INTEGRATED
ANNUAL
REPORT
www.bakkafrost.com
2023
Letter to our Shareholders 6
About Bakkafrost 10
Business Model 14
Memberships and ratings 18
Certifications 19
Our Journey 20
Main Events 2023 21
Governance and Strategy 22
Strategy 23
Bakkafrost and the UN Sustainable Development Goals 24
Double Materiality Assessment Outcome 25
Bakkafrost’s Healthy Living Plan 26
Corporate Governance 27
Sustainability Governance Framework 29
Governance Structure 31
Stakeholder Engagement 32
Government Regulation and Compliance 35
Preparing for the Corporate Sustainability Reporting Directive (CSRD) 37
Risk Management 38
Shareholder Information 42
Directors and Management 43
Directors’ Profiles 44
Group Management’s Profiles 46
Healthy Business 49
The Importance of Aquaculture and Salmon Farming 51
Sustainable Growth 52
Research and Development 56
Bakkafossur Pioneering Sustainable Aquaculture 58
Financial Review 59
Segments and the Value Chain 61
FOF Segment 62
Freshwater Segments 63
Farming Segments 64
Services 65
Sales & Other 66
Bakkafrost Brands 67
Markets Served 68
Customer Satisfaction 69
Market Review 71
Healthy People 81
Our Workforce 83
Health & Safety 85
Human Rights 87
Healthy Living Awards Winners 2023 90
Diversity, Equity, & Inclusion 92
Training & Development 93
Consolidating the ‘One Company’ Strategy 95
Content
Coverphoto by Vilhelm Jørginsson Jacobsen, winner of our Employee Photo Competition. This captivating photo was
selected from over 200 entries.
Content Integrated Annual Report 2023
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Integrated Annual Report 2023
Healthy Salmon 97
Fish Health and Welfare 99
Farming Service Vessels – The Cornerstone of Our Fish Health and Welfare Strategy 102
Examples of Initiatives to Improve Fish Health and Welfare 108
Ensuring Excellence in Animal Health: Our Veterinarians and Biologists 111
Research & Development Projects 112
Healthy and Safe Food 114
Nutrition 115
Collaboration and Certification 118
Broodstock Programs 122
Healthy Environment 123
Climate Action 125
Eysturlund – A Crucial Move Towards Reducing Our Carbon Footprint 134
Pollution 135
Water 138
Biodiversity 141
Resource Use & Circular Economy 145
FÖRKA – Biogas Plant 147
Recycling Food Waste for the Production of Renewable Energy 148
Salmon – One of the Most Eco-efficient Proteins 149
Sustainable Fish Feed – Havsbrún 152
Black Soldier Fly Larvae: a Sustainable Solution for Aquaculture Feed? 160
Healthy Communities 161
Responsible Leadership 163
Value Generation 165
Contribution to Local Communities 167
Community Engagement 169
Examples of Initiatives in Scotland 170
Examples of Initiatives in the Faroe Islands 171
Transparency 173
2023 Island Games 174
Integrated Annual Report 2023 CONTENT
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Integrated Annual Report 2023
ESG General Information
175
ESG Index 2023 176
General Basis for Preparation of the Sustainability Statement 190
Double Materiality Assessment Methodology 192
TCFD Report 196
Disclosure Requirements and Incorporation by Reference 204
Financial Statements and Notes 214
Consolidated Income Statement 217
Consolidated Statement of Other Comprehensive Income 218
Consolidated Statement of Financial Position 219
Consolidated Cash Flow Statement 221
Consolidated Statement of Changes in Equity 222
NOTES - SECTION 1 Basis of Preparation 224
NOTES - SECTION 2 Results for the Year 227
NOTES - SECTION 3 Assets and Liabilities 237
NOTES - SECTION 4 Capital Structure and Financing Items 259
NOTES - SECTION 5 Other Disclosures 266
Financial Statements 273
P/F BAKKA FROST - Income Statement 275
P/F BAKKA FROST - Statement of Financial Position 276
P/F BAKKA FROST - Statement of Financial Position 277
P/F BAKKA FROST - Cash Flow Statement 278
P/F BAKKA FROST – Statement of Changes in Equity 279
P/F BAKKA FROST – Notes to the Financial Statements 280
Quarterly Financial Figures 2021-2023 288
Key Figures – 5 Year Overview 291
Statement by the Management and the Board of Directors on the Annual Report 292
Independent Auditor’s Report 293
Independent Limited Assurance Report on Selected ESG Data in the Sustainability Statements 297
Content Integrated Annual Report 2023
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Integrated Annual Report 2023
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Integrated Annual Report 2023
In 2023, Bakkafrost encountered some challenges, yet we
notably strengthened our position and biological performance
throughout the year, setting the stage for a promising 2024
and beyond. Our financial performance was solid, with total
revenues reaching DKK 7.1 billion and an operational EBIT of
DKK 1.5 billion. We harvested 73 thousand tonnes of salmon,
and Havsbrún recorded unparalleled production levels of
fishmeal and oil, thanks to sourcing an unprecedented 467
thousand tonnes of marine raw materials. Our innovative sea
lice prevention strategies led to the lowest sea lice levels on
record, bolstered by significantly increased treatment vessel
capacity. However, due to changes in the revenue tax, we had
to make the difficult decision to reduce our workforce by
140 employees in the Faroe Islands’ value-added processing
facility as of January 1, 2024. In Scotland, we experienced a
strong start to the year but faced biological challenges in the
third quarter. Nonetheless, the fourth quarter showed signs
of improvement in biological performance, with significantly
reduced mortality rates and we decided to allow the fish
additional growth time for harvest in the first quarter of
2024. Looking ahead to 2024, our prospects are bright with
increased biomass and larger fish in the water in both the
Faroe Islands and Scotland, indicating robust biological health.
Cost inflation has increased the production costs significantly,
mainly driven by higher raw material prices for feed. Even
though Bakkafrost gains from external sales of fishmeal
and oil, a strict focus on cost-reduction is important for
Bakkafrost going forward, including ensuring a fit-for-purpose
organisation. Our strategic initiative, “One Company”, aimed
at integrating our Scottish and Faroese operations, continues
to progress effectively. In 2023, we streamlined processes
and restructured the organisation to enhance efficiency,
which included a workforce reduction of 75 employees in
Scotland, in addition to the earlier mentioned layoffs in the
Faroe Islands due to adjustments in value-added processing
in response to tax changes.
Market
The salmon market dynamics in 2023 were characterised
by a 2% drop in global supply (including inventory
movements) alongside robust demand. Salmon prices
reached unprecedented highs, accompanied by significant
price volatility. Post COVID-19, the Chinese market has made
a strong recovery, taking higher volumes of salmon than
before. Meanwhile, the US market has shown remarkable
strength and sustained growth over an extended period.
Biological challenges across various regions in 2023 resulted
in a scarcity of large-sized and superior-quality fish. This
scarcity led to a notable disparity in pricing between large
and small fish sizes, with a substantial premium placed on
large, superior salmon. Looking ahead to 2024, Bakkafrost
stands in an advantageous position with an increased
biomass comprising with a high share of large-sized fish of
almost exclusively superior quality.
ESG
Bakkafrost is committed to the United Nation’s Global Compact
principles, and we will continue to work collaboratively with
the business community in the Faroe Islands and Scotland
to support the overall contribution to the UN Sustainable
Development Goals (SDGs). As one of the largest contributors
to the Faroese economy, we take our responsibility seriously
and take a leading role. This includes increased local
stakeholder engagement in specific areas, including our
approach to environmental management in the fjords.
We are steadfast in our commitment to reducing our CO
2
emissions. In line with this, we have set ambitious targets to
cut our Scope 1 and 2 emissions by 50%, Scope 3 emissions
by 52% per sold product by the year 2030 and to become
Net Zero by 2050. The Scope 1 and 2 carbon reduction
Letter to our
Shareholders
6
Letter to our Shareholders Integrated Annual Report 2023
objectives received approval from the Science Based Targets
initiative (SBTi) in 2023. On route with this, in the fourth
quarter of 2023, we forged a partnership with EFFO, one of
our energy suppliers, to embark on constructing a new wind
farm/energy park. This venture is poised to supply renewable
energy for the production of fish meal, oil, and feed at our
Havsbrún facility, marking a significant stride towards the
decarbonisation of our production activities. This project is
now pending approval from the authorities.
Operational performance
In 2023, we changed our segment structure to enable us to
provide a clearer picture of the value creation across our
value chain.
Fishmeal, oil and feed
In the fishmeal, oil, and feed segment, we achieved an
unprecedented level of raw material sourcing, reaching 467
thousand tonnes. This surge was significantly influenced by
an 81% increase in the blue whiting quota recommendation
for 2023, set by International Council for the Exploration
of the Sea (ICES). In addition, a high sourcing of oily fish
culminated in record-breaking production and sales figures
for fish oil. The remarkable upswing in market prices for
fish oil further enhanced the value of our augmented fish oil
production. The external sale of 19 thousand tonnes of fish
oil in 2023 made a significant contribution to annual financial
outcomes. Similarly, our external sale of 63 thousand tonnes
of fish meal also made a substantial contribution to our
results for the year.
Freshwater FO
Bakkafrost has dedicated significant efforts to enhancing
the production of large smolt, a more complex process.
Since the initial smolt batches from the Strond hatchery,
there has been a considerable improvement in both the
quality and performance of the large smolt. The focus now
shifts towards ensuring the smolt’s consistent size and high
quality while simultaneously expanding production volumes.
The expansions of the Norðtoftir, Glyvradal, and Viðareiði
hatcheries have led to a 55% capacity increase in 2023, with
both production and capacity utilisation now on an upward
trajectory. In the last quarter of 2023, Bakkafrost committed
to the construction of a new large hatchery in Skálavík, Faroe
Islands, poised to boost production capacity by approximately
7 million smolt at 500g each.
Set to commence in the first quarter of 2024, this project
aligns with the 2024-2028 investment program, forecasting
that upon completion within three years, the annual smolt
production capacity in the Faroe Islands will reach 24 million
smolts weighing 500g each.
In 2023, we released 14.2 million smolt, averaging 396g each,
marking a 15% increase in size from 2022. Our commitment
remains firm on escalating the production both in numbers
and size of smolt, without compromising their high quality.
Additionally, our broodstock operation saw advancements
across various domains in 2023, and we have initiated the
scaling up of this operation towards attaining self-sufficiency
in eggs from our own Faroese strain.
Farming FO
In the Faroe Islands’ farming segment, 2023 commenced
with notable challenges. We faced the dilemma of harvesting
smaller fish and a harvest timeline that was heavily
weighted towards the latter part of the year, compounded
by the necessity for early harvests due to a relatively high
proportion of contracts. At the end of 2023, we observed
a significant improvement in biological performance, with
growth rates reaching unprecedented levels.
The introduction of our new farming service vessel,
Bakkafossur, has revolutionised our capacity to manage sea
lice effectively and administer treatments to even larger fish
with good fish welfare. As a result, we’ve achieved the lowest
sea lice levels in our history.
Compared to year-end 2022, our biomass volume in the Faroe
Islands is 24% higher with more than four times as many fish
exceeding 5 kg, restoring our status as producers of large,
superior-quality fish — a hallmark of Bakkafrost’s reputation.
In total for 2023, our farming operations in the Faroe Islands
yielded a harvest of 52,408 tonnes, with an average weight
of 4.6kg HOG per fish.
Freshwater SCT
In Scotland, our smolt production marked the beginning of a
transformative phase in 2023 with the Applecross hatchery
starting operations at approximately 50% of its total capacity
following the completion of Applecross stage 4. The focus
is now on ramping up the production of large and healthy
smolt at Applecross, and this strategic shift was marked by
the release of the initial trial batch of 250g smolt in May
2023. These fish will all be harvested in the first half of 2024
after one summer at sea, which aligns to the goal for all fish
in Scotland going forward. For 2024, it’s anticipated that
Applecross will provide 9.1 million smolts, weighing between
200-250g, accounting for 98% of the total planned smolt
releases for the year.
With the expected completion of the Applecross stage 5 &
6 expansions by the end of 2024, Applecross will have the
capacity to produce all our smolts for Scotland within the 200-
300g range. Drawing from the experience in the Faroe Islands,
we know that larger and healthier smolts are less susceptible
to risks in marine conditions due to shorter sea production
cycles, resulting in more resilient salmon. The emphasis on
large and high-quality smolt is pivotal to the turnaround of
our Scottish operations. Therefore, further preparations were
done in 2023 for the next planned hatchery to be built in
Scotland at Fairlie.
In 2023, we released 9.0 million smolt in Scotland, averaging
117g each, marking a 9% increase fom 2022.
Farming SCT
In the Scottish farming segment, 2023 continued to present
challenges alike recent years, though certain aspects fared
better than anticipated. The first half of the year, particularly
the first quarter, was notably strong, with the harvest of large
fish weighing above 5kg gutted weight, fetching high prices.
The third quarter posed significant difficulties, marked by an
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Integrated Annual Report 2023 Letter to our Shareholders
increase in mortality, largely attributable to jellyfish impacts.
Despite these challenges, Bakkafrost Scotland’s overall share
of the Scottish industry’s mortality saw a decline, especially
noticeable in the fourth quarter, when biological performance
notably improved. A key factor in this positive shift has been
the enhanced freshwater treatment capacity, enabled by our
two farming service vessels equipped with a unique dual-
treatment system targeting gill-related issues and sea lice.
This innovation led to record-low sea lice levels in 2023 and
improved the overall gill health of our fish.
To tackle the biological challenges head-on, Bakkafrost has
strategically revised its short-term plans and production
approach for the Scottish operation. A thorough risk
assessment of all farming sites was undertaken in 2023 to
determine the viability of various strains, hatcheries, and
smolt sizes for stocking and farming. As a result, Bakkafrost
has decided to prioritise the use of large, high-quality smolt
from the Applecross hatchery, moving away from reliance
on external sources. Certain sites may not be restocked
or remain in production during the third quarter until the
implementation of large, high-quality smolt effectively
mitigates the risks. This strategy aims to minimise the
biomass at risk during Q3, leading to an estimated 70% of the
2024 harvest being completed in the first half of the year.
In 2023, our Scottish operations harvested 20,598 tonnes of
salmon, with an average weight of 4.2kg HOG. Compared to
year-end 2022, our biomass volume increased 28% YoY with
15% more fish exceeding 5kg.
Services
In 2023, our new services segment, encompassing, amongst
others, biogas production, live fish carriers and farming
service vessels, received a significant boost with the
introduction of the 10,000 m
3
live fish carrier Bakkafossur
for the Faroese operation. After fine-tuning its operations in
the first half of the year, incorporating the same innovative
dual-treatment technology found in our Scottish vessels,
Bakkafossur has become an indispensable asset to our
Faroese farming operations. Its ability to combat sea lice and
gill related parasites on salmon without adversely affecting
mortality rates has contributed to historically low sea lice
levels and a biomass that boasts a greater proportion of large
fish.
Sales & Other
In the Sales & Other segment, our refreshed brand strategy,
centered around the Bakkafrost main brand and its origin
story, has been met with success, unlocking new avenues
with our customers. Our foothold in the US market has been
fortified; in Q4 2023, 20% of all our salmon was distributed
to the US, compared to 11% during the same period last year.
The inauguration of our new cargo plane in the first quarter
of 2024 is set to further enhance our delivery capabilities
directly from the Faroe Islands to the US market. By offering
the best quality and freshest salmon available, we aim to
minimise food waste and achieve a considerable reduction
in CO
2
emissions compared to other logistic routes by flying
more edible product, less ice, and a shorter distance.
The revision of the Faroese revenue tax in 2023 has elevated
the risks associated with entering long-term contracts,
influencing our strategy towards value-added products
(VAP). Consequently, the contract share for the 2024 harvest
volume has been lowered to 9%, positioning Bakkafrost to
have greater flexibility and greater exposure to the spot
market. Looking ahead, our sales and marketing strategies are
adapting to a higher reliance on the spot market, reflecting
our strategic responses to these evolving challenges and
opportunities.
Investments
At the Capital Markets Day on June 6, 2023, Bakkafrost
unveiled an ambitious DKK 6.3 billion investment plan for the
period 2024-2028. This investment is poised to turn around
operations in Scotland and facilitate sustained growth in both
the Faroe Islands and Scotland.
2024-2028 6.3BN DKK INVESTMENT PROGRAMME VS 2022-2026 6.2BN DKK INVESTMENT PROGRAMME
(DKK 1,000)
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
600,000
800,000
400,000
200,000
0
2022 2023 2024 2025 2026 2027 2028
2024-2028 Capex Plan
2022-2026 Capex Plan
8
Letter to our Shareholders Integrated Annual Report 2023
The strategic focus of the investment in Scotland is to
emulate the successful model established by Bakkafrost in
the Faroe Islands. This includes plans to construct two large,
energy-efficient hatcheries in Scotland, pivotal to adopting
Bakkafrost’s strategy for growing large smolts, with an
envisioned annual production capacity exceeding 15 million
smolts at 500g. The introduction of large smolt to Scotland is
expected to significantly enhance operational performance,
reduce biological risks, and increase harvest volumes. In
addition to hatchery expansion, Bakkafrost is set to establish
a new processing plant to enhance processing capabilities
and operational flexibility. Investments will also extend to
additional service vessel capacity, aimed at better managing
biological risks and optimizing operational costs. Further,
Bakkafrost will invest in the development of marine sites.
In the Faroe Islands, the investments will increase the annual
hatchery production capacity to approximately 24 million
smolts at 500g, repurpose older hatcheries for broodstock
operations in a cost-effective manner, expand feed
production capacity, and pursue sustainable growth through
the optimisation of existing sites and the integration of new
technologies.
Through this comprehensive investment plan, Bakkafrost
anticipates a sustainable increase in total annual harvest
volumes to 165,000 tonnes by 2028. Concurrently, the total
annual production capacity across Bakkafrost’s value chain
is projected to reach 200,000 tonnes of gutted weight over
this timeframe.
Financial
The global salmon product market’s long-term balance is
likely to be favorable for Bakkafrost. Bakkafrost has a long
value chain and a cost-efficient production of high-quality
salmon products and will likely maintain financial flexibility
going forward.
In March 2022, Bakkafrost secured a 700 mEUR sustainability-
linked credit facility (expandable by 150 mEUR) with a
5-year term and 2-year extension options, which have been
exercised. This facility, along with Bakkafrost’s strong equity
ratio, bolsters the Group’s financial strength for organic
growth and cost reduction in Scotland, while also facilitating
M&A and future organic growth opportunities, and upholding
an unchanged dividend policy.
Outlook
The supply growth forecast for salmon in 2024 appears
constrained. The first half of 2024 is not expected to see any
growth in global supply. However, in the second half of the
year, a 4% increase in global supply is anticipated compared
to the latter half of 2023. Over the entirety of 2024, a
global supply growth of approximately 2% is forecasted, not
accounting for inventory changes.
Salmon prices are projected to remain robust, particularly
in the first half of 2024. Bakkafrost is experiencing strong
biological performance in the Faroe Islands, characterized by
large fish sizes and a high rate of superior quality salmon.
In Scotland, large fish harvests are also expected in the first
half of 2024. This positions Bakkafrost advantageously in
a market with limited supply, especially for large, superior
quality salmon.
With long-term supply also expected to remain constrained,
salmon prices are anticipated to stay elevated for an extended
period.
In the fishmeal, oil, and feed segment, 2024 is forecasted to
be a strong year. Production volumes of fishmeal and fish
oil are contingent on the availability of raw materials. The
ICES recommendation for blue whiting in 2024 is set at 1,530
thousand tonnes, marking a 12.5% increase from the previous
year. Bakkafrost anticipates maintaining high production
volumes of fishmeal and expects a normalization in fish oil
production volumes in 2024. Havsbrún’s primary markets
for fish feed include the internal segments in both the Faroe
Islands and Scotland.
Bakkafrost has planned a release of approximately 17.8
million large smolts in the Faroe Islands in 2024. In Scotland,
the smolt release is expected to total around 9.3 million,
with an average weight exceeding 200g. The quantity and
average weight of released smolts are crucial for forecasting
Bakkafrost’s future production.
For 2024, Bakkafrost anticipates a harvest of approximately
66,000 tonnes gutted weight in the Faroe Islands and 25,000
tonnes gutted weight in Scotland, totaling around 91,000
tonnes gutted weight. Approximately 70% of Scotland’s
harvest is scheduled for the first half of the year, with 45% in
the Faroe Islands.
Expected harvest profile as a % of total harvest pr. region:
Region Q1 Q2 Q3 Q4
FO 20% 25% 27% 28%
SCT 25% 45% 16% 14%
It’s important to note that biological, environmental, and
market conditions may influence the anticipated harvest and
smolt release outcomes.
Return to shareholders
The Board of Directors will propose a dividend of DKK 8.70
per share at the Annual General Meeting convened on 30
April 2024. This corresponds to a total dividend of mDKK
515 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
commitment and hard work in 2023.
Million smolt transferred ‘19 ‘20 ‘21 ‘22 ‘23 ‘24e
FO 12.7 14.3 14.4 14.4 14.2 17.8
SCT 12.4 10.4 11.1 11.0 9.0 9.3
Avg. weight (g)
FO 205 320 376 345 396 450
SCT 83 88 95 107 117 >200
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Integrated Annual Report 2023 Letter to our Shareholders
FAROE ISLANDS
SCOTLAND
DENMARK
FRANCE
UNITED STATES OF AMERICA
LEGEND TO MAP SYMBOLS
Headquarters, Sales & Logistics
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
Established: 1968
Headquarters: Glyvrar, Faroe Islands
Employees: Approximately 1,700 full-time employees across the Group
Markets Served: 40+ countries
Listed on: Oslo Børs with ticker code BAKKA
Parent company: Bakkafrost P/F, Faroese registration number 1724
About Bakkafrost
10
About Bakkafrost Integrated Annual Report 2023
FAROE ISLANDS
SCOTLAND
DENMARK
FRANCE
UNITED STATES OF AMERICA
LEGEND TO MAP SYMBOLS
Headquarters, Sales & Logistics
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
Leading Producer of Superior Quality Salmon from the Faroe Islands and Scotland
Established: 1968
Headquarters: Glyvrar, Faroe Islands
Employees: Approximately 1,700 full-time employees across the Group
Markets Served: 40+ countries
Listed on: Oslo Børs with ticker code BAKKA
Parent company: Bakkafrost P/F, Faroese registration number 1724
Faroe Islands
Scotland
CONSTRUCTION/EXPANSION
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
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Integrated Annual Report 2023 About Bakkafrost
Employees
1,686
Group FTE: 75% Male 25% Female
Lost Time Injury Rate
LTIR per million working hours
13.98
Group
Harvest Volumes
TGW
73,006
Salaries
862 mDKK
Group
Feed Conversion Ratio
1.096
Faroe Islands
1.18
Scotland
Antibiotica
0
Faroe Islands
0
Scotland
Survival Rate
92.7%
Faroe Islands
79.4%
Scotland
Escapes
251,344
(1 incident)
Faroe Islands
0
Scotland
Key Figures
Greenhouse Gas Intensity
Group
Scope 1, 2 & 3
-14% -22%
Per Tonne of Product Sold Per Tonne of Product Produced
From 2020 (baseline) to 2023
2023 2022
Operating Revenue mDKK 7,141 7,130
Operational EBIT mDKK 1,544 1,705
Earnings per share DKK 17.45 19.02
Equity Ratio 61% 62%
12
About Bakkafrost Integrated Annual Report 2023
13
Integrated Annual Report 2023 About Bakkafrost
Business Model
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
Research & Development
FISHMEAL
FISH OIL
FISH FEED
BROODSTOCK
HATCHERIES
BIOGAS
FARMING
FSV
HARVESTING
PROCESSING
PACKAGING
SALES & LOGISTICS
Bakkafrost is the most vertically integrated salmon farming
company in the world, which gives Bakkafrost full control
and responsibility over all aspects of production. This ena-
bles Bakkafrost to have optimal control over the quality of its
salmon and the costs of production.
Bakkafrost is the leading producer of superior-quality salmon
from the Faroe Islands and Scotland, offering a wide range
of healthy and nutritious salmon products from its own fa-
cilities.
The Bakkafrost Group controls the entire value chain, from its
own production of fishmeal, fish oil and fish feed to the sales
and marketing of finished VAP products. Control of the entire
value chain is considered essential to ensure availability and
traceability and to be able to control the product flow daily.
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Business Model Integrated Annual Report 2023
Resources
Key inputs into the value chain include:
Shareholder capital
Salmon farming is a capital-intensive business, and we rely
on access to capital to ensure business growth and manage
operational risks continuously.
We value constructive communication with banks and
investors and ensure comprehensive and transparent
reporting on financial and ESG topics.
Skilled workforce
We operate in a knowledge-intensive industry and rely on
a skilled, motivated, and engaged workforce. By focusing
on work satisfaction, inclusion and developing employees’
competencies, we believe we can attract and retain employees
with the right competencies and knowledge.
Licenses
We use fjords and lochs for farming salmon. We hold licenses
which give exclusive rights to utilise a given area for farming
fish. These licenses are granted by the Faroese and the
Scottish authorities, and we are reliant on them to continue
our business. We understand our duty to utilise these licenses
responsibly, and we achieve this through comprehensive
programmes to support sustainable farming practices.
Natural resources
Our operations rely on access to natural resources. Among the
most essential materials are raw materials to produce salmon
feed, e.g., marine raw materials, soy, wheat, and rapeseed oil.
The production of salmon feed is dependent on the
availability of raw materials. For marine raw materials,
the volumes are dependent on the ICES recommendations
for the sourcing of various species in the North Atlantic,
whereas the availability of agri-commodities is dependent
on variables such as the weather conditions for growing the
products, the political situation in the countries in which we
source and the price volatility. We aim to secure inputs and
minimise risk by sourcing from multiple vendors within the
same commodity category. Also, we continuously develop
our feed composition to enable variations, thereby securing
alternatives in situations where we would potentially face
reduced availability of commodities.
Freshwater is another material natural resource used in our
operations.
Pristine waters
Pristine waters are essential to keep our product at a high-
quality standard. We contribute to maintaining clean waters
by continuously minimising our environmental impact.
Value Chain
Bakkafrost controls the entire value chain from its 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 essential to ensure availability,
traceability, and to be able to control the product flow daily.
Both customers and processing facilities depend on the 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 operation,
from the production of fishmeal and fish oil to the processing
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
crucial 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 utilisation of the facilities throughout
the value chain and prevents internal sub-optimization.
Enablers
Central to Bakkafrost’s strategy is a strong growth ambition. The
opportunities for sustainable growth are good in the Faroe Islands
and Scotland. Salmon farming is highly dependent on natural re-
sources and the license to operate, as reflected in Bakkafrost’s
business model, in which sustainability is deeply embedded.
Since the acquisition of the Scottish Salmon Company (now
Bakkafrost Scotland) in Q4 2019, Bakkafrost has focused
on merging together the two organisations to form “One
Company”, building upon the robust best practices processes
Bakkafrost has established and proven successful.
Differentiators
Bakkafrost aims to produce delicious, healthy, sustainable,
high-quality salmon that adds value for customers. This
enables the Group to obtain a higher price that benefits the
Group’s outcomes. The Bakkafrost Group intends to enhance
this position by investing in differentiation and the following
USPs (unique selling points).
Provenance
The natural conditions and cold waters in the North Atlantic
around the Faroe Islands and Scotland are perfect for
raising salmon. Bakkafrost will further promote this unique
provenance as producing exceptional quality salmon.
Both salmon from The Faroe Islands and Scotland are
recognised globally as top quality. Still, as the Faroe Islands
only produce about 3.6% (3.5%) and Scotland 5.5% (5,8%) of
the world’s salmon, the salmon from these two origins is in
high demand. Bakkafrost salmon is sought after worldwide
with accepted premium positioning and is preferred by select
customers.
Longest Integrated Value Chain
Bakkafrost is one of the world‘s most vertically integrated
salmon farming companies and uniquely produces its own
fishmeal and fish oil. This ensures that Bakkafrost has
complete control and responsibility over all aspects of
production and gives clients unparalleled traceability.
15
Integrated Annual Report 2023 Business Model
Large Salmon Of High Quality Rich In Omega-3 Levels
The Faroe Islands aquaculture industry is recognised as
producing the largest Atlantic salmon in the world. In recent
years, a significant price difference has been evident between
the different sizes of salmon. Due to a lack of supply, salmon
over 6 kg achieved a considerable price premium. With a
good supply of larger sizes, Bakkafrost was well placed to
capitalise 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 with any natural environment.
Bakkafrost’s salmon are raised on a diet rich in marine
content. This is also the most important factor for the quality
of Bakkafrost Salmon, as the marine content ensures the
optimum fat content, rich in healthy Omega 3 fatty acids
DHA and EPA. The natural diet also ensures enjoyment of the
exceptional taste of Bakkafrost Salmon, which contributes to
its high quality.
Feed Rich In Marine Content
Bakkafrost has an integrated value chain that includes its
own fish meal, oil and feed production. With its rich access
to marine raw material from the waters surrounding the
Faroe Islands, Bakkafrost is uniquely positioned to maintain
a substantially higher marine inclusion in the salmon feed
compared to peers in the industry. The natural diet for wild
salmon 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
responsible for the worldwide sales of Bakkafrost Salmon,
whether farmed in the Faroe Islands or Scotland. The Group
focuses on direct sales through channels where the quality
attributes of Bakkafrost Salmon are recognised, and a price
premium is achieved. The strategy ensures geographical
sales diversification, thereby minimising the risk of market
fluctuations.
Worldwide Reach
Bakkafrost uses ship transport and trucking whenever
possible to transport frozen and fresh products to nearby
markets. Fresh salmon delivered to long-distance markets
such as the US and Asia are transported by air.
Fast, reliable logistics with global reach are vital for
distributing fresh perishable produce sought after worldwide.
To maintain the leading position, Bakkafrost works closely
with key freight forwarders to ensure effective logistics
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
further passenger airlines to diverse worldwide locations.
Bakkafrost expects to have its own aeroplane in operation
in H1 2024, primarily serving the US market. This will
strengthen Bakkafrost’s position as a supplier of superior-
quality fresh salmon.
Research & Development
Research and development are deeply rooted in Bakkafrost’s
DNA. By addressing technical and operational challenges,
valuable knowledge is created. Bakkafrost’s research and
development activities are spread around the whole value
FAROE ISLANDS
16
Business Model Integrated Annual Report 2023
chain, from research in broodstock and research in feed
recipes, focusing on the development of fish health and
welfare to food safety, product development and piloting new
packaging. Knowledge drives long-term value and ensures
competitive advantage, whether it is enhancing biomass
production or sea lice management. Through research and
development projects, Bakkafrost safeguards innovations,
fostering responsible growth and environmental stewardship.
Segmentation
The Bakkafrost brand is particularly strong in the US, 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 profile of Bakkafrost Salmon
is particularly important to clients in the premium sushi
segment. Bakkafrost does not use any antibiotics and uses
only non-GMO ingredients in feed.
Value Added Products
Bakkafrost holds a leading position in frozen salmon portions.
The main markets are leading European and US retailers.
Bakkafrost adds value to VAP production by producing the
highest quality product and is recognised as a reliable and
responsible supplier.
The diversification of the Bakkafrost product mix brings
additional benefits for the Group; it ensures increased
revenue stability with negotiated 6- and 12-month contracts
and offers an outlet for whole fresh fish in adverse market
conditions.
Sustainability
Sustainability is deeply embedded in the business strategy
and drives and shapes the business and operations.
Bakkafrost relies on certifications, such as the MSC, ASC and
BAP certifications. 100% of Bakkafrost’s sites in the Faroe
Islands and 40% in Scotland are ASC-certified, and the Scottish
operation is BAP-certified.
Branding
Over the years, Bakkafrost has prioritised strengthening the
brand and widening the market reach. Today, Bakkafrost
is well known for its sizeable superior quality salmon and
sustainable operation. In 2022, Bakkafrost revised the brand
strategy to leverage the solid Bakkafrost brand supported by
several sub-brands, emphasising provenance, and targeting
different customer segments.
Values Created
Key outputs from the business include:
Satisfied customers
We take great pride in producing the finest Atlantic Salmon
for our customers. We focus on farming high-quality and
healthy salmon rich in flavour, supple in texture, and vibrant
in colour. We go above and beyond to supply our customers
with fresh and nutritious salmon.
Shareholder returns
We are committed to the equal treatment of all our
stakeholders, and we work hard to create a profitable
business which creates value for our stakeholders and the
communities in which we operate.
Tax contributions
Bakkafrost is an integral part of the communities in which
we operate, and we understand our role in supporting
communities through tax contributions. We are passionate
about driving economic growth and the sustainability of our
rural economies.
Community investments
We are committed to supporting the local communities,
and to support our commitment, we have established
the Healthy Living Fund, where everyone can apply for
funding. We support causes that promote sports, education,
social inclusion, a healthy environment, and community
volunteering.
Satisfied employees
We take great pride in creating meaningful jobs in remote
areas, and our strategic priority is to be an employer of
choice. We pay our employees an adequate salary, aim to
create a safe and inclusive work environment, and encourage
them to take responsibility and pride in their work.
17
Integrated Annual Report 2023 Business Model
Memberships and ratings
Transparent about progress
We aim to have a transparent approach to sustainability. We recognize our broader responsibility to engage, support, and work
collaboratively with stakeholders in our wider environment. We aim to be open and transparent; this includes reporting the
progress we make in addressing our most material issues.
Please see our webpages for a comprehensive list of
memberships and associations.
2023 Ratings
• In 2023, Bakkafrost achieved management ‚B‘
score from CDP for our coordinated actions on
Climate Change. Bakkafrost achieved a ‚B‘ on Water
security coordinated actions and achieved a ,C‘ in
CDP Forest for Soy. Bakkafrost overall CDP Supplier
Engagment Rating for 2023 was ‚B‘.
• Bakkafrost ranked 6th by the 2023 Coller FAIRR
Protein Producer Index of the world’s most
sustainable protein producers.
• In 2023, Bakkafrost was rated 24.5 (on a
scale of 0-40+) in the Sustainalytics ESG Risk
Ratings assessment (a lower score indicates less
unmanaged ESG risk).
• Bakkafrost received a rating of A (on a scale
of AAA-CCC) in the MSCI ESG 2023 Ratings
assessment.
• In 2023, Bakkafrost received an ESG Score of
42, in the S&P Global’s Corporate Sustainability
Assessment (CSA).
• Bakkafrost received a B in the Position Green
ESG100 2023 report. The report ranks the ESG
reporting of the 300 largest companies on the
Scandinavian stock exchanges.
• Bakkafrost is listed on the OBX® ESG Index,
launched by the Euronext Group in May 2022.
The index identifies the 40 companies listed on
the Oslo Stock exchange that demonstrate the
best Environmental, Social and Governance (ESG)
practices.
Memberships
Global Salmon Initiative (GSI)
Bakkafrost is a founding member of the initiative,
which is focused on promoting sustainable
aquaculture leadership through collaboration.
EFFOP
Havsbrún is a member of the EU Fishmeal initiative,
which is a European nongovernmental organization
representing European fishmeal and fish oil
producers.
IFFO
The Marine Ingredients Association Havsbrún is
a member of the IFFO is an international trade
organization that represents and promotes the
marine ingredients industry, such as fishmeal, fish oil
and other related industries.
VINNUHÚSIÐ
HO U SE OF I NDUST R Y
Faroese Employers Association and Faroese
Aquaculture Association
Bakkafrost was instrumental in the formation of the
Faroese Aquaculture Association which promotes
a joint approach to the management of material
sustainability issues faced by the aquaculture
industry in the Faroe Islands.
Lantra
The Sector Skills Council for Aquaculture and Land-
based industries. Lantra is a key organisation in a
collaborative network across Scotland supporting the
development of the skills agenda across Aquaculture.
SEDEX
Bakkafrost is members of Sedex, a membership
organisation that provides one of the world’s leading
online platforms for companies to manage and
improve working conditions in global supply chains.
2023 Awards
• Bakkafrost Native Hebridean Smoked Scottish
Salmon won a two-star Great Taste Award 2023.
• Bakkafrost Native Hebridean Smoked Scottish
Salmon won Silver at the Scottish Retail Food &
Drinks Awards 2023.
• Bakkafrost Native Hebridean won Primary
Producer award at the prestigious Highlands &
Islands Food & Drink Awards.
• The Faroese Sustainable Business Initiative
- Burðardygd Vinnulív - that Bakkafrost is a
founding member of, won the 2023 international
edie award for Partnerships and Collaboration.
• Bakkafrost Scotland won the SCDI Award for
Outstanding Islands Business.
• Bakkafrost Scotland won The Benromach Award
for Excellence in International Business at the SCDI
Awards.
UN Global Compact
• Bakkafrost is a participant in the UN Global Compact
and a member of the Business Action Platform for the
Ocean. Through the action platform, we aim to contribute
to the health of the ocean, through a focus on growth,
innovation, and sustainability.
Voluntary Disclosure
Ocean Disclosure Project
• Bakkafrost has signed up for the Ocean Disclosure Project to further
increase transparency and focus on sustainable sourcing of marine
ingredients.
• For Bakkafrost’s profile, please visit www.oceandisclosureproject. org.
18
Memberships and ratings Integrated Annual Report 2023
Certifications
19
Integrated Annual Report 2023 Certifications
Our Journey
The Bakkafrost business was
established by the two brothers
Hans and Róland Jacobsen. The
first processing plant was built in
the same year. The third brother,
Martin Jakobsen, joined the
company in 1971.
Bakkafrost started fish
farming activities – one
of the first companies
in the Faroe Islands to
do so.
Bakkafrost built a factory
for value-adding salmon
at Glyvrar. Although the
investment was limited
and the capacity was
low, this was Bakkafrost’s
starting point for value-
added salmon production.
The Bakkafrost Group grew
through mergers and acquisitions
with several farming companies.
Bakkafrost’s farming operation
increased significantly, both on
land and at sea.
The shareholders of Bakkafrost and Vestlax agreed to merge the
companies. Vestlax Group’s shareholders agreed to be remunerated
in Bakkafrost shares. The Vestlax Group was a farming company
with a harvest factory in Kollafjørður. The Bakkafrost Group was an
integrated farming company, ranging from smolt production, fish
farming, and production of packaging materials to finished VAP
products and Sales.
Bakkafrost was listed on Oslo Børs and broadened its shareholder
base. In addition to local Faroese investors, the company was now
owned by international investors from all over Europe and the USA.
Bakkafrost was the first feed factory to attain GLOBALG.A.P.
certification.
Bakkafrost acquired P/F
Havsbrún, a modern,
internationally renowned
producer of fishmeal, fish
oil, and fish feed, situated
in the Faroe Islands.
Bakkafrost was a founding
member of the Global
Salmon Initiative.
In July, Bakkafrost’s new live fish carrier M/S
Hans á Bakka was delivered.
Bakkafrost was the first company and site
in the Faroe Islands to be awarded an ASC
certification, and an ASC Chain of Custody
certification.
Bakkafrost’s new harvest/VAP
factory and the headquarters in
Glyvrar were finished.
The fish meal and oil division
received MSC Chain of Custody
certification.
Bakkafrost started the integration of the Faroese broodstock program.
Bakkafrost’s new hatchery at Strond started operation. Bakkafrost closed
the acquisition of the business and assets in the US salmon importer North
Landing.
Bakkafrost’s first sustainability report, the Healthy Living Plan, was released
to accelerate progress on material sustainability issues with increased
transparency.
Celebrated the 50th anniversary and announced a DKK 10 million Healthy
Living Fund, including a 3-year partnership with the University of the Faroe
Islands to support natural sciences.
Began construction on a new biogas plant, converting
farming waste into renewable energy, heat, and
fertilizer. Began smoking salmon in-house in the Faroe
Islands, using sustainably certified wood.
Bakkafrost acquired The Scottish Salmon Company PLC,
an integrated salmon farming business in Scotland with
a 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.
First biogas was produced at the new biogas plant and
sold the first KWh of renewable electricity.
Achieved the goal to have all Bakkafrost farms in
the Faroe Islands certified to the ASC standard for
responsible aquaculture, following a 7-year assessment
period.
The Scottish Salmon Company was the first salmon
producer in Europe to be recognized with a 4-star Best
Aquaculture Practices (BAP) certification.
Bakkafrost and 10 other businesses
in the Faroe Islands joined forces
to work together on a three-year
corporate sustainability initiative.
Bakkafrost was a founding member
of Burðardygt Vinnulív.
Hatchery expansion in the Faroes and the
first of two planned large hatcheries in
Scotland to support our biosecurity strategy.
The first farming service vessel with
innovative dual-treatment freshwater
systems for gill-health and sea lice treatments
entered the fleet in Scotland.
Bakkafrost received a new fully electric
workboat called Grønarók.
In January, Bakkafrost’s new combined hybrid live fish carrier and farming
service vessel, M/S Bakkafossur, was delivered.
Hatchery expansions at Glyvradalur, Norðtoftir and Viðareiði came into
operation and contract for new hatchery at Skálavík was signed.
Expansion phase 4 of the Applecross hatchery in Scotland was completed
and the first batch of 250g smolt were released.
Bakkafrost’s ambitious climate change targets were SBTI-approved.
Bakkafrost committed to reduce Scope 1 and 2 GHG emissions 50% by 2030.
And committed to reduce Scope 3 GHG emissions by 52% per tonne product
sold.
Bakkafrost announced an updated five-year investment program for 2024-
2028.
Faroese Veterinary
Model introduced,
reducing mortality
rates.
For more details on Bakkafrost’s history, please visit www.bakkafrost.com/about/history
1968 1979 1995
2006
2010
2011 2013 2015 2017 2018
2019 2020 2021 2022 2023
2003
20
Our Journey Integrated Annual Report 2023
Main Events 2023
September
• Bakkafrost’s ambitious climate action
targets SBTI approved.
• Bakkafrost Scotland won the award
for Excellence in International
Business at the annual SCDI awards.
October
• Native Hebridean wins
silver at the Great
British Taste Awards
2023.
November
• Bakkafrost signed a contract to
build a new smolt hatchery in
Skálavík in the Faroe Islands.
• Bakkafrost participated in the
world’s first 100% Sustainable Aviation Fuel (SAF)
flight across the Atlantic by a commercial airline.
• Bakkafrost hosted a supplier day for Bakkafrost
Scotland suppliers.
• Bakkafrost has partnered with Faroese energy
provider Effo to launch the largest wind farm in the
Faroe Islands to drive decarbonisation of Bakkafrost
operations..
December
• Förka starts project to convert
CO
2
from biogas and green
hydrogen to biomethane to
fuel heavy vehicles in the
Faroe Islands.
April
Annual General
Meeting held
July
• Bakkafrost contributes to annual
local Salmon Market, opening
our HQ to the public and serving
Salmon to participants.
February
• Our Native Hebridean smoked salmon was showcased at
10 Downing Street for Burns Night.
March
• Bakkafrost
introduced a new
brand, “Heimland”,
which now offers the same high-quality
products as before but with a fresh
name and updated packaging in the
Faroe Islands.
• Annual Report and Healthy Living
Report launched
May
• Native Hebridean smoked Scottish
Salmon wins silver at Scottish Retail
Food and Drink Awards
• First batch of 250g smolt released from
the Applecross hatchery in Scotland
June
• Förka started a pilot project
producing energy out of
food waste from local
authorities, hotels, and
wholesale.
• Arranged our Capital
Markets Day in Scotland,
where we communicated
our five-year business
strategy and investment
plan to over 100
stakeholders.
January
• Reception at the headquarters
to welcome our new 10,000m
3
hybrid live fish carrier and farming
servicevessel M/S Bakkafossur.
August
• Bakkafrost
participates in
Seafarer Day and
Cultural days in the
Faroe Islands where
free salmon meals
were handed out.
21
Integrated Annual Report 2023 Main Events 2023
Integrated Annual Report 2023
Governance and Strategy
IN THIS SECTION
STRATEGY 23
BAKKAFROST AND THE UN SDGs 24
DOUBLE MATERIALITY
ASSESSMENT OUTCOME
25
BAKKAFROST’S HEALTHY LIVING
PLAN
26
CORPORATE GOVERNANCE 27
SUSTAINABILITY GOVERNANCE
FRAMEWORK
29
STAKEHOLDER ENGAGEMENT 32
GOVERNMENT REGULATION
AND COMPLIANCE
35
PREPARING FOR CSRD 37
RISK MANAGEMENT 38
SHAREHOLDER INFORMATION 42
DIRECTORS AND MANAGEMENT 43
GOVERNANCE & STRATEGY
22
Integrated Annual Report 2023 Strategy
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
fulfilling 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
cultural 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 other,
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 wellbeing.
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 position 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 building
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 and large sized
salmon, taste and nutritional profile of our salmon with full
traceability, fed on our own feed with high marine content.
Scotland Turnaround
We will transform the performance of our Scottish operation
through targeted investments and applied best practices, which
will reduce biological risks, reduce costs, improve product
quality, enable simpler processes and release synergies.
Sustainability
We embed sustainability deeply in our decision-making
processes and demonstrate our commitment to sustainability
through our actions and achievements, for which we aspire to
be acknowledged as industry-leading.
Our core values, which support our performance and guide
our behaviour, reflect our commitment to creating long-term
value for our customers, shareholders and society by acting
responsibly, showing respect, and being persistent, efficient
and ambitious.
In 2021, we reviewed our corporate strategy and aligned our
strategic objectives with our Healthy Living Plan, outlined in
our sustainability statement. We have updated our strategic
objectives to reflect and align with the updated sustainability-
targets, set in 2024.
We have set SBTi-validated carbon reduction targets of:
• 50% reduction in absolute Scope 1 and 2 GHG emissions by
2030 from a 2020 base year
• 52% reduction per tonne of product sold in Scope 3 GHG
emissions from a 2020 base year
Our carbon reduction targets guide our overall business
strategy and informs our investment plan. For example, we
have allocated 355 mDKK in our five-year investment plan
to green transition.
Our strategy going forward is focused on decoupling carbon
emissions from business growth. The growing population
means an increased demand for protein. Thus, we look to
grow the business in the coming years.
We have identified some key elements of our value chain,
which need to be transitioned to renewable energy to decouple
growth from carbon emissions, including transitioning feed
production to use renewable energy as well as switching to
renewable energy solutions onboard our large vessels. Green
innovation within the marine sector is critical for us to be
able to do energy transition in this sector.
GOVERNANCE & STRATEGY
23
Bakkafrost and the UN Sustainable Development Goals Integrated Annual Report 2023
Bakkafrost and the UN Sustainable Development Goals (SDGs)
The UN SDGs set out 17 global goals for social, environmental and eco-
nomic progress between 2015 and 2030. The goals seek to address the
greatest challenges and opportunities faced by society today. The UN
resolution identifies specific targets for each goal and provides indica-
tors to measure progress.
At Bakkafrost we view the goals as representing broad stakeholder
expectations on global issues, so we have used them as part of the
materiality assessment which is the foundation for our 2023 Healthy
Living Plan.
We have conducted a mapping of the SDG goals and targets against our
activity to understand which are most relevant for us. We have distin-
guished between areas where there is potential for high positive impact,
areas for limited positive impact, and areas where we have a responsi-
bility to mitigate potential negative impacts.
Below you can see how we’ve assessed our contribution to the goals,
which you can read more about throughout the report.
Bakkafrost and the
UN Sustainable Development Goals
Potential for high positive impact
Potential for limited positive impact
SDG 2 Zero Hunger:
End hunger, achieve food security and improved nutrition
and promote sustainable agriculture.
We are contributing towards target 2.4 by providing an
efficient sustainable production of a healthy source of
protein and essential fatty acids to feed a growing global
population.
SDG 8 Decent Work and Economic Growth:
Promote inclusive and sustainable economic growth, full
and productive employment and decent work for all.
We are contributing towards target 8.1 through our
substantial contribution to the Faroese economy and
contributing to the Scottish, US and Danish economy;
8.5 by creating full and productive employment with
equal opportunities in the Faroe Islands, Scotland, US and
Denmark; 8.7 through the strict labour standards outlined
in our Code of Conduct and Supplier Standard; and 8.8 by
applying labour standards throughout our value chain (in
line with third party certification).
SDG 5 Gender Equality:
Achieve Gender equality and empower all women and girls.
We are contributing towards target 5.5 by ensuring wom-
en’s full and effective participation and equal opportuni-
ties for leadership at all levels of decision-making in the
company
SDG 7 Affordable and Clean Energy:
Ensure access to affordable, reliable, sustainable and
modern energy for all.
We are contributing towards target 7.2 by increasing the
share of renewable energy in the Faroe Islands’ energy
mix from our biogas plant; and 7.3 by increasing energy
efficiency in our operations.
SDG 9 Industry, Innovation, and Infrastructure:
Build resilient infrastructure, promote inclusive and sus-
tainable industrialization and foster innovation.
We are contributing towards target 9.4 by upgrading
and retrofitting assets across our value chain to make
them more sustainable, as well contributing towards new
renewable technologies and infrastructure in the Faroe
Islands and in Scotland.
SDG 17 Partnerships for the Goals:
Strengthen the means of implementation and revitalize
the global partnership for sustainable development.
We are contributing towards target 17.16 through col-
laboration and partnerships to develop and share best
practice solutions that address systemic challenges in
aquaculture.
Responsibility to mitigate potential negative impact
SDG 6 Clean Water and Sanitation:
Ensure availability and sustainable management of water
and sanitation for all.
We are addressing target 6.3 by substantially increasing
the safe reuse of water via our Recirculating Aquaculture
System (RAS) facilities, minimising the impact of our
operations on the fjord environment; 6.4 by increasing
water efficiency; and 6.6 by minimising future pollution
from agriculture through liquid fertilizer produced at our
biogas plant.
SDG 12 Responsible Consumption and Production:
Ensure sustainable consumption and production patterns.
We are addressing target 12.3 by reducing food losses;
target 12.2 by maximizing efficiency of natural resources
used in our feed; 12.5 by adopting a circular approch
across different elements of our value chain, by reducing
our waste generation through prevention, reduction, re-
cycling and reuse; and 12.6 by encourage companies, to
adopt sustainable practices and to integrate sustainability
information into their reporting cycle by increasing trans-
parency on our sustainability performance.
SDG 13 Climate Action:
Take urgent action to combat climate change and its
impacts.
We are addressing target 13.1 by building the climate
resilience of our company and value chain and look to
reduce emissions associated with own operations.
We will continue to look for data to enable us to benchmark and where
relevant increase our contribution to the Sustainable Development Goals.
SDG 14 Life Below Water:
Conserve and sustainably use the oceans, seas and marine
resources for sustainable development.
We are contributing towards target 14.4 by using marine
ingredients certified as sustainable; and 14.1 by managing
our impacts on the fjord environment.
SDG 15 Life on Land:
Protect, restore and promote sustainable use of terrestrial
ecosystems, sustainably manage forests, combat deserti-
fication, and halt and reverse land degradation and halt
biodiversity loss.
We are addressing target 15.2 by sourcing certified sus-
tainable paper and wood products and only procuring
non-GMO, Pro-Terra certified or similar soy protein for
our animal feed; and 15.5 by implementing measures to
reduce the impact from salmon aquaculture on the near-
shore environment and increasing research into this area.
GOVERNANCE & STRATEGY
24
Integrated Annual Report 2023 Double Materiality Assessment Outcome
Double Materiality
Assessment
Outcome
Conducting a double materiality assessment (DMA) is key to
understanding a company’s impacts on the surroundings as
well as understanding and assessing risks and opportunities
that the surroundings provide to a company.
As part of our preparation for reporting according to the
European Sustainability Reporting Standards (ESRS), we
performed our double materiality assessment in 2023. The
figure on the right shows the result of the assessment.
The outcome is aggregated per ESRS topic, and the topics
are positioned based on the average materiality rating of
the specific topics within each general topic; for example,
the position of E1 reflects the average score of the sub-
topics E1.1, E1.2 and E1.3 in terms of impact and financial
materiality.
The figure does not have values on the axis because the
impact materiality and the financial materiality use different
scales.
The double materiality assessment revealed that almost all
topics in the ESRS are relevant to report on for Bakkafrost.
This is mainly because our long, integrated value chain covers
everything from fishmeal, oil and feed production, including
sourcing of agro- and marine commodities, to operating
farming service vessels, production of biogas, salmon farming
and production, packaging and airfreight. The only topic
standard that was assessed not to be material was S3 (Affected
Communities). However, we will be reporting on S3.5 (Security
of local communities affected by Bakkafrost’s operations),
as this specific sub-topic was rated to be significant to our
stakeholders. We recognize that the nature of our operations
with such a comprehensive value chain has impacts, risks and
opportunities across a range of sustainability-related topics,
and we are committed to providing thorough and trustworthy
reporting on these topics. The complete list of relevant
topics that we will be reporting against in the future can be
found in the Appendix section ‘Material impacts, risks and
opportunities’.
IMPACT
MATERIALITY
DOUBLE MATERIALITYMATERIAL
NOT MATERIAL MATERIAL
FINANCIAL
MATERIALITY
Low
High
High
E1: Climate Change
S4: Consumers
and end-users
FINANCIAL MATERIALITY
IMPACT MATERIALITY
E4: Biodiversity
and ecosystems
E3: Water
and marine
resources
E5: Circular economy
G1: Business
conduct
E2: Pollution
S2: Workers in
the value chain
S1: Own
workforce
GOVERNANCE & STRATEGY
25
Bakkafrost’s Healthy Living Plan Integrated Annual Report 2023
Healthy Business Healthy People Healthy Salmon Healthy Environment Healthy Communities
Strategic
Priority
To grow efficiently and responsibly To be a preferred employer To exceed leading standards To minimise our environmental impact To create shared value
2022
Performance
Against Our
2023
Commitments
• Have zero cases of
non-compliance
• Update procurement policy
and supplier code of conduct
• Maintain high net promoter
and customer satisfaction
with quality scores
• Actively engage customers
in waste reduction
• Influence the improvement of
aquaculture practices
• Extend ISO9001 standard
Certification
• Focus on producing salmon
from own unique breed
• Have industry leading employee
engagement scores
• Launch internal sustainable
behavior campaign
• Reduce absence rate to 4.4%
• Achieve ISO45001 certified
• Reduce LTIR to below 5 by 2026
• Have zero fatalities
• Increase number of women
in management positions
(managers with direct reports)
to at least 25% by 2025
• Increase smolt size to 500 g by 2023
in Faroes and 2026 in Scotland
• Maintain our high Omega-3 levels
• Zero antibiotica use
• Maintain salmon survival rate at 94% or
above (Faroes)
• Increase research to optimise fish
welfare and product quality
• Maintain industry leading approach to
animal welfare
• Maintain ASC certification, BAP
certification or similar for all
Bakkafrost salmon
• By 2030 reduce by 50% the Scope 1 & 2 CO
2
footprint (Group)
• Continue research into sustainable feed ingredients
• Investigate new sustainable marine sources
for fishmeal
• Optimise feed strategy to maintain industry
leading FCR
• Achieve ISO14001 environmental standard
certification in the Faroe Islands, alreadyin place in Scotland
• Zero fish escapes
• Measurably reduce environmental impact from
packaging
• Explore innovative waste streams at the new biogas
plant
• Over 97% water recirculation rate in hatcheries (Faroes)
• Actively educate key
stakeholders on the benefits of
salmon aquaculture
• Increase collaboration with key
stakeholders to achieve the
Healthy Living Plan
• Increase transparency on local
value Creation
• Continue 10m DKK 3yr
investment in Healthy Living
Fund in the Faroe Islands
• Continue investment in
Community Fund in Scotland
2026
Targets
• Zero cases of non-compliance. “No
product recall, No market bans, No IT
security incidents”.
• Sustainability recommendations on all
Bakkafrost-branded products
• Average customer rating of >8.5 and a
net promoter score above +50
• Include sustainability in CAPEX request
form
• Board to receive sustainability training
annually
• In-house production of FPC (Fish protein
concentrate) by 2026
• Implement strategical use of AI and BI
to contribute to operational efficiency
(both regarding the salmon and
environment)
• Employee engagement scores above
industry benchmark (provided by
Peakon)
• Minimum three employee events
a year with focus on sustainability
engagement and awareness
• Reduce group absence rate to 3.9%
• Reduce LTIR to below 5
• Zero fatalities
• Target on number on 10 vocational
graduates a year
• Increase number of women in
management positions (managers with
direct reports) to at least 25%
• Disclose gender paygap. Percentage
increase from year 0 in the company
to year 5
• Annual salmon survival rate of 96%
(Faroes) and 92% (Scotland)
• Zero antibiotic use
• Maintain industry-leading approach to
animal welfare.
• High omega-3 levels
• High protein levels average 19g/100g
• No product recall
• Maintain ASC certification in the Faroes
and achieve ASC certification in Scotland
by 2027
• All salmon from own genetic production in
2028 Faroes and 2030 Scotland
• Reduce by 50% the Scope 1 & 2 CO
2
footprint by 2030,
• Reduce the Scope 3 footprint by 52% per tonnes of product
by 2030.
• Water recirculation rate over 97% in all hatcheries.
• Measure freshwater use/tonne of fish processed by 2026
• Zero fish escapes.
• Group FCR below 1.083 weighted average
• Continue research and investigation of new sustainable
sources for marine ingredients.
• Engaging with suppliers of feed ingredients
• Minimum yearly investment of 3
m DKK in Healthy Living Fund in
the Faroes and Community Fund in
Scotland
• Enhance stakeholder alignment and
collaboration to drive sustainable
outcomes
• Promote community engagement
and transparency through a
minimum of 30 annual visits from
schools, local communities and
stakeholders
• Annual beach clean: >90% of areas
where we operate
• Minimum 60% use of local suppliers
SDGs
• SDG 2 Zero Hunger
• SDG 8 Decent work and economic
growth
• SDG 9 Industry, Innovation, and
Infrastructure
• SDG 7 Affordable and Clean Energy
• SDG 8 Decent work and economic
growth
• SDG 5 Gender Equality
• SDG 2 Zero hunger
• SDG 6 Clean water and sanitation
• SDG 14 Life below water
• SDG 17 Partnerships for the goals
• SDG 6 Clean water and sanitation
• SDG 7 Affordable and Clean Energy
• SDG 9 Industry, Innovation, and Infrastructure
• SDG 12 Responsible Consumption and Production
• SDG 13 Climate Action
• SDG 14 Life below water
• SDG 15 Life on Land
• SDG 8 Decent work and economic
growth
• SDG 17 Partnerships for the goals
Our mission is to produce healthy world-class salmon. We believe that by investing in the health of our business, our people, our salmon, the environment and the
communities in which we operate, we will enable healthy living for millions of people globally. Our Healthy Living Plan outlines our sustainability goals in one place.
Bakkafrost’s Healthy Living Plan
Achieved
Partly achieved
Did not or will not meet the target
If the target is measured on a yearly basis, like Zero fish escapes, Customer scores, Omega-3 levels, etc., we base the performance on the yearly results.
GOVERNANCE & STRATEGY
26
Integrated Annual Report 2023 Corporate Governance
Corporate
Governance
P/F Bakkafrost is dedicated to maintaining high standards
of corporate governance. The company endeavours to be
in compliance with the Norwegian corporate governance
regime, as detailed in the Norwegian Code of Practice for
Corporate Governance, published on 14 October 2021 by
the Norwegian Corporate Governance Board (the “Code of
Practice”). 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
Corporate Governance, which may be found on our website.
Bakkafrost does not comply with the following
recommendations in the Norwegian Code of Practice for
Corporate Governance:
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 2025. For
practical 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
elaborated specific instructions regarding rules of procedure
for the Board of Directors, instructions for the Nomination
Committee, 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
Committee, Board of Directors and auditor.
The procedures at Bakkafrost’s general meeting follow the
standard rules stipulated in the Faroese company law and
Bakkafrost’s Articles of Association.
Bakkafrost’s Governance Model
SHAREHOLDERS
GENERAL MEETING
Bakkafrost’s
shareholders exercise
their rights at the
General Meeting.
NOMINATION
COMMITTEE
Consists of four
members, which are
elected by AGM.
Recommends
candidates for election
to the Board of
Directors and Directors’
fees.
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.
AUDIT COMMITTEE
Consists of three
members from the
Board of Directors and
is chaired by the Board
of Directors’ Chairman.
GROUP EXECUTIVE
MANAGEMENT
The Group Executive
Management is
responsible for the day-
to-day management of
Bakkafrost.
REMUNERATION
COMMITEE
Consists of three
members from the
board of Directors.
GOVERNANCE & STRATEGY
27
Corporate Governance Integrated Annual Report 2023
Nomination Committee
The Nomination Committee recommends candidates for
election to the Board of Directors and the Directors’ fees.
The deadline for submitting proposals to the Nomination
Committee is 31 January.
Bakkafrost’s General Meeting elects the members, hereunder
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
Committee are incorporated in Bakkafrost’s Articles of
Association.
At the end of 2023, the members of the Nomination
Committee 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
Management 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. 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 regarding
its activities in a working procedure, which is reviewed
regularly.
The Board of Directors held eleven meetings in 2023. Below
under each Director’s profile is disclosed each Director’s
participation in the Board meetings held during 2023.
The members of the Board of Directors receive a fixed
remuneration, which is approved by the general meeting. The
members of the Board of Directors are not part of Bakkafrost’s
share savings plan for employees or any bonus schemes.
Audit Committee
The Audit Committee is a sub-committee of the Board of
Directors 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 five times during 2023
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
Executive Management to achieve the long-term interests
of the shareholders. Responsibilities include setting the
remuneration policy for the Group Executive Management,
determining individual compensation, and providing direction
on salaries, bonuses and pensions and other remuneration.
Group Executive Management
The Group Executive Management leads Bakkafrost’s daily
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
Management 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 Executive
Management may be found in “Group Managements’ Profiles”
in the Annual Report.
GOVERNANCE & STRATEGY
28
Integrated Annual Report 2023 Sustainability Governance Framework
Sustainability
Governance
Framework
This policy applies to all Bakkafrost operations and outlines
the company’s approach to sustainability governance,
including the highest governance body’s involvement in
sustainability management.
Sustainability is at the heart of everything we do. Through
our sustainability strategy, the Healthy Living Plan, which
comprises our five Group Sustainability pillars Healthy
Business, Healthy People, Healthy Salmon, Healthy
Environment and Healthy Communities, we have set
ambitious goals and targets to drive sustainable development
in the organisation.
Through our Sustainability Governance Framework, we ensure
that we have the organisational capability to implement
measures necessary to achieve our sustainability goals,
including integration of sustainability in business strategies
and high-level decisions. In addition, the governance
framework ensures that we manage sustainability-linked
risks in an effective and responsible manner.
Responsibility For Managing Impacts, Risks And
Opportunities
The Board of Directors oversees and has the overall
responsibility of the management of sustainability-related
impacts, risks and opportunities as well as sustainability
reporting.
The Board of Directors has delegated the day-to-day
responsibility for managing the organization’s sustainability-
related impacts, risks and opportunities to the CEO. However,
major decisions and investments into climate and energy
transition above DKK 5 million are to be approved by the
Board of Directors.
Responsibility for legal compliance and reporting of impacts
and risks is delegated to the Group Sustainability Director.
The CEO reports back to the Board of Directors on
sustainability-related impacts, risks and opportunities at
every board meeting.
GOVERNANCE & STRATEGY
29
Sustainability Governance Framework Integrated Annual Report 2023
Risk & Impact Management
Management of sustainability-related risks and impacts
follows our risk management framework. Risks and impacts
are identified and reported through group and department
forums, and if risks/impacts are assessed to be significant,
they are escalated through the reporting hierarchy, and
eventually reported and discussed at board level.
The risk management framework ensures any potential
negative impact is avoided or remediated.
Dialogue and transparency with stakeholders or potentially
affected communities and authorities are key elements in
the process in order to mitigate any impacts caused by the
organisation’s operations.
The Board has delegated the implementation of stakeholder
engagement to the Group Executive Management.
Stakeholders are regularly consulted to identify potential
risks and concerns. We regularly engage with investors
and customers through regular meetings and our biennual
events, the Capital Markets Day and the Bakkafrost Summit.
Community stakeholders are regularly consulted through our
sustainability materiality assessment, and we partner with
community stakeholders to support management in cases of
impact.
The Board is responsible for overseeing the organisation’s
due diligence and the effectiveness of risk management
processes. The board reviews the organization’s processes in
relation to due diligence on an annual basis.
Competence Of The Board Of Directors
We aim to support the transition to a global sustainable
food system. To ensure decisions on sustainability issues
are well-informed and science-based, the Board of Directors
is updated annually on both general as well as company-
specific sustainability topics and trends.
The competence of the members of the Board of Directors are
reviewed annually.
The Effectiveness Of Our Sustainability Management
To ensure effective sustainability management in the
organisation, including effective due diligence processes
and risk management, external independent audits and
performance reviews are carried out annually at several
levels, including the Board of Directors and the Group
Sustainability Committee.
In addition, we perform quality assurance through
certifications and standards such as the Aquaculture
Stewardships Council (ASC) and ISO 9001.
Process For Setting Sustainability-Related Targets
We have a structured and collaborative process for setting
our sustainability targets, which is overseen by the senior
executives, including the CEO, and the sustainability
committee.
The Sustainability department creates a draft long-list of
targets based on various parameters, including ambitions
to manage impacts, risks and opportunities assessed to be
material via our double materiality assessment as well as
ambitions to comply with internationally recognised targets
such as reducing carbon emissions in line with the Paris
Agreement. In the process of creating the long-list, we also
investigate sustainability-related trends and demand from
consumers and investors, including topics of importance to
the company’s most important stakeholders.
Feedback and input to the long-list is provided from the
Group Management and senior executives on a strategy
seminar. The final targets are then approved by our Group
Management and the Board and then communicated to our
employees and our stakeholders.
The Board and the Group Management oversee the progress
of our sustainability targets through data collection in various
systems, and progression against the targets is also discussed
at our sustainability committee meetings.
Embedding Sustainability In The Organisation
Our Healthy Living Sustainability Strategy sets out the aim,
the purpose and our goals. The company policy is to produce
healthy salmon, with sustainable use of resources, minimum
impact on the environment, maximum respect for people, and
optimum value for its stakeholders and society.
Policy commitments are embedded in the organisation
through various mechanisms. Sustainability-related policies
are reviewed and approved by the CEO.
Each management-level position has sustainability-related
responsibilities assigned to it, and the responsibilities are
delegated as follows:
Executive leadership:
Ensuring governance of the company’s sustainability ambitions
and that sustainability commitments are integrated into corporate
strategies and policies.
Sustainability department:
Responsible for driving sustainability in the organisation,
ESG reporting, compliance with regulations and sustainability
standards, and support for the rest of the organisation to deliver
on sustainability targets, including advisory for managers and
employees on how to implement policy commitments.
Quality/Biology department:
Responsible for avoiding and/or minimising the environmental and
biological impact in operations.
Finance department:
Responsible for corporate governance, business conduct and
compliance with legal regulations.
Human Resources department:
Responsible for compliance with human rights, employee
engagement
Health & Safety department:
Responsible for health and safety in the organisation.
Procurement department:
Responsible for ensuring a sustainable supply chain.
The Group Sustainability Committee:
Is responsible for assessing the competence needed and for
providing necessary training for employees, who are responsible
for implementing the policy commitments.
GOVERNANCE & STRATEGY
30
Integrated Annual Report 2023 Governance Structure
Governance Structure
Board of Directors
Meets around 10 times a year
Responsible for setting the strategic direction for sustainability at Bakkafrost, including overseeing and having the overall responsibility
of sustainability management and reporting at Bakkafrost. Responsibility of the board in relation to sustainable development includes:
• Approving the Group climate-related targets and monitoring progress against targets.
• Approving annual sustainability report.
• Approving significant sustainability initiatives, including projects and participation in sustainability-related disclosures and initiatives.
• Overall responsibility for the management of risks and opportunities in relation to climate change and sustainability topics in a
broader sense.
Chair
Rúni M. Hansen, Chairman of the Board
Group Executive Management
Weekly meetings (or more if relevant)
The Group Executive Management is responsible for the implementation of sustainability programmes, including:
• Monitoring progress against sustainability targets at an operational level.
• Approving sustainability related policies.
• Responsibility for the implementation of sustainable solutions in the value chain.
• Responsibility for reporting operational risks to the board of directors, including climate-related risks.
• Assessing material sustainability topics.
CEO
Regin Jacobsen
Group Sustainability Committee
Meets six times a year (or more if relevant)
A board committee appointed by the Group Executive Management to oversee the implementation and performance against the compa-
ny’s sustainability strategy.
• Development and implementation of Bakkafrost Corporate Responsibility & Sustainability Policy
• Overseeing implementation and performance against Bakkafrost’s sustainability strategy commitments.
Chair
Regin Jacobsen, CEO
Key Executives
Weekly meetings
• Responsible for the everyday implementation of sustainability measures.
Review And Approvement Of Reported
Information
The Board of Directors is responsible for reviewing and
approving reported information regarding the company’s
impact on the economy, environment, and people. The
Board of Directors receives a report on the management of
sustainability topics for every board meeting, and the most
material issues are discussed.
The Board of Directors is also responsible for reviewing and
approving the annual sustainability report.
GOVERNANCE & STRATEGY
31
Stakeholder Engagement Integrated Annual Report 2023
As the biggest private employer in the Faroe Islands and
among the important employers in the rural regions of
Scotland, we recognise our duty to act responsibly and
think long-term for the future health of our business
and the areas in which we operate. We understand
the significance of engaging with stakeholders, and
we regularly communicate with various stakeholders
on different topics. We actively create opportunities
for stakeholders to share their interests and views
through regular dialogues, open days, supplier events,
local cultural events, employee involvement and
sustainability surveys etc.
Each department within Bakkafrost is responsible for
identifying relevant stakeholders and arranging for
appropriate initiatives to ensure that our stakeholders
regularly get the opportunity to communicate their
views, concerns and expectations for us as a business.
Further information on how engagement is organised
can be found in the stakeholder engagement table under
‘Engagement mechanisms’.
We use the input from stakeholders to guide our business
strategy and sustainability efforts, and we made sure to
include a wide range of external stakeholders to inform
our double materiality assessment to ensure that our
ESG reporting meets the needs and expectations of
our stakeholders. When we analysed the input from
stakeholders through the double materiality assessment,
we generally found that the stakeholders consider
almost all impacts relevant to report on for Bakkafrost.
This was expected, as we have one of the most extensive
and diverse value chains in the industry operating in
different business areas, from the production of feed
to salmon farming to being a vessel operator to biogas
production, and in 2024 we will also be operating within
the area of cargo aviation.
The CEO receives reports on the opinions and concerns
of stakeholders and passes them on to the board of
directors if they are considered material for the business.
We also have procedures in which the board of directors
are required to consider opinions of stakeholders such
as through the evaluation of the employee survey.
