ANNUAL
REPORT
Faroese Company Registration No. 1724
2022
Contents
Statement by the Management and the Board of Directors 4
Outlook 8
Bakkafrost at a Glance 12
Key Figures 15
Main Events 16
STRATEGY 17
Business Objectives and Strategy 18
Business Model 20
Differentiators 21
Outline of Bakkafrost’s History 23
The Value Chain 24
PERFORMANCE 30
Operational Review 31
Financial Review 35
Farming Segment – Faroe Islands (FO) 38
Farming Segment – Scotland (SCT) 40
VAP Segment 42
FOF Segment 44
Market Review 47
RISKS 58
Risk Management 59
GOVERNANCE 68
Corporate Governance 69
Corporate Responsibility and Sustainability 71
Shareholder Information 73
Directors and Management 74
Directors’ Profiles 75
Group Management’s Profiles 77
Statement by the Management
and the Board of Directors on the Annual Report 78
Independent Auditor’s Report 79
2
ANNUAL REPORT 2022
Contents
FINANCIAL STATEMENTS AND NOTES
– BAKKAFROST GROUP 84
Consolidated Income Statement 88
Consolidated Statement of Other Comprehensive Income 89
Consolidated Statement of Financial Position 90
Consolidated Cash Flow Statement 92
Consolidated Statement of Changes in Equity 93
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS – BAKKAFROST GROUP 94
NOTES – SECTION 1 Basis of Preparation 95
NOTES – SECTION 2 Results for the Year 98
NOTES – SECTION 3 Assets and Liabilities 109
NOTES – SECTION 4 Capital Structure and Financing Items 134
NOTES – SECTION 5 Other Disclosures 141
FINANCIAL STATEMENTS – P/F BAKKAFROST 149
P/F BAKKAFROST – Income Statement 151
P/F BAKKAFROST – Statement of Financial Position 152
P/F BAKKAFROST – Cash Flow Statement 154
P/F BAKKAFROST – Statement of Changes in Equity 155
P/F BAKKAFROST – NOTES TO THE
FINANCIAL STATEMENTS 156
APPENDIX 164
Quarterly financial figures 2020-2022 164
Market Announcements Published in 2022 167
Financial Calendar for 2023 168
Glossary 169
3
ANNUAL REPORT 2022
RÚNI M. HANSEN
Chairman of the Board
A TURBULENT YEAR
Bakkafrost has managed to navigate well through 2022
which was a year with great market turbulence and uncer-
tainties in the global economy. Overall we are satisfied with
the results – especially in the operation in the Faroe Islands.
The turbulent year can be caracterized as a year of two
halves with highly volatile salmon prices.
Volatile market
At the beginning of the year, the market outlook was positive
as the global market was increasingly unwound from Cov-
id. The reopening of the food service industries increased
the demand for salmon. Combined with the negative supply
growth of salmon in the first half of 2022, this led to sub-
stantially higher salmon prices, reaching all-time high levels
of 126.22 NOK/kg
1
in the last week of April 2022. Howev-
er, following Russia’s invasion of Ukraine in February, global
supply chains were again disrupted, and the world econo-
my faced significant challenges and increased uncertainties.
Bakkafrost stopped all trade with Russia following the inva-
sion of Ukraine and managed to divert the affected sales vol-
umes into other markets and find new suppliers and raw ma-
terials that could no longer be sourced from Ukraine. In the
second half of 2022, spot prices fell as low as 57.45 NOK/
kg
1
in August to increase into Q4 and reach 85.97 NOK/kg
1
at year-end.
The global volume of salmon sold was reduced by 2.1% in
2022 compared to 2021. Most notably, the sale to Russia
and Ukraine was reduced 43% each. Global sales to the EU
and China declined by 1% and 2%, respectively, while sales to
the US increased by 3%. Hence, the US market was one of the
strongest in 2022, just as during 2021 when the global sales
to the US market grew 13%.
In 2022, Bakkafrost sold 67% of the volume to the EU mar-
ket, compared to 61% in 2021. Sales to the US and Asia were
1
NASDAQ superior 4-5kg (HOG)
18% and 9%, respectively, compared to 19% and 11%, in
2021. Bakkafrost sold 40% of the harvested volume from
the Faroe Islands to the retail market, compared to 33% in
2021. Bakkafrost has an excellent capacity to produce retail
products in the VAP segment and has a strategy of selling
around 35-40% of the harvest volume to the retail market.
However, the food service market is important to Bakkafrost
as we usually achieve a higher price premium.
The high inflation and uncertain supply chains in 2022 were
unforeseen, but Bakkafrost has managed to navigate well
through this through careful procurement planning. Raw
material prices for feed production have been impacted the
most, but the effect of this has been more than offset by the
increased salmon price, which is believed to have left the
level of around 60 NOK/kg, it has fluctuated since 2016. With
general inflation and a tight salmon market outlook taken
into account, it is likely that the salmon price will remain at a
higher level in the coming years.
Bakkafrost harvested 90.6 thousand tonnes of salmon head-
on gutted weight in 2022, of which 66.7 thousand tonnes were
harvested in the Faroe Islands, and 23.9 thousand tonnes in
Scotland. In comparison, Bakkafrost harvested 96.9 thou-
sand tonnes in 2021. Bakkafrost had all-time high revenues
of 7,130 mDKK in 2022, compared to 5,554 mDKK in 2021.
Operational EBIT was also all-time high at 1,705 mDKK, com-
pared to 821 mDKK in 2021. The results from the operation
in the Faroe Islands were satisfactory, while the results from
Scotland were weak and negatively affected by exceptional
mortality costs.
Scotland improving
When Bakkafrost acquired Bakkafrost Scotland (previously
named “The Scottish Salmon Company”) in Q4 2019, it was
fully known that this was a turnaround case, requiring sig-
nificant investments to be made over 5 years. This also was
Statement by
the Management
and the Board of
Directors
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS
4
ANNUAL REPORT 2022
detailed at our 2021 Capital Markets Day, where a 6.2bn DKK
was announced, whereof 2.8bn DKK is planned for Scotland.
The first years during the turnaround period were expected
to be difficult, however less challenging than experienced in
2021 and 2022. During these two years, farming conditions
have been more difficult than usual. Bakkafrost suffered sig-
nificant biological challenges leading to high mortality costs
for our fish. Significant challenges in Scotland are poor qual-
ity smolt and gill challenges in marine farming.
The turnaround of the Scottish operation is mainly driven
by the same kind of investments as Bakkafrost has made in
the Faroe Islands, where we have successfully demonstrated
that biological risk can be reduced and efficiency improved.
In Scotland, the most important investments are the replace-
ment of the old obsolete hatcheries acquired with three new
state-of-the-art hatcheries based on the same technology
and experience from the Faroe Islands.
Now, three years into the process, we see some early in-
dications of improvements. However, the real test being in
the autumn when sea water temperature and biological risks
peak. The first of the new hatcheries, Applecross, is expect-
ed to deliver the first batch of large smolt in Q2 2023, and
the second hatchery is expected to start construction in H2
2023.
We have also seen good results from our increased treatment
vessel capacity in Scotland, most recently in late Q3 2022
with the arrival of our second Farming Service Vessel for
freshwater treatment. The vessel is uniquely equipped with
dual treatment systems, treating gill health issues with fresh
water and removing sea lice. At the beginning of 2023, we
have seen the benefit of this on the sales value of our fish
by being able to adapt harvest to the improved biological
situation, thereby growing the fish larger to achieve higher
value in the market.
We have already made several improvements in Scotland
besides building hatcheries and treatment vessel capacity.
This includes substantial investments in processing capaci-
ty, technology and marine farming operations. In addition,
best practices have been shared across the Faroe Islands and
Scotland to extract and implement the best of two worlds.
We have focused on collaboration and knowledge transfer,
supported by new organisational structures and simplicity
via our strategic focus, “One Company“. One important mile-
stone was passed in May 2022 when we renamed the Scot-
tish Salmon Company “Bakkafrost Scotland”.
Strong development in the Faroe Islands
Bakkafrost’s operation in the Faroe Islands is robust. Dur-
ing 2022 the biological performance has continued to im-
prove with strong growth, all-time low sea lice, historically
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS
5
ANNUAL REPORT 2022
low mortality and biological feed conversion ratio. This is
partly due to efficient treatment strategy and improvements
to the large smolt production method. This has been adjust-
ed and improved continuously, resulting in more robust and
better-performing smolt.
Significant investments have been made in increased hatch-
ery capacity to produce large smolt of around 500 g. In Q4
2022, the expanded capacity at the Norðtoftir hatchery was
commissioned and started production. In Q1 2023, the same
applies to the expanded hatchery at Glyvradal, which will
be followed by the commissioning of the expansion of the
Viðareiði hatchery. Combined, these hatcheries provide an
additional annual production capacity of 6.5 million smolt
of 500 g. In addition, we expect to start the construction of
a new hatchery at Ónavík in H1 2023, which will expand
the annual smolt production capacity to more than 23 million
smolt of 500 g.
Production capacity is also increased throughout the value
chain. In coming years, we expect actual harvest volumes
to grow towards the guidance target for 2026, which is
100,000 tonnes of head-on gutted weight. This is only the
beginning, as the full effect of the large smolt strategy has
yet to materialise, but this will gradually reveal itself in the
coming years.
Fishmeal, Oil and Feed scaling up for the future
One of the expected synergies following the acquisition of
Bakkafrost Scotland was increased efficiency at our fishmeal,
-oil and feed plant, Havsbrún. In 2022, 83% of the feed in
Scotland was supplied from Havsbrún, and the operational
efficiency has improved noticeably. To prepare for future
growth, Havsbrún has in 2022 started expanding its feed
production capacity with a new feed line.
Feeding our Scottish salmon with the same feed from Havs-
brún used to feed our salmon in the Faroe Islands is an
essential step towards harmonizing the quality and custom-
er perception of our salmon. This increases the flexibility in
sales and helps us develop further the value proposition to
our customers.
Sustainability
Bakkafrost is uniquely located in one of the best natural envi-
ronments for salmon farming, with excellent and sustainable
access to marine raw material for fish feed production. Given
our location in the North Atlantic Ocean and the challenge
of ensuring enough healthy and sustainably produced food
for the world’s growing population, we see it as our obliga-
tion to increase our supply of salmon to the world. Salmon is
amongst the most sustainable and resource-efficient sources
of healthy animal protein. Over the following years, we will
increase our supply significantly, reaching 150,000 tonnes
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS
6
ANNUAL REPORT 2022
of head-on gutted weight in 2026. Hence, it is vital that we
firmly address the sustainability challenges. Bakkafrost is
committed to contributing to UN SGDs and is being evaluat-
ed by increasing sustainability-focused analysts and rating
organisations. We provide comprehensive and transparent
sustainability reporting and demonstrate that Bakkafrost is
at the forefront of sustainable food production.
We have committed ourselves to reducing scope 1 & 2 car-
bon emissions by 50% and scope 3 carbon emissions by 52%
in 2030. We have also committed ourselves to net-zero in
2050. These targets are science-based, in line with the Paris
Treaty, and scheduled for SBTi approval in 2023. The details
on our progress and achievements towards our sustainability
targets are disclosed in our 2022 Healty Living Sustainability
Report.
Bakkafrost has a long value chain, which gives us more au-
tonomy to seek opportunities to reduce our environmental
footprint. For example, we rely on air cargo to overseas mar-
kets. To reduce our carbon emissions from air freight, we
have decided to acquire our own cargo plane to set up direct
transport to the US market. We expect this to be operational
in H1 2023, and it will enable us to shorten the flown dis-
tance and omit the weight of ice transported. The result is a
reduced carbon emission for the fresh salmon sold to the US
by around 40-50% for each kg of edible product.
Investments
In September 2021, Bakkafrost held its biennial Capital
Markets Day in the Faroe Islands, where the Group’s invest-
ment plan for 2022-2026 and strategy were disclosed. The
large smolt strategy is the main game changer for opera-
tion in Scotland, reducing biological risk, improving efficien-
cy, reducing cost, and providing an opportunity for further
sustainable growth. Another strategic priority is the “One
Company” pillar of the strategy, whereby the Faroese and
Scottish operations gradually evolve into one, building on the
strengths and best practices of both.
With the disclosed investment plan, Bakkafrost expects to
grow harvest volumes to 150,000 tonnes of head-on gutted
weight in 2026 while simultaneously building production ca-
pacity for 180,000 tonnes and preparing for further growth.
Bakkafrost will host the next Capital Markets Day on 6-7
June 2023. The Capital Markets Day will be held in Scotland.
Tax uncertainties
In September 2022, the Norwegian Government proposed a
new resource tax for the Norwegian salmon industry. This
caused great uncertainty to the Norwegian salmon and the
financial market with interests in this industry. As Bakkafrost
has no operation in Norway, Bakkafrost is not subject to Nor-
wegian tax. However, since 2014 there has been a special
revenue tax on salmon farming in the Faroes. The Faroese
Government is expected to make adjustments to the revenue
tax. These adjustments are expected to increase the revenue
tax at very high salmon prices while giving improved down-
side protection when salmon prices are low.
In Scotland, there is no special tax on the salmon industry.
Strong financial position
In December 2021, Bakkafrost entered a term sheet for a
sustainability-linked revolving multicurrency financing
agreement of 700 mEUR. With this agreement, we have en-
sured the funding of our investment program for 2022-2026.
The applicable interest margin depends on Bakkafrost’s per-
formance against several sustainability KPIs. These include
increasing the survivability rate of the fish, decreasing the
biological feed conversion ratio and generating our own pro-
duction of renewable energy.
The Bakkafrost Group’s interest-bearing debt was DKK
2,664 million at the end of 2022, compared with DKK
2,126 million at the year-end 2021. The Group had undrawn
committed credit facilities of DKK 2,542 million at the end
of 2022.
The Bakkafrost Group made a profit of DKK 1,344 million in
2022, compared with DKK 964 million in 2021. Bakkafrost’s
equity ratio was 62% at the end of 2022, compared to 64%
at the end of 2021.
Return to shareholders
The Board of Directors will propose a dividend of DKK 10.00
per share at the Annual General Meeting convened on 28
April 2023. This corresponds to a total dividend of DKK
591,430 million.
Thank you to our employees
On behalf of the Board of Directors and Management, we
thank all employees in the Bakkafrost Group for their com-
mitment and hard work in 2022.
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS
7
ANNUAL REPORT 2022
Outlook
Market
Supply decreased in 2022
The supply of salmon decreased by 2% in 2022 compared to
2021, incl. inventory movements.
44% higher salmon prices
Salmon spot prices were 44% higher this year compared to
2021. Strong demand for salmon, low supply increase and
general inflation have contributed to high salmon prices this
year.
Low growth in 2023
In H1 2023, the global supply is expected to be on the same
level as in H1 2022. In H2 2023, the global supply is expect-
ed to grow around 4-5%. For the full year 2023, the global
supply growth is expected to be around 2%, excluding inven-
tory movements.
Bakkafrost has a strong focus on ensuring a well-balanced
flow to the different markets to increase diversification and
mitigate market risk. Bakkafrost operates in the main salmon
markets, Europe, the USA, and the Far East. Since the begin-
ning of the war in Ukraine, Bakkafrost has stopped all trading
with Russia.
Farming
The strong biological performance in the Faroese farming op-
eration seen in previous years has continued this year. Sea
lice levels have been maintained at all-time low this year,
and the low mortality rates have continued.
Bakkafrost’s new 10,000 m
3
Live Fish Carrier, Bakkafossur,
arrived in the Faroe Islands at the beginning of January 2023
and will play an important role in strengthening Bakkafrost’s
capabilities to maintain low biological risk in the Faroe Is-
lands. Also, the vessel is designed to support future off-shore
farming in the Faroe Islands.
The Norðtoftir hatchery is now in operation and has success-
fully released the first batch of large smolt since the expan-
sion. The hatchery expansion at Glyvradal is about to be fin-
ished and will start operation in Q1 2023. Combined, these
capacity expansions will increase the smolt production ca-
pacity in the Faroe Islands with around 6.5 million smolts of
500 g. These are important milestones to fulfil Bakkafrost’s
goal to build an annual smolt production capacity in the Far-
oe Islands of over 23 million smolts of 500 g in 2026.
In Scotland, farming conditions in 2022 have followed the
normal seasonal pattern with more biological challenges in
the second half of the year, compared to the first half. How-
ever, the biological situation improved considerably in the
second half of Q4, and Bakkafrost decided to slow down har-
vest to let the fish continue growing and gain weight. This re-
duced the harvest volume in Q4 2022 but will increase value
with harvesting larger fish in Q1 2023. Overall, the mortality
in Q4 2022 was lower than the same quarter the year before,
and from the beginning of December 2022, mortality levels
have been at the same level as normally found in the first
half of the year.
One contributing factor to the improved biological devel-
opment in late Q4 in Scotland was the arrival of the new
4,000 m
3
Live Fish Carrier in late September 2022. Equipped
with freshwater treatment capacity as well as an innovative
in-line freshwater-based sea lice removal system this vessel
can efficiently do dual treatments for gill-related issues as
well as sea lice removal in one operation. The operation has
proven to be efficient and Bakkafrost has decided to imple-
ment the same systems on the second Live Fish Carrier in
Scotland as well as on the new Live Fish Carrier in the Faroe
Islands, Bakkafossur.
The biological risk in Scotland is still higher than in the Faroe
Islands but is expected to be transformed with the implemen-
tation of Bakkafrost’s large-smolt strategy. As demonstrated
in the Faroe Islands, large high-quality and robust smolt will
have a lower risk exposure in the marine environment due
to shorter production cycles in the sea. This is expected to
significantly reduce the biological risk in Scotland and is fun-
damental to the turnaround of the farming operation. There-
fore, it is Bakkafrost’s topmost priority in Scotland to build
new modern hatcheries. The ongoing expansion of the Ap-
plecross hatchery is progressing well, and the Applecross 4
expansion is expected to be operational with fish in the tanks
in March 2023. The first batch of large smolt delivered from
Applecross 4 is planned for Q2 2023 and will contribute to
increasing the mean weights and quality of the smolt stocked
in Scotland in 2023.
OUTLOOK
8
ANNUAL REPORT 2022
The full capacity of the Applecross hatchery, including the
next expansions, will be in operation in mid-2024, bringing
the overall annual production capacity from Applecross to
around 10 million high-quality smolts of around 500 g.
In 2022, the average weight of released smolt in Scotland
was 107 g, which is 12% higher than in 2021.
Bakkafrost plans to build 3 large hatcheries in Scotland,
which will increase the total annual production capacity to
around 18 million smolts of around 500 g in 2026.
Smolt release
Bakkafrost expects to release around 16 million large smolts
in 2023 in the Faroe Islands and around 9.6 million smolts
in Scotland. The number and the average weight of smolts
released are key elements of predicting Bakkafrost’s future
production.
The average weight of the smolt released in Scotland in 2023
is expected to increase to around 150-175 g. In 2023, the
number of released smolt will be lower than in previous
years as the focus is on stabilising the operation before in-
creasing the volume. In this respect, smolt quality is more
important than the released volume.
Harvest volumes for 2022 in the Faroe Islands were 66.7
thousand tonnes gutted weight and 23.9 thousand tonnes
gutted weight in Scotland, giving a total of 90.6 thou-
sand tonnes gutted weight.
In 2023, Bakkafrost expects to harvest around 68,000 tonnes
gutted weight in the Faroe Islands and 30,000 tonnes gutted
weight in Scotland, giving a total of around 98,000 tonnes
gutted weight.
The estimates for harvest volumes and smolt releases in both
geographies are dependent on biological development.
VAP (Value added products)
Bakkafrost’s highly fl exible value chain includes a state-
of-the-art VAP factory with high capacity. This enables
Bakkafrost to adapt well to the rapidly changing market sit-
uations.
Bakkafrost’s long-term strategy is to sell around 40% of the
harvested volumes of salmon as VAP products on contracts.
The contracts are at fi xed prices with a duration of 6 to 12
months.
For 2023, Bakkafrost has signed contracts covering around
23% of the expected harvest volumes in the Faroe Islands
and Scotland combined.
FOF (Fishmeal, oil and feed)
The outlook of fi shmeal and fi sh oil production is dependent
on the availability of raw materials.
The ICES 2023 recommendation for blue whit ing is 1,360
thousand tonnes, which is an 81% increase from the recom-
mendation for 2022.
In 2023 Bakkafrost expects similar production volumes of
fi shmeal and fi sh oil as in 2022.
Havsbrún’s sales of fi sh feed in 2022 was 128,000 tonnes
and is expected to increase up to around 130,000 tonnes in
2023.
The major market for Havsbrún’s fi sh feed are the internal
Faroese and Scottish Farming segments.
Lately, the prices on vegetable raw materials have increased
signifi cantly. This affects the whole animal protein market
as well as other food producers. Bakkafrost is in a relatively
good competitive position due to the low inclusion of vegeta-
ble ingredients in the feed combined with a low feed conver-
sion ratio and good access to marine raw materials.
Investments
On the Capital Markets Day on 14-15 September 2021,
Bakkafrost announced a 6.2bn DKK investment plan for
2022-2026. The investments will enable a transformation of
the operation in Scotland and provide sustainable growth in
the Faroe Islands as well as Scotland.
The main purpose of the investments in Scotland is to rep-
licate Bakkafrost’s successful operation in the Faroe Islands.
Bakkafrost plans to build 3 large energy-effi cient hatcher-
ies in Scotland, enabling the implementation of Bakkafrost’s
large smolt strategy and giving an annual production capac-
ity above 18 million smolts at 500 g. Having large smolt in
Scotland will transform the performance, lower the biological
risk and increase harvest volumes. In addition to building
hatchery capacity, Bakkafrost plans to build a new process-
ing plant to strengthen processing capabilities and increase
fl exibility in operation. Bakkafrost will also invest in more
service vessel capacity to improve the mitigation of biologi-
cal risk. Further, Bakkafrost will make investments in marine
site development.
The investments in the Faroe Islands include increasing annu-
al hatchery production capacity to around 23 million smolts
at 500 g, investments in a brood stock facility and expansion
of feed production capacity.
With the investment plan, Bakkafrost expects to sustainably grow
the total annual harvest volumes to 150,000 tonnes in 2026.
Over the same period, the total annual production capacity in
Bakkafrost’s value chain will reach 180,000 tonnes gutted weight.
Million smolt
released '23e '22 '21 '20 '19 '18
FO 16.0 14.4 14.4 14.3 12.7 12.6
SCT 9.6 11.0 11.1 10.4 12.4 8.6
OUTLOOK
9
ANNUAL REPORT 2022
Capital Market Day in Scotland in 2023
Bakkafrost’s next Capital Markets Day will be on 6-7 June
2023 and will be held in Scotland.
Financial
The long-term market balance in the global market for salmon
products will most likely remain favourable for Bakkafrost.
Bakkafrost has a long val ue chain and a cost-efficient pro-
duction of high-qual ity salmon products and will likely main-
tain finan cial flexibility going forward.
In March 2022, Bakkafrost finalized a new sustainability-
linked 700 mEUR multicurrency revolving credit facility
agreement with an additional accordion option of 150 mEUR.
The facility has a tenor of five years plus an extension of one
year. In combination with Bakkafrost’s high equity ratio, the
facility gives the necessary financial strength and flexibility
for the Group’s investment plans aimed at significant organic
growth and structural cost reductions in Scotland. It will also
enable M&A’s and further organic growth opportunities as
well as support an un changed dividend policy in the future.
Fig. 1
6.2BN DKK INVESTMENT PROGRAMME 2022-2026
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2022 2023 2024 2025 2026
Marine FOF Processing
Freshwater&Broodstock
Other
FSV
mDKK
OUTLOOK
10
ANNUAL REPORT 2022
11
FAROE ISLANDS
SCOTLAND
DENMARK
FRANCE
UNITED STATES OF AMERICA
LEGEND TO MAP SYMBOLS
Headquarters, Sales
Fishmeal, Fish oil & Fish feed
Broodstock, Hatcheries & Farming
Harvest & Processing
Farming Service Vessels, Packaging & Biogas
BIOGAS
FISHMEAL
FISH OIL
FARMING
FISH FEED
HATCHERIES
SALES/LOGISTICS
PACKAGING
FSV (FARMING SERVICE VESSELS)
HARVESTING
PROCESSING
Sales
Processing
Sales
Processing
Sales
BROODSTOCK
Sales
Broodstock, Hatcheries & Farming
Harvest & Processing
Farming Service Vessels
BAKKAFROST
Location: Faroe Islands
Headquarters: Glyvrar, Eysturoy
Production and business-to-business sale: salmon, fishmeal, fish oil and fish feed
Longest integrated value chain in the industry
Listed on: Oslo Børs with ticker code BAKKA
Bakkafrost at a Glance
BAKKAFROST AT A GLANCE
12
ANNUAL REPORT 2022
CONSTRUCTION/EXPANSION
Faroe Islands
Scotland
FAROE ISLANDS SCOTLAND
HARRIS AND LEWIS
SOUTH UIST
NORTH UIST
GLYVRAR
FUGLAFJØRÐUR
KLAKSVÍK
TÓRSHAVN
VÁGUR
LOCH CARRON
APPLECROSS
LOCH FYNE
LOCH STRIVEN
LOCH TORRIDON
CAIRNDOW
MARYBANK
STORNOWAY
(SMOKEHOUSE)
LOCH ROAG
SKYE
MULL
JURA
ISLAY
GIGHA
ARRAN
EDINBURGH
FISHMEAL/OIL & FEED FACTORY
HATCHERIES
FARMING SITES
BROODSTOCK
HARVEST FACTORIES
PROCESSING PLANT
PACKAGING FACTORY
HEADQUARTERS
SALES OFFICES
BIOGAS
LEGEND TO MAP SYMBOLS
I
N
N
E
R
H
E
B
R
I
D
E
S
O
U
T
E
R
H
E
B
R
I
D
E
S
BAKKAFROST AT A GLANCE
13
ANNUAL REPORT 2022
14
Key Figures
(DKK 1,000)
Income Statement 2022 2021 2020 2019 2018
Operating revenues 7,129,967 5,553,849 4,651,892 4,511,107 3,177,422
Operational EBIT * 1,705,165 821,194 621,158 1,325,100 1,074,912
Operational EBITDA * 2,242,645 1,351,628 1,067,923 1,635,215 1,273,810
Earnings before interest and taxes (EBIT) 1,826,153 1,144,685 691,123 1,019,217 1,184,233
Earnings before taxes (EBT) 1,690,335 1,137,662 625,984 981,916 1,172,066
Net earnings 1,344,330 964,036 462,845 801,885 960,292
Earnings per share before fair value adjustments
of biomass and provision for onerous contracts (DKK) 19.02 10.28 6.20 19.04 16.44
Earnings per share after fair value adjustments
of biomass and provision for onerous contracts (DKK) 22.75 16.32 7.83 15.53 19.74
Statement of Financial Position
Total non-current assets 11,164,639 10,059,184 9,224,680 8,670,109 3,396,036
Total current assets 5,716,933 4,568,984 3,983,644 4,431,296 2,406,487
TOTAL ASSETS 16,881,572 14,628,168 13,208,324 13,101,405 5,802,523
Total equity 10,395,813 9,347,545 8,729,487 8,496,875 4,077,029
Total liabilities 6,485,759 5,280,623 4,478,837 4,604,530 1,725,494
TOTAL EQUITY AND LIABILITIES 16,881,572 14,628,168 13,208,324 13,101,405 5,802,523
Net interest-bearing debt 2,663,686 2,125,811 1,752,751 1,018,686 495,479
Equity share 62% 64% 66% 65% 70%
*Aligned for fair value adjustments of biomass, onerous contracts provision, income from associates
Operating revenues 7,129,967 5,553,849 4,651,892 4,511,107 3,177,422
Operational EBIT * 1,705,165 821,194 621,158 1,325,100 1,074,912
Operational EBITDA * 2,242,645 1,351,628 1,067,923 1,635,215 1,273,810
Earnings before interest and taxes (EBIT) 1,826,153 1,144,685 691,123 1,019,217 1,184,233
Earnings before taxes (EBT) 1,690,335 1,137,662 625,984 981,916 1,172,066
Net earnings 1,344,330 964,036 462,845 801,885 960,292
of biomass and provision for onerous contracts (DKK) 19.02 10.28 6.20 19.04 16.44
of biomass and provision for onerous contracts (DKK) 22.75 16.32 7.83 15.53 19.74
Total non-current assets 11,164,639 10,059,184 9,224,680 8,670,109 3,396,036
Total current assets 5,716,933 4,568,984 3,983,644 4,431,296 2,406,487
TOTAL ASSETS 16,881,572 14,628,168 13,208,324 13,101,405 5,802,523
Total equity 10,395,813 9,347,545 8,729,487 8,496,875 4,077,029
Total liabilities 6,485,759 5,280,623 4,478,837 4,604,530 1,725,494
TOTAL EQUITY AND LIABILITIES 16,881,572 14,628,168 13,208,324 13,101,405 5,802,523
Net interest-bearing debt 2,663,686 2,125,811 1,752,751 1,018,686 495,479
Equity share 62% 64% 66% 65% 70%
Fig. 2
KEY FIGURES
15
ANNUAL REPORT 2022
November
• Arranged our first Bakkafrost
Supplier Day to engage with
our most significant suppliers in
the Faroe Islands to drive car-
bon reduction and general ESG
reporting
• Open day for key stakeholders,
our communities and em ploy-
ees on our new hybrid
4,000 m
3
well boat in Storno-
way, Isle of Lewis equipped
with flushing technology and
reverse osmosis to increase
freshwater treat ment capacity.
July
• Bakkafrost contributes to
annual local Salmon
Market, opening our HQ
to the public and serving
salmon to participants
September
• Bakkafrost takes delivery of our first 100%
electric catamaran workboat ‘Grønarók’
• Bakkafrost Scotland receives a second wellboat
with a capacity of 4,000 m
3
.
• Position Green (formerly The Governance Group)
appoints Bakkafrost among top performers in
Scandinavia in sustainability reporting
• Launched our first Summary Sustainability Report
• Bakkafrost announces the acquistion of
P/F Faroe Seafood 2011 and it’s subsidiary Faroe
France which is renamed “Bakkafrost France”
January
• Bakkafrost announces the
acquisition of 90% of the
shares in Munkebo Seafood
A/S, a seafood canning busi-
ness in Munkebo, Denmark.
Bakkafrost has been one of
the largest suppliers of raw
materials for the company in
recent years.
April
• Native Hebridean smoked
salmon awarded 2 star in
UK Great Taste Awards
February
• Bakkafrost
subsidiary Munkebo
launches vegan soup
May
• The Scottish Salmon Company is formally renamed to Bakkafrost
Scotland and introduces the brand “Bakka Salmon” to be used for
salmon from the Faroe Islands and Scotland
December
• Bakkafrost receives the new 10,000 m
3
wellboat, Bakkafossur,
planned for operation in the Faroe Islands
• Bakkafrost is ranked “B” against the CDP Climate Change index. This
was also the first time Bakkafrost disclosed against the CDP Water
Security index
• Bakkafrost Smoked Salmon ‘Heimland’ voted ‘best product in test’ in
the renowned Danish food magazine ‘Gastro’
• The University of Faroe Islands and Bakkafrost extend research col-
laboration to support research in aquaculture. The new agreement
will partially fund a new Faroese Centre for Ocean Modelling
• The Norðtoftir hatchery in the Faroe Islands release the first batch of
large smolt from the expanded part of the hatchery
June
• Bakkafrost rated
amongst top-performing
sustainable companies
as Oslo Stock exchange
includes Bakkafrost in
their new ESG index
• Key stakeholder event
at opening of Office in
central Edinburgh, fo-
cussed on 5 pillars of
our Healthy Living Plan
August
• Bakkafrost signs contract to expand the
hatchery at Viðareiði in the Faroe Islands
October
• Native Hebridean salmon winning top overall award
at Scotland Food & Drink Awards and sustainability
prize and Highland Food and Drink Awards
March
• Native Hebride-
an Smoked Salm-
on wins coveted
International
Food Award
• Bakkafrost
launches its fifth
Healthy Living
Sustainability
Report alongside
the 2021 Annual
Report
Main Events
MAIN EVENTS
16
ANNUAL REPORT 2022
STRATEGYSTRATEGY
MAIN EVENTS
STRATEGY
17
STRATEGY
Business Objectives
and Strategy
VISION
To be a significant contributor
in fulfilling the world’s growing
demand for healthy and
sustainably produced protein
MISSION
To produce the best
salmon in the world!
VALUES
Provenance, Passion
and Respect
Bakkafrost’s vision is to be a significant contributor in fulfill-
ing the world’s growing demand for healthy and sustainably
produced protein. Our mission is to produce the best salmon
in the world.
We are proud of our Provenance, bringing together our cul-
tural differences to raise sustainable, nutritional salmon, with
full value chain integrity.
We celebrate our Passion for our business and our people,
who go above and beyond to accomplish our shared purpose,
together. This is our competitive advantage.
We Respect and care for our natural environment, each oth-
er, our employees and our local communities in which we live
and work – sustainability is at the heart of everything we do.
Bakkafrost’s experience within the seafood industry dates
back to 1968, and since then, our priority has been to run
a healthy, attractive and competitive cost-conscious salmon
farming group.
Our strategy is focused on sustainable value creation. This
extends beyond healthy financial returns, to the strength,
capability and reputation of the business, the quality of our
workforce, and collective social and environmental well-
being. We recognize that by investing in the health of our
business, our people, our salmon, the environment and the
communities in which we operate, we will be in a better po-
sition to achieve this.
Today, our five business objectives are:
• Growth
We strive for a continuous market driven growth of harvest
volumes as well as of the value of our products, while build-
ing strategic strongholds in selected markets.
• One Company
We will be one united company where our employees share
values, identity and culture and operate efficiently “as one”
according to best practices and within simple organisational
and governance structures.
• Differentiation
We differentiate ourselves by increasing brand awareness,
based upon the provenance, superior quality, taste and nutri-
tional profile of our salmon with full traceability.
• SSC Turnaround
We will transform the performance of our Scottish opera-
tion through targeted investments and applied best practic-
es, which will reduce biological risks, reduce costs, improve
product quality, enable simpler processes and release syn-
ergies.
BUSINESS OBJECTIVES AND STRATEGY
18
ANNUAL REPORT 2022
STRATEGYSTRATEGY
• Sustainability
We embed sustainability deeply in our decision-making pro-
cesses and demonstrate our commitment to sustainability
through our actions and achievements for which we aspire to
be acknowledged as industry leading. See our sustainability
report www.bakkafrost.com/sustainability for more informa-
tion on our progress in 2022.
Our core values, which support our performance and guide
our behaviour, reflect our commitment to creating long-term
value for our customers, shareholders and the society by act-
ing responsibly, showing respect, and being persistent, effi-
cient and ambitious.
In 2021, we reviewed our corporate strategy and aligned our
strategic objectives with our Healthy Living Plan, outlined in
our sustainability report.
BUSINESS OBJECTIVES AND STRATEGY
19
ANNUAL REPORT 2022
STRATEGY
RESOURCES
VALUES CREATED
CORPORATE STRATEGY
DIFFERENTIATORS BRANDINGENABLERSVALUE CHAIN
Shareholders returns
Tax contributions
Community investments
Shareholder Capital
Skilled Workforce
Licences
Natural Resources
Pristine Waters
Growth ambition
One Company
Best practice processes
Embedded Sustainability
Provenance
Longest integrated value chain
in the salmon industry
Optimal farming conditions
in the Faroe Islands
High levels of Omega 3
Healthy Omega 3-6 Ratio
High quality
Sustainable fishmeal,
fish oil and fish feed
Lower than average feed
conversion ratio
FISHMEAL
FISH OIL
FISH FEED
BROODSTOCK
HATCHERIES
BIOGAS
FARMING
FSV
HARVESTING
PROCESSING
PACKAGING
SALES & LOGISTICS
Business Model
Bakkafrost is probably the most vertically integrated salmon farming company in the world, which gives Bakkafrost full control
and responsibility over all aspects of production. This enables Bakkafrost to have optimal control over the quality of its salmon
and the costs of production.
Fig. 3
BUSINESS MODEL
20
ANNUAL REPORT 2022
STRATEGY
Differentiators
Bakkafrost is committed to producing; tasty, healthy, sustain-
able, and quality salmon, truly creating value for customers.
This ensures a price premium can be achieved which in turn
reflects positively in the Group’s results.
The Bakkafrost Group plans to further strengthen this posi-
tion by investing in differentiation and the following USPs
(unique selling points).
PROVENANCE
The natural conditions and cold waters in the North Atlan-
tic around the Faroe Islands as well in Scotland are very
good for raising salmon. Bakkafrost will further promote this
unique provenance as producing exceptional quality salmon.
Both salmon from The Faroe Islands and Scotland is recog-
nized globally as top quality, but as the Faroe Islands only
produce about 3.5% (3.0%) and Scotland 5.8% (6.0%) of the
world’s salmon, the salmon from these two origins is in high
demand. Bakkafrost salmon is sought after around the world
with accepted premium positioning and is preferred by select
customers.
LONGEST INTEGRATED VALUE CHAIN
Bakkafrost is one of the most vertically integrated salmon
farming companies in the world and uniquely produces its
own fishmeal and fish oil. This ensures that Bakkafrost has
full control and responsibility over all aspects of production
and gives clients unparalleled traceability.
LARGE SALMON OF HIGH QUALITY RICH ON
OMEGA-3 LEVELS
The Faroe Islands aquaculture industry is recognized as pro-
ducing the largest Atlantic salmon in the world. In recent
years, a significant price difference has been evident be-
tween the different sizes of salmon. Due to lack of supply,
salmon over 6 kg achieved a considerable price premium.
With good supply of larger sizes, Bakkafrost is well placed
to capitalize on this position. Farming large salmon requires
good biology. The longer the salmon is at sea, the more it
is exposed to different risks as in any natural environment.
Bakkafrost’s salmon are raised on a diet rich in marine con-
tent. This is also the most important factor for the quality of
Bakkafrost Salmon, as the marine content ensures the opti-
mum fat content, rich in healthy Omega 3 fatty acids DHA
and EPA. The natural diet also ensures enjoyment in the
exceptional taste of Bakkafrost Salmon and contributes to
the high quality.
FEED RICH IN MARINE CONTENT
Bakkafrost has an integrated value chain that includes own
production of fish meal, oil and feed. With its rich access to
marine raw material from the waters surrounding the Faroe
Islands, Bakkafrost is uniquely positioned to maintain a sub-
stantially higher marine inclusion in the salmon feed, com-
pared to peers in the industry. The natural diet for wild salm-
on is rich in marine resources. By keeping the Bakkafrost diet
close to this, the Bakkafrost Group is able to have one of the
industry’s best Feed Conversion Ratios (FCR) which is a key
indicator of fish welfare and low production costs.
SALES AND GEOGRAPHICAL DIVERSIFICATION
The Sales and Marketing Department at Bakkafrost is respon-
sible for the worldwide sales of Bakkafrost Salmon, wheth-
er it is farmed in the Faroe Islands or Scotland. The Group
focusses on direct sales into channels, where the quality
attributes of Bakkafrost Salmon are recognised, and a price
premium is achieved. The strategy continues to ensure geo-
graphical sales diversification thereby minimizing the risk of
market fluctuations.
WORLDWIDE REACH
Bakkafrost uses ship transport and trucking whenever pos-
sible, such as for all frozen products and fresh products to
nearby markets. Fresh salmon delivered to long-distance
markets such as US and Asia are transported by air.
Fast reliable logistics with global reach is vital for the distribu-
tion of fresh perishable produce which is sought after around
the world. To maintain the leading position, Bakkafrost works
closely with key freight forwarders to ensure effective logis-
tics and first-class customer service worldwide, ensuring that
Bakkafrost´s salmon is always delivered as fresh as possible
by freight carriers to major airports and then linking with
DIFFERENTIATORS
21
ANNUAL REPORT 2022
STRATEGY
further passenger airlines to diverse worldwide locations.
Bakkafrost expects to have it’s own airplane in operation in
H1 2023, primarily serving the US market. This will strength-
en Bakkafrost’s position as a supplier of superior quality
fresh salmon.
SEGMENTATION
The Bakkafrost brand is particularly strong in USA, where
demand for salmon over 6 kg is strong, predominantly in the
sushi segment. The market share in China is also strong.
The strong sustainability profi le of Bakkafrost Salmon is par-
ticularly important to clients in the premium sushi segment.
Bakkafrost does not use any antibiotics and uses only non-
GMO ingredients in feed.
VAP
Bakkafrost holds a leading position in frozen salmon por-
tions, the main markets are leading European and US retail-
ers. Bakkafrost adds value to VAP production by producing
the highest quality product and is recognized as a reliable
and responsible supplier.
The diversifi cation of the Bakkafrost product mix brings ad-
ditional benefi ts for the Group; it ensures increased revenue
stability with 6- and 12-months contracts being negotiated
and offers an outlet for whole fresh fi sh in adverse market
conditions.
SUSTAINABILITY
Bakkafrost is committed to sustainability and care for the
environment in which it operates, this is fundamental for dis-
cerning customers. Sustainability is deeply embedded in the
business strategy and drives and shapes the business and
operations. Bakkafrost relies on certifi cations, such as the
MSC, ASC and BAP certifi cations. 100% of Bakkafrost’s sites
in the Faroe Islands and many of the sites in Scotland are ASC
certifi ed and the Scottish operation is 4-star BAP certifi ed.
FAROE ISLANDS
DIFFERENTIATORS
22
ANNUAL REPORT 2022
STRATEGYSTRATEGY
Outline of
Bakkafrost’s History
For more details on Bakkafrost’s history,
please visit www. Bakkafrost.com/about/history
1968
The Bakkafrost business is established by the two brothers
Hans and Róland Jacobsen. The first processing plant is built
the same year. The third brother, Martin Jakobsen, joins the
company in 1971.
1979
Bakkafrost starts fish farming activities – one of the first
companies in the Faroe Islands to do so.
1995
Bakkafrost builds a factory for value adding salmon at
Glyvrar. Although the investment is limited and the capac-
ity is low, this is Bakkafrost’s starting point of value-added
salmon production.
2006
The Bakkafrost Group grows through acquisitions and merg-
ers with several farming companies. Bakkafrost’s farming op-
eration increases significantly, both on land and at sea.
2010
The shareholders of Bakkafrost and Vestlax agree to merge
the companies. Vestlax Group’s shareholders agree to be
remunerated in Bakkafrost shares. The Vestlax Group is a
farming company with a harvest factory in Kollafjørður. The
Bakkafrost Group is an integrated farming company, ranging
from smolt production, fish farming, production of packaging
materials to finished VAP products and Sales.
Bakkafrost is listed on Oslo Børs and broadens its sharehold-
er base. In addition to local Faroese investors, the company
is now owned by international investors from all over Eu-
rope and the USA.
2011
Bakkafrost acquires P/F Havsbrún, a modern, internationally
renowned producer of fishmeal, fish oil and fish feed, situat-
ed in the Faroe Islands.
2015
In July, Bakkafrost’s new live fish carrier M/S Hans á Bakka
was delivered.
2017
Bakkafrost’s new harvest/VAP factory and the headquarters
in Glyvrar are finished.
2018
Bakkafrost starts the integration of the Faroese broodstock
programme. Bakkafrost’s new hatchery at Strond starts oper-
ation. Bakkafrost closes the acquisition of the business and
assets in the US salmon importer North Landing.
