBP Credit risk 89,529 41,120 14,265 13,044 21,100 2020 - - - 85,691 40,444 11,508 12,639 21,100 2021 - - - 31/12/2018 576,716 520,887 39,678 8,715 7,436 2022 191,997 31,731 67,121 3,643 - - - 72,408 38,729 10,767 20,675 2,237 2023 - - - 31/12/2017 After 2023 633,196 241,801 284,210 106,166 130,527 120,772 19,834 16,556 1,019 ------Passion for Salmon 73 - - - 394 989 Total 5,080 5,474 123,958 126,840 294,299 241,797 123,958 663,926 After 2022 After ------2022 2,142 9,565 394 394 20,887 38,734 71,328 Level 3 Level December 2017). At the At 2017). December - - - 2021 2,469 21,100 11,421 39,750 - 74,739 - - - 5,080 5,080 Level 2 123,958 123,958 2020 2,798 21,100 14,158 40,607 78,662 ------December 2018, the Group had an equity ratio of of ratio equity an had Group the 2018, December 2019 7,807 15,529 41,331 Level 1 621,100 685,767 costs. By ensuring a good debt-to-equity ratio the Group will the Group ratio ensuring a good debt-to-equity By costs. As at 31 at As 31 at as cent per (59.3 cent per 60.4 of debt interest-bearing had a net 2018, the Group close of NOK 1,527,708,000 (2017: NOK 1,222,533,000). support its business operations, and thereby maximise the maximise the and thereby operations, support its business shares. the Group’s of value its capital structure changes to manages and makes The Group condi- the financial of an ongoing assessment to in response and its short and tions under which the business operates, in dividend adjustment outlook, including any medium-term or is- capital reduction shares, treasury buyback of payouts, guidelines the in made were No changes shares. new of sue in 2018. this area covering the basis on its capital management monitors The company ratio equity on based are These stipulated. covenants the of See Note EBITDA. to debt interest-bearing net of and the ratio further details. 17 for 390 2018 13,572 16,962 41,930 117,975 108,696 1,248,975 1,548,500 390 Total Total 29,777 929,001 361,934 444,149 108,696 1,248,975 3,122,922 NOK 1,000 Quoted price in an active market for an identical asset or liability (level 1) or liability (level asset an identical for market price in an active Quoted price (used than a quoted price) other (deduced from (price) or indirect either direct factors, based on observable Valuation 2) (level or liability concerned the asset 1) for in level 3) (level assumptions) (non-observable markets observable from derived not which are based on factors Valuation 31 Dec 2018 and maintain an optimal capital structure for reducing capital reducing for capital structure an optimal and maintain return on investment for shareholders and other stakeholders, stakeholders, other and shareholders for on investment return than one year after the close of the financial statements. As statements. the financial the close of after than one year - institu to credit debt under short-term it is classified a result 31 Dec 2018. The loan at as statements tions in the financial maturity. before will be refinanced agreement is payables trade the Group’s for terms The normal payment the to relating payables of with the exception net, 30 days 17 time. See Note a longer credit which has feed of purchase further details. for and equity Capital structure - safe is to capital management the Group’s of The objective a secure to in order operations continued the Group’s guard The Group’s term loan was entered into in 2014 with a 5-year 5-year a with 2014 in into entered was loan term Group’s The on the loan Annual instalments in June 2019. and matures term, loan has been classified under NOK 100,000,000. The total The balance remaining institutions. credit to debt long-term less repayment for and falls due NOK 600,000,000 totals Maturity structure for financial liabilities as at 31 Dec 2017 at liabilities as financial for structure Maturity Maturity Assessment of fair value of Assessment various The method. valuation with the value in accordance at fair and liabilities financial instruments shows The table below follows: defined as are levels • • • contracts forward of details for 11 Note See fair value. at measured and liabilities assets Group’s the presents The table below value fair at measured assets biological of details for 13 Note also See 2. level value fair at measured contracts Pool Fish and 3. in level Assets Derivatives swap agreements rate - Interest Equity instruments equity instruments - Unlisted Long-term debt debt Long-term TOTAL assets TOTAL Liabilities Derivatives contracts currency - Forward TOTAL liabilities TOTAL Interest on long-term debt debt on long-term Interest Financial leasing agreements agreements Financial leasing Interest on financial leasing agreements leasing agreements on financial Interest Short-term credit facilities credit Short-term Interest on short-term debt debt on short-term Interest Trade payables payables Trade Total liabilities Total Maturity 74 SALMAR ANNUAL REPORT 2018 business entities Year's investments in Year's investments inPP&E Net profit for the year Tax Profit before tax Net financialitems from associates Share of profit/loss Operating profit/loss Fair value adjustments Operational EBIT Operating expenses Write-downs Depreciation Total operating revenues Other operating revenues Note 10for furtherdetails. ortised cost). The Group has “per tem” interest terms that are deemed to equal the market rate on the balance sheet date. See For debt instruments, interest-bearing debt andother financialliabilities,fair value ispractically thesameasbook value (am- Leasing income TOTAL liabilities Compensation - Interest swapagreements contracts withcustomers TOTAL revenues from - Forward currency contracts Derivatives Liabilities - saleof goodsandservices Internal operating revenues TOTAL assets - saleof goodsandservices External operating revenues - unlisted equityinstruments Equity instruments Assets 2018 events. Depreciation andtherealisation of excess value from the basis of Operational EBIT, as well as exceptional biological Group management evaluates thesegments’ performance on Sales &Processing segment reports separately. reported andadministered as suchinternally. Inaddition,a way. Thesetwo are definedasseparate segments whichare Fish FarmingCentral Norway andFishFarmingNorthernNor- other. Thefishfarmingsegment isdividedinto two regions: and trout ontheonehand,anditsprocessing andsaleonthe The Group hastwo businessactivities:thefarmingof salmon of theoperating segments’ earnings. responsible for the allocation of resources and the evaluation are reported internally to company management, which is Operating segments are reported in the same way as they Note 3 31 Dec2017 NOK 1,000 – Segments NOK 1,000 Fish Farming 2,533,281 2,533,281 5,961,984 5,945,481 3,154,633 5,945,481 311,593 274,070 Norway Central 2,000 4,209 4,050 8,244 0 - - Fish Farming 1,153,925 1,153,925 2,645,021 2,636,428 1,394,939 2,421,267 Northern 215,161 Norway 98,391 96,157 1,483 7,110 0 - - - are reported to group management, they are measured at the the arm’s lengthprinciple.Whenrevenues from external parties Sales between segments are carriedoutinaccordance with column for eliminations. licences and non-recurring events are also included in the recurring events and R&D associated with jointly operated sales revenues. tomers whichaccounted for more than10%of theGroup’s In thepast two years, thecompany hashadnoindividualcus- allocated to segments are not reported to group management. same amount recognised in profit and loss. Assets andliabilities not allocated to the segments. Costs relating to options, non- tangible andintangible assets derivingfrom acquisitionsare 11,432,002 11,416,294 11,382,845 11,086,178 Processing 330,116 -12,788 -12,788 Sales & Level 1 Level 42,472 61,945 15,161 547 0

------difference 845,831 845,831 48,004 Level 2 Level 28,435 19,569 GAAP 0 0 ------eliminations -8,696,453 -8,696,865 -8,538,452 -8,696,865 -213,606 -213,606 Level 3 55,606 Other/ 5,370 393 412 393 0 ------SalMar Group 11,342,554 11,301,338 11,301,338 4,306,642 3,579,225 4,452,568 3,460,812 7,393,965 -107,007 457,827 873,343 252,933 845,831 487,778 48,004 20,852 15,902 28,435 19,569 2,000 4,462 Total 393 393 0 - - Passion for Salmon 75 - 0 7,177 6,322 6,297 1,976 3,926 TOTAL 20,500 59,550 65,872 16,371 10,239 82,242 43,274 488,170 414,686 208,941 558,402 917,386 -370,015 -144,953 2,970,347 2,990,847 3,486,194 2,910,797 2,924,975 7,236,399 3,403,950 3,162,227 2,792,213 2,856,201 2,297,798 10,755,452 10,755,452 10,755,452 10,817,238 SalMar Group SalMar Group ------0