Stakeholder Engagement
GOVERNANCE & STRATEGY
32
Integrated Annual Report 2023 Stakeholder Engagement
Group Engagement mechanisms Notes on engagement Outcome
Employees
Whistleblower mechanism
Employee engagement Survey
Digital Communication Platform
Staff Forums
Toolbox Talks
Weekly newsletter
Healthy Living Awards
Appraisal
Bonus scheme
Employees have access to an online whistleblower mechanism.
We run regular employee engagement surveys and additional feedback surveys
where required
Programme of Engagement
Quarterly meetings with elected staff representatives
Team briefings with Health & Safety focus
Business updates for all employees
Team awards recognising achievement and encouraging positive behaviour
Appraisal programme + Sustainability-linked employee bonus scheme
Internal policy updates.
Management communication
20 Healthy Living Awards handed
to Bakkafrost employees.
Employees are awarded free bonus
shares depending on achieved KPIs.
Employees
Unions
Regular contact and ongoing meetings with Unions
Regular employee working group meetings
Main topics: labour conditions, remuneration, health and safety, human capital Internal policy updates
Customers
Sustainability double materiality assessment every 2-3 years.
Biennial Customer Summit (which all customers are invited to)
Annual online survey
Annual engagement at seafood exhibitions including e.g.: Seafood Expo North
America (Boston), Seafood
Global (Brussels), China Fisheries & Seafood Expo (Qingdao), World Food Shanghai
Exhibition, Ocean Group
Seafood Show (San Diego), Wabel Frozen Summit (Paris)
Annual engagement at client summits
Annual Customer feedback survey
Virtual Events
Programme for long-term customer partnerships
Customer visits at headquarters
Main topics: certification, quality, satisfaction, international relations, packaging, and
product development.
We have trialed some changes to our packaging, including reducing plastic on our
retail tail bags due to customer feedback.
To further support customer service in the US market and to reduce the amount of
ice used for the transportation of salmon, resulting in carbon reduction, we have
invested in a new cargo airline company. Due to some delays, we have not been
able to start flying in 2023 as planned. We expect to commence flights in the first
half of 2024.
Updating marketing strategies
Increased transparency
Suppliers
Sustainability double materiality assessment every 2-3 years.
Ongoing engagement
Supplier audits
Sedex
Local Sourcing Policy + Supplier Summit
Main topics: certification, quality, company standards (including human rights,
health and safety and environmental standards).
Supply chain compliance programme, all suppliers are carefully assessed to ensure
performance to an appropriate ethical standard
Source locally where possible, supplier engagement sessions
In 2023, we arranged a supplier summit in Scotland to further engage our suppliers
on sustainability topics.
Bakkafrost engaged with suppliers
through various channels such as
interviews, emails, workshops,
and questionnaires to identify the
most material information to report
according to the CSRD directive
Supplier queries answered.
Government and
regulatory bodies
Regular ongoing engagement
Salmon Scotland Membership
Main topics: licenses and registration, fish health & welfare, pollution, biogas plant,
ethical conduct, international relations, UN Sustainable Development Goals.
We continue engagement with government and regulatory bodies to advance
sustainable development Industry Trade body to champion the sector’s interests.
In 2023, we engaged with Faroese political parties concerning harvesting tax
legislation.
Host visits for political parties.
Alligning Business strategy.
Compliance in reporting
GOVERNANCE & STRATEGY
33
Stakeholder Engagement Integrated Annual Report 2023
Group Engagement mechanisms Notes on engagement Outcome
Local communities
Sustainability double materiality assessment every 2-3 years.
Ongoing engagement with local councils, harbour masters, and interest groups
Periodic engagement at industry events with Faroese business community Annual
local events such as Seaman’s Day and Day at Sea
Programme of community events and sponsorship
Community consultation
Community Charter and Fund
Main topics: new building projects, community investment, waste, water, pollution,
value creation.
We host visits at our Faroese headquarters and continue our partnerships with local
educational institutions.
Site development plans – where relevant
Participate in different annual local
events where free salmon meals
are handed out.
Educate by hosting visits and
teaching in the educational
institution.
Local project support.
Discovering of community benefits
Investors
Quarterly investor roadshows and periodic engagements
Biennial Capital Markets Day (which investors are invited to)
Annual engagement on investor ESG ratings
Sustainability double materiality assessment every 2-3 years.
Periodic investor visits
Main topics: transparency on all material issues. Bakkafrost has increased
transparency on material issues in each annual Sustainability Report; from this year,
we are aligning reporting with the CSRD directive.
Investor queries get answered.
ESG ratings improvement.
NGOs
Sustainability double materiality assessment every 2-3 years. Main topics: pollution, fish health and welfare, community engagement.
Represented on committees
Improvement of business
strategies.
Certification
bodies
Ongoing engagement with third party certification bodies, including the ASC, BAP,
MSC and GLOBALG.A.P.
Sustainability double materiality assessment every 2-3 years.
Main topics: certification, quality (including food safety), health and safety. Product quality secured.
Industry groups
Ongoing engagement with groups including the Faroese Working Environment
Service, and Faroese
Maritime Authorities, Faroese Employers Association and Faroese Aquaculture
Association, Global Salmon Initiative (GSI)
Sustainability double materiality assessment every 2-3 years.
Main topics: fish health and welfare, human rights, innovation, collaboration and
certification, international relations, health and safety, pollution, feed ingredients,
transparency.
Partnerships and collaborations
Industry experts
and academics
Ongoing engagement with external vets
Sustainability double materiality assessment every 2-3 years.
Sustainability training with experts
Partnerships
Main topics: all material issues.
Extended partnership with University of Faroe Islands on various biological topics,
including establishing a baseline for marine biological diversity in the Faroe Islands
+ Participation in research projects
Updated animal welfare policies
and procedures
GOVERNANCE & STRATEGY
34
Integrated Annual Report 2023 Government Regulation and Compliance
Complying to regional and international standards is critical
for sustainable growth. We strictly adhere to all relevant
legislation in the areas in which we operate and are committed
to going beyond compliance including leadership on issues at
a national and international level.
Our business relies heavily on the natural capital in the Faroe
Islands and Scotland. We work with the relevant environment
agencies and comply with aquaculture legislation at each stage
of the value chain. Compliance, leadership and transparency
are fundamental, and we are committed to zero cases of non-
compliance.
We go beyond compliance by voluntarily adhering to
international standards, including ASC and Best Aquaculture
Practices (BAP), to raise the bar for the industry in
sustainability.
In 2022 we were part of a working group under Vakstrarforum,
a strategic think-tank established by the Faroese government.
Its aim was to develop a strategy for sustainable growth for
the Faroese economy. The Faroese Prime Minister initiated
the project with the aim to engage local business leaders and
to identify the growth opportunities of our small nation, in
balance with environmental and sustainable development.
In 2023, we also engaged with political parties in the Faroe
Islands to update on our operation, discuss the impacts of
regulations, and discuss sustainability. We have in particular
discussed the changes to the Faroese revenue tax and how
this would potentially impact the industry. Bakkafrost also
hosted a public debate regarding the future vision for the
Faroese salmon industry, with participation from relevant
ministers and politicians.
Our goal is to not have any cases of non-compliance. In 2023,
we had no market bans, but for the first time ever in the
company‘s history we have had a product recall caused by a
mislabeled best-before date, in which the European and US
date formats were mixed-up. Please find more information on
page 116 in the Healthy Salmon section.
Regulation and licenses
In the Faroe Islands salmon farming licenses are given as
rolling licenses for 12 years. The license gives an exclusive
right to use a larger area, typically a whole fjord. There is
no limit to the biomass allowed, however production plans
must be approved by the authorities before releasing smolt
into the sites and production plan approval relies on historic
performance with KPI’s related to fish welfare and the
environment. These include, mortality, sea lice levels and
impact on benthic. These KPI’s are sampled and assessed
by independent 3rd parties on behalf of the authorities. The
licensee can only have one generation of salmon at a time
in a licensed area and is required to harvest out the entire
population before stocking the next generation. A fallow
period of at least 2 months is required between stockings.
There is no payment or fee for the license itself, but a revenue
tax is due on the harvest volume.
Licenses in Scotland are in general smaller than in the Faroe
Islands and include a maximum biomass limit. License holders
receive an option to renew their licenses for further 25 years
at end of term. Licenses are rented from the Crown Estate
Scotland.
Government
Regulation
and Compliance
Deputy Prime Minister and Minister of Foreign affairs,
Industry and Trade participating with other Faroese
politicians in a debate about the vision for Faroese
salmon industry, hosted by Bakkafrost.
GOVERNANCE & STRATEGY
35
Government Regulation and Compliance Integrated Annual Report 2023
Ethical Conduct
It is important to go beyond compliance to uphold and
promote good business practice consistent with our core
values and principles. Our values guide our approach in
creating long-term value for our customers, shareholders and
society. This means we act responsibly, with respect, while
being passionate about our provenance.
These values are outlined in our Code of Conduct, which aims
to create a sound corporate culture. Our Code of Conduct
requires all employees to observe high standards of business
and personal ethics and employ a fair and honest approach
to working with each other and external stakeholders. Our
policies, which are aligned to third party standards, ensure
our suppliers meet ethical standards and adhere to standards
on occupational health, safety and wellbeing, human rights,
freedom of association and collective bargaining, child labour
and environmental standards. In Scotland and Faroe Islands,
we have established a rigorous supply chain compliance
programme using SEDEX membership and self-audit to
make informed business decisions and drive continuous
improvement across our value chain. All suppliers are
carefully assessed to make sure that they are performing
to an appropriate standard, especially regarding their level
of quality management, health and safety, corporate social
responsibility as well as ethics and environmental care. Key
supplier relationships are closely managed through quarterly
business reviews to measure and review the performance.
Bakkafrost has an online mechanism where members of the
public can raise a complaint and if necessary, employees
can raise concerns through an independent and confidential
whistleblowing programme.
International relations
The Faroe Islands maintains good international relations.
There is ongoing public interest in Bakkafrost’s position in
regard pilot whale or dolphin hunting in the Faroe Islands.
Bakkafrost has a strict and unambiguous policy banning
employees to take any part in pilot whale or dolphin hunting
during work at Bakkafrost. Nor is our equipment allowed to
be used in any way. The Faroese Fish Farmers Association, of
which Bakkafrost is a member, has made a statement marking
the industry’s position, signed by all Faroese farming CEO’s.
License rent in Scotland
– In Scotland, a license rent is charged at 1% of
‘revenue’ calculated using a Benchmark rate. The
Benchmark rate is based on actual Fishpool prices
applied to harvested volume.
The Faroese revenue tax
– Applicable revenue tax rates range from 0.5% to
20%, of the Nasdaq value of fish harvested each
month. The applicable tax rate depends on the
difference between the average production cost
for the Faroese salmon farming industry and
Nasdaq price. Any price premium on top for the
Nasdaq price is not subject to the revenue tax.
– Bakkafrost receives a significant price premium
for its salmon.
GOVERNANCE & STRATEGY
36
Integrated Annual Report 2023 Preparing for the Corporate Sustainability Reporting Directive (CSRD)
Preparing for
the Corporate
Sustainability
Reporting Directive
(CSRD)
Sustainability reporting has become increasingly important
in recent years for customers, investors and financial
institutions as well as the general public. However, there has
been a lack of standardisation when it comes to how to report
on sustainability.
Therefore, we welcome the Corporate Sustainability Reporting
Directive (CSRD), which will enable more consistent and
transparent reporting in the future.
Even though reporting with reference to CSRD doesn’t
come into effect until next year, we have chosen to actively
prepare for the full implementation by developing a new
sustainability statement in 2023, which has been prepared
with reference to the underlying reporting standards, the
European Sustainability Reporting Standards (ESRS). This will
ensure that our reporting processes are aligned with the new
directive and that we are able to provide transparent and
accurate information to our stakeholders.
As this is the first year of reporting with reference to ESRS, we
are still working on developing procedures and descriptions to
fully meet the requirements. We are committed to allocating
the necessary resources to fully apply the new reporting
standard and we see great opportunities in this.
We believe that this directive will help to improve the quality
of sustainability reporting, and we are happy and proud to
have taken this important step towards CSRD compliance by
preparing our statement with reference to the new standards.
GOVERNANCE & STRATEGY
37
Risk Management Integrated Annual Report 2023
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 a range of operational and business risks
arising from normal business activities in the value chain.
Bakkafrost categorize the these risks according to following
structure:
• Financial, legal and regulatory risks
• Market risks
• ESG risks
• Environmental risks
• Fish health and welfare risks
• Other operational risks
• IT risks
• HR risks
Risk Management Structure And Process
The Board of Directors has the ultimate responsibility for
the risk management of the Group. The Board of Directors
determines 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. This includes maintaining a risk
register for the Bakkafrost Group in which identified risks
are documented and assessed alongside the progress and
impact of risk mitigating efforts. The Group Management
regularly monitor the risk register and the continuous risk
assessment is followed yearly with an extensive risk analysis
for the whole Group. Around year-end, a comprehensive risk
report is produced to report status of the risks to the Audit
Committee for approval by both the Audit Committee and the
Board of Directors.
The latest comprehensive risk analysis was reported in
January 2023.
Development In Risks In 2023
Overall, operational risks related to biology constitute the
most significant risk types for Bakkafrost.
In 2023, the following categories of risks increased:
• Financial, legal and regulatory risks
• Market risks
• ESG risks
The following risks reduced during 2023:
• HR risks
Below is an outline of the risks assessed as being critical to
Bakkafrost, regarding the potential magnitude of impact the
risk has on Bakkafrost’s financial position – short term or
long term. The impact can be either positive, constituting an
opportunity, or negative being a threat.
Financial, legal and regulatory risks
Macro-economic factors
Bakkafrost operates in different countries and sells its
products all over the world. Hence, Bakkafrost is subject to
macro economical changes, whether they are local, regional
or global. Such changes can be positive as well as negative
to Bakkafrost and have a major impact on Bakkafrost. Wars
and conflicts between countries, political instability, rapidly
changing interest rates and economic recessions are examples
of changes that affect the world economy, market and trade
flows as well as the financial uncertainty.
How this risk is managed
Bakkafrost maintains a diversified market approach,
spreading the risk by selling products to different geographic
markets and by selling to different channels (retail vs. food
service). Being present in different markets, which are not
financially dependent on each other, lowers this risk. Also,
Bakkafrost ensures access to good information sources
on macro economical changes in areas where Bakkafrost
operates or sells products.
Foreign exchange risk
Bakkafrost trades in the world market for farmed salmonids.
The revenues and accounts receivable are predominantly
denominated in DKK, EUR, USD and GBP, but to some small
extent also in other foreign currencies. Accounts payables are
primarily in DKK, USD, GBP and NOK. As a group, Bakkafrost
has significant natural hedging, however with a significant
trade surplus in USD. For those currencies not fully hedged,
fluctuations in foreign exchange rates present a financial risk
to Bakkafrost.
In 2023, the FX-market has been quite volatile. Despite large
variations during the year, the USD/DKK has had an overall
flat development. The NOK weakened towards the DKK in the
beginning of 2023 but had a relative flat development since
May. Similarly, GBP has been relatively stable towards the
DKK since June, while strengthening during H1 2023.
How this risk is managed
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.
The Company’s multicurrency finance agreement gives
Bakkafrost the possibility to request other currencies at
utilisation.
Risk Management
GOVERNANCE & STRATEGY
38
Integrated Annual Report 2023 Risk Management
Interest rate risk
Interest rates have been historically low for years, but to
combat the increasing inflation, interest rates have increased
significantly. It is likely, that interest rates will reduce during
2024 and 2025.
How this risk is managed
Bakkafrost monitors the forecasted development to make
appropriate and informed hedging decisions.
In addition to the critical risks outlined above, following
financial, legal and regulatory risks have been assessed as
semi-critical:
• Insurance risk
• Tax risk
• Investment risk
• Liquidity risk
• Capital structure risk
• Legal and regulatory risk
• Reputational risk
Market risks
Salmon price
Bakkafrost’s financial position and future development
depend considerably on the price of farmed salmon, which
has historically been subject to substantial fluctuations.
Hence, it is reasonable 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 2024-2025, salmon prices
are expected to be strong – hence constituting an upside
risk rather than a significant downside risk. However, the
volatility itself is the main risk.
How this risk is managed
Bakkafrost’s strategy is to sell around 40% of the harvested
volumes on fixed price contracts, which alleviates a substantial
part of the risk induced by salmon volatile prices. However,
for 2024, Bakkafrost has decided to reduce the contract
volume, hence being more exposed to the spot market. This is
done to reduce the revenue tax risk caused by the increase in
revenue tax in the Faroe Islands.
Bakkafrost regularly reviews of balance between selling on
spot and on long-term contracts. Appropriate contract levels
are negotiated primarily towards the end of each year.
In addition, Bakkafrost applies a diversified market approach,
building on the Bakkafrost main brand underpinned by the
different sub-brands and origins. This improves Bakkafrost’s
agility in the market on a strategic, tactical and operational
level, and helps to reduce the overall market risk.
Finally, salmon contracts are hedged on FishPool on ad-hoc
basis.
In addition to the critical risks outlined above, following
market risks have been assessed as semi-critical:
• General inflation risk
• Sourcing raw material for feed production
ESG risks
Carbon price
As global economies transition to a low-carbon world, it is
increasingly likely that some form of carbon pricing will
be enforced across markets where Bakkafrost operates.
Given Bakkafrost’s growth strategy, without significant
decarbonization of Bakkafrost’s operation, this could pose a
great threat to the business.
How this risk is managed
Bakkafrost has committed to reduce absolute Scope 1 and 2
greenhouse gas emissions by 50 % by 2030 and to reduce
Scope 3 emissions by 52 % per tonne of product sold within the
same timeframe. Focusing on increasing the use of renewable
energy and improving energy efficiency in our facilities is
important in this regard. It is also essential to continue the
work we have started to build strong partnerships with other
companies and energy suppliers to drive reduction in GHG
emissions.
In addition to the critical risks outlined above, following EGS
risks have been assessed as semi-critical:
• ESG rating and stakeholder management risk
• External dependencies risk for ESG commitments
Environmental risks
Bakkafrost has strong mitigating procedures in place for
environmental risks, which reduced the assessed potential
impact on these risks significantly. Consequently, taking this
into account no environmental risks are assessed as being
critical or semi-critical to Bakkafrost’s financial position.
Fish health and welfare risks
Gill health (Scotland)
Gill health continues to be a primary driver of mortality,
particularly during Q3 in Scotland. While seasonal gill
challenges occurred, recovery after the challenge generally
was fast, with improvements in mortality observed earlier
than previous seasons. AGD, while persistent in presence,
is relatively well managed with the resources available.
Seasonal insults from phyto- and zoo-plankton remain a
newer issue, with innovation required to deal with blooms
and resulting damage.
How this risk is managed
Investments made in dual-treatment systems using a
combination of freshwater bathing and flushing combined
with the strategies employed to ensure maintenance of good
gill health, as well as rapid response to deteriorations in
health, showed promising results in 2023.
Monitoring was rolled out for micro jellyfish in 2023, which
reveal strong correlations between presence of gelatinous
zooplankton species and increased mortality, as well as being
a complicating factor in other diseases such as Pancreas
Disease & AGD. Industry wide attention is being focused on
water borne insults, which Bakkafrost Scotland is involved
in, and internally, further work is planned to understand cost
vs. benefit of some of the mitigations available for jellyfish
blooms.
GOVERNANCE & STRATEGY
39
Risk Management Integrated Annual Report 2023
Salmon lice
Salmon lice (Lepeoptheirus salmonis) and especially
treatment against salmon lice is considered a critical risk. The
lice infestation itself does not cause considerable physical
damage to the fish, but the extensive effort to continuously
keep the lice number low, is a demanding task causing issues
concerning animal welfare, as well as economic consequences.
How this risk is managed
Bakkafrost has significantly increased the capacity to combat
sea lice, mainly with the farming service vessels with dual-
treatment systems using a combination of freshwater bathing.
In addition, proactive monitoring and treatment strategies
are applied.
Treatment and handling of fish
One of the main causes for mortality, is handling of fish during
delousing procedures. Delousing procedures are therefore
considered a critical risk. Bakkafrost is continuously working
on optimizing delousing procedures to ensure optimal fish
welfare and reduce fish mortality. Increased freshwater dual-
treatment capacity has to a large extend improved handling
mortality and treatment efficiency. Actions to control lice
infestation pressure, is however still considered one on the
biggest challenges and most critical biological risks for the
company.
How this risk is managed
Freshwater dual-treatments has to a large extend throughout
the year become the treatment of choice, with very good effect,
and low mortality. The prospect for significant improvement
in reducing handling mortality is looking good in the near
future. Warm water treatment (Optilice) is well implemented
and is however a necessary part of the production on almost
all sea sites. Bakkafrost treatment policy requires veterinary
attestation before every non-medicinal treatment, which is
crucial to ensure optimal treatments based on lice numbers
and fish health.
In addition to the critical risks outlined above, following fish
health and welfare risks have been assessed as semi-critical:
• Sea lice regulation
• Diseases (CMS, ISA, HSMI, PD, SRS and Furunculosis)
• Cage grid moorings breakage
• Governmental administration
• Seal impact
• Microalga, hydrozoa and jellyfish
• Compromised health during smolt transport and stocking
• Cooling capacity in hatcheries
• Quality of eggs
• Disinfection of intake air in hatcheries
• Water quality in RAS
• Smolt quality and robustness (Scotland)
• Sufficient supply of freshwater in hatcheries (Scotland)
• Breaches to follow best practice procedures
• Physical broodstock facilities
• Loss of genetic material in brooodstock
• 3rd party risk in broodstock
Other operational risks
Bakkafrost has strong mitigating procedures in place for
other operational risks, which reduced the assessed potential
impact on these risks significantly. Consequently, taking this
GOVERNANCE & STRATEGY
40
Integrated Annual Report 2023 Risk Management
into account no other operational risks are assessed as being
critical to Bakkafrost’s financial position.
In addition to the critical risks outlined above, following other
operational risks have been assessed as semi-critical:
• Fire or explosion at at the styrofoam factory in the Faroe
Islands
IT risks
Cybersecurity
Bakkafrost is targeted by increased activity with viruses,
ransomware, and encryption. The acquisition of SSC,
Bakkafrost France, Munkebo, and FarCargo has increased
the attack surface. A cyber-attack could result in severe
consequences such as unauthorized access to confidential
commercial or personal data by third parties, potential fines,
loss of customer information, reputational damage, and data
corruption.
Bakkafrost has not been affected by this risk so far. However,
it is assumed that Bakkafrost is a viable target for future
attacks. Bakkafrost’s policy is to be proactive and plan for
the assumption that devices will be affected in the future.
How this risk is managed
Bakkafrost has taken a range of steps to mitigate this risk.
This includes ensuring daily, weekly, and monthly backups
of all critical clients/servers and having live and tape
backup procedures to offsite locations. Bakkafrost has
several mirrored data centers and 24/7 monitoring of the
IT environment by external Security Operations Center. All
clients and infrastructure nodes are equipped with the latest
security software and complete disaster recovery tests are
executed unannounced on a regular basis.
Risk assessments are performed as part of the yearly IT
audit, conducted by certified CISA, CRISC and CDSPE auditors.
Bakkafrost is currently undergoing ISO 27001 certification,
estimated to complete in 2024.
Issue response time at hatcheries
Due to a complicated environment with many low-level ICS
(PLCs) and many vendors, the outcome of a failure will in
most cases require an external provider to solve a possible
issue. Reaction time is critical and failure to react in a timely
manner might have severe consequences.
How this risk is managed
Proactive approach with multiple alarming systems to alert
relevant personnel at hatcheries.
In addition to the critical risks outlined above, following IT
risks have been assessed as semi-critical:
• Issue response times in a widespread operation
• Sufficient access to skilled IT experts
• Remote access to IT infrastructure
• Activists
HR risks
Bakkafrost has strong mitigating procedures in place for HR
risks, which reduced the assessed potential impact on these
risks significantly. Consequently, taking this into account no
other HR risks are assessed as being critical to Bakkafrost’s
financial position.
Following HR risks have been assessed as semi-critical:
• Succession Planning for critical roles and technical staff
• Recruitment of Operatives
• Preserving tacit knowledge and knowledge sharing
• Managing change and organizational culture
GOVERNANCE & STRATEGY
41
Shareholder Information Integrated Annual Report 2023
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
Accountants), which is also the auditor of the parent company
and all its subsidiaries, registered in the Faroe Islands. Auditor
for subsidiaries are:
• Bakkafrost UK Ltd is Forrester Boyd Chartered Accountants,
Grimsby
• Bakkafrost Scotland Ltd is Azets, Glasgow.
• Bakkafrost USA LLC is Kotulak & Company, Clifton, New
Jersey
• Munkebo A/S is Beierholm, Aarhus
• SARL Faroe France, Terninck Laurent, Saint Omer.
Dividend Policy
Bakkafrost aims to give its shareholders a competitive return
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
shareholders, but it is the responsibility of the Board of
Directors 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 balance
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
1,531 million for 2023. The Board of Directors has decided
to propose to the Annual General Meeting that DKK 8.70
(approximately NOK 13.26*) per share shall be paid out as
dividends. This corresponds to DKK 515 million (NOK 785*
million).
The Board thereby proposes the following allocation of funds:
Result for 2023: DKK 1,531 million
Transferred to other equity: DKK 1,016 million
Total provision for dividends: DKK 515 million
After the payment of dividends, the distributable equity
totals DKK 10,148 million.
Shareholders, Capital And Votes
P/F Bakkafrost had on 31 December 2023, a total of
59,227,607 shares outstanding, each with a nominal value of
DKK 1. Of the 59,227,607 shares outstanding, P/F Bakkafrost
holds 16,045 treasury shares per 31 December 2023.
Ticker code: BAKKA
Largest Shareholders
These shareholders held directly or indirectly more than 5%
of the shares in the company per December 2023:
• Folketrygdfondet
• Regin Jacobsen
• Oddvør Jacobsen
* 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.
GOVERNANCE & STRATEGY
42
Integrated Annual Report 2023 Directors and Management
Directors and Management
GOVERNANCE & STRATEGY
43
Directors’ Profiles Integrated Annual Report 2023
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 2024.
He is considered to be independent. Executive Chairman
of the industry holding 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
Business School. Postgraduate, Lancaster University.
Board meetings in 2023:
Participated in all 11 Board meetings in 2023.
Number of shares held in Bakkafrost:
Holds 10,761 shares – no change in portfolio in 2023.
Mr Hansen is a member of The UN Global Compact´s Platform
for Sustainable Ocean Business. He was a member of the World
Economic 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 2024. He is considered to
be independent. Managing Director at P/F Eystur- og
Sandoyartunlar and P/F Suðuroyartunnilin.
Education:
MSc. in Business Economics & Auditing, Copenhagen Business
School.
Board meetings in 2023:
Participated in all 11 Board meetings in 2023.
Number of shares in Bakkafrost:
Holds 100 shares – no change in portfolio in 2023.
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 and
Grannskoðaraeftirlitið, and holds the position as Chairman of
the Board of Directors at Bústaðir.
Annika Frederiksberg
Board member
Born 1971. Faroese citizen. She joined the Board in 2008.
The term of office expires in 2024. She is not considered to
be independent.
Sales Manager at Bakkafrost.
Education:
Basic Vocational Course, Commercial Line, Faroese Business
School.
Board meetings in 2023:
Participated in all 11 Board meetings in 2023.
Number of shares in Bakkafrost:
Holds directly and indirectly 16,781 shares – change in
portfolio in 2023: +368 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.
GOVERNANCE & STRATEGY
44
Integrated Annual Report 2023 Directors’ Profiles
Øystein Sandvik
Board member
Born 1948. Norwegian citizen. He joined the Board in 2013. The
term of office expires in 2024. He is considered to be independent.
Education:
Bank Economist.
Board meetings in 2023:
Participated in all 11 Board meetings in 2023.
Number of shares in Bakkafrost:
Holds no shares – no change in portfolio in 2023.
Mr Sandvik has extensive experience in the finance sector
and seafood. 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 2024. He is considered to be
independent.
Education:
Master in Animal Nutrition at NMBU.
Ph.D. in Aquaculture, NMBU.
MBA, Handelshøyskolen BI
Board meetings in 2023:
Participated in all 11 Board meetings in 2023.
Number of shares in Bakkafrost:
Holds no shares – no change in portfolio in 2023.
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 2024. She is considered to be independent. She
is currently CEO of Visit Faroe Islands and previously Marketing
Director of Visit Stockholm.
Education:
MSc. in Business Administration & International Marketing,
Copenhagen Business School and Stockholm University.
Board meetings in 2023:
Participated in all 11 Board meetings in 2023.
Number of shares in Bakkafrost:
Holds no shares – no change in portfolio in 2023.
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).
GOVERNANCE & STRATEGY
45
Group Management’s Profiles Integrated Annual Report 2023
Group Management’s Profiles
Regin Jacobsen
Chief Executive Officer
Born 1966. Faroese citizen. Mr Jacobsen has been Chief
Executive Officer 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 4,640,281 shares at year-end 2023.
Changes in portfolio in 2023: +22,330 shares.
Mr Jacobsen has extensive experience in the salmon industry
and finances. He was the Financial Manager of Bakkafrost
before he became Chief Executive Officer of Bakkafrost.
Over the past 35 years, Mr Jacobsen has accumulated
extensive experience in strategy review and change. During
this time, Mr Jacobsen has been instrumental in developing
Bakkafrost’s extensive value chain, emphasising differentiation
and competitive advantage.
Høgni Dahl Jakobsen
Chief Financial Officer
Born 1972. Faroese & Swedish citizen. Mr Jakobsen has been
Chief Financial Officer 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 76,636 shares at year-end 2023.
Changes in portfolio in 2023: +1,612 shares.
Mr Jakobsen has extensive experience in the salmon industry,
finances and the management consulting 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 Certificate Exam, University of the Faroe Islands.
Number of shares held in Bakkafrost:
Holds 185,391 shares at year-end 2023.
Changes in portfolio in 2023: +1,321 shares.
Mr Eliasen has broad experience in the fish farming industry
and has been an active player in restructuring the fish farming
industry in the Faroe Islands. He has been responsible for
Havsbrún’s farming activities and has held various board
positions in the industry. Mr Eliasen was a board member of
Bakkafrost from 2006 to 2012.
GOVERNANCE & STRATEGY
46
47
INTEGRATED ANNUAL REPORT 2023
48
INTEGRATED ANNUAL REPORT 2023
STRATEGIC PRIORITY
• To grow efficiently and responsibly
2023 PERFORMANCE AGAINST OUR 2023
COMMITMENTS
• Zero cases of non-compliance
∙ No product recalls
∙ No market bans
• Actively engage customers in waste reduction
• Maintain high NPS and customer satisfaction with quality
• scores
• Update procurement policy and supplier code of conduct
• Influence the improvement of aquaculture practices
• Extend ISO9001 standard certification
• Focus on producing salmon from own unique breed
2026 TARGETS
• Zero cases of non-compliance. “No product recall, No market
bans, No IT security incidents“
• Sustainability recommendations on all Bakkafrost-branded
products by 2026
• Average customer rating of >8.5 and a net promoter score
above +50
• Include sustainability in CAPEX request form
• Board to receive sustainability training annually
• In-house production of FPC (Fish protein concentrate) by 2026
• Implement strategical use of AI and BI to contribute to
operational efficiency (both regarding the salmon and
environment.
SDGS
Healthy Business
HEALTHY BUSINESS
49
INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
Bakkafrost is committed to sustainable salmon
production, a key solution for feeding the world‘s
growing population. As a leader in salmon
farming, we see growing our production as both
an opportunity and a responsibility given the
natural resources, that we are surrounded by. This
benefits the world’s population as well as the local
communities where we operate, fostering mutual
growth and prosperity.
We are dedicated to sustainable growth, ensuring
our practices are in harmony with nature, compliant
with regulations, and beneficial to local ecosystems.
Our efforts extend beyond our operations, aiming
to drive innovation and sustainability across the
industry. We call this Healthy Business.
IN THIS SECTION
THE IMPORTANCE OF AQUACULTURE
AND SALMON FARMING
51
SUSTAINABLE GROWTH 52
RESEARCH AND DEVELOPMENT 56
FINANCIAL REVIEW
59
SEGMENTS AND THE VALUE CHAIN
61
MARKET REVIEW 71
HEALTHY BUSINESS
50
HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
Today’s food systems face extraordinary challenges as global
population grows, in turn putting enormous pressure on food
resources. To feed nine billion people by 2050, we must
focus on further development of sustainable food systems,
with minimal footprints that preserve the earth for future
generations.
Aquaculture has been identified as a sustainable solution to
meet the increasing demand for nutritious protein to feed the
growing population. Farmed salmon is among the healthiest
protein sources with its high content of omega-3 fatty acids,
vitamin D, selenium, and B vitamins. According to the 2018
World Resource Institute’s report ‘Creating a Sustainable
Food Future’, aquaculture production would need to more
than double between 2010 and 2050 to meet projected fish
demand.
Aquaculture is a sustainable option for consumers, compared
to other farmed proteins. Sustainably sourced salmon has
one of the lowest carbon footprints of all animal proteins
including; chicken, pork, beef, and lamb. It is highly resource
efficient and compared to these proteins, has the highest
protein retention, the lowest feed conversion ratio, and the
lowest water footprint.
Responsible and sustainable salmon produced in a way that
minimises potential negative impact is the solution to providing
future generations with healthy and environmentally friendly
protein options.
Bakkafrost has an ambitious growth strategy which enables
us to compete in the world’s fastest growing food producing
sector and make a significant contribution to providing
healthy sustainable food for a growing population.
Through responsible and efficient production of high-quality
protein for the global market and our investment in innovation,
sustainable infrastructure, and renewable energy solutions,
we are contributing towards UN Sustainable Development
Goals 2, 7, 8 and 9. For more information see page 24.
The Importance
of Aquaculture
and Salmon Farming
240
200
160
120
80
40
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
0
Aquaculture production must continue to grow
to meet world fish demand
Aquaculture
Wild (capture) fisheries
Million tons
Source: Historical data, 1950-2016: FAO (2017b) and FAO (2018). Projections
to 2050: Calculated at WRI; assumes 10 percent reduction in wild fish catch
from 2010 levels by 2050, linear growth of aquaculture production of 2
Mt per year between 2010 and 2050. (Creating a Sustainable Food Future,
World Resource Institutes, 2018)
CattlePorkPoultryFarmed Atlantic
Salmon
Lamb
CARBON FOOTPRINT
LAND USE
FEED CONVERSION
WATER FOOTPRINT
EDIBLE YIELD
PROTEIN
OMEGA-3
VITAMIN D
Lowest
Lowest
Lowest
Lowest
Highest
2nd Highest
Highest
Highest
FARMED SALMON IS A VERY RESSOURCE EFFICIENT SOURCE OF HEALTHY PROTEINS
Source: Global Salmon Initiative
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
Sustainable Growth
Sustainable growth is fundamental to our ambitious growth
target. In 2023, Bakkafrost announced a new 5-year
investment plan where we set ourselves the ambitious growth
target of increasing output of our premium salmon by more
than 50% by 2028. Our stated 5-year investment programme
for the period 2024-2028 will increase total production
capacity to around 200,000 tonnes (head on gutted weight)
and enable us to reach harvested volumes of 165,000 tonnes
by 2028.
Our unique value chain plays an important role in ensuring
each stage of the value chain is adapted to the next and we can
achieve optimal efficiency and maximise resource utilisation.
A key element to achieve this growth is expanding our land-
based freshwater hatchery capacity, in which we produce
large, robust high-quality smolt. Our strategy to produce
smolt of around 500g involves moving a larger part of the
production cycle to state-of-the-art hatcheries, with cutting-
edge water recycling technology (RAS). This is a well-known
technology for Bakkafrost which has been used for over
25 years. The well-controlled environment in RAS reduces
biological risk while increasing the production capacity in
existing farms through the reduced marine production cycle
of 18 months and in the Faroe Islands about 10-12 months.
In the Faroes we are also able to move farming sites to more
exposed locations where there are stronger sea currents and
water quality is better for healthy growth and furthermore,
any impact on the seabed is further reduced.
The large-smolt capacity is the most important driver for
volume growth in the Faroe Islands as well as in Scotland
long term. In the Faroe Islands, we have come a long way
in implementing this strategy and invested in increased
hatchery capacity. Increased production on land generates
considerable volumes of organic waste which is sent to
our biogas plant. We have therefore become a significant
producer of renewable energy and fertiliser in the Faroes.
This is an excellent example of a circular economy where
business growth and sustainability work hand in hand.
The large smolt strategy is the game changer for farming
operations in Scotland, reducing biological risk, improving
efficiency, reducing cost, and providing an opportunity for
further growth. Another priority to us is the “One Company”
pillar of our strategy, integrating Faroese and Scottish
operations, building on the strengths and best practices of
both.
As previously announced, we plan to replicate this successful
strategy in Scotland. When we acquired The Scottish Salmon
Company (now Bakkafrost Scotland), we planned for a 5-year
turnaround of the Scottish operation and that we would
have to replicate the investments made in the Faroe Islands
and transfer best practices. Due to delays, mainly caused
by COVID-19, the turnaround period is expected to be 6-7
years. As we have seen in the Faroe Islands, the cornerstone
is to produce large robust, and high-quality smolt in large
new state-of-the art hatcheries with RAS technology and we
plan to build two of these hatcheries in Scotland, mirroring
the hatcheries in the Faroe Islands. In addition, investment
is required in vessels and infrastructure to improve fish
health and increase survivability. In 2022, we significantly
increased the vessel capacity with a 4,000m
3
farming service
vessel with dual-treatment systems to treat gill health with
fresh water and remove sea lice in one combined treatment.
In early 2023 we installed this system on our other farming
service vessel in Scotland as well as on the new large
10,000m
3
farming service vessel, Bakkafossur in the Faroe
Islands. Having this capacity reduces biological risk further
and improves fish welfare.
In Scotland, we have invested heavily in technology and
farming equipment to replicate the standard of our Faroese
operations. This includes IT, camera systems, predation-proof
PLANNED TOTAL HARVEST VOLUME AND HARVEST CAPACITY (KT)
200
150
100
50
0
2028202620242023
Capacity
Harvest
HEALTHY BUSINESS
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
nets, aeration systems in all farming pens, advanced feeding
systems, innovative treatment systems on farming service
vessels, and environmental sensors which will help safeguard
our fish, improve our feed conversion ratio, and improve
environmental management.
As new hatcheries come into operation in both the Faroe
Islands and Scotland, energy consumption and biological
waste generation increase. Sourcing renewable energy and
ensuring sustainable waste handling are integral to our
hatchery designs and investment plans. At our Applecross
hatchery, all energy will be provided from renewable sources.
This includes solar panels and establishing direct private
powerline to a nearby hydropower plant. The next planned
hatchery in Scotland, at Fairlie, is also planned to be powered
exclusively on renewable energy and the biological waste to
be turned into fertilizer.
One of the expected synergy effects when acquiring the
Scottish Salmon Company (Bakkafrost Scotland) was to
achieve higher volumes and efficiency in our fish feed
production at Havsbrún. As all our salmon in the Faroe Islands
and Scotland is fed on Havsbrún feed, and the salmon grows
faster in Scotland during the winter due to higher seawater
temperatures, capacity utilization at Havsbrún has increased,
giving a more even production during the year. This has a
positive impact on production costs. Feeding the salmon in
Scotland on the same high-marine diet as our Faroese salmon
has also improved product quality and price achievement in
the market, where we leverage the strong market positioning
of our Faroese salmon using the same main Bakkafrost brand.
Business profitability
Since 2013, we have invested 6.4bn DKK in our value chain
in the Faroe Islands.
Bakkafrost has the longest integrated value chain in the
industry and is the only salmon producer with its own
production of fish meal and -oil, used in feed production.
As a result of strategic investments in building a highly
efficient value chain in the Faroe Islands, Bakkafrost has
realized significant increases in efficiency and profitability.
This has placed Bakkafrost’s Faroese operation among the
highest margin earners compared to its peers and other
listed companies on the Oslo stock exchange. Since 2015,
investment spend in the Faroe Islands has been between DKK
10-14 per kg of harvested salmon.
In 2023, Bakkafrost produced around 2.7 million meals a day*
*
,
serving our customers, including importers, food producers,
large supermarkets and restaurant chains, in more than 40
countries across four key markets: Western Europe (69%),
North America (19%), Asia (9%), Eastern Europe – excluding
Russia (3%) and the Rest of the World (<1%). Consumers in
these markets increasingly require reassurance about the
sustainability of food and in turn our customer requirements
have also increased. Our strong sustainability record has
been key in strengthening partnerships with key customers
and we anticipate this trend in increased food transparency
will continue.
We are committed to responsible and sustainable production
of healthy world-class salmon. This includes increased
transparency and focus on third-party certification
demonstrating our sustainability and welfare credentials with
a focus on quality and supply chain integrity.
On the second day after Russia’s invasion of Ukraine in
February 2022, Bakkafrost stopped all trade with Russia. To
prevent Bakkafrost salmon being sold into Russia fraudulently
re-labelled, we asked the authorities to remove Bakkafrost
from the list of approved suppliers into Russia.
New solutions and unchartered territories
The salmon farming industry is still a relatively young industry
frequently faced with new challenges. Sometimes there are
no solutions, and you have to invent them or find innovative
ways to reach the goal. This kind of entrepreneurship is
* Meals per day calculated as 125g portions, 220 days of productions/year
6.4BN INVESTED IN THE FAROE ISLANDS SINCE 2013
900
800
700
600
500
400
300
200
100
0
Other
FSV (FO)
FOF
Freshwater (FO)
Processing & VAP (FO)
Marine (FO)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
HEALTHY BUSINESS
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
deeply rooted in our DNA and Bakkafrost’s early move into
RAS in the mid-90’s is a good example of how an emerging
risk, which at that time was insufficient access to freshwater
for the growing smolt production, over the years has turned
into one of Bakkafrost’s strong core capabilities. Some newer
examples are :
• Förka (turning biological waste into renewable energy)
• Eysturlund (solving a shortage of renewable energy)
• FarCargo (establishing the first air cargo route from the
Faroe Islands)
Food authenticity
There has been an increased focus on food fraud in recent
years. Customers want to know and trust the authenticity of
food. To prevent other salmon products from being sold as
Bakkafrost-branded products, we have taken the following
steps:
• all products are certified
• full control of the value chain
• unique packaging and labelling with security features
• authority-approved documents with watermarks following
the products
• unique serial numbers/lot numbers on every box
• reliable and trusted suppliers
• regular testing with techniques such as DNA testing.
By implementing these steps, we reduce the risk of our
products being counterfeited or substituted and maintain the
trust and confidence of customers.
For more information on food safety and quality, please see
page 114-117.
Motivated and skilled employees
Bakkafrost needs competent and driven employees to achieve
its growth goals. To inspire the employees to work in line
with Bakkafrost's strategy and growth vision, Bakkafrost has
established a share-based bonus scheme for all employees
in the Group. Under this scheme, all employees receive free
bonus shares based on performance on certain KPIs that are
linked to the strategy. These include KPIs on sustainability
and profitability, and Bakkafrost Group's adjusted earnings
per share is required to be above a certain level. The bonus
shares are given quarterly as restricted share units that are
only released after the Annual General Meeting approves to
pay dividends to the shareholders. Employees who remain
employed for two calendar years after getting bonus shares
will also get a varying number of free matching shares. This
is to motivate long-term employment and avoid losing skills
and expertise from the company.
The bonus scheme is monitored by the Remuneration
Committee.
Sustainably linked finance
Bakkafrost has secured sufficient financing for the 5-year
investment plan. In March 2022, Bakkafrost entered a new
sustainability-linked EUR 700 million multicurrency revolving
credit facility with a tenor of five years, which has since been
extended with 2 years. The purpose of the facility was to
refinance Bakkafrost’s existing bank facilities, and it serves as
a robust and flexible financial framework for our investment
plans aimed at significant sustainable growth. Importantly,
the margin payable is linked to Bakkafrost’s performance
against certain sustainability KPIs, consistent with our
overall sustainability targets and ambitions, including own
production of renewable energy. Through this we strengthen
our commitment to make our growth ambitions sustainable
by increasing the financial upside in achieving this.
Capital Markets Day
It is important for Bakkafrost to be transparent to investors,
analysts and banks on our plans and progress against these.
Therefore, Bakkafrost hosts a Capitial Markets Day every
second year which aims to enhance transparency, share key
developments, and engage with the investment community.
The Capital Markets Day 2023 took place in June in
Scotland, where the company provided insights and updates
to investors, analysts, and stakeholders. During the day,
Bakkafrost presented its financial strategy, growth plans,
sustainability initiatives, and other relevant information.
It featured discussions on various aspects of Bakkafrost’s
operations and prospects and included site visits in Scotland.
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
For the last ten years, the Faroese aquaculture industry has
transformed with strong growth and development. Bakkafrost
is a significant contributor to the development of the industry
in the Faroe Islands and has started the transformation of our
Scottish business.
Our Approach
In our pursuit of sustainable salmon farming, research and
development stands as a cornerstone. By addressing technical
and operational challenges, we create valuable knowledge.
Our work in research and development is spread around the
whole value chain, from research in broodstock, research in
feed recipes, focusing on the development of fish health and
welfare to food safety, product development and piloting new
packaging. Whether it is enhancing biomass production or sea
lice management, the knowledge not only drives long-term
value but also ensures our competitive advantage. Through
our research and development projects, we safeguard our
innovations, fostering responsible growth and environmental
stewardship.
In recent years a significant effort has been made to recruit a
skilled labour force of (but not limited to):
• Veterinarians
• Animal biologists
• Technical leaders
• Data scientists
• Fish health experts
• Smolt developers
Performance
The estimated Research and Development related activities
were 509 million DKK in 2023 (489 million DKK).
R&D related activities
DKK 1,000 2023 2022
Total R&D activities 509,227 488,512
% Faroe Islands 58% 56%
% Scotland & other 42% 44%
The R&D related activities are recognized following the same
R&D Expenditure Credit (RDEC) Claim used for tax credits
for Bakkafrost Scotland. The policy is crafted by a certified
external consultant firm and is approved by related parties
for governmental tax credit.
Innovation
As salmon farming is a relatively new industry, innovation
is key to continued development and growth. Investments in
innovation and research and development are fundamental to
meeting our customers’ requirements, realizing opportunities
and leading on sustainability. As part of our ambitious
growth plan, we are investing heavily in new technology
to mitigate risk, including non-medicinal sea lice treatment,
environmental monitoring systems and feeding technology.
We capitalize on opportunities for product development and
growth, including circular solutions for waste management
and energy, and continuous improvements in our feed recipes,
based on continuous R&D projects that seek to improve feed
efficiency, fish health and environmental impact.
Bakkafrost runs an ambitious broodstock program around
our two strains: The Faroese strain and the Native Hebridean
strain. Through our research, we have discovered genetic
markers that are linked to specific positive properties, such
as resistance to different deceases, survival, and growth
rates. In the future, we even believe we will find genetic
markers linked to improved resistance to sea lice. For more
details, please refer to the related text on page 122 in Healthy
Salmon.
Our award-winning biogas plant, FÖRKA, is an example of
a large-scale research and development program that has
resulted in a profitable and sustainable business model. By
Research
and Development
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
applying a holistic view on two challenges; the increased
volume of phosphorus-rich biological waste from our
operation and the Faroese diary-farmer’s issue with handling
nitrogen-rich manure from their livestock, the idea emerged
to combine these valuable resources in a biogas plant to
produce renewable energy as well as enriched liquid fertilizer
as a waste product. The latest project at FÖRKA is to combine
CO
2
from the biogas with green hydrogen to form biomethane
to fuel heavy vehicles in the Faroes.
Another example of a holistic and systemic approach to
research and development, is the fully electric workboat,
Grønarók. Developed collaboratively with the Nordic Council
of Ministers, Faroese Government, and SEV (Faroese energy
company), the fully electric workboat operates without
emitting greenhouse gases, powered by batteries charged
during excess renewable power hours. The project is part of a
broader effort to find sustainable energy solutions in remote
areas. Ships and boats in the Faroe Islands have significant
potential to reduce overall GHG emissions. The project is
expected to positively impact both the salmon farming and
Faroese shipping industries.
In 2022 Bakkafrost launched its first products with an
alternative protein. Bakkafrost subsidiary Munkebo Seafood
sells a range of vegan soups containing sustainable vegetable
seaweed. The seaweed comes from the Faroe Islands where
it is natural and native to the surrounding environment. Apart
from being sustainable, seaweed contains a wide range of
vitamins and minerals. All soups also contain legumes, which
is a good plant-based source of protein. Legumes' hearty
texture and special flavor make them a good replacement for
meat.
Growing sustainably is about maximizing value from available
resources. We are focused on harnessing value from every
stage in our value chain, including maximizing ‘nose to tail’ to
ensure every part of the salmon is used and converted into
value. Hence, significant research and development has been
put into our recently established production facility to use
all parts of the salmon. Guts and skin can be converted into
salmon meal and oil for the pet food industry.
In Scotland, we have established a sustainable Innovation
Forum, comprising nominated employees from across the
business. The forum actively integrates sustainability into our
culture and ensures that it is prioritized in decision-making
processes.
For more examples of R&D projects see page 112 and page
113.
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
Bakkafossur
Pioneering Sustainable Aquaculture
On January 7th, 2023, Bakkafossur, one of the largest live-fish
carrier and farming service vessel in the global aquaculture
industry, arrived in the Faroe Islands. With it’s 10,000m
3
capacity, the 109-meter vessel can carry up to 1,000 tonnes
of live salmon for freshwater and sea lice treatment and is
considered a significant upgrade for sustainable operations
in the future.
Bakkafossur is equipped with reverse osmosis technology
for water desalination, with a production capacity of 6,000
tonnes of freshwater per day. This adds considerable
freshwater treatment capacity to Bakkafrost’s operations in
the Faroe Islands.
Freshwater treatment of salmon is an effective and natural
method for restoring gill health and promoting robust
growth. Bakkafossur is also equipped with freshwater sea
lice removal system, which increases biosecurity in line with
Bakka frost’s sustainability strategy. The unique combination
of freshwater treatment with the sea lice removal system
makes the treatment very efficient and gentle to the fish. The
vessel provides options for enclosed treatments and supports
specific selection methods to ensure fish are handled
according to size and health status, thereby strengthening
our approach to biological risk mitigation.
Why is this important
Sustainable and responsible farming is essential for success
in the aquaculture industry. By the end of 2023, 97% of
Bakkafrost’s farming pens were classified as having very
good or good benthic status. Sea lice levels were all-time low,
and the overall health of the fish was strong. The introduction
of Bakkafossur further enhanced Bakkafrost’s capability to
continue its efforts towards sustainable growth.
Since joining the fleet, Bakkafossur has treated 63,000 tonnes
of salmon with freshwater, with a clearance rate for sea lice
of 93%. Mortality during treatment is low, averaging 0.27%.
This innovative capability of treating salmon onboard with
freshwater has proven efficient and is a key factor in securing
long-term health and sustainability for salmon treatment.
These milestones are not only important for sustainable and
healthy farming but also represent key achievements for
continuous and increased farming in the Faroe Islands.
A common challenge in the aquaculture industry is the
treatment of larger fish. Bakkafossur has demonstrated
impressive capabilities in treating large fish for both lice
and disease prevention via freshwater treatment and thus
minimizing the risk for injuries and mortality. The results
are higher mean weights and better quality, which are
instrumental for maintaining a strong market position and
ensuring a consistent and high-quality supply to Bakkafrost’s
customers.
Renewable energy
Bakkafossur is a state-of-the-art vessel that incorporates
renewable hybrid energy technology into its operations.
Equipped with five diesel-electric engines and large batteries,
the vessel achieves an energy efficiency and fuel reduction.
The strategic placement of the engines on the top deck allows
for a swift transition to sustainable energy solutions as they
become available.
Preparing for the future
Bakkafossur represents a significant advancement in salmon
treatment and is preparing Bakkafrost, and the aquaculture
industry as a whole, for future growth and sustainable farming.
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
INCOME STATEMENT
In 2023, the Bakkafrost Group generated gross operating
revenues of DKK 7,141 million, which is a slight increase
compared to DKK 7,130 million in 2022.
The Group achieved higher salmon prices on salmon and
value-added products in 2023 compared to 2022, however
there was a 19% decrease in harvested volumes of salmon
in 2023 compared to 2022, with lower volumes in both the
Faroe Islands and Scotland. The Group harvested a total of
73,006 tonnes gutted weight, compared to 90,603 tonnes in
2022. Sales of value-added products decreased by 15% in
2023. There was a significant increase in external revenue
from the sale of fishmeal and fish oil in 2023 compared to
2022, with a 105% increase in external sales of fishmeal and
fish oil.
The average feed price during 2023 was higher than the
average feed price in 2022. The reason for the increase
in the feed price is the increasing cost of the raw material
for fish oil and fishmeal, which are the main ingredients in
Bakkafrost’s salmon feed. The fluctuations in the feed prices
will be reflected in the production costs for salmon.
Operational EBIT was DKK 1,544 million in 2023, compared to
DKK 1,705 million in 2022. A negative fair value adjustment
of the Group’s biological assets has been recognized in 2023,
amounting to DKK 142 million, compared to a positive
adjustment of DKK 278 million in 2022. The negative fair
value adjustment mostly relates to higher cost.
In 2023, the Group’s associated companies made a net result
to Bakkafrost of DKK 71 million, compared to DKK 58 million
in 2022.
Net interest expenses amounted to DKK -185 million,
compared to DKK -65 million in 2022. Net currency effects
amounted to DKK 3 million, compared to DKK -69 million in
2022.
Net taxes amounted to DKK -193 million, compared to DKK
-346 million in 2022.
The consolidated net profit totalled DKK 955 million in 2023,
compared to DKK 1,344 million in 2022. Earnings per share
totalled DKK 16.14 in 2023, compared to DKK 22.75 in 2022.
DKK 1,000 2023 2022
Operating revenue 7,140,849 7,129,967
Purchase of goods -2,401,063 -2,756,273
Change in inventory and
biological assets (at cost) 141,200 666,550
Salary and personnel expenses -862,670 -831,679
Other operation expenses -1,875,239 -1,990,299
Depreciation -637,209 -537,480
Other income 37,942 24,379
Operational EBIT 1,543,810 1,705,165
Fair value adjustments
of biological assets -141,665 278,392
Income from associates 70,652 57,597
Revenue tax -152,836 -215,001
EBIT 1,319,961 1,826,153
EBT 1,148,351 1,690,335
Taxes -193,135 -346,005
Profit or loss for the period 955,216 1,344,330
STATEMENT OF FINANCIAL POSITION
The Group’s total assets as at end 2023 amounted to DKK
17,841 million, compared to DKK 16,882 million at the end
of 2022.
The Group’s intangible assets amounted to DKK 4,509 million
at the end of 2023, compared to DKK 4,509 million at the
end of 2022. Intangible assets comprise primarily of the
acquisition of Bakkafrost Scotland Ltd., the fair value of
acquired farming licenses in Scotland and the Faroe Islands.
Property, plant, and equipment amounted to DKK 6,220
million at the end of 2023, compared to DKK 5,647 million
at the end of 2022. In 2023, Bakkafrost made investments
in PP&E amounting to DKK 1,060 million, compared to DKK
1,236 million in 2022. The most significant investments,
Bakkafrost carried out in 2023, were in hatcheries, a new
feed line and a cargo airplane. Other investments relate
mainly to maintenance investments.
Right of use assets amounted to DKK 413 million at the end
of 2023, compared to DKK 439 million at the end of 2022.
Investments in associated companies and stocks and shares
amounted to DKK 289 million at the end of 2023, compared
to DKK 234 million at the end of 2022. Deferred tax assets
amounted to DKK 512 million at the end of 2023, compared
to DKK 336 million at the end of 2022.
The Group’s carrying amount (fair value) of biological
assets amounted to DKK 3,336 million at the end of 2023,
compared to DKK 2,938 million at the end of 2022. Included
in the carrying amount of the biological assets is a fair value
adjustment amounting to DKK 741 million, compared to DKK
883 million at the end of 2022.
The Group’s inventories amounted to DKK 1,149 million as at
year-end 2023, compared to DKK 1,074 million as at year-
end 2022. The inventory primarily represents Havsbrún’s
inventory of fishmeal, fish oil and fish feed in addition to
Financial Review
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59
INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
finished VAP products, packing materials and other raw
materials.
The Group’s total receivables amounted to DKK 1,001 million
as at year-end 2023, compared to DKK 985 million as at
year-end 2022.
Cash and cash equivalents at year-end 2023 amounted to
DKK 412 million, compared to DKK 720 million at year-end
2022.
The Group’s equity at the end of 2023 was DKK 10,866
million, compared to DKK 10,396 million at the end of 2022.
The movement in the equity is due to increase of share capital
amounting to DKK 41 million, the positive result of DKK 956
million and a dividend payout of DKK 591 million.
The Group’s total non-current liabilities amounted to DKK
6,228 million at the end of 2023, compared to DKK 5,563
million at the end of 2022. Deferred taxes amounted to DKK
1,953 million, compared to DKK 1,826 million at the end of
2022.
Long-term debt was DKK 3,945 million at the end of 2023,
compared to DKK 3,383 million at the end of 2022.
At the end of 2023, the Group’s total current liabilities were
DKK 747 million, compared to DKK 923 million at the end of
2022.
Trade payable amounted to DKK 388 million, compared to
DKK 479 million at the beginning of the year.
Long- and short-term leasing debt amounted to DKK 397
million at the end of 2023, compared to DKK 460 million at
the end of 2022.
Bakkafrost’s equity ratio was 61% at the end of 2023,
compared to 62% at the end of 2022.
CASH FLOW
The total cash flow from operations in 2023 was DKK 1,023
million, compared to DKK 1,202 million in 2022. The cash
flow from operations in 2023 is primarily due to positive
results. Paid taxes and change in inventory and current debts
had a negative effect on the cash flow from operations in
2023. Cash flow from investment activities amounted to DKK
-1,044 million, compared to DKK -1,255 million in 2022.
For 2023, cash flow from financing amounted to DKK -287
million, compared to DKK 263 million for 2022. The change
in long-term interest-bearing debt of DKK 546 million had
a positive effect on the cash flow from financing in 2023.
Other 2023 figures include dividend paid of DKK -591, lease
payments of DKK -131 and financial expenses of DKK -187
million.
With the established credit facilities, the Group’s liquidity
and financial strength is considered good. Bakkafrost had
undrawn credit facilities of approximately DKK 1,851 million
at the end of 2023.
DKK 1,000 2023 2022
Intangible assets 4,509,334 4,508,704
Property, plant, and equipment 6,633,758 6,085,706
Financial assets 801,186 570,229
NON-CURRENT ASSETS 11,944,278 11,164,639
Inventory 4,484,358 4,012,829
Receivables 1,000,851 984,501
Cash and cash equivalents 411,674 719,603
CURRENT ASSETS 5,896,883 5,716,933
ASSETS 17,841,161 16,881,572
Equity 10,865,854 10,395,813
Deferred taxes 1,952,668 1,825,873
Long-term interest-bearing debt 3,944,498 3,383,289
Long-term leasing debt 331,115 353,355
Non-current liabilities 6,228,281 5,562,517
Trade payables 387,615 478,750
Current tax liabilities 210,367 237,780
Short-term leasing debt 65,848 106,215
Other current liabilities 83,196 100,497
Current liabilities 747,026 923,242
Total liabilities 6,975,307 6,485,759
EQUITY AND LIABILITIES 17,841,161 16,881,572
DKK 1,000 2023 2022
EBIT 1,319,961 1,826,153
Cash flow from operations 1,022,722 1,201,856
Cash flow from investments -1,043,846 -1,254,597
Cash flow from financing -286,805 263,187
Cash and cash equivalents
– opening balance 719,603 509,157
Cash and cash equivalents
– closing balance total 411,674 719,603
HEALTHY BUSINESS
60
HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
Segments and
the Value Chain
FISH FEED HATCHERIESFISH OILFISHMEAL BROODSTOCK BIOGAS
SALES/LOGISTICS
FSV HARVESTING PROCESSINGFARMING
PACKAGING
VALUE CHAIN
7 SEGMENTS
FOF
FRESHWATER FO
FRESHWATER SCT
FARMING FO
FARMING SCT
SERVICES
SALES & OTHER
7 SEGMENTS
FOF
FRESHWATER FO
FRESHWATER SCT
FARMING FO
FARMING SCT
SERVICES
SALES & OTHER
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
The FOF segment consists of the production and sale of
fishmeal, fish oil and fish feed. The production is operated
by Bakkafrost’s subsidiary Havsbrún, located in Fuglafjørður.
Fishmeal and oil are in part used internally to produce fish
feed for the Farming and Freshwater segments. Whenever we
have surplus from the production of fishmeal and fish oil, it
will be sold externally.
Bakkafrost sources marine raw materials to produce high
quality fishmeal and fish oil. In addition to sourcing industrial
fish, unviable to produce for human consumption, we also
source all fish trimmings and fish silage from the Faroese
pelagic fishing industry. The demands to high quality fish-
material combined with our processing technology enable us
to manufacture top-quality fishmeal, fish oil and fish feed.
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. Bakkafrost has strategically
chosen to maintain a substantially higher marine inclusion
in the salmon feed, compared to peers in the industry. 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. Bakkafrost’s strategy is to
have a high fish oil content in the feed, results in salmon with
a high content of omega 3.
VOLUMES
The FOF segment has maintained a consistent intake of raw
materials for fishmeal and fish oil production over the past few
years. In 2023, there was a considerable increase in the intake
of raw materials, compared to 2022. The produced fishmeal
and oil were partly used internally for feed production, and
partly exported. In 2023, the FOF segment sourced 467,037
tonnes of raw material, compared to 297,814 tonnes in 2022,
which corresponds to an increase of 57%.
The production of fishmeal in 2023 was 101,976 tonnes,
compared to 65,395 tonnes in 2022, an increase of 56%. The
production of fish oil in 2022 was 34,786 tonnes, compared
to 23,862 tonnes in 2022, an increase of 46%. In 2024
Bakkafrost expects continued high production volumes of
fishmeal and normalisation of fish oil production volumes.
The FOF segment sold 127,775 tonnes of feed in 2023,
compared to 127,840 tonnes in 2022. Bakkafrost used
124,321 tonnes of sold feed in 2023 internally, corresponding
to 97%. The internal use in 2022 was 123,118 tonnes,
corresponding to 96%.
FINANCIAL PERFORMANCE
Total revenues for the FOF segment in 2023 amounted to
DKK 3,489 million, compared to DKK 2,433 million in 2022,
an increase of 43%.
The external operating revenue for the FOF segment
amounted to DKK 1,576 million in 2023, compared to DKK
743 million in 2022. The increase in external revenue from
2022 to 2023 was mainly due to higher external sale of fish
feed and fishmeal.
The internal revenue in 2023 amounted to DKK 1,912 million,
compared to DKK 1,691 million in 2022. The internal revenue
comprises the sales of feed to Bakkafrost’s farming activities,
both in Scotland and the Faroe Islands
Operational EBIT was DKK 791 million in 2023, compared to
DKK 411 million in 2022, and the operational EBIT margin
was 23% in 2023, compared to 17% in 2022.
DKK 1,000 2023 2022 Change
Financial
Total revenue 3,488,735 2,433,494 43%
EBIT 862,146 468,643 84%
Operational EBIT 791,461 411,289 92%
Operational EBIT margin 23% 17%
Volumes (tonnes)
Total Feed sold 127,775 127,840 0%
- Feed internal sale FO 84,474 79,262 7%
- Feed internal sale SCT 39,847 43,856 -9%
- Feed external sale 3,454 4,722 -27%
Fishmeal external sale 63,063 34,667 82%
Fish oil external sale 18,924 5,285 258%
Received raw material 467,037 297,814 57%
Fishmeal production 101,976 65,395 56%
Fish oil production 34,786 23,862 46%
FOF Segment
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62
HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
There are two similar Freshwater segments – one in the Faroe
Islands and one in Scotland. The two Freshwater segments
both include broodstock and smolt production in hatcheries
on land. In the broodstock operation, eggs are produced
from breeding self-owned salmon strains. Eggs are sold to
the hatcheries who in turn produce from egg to smolt, which
are sold to the Farming operations in the Faroe Islands and
Scotland. The Freshwater segments rely on feed from the
FOF segment and certain services provided by the Services
segment, such as smolt transportation and waste handling for
biogas production.
Bakkafrost has broodstock programs in the Faroe Islands
and Scotland to maximize biosecurity, breeding, and
genetics. These programs enable accelerated development
of more resilient eggs, reducing disease risks and protecting
intellectual capital.
Bakkafrost has six hatcheries in the Faroe Islands, located
in areas with abundant clean fresh water. The hatcheries
use closed-water circulation systems with biofilters and are
housed indoors with high biosecurity to minimize external
factors.
Bakkafrost is replacing current hatcheries in Scotland with
two large, modern RAS technology hatcheries. The Applecross
hatchery is operational and will expand in 2024 to produce
7 million smolt at 500g. The Fairlie hatchery will produce
around 8 million smolt at 500g. Bakkafrost aims to produce
all smolts for release at an average weight of 500 grams by
2024 in the Faroe Islands and by 2027 in Scotland.
Freshwater
Segments
VOLUMES
In 2023, 14.2 million smolts were released into the sea, which
is slightly lower than the 14.4 million transferred in 2022.
FINANCIAL PERFORMANCE
In 2023, the operating revenue amounted to DKK 586 million,
which represents a 22% increase compared to the DKK 480
million operating revenue in 2022. The operational EBIT per
kg of released smolt in 2023 was DKK 27.95, showing a 26%
decrease from the DKK 37.88 achieved in 2022.
FAROE ISLANDS
DKK 1,000 2023 2022 Change
Financial
Total revenue 586,388 480,060 22%
EBIT 156,730 188,242 -17%
Operational EBIT 156,730 188,242 -17%
Operational EBIT/kg (DKK)* 27.95 37.88 -26%
Operational EBIT margin 27% 39%
Volumes
Smolt Released - Pieces 14,172 14,417 -2%
Smolt Released - Avg Size (g) 396 345 15%
* Calculated EBIT per KG released smolt
SCOTLAND
DKK 1,000 2023 2022 Change
Financial
Total revenue 141,803 123,858 14%
EBIT 9,174 -23,834 N/A
Operational EBIT 9,174 -23,834 N/A
Operational EBIT/kg (DKK)* 8.75 -20.24 N/A
Operational EBIT margin 6% -19%
Volumes
Smolt Released - Pieces 8,993 11,008 -18%
Smolt Released - Avg Size 117 107 9%
* Calculated EBIT per KG released smolt
VOLUMES
In 2023, 9.0 million smolts were released into the sea,
compared to 11.0 million transferred in 2022.
FINANCIAL PERFORMANCE
In 2023, the operating revenue amounted to DKK 142 million,
which represents a 14% increase compared to the DKK 124
million operating revenue in 2022. The operational EBIT per
kg of released smolt in 2023 was DKK 8.75, compared to
-20.24 in 2022.
HEALTHY BUSINESS
63
INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
Fish farming involves growing salmon in the marine
environment from smolt to harvest-ready salmon. The Group
has marine farming licenses in the Faroe Islands and Scotland,
which are reported as two separate segments - Farming Faroe
Islands and Farming Scotland. The Farming segments rely on
feed from the FOF segment and several services provided
by the Services segment. These include fish transportation,
treatments, net cleaning, harvest, etc. The Farming segments
also rely on sales services provided by the Sales & Other
segment.
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. Following 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.
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 Scotland, 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 13
months on average in the Faroe Islands and for around 16-
22 months in Scotland. During this period, the fish grows to
a target weight of approx. 6.3 kg LW in the Faroe Islands and
approx. 5.9 kg LW in Scotland.
Farming
Segments
VOLUMES
The total volumes harvested in Faroe Islands in 2023 were
52,408 tonnes gutted weight compared to 66,686 tonnes
gutted weight in 2022 – a change in volume of -21%.
FINANCIAL PERFORMANCE
In 2023, the operating revenue for the Farming Faroe Islands
segment was DKK 3,312 million compared to 4,951 million
– a decrease of 33%. The operational EBIT/kg for 2023 was
DKK 10.51 compared to DKK 22.71 – a reduction of 54%.
FAROE ISLANDS
DKK 1,000 2023 2022 Change
Financial
Total revenue 3,311,614 4,950,575 -33%
EBIT 359,977 1,468,570 -75%
Operational EBIT 550,793 1,514,705 -64%
Operational EBIT/kg (DKK) 10.51 22.71 -54%
Operational EBIT margin 17% 31%
Volumes
Harvested volumes (tgw) 52,408 66,686 -21%
VOLUMES
The total volumes harvested in Scotland 2023 were 20,598
tonnes gutted weight compared to 23,917 tonnes gutted
weight in 2022 - a change in volume of -14%.
FINANCIAL PERFORMANCE
In 2023, the operating revenue for the Farming Scotland
segment was DKK 1,453 million compared to 1,470 million –
a decrease of 1%. The operational EBIT/kg for 2023 was DKK
-7.53 compared to DKK -9.46 – an increase of 20%.
SCOTLAND
DKK 1,000 2023 2022 Change
Financial
Total revenue 1,452,652 1,469,824 -1%
EBIT -258,777 -116,503 -122%
Operational EBIT -155,092 -226,190 31%
Operational EBIT/kg (DKK) -7.53 -9.46 20%
Operational EBIT margin -11% -15%
Volumes
Harvested volumes (tgw) 20,598 23,917 -14%
HEALTHY BUSINESS
64
HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
The Services segment provides several services to the Group.
The segment operates a fleet of large Farming Service Vessels
(FSV), harvesting services, styrofoam boxes and converts
organic waste into energy.
FSV consists of nine fully owned farming service vessels.
These vessels are leased to the farming segments - eight
are leased to the Faroe Islands and one to Scotland. In
addition, Scotland has external leasing of several vessels. The
services provided by the vessels include transportation, lice-
treatment, net-cleaning and other operations.
Bakkafrost has four harvest factories, two in the Faroe Islands
and two in Scotland.
Bakkafrost has one packaging plant, which is located and
integrated into the Glyvrar processing facility, providing both
packaging for internal use in the Faroe Islands and to external
customers.
The biogas plant uses waste products from our farms and
other fish and dairy farmers to produce renewable energy
and fertilizer.
VOLUMES
The biogas plant Förka produced 11,404 Mwh of energy
in 2023, compared to 15,284 Mwh in 2022 – a change in
volume of -25%.
FINANCIAL PERFORMANCE
In 2023, the operating revenue for the Services segment was
DKK 783 million, compared to DKK 794 million in 2022 – a
decrease of 1%. The operational EBIT/kg for 2023 was DKK
0.60, compared to DKK 0.16 in 2022 – an increase of 268%.