2019
Bakkafrost acquired The Scottish Salmon Company PLC, an
integrated salmon farming business in Scotland with focus on
traceability and total supply chain integrity.
Bakkafrost issued new shares for the first time since listing
on Oslo Børs to finance the acquisition.
2020
First biogas produced at the new biogas plant and sold the
first KWh’s of renewable electricity.
Received ASC certification for the last farming site and is
now 100% ASC certified in the Faroe Islands.
2021
Bakkafrost and 10 other business in the Faroe Islands join
forces to work together on a three-year corporate sustaina-
bility initiative.
Bakkafrost announced an updated new five-year investment
plan for 2022-2026.
OUTLINE OF BAKKAFROST’S HISTORY
23
ANNUAL REPORT 2022
STRATEGY
FISH FEED HATCHERIESFISH OILFISHMEAL BROODSTOCK BIOGAS
SALES & LOGISTICS
FSV HARVESTING PROCESSINGFARMING
PACKAGING
FAROE ISLANDS
SCOTLAND
The Value Chain
The Bakkafrost Group controls the entire value chain from
own production of fishmeal, fish oil and fish feed to sales
and marketing of finished VAP products. Control of the entire
value chain is considered important to ensure availability,
traceability and to be able to control the product flow daily.
Both customers and processing facilities depend on a daily
availability of salmon and depend entirely on a steady flow
of harvested fish.
The quality of the salmon is the result of the whole opera-
tion, from production of fishmeal and fish oil to the process-
ing of the salmon. The documentation and traceability from
the finished product back to the raw material in the feed and
the salmon eggs is important for the customers and therefore
important to Bakkafrost.
The control of the entire value chain enables Bakkafrost to
make long-term delivery contracts and long-term customer
relationships without being dependent on any third party
to ensure the quality and predictability of the deliveries. It
further enables better utilization of the facilities throughout
the value chain and prevents sub-optimization between cost
centres.
In January 2022, Bakkafrost acquired Munkebo Seafood, a
danish canned seafood producer supplementing Bakkafrost’s
other consumer packaged products. The acquisition is an ad-
dition to the Processing part of the value chain.
Fig. 4
THE VALUE CHAIN
24
ANNUAL REPORT 2022
STRATEGY
Fig. 5
FISHMEAL, FISH OIL AND FISH FEED
Bakkafrost sources fish materials to produce fishmeal and fish oil. This is mainly based on var-
ious pelagic species. In addition to whole fish, we also utilize co-products of fish destined for
direct human consumption, such as fish trimmings and fish silage. The demands to high quality
fish -material combined with our processing technology enable us to manufacture top-quality
fishmeal, fish oil and fish feed. Fishmeal is rich in protein with a balanced amino acid profile
which makes it an ideal ingredient in fish feed. Fish oil is a great source of energy and contains
the essential and health beneficial long-chain omega-3 fatty acids. The fish material comes
mainly from Faroese vessels and fish processing factories, as well as foreign vessels operating
in the North Atlantic.
As producers of our own high-quality fish feed ingredients, we are uniquely positioned to
select the very best fishmeal and fish oil for our feed production. The fish species which we
transform to fishmeal and fish oil constitutes a part of the natural food sources which wild
salmon eats. Thus, the main ingredients in our dietary feed composition provides a foundation
for healthy and efficient growth for our farmed salmon.
BROODSTOCK
Native Faroese broodstock programme
The broodstock programme in the Faroe Islands is part of our strategy to maximize biosecuri-
ty, breeding and genetics, and to have the longest integrated value chain in the industry. The
programme enables accelerated development of more resilient roe – reducing risks of disease
in farmed salmon – but also protect the intellectual capital in the Faroe Islands, which has been
built up over the years with the programme.
The selective breeding programme uses targeted mating to concentrate the following impor-
tant traits: growth, quality and disease resistance.
A new broodstock facility will be built in Skálavík and finalised in 2026.
Native Hebridean broodstock programme
In Scotland, the Group operates a unique Native Hebridean broodstock programme producing
pure Scottish Island salmon, originally bred from wild stock and farmed only in Hebridean
waters, which results in a strong, lean and noticeably firmer salmon than other Atlantic salmon.
Fig. 6
FISHMEAL
FISH OIL
FISH FEED
BROODSTOCK
THE VALUE CHAIN
25
ANNUAL REPORT 2022
STRATEGY
Fig. 7 Fig. 8
HATCHERIES
BIOGAS
HATCHERIES
Bakkafrost aims at producing all smolts for release at an average weight of 500 grams by 2024
in the Faroe Islands and by 2026 in Scotland. The benefits are a shorter production time at sea
and reduced biological risk.
Hatcheries in the Faroe Islands
Bakkafrost operates six hatcheries in the Faroe Islands. The hatcheries are in environments
with large quantities of clean fresh water, where no villages or industries are competing for
the water. This is important, as there is no ground water available in the Faroe Islands. The
hatcheries are equipped with closed water circulation systems with biofilters, and the fish
tanks are inside buildings to limit the effect of external factors, such as weather, birds, and
other pollution.
In September 2021, Bakkafrost announced the plan to increase the capacity of the hatcheries
to a total of 85,600m
3
. This will be achieved by increasing the capacity of our current hatcher-
ies in Norðtoftir, Glyvradalur and Viðareiði and building a new hatchery in Ónavík.
Hatcheries in Scotland
In Scotland, the Bakkafrost Group intends to replace the current hatcheries with three large
and modern hatcheries with RAS technology over the next years. These hatcheries will be
around the same size as the hatchery at Strond in the Faroe Islands. The Applecross hatchery
will have a capacity of 10 million smolts at 500 grams and will start production in 2023 and
will be in full operation in 2025. The other two new hatcheries will be in the northern part and
in the southern part of operations in Scotland.
BIOGAS
The biogas plant uses waste products from our farms and other fish and dairy farmers to pro-
duce renewable energy and fertilizer. The process works by breaking down the organic matter
in the biomass into smaller molecules through anaerobic digestion. Upon completion of this
process, the biomass is converted into biogas, namely carbon dioxide and methane (the latter
which is used for renewable energy production), and digestate (which is used as fertilizer).
• 2.4 % of Faroe Island’s renewable electricity production in 2022 came from our biogas plant
• Capacity to convert up to 45-50,000 tonnes annually of waste
• Providing heat for 400 homes and electricity for 1,900 homes
• 30,345 tonnes of natural liquid fertilizer produced in 2022
THE VALUE CHAIN
26
ANNUAL REPORT 2022
STRATEGYSTRATEGY
Fig. 9 Fig. 10
FARMING
FSV
FARMING
The main goal of the farming operation is to produce salmon at a low feed conversion rate
and with low mortality. To reach this goal, Bakkafrost believes the environment is important
and therefore does its utmost to create and maintain a healthy environment for the fish. Fol-
lowing national regulations, external agencies undertake environmental investigations at each
farming location each year. The result of each survey becomes input data used in the tactical
planning to achieve the best environmental and sustainable farming results possible.
The fish are fed several times a day, and the feed consumption is monitored continuously.
Bakkafrost’s salmon farming sites benefit from excellent water quality and circulation due to
strong currents and cool, steady sea temperatures in the Faroe Islands. The operations in Scot-
land, are in the unique natural environment of the West Coast of Scotland and the Hebridean
Islands.
The fish are kept, fed, and nurtured in large sea pens, providing the fish with abundant space
to grow for 14–16 months in the Faroe Islands and for around 16-22 months in Scotland. Dur-
ing this period, the fish grows to a target weight of aprox. 6.3 kg LW in the Faroe Islands and
aprox. 5.9 kg LW in Scotland.
• 19 farming sites in operation across 17 fjords in the Faroe Islands
• 44 farming sites in operation across the West Coast of Scotland and the Hebridean Islands
FARMING SERVICE VESSELS (FSV)
Bakkafrost continually seeks to improve methods for delousing without using any chemicals
and creating lowest possible stress on the salmon. Bakkafrost uses a combination of owned
and leased vessels.
FSV in the Faroe Islands consists of a fleet of seven. Two vessels for smolt transport, two ves-
sels for transportation of fish to harvest and two service vessels are equipped with various
non-medical systems for lice-treatment, systems for net-cleaning and are also equipped to do
other operations.
The new well boat Bakkafossur is 109 meters long and 22 meters wide. It has a capacity of
10,000 m
3
, where the four wells have a total capacity of 7,000 m
3
of seawater, and the fresh-
water tanks have a total capacity of 3,000 m
3
. The vessel can carry 1,000 tons of salmon but
is also equipped with non-medical systems for lice-treatment.
FSV in Scotland consists of a fleet of eight. One vessel for smolt transport, two vessels for
transportation of fish to harvest and five service vessels are equipped with various non-med-
ical systems for freshwater- and lice-treatment and other services. The fleet is leased whereof
one of the farming service vessels is leased from the operation in the Faroes.
THE VALUE CHAIN
27
ANNUAL REPORT 2022
STRATEGY
Fig. 11 Fig. 12
HARVESTING
PROCESSING
HARVESTING
Harvesting in the Faroe Islands
In the Faroe Islands, all Bakkafrost´s fish is harvested at the harvest factories in Glyvrar and
Vágur. The harvest factory in Glyvrar has a daily capacity of around 375 tonnes HOG and the
harvest factory in Vágur has a daily capacity of around 110 tonnes HOG.
The fish is transported from the farming sites to the harvest factory in live fish carriers with
closed seawater systems.
Harvesting in Scotland
The Bakkafrost Group operates two harvest stations, Arnish Point in the North of Scotland,
and Ardyne in the South. The total daily capacity is 206 tonnes HOG and 103 tonnes HOG in
each factory.
Fish are transported from the farming sites to the harvest sites in live fish carriers.
PROCESSING
Processing in the Faroe Islands
The 4,000m
2
VAP factory at Glyvrar has a production capacity of 160 tonnes HOG of val-
ue-added products a day. The VAP factory also has a daily capacity of 4 tonnes for smoked
salmon.
Processing in Scotland
The Bakkafrost Group operates two processing plants, Marybank in the North of Scotland,
Cairndow in the South, and a Smokehouse in Stornoway. The daily production capacity is
51 tonnes HOG of value-added products, and 1 tonsne smoked of products.
As part of the investment plan 2022-2026, Bakkafrost plans to build a new state-of-the art
processing facility in Scotland.
Processing in US
A modern filleting facility in New Jersey which offers a wide range of fresh value-added
products.
Processing in Denmark
A modern canning facility at Munkebo which offers a wide range of products, of which a larger
share is based on salmon and other seafood.
THE VALUE CHAIN
28
ANNUAL REPORT 2022
STRATEGYSTRATEGY
Fig. 13 Fig. 14
PACKAGING
SALES & LOGISTICS
PACKAGING
Bakkafrost has a packaging plant, which is located and integrated into the Glyvrar processing
facility. The packaging plant has a capacity to produce polystyrene boxes for the fresh salmon,
both for sea and air freight equivalent to 70,000 tonnes of salmon.
SALES AND DISTRIBUTION
The most important markets are the European, US, and Chinese markets. As a rule, the whole
fish from the Faroe Islands is sold on the spot market, while the whole fish from Scotland is
sold both on the spot market and on long-term contracts.
The distribution network is based on transportation by ship, truck and/or train to Europe and
by plane to the US and China. Bakkafrost can distribute both fresh and frozen fish to the var-
ious markets.
With the existing distribution network, Bakkafrost can ship products from the Faroe Islands to
the UK within 20 hours by ship and to Denmark within 36 hours. From the UK and Denmark,
the products are distributed by plane to major airports in the US and China within 24 hours.
Bakkafrost is in the process of acquiring a cargo plane, which will be used to transport fresh
salmon directly from the Faroe Islands to the US market within 24 hours. This will reduce car-
bon emission per kg by 40-50% for fresh salmon sold to the US market.
THE VALUE CHAIN
29
ANNUAL REPORT 2022
PERFORMANCE
THE VALUE CHAIN
PERFORMANCE
30
PERFORMANCE
Operational Review
FARMING
Bakkafrost holds sea farming licenses in the north-east and
south parts of the Faroe Islands and licenses in the north-
west of Scotland. The licenses give exclusive right to utilise
a given area of fjords for farming fish. Farming authorities
focus on veterinary and environmental key performing indi-
cators. Yearly reports and plans, approved by the authorities,
are requested to certify the operation.
The Gulf Stream provides stable farming conditions in the
Faroe Islands and Scotland and excellent water quality
throughout the year. The water temperature in the Faroe Is-
lands is steady, with a fluctuation of only 4-5 °C during the
year. The lowest temperatures, approximately 6 °C, are usu-
ally reached in February, and the highest temperatures of
around 10.5 °C are reached in the late summer months. The
water temperature is slightly higher in Scotland, between 7
°C and 14.5 °C.
All farm sites in the Faroe Islands and Scotland are environ-
mentally certified and yearly audited by agencies. Salmon
farming in Scotland is one of the most transparent and highly
regulated farming sectors in the UK. Our sites are regularly
audited by various bodies, including Marine Scotland, Scot-
tish Environmental Protection Agency (SEPA), Fish Health In-
spectorate and Scottish Natural Heritage. Bakkafrost is com-
mitted to operating transparently and sharing data on both
a compulsory and voluntary basis through various channels,
including the Scottish Salmon Producers’ Organisation (SSPO)
and Marine Scotland.
Production plans in the Faroe Islands are approved on a year-
ly basis by both veterinary and environmental authorities.
The biological situation and regulatory system in the Faroe
Islands provide the opportunity to grow salmon with a high-
er-than-average weight, which minimises unit costs, biologi-
cal feed conversion rate and gives best in class performance.
The ideal biological situation is crucial for maintaining low
production costs and maximising returns on invested capital.
COST-CONSCIOUS PRODUCER AND VETERINARY
MODEL
Our farming operation in the Faroe Islands has delivered
strong results in production costs compared to peers.
The objective of the Bakkafrost farming method in the Faroe
Islands is to increase biological and veterinary security and
to support a sustainable and healthy operation by total sep-
aration of salmon generations, vaccination against different
diseases (ISA among others), strict regulation of movement
of equipment and fish and other regulations. This method is
critical to improve fish health and reduce costs.
The farming in Scotland differs in biology and legislation
from the farming in the Faroe Islands. Bakkafrost is adapting
the farming methods in Scotland based on the best practices
from the farming operation in the Faroe Islands combined
with key insights into the specific farming conditions in Scot-
land. The process will take some time to complete. Also, sig-
nificant investments across the value chain are needed.
The farming costs have increased in recent years, partly be-
cause of increased feed and health costs but especially due to
higher costs of large smolt. Following the significant invest-
ments made in the Faroe Islands to enable Bakkafrost’s large
smolt strategy, smolt costs have increased and transcended
into increased total farming costs. Bakkafrost expects the to-
tal farming costs to reduce as the benefits from the larger
smolts and the increased capacity utilisation will fully mate-
rialise. In the Faroe Islands, farming sites have been moved
further out the fjords to more exposed areas, where more
expensive equipment is needed. The plan is also to do so in
Scotland where possible.
OPERATIONAL REVIEW
31
ANNUAL REPORT 2022
PERFORMANCE
Fig. 15
MORTALITY % OF OUTPUT FARMING
Fig. 16
BIOLOGICAL FEED FACTOR FARMING
Fig. 17
AVERAGE HARVEST WEIGHT FARMING (KG LW)
Salmon feed with high marine content, like the diet in the
wild, is used in both the Faroes and Scotland; this results
in relatively high feed costs. However, benefi ts are evident
in higher production effi ciency; this is also impacted by the
high animal welfare standards, which positively impact non-
feed cost elements.
The health costs mainly relate to treatments against sea lice.
Since 2015, Bakkafrost has mainly used non-medical treat-
ments, including freshwater, lukewarm seawater and fl ushing
with clean seawater with ambient temperature. These me-
chanical treatments resulted in elevated mortality, but after
a start-up phase and more experience and better knowledge
of the equipment and the treatment methods, the mortality
level has improved, but Bakkafrost is continuously improving
these mechanical treatment methods.
In addition to this, Bakkafrost is using lumpfi sh and wrasse
to reduce the number of sea lice in the Faroe Islands and
Scotland. These initiatives aim to maintain a sustainable,
cost-conscious farming operation.
INVESTMENTS TO REDUCE BIOLOGICAL RISK,
ENABLE ORGANIC GROWTH AND TURNAROUND
SCOTTISH OPERATION
Bakkafrost has invested more than DKK 6.0 billion since
2015 in all parts of its value chain. The fi ve-year investment
plan from August 2018 amounted to around DKK 3 billion.
Around DKK 2.4 billion has been invested in the last two
years.
Bakkafrost has announced a DKK 6.2 billion investment plan
for 2022-2026 for the Group. The goals for the investment
plan are to reduce the biological risk, enable organic growth
and turn around the operation in Scotland. With these in-
vestments, Bakkafrost will build production capacity of
180,000 tonnes head-on gutted weight and an actual harvest
volume in 2026 of 150,000 tonnes. Also, the investment plan
enables turnaround of the operation in Scotland. A signifi cant
part of the investment plan is dedicated to build hatchery
capacity for large smolt in the Faroe Islands and Scotland.
The operation in the Faroes is self-supplied with smolt and
aims to have an average weight of 500 g for all smolts re-
leased into the sea. Expansions of the hatcheries at Glyvradal
and Norðtoftir are in progress and the expansion in Viðareiði
and a new hatchery at Ónavík will start soon. Once complet-
ed, Bakkafrost will be able to produce more than 23 million
smolts with an average weight of 500 g.
The average release size of smolt in the Faroe Islands has in-
creased from around 120 g in 2014 to around 345 g in 2022,
corresponding to a 188% increase in size.
The investment plan 2022-2026 includes three large hatch-
eries for Scotland, the fi rst being the Applecross hatchery.
Once completed, these hatcheries will enable the production
of more than 18 million smolts of 500 g.
Signifi cant amounts have been invested in new equipment at
Bakkafrost’s farming sites, e.g., new feeding barges, catama-
rans and larger pens.
Bakkafrost has over the years acquired and leased several
vessels, and in 2022 operates 14 vessels, fully capable of
servicing the groups farming operation.
FO
SCT
1
0%
2
0%
3
0%
40%
20192018 2020 2021 2022
1.40
1.30
1.20
1.10
1.00
FO
SCT
20192018 2020 2021 2022
6.00
5.00
4.00
3.00
SCT
FO
20192018 2020 2021 2022
OPERATIONAL REVIEW
32
ANNUAL REPORT 2022
PERFORMANCE
CERTIFICATES
To ensure prime quality, Bakkafrost has implemented a se-
ries of procedures and quality control systems, not only at
our salmon farms and processing plants, but also for our
suppliers. All stages of our Faroese production chain are
Global g.A.P. compliant. Other certifications include ASC, BAP,
HACCP, IFS, GMP+, MSC, ISO9001:2008 and BRC. Bakkafrost
is a member of the Global Salmon Initiative (GSI). GSI focus-
es on three pillars of sustainability: Reducing environmental
impact, increasing social contribution, and maintaining eco-
nomic growth.
Bakkafrost was proud to reach its goal to have all of its farm-
ing sites in the Faroe Islands ASC certified by 2020. The ASC
standard was developed in cooperation with WWF and is
seen as the most stringent standard in the aquaculture indus-
try with requirements regarding fish welfare, sea lice, smolt
production, feed production and the environment.
Farming Scotland holds national and international accredi-
tations and certifications across the value chain, including
Global g.A.P. Farming Scotland, was the first salmon producer
in the EU to be awarded 4-star Best Aquaculture Practice
(BAP) certification for all its marine and processing sites, as
well as the feed suppliers. This is the highest designation in
the BAP third-party certification programme. The processing
facilities have been awarded the highest level of British Re-
tail Consortium (BRC) Accreditation for food safety, process-
ing, and supply chain management.
GEOGRAPHICAL LOCATION
Salmon farms in the Faroe Islands and Scotland are in areas
with attractive qualities for salmon farming in terms of wa-
ter quality, water temperature and circulation. The Faroese
fjords provide separation between locations, which improves
biological control and area management. Relatively short dis-
tances between farming areas and processing facilities and
well-developed infrastructure offer cost-efficient transporta-
tion of both feed and fish on land and at sea.
STRONG CUSTOMER BASE IN ALL MAJOR
MARKETS
By focusing on meeting existing customers’ demands, Bak-
kafrost benefits from its long-term relationships with many
customers. Customer relationships have proven a competi-
tive advantage through product development and marketing.
Over the past many years, Bakkafrost has developed a dif-
ferentiated market strategy. This has ensured Bakkafrost a
good market position in the EU, Asia, US, and Eastern Europe.
VAP
Bakkafrost has long-term experience producing and selling
value added products (VAP). Bakkafrost’s long-term strategy
is that VAP products shall represent around 40% of the Far-
oese harvested volumes. The sales of VAP products stabilise
the Group’s earnings, as the deals are based on fixed-price
contracts. The contract prices are not as volatile as the spot
market prices for fresh salmon. There is a time lag between
the increase in the spot prices and a subsequent increase
in the contract prices for VAP products. On the other hand,
when the spot prices decrease, there is a time lag until the
contract prices drop.
In 2022 40% of the Faroese harvest volumes was used in the
VAP segment. The demand from retail was strong driven by
the disruption by Covid-19 pandemic. The VAP segment pro-
duced 26,747 tonnes in 2022, compared to 22,180 tonnes in
2021. Higher spot prices in 2022 compared to 2021 had a
negative effect on the margins in the VAP segment.
PRODUCTION OF FISHMEAL, OIL AND FEED
Havsbrún – FOF segment – performed very well in 2022, with
both higher raw material sourcing and higher external sale
of fish meal and feed. Havsbrún received 297,814 tonnes of
raw materials in 2022, compared to 152,383 tonnes in 2021.
The production of fishmeal and fish oil depends on sourcing
raw materials. The availability is highly related to the quotas
for the pelagic fishery in the North Atlantic. The raw material
situation will be volatile in the future. However, quotas for
fishing blue whiting have decreased over the last years, but
have increased for 2023.
Besides sourcing wild-caught pelagic fish, Havsbrún also
sourced offcuts from pelagic fish factories in the Faroe Is-
lands. In recent years, processing plants for pelagic species
have been built in the Faroe Islands, increasing access to off-
cuts from this production.
Havsbrún sold 34,667 tonnes of fishmeal externally in 2022,
compared with 16,376 tonnes in 2021. External sale of fish
oil in 2022 was 5,285 tonnes, compared to 41 tonnes in
2021.
Havsbrún sold 127,840 tonnes of feed in 2022, of which 96%
was used internally. In 2021, Havsbrún sold 128,489 tonnes
of feed.
Fig. 18
Smolt – FO Average size – FO
Smolt – SCT Average size – SCT
Million smolt
Average size gram
2016 2017 2018 2019 2020 2021 2022
0
5
10
15
0
100
200
300
400
operational review
33
ANNUAL REPORT 2022
PERFORMANCE
The world’s total fi sh oil production has been relatively sta-
ble for many decades, while the demand for fi sh oil has in-
creased. Therefore, fi sh oil is expected to be a scarce resource
in the future, but decreasing fi sh oil content in the salmon
feed, led by the major producers, will reduce some demand.
Bakkafrost’s strategy is to have a high fi sh oil content in the
feed, resulting in salmon with a high content of omega 3.
PEOPLE
Our most important resource is our employees. For Bakka-
frost to remain a high-performing organisation and expand
our leading market position, it is vital to attract and retain
employees with the right competencies and knowledge.
Therefore, we shall maintain and further strengthen the
focus on HR, work satisfaction, and developing employees’
competencies.
The foundations of our human resource development are
the company culture and the fundamental values of Bakkaf-
rost to be a reliable and responsible partner. Many excellent
results have been achieved during the past years, and we
strive continuously to nurture our company culture.
One of our strategic priorities is to merge the acquired busi-
ness in Scotland with Bakkafrost into “One Company”. Sever-
al workstreams are set up to facilitate collaboration, knowl-
edge sharing, and synthesis of best practices, drawing upon
both organisations' strengths and unique insights. Over time,
company culture and values will also merge, hence becoming
truly “One Company”.
We aim to continuously strengthen our employees' compe-
tencies on all levels in the Group by implementing relevant
training schemes to meet current and future demands for a
qualifi ed workforce. Supporting Bakkafrost’s strategy and se-
curing high standards in our business conduct and creating
the best possible value for our customers is essential for all
training efforts.
Bakkafrost’s training is performed as work-related training,
in-house and external courses, and other forms of training.
It is an ongoing process to develop professional competen-
cies further and develop leadership skills at all levels in the
Group.
We engage and form partnerships with local educational in-
stitutions and experts focusing on health, safety, business,
and commerce education for work-related training, in-house
and external courses, and other forms of training.
In 2022, the number of full-time equivalent employees in the
Bakkafrost Group was 1,778 employees (FO: 1.076, SCT/UK:
600, US: 63, DK: 38 and FR: 1), compared to 1,653 employees
in 2021.
For further information, see our Sustainability Report 2022.
Extruded feed for smolt
Size: 3mm Size: 4mm Size: 6mm Size: 9-12mm
OPERATIONAL REVIEW
34
ANNUAL REPORT 2022
PERFORMANCE
Financial Review
The supply of salmon to the world market decreased by
around 2% in 2022 (2021: 9% increase). The average salmon
spot price in 2022 was DKK 61.29, compared to DKK 42.69
in 2021, an increase of 44%.
The prices for value added products (VAP) have increased
during 2022 and are on a higher level than in 2021. Impor-
tant for the result for the VAP segment are also the raw ma-
terial prices, as the VAP segment purchases its raw material
based on the salmon spot market every week. In 2022, the
average price was higher compared to 2021. Therefore, the
VAP segment made a lower profi t in 2022. The value-added
products are typically sold on fi xed-price contracts with a
duration of 6-12 months, where the prices for value added
products follow the trend on the spot market with a time lag.
The average feed price during 2022 was higher than the av-
erage feed price in 2021. The reason for the fl uctuations in
the feed price is the market situation for fi sh oil and fi sh-
meal, which are the main ingredients in Bakkafrost’s salm-
on feed. The market situation for salmon feed ingredients is
negatively affected by the war in Ukraine. The fl uctuations
in the feed prices will be refl ected in the production costs
for salmon.
The Bakkafrost Group generated gross operating revenues of
DKK 7,130 million in 2022, compared to DKK 5,554 million
in 2021. The increase in revenue is mainly due to higher
prices in 2022. Harvested volumes of salmon decreased 6%
in 2022, compared to 2021, mostly coming from lower har-
vested volumes in Scotland. The volumes sold as value added
products increased 21% in 2022. The Group harvested a total
of 90,603 tonnes gutted weight, compared to 96,889 tonnes
in 2021. The external revenue from sales of fi shmeal and fi sh
oil increased in 2022, compared to 2021. The external sales
of fi shmeal and fi sh oil increased 143%.
Income statement
DKK 1,000 2022 2021
Operating revenue 7,129,967 5,553,849
Purchase of goods -2,756,273 -1,692,501
Change in inventory and bio-logical assets (at cost) 666,550 -178,060
Salary and personnel expenses -831,679 -728,423
Other operation expenses -1,990,299 -1,632,114
Depreciation -537,480 -530,434
Other income 24,379 28,877
Operational EBIT 1,705,165 821,194
Fair value adjustments of biological assets 278,392 434,868
Income from associates 57,597 30,112
Revenue tax -215,001 -141,489
EBIT 1,826,153 1,144,685
EBT 1,690,335 1,137,662
Taxes -346,005 -173,626
Profi t or loss for the period 1,344,330 964,036
Operating revenue 7,129,967 5,553,849
Purchase of goods -2,756,273 -1,692,501
Change in inventory and bio-logical assets (at cost) 666,550 -178,060
Salary and personnel expenses -831,679 -728,423
Other operation expenses -1,990,299 -1,632,114
Depreciation -537,480 -530,434
Other income 24,379 28,877
Operational EBIT 1,705,165 821,194
Fair value adjustments of biological assets 278,392 434,868
Income from associates 57,597 30,112
Revenue tax -215,001 -141,489
EBIT 1,826,153 1,144,685
EBT 1,690,335 1,137,662
Taxes -346,005 -173,626
Profi t or loss for the period 1,344,330 964,036
FINANCIAL REVIEW
35
ANNUAL REPORT 2022
PERFORMANCE
Operational EBIT was DKK 1,705 million in 2022, compared
to DKK 821 million in 2021. A positive fair value adjustment
of the Group’s biological assets has been recognized in 2022,
amounting to DKK 278 million, compared to an adjustment of
DKK 435 million in 2021. The positive fair value adjustment
mostly relates to higher forward prices.
In 2022, the Group’s associated companies made a net result
to Bakkafrost of DKK 58 million, compared to DKK 30 million
in 2021.
Net interest expenses amounted to DKK -65 million, com-
pared to DKK -41 million in 2021. Net currency effects
amounted to DKK -69 million, compared to DKK 39 million
in 2021.
Net taxes amounted to DKK -346 million, compared to DKK
-174 million in 2021.
The consolidated net profit totalled DKK 1,344 million in
2022, compared to DKK 964 million in 2021. Earnings per
share totalled DKK 22.75 in 2022, compared to DKK 16.32
in 2021.
STATEMENT OF FINANCIAL POSITION
The Group’s total assets as at end 2022 amounted to DKK
16,882 million, compared to DKK 14,628 million at the end
of 2021.
The Group’s intangible assets amounted to DKK 4,509 mil-
lion at the end of 2022, compared to DKK 4,496 million at
the end of 2021. Intangible assets comprise primarily of the
acquisition of Bakkafrost Scotland Ltd., the fair value of ac-
quired farming licences in Scotland and the Faroe Islands.
Property, plant, and equipment amounted to DKK 5,647 mil-
lion at the end of 2022, compared to DKK 4,889 million at
the end of 2021. In 2022, Bakkafrost made investments in
PP&E amounting to DKK 1,236 million, compared to DKK
1,116 million in 2021. The most significant investments,
Bakkafrost carried out in 2022, were in hatcheries, a new
FSV and a new feed line. Other investments relate mainly to
maintenance investments.
Right of use assets amounted to DKK 439 million at the end
of 2022, compared to DKK 302 million at the end of 2021.
Investments in associated companies and stocks and shares
amounted to DKK 234 million at the end of 2022, compared
to DKK 149 million at the end of 2021. The increase in finan-
cial assets relates to the result from the associated compa-
nies and FF Skagen A/S changing classification to an associ-
ated company during 2022.
Bakkafrost had DKK 0 million in long-term receivables at the
end of 2022, compared to DKK 8 million at the end of 2021.
Deferred tax assets amounted to DKK 336 million at the end
of 2022, compared to DKK 215 million at the end of 2021.
The Group’s carrying amount (fair value) of biological assets
amounted to DKK 2,938 million at the end of 2022, com-
pared to DKK 2,448 million at the end of 2021. Included in
the carrying amount of the biological assets is a fair value
adjustment amounting to DKK 883 million, compared to DKK
605 million at the end of 2021.
The Group’s total inventories amounted to DKK 1,074 mil-
lion as at year-end 2022, compared to DKK 709 million as
at year-end 2021. The inventory primarily represents Havs-
brún’s inventory of fishmeal, fish oil and fish feed in addition
to finished VAP products, packing materials and other raw
materials.
The Group’s total receivables amounted to DKK 985 million
as at year-end 2022, compared to DKK 902 million as at
year-end 2021.
Cash and cash equivalents at year-end 2022 amounted to
DKK 720 million, compared to DKK 509 million at year-end
2021.
The Group’s equity at the end of 2022 was DKK 10,396 mil-
lion, compared to DKK 9,348 million at the end of 2021.
The increase in equity is primarily due to the increase of the
positive result for 2022.
FINANCIAL REVIEW
36
ANNUAL REPORT 2022
PERFORMANCE
Cash fl ow
The total cash fl ow from operations in 2022 was DKK
1,202 million, compared to DKK 1,125 million in 2021. The
cash fl ow from operations in 2022 is primarily due to posi-
tive results. Paid taxes and change in inventory and receiva-
bles had a negative effect on the cash fl ow from operations
in 2022. Cash fl ow from investment activities amounted to
DKK -1,255 million, compared to DKK -1,112 million in 2021.
For 2022, cash fl ow from fi nancing amounted to DKK
263 million, compared to DKK 30 million for 2021. The
change in long-term interest-bearing debt of DKK 735 mil-
lion had a positive effect on the cash fl ow from fi nancing in
2022. Other 2022 fi gures include dividend paid of DKK -303,
lease payments of DKK -117 and fi nancial expenses of DKK
-68 million.
With the established credit facilities, the Group’s liquidity
and fi nancial strength is considered good. Bakkafrost had
undrawn credit facilities of approximately DKK 2,542 million
at the end of 2022.
DKK 1,000 2022 2021
Cash fl ow from operations 1,201,856 1,124,554
Cash fl ow from investments -1,254,597 -1,112,239
Cash fl ow from fi nancing 263,187 29,903
Cash and cash equivalents – opening balance 509,157 466,939
Cash and cash equivalents – closing balance total 719,603 509,157
Cash fl ow from operations 1,201,856 1,124,554
Cash fl ow from investments -1,254,597 -1,112,239
Cash fl ow from fi nancing 263,187 29,903
Cash and cash equivalents – opening balance 509,157 466,939
Cash and cash equivalents – closing balance total 719,603 509,157
DKK 1,000 2022 2021
Intangible assets 4,508,704 4,495,726
Property, plant and equipment 6,085,706 5,190,883
Financial assets 570,229 372,575
NON-CURRENT ASSETS 11,164,639 10,059,184
Inventory 4,012,829 3,157,596
Receivables 984,501 902,231
Cash and cash equivalents 719,603 509,157
CURRENT ASSETS 5,716,933 4,568,984
ASSETS 16,881,572 14,628,168
Equity 10,395,813 9,347,545
Deferred taxes 1,825,873 1,590,034
Long-term interest-bearing debt 3,383,289 2,634,968
Long-term leasing debt 353,355 245,753
Derivatives 0 3,207
Non-current liabilities 5,562,517 4,473,962
Derivatives 0 4,602
Trade payables 478,750 510,357
Current tax liabilities 237,780 170,997
Short-term leasing debt 106,215 87,668
Other current liabilities 100,497 33,037
Current liabilities 923,242 806,661
Total liabilities 6,485,759 5,280,623
EQUITY AND LIABILITIES 16,881,572 14,628,168
Intangible assets 4,508,704 4,495,726
Property, plant and equipment 6,085,706 5,190,883
Financial assets 570,229 372,575
NON-CURRENT ASSETS 11,164,639 10,059,184
Inventory 4,012,829 3,157,596
Receivables 984,501 902,231
Cash and cash equivalents 719,603 509,157
CURRENT ASSETS 5,716,933 4,568,984
ASSETS 16,881,572 14,628,168
Equity 10,395,813 9,347,545
Deferred taxes 1,825,873 1,590,034
Long-term interest-bearing debt 3,383,289 2,634,968
Long-term leasing debt 353,355 245,753
Derivatives 0 3,207
Non-current liabilities 5,562,517 4,473,962
Derivatives 0 4,602
Trade payables 478,750 510,357
Current tax liabilities 237,780 170,997
Short-term leasing debt 106,215 87,668
Other current liabilities 100,497 33,037
Current liabilities 923,242 806,661
Total liabilities 6,485,759 5,280,623
EQUITY AND LIABILITIES 16,881,572 14,628,168
The Group’s total non-current liabilities amounted to
DKK 5,563 million at the end of 2022, compared to DKK
4,474 million at the end of 2021. Deferred taxes amounted
to DKK 1,826 million, compared to DKK 1,590 million at the
end of 2021.
Long-term debt was DKK 3,383 million at the end of 2022,
compared to DKK 2,635 million at the end of 2021.
At the end of 2021, the Group’s total current liabilities were
DKK 923 million, compared to DKK 807 million at the end
of 2021.
Trade payable amounted to DKK 479 million, compared to
DKK 510 million at the beginning of the year.
Long- and short-term leasing debt amounted to DKK 460 mil-
lion at the end of 2022, compared to DKK 333 million at the
end of 2021.
Bakkafrost’s equity ratio was 62% at the end of 2022, com-
pared to 64% at the end of 2021.
FINANCIAL REVIEW
37
ANNUAL REPORT 2022
PERFORMANCE
Farming Segment
– Faroe Islands (FO)
The farming FO segment produces high-quality
Atlantic salmon from roe to harvest size salmon.
The salmon is sold to fresh fi sh markets globally
and to the internal VAP production. The farming
sites are in the Faroe Islands.
VOLUMES
The FO farming segment harvested 66,686 tonnes gut-
ted weight in 2022, compared to 67,217 tonnes gutted
weight in 2021. The expectation for 2023 is the same as for
2022 - 68,000 tonnes gutted weight.
The FO farming segment released 14.4 million smolts into
the sea in 2022. The smolt release in 2021 was 14.4 mil-
lion smolts. The expectation for 2023 is higher than for
2022 - 16 million smolts.
FINANCIAL PERFORMANCE
For 2022, costs of DKK 0 million were related to inci-
dent-based mortality compared to DKK 45 million for 2021.
Total revenues for FO farming segment in 2022 amounted to
DKK 4,633 million, compared to DKK 3,477 million in 2021,
a change of 33%. Gross external operating revenues for FO
farming segment increased to DKK 3,242 million in 2022,
from DKK 2,665 million in 2021 even though the external
volumes decreased in 2022, compared to 2021. Because of
both higher prices and higher volumes to the VAP segment
the internal revenue increased in 2022 from DKK 811 million
in 2021 to DKK 1,391 million in 2022.
In 2022, operational EBIT totalled DKK 1,913 million, com-
pared to DKK 904 million in 2021. This corresponds to an
operational EBIT of DKK 28.68 (NOK 38.47) per kg gutted
weight in 2022, compared to DKK 13.45 (NOK 18.37) per kg
gutted weight in 2021.
YTD YTD
DKK 1,000 2022 2021 Change
Financial
Total revenue 4,632,581 3,476,725 33%
EBIT 1,872,176 1,302,738 44%
Operational EBIT 1,912,534 903,820 112%
Operational EBIT/kg (DKK) 28.68 13.45 113%
Operational EBIT margin 41% 26%
Volumes
Harvested volumes (tgw) 66,686 67,217 -1%
Smolts released (thousand) 14,417 14,427 0%
Total revenue 4,632,581 3,476,725 33%
EBIT 1,872,176 1,302,738 44%
Operational EBIT 1,912,534 903,820 112%
Operational EBIT/kg (DKK) 28.68 13.45 113%
Operational EBIT margin 41% 26%
Harvested volumes (tgw) 66,686 67,217 -1%
Smolts released (thousand) 14,417 14,427 0%
FARMING SEGMENT – FAROE ISLANDS (FO)
38
ANNUAL REPORT 2022
PERFORMANCE
Fig. 22
SMOLT RELEASE – THOUSAND SMOLTS
Fig. 21
HARVESTED VOLUME (TGW) PER QUARTER
Fig. 23
HARVEST VOLUMES (TGW)
Fig. 19
TOTAL REVENUE (DKK 1,000) PER QUARTER
1,500,000
1,000,000
500,000
20192018 2020 2021 2022
2
018
2
019
2
020
2
021
2
022
12,500
12,700
14,400
14,400
14,300
2
018
2
019
2
020
2
021
2
022
44,600
57,200
50,700
66,686
67,200
Fig. 20
OPERTIONAL EBIT/KG (DKK) PER QUARTER
50.00
40.00
30.00
20.00
10.00
20192018 2020 2021 2022
25,000
5000
10,000
15,000
20,000
20192018 2020 2021 2022
farMing SegMent – faroe iSlanDS (fo)
39
ANNUAL REPORT 2022
PERFORMANCE
Farming Segment
– Scotland (SCT)
Bakkafrost’s farming segment in Scotland is com-
mitted to producing the fi nest quality Scottish
Salmon with Scottish Provenance and full trace-
ability. The Scottish farming segment has sites
across the West Coast of Scotland and Hebridean
Islands and is exporting globally.
VOLUMES
The SCT farming segment harvested 23,917 in 2022, com-
pared to 29,672 tonnes gutted weight for the full year 2021.
The expectation for 2023 is higher than for 2022 – 30,000
tonnes gutted weight.
11,0 million smolts were transferred in 2022, compared to
11,1 million smolts for 2021. The expectation for 2023 is
lower than for 2022 – 9.6 million smolts.
FINANCIAL PERFORMANCE
For 2022, costs of DKK 283 million relate to incident-based
mortality, compared to DKK 262 million for 2021.
In 2022, the operating revenue for the SCT farm ing segment
was DKK 1,442 million, compared to DKK 1,455 million in
2021.
Operational EBIT amounted to DKK -298 million, compared
to DKK -249 million in 2021. This corresponds to an opera-
tional EBIT of DKK -12.44 (NOK -16.88) per kg gutted weight,
compared to DKK -8.41 (NOK -11.49) per kg gutted weight
in 2021.
YTD YTD
DKK 1,000 2022 2021 Change
Financial
Total revenue 1,441,566 1,455,391 -1%
EBIT -189,442 -353,669 46%
Operational EBIT -297,606 -249,497 -19%
Operational EBIT/kg (DKK) -12.44 -8.41 -48%
Operational EBIT margin -21% -17%
Volumes
Harvested volumes (tgw) 23,917 29,672 -19%
Smolts released (thousand pcs) 11,008 11,108 -1%
Total revenue 1,441,566 1,455,391 -1%
EBIT -189,442 -353,669 46%
Operational EBIT -297,606 -249,497 -19%
Operational EBIT/kg (DKK) -12.44 -8.41 -48%
Operational EBIT margin -21% -17%
Harvested volumes (tgw) 23,917 29,672 -19%
Smolts released (thousand pcs) 11,008 11,108 -1%
FARMING SEGMENT – SCOTLAND (SCT)
40
ANNUAL REPORT 2022
PERFORMANCE
Fig. 24
TOTAL REVENUE (DKK 1,000) PER QUARTER
Fig. 26
HARVEST VOLUME (TGW) PER QUARTER
Fig. 25
OPERATIONAL EBIT/KG (DKK) PER QUARTER
600,000
400,000
200,000
2020 2021 2022
2020 2021 2022
-5.00
5.00
10.00
0.00
-10.00
-15.00
-20.00
-25.00
-30.00
-35.00
-40.00
-45.00
12,000
10,000
8,000
6,000
4,000
2,000
2020 2021 2022
Fig. 28
HARVEST VOLUMES (TGW)
Fig. 27
SMOLT RELEASE – THOUSAND SMOLTS
2
019
2
020
2
021
2
022
5,700
10,400
11,008
11,100
2
019
2
020
2
021
2
022
7,900
35,000
23,917
29,700
FARMING SEGMENT – SCOTLAND (SCT)
41
ANNUAL REPORT 2022
PERFORMANCE
VAP Segment
The VAP (value added products) segment produc-
es skinless and boneless portions of salmon in
the Faroe Islands. The main market for the VAP
products is Europe with increasing sales in other
markets. The VAP products are sold on long-term
fi xed-price contracts.
