Our goal is to be the best trawler company in Norway, based on our values safety, sustainability, profitability and pride.

Transcription

1 Annual report 2014

2 2 HAVFISK 2014

3 HAVFISK 2014 Our goal is to be the best trawler company in Norway, based on our values safety, sustainability, profitability and pride. Content In review 4 WE ARE HAVFISK 6 HEADLINES 9 KEY FIGURES 10 LETTER FROM THE CEO 12 OUR VALUES Our results 16 BOARD OF DIRECTORS REPORT 22 DECLARATION BY THE DIRECTORS AND THE CEO 24 ANNUAL ACCOUNTS - GROUP 64 ANNUAL ACCOUNTS PARENT COMPANY 74 INDEPENDENT AUDITOR S REPORT 76 SHARE AND SHAREHOLDER INFORMATION Organisation and governance 80 CORPORATE GOVERNANCE 85 REPORT ON CORPORATE SOCIAL RESPONSIBILITY 90 MANAGEMENT TEAM 92 BOARD OF DIRECTORS

4 4 HAVFISK 2014 WE ARE HAVFISK We are HAVFISK HAVFISK is solely a fishing company, operating Norway s largest trawler fleet. The group has 10 trawlers in operation at the start of These fish for cod, haddock, saithe, redfish, Greenland halibut and prawns.

5 HAVFISK 2014 WE ARE HAVFISK 5 It is about putting the focus where the battle is won or lost on board each individual vessel. In 2014, HAVFISK achieved operating revenues of NOK 1,049 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) amounted to NOK 299 million. Net profit for 2014 was NOK 197 million, equal to NOK 2.32 per share. HAVFISK had 390 employees at the end of HAVFISK operates 10 trawlers with 29.6 quotas for cod and haddock. The group also has 31.9 quotas for saithe. Other species were also harvested, including Grenland halibut, redfish and prawns. The total catch in 2014 was 59,295tonnes, including 32,765 tonnes of cod, 7,853 tonnes of haddock and 10,872 tonnes of saithe. Other fish species increased by 4,489 tonnes to 7,021 tonnes in Harvest efficiency (catch per day) was at approximately the same level as in All the fish is headed and gutted on board and delivered fresh or frozen. The group holds approximately elleven per cent of the quotas for white fish in Norway. At the beginning of 2015, the fleet consists of one fresh-fish trawler, four freezer trawlers and five combination trawlers (fresh-fish trawlers with freezing capacity). Three new trawlers have been delivered in 2013 and Operation of the trawlers is through the subsidiary shipowners Nordland Havfiske AS, Finnmark Havfiske AS and Hammerfest Industrifiske AS. The main administration is in Ålesund, with branch offices in Hammerfest and Stamsund. The largest shareholder in HAVFISK ASA is Aker ASA, with per cent of the shares. Foreign shareholders owned approximately 1.5 per cent of the shares at 31 December.

6 6 HAVFISK 2014 HISTORY & THE PASSED YEAR History & The passed year 1994 / Norway Seafoods AS was established. Skaarfish Group AS was the first fishing operation acquired in Norway / Acquisition of Foodmark, a Danish holding company, which included the Thorfisk and Thorfisk Trading subsidiaries / Important acquisitions in Norway to strengthen the fishing fleet and processing capabilities / Name changed to Aker Seafoods. Listed on the Oslo Stock Exchange. Acquired West Fish- Aarsasther AS and Nordic Sea Holding AS / 2010 / 2011 / 2013 / Acquired French seafood group Viviers de France. Norway Seafoods was re-established as the group s processing and sales company. Decision to fully separate Norway Seafoods and Aker Seafoods, with separate ownership and management. The change took effect in January Aker Seafoods ASA changed its name to HAVFISK ASA.

7 HAVFISK 2014 HISTORY & THE PASSED YEAR 7 Financial calendar 2014 Annual general meeting 2015: 10 April First quarter 2015: 7 May Second quarter 2015: 16 July Third quarter 2015: 6 November HAVFISK reserves the right to amend these dates. Profit development HAVFISK has had good underlying operations in Operating revenues and operating profit increased compared with previous years, mainly due to higher prices and higher volume. Harvesting income per operating day in 2014 was the highest in the group s history. The quota basis was good, with good availability of cod and haddock. Utilisation of the saithe quota has also been better and considerably more of the other fish species such as redfish, Greenland halibut and prawns have been harvested. Total harvest quantity increased by approximately 2,600 tonnes in New group CEO and Technical Director Webjørn Barstad (49) took up the position of group CEO and Eldar Vindvik (39) the position of Technical Director of HAVFISK ASA on 1 January Fleet renewal programme It is HAVFISK s objective to have a flexible and modern fleet. Three new trawlers are delivered in 2013 and 2014 and have considerably increased the group s capacity. HAVFISK works continuously to optimise operations and ensure a well-maintained fleet. The vessels Båtsfjord and Havtind were converted from freezer trawlers to vessels with both freezer and fresh-fish capacity. The conversions have given the company greater operational flexibility. Rypefjord was sold in November 2014; this was one of our older vessels. The market The quotas for cod have been at a high level in recent years, while the quotas for saithe and haddock have been somewhat reduced. Prices for cod, haddock and saithe increased in 2014 by 24, 29 and 36 per cent respectively. The Glitnir case Refer to earlier stock exchange releases and quarterly and annual reports regarding the Glitnir case. HAVFISK was found liable in Reykjavik County Court, but the case was appealed. HAVFISK s appeal was heard by Iceland s Supreme Court on 4 March 2015 and judgement was given on 12 March. The court concluded that HAVFISK was entitled to cancel the agreement in question in The court found in favour of HAVFISK. Structuring The Ministry of Trade, Industry and Fisheries sent a proposal to amend the regulations that govern the maximum number of quotas per vessel for consultation in The government proposed to increase the ceiling for trawlers from three to four quotas per vessel. The case was discussed and approved by royal resolution on 23 January HAVFISK takes a positive view of this decision. The change offers opportunities for more efficient operation, in that the total number of quotas can be fished with fewer vessels. The Tveterås committee Ragnar Tveterås, chair of the Tveterås committee, delivered the seafood industry committee s proposals to fisheries minister Elisabeth Aspaker on 16 December The committee was set up in spring 2013 with a mandate to look at conditions that might prevent or contribute to increased profitability and value creation in the seafood industry. The committee put forward a number of proposed changes. The committee s report (NOU 2014:16 The Seafood Industry) has been sent out for consultation with a deadline of 30 April The proposals will be followed up with a white paper before the end of the year. The aim is for predictable framework conditions that can create profitability in the industry. Continued focus on environment Norwegian non-coastal cod and haddock were environmentally certified by the Marine Stewardship Council (MSC) in HAVFISK is continually seeking more environmentally friendly solutions in harvesting. Through the building of the three new trawlers, the environmental aspects have had a high priority, with fuel-efficient engines, diesel-electric power and clean class notification from Det Norske Veritas. The new vessels are also equipped with fish meal plants, for maximum utilisation of the raw material. Several other vessels in the fleet have also been upgraded, with more environmentally-friendly solutions. HAVFISK focuses on sustainable exploitation of the quota basis. For example, HAVFISK has entered into an agreement with the environmental organisation WWF, which will act as the group s adviser in environmental issues.

8 8 HAVFISK 2014 HOVEDTALL

9 HAVFISK IN REVIEW 2014 HISTORY & THE PASSED KEY FIGURES YEAR 9 Key figures Operating revenues: Net profit: Share price: : 1049NOK mill. 197NOK mill. 15.2NOK ORDER RESERVE AND PROFIT & LOSS ITEMS Operating revenues (NOK mill.) EBITDA (NOK mill.) EBITDA margin (%) Net profit (loss) for the year (1) (NOK mill.) CASH FLOW Cash flow from operating activities (NOK mill.) BALANCE SHEET Net interest-bearing debt NOK mill Equity ratio (2) (%) SHARES Share price as of 31 Dec. NOK EMPLOYEES Number of employees as of 31 Dec. ((In man-years)) HSE Sick leaves (%) * Numbers ex. balance for 2010 and 2011 are for continued operations 1 ) The results for 2010 and 2011 are for continued operations 2) The equity ratio is affected by the distribution of shares in Norway Seafoods

10 10 HAVFISK 2014 DEAR SHAREHOLDERS Dear shareholders 2014 was a good year for HAVFISK, with many records fell. In fact in 2014 we harvested the equivalent of about 180 million meals! There is no doubt that HAVFISK plays a vital role in the Norwegian seafood industry. Dedicated and skilful crews, together with a renewed and upgraded fleet, ensured that the total harvest for the year was 59,295 tonnes of headed and gutted fish, the highest total for the company s fleet ever. It is worth mentioning here that we had smaller cod quotas to fish in 2014 than in 2013, and the increase has come in other species, such as saithe, redfish, Greenland halibut and prawns. Fish meal was also delivered in 2014, and increasing the utilisation of raw materials will doubtless be of ever greater significance in the future. «Gadus Neptun» was delivered from Vard in the first quarter of This meant that the last of our three new trawlers was in place and the Gadus vessels have proved to be highly efficient fish harvesters. Parallel with the new build programme, HAVFISK has performed a number of rebuilds and modernisations of the existing fleet, while the oldest vessels have been replaced. As part of this process, «Rypefjord» was sold in autumn In this way, HAVFISK has developed a fleet of efficient and flexible vessels that can take part in most fisheries and offer both frozen and fresh products. The rise in fish prices that began in 2013 continued in 2014, with the greatest rise in the second half of the year. Prices of haddock and saithe were relatively high towards the end of the year, compared with the last 5-6 years, while cod prices still had a way to go to reach former levels. In spite of the improvement in prices in recent years, it is worth bearing in mind that wild fish still represent a cheap source of protein. The higher prices, a more efficient and flexible fishing fleet and, not least, our skilful and committed employees on board the vessels all helped to ensure that the average harvest value per vessel per operating day reached

11 HAVFISK 2014 DEAR SHAREHOLDERS 11 Dedicated and skilful crews, together with a renewed and upgraded fleet, ensured a record harvest in In fact in 2014 we harvested the equivalent of about 180 million meals! NOK 321,000. This is a record for HAVFISK, as is the combined harvest value of more than NOK 1 billion. It is very positive to note that harvest value per operating day increased in both the last two quarters and was well over the average for the year. Operating profit, EBITDA, was NOK 299 million the highest in the company s history. The HAVFISK share was traded at just under NOK 12 at the previous year end, and fell back a little at the beginning of the year, but ended at NOK on 31 December This rise has continued into the new year. We are working purposefully to build value for shareholders over time. Over the last couple of years, we have also increased our efforts in health and safety and the work environment. We have added a dedicated safety officer to our staff and we are well under way with implementing ISM-approved safety management systems on the vessels. According to new requirements from the authorities, these must be in place by 1 January We saw a positive trend in sick leave compared with the previous year, but absence due to illness is still higher than our target. In 2014, we had some incidents that led to minor injuries, but fortunately no serious accidents. We have a zero vision for injuries. «Safety» is our most important value. Our employees are our most important resource, and their safety and security must always come first. Well-being is also of vital significance. The fleet renewal programme has meant great changes for many of our employees the last years. With new vessels to be manned, there was a great deal of movement of crews between vessels. Existing working environments were broken up and some colleagues who had been working together for years found themselves on different vessels. This reorganisation has been necessary, but is doubtless perceived differently from employee to employee. I would therefore like to especially thank our on-board employees for their efforts in I have the deepest respect for the work our crews perform at sea every day, in all conditions. In recent years, HAVFISK has been working systematically on quality improvements. Our aim is always to be able to offer fish of a consistently high quality. The quality activities are organised as a project, with a dedicated quality adviser spending time on board all vessels, in close cooperation with dedicated personnel in administration. We have taken new steps towards our goal. It is HAVFISK s aim to help ensure that Norwegian fish is perceived as the good, nutritional food it is. On 12 March 2015, the final judgement was made in the so-called Glitnir case. This case goes back to 2008, when HAVFISK cancelled a rate, inflation and currency swap agreement with the Glitnir bank of the time on the grounds that Glitnir was in practice bankrupt and could not fulfil its obligations. The judgement in the first instance was not in our favour, but HAVFISK appealed the judgement made by Rejkavik County Court in December HAVFISK s appeal was heard by Iceland s Supreme Court on 4 March 2015 and judgement was given on 12 March. The court concluded that HAVFISK was entitled to cancel the agreement in question in The court found in favour of HAVFISK, which was also awarded costs of ISK 3 million. The judgement of the court is final. Right at the end of the year, Prof. Ragnar Tveterås delivered «NOU 2014:16 The Seafood Industry» to the Ministry of Trade, Industry and Fisheries. The Tveterås committee proposed a number of comprehensive and controversial changes in the Norwegian seafood industry. Many of these proposals could be of great significance for HAVFISK. Not least the proposal to abolish the activity obligation, the supply obligation and the processing obligation that are assosiated with our fishing lisences. HAVFISK is a large and important player in the Norwegian seafood industry, which means a great deal to people in many local communities. We recognise this responsibility and we carry it with us into the forthcoming discussions about the Tveterås committee s position in At the same time, there is undoubtedly a great need for reorganisation in the Norwegian fishing industry, as it has been and is now at sea and in other parts of the norwegian fishing industry. Reorganisation is a demanding, but necessary process. Unprofitable jobs are no safe haven for any local community. We look forward to some interesting discussions, and we believe that 2015 could be one of the most important years for fishing policy for many years. One of the Tveterås committee s proposals was to abolish the quota ceilings and let each company decide for itself how many quotas to apply to each vessel. This proposal has already been partially put into practice with an increase in the quota ceiling in the new year from three to four. HAVFISK is well under way with a process to use this to optimise quota utilisation for saithe and haddock. We will however continue to have 10 vessels in operation in 2015 and intend to use available capacity to increase fishing for prawns, saithe and redfish, before any decision may be made to further reduce the number of vessels. The financial results we present for the fourth quarter and the year as a whole are positive. But everything can be improved, and we will not be satisfied. We will strengthen the interaction between employees on board and onshore. We will be even better on quality, the market, HR, HSE, technology and operations. And we will continue to develop the fleet. To put it briefly, we will endeavour to improve in all aspects of the company s operations. The results will then come by themselves. It is all about putting the focus where the battle is won or lost on board each individual vessel. Webjørn Barstad CEO, HAVFISK ASA

12 12 HAVFISK 2014 DEAR OUR VALUES SHAREHOLDERS Our values Safety EVERYONE COMES HOME Sustainability KNOW THAT WE CARE Those at home must know that we care about everyone on board. Mums and dads will come home safely, and good friends will meet again to swap stories. This means that we need good safety routines on board and to ensure they are fully complied with. Individual crew members must therefore always be on the lookout for anything or anyone who is a danger to safety and who could put life and health at risk. HAVFISK is no Mayfly. Our families need to feel security in the form of safe, permanent jobs and well-planned personnel management. Sustainability is a term many companies use to describe how they take account of the environment and natural resources. We at HAVFISK take ownership of sustainability on an emotional level. We know first-hand what it is like to encounter a black sea and we know that fish tastes best when it is handled with care. Our integrity does not permit us to modify our food quality requirements and sensible management of the sea s riches. Everyone at HAVFISK has a moral responsibility to question decisions that do not take sustainability into account. Being a fisherman is a lifestyle that undoubtedly makes demands of those left at home. We want your family and friends to feel included and informed; and they should know who to contact should a critical situation arise.

13 HAVFISK 2014 DEAR SHAREHOLDERS OUR VALUES 13 Our employees are shaped by a life of hard work and heavy strain. It is therefore even more important that each of us is given the skills necessary to handle demanding situations properly, and the strength to do the tough but important job we do. Profitability A LEAGUE AHEAD Pride A FEELING OF PRIDE Vessels that fish well and are run efficiently are the best guarantee against idle hands. Our focus is therefore on ensuring everybody takes responsibility for their job by doing everything in their power to contribute to profitability. Running a profitable business makes a difference to us. It proves we have done a good job and motivates us to get stuck in when we are up against it. We wish that all our employees are proud of working in HAVFISK. Together we can develop a feeling of pride based on the results we deliver and how we each do our bit. Pride is therefore the sum of all the good things we do - for our colleagues, for ourselves and for HAVFISK. However, the need for profitability must not overshadow our desire to ensure the sustainable management of these resources. Running a profitable business while taking health, safety and the environment into account is character-building and a source of pride.

14 14 HAVFISK 2014 DEAR SHAREHOLDERS

15 HAVFISK 2014 DEAR SHAREHOLDERS 15 Our results 2014 Content 16 BOARD OF DIRECTORS REPORT 22 DIRECTORS RESPONSIBILITY STATEMENT 24 ANNUAL ACCOUNTS - GROUP 64 ANNUAL ACCOUNTS PARENT COMPANY 74 INDEPENDENT AUDITOR S REPORT 76 SHARE AND SHAREHOLDER INFORMATION

16 16 OUR RESULTS BOARD OF DIRECTORS REPORT 2014 Board of Directors report 2014 In 2014, earnings from HAVFISK s trawlers were better than ever before. The last of the company s new builds was delivered in the first quarter of The new build project to build three new vessels has considerably increased the company s harvesting capacity. Profit before depreciation and amortisation (EBITDA) came to NOK 299 million, up by NOK 88 million from HAVFISK is a fisheries company with activities in Norway. At the end of 2014, the group had ten trawlers and associated fishing rights. The group also owns several fish processing plants in the counties of Nordland and Finnmark in northern Norway. These are leased to Norway Seafoods on long contracts Norway Seafoods performs fish processing at these plants. Consolidated operating revenues in 2014 amounted to NOK 1,049 million, compared with NOK 779 million in Harvested volume in 2014 increased by 2,602 tonnes compared with There are lower quotas for cod and haddock, while the volume of saithe and other fish species is considerably higher. Price trends for all fish species have been positive in 2014, compared with The prices of cod, haddock and saithe have risen by 24, 29 and 36 per cent respectively. EBITDA in 2014 was NOK 299 million, compared with NOK 211 million in Depreciation and amortisation in 2014 totalled NOK 130 million, NOK 28 million of which refers to depreciation of quotas. In 2013, depreciation and amortisation amounted to NOK 105 million. There were no non-recurring items in The consolidated operating profit (EBIT) was NOK 169 million in 2014, as against NOK 106 million in Net financial items were a positive NOK 91 million in 2014, compared with net financial expenses of NOK 209 million in In 2013, provisions of NOK 158 million were made in connection with the judgement in the Glitnir case. After the Icelandic Supreme Court found in favour of HAVFISK in this case, the provision has been reversed in the annual accounts for 2014, ref. Note 27 to the consolidated financial statements Tax expenses were NOK 64 million in 2014, compared with tax income of NOK 32 million in Consolidated net profit amounted to NOK +197 million, up from NOK -72 million in The group s equity ratio at the end of 2014 was 35 per cent of a balance sheet totalling NOK 2,504 million. The balance sheet total increased by NOK 6 million from the end of This increase is mainly due to investments in connection with the new build project. The final vessel of the project, «Gadus Neptun», was delivered in the first quarter of Reduction in other assets has however meant that the effect of this investment has not significantly increased the balance sheet total. Available liquidity, including NOK 87 million in undrawn drawing rights, totalled NOK 233 million at the end of the year. The group s business and locations The group s primary business is the harvesting of white fish. At the end of the financial year, HAVFISK owned 100 per cent of the shares in Nordland Havfiske, 60 per cent of the shares in Hammerfest Industrifiske and per cent of the shares in Finnmark Havfiske. The group operated ten trawlers at the beginning of 2014, with 29.6 associated cod licences. The trawler «Gadus Neptun» was delivered from the shipyard and entered service during the first quarter. At the end of the financial year, the group had ten trawlers in service, the trawler «Rypefjord» having been withdrawn from service and sold to a foreign owner in the fourth quarter. The group will also have ten trawlers in service in The group has licence rights to harvest just over 10 per cent of the total Norwegian cod quotas north of 62 N. This corresponds to over 30 per cent of the quotas allocated to the trawler fleet for HAVFISK owns several processing plants that are mainly leased to Norway Seafoods Group on long-term contracts. There is an activity obligation for these plants linked to HAVFISK s trawler licenses. HAVFISK had 390 employees at the end of The company s head office lies in Ålesund. Its administration is mainly located in Ålesund, with offices also in Hammerfest and Stamsund. Strategic priority areas The company s most important focus areas in recent years have been: better utilisation of all quota rights. increasing production capacities in order to exploit periods of good fishing and thereby improve profitability. flexible vessels to boost earnings potential from the various species and product categories, including the supply of fresh fish. enhanced quality of products delivered. enhancing the skills of employees. The strategy calls among other things for a renewal of the fleet, whereby older trawlers are replaced by newer ones and existing ves-

17 OUR RESULTS BOARD OF DIRECTORS REPORT sels are upgraded. A new build project was initiated in which three new vessels were contracted in This project has now been completed, with the final vessel, «Gadus Neptun» delivered in the first quarter of During this period, the group has sold three older vessels, which have been replaced by the new builds. The group has reviewed and audited the strategy annually. The main elements of the strategy remain, but with a clarification of the objective of being «Norway s best trawler operator», under which HAVFISK is to be: market-oriented and sell both raw materials and special products the industry leader in the operation of vessels, as well as in health & safety and the environment the most attractive workplace in fishing Market conditions In 2014 the quotas for cod were at approximately the same level as in 2013, while the quotas for saithe and haddock were reduced by 10 and 20 per cent respectively. The total harvest volume of cod in 2014 was reduced compared with 2013 as a result of considerable additional quotas having come towards the end of The total cod quota increased by approximately 30 per cent from 2012 to 2013, which led to a considerable price reduction in autumn This continued into the first quarter of 2013, when the bottom was reached. Prices were then stabilised and the second half of 2013 saw cod prices slowly increasing. This price rise has continued through 2014 and the price of cod rose by 24 per cent during the course of the year. For haddock, the reduced quotas had a positive effect on demand, which led to a price rise of 29 per cent in The same is true for saithe, where prices rose by 39 per cent in HAVFISK sells its products through the Norwegian Fishermen s Sales Organisation (Norges Råfisklag) and the Sunnmøre & Romsdal Fishermen s Sales Organisation. Frozen products have two primary applications - domestic production of salted/dried fish and exports for further processing into consumer products. The group s sales of fresh products are largely made to Norway Seafoods, and are based to a great extent on long-term delivery agreements which rest in turn on HAVFISK s supply obligations. Norway Seafoods undertakes further processing of the fish, largely into fillet products. HAVFISK delivered 8,823 tonnes of fresh cod in 2014, compared with 9,706 tonnes in per cent of this volume was delivered during the second half of Competitive conditions Frozen products are sold through auctions and contract sales conducted by the sales organisations. HAVFISK competes in this market with other trawler owners and companies which deliver fish harvested with other types of gear, such as long lines and Danish seines. Prices for fresh products are based on the minimum prices established by the Norwegian Fishermen s Sales Organisation, with a supplement for quality. For part of the year (February-April), supplies of fresh fish - particularly cod - from the coastal fishing fleet are normally very good. During this period, the trawlers are usually engaged in other fisheries in order to retain quotas until the autumn season when the processing industry is in great need of raw material. Important events in 2014 The fleet renewal project was completed during the course of All the new build vessels, «Gadus Poseidon», «Gadus Njord» and «Gadus Neptun» are now in operation and performing as anticipated. The last vessel, «Gadus Neptun», was delivered and put into service in the first quarter of The vessels «Båtsfjord» and «Havtind» were converted from freezer trawlers to vessels with both freezer and fresh-fish capacity. The conversions have given the company greater operational flexibility. As part of the fleet renewal programme, the vessel «Rypefjord» was sold to a foreign owner and handed over in November In 2005, the company established a financing solution with a bond issue in Icelandic kroner (ISK) and a swap agreement to hedge interest, inflation and currency, so that the issue could be regarded as a loan in Norwegian kroner (NOK). The total financing solution was facilitated by Glitnir bank in Iceland. At the time of the financial crisis in 2008, Glitnir was placed in administration. In the opinion of HAVFISK, in practice the bank suspended its obligations under the swap agreement and was in breach of the agreement. In order to avoid uncovered exposure to the ISK and Icelandic inflation, HAVFISK therefore decided to cancel the swap agreement and buy back the bond issue. In 2011, Glitnir lodged a claim against HAVFISK for repayment of approximately NOK 105 million plus interest for claimed losses under the swap agreement. The case was heard at the county court in Reykjavik in November The judgement of the court was that HAVFISK should pay Glitnir approximately NOK 100 million in compensation, plus Approximately NOK 58 million in interest. The judgement was appealed to the Icelandic Supreme Court. Following IFRS rules however, a provision for the claim and interest from the county court judgement was included in the 2013 accounts. In the 2014 interim reports, further provisions were made for accrued interest in 2014, as well as for interest rate adjustments against the Icelandic kroner. In total this amounts to NOK 38 million for which provision was made during the course of The total provisions in this case in the Q report were NOK 195 million. HAVFISK s appeal in this case was heard in Iceland s Supreme Court on 4 March 2015 and judgement was given on 12 March The court concluded that HAVFISK was entitled to cancel the contract in question in The court found entirely in favour of HAVFISK. The accounting provision that HAVFISK had made for the claim, including interest and exchange rate losses, of NOK 195 million has been reversed, ref Note 7. Mehamn Fiskeindustri AS and HAVFISK Nordkyn AS, a subsidiary of HAVFISK ASA, entered into an agreement in the second quarter that means new activity in Mehamn. Mehamn Fiskeindustri is leasing the facility for a period of three years, with a right and obligation to take over the facility at the end of the lease period. Mehamn Fiskeindustri has also bought machinery and equipment at the facility. The handover date was 20 June HAVFISK Båtsfjord AS, a subsidiary of HAVFISK ASA, sold several residential properties in Båtsfjord in the second quarter. The properties were rented to employees of the facility in Båtsfjord. An agreement has been entered into to lease a smaller number of residential units to cover future needs. The proceeds of the sale amounted to NOK 6.3 million. The Ministry of Trade, Industry and Fisheries has approved Norway Seafoods plans to move production in Hammerfest from Rypefjord to Forsøl. The move means a change in production, with an emphasis on fresh fillet production and a reduction in the level of activity. The Ministry of Trade, Industry and Fisheries has noted that the planned activity is sufficient to maintain the activity obligation in Hammerfest.