476 6,167 2,175 Other/ 2,500 Other 7,177 6,322 assets assets 34,579 20,159 26,481 16,371 42,852 96,913 -153,233 -153,233 120,894 123,394 165,150 100,735 -8,171,307 -8,023,765 122,298 -8,171,307 -8,170,831 intangible intangible eliminations eliminations 5–50 years 5–50 years Straight-line Straight-line ------0 0 0 0 GAAP 0 0 0 -370,015 -370,015 difference difference 18,390 18,390 18,390 464,855 464,855 464,855 446,465 446,465 Goodwill 446,465 Unlimited - - - 0 897 5,898 25,351 76,536 37,218 Sales & 47,850 47,850 0 0 0 333,711 Processing Processing 10,559,837 10,559,837 10,799,514 10,893,548 10,924,797 18,000 21,000 21,000 21,000 453,591 Licences - - - - Unlimited Unlimited 0 2,384,597 2,402,597 2,856,188 2,381,597 2,363,597 2,835,188 2,508 1,357 93,616 Norway Norway 195,615 129,980 Northern 2,666,679 1,393,694 2,862,294 2,864,802 1,376,135 1,376,135 Fish Farming Fish Farming - - 0 399 1,500 1,672 10,239 15,416 Central Central Norway Norway 238,367 748,012 5,170,917 3,066,956 5,170,917 5,198,471 1,891,476 1,891,476 Fish Farming Fish Farming Intangible assets Intangible – NOK 1,000 Acquisition cost 1 Jan 2017 cost Acquisition Additions is in a development phase and depreciation has not yet commenced. In addition, the capitalised amount includes excess includes excess In addition, the capitalised amount commenced. yet has not and depreciation phase is in a development as at value and their residual 50 years over depreciated nuclei are nuclei. Breeding breeding of the purchase to relating value 31 December 2018 was NOK 25.0 million. NOK 1,000 Note 4 Note 2017 Acquisition cost 31 Dec 2017 cost Acquisition Additions External operating revenues revenues operating External goods and services - sale of Additions upon business acquisitions upon Additions Internal operating revenues revenues operating Internal goods and services - sale of Acc. dep. and write-downs 1 Jan 2017 write-downs dep. and Acc. Acquisition cost 31 Dec 2018 cost Acquisition TOTAL revenues from from revenues TOTAL with customers contracts Year's depreciation depreciation Year's Compensation Compensation Acc. dep. and write-downs 31 Dec 2017 write-downs dep. and Acc. Leasing income income Leasing Year's depreciation depreciation Year's Gains on exit of subsidiaries of Gains on exit Acc. dep. and write-downs 31 Dec 2018 write-downs dep. and Acc. Other operating revenues revenues Other operating Book value 31 Dec 2018 Book value Total operating revenues revenues operating Total Depreciation plan Depreciation NOK 52.4 million capitalised R&D costs. of entirely made up almost NOK 122.3 million are totalling assets Other intangible In 5 years. over depreciated are These costs Farm 1 installation. the Ocean of with the development associated these are of Fish Farm. This project Smart new Group’s the of development the to relating costs capitalised are million 41.8 NOK addition, Economic life life Economic Book value 31 Dec 2017 31 Book value Jan 2017 1 Book value Depreciation Depreciation Write-downs Write-downs Operating expenses expenses Operating Operational EBIT Operational Fair value adjustments adjustments Fair value Operating profit/loss profit/loss Operating Share of profit/loss profit/loss of Share associates from financial items Net tax before Profit Tax year for the profit Net in PP&E investments Year's Year's investments in investments Year's business entities 76 SALMAR ANNUAL REPORT 2018 grounds for any write-down of thebook value of seafarmlicencesasat 31 December2018. MAB in Northern Norway. The assessment is based on level 3 in the valuation hierarchy. The test for impairment did not give conducted in2018,theGroup paidat most NOK208,800pertonne MABinCentral Norway and NOK165,600pertonne each segment. Asabest estimate of fairvalue, anaverage of observable historic transactions in2018 is used. In theauction Norway segment. Impairment assessments are not performed for theindividuallicence,butfor aportfolio of licenceswithin per tonne MABof NOK30,400for theFishFarmingCentral Norway segment, andNOK36,200for theFishFarmingNorthern Impairment of theGroup’s licencesisassessedonthebasisof fairvalue. TheGroup hasrecognised licencesat anaverage value Licences employed to calculate therecoverable value. Awrite-down isperformed ifthebookvalue islower thantherecoverable value. able amount. Therecoverable amount isthehigherof value inuseandfairvalue lesssalescosts. Anestimated salesvalue is tions that awrite-down may benecessary.Thebookvalue of licencesandgoodwillrespectively iscompared withtherecover - The bookvalue of thecash-flow generating entities is tested annually for impairment, ormore frequently ifthere are indica- by segment, seeover. Fish FarmingNorthernNorway, aswell asSales&Processing. For aspecification of thebook value of licencesandgoodwill the Group dividesitsoperations basedonthegeographic distribution of itsseafarms,ieFishFarmingCentral Norway and the lowest level at whichindependent cashflows canbeidentified, and are not atahigher level thanthesegments into which assigned to the cash-flow generating entities withinthe Group to whichthey are associated. Cash-generating entities are SalMar has identified the Group’s segments as cash-generating entities. On acquisition, goodwill and intangible assets are Testing for impairment of licencesandgoodwill Fish FarmingCentral Norway Fish FarmingNorthernNorway NOK 1,000 Specification of goodwill2017 Fish FarmingCentral Norway Fish FarmingNorthernNorway NOK 1,000 Specification of goodwill2018 volume produced under existing licencesinFinnmark. The NOK18millionincrease inthecost of licencesinNorthernNorway istheresult of investments intended to increase the Fish FarmingCentral Norway Fish FarmingNorthernNorway NOK 1,000 Specification of fishfarminglicences2017 Apart from this,theGroup hastwo time-limited licences,aswell aspartnershipagreements linked to ten licences. attempt willbemadeto convert thelicencesinto ordinary production licencesin2019. into operation in the autumn of 2017, and the first generation of fish raisedtherein wasfully harvested inJanuary 2019.An In 2016, the Group was granted eight development licences for its Ocean Farm project. The pilot facility Ocean Farm 1 went auction conducted in2018. granted duringtheyear. Inaddition,NOK363.1millionwaspaidinconsideration for 2,132tonnes MABinconnection withan 90.5 million was paid in consideration for 754 tonnes MAB in connection with a 2 per cent increase in production capacity Increased licencecosts totalling NOK435.6millionin2018relate to thepurchase of anadditional2,886tonnes MAB.NOK Fish FarmingCentral Norway Fish FarmingNorthernNorway NOK 1,000 Specification of fishfarminglicences2018 No. of licences No. of licences 100 100 68 32 68 32 MAB tonnes MAB tonnes 1999–2014 1999–2014 Acquisition Acquisition 84,131 87,017 53,040 31,091 53,611 33,406 2006 2006 year year Acquisition cost Acquisition cost Acquisition Acquisition 2,402,597 2,856,188 1,535,404 1,643,274 1,212,914 452,932 357,818 452,932 357,818 867,193 95,114 95,114 cost cost 31/12/2018 31/12/2018 31/12/2018 31/12/2018 Book value Book value Book value Book value 2,381,597 2,835,188 1,519,404 1,627,274 1,207,914 446,465 351,351 446,465 351,351 862,193 95,114 95,114 Passion for Salmon 77 - Salmon price costs - Production no material changes in production cost compared with that underpinning the estimate in 2017. underpinning the estimate with that compared cost changes in production no material December 2017 31 those at higher than are 31 December 2018 prices as at future for risen and expectations have salmon prices - Discount rate - Discount - EBIT(DA)/Margins output levels - Future - - The Group continuously monitors its financial performance with respect to the long-term assumptions used to determine determine to used assumptions long-term the to respect with performance financial its monitors continuously Group The valid. still in the basic model are assumptions the whether fish farming licences or of the book values of write-down any for no grounds gave tests impairment Based on the above, 31 December 2018 or 31 December 2017. goodwill as at Discount rate: the discount rate used reflects management’s estimate of the risk specified for each cash-flow generating entity. generating cash-flow each for specified risk the of estimate management’s reflects used rate discount the rate: Discount rate The discount the assessment. the time of at in effect bond rate government using the 10-year is set rate The discount 8.93 per cent. of requirement a pre-tax to This corresponds 6.88 per cent. at is calculated tax after based are prices. Salmon price estimates changes in salmon to with respect EBIT per kg is highly volatile EBIT(DA)/Margins: based on historic are cost for production in which the fish is sold. Estimates in the market price level on the actual long-term than last to be lower is deemed used in the assessment margin net changes. Since the long-term for known adjusted figures, EBIT per kg has been used. EBIT per kg, a normalised long-term year’s for plans, adjusted and harvesting production current basis of on the estimated are output levels future output levels: Future licences. current output given in future increases expected of each value book and the cash flows future estimated of value present the of a comparison based on is assessment The at the values by looking present to assess estimated out also carried analyses are Sensitivity entity. generating cash-flow EBIT per kg for level The break-even rates. and discount margins net and, thereby, costs change in salmon prices, production rate NOK 27.24. The discount per kg of an EBIT achieved the segment is NOK 5.97. In 2018, in Fish Farming Northern Norway a write-down. the need for lead to would value calculated the before points by 9.96 percentage increase must would have been obtained: have would Goodwill use was in value of estimation recent most in use. The value basis of is assessed on the goodwill the Group’s of Impairment 36.99, the Group with IAS In accordance been considered. has subsequently reassessment need for in 2017. The performed value book below amount a recoverable that unlikely highly conditions, following the under it is, because so done not has The calculation performed in 2017 was based on the following assumptions and assessments: assumptions on the following in 2017 was based performed The calculation growth real years. No three for the next forecasts and budget of the Group’s on the basis estimated are cash flows net Future in use is calcu- Value inflation. of rate the expected at is stipulated ie growth value, the terminal is assumed when calculating sensitive are forecasts cash flow tax. As with all estimates, after on investment return a 6.88 per cent on the basis of lated changes in underlying assumptions. to assumptions: by the following strongly most in use will be affected value Estimated 78 SALMAR ANNUAL REPORT 2018 220,335,000 in connection with an investment project that As at 31 December2018,thecompany hadcapitalisedNOK Annual leasingof off-balance sheet assets 2017 Annual leasingof off-balance sheet assets 2018 Gains/losses onsaleof non-current assets Book value 1Jan2017 Book value 31Dec2017 Book value 31Dec2018 Acc. dep.&write-downs 31Dec2018 Reversed depreciation Year's write-downs Year's depreciation Acc. dep.&write-downs 31Dec2017 Reversed depreciation Year's write-downs Year's depreciation Acc. dep.&write-downs 1Jan2017 Acquisition cost 31Dec2018 Disposals Additions Acquisition cost 31Dec2017 Disposals Additions from businesstransfers Disposals onexit of subsidiaries Additions and conditions. All leasingagreements were entered into at standard terms operating assets, andNOK251,976 ,000to landandbuildings. to plant andequipment, NOK80,069,000to vessels andother Of thecapitalisedoperating assets, NOK25,136,000related 2017, capitalisedleasingliabilitiestotalled NOK361,934,000. into at standard terms andconditions. Asat 31 December land andbuildings.Allleasingagreements have beenentered vessels andother operating assets, andNOK 237,479,000 to 9,580,000 relates to plant andequipment, NOK69,444,000to NOK 316,772,000.Ofthecapitalisedoperating assets, NOK As at 31 December2018,capitalisedleasingliabilitiestotalled ing assets. equipment, andNOK3,131,000invessels andother operat- NOK 7,508,000inreal property, NOK6,145,000inplant and 2017, were NOK 16,784,000 in total, which breaks down as ating assets. Thecorresponding figures as at 31 December equipment, andNOK47,650,000invessels andother oper - 104,587,000 inreal property, NOK68,098,000inplant and depreciation hadnot begun.Thisbreaks down asfollows: NOK had not beencompleted andputinto operation, andwhere Acquisition cost 1Jan2017 NOK 1,000 Note 5 – Property, plant &equipment buildings & 1,100,269 1,030,052 1,350,319 1,224,204 1,035,094 other real property 882,066 250,050 194,152 153,028 126,115 204,538 26,447 24,955 55,898 41,999 11,622 3,806 Land, 875 0 0 0 0 0 0 is depreciated over 13years. Landisnot depreciated. Correspondingly, theportionallocated to technical installations The portion allocated to buildings is depreciated over 30 years. into thecomponents building,technical installation andland. amount of NOK314.8million.Theinvestment breaks down at 31 December2018.Theleasingliabilityiscapitalisedinthe property wascapitalisedto thevalue of NOK236.9millionas balance sheet witheffect from 1 October 2013.Intotal, the building andtheleasingliabilityhave beenrecognised inthe change intheterms of theleasingagreement meansthat the the expiry of the agreement for the sum of NOK 70 million. The to demandthat SalMar, astenant, acquires theproperty after The lessor has, furthermore, the right but not the obligation the agreement in return for a reduced annual leasing cost. 15 to 20 years, with an option to extend after the expiry of that owns thefactory. Theleasingperiodwasextended from ment inconnection withthesaleof itsshares inthecompany In 2013, the Group renegotiated the InnovaMar leasing agree fixtures, etc equipment, 2,234,617 1,981,840 2,314,523 1,916,243 1,584,473 1,292,521 4,150,860 3,898,996 3,274,362 operating 334,657 289,725 254,450 649,545 35,273 17,770 22,148 2,887 1,699 3,926 2,587 2,816 Plant, 281 54 0 and other operating 256,604 288,133 369,865 273,616 260,194 350,007 269,154 193,106 606,610 529,348 466,722 Vessels 80,852 76,641 77,261 63,302 assets 592 676 0 0 0 0 0 0 0 3,591,490 3,137,522 3,604,770 2,516,300 2,047,779 1,638,655 6,107,789 5,652,548 4,776,178 349,853 412,590 471,407 408,364 457,827 917,386 33,770 TOTAL TOTAL 2,887 3,166 3,926 2,587 7,298 54 0 0 operating 761,854 of which 400,153 357,181 404,673 361,574 761,854 761,854 761,728 41,002 43,137 leased assets 592 592 553 676 802 0 0 0 0 0 0 - Passion for Salmon 79 - - 1,940 51.0% 51.0% 96.3% 51.0% 91,729 88,069 49,463 50,580 37,490 40,325 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Share 31 Dec Share share of equity of share equity of share Non-controlling Non-controlling Non-controlling interests' aggregated aggregated interests' aggregated interests' 51.0% 51.0% 93.4% 51.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% - - 19 Share 1 Jan Share 9,082 -1,117 10,812 23,816 14,734 11,910 Japan Senja Senja Aukra Aukra allocated to non- to allocated non- to allocated office Kverva Kverva Kverva Kverva Kverva Kverva Kverva Kverva Kverva Kverva Kverva Ørskog Ørskog Ørskog Leirfjord Leirfjord Share of profit/loss profit/loss of Share profit/loss of Share controlling interests interests controlling interests controlling Registered Registered 3.7% 6.6% 49.0% 49.0% 49.0% 49.0% 49.0% NO YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES voting share share voting share voting Non-controlling Non-controlling Non-controlling Consolidated interests' shareholding/ interests' shareholding/ interests' Group companies Group – - Langstein Fisk AS * Fisk AS - Langstein AS Settefisk - Straumsnes AS * Stamfiskstasjon - Troms AS ** - Rauma Stamfisk AS - Vikenco - Rauma Sætre AS AS - Rauma Sætre - Rauma Eik AS - SalMar Japan KK SalMar Nord AS ** AS SalMar Nord AS MariCulture Ocean Farming AS SalMar AS Salmus AS SalMar Settefisk AS SalMar Settefisk SalMar Farming AS Farming AS Hitramat AS SalMar-Tunet Subsidiaries Subsidiaries Ocean Farming AS Ocean Farming AS MariCulture AS AS MariCulture Ocean Farming AS Ocean Farming AS 31 Dec 2017: Non-controlling 31 Dec 2017: Non-controlling with subsidiaries associated interests Salmus AS was a wholly owned subsidiary of SalMar in 2018. The company is a holding company for SalMar’s shares in Arnarlax shares SalMar’s for is a holding company SalMar in 2018. The company subsidiary of was a wholly owned Salmus AS further details. 9 for See Note AS. 31 Dec 2018: Non-controlling 31 Dec 2018: Non-controlling with subsidiaries associated interests Vikenco AS AS Vikenco Note 6 Note subsidiaries: following the cover for 2018 statements financial The consolidated Vikenco AS AS Vikenco * Companies merged into SalMar Settefisk AS with effect from 1 Jan 2018 from effect AS with SalMar Settefisk into merged * Companies 1 Jan 2018 from with effect SalMar Farming AS into merged ** Companies Hitramat Farming AS Farming AS Hitramat Farming AS Hitramat 80 SALMAR ANNUAL REPORT 2018 Cash consideration Goodwill Net identifiable assets andliabilities Liabilities Cash &cashequivalents Current assets Property, plant &equipment Deferred taxasset NOK 1,000 Effect onthebalancesheet of theacquisition 1 January 2018. 2017, Sunnfjord Rensefisk AS wasmerged into Langstein Fisk AS, whichmerged into SalMarSettefisk ASwith effect from transaction costs were incurred in connection with the acquisition. The company’s shares were transferred free of charge. In paid NOK8.3millionfor thereceivable, whichisrecognised intheaccounts withabookvalue of NOK25.75million.Nomaterial capacity. Inconnection withthetransaction, theshareholders’ receivable from thecompany wastransferred to SalMar. SalMar produces cleanerfish(ballanwrasse), andthepurpose of theacquisitionwas to boost theGroup’s cleanerfish production purposes, thetransaction wasrecognised asabusinesstransfer witheffect from 1 January2017.Sunnfjord Rensefisk AS On 13 February2017,theGroup agreed to acquire 100percent of theshares inSunnfjord Rensefisk AS. For accounting Sunnfjord Rensefisk AS Acquisitions in 2017 Cash consideration Non-controlling interests Net identifiable assets andliabilities Other current liabilities Non-current liabilities Deferred tax Cash &cashequivalents Current assets Intangible assets NOK 1,000 Effect onthebalancesheet of theacquisition tion costs were associated withtheacquisition.Abreakdown of theconsideration paidfor theshareholding ispresented below. “Smart FishFarm”concept, adeepwater installation that willmake itpossible to farm fishintheopenocean. Nomaterial transac MariCulture AS. Thecompany engagesinactivitiesthefield of aquaculture andhasapplied for development licences for the transaction isdealtwithasabusinesstransfer. Thepurposeof theacquisitionisto secure accessto technology developed by On 11 April2018,theGroup agreed theacquisitionof 51percent of theshares inMariCulture AS. For accounting purposes,the MariCulture AS Acquisitions in2018 Note 7 – Business combinations Book value Book value -14,941 -30,953 -2,093 -1,562 7,709 1,507 6,566 -555 231 24 - - - Adjustment to Adjustment to fair value fair value 14,941 17,450 -1,848 -1,453 -1,162 6,014 7,177 792 - - - - Fair value Fair value -13,503 -1,562 -1,162 2,000 3,922 5,861 7,358 1,922 7,177 -555 231 54 24 - - - - - Passion for Salmon 81

0 -142 TOTAL TOTAL -5,627 25,869 41,743 31 Dec 50.00% 41.95% 50.00% 50.00% 44.45% 160,070 252,933 908,400 208,941 -242,200 -161,015 December 1,023,796 1,188,971 1,023,796 0 0 0 0 0 0 Shareholding