YTD YTD
DKK 1,000 2022 2021 Change
Financial
Total revenue 1,703,637 1,195,195 44%
EBIT -50,824 119,521 -143%
Operational EBIT -50,824 119,521 -143%
VAP - Operational EBIT/kg (DKK) -1.90 5.39 -135%
Operational EBIT margin -3% 10%
Volumes
Farming FO transferred to VAP (tgw) 26,401 21,974 20%
VAP produced (tgw) 26,747 22,180 21%
Harvested volumes used in VAP production 40% 33%
Harvested volumes sold fresh/frozen 60% 67%
Total revenue 1,703,637 1,195,195 44%
EBIT -50,824 119,521 -143%
Operational EBIT -50,824 119,521 -143%
VAP - Operational EBIT/kg (DKK) -1.90 5.39 -135%
Operational EBIT margin -3% 10%
Farming FO transferred to VAP (tgw) 26,401 21,974 20%
VAP produced (tgw) 26,747 22,180 21%
Harvested volumes used in VAP production 40% 33%
Harvested volumes sold fresh/frozen 60% 67%
VOLUMES
Bakkafrost has a long-term strategy of producing 40% of its
harvested salmon in the Faroe Islands as value added prod-
ucts. The output is predominantly portions for the retail mar-
ket in Europe, but some sales are also to the US retail market.
The strategy with value added products is – in addition to
increasing the Group’s earnings – to reduce the volatility in
Bakkafrost Group’s net earnings, as these products are sold
under different fi xed-price contracts for a period of up to
12 months. As there is a time lag between the movement
in fresh salmon prices and the contract prices, Bakkafrost
normally makes a profi t in the VAP segment, when the spot
prices are decreasing and vice versa, when the spot prices
increase during a period.
In 2022, 40% of the total Faroese harvested volumes went to
the production of VAP products, compared to 33% in 2021.
The VAP production in 2022 was 26,747 tonnes gutted
weight, compared to 22,180 tonnes gutted weight in 2021.
FINANCIAL PERFORMANCE
The contract prices in 2022 have increased at the same rate
as the spot prices but were achieved with a time delay com-
pared to spot prices. The contract prices were on a higher
level than in 2021. The VAP segment’s operating revenue
amounted to DKK 1,704 million in 2022, compared to DKK
1,195 million in 2021, an increase of 44%.
Operational EBIT in 2022, which is EBIT adjusted for pro-
vision for onerous contracts etc., totalled DKK -51 million,
compared to DKK 120 million in 2021. This corresponds to
an operational EBIT of DKK -1.90 (NOK -2.58) per kg gut-
ted weight, compared to DKK 5.39 (NOK 7.36) per kg gutted
weight in 2021.
VAP SEGMENT
42
ANNUAL REPORT 2022
PERFORMANCE
Fig. 33
DISTRIBUTION OF HARVESTED VOLUMES (%)
Fig. 32
PRODUCT WEIGHT OF VAP (TGW)
Fig. 29
TOTAL REVENUE (DKK 1,000) PER QUARTER
Fig.31
VAP VOLUME (TGW) PER QUARTER
Fig. 30
OPERATIONAL EBIT/KG (DKK) PER QUARTER
600,000
400,000
200,000
20192018 2020 2021 2022
0.00
-5.00
-10.00
-15.00
-20.00
5.00
10.00
15.00
20192018 2020 2021 2022
4,000
3,000
2,000
1,000
5,000
6,000
7,000
20192018 2020 2021 2022
2
018
2
019
2
020
2
021
2
022
8,400
16,700
23,900
26,747
22,000
Harvested volumes used in Vap production
Harvested volumes sold fresh/frozen
100%
75%
50%
25%
2017 2018 2020 2021 2022
VAP SEGMENT
43
ANNUAL REPORT 2022
PERFORMANCE
FOF Segment
The FOF (fi shmeal, -oil and feed) segment pro-
duces fi shmeal, fi sh oil and fi sh feed. Most of the
production is used for fi sh feed, which is used
internally in the farming segment. The quality of
the fi sh feed is important to the quality of the
salmon from Bakkafrost. Fishmeal, fi sh oil and
fi sh feed are also sold externally.
DKK 1,000 2022 2021 Change
Financial
Total revenue 2,433,494 1,659,351 47%
EBIT 463,450 305,988 51%
EBITDA 436,150 306,227 42%
FOF - EBITDA margin 18% 18%
Volumes (tonnes)
Total Feed sold 127,840 128,489 -1%
- Feed internal sale FO 79,262 94,163 -16%
- Feed internal sale SCT 43,856 30,096 46%
- Feed external sale 4,722 4,230 12%
Total Feed sold 127,840 128,489 -1%
Fishmeal external sale 34,667 16,376 112%
Fish oil external sale 5,285 41 12790%
Received raw material 297,814 152,383 95%
Fishmeal production 65,395 34,962 87%
Fish oil production 23,862 8,124 194%
Financial
Total revenue 2,433,494 1,659,351 47%
EBIT 463,450 305,988 51%
EBITDA 436,150 306,227 42%
FOF - EBITDA margin 18% 18%
Volumes (tonnes)
Total Feed sold 127,840 128,489 -1%
- Feed internal sale FO 79,262 94,163 -16%
- Feed internal sale SCT 43,856 30,096 46%
- Feed external sale 4,722 4,230 12%
Total Feed sold 127,840 128,489 -1%
Fishmeal external sale 34,667 16,376 112%
Fish oil external sale 5,285 41 12790%
Received raw material 297,814 152,383 95%
Fishmeal production 65,395 34,962 87%
Fish oil production 23,862 8,124 194%
VOLUMES
The FOF segment, has over the last couple of years had a sta-
ble raw material intake for fi shmeal and fi sh oil production,
but in 2021 there was a decline in the raw material intake.
In 2022 the raw material intake has increased to the same
level again. The produced fi shmeal and oil were partly used
internally for feed production, and partly exported. In 2022,
the FOF segment sourced 297,814 tonnes of raw material,
compared to 152,383 tonnes in 2021, which corresponds to
an increase of 95%. The raw material intake depends on off-
cuts from the pelagic industry as well as fi shery in the North
Atlantic and available species of fi sh.
The production of fi shmeal in 2022 was 65,395 tonnes, com-
pared to 34,962 tonnes in 2021, an increase of 87%. The pro-
duction of fi sh oil in 2022 was 23,862 tonnes, compared to
8,124 tonnes in 2021, an increase of 194%. The production
of fi sh oil varies, depending on the species of fi sh available
for production and the timing of catches. The expectation for
2023 is the same as for 2022.
The FOF segment sold 127,840 tonnes of feed in 2022,
compared to 128,489 tonnes in 2021. Bakkafrost used
123,118 tonnes of sold feed in 2022 internally, correspond-
ing to 96%. The internal use in 2021 was 124,259 tonnes,
corresponding to 97%. The expectation for 2023 is the same
as for 2022 130,000 tonnes.
FINANCIAL PERFORMANCE
Total revenues for the FOF segment in 2022 amounted to
DKK 2,433 million, compared to DKK 1,659 million in 2021,
an increase of 47%.
The external operating revenue for the FOF segment amount-
ed to DKK 743 million in 2022, compared to DKK 238 mil-
lion in 2021. The increase in external revenue from 2021 to
2022 was mainly due to higher external sale of fi sh feed and
fi shmeal.
The internal revenue in 2022 amounted to DKK 1,691 mil-
lion, compared to DKK 1,421 million in 2021. The internal
revenue comprises the sales of feed to Bakkafrost’s farming
activities, both in Scotland and the Faroe Islands
EBITDA was DKK 436 million in 2022, compared to DKK
306 million in 2021, and the EBITDA margin was 17,9% in
2022, compared to 18,5% in 2021.
FOF SEGMENT
44
ANNUAL REPORT 2022
PERFORMANCE
Fig. 37
FISH FEED PRODUCTION VOLUMES (TONNES)
Fig. 38
SOURCING OF RAW MATERIAL (TONNES)
Fig. 34
TOTAL EBITDA (DKK 1,000) PER QUARTER
Fig. 35
SOLD FEED TONNES PER QUARTER
Fig. 36
EBITDA MARGIN (%) PER QUARTER
140,000
40,000
20,000
60,000
80,000
100,000
120,000
20192018 2020 2021 2022
50,000
10,000
20,000
30,000
40,000
20192018 2020 2021 2022
30%
10%
20%
20192018 2020 2021 2022
2
018
2
019
2
020
2
021
2
022
80,100
99,200
113,700
127,830
128,090
2
018
2
019
2
020
2
021
2
022
302,465
278,665
283,307
297,814
152,383
FOF SEGMENT
45
ANNUAL REPORT 2022
PERFORMANCE
FOF SEGMENT
46
ANNUAL REPORT 2022
PERFORMANCE
Market Review
SEAFOOD CONSUMPTION
In 2020, capture fisheries and aquaculture are estimated to
be about 178 million tons, of which roughly 157 million tons
were utilized as food. This corresponds to a per capita con-
sumption of seafood close to 20 kg (live weight equivalent).
The drop in both catch, more limited production growth and
consumption must be seen in relation to and a direct result
of the contraction of demand caused by the Covid-19 pan-
demic. While estimates suggest an increase in consumption
in 2021, the high price of fish products in 2022, compromis-
es future growth for the aquaculture segment.
Salmon and trout became the most important commodity
traded in value terms in 2013, and in 2022 the specie ac-
counted for about 17 per cent of the total value of interna-
tionally traded fish products – with a total export value close
to 21 bn EUR. Shrimps and prawns came at a close 2nd place,
just above 20 bn EUR, followed by groundfish (hake, cod,
haddock and Alaska pollock) and tuna.
Fig. 39
WORLD SEAFOOD PRODUCTION (FOR HUMAN CONSUMPTION) AND CONSUMPTION PER CAPITA.
-
5
10
15
20
120
125
130
135
140
145
150
155
160
165
kilo/capita
million tonnes
2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E
World seafood for human consumption Per capita - From Fisheries Per capita - From Aquaculture
Source: Kontali, FAO
MARKET REVIEW
47
ANNUAL REPORT 2022
PERFORMANCE
MARKET TRENDS IN 2022 – ATLANTIC SALMON
Worldwide, the supply of farmed Atlantic salmon fell by 2%
in 2022 to 2,83 million tons wfe following strong supply
growth the previous year and demand recovering following
the COVID-19 pandemic. Russia's attack on Ukraine and its
continued warfare and occupation have had far-reaching so-
cial and global economic consequences.
Major disruptions to logistics and logistic costs, price shocks
to most major protein resources, a prolonging of the pan-
demic-driven supply shortage for major categories of com-
modities, spare parts, and not least - a European energy cri-
sis, with ripple effects also into other continents. Probably,
energy shortage is an issue that we would have seen coming
but expedited and escalated by the war. This has led to the
most significant increase in salmon production costs seen in
at least a decade.
Coupled with increases in interest rates, and food and hous-
ing inflation, these effects of both the pandemic and the war
have impacted - and will continue to impact consumer be-
havior and choices in the seafood segment. For salmon, there
are both drivers suggesting strong reliance versus competing
categories, but also certain threats of downtrading to cheap-
er proteins - in times such as we are facing.
Despite significant uncertainty, the good, old, universal driv-
ers for supply, demand and price development on salmon
- are fully operating. 2022 has been characterized by two
distinct periods; January-July, with a decline in market sup-
ply of close to 6 %, and August-December, for which supply
growth is estimated to be slightly higher than 4 %. These
two periods had quite different pricing situations. In 2022
most salmon-producing regions experienced issues that af-
fect growth and growth opportunities, being of a biological
kind - or the regulatory eye of the needle getting tighter and
tighter.
European spot prices (Nasdaq 3-6 kg) for Atlantic salmon in
2022 ended on average just above 8,1 EUR per kg (+40%). Ad-
justed for inflation of 8,3 % in the Euro area – price achieve-
ment in real terms is on a similar level as peak during 2016.
Fig. 40
PER CAPITA CONSUMPTION OF FARMED ATLANTIC SALMON FOR SELECTED MARKETS.
Fig. 41
RELATIVE CHANGE IN GLOBAL SUPPLY OF ATLANTIC SALMON AND EUROPEAN SPOT PRICES FOR FRESH
ATLANTIC SALMON
2013 2014 2015 2016 2017 2018 2019 2020 2022E2021E
0,5
1,0
1,5
2,0
2,5
3.0
EU &
UK
USA
Russia
Japan
Change in global
market supply of
farmed Atlantic
salmon from the
previous year
Change in European
spot prices - fresh
Atlantic salmon
(Nasdaq 3-6 kg in
NOK) from the
previous year
100%
80%
60%
40%
20%
0%
-20%
-40%
-60%
2018 2019 2020 20212017 2022
Source: Kontali, FAO
MARKET REVIEW
48
ANNUAL REPORT 2022
PERFORMANCE
Source: Kontali, FAO
US MARKET
Despite the US being heavily affected by the COVID-19 pan-
demic, both in 2020 and 2021, the supply and consumption
of Atlantic salmon have continued to grow at an impressive
rate – both measured in volume and value. For the first time,
2022 represents a market size exceeding 650 thousand tons
wfe for Atlantic salmon only.
A US population of 332 million and consumption of
652,000 tons wfe in 2022 correspond to a per capita con-
sumption of approx. 2.0 kg wfe, indicating about 6-7 meals
per capita yearly. Salmon was the second most consumed
seafood specie by US consumers, while shrimp still firmly
holds the top spot.
Average export prices for Chilean salmon fillets (approx-
imately 35-40% of the total US market) increased from
10,30 USD/kilogram in 2021 to 12,10 USD/kilogram in 2022
- corresponding to an increase of 17%. This illustrates the
strong demand growth in the US market.
Fig. 42
SUPPLY OF ATLANTIC SALMON TO US MARKET
Tonnes WFE
Other
USA
United Kingdom
Faroe Islands
Norway
Canada
Chile
100
,
00
0
4
00
,
00
0
3
00
,
00
0
2
00
,
00
0
6
00
,
00
0
7
00
,
00
0
5
00
,
00
0
202
1E
202
2E
201
3
201
4
201
5
201
6
201
7
201
8
201
9
2020
Fig 42
SUPPLY OF ATLANTIC SALMON IN THE US MARKET
Country 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E
Chile 191,600 214,700 224,100 217,300 220,400 267,200 284,300 325,100 349,600 362,000
Canada 77,400 55,000 92,900 100,900 92,100 93,800 94,300 92,900 104,300 88,800
Norway 27,000 39,900 51,200 55,700 68,400 67,300 68,300 69,100 82,900 99,300
Faroe Islands 16,400 17,100 14,700 16,900 14,800 12,800 18,500 14,400 20,800 23,300
United Kingdom 16,100 20,400 16,300 12,700 18,000 16,100 20,300 11,500 17,100 9,200
USA 10,100 16,200 13,800 7,700 13,100 7,300 8,100 8,800 6,200 3,500
Other 11,000 10,400 14,600 16,100 19,200 22,300 29,400 40,500 54,300 65,600
Total 349,600 373,700 427,600 427,300 446,000 486,800 523,200 562,300 635,200 651,700
MARKET REVIEW
49
ANNUAL REPORT 2022
PERFORMANCE
EUROPEAN MARKET
In 2022, the EU market (including the United Kingdom) for
farmed Atlantic salmon declined by 1 %, or 15,000 tons wfe,
to a total supply of 1,27 million tonnes wfe. Norway account-
ed for approx. 85 % of the total supply volume. With a com-
bined population of 513 million, this corresponds to a per
capita consumption of 2,5 kg wfe per year, indicating 8-9
meals per capita per year.
Within Europe, Germany, France, and the United Kingdom
accounted for approx. 50 % of the total consumption, mak-
ing them the largest market for salmon. Trade flow is also
characterized by large salmon processing hubs (e.g. Poland,
Denmark, Netherlands). Supply growth was notable both in
Italy and Spain (Southern Europe) in recent years.
During 2022, demand from high-value segments (food ser-
vice) has continued to recover following the Covid-19 pan-
demic in combination with limited growth in terms of vol-
ume. Re-allocation of Russian volume had a marginal impact,
with the European market share of global supply increasing
from 44,5% to 44,9% in 2022.
Source: Kontali
Fig. 44
SUPPLY OF ATLANTIC SALMON TO THE EUROPEAN (EU+UK) MARKET
Other/Re-export
Faroe Islands
Chile
United Kingdom
Norway
200,000
400,000
600,000
800,000
1000,000
1,200,000
1,400,000
2021E 2022E2013 2014 2015 2016 2017 2018 2019 2020
Fig. 43
SUPPLY OF ATLANTIC SALMON TO EU+UK MARKET
Country 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E
Norway 755,500 834,600 912,200 860,200 841,400 910,800 944,500 995,600 1,085,500 1,071,200
United Kingdom 110,300 117,800 121,100 115,400 124,900 108,100 142,300 152,500 162,800 143,800
Chile 50,200 50,500 44,900 53,900 42,500 40,700 36,200 40,900 28,400 32,800
Faroe Islands 34,300 32,300 20,400 28,400 27,800 20,600 30,800 34,400 50,600 59,000
Other/ Re-export -18,800 -30,100 -27,700 -16,900 -17,100 -25,700 -23,200 -31,500 -40,600 -37,100
Total 931,500 1,005,100 1,070,900 1,041,000 1,019,500 1,054,500 1,130,600 1,191,900 1,286,700 1,269,700
MARKET REVIEW
50
ANNUAL REPORT 2022
PERFORMANCE
Source: Kontali
CHINA AND HONG KONG
From 2015 to 2019 supply of Atlantic salmon to China and
Hong Kong almost doubled, reaching nearly 125,000 tons
wfe (pre-pandemic). Historically, supply to China has main-
ly been large-sized fresh whole salmon (6+ kg), with the
food service segment covering a high consumption share.
Following a steep fall in 2020 (83,000 tons, -33%) due
to the COVID-19 pandemic, market supply has since re-
covered somewhat. In terms of volume, supply in 2022
was just above 93,000 tons wfe. Market value, however,
reached a new all-time high in 2022 of 933 million USD -
exceeding pre-pandemic levels.
In December 2022, the Chinese government unveiled a
broad easing of its strict "Zero Covid" policy.
Fig. 45
SUPPLY OF ATLANTIC SALMON TO CHINESE MARKET (INKL. HONG KONG)
Country 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E
Norway 32,190 34,140 31,110 16,480 17,860 30,920 42,990 32,550 44,770 42,990
Chile 10,750 19,960 18,270 29,280 27,790 44,770 45,540 28,580 15,110 23,920
United Kingdom 12,200 16,430 14,920 12,250 12,660 12,370 10,900 3,300 7,100 3,830
Denmark 300 350 130 80 340 330 320 230 60 30
Australia 230 940 6,420 1,360 9,630 6,770 7,590 10,700 13,990 14,290
Faroe Islands 9,710 11,050 9,520 10,410 8,730 10,620 14,690 6,200 6,580 6,670
Canada 410 280 2,430 5,790 2,120 5,090 1,110 640 320 500
Others 10,090 3,240 2,570 12,220 18,590 800 970 880 1,390 1,430
Total 75,880 86,390 85,370 87,870 97,720 111,670 124,110 83,080 89,320 93,660
Fig. 46
SUPPLY OF ATLANTIC SALMON TO CHINA AND HONG KONG
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E
140,000
12
0,000
1
00,000
80,000
60,000
40,000
40,000
Other
Canada
Faroe Islands
Australia
Denmark
United Kingdom
Chile
Norway
MARKET REVIEW
51
ANNUAL REPORT 2022
PERFORMANCE
SUPPLY OF FARMED ATLANTIC SALMON FROM
THE FAROE ISLANDS
The biological performance of the Faroese salmon has, over
the last decade, been the best in the world, with low loss
rates and high average harvest weights. This has led to the
highest smolt yield in the industry.
The Faroese industry has faced biological challenges with
fi sh health and higher levels of sea lice in combination with
stricter regulations and extraordinary events due to bad
weather - which have periodically affected production. Fol-
lowing a record year in 2021, the harvest volume of Atlantic
salmon was just below 100,000 tons wfe (-6%) last year. The
increased production on the Faroe Islands is driven by major
investments on land (large smolt strategy) – allowing for in-
creased stocking and turnover of biomass in the sea.
Faroese exports saw a major shift in trade fl ow last year due
to Russia's invasion of Ukraine. With sales to Russia suspend-
ed, the European and US market accounted for more than
80% of the total supply volume – a level of market shares
not seen since 2011. However, regarding the market value,
Faroe exports saw new records, totaling 765 million (+24%)
measured in Euro.
Source: Kontali
Fig. 48
SUPPLY OF ATLANTIC SALMON FROM THE FAROE ISLANDS TO TOP 5 MARKETS
All other markets
China / Hong Kong
Japan
USA
EU & UK
Russia
120,000
10
0,000
80,000
60,000
40,000
20,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Fig 47
SUPPLY OF ATLANTIC SALMON FROM THE FAROE ISLANDS TO TOP 5 MARKETS
Country 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Russia 2,613 15,465 25,660 19,798 24,096 23,812 18,276 19,465 23,665 2,468
EU+UK 34,271 32,255 20,372 28,384 27,793 20,629 30,773 34,354 50,576 58,967
USA 16,394 17,105 14,671 16,908 14,820 12,829 18,469 14,392 20,812 23,305
China / Hong Kong 9,648 11,055 9,522 10,401 8,722 10,625 14,690 6,204 6,584 6,346
Japan 964 750 830 452 690 582 870 658 525 501
All other markets 7,795 4,731 3,706 2,138 3,191 2,314 3,368 4,243 4,261 7,020
Total 71,685 81,361 74,761 78,081 79,312 70,791 86,446 79,316 106,423 98,607
MARKET REVIEW
52
ANNUAL REPORT 2022
PERFORMANCE
GLOBAL SUPPLY OF ALL SALMONIDS
Source: Kontali
Fig. 49
HISTORICAL SUPPLY OF ALL SALMONIDS
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E
Atlantic salmon 2,041,250 2,229,000 2,317,900 2,161,100 2,293,100 2,402,650 2,577,850 2,712,500 2,896,600 2,865,700
Small trout 570,000 550,600 565,600 610,600 626,500 660,400 685,100 718,400 741,800 765,000
Chum 338,300 321,900 338,100 280,900 261,100 268,600 229,000 164,800 167,200 233,200
Pink 579,300 307,100 398,300 353,200 447,900 591,400 525,100 279,400 648,000 250,500
Large trout 300,100 300,100 300,100 300,100 300,100 300,100 300,100 300,100 300,100 300,100
Sockeye 133,200 173,700 190,300 183,000 173,700 171,600 178,500 138,900 154,200 211,300
Coho 176,800 200,400 190,600 151,800 194,900 211,100 234,700 231,700 239,100 263,600
Chinook 20,300 18,800 20,900 19,200 19,900 19,800 20,300 21,500 21,600 19,500
Total 4,159,250 4,101,600 4,321,800 4,059,900 4,317,200 4,625,650 4,750,650 4,567,300 5,168,600 4,908,900
Fig. 50
GLOBAL SUPPLY OF ALL FARMED AND WILD SALMONIDS
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E
6,
000,000
5,
000,000
4,
000,000
3,
000,000
2,
000,000
1,
000,000
Chinook
Coho
Sockeye
Large trout
Pink
Chum
Small trout
Atlantic salmon
MARKET REVIEW
53
ANNUAL REPORT 2022
PERFORMANCE
Source: Kontali
Fig. 52
THE GLOBAL HARVEST QUANTITY OF ATLANTIC SALMON
Fig. 51
THE GLOBAL HARVEST QUANTITY OF ATLANTIC SALMON
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E
Norway 1,143,600 1,199,000 1,234,200 1,171,100 1,207,800 1,253,400 1,333,400 1,370,000 1,533,400 1,517,100 1,548,000
Chile 468,100 582,900 598,200 504,400 564,200 660,100 690,300 778,500 718,300 751,600 759,800
UK 157,800 170,500 166,300 157,400 177,200 152,100 190,500 178,300 199,200 165,000 180,100
North America 135,400 119,000 155,400 168,500 158,700 165,000 158,300 156,800 161,000 151,000 146,500
Faroe Island 72,600 82,700 75,600 77,300 80,300 71,700 86,600 80,600 105,500 99,600 103,600
Ireland 10,600 12,300 15,700 15,800 17,000 14,300 15,500 15,800 15,900 18,700 16,500
Australia 39,000 42,000 53,600 49,600 63,100 62,300 60,900 82,800 87,800 88,500 89,700
Iceland 3,350 4,400 3,600 8,100 11,600 13,600 24,500 31,200 41,500 42,900 40,100
Russia 10,000 14,500 13,600 5,000 8,600 5,400 11,400 10,500 23,000 18,500 17,000
Others 300 300 300 300 300 350 350 500 600 1,000 2,500
Landbased RAS 300 1,500 1,400 3,500 4,200 4,400 6,100 7,500 10,300 12,100 21,500
*Total 2,041,050 2,229,100 2,317,900 2,161,000 2,293,000 2,402,650 2,577,850 2,712,500 2,896,500 2,866,000 2,925,300
Landbased RAS
Others
Russia
Iceland
Australia
Ireland
Faroe Island
North America
UK
Chile
Norway
3,500,000
3,000,000
2,500,000
2,200,000
1,500,000
1,000,000
500,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E
MARKET REVIEW
54
ANNUAL REPORT 2022
GLOBAL HARVEST OF FARMED ATLANTIC
SALMON
Norway is the world's largest producing country of Atlantic
salmon, accounting for 53 % of global production in 2022.
During the past few years, increased MAB capacity through
the traffic light system and new development licenses have
allowed increased stocking and growth. However, during the
same period, sea lice regulation and high sea lice treatment
frequency have limited productivity (lost feeding days im-
pacting the smolt yield potential).
The second largest producing country of Atlantic salmon,
Chile, accounted for 25 % of the global production in 2022.
Following the heavy losses caused by the algae bloom cri-
sis in 2016, the Chilean industry has continued to show im-
provements in key production parameters.
In other European farming regions, the total harvest volume
decreased by 5 % last year, while production in North Amer-
ica (Canada) dropped by 6%. Harvest volume in Australia
was just above 90,000 tons wfe, while Russian production
is estimated to be just below 20,000 tons wfe. In addition,
the global harvest volume from land-based (grow-out) is es-
timated to be approximately 12,000 tons wfe in 2022 (sum
of estimates for approx. 20 production plants).
The best estimate for FY 2023 corresponds to a global growth
rate of 1,5 – 2,0 %.
PERFORMANCE
TOP 15 - FARMING COMPANIES (SALMONIDS)
In 2021, the world's largest 15 salmon farming companies
harvested approximately 2.1 million tonnes wfe of salmo-
nids (Atlantic Salmon, Coho Salmon, Chinook, Large Trout),
representing 62 % of the total harvest quantity. In Norway,
these companies comprised 62 % of the total harvest and 67
% in Chile.
Fig. 53
TOP 15 SALMON FARMING COMPANIES IN 2021
(HARVEST VOLUME, ALL FARMED SALMON SPECIES)
Group Head off. Total Norway UK Chile North Am. Faroe Isl. Australia Other
MOWI NO 517,800 303,300 71,700 73,300 50,600 11,100 7,800
CERMAQ NO 223,400 99,100 101,400 22,900
LERØY SEAFOOD GROUP * NO 207,800 207,800
SALMAR * NO 202,100 189,400 12,700
AQUACHILE CL 202,000 202,000
COOKE AQUACULTURE CA 130,000 31,000 28,000 71,000
BAKKAFROST ** FO 107,700 33,000 74,700
MULTIEXPORT CL 97,800 97,800
AUSTRALIS SEAFOOD NO 84,300 84,300
GRIEG SEAFOOD *** NO 84,000 68,000 16,000
SALMONES BLUMAR CL 69,500 69,500
NORWAY ROYAL SALMON **** CL 55,000 42,300 12,700
NTS ASA***** NO 50,100 37,300 12,800
NOVA SEA ****** NO 48,400 48,400
TASSAL NO 45,000 45,000
Top 15 2,124,900 995,600 135,700 656,300 160,500 85,800 45,000 46,000
Global harvest -Farmed Salmonids 3,426,700 1,616,400 204,700 984,400 170,700 105,500 92,800 252,200
Share 62% 62% 66% 67% 94% 81% 48% 18%
* Volumes from Scottish Sea Farms (50% stake) not included. Owned 50/50 by Lerøy Seafood and Salmar
** Bakkafrost acquired The Scottish Salmon Company in 2019
*** Excluding UK operations, acquired by Scottish Sea Farms
**** NTS ASA has 68,1% ownership in Norway Royal Salmon
***** Including Salmonor and Arctic Fish
****** Mowi has 48% ownership in Nova Sea.
All farmed salmonids (Atlantic salmon, Large Trout, Coho and Chinook). Figures rounded to nearest 100 tonnes WFE (round bled weight)
Source: Kontali
MARKET REVIEW
55
ANNUAL REPORT 2022
PERFORMANCE
BUSINESS REVIEW – FISH FEED
The total feed consumption of ocean-farmed salmonids was
just below 4.7 million tons in 2022. Furthermore, this is mar-
ginally lower than 2021, -1%, and must be seen in relation to
a challenging biological second half in Europe last year.
Norway and Chile account for approximately 75 % of fi sh
feed consumption. Limited granting of new license capacity
or rights to produce is the main barrier to further growth
in salmonid fi sh feed demand. Other developed farming re-
gions such as Australia, North America, and Iceland highly
utilize existing capacity – considering biological constraints
and issues.
Over the last decade, the share of marine ingredients in feed
for farmed salmonids has shown a decreasing trend. Howev-
er, fi shmeal and fi sh oil prices still impact salmon farmers'
feed prices.
In 2022, we saw a slight decrease in global fi shmeal produc-
tion due to the delayed second fi shing season in Peru, though
with stable output the season as a whole. In northern Eu-
rope, production was lifted by the large capelin quota, which
increased Icelandic production to the highest level seen in
many years. Unusual low oil yield in Peruvian anchoveta
landings tightened the fi sh oil market further, lifted prices
to record heights in the second half of 2022 and continues
throughout the fi rst weeks of this year.
Prices for fi shmeal have remained high throughout the last
year and during the latest Peruvian production season. In
Europe, prices have ranged between USD 1,700 and 1,800
since the beginning of December last year. In Peru, prices
have climbed up to USD 1,700/ton after the fi nishing of a
quite satisfying production season as regards fi shmeal out-
put. Continued high prices on vegetable substitutes, particu-
larly soy, will probably maintain the demand for fi shmeal
and, thus price level.
China is fully back in the market after the COVID-19 pandem-
ic, and imports reached 1,8 million tons last year whereof
48% from Peru.
Fig. 55
DEVELOPMENT IN FISH FEED (RAW MATERIAL PRICES LAST 5 YEARS. USD/TONS)
2017 2018 2019 2020 2021 2022
3,000
2,500
2,000
1,500
1,000
1,000
3,500
Fishmeal
Fishoil
Soyameal
Rape oil
Wheat
Maize
Fig. 54
ESTIMATED FEED CONSUMPTION/SALE TO SALMONIDS
5,000
4,000
3,000
2,000
1,000
2014 2015 2016 2017 2018 2019 2020 2021 2022E
Others
Faroe Island
North America
UK
Chile
Norway
MARKET REVIEW
56
ANNUAL REPORT 2022
PERFORMANCE
MARKET REVIEW
57
ANNUAL REPORT 2022
RISKS
RISKS
58
RISKS
The Bakkafrost Group is exposed to several risks, which will
always be a natural part of our business activities. Therefore,
risk management is crucial so that the risks Bakkafrost is
exposed to and the potential financial impact is reduced to
an acceptable level.
Bakkafrost has general operational and business risks arising
from normal business activities in the value chain. In addi-
tion to the operational risks, Bakkafrost is exposed to mar-
kets and financial risks arising from normal business activi-
ties in the value chain.
RISK MANAGEMENT STRUCTURE AND PROCESS
The Board of Directors has the final responsibility for the
risk management of the Group. The Board of Directors de-
termines the framework for identifying and mitigating risks.
The Audit Committee supervises risk management.
The Group Management is responsible for daily compliance
with the risk management framework and the Group’s day-
to-day risk management. The Group Management assesses
the Group’s principal risks on an ongoing basis, based on
weekly or monthly reporting from the organisation on busi-
ness activities, market development, technology etc. The
continuous risk assessment is followed yearly with an exten-
sive risk analysis for the whole Group. The risks are assessed
and quantified, and reported to the Group Management. The
latest analysis of the Group’s risks was in January 2023.
Around year-end, the status of the main risks is reported to
the Audit Committee and is approved by both the Audit Com-
mittee and the Board of Directors.
OPERATIONAL RISKS
Farming
One of the most significant risk factors, Bakkafrost is ex-
posed to is the biological risk in the seawater grow-out stage.
Such risks include direct threats to the fish, such as diseases,
sea lice and algae blooms. Although comprehensive meas-
ures are put in place to mitigate the negative impact arising
from exposure to such threats, there is always a variation in
key performance indicators such as mortality, growth, yield
per smolt, price achievement versus reference prices, feed
conversion ratio, costs of treatment and required fallowing
time between generations for sites or larger geographic are-
as. The impact of being exposed to such risks can vary from
minor cost variations to a complete wipe-out of the biomass
in a vast geographic area. Due to exceptionally good miti-
gating measures in the Faroe Islands, the outcome on key
performance indicators has been attractive in recent years.
However, the corresponding scores have generally been less
attractive in Scotland and have had significantly higher vol-
atility. Bakkafrost’s investment plan for Scotland is expected
to reduce the risk significantly.
Although operational risks are, to a certain extent, reflected
in budgets using estimates for mortality and the percentage
of fish whose quality is downgraded in connection with pri-
mary processing, such risks might, if they occur, materially
affect Bakkafrost’s results and financial condition. Bakkaf-
rost’s operations can also be materially impacted by what is
classified as normal operating risks, e.g., quality from sup-
pliers and sub-suppliers, etc. The salmon farming industry
is associated with a high level of biological risk. Bakkafrost
aims to reduce that risk through the entire production cycle
using systematic group-wide biosecurity auditing.
Fish escapes
Bakkafrost has zero tolerance for the escape of farmed salm-
on. However, the company operates many seawater sites,
each exposed to risks linked to bad weather, handling of fish,
changing of nets, operations of workboats and well boats,
predators, etc. Escaped salmon and lumpfish may also inter-
act with wild populations of salmon and lumpfish and cause
genetic disruption of these populations. Considerably inter-
national focus is on the possible negative impact of salmon
farming on biodiversity, and incidents of fish escapes may
lead to a negative public image. The direct financial expo-
sure to escapes is moderate due to the geographic diversi-
fication of the sites. The indirect effects, such as the spread
of diseases, negative impact on wild salmon, governmental
penalties and negative publicity, are hard to quantify for the
accounts of Bakkafrost and the society. Procedures, quality
assurance systems and new technological solutions, such as
predator-resistant nets, are essential to mitigate the risk of
escapes.
Bakkafrost has a series of mitigating actions , such as staff
training, regular net inspection, etc. New wave and current
measurements at exposed sites and improved assessment of
physical demands for equipment.
Benthic impact
Farming activity at sea-sites can result in the local impact
of feed pellets or fish faeces on the seabed that may re-
sult in elevated content of organic or inorganic matter in the
sediment. While excess organic matter is typically relatively
quickly mineralised by benthic fauna and bacteria, inorganic
compounds like zinc added to fish feed as a dietary supple-
ment are more persistently bound and tend to accumulate
in the sediment on several farming sites. The Environment
Agency has set national limits for acceptable organic impact
on the seabed as well as the content of zinc and copper in
sediment.
Bakkafrost mitigates benthic impact due to the continuous
adaptation to relocate farming activity to more exposed lo-
cations. Since the company stopped using copper fouling,
copper is no longer considered a risk. The levels are now
Risk Management
RISKS AND RISK MANAGEMENT
59
ANNUAL REPORT 2022
RISKS
comparable with the background levels. Measures, such as
changing the feed composition and rotating cage positions,
have been taken to ensure that zinc concentrations will re-
main below the limit set by the Environmental Agency.
Sea lice and impact on wildlife
Sea lice are one of the most significant risks and challenges
in the farming industry globally. A high number of sea lice
may cause stress, which can lead to diseases. Sea lice from
farming may also infect wild salmon and trout populations
and contribute to a negative impact on the condition of these
populations. Farming activities may also have negative im-
pact on sea mammals and birds.
Bakkafrost has procedures for reducing the number of sea
lice with different types of treatment. The procedures are
improved continuously.
Bakkafrost uses lumpfish as cleaner fish for sea lice. Lump-
fish is the only cleaner fish used in the Faroe Islands, while
a combination of lumpfish and wrasse is used in Scotland.
These cleaner fish are essential preventive measures against
sea lice.
Bakkafrost uses a freshwater bath on-board live fish carriers
and water flushing treatments in farming service vessels as
a sea lice treatment. Additionally, Bakkafrost strives to im-
prove delousing methods continuously.
To achieve greater knowledge of the possible negative im-
pact on the Faroese trout population, a research project has
been funded to establish if any negative impact can be seen.
So far, no negative impact has been observed. Negative im-
pacts on seals and other sea mammals are also negligible.
Possible entanglement of birds in bird nets and disturbance
of bird colonies are also considered to be insignificant.
Seals
Seals cause loss of fish, as well as the presence of seals, dis-
turbs salmon resulting in lowered feeding and fish growth.
Faroese law prohibits killing seals. Bakkafrost is working
on implementing effective and safe preventive measures
on sites where seals constitute a fish welfare issue. This has
been a growing challenge to production at sea, where it is
difficult to find the right solutions.
Storms
The growth rate of farmed salmon depends, among other
things, on weather conditions. Unexpected warm or cold
temperatures can significantly negatively impact growth
rates and feed consumption. Bakkafrost operates at sea
under sometimes challenging conditions. This can result in
incidents or necessary measures that may have significant
cost implications, e.g., unexpected maintenance/repairs or
escaped fish, even if Bakkafrost continually reduces risks
using experience with equipment, location, and operational
organisation. Bakkafrost’s facilities are in areas where the
weather conditions are well known and the facilities well se-
cured. However, other weather conditions, such as storms or
floods, could also lead to unexpected losses at facilities. In
recent years, Bakkafrost has moved several farming sites in
the Faroe Islands to more exposed areas but simultaneously
upgraded the farming equipment to more robust equipment
to mitigate the risk of storms. Wave and current measure-
ments at exposed sites have been improved, as well as im-
proved assessments of physical demands for equipment.
Climate change
Climate change may have negative impact on fish health and
increase the risk of harmful species. Elevated sea tempera-
tures may lead to episodes of oxygen depletion, increased
blooms of harmful algae and other plankton species, as well
as more extreme weather events.
Bakkafrost has close surveillance at the site with online ox-
ygen monitoring implemented and monitoring sea tempera-
ture at farming sites. Algae and patogens monitoring is im-
plemented, and the assessment and procedures for physical
demands for equipment have been improved.
Algae, hydrozoa, and other plankton living species
Microalgae, hydrozoa, and other plankton species may harm
fish and cause mortalities either by causing oxygen deple-
tion, releasing toxic substances or causing gill damage. Cur-
rent knowledge on the prevalence of algae and hydrozoa is
limited. Recent studies on salmon on one of our sites have
indicated an inflammatory response on gill health at algae
levels typically found at our farming sites. Further effort
ought to be put into a survey of the prevalence of plankton
living species and their effect on fish health.
Surveillance of algae and other plankton living species is im-
plemented, and Bakkafrost is working in collaboration with
researchers to gain a better understanding of the occurrence
of hydrozoans and other species. Bakkafrost also samples
and analyse nutrients level preparing for further knowledge
and possibilities of a modelling and predicting.
Treatment and handling of fish
One of the main causes of mortality, is the handling of fish
during delousing procedures. Bakkafrost is continuously
working on optimising delousing procedures to ensure op-
timal fish welfare and reduce fish mortality. Non-medicinal
treatments are well implemented in our lice treatment strat-
egy, combined with preventive use of lumpfish and lice skirts
and proper veterinary procedures. Salmon lice and deriva-
tive actions to control lice infestation pressure, is however,
still considered one of the biggest challenges and most criti-
cal biological risks for the company.
RISKS AND RISK MANAGEMENT
60
ANNUAL REPORT 2022
RISKS
Fish diseases
The operation of fish farming facilities involves risks regard-
ing diseases. In the case of an outbreak of disease, Bakkaf-
rost will, in addition to the direct loss of fish, incur substan-
tial costs in the form of premature harvesting, loss of quality
of harvested fish and subsequent periodic reduced produc-
tion capacity. Examples of diseases being prevalent in the
Faroe Islands in recent years are Amoebic gill disease (AGD),
Bacterial kidney disease (BKD), Infectious salmon anaemia
(ISA), Cardiomyopathy syndrome (CMS) and Heart and skel-
etal muscle inflammation (HSMI). Related diseases prevalent
in Scotland are, in addition to the above, Pancreas disease
(PD) as an example.
Bakkafrost’s large smolt strategy and investments in fresh-
water treatment capacity play essential roles in mitigating
these risks. Screening procedures to ensure early detection
of disease agents have been implemented. Advancements in
the broodstock operation also increases the overall resist-
ance to diseases.
Mortality
The farming industry in the Faroe Islands has experienced
a lower mortality rate than the rest of the farming industry
in the last decade. In Scotland, the risk of mass mortality is
higher and a mass mortality event in Scotland would lead
to significantly reduced harvest biomass for the period, de-
creasing the efficiency of the processing plant and harvest-
ing, significantly impact EBIT and cash flow.
Bakkafrost monitors fish health on a daily. Staff is trained
to identify potential risks and disease is treated when iden-
tified. Significant investments have been made in treatment
capability and capacity (fresh water and sea lice) and recent
site swap has been made to manage disease risk. Aeration is
also installed on all sites and used 24/7 during risk period.
Full mitigation is difficult as these are environmental factors
often without our control. We will continue to review op-
portunities for site swaps, potentially allowing more control
over the spread of disease. As the size and robustness of the
smolt increases in coming years, this will reduce the biolog-
ical risk overall.
Bakkafrost is continuously working on reducing mortality to
have a 94% survival rate in the Faroe Islands. In Scotland, the
survival rate is expected to be somewhat lower, and Bakkaf-
rost targets 88% in 2026.
Smolt
The smolts are produced in freshwater hatcheries on land.
Therefore, enough freshwater is critical for smolt production
as reduced freshwater intake can severely affect the water
quality in the hatcheries and cause mortality. In the Faroe
Islands, Bakkafrost’s hatcheries use water-recycling tech-
nology (RAS), whereby more than 97% of the freshwater is
recycled. This significantly reduces the risk of freshwater
shortage. In Scotland, Bakkafrost’s hatcheries are in part
flow-through hatcheries but will all be replaced by modern
RAS-based hatcheries over the following years.
Bakkafrost releases millions of smolt per year. A limited ca-
pacity in the wellboats for smolt transport can necessitate
smolt transportation under sub-optimal conditions such as
bad weather. This can strain the released smolt, leading to
higher mortality. Bakkafrost is constantly improving han-
dling procedures to optimise fish welfare. Transport of fish
have improved considerably over the years, and a lot of this
is caused by improved knowledge and experience of the
workers.
In 2022, Bakkafrost increased the wellboat capacity in the
Faroe Island significantly. This will help mitigate the risk as-
sociated with the smolt transfer.
Roe
Essential to a good smolt production is the quality of roe.
Bakkafrost is dependent on external providers of roe to the
production. Poor roe quality reduces the survival of fry in
start feeding and affects the whole salmon production chain.