18 18 OUR RESULTS BOARD OF DIRECTORS REPORT 2014 On 8 October 2014, HAVFISK entered into an agreement for the sale of the trawler «Rypefjord» to a foreign company. The sales price was approximately NOK 41 million and the vessel was handed over in November The Ministry of Trade, Industry and Fisheries sent a proposal to amend the regulations that govern the maximum number of quotas per vessel for consultation in The government proposed to increase the ceiling for trawlers from three to four quotas per vessel. The case was discussed and approved by royal resolution on 23 January HAVFISK takes a positive view of this decision. The change offers opportunities for more efficient operation, in that the total number of quotas can be fished with fewer vessels. Webjørn Barstad (49) took up the position of CEO of HAVFISK on 1 January Eldar Vindvik (39) took up the position of Technical Director of HAVFISK ASA on 1 January Ragnar Tveterås, chair of the Tveterås committee, delivered the seafood industry committee s proposals to fisheries minister Elisabeth Aspaker on 16 December The committee was set up in spring 2013 with a mandate to look at conditions that might prevent or contribute to increased profitability and value creation in the seafood industry. The committee put forward a number of proposed changes. The committee s report (NOU 2014:16 The Seafood Industry) is being sent out for consultation with a deadline of 30 April The proposals will be followed up with a white paper before the end of the year. The aim is for predictable framework conditions that can create profitability in the industry. Sale of vessels and quotas In December 2013, the company signed an agreement for the sale of «Jergul» with quotas. It was planned to complete the sale during the second quarter of 2014, depending on the approval of the Norwegian authorities. The agreement was not implemented, due to the lack of a response from the Norwegian authorities. However in its decision of 8 October 2014, the Ministry of Trade, Industry and Fisheries rejected dispensation from the Participation Act in the application to move quotas from Nordland to Finnmark. Annual financial statements Income statement HAVFISK is a Norwegian company and has presented its financial statements in accordance with the International Financial Reporting Standards (IFRS) since the first quarter of HAVFISK had operating revenues of NOK 1,049 million in 2014, compared with NOK 779 million in EBITDA was NOK 299 million in 2013, an increase of NOK 88 million from The quantity harvested in 2014 increased by five per cent over The quotas for cod in 2014 were at approximately the same level as in 2013, but those for haddock and saithe were reduced. However, harvest volume for cod was approximately nine per cent lower than in This is because the quantity of cod was increased at the end of 2013 because of redistribution from other groups of vessels. In 2014 there was no equivalent redistribution, since the other groups of vessels caught their quotas. For haddock, harvest volume was reduced by 10 per cent as a result of reduced quotas. However harvest volume of saithe increased by 18 per cent, in spite of reduced quotas. This was due to better utilisation of quotas and the result of the fleet renewal project, which has led to increased harvesting capacity as a result of investment in efficient new vessels. The average harvest value per operating day in 2014 was NOK 321,000 per vessel. This is the highest that has been achieved in the company s history. Depreciation and amortisation in 2014 totalled NOK 130 million, NOK 28 million of which refers to depreciation of quotas. In 2013, depreciation and amortisation amounted to NOK 105 million. HAVFISK had no non-recurring items in The consolidated operating profit (EBIT) was NOK 169 million in 2014 as against NOK 106 million in The group s net financial items showed an income of NOK 91 million in 2014 (expenses of NOK 209 million in 2013). The net financial items in 2014 include a reversal of provisions of NOK 158 million from 2013 relating to the Glitnir case, as described under «important events in 2014». Tax expenses were NOK 64 million in 2014 (tax income of NOK 32 million in 2013). Consolidated net profit for 2014 was NOK +197 million (NOK -72 million in 2013). Earnings per share in 2014 were NOK +2.32, compared with NOK per share in Cash flow Consolidated net cash flow from operating activities was NOK 245 million in 2014, compared with NOK 143 million in The increase is mainly due to profit being considerably better compared with the previous year. Net cash flow from investing activities was NOK -185 million in Investment in the new build project amounted to NOK 187 million net, after deduction of the NOK 25 million contribution from the NO X Fund. Upgrades and new investment in the existing fleet and plant amounted to NOK 48 million. These are offset by income from the sale of fixed assets and changes in other non-current receivables of NOK 50 million altogether. Net cash flow from financing activities in 2013 was NOK -495 million. The year s net cash flow from financing activities was NOK 61 million. Borrowing in connection with financing of the new build project amounted to NOK 140 million. Instalment payments on the company s long-term liabilities of NOK 78 million were also made during the year. Net cash flow from financing activities in 2013 was NOK 324 million. Cash in hand and unused drawing rights totalled NOK 146 million at the end of 2014, compared with NOK 24 million in At the end of 2014, the group also had unused drawing rights amounting to NOK 87 million. Balance sheet and liquidity At the end of 2014, current interest-bearing liabilities totalled NOK 78 million. This is the same amount as at the end of At 31 December 2014, current interest-bearing liabilities consisted entirely of first-year instalments on non-current debt. The group had made no drawings on its operating credit at 31 December. Non-current interest-bearing loans increased by NOK 65 million to NOK 1,210 million in 2014, compared to NOK 1,145 million in Net interest-bearing liabilities (interest-bearing liabilities less cash in hand and interest-bearing assets) were reduced to NOK 925 million as of 31 December 2014, from NOK 997 million at the end of The group s working capital (interest-free current assets less interest-free current liabilities) was NOK -145 million at year end. This represented a change of NOK 72 million from NOK -217 million at the end of Working capital at the end of 2013 included a provision of NOK 158 million in connection with the Glitnir case. This was reversed in HAVFISK s overall balance total increased from NOK 2,498 million in 2013 to NOK 2,504 million in Group equity

19 OUR RESULTS BOARD OF DIRECTORS REPORT increased over the same period from NOK 714 million to NOK 876 million. This yielded an equity ratio of 35 per cent at 31 December 2014, compared with 28.6 per cent at 31 December Operations HAVFISK is a fishery company that reports its entire activities under one segment. HAVFISK had ten active trawlers in Norway as of 31 December 2014, including one freshfish trawler, four freezer trawlers and five combination trawlers (fresh-fish trawlers with freezing capacity). Altogether, the group holds 29.6 cod and haddock licenses, 31.9 saithe licences, eight shrimp trawling licences and three greater silver smelt licences. HAVFISK also owns several onshore processing plants that are mainly leased to Norway Seafoods Group on long-term contracts. HAVFISK s total harvested volume in 2014 was 59,295 tonnes headed and gutted weight. This is the highest harvested volume in the company s history. This is due to better utilisation of saithe quotas and increased harvest volume of species other than cod and haddock, such as Greenland halibut, redfish and prawns. Harvested volumes of both cod and haddock declined in relation to 2013 because of reduced quotas and the considerable redistributed volume in However the reduction in cod and haddock volumes was compensated by the increased volume of other species. Prices achieved for all fish species were higher in 2014 than in Cod is HAVFISK s most important species and accounts for approximately 55 per cent of the quantity harvested. Price trends for cod have been positive throughout 2014 and the average price increased by 24 per cent compared with The price of fuel in 2014 was at approximately the same level as in The consequences of changes in the price of bunker oil over the year are somewhat reduced through hedging contracts. The price of bunker oil was reduced towards the end of 2014 as a result of the general reduction in oil prices. This reduction had little effect on profits in 2014 however, due to the reduced operation at the end of the year. Costs of repairs and maintenance of the fleet and other operations-related costs were higher in 2014 than in This is mainly due to there being more operating days, as well as a higher harvest volume and value. Financial risk and risk management Market risk HAVFISK is exposed to risk related to the value of investment in quotas and vessels in the event that price changes for the company s products affect the competitiveness and earning potential of the companies over time. Guidelines established by the board are observed in the company when entering into on-going hedging transactions related to the purchase of fuel for the fleet. This means that all hedging transactions are related to expected future consumption of bunkers. Current settlement of hedging contracts is recognised in operating costs. Changes in the present value of hedging agreements that mature in the future are recognised in comprehensive income under changes in fair value of cash flow hedges. Exposure to risk posed by changes in the level of interest rates is identified and assessed on an on-going basis. Fixed interest agreements have been concluded for part of the group s non-current interest-bearing debt. Current settlement of hedging contracts is recognised in financial expenses. Changes in the present value of hedging agreements that mature in the future are recognised in comprehensive income under changes in fair value of cash flow hedges. Credit risk Sales to customers by HAVFISK are made through the Norwegian Fishermen s Sales Organisation and the Sunnmøre & Romsdal Fishermen s Sales Organisation. Settlement is guaranteed through these two organisations and the risk that counterparties will be unable to meet their obligations for financial reasons is currently regarded as small. The Norway Seafoods group is the group s largest customer and a close partner. HAVFISK owns several processing plants that are rented by Norway Seafoods group on long-term contracts. A long-term lease agreement with HAVFISK regarding production equipment is recognised as a finance lease and presented as an interest-bearing non-current asset investment on the balance sheet. The lease agreement for buildings is treated as an operating lease in the accounts and the annual rent is recognised under other operating revenues in the income statement. At the end of the fourth quarter, total receivables from the Norway Seafoods group amounted to NOK 211 million, including NOK 72 million relating to finance leases for equipment in the company s production plants and NOK 139 million, which is a subordinated loan and other receivables including cumulative interest. Norway Seafoods has had low profitability for some time and has taken several measures to strengthen the operation. HAVFISK sells a substantial share of its fresh volume to Norway Seafoods. Settlement takes place through the Norwegian Fishermen s Sales Organisation, which guarantees the settlements. The company therefore has practically no credit risk related to this type of sale. Liquidity risk The board of HAVFISK considers the group s liquidity to be satisfactory. The group is continuing its efforts to safeguard its ability to meet current and future obligations through cash flow from operational activities. A refinancing was carried out in January 2012 with an expanded credit facility which were drawn down in line with payments under the new building contracts awarded in September The credit facility together with earnings from operations are regarded as satisfactory for meeting the group s liquidity requirements in the time to come. Available liquidity at 31 December was NOK 233 million, including NOK 87 million in undrawn drawing rights. Foreign exchange risk HAVFISK ASA is not directly exposed to foreign exchange risk, as the company does not have subsidiaries outside Norway and all revenues from sales are in Norwegian kroner. However, the group is indirectly exposed as the price of its products could over time be affected by exchange rate fluctuations. HAVFISK has no current hedging instruments related to sales in foreign currencies. Events after the balance sheet date HAVFISK s appeal was heard by Iceland s Supreme Court on 4 March 2015 and judgement was given on 12 March. The court concluded that HAVFISK was entitled to cancel the agreement in question in The court found in favour of HAVFISK. The consequences in the accounts are incorporated in the annual accounts for 2014, cf. description under important events in Going concern assumption Pursuant to section 3-3a of the Norwegian Accounting Act, it is confirmed that the going concern assumption is realistic.

20 20 OUR RESULTS BOARD OF DIRECTORS REPORT 2014 Parent company financial statements and coverage of net loss Parent company income statement The parent company s income statement The parent company had operating revenues of NOK 46 million in 2014, against NOK 34 million in Operating revenues consist mainly of administrative services for other companies in the HAVFISK group, as well as the company having handled sales of fish meal from the group s trawlers in EBITDA for the parent company was NOK -12 million in 2014, compared with NOK -2 million in Changes in EBITDA are mainly due to charging internal costs from subsidiaries in connection with skattefunn projects. Depreciation and amortisation totalled NOK in 2014, compared with NOK in The parent company accordingly showed a loss before interest and taxes (EBIT) of NOK 13 million in 2014 (NOK -3 million in 2013). The parent company had net financial income of NOK 192 million in The company had net financial expenses in 2013 of NOK 142 million. Net financial expenses in 2013 included provisions of NOK 158 million relating to the Glitnir case. In 2014, these provisions were reversed Profit after financial items was NOK 179 million in 2014 (against a loss of NOK 144 million in 2013). The parent company had tax expenses of NOK 42 million in 2014 as against income of NOK 40 million in Parent company cash flow The parent company s net cash flow from operating activities was NOK -31 million in 2014, compared with NOK -10 million in The net cash flow from investing activities was NOK -7 million in 2014 (2013: NOK -229 million). Net cash flow from financing activities was NOK +67 million (2013: NOK +240 million). Cash in hand at end 2014 totalled NOK 29 million, compared with NOK 1 million at the end of Parent company balance sheet The parent company s net interest-bearing liabilities (interest-bearing liabilities less cash in hand and interest-bearing receivables) amounted to NOK 104 million as of 31 December 2014, compared with NOK -29 million as of 31 December Working capital for the company (interest-free current assets less interest-free current liabilities) at year end was NOK -49 million, compared with NOK -182 million at the end of The parent company s overall balance sheet at 31 December 2014 was NOK 2,111 million, compared with NOK 2,074 million at 31 December Equity for the parent company at year end 2014 was NOK 713 million, compared with NOK 608 million at the end of This gave an equity ratio at 31 December 2014 of 34 per cent as against 29 per cent at 31 December Allocation of profit The 2014 income statement for the parent company, HAVFISK ASA, shows an ordinary net profit of NOK 137 million. On this basis, the Board proposes that the profit for the year is allocated as follows: Transferred to other equity Total NOK tusen kroner NOK tusen kroner Dividends HAVFISK ASA s goal is to give its shareholders the best possible return. Over time, the objective is to pay a reasonable proportion of the company s net profit as dividend. Now that the fleet renewal project has been completed and the Glitnir-case is concluded with a positive outcome, the company`s possibilities to enable paying dividends to the shareholders are significantly strengthened. Freely negotiable shares The acquisition of shares in the company is subject to the consent of the board. Such consent can only be withheld if, as the result of the acquisition, more than 40 per cent of the company s capital would become owned by people who are not Norwegian citizens or who are treated on an equal footing with the latter pursuant to the Act on Participation in Fisheries, or if the acquisition generates a mandatory requirement for a licence pursuant to this Act. No other transfer restrictions are included in the company s articles of association. Research and development - R&D The group has not recognised R&D costs in the balance sheet. The group has three current projects in the «skattefunn» scheme, relating to quality improvement and increased utilisation of raw materials and by-products. The costs of these projects are recognised in operating expenses as they arise. In connection with the new vessels project, the group has been granted and has received NOK 25 million from the NO X Fund. This contribution relates to reduced Nox emissions from the new vessels and was paid out in The amount has been used to offset investment in new vessels and recognised on the income statement in the form of reduced depreciation in line with the economic lifetime of the vessel. Health, safety and the environment The group s basic view is that all harm to people, the environment or material assets can and will be avoided. HAVFISK gives priority to work on HSE, and a high level of awareness prevails in day-to-day operations about the need to reduce the consumption of energy, packaging and chemical cleaning agents. Sickness absence averaged 7.3 per cent in 2014, compared with 7.6 per cent the previous year. 6.0 per cent of this represents absence of more than 16 days. Sickness absence has been reduced compared to 2013, but the level is not satisfactory. Further measures have been initiated to reduce such absences. Absence owing to illness amounted to 9,973 days out of a total of 137,390 working days in Sickness absence in the parent company in 2014 was 4.1 per cent, compared with 5.0 per cent in A total of 24 incidents during the year caused personal injuries. These were mainly cuts and compression injuries, as well as sprains. In 2014, there have been no accidents that led to serious injury. In 2013, 17 incidents that led to injury were recorded, including one serious injury. HAVFISK has an ambition of achieving zero personal injuries and will continue to implement measures targeted at reducing such incidents. Earlier surveys of the working environment show that this is regarded as good, but improvement measures are implemented on a continuous basis. HAVFISK participates in «Aker Active», which is the Aker group s initiative to improve the health of its employees. This programme encourages employees to be active, and expert guidance is offered in exercise and diet. Aker Active works closely with the Norwegian Ski Federation. HAVFISK had an average of 381 employees in The company is part of Norway s inclusive workplace scheme.

21 OUR RESULTS BOARD OF DIRECTORS REPORT HAVFISK focuses on sustainable exploitation of resources. For example, we have entered into a partnership agreement with the environmental organisation WWF, which acts as the company s adviser in environmental issues. The agreement includes specific activities on board the vessels that could contribute to even more sustainable fishing. HAVFISK and WWF are also working together to help strengthen Norwegian resource research and establish good management of stocks of all types of fish. Norwegian Arctic cod and haddock became MSC certified in 2009 and are now subject to an ordinary 5-year recertification. This is expected to be concluded with a positive result. HAVFISK is an industrial partner in an international, interdisciplinary research collaboration on the effects of climate change on the ecosystem at sea, GreenMar. This collaboration involves research environments in ecology, climate and marine resources and is intended to increase knowledge that could contribute to «green growth» by means of the sustainable management and use of our marine areas. HAVFISK contributes one vessel for use in the Institute of Marine Research reference fleet. In this way, HAVFISK assists in the collection of a range of biological data that can be used in research into fish stocks. Impact on the natural environment All the vessels are fitted with separators for bilge water, and carry refuse containers for household waste. The group s trawlers use bunker oil as fuel. In 2014, the company consumed 30.1 million litres of bunker oil. The 2014 energy and climate accounting for HAVFISK is available on our website, (link to report). The group is concerned to implement measures which can reduce bunker oil consumption and the likelihood of fuel spills. There were no spillages of oil or diesel in All waste oil is collected and returned to land for delivery to treatment facilities. The board takes the view that the companies in HAVFISK do not cause significant emissions or discharges to the natural environment, and are not considered to burden the natural environment to any substantial extent over and above the level normal for this type of industry. Report on corporate social responsibility HAVFISK has prepared a separate document which reports on corporate social responsibility. This document is now available on the company s website Organisation Employees and equal opportunities HAVFISK aims to be an attractive employer. Its human resources policy is intended to be equitable, neutral and non-discriminatory, regardless of ethnicity and/or national background, gender, religion or age. This has been included in the group s ethical guidelines. The three new vessels brought into service by the group in 2013/14 have better facilities, including single cabins for all. This makes it easier to recruit crew of both genders. No other special recruitment measures have been initiated in this regard. At year end 2014, women accounted for 6 per cent of the workforce, compared with 6 per cent in The group management team includes one woman. Two of the company s five shareholder-elected board members are women. All three employee representatives on the board are men. The company complies with the legal requirement for 40 per cent representation for each gender among the shareholder-elected board members. Corporate governance In accordance with the Norwegian code of practice for corporate governance, last revised in the autumn of 2014, the Board has reviewed and updated the company s principles for corporate governance. A large measure of correspondence exists between the recommendations and HAVFISK s principles. Deviations from the code are noted in the presentation of corporate governance on page 80 of the annual report or on the company s website Outlook Quotas for cod have been reduced by approximately 10 per cent for 2015, compared with For saithe north of 62 degrees, quotas are reduced by about 5 per cent, while the haddock quota is unchanged. This is in line with earlier forecasts by marine researchers. Demand for most fish species is good, important markets are improving and prices have shown a positive trend in 2014 and into HAVFISK has a good quota basis for 2015 and the fleet renewal has increased the group s harvesting capacity considerably. This is demonstrated among other things by the increased quota utilisation for saithe and other fish species that has been achieved in The government s decision to increase the quota ceiling from three to four quotas per vessel could provide opportunities for further efficiency improvements. To begin with, HAVFISK will be able to exploit the quotas better. In the longer term, this may also allow for the combined quota basis to be fished with fewer vessels. There is a strong focus on quality improvements in the industry generally, and in the group in particular. HAVFISK s aim is to offer fish of high and consistent quality and a number of measures have been initiated such as training, new routines etc. to ensure that this objective is fulfilled. It is HAVFISK s aim to help ensure that Norwegian cod is perceived as the good, nutritional food it is, both in Norway and globally. Ålesund, 19 March 2015 The Board of Directors of HAVFISK ASA Frank O. Reite Trine Sæther Romuld Leiv Grønnevet Ola Snøve Kari Mette Ski Chair Deputy Chair Director Director Director Ottar S. Johnsen Andre Steffensen Erlend Hanssen Webjørn Barstad Director Director Director President and CEO

22 22 OUR RESULTS DECLARATION BY THE DIRECTORS AND THE CEO Declaration by the directors and chief executive The Board of Directors and the chief executive officer have today reviewed and approved the directors report and the annual consolidated and parent company financial statements for HAVFISK ASA for the fiscal year 2014 and at 31 December 2014 (annual report for 2014). The consolidated financial statements have been prepared in accordance with the IFRS approved by the EU and associated interpretations (IFRICs), as well as the additional disclosure requirements in the Norwegian Accounting Act applicable at 31/12/2014. The financial statements for the parent company have been prepared in accordance with the Norwegian Accounting Act and Norwegian generally accepted accounting practice at 31/12/2014. To the best of our knowledge and belief the annual consolidated and parent company financial statements for 2014 have been prepared in accordance with applicable accounting standards the annual consolidated and parent company financial statements give a true and fair view of the assets, liabilities, financial position and profit (or loss) as a whole at 31 December 2014 the development and performance of the business and the position of the group and the parent company the principal risks and uncertainties faced by the group and the parent company Ålesund, 19 March 2015 The Board of Directors of HAVFISK ASA Frank O. Reite Trine Sæther Romuld Leiv Grønnevet Ola Snøve Kari Mette Ski Chair Deputy Chair Director Director Director Ottar S. Johnsen Andre Steffensen Erlend Hanssen Webjørn Barstad Director Director Director President and CEO

23 23 Annual accounts Group

24 24 ANNUAL ACCOUNTS INCOME STATEMENT HAVFISK ASA Group Income statement NOK million Note Operating revenues Other operating revenues Cost of goods sold and change in inventories 3 (110) (53) Salaries and payroll costs 4, 29 (359) (288) Other operating expenses 5, 9 (282) (226) Operating profit before depreciation and amortisation Depreciation and amortisation 10, 11 (130) (105) Non-recurring operating items 6 - Operating profit Financial income Financial expenses 7 (77) (220) Profit before tax 260 (103) Tax expense 8 (64) 32 Profit for the year 197 (72) Attributable to: Majority shareholding (owners of parent company) 195 (72) Minority interests Average number of shares outstanding Earnings per share: Earnings per share 17 2,32 (0.85) Diluted earnings per share1 17 2,32 (0.85) 1) There were no potentially dilutive instruments outstanding as of 31 December 2014 and 31 December Comprehensive income NOK million Note Profit for the year Other comprehensive income, net of tax: Actuarial gains and losses in pension schemes 23 (2) (2) Total items that cannot be reclass. to profit Change in fair value of cash flow hedges 26 (31) 15 Translation differences Total items that can be reclass. to profit (31) 15 Other comprehensive income, net of tax: (34) 13 Comprehensive income 163 (59) Attributable to: Majority shareholding (owners of parent company) 162 (60) Minority interests 1 1 Comprehensive income 163 (59)

25 ANNUAL ACCOUNTS BALANCE SHEET AS AT HAVFISK ASA Group Balance Sheet as at NOK million Note ASSETS Vessels and equipment Buildings and housing Intangible assets 1, Deferred tax assets Financial interest bearing non-current assets Building contracts vessels 10, Other non-current assets Total non-current assets Inventories Trade and other current non-interest-bearing receivables Derivatives 26-5 Interest bearing receivables Cash and cash equivalents Assets discontinued operations held for sale Total current assets Total assets EQUITY AND LIABILITIES Share capital 18, Other paid-in equity Treasury shares 18 (1) (1) Other equity / uncovered loss 89 (72) Total equity attributable to owners of the parent company Minority interests Total equity Interest-bearing loans and credits Deferred tax liability Pension liabilities Other non-current liabilities 30-6 Total non-current liabilities Current interest-bearing liabilities Trade and other payables Provisions for loss ref. interest and currency swap ref. Glitnir 25, Tax payable for the period 8, Derivatives Total current liabilities Total liabilities Total equity and liabilities Ålesund, 19 March 2015 For HAVFISK ASA Frank O. Reite Trine Sæther Romuld Leiv Grønnevet Ola Snøve Kari Mette Ski Chair Deputy Chair Director Director Director Ottar S. Johnsen Andre Steffensen Erlend Hanssen Webjørn Barstad Director Director Director President and CEO

26 26 ANNUAL ACCOUNTS CHANGES IN EQUITY HAVFISK ASA Group Changes in Equity NOK million Note Paid-in capital Translation differences Hedging and other reserves Total translation and other reserves Retained earnings Total reserves and retained earnings equity Total equity Minority interests interests Total equity equity Balance as of 01 January (38) (38) 25 (12) Profit for the year - (72) (72) (72) 1 (72) Other profit elements (see below) Comprehensive income (72) (60) (60) 1 (59) Dividends (1) (1) Balance as of 31 December (25) (25) (47) (72) Profit for the year Other profit elements (see below) (34) (34) (34) (34) - (34) Comprehensive income 163 Dividends (1) (1) Balance as of 31 December (59) (59) Hedging and other reserves The hedging reserve applies to so-called cash flow hedging transactions entered into to hedge against changes in income and expenses as a result of changes in interest rates and oil prices. Changes in the present value of hedging agreements that mature in the future are recognised in comprehensive income under changes in fair value of cash flow hedges. The contra entry is hedging and other reserves under equity. NOK million Translation differences Fair value reserves Hedging reserves Translation and other reserves Retained equity Total Minority interests Total equity 2013 Change in fair value of financial assets Change in fair value of cash flow hedges Actuarial gains and losses in pension schemes (2) (2) - (2) - (2) Other profit elements (2) Change in fair value of financial assets Change in fair value of cash flow hedges (31) (31) - (31) - (31) Actuarial gains and losses in pension schemes (2) (2) - (2) - (2) Translation differences Other profit elements (2) (31) (34) - (34) - (34) NOK million Functionalcurrency Balance as of 1 January Changes in fair value Balance as of 31 Dec. Hedging 2013 Currency hedging reserve in HAVFISK Interest rate hedging in HAVFISK (32) 4 (28) Bunker hedging in HAVFISK (5) 11 5 Total (38) 15 (23) Hedging 2014 Currency hedging reserve in HAVFISK Interest rate hedging in HAVFISK (28) (15) (43) Bunker hedging in HAVFISK 5 (16) (11) Total (23) (31) (54)

27 ANNUAL ACCOUNTS STATEMENT OF CASH FLOW 27 HAVFISK ASA Group Statement of Cash Flow NOK million Note Profit before tax 260 (103) Adjusted for net interest expenses Sales gains/(losses) and impairments (6) (1) Ordinary depreciation 10, Interest paid 7 (74) (56) Interest received Taxes paid 8 (6) (7) Other items without cash flow effect (210) 172 Change in operating assets and liabilities 83 (22) Cash flow from operating activities Proceeds from sale of vessels, property, plant and equipment Proceeds from reduction of non-current receivables 2 Payments on investment in non-current receivables - (3) Procurement of vessels, property, plant and equipment 10 (47) (33) Payments on building contracts 10, 13 (212) (461) Contribution received from NOX Fund in connection with new building Net cash flow from other investments - - Cash flow from investing activities (184) (495) Proceeds from taking out of long-term loans Repayment of long-term loans 21 (78) (76) Dividends/group contributions paid 20 (1) (1) Cash flow from financing activities Cash flow for the year 122 (28) Cash and cash equivalents as of 1 January Cash and cash equivalents as of 31 December

28 28 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group Notes to the accounts Note 1: Accounting principles, basis for preparation and estimates Information about the Group HAVFISK ASA is a company domiciled in Norway, with its head office in Ålesund. The 2014 consolidated financial statements include the parent company HAVFISK ASA and its subsidiaries. HAVFISK ASA is listed on the Oslo Stock Exchange under the HFISK ticker. Basis for preparation and accounting standards not applied Statement of compliance The consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) approved by the EU and the associated interpretations in force as of 31 December 2014, and the Norwegian requirements for disclosure pursuant to the Securities Trading Act (Norway) and the Accounting Act (Norway) as of 31 December The proposed annual financial statements for 2014 were approved by the board and CEO on 19 March The annual financial statements will be presented to the annual general meeting on 10 April 2015 for final approval. The board is authorised to make modifications to the annual financial statements until such final approval has been granted. Basis for measurement These consolidated financial statements have been prepared on the basis of historical cost, with the following exceptions: Derivatives are valued at fair value Financial instruments at fair value through profit and loss are valued at fair value In the event of phased acquisitions, changes in value are recognised for previous assets Functional currency and presentation currency The consolidated financial statements are presented in NOK million. The Norwegian krone (NOK) is the functional currency of the parent company. Numbers and percentages may not always correspond to totals owing to amounts being rounded up or down. Estimates and assessments Preparation of annual financial statements in conformity with the IFRS includes assessments, estimates and assumptions that affect the application of the accounting principles applied, as well as the reported amounts for assets, liabilities, revenues and expenses. The actual amounts may deviate from estimated amounts. Estimates and underlying assumptions are reviewed and assessed on an on-going basis. Estimates and associated assumptions are based on historical experience and various other factors considered to be reasonable under the circumstances. Changes to accounting estimates are recognised in the period in which the estimates are revised and in any future periods that are affected. Areas where material uncertainty exists as to estimates and critical assumptions and assessments in applying the group s accounting principles are described in the following paragraphs and in relevant notes to the financial statements. Estimates and underlying assumptions are reviewed and assessed on an on-going basis. The activities of the operating companies of the group are conducted in Norway, but they are indirectly affected by uncertainty in the various markets in the rest of the world. (a) Intangible assets In accordance with applicable accounting principles, the group tests annually to determine whether there is any need for impairment of intangible assets (licences). The estimated recoverable amount is determined on the basis of the present value of budgeted cash flows for the cash-generating unit. Such calculations require the use of estimates, and that these are consistent with the market valuation of the group. See note 11. (b) Taxes The group consists entirely of companies that pay tax in Norway. The rate of corporation tax in 2014 is 27% and this is the tax rate that is used for calculating future tax liabilities on the balance sheet. See note 8. (c) Pension liabilities The present value of pension liabilities depends on a number of factors determined on an actuarial basis using a number of assumptions. The assumptions used in determining net pension costs include a discount rate. Any changes in these assumptions will affect the calculated pension liabilities. The group determines the discount rate at the end of each year. This is the interest rate to be used to determine the present value of estimated future cash flows needed to fulfil the pension liabilities. In determining the discount rate, the group takes as its basis the interest rates on bonds with a high credit rating in the currency in which the benefits are payable and with terms to maturity that approximately equate to the pension liabilities. This and other key assumptions relating to pension liabilities are stated in Note 23. (d) Financial instruments The group is exposed to the following risks resulting from its use of financial instruments: Credit risk Liquidity risk (change in oil price) Market risk( interest rates)

