Mowi ASA is a Norwegian company headquartered at Sandviksboder 77A/B, 5035 Bergen. Mowi ASA is a publicly listed company on the Oslo Stock Exchange, with the ticker symbol MOWI.
The Group\u2019s operations are described in Note 4. Mowi has operations in 26 countries and has structured its operations in three Business Areas: Feed, Farming and Sales & Marketing. The Feed factories are located in Norway and Scotland. The Group\u2019s farming activities are located in Norway, Scotland, Canada, Chile, Ireland,
Iceland and the Faroe Islands. Sales & Marketing comprises the global sales organisation, in addition to the value-added operations in Consumer Products.
Comparable information for one year is presented in this year's Annual Report.
The significant accounting policies applied in the preparation of these consolidated financial statements are described below. These policies have been consistently applied to all periods presented.
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
As of December\u00a031, 2022, the consolidated financial statements of Mowi ASA and its subsidiaries (\u2018\u2018the Group\u2019\u2019 or \u2018\u2018Mowi\u2019\u2019) have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU. In compliance with the Norwegian Accounting Act, additional disclosures are included in the notes to the financial statements of Mowi ASA.
Any new standards and amendments adopted by the Group in 2022 are described in Note 33. At the end of 2022, new standards and changes to existing standards and interpretations have been enacted but are not yet effective. Any relevant effects for Mowi are further described in Note 33.
The consolidated financial statements have been prepared on the historical cost basis, except when IFRS requires recognition at fair value. This relates to the measurement of certain financial instruments and valuation of the biomass as further described below. The reporting period follows the calendar year.
CONSOLIDATION
Consolidated financial statements present the Group\u2019s financial position, comprehensive income, changes in equity and cash flow. All intragroup transactions, receivables and liabilities are eliminated.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.
Subsidiaries
The Group\u2019s consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at December\u00a031, 2022. Control is achieved when the Group is exposed, or is entitled, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights in an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
INVESTMENT IN ASSOCIATED COMPANIES AND JOINT VENTURES
Associated companies are companies in which the Group has a significant non-controlling interest (normally ownership of 20-50%). Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not to exercise control or joint control over those policies.
A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights with respect to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group's investments in its associated companies and joint ventures are accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of the associate or joint venture's net assets since the acquisition date. The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring their accounting policies in line with those of the Group.
The statement of comprehensive income reflects the Group's share of the results deriving from the associate or joint venture's operations.
FOREIGN CURRENCY TRANSLATION
The financial statements for the Group are presented in EUR, which is the functional currency of the parent company. The functional currency of the subsidiaries is their local currency, with the exception of the holding companies in Norway in addition to Mowi ASA, Mowi Markets Norway AS, Mowi Feed AS, and Waynor Trading AS which have EUR as their functional currency, subsidiaries in Chile, Singapore, and Vietnam which use USD as their functional currency, and subsidiaries in Iceland which have NOK as their functional currency.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other comprehensive income. When a foreign operation is sold the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
Translation of transactions in foreign subsidiaries
Profit or loss transactions in foreign subsidiaries are translated to the presentation currency using the average exchange rate for the reporting month, unless exchange rates in the period have fluctuated significantly, in which case the exchange rates in effect on the transaction dates are applied. Assets and liabilities of foreign subsidiaries are translated at the exchange rate at the end of the reporting period.
Transactions in foreign currencies
Foreign currency transactions are translated using the exchange rate at the time of the transaction. Receivables, debt and other monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation differences are recognised in profit or loss. Other assets in foreign currencies are translated at the exchange rate in effect on the transaction date.
FINANCIAL INSTRUMENTS - INITIAL AND SUBSEQUENT MEASUREMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
The Group\u00b4s financial assets are: derivatives, non-listed equity instruments, trade receivables and cash and cash equivalents.
The classification of financial assets at initial recognition depends on the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
The Group classified its financial assets within 2 categories; financial assets at amortised cost and financial asset at fair value through profit and loss. The Group does not apply hedge accounting.
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows and,
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment testing. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost includes trade receivables and other short-term deposit. Trade receivables are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers. No significant financing components are identified.
Derivatives at fair value through profit and loss
Financial assets at fair value through profit and loss include financial assets held for trading, financial assets designated through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near terms. Derivatives, including embedded derivatives, are also classified as held for trading.
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value in profit and loss.
The category includes derivatives instruments such as foreign exchange contracts, interest rate swaps and salmon derivatives. The Group trades in salmon derivatives, both as an operational hedging activity and a financial activity. Operational trading of salmon derivatives is presented as other operating income, while financial trading of salmon derivatives is presented as other financial items.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group\u2019s consolidated statement of financial position) when:
\u2013The rights to receive cash flows from the asset have expired, or
\u2013The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either.
a.the Group has transferred substantially all the risks and rewards of the asset, or
b.the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as financial liabilities at fair value through profit and loss (derivatives), as appropriate. Financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivatives as assets.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of comprehensive income.
Payables are measured at their nominal amount when the effect of discounting is not material.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
REVENUE
Revenue from contracts with customers as defined in IFRS 15 is recognised when control of the goods are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. The Group has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods before transferring them to the customer.
Sale of fish products
Revenue for the Group derives mainly from the sale of fish and elaborated fish products either on spot sales or from contracts. The Group recognises revenue from the sale of fish and elaborated fish products at the point in time when control of the goods is transferred to the customer. Control of an asset refers to the ability to direct the use of and obtain substantially all of the remaining benefits from the asset, and the ability to prevent others from directing the use of and receiving the benefits from the asset. Revenue is generally recognised on delivery of the goods (i.e. a certain point in time). Based on group business of sale of fish and elaborated fish products the customers do not pay any advances. The normal credit term is 30 days upon delivery, and based on the nature of the product there is generally no right of return or warranties. Refund is only given if delivered goods is damaged or delivered with discrepancy compared to agreement, such is immaterial.
The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated, currently no multiple performance obligations have been identified. In determining the transaction price for the sale of goods, the Group considers the effects of variable consideration, the existence of
significant financing components and consideration payable to the customer (if any). At the balance sheet date the group has no outstanding performance obligations in contracts that have original duration of more than 1 year. Therefore no additional disclosures is provided on performance obligations.
Variable consideration
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Contracts for the sale of goods may provide customers with retrospective volume rebates. The retrospective volume rebates give rise to variable consideration.
The Group provides retrospective volume rebates to certain customers once the quantity of products purchased during the period exceeds a threshold specified in the contracts. Rebates are presented as reduction of revenue in the statement of comprehensive income, and other current liabilities in the statement of financial position. To estimate expected rebates, the Group applies the expected value method at the end of each reporting period. The amount of unsettled rebates in the statement of financial position per year-end is immaterial.
Balances related to revenue
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A trade receivable represents the Group\u2019s right to an amount of consideration that is unconditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Group fulfils the performance obligation(s) under the contract.
Refer to notes 17 and 18, contract assets and liabilities are immaterial.
The Group has elected to apply the optional practical expedient for costs to obtain a contract which allows the Group to immediately expense such costs when the related revenue is expected to be recognised within one year, as such no assets have been presented in the statement of financial position.
Biomass
Changes in the estimated fair value of the biomass are recognised in profit or loss. The fair value adjustment is presented in the statement of comprehensive income as \u201cNet fair value adjustment biomass\u201d. The net fair value adjustment consists of \u201cfair value adjustment on biological assets\u201d, \u201cfair value adjustment on harvested fish\u201d and \u201cfair value on incident based mortality\u201d, see Note 6. The fair value adjustment on biological assets represents the change in fair value of the biomass less the change in accumulated cost of production for the biomass. The fair value adjustment on harvested fish is the release from stock of the fair value adjustment related to the fish harvested in the period. The fair value adjustment on incident based mortality is the release from stock of the fair value adjustment related to the fish recognised as incident based mortality in the period. The accumulated cost of incident based mortality is included in \u201ccost of materials\u201d in the statement of comprehensive income.
Interest income
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other financial items in the statement of comprehensive income.
Dividends
Revenue is recognised when the Group\u2019s right to receive the payment is established, which is generally when the dividend is approved by the investment's general meeting.
GOVERNMENT GRANTS
Government grants are recognised where there is reasonable assurance that the grant will be received and where the Company will be in compliance with all conditions attached thereto. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs that it is intended to compensate are expensed. When the grant relates to an asset, it is deducted from the carrying amount of the asset. The grant is then recognised in profit or loss over the useful life of a depreciable asset by way of a reduced depreciation charge.
GOODWILL AND LICENSES
Goodwill
Goodwill is initially measured at cost, and is the excess of the aggregate of the consideration transferred and the amount recognised for a non-controlling interest in the net identifiable assets acquired and liabilities assumed through a business combination.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (CGU) that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in such circumstance is measured on the basis of the relative values of the disposed operation and the portion of the cash-generating unit retained. Goodwill is tested for impairment annually as at December 31, and when circumstances otherwise indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Other intangible assets (licenses)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. The value of licenses acquired by Mowi (mainly licenses for salmon farming) in Norway, Chile, Ireland, the Faroe Islands, Scotland, Canada, and Iceland are considered indefinite. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually or when circumstances otherwise indicate that the carrying value may be impaired, either individually or at the cash-generating unit level. The indefinite life classification is reviewed annually to determine whether it continues to be appropriate. If not, the change in useful life from indefinite to finite is made on a prospective basis.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are measured at acquisition cost less accumulated depreciation and any impairment. Costs associated with normal maintenance and repairs are expensed as incurred. Costs of major replacements and renewals that substantially extend the economic life and functionality of the asset are capitalised. Assets are normally considered property, plant and equipment if the useful economic life exceeds one year. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Straight-line depreciation is applied over the useful life of property, plant and equipment, based on the asset\u2019s historical cost and estimated residual value at disposal. If a substantial part of an asset has an individual and different useful life, this part is depreciated separately. The asset\u2019s residual value and useful life are evaluated annually. The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset.
At the end of the reporting period, the carrying amounts of the Group\u2019s assets are reviewed to determine whether there are
indications that specific assets have suffered an impairment loss. If such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of net present value of discounted cash flows (value in use). If estimated recoverable amount is lower than book value impairment is recognised.
IMPAIRMENT OF NON-CURRENT ASSETS
Annually or upon indication, each cash generating unit, CGU, is tested for impairment. If the recoverable amount of a cash-generating unit is estimated to be less than the carrying amount of the net assets of the cash-generating unit, impairment to the recoverable amount is recognised. If impairment is required, goodwill is written down first, thereafter other intangible assets. If further impairment is required, other assets will be written down on a pro-rata basis.
Impairment losses recognised in previous periods are reversed if the recoverable amount in a later period exceeds the carrying amount. The reversal will not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
LEASING
The determination of whether a contract is, or contains, a lease is assessed at the inception of the lease and is based on whether the contract coveys a right to control the use of an identified asset or assets for a period of time in exchange for consideration. For contracts where the Group is the lessee, right-of-use assets and lease liabilities are recognised at the commencement of the lease.
Right-of-use assets are measured at cost, less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the asset. When a purchase option has been included in the cost at recognition, the right-of-use asset is depreciated over the estimated useful life of the asset.
The lease liabilities at commencement date is measured at the present value of the lease payments. The lease payments are discounted using the Group's incremental borrowing rate as the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate for each business unit is based on SOFR with an addition of a country specific margin.
\u00a0
Short term leases (lease term less than 12 months) and leases of low-value assets are not recognised as right-of-use assets and lease liabilities, as the recognition exemptions for these leases is applied. Lease payments of such leases are recognized as expense over the lease term.
For leasing contracts with optional renewal period, and where we are reasonably certain to exercise this option, the renewal periods are included in the calculation of the lease liability and asset.
The Group has lease contracts for various assets used in its operation, the main asset group being transportation. Lease terms and other conditions vary. Refer to note 29 for further information.
INVENTORY
Inventories mainly comprise feed, goods in progress, packaging materials and finished goods. Inventories of goods are measured at the lower of cost and net realisable value.\u00a0\u00a0\u00a0\u00a0
The cost of finished goods includes direct material costs, direct personnel expenses and indirect processing costs (full production cost). Interest costs are not included in the inventory value. The cost price of purchased goods is the actual purchase price. The cost is based on the principle of first-in first-out, except for feed and value-added-products, where a weighted average is used.
If fish farmed by the Group is included in inventory as a raw material for further processing in one of the Group's processing entities, such fish is included in inventory at fair value less cost to sell at harvest.
BIOLOGICAL ASSETS
Fair value of biological assets is calculated based on a present value model which does not rely on historical cost. Fish ready for harvest (mature fish), are valued at expected sales price with a deduction of cost related to harvest, transport etc. For fish not ready for harvest (immature fish), cost to completion is also deducted. The model uses an interpolation methodology where the known data points are the value of the fish when put to sea and when recognised as mature fish. Technically, the interpolation is calculated per location. The effect of this is that fish that have the same weight and quality are valued similarly. The interpolation model has a natural interpretation in the form of a present value calculation where an imputed rent of assets (i.e. theoretical license rent) per location is included as part of the rate of return. Thus, the value is to a lesser degree affected by the site because low production cost at a high quality site is offset by a higher imputed rent and vice versa. All surplus return in the future is assigned to the licenses through a similarly high imputed rent of assets, and where any shortage in return is recognised in profit and loss immediately. The interpolation model is updated every month, with best estimates for time of harvest, remaining months at sea, expected price at time of harvest and estimated residual cost to grow the fish to harvest weight. The methodology has the effect that any changes in price will have full effect on the biomass at hand, while the price effect on increased weight going forward will be allocated to the license and recognised over time as remaining time at sea decreases. An effect of this is that even with high salmon prices there is no profit at the time the fish is put to sea because all surplus return is assigned to future periods (licenses). Correspondingly the fair value of small fish is rather insensitive to price fluctuations.
An interpolation model as described works best if important variables such as pace of growth, mortality and feed conversion ratios are constant per unit of time or weight increase. Experience shows that in particular there is a deviation from an even
development during the first period in sea relating to increased value due, among other things to reduced risk after handling of the fish, vaccination and mortality related to the transfer to sea. This has been adjusted for.
Biological assets comprise eggs, juveniles, smolt and fish in the sea. Biological assets are, in accordance with IAS 41 and IFRS 13, measured at fair value less cost to sell. In line with IFRS 13, the highest and best use of the biological assets is applied for the valuation. In accordance with the principle for highest and best use, the fish is considered to have optimal harvest weight at 4 kg gutted. This corresponds to that a live weight of approximately 4.8 kg (there may be regional variances) or more are classified as mature fish, while fish that have still not achieved this weight are classified as immature fish. All fish at sea are subject to a fair value calculation, while broodstock and smolt are measured at cost less impairment losses. Cost is deemed a reasonable approximation for fair value for broodstock and smolt. Historically the market prices for eggs (broodstock are not traded) and smolt have not departed significantly from own production cost.\u00a0
Transactions with live fish rarely take place, partly due to regulatory constraints, so the valuation of live fish under IAS 41 implies the establishment of an estimated fair value of the fish in a hypothetical market. The calculation of the estimated fair value is based on market prices for harvested fish and adjusted for estimated differences in accordance with IFRS 13. The prices are reduced for harvesting costs and freight costs to market, to arrive at a net value back to farm. The valuation reflects the expected quality grading and size distribution. The valuation is completed for each Business Unit and is based on the biomass in sea for each seawater site and the estimated market price in each market derived from the development in recent contracts as well as spot prices. Where reliable forward prices are available, those have been used. The change in estimated fair value is recognised in profit or loss based on measurement as of each period, and is classified separately. At harvest, the fair value adjustment is classified as fair value adjustment on harvested fish. In cases of incident based mortality, the fair value adjustment is classified as fair value adjustment on incident based mortality when occurring. Both are included in net fair value adjustment of biological assets in the statement of comprehensive income.
ONEROUS CONTRACTS
At each reporting date, management assesses if there are contracts in which the unavoidable costs of meeting the Group's obligations under the contract exceed the economic benefits expected to be received in accordance with IAS 37. Fair value adjustment of biological assets is included in the unavoidable cost. This implies that the contract may be considered onerous even though the actual production cost of the products sold is lower than the contract price. Volumes used in the calculation is based on estimated remaining volumes for the contracts. Onerous contracts are classified as provisions in the statement of financial position.
TAXES
Income taxes comprise taxes on the taxable profit for the year, changes in deferred taxes and any adjustments in prior years' taxes. Taxes on transactions that are recorded in other comprehensive income or directly in equity do not form part of the tax expense in profit or loss.
Tax payable is calculated using the nominal tax rate for the relevant tax jurisdiction at the end of the reporting period.
Deferred tax is calculated on the basis of temporary differences between accounting and taxation values at the close of the accounting year. Deferred tax assets arise from temporary differences that give rise to future tax deductions. Deferred tax assets are recognised to the extent that it is probable that a taxable profit will arise, against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised.
Tax increasing and tax decreasing temporary differences are offset against each other to the extent that the taxes can be netted within one tax regime.
PROVISIONS
A provision is recognised if the Company has a legal or constructive obligation related to a past event, and it is likely that the obligation will lead to a financial outflow for the Company. Long-term provisions are valued on the basis of discounted expected cash flows.
RESTRUCTURING COSTS
Provisions for restructuring costs will be recognised if the Company has, within the reporting period, published or initiated a restructuring plan, which identifies which parts of the Company and approximately how many employees will be affected, the actions that will be taken and when the plan will be implemented. Provisions are recognised only for costs that cannot be associated with future earnings. Costs related to restructuring are presented on a separate line in the statement of comprehensive income.
SHARE OPTION SCHEMES
The Group has share option schemes from 2019, 2020, 2021, and 2022 which will be settled in shares (equity settlement). The cost of equity-settled transactions is recognised as a payroll expense over the vesting period. The cumulative expense is recognised in other equity reserves within equity.
CASH FLOW STATEMENT AND CASH
ESTIMATES
The preparation of financial statements in accordance with IFRS requires management to make accounting estimates and judgments that affect the recognised amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on past experience and information perceived to be relevant and probable when the judgments are made. Estimates are reviewed on an on-going basis and actual values and results may deviate from these estimates. Adjustments to accounting estimates are recognised in the period in which the estimates are revised.
Mowi is exposed to a number of underlying economic factors which affect the overall results, such as salmon prices, foreign exchange rates and interest rates, as well as financial instruments with fair values derived from changes in these factors.
The matters described below are considered to be the most important in understanding the key sources of estimation uncertainty that are involved in preparing these consolidated financial statements and the uncertainties that could most significantly impact the amounts reported on the result of operations, financial position and cash flows.
INTANGIBLE ASSETS - GOODWILL AND FARMING LICENSES
The annual impairment test on intangible assets is based on a discounted cash flow model per cash-generating unit (CGU). The cash flows used in the calculations represent management\u2019s best estimate at the time of reporting. The assumptions used rest on uncertainty with regard to product prices, input prices, biological performance and future regulatory frameworks. Costs can normally be estimated with a higher degree of accuracy than income.
As profitability in the salmon farming industry historically has been very volatile, depending on developments in the price of salmon, Mowi uses budgets and long-term plans for the analysis.
The WACC model is used for estimating the discount rate. The input data for the model is updated every 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 WACC is calculated separately for the different CGUs. Indications of impairment that initiate testing beyond the year-end test include a significant reduction in the profitability of the CGU compared to previous periods, negative deviations from budgets, changes in the use of assets, market changes and regulatory changes.
For further information about uncertainty in the valuation of intangible assets and impairment testing, please see Note 8,
Impairment testing. Note 9, Intangible assets, illustrates the specification of intangible assets in the Group.
BIOLOGICAL ASSETS
Biological assets comprise eggs, juveniles, smolt and fish in the sea. These assets are measured at fair value less cost to sell, unless the fair value cannot be measured reliably. The estimation of the fair value relies on a series of uncertain assumptions, e.g., biomass volume, biomass quality, size distribution, market prices, expected future costs, remaining time to harvest and total time to harvest.
Mowi measures all deviations in biomass volume compared to estimates when a site is harvested out. Except for situations where there has been an incident causing mass mortality, particularly early in the cycle, combined with an inability to count and weigh fish after the event in fear of further stressing the fish, volume deviations are normally minor. Similarly, excluding the effects of soft flesh and melanin, the quality of the fish can normally be estimated with a relatively high degree of accuracy. Categorisation of quality is normally set per country based on averages, but can be set individually per site when needed. The size distribution shows some degree of variation but normally not to an extent that significantly changes the estimated value of the biomass (the value of two fish at five kg is very similar to the value of two fish weighing four and six kg, respectively).
The accumulated cost of the fish per kg will only deviate from the estimate if the volume is different from the estimate. For the estimation of future costs, there is uncertainty with regard to feed prices, other input costs and biological development. Mowi measures cost deviations vs. budget as part of the follow up of Business Units. Excluding special situations (incidents etc.), the deviations in costs vs budgets are normally limited for a group of sites, although individual sites might show deviations. The estimation of costs influences the biomass value through the recognised fair value adjustment in the statements of comprehensive income and financial position (calculated as fair value less accumulated biological costs).
The key element in the estimation of fair value is the assumed market price. The assumed market price is the price that we expect to receive on the future date when the live fish is harvested. We derive these prices from a variety of sources, normally a combination of the prices achieved in the previous month and the contracts most recently entered into. For salmon of Norwegian, Scottish and Faroese origin, quoted forward prices (Nasdaq) are used in the estimation, see Note 2. The use of third-party forward prices improves the reliability and comparability of the price estimation.
For further information about biological asset values please see Note 6, Biological assets.
JUDGMENTS
The matters described below are considered to be the most important in understanding the key sources of judgments that are involved in preparing these consolidated financial statements and the uncertainties that could most significantly impact the amounts reported on the result of operations, financial position and cash flows.
LICENSES
The Group has assessed that all fish farming licenses have indefinite lives and, as such, are not amortised. Most of the jurisdictions in which the Group operates require us to obtain a license for each fish farm owned and operated in that jurisdiction. The Group has obtained and currently holds a license to own and operate each of our fish farms where a license is required. These licenses have indefinite lives or require renewal after a specific time period, but normally with automatic renewal and, as such, we have assessed that they have indefinite lives. However, the Group\u2019s licenses in each country are subject to certain requirements, and we risk penalties (including, in some cases, criminal charges), sanctions or even license revocation if we fail to comply with license requirements or related regulations. Also, local government may change the way licenses are renewed.
SUPPLY CHAIN FINANCING
Two companies in the Group hold Supply Chain Finance (SCF) agreements meaning that some vendors will indirectly offer extended credit terms to the company through a separate agreement with a financial institution. The vendors sell their trade receivables to the financial institution in order to receive payment immediately. Payment terms under the SCF agreement are in line with industry practice. The transaction is still between the company and its suppliers, and the company does not waive the right to claim any refund on quality issues, return goods etc. towards the supplier.
The refinancing by vendors has no cash-flow impact on the company, and only when the trade payable is settled with the bank will the cash flow statement be impacted, with a operating cash flow charge. The group's assessment is that the liabilities under these SCF agreements are presented as trade payables.
NOTE 3B - ENVIRONMENTAL RISK
Climate change represents both risks and opportunities for Mowi. We recognise the growing significance of climate change on our business and the increasing role of producing food from the ocean as a solution to climate change.
Mowi has developed a sustainability strategy, the Leading the Blue Revolution Plan. It sets ambitious goals to ensure our salmon is raised in the ocean in harmony with nature and local coastal communities, using an eco-efficient value chain while offering solutions to global challenges such as climate change and plastic pollution.
The risk of climate change on Mowi's financial position can be classified into two types of risks; transition risk and physical risk. Transition risks refer to the changes in technological advancements within clean energy, shifts in consumer behaviour and
For management purposes, Mowi is organised into three Business Areas: Feed, Farming and Sales & Marketing.
Business segments are components of a business that are regularly reviewed by its chief operating decision-makers for the purpose of assessing performance and allocating resources. The term business segments corresponds to operating segments as defined in IFRS 8. The Group Management Team is the Group\u2019s chief operating decision-maker (\"CODM\").
In Mowi the Feed Business Area consist of the feed factories in Norway and Scotland. Feed is considered to be a separate business segment due to the nature of the business (different economic characteristics (e.g similar long term average gross margin) compared to other business segments in the Group and separate management follow up).
The Farming Business Area consists of the farming and primary processing operations in Norway, Scotland, Canada, Chile, Ireland, the Faroe Islands and Iceland which are reported separately to CODM. The Farming operations are, due to similar production processes, a global market for both salmon feed and sales of salmon, in addition to similar biological risk factors, considered to have similar economic characteristics (e.g similar long term average gross margin). The farming units are therefore aggregated into one business segment.
The Sales & Marketing Business Area consists of the Markets operations in the Americas and Europe, as well as Consumer Products. As the Markets operations are considered to have similar economic characteristics (e.g similar long term average gross margin), due to similar production processes and operational risk factors, and a common set of key performance indicators, they are presented as one reporting segment. Consumer Products, which comprises the value-added operations in Europe, Asia and America, is presented as a single separate reporting segment due to similar production processes, operational risk factors and a common set of key performance indicators (e.g similar long term average gross margin).
The business segments' performance is monitored in order to achieve the overall objective of maximising the operational EBIT
per kg and margins. Consequently, reporting focuses on measuring and illustrating the overall profitability of the harvested volume, based on source of origin (operational EBIT per kg) and operational EBIT margin for the business segments Markets and Consumer Products. Legal entities with activities in both Farming and Sales & Marketing do not split their financial items or their statement of financial position. The net effects of Gross investments (CAPEX) in these entities are recognised in the business segment Farming.
The pricing principle between Feed and Farming is set at market terms and benchmarked against third parties. The pricing principle between Farming and Sales & Marketing is based on market reference prices for spot sales, while contracts are at market terms, with the target for Sales & Marketing to maximise profit beyond these terms.
The same accounting principles as described for the consolidated financial statements have been applied to the business segment reporting. Inter-segment transfers or transactions are entered into under normal commercial terms and conditions, and the measurements used in the business segment reporting are the same as those used for the third-party transactions.
In the business segment reporting internal profit related to unrealised gains from intra-group transactions are included in Operational EBIT for the relevant business segments, but eliminated in EBIT.
Operational EBIT and Operational EBITDA are non-IFRS financial measures. Operational EBIT is calculated by excluding certain items, according to the reconciliation below, from earnings before financial items and taxes (EBIT). Operational EBITDA is calculated by adding depreciation and amortisation to Operational EBIT, however Operational EBITDA excludes the effects of IFRS 16. For further explanations, see section Analytical information in this report.
The sustainability reporting follows the same reporting structure as the financial reporting structure described above.
KEY BUSINESS SEGMENT FIGURES (EUR MILLION) | |||||||
2022 | FEED | FARMING | MARKETS | CONSUMER PRODUCTS | OTHER 1) | ELIMINATIONS | TOTAL |
External revenue | 8.3 | 48.7 | 1\u00a0733.5 | 3\u00a0155.6 | \u2014 | \u2014 | 4\u00a0946.0 |
Internal revenue | 977.9 | 3\u00a0256.8 | 1\u00a0992.1 | 9.9 | 21.2 | -6\u00a0257.8 | \u2014 |
Operational revenue | 986.2 | 3\u00a0305.5 | 3\u00a0725.6 | 3\u00a0165.5 | 21.2 | -6\u00a0257.8 | 4\u00a0946.0 |
Derivatives and other items | \u2014 | -0.8 | -2.1 | 0.2 | \u2014 | -2.5 | -5.3 |
Revenue and other income | 986.2 | 3\u00a0304.8 | 3\u00a0723.5 | 3\u00a0165.7 | 21.2 | -6\u00a0260.4 | 4\u00a0940.8 |
Operational EBITDA | 47.0 | 946.7 | 61.5 | 139.4 | -15.2 | \u2014 | 1\u00a0179.4 |
Operational EBIT | 30.8 | 817.2 | 61.1 | 112.1 | -16.1 | \u2014 | 1\u00a0005.1 |
Change in unrealised internal margin | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | -10.4 | -10.4 |
Gain/loss from derivatives | \u2014 | 2.3 | -2.8 | -1.6 | -2.6 | \u2014 | -4.7 |
Net fair value adjustment biomass | \u2014 | 113.7 | \u2014 | \u2014 | \u2014 | \u2014 | 113.7 |
Onerous contract provisions | \u2014 | -8.3 | \u2014 | \u2014 | \u2014 | \u2014 | -8.3 |
Restructuring cost and other provisions | -11.7 | -0.3 | -1.7 | \u2014 | \u2014 | -13.7 | |
Production/license/sales taxes | \u2014 | -25.6 | \u2014 | \u2014 | \u2014 | \u2014 | -25.6 |
Other non-operational items | \u2014 | -3.2 | \u2014 | -0.1 | 1.2 | \u2014 | -2.1 |
Income from associated companies and joint ventures | \u2014 | 59.2 | \u2014 | \u2014 | \u2014 | \u2014 | 59.2 |
Impairment losses and write-downs | \u2014 | -56.0 | \u2014 | -3.5 | \u2014 | \u2014 | -59.5 |
EBIT | 30.8 | 887.6 | 58.0 | 105.3 | -17.5 | -10.4 | 1\u00a0053.8 |
Gross investments | 3.0 | 295.6 | 1.5 | 33.5 | 1.8 | \u2014 | 335.2 |
Number of FTEs 31.12 | 152 | 4\u00a0972 | 216 | 8\u00a0339 | 48 | \u2014 | 13\u00a0726 |
1) Corporate functions and holding companies are presented as \"Other\".
KEY BUSINESS SEGMENT FIGURES (EUR MILLION) | |||||||
2021 | FEED | FARMING | MARKETS | CONSUMER PRODUCTS | OTHER | ELIMINATIONS | TOTAL |
External revenue | 8.3 | 56.5 | 1\u00a0361.3 | 2\u00a0781.5 | \u2014 | \u2014 | 4\u00a0207.6 |
Internal revenue | 670.8 | 2\u00a0519.5 | 1\u00a0502.0 | 28.9 | 21.2 | -4\u00a0742.4 | \u2014 |
Operational revenue | 679.1 | 2\u00a0576.0 | 2\u00a0863.3 | 2\u00a0810.4 | 21.2 | -4\u00a0742.4 | 4\u00a0207.6 |
Derivatives and other items | \u2014 | -6.8 | -1.8 | -0.7 | \u2014 | 3.9 | -5.4 |
Revenue and other income | 679.1 | 2\u00a0569.3 | 2\u00a0861.5 | 2\u00a0809.6 | 21.2 | -4\u00a0738.5 | 4\u00a0202.2 |
Operational EBITDA | 34.5 | 494.2 | 50.8 | 122.0 | -11.2 | \u2014 | 690.3 |
Operational EBIT | 18.4 | 370.5 | 50.5 | 95.5 | -12.2 | \u2014 | 522.6 |
Change in unrealised internal margin | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | 6.6 | 6.6 |
Gain/loss from derivatives | \u2014 | -3.7 | -1.8 | 3.1 | 10.9 | \u2014 | 8.5 |
Net fair value adjustment biomass | \u2014 | 119.8 | \u2014 | \u2014 | \u2014 | \u2014 | 119.8 |
Onerous contract provisions | \u2014 | -3.2 | \u2014 | \u2014 | \u2014 | \u2014 | -3.2 |
Restructuring cost and other provisions | \u2014 | -7.9 | \u2014 | 0.3 | -15.0 | \u2014 | -22.6 |
Production/license/sales taxes | \u2014 | -21.9 | \u2014 | \u2014 | \u2014 | \u2014 | -21.9 |
Other non-operational items | -1.6 | -0.6 | \u2014 | -6.1 | -22.0 | \u2014 | -30.3 |
Income from associated companies and joint ventures | \u2014 | 44.4 | \u2014 | \u2014 | 53.1 | \u2014 | 97.5 |
Impairment losses and write-downs | \u2014 | -73.8 | -0.1 | -0.9 | \u2014 | \u2014 | -74.8 |
EBIT | 16.8 | 423.6 | 48.7 | 91.9 | 14.8 | 6.6 | 602.2 |
Gross investments 1) | 3.5 | 215.6 | 0.3 | 43.3 | 2.4 | \u2014 | 265.1 |
Number of FTEs 31.12 | 157 | 4\u00a0886 | 207 | 8\u00a0684 | 51 | \u2014 | 13\u00a0984 |
1) Gross investments includes EUR 20.5 million related to the acquisition of a farming license with 796 tonnes MAB in Norway Region North.
NON-CURRENT ASSETS BY COUNTRY LOCATION (EUR MILLION) | 2022 | 2021 |
Norway | 1\u00a0968.2 | 1\u00a0830.6 |
Poland | 128.8 | 125.8 |
Scotland | 507.0 | 544.1 |
Iceland | 408.1 | \u2014 |
Belgium | 77.5 | 77.5 |
France | 50.0 | 49.5 |
Rest of Europe | 101.8 | 100.5 |
Chile | 274.4 | 250.4 |
Canada/USA | 445.6 | 501.2 |
Asia | 9.4 | 9.6 |
Non-current assets | 3\u00a0970.8 | 3\u00a0489.2 |
Other non-current assets 1) | 71.8 | 53.1 |
Total non-current assets | 4\u00a0042.6 | 3\u00a0542.2 |
BUSINESS AREAS | Feed | Farming | Sales & Marketing | Total | |||||
(EUR million) | Note | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Geographical markets | |||||||||
Europe | 2.8 | 5.7 | 29.1 | 22.8 | 3\u00a0261.0 | 2\u00a0806.7 | 3\u00a0292.9 | 2\u00a0835.2 | |
Americas | \u2014 | \u2014 | 0.7 | 2.1 | 1\u00a0109.7 | 897.6 | 1\u00a0110.3 | 899.7 | |
Asia | \u2014 | \u2014 | \u2014 | \u2014 | 436.9 | 372.5 | 436.9 | 372.5 | |
Rest of the world | \u2014 | \u2014 | \u2014 | \u2014 | 72.4 | 63.9 | 72.4 | 63.9 | |
Revenue from contracts with customers | 2.8 | 5.7 | 29.8 | 24.9 | 4\u00a0880.0 | 4\u00a0140.7 | 4\u00a0912.6 | 4\u00a0171.3 | |
Other income | 5.5 | 2.5 | 18.9 | 31.6 | 9.1 | 2.1 | 33.4 | 36.3 | |
Operational revenue | 4 | 8.3 | 8.3 | 48.7 | 56.5 | 4\u00a0889.1 | 4\u00a0142.8 | 4\u00a0946.0 | 4\u00a0207.6 |
SOURCE OF REVENUE
The main source of revenue for the Group is sales of Atlantic salmon, including elaborated products.
\u00a0
The business area Sales & Marketing represents the majority of the Group's external revenue. The revenue distribution for Sales & Marketing according to product categories was as follows in 2022 (2021): Fresh bulk 37% (32%), smoked/marinated 19% (16%), fresh MAP 17% (20%), fresh prepared 16% (18%), frozen prepared 3% (4%), frozen bulk 1% (1%) and other 7% (9%). The revenue distribution for Sales & Marketing according to customer categories was as follows in 2022 (2021): Retail 50% (56%), Distributors 24% (25%), Industry 12% (8%), Foodservice 10% (7%) and Smoke houses 4% (4%).
VALUATION OF BIOLOGICAL ASSETS
Biological assets are, in accordance with IAS 41, measured at fair value less cost to sell. All fish at sea are subject to a fair value calculation, while broodstock and smolt are measured at cost less impairment losses. Cost is deemed a reasonable approximation for fair value for broodstock and smolt as there is little biological transformation (IAS 41.24).
Biomass measured at fair value, is categorised at Level 3 in the fair value hierarchy, as the input is mostly unobservable. In line with IFRS 13, the highest and best use of the biological assets is applied for the valuation. In accordance with the principle for highest and best use, we consider that the fish have optimal harvest weight at 4 kg gutted. This corresponds to a live weight of approximately 4.8 kg (there may be regional variances). Fish of this weight or above are classified as ready for harvest (mature fish), while fish that have still not achieved this weight are classified as not ready for harvest (immature fish). The valuations are carried out at business unit level based on a common model and basis for assumptions established at group level. All assumptions are subject to monthly quality assurance and analysis at the group level.
The valuations are based on an income approach and takes into consideration unobservable input based on biomass in the sea, the estimated growth rate and cost to completion at site level. Mortality, quality of the fish going forward and market price are considered at business unit level. A special assessment is performed for sites with high/low performance due to disease or other deviating factors. The market prices are derived from observable market prices where available.
ASSUMPTIONS USED FOR DETERMINING FAIR VALUE OF LIVE FISH
The estimated fair value of the biomass will always be based on uncertain assumptions, even though the group has built substantial expertise in assessing these factors. Estimates are applied to the following factors; biomass volume, the quality of the biomass, size distribution, cost, mortality and market prices.
Biomass volume: The biomass volume is in itself an estimate based on the number of smolt released into the sea, the estimated growth from the time of stocking, estimated mortality based on observed mortality in the period, etc. There is normally little uncertainty with regard to biomass volume.
The level of uncertainty will, however, be higher if an incident has resulted in mass mortality, especially early in the cycle, or if the fish's health status restricts handling. If the total biomass at sea was 1% lower than our estimates, this would result in an change in value of EUR -7.1 million.
The quality of the biomass: The quality of the biomass can be difficult to assess prior to harvesting, if the reason for downgrading
is related to muscle quality (e.g. the effect of Kudoa in Canada). In Norway downgraded fish is normally priced according to standard rates of deduction compared to a Superior quality fish. In our fair value model for salmon of Norwegian origin, we have used EUR 0.21 and EUR 0.61 as deductions from Superior grade for Ordinary and Production grade quality respectively. In other countries the price deductions related to quality are not as standardised. The quality of harvested fish has been good in 2022. For the Group as a whole, 91% of the fish were graded as Superior quality. A one percentage point change from Superior quality to Production grade quality would result in a change in value of EUR -3.2 million.
The size distribution: Fish in sea grow at different rates, and even in a situation with good estimates for the average weight of the fish there can be a considerable spread in the quality and weight of the fish. The size distribution affects the price achieved for the fish, as each size category of fish is priced separately in the market. When estimating the biomass value, a normal size distribution is applied.
Cost: For the estimation of future costs, there is uncertainty with regard to feed prices, other input costs and biological development. Mowi measures cost deviations vs. budget as part of the follow up of business units. Excluding special situations (incidents etc.), the deviations in costs vs budgets are normally limited for a group of sites, although individual sites might show deviations. The estimation of costs influences the biomass value through the recognised fair value adjustment in the statements of comprehensive income and financial position (calculated as fair value less accumulated biological costs).
Mortality: Normalised mortality will affect the fair value estimates both as a reduction of estimated harvesting volumes and because cost to completion includes cost incurred on fish that eventually will perish.
Market price: The market price assumption is very important for the valuation and even minor changes in the market price will result in significant changes in the valuation. The methodology used for establishing the market price is explained in Note 2. A EUR 0.1 decrease in the market price would result in a decrease in value of EUR 15.9 million.
The market price risk is reduced through fixed price/volume customer contracts and financial contracts, as well as our downstream integration as explained in Note 13.
Climate Risk : Climate risk is included in the assessment for calculating the Fair value of live fish. Due to the short time period relevant for the Fair value uplift (maximum of 2 years) climate risk has not had a material effect on the valuation of biomass in sea.
WRITE-DOWN OF BIOMASS AND INCIDENT-BASED MORTALITY
Incident-based mortality is accounted for when a site either experiences elevated mortality over time or substantial mortality due to an incident at the farm (outbreak of disease, lack of oxygen etc). The cost of incident based mortality is included in \u201ccost of
materials\u201d in the statement of comprehensive income. The fair value element is adjusted through fair value adjustment on incident based mortality, and included in net fair value adjustment in the statement of comprehensive income.
RECONCILIATION OF CHANGES IN THE CARRYING AMOUNT OF BIOLOGICAL ASSETS (EUR MILLION) | 2022 | 2021 |
Carrying amount as of 01.01 | 1\u00a0529.5 | 1\u00a0416.6 |
Cost to stock | 2\u00a0259.3 | 1\u00a0821.8 |
Net fair value adjustment | 113.7 | 119.8 |
Mortality for fish in sea | -88.7 | -96.0 |
Cost of harvested fish | -1\u00a0964.5 | -1\u00a0729.2 |
Write-downs | -18.3 | -49.8 |
Effects of business combinations | 83.3 | \u2014 |
Currency translation differences | -1.9 | 46.4 |
Total carrying amount of biological assets as of 31.12 | 1\u00a0912.5 | 1\u00a0529.5 |
FAIR VALUE ADJUSTMENT ON BIOLOGICAL ASSETS IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Mowi Norway | 305.5 | 224.3 |
Mowi Chile | 48.2 | 39.8 |
Mowi Canada | 26.9 | 14.6 |
Mowi Scotland | 52.3 | 36.6 |
Mowi Faroe Islands | 8.9 | 7.2 |
Mowi Ireland | 0.2 | 3.7 |
Arctic Fish | 15.2 | \u2014 |
Total fair value adjustment included in carrying amount in the statement of financial position | 457.2 | 326.2 |
Biomass at cost | 1\u00a0455.3 | 1\u00a0203.4 |
Total biological assets | 1\u00a0912.5 | 1\u00a0529.5 |
FAIR VALUE ADJUSTMENT ON BIOLOGICAL ASSETS IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Mowi Norway | 843.7 | 492.1 |
Mowi Chile | 120.1 | 87.2 |
Mowi Canada | 82.4 | 24.6 |
Mowi Scotland | 126.2 | 83.1 |
Mowi Faroe Islands | 15.7 | 14.4 |
Mowi Ireland | 10.4 | 8.4 |
Total fair value adjustment in the statement of comprehensive income | 1\u00a0198.6 | 709.8 |
FAIR VALUE ADJUSTMENT ON HARVESTED FISH IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Mowi Norway | -752.9 | -388.8 |
Mowi Chile | -112.0 | -87.0 |
Mowi Canada | -73.7 | -14.1 |
Mowi Scotland | -102.7 | -69.8 |
Mowi Faroe Islands | -13.8 | -9.0 |
Mowi Ireland | -13.1 | -13.2 |
Total fair value uplift in the statement of comprehensive income | -1\u00a0068.2 | -581.8 |
FAIR VALUE ADJUSTMENT ON INCIDENT BASED MORTALITY IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Mowi Norway | -12.0 | -7.5 |
Mowi Chile | -2.1 | -0.6 |
Mowi Canada | 4.2 | 3.5 |
Mowi Scotland | -5.7 | -2.1 |
Mowi Faroe Islands | -0.2 | -0.8 |
Mowi Ireland | -0.7 | -0.6 |
Total fair value uplift in the statement of comprehensive income | -16.6 | -8.1 |
NET FAIR VALUE ADJUSTMENT IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 | |
Mowi Norway | 78.8 | 95.8 | |
Mowi Chile | 6.0 | -0.4 | |
Mowi Canada | 12.9 | 14.0 | |
Mowi Scotland | 17.8 | 11.3 | |
Mowi Faroe Islands | 1.7 | 4.6 | |
Mowi Ireland | -3.4 | -5.4 | |
Total fair value uplift in the statement of comprehensive income | 113.7 | 119.8 |
VOLUMES OF BIOMASS (TONNES) | 2022 | 2021 |
Volume of biomass harvested during the year (gutted weight) | 463\u00a0635 | 465\u00a0600 |
Volume of biomass in the sea at year-end (live weight) | 295\u00a0279 | 293\u00a0388 |
SENSITIVITY EFFECT ON FAIR VALUE (SALMON ONLY) AT YEAR-END (EUR MILLION) | PRICE | BIOMASS | QUALITY |
Mowi Norway | -9.4 | -4.7 | -0.6 |
Mowi Chile | -2.1 | -0.6 | -0.4 |
Mowi Canada | -1.8 | -0.8 | -1.1 |
Mowi Scotland | -2.1 | -0.6 | -1.1 |
Mowi Faroe Islands | -0.3 | -0.1 | \u2014 |
Mowi Ireland | -0.2 | \u2014 | -0.1 |
Arctic Fish | -0.1 | -0.3 | \u2014 |
Total sensitivity effect on fair value | -15.9 | -7.1 | -3.2 |
INCIDENT-BASED MORTALITY 2022 (SALMON ONLY) | INCIDENT-BASED MORTALITY | INCIDENT-BASED MORTALITY IN % OF TOTAL MORTALITY (VOLUME) |
Mowi Norway | 8.5 | 23.0% |
Mowi Chile | 1.9 | 27.9% |
Mowi Canada | 0.9 | 17.1% |
Mowi Scotland | 4.4 | 42.3% |
Mowi Faroe Islands | 0.1 | 14.1% |
Mowi Ireland | 2.0 | 53.8% |
Mowi Group | 17.7 | 27.9% |
FORWARD PRICES USED IN FAIR VALUE CALCULATION 1) QUARTER | EUR/KG |
Q1 2023 | 8.57 |
Q2 2023 | 8.96 |
Q3 2023 | 7.16 |
Q4 2023 | 7.31 |
Q1 2024 | 8.01 |
Q2 2024 | 8.01 |
INVENTORY (EUR MILLION) | 2022 | 2021 |
Raw materials and goods in process | 421.5 | 245.3 |
Finished goods | 182.4 | 138.8 |
Total inventory | 603.9 | 384.1 |
At year-end 2022, the market value of the Group\u2019s equity was significantly higher than the carrying amount of equity, which is an indication that the market considers the value of the Group\u2019s assets to exceed the carrying amount. For all cash generating units (CGUs), the recoverable amount has been determined based on a value-in-use calculation using cash flow projections based on approved budgets for the first year. The four next years are based on the approved long-term plan, followed by a terminal value calculation. The net present value of the cash flow is compared to the carrying amount in the CGU. If the carrying amount is higher than the calculated value in use, an impairment loss is recognised in profit or loss, reducing the asset value to the calculated value in use. The estimated cash flows are based on the assumption of continued operation as part of the Mowi Group.