Bakkafrost is ramping up its own roe production from the
Faroese and Native Hebridean strains, which Bakkafrost
owns. This reduces dependence on external providers of
good quality roe, and Bakkafrost will control the productions.
Also, this will reduce the risk of importing foreign pathogens
into the stocks.
Broodstock
External suppliers of roe can supply Bakkafrost with roe for
the whole intended production, and the Bakkafrost is there-
fore not solely dependent on internal supply of roe. The
broodstock operation in the Faroe Islands is divided into two
branches, the production part with the aim to supply Bakka-
frost Farming with roe and the genetic part with the aim to
produce high quality roe with the traits necessary for mod-
ern farming operations.
Over the last years an extensive amount of work is done to
build up and improve the Bakkafrost brood stock. Markers for
disease resistance are identified with ongoing infection trials
since 2017 and testing for heredity for quality parameters
started when the first fish was harvested in 2020. Resistance
against specific diseases shown to be challenging for farming
operations are crucial for whether the roe is suitable for pro-
duction. Several of the markers are so well characterized that
these can be used for selection of the most resistant families
for stripping already in 2021. Crucial for the realization of
this work is that the genetic material is preserved, meaning
that the broodfish in the facilities is kept alive. Accidents in
the facilities could result in fish mortalities and irreversible
loss of genetic material that has taken several generation and
research effort to build up.
RISKS AND RISK MANAGEMENT
61
ANNUAL REPORT 2022
RISKS
As part of the 2022-2026 investment plan, Bakkafrost plans
to build a new state-of-the-art broodstock facility.
OTHER OPERATIONAL RISKS
Raw materials for fishmeal, fish oil and fish feed
The production of fishmeal, fish oil and fish feed follow es-
tablished methods with automated and controlled processes.
As the self-sufficient operator of fish meal, fish oil and fish
feed, Bakkafrost is exposed to certain risks which may re-
quire the purchase of fish feed from a third party. For exam-
ple, Bakkafrost is vulnerable to food safety incidents, down-
time, and possible insufficient supply of raw material input.
Unexpected shortfalls in raw material due to limited catch
volumes, geo-political issues or limited delivery or purchase
of fish or supply of substitutes could affect the volumes pro-
duced in the factory. This may result in incidents or neces-
sary measures with significant cost implications. Bakkafrost
is continually working on reducing risks. The Company’s
fishmeal, fish oil and fish feed department at Havsbrún’s fa-
cilities are in the Faroe Islands, in which case the Compa-
ny’s business could be materially adversely affected directly
from any trade restrictions or indirectly through restrictions
on ocean harvests or quotas. Although any salmon farmer,
being a net buyer of fish feed, is indirectly exposed to the
same risk factors, this risk is usually mitigated contractually
through third-party replacement obligations.
Feed contaminants
Through its use of different types of raw materials and in-
gredients and its production processes, the feed may be
exposed to contamination by several undesirable substanc-
es. Most contaminants are accumulated in organisms, such
as marine wild catch used to produce fishmeal and fish oil.
These contaminants are deposited into the organism’s fat,
and the concentration is greater the higher up the food chain.
Authorities set maximum allowable levels for the most crit-
ical contaminants. These limits are continuously monitored
by the authorities and may be altered. There is also the pos-
sibility of “new” contaminants being added periodically to
the list.
Generally, contamination may occur either accidentally or
deliberately through malicious product tampering. Such
contamination can affect the environment, fish health, and
food safety, potentially negatively impacting the public’s
confidence in eating salmon. Any of these events could hurt
Bakkafrost’s operating results and financial condition. Future
legislation may increase the risk of non-compliance and the
cost of ensuring compliance. The reputation risk associated
with non-compliance may be significant even if there is no
impact on the environment, fish health or food safety.
The Company´s feed department, Havsbrún, operates sev-
eral controls to reduce the risk of contamination. Examples
of measures and controls included in HACCP and ISO pro-
cedures include supplier audits and supplier specifications
of raw materials, targeted sourcing of raw materials, regular
raw material and finished feed quality control analyses, pro-
cedures for cleaning fish oils, etc. and strict plant security
procedures. The risks, however, can never be eliminated.
Contaminants that may be a risk for fish feed include, but
are not limited to, organic contaminants such as dioxins and
DL-PCBs, mycotoxins, pesticides, antioxidants such as Eth-
oxyquin and BHT, brominated flame retardants and bacterial
contamination and inorganic contaminants such as lead, mer-
cury, arsenic, and cadmium.
Even though all tests show that the levels of pollutants in the
Bakkafrost salmon are well within the safety limits imposed
by, e.g., the European Union, Bakkafrost has from early 2015
cleaned the fish oil used for Bakkafrost’s salmon feed for DL-
PCBs and other pollutants. Since early 2018, the antioxidant,
Ethoxyquin has been replaced with a natural antioxidant.
Through accidents or tampering, the feed may also be con-
taminated by other inorganic substances such as mineral oil,
physical objects, etc. Several substances in addition to the list
above are being monitored.
Fish meal spontaneous combustion
Spontaneous combustion is a serious risk that could occur
when fishmeal is stored in silos or transported overseas, al-
though very improbable. To avoid this, Havsbrún adds nat-
ural antioxidants to the fishmeal during production. The ad-
dition of an antioxidant is done according to requirements
from IMO to prevent spontaneous combustion of fishmeal
stored and transported overseas. IMO is a specialised agency
of the UN, the global standard-setting authority for the safe-
ty, security, and environmental performance of internation-
al shipping. By not adding antioxidants to the fishmeal, the
possibility of spontaneous combustion would be present, in-
creasing the risk of an explosion/fire. The antioxidant dosage
is based on research results from an IFFO report combined
with equivalent internal research based on Havsbrún's stor-
age and transport conditions.
Fire in production facility or hatchery
A fire occurrence in one of Bakkafrost’s large production fa-
cilities or hatcheries could be severe. To mitigate the risk of
fire, regular fire-technological inspections and assessments
are made by 3rd parties who also advice on and supervise
what changes should be made to reduce all possible risks of
fire. To reduce the risk of fire spreading, the large production
facilities and hatcheries are divided into several separate
fire cells with automatic fire extinguishing systems. The walls
within fire cells are covered with fire safe material and the
staff are trained in handling fire handling incidents.
RISKS AND RISK MANAGEMENT
62
ANNUAL REPORT 2022
RISKS
MARKET RISKS
Price on farmed salmon
The Company’s financial position and future development
depend considerably on the price of farmed salmon, which
has historically been subject to substantial fluctuations.
Therefore, farmed salmon is a commodity, and it is reason-
able to assume that the market price will continue to follow
a cyclical pattern. The balance between the total supply and
demand for farmed salmon is a crucial parameter.
In short term, covering the next 12-24 months, salmon pric-
es are expected to be strong – hence constituting an upside
risk rather than a significant downside risk. However, the
volatility itself is the main risk. By selling around 40% of
the harvested volumes on fixed price contracts, Bakkafrost’s
sales strategy alleviates a substantial part of the risk induced
by salmon prices. Annual revaluation of the company’s sales
distribution between selling on spot and long-term contract
prices. The goal is to have around 40% of the harvest volume
on long-term contracts at fixed prices. The appropriate con-
tract level is reviewed regularly and primarily towards the
end of each year, covering the next year.
Since the acquisition of SSC, Bakkafrost has focused on bring-
ing together the brands and coordinating the sales and mar-
ket approach under the One Company strategic pillar. This
improves Bakkafrost’s agility in the market on a strategic,
tactical and operational level, and helps to reduce the overall
market risk.
General inflation risk
The inflation rates have increased in general. This affects
revenues as well as the cost of operation and planned in-
vestments. In 2022, inflation has significantly increased the
salmon spot prices as well as the contracted prices from
Bakkafrost’s VAP segment. While this is positive for the
revenues, the input costs have also increased significantly
– however not yet fully materialised in increased in cost of
harvested fish. Due to the long production cycle of salmon,
cost of harvested fish will continue to increase.
The inflating input costs are to a high extent being passed on
to customers. The observed inflation in 2022 on feed ingre-
dients can also provide competitive opportunities for Bakka-
frost. Bakkafrost is less exposed to the inflation of vegetable
feed ingredients that it’s competitors, due to the much lower
vegetable content in the Havsbrún feed. Also, Bakkafrost’s
low feed conversion ratio compared to competitors and com-
pared to other animal (non-salmon) protein producers, can
give Bakkafrost a competitive advantage. Hence, remain-
ing the high marine inclusion in the feed and continuously
improve the FCR are measures that mitigate the effects of
the inflation on vegetable feed ingredients. Bakkafrost also
adapts procurement to inflation (e.g. procurement pooling
and securing frame agreements, fixing terms and conditions
where possible and feasible). Regarding the investment plan,
this is regularly revisited to reflect observed and expected
inflation.
Price on fishmeal and fish oil
Bakkafrost’s financial position and future development de-
pend to some extent on the price of fishmeal and fish oil,
which have historically been subject to substantial fluctua-
tions. Fishmeal and fish oil are commodities, and it is reason-
able to assume that the market price will continue to follow
a cyclical pattern. The balance between the total supply and
demand for fishmeal and fish oil is critical. Decreased supply
may cause prices to increase. This could, in turn, impact the
company’s profitability and cash position.
Price on fish feed
Feed costs account for a significant proportion of the total
production costs within the salmon farming segment, and
feed price fluctuations could substantially impact profitabil-
ity. Feed prices are affected by both the global market for
fishmeal and marine/animal/vegetable oils, and the feed
industry is dominated by a small number of large, global
producers.
Natural limitations in the marine resource base could lead to
global shortages of fishmeal and fish oil for fish feed produc-
tion. However, the feed producers have come a long way in
their efforts to replace some of the marine-based input fac-
tors with vegetable raw materials. Furthermore, the produc-
tion of fish feed is an integrated part of Bakkafrost’s value
chain and thus reducing this risk.
Customer and market dependency
Single large customers or specific markets accounting for a
large share of sales can constitute a risk to future revenues.
Bakkafrost maintains a diversified sale strategy, spreading
the sale across many customers in several markets. Bakkaf-
rost’s strategy is to sell around 30-40% of the harvested vol-
umes in the Faroe Islands to the retail segment, whereas the
remaining share is sold to the foodservice market. In addi-
tion, Bakkafrost has the flexibility and necessary production
capacity to adapt the production to changes in demand, as
demonstrated during the Covid-19 pandemic.
FINANCIAL, LEGAL & REGULATORY RISKS
Macro-economic factors
Bakkafrost operates in different countries and sells its prod-
ucts all over the world. Hence, Bakkafrost is subject to mac-
roeconomic changes, whether local, regional or global. Such
changes can be positive and negative to Bakkafrost and can
significantly impact Bakkafrost. The Covid-19 pandemic and
the ongoing war between Russia and Ukraine are recent ex-
amples of the world economy, market and trade flow can be
disrupted. This increases the level of financial uncertainty
significantly.
Bakkafrost maintains a diversified approach to the market,
spreading the risk by selling products to different geograph-
ic markets and selling to different channels (retail vs food
RISKS AND RISK MANAGEMENT
63
ANNUAL REPORT 2022
RISKS
service). Being present in different markets, which are not
financially dependent on each other, lowers this risk. Like-
wise, Bakkafrost seeks to source raw materials and servic-
es from many suppliers to avoid relying on single suppliers.
Also, Bakkafrost actively seeks good information sources on
macro economical changes in areas where Bakkafrost oper-
ates or sells products.
Foreign exchange risk
Bakkafrost trades in the world market for farmed salmonids.
The revenues and accounts receivable are predominantly de-
nominated in DKK, EUR, USD and GBP, but to some small ex-
tent also in other foreign currencies. Accounts payables are
primarily in DKK, USD, GBP and NOK. As a group, Bakkafrost
has significant natural hedging. For those currencies not fully
hedged, fluctuations in foreign exchange rates present a fi-
nancial risk to Bakkafrost. The Company’s finance agreement
is a 700 mEUR multicurrency facility giving Bakkafrost the
possibility to request other currencies at utilisation.
Bakkafrost’s foreign exchange risk is partly mitigated
through the natural hedging within the Group. Intragroup
transactions and external trade balance reduce the Group’s
foreign exchange rate exposure to the reporting currency. A
hedging strategy for the remaining net exposure to foreign
exchange rates is implemented to reduce the risk further. The
performance of the hedging strategy is reviewed monthly,
and the Board oversees the strategy.
Insurance risk
Bakkafrost has significant assets and trade flows at risk, and
risk mitigation is sought through insurance. The insurance
market has tightened in recent years, and the insurance mar-
ket has become less competitive. To get appropriate insurance
cover at competitive prices, Bakkafrost offers its insurances
to international insurance companies, and Group policies are
sought where feasible. External benchmarking is performed
regularly, and brokers are used to negotiating terms and pull
quotes for a broader field of insurance providers.
Tax risk
The Bakkafrost Group is complex, with subsidiaries in several
jurisdictions. This increases the risk of non-compliance with
local tax rules, and transfer pricing rules becomes more com-
plicated. In addition, the group is exposed to jurisdictions
where taxation laws can change. The newly introduced re-
source tax for the salmon industry in Norway has increased
the risk of spillover effects to the Faroe Islands and Scotland
and the government in the Faroe Islands are expected to in-
crease the revenue tax.
To mitigate this risk, Bakkafrost relies on tax and legal advice
and relevant services from acknowledged competent exter-
nal advisors/experts covering the jurisdictions where Bak-
kafrost has its operation. Bakkafrost also maintains a firm
transfer pricing policy and documentation. Bakkafrost also
keeps a close dialog with politicians in the Faroe Islands in
order to prevent tax increases, that are unhealthy for the
future growth and development of the Faroese salmon in-
dustry.
Investment risk
Bakkafrost has several large ongoing and planned invest-
ments. There is a risk that these projects do not deliver the
expected benefits, deliver on time or budget. To mitigate
this, major investment projects are properly organized and
staffed with skilled employees with clear objectives and
mandate. Programme and project management skills are in
strengthened across the organisation and efficient govern-
ance structures established, rooted in well-defined project
model and methodology. Project monitoring and reporting
processes on projects and programmes are strengthened.
Interest rate risk
Interest rates have been historically low for years, but to
combat the recent increasing inflation, interest rates have
increased. It is likely, that interest rates will continue to in-
crease during 2023, which not only affects Bakkafrosts cost
of financing, but also affects the general market. Bakkafrost
monitors the forecasted development in order to make ap-
propriate and informed hedging decisions.
Credit risk
The risk that counterparties do not have the financial
strength to meet their obligations is considered relatively
low since historically, losses due to bad debts have been
small. Bakkafrost has guidelines to ensure that sales are
made only to customers that have not previously had pay-
ment problems and that outstanding balances do not exceed
fixed credit limits. Most accounts receivables are insured, but
as not all receivables are insured, Bakkafrost must accept a
certain risk element in accounts. Bakkafrost has implement-
ed strong internal controls to reduce the credit risk. This in-
cludes centralised weekly monitoring of debtors’ balances,
and any non-standard credit terms need to be approved by
the Credit Committee.
Liquidity risk
Bakkafrost has announced a 6.2 billion DKK investment
programme for 2022-2026, which is financed with cash-
flow from operation and debt. The cashflow from operation
is dependent on the salmon market as well as the cost of
operation and biological performance in particular. There is
therefore a risk of reduced liquidity in the Group.
Bakkafrost monitors weekly the liquidity and net debt. Also,
the 5-year budget is updated on a quarterly basis, which
also takes into account the Group’s liquidity and net debt
development. If deemed necessary, the planned capex can
be adapted and/or partly postponed, to reflects deteriorated
liquidity forecasts. In February 2023, Bakkafrost’s group of
RISKS AND RISK MANAGEMENT
64
ANNUAL REPORT 2022
RISKS
lending banks accepted to extend their 5-year 700 mEUR fi-
nance agreement with Bakkafrost to February 2028. Unused
credit facilities and terms are described in Note 3.11.
Capital structure and equity
The prime objective of Bakkafrost’s capital management is
to ensure that it maintains a good credit rating to achieve
favourable borrowing terms. By ensuring a good debt-to-eq-
uity ratio, Bakkafrost will support its business operations.
Bakkafrost manages and changes its capital structure in re-
sponse to an ongoing assessment of the financial conditions
under which the business operates. It’s short- and medi-
um-term outlook, including any adjustment in dividend pay-
outs, buyback of its own shares, capital reduction or issue of
new shares.
Legal & Regulatory
Due to environmental or animal welfare concerns, regulatory
imposition may materially impact the Company’s operations
and financial condition. The Company emphasises organis-
ing its operations so that the risk for unexpected measures
is reduced. Still, there will always be a latent risk that the
regulatory authorities will impose restrictions and/or sudden
changes in the industry framework.
Salmon farming is regulated by licenses. The Group has
a good dialogue with the Faroese and Scottish authorities
regarding the prerequisites and restrictions connected to a
farming license.
In Scotland, all licenses and consents, policies and regulations
are overseen by the Scottish Environment Protection Agency
(SEPA).
The authorities may withdraw licenses for fish farming oper-
ations if substantial preconditions have been changed since
the license was issued, if the license goes against overall de-
velopment plans and protective measures, or if the licensee
breaches the conditions set in connection with the issuance
of the license. The license may also be withdrawn if the com-
pany breaches the rule on maximum ownership of licenses
or does not use the license. The license may also be revoked
if the environmental license of the company is repealed.
In the Faroese Islands, a salmon farming license is issued
for a period of 12 years from the date of issue. The Faroese
government may prolong the license period. If the company
fulfils the conditions in the license and if a continuation of
the activities is not contrary to overall development plans,
which have been adopted, it must be assumed (but there can
be no assurance) that the company has a legal claim to have
the license period prolonged.
Under the Act on Environmental Protection and under ex-
isting practice, the relevant environmental authorities may
demand a reduction in the stocking of fry, compared to the
last stocking, in case examinations of the seabed or other en-
vironmental studies show that pollution of the environment
exceeds certain specified limits. The Faroese environment
has become the subject of increasing attention and publici-
ty about aquafarming. Therefore it can be expected that the
rules in this area may become stricter or that existing prac-
tice will become stricter.
Geographical diversification by acquiring The Scottish Salm-
on Company has reduced the likelihood of regulatory changes
having devastating effects on a group level. In addition, con-
tinuous dialogue with regulators and politicians in the Faroes
and Scotland is performed to be able to influence regulatory
changes and be prepared for changes. The dialogue occurs
directly and via memberships in industry organisations such
as Havbúnaðarfelagið and Salmon Scotland (former SSPO).
Bakkafrost continuously monitors if the company complies
with legal and regulatory requirements, such as veterinary
regulations, food safety, human safety, financial regulations,
tax, corporate laws etc. This responsibility is unambiguous-
ly split between several parts of the organisation, e.g. the
Quality Department (FO), Biology Department (SCO), Health &
Safety and Finance. External advice and assistance are used
when needed – e.g. lawyers and renowned professional ser-
vices firms.
ESG RISKS
ESG rating and stakeholder management risk
Sustainability is increasingly becoming a key priority to gov-
ernments, the public, NGOs, customers, investors and the
financial market as a whole. Due to the inherent complexi-
ty in the “measurement of sustainability”, stakeholders are
increasingly relying on ESG ratings before making decisions
on buying Bakkafrost’s salmon, shares or providing financ-
ing. It is increasingly important to demonstrate to stakehold-
ers clearly and convincingly that Bakkafrost takes its ESG
responsibility seriously. Failing in this can negatively affect
license to operate, sales, share price, and access to capital.
Bakkafrost has strengthened the capabilities and capacity
to engage with organisations providing ESG ratings. Active
dialogue with the most important and influential rating or-
ganisations will increase transparency and accurately picture
Bakkafrost’s sustainability profile and achievements. As a
consequence, Bakkafrost has improved ESG-scorings in gen-
eral.
In Scotland, reputational management and communications
planning help reduce the risk and our membership in Salmon
Scotland is important in this respect. Direct engagement with
the Scottish Government, participation in industry commit-
tees is also important.
External dependencies for ESG commitments
Bakkafrost has set several ambitious targets: the scope 1 & 2
carbon emission reduction targets for 2030 and the net-ze-
ro target for 2050. To reach these targets, the main hurdle
RISKS AND RISK MANAGEMENT
65
ANNUAL REPORT 2022
RISKS
is that Bakkafrost relies on deregulation of the electricity
market in the Faroe Islands or access to suffi cient amounts
of renewable energy to power its operation, primarily at
Havsbrún. Although the declared 2030 goal from the Faro-
ese Government is to have 100% renewable electricity in the
Faroes in 2030, there is a signifi cant risk that this will not be
achieved. Also, it is uncertain if the offered electricity prices
in the Faroese national grid will be competitive compared to
non-renewable alternatives.
To mitigate this risk, Bakkafrost actively engages stakehold-
ers to facilitate the transition to cost-effi cient solutions for
powering Bakkafrost with renewable energy. This includes
lobbying the political system and cooperation with the Faro-
ese national electricity company, SEV. Bakkafrost is also ex-
ploring other routes to ensure access to renewable energy.
Failing to deliver on commitments
In addition to ambitious carbon reduction targets, Bakkaf-
rost has set a number of commitments in it’s sustainability
plan. If Bakkafrost is signifi cantly underdelivering on these
commitments, it can have a negative effect on Bakkafrost’s
corporate brand and reputation.
Bakkafrost performs regular reviews of target achievement
and track to completion. Commitments are anchored at ex-
ecutive level. However, some of the commitments are linked
to improvements to the biological performance in Scotland.
These improvements rely on the strategic investment plan to
materialise in large robust smolt in Scotland.
IT RISKS
Cyber security
With the increased use of technologies such as the internet
to conduct business, the Group and its customers and service
providers are susceptible to operational information security
and related “cyber” risks both directly and indirectly. This
could result in material adverse consequences for the Group
RISKS AND RISK MANAGEMENT
66
ANNUAL REPORT 2022
RISKS
and the shareholders, such as causing disruptions and im-
pacting business operations, potentially resulting in financial
losses. In general, cyber incidents can result from deliberate
attacks or unintentional events. Cyber incidents include, but
are not limited to, gaining unauthorised access to digital sys-
tems (e.g., through “hacking” or malicious software coding)
for purposes of misappropriating assets or sensitive infor-
mation, corrupting data (e.g. ransomware), or causing oper-
ational disruption. Cyber-attacks may also be carried out in
a manner that does not require gaining unauthorised access,
such as causing denial-of-service attacks on websites (i.e.,
efforts to make network services unavailable to intended
users). In recent periods, examples have shown that large
industrial groups can be subject to complete shutdowns be-
cause of cyber-attacks. The most exposed areas of the Com-
pany’s value chain in case of cyber-attacks are hatcheries,
processing and sales. For shorter periods, harvestable fish
can be held in seawater sites pending a solution to such an
adverse event, implying a delay in profits and cash flows.
The IT risks are assessed continuously, based on the impor-
tance of a potential event for Bakkafrost operations and the
likelihood that the event may occur. Bakkafrost’s IT infra-
structure is being restructured to increase the robustness
and resilience to malicious attacks. 24/7 monitoring is in
place and 3rd parties are engaged for increased security.
HR RISKS
Recruitment of Operatives in Processing
Bakkafrost is highly dependent on access to operative la-
bour for the VAP and Harvest operations in Processing as
well as operative staff for remote areas. The unemployment
rate in the Faroe Islands is 0.8% and companies increasingly
rely on foreign workers. In Scotland, Bakkafrost has had high
staff turnover during 2022 and it has been more challenging
to recruit adequate numbers and skilled employees to meet
current or future requirements. Brexit has resulted in a more
restricted access to labour, and we have felt that, as have
other industries in UK. Furthermore, the high inflation has
resulted in an increased mobility between operative staff, as
the cost of living is fuelling a pressure on income.
In the Faroes, the development is monitored closely, and
Bakkafrost has been able to sufficiently recruit foreign work-
ers. In Scotland, Bakkafrost will continue to focus in the most
critical areas for recruitment. Future automation through in-
vestments will require relatively fewer operative roles. Ro-
tation patterns in key areas have been introduced to allow
recruitment opportunities out-with regions. Consolidation of
freshwater sites will also reduce geographical areas to hire
for and investment in new processing/harvesting are planned
for areas with higher concentration of labour.
RISKS AND RISK MANAGEMENT
67
ANNUAL REPORT 2022
GOVERNANCE
MARKET REVIEW
GOVERNANCE
68
ANNUAL REPORT 2022
GOVERNANCE
Corporate
Governance
BAKKAFROST’S GOVERNANCE MODEL
P/F Bakkafrost is dedicated to maintaining high standards
of corporate governance. The company endeavours to be in
compliance with the Norwegian corporate governance re-
gime, as detailed in the Norwegian Code of Practice for Cor-
porate Governance, published on 14 October 2021 by the
Norwegian Corporate Governance Board (the “Code of Prac-
tice”). The recommendation may be found at www.nues.no.
Beside the Corporate Governance description in our annual
report, Bakkafrost publishes a more detailed report on Cor-
porate Governance, which may be found on our website.
Bakkafrost does not comply with the following recommenda-
tions in the Norwegian Code of Practice for Corporate Gov-
ernance:
• Section 3 stipulates, “that mandates granted to the board
should be limited in time to no later than the date of the
next annual general meeting”.
Bakkafrost’s Articles of Association § 4A gives the Board of
Directors authorization to increase the share capital until
the ordinary general meeting of the company in 2023, and
§ 4B gives the Board of Directors authorization to buy own
shares on behalf of the company until the annual general
meeting is held in 2023. According to the Faroese company
law, a company may in its Articles of Association decide
that the AGM may give the Board of Directors authority
to increase the share capital and buy own shares. This
permission may last for more than one year. For practi-
cal reasons, this has been implemented into the Articles of
Association of P/F Bakkafrost. It is the Board’s view that
if shareholders find this authorization unacceptable, the
Board will support a change to the Articles of Association.
Bakkafrost’s Governance Model
To ensure adherence to the principles, the company has elab-
orated specific instructions regarding rules of procedure for
the Board of Directors, instructions for the Nomination Com-
mittee, instructions for the Chief Executive Officer and other
management, guidelines with regards to values and ethics,
instructions for the Audit Committee, an investor relations
policy, guidelines relating to takeover bids and guidelines for
related-party transactions.
Shareholders and General Meeting
Shareholders exercise their rights at Bakkafrost’s general
meeting – such as appointing Bakkafrost’s Nomination Com-
mittee, Board of Directors and auditor.
SHAREHOLDERS
GENERAL MEETING
Bakkafrost’s shareholders
exercise their rights at the
General Meeting.
BOARD OF DIRECTORS
Consists of 3-7 members,
which are elected every
year. The Board of
Directors is responsible for
the overall management of
Bakkafrost.
GROUP EXECUTIVE
MANAGEMENT
The Group Executive
Management is responsible
for the day-to-day
management of Bakkafrost.
NOMINATION COMMITTEE
Consists of four members,
which are elected by AGM.
Recommends candidates
for election to the Board
of Directors and Directors’
fees.
AUDIT COMMITTEE
Consists of three members
from the Board of Directors
and is chaired by the Board
of Directors’ Chairman.
REMUNERATION
COMMITEE
Consists of tree members
from the board of
Directors.
CORPORATE GOVERNANCE
69
ANNUAL REPORT 2022
GOVERNANCE
The procedures at Bakkafrost’s general meeting follow the
standard rules stipulated in the Faroese company law and
Bakkafrost’s Articles of Association.
Nomination Committee
The Nomination Committee recommends candidates for elec-
tion to the Board of Directors and the Directors’ fees. The
deadline for submitting proposals to the Nomination Com-
mittee is 31 January.
Bakkafrost’s General Meeting elects the members, hereun-
der its chairman, for the Nomination Committee for a period
of two years, unless the General Meeting decides otherwise.
The remuneration payable to the Nomination Committee’s
members is also determined by the General Meeting.
The regulations governing the work of the Nomination Com-
mittee are incorporated in Bakkafrost’s Articles of Associa-
tion.
At the end of 2022, the members of the Nomination Com-
mittee were:
• Gunnar í Liða (Chairman)
• Eyðun Rasmussen
• Rógvi Jacobsen
• Leif Eriksrød
Board of Directors
Bakkafrost’s Board of Directors is responsible for the overall
management of the company and appoints a management
of one or several managers to manage the daily business of
Bakkafrost. The Board of Directors sets out the strategy for
Bakkafrost and decides major investments and divestments.
The Board of Directors is also responsible for ensuring that
Bakkafrost has at any time an appropriate capital base, key
policies and controls and for reviewing audit matters. The
Board of Directors is responsible for Bakkafrost’s Risk Man-
agement and material operational decisions.
The majority of the members of the Board of Directors
shall be residents in the Faroe Islands. The chairman of the
Board of Directors is elected by the general meeting, whilst
the vice-chairman is appointed by the Board of Directors.
The Board of Directors shall have between three and seven
members. Information about the members of the Board of
Directors may be found in “Directors’ Profiles” in the Annual
Report.
The Board of Directors has laid down detailed rules regard-
ing its activities in a working procedure, which is reviewed
regularly.
The Board of Directors held eight meetings in 2022. Below
under each Director’s profile is disclosed each Director’s par-
ticipation in the Board meetings held during 2022.
The members of the Board of Directors receive a fixed re-
muneration, which is approved by the general meeting. The
members of the Board of Directors are not part of Bakkaf-
rost’s share savings plan for employees.
Audit Committee
The Audit Committee is a sub-committee of the Board of Di-
rectors and assists the Board of Directors in overseeing the
financial and non-financial reporting process, financial and
business-related risks, internal controls, and compliance with
statutory and other requirements from the public authorities.
The Audit Committee decides the framework of Bakkafrost’s
external auditors, evaluates the auditors’ independence and
qualifications.
The company’s audit committee met four times during 2022
to review accounting and operational issues in detail. The
committee consists of Rúni M. Hansen (Chairman), Øystein
Sandvik and Teitur Samuelsen.
Remuneration Committee
The Remuneration Committee is as sub-committee of the
Board of Directors and consists of three members: Øystein
Sandvik (Chairman), Einar Wathne and Teitur Samuelsen.
The Remuneration Committee is responsible for setting an
appropriate reward policy that motivates the Group Execu-
tive Management to achieve the long-term interests of the
shareholders. Responsibilities include setting the remunera-
tion policy for the Group Executive Management, determin-
ing individual compensation, and providing direction on sal-
aries, bonuses and pensions and other remuneration.
Group Executive Management
The Group Executive Management leads Bakkafrost’s dai-
ly business and shall adhere to any decisions made by the
Board of Directors as well as to any rules and requests from
the Board of Directors.
The Board of Directors has in executive instructions laid down
specific rules regarding the authority and duties of the Group
Executive Management. The Board of Directors also decides
the employment conditions of the Group Executive Manage-
ment and gives more specific rules regarding its work.
The Group Executive Management consist of CEO Regin
Jacobsen, CFO Høgni Dahl Jakobsen and managing director
of Havsbrún Odd Eliasen. Information about the Group Ex-
ecutive Management may be found in “Group Managements’
Profiles” in the Annual Report.
CORPORATE GOVERNANCE
70
ANNUAL REPORT 2022
GOVERNANCE
Corporate
Responsibility
and Sustainability
Governance and management
Bakkafrost’s core values specify an intent to act responsi-
bly, this includes thinking long-term on economic, social, and
environmental issues. The company follows a precautionary
approach to the management of sustainability risk through
our risk assessment process. The process allocates responsi-
bility for the mitigation of significant operational risks. Risks
are monitored throughout the supply chain and reported in-
ternally on a regular basis and externally on an annual basis
in the Annual Report and Sustainability Report.
The Audit Committee assists the Board in overseeing finan-
cial and business-related risks, internal controls and compli-
ance with statutory and other requirements from public au-
thorities. Sustainability strategy, management and reporting
is overseen by the Board of Directors and is the day-to-day
responsibility of Bakkafrost’s Management Team.
Sustainability is covered in Bakkafrost’s corporate strategy
and management plans and will continue to be integrated
into these in 2022, through the Healthy Living Plan.
Compliance and ethical conduct
Bakkafrost acts in accordance with strict national workplace
health and safety, environmental, and fish health and welfare
regulation in the Faroes and Scotland. The company has an
ongoing commitment to have zero cases of non-compliance.
The company upholds and promotes good business practice
throughout the value chain, consistent with Bakkafrost’s core
values and principles. Its values guide its behaviour and
approach to creating long-term value for customers, share-
holders and society and are outlined in Bakkafrost’s Code
of Conduct, which aims to create a sound corporate culture.
The Code requires all employees to observe high standards
of business and personal ethics in the conduct of their duties
and responsibilities. They must employ a fair and honest ap-
proach in every dealing with fellow employees and all exter-
nal stakeholders.
Further commitment to voluntary sustainability standards
and certifications is outlined below.
Workplace and human rights
The company is committed to respecting the protection of
human rights and to making sure that it is not complicit in
human rights abuses.
Its Code states a commitment to ensure that neither Bakka-
frost nor its business partners shall exploit children as a la-
bour force. This is supported by the standards, suppliers are
asked to sign up to, when entering into agreements.
Bakkafrost’s Code of Conduct also outlines its approach to
creating optimal working conditions and culture, including a
commitment to create a professional and positive work en-
vironment which is inclusive and free from discrimination.
In 2018, Bakkafrost strengthened its commitment in this area
by signing up to the ten principles of the UN Global Com-
pact to pledge to protect human rights; respect the freedom
of association and the right to collective bargaining; and to
have a workforce free from forced/compulsory/child labour
and discrimination. The company communicates its progress
against these principles annually in the Healthy Living Sus-
tainability Report.
Human capital
Bakkafrost employs 1,778 FTE’s in the Faroe Islands, UK,
Scotland, USA, Denmark and France. It acknowledges that to
achieve its mission and meet its strategic objectives, it must
have a capable and engaged workforce, which is committed
to its core values.
The company is dedicated to having a diverse and inclusive
workplace, to attract and retain talent and expertise, to build
workforce competency and maintaining high employee en-
gagement. The 2023 Healthy Living Plan outlines areas in
which the company will increase focus to strengthen its hu-
man capital.
Health, safety and wellbeing
Protecting human capital involves maintaining a high stand-
ard of occupational health and safety and creating a healthy
working culture.
The company’s Code outlines its intention to ensure a sys-
tematic approach to attaining an injury and accident-free
workplace. This is achieved through a set of guidelines based
on the highest health, safety and environment standards.
Employees receive regular training on these.
Product quality and safety
Through various best practice standards and certification
programmes (outlined below), Bakkafrost ensures indus-
try-leading product quality and safety standards. A compre-
hensive internal control system is in place, which is regularly
inspected by the authorities; this involves daily product test-
ing and monitoring for compliance with national health and
food safety regulations. As well as ongoing adherence to the
highest standards, the company has made a commitment to
CORPORATE RESPONSIBILITY AND SUSTAINABILITY
71
ANNUAL REPORT 2022
GOVERNANCE
maintain our high omega 3 levels and maintain high custom-
er product quality scores.
BIOSECURITY, FISH HEALTH AND WELFARE
Bakkafrost is committed to upholding leading welfare stand-
ards and reducing the use of chemicals and medicines in
the prevention of disease and sea lice. The experienced fish
health team – made up of certified veterinarians, biologists,
and assistants – has a strategy in place to achieve this, which
includes surveillance across all sites to ensure that optimal
health and welfare is always maintained. The company has
made a commitment to maintain high fish survival rates, to
maintain an industry-leading approach to animal welfare and
to have zero fish escapes.
Environmental management and sustainable feed
Bakkafrost is committed to minimizing pollution of the envi-
ronment from each stage of the value chain. The company’s
Code outlines an intention to strive to be market leading in
environmental protection. All employees will be required to
bear in mind the environmental effects work-related activi-
ties have on nature and the environment and apply environ-
mentally friendly solutions to the extent reasonably possible.
The company is focused on optimizing its efficient use of fos-
sil fuels and has made a series of commitments towards the
health of the environment, including meeting a third-party
environmental standard, reducing the impact from packaging
on the environment and reducing its GHG emissions.
Collaboration and certification
As well as collaborating with the salmon industry through
the Faroese Aquaculture Association and the Global Salm-
on Initiative (GSI) Bakkafrost subscribes to several external
standards and certification programmes to ensure product
sustainability, quality and safety. The entire value chain in
the Faroe Islands – feed production, broodstock, hatcher-
ies, farming sites, and harvesting and processing plant – is
certified according to the international GLOBAL g.A.P. stand-
ard, which focuses on food safety throughout the production,
fish welfare, health and safety and environmental manage-
ment. Our value chain also has the Ohne Gentechnik Non-
GMO add on.
The operation in Scotland is accredited according to BAP (4-
star) and BRC for the processing plants and the smokehouse.
Bakkafrost’s harvesting and value-added product (VAP) pro-
duction have the Aquaculture Stewardship Council (ASC)
Chain of Custody certification, and the VAP production is cer-
tified according to the BRC and IFS food safety standards.
The fishmeal, oil and feed production at Havsbrún holds mul-
tiple certifications; all units are certified to ISO9001:2015,
and the fishmeal and fish oil division is certified according
to the GMP+ standards, the IFFO RS certification and the MSC
Chain of Custody standard. Our salmon meal and oil also
have GMP+.
All farming sites in the Faroe Islands are ASC certified.
Responsible leadership and value generation
The considerable value generated by Bakkafrost to the Faroe
Islands through employment, taxes and returns, means it has
a big responsibility to everyone with an invested interest
in the company. The company has made a commitment to
demonstrate responsible leadership at both a local and in-
ternational level and increase transparency on issues of high
stakeholder interest, such as community investment.
Further information on Bakkafrost’s management approach
to these issues, its plan to meet its commitments and its
2022 performance against them, can be found in Bakkaf-
rost’s 2022 Healthy Living Sustainability Report.
CORPORATE RESPONSIBILITY AND SUSTAINABILITY
72
ANNUAL REPORT 2022
GOVERNANCE
Shareholder
Information
Information to shareholders has high priority in Bakkafrost.
The company aims at maintaining a regular dialogue with
the Group’s shareholders through the formal channel of stock
exchange announcements, interim reports, annual reports,
annual general meetings and presentations to investors and
analysts.
AUDITORS
The consolidated accounts have been audited by P/F Januar,
løggilt grannskoðanarvirki (State Authorized Public Account-
ants), which is also the auditor of the parent company and
all its subsidiaries, registered in the Faroe Islands. Auditor
for subsidiaries
- Bakkafrost UK Ltd is Forrester Boyd Chartered Account-
ants, Grimsby
- Bakkafrost Scotland Ltd is Azets, Glasgow.
- Munkebo A/S is Beierholm, Aarhus
- SARL Faroe France, Terninck Laurent, Saint Omer.
DIVIDEND POLICY
Bakkafrost aims to give its shareholders a competitive re-
turn on their investment, both through payment of dividends
from the company and by securing an increase in the value
of the equity through positive operations.
Generally, the company should pay dividends to its share-
holders, but it is the responsibility of the Board of Direc-
tors to make an overall assessment to secure the company a
healthy capital base, both for the daily operations and for a
healthy future growth of the company.
A long-term goal for the Board of Directors is that 30–50% of
adjusted EPS shall be paid out as dividends.
Bakkafrost’s financial position is strong with a healthy bal-
ance sheet, a competitive operation and undrawn available
credit facilities.
PARENT COMPANY’S FINANCIAL STATEMENTS
AND ALLOCATION OF PROFIT FOR THE YEAR
The parent company P/F Bakkafrost had a net profit of DKK
756 million for 2022. The Board of Directors has decided to
propose to the Annual General Meeting that DKK 10.00 (ap-
proximately NOK 14.53*) per share shall be paid out as div-
idends. This corresponds to DKK 591 million (NOK 836* mil-
lion).
The Board thereby proposes the following allocation of funds:
- Result for 2022: DKK 756 million
- Transferred to other equity: DKK 165 million
- Total provision for dividends: DKK 591 million
After the payment of dividends, the distributable equity to-
tals DKK 9,087 million.
SHAREHOLDERS, CAPITAL AND VOTES
P/F Bakkafrost had on 31 December 2022, a total of
59,143,000 shares outstanding, each with a nominal value of
DKK 1. Of the 59,143,000 shares outstanding, P/F Bakkafrost
holds 44,519 treasury shares as at 31 December 2022.
Ticker code: BAKKA
LARGEST SHAREHOLDERS
These shareholders held directly or indirectly more than 5%
of the shares in the company as at 31 December 2022: Odd-
vør Jacobsen, Regin Jacobsen, Goldman Sachs Group, Inc. and
Folketrygdfondet.
* The dividend per share in NOK is subject to changes, depending on the currency
rate NOK/DKK. The currency rate NOK/DKK will be announced on ex-date.
SHAREHOLDER INFORMATION
73
ANNUAL REPORT 2022
GOVERNANCE
DIRECTORS AND MANAGEMENT
Directors and Management
74
ANNUAL REPORT 2022
GOVERNANCE
Directors’ Profiles
RÚNI M. HANSEN
Chairman of the Board
Born 1967. Faroese citizen. He joined the Board in 2009 and has
been Chairman since. The term of office expires in 2023. He is con-
sidered to be independent. Executive Chairman of the industry hold-
ing company Tjaldur. Chairman of the Board of Mintra. Mintra is a
listed company on Oslo Euronext Growth.
Education:
MSc. in Economics and Business Administration, Copenhagen Busi-
ness School. Postgraduate, Lancaster University.
Board meetings in 2022:
Participated in all 8 Board meetings in 2022.
Number of shares held in Bakkafrost:
Holds 10,761 shares – no change in portfolio in 2022.
Mr Hansen is a member of The UN Global Compact´s Platform for
Sustainable Ocean Business. He was a member of the World Eco-
nomic Forum´s Agenda Council on the Arctic from 2012 to 2016.
Mr Hansen has extensive experience in the seafood industry and
the international energy industry. He was among other members
of Equinor´s Exploration Executive team. During his time in Equinor
(former Statoil), he has been based in London, Copenhagen, Oslo and
The Faroe Islands. Prior to Equinor (Statoil) he was in the seafood and
shipping industry.
TEITUR SAMUELSEN
Board member
Born 1972. Faroese citizen. He joined the Board in 2016. The term of
office expires in 2023. He is considered to be independent. Managing
Director at P/F Eystur- og Sandoyartunlar and P/F Suðuroyartunlar.
Education:
MSc. in Business Economics & Auditing, Copenhagen Business School.
Board meetings in 2022:
Participated in all 8 Board meetings in 2022.
Number of shares in Bakkafrost:
Holds 100 shares – no change in portfolio in 2022.
Mr Samuelsen has extensive experience in accounting and finance.
He has worked at KMPG and Dong E&P in Denmark and has been
CFO at Atlantic Petroleum (2005-2009) and Bakkafrost (2009-2014).
Mr Samuelsen is presently a member of the Board of Directors at
Betri Trygging. He is also a chairman of the board in Bústaðir, and a
member of the Faroese auditor supervision board.
ANNIKA FREDERIKSBERG
Board member
Born 1971. Faroese citizen. She joined the Board in 2008. The term
of office expires in 2023. She is not considered to be independent.
Sales Manager at Bakkafrost.
Education:
Basic Vocational Course, Commercial Line, Faroese Business School.
Board meetings in 2022:
Participated in all 8 Board meetings in 2022.