29 ANNUAL ACCOUNTS NOTES 29 HAVFISK ASA Group Note 26 presents information on the group s exposure to each of the aforementioned risks, objectives, principles and processes for measuring and managing risk, and the group s asset management. (e) Contingent liabilities Provisions have been made to cover expected losses resulting from disputes in so far as negative outcomes are likely and reliable estimates can be made. However, the final outcome of these cases will always be subject to uncertainties and resulting liabilities may exceed recognised provisions. See note 27. New and amended accounting standards IFRS 13 Fair Value Measurement, the revised IAS 19 Employee Benefits and the revised IAS 1 IAS 1 Presentation of Financial Statements have been implemented with effect from 1 January Changes to IAS 19 Employee Benefits: The HAVFISK group has previously used the corridor method for reporting actuarial gains and losses. According to IAS 19R, actuarial gains and losses are shown in the statement of other income elements in comprehensive income. Previously return on pension funds was calculated using an anticipated longterm return on pension funds. As a result of the application of IAS 19R, the net interest rate cost for the period is now calculated by applying the discount rate for the obligation at the start of the period of the net obligation. Net interest rate costs therefore consist of interest on the obligation and return on the funds, both calculated using the discount rate. Changes in net pension obligations as a result of premium payments and payment of pensions are taken into account. The difference between actual returns on pension funds and that recognised on the income statement is entered against other profit elements in comprehensive income. Changes as a result of IAS 19R amount to NOK 2 million, which has been recognised in comprehensive income for 2013 and NOK 3 million, which has been recognised in comprehensive income for HAVFISK has applied IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, as well as the revised standards IAS27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures with effect from 1 January The standards mentioned have not led to any changes in the financial reporting of investments in other companies. IFRS 12 includes note information requirements for subsidiaries, joint arrangements, associated companies and other investments. The group will review and assess the note information requirements of IFRS 12 in relation to existing notes. Accounting principles and interpretations issued but not applied The new revenue recognition standard, IFRS 15, comes into force on 1 January Until such time, HAVFISK will assess the effects of IFRS 15 for the group s financial reporting of sales of fish. IFRS 9 Financial Instruments was concluded in July 2014 and enters into force on 1 January 2018, assuming EU approval. HAVFISK will consider the effects of IFRS 9 for the company. Accounting principles The accounting principles presented below have been applied consistently for all periods and companies presented in the consolidated financial statements. In the case of significant changes, comparative figures have been reclassified in accordance with this year s presentation. In addition, comparative figures for the income statement have been restated so that discontinued operations are presented as if they had been discontinued at the start of the comparative period. Consolidated financial statements and consolidation principles Subsidiaries Subsidiaries are entities in which HAVFISK controls the company s operating and financial policies. Generally, the group owns, directly or indirectly, more than 50 per cent of the voting rights of such companies. Potential voting rights that may be exercised are considered when assessing whether an entity is controlled. Subsidiaries are recognised in the consolidated financial statements from the day control is achieved until control ceases. Wherever necessary, subsidiaries principles for preparing financial statement are adjusted to ensure compatibility with the group s accounting principles. Minority interests Minority interests have been disclosed separately from liabilities and equity assigned to the owners of the parent company in the balance sheet, and are recorded as a separate item in the income statement. Takeovers of minority interests are recognised as transactions with owners in their capacity as owners, which means that no goodwill or gains or losses arise as a result of these transactions. EBITDA HAVFISK defines EBITDA as operating profit before depreciation, amortisation and non-recurring operating items. Non-recurring operating items Non-recurring operating items include writedowns of goodwill, significant write-downs and reversals of write-downs on property, plant and equipment, significant losses and gains on the sale of operating assets, restructuring costs and other material items not deemed to be of a regularly recurring nature. HAVFISK had no special operational items in 2014; see note 6. Other items Other items include gains on the sale of subsidiaries and significant gains and losses that are not part of the group s operational activities. The resulting amount is included in the profit before tax. Elimination of transactions during consolidation Internal outstanding accounts and transactions within the group, as well as unrealised income and expenses from internal transactions, are eliminated in the consolidated financial statements. Unrealised gains from transactions with companies recognised using the equity method are eliminated against investment corresponding to the group s ownership share. Unrealised losses are eliminated in the same way, but only to the extent that no impairment has been demonstrated. Foreign currency translations and transactions Functional currency Initial recording of items included in the financial statements of each group subsidiary is undertaken in its functional currency, i.e., the currency that best reflects the economic situation and environment relevant to that subsidiary. The consolidated financial statements are presented in Norwegian kroner (NOK), which is the functional currency of the parent company. All subsidiaries of HAVFISK present their accounts in Norwegian kroner. Related party transactions All transactions, agreements and business dealings with related parties are conducted under normal market terms. Financial instruments Non-derivative financial instruments

30 30 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group The group initially posts loans, receivables and contributions at the time of acquisition. All other financial assets (including assets allocated at fair value through profit and loss) are initially recognised at the time of the agreement, when the group becomes a party to the instrument s contractual terms. The group derecognises a financial asset when the contractual rights to the cash flow from the asset expire, or when the group transfers these contractual rights in a transaction where practically all risk and return on ownership of the financial asset are transferred. All rights and obligations created or retained in this type of transfer are accounted for separately as assets or liabilities. Financial assets and liabilities are offset if the group has a legal right to offset these amounts and intends either to settle them on a net basis or to realise the asset and settle the liability in one go. When amounts are offset, they are presented on a net basis in the balance sheet. The group has the following non-derivative financial assets: financial assets at fair value through profit and loss, loans and receivables and financial assets available for sale. The group has no financial assets held to maturity. Principles used in accounting for financial income and expenses are described in a separate paragraph. Financial assets at fair value through profit and loss A financial instrument is classified at fair value through profit and loss if it is designated as such at initial recognition or held for trading. Financial instruments are allocated at fair value through profit and loss if the asset is managed, and purchase and sale decisions related to it are made on the basis of fair value. After initial recognition, transaction costs attributable to the asset are recognised in the income statement when they are incurred. A financial instrument is valued at fair value, and any changes in value are recognised in the income statement. Loans and receivables Loans and receivables are financial assets involving fixed payments or payments that can be fixed and are not listed in an active market. Loans and receivables are initially recognised at fair value under directly derivative transaction costs. After this, loans and receivables are valued at amortised cost using the effective interest rate method, minus any losses in the event of impairment. Loans and receivables consist of customer receivables and other receivables. Cash amounts and bank payments, including payments on special terms due within the next three months, represent cash and cash equivalents. Investments held to maturity The group had no financial assets held to maturity as at the end of the year. Where the group has both the intention and ability to hold bonds to maturity, they are classified as held to maturity. Investments held to maturity are measured at their amortised cost using the effective interest method, minus any impairment losses Financial assets available for sale Financial assets available for sale are non-derivative financial assets classified as available for sale and which are not classified under any other category. The group s investments in equity instruments and certain debt instruments are classified as financial assets available for sale. After initial recognition, they are measured at fair value. Changes to the fair value are recognised in other income and expenses under comprehensive income and are presented as fair value reserve under equity. However, this does not apply to losses in the event of impairment (see separate section). Once an investment has been de-recognised, the accumulated gain or loss is transferred from other income and expenses to profit and loss. Non-derivative financial liabilities The group initially recognises bonded debt and unprioritised obligations at the time they are issued. All other financial obligations (including obligations allocated at fair value through profit and loss) are initially recognised on the contract date, when the group becomes a party to the contractual terms of the instrument. The group derecognises a financial obligation when the contractual terms have been fulfilled, cancelled or expired. Financial assets and liabilities are offset if the group has a legal right to offset these amounts and intends either to settle them on a net basis or to realise the asset and settle the liability in one go. When amounts are offset, they are presented on a net basis in the balance sheet. The group has the following non-derivative financial obligations: loans, overdraft facilities, trade creditors and other creditors. Non-derivative financial obligations are initially recognised at fair value plus directly attributable transaction costs. Once initially recognised, these obligations are valued at amortised cost using the effective interest rate method. Financial derivatives, including hedge accounting The group uses financial derivative instruments to hedge its exposure to interest rate and bunkering risks. Derivatives are initially recognised at fair value. Attributable transaction costs are recognised in the income statement as they are incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. When hedging is established, the relationship between the hedging instrument(s) and the hedging object(s) is formally identified and documented. Documentation includes the company s goals and strategy for risk management in undertaking this hedging, and a description of how the company will evaluate its effectiveness. When entering into the hedge and on an ongoing basis for the periods for which the hedge is identified, the group assesses whether the hedging instrument is expected to be particularly effective in terms of achieving equalising changes in the fair value or cash flow from the relevant hedged objects. The actual effect of hedging is assessed on an on-going basis for the periods for which hedge accounting has been identified, up to a range of per cent. When hedging cash flow for anticipated transactions, the anticipated transaction that is the hedge s contra entry must be highly probable, and have exposure to variations in cash flows that may eventually affect the result. Cash flow hedges Changes in the fair value of a derivative allocated as a hedging instrument in a cash flow hedge are recognised under other income and expenses and presented in the exchange rate hedging reserve as part of the equity. Amounts included in other income and expenses are transferred to the income statement for the period in which the hedged object affects the result. Upon transfer to the income statement, the same line in the comprehensive income is used for the hedged object and the hedging instrument. Ineffective hedging is recognised directly in the income statement. When a hedging instrument no longer meets the criteria for hedge accounting, expires, or is sold, terminated or exercised, or when it is no longer allocated for hedging, hedge accounting is terminated. Any cumulative gain or loss previously recognised under other income and expenses and presented in the hedging reserve remains there until the expected transaction affects the result. If the hedged object is a non-financial asset recognised in the balance sheet, the amount recognised under other income and expenses is transferred to the book value of the asset upon recognition. When hedging expected transactions that are no longer expected to occur, the amount rec-

31 ANNUAL ACCOUNTS NOTES 31 HAVFISK ASA Group ognised under other income and expenses is transferred to the income statement. In other cases, the amount recognised under other income and expenses is transferred to the income statement in the same period that the hedged item affects the result. Fair value hedges Changes in the fair value of derivative hedging instruments that have been allocated as fair value hedging are recognised in the income statement. The hedged object is also assessed at fair value with regard to the risk being hedged. Gains or losses that can be attributed to the hedged risk are recognised in the income statement and adjust the book value of the hedged object. Economic hedges - derivatives not included in hedge accounting These derivatives are valued at fair value and all changes in value are recognised in the income statement. Share capital Ordinary shares Ordinary shares are classified as equity. Costs directly attributable to the issue of ordinary shares or share options are recognised as a deduction from equity, net of any tax effects. Purchase of treasury shares When share capital that was recognised as equity is repurchased, the compensation, including directly attributable costs, is recognised as a reduction in equity, net of any tax. Repurchased shares are classified as treasury shares and are presented separately as a deduction from total equity. When treasury shares are sold or reissued, the amount received is recognised as an increase in equity, and any resulting gain or loss on the transaction is transferred to/from retained earnings. Vessels, property, plant and equipment Recognition and measurement The acquisition cost for a unit of property, plant and equipment is recognised as an asset if it is probable that future financial benefits associated with the asset will accrue to the enterprise, and that the acquisition cost for the asset can be reliably measured. Property, plant and equipment are valued at cost, minus cumulative depreciation and cumulative impairments. Cost includes expenses directly attributable to the purchase of the asset. Cost of self-constructed assets includes the cost of materials, direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the assets and preparing the site on which they are located. Cost can also include transfers from equity of any gain or loss on cash flow hedges of foreign currency purchases of property, plant and equipment, transferred from equity. Borrowing costs associated with loans to finance the construction of property, plant and equipment are capitalised over the period necessary to complete an asset and prepare it for its intended use. Other borrowing costs are expensed. When material parts of an item of property, plant and equipment have different useful lives, they are recognised as separate items. Gains or losses from the sale of property, plant and equipment are valued as the difference between the sale proceeds and book value. The resulting figure is included in the operating result before depreciation and amortisation. If the amount is material and is not deemed to be of a recurring nature, it is presented under non-recurring operating items. Assets that will be disposed of, which are classified as held for sale, are reported at the lower of the book value and the fair value less costs to sell. Subsequent costs The cost of replacing part of an item of property, plant and equipment is included in the book value of the item if it is probable that the future economic benefits in the part will accrue to the group and its cost can be measured reliably. The book value of the replaced part is derecognised. The costs of day-to-day maintenance of property, plant and equipment are recognised in the income statement as they are incurred. Depreciation Depreciation is recognised in the income statement on a straight-line basis over the estimated useful life of each component of an item of vessels, property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives, unless it is reasonably certain that the group will acquire ownership of the asset at the end of the lease term. Estimated useful lives for the current and comparative periods are as follows: Vessels and similar years Machines and vehicles 2-10 years Buildings and residences years Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. Intangible assets Goodwill All business combinations are accounted for using the acquisition method. Goodwill represents amounts arising as a consequence of takeovers of subsidiaries, associates and joint ventures. Goodwill is allocated to cash-generating units and is tested annually for impairment. For associates, the book value of goodwill is included in the book value of the investment. Negative goodwill arising from an acquisition is recognised directly in the income statement. After the implementation of IFRS 3 (revised), minority interests can be valued on the basis of the net value of identifiable assets and liabilities in the transferring company, or the minority interests can be valued at fair value, including a goodwill element. The valuation method is chosen for each acquisition. Goodwill in compliance with IFRS 3 (revised) is valued as residual at the time of takeover, and represents the sum of the following: remuneration transferred when businesses are merged minority interests recognised in the balance sheet fair value of previous assets at the time of purchase the net amount (generally the fair value) of identifiable acquired assets and obligations is deducted from this total. The takeover of minority interests is recognised under transactions with owners in their capacity as owners, which means that goodwill is not involved in these transactions. During subsequent valuation, goodwill is valued at acquisition cost, minus any accumulated impairment losses. As at 31/12/2014, HAVFISK has no goodwill on the balance sheet. Other intangible assets - Licences Other intangible assets (fishing licences and other rights) acquired are stated in the balance sheet at cost minus any accumulated amortisation and impairment losses. The licences are tested annually for impairment on the basis of indications of loss of value as well as assessments of possible indications of errors. Intangible assets with an indefinite lifetime are tested annual for loss of value. Fishing rights consist of basic quotas with no time limit and structural quotas with a time limit of 20 or 25 years. The structural quotas have a predetermined useful lifetime and are depreciated over this period. Basic quotas have an indefinite useful lifetime and are not depreciated; they are however tested for loss of value annually. Further information on licences/fishing rights

32 32 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group is provided in note 11. Expenditures on internally generated goodwill and brand names are recognised in the income statement for the period in which they are incurred. Depreciation of licences Fishing licences in the form of structural quotas are depreciated over the structural period. Basic quotas are not depreciated; see note 11. Estimated useful lives for the current and comparative periods are as follows: Structural quotas years Leases (as lessee) Leases of property, plant and equipment on terms that substantively transfer the risks and rewards of ownership to the group are classified as finance leases (financial leasing). Finance leases are recognised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Following initial recognition, the same accounting principle that applies to the corresponding asset is used. Lease payments are apportioned between financial expenses and a reduction in the lease liabilities. Finance charges are charged as financial expenses in the income statement. Leases in which a significant proportion of the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the income statement on a straight-line basis such that a constant periodic interest rate is calculated on the remaining balance sheet liability. Inventories Inventories are stated at the lower of cost and net realisable value. Acquisition cost is based on the first-in, first-out method (Fifo). The cost of finished goods comprises raw materials, direct labour and other direct costs, and related production overheads (based on normal operating capacity), but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less costs to completion and costs to sell. Impairment Financial assets Financial assets are reviewed at each balance sheet date to determine whether objective indications of impairment exist. A financial asset is regarded as subject to impairment if objective indications exist that one or more events have had a negative effect on estimated future cash flows for the asset, and this can be reliably measured. Impairments with respect to a financial asset measured at amortised cost are calculated as the difference between its book value and the present value of estimated future cash flows, discounted at the original effective interest rate. If any subsequent event reduces this impairment, the previously recognised impairment loss is reversed. The reversed amount is recognised in the income statement. Impairment losses on investments available for sale are accounted for by transferring accumulated losses that have been recognised under other income and expenses, and presented as the fair value reserve in equity, to the income statement. The accumulated loss deducted from other income and expenses and accounted for in the income statement is the difference between acquisition cost minus any repayment of the principal and amortisation, and the current fair value, minus any impairment previously recognised in the income statement. Changes in impairment provisions that reflect a time value are recognised as interest income. Impairments are reversed if the reversal can be objectively linked to an event occurring after the impairment was recognised. For debt instruments classified as available for sale, the reversal is recognised in the income statement. For equity instruments classified as available for sale, the reversal is recognised in other income and expenses in comprehensive income. The group has no financial investments held to maturity. Non-financial assets The book value of non-financial assets other than inventories and deferred tax assets is reviewed at each balance sheet date to determine whether indications of impairment exist. If such indications exist, the asset s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, annual testing for loss of value is performed. For the purpose of testing for loss of value, assets are grouped together in the smallest group of assets that generate cash inflows from continuing use, and that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit). Goodwill is allocated to the cash-generating units that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value, less costs to sell. In assessing value in use, estimated future cash flows are discounted to their present value using a market-based pre-tax discount rate. The pre-tax discount rate reflects the time value of money and the risks specific to the asset. Any impairment is recognised in the income statement if the book value of an asset or cash-generating unit exceeds its estimated recoverable amount. For impairments recognised in respect of cash-generating units, the book value is first reduced for any goodwill. Any remaining amounts are distributed proportionally between the other assets in the unit (group of units). Impairments associated with goodwill are not reversed. For other assets, impairments recognised in prior periods are assessed at each reporting date for any indication that the impairment has decreased or no longer exists. Impairments are reversed if the estimates used in the calculation of the recoverable amount have been changed. Reversal only takes place until the book value corresponds to the value that would have been recognised, net of depreciation or amortisation, if no previous impairment loss had been recognised. Payments and benefits to employees Payroll and pensions Short term payments to employees, such as payroll, are valued on an undiscounted basis and recognised as costs as they are incurred. The group has both defined benefit and defined contribution pension schemes. For defined benefit schemes, the liability recognised is the present value of the defined benefit liability at the balance sheet date, minus the fair value of plan assets, together with adjustments for actuarial gains/losses and costs of pension entitlements in previous periods. The defined benefit liability is calculated by independent actuaries and is measured as the present value of estimated future cash outflows. The cost of providing pensions is charged to the income statement so as to spread the regular cost over the number of years of service of employees. Actuarial gains and losses arising from empirical adjustments, changes in actuarial assumptions and amendments to pension schemes are recognised over the average remaining years of service of the employees concerned. For defined con-

33 ANNUAL ACCOUNTS NOTES 33 HAVFISK ASA Group tribution schemes, contributions are paid into pension insurance schemes. Once the contributions have been paid, no further payment liabilities exist. Contributions to defined contribution schemes are charged to the income statement in the period to which the contributions relate. Provisions A provision is recognised when the group has a present legal or constructive obligation as a result of a past event, where it is probable that payments or the transfer of other assets will be required to settle the obligation and the obligation can be reliably measured. Provisions are determined as the present value of expected future cash flows, discounted using a market-based pre-tax discount rate. The interest rate applied reflects the time value of money and the risks specific to the liability. Principles for revenue recognition Revenue is recognised only if it is probable that future economic benefits will flow to HAVFISK, and that these benefits can be measured reliably. Revenue includes gross inflows of economic benefits that HAVFISK receives for its own account. with a buyer, but in this case the contract must be approved by the marketing association. The confirmation of sale is issued by the marketing association when buyer and seller have confirmed the contract. Settlement and entry of income are then performed exactly as with a sale by auction. For the sale of fresh fish, the process is different. With a few exceptions, HAVFISK delivers all its fresh fish to Norway Seafoods facilities in Nordland and Finnmark. The fish is in this case delivered to a facility that issues a landing note or contract note, which forms the basis for the settlement note issued by Råfisklaget. The sale is completed by signing the landing/ contract note, which then forms the basis for entering income in the accounts. Leases (as lessor) Lease agreements are classified as financial or operational in accordance with the agreement s real content at the time of entering into the contract. Lease agreements are classified as financial if all risks and benefits connected with ownership are substantially transferred to the landlord. Other lease agreements are classified as operational. Financial expenses comprise interest expenses on borrowing, the interest effect of downward discounted provisions, changes in the fair value of financial assets to fair value through profit or loss, impairments of financial assets and losses on hedging instruments recognised in the income statement. Borrowing costs not directly attributable to the acquisition, manufacture or production of a qualifying asset are recognised in the income statement using the effective interest method. Foreign exchange gains and losses are reported on a net basis. Tax expense The tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement with the exception of items recognised directly in equity, which are recognised in equity. Current tax is the tax payable on the taxable income for the year, based on tax rates adopted or substantively adopted at the balance sheet date. Any change in the estimated tax for previous years is included in this amount. Sale of goods Operating revenues for the sale of goods are included when the company has transferred the significant risks and benefits of ownership to the buyer, the income amount can be reliably measured, it is probably that the financial benefits connected with the transaction will fall to the company and the expenses that have accrued or will accrue in connection with the transaction can be reliably measured. The sale of harvested wild fish is strictly controlled by legislation and regulations. According to the Raw Fish Act with regulations, all initial sales of harvested wild fish in Norway must be through the fish marketing associations. For HAVFISK, in practice this means Norges Råfisklag and Sunnmøre og Romsdal Fiskesalgslag. The form of sale is different for fresh and frozen fish. Frozen fish is normally unloaded at a neutral frozen store. The fish marketing associations then sell the fish in larger or smaller batches at actions where approved buyers can bid. When the auction is over, the marketing association issues a confirmation of sale and the sold batch is transferred to the buyer. On the basis of the confirmation of sale, the marketing association issues a contract note and settlement that forms the basis for entering income in the accounts. HAVFISK is also permitted to enter into a direct contract Lease payments under operating leases are recognised in the income statement on a straight line basis over the lease period. Any lease incentives received are recognised as an integral part of the total lease expense. In financial leases, minimum lease payments are apportioned between financial expenses and a reduction in the outstanding liability. The finance expense is allocated over the lease period so as to produce a constant periodic interest rate on the remaining balance of the liability; see note 12. Expenses Financial income and expenses Financial income comprises interest income on financial investments (including financial assets classified as available for sale), dividend income, gains on the disposal of financial assets available for sale, changes in the fair value of financial assets at fair value through profit and loss, and gains on hedging instruments recognised in the income statement. Interest income is recognised using the effective interest rate method. Dividend income is recognised when approved by the general meeting of the company in question. Deferred tax is calculated on the basis of the differences between the accounting and taxwritten-down values of assets and liabilities at the balance sheet date. Deferred tax is not recognised for the following temporary differences: initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit differences relating to investments in subsidiaries and joint ventures, to the extent it is probable that these will not be reversed in the foreseeable future tax-increasing temporary differences on initial recognition of goodwill Deferred tax is measured at the tax rates expected to be applied to the temporary differences when they are reversed. Deferred tax assets and liabilities are offset if: the group has a legal right to offset current tax liabilities and assets these relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities which intend to settle current tax liabilities and

34 34 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group assets on a net basis or to realise the tax assets and liabilities of the entities simultaneously A deferred tax asset will be recognised to the extent that it is probable that it can be offset against future taxable income. This item is re-evaluated at each balance sheet date, and is reversed to the extent that it no longer is probable that the tax asset will be realised. Discontinued operations A discontinued operation is a separate and major component of an operation or a separate and extensive geographic area of operations that has been disposed of or classified as held for sale. It can also be a subsidiary acquired for the sole purpose of onward sale. Classification as a discontinued operation occurs on disposal or earlier when the operation meets the criteria for classification as held for sale. Gains and profit/loss from the discontinued operation (net after tax) are reclassified and presented in the income statement on a separate line. Comparable figures are restated to a corresponding extent. Dividends Dividends are recorded in the financial statements in the period in which they are approved by the group s shareholders. Earnings per share Calculation of earnings per share is based on the result attributable to ordinary shares using the weighted average number of shares outstanding during the reporting period, after deduction of the average number of treasury shares held over the period. Calculation of diluted earnings per share is consistent with the calculation of ordinary earnings per share, and gives effect to all ordinary shares with dilutive potential outstanding during the period, i.e., the net profit for the period attributable to ordinary shares is increased by the post-tax amount of dividends and interest recognised in the period in respect of the ordinary shares with dilutive potential, and adjusted for any other changes in income or expenses that would result from the conversion of the ordinary shares with dilutive potential. The weighted average number of additional ordinary shares that would have been outstanding, assuming the conversion of all ordinary shares with dilutive potential, increases the weighted average number of ordinary shares outstanding. Comparative figures When necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. Segment reporting IFRS 8 Operating Segments identifies segments based on the group s internal management and reporting structure. The company s top-level decision-maker, who is responsible for allocating resources to and assessing earnings in the operating segments, is defined as Group Management and the Board of Directors. Activities in the group were previously divided into five main areas: harvest, processing Norway, processing Denmark, processing France and eliminations. As a consequence of the decision to distribute Norway Seafoods to the shareholders in Aker Seafoods (now Havfisk) in 2011, four of the five segments were separated out from the group. After the distribution, HAVFISK only reports one segment, which is harvest. Determination of fair value Accounting principles and note information require fair value to be determined for both financial and non-financial assets and liabilities. Fair values are determined for measurement and/or disclosure purposes on the basis of the methods described below. When applicable, further information on the assumptions made in determining fair values is disclosed in the notes on the respective asset or liability. Vessels, property, plant and equipment In a business combination, property, plant and equipment are recognised at market value. The market value of property is the estimated selling price between two independent parties in an arm s-length transaction. The market value of non-current assets and of fixtures and fittings is based on market prices for similar items. Intangible assets The fair value of patents and trademarks acquired in a business combination is based on the estimated discounted royalty payments that would have been paid if the group had not had control of the patent or brand name. The fair value of other intangible assets is based on the discounted projected cash flow from usage or any sale of the assets. Inventories The fair value of inventories acquired in a business combination is determined on the basis of their estimated selling price in the ordinary course of business, less the costs of completion and sale, with the addition of a profit margin based on the effort required to complete and sell the inventories. Investments in shares and bonds Listed securities The fair value of listed securities is defined as the listed price (most recent purchase price) on the balance sheet date for liquid investments. Unlisted securities Several valuation methods are used to measure the fair value of unlisted investments. When an arm s-length transaction has recently occurred for the relevant security, the value is based on the transaction price. If no arm slength transaction has recently occurred, the company s value is inferred via a relative valuation of comparable listed companies, adjusted for individual properties such as differences in size and selection. Another method is to discount the estimated future cash flows to the current value using a market-based pre-tax discount rate. Valuation methods other than those described above are also used in cases where these better reflect the fair value of an unlisted investment. Trade and other receivables The fair value of accounts receivable and other receivables, other than construction work in progress, is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date. Derivatives Forward exchange contracts are valued at fair value in relation to the observed forward rate for contracts with the equivalent term to maturity. The fair value of interest rate swaps is the present value of future cash flows based on observed market rates on the balance sheet date, including accrued interest. Fixed price contracts for bunker oil are measured at market price on the balance sheet date in relation to the price in the derivative, discounted from the maturity date of the derivative to the balance sheet date. Non-derivative financial liabilities Fair value is determined for disclosure purposes. Fair value for liquid, listed liabilities is based on market rates, while other liabilities are calculated in accordance with the present value of future cash flows for interest and deductions, discounted at the market rate at the balance sheet date. For convertible bonds, the conversion right and the loan are separated, and the market rate of interest

35 ANNUAL ACCOUNTS NOTES 35 HAVFISK ASA Group applicable to similar liabilities with no conversion option is applied to the loan. For finance leases, the market rate of interest is based on similar leases. Financial risk management Financial risk factors The group s activities expose it to a variety of financial risks: market risk (including changes in foreign exchange rates, interest rate risk, oil price trends and price risk), credit risk, liquidity risk and cash-flow interest rate risk. The group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group s financial performance. The group uses financial derivatives to hedge certain risk exposures. Risk management is carried out in accordance with principles prepared by the Board of Directors. Principles and systems related to risk management are reviewed on a regular basis in order to reflect any changes in activities and market conditions. Asset management The board aims to construct a strong capital base in order to retain the confidence of investors, creditors and the market, and to develop the business. The return on capital is monitored by the Board in the same way as assessment of dividends.

36 36 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 2: Sales revenues and other operating revenue Geographical segments: Operating revenues based on customer location NOK million Accounts 2014 Accounts 2013 Norway EU 7 Other areas - - Total Geographical segments: Non-current assets and intangible assets excl. deferred tax by company location NOK million Accounts 2014 Accounts 2013 Norway EU Total Operating revenues by category: NOK million Accounts 2014 Accounts 2013 Sales revenues Services and other operating revenues Total Specification of operating revenues by fish type and product: NOK million Fresh Frozen Total Fresh Frozen Total Cod Saithe Haddock Other fish species Other operating revenues Total The sale of harvested wild fish is strictly by legislation and regulations. According to the Raw Fish Act with regulations, all initial sales of harvested wild fish in Norway must be through the fish marketing associations. For HAVFISK, in practice this means Norges Råfisklag and Sunnmøre og Romsdal Fiskesalgslag. These two sales organisations account for 71% and 28% respectively of the sales revenues in the group. Ref. Note 1 Information about operating revenues - accounting principle with sales form described in more detail. All sales are cleared through the two marketing associations, which also handle settlement to HAVFISK. The table below shows sales to HAVFISK s five largest customers through the two marketing associations: Specification of operating revenues from the largest customers NOK million Norway Seafoods AS Ståle Nilsen Seafoods AS Scanfish Norway AS Normarine AS Brødrene Sperre AS Total NOTE 3: Cost of goods sold and change in inventories Cost of goods sold and change in inventories comprise: NOK million Cost of goods Change in inventories of goods under processing and finished goods Total

37 ANNUAL ACCOUNTS NOTES 37 HAVFISK ASA Group NOTE 4: Salaries and payroll costs Salaries and payroll costs comprise the following: NOK million Salaries Social security contributions 3 3 Pension costs (note 23) 2 2 Other benefits Total Average number of full-time equivalents Number of employees at the end of the year Geographical location of number of employees at the end of the year: Norway EU - - Other areas Total NOTE 5: Other operating expenses Other operating expenses comprise the following: NOK million Rental and leasing expenses (Note 21) 1 1 Bad debts, trade receivables 0 - Hired-in labour, legal assistance 3 4 Bunkerage and lubricants Trawl equipment Repair and maintenance of vessels and equipment Research and administration expenses Total other operating expenses Hired-in labour consists of expenses for personnel without a permanent contract of employment, and who are not subcontractors, and external administrative consultants. Remuneration paid to the Havfisk ASA Group s auditors is recognised in other operating expenses and is allocated as follows: NOK 1,000 Statutory auditing Other services from auditors Accounts 2014 Accounts 2013 HAVFISK ASA Subsidiaries Total Other services from auditors consist of the following: NOK 1,000 Accounts 2014 Accounts 2013 Other certification services 21 6 Tax consultancy services Other non-auditing services Total Services other than auditing consist mainly of assistance in connection with a review by the Financial Supervisory Authority in connection with the annual accounts for 2013.