Services
DKK 1,000 2023 2022 Change
Financial
Total revenue 782,865 793,496 -1%
EBIT 43,550 14,712 196%
Operational EBIT 43,550 14,685 197%
Operational EBIT/kg (DKK)* 0.60 0.16 268%
Operational EBIT margin 6% 2%
Volumes
Total Energy produced (Mwh) 11,404 15,284 -25%
* Calculated EBIT per KG harvest for the Group
HEALTHY BUSINESS
65
INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
The Sales & Other segment consists of all external sales of
fresh salmon and production and sales of VAP (Value-Added-
Products). The segment also provides logistical services,
administration, marketing, and branding for the Group. The
segment mainly relies on salmon from the farming segment.
The segment is actively enhancing the overall sales
performance and value optimization of salmon product
portfolios. This entails coordinating production schedules,
synchronizing sales projections, strategically responding to
market dynamics, and ensuring products are tailored to meet
customer needs.
Bakkafrost has a long-term strategy to produce and sell
value-added products (VAP), representing around 40% of
the Faroese harvested volumes. The sales of VAP products
stabilize the Group’s earnings through fixed-price contracts,
which are less volatile than spot market prices. In 2024,
Bakkafrost adjusted its VAP strategy due to changes in the
Faroese revenue tax, reducing exposure. The signed contracts
now cover 9% of the expected harvest volumes for the Faroe
Islands and Scotland combined.
The most important markets are the European, US, and
Chinese markets. Generally, the whole fish from the Faroe
Islands is sold on the spot market. The VAP products are sold
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 various markets.
In 2024, FarCargo, a subsidiary of Bakkafrost, will utilise its
aircraft to transport fresh salmon directly from the Faroe
Islands to the US market within few hours.
VOLUMES
Total volumes harvested in 2023 for Bakkafrost Group were
73,006 tonnes gutted weight, compared to 90,603 tonnes
gutted weight in 2022 – a change in volume of -19%. In the
Faroes the split between VAP and Fresh was 43% VAP and
57% Fresh, compared to 40% VAP and 60% fresh in 2022. VAP
produced 22,650 tonnes gutted weight in 2023, compared to
26,747 tonnes gutted weight in 2022 – a change in volume
of -15%.
FINANCIAL PERFORMANCE
In 2023, the operating revenue for the Sales & Other segment
was DKK 9,273 million, compared to DKK 10,589 million
in 2022. The total revenue for the Sales & Other segment
declined in 2023 compared to 2022, primarily due to reduced
volumes.
Sales & Other
DKK 1,000 2023 2022 Change
Financial
Total revenue 9,272,817 10,589,444 -12%
EBIT 210,359 -172,474 N/A
Operational EBIT 210,393 -172,531 N/A
Operational EBIT/kg (DKK) 2.88 -1.90 N/A
Operational EBIT margin 2% -2%
Volumes
Harvested Volumes (tgw) 73,006 90,603 -19%
Farming FO transferred
to VAP (tgw) 22,787 26,401 -14%
VAP produced (tgw) 22,650 26,747 -15%
Harvested volumes used
in VAP production FO 43% 40%
Harvested volumes
sold fresh/frozen FO 57% 60%
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
All salmon from Bakkafrost is sold under the Bakkafrost main
brand. Depending on the origin of the salmon, customer seg-
ment and product or quality, co-branded sub-brands are used.
FAROE ISLANDS SCOTLAND
B2C B2B
B2C B2B
CO-BRANDING:
BY BAKKAFROST
ORIGIN
CORPORATE
BRAND
SEGMENT
BAKKA
SALMON
from the Faroe Islands
BAKKA
SALMON
from Scotland
Bakkafrost Brands
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
FAROE ISLANDS
SCOTLAND
Western Europe
69%
North America
19%
Asia
9%
Eastern Europe
3%
Rest of the World
<1%
Markets Served
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
Building long term relationships with our customers is
important for maintaining our position as a preferred
supplier of world class salmon. We are committed to
building long term partnerships and delivering outstanding
customer service and work with our customers to introduce
new product developments and certifications. We conduct
an annual customer feedback survey and hold a Customer
Summit every two years where we welcome customers to
visit our facilities.
95% of Bakkafrost customers in 2023 were
either "satisfied", "more than satisfied”, or
“very satisfied".
Our customer survey showed an average customer rating of
8.3 and a net promoter score of 36. Even though our NPS
score is still on a high level, we have seen a drop in 2022 and
2023, which seems to reflect the salmon prices remaining
substantially higher than the previous five-year average. Our
analysis indicates a negative association between the level
of customer satisfaction and the degree of price tolerance
exhibited by our customers.
Bakkafrost has been growing for a number of years and this
has accelerated since the listing on the Oslo Stock Exchange
in 2010, and more recently with the acquisition of companies
in the US, UK, Denmark and France. In line with production
growth, we continue to expand into new markets and increase
sales.
CUSTOMER NET PROMOTER SCORE
100
75
50
25
0
10
8
6
4
2
0
2019 2020 2021 2022 2023
NPS Score (-100-+100)
Average customer rating (1-10)
55.6
8.8 8.9 8.6 8.5 8.3
53.3 51.0 42.9 36.1
Customer Satisfaction
CUSTOMER SCORE OF BAKKAFROST
SALMON’S QUALITY
Reflecting the views of customers representing 57% in 2021, 47% in 2022
and 55% of the revenue in 2023.
36%
4%
59%
2023:
1% Not Satisfied
4% Somewhat satisfied
36% Satisfied
59% More than or very satisfied
2022
0% Not satisfied
8% Somewhat satisfied
31% Satisfied
62% More than or very satisfied
2021
0% Not satisfied
2% Somewhat satisfied
33% Satisfied
65% More than or very satisfied
2020
0% Not satisfied
4% Somewhat satisfied
25% Satisfied
71% More than or very satisfied
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
Strenghtening our Customer Value Proposition
The Bakkafrost subsidiary FarCargo has purchased a Boeing
757-200 cargo aircraft, a 47-meter airplane with a flight
range of 7,000 kilometres, able to carry some 35 tonnes of
cargo.
The maiden trip was 5 March 2024 and the plane will fly
regularly between Vágar, the Faroe Islands and New York,
delivering fresh high-quality salmon directly to the USA.
Compared to the current transportation routes through various
airfields in Europe, the new route will ensure prolonged shelf-
life due to shortened transportation, an unbroken cooling
chain and significant reduction in GHG emissions.
FarCargo will offer both Faroese and international businesses
options to buy cargo space. Bakkafrost expects that the
Faroese market will benefit from this new direct route, and
that it will provide new opportunities in the Faroe Islands.
In 2023, 69% of Bakkafrost’s salmon was exported to the
Western European market, and particularly Bakkafrost
Scotland exports a significant part of its harvest to the
European continent.
2023 also saw the company’s world-class Native Hebridean
salmon continue to claim several industry accolades with
further success at the Great Taste awards, the Great British
Food Awards, a Primary Producer Award at the prestigious
Highlands & Islands Food and Drink Awards and further
recognition at the Scottish Retail Food & Drinks Awards.
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
Market Review
WORLD SEAFOOD PRODUCTION (FOR HUMAN CONSUMPTION) AND CONSUMPTION PER CAPITA
kilo/capita
million tonnes
Per capita - From AquaculturePer capita - From FisheriesWorld seafood for human consumption
-
5
10
15
20
120
125
130
135
140
145
150
155
160
165
170
2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E
Source: Kontali, FAO
SEAFOOD CONSUMPTION
In 2023, the global salmon sector experienced a slight overall
decline of -0.5% year-on-year, contrasting with projections
for the shrimp sector’s global farming to conclude with a
closer to 4.5% increase.
Looking back to 2022, the global farming of all shrimp
species saw a notable growth of 6%, while the production of
all farmed salmonids, including small/portion trout, remained
stagnant with 0% growth in volume.
Reflecting on the seafood market in 2021, the combined
production of capture fisheries and aquaculture amounted to
approximately 182 million tonnes. Around 162 million tonnes
were utilized for food consumption, resulting in an average
per capita seafood consumption of about 20 kg (live weight
equivalent). The decline in wild catch volumes, limited
production growth, and consumption during this period can
be directly attributed to the reduced demand stemming from
the COVID-19 pandemic.
Backtracking further to 2013, salmon and trout emerged
as the most significant internationally traded seafood
commodities in value, contributing to about 17 per cent of
the total value of globally traded seafood products in 2022.
Their combined export value nearly reached 21 billion EUR.
Shrimps and prawns secured the second position with a value
of just above 20 billion EUR, followed by groundfish (such as
hake, cod, haddock, and Alaska pollock) and tuna.
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
MAIN MARKETS AND PRICE TRENDS 2023
Worldwide market supply of farmed Atlantic salmon fell by
another 2% in 2023 (from 2.83 million tonnes WFE in 2021,
and a two-step decline in 2022 and 2023: – both by −2%, to
2.77 million tonnes WFE in 2023). The main reason for this
trend is a combined supply shortage and a lack of available
harvest volumes of the species. This has affected both the
first-half and second-half trends, with a slightly stronger
decline in the first half (−2.9%) than in the second half (−1.8%).
Like in 2021, warfare and regional economic conflicts have
impacted both salmon trade logistics and trade relations, but
major differences in market supply to the regional market
blocks are primarily impacted by the strength of demand and
consumption drivers.
In addition to a slight normalization of the supply of Atlantic
salmon to Russia, resulting in an 18% increase over 2022
(but still 30% below 2021), the major markets that did show
volume growth in 2023 were China/Hong Kong (+39%), and
Brazil (+7%).
Growth in China/Hong Kong primarily results from a later and
steeper normalization to a post-COVID situation with a strong
underlying demand. The growth in Brazil was lower, and the
8,500 tonnes WFE increase is a return to the level seen in
2021, while the rest is growth to a new and unprecedented
consumption level of around 116,500 tonnes WFE, which is
the highest ever seen for Brazil, both in absolute volume and
per capita.
Markets within EU+UK continued their decline in 2023, as also
seen in 2022, and over the two-year period, the per capita
consumption has thus declined from 2.5 to 2.3 kilo WFE (−7%).
The U.S. market did end with a slight increase (+0.5%),
following a long and continuous growth trend. The lack of
growth has primarily been driven by a decline of more than
−15% in the supply from North American harvests and an
additional decline in supply from Chile, while the continued
increase in shipments from Europe by 10% still allowed for
this marginal growth.
European spot prices (Nasdaq 3-6 kg) for Atlantic salmon in
2023 ended at 8.1 EUR per kg, the same level as in 2022. In
real terms, considering that 2023 has brought along notable
inflation in most markets and specifically in the EUR area,
this implies a lower market price during 2023 versus 2022.
RELATIVE CHANGE IN GLOBAL SUPPLY OF ATLANTIC SALMON AND EUROPEAN SPOT PRICES
100%
80%
60%
40%
20%
0%
-20%
-40%
-60%
2018 2019 2020 2021 2022 2023
Change in European
spot prices - fresh
Atlantic salmon
(Nasdaq 3-6 kg in
NOK) from the
previous year
Change in global
market supply of
farmed Atlantic
salmon from the
previous year
PER CAPITA CONSUMPTION OF FARMED ATLANTIC SALMON FOR SELECTED MARKETS
2014 2015 2016 2017 2018 2019 2020 2022E 2023E2021E
0
.5
1
.0
1
.5
2
-0
2
-5
3.0
EU & UK
USA
Russia
China +
Hong Kong
Brazil
Japan
Source: Kontali, FAO
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
US MARKET
In 2023, the U.S. market, following a prolonged and
consistent growth trend, experienced a slight increase of
0.5%. The limited growth was primarily influenced by a more
than 15% decline in supply from North American harvests
and an additional decrease in supply from Chile. However,
a continued 10% increase in European shipments facilitated
this marginal growth. This development underscores the
resilience and demand for the Atlantic salmon market in the
face of a “global shortage”, reaffirming its popularity and
increasing significance in the United States.
With a population of 335 million, the consumption of Atlantic
salmon in 2023 reached 654,000 tonnes WFE. This translates
to a per capita consumption of approximately 2.0 kg WFE,
signifying an average of 6-7 meals per capita yearly. Salmon
solidified its position as the second-most consumed seafood
species among US consumers, with shrimp maintaining its
dominance as the top choice.
SUPPLY OF ATLANTIC SALMON TO THE US MARKET
Country 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Chile 214,700 224,100 217,300 220,400 267,200 284,300 325,100 349,600 362,000 359,100
Canada 55,000 92,900 100,900 92,100 93,800 94,300 92,900 104,300 88,800 76,200
Norway 39,900 51,200 55,700 68,400 67,300 68,300 69,100 82,900 99,300 103,500
Faroe Islands 17,100 14,700 16,900 14,800 12,800 18,500 14,400 20,800 23,300 26,000
United Kingdom 20,400 16,300 12,700 18,000 16,100 20,300 11,500 17,100 9,200 14,300
USA 16,200 13,800 7,700 13,100 7,300 8,100 8,800 6,200 3,500 7,900
Other 10,800 14,600 16,100 19,200 22,300 29,400 40,100 53,900 64,800 67,100
Total 374,100 427,600 427,300 446,000 486,800 523,200 561,900 634,800 650,900 654,100
SUPPLY OF ATLANTIC SALMON TO THE US MARKET
Tonnes WFE
700,000
600,000
500,000
400,000
300,000
200,000
100,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Other
USA
United Kingdom
Faroe Islands
Norway
Canada
Chile
Source: Kontali, FAO
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
EUROPEAN MARKET
In 2023, the European Union market, including the United
Kingdom, experienced a 5% decline in farmed Atlantic
salmon, equivalent to 60,000 tonnes WFE, resulting in a total
supply of 1.2 million tonnes WFE. Over the two-year period,
per capita consumption decreased from 2.5 to 2.3 kilos WFE,
representing a 7% decline or 80,000 tonnes WFE. This trend
must be considered in the context of limited production
growth and an increasing demand from other salmon markets.
Germany, France, and the United Kingdom, collectively
accounting for approximately 50% of the total consumption,
emerged as the largest salmon market in Europe. The trade
flow is also characterized by significant salmon processing
hubs, such as Poland, Denmark, and the Netherlands.
Noteworthy supply growth was observed in Italy and Spain
(Southern Europe) over the past decade.
While inflation and the rising cost of living have impacted
demand and market dynamics for salmon, sales to both
retail or foodservice-segments have demonstrated resilience
and remain robust. Within the EU+UK market, the current
situation can accurately be described as having “insufficient
availability.” Industry participants are compelled to swiftly
adapt to this challenging scenario to maintain profitable.
SUPPLY OF ATLANTIC SALMON TO EUROPEAN (EU+UK) MARKET
Country 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Norway 834,600 912,200 860,200 841,400 910,800 944,500 995,600 1,085,500 1,071,200 1,038,800
United Kingdom 117,800 121,100 115,400 124,900 108,100 142,300 152,500 162,800 139,600 128,300
Chile 50,500 44,900 53,900 42,500 40,700 36,200 40,900 28,400 32,800 35,500
Faroe Islands 32,300 20,400 28,400 27,800 20,600 30,800 34,400 50,600 59,000 51,700
Other/Re-export 30,100 27,700 16,900 17,100 25,700 23,200 31,500 40,500 38,900 51,200
Total 1,005,100 1,070,900 1,041,000 1,019,500 1,054,500 1,130,600 1,191,900 1,286,800 1,263,700 1,203,100
SUPPLY OF ATLANTIC SALMON TO EUROPEAN (EU+UK) MARKET
Other/Re-export
Faroe Islands
Chile
United Kingdom
Norway
200,000
0
400,000
600,000
800,000
1000,000
1,200,000
1,400,000
2021 2022 2023E2014 2015 2016 2017 2018 2019 2020
Source: Kontali, FAO
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
CHINA AND HONG KONG
The growth in China and Hong Kong can be attributed
primarily to a delayed and more pronounced normalization
following the post-Covid situation, driven by robust
underlying demand. The significant 39% increase, amounting
to 36,000 tonnes WFE in 2023, needs to be understood
in the context of the Chinese government’s unveiling of a
comprehensive relaxation of its stringent “Zero Covid” policy
in December 2022.
In terms of the value of the trade to China/Hong Kong
(exports), the progress has been even more remarkable,
surpassing 1.2 billion U.S. dollars in 2023. Traditionally, the
supply to China has consisted mainly of fresh whole salmon
and larger sizes (6+ kg), with the foodservice segment
accounting for a substantial share of consumption. However,
due to the limited availability of large-sized salmon, there
has been a greater acceptance of receiving 5+ kg salmon in
both China/Hong Kong and other Asian markets.
Land-based RAS plants and offshore salmon projects are
currently under construction or in large-scale testing phases.
Although there is limited domestic production of Atlantic
salmon in China, there is a growing trend in trout farming,
which is being sold and labelled as salmon in accordance with
the regulations set by The China Fisheries Association.
SUPPLY OF ATLANTIC SALMON TO CHINA AND HONG KONG
Country 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Norway 34,140 31,110 16,480 17,860 30,920 42,990 32,550 44,770 42,990 61,880
Chile 19,960 18,270 29,280 27,790 44,770 45,540 28,580 15,110 23,920 37,640
United Kingdom 16,430 14,920 12,250 12,660 12,370 10,900 3,300 7,100 3,720 4,800
Denmark 350 130 80 340 330 320 230 60 30 790
Australia 940 6,420 1,360 9,630 6,770 7,590 10,700 13,990 13,750 16,030
Faroe Islands 11,050 9,520 10,410 8,730 10,620 14,690 6,200 6,580 6,340 5,270
Canada 280 2,430 5,790 2,120 5,090 1,110 640 320 480 690
Others 3,240 2,570 12,220 18,590 800 970 880 1,390 1,310 1,970
Total 86,390 85,370 87,870 97,720 111,670 124,110 83,080 89,320 92,540 129,070
SUPPLY OF ATLANTIC SALMON TO CHINA AND HONG KONG
140,000
12
0,000
1
00,000
80,000
60,000
40,000
20,000
0
Other
Canada
Faroe Islands
Australia
Denmark
United Kingdom
Chile
Norway
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Source: Kontali, FAO
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
SUPPLY OF FARMED ATLANTIC SALMON FROM
THE FAROE ISLANDS
Over the past decade, the Faroese salmon industry has
demonstrated unparalleled biological performance, with
the lowest loss rates and consistently high average harvest
weights compared to other producing regions. This success
has resulted in the industry achieving the highest smolt
yield in the global salmon sector. The substantial growth in
production on the Faroe Islands can be attributed to significant
investments in smolt facilities and the implementation of a
large smolt strategy – that enables increased stocking and
turnover of biomass in the sea.
However, the Faroese industry has encountered biological
challenges, including fish health issues such as gill disease,
stricter regulations, elevated levels of sea lice, and occasional
production disruptions due to adverse weather conditions.
Despite achieving a record year in 2021, with Atlantic salmon
export volume surpassing 105,000 tonnes WFE, sales have
declined to below 90,000 tonnes WFE in 2023.
Faroese exports witnessed a substantial shift in trade
flow in 2022, which was attributed to Russia’s invasion of
Ukraine. With sales suspended in Russia, the European and
U.S. markets collectively accounted for over 80% of the total
supply volume, reaching market shares not seen since 2011.
Notably, in 2023, the U.S. market experienced a 3,000-tonne
WFE increase, while sales to the EU and UK declined by close
to 7,000 tonnes WFE.
Source: Kontali, FAO
SUPPLY OF ATLANTIC SALMON FROM THE FAROE ISLANDS TO TOP 5 MARKETS
Country 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Russia 15,465 25,660 19,798 24,096 23,812 18,276 19,465 23,665 2,468 -
EU+UK 32,255 20,372 28,384 27,793 20,629 30,773 34,354 50,576 58,967 51,700
USA 17,105 14,671 16,908 14,820 12,829 18,469 14,392 20,812 23,305 26,000
China / Hong Kong 11,055 9,522 10,401 8,722 10,625 14,690 6,204 6,584 6,346 5,400
Japan 750 830 452 690 582 870 658 525 501 500
ASEAN 2,351 1,946 942 834 279 343 799 702 1,247 1,600
Middle East 908 458 315 784 1,198 1,352 735 349 3,713 700
All other markets 1,472 1,302 881 1,572 837 1,673 2,709 3,210 2,060 2,900
Total 81,361 74,761 78,081 79,312 70,790 86,445 79,315 106,423 98,607 88,800
SUPPLY OF ATLANTIC SALMON FROM THE FAROE ISLANDS TO TOP 5 MARKETS
All other markets
Middle East
ASEAN
China / Hong Kong
Japan
USA
EU & UK
Russia
120,000
10
0,000
80,000
60,000
40,000
20,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
GLOBAL SUPPLY OF ALL SALMONIDS
GLOBAL SUPPLY OF ALL FARMED AND WILD SALMONIDS
Country 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Atlantic salmon 2,230,000 2,318,500 2,161,400 2,293,500 2,395,650 2,577,250 2,712,900 2,893,800 2,863,600 2,796,700
Small trout 550,600 565,600 610,600 626,500 660,400 685,100 718,400 741,800 765,000 789,200
Chum 321,900 338,100 280,900 261,100 268,600 229,000 164,800 167,200 208,500 208,500
Pink 307,100 398,300 353,200 447,900 591,400 525,100 279,400 648,000 258,300 695,700
Large trout 303,100 303,100 303,100 303,100 303,100 303,100 303,100 303,100 303,100 303,100
Sockeye 173,700 190,300 183,000 173,700 171,600 178,500 138,900 154,200 214,100 167,300
Coho 199,800 192,900 154,100 201,500 219,900 240,500 237,800 246,300 277,700 329,000
Chinook 18,800 20,900 19,200 19,900 19,800 20,300 21,500 21,600 19,800 20,400
Total 4,105,000 4,327,700 4,065,500 4,327,200 4,630,450 4,758,850 4,576,800 5,176,000 4,910,100 5,309,900
GLOBAL SUPPLY OF ALL FARMED AND WILD SALMONIDS
Chinook
Coho
Sockeye
Large trout
Pink
Chum
Small trout
Atlantic salmon
6,000,000
5,
000,000
4,
000,000
3,
000,000
2,
000,000
1,
000,000
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Source: Kontali, FAO
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
GLOBAL HARVEST OF FARMED ATLANTIC
SALMON
Norway is the world’s largest producer of Atlantic salmon,
contributing to 53% of the global production in 2023. In recent
years, the new MAB (Maximum Allowable Biomass) capacity,
facilitated by the traffic-light system and new development
licenses, has enabled increased stocking and growth. However,
stringent sea lice regulations and high treatment frequency
have impacted productivity and the smolt yield potential.
Currently, the MAB peak utilization is lower than seen for
the last decade, with production experiencing a significant
decline of nearly 40,000 tonnes WFE in 2023.
As the second-largest Atlantic salmon producer, Chile
contributed 27% to global production in 2023. Having
rebounded from the ISA crisis in 2008-2009 and overcoming
challenges like the Algae bloom crisis in 2016, the Chilean
industry has consistently improved its key production
parameters. After reaching an all-time high harvest volume in
2020, production in 2021 and 2022 remained stable above
720,000 tonnes WFE. The harvest of 766,000 tonnes of WFE
in the past year fell slightly short of the 2020 production
record. No new farming sites are expected to be granted (i.e.
Region 12).
In Europe, growth prospects were hampered by fish health
and treatments in the United Kingdom, Faroe Islands, and
Iceland, resulting in a combined decline in harvest volume
of just over 20,000 tonnes WFE in 2023. North America
experienced a decline in production output of approximately
24,000 tonnes due to stricter regulations and the revocation
of farming sites on the west coast. There were no significant
increases from other regions or new production technologies
such as offshore or land-based.
Kontali’s best estimate for FY 2024 indicates a limited global
growth rate of 2 – 3%. This estimate considers substantial
losses in Norway in Q4 2023, stemming from issues with
jellyfish and other various biological challenges related to
production in the sea.
Source: Kontali, FAO
THE GLOBAL HARVEST QUANTITY OF ATLANTIC SALMON
Country 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2024E
Norway 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 1,479,300 1,525,100
Chile 582,900 598,200 504,400 564,200 660,100 690,300 778,500 718,300 753,300 766,000 731,200
UK 170,500 166,300 157,400 177,200 152,100 190,500 178,300 199,200 160,800 153,700 167,600
North America 119,000 155,400 168,500 158,700 157,600 157,500 157,200 158,500 152,700 128,600 133,500
Faroe Island 82,700 75,600 77,300 80,300 71,700 86,600 80,600 105,500 99,600 89,400 103,000
Ireland 12,300 15,700 15,800 17,000 14,300 15,500 15,800 15,900 16,400 14,500 16,500
Australia 42,000 53,600 49,600 63,100 62,300 60,900 82,800 87,800 88,500 90,000 91,200
Iceland 4,400 3,600 8,100 11,600 13,600 24,500 31,200 41,500 42,900 38,700 47,600
Russia 14,500 13,600 5,000 8,600 5,400 11,400 10,500 23,000 22,000 23,600 22,500
Others 300 300 300 300 350 350 400 500 300 300 700
Landbased RAS/HFT 2,500 2,000 3,800 4,600 4,800 6,300 7,600 10,100 10,100 12,500 21,600
*Total 2,229,100 2,317,900 2,161,000 2,293,000 2,402,650 2,577,850 2,712,500 2,896,500 2,863,700 2,796,600 2,860,500
THE GLOBAL HARVEST QUANTITY OF ATLANTIC SALMON
Landbased RAS/HFT
Others
Russia
Iceland
Australia
Ireland
Faroe Island
North America
UK
Chile
Norway
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2024E
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
HEALTHY BUSINESS
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
TOP 15 – FARMING COMPANIES (SALMONIDS)
In 2022, the world’s largest 15 salmon farming companies
harvested approximately 2,3 million tonnes WFE of
salmonids (Atlantic Salmon, Coho Salmon, Chinook, Large
Trout), representing 66% of the total harvest quantity. In
Norway, these companies comprised 65% of the total harvest
and 72 % in Chile.
TOP 15 SALMON FARMING COMPANIES IN 2022
(HARVEST VOLUME, ALL FARMED SALMONID SPECIES)
Group Head off. Total Norway UK Chile North Am. Faroe Isl. Australia Other
MOWI* NO 525,000 326,000 54,000 73,000 46,000 9,000 17,000
SALMAR** NO 292,000 254,000 20,000 18,000
AQUACHILE CL 230,000 230,000
LERØY SEAFOOD GROUP *** NO 214,000 194,000 20,000
CERMAQ GROUP NO 211,000 87,000 106,000 18,000
COOKE AAQUACULTURE**** CA 162,000 31,000 20,000 67,000 44,000
BAKKAFROST FO 101,000 27,000 74,000
AUSTRALIS MAR SEAFOOD CL 95,000 95,000
GRIEG SEAFOOD NO 91,000 68,000 23,000
MULTI X CL 87,000 87,000
NORDLAKS NO 64,000 64,000
SALMONES BLUMAR CL 56,000 56,000
SALMONES CAMANCHACA CL 54,000 54,000
NOVA SEA NO 49,000 49,000
SALMONES AUSTRAL CL 45,000 45,000
Sum Top 15 2,276,000 1,042,000 152,000 766,000 154,000 83,000 44,000 35,000
Global harvest - Farmed Salmonids 3,446,605 1,592,500 164,800 1,061,750 162,200 99,600 94,500 271,255
Share 66% 65% 92% 72% 95% 83% 47% 13%
*MOWI: Including Western Ross Fisheries (UK), acquired in 2022 and Arctic Fish (IS) 51,28% acquired in 2022. MOWI has 48% ownership in Nova Sea, which
is not included.
**Salmar: Including NTS and NRS acquired in 2022 and 50% of harvest volumes from Scottish Seafarms. Volume from part ownership in Refsnes not included.
***Lerøy: Including 50% of harvest volumes from Scottish Seafarms Owned 50/50 by Lerøy Seafood and Salmar through Norskott Havbruk.
****Cooke: Including Tassal (AU), acquired by Cooke Aquaculture in 2022
All farmed salmonids (Atlantic salmon, Large Trout, Coho and Chinook). Figures rounded to nearest 100 tonnes WFE (round bled weight)
Source: Kontali
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INTEGRATED ANNUAL REPORT 2023 HEALTHY BUSINESS
BUSINESS REVIEW – FISH FEED
The total feed consumption of ocean-farmed salmonids was
just below 4.7 million tonnes in 2023. Furthermore, this is
marginally higher than in both 2021 and 2022.
Norway and Chile account for approximately 75% of the
total fish feed consumption. Limited granting of new license
capacity or rights to produce is the main barrier for further
growth in salmonid fish feed demand, where also other
developed farming regions such as Australia and North
America have high utilization of existing capacity.
The share of marine ingredients in feed for farmed salmonids
has, over the last decade, shown a decreasing trend.
However, fishmeal and fish oil prices still impact the feed
price delivered to farmers.
In 2023, the Peruvian fishmeal industry experienced one
of its most difficult years of the century after two fishing
seasons, with catches far below normal. The consequences of
the cancelled first season and a second season with a quota
below normal is that fishmeal production was reduced by
around 30% compared to 2022, and fish oil production was
reduced by 81%. Oil yield also remained low during the last
season, and Peruvian export prices of fish oil remain steady
and extremely high at USD 7,800/ton, while fishmeal prices
have decreased to around USD 1,600/ton after producing
around 280,000 tons of fishmeal during the past months.
In Europe, fishmeal prices increased by 14% on average
to USD 1,817/ ton, and fish oil prices increased by 55% to
USD 4,767/ton during 2023. A 70% increase in the landings
of blue whiting to nearly 1.4 million tons boosted fishmeal
production in the North Atlantic in 2023.
Due to a 47% decrease in imports from Peru, total fishmeal
imports to China decreased by 11% in 2023 to above
1.62 mill ion tons.
ESTIMATED FEED CONSUMPTION/SALE TO SALMONIDS
Country 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E
Norway 1,738 1,743 1,704 1,822 1,837 1,965 2,120 2,180 2,163 2,191
Chile 1,263 1,239 1,036 1,191 1,269 1,406 1,375 1,320 1,362 1,403
UK 234 244 246 241 248 275 291 266 254 244
North America 235 255 264 282 289 296 263 267 252 220
Faroe Islands 97 103 107 101 102 109 116 129 119 127
Others 312 327 322 373 375 389 435 489 481 485
Total 3,880 3,910 3,680 4,010 4,120 4,440 4,600 4,650 4,630 4,670
DEVELOPMENT IN FISH FEED (RAW MATERIAL PRICES LAST 5 YEARS. USD/TONNE)
700
600
500
400
300
200
100
0
Wheat
Maize
Soyameal
2018 2019 2020 2021 2022 2023
Fishmeal
Fishoil
Rape oil
6,000
5,000
4,000
3,000
2,000
1,000
0
2018 2019 2020 2021 2022 2023
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HEALTHY BUSINESS INTEGRATED ANNUAL REPORT 2023
STRATEGIC PRIORITY
• To be a preferred employer
2023 PERFORMANCE AGAINST OUR 2023
COMMITMENTS
• Industry-leading employee engagement scores
• Launch internal sustainable behaviour campaign
• Reduce absence rate to 4.4%
• Achieve ISO45001 certification
• Reduce LTIR to below 5 by 2026
• Zero fatalities
• Increase number of women in management positions
(managers with direct reports) to at least 25% by 2025
2026 TARGETS
• Employee engagement scores above industry benchmark
(provided by Peakon)
• Minimum three employee events a year with a focus on
sustainability engagement and awareness
• Reduce group absence rate to 3.9%
• Reduce LTIR to below 5 by 2026
• Zero fatalities
• Target on number on 10 vocational graduates a year
• Increase number of women in management positions
(managers with direct reports) to at least 25%
• Disclose gender paygap. Percentage increase from year 0 in
the company to year 5
SDGS
Healthy People
HEALTHY PEOPLE
81
INTEGRATED ANNUAL REPORT 2023 HEALTHY PEOPLE
At Bakkafrost, we take great pride in creating
meaningful jobs in remote rural areas. We aim to be
an employer of choice, where everyone can work
safely in an inclusive environment and encourage
employees to take responsibility and pride in their
work. We are committed to the health and safety
of our employees and their personal development,
and we strive to create an environment of
engagement and responsible business conduct.
In this section, we describe our principles,
ambition and progress against targets within the
Healthy People sustainability pillar, including
topics regarding our workforce, health and safety,
diversity and inclusion, employee engagement and
competence development and the assessment of
human rights across our value chain.
IN THIS SECTION
OUR WORKFORCE 83
HEALTH AND SAFETY 85
HUMAN RIGHTS 87
DIVERSITY, EQUITY
AND INCLUSION
92
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Our Workforce
Our people are our most important resource and
the key to our long-term success. We are committed
to investing in our people, fostering a diverse and
inclusive culture, and ensuring the well-being and
development of our employees.
Our approach
As a leading salmon producer, we operate in a highly
competitive and dynamic industry that requires a skilled,
motivated and engaged workforce. We believe that by
attracting, retaining and developing the best talent, we
can enhance our operational excellence, innovation and
sustainability performance. By promoting a culture of
diversity and inclusion, we can leverage the different
perspectives, experiences and backgrounds of our employees
to create value for our stakeholders and society.
Our employee policy sets the standards for our role as an
employer, where we pledge to ensure a safe and healthy
work environment, where employees thrive and a respectful
atmosphere is maintained. We strive to match job tasks with
each staff member’s skills, and we work together with the
staff to reach goals and to build a constructive and learning-
focused work culture where respect is the key value of both
the Bakkafrost Group and each employee.
We are committed to paying our employees a fair and decent
wage that reflects living costs in their respective locations.
All our employees are paid an adequate wage in line with
benchmarks which ensures that employees are paid a wage
that provides for the satisfaction of the needs of the employee
and his/her family in the light of national economic and social
conditions. For example, we are a supporter of the Real Living
Wage initiative in the UK.
We offer competitive compensation and benefits to our
employees, including health insurance, bonus schemes, which
are partially built on sustainability-linked key performance
indicators, and discounts on salmon products. We also provide
various learning and development opportunities, such as on-
the-job training, courses, seminars, etc.
We are committed to engaging with our employees and giving
them a voice to express their views on the actual or potential
impacts of our role as an employer. To ensure that we
receive their perspectives, and to measure the satisfaction,
engagement and motivation of our employees, we conduct
regular employee surveys.
Operating in highly regulated areas, all our employees are
covered by statutory protection against loss of income,
mainly through government programs and partially through
benefits offered by the company. This covers covers loss of
income due to sickness, employment injury and/or acquired
disability, parental leave and retirement.
We continuously assess and review the social protection of
employees and are committed to implementing benefits in
areas where deemed appropriate.
Targets
Targets related to our workforce include a target to have
industry-leading employee engagement scores (using industry
benchmarks) as well as to launch an internal sustainable
behaviour campaign.
Workforce update
We had a total of 1,686 employees in 2023 (FTE), a decrease
of 5% from 2022. The majority of our employees are based
in the Faroe Islands (1,051), followed by Scotland (538),
Denmark (51), USA (43), and France (3).
In 2023, 22% of the workforce was younger than 30 years
old, 48% was between 30 and 50 years old, and 30% was
above 50 years old.
The gender balance was 75% male and 25% female.
Our employee turnover rate was 27% in 2023. Due to the
characteristics of our operations, we tend to have a high
turnover in some parts of our value chain, especially in our
processing operations.
In November 2023, Bakkafrost announced that it would lay
off 140 employees in the VAP-related areas in the Faroe
Islands, effective from 1. January 2024. The decision was
made after the Faroese revenue tax was changed, creating
much greater uncertainty and increasing the price of VAP
products.
As a result, in November, Bakkafrost had only secured
contracts for 2024 covering 9% of the expected harvest
volumes in the Faroe Islands and Scotland combined,
compared to 22% at the same time in 2022. Therefore, the
BAKKAFROST
WORKFORCE 2023
EMPLOYEES
BY GENDER
CALCULATED AS FULL-TIME EQUIVALENT (FTE)
1,051
FO
538
SCT
43
USA
51
DK
3
FRANCE
0% 20% 40% 60% 80% 100%
25% 75%
WOMEN MEN
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company adjusted its strategy for contracted VAP products to
reduce its exposure for 2024.
The company communicated the possible effects of the
revenue tax changes to the employees in May 2023,
and in November they were brought together where the
announcement was made that 140 jobs would be made
redundant.
Throughout the process, we have aimed to keep the
employees updated and offer them the required assistance.
For instance, the employees had access to psychologists and
union representatives during the process.
Sadly, we have also lost some staff in Scotland. We reduced
around 15% of the staff in Scotland because of lower activity
from reduced harvest volumes and as a consequence of
initiatives aiming at making the organisation more efficient.
During the process, we made all efforts to provide our
employees with the support that they needed to assist them
in transitioning smoothly and maintaining their well-being.
Adequate wages
In 2023, we faced significantly increased inflation in the
countries in which we operate. In Scotland, we carried out a
salary review and awarded a 6% base salary increase to all
employees, and adjusted the base salary as a result of the
review. We continue to do salary reviews across the Group
to ensure employees are paid a salary that at least meets
everyday needs.
Employee engagement
To determine employee satisfaction, engagement, and
motivation, we regularly conduct employee surveys. We
conducted our first group-wide engagement survey in 2022.
Bakkafrost’s overall benchmark was 7.5 out of 10. This score
is considered good when benchmarked against other similar
companies. The results were reviewed and discussed at the
senior executive level, and the CEO ensures that the results
and comments from the survey inform the process of deciding
the company strategy.
Although we did not conduct a survey in 2023, we have
enhanced the process based on employee feedback. In 2024,
we will launch a less comprehensive quarterly employee
survey, which will allow for more timely insights and
actionable results.
We also monitor and address the feedback and suggestions
from our employees through various channels such as our
internal communications platform, and via our anonymous
whistle-blower programme, we enable employees to report
incidents and practices which are not in line with our code
of conduct.
In 2023, we continued our efforts to encourage sustainable
behaviour and progress among our employees through the
Healthy Living Awards, celebrating employees who have gone
above and beyond in advancing responsible and sustainable
practices within the company. The winners are awarded a
monetary prize.
In relation to our work to report accordingly to the EU
sustainability reporting standard (CSRD), we initiated a double
materiality assessment to determine which topics to include
in future reporting. Employee representatives participated by
ranking impact-related topics, including those related to the
company’s impact on its workforce. The input provided has
been taken into consideration in the process of selecting the
final reporting topics.
Additionally, we have other mechanisms in place for
employees to express their opinions, such as local health and
safety committees.
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The health and safety of our people remains the top
priority for Bakkafrost. We are committed to creating
the best and safest working environment for our
employees as well as our sub-contractors working
at our sites by preventing work-related injuries and
through external audits and certifications.
At Bakkafrost, health and safety is paramount, and we
are committed to continually improving the standards of
occupational health and safety by creating a healthy working
culture.
Our approach
All employees at Bakkafrost are covered by our health and
safety management system, which is structured around
industry-leading health and safety certifications and
accreditations such as ISO 45001.
The Board of Directors has overall responsibility for the area
along with the CEO, and health and safety is included on the
agenda of all board meetings. The responsibility for managing
impacts, ensuring compliance with legislation and regulation
as well as standards and reporting lies with the Quality,
Environment, Health and Safety department.
Our Group-wide policy for Health, Safety and Environment
defines the responsibility for applying the health and safety
protocols for each segment, which are designed to deal with
and reduce specific health and safety-related risks in each
operation area.
We have local health and safety committees covering 100%
of our employees in the Faroe Islands and Scotland. These
committees are a vital part of enabling the employees to
have their say and raise health and safety-related concerns
or make suggestions for improvements. We plan to establish
health and safety committees for the remaining operational
units in the near future.
Targets
Health and safety is a top priority in our business strategy.
This is reflected in our targets, where we have set several
ambitious targets that motivate our work in the area.
First and foremost, we have set a continuous target of having
zero work-related fatalities.
We have set a target to lower our Lost Time Injury Rate (LTIR)
to below 5 by 2026, and we work towards reducing the
absence rate to below 4.4%.
We also have a target of achieving ISO 45001 certification in
the Faroe Islands and in Scotland.
Performance
In 2023, we further increased the focus on creating a
working culture which promotes the health and safety of
the employees as a key priority. This has been done through
various and continuous awareness campaigns as well as
through site visits and internal and external audits and
certifications such as ASC (covering farming operations in
the Faroe Islands and partially in Scotland) and GLOBAL G.A.P
(covering all facilities). Our large service vessels are audited
against the International Safety Management Code.
Health & Safety
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In 2023, Bakkafrost Faroe Islands completed
the accreditation process for ISO 45001 on
an administrative level. The entire operation
in Bakkafrost Scotland already received its
accreditation for ISO 45001 in 2022.
ISO 45001 is the world’s international standard for
occupational health and safety, issued to protect employees
and visitors from work-related accidents and diseases. Our
health and safety management system is structured around
the ISO 45001 certification, ensuring equal health and
safety standards and practices are upheld throughout the
organisation.
During 2023, we had no fatalities due to work-related injuries
and/or work-related ill health.
The total Lost Time Injury Rate (LTIR), which reflects the
average number of work-related injuries per million hours
worked, decreased by 6% in 2023, from 14.88 in 2022 to
13.98 in 2023. This shows our ongoing commitment to
emphasize the safety of our employees and the need to
report any observed risks or near-misses.
We have seen especially improvements in Scotland in the last
few years, dropping from 24.19 in 2020 to 17.9 in 2023.
The Lost Days Rate, which is the average number of days that
workers miss due to work-related injuries, was 26.55 days
for each accident in 2023 compared to 56.8 in 2022.
Overall, we continue to advance in the field of health and
safety, and the 2023 performance reflected the constant
work that is done to emphasize the need to adhere to safety
protocols and report hazards and near-misses.
Other health and safety initiatives in 2023 included
hosting a 3-day internal safety course for around 40 safety
representatives and managers in the company. The aim of the
course was to educate representatives and managers in how
to implement and uphold safety procedures in operations.
Additionally, we invested in a new, large farming service
vessel for our operations in the Faroe Islands which is
specially designed for heavy load tasks.
An important part of improving health and safety in the
workplace is to have comprehensive reporting procedures
in place to ensure that we learn from actual and potential
incidents and implement appropriate measures in a timely
manner. As part of this effort, our Operational Directors have
begun to include more detailed information on health and
safety-related topics in their reports to the Board of Directors.
We are continuously looking to introduce new initiatives to
enhance our health and safety performance and culture. We
are strengthening our focus in the coming years working
towards our target of getting below 5 LTIR. For example, we
plan to facilitate health and safety workshops in both the
Faroe Islands and Scotland. Also, we are raising awareness
on the topic through intensive awareness campaigns, and
in 2023, we began sending health and safety reports to all
employees through our internal communications platform, as
well as stressing the importance of reporting near-misses.
35
30
25
20
15
10
5
0
2018 2019 2020 2022 20232021
LOST TIME INJURY RATE
LTIR PER MILLION WORKING
12.4
2023
BAKKAFROST FAROE ISLANDS
FATALITIES
0
2023
4.47%
SCOTLAND
3.95%
FAROE ISLANDS
2023
ABSENCE RATE
2023
17.9
BAKKAFROST SCOTLAND
LOST TIME INJURY RATE
LTIR PER MILLION WORKING HOURS
35
30
25
20
15
10
5
0
2020 2021 2022 2023
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We respect and support the human rights of our
employees, customers, suppliers, communities and
other stakeholders. Our commitment extends to
implementing thorough due diligence processes to
address and mitigate any actual or potential human
rights impacts.
As a global company with a long and diverse value chain,
Bakkafrost is exposed to human rights risks and impacts
across our business. We are committed to ethical business
conduct both in our direct operations as well as in our
upstream and downstream value chains.
Our approach
We respect all internationally recognised human rights
and are guided by the United Nations Guiding Principles
on Business and Human Rights (UNGPs) and are committed
to conducting business in a manner that is consistent with
the International Bill of Human Rights and the International
Labour Organization’s Declaration on Fundamental Principles
and Rights at Work which also is reflected in our anti-
discrimination policy.
In addition, Bakkafrost has signed up to the ten principles of
the UN Global Compact, including a pledge to protect human
rights, respect the freedom of association and the right to
collective bargaining, and have a workforce free from forced-
compulsory-child labour and discrimination.
We are committed to providing sufficient remedial support
in cases where Bakkafrost’s operations, directly or indirectly,
may cause or contribute to adverse human rights impacts on
individuals, workers and communities, and we continuously
work on improving our due diligence processes enabling us to
identify potential or actual violations.
The executive management level is responsible for ensuring
that we live up to our Human Rights commitments in our daily
operations, including allocating the necessary resources to
ensure effective human rights procedures. Each key executive
manager is responsible for ensuring respect for human rights
within their respective area of our direct operations, and they
are obligated to elevate severe cases to board level.
The responsibility for ensuring respect for human rights in
our upstream and downstream value chain is delegated to the
Procurement department. Responsibilities include identifying,
assessing, and acting on human rights risk and impacts.
Human Rights in our own workforce
Ensuring human rights within our workforce is a top priority,
and we have various due diligence mechanisms in place to
ensure that all employees are treated fairly and that incidents
are prevented.
Discrimination in the workplace is not tolerated and we are
committed to provide for or cooperate in the remediation of
any negative impacts relating to human rights and have a
system in place to manage issues raised.
We are committed to take all reasonable steps to employ and
promote employees based on their abilities and qualifications
Human Rights
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without regard to, age, disability, marriage and civil
partnership, pregnancy and maternity, race (including colour,
nationality and ethnic or national origins), religion or belief
and sex and/or sexual orientation.
We have published our policy on human rights in our staff
handbook, addressing zero-tolerance regarding discrimination,
slavery, forced labour, child labour and human trafficking, as
well as the employee’s right to file a grievance without fear of
penalty through our whistle-blower programme is described.
The handbook is easily accessible to all employees through
our internal communications platform.
Through internal audits, the policy is reviewed annually by
our HR department to ensure new potential human rights
risks are covered by the policy.
We continuously monitor and review human rights compliance
in our operations, e.g. through internal procedures such
as validation of personal identification numbers of our
employees against information held by the tax authorities,
we ensure that human rights, such as preventing child
labour and keeping within the maximum working hours. And
through certifications such as ASC, BAP, and GLOBAL G.A.P.,
our processes for due diligence and the monitoring of human
rights are regularly audited by third parties.
We actively engage in implementing the next steps of action
based on the results of the monitoring procedures as well as
the external certification audits.
In 2023, the total number of incidents of discrimination
within the organisation, including harassment, was 0, and
the number of grievances filed through our internal whistle-
blower programme was 1. The grievance incident does not
fall under the category of a severe human rights incident, i.e.
incidents related to forced labour, human trafficking, or child
labour.
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We respect the freedom of association and the right to
collective bargaining. In the Faroe Islands we are a member
of the Faroese Employers’ Association, which negotiates
collective agreements for the highly unionised Faroese
private labour market. Employee rights are protected by
the unions and union representatives, including ensuring
employees earn a fair living wage by collective agreements.
We meet with unions and associations regularly and strive
to have a good and constructive relationship. Employee
representatives are given time off from work to fulfil their
union duties, including training courses.
In 2023, 63% of the workforce was covered by collective
bargaining agreements.
In the areas where we operate where the degree of
unionisation is low, we have mechanisms in place to ensure
that employees are paid a fair and decent wage that reflects
the cost of living, for example through our support of the Real
Living Wage initiative in the UK.
* https://www.proterrafoundation.org/wp-content/uploads/2020/10/ProTerra-Standard-V4.1_EN-2.pdf
For employees not covered by collective bargaining
agreements, we apply national and educational-specific
salary benchmarks to ensure adequate wages. This includes
our employees based in Denmark, USA and France.
Human Rights in our supply chain and our communities
The main exposure to human rights risk exists within our
upstream supply chain. We use tools such as SEDEX for
auditing suppliers, and we ensure our suppliers are committed
to respecting human rights by sending out questionnaires
as well as having suppliers sign off to our guidelines for
suppliers every three years, which includes confirming to
respect internationally recognised human rights. We do not
conduct business with suppliers who do not conform to our
human rights-related requirements.
We generally aim to source raw materials and products from
countries, which are assessed to be within low risk in terms of
risk of not respecting human rights. Our analysis of supplier-
related human rights risks is based on various tools made
available by internationally recognised NGOs.
We also aim to source from suppliers who are certified
against standards, which incorporate human rights-related
requirements. For example, we source soy from suppliers,
who are certified against Proterra; a standard which includes
requirements on the absence of forced and child labour,
weekly working hours and overtime, equal treatment and
opportunities for workers, the protection of the health and
safety of workers as well as the freedom for workers to
organise, join and form associations*.
In November 2023, we arranged a supplier day for
our main suppliers and partners for our Scottish
operations, repeating the success of our supplier
day in the Faroe Islands arranged in 2022. The
aim was to engage with suppliers on sustainability
topics, including human rights, and we presented
our updated procurement guidelines, which
emphasizes the importance of conducting business
concerning human rights.
Going forward we will further integrate human rights metrics
and requirements into our procurement processes.
Our operations are intrinsically linked to the surrounding
environment and the communities in which we operate. We
respect the role that we play in society, and we are committed
to ensuring inclusive processes in which stakeholders are
consulted to better understand potential impacts and risks.
We operate in highly regulated areas, and thus many of
these consultation processes are already required through
legislation. However, in relation to bigger projects, we often
arrange public consultations to provide local people with the
opportunity to have their say in the matter.
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The Bakkafrost Healthy Living Awards are designed to
highlight how colleagues across the business go above and
beyond in their everyday roles.
It’s important to the business to hear about how staff have
contributed to the responsible and sustainable development
of our operations and sites.
We have five categories which come under our business
pillars – Healthy Environment, Salmon, Communities, People,
and Business.
In 2023, we held two rounds of Healthy Living Awards,
and the 2023 winners include:
Healthy Business winners:
• Warren Tracey (SCT), for his outstanding work in developing
Power BI reports.
• Maritha Danielsen (FO), her terrific and remarkable
contribution as canteen manager.
• Susanne Lillesø (DK), for the exceptional quality of her work
• Hjalgrím Svøðstein (FO), for his role in attracting and
retaining the younger generation.
Healthy People winners:
• Cameron Gibb (SCT), for his superb attitude and approach to
health and safety on his sites.
• Ali Guy (SCT), for implementing positive changes and
ensuring health and safety protocols.
• Jákup Súni Jacobsen (FO), for setting a good example for
good health and encouraging others to do the same.
• Christian Susoi and David Blair (SCT), design efforts for new
barge on site last year.
Healthy Environment winners:
• Bjarki Johannessen (FO), for his role in providing the
sustainability department with emissions data.
• Sonni Johannesen (FO), for his role in the significant
reduction in energy and oil consumption.
Healthy Salmon winners:
• Kenneth Prentice (SCT), for going above and beyond by
offering his time and experience to ensure the highest
standards of fish health and welfare are delivered.
• Kimberley McKinnell (SCT), for being the driving force
behind our Welfare Awareness Campaign.
Healthy Communities winners:
• Jamie Sillars, Simon Sloan, John Estlick, John Devoy, Kenny
Ross and Donald Park, from the Arran Marine Team (SCT),
on Beach Cleaning activities.
• Tom Lawrence, Ross Brennan and Sam LIoyd, from the Mull
Marine Team (SCT), on Beach Cleaning support.
• Craig Johnstone, Bryce Harvey & Kyle Durnin (SCT), for
assisting the Isle of Gigha Ranger Service with their beach
clean and collecting marine waste from an inaccessible area
of the island.
• Archie Galbraith and David Blair (SCT), for their response to
a coastguard call from a boat in distress.
Healthy Living Awards
Winners 2023
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Diversity, Equity,
& Inclusion
At Bakkafrost, we firmly believe that all individuals
have equal value and should be treated equally. We
are committed to creating a diverse, equitable, and
inclusive workplace where everyone feels valued and
respected.
Our goal is to be a preferred employer and to set a positive
standard in the communities in which we operate. We are a
company driven by values, and we value each person and
their potential. We work to foster a diverse and supportive
work culture where everyone has the chance to build a
healthy and fulfilling life for themselves, regardless of any
personal characteristics.
Our approach
As an equal opportunity employer, we are committed to equal
treatment of all employees and job applicants regardless
of gender, age, ethnic background, race, religion, disability,
sexual orientation, or social background.
To support our ambition to foster an inclusive workplace built
on respect for every individual, we have established various
policies which seek to guide the management of impacts
within this topic, including an antidiscrimination policy, a
policy addressing sexual harassment and a life transition
policy.
The policies stipulate that we do not tolerate discrimination
in any aspects of employment, including recruitment and
selection, promotion, transfer, training opportunities, pay and
benefits, other terms of employment, discipline, selection for
redundancy and dismissal. Also the policies promote a work
environment which is based on inclusion and a culture which
* The gender pay gap reflects the pay gap between men and women without adjusting for other factors impacting pay levels (e.g. career level and work experience)
** Due to legal restrictions, we cannot disclose the percentage of our employees with disabilities as well as figures on race/ethnicity and nationality
seeks to take individual’s work-related motivation and desires
into account and fit these with an appropriate solution.
People with disabilities and reduced ability to work can face
challenges in the labour market and are underrepresented in
many roles. We are committed to creating opportunities for
people with disabilities and working closely with relevant
parties.
Targets
We believe that creating equal opportunities for all is both
the right thing to do and it also contributes to the success of
the company.
To encourage and support a culture of equality and inclusion
throughout the organisation, we have started by setting a
target addressing equality within the management level of
the company.
We have set a target of having at least 25% women in
management positions (managers with direct reports) by
2025.
Performance
In 2023, 19.3% of managers with direct reports in the group
were women.
We continue to focus on supporting women in taking
on management positions, and in recent years we have
worked strategically to mitigate gender bias and promote
opportunities for women in our operations. During this initial
phase of strategic work, we mostly focused on reducing
gender bias in hiring processes, as the area of recruitment
is regarded as a vital part of improving the gender balance
across all levels in the organisation.
This year we further built on and strengthened our
understanding of the impact of diversity and inclusion on our
operations, and we are now developing a strategic action plan
to integrate these aspects into our business strategy, which
we hope eventually will lead to a more balanced gender
distribution among the managers.
In 2023, 33.3% of our Board of Directors were female, and
women accounted for 25% of the Group full-time equivalent
in 2023.
In 2023, the gender pay gap (defined as the difference in
average pay levels between female and male employees was
18% in the Faroe Islands (in favour of men) and 4% in Scotland
(in favour of women).
*
During 2023, we created several job opportunities for people
with disabilities and reduced ability to work across our
operations, and we will continue to investigate opportunities
to further support the inclusion of persons with disabilities
in our workforce.
**
Following several years of facing recruitment challenges,
especially for our processing operations, the share of
international staff has increased. To ensure a good integration
process of international staff, we arrange induction days
covering topics such as human rights, food safety culture and
health and safety. This initiative has been further expanded
in 2023 to also cover new staff in our offices.
Also, in the Faroe Islands, lessons in the Faroese language
continue to be arranged.
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Salmon farming is among the most knowledge intense
industries globally, and we are continuously focused
on educating and developing our people to enable
them to navigate and solve complex daily-tasks safely
and intelligently.
Our approach
It is of the utmost importance that our employees always
receive proper training to ensure we are compliant with
all external and internal requirements, including safety
requirements. To ensure we continue to meet the highest
health, safety, and animal welfare standards, we conduct
annual training using both internal and external trainers who
deliver modules on topics ranging from hygiene, first aid,
workplace safety, safety at sea, and safe chemical use and
fish welfare. All courses are regularly reviewed and updated.
PERFORMANCE
In 2023, 23.72 hours of training were delivered in average
per employee. On average, women received 10.8 hours of
training, and men received 27.9 hours of training.
Since not all employees are mandated to log their working
hours not all training hours are recorded.
We have not practiced regular and structured performance
and career development reviews across the whole group.
However, we provide this to those of our employees who
request it.
Safety training
Handling highly advanced technical equipment is a natural
part of the workday for many Bakkafrost employees. It is
of the utmost importance that the employees are trained
adequately to operate the equipment properly and safely.
In 2023, we arranged several training courses including
handling cranes, fork trucks, and general health and safety
at work, and we continued to arrange line manager training
courses focusing on planning and staff management. In
addition, with the introduction of a new e-learning module
and through our internal communications platform, we
have increased the cadence of delivering safety awareness
messages to our employees.
Sharing of best practices
To facilitate and advance the sharing of best practices, we have
established centers of excellence within several areas. This
includes freshwater operations, where the focus is on animal
welfare, biology, focussing on disease mitigation, and general
animal welfare in our marine operations, and environment,
focusing on responsible environmental management.
In addition, in 2023 we restructured the business and
appointed Group-directors across business areas. This fosters
greater cooperation across departments and locations.
Since expanding our farming operations to also include
operations in Scotland, a major focus has been on transferring
knowledge and know-how between the locations, and group
workstreams were established with participants from a wide
range of departments. We have also used secondments to
facilitate knowledge sharing, and this tool proved handy in
relation to the commencement of operations at our newly
expanded freshwater site in Scotland, Applecross.
Apprenticeships
We are committed to providing life-long career opportunities
within the aquaculture industry and to providing resources
and opportunities for learning and development.
In 2022, the national Faroese aquaculture apprenticeship
programme commenced. Bakkafrost partnered with the
national educational authorities to establish the programme,
and we contribute to the programme by providing internal
experts to teach subjects such as fish health and welfare as
well as sustainable aquaculture.
Sustainability awareness
Our employees are at the heart of our operations, and
they play a vital role in implementing sustainable practices
throughout our value chain.
In 2023, we built further on our sustainability awareness
campaign hosting a series of five live sustainability awareness
sessions which will also be hosted on our internal e-learning
platform. The series was well received, and as sustainability
awareness has been integrated into our business targets,
we will continue to build further on our progress within the
area, aiming at creating sustainability ambassadors in our
workforce.
Training &
Development
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WHAT’S NEXT?
• Further develop our engagement survey, going from
annual surveys to quarterly surveys, resulting in less
comprehensive surveys and allowing for more timely
insights
• Continued focus on staff retainment, especially in the
Processing stage of the value chain.
• Arrange health and safety workshops in the Faroe Islands
and Scotland
• Continue to work towards the goal of achieving an
LTIR below 5 by 2030 through the continuous focus on
increasing health and safety awareness among employees
and implementing advanced reporting mechanisms
• Expand our health and safety targets and initiatives to also
cover sub-contractors working at Bakkafrost sites
• Publish a revised and more comprehensive Human Rights
Policy which reflects our stronger commitment and
increased effort within the area
• Establish processes for reviewing the effectiveness of due
diligence processes, including the effectiveness of our
whistle-blower programme
• Introducing new technologies to further enable risk
assessment of suppliers
• Implement updated procurement guidance to support
sustainability decisions, including human rights risk
assessments
• Focus on increasing employee retainment
• Arrange at least three sustainability awareness sessions a
year
• Launch internal management training programme
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In 2023, we built further on the ‘One Company’
strategy, integrating operations in the Faroe Islands
and Scotland to leverage the strengths and best
practices of both. We have mainly focused on sharing
knowledge, and in 2023, we took the next step and
aligned the organisational structure with the strategy
by creating group roles at the highest executive level
When Bakkafrost acquired the Scottish Salmon Company
(SSC) in 2019, it was regarded as a turnaround case requiring
significant investments as well as time to make the transition.
Since the acquisition, Bakkafrost has invested heavily
in increasing freshwater capacity and marine farming
operations, and in Bakkafrost’s five-year investment plan,
significant funds have been allocated for investments in our
Scottish operations.
We have not only invested in farming equipment and
facilities. We have also focused on training our staff and
sharing knowledge between operational sites. This is part
of our ‘One Company’ strategy, which seeks to integrate the
businesses and create synergies.
In 2023, we took the next step by aligning the organisational
structure to reflect the purpose of the ‘One Company’ strategy.
Group roles have been created across the value chain,
including in Harvest, Value Added Products (VAP), Quality,
Environment, Safety and Health (QESH), Human Resources, IT,
Sales, Farming Service Vessels and Sustainability.
After the organisational consolidation, we launched several
projects, such as creating new lean reporting lines, aligning
policies and operational procedures, and organising joint
arrangements.
We expect that the organisational change will support
efficiency, enhance the quality of our performance, and
make our organisational projects more impactful through the
Group-wide view. Clear roles benefit both the staff and the
efficiency, and with the new organisation structure, we are
optimistic that we have established the best circumstances
for both the recovery in Scotland and the further growth of
operations in the Faroe Islands.
Healthy People
Consolidating the
‘One Company’ Strategy
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Healthy Salmon
STRATEGY PRIORITY
• To exceed leading standards
2023 PERFORMANCE AGAINST OUR 2023
COMMITMENTS
• Increase smolt size to 500 g by 2023 in the Faroes
and 2026 in Scotland
• Maintain our high omega-3 levels
• Zero antibiotic use
• Maintain salmon survival rate at 94% or above (Faroes)
• Increase research to optimise fish welfare and product quality
• Maintain industry-leading approach to animal welfare
• Maintain ASC certification, BAP certification or similar of all
Bakka frost salmon
2026 TARGETS
• Annual salmon survival rate of 96% (Faroes) and 92%
(Scotland)
• Zero antibiotic use
• Maintain industry-leading approach to animal welfare.
• High omega-3 levels,
• High protein levels average 19g/100g
• No product recall
• Maintain 100% ASC certification in the Faroes and achieve
100% ASC certification in Scotland by 2027
• All salmon from own genetic production in 2028 Faroes and
2030 Scotland
SDGS
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Rapid population growth and increased food demands
are putting a strain on our earth’s finite resources.
Expanding food production from the ocean is essential
in addressing these issues. Aquaculture production is
a sustainable and nutritious source of protein that can
meet the growing demand for protein. According to the
report “The State of World Fisheries and Aquaculture
2022” by the Food and Agriculture Organisation’s,
aquaculture will continue to be the driving force
behind the growth in global fish production with total
production volumes projected to reach 100 million
tonnes for the first time in 2027. The sustainable growth
of the aquaculture industry is fundamental, and this will
need innovation as well as committing to ending fish
escapes, obtaining all feed from sustainable sources,
and working towards complete renewable energy use.
Bakkafrost ambition is to become world-leading in the
provision of healthy, tasty, nutritious food, produced in
the most responsible and sustainable way. Collaboration
in the international salmon sector is critical to address
sustainability challenges.
In the Faroese fjords and the Scottish lochs, optimal
salmon farming conditions exist with good water
temperatures, salinity, and water flow. Bakkafrosts
objective is to grow healthy fish while safeguarding
their well-being across all our farms. Our farming
practices create optimal conditions for salmon welfare.
This includes providing clean water, space, and nutrient-
rich food throughout their lives. Bakkafrost strives to
improve survival rates and increase harvest weight while
decreasing feed conversion rates. Despite challenges like
compromised gill health and algae blooms, collaboration
and investment in new technology have ensured good
health and reply welfare standards. Going forward, we
anticipate that changing sea conditions including rising
temperatures will continue to result in new challenges.
This section outlines our principles, ambition and
progress against targets within the Healthy Salmon
sustainability pillar as well as describes the biological
and environmental challenges and opportunities that
are linked to the management of salmon farming.
IN THIS SECTION
FISH HEALTH AND WELFARE 99
RESEARCH AND DEVELOPMENT
PROJECTS
112
HEALTHY AND SAFE FOOD 114
COLLABORATIONS
AND CERTIFICATION
118
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We invest heavily in meeting and exceeding leading fish
health and welfare standards, and we are committed to
complying with the WOAH World Organisation for Animal
Health’s definition for animal welfare. Sustainable salmon
farming relies on maintaining healthy fish populations. As
salmon farmers, we have a responsibility to our livestock.
Optimal fish welfare is part of ethical and responsible farming
practices. When fish are well cared for, they grow efficiently,
require fewer resources, and produce less waste. By adhering
and exceeding to high welfare standards, we contribute to the
responsible development of the salmon farming industry. Our
commitment to fish welfare drives sustainable practices and
ensures healthy, thriving fish.
OUR APPROACH
Fish Health Management
Our commitment to responsible farming practices includes
stringent health management for our stock. We focus on
proactive health care to minimize disease risk through non-
medical preventive measures and medical programs.
Good survival rates are crucial to achieving our mission
to secure the highest levels of fish health and sustainable
operations. Significant resource goes into the growth of
salmon, including significant amounts of feed and energy, a
high survival rate is the single most effective measure that
can be implemented.
Fish welfare is embedded in our culture. Further, we have
an experienced team of specialized veterinarians and
biologists dedicated to animal health and welfare, as well as
training our on-site teams and we are always looking for new
ways to improve welfare. Our focus is on pro-active health
management, through health and welfare
surveillance and increased treatment resource and farming
expertise.
Veterinary standards
Bakkafrost upholds the Faroe Islands’ strict national
veterinary standards. These encompass disease treatment
and prevention, sea lice control, and transportation. The
Faroese Animal Welfare Act, incorporating the Five Freedoms
of animal welfare principles, guides our practices.
Salmon farming is one of the most transparent and highly
regulated farming sectors in the UK and our sites in Scotland
are governed and regularly audited by a range of bodies,
including Marine Directorate, the Scottish Environment
Protection Agency (SEPA), the Fish Health Inspectorate and
Naturescot. We are committed to operating transparently
and sharing data on both a compulsory and voluntary basis
through a variety of channels including Salmon Scotland and
Marine Directorate. To ensure our salmon are raised to the
highest welfare standards, we adhere to independent third-
party accreditations, including RSPCA Assured, the leading
ethical farm assurance scheme.
In the Faroe Islands specific Veterinary Health Plans are
implemented for each site. These plans are reviewed by ASC
and Global GAP. They focus on mitigating biological risks
and ensuring optimal fish welfare. Topics covered include
biosecurity, disease prevention, fish husbandry, and stocking
density. Stocking density is regulated through Faroese
legislation as follows:
<2 kg: 15 kg/m
3
2-3 kg: 20 kg/m
3
>3 kg: 25 kg/m
3
In Scotland, Veterinary Health & Welfare Plans are also in place
for each site. These plans align with guidance from regulatory
authorities such as Marine Directorate and SEPA. Compliance
is ensured through optimization of fish welfare, biosecurity,
disease prevention, and environmental considerations.
Stocking density is site-specific and determined by SEPA
consent.
Broodstock
Bakkafrost runs an ambitious broodstock program around
our two strains: The Faroese strain and the Native Hebridean
strain. We continue to invest in the development of our
broodstock programs and the first generations of Faroese
origin have been produced in a production environment,
allowing us to collect valuable data on quality parameters.
These parameters include resistance to Cardiomyopathy
Syndrome (CMS) and overall survival—critical information for
our breeding program. We anticipate the creation of a robust
parental strain with targeted resistance to several essential
traits.
To further improve our fish welfare standard, we will
implement distinct monitoring of group and individual based
fish welfare indicators, that are based on well-known scientific
studies of optimum fish welfare parameters. This monitoring
will be implemented through the whole production chain and
will be a key tool to further improve our welfare standard.
Our Native Hebridean strain is a unique breed of Scottish
salmon, descending from wild salmon from the remote Isle
of North Uist in the Outer Hebrides, off the North-West coast
of Scotland. A native breed that is naturally robust and grows
well in its natural environment as we have seen throughout
the production cycle.
Smolt
In addition to the selective breeding program, which aims
to avoid disease exposure through genetic selection, the
large and high-quality smolt strategy is a crucial part of our
biosecurity strategy. By increasing the smolt size to 500 g,
we minimize disease risk and sea lice exposure, enhance
production capacity, and improve supply consistency. We
focus on fish health and quality of the highest standards.
Fish Health
and Welfare
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Marine operation
We conduct thorough assessments of our marine farms. These
assessments help determine the appropriate cage size and
mooring system. Third-party analysis of current and weather
data, along with an evaluation of the mooring system’s
strength, guides us in placing the cages optimally. Our goal
is to create a balance between exposed site location and safe
pen positioning, all while prioritizing fish welfare. Our fish
health team conducts biosecurity audits at every site at least
once a month to observe fish behaviour, document physical
health observations and test aquatic conditions to ensure an
optimal environment and good fish welfare.
Freshwater treatment is vital for good gill health of the salmon.
To maintain salmon gill health, we’ve significantly increased
treatment capacity, including the addition of Farming Service
Vessel M/S Bakkafossur in the Faroe Islands and a 4,000m³
farming service vessel in Scotland during autumn 2022. We’ll
continue implementing preventive biological measures.
Strict hygiene practices, including thorough cleaning and
disinfection procedures, are in place. In 2023, additional
measures were implemented to prevent outbreaks of
Bacterial Kidney Disease (BKD). We actively exchange and
enhance best practices in biosecurity between our Faroese
and Scottish operations.
Our vessel crews closely monitor bulk oxygen uptake during
fish intake, transport, and offloading. The vessel’s computer
logs data, including oxygen saturation percentages upon
water intake and output from each well.
In the Faroe Islands, we set oxygen saturation limits at 70%
when the water temperature is 12 degrees Celsius (RMR). This
high limit accounts for the generally lower sea temperatures
in the Faroes. Lower temperatures result in reduced fish
oxygen consumption and higher seawater oxygen solubility.
Oxygen saturation below the RMR inhibits growth, and an
alarm sounds if levels fall below 86% saturation. The crew
has a buffer to adjust and maintain saturation above 70%.
To ensure optimal fish welfare during transport, we closely
monitor CO
2
levels. Additionally, we measure indicators such
as Total Ammoniacal Nitrogen (TAN) and other parameters in
the ship laboratory.
Our feed strategy prioritizes fish health and welfare. Recent
investments in underwater cameras allow farmers to
monitor fish appetite and behaviour, leading to efficient feed
utilization and reduced environmental impact.
Fish handling and gutting
Strict routines are in place for handling and transporting
live fish. Fish transport occurs via live fish carrier or bulk
vehicles, ensuring compliance with optimal welfare standards.
Water quality parameters are continuously monitored during
transport, and equipment is used to maintain optimal oxygen
conditions. Qualified employees manage logistics and undergo
training. All farming sites have access to large harvesting
capacity, harvest sites are strategically located related to
farming sites. Minimizing stress during transportation and
harvesting is crucial for fish welfare and product quality.
Harvest sites are equipped with stunning and bleeding
equipment following animal welfare principles. The fish swim
into channels where they are percussively stunned and then
bled. Our internal veterinarians train harvesting teams.
Medicine use
Medical treatment is important for fish health and welfare, and
the cornerstone of our medicinal strategy is 100% vaccination
programme. By administering vaccines in the early stages of
the salmon’s life, we avoid later compromising of fish welfare
and prevent and mitigate impact from diseases such as
Furunculosis, Vibriosis, ILA (ISA), IPN, Moritella (winter ulcer),
and Pancreas Disease (PD).
We are engaged in benchmarking available vaccines to
optimise the vaccine strategy. We have implemented fully
automated vaccination machines on all hatcheries improving
welfare and capacity. In addition to the vaccines, we use in
feed medicine for the treatment of sea lice. Our strategy is to
limit medicine use to only absolute necessity.