There has been no changes in the identified CGUs for the year 2022.
KEY ASSUMPTIONS
The key assumptions used in the calculation of value in use are harvested volume, EBIT(DA)/margins, capital expenditure, discount rates and the terminal growth rates. Please see the table below for a summary of the key assumptions for each CGU.
Harvest volume
The expected harvest volume is based on the fish currently being held at sea, forward stocking plan and adjusted for the expected future increase in production given today's licenses. This evaluation has been performed CGU by CGU and is updated yearly.
EBIT(DA)/Margins
The key profit target for salmon farming and sales is EBIT per kg, while value-added operations are measured in terms of EBIT/EBITDA in % of sales. EBIT per kg is highly volatile due to fluctuations in the price of salmon. Costs can under normal circumstances be forecast with a relatively high level of accuracy. As Mowi has entered into long-term sales contracts for a proportion of the volume to be harvested in 2023, the margin for 2023 can be forecasted with a higher level of accuracy than the margin for the years beyond (2023-2026). With regards to the terminal, an expected long-term EBIT pr kg has been used in the Farming entities and an expected EBIT in % of sales has been used for other operations. In the calculation we have used the EBIT margin from the Long Term Plan per entity, and reduced this to 90%. This principle has been applied in all Farming entities for the terminal value.
Capital expenditure
In the five-year forecast period, the capital expenditure necessary to meet the expected growth in revenue and profit is taken into consideration. Consistent with the Group\u2019s plan, the capital expenditure level for 2023 is high to further grow the operations. Beyond 2023, capital expenditures are aligned with growth and replacement plans. Capital expenditure to comply with current laws and regulations has been included. Capital expenditure
related to committed and approved efficiency improvement programs 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.
Discount rate
The discount rates are based on the Weighted Average Cost of Capital (WACC) methodology. The cost of equity is based on Capital Asset Pricing Model (CAPM). The cost of debt is based on the risk-free rate in the applicable country. In the model, a ten-year risk-free rate has been used. Calculation of the final discount rates (WACC) also takes into account market risk premium, debt risk premium, gearing and beta value. In the calculations, the Group has applied estimated cash flows before tax and the corresponding discount rates before tax.
Terminal growth rates
Growth after the five-year forecast period has in general been set independently for each cash-generating unit based on the five year average historic inflation rate. The maximum growth rate applied beyond the forecast period is 1.8%. This is lower than the expected growth rates in the first five years and lower than the historic growth rate in salmon demand.
Sensitivity
With regard to the assessment of recoverable amount, the Group is of the view that no reasonably likely change in any of the above key assumptions would cause the carrying value to materially exceed the recoverable amount for any of the CGUs. With regards to Climate change we have performed an sensitivity analysis and the Group is in the view that climate change will not materially change the carrying amounts. The Group try to incorporate all expected effects of climate change, inflation, wars, pandemics etc in the updated budget assumptions for 2023 and long term plan for 2024-2027. In general we expect a good market in 2023.
The significant key assumptions with regards to sensitivity are expected harvest volumes and EBIT(DA)/Margins.
ASSUMPTIONS | HARVEST VOLUME 2022 (GWT) | WACC | TERMINAL | ||
BEFORE TAX | VALUE GROWTH % | ||||
2022 | 2021 | 2022 | 2021 | ||
Mowi Norway Farming | 293\u00a0720 | 11.7% | 8.9% | 1.6% | 0.8% |
Mowi Chile Farming | 65\u00a0737 | 11.3% | 10.4% | 1.8% | 1.6% |
Mowi Canada Farming | 41\u00a0095 | 9.8% | 9.3% | 1.6% | 0.8% |
Mowi Scotland Farming | 48\u00a0374 | 9.2% | 7.9% | 1.6% | 0.6% |
Mowi Ireland Farming | 6\u00a0845 | 8.0% | 6.9% | 1.6% | 0.3% |
Mowi Faroe Islands Farming | 7\u00a0864 | 9.4% | 8.5% | 1.6% | 0.8% |
Mowi Consumer Products Europe | \u2014 | 9.0% | 7.9% | 1.5% | 0.2% |
Mowi Asia | \u2014 | 9.9% | 9.0% | 1.6% | 0.8% |
Mowi USA | \u2014 | 11.1% | 10.4% | 1.6% | 1.6% |
Mowi Feed | \u2014 | 9.5% | 8.7% | 1.6% | 0.8% |
Total | 463\u00a0635 |
Please see table below for an overview of the CGU's with allocated intangible assets as of December 31, 2022 and 2021.
CASH GENERATING UNITS (EUR MILLION) | GOODWILL | LICENSES | ||
2022 | 2021 | 2022 | 2021 | |
Mowi Norway Farming | 185.9 | 185.9 | 568.1 | 564.0 |
Mowi Scotland Farming | 7.3 | 7.7 | 75.2 | 66.1 |
Mowi Canada Farming | 39.0 | 39.1 | 157.8 | 158.0 |
Mowi Chile Farming | \u2014 | \u2014 | 126.9 | 122.9 |
Mowi Ireland Farming | \u2014 | \u2014 | 2.2 | 2.2 |
Mowi Faroe Islands Farming | \u2014 | \u2014 | 6.6 | 6.6 |
Mowi Iceland | 51.2 | \u2014 | 257.4 | \u2014 |
Mowi Consumer Products | 88.0 | 88.4 | \u2014 | \u2014 |
Total | 371.4 | 321.1 | 1\u00a0194.2 | 919.7 |
SPECIFICATION OF INTANGIBLE ASSETS 2022 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Additions in the year as a result of acquisitions1) | 53.4 | 283.4 | \u2014 | 336.8 |
Additions in the year | \u2014 | 2.3 | 5.4 | 7.7 |
Reclassification | \u2014 | -0.4 | \u2014 | -0.4 |
Disposals / scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 3.7 | -1.2 | 0.7 | 3.2 |
Total acquisition cost as of 31.12 | 643.4 | 1\u00a0377.5 | 70.9 | 2\u00a0091.8 |
Accumulated amortisation and impairment losses as of 01.01 | 265.2 | 173.6 | 38.7 | 477.6 |
Amortisation in the year | \u2014 | \u2014 | 2.8 | 2.8 |
Impairment losses in the year | \u2014 | 3.8 | \u2014 | 3.8 |
Reclassification | \u2014 | -0.4 | -0.3 | -0.7 |
Disposals/ scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 6.8 | 6.3 | 0.4 | 13.5 |
Total accumulated amortisation and impairment losses as of 31.12 | 272.0 | 183.3 | 41.0 | 496.4 |
Total carrying amount as of 31.12 | 371.4 | 1\u00a0194.2 | 29.8 | 1\u00a0595.4 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Additions in the year as a result of acquisitions are related to the purchase of Arctic Fish and Wester Ross Fisheries.
SPECIFICATION OF INTANGIBLE ASSETS 2021 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 569.7 | 1\u00a0038.1 | 59.1 | 1\u00a0666.9 |
Additions in the year2) | 4.3 | 20.5 | 4.8 | 29.6 |
Disposals / scrapping in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Foreign currency adjustments | 12.4 | 34.7 | 1.5 | 48.6 |
Total acquisition cost as of 31.12 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Accumulated amortisation and impairment losses as of 01.01 | 256.3 | 165.2 | 35.0 | 456.5 |
Amortisation in the year | \u2014 | \u2014 | 2.9 | 2.9 |
Impairment losses in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Disposals/scrapping in the year | \u2014 | \u2014 | 0.1 | 0.1 |
Foreign currency adjustments | 9.0 | 8.4 | 0.8 | 18.1 |
Total accumulated amortisation and impairment losses as of 31.12 | 265.2 | 173.6 | 38.7 | 477.6 |
Total carrying amount as of 31.12 | 321.1 | 919.7 | 26.7 | 1\u00a0267.5 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Other intangible assets includes assets under construction.
2) Additions on goodwill and licences are related to the purchase of Lofoten Aqua.
SPECIFICATION OF | NUMBER OF | NUMBER OF | TOTAL CURRENT PRODUCTION CAPACITY 3) (T TONNES) | OTHER LIMITATIONS |
Mowi Norway1) | 232.9 | 232.9 | 300 | MAB limitation per license |
Mowi Chile | 186 | 30-40 | 120-130 | |
Mowi Scotland | 74 | 51 | 89 | MAB limitation per license |
Mowi Canada | 95 | 46 | 97 | MAB limitation per license |
Mowi Ireland | 25 | 15 | 14 | |
Mowi Faroe Islands2) | 3 | 3 | 11 | |
Arctic Fish | 10 | 10 | 27 |
1) CAC licenses not included.
2) Total capacity is 16 tonnes over a 18 month cycle.
3) Total production capacity HOG, full utilisation.
SPECIFICATION LICENSES 2022 | TOTAL CURRENT PRODUCTION CAPACITY 2) (T TONNES) | HARVEST VOLUME (SALMON ONLY) | UTILISATION BASED | BOOK VALUE 1) (EUR MILLION) | BOOK VALUE PER |
Mowi Norway | 300 | 293\u00a0720 | 98% | 568.1 | 1.9 |
Mowi Chile | 120-130 | 65\u00a0737 | 51%-55% | 126.9 | 1.9 |
Mowi Scotland | 89 | 48\u00a0374 | 54% | 75.2 | 1.6 |
Mowi Canada | 97 | 41\u00a0095 | 47% | 157.8 | 3.8 |
Mowi Ireland | 14 | 6\u00a0845 | 49% | 2.2 | 0.3 |
Mowi Faroe Islands | 11 | 7\u00a0864 | 74% | 6.6 | 0.8 |
Arctic Fish | 27 | n.a. | n.a. | 257.4 | n.a. |
Total | 463\u00a0635 | 1\u00a0194.2 | 2.0 |
1) Book value includes freshwater licenses in addition to seawater licenses.
2)Total production capacity HOG, full utilisation.
SPECIFICATION OF PPE 2022 (EUR MILLION) | LAND & | MACHINERY | TRANSPORT | NETS, | UNDER | OTHER | TOTAL |
Acquisition cost as of 01.01 | 928.7 | 1\u00a0209.2 | 341.5 | 471.3 | 246.7 | 64.0 | 3\u00a0261.3 |
Acquisitions through business | 67.0 | 4.0 | 20.1 | 16.3 | \u2014 | \u2014 | 107.5 |
Additions in the year | 58.2 | 68.0 | 30.2 | 58.5 | 96.9 | 8.3 | 320.0 |
Reclassification | \u2014 | -1.3 | \u2014 | \u2014 | 0.6 | -0.9 | -1.5 |
Disposals / scrapping in the year | -6.5 | -19.8 | -4.1 | -8.9 | -0.1 | -1.9 | -41.3 |
Foreign currency adjustments | -8.3 | 0.1 | -2.0 | -1.3 | -10.8 | 1.0 | -21.2 |
Total acquisition cost as of 31.12 | 1\u00a0039.1 | 1\u00a0260.1 | 385.7 | 535.9 | 333.4 | 70.7 | 3\u00a0625.0 |
Accumulated depreciation and | 355.9 | 862.9 | 172.3 | 293.5 | 22.5 | 50.5 | 1\u00a0757.5 |
Depreciation in the year | 41.1 | 71.8 | 25.7 | 43.3 | \u2014 | 3.5 | 185.4 |
Impairment losses and reversal of | 7.6 | 6.8 | 1.0 | 0.1 | 0.5 | \u2014 | 16.1 |
Reclassification | 1.5 | -3.2 | 0.1 | 1.2 | \u2014 | -0.8 | -1.2 |
Disposals / scrapping in the year | -5.7 | -19.0 | -3.9 | -8.7 | -0.2 | -1.9 | -39.3 |
Foreign currency adjustments | 0.4 | 5.1 | -1.2 | -0.2 | -9.6 | 1.0 | -4.5 |
Total accumulated depreciation and impairment losses as of 31.12 | 400.8 | 924.4 | 194.0 | 329.2 | 13.3 | 52.4 | 1\u00a0914.0 |
Total carrying amount as of 31.12 | 638.3 | 335.9 | 191.7 | 206.6 | 320.1 | 18.3 | 1\u00a0711.0 |
Estimated lifetime | Land; infinite | 5-20 years | 3-10 years | 5-10 years | n/a | 3-10 years | \u00a0 |
Depreciation method | Linear | Linear | Linear | Linear | n/a | Linear | \u00a0 |
\u00a0\u00a0\u00a0\u00a0
SPECIFICATION OF PPE 2021 (EUR MILLION) | LAND & | MACHINERY | TRANSPORT | NETS, | UNDER | OTHER | TOTAL |
Acquisition cost as of 01.01 | 864.0 | 1\u00a0140.4 | 290.3 | 429.3 | 184.6 | 58.2 | 2\u00a0966.8 |
Additions in the year | 73.8 | 64.1 | 33.8 | 39.1 | 44.8 | 5.1 | 260.8 |
Reclassification | -15.9 | -1.6 | 15.3 | -3.4 | -1.4 | \u2014 | -7.0 |
Disposals / scrapping in the year | -18.0 | -39.1 | -4.5 | -14.0 | -0.3 | -1.6 | -77.5 |
Foreign currency adjustments | 24.7 | 45.4 | 6.6 | 20.2 | 19.0 | 2.4 | 118.4 |
Total acquisition cost as of 31.12 | 928.7 | 1\u00a0209.2 | 341.5 | 471.3 | 246.7 | 64.0 | 3\u00a0261.3 |
Accumulated depreciation and | 330.6 | 800.2 | 137.4 | 258.5 | -1.0 | 46.5 | 1\u00a0572.1 |
Depreciation in the year | 36.7 | 68.9 | 24.8 | 41.2 | \u2014 | 3.1 | 174.7 |
Impairment losses and reversal of | 2.9 | 3.8 | 0.5 | 0.5 | 12.1 | 0.1 | 19.9 |
Reclassification | -8.4 | -3.0 | 10.5 | -5.6 | -0.8 | 0.2 | -7.0 |
Disposals /scrapping in the year | -13.5 | -35.6 | -4.3 | -13.8 | -0.2 | -1.6 | -69.1 |
Foreign currency adjustments | 7.5 | 28.7 | 3.4 | 12.7 | 12.3 | 2.3 | 66.9 |
Total accumulated depreciation and impairment losses as of 31.12 | 355.9 | 862.9 | 172.3 | 293.5 | 22.5 | 50.5 | 1\u00a0757.5 |
Total carrying amount as of 31.12 | 572.8 | 346.5 | 169.1 | 177.8 | 224.2 | 13.5 | 1\u00a0504.0 |
Estimated lifetime | Land; infinite | 5-20 years | 3-10 years | 5-10 years | n/a | 3-10 years | \u00a0 |
Depreciation method | Linear | Linear | Linear | Linear | n/a | Linear | \u00a0 |
Sale of non-current assets
Non-current tangible assets have been sold during the year, and the net gain on the sale of assets (included in the line item Other operating expenses in the consolidated statement of comprehensive income) amounts to EUR 3.8 million in 2022. The corresponding figure for 2021 is EUR 0.5 million.
Impairment testing of non-current assets
Impairment tests for specific non-current assets are performed when there are indications of impairment. In 2022, a net loss in fixed assets of EUR 15.3 million was booked in Canada, EUR 0.7 million in Norway, EUR 0.1 million in Poland and EUR 0.2 million in Japan. Based on evaluation no additional impairment due to climate risk and no changes in useful life.
INTEREST-BEARING DEBT (EUR MILLION) | 2022 | 2021 |
Non-current interest-bearing bank debt | 1\u00a0377.7 | 811.8 |
Green bond | 199.1 | 199.8 |
Schuldschein loan | 149.0 | 148.8 |
Bond | \u2014 | 198.6 |
Total non-current interest-bearing debt | 1\u00a0725.8 | 1\u00a0358.9 |
Current interest-bearing bank debt | 11.6 | 0.1 |
Bond | 200.0 | \u2014 |
Current interest-bearing debt | 211.6 | 0.1 |
Total interest-bearing debt | 1\u00a0937.4 | 1\u00a0358.9 |
Financing of the Mowi Group is mainly carried out through the parent company Mowi ASA. External financing is obtained by subsidiaries only if this is optimal for the Group. Mowi complied with its loan covenants at the end of 2022.
The following programmes are the main sources of financing for the Mowi Group as of December\u00a031, 2022:
EUR 1800 MILLION SUSTAINABILITY-LINKED REVOLVING CREDIT FACILITY
In September 2021, Mowi signed a senior secured five-year, EUR 1 800 million multicurrency sustainability-linked revolving credit facility (the \"Facility Agreement\") with DNB, Nordea, ABN Amro, Rabobank, Danske Bank, SEB and Cr\u00e9dit Agricole. The Facility Agreement includes an accordion increase option, which provides flexibility for the parties to agree to increase the size of the Facility
Agreement by an additional EUR 300 million during the five-year term. The principal financial covenant of the Facility Agreement is an equity ratio of minimum 35%, with the calculation of the ratio being adjusted for the effects of IFRS 16. Furthermore, the ability of the Group to take on new debt is regulated by the loan agreement. The facility has final maturity in September 2026.
The facility is available to Mowi ASA and selected subsidiaries. In addition, the revolving credit facility may be allocated in part as bilateral credits (including overdraft facilities and facilities for the issuance of guarantees) between syndicate banks and group companies.
Drawings at year end 2022 on the syndicated credit facility amount to EUR 1 310.0 million, up from 810.7 million at year end 2021.
EUR 150 MILLION SCHULDSCHEIN LOAN
In May 2019, Mowi entered into a EUR 120 million, seven-year senior unsecured loan in the German Schuldschein market, increased to EUR 150 million in August 2019. The loan consists of two floating-rate tranches of EUR 99 million and EUR 30 million, and a fixed-rate tranche of EUR 21 million, and the sole financial covenant is an equity ratio of minimum 30%. Mowi pays semi-annual interest of six-month EURIBOR (floored at 0%) plus 1.70% p.a. on the floating-rate tranches and, through a corresponding interest rate swap, six-month EURIBOR plus 1.705% p.a. on the fixed-rate tranche. All tranches are non-amortising and are repayable in May 2026.
EUR 200 MILLION GREEN BOND
In January 2020, Mowi issued the first green bond in the seafood sector, with a principal amount of EUR 200 million. The bond issue carries a\u00a0coupon of three-month EURIBOR (floored at 0%) plus 1.60% p.a., payable quarterly, and the sole financial covenant is an equity ratio of minimum 30%. The green bond is unsecured and is repayable in January 2025 with no interim instalments. The proceeds from the green bond issue has been used to finance or refinance green projects as further defined by Mowi's green bond framework, which received a medium green shading from CICERO. The bond is listed on the Oslo Stock Exchange and in Euronext ESG Bonds section with ISIN: N0 0010874050.
EUR 200 MILLION BOND
In June 2018, Mowi issued an unsecured bond with a\u00a0principal amount of EUR 200 million, listed on the Oslo Stock Exchange with ISIN: NO 0010824006. The bond issue carries a\u00a0coupon of three-month EURIBOR (floored at 0%) plus 2.15% p.a., payable quarterly, and the sole financial covenant is an equity ratio of minimum 30%. The full principal amount is repayable in June 2023 and the bond is therefore presented as Current interest-bearing debt.
EUR 100 MILLION REVOLVING CREDIT AND CONSTRUCTION FACILITIES, ARCTIC FISH
In December 2020 Arctic Fish signed a three-year, EUR 67 million senior secured multi-currency credit facility with a one-year extension option with Arion Bank and DNB to finance day-to-day operation and future growth (the \"Arctic Fish Facility Agreement\"). Subsequent amendments have increased the facility size to EUR 100 million. Drawings on the facility at year end 2022 amount to EUR 75.8 million. For details, see note 22 Business combinations.
CASH MOVEMENTS FINANCING ACTIVITIES
CASH MOVEMENTS FINANCING ACTIVITIES (EUR MILLION) | INTEREST-BEARING DEBT | DERIVATIVES |
Balance at January 1, 2022 | 1\u00a0358.9 | 7.0 |
Proceeds from loans and borrowings | 499.9 | \u2014 |
Total changes from financing cash flows | 499.9 | \u2014 |
Changes from business combinations | 78.3 | |
The effect of changes in foreign exchange rates | -3.4 | \u2014 |
Changes in fair value | \u2014 | 4.9 |
Liability-related | 74.9 | 4.9 |
Capitalised borrowing cost | 1.7 | \u2014 |
Interest expense | 36.3 | 4.1 |
Interest paid | -34.3 | -4.1 |
Total liability-related other changes | 3.7 | \u2014 |
Balance at December 31, 2022 | 1\u00a0937.4 | 11.9 |
In addition Mowi has paid EUR 12.7 million in interest expenses for leasing during 2022. For cash details in regards to leasing, please see note 29.
CASH MOVEMENTS FINANCING ACTIVITIES (EUR MILLION) | \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 INTEREST-BEARING DEBT | DERIVATIVES |
Balance at January 1, 2021 | 1\u00a0565.5 | 30.1 |
Proceeds from loans and borrowings | -209.6 | \u2014 |
Transaction cost related to loans and borrowings | -10.8 | \u2014 |
Total changes from financing cash flows | -220.4 | \u2014 |
The effect of changes in foreign exchange rates | 11.0 | \u2014 |
Changes in fair value | \u2014 | -23.1 |
Liability-related | 11.0 | -23.1 |
Capitalised borrowing cost | 2.5 | \u2014 |
Interest expense | 28.0 | 12.5 |
Interest paid | -27.7 | -12.5 |
Total liability-related other changes | 2.8 | \u2014 |
Balance at December 31, 2021 | 1\u00a0358.9 | 7.0 |
FINANCIAL INSTRUMENTS IMPACT ON COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Interest expenses | -36.3 | -40.5 |
Interest expenses leasing | -12.7 | -15.6 |
Amortised interest cost | -3.6 | -3.0 |
Interest expenses | -52.6 | -59.0 |
Net currency effects on interest-bearing debt | 2.1 | -11.1 |
Net currency effects on cash, trade receivables and trade payables | 3.6 | 24.6 |
Gain/loss on short-term currency swaps | -6.5 | 3.0 |
Gain/loss on long-term currency swaps | -6.1 | 20.2 |
Currency effects on leasing (IFRS 16) | 8.4 | 0.3 |
Net currency effects | 1.4 | 37.0 |
Interest income | 2.0 | 0.5 |
Gain/loss on salmon derivatives non-operational | -0.8 | 0.4 |
Change in fair value other financial instruments | 2.9 | 12.1 |
Change in fair value other shares | -0.1 | \u2014 |
Net other financial items | -5.8 | 0.1 |
Other financial items | -1.8 | 13.1 |
Total financial items | -52.9 | -8.9 |
CATEGORIES OF FINANCIAL INSTRUMENTS IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | FINANCIAL ASSETS AND LIABILITIES | |||
DECEMBER 31, 2022 | DEBT INSTRUMENTS AT AMORTISED COST | FINANCIAL | NON-FINANCIAL | TOTAL |
Non-current assets | ||||
Other non-current financial assets | \u2014 | 2.7 | \u2014 | 2.7 |
Current assets | ||||
Trade receivables | 600.1 | \u2014 | \u2014 | 600.1 |
Other receivables | 98.4 | \u2014 | 85.3 | 183.7 |
Other current financial assets | \u2014 | 10.0 | \u2014 | 10.0 |
Cash | 178.5 | \u2014 | \u2014 | 178.5 |
Non-current liabilities | ||||
Non-current interest-bearing debt | -1\u00a0725.8 | \u2014 | \u2014 | -1\u00a0725.8 |
Current liabilities | ||||
Current interest-bearing debt | -211.6 | \u2014 | \u2014 | -211.6 |
Trade payables | -437.0 | \u2014 | \u2014 | -437.0 |
Other current financial liabilities | \u2014 | -11.9 | \u2014 | -11.9 |
Other current liabilities | 98.2 | \u2014 | -341.4 | -243.3 |
Total | -1\u00a0399.2 | 0.8 | ||
Fair value1) | -1\u00a0401.1 | 0.8 |
1) Difference in fair value is related to Non-current interest-bearing debt (Bond).
CATEGORIES OF FINANCIAL INSTRUMENTS IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | FINANCIAL ASSETS AND LIABILITIES | |||
31 DECEMBER 2021 | DEBT INSTRUMENTS AT AMORTISED COST | FINANCIAL | NON-FINANCIAL | TOTAL |
Non-current assets | ||||
Other non-current financial assets | \u2014 | 1.9 | \u2014 | 1.9 |
Current assets | ||||
Trade receivables | 492.1 | \u2014 | \u2014 | 492.1 |
Other receivables | 86.2 | \u2014 | 91.0 | 177.2 |
Other current financial assets | \u2014 | 33.0 | \u2014 | 33.0 |
Cash | 101.7 | \u2014 | \u2014 | 101.7 |
Non-current liabilities | ||||
Non-current interest-bearing debt | -1\u00a0358.9 | \u2014 | \u2014 | -1\u00a0358.9 |
Current liabilities | ||||
Current interest-bearing debt | -0.1 | \u2014 | \u2014 | -0.1 |
Trade payables | -392.8 | \u2014 | \u2014 | -392.8 |
Other current financial liabilities | \u2014 | -7.0 | \u2014 | -7.0 |
Other current liabilities | -96.0 | \u2014 | -149.0 | -244.9 |
Total | -1\u00a0167.8 | 27.9 | ||
Fair value1) | -1\u00a0178.8 | 27.9 |
1) Difference in fair value is related to Non-current interest-bearing debt (Bond).
There has not been any reclassification between the categories of financial assets or liabilities in 2022, or 2021. Details regarding the criteria for recognition and the basis for measurement of each class of financial instrument are disclosed in Note 2 Significant accounting principles.
OTHER CURRENT FINANCIAL ASSETS (EUR MILLION) | 2022 | 2021 |
Market value of other financial instruments | 6.0 | 8.2 |
Currency swaps | 4.0 | 24.7 |
Other current financial assets as of 31.12 | 10.0 | 33.0 |
OTHER CURRENT FINANCIAL LIABILITIES (EUR MILLION) | 2022 | 2021 |
Currency swaps | 10.2 | 2.5 |
Interest rate swaps | 1.7 | 4.5 |
Other current financial liabilities as of 31.12 | 11.9 | 7.0 |
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of financial instruments carried at amortised cost
The Group considers that the carrying amount of financial assets and liabilities recognised at amortised cost in the financial statements approximates their fair value.
Fair value measurements recognised in the statement of financial position
Financial instruments that are measured at fair value subsequent to initial recognition are grouped into a hierarchy of three different levels, based on the degree to which the fair value is observable:
Level 1:
Fair value determined directly by reference to published quotations.
Level 2:
Fair value estimated using valuation technique based on input other than quoted prices included in level 1 that are observable.
Level 3:
Fair value estimated using a valuation technique based on unobservable data.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (EUR MILLION) | 2022 | 2021 | ||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | LEVEL 1 | LEVEL 2 | LEVEL 3 | |
Financial assets/liabilities to fair value through profit or loss: | ||||||
Other financial instruments | \u2014 | \u2014 | \u2014 | \u2014 | -6.3 | \u2014 |
Current currency swaps | \u2014 | 4.0 | \u2014 | \u2014 | 24.7 | \u2014 |
Interest swaps | \u2014 | -1.7 | \u2014 | \u2014 | -4.5 | \u2014 |
Current currency swaps | \u2014 | -10.2 | \u2014 | \u2014 | -2.5 | \u2014 |
BONDS AT AMORTISED COST, FAIR VALUE | \u2014 | -545.0 | \u2014 | \u2014 | -558.1 | \u2014 |
LEVERAGE AND CAPITAL ACCESS
Leverage and Capital access (i.e. Capital management) refers to the process of acquiring and utilising capital in the most efficient manner compared to the available alternatives. The primary objective of the Group\u2019s capital management is to ensure access to capital contributing to satisfactory operations and maximum generation of shareholder value. The Group manages its capital structure and makes adjustments in light of changes in underlying economic conditions. Access to borrowed capital is continuously monitored and the Group has a continuous dialogue with its lenders. The syndicated loan facility sets forth an equity ratio as the only financial covenant. The remaining portfolio of interest bearing debt does not include more restrictive financial covenants. Mowi complied with the financial covenants in its loan agreements during and at the end of 2022. Details relating to the main loan programmes in the Group are described in Note 11.
Mowi intends to maintain an equity base suited to the characteristics of its operations, taking into consideration that fish farming is a cyclical business. At year-end 2022, the equity of Mowi amounted to EUR 3\u00a0687.1 million. The equity share, defined by equity/total assets, was at the same time 49.0%. Net interest bearing debt, defined as total interest-bearing debt less cash was EUR 1 758.9 million at year-end, above the long-term target of EUR 1 400 million, excluding effects of IFRS 16. The Board of Directors of Mowi ASA considers the equity in the Group appropriate for the scale of the operation.
Mowi\u2019s ambition is to create long-term value for the shareholder through both positive share price development and a growing dividend in line with long-term earnings. In 2020 the Board decided to make dividend payments more predicable and transparent by operationalising the dividend policy and introducing ordinary and extraordinary dividends. The dividend policy states that:
\u2013The quarterly ordinary dividend shall under normal circumstances be at least 50% of underlying earnings per share (EPS).
\u2013Excess capital will be paid out as extraordinary dividends.
\u2013When deciding excess capital the Board of Directors will take into consideration expected cash flow, capital expenditure plans, financing requirements and appropriate financial flexibility. Further to this a long-term target level for net interest-bearing debt is determined, reviewed and updated on a regular basis.
\u2013Shareholder returns are distributed primarily as cash dividends with the option of using share buybacks as a complementary supplement on an ad-hoc basis.
The Board of Directors of Mowi ASA has been given proxies from the Annual General Meeting on 13 June 2022 for the following:
\u2013(1) To approve the distribution of dividends based on the Company\u2019s annual accounts for 2022. The authority may be used to approve the distribution of dividends up to an aggregate amount of NOK 7 500 000 000. The authority is valid for dividends from the date of the Annual General Meeting on 13 June 2022 until the AGM in 2023, however no later than June 30, 2023.
\u2013(2) To purchase up to 51 711 109 shares in the Company (representing 10% of the shares in issue at the time) during the period up until the AGM in 2023, however no later than June 30, 2023.
\u2013(3a) To increase the Company\u2019s share capital by up to 51 711 109 shares (representing 10% of the shares in issue at the time) provided that the the combined number of shares that are issued pursuant to this authorisation and the authorisation in item 3b below shall not in aggregate exceed 10% of the Company's current share capital. The authority did not define the purpose(s) of such a capital increase. The authority expires at the AGM in 2023, however no later than June 30, 2023.
\u2013(3b) To take up convertible bond loans of up to NOK 3 200 million (par value), convertible to a share capital equivalent of up to 51 711 109 shares provided that the the combined number of shares that are issued pursuant to this authorisation and the authorisation in item 3a above shall not in aggregate exceed 10% of the Company's current share capital. The authority expires at the AGM in 2023, however no later than June 30, 2023.
The Group\u2019s principal financial liabilities, other than loans, consist of non-convertible bonds, derivatives and trade payables. These financial liabilities constitute the majority of the\u00a0Group\u2019s third party financing. The Group holds financial assets such as trade receivables, cash and shares.
The Group uses financial derivatives, mainly currency forward contracts, interest rate swaps and financial salmon futures, using large international banks and Fish Pool ASA as counterparts. The purpose of these derivatives is to manage the interest rate, currency and salmon price risks arising from the operations of the Group. With the exception of financial salmon futures, no trading activities in financial instruments are undertaken. On a selective basis, the Group also enters into other financial derivatives such as equity forward contracts.
Details regarding significant accounting policies for financial assets and liabilities are disclosed in Note 2 Significant accounting policies.
FINANCIAL RISK MANAGEMENT
The Group monitors and manages financial risks arising from operations. These include currency risks, interest rate risk, credit risk and price/liquidity risk.
The Group seeks to manage these risks through operational measures or (where such measures are not available) through the use of financial derivatives.
A policy on the management of these risks has been approved by the Board of Directors. The policy includes principles on currency risk, interest rate risk, price risk, the use of financial instruments and other operational means as well as limits on the maximum and minimum levels of these exposures.
CURRENCY RISK
In the Mowi Group, several Business Units carry out a\u00a0large number of business transactions in currencies different from the domestic currency. For the Group, the relative importance of these transactions is substantially larger on the revenue side than on the cost side. To mitigate the potential fluctuation effects on its cash flows, the Group maintains a foreign exchange strategy designated to manage these exposures both in the short and long term. For each of Mowi\u2019s units, the Group has defined a\u00a0hedging strategy not designated for hedge accounting. According to the hedging strategy, units located in the following regions generate cash flow in currencies (main hedging currencies) according to the below table.
REGION | HEDGING CURRENCY |
Europe ex. UK | EUR |
UK | GBP |
Americas | USD |
Asia | USD |
For some units the main hedging currency is different from the functional currency.
Transaction exposures arise from firm commitments made to transact in a currency different from the main currency. Each transaction exposure depends on the duration of the associated commitment, but these are normally be of relatively short duration. Hedging transactions undertaken to manage transaction exposures are referred to as transaction hedges.
Through hedging of transaction exposures, each Business Unit aims to ensure that its net cash flows in currencies other than its main hedging currency are hedged towards this currency. Further exposures arise from structural imbalances between the main currencies on the revenue side and those on the expense side. These imbalances are predominantly a result of production taking place in a different country from that in which the product is sold. Due to their structural nature, such exposures are of a longer duration than transaction exposures and are therefore quantified based on estimates of future revenues and expenses. For these purposes, the focus is on the underlying currency structure of the individual revenue and cost item while the actual currency in which transactions are invoiced is of lesser importance.
The Mowi Group normally has a net positive cash flow exposure towards EUR, GBP, USD and JPY and a net negative cash flow exposure towards NOK, CAD and CLP. To hedge Group cash flows against exchange rate fluctuations Mowi has a policy for long-term hedging of the most predominant net exposures. The Group currently hedges up to 30% of its underlying exposure between EUR/NOK and USD/CAD with a horizon of two years.
As of December 31, 2022 the Group held a portfolio of derivative instruments designed to mitigate transaction and cash flow exposure with a total contract value of EUR 544.4 million (EUR 728.4 million). Instruments equivalent to 96% (74%) of the contract value mature in 2023 and no instrument matures after December 2024. The portfolio had a net market value of EUR -6.7 million (EUR 22.2 million) at year end.
Currency exposure in the statement of financial position
As a consequence of the Group\u2019s net cash flows being generated in EUR, GBP and USD, the interest-bearing debt should reflect this currency structure. On December\u00a031, 2022, the portfolio was in line with policy.
CURRENCY STRUCTURE OF NET INTEREST-BEARING DEBT (EUR MILLION) | NOK | USD | EUR | GBP | JPY | DKK | CAD | PLN | OTHER | TOTAL |
Cash and cash equivalents | 33.5 | 31.0 | 78.5 | 7.4 | 8.4 | 2.7 | 7.0 | 0.3 | 9.7 | 178.5 |
Current interest-bearing debt | \u2014 | \u2014 | 211.6 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | 211.6 |
Non-current interest-bearing debt | 76.6 | 56.4 | 1\u00a0547.3 | 45.2 | \u2014 | \u2014 | \u2014 | \u2014 | 0.3 | 1\u00a0725.8 |
Net interest-bearing debt | 43.1 | 25.4 | 1\u00a0680.4 | 37.8 | -8.4 | -2.7 | -7.0 | -0.3 | -9.4 | 1\u00a0758.9 |
The carrying amount of interest-bearing debt has been reduced by EUR 9.4 million (EUR 13.0 million) in transaction costs. There are no significant differences between the carrying amount and the fair value of non-current interest-bearing debt and leasing.
SENSITIVITY ANALYSIS - CHANGE IN EXCHANGE RATES IMPACT ON RESULT
The main sources of sensitivity to exchange rate movements are the long-term hedges of exposure to EUR/NOK and USD/CAD and loans in NOK, USD and GBP under the multicurrency revolving credit facility. Based on the exposure as of December\u00a031, 2022, the effect of a 15% change in exchange rates on the long-term currency hedges and the multicurrency loan positions has been estimated. As no hedge accounting no impact on other comprehensive income.
CURRENCY PAIR (EUR MILLION) | EUR/NOK | EUR/USD | EUR/GBP | USD/CAD | |
Effect in EUR from a 15% increase in the value of | EUR | EUR | EUR | CAD | |
Effect on profit before tax | -6.3 | 7.4 | 5.9 | 6.6 |
INTEREST RATE RISK
Mowi ASA shall over time hedge 0%-35% of the Group\u2019s long-term interest bearing debt by currency with fixed interest or interest rate derivatives for the first 5 years, and 0% thereafter. Interest-bearing debt includes external interest-bearing debt and leasing in the parent company or subsidiaries. The interest rate hedges shall be based on the targeted currency composition. Interest rate exposure in other currencies than EUR, USD, GBP and NOK shall not be hedged. All interest rate hedging shall be executed from the parent company. At year end 2022 the Group's overall interest rate swap portfolio had a contract nominal value of EUR 77.4 million (EUR 498.3 million) and a net market value of EUR -1.7 million (EUR -4.5 million).
A 0.50% point parallel increase in all relevant yield curves will cause a EUR 0.2 million decrease (EUR 0.3 million increase) in the market value of the overall interest swap portfolio. This change would be recognised through profit and loss. Based on the debt and interest rate swaps outstanding as of December\u00a031, 2022 a 0.50% point parallel increase in all relevant yield curves would result in an estimated increase in the Group's annual interest cost of EUR 9.7 million.
CREDIT RISK
The Group trades only with recognised, creditworthy third parties. It is the Group\u2019s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and as a rule the Group\u2019s trade receivables are fully credit insured. The Group monitors exposure towards individual customers closely and is not substantially exposed to any individual customer or contractual partner as of December\u00a031, 2022. The maximum exposure to credit risk at the reporting date is the carrying value of
trade receivables, with reference to Note 17. The Group considers the concentration of risk with respect to trade receivables as low, as its customers are located in various jurisdictions and operate in different markets.
The Group only enters into derivative transactions with counterparties with an established business relationship to the Group.
PRICE/LIQUIDITY RISK
The Group is continuously monitoring liquidity and estimates expected liquidity development on the basis of budgets and monthly updated forecasts from the business units. Mowi\u2019s financial position and development depend significantly on spot price developments for salmon, and these prices have historically been volatile. As such Mowi is exposed to movements in supply and demand for salmon. Mowi has to some extent mitigated its exposure to spot prices by entering into bilateral fixed price/volume contracts with its customers. The contract share has normally varied between 20% and 50% of our sold volume, however hedged volumes can increase up to 65% under special circumstances, and the duration of contracts has typically been three to eighteen months. Furthermore Mowi reduces its exposure to spot price movements through value added processing activities and tailoring of products for its customers. Other key liquidity risks are fluctuations in production and harvest volumes, biological issues, and changes in the feed price, feed being the most important individual factor on the cost side. Feed costs are correlated to the marine and agricultural commodity prices of the ingredients.
Mowi\u2019s aim is to maintain a balance between long-term financing and flexibility by using credit facilities, new borrowings and bonds.
MATURITY PROFILE OF THE FINANCIAL LIABILITIES AND DERIVATIVES BASED ON CONTRACTUAL UNDISCOUNTED PAYMENTS, INCLUDING INTEREST: 2022 (EUR MILLION) | CARRYING AMOUNT | CONTRACTUAL CASH FLOWS | WITHIN | 1 -2 YEARS | 2 - 5 YEARS | MORE THAN |
Non-derivative financial liabilities | ||||||
Syndicated loan | 1\u00a0310.7 | -1\u00a0506.2 | -59.5 | -52.4 | -1\u00a0394.4 | \u2014 |
Unsecured bond | 200.5 | -204.9 | -204.9 | \u2014 | \u2014 | \u2014 |
Unsecured Schuldschein loan | 150.1 | -172.6 | -6.7 | -7.1 | -158.9 | \u2014 |
Unsecured Green bond | 200.2 | -219.8 | -8.7 | -9.2 | -201.9 | \u2014 |
Arctic Fish bank facility | 75.6 | -86.1 | -14.7 | -71.4 | \u2014 | \u2014 |
Other debt | 1.0 | -0.8 | -0.1 | -0.1 | -0.1 | -0.4 |
Trade payables and other liabilities | 437.0 | -437.0 | -437.0 | \u2014 | \u2014 | \u2014 |
Derivative financial liabilities | ||||||
Interest rate swaps | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Cash flow instruments | 4.4 | -4.4 | -4.4 | \u2014 | \u2014 | \u2014 |
Transaction instruments | 6.3 | -6.3 | -6.0 | -0.2 | \u2014 | \u2014 |
Total financial liabilities 1) | 2\u00a0385.5 | -2\u00a0638.1 | -742.0 | -140.4 | -1\u00a0755.3 | -0.4 |
MATURITY PROFILE OF THE FINANCIAL LIABILITIES AND DERIVATIVES BASED ON CONTRACTUAL UNDISCOUNTED PAYMENTS, INCLUDING INTEREST: 2021 (EUR MILLION) | CARRYING AMOUNT | CONTRACTUAL CASH FLOWS | WITHIN | 1 -2 YEARS | 2 - 5 YEARS | MORE THAN |
Non-derivative financial liabilities | ||||||
Syndicated loan | 811.0 | -875.4 | -10.9 | -10.9 | -853.6 | \u2014 |
Unsecured bond | 200.0 | -206.5 | -4.3 | -202.2 | \u2014 | \u2014 |
Unsecured Schuldschein loan | 149.4 | -161.0 | -2.4 | -2.4 | -156.1 | \u2014 |
Unsecured Green bond | 199.2 | -214.4 | -3.2 | -3.2 | -208.0 | \u2014 |
Other debt | 1.2 | -1.2 | -0.3 | -0.2 | -0.2 | -0.5 |
Trade payables and other liabilities | 392.8 | -392.8 | -392.8 | \u2014 | \u2014 | \u2014 |
Derivative financial liabilities | ||||||
Interest rate swaps | 5.1 | -5.3 | -4.8 | -0.5 | \u2014 | \u2014 |
Cash flow instruments | 1.0 | -1.0 | \u2014 | -0.9 | \u2014 | \u2014 |
Transaction instruments | 1.6 | -1.6 | -1.4 | -0.1 | \u2014 | \u2014 |
Total financial liabilities 1) | 1\u00a0761.1 | -1\u00a0858.9 | -420.1 | -220.5 | -1\u00a0217.9 | -0.5 |
SALARY AND PERSONNEL EXPENSES (EUR MILLION) | 2022 | 2021 |
Salaries | -406.1 | -378.1 |
Cash bonuses | -31.0 | -27.1 |
Social security taxes | -54.9 | -51.8 |
Pension expenses | -16.9 | -13.7 |
Share price based bonus | -4.6 | -3.6 |
Temporary labor | -70.7 | -66.8 |
Other benefits | -28.6 | -27.3 |
Total salary and personnel expenses | -612.6 | -568.3 |
Average number of FTEs | 13\u00a0930 | 14\u00a0315 |
At year-end 2022 there were 13\u00a0726 FTEs (full-time employee equivalent) in the Group.
