Content
Approved by the Board of Directors in Hofseth BioCare ASA 18 April 2024
Hofseth BioCare ASA is committed to maintaining high standards of cor-
porate governance that will strengthen confidence in the company among
share holders, capital market and among other stakeholders, thereby con-
tributing to the greatest possible value creation over time. The aim of
corporate governance is to regulate the roles of shareholders, board and
management beyond what is required by legislation.
The company reports in accordance with the recommendation of 30 October
2014, last updated 17 October 2018 («the Recommendations») issued by the
Norwegian Corporate Governance Board (NUES). The rules on the continuing
obligations of listed companies at www.oslobors.no and guidelines are avail-
able at www.nues.no
Compliance is based on a «comply or explain» principle, which means that
the company must comply with all recommendations or explain why they
have chosen an alternative approach to specific recommendations. The
following explains the company's compliance with the 15 sections and ad-
dresses the additional requirements set out in the Accounting Act § 3-3 b.
Any deviation from the Code of Conduct will be explained under the appro-
priate section.
This report is part of the company's annual report. The report is also avail-
able on Hofseth BioCare's website www.hofsethbiocare.com, along with
more information about the company's business.
CHAPTER 1
Corporate governance 3
CHAPTER 2
The board of director’s report 2023 10
CHAPTER 3
Financial statements 18
Statement of comprehensive income 20
Statement of financial position 21
Statement of cash flows 23
Statement of changes in equity 24
Notes to the accounts 25
Declaration of the Board of Directors and Managing Director in Hofseth BioCareASA
60
CHAPTER 4
Auditors report 61
CORPORATE GOVERNANCE
Hofseth BioCare is a Norwegian public limited company and is
listed on Oslo Stock Exchange. The Norwegian Accounting Act
and the rules of the Continuing Obligations for stock listed com-
panies impose a duty on the Company to issue its principles
and practice for corporate governance in the annual report.
Values and guidelines for business
ethics and corporate social
responsibility
The company's values are an important premise for corporate
governance. Trust in HBC as a company, and in the business,
is crucial for the company's future competitiveness.
Hofseth BioCare is committed to transparency about its
guidelines for management of the Company. This strengthens
the value creation, builds internal and external confidence
and promotes a code of ethics and a sustainable approach
to business.
HBC is founded on the core value of sustainability and optimal
use of natural resources. The Company aspires to create
a healthy company culture based on these core values. The
Board of Directors has approved the Code of Conduct for
business ethics and corporate social responsibility. The
Company's customization of the Code of Conduct and the
internal guidelines ensures a proper division of roles and
responsibilities and well-functioning cooperation among
the Company's shareholders, the Board of Directors and its
management, and that the business is subject to satisfactory
controls. An appropriate distribution of roles, effective
collaboration and satisfactory controls contributes to the best
possible value creation over time, for the benefit of its owners
and other stakeholders.
The company's Code of Ethics deals with the handling of
impartiality, conflicts of interest, relationships with customers
and suppliers, relations with the media, insider trading and
relevant financial interests of a personal nature. The core of
the concept of CSR is the company's responsibility for people,
communities and environment affected by operations and
typically addresses:
› Human rights which means that the company carries out
its operations in accordance with the international agre-
ements and conventions that are fundamental rights for
every human being, regardless of race, gender, religion or
other status.
› Anti-corruption which means that the organization manda-
tes that it should not demand, receive or accept an offer of
an improper advantage in connection with a position, office
or assignment.
› Employee relations where AMLs (Working Environment
Act) provisions concerning employment contracts, working
hours, insurance, pension, vacation, sick monitoring etc.
embodied in internal guidelines and be followed throug-
hout the organization. The employees are organized, and
there is established good communication channels betwe-
en employee representatives and management.
› HSE (Health, Security and Environment) is the company’s
top priority. Through guidelines and incorporate routines
that safety inspections, preventive maintenance routines,
etc. all the employee are involved. A safety delegate sys-
tem is implemented in the organization.
› Discrimination where the Company endeavours to ensure
that there shall be no discrimination or unequal treatment
which has its basis in individuals, genders, ethnicities, nati-
The Board of Directors of Hofseth BioCare ASA (HBC or the
company) has the ultimate responsibility to ensure that the
company is practicing good corporate governance. The company's
Board of Directors and management conducts a thorough review
and assessment of its principles of corporate governance annually.