Antibiotics
Our policy is not to use any antibiotics.
All Bakkafrost salmon in the Faroe Islands has been produced
free from any antibiotics since 2004 and in Scotland, there
has been none used in marine operations since 2010.
Sea Lice
Our sea lice management strategy combines proactive and
reactive measures. We’ve increased our non-medicinal
treatment capacity using new technologies and reviewed our
cleaner fish program. Rigorous health monitoring by our in-
house biologists and vets ensures early detection and swift
action. Collaborating with academic and industry partners,
we seek sustainable solutions. The lice simulation tool,
implemented in the Faroe Islands in 2022, identifies risks and
aids early intervention. The tool has proved highly effective
and is a significant part of the explanation for our low lice
numbers.
Non-medical treatments are preferred, including using
lukewarm water to remove lice and pumping systems on our
service vessels that flushes the lice off the fish. Freshwater is
now integral to our preventive sea lice strategy.
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In 2020, Faroese legislation reduced permitted lice numbers
from 1.5 to 1.0 adult female lice per fish. A further reduction
was made in 2021, reducing the number from 1.0 to 0.5
during the summer months. The number of sampled fish
during a lice count was increased from 10 to 20 fish for more
accurate lice numbers and in addition, as an extra control, lice
counts are performed by a third party. We comply fully with
our statutory obligations in Faroes and Scotland with regard
to lice management.
We are determent to adhere to our policy not to use medicinal
treatment, increasing our capacity and ensuring more timely
and effective treatment, using a unique combination of
freshwater treatment and a gentle mechanical treatment.
However, in regard to bath treatments, it can at times be
necessary to ensure fish welfare.
Recent measures have focused on fish health and welfare
during handling and treatment. Our in-house veterinarians
conduct site visits and review protocols before intervention,
ensuring that only healthy fish undergo treatment. The newly
operational Farming Service Vessel Bakkafossur also added
substantial sea lice treatment capacity and strengthened
our biological risk mitigation strategy. It enabled more
precise selection based on fish size and health status. As a
result, mortality rates because of sea lice treatment have
significantly decreased.
In Scotland, we have adopted a strategic approach to sea lice
management by utilizing a combination of cleaner fish and
non-medicinal interventions at all our sites. This practice has
significantly reduced the need for medicinal treatments and
has seen a significant improvement in sea lice control.
Disease
To mitigate exposure to disease, we source from selective
salmon breeds, which are particularly resilient. Integrating
salmon egg production into our value chain reduces the
risk of importing pathogens and ensures quality eggs
adapted to local conditions. We closely monitor diseases like
Cardiomyopathy Syndrome (CMS) and Heart and Skeletal
Muscle Inflammation (HSMI). Implementing QTL-CMS resistant
egg has improved survivability.
Biosecurity is a priority in our hatcheries, where smolt
production occurs in closed environments. Water quality,
monitored digitally, plays a crucial role. UV treatment and
ozone are used for water cleaning. We rigorously screen for
various pathogens in our hatcheries, including ISAV, PRV,
SGPV, SAV, PMCV, IPNV, and others.
We have a team of dedicated fish health specialists who
monitor the performance and wellbeing of the salmon,
with regular screening of pathogens, bacteria or parasites
that freshwater fish are susceptible to. Once the salmon
have reached the point of transfer to seawater, extensive
testing is carried out to evaluate readiness, including visual
observations and genetic analysis to ascertain the gill
function’s ability to process sea water. Once these results are
successfully returned, the salmon is carefully removed from
its freshwater environment and begins its seawater leg of the
journey.
Biosecurity strategy
OUR BIOSECURITY STRATEGY FOCUSES ON:
Breeding programmes and vaccination
Selective breeding programmes are ongoing to improve
fish resilience and vaccinate all stock. By bringing the
production of broodstock into our own value chain we
mitigate biological risk of imported disease.
Robust smolts and shorter time at sea
Large robust smolt of high quality: RAS facilities to
increase the average smolt size to 500 g in sustaina-
ble growth rates, and thereby reduce time at sea. This
strategy will increase production capacity, improve
consistency of supply and reduce biological risk.
Optimal placing
We continue to stock sites in optimal water conditions,
the largest fish further out in the fjords, reducing risk
of disease. These sites are more exposed and require
strong equipment and wider cages with reduced stock-
ing density.
VHP and internal control
We have specific veterinary health plans (VHP) for
each site with strict intern controls on transport be-
tween sites, controls and plans on dead fish handling,
parasites and predators all to optimize fish welfare and
reduce mortality.
Screening programmes
Continuous screening of all fish throughout the produc-
tions chain, ensures healthy stocks, and early warning
system for preventive intervention. Our fish health
team and veterinarians regularly inspect and test all
farms and hatcheries. There is regulatory testing as
well as taking part in Group-wide biosecurity auditing.
Training and awareness program
Regular training of all employes in biosecurity proce-
dures and plans is an essential part of the strategy
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INTEGRATED ANNUAL REPORT 2023 HEALTHY SALMON
In recent years we have invested heavily in farming
service vessels. This is part of our biosecurity strategy
which aims at preventing welfare compromising incidents,
sufficient treatment capacity is also key to strong biological
performance.
We have accelerated increased treatment capacity in Scotland
to improve biological performance in the Scottish operations.
In 2021, we received the FSV Bakkanes, and in January 2023
we added further to the sea lice treatment capacity with the
fitting of a delousing system onboard our 2,500 m
3
vessel
using flushing technology, which complimented the arrival of
a 4,000 m
3
FSV in Scotland in 2022. Both vessels are equipped
with state-of-the-art RO technology, to enable combination
FW and sea lice flushing to optimize every handling event,
maximise sea lice clearance and maintain good gill health.
In the Faroe Islands FSV Bakkafossur, one of the largest
well boats in the global aquaculture industry was added
to our fleet in 2023. Bakkafossur can carry up to 1,000
tonnes of live salmon and is regarded as a huge upgrade to
secure sustainable operations in the future. Equipped with
reverse osmosis technology for de-salination of water with
a production capacity of 6,000 tonnes of freshwater a day,
Bakkafossur adds significant freshwater treatment capacity
to Bakkafrost’s operations in the Faroe Islands. Treating
salmon with freshwater is an efficient way to rinse the
gills, restore gill health and ensure more robust and healthy
growth. In addition, Bakkafossur is equipped with a flushing
sea-lice removal system, reducing lice numbers in line with
our sustainability strategy.
The vessel also provides options for enclosed treatments for a
more controlled treatment environment as well as supporting
specific selection methods to ensure fish is handled
according to size and health status, thereby strengthening
our biological risk mitigation approach. In line with our
harvesting operations, the grading mechanism fitted onboard
Bakkafossur also provides the opportunity to transfer ‘small
sized’ salmon back to the cages for continuous growth,
securing a more premium-quality salmon being harvested.
Dual Fresh Water treatments
The delousing system has a mechanical flushing and filtration
action to remove sea lice. We have found this system to
work well on our farms being relatively gentle on fish with
effective removal of sea lice and having a high throughput to
ensure that handling time for the fish is minimised. This has
resulted in significantly reduced mortality during handling.
In a strategic effort to further reduce the mortality during
handling, we have implemented integrated delousing and
freshwater treatment systems onboard our newest vessels,
including our 4,000 m
3
vessel in Scotland and FSV Bakkafossur,
enabling gills and lice to be treated in a single handling event.
Freshwater Treatments
Freshwater treatment has proved highly effective and
particularly important in maintaining the lowest possible
levels of amoebic gill disease (AGD) and reducing the effect
of other gill challenges like plankton blooms and improves
the resilience of salmon to stress.
Scottish operations have been particularly challenged by
reduced gill health in recent years due to the extended
growth period in the marine environment exposing the fish
to hazards that impair their gills during this period, such
as blooms of hydrozoans. Treating the fish regularly with
freshwater is an efficient way to rinse the gills of the fish and
restore gill health.
Thermal treatment
The system is a thermal, non-medical treatment system,
which utilizes luke-warm water for the removal of sea lice.
The salmon is pumped from the cages for the thermal system
using a gentle pumping system. The fish is counted and then
bathed in temperature-controlled water. The treatment is time
adjustable, and the system uses high-frequency underwater
circulation, ensuring a continuous supply of fresh water.
After the treatment, the salmon flow back to the cages in a
continuous flow of fresh seawater.
Enclosed Medical Bath Treatment
Although non-medical treatment is our preferred treatment
choice, health and welfare compromising issues might
occur where medicinal interventions are required. Enclosed
medicinal bath treatments enable us to treat the fish with
antiparasitic agents in a much more efficient manner, ensuring
optimal fish welfare during treatment.
Years of persistent efforts to combat disease outbreaks and
sea lice have given significant results. In 2022, sea lice levels
reached an all-time low in both the Faroese and Scottish
operations—an important achievement. And the positive
trend continued in 2023, with yet another year of all-time
low sea lice levels. This dedication to maintaining healthy sea
environments is crucial for sustainable aquaculture.
Healthy Salmon
Farming Service Vessels – The Cornerstone
of Our Fish Health and Welfare Strategy
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Targets
• Increase smolt size to 500 g by 2023 in the Faroes and
2026 in Scotland
• Zero antibiotic use
• Maintain salmon survival rate at 94% or above (Faroes)
• Increase research to optimise fish welfare and product
quality
• Maintain industry-leading approach to animal welfare
Performance
We provide optimal conditions, including clean water,
plenty of space, and proper nutrition. Our fish are stocked
at densities that enhance performance and allow them to
express natural behaviour. Throughout 2023 our Faroese
operations complied with regulation, the average stocking
density at our stocked sites in 2023 was 7.59 kg/m
3
.
The average stocking density at our stocked Scottish sites in
2023 was on average 8.14 kg/m
3
.
Survival - Faroe Islands
The strong biological performance in the Faroese farming
operation seen in recent years continued throughout the
year, resulting in very high survival rates in 2023. We have
seen a significant positive impact with our new well boat
Bakkafossur commencing operations in 2023. Survivability
has mostly improved due to optimizing treatment operations,
including the handling of the fish, and accurate strategic
planning of sea lice control, with specific consideration to
fish health.
The effect of our smolt strategy began to materialize, with a
focus on optimal growth rates in hatcheries to improve heart
health and increase smolt size upon transfer to the marine
environment. We have also observed successful signs of the
QTL-CMS resistance of the smolt being transferred.
We have relocated several marine sites in the Faroe Islands to
increase water flow and oxygen which improves fish welfare.
For the Faroese operations the trend is positive. The survival
rate in Scotland is however trending lower than in the Faroes.
Survival - Scotland
In 2023, the entire Scottish salmon aquaculture sector faced
elevated environmental challenges. These challenges included
seasonal blooms of harmful plankton and jellyfish, resulting
in gill health issues and significantly reduced survival rates in
the most affected areas.
Bakkafrost’s Scotland operation experienced an earlier
challenge in 2023, as a result of high water temperatures
arriving earlier than previous years. Mortality peaked one
month early, in August, however the FW treatment strategy
showed promise assisting in regaining control of AGD,
improving gill health following hydrozoan and plankton
blooms, and maintaining low lice. From September through
to end of Q4 2023, survival rates improved which was a
significant improvement in 2022.
AGD, a driver of mortality in 2022, was brought under
control in 2023 with appropriate access to FW treatment.
The increasing incidence of bacterial diseases such as
furunculosis and Piscirikketsia led to some reduced survival
in compromised fish. Maintaining good general health by
keeping on top of AGD and other gill complaints worked well
in limiting these infections to some degree, and antibiotic
treatments have not been required to be fed to any stock in
2023.
ANNUAL
SURVIVAL RATE
2023
92.7%
FAROE ISLANDS
79.4%
SCOTLAND
MONTHLY
SURVIVAL RATE
2023
99.39%
FAROE ISLANDS
98.29%
SCOTLAND
*Global Salmon Initiative (GSI) methodology:
12 months
rolling mortality =
total # of mortalities in sea last 12 months**
x 100
(closing # of fish in sea the last month + total
# of mortalities the last 12 months + total #
harvested fish the last 12 months + total # of
culled fish in sea (due to illness or similar and
not included in the harvest number))
** not including cullings
ANNUAL SURVIVAL RATE
75
80
90
95
100
2018 2019 2020 2021 2022 20
23
Faroe Islands Scotland*
*Scottish numbers have been incorporated subsequent to
the acquisition of the company.
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INTEGRATED ANNUAL REPORT 2023 HEALTHY SALMON
Some significant improvements have been seen in
survivability in 2023, and the FW treatment strategy has
been demonstrated to be successful in improving general
health while keeping control of parasite infections. Further
improvements are expected in 2024 as optimization continues,
and derisking ahead of high-risk periods is undertaken.
Measures taken to mitigate biological risk include:
• Increase of both mechanical and freshwater treatment
capacity, latest with the introduction of a 4,000m
3
FSV
in Scotland and 10.000m
3
FSV Bakkafossur in the Faroe
Islands
• Reduced time in the marine environment
• Robust high quality smolt strategy, releasing larger and
more robust salmon into the marine environment
• Broodstock optimization, including the implementation of
CMS-resistant egg in the production cycle
• Enhanced program of surveillance for AGD and biological
indicators or health and respiratory function to help
mitigate challenges
• Continuous investment in R&D projects
• Treatment resources in Scotland more than doubled since
2021, resulting in improved gill health and consequently
improved survival rates toward year end.
Broodstock
We continued to invest in the development of our broodstock
programs and made further progress in 2023. We have
expanded the production of salmon eggs from the Faroese
strain with incubation at additional hatcheries. For more
information about broodstock please see page 122.
SMOLT
Faroes
In 2023, we made further progress, in Scotland the smolt size
increased from an average of 106 g in 2022 to 117 g in 2023
and in the Faroes the smolt size increased to 396g.
Bakkafrost aims to produce all smolts for release at an
average weight of 500 grams by 2024 in the Faroe Islands
and by 2027 in Scotland.
In Scotland we have four hatcheries and currently produce
just over 60% of the smolt we need. In 2024 nearly all smolt
will be sourced internally - size will gradually increase next
years to over 200g. The next RAS site is expected to be
in operation in 2027, enabling total yearly capacity of 18
million smolt á 500g
Increased smolt size significantly improves salmon resilience
in the marine environment. We continue to expand our RAS
capacity in the freshwater stages of the salmon lifecycle
with Applecross under construction in Scotland and with
the expansion of Glyvradalur and Norðtoftir commencing
operations in 2023.
Increasing the smolt size is transformational to our operations.
With high focus on all processes to optimize quality and fish
health and robustness of the fish. Measures include lowering
the water temperature and close monitoring of water quality.
The resulting growth rates is slightly slower than originally
projected, however we are committed to operating to the
highest standards for fish health and welfare therefore the
focus is on quality rather than quantity.
Medicine use
In the Faroes we have reduced the quantities of in-feed
medicine from 5.11 g per tonne produced to 0.47 g per tonne
produced. In Scotland, this has remained stable in recent
years with 0.43 g per tonne in 2023.
Antibiotics
In 2023, all Bakkafrost salmon was produced free from any
antibiotics.
Sea Lice
Overall, sea lice levels in both the Faroese and Scottish
operations remained at historically low levels throughout
2023.
In the Faroe Islands, 2023 was another record-breaking year
with generally low levels of sea lice with an average of 0.28
female adult lice per fish.
On average across all Scottish farms, sea lice levels remained
among the lowest levels seen over the past 5 years. The
increased use of freshwater bathing, has ensured we have
remained within these parameters, while minimising the
need for further mechanical and medicinal treatments.
SEA LICE COUNT
2023
0.28
FAROE ISLANDS
0.22
SCOTLAND
Average over 12 months
of female adult lice per fish across all sites.
For more information on fallow time and medicine use, please visit
www.bakkafrost.com/sustainability/data
MAIN CAUSES OF REDUCED
SALMON SURVIVAL
2023
FAROE ISLANDS
Marine
• Handling mortality, treat-
ments
• Seals
• Disease (CMS, HSMI, Gill
health)
Freshwater
• Technical issues/accidents
• Low egg quality
• Start feeding mortality
SCOTLAND
Marine
• Disease (Gill Health)
• Transfer Mortality
• Environment (Water quali-
ty/blooms)
Freshwater
• Technical Incidents
• Physical (Deformity)
• Transfer
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Disease - Faroe Islands
In the Faroe Islands, the overall health of the salmon has
been good in recent years.
Renibacterium salmoninarum (BKD) was detected at some
marine sites in the Faroe Islands in 2023, these findings were
closely monitored. All the diseased sites are harvested, and
currently all sites are disease free. Smolts have continously
been screened for BKD throughout 2023 as a biosecurity
measure, and all results have been negative.
Although production of increasingly larger smolts can be
challenging, the overall health status has been good at all
hatcheries in 2023, and we continue to monitor emerging
diseases as well as improving the quality of the smolts.
Disease – Scotland
In the Scottish operations Q1 & Q2 saw excellent health &
growth, due to control of AGD and lice. In the early part of
Q3 some losses were experienced in farms that saw high
levels of jellyfish and plankton. Sites with concurrent disease
presence had worse outcomes, for example a strong link
was found between Pancreas Disease presence and jellyfish
exposure. These experiences have led to investment in better
vaccine coverage.
Bacterial diseases have increased in the last years, with
furunculosis, Piscirikketsia and Yersinia having some impact
on survivability in 2023, however these are mostly limited to
outliers of populations and outbreaks generally controlled by
managing general health.
CMS continues to be a late cycle disease causing some losses,
and harvest is the main mitigation against mortality.
“As stewards of the marine
environment, we recognize that fish
health and welfare are paramount.
Our unwavering commitment
extends beyond the water’s surface.
Through continuous learning, robust
infrastructure, and strategic protocols,
we enhance welfare and minimize
mortality at every stage of a salmon’s
life cycle. From selective breeding
initiatives to nurturing larger smolt
and expanding treatment capabilities,
we support responsible practices
that resonate through the currents of
sustainability”
Anna Johansen, Group Quality, Environment,
Safety & Health Director
*Average on max biomass
AT LEAST 98.2%
OF THE VOLUME IS WATER
IN OUR CAGES*
1.8%
SALMON
98.2%
WATER
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INTEGRATED ANNUAL REPORT 2023 HEALTHY SALMON
ASC CERTIFIED SITES
100%
FAROE ISLANDS
40%
SCOTLAND
MONTHLY SURVIVAL
RATE
99.39%
FAROE ISLANDS
98.29%
SCOTLAND
ANNUAL SURVIVAL
RATE
92.7%
FAROE ISLANDS
79.38%
SCOTLAND
MEDICINE IN BATH
3.27 g
per tonne
FAROE ISLANDS
0.03 g
per tonne
SCOTLAND
Used by Bakkafrost
to treat sea lice in 2023
AUDITS PASSED
100%
AT BAKKAFROST IN 2023
STOCKING DENSITY
7.59 kg/m³
FAROE ISLANDS
8.14 kg/m³
SCOTLAND
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SEA LICE COUNT
2023
0.28
FAROE ISLANDS
0.22
SCOTLAND
How We Reduced Sea Lice Levels
Reducing time at sea
• Increasing average weight of smolt
Increase the preventative period (for infection)
• Skirts
• Preventive in feed treatments
• Location of sites – from sheltered to exposed sites
• Coordination of stocking of sites
• Higher stocking density during the first months
Reduce overall lice pressure
• Effective and timely treatments
• Low threshold treatments limits
• Site specific lice strategies
Modelling
• Site specific lice strategies relating to lice pressure,
lice biology and in combination with exact planning of
available treatment resources
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2017 2018 2019 2020 2021 2022 2023
ANNUAL SEA LICE COUNT
Faroe Islands Scotland
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Our treatment capacity in scotland has doubled to ensure
that we have flexibility to deal with unpredictable levels of
gill health challenges driven by environmental conditions.
In 2023, we achieved more than 20% increase in both
the number of fish and biomass treated with freshwater
compared to 2022.
We have further increased the size of smolt (juveniles)
in scotland, improving marine resistance against lice and
disease.
Since 2022, QTL-CMS resistant egg are fully implemented
in the Faroe Islands and all fish that are stocked to sea
have specific genetic resistance against this disease. We
should see the full effect of this resistance in the future
production cycles. Our own production of eggs from local
faroese broodstock is also producing specific QTL strains
that are resistant to CMS and X, Y, Z. Production egg are
now included in faroese hatchery production.
Fully rolled out lice simulations in the faroe islands to
identify potential risk of increased concentration of sea
lice, resulting in very low lice levels in 2022 and 2023.
Increased Farming Service Vessel capacity in the Faroe
Islands with the arrival of 10.000 m
3
Bakkafossur, fitted
with the newest equipment to ensure careful handling of
fish and new treatment options. A significant contribution
to increased sea lice control and improving gill health.
To optimise welfare, all employees have received handling
training, including crowding.
The scottish operations are involved in many R&D projects
aimed at improving welfare, both internally and engaging
with external academic groups. A big driver in 2023 was
understanding the risk to our farms from micro jellyfish
but implementing a monitoring programme. This has led to
new vaccinations, as well as opened the door for academic
projects aiming to improve mitigation or tolerance to such
blooms.
For mechanical treatments detailed data is registered,
including delta temperature and soak time, lice counts and
calculated treatment effect and mortality. This information
is used to evaluate the treatment and to identify the optimal
treatment factors, including temperature, treatment time,
duration of crowding and fish size.
Increased the capacity at two hatcheries with 55% in total
and implemented new technologies to improve water
quality, including protein skimmers to remove small
particles from the recirculated water.
Continued to improve systems in hatcheries with newest
available technology to improve water flow and installing
new degassers.
Installed new systems in hatcheries to implement the slow
growth smolt strategy.
The utilization of cleanerfish has demonstrated a positive
preventive effect against salmon lice, particularly when
lice numbers are low. Over the years, substantial efforts
have been dedicated to enhancing the well-being and care
of these cleanerfish. Examples of initiatives: cleanerfish
are provided with specialized feed that meets their
specific nutrient requirements. Methods of cleanerfish
transportation have been refined to ensure their welfare
during transit. Ongoing research aims to develop effective
vaccines for cleanerfish, at sea farms. Thorough attention
is given to the daily care of cleanerfish. Bakkafrost
has invested in new cleanerfish shelters and essential
equipment. These facilities play a vital role in enabling
cleanerfish to thrive within our cage systems. Projects
involving natural algae within the cage environment and
prebiotic bath treatments before stocking to sea have been
explored.
Despite these determined efforts, concerns persist
regarding the health and welfare of Lumpfish in our
production systems. Unfortunately, the mortality rate
remains unacceptably high. As a result, Lumpfish will
not be included in Bakkafrost’s sealice strategy moving
forward.
Welfare awareness
We launched welfare awareness month in June 2021 in
Scotland. We have further developed it in 2023 and will
expand to the whole group in 2024. The campaign is aimed
Examples of
Initiatives to
Improve Fish Health
and Welfare
“We are dedicated to securing the
welfare of the salmon in all phases
of their lifecycle. Through the Global
Salmon Initiative, we collaborate with
other companies in the industry to
advance animal welfare in operations,
and we are currently in the process
of creating a common animal welfare
standard which addresses the most
important salmon welfare parameters.
We are excited about this project, which
we think will establish a solid basis for
the continuous improvement of animal
welfare throughout the industry.”
Marner Nolsøe, Veterinarian, Bakkafrost Faroe Islands
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Healthy Salmon 2023 highlights
• Significantly increased treatment capacity as we
have taken delivery of Farming Service Vessel
Bakkafossur in the Faroe Islands.
• Historically low levels of sea lice both in the Faroe
Islands and in Scotland
• Continued implementing veterinary visits and
attestation prior to mechanical delousing.
• Upheld the increased focus on biosecurity onboard
vessels, with risk-based hygiene inspections to
ensure biosecurity. In 2023, a comprehensive
effort was made to ensure the hygiene and safety
of our Farming Service Vessels. Veterinarians
and biologists have conducted regular hygiene
inspections as well as inspections based on
biological risk management. The results revealed
significant improvements in hygiene procedures
across these vessels.
• Had no outbreaks of ISA in our operations.
• Reported the following notifiable diseases to the
Faroese authorities: Bacterial Kidney Disease
(BKD) and IPN.
• Continued focus on fish welfare during delousing
procedures, including veterinary surveillance and
improvements of delousing systems.
• Continued our feed project to improve fish health
and welfare.
• Reached a milestone as all smolt transferred to the
marine environment was QTL-CMS resistant
• Expanded the production of egg from the Faroese
strain with incubations at additional hatcheries.
• Conducted tests of the Faroese broodstock in the
marine environment, including testing against
parameters such as lice resistance, growth, quality,
fertility and survivability
• Monitoring of algae in Faroese fjords and coastal
areas continued representing several farming sites
in the Faroes
• Recertification of all ASC certified sites
• Passed 100% of audits across our various
certification programmes.
• Increased focus on optimizing biological risk
management. Risk management was updated in
2023
• As members of the Global Salmon Initiative, we
participate in developing an industry standard for
fish health and welfare, although this work is still
in early stages.
• Bakkafrost Scotland submitted a Planning
Application Notice with North Ayrshire Council to
construct a further RAS facility at Fairlie on the
Ayrshire coast
at ensuring good fish welfare is at the forefront of everything
we do and everyday best practice.
Welfare awareness includes a programme of in person and
virtual workshops delivering key information on company
wide areas of focus for improvement. In 2023 this was
centred around managing gill health by utilizing and
optimizing our Farming Service Vessels, and implement our
jellyfish monitoring regime. Training was also delivered
by the biology team, covering basic biology and advanced
training to freshwater biology and cleaner fish, as well as a
welfare taster session targeted at non-production employees
interested in a short introduction to welfare. In 2023, there
were 117 attendees to an in-person wam session, which were
held over 10 weeks, and then a further 546 people attended
a training course over the year.
Once a year we gather all staff for company day which
comprises a strong focus on fish health and welfare. Through
workshops and classes, all staff in direct contact with the
salmon are educated in signs of fish welfare and in taking
action when needed.
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WHAT’S NEXT?
• The RAS facility at Applecross is set to be completed in
early 2025, and planning to construct a further RAS facility
at Fairlie on the Ayrshire coast, awaiting approval.
• Increase biosecurity focus in freshwater operation in
Scotland, for example ensure full desinfection of all intake
water, all ingoing trafic, and all incoming live stock.
• Continue our high focus on veterinary visits during
delousing operations, ensuring good fish welfare.
• Continue focus on vessel biosecurity.
• Continue developing the Faroese strain and Native
Hebridean strain.
• Continue to roll out our new sea lice site specific treatment
and prevention strategy.
• Continued the increased focus focus on preventive
screening of ISAV at hatchery level
• Ongoing focus on vaccination and optimal use of vaccines.
• Focus on disease prevention and better understanding of
health status at hatcheries. The smolt health status has
crucial importance for the performance when transferred
to the marine environment.
• Focus on gill health and freshwater treatments
• Continued focus on reducing formalin treatments at
hatcheries.
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We frequently encounter the question: “Do you have
veterinarians working with you, and what role do they play in
fish farming?” The answer is a resounding yes. As stewards of
living animals, we must create the most favourable conditions
for our fish to thrive.
Bakkafrost‘s dedicated team of veterinarians and biologists
plays a key role in achieving this goal. They visit and
carefully inspect each site at least once a month, establishing
comprehensive Veterinary health plans tailored to the unique
needs of every location.
Their expertise extends beyond routine check-ups:
Breeding Programs: Our veterinarians and biologists actively
contribute to the development of breeding programs, ensuring
healthy and resilient fish populations.
Feed Composition: They collaborate on optimizing feed
formulations, promoting growth and well-being.
Site Planning: From stocking decisions to habitat design, they
guide us in creating optimal conditions for fish production.
Biosecurity Measures: Disease prevention is paramount.
Our experts implement rigorous biosecurity protocols to
safeguard our aquatic environment.
Currently, our team boasts 28 highly educated professionals—
biologists, veterinarians, and similar experts—united by their
unwavering commitment to animal health and welfare and
fundamental to our mission of responsible and sustainable
fish farming.
This underscores our dedication to quality, innovation, and
the well-being of our fish.
Healthy Salmon
Ensuring Excellence in Animal Health:
Our Veterinarians and Biologists
“Maintaining strict controls and
adhering to high standards is essential
for optimal farming operations. We
utilize a data-driven approach, which
includes continuous monitoring and
ongoing analysis of the effects and
outcomes of our operations”
Rósa Waag, Veterinarian, Bakkafrost Faroe Islands
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Research &
Development
Projects
Our approach
Research and development is embedded in our operations
and extends into collaboration with industry and academic
partners to find sustainable solutions for industry-wide
challenges. In our commitment to sustainable salmon farming,
research and development (R&D) plays a key role. By tackling
technical and operational challenges, we generate valuable
insights related to fish well-being.
Performance
A focus on research and development is important for
progress. In 2023 we had 28 highly educated professionals —
biologists, veterinarians, and similar experts working fulltime
at Bakkafrost.
Here are some examples of our ongoing research projects
aimed at enhancing and deepening our understanding of
healthy salmon:
Broodstock
In 2023, we intensified our investment in developing
broodstock of Faroese origin. Notably, the first generations
were successfully produced in a controlled production
environment within the Faroe Islands. This milestone
allowed us to meticulously collect data on critical quality
parameters, including CMS (Cardiomyopathy syndrome)
resistance and overall survival—essential for our breeding
program. Further ongoing breeding work is in progress,
preliminary results are promising for the production of a
strong parental strain, with specific resistance for several
important traits.
Fish health & welfare projects
Bakkafrost is a partner in the FHF sponsored LiceDetached,
where local (Firum) scientists are studying the reattachment
rate, and ability to reinfest other farms after falling of the
fish during a handling.
To support development within fish health and welfare in
the salmon industry, we participate in the work to develop
an industry standard for health and welfare, facilitated
through the Global Salmon Initiative.
DigiHeart - heart diseases are one of the biggest challenges
in aquaculture industry. The subject of this project is to get
a better understanding of the morphology of the heart and
to measure and understand the optimal shape of a salmon
heart.
A disease of concern is Cardiomyopathy Syndrome (CMS),
caused by Piscine myocarditis virus as this reduces fish
tolerance to stress. All smolt put to sea in the Faroes Islands
are now CMS resistant. The first generation of Faroese
bred salmon was harvested in 2020 which enabled us to
initiate gathering data on quality parameters, including
CMS resistance and survival which is fundamental for the
breeding programme.
Members of our fish health team in Scotland participate
in a project team together with representatives from
University of the West of Scotland (UWS), WellFish
Diagnostics, Bakkafrost Scotland, Vertebrate Antibodies
Limited (VAL), and the University of Aberdeen’s Scottish
Fish Immunology Research Centre to develop antibodies to
probe key markers in fish blood that indicate an immune
system response to four of the most common health
challenges.
In Scotland, during 2023, we have trialled Live Plankton
Analysis Systems (LPAS) at a number of sites, to support
the development of autonomous plankton monitoring
systems to help us understand more about environmental
threats in the environment.
Jellyfish – In recognition that jellyfish pose one of the
major environmental threats to gill health, our Scottish
operation commenced a jellyfish monitoring programme at
all marine sites, to support decision making with regard to
health and husbandry and mitigate impacts from jellyfish
blooms. Data from this endeavour allowed investment to
be agreed in vaccination programmes, and further research
“Fish Welfare and Survivability is
of paramount importance for the
sustainability of our business in the
broadest sense. For this reason, we
collaborate with universities and other
agencies, investing significant time
and financial resource on research
and innovation. We secure the future
of our business by ensuring that our
investments and production strategies
remain well targeted to address the
dynamic challenges of the environment
in which we farm.”
Dave Cockerill, Biology Director, Bakkafrost Scotland
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will be undertaken going forward to better understand
species specific risks and mitigations.
Gill health – gills being scored for AGD and other gill
changes and gill swabbing to check for pathogens.
Increased pathogen monitoring and screening through
eDNA analysis of filtrated sedation water during sea lice
counting
We are involved in many research projects with Scottish
Universities to improve understanding and develop
indicators for multifactorial disease challenges like
Complex Gill Disease (CGD) and non-infectious anaemia, as
well as projects to improve smolt quality. We have been
successful in obtaining a significant grant from HIE and
from Marine Directorate to undertake ground-breaking
work in advancing our ability to grow smolts to an average
of 500 g and we have a program of research set out to
obtain this critical knowledge which builds upon the work
done within our Faroese RAS systems.
Environmental impact projects
We are committed to responsible stewardship of the
environment in which we work and live. To better
understand and prevent any harmful impact from farming
activities on the environment, we participate in various
environmental projects.
We are involved in a project together with Firum, an
aquaculture research station, to gain a better understanding
of the interaction between salmon farming and wild trout
population.
We are actively involved in various projects, which aim
to minimise the environmental impact of our operations,
such as our project with the University of Faroe Islands,
aimed at creating a robust and reliable model of currents in
Faroese fjords and coastal areas. The new modelling tool is
expected to give a much better understanding of physical,
biological, environmental, dynamic properties and effects
of the natural nearshore systems and the interaction with
industrial undertakings such as aquaculture.
We have run a collaborative project with Firum and other
industry partners in the last couple of years to monitor
level of algae in Faroese Fjords. The project will determine
a baseline of algae in different locations and investigate
the possibilities of implementing a warning system for
algae blooms. The project is part of the work to prepare for
potential future climate changes.
We have completed a pilot project that involves a
collaboration with Firum to monitor and analyze hydrozoa
in the Faroese fjords. The upcoming full survey planned for
2024 will focus on two specific sites, providing valuable
insights into the behaviour of hydrozoas. By enhancing our
understanding of hydrozoa, this project aims to contribute
to the overall health and sustainability of Faroese fjords.
We are actively involved in developing an inspirational
new Digital Management tool, which can simulate sea lice
development, identify risks, and aid early intervention and
is now being used for planning sea lice treatment. The tool
has proved highly effective and is a significant part of the
explanation for our low lice numbers.
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Healthy and
Safe Food
Production of more sustainable food with high nutritional
quality remains our top priority. Our salmon offers several
health benefits compared to other animal proteins. Salmon
is a healthy food choice and it contains several nutrients
necessary for our health and well-being, including Omega-3
fatty acids and Vitamin D. Our salmon are fed with a top-
quality feed, high in marine and Omega-3 content. Due to the
high levels of marine content in our salmon feed, Bakkafrost
salmon is an excellent source of the long-chain omega 3 fatty
acids EPA and DHA, making it very effective in preventing
cardiovascular disease.
HUMAN HEALTH
Our approach
We feed our salmon a diet close to the natural diet of wild
salmon. We believe this is beneficial to salmon health and
well-being and also results in a higher nutritional value. The
vertical integration of our fishmeal, oil, feed, and salmon
production ensures we source the highest quality marine
ingredients from well-managed, sustainable local Faroes
fisheries with the marine content resulting in a high Omega-3
fatty acid content of our salmon
Targets
• Maintain our high omega-3 levels
Performance
In 2023, the Omega-3 content of Bakkafrost salmon
was on average 2.36 g per 100 g of salmon fillet
In 2023, the protein content of Bakkafrost salmon was on
average 20.2 g per 100 g of salmon fillet.
Vitamin B12
HEALTHY FATS INCLUDING
OMEGA-3 FATTY ACIDS
(ALA, DHA, EPA)
PROTEIN
(All nine essential
amino acids)
NIACIN, B3
VITAMIN B6
SELENIUM
POTASSIUM
VITAMIN D
(D2 + D3)
Salmon a nutrient-rich choice for a sustainable diet
Salmon offers a wealth of health benefits. As awareness
grows about sustainable food choices, salmon stands out
as an excellent reason to include salmon in your regular
diet:
Rich in Omega-3 fatty acids:
• Salmon is a centre of omega-3 fatty acids, which
play a crucial role in heart health, brain function, and
reducing inflammation.
High-quality Protein:
• Salmon provides high-quality protein, essential for
muscle-building, muscle repair, immune function, and
overall well-being.
High levels of vitamins and minerals:
• Bakkafrost salmon contains a variety of essential
vitamins and minerals, including vitamin D, niacin,
vitamin B6 and riboflavin, selenium and potassium.
These nutrients support bone health, immune function,
energy metabolism, and overall well-being.
In summary, salmon stands out due to its combination
of protein, healthy fats, and essential vitamins and
minerals. Including at least two servings of salmon per
week can help people meet their nutrient needs and
reduce the risk of several diseases.
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Bakkafrost data calculated through an analysis of whole salmon variations
between all Bakkafrost sales sizes from 3-4kg up to 7+ kg.
RDI sources: Nordic Nutrition 2012 and EFSA
Nutrition
OMEGA-3 LEVELS OMEGA-3 TO 6 VITAMIN D
MEAN RATIO MEAN
2.42
g 1.40 9.6 µg
per 100g per 100g per 100g
RDI 10 µg RDI 10 µg
PROTEIN LEVELS VITAMIN B12 LEVELS VITAMIN E LEVELS
MEAN MEAN
20.37
g 4.23 µg 5.1 mg
per 100g per 100g per 100g
RDI 2 µg RDI 9 mg
SELENIUM IODINE
MEAN MEAN
0.2 mg 0.08 mg
per 100g per 100g
RDI 0.06 mg RDI 0.15 mg
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FOOD SAFETY
Our approach
Our products are designed for human consumption and
adhere to rigorous food safety regulations. We thoroughly
oversee every step, throughout the value chain, ensuring a
high standard of protection for human health. We actively
address biological, chemical, and physical hazards that
could jeopardize our products. Additionally, we are alert
against external threats such as food fraud and food
defence. Customers and consumers can place their trust in
our products, our commitment to food safety, and our robust
management systems.
We focus on HACCP (Hazard Analysis and Critical Control
Point), risk management and traceability for each site. HACCP
identifies any Critical Control Points (CCP) and Operational
Control Points (OCP) and frames the risk assessment against
these.
We routinely send product samples to third-party laboratories
for food safety testing, and employees receive food safety
and quality training.
Our strategic priority is industry-leading food safety. We have
robust food safety and quality risk assessment systems and
controls throughout the value chain. Quality assurance and
control are integral to all stages of production involving daily
testing and monitoring before issuing health certificates,
ensuring compliance with international health and food
safety regulations.
To ensure operations are aligned throughout the value chain
and to strengthen procedures, we have implemented a new
digital quality management system, increasing the availability
and usability of documents, procedures and registrational
forms.
Performance
Bakkafrost did have one product recall in 2023 because of
mislabelling.
In August 2023, we initiated a recall of a batch of 100g
smoked salmon sold in the Faroe Islands. The issue arose
due to a mislabelled best-before date: it was erroneously
printed as 08.12.2023 when it should have read 12.08.2023.
Importantly, the actual product remained safe for consumption
until the corrected best-before date. The root cause of this
mislabelling was a mix-up between the European and US date
formats.
Our commitment to transparency and quality assurance led
us to promptly address this oversight.
We promptly addressed the oversight and implemented
revised procedures to prevent such incidents from occurring
in the future.
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Except for this minor mistake, we have not had any product
recalls ever.
We have not experienced any significant incidents related
to food safety non-conformities concerning regulatory
requirements or voluntary standards.
Our products remain unrestricted in all markets.
The percentage of production volume originating from sites
certified by internationally recognized food safety standards
is a fundamental metric for ensuring the safety and quality
of food products.
Food defence
Bakkafrost has a series of proactive measures to protect
our products and company. The range of measures include
advanced electronic access control systems, surveillance
systems and strictly segregated food production areas.
This ensures that only designated people have access and
to relevant areas as well as ensuring that all employees are
accounted for in case of fire or other emergencies. Keeping the
products safe as well as our employees is of vital importance.
Traceability
Bakkafrost has control of the entire value chain from fish
oil, meal and feed to egg and genetics at our hatcheries,
throughout the farming process to the final product. This
enables Bakkafrost to ensure full traceability throughout
the value chain. Traceability can be used effectively to
improve trust and engage with customers and consumers.
In cooperation with selected customers, Bakkafrost use QR
codes on the products, enabling the end consumer to access
information about origin and further information about the
product. Ensuring that our supply chain is fully traceable helps
us to document the authenticity of our products and combat
potential food fraud, this further supports sustainability
credentials.
Free from
Our feed remains free from growth-promoting hormones and
salmon offal or waste from other farmed species. We include
only natural antioxidants to maintain nutritional quality, and
our fishmeal and fish oil are ethoxyquin-free. Our products
are well below EU directive limits for undesirable substances,
including dioxins and dioxin-like PCB’s and we continue to
look for ways to further reduce these levels. Further, the
levels of perfluoroalkyl substances (PFAS) including PFOS,
PFOAS, PFNA, PFHxS in our salmon are either under the limit
of quantification when tested or well below and in line with
the EU regulatory limits as also monitored by our Food and
Veterinary authorities.
Examples of measures:
• We have well-established Business Continuity and Incident
Management procedures, including product recall with
regular recall exercises.
• We adhere to standards and certification programmes and
our comprehensive internal control system is regularly
reviewed by authorities and third-party certification
bodies.
• All our processing facilities hold certifications recognized
by the GFSI (Global Food Safety Initiative)
• 100% of our products and our entire value chain are covered
by third-party certification, ensuring high international
food safety standards. See more under Collaboration and
Certification on page 120.
Traceability
Every salmon in our production has a
comprehensive log that provides essential
information about its origin and growth. Here are
the key details included in each salmon’s log:
Feed: As the only salmon farmer that also has own
production of fishmeal and oil in the industry, we
have full traceability of the feed provided during
the salmon growth, back to which species are used,
where and when it was fished, and who has fished
the marine ingredients. The same applies to other
feed ingredients. We also have full details of the
quality of the feed provided during its growth.
Broodstock: We have our own ambitious
broodstock program and therefore information
about the parent fish and family tree used for
breeding, back 17 generations.
Egg: Insights into the salmon’s early life stage.
Fish Group: We specify the relevant fish group to
which the salmon belongs.
Farm and Pen: Details about the specific farm and
pen where the salmon was raised.
Certifications: Any relevant certifications obtained
during the salmon’s lifecycle.
Vaccinations: Details about vaccinations
administered to ensure health.
Medical Treatments: We carefully monitor medical
treatments, ensuring that no residues of medicines
remain in our products.
Traceable LOT Number: Each fish box is assigned a
unique LOT number, allowing for easy traceability.
Supplier and Raw Materials Control: Our operation
maintains meticulous records of suppliers, raw
materials, ingredients, equipment, and services that
could impact food safety in our products.
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Collaboration and
Certification
We are committed to responsible farming practices and aim
to exceed leading standards. We are committed to operating
to the highest quality levels. Our third-party food safety
certification assures customers that our products are safe,
legal, and of the highest quality. We are certified to standards
that are accepted worldwide, and endorsed by top retailers,
restaurants, and manufacturers. We evolve with each edition,
incorporating food safety culture and addressing food fraud.
Our approach
All our operations are required to adhere to a minimum set of
third-party verified certification schemes that cover various
aspects, including food safety, environmental responsibility,
social responsibility, and fish welfare. Specifically, we must
achieve Chain of Custody certifications, as mandated by
GLOBAL G.A.P., RSPCA, BAP, ASC, and MSC. These certifications
ensure that our practices meet thorough standards and
contribute to sustainable and responsible operations.
Collaboration in the international salmon sector is critical
to address sustainability challenges. We were influential
in the formation of the Faroe Fish Farmer’s Association,
established to promote collaboration of a joint approach
to the management of sea lice and disease. In 2013, we
became a founding member of the Global Salmon Initiative
(GSI), an international leadership initiative established to
improve sustainability in salmon farming. As part of the GSI
collaboration, in 2013, we prioritized having all our sites in
the Faroes certified by the Aquaculture Stewardship Council
(ASC), the world’s leading certification scheme for responsible
farmed seafood, in 2020, which we achieved in November
2020. In Scotland, we have set a goal to have all sites ASC
certified by 2027 with over 40% of the sites already certified.
We have a comprehensive suite of national and international
accreditations and certifications across our value chain in
recognition of our exacting standards. All of our primary and
secondary processing plants are certified according to a food
safety standard such as BRCGS, IFS, GlobalGAP and BAP, all
are recognised by the Global Food Safety Initiative (GFSI).
GFSI recognition demonstrates that the scheme meets the
highest standards globally leading to international food
industry acceptance. The Global Food Safety Initiative is a
business-driven initiative for the continuous improvement
of food safety management systems with the ambition to
ensure confidence in the delivery of safe food to consumers
worldwide. GFSI’s work in benchmarking and harmonisation
aims to foster mutual acceptance of GFSI recognized
certification programmes across the industry with the
ambition to enable a “once certified, accepted everywhere”
approach.
Bakkafrost entire value chain; feed production, brood stock,
hatcheries, farming sites, harvesting and processing are
certified according to the international Global GAP (good
agricultural practices) standard. Global GAP is an international
standard, which focuses on food safety throughout the
whole production (based on HACCP), fish welfare and
health, biosecurity, traceability health and safety, social
responsibility, and minimising the impact on the environment.
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Global G.A.P differentiates from ASC in some areas as greater
focus on food safety and ensures strict procedures on
humane slaughter and stunning practices. The ASC standard
and the Global GAP standard complement each other well
to ensure the best practices in these main areas, ensuring
coverage by strict metrics and management systems. In the
Faroes, we also have added ‘Ohne Gentechnik Non-GMO’ to
our certifications.
Bakkafrost’s harvesting and value-added product (VAP)
production has the Aquaculture Stewardship Council (ASC)
Chain of Custody certification, BRCGS, and IFS food safety
standards. Both standards are a renowned benchmark
for food safety, integrity, and legality. They provide a
comprehensive framework to manage product safety
throughout our manufacturing, processing, and packing
processes. The fishmeal, oil and feed production at Havsbrún,
hold multiple certifications. The Feed division holds a Global
GAP certification as well as a BAP certification. The fishmeal
and fish oil division are certified according to the GMP+
standards, the Marin Trust standard and the MSC Chain of
Custody standard. Our salmon meal and oil also have GMP+.
All units at Havsbrún are certified to ISO9001:2015.
With BAP accreditation already secured on all Bakkafrost
Scotland facilities, we are now working with ASC to further
add to the business’ accreditation credentials. Bakkafrost
Scotland standards and certifications also include: RSPCA,
GlobalGAP and the Code of Good Practice to maintain the best
standards across each of its sites across the country.
Our accreditations are under constant review and our
diligent and consistent approach to meeting our customer
requirements and applying the highest standards across our
value chain underpins everything we do.
IFS
Our processing subsidiary, Munkebo Seafood, based in
Denmark, is certified against the International Food Standard,
IFS, which focuses on the processing and handling of food
packages in bulk. The processing plant is regularly audited,
and production processes are continuously reviewed to
ensure the production meets the highest standards for food
safety.
Target
• Maintain ASC certification, BAP certification or similar for
all Bakkafrost salmon
Performance
Passed 100% of audits across our various certification
programs.
As part of the GSI collaboration, in 2013, we sat a goal
having all Faroese sites certified by ASC by 2020. This was
accomplished in November 2020.
This is a major achievement for the sites and teams across
the business as the ASC develops and manages the strictest
standards in the industry including hundreds of requirements
covering potential aquaculture impacts – such as water
quality, responsible sourcing of feed, disease prevention,
animal welfare, the fair treatment and pay of workers
and maintaining positive relationships with neighbouring
communities.
We started the process to have all sites in Scotland ASC
certified in 2022 and by the end of 2023, 40% of all sites in
Scotland were ASC certified.
Bakkafrost Scotland was the first producer in Europe to
achieve 4-star Best Aquaculture Practice (BAP) certification,
which is a testament to the commitment that goes into
responsible farming throughout the value chain.
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FEED
BUSINESS UNIT FEED MILL CERTIFICATION
Havsbrún Feed Havsbrún P/F Faroe Islands
Global G.A.P. / VLOG, GAA BAP, ISO9001:2015, VLOG, MSC CoC, Label Rouge, GMP+; Marin
Trust
Our feed raw materials are certified
according to our sourcing policy.
FARMING - FRESHWATER
BUSINESS UNIT CERTIFICATION
Bakkafrost Faroe Islands Global G.A.P. / VLOG
Bakkafrost Scotland GAA BAP, Global G.A.P., Label Rouge, COGP*, RSPCA Assured, ISO14001
FARMING - MARINE
BUSINESS UNIT CERTIFICATION
Bakkafrost Faroe Islands ASC (100%), Global G.A.P. / VLOG
Bakkafrost Scotland GAA BAP, Global G.A.P., Label Rouge, PGI, COGP*, RSPCA Assured, ISO14001
PROCESSING
BUSINESS UNIT FACTORY PROCESSING TYPE CERTIFICATION
Bakkafrost Faroe Islands Glyvrar Primary & Secondary BRCGS, IFS, Global G.A.P. / VLOG, ASC CoC, Kosher, SEDEX
Bakkafrost Faroe Islands Vágur Primary Global G.A.P. / VLOG, ASC CoC, Kosher
Bakkafrost Scotland Cairndow Primary
BRCGS, GAA BAP, Global G.A.P., Label Rouge, PGI, COGP*, RSPCA Assured, Kosher, ISO14001,
SEDEX
Bakkafrost Scotland Marybank Primary & Secondary
BRCGS, GAA BAP, Global G.A.P., Label Rouge, PGI, COGP*, RSPCA Assured, Kosher, ISO14001,
SEDEX
Bakkafrost USA New Jersey Secondary Global G.A.P. / VLOG, ASC CoC, Kosher
*Scottish Finfish Code of Good Practice
ADMINISTRATION
BUSINESS UNIT CERTIFICATION
Faroe Islands ISO 9001, ISO 14001, ISO 45001
Scotland, Whole Company ISO 14001, ISO 45001
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100% ASC Certified in the Faroe Islands and 40% in
Scotland
All our sites in the Faroe Islands are ASC accredited and
we have started the journey in Scotland with 40% of the
sites now ASC certified. The ASC Salmon Standard aims to
address the key negative environmental and social impacts of
salmon farming associated with sourcing of feed ingredients,
disease, protection of wild salmon populations, biodiversity
and ecosystems, controlling of escapes into the wild, use
of medicine, labour standards and corporate citizenship.
The certification requires third party auditing on a number
of criteria, which exceeds national regulation in areas such
as biodiversity, environmental monitoring and health and
safety.
The ASC standard was developed in cooperation with the
WWF (World Wide Fund for Nature). The standard is seen as
the most stringent in the aquaculture industry and outlines
over 400 individual points with a range of requirements
all to ensure a more sustainable and socially responsible
production. The standard focuses on protecting the natural
habitat, water quality and ensure biodiversity and protection
of wildlife and with strict focus on prevention of fish escapes.
The standard sets criteria to manage sea lice and diseases
including direct mortality reduction plans and target.
Resources, including feed, shall be used in a responsible
manner from proper handling and treatment on waste to
energy usage assessments to sourcing policies whilst ensuring
full traceability. Social responsibility is of great focus ensuring
policies on discrimination and conflict resolution and whilst
protecting children from child labour, also ensuring contracts,
training and safe conditions for employees. Community
engagement with regular meetings and information.
The ASC standard is species specific and differentiates from
all other standards by having specific indicators, such as
specific metrics and limits. ASC standards are developed
according to ISEAL guidelines – multi-stakeholder, transparent,
incorporating science-based performance metrics.
The standard is under further development and a total
revised standard is expected to be released in 2024 with
even greater focus on fish welfare. Bakkafrost is via GSI
a part of the Technical Working Group on the fish welfare
project, which sets out to develop global indicators on fish
welfare and health. Bakkafrost is also part of an ASC working
group which is established to include lumpfish welfare in the
standard.
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Healthy Salmon
Broodstock Programs
Bakkafrost runs an ambitious broodstock program around
our two strains: The Faroese strain and the Native Hebridean
strain. The first trial generation of the Faroese strain was
harvested in 2020 and detailed quality data was gathered
on growth, survival rate, and disease resistance. In recent
years, the technological development within the field of
genetic research has been strong. Leveraged by this and more
than 40 years of data on the heritage of the Faroese strain,
Bakkafrost has made significant progress in the broodstock
program.
We now have 2 locations in Scotland dedicated to our Native
Hebridean Strain broodstock program. Our Native Hebridean
strain is a unique breed of Scottish salmon, descending from
wild salmon from the remote Isle of North Uist.
In the Faroe Islands, we have around 400 families of fish
in our bio-secure land-based broodstock facility, and the
heritage and genome are fully documented for each fish.
Through our research, we have identified genetic markers that
are linked to specific positive properties, such as resistance
to different deceases, survival and growth rates. In the
future, we even believe we will find genetic markers linked to
improved resistance to sea lice. This knowledge is then used
to carefully select the males and females for rearing the next
generation, thereby improving each generation. No genetic
modification is done, only natural selection is facilitated by
data and technology.
In our breeding program we focus on maintaining genetic
diversity as well as minimizing inbreeding. We perform
selection for core traits like robustness, growth, and disease
resistance. The salmon is selected to be resistant to viral
diseases such as Cardiomyopathy syndrome (CMS), Pancreatic
disease (PD) and infectious pancreatic necrosis (IPN). The
disease resistance traits are measured and validated on
the siblings of the breeding candidates through challenge
tests and field measurements. Monitoring and optimizing
the disease resistance traits reduces loss of fish in disease
outbreaks. The growth in fresh water and seawater is also
measured on the siblings of the breeding candidates through
field measurements and harvest tests.
We use genomic selection (GS) to increase the selection
intensity for the key traits. This is a continuous process where
the 20 thousand gene markers are used to select the best
broodstock fish and the results improve over time. Selection
at an individual level for the performance traits of the
candidate is also performed. The breeding program consists
of 1200 families. The broodstock nucleus is kept in addition
to the elite broodstock. The eggs are produced from the very
best elite broodstock fish in our land-based broodstock sites
where disease resistance, robustness, and shorter production
time are our key focus.
We continue to invest in the development of broodstock of
Faroese origin and made further progress in 2023.
The first generations have been produced in a production
environment in the Faroe Islands, which has enabled us to
gather data on quality parameters, including CMS resistance
and survival, fundamental for the breeding programme.
Further ongoing breeding work is in progress, preliminary
results are promising for the production of a strong parental
strain, with specific resistance for several important traits.
We have expanded the production of salmon eggs from the
Faroese strain with incubation at additional hatcheries.
Native Hebridean Salmon is a unique breed of Scottish salmon,
descending from wild salmon from the remote Isle of North Uist in the
Outer Hebrides, off the North-West coast of Scotland. A native breed,
that is naturally robust and grows well in its natural environment as
we have seen throughout the production cycle.
Spawning usually occurs from October to November, but
these off-season eggs were produced on the 6th of June
2023. This is the first time we have managed to produce
salmon eggs this early.
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Healthy Environment
STRATEGIC PRIORITY
• To minimise our environmental impact
2023 PERFORMANCE AGAINST OUR 2023
COMMITMENTS
• Reduce the Scope 1 & 2 CO2 footprint by 50% by 2030
• Continue research into sustainable feed ingredients
• Investigate new sustainable marine source for
fish raw ingredients
• Optimise feed strategy to maintain industry leading FCR
• Achieve ISO 14001 environmental certification in the Faroe
Islands, already in place in Scotland
• Zero fish escapes
• Measurably reduce environmental impact from packaging
• Explore innovative waste streams at the new biogas plant
• Achieve over 97% water recirculation rate in hatcheries
(Faroes)
2026 TARGETS
• Reduce by 50% the Scope 1 & 2 CO2 footprint by 2030,
• Reduce the Scope 3 footprint by 52% per tonnes of product by
2030.
• Water recirculation rate over 97% in all hatcheries.
• Measure freshwater use/tonne of fish processed by 2026
• Zero fish escapes.
• Group FCR below 1.083 weighted average
• Continue research and investigation of new sustainable
sources for fish raw ingredients.
• Engaging with suppliers of feed ingredients
SDGS
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
IN THIS SECTION
CLIMATE ACTION 125
POLLUTION 135
WATER 138
BIODIVERSITY 141
RESOURCE USE
& CIRCULAR ECONOMY
145
SUSTAINABLE FISH FEED
– HAVSBRÚN
152
Our vision is to be a significant contributor in
fulfilling the world‘s growing demand for healthy
and sustainably produced protein. We are
committed to environmental innovation, and we
are constantly improving our processes to reduce
our carbon footprint, optimise resource use and
have a positive impact on biodiversity.
This section outlines our ambition and progress
towards a positive environmental impact, as well
as describing the financial risks and opportunities
that are linked to the management of environmental
issues.
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Global food systems contribute about one-third of the
total global carbon emissions. There is a need to shift
to more eco-friendly food systems, and at Bakkafrost
we are committed to providing the protein of the
future. We have set ourselves ambitious near and long-
term climate targets and work every day to decouple
carbon emissions from our production
Despite farmed salmon having the lowest carbon footprint
relative to the five largest sources of animal protein, we
aim to maintain a low level of carbon emissions through
efficiencies in our vertically integrated value chain.
Our approach
Decoupling carbon emissions from our production is among
our top priorities as a company. The board of directors
is responsible for the management of climate-related
issues. The board has delegated the responsibility for
everyday management of climate-related impacts, risks and
opportunities to the CEO.
Resources have been specifically allocated for investigating
and implementing low-carbon solutions across our value
chain. Our strategy is to prioritize operational units that
contribute the most to carbon emissions and then move down
through the organisation based on the level of impact.
Our operations are guided by our environmental policy,
which addresses the issue of climate change and states that
we seek to minimise emissions by using resources efficiently
and responsibly, and setting targets to drive improvement
across our operations. We are committed to developing and
maintaining management systems and procedures to improve
our environmental performance, and we monitor, evaluate,
and report the environmental impact and performance of our
operations.
We are continuously exploring options that can help us execute
our policies and reach our goals. Financial incentives have
proven effective as a driver of action, and we acknowledge
the effects of factoring in climate-related performance into
the remuneration policies for the board and the management.
We are currently investigating options for integrating climate-
related KPI’s into the policies.
We have set ambitious climate targets, and we are currently
in the process of developing a detailed transition plan for
climate change mitigation, which we expect to complete no
later than 2025.
Targets
Our strategic target is to reduce our Scope 1 &
2 GHG emissions by 50% by 2030 and to reduce
our Scope 3 GHG emissions by 52% per tonne of
product sold within the same timeframe.
We have set SBTi-validated near-term climate targets, which
are consistent with the reductions required to keep global
warming to 1.5 degrees, which is in line with the Paris
Agreement.
Bakkafrost has committed to reducing absolute Scope 1 and
2 GHG emissions by 50% by 2030 from a 2020 base year.
The target covers 100% of emissions from sites over which
Bakkafrost has operational control.
We have also committed to reducing Scope 3 GHG emissions
by 52% per tonne of product sold within the same timeframe
from purchased goods and services, fuel and energy-
related activities, upstream transportation and distribution,
waste generated in operations, business travel, employee
commuting, downstream transportation and distribution and
end-of-life treatment of sold products.
Performance
In 2023, Bakkafrost’s absolute Scope 1 and Scope 2 GHG
emissions amounted to 162,155 tCO
2
e, which is a 36% increase
compared to our baseline year 2020. In 2023 our production
of fishmeal increased significantly, therefore our tonnes of
sold products have increased 26% compared to 2020, so the
overall Scope 1 and 2 GHG intensity increased 8%, compared
to 2020. The increase in direct emissions is primarily due
to all-time high activity at our fishmeal and oil division
Havsbrún, which saw an 57% increase in raw material intake
from 2022. Emissions primarily derive from the energy-
intensive process of converting marine raw material into
dry material using steam. Another major factor behind the
rise in total Scope 1 and 2 emissions is the inclusion of the
live fish carrier with dual treatment capabilities Bakkafossur,
which was added to the fleet in January 2023 and is one of
the largest farming service vessels in the industry. Also the
addition of extra capacity at our Norðtoftir and Glyvradalur
hatcheries in the Faroe Islands resulted in an increase in
electricity consumption.
Total indirect carbon emissions Scope 3 amounted to 437,884
tCO
2
e. This corresponds to 2.8 tCO
2
e per tonne of product
sold, which is a decrease of 20% from our base year 2020.
Thus, we are making good progress towards our SBTi target of
reducing Scope 3 GHG emissions by 52% per tonne of product
sold by 2030.
When including all quantities of product produced in 2023
regardless of being sold within the year or going to inventory,
the tCO
2
e emmitted per tonne of product produced in the
Scope 3 category decreased with 27% compared with 2020.
Direct carbon emissions from our production (Scope 1 & 2)
account for 27% of our total emissions. 73% of our emissions
originate from our value chain (Scope 3), specifically linked to
feed raw materials and downstream transportation.
As shown in the table on page 132 our total emission (Scope
1, 2 and 3) decreased with 14% per tonne of products sold
and decreased 22% per tonne of product produced.
Climate Action
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
0
100
200
300
400
500
600
700
800
900
1000
2020 2021 2022 2023
GHG emissions per net revenue (tCO2e/mEUR)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2020 2021 2022 2023
Total emissions from energy (scope 1 and 2)
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
2020 2021 2022 2023
tCO2e emitted per tonne of product sold – Scope 3
The GHG intensity per net revenue amounted to 626 tCO
2
e
per million EUR net revenue from 576 tCO
2
e per million EUR
net revenue in 2022, and from 891 tCO
2
e from 2020.
No significant changes in Scope 3 emissions were reported
during 2023. Purchased goods and services continue to
account for nearly half of all Scope 3 emissions with raw
materials for the production of feed production being the
main source of emissions.
We keep improving how we collect data related to Scope 3,
and this was true for 2023 data as well, where we improved
our reporting of substance use. Also, for the first time we
have collected data on consumption of fluorinated gases, also
called F-gases.
In 2023, total usage of fluorinated gases was 265 kg. The
greenhouse gas emissions deriving from F-gases have been
included in the reported Scope 1 GHG emissions.
Carbon reduction initiatives
We are currently in the process of developing a formal
roadmap to achieve our near- and long-term climate targets.
The aim of the work is to identify decarbonisation levers that
will help us direct our focus.
Meanwhile, we have started to explore and apply solutions
that aim to lower our carbon footprint.
The fishmeal, oil and feed production at Havsbrún, is highly
energy demanding. Therefore, our main goal has been to
switch the energy source of this process from fuel oil to a
renewable energy source.
In 2023, we partnered up with Faroese energy provider
Effo to launch an advanced project aimed at significantly
boosting renewable energy production. The project involves
establishing the largest wind farm in the Faroe Islands,
capable of generating power equivalent to 10% of the
collective oil consumption across the islands - both on land
and at sea. Initially, the project will supply renewable energy
to Bakkafrost’s feed department, Havsbrún, in Fuglafjørður.
The project is expected to be complete in 2026, pending
necessary approvals. Should all necessary authorisations be
given, the windfarm will significantly reduce Bakkafrost’s
greenhouse gas emissions.
At Bakkafrost we recognize the critical role that energy
efficiency plays in achieving our sustainability targets. We
have recently initiated a project to optimise energy usage
during fishmeal production. The new procedure involves “pre-
cooking” raw marine material using surplus steam generated
within the factory. This pre-heating step significantly reduces
the energy required during the subsequent cooking process,
resulting in anticipated energy savings of 15-20%. This
reduction directly contributes to Havsbrún’s and Bakkafrost’s
overall goals to reduce greenhouse gas emissions.
Among the big events in 2023 was when Bakkafrost
participated in the world’s first 100% Sustainable Aviation
Fuel (SAF) flight across the Atlantic by a commercial airline
by having a shipment of our salmon onboard. In collaboration
with Virgin Atlantic and Kuehne+Nagel, the milestone flight
is set to be a significant talking point in aviation history and
marks a pivotal moment in the global pursuit of eco-friendly
aviation solutions.
We will continue to explore new opportunities for eco-
friendly transport, and with FarCargo, we have brought air
freight into our value chain, which increases control and
provides us with the opportunity to change from fossil fuel
to green fuel. FarCargo will commence operations in 2024,
and the aeroplane will use a 1% share of SAF as a start in
its operation. This means that FarCargo will participate
in developing the SAF fuel, to mitigate the environmental
impacts from the aviation industry. The goal is to increase
the share of SAF in the fuel as much as the technology and
market conditions allow for.
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
In 2023, we significantly expanded the production capacity
at two of our freshwater facilities in the Faroe Islands. We
also expanded operations at our new 29,000 m
3
freshwater
facility, Applecross, in Scotland. This facility is supplied with
renewable energy from a hydro scheme and supplemented
with both photovoltaic renewable energy and battery storage
with PV cells on a number of the buildings on site.
We have worked on energy efficiency for several years, for
example onboard our farming service vessels, where we
have reduced the energy demand by reducing sailing speeds
for less urgent assignments. Also, our headquarters in the
Faroe Islands utilises the excess heating from our packaging
production.
To achieve our Scope 3 reduction target, we engage with our
most significant suppliers on carbon reduction. This includes
feed raw material suppliers with whom we have engaged,
discussing topics such as improved primary data, more
specific CO
2
e emission factors, and GHG reductions.
We are in the process of implementing our updated sustainable
procurement guidelines in which we address climate-related
topics in both our upstream and downstream value chain to
ensure that our suppliers are working actively on reducing
their carbon footprint.
In 2022, we arranged our first supplier day in the Faroe
Islands, and in 2023, we held a supplier day in Scotland. We
focus on greenhouse gas reporting and Scope 1, 2, and 3
emissions with emphasis on our supply chain, and focus on
areas were suppliers need to deliver change as collaboration
is required to achieve our ambitious emissions targets.
We have received a lot of positive feedback following the
events, and several of our suppliers have reported back
that they have allocated further resources for advancing
sustainability in their operations following the events.
SCOPE 3 BREAKDOWN BY SOURCE
Soy Protein Concentrate embodied 9%
Wheat products
embodied 3%
Marine Ingredients 15%
Rapeseed Oil
embodied 12%
Fishmeal purchased
embodied 1%
Other Feed Ingredients 3%
Packaging materials embodied 3%
Downstream Logistics Air Freight 17%
Downstream Logistics Vessels
and Trucking 6%
Upstream Logistics 5%
Refirgeration and cooking of end product
in supermarkets and homes 11%
Processing of sold products 4%
Other 11%
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
HEALTHY ENVIRONMENT
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Climate-related scenario analysis (TCFD)
Climate-related risks are incorporated in our assessment
of operational risks. Climate-related risks are divided into
transition risks, covering the financial resilience of the
company’s business model and various decarbonisation
scenarios, and physical climate risks, which cover the
vulnerability of Bakkafrost‘s assets to climate-related threats
in different warming scenarios.
We followed the TCFD reporting guidelines to conduct our
climate-related risk assessment. We used three different
warming scenarios and three different timeframes for the
climate scenario analysis, which was completed in 2022.
Bakkafrost faces the biggest transition-related risks in a
scenario of “late transition”, and to the biggest physical-
related risks in a “hot house” scenario.
The analysis suggests that Bakkafrost is most exposed to the
risk of a carbon tax on direct emissions, given the ambitious
growth strategy and the carbon-intensive operations in some
parts of the value chain, as well as a carbon tax on energy
sourcing.
Since the completion of the analysis, the Faroese government
has increased taxation on fuel oil, mainly impacting our
fishmeal and oil segment. The impact is managed through
the planned energy transition at Havsbrún from fuel oil
to electricity, which is further explained in the case story
following this section.
Aside from carbon pricing, in the time period from now to
2050, Bakkafrost primarily faces risk through the fishmeal
and oil segment supply chain. Key inputs into the salmon feed
production process include soy protein concentrate, rapeseed
oil, wheat products, and marine caught fish and off-cuts
from the Faroese pelagic fishing industry (various pelagic
species, processed to create both fishmeal and fish oil). Given
the dependency on fishery in the surrounding waters by
Faroese fishing vessels, there is a risk that Bakkafrost will
not be able to maintain required feed output levels should
Scenarios and timeframes
Scenario Short description Referance data
Early transition
Gradual and deliberate shift towards a low carbon economy with the
outcome of successfully limiting global average temperature within 2°C
by 2100.
SSP1 (UNFCCC) RCP1.9
(IPCC)
Late transition
Sudden shift towards a low carbon economy with governments making
dramatic policy interventions to make up for a late start. Global average
temperature increase to be kept within 2°C by 2100 with possible
overshoot.
SSP1-2 (UNFCCC)
RCP2.6 (I PCC)
Hot house
Continuation of current projection of carbon emissions without any
significant abatement or mitigation. Likely to result in temperature
increases in excess of 4°C by 2100.
SSP2-5 (UNFCCC)
RCP8.5 (I PCC)
The potential impacts on Bakkafrost under each scenario have been considered for two time horizons, 2050 and 2070. These time horizons
were chosen to reflect a sufficiently long-term timeframe in order to adequately capture physical risk exposure (2070), while also allowing
cross comparison with transition risks (2050).
Priority risks at 2050
Value chain stage Risk description Early transition Late transition Hot house
Upstream
Sourcing feed inputs for Havsbrún
(soy and marine proteins)
Electricity supply
Direct operations
Carbon pricing
Harmful algal blooms
Extreme weather events
Downstream Use of air transportation
Key: High= Medium= Low=
Beyond 2050, it is possible that harmful algal blooms may lead to significant losses in yield through mortality events. Similarly, increases in
extreme weather events may also lead to increased operating costs through challenges associated in marine farming security and attracting
skilled labour. However, it should also be noted that these are evolving areas of understanding with a high degree of uncertainty.
In terms of the climate-related opportunities most likely to be realised over the chosen scenarios, expansion of biogas production in the Faroe
Islands and exploration of future renewables generation are both potentially significant opportunities for the business. Of the chosen scenarios,
“Hot house” demonstrated the lowest potential for capitalising on climate-related opportunity.
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
climate change impact these fisheries. The risk of wild fishery
collapse is difficult to model as it may be due to a number of
climate- and non-climate-related factors. Ocean acidification
are known to be increasing globally, but the direct impact
on fishery in Faroese waters are unceartain. However, the
vertical integration of fishmeal, oil, and feed, and farming
enables us to mobilise a swift transition to other available
commodities for feed production.
Bakkafrost also purchases a large quantity of products
essential to business operations, e.g., soy, wheat, and
rapeseed oil. The purchased quantities are likely to increase
due to our future production growth plans and could pose
a risk to the business. In potential future scenarios, the
growing impact of rising temperatures is likely to constrain
agriproduct growth. Consequently, regulations governing
the sourcing of these products may be introduced, leading
to higher commodity prices and increased operating costs
for businesses, dependant on agricultural products. This not
only includes salmon farming, but also other farmed animal
production such as poultry, pork, and beef.
Increasing ocean temperatures also pose a risk to our own
operations as the warmer environment creates circumstances
for algae blooms, sea lice, and other harmful organisms
such as jellyfish. To mitgate the risk of increased biological
challenges from this, we have expanded our treatment
capacity in the Faroe Islands and Scotland significantly,
and especially freshwater treatments have proven their
effectiveness in maintaining good gill health of the salmon.