-376 -142 Other 7,995 Other -8,197 25,525 25,869 1 Jan 25,149 25,525 50.00% 34.03% 50.00% 50.00% 44.45% 0 0 0 0 0 2,762 Shareholding 16,438 -11,683 -55,700 160,070 251,535 290,797 402,684 251,535 Arnarlax AS Arnarlax AS Sector 0 0 0 0 Fish farming Fish farming -8,390 25,305 746,739 264,993 609,610 272,839 761,141 746,739 -242,200 -161,015 Genetics/breeding Salmon harvesting Harvesting & processing Harvesting Norskott Havbruk AS Havbruk Norskott Norskott Havbruk AS Havbruk Norskott Molde office Rauma Bergen Leirfjord Kirkenes Registered Registered May 2017, the Group reduced its shareholding in the subsidiary SalMar Genetics AS from 100 per cent cent per 100 from AS Genetics SalMar subsidiary the in shareholding its reduced Group the 2017, May Exit of subsidiaries and non-controlling interests and non-controlling subsidiaries Exit of – Associates – Additions of shares of Additions Opening balance 1 Jan 2018 with the equity method in accordance recognised Companies NOK 1,000 Note 9 Note in associates: investments has the following The Group Company of the subsidiary generated a gain for the Group of NOK 9.7 million, which was classified as operating revenue in profit and loss. in profit revenue million, which was classified as operating NOK 9.7 of the Group a gain for the subsidiary generated of in 2017 and 2018 interests Change in non-controlling The in the company. interests non-controlling from in Ocean Farm AS shareholding a 2.4 per cent acquired In 2017, the Group to cent per 9 from reduced was company the in interest non-controlling the and million, 4.0 NOK totalled paid consideration 31 at As million. 5.0 NOK totalling consideration a for acquired was cent per 2.9 further a 2018, In cent. per 6.6 the company. of held 3.7 per cent interests 2018, non-controlling Following the transaction, the Group no longer has a controlling influence over the company. The entire investment is deemed to is deemed investment The entire company. the over influence no longer has a controlling the Group the transaction, Following The has been established. shareholding the remaining of based on the fair value acquisition cost and a new been realised have The sale in the balance sheet. as a financial asset NOK 25.9 million, is recognised at set shareholding, the remaining of fair value Note 8 Note in 2017 subsidiaries Exit of AS Villa Smolt of The fair value Smolt AS. in the subsidiary Villa its shares of 100 per cent sold 2017, the Group 31 May from With effect produced the subsidiary the sale of the Group, in cash. For was settled was NOK 16 million, which received the consideration and loss. in profit revenue classified as operating NOK 0.5 million, which was a gain of AS SalMar Genetics 31 from effect With AS in SalMar Genetics issue a share through its shareholding the dilution of partly from derived The reduction 50 per cent. to shares. the sale of and partly through Norskott Havbruk AS Havbruk Norskott Arnarlax AS (owned via the holding company Salmus AS) via the holding company (owned Arnarlax AS SalMar Genetics AS SalMar Genetics AS Processing Kirkenes Romsdal Processing AS Processing Romsdal on a stock is listed associates the Group’s Since none of with the equity method. in accordance recognised are All associates available. therefore are values market no observable exchange, Disposal of shares Disposal of profit/loss the year's of Share Items recognised in other comprehensive income comprehensive in other recognised Items Dividend received Opening balance 1 Jan 2017 Closing balance 31 Dec 2018 with the equity method in accordance recognised Companies NOK 1,000 Additions of shares of Additions shares Disposal of profit/loss the year's of Share income comprehensive in other recognised Items Dividend received Closing balance 31 Dec 2017 82 SALMAR ANNUAL REPORT 2018 cent. At thecloseof 2018,SalmusAS hadbecome apure holdingcompany for SalMar’s shareholding inArnarlaxAS. time, SalmusAS reduced itsshareholding inArnarlaxAS, asaresult of thecapitaldecrease, from 49.05percent to 41.95per Following thesetransactions, SalMarincreased itsshareholding inSalmus AS from 50percent to 100percent. At thesame to minorityshareholders, whoreceived theirrelative portionof theshares inArnarlaxAS, inadditionto other company assets. per cent. Duringtheyear, SalmusAS wassplitinto ajointly owned company bymeansof acapitalreduction withadistribution At thestart of 2018,SalMarowned 50percent of SalmusAS, HaganesAS owned 31percent, whileEdinborg AS owned 19 rose from 34.03percent at 31 December2017to 41.95percent asat 31 December2018. indicate. Furthermore, SalMar then acquired and converted subscription rights in SalmusAS. SalMar’s shareholding in Arnarlax to theshare issue,SalMarstrengthened SalmusAS’s capital byanamount relatively larger thanitsprevious holdingwould In 2018,aNOK200millionshare issueinArnarlaxwas carriedout.SalMusAS participated pro rata intheshare issue.Prior shares inArnarlaxEhf. ArnarlaxEhf isanaquaculture company withoperations inIceland. Salmus AS isaholdingcompany located inLeirfjord. Thecompany owns andcontrols, viaArnarlaxAS, 41.95percent of the Arnarlax AS /SalmusAS to beanassociate. shareholders alternate inhaving theboard’s chair. Sinceneitherof thecompany’s owners hasoverall control, itisconsidered Mar ASA andLerøy Seafood AS. Theboard of directors has4members,witheachshareholder represented by2directors. The aquaculture company intheUK,withoperations inmainlandScotland andShetland. Norskott Havbruk is50/50owned bySal- Located inBergen, Norskott Havbruk AS isaholdingcompany that owns 100%of Scottish Sea FarmsLtd, thesecond largest Norskott Havbruk AS 31 December 2018hasbeenwhollyallocated to thevalue of licencesandisnot depreciated. tributable to excess value obtained inconnection with theacquisitionof theinvestment. Theremaining excess value asat The difference between thebookvalue of theinvestment inArnarlaxAS andSalMar’s share of thecompany’s equityisat- Book value 31Dec The Group's share of equity Equity Non-current liabilities Current liabilities Non-current assets Current assets Net profit/loss Fair value adjustments Operating expenses Operating revenues NOK 1,000 The following tableshows asummaryof financialinformation relating to material associates, basedon100%figures: lax AS are considered to bematerial associates. Furtherinformation relating to thesecompanies isprovided below. Based on an overall assessment, in which size and complexity have been taken into account, Norskott Havbruk AS and Arnar- Material associates 1,522,677 1,330,163 1,303,476 1,396,202 2,057,006 Norskott Havbruk AS 761,141 761,339 774,567 336,395 529,985 -9,985 2018 1,493,871 1,360,089 1,418,710 2,088,007 746,739 746,936 557,360 292,255 983,398 541,320 8,989 2017 1,230,653 402,684 318,578 104,908 366,254 655,755 574,897 479,240 400,360 -29,273 82,544 2018 Arnarlax AS -134,298 -185,989 584,314 251,535 198,842 110,707 473,918 628,307 540,632 565,246 625,445 2017 Passion for Salmon 83 394 393 5,080 TOTAL TOTAL 19,569 28,435 251,486 239,596 343,794 123,958 256,711 177,098 361,934 630,061 501,112 935,314 1,423,510 1,194,760 1,037,697 1,121,536 3,086,022 2,696,610 ------227,536 239,596 343,794 235,070 177,098 361,934 630,061 501,112 913,280 Financial Financial 1,423,510 1,194,760 1,037,697 1,097,192 2,962,064 2,648,606 instruments at at instruments at instruments amortised cost amortised cost ------394 393 5,080 23,950 21,641 19,569 28,435 24,344 22,034 48,004 123,958 123,958 Financial Financial profit & loss profit & loss profit instruments at at instruments at instruments fair value through through fair value through fair value Financial instruments by category instruments Financial – As at 31 Dec 2018 As at 10 Note Cash & cash equivalents financial assets Total Liabilities debt Interest-bearing Bank loans Financial leasing agreements Derivatives contracts currency Forward Other financial liabilities payables Trade financial liabilities Total 2017 December 31 Pr. NOK 1,000 Cash & cash equivalents financial assets Total Liabilities debt Interest-bearing Bank loans Financial leasing agreements Derivatives contracts currency Forward Assets Derivatives swap agreements rate Interest Equity instruments equity instruments Unlisted instruments Debt receivables Trade Other receivables Assets Equity instruments equity instruments Unlisted instruments Debt receivables Trade Other receivables swap agreements rate Interest Other financial liabilities financial liabilities Total 84 SALMAR ANNUAL REPORT 2018 and sellingof currencies against NOK.Forward contracts are entered into to reduce asfarpossibleexchange rate risk on The tablebelow shows thecompany’s forward currency contracts asat 31 December2018.Allcontracts relate to thebuying Forward currency contracts Total Cross-currency interest rate swaps agreement wasrecognised at NOK5,080million.Thecorresponding figure for 2017was NOK‑28,435million. tors includingspot prices,forward currency pricesandinterest rate curves. Asat 31 December2018,thefairvalue of this includes future pricingandswapmodelswhenapplyingpresent value models.Themodelsuseinputs relating to various fac- The company uses a recognised valuation method to determine thefairvalue of interest rate swaps.Thevaluation method similar agreement for EUR43million against adrawdown of USD48millionthat wasentered into in 2016andsettled in2018. a drawdown of USD 49,764,000. The agreement runs for two years and matures on 10 In 2018, a cross-currency interest rate swap agreement was entered into, whereby SalMar has received EUR 43 million against Forward Forward Product used withrespect to forward currency contracts asat 31 December2018or2017. the term of thecontract, agreed currency amounts andthespot rate onthebalancesheet date. Hedgeaccounting wasnot The value of forward contracts iscalculated onthebasisof estimated forward exchange rates for thecurrencies concerned, outstanding trade receivables and sales contracts. Forward currency contracts are recognised at fair value inthe balance sheet. NOK 1,000 Derivatives are measured at fairvalue. Onthebalancesheet date, thesewere recognised inthebalancesheet asfollows: Note 11 Forward Forward Forward currency contracts Recognised fairvalue asat 31Dec Cross-currency interest rate swaps operations cameto NOK-9,342,000(2017:‑21,932,000). the FishPool contracts are classified aspart of thefair value adjustment. In2018, realised Fish Pool contracts classifiedunder Realised FishPool contracts are classifiedinprofit andlossunderOperational EBIT, whileunrealised changesinthe value of out, asaresult of which,thevalue of thecontracts isnot includedinother current items. contracts at thecloseof 2017wasNOK44,719,000.Dailysettlement of unrealised gains and lossesonFishPool iscarried at 31 December2017wasNOK‑13,031,000.At thecloseof 2018,theGroup hadnosalescontracts. Thefairvalue of sales fair value was estimated at NOK 1,062,000, based on market prices on the balance sheet date. The corresponding figure as sheet date, thecontract’s term andobservable market pricesfor contracts withasimilarterm. Asat 31 December2018,the contracts iscalculated onthebasisof theagreed settlement priceinthecontract, thefairvalue of thefishonbalance fair value inprofit andloss.Settlement of the contracts isdue to take placewithinone year. Thefair value of theFish Pool Financial fishsales/purchase contracts (derivatives) have beenentered into onFish Pool. Thederivatives are recognised at Financial salescontracts (FishPool contracts) Total liability Forward – Derivatives Type Salg Salg Salg Salg Salg Currency USD CAD EUR GBP JPY Other receivables Currency amount (1,000) 5,080 5,080 3,451,290 2018 0 211,128 81,523 2,986 9,500 Other current Q1,2019 -Q1,2020 Q1,2019 -Q2,2019 Q1,2019 -Q2,2020 Q1,2019 -Q4,2020 Q1,2019 -Q4,2019 -123,958 -123,958 liabilities 0 Other receivables Term September 2020. The Group had a 10,758–11,024 9,463–10,179 0,073–0,079 7,599–8,752 6,288–6,351 rate interval Exchange 2017 0 0 0 Other current Book value/ Fair value liabilities -123,958 -48,004 -28,435 -19,569 -14,641 -15,262 -93,052 TNOK -975 -27 Passion for Salmon 85 0 807 >90d 2017 2017 6,615 9,032 2,417 2,417 3,224 1,379 -9,032 36,790 20,818 56,663 41,439 55,284 510,144 242,866 800,641 144,704 0 270 2018 2018 9,032 6,621 2,641 5,080 7,324 -2,371 -2,317 26,136 51,662 18,812 630,061 289,416 945,613 166,733 4,026 16,106 45–90d 8,541 11,949 30–45d <30 d 93,194 40,991 Not due Not 478,682 435,769 Total Total 636,721 510,144 Receivables, provisions for bad debts for provisions Receivables, – NOK 1,000 insured. not is which portion that on debts bad expected for provision a makes and receivables trade its insures credit Group the period, each reporting the span of losses over credit expected on the basis of bad debts for its provision measures The Group loss. expected based on a 12-month and not receivables trade for agreement Buyout certain speci- meet that receivables of trade for the buyout with a financial institution an agreement into SalMar has entered - set immediate receives arise and when they as and criteria these meet that receivables trade SalMar transfers fied criteria. assumes institution financial The arrive. to days 30–45 taken have would payment customer’s the Normally, thereof. tlement be is deemed to such receivables of The transfer its transfer. of the time from the receivable to risk with respect all material NOK of a total 31 December 2018, place. As at it takes date on the balance sheet the from is derecognised and a transaction (31 December 2017: the balance sheet from and derecognised had been transferred receivables 661,3 million in outstanding in the activities is included in operating derecognition this deriving from receivables change in trade million). The NOK 456.0 cash flow. of statement NOK 1,000 Book value equals fair value. Book value NOK 1,000 12 Note rate. daily the at valued are currencies foreign in denominated Receivables cost. amortised at measured are receivables Group’s The 2018 Provisions for bad debt 1 Jan debt bad for Provisions Trade receivables Trade 2017 Provisions for bad debts for Provisions 31 Dec debts bad for Provisions Other current receivables Other current Change in provisions for bad debts during the period bad debts for Change in provisions In principle, assets. contract and receivables for losses on trade provisions for calculating uses a simplified method The Group Other non-current receivables Other non-current Actual bad debts Actual Total Change in provisions for bad debts for Change in provisions Included in the item Other current receivables above are prepaid expenses in the amount of in the amount expenses prepaid are above receivables Other current Included in the item Bad debts charged to expenses during the period expenses to charged Bad debts Included in the item Other current receivables above are derivatives in the amount of in the amount derivatives are above receivables Other current Included in the item See Note 2 for further details of the credit risk and foreign exchange risk associated with trade receivables. with trade risk associated exchange and foreign risk the credit of further details 2 for See Note profile: payment had the following receivables trade outstanding the company’s 31 December, As at Included in the item Other current receivables above are VAT refunds due in the amount of due in the amount refunds VAT are above receivables Other current Included in the item Included in the item Other non-current receivables above are the following, falling due for payment payment falling due for the following, are above receivables Other non-current Included in the item year than one in more Included in the item Other non-current receivables above are pension assets in the amount of in the amount pension assets are above receivables Other non-current Included in the item Bad debts are classified as other operating expenses in profit and loss. Changes in provisions for bad debts and bad debts and bad debts for bad debts provisions and loss. Changes in expenses in profit other operating as classified are Bad debts below. presented during the period are expenses to charged 86 SALMAR ANNUAL REPORT 2018 Biological assets Roe, fry, smoltandcleanerfish at cost Biological assets heldat seafarms > 4kg(GW) 1–4 kg < 1kg(LW) Biological assets heldat seafarms31Dec2017 Biological assets Roe, fry, smoltandcleanerfish at cost Biological assets heldat seafarms > 4kg(GW) 1–4 kg < 1kg(LW) since thisisconsidered thebest estimate of fairvalue. Roe, fry, smoltandcleanerfish are recognised at historic cost, factors not drawn from observable markets. of biological assets is included in valuation level 3, ie based on ognised at fairvalue inaccordance withIFRS13.Thevaluation Agriculture. The general rule is that such assets must be rec- The way live fishare accounted for is regulated byIAS 41 Biological assets heldat seafarms31Dec2018 Biological assets 1Jan Change inthebookvalue of biologicalassets Finished goodscomprises wholesalmon,fresh andfrozen, aswell asprocessed salmonproducts. cleaner fishandheld atseafarms. Stocks of biologicalassets are associated withSalMar’s fishfarmingactivitiesonlandand at sea,and comprise roe, fry, smolt, processing, aswell aspackaging. Raw materials comprise mainlyfeed for smoltandmarine-phasefishproduction. Italsoincludes raw materials for usein Book value of inventory Note 13 Increase dueto production/purchase Goods inprogress (entirely biologicalassets) Raw materials Fair value adjustments 31Dec(new) Fair value adjustment -changeinestimate (seecomment below) Fair value adjustments 1Jan(reversed) Reduction resulting from sale/harvesting Total inventory 31Dec Finished goods Biological assets 31Dec Book value of biologicalassets recognised at fairvalue Biological assets inseafarmsat cost Roe, fry, smoltandcleanerfish at cost Total biologicalassets before fairvalue adjustment Fair value adjustment of biologicalassets Total biologicalassets 31Dec – Inventory andbiologicalassets NOK 1,000 NOK 1,000 NOK 1,000 loss pursuant to IAS 8. in theaccounts asanestimate changerecognised inprofit & had aNOK287.8millionpositive effect, whichisdealtwith than the growth model used earlier. The change in model has fish wasmodified.A present valuemodelis now used, rather year, thetechnical modelusedto calculate thefairvalue of live accordance withIAS 41,recognised at fairvalue. Duringthe The company’s stocks of live fishheld at seafarmsare, in Biomass Biomass (tonnes) (tonnes) 91,678 11,982 69,708 94,415 11,131 74,078 9,987 9,206 Acquisition Acquisition 3,034,628 2,843,051 2,078,816 3,269,939 3,044,550 2,280,596 191,577 271,885 492,351 225,389 286,982 476,971 cost cost -1,100,895 -4,144,478 5,305,616 4,135,523 4,379,789 5,305,616 1,747,861 5,765,550 3,044,550 3,269,939 2,035,677 5,305,616 135,500 287,816 324,434 225,389 adjustment adjustment 1,100,895 1,100,895 2,035,677 2,035,677 1,388,065 2018 2018 2018 227,922 872,973 169,495 478,118 Value Value - - - Bokført verdi Bokført verdi -2,028,662 -4,240,921 4,135,523 4,135,523 3,943,946 2,951,788 5,305,616 5,080,227 3,668,661 4,997,001 4,307,210 4,135,523 1,100,895 4,394,573 2,843,051 3,034,628 1,100,895 4,135,523 191,577 499,807 492,351 225,389 456,477 955,089 120,997 138,053 191,577 2017 2017 2017 - Passion for Salmon 87 53,93 53,18 53,25 55,03 57,80 56,80 -3,616 -19,761 -50,299 362,420 -496,533 -333,099 Effect on estimated on estimated Effect on estimated Effect fair value 31.12.2018 fair value 31.12.2018 fair value Forward price 31.12.2017 Forward -1% -1% -1% Decrease Decrease 1 month later 1 month - NOK 1 per kg - NOK 5 per kg 4,197 19,761 50,299 394,241 496,533 -327,456 fees and site rental charges. For further details of the various the various of further details For charges. rental and site fees premises used in the model, please see the description in Note Note in description the see please model, the in used premises and estimates accounting about “important 1 and the section assessments”. discretionary estimate in 2017, the best was used model that In the growth equalled accumu- weight fish under 1 kg live for fair value of the weight, 4 kg gutted over fish harvestable For cost. lated expected at put was biomass the of adjustment value fair gutted and 4 kg weight 1 kg live between fish For profit. net evenly recognised at harvesting profit expected net weight, the biomass of value period was used. The fair the growth over price on the balance market basis of was assessed on the sales for corrected class concerned, the weight for date sheet The wastage. trimmings and costs harvesting including costs, The differences. quality for adjustments included price market the prices for forward based on external sale prices used were The to be harvested. expected period in which the fish was and cost volume, to relating model included premises growth present as in the new price based on the same assumptions model. value period: Expected harvesting Q1-2018 Q2-2018 Q3-2018 Q4-2018 half 2019 1st 2nd half 2019 - Effect on estimated on estimated Effect on estimated Effect 64,02 65,00 59,52 61,48 62,90 60,10 fair value 31.12.2018 fair value 31.12.2017 fair value 1% 1% 1% Increase Increase Increase Increase + NOK 5 per kg + NOK 1 per kg 1 month earlier earlier 1 month Forward price 31.12.2018 Forward NOK 1,000 NOK 1,000 Change in biomass Change in discount factor Change in discount Change in biomass 2017 2018 Expected harvesting period: Expected harvesting Q1-2019 Q2-2019 Q3-2019 Q4-2019 half 2020 1st 2nd half 2020 time Change in harvesting harvest. prices forward Fish Pool on the basis of is calculated Fair value on the in effect were that date harvesting the estimated for an for adjusted are prices forward The date. sheet balance carriage sales and harvesting, as well as supplement, exporter of account take to is made adjustment an In addition, costs. in fish quality. differences expected which per month, 2018 was 7 per cent for rate The discount