4
CORPORATE GOVERNANCE
onalities, religious communities and the like.
› Environmental which is a key factor in the company's social
responsibility. Emissions to water and air are continuously
monitored. Regular meetings are held with local authorities
and municipal bodies.
Business
The aim of Hofseth BioCare is defined in the Company's Ar-
ticles of Association, which inter alia, states:
› Hofseth BioCare's business is development, manufactu-
ring, marketing and sale of marine ingredients such as
oil, calcium and protein products, as well as cooperation
with, and the participation and ownership in businesses
engaged in related businesses.
› The Company’s board of directors shall have from 3 to
10 members according to the resolution of the General
Meeting.
› The company shall have an audit committee.
Please refer to the Articles of Association for Hofseth BioCa-
re, last modified 4 January 2024, which are available at the
company's website www.hofsethbiocare.com.
Equity and dividend
Equity
Hofseth BioCare shall have an equity ratio which is appropria-
te in relation to its objectives, strategy and risk profile, and the
Board of Directors will continually assess the capital situation.
The Company's Board of Directors and management have
used the following instruments to have a customized equity
at any given time
› Private placement/capital increase
› Shareholder loans (subordinated loan) that can be dee-
med part of the company's equity
› Sales-enhancing and cost-cutting measures
As of 31 December 2023, the group had an equity of NOK
97.1 million, corresponding to an equity ratio of 10.6 %. The
board considers an equity ratio of more than 25 per cent to
be at a satisfactory and prudent level and hence the equity
ratio was not at a satisfactory level. The company's long-term
debt financing has financial covenant requirements of 25 %
equity, including subordinated loans, and the Company was
in breach with its financial covenants by 31 December 2023.
On 15 December 2023, the Board called for an extraordinary
general meeting to convert NOK 144 millions of trade
payables into equity, by issuing new class B shares towards
Hofseth International. Before 31 December, the Board had
already received the necessary voting proxies in favour of the
matter. Based on this increase of equity, by 4 January 2024,
the Company had an equity ratio of over 25 per cent and not
in breach with its financial covenants.
The board will at all times consider various instruments to
ensure that the company has sufficient equity, including an
authorization given to the board at the general meeting on 28
April 2023 to issue up to approximately 79 million new shares
intended to be used in the event of a need for additional
equity and liquidity. It is the Board's intention to ask the
General Meeting for a similar authorization for the coming
period.
Dividend
HBC aims to give its shareholders a competitive rate of return
based on the company's earnings. Dividends will be considered
in the context of HBC’s financial position, loan terms and capital
requirements for existing and new projects.
Mandates of the board of directors
Mandates granted to the Board of Directors, either to increase
the company's share capital or to buy its own shares, will gene-
rally be limited to defined purposes and usually limited in time
until the date of the next ordinary general meeting.
As of 31 December 2023, the Board of Directors in HBC holds
an authorization to increase the company's share capital by is-
suing new shares with a total face value of up to NOK 790,162
equivalent to 79,016,200 shares, each with a nominal value of
NOK 0.01.
The authorization can be used in connection with the issuance
of shares to investors who are considered to have strategic
importance for the company as well as to repair any issues as
a result of such, or any other private equity issues.
In accordance with this power of attorney to the Board of Dire-
ctors will also be able to offer shares to the people or compa-
nies who are not shareholders of the company. Existing share-
holders' preferential right may be waived.
The Board of Directors is given the authority to change the
Articles of Association stating the share capital size in acco-
rdance with the shares the Board decides under this authori-
zation. The authorization was granted at the Ordinary General
Assembly 28 April 2023 and is valid until the Ordinary General
Assembly in 2024, however not longer than 30 June 2024.
Equal treatment and transactions with related
parties
Hofseth BioCare has two classes of shares, ordinary class A
shares with voting rights, and class B shares which not hold
any voting rights but will carry a preferential right to receive
dividends and a preferred right in the case of liquidation or
other distribution of the Company's assets. Each class A share
in the Company carries one vote.
As a main rule, all transactions in the company’s own shares
5
CORPORATE GOVERNANCE
shall take place through the stock exchange or at the stock
market price if traded outside of the stock exchange, or in a
way so all shareholders shall be treated on an equal basis.
Transactions with related parties
Included in the rules of procedures for the Board are guideli-
nes for how the members of the Board and the CEO shall act in
discussions or decisions related to issues which are of special
personal importance to them, or to any related parties to the
member in question.