We have also shifted to farm more on land, reducing risks
imposed during the seawater grow-out stage for a longer
period of its life cycle.
To better understand the risk of increasing temperatures,
we have financed a 3-year research project with DKK 2.1M.
The aim of the research project is to describe the impact of
climate change on the Faroese fjord environment, which may
impact our operations in the future. Understanding this risk
has become a priority for us, so we can not only increase
mitigation of risks within our control, but can also adapt to
factors outside our control.
Finally, significant climate-related opportunities exist for
Bakkafrost, like further revenue streams in biogas production
and energy independence through renewables have shown to
be significant under transition scenarios.
Other actual and potential risks and opportunities were
considered in our climate scenario risk assessment as well
as other climate-related risks are included in our general
operational risk assessment, which is continuously reviewed
and updated.
Further information on our climate-related scenario analysis
can be found in our TCFD report, which has been included in
this report.
-0,5
0,0
0,5
1,0
1,5
0
2
4
6
8
10
12
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
TEMPERATURE DIFFERENCE (°C)
SEA TEMPERATURE
MONTH
SEA TEMPERATURE 2023 – FAROE ISLANDS (18m depth)
Average (2003-2022)
2023
Lowest measured
Highest measured
Temperature difference
2023 - Average
(2003-2022) Second axis
-0,5
0,0
0,5
1,0
1,5
2,0
0
2
4
6
8
10
12
14
16
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Average (2003-2022)
2023
Lowest measured
Highest measured
Temperature difference
2023 - Average
(2003-2022) Second axis
SEA TEMPERATURE 2023 – SCOTLAND (5m depth)
TEMPERATURE DIFFERENCE (°C)
SEA TEMPERATURE
MONTH
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
GLYVRAR
FAROE ISLANDS
START TÓRSHAVN
FAROE ISLANDS
SCRABSTER
SCOTLAND
HEATHROW
AIRPORT
ENGLAND
NEW YORK
USA
GLYVRAR
FAROE ISLANDS
VÁGAR
AIRPORT
FAROE ISLANDS
NEW YORK
USA
BEFORE
AFTER
START
18 KM 432 KM
56 KM 4.938 KM
= 4.994 KM
APPROX.
9 HOURS
= 7.107 KM
1.076 KM 5.581 KM
Unbroken cooling chain, reduced food waste
and up to 60% more products in boxes.
APPROX.
72 HOURS
EXAMPLE:
TRANSPORT BY
AIR VS. SEA/LAND
77% 23%
LOGISTICS
Transport is an integral part of our daily business at
Bakkafrost. Our customers have high expectations for fast
and reliable deliveries.
One of our most significant challenges lies in shipping our
products to worldwide customers. Sea freight serves as our
primary mode of transport for frozen products and wherever
possible, while air freight comes into play for transporting
our fresh salmon to overseas markets. However, we recognize
that air freight, which constitutes a substantial portion of our
Scope 3 emissions, needs a more sustainable approach.
In this decade, the entire sector will take significant steps
toward handling intercontinental supply chains more
sustainably. But we don’t want to wait for others to solve
the issue; we aim to be part of the solution. Despite today’s
technological advancements, there are still no sufficient
solutions for transporting fresh fish to overseas markets
by sea without compromising quality, which can lead to
significant food waste.
According to EPA 2021 report, „The Environmental Impacts of
U.S. Food Waste“ 43% of seafood in the US ends up as food
waste.
Our customers recognize Bakkafrost’s superior-quality
salmon, ideal for high-end restaurants and the fresh market.
To serve our customers overseas, we rely on airfreight. In
response, we’ve established a new airfreight company to
maintain control and reduce emissions. Our strategy includes
both short-term measures (such as flying shorter distances,
minimizing or quitting the use of ice, and maximizing fillets)
and long-term initiatives (such as exploring environmentally
friendly fuel options).
While sea freight remains our primary choice (accounting for
77% of our salmon transport in 2023), it’s not the best option
for fresh fish due to the time it takes. For instance, shipping
from the Faroe Islands to New York takes around 12 days. By
optimizing each link and integrating airfreight strategically,
we will reduce our CO
2
emissions.
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
Energy Consumption and GHG Emissions Table
% Change
– 2023 from
BAKKAFROST: ENERGY CONSUMPTION AND EMISSIONS 2022 2020 2021 2022 2023 2020 (baseline)
Energy Consumption [kWh] [kWh] [kWh] [kWh]
Direct energy use - Scope 1 337,070,454 287,118,843 358,094,311 489,241,073 45%
Indirect energy [electricity] use - Scope 2 77,807,180 84,301,681 89,775,154 102,596,482 32%
Total energy use 414,877.633 371,420,524 447,869.466 591,837.554 43%
GHG Emissions [TCO2e] [TCO2e] [TCO2e] [TCO2e]
Direct energy use - Scope 1 89,168 75,869 94,547 129,294 45%
Indirect energy [electricity] use - Scope 2 30,467 31,876 27,294 32,860 8%
Total emissions from energy (Scope 1 and 2) 119,635 107,745 121,841 162,155 36%
Total Scope 3 emissions (see boundary below) 436,317 425,421 429,565 437,884 0%
Total GHG emissions: 555,952 533,166 551,406 600,039 8%
GHG Intensity (product sold)*
Tonnes of product sold (see products below) 124,579 121,469 135,810 156,646 26%
tCO2e emitted per tonne of product sold – Scope 1, 2 0.96 0.89 0.90 1.04 8%
tCO2e emitted per tonne of product sold – Scope 3 3.50 3.50 3.16 2.80 -20%
tCO2e emitted per tonne of product sold - Scope 1, 2 and 3 4.46 4.39 4.06 3.83 -14%
GHG Intensity (product produced)**
Tonnes of product produced (incl. liquid fertiliser) (tonnes) 268,277 302,735 338,045 369,041 38%
tCO2e emitted per tonne of product produced - Scope 1, 2 0.45 0.36 0.36 0.44 -1%
tCO2e emmitted per tonne of product produced - Scope 3 1.63 1.41 1.27 1.19 -27%
tCO2e emitted per tonne of product produced (total Scope 1, 2 and 3) 2.07 1.76 1.63 1.63 -22%
GHG emissions per net revenue (tCO2e/mEUR) 891 714 576 626
* Excluding produced quantities going to inventory
** Including all quantities of product produced regardless of being sold within the year or going to inventory Volumes of products produced include Fishmeal, fish oil, feed, salmon harvested and liquid fertilizer
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Context
The Energy Consumption and Ghg Emissions Table outlines the annual
energy consumption and GHG emissions for Scope 1, 2 and 3 from our
base year (2020) to the latest reporting year (2023). Note, our two-and-
a-half-year salmon production cycle and growing variability in other
products sold (oils, feed, and fish meal) means there is some variability
in tonnes of product sold. Environmental data will be impacted by this,
and trends will be most meaningful over a four-year period. This should
be considered when comparing data.
Organisational Boundary
The selected organisational boundary for the reported Bakkafrost
energy consumption and GHG emissions calculations are any business
units under Bakkafrost’s operational control. As of 2023, the reported
energy consumption and GHG emissions are from Bakkafrost business
units within the Faroe Islands, US, Scotland, Denmark, and France. We
have previously reported energy consumption and GHG emissions
for Bakkafrost UK site between 2019 and 2022. This site is no longer
operational from 2023 but is still included within the above energy
consumption and emissions table.
GHG Protocol Emissions Scopes and their relevance to Bakkafrost
The methodologies used for the carbon accounting are The Greenhouse
Gas Protocol: A Corporate Accounting and Reporting Standard (Revised
Edition) and The GHG Protocol Corporate Value Chain (Scope 3) Standard.
The below defines the GHG Protocol Emissions Scopes relevant to
Bakkafrost’s operations:
Scope 1 - Direct emissions result from the stationary and mobile
combustion of fossil fuels (e.g. solid, liquid, or gas for heating, or
creating propulsion in vessels) and refrigerant use.
Scope 2 - Electricity consumption gives rise to indirect emissions (e.g.
via combustion of fossil fuels by the power company to generate
energy).
• For Scope 1 and 2, the energy consumption and GHG emissions
reported include full coverage of Bakkafrost operations:
• Bakkafrost Faroe Islands - broodstock, biogas production, hatcheries,
farming, farming service vessels, harvesting, processing (including
smokery), freshwater, and offices.
• Bakkafrost US - Processing
• Bakkafrost Scotland - all farming, harvesting, and processing
operations.
• Munkebo Denmark site.
• Bakkafrost France site.
• Bakkafrost UK site (until 2022).
Scope 3 – Emissions upstream and downstream within the Bakkafrost
value chain. We first quantified our indirect Scope 3 emissions for
Bakkafrost Faroe Islands in 2019, and Bakkafrost Scotland in 2021.
We annually review the applicability of the 15 Scope 3 categories of
the GHG Protocol Corporate Standard and have included the following
within our emissions calculations from 2019 to 2023:
• 3.1. Purchased Goods and Services - purchase of raw materials, feed,
packaging, chemicals and services.
• 3.3. Fuel and energy-related activities – fuels well-to-tank (WTT)
emissions and electricity transmission and distribution (T&D), WTT
and T&D WTT emissions.
• 3.4. Upstream transportation and distribution of raw materials, feed,
and packaging.
• 3.5. Waste generated in operations.
• 3.6. Business Travel.
• 3.7. Employee Commuting.
• 3.9. Downstream Transportation and Distribution of sold products.
and supermarket refrigeration.
• 3.10. Processing of sold products - for sold oil and waste products as
well as product going to food service and for smoking.
• 3.11. Use of sold products – customer refrigeration and food
preparation.
• 3.12. End-of-life treatment of sold products.
• 3.13. Downstream leased assets – leased well-boat fuel use.
We have also re-confirmed the materiality of emissions from 3.2.
Capital Goods for Bakkafrost Faroe Islands and Bakkafrost Scotland in
the 2023 Scope 3 footprint, in order to be able to continue to justify its
exclusion. Capital Goods emissions are not included within the reported
Scope 3 figures from 2020 to 2023.
GHG reporting improvements
In 2023, we consolidated the Scope 1, 2, and 3 footprints for all
Bakkafrost entities given improvements in data collection and quality
of data available. This has led to a restatement of our Scope 1, 2, and 3
figures from 2020 to 2023.
From the consolidation, we now include coverage of the following
emission sources within our Scope 1, 2 and 3 footprint:
• Scope 1 - Refrigerant use in operations.
• Scope 3 – Additional chemical purchases.
• Scope 3 – Fuels Well-to-tank (WTT) and electricity WTT, Transmission
and Distribution (T&D) and T&D WTT throughout our value chain.
• Scope 3 – Purchased fish in Bakkafrost France.
From the GHG reporting improvements, we have seen a very small
change in the reported base year, 2021 and 2022 Scope 1 and 2
emissions. In the base year Scope 1 and 2 emissions have increased
by 0.58% compared with last year’s report. 2021 has increased by
0.95% and 2022 has increased by 0.71%. This is primarily driven by
the revision to use USA eGrid emission factors and the inclusion of
emissions from refrigerant use.
We have seen a slightly bigger increase in the reported Scope 3
emissions primarily driven by the inclusion of additional emission
sources, as mentioned above.
GHG Intensity KPI
From 2022, the GHG Intensity KPI now benchmarks annual Scope 1,
2, and 3 emissions against tonnes of sold product rather than salmon
produced. This KPI is more representative of Bakkafrost’s operations
and takes account of all salmon, fish feed, fish meal, and oils sold.
Year on year changes
Based on the re-stated figures, our Scope 1 and 2 emissions have
increased by 33% compared to 2022. This is driven by an increase in
ship marine gas oil use within our Faroe Islands and Scotland operations,
as well as fuel oil and electricity use within the Faroe Islands. More
tonnes of product were sold in 2023, as such the Scope 1 and 2 GHG
intensity (kgCO
2
e/kg of tonnes of sold product) has only increased by
15% compared to 2022.
Scope 3 emissions have slightly increased in 2023 compared to 2022.
This is primarily driven by an increase in fuel and energy related
activities (relating to an increase in fuel and electricity use at sites and
within vessels). As more tonnes of product were sold in 2023, the Scope
3 intensity compared to 2022 has reduced by 12%.
Supporting Information on emissions calculations
All figures are direct consumption reported for each business unit,
multiplied by an energy conversion factor (as appropriate) and carbon
emission factor per unit consumed.
All emission and conversion factors for direct emissions (Scope 1)
are from BEIS GHG Conversion Factors (UK) 2023’s dataset, while
emission factors for electricity use (Scope 2) are based on the most
recent statistical data available obtained from IEA, BEIS, eGrid, or
direct from Umhvørvisstovan, the Faroe Islands Environment Agency.
Scope 3 emission factors are obtained from sources including BEIS GHG
Conversion Factors, EcoInvent, and relevant journal articles.
Tonnes of Carbon Dioxide equivalent (tCO
2
e) has been calculated and
stated here – this then takes account of the global warming potential
attributed to the other two key greenhouse gases associated with
combustion of fossil fuels, in addition to carbon dioxide (CO
2
), i.e.
methane (CH4) and nitrous oxide (N2O).
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In 2023, Bakkafrost partnered up with the Faroese
energy provider Effo to launch a project involving
establishing the biggest wind farm in the Faroe Islands,
named ‘Eysturlund’. By the end of 2026, 24 wind
turbines with a capacity of 4.2 MW each will provide
green energy to our feed facility Havsbrún
Bakkafrost has set ambitious near- and long-term climate
targets. In 2023, the Science Based Targets initiative (SBTi)
approved our near-term climate targets. This assessment
validated the targets as science-based and consistent with
the reductions required to keep global warming to 1.5 °C - in
line with the Paris Agreement.
We acknowledge that it will be challenging to achieve the
targets, but we are committed to doing our best to minimise
our carbon footprint, and in 2023 an important step was
taken to achieve this goal. The Faroese energy company Effo,
in partnership with Bakkafrost, announced that they will
launch a project to build a 100MW wind farm, which will be
by far the largest wind farm in the Faroe Islands. The farm
will provide 350 GWh of renewable energy annually, and it
will be connected directly to our fishmeal, oil and feed facility
Havsbrún.
Havsbrún is by far the most energy-intensive part of
Bakkafrost’s operations, and currently, the vast majority of
the energy required is produced from Heavy Fuel Oil (HFO),
resulting in a large carbon footprint.
With the introduction of the new wind farm, we will take a
significant and vital step towards achieving our SBTi target of
reducing absolute Scope 1 and 2 emissions by 50% by 2030.
The project’s primary goal is to generate electricity. But when
there is more supply than demand, such as at night, the wind
farm will also have the capacity to create hydrogen, oxygen,
and heat. This allows the option of using the generated energy
for other resources, such as Bakkafrost’s bigger ships in the
Faroe Islands, which can be adapted to use 100% renewable
energy.
The Eysturlund project is expected to be completed in 2026,
pending necessary approvals.
Healthy Environment
Eysturlund – A Crucial Move Towards
Reducing Our Carbon Footprint
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Pollution
We are committed to minimising impact on the local
environment at all stages of our operations, and we
invest in preventing actual and potential pollution.
At Bakkafrost, we prioritize responsible management of
substances, potentially harmful to the environment, and take
our responsibility seriously. Through preventive measures
and ongoing monitoring, we strive to prevent pollution-
related impacts.
Our approach
Our work procedures align with our environmental policy to
prevent incidents and minimize air, water, and soil pollution,
transitioning to more eco-friendly products where suitable.
Our commitment extends to minimizing visual, noise, and
odour-related pollution, and we actively seek solutions for
further reductions.
Salmon farming is heavily regulated by national legislation,
and all our sites comply with strict legislation and
environmental standards. We are certified against ISO
14001 both in Scotland and the Faroe Islands, and the entire
value chain holds the Global G.A.P certification ensuring
streamlining of the risk assessment methodology applied in
regard to environmental impact. These standards, including
those set by ASC, guide our environmental business conduct.
We continuously perform due diligence to ensure we
identify pollution-related risks and opportunities, and we
are committed to mitigate any actual impacts we may have.
Impacts and risks are identified through the regular screening
of sites as well as during the regular update of our operational
risk assessment, which covers impacts and risks on land,
water, and soil.
Our sites are regularly monitored and inspected by several
government and third-party certification bodies.
We are in the process of implementing our updated sustainable
procurement guidelines, in which we address pollution-
related topics in both our upstream and downstream value
chains to ensure that our suppliers operate in a responsible
manner. As part of our commitment, we purchase certified
raw materials, e.g. ProTerra-certified soy, which ensures
responsible handling of waste and minimising pollution.
This approach supports our goal of promoting sustainability
throughout our supply chain.
Performance
In 2023, we complied with all national regulations
regarding the discharge of effluents to air, water
and soil.
Emissions to air
We are phasing out all F-gases (fluorinated gases), and in
2023, we recorded the total usage of F-gases across the
Group for the first time. In total, we purchased 265 kilograms
of F-gases in 2023.
Our total emissions to air in 2023 are stated in the table
below.
Emissions to air
Substance (tonnes) 2023 2022
Carbon monoxide (CO) 9.98 1.60
Nitrous oxide (N
2
0) 0.35 0.77
Ammonia 0.14 0.03
Nitrogen oxides (NO
x
/NO
2
) 307 126
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
Emissions to Water
Our resolute focus remains on minimising the environmental
impact of our marine operations, particularly the impact on the
seabed. We monitor the impact on the seabed continuously,
and in 2023, 97% of the farming frames in the Faroe Islands
were scored as low/medium impact*, where no measures are
needed, and in Scotland, 100% of the farming frames were
scored as low/medium impact** with no requirement for
actions to be taken.
All emissions to water reported in the table below relate to
substances found in the salmon feed, and all substances are
emitted to the ocean (no emissions to freshwater). We strive
to place pens in locations with strong currents, ensuring
responsible emission of substances.
We have also introduced several technological solutions in
recent years to prevent or reduce impacts on the seabed,
including installing automated feeding and underwater
cameras at all sites, and ensuring optimal feeding monitoring.
This means that feeding stops as soon as the systems records
that the salmon has had the amounts of feed that it needs,
significantly reducing any excessive feed delivery.
The all-time good results from the benthic monitoring prove
the efficiency of our feeding strategy.
Emissions to water (of substances listed in E-PRTR)***
Substance (tonnes) 2023 2022
Total nitrogen 381 354
Total phosphorus 1,525 1,417
Copper and compounds (Cu) 0.20 0.18
Zinc and compounds (as Zn) 4.6 4.3
Chlorides (as total Cl) 37.5 39.6
*** The European Pollutant Release and Transfer Register. Emissions are
reported as a calculated estimate of the substances which are emitted as
faeces from the salmon after consumption of the feed.
In 2023, Bakkafrost complied with all relevant
legislation and regulations.
No emissions of microplastics to the marine
environment or elsewhere were reported in 2023.
Emissions to Soil
In 2023, Bakkafrost did not emit any of the
pollutants listed in Annex II in E-PRTR to the soil.
Visual, noise, and smell-related pollution
Bakkafrost has been working on a project for the last few
years to decrease the odour from the production at our
fishmeal and oil facility Havsbrún, which continued in 2023.
We expect the project to be completed in 2024. This project
will significantly reduce the smell-related impact on the local
environment.
We continue to optimise our operations in line with our
environmental policy, which includes working towards
reducing visual, noise, and odour impacts. One example is
our efforts to reducing engine speed onboard our farming
service vessels, which we have done for the last many years,
as well as implementing electric and hybrid feed barges at
our marine sites which reduces noise pollution significantly.
Examples of strategic measures taken in recent years to
prevent pollution-related impacts:
Marine sites
• Continued relocation of farms in the Faroe Islands to reduce
impacts on the seabed. In 2023, 97% of the farming frames
in the Faroe Islands were scored as low/medium impact,
where no measures are needed, and in Scotland, 100% of
the farming frames were scored as low/medium impact.
• Site development programme in Scotland.
• Continued to explore new areas with optimal farming
conditions.
• Continual investment in the electrification/hybridisation of
barges minimising noise pollution.
Minimise usage of chemicals
• Discontinued use of copper-treated nets in 2018 in the
Faroe Islands and in 2020 in Scotland. The continuous
benthic monitoring has shown that the copper levels
have since decreased at all sites where the level is now
categorised as low impact.
• Focus on using alternatives to medicinal lice treatments,
e.g. freshwater treatment and using flushing techniques. In
2022 and 2023, we significantly increased non-medicinal
treatment capacity.
Fallow periods
• We continue to ensure fallow periods between production
cycles to allow the seabed to regenerate. In 2023, the
average fallow time between production cycles was 20
weeks in the Faroe Islands, and 17.9 weeks on average
in Scotland, which is much more than what is required by
national legislation.
Shorter time at sea
• We invest in expanding freshwater capacity to grow the
smolts larger on land and hence ensure shorter time for
growing at sea. This both reduces the biological risks as
well as reducing environmental impact on the marine
environment.
Monitoring
• Monitoring of the impacts on the seabed at around peak
biomass to ensure sustainable utilisation of marine
farm sites including sampling of benthic fauna to assess
biodiversity-related impacts.
• Regular impact assessment of the organic load, copper, and
zinc at cage edge and the surrounding area near the site in
the Faroes.
• Monitoring of seawater quality e.g., in testing levels of
oxygen, temperature and salinity.
*Using MOM-B scoring system, measured within one month of 75% of peak
biomass
** Using SEPA benthic monitoring scoring system, measured within one
month of 75% of peak biomass
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Benthic Monitoring and
Environmental Impact Assessment
We recognize biodiversity’s critical role in ecosystem health.
Our focus lies on areas where our operations directly impacts
biodiversity. Benthic fauna plays a vital role in maintaining
good ecological and biodiversity status in these areas. We
comply with ASC for credible biodiversity monitoring.
As part of our Biodiversity Strategy, we perform
Environmental Impact Assessments (EIA) for every new site.
These are updated annually and are verified by third party
audit bodies in relation to the certifications that we hold.
In the Faroes, we’ve implemented measures to minimize
environmental impact, including relocating pens for stronger
currents and better water exchange. By ensuring a healthy
marine ecosystem, we promote sustainability and preserve
diverse marine life. Additionally, we have stopped using
copper-treated nets on our marine sites. Continuous benthic
monitoring revealed reduced copper levels in the Faroe
Islands, now categorized as low impact
Our focus on optimal feed composition, feeding procedures,
and training, along with underwater cameras at marine sites,
has improved fish health and minimized environmental
impact, including benthic effects. We continue to explore new
technology to support further development.
Regular environmental inspections and seabed sampling
ensure sustainable practices. We employ a multi-faceted
monitoring approach which provides us with a comprehensive
understanding of the impact from marine farming activities
on the benthic ecosystem and helps to ensure that these
activities remain environmentally sustainable. Samples
taken from the seabed show continuous environmental
improvement following measures taken in recent years.
In the Faroe Islands, 97% of the sites are assessed as having
minimal impact in the closest surrounding area of the net
pens, while next to the pens all sites have been assessed to
have minimum impact.
In addition to monitoring potential impact on nature, we also
conduct benthic fauna inspections underneath and close to
the pens. Through testing of samples from the seabed, we
monitor the biodiversity, including registering the number of
different species, the number of animals of each species, and
registering which of the observed animals are assessed to be
indicating a healthy seabed.
All Bakkafrost marine sites in the Faroes are certified against
the ASC standard, and benthic inspections are carried out at
peak biomass.
In 2023, the ASC marine fauna site audits verified
that all the audited Bakkafrost sites in the Faroe
Islands are sustainably managed.
In Scotland, we closely monitor benthic conditions when
a site’s biomass reaches 75% of its peak biomass during
a production cycle. This practice ensures ecological and
biodiversity health in our coastal ecosystems.
Our benthic monitoring follows two regulatory approaches:
• Regime Stations: These are monitored at the pen edge and
allowable zone of effects (AZE) stations (including AZE-
10m, AZE, and AZE+10m).
• Area-Based Approach: We use a minimum of 4 transects
extending from each side of the site. Along each transect,
we monitor at least 7 stations to assess “Good” ecological
status. The total impact area is calculated based on transect
distances.
These efforts contribute to environmentally sustainable
marine farming. Additionally, Bakkafrost has partially funded
collaborative research projects to assess the potential
environmental impact of aquaculture on the biodiversity
of benthic macrofauna in Faroese fjords, and to establish a
baseline and a classification system for marine biological
diversity state undisturbed by human impact.
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Our operations are intrinsically linked to water as a
natural resource, and although we do not operate in
areas with water stress, we take our responsibility of
freshwater stewardship very seriously and actively
work toward reducing our freshwater usage.
The planet faces growing water constraints as climate change
causes fluctuations in supply resulting from both global
drought and flooding events. Although we do not operate in
areas with freshwater scarcity, no location is immune to water
scarcity effects. Thus, we continue to focus on freshwater
efficiency and stewardship, and we operate according to our
freshwater use policy, which sets out guidelines for both
limiting and efficient use of freshwater throughout our value
chain.
Our approach
Freshwater is considered an important resource for
Bakkafrost operations. We directly use freshwater in land-
based operations in producing eggs and smolt, at fishmeal,
oil, feed, and processing plants for hygiene purposes.
We indirectly use freshwater via the use of non-marine
ingredients to produce fish feed. Agricultural feed raw
materials are sourced from certified suppliers with full
traceability, ensuring the raw materials are sourced in areas
with low risk of water scarcity.
Bakkafrost feed has a high inclusion of marine raw material
and a lower inclusion of non-marine ingredients compared to
peers, reducing our indirect freshwater demand.
Our daily operational procedures are guided by our
freshwater use policy, which outlines our commitment to
treat freshwater as a valuable and limited resource. This is
reflected in our investing strategy, which includes extensive
investments into Recirculating Aquaculture Systems (RAS)
as well as reverse osmosis equipment onboard our farming
service vessels.
Reverse Osmosis (RO) equipment onboard our farming
service vessels serves a crucial purpose in water purification.
RO technology removes salts and impurities from seawater,
creating freshwater on a daily basis.
We continuously assess the exposure of our operations to
water-related risks, and we rely on the WRI Aqueduct Water
Risk Atlas as a tool for our risk analysis of water-related
risk exposure in both our direct operations as well as in our
upstream value chain.
All our current farming regions are located in low
or low-medium-risk areas.
Data capture and monitoring are essential to understand
water-related risks and performance, and we are currently
working to enable live reporting of freshwater use. Reports on
freshwater use will be reviewed at sustainability committee
meetings going forward. The CEO chairs the committee.
Targets
We have set a target to achieve over 97% water recirculation
rate in hatcheries in the Faroe Islands.
The freshwater facilities are the most water-demanding in
our entire operation. Thus, our focus is on minimising water
withdrawals as much as possible in this part of our operations.
We have identified significant benefits in implementing
recirculating aquaculture systems (RAS) at our freshwater
facilities in terms of minimising water demand.
The system has been implemented at all larger freshwater
sites in the Faroe Islands and at our newly expanded
Water
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freshwater facility Applecross in Scotland, reducing water
demand significantly compared to previous demand.
Performance
Water recirculation rate in hatcheries in the Faroe Islands was
99,1% in 2023.
In Scotland at our Applecross RAS site it is 94%.
In 2023, Bakkafrost’s total freshwater withdrawals amounted
to 14,581,655 m
3
from 15,030,154 in 2022.
Freshwater consumption (understood as water withdrawn,
which is not discharged again to the environment) amounted
to 184,343 m
3
.
Total water consumption in areas at water risk, including
areas of high-water stress, was 0 m
3
, as we only operate in
areas assessed to be exposed to a low or low-medium overall
water risk according to the WRI Aqueduct tool.
99.1% of all water used by hatcheries in the Faroe
Islands was recycled, from 98.7% in 2022.
At Applecross, the recirculation rate was 94% in
2023 which was the same in 2022.
In 2023, water-related CAPEX amounted to 51.5 mDKK from
26.9 mDKK in 2022. This included, e.g. expansions of sites,
new pipes and the purchase of equipment for freshwater
treatment.
Water-related OPEX amounted to 1.25 mDKK in 2023 from
2.2 mDKK in 2022. This covers, expenses for rentals of land
for water-related activities (such as freshwater facilities) and
replacement of drains and pipes.
Our feed facility at Havsbrún uses various agri-commodities
to produce feed, and in 2023, 90% of purchased commodities
for feed production (excluding marine resources) were
* Previous year‘s figure is restated due to improved data capture
sourced from areas categorised either as low or low-medium
in terms of overall water stress (based on country-level data)
*
.
Water reduction initiatives
Installing recirculating aquaculture systems (RAS) at our
freshwater facilities is a fundamental part of our strategy
and our investment plans, and this has already significantly
reduced our demand for freshwater.
In terms of water accounting, we further built on the progress
made in 2022, and for the first time, we submitted a full
disclosure for CDP Water in 2023 and were given a score of
B. While preparing the CDP Water disclosure, we streamlined
and did quality checks of water-related data capture, and we
expect to have live data on water withdrawals, consumption,
discharge, and other parameters in 2024. This will be a vital
step in achieving water reductions as we believe that you
cannot manage what you do not measure.
In 2023, we continued to engage with our suppliers on
sustainability topics through meetings and on our supplier
day. The topics addressed include water. We especially focus
on engaging with suppliers of water-intensive commodities
such as soy protein concentrate for feed production. Our feed
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WATER RECIRCULATION RATE
99.1%
99.1%
0.9%
(Faroe Islands)
policy actively considers water use and scarcity, ensuring
responsible practices across our supply chain.
We are also working on establishing more robust water
reporting processes covering our sourcing of raw materials,
and we plan to advance the use of data-driven procurement
processes going forward.
Management of water-related risks
In 2023, we carried out an extended assessment to identify
risks within our own operations and our supply chain with
the potential to have a substantial financial impact on our
business.
We identified that our feed facility at Havsbrún is the only
site within our own operations exposed to water risk that
may have a significant financial impact on the business due to
the production of feed, which consists of a significant portion
of water-intense agri-commodities such as soy, wheat, and
rapeseed. A shortage in the supply of these products would
significantly impact the business and our feed strategy,
eventually pushing for alternative compositions.
In 2023, we responded to this risk through a project of
trialling alternative compositions. For example, we trialled
algae oil and insect meal.
In general, commodities for feed production are the elements
within our business which are the most exposed to water-
related risks, including water scarcity. In future climate
scenarios, regulation on the sourcing of agri-commodities
may be introduced as well as other potential supply-side
challenges from increased physical risk (e.g. water stress,
ocean acidification). This could increase the price of these
commodities and affect the business’s operating costs.
WATER CONSUPTION
(liter per kg edible meat)
Source: GSI
CattlePorkPoultrySalmon
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
liter water
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Biodiversity
We recognise the importance of all species and
our responsibility to be custodians of the natural
environment in which we operate, including ensuring
future biodiversity. We work to minimise our impact
and have set ambitious targets to have net-positive
impact on our surroundings
There is rich biodiversity and abundant bird and marine life
in our farming locations, and it is important to maintain the
natural environment around our farming sites across fjords
and lochs. This extends to respecting biodiversity beyond our
immediate environment.
Through our long vertically integrated value chain, we have a
unique opportunity to control the impact of salmon farming,
from fishmeal production and farming to processing and
transportation.
Our approach
In our pursuit of becoming a leader in sustainability, it is of
the utmost importance that we live up to our commitments.
We have adopted the approach of acting proactively.
Biodiversity is a vital issue as we face a fast decline in the
number of animals and plants, and we are committed to
avoiding possible harmful effects that our activities could
cause to the nearby environment. Our goal is to help create
healthy ecosystems in the regions where we work.
We are committed to the long-term goals for 2050 set by the
Kumming-Montreal Global Biodiversity Framework, as well
as the 23 action oriented global targets for urgent action over
the decade to 2030.
Our board has the overall responsibility for managing
biodiversity-related impacts, risks, and opportunities. The
responsibility of identifying, assessing and managing material
biodiversity-related issues is delegated to the Department
for Quality, Environment, Safety, and Health (QESH).
We acknowledge the potential impact and risks of our
operations on biodiversity. These include the raw materials
we use, which may be influenced by stricter regulations and
land use. Our hatchery activity affects water release, while
marine operations can interact with both marine and land-
based wildlife, as well as impacting the seabed beneath our
farming pens.
Due diligence and monitoring processes are in place to ensure
that impacts and risks are identified, properly, and managed
in a timely manner. This includes regularly monitoring and
assessing the benthic environment and marine wildlife
beneath the farming pens by taking samples of the seabed,
monitoring the quality of discharged effluent water from
the hatcheries, and sourcing raw materials from certified
suppliers.
We have adopted the approach of applying the guidelines
set by SBTN and TFND. This includes using the LEAP and
5-step assessment using the mitigation hierarchy principle in
our decision-making process regarding biodiversity-related
topics. This framework allows us to prioritise actions that
avoid harm to the environment, reduce our ecological impact,
restore degraded sites, and collaborate with partners to
transform new areas into healthy ecosystems.
Below you can find descriptions of the approach we have
adopted for each area of impact that has been identified.
Hatcheries
Benthic
Discharge wastewater
near strong currents
Seafarms
Bird netsBirds
Benthic
Relocate farms
Work with legislators to
implement new guidelines
Reduce feed
Raw materials
Fisheries Overfi shing
Agriculture Use of land
MITIGATION HIERARCHYECO-SYSTEMSITE
UpstreamDirect
EXAMPLE OF OUR BIODIVERSITY METHODOLOGY BASED ON THE MITIGATION HIERARCHY
Example of how risk assessments of sites are combined with the
mitigation hierarchy to assess the biodiversity. In the mitigation
hierarchy the red colour is avoid, green is reduce, blue is restore, and
yellow is transform.
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Benthic biodiversity
At Bakkafrost, we understand the critical role that biodiversity
plays in maintaining the overall health and resilience of
ecosystems. While we acknowledge the importance of
preserving biodiversity across all ecosystems, we prioritize
areas where our operations can directly impact this delicate
balance.
Benthic fauna plays an important role in preserving healthy
ecological and biodiversity conditions in these regions. To
ensure credible biodiversity monitoring, we fully comply with
the Aquaculture Stewardship Council (ASC). This commitment
ensures that we monitor our areas diligently, especially
during peak biomass periods, to gather the most accurate and
comprehensive data.
Our approach to monitoring is multifaceted, allowing us to
gain a comprehensive understanding of how our marine
farming activities impact the benthic ecosystem. By doing
so, we strive to maintain an environmentally sustainable
balance while safeguarding the delicate web of life beneath
the waves.
Wildlife
We have committed to minimising the impact on the
biodiversity in our local environment at all stages of the value
chain. Our aim is to create a sustainable seafood industry
that operates in harmony with the ocean and its inhabitants.
Bakkafrost is committed to preserving biodiversity in
the marine ecosystem and understand the importance of
protecting the delicate balance of species in the ocean. This is
why we have a strict zero-tolerance policy for fish escapes,
and have invested substantially in containment measures to
minimise the risk of any potential escape.
Our commitment to preservation goes beyond mere
compliance, as we believe that proactive measures are
necessary to ensure the long-term health of the marine
environment. We conduct regular inspections and employ
cutting-edge technology to detect and identify any potential
threats early on.
In addition, we recognize the vital role that birds play
inmaintaining healthy ecosystems, and we are dedicated to
preserving their populations and habitats by ensuring zero
bird fatalities from our farms.
Elements that inform our biodiversity approach
Our biodiversity approach is informed by several commitments, standards, and targets. Below is a description of the
different elements that inform our strategy within the area of biodiversity.
UN: We have pledged to protect the health of our oceans
as part of the UN Sustainable Ocean Principles. We are
committing to take actions to prevent pollution affecting
the ocean, reduce greenhouse gas emissions in our oper-
ations, to prevent ocean warming and acidification, and
work towards a circular economy.
ASC: Sustainable farming is a critical component in
maintaining good ecological and biodiversity status in
our areas. Therefore, we adhere to the standards set by
fully comply with the Aquaculture Stewardship Council to
ensure credible biodiversity monitoring in our areas.
SDG 14: We aim to work towards the attainment of
Sustainable Development Goal 14 (Life Below Water),
which is dedicated to preserving and responsibly utilizing
oceans, seas, and marine resources to support sustainable
development and safeguard these vital ecosystems.
Compliance: Zero non-compliance with environmental
laws and regulations and continue to cooperate with
authorities to ensure our environmental impact is mini-
mised.
SDG 15: Our goal is to contribute to the attainment of Sus-
tainable Development Goal 15 (Life on Land), which seeks
to safeguard, rehabilitate, and promote the sustainable
utilization of terrestrial ecosystems, effectively manage
forests, combat desertification, prevent land degradation,
and cease and reverse biodiversity depletion.
Partnering with interest groups: We are collaborating
with partners and industry experts to obtain cutting-edge
technology and biodiversity-related knowledge. We
currently have multiple ongoing projects, while other
initiatives are still in the early stages of development.
Proactive: Our commitment to preservation goes beyond
mere compliance, as we believe that proactive measures
are necessary to ensure the long-term health of the ma-
rine and terrestrial environment
New farming areas: We are always looking into opportu-
nities of moving farms to more exposed areas, supporting
our goal to reduce the environmental impact. The water
exchange is often better in areas with strong currents
which reduces the risk of impact on the seabed. We are
also committed to avoiding operating in eco-sensitive and
protected areas.
eDNA: We are committed to improving knowledge on
biodiversity, and we continue to work with eDNA analysis
of biodiversity to gain a better understanding of the
ecosystems.
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Freshwater
Our environment faces growing water constrains as
freshwater reservoirs dry up. Although we do not operate
in areas that are currently experiencing freshwater scarcity,
we recognise the importance of preserving and protecting
the ecosystems that exist in our surroundings. For this
purpose, our Freshwater Use Policy provides clear guidance
on how to minimise and use freshwater effectively across
our value chain, so as to lower the effect that our operations
have on the environment and its inhabitants. To ensure that
our operations are sustainable, we take a holistic approach
to freshwater management, including identifying ways to
reduce our overall water usage and seeking out alternative
sources of water where possible.
Sustainable fish feed
We believe it is imperative that companies take steps to
protect and preserve biodiversity in all their operations,
including the sourcing of marine and plant materials. By
ensuring all our suppliers are individually and continuously
assessed against the company’s Sustainable Feed Policy, we
are taking a proactive approach to ensuring that the raw
materials used in production of fish feed are sourced in a
responsible and sustainable manner.
Targets
Our goal for biodiversity is to achieve a positive environmental
impact in the places we work. However, we are still working
on setting a baseline that includes internationally recognised
ecological thresholds.
We hope to get our goals approved as science-based goals
through the Science Based Targets initiative for Nature (SBTN).
As we work on setting science-based targets for biodiversity,
we also plan to create a reliable baseline, which we will use
to track and report our progress.
Creating a baseline is also crucial to set more specific
biodiversity-related targets in areas where we have a
material impact.
In addition to our biodiversity goal, we have a zero-tolerance
policy regarding fish escapes, marine mammal fatalities and
bird fatalities, and we are committed to ensuring that our
sites are fully compliant with benthic fauna requirements set
by national legislation and/or third-party certifications such
as ASC.
Performance
To achieve a net-positive impact, we need to first identify our
starting point. In 2023, we further worked on establishing a
benchmark for our biodiversity-related impact.
Bakkafrost invests substantially in upgrading the nets across
all our sites. These new nets are more resistant to damage
from weather and possible predator attacks. In addition,
divers and ROVs inspect the nets regularly.
In 2023, we had an unfortunate incident of extreme weather
that damaged a fish farm located in the southernmost island
in the Faroe Islands, leading to 251,344 fish escaping their
cages.
Bakkafrost has cooperated fully with veterinary,
environmental, and statutory authorities regarding this
incident and has further improved the structural equipment
at the site for the future.
All of our ASC certified sites were 100% in compliance with
ASC benthic biodiversity during 2023. In addition, our sites
fully comply with national benthic legislation. Our fallow
period in the Faroes was 20.08 weeks, while in Scotland it
was 17.9 weeks. Longer fallow periods ensure the recovery
of the benthic biodiversity between farming cycles.
With our biogas plant FÖRKA producing biogas from animal
manure, we continue to reduce the amounts of organic
content of fertilizer which is spread out on Faroese farmland.
This lowers the risk of organic pollution of rivers and lakes
and reduces the impact on the trout population and sensitive
aquatic species which occupy these habitats.
In 2023, the weighted average of accidental bird
mortalities across all our sites amounted to 0.4 in the
Faroe Islands, and in Scotland the weighted average was
0.28.
We had zero intentional bird fatalities in 2023.
We had zero mammal mortalities across all our sites in
2023.
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Humanity currently uses more resources from nature than
what the Earth can provide. Therefore, using resources wisely
is very important.
As a producer of salmon and fishmeal, we are committed to
resource efficiency. Our holistic approach includes reducing
virgin materials, promoting reusability, and implementing
circular solutions. Ultimately, we aim for a net-positive
impact on resource use.
Our approach
Resource use and circular economy is assessed to be a material
topic for the business, and we are committed to resource-
related action, allocating resources to the implementation of
these initiatives as well as providing transparent reporting on
our resource management performance.
Our Corporate Responsibility and Sustainability Policy
outlines our overall approach to sustainability, including our
commitment to employ a sustainable approach to the use and
management of natural resources.
We apply the mitigation hierarchy as our approach to resource
use. In our context, this means that we seek to avoid resource
use where we can, and we strive to minimise the usage of
materials in our industrial processes, including reducing
packaging and implementing the use of non-virgin material.
Bakkafrost’s material inflows based on volumes are primarily
marine- and agri-commodities used for feed production.
Other material resource inflow categories, as identified in our
risk framework, include salmon (eggs and smolt), substances,
water, and energy.
Material outflows of the business include products (including
packaging), discharges to water, waste, emissions to air, and
visual, noise, and smell.
We are committed to measuring our resource inflows and
outflows, and our reporting currently covers our most
material raw material use as well as packaging and waste
impacts. We will continue to focus on resource-related data
capture going forward.
Targets
Resource efficiency is a topic which we have been working
on for quite some time. We have set a target for and worked
on reducing the environmental impact of packaging for the
last few years. For example, we have employed a strategy to
optimise our plastic consumption by using thinner wrapping
for products, and we have been exploring novel solutions for
more eco-friendly packaging.
We have also set a target to investigate innovative waste
streams for our biogas plant and have made substantial
progress, introducing new types of waste to be used for the
generation of electricity and district heating.
We use large quantities of agri-commodities for the production
of feed, and we take our role as stewards of these natural
resources very seriously. First and foremost, we target this
through responsible procurement, but also by reducing the
demand for feed as much as possible in our own operations,
which is reflected in our target to optimise our feed strategy
to maintain industry-leading feed conversion ratio (FCR).
PERFORMANCE
Resource inflow
In 2023, 17% of resource inflows for packaging consisted of
reused or recycled material. To reduce the demand for virgin
materials, we continuously increase the proportion of reused
or recycled material in our resource inflow.
We have experimented with different kinds of monoplastic
packaging in the past few years to allow our customers to
recycle all our packaging. However, finding packaging that
can handle the high amount of moisture/water in salmon
without affecting the packaging quality has been difficult.
We will, however, continue to explore and trial solutions to
enable our customers to recycle all our packaging.
Our fishmeal and oil facility Havsbrún, which is the most
resource-demanding part of our value chain, saw an all-time
high sourcing of marine raw material in 2023, amounting to
467,100 tonnes. This resulted in a significant increase in the
amount of fishmeal produced, from 65,395 tonnes in 2022
to 101,976 tonnes in 2023, and also an increase in fishmeal
sold externally, from 34,667 tonnes in 2022 to 63,063
tonnes, as the volumes sourced exceeded the demand in our
own operations by far.
A vital part of the ingredients for feed production is marine
trimmings and offcuts, and our strategy is to source as much
of the available quantities as possible in the Faroe Islands.
In 2023, 51% of the fishmeal and 81% of the fish
oil included in our feed were derived from fish
trimmings. The species used are all responsibly
caught in well-regulated fisheries.
Other feed ingredients sourced, including soy protein
concentrate, wheat and rapeseed oil, amounted to 82,192
tonnes from 97,365 in 2022.
We are committed to researching novel ingredients, and in
2023 for the first time, Havsbrún used algae oil and insect
meal as an alternative ingredient.
To minimise the demand for raw materials, we work to lower
the feed conversion ratio (FCR) as much as possible, defined
as the quantity of feed required to produce 1 kg of salmon.
In the Faroe Islands, the biological FCR for 2023 was 1.096
and in Scotland, it was 1.18.
.
Resource Use &
Circular Economy
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We work according to our feeding strategy, and we have
fitted all sites with underwater cameras to assist with feeding
strategy and optimise feeding. Alarms are sounded if pellets
start to fall too far, alerting the feed technician to stop
feeding. The installation at the last marine site was completed
in November 2023. This both reduces the demand for raw
materials as well as it minimises the impact on the seabed.
Resource outflow
For resource outflow, we saw a decrease of 25% in the total
packaging weight, primarily due to reduced production
activity in 2023 compared to previous years.
84% of the materials in our resource outflow
consisted of recyclable content.
Waste
We are committed to reducing the amount of waste generated
in our operations and ensuring that as much of the waste as
possible is reused or recycled.
In 2023, the total amount of waste generated was 25,002
tonnes, which is a decrease of 1% from 2022.
17,913 tonnes were diverted from disposal, corresponding to
72% of our total waste.
The total amount of waste directed to disposal in 2023
amounted to 7,089.
The total amount of hazardous waste generated in 2023 was
230 tonnes, a decrease by 10% from 2022.
Biogas
Our award-winning biogas facility in the Faroe Islands, FÖRKA,
sources waste products from our farms and other salmon
farmers as well as from cattle manure from dairy farmers to
produce renewable energy. In 2023, FÖRKA delivered 4,036
MWh of electricity to the Faroese grid from 6,113 MWh in
2022 and 2,948 MWh of district heating in 2023 from 3,893
MWh in 2022. Total production in 2023 was 11,404 MWh of
energy compared to 15,284 MWh in 2022
FÖRKA faced difficulties during 2023 with low operations
from March to November due to technical challenges
Circular economy initiatives
2023 marked the year when our biogas facility, FÖRKA, started
to receive food waste from the Faroese National Hospital in
Tórshavn as well as from other major stakeholders such as
hotels and wholesales. The project results from a cooperation
between Tórshavn municipality, the National Hospital of the
Faroe Islands, Hotel Hilton, Hotel Brandan, Poul Michelsen,
and FK retail and wholesale. You can read more about the
project in the case story.
In 2023, FÖRKA was granted financial support from
the Nordic Energy Research to explore the potential of
producing liquified biomethane from the CO
2
that is present
in the biogas by adding hydrogen to liquify the methane.
Biomethane is increasingly used as an alternative fuel for
heavy transport, including semi-trucks, and due to its very
low carbon emissions, biomethane is seen as an important
step towards significantly reducing carbon emissions within
the transportation sector. The solution also supports a circular
economy.
2023 saw further progress at our Applecross freshwater
facility as the development approaches completion on
schedule. Several circular solutions are integrated into the
site.
Bakkafrost Scotland has continued to be part of the WRAP
& IGD Food Waste Reduction Roadmap as part of our
commitment to food waste reduction in Scotland. In 2023, we
reported the 2022 food waste figures as 5.48% of tonnes of
salmon produced from 8.15% in 2021. Food waste associated
with salmon production includes material that has come in
contact with the floor, filtrate material from water treatment,
mortalities and unsold spoilt stock.
We aim to optimise resource use across our value chain.
For example, we use leftovers from the production at our
processing plants to produce salmon meal and oil for use in
the pet food industry. In 2023, we produced 276 tonnes of
salmon meal, and 462 tonnes of salmon oil.
We continuously look for opportunities to reuse and recycle
material and assets in our operations. For example, we
continuously refurbish catamaran workboats as well as feed
barges, prolonging the lifespan of the material.
Another example of the employment of circular solutions is
that we are diverting used nets from disposal to preparation
for reuse. The material is then used to produce various new
products, for example carpets.
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POWER
Homes
807
DISTRICT HEATING
Homes
196
LIQUID FERTILIZER
Tonnes
31,498
(á 15 MWh)
(á 5 MWh)
Healthy Environment
FÖRKA – Biogas Plant
In 2023, FÖRKA delivered 31,498 tonnes of
high-quality fertilizer for Faroese agriculture and
delivered 4,036 MWh to the Faroese electricity
grid and 2,939 MWh of district heating.
HEALTHY ENVIRONMENT
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
In 2023, FÖRKA started receiving food waste from
major food producers and distributors in Tórshavn
municipality, contributing significantly to a transition
towards a circular economy
As noted elsewhere in the report, a new groundbreaking
cooperation between Bakkafrost’s biogas plant FÖRKA, local
authorities, hotels, wholesale companies and the National
Hospital ensures that food waste is transformed into energy
production.
The kitchen at the National Hospital is among the major food
producers in the Faroe Islands.
The kitchen prepares around 300 meals every day for patients,
staff, and others who drop by to buy meals. Additionally,
about 100 people get their meals from the salad bar at the
hospital every day.
In a recent development, the National Hospital has collaborated
with the Tórshavn Municipality to transfer food production to
the FÖRKA biogas plant owned by Bakkafrost. The plant has
facilities to receive food, convert it into electricity, heat, and
compost.
At the National Hospital, new workflows have been
implemented and waste separation has been initiated.
The kitchen has acquired a special grinder for the purpose
- grinding food waste before it is collected in bins. The
Tórshavn Municipality empties the bins at regular intervals
and transports the food waste to FÖRKA.
Healthy Environment
Recycling Food Waste for the
Production of Renewable Energy
„This initiative is excellent and we
are proud of setting a precedent
for others. Before FÖRKA became
a reality, we at the hospital pushed
for a circular solution for our
food waste, but unfortunately, the
infrastructure was not in place.
Now, all the right collaborators have
joined forces and everything is in
line for this project to flourish and
create excellent circular solutions for
the Faroese society“
Gudna á Rógvi Johansen, kitchen chef
at the National Hospital.
Can salmon waste
be used to grow
potatoes?
Scan the QR code
and find
the answer:
HEALTHY ENVIRONMENT
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Salmon – One of the
Most Eco-efficient
Proteins
Approximately 25% of greenhouse gas emissions originate
from our food choices, making it crucial to take action.
In northern Europe, each of us individually contributes an
average of 3 tonnes of carbon per year through the food and
beverages we consume equivalent to 8.2 kg per day. So, how
can we reduce this impact?
Choosing our diet wisely plays a significant role. Opting for
salmon, chicken, or pork over beef or lamb can significantly
lower our carbon footprint. Let’s explore why the salmon
industry stands out.
Among the five major sources of animal protein, the salmon
industry boasts the lowest carbon footprint. By switching
from beef to salmon, you can reduce your carbon footprint
related to animal protein consumption by up to 85%.
68%
Farmed Atlantic
Salmon
No data
Cattle
38%
Lamb
46%
Poultry
52%
Pork
Calculated with avg. FCR of 1.3. Bakkafrost Faroes FCR (2023) was 1.096
EDIBLE MEAT PR KG FEED
These calculations take into account differences in FCR, edible yields and the cost of progeny.
Source: Global Salmon Initative, Bakkafrost
3.24
Farmed Atlantic
Salmon
23.92
Cattle
21.00
Lamb
3.52
Poultry
3.44
Pork
CO
2
e is calculated by multiplying the emissions of each of the six greenhouse gases (CO
2
, CH
4
, N
2
O, HFCs, PFCs and
SF
6
) by its 100-year global warming potential (GWP) Source: WWF Sverige & Carboncloud
SALMON FARMING | CARBON FOOTPRINT
KG CO
2
e PER KG PRODUCT
HEALTHY ENVIRONMENT
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
When we consider the land area needed to produce 100g of
edible protein, pork, chicken, and salmon have the lowest
demand on land. However, salmon stands out due to its
remarkable efficiency in converting feed to edible meat. With
100 kg of feed, you get 68 kg of salmon meat, far more than
other animal species.
Beyond its low carbon footprint, Bakkafrost salmon is a
healthy protein source. A 125g portion of salmon meets the
recommended daily intake of Omega-3 and Vitamin D.
On several of these parameters, Bakkafrost salmon performs
better than the industry average. In summary, Bakkafrost
salmon is a highly resource-efficient and sustainable protein
source that benefits both our health and the environment
LAND AREA NEEDED TO PRODUCE 100G OF EDIBLE PROTEIN
Source: GSI Cattle Lamb and MuttonPorkPoultry
7.1 11
102
185
3.7
Salmon
200
150
100
50
0
(m2/100g protein)
CattlePorkPoultryFarmed Atlantic
Salmon
Lamb
CARBON FOOTPRINT
LAND USE
FEED CONVERSION
WATER FOOTPRINT
EDIBLE YIELD
PROTEIN
OMEGA-3
VITAMIN D
Lowest
Lowest
Lowest
Lowest
Highest
2nd Highest
Highest
Highest
FARMED SALMON IS A VERY RESSOURCE EFFICIENT SOURCE OF HEALTHY PROTEINS
HEALTHY ENVIRONMENT
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
WHAT’S NEXT?
Climate action
• Improve logistics with our new cargo plane, which lowers
transportation distances. Operations are expected to start
in early 2024.
• Change Havsbrún’s power source to green energy from new
wind farm
• Investigate opportunities for energy efficiency through the
implementation of artificial intelligence
• Electrify 100% of feed barges in the Faroes, and ensure
that 100% of feed barges in Scotland are either powered by
electricity or hybrid technology
Water
• Further shift smolt production in Scotland from water-
demanding ‘flow-through’ facilities to RAS facilities,
reducing the demand for water.
• Advance water reporting, including optimising data capture
as well as strengthening the quality of the reported data
• Continue and increase focus on supplier engagement on
water-related topics such as water intensity
Biodiversity
• We will examine the hydrozoan population at our farming
sites in 2024. There is currently very limited information
on the kinds of species that inhabit the Faroese fjords.
• We are working on implementing the guidelines set by
TNFD. We will embed the guidelines in our decision-making
processes as well as providing a heat map of our value
chain.
• Establish a baseline for biodiversity to become net-positive.
• Achieve 100% ASC certification across all sites in Scotland.
• As part of our expansion of the production facility at
Havsbrún, a new system will be in place which will reduce
the local noise pollution. Furthermore, we intend to supply
our feed barges with electric power from land. This is an
ongoing project
Resource use & circular economy
• Implement action plans to achieve updated and
strengthened targets
• Initiative to improve waste management at our processing
site at Glyvrar
• Run trials of alternatives to EPS boxes along with FarCargo
commencing operations
• Ongoing trials to introduce monoplastic for packaging
HEALTHY ENVIRONMENT
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
A secure supply of high-quality feed is crucial to
ensuring healthy, nutritious, world-class salmon, and
the long-term sustainable growth of our business.
We are committed to transparent, responsible, and
sustainable sourcing of feed ingredients.
Our approach
Our salmon feed has a high content of marine ingredients, and
we are committed to responsible sourcing of raw materials,
production of fishmeal, fish oil, and feed at our FOF segment
(Fishmeal, oil and feed) Havsbrún.
Our responsible sourcing practices bring positive social and
environmental impacts to our communities. We have an open
and transparent relationship with our marine ingredient
suppliers. Fish caught in our nearby water not only employs
the Faroese community, but it also reduces unnecessary
carbon emissions from imported raw materials. Our water
and land footprint would be increased if marine ingredients
were replaced with plant material as there is no production
of plant protein in the Faroe Islands.
We continually review the high inclusion of marine raw
material in our feed, monitoring potential implications for
migrating North Atlantic fish stocks. To mitigate these risks,
we continue to include the use of trimmings*. We source
off-cuts from pelagic fish factories in the Faroe Islands and
we source as many trimmings as possible. Trimmings which
are used for the production of fish meals derive solely from
responsibly caught marine raw material. In recent years,
processing plants for pelagic species have been built in
the Faroe Islands, increasing access to trimmings from this
production.
Sustainable Fish
Feed – Havsbrún
Havsbrún feed: Size: 3mm Size: 4mm Size: 6mm Size: 9-12mm
Fish byproducts, which are utilised equal to 51%
of the fishmeal and 81% of the fish oil ingredients
used in our feeds
*According to the ASC standard version, trimmings are defined as by-
products when fish are processed for human consumption or if whole fish
is rejected for use of human consumption because the quality at the time
of landing does not meet official regulations with regard to fish suitable for
human consumption.
ASC Salmon Standard, Version 1.4, February 2023
Trimming Strategy for Sustainable Feed
Production
At Bakkafrost, our trimmings strategy is rooted in
sustainability and local sourcing. We buy and procure
all available trimmings from pelagic factory’s within
the Faroe Islands, aligning with our commitment to
responsible practices.
Sourcing and Dependence on Fisheries
The availability of trimmings hinges on the thriving
fisheries around the islands and nearby waters. As these
fisheries flourish, we can access high-quality marine
raw materials for our feed production. The variation in
the percentage of inclusion of trimmings from year to
year is directly linked to the fluctuating availability of
trimmings, which, in turn, depends on the state of local
fisheries/quotas.
Responsible Utilization
Havsbrún exclusively utilizes trimmings derived from
responsibly caught marine resources. These trimmings
are the byproduct of fish production for human
consumption.
In summary, our trimmings strategy ensures sustainable
sourcing, responsible utilization, and a positive impact
on both our environment and the local fishing industry.
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Feed conversion
We remain focused on keeping this figure as low as possible
through our feed development strategy. A low feed conversion
ratio depicts an efficient use of feed resources.
Method
The biological feed conversion ratio (bFCR) explains how
efficiently the feed is converted into biomass – in other words,
how much feed is used to produce 1 kg of salmon biomass,
regardless of if the salmon is harvested, dead or otherwise
lost. For a harvested site, the bFCR can be calculated as
follows: bFCR = Feed used / ((Biomass harvested + Biomass
dead + Biomass culled or lost) – Biomass released).
A bFCR of 1.096 means that our salmon gained 1 kilogram
of weight for every 1.096 kilogram of feed consumed. The
lower the FCR, the more efficient salmon are in converting
feed into food.
We also measure the eFCR (the economic feed conversion
ratio) where mortality is included in the measurement, the
focus moving forward is to reduce this.
FCR improvement
Many years of research into feed strategy and feed
compositions together with improved farming management
have been pivotal in improving production performance
with enhanced growth and optimal feeding (reduced feed
conversion ratio).
1.7-2
2.7-5
6-10
No data
FEED CONVERSION RATIO (FCR)
0
2
4
6
8
10
12
Feed conversion Ratio (kg)
Note: Feed conversion ratio (FCR) measures the productivity of different protein production methods.
It demonstrates the kg in feed needs to increase the animals bodyweight by 1 kg. Source: GSI
Cattle LambPorkPoultryFarmed Atlantic
Salmon
1.2-1.5
HISTORIC bFCR FAROE ISLANDS AND SCOTLAND
Year FO
2019 1.11
2020 1.08
2021 1.06
2022 1.06
2023 1.096
SCT
-
1.18
1.21
1.26
1.18
HEALTHY ENVIRONMENT
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
Healthy feed
Medicine and hormone-Free Feed
Our feed is thoroughly crafted to be free from any
medications and growth-promoting hormones.
Salmon Meal and Residuals.
Our feed contains no salmon meal or residuals from
other farmed species. We maintain strict quality control
to ensure purity.
Ethoxyquin-Free.
All fishmeal and fish oil used in our feed is ethoxyquin-
free.
Environmental Purity.
To safeguard against environmental pollutants, we
employ carbon filtering. This process effectively removes
dioxins and DL-PCBs from fish oil, even though it already
falls within the EU safety limits.
At every step, we strive for optimal performance
while upholding the highest standards of safety and
sustainability.
Targets
• Continue research into sustainable feed ingredients.
• Investigate new sustainable marine source for fishmeal.
• Optimise feed strategy to maintain industry leading FCR.
Performance
In 2023, 51% of the fishmeal and 81% of the fish oil included
in our feed was derived from fish trimmings. The species
used are all responsibly caught in well-regulated fisheries.
HISTORIC USE OF TRIMMINGS
Year % in Fishmeal % in Fish oil
2023 51% 81%
2022 48% 72%
2021 32% 73%
2020 32% 66%
2019 31% 55%
Free from
Our feed remains free from medicine, growth-promoting
hormones, and any salmon meal or residuals from any other
farmed species. All fishmeal and fish oil used in the feed is
free from ethoxyquin.
We use carbon filtering to decontaminate environmental
pollutants like dioxins and DL-PCBs from fish oil despite it
being within EU safety limits
Feed conversion
Our biological feed conversion (bFCR) in the Faroe Islands
remains low at 1.096 in 2023. In Scotland, it was 1.18 in
2023 and we are striving to reduce this.
In 2023, the eFCR in the Faroe Islands was low at 1.20. The
biological challenges in Scotland during 2023 are reflected in
the eFCR for Scotland, which increased in 2023 to 1.41 from
1.26 in 2022.
Sustainable Sourcing
In 2023, 100% of our plant proteins and oil and all marine
raw materials complied with our Sustainable Feed Policy.
In 2023 all plant proteins and oils:
• Non-GMO
• Soybeans (Certified Pro-Terra, Europe Soya or similar)
• No use of palm oil
• Not produced in areas threatened by deforestation
Capacity
In 2023, the construction of a new state-of-the-art feed mill
facility started. The key focus areas are: Noise reduction, fire
prevention and odour purification via scrubbers. Notably,
this expansion grants us the flexibility to incorporate new
alternative raw materials into our recipes. By doubling our
current feed production capacity, Bakkafrost is prepared for
growth. The new mill’s production flexibility allows us to
swiftly adapt and introduce novel ingredients.
The new feed mill will be in operation for the peak season
in 2025.
Certifications
Havsbrún passed 100% of audits across our various
certifications. For a full list of certifications, see more on page
120.
Transparency
We demonstrate our commitment to responsible sourcing and
increased transparency of marine ingredients by voluntarily
reporting sourcing details to the Ocean Disclosure Project.
WHAT’S NEXT?
• Continue projects to develop our feed in line with our
customer needs and sustainability priorities.
• We will continue to work to optimise our feed strategy to
maintain industry-leading feed conversion ratio and grow
healthy salmon.
• We will continue to investigate how to include novel feed
ingredients into our feed.
HEALTHY ENVIRONMENT
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Havsbrún Feed Composition in 2023 Production
HAVSBRÚN FEED COMPOSITION IN 2023 PRODUCTION
Wheat Products
17.6%
(23,129 tonnes)
Plant oil
13.5%
(17,701 tonnes)
Non-GMO SPC
15.2%
(19,979 tonnes)
Marine proteins
37.3%
(49,008 tonnes)
Fish oil
13.4%
(17,602 tonnes)
Others (including Algae oil)
3.2%
(4,141 tonnes)
Please see our sustainability webpages for more information on the source of marine products in our feed.
Please note, there is a very small variation in content for Bakkafrost feed, which is around 97% of all feed produced and sold in 2023 by Havsbrún.
Origin of ingredients used in Havsbrún feed
Faroe Islands 42,6% Nordic 10,7% Europe 27,2%
North America 1,0% South America (Brazil) 15,3%
China & South East Asia 3,3%
80% of Havsbrún feed ingredients originates from Faroe Islands,
Nordic and Europe.
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
At Bakkafrost, we uphold a thorough Sustainable Feed
Policy that ensures responsible sourcing of feed raw
materials. Our commitment extends to every supplier,
as we continuously assess their practices against our
stringent criteria.
Sustainable Sourcing of Plant Proteins and Oils
Key Principles:
Traceability: Raw materials must be fully traceable to their
origin. We prioritize transparency in our supply chain,
ensuring accountability at every step.
Compliance: Our suppliers are expected to adhere to both
national laws and international agreements related to land
use. This ensures that their operations align with sustainable
practices.
Environmental Stewardship: We recognize that a sustainable
production pattern is essential for safeguarding the
livelihoods of current and future generations. Our ingredients
cannot come at the expense of the environment.
Supplier Expectations:
Certification: All feed suppliers are required to meet best-
practice international standards. Additionally, plant oils and
proteins that are not considered low-risk must be certified as
sustainable and non-genetically modified.
Deforestation-Free: We are committed to protecting
vulnerable ecosystems. Therefore, our suppliers must ensure
that their products are not produced in areas threatened by
deforestation.
Proactive Engagement:
We have initiated active dialogues with our plant protein and
oil suppliers. Through collaborative partnerships, we aim to
reduce the overall environmental footprint of our products.
Sustainable Sourcing of Marine Raw Materials
In an industry where the trend is to replace marine raw
materials with alternatives, Bakkafrost has taken a different
path. We continue to prioritize a relatively high inclusion
of marine content in our feed production. Why? Because
our unique location allows us to adopt a more sustainable
approach.
High inclusion of marine content is beneficial for several
reasons:
• Fishmeal and Fish Oil: Our marine raw material primarily
comes from fisheries in the North Atlantic, predominantly
within Faroese waters.
• Transparent Supply Chain: We maintain transparency
throughout our supply chain.
• Resource Efficiency: Marine ingredients have a low demand
on freshwater and land, unlike imported plant proteins.
• Reduced Transport: Opting for marine ingredients over
imported plant protein reduces the need for long-distance
transportation.
• Circular Economy: We actively purchase trimmings from
the Faroe Islands, supporting a circular economy.
• Nutritional Value: Our feed contains a high level of omega-3,
contributing to increased nutritional value.
• Salmon Diet: Feed composition close to the natural diet of
wild salmon.
• Certified Materials: We use a significant proportion of
certified North Atlantic marine raw materials.
• Essential Nutrients: Marine ingredients provide a
comprehensive and natural source of essential nutrients,
reducing our reliance on additional dietary supplements
and additives.
By maintaining this commitment to sustainable marine
sourcing, we not only benefit our business but also contribute
to the well-being of our environment and local communities.
Low demand
on freshwater
and land
Reduced transportUse of co-products
Cleaned Fish Oil
High in Omega-3
Fisheries in the
North Atlantic
North Atlantic
marine raw materials
Fish material with
low food value
Supporting circular
economy
Transparent
supply chain
Havsbrún
Feed
Sustainable Sourcing
HEALTHY ENVIRONMENT
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Species Location Fishery countries Production Methods
Certifications/
Improvement project
Atlantic herring, Clupea harengus NE Atlantic
Faroe Island, UK, Norway, Greenland, EU, Iceland, Midwater trawl, Purse seine Marin Trust (Trimmings)
Atlantic mackerel Scomber scombrus NE Atlantic
Faroe Island, UK, Norway, Greenland, EU, Iceland, Midwater trawl, Purse seine Marin Trust (Trimmings)
Blue whiting, Micromesistius poutassou NE Atlantic
Faroe Island, UK, Norway, Greenland, EU, Iceland, Midwater trawl, Purse seine Marin Trust
Greater Argentine, Argentina silus NE Atlantic Faroe Islands Midwater trawl MSC
Capelin, Mallotus villosus NE Atlantic
Faroe Island, UK, Norway, Greenland, EU, Iceland, Midwater trawl, Purse seine MSC
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
Balancing Sustainability: Marine vs. Plant-Based Feed
Ingredients
The composition of feed ingredients plays a crucial role
in determining Bakkafrost environmental impact. Despite
Bakkafrost feed having a higher proportion of marine raw
materials compared to plant-based ones, it is essential to
recognize the environmental impact associated with each
type. Below is the breakdown of Scope 3 emissions related
to our feed production.
Fish-Based Ingredients: These components contribute
significantly to our feed. However, their carbon footprint is
relatively lower.
Vegetable-Based Ingredients (Rapeseed Oil, Soy & Wheat):
Surprisingly, these plant-derived ingredients account for
three times the CO
2
emissions compared to their marine
counterparts.
While prioritizing fish-based ingredients benefits fish health,
it also plays a crucial role in limiting our emissions. Our
commitment to sustainability extends beyond ingredient
selection. We are actively exploring alternative energy
sources to further reduce our carbon footprint during feed
production.
In summary, maintaining a balance between marine and
plant-based ingredients not only supports our aquatic
ecosystem but also aligns with our long-term sustainability
goals at Bakkafrost.
Research and Development
At Havsbrún, our commitment to continuous improvement
drives our Research and Development (R&D) activities.
We allocate substantial resources to five key areas, each
contributing to our mission of sustainable feed development:
1. Recipe Enhancement for Fish Health and Welfare:
Our R&D team focuses on refining feed formulations
to enhance fish health, overall quality, and welfare.
By optimizing recipes, we ensure that our salmon
receive the best possible nutrition while minimizing
any adverse effects on their well-being.
2. Reducing Environmental Footprint through Recipe
Innovation:
We recognize the environmental impact of feed
production. Our R&D efforts are dedicated to
formulating feeds with a reduced carbon footprint.
By prioritizing sustainable ingredients, we aim to
minimize our ecological impact.
3. Exploring New Collaborations and Opportunities:
We actively engage with potential collaborators
to explore novel approaches. By fostering
partnerships, we uncover innovative solutions that
align with our sustainability goals.
4. Novel Ingredients and Resource Efficiency:
Our R&D team evaluates alternative ingredients.
Striving for resource optimization, we seek
ingredients that balance ecological responsibility
with performance.
5. Energy efficiency:
Fishmeal and oil production consumes a significant
amount of energy. It involves several energy-
intensive steps, including cooking, drying, and
pressing. Energy losses are often accepted as
unavoidable, but R&D can identify opportunities
for improvement. By optimizing processes and
reducing energy consumption, we can enhance our
economic and emission performance. Integration of
energy-saving technologies and practices becomes
crucial.
Example of research projects:
We conducted a comprehensive large-scale feed trial. The
objective was to investigate the effects of new dietary
mineral sources. The results demonstrated improved mineral
retention in salmon and reduced mineral excretion in faeces.
These effects were associated with enhanced salmon quality
and reduced environmental influence. Result: All our feeds
have been transitioned to these new mineral sources.”
In our ongoing pursuit of sustainable feed solutions,
we recently completed a significant commercial-scale
experiment. The primary objective was to replicate the
nutritional composition of our existing feed strategy, with a
notable shift toward plant-based ingredients. Here are the
key findings:
Scientific literature and industry observations consistently
highlight the remarkable ability of Atlantic salmon to
utilize nutrients from plant sources. Our trial reaffirmed
this capacity, emphasizing that salmon can thrive on diets
rich in plant-derived nutrients. While the experiment
showcased the promise of plant-based ingredients, it
also underscored the challenges. Creating an energy-
dense, high-performance feed solely from plant sources is
complex. Nutrient gaps exist when compared to traditional
fishmeal-based feeds. As we replaced marine ingredients
with plant alternatives, we observed a significant impact
on the feed’s carbon footprint. The experimental plant-
based feed exhibited a 25% higher carbon footprint
compared to our standard diet.”
FEED INGREDIENTS
SHARE IN FEED AND OF SCOPE 3 EMISSIONS
60%
50%
40%
30%
20%
10%
0%
Marine feed ingredients Vegetable feed ingredients
Share of feed Share of Scope 3 emission
HEALTHY ENVIRONMENT
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Investigating Mesopelagic Organisms for Salmon Feed.