38 38 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 6: Non-recurring operating items 2014 The HAVFISK group has had no non-recurring operating items in the accounts for 2014 or NOTE 7: Financial income and financial expenses Net financial items recognised in the income statement in 2014 and 2013 are allocated as follows: NOK million Interest income lending and receivables 9 8 Interest income bank and other 2 2 Foreign exchange gain - - Reversal of provisions for loss ref. interest and currency swap ref. Glitnir Total financial income Interest expenses (73) (59) Foreign exchange losses/gains (0) 0 Other financial expenses (3) (3) Provisions for loss ref. interest and currency swap ref. Glitnir - (158) Total financial expenses (77) (220) Net financial items 91 (209) Financial items in 2014 and 2013 recognised in other comprehensive income in the total result are as follows: NOK million Change in fair value of cash flow hedges (31) 15 Changes in value Total (31) 15 Items recognised in other comprehensive income are allocated to the majority and minority share as follows: Majority shareholding (31) (21) Minority interests Total (31) (21) Interest paid is allocated as follows: Interest paid recognised in the income statement (74) (56) Interest paid capitalised - - Total interest paid (74) (56) Interest received is allocated as follows: Interest income bank balances 2 2 Interest income loans 4 8 Total interest received 6 11

39 ANNUAL ACCOUNTS NOTES 39 HAVFISK ASA Group NOTE 8: Taxes TAX EXPENSE Recognised in the income statement: NOK million Accounts 2014 Accounts 2013 Tax expense for the period: Tax payable for the year (11) (6) Total tax expense for the period (11) (6) Deferred tax expense: Change in deferred tax (53) 36 Effect of changed tax regulations in Norway - 2 Total deferred tax expense (53) 38 Total tax expense in the income statement (64) 32 Reconciliation of effective tax rate NOK million Profit before tax 260 (103) Nominal tax rate in Norway 27 % (70) 29 Effect of changed tax regulations in Norway - 2 Tax on other income, expense 6 0 Non-deductible expenses, non-taxable income 1 1 Recognition in income of def. tax asset not rec. in the bs re. pvs. years Total tax expense in the income statement (64) 32 Effective tax rate -24 % 31 % Deferred tax assets and liabilities Deferred tax assets and liabilities are netted off when there is a legal right to net off assets and liabilities against the tax for the period and when the deferred tax relates to the same tax authority. The gross movement in deferred tax (assets and liabilities) accounts is as follows: NOK million Balance as of 1 January (56) (94) Deferred tax expense in other comprehensive income in total comprehensive income 12 Deferred tax from income statement (53) 38 Balance as of 31 December (96) (56) Deferred tax assets Deferred tax liability (-) (96) (202) Balance as of 31 December (96) (56) Deferred tax assets: NOK million Property, plant and equipment Tax loss carryforward Pensions Other Total as of 01 January (15) 124 Deferred tax expense/income in income statement (2) (11) Purchase and sale of subsidiaries - as of 31 December Deferred tax expense/income in income statement (3) (0) (0) (41) (45) Deferred tax expense/income included in comprehensive income Netted against deferred tax (9) (113) (2) 10 (114) as of 31 December Continue next page

40 40 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 8: Taxes (continues) Deferred tax liability: NOK million Property, plant and equipment Tax loss carryforward Gains on measurement as fair value Other inc. pensions as of 01 January 2013 (4) (9) (113) (91) (217) Total Deferred tax expense/income in income statement (3) 15 Purchase and sale of subsidiaries - as of 31 December 2013 (2) - (106) (94) (202) Deferred tax expense/income in income statement (17) (8) Deferred tax expense/income included in comprehensive income Netted against deferred tax (10) 114 as of 31 December 2014 (9) 114 (102) (98) (96) Deferred tax recognised directly in equity NOK million Deferred tax assets 12 - Deferred tax - The tax expense, net deferred tax liability and net liability on tax for the period relates to the following geographic areas: 2014 NOK million The year s payable tax Deferred tax expense Total Assets tax expense on deferred tax Net liabilities on deferred tax Norway (11) (53) (64) - (96) EU - Total (11) (53) (64) - (96) 2013 NOK million The year s payable tax Deferred tax expense Total Assets tax expense on deferred tax Net liabilities on deferred tax Norway (6) (202) EU - Total (6) (202) Refer to note 2 for further information about corrections in previous periods NOTE 9: "skattefunn" The group has three current projects under the skattefunn scheme: 1. Improved quality of trawler-caught fish - project period High-value fish meal and fish oil for human and animal use - project period Utilisation of cheeks, tongues and other parts of the head through goal-oriented R&D activity - project period Recognised contributions under the skattefunn scheme for the three projects in 2014 NOK million Improved quality High-value fish meal and fish oil Utilisation of cheeks, tongues and other parts The contributions are recognised as cost reductions in the income statement and as reduction in tax payable in the balance sheet.

41 ANNUAL ACCOUNTS NOTES 41 HAVFISK ASA Group NOTE 10: Vessels, property, plant and equipment Movements in vessels, property, plant and equipment for 2014 are shown below: NOK million Vessels Machinery Vehicles Buildings Housing 1) Land Total Cost as of 01 January Discontinued operations 74 (101) (28) Other acquisitions Disposals and scrappings (46) (25) (8) (79) Cost as of 31 December Cumulative depreciation and impairments as of 01 January Depreciation for the year Discontinued operations 50 (72) (22) Disposals and scrappings (7) (25) (5) (37) Cumulative depreciation and impairments as of 31 December Book value as of 31 December Economic life years 2-10 years years Depreciation plan Straight line Straight line Straight line In December 2013 a letter of intent was signed regarding the sale of the vessel Jergul. The vessel Stamsund was also taken out of service and put up for sale. In the annual accounts for 2013, the book value for these was presented under discontinued operations. The sales were not completed and the vessel Stamsund has been put back into operation. In the accounts for 2014, the provision for discontinued operations was reversed. In autumn 2014, Norway Seafoods decided to move operations from Rypefjord in Hammerfest to Forsøl in the same municipality. The move was approved by the Ministry of Trade, Industry and Fisheries in August HAVFISK Finnmark AS is the owner of both these facilities and Norway Seafoods is the tenant. As a result of moving the operation from Rypefjord to Forsøl, the facility in Rypefjord is now for sale and in the annual accounts for 2014 it is presented as discontinued operations held for sale. The book value of leases comprises: NOK 72 million. This refers to lease of production equipment to Norway Seafoods, ref. note 12. Contribution received from NO X Fund In connection with the new vessels project, the group has been granted and has received NOK 25 million from the NO X Fund. The contribution is in connection with reduced Nox emissions from the vessels Gadus Poseidon, Gadus Njord and Gadus Neptun. The contribution was paid in The amount has been used to offset investment in new vessels and recognised on the income statement in the form of reduced depreciation in line with the economic lifetime of the vessel. In the table above, the contribution has been used for deduction in other acquisitions under the column for vessels. Impairment loss and reversal of earlier impairment loss: No charge has been recognised in 2014 as a result of impairment. Provision of collateral: Tangible fixed assets with a carried value of NOK 1,247 million were provided as collateral for bank loans at 31 December 2014 (see note 21). Other acquisitions: The most important acquisitions during the year were connected with the delivery of the newly built Gadus Njord for a total of NOK 265 million. The new build project has received a contribution of NOK 25 million from the NOX Fund, which is used to offset investment in the new vessel project. Purchase of the facility in Forsøl in Hammerfest amounts to NOK 10 million. In addition there were ongoing investments and upgrades to the existing fleet and plant of approximately NOK 40 million. Building contracts vessels NOK million Book value Payment during the year Delivery of new builds - transferred ship (270) (530) Book value Continue next page

42 42 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 10: Vessels, property, plant and equipment (cont.) Movements in vessels, property, plant and equipment for 2013 are shown below: NOK million Vessels Machinery Vehicles Buildings Housing 1) Cost as of 01 January Discontinued operations (74) (74) Other acquisitions Reclassification 104 (157) 0 (53) Disposals and scrappings (1) (0) (0) (1) Effect of changes in foreign exchange rates - Cost as of 31 December Cumulative depreciation and impairments as of 01 January Depreciation for the year Impairments - Discontinued operations (50) (50) Reclassification 3 (56) 0 (52) Disposals and scrappings (1) 0 (1) Cumulative depreciation and impairments as of 31 December Book value as of 31 December Economic life years 2-10 years years Depreciation plan Straight line Straight line Straight line In December 2013 a letter of intent was signed regarding the sale of the vessel Jergul. The vessel Stamsund has also been taken out of service and put up for sale. In the annual accounts for 2013, the book value for these has been presented under discontinued operations. The book value of leases comprises: NOK 79 million. This refers to lease of production equipment to Norway Seafoods, ref. note 12. Impairment loss and reversal of earlier impairment loss: No charge has been recognised in 2013 as a result of impairment. Provision of collateral: Tangible fixed assets with a carried value of NOK 1,164 million were provided as collateral for bank loans at 31 December 2013 (see note 21). Other acquisitions: The most important acquisitions during the year were connected with the delivery of the newly built Gadus Poseidon and Gadus Njord for a total of NOK 530 million.. In addition there were ongoing investments and upgrades to the existing fleet and plant, for a total of NOK 33 million. Building contracts vessels NOK million Book value Payment during the year Delivery of new builds - transferred ship (530) - Book value Land Total NOTE 11: Intangible assets Movements in intangible assets for 2014 are shown below: NOK million Basic quotas, cod, shrimp and greater silver smelt Structural quotas cod trawler Cost as of 01 January Other acquisitions - Reversing of discontinued operations held for sale Cost as of 31 December Cumulative amortisation and impairments as of 01 January Discontinued operations Amortisation for the year Cumulative amortisation and impairments as of 31 December Total Book value as of 31 December Depreciation plan - straight line depreciation from the year of structuring years

43 ANNUAL ACCOUNTS NOTES 43 HAVFISK ASA Group Fishing rights At year end the Havfisk group owned 29.6 cod and haddock trawler licenses, 31.9 saithe trawler licences, eight shrimp trawler licences and three greater silver smelt licences in Norway. The licences are owned through the subsidiaries Nordland Havfiske AS, Finnmark Havfiske AS and Hammerfest Industrifiske AS. No acquisition or sale of quotas/rights occurred in However in December 2013 a letter of intent was signed for the sale of 1.35 cod and haddock quota units and 1.38 quota units of saithe and the trawler Jergul. These sales were not completed since approval was not given by the fishery authorities before the deadline in the contract expired. A licence for cod, haddock and saithe confers the right to trawl for whitefish above the 62nd parallel and in the North Sea for parts of the year. Similarly, a shrimp and greater silver smelt licence confers rights to harvest these species. In 2014 regulations permitted up to three licence units per vessel. On 23 January 2015, a royal resolution was adopted to increase the number of licence units permitted per vessel from three to four. The volume which can be harvested per licence unit is determined by the Ministry of Fisheries on an annual basis. In addition, transfers - known as reallocations - may be made during a year between the various categories of vessel if one vessel category fails to harvest its share of the quota. In 2014, one cod quota corresponded to the right to harvest 1,658 tonnes of cod, 368 tonnes of haddock and 344 tonnes of saithe north of the 62nd parallel. That represented an increase of 2 per cent for cod compared with 2013, and a reduction of 9 per cent and 21 per cent respectively for haddock and saithe. No reallocations were made during the year, as had been done the preceding year. The shrimp and greater silver smelt licences are not limited in quantity terms. To improve the profitability of fishing and to reduce the number of vessels in operation, the fishery authorities have introduced schemes which permit the concentration of more quota units in one vessel in exchange for the permanent removal of vessels which surrender their quotas from the fishing register. Every vessel has a cod trawling permit, a so-called basic quota, and in addition the vessels can have so-called structural quotas for cod trawling. A vessel cannot have more than three quotas per fish species in total. The structural quotas have a limited duration that depends on which scheme applied when the quota was structured. Essentially, there are two schemes with 20 and 25 year structure quota duration respectively. Essentially, the difference lies in structuring before and after Structures that were given before 2007 have a 25 year duration counted from 2008, while those that were structured after 2007 have a 20 year duration. The main purpose of the structuring schemes is to reduce the number of vessels that participate in a given fishery, thereby allowing for improved profitability for the remaining vessels, i.e. improving efficiency within a regulated framework. Secondly, the schemes are intended to help adapt fleet capacity to basic resources. On the expiry of the 20 or 25 year period, the structural quotas lapse and the total quotas will be distributed to the participants in the regulation group as basic quotas. The basic quotas are essentially perpetual. The structural quotas fulfil the definition of intangible assets according to IAS 38, because a structural quota is a legal right that is identifiable and gives financial benefits that the company can control. Since the right involved has a time limit, the structural quota is depreciated to zero over the remaining lifetime of the quota, since there is no active market and no obligation for a third party to acquire the right when the lifetime ends. According to Report to the Storting No. 21 ( ) (Structural Policy for the Fishing Fleet), after the expiry of the award period, structural quotas with a predetermined time limit will be redistributed within the cod trawler group of vessels and then become part of each vessel s basic quota. This means that if structures are held that correspond to the average for the group of vessels, approximately the same harvest quantity will be retained after the structural quota period has expired. HAVFISK is of the opinion that a vessel and associated quotas, including basic and structural quotas, is the smallest identifiable group of assets that generates cash inflows from continuing use, and that is largely independent of the cash inflows of other assets or groups of assets, ref. IAS36.6. Vessel and quota belong together are are considered to be a cash generating unit for continued operation. This also agrees with fisheries legislation, where it is the combination of quota and vessel that is given an operating permit: permits can only be sold together with the vessels, structural quotas can only be sold together with the basic quota, splitting up the quota basis is normally only done within the same group, and other splitting can only be done to another holder of a basic quota. In the annual settlement for 2014, HAVFISK has used a valuation model based on a method for calculating recoverable amount that is in turn based on discounting future cash flows, ref IAS (value in use). Future cash flows are based on budgets and forecasts for vessels with associated quotas as the smallest identifiable group of assets that generates cash inflows from continuing use, and that is largely independent of the cash inflows of other assets or groups of assets. It is thus the vessel and associated quotas that forms the basis for the valuation unit with regard to recoverable amount. The model is made up of separate discounted cash flows (DCFs) for every single unit, i.e. the individual vessel that is tested against book value of quotas and vessel. The model is based on the budget for 2015 and forecast for 2016, which also creates the basis for the period A terminal value is then added that is based on perpetual cash flows, although with a correction for reduced volume after the expiry of the structural quotas, as explained below. The terminal value is based on the basic quotas being the central assets that create the basis for the company s fishing rights. These have a time limit and when the structural quotas expire the company will have approximately the same harvest quantity because the basic quotas will increase, as explained above. The model is based on a forecast period of 10 years and then a terminal period. Three of the ten vessels that the company has in operation during the forecast period are newlybuilt vessels delivered in 2013 and The annual investment requirement will be significantly lower for a new vessel than for a vessel that is more than ten years old. In order to arrive at a terminal period that is equivalent to a normal year, the model is based on a 10 year forecast period. During the forecast period up to the terminal period, the investment on new vessels increases considerably more than the annual growth of 2.5%. In the period after 2016 and in the terminal value, an annual growth of 2.5% has been added in, which corresponds to Norges Bank s inflation target. Key assumptions in the model: Quota development Harvest efficiency Operations-related costs Price development for the products Development of TAC (Total Allowable Catch) within the different fish species Catch per operating day per vessel. Development of operations-related costs including bunker oil Development of price within the different fish species Discount rate Development in 10-year risk-free interest and longterm interest margin Continue next page

44 44 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 11: Intangible assets (continues) The quota trends included in the model are based on forecasts from the ICES (International Council for the Exploration of the Seas) and Norway s Institute of Marine Research. The model anticipates a reduction in the cod and saithe quotas for 2015 of 10 and 14 per cent respectively in relation to The haddock quota is however unchanged in relation to For 2016 onward, a further reduction is expected in cod and saithe quotas of 10 per cent in relation to No change to the haddock quota. Another important assumption in the model is harvesting efficiency, i.e. how much the individual vessel catches per operating day. The model is based on historically achieved catch rates, as well as on the change in the fleet structure that takes into account that three new vessels came into operation in Roughly speaking, operations-related costs can be divided into two categories: those that are generated based on the value of the harvest and those that are generated based on the number of operating days. Crew costs and common expenses are mainly related to the value of the harvest and are almost exactly correlated with harvesting revenues. Bunker expenses are the biggest item directly related to the number of operating days. In the model, we have used a bunker price for the period that relates to the level of bunker prices at the end of This is based on analyses and expectations of future prices in the oil market performed by external parties including DNB. The forecast also assumed a general price increase of 2.5% per year. Anticipated price trends for the quantity harvested are largely related to the anticipated increase/reduction in quotas for the different fish species. For the most important fish species, which is cod, the forecast is based on the price level increasing from the present level. Cod prices in 2012 and 2013 have been at a historically low level as a result the the large quota increase in 2012 combined with times of economic decline in many of the most important customer countries for cod products. In spite of the large quota increase in 2012, the market has taken up the increased quantity, albeit at a lower price. The bottom was reached in the first quarter of 2013, after which there has been a positive price trend, especially in the second half of 2014 when prices increased significantly. For 2015, prices are based on the same level as was achieved in the last part of For 2016 onwards, a 5 per cent price increase is assumed on the basis of the 10 per cent reduction in cod quotas. For haddock, a reduction in price from the 2014 level is assumed. This is because 2014 had historically high haddock prices, so that a gentle fall in prices from 2015 onward is anticipated. Because the quota trend is expected to be stable, prices are expected to stabilise at this level in the future. Saithe prices are based on a price level in line with that achieved in The discount rate is estimated based on a weighted average of required return on capital and anticipated debt costs, assuming an anticipated equity ratio of 45%. Debt costs are based on a risk-free rate (10 year government bonds) with an addition that reflects longterm interest rate margins. The discount rates used are 8.19% before tax and 7.41% after tax. The discount rate is initially estimated after tax and then converted into pre-tax using the iterative method. With regard to sensitivity, the most important key assumptions in the model are quota and price trends. Historically, there has been a correlation between quota and price changes for cod of about 0.5. This means that when quotas increase by 10%, prices will fall by 5%. It is therefore unlikely that these two factors will develop in the same direction over time. A further 10 per cent reduction in the cod quota from 2017 would not mean that book value exceeded recoverable amount. The average price for cod that has been used as a basis for the forecasts is lower than that achieved in 2007 and The risk of a reduction in the price of cod is therefore considered to be extremely limited as long as quotas are reduced. As regards the other key assumptions such as bunkerage, changes within a reasonable area of probability would not lead to the book value of the units exceeding their recoverable amount. A reasonable area of probability is here defined as a 10 per cent increase in bunker costs from the calculated level in 2015 onward. The effect of structuring in relation to the cod trawler group The average structuring measured in number of quotas per vessel has been increasing in recent years. At the end of 2014, HAVFISK had an average quota factor per vessel that is higher than the total for the cod trawler group, which is The total number of quotas that a vessel in this group is permitted is three. If this situation is unchanged on the expiry of the structural quotas, this means that HAVFISK will have its harvest quantity reduced from 33.7% to 28.5% of the total quantity for the cod trawler group. In the HAVFISK model for testing loss of value, the reduced quantity after the expiry of the structure period has been incorporated into the model and taken into account when calculating present value. This is done for the individual cash generating unit on the basis of the present structure situation for the cash generating unit in question in relation to the average for the cod trawler group. The structural quotas have a limited duration that depends on which scheme applied when the quota was structured, as explained earlier in the note. This leads to an annual redistribution of relative harvest quantity within the group from the time the first structural quotas expire in 2027 until the end of 2032 when the vast majority of the present structural quotas expire. HAVFISK has assessed the effects of this during the interim period in its model for testing for loss of value. In the company s assessment, redistribution within the trawler group as a result of expiry of structural quotas during this period will not have any significant effect on the calculated value in use of any of the cash generating units. The significance of this in future years will also be gradually reduced as the structural quotas in question will have been depreciated when this occurs. Supply commitments industry obligation The licences carry supply commitments to the regions which issued them, i.e. Finnmark and Nordland. This means that buyers in the relevant regions have a pre-emptive right to buy the fish. The beneficiaries of this supply commitment are determined by the terms for each licence unit. It may be a region, but it may also be a specific buyer. The principle for price determination is the average price obtained for the relevant species over the last 14 days, taking into account condition, size and quality. Havfisk is also under a so-called industry obligation in Stamsund, Melbu, Hammerfest, Båtsfjord, Honningsvåg and Kjøllefjord. This means that the licences are linked to the operation of plant in each of these places. Havfisk has however leased the facilities in these places and the tenant is responsible for maintaining the operation, ref. the discussion of lease contracts in note 12. If the tenant should cease operations, the licence terms oblige Havfisk to maintain operations in these places. The existing supply commitments and industry obligations have been taken into account in the model for testing for loss of value. HAVFISK has designed the operational pattern of the fleet with regard to the tenant s needs for the delivery of fresh raw materials at times of the year when opportunities of obtaining sufficient raw materials are limited. The consequences of this in terms of increased operating costs and price changes have been incorporated into future budgets and forecasts on which the model is based. The company considers that the obligations that are connected to the quotas do not affect cash flows in the company in any way other than has been taken into consideration in the calculations referred to. This also confirms the company s view that it is the vessel with its associated set of quotas that is the cash generating unit. In testing in connection with the annual report for 2014 there were no indications of loss of value.

45 ANNUAL ACCOUNTS NOTES 45 HAVFISK ASA Group Discounted - book value for the individual vessels with quotas Of which amounts in NOK million Discounted value Total book value Book value vessel Book value quotas M/Tr Båtsfjord M/Tr Stamsund M/Tr Gadus Poseidon M/Tr Gadus Neptun M/Tr Doggi M/Tr Rypefjord (ex. K.Arctander) M/Tr Havtind M/TrVesttind M/Tr Kongsfjord M/Tr Gadus Njord Sensitivity analysis for quotas: Changes in the Harvesting segment: Sales EBITDA A 10% change in the price of cod would result in the following changes A 10% change in the quantity of cod would result in the following changes A 10% change in the quantity of cod, saithe and haddock would result in the following changes A 10% decrease in the price of cod would reduce sales by 10%, and would have a slightly lower impact on EBITDA measured in NOK. Short-term changes in prices and quotas are not expected to have any significant influence on the valuation, since a structure quota is valued on the basis of a time frame of up to 25 years. Any permanent change in price, without an associated change in quota volumes, would be expected to affect the sales value of the quotas because EBITDA and cash flow contributions would be lower. The same would be the case with a permanent reduction in quotas without a rise in prices. Movements in intangible assets for 2013 are shown below: NOK million Basic quotas, cod, shrimp and greater silver smelt Structural quotas cod trawler Cost as of 01 January Other acquisitions - Discontinued operations (15) (39) (54) Cost as of 31 December Total Cumulative amortisation and impairments as of 01 January Discontinued operations - (12) (12) Amortisation for the year Cumulative amortisation and impairments as of 31 December Book value as of 31 December Fishing licenses 2013 At year end the Havfisk group owned 29.6 cod and haddock trawler licenses, 31.9 saithe trawler licences, eight shrimp trawler licences and three greater silver smelt licences in Norway. The licences are owned through the subsidiaries Nordland Havfiske AS, Finnmark Havfiske AS and Hammerfest Industrifiske AS. No acquisition or sale of quotas/rights occurred in However in December 2013 a letter of intent was signed for the sale of 1.35 cod and haddock quota units and 1.38 saithe quota units, as well as the vessel Jergul. In the annual accounts for 2013, the book value for these has been presented under discontinued operations. A licence for cod, haddock and saithe confers the right to trawl for whitefish above the 62nd parallel and in the North Sea for parts of the year. Similarly, a shrimp and greater silver smelt licence confers rights to harvest these species. Today s regulations permit up to three licence units per vessel. The volume which can be harvested per licence unit is determined by the Ministry of Fisheries on an annual basis. In addition, transfers - known as reallocations - may be made during a year between the various categories of vessel if one vessel category fails to harvest its share of the quota. At the beginning of 2013, one cod quota corresponded to the right to harvest 1,626 tonnes of cod, 406 tonnes of haddock and 438 tonnes of saithe north of the 62nd parallel. That represented an increase of 31 per cent for cod compared with Continue next page

46 46 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 11: Intangible assets (continues) 2012, and a reduction of 49 per cent and 16 per cent respectively for haddock and saithe. Reallocations were made during the year for all three species. As a result of these reallocations, the cod quantity increased by 241 tonnes per licence unit, while the saithe quantity was increased by 193 tonnes. In autumn 2013, there was also an extra quota for delivery of fresh cod, as so-called fresh fish bonus, of 115 tonnes per vessel. The shrimp and greater silver smelt licences are not limited in quantity terms. To improve the profitability of fishing and to reduce the number of vessels in operation, the fishery authorities have introduced schemes which permit the concentration of more quota units in one vessel in exchange for the permanent removal of vessels which surrender their quotas from the fishing register. Every vessel has a cod trawling permit, a so-called basic quota, and in addition the vessels can have so-called structural quotas for cod trawling. A vessel cannot have more than three quotas per fish species in total. The structural quotas have a limited duration that depends on which scheme applied when the quota was structured. Essentially, there are two schemes with 20 and 25 year structure quota duration respectively. Essentially, the difference lies in structuring before and after Structures that were given before 2007 have a 25 year duration counted from 2008, while those that were structured after 2007 have a 20 year duration. The main purpose of the structuring schemes is to reduce the number of vessels that participate in a given fishery, thereby allowing for improved profitability for the remaining vessels, i.e. improving efficiency within a regulated framework. Secondly, the schemes are intended to help adapt fleet capacity to basic resources. On the expiry of the 20 or 25 year period, the Key assumptions in the model: structural quotas lapse and the total quotas will be distributed to the participants in the regulation group as basic quotas. The basic quotas are essentially perpetual. The structural quotas fulfil the definition of intangible assets according to IAS 38, because a structural quota is a legal right that is identifiable and gives financial benefits that the company can control. Since the right involved has a time limit, the structural quota is depreciated to zero over the remaining lifetime of the quota, since there is no active market and no obligation for a third party to acquire the right when the lifetime ends. According to Report to the Storting No. 21 ( ) (Structural Policy for the Fishing Fleet), after the expiry of the award period, structural quotas with a predetermined time limit will be redistributed within the cod trawler group of vessels and then become part of each vessel s basic quota. This means that if structures are held that correspond to the average for the group of vessels, approximately the same harvest quantity will be retained after the structural quota period has expired. HAVFISK is of the opinion that a vessel and associated quotas, including basic and structural quotas, is the smallest identifiable group of assets that generates cash inflows from continuing use, and that is largely independent of the cash inflows of other assets or groups of assets, ref. IAS36.6. Vessel and quota belong together are are considered to be a cash generating unit for continued operation. This also agrees with fisheries legislation, where it is the combination of quota and vessel that is given an operating permit: permits can only be sold together with the vessels, structural quotas can only be sold together with the basic quota, splitting up the quota basis is normally only done within the same group, and other splitting can only be done to another holder of a basic quota. In the annual settlement for 2013, HAVFISK has used a valuation model based on a method for calculating recoverable amount that is in turn based on discounting future cash flows, ref IAS (value in use). Future cash flows are based on budgets and forecasts for vessels with associated quotas as the smallest identifiable group of assets that generates cash inflows from continuing use, and that is largely independent of the cash inflows of other assets or groups of assets. It is thus the vessel and associated quotas that forms the basis for the valuation unit with regard to recoverable amount. The model is made up of separate discounted cash flows (DCFs) for every single unit, i.e. the individual vessel that is tested against book value of quotas and vessel. The model is based on the budget for 2014 and forecast for 2015, which also creates the basis for the period A terminal value is then added that is based on perpetual cash flows, although with a correction for reduced volume after the expiry of the structural quotas, as explained below. The terminal value is based on the basic quotas being the central assets that create the basis for the company s fishing rights. These have a time limit and when the structural quotas expire the company will have approximately the same harvest quantity because the basic quotas will increase, as explained above. In the period after 2015 and in the terminal value, an annual growth of 2.5% has been added in, which corresponds to Norges Bank s inflation target. Quota development Harvest efficiency Operations-related costs Price development for the products Development of TAC (Total allowable Catch) within the different fish species Catch per operating day per vessel. Development of operations-related costs including bunker oil Development of price within the different fish species Discount rate Development in 10-year risk-free interest and long-term interest margin The quota trends included in the model are based on forecasts from the ICES (International Council for the Exploration of the Seas) and Norway s Institute of Marine Research. The model anticipates a reduction in the cod and haddock quotas for 2015 of 10 and 30 per cent respectively in relation to However the volume of saithe increased by 20 per cent in the same period. Another important assumption in the model is harvesting efficiency, i.e. how much the individual vessel catches per operating day. The model is based on historically achieved catch rates, as well as on the change in the fleet structure that takes into account that three new vessels came into operation in Roughly speaking, operations-related costs can be divided into two categories: those that are generated based on the value of the harvest and those that are generated based on the number of operating days. Crew costs and common expenses are mainly related to the value of the harvest and are almost exactly correlated with harvesting revenues. Bunker expenses are the biggest item directly related to the number of operating days. In the model, we have used a bunker price for the period that relates to the level of bunker prices in This is based on analyses and expectations of future prices in the oil market performed by external parties including DNB. The forecast also assumed a general price increase of 2.5% per year. Anticipated price trends for the quantity harvested are largely related to the anticipated increase/reduction in quotas for the different fish species. For the most important fish species, which is cod, the forecast is based on the price level increasing from the present level. Cod prices in 2012 and 2013 have been at a historically low level as a result the the large quota increase in 2012 combined with times of economic decline in many of the most important customer countries for cod products. In spite of the large quota increase in 2012, the market