Transactions with related parties are governed by market
terms and conditions in accordance with the «arm’s length
principle».
The Company’s shareholders, Board and management, and
their related parties, as well as all companies in the Hofseth
group, including RH Industri AS and Hofseth International AS,
will be related parties to Hofseth BioCare.
Transactions with related parties are further described in the
notes to the financial statements.
Freely tradable shares
All ordinary class A shares in Hofseth BioCare are freely tra-
dable with no limitations in the Articles of Association. Any
transfer of B-Shares is subject to consent of the Company's
board of directors.
The general meeting
Through the general meeting the shareholders exercise the
highest authority in Hofseth BioCare. All shareholders are
entitled to submit items to the agenda, meet, speak and vote
at general meetings in accordance with the provisions of the
Norwegian Public Limited Companies Act. The Board of Hof-
seth BioCare strives to ensure that the general meetings are
an effective forum for communication between shareholders
and the Board, and the Board shall take steps to ensure that
as many shareholders as possible may exercise their rights by
participating in the general meetings.
The annual general meeting is held each year before the end
of May. Extraordinary general meetings may be called by the
Board at any time. Hofseth BioCare’s auditor or shareholders
representing at least five percent of the total share capital may
demand an extraordinary General Meeting to be called.
The notice calling the annual general meeting is made availa-
ble on the Company’s website and sent to shareholders with
known addresses by post no later than 21 days prior to the
date of the meeting. Article 9 in the Company’s Article of As-
sociations states that documents related to matters on the
agenda of a general meeting can be made available on the
Company’s website rather than being sent to shareholders by
post. The supporting documentation will be available at the
same date as the notice calling the meeting and provides all
the necessary information for shareholders to form a view on
the matters to be considered. The deadline for registration for
the annual General Meeting is at the latest 3 days before the
general meeting takes place. Shareholders who cannot attend
the general meetings in person shall be given the opportunity
to vote, and the Company shall provide information and nomi-
nate an available person who may vote on behalf of the share-
holders in this respect.
The general meeting elects the members and deputy mem-
bers of the Board, determines the remuneration of the mem-
bers of the Board, approves the annual financial statements,
discusses the Board of Director’s guidelines on management
remuneration and decides such other matters which by law or
Hofseth BioCare’s Articles of Association are to be transacted
at the General Meeting.
The Board of Directors, the Nomination Committee and the
auditor's attendance at the General Meeting is waived from
the recommendation if a review of the agenda, the availabi-
lity and physical location would suggest this is not practical).
Under the General Meeting for the adoption of the financial
statements for 2022 one members participated. The auditor
did not participate.
Nomination committee
The General Meeting has chosen a Nomination Committee to
ensure objectivity regarding the shareholders’ interests.
The company shall have a nomination committee consisting
of 3 members where the majority of the members shall be
independent of the board of directors and the management.
The members of the nomination committee shall be elected
for terms of two years.
The nomination committee shall propose candidates for the
board of directors and the nomination committee, including
remuneration to the board of directors and the members of
the nomination committee. Members of the Nomination
Committee are Geir Even Håberg, Lennart Clausen and Svein
Myhre.
The remuneration to the Nominating Committee shall be
determined by the General Meeting.
The nomination committee shall evaluate the need for
changes of the board and the nomination committee. To have
the best possible basis for their deliberations, the committee
should be in contact with the directors and the CEO.
Furthermore, the Nomination Committee should consult
relevant shareholders for nominations and for consensus
in its decision. The board’s evaluation report (ref. Paragraph
9 on the Board’s work) should be treated separately by the
Nomination Committee.
The recommendations of the nomination committee shall
include a justification as to how the best interest of the
shareholders and the Company has been secured.
6
CORPORATE GOVERNANCE
The board of directors, composition and
independence
The Board of Hofseth BioCare includes six members, of which
three are female, corresponding with the Company’s Articles
of the Associations Section 5, stating that the Board should
have from three to ten members.
Members of the Board are selected in the light of an evaluation
of the Company’s needs for expertise, capacity and balanced
decision-making, and with the aim of ensuring that the Board
of Directors can operate independently of any special interests
and function effectively as a collegiate body.
The majority of the Board of Directors shall be independent of
Hofseth BioCare’s management and its main business conne-
ctions. At least two of the members of the Board shall be inde-
pendent of the Company’s main shareholder(s). The Board of
Directors does not include executive personnel.
