Our fish Your food with sustainable development Annual Report 2013 Layout and print: Skipnes Kommunikasjon AS Photos: Elin Iversen, Øyvind Sætre and Jørn Adde Map page 16: Prokart/Kartverket Retrospective… Contents Statement by the CEO. 6 Important Strategic milestones . 8 Key fi gures . 11 Highlights 2013 . 12 Our business . 14 Organisation. 23 Management. 24 The Board of Directors . 25 Shareholder information. 26 Norway Royal Salmon supports the local communities . 28 Corporate Governance . 30 Board of Directors report . 38 CONSOLIDATED FINANCIAL STATEMENTS Consolidated income statement . 52 8 Important Strategic milestones Consolidated statement of comprehensive income. 53 Consolidated balance sheet . 54 Consolidated statement of cash fl ow . 56 Consolidated statement of changes in equity . 57 Notes . 58 PARENT COMPANY ACCOUNTS Income statement . 97 Balance sheet . 98 Cash fl ow . 100 Notes . 101 Responsibility statement from the Board of Directors and Chief Executive Offi cer. 115 Auditor‘s Report . 116 Sitemap NRS. 118 26 Norway Royal Salmon supports the local communities SLAKTET VOLUM HOG OPERASJONELT DRIFTSRESULTAT LAKSEPRIS (TONN) (NOK 1 000) (NOS) 39,19 30000 300000 40 37,43 25 191 256 002 35 25000 250000 31,23 31,27 21 162 30 20000 18 781 200000 26,20 25 15000 150000 137 259 20 10 677 15 10000 100000 6 828 10 5000 50000 39 353 47 257 20 416 5 0 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 11 Key figures 12 Highlights 2013 51 Consolidated Financial Statements 95 Parent company accounts The main issue for both NRS and the” industry will be to search for improvements for efficient and sustain­ able production. A statement from the Chief Executive Officer 2013 was a record year for Norwegian salmon produ- cers. Globally, there have never before been consumed larger volumes of salmon. In recent years has annual growth rates been more than 7 per cent. 2013 was also a record year for Norway Royal Salmon; we have never sold or produced more than we did in 2013. NRS produced over 25 000 tonnes of salmon and the company sold a total of 62 000 tonnes in 2013. In the world market for Norwegian salmon, the growth in demand has been greater than the supply growth. Combined with low growth in Norway we consequently experienced a rapid price increase during the year. However, history shows that sustained high prices do not last forever. With 45 new green licenses and a possible adjustment of the current MAB regime, we believe there can be real growth in production capacity in Norway and in supply to the market. 6 Norway Royal Salmon | Annual Report 2013 The aquaculture industry has developed signifi cantly a environmental certifi cation that is the most diffi cult in recent years and has become increasingly industrial. to acquire, and only the most sustainable producers But in an industry with biological production there will will be able to satisfy the requirements’ of the scheme. always be factors that are diffi cult to control. Thus, we The initiative is fully supported by WWF and FAO. experience biological challenges of diff erent nature in the various geographical areas in Norway. This applies The market outlook for Norwegian salmon has rarely in particular to the challenges of disease, sea lice and been better. I think that the Norwegian Seafood council escapes. At the end of the year NRS had two escapes deserves praise for the work they do to promote salmon in a short time. Both escapes occurred during extreme outside Norway. It is also appropriate to give credit to weather conditions, yet this is something that should the fi rst initiators of the scheme of generic marketing. not happen. We believe we have taken measures to I believe that this scheme and the Seafood Council’s reduce the damage, and to reduce the likelihood that work over many years is a major reason for the success such an incident will happen again, but we apolo- the industry now experiences with powerful demand gize strongly that we have caused these undesirable outside Norway. events. There has been considerable focus on organisational In the case of the green licenses that the govern- development during the last year, and going forward ment is about to allocate, both NRS and the rest of we expect this to be important both in our salmon the industry have done a lot of creative work that production and in our trading activities. The main focus we believe will infl uence future solutions in a more for all employees of NRS is daily improvements in our sustainable direction. We also believe that the new work. This applies to our pursuit of further effi ciency solutions that are successful will form the standard in of salmon production through reduction of the group’s the time to come. production costs, and in terms of sales