47 ANNUAL ACCOUNTS NOTES 47 HAVFISK ASA Group has taken up the increased quantity, albeit at a lower price. The bottom was reached in the first quarter of 2013, after which there has been a positive price trend. For 2014, prices are based on a gradual increase from 2013, and from 2015 onward a further price increase is assumed based on the reduction in cod quotas. The anticipated level in 2015 onward is in line with what was achieved in 2011 when the quotas were lower. For haddock, a reduction in price from the 2013 level is assumed. This is because 2013 had historically high haddock prices with an increase of more than 100% over the course of the year. Because of a further reduction in quotas, prices are expected to stabilise at a level above , although somewhat lower than what was achieved in Saithe prices are based on a price level in line with that achieved in The discount rate is estimated based on a weighted average of required return on capital and anticipated debt costs, assuming an anticipated equity ratio of 45%. Debt costs are based on a risk-free rate (10 year government bonds) with an addition that reflects long-term interest rate margins. The discount rates used are 9.71 % before tax and 6.89 % after tax. The discount rate is initially estimated after tax and then converted into pre-tax using the iterative method. With regard to sensitivity, the most important key assumptions in the model are quota and price trends. Historically, there has been a correlation between quota and price changes for cod of about 0.5. This means that when quotas increase by 10%, prices will fall by 5%. It is therefore unlikely that these two factors will develop in the same direction over time. A further 10 per cent reduction in the cod quota from 2015 would not mean that book value exceeded recoverable amount. The average price achieved for cod in 2013 was the lowest since The risk of a further reduction in the price of cod is therefore considered to be extremely limited. As regards the other key assumptions such as bunkerage, changes within a reasonable area of probability would not lead to the book value of the units exceeding their recoverable amount. A reasonable area of probability is here defined as a 10 per cent increase in bunker costs from the calculated level in 2015 onward. The effect of structuring in relation to the cod trawler group The average structuring measured in number of quotas per vessel has been increasing in recent years. At the end of 2013, HAVFISK had an average quota factor per vessel that is 0.23 higher than the total for the cod trawler group, which is The total number of quotas that a vessel in this group is permitted is three. If this situation is unchanged on the expiry of the structural quotas, this means that HAVFISK will have its harvest quantity reduced from 33.7% to 31 % of the total quantity for the cod trawler group. In the HAVFISK model for testing loss of value, the reduced quantity after the expiry of the structure period has been incorporated into the model and taken into account when calculating present value. This is done for the individual cash generating unit on the basis of the present structure situation for the cash generating unit in question in relation to the average for the cod trawler group. The structural quotas have a limited duration that depends on which scheme applied when the quota was structured, as explained earlier in the note. This leads to an annual redistribution of relative harvest quantity within the group from the time the first structural quotas expire in 2027 until the end of 2032 when the vast majority of the present structural quotas expire. HAVFISK has assessed the effects of this during the interim period in its model for testing for loss of value. In the company s assessment, redistribution within the trawler group as a result of expiry of structural quotas during this period will not have any significant effect on the calculated value in use of any of the cash generating units. The significance of this in future years will also be gradually reduced as the structural quotas in question will have been depreciated when this occurs. Supply commitments industry obligation The licences carry supply commitments to the regions which issued them, i.e. Finnmark and Nordland. This means that buyers in the relevant regions have a pre-emptive right to buy the fish. The beneficiaries of this supply commitment are determined by the terms for each licence unit. It may be a region, but it may also be a specific buyer. The principle for price determination is the average price obtained for the relevant species over the last 14 days, taking into account condition, size and quality. Havfisk is also under a so-called industry obligation in Stamsund, Melbu, Hammerfest, Båtsfjord, Honningsvåg and Kjøllefjord. This means that the licences are linked to the operation of plant in each of these places. Havfisk has however leased the facilities in these places and the tenant is responsible for maintaining the operation, ref. the discussion of lease contracts in note 12. If the tenant should cease operations, the licence terms oblige Havfisk to maintain operations in these places. The existing supply commitments and industry obligations have been taken into account in the model for testing for loss of value. HAVFISK has designed the operational pattern of the fleet with regard to the tenant s needs for the delivery of fresh raw materials at times of the year when opportunities of obtaining sufficient raw materials are limited. The consequences of this in terms of increased operating costs and price changes have been incorporated into future budgets and forecasts on which the model is based. The company considers that the obligations that are connected to the quotas do not affect cash flows in the company in any way other than has been taken into consideration in the calculations referred to. This also confirms the company s view that it is the vessel with its associated set of quotas that is the cash generating unit. In testing in connection with the annual report for 2013 there were no indications of loss of value. Discounted - book value for the individual vessels with quotas Of which NOK million Discounted value Total book value Book value vessel **) Book value quotas M/Tr Båtsfjord M/Tr Kongsfjord M/Tr Gadus Poseidon M/Tr Gadus Neptun *) M/Tr Doggi M/Tr Rypefjord M/Tr Havtind M/TrVesttind M/Tr K.Arctander M/Tr Gadus Njord *) Gadus Neptun was delivered in 2014 **) Book value is inclusive of advance payments on building contracts.

48 48 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 12: Financial interest-bearing non-current assets Financial interest-bearing non-current assets comprise the following items: NOK million Subordinated loan to Norway Seafoods Financial leasing - Norway Seafoods Other interest-bearing, non-current receivables 3 0 Total Lease agreements with Norway Seafoods In 2010 it was decided to divide the operation into a fleet section (HAVFISK ASA) and a distribution section that was to be organised into a new group with Norway Seafoods as the parent company. Norway Seafoods undertook to lease existing processing facilities from HAVFISK (then Aker Seafoods) and continue the processing activities that had earlier been run by the Aker Seafoods group. By leasing the facilities in question and their operating equipment to Norway Seafoods, HAVFISK fulfils the activity obligations associated with the respective facilities. Norway Seafoods rents facilities and premises for the acceptance, processing, packing and shipping of fish and fish products, with all fixtures, machines, production equipment, spare parts and other inventory. The tenant is responsible for all expenses for the operation and use of the facility, including official requirements and orders. The lease runs for 15 years. The tenant is also entitled to extend the lease on unchanged terms for two further periods of 10 and 5 years respectively. The lease cannot be terminated during the lease period, with the following exceptions: The landlord may terminate the agreement with written notice to the tenant and with immediate effect if termination in the landlord s reasonable assessment is necessary to avoid a breach of the prevailing requirements for the landlord s activities in law, regulations and licence conditions, and corresponding lease agreements between one or more of the landlord s associated companies and one or more of the tenant s associated companies would also be terminated. In such a case the landlord is free to start activities in the facility. If the lease is terminated as above, the tenant must pay an amount to the landlord corresponding to any losses before tax the landlord may suffer in each of the first five financial years from and including the year in which the lease is terminated. The amount must be paid no later than 15 January the following year based on accounts approved by the board. For accounting purposes, operating equipment is considered sold by instalments. For financial leases, the receivable rent is split into instalments and financial income. The book value of the receivables as at 01 January 2014 was NOK 79.1 million. Instalments for 2014 amount to NOK 8.4 million, made up of NOK 3.4 million in financial income and NOK 5.1 million in instalment payments. Also, the book value of equipment at Mehamn of NOK 2.1 million was taken out of the contract; see explanation in the annual report. At the end of 2014 the residual value of the contracts in relation to the annuity was NOK 71.9 million. Unaccrued financial income for the remainder of the lease period amounts to NOK 20.7 million. For accounting purposes, the processing facilities are considered as lease of assets. For operational leases, the rent is entered on a straight line basis over the lease period. Annual rent for 2014 amounts to NOK 9.8 million. Minimum future rent, based on the lease period expiring after 15 years, amounts to NOK 103 million. Adjustments have been made for changes in Mehamn. NOTE 13: Building contracts vessels The company awarded a contract in September 2011 to VARD (STX OSV) for the construction of three new trawlers, with delivery in 2013 and In 2013 two vessels were delivered, Gadus Poseidon and Gadus Njord. The final vessel was delivered in the first quarter of NOK million Book value Payment during the year Delivery of new builds - transferred ship (270) (530) Book value Other non-current assets comprise the following items: NOK million Other long-term non-interest-bearing receivables 0 0 Total 0 0

49 ANNUAL ACCOUNTS NOTES 49 HAVFISK ASA Group NOTE 14: Inventories Inventories comprise the following items: NOK million Inventory of harvest 2 17 Goods under processing Inventory of trawl equipment and bunkerage on board Total An amount of NOK 41 million included in total inventories is mortgaged, see Note 20. As of 31 December 2014 the HAVFISK ASA Group s inventories were valued at the lower of fair value less costs to sell and production cost. Of HAVFISK ASA s total consolidated inventories as of 31 December 2014, NOK 39 million is recognised at fair value less costs to sell. The remaining inventories are recognised at full production cost. NOTE 15: Trade and other current non-interest-bearing receivables Trade and other current non-interest-bearing receivables comprise the following items: NOK million Trade receivables Other current non-interest-bearing receivables Total No bad debts were recognised by the group on trade receivables in 2014 or Trade and other current receivables were reduced by a provision that on represented NOK 0.5 million (2013: NOK 0.7 million) for bad debts as of 31 December NOTE 16: Cash and cash equivalents Cash and cash equivalents comprise the following items: NOK million Cash in hand and bank deposits Restricted funds 1 1 Cash and cash equivalents Overdraft facility Cash and cash equivalents in the statement of cash flow The Group had an unutilised overdraft facility as of 31 December 2014 of NOK 87 million (2013: NOK 87 million).

50 50 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 17: Earnings per share and dividends per share Earnings per share: NOK million Profit for the year majority Profit for the year minority 1 1 Profit attributable to ordinary shares Issued ordinary shares as of 1 January Effect of treasury shares (47 725) (47 725) Weighted average number of ordinary shares as of 31 December Earnings per share 2, Earnings per share, majority 2, Nominal value per share 5 5 DIVIDENDS PER SHARE No dividend was paid in Note 18: Paid-in equity A total 84,646,016 shares are issued and in circulation. All issued shares are fully paid-up. The par value per share is NOK 5. The company only has one share category and all shares have the same rights in the company. NOK million Share capital Share premium Other paid-in equity Treasury shares Total paid-in equity as of 01 January (1) 783 Purchase of treasury shares - - as of 31 December (1) 783 Issue Purchase of treasury shares - - as of 31 December (1) 783 Reconciliation of number of shares NOK million Share capital Par value Number of shares as of 01 January Treasury shares (0) Outstanding shares as of 31 December HAVFISK ASA is committed to maintaining a close dialogue with its shareholders, potential investors, analysts, brokers and other financial market players. The company aims to have a share price which reflects the underlying values in the company by ensuring that all information relevant to share price is made available to the market.

51 ANNUAL ACCOUNTS NOTES 51 HAVFISK ASA Group NOTE 19: Group companies The largest subsidiaries included in the consolidation of the HAVFISK group appear in the following table. The Group's The Group's Registered office Shareholding Voting rights Location Country Directly owned HAVFISK Finnmark AS 100 % 100 % Hammerfest Norway HAVFISK Melbu AS 100 % 100 % Melbu Norway HAVFISK Stamsund AS 100 % 100 % Stamsund Norway Aker Seafoods AS 100 % 100 % Ålesund Norway Indirectly owned Hammerfest Industrifiske AS 60 % 60 % Hammerfest Norway HAVFISK Management AS 100 % 100 % Hammerfest Norway Nordland Havfiske AS 100 % 100 % Stamsund Norway Finnmark Havfiske AS 98 % 98 % Hammerfest Norway HAVFISK Båtsfjord AS 100 % 100 % Båtsfjord Norway HAVFISK Nordkyn AS 100 % 100 % Kjøllefjord Norway NOTE 20: Minority interests The municipality of Hammerfest owns 40% (B shares) of shares in the subsidiary Hammerfest Industrfiske AS. B shares give entitlement to 7% annual return on paid-in equity which is NOK 200,000. Minority interests have not therefore been calculated in Hammerfest Industrifiske AS. NOK million Minority s percentage share Finnmark Havfiske AS 2,4 % Changes in minority interests in 2014 are attributable to the following companies: NOK million Balance as of 1 January Acquisitions and disposals Profit minority interests Dividend Balance as of 31.des Finnmark Havfiske AS Changes in minority interests in 2013 are attributable to the following companies: NOK million Balance as of 1 January Acquisitions and disposals Profit minority interests Dividend Balance as of 31.des Finnmark Havfiske AS

52 52 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 21: Interest-bearing loans and credits - pledging of security This note refers to the Group s interest-bearing liabilities: NOK million Interest-bearing loans and credits Mortgaged loans in NOK Unsecured bond issue - - Total non-current liabilities Current liabilities Current portion of mortgaged loan Overdraft facility - - Total current liabilities For further information on interest rate and foreign exchange risk, see Note 26. Change in interest-bearing liabilities in the Group in 2014: NOK million Current Long-term Total Interest-bearing liabilities as of 01/01/ New overdraft facility - New mortgaged loans Other borrowings 2 2 Total proceeds on issue of long-term and current loans Refinancing of mortgaged loans - Ordinary instalments paid (78) (78) First year's repayments and other repayments - Total repayment of long-term and current loans - (78) (78) Interest-bearing liabilities as of 31/12/ The Group s interest-bearing liabilities allocated by type of loan are due for repayment as follows: Maturity/year NOK million Mortgaged loans Other long loans After Total The mortgage loan is secured on the trawler fleet, plants and equipment, inventories, receivables and the shares in the subsidiaries. The loan matures in The conditions of the group s mortgage loan were renegotiated in December The new instalment structure is taken into account in the note above. HAVFISK ASA has covenants in its mortgage loan agreements relating to minimum equity Liabilities secured by mortgage: ratio, EBITDA in relation to net interest-bearing liabilities and EBITDA in relation to interest and instalments paid. The Group has an operating and guarantee facility of altogether NOK 100 million, made up of NOK 87 million in operating credit and NOK 13 million as a guarantee facility. No withdrawals against operating credit had been made as of year end. The unused credit facility is NOK 87 million. Mortgages The HAVFISK ASA Group operates a group account scheme. Members of/companies in the scheme are jointly and severally liable as guarantors for each outstanding amount under the group account scheme. NOK million Long-term mortgaged loan Current portion of long-term mortgaged loan Overdraft and other current loans

53 ANNUAL ACCOUNTS NOTES 53 HAVFISK ASA Group Book value of assets pledged as security: NOK million Trade receivables Inventories Tangible fixed assets inc. discontinued operations held for sale Other assets NET INTEREST-BEARING LIABILITIES Net interest-bearing liabilities include the following items: NOK million Cash and cash equivalents Financial interest bearing non-current assets Interest bearing receivables Total interest-bearing assets Long-term interest-bearing liabilities (1 210) (1 145) Current interest-bearing liabilities (78) (78) Total interest-bearing liabilities (1 288) (1 223) Net interest-bearing liabilities (-) / assets (+) (925) (997) Finance lease liabilities The company has no finance lease liabilities in the balance sheet as of 31/12/2014 NOTE 22: Operating leases Non-cancellable operating leases where the Group is the lessee. NOK million Costs in 2014/ Sum 1 1 Future liabilities: Total 7.2 Lease liabilities relate to the lease of office premises at Løvenvolgate 11 in Ålesund. The lease runs for 10 years from Operating leases where the group is the lessor. NOK million Recognised as income in 2014/ Total Future rental income After Total 103 Rental income refers to lease of production facilities to Norway Seafoods, ref. note 12.

54 54 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 23: Pension costs and pension liabilities HAVFISK ASA mainly covers its pension liabilities through a group pension scheme with a life insurance company. For accounting purposes this is treated as a defined benefit plan. HAVFISK is required to have collective occupational pensions in accordance with the Pensions Act. The company has both defined benefit and defined contribution pension schemes. The pensions schemes satisfy the requirements of the Mandatory Occupational Pensions Act. HAVFISK ASA also has unsecured pension insurance, which the company covers in operations. Future pension commitments will be calculated by an actuary and entered as for defined benefit schemes. The pension schemes are connected with operations onshore, since fishermen mainly are not covered by the mandatory occupational pension scheme. The discount rate for 2014 is based on OMF (preferential bonds). The assumptions used are in line with the recommendations of the Norwegian Accounting Standards Board. Actuarial calculations have been performed to determine pension liabilities and pension costs in connection with the Group s defined benefit schemes. The following assumptions have been made when calculating liabilities and expenses: Discount rate 2.5 % 4.1 % Projected yield 2.5 % 4.1 % Salary growth 3.3 % 3.8 % Adjustment of National Insurance Scheme's basic amount (G)/Inflation 3.0 % 3.5 % Pension adjustment 1.3 % 1.9 % Pension expense recognised in the income statement: NOK million Expense relating to current vesting period - - Interest expense on accrued pension liabilities 1 1 Expected yield on pension assets (1) (1) Administration costs 0 0 Employer's national insurance contributions Pension expense recognised for defined benefit schemes 0 0 Defined contribution schemes (employer's contributions) 2 2 Total pension expense recognised in the income statement 2 2 Pension expense recognised in comprehensive income 3 2 Total pension costs for the year 5 4 Net pension assets and pension liabilities NOK million Liability secured defined benefit schemes (funded) (32) (30) Liability unsecured defined benefit schemes (unfunded) Fair value of pension assets Estimated net present value of pension liabilities (7) (5) Net actuarial gains and losses not recognised in the balance sheet - - Cost of pension entitlements relating to previous periods not recognised in the balance sheet - - Net liability for defined benefit pension liabilities (7) (5) Pension assets Pension liabilities (32) (30) Number of persons in defined benefit scheme Of which pensioners Changes in present value of defined benefit pension liabilities: NOK million Net pension liabilities as of 1 January (5) (4) Expense relating to current vesting period (0) (0) Interest expense on accrued pension liabilities (1) (1) Return on pension funds 1 1 Actuarial gains and losses in included in comprehensive income (3) (2) Payment of pensions 2 1 Pension liabilities as of 31 December (7) (5)

55 ANNUAL ACCOUNTS NOTES 55 HAVFISK ASA Group The major categories of pension assets as a percentage of total pension assets are as follows: NOK million Bonds 79,3 % 80,4 % Money market 11,5 % 11,7 % Shares 6,5 % 5,6 % Property 0,0 % 0,0 % Other 2,7 % 2,3 % Total 100,0 % 100,0 % The Group expects to contribute approximately NOK 2 million to pension funds in Sensitivity The effect on pension costs and liabilities of a 1% increase or decrease in the discount rate is shown below. The effect of a 1% increase or decrease in salary growth is also shown. NOK million 1 prosent økning 1 prosent reduksjon Discount rate: 3,5 % 1,5 % Change in pension costs incl. interest - SCC 0 0 Change in pension obligation incl. salary growth - PBO (2,6) 2,8 Salary growth: 4,3 % 2,3 % Change in pension costs incl. interest - SCC 0 0 Change in pension obligation incl. salary growth - PBO 0,03-0,2 NOTE 24: Current interest-bearing liabilities Current interest-bearing liabilities include the following items: NOK million Overdraft facility - - Other interest-bearing liabilities Total Other current interest-bearing liabilities include the following items: NOK million Current portion of long-term liabilities Other current liabilities - - Total NOTE 25: Trade and other payables Current interest-bearing liabilities include the following items: NOK million Trade payables Public taxes payable Accrued expenses and other current liabilities Provisions for loss ref. interest and currency swap ref. Glitnir Total

56 56 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 26: Financial instruments The ordinary business results in exposure to credit, interest-rate, liquidity and foreign exchange risk. The company is not directly exposed to fluctuations in foreign exchange rates, since it does not have subsidiaries outside Norway and all sales are made in Norwegian kroner. The business is also exposed to fluctuations in oil prices, since the company s vessels use bunkers as fuel. Financial derivatives are used to hedge against fluctuations in these markets. Credit risk The company faces little credit risk in its ordinary harvesting/trading business, since virtually all sales are cleared through the Norwegian Fishermen s Sales Organisation and the Sunnmøre & Romsdal Fishermen s Sales Organisation, which have guarantee schemes for correct settlement. No security is required for financial assets. Exposure to Norway Seafoods The Norway Seafoods Group is the company s largest customer and a close partner. Havfisk owns several processing plants that are rented by Norway Seafoods Group on long-term contracts. A long-term lease agreement with Havfisk regarding production equipment is recognised as a finance lease and presented as an interest-bearing non-current asset investment on the balance sheet. The lease agreement for buildings is treated as an operating lease in the accounts and the annual rent is recognised under other operating revenues in the income statement. A subordinated loan was also established in the amount of NOK 100 million in connection with the distribution of shares in Norway Seafoods Group AS. At year end, total receivables from the Norway Seafoods Group amounted to NOK 211 million, including NOK 72 million relating to finance leases for equipment in the company s production plants. The total balance with Norway Seafoods increased by NOK 10 million in The lease agreement with Norway Seafoods is described in note 12. HAVFISK sells a substantial share of its fresh volume to Norway Seafoods. Settlement takes place through the Norwegian Fishermen s Sales Organisation, which guarantees the settlements. The company thereby has no credit risk associated with this type of sale, ref. note 1 principles for revenue entry. Maximum exposure to credit risk connected to trade receivables at the balance sheet date by customer category: Gross trade receivables NOK million Wholesale business Retailers, industry customers, sales organisation End users Total trade receivables: Exposure to credit risk The book value of receivables represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: 2014 Note Held for sale through profit or loss Allocated at fair value through profit or loss Available for sale Receivables at amortised cost Derivatives as hedging instrument Held until maturity Cash and cash equivalents Other share investments - Financial interest bearing non-current assets Other non-current assets Trade receivables, other curr. nonint-bearing receivables and share investments Short-term derivatives Interest bearing receivables Cash and cash equivalents 16 - Total Note Held for sale through profit or loss Allocated at fair value through profit or loss Available for sale Receivables at amortised cost Derivatives as hedging instrument Held until maturity Cash and cash equivalents Other share investments - - Financial interest bearing non-current assets Other non-current assets Trade receivables, other curr. nonint-bearing receivables and share investments Short-term derivatives Interest bearing receivables Cash and cash equivalents Total Sum Sum

57 ANNUAL ACCOUNTS NOTES 57 HAVFISK ASA Group Ageing of trade receivables and bad debt provisions The ageing profile of trade receivables is shown below: NOK million Brutto 2014 Avsetning Brutto 2013 Avsetning Not yet due 41 (1) 49 - Due 0-30 days 0 (0) - - Due days 0 (0) Due days Due more than 1 year 0 (0) 1 (1) Total trade receivables 41 (1) 49 (1) Written down - - Effect of hedge accounting on equity NOK million Cumulative, non-reversed amount at start of year Net change in equity as a result of hedge accounting Cumulative, non-reversed amount at year end Liquidity risk Liquidity risk is the risk that the Group will not be able to fulfil its financial liabilities as they mature. The aim of liquidity management is to secure sufficient liquidity to fulfil liabilities at the time of maturity. Maturity profile including estimated interest payments by category of interest-bearing liability: The following table provides an overview of maturities and maturities including interest estimates by main category of loan for interest-bearing financial liabilities. NOK million Book value Cash flow 2014 loan and interest maturity structure Up to 6 months 6-12 months 1-2 years 2-5 years Over 5 years Non-financial derivatives: - Mortgaged loans (1 288) (1 476) (63) (63) (126) (1 224) 0 Other long-term non-interest-bearing liabilities (106) (106) (12) - (94) Other current non-interest-bearing liabilities (169) (169) (132) (37) Discontinued operations Financial derivatives: - - Interest swaps used for hedging (49) (51) (6) (7) (13) (25) Derivatives used for bunker hedging (17) (17) (9) (5) (3) - Total (1 628) (1 819) (210) (112) (155) (1 249) (93) Current derivative financial liabilities comprise NOK 18.2 million in interest rate swaps. The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to occur: NOK million Book value Cash flow Up to 6 months 6-12 months 1-2 years 2-5 years Over 5 years Assets Other current non-interest-bearing liabilities (169) (169) (132) (37) Liabilities, mortgage loan (1 288) (1 476) (63) (63) (126) (1 224) 0 Financial derivatives Bunker derivatives (17) (17) (9) (5) (3) Interest derivatives (49) (51) (6) (7) (13) (25) - Total (1 522) (1 713) (210) (112) (142) (1 249) 0 The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to impact the income statement: NOK million Book value Cash flow Up to 6 months 6-12 months 1-2 years 2-5 years Over 5 years Assets Liabilities (557) (94) (94) (186) (183) - Financial derivatives Bunker derivatives (17) (9) (5) (3) - - Interest derivatives (51) (6) (7) (13) (25) - Total (625) (109) (106) (202) (208) - Continue next page

58 58 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 26: Financial instruments (continues) NOK million Book value Cash flow 2013 loan and interest maturity structure Up to 6 months 6-12 months 1-2 years 2-5 years Over 5 years Non-financial derivatives: - Mortgaged loans (1 223) (1 501) (68) (68) (133) (1 230) (3) Other long-term non-interest-bearing liabilities (257) (257) (36) (16) - (204) Other current non-interest-bearing liabilities (320) (320) (159) (161) Discontinued operations Financial derivatives: - - Interest swaps used for hedging (28) (28) (4) (4) (8) (12) Derivatives used for bunker hedging Total (1 823) (2 101) (265) (247) (139) (1 242) (207) The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to occur: NOK million Book value Cash flow Up to 6 months 6-12 months 1-2 years 2-5 years Over 5 years Assets Other current non-interest-bearing liabilities (320) (320) (159) (161) Liabilities, mortgage loan (1 223) (1 501) (68) (68) (133) (1 230) (3) Financial derivatives Bunker derivatives Interest derivatives (28) (28) (4) (4) (8) (12) - Total (1 566) (1 844) (229) (231) (139) (1 242) (3) The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to impact the income statement: NOK million Book value Cash flow Up to 6 months 6-12 months 1-2 years 2-5 years Over 5 years Assets Liabilities (468) (76) (80) (166) (145) - Financial derivatives Bunker derivatives Interest derivatives (28) (4) (4) (8) (12) - Total (490) (78) (82) (173) (157) - Interest rate risk At the balance sheet date the interest rate profile on Havfisk s interest-bearing instruments was as follows: NOK million Fixed interest: Cash and cash equivalents - - Other interest-bearing assets Interest-bearing liabilities Net interest-bearing receivables (liabilities) subject to fixed interest rates - - NOK million Variable interest rates: Cash and cash equivalents Other interest-bearing assets Interest-bearing liabilities Net interest-bearing receivables (liabilities) subject to variable interest rates (925) (997) Cash flow analysis and fair value analysis variable interest rate instruments 2014 Income statement Equity NOK million 100 pt increase 100 pt decrease 100 pt increase 100 pt decrease Variable interest rate on instruments (9) Interest rate swaps - cash flow hedging (24) Cash flow effect (9) 9 21 (24)

59 ANNUAL ACCOUNTS NOTES 59 HAVFISK ASA Group Interest swap agreements As of 31/12/2014, HAVFISK ASA had hedged parts of the mortgaged liabilities through an interest rate swap agreement. NOK 626 million has been secured. Other loans and interest-bearing financial assets are subject to variable interest rates. The fair value of the agreement amounted to NOK -49 million as of 31 December Effective interest rate The following table shows the effective interest rate at the balance sheet date for interest-bearing financial assets and interest-bearing financial liabilities. All interest-bearing financial assets and liabilities are repriced at 3 and 6-monthly intervals in line with the intervals used to fix interest margins. All interest-bearing financial assets and interest-bearing financial liabilities are subject to variable interest rates. NOK million Note Effective interest rate Effective interest rate Cash and cash equivalents % 1.4 % Non-current interest-bearing receivables % 4.2 % Non-current interest-bearing loans and credits % 4.5 % Operating facility (not used) % 4.6 % Foreign exchange risk After the Norway Seafoods business was demerged, the company is no longer directly exposed to fluctuations in exchange rates since it no longer has subsidiaries outside Norway and all sales are made in Norwegian kroner. However, the group is indirectly exposed as the price of its products could over time be affected by exchange rate fluctuations. Shown below are assets and obligations measured at fair value in the accounts or classified in notes in the fair value hierarchy. Level 1: Fair value based on prices quoted in an active market for identical assets and obligations. Level 2: Level 3: Fair value based on input from other than quoted prices. Level 2 includes interest rate and currency derivatives When the discounted cash flow method is used, estimated future cash flows are based on management s best estimate and the discount rate is the market rate for equivalent instruments on the date of balance. Face value is considered to reflect fair value for receivables/obligations with a duration of less than one year. As at 31 December 2014 Fair value 2014 NOK million Loans and receivables, other liabilities Available for sale - financial assets Interest and bunkers Derivatives Book value 2014 Level 1 Level 2 Level 3 Total Other non-current interest-bearing receivables Trade receivables Other interest-free current assets Interest-bearing current assets Cash and bank deposits Financial assets Mortgaged loans Trade payables Accrued, unpaid interest Other accrued costs Provision for dividend Other interest-free current liabilities Derivatives Financial liabilities As at 31 December 2013 Fair value 2013 NOK million Loans and receivables, other liabilities Available for sale - financial assets Interest and bunkers Derivatives Book value 2014 Level 1 Level 2 Level 3 Total Shares and shareholdings in other companies Other non-current interest-free receivables Other non-current interest-bearing receivables Trade receivables Other interest-free current assets Derivatives Interest-bearing current assets Cash and bank deposits Financial assets Mortgaged loans Trade payables Accrued, unpaid interest Other accrued costs Other interest-free current liabilities Derivatives Financial liabilities