Number of shares in Bakkafrost:
Holds directly and indirectly 16,413 shares – change in portfolio in
2022: +163 shares.
Mrs Frederiksberg has extensive experience in the salmon industry
and sales. She has been part of Bakkafrost’s administration team and
sales team for over 25 years.
DireCtorS’ profileS
75
ANNUAL REPORT 2022
GOVERNANCE
ØYSTEIN SANDVIK
Board member
Born 1948. Norwegian citizen. He joined the Board in 2013. The term
of office expires in 2023. He is considered to be independent.
Education:
Bank Economist.
Board meetings in 2022:
Participated in all 8 Board meetings in 2022.
Number of shares in Bakkafrost:
Holds no shares – no change in portfolio in 2022.
Mr Sandvik has extensive experience in the finance sector and sea-
food. He has held several positions at Nordea Bank Norge within fish
farming and fishery. Mr Sandvik is presently a member of the Board
of Directors of Coldwater Prawns of Norway AS.
EINAR WATHNE
Board member
Born 1961. Norwegian citizen. He joined the Board in 2019. The term
of office expires in 2023. He is considered to be independent.
Education:
Master in Animal Nutrition at NMBU.
Ph.D. in Aquaculture, NMBU.
MBA, Handelshøyskolen BI
Board meetings in 2022:
Participated in all 8 Board meetings in 2022.
Number of shares in Bakkafrost:
Holds no shares – no change in portfolio in 2022.
Mr Wathne has extensive experience in the seafood business. Mr
Wathne has held positions as CEO in Cargill and EWOS.
GUÐRIÐ HØJGAARD
Board member
Born 1972. Faroese citizen. Joined the board in 2022. Term of office
expires in 2023. She is considered to be independent. She is current-
ly CEO of Visit Faroe Islands and previously Marketing Director of
Visit Stockholm.
Education:
MSc. in Business Administration & International Marketing, Copenha-
gen Business School and Stockholm University.
Board meetings in 2022:
Participated in 6 Board meetings in 2022.
Number of shares in Bakkafrost:
Holds no shares – no change in portfolio in 2022.
Mrs. Højgaard has extensive experience from international marketing
and branding. She has worked in the travel and tourism industry in
Sweden, Denmark and the Faroe Islands. Mrs. Højgaard is presently
a member of the Board of Directors at P/F Postverk Føroya and The
Faroese Business Development Fund (Framtak).
DIRECTORS’ PROFILES
76
ANNUAL REPORT 2022
GOVERNANCE
Group Management’s Profi les
REGIN JACOBSEN
Chief Executive Offi cer
Born 1966. Faroese citizen. Mr Jacobsen has been Chief Executive
Offi cer of Bakkafrost since 1989.
Education:
Graduate Diploma in Business Administration and Accounting (HD-R),
Aarhus School of Business.
Number of shares held in Bakkafrost:
Holds 4,617,951 shares at year-end 2022.
Changes in portfolio in 2022: +600 shares.
Mr Jacobsen has extensive experience in the salmon industry and
fi nances. He was the Financial Manager of Bakkafrost before he be-
came Chief Executive Offi cer of Bakkafrost.
HØGNI DAHL JAKOBSEN
Chief Financial Offi cer
Born 1972. Faroese & Swedish citizen. Mr Jakobsen has been Chief
Financial Offi cer of Bakkafrost since 2019.
Education:
Business Design, Henley Business School.
MSc in Business Administration and Computer Science (cand.merc.
dat), Copenhagen Business School.
Number of shares held in Bakkafrost:
Holds directly and indirectly 75,024 shares at year-end 2022.
Changes in portfolio in 2022: +431 shares.
Mr Jakobsen has extensive experience in the management consult-
ing sector. Before joining Bakkafrost, he has held positions as Senior
Partner in Quorum Consulting and been Management Consultant at
PA Consulting Group.
ODD ELIASEN
Managing Director of Havsbrún
Born 1965. Faroese citizen. Mr Eliasen has been Managing Director
of Havsbrún since 2012.
Education:
Teacher Certifi cate Exam, University of the Faroe Islands.
Number of shares held in Bakkafrost:
Holds 185,391 shares at year-end 2022.
Changes in portfolio in 2022: +422 shares.
Mr Eliasen has broad experience in the fi sh farming industry and has
been an active player in restructuring the fi sh farming industry in the
Faroe Islands. He has been responsible for Havsbrún’s farming activ-
ities and has held various board positions in the industry. Mr Eliasen
was a board member of Bakkafrost from 2006 to 2012.
GROUP MANAGEMENT’S PROFILES
77
ANNUAL REPORT 2022
Statement by
the Management
and the Board of
Directors on the
Annual Report
Today, the Management and the Board of Directors have con-
sidered and approved the Annual and Consolidated Report
and Accounts of P/F Bakkafrost for the financial year 1 Jan-
uary 2022 to 31 December 2022.
The Annual Report has been prepared in accordance with the
International Financial Reporting Standards as adopted by
the EU and Faroese disclosure requirements for listed com-
panies.
In our opinion, the accounting policies used are appropriate,
and the Annual and Consolidated Report and Accounts gives
a true and fair view of the Group's and parent company's fi-
nancial positions at 31 December 2022, as well as the results
of the Group's and the parent company's activities and cash
flows for the financial year 1 January 2022 to 31 December
2022.
In our opinion, the management's review provides a true and
fair account of the development in the Group's and the par-
ent company's operations and financial circumstances, of the
results for the year and of the overall financial position of
the Group and the parent company as well as a description of
the most significant risks and elements of uncertainty facing
the Group and the parent company.
We recommend that the annual report be adopted at the an-
nual general meeting.
Glyvrar, 31 March 2023
Management:
Regin Jacobsen
CEO
The Board of Directors of P/F Bakkafrost
Rúni M. Hansen Øystein Sandvik Annika Frederiksberg
Chairman of the Board Board Member Board Member
Teitur Samuelsen Einar Wathne Guðrið Højgaard
Board Member Board Member Board Member
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT
78
ANNUAL REPORT 2022
Independent
Auditor’s Report
To the Shareholders of P/F Bakkafrost
Report on the Audit of the Consolidated financial statements
and parent company financial statements
Opinion
We have audited the consolidated financial statements and
parent company financial statements of P/F Bakkafrost and
its subsidiaries (the Group), which comprise the consolidated
statement of financial position as at December 31, 2022, and
the consolidated statement of comprehensive income, con-
solidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes
to the consolidated financial statements and parent company
financial statements, including a summary of significant ac-
counting policies.
In our opinion, the accompanying consolidated financial
statements and parent company financial statements give a
true and fair view of the consolidated financial position of
the Group and the parent company as at December 31, 2022,
and of its consolidated financial performance and its con-
solidated cash flows for the year then ended in accordance
with International Financial Reporting Standards (IFRSs) as
adopted by the EU and further requirements in the Faroese
Financial Statements Act. Our opinion is consistent with our
auditor’s long-form report to the audit committee and the
board of directors
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (ISAs) and additional requirements ap-
plicable in the Faroe Islands. Our responsibilities under those
standards and requirements are further described in the Au-
ditor’s Responsibilities for the audit of the Consolidated fi-
nancial statements and parent company financial statements
section of our report.
We are independent of the Group in accordance with the
International Ethics Standards Board for Professional Ac-
countants (IESBA Code) and the additional ethical require-
ments applicable in the Faroe Islands, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
To the best of our knowledge and belief, prohibited non-au-
dit services referred to in article 5(1) of Regulation (EU)
no 537/2014 were not provided.
We believe that the audit evidence we have obtained is suf-
ficient and appropriate to provide a basis for our opinion.
Appointment
P/F Januar was first appointed auditors of P/F Bakkafrost
on 18 April 2013 for the financial year 2013. We have been
reappointed by shareholders on AGMs for an annual engage-
ment every year since.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the con-
solidated financial statements of the current period. These
matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opin-
ion on these matters.
INDEPENDENT AUDITOR’S REPORT
79
ANNUAL REPORT 2022
Responsibilities of Management and Those Charged
with Governance for the Consolidated financial
statements and parent company financial statements
Management is responsible for the preparation and fair pres-
entation of the consolidated financial statements and parent
company financial statements in accordance with IFRSs as
adopted by the EU and further requirements in the Faro-
ese Financial Statements Act, and for such internal control as
management determines is necessary to enable the prepara-
tion of consolidated financial statements and parent compa-
ny financial statements that are free from material misstate-
ment, whether due to fraud or error.
In preparing the consolidated financial statements and par-
ent company financial statements, management is responsi-
ble for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting un-
less management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the
Consolidated financial statements and parent company
financial statements
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements and parent
company financial statements, as a whole, are free from ma-
terial misstatement, whether due to fraud or error, and to is-
sue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of these consolidated financial statements and
parent company financial statements.
Key Audit matter Our response to the matter during our audit
Biomass at cost
Biomass at marine sites is not accurately ascertainable prior to
harvest and material accounting estimates are applied at the
balance sheet date regarding existence and valuation. Estimates
are based on information on the number at launch, feeding,
sea temperature, exposure to daylight and treatment for lice
and other health issues, and knowledge about how salmon
responds to these factors in terms of growth rate, mortality, feed
consumption ratio, and liability to stress and decease. Material
inherent risk is related to biomass at sea.
Summary of the audit approach
During our audit, we:
• Applied our experience and knowledge about the characteristics
of the salmon production process when considering the
accounting estimates.
• Assured ourselves, that the estimates are based on factual data
and data which can be supported empirically.
• Assured ourselves, that management is applying estimates in
a way consistent with knowledge of the production process,
and that the estimates are performed consistently, and that the
estimates are free from bias.
• Assured ourselves of the ability of management to perform
these estimates by examining estimates made by management
at prior balance sheet dates on a back-end basis.
Biomass at Fair Value according to IAS 41
Measuring biomass at fair value includes present value
calculations based on complex inputs regarding the properties
of existing biomass and forecast regarding growth and mortality
rates from the balance sheet date to harvest, quality distributions,
as well as market conditions at expected harvest date.
Summary of the audit approach
During our audit, we:
• Reviewed and reconciled the company-specific characteristics
of inputs into the valuation models
• Reconciled inputs into the calculations model to observable
market conditions at the balance sheet date.
• Reviewed the calculation model and ascertained that it is
comparable to industry standards.
• On a sample bases reperformed net present value calculation.
Valuation of licenses and goodwill
The group has acquired production licenses at significant
amounts as part of business combinations where the group is
identified as acquiree according to IFRS 3. During the Purchase
Price Allocation process, licenses and goodwill at material
amounts were identified. Carrying amounts are calculated using
generally accepted valuation models, based on unobservable
inputs according to level 3 inputs in IFRS13.
During our audit, we:
Reviewed impairment model, and ascertained that it is built on
observable assumptions
• Aligned inputs to board approved plans and budgets, and
historical performance of the individual licenses
• Reviewed valuation models for mathematical coherence and
reperformed calculations on a test basis.
• Reviewed and challenged the indefinite useful life assumptions.
INDEPENDENT AUDITOR’S REPORT
80
ANNUAL REPORT 2022
As part of an audit in accordance with ISAs as adopted by
the EU and additional requirements applicable in the Faroe
Islands, we exercise professional judgment and maintain pro-
fessional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the consolidated financial statements and parent company
financial statements, whether due to fraud or error, de-
sign and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and ap-
propriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrep-
resentations, or the override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are ap-
propriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s
internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and relat-
ed disclosures made by management.
• Conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast signif-
icant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial state-
ments and parent company financial statements or, if such
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events
or conditions may cause the Group to cease to continue as
a going concern.
• Evaluate the overall presentation, structure and content of
the consolidated financial statements and parent company
financial statements, including the disclosures, and wheth-
er the consolidated financial statements and parent com-
pany financial statements represent the underlying trans-
actions and events in a manner that gives a true and fair
view.
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express an opinion on the consolidated
financial statements and parent company financial state-
ments. We are responsible for the direction, supervision
and performance of the group audit. We remain solely re-
sponsible for our audit opinion.
We communicate with those charged with governance re-
garding, among other matters, the planned scope and tim-
ing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a state-
ment that we have complied with relevant ethical require-
ments regarding independence, and to communicate with
them all relationships and other matters that may reason-
ably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial state-
ments and parent company financial statements of the cur-
rent period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such
communication.
Statement on the management’s review
Management is responsible for the management’s review.
Our opinion on the consolidated financial statements and
parent company financial statements does not cover the
management’s review, and we do not express any kind of
assurance opinion thereon.
In connection with our audit of the consolidated financial
statements and parent company financial statements, our re-
sponsibility is to read the management’s review and, in doing
so, consider whether the management’s review is materially
inconsistent with the consolidated financial statement or our
knowledge obtained during the audit, or whether it other-
wise appears to be materially misstated.
Further, it is our responsibility to consider whether the man-
agement’s review provides the information required by the
International Financial Reporting Standards as adopted by
EU and further requirements in the Faroe Islands financial
statements act.
Based on the work we have performed, we believe that the
management’s review is in accordance with the consolidat-
ed financial statements and parent company financial state-
ments and that it has been prepared in accordance with the
requirements of the International Financial Reporting Stand-
ards as adopted by EU and further requirements in the Faroe
Islands financial statements act.
We did not identify any material misstatement in the man-
agement’s review.
Report on compliance with the ESEF Regulation
As part of our audit of the Consolidated Financial Statements,
we performed procedures to express an opinion on wheth-
er the Consolidated Financial Statements of P/F Bakkafrost
for the financial year 1 January to 31 December 2022 with
the filename 2138007LH7OP4V112978-2022-12-31-en.zip
INDEPENDENT AUDITOR’S REPORT
81
ANNUAL REPORT 2022
is prepared, in all material respects, in compliance with the
Commission Delegated Regulation (EU) 2019/815 on the Eu-
ropean Single Electronic Format (ESEF Regulation) which in-
cludes requirements related to the preparation of the annual
report in XHTML format and iXBRL tagging of the Consolidat-
ed Financial Statements.
Management is responsible for preparing a consolidated fi-
nancial statement that complies with the ESEF Regulation.
This responsibility includes:
• The preparing of the annual report in XHTML format.
• The selection and application of appropriate iXBRL tags,
including extensions to the ESEF taxonomy and the an-
choring thereof to elements in the taxonomy, for all fi-
nancial information required to be tagged using judgement
where necessary.
• Ensuring consistency between iXBRL tagged data and
the Consolidated Financial Statements presented in hu-
man-readable format; and
• For such internal control as Management determines nec-
essary to enable the preparation of a consolidated finan-
cial statement that is compliant with the ESEF Regulation.
Our responsibility is to obtain reasonable assurance on
whether the Consolidated Financial Statement is prepared, in
all material respects, in compliance with the ESEF Regulation
based on the evidence we have obtained and to issue a re-
port that includes our opinion. The nature, timing and extent
of procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material departures
from the requirements set out in the ESEF Regulation, wheth-
er due to fraud or error. The procedures include:
• Testing whether the Consolidated Financial Statement is
prepared in XHTML format.
• Obtaining an understanding of the company’s iXBRL tag-
ging process and of internal control over the tagging pro-
cess.
• Evaluating the completeness of the iXBRL tagging of the
Consolidated Financial Statements.
• Evaluating the appropriateness of the company’s use of
iXBRL elements selected from the ESEF taxonomy and the
creation of extension elements where no suitable element
in the ESEF taxonomy has been identified.
• Evaluating the use of anchoring of extension elements to
elements in the ESEF taxonomy; and
• Reconciling the iXBRL tagged data with the audited Consol-
idated Financial Statements.
In our opinion, the Consolidated Financial Report of P/F
Bakkafrost for the financial year 1 January to 31 December
2022 with the file name 2138007LH7OP4V112978-2022-
12-31-en.zip is prepared, in all material respects, in compli-
ance with the ESEF Regulation.
Tórshavn, 31. March 2023
Januar P/F
løggilt grannskoðanarvirki
State Authorized Public Accountants • Company reg.no. 5821
Fróði Sivertsen
State Authorised Public Accountant
John Michal Petersen
State Authorised Public Accountant
INDEPENDENT AUDITOR’S REPORT
82
ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S REPORT
83
ANNUAL REPORT 2022
Financial
Statements
and Notes
BAKKAFROST GROUP
84
Table of Contents
BAKKAFROST GROUP
Consolidated Income Statement 88
Consolidated Statement of Other Comprehensive Income 89
Consolidated Statement of Financial Position 90
Consolidated Cash Flow Statement 92
Consolidated Statement of Changes in Equity 93
NOTES – SECTION 1 – BASIS OF PREPARATION 95
This section gives an overview of the financial accounting policies in general and an overview of the management’s key accounting estimates.
Note 1. General Information 95
Note 1.1 Summary of Significant Accounting Policies 95
Note 1.2 Basis of Presentation 95
Note 1.3 Consolidation Principles 95
Note 1.4 Translation of Foreign Currencies 96
Note 1.5 Classification Principles 96
Note 1.6 Functional Currency 96
Note 1.7 New Standards 97
Note 1.8 Accounting Estimates 97
Note 1.9 IXBRL Reporting 97
TABLE OF CONTENTS - BAKKAFROST GROUP
85
ANNUAL REPORT 2022
NOTES – SECTION 2 – RESULTS FOR THE YEAR 98
This section gives more details on the results for the year, including operating segments, taxes, and employee costs.
Note 2.1 Revenue 98
Note 2.2 Major Customers 98
Note 2.3 Operating Segment Information 99
Note 2.4 Salaries and other Personnel Expenses 103
Note 2.5 Other Operating Expenses and other Income 105
Note 2.6 Research and Development Expenses 105
Note 2.7 Net Financial Items 106
Note 2.8 Tax 107
NOTES – SECTION 3 – ASSETS AND LIABILITIES 109
This section gives more details on the assets that form the basis for the activities of bakkafrost and the related liabilities.
Note 3.1 Intangible Assets 109
Note 3.2 Property, Plant and Equipment 113
Note 3.3 Leasing 115
Note 3.4 Companies in the Group 117
Note 3.5 Shares and Holdings in Other Companies 119
Note 3.6 Inventory 120
Note 3.7 Biological Assets 121
Note 3.8. Accounts Receivable and other Receivables 124
Note 3.9 Cash and Cash Equivalents 125
Note 3.10 Share Capital and Major Shareholders 126
Note 3.11 Interest-Bearing Debt 128
Note 3.12 Mortgages and Guarantees 131
Note 3.13 Derivatives 132
TABLE OF CONTENTS - BAKKAFROST GROUP
86
ANNUAL REPORT 2022
NOTES – SECTION 4 – CAPITAL STRUCTURE AND FINANCING ITEMS 134
This section gives an insight into the capital structure and financing items.
Note 4.2 Categories and Fair Value of Financial Instruments 139
Note 4.3 Earnings Per Share 140
NOTES – SECTION 5 – OTHER DISCLOSURES 141
This section gives more details on the statutory notes that have secondary importance from the perspective of bakkafrost.
Note 5.1. Capital Commitments 141
Note 5.2 Related-Party Transactions 142
Note 5.3 Business Combinations 143
Note 5.4 Events after the Date of the Statement of Financial Position 145
Note 5.5 Auditor’s Fees 145
Note 5.6 Going Concern 146
Note 5.7 Alternative Performance Measures 146
TABLE OF CONTENTS - BAKKAFROST GROUP
87
ANNUAL REPORT 2022
Consolidated
Income Statement
FOR THE YEAR ENDED 31 DECEMBER
*Operational EBIT is EBIT before fair value adjustment of biomass, onerous
contracts, income from associates and revenue tax
DKK 1,000 2022 2021
Operating revenue 7,129,967 5,553,849
Purchase of goods -2,756,273 -1,692,501
Change in inventory and biological assets (at cost) 666,550 -178,060
Salary and personnel expenses 2.4 -831,679 -728,423
Other operating expenses 2.5 -1,990,299 -1,632,114
Depreciation 3.1/3.2/3.3 -537,480 -530,434
Other income 2.5 24,379 28,877
Operational EBIT* 1,705,165 821,194
Fair value adjustments of biological assets 3.7 278,392 434,868
Income from associates 57,597 30,112
Revenue tax – FO -215,001 -141,489
Earnings before interest and taxes (EBIT) 1,826,153 1,144,685
Financial income 2.7 7,000 5,415
Financial expenses 2.7 -65,039 -40,608
Net currency effects 2.7 -69,066 38,761
Other financial items 2.7 -8,713 -10,591
Earnings before taxes (EBT) 1,690,335 1,137,662
Taxes 2.8 -346,005 -173,626
Profit or loss for the period continuing operations 1,344,330 964,036
Profit or loss for the year attributable to
Non-controlling interests -780 -17
Owners of P/F Bakkafrost 1,345,110 964,053
Earnings/Diluted earnings per share (DKK) 4.3 22.75 16.32
CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
88
ANNUAL REPORT 2022
Consolidated
Statement of Other
Comprehensive
Income
FOR THE YEAR ENDED 31 DECEMBER
DKK 1,000 2022 2021
Profit for the year 1,344,330 964,036
Change in tax rate on equity posted PPA in prior years 0 -193,574
Changes on financial derivatives 11,102 12,928
Hereof income tax effect -1,103 -1,972
Reserve to share based payment 12,760 1,570
Currency translation differences -28,490 36,139
Reclassification - Currency translation differences fund 0 -24,452
Reclassification - Biomass Fair value adjustments fund 0 24,452
Net other comprehensive income to be reclassified to profit or loss in subsequent periods -5,731 -144,909
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods 0 0
Other comprehensive income -5,731 -144,909
Total comprehensive income for the year net tax 1,338,599 819,127
Total comprehensive income attributable to
Non-controlling interests -780 -17
Owners of P/F Bakkafrost 1,339,379 819,144
CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
89
ANNUAL REPORT 2022
Consolidated
Statement of
Financial Position
AS AT 31 DECEMBER
DKK 1,000 Note 2022 2021
ASSETS
Non-current assets
Intangible assets 3.1 4,508,704 4,495,726
Total intangible assets 4,508,704 4,495,726
Property, plant and equipment 3.2 5,647,161 4,888,778
Right of use assets 3.3 438,545 302,105
Total property, plant and equipment 6,085,706 5,190,883
Non-current financial assets
Investments in associated companies 3.4 233,276 93,904
Investments in stocks and shares 3.5 933 55,321
Long-term receivables 3.8 0 8,102
Deferred tax assets 2.8 336,020 215,248
Total non-current financial assets 570,229 372,575
TOTAL NON-CURRENT ASSETS 11,164,639 10,059,184
Current assets
Biological assets (biomass) 3.7 2,938,485 2,448,290
Inventory 3.6 1,074,344 709,306
Total inventory 4,012,829 3,157,596
Derivatives 3.13 7,474 0
Accounts receivables 3.8 808,755 620,324
Tax receivables 2.8 65,822 109,701
Other receivables 3.8 102,450 172,206
Total receivables 984,501 902,231
Cash and cash equivalents 3.9 719,603 509,157
TOTAL CURRENT ASSETS 5,716,933 4,568,984
TOTAL ASSETS 16,881,572 14,628,168
CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
90
ANNUAL REPORT 2022
DKK 1,000 Note 2022 2021
EQUITY AND LIABILITIES
Equity
Share capital 3.10 59,143 59,143
Other equity 10,333,259 9,288,269
Non-controlling interest 3,411 133
Total equity 10,395,813 9,347,545
Non-current liabilities
Deferred taxes 2.8 1,825,873 1,590,034
Long-term interest-bearing debt 3.11 3,383,289 2,634,968
Long-term leasing debt 3.3 353,355 245,753
Derivatives 3.13 0 3,207
Total non-current liabilities 5,562,517 4,473,962
Current liabilities
Financial derivatives 3.13 0 4,602
Trade payables 478,750 510,357
Current tax liabilities 2.8 237,780 170,997
Short-term leasing debt 3.3 106,215 87,668
Other current liabilities 100,497 33,037
Total current liabilities 923,242 806,661
Total liabilities 6,485,759 5,280,623
TOTAL EQUITY AND LIABILITIES 16,881,572 14,628,168
CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
91
ANNUAL REPORT 2022
Consolidated Cash
Flow Statement
FOR THE YEAR ENDED 31 DECEMBER
Accounting Policies
The Group’s statement of cash flow shows a breakdown of
the Group’s overall cash flow into operating, investing and
financing activities. The cash flow statement is prepared ac-
cording to the indirect method. The statement shows the in-
dividual activity’s impact on cash and cash equivalents. The
cash flow deriving from the acquisition and sale of business-
es is presented under investing activities.
DKK 1,000 Note 2022 2021
Cash flow from operations
EBIT 1,826,153 1,144,685
Adjustments for write-downs and depreciation 3.1/3.2/3.3 537,480 530,434
Adjustments for fair value adjustments on biomass 3.7 -278,392 -434,868
Adjustments for income from associates -57,597 -30,112
Adjustments for currency effects -145,495 45,160
Taxes paid -170,748 -54,327
Change in inventory -576,841 142,314
Change in receivables -208,951 -493,831
Change in current debts 276,247 275,099
Cash flow from operations 1,201,856 1,124,554
Cash flow from investments
Proceeds from sale of fixed assets 368 667
Payments made for purchase of fixed assets 3.2 -1,235,680 -1,115,680
Purchase of shares and other investments -27,387 2,775
Change in long-term receivables 8,102 -1
Cash flow from investments -1,254,597 -1,112,239
Cash flow from financing
Change in revolving credit facilities 735,352 404,600
Financial income 4,310 3,542
Financial expenses -68,255 -56,427
Lease payment -117,022 -116,897
Proceeds/Acquisition of treasury shares 12,797 10,957
Dividend paid -303,995 -215,872
Cash flow from financing 263,187 29,903
Net change in cash and cash equivalents in period 210,446 42,218
Cash and cash equivalents – opening balance 509,157 466,939
Cash and cash equivalents – closing balance total 719,603 509,157
CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
92
ANNUAL REPORT 2022
Consolidated
Statement of
Changes in Equity
AS AT 31 DECEMBER
Restricted equity comprises equity in which dis-
tribution to the shareholders may only take place
adhering to specific procedures prescribed by the
Faroese Limited Companies Act. Restricted equi-
ty consists of Equity Recognition Surplus and Fair
Value Adjustments of Biomass. Free equity may be
readily distributed to the shareholders, or otherwise
disposed of, after due approval by the AGM. The
composition of equity may be specified as follows:
Share Share- Currency Non
Share Premium Treasury Based translation Fair value Retained controlling Total
DKK 1,000 Capital Reserve Shares Payment differences Derivatives Dividend adjustments Earnings interest Equity
Equity 01.01.2022 59,143 4,027,375 -26,767 7,799 46,232 -3,873 303,995 604,707 4,328,801 133 9,347,545
Consolidated profit 0 0 0 0 0 0 0 278,392 1,066,718 -780 1,344,330
Changes in financial derivatives 0 0 0 0 0 11,102 0 0 0 0 11,102
Hereof tax effect 0 0 0 0 0 -1,103 0 0 0 0 -1,103
Share-based payment 0 0 0 12,760 0 0 0 0 0 0 12,760
Currency translation differences 0 0 0 0 -28,490 0 0 0 0 0 -28,490
Total other comprehensive income 0 0 0 12,760 -28,490 9,999 0 0 0 0 -5,731
Total comprehensive income 0 0 0 12,760 -28,490 9,999 0 278,392 1,066,718 -780 1,338,599
Treasury shares 0 0 8,255 0 0 0 0 0 1,349 0 9,604
Addition of non-controlling interests 0 0 0 0 0 0 0 0 0 4,060 4,060
Paid-out dividend 0 0 0 0 0 0 -303,995 0 0 0 -303,995
Proposed dividend 0 0 0 0 0 0 591,430 0 -591,430 0 0
Total transaction with owners 0 0 8,255 0 0 0 287,435 0 -590,081 4,060 -290,331
Total changes in equity 0 0 8,255 12,760 -28,490 9,999 287,435 278,392 476,637 3,280 1,048,268
Total equity 31.12.2022 59,143 4,027,375 -18,512 20,559 17,742 6,126 591,430 883,099 4,805,438 3,413 10,395,813
DKK 1,000
Equity 01.01.2021 59,143 4,027,375 -37,672 6,229 34,545 -14,829 215,872 145,387 4,293,438 0 8,729,487
Consolidated profit 0 0 0 0 0 0 0 434,868 529,185 -17 964,036
Change in tax rate on equity posted PPA in prior years 0 0 0 0 0 0 0 0 -193,574 0 -193,574
Changes in financial derivatives 0 0 0 0 0 12,928 0 0 0 0 12,928
Hereof tax effect 0 0 0 0 0 -1,972 0 0 0 0 -1,972
Share-based payment 0 0 0 1,570 0 0 0 0 0 0 1,570
Currency translation differences 0 0 0 0 36,139 0 0 0 0 0 36,139
Reclassification between funds 0 0 0 0 -24,452 0 0 24,452 0 0 0
Total other comprehensive income 0 0 0 1,570 11,687 10,956 0 24,452 -193,574 0 -144,909
Total comprehensive income 0 0 0 1,570 11,687 10,956 0 459,320 335,611 -17 819,127
Treasury shares 0 0 10,905 0 0 0 0 0 3,748 0 14,653
Addition of non-controlling interests 0 0 0 0 0 0 0 0 0 150 150
Paid-out dividend 0 0 0 0 0 0 -215,872 0 0 0 -215,872
Proposed dividend 0 0 0 0 0 0 303,995 0 -303,995 0 0
Total transaction with owners 0 0 10,905 0 0 0 88,123 0 -300,247 150 -201,069
Total changes in equity 0 0 10,905 1,570 11,687 10,956 88,123 459,320 35,364 133 618,058
Total equity 31.12.2021 59,143 4,027,375 -26,767 7,799 46,232 -3,873 303,995 604,707 4,328,801 133 9,347,545
CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
93
ANNUAL REPORT 2022
Notes to the
Consolidated
Financial
Statements
BAKKAFROST GROUP
94
ANNUAL REPORT 2022
SECTION 1
NOTES – SECTION 1
Basis
of Preparation
This section gives an overview of the financial accounting
policies in general and an overview of the management’s key
accounting estimates.
NOTE 1. GENERAL INFORMATION
iciled in the Faroe Islands at Bakkavegur 9, Glyvrar .
P/F Bakkafrost was listed on Oslo Stock Exchange in 2010
with the ticker code: BAKKA.
NOTE 1.1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation
of these consolidated financial statements are set out below.
These policies have been consistently applied to all periods
presented.
NOTE 1.2 BASIS OF PRESENTATION
The Annual Report comprises the income statement, state-
ment of comprehensive income, statement of financial posi-
tion, specification of changes in equity, cash flow statement
and note disclosures for the Group. The accounting year
equals the calendar year. The financial statements were for-
mally drawn up in accordance with International Financial
Reporting Standards (IFRS) and the interpretations issued by
the International Accounting Standards Board as approved
by the European Community and the additional requirements
in the Faroese Financial Reporting act.
The Annual and Consolidated Report and Accounts for the
period 1 January to 31 December 2022 comprises both the
Consolidated Annual Report and Accounts for P/F Bakkafrost
and its subsidiaries (Group) and the separate Annual Ac-
counts for the parent company.
The financial statements were formally authorized for issue
by the Board of Directors on 31 March 2023.
The Annual Report has been prepared on a historical cost
basis except for where IFRS requires recognition at fair value,
mainly valuation of licences, which are acquired by business
combinations, and of biomass.
Preparation of the financial statements involves the use of
estimates and assumptions. Changes in estimates and esti-
mated assumptions are accounted for when they occur. De-
scriptions about the various estimates applied are given in
the notes to the accounts where relevant.
NOTE 1.3 CONSOLIDATION PRINCIPLES
The consolidated financial statements include P/F Bakkafrost
and the subsidiaries over which P/F Bakkafrost has a con-
trolling influence either by shareholding or by agreement. A
controlling interest is normally deemed to exist when own-
ership directly or indirectly exceeds 50% of the voting rights.
Controlling interest may also exist by nature of agreement.
Similarly, limitations in voting rights by agreement may im-
pede exercise of control, and the investment concerned will
be considered an associate.
Newly acquired subsidiaries are included from the date on
which a controlling interest is secured, and divested subsid-
iaries are included up until the date of divestment. The con-
solidated accounts have been prepared in accordance with
uniform accounting principles for similar transactions in all
companies included in the consolidated accounts.
All material transactions and balances between Group Com-
panies have been eliminated.
Shares in subsidiaries have been eliminated in the consoli-
dated financial statements in accordance with the acquisition
method. This means that the acquired company’s assets and
liabilities are reported at fair value at the date of acquisition,
with any excess value being classified as goodwill. Where the
fair value of the assets acquired exceeds the payment made,
the difference is treated as negative goodwill in the Income
Statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
95
ANNUAL REPORT 2022
SECTION 1
When shares are acquired in stages, the value basis of the
assets and liabilities is the date, the Group was formed. Later
acquisition of assets in existing subsidiaries will not affect
the value of assets or liabilities, except for goodwill, which is
calculated with each acquisition.
Investments in companies in which the Group has a signifi-
cant influence (associated companies) are treated in accord-
ance with the equity method in the consolidated accounts. A
considerable influence is normally deemed to exist when the
Group owns 20%–50% of the voting capital. The Group’s share
of the profits in such companies is based on profit after tax,
less internal gains, and depreciation on excess value due to
the cost price of the shares being higher than the acquired
portion of book equity. In the Income Statement, the profit
share is presented on a separate line, while the assets are
presented in the statement of financial position as non-cur-
rent financial assets. The accounting principles used by as-
sociated companies have been changed where necessary to
achieve consistency with the principles used by the Group.
NOTE 1.4 TRANSLATION OF FOREIGN
CURRENCIES
For each individual entity, which is recognized in the consoli-
dated accounts, a functional currency is determined in which
the entity measures its results and financial position. The
functional currency is the currency of the primary economic
environment in which the entity operates. Transactions in
other currencies than the functional currency are transac-
tions in a foreign currency.
A foreign currency transaction is, on initial recognition, re-
corded in the functional currency at the spot exchange rate
between the functional currency and the foreign currency on
the date of the transaction.
At each balance sheet date, receivables, payables, and oth-
er monetary items in foreign currency are translated to the
functional currency using the closing rate. Exchange differ-
ences arising on the settlement of monetary items or on
translating monetary items, at rates different from those at
which they were translated on initial recognition during the
period or in previous financial statements, shall be recog-
nized in the income statement under financial revenues and
expenses.
On consolidation, the results and financial position of the
Group’s individual entities with different functional curren-
cies than the Group’s presentation currency (DKK) are trans-
lated into the Group’s presentation currency using the fol-
lowing procedure:
• Assets and liabilities are translated at the closing rate at
the date of the balance sheet.
• Income and expenses are translated at exchange rates at
the dates of the transactions.
• All resulting exchange differences are recognized directly
in equity as a separate component of equity. For practical
reasons an average rate for the period that approximates
the exchange rates at the dates of the transactions is used.
NOTE 1.5 CLASSIFICATION PRINCIPLES
Biomass is recognized at fair value in the Statement of Fi-
nancial Position. Changes in biomass and inventory meas-
ured at cost are presented as a one-line item in the Income
Statement. Biomass at cost consists of all production costs.
The biomass is then adjusted to fair value, i.e., market value
less finishing costs, by adding or subtracting an IFRS adjust-
ment. The IFRS adjustment is the difference between bio-
mass measured at cost and measured at fair value.
fall due for payment within 12 months, are classified as cur-
rent assets. Other assets are classified as non-current assets.
Liabilities, which form part of the production cycle or fall
due for payment within 12 months, are classified as current
liabilities. Other liabilities are classified as non-current lia-
bilities.
Dividend proposals are not classified as liabilities until the
parent company has assumed an irrevocable obligation to
pay the dividend, normally when dividend proposals have
been approved by the Annual General Meeting.
Next year’s instalments on long-term debts are classified as
current liabilities.
Changes in the fair value of biological assets are presented
on a line item separately from biomass changes measured at
cost under operating profit/loss. This allows the reader of the
Financial Report to determine both production efficiency and
biomass at fair value.
NOTE 1.6 FUNCTIONAL CURRENCY
The consolidated accounts are presented in Danish Kroner
(DKK), which is the Group’s functional and presentation cur-
rency. All transactions in foreign currencies are translated
into DKK at the time of transaction. In the statement of fi-
nancial position, monetary items in foreign currencies are
translated at the exchange rate in effect on the statement of
financial position date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
96
ANNUAL REPORT 2022
SECTION 1
NOTE 1.7 NEW STANDARDS
Standards and interpretations, which are issued at the date
of the Group’s Financial statements, but will become effec-
tive later, are disclosed below. The disclosures contain stand-
ards including amendments, which may influence recognition
or measurements in the Financial statements, alter existing
disclosures or require additional disclosures when effective
at a future date. The standards are implemented as they be-
come effective.
New standards, regulating issues not relevant to the Group
or with insignificant impact on the Group, are omitted from
this narrative.
New standards effective from 1 January 2023 and
Only minor adjustments have been made in standards and
interpretations (IFRIC) which are effective for the financial
year 2022. Neither are new standards nor amendments to
these from 2023 and forth expected to have any impact on
the Bakkafrost Group.
NOTE 1.8 ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with
IFRS requires the management to make judgement estimates
and assumptions that affect the application of accounting
principles and carrying amounts of assets and liabilities, in-
come, and expenses. The estimates and underlying assump-
tions are based on experience and other factors perceived to
be relevant and probable when the judgements were made.
Estimates are reviewed on an on-going basis, and actual val-
ues and results may deviate from the initial estimates. Revi-
sion to accounting estimates is recognized in the period in
which the estimates are revised. The evaluations and esti-
mates, deemed to be of greatest significance for Bakkafrost
Group’s Financial Statements, are described in the notes.
NOTE 1.9 IXBRL REPORTING
We are required to file our annual report in the European
Single Electronic Format (‘ESEF’) using the XHTML format and
to tag the primary consolidated financial statements using
Inline eXtensible Business Reporting Language (iXBRL). The
iXBRL tags comply with the ESEF taxonomy. Where a finan-
cial statement line item is not defined in the ESEF taxon-
omy, an extension to the taxonomy has been created. The
annual report submitted to the Faroese Financial Supervi-
sory Authority consists of the XHTML document together
with certain technical files, all included in a ZIP file named
2138007LH7OP4V112978-2022-12-31-en.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
97
ANNUAL REPORT 2022
SECTION 2
NOTES – SECTION 2
Results for
the Year
This section gives more details on the results for the year,
including operating segments, taxes, and employee costs.
NOTE 2.1 REVENUE
Revenue is measured at the fair value of the consideration
received or receivable for the sale of goods and services in
the ordinary course of business. Revenue is recognized net of
discounts, VAT and other sales related taxes.
The revenue of the Group is mainly from sales of salmon,
fishmeal, fish oil and fish feed. Sales revenue is recognized
when the goods are delivered, and both title and risk have
passed to the customer. This will normally be upon delivery.
NOTE 2.2 MAJOR CUSTOMERS
In 2022, there were no major customers - as defined in IFRS
8.34, compared to no major customer in 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
98
ANNUAL REPORT 2022
SECTION 2
NOTE 2.3 OPERATING SEGMENT INFORMATION
2022 – DKK 1,000
Farming FO
Value Added
Products
Fishmeal,
oil and feed
Farming SCT
Eliminations
Bakkafros
Group
External operating revenues 3,242,069 1,703,637 742,695 1,441,566 0 7,129,967
Internal operating revenues 1,390,512 0 1,690,799 0 -3,081,311 0
Total operating revenues 4,632,581 1,703,637 2,433,494 1,441,566 -3,081,311 7,129,967
Depreciation and amortization -298,677 -21,269 -25,882 -191,652 0 -537,480
Operating expenses -1,320,326 -342,680 -1,997,344 -982,145 -269,207 -4,911,702
Internal operating expenses -1,101,044 -1,390,512 0 -589,755 3,081,311 0
Other income 0 0 0 24,380 0 24,380
Operating EBIT 1,912,534 -50,824 410,268 -297,606 -269,207 1,705,165
Fair value adjustments on biological assets 170,228 0 0 108,164 0 278,392
Income from associates 4,415 0 53,182 0 0 57,597
Revenue tax -215,001 0 0 0 0 -215,001
EBIT 1,872,176 -50,824 463,450 -189,442 -269,207 1,826,153
Operating EBITDA 2,211,211 -29,555 436,150 -105,954 -269,207 2,242,645
INVESTMENTS
Property, plant and equipment 681,395 9,170 140,624 435,867 1,267,056
Depreciation -298,677 -21,269 -25,882 -191,652 -537,480
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
99
ANNUAL REPORT 2022
SECTION 2
2021 – DKK 1,000
Farming FO
Value Added
Products
Fishmeal,
oil and feed
Farming SCT
Eliminations
Bakkafros
Group
External operating revenue 2,665,396 1,195,195 237,867 1,455,391 0 5,553,849
Internal operating revenue 811,326 0 1,421,484 0 -2,232,810 0
Total operating revenue 3,476,722 1,195,195 1,659,351 1,455,391 -2,232,810 5,553,849
Depreciation and amortization -278,395 -21,316 -30,057 -200,666 0 -530,434
Operating expenses -1,241,170 -243,032 -1,353,124 -1,163,882 -229,890 -4,231,098
Internal operating expenses -1,052,267 -811,326 0 -369,217 2,232,810 0
Other income 0 0 0 28,877 0 28,877
Operating EBIT 904,890 119,521 276,170 -249,497 -229,890 821,194
Fair value adjustments on biological assets 539,040 0 0 -104,172 0 434,868
Income from associates 294 0 29,818 0 0 30,112
Revenue tax -141,489 0 0 0 0 -141,489
EBIT 1,302,735 119,521 305,988 -353,669 -229,890 1,144,685
Operating EBITDA 1,183,285 140,837 306,227 -48,831 -229,890 1,351,628
INVESTMENTS
Property, plant and equipment 601,185 720 29,430 436,533 1,067,868
Depreciation -278,395 -21,316 -30,057 -200,666 -530,434
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
100
ANNUAL REPORT 2022
SECTION 2
2022 2021
FARMING FO – DISTRIBUTION OF HARVESTED VOLUMES tgw % tgw %
Harvested FO volume used in VAP production 26,401 39.6% 21,974 32.7%
Harvested FO volume sold fresh/frozen 40,285 60.4% 45,243 67.3%
Total harvested volumes 66,686 100.0% 67,217 100.0%
FOF SEGMENT – DISTRIBUTION OF FEED tonnes % tonnes %
Volumes used internally 123,118 96.3% 124,259 96.7%
External sold 4,722 3.7% 4,230 3.3%
Total Sold volumes 127,840 100.0% 128,489 100.0%
PRODUCTION OF FISHMEAL AND FISH OIL tonnes % tonnes %
Fishmeal 65,395 73.3% 34,962 81.1%
Fish oil 23,862 26.7% 8,124 18.9%
Total production 89,257 100.0% 43,086 100.0%
FARMING SCT – DISTRIBUTION OF HARVESTED VOLUMES tgw % tgw %
Harvested volume sold fresh/frozen 23,917 100.0% 29,672 100.0%
Total harvested volumes 23,917 100.0% 29,672 100.0%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
101
ANNUAL REPORT 2022
SECTION 2
GEOGRAPHIC BREAKDOWN OF SALES REVENUES BASED ON SEGMENTS AND CUSTOMER LOCATION
2022 – DKK 1,000 Farming FO VAP FOF Farming SCT Total
Western Europe 1,361,669 1,431,055 742,695 1,326,241 4,861,660
North America 1,102,303 119,255 0 72,078 1,293,636
Asia 583,572 51,109 0 28,831 663,512
Eastern Europe 162,103 85,182 0 14,416 261,701
Rest of the world 32,422 17,036 0 0 49,458
Total 3,242,069 1,703,637 742,695 1,441,566 7,129,967
2021 – DKK 1,000 Farming FO VAP FOF Farming SCT Total
Western Europe 1,170,908 896,396 237,867 1,178,867 3,484,038
North America 693,003 179,279 0 145,539 1,017,821
Asia 453,117 11,952 0 130,985 596,054
Eastern Europe 346,501 107,568 0 0 454,069
Rest of the world 1,867 0 0 0 1,867
Total 2,665,396 1,195,195 237,867 1,455,391 5,553,849
The Group has four reportable segments in accordance with
IFRS 8, Operating Segments. The Group’s main strategic business
area is aquaculture, which consists of four segments: fish farm-
ing Faroe Islands and Scotland, value added products (VAP) and
production and sales of fishmeal, fish oil and fish feed (FOF).