REMUNERATION TO GROUP MANAGEMENT TEAM (EUR MILLION) | 2022 | 2021 |
Salaries and other short-term employee benefits | -3.4 | -3.1 |
Post-employment benefits | -0.1 | -0.1 |
Share-based payments | -2.6 | -2.3 |
Total remuneration to Group Management Team | -6.1 | -5.5 |
SHARE OPTION SCHEME
Mowi Group has a share-price based payment scheme for senior executives, and management and key experts of Business Areas, subsidiaries and group functions:
OUTSTANDING | 2022-ALLOTMENT OF CALL OPTIONS | 2021-ALLOTMENT OF CALL OPTIONS | 2020-ALLOTMENT OF CALL OPTIONS | 2019-ALLOTMENT OF CALL OPTIONS |
Distributed options | 1\u00a0570\u00a0000 | 1\u00a0675\u00a0000 | 1\u00a0125\u00a0000 | 1\u00a0470\u00a0000 |
Forfeited options | -15\u00a0000 | -95\u00a0000 | -100\u00a0000 | -430\u00a0000 |
Dividend adjustment | 34\u00a0736 | 82\u00a0714 | 59\u00a0208 | 99\u00a0099 |
Total options outstanding at year end 1) | 1\u00a0589\u00a0736 | 1\u00a0662\u00a0714 | 1\u00a0084\u00a0208 | 1\u00a0139\u00a0099 |
Strike price December 31, 2022 (NOK) | 246.50 | 234.85 | 198.35 | 203.06 |
Number of employees in the scheme at year end | 30 | 30 | 28 | 23 |
1) None of the options were exercisable at year-end 2022.
The Share-Price-Based Payment Scheme comprises annual allocations by the Board of Directors of a number of European call options with a strike price of 107.5% of the share price of Mowi\u2019s shares at the date of the annual general meeting authorising allocations under the scheme. The options have a term of four years but will become exercisable immediately if a mandatory bid is made for all of the shares in Mowi or if Mowi is the non-surviving entity in a merger with another company. If the holder of the options exercises the options, the company may settle its obligation through the issue of new shares or, alternatively, by selling treasury shares to the option holder. There will be no lock-up obligation on the shares the option holder receives through the exercise of the option. The
exercise of the option is conditional upon the option holder being employed in a non-terminated position in the Group on the date of exercise.
The number of shares and the strike price will be adjusted for dividends and changes in equity capital during the term of the option in accordance with Oslo Stock Exchange derivative rules (A.2.2.8(1)b). Total profit through the exercise of the option in a year is capped at two years\u2019 salary for the option holder for the 2019, 2020- and 2021-allotment of options.
For the 2022-allotment, the exercise of 50% of the options awarded to an option holder is conditional on achievement of performance criteria, measured in the development of the share price of the Company's shares compared with those of peers (\"Performance-based Options\"). The exercise of the remaining 50% of the options awarded to an option holder is not conditional on achievement of such performance criteria (\"Ordinary Options\"). Total profit through the exercise of Performance-based Options in a year is capped at one year's salary for the option holder, and total profit through the exercise of Ordinary Options in a year is capped at one year's salary for the option holder.
If the profit exceeds these limits, the number of shares to be issued will be reduced accordingly. Following the 2022 annual general meeting (the \"AGM\"), the Board of Directors allocated 1 570 000 options with a strike price corresponding to 107.5% of the volume-weighted average share price on the OSE on the day of the AGM (NOK 252.0070) to a total of 31 individuals.
Eligibility to the senior executive share option scheme is limited to: Group CEO, other Senior Executives and management and key experts of Business Areas, subsidiaries and group functions, based on the following criteria:
\u2013the position and individual is important in realising the Mowi Group ambitions;
\u2013the individual is considered critical for the Business Unit(s);
\u2013the individual is expected to continue in a role covered by the scheme;
\u2013the individual will not retire during the first year of the scheme
SHARE PURCHASE PROGRAM
In 2022 all permanent employees in Mowi ASA and its Norwegian subsidiaries, as well as permanent employees in Mowi Scotland and Mowi Canada, had the opportunity to acquire shares in the Company. For the year 2022 these provisions entitled this group of employees to receive a taxable benefit of NOK 6 000 in connection with their participation in such a scheme. All employees were offered funding of the purchase price through an interest-free advance on salary from Mowi.
No other loans or guaranties have been granted to key management personnel.
PENSION PLANS
Pension plans in the Group are mainly defined contribution plans. There are a few defined benefits plans, which are considered to be immaterial for the Group's financial statements.
PENSION PLANS (EUR MILLION) | PENSION COST | PENSION NET LIABILITY |
Mowi Norway 1) | -9.3 | 4.2 |
Mowi Scotland | -2.1 | -10.6 |
Mowi Canada | -2.2 | \u2014 |
Other entities | -3.3 | 2.0 |
Total 2022 | -16.9 | -4.3 |
Total 2021 | -13.7 | -12.7 |
INCOME TAXES FOR THE YEAR IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Norway | -339.8 | -63.5 |
Foreign units | -56.4 | -31.7 |
Tax on profits (current tax) | -396.3 | -95.3 |
Norway | 166.9 | -21.2 |
Foreign units | 13.9 | 10.9 |
Change in deferred tax | 180.8 | -10.2 |
Total income taxes related to profit for the year | -215.5 | -105.5 |
RECONCILIATION BETWEEN NOMINAL AND EFFECTIVE TAX RATES (EUR MILLION) | 2022 | 2021 |
Profit before tax | 1\u00a0000.9 | 593.4 |
Nominal tax rate | 22% | 22% |
Tax calculated with nominal tax rate | -220.2 | -130.5 |
Non-taxable income/loss on sale of shares | 5.0 | \u2014 |
Non-taxable income/loss from associated companies and joint ventures | 13.1 | 21.3 |
Effect of changed tax rate on deferred tax positions | -3.1 | -2.4 |
Effect of adjustment of income tax from previous years | -2.4 | 4.1 |
Effect of recognition of previously non-recognised tax assets | -3.1 | 1.6 |
Effect of non-recognition of losses and tax assets | -0.4 | 1.2 |
Withholding tax | \u2014 | -2.9 |
Other permanent differences | -6.8 | -9.2 |
Effect of different tax rates compared to nominal rate | 2.4 | 11.5 |
Total income taxes | -215.5 | -105.5 |
TAX PREPAID/RECEIVABLE IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Tax prepaid/receivable in Norway | 8.2 | 16.8 |
Tax prepaid/receivable in foreign units | 11.7 | 11.8 |
Total tax prepaid/receivable in the statement of financial position | 19.9 | 28.6 |
TAX PAYABLE IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Tax payable in Norway | 339.0 | 72.1 |
Tax payable in foreign units | 38.4 | 7.8 |
Total tax payable in the statement of financial position | 377.4 | 79.9 |
SPECIFICATION OF DEFERRED TAX AND BASIS FOR DEFERRED TAX/TAX ASSETS TAX INCREASING/REDUCING TEMPORARY DIFFERENCES (EUR MILLION) | 2022 | 2021 |
Non-current assets | 1\u00a0309.9 | 926.7 |
Current assets | 84.8 | 910.9 |
Debt | -53.7 | -46.4 |
Pension obligation | -6.6 | -7.2 |
Tax losses carried forward | -133.3 | -81.0 |
Other differences | 40.8 | 58.2 |
Total temporary differences | 1\u00a0241.8 | 1\u00a0761.2 |
Tax losses carried forward in Norway | -7.0 | -12.7 |
Other temporary differences in Norway | 548.8 | 1\u00a0309.1 |
Tax losses carried forward abroad | -126.3 | -68.4 |
Other temporary differences abroad | 826.4 | 533.1 |
Total temporary differences | 1\u00a0241.8 | 1\u00a0761.2 |
TOTAL DEFERRED TAX ASSET/LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Deferred tax assets | 69.1 | 51.1 |
Deferred tax liabilities | -332.4 | -441.4 |
Net deferred tax in the statement of financial position | -263.3 | -390.3 |
Mowi has recognised deferred tax assets related to tax losses carried forward. This is based on the expectation of probable sufficient earnings in the future. The expectations are based on current earnings and approved budgets. Deferred tax assets related to tax losses carried forward at a total of EUR 115.4 million have not been recognised due to uncertain utilisation.
Deferred tax assets linked to tax losses are offset against deferred tax liabilities in the tax jurisdictions, where acceptable.
MATURITY OF TAX LOSSES (EUR MILLION) | NORWAY | ABROAD | TOTAL |
2023 | \u2014 | 2.2 | 2.2 |
2024 | \u2014 | 0.3 | 0.3 |
2025 | \u2014 | 2.1 | 2.1 |
2026 | \u2014 | 6.0 | 6.0 |
2027 | \u2014 | 1.7 | 1.7 |
2028 | \u2014 | 1.5 | 1.5 |
2029 | \u2014 | 9.6 | 9.6 |
2030 | \u2014 | 3.6 | 3.6 |
2031 | \u2014 | \u2014 | \u2014 |
2032+ | \u2014 | 69.7 | 69.7 |
Unlimited | 7.0 | 29.6 | 36.6 |
Total 2022 | 7.0 | 126.3 | 133.3 |
Total 2021 | 12.7 | 68.4 | 81.0 |
MATURITY OF TAX LOSSES FOR WHICH NO DEFERRED TAX ASSET IS RECOGNISED (EUR MILLION) | NORWAY | ABROAD | TOTAL |
2023 | \u2014 | \u2014 | \u2014 |
2024 | \u2014 | \u2014 | \u2014 |
2025 | \u2014 | 2.4 | 2.4 |
2026 | \u2014 | 0.7 | 0.7 |
2027 | \u2014 | \u2014 | \u2014 |
2028 | \u2014 | 0.1 | 0.1 |
2029 | \u2014 | 1.7 | 1.7 |
2030 | \u2014 | \u2014 | \u2014 |
2031 | \u2014 | \u2014 | \u2014 |
2032+ | \u2014 | 0.9 | 0.9 |
Unlimited | \u2014 | 109.6 | 109.6 |
Total 2022 | \u2014 | 115.4 | 115.4 |
Total 2021 | \u2014 | 104.6 | 104.6 |
TAX RATES APPLIED | 2022 | 2021 |
Japan | 30.6% | 30.6% |
USA | 21.0% | 21.0% |
Belgium | 25.0% | 25.0% |
Germany | 29.5% | 29.5% |
France | 25.0% | 27.5% |
Norway\u00a0 | 22.0% | 22.0% |
China | 25.0% | 25.0% |
Netherlands | 25.8% | 25.0% |
Scotland | 19.0% | 19.0% |
Canada West | 27.0% | 27.0% |
Canada East | 29.0% | 29.0% |
Faroe Islands | 18.0% | 18.0% |
Chile | 27.0% | 27.0% |
Poland | 19.0% | 19.0% |
Ireland | 12.5% | 12.5% |
CASH (EUR MILLION) | 2022 | 2021 |
Cash in bank | 170.9 | 94.9 |
Employees' tax deduction | 7.0 | 6.8 |
Other restricted cash1) | 0.6 | \u2014 |
Total cash | 178.5 | 101.7 |
SPECIFICATION OF RECEIVABLES (EUR MILLION) | 2022 | 2021 |
Trade receivables | 603.4 | 495.5 |
Provisions for expected credit losses | -3.3 | -3.4 |
Net trade receivables | 600.1 | 492.1 |
Prepayments | 53.9 | 37.9 |
Pension fund | 11.0 | 20.4 |
Tax prepaid/receivable | 19.9 | 28.6 |
Other | 99.1 | 90.2 |
Trade receivables, other receivables and prepayments | 183.7 | 177.2 |
Total trade receivables, other receivables and prepayments | 783.8 | 669.3 |
Based on the nature of business, the Group does not have any material contract assets.
AGE DISTRIBUTION OF TRADE RECEIVABLES (EUR MILLION) | 2022 | 2021 |
Receivables not overdue | 510.2 | 440.6 |
Overdue 0-6 months | 84.9 | 48.9 |
Overdue more than 6 months | 8.3 | 6.0 |
Total trade receivables | 603.4 | 495.5 |
MOVEMENT IN PROVISIONS FOR CREDIT LOSSES (TRADE RECEIVABLES)
At the beginning of 2022, provisions for credit losses amounted to EUR 3.4 million. During 2022, EUR 0.7 million were considered lost. Adjusted for additional provisions for credit losses of EUR 0.5 million the provision at year-end amounted to EUR 3.3 million for 2022. See also Note 13.
CURRENCY EXPOSURE TO TRADE RECEIVABLES
The Business Units generally complete their sales in the main trading currency in the country of destination. The carrying amount of trade receivables per currency is presented below.
CURRENCY SPLIT ACCOUNTS RECEIVABLES | 2022 | 2021 |
EUR | 53% | 54% |
USD | 17% | 17% |
GBP | 9% | 10% |
NOK | 8% | 5% |
PLN | 4% | 3% |
JPY | 4% | 5% |
CAD | 2% | 2% |
Other | 3% | 5% |
CURRENT LIABILITIES (EUR MILLION) | 2022 | 2021 |
Trade payables 1) | 437.0 | 392.8 |
Other current liabilities | ||
Salaries and vacation pay due | 65.5 | 58.1 |
Social security and other taxes | 44.9 | 21.2 |
Accrued expenses | 93.8 | 93.6 |
Other liabilities | 39.2 | 72.1 |
Total other current liabilities | 243.3 | 244.9 |
1) As of year-end 2022 the payable related to the Supply Chain Financing was 136.0 million EUR (120.6 million EUR at year-end 2021).
Based on the nature of business, the Group does not have any material contract liabilities.
CURRENT LEASING LIABILITIES (EUR MILLION) | 2022 | 2021 |
Current part (first year) leases | 173.5 | 182.7 |
Total current leasing liabilities | 173.5 | 182.7 |
UNUSED DRAWING RIGHTS (EUR MILLION) | 2022 | 2021 |
Unused part of bank overdraft facility (to be renewed within one year) | 7.3 | 7.0 |
Unused part of bank overdraft facility (to be renewed in more than one year) | 66.0 | 66.0 |
Unused part of other drawing rights (to be renewed in more than one year) | 402.5 | 899.1 |
Total unused drawing rights | 475.8 | 972.1 |
DEBT SECURED BY MORTGAGES AND PLEDGES (EUR MILLION) | 2022 | 2021 |
Debt to financial institutions | 1\u00a0526.4 | 933.7 |
Leasing debt | 1.0 | 1.2 |
Total debt secured by mortgages and pledges | 1\u00a0527.4 | 934.9 |
Guarantee commitments | 20.0 | 18.7 |
The Mowi Group syndicated loan facility has been established with security in current assets, licenses (where applicable), fixed assets and guarantees from some of the entities in the Group. In addition the shares in larger subsidiaries have been pledged in favour of the bank syndicate.
ASSETS PLEDGED AS SECURITY FOR DEBT (EUR MILLION) | 2022 | 2021 |
Tangible non-current assets and licenses | 1\u00a0750.1 | 1\u00a0731.0 |
Inventory and biological assets | 2\u00a0215.1 | 1\u00a0716.5 |
Trade receivables | 369.0 | 299.7 |
Other assets | 190.7 | 176.5 |
Total assets pledged as security | 4\u00a0524.9 | 3\u00a0923.7 |
OTHER NON-CURRENT LIABILITIES (EUR MILLION) | 2022 | 2021 |
Net pension obligations | 6.6 | 7.6 |
Other non-current liabilities | 1.5 | 11.6 |
Total other non-current liabilities | 8.2 | 19.3 |
Associated companies are recorded in Mowi Group statements in accordance with the equity method. None of the associated companies are listed.
ASSOCIATED COMPANIES (EUR MILLION) | HEAD OFFICE | OWNER- | OWNED BY | AQUISITION COST | CARRYING AMOUNT | SHARE OF PROFIT | DIVIDENDS RECEIVED | OTHER CHANGES | CARRYING AMOUNT |
Nova Sea AS | Lovund | 49% | Mowi Holding AS | 28.2 | 192.8 | 60.0 | -32.5 | -10.7 | 209.7 |
Others | 0.3 | 3.1 | -0.8 | \u2014 | -0.1 | 2.2 | |||
Total | 28.6 | 195.9 | 59.2 | -32.5 | -10.8 | 211.7 |
1) Other changes mainly relates to foreign currency adjustments and movements in loans. Finn\u00f8y Fisk AS has been fully consolidated in 2022
ASSOCIATED COMPANIES 100 % BASIS (EUR MILLION) | DIVIDEND RECEIVED | FAIR VALUE ADJUSTMENT BIOMASS 1) | TOTAL REVENUE | TOTAL PROFIT AND LOSS | TOTAL NON- | TOTAL BIOLOGICAL ASSETS | TOTAL | TOTAL NON- | TOTAL CURRENT LIABILITIES |
2022 | |||||||||
Nova Sea AS | 32.5 | 25.8 | 383.7 | 110.1 | 211.7 | 91.9 | 126.3 | 0.9 | 97.8 |
2021 | |||||||||
Nova Sea AS | 16.2 | 18.1 | 296.4 | 69.3 | 193.6 | 83.6 | 104.1 | 24.1 | 46.1 |
1) Effect of adjusting Mowi`s share of total biological assets as of December 31 presented above to fair value. The effect is shown after tax.
BUSINESS COMBINATIONS
Arctic Fish
In October 2022 Mowi entered into a conditional agreement to acquire 51.28% of the shares in the salmon farmer Arctic Fish, situated in the West Fjords of Iceland for NOK 115 per share amounting to EUR 179.5 million in total. The transaction was subject to approval by the EU Commission and other closing conditions. In December 2022, Mowi obtained a No Action Letter from the EU Commission. The transaction was closed on 29 December 2022 which has been identified as the acquisition date.
Arctic Fish has licenses for 10 ASC approved sites in total, providing a maximum allowed biomass of 27,100 tonnes and another 4,800 tonnes pending approval. Expected harvest volume for 2023 is 15,000 GWT. The Icelandic salmon farming industry is set for extensive development and growth in the coming years and the purchase of Arctic Fish is of strategic importance, and the benefits include expansion into a new country for Mowi. Icelandic waters provide excellent growth and living conditions for salmon, combined with Arctic Fish's geographical footprint and competent organisation and Mowi's strong financial position this will be beneficial for growth and local communities.
We have performed a Provisional Purchase Price Allocation at year end and all values are based on the purchase price of NOK 115 per share. The recognised goodwill of EUR 51 million arises from expected synergies from combining the assets and activities of
Arctic Fish with Mowi. Goodwill is not deductible for income tax purposes. The table below summarizes the consideration paid for Arctic Fish and the assessed fair value of the assets acquired and liabilities assumed, recognised at the acquisition date. Acquisition-related costs of EUR 0.7 million have been recognised as other operating expenses in the consolidated statement of comprehensive income in accordance with IFRS 3, all in 2022.
If consolidated as of January 1 the combined revenue would have been EUR 4\u00a0998.8 million and profit would have been EUR 791.2 million for the year 2022.
Recognised amounts of identifiable assets acquired and liabilities assumed | EUR Million |
Provisional fair value | |
Deferred tax assets | 0 |
Licenses | 257 |
Property, plant and equipment | 100 |
Other assets | 1 |
Biological assets | 68 |
Other inventory | 3 |
Trade receivables | 4 |
Other receivables | 6 |
Cash and cash equivalents | 9 |
Deferred tax liabilities | -51 |
Other long term debt | -67 |
Other current liabilities | -13 |
Trade payables | -18 |
Total identifiable net assets | 300 |
Goodwill | 51 |
Consideration on 100% basis | 351 |
Cash consideration for 51.28% | 180 |
Non-controlling Interests | 171 |
Wester Ross Fisheries
In June 2022, Mowi Scotland acquired Wester Ross Fisheries with MAB of 2 600 LWT operating in three cluster locations in the North. Wester Ross has been consolidated from Q2 2022.
ASSETS HELD FOR SALE
Mowi had no Assets held for sale at year end 2022.
DISCONTINUED OPERATIONS
The consolidated financial statements include the following companies:
PARENT COMPANY | COUNTRY | |
Mowi ASA | Norway | |
SUBSIDIARIES - NORWAY | COUNTRY | OWNERSHIP % |
Mowi Seawater Norway AS | Norway | 100.00% |
Mowi Feed AS | Norway | 100.00% |
Mowi Genetics AS | Norway | 100.00% |
Mowi Holding AS | Norway | 100.00% |
Mowi Minority Holding AS | Norway | 100.00% |
Mowi Markets Norway AS | Norway | 100.00% |
Mowi Norway FOU AS | Norway | 100.00% |
Waynor Trading AS | Norway | 100.00% |
Arctic Fish Holding AS | Norway | 51.28% |
Finn\u00f8y Fisk AS | Norway | 45.05% |
Centre for Aquaculture Competence AS | Norway | 33.30% |
SUBSIDIARIES - AMERICAS | COUNTRY | OWNERSHIP % |
Mowi North America Inc | Canada | 100.00% |
Mowi Canada West Inc | Canada | 100.00% |
Mowi Canada East Inc | Canada | 100.00% |
Englewood Packing Company Ltd | Canada | 100.00% |
Mowi Chile S.A | Chile | 100.00% |
Salmones Tecmar S.A | Chile | 100.00% |
Processadora De Productos Marinos Delifish S.A | Chile | 100.00% |
Delifish Farming SPA | Chile | 100.00% |
Mowi Ducktrap LLC | USA | 100.00% |
Mowi USA Holding LLC | USA | 100.00% |
Mowi USA LLC | USA | 100.00% |
SUBSIDIARIES - ASIA | COUNTRY | OWNERSHIP % |
Mowi China Co. Ltd | China | 100.00% |
Mowi Japan Co. Ltd | Japan | 100.00% |
Mowi Korea Co. Ltd | South Korea | 100.00% |
Mowi Singapore Pte Ltd | Singapore | 100.00% |
Morpol Holdings Singapore Pte Ltd | Singapore | 100.00% |
Mowi Taiwan Co. Ltd | Taiwan | 100.00% |
Mowi Vietnam Company Ltd | Vietnam | 100.00% |
SUBSIDIARIES - EUROPE | COUNTRY | OWNERSHIP % |
Mowi Belgium NV | Belgium | 100.00% |
Mowi Czech s.r.o. | Czech Republic | 100.00% |
Mowi Faroe Islands P/F | Faroes | 100.00% |
Mowi France SAS | France | 100.00% |
Mowi Boulogne SAS | France | 100.00% |
Mowi Bretagne SAS | France | 100.00% |
Mowi Rennes SAS | France | 100.00% |
Mowi Cuisery SAS | France | 100.00% |
Laschinger Seafood GmbH | Germany | 100.00% |
Mowi Harsum DACH GmbH | Germany | 100.00% |
Mowi Germany Verwaltungs GmbH | Germany | 100.00% |
Mowi Germany GmbH & Co. KG | Germany | 100.00% |
Belisco Ehf | Iceland | 100.00% |
Arctic Fish Ehf | Iceland | 51.28% |
Arctic Smolt Ehf | Iceland | 51.28% |
Arctic Sea Farm Ehf | Iceland | 51.28% |
Arctic Oddi Ehf | Iceland | 51.28% |
Comhlucht Iascaireachta Fanad Teoranta | Ireland | 100.00% |
Bradan (Maoil Rua) Teoranta | Ireland | 100.00% |
Bradan Fanad Teoranta | Ireland | 100.00% |
Fanad Pettigo Teoranta | Ireland | 100.00% |
Feirm Farraige Oilean Chliara Teoranta | Ireland | 92.03% |
Silverking Seafoods Ltd | Ireland | 100.00% |
Mowi Italia S.R.L. | Italy | 100.00% |
Mowi Netherlands BV | Netherlands | 100.00% |
Mowi Lemmer BV | Netherlands | 100.00% |
Mowi Poland SA | Poland | 100.00% |
Mowi Lebork Sp. z.o.o. | Poland | 100.00% |
Mowi Technology Sp.z.o.o. | Poland | 100.00% |
Mowi Strzelino Sp. z.o.o. | Poland | 100.00% |
Mowi Poland Sales SA | Poland | 100.00% |
Mowi Nutrition Goleni\u00f3w Sp. z.o.o | Poland | 100.00% |
Mowi Iberia SLU | Spain | 100.00% |
Mowi Sweden AB | Sweden | 100.00% |
Mowi Turkiye Su \u00dcrunleri Ticaret A.\u015e. | Turkey | 100.00% |
Mowi Scotland Ltd | UK | 100.00% |
Meridian Salmon Group Ltd | UK | 100.00% |
Meridian Salmon Processing Ltd | UK | 100.00% |
Meridian Salmon Farms (Argyll) Ltd | UK | 100.00% |
Lakeland Smolt Ltd | UK | 100.00% |
Mowi Consumer Products UK Ltd | UK | 100.00% |
Dorset Cleanerfish Ltd | UK | 100.00% |
Anglesey Aquaculture Ltd | UK | 100.00% |
Ocean Matters Ltd | UK | 100.00% |
OM Penmon Ltd | UK | 100.00% |
SUBSIDIARIES - EUROPE | COUNTRY | OWNERSHIP % |
Ferguson Salmon Ltd | UK | 100.00% |
Finfish Limited | UK | 100.00% |
Scalpay Multi-Trohpic Aquaculture Ltd | UK | 100.00% |
Wester Ross Fisheries Ltd | UK | 100.00% |
Ardessie Salmon Ltd | UK | 100.00% |
Wester Ross Property Investment Ltd | UK | 100.00% |
Marine Harvest Atlantic Inc changed name to Mowi Canada East Inc during 2022
SHARE CAPITAL | 2022 | 2021 |
Total number of shares as of 01.01 | 517\u00a0111\u00a0091 | 517\u00a0111\u00a0091 |
Shares issued during the year | \u2014 | \u2014 |
Total number of shares as of 31.12 | 517\u00a0111\u00a0091 | 517\u00a0111\u00a0091 |
Treasury shares as of 01.01 | \u2014 | \u2014 |
Treasury shares purchased during the year | 1\u00a0170\u00a0034 | 887\u00a0905 |
Treasury shares sold during the year | -1\u00a0170\u00a0034 | -887\u00a0905 |
Treasury shares as of 31.12 | \u2014 | \u2014 |
Nominal value as of 31.12 (NOK) | 7.50 | 7.50 |
Share capital (total number of shares at nominal value) (EUR million) | 404.8 | 404.8 |
Other paid-in capital (EUR million) | 1\u00a0274.7 | 1\u00a0274.7 |
OVERVIEW OF THE LARGEST SHAREHOLDERS 31.12.22 | NUMBER OF SHARES | SHAREHOLDING % |
Geveran Trading Co Ltd1) | 74\u00a0289\u00a0287 | 14.37% |
Folketrygdfondet | 41\u00a0727\u00a0039 | 8.07% |
BlackRock, Inc. | 22\u00a0971\u00a0027 | 4.44% |
Vanguard Group Holdings | 16\u00a0111\u00a0774 | 3.12% |
DnB ASA | 13\u00a0981\u00a0376 | 2.70% |
Svenska Handelsbanken AB | 12\u00a0983\u00a0667 | 2.51% |
UBS AG | 11\u00a0830\u00a0921 | 2.29% |
Schroders PLC | 10\u00a0163\u00a0765 | 1.97% |
Groupe Bruxelles Lambert S.A. | 9\u00a0854\u00a0959 | 1.91% |
Storebrand Kapitalforvaltning | 9\u00a0852\u00a0683 | 1.91% |
Altshuler Shaham Mutual Funds Management Ltd. | 9\u00a0508\u00a0580 | 1.84% |
Amundi Asset Management, SAS | 9\u00a0450\u00a0271 | 1.83% |
Kommunal Landspensjonskasse | 9\u00a0193\u00a0568 | 1.78% |
Deutsche Bank AG Group | 6\u00a0871\u00a0644 | 1.33% |
Danske Bank Group | 6\u00a0368\u00a0370 | 1.23% |
CPP Investment Board | 6\u00a0031\u00a0367 | 1.17% |
Legal & General Group Plc | 5\u00a0766\u00a0401 | 1.12% |
Nordea AB | 5\u00a0747\u00a0128 | 1.11% |
Janus Henderson Investors Group | 5\u00a0263\u00a0480 | 1.02% |
Northern Trust Corporation | 4\u00a0824\u00a0647 | 0.93% |
Total 20 largest shareholders | 292\u00a0791\u00a0954 | 56.62% |
Total other shareholders | 224\u00a0319\u00a0137 | 43.38% |
Total number of shares 31.12.22 | 517\u00a0111\u00a0091 | 100.00% |
1) In addition to the shares included above Geveran Trading Co Ltd had per 31 December 2022 entered into a Total Return Swap (\"TRS\") agreement with underlying exposure to 4 000 000 shares in Mowi. Expiry date for the TRS agreement was 6 March 2023 and the TRS price was NOK 153.55 per share.
SHAREHOLDERS PER COUNTRY | NUMBER OF SHARES | SHARE % |
Norway | 136\u00a0499\u00a0841 | 26.40% |
USA | 77\u00a0754\u00a0335 | 15.04% |
Cyprus | 74\u00a0293\u00a0327 | 14.37% |
Great Britain | 59\u00a0879\u00a0837 | 11.58% |
Germany | 33\u00a0645\u00a0825 | 6.51% |
Other countries | 135\u00a0037\u00a0926 | 26.11% |
Total number of shares 31.12.22 | 517\u00a0111\u00a0091 | 100.00% |
SHARES OWNED BY BOARD MEMBERS, GROUP MANAGEMENT AND THEIR RELATED PARTIES AS OF 31.12.22 | NUMBER OF SHARES |
Board of Directors | |
Ole-Eirik Ler\u00f8y (Chair) | 1\u00a0501\u00a0495 |
Kristian Melhuus | 1\u00a0495 |
Lisbet K. N\u00e6r\u00f8 | 1\u00a0495 |
Kathrine Fredriksen1) | 263 |
Michal Chalaczkiewicz | 263 |
Renate Larsen | 263 |
Peder Strand | 263 |
J\u00f8rgen J. Wengaard | 600 |
Marianne Andersen | 1\u00a0179 |
Roger Petterssen | 1\u00a0883 |
Total number of shares held by Board members | 1\u00a0509\u00a0199 |
Group Management | |
Ivan Vindheim, CEO | 7\u00a0750 |
Kristian Ellingsen, CFO | 1\u00a0090 |
Catarina Martins, Chief Technology Officer and Chief Sustainability Officer | 2\u00a0535 |
\u00d8yvind Oaland, COO Farming Norway | 5\u00a0478 |
Ben Hadfield, COO Farming Scotland, Ireland and Faroes | 7\u00a0960 |
Fernando Villarroel, COO Farming Americas | 5\u00a0502 |
Ola Brattvoll, COO Sales and Marketing | 10\u00a0321 |
Atle Kvist, COO Feed | 633 |
Anne Lorgen Riise, Chief HR Officer | 1\u00a0448 |
Total number of shares held by Group management | 42\u00a0717 |
Total number of shares held by Board members and Group management | 1\u00a0551\u00a0916 |
Total number of shares held by Board members and Group management in % of total outstanding shares | 0.30% |
1) Kathrine Fredriksen is a member of the class of Beneficiaries of the Trusts which indirectly control Geveran Trading Co Limited.
SHAREHOLDERS RIGHTS
There are no current limitations on voting rights or trade limitations related to the Mowi share.
The Board of Directors has been granted the following authorisations which may impact the share capital:
1.To acquire shares in the company (\"own shares\") on behalf of the company with a total nominal value of up to NOK 387 833 318. The authorisation is valid until the ordinary general meeting in 2023, however no longer than 30 June 2023.\"
2.To increase the company's share capital by up to NOK 387 833 318 provided that the combined number of shares that are issued pursuant to this authorisation and the authorisation 3) below shall not in aggregate exceed 10% of the Company's current share capital. The authorisation is valid until the ordinary general meeting in 2023, however no longer than 30 June 2023.\"
BASIC AND DILUTED EARNINGS PER SHARE | 2022 | 2021 |
| ||
Profit for the year attributable to owners of Mowi ASA | ||
Profit from continuing operations attributable to the owners of the parent (EUR million) | 782.4 | 487.6 |
Profit for the year attributable to owners of Mowi ASA (EUR million) | 782.4 | 487.6 |
| ||
Time-weighted average of shares issued and outstanding (million) | 517.1 | 517.1 |
| ||
Basic earnings per share attributable to the owners of Mowi ASA | ||
Basic earnings per share from continuing operations (EUR) | 1.51 | 0.94 |
Basic earnings per share (EUR) | 1.51 | 0.94 |
| ||
Diluted earnings per share attributable to the owners of Mowi ASA | ||
Diluted earnings per share from continuing operations (EUR) | 1.51 | 0.94 |
Diluted earnings per share (EUR) | 1.51 | 0.94 |
TRANSACTIONS WITH ASSOCIATED COMPANIES
The figures presented below are with associated companies, mainly Nova Sea AS.
RELATED PARTY TRANSACTIONS (EUR MILLION) | 2022 | 2021 |
Revenue | 0.8 | 8.1 |
Purchase | -2.3 | -10.3 |
Trade receivables | 0.1 | 3.0 |
Trade payables | -0.3 | \u2014 |
All significant transactions are mainly related to the sale or purchase of fish or smolt and related services.
SHAREHOLDERS
In 2022 and 2021 Mowi Group had no material transactions with any of its shareholders.
UPDATE ON THE ALLEGATIONS OF PRICE COLLUSION
Further to the European Commission inspections in 2019. The European Commission is still at the investigation stage and has not initiated formal proceedings in the case, and no decision has been made.
Furthermore, Mowi has been named a defendant in a class action complaint in Canada. This civil law case is still at the pre-trial stage. Mowi considers that there is no basis for any competition concerns and that the investigations and civil law case clearly lack merit and are entirely unsubstantiated.
OTHER CASES
We are routinely involved in various legal matters arising from the course of our business.
While the outcome of these proceedings cannot be predicted with certainty, we believe that, when resolved, they will not have any material adverse effect on our results, financial position or liquidity.
SPECIFICATION OF OTHER OPERATING EXPENSES (EUR MILLION) | 2022 | 2021 |
Maintenance | -206.7 | -200.6 |
Electricity and fuel | -142.3 | -97.8 |
Rent, leases and third-party services | -48.9 | -36.3 |
Insurance | -42.3 | -43.1 |
Consultancy and audit fees | -44.1 | -43.5 |
IT costs | -24.7 | -24.6 |
Travel cost | -9.4 | -5.2 |
Sales and marketing costs | -25.5 | -24.7 |
Other operating costs | -63.5 | -58.6 |
Total other operating expenses | -607.4 | -534.4 |
SPECIFICATION OF RIGHT OF USE ASSET 2022 (EUR MILLION) | LAND & | MACHINERY & | TRANSPORT | NETS, PENS & MOORINGS | OTHER | TOTAL |
Opening balance | 64.3 | 13.5 | 760.2 | 7.7 | 5.2 | 850.8 |
New contracts | 6.7 | 13.9 | 110.5 | \u2014 | 0.1 | 131.2 |
Extension and other adjustments of existing agreements | 1.3 | \u2014 | 41.9 | \u2014 | \u2014 | 43.2 |
Termination of agreements | -4.7 | -6.7 | -151.7 | -0.7 | -0.2 | -164.0 |
Foreign currency adjustments | 0.2 | -0.1 | -5.0 | -0.1 | 0.1 | -4.9 |
Total acquisition cost as of 31.12 | 67.7 | 20.6 | 755.8 | 7.0 | 5.1 | 856.3 |
Accumulated depreciation and | 21.6 | 7.1 | 304.4 | 3.1 | 1.6 | 337.7 |
Depreciation in the year | 9.1 | 5.8 | 180.8 | 1.5 | 1.1 | 198.4 |
Impairment | \u2014 | \u2014 | 13.4 | \u2014 | \u2014 | 13.4 |
Accumulated depreciation on terminated contracts | -4.6 | -6.5 | -129.0 | -0.7 | -0.2 | -141.1 |
Foreign currency adjustments | \u2014 | \u2014 | -4.2 | \u2014 | \u2014 | -4.1 |
Total accumulated depreciation as of 31.12 | 26.0 | 6.4 | 365.5 | 3.9 | 2.5 | 404.2 |
Total carrying amount as of 31.12 | 41.7 | 14.3 | 390.4 | 3.1 | 2.6 | 452.1 |
Depreciation method | Linear | Linear | Linear | Linear | Linear | \u00a0 |
SPECIFICATION OF RIGHT OF USE ASSET 2021\u00a0 (EUR MILLION) | LAND & | MACHINERY & | TRANSPORT | NETS, PENS & MOORINGS | OTHER | TOTAL |
Opening balance | 61.7 | 18.4 | 658.6 | 7.1 | 3.9 | 749.7 |
New contracts | 3.3 | 3.9 | 119.4 | 0.9 | 1.9 | 129.4 |
Extension and other adjustments of existing agreements | 2.7 | -0.2 | 74.0 | \u2014 | \u2014 | 76.6 |
Termination of agreements | -5.6 | -9.4 | -110.6 | -0.5 | -0.7 | -126.8 |
Foreign currency adjustments | 2.3 | 0.8 | 18.7 | 0.1 | 0.1 | 22.0 |
Total acquisition cost as of 31.12 | 64.3 | 13.5 | 760.2 | 7.7 | 5.2 | 850.8 |
Accumulated depreciation and | 16.1 | 10.0 | 183.9 | 2.0 | 1.3 | 213.3 |
Depreciation in the year | 9.3 | 4.7 | 179.2 | 1.5 | 0.8 | 195.6 |
Reclassification | \u2014 | \u2014 | 5.1 | \u2014 | \u2014 | 5.1 |
Accumulated depreciation on terminated contracts | -4.4 | -8.1 | -69.4 | -0.5 | -0.6 | -83.0 |
Foreign currency adjustments | 0.6 | 0.4 | 5.6 | \u2014 | \u2014 | 6.7 |
Total accumulated depreciation as of 31.12 | 21.6 | 7.1 | 304.4 | 3.1 | 1.6 | 337.7 |
Total carrying amount as of 31.12 | 42.7 | 6.5 | 455.7 | 4.6 | 3.6 | 513.2 |
Depreciation method | Linear | Linear | Linear | Linear | Linear | \u00a0 |
RECONCILIATION RIGHT-OF-USE LIABILITIES (EUR MILLION) | 2022 | 2021 |
Opening balance | 518.4 | 533.1 |
New contracts | 131.2 | 129.4 |
Extensions and other adjustments of existing agreements | 43.2 | 76.6 |
Termination of agreements | -20.9 | -43.2 |
Down payment leasing debt (cash movement) | -199.6 | -192.7 |
Currency effects | -9.4 | 15.2 |
Closing balance 31.12 | 462.9 | 518.4 |
Of which non-current liabilities | 289.4 | 335.7 |
Of which current liabilities | 173.5 | 182.7 |
MATURITY ANALYSIS COMMENCED LEASES (EUR MILLION) | 2022 | 2021 |
Less than 1 year | 183.9 | 193.7 |
1-2 years | 125.2 | 136.8 |
2-3 years | 83.0 | 90.0 |
3-4 years | 51.4 | 50.0 |
4-5 years | 20.5 | 34.1 |
More than 5 years | 31.0 | 47.7 |
Sum 31.12 | 495.0 | 552.1 |
Commenced leases consists of future cash flow related to down payment of leases and interest.
The group has various contracts that have not yet commenced as of 31 December 2022. The future lease payments for these
non-cancellable lease contracts are EUR 26.2 million within one year (EUR 4.4 million), EUR 161.9 million within five years (EUR 31.6 million) and EUR 24.9 million thereafter (EUR 7.1 million).
LEASES EXPENSED (EUR MILLION) | 2022 | 2021 |
Leases not reported as right of use assets 1) | 37.6 | 33.1 |
1) Short term leases with contract period less than one year and low value leases.
SUBLEASES (EUR MILLION) | 2022 | 2021 |
Income from subleases | 2.6 | 8.2 |
SPECIFICATION OF PROVISIONS 2022 (EUR MILLION) | RESTRUCTURING AND OTHER PROVISIONS | ONEROUS | OTHER | TOTAL |
Provisions as of 01.01 | 33.7 | 3.2 | 28.4 | 65.4 |
New provisions in the year | 11.8 | \u2014 | 1.8 | 13.6 |
Utilised provisions | -33.3 | \u2014 | -20.5 | -54.0 |
Non cash utilisation | \u2014 | 8.0 | \u2014 | 8.0 |
Currency adjustment | 0.2 | -0.1 | 0.4 | 0.6 |
Provisions as of 31.12 | 12.4 | 11.2 | 10.1 | 33.7 |
The majority of restructuring cost in 2022 was related to Mowi Canada West with the amount of EUR 11.1 million.
SPECIFICATION OF PROVISIONS 2021 (EUR MILLION) | RESTRUCTURING AND OTHER PROVISIONS | ONEROUS | OTHER | TOTAL |
Provisions as of 01.01 | 13.7 | \u2014 | 11.8 | 25.4 |
New provisions in the year | 24.9 | \u2014 | 19.5 | 44.4 |
Utilised provisions | -5.7 | \u2014 | -3.4 | -9.1 |
Non cash utilisation | \u2014 | 3.2 | \u2014 | 3.2 |
Currency adjustment | 0.9 | \u2014 | 0.5 | 1.4 |
Provisions as of 31.12 | 33.7 | 3.2 | 28.4 | 65.4 |
RESEARCH AND DEVELOPMENT EXPENSES (EUR MILLION) | 2022 | 2021 |
R&D expenses | 35.0 | 39.6 |
FEES TO AUDITORS 2022 (EUR MILLION) | EY | OTHER APPOINTED AUDITORS |
Audit services | -1.6 | -0.1 |
Tax services | -1.1 | \u2014 |
Other non-audit fees | -0.1 | \u2014 |
Total fees for 2022 | -2.7 | -0.1 |
FEES TO AUDITORS 2021 | EY | OTHER APPOINTED AUDITORS |
Audit services | -1.4 | -0.1 |
Tax services | -0.3 | \u2014 |
Other non-audit fees | -0.2 | \u2014 |
Total fees for 2021 | -1.8 | -0.1 |
\u00a0
NEW STANDARDS APPLIED
No new standards have been applied in 2022.
NEW STANDARDS - NOT YET IMPLEMENTED
Mowi ASA is a Norwegian company headquartered at Sandviksboder 77A/B, 5035 Bergen. Mowi ASA is a publicly listed company on the Oslo Stock Exchange, with the ticker symbol MOWI.
The Group\u2019s operations are described in Note 4. Mowi has operations in 26 countries and has structured its operations in three Business Areas: Feed, Farming and Sales & Marketing. The Feed factories are located in Norway and Scotland. The Group\u2019s farming activities are located in Norway, Scotland, Canada, Chile, Ireland,
Iceland and the Faroe Islands. Sales & Marketing comprises the global sales organisation, in addition to the value-added operations in Consumer Products.
Comparable information for one year is presented in this year's Annual Report.
The significant accounting policies applied in the preparation of these consolidated financial statements are described below. These policies have been consistently applied to all periods presented.