60 60 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 27: Contingent events and contractual liabilities CONTINGENT LIABILITIES Guarantee obligations At the end of 2014 the HAVFISK Group has guarantee obligations not recognised in the balance sheet in the amount of NOK 13 million. The guarantees are payment bonds provided on behalf of the subsidiaries towards external suppliers and the authorities. Legal disputes / legal claims HAVFISK received a claim in September 2010 from the administration committee for Glitnir in Iceland for NOK 105 million in final settlement for an interest and currency swap agreement entered into during HAVFISK received a summons from Glitnir in December 2011, in which the claim is maintained. As mentioned in the company s prospectus dated 31 August 2009, the relevant swap contract was terminated by HAVFISK in HAVFISK was of the opinion that the company had the right to terminate the swap agreement under Icelandic law and did so correctly. On 30 December 2013, Rekjavik county court passed judgement in the case regarding HAVFISK s rate, inflation and currency swap agreement with Glitnir. The court ruled that HAVFISK did not have the right to cancel the agreement i HAVFISK was thereby ordered to pay ISK 1,897,563,144 in compensation to Glitnir, with the addition of ISK 1,081,391,516 in interest. According to the official rate of exchange from the Icelandic central bank, the combined claim as at was approximately NOK 158 million. A provision for this amount was made in the annual accounts for 2013, see note 5. The judgement was appealed by HAVFISK. In the 2014 interim reports a further provision was made for accrued interest in 2014, as well as for interest rate adjustments against the Icelandic kroner. In total this ammounted to NOK 38 million in provisions during the course of In the Q4 report 2014 the provision was NOK 195 million. HAVFISK s appeal in this case came before the Icelandic Supreme Court on 4 March 2015 and the judgement was given on 12 March The court concluded that HAVFISK was entitled to cancel the contract in question in The judgement was entirely in favour of HAVFISK. The accounting provisions made by HAVFISK for the claim, including interest and exchange rate losses, of NOK 195 million has been reversed, ref. note 7. CONTINGENT ASSETS HAVFISK has no contingent assets. NOTE 28: Transactions and agreements with related parties HAVFISK ASA s consolidated financial statements include the following transactions and intercompany balances with Aker ASA, Norway Seafoods and the company Ocean Harvest AS, which is controlled by Aker ASA. Below is a list of related party transactions: Operating revenues Non-recurring operating items (income) 1 2 Operating expenses Financial income Financial expenses 8 8 Current non-interest-bearing liabilities Long-term receivables (3) - Current non-interest-bearing receivables Kortsiktig rentefri fordring Services are performed on arm s-length terms. Operating revenues and operating expenses comprise rent and Group expenses charged by and received from Aker ASA, Norway Seafoods and Ocean Harvest AS. HAVFISK had sales to the sister company Norway Seafoods of NOK 148 million in These sales are settled through the Norwegian Fishermen s Sales Organisation and Romsdal Fishermen s Sales Organisation, ref. report in note 1 under principles for revenue entry. NOTE 29: Total salaries and other remuneration paid to the board, the CEO and other executive management at HAVFISK ASA 2014: Remuneration paid to executive management NOK 1,000 Position Fixed salary Other remuneration Bonuses Pension benefits Total Olav Holst-Dyrnes President and CEO Eldar Kåre Farstad CFO Ari Josefsson COO Erik Kartevoll HR Director Tone Myklebust Sales Director Lasse Stokkeland Technical Director Eldar Vindvik Technical Director Total

61 ANNUAL ACCOUNTS NOTES 61 HAVFISK ASA Group Olav Holst -Dyrnes resigned as CEO as at 30 September and Eldar Kåre Farstad was acting CEO during the period 1 October to 31 December Webjørn Barstad took up the position of group CEO with effect from 1 January Lasse Stokkeland resigned the position of Technical Director at the end of Eldar Vindvik was appointed as the new Technical Director with effect from 1 January 2015, but worked at the company in December 2014 together with Lasse Stokkeland. No loans have been extended nor security provided to members of the executive management. No option schemes are provided for company employees. Remuneration paid to members of the executive management complies with the policy adopted by the annual general meeting in : Remuneration paid to executive management NOK 1,000 Position Fixed salary Other remuneration Bonuses Pension benefits Total Olav Holst-Dyrnes President and CEO Eldar Kåre Farstad CFO Ari Josefsson COO Erik Kartevoll HR Director Tone Myklebust Sales Director Lasse Stokkeland Technical Director Odd Johan Fladmark Technical Director Total Lasse Stokkeland took over as Technical Director with effect from 1 October Stokkeland was previously project manager of the fleet renewal project. No loans have been extended nor security provided to members of the executive management. No option schemes are provided for company employees. Remuneration paid to members of the executive management complies with the policy adopted by the annual general meeting in Remuneration paid to Board members NOK Fees 2014 Fees 2013 Frank Ove Reite Chair Trine Sæther Romuld Deputy chair Leiv Grønnevet Director Øyvind Eriksen * Director Ola Snøve * Director Kari Mette Ski Director Trond Brandsrud '* Director Bjarne Kristiansen Deputy director Ottar Johansen Worker Director Andre Steffensen Worker Director Erlend Hanssen Worker Director Total The remuneration to Frank Ove Reite is paid to his employer. The remuneration to Ola Snøve and Trond Brandsrud is paid to their employer Aker ASA. Trine Sæther Romuld chairs the audit committee, while Leiv Grønnevet and Erlend Hanssen are members of the committee. *) Those marked with an asterisk have not been directors all year. Guidelines for remuneration for the CEO and the Group s management group The key purpose of the salary system for executive management is to stimulate a strong and lasting performance-related culture which contributes to an increase in share value. The overall remuneration of executive management comprises a market-based basic salary, a few standard additional benefits and a variable salary. The CEO and the Group s management group are members of the occupational pension and insurance schemes applicable to all employees. The company uses standard contracts and standard terms of employment concerning notice periods and post-employment salaries for positions such as CEO and for members of the management group. The company does not offer share option schemes to employees. The variable salary scheme is intended to help achieve sound financial results and management in line with the company s values and business ethics. The variable salary is based on the achievement of financial, operational and personal targets, as well as management in line with the company s values. The scheme gives managers the potential to earn a variable additional salary of up to 50% of the basic salary. Variable salary earned is paid out the following year. The implementation of special projects may trigger the allocation of additional bonuses / variable salaries. Agreement on remuneration on cessation of employment relationship/retirement The managing director is entitled to 3-6 months remuneration on cessation of employment. Other members of the management group are entitled to 3-6 months remuneration on cessation of employment.

62 62 ANNUAL ACCOUNTS NOTES HAVFISK ASA Group NOTE 30: Other long-term liabilities Other long-term liabilities includes the following items: NOK million Provisions for costs in the Glitnir case - 6 Total - 6 NOTE 31: Shares owned by the CEO, board and executive management of HAVFISK ASA Board members and group management and their related parties owned the following number of shares as of 31 December 2014: Number The Board: Frank O Reite Chair Through the company Converto AS Andre Steffensen Director Group management: Eldar Kåre Farstad CFO Tone Myklebust Sales Director Overview of the 20 largest shareholders as of 31/12/2014 Name Number of shares Shareholding AKER ASA % MARINE HARVEST ASA % CORTEX AS % CONVERTO AS % KONTRARI AS % SES AS % JAH AS % HOLDEN JIM ØYSTEIN % STATOR AS % TRAPESA AS % CAPRECA AS % MP PENSJON PK % BENTNESET INVEST A/S % SKANDINAVISKA ENSKILDA BANKEN AB % STATE STREET BANK AND TRUST CO % MIDDELBOE AS % ROSØY AS % BIRKELAND ODD KNUT % JOMANI AS % HYLLIBRÅTEN AS % Others % Total % NOTE 32: Events after the balance sheet date HAVFISK s appeal was heard by Iceland s Supreme Court on 4 March 2015 and judgement was given on 12 March. The court concluded that HAVFISK was entitled to cancel the agreement in question in The court found in favour of HAVFISK. The consequences in the accounts are incorporated in the annual accounts for 2014, cf. description under note 27.

63 63 Annual accounts and notes HAVFISK ASA

64 64 ANNUAL ACCOUNTS INCOME STATEMENT HAVFISK ASA Income statement NOK 1,000 Note Sales revenues Other operating revenues Total operating revenues Cost of goods sold and change in inventories (5 662) - Salaries and payroll costs 3 (30 885) (23 944) Other operating expenses 4 (22 172) (12 628) Operating profit before depreciation and amortisation (12 391) (2 353) Depreciation and amortisation 7 (584) (497) Operating profit (12 975) (2 850) Net financial items ( ) Profit/loss after financial items ( ) Tax expense/tax income 6 (42 166) Net profit/loss for the year ( ) Allocation of profit/loss for the year Net profit/loss for the year ( ) Transfer to (-) / from (+) other equity ( ) Total - -

65 ANNUAL ACCOUNTS BALANSE PER 31. DESEMBER 65 HAVFISK ASA Balance Sheet as at NOK 1,000 Note Assets Deferred tax asset Property, machinery and equipment Advance payments for building contracts Total intangible assets and property, plant and equipment Shares in subsidiaries Long-term receivables from Group companies Other long-term receivables etc. 8, Total non-current financial assets Total non-current assets Current receivables due from Group companies Other current receivables Derivatives Interest bearing receivables 8, Cash and cash equivalents Total current assets Total assets Equity and liabilities Share capital Treasury shares 11 (1 486) (1 486) Share premium Other paid-in equity Total paid-in equity Other equity (56 575) Total retained earnings (56 575) Total equity Deferred tax liability Pension liabilities Other non-current liabilities Total provisions Long-term liabilities due to subsidiaries Long-term interest-bearing liabilities due to third parties 12, Total other long-term liabilities Current interest-bearing liabilities 12, Trade payables Current liabilities due to Group companies Derivatives Public taxes payable Provisions for loss ref. interest and currency swap ref. Glitnir Other current liabilities Total current liabilities Total equity and liabilities Ålesund, 19 March 2015 For HAVFISK ASA Frank O. Reite Trine Sæther Romuld Leiv Grønnevet Ola Snøve Kari Mette Ski Chair Deputy Chair Director Director Director Ottar S. Johnsen Andre Steffensen Erlend Hanssen Webjørn Barstad Director Director Director President and CEO

66 66 ANNUAL ACCOUNTS STATEMENT OF CASH FLOW HAVFISK ASA Statement of cash flow NOK 1, Profit/loss after financial items ( ) Ordinary depreciation 7 (584) 497 Interest paid (67 492) (53 328) Interest received Other changes in current items ( ) Cash flow from operating activities (31 346) (10 472) Payments on the purchase of property, plant and equipment 7 (340) (565) Payments from other long-term investments/receivables ( ) ( ) Receipts on other long-term investments/receivables Cash flow from investing activities (7 077) ( ) Payments on long-term interest-bearing liabilities (78 976) (75 498) Receipts from long-term interest-bearing liabilities Payments on current interest-bearing liabilities (19 437) ( ) Receipts from taking out of current interest-bearing liabilities - - Group contributions / dividends received Cash flow from financing activities Cash flow for the year (41) Cash and cash equivalents 1 January Cash and cash equivalents 31 December

67 ANNUAL ACCOUNTS NOTES 67 HAVFISK ASA Notes to the account Note 1: Accounting principles The annual financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice in Norway. Subsidiaries/associates In the parent company financial statements, subsidiaries and associates are recognised at cost less any necessary impairments. Shares are written down to fair value where any impairment is attributable to causes not deemed to be temporary in nature and where such action is deemed necessary in accordance with generally accepted accounting practice. Impairments are reversed when the basis for the impairment no longer exists. Dividends and other distributions are recognised in income in the same year that they are proposed in the subsidiary. If the dividend exceeds the share of retained earnings after the acquisition, the excess share is deemed to represent a repayment of the invested capital and the distributions are deducted from the value of the investment in the balance sheet. Sales revenues Sales of goods are recognised in income at the time of delivery. Services are recognised in income as they are performed. The share of sales revenues that relates to future services is recognised in the balance sheet as unearned income on the sale, and subsequently recognised as income in line with performance. Classification and valuation of balance sheet items Current assets and liabilities relate to items that fall due for payment within one year of the time they are acquired or incurred, and items connected to the circulation of goods. Other items are classified as non-current assets/liabilities. Current assets are valued at the lower of cost and fair value. Current liabilities are recognised in the balance sheet at their nominal amount at the time they are incurred. Non-current assets are recorded at cost, but written down to fair value when any impairment is not considered to be of a temporary nature. Non-current liabilities are recognised in the balance sheet at their nominal amount at the time they are incurred. Receivables Trade and other receivables are recognised at nominal value in the balance sheet less provisions for expected bad debts. Bad-debt provisions are based on an individual assessment of each receivable. A non-specific provision is also recognised to cover expected bad debts on other trade receivables. Foreign currency Monetary items denoted in foreign currency are valued at the rate in force at the end of the financial year. Current investments Current investments (shares and interests valued as current assets) are valued at the lower of cost and fair value at the balance sheet date. Dividends and other distributions received from the companies in which investments are made are recognised in income as other financial income. Property, plant and equipment Property, plant and equipment are recognised in the balance sheet and depreciated over the expected useful lives of the operating assets. Direct maintenance of operating assets is expensed on an ongoing basis under operating expenses, while improvements or upgrades are added to the operating asset s cost and are depreciated at the same rate as the operating asset. If the recoverable amount of the operating asset is lower than its book value, the operating asset is written down to the recoverable amount. The recoverable amount is the higher of the net recoverable value and the value in use. The value in use is the present value of the future cash flows that the asset is expected to generate. Research and development Research and development costs are recognised in the balance sheet to the extent that a future financial benefit can be identified as deriving from the development of an identifiable intangible asset. Where this is not the case, costs are expensed on an ongoing basis. Research and development recognised in the balance sheet is amortised on a straight-line basis over the useful lives of the assets. Pensions The company has both defined benefit and defined contribution pension schemes. For defined benefit schemes, the liability recognised is the present value of the defined benefit liability at the balance sheet date, minus the fair value of plan assets, together with adjustments for actuarial gains/losses and costs of pension entitlements in previous periods. The defined benefit liability is calculated by independent actuaries and is measured as the present value of estimated future cash outflows. The cost of providing pensions is charged to the income statement so as to spread the regular cost over the number of years of service of employees. Actuarial gains and losses arising from empirical adjustments, changes in actuarial assumptions and amendments to pension schemes are recognised over the average remaining years of service of the employees concerned. For defined contribution schemes, contributions are paid into pension insurance schemes. Once the contributions have been paid, no further payment liabilities exist. Contributions to defined contribution schemes are charged to the income statement in the period to which the contributions relate. Taxes The tax expense in the income statement comprises both taxes payable for the period and changes in deferred tax liabilities/assets. Deferred tax is calculated as 27 per cent of the basis of temporary differences that exist at the end of the financial year between the accounting and tax written-down values, and tax loss carried forward. Tax-reducing and tax-increasing temporary differences that reverse or could reverse in the same period are set off. Net deferred tax assets are recognised in the balance sheet to the extent that it is probable that these can be utilised. To the extent that group contributions are not recognised in the income statement, the tax effect of the group contributions is recognised directly against the investment in the balance sheet. Statement of cash flow The cash flow statement has been prepared in accordance with the indirect method. Cash and cash equivalents include cash, bank deposits and other current liquid investments. Use of estimates The preparation of the annual financial statements in accordance with generally accepted accounting practice requires management to make estimates and assumptions that affect the reported amounts in the income statement, the valuation of assets and liabilities and information on contingent assets and liabilities at the balance sheet date. Probable and quantifiable contingent losses are expensed on an ongoing basis.

68 68 ANNUAL ACCOUNTS NOTES HAVFISK ASA NOTE 2: Operating revenues Other operating revenues consist mainly of the sale of administrative services to companies in HAVFISK and the Aker Group. The sales revenues are from sale of fish meal from the group s trawlers. NOTE 3: Salaries and payroll costs Salaries and payroll costs comprise the following: NOK 1, Salaries Social security contributions Other benefits Pension costs Total Number of employees at the end of the year Average number of full-time equivalents For an overview of total salaries and other remuneration paid to the Board and CEO and other executive employees at Havfisk ASA, see Note 29 in the consolidated financial statements. The company has a defined contribution pension scheme which fulfils the requirements of the Norwegian Act on mandatory occupational pensions. The company s pension liabilities are presented in note 14. NOTE 4: Remuneration paid to auditors Remuneration paid to the auditors is included in other operating expenses and is allocated as follows: NOK 1,000 Statutory auditing Others cert. services Expenses issue Auditing Total Of the remuneration for other services in 2014, NOK 56,000 refers to tax consultancy and NOK 674,000 to services other than the audit. The amounts are exclusive of VAT. NOTE 5: Net financial items Financial income includes the following items: NOK 1, Interest income bank deposits Interest income from Group companies Net Group contribution received from subsidiaries Other financial income Total financial income Interest expenses paid to third parties (66 461) (55 684) Interest expenses paid to Group companies - (461) Other financial expenses (2 591) (2 766) Provisions for loss ref. interest and currency swap ref. Glitnir ( ) Total financial expenses ( ) Net financial items ( )

69 ANNUAL ACCOUNTS NOTES 69 HAVFISK ASA NOTE 6: Estimated taxable profit/loss The tax expense is allocated as follows: NOK 1, Profit before tax ( ) Permanent differences (65 282) (2 232) Change in temporary differences ( ) Tax loss carryforward used - (27 442) Estimated taxable profit/loss (19 358) 0 Estimated tax payable at 27% - - Tax expense Net tax payable - - Tax on items recognised directly in equity (11 550) Change in deferred tax (30 616) Tax expense/tax income (42 166) See also Note 13 concerning deferred tax. NOTE 7: Fixed assets/ property, plant and equipment The movement in property, plant and equipment for 2014 is shown below: NOK 1,000 Machinery and equipment Buildings/Housing Total Cost as of 01 January Additions during the year Disposals and scrappings - Cost as of 31 December Cumulative depreciation and impairments as of 01 January Sold - Depreciation for the year Cumulative depreciation and impairments as of 31 December Book value as of 31 December Economic life 3-5 år Advance payments for building contracts The HAVFISK group awarded contracts to VARD (STX OVS) in September 2011 for the construction of three new trawlers for delivery in 2013 and Gadus Poseidon and Gadus Njord were delivered during The last, Gadus Neptun was delivered in Q Changes to advance payments building contracts: Accounts Accounts NOK 1, Book value 1 January Payment during the year Delivery of new builds - transferred ship ( ) ( ) Book value 31 December NOTE 8: Receivables Long-term receivables are allocated as follows: NOK 1, Maturing within 1 year Maturing after more than 1 year Total The interest terms are in line with market terms. Current receivables from group companies consist of group contributions owed, ordinary trade receivables and accrued interest from Norway Seafoods AS. Interest-bearing current receivables refers entirely to receivables from Norway Seafoods AS. Current liabilities to group companies are ordinary supplier liabilities.

70 70 ANNUAL ACCOUNTS NOTES HAVFISK ASA NOTE 9: Shares in subsidiaries As of 31 December 2014 this item comprises the following: NOK 1,000 Registered office Share % 1) Equity Profit/loss before tax Book value 2014 Book value 2013 Havfisk Stamsund AS Stamsund (2 732) Havfisk Melbu AS Melbu Havfisk Finnmark AS Hammerfest Aker Seafoods AS Ålesund Total shares in subsidiaries ) The company s shareholding and voting rights are the same for all companies. NOTE 10: Derivatives The company has entered into forward contracts to hedge the price of bunkers. These contracts mature on a continuous basis from 31 January 2015 until 30 June As of 31/12/2014 these contracts had a negative present value of NOK 16,661 million, and they are presented in the accounts as current liabilities. The change in present value in 2014 is a negative NOK 21.8 million and the change has been entered against equity, see note 11. The company also has three existing interest rate hedge contracts of NOK 200, NOK 181 and NOK 250 million respectively. The contracts run until Their present value at year end was negative at NOK 48,919 million, and they are presented in the accounts as current liabilities. The change in present value in 2014 is a negative NOK 21 million and the change has been entered against equity, see note 11. See note 26 in the consolidated accounts for a more detailed specification. NOTE 11: Equity HAVFISK ASA s share capital as of 31/12/2014 comprised shares each with a par value of NOK 5. The company has treasury shares and the outstanding number of shares is All shares have equal voting rights. Overview of the 20 largest shareholders as of 31/12/2014 Name Number of shares Shareholding AKER ASA % MARINE HARVEST ASA % CORTEX AS % CONVERTO AS % KONTRARI AS % SES AS % JAH AS % HOLDEN JIM ØYSTEIN % STATOR AS % TRAPESA AS % CAPRECA AS % MP PENSJON PK % BENTNESET INVEST A/S % SKANDINAVISKA ENSKILDA BANKEN AB % STATE STREET BANK AND TRUST CO % MIDDELBOE AS % ROSØY AS % BIRKELAND ODD KNUT % JOMANI AS % HYLLIBRÅTEN AS % OTHERS % Total %

71 ANNUAL ACCOUNTS NOTES 71 HAVFISK ASA The change in equity in 2014 was as follows: NOK 1,000 Share capital Treasury shares Share premium Other paid-in equity Total paid-in capital Total retained equity Total equity Equity as of 1 January (1 486) (56 575) Currency derivatives rec. dir. in eq. - (31 226) (31 226) Net profit/loss for the year Equity as of 31 December (1 486) NOTE 12: Liabilities Long-term interest-bearing loans relate to liabilities taken out in Norwegian and foreign currency as follows: NOK 1, Long-term interest-bearing liabilities to third parties in NOK Long-term interest-bearing liabilities to subsidiaries in NOK - - Total Long-term interest-bearing liabilities to third parties increased by NOK 140 million as a result of borrowing in connection with payments under building contracts for new vessels. In 2014 ordinary repayments of liabilities totalling NOK 78 million were made. Specification of current interest-bearing liabilities: NOK 1, Current liabilities to credit institutions Current portion of long-term interest-bearing liabilities Total Long-term interest-bearing liabilities allocated by type of loan are due for repayment as follows: NOK 1,000 Financial leasing Liabilities to credit inst./others Liabilities in the group 2015 (78 000) (78 000) 2016 (78 000) (78 000) 2017 (78 000) (78 000) 2018 ( ) ( ) 2019 (1 667) (1 667) After 2019 (1 667) - (1 667) Total - ( ) - ( ) Total The company issues cross-guarantees for other Group companies. NOTE 13: Deferred tax Interest terms are in line with market terms. The average interest on liabilities due to credit institutions at year end was 3/6 months Nibor %. The loan agreement imposes minimum equity requirements and various earnings requirements on HAVFISK ASA. This also governs how great a margin is paid on the company s mortgage liabilities. The following list shows the difference between the accounting and tax-written-down values at the end of 2014 and 2013, changes in these differences, as well as deferred tax liabilities at the end of 2014 and 2013 and the change in deferred tax. NOK 1, Change Fixed assets/ property, plant and equipment (49) 171 (220) Financial instruments (22 743) Other differences (7) Provisions in the Glitnir case - ( ) (37 557) Pensions (6 084) (4 105) (1 979) Temporary differences (6 105) ( ) (62 506) Cumulative tax loss carryforward (25 410) (6 052) (19 358) Deferred tax basis (31 515) ( ) (81 864) Net deferred tax liabilities/assets 27% (8 509) (39 125) (22 103) The tax expense in shown in Note 6.

72 72 ANNUAL ACCOUNTS NOTES HAVFISK ASA NOTE 14: Pension costs and pension liabilities HAVFISK is required to have collective occupational pensions in accordance with the Pen sions Act. The company has both defined benefit and defined contribution pension schemes. The pensions schemes satisfy the requirements of the Mandatory Occupational Pensions Act. HAVFISK ASA mainly covers its pension liabilities through a group pension scheme with a life insurance company. For accounting purposes this is treated as a defined benefit plan. HAVFISK ASA also has unsecured pension insurance, which the company covers in operations. Future pension commitments will be calculated by an actuary and entered as for defined benefit schemes. Actuarial calculations have been based on the following assumptions: Discount rate 2,5 % 4,1 % Projected yield 2,5 % 4,1 % Salary growth 3,3 % 3,8 % Adjustment of National Insurance Scheme's basic amount (G)/Inflation 3,0 % 3,5 % Pension adjustment 1,3 % 1,9 % Percentage composition of pension funds: Bonds 79,3 % 80,4 % Money market 11,5 % 11,7 % Shares 6,5 % 5,6 % Property 0,0 % 0,0 % Other 2,7 % 2,3 % Total 100 % 100 % Pension expenses NOK 1, Present value of accrued pension entitlements for the year Interest expense on accrued pension liabilities (996) (964) Expected yield on pension assets Allocated effect of change in estimates and pension schemes etc. (2 586) - Administration costs (49) (51) Net pension costs (2 783) (164) Defined contribution scheme (employer's contributions) (1 588) (1 558) Total net pension costs (4 371) (1 722) Net pension assets/liabilities break down as follows: Present value of accrued pension liabilities (27 103) (25 412) Value of future salary growth Calculated pension liabilities (27 103) (25 412) Value of pension assets Estimated net pension assets/(liabilities) (6 084) (4 105) Net pension assets/(liabilities) 2) (6 084) (4 105) Net pension assets/(liabilities) recognised in the balance sheet 2) (6 084) (4 105) Number of employees Number of beneficiaries Underfinanced plans: Value of pension liabilities exceeds value of pension assets. Overfinanced plans: Value of pension assets exceeds value of pension liabilities. HAVFISK pension plans are underfinanced plans. 2) Provisions have been recognised for employer s national insurance contributions on contracts with net pension liabilities. For 2014 the employer s contributions have been included in the present value of accrued pension liabilities. NOTE 15: Financial market risk The company is exposed to risk attaching to the value of its investments in subsidiaries through changes in prices on the finished goods market, to the extent that such changes result in changes in the competitive power and earning potential of these companies over time. The Norway Seafoods Group is the company s largest customer and a close partner. The HAVFISK group owns several processing plants that are rented by Norway Seafoods Group on long-term contracts. A subordinated loan was also established in the amount of NOK 100 million in connection with the distribution of shares in Norway Seafoods Group AS. The outstanding balance with Norway Seafoods at year end was NOK 144 million. The total balance with Norway Seafoods increased by NOK 22 million in See also note 12 in the consolidated financial statements for further information. The company has no current hedge transactions related to foreign currencies and no sales in foreign currencies.

73 ANNUAL ACCOUNTS NOTES 73 HAVFISK ASA NOTE 16: Leases The Company leases administrative services from Aker ASA on market terms. The company leases office premises in Løvenvoldgt. 11 in Ålesund, ref. note 22 in the consolidated accounts. NOTE 17: Mortgages and guarantees Long-term interest-bearing liabilities Current interest-bearing liabilities Total mortgaged liabilities Book value of mortgaged assets: Receivables from Group companies Advance payments on building contracts 0 Property, machinery and equipment Shares in subsidiaries Total mortgaged assets The company s subsidiary has provided guarantees of up to NOK 1,532 million for mortgage loans. Remaining liability as at 31 December 2014 is NOK 1,287,253. The group has a group account system, in which cross-guarantees have been provided. The company has also provided bank guarantees of NOK 13 million related to tax deductions. NOTE 18: Events after the balance sheet date HAVFISK s appeal was heard by Iceland s Supreme Court on 4 March 2015 and judgement was given on 12 March. The court concluded that HAVFISK was entitled to cancel the agreement in question in The court found in favour of HAVFISK. The consequences in the accounts are incorporated in the annual accounts for 2014, cf. description under note 19. NOTE 19: Legal disputes / contingent events HAVFISK received a claim in September 2010 from the administration committee for Glitnir in Iceland for NOK 105 million in final settlement for an interest and currency swap agreement entered into during HAVFISK received a summons from Glitnir in December 2011, in which the claim is maintained. As mentioned in the company s prospectus dated 31 August 2009, the relevant swap contract was terminated by HAVFISK in HAVFISK was of the opinion that the company had the right to terminate the swap agreement under Icelandic law and did so correctly. On 30 December 2013, Rekjavik county court passed judgement in the case regarding HAVFISK s rate, inflation and currency swap agreement with Glitnir. The court ruled that HAVFISK did not have the right to cancel the agreement i HAVFISK was thereby ordered to pay ISK 1,897,563,144 in compensation to Glitnir, with the addition of ISK 1,081,391,516 in interest. According to the official rate of exchange from the Icelandic central bank, the combined claim as at was approximately NOK 158 million. A provision for this amount was made in the annual accounts for 2013, see note 5. The judgement was appealed by HAVFISK. In the 2014 interim reports a further provision was made for accrued interest in 2014, as well as for interest rate adjustments against the Icelandic kroner. In total this ammounted to NOK 38 million in provisions during the course of In the Q4 report 2014 the provision was NOK 195 million. HAVFISK s appeal in this case came before the Icelandic Supreme Court on 4 March 2015 and the judgement was given on 12 March The court concluded that HAVFISK was entitled to cancel the contract in question in The judgement was entirely in favour of HAVFISK. The accounting provisions made by HAVFISK for the claim, including interest and exchange rate losses, of NOK 195 million has been reversed, ref. note 5. NOTE 20: Cash and cash equivalents NOK 1.1 million of the company s recognised cash and cash equivalents is held in a restricted account for tax deductions and deposits. The company has a group overdraft facility with DNB Bank ASA. As of , the company had not drawn on this facility. Neither did the Havfisk group in total draw on the group overdraft facility. The group overdraft facility has an upper limit of NOK 87 million.