licence synthetic risk and cost, capital the biomass’s reflects pany’s budgets and plans. The estimated value is discounted is discounted value plans. The estimated and budgets pany’s date. the balance sheet on value present to the basis on is calculated harvest at biomass The expected balance sea farms on the individuals held at the number of of point the until up mortality expected for adjusted date, sheet at weight estimated and multiplied by the fish’s harvest of Present value is calculated on the basis of estimated revenues revenues estimated basis of on the is calculated value Present at harvestable the fish is until remaining costs less production thereached when it has A fish is harvestable site. the individual com the in specified harvesting for required weight estimated Sensitivity assessments: of on the book value The effect parameters. using different calculated has been biological assets of value fair The estimated is summarised below: the biological assets Change in forward price Change in forward price Change in forward 88 SALMAR ANNUAL REPORT 2018 Total no.of shares Total other shareholders Total 20largest shareholders SALMAR ASA AB SICILOW VOL EQU PORTF State Street BankandTrust Comp JPMorgan ChaseBank,N.A.,London OLD WESTBURY LARGE CAPSTRATS FD The Bankof New York MellonSA/NV JPMorgan ChaseBank,N.A.,London JPMorgan ChaseBank,N.A.,London J.P. Morgan BankLuxembourg S.A. The Bankof New York MellonSA/NV INVESCO FUNDS CLEARSTREAM BANKING S.A. J.P. Morgan BankLuxembourg S.A. State Street BankandTrust Comp LIN AS Euroclear BankS.A./N.V. State Street BankandTrust Comp State Street BankandTrust Comp FOLKETRYGDFONDET KVERVA INDUSTRIERAS The company’s 20largest shareholders asat 31 December2018were: Shareholders There were nochangesinshare capitalduring theyear. Ordinary shares NOK 1,000 As at 31 December2018,theparent company’s share capitalcomprised: Note 16 the amount of NOK38,958,000(2017:48,317,000). NOK 87,244,000(2107:70,077,000).TheGroup hadadditionalrestricted fundsassociated withFishPool contracts in As at 31 December2018,theitem “Bankdeposits,cash&equivalents” includedrestricted taxdeductionsamounting to Note 15 NOK 1,000 to provide agreater understanding of theGroup’s profit/loss onsoldgoods.Theitem comprises: Fair value adjustments are partof theGroup’s operating profit/loss, butchangesinfair value are presented onaseparate line Note 14 Recognised fairvalue adjustments Unrealised changeinvalue of forward currency contracts Unrealised changeinvalue of FishPool contracts Change inprovisions for loss-makingcontracts Change infairvalue of thebiomass – – – Share capitalandshareholders Bank deposits Fair value adjustments 113,299,999 113,299,999 84,341,388 28,958,611 59,436,137 1,111,621 1,119,712 1,129,973 1,153,536 1,174,620 1,363,891 2,186,226 2,474,294 5,948,899 561,003 587,338 593,491 650,673 653,647 718,085 787,110 787,419 942,394 961,319 No. No. Shareholding Face value 100.00% 845,831 934,782 74.44% -87,592 -31,395 25.56% 52.46% 30,036 0.98% 0.99% 1.00% 1.02% 1.04% 1.20% 1.93% 2.18% 5.25% 0.50% 0.52% 0.52% 0.57% 0.58% 0.63% 0.69% 0.69% 0.83% 0.85% 2018 0,25 Voting share Book value -370,015 100.00% -927,767 143,583 407,555 74.31% 25.69% 52.72% 28,325 0.99% 0.99% 1.00% 1.02% 1.04% 1.21% 1.94% 2.19% 5.28% 0.52% 0.53% 0.58% 0.58% 0.64% 0.70% 0.70% 0.84% 0.85% 6,614 2017 Passion for Salmon 89 0.00% 0.00% 0.01% 0.02% 0.01% Shareholding Shareholding 2017 929,001 361,934 -134,937 1,155,998 108,696 134,937 243,633 1,399,631 177,098 1,222,533 ** 736 3,715 13,882 21,047 12,217 No. of shares shares No. of 2018 1,311,027 343,794 -635,704 1,019,116 112,484 635,704 748,188 1,767,304 239,596 1,527,708 dividend payout of NOK 2,592,997,000. Dividend is not paid NOK 2,592,997,000. Dividend is not of dividend payout ending the year dividend for The proposed shares. on treasury corresponding 31 December 2017 was NOK 19.00 per share, NOK 2,138,356,000. of payout dividend a total to authorisation must be seen in conjunction with the authorisa- be seen in conjunction must authorisation in increase total the that such capital, share increase to tion 10% exceed not may combined authorisations both capital for - sharehold existing permits authorisation The capital. share of authorisation The board’s be waived. to rights ers’ preference the latest. or 30 June 2019 at the 2019 AGM, until is valid Dividend NOK 31 December 2018, a dividend of ending year the For a total to This corresponds proposed. has been 23.00 per share - Director, Fish Farming Director, Director Sales and Processing Director Director Business Support, Finance & Strategy Business Director Director, Strategic Projects Strategic Director, CFO CEO Interest-bearing debt Interest-bearing – Roger Bekken Bekken Roger 31 December 2018. as at in SalMar ASA shares owned directors of board the company’s No members of AS. TTU Invest through and indirectly directly owned * shares the of cent per 93.02 owns AS Kvarv Group. Kverva the in company parent the AS, Kvarv through indirectly owned shares ** Frode Arntsen Arntsen Frode Ulrik Steinvik Ulrik Steinvik - agree on bank loans and leasing instalments year’s Next the same as fair value. practically is debt long-term of The book value liabilities in the balance sheet. classified as current are ments liabilities. of the Group’s profile the maturity of details 2 for See Note Gustav Witzøe ** Witzøe Gustav institutions credit to Debt liabilities Leasing debt on long-term instalment year's Next 31 Dec debt interest-bearing long-term Total debt Short-term interest-bearing institutions credit to Debt debt on long-term instalment year's Next 31 Dec debt interest-bearing short-term Total debt interest-bearing Total Cash & cash equivalents debt interest-bearing Net NOK 1,000 debt interest-bearing Long-term plies to a total loan amount of NOK 2 billion. The capital increase The capital increase NOK 2 billion. of amount loan a total plies to 2,832,000. The NOK exceed not may conversion from resulting 17 Note with a face value of NOK 2,586,000, a total of 10,345,632 of NOK 2,586,000, a total of with a face value AGM, the 2019 until valid is authorisation The board’s shares. the latest. or 30 June 2019 at loans issue convertible has also been authorised to The board part as instruments financial such use to company the enable to ap authorisation financing. The board’s short-term its overall of Trond Tuvstein * Tuvstein Trond authorisations Board capital by the share raise has been authorised to The board up to the issue of NOK 2,832,000, through a maximum of the 2019 until is valid The authorisation 11,328,000 shares. the latest. or 30 June 2019 at AGM shares treasury acquire has also been authorised to The board shares in Kverva AS, which, in turn, owns 100 per cent of the shares in Kverva Industrier AS. Kverva Industrier AS owns 52.46 per owns AS Industrier Kverva AS. Industrier in Kverva the shares of per cent 100 owns which, in turn, AS, in Kverva shares of share a voting commands Witzøe Gustav 52.72 per cent. of share a voting and commands in SalMar ASA the shares of cent company. in the company, in the A-shares of his ownership through AS in Kvarv cent 1 per of and has a shareholding 80 per cent Shares owned by members of the board and senior executives: and the board members of by owned Shares Name Olav-Andreas Ervik Ervik Olav-Andreas 90 SALMAR ANNUAL REPORT 2018 cies relating to thegroup account schemeare recognised net intheGroup’s financial statements. Group hadanet drawdown ontheschemeinamount of NOK112,484,000.Depositsanddrawdowns indifferent curren- The Group hasamulticurrency group account schemewithacredit ceilingof NOK500million.Asat 31 December2018,the Interest-bearing debt inmore detail Net interest-bearing debt Cash &cashequivalents Total interest-bearing debt Financing activities-changesinliability31Dec2017: Short-term debt to credit institutions Total interest-bearing debt Total interest-bearing debt Short-term debt to credit institutions Long-term interest-bearing debt Short-term debt to credit institutions Long-term interest-bearing debt Leasing liabilities Leasing liabilities Leasing liabilities Long-term debt to credit institution Long-term debt to credit institutions Long-term debt to credit institutions of 20years. leasing agreement for the InnovaMar facility which has aterm original term of 60–84months, apartfrom the capitalised amount to NOK14,604,000.Leasing agreements have an Estimated annualinstalments onleasingliabilitiesin2019 exception of Vikenco AS and SalMarJapanK.K. This financingagreement covers allgroup companies withthe drawn down onthe revolving credit facility. 2023. Asat 31 December2018,NOK500millionhadbeen due to mature inFebruary2022,withanoption to extend to February 2018 for a term of 3+1+1 years. They are currently amounting to NOK 1.5billion.Thesefacilitieswere renewed in in theamount of NOK2billionandarevolving credit facility 5 years. There isalsoaninvestment andacquisitionfacility billion, whichhasa10-year repayment profile maturing after a term of 5years. Thecredit facilitycomprises aterm loanof 1 In 2014, SalMar entered into a new borrowing agreement with Financing activities-changesinliability31Dec2018: Specification of net interest-bearing debt bycurrency: -1,274,498 -1,455,822 -1,311,027 31.12.2016 31.12.2017 -343,794 181,324 198,998 2,638,170 1,399,632 2,578,689 1,290,936 2,196,976 108,696 361,934 381,714 929,001 59,480 NOK 248,305 248,305 248,305 -1,250,942 -1,289,592 -1,267,975 Cash flow Cash flow EUR 367,119 363,331 382,026 -18,695 -21,617 38,650 3,788 this typeof financing. Group owed itsbankNOK697,919,000inconnection with the statement of cash flow. As at 31 December 2018, the payable, andthechangeisincludedinoperating activitiesin feed suppliers.Asaresult, theliability isclassifiedasatrade from the terms which could have been obtained from the terms obtained from the bank are not materially different ments containing provisions for variable credit times,andthe with theGroup’s bank.Theliabilityspringsfrom supplyagree- feed supplier hasagreed thediscounting of thetrade payable feed suppliersto extend thecredit given onfeed orders. The The Group hasentered into anagreement withthecompany’s Financing of trade payables financial expenses) shallnot exceed 4.0. stipulates that the Group’s interest coverage rate (EBITDA/net ratio shallexceed 35%,andaprofitability requirement, which ment, whichstipulates that theGroup’s recognised equity financing of SalMar ASA are, respectively, asolvency require- The most important financial covenants for the long-term Financial covenants 25,000 11,198 13,802 13,802 JPY Acquisitions Acquisitions -443,021 -452,930 -452,930 Non-cash generating effects 1,384 1,384 1,384 555 555 555 9,909 USD Non-cash generating effects 10,218 10,566 Exits Exits -348 -348 -2,331 -2,331 -2,331 GBP Other effects Other effects -118,327 -118,327 -81,163 37,164 Other 802 802 802 31.12.2017 31.12.2018 -1,527,708 -1,767,304 -1,311,027 1,399,632 1,767,305 1,290,936 1,654,821 1,311,027 -112,484 -343,794 239,596 108,696 112,484 361,934 343,794 929,001 Totalt Passion for Salmon 91 23% -793 2017 2017 2017 2017 2017 2,980 5,711 6,844 5,711 19.6% -3,637 -5,191 -6,566 -5,555 -3,887 -2,457 -2,075 -4,350 -7,932 -5,671 -5,555 21,210 -61,383 -58,490 -61,383 -65,860 -14,138 -50,146 -65,860 -58,490 -61,383 558,401 685,488 678,119 672,448 558,402 678,119 -139,782 1,495,301 1,362,222 2,856,201 5,922,705 1,362,222 1,906,060 4,147,499 0 0 3 0 0 91 91 22% 2018 2018 2018 2018 2018 1,162 9,133 1,340 1,340 19.6% -3,151 -2,197 -7,836 -4,918 16,298 -71,181 -71,181 -80,998 -21,923 -58,175 -80,998 -27,765 -71,181 252,376 873,343 690,717 690,717 873,343 252,376 690,717 -306,620 1,362,222 4,452,568 1,024,091 1,541,431 1,541,431 7,006,506 2,042,260 5,287,251 Deferred tax and tax expense tax and Deferred – Deferred tax associated with items recognised in comprehensive income in comprehensive recognised with items tax associated Deferred with equity transactions tax associated Deferred Change in deferred tax resulting from changed tax rate - effect recognised in profit and loss in profit recognised - effect changed tax rate from tax resulting Change in deferred subsidiaries of with the exit tax associated Deferred with acquisitions tax associated Deferred tax rate Effective the following: apply to differences Permanent expenses Option Deferred tax 1 Jan Deferred and loss tax in profit Change in deferred Other changes actual tax rates to nominal from Reconciliation tax before Profit nominal tax rate tax at Expected change in tax rate of Effect (23%/24%) differences Permanent paid abroad Tax years in previous Surplus/shortfall in tax provisions tax expense Calculated redeemed Options R&D expenses) scheme for tax refund (Norwegian Skattefunn associates from profit/loss of Share subsidiaries of exit Gain from Other Total Change in deferred tax in the balance sheet: tax Change in deferred tax 31 Dec Deferred Deferred tax liabilities (+) / deferred tax assets (-) tax assets tax liabilities (+) / deferred Deferred tax deferred used when calculating rate Tax Profit & loss account Profit differences temporary TOTAL Intangible and operating assets and operating Intangible Financial leasing Inventory Receivables Other Tax refund owing due to changes in previous years' tax assessments years' changes in previous due to owing refund Tax in the balance sheet payable Tax differences temporary of Breakdown Tax payable for the year for payable Tax Tax payable in the balance sheet in the balance payable Tax Effect of change in tax rate of Effect paid abroad Tax years in previous provisions Surplus/shortfall in tax profit on ordinary Tax Change in deferred tax Change in deferred Tax payable Tax NOK 1,000 : as follows down breaks tax expense The year's 18 Note 92 SALMAR ANNUAL REPORT 2018 Capitalised pensionassets associated withsecured scheme Total future leasing payments NOK 1,000 Witzøe andrelated parties.SeeNote 29for further details. were madein2018withrespect to theleasingof thefacilitiesandwater rights. Wessel Invest AS iswhollyowned byGustav relates to theleaseof Kjørsvik Settefisk’s premises andincludesthelease of water rights. Payments totalling NOK7,109,000 The Group hasentered into a5-year leasingcontract withWessel Invest AS, whichexpires 26 February 2020.Thecontract of theproperty from Romsdalsfisk. related portioncappedat NOK300,000. Following thecloseof thefinancial year, agreement was reached for thepurchase has apreferred right withrespect to extending thelease.The leasingamount isdivided into afixed portionandaperformance- The Group has a leasing contract with Romsdalsfisk AS. The contract is for the lease of the Vikenco harvesting plant. The Group Material operational leasingagreements Note 21 As at 31 December2018,theGroup hadissuednoguarantees withrespect to third parties. Total Trade receivables Inventory andbiologicalassets Property, plant &equipment andlicences Book value of assets pledgedassecurityfor recognised liabilities Total Leasing liabilitiesandother non-current liabilities Long-term debt to credit institutions Short-term debt to credit institutions Recognised liabilitiessecured through liens,etc: NOK 1,000 Note 20 NOK 1,000 bution isasfollows: The total pension cost for the Group is divided into a defined-contribution portion and a defined-benefits portion. The distri- are charged to expenses asthey accrue. contribution scheme.Thismeansthat liabilitiesinrespect of theAFPschemeare not capitalised.Premiums paidinto thescheme of thescheme’s underlying financial position and results withsufficient reliability, andtherefore recognises itasadefined- purposes, theschemeisdeemedto beamulti-employer occupational pensionplan.TheGroup isunableto identify itsshare Liabilities associated withtheAFPretirement schemeare not includedintheGroup’s pensioncalculations. For accounting the defined-benefitsplanderives inits entirety from 7pensioners. residual pensioners,remain inthedefined-benefitsscheme.As at31 December2018,thepensionliabilityassociated with assets andliabilitiesassociated withemployees whowere onsick leave orinreceipt of disabilitybenefits,inaddition to the In 2006,theGroup switched from adefined-benefitspensionplan toadefined-contribution pensionscheme.Onlythose has apensionschemethat meets therequirements of thislegislation. The company hasadutyto provide anoccupational pensionscheme,undertheMandatory Occupational Pensions Act, and Note 19 Pension assets andliabilities recognised intheGroup’s balancesheet break down asfollows: Year's pensioncosts, incl.employers' national insurance contributions Accrued employers' national insurance contributions Costs relating to thedefined-benefitsplan Premiums paidinto thedefined-contribution scheme – – – Other off-balance sheet liabilities Liens andguarantees Pension costs, assets andliabilities Less than1year 218,624 2–5 years 455,793 More than5years 12,822,289 630,061 5,765,550 6,426,678 2018 1,767,304 343,794 1,311,027 112,484 2018 3,808 44,970 13,283 29,568 1,902 2,118 2018 2018 10,882,052 501,112 4,394,573 5,986,367 2017 1,399,631 361,934 929,001 108,696 2017 678,225 35,497 12,345 21,038 1,379 2,113 2017 2017 Total Passion for Salmon 93 % % 0.3% 0.9% 0.6% 0.0% 4.4% 2.7% 2017 2017 6,297 1,976 22.5% 19.4% 39.3% 18.5% 28.5% 35.0% 28.0% 76,686 48,004 34,556 94,155 10,239 43,274 100.0% 100.0% 150,725 404,125 10,755,452 10,817,238 0 0 2018 2018 2017 2017 4,520 4,462 84,758 30,725 65,775 15,902 97,381 20,852 123,958 104,358 183,325 500,919 471,861 286,850 2,429,891 2,103,021 4,248,956 2,004,645 3,077,854 3,788,419 3,029,098 11,301,338 11,342,554 10,817,238 10,817,238 % % 0.6% 0.6% 0.4% 4.6% 2.6% 1.1% 20.7% 17.5% 45.4% 15.8% 27.3% 31.8% 31.7% 100.0% 100.0% 2018 2018 70,940 42,008 69,179 516,734 299,043 119,474 2,346,619 1,989,222 5,150,952 1,786,583 3,093,603 3,604,962 3,595,792 11,342,554 11,342,554 Operating revenues Operating Other current liabilities Other current – – Accrued holiday pay holiday Accrued with customers contracts from goods and services - revenues Sale of revenues operating Total KRW CAD revenues operating Total Group revenues by geographic market: by geographic revenues Group Derivatives loss-making sales contracts for Provisions Compensation revenues Leasing Asia Canada USA/ Norway excl. Europe, Norway Other by currency: revenues The Group's NOK JPY GBP USD EUR SEK Note 23 Note NOK 1,000 revenues Operating NOK 1,000 22 Note comprise: liabilities Other current Provisions for future maintenance future for Provisions and provisions Other accrued costs liabilities current other TOTAL subsidiaries of Gains on exit Other operating revenues Other operating Total operating revenues operating Total See also Note 3 for details of operating revenues associated with the Group’s business segments. with the Group’s associated revenues operating of details 3 for See also Note 94 SALMAR ANNUAL REPORT 2018 severance pay. CEO Trond Williksenstood down on10 April2018.Hewaspaidhissalaryduring6months’ periodof notice, plus6months’ Severence pay for former CEO **** Stood down 31 May 2018 *** Joinedgroup management 4 June2018 ** Stood down 10 April2018 * Took upposition10 April2018 Tom Aleksandersen,Director, Organisation, HSE&Quality**** Roger Bekken, Director, Farming*** Ulrik Steinvik, Director, BusinessSupport,Finance&Strategy Gustav Witzøe,Director, Strategic Projects Frode Arntsen, Director, Processing andSales Trond Tuvstein, CFO Trond Williksen, CEO** Olav-Andreas Ervik, CEO* Senior executives 2018 NOK 1,000 Payroll costs Note 24 NOK 1,000 The remuneration (excl. VAT) paidto theGroup's auditor breaks down asfollows: Auditor: No. of full-timeequivalents employed duringthefinancial year. Total Other benefits Options Pension costs (seeNote 19) Employers' national insurance contributions Salaries, incl.holiday pay andbonuses Total Refunded expenditures Other services Tax advisoryservices Other certification services Statutory auditingservices The SalMarGroup hasamanagement team comprising theCEO, CFO andtheleadersof thelargest businessareas. Remuneration paidto seniorexecutives andmembersof theboard: No loanshave beengranted to any of theGroup’s seniorexecutives. Employees Loans andsureties granted to employees NOK 1,000 – Payroll costs, no.of employees, remunerations, loansto employees, etc Salary 1,352 1,804 1,809 1,070 2,148 2,235 4,400 2,731 Bonus 1,000 634 494 274 593 634 869 0 Benefits- in-kind 145 10 46 3 9 9 8 0 1,040,438 pension costs 865,811 1,479,0 24,697 39,707 44,430 65,793 Periodised 1,712 Loans 1,229 2018 2018 171 141 108 766 63 41 48 68 53 51 74 90 75 exercised 929,100 791,034 Sureties 1,427,0 19,247 28,515 33,383 56,920 1,852 1,829 1,800 2,223 2,434 1,334 2017 2017 RSUs 686 107 145 187 78 0 0 0 0 Passion for Salmon 95 0 0 0 50 54 50 200 263 143 108 160 118 100 104 667 345 712 RSUs 2017 1,492 1,310 1,351 1,234 exercised 0 60 67 50 60 66 149 Directors fees 2017 fees Directors Periodised Periodised 0 0 0 0 0 pension costs 400 285 263 215 108 108 108 758 7 9 5 1 9 9 9 2018 1,927 in-kind Benefits- 0 614 624 264 484 584 Directors fees 2018 fees Directors 1,000 Bonus 154 2,176 2,798 2,191 1,011 1,774 2,231 Salary NOK 1,000 Atle Eide, Chair with effect from the 2017 AGM from Eide, Chair with effect Atle * Kjell A. Storeide Helge Moen ** Hauge Margrethe Danielsen Trine Bjørn Flatgård, Chair up until the 2017 AGM Chair up until Bjørn Flatgård, Witzøe Gustav *** Nedreberg Tove Rathe Bente representative employee Geir Berg, representative Brit Elin Soleng, employee representative employee Sandberg, Gisvold Merete (2017: NOK 55,000). Committee the Audit as chair of NOK 70,000 in remuneration includes * The fee (2017: NOK 22,500). Committee the Audit as a member of NOK 47,500 in remuneration includes ** The fee 2017. for Committee the Audit as a member of NOK 17,500 in remuneration includes *** The fee performance-related. not are fees Directors’ NOK 1,000 directors of Board 2017 Senior executives Geir Berg Brit Elin Soleng