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
As of December\u00a031, 2022, the consolidated financial statements of Mowi ASA and its subsidiaries (\u2018\u2018the Group\u2019\u2019 or \u2018\u2018Mowi\u2019\u2019) have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU. In compliance with the Norwegian Accounting Act, additional disclosures are included in the notes to the financial statements of Mowi ASA.
Any new standards and amendments adopted by the Group in 2022 are described in Note 33. At the end of 2022, new standards and changes to existing standards and interpretations have been enacted but are not yet effective. Any relevant effects for Mowi are further described in Note 33.
The consolidated financial statements have been prepared on the historical cost basis, except when IFRS requires recognition at fair value. This relates to the measurement of certain financial instruments and valuation of the biomass as further described below. The reporting period follows the calendar year.
CONSOLIDATION
Consolidated financial statements present the Group\u2019s financial position, comprehensive income, changes in equity and cash flow. All intragroup transactions, receivables and liabilities are eliminated.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.
Subsidiaries
The Group\u2019s consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at December\u00a031, 2022. Control is achieved when the Group is exposed, or is entitled, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights in an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
INVESTMENT IN ASSOCIATED COMPANIES AND JOINT VENTURES
Associated companies are companies in which the Group has a significant non-controlling interest (normally ownership of 20-50%). Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not to exercise control or joint control over those policies.
A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights with respect to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group's investments in its associated companies and joint ventures are accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of the associate or joint venture's net assets since the acquisition date. The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring their accounting policies in line with those of the Group.
The statement of comprehensive income reflects the Group's share of the results deriving from the associate or joint venture's operations.
FOREIGN CURRENCY TRANSLATION
The financial statements for the Group are presented in EUR, which is the functional currency of the parent company. The functional currency of the subsidiaries is their local currency, with the exception of the holding companies in Norway in addition to Mowi ASA, Mowi Markets Norway AS, Mowi Feed AS, and Waynor Trading AS which have EUR as their functional currency, subsidiaries in Chile, Singapore, and Vietnam which use USD as their functional currency, and subsidiaries in Iceland which have NOK as their functional currency.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other comprehensive income. When a foreign operation is sold the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
Translation of transactions in foreign subsidiaries
Profit or loss transactions in foreign subsidiaries are translated to the presentation currency using the average exchange rate for the reporting month, unless exchange rates in the period have fluctuated significantly, in which case the exchange rates in effect on the transaction dates are applied. Assets and liabilities of foreign subsidiaries are translated at the exchange rate at the end of the reporting period.
Transactions in foreign currencies
Foreign currency transactions are translated using the exchange rate at the time of the transaction. Receivables, debt and other monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation differences are recognised in profit or loss. Other assets in foreign currencies are translated at the exchange rate in effect on the transaction date.
FINANCIAL INSTRUMENTS - INITIAL AND SUBSEQUENT MEASUREMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
The Group\u00b4s financial assets are: derivatives, non-listed equity instruments, trade receivables and cash and cash equivalents.
The classification of financial assets at initial recognition depends on the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
The Group classified its financial assets within 2 categories; financial assets at amortised cost and financial asset at fair value through profit and loss. The Group does not apply hedge accounting.
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows and,
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment testing. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost includes trade receivables and other short-term deposit. Trade receivables are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers. No significant financing components are identified.
Derivatives at fair value through profit and loss
Financial assets at fair value through profit and loss include financial assets held for trading, financial assets designated through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near terms. Derivatives, including embedded derivatives, are also classified as held for trading.
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value in profit and loss.
The category includes derivatives instruments such as foreign exchange contracts, interest rate swaps and salmon derivatives. The Group trades in salmon derivatives, both as an operational hedging activity and a financial activity. Operational trading of salmon derivatives is presented as other operating income, while financial trading of salmon derivatives is presented as other financial items.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group\u2019s consolidated statement of financial position) when:
\u2013The rights to receive cash flows from the asset have expired, or
\u2013The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either.
a.the Group has transferred substantially all the risks and rewards of the asset, or
b.the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as financial liabilities at fair value through profit and loss (derivatives), as appropriate. Financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivatives as assets.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of comprehensive income.
Payables are measured at their nominal amount when the effect of discounting is not material.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
REVENUE
Revenue from contracts with customers as defined in IFRS 15 is recognised when control of the goods are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. The Group has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods before transferring them to the customer.
Sale of fish products
Revenue for the Group derives mainly from the sale of fish and elaborated fish products either on spot sales or from contracts. The Group recognises revenue from the sale of fish and elaborated fish products at the point in time when control of the goods is transferred to the customer. Control of an asset refers to the ability to direct the use of and obtain substantially all of the remaining benefits from the asset, and the ability to prevent others from directing the use of and receiving the benefits from the asset. Revenue is generally recognised on delivery of the goods (i.e. a certain point in time). Based on group business of sale of fish and elaborated fish products the customers do not pay any advances. The normal credit term is 30 days upon delivery, and based on the nature of the product there is generally no right of return or warranties. Refund is only given if delivered goods is damaged or delivered with discrepancy compared to agreement, such is immaterial.
The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated, currently no multiple performance obligations have been identified. In determining the transaction price for the sale of goods, the Group considers the effects of variable consideration, the existence of
significant financing components and consideration payable to the customer (if any). At the balance sheet date the group has no outstanding performance obligations in contracts that have original duration of more than 1 year. Therefore no additional disclosures is provided on performance obligations.
Variable consideration
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Contracts for the sale of goods may provide customers with retrospective volume rebates. The retrospective volume rebates give rise to variable consideration.
The Group provides retrospective volume rebates to certain customers once the quantity of products purchased during the period exceeds a threshold specified in the contracts. Rebates are presented as reduction of revenue in the statement of comprehensive income, and other current liabilities in the statement of financial position. To estimate expected rebates, the Group applies the expected value method at the end of each reporting period. The amount of unsettled rebates in the statement of financial position per year-end is immaterial.
Balances related to revenue
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A trade receivable represents the Group\u2019s right to an amount of consideration that is unconditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Group fulfils the performance obligation(s) under the contract.
Refer to notes 17 and 18, contract assets and liabilities are immaterial.
The Group has elected to apply the optional practical expedient for costs to obtain a contract which allows the Group to immediately expense such costs when the related revenue is expected to be recognised within one year, as such no assets have been presented in the statement of financial position.
Biomass
Changes in the estimated fair value of the biomass are recognised in profit or loss. The fair value adjustment is presented in the statement of comprehensive income as \u201cNet fair value adjustment biomass\u201d. The net fair value adjustment consists of \u201cfair value adjustment on biological assets\u201d, \u201cfair value adjustment on harvested fish\u201d and \u201cfair value on incident based mortality\u201d, see Note 6. The fair value adjustment on biological assets represents the change in fair value of the biomass less the change in accumulated cost of production for the biomass. The fair value adjustment on harvested fish is the release from stock of the fair value adjustment related to the fish harvested in the period. The fair value adjustment on incident based mortality is the release from stock of the fair value adjustment related to the fish recognised as incident based mortality in the period. The accumulated cost of incident based mortality is included in \u201ccost of materials\u201d in the statement of comprehensive income.
Interest income
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other financial items in the statement of comprehensive income.
Dividends
Revenue is recognised when the Group\u2019s right to receive the payment is established, which is generally when the dividend is approved by the investment's general meeting.
GOVERNMENT GRANTS
Government grants are recognised where there is reasonable assurance that the grant will be received and where the Company will be in compliance with all conditions attached thereto. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs that it is intended to compensate are expensed. When the grant relates to an asset, it is deducted from the carrying amount of the asset. The grant is then recognised in profit or loss over the useful life of a depreciable asset by way of a reduced depreciation charge.
GOODWILL AND LICENSES
Goodwill
Goodwill is initially measured at cost, and is the excess of the aggregate of the consideration transferred and the amount recognised for a non-controlling interest in the net identifiable assets acquired and liabilities assumed through a business combination.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (CGU) that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in such circumstance is measured on the basis of the relative values of the disposed operation and the portion of the cash-generating unit retained. Goodwill is tested for impairment annually as at December 31, and when circumstances otherwise indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Other intangible assets (licenses)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. The value of licenses acquired by Mowi (mainly licenses for salmon farming) in Norway, Chile, Ireland, the Faroe Islands, Scotland, Canada, and Iceland are considered indefinite. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually or when circumstances otherwise indicate that the carrying value may be impaired, either individually or at the cash-generating unit level. The indefinite life classification is reviewed annually to determine whether it continues to be appropriate. If not, the change in useful life from indefinite to finite is made on a prospective basis.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are measured at acquisition cost less accumulated depreciation and any impairment. Costs associated with normal maintenance and repairs are expensed as incurred. Costs of major replacements and renewals that substantially extend the economic life and functionality of the asset are capitalised. Assets are normally considered property, plant and equipment if the useful economic life exceeds one year. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Straight-line depreciation is applied over the useful life of property, plant and equipment, based on the asset\u2019s historical cost and estimated residual value at disposal. If a substantial part of an asset has an individual and different useful life, this part is depreciated separately. The asset\u2019s residual value and useful life are evaluated annually. The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset.
At the end of the reporting period, the carrying amounts of the Group\u2019s assets are reviewed to determine whether there are
indications that specific assets have suffered an impairment loss. If such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of net present value of discounted cash flows (value in use). If estimated recoverable amount is lower than book value impairment is recognised.
IMPAIRMENT OF NON-CURRENT ASSETS
Annually or upon indication, each cash generating unit, CGU, is tested for impairment. If the recoverable amount of a cash-generating unit is estimated to be less than the carrying amount of the net assets of the cash-generating unit, impairment to the recoverable amount is recognised. If impairment is required, goodwill is written down first, thereafter other intangible assets. If further impairment is required, other assets will be written down on a pro-rata basis.
Impairment losses recognised in previous periods are reversed if the recoverable amount in a later period exceeds the carrying amount. The reversal will not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
LEASING
The determination of whether a contract is, or contains, a lease is assessed at the inception of the lease and is based on whether the contract coveys a right to control the use of an identified asset or assets for a period of time in exchange for consideration. For contracts where the Group is the lessee, right-of-use assets and lease liabilities are recognised at the commencement of the lease.
Right-of-use assets are measured at cost, less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the asset. When a purchase option has been included in the cost at recognition, the right-of-use asset is depreciated over the estimated useful life of the asset.
The lease liabilities at commencement date is measured at the present value of the lease payments. The lease payments are discounted using the Group's incremental borrowing rate as the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate for each business unit is based on SOFR with an addition of a country specific margin.
\u00a0
Short term leases (lease term less than 12 months) and leases of low-value assets are not recognised as right-of-use assets and lease liabilities, as the recognition exemptions for these leases is applied. Lease payments of such leases are recognized as expense over the lease term.
For leasing contracts with optional renewal period, and where we are reasonably certain to exercise this option, the renewal periods are included in the calculation of the lease liability and asset.
The Group has lease contracts for various assets used in its operation, the main asset group being transportation. Lease terms and other conditions vary. Refer to note 29 for further information.
INVENTORY
Inventories mainly comprise feed, goods in progress, packaging materials and finished goods. Inventories of goods are measured at the lower of cost and net realisable value.\u00a0\u00a0\u00a0\u00a0
The cost of finished goods includes direct material costs, direct personnel expenses and indirect processing costs (full production cost). Interest costs are not included in the inventory value. The cost price of purchased goods is the actual purchase price. The cost is based on the principle of first-in first-out, except for feed and value-added-products, where a weighted average is used.
If fish farmed by the Group is included in inventory as a raw material for further processing in one of the Group's processing entities, such fish is included in inventory at fair value less cost to sell at harvest.
BIOLOGICAL ASSETS
Fair value of biological assets is calculated based on a present value model which does not rely on historical cost. Fish ready for harvest (mature fish), are valued at expected sales price with a deduction of cost related to harvest, transport etc. For fish not ready for harvest (immature fish), cost to completion is also deducted. The model uses an interpolation methodology where the known data points are the value of the fish when put to sea and when recognised as mature fish. Technically, the interpolation is calculated per location. The effect of this is that fish that have the same weight and quality are valued similarly. The interpolation model has a natural interpretation in the form of a present value calculation where an imputed rent of assets (i.e. theoretical license rent) per location is included as part of the rate of return. Thus, the value is to a lesser degree affected by the site because low production cost at a high quality site is offset by a higher imputed rent and vice versa. All surplus return in the future is assigned to the licenses through a similarly high imputed rent of assets, and where any shortage in return is recognised in profit and loss immediately. The interpolation model is updated every month, with best estimates for time of harvest, remaining months at sea, expected price at time of harvest and estimated residual cost to grow the fish to harvest weight. The methodology has the effect that any changes in price will have full effect on the biomass at hand, while the price effect on increased weight going forward will be allocated to the license and recognised over time as remaining time at sea decreases. An effect of this is that even with high salmon prices there is no profit at the time the fish is put to sea because all surplus return is assigned to future periods (licenses). Correspondingly the fair value of small fish is rather insensitive to price fluctuations.
An interpolation model as described works best if important variables such as pace of growth, mortality and feed conversion ratios are constant per unit of time or weight increase. Experience shows that in particular there is a deviation from an even
development during the first period in sea relating to increased value due, among other things to reduced risk after handling of the fish, vaccination and mortality related to the transfer to sea. This has been adjusted for.
Biological assets comprise eggs, juveniles, smolt and fish in the sea. Biological assets are, in accordance with IAS 41 and IFRS 13, measured at fair value less cost to sell. In line with IFRS 13, the highest and best use of the biological assets is applied for the valuation. In accordance with the principle for highest and best use, the fish is considered to have optimal harvest weight at 4 kg gutted. This corresponds to that a live weight of approximately 4.8 kg (there may be regional variances) or more are classified as mature fish, while fish that have still not achieved this weight are classified as immature fish. All fish at sea are subject to a fair value calculation, while broodstock and smolt are measured at cost less impairment losses. Cost is deemed a reasonable approximation for fair value for broodstock and smolt. Historically the market prices for eggs (broodstock are not traded) and smolt have not departed significantly from own production cost.\u00a0
Transactions with live fish rarely take place, partly due to regulatory constraints, so the valuation of live fish under IAS 41 implies the establishment of an estimated fair value of the fish in a hypothetical market. The calculation of the estimated fair value is based on market prices for harvested fish and adjusted for estimated differences in accordance with IFRS 13. The prices are reduced for harvesting costs and freight costs to market, to arrive at a net value back to farm. The valuation reflects the expected quality grading and size distribution. The valuation is completed for each Business Unit and is based on the biomass in sea for each seawater site and the estimated market price in each market derived from the development in recent contracts as well as spot prices. Where reliable forward prices are available, those have been used. The change in estimated fair value is recognised in profit or loss based on measurement as of each period, and is classified separately. At harvest, the fair value adjustment is classified as fair value adjustment on harvested fish. In cases of incident based mortality, the fair value adjustment is classified as fair value adjustment on incident based mortality when occurring. Both are included in net fair value adjustment of biological assets in the statement of comprehensive income.
ONEROUS CONTRACTS
At each reporting date, management assesses if there are contracts in which the unavoidable costs of meeting the Group's obligations under the contract exceed the economic benefits expected to be received in accordance with IAS 37. Fair value adjustment of biological assets is included in the unavoidable cost. This implies that the contract may be considered onerous even though the actual production cost of the products sold is lower than the contract price. Volumes used in the calculation is based on estimated remaining volumes for the contracts. Onerous contracts are classified as provisions in the statement of financial position.
TAXES
Income taxes comprise taxes on the taxable profit for the year, changes in deferred taxes and any adjustments in prior years' taxes. Taxes on transactions that are recorded in other comprehensive income or directly in equity do not form part of the tax expense in profit or loss.
Tax payable is calculated using the nominal tax rate for the relevant tax jurisdiction at the end of the reporting period.
Deferred tax is calculated on the basis of temporary differences between accounting and taxation values at the close of the accounting year. Deferred tax assets arise from temporary differences that give rise to future tax deductions. Deferred tax assets are recognised to the extent that it is probable that a taxable profit will arise, against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised.
Tax increasing and tax decreasing temporary differences are offset against each other to the extent that the taxes can be netted within one tax regime.
PROVISIONS
A provision is recognised if the Company has a legal or constructive obligation related to a past event, and it is likely that the obligation will lead to a financial outflow for the Company. Long-term provisions are valued on the basis of discounted expected cash flows.
RESTRUCTURING COSTS
Provisions for restructuring costs will be recognised if the Company has, within the reporting period, published or initiated a restructuring plan, which identifies which parts of the Company and approximately how many employees will be affected, the actions that will be taken and when the plan will be implemented. Provisions are recognised only for costs that cannot be associated with future earnings. Costs related to restructuring are presented on a separate line in the statement of comprehensive income.
SHARE OPTION SCHEMES
The Group has share option schemes from 2019, 2020, 2021, and 2022 which will be settled in shares (equity settlement). The cost of equity-settled transactions is recognised as a payroll expense over the vesting period. The cumulative expense is recognised in other equity reserves within equity.
CASH FLOW STATEMENT AND CASH
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
As of December\u00a031, 2022, the consolidated financial statements of Mowi ASA and its subsidiaries (\u2018\u2018the Group\u2019\u2019 or \u2018\u2018Mowi\u2019\u2019) have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU. In compliance with the Norwegian Accounting Act, additional disclosures are included in the notes to the financial statements of Mowi ASA.
Any new standards and amendments adopted by the Group in 2022 are described in Note 33. At the end of 2022, new standards and changes to existing standards and interpretations have been enacted but are not yet effective. Any relevant effects for Mowi are further described in Note 33.
The consolidated financial statements have been prepared on the historical cost basis, except when IFRS requires recognition at fair value. This relates to the measurement of certain financial instruments and valuation of the biomass as further described below. The reporting period follows the calendar year.
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
As of December\u00a031, 2022, the consolidated financial statements of Mowi ASA and its subsidiaries (\u2018\u2018the Group\u2019\u2019 or \u2018\u2018Mowi\u2019\u2019) have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU. In compliance with the Norwegian Accounting Act, additional disclosures are included in the notes to the financial statements of Mowi ASA.
Any new standards and amendments adopted by the Group in 2022 are described in Note 33. At the end of 2022, new standards and changes to existing standards and interpretations have been enacted but are not yet effective. Any relevant effects for Mowi are further described in Note 33.
The consolidated financial statements have been prepared on the historical cost basis, except when IFRS requires recognition at fair value. This relates to the measurement of certain financial instruments and valuation of the biomass as further described below. The reporting period follows the calendar year.
CONSOLIDATION
Consolidated financial statements present the Group\u2019s financial position, comprehensive income, changes in equity and cash flow. All intragroup transactions, receivables and liabilities are eliminated.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.
Subsidiaries
The Group\u2019s consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at December\u00a031, 2022. Control is achieved when the Group is exposed, or is entitled, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights in an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee.
Subsidiaries
The Group\u2019s consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at December\u00a031, 2022. Control is achieved when the Group is exposed, or is entitled, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights in an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee.
INVESTMENT IN ASSOCIATED COMPANIES AND JOINT VENTURES
Associated companies are companies in which the Group has a significant non-controlling interest (normally ownership of 20-50%). Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not to exercise control or joint control over those policies.
A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights with respect to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group's investments in its associated companies and joint ventures are accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of the associate or joint venture's net assets since the acquisition date. The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring their accounting policies in line with those of the Group.
The statement of comprehensive income reflects the Group's share of the results deriving from the associate or joint venture's operations.
INVESTMENT IN ASSOCIATED COMPANIES AND JOINT VENTURES
Associated companies are companies in which the Group has a significant non-controlling interest (normally ownership of 20-50%). Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not to exercise control or joint control over those policies.
A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights with respect to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group's investments in its associated companies and joint ventures are accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of the associate or joint venture's net assets since the acquisition date. The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring their accounting policies in line with those of the Group.
The statement of comprehensive income reflects the Group's share of the results deriving from the associate or joint venture's operations.
INVESTMENT IN ASSOCIATED COMPANIES AND JOINT VENTURES
Associated companies are companies in which the Group has a significant non-controlling interest (normally ownership of 20-50%). Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not to exercise control or joint control over those policies.
A joint venture is an arrangement whereby the parties that have joint control of the arrangement have rights with respect to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group's investments in its associated companies and joint ventures are accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of the associate or joint venture's net assets since the acquisition date. The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring their accounting policies in line with those of the Group.
The statement of comprehensive income reflects the Group's share of the results deriving from the associate or joint venture's operations.
FOREIGN CURRENCY TRANSLATION
The financial statements for the Group are presented in EUR, which is the functional currency of the parent company. The functional currency of the subsidiaries is their local currency, with the exception of the holding companies in Norway in addition to Mowi ASA, Mowi Markets Norway AS, Mowi Feed AS, and Waynor Trading AS which have EUR as their functional currency, subsidiaries in Chile, Singapore, and Vietnam which use USD as their functional currency, and subsidiaries in Iceland which have NOK as their functional currency.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other comprehensive income. When a foreign operation is sold the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
Translation of transactions in foreign subsidiaries
Profit or loss transactions in foreign subsidiaries are translated to the presentation currency using the average exchange rate for the reporting month, unless exchange rates in the period have fluctuated significantly, in which case the exchange rates in effect on the transaction dates are applied. Assets and liabilities of foreign subsidiaries are translated at the exchange rate at the end of the reporting period.
Transactions in foreign currencies
Foreign currency transactions are translated using the exchange rate at the time of the transaction. Receivables, debt and other monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation differences are recognised in profit or loss. Other assets in foreign currencies are translated at the exchange rate in effect on the transaction date.
FOREIGN CURRENCY TRANSLATION
The financial statements for the Group are presented in EUR, which is the functional currency of the parent company. The functional currency of the subsidiaries is their local currency, with the exception of the holding companies in Norway in addition to Mowi ASA, Mowi Markets Norway AS, Mowi Feed AS, and Waynor Trading AS which have EUR as their functional currency, subsidiaries in Chile, Singapore, and Vietnam which use USD as their functional currency, and subsidiaries in Iceland which have NOK as their functional currency.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other comprehensive income. When a foreign operation is sold the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.
Translation of transactions in foreign subsidiaries
Profit or loss transactions in foreign subsidiaries are translated to the presentation currency using the average exchange rate for the reporting month, unless exchange rates in the period have fluctuated significantly, in which case the exchange rates in effect on the transaction dates are applied. Assets and liabilities of foreign subsidiaries are translated at the exchange rate at the end of the reporting period.
Transactions in foreign currencies
Foreign currency transactions are translated using the exchange rate at the time of the transaction. Receivables, debt and other monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation differences are recognised in profit or loss. Other assets in foreign currencies are translated at the exchange rate in effect on the transaction date.
FINANCIAL INSTRUMENTS - INITIAL AND SUBSEQUENT MEASUREMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
The Group\u00b4s financial assets are: derivatives, non-listed equity instruments, trade receivables and cash and cash equivalents.
The classification of financial assets at initial recognition depends on the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
The Group classified its financial assets within 2 categories; financial assets at amortised cost and financial asset at fair value through profit and loss. The Group does not apply hedge accounting.
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows and,
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment testing. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost includes trade receivables and other short-term deposit. Trade receivables are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers. No significant financing components are identified.
Derivatives at fair value through profit and loss
Financial assets at fair value through profit and loss include financial assets held for trading, financial assets designated through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near terms. Derivatives, including embedded derivatives, are also classified as held for trading.
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value in profit and loss.
The category includes derivatives instruments such as foreign exchange contracts, interest rate swaps and salmon derivatives. The Group trades in salmon derivatives, both as an operational hedging activity and a financial activity. Operational trading of salmon derivatives is presented as other operating income, while financial trading of salmon derivatives is presented as other financial items.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group\u2019s consolidated statement of financial position) when:
\u2013The rights to receive cash flows from the asset have expired, or
\u2013The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either.
a.the Group has transferred substantially all the risks and rewards of the asset, or
b.the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as financial liabilities at fair value through profit and loss (derivatives), as appropriate. Financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivatives as assets.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of comprehensive income.
Payables are measured at their nominal amount when the effect of discounting is not material.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
Financial assets
The Group\u00b4s financial assets are: derivatives, non-listed equity instruments, trade receivables and cash and cash equivalents.
The classification of financial assets at initial recognition depends on the financial asset\u2019s contractual cash flow characteristics and the Group\u2019s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
The Group classified its financial assets within 2 categories; financial assets at amortised cost and financial asset at fair value through profit and loss. The Group does not apply hedge accounting.
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows and,
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment testing. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost includes trade receivables and other short-term deposit. Trade receivables are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers. No significant financing components are identified.
Derivatives at fair value through profit and loss
Financial assets at fair value through profit and loss include financial assets held for trading, financial assets designated through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near terms. Derivatives, including embedded derivatives, are also classified as held for trading.
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value in profit and loss.
The category includes derivatives instruments such as foreign exchange contracts, interest rate swaps and salmon derivatives. The Group trades in salmon derivatives, both as an operational hedging activity and a financial activity. Operational trading of salmon derivatives is presented as other operating income, while financial trading of salmon derivatives is presented as other financial items.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group\u2019s consolidated statement of financial position) when:
\u2013The rights to receive cash flows from the asset have expired, or
\u2013The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either.
a.the Group has transferred substantially all the risks and rewards of the asset, or
Derivatives at fair value through profit and loss
Financial assets at fair value through profit and loss include financial assets held for trading, financial assets designated through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near terms. Derivatives, including embedded derivatives, are also classified as held for trading.
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value in profit and loss.
Derivatives at fair value through profit and loss
Financial assets at fair value through profit and loss include financial assets held for trading, financial assets designated through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near terms. Derivatives, including embedded derivatives, are also classified as held for trading.
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value in profit and loss.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group\u2019s consolidated statement of financial position) when:
\u2013The rights to receive cash flows from the asset have expired, or
\u2013The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either.
a.the Group has transferred substantially all the risks and rewards of the asset, or
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300W1OGQF5LZIH349", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f-290": { "value": "Financial liabilities
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as financial liabilities at fair value through profit and loss (derivatives), as appropriate. Financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivatives as assets.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of comprehensive income.
Payables are measured at their nominal amount when the effect of discounting is not material.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300W1OGQF5LZIH349", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f-291": { "value": "Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
IMPAIRMENT OF NON-CURRENT ASSETS
Annually or upon indication, each cash generating unit, CGU, is tested for impairment. If the recoverable amount of a cash-generating unit is estimated to be less than the carrying amount of the net assets of the cash-generating unit, impairment to the recoverable amount is recognised. If impairment is required, goodwill is written down first, thereafter other intangible assets. If further impairment is required, other assets will be written down on a pro-rata basis.
Impairment losses recognised in previous periods are reversed if the recoverable amount in a later period exceeds the carrying amount. The reversal will not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
REVENUE
Revenue from contracts with customers as defined in IFRS 15 is recognised when control of the goods are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. The Group has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods before transferring them to the customer.
Sale of fish products
Revenue for the Group derives mainly from the sale of fish and elaborated fish products either on spot sales or from contracts. The Group recognises revenue from the sale of fish and elaborated fish products at the point in time when control of the goods is transferred to the customer. Control of an asset refers to the ability to direct the use of and obtain substantially all of the remaining benefits from the asset, and the ability to prevent others from directing the use of and receiving the benefits from the asset. Revenue is generally recognised on delivery of the goods (i.e. a certain point in time). Based on group business of sale of fish and elaborated fish products the customers do not pay any advances. The normal credit term is 30 days upon delivery, and based on the nature of the product there is generally no right of return or warranties. Refund is only given if delivered goods is damaged or delivered with discrepancy compared to agreement, such is immaterial.
The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated, currently no multiple performance obligations have been identified. In determining the transaction price for the sale of goods, the Group considers the effects of variable consideration, the existence of
significant financing components and consideration payable to the customer (if any). At the balance sheet date the group has no outstanding performance obligations in contracts that have original duration of more than 1 year. Therefore no additional disclosures is provided on performance obligations.
Variable consideration
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Contracts for the sale of goods may provide customers with retrospective volume rebates. The retrospective volume rebates give rise to variable consideration.
The Group provides retrospective volume rebates to certain customers once the quantity of products purchased during the period exceeds a threshold specified in the contracts. Rebates are presented as reduction of revenue in the statement of comprehensive income, and other current liabilities in the statement of financial position. To estimate expected rebates, the Group applies the expected value method at the end of each reporting period. The amount of unsettled rebates in the statement of financial position per year-end is immaterial.
Balances related to revenue
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A trade receivable represents the Group\u2019s right to an amount of consideration that is unconditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Group fulfils the performance obligation(s) under the contract.
Refer to notes 17 and 18, contract assets and liabilities are immaterial.
The Group has elected to apply the optional practical expedient for costs to obtain a contract which allows the Group to immediately expense such costs when the related revenue is expected to be recognised within one year, as such no assets have been presented in the statement of financial position.
Biomass
Changes in the estimated fair value of the biomass are recognised in profit or loss. The fair value adjustment is presented in the statement of comprehensive income as \u201cNet fair value adjustment biomass\u201d. The net fair value adjustment consists of \u201cfair value adjustment on biological assets\u201d, \u201cfair value adjustment on harvested fish\u201d and \u201cfair value on incident based mortality\u201d, see Note 6. The fair value adjustment on biological assets represents the change in fair value of the biomass less the change in accumulated cost of production for the biomass. The fair value adjustment on harvested fish is the release from stock of the fair value adjustment related to the fish harvested in the period. The fair value adjustment on incident based mortality is the release from stock of the fair value adjustment related to the fish recognised as incident based mortality in the period. The accumulated cost of incident based mortality is included in \u201ccost of materials\u201d in the statement of comprehensive income.
Interest income
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other financial items in the statement of comprehensive income.
Dividends
Revenue is recognised when the Group\u2019s right to receive the payment is established, which is generally when the dividend is approved by the investment's general meeting.
Interest income
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other financial items in the statement of comprehensive income.
Dividends
Revenue is recognised when the Group\u2019s right to receive the payment is established, which is generally when the dividend is approved by the investment's general meeting.
GOODWILL AND LICENSES
Goodwill
Goodwill is initially measured at cost, and is the excess of the aggregate of the consideration transferred and the amount recognised for a non-controlling interest in the net identifiable assets acquired and liabilities assumed through a business combination.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (CGU) that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in such circumstance is measured on the basis of the relative values of the disposed operation and the portion of the cash-generating unit retained. Goodwill is tested for impairment annually as at December 31, and when circumstances otherwise indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Other intangible assets (licenses)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. The value of licenses acquired by Mowi (mainly licenses for salmon farming) in Norway, Chile, Ireland, the Faroe Islands, Scotland, Canada, and Iceland are considered indefinite. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually or when circumstances otherwise indicate that the carrying value may be impaired, either individually or at the cash-generating unit level. The indefinite life classification is reviewed annually to determine whether it continues to be appropriate. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Goodwill
Goodwill is initially measured at cost, and is the excess of the aggregate of the consideration transferred and the amount recognised for a non-controlling interest in the net identifiable assets acquired and liabilities assumed through a business combination.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (CGU) that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in such circumstance is measured on the basis of the relative values of the disposed operation and the portion of the cash-generating unit retained. Goodwill is tested for impairment annually as at December 31, and when circumstances otherwise indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Other intangible assets (licenses)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite. The value of licenses acquired by Mowi (mainly licenses for salmon farming) in Norway, Chile, Ireland, the Faroe Islands, Scotland, Canada, and Iceland are considered indefinite. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually or when circumstances otherwise indicate that the carrying value may be impaired, either individually or at the cash-generating unit level. The indefinite life classification is reviewed annually to determine whether it continues to be appropriate. If not, the change in useful life from indefinite to finite is made on a prospective basis.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are measured at acquisition cost less accumulated depreciation and any impairment. Costs associated with normal maintenance and repairs are expensed as incurred. Costs of major replacements and renewals that substantially extend the economic life and functionality of the asset are capitalised. Assets are normally considered property, plant and equipment if the useful economic life exceeds one year. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Straight-line depreciation is applied over the useful life of property, plant and equipment, based on the asset\u2019s historical cost and estimated residual value at disposal. If a substantial part of an asset has an individual and different useful life, this part is depreciated separately. The asset\u2019s residual value and useful life are evaluated annually. The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset.
At the end of the reporting period, the carrying amounts of the Group\u2019s assets are reviewed to determine whether there are
indications that specific assets have suffered an impairment loss. If such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of net present value of discounted cash flows (value in use). If estimated recoverable amount is lower than book value impairment is recognised.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300W1OGQF5LZIH349", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f-301": { "value": "IMPAIRMENT OF NON-CURRENT ASSETS
Annually or upon indication, each cash generating unit, CGU, is tested for impairment. If the recoverable amount of a cash-generating unit is estimated to be less than the carrying amount of the net assets of the cash-generating unit, impairment to the recoverable amount is recognised. If impairment is required, goodwill is written down first, thereafter other intangible assets. If further impairment is required, other assets will be written down on a pro-rata basis.
Impairment losses recognised in previous periods are reversed if the recoverable amount in a later period exceeds the carrying amount. The reversal will not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
LEASING
The determination of whether a contract is, or contains, a lease is assessed at the inception of the lease and is based on whether the contract coveys a right to control the use of an identified asset or assets for a period of time in exchange for consideration. For contracts where the Group is the lessee, right-of-use assets and lease liabilities are recognised at the commencement of the lease.
Right-of-use assets are measured at cost, less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the asset. When a purchase option has been included in the cost at recognition, the right-of-use asset is depreciated over the estimated useful life of the asset.
The lease liabilities at commencement date is measured at the present value of the lease payments. The lease payments are discounted using the Group's incremental borrowing rate as the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate for each business unit is based on SOFR with an addition of a country specific margin.
\u00a0
Short term leases (lease term less than 12 months) and leases of low-value assets are not recognised as right-of-use assets and lease liabilities, as the recognition exemptions for these leases is applied. Lease payments of such leases are recognized as expense over the lease term.
For leasing contracts with optional renewal period, and where we are reasonably certain to exercise this option, the renewal periods are included in the calculation of the lease liability and asset.
INVENTORY
Inventories mainly comprise feed, goods in progress, packaging materials and finished goods. Inventories of goods are measured at the lower of cost and net realisable value.\u00a0\u00a0\u00a0\u00a0
The cost of finished goods includes direct material costs, direct personnel expenses and indirect processing costs (full production cost). Interest costs are not included in the inventory value. The cost price of purchased goods is the actual purchase price. The cost is based on the principle of first-in first-out, except for feed and value-added-products, where a weighted average is used.
If fish farmed by the Group is included in inventory as a raw material for further processing in one of the Group's processing entities, such fish is included in inventory at fair value less cost to sell at harvest.
BIOLOGICAL ASSETS
Fair value of biological assets is calculated based on a present value model which does not rely on historical cost. Fish ready for harvest (mature fish), are valued at expected sales price with a deduction of cost related to harvest, transport etc. For fish not ready for harvest (immature fish), cost to completion is also deducted. The model uses an interpolation methodology where the known data points are the value of the fish when put to sea and when recognised as mature fish. Technically, the interpolation is calculated per location. The effect of this is that fish that have the same weight and quality are valued similarly. The interpolation model has a natural interpretation in the form of a present value calculation where an imputed rent of assets (i.e. theoretical license rent) per location is included as part of the rate of return. Thus, the value is to a lesser degree affected by the site because low production cost at a high quality site is offset by a higher imputed rent and vice versa. All surplus return in the future is assigned to the licenses through a similarly high imputed rent of assets, and where any shortage in return is recognised in profit and loss immediately. The interpolation model is updated every month, with best estimates for time of harvest, remaining months at sea, expected price at time of harvest and estimated residual cost to grow the fish to harvest weight. The methodology has the effect that any changes in price will have full effect on the biomass at hand, while the price effect on increased weight going forward will be allocated to the license and recognised over time as remaining time at sea decreases. An effect of this is that even with high salmon prices there is no profit at the time the fish is put to sea because all surplus return is assigned to future periods (licenses). Correspondingly the fair value of small fish is rather insensitive to price fluctuations.
An interpolation model as described works best if important variables such as pace of growth, mortality and feed conversion ratios are constant per unit of time or weight increase. Experience shows that in particular there is a deviation from an even
development during the first period in sea relating to increased value due, among other things to reduced risk after handling of the fish, vaccination and mortality related to the transfer to sea. This has been adjusted for.
Biological assets comprise eggs, juveniles, smolt and fish in the sea. Biological assets are, in accordance with IAS 41 and IFRS 13, measured at fair value less cost to sell. In line with IFRS 13, the highest and best use of the biological assets is applied for the valuation. In accordance with the principle for highest and best use, the fish is considered to have optimal harvest weight at 4 kg gutted. This corresponds to that a live weight of approximately 4.8 kg (there may be regional variances) or more are classified as mature fish, while fish that have still not achieved this weight are classified as immature fish. All fish at sea are subject to a fair value calculation, while broodstock and smolt are measured at cost less impairment losses. Cost is deemed a reasonable approximation for fair value for broodstock and smolt. Historically the market prices for eggs (broodstock are not traded) and smolt have not departed significantly from own production cost.\u00a0
Transactions with live fish rarely take place, partly due to regulatory constraints, so the valuation of live fish under IAS 41 implies the establishment of an estimated fair value of the fish in a hypothetical market. The calculation of the estimated fair value is based on market prices for harvested fish and adjusted for estimated differences in accordance with IFRS 13. The prices are reduced for harvesting costs and freight costs to market, to arrive at a net value back to farm. The valuation reflects the expected quality grading and size distribution. The valuation is completed for each Business Unit and is based on the biomass in sea for each seawater site and the estimated market price in each market derived from the development in recent contracts as well as spot prices. Where reliable forward prices are available, those have been used. The change in estimated fair value is recognised in profit or loss based on measurement as of each period, and is classified separately. At harvest, the fair value adjustment is classified as fair value adjustment on harvested fish. In cases of incident based mortality, the fair value adjustment is classified as fair value adjustment on incident based mortality when occurring. Both are included in net fair value adjustment of biological assets in the statement of comprehensive income.
ONEROUS CONTRACTS
At each reporting date, management assesses if there are contracts in which the unavoidable costs of meeting the Group's obligations under the contract exceed the economic benefits expected to be received in accordance with IAS 37. Fair value adjustment of biological assets is included in the unavoidable cost. This implies that the contract may be considered onerous even though the actual production cost of the products sold is lower than the contract price. Volumes used in the calculation is based on estimated remaining volumes for the contracts. Onerous contracts are classified as provisions in the statement of financial position.
PROVISIONS
A provision is recognised if the Company has a legal or constructive obligation related to a past event, and it is likely that the obligation will lead to a financial outflow for the Company. Long-term provisions are valued on the basis of discounted expected cash flows.
RESTRUCTURING COSTS
Provisions for restructuring costs will be recognised if the Company has, within the reporting period, published or initiated a restructuring plan, which identifies which parts of the Company and approximately how many employees will be affected, the actions that will be taken and when the plan will be implemented. Provisions are recognised only for costs that cannot be associated with future earnings. Costs related to restructuring are presented on a separate line in the statement of comprehensive income.
TAXES
Income taxes comprise taxes on the taxable profit for the year, changes in deferred taxes and any adjustments in prior years' taxes. Taxes on transactions that are recorded in other comprehensive income or directly in equity do not form part of the tax expense in profit or loss.
Tax payable is calculated using the nominal tax rate for the relevant tax jurisdiction at the end of the reporting period.
Deferred tax is calculated on the basis of temporary differences between accounting and taxation values at the close of the accounting year. Deferred tax assets arise from temporary differences that give rise to future tax deductions. Deferred tax assets are recognised to the extent that it is probable that a taxable profit will arise, against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised.
Tax increasing and tax decreasing temporary differences are offset against each other to the extent that the taxes can be netted within one tax regime.
SHARE OPTION SCHEMES
The Group has share option schemes from 2019, 2020, 2021, and 2022 which will be settled in shares (equity settlement). The cost of equity-settled transactions is recognised as a payroll expense over the vesting period. The cumulative expense is recognised in other equity reserves within equity.
SHARE OPTION SCHEMES
The Group has share option schemes from 2019, 2020, 2021, and 2022 which will be settled in shares (equity settlement). The cost of equity-settled transactions is recognised as a payroll expense over the vesting period. The cumulative expense is recognised in other equity reserves within equity.
ESTIMATES
The preparation of financial statements in accordance with IFRS requires management to make accounting estimates and judgments that affect the recognised amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on past experience and information perceived to be relevant and probable when the judgments are made. Estimates are reviewed on an on-going basis and actual values and results may deviate from these estimates. Adjustments to accounting estimates are recognised in the period in which the estimates are revised.
Mowi is exposed to a number of underlying economic factors which affect the overall results, such as salmon prices, foreign exchange rates and interest rates, as well as financial instruments with fair values derived from changes in these factors.
The matters described below are considered to be the most important in understanding the key sources of estimation uncertainty that are involved in preparing these consolidated financial statements and the uncertainties that could most significantly impact the amounts reported on the result of operations, financial position and cash flows.
INTANGIBLE ASSETS - GOODWILL AND FARMING LICENSES
The annual impairment test on intangible assets is based on a discounted cash flow model per cash-generating unit (CGU). The cash flows used in the calculations represent management\u2019s best estimate at the time of reporting. The assumptions used rest on uncertainty with regard to product prices, input prices, biological performance and future regulatory frameworks. Costs can normally be estimated with a higher degree of accuracy than income.
As profitability in the salmon farming industry historically has been very volatile, depending on developments in the price of salmon, Mowi uses budgets and long-term plans for the analysis.
The WACC model is used for estimating the discount rate. The input data for the model is updated every 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 WACC is calculated separately for the different CGUs. Indications of impairment that initiate testing beyond the year-end test include a significant reduction in the profitability of the CGU compared to previous periods, negative deviations from budgets, changes in the use of assets, market changes and regulatory changes.
For further information about uncertainty in the valuation of intangible assets and impairment testing, please see Note 8,
Impairment testing. Note 9, Intangible assets, illustrates the specification of intangible assets in the Group.
BIOLOGICAL ASSETS
Biological assets comprise eggs, juveniles, smolt and fish in the sea. These assets are measured at fair value less cost to sell, unless the fair value cannot be measured reliably. The estimation of the fair value relies on a series of uncertain assumptions, e.g., biomass volume, biomass quality, size distribution, market prices, expected future costs, remaining time to harvest and total time to harvest.
Mowi measures all deviations in biomass volume compared to estimates when a site is harvested out. Except for situations where there has been an incident causing mass mortality, particularly early in the cycle, combined with an inability to count and weigh fish after the event in fear of further stressing the fish, volume deviations are normally minor. Similarly, excluding the effects of soft flesh and melanin, the quality of the fish can normally be estimated with a relatively high degree of accuracy. Categorisation of quality is normally set per country based on averages, but can be set individually per site when needed. The size distribution shows some degree of variation but normally not to an extent that significantly changes the estimated value of the biomass (the value of two fish at five kg is very similar to the value of two fish weighing four and six kg, respectively).
The accumulated cost of the fish per kg will only deviate from the estimate if the volume is different from the estimate. For the estimation of future costs, there is uncertainty with regard to feed prices, other input costs and biological development. Mowi measures cost deviations vs. budget as part of the follow up of Business Units. Excluding special situations (incidents etc.), the deviations in costs vs budgets are normally limited for a group of sites, although individual sites might show deviations. The estimation of costs influences the biomass value through the recognised fair value adjustment in the statements of comprehensive income and financial position (calculated as fair value less accumulated biological costs).
The key element in the estimation of fair value is the assumed market price. The assumed market price is the price that we expect to receive on the future date when the live fish is harvested. We derive these prices from a variety of sources, normally a combination of the prices achieved in the previous month and the contracts most recently entered into. For salmon of Norwegian, Scottish and Faroese origin, quoted forward prices (Nasdaq) are used in the estimation, see Note 2. The use of third-party forward prices improves the reliability and comparability of the price estimation.
For further information about biological asset values please see Note 6, Biological assets.