74 74 KPMG AS Telephone P.O. Box 7000 Majorstuen Fax Sørkedalsveien 6 Internet N-0306 Oslo Enterprise MVA To the Annual Shareholders Meeting of Havfisk ASA INDEPENDENT AUDITOR S REPORT Report on the Financial Statements We have audited the accompanying financial statements of Havfisk ASA, which comprise the financial statements of the parent company Havfisk ASA and the consolidated financial statements of Havfisk ASA and its subsidiaries. The parent company s financial statements comprise the balance sheet as at 31 December 2014, the income statement and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The consolidated financial statements comprise the balance sheet as at 31 December 2014, and the income statement and the statement of other comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The Board of Directors and the Managing Director s Responsibility for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the parent company financial statements in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway and for the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Offices in: KPMG AS, a Norwegian member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. Statsautoriserte revisorer - medlemmer av Den norske Revisorforening. Oslo Alta Arendal Bergen Bodø Elverum Finnsnes Grimstad Hamar Haugesund Knarvik Kristiansand Larvik Mo i Rana Molde Narvik Sandefjord Sandnessjøen Stavanger Stord Straume Tromsø Trondheim Tynset Tønsberg Ålesund

75 75 Independent auditor's report 2014 Havfisk ASA Opinion on the separate financial statements In our opinion, the parent company s financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of Havfisk ASA as at 31 December 2014, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway. Opinion on the consolidated financial statements In our opinion, the consolidated financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of Havfisk ASA and its subsidiaries as at 31 December 2014, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Report on Other Legal and Regulatory Requirements Opinion on the Board of Directors report and the statements on Corporate Governance and Corporate Social Responsibility Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report and in the statements on Corporate Governance and Corporate Social Responsibility concerning the financial statements, the going concern assumption and the coverage of the loss is consistent with the financial statements and complies with the law and regulations. Opinion on Accounting Registration and Documentation Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is our opinion that the management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway. Oslo, 19 March 2015 KPMG AS Monica Hansen State authorized public accountant [Translation has been made for information purposes only] p. 2 / 2

76 76 OUR RESULTS SHARE AND SHAREHOLDER INFORMATION Share and shareholder information HAVFISK ASA is committed to maintaining an open and direct dialogue with its shareholders, potential investors, analysts, brokers and the financial community in general. The group s goal is that its shareholders will, over time, receive competitive returns on their investments through a combination of dividends and share price growth. HAVFISK ASA aims to provide its shareholders with the best possible yield. Over time, it is our goal to pay out a reasonable proportion of the group s net profit as dividends. Now that the fleet renewal project has been completed and the Glitnir-case is concluded with a positive outcome, the company`s possibilities to enable paying dividends to the shareholders are significantly strengthened. Accounting year Dividend (NOK) (proposed) 0.00 Shares and share capital HAVFISK ASA has 84,646,016 ordinary shares, each with a par value of NOK 5 (see note 11 to the parent group s accounts for 2014). As at 31 December 2014, the group had 1,028 shareholders. Foreign owners held 1.5 per cent of the shares as at HAVFISK has one share class. Each share is entitled to one vote. The company held 47,725 of its own (treasury) shares at 31 December Stock-exchange listing HAVFISK ASA was listed on the Oslo Stock Exchange on 13 May 2005 (ticker: HFISK). Its shares are registered in the Norwegian Central Securities Depository with securities registration number ISIN NO DNB Bank ASA is the group s registrar. Majority shareholder HAVFISK ASA s majority shareholder is Aker ASA. HAVFISK ASA is part of Aker ASA s industrial portfolio. Converto AS is responsible for following up on Aker ASA s stake in HAVFISK. The Aker group consists of companies that are legally and financially independent entities. Aker ASA exercises active ownership as part of its systematic activities to create value for the shareholders. Aker ASA s long-term industrial approach, shareholder structure and governance model give the Aker companies corporate vigour and room to manoeuvre. Current Board mandates The AGM of HAVFISK ASA held on 23 May 2014 mandated the board to acquire the company s own shares with a total nominal value of NOK 42,323,005, subject to the provision that the group cannot acquire its own shares if the total holding after the acquisition exceeds 10 per cent of the share capital. This mandate cannot be used if an acquisition triggers a mandatory licence requirement pursuant to the Norwegian Act on Participation in Fishing or corresponding rules, or results in more than 40 per cent of the shares in the group being owned by foreigners. The maximum price that can be paid per share is NOK 100, and the minimum is NOK 1. The board is free to determine how the company s own shares will be bought and sold. This mandate applies from the date of the general meeting, and will expire at the earlier of the general meeting in 2015 and 30 June The AGM also mandated the board to increase the group s share capital by up to NOK 42,323,005 through subscription to new shares. This mandate permits the pre-emptive right of shareholders pursuant to section 10-4 of the Norwegian Public Limited Company Act to be waived. The mandate covers an increase in capital through payments in non-monetary assets, and the right to incur special obligations on behalf of the group; see section 10-2 of the Act. In addition, the mandate covers decisions on mergers pursuant to section 13.5 of the Act. The mandate may not be exercised in the event that it triggers a mandatory licence requirement pursuant to the Act on Participation in Fishing or corresponding rules, or results in more than 40 per cent of the shares in the group being owned by foreigners. The mandate remains in force from the date of the general meeting until the earliest point at which the general meeting can be held in 2015 or 30 June Stock option plans At 31 December 2014, HAVFISK ASA had no options programme. Investor contact HAVFISK ASA seeks to maintain an open and direct dialogue with its shareholders, financial analysts and the financial market in general. HAVFISK ASA s stock exchange notices and investor relations (IR) publications, including a news archive, are available on no. Interim reports, annual reports, prospectuses, company presentations, relevant articles, financial calendar, investor relations information and corporate governance can all be found on the website. Shareholders can contact the group at post@havfisk.no.

77 OUR RESULTS SHARE AND SHAREHOLDER INFORMATION 77 Electronic annual and interim reports Annual reports are distributed electronically to all shareholders. Shareholders who wish to receive the print version of the annual report may contact HAVFISK ASA s investor contact. HAVFISK ASA encourages its shareholders to receive the electronic version of its annual reports. Annual reports are published on the group s website at the same time as they are made available via website release by the Oslo Stock Exchange: www. newsweb.no (ticker: HFISK). Subscribers to this service receive annual reports in PDF format by . Interim reports are available from the group s website and Shareholders who wish to receive the print version of the interim report may contact HAVFISK ASA s investor contact. Analyst coverage The following securities brokers provided analyst coverage of HAVFISK ASA at 31 December 2014: Nordea Markets Kolbjørn Giskeødegård Fondsfinans Bent Rølland Geographical distribution of shareholders as of 31 December 2014 Nationality Number of shares Ownership (%) Non-Norwegian shareholders % Norwegian shareholders % Total % Changes in share capital Date Change in share capital Share capital (in million kroner) Number of A shares Number of shares Par value (NOK) 1 January ,230,080 48,646, Change in , January , ,646, Change in January , ,646, Change in January ,230,080 84,646, Change in January ,230,080 84,646, Change in January ,230,080 84,646, Change in Nomination committee Pursuant to the articles of association, HAVFISK ASA must have a nomination committee consisting of at least three members who are elected by the annual general meeting. The nomination committee is responsible for nominating the shareholder-elected members of the board. The nomination committee of HAVFISK ASA consists of the following members: Leif-Arne Langøy (chair), Gerhard Heiberg and Kjetil Kristiansen. The deadline for submitting proposals for board and nomination committee candidates for the next period is 31 October Shareholders who wish to contact HAVFISK ASA s nomination committee may do so by contacting Kjetil Kristiansen: kjetil.kristiansen@ akerasa.com. Annual general meeting HAVFISK ASA s AGM is normally held in March or early April. This year s AGM will be held on 10 April Electronic notification is sent to all shareholders individually or to shareholder nominees. To vote at general meetings, shareholders (or their duly authorised representatives) must either be physically present or vote by proxy. Existing systems for managing electronic participation in general meetings are inadequate. HAVFISK will consider this for future general meetings, if systems that can handle this in a reliable way become available. The board has accordingly resolved that such participation will not be permitted in HAVFISK ASA s general meetings. The board has resolved that shareholders unable to attend the general meeting in person may vote directly on each agenda item through electronic advance voting. Shareholders will be able to amend their vote and to register as participating in the meeting throughout the period from the issue of the notice and until the deadline for registering participation. This may be done on the group s website. The share in 2014 The group s total market capitalisation at 31 December 2014 was 1,286,619,443. A total value of 444,807 HAVFISK ASA shares were traded during 2014, corresponding to 7.6 per cent of the group s freely tradable stock at 31 December The share was traded in a total of 3,521 transactions on 242 trading days.

78 78 OUR RESULTS SHARE AND SHAREHOLDER INFORMATION 20 largest shareholders 31 December 2014 Name Holding Percentage of total AKER ASA % MARINE HARVEST ASA % CORTEX AS % CONVERTO AS % KONTRARI AS % SES AS c/o Lawyer Bertel O % JAH AS % HOLDEN JIM ØYSTEIN % STATOR AS % BENTNESET INVEST AS % CAPRECA AS % MP PENSJON PK % TRAPESA AS c/o SNORRE ØVERLAND % SKANDINAVISKA ENSKIL A/C FINNISH RESIDENT % STATE STREET BANK AN A/C CLIENT OMNIBUS F % MIDDELBOE AS % ROSØY AS % BIRKELAND ODD KNUT % JOMANI AS % HYLLIBRÅTEN AS % Total % Ownership structure (31 December 2014) Number of shares Number of shareholders Percentage of share capital % % % % % Over % Total % Share price developments in share data Highest traded NOK Lowest traded NOK 9.61 Share price at 31 Dec NOK 15.2 Shares issued at 31 Dec Own (treasury) shares at 31 Dec Shares issued and outstanding at 31 Dec Market capitalisation 31 December 2014 NOK million Proposed share dividend NOK per share Authorisation to The Board

79 79 Organisation and governance 2014 Content 80 CORPORATE GOVERNANCE 85 REPORT ON CORPORATE SOCIAL RESPONSIBILITY 90 MANAGEMENT TEAM 92 BOARD OF DIRECTORS

80 80 ORGANISATION AND GOVERNANCE CORPORATE GOVERNANCE Corporate governance HAVFISK ASA s objective is to create the greatest possible value for its shareholders over time. Strong corporate governance will contribute to reducing risk and ensure sustainable value creation. Pursuant to section 3-3(b) of the Norwegian Accounting Act and the Norwegian code of practice for corporate governance, last revised in the autumn of 2014, the board has reviewed and updated the company s principles for corporate governance. These principles also apply to HAVFISK ASA s subsidiaries to the extent they are relevant. The board s combined report on corporate governance has been included in the annual report. The individual recommendations in the code of practice from the Norwegian Corporate Governance Board (NCGB) are discussed below. These recommendations are available on the NCGB website at: To a large extent HAVFISK s principles correspond to these recommendations. Possible deviations from the code are discussed under the relevant sections below, and any deviation is accounted for and alternative practice adopted by the company explained. Purpose HAVFISK ASA s corporate governance principles are intended to ensure an appropriate allocation of responsibility between the company s owners, its board of directors and its executive management, and to ensure that the company s operations are subject to satisfactory supervision. An appropriate allocation of responsibility and satisfactory supervision will contribute to the utilising sustainable value creation, to the benefit of the shareholders, the employees and other stakeholders. Values and ethical guidelines The board has adopted the company s corporate values and ethical guidelines. The values are based on the vision of «Proud managers» and central to this are our values Safety, Sustainability, Profitability and Pride. In 2012, the company established the Aker Seafoods School, to increase the employees expertise and reinforce the company s ability to get things done. This work has continued through the «HAVFISK School». Group meetings have been held with key personnel from the fleet, all crew as well as the entire administration. Both the values and the ethical guidelines have been central topics for discussion at these meetings. The ethical guidelines are made known to all employees and are also part of the documentation that is presented to and reviewed with new employees. A whistle-blowing system has also been established for breaches of the guidelines on the company s website. Overall control of the Group s ethical guidelines is performed by corporate management. However the day-to-day follow-up has a decentralised structure of responsibility to captains and leading personnel on the individual vessels. Business The company s business purpose clause is included in the company s articles of association: «The business of the company is trade, production and marketing of fish and fish products, to invest in and own fishing vessels and production equipment in connection therewith, hereunder the operation of fishing and fish production vessels and equipment, and advisory services and other activities within this business area. The company may also participate in other economic activities, including owning and managing real property, securities, and other assets, as well as owning subsidiaries within similar or other businesses.» The business purpose clause ensures the shareholders control of the business and the company s risk profile, without limiting the opportunities for the board and the executive management to implement strategic and commercially appropriate decisions within the defined purpose. The group s main strategies are presented in the annual report. Equity and dividends Equity The group s book equity as of 31 December 2014 was NOK 876 million, corresponding to an equity ratio of 35 per cent. HAVFISK ASA must at all times have an equity that is prudent with regard to the activities pursued by the group, including the goals and strategies governing its activities. It is the group s objective that the equity ratio will be built up to a minimum of 30 per cent during In the event that additional equity is required, a possible share capital increase will be considered by the board and the general meeting. Any board authorisation to increase the share capital will be limited to defined purposes and apply until the earlier of the annual general meeting of 2016 and 30 June Dividends HAVFISK ASA s goal is to give its shareholders the best possible return. Over time, the objective is to pay a reasonable proportion of the company s net profit as dividend. Now that the fleet renewal project has been completed and the Glitnir-case is concluded with a positive outcome, the company`s possibilities to enable paying dividends to the shareholders are significantly strengthened. Board authorisations The board s proposals for future authorisations will be limited to defined conditions and apply until the next annual general meeting, although

81 ORGANISATION AND GOVERNANCE CORPORATE GOVERNANCE 81 no later than 30 June the following year. Equal treatment of shareholders and transactions with related parties The company has one class of shares, and all shares carry the same rights in the company. Emphasis is given to equal treatment of all shareholders. The board must provide a justification for any exemption of the pre-emptive rights of existing shareholders in connection with any share capital increases. Transactions in the company s own shares are conducted through Oslo Stock Exchange. In share capital increases, the group s policy is to prevent any dilution of shareholders. Accordingly, strong emphasis is given to ensuring equal treatment of all shareholders in connection with any future share issues, whether private placements or rights issues. Private placements can be used in cases where this is considered advantageous for existing shareholders. Information to the stock market will be characterised by transparency and equality, and will aim to ensure that shareholders receive correct, clear, relevant and timely information for conducting any share value assessments. Provided that appropriate board authorisation has been resolved by the general meeting, the company can purchase own shares. Such shares are purchased at the market price at which they are traded on the Oslo Stock Exchange. Any board authorisation to purchase the company s own shares will apply until the next annual general meeting. All agreements of a material nature between related parties must be entered into on commercial terms and will be reviewed by the company s audit committee. In cases where transactions of a material nature are conducted between the company and related parties, these must in every case be reviewed and approved by the board. External, independent valuation must be used as a basis for decision making. HAVFISK ASA sells a substantial part of its fresh fish harvest to Norway Seafoods. Clearing of such is conducted by the Norwegian Fishermen s Sales Organisation, which is also responsible for the settlement. The Norwegian Fishermen s Sales Organisation has systems to ensure that all sales occur within the price mechanisms applicable in its district, including minimum pricing. HAVFISK ASA has prepared guidelines to ensure that board members notify the board if they have any material direct or indirect interest in agreements entered into by the group. Freely negotiable shares The acquisition of shares in the company is subject to the consent of the board. Such consent can only be withheld if more than 40 per cent of the company s capital would become owned by people who are not Norwegian citizens or treated on an equal footing with the latter pursuant to the Act on Participation in Fisheries, or if the acquisition generates a mandatory requirement for a licence pursuant to this Act. No other transfer restrictions are included in the company s articles of association. General meetings The general meeting of HAVFISK ASA is the supreme governing body of the group. The general meeting elects the shareholder representatives on the board of directors of HAVFISK ASA. Other responsibilities of the general meeting, including adoption of the annual financial statements for the parent company and the group, are specified in the Norwegian Public Limited Liability Companies Act. The company encourages shareholders to participate in the annual general meeting. Priority is given to holding the annual general meeting as soon as possible after the end of the fiscal year. The date of the annual general meeting to review 2014 has been fixed as 10 April The company s financial calendar is published as stock exchange releases and on the company s website. Notices of general meetings with comprehensive supporting documentation, including recommendations from the nomination committee, are made available to shareholders on the company s website within the applicable deadlines stated in the Norwegian Public Limited Liability Companies Act. The deadline for registering attendance is set as close to the date of the meeting as possible. Shareholders unable to attend in person may vote by proxy. HAVFISK ASA will appoint a person to act as proxy for shareholders who wish to make use of this service. Procedures for registering and appointing a proxy are otherwise specified in the notice and in the registration form. The annual report and other documentation appended to the notice of the meeting will only be made available on the company s website and through the Oslo Stock Exchange s publication system. Shareholders requiring such documentation sent by mail must contact the company. Existing systems for managing electronic participation in general meetings are inadequate. HAVFISK will consider this for future general meetings, if systems that can handle this in a reliable way become available. The board has accordingly resolved that such participation will not be permitted in HAVFISK ASA s general meetings. The board has resolved that shareholders unable to attend the general meeting in person may vote directly on each agenda item through electronic advance voting. Shareholders will be able to amend their vote and to register as participating in the meeting throughout the period from the issue of the notice and until the deadline for registering participation. This may be done on the company s website. Further, voting by proxy will still be possible. The form of proxy has been prepared in such a manner that the shareholder may vote on the matters as they are presented in the general meeting (proxy with voting instructions). Information on the procedure for electronic advance voting and the appointment of a proxy with voting instructions are provided in the notice of the general meeting. The company does not appoint an independent proxy to vote on behalf of shareholders. In the company s opinion the shareholder interests are duly protected through participation with a personal proxy or by awarding a proxy with voting instructions to the chair of the meeting/chairman of the board or any person appointed by the shareholder. Pursuant to the articles of association, the general meeting is chaired by the chairman of the board or a person appointed by him. Hence, HAVFISK ASA does not follow the recommendation in the NCGB code of practice, i.e. that the board should have practices to ensure an independent meeting chairman, since previous experience of the leadership and conduct of annual general meetings has been good. It is envisaged that the chairman of the board, the chairman of the nomination committee and the company s auditor attend the general meetings. The nomination committee gives emphasis to ensuring that the board functions as effectively as possible as a collective body, that statutory requirements regarding gender equality are met, and

82 82 ORGANISATION AND GOVERNANCE CORPORATE GOVERNANCE that the board members possess complementary experience and qualifications. The general meeting is therefore normally called on to vote for a complete board of directors. Advance voting on individual candidates is not possible. The company facilitate the opportunity to propose agenda items for the general meeting. Further, shareholders may ask questions and propose resolutions for adoption in the general meeting. Minutes from the general meetings are published as soon as practicable via the Oslo Stock Exchange s reporting system on www. newsweb.no (ticker: HFISK) and in the Investor Relations section on Nomination committee The company has a nomination committee, as specified in its articles of association. The committee comprises a minimum of three members, normally elected for two-year terms. When composing the nomination committee consideration is given to the shareholders interest as well as to the members independence from the board of directors and the executive management. Members of the nomination committee are elected by the general meeting, which also determines the remuneration of the committee members. Pursuant to the articles of association, the nomination committee recommends candidates for the board of directors and proposes their remuneration. The nomination committee must state the reasons for its recommendations. The nomination committee must present a written recommendation, which is published and presented to the annual general meeting. In its work, the nomination committee must be in contact with shareholders, board members and the general manager. Shareholders who wish to contact the nomination committee may do so by contacting Kjetil Kristiansen: kjetil.kristiansen@akerasa. com. Information about the members of the nomination committee and any deadlines for proposing new board members is available on HAVFISK ASA s website. The deadline for proposing board candidates for the forthcoming period is 31 October. Following this date the nomination committee normally starts preparing for the forthcoming general meeting. The nomination committee s duties are regulated in an instruction adopted by the annual general meeting in These are available on HAVFISK ASA s website. Corporate assembly and board of directors; composition and independence The articles of association of HAVFISK ASA state that the board must be comprised of seven to ten board members, of whom three are elected by and among the employees of the group. The chief executive officer (CEO) is not a member of the board, but attends board meetings. It has been agreed that HAVFISK ASA will not have a corporate assembly. The employees rights of representation and participation in decision-making processes are secured through extended representation in the board of directors. The nomination committee s recommendations normally include a proposal for who shall be chairman of the board and they are adopted by the shareholders at the general meeting. If the general meeting has not elected a deputy chair, the board will elect its deputy chair. Board members are elected on two year terms. The majority of shareholder-elected board members are independent from the company s executive management and significant business associates. Furthermore, at least two of the shareholder-elected board members are independent from the company s main shareholders, i.e. a shareholder controlling, directly or indirectly, at least ten per cent of the shares or votes in HAVFISK ASA. None of the company s executive management is also a member of the board. Board members are obliged to disqualify themselves and withdraw from any consideration of matters in which they or any related party have a special interest. To ensure independent consideration by the board, one of the board members will be elected to chair the discussion on matters where the chairman or the deputy chairman cannot or should not chair the discussion. The present composition of the board is described in the annual report and on the company s website ( There is also further information about the board members competence. In 2014 the board held 10 meetings. Participation in the meetings was around 85 per cent. Collectively, the shareholder-elected board members represent diversified expertise, capacity and experience from the financial sector, politics, industry and interest organisations. Three of the shareholder-elected board members are independent of the main shareholders. Board members are encouraged to own shares in the company. A summary of board members shareholdings in the company may be found in note 31 to the financial statements. Three of the shareholder-elected board members are up for election in The nomination committee s recommendation of candidates, including the basis of the recommendation, will be appended to the notice for the annual general meeting, which will be published on the company s website and on the Oslo Stock Exchange s reporting site, The activity and operations of the board of directors The board has ultimate responsibility for the group. The board shall ensure an acceptable organisation of the business and is responsible for establishing systems for supervision and for ensuring that the business is conducted in accordance with the group s corporate values and ethical guidelines. The board approves strategic plans and adopts the group s budget. Matters of material strategic and financial significance for the business will be considered by the board, which is also responsible for the interim financial statements. The board conducts its activities and operations based on a set of established board instructions which emphasise the following: Strategic activities Organisational matters Supervision Self-regulation The board of HAVFISK ASA normally conducts six to eight meetings per year in accordance with the annual plan for the board s activities. The board appoints the CEO of the company, and determines the instructions for the CEO and his authority and powers of attorney. Further, the board determines the CEO s remuneration. To secure a more independent and objective consideration of matters of material significance in which the chairman of the board is or has been actively engaged, practices has been established in order for another board member to chair such discussions. The board conducts annual evaluations of its performance and expertise.

83 ORGANISATION AND GOVERNANCE CORPORATE GOVERNANCE 83 The board of HAVFISK ASA has elected an audit committee from and among the board members of the company. A majority of the audit committee members are independent of the group s business. The committee shall prepare the matters to be considered by the board and contributes to a thorough and independent consideration of matters related to financial reporting and other matters which fall naturally within the scope of the committee. The board has assessed the need for a compensation committee, and the company does not at present have such a committee, since it is considered more appropriate for the entire board to discuss this. Risk management and internal control - management principles The board of HAVFISK ASA determines the overall principles for management and control of the company. Board instructions defining the board s obligations and areas of responsibility, as well as the allocation of responsibility and obligations between the CEO and the board, has been prepared. The board annually conducts a review of the company s risk areas and its internal control systems. Other governing documents, clarifying the responsibilities of the board and the allocation of responsibility between the board and the management, have been adopted by the board. A system has been established by HAVFISK ASA on the company s website for notifying serious misconduct, such as breaches of the company s ethical guidelines and violations of applicable law. HAVFISK ASA has a decentralised allocation of responsibility, whereby operational subsidiaries and associated companies establish their own systems for risk management and control. The systems are based on overall guidelines from HAVFISK ASA. The board members elected by HAVFISK ASA are the driving force working to ensure that activities in the various operational subsidiaries comply with management principles. Risk management and internal control The board ensures that the company has appropriate internal control procedures and appropriate risk management systems tailored to its business. HAVFISK ASA is exposed to interest rate and market risk, as well as credit risk and operational risk. HAVFISK ASA is not directly exposed to foreign exchange risk, as the company does not have subsidiaries outside Norway and all revenues from sales are in Norwegian kroner. However, the company is indirectly exposed as the price of its products could over time be affected by exchange rate fluctuations. Financial guidelines in HAVFISK ASA ensure the monitoring of financial risk. Management of exposure in financial markets, including bunkers, interest rate and counterparty risk, is emphasised in the company s governing documents. Further details on these principles are provided in notes 1 and 26 to the group s financial statements and note 10 to the parent company s financial statements. The company has developed an authority matrix which is included in its governing documents. Separate approval practices for company costs have also been established. Managing operational risk primarily takes place within the operational subsidiaries, but with HAVFISK ASA as an active driving force through its positions in the boards of the subsidiaries. Operational risk relates to loss of life and injury, damage to the environment and loss and damage of material. There is also operational risk relating to the observance of legislation, regulations and licence terms that provide the basis for the company s operations. Routines and guidelines have been established to ensure that operational risk is acceptable and priority is given to work on ensuring compliance with the company s values and ethical guidelines by means of competence-raising measures and attitude creation. The financial reporting process HAVFISK ASA prepares and publishes interim (quarterly) as well as annual financial statements. The consolidated financial statements are prepared in accordance with the EU-approved provisions of the IFRS, while the parent company s financial statements are prepared in accordance with the provisions of the Norwegian Accounting Act and Norwegian generally accepted accounting principles (NGAAP). Several control measures have been established in connection with the preparation of the interim and annual financial statements. Processes related to the closing of financial statements focus on the control of reported financial statements and analyses of the underlying figures. HAVFISK ASA utilises a reporting and consolidation tool, whereby the group companies report their financial statements to HAVFISK ASA. Further, the operational subsidiaries and associated companies have established control measures to be applied prior to reporting their respective financial statements to HAVFISK ASA. In addition to interim and annual financial statements, HAVFISK ASA reports financial information monthly through the group s collective reporting and consolidation tool. Consolidation and control of financial information is a centralised responsibility and lies with the Chief Financial Officer (CFO). Financial results compared to budget are assessed and analysed by the CEO and CFO on a continuous basis, and are reported to the board of directors on a monthly basis. Consideration by the audit committee and the board The audit committee reviews the company s internal reporting systems, internal control and risk management, maintains contact with the company s auditor concerning the auditing of the company, and prepares the board s review of the financial reporting. The audit committee has also assessed the independence of the elected auditor. Remuneration to the members of the board The remuneration to the members of the board reflects the board s responsibilities, expertise, time spent and the complexity of the operations. The company s financial performance is not a relevant factor when approving the remuneration, and no board member is included in any option programme. Remuneration to board members is approved by the general meeting on the basis of a recommendation from the nomination committee. Except for their position as member of the board, and with the exception of certain contractual assignments between Converto and HAVFISK ASA, the board members and their associated companies do not undertake any assignments for the company. Board members elected by and among the employees of the group and associated companies receive board remuneration in addition to their ordinary salary from employers. Remuneration for the employee elected board members is divided between the employee elected board members and the collective fund for union collaboration at corporate level in HAVFISK ASA. This is in line with the agreement between the unions and HAVFISK ASA.