members of the board of directors, including directors’ fees as stated above and redeemed RSUs, is as follows: RSUs, and redeemed above as stated fees including directors’ directors, of the board members of NOK 1,000 Directors’ fees payable to employee representatives are stated above. Total remuneration from the Group to employee-elected employee-elected to the Group from remuneration Total above. stated are representatives employee to payable fees Directors’ Olav-Andreas Ervik, CEO * Ervik, Olav-Andreas Trond Williksen, CEO ** Williksen, Trond Trond Tuvstein, CFO Tuvstein, Trond Frode Arntsen, Director, Processing and Sales *** Sales and Processing Director, Arntsen, Frode Gustav Witzøe, Director, Strategic Projects **** Projects Strategic Witzøe, Director, Gustav Ulrik Steinvik, Director, Business Support, Director, Ulrik Steinvik, ***** Finance & Strategy Tom Aleksandersen, Director, Organisation, HSE & Quality Organisation, Aleksandersen, Director, Tom * Took up position 10 April 2018 * Took 10 April 2018 down ** Stood up position 1 December 2017 *** Took 1 December 2017 from with effect Projects Strategic Director to Business Development Director from **** Went 2017 August from effect with ***** Joined gorup management 96 SALMAR ANNUAL REPORT 2018 The award for 2018wasformally carriedouton21 January2019,at whichtimeatotal of 128,019 RSUswere awarded. * Theaward for 2017wasformally carriedouton15 January2018,at whichtimeatotal of 240,863RSUswere awarded. As at 31Dec Dividend adjustment Lapsed duringtheyear dueto performance criteria not beingmet Lapsed duringtheyear Vested duringtheyear Awarded duringtheyear * As at 1Jan Movements intheno.of outstanding RSUs: - - - rests onthefollowing performance criteria: share. Theaward of RSUsineachof thethree accrualperiods in theplan. One RSUaffords a contingent entitlement to one years. Each accrual period covers 1/3 of the total annual RSUs accrual periodsof, respectively, one,two andthree calendar to the employee free of charge. The plan comprises three defined performance criteria. Theshares are thentransferred as shares to participants after anaccrualperiodsubjectto pre (RSUs) free of charge. These will be released and transferred Participants of theplanare granted Restricted Share Units existing holdingof treasury shares. The company’s liabilitiesundertheplanwillbecovered byits take partintheprogramme intheircapacityasanemployee. with theexception of employee representatives, whomay RSUs. Thecompany’s board membersdonot receive options, on 21 January2019andencompassed atotal of 128,019 must beaddedtheaward for 2018,whichformally took place up to 216,538shares, andhasaterm of three years. To this subsidiaries. Asat 31 December2018,theplanencompasses executives andkey personnelemployed bythecompany andits based incentive scheme(Restricted Share UnitPlan)for senior AGM, SalMarASA’s board of directors has introduced ashare- In accordance with the authorisation granted by the company’s Restricted Share UnitPlan(RSU): Note 25 Model employed Option's lifespan Risk-free interest rate (%) Expected volatility (%) Expected yield(%) Weighted average fairvalue ondate of award Share priceondate of award Date of award The calculation of the year's award wasbased onthefollowing parameters : 1/3 of the RSUs will vest provided that SalMar achieves of comparable companies duringtheaccrualperiod. a highertotal shareholder return (TSR)thanadefinedgroup listed ontheOsloStock Exchange duringtheaccrualperiod. a better EBIT/kgratio thanother aquaculture enterprises criteria. 1/3 of theRSUswillvest provided that SalMar’s shares deliver 1/3 of theRSUswillvest irrespective of theperformance – Share-based incentives - terms iscalculated onthebasisof aMonte-Carlo simulation. The fairvalue of theRSUentitlements that are at market 2019, theshare pricewasNOK431.10(2017: NOK225.80). be redeemed. Whenthe2018award wasmadeon21 January into account when assessing how many RSU entitlements will The probability of theperformance criteria being met istaken terms is set as the share price on the date the award was made. The fairvalue of theRSUentitlements that are not at market to theextent that theperformance criteria are met. scheme have alsobeenmade.Theexpense willbecome real for employer’s national insurance contributions linked to the with theschemein2018(2017:NOK28,515,000).Provisions NOK 39,707,000wascharged to expenses inconnection The cost isperiodisedover theaccrualperiod,andatotal of calculated to beNOK92,678,300(2017:58,547,900). they are awarded. Thetotal fairvalue for theentitlements is The fairvalue of RSUentitlements iscalculated onthedate 100% of theparticipant’s basic salary. RSUs duringthecourse of onecalendaryear may not exceed is still anemployee of theGroup. Thetotal gainsfrom released individual employee. The value of theRSUsistreated asasalarypayment to the share at thetimeRSUswere exercised wasNOK257,32. In 2017,229,446RSUswere exercised. Themarket priceper share at thetimeRSUswere exercised wasNOK492.21. In 2018,193,919RSUswere exercised. Themarket priceper RSU entitlement isworth NOK448.17(2017:225,75). accrual period.BasedontheMonte-Carlo simulation, each the award, volatility, risk-free interest, expected dividendand of these RSU entitlements are the share price on the date of The most important inputdata whencalculating thevalue The planstipulates that RSUswillvest onlyiftheparticipant Monte Carlo&Black-Scholes 15.1.2018 -193,919 216,538 240,863 237,228 -20,778 -72,873 31.02% 26,017 207,11 448,00 0.63% 2018 2018 1,88 0% -229,446 237,228 529,470 -57,029 -33,081 27,314 2017 - Passion for Salmon 97 - - - - 2017 2,017 8,303 4,824 5,996 5,171 5,709 31.12 71,688 66,072 66,097 105,059 266,520 243,061 672,145 331,411 237,228 Holding 1,584,825 - - - - due to due to Lapsed -10,462 -10,396 resignation resignation from position from - - - - - 2018 2018 -509 -346 76,218 61,826 77,344 77,368 due to due to -1,008 -1,115 312,657 170,942 681,094 527,126 216,538 Lapsed 1,768,036 being met criteria not criteria not performance performance - - 564 567 474 234 402 Dividend adjustment 0 0 -4,957 -4,527 -3,665 -1,396 -3,715 Vested - - - 3,479 2,092 2,377 2,435 Vesting period Vesting Awarded 2016–18 2015–18 2016–19 2018–19 2018–20 9,726 9,792 8,210 3,956 6,933 01.01 10,462 10,396 Holding Operating expenses Operating – Olav-Andreas Ervik, CEO ** Olav-Andreas Trond Williksen, CEO *** Trond Trond Tuvstein, CFO Tuvstein, Trond Tom Aleksandersen, Director, Aleksandersen, Director, Tom **** HSE & Quality Org. Ulrik Steinvik, Director, Bus. Director, Ulrik Steinvik, Support, Fin. & Strategy Frode Arntsen, Director, Director, Arntsen, Frode Sales & Processing Roger Bekken, Director, Director, Bekken, Roger Fish Farming ***** 16.12.2016 Maintenance & consumables equipment Operating input factors Direct costs & delivery Freight expenses Other operating Total to relating expenses of the reclassification to is attributable expenses operating in other the increase portion of A material rec- is cost 2018, the leasing from effect COGS. With of classified as part In 2017, these were and service boats. wellboats expenses. operating ognised in other R&D expenses: 21.12.2015 16.12.2016 Specification of other operating expenses: other operating of Specification NOK 1,000 Note 26 Note 15.1.2018 15.1.2018 31 Dec RSUs as at Outstanding 42,652 in 2020 and 42,737 in 2021. in 2019, RSUs will vest carried out on 21 January 2019, 42,630 the 2018 award For RSU entitlements: holdings of the following have management Group Vesting period for the outstanding RSUs at the close of the year: the close of RSUs at the outstanding period for Vesting awarded Date sea farm project (Smart Fish Farm). See Note 4 for further details. Other R&D costs are not deemed to meet the criteria for for the criteria meet deemed to not are Other R&D costs further details. 4 for (Smart Fish Farm). See Note sea farm project in expenses was recognised costs R&D in NOK 73,234,000 2018, In expenses. in recognised therefore are and capitalisation (2017: NOK 93,669,000). R&D expenses include costs relating to research and administrative personnel, technical plant and equipment, as well as as as well and equipment, plant personnel, technical and administrative research to relating include costs R&D expenses R&D services. external ocean-going new the Group’s for been met have deemed to are R&D expenses of capitalisation the for The requirements * The 2018 award was formally carried out on 21 January 2019 was formally * The 2018 award up position 10 April 2018 ** Took 10 April 2018 down *** Stood 2018 2 March down **** Stood 4 June 2018 management ***** Joined group 98 SALMAR ANNUAL REPORT 2018 In addition,dividendhasbeenreceived from associates. SeeNote 9for furtherdetails. Transactions between theGroup andrelated partiesare undertaken at market terms andconditions. Companies controlled byGustav Witzøeandrelated parties Associates of theparent company Kverva AS Companies controlled bytheparent company Kverva AS Associates of theSalMarGroup Transactions withrelated partiesin2017: Companies controlled byGustav Witzøeandrelated parties Associates of theparent company Kverva AS Companies controlled bytheparent company Kverva AS Associates of theSalMarGroup Transactions withrelated partiesin2018: See Note 18for furtherdetails. SalMar ASA. Theultimate parent company isKvarv AS, whichprepares itsown consolidated accounts inaccordance withNGAAP. The Group’s parent company isSalMarASA. Theoverall parent company isKverva AS, whichowns 52.46%of theshares in Note 29 Diluted Basic Earnings pershare Average no.of diluted shares outstanding through theyear Diluting effect of RSUentitlements granted (seeNote 25) Average no.of shares outstanding through theyear Effect of treasury shares allocated to employees (seeNote 25) Effect of share issue Average no.of shares outstanding asat 1Jan Net profit for the year (controlling interest's share) NOK 1000 Note 28 construction of theOceanFarminstallation. TheGroup received nosuchgrants in2018. In 2017, an investment grant totalling NOK 24.5 million was received from Innovation Norway in 2016, in connection with In 2018,Group companies took to income NOK12,926,000inSkatteFUNN contributions (2017:NOK16,196,000). Note 27 – – – Related parties/individualtransactions Earnings pershare Government grants 1,017,860 861,190 12,866 87,083 Sales Sales 44 0 0 0 Purchases Purchases 112,935,270 112,577,397 112,545,077 292,644 69,867 15,630 32,258 3,568,413 7,051 7,556 7,109 357,873 193,919 31 31,60 31,70 2018 Receivables Receivables - 115,754 106,492 15,266 229 44 0 0 0 112,674,975 112,334,752 112,315,631 2,273,983 Liabilities Liabilities 340,223 229,446 11,777 4,658 2,002 20,18 20,24 2017 465 490 330 0 0 - Passion for Salmon 99 - 4,594 20,486 64,390 331,985 613,999 525,285 179,777 793,775 179,777 -613,999 -669,997 -155,342 -301,596 -136,702 Fair value the Group 1,110,672 1,463,772 recognised by recognised Cost price initially Cost ------41.95% 12.28% 54.23% 889,194 711,355 -177,839 fair value Shareholding Adjustment to to Adjustment 4,594 20,486 64,390 22,496 331,985 221,479 525,285 752,417 -301,596 -136,702 3,268,670 Book value 11,163,611 14,432,281 No. of shares No. of Arnarlax is Iceland’s largest salmon farmer and is situated in farmer and is situated salmon largest Arnarlax is Iceland’s the country’s Westfjords district. The company was established was established The company district. Westfjords the country’s fish in 2016. The its first harvested in Iceland in 2009 and with farming enterprise, salmon is a fully integrated company plant harvesting wellboat, sea farms, smolt facility, its own repre transaction the Strategically, organisation. sales and further to aims which SalMar, for step next a natural sents in the coming Arnarlax and salmon farming in Iceland develop which shares, the for SalMar paid NOK 179,777,000 years. allocation provisional A per share. NOK 55.00 to corresponds below. is presented the consideration of the share agreement, with the shareholders’ In accordance non- the remaining to offer triggers a mandatory purchase are The shareholders in Arnarlax AS. shareholders controlling period offer The per share. NOK 55.78 of a price being offered ends on 10 April 2019. Events after the balance sheet date sheet the balance after Events – Fair value of shareholding before before shareholding of Fair value was obtained influence controlling interests Non-controlling Cash consideration in 2019 in associates Investment Limited Fish Private Yu a significant obtained Fish and thereby in Yu the shares of 45.30 per cent of the purchase agreed In January 2019, the Group products. to sell seafood and its object is in Singapore Yu Fish is located company. the over influence equity totalled the company’s the transaction, of On the date the shares. NOK 24,009,000 was paid for on of A consideration NOK 47,289,000. For accounting purposes, the investment will be treated as an associate in accordance with the equity method. equity the with accordance in as an associate treated be will investment purposes, the accounting For NOK 47,289,000. Property, plant & equipment plant Property, assets Other non-current liabilities Other non-current liabilities Current and liabilities assets identifiable Net NOK 1,000 NOK 613,999,000, and a gain of NOK 273,373,000 will be NOK 273,373,000 NOK 613,999,000, and a gain of in 2019. in revenue recognised of 54.23 per cent SalMar owns the transaction, Following - transac purposes, the accounting For in Arnarlax. the shares from with effect as a business transfer tion will be treated is EUR. functional currency 1 February 2019. The company’s in Arnarlax shareholding the existing of Fair value influence was obtained controlling before in the transaction shares for Cash consideration carried out on 14 February 2019 Licences Biological assets assets Other current Cash & cash equivalents tax assets/liabilities Deferred share purchase, the investment was classified as an associ- was classified the investment purchase, share in an associate classified as remained The investment ate. on which the date up until with the equity method accordance the entire date, On that was achieved. interest a controlling realised been have to in Arnarlax was deemed shareholding on the investment of fair value The price set. cost and a new was was obtained influence on which a controlling the date February 2019, the Group agreed the purchase of of the purchase agreed Group On 14 February 2019, the 12.28 to This corresponds in Arnarlax AS. 3,268,670 shares this transaction, Before shares. the company’s of per cent in Arnarlax and the shares of 41.95 per cent SalMar owned this until Up company. the over influence significant a had 30 Note in 2019 businesses of Acquisition Arnarlax AS Fair value of the Group's holding of shares in Arnarlax shares holding of the Group's of Fair value influence was obtained when controlling on the date the acquisition NOK 1,000 of in the balance sheet Effect 100 SALMAR ANNUAL REPORT 2018 No changeshave beenmadeintheclassification andmeasurement of theGroup’s financial liabilities. Total Bank deposits,cash&equivalents Trade andother receivables Loans andreceivables Unlisted equityinstruments Available for sale Classification IAS 39 31.12.2017 The effect of implementation of IFRS9ispresented inthe following table: ments for 2018. has beenmet inthenotes to the consolidated financial state enue recognition. Therequirement for additionaldisclosures The standard hashadnomaterial impactontheGroup’s rev- retrospective method. statements. TheGroup implemented IFRS15usingthefull requires extensive disclosures inthenotes to thefinancial fulfil said contract must recognised. Inaddition,the standard winning acontract andtheexpenses anenterprise incursto The standard also specifies how marginal costs relating to contracts are assessed in the various stages of the model. account of allrelevant factsandcircumstances whencustomer IFRS 15requires enterprises to usetheirdiscretion andtake to thecustomer. pects to receive inreturn for thetransfer of agoodorservice an amount that reflects the consideration theenterprise ex- with customers and requires that revenues are recognised at model for therecognition of revenue derivingfrom contracts from contracts withcustomers. IFRS15establishes a5-stage Revenue. Itapplies,withfew exceptions, to allrevenue deriving IFRS 15replaces IAS 11Construction Contracts andIAS 18 IFRS 15Revenue from Contracts withCustomers statements for 2018. sures beingincludedinthenotes to theconsolidated financial Both standards have, however, resulted in additional disclo recognition of revenue andprofit andloss,orclassifications. Neither standard hashadany material impactontheGroup’s tracts withCustomers cameinto effect on1 January2018. IFRS 9 Financial Instruments and IFRS 15 Revenue from Con- have come into effect New andamendedstandards andinterpretations that Note 31 – New andamendedaccounting standards - - Trade receivables andcash& equivalents: -Theinstru- tion of IFRS9: Group’s financialassets in connection withtheimplementa- following changes have been made in the classification of the under IAS 39are alsomeasured at fairvalue underIFRS9.The The Group’s financialassets that were measured at fair value certain dates. represent thepayment of interest andprincipalamounts on and those where contractually determined cash flows simply both receive contractually determined cash flows and for sale, a distinction between instruments heldinabusinessmodelto income (OCI)andamortisedcost. Theclassification isbasedon fair value withchangesinvalue through other comprehensive egories: fair value with changes in value through profit and loss, Under IFRS9,financialassets must beclassifiedinthree cat- Classification andmeasurement the periodstarting 1 January2017. accounting. TheGroup hasprepared comparable figures for and measurement, lossprovisions, derecognition andhedge 1 January 2018.IFRS9dealswithrecognition, classification struments: Recognition andMeasurement, andappliesfrom IFRS 9FinancialInstruments replaces IAS 39FinancialIn nised inprofit andlossinprevious periods. losses associated with these investments have been recog- investments willberetained for theforeseeable future. No investments in this category because it is expected that these income (OCI).TheGroup haselected to classifyunlisted equity fair value withchangesinvalue through other comprehensive but are now classified and measured as equity instruments at were previously classified as financialassets available forsale, Equity investments inunlisted companies: -Theinstruments ments at amortisedcost underIFRS9. certain dates. The instruments are classifiedasdebt instru- comprising the payment of interest and principal amounts on are held to receive contractually determined cash flows solely ments were previously classified as loans and receivables, and IFRS 9FinancialInstruments Amortised cost 914,659 177,098 737,561 Classification IFRS9 Fair value through OCI 22,034 21,641 393 - Passion for Salmon 101 - 0 2019 1,908 1,677 -9,529 -5,944 20,329 131,628 133,536 349,008 -369,337 At 1.1.2019 At In those cases where the Group has entered into complex complex into entered has Group the where In those cases in order is split off the service element leasing agreements, This applies asset. right-to-use the of the value calculate to and ser wellboats to relating leasing agreements primarily to included are elements cost and other crew where vice boats price market the estimated where and amount, in the leasing is split off. the service element for be will liability leasing the implementation, of date the On with the leasing payments of value the present at measured In the calculation, lending rate. marginal the Group’s the help of is used. 3 per cent of rate an interest 1 January 2019, and from with effect IFRS 16 is compulsory retrospective apply the modified to has elected the Group simplification, the opportunity for itself of avail and to method the equal to is set asset the right-to-use of the value whereby leasing liability. calculated on effects the following IFRS 16 will have that It is expected date: its implementation NOK 1000 PP&E of Deprecition expenses) operating (included in other costs Leasing EBIT Operational expense Interest expense Tax year for the profit/loss Net as those of short duration (a term of less than 12 months). For For less than 12 months). of (a term short duration as those of periodically is recognised cost leasing the agreements, these and loss. in profit NOK 1000 Assets assets) (right-to-use property real Land, buildings and other assets) (right-to-use transport means of and other vehicles Vessels, Liabilities liabilities Leasing on equity effect Net disclosures relating to leasing agreements for both parties parties both for leasing agreements to relating disclosures (lessor). (lessee) and the provider ie the customer thereto, assets recognise to lessee the requires standard new The which leasing agreements, of the majority and liabilities for is exception An principles. today’s change from a material is as well immaterial, considered leasing agreements made for which had not come into effect by that date are listed below. below. listed are date by that effect into come not had which the consolidated affect it is assumed may that Only standards mentioned. are statements financial - IFRS stand existing the replaces Contracts Leasing IFRS 16 out IFRS 16 sets 17 Leases. IAS agreements, leasing for ard and presentation measurement, recognition, principles for Standards, amendments and interpretations of existing existing of and interpretations amendments Standards, effect into come yet not have that standards the prior to adopted were that and Interpretations Standards but statements financial the consolidated of presentation 102 SALMAR ANNUAL REPORT 2018 FINANCIAL ACCOUNTS SalMar ASA 2018 Passion for Salmon