JUDGMENTS
The matters described below are considered to be the most important in understanding the key sources of judgments that are involved in preparing these consolidated financial statements and the uncertainties that could most significantly impact the amounts reported on the result of operations, financial position and cash flows.
LICENSES
The Group has assessed that all fish farming licenses have indefinite lives and, as such, are not amortised. Most of the jurisdictions in which the Group operates require us to obtain a license for each fish farm owned and operated in that jurisdiction. The Group has obtained and currently holds a license to own and operate each of our fish farms where a license is required. These licenses have indefinite lives or require renewal after a specific time period, but normally with automatic renewal and, as such, we have assessed that they have indefinite lives. However, the Group\u2019s licenses in each country are subject to certain requirements, and we risk penalties (including, in some cases, criminal charges), sanctions or even license revocation if we fail to comply with license requirements or related regulations. Also, local government may change the way licenses are renewed.
SUPPLY CHAIN FINANCING
Two companies in the Group hold Supply Chain Finance (SCF) agreements meaning that some vendors will indirectly offer extended credit terms to the company through a separate agreement with a financial institution. The vendors sell their trade receivables to the financial institution in order to receive payment immediately. Payment terms under the SCF agreement are in line with industry practice. The transaction is still between the company and its suppliers, and the company does not waive the right to claim any refund on quality issues, return goods etc. towards the supplier.
The refinancing by vendors has no cash-flow impact on the company, and only when the trade payable is settled with the bank will the cash flow statement be impacted, with a operating cash flow charge. The group's assessment is that the liabilities under these SCF agreements are presented as trade payables.
NOTE 3B - ENVIRONMENTAL RISK
Climate change represents both risks and opportunities for Mowi. We recognise the growing significance of climate change on our business and the increasing role of producing food from the ocean as a solution to climate change.
Mowi has developed a sustainability strategy, the Leading the Blue Revolution Plan. It sets ambitious goals to ensure our salmon is raised in the ocean in harmony with nature and local coastal communities, using an eco-efficient value chain while offering solutions to global challenges such as climate change and plastic pollution.
The risk of climate change on Mowi's financial position can be classified into two types of risks; transition risk and physical risk. Transition risks refer to the changes in technological advancements within clean energy, shifts in consumer behaviour and
KEY ASSUMPTIONS
The key assumptions used in the calculation of value in use are harvested volume, EBIT(DA)/margins, capital expenditure, discount rates and the terminal growth rates. Please see the table below for a summary of the key assumptions for each CGU.
Harvest volume
The expected harvest volume is based on the fish currently being held at sea, forward stocking plan and adjusted for the expected future increase in production given today's licenses. This evaluation has been performed CGU by CGU and is updated yearly.
EBIT(DA)/Margins
The key profit target for salmon farming and sales is EBIT per kg, while value-added operations are measured in terms of EBIT/EBITDA in % of sales. EBIT per kg is highly volatile due to fluctuations in the price of salmon. Costs can under normal circumstances be forecast with a relatively high level of accuracy. As Mowi has entered into long-term sales contracts for a proportion of the volume to be harvested in 2023, the margin for 2023 can be forecasted with a higher level of accuracy than the margin for the years beyond (2023-2026). With regards to the terminal, an expected long-term EBIT pr kg has been used in the Farming entities and an expected EBIT in % of sales has been used for other operations. In the calculation we have used the EBIT margin from the Long Term Plan per entity, and reduced this to 90%. This principle has been applied in all Farming entities for the terminal value.
Capital expenditure
In the five-year forecast period, the capital expenditure necessary to meet the expected growth in revenue and profit is taken into consideration. Consistent with the Group\u2019s plan, the capital expenditure level for 2023 is high to further grow the operations. Beyond 2023, capital expenditures are aligned with growth and replacement plans. Capital expenditure to comply with current laws and regulations has been included. Capital expenditure
related to committed and approved efficiency improvement programs 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.
Discount rate
The discount rates are based on the Weighted Average Cost of Capital (WACC) methodology. The cost of equity is based on Capital Asset Pricing Model (CAPM). The cost of debt is based on the risk-free rate in the applicable country. In the model, a ten-year risk-free rate has been used. Calculation of the final discount rates (WACC) also takes into account market risk premium, debt risk premium, gearing and beta value. In the calculations, the Group has applied estimated cash flows before tax and the corresponding discount rates before tax.
Terminal growth rates
Growth after the five-year forecast period has in general been set independently for each cash-generating unit based on the five year average historic inflation rate. The maximum growth rate applied beyond the forecast period is 1.8%. This is lower than the expected growth rates in the first five years and lower than the historic growth rate in salmon demand.
Sensitivity
With regard to the assessment of recoverable amount, the Group is of the view that no reasonably likely change in any of the above key assumptions would cause the carrying value to materially exceed the recoverable amount for any of the CGUs. With regards to Climate change we have performed an sensitivity analysis and the Group is in the view that climate change will not materially change the carrying amounts. The Group try to incorporate all expected effects of climate change, inflation, wars, pandemics etc in the updated budget assumptions for 2023 and long term plan for 2024-2027. In general we expect a good market in 2023.
The significant key assumptions with regards to sensitivity are expected harvest volumes and EBIT(DA)/Margins.
ASSUMPTIONS | HARVEST VOLUME 2022 (GWT) | WACC | TERMINAL | ||
BEFORE TAX | VALUE GROWTH % | ||||
2022 | 2021 | 2022 | 2021 | ||
Mowi Norway Farming | 293\u00a0720 | 11.7% | 8.9% | 1.6% | 0.8% |
Mowi Chile Farming | 65\u00a0737 | 11.3% | 10.4% | 1.8% | 1.6% |
Mowi Canada Farming | 41\u00a0095 | 9.8% | 9.3% | 1.6% | 0.8% |
Mowi Scotland Farming | 48\u00a0374 | 9.2% | 7.9% | 1.6% | 0.6% |
Mowi Ireland Farming | 6\u00a0845 | 8.0% | 6.9% | 1.6% | 0.3% |
Mowi Faroe Islands Farming | 7\u00a0864 | 9.4% | 8.5% | 1.6% | 0.8% |
Mowi Consumer Products Europe | \u2014 | 9.0% | 7.9% | 1.5% | 0.2% |
Mowi Asia | \u2014 | 9.9% | 9.0% | 1.6% | 0.8% |
Mowi USA | \u2014 | 11.1% | 10.4% | 1.6% | 1.6% |
Mowi Feed | \u2014 | 9.5% | 8.7% | 1.6% | 0.8% |
Total | 463\u00a0635 |
For management purposes, Mowi is organised into three Business Areas: Feed, Farming and Sales & Marketing.
Business segments are components of a business that are regularly reviewed by its chief operating decision-makers for the purpose of assessing performance and allocating resources. The term business segments corresponds to operating segments as defined in IFRS 8. The Group Management Team is the Group\u2019s chief operating decision-maker (\"CODM\").
In Mowi the Feed Business Area consist of the feed factories in Norway and Scotland. Feed is considered to be a separate business segment due to the nature of the business (different economic characteristics (e.g similar long term average gross margin) compared to other business segments in the Group and separate management follow up).
The Farming Business Area consists of the farming and primary processing operations in Norway, Scotland, Canada, Chile, Ireland, the Faroe Islands and Iceland which are reported separately to CODM. The Farming operations are, due to similar production processes, a global market for both salmon feed and sales of salmon, in addition to similar biological risk factors, considered to have similar economic characteristics (e.g similar long term average gross margin). The farming units are therefore aggregated into one business segment.
The Sales & Marketing Business Area consists of the Markets operations in the Americas and Europe, as well as Consumer Products. As the Markets operations are considered to have similar economic characteristics (e.g similar long term average gross margin), due to similar production processes and operational risk factors, and a common set of key performance indicators, they are presented as one reporting segment. Consumer Products, which comprises the value-added operations in Europe, Asia and America, is presented as a single separate reporting segment due to similar production processes, operational risk factors and a common set of key performance indicators (e.g similar long term average gross margin).
The business segments' performance is monitored in order to achieve the overall objective of maximising the operational EBIT
per kg and margins. Consequently, reporting focuses on measuring and illustrating the overall profitability of the harvested volume, based on source of origin (operational EBIT per kg) and operational EBIT margin for the business segments Markets and Consumer Products. Legal entities with activities in both Farming and Sales & Marketing do not split their financial items or their statement of financial position. The net effects of Gross investments (CAPEX) in these entities are recognised in the business segment Farming.
The pricing principle between Feed and Farming is set at market terms and benchmarked against third parties. The pricing principle between Farming and Sales & Marketing is based on market reference prices for spot sales, while contracts are at market terms, with the target for Sales & Marketing to maximise profit beyond these terms.
The same accounting principles as described for the consolidated financial statements have been applied to the business segment reporting. Inter-segment transfers or transactions are entered into under normal commercial terms and conditions, and the measurements used in the business segment reporting are the same as those used for the third-party transactions.
In the business segment reporting internal profit related to unrealised gains from intra-group transactions are included in Operational EBIT for the relevant business segments, but eliminated in EBIT.
Operational EBIT and Operational EBITDA are non-IFRS financial measures. Operational EBIT is calculated by excluding certain items, according to the reconciliation below, from earnings before financial items and taxes (EBIT). Operational EBITDA is calculated by adding depreciation and amortisation to Operational EBIT, however Operational EBITDA excludes the effects of IFRS 16. For further explanations, see section Analytical information in this report.
The sustainability reporting follows the same reporting structure as the financial reporting structure described above.
KEY BUSINESS SEGMENT FIGURES (EUR MILLION) | |||||||
2022 | FEED | FARMING | MARKETS | CONSUMER PRODUCTS | OTHER 1) | ELIMINATIONS | TOTAL |
External revenue | 8.3 | 48.7 | 1\u00a0733.5 | 3\u00a0155.6 | \u2014 | \u2014 | 4\u00a0946.0 |
Internal revenue | 977.9 | 3\u00a0256.8 | 1\u00a0992.1 | 9.9 | 21.2 | -6\u00a0257.8 | \u2014 |
Operational revenue | 986.2 | 3\u00a0305.5 | 3\u00a0725.6 | 3\u00a0165.5 | 21.2 | -6\u00a0257.8 | 4\u00a0946.0 |
Derivatives and other items | \u2014 | -0.8 | -2.1 | 0.2 | \u2014 | -2.5 | -5.3 |
Revenue and other income | 986.2 | 3\u00a0304.8 | 3\u00a0723.5 | 3\u00a0165.7 | 21.2 | -6\u00a0260.4 | 4\u00a0940.8 |
Operational EBITDA | 47.0 | 946.7 | 61.5 | 139.4 | -15.2 | \u2014 | 1\u00a0179.4 |
Operational EBIT | 30.8 | 817.2 | 61.1 | 112.1 | -16.1 | \u2014 | 1\u00a0005.1 |
Change in unrealised internal margin | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | -10.4 | -10.4 |
Gain/loss from derivatives | \u2014 | 2.3 | -2.8 | -1.6 | -2.6 | \u2014 | -4.7 |
Net fair value adjustment biomass | \u2014 | 113.7 | \u2014 | \u2014 | \u2014 | \u2014 | 113.7 |
Onerous contract provisions | \u2014 | -8.3 | \u2014 | \u2014 | \u2014 | \u2014 | -8.3 |
Restructuring cost and other provisions | -11.7 | -0.3 | -1.7 | \u2014 | \u2014 | -13.7 | |
Production/license/sales taxes | \u2014 | -25.6 | \u2014 | \u2014 | \u2014 | \u2014 | -25.6 |
Other non-operational items | \u2014 | -3.2 | \u2014 | -0.1 | 1.2 | \u2014 | -2.1 |
Income from associated companies and joint ventures | \u2014 | 59.2 | \u2014 | \u2014 | \u2014 | \u2014 | 59.2 |
Impairment losses and write-downs | \u2014 | -56.0 | \u2014 | -3.5 | \u2014 | \u2014 | -59.5 |
EBIT | 30.8 | 887.6 | 58.0 | 105.3 | -17.5 | -10.4 | 1\u00a0053.8 |
Gross investments | 3.0 | 295.6 | 1.5 | 33.5 | 1.8 | \u2014 | 335.2 |
Number of FTEs 31.12 | 152 | 4\u00a0972 | 216 | 8\u00a0339 | 48 | \u2014 | 13\u00a0726 |
1) Corporate functions and holding companies are presented as \"Other\".
KEY BUSINESS SEGMENT FIGURES (EUR MILLION) | |||||||
2021 | FEED | FARMING | MARKETS | CONSUMER PRODUCTS | OTHER | ELIMINATIONS | TOTAL |
External revenue | 8.3 | 56.5 | 1\u00a0361.3 | 2\u00a0781.5 | \u2014 | \u2014 | 4\u00a0207.6 |
Internal revenue | 670.8 | 2\u00a0519.5 | 1\u00a0502.0 | 28.9 | 21.2 | -4\u00a0742.4 | \u2014 |
Operational revenue | 679.1 | 2\u00a0576.0 | 2\u00a0863.3 | 2\u00a0810.4 | 21.2 | -4\u00a0742.4 | 4\u00a0207.6 |
Derivatives and other items | \u2014 | -6.8 | -1.8 | -0.7 | \u2014 | 3.9 | -5.4 |
Revenue and other income | 679.1 | 2\u00a0569.3 | 2\u00a0861.5 | 2\u00a0809.6 | 21.2 | -4\u00a0738.5 | 4\u00a0202.2 |
Operational EBITDA | 34.5 | 494.2 | 50.8 | 122.0 | -11.2 | \u2014 | 690.3 |
Operational EBIT | 18.4 | 370.5 | 50.5 | 95.5 | -12.2 | \u2014 | 522.6 |
Change in unrealised internal margin | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | 6.6 | 6.6 |
Gain/loss from derivatives | \u2014 | -3.7 | -1.8 | 3.1 | 10.9 | \u2014 | 8.5 |
Net fair value adjustment biomass | \u2014 | 119.8 | \u2014 | \u2014 | \u2014 | \u2014 | 119.8 |
Onerous contract provisions | \u2014 | -3.2 | \u2014 | \u2014 | \u2014 | \u2014 | -3.2 |
Restructuring cost and other provisions | \u2014 | -7.9 | \u2014 | 0.3 | -15.0 | \u2014 | -22.6 |
Production/license/sales taxes | \u2014 | -21.9 | \u2014 | \u2014 | \u2014 | \u2014 | -21.9 |
Other non-operational items | -1.6 | -0.6 | \u2014 | -6.1 | -22.0 | \u2014 | -30.3 |
Income from associated companies and joint ventures | \u2014 | 44.4 | \u2014 | \u2014 | 53.1 | \u2014 | 97.5 |
Impairment losses and write-downs | \u2014 | -73.8 | -0.1 | -0.9 | \u2014 | \u2014 | -74.8 |
EBIT | 16.8 | 423.6 | 48.7 | 91.9 | 14.8 | 6.6 | 602.2 |
Gross investments 1) | 3.5 | 215.6 | 0.3 | 43.3 | 2.4 | \u2014 | 265.1 |
Number of FTEs 31.12 | 157 | 4\u00a0886 | 207 | 8\u00a0684 | 51 | \u2014 | 13\u00a0984 |
1) Gross investments includes EUR 20.5 million related to the acquisition of a farming license with 796 tonnes MAB in Norway Region North.
NON-CURRENT ASSETS BY COUNTRY LOCATION (EUR MILLION) | 2022 | 2021 |
Norway | 1\u00a0968.2 | 1\u00a0830.6 |
Poland | 128.8 | 125.8 |
Scotland | 507.0 | 544.1 |
Iceland | 408.1 | \u2014 |
Belgium | 77.5 | 77.5 |
France | 50.0 | 49.5 |
Rest of Europe | 101.8 | 100.5 |
Chile | 274.4 | 250.4 |
Canada/USA | 445.6 | 501.2 |
Asia | 9.4 | 9.6 |
Non-current assets | 3\u00a0970.8 | 3\u00a0489.2 |
Other non-current assets 1) | 71.8 | 53.1 |
Total non-current assets | 4\u00a0042.6 | 3\u00a0542.2 |
BUSINESS AREAS | Feed | Farming | Sales & Marketing | Total | |||||
(EUR million) | Note | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Geographical markets | |||||||||
Europe | 2.8 | 5.7 | 29.1 | 22.8 | 3\u00a0261.0 | 2\u00a0806.7 | 3\u00a0292.9 | 2\u00a0835.2 | |
Americas | \u2014 | \u2014 | 0.7 | 2.1 | 1\u00a0109.7 | 897.6 | 1\u00a0110.3 | 899.7 | |
Asia | \u2014 | \u2014 | \u2014 | \u2014 | 436.9 | 372.5 | 436.9 | 372.5 | |
Rest of the world | \u2014 | \u2014 | \u2014 | \u2014 | 72.4 | 63.9 | 72.4 | 63.9 | |
Revenue from contracts with customers | 2.8 | 5.7 | 29.8 | 24.9 | 4\u00a0880.0 | 4\u00a0140.7 | 4\u00a0912.6 | 4\u00a0171.3 | |
Other income | 5.5 | 2.5 | 18.9 | 31.6 | 9.1 | 2.1 | 33.4 | 36.3 | |
Operational revenue | 4 | 8.3 | 8.3 | 48.7 | 56.5 | 4\u00a0889.1 | 4\u00a0142.8 | 4\u00a0946.0 | 4\u00a0207.6 |
SOURCE OF REVENUE
The main source of revenue for the Group is sales of Atlantic salmon, including elaborated products.
\u00a0
The business area Sales & Marketing represents the majority of the Group's external revenue. The revenue distribution for Sales & Marketing according to product categories was as follows in 2022 (2021): Fresh bulk 37% (32%), smoked/marinated 19% (16%), fresh MAP 17% (20%), fresh prepared 16% (18%), frozen prepared 3% (4%), frozen bulk 1% (1%) and other 7% (9%). The revenue distribution for Sales & Marketing according to customer categories was as follows in 2022 (2021): Retail 50% (56%), Distributors 24% (25%), Industry 12% (8%), Foodservice 10% (7%) and Smoke houses 4% (4%).
BUSINESS AREAS | Feed | Farming | Sales & Marketing | Total | |||||
(EUR million) | Note | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Geographical markets | |||||||||
Europe | 2.8 | 5.7 | 29.1 | 22.8 | 3\u00a0261.0 | 2\u00a0806.7 | 3\u00a0292.9 | 2\u00a0835.2 | |
Americas | \u2014 | \u2014 | 0.7 | 2.1 | 1\u00a0109.7 | 897.6 | 1\u00a0110.3 | 899.7 | |
Asia | \u2014 | \u2014 | \u2014 | \u2014 | 436.9 | 372.5 | 436.9 | 372.5 | |
Rest of the world | \u2014 | \u2014 | \u2014 | \u2014 | 72.4 | 63.9 | 72.4 | 63.9 | |
Revenue from contracts with customers | 2.8 | 5.7 | 29.8 | 24.9 | 4\u00a0880.0 | 4\u00a0140.7 | 4\u00a0912.6 | 4\u00a0171.3 | |
Other income | 5.5 | 2.5 | 18.9 | 31.6 | 9.1 | 2.1 | 33.4 | 36.3 | |
Operational revenue | 4 | 8.3 | 8.3 | 48.7 | 56.5 | 4\u00a0889.1 | 4\u00a0142.8 | 4\u00a0946.0 | 4\u00a0207.6 |
SOURCE OF REVENUE
The main source of revenue for the Group is sales of Atlantic salmon, including elaborated products.
\u00a0
The business area Sales & Marketing represents the majority of the Group's external revenue. The revenue distribution for Sales & Marketing according to product categories was as follows in 2022 (2021): Fresh bulk 37% (32%), smoked/marinated 19% (16%), fresh MAP 17% (20%), fresh prepared 16% (18%), frozen prepared 3% (4%), frozen bulk 1% (1%) and other 7% (9%). The revenue distribution for Sales & Marketing according to customer categories was as follows in 2022 (2021): Retail 50% (56%), Distributors 24% (25%), Industry 12% (8%), Foodservice 10% (7%) and Smoke houses 4% (4%).
VALUATION OF BIOLOGICAL ASSETS
Biological assets are, in accordance with IAS 41, measured at fair value less cost to sell. All fish at sea are subject to a fair value calculation, while broodstock and smolt are measured at cost less impairment losses. Cost is deemed a reasonable approximation for fair value for broodstock and smolt as there is little biological transformation (IAS 41.24).
Biomass measured at fair value, is categorised at Level 3 in the fair value hierarchy, as the input is mostly unobservable. In line with IFRS 13, the highest and best use of the biological assets is applied for the valuation. In accordance with the principle for highest and best use, we consider that the fish have optimal harvest weight at 4 kg gutted. This corresponds to a live weight of approximately 4.8 kg (there may be regional variances). Fish of this weight or above are classified as ready for harvest (mature fish), while fish that have still not achieved this weight are classified as not ready for harvest (immature fish). The valuations are carried out at business unit level based on a common model and basis for assumptions established at group level. All assumptions are subject to monthly quality assurance and analysis at the group level.
The valuations are based on an income approach and takes into consideration unobservable input based on biomass in the sea, the estimated growth rate and cost to completion at site level. Mortality, quality of the fish going forward and market price are considered at business unit level. A special assessment is performed for sites with high/low performance due to disease or other deviating factors. The market prices are derived from observable market prices where available.
ASSUMPTIONS USED FOR DETERMINING FAIR VALUE OF LIVE FISH
The estimated fair value of the biomass will always be based on uncertain assumptions, even though the group has built substantial expertise in assessing these factors. Estimates are applied to the following factors; biomass volume, the quality of the biomass, size distribution, cost, mortality and market prices.
Biomass volume: The biomass volume is in itself an estimate based on the number of smolt released into the sea, the estimated growth from the time of stocking, estimated mortality based on observed mortality in the period, etc. There is normally little uncertainty with regard to biomass volume.
The level of uncertainty will, however, be higher if an incident has resulted in mass mortality, especially early in the cycle, or if the fish's health status restricts handling. If the total biomass at sea was 1% lower than our estimates, this would result in an change in value of EUR -7.1 million.
The quality of the biomass: The quality of the biomass can be difficult to assess prior to harvesting, if the reason for downgrading
is related to muscle quality (e.g. the effect of Kudoa in Canada). In Norway downgraded fish is normally priced according to standard rates of deduction compared to a Superior quality fish. In our fair value model for salmon of Norwegian origin, we have used EUR 0.21 and EUR 0.61 as deductions from Superior grade for Ordinary and Production grade quality respectively. In other countries the price deductions related to quality are not as standardised. The quality of harvested fish has been good in 2022. For the Group as a whole, 91% of the fish were graded as Superior quality. A one percentage point change from Superior quality to Production grade quality would result in a change in value of EUR -3.2 million.
The size distribution: Fish in sea grow at different rates, and even in a situation with good estimates for the average weight of the fish there can be a considerable spread in the quality and weight of the fish. The size distribution affects the price achieved for the fish, as each size category of fish is priced separately in the market. When estimating the biomass value, a normal size distribution is applied.
Cost: For the estimation of future costs, there is uncertainty with regard to feed prices, other input costs and biological development. Mowi measures cost deviations vs. budget as part of the follow up of business units. Excluding special situations (incidents etc.), the deviations in costs vs budgets are normally limited for a group of sites, although individual sites might show deviations. The estimation of costs influences the biomass value through the recognised fair value adjustment in the statements of comprehensive income and financial position (calculated as fair value less accumulated biological costs).
Mortality: Normalised mortality will affect the fair value estimates both as a reduction of estimated harvesting volumes and because cost to completion includes cost incurred on fish that eventually will perish.
Market price: The market price assumption is very important for the valuation and even minor changes in the market price will result in significant changes in the valuation. The methodology used for establishing the market price is explained in Note 2. A EUR 0.1 decrease in the market price would result in a decrease in value of EUR 15.9 million.
The market price risk is reduced through fixed price/volume customer contracts and financial contracts, as well as our downstream integration as explained in Note 13.
Climate Risk : Climate risk is included in the assessment for calculating the Fair value of live fish. Due to the short time period relevant for the Fair value uplift (maximum of 2 years) climate risk has not had a material effect on the valuation of biomass in sea.
WRITE-DOWN OF BIOMASS AND INCIDENT-BASED MORTALITY
Incident-based mortality is accounted for when a site either experiences elevated mortality over time or substantial mortality due to an incident at the farm (outbreak of disease, lack of oxygen etc). The cost of incident based mortality is included in \u201ccost of
materials\u201d in the statement of comprehensive income. The fair value element is adjusted through fair value adjustment on incident based mortality, and included in net fair value adjustment in the statement of comprehensive income.
RECONCILIATION OF CHANGES IN THE CARRYING AMOUNT OF BIOLOGICAL ASSETS (EUR MILLION) | 2022 | 2021 |
Carrying amount as of 01.01 | 1\u00a0529.5 | 1\u00a0416.6 |
Cost to stock | 2\u00a0259.3 | 1\u00a0821.8 |
Net fair value adjustment | 113.7 | 119.8 |
Mortality for fish in sea | -88.7 | -96.0 |
Cost of harvested fish | -1\u00a0964.5 | -1\u00a0729.2 |
Write-downs | -18.3 | -49.8 |
Effects of business combinations | 83.3 | \u2014 |
Currency translation differences | -1.9 | 46.4 |
Total carrying amount of biological assets as of 31.12 | 1\u00a0912.5 | 1\u00a0529.5 |
FAIR VALUE ADJUSTMENT ON BIOLOGICAL ASSETS IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Mowi Norway | 305.5 | 224.3 |
Mowi Chile | 48.2 | 39.8 |
Mowi Canada | 26.9 | 14.6 |
Mowi Scotland | 52.3 | 36.6 |
Mowi Faroe Islands | 8.9 | 7.2 |
Mowi Ireland | 0.2 | 3.7 |
Arctic Fish | 15.2 | \u2014 |
Total fair value adjustment included in carrying amount in the statement of financial position | 457.2 | 326.2 |
Biomass at cost | 1\u00a0455.3 | 1\u00a0203.4 |
Total biological assets | 1\u00a0912.5 | 1\u00a0529.5 |
FAIR VALUE ADJUSTMENT ON BIOLOGICAL ASSETS IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Mowi Norway | 843.7 | 492.1 |
Mowi Chile | 120.1 | 87.2 |
Mowi Canada | 82.4 | 24.6 |
Mowi Scotland | 126.2 | 83.1 |
Mowi Faroe Islands | 15.7 | 14.4 |
Mowi Ireland | 10.4 | 8.4 |
Total fair value adjustment in the statement of comprehensive income | 1\u00a0198.6 | 709.8 |
FAIR VALUE ADJUSTMENT ON HARVESTED FISH IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Mowi Norway | -752.9 | -388.8 |
Mowi Chile | -112.0 | -87.0 |
Mowi Canada | -73.7 | -14.1 |
Mowi Scotland | -102.7 | -69.8 |
Mowi Faroe Islands | -13.8 | -9.0 |
Mowi Ireland | -13.1 | -13.2 |
Total fair value uplift in the statement of comprehensive income | -1\u00a0068.2 | -581.8 |
FAIR VALUE ADJUSTMENT ON INCIDENT BASED MORTALITY IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Mowi Norway | -12.0 | -7.5 |
Mowi Chile | -2.1 | -0.6 |
Mowi Canada | 4.2 | 3.5 |
Mowi Scotland | -5.7 | -2.1 |
Mowi Faroe Islands | -0.2 | -0.8 |
Mowi Ireland | -0.7 | -0.6 |
Total fair value uplift in the statement of comprehensive income | -16.6 | -8.1 |
NET FAIR VALUE ADJUSTMENT IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 | |
Mowi Norway | 78.8 | 95.8 | |
Mowi Chile | 6.0 | -0.4 | |
Mowi Canada | 12.9 | 14.0 | |
Mowi Scotland | 17.8 | 11.3 | |
Mowi Faroe Islands | 1.7 | 4.6 | |
Mowi Ireland | -3.4 | -5.4 | |
Total fair value uplift in the statement of comprehensive income | 113.7 | 119.8 |
VOLUMES OF BIOMASS (TONNES) | 2022 | 2021 |
Volume of biomass harvested during the year (gutted weight) | 463\u00a0635 | 465\u00a0600 |
Volume of biomass in the sea at year-end (live weight) | 295\u00a0279 | 293\u00a0388 |
SENSITIVITY EFFECT ON FAIR VALUE (SALMON ONLY) AT YEAR-END (EUR MILLION) | PRICE | BIOMASS | QUALITY |
Mowi Norway | -9.4 | -4.7 | -0.6 |
Mowi Chile | -2.1 | -0.6 | -0.4 |
Mowi Canada | -1.8 | -0.8 | -1.1 |
Mowi Scotland | -2.1 | -0.6 | -1.1 |
Mowi Faroe Islands | -0.3 | -0.1 | \u2014 |
Mowi Ireland | -0.2 | \u2014 | -0.1 |
Arctic Fish | -0.1 | -0.3 | \u2014 |
Total sensitivity effect on fair value | -15.9 | -7.1 | -3.2 |
INCIDENT-BASED MORTALITY 2022 (SALMON ONLY) | INCIDENT-BASED MORTALITY | INCIDENT-BASED MORTALITY IN % OF TOTAL MORTALITY (VOLUME) |
Mowi Norway | 8.5 | 23.0% |
Mowi Chile | 1.9 | 27.9% |
Mowi Canada | 0.9 | 17.1% |
Mowi Scotland | 4.4 | 42.3% |
Mowi Faroe Islands | 0.1 | 14.1% |
Mowi Ireland | 2.0 | 53.8% |
Mowi Group | 17.7 | 27.9% |
FORWARD PRICES USED IN FAIR VALUE CALCULATION 1) QUARTER | EUR/KG |
Q1 2023 | 8.57 |
Q2 2023 | 8.96 |
Q3 2023 | 7.16 |
Q4 2023 | 7.31 |
Q1 2024 | 8.01 |
Q2 2024 | 8.01 |
INVENTORY (EUR MILLION) | 2022 | 2021 |
Raw materials and goods in process | 421.5 | 245.3 |
Finished goods | 182.4 | 138.8 |
Total inventory | 603.9 | 384.1 |
At year-end 2022, the market value of the Group\u2019s equity was significantly higher than the carrying amount of equity, which is an indication that the market considers the value of the Group\u2019s assets to exceed the carrying amount. For all cash generating units (CGUs), the recoverable amount has been determined based on a value-in-use calculation using cash flow projections based on approved budgets for the first year. The four next years are based on the approved long-term plan, followed by a terminal value calculation. The net present value of the cash flow is compared to the carrying amount in the CGU. If the carrying amount is higher than the calculated value in use, an impairment loss is recognised in profit or loss, reducing the asset value to the calculated value in use. The estimated cash flows are based on the assumption of continued operation as part of the Mowi Group.
There has been no changes in the identified CGUs for the year 2022.
KEY ASSUMPTIONS
The key assumptions used in the calculation of value in use are harvested volume, EBIT(DA)/margins, capital expenditure, discount rates and the terminal growth rates. Please see the table below for a summary of the key assumptions for each CGU.
Harvest volume
The expected harvest volume is based on the fish currently being held at sea, forward stocking plan and adjusted for the expected future increase in production given today's licenses. This evaluation has been performed CGU by CGU and is updated yearly.
EBIT(DA)/Margins
The key profit target for salmon farming and sales is EBIT per kg, while value-added operations are measured in terms of EBIT/EBITDA in % of sales. EBIT per kg is highly volatile due to fluctuations in the price of salmon. Costs can under normal circumstances be forecast with a relatively high level of accuracy. As Mowi has entered into long-term sales contracts for a proportion of the volume to be harvested in 2023, the margin for 2023 can be forecasted with a higher level of accuracy than the margin for the years beyond (2023-2026). With regards to the terminal, an expected long-term EBIT pr kg has been used in the Farming entities and an expected EBIT in % of sales has been used for other operations. In the calculation we have used the EBIT margin from the Long Term Plan per entity, and reduced this to 90%. This principle has been applied in all Farming entities for the terminal value.
Capital expenditure
In the five-year forecast period, the capital expenditure necessary to meet the expected growth in revenue and profit is taken into consideration. Consistent with the Group\u2019s plan, the capital expenditure level for 2023 is high to further grow the operations. Beyond 2023, capital expenditures are aligned with growth and replacement plans. Capital expenditure to comply with current laws and regulations has been included. Capital expenditure
related to committed and approved efficiency improvement programs 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.
Discount rate
The discount rates are based on the Weighted Average Cost of Capital (WACC) methodology. The cost of equity is based on Capital Asset Pricing Model (CAPM). The cost of debt is based on the risk-free rate in the applicable country. In the model, a ten-year risk-free rate has been used. Calculation of the final discount rates (WACC) also takes into account market risk premium, debt risk premium, gearing and beta value. In the calculations, the Group has applied estimated cash flows before tax and the corresponding discount rates before tax.
Terminal growth rates
Growth after the five-year forecast period has in general been set independently for each cash-generating unit based on the five year average historic inflation rate. The maximum growth rate applied beyond the forecast period is 1.8%. This is lower than the expected growth rates in the first five years and lower than the historic growth rate in salmon demand.
Sensitivity
With regard to the assessment of recoverable amount, the Group is of the view that no reasonably likely change in any of the above key assumptions would cause the carrying value to materially exceed the recoverable amount for any of the CGUs. With regards to Climate change we have performed an sensitivity analysis and the Group is in the view that climate change will not materially change the carrying amounts. The Group try to incorporate all expected effects of climate change, inflation, wars, pandemics etc in the updated budget assumptions for 2023 and long term plan for 2024-2027. In general we expect a good market in 2023.
The significant key assumptions with regards to sensitivity are expected harvest volumes and EBIT(DA)/Margins.
ASSUMPTIONS | HARVEST VOLUME 2022 (GWT) | WACC | TERMINAL | ||
BEFORE TAX | VALUE GROWTH % | ||||
2022 | 2021 | 2022 | 2021 | ||
Mowi Norway Farming | 293\u00a0720 | 11.7% | 8.9% | 1.6% | 0.8% |
Mowi Chile Farming | 65\u00a0737 | 11.3% | 10.4% | 1.8% | 1.6% |
Mowi Canada Farming | 41\u00a0095 | 9.8% | 9.3% | 1.6% | 0.8% |
Mowi Scotland Farming | 48\u00a0374 | 9.2% | 7.9% | 1.6% | 0.6% |
Mowi Ireland Farming | 6\u00a0845 | 8.0% | 6.9% | 1.6% | 0.3% |
Mowi Faroe Islands Farming | 7\u00a0864 | 9.4% | 8.5% | 1.6% | 0.8% |
Mowi Consumer Products Europe | \u2014 | 9.0% | 7.9% | 1.5% | 0.2% |
Mowi Asia | \u2014 | 9.9% | 9.0% | 1.6% | 0.8% |
Mowi USA | \u2014 | 11.1% | 10.4% | 1.6% | 1.6% |
Mowi Feed | \u2014 | 9.5% | 8.7% | 1.6% | 0.8% |
Total | 463\u00a0635 |
Please see table below for an overview of the CGU's with allocated intangible assets as of December 31, 2022 and 2021.
CASH GENERATING UNITS (EUR MILLION) | GOODWILL | LICENSES | ||
2022 | 2021 | 2022 | 2021 | |
Mowi Norway Farming | 185.9 | 185.9 | 568.1 | 564.0 |
Mowi Scotland Farming | 7.3 | 7.7 | 75.2 | 66.1 |
Mowi Canada Farming | 39.0 | 39.1 | 157.8 | 158.0 |
Mowi Chile Farming | \u2014 | \u2014 | 126.9 | 122.9 |
Mowi Ireland Farming | \u2014 | \u2014 | 2.2 | 2.2 |
Mowi Faroe Islands Farming | \u2014 | \u2014 | 6.6 | 6.6 |
Mowi Iceland | 51.2 | \u2014 | 257.4 | \u2014 |
Mowi Consumer Products | 88.0 | 88.4 | \u2014 | \u2014 |
Total | 371.4 | 321.1 | 1\u00a0194.2 | 919.7 |
SPECIFICATION OF INTANGIBLE ASSETS 2022 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Additions in the year as a result of acquisitions1) | 53.4 | 283.4 | \u2014 | 336.8 |
Additions in the year | \u2014 | 2.3 | 5.4 | 7.7 |
Reclassification | \u2014 | -0.4 | \u2014 | -0.4 |
Disposals / scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 3.7 | -1.2 | 0.7 | 3.2 |
Total acquisition cost as of 31.12 | 643.4 | 1\u00a0377.5 | 70.9 | 2\u00a0091.8 |
Accumulated amortisation and impairment losses as of 01.01 | 265.2 | 173.6 | 38.7 | 477.6 |
Amortisation in the year | \u2014 | \u2014 | 2.8 | 2.8 |
Impairment losses in the year | \u2014 | 3.8 | \u2014 | 3.8 |
Reclassification | \u2014 | -0.4 | -0.3 | -0.7 |
Disposals/ scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 6.8 | 6.3 | 0.4 | 13.5 |
Total accumulated amortisation and impairment losses as of 31.12 | 272.0 | 183.3 | 41.0 | 496.4 |
Total carrying amount as of 31.12 | 371.4 | 1\u00a0194.2 | 29.8 | 1\u00a0595.4 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Additions in the year as a result of acquisitions are related to the purchase of Arctic Fish and Wester Ross Fisheries.
SPECIFICATION OF INTANGIBLE ASSETS 2021 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 569.7 | 1\u00a0038.1 | 59.1 | 1\u00a0666.9 |
Additions in the year2) | 4.3 | 20.5 | 4.8 | 29.6 |
Disposals / scrapping in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Foreign currency adjustments | 12.4 | 34.7 | 1.5 | 48.6 |
Total acquisition cost as of 31.12 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Accumulated amortisation and impairment losses as of 01.01 | 256.3 | 165.2 | 35.0 | 456.5 |
Amortisation in the year | \u2014 | \u2014 | 2.9 | 2.9 |
Impairment losses in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Disposals/scrapping in the year | \u2014 | \u2014 | 0.1 | 0.1 |
Foreign currency adjustments | 9.0 | 8.4 | 0.8 | 18.1 |
Total accumulated amortisation and impairment losses as of 31.12 | 265.2 | 173.6 | 38.7 | 477.6 |
Total carrying amount as of 31.12 | 321.1 | 919.7 | 26.7 | 1\u00a0267.5 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Other intangible assets includes assets under construction.
2) Additions on goodwill and licences are related to the purchase of Lofoten Aqua.
SPECIFICATION OF | NUMBER OF | NUMBER OF | TOTAL CURRENT PRODUCTION CAPACITY 3) (T TONNES) | OTHER LIMITATIONS |
Mowi Norway1) | 232.9 | 232.9 | 300 | MAB limitation per license |
Mowi Chile | 186 | 30-40 | 120-130 | |
Mowi Scotland | 74 | 51 | 89 | MAB limitation per license |
Mowi Canada | 95 | 46 | 97 | MAB limitation per license |
Mowi Ireland | 25 | 15 | 14 | |
Mowi Faroe Islands2) | 3 | 3 | 11 | |
Arctic Fish | 10 | 10 | 27 |
1) CAC licenses not included.
2) Total capacity is 16 tonnes over a 18 month cycle.
3) Total production capacity HOG, full utilisation.
SPECIFICATION LICENSES 2022 | TOTAL CURRENT PRODUCTION CAPACITY 2) (T TONNES) | HARVEST VOLUME (SALMON ONLY) | UTILISATION BASED | BOOK VALUE 1) (EUR MILLION) | BOOK VALUE PER |
Mowi Norway | 300 | 293\u00a0720 | 98% | 568.1 | 1.9 |
Mowi Chile | 120-130 | 65\u00a0737 | 51%-55% | 126.9 | 1.9 |
Mowi Scotland | 89 | 48\u00a0374 | 54% | 75.2 | 1.6 |
Mowi Canada | 97 | 41\u00a0095 | 47% | 157.8 | 3.8 |
Mowi Ireland | 14 | 6\u00a0845 | 49% | 2.2 | 0.3 |
Mowi Faroe Islands | 11 | 7\u00a0864 | 74% | 6.6 | 0.8 |
Arctic Fish | 27 | n.a. | n.a. | 257.4 | n.a. |
Total | 463\u00a0635 | 1\u00a0194.2 | 2.0 |
1) Book value includes freshwater licenses in addition to seawater licenses.
2)Total production capacity HOG, full utilisation.
At year-end 2022, the market value of the Group\u2019s equity was significantly higher than the carrying amount of equity, which is an indication that the market considers the value of the Group\u2019s assets to exceed the carrying amount. For all cash generating units (CGUs), the recoverable amount has been determined based on a value-in-use calculation using cash flow projections based on approved budgets for the first year. The four next years are based on the approved long-term plan, followed by a terminal value calculation. The net present value of the cash flow is compared to the carrying amount in the CGU. If the carrying amount is higher than the calculated value in use, an impairment loss is recognised in profit or loss, reducing the asset value to the calculated value in use. The estimated cash flows are based on the assumption of continued operation as part of the Mowi Group.
There has been no changes in the identified CGUs for the year 2022.
KEY ASSUMPTIONS
The key assumptions used in the calculation of value in use are harvested volume, EBIT(DA)/margins, capital expenditure, discount rates and the terminal growth rates. Please see the table below for a summary of the key assumptions for each CGU.
Harvest volume
The expected harvest volume is based on the fish currently being held at sea, forward stocking plan and adjusted for the expected future increase in production given today's licenses. This evaluation has been performed CGU by CGU and is updated yearly.
EBIT(DA)/Margins
The key profit target for salmon farming and sales is EBIT per kg, while value-added operations are measured in terms of EBIT/EBITDA in % of sales. EBIT per kg is highly volatile due to fluctuations in the price of salmon. Costs can under normal circumstances be forecast with a relatively high level of accuracy. As Mowi has entered into long-term sales contracts for a proportion of the volume to be harvested in 2023, the margin for 2023 can be forecasted with a higher level of accuracy than the margin for the years beyond (2023-2026). With regards to the terminal, an expected long-term EBIT pr kg has been used in the Farming entities and an expected EBIT in % of sales has been used for other operations. In the calculation we have used the EBIT margin from the Long Term Plan per entity, and reduced this to 90%. This principle has been applied in all Farming entities for the terminal value.
Capital expenditure
In the five-year forecast period, the capital expenditure necessary to meet the expected growth in revenue and profit is taken into consideration. Consistent with the Group\u2019s plan, the capital expenditure level for 2023 is high to further grow the operations. Beyond 2023, capital expenditures are aligned with growth and replacement plans. Capital expenditure to comply with current laws and regulations has been included. Capital expenditure
related to committed and approved efficiency improvement programs 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.
Discount rate
The discount rates are based on the Weighted Average Cost of Capital (WACC) methodology. The cost of equity is based on Capital Asset Pricing Model (CAPM). The cost of debt is based on the risk-free rate in the applicable country. In the model, a ten-year risk-free rate has been used. Calculation of the final discount rates (WACC) also takes into account market risk premium, debt risk premium, gearing and beta value. In the calculations, the Group has applied estimated cash flows before tax and the corresponding discount rates before tax.
Terminal growth rates
Growth after the five-year forecast period has in general been set independently for each cash-generating unit based on the five year average historic inflation rate. The maximum growth rate applied beyond the forecast period is 1.8%. This is lower than the expected growth rates in the first five years and lower than the historic growth rate in salmon demand.
Sensitivity
With regard to the assessment of recoverable amount, the Group is of the view that no reasonably likely change in any of the above key assumptions would cause the carrying value to materially exceed the recoverable amount for any of the CGUs. With regards to Climate change we have performed an sensitivity analysis and the Group is in the view that climate change will not materially change the carrying amounts. The Group try to incorporate all expected effects of climate change, inflation, wars, pandemics etc in the updated budget assumptions for 2023 and long term plan for 2024-2027. In general we expect a good market in 2023.
The significant key assumptions with regards to sensitivity are expected harvest volumes and EBIT(DA)/Margins.