Director of the Board, Roger Hofseth, is as of 31 December
2023 CEO of Hofseth International AS, one of the Company’s
largest shareholders, and director of the Board, Dr. Crawford
Currie is Head of Medical R&D in the Company. Both are rela-
ted to several of the Company’s business connections and is
thus not considered independent.
The Chair of the Board, Kristin Fjellby Grung, Director Chris-
toph Baldegger, Director Amy Novogratz and Director Torill
Standal Eliassen are considered independent of management,
business connections and the Company’s main shareholders.
The term of office for members of the Board of Directors is
two years. An updated overview of the members of the Board
of Directors of Hofseth BioCare, including their employment,
education and professional background is provided at the
Company’s website www.hofsethbiocare.com.
Members of the Board of Directors are encouraged to own
shares in the company.
The General Meeting elects the Chair of The Board of Dire-
ctors.
The work of the board of directors
The Board
The Board of Directors has the overall responsibility for the
management of Hofseth BioCare. This includes a respon-
sibility to supervise and exercise control of the Company’s
activities.
Furthermore, this includes developing the Company’s stra-
tegy and monitoring its implementation. In addition, the
Board of Directors exercises supervision responsibilities to
ensure that the company manages its business and assets
and carries out risk management in a prudent and satis-
factory manner. The Board of Directors is also responsible
for the appointment of the Chief Executive Officer (CEO).
A separate instruction for the board of directors is imple-
mented and the Board develops a yearly plan for their work.
In accordance with the provisions of Norwegian company
law, the case processing and responsibilities of the board
are governed by a set of rules and procedures. The chair of
the board is responsible for ensuring that the work of the
board is carried out in an efficient and responsible manner
in accordance with the legislation.
The board has established instructions for the work of the
CEO. There is a clear separation of work between the board
and the general manager. The CEO is responsible for the
operational management of the Company.
The board conducts an annual evaluation of its work, form
of work and competence.
The Board of Directors has adopted an audit committee (the
"Audit Committee") in accordance with the Company's Ar-
ticles of Association § 6 and the Code of Practice. There is
a separate instruction for the Audit Committee.
According to the company's articles of association, section
6, the board decides the members of the committee. The
members of the audit committee in Hofseth BioCare are To-
rill Standal Eliassen (chair) and Christoph Baldegger.
The company has established its own compensation
committee in accordance with the company's articles of
association, section 11. The members of the compensation
committee are Christoph Baldegger and Torill Standal Eli-
assen.
Risk management and internal control
The Board of Hofseth BioCare shall ensure that the Company
has sound internal control and systems for risk management
that are appropriate in relation to the extent and nature of the
Company’s activities. The internal control and the systems
should also encompass the Company’s corporate values, ethi-
cal guidelines and guidelines for corporate social responsibility.
Risk management and internal control is performed through va-
rious processes within the Company, both though the Board of
Directors work and the operational management of the Compa-
ny.
The Board of Directors receives weekly reports from manage-
ment outlining the financial and operational performance of
the Company. The administration's reporting is based on input
7
CORPORATE GOVERNANCE
according to key reporting from the chain of command, as up-
dated accounting and valuation of accounting items, including
relevant operating data of importance for the assessment of
accounting records. Monthly operating reports are evaluated
and decided by the top management of the group.
There must be sufficient qualified resources to carry out appro-
priate reports which will contribute to effective decision making
and continuous control of the Group's financial performance.
In connection with the budget work and approval of the budget,
the board considers the internal control systems and the most
important risk factors are taken into account that the compa-
ny may be confronted with. In light of the company's growth
strategy, the board is ensuring that the internal control systems
apply to all aspects of the company's operations, including stra-
tegic, operational and financial risk. The board also assesses
the need for any further measures in relation to the risk factors.
The Board of Directors has adopted guidelines that encompass
the Company’s corporate and ethical values and corporate soci-
al responsibility, cf. Section 1 (Code of Ethics).
The preparation of interim reports and annual reports shall be
in accordance with Norwegian and international principles for
accounting and as further set out in the rules of procedure for
Board of Directors.
The Group's control environment is assessed as satisfactory,
and the Group has a satisfactory accounting and controlling
department. Parts of the payroll functions are outsourced to an
external accounting firm.