and marketing of salmon in the best paying markets. This is hard The main issue for both NRS and the industry will be work where we always must look for improvements. to search for improvements for effi cient and sustain- able production, and to minimize the negative biolo- I am proud of the work that all employees of NRS do in gical challenges that we see today. the best interests of the company, so that we emerge as a well run salmon company that creates signifi cant Based on this, the Global Salmon Initiative (GSI) was value for the shareholders and for the communities in established almost two years ago. Norway Royal which we are located. I would therefore like to thank Salmon is a member of the Global Salmon Initiative. all employees, shareholders, the company’s partners GSI consists of 15 global salmon producers from fi ve and last, but not the least, the various communities in diff erent countries, representing 70 % of the global which we operate. production of Atlantic salmon. The objective of the GSI is that the industry, through cooperation and transparency, shall achieve a signifi cant improve- ment in sustainable production of Atlantic salmon at a time when the world needs a substantial increase in food production. All members of the GSI, including Norway Royal Salmon, have committed themselves to John Binde working towards full ASC certifi cation by 2020. This is CEO Annual Report 2013 | Norway Royal Salmon 7 Important Strategic 1992 • Norway Royal Salmon AS was founded by 34 fi sh farming companies as a sales 1998 2006 and marketing company for • Acquisition resulting in • Private placement in which farmed salmon 31.1 % ownership of the company raised gross Hardanger Fiskeforedling AS proceeds of NOK 50 million • Acquisition resulting in 37.5 % ownership in 1996 2003 Espevær Laks AS • The Company took control of • Acquisition resulting in Reinhartsen Seafood AS with 36.1 % ownership of 90.1 % Måsøval Fishfarm AS 2007 • Acquisition resulting in 100 % ownership of Feøy Fiskeoppdrett 2004 AS (now named NRS Feøy AS) • Acquisition resulting in • Acquisition resulting in 100% 48.0 % ownership of ownership of Åmøy Fiske oppdrett Larssen Seafood AS AS (merged • Acquisition resulting in into NRS Feøy AS in 2009) 33.5 % ownership of • Acquisition resulting in 82.5 % Hellesund Fiskeoppdrett AS ownership of Nor Seafood AS 8 Norway Royal Salmon | Annual Report 2013 Important Strategic milestones 2008 2009 2011 • Private placement in which the • Acquisition resulting in • Public off ering in which company raised gross proceeds 100 % ownership of AS Bril- the company raised gross of NOK 100 million liant Fiskeoppdrett (later proceeds of NOK 46.1 million • Acquisition resulting in 100 % merged into NRS Feøy AS) • Norway Royal Salmon ASA ownership of Altafj ord Laks AS is listed on Oslo Stock • Acquisition resulting in 76.24 % exchange ownership of AS Tri and Salmo 2010 • Sold all shares (48 %) in Arctica AS (later merged into • Acquisition resulting in Larssen Seafood AS AS Tri) 66.67 % ownership of • Acquisition resulting in 37.5 % Nord Senja Laks AS ownership of Wilsgård Fiskeopp- • The remaining 23.76 % of the 2012 drett AS shares in AS Tri were acquired, • Private placement and sale resulting in AS Tri becoming of treasury shares in which a 100 % owned subsidiary the company raised gross (subsequently merged into proceeds of NOK 43.4 million NRS Finnmark AS) • Acquisition resulting in • Acquisition resulting in 37.75 % ownership of Ranfj ord 27.65 % ownership of Fiskeprodukter AS Ranfj ord Fiskeprodukter AS • The company was converted from a private to a public limited liability company Annual Report 2013 | Norway Royal Salmon 9 Key fi gures (NOK 1 000) 2013 2012 2011 Operating revenue 2 603 712 1 744 266 1 734 022 Volume sold (tonnes) 62 141 57 673 50 428 Volume of own fi sh harvested (tonnes gutted weight) 25 191 21 162 18 781 Operational EBITDA 1) 289 729 50 866 70 800 Operational EBIT 1) 256 002 20 416 47 257 EBIT 350 727 69 844 -25 870 EBT 396 292 40 748 -17 166 Result for the year 315 805 31 618 -1 618 EBITDA margin 1) 11.1 % 2.9 % 4.1 % Operational EBIT margin 1) 9.8 % 1.2 % 2.7 % ROACE 2) 25.3 % 2.1 % 5.1 % EBIT per kg - own production 1) 11.71 1.23 2.19 Book value of biological assets 666 276 525 739 387 880 Total capital 2 051 612 1 675 526 1 467 292 Net interest bearing debt 453 883 566 075 531 734 Book equity 868 989 607 184 532 662 Equity ratio % 42.4 % 36.2 % 36.3 % Net cash fl ow from operating activities 211 835 -2 828 -25 781 Net cash fl ow from investing activities -24 348 -36 970 -56 602 Earnings per share 6.96 0.66 0.06 Number of shares as at 31 December 43 572 191 43 572 191 39 611 083 Number of employees (full-time equivalents) 114 103 89 1) Before fair value adjustments and