103 104 SALMAR ANNUAL REPORT 2018 TOTAL allocations Transferred to/from other equity Dividend provisions ALLOCATIONS NET PROFIT/LOSS FOR THEYEAR Profit/loss after tax Tax Ordinary profit/loss before tax Net financialitems Other financial expenses Other interest expenses Interest paidto group companies Other interest income Interest received from group companies Income from investment inassociates Income from investment insubsidiaries FINANCIAL INCOME ANDFINANCIAL EXPENSES Operating profit/loss Total operating expenses Other operating expenses Depreciation of property, plant &equipment Salary andpayroll costs Total operating revenues Sales revenues OPERATING REVENUES ANDOPERATING EXPENSES NOK 1000 Income Statement

NOTE 8, 9 12 -257 9 6 5 3 4 3 2

2,747,562 2,747,562 2,747,562 2,747,304 2,797,224 2,592,997 2,527,856 138,844 110,860 154,565 242,200 -49,920 88,924 49,827 31,714 71,038 62,545 88,924 2,424 5,260 2018 273 2,395,174 2,395,174 2,395,174 3,046,553 3,096,269 2,138,356 2,920,595 134,805 651,379 256,818 161,015 -49,716 85,089 41,942 23,051 86,008 78,169 52,134 85,089 9,468 3,111 4,501 2017 Passion for Salmon 105

38 113 728 728 2017 9,846 9,857 8,497 2,253 46,992 10,750 406,180 2,891,002 2,102,019 3,133,596 5,688,901 5,700,379 2,900,886 2,910,743 8,611,122

88 426 113 2018 8,581 2,279 1,675 1,675 14,648 12,393 10,860 565,344 2,758,955 2,063,730 3,163,772 5,793,047 5,805,582 2,774,029 2,786,422 8,592,004

7 6 4 4 14 14 16 12 14 5, 14 NOTE 11,14 7, 11, 14

NOK 1,000 Balance Sheet Balance Consolidated 31 December as at ASSETS financial assets non-current Total assets non-current Total ASSETS CURRENT RECEIVABLES receivables Trade companies group from receivables Short-term Other receivables receivables Total Bank deposits, cash & cash equivalents assets current Total ASSETS TOTAL Investments in shares and other securities and other in shares Investments Other receivables ASSETS FINANCIAL NON-CURRENT in subsidiaries Investments companies group to Loans in associates Investments & equipment plant property, Total consumables and operating equipment Plant, & EQUIPMENT PLANT PROPERTY, property real Land, buildings and other NON-CURRENT ASSETS ASSETS NON-CURRENT ASSETS INTANGIBLE tax assets Deferred assets intangible Total 106 SALMAR ANNUAL REPORT 2018 Trondheim, 10 April2019 Share capital PAID-IN EQUITY EQUITY Treasury shares Share premium fund TOTAL EQUITYANDLIABILITIES Total liabilities Total current liabilities Other current liabilities Short-term payables to group companies Public charges payable Dividend Tax payable Trade payables Debt to credit institutions CURRENT LIABILITIES Total other non-current liabilities Debt to credit institutions OTHER NON-CURRENT LIABILITIES LIABILITIES Total equity Total retained earnings Other equity RETAINED EARNINGS Total paid-inequity Other paid-inequity EQUITY ANDLIABILITIES as at 31 December Consolidated BalanceSheet Trine L.Danielsen Board member Atle S.Eide Chair NOK 1,000

Employee representative Kjell A.Storeide Brit ElinSoleng Vice-Chair Employee representative 13,14 13,14 NOTE 2018 Board member Helge K.Moen 8, 9 8, 9 11 12 Geir Berg 9 9 9 9 9

8,592,004 6,033,964 4,933,964 1,100,000 2,558,040 1,967,257 2,023,597 2,592,997 1,100,000 1,967,257 590,783 415,285 223,659 147,312 28,325 10,195 81,675 1,841 -140 0 Olav-Andreas Ervik Margrethe Hauge Board member 8,611,122 6,247,872 5,547,872 2,363,250 1,812,693 2,550,856 2,138,356 1,812,693 CEO 700,000 550,557 415,285 657,529 700,000 107,136 28,325 97,575 93,679 7,508 2,369 2017 -189 Passion for Salmon 107

0 0 0 230 176 2017 8,162 1,694 9,856 5,206 9,857 -2,175 55,038 51,059 -56,612 -20,872 954,932 161,015 -161,015 3,906,321 1,451,313 3,046,553 2,565,315 -1,347,788 -1,250,000 -2,920,595 -2,542,749

0 0 0 2018 9,857 2,536 5,492 5,260 4,501 -5,370 -9,554 12,393 -12,004 400,000 242,200 124,162 -468,847 -119,433 -121,847 -242,200 -657,699 -676,936 3,387,516 2,781,284 2,747,304 2,429,834 -2,138,356 -2,527,856 -1,750,361