The same accounting principles, as described for the consol-
idated financial statements, have been applied for the seg-
ment reporting. Intersegment transfers or transactions are
entered into under normal commercial terms and conditions,
and the measurement used in the segment reporting is the
same as used for the third party’s transactions. The pric-
ing principle between the VAP and Farming FO segments is
based on market reference prices for spot sale, and the pric-
ing principle between the FOF and the Farming FO segments
is based on quarterly contracts.
ACCOUNTING POLICIES SEGMENT REPORTING
Farming FO
Fish farming involves the breeding and on-growing of salmon
as well as the harvesting, sales, and distribution of salmon.
The Group has production facilities around the Faroe Islands.
There are no significant differences in the production prop-
erties of the licences, and the Group therefore reports the
farmed salmonids, including the sale of fresh salmon, as one
segment. The salmon is sold on the spot market for salmon
products and to foreign seafood processing companies.
Farming SCT
The Farming SCT segment comprises the total operation in the
Scottish part of the Group. The operation in Scotland includes
salmon farming, harvest, filleting, sales and administration.
Value added products (VAP)
A significant share of the farmed products is value added at
the factory in Glyvrar. The outputs of the factory are pre-
dominantly portions for the retail market. The business seg-
ment definition is based on the distinction between output
sold to the industrial market and the value-added products
for the end-consumers in the retail market.
Fishmeal, fish oil and fish feed (FOF)
Fishmeal, fish oil and fish feed involve the production and
sale of fishmeal, fish oil and fish feed. The production of fish-
meal, fish oil and fish feed are operated by Bakkafrost’s sub-
sidiary Havsbrún, located in Fuglafjørður.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
102
ANNUAL REPORT 2022
SECTION 2
NOTE 2.4 SALARIES AND OTHER PERSONNEL EXPENSES
DKK 1,000 2022 2021
Wages and salaries 673,986 613,756
Share based payment 30,610 3,547
Social security taxes 50,809 45,825
Pension expenses 54,850 48,392
Other benefi ts 21,424 16,903
Total payroll expenses 831,679 728,423
Average number of full-time employees 1,778 1,653
DKK 1,000 2022 2021
Rúni M. Hansen** Chairman of the Board 487 482
Johannes Jensen*** Deputy Chairman of the Board 90 274
Annika Frederiksberg* Member of the Board 221 219
Einar Wathne Member of the Board 240 236
Teitur Samuelsen** Member of the Board 266 263
Øystein Sandvik** Member of the Board 289 283
Guðrið Højgaard**** Member of the Board 147 0
Total remuneration 1,740 1,757
* Annika Frederiksberg is also an employee in the Bakkafrost Group. For this, she received DKK 661 thousand (2021: DKK 656 thousand) and has been
awarded 245 restriced shares which equals 85 tDKK
** Member of the audit committee. Salary includes fee to the audit committee.
*** Member of the Board of Directors until May 2022
**** Member of the Board of Directors from May 2022
Remuneration to corporate management
The total remuneration to the corporate management con-
sists of basic salary (main element), benefi ts in-kind and pen-
sion schemes, but varies from person to person. The Group’s
Chief Executive Offi cer determines the remunerations to oth-
er management in agreement with the Chairman of the Board
of Directors. The total remuneration is determined based on
the need to offer competitive terms in the various business
areas. The remunerations should promote the Group’s com-
petitiveness in the relevant labour market.
The total remuneration must neither pose a threat to Bakka-
frost’s reputation nor be market leading but should ensure
that Bakkafrost attracts and retains senior executives with
the desired skills and experience. The basic salary is subject
to an annual evaluation and is determined based on general
salary levels in the labour market.
Notice of Termination and Severance Payment
Bakkafrost may terminate employment by giving Group Man-
agement Executives a notice period. The company’s period of
notice for the Group’s Chief Executive Offi cer is 24 months.
The company’s period of notice for other Group Management
Executives covers a period from 6 to 12 months.
SHARE-BASED PAYMENT
In 2021, Bakkafrost implemented a share-based bonus
scheme for all employees in the Group. According to the
scheme, all employees are awarded free bonus shares de-
pendent on achieved performance against certain KPIs and
Bakkafrost Group’s adjusted earnings per share being above
a certain threshold. The bonus shares are awarded quarterly
as restricted shares units which are released pursuant only
to the Annual General Meeting resolution to pay dividends
to the shareholders. Employees still employed two calendar
years after being awarded bonus shares, will additionally re-
ceive free loyalty shares.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
103
ANNUAL REPORT 2022
SECTION 2
Fixed remuneration Variable remuneration
2022 - DKK 1,000 Share saving
Salary and other benefits paid Salary Pension Other Total Bonus RSU 1* RSU 2** Plan*** Total Total
Chief Executive Officer 2,048 195 89 2,332 0 402 402 136 940 3,272
Managing Director 1,485 141 0 1,626 0 292 292 93 677 2,303
Chief Financial Officer 1,485 141 89 1,715 0 292 292 61 645 2,360
Total remuneration 5,018 477 178 5,673 0 986 986 290 2,262 7,935
2021 - DKK 1,000 Share saving
Salary and other benefits paid Salary Pension Other Total Bonus RSU 1* RSU 2** Plan*** Total Total
Chief Executive Officer 2,099 168 89 2,356 0 0 0 117 117 2,473
Managing Director 1,727 140 0 1,867 58 0 0 97 155 2,022
Chief Financial Officer 1,362 109 89 1,560 58 0 0 0 58 1,618
Total remuneration 5,188 417 178 5,783 116 0 0 214 330 6,113
* Restricted Share Units 1 will be released out as shares if the AGM on 28 April 2023 pays out a dividend
** Restricted Share Units 2 will be released in shares in 2025 if the AGM on 8 April 2023 pays out a dividend and the employee still is hired
*** Matching shares in the share saving plan
Movements in share-based payment in DKK 1,000 Movements in share-based payment number of shares
Outstanding
per
01.01.22
Restricted
Share based
Payment
Released
Share based
Payment
Outstanding
per
31.12.22
Outstanding
per
01.01.22
Restricted
Share based
Payment
Released
Share based
Payment
Outstanding
per
31.12.22
Chief Executive Officer 0 804 0 804 0 2,294 0 2,294
Managing Director 0 583 0 583 0 1,664 0 1,664
Chief Financial Officer 0 583 0 583 0 1,664 0 1,664
Total remuneration 0 1,970 0 1,970 0 5,622 0 5,622
Outstanding
per
01.01.21
Restricted
Share based
Payment
Released
Share based
Payment
Outstanding
per
31.12.21
Outstanding
per
01.01.21
Restricted
Share based
Payment
Released
Share based
Payment
Outstanding
per
31.12.21
Chief Executive Officer 0 0 0 0 0 0 0 0
Managing Director 0 0 0 0 0 0 0 0
Chief Financial Officer 0 0 0 0 0 0 0 0
Total remuneration 0 0 0 0 0 0 0 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
104
ANNUAL REPORT 2022
SECTION 2
Each quarter, the Board reviews and determines the param-
eters used in the bonus scheme – e.g. overall size of bonus
pool, KPIs and thresholds. The Board has the right to decide,
in its sole discretion, whether the bonus scheme will be con-
tinued in the following quarter, and the terms of the plan.
SHARE SAVING PLAN
Bakkafrost has established a share saving plan for its em-
ployees in the Faroe Islands. In 2022, the plan will be ex-
tended to all employees of the Group. It is the Board's inten-
tion that the plan shall be a continuing part of the company's
employee incentive scheme. The Board shall, however, have
the right to decide, in its sole discretion, whether the plan
will be extended in the future, and the terms of the plan.
Employees may invest up to 5% of their base salary in Bak-
kafrost shares. The saved amount is deducted from the
monthly net salary and used to purchase Bakkafrost shares
on behalf of the employees. The purchase will be made from
Bakkafrost's treasury shares or on the market. An employee
may not change the savings amount during the year, but an
employee may cancel the subscription during the year. The
purchase price and the number of shares acquired by the
company will be reported in accordance with the applicable
regulations.
After a lock-in period of two calendar years, one extra match-
ing share will be awarded for each share purchased. Shares
transferred to employees are acquired by the company on
the market.
LOANS TO EMPLOYEES
As at 31.12.2022, there are no loans to employees.
ACCOUNTING POLICIES SHARE-BASED
PAYMENTS
The share saving plan liabilities and payroll expense have
been allocated over the employees' contribution period. The
contribution period is from when the employee signed the
share saving plan and until the shares are granted. The fair
value of these liabilities will be determined using the number
of shares contracted at the start of the share saving plan,
using the share price on the date of the employee signature,
adjustment is made for estimated leavers of the share saving
plan. The difference between the fair value and the share
price, when the shares are granted, will be booked as a fi nan-
cial item in the income statement. The liability is recognized
in other equity reserves within equity.
PENSIONS
The Group operates a defi ned contribution pension scheme.
Pension premiums are charged to the Income Statement as
they accrue. The Group has no additional pension liabilities
towards the employees, apart from these periodical pay-
ments.
NOTE 2.5 OTHER OPERATING EXPENSES AND OTHER INCOME
DKK 1,000 2022 2021
Maintenance -239,362 -187,655
Operating expenses -418,158 -291,690
Health -183,070 -227,542
Freight -686,183 -629,123
Energy -364,513 -226,988
Other costs -99,013 -69,116
Other operating expenses total -1,990,299 -1,632,114
R&D Expenditure tax credit in SCT 28,877 44,041
Other income 28,877 44,041
NOTE 2.6 RESEARCH AND DEVELOPMENT
EXPENSES
R&D expenditure occurs throughout the value chain. R&D is
built in the Bakkafrost business model DNA.
Bakkafrost has a continual development of the entire value
chain. This is not seen as R&D but is an integrated part of
other operating expenses and salaries.
The focus of Bakkafrost’s R&D efforts has been evaluated and
slightly improved during recent years. Lice abatement, bio-
mass control and smolt quality remain high priorities, and
the development and improvement of vaccines, nutrition and
feeding, as well as operating technologies, are equally top-
ical. In addition, Bakkafrost continuously performs assess-
ments of its own operating practices.
Bakkafrost aims to expand its R&D activities in feed and
feeding and sees a substantial need for greater focus on basic
knowledge of how the fi sh are fed and how we can maintain
a healthy salmon. The past year has proven to be above our
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
105
ANNUAL REPORT 2022
SECTION 2
expectations in terms of production improvements in farm-
ing. We are convinced that our adaption of the mix of raw
material has resulted in better nutritional quality in the feed.
It is Bakkafrost’s clearly expressed goal to initiate better and
more comprehensive research into these issues under large-
scale conditions.
Bakkafrost focuses on reducing biological risk continuously
and has made several new investments and procedures to
diminish this risk. Bakkafrost focuses on using non-medical
methods in treatments against sea lice and has invested in
new technology to follow this strategy.
Bakkafrost has a large-smolt strategy and aims at increas-
ing smolt size to around 500 grams smolts in 2023 the
Faroe Islands. The strategy is also pivotal to the turnaround
of the operation in Scotland. The benefi ts are shorter pro-
duction time at sea and reduced biological risk. The hatch-
ery at Strond, Klaksvík, is an essential part of this plan for
the Faroe Islands. This hatchery is fully operational and can
produce 8 million smolts at 500 g. In addition, Bakkafrost
is expanding Faroese hatchery capacity of the hatcheries
at Glyvradal, Norðtoftir and the new hatchery at Ónavík. In
Scotland, three large hatcheries will be built, the fi rst be-
ing the hatchery at Applecross. All Bakkafrost’s hatcheries
will be based on state-of-the-art technology and advanced
RAS (water recirculation) systems. The capacity growth from
these investments is crucial to enable harvest volume growth
to 150,000 tonnes for the Group in 2026.
NOTE 2.7 NET FINANCIAL ITEMS
DKK 1,000 2022 2021
Realised profi t on fi nancial derivatives 4,889 4,942
Other fi nancial income 2,111 473
Financial income 7,000 5,415
Interest expenses on long-term loans -53,135 -31,958
Loss on fi nancial derivatives -3,088 0
Interest expenses on credit lines -470 -403
Interest expenses on IFRS 16 (leases) -7,197 -7,468
Interest expenses on accounts payable -1,149 -779
Financial expenses -65,039 -40,608
Other exchange differences -69,066 38,761
Net currency effects -69,066 38,761
Other fi nancial expenses -8,713 -10,591
Other fi nancial items -8,713 -10,591
Net fi nancial items -135,818 -7,023
ACCOUNTING POLICIES FINANCIAL INCOME
Interest income is recognized on an accrual basis. Dividend
income is recognized, when the shareholders’ right to receive
a dividend has been approved by the Annual General Meet-
ing.
BORROWING COSTS
Borrowings is recognized initially at fair value, net of trans-
action costs incurred. Borrowings is subsequently stated at
amortized cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognized
in the income statement over the period of the borrowings.
Borrowings is classifi ed as a current liability, unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
106
ANNUAL REPORT 2022
ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
107
NOTE 2.8 TAX
The tax expense for the year breaks down as follows:
DKK 1,000 2022 2021
Tax payable 240,529 171,283
Tax credit 0 -1,151
Change in deferred tax 105,476 3,494
Tax expense on ordinary profi t 346,005 173,626
Tax payable 237,780 170,997
Tax payable in the statement of fi nancial position 237,780 170,997
SECTION 2
Specifi cations of temporary differences and deferred tax
DKK 1,000 2022 2021
Temporary Temporary
Deferred tax assets Differences Deferred tax Differences Deferred tax
Property, plant and equipment 21,083 5,271 32,450 8,037
Biomass 135,655 24,418 175,529 36,248
Receivables 1,245 224 1,995 359
Derivatives (Equity posted) 0 0 5,099 1,275
Losses carried forward 1,228,522 305,805 677,309 169,329
Other differances 1,207 302 0 0
Total temporary differences 336,020 215,248
SECTION 2
DKK 1,000 2022 2021
Temporary Temporary
Deferred tax liabilities Differences Deferred tax Differences Deferred tax
Licences 3,690,715 896,381 3,601,916 874,182
Goodwill 11,592 2,039 0 0
Research and development 541 119 0 0
Property, plant and equipment 2,463,339 491,927 1,539,529 353,079
Financial assets 149,582 26,925 92,302 16,614
Biomass 2,234,515 407,074 1,892,013 340,562
Currency effects 0 0 1,219 240
Derivatives (Equity posted) 7,474 1,346 0 0
Other differances 289 62 21,428 5,357
Total temporary differences 1,825,873 1,590,034
Deferred tax assets -336,020 -215,248
Deferred tax liabilities 1,825,873 1,590,034
Deferred tax liabilities (+) / assets (-) 1,489,853 1,374,786
Reconciliation from nominal to actual tax rate
DKK 1,000 2022 2021
Profi t before tax 1,690,335 1,137,662
Expected tax at nominal tax rate 292,568 178,385
Permanent differences 53,437 -4,759
Calculated tax expense 346,005 173,626
Effective tax rate excl. equity entries 20.47% 15.26%
Normal tax rate for countries in the Group:
- Faroe Islands 18%
- UK/Scotland 19% (25% from 2023)
- USA 21% + New Jersey 11.5%
- Denmark 22%
- France 25%
ACCOUNTING POLICIES
The tax expense is matched against the profi t or loss before
tax, as it appears in the accounts. Tax ascribable to equity
transactions is taken to equity. The tax expense comprises
tax payable (tax on the year’s direct taxable income) and
changes in net deferred taxes. Deferred tax liabilities and
deferred tax assets are presented net in the statement of
fi nancial position to the extent that tax assets and liabilities
can be netted against each other.
Deferred tax in the statement of fi nancial position is a nom-
inal amount calculated based on temporary differences be-
tween accounting and tax values at their intended use, as
well as the taxable loss carried forward at the end of the
fi nancial year.
SIGNIFICANT ASSUMPTION ACCOUNTING FOR
DEFERRED TAX LIABILITIES
The accounting of deferred taxes refl ects tax rates and tax
laws that have been enacted or substantively enacted by the
date of the statement of fi nancial position. The recognition of
a deferred tax asset is based on expectations of profi tability
in the future. In addition, there are many transactions and
calculations during the ordinary course of business for which
the ultimate tax determination is uncertain.
Deferred taxes are calculated using the nominal tax rate ac-
cording to IAS 12.
SIGNIFICANT ASSUMPTION ACCOUNTING FOR
DEFERRED TAX ASSETS
Deferred tax assets, including tax loss carry forwards, are
assessed once a year. Losses are recognized if it is likely that
they will be utilized in the foreseeable future.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
108
ANNUAL REPORT 2022
SECTION 3
NOTES – SECTION 3
Assets and
Liabilities
This section gives more details on the assets that form the
basis for the activities of Bakkafrost and the related liabil-
ities.
NOTE 3.1 INTANGIBLE ASSETS
DKK 1,000 Goodwill Licences Brands Total
Acquisitions costs as at 01.01.22 669,319 3,720,158 108,400 4,497,877
Reclassification -99,725 99,725 0 0
Additions in the year 12,136 0 0 12,136
Currency translation differences -1,309 0 0 -1,309
Acquisitions costs as at 31.12.22 580,421 3,819,883 108,400 4,508,704
Depreciations and impairments 01.01.22 -2,151 0 0 -2,151
Depreciation during the year 2,151 0 0 2,151
Accumulated impairments/depreciation and write-downs as at 31.12.22 0 0 0 0
Net book value as at 31.12.22 580,421 3,819,883 108,400 4,508,704
DKK 1,000 Goodwill Licences Brands Total
Acquisitions costs as at 01.01.21 666,950 3,720,158 108,400 4,495,508
Currency translation differences 2,369 0 0 2,369
Acquisitions costs as at 31.12.21 669,319 3,720,158 108,400 4,497,877
Depreciations and impairments 01.01.21 -2,113 0 0 -2,113
Depreciation during the year -38 0 0 -38
Accumulated impairments/depreciation and write-downs as at 31.12.21 -2,151 0 0 -2,151
Net book value as at 31.12.21 667,168 3,720,158 108,400 4,495,726
In the Faroe Islands, Bakkafrost operates its sea farming ac-
tivity in 14 identifiable CGUs based on single or groups of
sea farming licenses, seven out of which are issued by the
government without consideration, and hence are not capi-
talized. These belong to the North region.
The other seven CGUs were acquired as part of business com-
binations. Respectively, when acquiring the Vestlax Group,
Havsbrún Group and Faroe Farming, hence three groups of
CGUs. These belong to the West region. These are considered
as significant in comparison to the total carrying amount of
goodwill and intangible assets with indefinite useful lives.
In Scotland, Bakkafrost has chosen to include all the farming
in Scotland into one CGU.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
109
ANNUAL REPORT 2022
SECTION 3
Impairment testing
The Group tests intangible assets annually for impairment or
more frequently if there are indications that the assets are
impaired. The annual impairment test is performed at year-
end. The Group has substantial assets with indefinite lives in
the form of licenses. The licenses are subject to impairment
testing in combination with goodwill in the annual test. The
Group identifies each farming zone, which may contain one
or several licences or farming sites, as one cash-generating
unit.
The procedure of impairment testing
Impairment testing is carried out by calculating the net pres-
ent value of estimated future cash flows (value in use) for
the cash-generating unit in line with IAS 36 and comparing
the net present value of the cash flow towards the carry-
ing amount of net assets held by the cash-generating unit
(CGU). The cash flow used in the calculations represents the
management’s best estimate at the time of reporting. If the
carrying amount is higher than the calculated value in use,
the assets are considered impaired. The estimated cash flow
is based on an assumption of continued operation. The ba-
sis for the estimated cash flow is the strategic plan for the
following years. The strategic plans have been reviewed and
the targets approved by the Group management.
The considered operating conditions are costs of feed, smolt,
harvest, packaging, transport, and other costs. Other operat-
ing conditions considered the same are mortality, production
time, fallowing and harvest weight. CAPEX is also assumed
to be the same for all CGUs over the calculated period. All
CGUs are calculated with the same WACC. If there will be
variances between the assumptions for the different CGUs in
the future, this will be incorporated into the impairment test.
Indications of impairment
The impairment testing at year-end did not result in identifi-
cation of impairment losses. Intangible assets were tested for
impairment to evaluate if the cash flow from a conservative
estimate was sufficient to support the carrying amount of net
assets. The test confirmed the asset values.
The key assumptions
The key assumptions in the calculations of value in use are
harvest volume, prices, and costs, hence EBIDTA and WACC.
Amongst other assumptions are inflation, CAPEX, and termi-
nal growth.
In general, the value in use has been determined based on
future strategic plans considering the expected development
in both macroeconomic and company-related conditions.
The assumptions used, rest on uncertainty regarding product
prices, input prices, biological performance, and future reg-
ulatory frameworks. Costs can normally be estimated with
more accuracy than income. As profitability in the salmon
farming industry historically has been very volatile, depend-
ing on developments in the prices of salmon. Bakkafrost uses
budgets and long-term plans for the first five years of the
analysis but returns to long- term historic averages for prof-
itability in the sixth year and terminal period.
The key assumptions used in determining the value in use are:
• Harvested volume is based on the current stocking plans
for each unit, and forecasted figures for growth, assumed
harvest weight and mortality, based on historical figures.
• The costs are based on the Groups own assumptions, based
on historical costs and expectations. The costs are expect-
ed to remain stable but are calculated to increase with an
inflation rate of FO: 2.6% (2021: 0.9%) and SCT: 2.0% (2021:
2.3%)
• The forward prices are based on the Fish Pool index –
which is a part of Oslo Børs ASA – at the day of the calcula-
tion. The long-term forward prices are based on third-par-
ties’ sources with adjustments to local conditions.
• The WACC is FO: 9.6% (2021: 8.9%) and SCT 9.6% (2021:
8.9%) pre-tax and calculated in accordance with IAS 36.
The WACC model is used for estimating the discount rate.
The input data for the model is updated each year for the
annual impairment test. The choice of input data for the
model significantly influences the outcome of the model,
and to ensure that there is as little uncertainty as possible
with regards to the calculation of the WACC, third-party
sources are used where available (interest, inflation, beta).
The discount rate is based on a five-year average for ten-
year bonds issued by the Danish government, with an ad-
justment margin for the food industry in the EU.
• The inflation is set to FO: 2.6% (2021: 0.9%) and SCT: 2.0%
(2021: 2.3%) for the budget period. This is done based on
third-parties’ sources. The terminal growth is set to 0%.
• Capital expenditure (CAPEX). In the 5-year forecast period,
the capital expenditure necessary to meet the expected
growth in revenue and profit is taken into consideration.
Capital expenditures are aligned with the growth and re-
placement plans. Capital expenditure to comply with cur-
rent laws and regulations has been included. Capex related
to committed and approved efficiency improvement pro-
grammes has also been included to support the inclusion
of the benefits in the applied margin. Changes in applicable
laws and regulations may affect future estimated capital
expenditure needs; this is not reflected in the figures used
in the impairment test. Beyond the forecast period, capital
expenditure will in general equal depreciation and relate
to maintenance investments.
Sensitivity
In connection with the impairment testing of intangible as-
sets, a sensitivity analysis has been carried out. Sensitivity
analysis has been performed for each of the defined cash
generating units. With the assumptions used, the headroom
is DKK 20,198 million (DKK 10,900 million).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
110
ANNUAL REPORT 2022
SECTION 3
ACCOUNTING POLICIES
Intangible assets that are purchased individually are capital-
ized at acquisition cost. Intangible assets acquired in connec-
tion with the purchase of a business entity are capitalized at
acquisition cost when the criteria for separate recognition
are met.
Intangible assets with a limited economic lifespan are depre-
ciated systematically. Intangible assets are written down to
the recoverable amount if the expected financial benefits do
not cover their carrying amount.
Costs relating to research and development are charged as
expenses as they accrue. R&D costs are capitalized in the
statement of financial position, when it can be demonstrated
that the relevant R&D projects carry economic benefits, that
they can be technically finalized, and that the company in-
tends to and is financially able to reap the economic benefits.
Sea farming licences, which are purchased either as part of an
acquisition or business combination according to IFRS 3, are
capitalized at cost less accumulated write-downs according
to a PPA analysis. Sea farming licences in the Faroe Islands
and Scotland are considered perpetual, given that certain
preconditions regarding environmental protection and ani-
mal welfare are met. Consequently, sea farming licences are
not depreciated systematically, but are subject to an annual
impairment test. If the carrying amount exceeds the recov-
erable amount, licences are considered impaired, and write-
downs are entered and charged to the Income Statement.
The assessment of indefinite life is reviewed annually to de-
termine whether the indefinite life continues to be appropri-
ate. If not, the change in useful life from indefinite to finite is
made on a prospective basis.
Licenses with indefinite useful lives
The sea farming licenses in the Faroe Islands are defined as
the right to utilize a given area of fjords for farming fish.
There are no provisions as to the maximum allowed biomass
at the given site, but the legislation has imposed strict meas-
ures to regulate the farming activity to be environmentally
sustainable.
The sea farming licenses in the Faroes are issued with a nom-
inal lifespan of 12 years. Licenses are renewed, unless there
is a specific reason against renewal, based on failure to fulfil
the veterinary conditions set by the authorities. In connec-
tion with renewal of licenses, authorities may only decline
renewal if specific legislation on area planning, animal wel-
fare or environmental protection conflicts with renewal of
the licenses. Special emphasis is to be placed on the fact that
it is renewals of existing licenses. This means that sea farm-
ing licenses are operated in a 12-year rolling lifespan system,
where the licenses are renewed every 12th year. In the very
rare cases, where the authorities have declined to renew li-
censes to use locations for other purposes, the farmers have
obtained licenses from the authorities at other locations.
The sea farming licenses in Scotland are perpetual if certain
environmental, operational, and biological conditions speci-
fied in the licenses continue to be met.
The Group has therefore decided to account for sea farming
licenses, which are capitalized, following the provisions for
intangible rights with indefinite useful lives.
GOODWILL
When the company assumes control over a separate business
entity for a consideration that exceeds the fair value of the
individual assets, the difference is entered as goodwill in the
statement of financial position.
Goodwill deriving from purchases of subsidiaries and asso-
ciates is presented under intangible assets. Goodwill is not
depreciated but is tested for impairment annually or more
often if there are indications that its value is lower than the
carrying amount. When assessing the need to write-down
goodwill, this is assigned to relevant cash flow generating
units or groups, which are expected to benefit from the ac-
quisition.
Write-downs are performed in accordance with an assess-
ment of the recoverable value of each of the cash-flow
generating units to which the goodwill is assigned. To iden-
tify the Group’s cash-flow generating units, the assets are
grouped according to the lowest level to which separate and
independent cash flows may be ascribed. Recoverable value
is calculated based on value in use. This is arrived at by esti-
mating future cash flows.
If the calculated value in use is less than the carrying amount
of the cash-flow generating unit, goodwill is written down
first, and then other assets as required.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
111
ANNUAL REPORT 2022
SECTION 3
SPECIFICATION OF CGUS - BOOKED VALUE TESTED AND SENSITIVITY
Sensitivity analyses and booked value per CGU:
Total
booked EBITDA WACC WACC
Other value change change change
CGUs (1,000) Licenses assets***** tested WACC of +/-1% of -1% of +1%
31/12/2022
The Scottish Salmon Company acquisition**** 4,006,820 2,082,123 6,088,943 9.6% 455,069 2,213,869 -1,567,700
Vestlax acquisition* 132,708 1,623,586 1,756,294 9.6% 92,103 876,396 -597,990
Havsbrún acquisition** 157,430 390,749 548,179 9.6% 304,962 2,901,845 -1,980,012
Faroe Farming acquisition*** 82,000 1,131,089 1,213,089 9.6% 176,018 1,674,891 -1,142,825
TOTAL 4,378,958 5,227,547 9,606,505 1,028,152 7,667,001 -5,288,527
31/12/2021
The Scottish Salmon Company acquisition**** 4,006,820 1,906,234 5,913,054 8.9% 382,619 2,378,574 -1,599,072
Vestlax acquisition* 132,708 1,318,791 1,451,499 8.9% 57,039 365,472 -269,400
Havsbrún acquisition** 157,430 301,696 459,126 8.9% 188,862 1,210,119 -892,012
Faroe Farming acquisition*** 82,000 955,167 1,037,167 8.9% 109,008 514,853 -698,458
TOTAL 4,378,958 4,481,888 8,860,846 737,528 4,469,018 -3,458,942
* 4 CGUs in 7 licenses. Acquired in 2010.
** 2 CGUs in 2 licenses. Acquired in 2011.
*** 1 CGU in 2 licenses A-92. Acquired in 2016.
**** 7 CGUs in 44 licenses. Acquired in 2019.
***** Other assets consist of goodwill, PP&E, inventory, receivables, etc. which can be allocated to CGUs or are directly attributable to CGUs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
112
ANNUAL REPORT 2022
SECTION 3
NOTE 3.2 PROPERTY, PLANT AND EQUIPMENT
Plant,
machinery,
Land operating Other
and equipment, operating Assets under
DKK 1,000 buildings fixtures etc. equipment Vessels construction Total
Acquisition costs as at 01.01.22 2,119,115 3,229,596 449,031 642,653 782,545 7,222,940
Reclassification -7,409 78,750 76,650 47,418 -201,554 -6,145
Acquisitions during the year 28,092 176,326 23,856 495,140 543,642 1,267,056
Disposals and scrapping during the year -25,096 -73,359 -922 -3,120 0 -102,497
Currency translation differences -2,757 -38,215 -509 -7,027 -9,763 -58,271
Acquisition costs as at 31.12.22 2,111,945 3,373,098 548,106 1,175,064 1,114,870 8,323,083
Accumulated depreciations and write-downs as at 01.01.22 -517,934 -1,443,109 -222,921 -150,199 0 -2,334,163
Reclassification 18,118 38,087 -38,498 -28,346 0 -10,639
Depreciations during the year -77,220 -252,802 -58,987 -47,168 0 -436,177
Accumulated deprecations and write-downs on disposals and scrapping 24,926 67,661 73 3,053 0 95,713
Currency translation differences 783 7,546 9 1,006 0 9,344
Accumulated depreciations and write-downs as at 31.12.22 -551,327 -1,582,617 -320,324 -221,654 0 -2,675,922
Net book value as at 31.12.22 1,560,618 1,790,481 227,782 953,410 1,114,870 5,647,161
Acquisition costs as at 01.01.21 1,936,967 2,746,675 406,493 450,899 387,946 5,928,980
Reclassification 83,078 61,012 57,444 53,117 -52,912 201,739
Acquisitions during the year 72,206 432,757 41,218 81,455 440,231 1,067,867
Disposals and scrapping during the year -2,519 -96,842 -5,023 -373 0 -104,757
Currency translation differences 29,383 85,994 -51,101 57,555 7,280 129,111
Acquisition costs as at 31.12.21 2,119,115 3,229,596 449,031 642,653 782,545 7,222,940
Accumulated depreciations and write-downs as at 01.01.21 -381,949 -1,043,442 -164,346 -118,644 0 -1,708,381
Reclassification -44,377 -141,158 -16,205 0 0 -201,739
Depreciations during the year -80,574 -277,445 -45,526 -30,403 0 -433,948
Accumulated deprecations and write-downs on disposals and scrapping 2,519 94,787 4,239 242 0 101,788
Currency translation differences -13,554 -75,850 -1,082 -1,394 0 -91,882
Accumulated depreciations and write-downs as at 31.12.21 -517,935 -1,443,108 -222,920 -150,199 0 -2,334,162
Net book value as at 31.12.21 1,601,180 1,786,488 226,111 492,454 782,545 4,888,778
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
113
ANNUAL REPORT 2022
SECTION 3
Description of depreciations Estimated lifetime Depreciation method Scrap value
Land and buildings 10-25 years linear 10%
Plant, machinery, operating equipment, fixtures etc. 3-20 years linear 0%-10%
Other operating equipment 3-8 years linear 0%
Ships 15-25 years linear 10%-13%
ACCOUNTING POLICIES
Property, plant, and equipment is capitalized at acquisition
cost, less accumulated depreciation and write downs. When
assets are sold, or divested, the book value is deducted, and
any loss or gain entered to the Income Statement. Ordinary
depreciation commences from the date on which the asset
goes into normal operation and is calculated based on its
economic lifespan. Depreciation is assigned in a straight line
over the expected economic lifespan of the assets, taking
into consideration the estimated residual value.
If an asset comprises significant components with varying
lifespan, these components are depreciated separately. The
scrap value of the property, plant, and equipment as well as
the depreciation period and depreciation method employed
are reassessed annually.
Facilities under construction are not depreciated. Deprecia-
tion is charged to expenses when the facilities are ready for
use. If the situation or circumstances indicate that the carry-
ing amount of an asset cannot be recovered, an assessment is
made about whether to write-down its value. If the recover-
able value of the assets is less than the carrying amount and
the impairment is not expected to be temporary, the assets
are written down to the recoverable value. The recoverable
value is the greater of net sales price or value in use. Value in
use is the present value of the future cash flows, which the
asset will generate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
114
ANNUAL REPORT 2022
SECTION 3
NOTE 3.3 LEASING
Right of use
Land and buldings Ships, and
DKK 1,000 & properties equipment TOTAL
Beginning balance 01.01.22 126,861 175,244 302,105
Additions 0 253,383 253,383
Adjustments 4,184 -1,012 3,172
Depreciation -8,384 -95,070 -103,454
Effect of changes in currency exchange rate -2,381 -14,280 -16,661
Ending balance 31.12.22 120,280 318,265 438,545
Lease liability
Beginning balance 01.01.22 -153,043 -180,378 -333,421
Additions 0 -244,898 -244,898
Effect of changes in currency exchange rate 0 2,223 2,223
Adjustments 2,212 10,518 12,730
Lease payments 13,001 97,833 110,834
Interests -2,448 -4,132 -6,580
Ending balance 31.12.22 -145,021 -314,549 -459,570
Current lease liability -12,682 -93,533 -106,215
Non-current lease liability -132,339 -221,016 -353,355
Maturity analysis, undiscounted cash flow
Up to 1 year 106,215
1-2 years 96,670
2-3 years 90,716
3-4 years 53,167
4-5 years 39,090
More than 5 years 73,712
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
115
ANNUAL REPORT 2022
SECTION 3
Right of use
Land and buildings Ships, and
DKK 1,000 & properties other equipment TOTAL
Beginning balance 01.01.21 107,108 239,376 346,484
Additions 10,322 10,752 21,074
Adjustments 17,267 305 17,572
Depreciation -7,835 -88,632 -96,467
Effect of changes in currency exchange rate -1 13,443 13,442
Ending balance 31.12.21 126,861 175,244 302,105
Lease liability
Beginning balance 01.01.21 -136,031 -252,182 -388,213
Additions -9,962 -3,878 -13,840
Effect of changes in currency exchange rate 0 1,898 1,898
Adjustments -17,266 -304 -17,570
Lease payments 12,769 102,482 115,251
Interests -2,554 -5,050 -7,604
Effect of changes in currency exchange rate 1 -23,344 -23,343
Ending balance 31.12.21 -153,043 -180,378 -333,421
Current lease liability -9,399 -78,608 -87,668
Non-current lease liability -143,644 -101,769 -245,753
Maturity analysis, undiscounted cash flow
Up to 1 year 87,668
1-2 years 51,216
2-3 years 48,550
3-4 years 46,710
4-5 years 11,257
More than 5 years 88,020
Bakkafrost has applied the rules for short-term leases and
leases with low value leasing assets and has expensed these
in the Income Statement. The amount is not material to the
Group.
Accounting policies
Based on the accounting policy applied, Bakkafrost recogniz-
es a right-of-use asset and a lease liability at the commence-
ment date of the contract for all leases, conveying the right
to control the use of an identified asset for a period. The
commencement date is the date on which a lessor makes an
underlying asset available for use by a lessee.
The right of use assets is recognized at cost. The cost of the
asset consists of the total discounted lease payments (the
lease obligation), plus lease payments paid at contract of the
agreement (e.g., upfront payments) less any lease incentives
received, plus any costs directly related to the conclusion of
the agreement and the obligation to demolish or restore the
asset after use.
Subsequent measurement of the leasing asset is done ac-
cording to the same practice as for similar assets, that is
owned by the company. This means that leased assets are
classified as tangible fixed assets, even if it is legally a right
of use asset.
The lease obligation is recognized at the present value of the
lease payments obtained by discounting the lease payments,
using the company’s marginal borrowing rate, since the inter-
nal rate cannot be reasonably defined.
The lease payments consist of the fixed lease payments,
guaranteed residual values and payment for exercise of pur-
chase option or payment for cancellation of lease when con-
sidered reasonably certain that the options are exercised. In
addition, variable lease payments which are adjusted, based
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
116
ANNUAL REPORT 2022
SECTION 3
on an index, whereas consumption-based leasing payments
are not recognized as part of the cost of the lease asset and
liability.
The lease payments are distributed between an instalment
portion and an interest portion. The lease obligation is re-
calculated at a constant interest rate, corresponding to the
discount rate used. At initial recognition, the value of the
leased asset corresponds to the value of the lease obligation,
unless upfront payments and/or there are recovery obliga-
tions regarding the asset.
The Group chose to apply the two practical exceptions in
IFRS 16 regarding short term leases and low value assets.
Short term leases represent lease agreements shorter than
12 months from the date of the contract, and low value as-
sets represent lease agreements that are lower than DKK
35,000 each.
NOTE 3.4 COMPANIES IN THE GROUP
The consolidated accounts for 2022 include the following subsidiaries and associates:
Nominal
Subsidiary Companies Currency Nature of Business Head Office Ownership share capital
Bakkafrost Farming P/F DKK Salmon farming Glyvrar 100% 19,762
Bakkafrost Processing P/F DKK Value adding of salmon (VAP) Glyvrar 100% 150,000
Bakkafrost Sales P/F DKK Sales of salmon and VAP products Glyvrar 100% 667
Bakkafrost Packaging P/F DKK Production of styrofoam boxes Glyvrar 100% 8,022
Havsbrún P/F DKK Production and sales of fishmeal, fish oil and fish feed Fuglafjørður 100% 2,000
Bakkafrost UK Ltd. GBP Sales of salmon Grimsby 100% 2 GBP
Bakkafrost USA LLC USD Sales of salmon Clifton, New Jersey 100% 2,000,000 USD
Förka P/F DKK Production of biogas and fertilizer Glyvrar 100% 5,000
Bakkafrost Scotland Ltd.* GBP Salmon Farming Edinburgh 100% 20,000,000
Scottish Salmon 2020 (Jersey) Ltd. GBP In liquidation Edinburgh 100% 17,530,000
Svínoyar rognkelsisstøð Sp/f DKK Lumpfish farming Svínoy 100% 8,102,222
Faroe Seafood 2011 P/F DKK Trading fish Glyvrar 100% 2,000,000
Bakkafrost France SARL EUR Trading fish Boulogne, France 100% 160,000 EUR
Munkebo Seafood A/S DKK Production and sales of canned fish Munkebo 90% 1,800,000
FarCargo P/F** DKK Freight transportation of goods Glyvrar 70% 4,666,667
* Previously Scottish Salmon Company Ltd.
** Previously 07.07.2021 P/F
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
117
ANNUAL REPORT 2022
SECTION 3
118
SECTION 3
Carrying Carrying
Associated Companies Head Net Share of value value
DKK 1,000 Offi ce Ownership Additions the result 2022 2021
Pelagos P/F Fuglafjørður 30% 0 10,427 98,734 88,307
Salmon Proteins P/F* Eiði 79% 0 312 5,176 4,864
Svínoyar rognkelsisstøð Sp/f** Svínoy 100% n/a n/a n/a 733
FF Skagen A/S*** Skagen 25% 90,854 38,512 129,366 n/a
Total 233,276 93,904
Total assets Total assets Equity Equity Result Result
2022 2021 2022 2021 2022 2021
Pelagos P/F**** 540,104 540,104 291,441 291,441 97,495 97,495
Salmon Proteins P/F**** 9,557 9,557 6,183 6,183 407 407
Svínoyar rognkelsisstøð Sp/f**** n/a 8,386 n/a -842 n/a -837
FF Skagen A/S**** 1,364,847 1,364,847 412,081 412,081 8,403 8,403
*Voting rights 30%. The voting rights are limited in the Articles of Association of P/F Salmon Proteins.
**Changed classifi cation to a subsidiary company during 2022
***Changed classifi cation to an associated company during 2022
****Information from 2021
NOTE 3.5 SHARES AND HOLDINGS IN OTHER COMPANIES
Carrying Carrying
DKK 1,000 amount amount
Companies 2022 2021
Others 933 55,321
Total 933 55,321
Companies 2022 2021
Others 933 55,321
Total 933 55,321
ACCOUNTING POLICIES
Investments in other companies are classifi ed as available
for sale. Shares and holdings in which the Group does not
have signifi cant infl uence are valued at cost as fair value
cannot be measured reliably.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
119
ANNUAL REPORT 2022
SECTION 3
NOTE 3.6 INVENTORY
DKK 1,000 2022 2021
Raw materials and goods in-progress 843,909 514,977
Finished goods 230,435 194,329
Total inventory 1,074,344 709,306
Raw materials primarily consist of raw material to produce
fi shmeal, fi sh oil and fi sh feed and packaging materials used
in processing.
Goods in-progress include semi-fi nished products and spare
parts.
Finished products include all products ready for sale, such
as fi sh feed, fresh and frozen whole salmon, as well as pro-
cessed salmon products.
Inventories are measured at full cost price.
ACCOUNTING POLICIES
Inventories consist of inventories in the Farming FO unit,
Farming SCT unit, VAP unit and the FOF unit.
FARMING FO AND FARMING SCT
Inventories include mainly feed, packaging materials and fi n-
ished goods. Inventories of goods are stated at the lower of
cost and net realizable value.
The cost of processed goods is a full production cost that in-
cludes direct material and personnel costs, and a percentage
of indirect processing costs. Interest costs are not included in
the value of inventory.
The cost price of purchased goods is the acquisition price.
Cost is based on the FIFO principle.
Net realizable value is estimated sales price less selling
expenses.
VAP
Inventories consist of raw material, additives, packaging ma-
terial and fi nished goods. Raw material in the VAP unit con-
sist basically of processed salmonids. Raw material is meas-
ured at fair value at the time of harvesting.