84 84 ORGANISATION AND GOVERNANCE CORPORATE GOVERNANCE Further details about the remuneration of each director in 2014 are presented in note 29 to the group s consolidated financial statements. Remuneration paid to executive management The board has adopted guidelines for remuneration to executive management in accordance with section 6-16a of the Norwegian Public Limited Liability Companies Act. These guidelines will be presented for the annual general meeting s consideration. The remuneration of the CEO is determined by the board of directors. HAVFISK ASA has no option schemes or arrangements for awarding shares to employees. The key purpose of the salary system for executive management is to stimulate a strong and lasting performance-related culture which contributes to an increase in share value. The overall remuneration of executive management comprises a market-based basic salary, a few standard additional benefits and a variable salary. The variable salary is based on the achievement of financial, operational and personal targets, as well as management in line with the company s values. The scheme gives managers the potential to earn a variable additional salary of up to 50 per cent of the basic salary. Variable salary earned is paid out the following year. The implementation of special projects may trigger the allocation of additional bonuses / variable salaries. The company s guidelines for remuneration to executive management are given in note 29 to the consolidated financial statements and are also presented to the annual general meeting as a specific document. Certain members of the executive management of HAVFISK ASA attend to the company s ownership interests as board members of other HAVFISK companies. They do not receive board remuneration in this regard. Information and communication HAVFISK ASA s information policy is based on transparency and equal treatment of all shareholders. This policy is to ensure that the company s shareholders receive correct, clear, relevant and timely information. The purpose is to enhance knowledge of HAVFISK ASA in particular and the group s operations in general, so that the pricing of the shares as far as practicably possible is based on the underlying value and potential earnings of the group. The CEO or a person appointed by the CEO is responsible for information to and communication with the market. Important information that might influence the valuation of the shares in HAVFISK will be made publicly available via the Oslo Stock Exchange reporting system ( no) at the same time as it is published on HAVFISK ASA s website. Media and other third parties will simultaneously receive the same information through press releases. All stock exchange notices and press releases are made available on the group s website at while stock exchange notices are also available at no. All information sent to the shareholders is at the same time made available on the group s website. An annual information plan/financial calendar is prepared annually and made public through the Oslo Stock Exchange and HAVFISK ASA s website. The HAVFISK ASA website includes a section for investor information, where the group s annual and interim reports, stock exchange notices and other presentations can be found. Takeovers No separate set of principles has been prepared in case of a possible takeover bid for HAVFISK ASA. On this matter the company deviates from the recommendation in the code of practice. A total of per cent of the shares in HAVFISK ASA are controlled by Kjell Inge Røkke through Aker ASA. Share transactions in HAVFISK ASA and its direct or indirect parent companies require approval by the Norwegian fisheries authorities pursuant to the Act on Participation in Fisheries (the Participation Act). Exemptions to this regulation have been given for share transactions in the listed companies in the ownership chain (i.e. HAVFISK ASA and Aker ASA), so that approval is only required if Aker ASA no longer owns more than 50 per cent of the shares with voting rights in HAVFISK ASA or if Kjell Inge Røkke no longer directly or indirectly owns at least 67.8 per cent of the shares with voting rights in Aker ASA. It would moreover represent a breach of the Participation Act if more than 40 per cent of the shares with voting rights in HAVFISK ASA were to be owned by foreigners, and the board of HAVFISK can refuse to approve transactions that might result in a breach of the Act. Share transactions in a breach of said regulations may result in the company losing its Norwegian fishing licences. On this basis, the company considers that a separate set of principles for takeover bids is not relevant. However, the company will continuously evaluate the need for such principles. Auditor The auditor annually presents a plan for the audit of the group to the company s audit committee. The auditor has provided a written confirmation to the board stating that the requirement of independence is fulfilled. The auditor attends the board meeting in which the annual financial statements are considered, and has, along with the audit committee reviewed and assessed possible material changes to the company s accounting principles and the assessment of material accounting estimates. The auditor attends all meetings of the audit committee. There have not been any differences in opinion between the auditor and the executive management regarding material issues. The auditor has also reviewed and considered the company s internal control with the audit committee. The results of this review have been presented to the board. The board meets with the auditor without members of the executive management present. The board has determined guidelines for the executive management s possibility of using the auditor for services other than auditing. The guidelines lay down that services that exceed NOK 100,000 require authorisation from the chair of the audit committee. HAVFISK endeavours as far as practicable to employ the same audit company for its subsidiaries as for HAVFISK ASA. The auditor s fees allocated between audit work and other services are presented in note 5 to the annual financial statements, and are also presented in the annual general meeting.

85 ORGANISATION AND GOVERNANCE SOCIAL RESPONSIBILITY 85 Report on corporate social responsibility for HAVFISK ASA HAVFISK ASA operates Norway s largest trawler fleet and its activities are entirely in Norway. The operations of HAVFISK ASA are based on fish, which is a natural resource. HAVFISK is a pure fishing company with 10 trawlers. The company primarily catches cod, haddock and saithe. All fish are headed and gutted onboard and the company is able to provide fresh and frozen fish throughout the year. The group head office is located in Ålesund and there are also branch offices in Stamsund and Hammerfest. At the end of 2014, the fleet consisted of 10 trawlers: one fresh fish trawler, five combination trawlers (handling both fresh and frozen fish) and four freezer trawlers. The trawlers are operated by the subsidiaries Nordland Havfiske AS, Finnmark Havfiske AS and Hammerfest Industrifiske AS was the first year for which the group is presenting a corporate social responsibility report. The group has further developed the report in 2014 and will continue to do so in future years. The total crew personnel for all vessels is 364 made up of two shifts. The group also has 26 employees in administrative positions onshore. The HAVFISK group also owns several production plants in Nordland and Finnmark. These are leased out on long-term agreements, primarily to the sister company Norway Seafoods, which has the operational responsibility for these facilities. HAVFISK has no employees connected with these activities. HAVFISK s goal is to be «Norway s best trawler operator» and our values are: Safety Sustainability Profitability Pride Our intention is that HAVFISK will be the best trawler operator for well-being, profitability and our relations in the market. SOCIETY Official permits HAVFISK operates its activities on the basis of official permits that give the group the right to harvest Norway s fish resources. This right also brings with it obligations in the form of activity and delivery obligations, and also the responsibility of operating in a sustainable manner. HAVFISK summarises this responsibility by saying that we will be a «Proud manager». By this we mean that we see ourselves as part of the management of Norway s resources and that our activities should contribute to both ecologically and economically sustainable value creation for Norwegian society. It is HAVFISK s standpoint that all regulations connected with fisheries must be complied with, and the group participates in developing the regulations through participation in organisations such as the Norwegian Fishing Vessel Owners Association. HAVFISK also contributes to the development of equipment technology, for example by participation in trial schemes for new technology organised by the Directorate of Fisheries. Stakeholders Given HAVFISK s position as a key player in the Norwegian fishing industry and its connection with Norway Seafoods, which runs cornerstone companies in many local communities, the group has a number of stakeholders. These include local, regional and national politicians, organisations connected with fishing and regional and central administration. HAVFISK places emphasis on maintaining a good, open dialogue with all stakeholders. Local politicians are represented on the board of all three trawler operating subsidiaries. At county level, meetings are held with the administrative and political leadership in both Nordland and Finnmark, where the group has the greater part of its business. Group management also has regular contact with parliamentary politicians of all parties to discuss relevant issues for fishing in general and the group in particular. Within the administration, the Directorate of Fisheries and the Ministry of Trade, Industry and Fisheries are the group s main points of contact. Among industry organisations, the group primarily relates to the Norwegian Fishing Vessel Owners Association, both through participation in activities and by serving on the association s committees. The Norwegian Fishing Vessel Owners Association is a member of the Norwegian Fishermen s Organisation. The group also has ongoing dialogue with other organisations, such as the employee organisations the Norwegian Seafarers Union, the Norwegian Marine Engineers Union and the Norwegian Ships Officers Association. With its links to Norway Seafoods, the group also occasionally participates in meetings with the union NNN and the Norwegian Confederation of Trade Unions. On the employer side, there is dialogue with the Confederation of

86 86 ORGANISATION AND GOVERNANCE SOCIAL RESPONSIBILITY Norwegian Enterprise through the Norwegian Seafood Federation (FHL) and the Federation of Norwegian Industries. The latter is in collaboration with Aker ASA. The initial sales of wild-harvested fish in Norway are regulated by the Fish Sales Act, which lays down that sales must be through approved fish sales organisations. The two sales organisations relevant to HAVFISK s activities are The Norwegian Fishermen s Sales Organization (Råfisklaget) and Fishermens own sales organization (SUROFI). Both Råfisklaget and SUROFI are important in determining conditions in the fishing industry, as a result of their special position, which is established by the act. In addition to day-to-day contact relating to the sale of fish, there is regular contact with the management of the two organisations. From time to time, the group is the subject of a good deal of attention in the local press in Nordland and Finnmark. Most media coverage relates to the group s delivery obligations and its compliance with these. In its contact with the media, it is the group s policy to contribute to social debate by providing correct information in interviews and reader comment. An increasing population and the need for healthy protein As the world s population increases, the demand for protein will increase accordingly. Norway has a vital role as a supplier of marine proteins from both fish harvested from the wild and aquaculture. HAVFISK is the largest single industry participant in wild-harvested fish in Norway, and thus also a significant supplier of such marine proteins. The fish species for which HAVFISK primarily fishes (cod, haddock and saithe) are all species with a high protein content and low fat content. The Food and Agriculture Organisation (FAO) maintains the following: «Fish is food for the brain as well as a good source of protein. Fish is food with a high nutritional content, providing a good quality source of protein and many vitamins and minerals, e.g. Vitamins A and D, phosphate, magnesium, selenium and iodine. Experts agree that even small amounts of fish can have a beneficial effect on improving the quality of protein in one s diet.» PEOPLE The group s work at being a «Proud manager» also includes the group s ethical guidelines, as detailed in the points below. During the recent years, HAVFISK has used considerable resources in making its aims and vision the group s values and its ethical guidelines known within the organisation. These have been presented on the group s website and several meetings have been held with employees to review them. Key personnel within the group have also undergone training in handling ethical dilemmas that can arise and how the values and ethical guidelines can help in such cases. The group s management has also been on board all vessels to give presentations on this to the various shifts. Health, safety and the environment Work on health and safety and the environment is a priority for HAVFISK. There is great awareness in day-to-day operations of avoiding injuries and reducing consumption of energy and environmentally damaging substances. The group s basic view is that all harm to people, the environment or material assets can and will be avoided. Our ambition is zero injuries, whether serious or otherwise. The crews on board the trawlers work in an environment that has historically been associated with a high rate of injuries. This is partly because trawlers are in operation 24 hours a day and continuously fish and produce in sea areas that are often very exposed to bad weather. Work on preventive measures is therefore continuous and HAVFISK has its own principles and guidelines for safety management on board all vessels. These are laid down in every vessel s safety manual. Sickness absence averaged 7.3 per cent in 2014, compared with 7.6 per cent the previous year. Sickness absence has been reduced compared to 2013, but the level is not satisfactory. Further measures have been initiated to reduce such absences. A total of 24 incidents during the year caused personal injuries. These were mainly cuts and compression injuries, as well as sprains. In 2014, there have been no accidents that led to serious injury. Information screens have been installed on all vessels to give regular reminders of values, ethical guidelines, safety routines etc. Earlier surveys of the working environment show that this is regarded as good, but improvement measures are implemented on a continuous basis. Among other things, there has been a focus on the roles and activities of safety delegates and working environment committees on board. Work is also going on to increase the degree of job rotation, so as to reduce the risk of stress injuries when working in the plant on board. The aim is to be Norway s best trawler operator and as part of this work, the company has begun the HAVFISK School for training and attitude-creating work among our own employees. A safety manager has also been appointed with responsibility for developing and monitoring HSE work. Human rights, labour rights and social conditions HAVFISK intends to offer an open and inclusive workplace. The group lays emphasis on diversity and encourages the development of a working environment that inspires effort, enthusiasm and creativity. HAVFISK has undertaken to: Have an employment philosophy that is open and non-discriminatory. Ensure that there is no discrimination at HAVFISK on grounds of ethnicity, skin colour, gender, language, religion, political or other viewpoint, national or social origin or other status. HAVFISK employees have a right to a workplace where nobody is persecuted. Respect the right of the individual employee to personal protection. Work to achieving an open and solutions-oriented culture, where there is room for disagreements to be addressed. Recognise the right of all employees to freely organise themselves so as to promote and defend their occupational interests, including the right to participate in collective negotiations. There is good collaboration with employee representatives. Safety and environment committees (VMUs) are mandatory on all vessels. The crews of the group s trawlers have pay and working conditions that are regulated by tariffs applying to the Norwegian trawler fleet. The tariff party for the employers is the Norwegian Fishing Vessel Owners Association, while the employees are represented by the Norwegian Seafarers Union, the Norwegian Marine Engineers Union and the Norwegian Ships Officers Association. In addition to share and pay calculations, the tariffs regulate conditions relating to employment. This ensures that employees in the same job category have equal pay and working conditions. CORRUPTION HAVFISK has established systems and attitudes that reduce the risk of corruption, bribery and misappropriation. Corruption, bribery

87 ORGANISATION AND GOVERNANCE SOCIAL RESPONSIBILITY 87 and misappropriation cannot be accepted under any circumstances. HAVFISK ASA is subject to Norwegian criminal law, with strict rules in relation to corruption, bribery and misappropriation. The penal code gives both personal and company responsibility in this area. Managers thus have a special responsibility to ensure that such things never occur and to report any concerns. Employees of HAVFISK must always act in a manner that is in the group s best interest and seek to avoid situations that might create conflicts of interest. Employees must not participate in transactions or other business on behalf of the group in which the employee has specific financial or personal interests. If there is a possibility that a conflict of interest may arise, this must be reported so that the immediate manager can make the necessary assessment and if necessary release the person concerned from any further participation in decision making connected with the conflict of interest. HAVFISK is a Norwegian group that has no operations outside Norway and thus has no activities in countries where corruption is widespread. Whistle-blowing channel A dedicated whistle-blowing channel has been established via our website, through which employees or others can warn of suspected or known breaches of the group s values or internal guidelines, or of laws and regulations generally. Aker Aktiv HAVFISK recommends that its employees participate in the activities on the Aker Aktiv portal, who employees are stimulated and invited to activity and expert guidance on exercise and diet is offered. THE ENVIRONMENT HAVFISK manages natural resources on behalf of society and so has a specific responsibility to operate its activities in a sustainable manner and with as little impact on the environment as possible. Fleet renewal Three new trawlers have been delivered in 2013 and The fleet has been generally upgraded in that older trawlers have been rebuilt and modernised and some have been sold. The new vessels are equipped with modern technology for more environmentally -friendly operation. The vessels have diesel-electric power using dual propellers. All relevant equipment on board is electrically powered. With two large and two smaller generators, the required amount of electrical energy needed to run all components at any time can be generated. The hull design of these vessels has also been optimised for the speed at which they operate. This helps to reduce fuel consumption, compared with similar vessels. These vessels have been built in accordance with DNV GL s «Clean Class» requirements, which means for example that they have a double hull and no fuel tanks toward the outer side of the vessel. This reduces the risk of spillage in the event of an incident. The vessels also employ modern technology in production, so that formerly manual tasks such as emptying freezers and wrapping and packing blocks have been automated. This places less stress on the crew. The vessels are equipped with fish meal plants, so that the entire fish, including heads and offal, can be utilised. Facilities for the crew have been improved; in particular, noise levels in the cabin area are considerable lower than on older vessels. Several vessels in the existing fleet have been upgraded, with more environmentallyfriendly solutions. Some vessels have also been converted into combi vessels, that can deliver both fresh and frozen fish. This increases flexibility and reduces fuel consumption in comparison with delivering only fresh fish (we are obliged to deliver fresh fish under the supply obligations). Sustainable development HAVFISK is concerned to see sustainable development of fish resources, and actively monitors to ensure that employees and management are complying with applicable regulations and quota terms. The company has also participated, together with the authorities, industry bodies and non-governmental organisations, in combating illegal fishing, thus helping to ensure that resources are preserved for future generations. HAVFISK has a partnership agreement up to and including 2015 with the environmental organisation WWF, which acts as the company s adviser in environmental issues. The agreement includes specific activities on board, including recording secondary catches, which could contribute to even more sustainable fishing. HAVFISK and WWF are also working together to help strengthen Norwegian resource research and establish good management of stocks of all types of fish. HAVFISK is an industrial partner in an international, interdisciplinary research collaboration on the effects of climate change on the ecosystem at sea, GreenMar. This collaboration involves research environments in ecology, climate and marine resources and is intended to increase knowledge that could contribute to «green growth» by means of the sustainable management and use of our marine areas. HAVFISK contributes one vessel for use in the Institute of Marine Research reference fleet. In this way, HAVFISK assists in the collection of a range of biological data that can be used in research into fish stocks. HAVFISK has three current R&D projects relating to increased total utilisation of the raw materials. The aim of this work is better utilisation of resources and increased value creation. Norwegian non-coastal cod and haddock were environmentally certified by the Marine Stewardship Council (MSC) in In 2012, prawn fishing was also MSC certified. Certification helps ensure that Norwegian fishing for these species is sustainable. HAVFISK has an agreement with the company CO2focus AS to register and display an overview of the organisation s greenhouse gas emissions, as an integral part of the overall climate strategy. Climate accounting is an important tool in the work of identifying actual measures to reduce the group s energy consumption and associated greenhouse gas emissions. This annual report enables HAVFISK to measure key figures and evaluate itself over the course of time. The group s trawler fleet uses diesel as a fuel, as a result of which there are NO X and CO 2 emissions. In 2014, the trawlers had emissions of 81,348 tonnes of CO 2 equivalents. Somewhat simplified, CO 2 equivalents are a standardised measure of the total climate impact (global warming effect) this year s emissions have in a 100 year perspective. Diesel represents 98.5 per cent of the group s total emissions of CO 2.

88 88 ORGANISATION AND GOVERNANCE SOCIAL RESPONSIBILITY Energy and climate accounting Category Function Consumption Unit Energy (MWh) Emissions Emissions (tco2e) (distribution) Transportation Diesel (B5) Company cars liters Marine gas oil (MGO) tonne % Process emissions HCFC22 Cooling agent kg % Scope 1 total % Electricity Nordic mix Office Ålesund kwh Electricity Nordic mix Stamsund storage and workshop kwh Scope 2 total Air travel Continental pkm % Intercontinental pkm % Nordic pkm % Other travel Mileage allowance (NO) km 8.3 Waste Waste, incinerated Office Ålesund 4650 kg 2.3 Waste, incinerated Stamsund storage and workshop 4000 kg 2.0 Scope 3 total % Total % The 2014 energy and climate accounting for HAVFISK is available on our website, (link to report) Integrity HAVFISK has updated the company s ethical guidelines in Risk, management system and reporting HAVFISK has a system for risk management. This identifies risks and opportunities in various parts of the operation. Risks and opportunities relating to the group s corporate social responsibility are part of this system. Here, risks and opportunities are identified and classified according to probability and consequences (both positive and negative). As a result of this, possible measures are also described. The CEO reports to the board regularly on this. It is also the CEO who has overall responsibility for ensuring that the group fulfils its corporate social responsibilities. HAVFISK fulfils its social responsibilities in many ways through its day-to-day operations. The group s main owner is Aker ASA, and Aker ASA pays great attention to its corporate social responsibility. The statutory report on corporate social responsibility was presented for the first time in connection with the annual report for HAVFISK s initial ambition is to describe the activities and measures that are ongoing within the group.

89 The Board & Management team 8989

90 90 HAVFISK ASA PRESENTATION DEAR SHAREHOLDERS OF THE MANAGEMENT TEAM Presentation of the management team / Webjørn Barstad (born 1965) Mr Barstad is CEO of HAVFISK with effect from 1 January For the last four years, Barstad has managed daily operations at Strand Havfiske, and his previous positions include department manager at Fiskebåtredernes Forbund (now Fiskebåt) and consultant at Norges Fiskarlag, and he started his career in production/sales in the fisheries company L.S. Larsen Eftf. in Ålesund in Webjørn Barstad was educated at Heriott-Watt University Business School in Edinburgh, Scotland, where he attained BA Hons. Business Organization and MSc International Banking and Financial Studies. Barstad is a committee member of the Norwegian Fishing Vessel Owners Association from As at 01 January 2015, Mr Barstad held no shares or stock options in the company. Mr Barstad is a Norwegian citizen. 2 / Eldar Kåre Farstad (born 1960) CFO of HAVFISK ASA since January He has been CFO of Harvesting since May 2011, and Senior Vice President/ Corporate Group Controller since May Mr Farstad has experience as CFO at West Fish Aarsæther AS, which was merged into HAVFISK ASA (Aker Seafoods ASA) before the listing on the Oslo Stock Exchange in Mr Farstad is a Bachelor in Business Administration from BI Norwegian Business School. As at 31 December 2014, Mr Farstad held 40,000 shares but no stock options in the company. Mr Farstad is a Norwegian citizen.

91 HAVFISK HAVFISK ASA 2014 PRESENTATION OF THE DEAR MANAGEMENT SHAREHOLDERS TEAM / Erik Kartevoll (born 1952) Director for HR & HSEQ at HAVFISK ASA since June Mr Kartevoll was previously President of EstreMar SA, Aker s fishing company in Argentina, for two and a half years. He has long experience as a consultant in the seafood industry through INAQ Management AS and KPMG centre for aquaculture and fisheries. Mr Kartevoll holds a Master of Science from the Norwegian University of Technology and Science (NTH, now NTNU) in Trondheim. He also holds a degree in economics from Agder District University College. As at 31 December 2014, Mr Kartevoll held no shares or stock options in the company. Mr Kartevoll is a Norwegian citizen. 5 / Tone Utseth Myklebust (born 1967) Ms Myklebust has been responsible for sale of the company s trawl fish for many years and was appointed in Ms Myklebust has been employed by HAVFISK ASA since the company was formed (as Aker Seafoods) in Ms Myklebust was formerly employed at West-Fish Aarsæther AS from 1995; the company was merged into Aker Seafoods ASA in She holds a Bachelor degree from the College of Fishery Technology in Ålesund, specialising in fishing, ships administration and management. Ms Myklebust has also had post-graduate education at the Norwegian School of Economics. As at 31 December 2014, Ms Myklebust held 7,656 shares but no stock options in the company. Ms Myklebust is a Norwegian citizen. 4 / Ari Theodor Josefsson (born 1969) Employed by HAVFISK ASA since March In July 2011 he was appointed Chief Operational Officer of HAVFISK ASA. He is also general manager of Nordland Havfiske AS and Finnmark Havfiske AS, two of HAVFISK ASA s trawler companies. Mr Josefsson has long experience of fisheries in Norway. He has previously worked in sales and management in the fishing gear industry. Mr Josefsson was previously general manager of Sæplast Ålesund AS. He was educated at the University of Tromsø, Faculty of Biosciences, Fisheries and Economics. As at 31 December 2014, Mr Josefsson held no shares or stock options in the company. Mr Josefsson is an Icelandic citizen. 6 / Eldar Vindvik (born 1975) Technical Director of HAVFISK since January Mr Vindvik was project engineer and site manager for the new vessel project at HAVFISK and knows the company and the fishing industry well. He has extensive experience of the fishing, offshore and shipyard industries and was formerly employed by the Ulstein group, Farstad Shipping and the American Seafoods Company, among others. Mr Vindvik qualified as an automation engineer, specialising in marine systems, at the University College in Ålesund. As at 01 January 2015, Mr Vindvik held no shares or stock options in the company. Mr Vindvik is a Norwegian citizen.

92 92 ORGANISATION HAVFISK 2014 AND GOVERNANCE PRESENTATION DEAR SHAREHOLDERS OF THE BOARD OF DIRECTORS Presentation of the Board of Directors / Frank O. Reite CHAIRMAN OF THE BOARD (born 1970) is CEO off Akastor, a listed investment company in oil service. Reite was formerly head of Converto AS and is still its largest shareholder. Converto manages the Converto Capital Fund, among others. Mr Reite also has previous experience with Aker, where he has held a variety of executive positions, including overseeing and developing Aker investments in seafood and shipbuilding, including Norway Seafoods, American Seafoods Company and Aker Yards. Mr Reite also has experience from the Glitnir group and has been Operating Director of Paine & Partners, a New York based private equity firm. Mr Reite is Director of several of the companies controlled by Akastor. He is a graduate of BI Norwegian School of Management (B.A. Business Administration). As at 31 December 2014, Converto AS, of which Reite owns 80% of the shares, has 1,283,290 HAVFISK shares, but no share options. Mr Reite is a Norwegian citizen. He has been elected for the period. 2 / Trine Sæther Romuld, DEPUTY CHAIR (born 1968) is currently Executive Finance Director Europe of MRC Global, after Stream was acquired by MRC Global in January Trine has been CFO of Stream AS (formerly Bjørge ASA) since February She came from the position of CFO and Investment Director of Converto Capital Management. Prior to this, she was EVP at Aker ASA and CFO of Aker Drilling ASA. Ms Sæther Romuld worked as CFO in Pan Fish ASA/Marine Harvest ASA for a total of four years and has nine years experience with Arthur Andersen & Co/ Ernst & Young. In addition, she worked in the rig industry for four years, prior to joining Aker Drilling ASA. Ms. Sæther Romuld is a state authorised public accountant from the Norwegian School of Economics and Business Administration (NHH) in Bergen. Ms Sæther Romuld has served on the boards of a number of listed companies and was a Director of the Faroese aquaculture company Bakkafrost (listed on OSE) from 2009 to 2014, in addition to HAVFISK. As at 31 December 2014, Ms Sæther Romuld held no shares or stock options in the company. Ms Sæther Romuld is a Norwegian citizen. She has been elected for the period. 3 / Leiv Grønnevet DIRECTOR Leiv Grønnevet (born 1943) has a wide experience from various sectors of Norwegian and international fishing industry. Mr Grønnevet was State Secretary in the Ministry of Fisheries from 1981 to He was CEO of the Norwegian Fishing Vessel Owners Association for 10 years. Mr Grønnevet served as head of the Fisheries Division of Christiania Bank/Nordea from 1992 to Today, he is Senior Business Consultant with the consultancy company MRB AS. Mr Grønnevet has been Director or Chair of a number of companies and participated in task forces related to the fishing industry and fishery research issues. From 1999 to 2007, he was Chairman of Norway s Institute of Marine Research. Since 2012, Mr Grønnevet has been a member of the Marine Stewardship Council (MSC) a foundation for the certification of sustainable seafood products. Mr Grønnevet has an MBA from the Norwegian School of Economics and Business Administration (NHH) in Bergen. As at 31 December 2014, Mr Grønnevet held no shares or stock options in the company. Mr Grønnevet is a Norwegian citizen. He has been elected for the period.

93 ORGANISATION AND GOVERNANCE HAVFISK 2014 PRESENTATION OF THE BOARD DEAR SHAREHOLDERS OF DIRECTORS / Kari Mette Ski DIRECTOR (born 1957) has recently taken up the position of General Manager of Isolaft AS. Ms Ski was CEO of Devold of Norway from 2002 to Before this, she worked in the IT industry for 25 years, most recently as CEO of Tempus AS. Kari Mette Ski serves on several company boards. She graduated in social science, information studies and statistics from the University of Bergen and in marketing management from BI Norwegian Business School. As at 31 December 2014, Ms Ski held no shares or stock options in the company. Ms Ski is a Norwegian citizen. She has been elected for the period. 5 / Ola Snøve DIRECTOR (born 1977) is Investment Director of Aker ASA. Mr Snøve was previously CEO of Epax, which was a joint venture between Aker and Lindsay Goldberg that was acquired by FMC Corp. Before the period at Epax, Snøve had been employed by Aker since January Mr Snøve is now chair of Aker BioMarine. He holds an MSc and has a doctorate from NTNU, as well as an MBA (Dist.) from INSEAD. As at 31 December 2014, Mr Snøve held no shares or stock options in the company. Mr Snøve is a Norwegian citizen. He has been elected for the period. 6 / Bjarne Kristiansen DEPUTY MEMBER (born 1955) has worked in the fishing industry since 1973 and has been the chief union representative since Mr Kristiansen is now employed by Norway Seafoods. Mr Kristiansen has been a director of HAVFISK since As at 31 December 2014, Mr Kristiansen held no shares or stock options in the company. Mr Kristiansen is a Norwegian citizen. He has been elected for the period. 7 / Ottar Signor Johnsen EMPLOYEE-ELECTED DIRECTOR (born 1957) has worked at Nordland Havfiske, formerly Havfisk AS since He has worked as a trawl foreman for 25 years. Mr Johnsen is the chief union representative at Nordland Havfiske. Mr Johnsen is a Norwegian citizen. As at 31 December 2014, Mr Johnsen held no shares or stock options in the company. Mr Johnsen is a Norwegian citizen. He has been elected for the period. 8 / Erlend Hanssen EMPLOYEE-ELECTED DIRECTOR (born 1972) has worked for the company since Mr Hanssen started in Havfisk AS, and has worked as netman/trawl foreman at HAVFISK ASA. He has been a union representative and has also previously sat on shipowning company boards. He has been actively involved in union work for many years and is a deputy member of the national committee of the Norwegian Seafarers Union. He graduated from Bodø University College in fishery economics, quality management and seafood processing, but after completing his education he chose a career at sea. As at 31 December 2014, Mr Hanssen held no shares or stock options in the company. Mr Hanssen is a Norwegian citizen. He has been elected for the period. 9 / Andre Steffensen EMPLOYEE-ELECTED DIRECTOR (born 1968) is employed by HAVFISK. Mr Steffensen has been captain of the «Vesttind» and has been employed by the company since Mr Steffensen is now captain of the newly built Gadus Poseidon, which was delivered in the second quarter of He qualified as captain and mate at Tromsø Maritime College. As at 31 December 2014, Mr Steffensen held 17,000 shares in the company but had no stock options. Mr Steffensen is a Norwegian citizen. He has been elected for the period.

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95 CONSERVE THE ENVIRONMENT READ THE REPORT ONLINE The annual reports of HAVFISK ASA are available via our home page: Alternatively, HAVFISK ASA encourages its shareholders to subscribe to the company s annual reports via the electronic delivery system of the Norwegian Central Securities Depository (VPS). Subscribers to this service receive annual reports in PDF format by . VPS distribution takes place at the same time as distribution of the printed version of HAVFISK s annual report to shareholders who have requested it. Electronic distribution is the fastest channel for information from the company. It is also cost-effective and environmentally friendly. Text: HAVFISK ASA Photo: Joachim Valderhaug Eldar Vindvik Rino Grande Peder Otto Dybvik Bent Ulleland Andre Steffensen Layout / print: Havnevik AS

96 VISIT AND POST ADDRESS: HAVFISK ASA Løvenvoldg. 11 P.O.Box 876 NO-6001 ÅLESUND Telephone: Telefaks: Address list on Annual report HAVFISK