4 6 6 6 3 5 4 11 12 5,11 NOTE NOTE

NOK 1,000 Bank deposits, cash & cash equivalents as at 31 Dec as at Bank deposits, cash & cash equivalents rights Unused drawing Bank deposits, cash & cash equivalents as at 1 Jan as at Bank deposits, cash & cash equivalents in bank deposits, cash & cash equivalents change Net Net cash flow from financing activities from cash flow Net in overdraft change Net Dividend (paid) Innbetaling ved opptak av langsiktig gjeld av opptak ved Innbetaling debt long-term of Repayment FINANCING ACTIVITIES FROM FLOW CASH & equipment plant property, of the purchase for Payments balances Change in intra-group subsidiaries and dividends from contributions group of receipts Net investments and other associates dividends from of Receipts companies and associated in subsidiaries on investments payments Net activities investing from cash flow Net & equipment plant property, sale of the from Receipts ACTIVITIES INVESTING FROM FLOW CASH Net cash flow from operating activities operating from cash flow Net items time-limited Change in other payables Change in trade in associates investments from Income in expenses recognised Options receivables Change in trade in subsidiaries investments from Income Statement of Cash Flow of Statement Consolidated 31 December as at ACTIVITIES: OPERATING FROM FLOW CASH tax before profit Ordinary paid during the period Tax Depreciation assets non-current on disposal of Loss 108 SALMAR ANNUAL REPORT 2018 FINANCIAL STATEMENTS ASA 2018 SalMar ASA NOTES TO THE Passion for Salmon 109 NOTES TO THE TO NOTES ASASalMar 2018 FINANCIAL STATEMENTS FINANCIAL 110 SALMAR ANNUAL REPORT 2018 receivable. determined onthebasisof anassessment of theindividual less provisions for baddebts. Provisions for baddebts are Trade receivables and other receivables are recognised at par Receivables and other salescosts. revenues are recognised less public charges, discounts, bonuses Services are taken to income asthey are performed. Operating Revenues Other non-current liabilities are valued at par. fair value. Current assets are valued at thelower of acquisitioncost and sets withalimited economic life are depreciated systematically. asset iswritten down to its recoverable value. Non-current as value, and the impairment is not expected to be temporary, the erable portionof thenon-current asset islower thanitsbook Non-current assets are valued at acquisitioncost. Iftherecov is basedonthesamecriteria. cycle. The classification of current and non-current liabilities within oneyear, aswell asitems associated withtheproduction assets and normally include items falling due for payment as non-current assets. Otherassets are classifiedascurrent Assets intended for permanent ownership oruseare classified Liquidity isdefinedascashandbankdeposits. Classification and valuation of balancesheet items takes place. estimates are recognised intheperiodwhichchange may deviate from these estimates. Changes in accounting Estimates are assessedcontinually, andfinal values and results liabilities where thevaluation isnot basedonother sources. made. Theseassessments affect thebookvalue of assets and to be relevant andprobable at thetimeassessment is on historic experience andother factors whichare deemed date. Estimates andtheirunderlyingassumptions are based relating to uncertainassets andliabilitiesonthebalancesheet and expenses for thefinancial year, as well asinformation value of assets andliabilitiesinthebalancesheet, revenues affect theapplication of accounting principles,therecognised agement make assessments, estimates andassumptions that generally accepted accounting principlesrequires that man- Preparation of thefinancial statements inaccordance with Use of estimates along withtheGroup’s consolidated financial statements. SalMar ASA. Notes relating to theSalMarGroup are presented principles describedbelow applyonly to theparent company accepted accounting principles in Norway. The accounting with the Norwegian Accounting Act of 1998 and generally The financial statements have beenprepared inaccordance Note 1 – Accounting principles - - acquisition cost unlessawrite-down hasbeen necessary. of thevoting capital.Investments are valued at theshares’ deemed to exist when thecompany owns 20–50 per cent has aconsiderable influence. Considerable influenceisnormally of thevoting capital.Associates are companies inwhichSalMar company’s direct orindirect shareholding exceeds 50percent principle, acontrolling influenceisdeemed to exist whenthe ling influence,asa result of eitherlegaloractual control. In Subsidiaries are companies inwhichSalMarASA hasacontrol current assets are valued inaccordance withthecost method. Subsidiaries, associates andother shares classifiedasnon- Shares value of future cashflows whichtheasset willgenerate. of net salesvalue andvalue inuse.Value inuseisthepresent down to itsrecoverable value. Recoverable value isthehigher equipment islower thanitsbookvalue, theasset iswritten itself. If the recoverable value of an item of property, plant and to theasset’s cost priceanddepreciated inlinewiththeasset they arise, while enhancements or improvements are added plant andequipment are charged to operating expenses as lifespan. Costs directly relating to maintenance of property, affect thenumberof RSUsthat canbeexpected to beearned. market terms. However, vesting terms that are not market terms take account of theimpactof any vesting terms that are not Fair value includes the effect of any market terms, but does not are expected to accrue. time theRSUswere granted, andthenumberof RSUswhich vesting periodisdetermined onthebasisof fair value at the paid-in equity. The total amount charged to expenses over the recognised asanexpense, withacorresponding increase in rendered by the employees in return for the RSUs awarded is for equityinstruments (RSUs).The fair value of theservices the company receives servicesfrom theemployees inreturn The company hasshare-based incentive schemes,underwhich – RSU) Share-based remuneration (Restricted Share UnitPlan this annualpayment. arise, and the Group has no other liabilities over and above scheme. Pension premiums are charged to expenses as they The company hasadefined-contribution occupational pension Pensions the value of theinvestment inthebalancesheet. ment of invested capital,andthepayouts are deducted from loss after acquisition, the surplus amount represents a repay- income. Ifthedividendexceeds theshare of withheldprofit/ Dividend andother payouts are recognised asother financial write-down nolonger applies. principles. Write-downs are reversed whenthereason for the nature andare required undergenerally accepted accounting is dueto reasons that are not deemedto beof atemporary Write-downs to fairvalue are performed whentheimpairment toric cost priceandare depreciated over theasset’s expected Items of property, plant andequipment are capitalisedat his- Property, plant &equipment - Passion for Salmon 111 33 247 2017 2017 4,941 1,111 5,206 4,936 84,842 35,940 52,134 85,089 32 774 2018 2018 6,597 1,447 5,492 7,762 88,150 41,247 62,545 88,924 the rate of 22 per cent on the temporary differences between between differences on the temporary cent 22 per of rate the forward as tax losses carried as well and tax values, accounting tax liabilities and Deferred year. the financial the end of at sheet. in the balance net presented are assets tax deferred cash flow of Statement of a breakdown shows cash flow of statement The company’s and financing investing by operating, flow cash the company’s impact the individual activity’s shows activity. The statement up in has been drawn cash flow of on liquidity. The statement method. the indirect with accordance Payroll costs, no. of employees, remuneration, employee loans, etc employee remuneration, employees, no. of costs, Payroll Sales revenues – – No. of people employed (full-time equivalents) during the financial year during the financial (full-time equivalents) employed people No. of and the auditor officers senior company paid to Remuneration executives. to senior paid remuneration of the for details statements financial the consolidated 24 to Please see Note Unit Plan (RSU) Share Restricted the 2017 for shares the company’s of 43,424 RSUs in respect awarded formally were On 15 January 2018, 14 employees for 2018 of 34,837 RSUs in 2016. The award total a awarded were employees company 13 Correspondingly, year. financial The fair value accruing each year. with 1/3 3 years, of a period over made on 21 January 2019. The RSUs vest was formally the accrual period. The periodised cost and periodised over the award, of on the date is calculated in SalMar ASA the cost of insurance national employers’ to respect with made been has provision A 5,205,700). NOK (2017: 5,492,400 NOK is 2018 in on the cost. contributions schemes. incentive of the share-based for details statements financial the consolidated 24 to Please see Note NOK 1000 COSTS PAYROLL Note 3 Note Note 2 Note its services to administrative of in the provision primarily engaged is a holding company SalMar ASA company The parent divided between and are area, one business solely from derive revenues company’s the parent subsidiaries. Consequently, as specified below. revenues services and other intra-group from revenues NOK 1000 companies group services to administrative of provision from Revenues Other revenues & bonuses pay Salaries, incl. holiday contributions insurance national Employers’ costs Pension Options/RSUs Other benefits Total relating to equity transactions is recognised in equity. The tax is recognised equity transactions to relating taxable company’s the on (tax payable tax comprises expense and statement), as it appears in the income the year for income at is calculated tax tax. Deferred deferred change in net any in profit and loss, with a corresponding adjustment in equity. in adjustment corresponding a with loss, and profit in is subsidiaries of employees to relating options of The value in subsidiaries. investments to posted Tax Tax tax. before profit/loss against matched is expense tax The The total expense is periodised over the vesting period. On the the vesting is periodised over expense The total for its estimates recalculates company the date, balance sheet The company vest. to expected are that options of the number estimates changes in the original any of the effect recognises Total 112 SALMAR ANNUAL REPORT 2018 Total recognised income from investments in subsidiaries Gains onthesaleof shares insubsidiaries Total recognised dividends from subsidiaries Hitramat FarmingAS SalMar Nord AS Total recognised group contributions from subsidiaries SalMar Nord AS SalMar FarmingAS SalMar FarmingAS Total Refunded expenditures Other services Tax advisoryservices NOK 1000 Company Investments insubsidiariesare recognised inaccordance withthecost method. Note 5 Annual leasingof off-balance sheet operating assets Depreciation plan Economic lifespan Book value 31Dec2018 Acc. depreciation 31Dec2018 Year’s depreciation Acc. depreciation &write-downs 1Jan2018 Acquisition cost 31Dec2018 Additions Acquisition cost 1Jan2018 NOK 1000 Note 4 Other certification services Statutory auditingservices NOK 1000 The fee paidto theauditor, excl. VAT, breaks down asfollows: Auditor SalMar Settefisk AS SalMar FarmingAS SalMar AS SalMar Nord AS SalMar Tunet AS Hitramat FarmingAS Ocean FarmingAS With effect from 1 January2018,SalMarNord AS wasmerged into SalMarFarmingAS. TOTAL subsidiaries Mariculture AS – Subsidiaries – Property, plant &equipment Registered office Stavanger Finnsnes Kverva Kverva Kverva Kverva Kverva Hitra Voting share/ shareholding No dep./3years Real property Straight line 100.0% 100.0% 100.0% 100.0% 100.0% 51.0% 51.0% 93.4% 2,279 4,367 2,450 2,424 171 171 25 0 Operating equipment, Book value 2018 2,063,730 fixtures, etc 1,212,539 Straight line 2,527,856 2,509,180 5–10 years 2,500,000 229,898 519,638 28,785 63,460 18,676 7,400 2,000 18,676 21,537 16,277 30,119 24,774 8,581 9,180 5,345 5,260 2018 2018 2018 506 137 275 51 13 30 36 0 0 0 Book value 2017 2,920,565 2,772,182 2,102,019 1,355,996 1,416,186 1,221,193 148,382 236,125 480,447 10,860 74,850 64,811 21,709 16,448 32,569 27,198 69,729 28,785 58,329 TOTAL 8,721 4,403 5,370 5,260 7,400 2017 2017 2017 329 111 207 30 0 7 5 0 Passion for Salmon 113 0 135 518 Total 2017 equity 46,857 28,325 39,707 243,394 522,614 162,787 406,180 -117,150 3,133,596 2,747,562 2,363,250 2,558,040 -2,592,997 Book value 0 0 0 Profit/loss in last in last Profit/loss Book value 2017 Book value Other year-end finan. stat. finan. year-end equity 0 2,747,562 88 1,812,693 1,967,257 -2,592,997 2018 0 0 402,558 628,279 162,787 3,163,772 -48 565,344 518 1,339,399 0,25 equity 39,707 107,136 147,312 end finan. stat. end finan. Face value Book value 2018 Book value Other paid-in Equity in last year- Equity in last 0 0 0 0 0 0 Share Share 50% 415,285 415,285 41.95% 242,200 premium fund premium 0 0 0 0 shareholding 48 Voting share/ share/ Voting -189 -140 shares Treasury Treasury Recognised dividend Recognised 113,299,999 No. of shares No. of 0 0 0 0 0 Bergen Leirfjord 28,325 28,325 Share capital Share Registered office Registered Share capital and shareholders Share Receivables falling due more than one year hence than one year falling due more Receivables – Equity – – – Associates December 2018, a provision has been made with respect to a dividend payout of NOK 23.00 per share, or NOK NOK or share, per 23.00 NOK of payout dividend a to respect with made been has provision a 2018, December TOTAL associates TOTAL Company NOK 1000 AS Havbruk Norskott Arnarlax AS its has no activity apart from Salmus AS subsidiary Salmus AS. the wholly owned through Arnarlax AS owns SalMar ASA Arnarlax AS. of ownership Arnarlax AS (Salmus AS) Arnarlax AS Norskott Havbruk AS Havbruk Norskott Year’s change in equity: change in Year’s in the period Profit/loss Note 9 Note NOK 1000 As at 31 at As shares. treasury to has been made with respect No dividend provision 2,592,997,000 in total. Note 8 Note capital comprised: share 31 December 2018, the company’s As at NOK 1000 Note 7 Note NOK 1000 Other receivables Company NOK 1000 Note 6 Note method. with the cost in accordance recognised are associates in Investments Loans to employees to Loans companies group to Loans Ordinary shares Ordinary Equity 31 Dec 2017 Dividend provision Please see Note 16 to the consolidated financial statements for details of the largest shareholders and senior executives’ executives’ and senior shareholders of the largest for details statements financial the consolidated 16 to Please see Note shares. company holdings of Dividend Redeemed options Redeemed Option cost recognised in equity recognised cost Option Deferred tax on option cost tax on option Deferred Equity 31 Dec 2018 A share-based incentive scheme has been entered into with senior company executives. Please see Note 3 for further details. further details. 3 for Please see Note executives. with senior company into scheme has been entered incentive A share-based 8. discussed in Note are dividend payouts to with respect Provisions 114 SALMAR ANNUAL REPORT 2018 Other short-term receivables from group companies, whichtotalled NOK2,758,955,000asat 31 December2018,includes Sum Group companies NOK 1000 Sum Group companies ordinary trade payables. 2018 group contributions payable amounted to NOK79,000.Theremaining short-term payables to group companies were in payables to group companies participating inthegroup account scheme (2017: NOK2,521,856,000).Asat 31 December The NOK2,023,597,000inother short-term payables to group companies asat 31 December2018includesNOK2,003,701,000 over andabove thisare ordinary trade receivables. at 31 December2018alsoincludesNOK2,500,000,000individendreceivable from subsidiaries.Othershort-term receivables group contributions receivable intheamount of NOK18,676,000(2017:2,772,182,000). Other short-term receivables as Note 11 1,447,000 wascharged to expenses. Thecorresponding figure in2017wasNOK1,110,800. Premiums underthedefined-contribution schemeare charged to expenses asthey falldue.In2018,thegross amount of NOK The company hasnodefined-benefitspensionschemes. sions Act, andhasapensionscheme that meets therequirements thereof. The company hasastatutory obligation to provide anoccupational pensionschemeundertheCompulsory Occupational Pen- Note 10 NOK 1000 – – Intra-group balances,etc Pension costs 3,163,772 3,163,772 Non-current receivables 2018 2018 0 0 Long-term debt 3,133,596 3,133,596 2017 2017 0 0 Other short-termreceivables 2,023,597 2,758,955 2,023,597 2,758,955 Other short-termpayables 2018 2018 2,550,856 2,891,002 2,550,856 2,891,002 2017 2017 Passion for Salmon 115 Note 12 – Tax

NOK 1000 Breakdown of the year's tax expense 2018 2017 Tax payable 0 657,548 Change in deferred tax -463 -424 Tax provisions (shortfall/excess) in previous years 171 -5,760 Effect of change in tax rate from 23% to 22% 35 15 Tax on ordinary profit/loss -257 651,379

Breakdown of the year's taxable income 2018 2017 Profit/loss before tax 2,747,304 3,046,553 Permanent differences -2,749,317 -308,538 Change in temporary differences 2,012 1,766 Group contributions paid 0 -79 Year's taxable income 0 2,739,703

Tax payable in the balance sheet 2018 2017 Tax payable on the year's profit/loss 0 657,548 Tax on group contributions paid 0 -19 Tax payable in the balance sheet 0 657,529

Breakdown of temporary differences 2018 2017 Operating assets, incl. goodwill -345 1,254 Non-current financial assets 69 125 Profit & loss account 70 88 Other differences -7,405 -4,633 TOTAL temporary differences -7,612 -3,166

Deferred tax liabilities (+) / deferred tax assets (-) -1,675 -728 Deferred tax recognised in equity 518 -397

Reconciliation from nominal to actual tax rate 2018 2017 Profit/loss before tax 2,747,304 3,046,553

Expected tax on income at nominal tax rate 631,880 731,173 Permanent differences (23% / 24%) -632,343 -74,049 Tax provisions (shortfall/excess) 206 -5,745 Estimated tax expense -257 651,379 Effective tax rate 0.0% 21.4%

Note 13 – Debt

Repayment profile In 2014, SalMar entered into a new loan agreement with a 5-year term. The credit facility comprises a NOK 1 billion term loan, which has a 10-year repayment profile, maturing after 5 years. In addition, there is a NOK 2 billion investment and acquisition facility and a NOK 1.5 billion revolving credit facility. These facilities were renewed in February 2018 with a term of 3+1+1 years. The facilities currently mature in February 2022, with an option to mature in 2023. As at 31 December 2018, NOK 500 million had been drawn down on the revolving credit facility.

There is, in addition, an overdraft agreement capped at 500 million, with annual renewal. Interest rates are based on so-called ‘current terms’.

Financial covenants The most important financial covenants for the long-term financing of SalMar ASA are, respectively, a solvency requirement, which stipulates that the Group’s recognised equity ratio shall exceed 35%, and a profitability requirement, which stipulates that the Group’s interest coverage rate (EBITDA/net financial expenses) shall not exceed 4.0.

116 Passion for Salmon 117 38 2017 2017 93,679 10,750 700,000 793,679 2,102,019 6,034,444 8,147,252 426 2018 2018 81,675 10,860 1,100,000 1,181,675 2,063,730 5,937,375 8,012,390 December 2018 includes a total of NOK 10,551,000 in restricted restricted in 10,551,000 NOK of total a includes 2018 December Financial risk Bank deposits Liens, guarantees, etc Liens, guarantees, – – – funds, all of which relate to employees’ PAYE tax deductions. The corresponding figure for 2017 was NOK 7,211,000. figure tax deductions. The corresponding PAYE employees’ to relate which funds, all of Note 16 Note 31 at as equivalents cash and cash deposits, bank item The Note 15 Note of financial and to the management relating for further details statements financial the consolidated 2 to Please see Note exposed. are and the Group which the company risks to market January 2004, and is reduced by NOK 250,000 per year. As at 31 December 2018, As at by NOK 250,000 per year. on 1 January 2004, and is reduced into was entered agreement guarantee NOK 1,250,000. totalled guaranteed amount the remaining Nordskag owes which SalMar AS and all amounts any for Næringspark AS Nordskag to issued a guarantee has SalMar ASA during is valid The guarantee Næringspark AS. and Nordskag SalMar AS between under the leasing agreement Næringspark AS months. plus a further three in the leasing agreement, the leasing period, as stipulated has been guarantee The AS. Norge Billund Aquakulturservice NOK 23,606,000 to totalling a guarantee has issued SalMar ASA construction for the contract of a prime respect in to its creditor liabilities AS’s Stamfiskstasjon Troms issued as security for smolt facility. a new of has been issued as se- The guarantee Kruger Kaldnes AS. NOK 22,728,000 to totalling issued a guarantee has SalMar ASA smolt facility. of a new construction for the contract of a prime respect in to its creditor liabilities SalMar Settefisk’s curity for Under the agreement with its bank, SalMar has assumed a joint and several liability in connection with a group account overdraft overdraft account with a group connection liability in and several bank, SalMar has assumed a joint with its Under the agreement NOK 500 million. to upwards scheme, limited SalMar and NOK 80 million on behalf of SalMar AS NOK 17 million on behalf of totalling issued guarantees has SalMar ASA by SG Finans AS. facility granted a credit to with respect Farming AS for a guarantee and SalMar AS loan to a long-term to with respect NOK 95 million for issued a guarantee has SalMar ASA Norway. by Innovation been granted loans have Both Ocean Farming AS. loan to a long-term to NOK 175 million with respect AS. The SalMar Settefisk on behalf of E-verk Nord-Trøndelag NOK 5 million to totalling issued a guarantee has SalMar ASA 14 Note NOK 1000 liens, etc through secured debt Recognised Short-term debt to credit institutions institutions credit to debt Short-term institutions credit to debt Long-term Total Total debt recognised for pledged as security assets of Book value assets Operating Shares receivables Trade Receivables Receivables Total ORT 2018 REP ORT ANNUAL SALMAR