Bakkafrost is committed to advancing salmon aquaculture
by identifying alternative proteins for feed. In a new
project, started in 2023, we are collaborating with three
other partners to investigate the opportunity to catch
and use mesopelagic organisms as a sustainable source of
fishmeal. If the project has a successful outcome, the aim
is to reduce reliance on traditional fishmeal by harnessing
mesopelagic organisms.
In 2023, the total cost of the project amounted to 4.5
million DKK. Bakkafrost accounted for 1.5 million DKK of
this expenditure.
This project exemplifies our dedication to exploring
new frontiers in aquaculture while safeguarding our
environment.
Enhancing Energy Efficiency:
At Bakkafrost we recognize the critical role energy
efficiency plays in achieving our sustainability targets. As
part of our commitment to reducing emissions, we have
initiated a project aimed at optimizing energy usage during
the energy-consuming fishmeal production process. When
raw marine material arrives at our factory, it is 2 degrees
Celsius. Traditionally, this material is directly pumped
into the cooking process, consuming significant energy to
raise its temperature. Our new procedure involves “pre-
cooking” the raw material before it enters the main cooker.
We utilize surplus energy in the form of steam generated
within the factory. The raw material will be pre-heated
to 55 degrees Celsius using the available steam. This pre-
heating step significantly reduces the energy required
during the subsequent cooking process. By implementing
this pre-cooking approach, we anticipate energy savings
of 15-20%.
This reduction directly contributes to Havsbrún’s and
Bakkafrost overall goals to reduce our greenhouse gas
emissions.
Algae oil.
Algae oil is increasingly being recognized as a sustainable
and beneficial ingredient in salmon feed. Algae oil is
derived directly from algae which is rich in omega-3 fatty
acids, specifically docosahexaenoic acid (DHA). In 2023
Bakkafrost has used an inclusion of algae oil in our feed.
% plant ingredients
Marine based standard diet Havsbrún
Plant based diet Havsbrún Project 2021
Kg CO
2
eq.
+ 25%
The figure shows that marine-based diets, despite having a greater
proportion of marine ingredients, yield a much lower carbon footprint
compared to plant-based ingredients. This correlation is evident when
analyzing carbon footprint calculations for dietary compositions reported
in scientific papers.
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SUSTAINABILITY REPORT 2023 HEALTHY ENVIRONMENT
Insect meal is gaining traction as a sustainable alternative
in salmon feed for several compelling reasons and Havsbrún
has just started a project with added insects to its feed. The
first trials to test the new feed will take place in the Faroe
Islands in early 2024.
So what are the benefits of adding insects to the feed? Insects
are very resource-efficient. Insects are cold-blooded and
highly efficient at converting feed biomass into their own
biomass. On average, one kilogram of insect biomass can be
produced from just two kilograms of feed biomass.
Traditionally, fish meal for salmon feed is sourced from wild-
caught fish. This practice can in some parts of the world
contribute to overfishing and bycatch of sensitive marine
organisms. By using insect-based feed, the need to catch
fish specifically for salmon feed can be reduced. Insects are
very nutrient-rich. Insects, particularly the black soldier fly
larvae, store a significant amount of protein during their
larvae stage. Salmon, being discerning eaters, often prefer
this insect-based food over other alternatives. Insect meal
production also has a low carbon footprint.
In summary, incorporating insect meal into salmon feed aligns
with our commitment to innovation, resource conservation,
and a healthy environment.
Healthy Environment
Black Soldier Fly Larvae:
a Sustainable Solution
for Aquaculture Feed?
HEALTHY ENVIRONMENT
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HEALTHY ENVIRONMENT SUSTAINABILITY REPORT 2023
Healthy Communities
STRATEGIC PRIORITY
• To create shared value
2023 PERFORMANCE AGAINST OUR 2023
COMMITMENTS
• Educate key stakeholders on the benefits of salmon
aquaculture
• Increase collaboration with key stakeholders to achieve the
Healthy Living Plan
• Increase transparency of local value creation
• Continue 10m DKK 3yr investment
in Healthy Living Fund in the Faroe Islands
• Continue investment in Community Fund in Scotland
2026 TARGETS
• Minimum yearly investment of 3 m DKK in Healthy Living
Fund in the Faroes and Community Fund in Scotland
• Enhance stakeholder alignment and collaboration to drive
sustainable outcomes
• Promote community engagement and transparency through a
minimum of 30 annual visits from schools, local communities
and stakeholders
• Annual beach clean: >90% of areas where we operate
• Minimum 60% use of local suppliers
SDGS
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IN THIS SECTION
RESPONSIBLE LEADERSHIP 163
VALUE GENERATION 165
COMMUNITY ENGAGEMENT 169
TRANSPARENCY 173
Bakkafrost is committed to our local communities
and proud of our heritage. We farm in some of the
most remote coastal locations in the Faroes and in
Scotland. We respect the integral role we play in the
local communities in which we live and work. We
are focused on driving multinational growth and
global market share and recognise the importance
of our communities in which we live and work.
As a responsible business, we are passionate about
both driving economic growth and sustainability
of our rural economies through; employment,
investment, taxes, sourcing locally and supporting
sport, art and culture. We are committed to
environmental stewardship and working closely
and openly with our local communities. We seek
to ensure open and transparent communication,
including for development projects, with
stakeholder groups and communities. Our
collaborative approach to business and value
created in our local communities contributes
towards UN Sustainable Development Goals 8 and
17. Please see page 24 for more information.
Our commitment to ‘Healthy Communities’ is
built on four pillars: Responsible Leadership,
Value Generation, Community Engagement and
Transparency.
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We are committed to demonstrating responsible leadership
on sustainability and sector issues. We contribute at an
international level through initiatives such as the Global Salmon
Initiative (GSI), and regionally through the Faroese Fish Farmer’s
Association, Salmon Scotland, and other relevant sector groups.
Bakkafrost is a founding member of the Faroese Sustainable
Business Initiative, which aims to encourage collaboration
to advance sustainable business practices and contribute
towards UN Sustainable Development Goals, including
Climate Action.
In 2023, the initiative promoted the first voluntary Faroese
ESG Reporting Guide - developed by the network - to
encourage transparent ESG reporting in the Faroe Islands.
Also, a free-to-use GHG calculator for Faroese companies
was launched, which the initiative funded and developed
in collaboration with the Faroese Environment Agency. This
involved establishing some new national emissions factors
for the first time.
The Faroese Sustainable Business Initiative claimed the 2023
international edie award for Partnership and Collaboration
at the awards event in London on March 30th. The edie
awards are known as the UK’s largest and most prestigious
sustainability awards, recognizing excellence across the
spectrum of sustainable business, including both large and
small initiatives and projects.
We aim to inspire and share best practices to encourage
positive change and participate in many events and initiatives
involving key stakeholders. In 2023, this included different
forums where stakeholders meet to discuss the future of
aquaculture, including sustainability.
We are committed to engaging with the local communities
where we operate and giving them a voice to express their
views on the actual or potential impacts of our role as
neighbors. To ensure that we receive their perspectives, and
to measure the satisfaction, engagement, and motivation of
our employees, we conduct regular employee surveys.
We are committed to reducing our greenhouse gas emissions
recognizing that we cannot achieve this goal alone. To
successfully reduce emissions, we must collaborate closely
with our suppliers. In November 2023, we hosted the
second of our Supplier Days - this time in Scotland - with
41 attendees. Presentations were given by our Sustainability
and Procurement teams, followed by our keynote speaker
Verco. We focused on greenhouse gas reporting and Scope
1, 2, and 3 emissions with emphasis on our supply chain, we
also focus on areas were suppliers need to deliver change
to help us acheive our goals as collaboration is required to
achieve our ambitious emissions targets. We will host more
of these events going forward.
Connecting with Our Community
We are committed to engaging and creating meaningful
connections with the local communities where we operate.
We recognize the importance of giving community members
a platform to express their views on the real and potential
impacts of our presence as neighbors. Their perspectives
matter, and we actively create opportunities for them to
share their insights.
Here’s how we engage with our community:
Regular Dialogues: We actively engage with municipalities
where we operate, including mayors and municipal
representatives, in regular meetings held as a minimum
yearly. These sessions allow us to listen attentively to their
concerns, understand their needs, and align our efforts
accordingly.
Open Days: Transparency is at the core of our approach.
During open days, community members visit our facilities,
observe our processes firsthand, and taste our products.
It’s an opportunity for them to connect with our team, have
discoussions, and provide valuable feedback.
Local Cultural Events: We actively participate in local
cultural events. Our senior management team engages with
attendees, offering free product samples. Beyond showcasing
our work, these events foster relationships and deepen our
understanding of the community’s pulse.
Employee Involvement: Our employees play a crucial role.
They interact with visitors during open days and events,
sharing insights about our work and actively listening to
community perspectives.
Sustainability Surveys: Every 2-3 years, we conduct surveys
to gauge community priorities related to sustainability. What
matters most to our communities? Is it environmental impact,
social responsibility, or economic development? These
insights guide our future initiatives.
Additionally, when we submit planning applications for new
developments, we proactively consult with the involved
communities and neighbors. Many of our projects are of
significant scale, requiring robust community engagement.
We regularly meet with community councils and other local
groups, responding to correspondence from individuals.
Such engagement allows for the concern to be heard e.g.
regarding possible noise or light issues etc., and allows us the
opportunity to present mitigation measures and to present
the wider opportunities of such developments to the local
community including local investment and jobs.
We remain committed to building a shared future that reflects
the collective voice of our community.
Responsible
Leadership
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In March 2023 The Faroese Sustainable Business
Initiative won the ‘Partnership and Collaboration of
the Year’ at edie Sustainability Awards 2023.
The judges said: “This
collaboration has achieved
significant, impressive progress
in its first year. it has brought
together diverse set of partners
to take the initiative and fill a
void where regulations were
not present; working together
for ambitious goals. We were
impressed by the highly
systemic and participative
approach taken by such a
small community, making this
initiative a worthy winner of a
very popular category.”
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We operate in some of the most remote and fragile regions in
the countries and remain committed to creating and retaining
value in the rural economy. We respect the major role that
salmon farming plays in these regions and are committed to
being an active and integral part of our communities. As the
largest private employer in the Faroe Islands and the largest
private employer in the Outer Hebrides in Scotland, we create
long-term career opportunities across all stages of our value
chain.
As part of our commitment to preserving value and
employment in the rural communities of Scotland, we have
recently developed a housing programme aimed at enhancing
recruitment opportunities in local areas where housing
options are limited, this included three new accommodation
lodges in West Strome in 2022.
We are committed to creating shared value in our local
economies by sourcing locally where possible. 70% of
procurement was spent locally in 2023. For the last decade,
Bakkafrost has been the salmon farming company with
the highest investment rate per kilo of salmon produced
compared to Norwegian peers. We continue to progress
our 2028 sustainable growth investment plan, focusing on
farming healthy, quality salmon. As part of the plan to reduce
biological risk, we have invested significantly in developing
hatcheries in the Faroe Islands and Scotland. The investment
in hatcheries creates value and employment in our local
economies and supports the core principles of our sustainable
procurement policy.
We contribute to the local economies through CAPEX
expenditure as well as through significant investment in
maintenance and upgrades. Equipping sites with up-to-date
tools as part of our 2023 plan, including centralised feeding
and introducing AI, predator-proof netting on all sites, and
jump nets where required, with the introduction of our
new well boat Bakkafossur, other hybrid well boats, and
new barges for Ardyne and Portree were installed. Further
investment has been made to add new support boats to work
alongside our farming service vessels.
It is essential for us to drive and participate in sustainable
development in our local communities through innovative
projects. In 2023, we partnered up with Faroese energy
provider Effo to launch an advanced project aimed at
significantly boosting renewable energy production. The
project involves establishing the largest wind farm in the
Faroe Islands, capable of generating power equivalent to 10%
of the collective oil consumption across the islands—both on
land and at sea. Initially, the project will supply renewable
energy to Bakkafrost’s feed department, Havsbrún, in
Fuglafjørður, Faroe Islands. The project is expected to be
complete in 2026, pending necessary approvals. Should all
necessary authorisation be given, then the wind farm will
significantly reduce Bakkafrost’s greenhouse gas emissions.
In the Faroes we support around 45 sporting organisations
spanning from grassroots to national level. We have been the
proud main sponsor of the Faroese men’s national football
team since 2012. We have provided support to clubs and
organisations in 19 municipalities, giving them the possibility
to finance their operations, maintain their equipment, and
improve opportunities for participation. A benefit to the
community as a whole.
We continue to support various local and national initiatives
through our Healthy Living Fund both in the Faroe Islands
and in Scotland. We support causes that align with our values
and focus on sports, arts and culture, education, environment,
and social inclusion.
Among projects in the Faroe Islands, which we have
supported, is the Faroese participation at the 2023 Island
Games in Guernsey. Around 200 athletes, coaches, assistants
and others were a part of the Faroese delegation.
One of our key investments is a five year partnership agree-
ment with the University of the Faroe Islands to support nat-
ural sciences, specifically supporting the establishment of the
University Centre for Ocean Modelling. The project aims to
improve knowledge of the ecosystems in the Faroese fjords
and wider marine environment to support the development
of the aquaculture industry in the Faroes. The collaboration
will also improve understanding of the potential impact that
climate change can have on the ecosystems of the fjords and
Faroese aquaculture. We also have a partnership with the
Faroese men’s national football team. The Faroese national
team is very important to the Faroese people, and their per-
formance reminds us that even though we are small, with
diligence and skill we can accomplish great things.
Value Generation
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Other fund investments in the Faroe Islands included:
• Establishing a statue of the first Norse settler in the Faroe
Islands, Grímur Kamban
• Humanitarian organisations such as the Red Cross
• Team Rynkeby Faroe Islands, a cycling team raising funds
for children with serious health conditions and their
families
• Annual children’s football event “Summar Cup”
We continue to invest in local economies in Scotland. We
have commissioned the building of three bespoke boats with
Macduff Shipyards, Aberdeenshire, supporting several local
jobs.
Bakkafrost Scotland offers community groups
and charities across Scotland the opportunity to
apply directly to support local causes in their area.
In 2023, we supported over 20 local community groups
in our local areas through our Community Fund and
programme of sponsorship and events. Since starting the
fund, over 165 community groups have received financial
support from the fund, including; pipe bands, shinty and a
‘Boat Bus’ mobile education center for primary children to
reconnect local communities with maritime heritage through
the arts, as well as groups that organised beach cleans.
Following the success of the scheme, the Company extended
the Community Fund to include external applications,
allowing communities near the company’s 60 sites on
Scotland’s west coast to bid for financial support for
projects that promote health and wellbeing, stewardship
of the natural environment or economic development.
In Denmark, Munkebo Seafood mainly sponsors local
initiatives, sports clubs and their local football club.
In 2023, we:
• Paid DKK 587 million in salaries and employee taxes in the
Faroe Islands from DKK 545 in 2022
• Paid £ 26.3 million in salaries and employee taxes in
• Scotland
• Our operation generated 527 million DKK in corporate,
revenue and dividend taxes
• Contributed DKK 3.7 million in the Faroe Islands and
£95.000 in Scotland through our Healthy Living Fund to
local causes including sport, arts and culture, education,
environment and social inclusion.
Kyles Athletic Under 14 Shinty team
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Contribution to
Local Communities
Locally sourced products
and services
70%
Corporate, revenue
and dividend taxes
Around 527 MDKK
Initiatives supported
4.5 MDKK
Salaries and employee taxes
Group
863 MDKK
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Local sports clubs 45%
Arts and culture 10%
Social inclusion of the elderly or the disabled 2%
Environment and biodiversity 32%
Other local giving 7%
Emergency relief 4%
Arts and culture 21%
Local sports clubs 26%
Environment and biodiversity
(incl. Salmon Scotland
Wild Salmonid Fund) 53%
Munkebo Football Club 64%
Local sports clubs 36%
DENMARK
FAROE
ISLANDS
32%
7%
4%
45%
SCOTLAND
53%
21%
26%
36%
64%
10%
2%
INITIATIVES SUPPORTED
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We are committed to being a good neighbor and an integral
part of the communities in which our employees live and
work. We aim to encourage engagement in our communities
and support local initiatives.
Community events in the Faroe Islands
In January Bakkafrost hosted a reception at the headquarters
at Glyvrar with the Bakkafrost board members and senior
management, Aksel V. Johannesen, prime minister of the Faroe
Islands and other government representatives welcomed
the ship and its crew members. There were speeches, music
performances and presentations about Bakkafrost. Attendees
had the opportunity to explore our new ship Bakkafossur
and visit our headquartes, were food was served for the
occasion. The event was very succesful with over 2500
people attending.
To mark World Environment Day on 5
th
of June, Bakkafrost
handed out free trees and bushes, providing all employees
in the Faroe Islands with the opportunity to contribute to a
greener future. The type of tree had to be carefully selected
to survive the extreme weather in the Faroes.
At the local “Salmon Market” at Glyvrar, Bakkafrost
contributes to the community culture by offering free salmon
for all participants. Bakkafrost had activities for children
and invited people to visit our headquartes. Bakkafrost also
hosted a public debate regarding the future vision for the
Faroese salmon industry, with participation from relevant
ministers and politicians. Over 2000 people attended the
Salmon Market.
Another community event is the annual clean-up week, where
Bakkafrost employees during working hours go to locations
across the Faroes to clean the shores. Once again, this year,
Bakkafrost employees cleared up several tonnes of waste.
We also took part in Seafarer Day (Sjómannadegnum) in
Klaksvík, where we invited people to board our ship Róland
and participate in the annual water battle. Additionally, we
served salmon to over 3,000 participants. At the Cultur-
al Days in Fuglafjørður we participated with a booth at the
event, where we talked to visitors and handed out free salm-
on meals.
As the biggest private employer in the Faroe Islands, we are
aware of our responsibility and motivated by our impact on
local communities.
We are very proud of our talented and diverse workforce,
which consists of employees with different skills and differ-
ent backgrounds. To ensure all employees are included in so-
ciety, we offer employees to join classes in Faroese language,
and moreover through induction courses, we aim to support
employees in general matters regarding living in the Faroe
Islands.
Community Engagement in Scotland
In 2023, Bakkafrost Scotland partnered on a range of
sponsorship activities supporting and celebrating sport,
culture and tradition.
Bakkafrost Scotland also continued the long-term
association with two of the west coast of Scotland’s
highest profile community gatherings and Highland Games
events at the Cowal Gathering and Lochcarron Highland
Games. Both events attract thousands of visitors from
far and wide every year, and the mix of tradition and
competition is a major attraction for all who attend.
The investments made by Bakkafrost Scotland in 2023 will
be significant for the business, and importantly supported
by sound business practice, based on sustainability for long-
term success, in a sector that still delivers for the often fragile
communities in which it operates as well as for Scotland.
Native Hebridean Salmon was one of the sponsors of
the Tiree Wave Classic which is a thrilling celebration of
windsurfing, uniting athletes from around the world on the
stunning Hebridean Isle of Tiree. It is the oldest established
windsurfing competition.
After a community beach clean of one of Tiree’s stunning
sandy beaches, MasterChef Champion, Thomas Frake,
prepared a beach BBQ using our world-class Smoked and
Fresh salmon.
The Mull Feis festival was held in Bunessan, Isle of Mull, on
the weekend of 3 to 5 February. The event was well attended,
with 45 children visiting the Fèis while 15 adults participated
in the Gaelic singing and drumming classes.
The Fèis kicked off with a Ceilidh in the Argyll Arms on Friday
night, and for the remainder of the weekend people came
from across Mull for music lessons, shinty and arts and crafts.
The weekend closed with the children who performed the
‘Thoir mo shoraidh thar Ghunaidh’.
Bakkafrost Scotland supported the Festival of the Sea in
Glasgow. During the event various activities were made
available including art workshops, live cooking demonstrations,
free tasters and many local artists stands. Our salmon was
used in cooking demonstrations and public tasting sessions.
In July, we continued our long-standing sponsorship of
the Western Isles Games Association’s participation at the
NatWest International Island Games – held in Guernsey. The
biennial event attracts island teams from around the world
and this year over 110 athletes flew out of Stornoway to
represent the Western Isles. As the largest private employer
in the Outer Hebrides in Scotland, we were pleased to have
the opportunity to support the valuable community which
also aligns well with our efforts to promote a healthy lifestyle.
Community
Engagement
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Examples of
Initiatives in Scotland
SKYE HALF MARATHON
The 2023 events included the Isle of Skye Half Marathon, where runners
enjoyed breath-taking views of the world-famous local landscape
throughout the 13.1mile closed-road course.
The event is also important for local businesses, with runners keen to
experience all the island has to offer.
COWAL HIGHLAND GATHERING
Bakkafrost Scotland also celebrated the company’s tenth year as headline
sponsor of the Cowal Highland Gathering which took place in August.
The event described as “all of Scotland in one week” welcomed more than
23,000 visitors from across the globe who enjoyed the unique atmosphere
and watched the world’s best pipe bands, highland dancers, and athletes as
they competed in Dunoon’s Cowal Stadium.
As part of our sponsorship, we had kitchen trailer demonstrations and
tasters in the top field, which provided a high-profile opportunity to
promote our brands locally.
LOCHCARRON HIGHLAND GAMES (2023)
WESTERN ISLES ISLAND GAMES ASSOCIATION
(WIIGA)
Bakkafrost Scotland extended its relationship with WIIGA for the twenty-
fifth year. The 2023 event saw the largest WIIGA squad yet, with 110
athletes and support team members travelling to Guernsey. They competed
in sports including football, indoor bowls, golf, badminton, cycling, shooting,
swimming and athletics. WIIGA also competed in women’s golf and archery
for the first time this year.
The Mull Marine team actively participated in the cleanup activities
organised by “The Scottish Coastal Clean Up Project” in September 2023,
playing a key role in the restoration of the local environment around Ulva
Ferry.
BEACH CLEANS ON THE SCOTTISH COAST
We are committed to preserving the natural environment in the rural areas
in which we operate. In Scotland, we have a tradition of facilitating regular
beach clean ups, and in 2023 we carried out 7 beach cleans across Scotland,
providing both manpower as well as equipment.
KIRN PRIMARY SCHOOL 1 (2023)
Bakkafrost Scotland has provided Kirn Primary School with funding towards
outdoor facilities through its Community Fund.
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Examples of
Initiatives in
the Faroe Islands
ANNUAL CLEAN UP WEEK
For several years, Bakkafrost has arranged a clean-up week where
Bakkafrost staff cleans coasts in the areas in which we operate.
In mid-June 2023, Bakkafrost staff set the day off to clean a large area
around Strond hatchery, the Haraldssund dam and Bakkafrost terminal
nearby. Around 60 employees participated and 23 tonnes of waste was
cleaned up.
VISITS
We have hosted many visits from local schools and high schools at our
headquarters during the year. The students get a tour of the facility in
Glyvrar and a presentation focusing on the value chain, who we are
as a company and on sustainability and future career opportunities.
It has been a delight to experience how the students have been
interested in Bakkafrost as a company and how Bakkafrost, as a listed
international company, is impacted by geopolitical development, market
fluctuations and stakeholders’ increasing interest in sustainability.
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Seafarer Day in Klaksvík – 2023. Photo: nordlysid.fo
SALMON MARKET
On the 22rd of July, as part of the local “Salmon Market” at Glyvrar,
we opened the doors of our offices and production plant in the Faroe
Islands to the community. We received more than 2,000 visitors, who
were given a tour and insight into our corporate and sustainability
strategy and had the opportunity to ask our employees questions.
We make sure our employees connect by organizing company-wide events.
These gatherings are all about recognizing their hard work. Our annual
Company Day is a mix of business updates, training sessions, and fun
entertainment. Organized company hikes provide networking opportunities,
natur and exercises. Finally, our annual Christmas celebration for employees
and their families is a very popular event with gifts and entertainment.
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Bakkafrost plays an important role in the rural communities
in which we operate, and we aim to engage with our
community about the sector and our business. By conducting
regular materiality assessments, we ensure that we provide
transparency on the sustainability issues which our
stakeholders find the most material.
We regularly host many different groups of visitors to our
headquarters, production plants and marine sites, these
include; prime ministers, ambassadors, customers, investors
and school groups.
In 2023, we expanded our participation at the annual
“Salmon Market” at Glyvrar to include presentations from
CEO at Bakkafrost, Regin Jacobsen, and Minister of Industry,
Høgni Hoydal, about the future of salmon farming in the
Faroe Islands. In addition, we hosted a political debate the
same day at the event, where local and national politicians
participated alongside Regin Jacobsen, CEO.
A key part of our Group alignment programme is the
communication of the five-year business strategy and
investment plan. On the 6
th
of June in 2023, Bakkafrost
held its Capital Markets Day for the first time in Inverness,
Scotland. The day marked the announcement of a new
five-year 6.3bn DKK investment plan for 2024-2028.
The investments will enable a transformation of the
operation in Scotland and provide sustainable growth in
the Faroe Islands. Over 100 stakeholders participated in
the Capital Markets Day, which included several site visits
with presentations giving insight to Bakkafrost operations
and opportunities to speak with group management.
In January 2023, a reception was held in Glyvrar to welcome
our new 109-metre hybrid well boat Bakkafossur. The
public, invited stakeholders, including business partners,
the Prime Minister, politicians, Faroese media and other key
stakeholders participated in the reception.
We are committed to educating community stakeholders
on our sustainable operations as well as the benefits and
the role of aquaculture in future sustainable food systems.
As part of this work, we provide insight and support for
students to use Bakkafrost as a case study. In addition, staff
from Bakkafrost are involved in lecturing on sustainability at
various educational institutions, e.g. at the University of
the Faroe Islands and at the vocational education for the
aquaculture industry. Farming and sustainability practices
at Bakkafrost have been used as case studies, increasing the
students’ knowledge of our operations.
We seek to ensure open and transparent
communication with industry, stakeholder groups
and our community.
We ensure there is open dialogue with stakeholders local
to our farming sites and update them on our sustainability
initiatives and ensure there is an opportunity to raise any
concerns.
To ensure we understand any potential negative impacts from
our operations that we our stakeholders may experience, we
have grievance mechanisms, including a form on our website
enabling all stakeholders can raise concerns. As part of our
work to update our Human Rights policy, we will start to
regularly review the grievance processes, including reviewing
the knowledge of and the availability of the form as well as
an assessment of the effectiveness of these mechanisms. We
are committed to remediating any potential negative impacts
we might have caused, and our grievance policy states that
response should be given to the complainant within four
weeks.
As members of Salmon Scotland, the salmon sector
organisation in Scotland, we report key information in line with
requirements. We also recognise our broader responsibility to
engage, support and work collaboratively with stakeholders
in our wider environment in key geographical areas. We are
involved in various local wild fishery projects, including
research and habitat.
To provide further and topic-specific insight into our
sustainability management and performance, we disclose
against various sustainability disclosures, including CDP
Climate Change, Water and Forest, Coller FAIRR, S&P Global
Corporate Sustainability Assessment and more.
In 2023, we:
• Hosted visits from key stakeholders, including ambassadors,
investors, students as well as politicians.
• Arranged our Capital Markets Day in Scotland, where
we communicated our five-year business strategy and
investment plan to over 100 stakeholders.
• Increased transparency on sustainability issues through
reporting against various sustainability frameworks.
The ambassador of Ukraine to Denmark, Vydoinyk Mykhailo, at our
headquarters in Glyvrar. Ambassador Mykhailo also met five fellow
Ukrainians that work for Bakkafrost.
Transparency
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Swimming athletes from the Faroe Islands and Western Isles, Scotland
Once every two years, thousands of athletes representing
different island communities from around the world come
together to compete in the NatWest International Island
Games.
The Island Games 2023 - held in Guernsey, allowed us to
unify Bakkafrost, Western Isles, and Faroe Islands in one
single event.
As the largest private employer in the Faroe Islands and
the Outer Hebrides in Scotland, we were pleased to have
the opportunity to support these two valuable communities
which also aligns well with our efforts to promote a healthy
lifestyle.
As a main sponsor of the Faroe Islands and the Western
Isles, Scotland teams of over 200 athletes, we were pleased
with their great results competing in different sports such
as football, golf, cycling, athletics and swimming. The teams
were successful in bringing home 17 gold, 25 silver and 27
bronze medals in total from the Games.
Although cultural differences shape both communities, the
Island Games offered a rare opportunity for Bakkafrost to
make it even more visible that we are committed to several
local communities and proud of our heritage.
Furthermore, the Island Games are an important chance for
talented athletes to compete at an elite international sporting
event, mix with other islanders from around the world and
learn about different cultures.
Healthy Communities
Bakkafrost Sponsored Western Isles
and Faroe Islands at the 2023 Islands Games
Photo: Jens Kr. Vang
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ESG General
Information
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ESG Index 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Energy Consumption
Direct energy consumption (Scope 1) tCO2 489,241,073 358,094,311 37% E1-5, 35
Indirect energy consumption (Scope 2) tCO2 102,596,482 89,775,154 14% E1-5, 35
Total Scope 1 & 2 energy consumption kWh 591,837,554 447,869,466 32% E1-5, 35
ENERGY PRODUCTION
Electricity (share which is sold to the Faroese grid) kWh 4,035,596 5,438,140 -26%
District Heating kWh 2,947,700 3,893,000 -24%
Total energy production kWh 6,983,296 9,331,140 -25%
GHG Emissions
Gross direct GHG emissions (Scope 1) (tCO2e) tCO2e 129,294 94,547 37% E1-6, 44a
Gross location-based Scope 2 GHG emissions (Scope 2) (tCO2e) tCO2e 32,860 27,332 20% E1-6, 44b
Total GHG emissions - Scope 1 and 2 (tCO2) tCO2e 162,155 121,841 33%
Indirect GHG emissions (Scope 3, excl, Capital Goods) (tCO2e) tCO2e 437,884 429,565 2% E1-6, 44c
Total GHG emissions - Scope 1, 2 and 3 (tCO2e) tCO2e 600,038 551,406 9% E1-6, 44d
GHG Intensity
Tonnes of product sold Tonnes 156,646 135,810 15%
tCO2e emitted per tonne of product sold - Scope 1 and 2 tCO2e/product sold 1.04 0.90 16%
tCO2e emitted per tonne of product sold - Scope 3 tCO2e/product sold 2.80 3.16 -11%
tCO2e emitted per tonne of product sold - Total Scope 1, 2 and 3: tCO2e/product sold 3.83 4.06 -6%
Total GHG emissions per net revenue (incl, production of fishmeal and oil) tCO2e/million EUR net
revenue
626,34 576,00 9% E1-6 53
176
ESG INDEX 2023 INTEGRATED ANNUAL REPORT 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Resource Inflows
Tonnes of biological materials (and biofuels used for non-energy purposes) used to manufacture
the undertaking’s products and services (including packaging) that is sustainably sourced, with the
information on the certification scheme used and on the application of the cascading principle
Tonnes (FSC certified) 1,002,44 1,236 E5-4, 31b
The percentage of biological materials (and biofuels used for non-energy purposes) used to
manufacture the undertaking’s products and services (including packaging) that is sustainably
sourced, with the information on the certification scheme used and on the application of the
cascading principle
Percentage 28% 24% 4%p E5-4, 31b
Weight in absolute value of secondary reused or recycled components, secondary intermediary
products and secondary materials used to manufacture the undertaking’s products and services
(including packaging)
Tonnes 648,59 N/A E5-4, 31c
Weight in percentage of secondary reused or recycled components, secondary intermediary
products and secondary materials used to manufacture products and services (including packaging)
Percentage 18% N/A E5-4 ,31c
Resource Outflows
Volumes of recyclable content in products and their packaging, tonnes 3,044 4,116 E5-5, 36c
The rates of recyclable content in products and their packaging, Percentage 84% 80% 4%p E5-5,36c
Total weight of packaging materials tonnes 3,638 5,166 -30%
177
INTEGRATED ANNUAL REPORT 2023 ESG INDEX 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Waste*
DIVERTED FROM DISPOSAL 17,913,04
Hazardous 0 E5-5, 37b
Preperation for reuse Tonnes 0 E5-5, 37b i
Recycling Tonnes 230 E5-5, 37b ii
Other recovery Tonnes 0 E5-5, 37b iii
Total hazardous waste diverted from disposal Tonnes 230 257 -11% E5-5, 37b
Non-Hazardous E5-5, 37b i
Preperation for reuse Tonnes 2,519 E5-5, 37b ii
Recycling Tonnes 1,483 E5-5, 37b iii
Other recovery Tonnes 13,681 E5-5, 37b
Total non-hazardous waste diverted from disposal Tonnes 17,683 19,827 -11% E5-5, 37b
DIVERTED TO DISPOSAL 7,089
Hazardous E5-5, 37c
Incineration Tonnes 1 E5-5, 37c i
Landfill Tonnes 0 E5-5, 37c ii
Other disposal moperations Tonnes 0 E5-5, 37c iii
Total hazardous waste diverted to disposal Tonnes 1 1 0% E5-5, 37c
Non-Hazardous 0 E5-5, 37c
Incineration Tonnes 2,924 0 E5-5, 37c i
Landfill Tonnes 4,164 E5-5, 37c ii
Other disposal methods Tonnes 0 E5-5, 37c iii
Total non-hazardous waste diverted to disposal Tonnes 7,087 5,279 34% E5-5, 37c
* Disaggregated 2022 figures are not available due to new categorisation from previous years.
178
ESG INDEX 2023 INTEGRATED ANNUAL REPORT 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Total amount of non-recycled waste Tonnes 7,089 N/A E5-5, 37d
Total amount of non-recycled waste Percentage 28% N/A E5-5, 37d
Total amount of recycled waste Tonnes 17,907 N/A
Total amount of recycled waste Percentage 72% N/A
Hazardous waste generated Tonnes 231 258 -10% E5-5, 39
Radioactive waste generated Tonnes 0 0 E5-5, 39
Total waste generated Tonnes 25,002 25,364 E5-5, 37a
Pollution - Emissions to air**
Carbon monoxide (CO) tonnes 9.98 1.6 524% E2-2, 28a
Nitrous oxide (N20) tonnes 0.35 0.77 -55% E2-2, 28a
Ammonia tonnes 0.14 0.03 367% E2-2, 28a
Nitrogen oxides (Nox/NO2) tonnes 307 126 144% E2-2, 28a
Pollution - Emissions to water
Total nitrogen tonnes 377 365.0 3% E2-2, 28a
Total phosphorus tonnes 1,525 142 8% E2-2, 28a
Copper and compounds (Cu) tonnes 0.20 0.20 0% E2-2, 28a
Zinc and compounds (as Zn) tonnes 4.6 4.4 5% E2-2, 28a
Chlorides (as total Cl) tonnes 37.5 39.6 -5% E2-2, 28a
** Data based on very limited data sampling
179
INTEGRATED ANNUAL REPORT 2023 ESG INDEX 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Water
Freshwater withdrawal, by source
Fresh surface water, including rainwater, water from wetlands, rivers, and lakes m
3
14,232,623 14,679,588 -3%
Groundwater - non renewable m
3
282,863 271,859 4%
Produced/entrained water m
3
0 15,680 -100%
Third party m
3
66,169 63,027 5%
Total m
3
14,581,655 15,030,154 -3%
Water withdrawals by water stress (as per the ”Overall Water Risk” in the WRI Water
Risk Atlas at date of reporting)
Low m
3
14,581,655 15,013,324
Low-medium m
3
16,830
Medium-high m
3
High m
3
Extremely high m
3
Water consumption
Total water consumption m
3
184,343 48,184 E3-4, 28a
Areas at water risk, including areas of high-water stress Number 0 0 E3-4, 28b
Water discharges, by destination m
3
Brackish surface water/seawater m
3
10,830,232 11,069,178 -2%
Third party destination m
3
69,041 79,853 -14%
Fresh surface water m
3
3,498,039 3,643,520 -4%
Total m
3
14,397,312 14,792,551 -3%
Water-related OPEX & CAPEX
Water-related OPEX mDKK 1,252 2,169 -42%
Total water-related CAPEX mDKK 51,475 26,930 91%
180
ESG INDEX 2023 INTEGRATED ANNUAL REPORT 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Bentich Impact - Faroe Islands
% of frames - Using MOM-B scoring system, measured at peak biomass,measured within one month
of 75% of peak biomass
Low/medium impact (no measures needed or taken) Percentage 97% 85% 12%p
High organic loading (measures taken to minimise impact) Percentage 3% 15% -12%p
Bentich Impact - Scotland
% of frames - Using the SEPA benthic monitoring scoring system, measured within one month of
75% of peak biomass
Low/medium impact (no measures needed or taken) Percentage 100% 100% 0%p
High impact (measures taken to minimise impact) Percentage 0% 0% 0%p
Escape Prevention
Number of escape incidents - Group Number 1 0
Number of escaped fish - Group Number 251,344 0
Fallow Time Between Production Cycles
Fallow time - Faroe Islands Weeks 20.08 18.50 9%
Fallow time - Scotland Weeks 17.90 12.80 40%
Feed Conversion Ratio
Biological Feed Conversion Ratio - Faroe Islands bFCR 1.10 1.06 3%
Biological Feed Conversion Ratio - Scotland bFCR 1.18 1.26 -6%
181
INTEGRATED ANNUAL REPORT 2023 ESG INDEX 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Feed Composition (Havsbrún)
Non-GMO Soy Tonnes 19,979 13,261 51%
Algae oil Tonnes 80 0
Wheat products Tonnes 23,129 28,162 -18%
Plant oil Tonnes 17,701 17,843 -1%
Marine proteins Tonnes 49,008 50,630 -3%
Fish oil Tonnes 17,602 18,068 -3%
Others Tonnes 4,061 4,384 -7%
Total Tonnes 131,560 132,348 -1%
Feed sources (excl, marine resources) by water stress category (WRI Aqueduct Country
Rankings)
Low Percentage 17.5% N/A
Low-medium Percentage 72.4% N/A
Medium-high Percentage 5.5% N/A
High Percentage 1.9% N/A
Extremely-high Percentage 0.2% N/A
Undefined Percentage 2.5% N/A
Fish Welfare
Survival rate, Faroe Islands (%) Percentage 92.7% 95.1% -2.4%p
Annual survival rate, Scotland (%) Percentage 79.4% 76.8% 2.6%p
Monthly survival rate - Faroe Islands Percentage 99.39% 99.60% -0.21%p
Monthly survival rate - Scotland Percentage 98.29% 98.20% 0.09%p
Average annual stocking density, Faroe Islands kg/m
3
7.59 7.19 6%
Average annual stocking density, Scotland kg/m
3
8.14
Bulk oxygen uptake during transport Never below 70% Never below 70%
182
ESG INDEX 2023 INTEGRATED ANNUAL REPORT 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
Sea Lice Management
Sea lice levels, Faroe Islands Sea lice count 0.28 0.28 0%
Sea lice levels, Scotland Sea lice count 0.22 0.22 0%
Medicine use in feed, Faroe Islands Grams active
pharmaceutical
ingredients per tonne of
live weight produced
0.47 5.52 -91%
Medicine use in feed, Scotland Grams active
pharmaceutical
ingredients per tonne of
live weight produced
0.43 0.49 -12%
Medicine in bath treatment, Faroe Islands Grams active
pharmaceutical
ingredients per tonne of
live weight produced
3.27 2.7 21%
Medicine in bath treatment, Scotland Grams active
pharmaceutical
ingredients per tonne of
live weight produced
0.03 0.389 -92%
Sustainability Certifications
Number of ASC sites certified (Group) Number of sites 34 20 70%
% of total harvested volume in the Faroe Islands which was ASC certified Percentage 100% 100% 0%
Number of BAP sites certified Number of sites 48 39 23%
% of total harvested volume in Scotland which was BAP certified Percentage 100% 100% 0%
USE OF MARINE INGREDIENTS IN FEED
Forage Fish Dependency Ratio - meal (FFDRm), weighted average, Group FFDRm 0.751 0.91 -17%
Forage Fish Dependency Ratio - oil (FFDRo), weighted average, Group FFDRo 0.433 0.72 -40%
183
INTEGRATED ANNUAL REPORT 2023 ESG INDEX 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
EMPLOYEES & FTE Group 2023
Heads total Heads 1960 0% ESRS 2, 40a
FTE total Full time equivalent 1,686 1,778 -5% S1-6, 50
Employees, permanent Full time equivalent 1680 1,770 -8% S1-6, 50b i
Employees, temporary Full time equivalent 6 7 -56% S1-6, 50b ii
Employees, part-time Full time equivalent 300 307 -2% S1-6, 52b
Employees, full-time Full time equivalent 1,386 1,470 -6% S1-6, 52 a
Employees, female (%) Percentage 25% 25% 0% S1-6, 50
Employees, male (%) Percentage 75% 75% 0% S1-6, 50
Employees, younger than 30 (%) Percentage 22% 24% -2%p S1-9, 66b
Employees, aged 30-50 (%) Percentage 48% 47% 1%p S1-9, 66b
Employees, older than 50 (%) Percentage 30% 29% 1%p S1-9, 66b
Non-guaranteed hours employees FTE 656 734 -11%
Non-guaranteed hours employees - Female FTE 252 246 3%
Non-guaranteed hours employees - Male FTE 403 488 -17%
Workers who are not employees Heads 1 3 -33% S1-7, 55a
Employees by geographical areas Heads 1960 1,778 10% SBM-1, 40a iii
Employees by geographical areas: 1960
Faroe Islands: 1274
Scotland: 546
USA: 73
Denmark: 63
France: 4
Employees, male Heads 1411 0% S1, S1-5 51a
Employees, female Heads 549 0% S1, S1-5 51a
184
ESG INDEX 2023 INTEGRATED ANNUAL REPORT 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
TURNOVER Group 2023
Number of employees who left Heads 528 534 -1% S1-6, 50c
Number of employees who left, female Heads 160 135 19% S1-6, 50c
Number of employees who left, male Heads 368 399 -8% S1-6, 50c
Number of employees who left, younger than 30 Heads 221 274 -19% S1-6, 50c
Number of employees who left, aged 30-50 Heads 188 170 11% S1-6, 50c
Number of employees who left, older than 50 Heads 120 90 33% S1-6, 50c
Rate of total employee turnover Rate 27% S1-6, 50c
Turnover rate by level of seniority, Senior Leadership Team Rate 7.69%
Turnover rate by level of seniority, Line Manager Rate 11%
Turnover rate by level of seniority, Employees Rate 29%
NEW HIRES Group 2023
New hires total Heads 319 597 -47%
New hires, female Heads 98 144 -32%
New hires, male Heads 221 453 -51%
New hires, younger than 30 Heads 170 299 -43%
New hires, aged 30-50 Heads 111 207 -46%
New hires, older than 50 Heads 38 91 -58%
185
INTEGRATED ANNUAL REPORT 2023 ESG INDEX 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
OCCUPATIONAL HEALTH & SAFETY Group 2023
Absence rate in % of total hours worked Percentage 3.93% 4.53% -0.6%p
Lost Time Injuries Number of accidents 44 49 -10% S1-14, 88e
Lost days rate Average number of
absence days per injury
26.55 56.77 -53% S1-14, 88e
Lost Time Injury Rate (LTIR) per million hours worked Number of accidents
divided with total hours
worked
13.98 14.88 -6% S1-14, 88c
Fatalities Number 0 0 0 S1-14, 88b
Employees covered by the health and management system Percentage 100% S1-4, 88a
Work-related accidents Number 44 49 -10% S1-14, 88c
Work-related ill-health Number 19 N/A S1-14, 88d
Employees entiteled to family-related leave Percentage 100% N/A S1-15, 93a
Family-related leave, female Percentage 11% N/A S1-1, 93b
Family-related leave, male Percentage 7% N/A S1-15, 93b
TRAINING AND FURTHER EDUCATION Group 2023
Total average hours of training (Faroe Islands and Scotland) Hours 23.72 17.89 33%
Average hours of training, female Hours 10.80 10.00 8% S1-13, 83b
Average hours of training, male Hours 27.89 19.58 42% S1-13, 83b
WHISTLEBLOWING Group 2023
Internal whistleblowing cases Number 1 2 -50% S1-17 103b
Whistleblowing cases related to human rights, discrimination, or forced/child labour Number 0 0 0% S1-17 103a
Compensation for damages from violations regarding social and human rights factors DKK 0 0 0% S1-17, 104b
186
ESG INDEX 2023 INTEGRATED ANNUAL REPORT 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
ANNUAL TOTAL COMPENSATION RATIO - HIGHEST PAID RATIO TO THE MEDIAN SALARY
OF ALL EMPLOYEES
Annual total compensation ratio, Faroe Islands Ratio 8.6 7.24 19% S1-16, 97b
Annual total compensation ratio, Scotland Ratio 9.22 8.77 5% S1-16, 97b
Percentage increase, highest-paid vs, Median Faroe Islands Percentage 28.01 Highest
paid/ 9.84%
Median Employee
0 highest paid
/ 9.43% median
employee
Percentage increase, highest-paid vs, Median, Scotland Percentage 18.36% Highest
paid/ 4.43%
Median Employee
N/A
Gender pay gap , Faroe Islands Pay gap 18.25% N/A S1-16, 97a
Gender pay gap, Scotland Pay gap -3.70% N/A S1-16, 97a
EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS Group 2023
Employees covered by collective bargaining agreements Percentage 63% N/A S1-8, 60
Conditions based on similar agreements Percentage 37% N/A S1-8, 61
The global percentage of employees covered by workers’ representatives, reported at the country
level for each EEA country in which the undertaking has significant employment
Percentage 96% N/A S1-8, 60b&c
EMPLOYEES RECEIVING PERFORMANCE REVIEWS BY GENDER Group 2023
Employees participated in regular performance and career development reviews - Female Percentage 1% 2% -1%p S1-13, 80a
Employees participated in regular performance and career development reviews - Male Percentage 10% 13% -3%p S1-13, 80a
187
INTEGRATED ANNUAL REPORT 2023 ESG INDEX 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
DIVERSITY OF GOVERNANCE BODIES AND EMPLOYEES - FTE BY END OF REPORTING
PERIOD
Group 2023
Board of Directors - Female Number 2 2 0% S1-9, 66a
Board of Directors - Female Percentage 33% 33% 0%p
Board of Directors - Male Number 4 4 0% S1-9, 66a
Board of Directors - Male Percentage 67% 67% 0%p S1-9, 66a
Board of Directors - Average ratio of female to male Percentage 33% 33% 0%p GOV-2, 21d
Directors reporting to the CEO - Female Percentage 15% 25% -10%p
Directors reporting to the CEO - Male Percentage 85% 75% 10%p
All Line Management (inclusive SLT) - Female Percentage 19% 20% -1%p
All Line Management (inclusive SLT) - Male Percentage 81% 80% 1%p
Independent board members Percentage 83% 83% 0% GOV-2, 21e
Governance Group 2023
Number of convictions and the amount of fines for violation of anti-corruption and anti-bribery
laws
Number and DKK 0 0 0% G1-4, 24a
Confirmed incidents of corruption or bribery Number 0 0 0% G1-4, 25a
Confirmed incidents in which own workers were dismissed or disciplined for corruption or bribery-
related incidents
Number 0 0 0% G1-4, 25b
Confirmed incidents relating to contracts with business partners that were terminated or not
renewed due to violations related to corruption or bribery
Number 0 0 0% G1-4, 25c
Financial and in-kind political contributions made directly and indirectly by the undertaking
aggregated by country or geographical area where relevant, as well as type of recipient/beneficiary
Value 0 N/A G1-5, 29b i
Average days to pay invoices from the invoice date Number of days 37 36 3% G1-6, 33a
Legal proceedings currently outstanding for late payments; Number 0 N/A 0% G1-6, 33c
188
ESG INDEX 2023 INTEGRATED ANNUAL REPORT 2023
BAKKAFROST GROUP UNIT OF MEASURE 2023 2022 % ESRS REFERENCE
MEMBERSHIP OF ASSOCIATIONS
SEDEX
Global Gap
Aquaculture Forums
CIPD
NEBOSH
Mental Health Forum
DYW
SAIC
Lantra
IOSH
IEMA
The Faroese Fish Farmers Association
Salmon Scotland
Dansk Industri
189
INTEGRATED ANNUAL REPORT 2023 ESG INDEX 2023
General Basis for
Preparation of
the Sustainability
Statement
This is Bakkafrost’s first integrated sustainability statement
covering the reporting period 1 January to 31 December
2023.
The sustainability statement is prepared with reference to the
European Sustainability Reporting Standards (ESRS) issued by
European Financial Reporting Advisory Group (EFRAG).
Calculations and reporting of greenhouse gas emissions is
prepared in accordance with the Greenhouse Gas Protocol,
following the ‘operational control’ consolidation approach
where the company accounts for 100 percent of the GHG
emissions from operations over which it has control.
The sustainability statement is prepared on a consolidated
basis which follows the Scope of the company‘s financial
statement. The consolidated sustainability statement
includes P/F Bakkafrost and the subsidiaries over which P/F
Bakkafrost has a controlling influence either by shareholding
or by agreement. A controlling interest is normally deemed
to exist when ownership directly or indirectly exceeds 50%
of the voting rights.
The sustainability statement covers Bakkafrost‘s full upstream
and downstream value chain.
This statement includes or mentions sustainability-related
policies, actions and targets that apply to the organisation‘s
upstream value chain where they are relevant, such as
policies, actions and targets related to sourcing sustainably
from suppliers, human rights, health and safety and reducing
carbon emissions.
Upstream and downstream value chain data is included in
parts of the reported metrics, e.g. Scope 3 GHG emissions and
reported grievances from 3rd party stakeholders.
Information subject to confidentiality due to national
legislation has been omitted.
Accounting estimates
Across our ESG reporting, value chain-related proxies/sector-
average data is only applied in the calculations of our Scope
3 greenhouse gas emissions.
We are committed to measuring and reporting our greenhouse
gas emissions in accordance with the Greenhouse Gas
Protocol, and we seek to apply specific data wherever we
can. However, we acknowledge that in some cases we do not
have access to activity data.
Currently we apply proxy data/sector-average data to the
calculation of emissions of our upstream and downstream
activities (Scope 3). This includes using emission factors
deriving from databases for the calculation of GHG emissions
within the categories:
• Purchased good and services (excluding quantities of soy,
where we apply a supplier-specific emission factor)
• Capital goods (currently excluded from the reported
inventory due to high annual volatility)
• Fuel and energy-related activities
• Transportation and distribution (excluding transport of
feed from Havsbrún to our Scottish operations where we
have activity data)
• Waste generated in operations
• Business travel
• Employee commuting
• Leased assets
• Processing of sold product
• Use of sold product
• End of life treatment of sold products
Since we apply proxy data to the calculation of Scope 3 GHG
emissions, we estimate that the level of accuracy of the
reported Scope 3 GHG emissions for 2022 is 69%.
The calculation of level of accuracy is based on an assessment
of the data quality of the collected raw data such as volumes
or amount spend combined with an assessment of the data
quality of the GHG factor applied to calculate the total GHG
emissions.
190
GENERAL BASIS FOR PREPARATION OF THE SUSTAINABILITY STATEMENT INTEGRATED ANNUAL REPORT 2023
We are currently in a dialogue with some of our most
significant stakeholders in relation to Scope 3 to have
activity data into our calculations and we expect to improve
the accuracy and completeness of our data collection and
reporting processes over time.
Preparation of the sustainability statements involves the use
of estimates and assumptions. Use and changes in estimates
and estimated assumptions are accounted for when they
occur. Descriptions about the various estimates applied are
given in the notes to the accounts where relevant.
Time horizons applied
Bakkafrost applies its own time horizons for reporting
purposes and risk assessments. Bakkafrost has a short-term
time horizon on 3 years, a medium-term horizon at 3-8 years,
and a long-term horizon at 8 years and more.
Bakkafrost has a short-term time horizon of 3 years
corresponding to the life cycle of one generation of salmon.
Salmon farming is a long-term business requiring significant
infrastructure, equipment, and personnel investment. It
takes approximately 3 years for salmon to grow from eggs
to harvestable size. Therefore, Bakkafrost’s short-term plans
and production strategy are designed to maximize efficiency
and profitability while ensuring the long-term sustainability
of the company’s operations.
The applied definitions of medium- and long-term time
horizons are a direct result of the definition of a short-term
time horizon.
Changes in preparation of sustainability information
For the reporting of sustainability information for 2023, we
have decided to adopt an integrated reporting approach that
combines our financial and sustainability information in a
single report. This reflects our commitment to creating value
for our stakeholders and society in a holistic and transparent
manner.
Due to the adoption of CSRD, some of the ESG metrics
previously reported might have been replaced or revised
to reflect CSRD requirements. For example, we have revised
the reporting structure of waste generated in operations to
reflect the structure suggested in CSRD. Thus, volumes can
only be compared to previous years on an aggregated level,
as it has been found impracticable to generate the figures
following two different reporting structures.
Disclosure stemming from other
sustainability reporting standards
As the sector agnostic ESRS standards are the only reporting
standards that have been released yet as a result of the
EU Corporate Sustainability Reporting Directive (CSRD), we
continue to apply other reporting standards as we have
done in previous years to support the transparency in our
reporting. These include calculation methodologies which
have been prepared and decided by members of the Global
Salmon Initiative (GSI) and methodologies as stated in
certifications and national legislation.
Metrics that have been prepared with reference to the Global
Salmon Initiative methodology handbook include:
• Fish escapes
• Fish mortality
• Antibiotic use
• Medicinal in-bath treatments
• Medicinal in-feed treatments
• Use of hydrogen peroxide
Metrics which are reported with reference to the Aquaculture
Stewardship Certification (ASC) include:
• Wildlife interactions
• Forage fish dependency ratio (FFDr)
Metrics which are reported with reference to national
regulatory standards are:
• Sea lice levels
• Organic loading of seabed (scored with reference to the
MOM-B system for the Faroe Islands and SEPA for Scotland)
External review
All quantitative data included in the sustainability statement
is covered by limited assurance performed by our auditor
Januar - Løggilt Grannskoðanarvirki. An independent
assurance report can be found at the end of the report.
191
INTEGRATED ANNUAL REPORT 2023 GENERAL BASIS FOR PREPARATION OF THE SUSTAINABILITY STATEMENT
To identify which disclosure requirements are relevant
for Bakkafrost to report on, we have carried out a double
materiality assessment which considers the sustainability-
related impacts that Bakkafrost has on its surroundings and
the risks and opportunities which Bakkafrost faces from its
surroundings
The Corporate Sustainability Reporting Directive (CSRD)
requires that Bakkafrost reports on sustainability matters
based on a double materiality assessment.
Bakkafrost’s double materiality assessment has been carried
out from October 2023 to January 2024.
Overview of the process to identify material
impacts, risks and opportunities (IRO’s)
The Double Materiality Assessment (DMA) was performed
through 4 general phases. Phase 1 and 2 covered both
identification and assessment of impacts as well as financial
risks and opportunities. Differences in the process are
described in sections covering Phase 3 and Phase 4.
Phase 1: Understanding the context
To ensure we included all relevant topics in our assessment,
we performed an analysis of our current ESG activities, our
current legal and regulatory landscape, a review of selected
competitors’ and suppliers’ ESG reporting and activities,
we conducted interviews with selected internal and
external stakeholders, and we mapped our value chain and
stakeholders.
It is important that actual and potential IRO’s that arise
through Bakkafrost’s network of suppliers are considered.
We have identified these through a risk assessment that we
did using desk research based on Bakkafrost-specific data
regarding sourcing of raw materials. The assessment focuses
on raw materials used for feed production at our feed facility
at Havsbrún, as the sourcing of raw materials for feed
production was identified as giving rise to a heightened risk
of adverse impacts.
As part of understanding the context, we considered both
direct impacts as well as potential impacts through business
relationships. We particularly focused on relationships
which are likely to be associated with material impacts,
including actors associated with ‘hot spots’ that are exposed
to the likelihood of actual and potential impacts (e.g. natural
resource sourcing from areas with high deforestation rates
or production in countries with poor working conditions). We
also focused on actors with whom we have key dependencies.
We used the following factors to differentiate actors:
a) Proximity to business (e.g. tier 1, tier 2, tier 3 etc.)
b) Connection to adverse impacts
c) Degree of leverage or influence of value chain actor over
the undertaking or vice-versa
The most important factor is b, and the determination should
not be primarily based on either a or c.
The analysis showed that Havsbrún sources several
raw materials in the production of fish feed, which are
documented to have a high climate change-, biodiversity-,
social- or governance impact, including soy and rapeseed oil.
Phase 2: Identification of potential material impacts
We created an ESG long list with potential material impacts
based on the findings from Phase 1.
ESRS 1 states that the sustainability matters presented in
Article 16 (subdivided into topic, sub-topic and sub-sub-topic
level) shall be considered. Thus, the sustainability matters
identified in Phase 1 were categorised according to the
categories listed in ESRS 1 and supplemented with identified
entity-specific topics for Bakkafrost.
The ESG long list included topical matters which were
presented slightly differently. All matters that could
reasonably be aggregated, e.g. as they represented the same
or close to the same matter but with a different wording,
were aggregated. Formulations of the different impacts
within each sustainability topic were included to assist the
assessment of potential materiality.
Phase 3: Rating of potential material
sustainability matters and IROs
Phase 3 focused on assessing the materiality to inform the
consolidation of results in Phase 4. This was done through
two ratings.
The first rating, which was performed via an online survey,
included engagement with affected stakeholders. The
purpose of the survey was to: potentially delimit the amount
of potential material matters planned for more detailed
assessment in the second rating; directly involve and include
stakeholder perspectives to inform the management’s
consolidation of results; and provide insights for future
actions, i.e. from gaining inputs from stakeholders on specific
concerns or expectation to Bakkafrost.
66 approved sustainability matters were assessed by the
stakeholders.
The impact-related stakeholder groups who received the
survey were:
• Employees
• Customers
• Industry associations
• Local communities
• Authorities
The financial stakeholder groups were:
• The Bakkafrost management
• Banks
• Financial and ESG analysts
• Investors
Double Materiality
Assessment
Methodology
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DOUBLE MATERIALITY ASSESSMENT METHODOLOGY INTEGRATED ANNUAL REPORT 2023
In total, 144 stakeholders received the survey.
Suppliers were not engaged as the risk of them providing
biased feedback was too high. Instead, we have emphasised
the importance of considering IROs arising from the supply
chain in the assessment, especially in the second rating.
Each respondent was asked to rate the materiality of the
identified sustainability matters in relation to Bakkafrost on
a scale from 1-5 as follows:
• 5 is crucial
• 4 is important
• 3 is neutral
• 2 is less important
• 1 is not important
To further narrow down the number of potential material
sustainability matters, a first level cut-off at an average score
of 3 or higher was anticipated. Matters with an average score
above 3 would be included in the second rating.
However, the results showed that all topics were rated high,
and no matter was given an impact or financial score below
3.5.
Due to the high scores, all 66 topical matters were included
in the second rating, and it was decided that the first rating
stage could not form the basis for delimiting the number of
sustainability matters in the second rating. However, the
first rating stage provided relevant information, which was
included alongside the rating results for the second rating.
For the second rating stage, we involved subject matter
experts (SME) within the company to perform a detailed
impacts, risk and opportunities rating. The results from this
rating served as the foundation for the final consolidation of
results.
The task of performing the rating of the impact-related
topics was delegated to the relevant SMEs, while the task of
assessing the financial materiality was delegated to our CFO.
Assessment of impact materiality
The process of assessing the impact materiality followed the
methodology stated in ESRS. Impacts were firstly assessed to
be either negative or positive, then actual or potential, and
for actual negative impacts, the topics were rated in terms
of severity of the impact, and for potential negative impacts,
the factor of likelihood was added along with severity. For
actual positive impacts, only severity was considered, and for
potential positive impacts, the likelihood was assessed.
The process is illustrated in the figure below:
Assessment of financial materiality
(risks and opportunities)
The assessment of financial materiality was based on a
combination of the likelihood of occurrence (0%-100%) and
the potential magnitude of financial effects, and all matters
were considered from a short-, medium- and long-term
perspective.
For the assessment of the magnitude of financial effects, the
following quantitative thresholds were applied:
IMPACT
Negative impact Positive impact
Actual impact Potential impactActual impact Potential impact
Scale ScaleScale Scale
Scope ScopeScope Scope
Irremediability Irremediability
Severity Severity*
LikelihoodLikelihood
Whether and to what extent the negative
impacts could be remediated
How widespread
the negative impact is
How grace the negative
impact is
How grace the negative
impact is
How grace the negative
impact is
How grace the negative
impact is
How widespread
the negative impact is
How widespread
the negative impact is
How widespread
the negative impact is
Whether and to what extent the negative
impacts could be remediated
Magnitude of
financial effects
From mDKK
(lower limit)
To mDKK
(upper limit)
0 0 10
1 10 30
2 30 100
3 100 200
4 200 500
5 500 99999
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INTEGRATED ANNUAL REPORT 2023 DOUBLE MATERIALITY ASSESSMENT METHODOLOGY
The ISA 320 standard was used as a guiding instrument for
defining the cut-off level, as it stipulates 1% for revenue and
costs, and 5% for profit before tax as relevant materiality
levels in the context of financial reporting.
When defining financial materiality in accounting processes,
companies therefore typically work with a threshold of
between 1-3% of annual revenue.
Bakkafrost’s annual revenue for 2022 constituted 7,300
mDKK, and the threshold of 1% is therefore equal to roughly
73 mDKK.
Based on this, the estimated financial risk/opportunity for
each topical matter is therefore calculated by multiplying the
maximum exposure of each scoring level cf. the table above
with the likelihood of occurrence.
Example: A topical matter received a magnitude of financial
effects rating of 4, which is equal to a maximum exposure of
500 mDKK. The likelihood was estimated to 30%, and the total
estimated financial opportunity was therefore calculated at
500 mDKK * 30 % = 150 mDKK.
To guide the definition of financial materiality in the context
of the double materiality assessment, the Pareto principle
is further applied to understand the total identified risks
or opportunities. This principle is used to guide financial
decisions, as it is estimated that around 80% of consequences
often come from 20% of the causes.
By applying the Pareto principle, it is estimated that topical
matters with individual maximum risk exposures of 50 mDKK
or above constitute 67.1% of the total identified risks for
Bakkafrost. At this level (50 mDKK), the risk exposure of each
topical matter represents approximately 0.7% of Bakkafrost’s
annual revenue. This is defined as the threshold for material
financial risk.
For opportunities, the materiality threshold applied was 0.8%
of Bakkafrost’s annual revenue.
Phase 4: Consolidation of the DMA results
In order to consolidate the double materiality assessment
for Bakkafrost, a final workshop was held Bakkafrost
management to review the materiality assessment and
determine if the materiality of any topical matters should be
adjusted.
To establish the best possible foundation for the workshop,
all relevant information from the first and second ratings was
presented in a table, which was used as the basis for the
consolidation of materiality by Bakkafrost management.
Individual tables were prepared for the financial and impact
ratings respectively. The tables were divided into topical
matters which were defined as material in the second rating,
and topical matters which were not defined as material in
the second rating. The scoring of the second rating thus
constituted the basis for assessing materiality of the topical
matters, while the information from the first rating served
as additional information, to include the broader stakeholder
perspective and support the consolidation process of
materiality at the workshop.
If a topical matter had been identified as material from either
an impact or financial perspective, Bakkafrost management
still had the possibility to reevaluate this assessment during
the final workshop. This would, however, require that they
provide solid argumentation as to why they believe that the
topical matter should not be defined as material, to justify
their decision to reevaluate the assessment.
The management also had the opportunity to include topics
which had been assessed immaterial.
As a result of the discussions at the final consolidation
workshop, 47 topical matters were identified as material from
an impact perspective and 36 topical matters were identified
as material from a financial perspective, which resulted in
a list of 49 material sustainability matters, which will guide
future sustainability reporting at Bakkafrost.
Basis for preparation of the double
materiality assessment
This is the first time we have performed a double materiality
assessment. We have previously performed standard
materiality assessments. No sustainability matters have been
excluded as a result of the double materiality assessment
compared to previous materiality assessments.
The double materiality assessment has been performed on a
consolidated basis which follows the Scope of the company‘s
financial and sustainability statement.
The double materiality assessment covers Bakkafrost‘s full
upstream and downstream value chain.
The following four sections of ESRS 2 along with the EFRAG
Implementation guidance for value chain (VCIG) has been
used to frame the methodology and process concerning the
supply chain analysis and stakeholder mapping:
ESRS 2, IRO-1: Description of the process to identify and assess
material impacts, risks and opportunities.
ESRS 2, SBM-1: Disclosure requirement on Strategy, business
model and value chain.
ESRS 2, SBM-2: Disclosure requirement on interests and views
of stakeholders
ESRS 2, SBM-3: Disclosure requirement on material impacts,
risks and opportunities and their interaction
with strategy and business model (including
value chain)
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DOUBLE MATERIALITY ASSESSMENT METHODOLOGY INTEGRATED ANNUAL REPORT 2023
Sources of information used
• Bakkafrost Annual report 2022, Bakkafrost Healthy Living
Sustainability Report 2022 and, information provided to
investors (Capital Market Day 2023).
• Existing ESG data: Healthy Business data and GRI Standards
Content Index 2022
• ESG baseline assessment via ESRS due diligence scheme
(Appendix A3)1
• Bakkafrost Sustainability Governance Framework
• Bakkafrost Corporate Responsibility and Sustainability
Policy Statement
• Bakkafrost Feed Policy Statement
• Bakkafrost Freshwater Use Policy
• Materiality Assessment Research (2021, prepared by
Buchanan)
• Materiality Review, Desktop Research (2023, prepared by
Buchanan)
• Previous materiality assessment (2019, internally prepared)
• TCFD Scenario Analysis (2023, prepared by Verco)
• Bakkafrost Plastics Recycling landscapes Report (2019,
prepared by 3keel)
• Packaging Portfolio Audit (2019 prepared by 3keel)
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TCFD Report
Climate change is the long-term alteration of Earth’s
climate patterns due to various factors. The accumulation
of greenhouse gases in the atmosphere leads to a warming
effect, causing shifts in weather patterns, rising sea levels,
and more frequent extreme events like heatwaves, storms,
and droughts. Addressing climate change requires global
cooperation, sustainable practices, and efforts to reduce
emissions and adapt to the changing environment.
Bakkafrost has verified SBTI targets consistent with
reductions required to keep global warming to 1.5°C. We have
committed to reducing absolute Scope 1 and 2 greenhouse
gas emissions by 50% by 2030 and to reduce Scope 3 GHG
emissions by 52% per tonne of product sold within the same
timeframe. Bakkafrost has been working toward consistency
with the Task Force on Climate-related Financial Disclosures
(TCFD) recommended disclosures since 2019. The TCFD
has consolidated its recommendations into a structured
framework. This framework aims to facilitate the disclosure
of transparent, comparable, and harmonised information
regarding the risks and opportunities associated with climate
change.
In this report, we have briefly outlined the risks and
opportunities stemming from climate change, our strategic
approach toward a low-carbon economy, and our corporate
targets. Our CDP report also contains more information
regarding Bakkafrost’s greenhouse gas emissions and climate
change strategies.
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TCFD REPORT INTEGRATED ANNUAL REPORT 2023
Transition Risks
Regulation
Bakkafrost’s fish feed subsidiary Havsbrún procures substantial quantities of agricultural commities in order to produce feed for the farming segment. This is an
essential business function and is vital for the business growth strategy. These commodities include soy protein concentrate, plant oil (primarily rapseed), and wheat
products.
Technology
Bakkafrost is vulnerable to electricity price rise due to its increasing electricity demand over time (driven by process automation, electrification of thermal, and
production growth). Potential future volatility in the energy market could result in increased exposure and increased operating costs. Bakkafrost is also dependent
on air transportation to distribute products to key overseas markets. Under some scenarios, decarbonisation of the global economy will result in large tariffs being
placed on air travel and transport, something which will particularly impact businesses directly dependent on air freight logistics.
Market
As global economies transition to a low-carbon world, it is increasingly likely that some form of carbon pricing will be enforced across markets where Bakkafrost
operates. While not certain what form this pricing will take, it can be calculated as a variable £X/tonne CO
2
e emissions per year (or per kg product sold with regional
variation). Given Bakkafrost’s growth projections this risk is expected to increase under some climate scenarios.
Physical Risks
Acute
In a warming climate, there is much uncertainty over how meteorological ocean/atmospheric interactions will change. Extreme weather events such as storms, coastal
surges, high winds and intense precipitation are current a high risk for Bakkafrost given the exposed locations where marine operations are often located. Potential
impact from extreme weather could be salmon escapes, injury, mortality of salmon, impact on workforce and capital assets. Marine farming depends on seawater
quality in fjords where the business holds licenses to rear salmon. Climate-related drivers can put pressure on the state of this environment in a number of ways.
These potential impacts could be harmful algeblooms, de-oxygenation, sea lice, pathogens and so on.
Chronic
Bakkafrost is unique in the industry in having full control of the feed production process through ownership of the Havsbrún FOF subsidiary company. This facility
currently supplies bespoke fish feed for all Bakkafrost farming operations. Key inputs into the fish feed production process include soy protein, rapeseed oil, wheat
products, and marine caught fish inputs (various pelagic species processed to create fishmeal and fish oil). Given that these are wild caught from surrounding waters
by Faroese fishing vessels, there is a risk that Bakkafrost will not be able to maintain the required Havsbrún output levels should climate change impact these
fisheries. A warming climate could come with increasing storm activities, as in the expectation that as Bakkafrost grows, more exposed locations will be used. In order
to maintain access to skilled labour, Bakkafrost will need to raise labour costs faster under high physical risk scenarios.
Oppurtunities
Energy Sources
Bakkafrost’s biogas plant FØRKA uses biological waste from hatcheries to generate electricity, heat and fertiliser. These three production streams are sold to the
grid/heat network /customers respectively and is an opportunity to revenue generation. As the business continues to grow it is assumed that the biological waste
quantities will increase and FØRKA production can increase the Financial impact of the increased production will be assessed.
Resilience
Bakkafrost may have the ability to self-generate a proportion of the electricity onsite, using renewable energy technologies. This reduces exposure to electricity/
fossil fuel prices and reduces risk of energy supply / security constraints. The financial benefit of self-generation is assessed under these three climate scenarios.
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INTEGRATED ANNUAL REPORT 2023 TCFD REPORT
TCFD recommended
disclosure
Response Location (section, page
reference) and notes
Governance: Disclose the organisation’s governance around climate-related risks and opportunities.
a. Describe the board’s
oversight of climate-
related risks and
opportunities.
The Board of Directors has delegated the day-to-day responsibility for managing the organization’s sustainability-related impacts
to the CEO. However, major decisions and investments into climate and energy transition above DKK 5M are to be approved by the
Board of Directors. The CEO is responsible for reporting back to the Board of Directors on sustainability topics, including material
impacts, risks and opportunities at every board meeting. The Board of Directors meets at least four times a year in addition to the
annual general meeting.