ASSUMPTIONS | HARVEST VOLUME 2022 (GWT) | WACC | TERMINAL | ||
BEFORE TAX | VALUE GROWTH % | ||||
2022 | 2021 | 2022 | 2021 | ||
Mowi Norway Farming | 293\u00a0720 | 11.7% | 8.9% | 1.6% | 0.8% |
Mowi Chile Farming | 65\u00a0737 | 11.3% | 10.4% | 1.8% | 1.6% |
Mowi Canada Farming | 41\u00a0095 | 9.8% | 9.3% | 1.6% | 0.8% |
Mowi Scotland Farming | 48\u00a0374 | 9.2% | 7.9% | 1.6% | 0.6% |
Mowi Ireland Farming | 6\u00a0845 | 8.0% | 6.9% | 1.6% | 0.3% |
Mowi Faroe Islands Farming | 7\u00a0864 | 9.4% | 8.5% | 1.6% | 0.8% |
Mowi Consumer Products Europe | \u2014 | 9.0% | 7.9% | 1.5% | 0.2% |
Mowi Asia | \u2014 | 9.9% | 9.0% | 1.6% | 0.8% |
Mowi USA | \u2014 | 11.1% | 10.4% | 1.6% | 1.6% |
Mowi Feed | \u2014 | 9.5% | 8.7% | 1.6% | 0.8% |
Total | 463\u00a0635 |
Please see table below for an overview of the CGU's with allocated intangible assets as of December 31, 2022 and 2021.
CASH GENERATING UNITS (EUR MILLION) | GOODWILL | LICENSES | ||
2022 | 2021 | 2022 | 2021 | |
Mowi Norway Farming | 185.9 | 185.9 | 568.1 | 564.0 |
Mowi Scotland Farming | 7.3 | 7.7 | 75.2 | 66.1 |
Mowi Canada Farming | 39.0 | 39.1 | 157.8 | 158.0 |
Mowi Chile Farming | \u2014 | \u2014 | 126.9 | 122.9 |
Mowi Ireland Farming | \u2014 | \u2014 | 2.2 | 2.2 |
Mowi Faroe Islands Farming | \u2014 | \u2014 | 6.6 | 6.6 |
Mowi Iceland | 51.2 | \u2014 | 257.4 | \u2014 |
Mowi Consumer Products | 88.0 | 88.4 | \u2014 | \u2014 |
Total | 371.4 | 321.1 | 1\u00a0194.2 | 919.7 |
Impairment testing of non-current assets
Impairment tests for specific non-current assets are performed when there are indications of impairment. In 2022, a net loss in fixed assets of EUR 15.3 million was booked in Canada, EUR 0.7 million in Norway, EUR 0.1 million in Poland and EUR 0.2 million in Japan. Based on evaluation no additional impairment due to climate risk and no changes in useful life.
SPECIFICATION OF INTANGIBLE ASSETS 2022 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Additions in the year as a result of acquisitions1) | 53.4 | 283.4 | \u2014 | 336.8 |
Additions in the year | \u2014 | 2.3 | 5.4 | 7.7 |
Reclassification | \u2014 | -0.4 | \u2014 | -0.4 |
Disposals / scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 3.7 | -1.2 | 0.7 | 3.2 |
Total acquisition cost as of 31.12 | 643.4 | 1\u00a0377.5 | 70.9 | 2\u00a0091.8 |
Accumulated amortisation and impairment losses as of 01.01 | 265.2 | 173.6 | 38.7 | 477.6 |
Amortisation in the year | \u2014 | \u2014 | 2.8 | 2.8 |
Impairment losses in the year | \u2014 | 3.8 | \u2014 | 3.8 |
Reclassification | \u2014 | -0.4 | -0.3 | -0.7 |
Disposals/ scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 6.8 | 6.3 | 0.4 | 13.5 |
Total accumulated amortisation and impairment losses as of 31.12 | 272.0 | 183.3 | 41.0 | 496.4 |
Total carrying amount as of 31.12 | 371.4 | 1\u00a0194.2 | 29.8 | 1\u00a0595.4 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Additions in the year as a result of acquisitions are related to the purchase of Arctic Fish and Wester Ross Fisheries.
SPECIFICATION OF INTANGIBLE ASSETS 2021 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 569.7 | 1\u00a0038.1 | 59.1 | 1\u00a0666.9 |
Additions in the year2) | 4.3 | 20.5 | 4.8 | 29.6 |
Disposals / scrapping in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Foreign currency adjustments | 12.4 | 34.7 | 1.5 | 48.6 |
Total acquisition cost as of 31.12 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Accumulated amortisation and impairment losses as of 01.01 | 256.3 | 165.2 | 35.0 | 456.5 |
Amortisation in the year | \u2014 | \u2014 | 2.9 | 2.9 |
Impairment losses in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Disposals/scrapping in the year | \u2014 | \u2014 | 0.1 | 0.1 |
Foreign currency adjustments | 9.0 | 8.4 | 0.8 | 18.1 |
Total accumulated amortisation and impairment losses as of 31.12 | 265.2 | 173.6 | 38.7 | 477.6 |
Total carrying amount as of 31.12 | 321.1 | 919.7 | 26.7 | 1\u00a0267.5 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Other intangible assets includes assets under construction.
2) Additions on goodwill and licences are related to the purchase of Lofoten Aqua.
SPECIFICATION OF | NUMBER OF | NUMBER OF | TOTAL CURRENT PRODUCTION CAPACITY 3) (T TONNES) | OTHER LIMITATIONS |
Mowi Norway1) | 232.9 | 232.9 | 300 | MAB limitation per license |
Mowi Chile | 186 | 30-40 | 120-130 | |
Mowi Scotland | 74 | 51 | 89 | MAB limitation per license |
Mowi Canada | 95 | 46 | 97 | MAB limitation per license |
Mowi Ireland | 25 | 15 | 14 | |
Mowi Faroe Islands2) | 3 | 3 | 11 | |
Arctic Fish | 10 | 10 | 27 |
1) CAC licenses not included.
2) Total capacity is 16 tonnes over a 18 month cycle.
3) Total production capacity HOG, full utilisation.
SPECIFICATION LICENSES 2022 | TOTAL CURRENT PRODUCTION CAPACITY 2) (T TONNES) | HARVEST VOLUME (SALMON ONLY) | UTILISATION BASED | BOOK VALUE 1) (EUR MILLION) | BOOK VALUE PER |
Mowi Norway | 300 | 293\u00a0720 | 98% | 568.1 | 1.9 |
Mowi Chile | 120-130 | 65\u00a0737 | 51%-55% | 126.9 | 1.9 |
Mowi Scotland | 89 | 48\u00a0374 | 54% | 75.2 | 1.6 |
Mowi Canada | 97 | 41\u00a0095 | 47% | 157.8 | 3.8 |
Mowi Ireland | 14 | 6\u00a0845 | 49% | 2.2 | 0.3 |
Mowi Faroe Islands | 11 | 7\u00a0864 | 74% | 6.6 | 0.8 |
Arctic Fish | 27 | n.a. | n.a. | 257.4 | n.a. |
Total | 463\u00a0635 | 1\u00a0194.2 | 2.0 |
1) Book value includes freshwater licenses in addition to seawater licenses.
2)Total production capacity HOG, full utilisation.
SPECIFICATION OF INTANGIBLE ASSETS 2022 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Additions in the year as a result of acquisitions1) | 53.4 | 283.4 | \u2014 | 336.8 |
Additions in the year | \u2014 | 2.3 | 5.4 | 7.7 |
Reclassification | \u2014 | -0.4 | \u2014 | -0.4 |
Disposals / scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 3.7 | -1.2 | 0.7 | 3.2 |
Total acquisition cost as of 31.12 | 643.4 | 1\u00a0377.5 | 70.9 | 2\u00a0091.8 |
Accumulated amortisation and impairment losses as of 01.01 | 265.2 | 173.6 | 38.7 | 477.6 |
Amortisation in the year | \u2014 | \u2014 | 2.8 | 2.8 |
Impairment losses in the year | \u2014 | 3.8 | \u2014 | 3.8 |
Reclassification | \u2014 | -0.4 | -0.3 | -0.7 |
Disposals/ scrapping in the year | \u2014 | \u2014 | -0.7 | -0.7 |
Foreign currency adjustments | 6.8 | 6.3 | 0.4 | 13.5 |
Total accumulated amortisation and impairment losses as of 31.12 | 272.0 | 183.3 | 41.0 | 496.4 |
Total carrying amount as of 31.12 | 371.4 | 1\u00a0194.2 | 29.8 | 1\u00a0595.4 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Additions in the year as a result of acquisitions are related to the purchase of Arctic Fish and Wester Ross Fisheries.
SPECIFICATION OF INTANGIBLE ASSETS 2021 (EUR MILLION) | GOODWILL | LICENSES | OTHER INTANGIBLE ASSETS 1) | TOTAL |
Acquisition cost as of 01.01 | 569.7 | 1\u00a0038.1 | 59.1 | 1\u00a0666.9 |
Additions in the year2) | 4.3 | 20.5 | 4.8 | 29.6 |
Disposals / scrapping in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Foreign currency adjustments | 12.4 | 34.7 | 1.5 | 48.6 |
Total acquisition cost as of 31.12 | 586.4 | 1\u00a0093.4 | 65.4 | 1\u00a0745.1 |
Accumulated amortisation and impairment losses as of 01.01 | 256.3 | 165.2 | 35.0 | 456.5 |
Amortisation in the year | \u2014 | \u2014 | 2.9 | 2.9 |
Impairment losses in the year | \u2014 | \u2014 | \u2014 | \u2014 |
Disposals/scrapping in the year | \u2014 | \u2014 | 0.1 | 0.1 |
Foreign currency adjustments | 9.0 | 8.4 | 0.8 | 18.1 |
Total accumulated amortisation and impairment losses as of 31.12 | 265.2 | 173.6 | 38.7 | 477.6 |
Total carrying amount as of 31.12 | 321.1 | 919.7 | 26.7 | 1\u00a0267.5 |
Estimated lifetime | 3 - 25 years | |||
Amortisation method | Linear |
1) Other intangible assets includes assets under construction.
2) Additions on goodwill and licences are related to the purchase of Lofoten Aqua.
SPECIFICATION OF | NUMBER OF | NUMBER OF | TOTAL CURRENT PRODUCTION CAPACITY 3) (T TONNES) | OTHER LIMITATIONS |
Mowi Norway1) | 232.9 | 232.9 | 300 | MAB limitation per license |
Mowi Chile | 186 | 30-40 | 120-130 | |
Mowi Scotland | 74 | 51 | 89 | MAB limitation per license |
Mowi Canada | 95 | 46 | 97 | MAB limitation per license |
Mowi Ireland | 25 | 15 | 14 | |
Mowi Faroe Islands2) | 3 | 3 | 11 | |
Arctic Fish | 10 | 10 | 27 |
1) CAC licenses not included.
2) Total capacity is 16 tonnes over a 18 month cycle.
3) Total production capacity HOG, full utilisation.
SPECIFICATION LICENSES 2022 | TOTAL CURRENT PRODUCTION CAPACITY 2) (T TONNES) | HARVEST VOLUME (SALMON ONLY) | UTILISATION BASED | BOOK VALUE 1) (EUR MILLION) | BOOK VALUE PER |
Mowi Norway | 300 | 293\u00a0720 | 98% | 568.1 | 1.9 |
Mowi Chile | 120-130 | 65\u00a0737 | 51%-55% | 126.9 | 1.9 |
Mowi Scotland | 89 | 48\u00a0374 | 54% | 75.2 | 1.6 |
Mowi Canada | 97 | 41\u00a0095 | 47% | 157.8 | 3.8 |
Mowi Ireland | 14 | 6\u00a0845 | 49% | 2.2 | 0.3 |
Mowi Faroe Islands | 11 | 7\u00a0864 | 74% | 6.6 | 0.8 |
Arctic Fish | 27 | n.a. | n.a. | 257.4 | n.a. |
Total | 463\u00a0635 | 1\u00a0194.2 | 2.0 |
1) Book value includes freshwater licenses in addition to seawater licenses.
2)Total production capacity HOG, full utilisation.
SPECIFICATION OF PPE 2022 (EUR MILLION) | LAND & | MACHINERY | TRANSPORT | NETS, | UNDER | OTHER | TOTAL |
Acquisition cost as of 01.01 | 928.7 | 1\u00a0209.2 | 341.5 | 471.3 | 246.7 | 64.0 | 3\u00a0261.3 |
Acquisitions through business | 67.0 | 4.0 | 20.1 | 16.3 | \u2014 | \u2014 | 107.5 |
Additions in the year | 58.2 | 68.0 | 30.2 | 58.5 | 96.9 | 8.3 | 320.0 |
Reclassification | \u2014 | -1.3 | \u2014 | \u2014 | 0.6 | -0.9 | -1.5 |
Disposals / scrapping in the year | -6.5 | -19.8 | -4.1 | -8.9 | -0.1 | -1.9 | -41.3 |
Foreign currency adjustments | -8.3 | 0.1 | -2.0 | -1.3 | -10.8 | 1.0 | -21.2 |
Total acquisition cost as of 31.12 | 1\u00a0039.1 | 1\u00a0260.1 | 385.7 | 535.9 | 333.4 | 70.7 | 3\u00a0625.0 |
Accumulated depreciation and | 355.9 | 862.9 | 172.3 | 293.5 | 22.5 | 50.5 | 1\u00a0757.5 |
Depreciation in the year | 41.1 | 71.8 | 25.7 | 43.3 | \u2014 | 3.5 | 185.4 |
Impairment losses and reversal of | 7.6 | 6.8 | 1.0 | 0.1 | 0.5 | \u2014 | 16.1 |
Reclassification | 1.5 | -3.2 | 0.1 | 1.2 | \u2014 | -0.8 | -1.2 |
Disposals / scrapping in the year | -5.7 | -19.0 | -3.9 | -8.7 | -0.2 | -1.9 | -39.3 |
Foreign currency adjustments | 0.4 | 5.1 | -1.2 | -0.2 | -9.6 | 1.0 | -4.5 |
Total accumulated depreciation and impairment losses as of 31.12 | 400.8 | 924.4 | 194.0 | 329.2 | 13.3 | 52.4 | 1\u00a0914.0 |
Total carrying amount as of 31.12 | 638.3 | 335.9 | 191.7 | 206.6 | 320.1 | 18.3 | 1\u00a0711.0 |
Estimated lifetime | Land; infinite | 5-20 years | 3-10 years | 5-10 years | n/a | 3-10 years | \u00a0 |
Depreciation method | Linear | Linear | Linear | Linear | n/a | Linear | \u00a0 |
\u00a0\u00a0\u00a0\u00a0
SPECIFICATION OF PPE 2021 (EUR MILLION) | LAND & | MACHINERY | TRANSPORT | NETS, | UNDER | OTHER | TOTAL |
Acquisition cost as of 01.01 | 864.0 | 1\u00a0140.4 | 290.3 | 429.3 | 184.6 | 58.2 | 2\u00a0966.8 |
Additions in the year | 73.8 | 64.1 | 33.8 | 39.1 | 44.8 | 5.1 | 260.8 |
Reclassification | -15.9 | -1.6 | 15.3 | -3.4 | -1.4 | \u2014 | -7.0 |
Disposals / scrapping in the year | -18.0 | -39.1 | -4.5 | -14.0 | -0.3 | -1.6 | -77.5 |
Foreign currency adjustments | 24.7 | 45.4 | 6.6 | 20.2 | 19.0 | 2.4 | 118.4 |
Total acquisition cost as of 31.12 | 928.7 | 1\u00a0209.2 | 341.5 | 471.3 | 246.7 | 64.0 | 3\u00a0261.3 |
Accumulated depreciation and | 330.6 | 800.2 | 137.4 | 258.5 | -1.0 | 46.5 | 1\u00a0572.1 |
Depreciation in the year | 36.7 | 68.9 | 24.8 | 41.2 | \u2014 | 3.1 | 174.7 |
Impairment losses and reversal of | 2.9 | 3.8 | 0.5 | 0.5 | 12.1 | 0.1 | 19.9 |
Reclassification | -8.4 | -3.0 | 10.5 | -5.6 | -0.8 | 0.2 | -7.0 |
Disposals /scrapping in the year | -13.5 | -35.6 | -4.3 | -13.8 | -0.2 | -1.6 | -69.1 |
Foreign currency adjustments | 7.5 | 28.7 | 3.4 | 12.7 | 12.3 | 2.3 | 66.9 |
Total accumulated depreciation and impairment losses as of 31.12 | 355.9 | 862.9 | 172.3 | 293.5 | 22.5 | 50.5 | 1\u00a0757.5 |
Total carrying amount as of 31.12 | 572.8 | 346.5 | 169.1 | 177.8 | 224.2 | 13.5 | 1\u00a0504.0 |
Estimated lifetime | Land; infinite | 5-20 years | 3-10 years | 5-10 years | n/a | 3-10 years | \u00a0 |
Depreciation method | Linear | Linear | Linear | Linear | n/a | Linear | \u00a0 |
Sale of non-current assets
Non-current tangible assets have been sold during the year, and the net gain on the sale of assets (included in the line item Other operating expenses in the consolidated statement of comprehensive income) amounts to EUR 3.8 million in 2022. The corresponding figure for 2021 is EUR 0.5 million.
Impairment testing of non-current assets
Impairment tests for specific non-current assets are performed when there are indications of impairment. In 2022, a net loss in fixed assets of EUR 15.3 million was booked in Canada, EUR 0.7 million in Norway, EUR 0.1 million in Poland and EUR 0.2 million in Japan. Based on evaluation no additional impairment due to climate risk and no changes in useful life.
INTEREST-BEARING DEBT (EUR MILLION) | 2022 | 2021 |
Non-current interest-bearing bank debt | 1\u00a0377.7 | 811.8 |
Green bond | 199.1 | 199.8 |
Schuldschein loan | 149.0 | 148.8 |
Bond | \u2014 | 198.6 |
Total non-current interest-bearing debt | 1\u00a0725.8 | 1\u00a0358.9 |
Current interest-bearing bank debt | 11.6 | 0.1 |
Bond | 200.0 | \u2014 |
Current interest-bearing debt | 211.6 | 0.1 |
Total interest-bearing debt | 1\u00a0937.4 | 1\u00a0358.9 |
Financing of the Mowi Group is mainly carried out through the parent company Mowi ASA. External financing is obtained by subsidiaries only if this is optimal for the Group. Mowi complied with its loan covenants at the end of 2022.
The following programmes are the main sources of financing for the Mowi Group as of December\u00a031, 2022:
EUR 1800 MILLION SUSTAINABILITY-LINKED REVOLVING CREDIT FACILITY
In September 2021, Mowi signed a senior secured five-year, EUR 1 800 million multicurrency sustainability-linked revolving credit facility (the \"Facility Agreement\") with DNB, Nordea, ABN Amro, Rabobank, Danske Bank, SEB and Cr\u00e9dit Agricole. The Facility Agreement includes an accordion increase option, which provides flexibility for the parties to agree to increase the size of the Facility
Agreement by an additional EUR 300 million during the five-year term. The principal financial covenant of the Facility Agreement is an equity ratio of minimum 35%, with the calculation of the ratio being adjusted for the effects of IFRS 16. Furthermore, the ability of the Group to take on new debt is regulated by the loan agreement. The facility has final maturity in September 2026.
The facility is available to Mowi ASA and selected subsidiaries. In addition, the revolving credit facility may be allocated in part as bilateral credits (including overdraft facilities and facilities for the issuance of guarantees) between syndicate banks and group companies.
Drawings at year end 2022 on the syndicated credit facility amount to EUR 1 310.0 million, up from 810.7 million at year end 2021.
EUR 150 MILLION SCHULDSCHEIN LOAN
In May 2019, Mowi entered into a EUR 120 million, seven-year senior unsecured loan in the German Schuldschein market, increased to EUR 150 million in August 2019. The loan consists of two floating-rate tranches of EUR 99 million and EUR 30 million, and a fixed-rate tranche of EUR 21 million, and the sole financial covenant is an equity ratio of minimum 30%. Mowi pays semi-annual interest of six-month EURIBOR (floored at 0%) plus 1.70% p.a. on the floating-rate tranches and, through a corresponding interest rate swap, six-month EURIBOR plus 1.705% p.a. on the fixed-rate tranche. All tranches are non-amortising and are repayable in May 2026.
EUR 200 MILLION GREEN BOND
In January 2020, Mowi issued the first green bond in the seafood sector, with a principal amount of EUR 200 million. The bond issue carries a\u00a0coupon of three-month EURIBOR (floored at 0%) plus 1.60% p.a., payable quarterly, and the sole financial covenant is an equity ratio of minimum 30%. The green bond is unsecured and is repayable in January 2025 with no interim instalments. The proceeds from the green bond issue has been used to finance or refinance green projects as further defined by Mowi's green bond framework, which received a medium green shading from CICERO. The bond is listed on the Oslo Stock Exchange and in Euronext ESG Bonds section with ISIN: N0 0010874050.
EUR 200 MILLION BOND
In June 2018, Mowi issued an unsecured bond with a\u00a0principal amount of EUR 200 million, listed on the Oslo Stock Exchange with ISIN: NO 0010824006. The bond issue carries a\u00a0coupon of three-month EURIBOR (floored at 0%) plus 2.15% p.a., payable quarterly, and the sole financial covenant is an equity ratio of minimum 30%. The full principal amount is repayable in June 2023 and the bond is therefore presented as Current interest-bearing debt.
EUR 100 MILLION REVOLVING CREDIT AND CONSTRUCTION FACILITIES, ARCTIC FISH
In December 2020 Arctic Fish signed a three-year, EUR 67 million senior secured multi-currency credit facility with a one-year extension option with Arion Bank and DNB to finance day-to-day operation and future growth (the \"Arctic Fish Facility Agreement\"). Subsequent amendments have increased the facility size to EUR 100 million. Drawings on the facility at year end 2022 amount to EUR 75.8 million. For details, see note 22 Business combinations.
CASH MOVEMENTS FINANCING ACTIVITIES
CASH MOVEMENTS FINANCING ACTIVITIES (EUR MILLION) | INTEREST-BEARING DEBT | DERIVATIVES |
Balance at January 1, 2022 | 1\u00a0358.9 | 7.0 |
Proceeds from loans and borrowings | 499.9 | \u2014 |
Total changes from financing cash flows | 499.9 | \u2014 |
Changes from business combinations | 78.3 | |
The effect of changes in foreign exchange rates | -3.4 | \u2014 |
Changes in fair value | \u2014 | 4.9 |
Liability-related | 74.9 | 4.9 |
Capitalised borrowing cost | 1.7 | \u2014 |
Interest expense | 36.3 | 4.1 |
Interest paid | -34.3 | -4.1 |
Total liability-related other changes | 3.7 | \u2014 |
Balance at December 31, 2022 | 1\u00a0937.4 | 11.9 |
In addition Mowi has paid EUR 12.7 million in interest expenses for leasing during 2022. For cash details in regards to leasing, please see note 29.
CASH MOVEMENTS FINANCING ACTIVITIES (EUR MILLION) | \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 INTEREST-BEARING DEBT | DERIVATIVES |
Balance at January 1, 2021 | 1\u00a0565.5 | 30.1 |
Proceeds from loans and borrowings | -209.6 | \u2014 |
Transaction cost related to loans and borrowings | -10.8 | \u2014 |
Total changes from financing cash flows | -220.4 | \u2014 |
The effect of changes in foreign exchange rates | 11.0 | \u2014 |
Changes in fair value | \u2014 | -23.1 |
Liability-related | 11.0 | -23.1 |
Capitalised borrowing cost | 2.5 | \u2014 |
Interest expense | 28.0 | 12.5 |
Interest paid | -27.7 | -12.5 |
Total liability-related other changes | 2.8 | \u2014 |
Balance at December 31, 2021 | 1\u00a0358.9 | 7.0 |
The following programmes are the main sources of financing for the Mowi Group as of December\u00a031, 2022:
EUR 1800 MILLION SUSTAINABILITY-LINKED REVOLVING CREDIT FACILITY
In September 2021, Mowi signed a senior secured five-year, EUR 1 800 million multicurrency sustainability-linked revolving credit facility (the \"Facility Agreement\") with DNB, Nordea, ABN Amro, Rabobank, Danske Bank, SEB and Cr\u00e9dit Agricole. The Facility Agreement includes an accordion increase option, which provides flexibility for the parties to agree to increase the size of the Facility
Agreement by an additional EUR 300 million during the five-year term. The principal financial covenant of the Facility Agreement is an equity ratio of minimum 35%, with the calculation of the ratio being adjusted for the effects of IFRS 16. Furthermore, the ability of the Group to take on new debt is regulated by the loan agreement. The facility has final maturity in September 2026.
The facility is available to Mowi ASA and selected subsidiaries. In addition, the revolving credit facility may be allocated in part as bilateral credits (including overdraft facilities and facilities for the issuance of guarantees) between syndicate banks and group companies.
Drawings at year end 2022 on the syndicated credit facility amount to EUR 1 310.0 million, up from 810.7 million at year end 2021.
EUR 150 MILLION SCHULDSCHEIN LOAN
In May 2019, Mowi entered into a EUR 120 million, seven-year senior unsecured loan in the German Schuldschein market, increased to EUR 150 million in August 2019. The loan consists of two floating-rate tranches of EUR 99 million and EUR 30 million, and a fixed-rate tranche of EUR 21 million, and the sole financial covenant is an equity ratio of minimum 30%. Mowi pays semi-annual interest of six-month EURIBOR (floored at 0%) plus 1.70% p.a. on the floating-rate tranches and, through a corresponding interest rate swap, six-month EURIBOR plus 1.705% p.a. on the fixed-rate tranche. All tranches are non-amortising and are repayable in May 2026.
EUR 200 MILLION GREEN BOND
In January 2020, Mowi issued the first green bond in the seafood sector, with a principal amount of EUR 200 million. The bond issue carries a\u00a0coupon of three-month EURIBOR (floored at 0%) plus 1.60% p.a., payable quarterly, and the sole financial covenant is an equity ratio of minimum 30%. The green bond is unsecured and is repayable in January 2025 with no interim instalments. The proceeds from the green bond issue has been used to finance or refinance green projects as further defined by Mowi's green bond framework, which received a medium green shading from CICERO. The bond is listed on the Oslo Stock Exchange and in Euronext ESG Bonds section with ISIN: N0 0010874050.
EUR 200 MILLION BOND
In June 2018, Mowi issued an unsecured bond with a\u00a0principal amount of EUR 200 million, listed on the Oslo Stock Exchange with ISIN: NO 0010824006. The bond issue carries a\u00a0coupon of three-month EURIBOR (floored at 0%) plus 2.15% p.a., payable quarterly, and the sole financial covenant is an equity ratio of minimum 30%. The full principal amount is repayable in June 2023 and the bond is therefore presented as Current interest-bearing debt.
EUR 100 MILLION REVOLVING CREDIT AND CONSTRUCTION FACILITIES, ARCTIC FISH
In December 2020 Arctic Fish signed a three-year, EUR 67 million senior secured multi-currency credit facility with a one-year extension option with Arion Bank and DNB to finance day-to-day operation and future growth (the \"Arctic Fish Facility Agreement\"). Subsequent amendments have increased the facility size to EUR 100 million. Drawings on the facility at year end 2022 amount to EUR 75.8 million. For details, see note 22 Business combinations.
CASH MOVEMENTS FINANCING ACTIVITIES
CASH MOVEMENTS FINANCING ACTIVITIES (EUR MILLION) | INTEREST-BEARING DEBT | DERIVATIVES |
Balance at January 1, 2022 | 1\u00a0358.9 | 7.0 |
Proceeds from loans and borrowings | 499.9 | \u2014 |
Total changes from financing cash flows | 499.9 | \u2014 |
Changes from business combinations | 78.3 | |
The effect of changes in foreign exchange rates | -3.4 | \u2014 |
Changes in fair value | \u2014 | 4.9 |
Liability-related | 74.9 | 4.9 |
Capitalised borrowing cost | 1.7 | \u2014 |
Interest expense | 36.3 | 4.1 |
Interest paid | -34.3 | -4.1 |
Total liability-related other changes | 3.7 | \u2014 |
Balance at December 31, 2022 | 1\u00a0937.4 | 11.9 |
In addition Mowi has paid EUR 12.7 million in interest expenses for leasing during 2022. For cash details in regards to leasing, please see note 29.
CASH MOVEMENTS FINANCING ACTIVITIES (EUR MILLION) | \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 INTEREST-BEARING DEBT | DERIVATIVES |
Balance at January 1, 2021 | 1\u00a0565.5 | 30.1 |
Proceeds from loans and borrowings | -209.6 | \u2014 |
Transaction cost related to loans and borrowings | -10.8 | \u2014 |
Total changes from financing cash flows | -220.4 | \u2014 |
The effect of changes in foreign exchange rates | 11.0 | \u2014 |
Changes in fair value | \u2014 | -23.1 |
Liability-related | 11.0 | -23.1 |
Capitalised borrowing cost | 2.5 | \u2014 |
Interest expense | 28.0 | 12.5 |
Interest paid | -27.7 | -12.5 |
Total liability-related other changes | 2.8 | \u2014 |
Balance at December 31, 2021 | 1\u00a0358.9 | 7.0 |
FINANCIAL INSTRUMENTS IMPACT ON COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Interest expenses | -36.3 | -40.5 |
Interest expenses leasing | -12.7 | -15.6 |
Amortised interest cost | -3.6 | -3.0 |
Interest expenses | -52.6 | -59.0 |
Net currency effects on interest-bearing debt | 2.1 | -11.1 |
Net currency effects on cash, trade receivables and trade payables | 3.6 | 24.6 |
Gain/loss on short-term currency swaps | -6.5 | 3.0 |
Gain/loss on long-term currency swaps | -6.1 | 20.2 |
Currency effects on leasing (IFRS 16) | 8.4 | 0.3 |
Net currency effects | 1.4 | 37.0 |
Interest income | 2.0 | 0.5 |
Gain/loss on salmon derivatives non-operational | -0.8 | 0.4 |
Change in fair value other financial instruments | 2.9 | 12.1 |
Change in fair value other shares | -0.1 | \u2014 |
Net other financial items | -5.8 | 0.1 |
Other financial items | -1.8 | 13.1 |
Total financial items | -52.9 | -8.9 |
FINANCIAL INSTRUMENTS IMPACT ON COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Interest expenses | -36.3 | -40.5 |
Interest expenses leasing | -12.7 | -15.6 |
Amortised interest cost | -3.6 | -3.0 |
Interest expenses | -52.6 | -59.0 |
Net currency effects on interest-bearing debt | 2.1 | -11.1 |
Net currency effects on cash, trade receivables and trade payables | 3.6 | 24.6 |
Gain/loss on short-term currency swaps | -6.5 | 3.0 |
Gain/loss on long-term currency swaps | -6.1 | 20.2 |
Currency effects on leasing (IFRS 16) | 8.4 | 0.3 |
Net currency effects | 1.4 | 37.0 |
Interest income | 2.0 | 0.5 |
Gain/loss on salmon derivatives non-operational | -0.8 | 0.4 |
Change in fair value other financial instruments | 2.9 | 12.1 |
Change in fair value other shares | -0.1 | \u2014 |
Net other financial items | -5.8 | 0.1 |
Other financial items | -1.8 | 13.1 |
Total financial items | -52.9 | -8.9 |
FINANCIAL INSTRUMENTS IMPACT ON COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Interest expenses | -36.3 | -40.5 |
Interest expenses leasing | -12.7 | -15.6 |
Amortised interest cost | -3.6 | -3.0 |
Interest expenses | -52.6 | -59.0 |
Net currency effects on interest-bearing debt | 2.1 | -11.1 |
Net currency effects on cash, trade receivables and trade payables | 3.6 | 24.6 |
Gain/loss on short-term currency swaps | -6.5 | 3.0 |
Gain/loss on long-term currency swaps | -6.1 | 20.2 |
Currency effects on leasing (IFRS 16) | 8.4 | 0.3 |
Net currency effects | 1.4 | 37.0 |
Interest income | 2.0 | 0.5 |
Gain/loss on salmon derivatives non-operational | -0.8 | 0.4 |
Change in fair value other financial instruments | 2.9 | 12.1 |
Change in fair value other shares | -0.1 | \u2014 |
Net other financial items | -5.8 | 0.1 |
Other financial items | -1.8 | 13.1 |
Total financial items | -52.9 | -8.9 |
FINANCIAL INSTRUMENTS IMPACT ON COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Interest expenses | -36.3 | -40.5 |
Interest expenses leasing | -12.7 | -15.6 |
Amortised interest cost | -3.6 | -3.0 |
Interest expenses | -52.6 | -59.0 |
Net currency effects on interest-bearing debt | 2.1 | -11.1 |
Net currency effects on cash, trade receivables and trade payables | 3.6 | 24.6 |
Gain/loss on short-term currency swaps | -6.5 | 3.0 |
Gain/loss on long-term currency swaps | -6.1 | 20.2 |
Currency effects on leasing (IFRS 16) | 8.4 | 0.3 |
Net currency effects | 1.4 | 37.0 |
Interest income | 2.0 | 0.5 |
Gain/loss on salmon derivatives non-operational | -0.8 | 0.4 |
Change in fair value other financial instruments | 2.9 | 12.1 |
Change in fair value other shares | -0.1 | \u2014 |
Net other financial items | -5.8 | 0.1 |
Other financial items | -1.8 | 13.1 |
Total financial items | -52.9 | -8.9 |
CATEGORIES OF FINANCIAL INSTRUMENTS IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | FINANCIAL ASSETS AND LIABILITIES | |||
DECEMBER 31, 2022 | DEBT INSTRUMENTS AT AMORTISED COST | FINANCIAL | NON-FINANCIAL | TOTAL |
Non-current assets | ||||
Other non-current financial assets | \u2014 | 2.7 | \u2014 | 2.7 |
Current assets | ||||
Trade receivables | 600.1 | \u2014 | \u2014 | 600.1 |
Other receivables | 98.4 | \u2014 | 85.3 | 183.7 |
Other current financial assets | \u2014 | 10.0 | \u2014 | 10.0 |
Cash | 178.5 | \u2014 | \u2014 | 178.5 |
Non-current liabilities | ||||
Non-current interest-bearing debt | -1\u00a0725.8 | \u2014 | \u2014 | -1\u00a0725.8 |
Current liabilities | ||||
Current interest-bearing debt | -211.6 | \u2014 | \u2014 | -211.6 |
Trade payables | -437.0 | \u2014 | \u2014 | -437.0 |
Other current financial liabilities | \u2014 | -11.9 | \u2014 | -11.9 |
Other current liabilities | 98.2 | \u2014 | -341.4 | -243.3 |
Total | -1\u00a0399.2 | 0.8 | ||
Fair value1) | -1\u00a0401.1 | 0.8 |
1) Difference in fair value is related to Non-current interest-bearing debt (Bond).
CATEGORIES OF FINANCIAL INSTRUMENTS IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | FINANCIAL ASSETS AND LIABILITIES | |||
31 DECEMBER 2021 | DEBT INSTRUMENTS AT AMORTISED COST | FINANCIAL | NON-FINANCIAL | TOTAL |
Non-current assets | ||||
Other non-current financial assets | \u2014 | 1.9 | \u2014 | 1.9 |
Current assets | ||||
Trade receivables | 492.1 | \u2014 | \u2014 | 492.1 |
Other receivables | 86.2 | \u2014 | 91.0 | 177.2 |
Other current financial assets | \u2014 | 33.0 | \u2014 | 33.0 |
Cash | 101.7 | \u2014 | \u2014 | 101.7 |
Non-current liabilities | ||||
Non-current interest-bearing debt | -1\u00a0358.9 | \u2014 | \u2014 | -1\u00a0358.9 |
Current liabilities | ||||
Current interest-bearing debt | -0.1 | \u2014 | \u2014 | -0.1 |
Trade payables | -392.8 | \u2014 | \u2014 | -392.8 |
Other current financial liabilities | \u2014 | -7.0 | \u2014 | -7.0 |
Other current liabilities | -96.0 | \u2014 | -149.0 | -244.9 |
Total | -1\u00a0167.8 | 27.9 | ||
Fair value1) | -1\u00a0178.8 | 27.9 |
1) Difference in fair value is related to Non-current interest-bearing debt (Bond).
There has not been any reclassification between the categories of financial assets or liabilities in 2022, or 2021. Details regarding the criteria for recognition and the basis for measurement of each class of financial instrument are disclosed in Note 2 Significant accounting principles.
OTHER CURRENT FINANCIAL ASSETS (EUR MILLION) | 2022 | 2021 |
Market value of other financial instruments | 6.0 | 8.2 |
Currency swaps | 4.0 | 24.7 |
Other current financial assets as of 31.12 | 10.0 | 33.0 |
OTHER CURRENT FINANCIAL LIABILITIES (EUR MILLION) | 2022 | 2021 |
Currency swaps | 10.2 | 2.5 |
Interest rate swaps | 1.7 | 4.5 |
Other current financial liabilities as of 31.12 | 11.9 | 7.0 |
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of financial instruments carried at amortised cost
The Group considers that the carrying amount of financial assets and liabilities recognised at amortised cost in the financial statements approximates their fair value.
Fair value measurements recognised in the statement of financial position
Financial instruments that are measured at fair value subsequent to initial recognition are grouped into a hierarchy of three different levels, based on the degree to which the fair value is observable:
Level 1:
Fair value determined directly by reference to published quotations.
Level 2:
Fair value estimated using valuation technique based on input other than quoted prices included in level 1 that are observable.
Level 3:
Fair value estimated using a valuation technique based on unobservable data.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (EUR MILLION) | 2022 | 2021 | ||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | LEVEL 1 | LEVEL 2 | LEVEL 3 | |
Financial assets/liabilities to fair value through profit or loss: | ||||||
Other financial instruments | \u2014 | \u2014 | \u2014 | \u2014 | -6.3 | \u2014 |
Current currency swaps | \u2014 | 4.0 | \u2014 | \u2014 | 24.7 | \u2014 |
Interest swaps | \u2014 | -1.7 | \u2014 | \u2014 | -4.5 | \u2014 |
Current currency swaps | \u2014 | -10.2 | \u2014 | \u2014 | -2.5 | \u2014 |
BONDS AT AMORTISED COST, FAIR VALUE | \u2014 | -545.0 | \u2014 | \u2014 | -558.1 | \u2014 |
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of financial instruments carried at amortised cost
The Group considers that the carrying amount of financial assets and liabilities recognised at amortised cost in the financial statements approximates their fair value.
Fair value measurements recognised in the statement of financial position
Financial instruments that are measured at fair value subsequent to initial recognition are grouped into a hierarchy of three different levels, based on the degree to which the fair value is observable:
Level 1:
Fair value determined directly by reference to published quotations.
Level 2:
Fair value estimated using valuation technique based on input other than quoted prices included in level 1 that are observable.
Level 3:
Fair value estimated using a valuation technique based on unobservable data.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (EUR MILLION) | 2022 | 2021 | ||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | LEVEL 1 | LEVEL 2 | LEVEL 3 | |
Financial assets/liabilities to fair value through profit or loss: | ||||||
Other financial instruments | \u2014 | \u2014 | \u2014 | \u2014 | -6.3 | \u2014 |
Current currency swaps | \u2014 | 4.0 | \u2014 | \u2014 | 24.7 | \u2014 |
Interest swaps | \u2014 | -1.7 | \u2014 | \u2014 | -4.5 | \u2014 |
Current currency swaps | \u2014 | -10.2 | \u2014 | \u2014 | -2.5 | \u2014 |
BONDS AT AMORTISED COST, FAIR VALUE | \u2014 | -545.0 | \u2014 | \u2014 | -558.1 | \u2014 |
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of financial instruments carried at amortised cost
The Group considers that the carrying amount of financial assets and liabilities recognised at amortised cost in the financial statements approximates their fair value.
Fair value measurements recognised in the statement of financial position
Financial instruments that are measured at fair value subsequent to initial recognition are grouped into a hierarchy of three different levels, based on the degree to which the fair value is observable:
Level 1:
Fair value determined directly by reference to published quotations.
Level 2:
Fair value estimated using valuation technique based on input other than quoted prices included in level 1 that are observable.
Level 3:
Fair value estimated using a valuation technique based on unobservable data.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (EUR MILLION) | 2022 | 2021 | ||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | LEVEL 1 | LEVEL 2 | LEVEL 3 | |
Financial assets/liabilities to fair value through profit or loss: | ||||||
Other financial instruments | \u2014 | \u2014 | \u2014 | \u2014 | -6.3 | \u2014 |
Current currency swaps | \u2014 | 4.0 | \u2014 | \u2014 | 24.7 | \u2014 |
Interest swaps | \u2014 | -1.7 | \u2014 | \u2014 | -4.5 | \u2014 |
Current currency swaps | \u2014 | -10.2 | \u2014 | \u2014 | -2.5 | \u2014 |
BONDS AT AMORTISED COST, FAIR VALUE | \u2014 | -545.0 | \u2014 | \u2014 | -558.1 | \u2014 |
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (EUR MILLION) | 2022 | 2021 | ||||
LEVEL 1 | LEVEL 2 | LEVEL 3 | LEVEL 1 | LEVEL 2 | LEVEL 3 | |
Financial assets/liabilities to fair value through profit or loss: | ||||||
Other financial instruments | \u2014 | \u2014 | \u2014 | \u2014 | -6.3 | \u2014 |
Current currency swaps | \u2014 | 4.0 | \u2014 | \u2014 | 24.7 | \u2014 |
Interest swaps | \u2014 | -1.7 | \u2014 | \u2014 | -4.5 | \u2014 |
Current currency swaps | \u2014 | -10.2 | \u2014 | \u2014 | -2.5 | \u2014 |
BONDS AT AMORTISED COST, FAIR VALUE | \u2014 | -545.0 | \u2014 | \u2014 | -558.1 | \u2014 |
LEVERAGE AND CAPITAL ACCESS
Leverage and Capital access (i.e. Capital management) refers to the process of acquiring and utilising capital in the most efficient manner compared to the available alternatives. The primary objective of the Group\u2019s capital management is to ensure access to capital contributing to satisfactory operations and maximum generation of shareholder value. The Group manages its capital structure and makes adjustments in light of changes in underlying economic conditions. Access to borrowed capital is continuously monitored and the Group has a continuous dialogue with its lenders. The syndicated loan facility sets forth an equity ratio as the only financial covenant. The remaining portfolio of interest bearing debt does not include more restrictive financial covenants. Mowi complied with the financial covenants in its loan agreements during and at the end of 2022. Details relating to the main loan programmes in the Group are described in Note 11.
Mowi intends to maintain an equity base suited to the characteristics of its operations, taking into consideration that fish farming is a cyclical business. At year-end 2022, the equity of Mowi amounted to EUR 3\u00a0687.1 million. The equity share, defined by equity/total assets, was at the same time 49.0%. Net interest bearing debt, defined as total interest-bearing debt less cash was EUR 1 758.9 million at year-end, above the long-term target of EUR 1 400 million, excluding effects of IFRS 16. The Board of Directors of Mowi ASA considers the equity in the Group appropriate for the scale of the operation.
Mowi\u2019s ambition is to create long-term value for the shareholder through both positive share price development and a growing dividend in line with long-term earnings. In 2020 the Board decided to make dividend payments more predicable and transparent by operationalising the dividend policy and introducing ordinary and extraordinary dividends. The dividend policy states that:
\u2013The quarterly ordinary dividend shall under normal circumstances be at least 50% of underlying earnings per share (EPS).
\u2013Excess capital will be paid out as extraordinary dividends.
\u2013When deciding excess capital the Board of Directors will take into consideration expected cash flow, capital expenditure plans, financing requirements and appropriate financial flexibility. Further to this a long-term target level for net interest-bearing debt is determined, reviewed and updated on a regular basis.
\u2013Shareholder returns are distributed primarily as cash dividends with the option of using share buybacks as a complementary supplement on an ad-hoc basis.