118 Passion for Salmon 119 CEO Board member Board Margrethe Hauge Margrethe Olav-Andreas Ervik Olav-Andreas December 2018 have been prepared in prepared been have 2018 December Geir Berg Helge K. Moen Board member Board Employee representative Employee January to 31 to January Vice-Chair Brit Elin Soleng Kjell A. Storeide Employee representative Employee Chair Atle S. Eide Atle Board member Board Trine L. Danielsen Trine - in accord been prepared 31 December 2018 have 1 January to for the period from statements financial The Group by the EU. ance with IFRS, as adopted 1 from period the for ASA SalMar of statements financial The accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway. accepted generally and practices standards and accounting Act Accounting with Norwegian accordance liabilities, assets, consolidated Company’s and the of the Group fair view a true and give statements The financial operations. of results financial position and the business of and performance the development of true and fair view a provides Directors of Board of The Report factors risks and uncertainty the key of with a description together Company, and the the Group of and the position is facing. and the Company the Group that Trondheim, 10 April 2019 Trondheim, by the board of directors and CEO directors of by the board Statement that: of our knowledge, to the best confirm, We • • • • ORT 2018 REP ORT ANNUAL SALMAR

120 Passion for Salmon 121 2018 report AUDITOR’S 122 SALMAR ANNUAL REPORT 2018 A member firm of Ernst & Young Global of Limited & firm Ernst A member address the matters below,provide the basis ouraudit for opinion on the financial statements. of the financial statements. The results ofour audit procedures,including the procedures performed to performance procedures of designed respond to our to assessmentof the risks ofmaterial misstatement statements We have fulfilled the responsibilities described the in provided in that context. opinion on these matters.For each matter below,our description ofhow ouraudit addressed the matter is financial statements asand awhole, in forming our opinion thereon,and we do notprovide aseparate audit ofthe financial statements 2018. for These matters were addressed thecontext in of our audit ofthe Key audit matters arethose matters that, ourin professional judgment, were ofmostsignificance in our Key audit matters obtainedhave is sufficient and appropriate to provide a basis our opinion. for other ethical obligations in accordance with these requirements. We believe that the auditevidence we fulfilled ourethical responsibilities as required bylaw and regulations. We have also complied with our the ethical requirements that arerelevant toour audit ofthe financial statements in Norway,and we have statements under those standards are described further the in generally accepted in Norway,including International Standards on Auditing (ISAs). Ourresponsibilities We conducted ouraudit inaccordance with laws,regulations, and auditing standards and practices Basis for opinion In ouropinion, financial statements,including asummary ofsignificant accounting policies. comprehensive income, cash flows and changes equity in for the year then ended and notes the to consolidated financial statements comprise thebalance sheet as31 at December 2018, statements of ended and notes the to financial statements, including a summary ofsignificant accounting policies. The sheet as31 at December 2018, the income statement andof statement cash flows the year for then parentcompany and the Group. The financial statements parent ofthe company comprise thebalance We have audited the financial statements SalMar of ASA comprising the financial statements of the Opinion financial ontheauditof statements the Report To the Annual Shareholders' Meeting ofSalMar ASA INDEPENDENT AUDITOR’SREPORT ► ► ► the EU year then ended accordance in with International Financial Reporting Standards as adopted by of the Group as31 at December 2018 and ofits performancefinancial and its cash flows the for the consolidated financial statements presentfairly, in all material respects the financial position practices generally accepted Norwayin year then ended accordance in with the Norwegian Accounting Actand accounting standards and company as at31 December 2018, and ofits financial performance and its cash flows the for the financial statements present fairly, inall material respects,the financial position ofthe parent the financial statements areprepared in accordance with the law and regulations section ofour report, including relationin to these matters. Accordingly, ouraudit included the section ofour report. We are independent Company ofthe and the Group in accordance with Postboks 1299 Pirsenteret, NO-7462 Trondheim NO-7462 Pirsenteret, 1299 Postboks NO-7010Trondheim 9, Havnegt. Young AS & Ernst revisorer Statsautoriserte Auditor’s responsibilities fortheaudit ofthe financial Auditor’s responsibilities forthe audit ofthe financial Medlemmer av Den norske revisorforening av norske Den Medlemmer www.ey.no Tlf: +47 24 00 24 00 +47 2400 Tlf: MVA 387 389 NO976 Foretaksregisteret: Independent auditor's report - SalMar ASA -SalMar report auditor's Independent cease operations,or has alternative norealistic but to do so. going concern basisaccounting, of unless managementeither intends to liquidate the Company or to continue as agoingconcern, disclosing, as applicable, matters related going to concern and using the In preparing the financial statements, management responsible is assessing for the Companyʼs abilityto are free from material misstatement,whether due to fraud orerror. control as managementdetermines isnecessary toenable thepreparation of financial statements that Reporting Standards as adopted bythe EU for the financial statements of the Group, and such for internal accepted Norway in the for financial statementsthe of parentcompany and International Financial accordance with the Norwegian Accounting Actand accounting standards and practices generally Management is responsible for the preparation and fair presentation of these financial statements in Responsibilitiesmanagement for of thefinancial statements information, we are required to report that fact. We have nothing to report in this regard. based on the work we performed, have we conclude that there is a material misstatement of this other statements orourknowledge obtained in the audit, orotherwise appears be to materially misstated. If, doingand, in so, consider whether theother information is materially inconsistent with the financial In connection with ourauditof the financial statements, ourresponsibility readis to the other information, cover the other information,and we do notexpress assurance any form of conclusion thereon. (management) areresponsible theother for information.Our opinion onthe financial statements does not financial statements and ourauditorʼs reportthereon. The Board Directors of and ChiefExecutive Officer Other information consists the information of included intheCompanyʼs annual reportother than the Other information and note 14with respectto the Groupʼs principles,significant estimates and assumptions. We assessed the Groupʼs disclosures regarding fair value ofbiological assets in included note1, note13 the relevant weight classes. expected prices,biomass and discount rate.Werecalculated the modelused calculate to fair value for evaluated thehistorical accuracy priorin periodsʼ estimates and the sensitivity analysis ofchanges in and quality ofthe live fish and compared these with budgetsdata. and historical Furthermore, we manufacturing costs,size distribution ofthe biomass,time in sea harvest until mature, expected mortality againstobservable market pricesthe expected at harvesting dates.In addition, we evaluated expected related to the calculation of the fair adjustment value of the biomass. We compared the prices applied requirements in IAS 41, IFRS 13and industrypractice. We observed the routines and tested controls We evaluated the valuation and the new model including theapplied discount rate againstthe calculation. extent, the level of judgements related to the choice of valuation model and the assumptions used the in the expected harvesting dates. The fair value biological of assetswas akeyaudit matter due to the discounted based on discount monthly rate. The market prices arebased onobservable forward prices at produce, harvestand sell the biomass sea andin time until harvest mature.Expected netprofit is volumes,quality, the sizeofthe biomass and marketpricesthe harvest at dates, remaining expenses to methodology aligned with industrypractice Norway.in The valuefair is calculated based onestimated For fish in sea the fair value was using calculated anewbased model onanetpresent value value adjustment included in the carrying amountwas NOK 2035.7 million. value adjustment. In 2018, the recognised fair adjustmentvalue amounted to NOK934.8 million. The fair The difference between the fair value of the biological assets and the related costis recognised as a fair 31,2018 the biological assets NOK amounted to 5 305.6 andmillion 35 %ofthe Groupʼs assets. total The Group evaluates biological assets fair accordance at value in with IAS 41and IFRS 13. AtDecember assets biological of value Fair A member firm of Ernst & Young Global of Limited & firm Ernst A member 2 Passion for Salmon 123 2 A memberA Ernst firm & Limited of Global Young Responsibilities of management for the financial statements of the financial for management Responsibilities in statements financial these of presentation fair and preparation for the responsible is Management generally practices and standards accounting and Act Accounting Norwegian the with accordance Financial International and company parent of the statements financial forthe in Norway accepted internal for such and the Group, of statements financial for the EU by the adopted as Standards Reporting that statements financial of the preparation to enable is necessary determines management as control or error. fraud to due whether misstatement, material from free are ability to Companyʼs the for assessing is responsible management statements, financial the In preparing the using and concern to going related matters applicable, as disclosing, a going concern, as continue to or Company the liquidate to intends either management unless of accounting, basis concern going so. to do but no realistic alternative or has operations, cease Other information the than other report annual Companyʼs in the included of information the consists information Other Officer Executive Chief and of Directors Board The thereon. report our auditorʼs and statements financial not does statements financial on the opinion Our information. for the other are responsible (management) thereon. conclusion ofform any assurance not express do we and information, other the cover information, the other tois read our responsibility statements, financial the of our audit with In connection financial the with inconsistent materially is information the other whether consider so, inand, doing If, misstated. materially to be appears or otherwise the audit, in obtained or our knowledge statements other this of misstatement material a is there that conclude we have performed, we work the on based regard. this in report to nothing We have fact. that report to required are we information, Fair value of biological assets December At 13. IFRS 41 and IAS with invalue at accordance fair assets biological evaluates The Group total assets. Groupʼs the % of 35 million and 305.6 5 to amounted NOK assets biological the 2018 31, fair a as recognised is cost related the and assets biological the of value fair the between The difference fair The million. 934.8 to NOK amounted value adjustment fair recognised the 2018, In adjustment. value million. NOK 2 035.7 was amount carrying the in included adjustment value value present on a net model based a new calculated using was fairvalue the sea fish in For on estimated based calculated is fairvalue The in Norway. practice industry with aligned methodology to expenses remaining dates, at the harvest market prices and the biomass size of the quality, volumes, is profit net Expected mature. harvest until timein and sea biomass the sell and harvest produce, at prices forward on observable are based prices market The rate. monthly discount on based discounted the to due matter a key audit was assets of biological value fair The dates. harvesting the expected in the used assumptions the and model valuation of the choice to related judgements level of the extent, calculation. the against rate discount the applied including model new the and valuation the evaluated We controls tested and routines the observed We practice. industry and 13 IFRS 41, inIAS requirements applied the prices compared We biomass. the of value fair adjustment the of calculation the related to expected evaluated we In addition, dates. harvesting at the expected prices market observable against mortality expected mature, until harvest sea in time biomass, the of distribution size costs, manufacturing we Furthermore, historical and data. budgets with these compared fish and live the of quality and in changes of analysis sensitivity the and estimates in periodsʼ prior accuracy the historical evaluated for value fair to calculate used model the rate. We recalculated discount and biomass prices, expected classes. weight the relevant note 13 note 1, included in assets of biological value fair regarding disclosures Groupʼs the assessed We assumptions. and estimates significant principles, the Groupʼs to respect 14 with note and Independent auditor's report - SalMar ASA 124 SALMAR ANNUAL REPORT 2018 Independent auditor's report - SalMar ASA -SalMar report auditor's Independent A member firm of Ernst & Young Global of Limited & firm Ernst A member reasonably beexpected to outweigh thepublic interest benefits such of communication. a matter should notbecommunicated ourin reportbecause theadverse consequences doing of so would precludes disclosure public about the matter or when, inextremely rare circumstances,we determine that the keyaudit matters. We describe these matters ourin auditorʼs reportunless law orregulation were significancemost of in the audit ofthe financial statements ofthe current period and aretherefore From the matters communicated with those chargedwith governance, we determine those matters that safeguards. matters that may reasonably bethought tobear on our independence,and where related applicable, ethical requirements regarding independence,and communicate with themrelationships all and other We also provide those charged with governance with a statement thatwe have complied with relevant internal control that we identify duringour audit. scope of and timing the audit and significant audit findings,including anysignificant deficiencies in We communicate with those charged with governance regarding,among other matters, the planned ► ► ► ► ► ► throughoutthe audit. We also Norway,including ISAs,we exercise professional judgment and maintain professionalscepticism As anaudit partof inaccordance with law,regulations and generally accepted auditing principles in basis these of financial statements. aggregate, could they reasonably beexpected to influence the economic decisions users of taken on the Misstatements canarise fraudfrom orerror and areconsidered material if, individually orthe in audit conducted accordancein with ISAs will alwaysa detect material misstatementwhen it exists. includes ouropinion.Reasonable assurance isahigh level ofassurance, but is notaguarantee that an free from material misstatement,whether due to fraud or error, and to issue anauditorʼs reportthat Our objectives aretoobtain reasonable assurance aboutwhether the financial statements as awhole are Auditor’s responsibilities fortheaudit ofthefinancial statements presentation; whetherthe financial statements represent the underlying transactions and events in amannerthat achieves fair evaluate the overall presentation,structure and content ofthe financial statements, including the disclosures, and cause the Company to cease the audit evidence obtained up to the date of ourauditorʼs report. However, future eventsor conditions may financial statements or, ifsuch disclosures are inadequate, to modify our opinion. Our conclusions are based on uncertainty exists, we are required to draw attention ourin auditorʼs report to the related disclosures in the significant doubt onthe Companyʼs ability to continue as a going concern. Ifwe conclude thata material the audit evidence obtained, whethera material uncertainty exists related to eventsorconditions that may cast conclude onthe appropriateness of managementʼs use of the going concern basis of accounting and, based on related evaluate the appropriatenessaccounting of policies used and the reasonablenessaccounting of estimates and Companyʼ appropriate in the circumstances,but not for the purpose ofexpressing an opinion on the effectiveness ofthe obtain anunderstanding of internal control relevant to the audit orderin to design audit procedures that are misrepresentations, or the override ofinternal contro fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, appropriate toprovide a basis for our opinion. The risknot of detecting a material misstatement resulting from design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient and identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud orerror, the direction, supervision and performance of the group audit. We remain solely responsible for ouraudit opinion. activities within the Group to expressopinion an onthe consolidated financial statements. We are responsible for obtain sufficient appropriate audit evidence regarding the financial information ofthe entities or business disclosures made by management; s internal control; to continue as a going concern; l; 3 (This translation from Norwegian has been made informationfor purposes only.) (Norway)AccountantPublicState Authorised Christian Ronæss Independent auditor's report - SalMar ASA -SalMar report auditor's Independent E Trondheim, 10 April 2019 accepted Norway. in properly recorded and documented as required by law and bookkeeping standards and practices our opinion that managementhas fulfilled its dutyto ensurethe Company's that accounting information is 3000,«Assurance Engagements Other than Audits or Reviews Historical of Financial Information», is it considered necessary accordance in with the InternationalStandard on Assurance Engagements (ISAE) Based onourof audit the financial statements as described above,and control procedures we have Opinion onregistration anddocumentation regulations. the allocation ofthe result is consistent with the statementsfinancial and complies with the law and social responsibility concerning the financial statements,the going concern assumption and proposal for presented Board inthe ofDirectorsʼ reportand in the statements oncorporate governance and corporate Based onourof audit the financial statements as described above, itis ouropinion that the information governance andcorporate social responsibility Opinion ontheBoardofDirectors’ report and on thestatements oncorporate on and requirementsReport legal other regulatory A member firm of Ernst & Young Global of Limited & firm Ernst A member RNST & Y OUNG AS 4 Passion for Salmon 125 4 AS OUNG Y & RNST A memberA Ernst firm & Limited of Global Young Based on our audit of the financial statements as described above, and control procedures we have we procedures control and above, described as statements financial the audit of on our Based (ISAE) Engagements Assurance on Standard International the with in accordance necessary considered it is Information», Financial of Historical Reviews or Audits than Other Engagements «Assurance 3000, is information accounting that the Company's ensure to duty its fulfilled has management that opinion our practices and standards bookkeeping and law by required as documented and recorded properly in Norway. accepted 2019 April 10 Trondheim, E Opinion on registration and documentation registration on Opinion Report on other legal and regulatoryother legalReport requirements and on corporate on the statements and on report Directors’ on the Board of Opinion responsibility social and corporate governance the information that opinion our is it above, described as statements financial the audit of on our Based corporate and governance on corporate the statements in and report Directorsʼ of in the Board presented for proposal and assumption concern the going statements, financial the concerning responsibility social and law the with complies and financial statements the with consistent is the result of the allocation regulations. Independent auditor's report - SalMar ASA Christian Ronæss Christian State Authorised Public Accountant (Norway) only.) purposes forinformation made been has from Norwegian translation (This

SalMar ASA Industriveien 51, N-7266 Kverva , Norway Phone +47 72 44 79 00 Fax +47 72 44 79 01 www.salmar.no Rosenborg Reklame 0318 Reklame Rosenborg