For more information, see
page 204-212, ESRS2, GOV
2- 26
b. Describe management’s
role in assessing and
managing climate-related
risks and opportunities.
The responsibility for maintaining effective controls and risk management systems rests with the Board of Directors and the
Executive Board. The operational responsibility for the internal control and risk management systems is carried out by several
levels of management in the group. To ensure effective sustainability management in the organisation, including effective due
diligence processes and risk management, external independent audits and performance reviews are carried out annually at several
levels in the organisation. Sustainability-related policies are reviewed and approved by the CEO.
The Group Sustainability Director is responsible for reporting results and effectiveness of sustainability-related policies, actions,
metrics and targets to the board, which is done for every board meeting.
It is also via input from the Group Sustainability Director and the CFO that the board considers impacts, risks and opportunities
when overseeing the company’s general strategy. Due to Bakkafrost having set science based targets for reducing carbon emissions
from operations by 2030, the strategy and derivative investments are affected directly by this commitment. The risk management
process is continuously reviewed to reflect the increasing requirements on the ability to identify, assess and react to new risks,
including climate-related risks.
For more information, see
page 204-212, ESRS2, GOV
2,26 and GOV 5,36
TCFD Index 2023
The Task Force on Climate-related Disclosures (TCFD)
published its recommendations on information regarding
climate change for companies in June 2017.
The table below identifies the actions taken by Bakkafrost in
response to these recommendations.
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TCFD REPORT INTEGRATED ANNUAL REPORT 2023
TCFD recommended
disclosure
Response Location (section, page
reference) and notes
Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s business, strategy, and financial planning where such information is
material.
a. Describe the
climate-related risks
and opportunities the
organization has identified
over the short, medium,
and long term
See “Bakkafrost climate-related risks and opportunities” table presented above.
Bakkafrost is most exposed to the risk of a carbon tax on emissions in the short term, with the risk further rising unless
decarbonisation continues following the achievement of the current near-term target.
Medium and long-term risks such as extreme weather, ocean temperature, and technological transition risks are also mentioned.
b. Describe the impact
of climate-related risks
and opportunities on the
organization’s businesses,
strategy, and financial
planning.
Identification of climate-related risks and opportunities has motivated investments over the short term, such as investing in the
biogas plant, renewable energy, renewable heat, new hybrid well boat and electrification of hatcheries.
Regarding indirect costs, 100% of our energy supplied was from renewable sources in in Scotland when in contract. In the Faroe
Islands we have a commitment to have 100% sustainable electricity production by 2030.
Identification of climate-related risks and opportunities has motivated the following investments over the short, medium and long
term: Invested in new Farming Service Vessels ‘Bakkanes’ and Ronja Star for Scottish operations to mitigate biological risks, e.g.
algae blooming due to rising temperatures.
c. Describe the resilience of
the organization’s strategy,
taking into consideration
different climate-related
scenarios, including a 2°C
or lower scenario
Bakkafrost has committed to taking the green road (RCP1.9) pathway and has verified science-based targets for Scope 1, 2 &
3 aligned with the 1.5°C target. These targets are always in mind when setting strategies and decision-making for Bakkafrost.
Bakkafrost strives to reach the RCP1.9 early transition scenario.
In the process, Bakkafrost also calculated the impact of the 2° and 4° scenarios. It is important for Bakkafrost to be resilient in its
business strategy. Even though Bakkafrost strives to manage the 1.5° target, mitigation of risks implied by the other scenarios will
also be done.
See page 204-212 ESRS
2, SBM-3 for more
information
See above for more
information about
Bakkafrost climate-related
scenarios.
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INTEGRATED ANNUAL REPORT 2023 TCFD REPORT
TCFD recommended
disclosure
Response Location (section, page
reference) and notes
Risk management: Disclose how the organisation identifies, assesses, and manages climate-related risks.
a. Describe the
organization’s processes
for identifying and
assessing climate-related
risks
The Board of Directors has the final responsibility for the risk management of the Group. The Board of Directors determines the
framework for identifying and mitigating risks. The Audit Committee supervises risk management.
Risks and opportunities are both identified through annual workshops and weekly meetings. Risks are continuously monitored
by all departments for their specific area of operation and identified and relevant risks are tabled at weekly executive meetings,
where executives from all departments participate, e.g. executives from IT, Quality/Biology, Feed division, Finance, HR, Sales,
Procurement etc, ensuring the risk management process is a multi-disciplinary and company-wide process. Extensive risk analysis
for the whole Group is carried out by the end of each year and reported to the Group Management.
For more information, see
page 204-212,
ESRS 2, IRO-1
b. Describe the
organization’s processes
for managing climate-
related risks.
Risks and opportunities are both identified through annual workshops and weekly meetings. Our Quality Department arranges
annual workshops to review current risks, including potential re-prioritising of risks and opportunities, making new assessments
as well as potentially suggesting new actions to mitigate risks. New risks and opportunities are also considered and added to the
register. This process considers both short-term, medium-term and long-term risks.
Assessment and decision-making as response to the results of the Quality Department’s risk assessment are done primarily by
the Group Management, which has the overall responsibility for the daily compliance with the risk management framework. When
assessing the potential impact of climate-related risks to Bakkafrost, we consider all stages of the value chain, from our suppliers to
customers, and responses to risk are appropriately determined.
For more information, see
page 204-212, ESRS 2,
IRO-1
c. Describe how processes
for identifying, assessing,
and managing climate-
related risks are integrated
into the organization’s
overall risk management
The process of identifying, assessing and managing sustainability-related impacts and risks is part of the overall management
process through the sustainability governance framework, which stipulates that the board has delegated the responsibility of
managing sustainability-related impacts and risks to the CEO, who has further delegated the responsibility of monitoring and
reporting sustainability-related impacts and risks to the Group directors.
Also, the Group directors delivered key input to the double materiality assessment. The process of identifying, assessing and
managing sustainability-related impacts and risks feeds into our overall risk profile, which our CFO is responsible for monitoring
and reviewing,
For more information, see
page 204-212, ESRS 2,
IRO-1
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TCFD REPORT INTEGRATED ANNUAL REPORT 2023
TCFD recommended
disclosure
Response Location (section, page
reference) and notes
Metrics and Targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
a. Disclose the metrics
used by the organization to
assess climate-related risks
and opportunities in line
with its strategy and risk
management process.
The following are the priority risks at 2050.
Souring feed inputs for Havsbrún
The risk of wild fishery collapse is difficult to model as it may be due to a number of climate- and non-climate-related factors.
However, the impacts of ocean acidification are known to be increasing globally. As OA primarily impacts organisms at the base of
the marine nutrient chains, there is a risk that pelagic fisheries surrounding the Faroe Islands may be impacted as well. The model
parameter is the availability of feed ingredients, e.g. rising cost of sourcing marine protein feed input. This is calculated by the
quantity of feed needed to meet projected future demand. The quantity of marine protein and the cost of procurement needed to
produce this much feed is calculated. Then we identify the “worst case scenario” factor increase for the cost of marine protein, to be
scaled by scenario in proportion to the relevant RCP.
At last the financial impact in calculated as the difference between the baseline cost of feed, and the increased cost of feed for each
scenario (increased cost to be applied to % of catch identified as most vulnerable to ocean acidification).
See page 204-212, ESRS 2,
IRO-1 53.
For more description of
the risks, see “Bakkafrost
climate-related risks and
opportunities” above.
Increased electricity costs
Bakkafrost’s vulnerability to electricity price rises is modeled by considering the electricity price. The baseline for this analysis is
the total electricity consumption for both Faroese and Scottish operations in 2021, as reported in the 2021 sustainability report.
To forecast electricity usage, Bakkafrost’s production growth rates are projected out to 2026. Beyond that, the period from 2026
to 2050 is estimated using population growth scenarios. Electricity forecasts for all three scenarios are calculated using datasets
from the NGFS Phase 3 Scenario Explorer. Specifically, a UK-specific dataset is used for Scotland operations, while a world dataset
is used for the Faroese operations. By combining the predicted energy usage and anticipated prices, the yearly expenditure on
electricity can be determined. The financial impact is then calculated as the difference between the electricity spend in the year of
calculation and the 2020 electricity spend. This approach allows Bakkafrost to assess its exposure to potential price fluctuations
and make informed decisions regarding energy management.
Carbon pricing
Given Bakkafrost’s growth projections the carbon pricing risk is expected to increase under some climate scenarios. The modelled
parameter for this is carbon emissions or carbon price forecasts. First the total carbon emissions for both Faroe Islands and
Scotland operations in 2021 were calculated. There are two methodologies used for furture emissions projections. The first shows
emission reduction in line with Bakkafrost’s science based targets commitments, corresponding to a 50% reduction in absolute
Scope 1 and 2 and a 52% reduction in intensity of Scope 3. The second uses Bakkafrost’s production growth rates in order to
forecast emissions. A UK Carbon price dataset from NGFS Phase 3 scenario explorer was applied to Scotland emissions and a
World carbon price dataset from NGFS was applied to Faroese based emissions. Financial impact was calculated by multiplying the
predicted carbon price for a particular year/ scenario (DKK/tCO
2
e) by the total emission for the year.
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INTEGRATED ANNUAL REPORT 2023 TCFD REPORT
TCFD recommended
disclosure
Response Location (section, page
reference) and notes
Harmful algal blooms
For the calculation of the risk of harmful algal blooms, the modelled parameter predicted algal bloom events, increasing due to
increased temperature. There was created a proxy impact factor based on mean average temperature change for Faroe Islands and
Scotland (IPCC). Scaled per RCP scenario. We moddelled recent farming losses (approximately) based on % mortality by farming site
both for Faroe Islands and Scotland. We assumed that this equated to a 1-in-5 year event by 2017 (RCP8.5). Linear-phase-in of
impact from 2020 to 2070, scaled by scenario. Impact of mortality losses calculated as total lost product using projected FPI salmon
costs per kg.
Extreme weather risk
The modelled parameter of the extreme weather risk is the magnitude of future extratropical cyclones (ETCs) AKA “European winter
storms” (resulting in fish escapes and damage to equipment). This is calculated by the average annual losses from storm events
calculated based on the period from 2017 to 2021 (including the Storm Jorge case study event in 2020). This calculation based on
combination of publicly reported fish escapes data, known impact of the case study event, and data on annual mortality rates for
farming segment (assumption that storm events are responsible for 10% of total mortality on average). Calculated the insurance
discount for storm losses based on the inherent impact, i.e. cost price of case study event (1mn lost fish at 2.1kg each on average)
vs the residual impact i.e. (five-year average market value of lost salmon). Applied this to three average weight scenarios for
checking sensitivity (0.5 kg; 2.1kg; 5.5kg). Applied an increase in storm damage factor for RCP8.5 scenario based on Severio et al
(2019) and scaled this impact in proportion to other scenarios as appropriate. The loss is calculated as a % of total production (tgw)
for future production scenarios.
Use of air transportation
The modelled parameter for the risk of dependence on air transport is by electricity price. Carbon emissions from downstream
air freight for both Scotland and Faroese operations in 2020 was used as a baseline figure for a CORSIA style scheme where all
forward growth in air freight emissions from 2020 must be offset. Emissions from air freight were forecasted up to 2026 using
Bakkafrost’s production growth rates. Emissions from 2026-2050 were forecasted using population growth rates under the three
scenarios. An offset value for 2020 was provided by the CORSIA scheme and price of offsetting was forecast using a carbon price
index from NGFS phase 3 scenario explorer. The financial impact was reached by multiplying the emissions required to be offset by
the offsetting costs for that particular year.
b. Disclose Scope 1, Scope 2
and, if appropriate, Scope 3
greenhouse gas (GHG)
emissions and the related
risks
Emission Scope Group GHG emissions (tCO
2
e) 2023:
Scope 1 129,294
Scope 2 32,860
Scope 3 437,884
For more information, see
Annual report specifically
Healthy environment
c. Describe the targets
used by the organization
to manage climate-related
risks and opportunities and
performance against targets.
Bakkafrost has verified science-based targets aligned with the 1.5°C target. From a 2020 base year we target a 50% reduction on
Scope 1 and 2. Bakkafrost also commits to reduce Scope 3 GHG emissions from purchased goods and services, fuel and energy
related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting,
downstream transportation and distribution and end-of-lifetreatment of sold products, 52% per tonne of product sold within the
same timeframe.
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Disclosure Requirements and Incorporation by Reference
Disclosure requirements Section / Report Page Bakkafrost respond
ESRS 2 ¶ General disclosures
BP-1 General basis for preparation of the sustainability statement
5 General basis for preparation of the sustainability statement General basis for preparation of sustainability
statement
190
BP-2 Disclosures in relation to specific circumstances
9 Time Horizons General basis for preparation of sustainability
statement
10 Value chain estimation General basis for preparation of sustainability
statement
11 Sources of estimation and outcome uncertainty General basis for preparation of sustainability
statement
13 Changes in preparation or presentation of sustainability information General basis for preparation of sustainability
statement
14 Reporting error in prior errors General basis for preparation of sustainability
statement
15 Dislosures stemming from other legislation or generally accepted
sustainability reporting pronouncements
General basis for preparation of sustainability
statement
GOV-1 The role of the administrative, management and supervisory bodies
21 Composition and diversity of the members of the undertaking‘s
administrative, management and supervisory bodies
Sustainability governance framework 29
22 Information about the roles and responsibilities of the administrative,
management and supervisory bodies
Sustainability governance framework
23 Description of how the administrative, management and supervisory
bodies determine whether appropriate skills and expertise are
available or will be developed to oversee sustainability matters
Sustainability governance framework
204
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Disclosure requirements Section / Report Page Bakkafrost respond
GOV-2 Information provided to and sustainability matters addressed by the
undertaking’s administrative, management and supervisory bodies
26 Information provided to and sustainability matters addressed by the
undertaking’s administrative, management and supervisory bodies
Bakkafrost Sustainability framework 29
GOV-3 Integration of sustainability-related performance in incentive schemes
29 Information about the incentive schemes and remuneration policies
linked to sustainability matters
- Our remuneration policy for Board
members does currently not
incorporate any key performance
indicators linked to sustainability.
We recognize the importance of
such a tool for driving sustainable
development and are exploring
how to implement it.
GOV-4 Statement on sustainability due diligence
32 Mapping of the information provided in its sustainability statement
about the due diligence process
- No disclosure
GOV-5 Risk management and internal controls over sustainability reporting
36 Main features of the organisation‘s risk management and internal
control system in relation to the sustainability reporting process
Governance & Strategy, Sustainability Governance
Framework, Risk & Impact management.
29
SBM-1 Interests and views of stakeholders
40ai Strategy, business model and value chain (products and services
offered)
Governance & Strategy, Strategy 23
40aii Strategy, business model and value chain (markets served) Healthy Business, Markets Served 68
40aiii Strategy, business model and value chain (headcount by country) Healthy People, ESG index 176
40b Strategy, business model and value chain (Total revenue) Note 2.3 Operating segment information 228
40e Strategy, business model and value chain (Description of sustainability-
related goals in terms of significant groups of products and services,
customer categories, geographical areas and relationships with
stakeholders )
Governance & Strategy, Bakkafrost‘s Healthy
Living Plan
26
40f Strategy, business model and value chain (Disclosure of assessment of
current significant products and (or) services, and significant markets
and customer groups, in relation to sustainability-related goals )
Healthy Business, The Importance of Aquaculture
and Salmon Farming
51
40g Strategy, business model and value chain (Disclosure of elements of
strategy that relate to or impact sustainability matters)
Governance & Strategy, Strategy 23
42 Strategy, business model and value chain (Description of business
model and value chain)
Business model 14
205
INTEGRATED ANNUAL REPORT 2023 DISCLOSURE REQUIREMENTS AND INCORPORATION BY REFERENCE
Disclosure requirements Section / Report Page Bakkafrost respond
SBM-2 Interests and views of stakeholders Stakeholder engagement
45 The undertaking shall disclose a summarised description of its
stakeholder engagement
Stakeholder engagement 32
SBM-3 Material impacts, risks and opportunities and their interaction with
strategy and business model
48 A brief description of the organisation‘s material impacts, risks and
opportunities resulting from its materiality assessment
Double Materiality Outcome; Risk Management 25 and
38
48b The current and anticipated effects of its material impacts, risks and
opportunities on its business model, value chain, strategy and decision-
making, and how it has responded or plans to respond to these effects
Risk Management 38
48c Description of impacts -
48d Current financial effects of the undertaking’s material risks and
opportunities
-
48e Anticipated financial effects of the undertaking’s material risks and
opportunities
-
48f Information about the resilience of the undertaking‘s strategy and
business model regarding its capacity to address its material impacts
and risks and to take advantage of its material opportunities.
-
48g Changes to the material impacts, risks and opportunities compared to
the previous reporting period
- This is the first disclosure after
performing a double materiality
assessment
IRO-1 Description of the process to identify and assess material impacts,
risks and opportunities
53a Description of the process to identify and assess material impacts, risks
and opportunities
Double Materiality assessment methodology 192
53b Description of process to identify, assess, prioritise and monitor
potential and actual impacts on people and environment, informed by
due diligence process
Double materiality assessment methodology,
Phase 1
192
53bi Description of how process focuses on specific activities, business
relationships, geographies or other factors that give rise to heightened
risk of adverse impacts
Double materiality assessment methodology,
Phase 1
192
53bii
& vi
Description of how process considers impacts with which undertaking
is involved through own operations or as result of business
relationships
Double materiality assessment methodology,
Phase 3
192
53c Overview of the process to identify, assess, priorities and monitor risks
and opportunities that have or may have financial effects
Double materiality assessment methodology,
Phase 3
206
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Disclosure requirements Section / Report Page Bakkafrost respond
53d Description of the decision-making process and the related internal
control procedures
Double materiality assessment methodology 192
53e The extent to which and how the process to identify, assess and
manage impacts and risks is integrated into the undertaking‘s overall
risk management process and used to evaluate the undertaking‘s
overall risk profile and risk management processes
- 192
53f The extent to which and how the process to identify, assess and
manage opportunities is integrated into the undertaking’s overall
management process
-
53g The input parameters it uses (for example, data sources, the scope of
operations covered and the detail used in assumptions)
Double Materiality assessment methodology,
Basis for preparation of the double
materiality assessment
192
53h Whether and how the process has changed compared to the prior
reporting period, when the process was modified for the last time and
future revision dates of the materiality assessment
The last time Bakkafrost performed
a materiality assessment was
in 2019. The assessment only
covered inside-out impacts,
whereas this time, we performed
a double materiality assessment,
which also covered outside-in risks
and opportunities.
The 2023 double materiality
assessment was revised by an
auditor prior to the launch of the
integrated annual report in March
2024.
We look to update the double
materiality assessment every three
to five years or when assessed
as necessary due to major
organisational changes.
207
INTEGRATED ANNUAL REPORT 2023 DISCLOSURE REQUIREMENTS AND INCORPORATION BY REFERENCE
Disclosure requirements Section / Report Page Bakkafrost respond
IRO-2 Disclosure requirements in ESRS covered by the undertaking’s
sustainability statement
58 If any topics are found not material and thus disclosures for this topic
are omitted, provide a brief explanation for why topics have been left
out
Governence & Strategy, Double Materiality
Assessment Outcome
25
59 Explanation of how material information to be disclosed in relation to
material impacts, risks and opportunities has been determined
ESG General Information, Double Materiality
Assessment Methodology
192
ESRS E1 Climate change
ESRS 2, GOV
3
Integration of sustainability-related performance in incentive schemes Climate action, Our approach 125
E1-1 Transition plan for climate change mitigation Climate action, Our approach 125
ESRS 2,
SMB-3
Material impacts, risks and opportunities, and their interaction with
strategy and business model
Governence & Strategy, Double Materiality
Assessment Outcome
25
ESRS 2, IRO-1 Description of the processes to identify and assess material climate-
related impacts, risks and opportunities
-
E1-2 Policies related to climate change mitigation and adaptation Climate action, Our approach 125
E1-3 Actions and resources in relation to climate change policies Climate action, Carbon reduction initiatives 125
E1-4 Targets related to climate change mitigation and adaptation Climate action, Targets 125
E1-5 Energy consumption and mix Climate action, Performance 125
E1-6 Gross Scopes 1, 2, 3 and total GHG emissions Climate action, Performance 125
E1-7 GHG removals and GHG mitigation projects financed through carbon
credits
Climate action, Carbon reduction initiatives 125
E1-8 Internal carbon pricing -
E1-9 Anticipated financial effects from material physical and transition risks
and potential climate-related opportunities
ESG General Information, TCFD Report 96
ESRS E2 Pollution
ESRS 2,
SBM-3
Material impacts, risks and opportunities, and their interaction with
strategy and business model
Governence & Strategy, Double Materiality
Assessment Outcome
25
ESRS 2, IRO-1 Description of the processes to identify and assess material pollution-
related impacts, risks and opportunities
Healthy Environment, Pollution, Our approach 135
E2-1 Policies related to pollution Healthy Environment, Pollution, Our approach 135
E2-2 Actions and resources related to pollution Healthy Environment, Pollution, Visual, noise and
smell-related pollution
135
E2-3 Targets related to pollution Healthy Environment, Pollution 135
E2-4 Pollution of air, water and soil Healthy Environment, Performance 135
208
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Disclosure requirements Section / Report Page Bakkafrost respond
E2-5 Substances of concern and substances of very high concern Healthy Environment, Pollution 135
E2-6 Anticipated financial effects from pollution-related impacts, risks and
opportunities
-
ESRS E3 Water and Marine Resources
(ESRS 2,
SBM-3)
Material impacts, risks and opportunities, and their interaction with
strategy and business model
Governence & Strategy, Double Materiality
Assessment Outcome
25
ESRS 2, IRO-1 Description of the processes to identify and assess material water and
marine resources-related impacts, risks and opportunities
-
E3-1 Policies related to water and marine resources Healthy Environment, Water, Our approach 138
E3-2 Actions and resources related to water and marine resources Healthy Environment, Water reduction initiatives 138
E3-3 Targets related to water and marine resources Healthy Environment, Targets 138
E3-4 Water consumption Healthy Environment, Water 138
E3-5 Anticipated financial effects from water and marine resources-related
impacts, risks and opportunities
-
ESRS E4 Biodiversity and Ecosystems
E4-1 Transition plan and consideration of biodiversity and ecosystems in
strategy and business model
-
ESRS 2,
SBM-3
Material impacts, risks and opportunities and their interaction with
strategy and business model
Governence & Strategy, Double Materiality
Assessment Outcome
25
ESRS 2, IRO-1 Description of processes to identify and assess material biodiversity
and ecosystem-related impacts, risks and opportunities
Healthy Environment, Biodiversity, Our approach 141
E4-2 Policies related to biodiversity and ecosystems Healthy Environment, Biodiversity, Our approach 141
E4-3 Actions and resources related to biodiversity and ecosystems Healthy Environment, Biodiversity, Performance 141
E4-4 Targets related to biodiversity and ecosystems Healthy Environment, Biodiversity, Targets 141
E4-5 Impact metrics related to biodiversity and ecosystems change Healthy Environment, Biodiversity 141
E4-6 Anticipated financial effects from biodiversity and ecosystem-related
risks and opportunities
-
ESRS E5 Resource use and circular economy
ESRS 2, IRO-1 Description of the processes to identify and assess material resource
use and circular economy-related impacts, risks and opportunities
-
ESRS 2,
SBM-3
Material impacts, risks and opportunities and their interaction with
strategy and business model
Governence & Strategy, Double Materiality
Assessment Outcome
25
E5-1 Policies related to resource use and circular economy Healthy Environment, Resouce Use & Circular
Economy, Our approach
145
209
INTEGRATED ANNUAL REPORT 2023 DISCLOSURE REQUIREMENTS AND INCORPORATION BY REFERENCE
Disclosure requirements Section / Report Page Bakkafrost respond
E5-2 Actions and resources related to resource use and circular economy Healthy Environment, Resouce Use & Circular
Economy, Circular economy initiatives
145
E5-3 Targets related to resource use and circular economy Healthy Environment, Resouce Use & Circular
Economy, Targets
145
E5-4 Resource inflows Healthy Environment, Resouce Use & Circular
Economy, Performance
145
E5-5 Resource outflows Healthy Environment, Resouce Use & Circular
Economy, Performance
145
E5-6 Anticipated financial effects from resource use and circular economy-
related impacts, risks and opportunities
- 145
ESRS S1 Own workforce
ESRS 2,
SBM-2
Interests and views of stakeholders Governance &Strategy, Stakeholder engagement 32
ESRS 2,
SBM-3
Material impacts, risks and opportunities and their interaction with
strategy and business model
Governence & Strategy, Double Materiality
Assessment Outcome
25
S1-1 Policies related to own workforce Healthy People, Our Workforce, Our approach 83
S1-2 Processes for engaging with own workers and workers’ representatives
about impacts
Healthy People, Our Workforce, Our approach;
Double Materiality Assessment Methodology;
Stakeholder engagement
83,
192
and 32
S1-3 Processes to remediate negative impacts and channels for own workers
to raise concerns
Healthy People, Human Rights, Our approach 87
S1-4 Taking action on material impacts on own workforce, and approaches
to mitigating material risks and pursuing material opportunities related
to own workforce, and effectiveness of those actions
Healthy People, Our Workforce/Health & Safety/
Human Rights/Diversity, Equity & Inclusion/
Training and Development
83, 85,
87, 92,
93
Descriptions of actions taken can
be found in various sub-sections
across our Healthy People section
S1-5 Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
Healthy People, Targets 83, 85,
87, 92,
93
Descriptions of targets can be
found in the ‚Targets‘-sections
across all sub-section in the
Healthy People section
S1-6 Characteristics of the undertaking’s employees ESG General Information, ESG Index 176
S1-7 Characteristics of non-employee workers in the undertaking’s own
workforce
ESG General Information, ESG Index 76
S1-8 Collective bargaining coverage and social dialogue Healthy People, Human rights, Human rights in
our own workforce
87
S1-9 Diversity metrics Healthy People, Our Workforce, Workforce update 83
S-10 Adequate wages Healthy People, Our Workforce, Adequate wages 83
210
DISCLOSURE REQUIREMENTS AND INCORPORATION BY REFERENCE INTEGRATED ANNUAL REPORT 2023
Disclosure requirements Section / Report Page Bakkafrost respond
S1-11 Social protection Healthy People, Our Workforce, Our approach 83
S1-12 Persons with disabilities Healthy People, Diversity, Equity & Inclusion,
Performance
92
S1-13 Training and skills development metrics Healthy People, Training and Development 93
S1-14 Health and safety metrics Healthy People, Health & Safety, Performance 85
S1-15 Work-life balance metrics ESG General Information, ESG Index 176
S1-16 Compensation metrics (pay gap and total compensation) Healthy People, Diversity, Equity & inclusion,
Performance
92
S1-17 Incidents, complaints and severe human rights impacts Healthy People, Human rights, Our approach 87
ESRS S2 Workers in the value chain
ESRS 2,
SBM-2
Interests and views of stakeholders Governance &Strategy, Stakeholder engagement 32
ESRS 2,
SBM-3
Material impacts, risks and opportunities and their interaction with
strategy and business model
Governence & Strategy, Double Materiality
Assessment Outcome
25
S2-1 Policies related to value chain workers Healthy People, Human Rights, Human Right in
our supply chain an our communities
87
S2-2 Processes for engaging with value chain workers about impacts -
S2-3 Processes to remediate negative impacts and channels for value chain
workers to raise concerns
-
S2-4 Taking action on material impacts on value chain workers, and
approaches to managing material risks and pursuing material
opportunities related to value chain workers, and effectiveness of
those actions
Healthy People, Human Rights, Human Right in
our supply chain an our communities
87
S2-5 Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
-
ESRS S3 Affected communities
S3-5 Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
Healthy Communities, 2023 Commitments &
2026 Targets
161
ESRS S4 Consumer and end-users
S4-1 Policies related to consumers and end-users Healthy People, Human Rights; Governance &
Strategy, Stakeholder engagement
32
S4-2 Processes for engaging with consumers and end-users about impacts Governance & Strategy, Stakeholder engagement 32
S4-3 Processes to remediate negative impacts and channels for consumers
and end-users to raise concerns
-
211
INTEGRATED ANNUAL REPORT 2023 DISCLOSURE REQUIREMENTS AND INCORPORATION BY REFERENCE
Disclosure requirements Section / Report Page Bakkafrost respond
S4-4 Taking action on material impacts on consumers and end- users,
and approaches to managing material risks and pursuing material
opportunities related to consumers and end-users, and effectiveness of
those actions
Governance & Strategy, Risk Management, Market
Risks
38
S4-5 Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
Healthy Business, 2023 Commitments and 2026
Targets
49
ESRS G1 Business conduct
ESRS 2, GOV
1
The role of the administrative, supervisory and management bodies Governance & Strategy, Corporate Governance 27
ESRS 2, IRO-1 Description of the processes to identify and assess material impacts,
risks and opportunities
-
G1-1 Business conduct policies and corporate culture Governance & Strategy, Government Regulation
and Compliance, Ethical conduct
35
G1-2 Management of relationships with suppliers Governance & Strategy, Risk Manamgenet;
Healthy People, Human Rights; Governance &
Strategy, Stakeholder engagement
32
G1-3 Prevention and detection of corruption and bribery Governance & Strategy, Government Regulation
and Compliance, Ethical conduct
35
G1-4 Incidents of corruption or bribery ESG General information, ESG index 176
G1-5 Political influence and lobbying activites Governance & Strategy, Government Regulation
and Compliance, Ethical conduct
35
G1-6 Payment practices ESG General information, ESG index 176
212
DISCLOSURE REQUIREMENTS AND INCORPORATION BY REFERENCE INTEGRATED ANNUAL REPORT 2023
Financial
Statements
BAKKA FROST GROUP
213
INTEGRATED ANNUAL REPORT 2023
Consolidated Income Statement 217
Consolidated Statement of Other Comprehensive Income 218
Consolidated Statement of Financial Position 219
Consolidated Cash Flow Statement 221
Consolidated Statement of Changes in Equity 222
NOTES - SECTION 1 BASIS OF PREPARATION 224
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 224
Note 1.1 Summary of Material Accounting Policies 224
Note 1.2 Basis of Presentation 224
Note 1.3 Consolidation Principles 224
Note 1.4 Translation of Foreign Currencies 225
Note 1.5 Classification Principles 225
Note 1.6 Functional Currency 225
Note 1.7 New Standards 225
Note 1.8 Accounting Estimates 226
Note 1.9 iXBRL Reporting 226
CONTENT INTEGRATED ANNUAL REPORT 2023
214
INTEGRATED ANNUAL REPORT 2023
Content
BAKKAFROST GROUP
NOTES - SECTION 2 RESULTS FOR THE YEAR 227
This section gives more details on the results for the year, including operating segments, taxes, and employee costs.
Note 2.1 Revenue 227
Note 2.2 Major Customers 227
Note 2.3 Operating Segment Information 228
Note 2.4 Salaries and other Personnel Expenses 231
Note 2.6 Research and Development Expenses 233
Note 2.5 Other Operating Expenses and other Income 233
Note 2.7 Net Financial Items 234
Note 2.8 Tax 235
NOTES - SECTION 3 ASSETS AND LIABILITIES 237
This section gives more details on the assets that form the basis for the activities of Bakka frost and the related liabilities.
Note 3.1 Intangible Assets 237
Note 3.2 Property, Plant, and Equipment 241
Note 3.3 Leasing 242
Note 3.4 Companies in the Group 244
Note 3.5 Shares and Holdings in Other Companies 245
Note 3.6 Inventory 246
Note 3.7 Biological Assets 247
Note 3.8. Accounts Receivable and Other Receivables 249
Note 3.9 Cash and Cash Equivalents 250
Note 3.10 Share Capital and Major Shareholders 251
Note 3.11 Interest-Bearing Debt 253
Note 3.12 Mortgages and Guarantees 256
Note 3.13 Derivatives 257
Note 3.14 Provisions 258
INTEGRATED ANNUAL REPORT 2023 CONTENT
215
INTEGRATED ANNUAL REPORT 2023
NOTES - SECTION 4 CAPITAL STRUCTURE AND FINANCING ITEMS 259
This section gives an insight into the capital structure and financing items.
Note 4.1 Financial Risk Management 259
Note 4.2 Categories and Fair Value of Financial Instruments 264
Note 4.3 Earnings Per Share 265
NOTES - SECTION 5 OTHER DISCLOSURES 266
This section gives more details on the statutory notes that have secondary importance from the perspective of Bakkafrost.
Note 5.1. Capital Commitments 266
Note 5.2 Related-Party Transactions 267
Note 5.3 Business Combinations 268
Note 5.4 Events After the Date of the Statement of Financial Position 269
Note 5.5 Auditor’s Fees 269
Note 5.6 Going Concern 270
Note 5.7 Alternative Performance Measures 270
CONTENT INTEGRATED ANNUAL REPORT 2023
216
INTEGRATED ANNUAL REPORT 2023
DKK 1,000 Note 2023 2022
Operating revenue 7,140,849 7,129,967
Purchase of goods -2,401,063 -2,756,273
Change in inventory and biological assets (at cost) 141,200 666,550
Salary and personnel expenses 2.4 -862,670 -831,679
Other operating expenses 2.5 -1,875,239 -1,990,299
Depreciation 3.1/3.2/3.3 -637,209 -537,480
Other income 2.5 37,942 24,379
Operational EBIT* 1,543,810 1,705,165
Fair value adjustments of biological assets 3.7 -141,665 278,392
Income from associates 70,652 57,597
Revenue tax -152,836 -215,001
Earnings before interest and taxes (EBIT) 1,319,961 1,826,153
Financial income 2.7 20,811 7,000
Net interest expenses 2.7 -184,680 -65,039
Net currency effects 2.7 2,784 -69,066
Other financial expenses 2.7 -10,525 -8,713
Earnings before taxes (EBT) 1,148,351 1,690,335
Taxes 2.8 -193,135 -346,005
Profit or loss for the period continuing operations 955,216 1,344,330
Profit or loss for the year attributable to
Non-controlling interests -358 -780
Owners of P/F Bakka frost 955,574 1,345,110
Earnings/Diluted earnings per share (DKK) 4.3 16.14 22.75
Consolidated
Income Statement
For the Year Ended 31 December
*Operational EBIT is EBIT before fair value of biomass, onerous contracts
and income from associates and revenue tax
217
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
Consolidated
Statement of Other
Comprehensive
Income
For the Year Ended 31 December
DKK 1,000 2023 2022
Profit for the year 955,216 1,344,330
Changes on financial derivatives -6,400 11,102
Hereof income tax effect 976 -1,103
Reserve to share based payment 1,068 12,760
Currency translation differences 58,653 -28,490
Net other comprehensive income to be reclassified to profit or loss in subsequent periods 54,297 -5,731
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods 0 0
Other comprehensive income 54,297 -5,731
Total comprehensive income for the year net tax 1,009,513 1,338,599
Total comprehensive income attributable to
Non-controlling interests -358 -780
Owners of P/F Bakka frost 1,009,871 1,339,379
218
B/F BAKKAFROST - FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
DKK 1,000 Note 2023 2022
ASSETS
Non-current assets
Intangible assets 3.1 4,509,334 4,508,704
Total intangible assets 4,509,334 4,508,704
Property, plant, and equipment 3.2 6,220,481 5,647,161
Right of use assets 3.3 413,277 438,545
Total property, plant, and equipment 6,633,758 6,085,706
Non-current financial assets
Investments in associated companies 3.4 287,718 233,276
Investments in stocks and shares 3.5 983 933
Deferred tax assets 2.8 512,485 336,020
Total non-current financial assets 801,186 570,229
TOTAL NON-CURRENT ASSETS 11,944,278 11,164,639
Current assets
Biological assets (biomass) 3.7 3,335,570 2,938,485
Inventory 3.6 1,148,788 1,074,344
Total inventory 4,484,358 4,012,829
Derivatives 3.13 374 7,474
Accounts receivables 3.8 850,338 808,755
Tax receivables 3.8 56,112 65,822
Other receivables 3.8 94,027 102,450
Total receivables 1,000,851 984,501
Cash and cash equivalents 3.9 411,674 719,603
TOTAL CURRENT ASSETS 5,896,883 5,716,933
TOTAL ASSETS 17,841,161 16,881,572
Consolidated
Statement of
Financial Position
As at 31 December
219
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
DKK 1,000 Note 2023 2022
EQUITY AND LIABILITIES
Equity
Share capital 3.10 59,228 59,143
Other equity 10,803,571 10,333,259
Non-controlling interest 3,055 3,411
Total equity 10,865,854 10,395,813
Non-current liabilities
Deferred taxes 2.8 1,952,668 1,825,873
Long-term interest-bearing debt 3.11 3,944,498 3,383,289
Long-term leasing debt 3.3 331,115 353,355
Total non-current liabilities 6,228,281 5,562,517
Current liabilities
Trade payables 387,615 478,750
Current tax liabilities 2.8 210,367 237,780
Short-term leasing debt 3.3 65,848 106,215
Other current liabilities 83,196 100,497
Total current liabilities 747,026 923,242
Total liabilities 6,975,307 6,485,759
TOTAL EQUITY AND LIABILITIES 17,841,161 16,881,572
220
B/F BAKKAFROST - FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
DKK 1,000 Note 2023 2022
Cash flow from operations
EBIT 1,319,961 1,826,153
Adjustments for write-downs and depreciation 3.1/3.2/3.3 637,209 537,480
Adjustments for fair value adjustments on biomass 3.7 141,665 -278,392
Adjustments for income from associates -70,652 -57,597
Adjustments for currency effects 46,414 -145,495
Taxes paid -196,993 -170,748
Change in inventory -613,194 -576,841
Change in receivables 113,955 -208,951
Change in current debts -355,643 276,247
Cash flow from operations 1,022,722 1,201,856
Cash flow from investments
Proceeds from sale of fixed assets 2,085 368
Payments made for purchase of fixed assets 3.2 -1,062,091 -1,235,680
Purchase of shares and other investments 16,160 -27,387
Change in long-term receivables 0 8,102
Cash flow from investments -1,043,846 -1,254,597
Cash flow from financing
Change in revolving credit facilities 546,241 735,352
Financial income 21,788 4,310
Financial expenses -186,630 -68,255
Lease payment -130,740 -117,022
Proceeds/Acquisition of treasury shares 13,435 12,797
Proceeds from share capital increases 40,531 0
Dividend paid -591,430 -303,995
Cash flow from financing -286,805 263,187
Net change in cash and cash equivalents in period -307,929 210,446
Cash and cash equivalents – opening balance 719,603 509,157
Cash and cash equivalents – closing balance total 411,674 719,603
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
according to the indirect method. The statement shows the
individual activity’s impact on cash and cash equivalents. The
cash flow deriving from the acquisition and sale of businesses
is presented under investing activities.
221
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
Share Share- Currency Biomass 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 01.01.2023 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
Consolidated profit 0 0 0 0 0 0 0 -141,665 1,097,239 -358 955,216
Changes in financial derivatives 0 0 0 0 0 -6,400 0 0 0 0 -6,400
Hereof tax effect 0 0 0 0 0 976 0 0 0 0 976
Share-based payment 0 0 0 1,068 0 0 0 0 0 0 1,068
Currency translation differences 0 0 0 0 58,653 0 0 0 0 0 58,653
Total other comprehensive income 0 0 0 1,068 58,653 -5,424 0 0 0 0 54,297
Total comprehensive income 0 0 0 1,068 58,653 -5,424 0 -141,665 1,097,239 -358 1,009,513
Treasury shares 0 0 10,034 0 0 0 0 0 1,102 0 11,136
Share capital increase 85 0 0 0 0 0 0 0 40,446 0 40,531
Paid-out dividend 0 0 0 0 0 0 -591,430 0 291 0 -591,139
Proposed dividend 0 0 0 0 0 0 515,284 0 -515,284 0 0
Total transaction with owners 85 0 10,034 0 0 0 -76,146 0 -473,445 0 -539,472
Total changes in equity 85 0 10,034 1,068 58,653 -5,424 -76,146 -141,665 623,794 -358 470,041
Total equity 31.12.2023 59,228 4,027,375 -8,478 21,627 76,395 702 515,284 741,434 5,429,232 3,055 10,865,854
DKK 1,000
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
Consolidated
Statement of
Changes in Equity
As at 31 December
Restricted equity comprises equity in which distribution to
the shareholders may only take place adhering to specific
procedures prescribed by the Faroese Limited Companies
Act. Restricted equity 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:
222
B/F BAKKAFROST - FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
Notes to the
Consolidated
Financial
Statements
BAKKA FROST GROUP
223
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
NOTE 1. GENERAL INFORMATION
domiciled in the Faroe Islands at Bakkavegur 9, Glyvrar .
P/F Bakka frost was listed on Oslo Stock Exchange in 2010
with the ticker code: BAKKA.
NOTE 1.1 SUMMARY OF MATERIAL 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 consolidated financial statements comprises the income
statement, statement of comprehensive income, statement of
financial position, 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
formally 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 consolidated financial statements for the period
1 January to 31 December 2023 comprises both the
Consolidated Annual Report and Accounts for P/F Bakka frost
and its subsidiaries (Group) and the separate Annual Accounts
for the parent company.
The financial statements were formally authorized for issue
by the Board of Directors on 27 March 2024.
The financial statements have 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
estimated assumptions are accounted for when they occur.
Descriptions 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 Bakka-
frost and the subsidiaries over which P/F Bakka frost
has a controlling influence either by shareholding or by
agreement. A controlling interest is normally deemed to
exist when ownership 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 impede 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
subsidiaries are included up until the date of divestment.
The consolidated 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
Companies have been eliminated.
Shares in subsidiaries have been eliminated in the consolidated
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.
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.
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.
SECTION 1
224
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
Investments in companies in which the Group has a significant
influence (associated companies) are treated in accordance
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-
current financial assets. The accounting principles used by
associated 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
consolidated 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 transactions in a foreign currency.
A foreign currency transaction is, on initial recognition,
recorded 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
other monetary items in foreign currency are translated
to the functional currency using the closing rate. Exchange
differences 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
recognized 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 currencies
than the Group’s presentation currency (DKK) are translated
into the Group’s presentation currency using the following
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
Financial Position. Changes in biomass and inventory
measured 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
adjustment. The IFRS adjustment is the difference between
biomass measured at cost and measured at fair value.
or fall due for payment within 12 months, are classified as
current 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 liabilities.
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
currency. All transactions in foreign currencies are translated
into DKK at the time of transaction. In the statement of
financial position, monetary items in foreign currencies are
translated at the exchange rate in effect on the statement of
financial position date.
NOTE 1.7 NEW STANDARDS
Standards and interpretations, which are issued at the date
of the Group’s Financial statements, but will become effective
later, are disclosed below. The disclosures contain standards
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
become 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
Only minor adjustments have been made in standards and
interpretations (IFRIC) which are effective for the financial
year 2023. Neither are new standards nor amendments to
these from 2023 and forth expected to have any impact on
the Bakka frost Group.
SECTION 1
225
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – 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,
income, and expenses. The estimates and underlying
assumptions 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
values and results may deviate from the initial estimates.
Revision to accounting estimates is recognized in the period
in which the estimates are revised. The evaluations and
estimates, deemed to be of greatest significance for Bakka-
frost 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
financial statement line item is not defined in the ESEF
taxonomy, an extension to the taxonomy has been created.
The annual report submitted to the Faroese Financial
Supervisory Authority consists of the XHTML document
together with certain technical files, all included in a ZIP file
named 2138007LH7OP4V112978-2023-12-31-en.
SECTION 1
226
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
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 2023, there were no major customers - as defined in IFRS
8.34, compared to no major customer in 2022.
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.
SECTION 2
227
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
NOTE 2.3 OPERATING SEGMENT INFORMATION
Fishmeal, Freshwater Freshwater Farming Farming Sales
2023 – DKK 1,000 oil and feed Faroe Islands Scotland Faroe Islands Scotland Services and other Eliminations Group
External operating revenues 1,576,435 1,211 0 581 1,138 44,176 5,517,308 0 7,140,849
Internal operating revenues 1,912,300 585,177 141,803 3,311,033 1,451,514 738,689 3,755,509 -11,896,025 0
Total operating revenues 3,488,735 586,388 141,803 3,311,614 1,452,652 782,865 9,272,817 -11,896,025 7,140,849
Depreciation and amortization -26,490 -86,926 -15,533 -123,511 -257,028 -98,822 -28,899 0 -637,209
Change in internal margin 0 0 0 0 0 0 0 -63,197 -63,197
Operating expenses -2,670,785 -342,732 -117,096 -2,637,311 -1,388,658 -640,494 -9,033,525 11,896,026 -4,934,575
Other income 0 0 0 0 37,942 0 0 0 37,942
Operational EBIT 791,460 156,730 9,174 550,792 -155,092 43,549 210,393 -63,196 1,543,810
Fair value adjustments on biological assets 0 0 0 -53,750 -87,915 0 0 0 -141,665
Income from associates 70,685 0 0 0 0 0 -33 0 70,652
Revenue tax 0 0 0 -137,066 -15,770 0 0 0 -152,836
EBIT 862,145 156,730 9,174 359,976 -258,777 43,549 210,360 -63,196 1,319,961
Operational EBITDA 817,950 243,656 24,707 674,303 101,936 142,371 239,292 -63,196 2,181,019
INVESTMENTS in property, plant, and equipment 172,194 203,386 183,136 105,831 124,324 63,328 188,504 1,040,703
2022 – DKK 1,000
External operating revenues 742,695 1,632 134 940 6,123 34,113 6,344,330 0 7,129,967
Internal operating revenues 1,690,798 478,428 123,724 4,949,635 1,463,701 759,383 4,245,114 -13,710,783 0
Total operating revenues 2,433,493 480,060 123,858 4,950,575 1,469,824 793,496 10,589,444 -13,710,783 7,129,967
Depreciation and amortization -25,382 -77,146 -13,239 -100,024 -187,832 -89,157 -44,700 0 -537,480
Change in internal margin 0 0 0 0 0 0 0 -1,202 -1,202
Operating expenses -1,996,824 -214,671 -134,453 -3,335,846 -1,532,560 -689,654 -10,717,274 13,710,783 -4,910,499
Other income 0 0 0 0 24,379 0 0 0 24,379
Operational EBIT 411,287 188,243 -23,834 1,514,705 -226,189 14,685 -172,530 -1,202 1,705,165
Fair value adjustments on biological assets 0 0 0 168,705 109,687 0 0 0 278,392
Income from associates 57,354 0 0 160 0 27 56 0 57,597
Revenue tax 0 0 0 -215,001 0 0 0 0 -215,001
EBIT 468,641 188,243 -23,834 1,468,569 -116,502 14,712 -172,474 -1,202 1,826,153
Operational EBITDA 436,669 265,389 -10,595 1,614,729 -38,357 103,842 -127,830 -1,202 2,242,645
INVESTMENTS in property, plant, and equipment 140,624 255,349 261,240 97,967 174,627 309,581 27,668 1,267,056
SECTION 2
228
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
2023 2022
FARMING FO – DISTRIBUTION OF HARVESTED VOLUMES tgw % tgw %
Harvested FO volume used in VAP production 22,787 43.5% 26,401 39.6%
Harvested FO volume sold fresh/frozen 29,621 56.5% 40,285 60.4%
Total harvested volumes 52,408 100.0% 66,686 100.0%
FOF SEGMENT – DISTRIBUTION OF FEED tonnes % tonnes %
Volumes used internally 124,321 97.3% 123,118 96.3%
External sold 3,454 2.7% 4,722 3.7%
Sold volumes 127,775 100.0% 127,840 100.0%
PRODUCTION OF FISHMEAL AND FISH OIL tonnes % tonnes %
Fishmeal 101,976 74.6% 65,395 73.3%
Fish oil 34,786 25.4% 23,862 26.7%
Total production 136,762 100.0% 89,257 100.0%
FARMING SCT – DISTRIBUTION OF HARVESTED VOLUMES tgw % tgw %
Harvested volume sold fresh/frozen 20,598 100.0% 23,917 100.0%
Total harvested volumes 20,598 100.0% 23,917 100.0%
SECTION 2
229
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
GEOGRAPHIC BREAKDOWN OF SALES REVENUES BASED ON SEGMENTS AND CUSTOMER LOCATION
Fishmeal, Sales
2023 – DKK 1,000 oil and feed Freshwater FO Freshwater SCT Farming FO Farming SCT Services & Other Total
Western Europe 1,576,435 1,211 0 581 1,138 44,176 3,268,230 4,891,771
North America 0 0 0 0 0 0 1,358,253 1,358,253
Asia 0 0 0 0 0 0 643,602 643,602
Eastern Europe 0 0 0 0 0 0 215,663 215,663
Rest of the World 0 0 0 0 0 0 31,560 31,560
Total 1,576,435 1,211 0 581 1,138 44,176 5,517,308 7,140,849
2022 – DKK 1,000
Western Europe 742,695 1,632 134 940 6,123 34,113 3,948,632 4,734,269
North America 0 0 0 0 0 0 1,352,381 1,352,381
Asia 0 0 0 0 0 0 711,785 711,785
Eastern Europe 0 0 0 0 0 0 270,622 270,622
Rest of the World 0 0 0 0 0 0 60,910 60,910
Total 742,695 1,632 134 940 6,123 34,113 6,344,330 7,129,967
The Group has seven reportable segments in accordance
with IFRS 8, Operating Segments. A new segmentation was
implemented in the third quarter of 2023, resulting in the
transformation of the previous four segments into seven
segments. Comparative figures have been adjusted in
accordance with the new segmentation. The main purpose of
the new segment structure is to derive to a clear definition
of how the value creation is split across the value chain. The
Group’s main strategic business area is aquaculture, which
now consists of the following seven segments: fishmeal, fish
oil and fish Feed (FOF), freshwater Faroe Islands, freshwater
Scotland, farming Faroe Islands, farming Scotland, services,
and sales & other.
The same accounting principles, as described to the
consolidated financial statements, have been applied for the
segment 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 third-party transactions. The pricing
principle between the segments is based on market reference
prices for spot sale.
ACCOUNTING POLICIES SEGMENT REPORTING
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
fishmeal, fish oil and fish feed are operated by Bakka frost’s
subsidiary Havsbrún, located in Fuglafjørður. Intersegment
transfers follow standard commercial terms and are measured
using the same criteria as transactions with third parties. The
pricing principle between the FOF and the Farming segments
is based on quarterly contracts.
Freshwater Faroe Islands and Freshwater Scotland
The two Freshwater segments both include broodstock and
smolt production in hatcheries on land. In the broodstock
operation, eggs are produced from breeding self-owned
salmon strains. Eggs are sold to the hatcheries who in turn
produce from egg to smolt, which are sold to the Farming
operations in the Faroe Islands and Scotland. The pricing
principle between the freshwater segments and farming
segments is based on estimates of prevailing market prices,
ensuring fair and transparent pricing and transactions.
Farming Faroe Islands og Farming Scotland
Fish farming involves the on-growing of salmon, nurturing
them in the marine environment from smolt to harvest-ready
salmon. The Group holds marine farming licenses around the
Faroe Islands and Scotland, which are reported as two separate
segments (farming Faroe Islands and farming Scotland). The
pricing principle between, the farming segments and the sales
& other segment is determined by market reference prices for
spot sales.
Services
The services segment offers various services to the Group.
It manages a fleet of farming service vessels, providing
fish transportation, treatments, net cleaning, heavy marine
SECTION 2
230
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 2.4 SALARIES AND OTHER PERSONNEL EXPENSES
DKK 1,000 2023 2022
Wages and salaries 686,998 673,986
Share based payment 43,678 30,610
Social security taxes 48,485 50,809
Pension expenses 59,104 54,850
Other benefits 24,405 21,424
Total payroll expenses 862,670 831,679
Average number of full-time employees 1,686 1,778
Fees paid to the Board of Directors
DKK 1,000 2023 2022
Rúni M. Hansen** Chairman of the Board 489 487
Johannes Jensen*** Deputy Chairman of the Board 0 90
Guðrið Højgaard**** Member of the Board 222 147
Annika Frederiksberg* Member of the Board 222 221
Einar Wathne Member of the Board 260 240
Teitur Samuelsen ** Member of the Board 282 266
Øystein Sandvik** Member of the Board 310 289
Total remuneration 1,785 1,740
* Annika Frederiksberg is also an employee in the Bakka frost Group. For this, she received DKK 670 thousand (2022: DKK 661 thousand).
** 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 Mai 2022
support services, and it also converts organic waste into
biogas, heating, electricity, and fertilizer for external sale.
Furthermore, this segment provides harvesting services
to both the Scottish and Faroese farming operations, along
with producing styrofoam boxes to the Faroese operation.
Intersegmental transfers and transactions are priced based
on direct market prices, if possible, or estimates derived from
market pricing and external pricing approaches.
Sales & Other
The sales & other segment optimizes the value creation
and retention from the harvested fish and provides freight
& logistical services. The segment strategically utilizes
processing capacities located in key regions such as the Faroe
Islands, Scotland, Denmark, and the United States to enhance
the production of value-added products (VAP). The pricing
approach for sales administration is based on benchmarking
analysis from external sources as well as pricing contracts.
Remuneration to corporate management
The total remuneration to the corporate management consists
of basic salary (main element), benefits in-kind and pension
schemes, but varies from person to person. The Group’s Chief
Executive Officer determines the remunerations to other
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
competitiveness 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 Bakka frost 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
Bakka frost may terminate employment by giving Group
Management Executives a notice period. The company’s
period of notice for the Group’s Chief Executive Officer is
SECTION 2
231
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
REMUNERATION TO CORPORATE MANAGEMENT
2023 Fixed remuneration DKK 1,000 Variable remuneration number shares
Salary and other benefits paid Salary Pension Other Total tDKK RSU 1* RSU 2** Share saving plan Total number
Chief Executive Officer 2,571 233 89 2,893 1,136 1,136 316 2,588
Managing Director 1,789 162 0 1,951 790 790 197 1,777
Chief Financial Officer 1,789 162 89 2,040 790 790 253 1,833
Total remuneration 6,149 557 178 6,884 2,716 2,716 766 6,198
2022
Salary and other benefits paid
Chief Executive Officer 2,048 195 89 2,332 402 402 136 940
Managing Director 1,485 141 0 1,626 292 292 93 677
Chief Financial Officer 1,485 141 89 1,715 292 292 61 645
Total remuneration 5,018 477 178 5,673 986 986 290 2,262
* Restricted Stock Units 1 will be released out as shares if the AGM 2024 pays out a dividend
** Restricted Stock Units 2 will be released in shares in 2026 if the AGM pays out a dividend and the employee still is hired
Movements in RSU number of shares
Outstanding
per 01.01.23 Addition RSU Released RSU
Outstanding
per 31.12.23
Chief Executive Officer 2,294 2,272 -1,147 3,419
Managing Director 1,664 1,580 -832 2,412
Chief Financial Officer 1,664 1,580 -832 2,412
Total remuneration 5,622 5,432 -2,811 8,243
Outstanding
per 01.01.22 Addition RSU Released RSU
Outstanding
per 31.12.22
Chief Executive Officer 0 2,294 0 2,294
Managing Director 0 1,664 0 1,664
Chief Financial Officer 0 1,664 0 1,664
Total remuneration 0 5,622 0 5,622
SECTION 2
232
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
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, Bakka frost implemented a share-based bonus
scheme for all employees in the Group. According to the
scheme, all employees are awarded free bonus shares
dependent on achieved performance against certain KPIs and
Bakka frost 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
receive free loyalty shares.
Each quarter, the Board reviews and determines the
parameters 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 continued in the following quarter, and the terms of the
plan.
SHARE SAVING PLAN
Bakka frost has established a share saving plan for its
employees in the Faroe Islands. In 2022, the savings plan
was extended to all employees of the Group. It is the Board’s
intention 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
Bakka frost shares. The saved amount is deducted from the
monthly net salary and used to purchase Bakka frost shares
on behalf of the employees. The purchase will be made from
Bakka frost’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
matching 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 31.12.2023, 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 financial item in the income statement. The liability is
recognized in other equity reserves within equity.
PENSIONS
The Group operates a defined 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 payments.
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 is continually developing its entire value chain.
This is not seen as R&D expenditures but rather as R&D-
related activities, thus being an integrated part of other
operating expenses and salaries.
The focus of Bakkafrost’s R&D efforts has been evaluated and
improved in recent years. Lice abatement, biomass control,
and smolt quality remain high priorities, and the development
and improvement of vaccines, nutrition and feeding, as well
as operating technologies, are equally topical. In addition,
Bakkafrost continuously assesses its own operating practices.
Bakkafrost continues to expand its R&D activities in feed and
feeding and sees the need for greater focus on the valuable
NOTE 2.5 OTHER OPERATING EXPENSES AND OTHER INCOME
DKK 1,000 2023 2022
Maintenance -261,200 -239,362
Operating expenses -433,964 -418,158
Health -206,507 -183,070
Freight -507,973 -686,183
Energy -427,611 -364,513
Other costs -37,984 -99,013
Other operating expenses total -1,875,239 -1,990,299
R&D Expenditure tax credit 37,942 24,379
Other income 37,942 24,379
SECTION 2
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
knowledge of how fish are fed and how we can maintain
a healthy salmon. We are convinced that our adaption of
the mix of raw materials has resulted in better nutritional
quality in the feed. Bakkafrost’s clearly expressed goal is
to continuously initiate better and more comprehensive
research into these issues under large-scale conditions.
Bakkafrost continuously focuses on reducing biological risk
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 to increase
the smolt size to around 500 grams smolts in 2023 in the
Faroe Islands. The strategy is also pivotal to the turnaround of
the operation in Scotland. The benefits are shorter production
time at sea and reduced biological risk. The hatchery at
Strond, Klaksvík, is an essential part of this plan for the Faroe
Islands. This fully operational hatchery can produce 8 million
smolts at 500g. In addition, Bakkafrost is expanding the
Faroese hatchery capacity of the hatcheries at Glyvradal and
Viðareiði. Furthermore, Bakkafrost announced a new hatchery
to be built in Skálavík, which will be operational in late 2026.
In Scotland, three large hatcheries will be built, the first being
the hatchery at Applecross. All Bakkafrost’s hatcheries will
be based on state-of-the-art technology and advanced RAS
(water recirculation) systems. These investments are crucial
for achieving the volume growth strategy.
In 2023, Bakkafrost had R&D-related activities on the
following projects (but not limited to):
• Native Faroese and Hebridean broodstock programme
• Optimising nutritional quality
• Fish welfare related to lice and other risks
• Freshwater treatment optimisation
• Robust smolt strategy
R&D-related activities are large-scale developments and
experiments that reflect the nature of Bakkafrost’s business.
Examples of large-scale activities are (but not limited to):
• Large batch smolt related to development and optimisation
of freshwater treatment
• Batches on broodstock programmes and development
• Large-scale developments on fish welfare in sea farming
operation
NOTE 2.7 NET FINANCIAL ITEMS
DKK 1,000 2023 2022
Realised profit on financial derivatives 2,199 4,889
Other financial income 18,612 2,111
Financial income 20,811 7,000
Interest expenses on long-term loans -160,158 -53,135
Loss on financial derivatives -2,891 -3,088
Interest expenses on credit lines -502 -470
Interest expenses on IFRS 16 (leases) -10,118 -7,197
Interest expenses on accounts payable -11,011 -1,149
Financial expenses -184,680 -65,039
Other exchange differences 2,784 -69,066
Net currency effects 2,784 -69,066
Other financial expenses -10,525 -8,713
Other financial items -10,525 -8,713
Net financial items -171,610 -135,818
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 Meeting.
BORROWING COSTS
Borrowings is recognized initially at fair value, net of
transaction 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 classified 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.
SECTION 2
234
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 2.8 TAX
The tax expense for the year breaks down as follows:
DKK 1,000 2023 2022
Tax payable 210,367 240,529
Change in deferred tax -16,964 105,476
Tax on treasury shares -268 0
Tax expense on ordinary profit 193,135 346,005
Tax payable 210,367 237,780
Tax payable in the statement of financial position 210,367 237,780
Specifications of temporary differences and deferred tax
DKK 1,000 2023 2022
Temporary Temporary
Deferred tax assets Differences Deferred tax Differences Deferred tax
Property, plant, and equipment 0 0 21,083 5,271
Biomass 0 0 135,655 24,418
Receivables 1,245 224 1,245 224
Currency effects 114,781 20,661 0 0
Derivatives (Equity posted) 2,398 432 0 0
Losses carried forward 1,793,983 446,298 1,228,522 305,805
Other differances 179,483 44,870 1,207 302
Total temporary differences 512,485 336,020
SECTION 2
235
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
DKK 1,000 2023 2022
Temporary Temporary
Deferred tax assets Differences Deferred tax Differences Deferred tax
Licences 3,690,658 896,427 3,690,715 896,381
Goodwill 11,592 2,039 11,592 2,039
Research and development 541 119 541 119
Property, plant, and equipment 2,753,957 560,282 2,463,339 491,927
Financial assets 220,117 39,621 149,582 26,925
Biomass 2,277,229 453,928 2,234,515 407,074
Derivatives (Equity posted) 0 0 7,474 1,346
Other differances 1,260 252 289 62
Total temporary differences 1,952,668 1,825,873
Deferred tax assets -512,485 -336,020
Deferred tax liabilities 1,952,668 1,825,873
Deferred tax liabilities (+) / assets (-) 1,440,183 1,489,853
Reconciliation from nominal to actual tax rate
DKK 1,000 2023 2022
Profit before tax 1,148,351 1,148,351
Expected tax at nominal tax rate 206,703 198,760
Permanent differences -13,568 147,245
Calculated tax expense 193,135 346,005
Effective tax rate excl. equity entries 16.82% 30.13%
Normal tax rate for countries in the Group:
• Faroe Islands 18%
• UK/Scotland 25% (25% from April 2023)
• USA 21% + New Jersey 11.5%
• Denmark 22%
• France 25%
ACCOUNTING POLICIES
The tax expense is matched against the profit 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
financial position to the extent that tax assets and liabilities
can be netted against each other.
Deferred tax in the statement of financial position is a nominal
amount calculated based on temporary differences between
accounting and tax values at their intended use, as well as the
taxable loss carried forward at the end of the financial year.
SIGNIFICANT ASSUMPTION ACCOUNTING
FOR DEFERRED TAX LIABILITIES
The accounting of deferred taxes reflects tax rates and tax
laws that have been enacted or substantively enacted by the
date of the statement of financial position. The recognition of
a deferred tax asset is based on expectations of profitability
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
according 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.
SECTION 2
236
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 3.1 INTANGIBLE ASSETS
DKK 1,000 Goodwill Licences Brands Total
Acquisitions costs as at 01.01.23 580,421 3,819,883 108,400 4,508,704
Currency translation differences 1,134 0 0 1,134
Acquisitions costs as at 31.12.23 581,555 3,819,883 108,400 4,509,838
Depreciation during the year -504 0 0 -504
Accumulated impairments/depreciation and write-downs as at 31.12.23 -504 0 0 -504
Net book value as at 31.12.23 581,051 3,819,883 108,400 4,509,334
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
In the Faroe Islands, Bakka frost operates its sea farming
activity 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
capitalized. These belong to the North region.
The other seven CGUs were acquired as part of business
combinations. 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, Bakka frost has chosen to include all the farming
in Scotland into one CGU.
NOTES - SECTION 3
Assets and Liabilities
This section gives more details on the assets that form the ba-
sis for the activities of Bakka frost and the related liabilities.
SECTION 3
237
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
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
present 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
carrying 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
basis 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 operating
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
identification 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
terminal 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
regulatory frameworks. Costs can normally be estimated
with more accuracy than income. As profitability in the
salmon farming industry historically has been very volatile,
depending on developments in the prices of salmon. Bakka-
frost uses budgets and long-term plans for the first five years
of the analysis but returns to long- term historic averages for
profitability 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 expected
to remain stable but are calculated to increase with an
inflation rate of FO: 3.0% (2022: 2.6%) and SCT: 2.0% (2022:
2.0%)
• The forward prices are based on the Fish Pool index – which
is a part of Oslo Børs ASA – at the day of the calculation.
The long-term forward prices are based on third-parties’
sources with adjustments to local conditions.
• The WACC is FO: 9.2% (2022: 9.6%) and SCT 9.8% (2022:
9.8%) 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
adjustment margin for the food industry in the EU.
• The inflation is set to FO: 3.0% (2022: 2.6%) and SCT: 2.0%
(2022: 2.0%) 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
replacement plans. Capital expenditure to comply with
current laws and regulations has been included. Capex
related to committed and approved efficiency improvement
programmes 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
assets, 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 14,774 million (DKK 22,632 million).
ACCOUNTING POLICIES
Intangible assets that are purchased individually are
capitalized at acquisition cost. Intangible assets acquired
in connection 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
depreciated systematically. Intangible assets are written
down to the recoverable amount if the expected financial
benefits do not cover their carrying amount.
SECTION 3
238
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
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
intends 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 animal 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 recoverable 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 determine whether the indefinite life continues to be
appropriate. 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 measures
to regulate the farming activity to be environmentally
sustainable.
The sea farming licenses in the Faroes are issued with a
nominal 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.
With regard to the renewal of licenses, authorities may only
decline renewal if specific legislation on area planning, animal
welfare 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 farming
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
licenses 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
specified 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
associates 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
acquisition.
Write-downs are performed in accordance with an assessment
of the recoverable value of each of the cash-flow generating
units to which the goodwill is assigned. To identify 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 estimating 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.
SECTION 3
239
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
Sensitivity analyses and booked value per CGU:
booked EBITDA WACC WACC
Other value WACC change change change
CGUs (1,000) Licenses assets***** tested pre tax of +/-1% of -1% of +1%
31/12/2023
Scottish Salmon Company acquistion**** 4,006,820 1,956,140 5,962,960 9.60% 483,596 2,306,173 -1,633,774
Vestlax acquisition* 132,708 1,649,475 1,782,183 9.20% 98,343 674,658 -452,683
Havsbrún acquisition** 157,430 398,567 555,997 9.20% 325,625 2,233,868 -1,498,883
Faroe Farming acquisition*** 82,000 1,146,032 1,228,032 9.20% 187,945 1,289,346 -865,127
TOTAL 4,378,958 5,150,214 9,529,172 1,095,509 6,504,045 -4,450,467
31/12/2022
Scottish Salmon Company acquistion**** 4,006,820 2,082,123 6,088,943 9.60% 455,069 2,213,869 -1,567,700
Vestlax acquisition* 132,708 1,623,586 1,756,294 9.60% 92,103 876,396 -597,990
Havsbrún acquisition** 157,430 390,749 548,179 9.60% 304,962 2,901,845 -1,980,012
Faroe Farming acquisition*** 82,000 1,131,089 1,213,089 9.60% 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
* 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.
SECTION 3
240
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
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 01.01.23 2,111,945 3,373,098 548,106 1,175,064 1,114,870 8,323,083
Reclassification 134,269 204,685 4,033 49,126 -390,988 1,125
Acquisitions during the year 237,008 291,809 20,143 42,948 468,993 1,060,901
Disposals and scrapping during the year -419 -99,983 -5,291 -1,925 -1,555 -109,173
Currency translation differences 1,191 16,011 342 4,202 9,275 31,021
Acquisition costs as at 31.12.23 2,483,994 3,785,620 567,333 1,269,415 1,200,595 9,306,957
Accumulated depreciations and write-downs as at 01.01.23 -551,327 -1,582,617 -320,324 -221,654 0 -2,675,922
Reclassification 0 1 -2,720 0 0 -2,719
Depreciations during the year -78,772 -322,060 -33,846 -67,596 0 -502,274
Accumulated deprecations and write-downs on disposals and scrapping 419 87,812 4,376 1,541 0 94,148
Currency translation differences 1,378 -2,591 1,082 422 0 291
Accumulated depreciations and write-downs as at 31.12.23 -628,302 -1,819,455 -351,432 -287,287 0 -3,086,476
Net book value as at 31.12.23 1,855,692 1,966,165 215,901 982,128 1,200,595 6,220,481
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
SECTION 3
241
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
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.
Depreciation is charged to expenses when the facilities are
ready for use. If the situation or circumstances indicate that
the carrying amount of an asset cannot be recovered, an
assessment is made about whether to write-down its value. If
the recoverable 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.
NOTE 3.3 LEASING
Land and buildings Ships, and
Right of use & properties other equipment TOTAL
Beginning balance 01.01.23 120,280 318,265 438,545
Additions 4,700 90,069 94,769
Adjustments 1,197 5,094 6,291
Depreciation -8,906 -125,525 -134,431
Effect of changes in currency exchange rate 771 7,332 8,103
Ending balance 31.12.23 118,042 295,235 413,277
Lease liability
Beginning balance 01.01.23 -145,021 -314,549 -459,570
Additions -3,209 -92,628 -95,837
Adjustments -252 -4,053 -4,305
Lease payments 13,551 117,993 131,544
Interests -2,450 -7,243 -9,693
Effect of changes in currency exchange rate -8,199 49,097 40,898
Ending balance 31.12.23 -145,580 -251,383 -396,963
Current lease liability -9,464 -56,384 -65,848
Non-current lease liability -136,116 -194,999 -331,115
Maturity analysis, undiscounted cash flow
Up to 1 year 118,989
1-2 years 112,557
2-3 years 51,654
3-4 years 38,215
4-5 years 10,547
More than 5 years 100,985
SECTION 3
242
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
Land and buldings Ships, and
Right of use & properties other 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
Adjustments -2,531 15,261 12,730
Lease payments 13,001 97,833 110,834
Interests -2,448 -4,132 -6,580
Effect of changes in currency exchange rate 0 1,765 1,765
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
Bakka frost 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, Bakka frost
recognizes a right-of-use asset and a lease liability at the
commencement 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
according 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
internal rate cannot be reasonably defined.
The lease payments consist of the fixed lease payments,
guaranteed residual values and payment for exercise of
purchase option or payment for cancellation of lease when
considered reasonably certain that the options are exercised.
In addition, variable lease payments which are adjusted,
based on an index, whereas consumption-based leasing
payments are not recognized as part of the cost of the lease
asset and liability.
SECTION 3
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
The lease payments are distributed between an instalment
portion and an interest portion. The lease obligation is
recalculated 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
obligations 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 assets
represent lease agreements that are lower than DKK 35,000
each.