The Board of Directors of Mowi ASA has been given proxies from the Annual General Meeting on 13 June 2022 for the following:
\u2013(1) To approve the distribution of dividends based on the Company\u2019s annual accounts for 2022. The authority may be used to approve the distribution of dividends up to an aggregate amount of NOK 7 500 000 000. The authority is valid for dividends from the date of the Annual General Meeting on 13 June 2022 until the AGM in 2023, however no later than June 30, 2023.
\u2013(2) To purchase up to 51 711 109 shares in the Company (representing 10% of the shares in issue at the time) during the period up until the AGM in 2023, however no later than June 30, 2023.
\u2013(3a) To increase the Company\u2019s share capital by up to 51 711 109 shares (representing 10% of the shares in issue at the time) provided that the the combined number of shares that are issued pursuant to this authorisation and the authorisation in item 3b below shall not in aggregate exceed 10% of the Company's current share capital. The authority did not define the purpose(s) of such a capital increase. The authority expires at the AGM in 2023, however no later than June 30, 2023.
\u2013(3b) To take up convertible bond loans of up to NOK 3 200 million (par value), convertible to a share capital equivalent of up to 51 711 109 shares provided that the the combined number of shares that are issued pursuant to this authorisation and the authorisation in item 3a above shall not in aggregate exceed 10% of the Company's current share capital. The authority expires at the AGM in 2023, however no later than June 30, 2023.
The Group\u2019s principal financial liabilities, other than loans, consist of non-convertible bonds, derivatives and trade payables. These financial liabilities constitute the majority of the\u00a0Group\u2019s third party financing. The Group holds financial assets such as trade receivables, cash and shares.
The Group uses financial derivatives, mainly currency forward contracts, interest rate swaps and financial salmon futures, using large international banks and Fish Pool ASA as counterparts. The purpose of these derivatives is to manage the interest rate, currency and salmon price risks arising from the operations of the Group. With the exception of financial salmon futures, no trading activities in financial instruments are undertaken. On a selective basis, the Group also enters into other financial derivatives such as equity forward contracts.
Mowi\u2019s ambition is to create long-term value for the shareholder through both positive share price development and a growing dividend in line with long-term earnings. In 2020 the Board decided to make dividend payments more predicable and transparent by operationalising the dividend policy and introducing ordinary and extraordinary dividends. The dividend policy states that:
\u2013The quarterly ordinary dividend shall under normal circumstances be at least 50% of underlying earnings per share (EPS).
\u2013Excess capital will be paid out as extraordinary dividends.
\u2013When deciding excess capital the Board of Directors will take into consideration expected cash flow, capital expenditure plans, financing requirements and appropriate financial flexibility. Further to this a long-term target level for net interest-bearing debt is determined, reviewed and updated on a regular basis.
\u2013Shareholder returns are distributed primarily as cash dividends with the option of using share buybacks as a complementary supplement on an ad-hoc basis.
The Board of Directors of Mowi ASA has been given proxies from the Annual General Meeting on 13 June 2022 for the following:
\u2013(1) To approve the distribution of dividends based on the Company\u2019s annual accounts for 2022. The authority may be used to approve the distribution of dividends up to an aggregate amount of NOK 7 500 000 000. The authority is valid for dividends from the date of the Annual General Meeting on 13 June 2022 until the AGM in 2023, however no later than June 30, 2023.
FINANCIAL RISK MANAGEMENT
The Group monitors and manages financial risks arising from operations. These include currency risks, interest rate risk, credit risk and price/liquidity risk.
The Group seeks to manage these risks through operational measures or (where such measures are not available) through the use of financial derivatives.
A policy on the management of these risks has been approved by the Board of Directors. The policy includes principles on currency risk, interest rate risk, price risk, the use of financial instruments and other operational means as well as limits on the maximum and minimum levels of these exposures.
CURRENCY RISK
In the Mowi Group, several Business Units carry out a\u00a0large number of business transactions in currencies different from the domestic currency. For the Group, the relative importance of these transactions is substantially larger on the revenue side than on the cost side. To mitigate the potential fluctuation effects on its cash flows, the Group maintains a foreign exchange strategy designated to manage these exposures both in the short and long term. For each of Mowi\u2019s units, the Group has defined a\u00a0hedging strategy not designated for hedge accounting. According to the hedging strategy, units located in the following regions generate cash flow in currencies (main hedging currencies) according to the below table.
REGION | HEDGING CURRENCY |
Europe ex. UK | EUR |
UK | GBP |
Americas | USD |
Asia | USD |
For some units the main hedging currency is different from the functional currency.
Transaction exposures arise from firm commitments made to transact in a currency different from the main currency. Each transaction exposure depends on the duration of the associated commitment, but these are normally be of relatively short duration. Hedging transactions undertaken to manage transaction exposures are referred to as transaction hedges.
Through hedging of transaction exposures, each Business Unit aims to ensure that its net cash flows in currencies other than its main hedging currency are hedged towards this currency. Further exposures arise from structural imbalances between the main currencies on the revenue side and those on the expense side. These imbalances are predominantly a result of production taking place in a different country from that in which the product is sold. Due to their structural nature, such exposures are of a longer duration than transaction exposures and are therefore quantified based on estimates of future revenues and expenses. For these purposes, the focus is on the underlying currency structure of the individual revenue and cost item while the actual currency in which transactions are invoiced is of lesser importance.
The Mowi Group normally has a net positive cash flow exposure towards EUR, GBP, USD and JPY and a net negative cash flow exposure towards NOK, CAD and CLP. To hedge Group cash flows against exchange rate fluctuations Mowi has a policy for long-term hedging of the most predominant net exposures. The Group currently hedges up to 30% of its underlying exposure between EUR/NOK and USD/CAD with a horizon of two years.
As of December 31, 2022 the Group held a portfolio of derivative instruments designed to mitigate transaction and cash flow exposure with a total contract value of EUR 544.4 million (EUR 728.4 million). Instruments equivalent to 96% (74%) of the contract value mature in 2023 and no instrument matures after December 2024. The portfolio had a net market value of EUR -6.7 million (EUR 22.2 million) at year end.
Currency exposure in the statement of financial position
As a consequence of the Group\u2019s net cash flows being generated in EUR, GBP and USD, the interest-bearing debt should reflect this currency structure. On December\u00a031, 2022, the portfolio was in line with policy.
CURRENCY STRUCTURE OF NET INTEREST-BEARING DEBT (EUR MILLION) | NOK | USD | EUR | GBP | JPY | DKK | CAD | PLN | OTHER | TOTAL |
Cash and cash equivalents | 33.5 | 31.0 | 78.5 | 7.4 | 8.4 | 2.7 | 7.0 | 0.3 | 9.7 | 178.5 |
Current interest-bearing debt | \u2014 | \u2014 | 211.6 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | 211.6 |
Non-current interest-bearing debt | 76.6 | 56.4 | 1\u00a0547.3 | 45.2 | \u2014 | \u2014 | \u2014 | \u2014 | 0.3 | 1\u00a0725.8 |
Net interest-bearing debt | 43.1 | 25.4 | 1\u00a0680.4 | 37.8 | -8.4 | -2.7 | -7.0 | -0.3 | -9.4 | 1\u00a0758.9 |
The carrying amount of interest-bearing debt has been reduced by EUR 9.4 million (EUR 13.0 million) in transaction costs. There are no significant differences between the carrying amount and the fair value of non-current interest-bearing debt and leasing.
SENSITIVITY ANALYSIS - CHANGE IN EXCHANGE RATES IMPACT ON RESULT
The main sources of sensitivity to exchange rate movements are the long-term hedges of exposure to EUR/NOK and USD/CAD and loans in NOK, USD and GBP under the multicurrency revolving credit facility. Based on the exposure as of December\u00a031, 2022, the effect of a 15% change in exchange rates on the long-term currency hedges and the multicurrency loan positions has been estimated. As no hedge accounting no impact on other comprehensive income.
CURRENCY PAIR (EUR MILLION) | EUR/NOK | EUR/USD | EUR/GBP | USD/CAD | |
Effect in EUR from a 15% increase in the value of | EUR | EUR | EUR | CAD | |
Effect on profit before tax | -6.3 | 7.4 | 5.9 | 6.6 |
INTEREST RATE RISK
Mowi ASA shall over time hedge 0%-35% of the Group\u2019s long-term interest bearing debt by currency with fixed interest or interest rate derivatives for the first 5 years, and 0% thereafter. Interest-bearing debt includes external interest-bearing debt and leasing in the parent company or subsidiaries. The interest rate hedges shall be based on the targeted currency composition. Interest rate exposure in other currencies than EUR, USD, GBP and NOK shall not be hedged. All interest rate hedging shall be executed from the parent company. At year end 2022 the Group's overall interest rate swap portfolio had a contract nominal value of EUR 77.4 million (EUR 498.3 million) and a net market value of EUR -1.7 million (EUR -4.5 million).
A 0.50% point parallel increase in all relevant yield curves will cause a EUR 0.2 million decrease (EUR 0.3 million increase) in the market value of the overall interest swap portfolio. This change would be recognised through profit and loss. Based on the debt and interest rate swaps outstanding as of December\u00a031, 2022 a 0.50% point parallel increase in all relevant yield curves would result in an estimated increase in the Group's annual interest cost of EUR 9.7 million.
CREDIT RISK
The Group trades only with recognised, creditworthy third parties. It is the Group\u2019s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and as a rule the Group\u2019s trade receivables are fully credit insured. The Group monitors exposure towards individual customers closely and is not substantially exposed to any individual customer or contractual partner as of December\u00a031, 2022. The maximum exposure to credit risk at the reporting date is the carrying value of
trade receivables, with reference to Note 17. The Group considers the concentration of risk with respect to trade receivables as low, as its customers are located in various jurisdictions and operate in different markets.
The Group only enters into derivative transactions with counterparties with an established business relationship to the Group.
PRICE/LIQUIDITY RISK
The Group is continuously monitoring liquidity and estimates expected liquidity development on the basis of budgets and monthly updated forecasts from the business units. Mowi\u2019s financial position and development depend significantly on spot price developments for salmon, and these prices have historically been volatile. As such Mowi is exposed to movements in supply and demand for salmon. Mowi has to some extent mitigated its exposure to spot prices by entering into bilateral fixed price/volume contracts with its customers. The contract share has normally varied between 20% and 50% of our sold volume, however hedged volumes can increase up to 65% under special circumstances, and the duration of contracts has typically been three to eighteen months. Furthermore Mowi reduces its exposure to spot price movements through value added processing activities and tailoring of products for its customers. Other key liquidity risks are fluctuations in production and harvest volumes, biological issues, and changes in the feed price, feed being the most important individual factor on the cost side. Feed costs are correlated to the marine and agricultural commodity prices of the ingredients.
Mowi\u2019s aim is to maintain a balance between long-term financing and flexibility by using credit facilities, new borrowings and bonds.
MATURITY PROFILE OF THE FINANCIAL LIABILITIES AND DERIVATIVES BASED ON CONTRACTUAL UNDISCOUNTED PAYMENTS, INCLUDING INTEREST: 2022 (EUR MILLION) | CARRYING AMOUNT | CONTRACTUAL CASH FLOWS | WITHIN | 1 -2 YEARS | 2 - 5 YEARS | MORE THAN |
Non-derivative financial liabilities | ||||||
Syndicated loan | 1\u00a0310.7 | -1\u00a0506.2 | -59.5 | -52.4 | -1\u00a0394.4 | \u2014 |
Unsecured bond | 200.5 | -204.9 | -204.9 | \u2014 | \u2014 | \u2014 |
Unsecured Schuldschein loan | 150.1 | -172.6 | -6.7 | -7.1 | -158.9 | \u2014 |
Unsecured Green bond | 200.2 | -219.8 | -8.7 | -9.2 | -201.9 | \u2014 |
Arctic Fish bank facility | 75.6 | -86.1 | -14.7 | -71.4 | \u2014 | \u2014 |
Other debt | 1.0 | -0.8 | -0.1 | -0.1 | -0.1 | -0.4 |
Trade payables and other liabilities | 437.0 | -437.0 | -437.0 | \u2014 | \u2014 | \u2014 |
Derivative financial liabilities | ||||||
Interest rate swaps | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Cash flow instruments | 4.4 | -4.4 | -4.4 | \u2014 | \u2014 | \u2014 |
Transaction instruments | 6.3 | -6.3 | -6.0 | -0.2 | \u2014 | \u2014 |
Total financial liabilities 1) | 2\u00a0385.5 | -2\u00a0638.1 | -742.0 | -140.4 | -1\u00a0755.3 | -0.4 |
MATURITY PROFILE OF THE FINANCIAL LIABILITIES AND DERIVATIVES BASED ON CONTRACTUAL UNDISCOUNTED PAYMENTS, INCLUDING INTEREST: 2021 (EUR MILLION) | CARRYING AMOUNT | CONTRACTUAL CASH FLOWS | WITHIN | 1 -2 YEARS | 2 - 5 YEARS | MORE THAN |
Non-derivative financial liabilities | ||||||
Syndicated loan | 811.0 | -875.4 | -10.9 | -10.9 | -853.6 | \u2014 |
Unsecured bond | 200.0 | -206.5 | -4.3 | -202.2 | \u2014 | \u2014 |
Unsecured Schuldschein loan | 149.4 | -161.0 | -2.4 | -2.4 | -156.1 | \u2014 |
Unsecured Green bond | 199.2 | -214.4 | -3.2 | -3.2 | -208.0 | \u2014 |
Other debt | 1.2 | -1.2 | -0.3 | -0.2 | -0.2 | -0.5 |
Trade payables and other liabilities | 392.8 | -392.8 | -392.8 | \u2014 | \u2014 | \u2014 |
Derivative financial liabilities | ||||||
Interest rate swaps | 5.1 | -5.3 | -4.8 | -0.5 | \u2014 | \u2014 |
Cash flow instruments | 1.0 | -1.0 | \u2014 | -0.9 | \u2014 | \u2014 |
Transaction instruments | 1.6 | -1.6 | -1.4 | -0.1 | \u2014 | \u2014 |
Total financial liabilities 1) | 1\u00a0761.1 | -1\u00a0858.9 | -420.1 | -220.5 | -1\u00a0217.9 | -0.5 |
CURRENCY RISK
In the Mowi Group, several Business Units carry out a\u00a0large number of business transactions in currencies different from the domestic currency. For the Group, the relative importance of these transactions is substantially larger on the revenue side than on the cost side. To mitigate the potential fluctuation effects on its cash flows, the Group maintains a foreign exchange strategy designated to manage these exposures both in the short and long term. For each of Mowi\u2019s units, the Group has defined a\u00a0hedging strategy not designated for hedge accounting. According to the hedging strategy, units located in the following regions generate cash flow in currencies (main hedging currencies) according to the below table.
REGION | HEDGING CURRENCY |
Europe ex. UK | EUR |
UK | GBP |
Americas | USD |
Asia | USD |
For some units the main hedging currency is different from the functional currency.
Transaction exposures arise from firm commitments made to transact in a currency different from the main currency. Each transaction exposure depends on the duration of the associated commitment, but these are normally be of relatively short duration. Hedging transactions undertaken to manage transaction exposures are referred to as transaction hedges.
Through hedging of transaction exposures, each Business Unit aims to ensure that its net cash flows in currencies other than its main hedging currency are hedged towards this currency. Further exposures arise from structural imbalances between the main currencies on the revenue side and those on the expense side. These imbalances are predominantly a result of production taking place in a different country from that in which the product is sold. Due to their structural nature, such exposures are of a longer duration than transaction exposures and are therefore quantified based on estimates of future revenues and expenses. For these purposes, the focus is on the underlying currency structure of the individual revenue and cost item while the actual currency in which transactions are invoiced is of lesser importance.
The Mowi Group normally has a net positive cash flow exposure towards EUR, GBP, USD and JPY and a net negative cash flow exposure towards NOK, CAD and CLP. To hedge Group cash flows against exchange rate fluctuations Mowi has a policy for long-term hedging of the most predominant net exposures. The Group currently hedges up to 30% of its underlying exposure between EUR/NOK and USD/CAD with a horizon of two years.
As of December 31, 2022 the Group held a portfolio of derivative instruments designed to mitigate transaction and cash flow exposure with a total contract value of EUR 544.4 million (EUR 728.4 million). Instruments equivalent to 96% (74%) of the contract value mature in 2023 and no instrument matures after December 2024. The portfolio had a net market value of EUR -6.7 million (EUR 22.2 million) at year end.
Currency exposure in the statement of financial position
As a consequence of the Group\u2019s net cash flows being generated in EUR, GBP and USD, the interest-bearing debt should reflect this currency structure. On December\u00a031, 2022, the portfolio was in line with policy.
CURRENCY STRUCTURE OF NET INTEREST-BEARING DEBT (EUR MILLION) | NOK | USD | EUR | GBP | JPY | DKK | CAD | PLN | OTHER | TOTAL |
Cash and cash equivalents | 33.5 | 31.0 | 78.5 | 7.4 | 8.4 | 2.7 | 7.0 | 0.3 | 9.7 | 178.5 |
Current interest-bearing debt | \u2014 | \u2014 | 211.6 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | 211.6 |
Non-current interest-bearing debt | 76.6 | 56.4 | 1\u00a0547.3 | 45.2 | \u2014 | \u2014 | \u2014 | \u2014 | 0.3 | 1\u00a0725.8 |
Net interest-bearing debt | 43.1 | 25.4 | 1\u00a0680.4 | 37.8 | -8.4 | -2.7 | -7.0 | -0.3 | -9.4 | 1\u00a0758.9 |
The carrying amount of interest-bearing debt has been reduced by EUR 9.4 million (EUR 13.0 million) in transaction costs. There are no significant differences between the carrying amount and the fair value of non-current interest-bearing debt and leasing.
SENSITIVITY ANALYSIS - CHANGE IN EXCHANGE RATES IMPACT ON RESULT
The main sources of sensitivity to exchange rate movements are the long-term hedges of exposure to EUR/NOK and USD/CAD and loans in NOK, USD and GBP under the multicurrency revolving credit facility. Based on the exposure as of December\u00a031, 2022, the effect of a 15% change in exchange rates on the long-term currency hedges and the multicurrency loan positions has been estimated. As no hedge accounting no impact on other comprehensive income.
CURRENCY PAIR (EUR MILLION) | EUR/NOK | EUR/USD | EUR/GBP | USD/CAD | |
Effect in EUR from a 15% increase in the value of | EUR | EUR | EUR | CAD | |
Effect on profit before tax | -6.3 | 7.4 | 5.9 | 6.6 |
INTEREST RATE RISK
Mowi ASA shall over time hedge 0%-35% of the Group\u2019s long-term interest bearing debt by currency with fixed interest or interest rate derivatives for the first 5 years, and 0% thereafter. Interest-bearing debt includes external interest-bearing debt and leasing in the parent company or subsidiaries. The interest rate hedges shall be based on the targeted currency composition. Interest rate exposure in other currencies than EUR, USD, GBP and NOK shall not be hedged. All interest rate hedging shall be executed from the parent company. At year end 2022 the Group's overall interest rate swap portfolio had a contract nominal value of EUR 77.4 million (EUR 498.3 million) and a net market value of EUR -1.7 million (EUR -4.5 million).
CREDIT RISK
The Group trades only with recognised, creditworthy third parties. It is the Group\u2019s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and as a rule the Group\u2019s trade receivables are fully credit insured. The Group monitors exposure towards individual customers closely and is not substantially exposed to any individual customer or contractual partner as of December\u00a031, 2022. The maximum exposure to credit risk at the reporting date is the carrying value of
trade receivables, with reference to Note 17. The Group considers the concentration of risk with respect to trade receivables as low, as its customers are located in various jurisdictions and operate in different markets.
The Group only enters into derivative transactions with counterparties with an established business relationship to the Group.
PRICE/LIQUIDITY RISK
The Group is continuously monitoring liquidity and estimates expected liquidity development on the basis of budgets and monthly updated forecasts from the business units. Mowi\u2019s financial position and development depend significantly on spot price developments for salmon, and these prices have historically been volatile. As such Mowi is exposed to movements in supply and demand for salmon. Mowi has to some extent mitigated its exposure to spot prices by entering into bilateral fixed price/volume contracts with its customers. The contract share has normally varied between 20% and 50% of our sold volume, however hedged volumes can increase up to 65% under special circumstances, and the duration of contracts has typically been three to eighteen months. Furthermore Mowi reduces its exposure to spot price movements through value added processing activities and tailoring of products for its customers. Other key liquidity risks are fluctuations in production and harvest volumes, biological issues, and changes in the feed price, feed being the most important individual factor on the cost side. Feed costs are correlated to the marine and agricultural commodity prices of the ingredients.
Mowi\u2019s aim is to maintain a balance between long-term financing and flexibility by using credit facilities, new borrowings and bonds.
MATURITY PROFILE OF THE FINANCIAL LIABILITIES AND DERIVATIVES BASED ON CONTRACTUAL UNDISCOUNTED PAYMENTS, INCLUDING INTEREST: 2022 (EUR MILLION) | CARRYING AMOUNT | CONTRACTUAL CASH FLOWS | WITHIN | 1 -2 YEARS | 2 - 5 YEARS | MORE THAN |
Non-derivative financial liabilities | ||||||
Syndicated loan | 1\u00a0310.7 | -1\u00a0506.2 | -59.5 | -52.4 | -1\u00a0394.4 | \u2014 |
Unsecured bond | 200.5 | -204.9 | -204.9 | \u2014 | \u2014 | \u2014 |
Unsecured Schuldschein loan | 150.1 | -172.6 | -6.7 | -7.1 | -158.9 | \u2014 |
Unsecured Green bond | 200.2 | -219.8 | -8.7 | -9.2 | -201.9 | \u2014 |
Arctic Fish bank facility | 75.6 | -86.1 | -14.7 | -71.4 | \u2014 | \u2014 |
Other debt | 1.0 | -0.8 | -0.1 | -0.1 | -0.1 | -0.4 |
Trade payables and other liabilities | 437.0 | -437.0 | -437.0 | \u2014 | \u2014 | \u2014 |
Derivative financial liabilities | ||||||
Interest rate swaps | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 | \u2014 |
Cash flow instruments | 4.4 | -4.4 | -4.4 | \u2014 | \u2014 | \u2014 |
Transaction instruments | 6.3 | -6.3 | -6.0 | -0.2 | \u2014 | \u2014 |
Total financial liabilities 1) | 2\u00a0385.5 | -2\u00a0638.1 | -742.0 | -140.4 | -1\u00a0755.3 | -0.4 |
MATURITY PROFILE OF THE FINANCIAL LIABILITIES AND DERIVATIVES BASED ON CONTRACTUAL UNDISCOUNTED PAYMENTS, INCLUDING INTEREST: 2021 (EUR MILLION) | CARRYING AMOUNT | CONTRACTUAL CASH FLOWS | WITHIN | 1 -2 YEARS | 2 - 5 YEARS | MORE THAN |
Non-derivative financial liabilities | ||||||
Syndicated loan | 811.0 | -875.4 | -10.9 | -10.9 | -853.6 | \u2014 |
Unsecured bond | 200.0 | -206.5 | -4.3 | -202.2 | \u2014 | \u2014 |
Unsecured Schuldschein loan | 149.4 | -161.0 | -2.4 | -2.4 | -156.1 | \u2014 |
Unsecured Green bond | 199.2 | -214.4 | -3.2 | -3.2 | -208.0 | \u2014 |
Other debt | 1.2 | -1.2 | -0.3 | -0.2 | -0.2 | -0.5 |
Trade payables and other liabilities | 392.8 | -392.8 | -392.8 | \u2014 | \u2014 | \u2014 |
Derivative financial liabilities | ||||||
Interest rate swaps | 5.1 | -5.3 | -4.8 | -0.5 | \u2014 | \u2014 |
Cash flow instruments | 1.0 | -1.0 | \u2014 | -0.9 | \u2014 | \u2014 |
Transaction instruments | 1.6 | -1.6 | -1.4 | -0.1 | \u2014 | \u2014 |
Total financial liabilities 1) | 1\u00a0761.1 | -1\u00a0858.9 | -420.1 | -220.5 | -1\u00a0217.9 | -0.5 |
SALARY AND PERSONNEL EXPENSES (EUR MILLION) | 2022 | 2021 |
Salaries | -406.1 | -378.1 |
Cash bonuses | -31.0 | -27.1 |
Social security taxes | -54.9 | -51.8 |
Pension expenses | -16.9 | -13.7 |
Share price based bonus | -4.6 | -3.6 |
Temporary labor | -70.7 | -66.8 |
Other benefits | -28.6 | -27.3 |
Total salary and personnel expenses | -612.6 | -568.3 |
Average number of FTEs | 13\u00a0930 | 14\u00a0315 |
At year-end 2022 there were 13\u00a0726 FTEs (full-time employee equivalent) in the Group.
REMUNERATION TO GROUP MANAGEMENT TEAM (EUR MILLION) | 2022 | 2021 |
Salaries and other short-term employee benefits | -3.4 | -3.1 |
Post-employment benefits | -0.1 | -0.1 |
Share-based payments | -2.6 | -2.3 |
Total remuneration to Group Management Team | -6.1 | -5.5 |
PENSION PLANS
Pension plans in the Group are mainly defined contribution plans. There are a few defined benefits plans, which are considered to be immaterial for the Group's financial statements.
PENSION PLANS (EUR MILLION) | PENSION COST | PENSION NET LIABILITY |
Mowi Norway 1) | -9.3 | 4.2 |
Mowi Scotland | -2.1 | -10.6 |
Mowi Canada | -2.2 | \u2014 |
Other entities | -3.3 | 2.0 |
Total 2022 | -16.9 | -4.3 |
Total 2021 | -13.7 | -12.7 |
SHARE OPTION SCHEME
Mowi Group has a share-price based payment scheme for senior executives, and management and key experts of Business Areas, subsidiaries and group functions:
OUTSTANDING | 2022-ALLOTMENT OF CALL OPTIONS | 2021-ALLOTMENT OF CALL OPTIONS | 2020-ALLOTMENT OF CALL OPTIONS | 2019-ALLOTMENT OF CALL OPTIONS |
Distributed options | 1\u00a0570\u00a0000 | 1\u00a0675\u00a0000 | 1\u00a0125\u00a0000 | 1\u00a0470\u00a0000 |
Forfeited options | -15\u00a0000 | -95\u00a0000 | -100\u00a0000 | -430\u00a0000 |
Dividend adjustment | 34\u00a0736 | 82\u00a0714 | 59\u00a0208 | 99\u00a0099 |
Total options outstanding at year end 1) | 1\u00a0589\u00a0736 | 1\u00a0662\u00a0714 | 1\u00a0084\u00a0208 | 1\u00a0139\u00a0099 |
Strike price December 31, 2022 (NOK) | 246.50 | 234.85 | 198.35 | 203.06 |
Number of employees in the scheme at year end | 30 | 30 | 28 | 23 |
1) None of the options were exercisable at year-end 2022.
The Share-Price-Based Payment Scheme comprises annual allocations by the Board of Directors of a number of European call options with a strike price of 107.5% of the share price of Mowi\u2019s shares at the date of the annual general meeting authorising allocations under the scheme. The options have a term of four years but will become exercisable immediately if a mandatory bid is made for all of the shares in Mowi or if Mowi is the non-surviving entity in a merger with another company. If the holder of the options exercises the options, the company may settle its obligation through the issue of new shares or, alternatively, by selling treasury shares to the option holder. There will be no lock-up obligation on the shares the option holder receives through the exercise of the option. The
exercise of the option is conditional upon the option holder being employed in a non-terminated position in the Group on the date of exercise.
The number of shares and the strike price will be adjusted for dividends and changes in equity capital during the term of the option in accordance with Oslo Stock Exchange derivative rules (A.2.2.8(1)b). Total profit through the exercise of the option in a year is capped at two years\u2019 salary for the option holder for the 2019, 2020- and 2021-allotment of options.
For the 2022-allotment, the exercise of 50% of the options awarded to an option holder is conditional on achievement of performance criteria, measured in the development of the share price of the Company's shares compared with those of peers (\"Performance-based Options\"). The exercise of the remaining 50% of the options awarded to an option holder is not conditional on achievement of such performance criteria (\"Ordinary Options\"). Total profit through the exercise of Performance-based Options in a year is capped at one year's salary for the option holder, and total profit through the exercise of Ordinary Options in a year is capped at one year's salary for the option holder.
If the profit exceeds these limits, the number of shares to be issued will be reduced accordingly. Following the 2022 annual general meeting (the \"AGM\"), the Board of Directors allocated 1 570 000 options with a strike price corresponding to 107.5% of the volume-weighted average share price on the OSE on the day of the AGM (NOK 252.0070) to a total of 31 individuals.
Eligibility to the senior executive share option scheme is limited to: Group CEO, other Senior Executives and management and key experts of Business Areas, subsidiaries and group functions, based on the following criteria:
\u2013the position and individual is important in realising the Mowi Group ambitions;
\u2013the individual is considered critical for the Business Unit(s);
\u2013the individual is expected to continue in a role covered by the scheme;
\u2013the individual will not retire during the first year of the scheme
SHARE PURCHASE PROGRAM
In 2022 all permanent employees in Mowi ASA and its Norwegian subsidiaries, as well as permanent employees in Mowi Scotland and Mowi Canada, had the opportunity to acquire shares in the Company. For the year 2022 these provisions entitled this group of employees to receive a taxable benefit of NOK 6 000 in connection with their participation in such a scheme. All employees were offered funding of the purchase price through an interest-free advance on salary from Mowi.
No other loans or guaranties have been granted to key management personnel.
INCOME TAXES FOR THE YEAR IN THE STATEMENT OF COMPREHENSIVE INCOME (EUR MILLION) | 2022 | 2021 |
Norway | -339.8 | -63.5 |
Foreign units | -56.4 | -31.7 |
Tax on profits (current tax) | -396.3 | -95.3 |
Norway | 166.9 | -21.2 |
Foreign units | 13.9 | 10.9 |
Change in deferred tax | 180.8 | -10.2 |
Total income taxes related to profit for the year | -215.5 | -105.5 |
RECONCILIATION BETWEEN NOMINAL AND EFFECTIVE TAX RATES (EUR MILLION) | 2022 | 2021 |
Profit before tax | 1\u00a0000.9 | 593.4 |
Nominal tax rate | 22% | 22% |
Tax calculated with nominal tax rate | -220.2 | -130.5 |
Non-taxable income/loss on sale of shares | 5.0 | \u2014 |
Non-taxable income/loss from associated companies and joint ventures | 13.1 | 21.3 |
Effect of changed tax rate on deferred tax positions | -3.1 | -2.4 |
Effect of adjustment of income tax from previous years | -2.4 | 4.1 |
Effect of recognition of previously non-recognised tax assets | -3.1 | 1.6 |
Effect of non-recognition of losses and tax assets | -0.4 | 1.2 |
Withholding tax | \u2014 | -2.9 |
Other permanent differences | -6.8 | -9.2 |
Effect of different tax rates compared to nominal rate | 2.4 | 11.5 |
Total income taxes | -215.5 | -105.5 |
TAX PREPAID/RECEIVABLE IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Tax prepaid/receivable in Norway | 8.2 | 16.8 |
Tax prepaid/receivable in foreign units | 11.7 | 11.8 |
Total tax prepaid/receivable in the statement of financial position | 19.9 | 28.6 |
TAX PAYABLE IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Tax payable in Norway | 339.0 | 72.1 |
Tax payable in foreign units | 38.4 | 7.8 |
Total tax payable in the statement of financial position | 377.4 | 79.9 |
SPECIFICATION OF DEFERRED TAX AND BASIS FOR DEFERRED TAX/TAX ASSETS TAX INCREASING/REDUCING TEMPORARY DIFFERENCES (EUR MILLION) | 2022 | 2021 |
Non-current assets | 1\u00a0309.9 | 926.7 |
Current assets | 84.8 | 910.9 |
Debt | -53.7 | -46.4 |
Pension obligation | -6.6 | -7.2 |
Tax losses carried forward | -133.3 | -81.0 |
Other differences | 40.8 | 58.2 |
Total temporary differences | 1\u00a0241.8 | 1\u00a0761.2 |
Tax losses carried forward in Norway | -7.0 | -12.7 |
Other temporary differences in Norway | 548.8 | 1\u00a0309.1 |
Tax losses carried forward abroad | -126.3 | -68.4 |
Other temporary differences abroad | 826.4 | 533.1 |
Total temporary differences | 1\u00a0241.8 | 1\u00a0761.2 |
TOTAL DEFERRED TAX ASSET/LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Deferred tax assets | 69.1 | 51.1 |
Deferred tax liabilities | -332.4 | -441.4 |
Net deferred tax in the statement of financial position | -263.3 | -390.3 |
Mowi has recognised deferred tax assets related to tax losses carried forward. This is based on the expectation of probable sufficient earnings in the future. The expectations are based on current earnings and approved budgets. Deferred tax assets related to tax losses carried forward at a total of EUR 115.4 million have not been recognised due to uncertain utilisation.
Deferred tax assets linked to tax losses are offset against deferred tax liabilities in the tax jurisdictions, where acceptable.
MATURITY OF TAX LOSSES (EUR MILLION) | NORWAY | ABROAD | TOTAL |
2023 | \u2014 | 2.2 | 2.2 |
2024 | \u2014 | 0.3 | 0.3 |
2025 | \u2014 | 2.1 | 2.1 |
2026 | \u2014 | 6.0 | 6.0 |
2027 | \u2014 | 1.7 | 1.7 |
2028 | \u2014 | 1.5 | 1.5 |
2029 | \u2014 | 9.6 | 9.6 |
2030 | \u2014 | 3.6 | 3.6 |
2031 | \u2014 | \u2014 | \u2014 |
2032+ | \u2014 | 69.7 | 69.7 |
Unlimited | 7.0 | 29.6 | 36.6 |
Total 2022 | 7.0 | 126.3 | 133.3 |
Total 2021 | 12.7 | 68.4 | 81.0 |
MATURITY OF TAX LOSSES FOR WHICH NO DEFERRED TAX ASSET IS RECOGNISED (EUR MILLION) | NORWAY | ABROAD | TOTAL |
2023 | \u2014 | \u2014 | \u2014 |
2024 | \u2014 | \u2014 | \u2014 |
2025 | \u2014 | 2.4 | 2.4 |
2026 | \u2014 | 0.7 | 0.7 |
2027 | \u2014 | \u2014 | \u2014 |
2028 | \u2014 | 0.1 | 0.1 |
2029 | \u2014 | 1.7 | 1.7 |
2030 | \u2014 | \u2014 | \u2014 |
2031 | \u2014 | \u2014 | \u2014 |
2032+ | \u2014 | 0.9 | 0.9 |
Unlimited | \u2014 | 109.6 | 109.6 |
Total 2022 | \u2014 | 115.4 | 115.4 |
Total 2021 | \u2014 | 104.6 | 104.6 |
TAX RATES APPLIED | 2022 | 2021 |
Japan | 30.6% | 30.6% |
USA | 21.0% | 21.0% |
Belgium | 25.0% | 25.0% |
Germany | 29.5% | 29.5% |
France | 25.0% | 27.5% |
Norway\u00a0 | 22.0% | 22.0% |
China | 25.0% | 25.0% |
Netherlands | 25.8% | 25.0% |
Scotland | 19.0% | 19.0% |
Canada West | 27.0% | 27.0% |
Canada East | 29.0% | 29.0% |
Faroe Islands | 18.0% | 18.0% |
Chile | 27.0% | 27.0% |
Poland | 19.0% | 19.0% |
Ireland | 12.5% | 12.5% |
TAX PREPAID/RECEIVABLE IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Tax prepaid/receivable in Norway | 8.2 | 16.8 |
Tax prepaid/receivable in foreign units | 11.7 | 11.8 |
Total tax prepaid/receivable in the statement of financial position | 19.9 | 28.6 |
TAX PAYABLE IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Tax payable in Norway | 339.0 | 72.1 |
Tax payable in foreign units | 38.4 | 7.8 |
Total tax payable in the statement of financial position | 377.4 | 79.9 |
SPECIFICATION OF DEFERRED TAX AND BASIS FOR DEFERRED TAX/TAX ASSETS TAX INCREASING/REDUCING TEMPORARY DIFFERENCES (EUR MILLION) | 2022 | 2021 |
Non-current assets | 1\u00a0309.9 | 926.7 |
Current assets | 84.8 | 910.9 |
Debt | -53.7 | -46.4 |
Pension obligation | -6.6 | -7.2 |
Tax losses carried forward | -133.3 | -81.0 |
Other differences | 40.8 | 58.2 |
Total temporary differences | 1\u00a0241.8 | 1\u00a0761.2 |
Tax losses carried forward in Norway | -7.0 | -12.7 |
Other temporary differences in Norway | 548.8 | 1\u00a0309.1 |
Tax losses carried forward abroad | -126.3 | -68.4 |
Other temporary differences abroad | 826.4 | 533.1 |
Total temporary differences | 1\u00a0241.8 | 1\u00a0761.2 |
TOTAL DEFERRED TAX ASSET/LIABILITIES IN THE STATEMENT OF FINANCIAL POSITION (EUR MILLION) | 2022 | 2021 |
Deferred tax assets | 69.1 | 51.1 |
Deferred tax liabilities | -332.4 | -441.4 |
Net deferred tax in the statement of financial position | -263.3 | -390.3 |
Mowi has recognised deferred tax assets related to tax losses carried forward. This is based on the expectation of probable sufficient earnings in the future. The expectations are based on current earnings and approved budgets. Deferred tax assets related to tax losses carried forward at a total of EUR 115.4 million have not been recognised due to uncertain utilisation.
Deferred tax assets linked to tax losses are offset against deferred tax liabilities in the tax jurisdictions, where acceptable.
MATURITY OF TAX LOSSES (EUR MILLION) | NORWAY | ABROAD | TOTAL |
2023 | \u2014 | 2.2 | 2.2 |
2024 | \u2014 | 0.3 | 0.3 |
2025 | \u2014 | 2.1 | 2.1 |
2026 | \u2014 | 6.0 | 6.0 |
2027 | \u2014 | 1.7 | 1.7 |
2028 | \u2014 | 1.5 | 1.5 |
2029 | \u2014 | 9.6 | 9.6 |
2030 | \u2014 | 3.6 | 3.6 |
2031 | \u2014 | \u2014 | \u2014 |
2032+ | \u2014 | 69.7 | 69.7 |
Unlimited | 7.0 | 29.6 | 36.6 |
Total 2022 | 7.0 | 126.3 | 133.3 |
Total 2021 | 12.7 | 68.4 | 81.0 |
MATURITY OF TAX LOSSES FOR WHICH NO DEFERRED TAX ASSET IS RECOGNISED (EUR MILLION) | NORWAY | ABROAD | TOTAL |
2023 | \u2014 | \u2014 | \u2014 |
2024 | \u2014 | \u2014 | \u2014 |
2025 | \u2014 | 2.4 | 2.4 |
2026 | \u2014 | 0.7 | 0.7 |
2027 | \u2014 | \u2014 | \u2014 |
2028 | \u2014 | 0.1 | 0.1 |
2029 | \u2014 | 1.7 | 1.7 |
2030 | \u2014 | \u2014 | \u2014 |
2031 | \u2014 | \u2014 | \u2014 |
2032+ | \u2014 | 0.9 | 0.9 |
Unlimited | \u2014 | 109.6 | 109.6 |
Total 2022 | \u2014 | 115.4 | 115.4 |
Total 2021 | \u2014 | 104.6 | 104.6 |
CASH (EUR MILLION) | 2022 | 2021 |
Cash in bank | 170.9 | 94.9 |
Employees' tax deduction | 7.0 | 6.8 |
Other restricted cash1) | 0.6 | \u2014 |
Total cash | 178.5 | 101.7 |
CASH (EUR MILLION) | 2022 | 2021 |
Cash in bank | 170.9 | 94.9 |
Employees' tax deduction | 7.0 | 6.8 |
Other restricted cash1) | 0.6 | \u2014 |
Total cash | 178.5 | 101.7 |
SPECIFICATION OF RECEIVABLES (EUR MILLION) | 2022 | 2021 |
Trade receivables | 603.4 | 495.5 |
Provisions for expected credit losses | -3.3 | -3.4 |
Net trade receivables | 600.1 | 492.1 |
Prepayments | 53.9 | 37.9 |
Pension fund | 11.0 | 20.4 |
Tax prepaid/receivable | 19.9 | 28.6 |
Other | 99.1 | 90.2 |
Trade receivables, other receivables and prepayments | 183.7 | 177.2 |
Total trade receivables, other receivables and prepayments | 783.8 | 669.3 |
Based on the nature of business, the Group does not have any material contract assets.
AGE DISTRIBUTION OF TRADE RECEIVABLES (EUR MILLION) | 2022 | 2021 |
Receivables not overdue | 510.2 | 440.6 |
Overdue 0-6 months | 84.9 | 48.9 |
Overdue more than 6 months | 8.3 | 6.0 |
Total trade receivables | 603.4 | 495.5 |
SPECIFICATION OF RECEIVABLES (EUR MILLION) | 2022 | 2021 |
Trade receivables | 603.4 | 495.5 |
Provisions for expected credit losses | -3.3 | -3.4 |
Net trade receivables | 600.1 | 492.1 |
Prepayments | 53.9 | 37.9 |
Pension fund | 11.0 | 20.4 |
Tax prepaid/receivable | 19.9 | 28.6 |
Other | 99.1 | 90.2 |
Trade receivables, other receivables and prepayments | 183.7 | 177.2 |
Total trade receivables, other receivables and prepayments | 783.8 | 669.3 |
Based on the nature of business, the Group does not have any material contract assets.
AGE DISTRIBUTION OF TRADE RECEIVABLES (EUR MILLION) | 2022 | 2021 |
Receivables not overdue | 510.2 | 440.6 |
Overdue 0-6 months | 84.9 | 48.9 |
Overdue more than 6 months | 8.3 | 6.0 |
Total trade receivables | 603.4 | 495.5 |
MOVEMENT IN PROVISIONS FOR CREDIT LOSSES (TRADE RECEIVABLES)
At the beginning of 2022, provisions for credit losses amounted to EUR 3.4 million. During 2022, EUR 0.7 million were considered lost. Adjusted for additional provisions for credit losses of EUR 0.5 million the provision at year-end amounted to EUR 3.3 million for 2022. See also Note 13.
CURRENCY EXPOSURE TO TRADE RECEIVABLES
The Business Units generally complete their sales in the main trading currency in the country of destination. The carrying amount of trade receivables per currency is presented below.
CURRENCY SPLIT ACCOUNTS RECEIVABLES | 2022 | 2021 |
EUR | 53% | 54% |
USD | 17% | 17% |
GBP | 9% | 10% |
NOK | 8% | 5% |
PLN | 4% | 3% |
JPY | 4% | 5% |
CAD | 2% | 2% |
Other | 3% | 5% |
MOVEMENT IN PROVISIONS FOR CREDIT LOSSES (TRADE RECEIVABLES)
At the beginning of 2022, provisions for credit losses amounted to EUR 3.4 million. During 2022, EUR 0.7 million were considered lost. Adjusted for additional provisions for credit losses of EUR 0.5 million the provision at year-end amounted to EUR 3.3 million for 2022. See also Note 13.
CURRENT LIABILITIES (EUR MILLION) | 2022 | 2021 |
Trade payables 1) | 437.0 | 392.8 |
Other current liabilities | ||
Salaries and vacation pay due | 65.5 | 58.1 |
Social security and other taxes | 44.9 | 21.2 |
Accrued expenses | 93.8 | 93.6 |
Other liabilities | 39.2 | 72.1 |
Total other current liabilities | 243.3 | 244.9 |
1) As of year-end 2022 the payable related to the Supply Chain Financing was 136.0 million EUR (120.6 million EUR at year-end 2021).
Based on the nature of business, the Group does not have any material contract liabilities.