Packaging material and additives are valued at the lesser of
cost or expected sales price less sales costs. The FIFO princi-
ple is used concerning the periodic assignment of inventory
costs.
Finished goods in inventory, fresh or frozen, are measured at
the lesser of cost or the expected sales price less sales costs.
In a case, where the cost price exceeds the sales price less
sales cost, impairment is entered and charged to the Income
Statement.
The cost price of goods produced in-house is the full pro-
duction cost, including production costs, which can be only
indirectly allocated to produce goods, less general adminis-
tration costs.
FOF
Raw materials and purchased commodities are valued at the
lower of historical cost and net realizable value in accord-
ance with the FIFO principle.
Finished goods are fi shmeal, oil and feed ready for delivery
to customer, valued at the lower of cost and net realizable
value. The cost of fi nished goods includes any processing
costs that have incurred. Processing costs consist of logistics,
handling and storage costs.
The cost price of goods produced in-house is the full pro-
duction cost, including production costs, which can be only
indirectly allocated to produce goods, less general adminis-
tration costs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
120
ANNUAL REPORT 2022
SECTION 3
NOTE 3.7 BIOLOGICAL ASSETS
DKK 1,000 2022 2021
Biological assets carrying amount 01.01. 2,448,289 2,117,024
Increase due to production or purchases 3,917,146 3,158,703
Reduction due to harvesting or sale (costs of goods sold) -3,363,747 -2,931,526
Reduction due to mortality (costs of incidents-based mortality) -282,768 -307,551
Fair value adjustment at the beginning of the period reversed -604,707 -145,387
Fair value reclassifi cation currency translation differences prior year 0 -24,452
Fair value adjustments at the end of the period 883,099 604,707
Reversal of elimination at the beginning of the period 134,193 80,083
Eliminations -135,650 -134,193
Currency translation differences -57,370 30,881
Biological assets carrying amount 31.12. 2,938,485 2,448,289
Cost price biological assets 2,248,406 1,946,894
Fair value adjustments at the end of the 883,099 604,707
Eliminations -135,650 -134,193
Currency translation differences -57,370 30,881
Biological assets carrying amount 2,938,485 2,448,289
Biomass on average (tonnes)
< 1 kg 4,737 5,070
1 < 2 kg 6,811 7,673
2 < 3 kg 8,608 10,026
3 < 4 kg 9,589 13,538
4 kg < 18,566 22,288
Volume of biomass at sea 48,311 58,595
Number of fi sh on average (thousand)
< 1 kg 11,043 9,770
1 < 2 kg 4,595 5,255
2 < 3 kg 3,520 3,873
3 < 4 kg 2,717 3,920
4 kg < 3,877 4,595
Total number of fi sh at sea 25,752 27,413
Harvested volumes (TGW) 90,603 96,889
Number of smolts released (thousand)
Q1 4,237 4,044
Q2 6,166 5,233
Q3 6,563 7,022
Q4 8,459 9,236
Total number of smolts released 25,425 25,535
Chang
e in discount rate +1% -212,686 -150,709
Change in discount rate -1% 238,534 167,502
Change in sales price +5 DKK 353,080 423,223
Change in sales price -5 DKK -353,080 -423,223
Change in biomass volume +1% 18,217 8,982
Change in biomass volume -1% -18,217 -8,982
One year forward prices in EUR FCA Oslo*
At year end 7.50 6.72
Q1 (forward) 8.58 6.86
Q2 (forward) 8.96 6.81
Q3 (forward) 7.16 5.66
Q4 (forward) 7.31 6.15
* Source Fish Pool
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
121
ANNUAL REPORT 2022
SECTION 3
ACCOUNTING POLICIES
IAS 41 requires biomass to be accounted for at the estimated
fair value net of sales costs and harvesting costs. The calcu-
lation of the estimated fair value is based on market prices
for harvested fish. In the accounts, the change in estimated
fair value is entered to the Income Statement on a continuous
basis.
The Group’s biological assets are salmon at all stages of the
life cycle. The fish is divided into two main groups, depend-
ing on the stage of the life cycle. The first group is fish pro-
duced on land in fresh water. The second is, when the fish
are released to sea.
For the first group, historical cost is deemed a reasonable
approach to fair value, as there is little biological transfor-
mation. This assessment must be seen in the light of the fact
that smolts are currently released to sea at a stage when
their weight is still relatively low.
For the second group, the fair value is calculated by applying
a present value model at level 3 in the fair value hierarchy in
IFRS 13. In accordance with the principle in IFRS 13 for high-
est and best use, the Group considers optimal harvest weight
to be for Farming FO 5.2 kg gutted weight (6.3 kg live weight)
and for Farming SCT 4.9 kg gutted weight (6.0 kg live weight).
The valuation model
The valuation model calculates the net present value of ex-
pected cash flow from biological assets.
Changes to estimated fair value of biological assets are pre-
sented on the line Fair value adjustments of biological assets
in the Income Statement.
The measurement unit is the individual fish. However, for
practical reasons, cash flows and estimates are carried out
per locality.
Main components in the model are:
• Volume
• Production costs
• Sales price
• Discount rate
Volume
Estimated harvest volume is based on the actual number of
fish in the sea on the balance sheet date, minus estimated
future mortality from balance sheet date and multiplied by
optimal harvest weight per fish.
Future monthly mortality is estimated to be for Farming FO
0.9% (2021: 0.9%) and for Farming SCT 2.0% (2021: 1.5%) of
the number of incoming fish per month.
Cost
Estimated future costs are based on the Group´s prognoses
per locality. Cost comprises mainly feed, production, harvest,
and transport costs.
Price
Estimated sales prices are based on externally quoted prices
from Fish Pool with adjustments to local conditions.
Fish Pool is a marketplace for financial purchase and sale
agreements for superior Norwegian salmon size 3-6 kg gut-
ted weight. The volume on Fish Pool is, however, limited. This
market may therefore be considered insufficiently active and
effective. Despite this, Bakkafrost’s opinion is that the ob-
servable forward prices are the best approach to a price for
the sale of salmon.
The prices are reduced for harvesting costs, freight costs to
market to arrive at a net value back-to-farm and for Farming
FO also revenue tax. The valuation also reflects the expected
quality grading.
Discounts
The estimated future cash flow is discounted monthly. The
monthly discount rate on 31 December 2022 is 6.0% (2021:
6.0%) per month for Farming FO and 4.0% (2021: 4.0%) per
month for Farming SCT. The discount rate considers a risk
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
122
ANNUAL REPORT 2022
SECTION 3
adjustment and time value. The risk adjustment considers the
volatility in volume, cost, and price.
Mortality
Mortality above normal will be accounted for when a farming
site either experiences elevated mortality over time or mor-
tality due to an incident.
Costs related to abnormal mortality will be recognized in the
Income Statement and presented on the line for changes in
inventory, while normal mortality is classified as part of pro-
duction costs.
Bakkafrost uses a common indicator and threshold for all
farming sites to assess normal and abnormal mortality. In-
dication of abnormal mortality is when a farming site in a
month registers mortality exceeding 1.5% (2021: 1.5%) for
Farming FO and 4.0% (2021: 4.0%) for Farming SCT of the
incoming number of fish. A more detailed assessment is then
carried out to evaluate, whether mortality is abnormal. These
assessments consider the cause of mortality and the size of
the fish.
SIGNIFICANT ASSUMPTIONS SENSITIVITY
The estimate of fair value of biomass will always be based on
uncertain assumptions, even though the company has built
substantial expertise in assessing these factors.
The Group considers three components to be key parameters
for valuation. These are: average price, monthly discount rate
and estimated biomass volume. In the table above a simu-
lated sensitivity analysis to changes in fair value of the bi-
ological assets is portrayed in the event of changes in these
parameters.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
123
ANNUAL REPORT 2022
SECTION 3
NOTE 3.8. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
DKK 1,000 2022 2021
Accounts receivable 808,806 620,356
Provisions for bad debts -51 -32
Net accounts receivables 808,755 620,324
VAT 75,973 78,227
Other 26,477 93,979
Tax receivables 65,822 109,701
Other receivables 168,272 281,907
Total short-term receivables 977,027 902,231
Long-term receivables 0 8,102
Total accounts receivable and other receivables 977,027 910,333
AGE DISTRIBUTION OF ACCOUNTS RECEIVABLE
DKK 1,000
Receivables not overdue 614,760 508,400
Overdue 0–6 months 190,538 103,258
Overdue more than 6 months 3,508 8,666
Total 808,806 620,324
The Group’s exposure to credit risks related to accounts receivable is disclosed in Note 4.1.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
124
ANNUAL REPORT 2022
SECTION 3
CURRENCY EXPOSURE TO ACCOUNTS RECEIVABLE
The Group holds accounts receivable in foreign currencies amounting to DKK 672 million at year-end 2022. (2021: DKK 528 million).
Below is presented the book value of receivables specifi ed in currency, translated into DKK employing the currency value at
31.12.
CURRENCY DISTRIBUTION OF RECEIVABLES
DKK 1,000 2022 2021
DKK 137,009 92,104
EUR 398,970 318,369
USD 105,135 126,231
GBP 73,511 66,754
JPY 5,730 0
NOK 88,451 2,803
Others 0 14,063
Total 808,806 620,324
ACCOUNTING POLICIES
Accounts receivable and other receivables are presented at
face value less provisions for bad debts. Provisions for bad
debts are made based on an individual assessment of the
receivables concerned. Due to insignifi cant cost and the short
credit period, amortized cost is equivalent to face value less
foreseeable losses.
NOTE 3.9 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of short-term bank depos-
its and were DKK 720 million at year-end 2022, compared to
DKK 509 million at year-end 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
125
ANNUAL REPORT 2022
SECTION 3
NOTE 3.10 SHARE CAPITAL AND MAJOR SHAREHOLDERS
Share capital:
DKK 1,000 2022 2021
Share capital at 1 January 59,143 59,143
Share capital at 31 December 59,143 59,143
The parent company’s share capital comprises:
DKK No. of Shares Face Value Share Capital
Ordinary shares 59,143,000 1 59,143,000
Total share capital 59,143,000
Reconciliation of outstanding shares: 2022 2021
Outstanding shares at 1 January 59,075,165 59,044,071
Sale of own shares to cover the employee bonus program 23,316 31,094
Outstanding shares at 31 December 59,098,481 59,075,165
Treasury shares at 31 December 44,519 67,835
SHAREHOLDERS
These shareholders held directly or indirectly more than
5% of the shares in the company as at 31 December 2022:
Folketrygdfondet, Regin Jacobsen, Oddvør Jacobsen and
The Goldman Sachs Group, Inc..
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
126
ANNUAL REPORT 2022
SECTION 3
Shares owned directly and indirectly by the members of the Board of Directors and Group Management:
Name Position No. of shares Shareholding
Rúni M. Hansen Chairman of the Board 10,761 0.02%
Teitur Samuelsen Member of the Board 100 0.00%
Annika Frederiksberg Member of the Board 16,250 0.03%
Øystein Sandvik Member of the Board 0 0.00%
Einar Wathne Member of the Board 0 0.00%
Guðrið Højgaard Member of the Board 0 0.00%
Regin Jacobsen Chief Executive Officer 4,617,351 7.81%
Odd Eliasen Managing Director 184,969 0.31%
Høgni D. Jakobsen Chief Financial Officer 74,593 0.13%
Dividend
The Board has proposed a dividend per share of DKK 10.00
for 2022. DKK 304 million were paid out for 2021. The div-
idends proposed are to be approved at the Annual General
Meeting and if approved, the total dividend payment will
amount to DKK 591 million. The dividend proposal has not
been recognized as a liability at 31 December 2022 but is
presented as an item within equity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
127
ANNUAL REPORT 2022
SECTION 3
NOTE 3.11 INTEREST-BEARING DEBT
DKK 1,000 2022 2021
Long-term interest-bearing debt 3,383,289 2,634,968
Total long-term interest-bearing debt 31.12. 3,383,289 2,634,968
Total interest-bearing debt 3,383,289 2,634,968
Cash and cash equivalents -719,603 -509,157
Net interest-bearing debt 2,663,686 2,125,811
The maturity structure of the Group’s fi nancial commitments
is based on undiscounted contractual payments. As the credit
limit is not necessarily in the same currency of debt drawn,
currency fl uctuations affect the amount available under the
facilities at any time.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
128
ANNUAL REPORT 2022
SECTION 3
The maturity plan of the Group’s interest-bearing debt is as follows
2022 2021
DKK 1,000 Carrying Contractual Carrying Contractual
amount amount amount payments
Credit facilities -3,383,289 -3,408,576 -2,634,968 -2,648,059
Gross interest-bearing debt -3,383,289 -3,408,576 -2,634,968 -2,648,059
Credit line 5,205,550 5,205,550
Long-term interest-bearing debt -3,383,289 -2,634,968
Cash and cash equivalents 719,603 509,157
Total available credit lines 2,541,864 3,079,739
REMAINING PERIOD
31.12.2022 1–3 months 3–12 months 1–5 years > 5 years Total
Interest-bearing bank loans 0 0 3,383,289 0 3,383,289
Accounts payable and other debt 579,247 237,780 0 0 817,027
REMAINING PERIOD
31.12.2021 1–3 months 3–12 months 1–5 years > 5 years Total
Interest-bearing bank loans 0 0 2,634,968 0 2,634,968
Accounts payable and other debt 543,394 170,997 0 0 714,391
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
129
ANNUAL REPORT 2022
SECTION 3
The difference between the carrying amount and the total
expected payments in the table above is due to upfront ar-
rangement and legal fees incurred in connection with the re-
financing of the credit facilities. One long-term bank borrow-
ing is drawn from a revolving credit facility, under which the
Group may draw and pay down any amount. The contractual
payments illustrated in the table above do not reflect rollo-
ver dates of loans drawn but are based on the maturity date
of the credit facilities.
INTEREST-BEARING DEBT IN MORE DETAIL
Financing of the Bakkafrost Group is mainly executed by the
parent company. Subsidiaries can only enter external financ-
ing if it is seen favourable for the whole Bakkafrost Group.
Sustainability-linked financing
In December 2021 the Group entered a term sheet for a sus-
tainability-linked EUR 700 million multicurrency revolving
credit facility with a tenor of five years. The Facility Agree-
ment was signed in March 2022. In February 2023 the Group
made use of an extension option and extended the Facility
with 12 months until February 2028.
The purpose of the Facility was to refinance Bakkafrost’s ex-
isting bank facilities as well as general corporate purposes
including acquisitions. The Facility will serve as a robust and
flexible financial framework for the Group’s investment plans
aimed at organic growth for the Group and structural cost
reductions in Scotland, as described at the Capital Markets
Day 2021.
As The Facility is sustainability-linked means that the margin
payable will be linked to Bakkafrost’s performance against
certain sustainability KPIs, consistent with the Group’s over-
all ESG targets and ambitions. The Facility includes flexi-
bility for the parties to agree an additional amount of up
to EUR 150 million during the tenor. The principal financial
covenants of the Facility are: (1) an equity ratio of no less
than 35% and (2) an interest coverage ratio (EBITDA to net
interest payable) of no less than 2x. The Bakkafrost Group
complied with these covenants at the end of 2022.
Coöperatieve Rabobank U.A, DNB Bank ASA and Nordea
Bank ABPm (Filial i Norge), have agreed to continue their
support as lenders.
At the end of 2022, the Group had unused committed credit
facilities of DKK 2,542 million (DKK 3,080 million). In addi-
tion, the Group has an accordion of EUR 150 million.
Maturity analysis - contractual payments
DKK 1,000 2023 2024 2025 2026 2027 2028
Long-term credit facilities 0 0 0 0 0 3,383,289
Gross interest-bearing debt 0 0 0 0 0 3,383,289
Reconciliation of development in interest-bearing debt
2021 Cash flows 2022
Long term interest-bearing debt 2.634.968 748.321 3.383.289
Total interest-bearing debt 2.634.968 748.321 3.383.289
2020 Cash flows 2021
Long term interest-bearing debt 2.219.690 415.278 2.634.968
Total interest-bearing debt 2.219.690 415.278 2.634.968
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
130
ANNUAL REPORT 2022
SECTION 3
NOTE 3.12 MORTGAGES AND GUARANTEES
Carrying amount of debt secured by mortgages and pledges
The Bakkafrost Group has a group fi nancing. The Group com-
panies are liable jointly and severely for the balance without
limitations for each other.
As part of the guarantees are also any insurance refunds.
In addition, the shares in larger subsidiaries have been
pledged to the bank syndicate.
DKK 1,000 2022 2021
Long-term debt to fi nancial institutions 3,383,289 2,634,968
Carrying amount of assets pledged as security for recognized debt
Licences 3,819,883 3,720,158
Property, plant and equipment 1,046,827 3,606,250
Biological assets (biomass) 2,938,485 2,448,289
Inventory 131,770 703,600
Total 7,936,965 10,478,297
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
131
ANNUAL REPORT 2022
SECTION 3
NOTE 3.13 DERIVATIVES
DKK 1,000 2022 2021
Currency swaps regarding forward contracts -7,474 7,809
Derivatives total -7,474 7,809
The fair value of derivatives held at the balance sheet date can be allocated as follows:
Recognized in Recognized in
the Income Recognized the Income Recognized
Fair Value Statement in equity Fair Value Statement in equity
2022 2022 2022 2021 2021 2021
Currency derivatives -7,474 0 -7,474 7,809 0 7,809
Total -7,474 0 -7,474 7,809 0 7,809
The expected timing of the effect on the income statement is as follows:
Interest and Interest and
Currency currency Total Currency currency Total
derivatives derivatives 2022 derivatives derivatives 2021
Within one year -7,474 0 -7,474 4,602 0 4,602
Between one and fi ve years 0 0 0 3,207 0 3,207
After fi ve years 0 0 0 0 0 0
Total -7,474 0 -7,474 7,809 0 7,809
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
132
ANNUAL REPORT 2022
SECTION 3
ACCOUNTING POLICES
In accordance with IFRS 9, financial instruments falling with-
in its remit are classified into the following categories: fair
value with changes in value entered to the Income State-
ment, hold until maturity, loans and receivables, available for
sale, and other liabilities.
Financial instruments at fair value with changes in value
entered to the Income Statement
Financial instruments, which are held primarily for buying
or selling in the short term, are classified as being held for
trading purposes. These instruments are included in the cat-
egory of financial instruments recognized at fair value with
changes in value entered to the Income Statement alongside
forward currency contracts, which are recognized at fair val-
ue with changes in value, entered to the Income Statement.
Hedge accounting
Interest rate swaps and forward currency settlement con-
tracts are used as hedges of its exposure to foreign currency
risk, interest expenses and instalment payments in foreign
currencies. The hedges are cash flow hedges.
The effective portion of the gain or loss on the hedging in-
strument is recognized directly in other comprehensive in-
come in the cash flow hedge reserve.
Amounts recognized as other comprehensive income are
transferred to the Income Statement, when the hedged trans-
action affects profit or loss, and when financial liabilities are
settled, such as when the hedged financial income or finan-
cial expense is recognized.
If the forecast transactions or commitments are no longer ex-
pected to occur, the cumulative gain or loss, previously rec-
ognized in equity, is transferred to the Income Statement. If
the hedging instrument expires or is sold, terminated, or ex-
ercised without replacement or rollover, or if its designation
as a hedge is revoked, any cumulative gain or loss, previ-
ously recognized in other comprehensive income, remain in
other comprehensive income until firm commitment affects
profit or loss, or settlement payments are made.
NOTE 3.14 PROVISIONS
A provision is recognized when, and only when, the compa-
ny has a valid liability (legal or self-imposed) deriving from
an event which has occurred, and when it is probable (more
likely than not) that a financial settlement will take place
because of that liability, and when the amount in question
can be reliably quantified. Provisions are reviewed on each
closing date, and the level reflects the best estimate for the
liability. The Group has no provisions as per 31 December
2022, compared to no provisions as per 31 December 2021.
PROVISIONS FOR ONEROUS CONTRACTS
ACCOUNTING POLICIES
The Group enters sales contracts for value added salmon
products (VAP) on an on-going basis. The contracts involve
physical settlement, and deliveries associated with the con-
tracts form part of the Group’s normal business activities.
The contracts contain no built-in derivative elements.
With respect to fixed-price contracts, which result in the
Group being obligated to sell salmon products at a price
less than production cost (including fair value adjustment of
raw materials at the point of harvesting), the contracts are
considered onerous, and provisions are calculated and en-
tered to the statement of financial position. The provision is
charged to the Income Statement.
SIGNIFICANT ASSUMPTION
The company holds long-term sale contracts related to salm-
on products. These contracts do not contain any elements
of embedded derivatives and are therefore not treated as
financial instruments. The contracts are settled, based exclu-
sively on the assumption that delivery of salmon products
should take place. The contracts are not tradable, nor do they
contain a clause for settlement in cash or cash equivalents.
Provisions are made for estimated onerous contracts that
oblige the Group to sell fish at a price less than calculated
production costs including raw materials, biomass, measured
at fair value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
133
ANNUAL REPORT 2022
SECTION 4
NOTES – SECTION 4
Capital
Structure and
Financing Items
This section gives an insight into the capital structure and
financing items.
NOTE 4.1 FINANCIAL RISK MANAGEMENT
CAPITAL MANAGEMENT
The Group’s objective, when managing capital, is to maintain
a capital structure able to support the operations and max-
imize shareholder value. The farming business is character-
ized by price volatility and challenging production dynamics.
The Group must be financially solid in order to be able to
cope with fluctuations in profits and financial position, and
the consolidated equity ratio shall at no time be lower than
35%. At 31 December 2022, the Group’s equity ratio was 62%
(64%).
The Group manages the capital structure and adjusts corre-
sponding to changes in the underlying economic conditions.
In December Bakkafrost entered a term sheet for a sustaina-
bility-linked EUR 700 million multicurrency revolving credit
facility with a tenor of five years. The facility agreement was
signed in March 2022. In February 2023 the Group made
use of an extension option and extended the Facility with 12
months until February 2028.
According to the Group’s dividend policy, under normal cir-
cumstances, average dividends over several years should be
30 to 50% of the adjusted net profit. The Board has proposed
a dividend of DKK 10.00 per share for the financial year
2022, corresponding to a distribution to shareholders of DKK
591 million (DKK 304 million).
At 31 December 2022, net interest-bearing debt amounted
to DKK 2,664 million (DKK 2,126 million). Note 3.10 provides
an overview of the debt’s maturity profile and information
on the debt’s financial covenants. Bakkafrost complied with
the covenants loan agreements at the end of 2022.
FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risks from its use
of financial instruments: market risk, liquidity risk and credit
risk. This note presents information about the Group’s expo-
sure to each of these risks, the Group’s objectives, policies
and procedures for measuring and managing risks.
Further quantitative disclosures are included throughout
these consolidated financial statements.
The main objective of Bakkafrost’s financial risk manage-
ment policies is to ensure the ongoing liquidity of the Group,
defined as being at all times in a position to meet the liabil-
ities of the Group as they fall due. This also includes being
able to meet financial covenants on Group debt under normal
circumstances.
Concerning insurance coverage, the Group insures against
material risks, where the insurance is economically viable.
The balance between the amount covered by insurance and
what is left to own risk varies, depending on the nature of
the risk, the value of the assets and prospective liabilities
and the cost, actual coverage and the availability of insur-
ance.
The Board of Directors believe that the most important meas-
ure against any risk is to have a strong financial position. At
31 December 2022, the Group’s equity ratio was 62% (64%).
Risk management policies and procedures are reviewed reg-
ularly to reflect changes in market conditions and the Group’s
activities.
FINANCIAL RISK
Financial risk can be defined as the risk that the Group will
not be able to meet its financial obligations.
In addition to bank loans, the Group has financial instru-
ments such as accounts receivables, cash, shares, accounts
payables, etc., which are ascribable directly to day-to-day
business operations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
134
ANNUAL REPORT 2022
SECTION 4
The Group uses financial derivatives, mainly currency for-
ward contracts. The purpose of these instruments is to man-
age the currency risks arising from the Group’s operations.
The Group does not employ financial instruments, including
financial derivatives, for the purpose of arbitrage.
The most important financial risks, to which the company is
exposed, are interest rate risk, foreign exchange risk, liquidi-
ty risk and credit risk. The management monitors these risks
on an on-going basis and draws up guidelines, for how these
should be managed.
MARKET RISK
Market risk can be defined as the risk that the Group’s in-
come and expenses, future cash flows or fair value of finan-
cial instruments will fluctuate because of changes in market
prices. Market risk comprises three types of risk: currency
risk, interest rates risk and other price risk (such as commod-
ity prices and salmon spot prices).
Market risk is monitored and actively managed by the Group.
Exposure to these risks is reduced by diversification, suitable
controls and business tactics. In some cases, market risks are
transferred to third parties via contractual price adjustment
clauses, but rarely by means of financial derivatives.
Foreign exchange risk
Because of the international nature of its operations, the
Group is exposed to fluctuations of foreign currency rates.
For risk management purposes, three types of currency ex-
posure have been identified: Translational exposure, Trans-
actional exposure and Economic currency exposure:
Translational exposure
Bakkafrost has subsidiaries abroad in Scotland, England, USA,
France and Denmark. Thus, Bakkafrost faces currency risks
arising from the translation of subsidiaries whose functional
currency differ from the presentation currency of the Group.
The exposure related to equity of foreign subsidiaries is gen-
erally not hedged.
Transactional exposure
Most of the operating companies in the Group are exposed to
changes in the value received or paid under foreign currency
denominated committed transactions. For the farming seg-
ments, exposure arises mainly from export sales, while for
the FOF segment, exposure results from the sourcing of raw
materials in the international commodities markets.
The Group has normally a net positive cash flow exposure
from USD and EUR and a net negative cash flow expo-
sure from DKK, GBP, and NOK. The predominant exposure
comes from the USD. The Group has therefore a policy for a
12-months layered hedging programme of USD/DKK.
The table below summarizes the foreign currency exposure
on the net monetary position of all Group entities against
their functional currency. The exposure on translating the fi-
nancial statements of subsidiaries into the presentation cur-
rency is not included in the analysis.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
135
ANNUAL REPORT 2022
SECTION 4
Exposure to currency risk Currency
DKK 1,000
2022 EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK
Cash and cash equivalents 358,978 0 219,246 24,031 2,324
Accounts receivable 398,970 73,511 105,135 88,451 5,730
Trade payables 0 -55,642 -22,555 -8,772 0
Interest-bearing debt -706,467 -628,838 0 0 0
Forward contracts 0 0 -331,250 0 0
Net exposure 51,481 -610,969 -29,424 103,710 8,054
2021 EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK
Cash and cash equivalents 203,593 0 181,144 0 15,018
Accounts receivable 318,369 66,785 203,383 14,063 2,803
Trade payables -1,253 -88,590 -9,992 0 0
Interest-bearing debt -706,468 -716,025 0 -8,905 0
Forward contracts 0 0 -249,562 7,873 0
Net exposure -185,759 -737,830 124,973 13,031 17,821
Sensitivity analysis Currency
DKK 1,000
2022 EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK Result
Net exposure 51,481 -610,969 -29,424 103,710 8,054
Historical volatility for the last 5 years 0.28% 7.24% 7.35% 9.98% 8.34%
Total effect on Profit of +movements 144 -44,234 -2,163 10,350 672 -35,231
Total effect on Profit of -movements -144 44,234 2,163 -10,350 -672 35,231
2021 EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK Result
Net exposure -185,759 -737,830 124,973 13,031 17,821
Historical volatility for the last 5 years 0.28% 7.19% 6.65% 9.31% 7.21%
Total effect on Profit of +movements -520 -53,050 8,311 1,213 1,285 -42,761
Total effect on Profit of -movements 520 53,050 -8,311 -1,213 -1,285 42,761
The analysis is based on the currencies that the Group is
most exposed to at the end of 2022. The reasonable shifts
in exchange rates in the table above are based on 5 years
historical volatility.
If the relevant cross foreign exchange rates moved by the
amounts showed in the table above, the effect on the Group’s
net income would be DKK -35 million (2021: DKK -43 mil-
lion).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
136
ANNUAL REPORT 2022
SECTION 4
Currency forward contracts as at 31 December 2022
Bakkafrost Group buys Bakkafrost Group sells
DKK 1,000
DKK 331,250 USD 46,957
Currency forward contracts as at 31 December 2021
Bakkafrost Group buys Bakkafrost Group sells
DKK 1,000
DKK 249,562 39,247
NOK 10,950 GBP 7,873
Significant exchange rates (average) during the year EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK
2022 743.96 872.59 708.30 73.69 5.40
2021 743.70 865.25 629.18 73.18 5.73
Interest rate risk
The Group is exposed to increase in interest rates as a result
of having debt with floating interest rate terms. An increased
cost of borrowing might adversely affect the Group’s profita-
bility. The Group does not have fixed interest rate debt.
According to the Group’s finance policy, the main objective
of interest rate risk management activities should be to min-
imize the risk of breach of the Group’s debt covenants and
to avoid situations of financial distress that might jeopard-
ize strategic flexibility. Trading in interest rate derivatives is
undertaken to cover existing exposures. Purely speculative
transactions are not allowed.
The Group has no fixed rate liabilities and is therefore not
exposed to the risk that changes in interest rates might drive
changes in market value of outstanding debt.
A 100 basis points increase in interest rate at the reporting
date would have a negative impact on the income statement
amounting to DKK 27 million (2021: DKK 21 million), based
on NIBD.
Price risk
The farming segments are sensitive to fluctuations in the
spot prices of salmon, which are determined by global supply
and demand. The impact of changes in salmon spot prices is
partly mitigated by long-term contracts at fixed prices in the
VAP segment and financial contracts, however, due to long
production cycles, it is difficult to respond quickly to global
trends in market prices. Salmon is to a large extent traded
based on spot prices, although this would vary with different
markets and with the market position of the Group.
Other price risk
The Group’s FOF segment is active in the international com-
modity markets. A large portion of raw materials needed in
production is contracted in advance of periodic sales price
regulations, this way the risk associated with increases in
commodity prices is effectively transferred to feed custom-
ers, mainly inside the Group. Constraints in the availability
of certain raw materials might result in increased sourcing
costs in those cases, where an unexpected surge in sales vol-
ume makes it necessary to purchase raw materials outside of
previously negotiated purchase agreements. Under these cir-
cumstances, it might not be possible to charge the customers
with the increased cost, and profitability would thus suffer.
Liquidity risk
Liquidity risk arises from the Group’s potential inability to
meet its financial obligations towards suppliers and debt
capital providers. The Group’s liquidity situation is closely
monitored and rolling forecasts of cash flows and cash hold-
ings are prepared regularly.
Liquidity risk is managed through maintaining flexibility in
funding by securing available committed credit lines, pro-
vided by our bank, and through maintaining sufficient liquid
assets with the same relationship bank.
The Group seeks to maintain committed facilities to cover
forecast borrowings for the next 24 months, plus financial
headroom to cover the planned investments and unfore-
seen movements in cash requirements. Please also refer
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
137
ANNUAL REPORT 2022
SECTION 4
to Note 3.11 for information on committed credit facilities,
available credit lines, and maturity of interest-bearing debt.
In addition to the above-described sources of liquidity,
Bakkafrost monitors funding options available in the capi-
tal markets as well as trends in the availability and cost of
such funding with a view to maintain financial flexibility and
limiting refinancing risk. Bakkafrost’s overall liquidity as at
31 December 2022 included DKK 720 million (2021: DKK
509 million) (see Note 3.11) of cash and cash equivalents
held in various currencies.
Credit risk
Credit risk represents the accounting loss that would have
to be recognized if other parties failed to perform as con-
tracted and is related to financial instruments such as cash
and cash equivalents, receivables and derivative financial
instruments.
Bakkafrost has a Group-wide credit management policy,
governed by Bakkafrost’s credit committee. The committee
is responsible for granting credits to the Groups customers.
In general, Bakkafrost uses credit insurance, bank guaran-
tees, parent company guarantees, or other securities such as
pledges on biological assets, thus reducing the actual risk on
outstanding receivables significantly. Historically, losses due
to bad debts have been low in Bakkafrost. Recoverable Tax
and VAT, included in the balance, also reduces the risk. In
addition to such risk mitigating measures, the Group focuses
on detailed credit management in operating companies, sup-
ported by regular follow up by central functions.
The concentration of credit risk is at the outset not con-
sidered significant, since the Group’s customers represent
various industries and geographic areas. Counterparty risk
against financial institutions is not considered significant,
due to limited liquid assets and low traded volumes in deriv-
atives. For these transactions, the Group relies upon Nordic
relationship banks, other relationship banks or widely recog-
nized commodity exchanges.
The carrying amount of financial assets represents the max-
imum credit exposure. The maximum exposure to credit risk
at the reporting date consists of accounts receivables, other
receivables, tax receivables and cash and cash equivalents
and amounts to DKK 1,697 million as at 31 December 2022
(2021: DKK 1,411 million). For the age distribution of ac-
counts receivable, please refer to Note 3.8.
Credit Risk 2022 2021
Accounts receivable 808,755 620,324
Other receivables 102,450 172,206
Tax receivables 65,822 109,700
Cash and Cash equivalents 719,603 509,157
Total 1,696,630 1,411,387
Bakkafrost has implemented a Group-wide cash management
policy with the overall objective of minimizing cash holdings,
while ensuring sufficient liquidity to meet business needs,
avoid shortage of cash and limit the need for borrowing. The
cash management is carried out from the Group’s head office.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
138
ANNUAL REPORT 2022
SECTION 4
NOTE 4.2 CATEGORIES AND FAIR VALUE OF
FINANCIAL INSTRUMENTS
Fair value of financial instruments
All assets/liabilities, for which fair value is recognized or dis-
closed, are categorized within the fair value hierarchy, de-
scribed as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1: Quoted market prices in an active market (that are
unadjusted) for identical assets or liabilities.
Level 2: Valuation techniques (for which the lowest level in-
put that is significant to the fair value measurement is direct-
ly or indirectly observable).
Level 3: Valuation techniques (for which the lowest level in-
put that is significant to the fair value measurement is un-
observable).
For biological assets, the fair value calculation is done using
a valuation model (level 3 in the valuation hierarchy), where
the value is estimated based on observable market prices
per period end. For more information on these calculations,
refer to Note 3.7.
For assets/liabilities that are recognized at fair value on a re-
curring basis, the Group determines, whether transfers have
occurred between Levels in the hierarchy by reassessing cat-
egorization (based on the lowest level input that is signifi-
cant to the fair value measurement).
There have been no transfers into or out of Level 3 fair value
measurements.
As at December 31st the Group held the following classes of assets/liabilities measured at fair value:
DKK 1,000
Assets and liabilities measured at fair value Fair value Cost amount Level 1 Level 2 Level 3
Biological assets (biomass) 2,938,485 2,055,386 0 0 2,938,485
Assets measured at fair value 31-12-22 2,938,485 2,055,386 0 0 2,938,485
Liabilities measured at fair value 31-12-22 0 0 0 0 0
Biological assets (biomass) 2,448,289 1,843,582 0 0 2,448,289
Assets measured at fair value 31-12-21 2,448,289 1,843,582 0 0 2,448,289
Liabilities measured at fair value 31-12-21 0 0 0 0 0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
139
ANNUAL REPORT 2022
SECTION 4
NOTE 4.3 EARNINGS PER SHARE
DKK 1,000 2022 2021
Earnings per share 2022 2021
Adjusted earnings per share (before fair value adjustments
of biomass and provision for onerous contracts (adjusted EPS)
Bakkafrost Group has no stock option programme running at present.
ACCOUNTING POLICIES
Basic earnings per share
Basic EPS is calculated by dividing the profi t attributable
to equity holders of the company by the weighted average
number of ordinary shares in issue during the year, exclud-
ing ordinary shares purchased by the company and held as
treasury shares.
Diluted earnings per share
Diluted earnings per share are adjusted for the dilution ef-
fect of issued share options. Bakkafrost has no share options
outstanding.
Adjusted earnings per share
Adjusted EPS is based on the reversal of certain fair value
adjustments shown in the table above, as it is Bakkafrost’s
view that this fi gure provides a more reliable measure of the
underlying performance.
Profi t for the year to the shareholders of P/F Bakkafrost 1,344,330 964,036
Fair value adjustment of biomass (IAS 41) -278,392 -434,868
Tax on fair value adjustment 57,682 78,276
Adjusted profi t for the year to shareholders of P/F Bakkafrost 1,123,620 607,444
Ordinary shares as at 01.01. 59,143,000 59,143,000
Ordinary shares as at 31.12. 59,143,000 59,143,000
Time-weighted average number of shares outstanding through the year 59,090,186 59,064,994
Basic (DKK) 22.75 16.32
Diluted (DKK) 22.75 16.32
Basic (DKK) 19.02 10.28
Diluted (DKK) 19.02 10.28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
140
ANNUAL REPORT 2022
SECTION 5
NOTES – SECTION 5
Other
Disclosures
This section gives more details on the statutory notes
that have secondary importance from the perspective of
Bakkafrost.
NOTE 5.1. CAPITAL COMMITMENTS
2022 2023 2024 Total
Total contractual new Hatchery stations in the Faroe Islands 57,077 26,294 83,371
Total contractual new marine sites and development of an existing freshwater site in Scotland. 233,900 0 233,900
Total contractual other PPE investments 336,700 0 336,700
Total 627,677 26,294 653,971
2021 2022 2023 Total
Total contractual new Hatchery stations in the Faroe Islands 163,204 99,065 262,269
Total contractual new marine sites and development of an existing freshwater site in Scotland. 163,400 0 163,400
Total contractual other PPE investments 324,600 0 324,600
Total 651,204 99,065 750,269
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
141
ANNUAL REPORT 2022
ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
142
SECTION 5
NOTE 5.2 RELATED-PARTY TRANSACTIONS
Related parties are in this respect considered as persons or
legal entities, which directly or indirectly possess signifi cant
infl uence on the Bakkafrost Group through shareholding or
position and vice versa. Related party transactions are at
arm’s length terms.
DKK 1,000 2022 2021
Based on key personnel
Revenues - Betri Trygging P/F 368 0
Purchase - Betri Trygging P/F 36,948 42,593
Accounts receivables - Betri Trygging P/F 143 0
Accounts payable - Betri Trygging P/F 2,344 50
Revenues - Gist & Vist P/F n/a 919
Purchase - Gist & Vist P/F n/a 106
Accounts receivable – Gist & Vist P/F n/a 59
Purchase – Frost P/F n/a 669
Accounts payable - Frost P/F n/a 77
Revenues - Tjaldur P/F 108 0
Purchase - Tjaldur P/F 161,289 81,766
Accounts payable - Tjaldur P/F 12,211 5,375
Purchase - Eystur- og Sandoyartunlar P/F 813 704
Accounts payable - Eystur- og Sandoyartunlar P/F 27 2
Revenues - Posta P/F 2 n/a
Purchase - Posta P/F 7,652 n/a
Accounts receivables - Posta P/F 0 n/a
Accounts payable - Posta P/F 9 n/a
Based on association
Revenues - FF Skagen A/S 49,242 14,019
Purchase - FF Skagen A/S 15,973 0
Accounts payable - FF Skagen A/S 6,099 0
Revenues - Pelagos P/F 0 27
Purchase - Pelagos P/F 144,702 51,401
Accounts payable - Pelagos P/F 46 4,028
Revenues - Salmon Proteins P/F 9,558 8,005
Purchase - Salmon Proteins P/F 1,794 131
Accounts receivables - Salmon Proteins P/F 0 1,941
Accounts payable - Salmon Proteins P/F 342 0
Revenues - Svínoyar Rognkelsisstøð SP/F
n/a 411
Purchase - Svínoyar Rognkelsisstøð SP/F n/a 6,137
Accounts receivables - Svínoyar Rognkelsisstøð SP/F n/a 8,102
Accounts payable - Svínoyar Rognkelsisstøð SP/F n/a 722
SECTION 5
NOTE 5.3 BUSINESS COMBINATIONS
In a transaction closed on 1 January 2022, Bakkafrost has
acquired 90% of the shares in Munkebo Seafood A/S. The
deal was jointly made with the General Manager of Munkebo
Seafood. The shares were acquired from Paul Lybech, who
has been engaged with Munkebo Seafood for almost 25
years. Following the transaction, the General Manager holds
10% of the shares in Munkebo Seafood A/S while Bakkafrost
holds 90% of the shares.
Munkebo Seafood A/S was founded in 1974 and has since
the formation been engaged in production of canned fish at
the factory in the city of Munkebo in Denmark. Today, the
company operates a modern canning facility and offers a
wide range of products, of which a larger share is based on
salmon. Bakkafrost has been one of the largest suppliers of
raw materials for Munkebo Seafood for the past few years,
making Munkebo Seafood a great extension of Bakkafrost’s
value chain. With a planned increase in production of salm-
on over the coming years, from Bakkafrost’s farms in the
Faroe Islands and in Scotland, Munkebo Seafood will have a
strengthened raw material base and Bakkafrost will strength-
en the ability to further increase the value derived from its
salmon by-products.
The operations of Munkebo Seafood will remain unchanged.
Munkebo Seafood has around 40 employees, and the prod-
ucts are currently sold mainly within the EU market to retail
customers. The key employees of Munkebo AS will continue.
There is considerable spare production capacity for future
growth within the current facility.
With the acquisition of Munkebo Seafood, Bakkafrost can
now offer a wider range of products. Bakkafrost offers fresh,
frozen, and smoked salmon products, and now canned food is
added. Bakkafrost has a global sales network, and Munkebo
Seafood’s products will now be offered in a wider market
as a supplement to Bakkafrost’s other consumer packaged
products.
The fair value of intangible assets has been determined on
an estimated fair value. Fair value has been identified in cus-
tomer relationship employing generally accepted valuation
techniques. The market value of the customer relationship is
measured to DKK 6.2 million.
The fair value of property, plant and equipment has been
determined based a 3rd party valuation.
The fair value of receivables has been determined based an
estimate of an age-distributed debtor list and historical fig-
ures on doubtful debtors.
The fair value of the inventory has been determined based
on inventory lists, historical sales data, and subtraction of
obsolete goods.
There have been no other new material business combina-
tions in 2022 and there were no new material business com-
binations in 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
143
ANNUAL REPORT 2022
SECTION 5
Book value Fair Value
DKK 1,000 31/12/2021 adjustments Fair value
Goodwill 0 7,586 7,586
Intangible assets 7 0 7
Property, plant, and equipment - incl. IFRS 16 13,665 0 13,665
Account’s receivables 8,480 0 8,480
Inventories 21,238 0 21,238
Other current assets, excluding cash and bank 2,202 0 2,202
Total assets 45,592 7,586 53,178
Deferred taxes and other taxes 1,091 1,157 2,248
Long-term liabilities, interest-bearing 7,405 0 7,405
Accounts payable 13,733 0 13,733
Other payable 4,404 0 4,404
Liabilities 26,633 1,157 27,790
Net assets 18,959 6,429 25,388
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
144
ANNUAL REPORT 2022
SECTION 5
NOTE 5.4 EVENTS AFTER THE DATE OF THE
STATEMENT OF FINANCIAL POSITION
This is regarding new information regarding the company’s
fi nancial position on the statement of fi nancial position,
which is received after the date of the statement of fi nancial
position, has been recognized in the annual accounts. Events
after the date of the statement of fi nancial position, which do
not affect the company’s fi nancial position on the statement
of fi nancial position date, but which will affect the company’s
future fi nancial position, are disclosed if material.