NOTE 3.4 COMPANIES IN THE GROUP
The consolidated accounts for 2023 include the following subsidiaries and associates:
Subsidiary Companies Currency Nature of Business Head Office Ownership Nominal share capital
Bakka frost Farming P/F DKK Salmon farming Glyvrar 100% 19,762,181
Bakka frost FSV P/F DKK Farming Service Vesselss Glyvrar 100% 500,000
Bakka frost Freshwater P/F DKK Smolt farming Glyvrar 100% 500,000
Bakka frost Processing P/F DKK Value adding of salmon (VAP) Glyvrar 100% 150,000,000
Bakka frost Sales P/F DKK Sales of salmon and VAP products Glyvrar 100% 667,000
Bakka frost Packaging P/F* DKK Production of styrofoam boxes Glyvrar 100% N/A
Havsbrún P/F DKK Production and sales of fishmeal, fish oil and fish feed Fuglafjørður 100% 2,000,000
Bakka frost UK Ltd. GBP Sales of salmon Grimsby 100% 2 GBP
Bakka frost 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% 5,000,000
Bakka frost Scotland Limited GBP Salmon Farming Edinburgh 100% 20,000,000 GBP
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
Bakka frost 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
*Bakka frost Packaging P/F merged into Bakka frost Processing P/F
SECTION 3
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
Carrying Carrying
Associated Companies Head Net Share of value value
DKK 1,000 Office Ownership Additions the result 2023 2022
Pelagos P/F Fuglafjørður 30% -12,029 7,864 94,569 98,734
Salmon Proteins P/F * Eiði 79% 0 0 5,176 5,176
FF Skagen A/S Skagen 25% -4,064 62,671 187,973 129,366
Total 287,718 233,276
Total assets Total assets Equity Equity Result Result
2023 2022 2023 2022 2023 2022
Pelagos P/F ** 499,642 499,642 325,967 325,967 79,500 79,500
Salmon Proteins P/F */** 9,489 9,489 6,577 6,577 393 393
FF Skagen A/S** 1,410,514 1,410,514 566,490 566,490 128,494 128,494
*Voting rights 30%. The voting rights are limited in the Articles of Association of P/f Salmon Proteins.
**Information from 2022
NOTE 3.5 SHARES AND HOLDINGS IN OTHER COMPANIES
DKK 1,000 2023 2022
Companies
Others 983 933
Total 983 933
ACCOUNTING POLICIES
Investments in other companies are classified as available for
sale. Shares and holdings in which the Group does not have
significant influence are valued at cost as fair value cannot be
measured reliably.
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
NOTE 3.6 INVENTORY
DKK 1,000 2023 2022
Raw materials and goods in-progress 911,369 843,909
Finished goods 237,419 230,435
Total inventory 1,148,788 1,074,344
Raw materials primarily consist of raw material to produce
fishmeal, fish oil and fish feed and packaging materials used
in processing.
Goods in-progress include semi-finished products and spare
parts.
Finished products include all products ready for sale, such as
fish feed, fresh and frozen whole salmon, as well as processed
salmon products.
Inventories are measured at full cost price.
ACCOUNTING POLICIES
Inventories consist of inventories in the Farming FO segment,
Farming SCT segment, Freshwater FO segment, Freshwater
SCT segment, Sales & Other segment and the FOF segment.
Farming FO, Farming SCT and
Freshwater FO, Freshwater SCT
Inventories include mainly packaging materials and finished
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
includes 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.
Services, and Sales & Other
Inventories consist of raw material, additives, packaging
material and finished goods. Raw material in the VAP unit
consists basically of processed salmonids. Raw material is
measured 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 principle
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 production
cost, including production costs, which can be only indirectly
allocated to produce goods, less general administration costs.
FOF
Raw materials and purchased commodities are valued at the
lower of historical cost and net realizable value in accordance
with the FIFO principle.
Finished goods are fishmeal, oil and feed ready for delivery
to customer, valued at the lower of cost and net realizable
value. The cost of finished 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 production
cost, including production costs, which can be only indirectly
allocated to produce goods, less general administration costs.
SECTION 3
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 3.7 BIOLOGICAL ASSETS
DKK 1,000 2023 2022
Biological assets carrying amount 01.01. 2,938,485 2,448,289
Increase due to production or purchases 4,198,900 3,917,146
Reduction due to harvesting or sale (costs of goods sold) -3,288,597 -3,363,747
Reduction due to mortality (costs of incidents based mortality) -328,168 -282,768
Fair value adjustment at the beginning of the period reversed -883,099 -604,707
Fair value adjustments at the end of the period 741,433 883,099
Reversal of elimination at the beginning of the period 368,918 134,193
Eliminations -434,167 -135,650
Currency translation differences 21,865 -57,370
Biological assets carrying amount 31.12. 3,335,570 2,938,485
Cost price biological assets 3,006,439 2,248,406
Fair value adjustments at the end of the period 741,433 883,099
Eliminations -434,167 -135,650
Currency translation differences 21,865 -57,370
Biological assets carrying amount 3,335,570 2,938,485
Volume of biomass at sea (tonnes)
< 1 kg 4,201 4,737
1 < 2 kg 7,926 6,811
2 < 3 kg 10,480 8,608
3 < 4 kg 9,377 9,589
4 kg < 28,705 18,566
Volume of biomass at sea 60,689 48,311
Number of fish (thousand)
< 1 kg 7,765 11,043
1 < 2 kg 5,472 4,595
2 < 3 kg 4,251 3,520
3 < 4 kg 2,731 2,717
4 kg < 5,638 3,877
Total number of fish at sea 25,857 25,752
2023 2022
Harvested volumes (TGW) 73,006 90,603
Number of smolts released (thousand)
Q1 4,988 4,237
Q2 7,107 6,166
Q3 2,076 6,563
Q4 8,993 8,459
Total number of smolts released 23,164 25,425
Sensitivity analysis of biomass DKK 1,000
Change in discount rate +1% -182,631 -212,686
Change in discount rate -1% 200,368 238,534
Change in sales price +5 DKK 406,582 353,080
Change in sales price -5 DKK -406,582 -353,080
Change in biomass volume +1% 11,196 18,217
Change in biomass volume -1% -11,196 -18,217
One year forward prices in EUR FCA Oslo*
At year end 7.90 7.50
Q1 (forward) 9.54 8.58
Q2 (forward) 10.08 8.96
Q3 (forward) 7.47 7.16
Q4 (forward) 7.69 7.31
* Source Fish Pool
SECTION 3
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
VALUATION OF BIOLOGICAL ASSETS
IAS 41 requires biomass to be accounted for at the estimated
fair value net of sales costs and harvesting costs. The
calculation 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, depending
on the stage of the life cycle. The first group is fish produced
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
transformation. 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
highest 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
expected cash flow from biological assets.
Changes to estimated fair value of biological assets are
presented 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% (2022: 0.9%) and for Farming SCT 2.0% (2022: 2.0%) 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
gutted weight. The volume on Fish Pool is, however, limited.
This market may therefore be considered insufficiently active
and effective. Despite this, Bakka frost’s opinion is that the
observable 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 2021 is 6.0% (2022:
6.0%) per month for Farming FO and 4.0% (2022: 4.0%) per
month for Farming SCT. The discount rate considers a risk
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
mortality 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
production costs.
Bakka frost uses a common indicator and threshold for all
farming sites to assess normal and abnormal mortality.
Indication of abnormal mortality is when a farming site in
a month registers mortality exceeding 1.5% (2022: 1.5%) for
Farming FO and 4.0% (2022: 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
simulated sensitivity analysis to changes in fair value of the
biological assets is portrayed in the event of changes in these
parameters.
SECTION 3
248
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 3.8. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
DKK 1,000 2023 2022
Accounts receivables 850,450 808,806
Provisions for bad debts -112 -51
Net accounts receivables 850,338 808,755
VAT 94,027 75,973
Other 0 26,477
Tax receivables 56,112 65,822
Other receivables 150,139 168,272
Total short-term receivables 1,000,477 977,027
AGE DISTRIBUTION OF ACCOUNTS RECEIVABLES
DKK 1,000 2023 2022
Receivables not overdue 686,106 614,760
Overdue 0–6 months 161,407 190,538
Overdue more than 6 months 2,825 3,508
Total 850,338 808,806
The Group’s exposure to credit risks related to accounts receivable is disclosed in Note 4.1.
SECTION 3
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
CURRENCY EXPOSURE TO ACCOUNTS RECEIVABLE
The Group holds accounts receivable in foreign currencies amounting to DKK 718 million at year-end 2023 (2022: DKK
672 million).
Below is presented the book value of receivables specified in currency, translated into DKK employing the currency value at
31.12.
CURRENCY DISTRIBUTION OF ACCOUNTS RECEIVABLES
DKK 1,000 2023 2022
DKK 131,972 137,009
EUR 406,849 398,970
USD 234,836 105,135
GBP 57,967 73,511
JPY 331 5,730
NOK 18,384 88,451
Total 850,338 808,806
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 insignificant 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 deposits
and were DKK 412 million at year-end 2023, compared to
DKK 720 million at year-end 2022.
SECTION 3
250
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 3.10 SHARE CAPITAL AND MAJOR SHAREHOLDERS
Share capital:
DKK 1,000 2023 2022
Share capital at 1 January 59,143 59,143
Increase in the year 85 0
Share capital at 31 December 59,228 59,143
The parent company’s share capital comprises:
No. of Shares No. of Shares
Ordinary shares 59,143,000 59,143,000
Increase in the year 84,607 0
Total share capital 59,227,607 59,143,000
Reconciliation of outstanding shares: 2023 2022
Outstanding shares at 1 January 59,098,481 59,075,165
Sale of own shares to cover the employee bonus program 28,474 23,316
Issuing new shares 84,607 0
Outstanding shares at 31 December 59,211,562 59,098,481
Treasury shares at 31 December 16,045 44,519
SHAREHOLDERS
These shareholders held directly or indirectly more than
5% of the shares in the company as at 31 December 2023:
Folketrygdfondet, Regin Jacobsen, and Oddvør Jacobsen.
SECTION 3
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
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%
Guðrið Højgaard Member of the Board 0 0.00%
Teitur Samuelsen Member of the Board 100 0.00%
Annika Frederiksberg Member of the Board 16,781 0.03%
Øystein Sandvik Member of the Board 0 0.00%
Einar Wathne Member of the Board 0 0.00%
Regin Jacobsen Chief Executive Officer 4,640,281 7.84%
Odd Eliasen Managing Director 185,391 0.31%
Høgni D. Jakobsen Chief Financial Officer 76,636 0.13%
Dividend
The Board has proposed a dividend per share of DKK 8.70
for 2023. DKK 591 million were paid out for 2022. The
dividends proposed are to be approved at the Annual General
Meeting and if approved, the total dividend payment will
amount to DKK 515 million. The dividend proposal has not
been recognized as a liability on 31 December 2023 but is
presented as an item within equity.
SECTION 3
252
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 3.11 INTEREST-BEARING DEBT
DKK 1,000 2023 2022
Long-term interest-bearing debt 3,944,498 3,383,289
Total long-term interest-bearing debt 31.12. 3,944,498 3,383,289
Total interest-bearing debt 3,944,498 3,383,289
Cash and cash equivalents -411,674 -719,603
Net interest-bearing debt 3,532,824 2,663,686
The maturity structure of the Group’s financial commitments
is based on undiscounted contractual payments. As the credit
limit is not necessarily in the same currency of debt drawn,
currency fluctuations affect the amount available under the
facilities at any time.
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
The maturity plan of the Group’s interest-bearing debt is as follows
2023 2022
DKK 1,000
Carrying
amount
Contractual
payments
Carrying
amount
Contractual
payments
Long-term interest-bearing debt
-3,944,498 -3,968,705 -3,383,289 -3,408,576
Gross interest-bearing debt
-3,944,498 -3,968,705 -3,383,289 -3,408,576
Credit line
5,380,144 5,205,550
Long-term interest-bearing debt
-3,944,498 -3,383,289
Cash and cash equivalents
411,674 719,603
Total available credit lines
1,847,320 2,541,864
REMAINING PERIOD
31.12.2023 1–3 months 3–12 months 1–5 years > 5 years Total
Interest-bearing bank loans 0 0 0 3,944,498 3,944,498
Accounts payable and other debt 470,811 210,367 0 0 681,178
31.12.2022 1–3 months 3–12 months 1–5 years > 5 years Total
Interest-bearing bank loans 0 0 0 3,383,289 3,383,289
Accounts payable and other debt 579,247 237,780 0 0 817,027
SECTION 3
254
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
The difference between the carrying amount and the total
expected payments in the table above is due to upfront
arrangement and legal fees incurred in connection with
the refinancing of the credit facilities. One long-term bank
borrowing 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 rollover dates of loans drawn but are based on the
maturity date of the credit facilities.
INTEREST-BEARING DEBT IN MORE DETAIL
Financing of the Bakka frost Group is mainly executed by
the parent company. Subsidiaries can only enter external
financing if it is seen favourable for the whole Bakka frost
Group.
Sustainability-linked financing
In March 2022 the Group signed a five-year EUR 700 million
multicurrency sustainability-linked revolving credit facility
with Coöperatieve Rabobank U.A, DNB Bank ASA and Nordea
Bank ABPm (Filial i Norge). The Facility includes flexibility for
the parties to agree an additional amount of up to EUR 150
million during the tenor. In January 2024 the Group made use
of the second and final extension option and extended the
Facility with 12 months until February 2029.
The purpose of the Facility was to refinance Bakka frost’s
existing 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 2023.
As The Facility is sustainability-linked means that the margin
payable will be linked to Bakka frost’s performance against
certain sustainability KPIs, consistent with the Group’s overall
ESG targets and ambitions. 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 Bakka frost Group complied with these
covenants at the end of 2023.
At the end of 2023, the Group had unused committed credit
facilities of DKK 1,851 million (DKK 2,542 million). In addition,
the Group has an accordion of EUR 150 million.
Maturity analysis - contractual payments
DKK 1,000 2024 2025 2026 2027 2028
Long-term credit facilities 0 0 0 0 3,944,498
Gross interest-bearing debt 0 0 0 0 3,944,498
Reconciliation of development in interest-bearing debt
2022 Cash flows 2023
Long term interest-bearing debt 3,383,289 561,209 3,944,498
Total interest-bearing debt 3,383,289 561,209 3,944,498
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
SECTION 3
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
NOTE 3.12 MORTGAGES AND GUARANTEES
Carrying amount of debt secured
by mortgages and pledges
The Bakka frost Group has a group financing. The Group
companies 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 2023 2022
Long-term debt to financial institutions 3,944,498 3,383,289
Carrying amount of assets pledged as security for recognized debt
Licences 3,819,883 3,819,883
Property, plant, and equipment 1,580,604 1,046,827
Biological assets (biomass) 3,335,570 2,938,485
Inventory 138,171 131,770
Total 8,874,228 7,936,965
SECTION 3
256
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 3.13 DERIVATIVES
DKK 1,000 2023 2022
Currency derivatives -374 -7,474
Derivatives total -374 -7,474
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
2023 2023 2023 2022 2022 2022
Currency derivatives -374 0 -374 -7,474 0 -7,474
Total -374 0 -374 -7,474 0 -7,474
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 2023 derivatives derivatives 2022
Within one year -374 0 -374 -7,474 0 -7,474
Between one and five years 0 0 0 0 0 0
After five years 0 0 0 0 0 0
Total -374 0 -374 -7,474 0 -7,474
SECTION 3
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
FINANCIAL INSTRUMENTS
In accordance with IFRS 9, financial instruments falling within
its remit are classified into the following categories: fair value
with changes in value entered to the Income Statement, 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 category 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 value with
changes in value, entered to the Income Statement.
Hedge accounting
Interest rate swaps and forward currency settlement contracts
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
instrument is recognized directly in other comprehensive
income in the cash flow hedge reserve.
Amounts recognized as other comprehensive income are
transferred to the Income Statement, when the hedged
transaction affects profit or loss, and when financial liabilities
are settled, such as when the hedged financial income or
financial expense is recognized.
If the forecast transactions or commitments are no longer
expected to occur, the cumulative gain or loss, previously
recognized in equity, is transferred to the Income Statement.
If the hedging instrument expires or is sold, terminated, or
exercised without replacement or rollover, or if its designation
as a hedge is revoked, any cumulative gain or loss, previously
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 company
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
2023, compared to no provisions as per 31 December 2022.
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
contracts 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
entered 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
salmon products. These contracts do not contain any
elements of embedded derivatives and are therefore not
treated as financial instruments. The contracts are settled,
based exclusively 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.
SECTION 3
258
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
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 maximize shareholder value. The farming business is
characterized by price volatility and challenging production
dynamics. The Group must be financially solid 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%. On 31 December 2023, the Group’s equity ratio was 61%
(62%).
The Group manages the capital structure and adjusts
corresponding to changes in the underlying economic
conditions. In December Bakka frost entered a term sheet
for a sustainability-linked EUR 700 million multicurrency
revolving credit facility with a tenor of five years. The facility
agreement was signed in March 2022. In January 2024, the
Group made use of the second extension option and extended
the Facility for 12 months until February 2029.
According to the Group’s dividend policy, under normal
circumstances, average dividends over several years should
be 30 to 50% of the adjusted net profit. The Board has
proposed a dividend of DKK 8.70 per share for the financial
year 2023, corresponding to a distribution to shareholders of
DKK 515 million (DKK 591 million).
On 31 December 2023, net interest-bearing debt amounted
to DKK 3,533 million (DKK 2,664 million). Note 3.11 provides
an overview of the debt’s maturity profile and information on
the debt’s financial covenants. Bakka frost complied with the
covenants loan agreements at the end of 2023.
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
exposure 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 Bakka frost’s financial risk management
policies is to ensure the ongoing liquidity of the Group,
defined as being always in a position to meet the liabilities
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 insurance.
The Board of Directors believe that the most important
measure against any risk is to have a strong financial
position. On 31 December 2023, the Group’s equity ratio was
61% (62%).
Risk management policies and procedures are reviewed
regularly 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 instruments
such as accounts receivable, cash, shares, accounts payable,
etc., which are ascribable directly to day-to-day business
operations.
The Group uses financial derivatives, mainly currency forward
contracts. The purpose of these instruments is to manage the
currency risks arising from the Group’s operations.
The Group does not employ financial instruments, including
financial derivatives, for the purpose of arbitrage.
NOTES - SECTION 4
Capital Structure and
Financing Items
This section gives an insight into the capital structure and
financing items.
SECTION 4
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
The most important financial risks to which the company is
exposed are interest rate risk, foreign exchange risk, liquidity
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
income and expenses, future cash flows or fair value of
financial 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
commodity 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 exposure
have been identified: Translational exposure, Transactional
exposure, and Economic currency exposure.
Translational exposure
Bakka frost has subsidiaries abroad in Scotland, England, USA,
France, and Denmark. Thus, Bakka frost faces currency risks
arising from the translation of subsidiaries whose functional
currency differs from the presentation currency of the Group.
The exposure related to the equity of foreign subsidiaries is
generally 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 sales & other
segment, 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 normally has a net positive cash flow exposure
from USD and EUR and a net negative cash flow exposure
from DKK, GBP, and NOK. The predominant exposure comes
from the USD. The Group has therefore a policy of a 12-month
layered hedging programme for USD/DKK.
The table below summarizes the foreign currency exposure to
the net monetary position of all Group entities against their
functional currency. The exposure of translating the financial
statements of subsidiaries into the presentation currency is
not included in the analysis.
SECTION 4
260
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
Exposure to currency risk Currency
DKK 1,000
2023 EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK
Cash and cash equivalents 76,273 0 142,583 0 20,884
Accounts receivables 406,849 57,967 234,836 18,384 331
Trade payables -31,568 -21,444 -4,016 -12,431 0
Interest-bearing debt -866,355 -727,554 0 -29,578 0
Forward contracts 0 0 -58,238 0 0
Net exposure -414,801 -691,031 315,165 -23,625 21,215
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 receivables 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
Sensitivity analysis Currency
DKK 1,000
2023 EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK Result
Net exposure -414,801 -691,031 315,165 -23,625 21,215
Historical volatility for the last 5 years 0.27% 7.05% 7.41% 10.48% 8.59%
Total effect on Profit of +movements -1,120 -48,718 23,354 -2,476 1,822 -27,137
Total effect on Profit of -movements 1,120 48,718 -23,354 2,476 -1,822 27,137
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
The analysis is based on the currencies that the Group is
most exposed to at the end of 2023. The reasonable shifts
in exchange rates in the table above are based on 5 years of
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 -27 million (2021: DKK -35 million).
SECTION 4
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
Currency forward contracts as of 31 December 2023
Bakka frost Group buys Bakka frost Group sells
DKK 1,000
DKK 58,238 USD 8,618
Currency forward contracts as at 31 December 2022
Bakka frost Group buys Bakka frost Group sells
DKK 1,000
DKK 331,250 USD 46,957
Significant exchange rates (average) during the year EUR/DKK GBP/DKK USD/DKK NOK/DKK JPY/DKK
2023 745.29 857.59 674.47 66.30 4.77
2022 743.96 872.59 708.30 73.69 5.40
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
profitability. 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 minimize
the risk of breach of the Group’s debt covenants and to avoid
situations of financial distress that might jeopardize 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 35 million (2022: DKK 27 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
commodity 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 customers, 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 volume makes it necessary to purchase raw materials
outside of previously negotiated purchase agreements. Under
these circumstances, it might not be possible to charge the
customers with the increased cost, and profitability would
thus be impacted.
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
holdings are prepared regularly.
Liquidity risk is managed through maintaining flexibility
in funding by securing available committed credit lines,
provided 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 unforeseen
movements in cash requirements. Please also refer 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,
Bakka frost monitors funding options available in the capital
markets as well as trends in the availability and cost of such
funding with a view to maintain financial flexibility and
limiting refinancing risk. Bakka frost’s overall liquidity as at
31 December 2023 included DKK 412 million (2022: DKK
SECTION 4
262
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
720 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 contracted
and is related to financial instruments such as cash and cash
equivalents, receivables, and derivative financial instruments.
Bakka frost has a Group-wide credit management policy,
governed by Bakka frost’s credit committee. The committee
is responsible for granting credits to the Groups customers.
In general, Bakka frost uses credit insurance, bank guarantees,
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 Bakka frost. 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,
supported by regular follow up by central functions.
The concentration of credit risk is at the outset not
considered 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
derivatives. For these transactions, the Group relies upon
Nordic relationship banks, other relationship banks or widely
recognized commodity exchanges.
The carrying amount of financial assets represents the
maximum 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 1,412 million as at 31
December 2023 (2022: DKK 1,697 million). For the age
distribution of accounts receivable, please refer to Note 3.8.
Credit Risk 2023 2022
Accounts receivables 850,338 808,755
Other receivables 94,027 102,450
Tax receivables 56,112 65,822
Cash and Cash equivalents 411,674 719,603
Total 1,412,151 1,696,630
Bakka frost 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.
SECTION 4
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
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
disclosed, are categorized within the fair value hierarchy,
described 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 input
that is significant to the fair value measurement is directly or
indirectly observable).
Level 3: Valuation techniques (for which the lowest level
input that is significant to the fair value measurement is
unobservable).
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
recurring basis, the Group determines, whether transfers
have occurred between Levels in the hierarchy by reassessing
categorization (based on the lowest level input that is
significant to the fair value measurement).
There have been no transfers into or out of Level 3 fair value
measurements.
As at December 31
st
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) 3,335,570 2,594,137 0 0 3,335,570
Assets measured at fair value 31-12-23 3,335,570 2,594,137 0 0 3,335,570
Liabilities measured at fair value 31-12-23 0 0 0 0 0
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
SECTION 4
264
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 4.3 EARNINGS PER SHARE
DKK 1,000 2023 2022
Profit for the year to the shareholders of P/F Bakka frost 955,216 1,344,330
Fair value adjustment of biomass (IAS 41) 141,665 -278,392
Tax on fair value adjustment -64,216 57,682
Adjusted profit for the year to shareholders of P/F Bakka frost 1,032,665 1,123,620
Ordinary shares as at 01.01. 59,227,607 59,143,000
Ordinary shares as at 31.12. 59,227,607 59,143,000
Time-weighted average number of shares outstanding through the year 59,174,265 59,090,186
Earnings per share 2023 2022
Basic (DKK) 16.14 22.75
Diluted (DKK) 16.14 22.75
Adjusted earnings per share (before fair value adjustments
of biomass and provision for onerous contracts) (adjusted EPS)
Basic (DKK) 17.45 19.02
Diluted (DKK) 17.45 19.02
Earnings per share (EPS)
Basic earnings per share
Basic EPS is calculated by dividing the profit attributable
to equity holders of the company by the weighted average
number of ordinary shares in issue during the year, excluding
ordinary shares purchased by the company and held as
treasury shares.
Diluted earnings per share
Diluted earnings per share are adjusted for the dilution effect
of issued share options. Bakka frost 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 Bakka frost’s
view that this figure provides a more reliable measure of the
underlying performance.
SECTION 4
265
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
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
2023 2024 2025 2026 Total
Total contractual new Hatchery stations in the Faroe Islands 246,157 202,486 101,976 550,619
Total contractual new marine sites and development of an existing freshwater site in Scotland 189,966 0 0 189,966
Total contractual other PPE investments 180,123 16,490 34,002 230,615
Total 616,246 218,976 135,978 971,200
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
SECTION 5
266
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 5.2 RELATED-PARTY TRANSACTIONS
Related parties are in this respect considered as persons or
legal entities, which directly or indirectly possess significant
influence on the Bakka frost Group through shareholding or
position and vice versa. Related party transactions are at
arm’s length terms.
DKK 1,000 2023 2022
Based on key personnel
Revenues - Betri Trygging P/F 6,765 368
Purchase - Betri Trygging P/F 27,712 36,948
Accounts receivables - Betri Trygging P/F 6,665 143
Accounts payable - Betri Trygging P/F 6,148 2,344
Revenues - Tjaldur P/F 153 108
Purchase - Tjaldur P/F 190,445 161,289
Accounts receivables - Tjaldur P/F 74 0
Accounts payable - Tjaldur P/F 16,436 12,211
Purchase - Eystur- og Sandoyartunlar P/F 1,306 813
Accounts payable - Eystur- og Sandoyartunlar P/F 58 27
Revenues - Kjølbro Heilsøla P/F 0 2
Purchase - Posta P/F 1,316 7,652
Accounts receivables - Posta P/F 2 0
Accounts payable - Posta P/F 44 9
Revenues - P/F J.F. Kjølbro Heilsøla 484 N/A
Purchase - P/F J.F. Kjølbro Heilsøla 3,150 N/A
Accounts receivables - P/F J.F. Kjølbro Heilsøla 271 N/A
Accounts payable - P/F J.F. Kjølbro Heilsøla 1,336 N/A
Based on association
Revenues - FF Skagen A/S 89,363 49,242
Purchase - FF Skagen A/S 2,228 15,973
Accounts payable - FF Skagen A/S 1,690 6,099
Revenues - Pelagos P/F 102 0
Purchase - Pelagos P/F 121,217 144,702
Accounts receivables - Pelagos P/F 63,180 0
Accounts payable - Pelagos P/F 2,505 46
Revenues - Salmon Proteins P/F 15,386 9,558
Purchase - Salmon Proteins P/F 221 1,794
Accounts receivables - Salmon Proteins P/F 4,417 0
Accounts payable - Salmon Proteins P/F 0 342
SECTION 5
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
NOTE 5.3 BUSINESS COMBINATIONS
2023:
There have not been any new business combinations in 2023.
2022:
In a transaction closed on 1 January 2022, Bakka frost 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 Bakka frost
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. Bakka frost 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 Bakka-
frost’s value chain. With a planned increase in production
of salmon over the coming years, from Bakka frost’s farms
in the Faroe Islands and in Scotland, Munkebo Seafood will
have a strengthened raw material base and Bakka frost will
strengthen 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 products
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, Bakka frost can
now offer a wider range of products. Bakka frost offers fresh,
frozen, and smoked salmon products, and now canned food is
added. Bakka frost has a global sales network, and Munkebo
Seafood’s products will now be offered in a wider market
as a supplement to Bakka frost’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
customer 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
figures 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
combinations in 2022 and there were no new material
business combinations in 2021.
Book value Fair value
DKK 1,000 31/12/2021 adjustments Fair value
Goodwill 0 9,726 9,726
Intangible assets 600 0 600
Property, plant, and equipment - incl. IFRS 16 13,106 0 13,106
Accounts receivables 11,310 0 11,310
Inventories 21,264 0 21,264
Other current assets, excluding cash and bank 2,739 0 2,739
Total assets 49,019 9,726 58,745
Deferred taxes and other taxes 1,511 1,754 3,265
Long-term liabilities, interest-bearing 8,797 0 8,797
Accounts payable 17,634 0 17,634
Other payable 3,660 0 3,660
Liabilities 31,602 1,754 33,356
Net assets 17,417 7,972 25,389
SECTION 5
268
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
NOTE 5.5 AUDITOR’S FEES
Fees paid to auditors (ex. VAT) break down as follows:
DKK 1,000 2023 2022
Statutory auditing 1,358 1,366
Other assurance engagements 203 201
Tax advisory services 138 9
Other services 141 160
Total auditor’s fees 1,840 1,736
NOTE 5.4 EVENTS AFTER THE DATE OF THE
STATEMENT OF FINANCIAL POSITION
This is regarding new information regarding the company’s
financial position on the statement of financial position,
which is received after the date of the statement of financial
position, has been recognized in the annual accounts. Events
after the date of the statement of financial position, which do
not affect the company’s financial position on the statement
of financial position date, but which will affect the company’s
future financial position, are disclosed if material.
SECTION 5
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INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
NOTE 5.6 GOING CONCERN
With reference to the Group’s profits, financial strength,
and long-term forecasts for the years ahead, it is confirmed
that the financial statements for 2023 are based on the
assumption that Bakka frost is a going concern. In the opinion
of the Board, the Group’s financial position is good.
NOTE 5.7 ALTERNATIVE PERFORMANCE
MEASURES
The Groups financial information is prepared in accordance
with international financial reporting standards (IFRS).
In addition, 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 financial
statements prepared in accordance with IFRS. The alternative
performance measures presented may be determined or
calculated differently by other companies. Bakka frost’s
experience is that these APM’s are frequently used by
analysts, investors and other parties.
These APM’s are adjusted IFRS measures defined, 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, financial 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 necessarily 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 defined 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 2023 2022
Cash and cash equivalents 411,674 719,603
Long- and short-term interest-bearing debt -3,944,498 -3,383,289
Net interest-bearing debt -3,532,824 -2,663,686
SECTION 5
270
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
Operational EBIT
Operational EBIT is EBIT aligned for fair value adjustments,
onerous contracts provisions, income from associates and
revenue tax.
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 2023 2022
EBIT 1,319,961 1,826,153
Fair value adjustments of biological assets 141,665 -278,392
Income from associates -70,652 -57,597
Revenue tax 152,836 215,001
Operational EBIT 1,543,810 1,705,165
EBITDA
Earnings before interest, tax, depreciations and amortizations
(EBITDA) is a key financial parameter for Bakka frost’s FOF
segment. EBITDA before other income and other expenses
is defined as EBITDA less gains and losses on disposals
of fixed assets and operations and is reconciled in the
section Group overview. This measure is useful to users of
Bakka frost’s financial information in evaluating operating
profitability on a more variable cost basis, as it excludes
depreciations and amortization expenses related primarily
to capital expenditures and acquisitions, which occurred in
the past, nonrecurring items, as well as evaluating operating
performance in relation to Bakka frost’s FOF segments
competitors. The EBITDA margin presented is defined as
EBITDA before other income and other expenses divided by
total revenues.
Operational EBIT per kg:
Freshwater FO Segment:
Operational EBIT Freshwater
Freshwater SCT Segment:
Operational EBIT Freshwater
Farming FO Segment:
Operational EBIT Farming
Farming SCT Segment:
Operational EBIT Farming
Services segment:
Operational EBIT
Sales & Other segment:
Operational EBIT
Total released smolt (kg) Total released smolt (kg) Total harvested volumes (gw) Total harvested volumes (gw) Total harvested volumes (gw) Total harvested volumes (gw)
SECTION 5
271
INTEGRATED ANNUAL REPORT 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP
DKK 1,000 2023 2022
Profit for the period to the shareholders of P/F Bakka frost 955,216 1,344,330
Fair value adjustment of biomass 141,665 -278,392
Tax on fair value adjustment and onerous contracts provisions -64,216 57,682
Adjusted profit for the period to shareholders of P/F Bakka frost 1,032,665 1,123,620
Time-weighted average number of shares outstanding through the period 59,174,265 59,090,186
Adjusted earnings per share (before fair value adjustment of
biomass and provisions for onerous contracts) (adjusted EPS) 17.45 19.02
Adjusted EPS
Adjusted EPS is based on the reversal of certain fair value
adjustments shown in the table above, as it is Bakka frost’s
view that this figure provides a more reliable measure of the
underlying performance.
SECTION 5
272
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – BAKKAFROST GROUP INTEGRATED ANNUAL REPORT 2023
273
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
Financial
Statements
P/F BAKKAFROST
P/F BAKKA FROST
Content
P/F BAKKA FROST - Income Statement 275
P/F BAKKA FROST - Statement of Financial Position 276
P/F BAKKA FROST - Statement of Financial Position 277
P/F BAKKA FROST - Cash Flow Statement 278
P/F BAKKA FROST – Statement of Changes in Equity 279
Note 1. Accounting Policies 280
Note 2. Salaries and Other Personnel Expenses 280
Note 3. Net Financial Items 281
Note 4. Property, Plant, and Equipment 282
Note 5. Subsidiaries and Associates 283
Note 6. Investments in Stocks and Shares 285
Note 7. Share Capital and Major Shareholders 285
Note 8. Tax 286
Note 9. Security Pledges and Contingent Liabilities 287
Note 10. Related-Party Transactions 287
Note 11. Auditor’s fee 287
Key Figures – 5 Year Overview 291
Independent Auditor’s Report 293
Independent Limited Assurance Report on Selected ESG Data in the Sustainability Statements 297
274
CONTENT INTEGRATED ANNUAL REPORT 2023
DKK 1,000 Note 2023 2022
Operating revenue 213,165 196,657
Salary and personnel expenses 2 -56,705 -49,050
Other operating expenses -141,404 -132,592
Depreciation 4 -29,681 -29,433
Earnings before interest and taxes (EBIT) -14,625 -14,418
Dividends from subsidiaries 5 1,518,764 880,409
Income from other investments in shares -33 42
Financial income 3 203,199 84,358
Net interest expenses 3 -161,774 -57,634
Net currency effects 3 -11,795 -149,523
Other financial expenses 3 -6,755 -6,509
Earnings before taxes (EBT) 1,526,981 736,725
Taxes 8 4,184 19,743
Profit to shareholders of P/F Bakka frost 1,531,165 756,468
Distribution of profit
Dividend proposed 515,284 591,430
Retained earnings 1,015,881 165,038
Distribution in total 1,531,165 756,468
P/F BAKKA FROST -
Income Statement
FOR THE YEAR ENDED 31 DECEMBER
275
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
P/F BAKKA FROST -
Statement of
Financial Position
AS AT 31 DECEMBER
DKK 1,000 Note 2023 2022
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 4 202,497 208,757
Plant, machinery and other operating equipment 4 56,706 73,761
Total property plant and equipment 259,203 282,518
Non-current financial assets
Investments in subsidiaries 5 6,052,499 5,623,754
Investments in stocks and shares 6 790 790
Deferred tax assets 8 10,026 0
Total non-current financial assets 6,063,315 5,624,544
TOTAL NON-CURRENT ASSETS 6,323,518 5,908,062
Inventory 43,771 49,635
Total inventory 43,771 49,635
Receivables from Group companies 9,879,273 8,342,539
Derivatives 3.13* 373 7,474
Accounts receivables 992,278 1,413
Other receivables 0 28,756
Total receivables 10,871,924 8,380,182
Cash and cash equivalents 251,454 588,639
TOTAL CURRENT ASSETS 11,167,149 9,018,456
TOTAL ASSETS 17,490,667 14,926,518
*Group note 3.13
276
B/F BAKKAFROST - FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
DKK 1,000 Note 2023 2022
EQUITY AND LIABILITIES
Equity
Share capital 7 59,228 59,143
Other equity 10,604,365 9,618,988
Total equity 10,663,593 9,678,131
Non-current liabilities
Long-term interest-bearing debt 9 3,771,861 3,353,892
Deferred taxes 8 0 12,173
Total non-current liabilities 3,771,861 3,366,065
Current liabilities
Derivatives 3.13* 0 0
Payables to Group companies 3,042,403 1,854,811
Current tax liabilities 4,494 0
Accounts payable 4,338 10,979
Other short-term liabilities 3,978 16,532
Total current liabilities 3,055,213 1,882,322
Total liabilities 6,827,074 5,248,387
TOTAL EQUITY AND LIABILITIES 17,490,667 14,926,518
*Group note 3.13
P/F BAKKA FROST -
Statement of
Financial Position
AS AT 31 DECEMBER
277
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
DKK 1,000 Note 2023 2022
Cash flow from operations
EBIT -14,625 -14,418
Adjustments for write-downs and depreciation 4 29,681 29,433
Adjustments for net currency effects 3 -11,795 -149,523
Adjustments for share-based payment 2 5,125 3,316
Taxes paid 8 19,605 -6,737
Change in inventory 5,864 -18,576
Change in receivables -955,008 17,863
Change in current debts -56,344 5,248
Cash flow from operations -977,497 -133,394
Cash flow from investments
Increase of share capital in subsidiaries, etc., net 5 -428,745 -48,541
Payments made for purchase of fixed assets 4 -6,366 -1,611
Cash flow from investments -435,111 -50,152
Cash flow from financing
Changes in interest-bearing debt (short and long) 412,147 717,334
Financial income 3 203,199 84,358
Financial expenses 3 -168,529 -64,143
Financing of associates/subsidiaries -349,142 -950,626
Acquisition/sale treasury shares 9,625 8,703
Dividend from subsidiaries 1,518,731 880,409
Emission - increase of share capital 40,531 0
Dividend paid -591,139 -303,995
Cash flow from financing 1,075,423 372,040
Net change in cash and cash equivalents -337,185 188,494
Cash and cash equivalents – opening balance 588,639 400,145
Cash and cash equivalents – closing balance total 251,454 588,639
P/F BAKKA FROST -
Cash Flow Statement
FOR THE YEAR ENDED 31 DECEMBER
278
B/F BAKKAFROST - FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
Share Share-
premium Treasury based Proposed Retained
DKK 1,000 Share capital account shares payment Derivatives dividends earnings Total
1 January 2023 59,143 3,838,206 -18,512 1,783 6,128 591,430 5,199,953 9,678,131
Net annual profit 0 0 0 0 0 0 1,531,165 1,531,165
Fair value adjustment on financial derivatives 0 0 0 0 -7,100 0 0 -7,100
Income tax effect 0 0 0 0 1,278 0 0 1,278
Total other comprehensive income 0 0 0 0 -5,822 0 0 -5,822
Total comprehensive income 0 0 0 0 -5,822 0 1,531,165 1,525,343
Emission - increase sharecapital 85 0 0 0 0 0 40,446 40,531
Treasury shares 0 0 10,034 0 0 0 1,102 11,136
Share-based payment 0 0 0 -409 0 0 0 -409
Dividend treasury shares 0 0 0 0 0 0 291 291
Paid-out dividends 0 0 0 0 0 -591,430 0 -591,430
Proposed dividends 0 0 0 0 0 515,284 -515,284 0
Total transaction with owners 85 0 10,034 -409 0 -76,146 -473,445 -539,881
Total changes in equity 85 0 10,034 -409 -5,822 -76,146 1,057,720 985,462
31 December 2023 59,228 3,838,206 -8,478 1,374 306 515,284 6,257,673 10,663,593
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 0 756,767 756,767
Fair value adjustment on financial derivatives 0 0 0 0 11,102 0 0 11,102
Income 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 0 756,767 766,766
Treasury shares 0 0 8,215 0 0 0 1,349 9,564
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 -589,805 -293,943
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
P/F BAKKA FROST –
Statement of
Changes in Equity
AS AT 31 DECEMBER
279
INTEGRATED ANNUAL REPORT 2023 B/F BAKKAFROST - FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
The financial 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 Reporting
Act. The accounting policies applied to the consolidated
accounts have also been applied to the parent company, P/F
Bakka frost. The notes to the consolidated accounts provide
additional information to the parent company’s accounts,
which is not presented here separately. The company’s
financial 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
investment is written down to fair value.
Notes to the
Financial Statements
NOTE 2. SALARIES AND OTHER PERSONNEL EXPENSES
DKK 1,000 2023 2022
Wages and salaries 39,315 34,551
Share based payments 5,125 3,316
Social security taxes 1,562 1,476
Pension expenses 3,325 2,603
Other benefits 7,378 7,104
Total payroll expenses 56,705 49,050
Average number of full-time employees 53 46
REMUNERATION TO SENIOR
EXECUTIVES AND AUDITORS
For details of remuneration paid to senior executives, see
notes to the consolidated financial statements.
280
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
NOTE 3. NET FINANCIAL ITEMS
DKK 1,000 2023 2022
Interests received deposit 16,388 0
Interests received from Group companies 186,811 77,966
Realized profit on financial derivatives 0 4,889
Other financial income 0 1,503
Financial income 203,199 84,358
Interest expenses on long- and short-term loans -159,241 -57,624
Interests expences from Group companies -2,533 0
Interest expenses on accounts payable 0 -10
Financial expenses -161,774 -57,634
Other exchange differences -11,795 -149,523
Net currency effects -11,795 -149,523
Other financial expenses -6,755 -6,509
Other financial items -6,755 -6,509
Net financial items 22,875 -129,308
281
INTEGRATED ANNUAL REPORT 2023 P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
NOTE 4. PROPERTY, PLANT, AND EQUIPMENT
Land and Other
DKK 1,000 buildings equipment Total
Acquisition cost as at 01.01.23 294,772 180,183 474,955
Acquisitions during the year 5,346 1,020 6,366
Acquisition cost as at 31.12.23 300,118 181,203 481,321
Accumulated depreciation and write-down as at 01.01.23 -86,015 -106,422 -192,437
Depreciations during the year -11,606 -18,075 -29,681
Accumulated depreciation and write-down as at 31.12.23 -97,621 -124,497 -222,118
Net book value as at 31.12.23 202,497 56,706 259,203
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 0 250 250
Depreciations during the year -11,468 -17,965 -29,433
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
A significant part of Bakka frost’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%
282
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
NOTE 5. SUBSIDIARIES AND ASSOCIATES
DKK 1,000 2023 2022
Acquisition cost as at 01.01. 5,626,520 5,578,019
Additions during the year 428,745 48,501
Acquisition cost as at 31.12. 6,055,265 5,626,520
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. 6,052,499 5,623,754
283
INTEGRATED ANNUAL REPORT 2023 P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
Carrying Carrying
Cost amount in amount in
DKK 1,000 Method Head Voting P/F Bakka frost P/F Bakka frost
Company Yes/No Office Ownership share 2023 2022
Bakka frost Processing P/F Yes Glyvrar 100% 100% 266,372 258,591
Bakka frost Sales P/F Yes Glyvrar 100% 100% 879 879
Bakka frost Packaging P/F* Yes Glyvrar N/A 100% N/A 7,781
Bakka frost Farming P/F Yes Glyvrar 100% 100% 313,887 314,887
Bakka frost FSV P/F Yes Glyvrar 100% 100% 500 N/A
Bakka frost Freshwater P/F Yes Glyvrar 100% 100% 500 N/A
Havsbrún P/F Yes Glyvrar 100% 100% 908,884 908,884
Bakka frost UK Ltd Yes Grimsby 100% 100% 4,649 4,649
Bakkafrost Danmark ApS Yes Glyvrar 100% 100% N/A 50
Bakka frost Scotland Ltd Yes Edinburgh 100% 100% 4,502,977 4,074,182
Förka P/F Yes Glyvrar 100% 100% 5,000 5,000
Faroe Seafood 2011 P/F Yes Glyvrar 100% 100% 14,000 14,000
Munkebo Seafood A/S Yes Munkebo 90% 90% 22,851 22,851
FarCargo P/F Yes Glyvrar 70% 70% 12,000 12,000
Total subsidiaries 6,052,499 5,623,754
* Bakka frost Packaging P/F is merged into Bakka frost Processing P/F
** Bakkafrost Danmark ApS termination date January 2024
P/F Bakka frost 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 Bakka frost 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 2023 2022
Bakka frost Farming P/F 1,010,177 -481,129 529,048 1,010,337
Bakka frost FSV P/F 0 61,689 61,689 N/A
Bakka frost Freshwater P/F 0 136,725 136,725 N/A
Bakka frost Sales P/F 207,769 -154,828 52,941 207,782
Bakka frost Packaging P/F 5,023 0 N/A 5,050
Bakka frost Processing P/F 0 75,833 75,833 -95,111
Havsbrún P/F 295,796 398,013 693,808 353,076
Bakka frost UK Ltd. 0 3,244 3,244 6,285
Bakka frost Danmark APS** 0 0 0 -6
Bakka frost Scotland Ltd 0 -262,618 -262,618 -274,334
Förka P/F 0 -2,011 -2,011 2,430
Faroe Seafood P/F 0 0 0 915
Munkebo Seafood A/S 0 -155 -155 1,425
FarCargo P/F 0 -6,834 -6,834 -3,155
Total revenue Group contribution 1,518,764 -232,070 1,281,672 1,214,694
284
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
NOTE 6. INVESTMENTS IN STOCKS AND SHARES
DKK 1,000 2023 2022
Acquisition cost as at 01.01. 183 183
Acquisition cost as at 31.12. 183 183
Re-evaluations as at 01.01. 607 567
Re-evaluations during the year 0 40
Re-evaluations as at 31.12. 607 607
Net book value as at 31.12. 790 790
Shares and holdings, in which the Group does not have significant influence. 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 2023 2022
Share capital at 31.12. 59,143 59,143
Emission - increase of share capital 85 0
Share capital at 31.12. 59,228 59,143
The share capital is distributed into shares of DKK 1 and multiples thereof. For shareholders holding more than 5% in the
Company as at 31 December 2023, see Group Accounts.
285
INTEGRATED ANNUAL REPORT 2023 P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
NOTE 8. TAX
The tax expense for the year breaks down as follows:
DKK 1,000 2023 2022
Tax payable -4,253 19,605
Change in deferred tax 8,437 138
Tax expense on ordinary profit 4,184 19,743
Tax in the statement of financial position
Deferred tax liabilities (+) / assets (-) -10,026 12,173
Reconciliation from nominal to actual tax rate
Profit before tax 1,526,981 736,725
Expected tax at nominal tax rate (18%) -274,857 -132,611
Permanent differences, including Group contribution without tax effect (18%) 273,378 158,474
Other permanent differences (18%) 5,905 -6,120
Calculated tax expense 4,184 19,743
Effective tax rate 0.27% 2.68%
As Parent company in the Bakka frost Group, Bakka frost
P/F is the administrating company in a Faroese Group Joint
Taxation and is liable towards the Faroese Tax Authorities for
taxes payable on behalf of the Faroese subsidiaries included
in the Faroese Group Joint Taxation.
286
P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2023
The company participates in a Group financing for the
Bakka frost Group. In relation to this matter, the company
has together with other Group companies pledged licenses,
property, plant, and equipment, shareholdings, inventory and
receivables 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.
As part of the guarantees are also any insurance refunds.
In addition, the shares in larger subsidiaries have been
pledged to the bank syndicate.
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 reflecting prevailing
market conditions for corresponding services, allowing
a margin to cover administration and risk. The company
allocates costs for corporate staff services and shared
services to subsidiaries and renting of buildings.
The total amounts for rent are DKK 21.4 million (2022: DKK
21.2 million), allocation of administration etc. DKK 102.2
million (2022: DKK 83.3 million), financial incomes of DKK
186.8 million (2022: DKK 77.9 million) and financial expenses
amounting to DKK 0.0 million (2022: DKK 0.0 million). The
principle of arm’s length is used in all transactions with
related parties.
NOTE 11. AUDITOR’S FEE
The company paid DKK 695,000 (641,500) for audit service,
DKK 138,500 (9,000) for tax advisory and DKK 132,400
(155,500) for other service. Please also see note 5.5 in the
consolidated financial statements.
NOTE 9. SECURITY PLEDGES AND CONTINGENT LIABILITIES
Carrying amount of debt secured by mortgages and pledges:
DKK 1,000 2023 2022
Long-term debt to financial institutions 3,771,861 3,353,892
Total 3,771,861 3,353,892
Carrying amount of assets pledged as security for recognized debt
Land and buildings 0 0
Total 0 0
287
INTEGRATED ANNUAL REPORT 2023 P/F BAKKAFROST - NOTES TO THE FINANCIAL STATEMENTS
Quarterly Financial Figures 2021-2023
DKK 1,000
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Operating revenue 1,175,637 1,617,534 1,272,362 1,488,316 1,639,345 1,683,824 1,866,989 1,939,809 2,049,881 1,669,658 1,859,408 1,561,902
Purchase of goods -288,602 -399,307 -496,680 -507,912 -559,267 -565,508 -1,048,355 -583,143 -542,707 -606,363 -1,004,249 -247,744
Change in inventory and biological assets (at cost)
-7,375 -79,924 30,181 -120,942 126,319 271,592 361,840 -93,201 -32,396 104,922 211,407 -142,733
Salary and personnel expenses -167,570 -184,782 -177,607 -198,464 -201,234 -186,279 -203,935 -240,231 -224,361 -201,942 -219,271 -217,096
Other operating expenses -357,934 -419,751 -434,744 -419,685 -455,576 -485,020 -525,902 -523,801 -540,966 -464,001 -432,287 -437,985
Depreciation -130,655 -126,281 -122,967 -150,531 -136,194 -137,112 -136,428 -127,746 -148,450 -154,248 -155,127 -179,384
Other income 0 0 0 28,877 4,496 5,081 10,478 4,324 4,287 5,314 9,109 19,232
Operational EBIT 223,501 407,489 70,545 119,659 417,889 586,578 324,687 376,011 565,288 353,340 268,990 356,192
Fair value adjustments on biological assets 284,622 176,486 113,713 -139,953 177,338 575,911 -48,803 -426,054 53,530 -432,065 55,236 181,634
Onerous contracts 0 0 0 0 -30,709 -33,606 64,315 0 0 0 0 0
Income from associates 1,317 3,081 7,963 17,751 3,345 -3,902 10,265 47,889 23,933 -3,384 10,713 39,390
Revenue tax -20,363 -41,152 -30,645 -49,329 -57,750 -62,838 -43,393 -51,020 -38,040 -30,002 -57,305 -27,489
Earnings before interest and taxes (EBIT) 489,077 545,904 161,576 -51,872 510,113 1,062,143 307,071 -53,174 604,711 -112,111 277,634 549,727
Net interest revenue 120 2,239 1,073 110 1,787 0 242 4,971 2,665 2,737 3,538 11,871
Net interest expenses -7,605 -10,908 -7,784 -10,566 -7,704 -9,545 -8,065 -39,725 -32,266 -37,672 -48,550 -66,192
Net currency effects 18,901 -1,992 6,552 22,401 -8,506 10,266 -8,427 -62,399 13,669 -1,193 4,506 -14,198
Other financial expenses -7,025 -5,438 -3,319 -3,782 -3,851 -5,961 -8,508 9,607 -2,428 -4,792 -1,223 -2,082
Earnings before taxes (EBT) 493,468 529,805 158,098 -43,709 491,839 1,056,903 282,313 -140,720 586,351 -153,031 235,905 479,126
Taxes -85,736 -101,678 -26,796 40,584 -87,082 -212,300 -33,293 -13,330 -119,467 30,491 -17,061 -87,098
Profit or loss for the period 407,732 428,127 131,302 -3,125 404,757 844,603 249,020 -154,050 466,884 -122,540 218,844 392,028
Earnings per share (DKK) 6.90 7.25 2.22 -0.05 6.85 14.29 4.21 -2.61 7.90 -2.07 3.70 6.61
Diluted earnings per share (DKK) 6.90 7.25 2.22 -0.05 6.85 14.29 4.21 -2.61 7.90 -2.07 3.70 6.61
288
QUARTERLY FINANCIAL FIGURES 2021-2023 INTEGRATED ANNUAL REPORT 2023
DKK 1,000
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
ASSETS
Non-current assets
Intangible assets 4,493,081 4,494,960 4,495,225 4,495,726 4,506,873 4,507,443 4,507,691 4,508,704 4,508,712 4,512,179 4,511,663 4,509,334
Property, plant, and equipment 4,405,542 4,549,575 4,742,180 4,888,778 4,942,556 5,091,194 5,213,364 5,647,161 5,737,923 5,950,975 6,062,698 6,220,481
Right of use assets 337,739 314,509 308,919 302,105 279,128 280,234 468,106 438,545 503,681 480,573 448,376 413,277
Financial assets 123,204 124,225 132,313 149,225 154,467 139,162 149,188 234,209 258,010 238,911 249,545 288,701
Long-term receivables 8,202 8,101 8,204 8,102 0 0 0 0 0 0 0 0
Deferred tax assets 0 0 0 215,248 133,801 120,191 155,208 336,020 336,297 354,015 428,873 512,485
Total non-current assets 9,367,768 9,491,370 9,686,841 10,059,184 10,016,825 10,138,224 10,493,557 11,164,639 11,344,623 11,536,653 11,701,155 11,944,278
Current assets
Biological assets (biomass) 2,441,083 2,489,210 2,703,268 2,448,290 2,636,644 3,300,603 3,268,658 2,938,485 3,035,517 2,776,846 2,765,951 3,335,570
Inventory 772,024 809,443 690,251 709,306 794,294 923,113 1,236,507 1,074,344 1,127,713 1,049,933 1,291,521 1,148,788
Total inventory 3,213,107 3,298,653 3,393,519 3,157,596 3,430,938 4,223,716 4,505,165 4,012,829 4,163,230 3,826,779 4,057,472 4,484,358
Financial derivatives 0 6,805 6,412 0 0 0 0 7,474 5,966 0 0 374
Accounts receivable 548,537 618,859 645,983 824,004 871,925 691,690 729,041 808,755 787,204 782,329 951,483 850,338
Other receivables 61,171 84,598 152,506 78,227 72,691 151,812 148,988 168,272 172,785 145,813 171,170 150,139
Total receivables 609,708 710,262 804,901 902,231 944,616 843,502 878,029 984,501 965,955 928,142 1,122,653 1,000,851
Cash and cash equivalents 373,706 552,981 373,318 509,157 445,079 508,193 568,165 719,603 570,056 543,793 370,397 411,674
Total current assets 4,196,521 4,561,896 4,571,738 4,568,984 4,820,633 5,575,411 5,951,359 5,716,933 5,699,241 5,298,714 5,550,522 5,896,883
TOTAL ASSETS 13,564,289 14,053,266 14,258,579 14,628,168 14,837,458 15,713,635 16,444,916 16,881,572 17,043,864 16,835,367 17,251,677 17,841,161
289
INTEGRATED ANNUAL REPORT 2023 QUARTERLY FINANCIAL FIGURES 2021-2023
DKK 1,000
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
EQUITY AND LIABILITIES
Equity
Share capital 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,143 59,228 59,228 59,228
Other equity 9,120,850 9,336,906 9,464,500 9,288,269 9,388,880 10,219,538 10,455,923 10,333,259 10,820,551 10,213,926 10,420,244 10,803,571
Non-controlling interests 0 0 0 133 2,722 -17 2,025 3,411 4,514 5,104 4,577 3,055
Total equity 9,179,993 9,396,049 9,523,643 9,347,545 9,450,745 10,278,664 10,517,091 10,395,813 10,884,208 10,278,258 10,484,049 10,865,854
Non-current liabilities
Deferred and other taxes 1,288,242 1,367,759 1,409,473 1,590,034 1,598,438 1,798,404 1,867,840 1,825,873 1,931,241 1,914,371 2,005,450 1,952,668
Long-term interest-bearing debt 2,312,487 2,456,065 2,359,589 2,634,968 2,636,926 2,774,792 2,994,760 3,383,289 2,927,265 3,454,307 3,415,259 3,944,498
Long-term leasing debt 235,552 249,024 247,076 245,753 232,735 235,739 427,270 353,355 415,744 389,391 359,768 331,115
Financial derivatives 0 0 0 3,207 0 0 0 0 0 0 0 0
Total non-current liabilities 3,836,281 4,072,848 4,016,138 4,473,962 4,468,099 4,808,935 5,289,870 5,562,517 5,274,250 5,758,069 5,780,477 6,228,281
Current liabilities
Financial derivatives 4,649 2,251 2,994 4,602 8,675 7,302 15,233 0 0 2,435 9,767 0
Short-term leasing debt 143,271 97,669 93,487 87,668 76,902 70,423 52,647 106,215 76,745 65,656 81,068 65,848
Accounts payable and other debt 400,095 484,449 622,317 714,391 833,037 548,311 570,075 817,027 808,661 730,949 896,316 681,178
Total current liabilities 548,015 584,369 718,798 806,661 918,614 626,036 637,955 923,242 885,406 799,040 987,151 747,026
Total liabilities 4,384,296 4,657,217 4,734,936 5,280,623 5,386,713 5,434,971 5,927,825 6,485,759 6,159,656 6,557,109 6,767,628 6,975,307
TOTAL EQUITY AND LIABILITIES 13,564,289 14,053,266 14,258,579 14,628,168 14,837,458 15,713,635 16,444,916 16,881,572 17,043,864 16,835,367 17,251,677 17,841,161
290
QUARTERLY FINANCIAL FIGURES 2021-2023 INTEGRATED ANNUAL REPORT 2023
Key Figures – 5 Year Overview
(DKK 1,000)
Income Statement 2023 2022 2021 2020 2019
Operating revenues 7,140,849 7,129,967 5,553,849 4,651,892 4,511,107
Operational EBIT * 1,543,810 1,705,165 821,194 621,158 1,325,100
Operational EBITDA * 2,181,019 2,242,645 1,351,628 1,067,923 1,635,215
Earnings before interest and taxes (EBIT) 1,319,961 1,826,153 1,144,685 691,123 1,019,217
Earnings before taxes (EBT) 1,148,351 1,690,335 1,137,662 625,984 981,916
Net earnings 955,216 1,344,330 964,036 462,845 801,885
Earnings per share before fair value adjustments of biomass and provision for onerous contracts (DKK) 17.45 19.02 10.28 6.20 19.04
Earnings per share after fair value adjustments of biomass and provision for onerous contracts (DKK) 16.14 22.75 16.32 7.83 15.53
Statement of Financial Position
Total non-current assets 11,944,278 11,164,639 10,059,184 9,224,680 8,670,109
Total current assets 5,896,883 5,716,933 4,568,984 3,983,644 4,431,296
TOTAL ASSETS 17,841,161 16,881,572 14,628,168 13,208,324 13,101,405
Total equity 10,865,854 10,395,813 9,347,545 8,729,487 8,496,875
Total liabilities 6,975,307 6,485,759 5,280,623 4,478,837 4,604,530
TOTAL EQUITY AND LIABILITIES 17,841,161 16,881,572 14,628,168 13,208,324 13,101,405
Net interest-bearing debt 3,532,824 2,663,686 2,125,811 1,752,751 1,018,686
Equity ratio 61% 62% 64% 66% 65%
291
INTEGRATED ANNUAL REPORT 2023 QUARTERLY FINANCIAL FIGURES 2021-2023
Statement by
the Management
and the Board of
Directors on the
Annual Report
Today, the Management and the Board of Directors have
considered and approved the Integrated Annual Report and
Consolidated Report and Accounts of P/F Bakkafrost for the
financial year 1 January 2023 to 31 December 2023.
The Integrated Annual Report has been prepared in accordance
with the International Financial Reporting Standards as
adopted by the EU and Faroese disclosure requirements for
listed companies.
In our opinion, the accounting policies used are appropriate,
and the Integrated Annual and Consolidated Report and
Accounts gives a true and fair view of the Group’s and parent
company’s financial positions at 31 December 2023, as
well as the results of the Group’s and the parent company’s
activities and cash flows for the financial year 1 January
2023 to 31 December 2023.
In our opinion, the management’s review provides a true
and fair account of the development in the Group’s and the
parent 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.
In our opinion, the Sustainability statements included in
the Management’s Report represent a reasonable, fair,
and balanced representation of the Group’s sustainability
performance and are prepared in accordance with the stated
accounting policies. In our opinion, the Integrated Annual
Report of Bakkafrost P/F for the financial year 1 January
– 31 December 2023 with the file name: 2138007LHOP4V
112978-2023-12-31-zip is prepared, in all material respects,
is in compliance with the ESEF Regulation.
We recommend that the Integrated Annual Report be adopted
at the annual general meeting.
Rúni M. Hansen
Chairman of the Board
Annika Frederiksberg
Board Member
Guðrið Højgaard
Board Member
Teitur Samuelsen
Board Member
Øystein Sandvik
Board Member
Einar Wathne
Board Member
Glyvrar, 27 March 2024
Management
Regin Jacobsen
CEO
The Board of Directors of P/F Bakkafrost
292
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT INTEGRATED ANNUAL REPORT 2023
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
Our opinion
In our opinion, the Consolidated Financial Statements
give a true and fair view of the Group’s financial position
at 31 December 2023 and of the results of the Group’s
operations and cash flows for the financial year 1 January
to 31 December 2023 in accordance with IFRS Accounting
Standards as adopted by the EU and further requirements in
the Faroese Financial Statements Act.
Moreover, in our opinion, the Parent Company Financial
Statements give a true and fair view of the Parent Company’s
financial position at 31 December 2023 and of the results
of the Parent Company’s operations and cash flows for the
financial year 1 January to 31 December 2023 in accordance
with 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.
What we have audited
The Consolidated Financial Statements of P/F Bakkafrost for
the financial year 1 January to 31 December 2023, pages 214-
272 and 292, comprise the consolidated income statement,
the consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated statement of
changes in equity, the consolidated cash flow statement, and
the notes to the consolidated financial statements, including
material accounting policy information.
The Parent Company Financial Statements of P/F Bakkafrost
for the financial year 1 January to 31 December 2023,
pages 273-287, comprise the income statement, the balance
sheet, the cash flow statement, the statement of changes in
equity, and the notes, including material accounting policy
information.
Collectively referred to as the ‘Financial Statements’.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (ISAs) and additional requirements
applicable in the Faroe Islands. Our responsibilities under
those standards and requirements are further described in
the Auditor’s Responsibilities for the audit of the Consolidated
financial 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 Accountants’
International Code of Ethics for Professional Accountants
(IESBA Code) and the additional ethical requirements
applicable in the Faroe Islands. We have also fulfilled our
other ethical responsibilities in accordance with these
requirements and the IESBA Code.
To the best of our knowledge and belief, prohibited non-
audit 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
sufficient 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 annually by shareholders on AGMs for an annual
engagement 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
Financial Statements for the current period. These matters
were addressed in the context of our audit of the Financial
Statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
293
INTEGRATED ANNUAL REPORT 2023 STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT
Key Audit matter Our response to the matter during our audit
Biomass at cost Summary of the audit approach
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.
• 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 Summary of the audit approach
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.
• 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 During our audit, we:
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.
• 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
Management’s responsibilities for
the Financial Statements
Management is responsible for the preparation of
consolidated financial statements that give a true and fair
view in accordance with IFRS Accounting Standards as
adopted by the EU and further requirements in the Faroese
Financial Statements Act and for the preparation of parent
company financial statements that give a true and fair view
in accordance with the Faroese Financial Statements Act,
and for such internal control as Management determines is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error.
In preparing the Financial Statements, Management is
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless Management either
intends to liquidate the Group or the Parent Company or to
cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit
of the Financial Statements
Our objectives are to obtain reasonable assurance about
whether the Financial Statements as a whole, are free from
material misstatement, whether due to fraud or error, and to
issue 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 Financial Statements.
294
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT INTEGRATED ANNUAL REPORT 2023
As part of an audit in accordance with ISAs and the additional
requirements applicable in the Faroe Islands, we exercise
professional judgment and maintain professional 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, design
and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate
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, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s
internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
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
significant 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
statements 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 whether
the consolidated financial statements and parent company
financial statements represent the underlying transactions
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 statements. We are responsible for the direction,
supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing 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
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably 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 Financial Statements of the
current 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.
Statement on the management’s review
Management is responsible for the management’s review.
Our opinion on the 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 Financial Statements,
our responsibility is to read the management’s review and,
in doing so, consider whether the management’s review is
materially inconsistent with the Financial Statements or our
knowledge obtained during the audit, or whether it otherwise
appears to be materially misstated.
Further, it is our responsibility to consider whether the
management’s review provides the information required by
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 Financial
Statements and that it has been prepared in accordance with
the requirements in the Faroe Islands financial statements act.
We did not identify any material misstatement in the
management’s review.
Report on compliance with the ESEF Regulation
As part of our audit of the Financial Statements, we
performed procedures to express an opinion on whether
the Consolidated Financial Statements of P/F Bakkafrost
for the financial year 1 January to 31 December 2023 with
the filename [bakkafrost-2023-12-31-zip] is prepared, in
all material respects, in compliance with the Commission
Delegated Regulation (EU) 2019/815 on the European
Single Electronic Format (ESEF Regulation) which includes
requirements related to the preparation of the annual report
in XHTML format and iXBRL tagging of the Consolidated
Financial Statements including notes.
Management is responsible for preparing a consolidated
financial 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
anchoring thereof to elements in the taxonomy, for all
financial information required to be tagged using judgement
where necessary.
• Ensuring consistency between iXBRL tagged data and the
Consolidated Financial Statements presented in human-
readable format; and
295
INTEGRATED ANNUAL REPORT 2023 STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT
• For such internal control as Management determines
necessary to enable the preparation of a consolidated
financial 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 report
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, whether
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 tagging
process and of internal control over the tagging process.
• 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
Consolidated Financial Statements.
In our opinion, the Consolidated Financial Report of P/F
Bakkafrost for the financial year 1 January to 31 December
2023 with the file name [2138007LH7OP4V112978-
2023-12-31-en.zip] is prepared, in all material respects, in
compliance with the ESEF Regulation.
Tórshavn, 27. March 2024
Januar P/F
løggilt grannskoðanarvirki
State Authorised Public Accountants
Company reg.no. 5821
Fróði Sivertsen John Michal Petersen
State Authorised Public Accountant State Authorised Public Accountant
296
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT INTEGRATED ANNUAL REPORT 2023
Independent Limited
Assurance Report on
Selected ESG Data
in the Sustainability
Statements
To The Stakeholders Of P/F Bakkafrost
P/F Bakkafrost has engaged us to provide limited assurance
on selected ESG data as described below for the period 1
January - 31 December 2023 as stated on pages 175-189
(the “Selected ESG Data”).
Our conclusion
Based on the procedures we have performed and the
evidence we have obtained, nothing came to our attention
that causes us not to believe, that the Selected ESG data for
the period 1 January – 31 December 2023 for Bakkafrost
are prepared, in all material respects, in accordance with
the applied accounting policies developed by Bakkafrost as
stated on pages 190-191 (the “Accounting policies”).
Our conclusion is to be read in the context of what we state
in the remainder of our report.
What we are assuring
The scope of our work was limited to assurance over the
Selected ESG Data as defined in the first paragraph of our
report.
We express limited assurance in our conclusion.
Professional standards applied and level of assurance
We performed a limited assurance engagement in accordance
with international standard on assurance engagements 3000
(revised) “Assurance Engagements Other than Audits and
Reviews of Historical Financial Information” and in respect
of the greenhouse gas emissions, in accordance with the
International Standard on Assurance Engagements 3410
“Assurance engagements on greenhouse gas statements”.
The quantification of greenhouse gas emissions is subject
to inherent uncertainty because of incomplete scientific
knowledge used to determine the emissions factors and the
values needed to combine emissions of different gasses.
A limited assurance engagement is substantially less in scope
than a reasonable assurance engagement in relation to both
the risk assessment procedures, including an understanding
of internal control, and the procedures performed in response
to the assessed risks, consequently, the level of assurance
obtained in a limited assurance engagement is substantially
lower than the assurance that would have been obtained had
a reasonable assurance engagement been performed.
Our independence and quality control
We have complied with the independence requirements
and other ethical requirements in the International Ethics
Standards Board for Accountants’ International Code of
Ethics for Professional Accountants (IESBA Code), which is
founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and
professional behavior and ethical requirements applicable in
Faroe Islands.
P/F Januar applies International Standard on Quality
Management 1, ISQM 1, which requires the firm to design,
implement and operate a system of quality management
including policies or procedures regarding compliance with
ethical requirements, professional standards, and applicable
legal and regulatory requirements.
Our work was carried out by an independent team with
experience in sustainability reporting and assurance.
Understanding reporting and measurement methodologies
The Selected ESG Data needs to be read and understood
together with the accounting policies.
The accounting policies used for the preparation of the
Selected ESG Data are the applied accounting policies
developed by Bakkafrost which Management is solely
responsible for selecting and applying.
297
INTEGRATED ANNUAL REPORT 2023 STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT
The absence of a significant body of established practice on
which to draw to evaluate and measure ESG Data allows for
different, but acceptable, measurement techniques and can
affect comparability between entities and over time.
Work performed
We are required to plan and perform our work in order to
consider the risk of material misstatement of the Selected ESG
Data. In doing so, and based on our professional judgement,
we:
• Evaluated the appropriateness of the accounting policies
used, their consistent application and related disclosures
• Made inquiries and conducted interviews with Group
functions with responsibility for management and
reporting of the Selected ESG Data to assess reporting and
consolidation processes, use of company-wide systems,
and controls performed
• Checked the Selected ESG Data on a sample basis to underlying
documentation and evaluated the appropriateness of the
quantification methods and compliance with the accounting
policies for preparing the Selected ESG Data
• Performed analytical review and trend explanation of the
Selected ESG Data
• Considered the disclosure and presentation of the Selected
ESG Data
• Evaluated the obtained evidence.
Management responsibilities
Management of P/F Bakkafrost is responsible for:
• Designing, implementing and maintaining internal control
over information relevant to the preparation of the Selected
ESG Data are free from material misstatement, whether due
to fraud of error;
• Establishing objective accounting principles for preparing
the Selected ESG Data;
• Measuring and reporting the information in the Selected
ESG Data based on the accounting principles; and
• The content of the Selected ESG Data for the period January
1 – December 31 2023.
Our Responsibility
We are responsible for:
• Planning and performing the engagement to obtain limited
assurance about whether the Selected ESG Data for the
period 1 January – 31 December 2023 are prepared, in
all material respects, in accordance with the accounting
principles;
• Forming an independent conclusion, based on the
procedures we have performed and the evidence we have
obtained, and
• Reporting our conclusion to the stakeholders of P/F
Bakkafrost
Tórshavn, 27. March 2024
Januar P/F
Løggilt grannskoðanarvirki
State Authorised Public Accountants
Company reg.no. 5821
Fróði Sivertsen John Michal Petersen
State Authorised Public Accountant State Authorised Public Accountant
298
STATEMENT BY THE MANAGEMENT AND THE BOARD OF DIRECTORS ON THE ANNUAL REPORT INTEGRATED ANNUAL REPORT 2023
Bakkafrost P/F
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Bakkavegur 9
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PO Box 221
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FO-625 Glyvrar
Tel +298 40 50 00
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Fax +298 40 50 09
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bakkafrost@bakkafrost.com
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www.bakkafrost.com