CURRENT LEASING LIABILITIES (EUR MILLION) | 2022 | 2021 |
Current part (first year) leases | 173.5 | 182.7 |
Total current leasing liabilities | 173.5 | 182.7 |
UNUSED DRAWING RIGHTS (EUR MILLION) | 2022 | 2021 |
Unused part of bank overdraft facility (to be renewed within one year) | 7.3 | 7.0 |
Unused part of bank overdraft facility (to be renewed in more than one year) | 66.0 | 66.0 |
Unused part of other drawing rights (to be renewed in more than one year) | 402.5 | 899.1 |
Total unused drawing rights | 475.8 | 972.1 |
CURRENT LIABILITIES (EUR MILLION) | 2022 | 2021 |
Trade payables 1) | 437.0 | 392.8 |
Other current liabilities | ||
Salaries and vacation pay due | 65.5 | 58.1 |
Social security and other taxes | 44.9 | 21.2 |
Accrued expenses | 93.8 | 93.6 |
Other liabilities | 39.2 | 72.1 |
Total other current liabilities | 243.3 | 244.9 |
1) As of year-end 2022 the payable related to the Supply Chain Financing was 136.0 million EUR (120.6 million EUR at year-end 2021).
Based on the nature of business, the Group does not have any material contract liabilities.
CURRENT LEASING LIABILITIES (EUR MILLION) | 2022 | 2021 |
Current part (first year) leases | 173.5 | 182.7 |
Total current leasing liabilities | 173.5 | 182.7 |
UNUSED DRAWING RIGHTS (EUR MILLION) | 2022 | 2021 |
Unused part of bank overdraft facility (to be renewed within one year) | 7.3 | 7.0 |
Unused part of bank overdraft facility (to be renewed in more than one year) | 66.0 | 66.0 |
Unused part of other drawing rights (to be renewed in more than one year) | 402.5 | 899.1 |
Total unused drawing rights | 475.8 | 972.1 |
DEBT SECURED BY MORTGAGES AND PLEDGES (EUR MILLION) | 2022 | 2021 |
Debt to financial institutions | 1\u00a0526.4 | 933.7 |
Leasing debt | 1.0 | 1.2 |
Total debt secured by mortgages and pledges | 1\u00a0527.4 | 934.9 |
Guarantee commitments | 20.0 | 18.7 |
The Mowi Group syndicated loan facility has been established with security in current assets, licenses (where applicable), fixed assets and guarantees from some of the entities in the Group. In addition the shares in larger subsidiaries have been pledged in favour of the bank syndicate.
ASSETS PLEDGED AS SECURITY FOR DEBT (EUR MILLION) | 2022 | 2021 |
Tangible non-current assets and licenses | 1\u00a0750.1 | 1\u00a0731.0 |
Inventory and biological assets | 2\u00a0215.1 | 1\u00a0716.5 |
Trade receivables | 369.0 | 299.7 |
Other assets | 190.7 | 176.5 |
Total assets pledged as security | 4\u00a0524.9 | 3\u00a0923.7 |
OTHER NON-CURRENT LIABILITIES (EUR MILLION) | 2022 | 2021 |
Net pension obligations | 6.6 | 7.6 |
Other non-current liabilities | 1.5 | 11.6 |
Total other non-current liabilities | 8.2 | 19.3 |
Associated companies are recorded in Mowi Group statements in accordance with the equity method. None of the associated companies are listed.
ASSOCIATED COMPANIES (EUR MILLION) | HEAD OFFICE | OWNER- | OWNED BY | AQUISITION COST | CARRYING AMOUNT | SHARE OF PROFIT | DIVIDENDS RECEIVED | OTHER CHANGES | CARRYING AMOUNT |
Nova Sea AS | Lovund | 49% | Mowi Holding AS | 28.2 | 192.8 | 60.0 | -32.5 | -10.7 | 209.7 |
Others | 0.3 | 3.1 | -0.8 | \u2014 | -0.1 | 2.2 | |||
Total | 28.6 | 195.9 | 59.2 | -32.5 | -10.8 | 211.7 |
1) Other changes mainly relates to foreign currency adjustments and movements in loans. Finn\u00f8y Fisk AS has been fully consolidated in 2022
ASSOCIATED COMPANIES 100 % BASIS (EUR MILLION) | DIVIDEND RECEIVED | FAIR VALUE ADJUSTMENT BIOMASS 1) | TOTAL REVENUE | TOTAL PROFIT AND LOSS | TOTAL NON- | TOTAL BIOLOGICAL ASSETS | TOTAL | TOTAL NON- | TOTAL CURRENT LIABILITIES |
2022 | |||||||||
Nova Sea AS | 32.5 | 25.8 | 383.7 | 110.1 | 211.7 | 91.9 | 126.3 | 0.9 | 97.8 |
2021 | |||||||||
Nova Sea AS | 16.2 | 18.1 | 296.4 | 69.3 | 193.6 | 83.6 | 104.1 | 24.1 | 46.1 |
1) Effect of adjusting Mowi`s share of total biological assets as of December 31 presented above to fair value. The effect is shown after tax.
Associated companies are recorded in Mowi Group statements in accordance with the equity method. None of the associated companies are listed.
ASSOCIATED COMPANIES (EUR MILLION) | HEAD OFFICE | OWNER- | OWNED BY | AQUISITION COST | CARRYING AMOUNT | SHARE OF PROFIT | DIVIDENDS RECEIVED | OTHER CHANGES | CARRYING AMOUNT |
Nova Sea AS | Lovund | 49% | Mowi Holding AS | 28.2 | 192.8 | 60.0 | -32.5 | -10.7 | 209.7 |
Others | 0.3 | 3.1 | -0.8 | \u2014 | -0.1 | 2.2 | |||
Total | 28.6 | 195.9 | 59.2 | -32.5 | -10.8 | 211.7 |
1) Other changes mainly relates to foreign currency adjustments and movements in loans. Finn\u00f8y Fisk AS has been fully consolidated in 2022
ASSOCIATED COMPANIES 100 % BASIS (EUR MILLION) | DIVIDEND RECEIVED | FAIR VALUE ADJUSTMENT BIOMASS 1) | TOTAL REVENUE | TOTAL PROFIT AND LOSS | TOTAL NON- | TOTAL BIOLOGICAL ASSETS | TOTAL | TOTAL NON- | TOTAL CURRENT LIABILITIES |
2022 | |||||||||
Nova Sea AS | 32.5 | 25.8 | 383.7 | 110.1 | 211.7 | 91.9 | 126.3 | 0.9 | 97.8 |
2021 | |||||||||
Nova Sea AS | 16.2 | 18.1 | 296.4 | 69.3 | 193.6 | 83.6 | 104.1 | 24.1 | 46.1 |
1) Effect of adjusting Mowi`s share of total biological assets as of December 31 presented above to fair value. The effect is shown after tax.
The consolidated financial statements include the following companies:
PARENT COMPANY | COUNTRY | |
Mowi ASA | Norway | |
SUBSIDIARIES - NORWAY | COUNTRY | OWNERSHIP % |
Mowi Seawater Norway AS | Norway | 100.00% |
Mowi Feed AS | Norway | 100.00% |
Mowi Genetics AS | Norway | 100.00% |
Mowi Holding AS | Norway | 100.00% |
Mowi Minority Holding AS | Norway | 100.00% |
Mowi Markets Norway AS | Norway | 100.00% |
Mowi Norway FOU AS | Norway | 100.00% |
Waynor Trading AS | Norway | 100.00% |
Arctic Fish Holding AS | Norway | 51.28% |
Finn\u00f8y Fisk AS | Norway | 45.05% |
Centre for Aquaculture Competence AS | Norway | 33.30% |
SUBSIDIARIES - AMERICAS | COUNTRY | OWNERSHIP % |
Mowi North America Inc | Canada | 100.00% |
Mowi Canada West Inc | Canada | 100.00% |
Mowi Canada East Inc | Canada | 100.00% |
Englewood Packing Company Ltd | Canada | 100.00% |
Mowi Chile S.A | Chile | 100.00% |
Salmones Tecmar S.A | Chile | 100.00% |
Processadora De Productos Marinos Delifish S.A | Chile | 100.00% |
Delifish Farming SPA | Chile | 100.00% |
Mowi Ducktrap LLC | USA | 100.00% |
Mowi USA Holding LLC | USA | 100.00% |
Mowi USA LLC | USA | 100.00% |
SUBSIDIARIES - ASIA | COUNTRY | OWNERSHIP % |
Mowi China Co. Ltd | China | 100.00% |
Mowi Japan Co. Ltd | Japan | 100.00% |
Mowi Korea Co. Ltd | South Korea | 100.00% |
Mowi Singapore Pte Ltd | Singapore | 100.00% |
Morpol Holdings Singapore Pte Ltd | Singapore | 100.00% |
Mowi Taiwan Co. Ltd | Taiwan | 100.00% |
Mowi Vietnam Company Ltd | Vietnam | 100.00% |
SUBSIDIARIES - EUROPE | COUNTRY | OWNERSHIP % |
Mowi Belgium NV | Belgium | 100.00% |
Mowi Czech s.r.o. | Czech Republic | 100.00% |
Mowi Faroe Islands P/F | Faroes | 100.00% |
Mowi France SAS | France | 100.00% |
Mowi Boulogne SAS | France | 100.00% |
Mowi Bretagne SAS | France | 100.00% |
Mowi Rennes SAS | France | 100.00% |
Mowi Cuisery SAS | France | 100.00% |
Laschinger Seafood GmbH | Germany | 100.00% |
Mowi Harsum DACH GmbH | Germany | 100.00% |
Mowi Germany Verwaltungs GmbH | Germany | 100.00% |
Mowi Germany GmbH & Co. KG | Germany | 100.00% |
Belisco Ehf | Iceland | 100.00% |
Arctic Fish Ehf | Iceland | 51.28% |
Arctic Smolt Ehf | Iceland | 51.28% |
Arctic Sea Farm Ehf | Iceland | 51.28% |
Arctic Oddi Ehf | Iceland | 51.28% |
Comhlucht Iascaireachta Fanad Teoranta | Ireland | 100.00% |
Bradan (Maoil Rua) Teoranta | Ireland | 100.00% |
Bradan Fanad Teoranta | Ireland | 100.00% |
Fanad Pettigo Teoranta | Ireland | 100.00% |
Feirm Farraige Oilean Chliara Teoranta | Ireland | 92.03% |
Silverking Seafoods Ltd | Ireland | 100.00% |
Mowi Italia S.R.L. | Italy | 100.00% |
Mowi Netherlands BV | Netherlands | 100.00% |
Mowi Lemmer BV | Netherlands | 100.00% |
Mowi Poland SA | Poland | 100.00% |
Mowi Lebork Sp. z.o.o. | Poland | 100.00% |
Mowi Technology Sp.z.o.o. | Poland | 100.00% |
Mowi Strzelino Sp. z.o.o. | Poland | 100.00% |
Mowi Poland Sales SA | Poland | 100.00% |
Mowi Nutrition Goleni\u00f3w Sp. z.o.o | Poland | 100.00% |
Mowi Iberia SLU | Spain | 100.00% |
Mowi Sweden AB | Sweden | 100.00% |
Mowi Turkiye Su \u00dcrunleri Ticaret A.\u015e. | Turkey | 100.00% |
Mowi Scotland Ltd | UK | 100.00% |
Meridian Salmon Group Ltd | UK | 100.00% |
Meridian Salmon Processing Ltd | UK | 100.00% |
Meridian Salmon Farms (Argyll) Ltd | UK | 100.00% |
Lakeland Smolt Ltd | UK | 100.00% |
Mowi Consumer Products UK Ltd | UK | 100.00% |
Dorset Cleanerfish Ltd | UK | 100.00% |
Anglesey Aquaculture Ltd | UK | 100.00% |
Ocean Matters Ltd | UK | 100.00% |
OM Penmon Ltd | UK | 100.00% |
SUBSIDIARIES - EUROPE | COUNTRY | OWNERSHIP % |
Ferguson Salmon Ltd | UK | 100.00% |
Finfish Limited | UK | 100.00% |
Scalpay Multi-Trohpic Aquaculture Ltd | UK | 100.00% |
Wester Ross Fisheries Ltd | UK | 100.00% |
Ardessie Salmon Ltd | UK | 100.00% |
Wester Ross Property Investment Ltd | UK | 100.00% |
Marine Harvest Atlantic Inc changed name to Mowi Canada East Inc during 2022
Associated companies are recorded in Mowi Group statements in accordance with the equity method. None of the associated companies are listed.
ASSOCIATED COMPANIES (EUR MILLION) | HEAD OFFICE | OWNER- | OWNED BY | AQUISITION COST | CARRYING AMOUNT | SHARE OF PROFIT | DIVIDENDS RECEIVED | OTHER CHANGES | CARRYING AMOUNT |
Nova Sea AS | Lovund | 49% | Mowi Holding AS | 28.2 | 192.8 | 60.0 | -32.5 | -10.7 | 209.7 |
Others | 0.3 | 3.1 | -0.8 | \u2014 | -0.1 | 2.2 | |||
Total | 28.6 | 195.9 | 59.2 | -32.5 | -10.8 | 211.7 |
1) Other changes mainly relates to foreign currency adjustments and movements in loans. Finn\u00f8y Fisk AS has been fully consolidated in 2022
ASSOCIATED COMPANIES 100 % BASIS (EUR MILLION) | DIVIDEND RECEIVED | FAIR VALUE ADJUSTMENT BIOMASS 1) | TOTAL REVENUE | TOTAL PROFIT AND LOSS | TOTAL NON- | TOTAL BIOLOGICAL ASSETS | TOTAL | TOTAL NON- | TOTAL CURRENT LIABILITIES |
2022 | |||||||||
Nova Sea AS | 32.5 | 25.8 | 383.7 | 110.1 | 211.7 | 91.9 | 126.3 | 0.9 | 97.8 |
2021 | |||||||||
Nova Sea AS | 16.2 | 18.1 | 296.4 | 69.3 | 193.6 | 83.6 | 104.1 | 24.1 | 46.1 |
1) Effect of adjusting Mowi`s share of total biological assets as of December 31 presented above to fair value. The effect is shown after tax.
BUSINESS COMBINATIONS
Arctic Fish
In October 2022 Mowi entered into a conditional agreement to acquire 51.28% of the shares in the salmon farmer Arctic Fish, situated in the West Fjords of Iceland for NOK 115 per share amounting to EUR 179.5 million in total. The transaction was subject to approval by the EU Commission and other closing conditions. In December 2022, Mowi obtained a No Action Letter from the EU Commission. The transaction was closed on 29 December 2022 which has been identified as the acquisition date.
Arctic Fish has licenses for 10 ASC approved sites in total, providing a maximum allowed biomass of 27,100 tonnes and another 4,800 tonnes pending approval. Expected harvest volume for 2023 is 15,000 GWT. The Icelandic salmon farming industry is set for extensive development and growth in the coming years and the purchase of Arctic Fish is of strategic importance, and the benefits include expansion into a new country for Mowi. Icelandic waters provide excellent growth and living conditions for salmon, combined with Arctic Fish's geographical footprint and competent organisation and Mowi's strong financial position this will be beneficial for growth and local communities.
We have performed a Provisional Purchase Price Allocation at year end and all values are based on the purchase price of NOK 115 per share. The recognised goodwill of EUR 51 million arises from expected synergies from combining the assets and activities of
Arctic Fish with Mowi. Goodwill is not deductible for income tax purposes. The table below summarizes the consideration paid for Arctic Fish and the assessed fair value of the assets acquired and liabilities assumed, recognised at the acquisition date. Acquisition-related costs of EUR 0.7 million have been recognised as other operating expenses in the consolidated statement of comprehensive income in accordance with IFRS 3, all in 2022.
If consolidated as of January 1 the combined revenue would have been EUR 4\u00a0998.8 million and profit would have been EUR 791.2 million for the year 2022.
Recognised amounts of identifiable assets acquired and liabilities assumed | EUR Million |
Provisional fair value | |
Deferred tax assets | 0 |
Licenses | 257 |
Property, plant and equipment | 100 |
Other assets | 1 |
Biological assets | 68 |
Other inventory | 3 |
Trade receivables | 4 |
Other receivables | 6 |
Cash and cash equivalents | 9 |
Deferred tax liabilities | -51 |
Other long term debt | -67 |
Other current liabilities | -13 |
Trade payables | -18 |
Total identifiable net assets | 300 |
Goodwill | 51 |
Consideration on 100% basis | 351 |
Cash consideration for 51.28% | 180 |
Non-controlling Interests | 171 |
ASSETS HELD FOR SALE
Mowi had no Assets held for sale at year end 2022.
DISCONTINUED OPERATIONS
The consolidated financial statements include the following companies:
PARENT COMPANY | COUNTRY | |
Mowi ASA | Norway | |
SUBSIDIARIES - NORWAY | COUNTRY | OWNERSHIP % |
Mowi Seawater Norway AS | Norway | 100.00% |
Mowi Feed AS | Norway | 100.00% |
Mowi Genetics AS | Norway | 100.00% |
Mowi Holding AS | Norway | 100.00% |
Mowi Minority Holding AS | Norway | 100.00% |
Mowi Markets Norway AS | Norway | 100.00% |
Mowi Norway FOU AS | Norway | 100.00% |
Waynor Trading AS | Norway | 100.00% |
Arctic Fish Holding AS | Norway | 51.28% |
Finn\u00f8y Fisk AS | Norway | 45.05% |
Centre for Aquaculture Competence AS | Norway | 33.30% |
SUBSIDIARIES - AMERICAS | COUNTRY | OWNERSHIP % |
Mowi North America Inc | Canada | 100.00% |
Mowi Canada West Inc | Canada | 100.00% |
Mowi Canada East Inc | Canada | 100.00% |
Englewood Packing Company Ltd | Canada | 100.00% |
Mowi Chile S.A | Chile | 100.00% |
Salmones Tecmar S.A | Chile | 100.00% |
Processadora De Productos Marinos Delifish S.A | Chile | 100.00% |
Delifish Farming SPA | Chile | 100.00% |
Mowi Ducktrap LLC | USA | 100.00% |
Mowi USA Holding LLC | USA | 100.00% |
Mowi USA LLC | USA | 100.00% |
SUBSIDIARIES - ASIA | COUNTRY | OWNERSHIP % |
Mowi China Co. Ltd | China | 100.00% |
Mowi Japan Co. Ltd | Japan | 100.00% |
Mowi Korea Co. Ltd | South Korea | 100.00% |
Mowi Singapore Pte Ltd | Singapore | 100.00% |
Morpol Holdings Singapore Pte Ltd | Singapore | 100.00% |
Mowi Taiwan Co. Ltd | Taiwan | 100.00% |
Mowi Vietnam Company Ltd | Vietnam | 100.00% |
SUBSIDIARIES - EUROPE | COUNTRY | OWNERSHIP % |
Mowi Belgium NV | Belgium | 100.00% |
Mowi Czech s.r.o. | Czech Republic | 100.00% |
Mowi Faroe Islands P/F | Faroes | 100.00% |
Mowi France SAS | France | 100.00% |
Mowi Boulogne SAS | France | 100.00% |
Mowi Bretagne SAS | France | 100.00% |
Mowi Rennes SAS | France | 100.00% |
Mowi Cuisery SAS | France | 100.00% |
Laschinger Seafood GmbH | Germany | 100.00% |
Mowi Harsum DACH GmbH | Germany | 100.00% |
Mowi Germany Verwaltungs GmbH | Germany | 100.00% |
Mowi Germany GmbH & Co. KG | Germany | 100.00% |
Belisco Ehf | Iceland | 100.00% |
Arctic Fish Ehf | Iceland | 51.28% |
Arctic Smolt Ehf | Iceland | 51.28% |
Arctic Sea Farm Ehf | Iceland | 51.28% |
Arctic Oddi Ehf | Iceland | 51.28% |
Comhlucht Iascaireachta Fanad Teoranta | Ireland | 100.00% |
Bradan (Maoil Rua) Teoranta | Ireland | 100.00% |
Bradan Fanad Teoranta | Ireland | 100.00% |
Fanad Pettigo Teoranta | Ireland | 100.00% |
Feirm Farraige Oilean Chliara Teoranta | Ireland | 92.03% |
Silverking Seafoods Ltd | Ireland | 100.00% |
Mowi Italia S.R.L. | Italy | 100.00% |
Mowi Netherlands BV | Netherlands | 100.00% |
Mowi Lemmer BV | Netherlands | 100.00% |
Mowi Poland SA | Poland | 100.00% |
Mowi Lebork Sp. z.o.o. | Poland | 100.00% |
Mowi Technology Sp.z.o.o. | Poland | 100.00% |
Mowi Strzelino Sp. z.o.o. | Poland | 100.00% |
Mowi Poland Sales SA | Poland | 100.00% |
Mowi Nutrition Goleni\u00f3w Sp. z.o.o | Poland | 100.00% |
Mowi Iberia SLU | Spain | 100.00% |
Mowi Sweden AB | Sweden | 100.00% |
Mowi Turkiye Su \u00dcrunleri Ticaret A.\u015e. | Turkey | 100.00% |
Mowi Scotland Ltd | UK | 100.00% |
Meridian Salmon Group Ltd | UK | 100.00% |
Meridian Salmon Processing Ltd | UK | 100.00% |
Meridian Salmon Farms (Argyll) Ltd | UK | 100.00% |
Lakeland Smolt Ltd | UK | 100.00% |
Mowi Consumer Products UK Ltd | UK | 100.00% |
Dorset Cleanerfish Ltd | UK | 100.00% |
Anglesey Aquaculture Ltd | UK | 100.00% |
Ocean Matters Ltd | UK | 100.00% |
OM Penmon Ltd | UK | 100.00% |
SUBSIDIARIES - EUROPE | COUNTRY | OWNERSHIP % |
Ferguson Salmon Ltd | UK | 100.00% |
Finfish Limited | UK | 100.00% |
Scalpay Multi-Trohpic Aquaculture Ltd | UK | 100.00% |
Wester Ross Fisheries Ltd | UK | 100.00% |
Ardessie Salmon Ltd | UK | 100.00% |
Wester Ross Property Investment Ltd | UK | 100.00% |
Marine Harvest Atlantic Inc changed name to Mowi Canada East Inc during 2022
SHARE CAPITAL | 2022 | 2021 |
Total number of shares as of 01.01 | 517\u00a0111\u00a0091 | 517\u00a0111\u00a0091 |
Shares issued during the year | \u2014 | \u2014 |
Total number of shares as of 31.12 | 517\u00a0111\u00a0091 | 517\u00a0111\u00a0091 |
Treasury shares as of 01.01 | \u2014 | \u2014 |
Treasury shares purchased during the year | 1\u00a0170\u00a0034 | 887\u00a0905 |
Treasury shares sold during the year | -1\u00a0170\u00a0034 | -887\u00a0905 |
Treasury shares as of 31.12 | \u2014 | \u2014 |
Nominal value as of 31.12 (NOK) | 7.50 | 7.50 |
Share capital (total number of shares at nominal value) (EUR million) | 404.8 | 404.8 |
Other paid-in capital (EUR million) | 1\u00a0274.7 | 1\u00a0274.7 |
SHARE CAPITAL | 2022 | 2021 |
Total number of shares as of 01.01 | 517\u00a0111\u00a0091 | 517\u00a0111\u00a0091 |
Shares issued during the year | \u2014 | \u2014 |
Total number of shares as of 31.12 | 517\u00a0111\u00a0091 | 517\u00a0111\u00a0091 |
Treasury shares as of 01.01 | \u2014 | \u2014 |
Treasury shares purchased during the year | 1\u00a0170\u00a0034 | 887\u00a0905 |
Treasury shares sold during the year | -1\u00a0170\u00a0034 | -887\u00a0905 |
Treasury shares as of 31.12 | \u2014 | \u2014 |
Nominal value as of 31.12 (NOK) | 7.50 | 7.50 |
Share capital (total number of shares at nominal value) (EUR million) | 404.8 | 404.8 |
Other paid-in capital (EUR million) | 1\u00a0274.7 | 1\u00a0274.7 |
OVERVIEW OF THE LARGEST SHAREHOLDERS 31.12.22 | NUMBER OF SHARES | SHAREHOLDING % |
Geveran Trading Co Ltd1) | 74\u00a0289\u00a0287 | 14.37% |
Folketrygdfondet | 41\u00a0727\u00a0039 | 8.07% |
BlackRock, Inc. | 22\u00a0971\u00a0027 | 4.44% |
Vanguard Group Holdings | 16\u00a0111\u00a0774 | 3.12% |
DnB ASA | 13\u00a0981\u00a0376 | 2.70% |
Svenska Handelsbanken AB | 12\u00a0983\u00a0667 | 2.51% |
UBS AG | 11\u00a0830\u00a0921 | 2.29% |
Schroders PLC | 10\u00a0163\u00a0765 | 1.97% |
Groupe Bruxelles Lambert S.A. | 9\u00a0854\u00a0959 | 1.91% |
Storebrand Kapitalforvaltning | 9\u00a0852\u00a0683 | 1.91% |
Altshuler Shaham Mutual Funds Management Ltd. | 9\u00a0508\u00a0580 | 1.84% |
Amundi Asset Management, SAS | 9\u00a0450\u00a0271 | 1.83% |
Kommunal Landspensjonskasse | 9\u00a0193\u00a0568 | 1.78% |
Deutsche Bank AG Group | 6\u00a0871\u00a0644 | 1.33% |
Danske Bank Group | 6\u00a0368\u00a0370 | 1.23% |
CPP Investment Board | 6\u00a0031\u00a0367 | 1.17% |
Legal & General Group Plc | 5\u00a0766\u00a0401 | 1.12% |
Nordea AB | 5\u00a0747\u00a0128 | 1.11% |
Janus Henderson Investors Group | 5\u00a0263\u00a0480 | 1.02% |
Northern Trust Corporation | 4\u00a0824\u00a0647 | 0.93% |
Total 20 largest shareholders | 292\u00a0791\u00a0954 | 56.62% |
Total other shareholders | 224\u00a0319\u00a0137 | 43.38% |
Total number of shares 31.12.22 | 517\u00a0111\u00a0091 | 100.00% |
1) In addition to the shares included above Geveran Trading Co Ltd had per 31 December 2022 entered into a Total Return Swap (\"TRS\") agreement with underlying exposure to 4 000 000 shares in Mowi. Expiry date for the TRS agreement was 6 March 2023 and the TRS price was NOK 153.55 per share.
SHAREHOLDERS PER COUNTRY | NUMBER OF SHARES | SHARE % |
Norway | 136\u00a0499\u00a0841 | 26.40% |
USA | 77\u00a0754\u00a0335 | 15.04% |
Cyprus | 74\u00a0293\u00a0327 | 14.37% |
Great Britain | 59\u00a0879\u00a0837 | 11.58% |
Germany | 33\u00a0645\u00a0825 | 6.51% |
Other countries | 135\u00a0037\u00a0926 | 26.11% |
Total number of shares 31.12.22 | 517\u00a0111\u00a0091 | 100.00% |
SHARES OWNED BY BOARD MEMBERS, GROUP MANAGEMENT AND THEIR RELATED PARTIES AS OF 31.12.22 | NUMBER OF SHARES |
Board of Directors | |
Ole-Eirik Ler\u00f8y (Chair) | 1\u00a0501\u00a0495 |
Kristian Melhuus | 1\u00a0495 |
Lisbet K. N\u00e6r\u00f8 | 1\u00a0495 |
Kathrine Fredriksen1) | 263 |
Michal Chalaczkiewicz | 263 |
Renate Larsen | 263 |
Peder Strand | 263 |
J\u00f8rgen J. Wengaard | 600 |
Marianne Andersen | 1\u00a0179 |
Roger Petterssen | 1\u00a0883 |
Total number of shares held by Board members | 1\u00a0509\u00a0199 |
Group Management | |
Ivan Vindheim, CEO | 7\u00a0750 |
Kristian Ellingsen, CFO | 1\u00a0090 |
Catarina Martins, Chief Technology Officer and Chief Sustainability Officer | 2\u00a0535 |
\u00d8yvind Oaland, COO Farming Norway | 5\u00a0478 |
Ben Hadfield, COO Farming Scotland, Ireland and Faroes | 7\u00a0960 |
Fernando Villarroel, COO Farming Americas | 5\u00a0502 |
Ola Brattvoll, COO Sales and Marketing | 10\u00a0321 |
Atle Kvist, COO Feed | 633 |
Anne Lorgen Riise, Chief HR Officer | 1\u00a0448 |
Total number of shares held by Group management | 42\u00a0717 |
Total number of shares held by Board members and Group management | 1\u00a0551\u00a0916 |
Total number of shares held by Board members and Group management in % of total outstanding shares | 0.30% |
1) Kathrine Fredriksen is a member of the class of Beneficiaries of the Trusts which indirectly control Geveran Trading Co Limited.
SHAREHOLDERS RIGHTS
There are no current limitations on voting rights or trade limitations related to the Mowi share.
The Board of Directors has been granted the following authorisations which may impact the share capital:
1.To acquire shares in the company (\"own shares\") on behalf of the company with a total nominal value of up to NOK 387 833 318. The authorisation is valid until the ordinary general meeting in 2023, however no longer than 30 June 2023.\"
2.To increase the company's share capital by up to NOK 387 833 318 provided that the combined number of shares that are issued pursuant to this authorisation and the authorisation 3) below shall not in aggregate exceed 10% of the Company's current share capital. The authorisation is valid until the ordinary general meeting in 2023, however no longer than 30 June 2023.\"
SHARES OWNED BY BOARD MEMBERS, GROUP MANAGEMENT AND THEIR RELATED PARTIES AS OF 31.12.22 | NUMBER OF SHARES |
Board of Directors | |
Ole-Eirik Ler\u00f8y (Chair) | 1\u00a0501\u00a0495 |
Kristian Melhuus | 1\u00a0495 |
Lisbet K. N\u00e6r\u00f8 | 1\u00a0495 |
Kathrine Fredriksen1) | 263 |
Michal Chalaczkiewicz | 263 |
Renate Larsen | 263 |
Peder Strand | 263 |
J\u00f8rgen J. Wengaard | 600 |
Marianne Andersen | 1\u00a0179 |
Roger Petterssen | 1\u00a0883 |
Total number of shares held by Board members | 1\u00a0509\u00a0199 |
Group Management | |
Ivan Vindheim, CEO | 7\u00a0750 |
Kristian Ellingsen, CFO | 1\u00a0090 |
Catarina Martins, Chief Technology Officer and Chief Sustainability Officer | 2\u00a0535 |
\u00d8yvind Oaland, COO Farming Norway | 5\u00a0478 |
Ben Hadfield, COO Farming Scotland, Ireland and Faroes | 7\u00a0960 |
Fernando Villarroel, COO Farming Americas | 5\u00a0502 |
Ola Brattvoll, COO Sales and Marketing | 10\u00a0321 |
Atle Kvist, COO Feed | 633 |
Anne Lorgen Riise, Chief HR Officer | 1\u00a0448 |
Total number of shares held by Group management | 42\u00a0717 |
Total number of shares held by Board members and Group management | 1\u00a0551\u00a0916 |
Total number of shares held by Board members and Group management in % of total outstanding shares | 0.30% |
BASIC AND DILUTED EARNINGS PER SHARE | 2022 | 2021 |
| ||
Profit for the year attributable to owners of Mowi ASA | ||
Profit from continuing operations attributable to the owners of the parent (EUR million) | 782.4 | 487.6 |
Profit for the year attributable to owners of Mowi ASA (EUR million) | 782.4 | 487.6 |
| ||
Time-weighted average of shares issued and outstanding (million) | 517.1 | 517.1 |
| ||
Basic earnings per share attributable to the owners of Mowi ASA | ||
Basic earnings per share from continuing operations (EUR) | 1.51 | 0.94 |
Basic earnings per share (EUR) | 1.51 | 0.94 |
| ||
Diluted earnings per share attributable to the owners of Mowi ASA | ||
Diluted earnings per share from continuing operations (EUR) | 1.51 | 0.94 |
Diluted earnings per share (EUR) | 1.51 | 0.94 |
TRANSACTIONS WITH ASSOCIATED COMPANIES
The figures presented below are with associated companies, mainly Nova Sea AS.
RELATED PARTY TRANSACTIONS (EUR MILLION) | 2022 | 2021 |
Revenue | 0.8 | 8.1 |
Purchase | -2.3 | -10.3 |
Trade receivables | 0.1 | 3.0 |
Trade payables | -0.3 | \u2014 |
All significant transactions are mainly related to the sale or purchase of fish or smolt and related services.
SHAREHOLDERS
In 2022 and 2021 Mowi Group had no material transactions with any of its shareholders.
UPDATE ON THE ALLEGATIONS OF PRICE COLLUSION
Further to the European Commission inspections in 2019. The European Commission is still at the investigation stage and has not initiated formal proceedings in the case, and no decision has been made.
Furthermore, Mowi has been named a defendant in a class action complaint in Canada. This civil law case is still at the pre-trial stage. Mowi considers that there is no basis for any competition concerns and that the investigations and civil law case clearly lack merit and are entirely unsubstantiated.
OTHER CASES
We are routinely involved in various legal matters arising from the course of our business.
While the outcome of these proceedings cannot be predicted with certainty, we believe that, when resolved, they will not have any material adverse effect on our results, financial position or liquidity.
SPECIFICATION OF PROVISIONS 2022 (EUR MILLION) | RESTRUCTURING AND OTHER PROVISIONS | ONEROUS | OTHER | TOTAL |
Provisions as of 01.01 | 33.7 | 3.2 | 28.4 | 65.4 |
New provisions in the year | 11.8 | \u2014 | 1.8 | 13.6 |
Utilised provisions | -33.3 | \u2014 | -20.5 | -54.0 |
Non cash utilisation | \u2014 | 8.0 | \u2014 | 8.0 |
Currency adjustment | 0.2 | -0.1 | 0.4 | 0.6 |
Provisions as of 31.12 | 12.4 | 11.2 | 10.1 | 33.7 |
The majority of restructuring cost in 2022 was related to Mowi Canada West with the amount of EUR 11.1 million.
SPECIFICATION OF PROVISIONS 2021 (EUR MILLION) | RESTRUCTURING AND OTHER PROVISIONS | ONEROUS | OTHER | TOTAL |
Provisions as of 01.01 | 13.7 | \u2014 | 11.8 | 25.4 |
New provisions in the year | 24.9 | \u2014 | 19.5 | 44.4 |
Utilised provisions | -5.7 | \u2014 | -3.4 | -9.1 |
Non cash utilisation | \u2014 | 3.2 | \u2014 | 3.2 |
Currency adjustment | 0.9 | \u2014 | 0.5 | 1.4 |
Provisions as of 31.12 | 33.7 | 3.2 | 28.4 | 65.4 |
UPDATE ON THE ALLEGATIONS OF PRICE COLLUSION
Further to the European Commission inspections in 2019. The European Commission is still at the investigation stage and has not initiated formal proceedings in the case, and no decision has been made.
Furthermore, Mowi has been named a defendant in a class action complaint in Canada. This civil law case is still at the pre-trial stage. Mowi considers that there is no basis for any competition concerns and that the investigations and civil law case clearly lack merit and are entirely unsubstantiated.
OTHER CASES
We are routinely involved in various legal matters arising from the course of our business.
While the outcome of these proceedings cannot be predicted with certainty, we believe that, when resolved, they will not have any material adverse effect on our results, financial position or liquidity.
SPECIFICATION OF PROVISIONS 2022 (EUR MILLION) | RESTRUCTURING AND OTHER PROVISIONS | ONEROUS | OTHER | TOTAL |
Provisions as of 01.01 | 33.7 | 3.2 | 28.4 | 65.4 |
New provisions in the year | 11.8 | \u2014 | 1.8 | 13.6 |
Utilised provisions | -33.3 | \u2014 | -20.5 | -54.0 |
Non cash utilisation | \u2014 | 8.0 | \u2014 | 8.0 |
Currency adjustment | 0.2 | -0.1 | 0.4 | 0.6 |
Provisions as of 31.12 | 12.4 | 11.2 | 10.1 | 33.7 |
The majority of restructuring cost in 2022 was related to Mowi Canada West with the amount of EUR 11.1 million.
SPECIFICATION OF PROVISIONS 2021 (EUR MILLION) | RESTRUCTURING AND OTHER PROVISIONS | ONEROUS | OTHER | TOTAL |
Provisions as of 01.01 | 13.7 | \u2014 | 11.8 | 25.4 |
New provisions in the year | 24.9 | \u2014 | 19.5 | 44.4 |
Utilised provisions | -5.7 | \u2014 | -3.4 | -9.1 |
Non cash utilisation | \u2014 | 3.2 | \u2014 | 3.2 |
Currency adjustment | 0.9 | \u2014 | 0.5 | 1.4 |
Provisions as of 31.12 | 33.7 | 3.2 | 28.4 | 65.4 |
UPDATE ON THE ALLEGATIONS OF PRICE COLLUSION
Further to the European Commission inspections in 2019. The European Commission is still at the investigation stage and has not initiated formal proceedings in the case, and no decision has been made.
Furthermore, Mowi has been named a defendant in a class action complaint in Canada. This civil law case is still at the pre-trial stage. Mowi considers that there is no basis for any competition concerns and that the investigations and civil law case clearly lack merit and are entirely unsubstantiated.
OTHER CASES
We are routinely involved in various legal matters arising from the course of our business.
While the outcome of these proceedings cannot be predicted with certainty, we believe that, when resolved, they will not have any material adverse effect on our results, financial position or liquidity.
SPECIFICATION OF OTHER OPERATING EXPENSES (EUR MILLION) | 2022 | 2021 |
Maintenance | -206.7 | -200.6 |
Electricity and fuel | -142.3 | -97.8 |
Rent, leases and third-party services | -48.9 | -36.3 |
Insurance | -42.3 | -43.1 |
Consultancy and audit fees | -44.1 | -43.5 |
IT costs | -24.7 | -24.6 |
Travel cost | -9.4 | -5.2 |
Sales and marketing costs | -25.5 | -24.7 |
Other operating costs | -63.5 | -58.6 |
Total other operating expenses | -607.4 | -534.4 |
SPECIFICATION OF RIGHT OF USE ASSET 2022 (EUR MILLION) | LAND & | MACHINERY & | TRANSPORT | NETS, PENS & MOORINGS | OTHER | TOTAL |
Opening balance | 64.3 | 13.5 | 760.2 | 7.7 | 5.2 | 850.8 |
New contracts | 6.7 | 13.9 | 110.5 | \u2014 | 0.1 | 131.2 |
Extension and other adjustments of existing agreements | 1.3 | \u2014 | 41.9 | \u2014 | \u2014 | 43.2 |
Termination of agreements | -4.7 | -6.7 | -151.7 | -0.7 | -0.2 | -164.0 |
Foreign currency adjustments | 0.2 | -0.1 | -5.0 | -0.1 | 0.1 | -4.9 |
Total acquisition cost as of 31.12 | 67.7 | 20.6 | 755.8 | 7.0 | 5.1 | 856.3 |
Accumulated depreciation and | 21.6 | 7.1 | 304.4 | 3.1 | 1.6 | 337.7 |
Depreciation in the year | 9.1 | 5.8 | 180.8 | 1.5 | 1.1 | 198.4 |
Impairment | \u2014 | \u2014 | 13.4 | \u2014 | \u2014 | 13.4 |
Accumulated depreciation on terminated contracts | -4.6 | -6.5 | -129.0 | -0.7 | -0.2 | -141.1 |
Foreign currency adjustments | \u2014 | \u2014 | -4.2 | \u2014 | \u2014 | -4.1 |
Total accumulated depreciation as of 31.12 | 26.0 | 6.4 | 365.5 | 3.9 | 2.5 | 404.2 |
Total carrying amount as of 31.12 | 41.7 | 14.3 | 390.4 | 3.1 | 2.6 | 452.1 |
Depreciation method | Linear | Linear | Linear | Linear | Linear | \u00a0 |
SPECIFICATION OF RIGHT OF USE ASSET 2021\u00a0 (EUR MILLION) | LAND & | MACHINERY & | TRANSPORT | NETS, PENS & MOORINGS | OTHER | TOTAL |
Opening balance | 61.7 | 18.4 | 658.6 | 7.1 | 3.9 | 749.7 |
New contracts | 3.3 | 3.9 | 119.4 | 0.9 | 1.9 | 129.4 |
Extension and other adjustments of existing agreements | 2.7 | -0.2 | 74.0 | \u2014 | \u2014 | 76.6 |
Termination of agreements | -5.6 | -9.4 | -110.6 | -0.5 | -0.7 | -126.8 |
Foreign currency adjustments | 2.3 | 0.8 | 18.7 | 0.1 | 0.1 | 22.0 |
Total acquisition cost as of 31.12 | 64.3 | 13.5 | 760.2 | 7.7 | 5.2 | 850.8 |
Accumulated depreciation and | 16.1 | 10.0 | 183.9 | 2.0 | 1.3 | 213.3 |
Depreciation in the year | 9.3 | 4.7 | 179.2 | 1.5 | 0.8 | 195.6 |
Reclassification | \u2014 | \u2014 | 5.1 | \u2014 | \u2014 | 5.1 |
Accumulated depreciation on terminated contracts | -4.4 | -8.1 | -69.4 | -0.5 | -0.6 | -83.0 |
Foreign currency adjustments | 0.6 | 0.4 | 5.6 | \u2014 | \u2014 | 6.7 |
Total accumulated depreciation as of 31.12 | 21.6 | 7.1 | 304.4 | 3.1 | 1.6 | 337.7 |
Total carrying amount as of 31.12 | 42.7 | 6.5 | 455.7 | 4.6 | 3.6 | 513.2 |
Depreciation method | Linear | Linear | Linear | Linear | Linear | \u00a0 |
RECONCILIATION RIGHT-OF-USE LIABILITIES (EUR MILLION) | 2022 | 2021 |
Opening balance | 518.4 | 533.1 |
New contracts | 131.2 | 129.4 |
Extensions and other adjustments of existing agreements | 43.2 | 76.6 |
Termination of agreements | -20.9 | -43.2 |
Down payment leasing debt (cash movement) | -199.6 | -192.7 |
Currency effects | -9.4 | 15.2 |
Closing balance 31.12 | 462.9 | 518.4 |
Of which non-current liabilities | 289.4 | 335.7 |
Of which current liabilities | 173.5 | 182.7 |
MATURITY ANALYSIS COMMENCED LEASES (EUR MILLION) | 2022 | 2021 |
Less than 1 year | 183.9 | 193.7 |
1-2 years | 125.2 | 136.8 |
2-3 years | 83.0 | 90.0 |
3-4 years | 51.4 | 50.0 |
4-5 years | 20.5 | 34.1 |
More than 5 years | 31.0 | 47.7 |
Sum 31.12 | 495.0 | 552.1 |
Commenced leases consists of future cash flow related to down payment of leases and interest.
The group has various contracts that have not yet commenced as of 31 December 2022. The future lease payments for these
non-cancellable lease contracts are EUR 26.2 million within one year (EUR 4.4 million), EUR 161.9 million within five years (EUR 31.6 million) and EUR 24.9 million thereafter (EUR 7.1 million).
LEASES EXPENSED (EUR MILLION) | 2022 | 2021 |
Leases not reported as right of use assets 1) | 37.6 | 33.1 |
1) Short term leases with contract period less than one year and low value leases.
SUBLEASES (EUR MILLION) | 2022 | 2021 |
Income from subleases | 2.6 | 8.2 |
RESEARCH AND DEVELOPMENT EXPENSES (EUR MILLION) | 2022 | 2021 |
R&D expenses | 35.0 | 39.6 |
FEES TO AUDITORS 2022 (EUR MILLION) | EY | OTHER APPOINTED AUDITORS |
Audit services | -1.6 | -0.1 |
Tax services | -1.1 | \u2014 |
Other non-audit fees | -0.1 | \u2014 |
Total fees for 2022 | -2.7 | -0.1 |
FEES TO AUDITORS 2021 | EY | OTHER APPOINTED AUDITORS |
Audit services | -1.4 | -0.1 |
Tax services | -0.3 | \u2014 |
Other non-audit fees | -0.2 | \u2014 |
Total fees for 2021 | -1.8 | -0.1 |
\u00a0
NEW STANDARDS APPLIED
No new standards have been applied in 2022.
NEW STANDARDS - NOT YET IMPLEMENTED