NOTE 5.5 AUDITOR’S FEES
Fees paid to auditors (ex. VAT) break down as follows:
DKK 1,000 2022 2021
Statutory auditing 1,366 1,262
Tax advisory services 9 55
Other services 361 300
Total auditor’s fees 1,736 1,617
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
145
ANNUAL REPORT 2022
SECTION 5
NOTE 5.6 GOING CONCERN
With reference to the Group’s profi ts, fi nancial strength and
long-term forecasts for the years ahead, it is confi rmed that
the fi nancial statements for 2022 are based on the assump-
tion that Bakkafrost is a going concern. In the opinion of the
Board, the Group’s fi nancial position is good.
NOTE 5.7
ALTERNATIVE PERFORMANCE MEASURES
The Groups fi nancial information is prepared in accordance
with international fi nancial reporting standards (IFRS). In ad-
dition, the management’s intention is to provide alternative
performance measures, which are regularly reviewed by the
management to enhance the understanding of the company’s
performance, but not replacing the fi nancial statements pre-
pared in accordance with IFRS. The alternative performance
measures presented may be determined or calculated dif-
ferently by other companies. Bakkafrost’s experience is that
these APM’s are frequently used by analysts, investors and
other parties.
These APM’s are adjusted IFRS measures defi ned, calculated
and used in a consistent and transparent manner over the
years and across the company where relevant.
NIBD
Net interest-bearing debt consists of both current and
non-current interest-bearing liabilities, less related current
and non-current hedging instruments, fi nancial instruments,
such as debt instruments and derivatives, and cash and cash
equivalents. The net interest-bearing debt is a measure of the
Group’s net indebtedness that provides an indicator of the
overall balance sheet strength. It is also a single measure that
can be used to assess both the Group’s cash position and its
indebtedness. The use of the term ‘net debt’ does not neces-
sarily mean that the cash included in the net debt calculation
is available to settle the liabilities included in this measure.
Net debt is an alternative performance measure as it is not
defi ned in IFRS. The most directly comparable IFRS measure
is the aggregate interest-bearing liabilities (both current and
non-current) and cash and cash equivalents. A reconciliation
from these to net debt is provided below.
DKK 1,000 2022 2021
Cash and cash equivalents -719,603 -509,157
Long- and short-term interest-bearing debt 3,383,289 2,634,968
Net interest-bearing debt 2,663,686 2,125,811
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
146
ANNUAL REPORT 2022
SECTION 5
Operational EBIT
Operational EBIT is EBIT aligned for fair value adjustments,
onerous contracts provisions, income from associates and
revenue tax - FO.
Operational EBIT is a major alternative performance measure
in the salmon farming industry. A reconciliation from EBIT to
Operational EBIT is provided below.
DKK 1,000 2022 2021
EBIT 1,826,153 1,144,685
Fair value adjustments of biological assets -278,392 -434,868
Income from associates -57,597 -30,112
Revenue tax - FO 215,001 141,489
Operational EBIT 1,705,165 821,194
EBITDA
Earnings before interest, tax, depreciations and amortizations
(EBITDA) is a key fi nancial parameter for Bakkafrost’s FOF
segment. EBITDA before other income and other expenses is
defi ned as EBITDA less gains and losses on disposals of fi xed
assets and operations and is reconciled in the section Group
overview. This measure is useful to users of Bakkafrost’s fi -
nancial information in evaluating operating profi tability on
a more variable cost basis, as it excludes depreciations and
amortization expenses related primarily to capital expendi-
tures and acquisitions, which occurred in the past, nonrecur-
ring items, as well as evaluating operating performance in re-
lation to Bakkafrost’s FOF segments competitors. The EBITDA
margin presented is defi ned as EBITDA before other income
and other expenses divided by total revenues.
Operational EBIT per kg:
Farming FO segment:
Operational EBIT Farming FO segment
Total harvested volumes FO (gw)
VAP segment:
Operational EBIT VAP segment
Total volumes produced (raw material gw)
Farming FO and VAP segment:
Operational EBIT Farming FO and VAP segment
Total harvested volumes FO (gw)
Farming SCT segment:
Operational EBIT Farming SCT segment
Total harvested volumes SCT (gw)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
147
ANNUAL REPORT 2022
SECTION 5
DKK 1,000 2022 2021
Profi t for the year to the shareholders of P/F Bakkafrost 1,344,330 964,036
Fair value adjustment of biomass -278,392 -434,868
Tax on fair value adjustment and onerous contracts provisions 57,682 78,276
Adjusted profi t for the year to shareholders of P/F Bakkafrost 1,123,620 607,444
Time-weighted average number of shares outstanding through the year 59,090,186 59,064,994
Adjusted earnings per share (before fair value adjustment of
biomass and provisions for onerous contracts) 19.02 10.28
Adjusted EPS
Adjusted EPS is based on the reversal of certain fair value
adjustments shown in the table above, as it is Bakkafrost’s
view that this fi gure provides a more reliable measure of the
underlying performance.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - BAKKAFROST GROUP
148
ANNUAL REPORT 2022
Financial
Statements
P/F BAKKAFROST
149
P/F BAKKAFROST
Table of Contents
P/F Bakkafrost – Income Statement for the Year ended 31 December 151
P/F Bakkafrost – Statement of Financial Positionas at 31 December 152
P/F Bakkafrost – Cash Flow Statement for the Year Ended 31 December 154
P/F Bakkafrost – Statement of Changes in Equity As at 31 December 155
Note 1 – Accounting Policies 156
Note 2 – Salaries and Other Personnel Expenses 156
Note 3 – Net Financial Items 157
Note 4 – Property, Plant and Equipment 158
Note 5 – Subsidiaries and Associates 159
Note 6 – Investments in Stocks and Shares 161
Note 7 – Share Capital and Major Shareholders 161
Note 8 – Tax 162
Note 9 – Security Pledges and Contingent Liabilities 163
Quarterly Financial Figures 2020-2022 164
Market Announcements Published in 2022 167
Financial Calendar for 2023 168
Glossary 169
TABLE OF CONTENTS – BAKKAFROST GROUP
150
ANNUAL REPORT 2022
DKK 1,000 Note 2022 2021
Operating revenue 196,657 163,467
Salary and personnel expenses 2 -49,050 -38,205
Other operating expenses -132,592 -97,291
Depreciation 4 -29,433 -29,500
Earnings before interest and taxes (EBIT) -14,418 -1,529
Dividends from subsidiaries 880,409 282,140
Income from other investments in shares 6 42 50
Financial income 3 84,358 44,227
Net interest expenses 3 -57,634 -31,501
Net currency effects 3 -149,523 31,014
Other fi nancial expenses 3 -6,509 -5,822
Earnings before taxes (EBT) 736,725 318,579
Taxes 8 19,743 -6,655
Profi t to shareholders of P/F Bakkafrost 756,468 311,924
Distribution of profi t
Dividend proposed 591,430 303,995
Retained earnings 165,038 7,929
Distribution in total 756,468 311,924
P/F BAKKAFROST
Income Statement
FOR THE YEAR ENDED 31 DECEMBER
Operating revenue 196,657 163,467
Salary and personnel expenses 2 -49,050 -38,205
Other operating expenses -132,592 -97,291
Depreciation 4 -29,433 -29,500
Earnings before interest and taxes (EBIT) -14,418 -1,529
Dividends from subsidiaries 880,409 282,140
Income from other investments in shares 6 42 50
Financial income 3 84,358 44,227
Net interest expenses 3 -57,634 -31,501
Net currency effects 3 -149,523 31,014
Other fi nancial expenses 3 -6,509 -5,822
Earnings before taxes (EBT) 736,725 318,579
Taxes 8 19,743 -6,655
Profi t to shareholders of P/F Bakkafrost 756,468 311,924
Dividend proposed 591,430 303,995
Retained earnings 165,038 7,929
Distribution in total 756,468 311,924
P/F BAKKAFROST - FINANCIAL STATEMENTS
151
ANNUAL REPORT 2022
DKK 1,000 Note 2022 2021
ASSETS
Non-current assets
Intangible assets 1,000 1,000
Total intangible assets 1,000 1,000
Property, plant and equipment
Land, buildings and other real estate 4 208,757 219,864
Plant, machinery and other operating equipment 4 73,761 90,477
Total property plant and equipment 282,518 310,341
Non-current fi nancial assets
Investments in subsidiaries 5 5,623,754 5,575,253
Investments in stocks and shares 6 790 750
Total non-current fi nancial assets 5,624,544 5,576,003
TOTAL NON-CURRENT ASSETS 5,908,062 5,887,344
Inventory 49,635 31,059
Total inventory 49,635 31,059
Receivables from Group companies 8,342,539 6,422,500
Derivatives 3.13* 7,474 0
Accounts receivables 1,413 24,753
Other receivables 28,756 23,279
Total receivables 8,380,182 6,470,532
Cash and cash equivalents 588,639 400,145
TOTAL CURRENT ASSETS 9,018,456 6,901,736
TOTAL ASSETS 14,926,518 12,789,080
*Group note 3.13
P/F BAKKAFROST
Statement of
Financial Position
AS AT 31 DECEMBER
Intangible assets 1,000 1,000
Total intangible assets 1,000 1,000
Land, buildings and other real estate 4 208,757 219,864
Plant, machinery and other operating equipment 4 73,761 90,477
Total property plant and equipment 282,518 310,341
Investments in subsidiaries 5 5,623,754 5,575,253
Investments in stocks and shares 6 790 750
Total non-current fi nancial assets 5,624,544 5,576,003
TOTAL NON-CURRENT ASSETS 5,908,062 5,887,344
Inventory 49,635 31,059
Total inventory 49,635 31,059
Receivables from Group companies 8,342,539 6,422,500
Derivatives 3.13* 7,474 0
Accounts receivables 1,413 24,753
Other receivables 28,756 23,279
Total receivables 8,380,182 6,470,532
Cash and cash equivalents 588,639 400,145
TOTAL CURRENT ASSETS 9,018,456 6,901,736
TOTAL ASSETS 14,926,518 12,789,080
P/F BAKKAFROST - FINANCIAL STATEMENTS
152
ANNUAL REPORT 2022
DKK 1,000 Note 2022 2021
EQUITY AND LIABILITIES
Equity
Share capital 7 59,143 59,143
Other equity 9,618,988 9,146,165
Total equity 9,678,131 9,205,308
Non-current liabilities
Long-term interest-bearing debt 9 3,353,892 2,634,362
Deferred taxes 8 12,173 10,116
Total non-current liabilities 3,366,065 2,644,478
Current liabilities
Derivatives 3.13* 0 4,721
Payables to Group companies 1,854,811 905,003
Current tax liabilities 0 7,559
Accounts payable 10,979 15,527
Other short-term liabilities 16,532 6,484
Total current liabilities 1,882,322 939,294
Total liabilities 5,248,387 3,583,772
TOTAL EQUITY AND LIABILITIES 14,926,518 12,789,080
*Group note 3.13
Share capital 7 59,143 59,143
Other equity 9,618,988 9,146,165
Total equity 9,678,131 9,205,308
Long-term interest-bearing debt 9 3,353,892 2,634,362
Deferred taxes 8 12,173 10,116
Total non-current liabilities 3,366,065 2,644,478
Derivatives 3.13* 0 4,721
Payables to Group companies 1,854,811 905,003
Current tax liabilities 0 7,559
Accounts payable 10,979 15,527
Other short-term liabilities 16,532 6,484
Total current liabilities 1,882,322 939,294
Total liabilities 5,248,387 3,583,772
TOTAL EQUITY AND LIABILITIES 14,926,518 12,789,080
P/F BAKKAFROST - FINANCIAL STATEMENTS
153
ANNUAL REPORT 2022
DKK 1,000 Note 2022 2021
Cash fl ow from operations
EBIT -14,418 -1,529
Adjustments for write-downs and depreciation 4 29,433 29,500
Adjustments for net currency effects 3 -149,523 31,014
Adjustments for share-based payment 2 3,316 601
Taxes paid 8 -6,737 1,099
Change in inventory -18,576 -7,219
Change in receivables 17,863 -27,660
Change in current debts 5,248 5,397
Cash fl ow from operations -133,394 31,203
Cash fl ow from investments
Increase of share capital in subsidiaries, etc., net 5 -48,541 1,770
Payments made for purchase of fi xed assets 4 -1,611 -5,712
Cash fl ow from investments -50,152 -3,942
Cash fl ow from fi nancing
Changes in interest-bearing debt (short and long) 717,334 415,560
Financial income 3 84,358 44,227
Financial expenses 3 -64,143 -37,323
Financing of associates/subsidiaries -950,626 -475,733
Acquisition/sale treasury shares 8,703 11,499
Dividend from subsidiaries 880,409 282,140
Dividend paid -303,995 -215,872
Cash fl ow from fi nancing 372,040 24,498
Net change in cash and cash equivalents 188,494 51,759
Cash and cash equivalents – opening balance 400,145 348,386
Cash and cash equivalents – closing balance total 588,639 400,145
P/F BAKKAFROST
Cash Flow
Statement
FOR THE YEAR ENDED 31 DECEMBER
EBIT -14,418 -1,529
Adjustments for write-downs and depreciation 4 29,433 29,500
Adjustments for net currency effects 3 -149,523 31,014
Adjustments for share-based payment 2 3,316 601
Taxes paid 8 -6,737 1,099
Change in inventory -18,576 -7,219
Change in receivables 17,863 -27,660
Change in current debts 5,248 5,397
Cash fl ow from operations -133,394 31,203
Increase of share capital in subsidiaries, etc., net 5 -48,541 1,770
Payments made for purchase of fi xed assets 4 -1,611 -5,712
Cash fl ow from investments -50,152 -3,942
Cash fl ow from fi nancing
Changes in interest-bearing debt (short and long) 717,334 415,560
Financial income 3 84,358 44,227
Financial expenses 3 -64,143 -37,323
Financing of associates/subsidiaries -950,626 -475,733
Acquisition/sale treasury shares 8,703 11,499
Dividend from subsidiaries 880,409 282,140
Dividend paid -303,995 -215,872
Cash fl ow from fi nancing 372,040 24,498
Net change in cash and cash equivalents 188,494 51,759
Cash and cash equivalents – opening balance 400,145 348,386
Cash and cash equivalents – closing balance total 588,639 400,145
P/F BAKKAFROST - FINANCIAL STATEMENTS
154
ANNUAL REPORT 2022
P/F BAKKAFROST
Statement of
Changes in Equity
AS AT 31 DECEMBER
Share Share-
premium Treasury based Proposed Retained
DKK 1,000 Share capital account shares payment Derivatives dividends earnings Total
1 January 2022 59,143 3,838,206 -26,727 1,571 -3,871 303,995 5,032,991 9,205,308
Net annual profit 0 0 0 0 0 0 758,116 758,116
Fair value adjustment on financial derivatives 0 0 0 0 11,102 0 0 11,102
Hereof tax effect 0 0 0 0 -1,103 0 0 -1,103
Total other comprehensive income 0 0 0 0 9,999 0 0 9,999
Total comprehensive income 0 0 0 0 9,999 0 758,116 768,115
Treasury shares 0 0 8,215 0 0 0 0 8,215
Share-based payment 0 0 0 212 0 0 0 212
Dividend treasury shares 0 0 0 0 0 0 276 276
Paid-out dividends 0 0 0 0 0 -303,995 0 -303,995
Proposed dividends 0 0 0 0 0 591,430 -591,430 0
Total transaction with owners 0 0 8,215 212 0 287,435 -591,154 -295,292
Total changes in equity 0 0 8,215 212 9,999 287,435 166,962 472,823
31 December 2022 59,143 3,838,206 -18,512 1,783 6,128 591,430 5,199,953 9,678,131
1 January 2021 59,143 3,838,206 -37,685 1,354 0 215,872 5,020,990 9,097,880
Net annual profit 0 0 0 0 0 0 311,924 311,924
Fair value adjustment on financial derivatives 0 0 0 0 -4,721 0 0 -4,721
Hereof tax effect 0 0 0 0 850 0 0 850
Total other comprehensive income 0 0 0 0 -3,871 0 0 -3,871
Total comprehensive income 0 0 0 0 -3,871 0 311,924 308,053
Treasury shares 0 0 10,958 0 0 0 3,748 14,706
Share-based payment 0 0 0 217 0 0 0 217
Dividend treasury shares 0 0 0 0 0 0 324 324
Paid-out dividends 0 0 0 0 0 -215,872 0 -215,872
Proposed dividends 0 0 0 0 0 303,995 -303,995 0
Total transaction with owners 0 0 10,958 217 0 88,123 -299,923 -200,625
Total changes in equity 0 0 10,958 217 -3,871 88,123 12,001 107,428
31 December 2021 59,143 3,838,206 -26,727 1,571 -3,871 303,995 5,032,991 9,205,308
P/F BAKKAFROST - FINANCIAL STATEMENTS
155
ANNUAL REPORT 2022
NOTE 2. SALARIES AND OTHER PERSONNEL EXPENSES
DKK 1,000 2022 2021
Wages and salaries 34,551 30,834
Share based payments 3,316 601
Social security taxes 1,476 1,349
Pension expenses 2,603 2,153
Other benefi ts 7,104 3,268
Total payroll expenses 49,050 38,205
Average number of full-time employees 46 41
Notes to the
Financial Statements
NOTE 1. ACCOUNTING POLICIES
The fi nancial statements have been prepared in accordance
with the International Financial Reporting Standards (IFRS),
endorsed by the European Union (EU), and the additional
requirements according to the Faroese Financial Report-
ing Act. The accounting policies applied to the consolidat-
ed accounts have also been applied to the parent compa-
ny, P/F Bakkafrost. The notes to the consolidated accounts
provide additional information to the parent company’s ac-
counts, which is not presented here separately. The compa-
ny’s fi nancial statements are presented in DKK. Investments
in subsidiaries are measured at historic cost unless there is
any indication of impairment. In case of impairment, an in-
vestment is written down to fair value.
REMUNERATION TO SENIOR EXECUTIVES AND AUDITORS
For details of remuneration paid to senior executives, see
notes to the consolidated fi nancial statements. The company
paid DKK 641,500 (586,000) for audit service, DKK 9,000
(55,000) for tax advisory and DKK 155,500 (97,500) for
other service. Please also see note 5.5 in the consolidated
fi nancial statements.
Wages and salaries 34,551 30,834
Share based payments 3,316 601
Social security taxes 1,476 1,349
Pension expenses 2,603 2,153
Other benefi ts 7,104 3,268
Total payroll expenses 49,050 38,205
Average number of full-time employees 46 41
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
156
ANNUAL REPORT 2022
NOTE 3. NET FINANCIAL ITEMS
DKK 1,000 2022 2021
Interests received from Group companies 77,966 43,303
Realized profi t on fi nancial derivatives 4,889 861
Other fi nancial income 1,503 63
Financial income 84,358 44,227
Interest expenses on long- and short-term loans -57,624 -31,500
Interest expenses on accounts payable -10 -1
Financial expenses -57,634 -31,501
Other exchange differences -149,523 31,014
Net currency effects -149,523 31,014
Other fi nancial expenses -6,509 -5,822
Other fi nancial items -6,509 -5,822
Net fi nancial items -129,308 37,918
Interests received from Group companies 77,966 43,303
Realized profi t on fi nancial derivatives 4,889 861
Other fi nancial income 1,503 63
Financial income 84,358 44,227
Interest expenses on long- and short-term loans -57,624 -31,500
Interest expenses on accounts payable -10 -1
Financial expenses -57,634 -31,501
Other exchange differences -149,523 31,014
Net currency effects -149,523 31,014
Other fi nancial expenses -6,509 -5,822
Other fi nancial items -6,509 -5,822
Net fi nancial items -129,308 37,918
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
157
ANNUAL REPORT 2022
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Land and Other
DKK 1,000 buildings equipment Total
Acquisition cost as at 01.01.22 294,411 179,183 473,594
Disposals and scrapping during the year 0 -600 -600
Acquisitions during the year 361 1,600 1,961
Acquisition cost as at 31.12.22 294,772 180,183 474,955
Accumulated depreciation and write-down as at 01.01.22 -74,547 -88,707 -163,254
Depreciations during the year related to disposals 0 251 251
Depreciations during the year -11,468 -17,966 -29,434
Accumulated depreciation and write-down as at 31.12.22 -86,015 -106,422 -192,437
Net book value as at 31.12.22 208,757 73,761 282,518
Acquisition cost as at 01.01.21 289,773 178,737 468,510
Disposals and scrapping during the year 0 -787 -787
Acquisitions during the year 4,638 1,234 5,872
Acquisition cost as at 31.12.21 294,411 179,184 473,595
Accumulated depreciation and write-down as at 01.01.21 -63,067 -71,315 -134,382
Depreciations during the year related to disposals 0 628 628
Depreciations during the year -11,480 -18,020 -29,500
Accumulated depreciation and write-down as at 31.12.21 -74,547 -88,707 -163,254
Net book value as at 31.12.21 219,864 90,477 310,341
A significant part of Bakkafrost’s buildings is located on rented land.
Estimated lifetime Depreciation method Scrap value
Land and buildings 15-25 years linear 10%
Other operating equipment 3-8 years linear 0%
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
158
ANNUAL REPORT 2022
NOTE 5. SUBSIDIARIES AND ASSOCIATES
DKK 1,000 2022 2021
Acquisition cost as at 01.01. 5,578,019 5,579,266
Additions during the year 48,501 -1,247
Acquisition cost as at 31.12. 5,626,520 5,578,019
Re-evaluations as at 01.01. -2,766 -2,766
Re-evaluations as at 31.12. -2,766 -2,766
Net book value as at 31.12. 5,623,754 5,575,253
Acquisition cost as at 01.01. 5,578,019 5,579,266
Additions during the year 48,501 -1,247
Acquisition cost as at 31.12. 5,626,520 5,578,019
Re-evaluations as at 01.01. -2,766 -2,766
Re-evaluations as at 31.12. -2,766 -2,766
Net book value as at 31.12. 5,623,754 5,575,253
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
159
ANNUAL REPORT 2022
Carrying Carrying
Cost amount in amount in
DKK 1,000 Method Head Voting P/F Bakkafrost P/F Bakkafrost
Company Yes/No Offi ce Ownership share 2022 2021
Bakkafrost Processing P/F Yes Glyvrar 100% 100% 258,591 258,591
Bakkafrost Sales P/F Yes Glyvrar 100% 100% 879 879
Bakkafrost Packaging P/F Yes Glyvrar 100% 100% 7,781 7,781
Bakkafrost Farming P/F Yes Glyvrar 100% 100% 314,887 314,887
Havsbrún P/F Yes Glyvrar 100% 100% 908,884 908,884
Bakkafrost UK Ltd Yes Grimsby 100% 100% 4,649 4,649
Bakkafrost Danmark ApS Yes Glyvrar 100% 100% 50 50
Bakkafrost Scotland Ltd Yes Edinburgh 100% 100% 4,074,182 4,074,182
Förka P/F Yes Glyvrar 100% 100% 5,000 5,000
Faroe Seafood P/F Yes Glyvrar 100% 100% 14,000 n/a
Munkebo Seafood A/S Yes Munkebo 90% 90% 22,851 n/a
FarCargo P/F Yes Glyvrar 70% 70% 12,000 350
Total subsidiaries 5,623,754 5,575,253
P/F Bakkafrost and subsidiaries, the Group, own a total of 78.7% in P/F Salmon Proteins, which is an associated company on the Group level.
P/F Bakkafrost owns 14.23% in P/F Salmon Proteins and this is classed in investment in stocks and shares.
Excess
dividends Result Result
DKK 1,000 Dividends* on result 2022 2021
Bakkafrost Farming P/F 1,010,177 160 1,010,337 317,033
Bakkafrost Sales P/F 207,769 13 207,782 207,408
Bakkafrost Packaging P/F 5,023 27 5,050 15,169
Bakkafrost Processing P/F 0 -95,111 -95,111 75,074
Havsbrún P/F 295,796 57,280 353,076 252,470
Bakkafrost UK Ltd. 0 6,285 6,285 3,754
Bakkafrost Danmark ApS 0 -9 -6 -6
Bakkafrost Scotland Ltd 0 -274,334 -274,334 -253,231
Förka P/F 0 2,430 2,430 2,430
Faroe Seafood P/F 0 915 915 n/a
Munkebo Seafood A/S 0 1,425 1,425 n/a
FarCargo P/F 0 -3,155 -3,155 -56
Total revenue Group contribution 1,518,765 -304,074 1,214,694 620,045
* Dividends from subsidiaries paid out in 2023
Bakkafrost Processing P/F Yes Glyvrar 100% 100% 258,591 258,591
Bakkafrost Sales P/F Yes Glyvrar 100% 100% 879 879
Bakkafrost Packaging P/F Yes Glyvrar 100% 100% 7,781 7,781
Bakkafrost Farming P/F Yes Glyvrar 100% 100% 314,887 314,887
Havsbrún P/F Yes Glyvrar 100% 100% 908,884 908,884
Bakkafrost UK Ltd Yes Grimsby 100% 100% 4,649 4,649
Bakkafrost Danmark ApS Yes Glyvrar 100% 100% 50 50
Bakkafrost Scotland Ltd Yes Edinburgh 100% 100% 4,074,182 4,074,182
Förka P/F Yes Glyvrar 100% 100% 5,000 5,000
Faroe Seafood P/F Yes Glyvrar 100% 100% 14,000 n/a
Munkebo Seafood A/S Yes Munkebo 90% 90% 22,851 n/a
FarCargo P/F Yes Glyvrar 70% 70% 12,000 350
Total subsidiaries 5,623,754 5,575,253
Bakkafrost Farming P/F 1,010,177 160 1,010,337 317,033
Bakkafrost Sales P/F 207,769 13 207,782 207,408
Bakkafrost Packaging P/F 5,023 27 5,050 15,169
Bakkafrost Processing P/F 0 -95,111 -95,111 75,074
Havsbrún P/F 295,796 57,280 353,076 252,470
Bakkafrost UK Ltd. 0 6,285 6,285 3,754
Bakkafrost Danmark ApS 0 -9 -6 -6
Bakkafrost Scotland Ltd 0 -274,334 -274,334 -253,231
Förka P/F 0 2,430 2,430 2,430
Faroe Seafood P/F 0 915 915 n/a
Munkebo Seafood A/S 0 1,425 1,425 n/a
FarCargo P/F 0 -3,155 -3,155 -56
Total revenue Group contribution 1,518,765 -304,074 1,214,694 620,045
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
160
ANNUAL REPORT 2022
NOTE 6. INVESTMENTS IN STOCKS AND SHARES
DKK 1,000 2022 2021
Acquisition cost as at 01.01. 183 183
Acquisition cost as at 31.12. 183 183
Re-evaluations as at 01.01. 567 1,090
Dividend 0 -573
Re-evaluations during the year 40 50
Re-evaluations as at 31.12. 607 567
Net book value as at 31.12. 790 750
Shares and holdings, in which the Group does not have signifi cant infl uence. These are valued using the equity method or at cost
since fair value cannot be measured reliably.
NOTE 7. SHARE CAPITAL AND MAJOR SHAREHOLDERS
DKK 1,000 2022 2021
Share capital as at 31.12. 59,143 59,143
Share capital as at 31.12. 59,143 59,143
The share capital is distributed into shares of DKK 1 and multiples thereof. For shareholders holding more than 5% in the Com-
pany as at 31 December 2022, see Group Account 3.10.
Acquisition cost as at 01.01. 183 183
Acquisition cost as at 31.12. 183 183
Re-evaluations as at 01.01. 567 1,090
Dividend 0 -573
Re-evaluations during the year 40 50
Re-evaluations as at 31.12. 607 567
Net book value as at 31.12. 790 750
Share capital as at 31.12. 59,143 59,143
Share capital as at 31.12. 59,143 59,143
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
161
ANNUAL REPORT 2022
NOTE 8. TAX
The tax expense for the year breaks down as follows:
DKK 1,000 2022 2021
Tax payable 19,605 -6,737
Change in deferred tax 138 82
Tax expense on ordinary profi t 19,743 -6,655
Tax in the statement of fi nancial position
Deferred tax 12,173 10,116
Tax in the statement of fi nancial position 12,173 10,116
Specifi cation of temporary differences
Property, plant and equipment 60,154 60,883
Currency derivatives 7,474 -4,683
Total temporary differences 67,628 56,200
Deferred tax liabilities (+) / assets (-) 12,173 10,116
Reconciliation from nominal to actual tax rate
Profi t before tax 736,725 318,579
Expected tax at nominal tax rate (18%) -132,661 -57,344
Permanent differences, including Group contribution without tax effect (18%) 158,474 50,785
Other permanent differences (18%) -6,120 -96
Calculated tax expense 19,743 -6,655
Effective tax rate 2.68% -2.09%
As Parent company in the Bakkafrost Group, Bakkafrost P/F
is the administrating company in a Faroese Group Joint Tax-
ation and is liable towards the Faroese Tax Authorities for
taxes payable on behalf of the Faroese subsidiaries included
in the Faroese Group Joint Taxation.
19,605 -6,737
138 82
Tax expense on ordinary profi t 19,743 -6,655
12,173 10,116
Tax in the statement of fi nancial position 12,173 10,116
60,154 60,883
7,474 -4,683
Total temporary differences 67,628 56,200
Deferred tax liabilities (+) / assets (-) 12,173 10,116
736,725 318,579
-132,661 -57,344
Permanent differences, including Group contribution without tax effect (18%) 158,474 50,785
-6,120 -96
Calculated tax expense 19,743 -6,655
2.68% -2.09%
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
162
ANNUAL REPORT 2022
NOTE 9. SECURITY PLEDGES AND CONTINGENT LIABILITIES
Carrying amount of debt secured by mortgages and pledges:
DKK 1,000 2022 2021
Long-term debt to fi nancial institutions 3,353,892 2,634,362
Total 3,353,892 2,634,362
Carrying amount of assets pledged as security for recognized debt
Property, plant and equipment 0 219,864
Total 0 219,864
The company participates in a Group fi nancing for the
Bakkafrost Group. In connection to this, the company has to-
gether with other Group companies pledged licenses, prop-
erty, plant and equipment, shareholdings, inventory and re-
ceivables as surety for the Group’s total debt to the banks.
In addition, the Group companies have guaranteed severally
and jointly for the balance without limitations for each other.
NOTE 10. RELATED-PARTY TRANSACTIONS
The company operates cash pooling arrangements in the
Group. Further, the company extends loans to subsidiaries
and associates at terms and conditions refl ecting prevailing
market conditions for corresponding services, allowing a
margin to cover administration and risk. The company allo-
cates costs for corporate staff services and shared services
to subsidiaries and renting of buildings.
The total amounts for rent are DKK 21.2 million (2021: DKK
21.2 million), allocation of administration etc. DKK 83.3 mil-
lion (2021: DKK 84.4 million) and fi nancial incomes of DKK
64.8 million (2021: DKK 15.9 million). The principle of arm’s
length is used in all transactions with related parties.
As part of the guarantees are also any insurance refunds.
In addition, the shares in larger subsidiaries have been
pledged to the bank syndicate.
Long-term debt to fi nancial institutions 3,353,892 2,634,362
Total 3,353,892 2,634,362
Property, plant and equipment 0 219,864
Total 0 219,864
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
163
ANNUAL REPORT 2022
APPENDIX
Quarterly financial figures 2020-2022
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
DKK 1,000 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022
Operating revenue 1,255,226 1,134,222 1,123,147 1,139,297 1,175,637 1,617,534 1,272,362 1,488,316 1,639,345 1,683,824 1,866,989 1,939,809
Purchase of goods -415,276 -642,818 -574,394 -726,135 -288,602 -399,307 -496,680 -507,912 -559,267 -565,508 -1,048,355 -583,143
Change in inventory and biological assets (at cost) -56,667 215,285 22,773 220,288 -7,375 -79,924 30,181 -120,942 126,319 271,592 361,840 -93,201
Salary and personnel expenses -148,713 -159,987 -135,441 -164,206 -167,570 -184,782 -177,607 -198,464 -201,234 -186,279 -203,935 -240,231
Other operating expenses -267,470 -249,039 -248,265 -297,945 -357,934 -419,751 -434,744 -419,685 -455,576 -485,020 -525,902 -523,801
Depreciation -119,017 -115,766 -85,157 -126,825 -130,655 -126,281 -122,967 -150,531 -136,194 -137,112 -136,428 -127,746
Other income 0 0 0 44,041 0 0 0 28,877 4,496 5,081 10,478 4,324
Operational EBIT 248,083 181,897 102,663 88,515 223,501 407,489 70,545 119,659 417,889 586,578 324,687 376,011
Fair value adjustments on biological assets -410,711 426,650 124,429 -22,365 284,622 176,486 113,713 -139,953 177,338 575,911 -48,803 -426,054
Onerous contracts 0 0 0 0 0 0 0 0 -30,709 -33,606 64,315 0
Income from associates 0 0 0 5,546 1,317 3,081 7,963 17,751 3,345 -3,902 10,265 47,889
Revenue tax -19,132 -22,633 -9,353 -2,466 -20,363 -41,152 -30,645 -49,329 -57,750 -62,838 -43,393 -51,020
Earnings before interest and taxes (EBIT) -181,760 585,914 217,739 69,230 489,077 545,904 161,576 -51,872 510,113 1,062,143 307,071 -53,174
Net interest revenue 803 344 101 151 120 2,239 1,073 110 1,787 0 242 4,971
Net interest expenses -9,527 -10,057 -6,446 -10,287 -7,605 -10,908 -7,784 -10,566 -7,704 -9,545 -8,065 -39,725
Net currency effects 15,448 -2,554 -12,284 -13,706 18,901 -1,992 6,552 22,401 -8,506 10,266 -8,427 -62,399
Other financial expenses -6,015 -2,355 -3,919 -4,836 -7,025 -5,438 -3,319 -3,782 -3,851 -5,961 -8,508 9,607
Earnings before taxes (EBT) -181,051 571,292 195,191 40,552 493,468 529,805 158,098 -43,709 491,839 1,056,903 282,313 -140,720
Taxes 33,070 -99,611 -18,369 -78,229 -85,736 -101,678 -26,796 40,584 -87,082 -212,300 -33,293 -13,330
Profit or loss for the period -147,981 471,681 176,822 -37,677 407,732 428,127 131,302 -3,125 404,757 844,603 249,020 -154,050
Earnings per share (DKK) -2.50 7.98 2.99 -0.64 6.90 7.25 2.22 -0.05 6.85 14.29 4.21 -2.61
Diluted earnings per share (DKK) -2.50 7.98 2.99 -0.64 6.90 7.25 2.22 -0.05 6.85 14.29 4.21 -2.61
*Operational EBIT is EBIT before fair value of biomass, onerous contracts and income from associates, and revenue tax - FO
APPENDIX
164
ANNUAL REPORT 2022
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
DKK 1,000 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022
ASSETS
Non-current assets
Intangible assets 4,386,056 4,377,948 4,491,387 4,493,395 4,493,081 4,494,960 4,495,225 4,495,726 4,506,873 4,507,443 4,507,691 4,508,704
Property, plant and equipment 3,762,740 3,894,070 3,977,620 4,220,599 4,405,542 4,549,575 4,742,180 4,888,778 4,942,556 5,091,194 5,213,364 5,647,161
Right of use assets 480,085 431,525 380,121 353,192 337,739 314,509 308,919 302,105 279,128 280,234 468,106 438,545
Financial assets 119,116 116,712 116,702 122,459 123,204 124,225 132,313 149,225 154,467 139,162 149,188 234,209
Long-term receivables 4,422 4,422 8,737 8,101 8,202 8,101 8,204 8,102 0 0 0 0
Deferred tax assets 37,840 35,718 58,238 26,934 0 0 0 215,248 133,801 120,191 155,208 336,020
Total non-current assets 8,790,259 8,860,395 9,032,805 9,224,680 9,367,768 9,491,370 9,686,841 10,059,184 10,016,825 10,138,224 10,493,557 11,164,639
Current assets
Biological assets (biomass) 1,492,337 1,903,359 2,146,338 2,117,024 2,441,083 2,489,210 2,703,268 2,448,290 2,636,644 3,300,603 3,268,658 2,938,485
Inventory 523,833 720,764 613,505 776,032 772,024 809,443 690,251 709,306 794,294 923,113 1,236,507 1,074,344
Total inventory 2,016,170 2,624,123 2,759,843 2,893,056 3,213,107 3,298,653 3,393,519 3,157,596 3,430,938 4,223,716 4,505,165 4,012,829
Financial derivatives 0 0 0 0 0 6,805 6,412 0 0 0 0 7,474
Accounts receivable 629,372 563,364 524,943 490,075 548,537 618,859 645,983 824,004 871,925 691,690 729,041 808,755
Other receivables 22,780 11,236 57,546 133,574 61,171 84,598 152,506 78,227 72,691 151,812 148,988 168,272
Total receivables 652,152 574,600 582,489 623,649 609,708 710,262 804,901 902,231 944,616 843,502 878,029 984,501
Cash and cash equivalents 801,079 454,389 445,929 466,939 373,706 552,981 373,318 509,157 445,079 508,193 568,165 719,603
Total current assets 3,469,401 3,653,112 3,788,261 3,983,644 4,196,521 4,561,896 4,571,738 4,568,984 4,820,633 5,575,411 5,951,359 5,716,933
TOTAL ASSETS 12,259,660 12,513,507 12,821,066 13,208,324 13,564,289 14,053,266 14,258,579 14,628,168 14,837,458 15,713,635 16,444,916 16,881,572
APPENDIX
165
ANNUAL REPORT 2022
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
DKK 1,000 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022
EQUITY AND LIABILITIES
Equity
Share capital 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,143
Other equity 8,070,356 8,522,287 8,702,346 8,670,344 9,120,850 9,336,906 9,464,500 9,288,269 9,388,880 10,219,538 10,455,923 10,333,259
Non-controlling interests 0 0 0 0 0 0 0 133 2,722 -17 2,025 3,411
Total equity 8,129,499 8,581,430 8,761,489 8,729,487 9,179,993 9,396,049 9,523,643 9,347,545 9,450,745 10,278,664 10,517,091 10,395,813
Non-current liabilities
Deferred and other taxes 1,097,117 1,181,972 1,218,379 1,222,222 1,288,242 1,367,759 1,409,473 1,590,034 1,598,438 1,798,404 1,867,840 1,825,873
Long-term interest-bearing debt 1,789,537 1,570,512 1,702,579 2,219,690 2,312,487 2,456,065 2,359,589 2,634,968 2,636,926 2,774,792 2,994,760 3,383,289
Long-term leasing debt 261,105 249,178 287,937 265,235 235,552 249,024 247,076 245,753 232,735 235,739 427,270 353,355
Financial derivatives 1,966 1,282 -1,077 1,480 0 0 0 3,207 0 0 0 0
Total non-current liabilities 3,149,725 3,002,944 3,207,818 3,708,627 3,836,281 4,072,848 4,016,138 4,473,962 4,468,099 4,808,935 5,289,870 5,562,517
Current liabilities
Financial derivatives 13,158 18,042 17,371 9,710 4,649 2,251 2,994 4,602 8,675 7,302 15,233 0
Short-term leasing debt 201,047 195,140 130,043 131,336 143,271 97,669 93,487 87,668 76,902 70,423 52,647 106,215
Accounts payable and other debt 766,231 715,951 704,345 629,164 400,095 484,449 622,317 714,391 833,037 548,311 570,075 817,027
Total current liabilities 980,436 929,133 851,759 770,210 548,015 584,369 718,798 806,661 918,614 626,036 637,955 923,242
Total liabilities 4,130,161 3,932,077 4,059,577 4,478,837 4,384,296 4,657,217 4,734,936 5,280,623 5,386,713 5,434,971 5,927,825 6,485,759
TOTAL EQUITY AND LIABILITIES 12,259,660 12,513,507 12,821,066 13,208,324 13,564,289 14,053,266 14,258,579 14,628,168 14,837,458 15,713,635 16,444,916 16,881,572
APPENDIX
166
ANNUAL REPORT 2022
Market
Announcements
Published in 2022
Exclusive Invitations, Managements’, Board of Directors’ and
large shareholders’ notification of trade and notification of
trade regarding Bakkafrost’s Share Savings Plan.
Q1 2022
3 January 2022: Bakkafrost has acquired 90% of the outstanding shares of Munkebo Seafood A/S
4 January 2022: Q4 2021 Trading Update
22 February 2022: Q4 2021 Interim Results and Full Year 2021
22 February 2022: Key Information Regarding Cash Dividend for Bakkafrost
31 March 2022: Annual Report 2021 and Sustainability report 2021
31 March 2022: Notice to the Annual General Meeting
Q2 2022
4 April 2022: Q1 2022 Trading Update
25 April 2022: Currency Rate for the upcoming Cash Dividend
29 April 2022: Protocol from Annual General Meeting
2 May 2022: Ex dividend DKK 5.14 today
10 May 2022: Q1 2022 Interim Results
Q3 2022
5 July 2022: Q2 2022 Trading Update
23 August 2022: Q2 2022 Interim Results
28 September 2022: Revenue tax on salmon farming in the Faroe Islands
30 September 2022: Update on Revenue tax on salmon farming in the Faroe Islands
Q4 2022
3 October 2022: Q3 2022 Trading Update
19 October 2022: Financial Calendar
8 November 2022: Q3 2022 Interim Results
All market announcements are available on www. Bakkafrost.com
and www.newsweb.no.
APPENDIX
167
ANNUAL REPORT 2022
Financial Calendar
for 2023
Annual General Meeting will take place at Bakkavegur 9, Glyvrar, Faroe Islands.
Please note that the financial calendar is subject to change.
Any changes will be announced via Oslo Børs, and the Group’s website, www. Bakkafrost.com, will be updated accordingly.
28 April 2023 Annual General Meeting 2023
09 May 2023 Presentation of Q1 2023
06 June 2023 Capital Markets Day 2023
22 August 2023 Presentation of Q2 2023
7 November 2023 Presentation of Q3 2023
APPENDIX
168
ANNUAL REPORT 2022
Glossary
AGM: Annual General Meeting
ASC: Aquaculture Stewardship Council
CGU: Cash-generating Unit
EBT: Earnings Before Tax
EBIT: Earnings Before Interest and Tax
EBITA: Earnings Before Interest, Amortization and Tax
EBITDA: Earnings Before Interest, Tax, Depreciation and
Amortization
EPS: Earnings Per Share
FIFO: First in First out
FOF: Fishmeal, Oil and Feed
FO: Faroe Islands
HACCP: Hazard Analyses Critical Control Point
IAS: International Accounting Standards
IFRS: International Financial Reporting Standards
ISO: International Organization for Standardization
LW: Live Weight
NIBD: Net Interesting Bearing Debt
PP&E: Property, Plant and Equipment
R&D: Research and Development Costs
SCT: Scotland
SSC: The Scottish Salmon Company Ltd
TGW: Tonnes Gutted Weight
USP: Unique Selling Points
VAT: Value Added Tax
VAP: Value Added Products; Value Added Production
WACC: Weighted Average Cost of Capital
WFE: Whole Fish Equivalent
APPENDIX
169
ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S REPORT
170
ANNUAL REPORT 2022
Bakkafrost P/F • Bakkavegur 9 • PO Box 221 • FO-625 Glyvrar
Tel +298 40 50 00 • Fax +298 40 50 09 • Bakkafrost@ Bakkafrost.com • www. Bakkafrost.com