Operative internal control is safeguarded through established
procedures and guidelines to be followed up through line mana-
gement and management reporting. Likewise, continuous risk
analysis and control activities are executed. The Board believes
that the scope and level of the said areas is satisfactory to the
Group's size and complexity.
The Board of Directors, through its Audit Committee and toget-
her with its independent auditor, carries out an annual review of
the Company’s most important areas of exposure to risk and its
internal control arrangements.
The Board of Directors describes in the annual report the main
features of the Company’s internal control and risk manage-
ment systems related to the Company’s financial reporting.
Remuneration of the board of directors
The compensation to the Board shall reflect the Board’s re-
sponsibility, expertise, time commitment and the complexity
of the Company’s activities.
The remuneration paid to the members of the Board will be
decided by the General meeting. The remuneration paid to
the members of the committees will be decided by the gene-
ral meeting having considered proposals by the Board in line
with the Code. Information about the fee paid to the Board and
committees is stated in the annual report.
There is an authorization the board may use in connection
with the issuance of shares to directors and employees of the
Company. In addition to moderate board remuneration, it was
considered that options are the most appropriate way to honor
board members.
Remuneration of executive personnel
The Board of Directors prepares guidelines for the remune-
ration of the executive personnel. The guidelines have been
communicated to the general meeting through a management
salary statement. The Company’s performance-related remu-
neration of the executive personnel are linked to value creation
for shareholders or the Company’s earnings performance over
time and the Company strives to ensure that its arrangements
are in line with the guidelines.
Information and communications
Hofseth BioCare’s information policy shall be based on open-
ness and equal treatment of all shareholders and the Compa-
ny has resolved to comply with the Oslo Børs’ Code of Practice
for Reporting IR Information.
Hofseth BioCare strives to continuously publish all relevant
information to the market in a timely, effective and non-dis-
criminatory manner. All stock exchange announcements are
made available both on the Company’s website and on the
Oslo Stock Exchange news website www.newsweb.no and are
also distributed to news agencies (via GlobeNewswire).
The Company publishes its preliminary annual financial state-
ments by the end of February, together with its fourth quarter
results.
The complete annual report and financial statements are
made available to shareholders no later than three weeks prior
to the annual general meeting, or, at the latest, by 30 April each
year, which is the last date permitted by the Securities Trading
Act. For 2022 the complete annual report and financial state-
ments were approved and published 31 March 2023.
Quarterly results are normally published at the latest within
two months after the close of the quarter.
The Company’s financial calendar for the coming year is pu-
blished no later than 31 December in accordance with the
rules of the Oslo Stock Exchange. The financial calendar is
available on the company’s website and on the Oslo Stock
Exchange website.
8
CORPORATE GOVERNANCE
Quarterly reports and presentation material are available on
the Company’s website, www.hofsethbiocare.com.
Take-overs
It is a fundamental principle to Hofseth BioCare that all share-
holders are treated equally. Openness in respect of take-over
situations is considered to be important in ensuring equal tre-
atment of all shareholders.
The Company will not seek to hinder or obstruct take-over bids
for the Company’s activities or shares unless there are parti-
cular reasons for this.
In the event of a take-over bid for the Company’s shares, the
Board of Directors should not exercise mandates or pass any
resolutions with the intention of obstructing the take-over bid
unless this is approved by the general meeting following anno-
uncement of the bid.
If an offer is made for the Company’s shares, the Company’s
Board of Directors should issue a statement making a re-
commendation as to whether shareholders should or should
not accept the offer. The Board of Director’s statement on the
offer should make it clear whether the views expressed are
unanimous. If this is not the case, it should explain the basis
on which specific members of the Board of Directors have
excluded themselves from the Board of Directors’ statement.
The Board of Directors should arrange a valuation from an in-
dependent expert. The valuation should include an explanati-
on and should be made public no later than at the time of the
public disclosure of the statement.
Any transaction that is in effect a disposal of the Company’s
activities should be decided by a general meeting, except in
cases where such decisions are required by law to be decided
by the corporate assembly.
Auditor
EY is the auditor for Hofseth BioCare and is appointed by the
Assembly General Meeting.
The auditor shall annually submit to the audit committee the
main features of the plan for the auditing work. Furthermore,
the auditor shall at least once a year prepare a report contai-
ning its opinions on the Company's accounting policies and
internal control. The auditor participates in board meetings de-
aling with the consolidated financial statements for the Group
and the company.
In meetings with the audit committee and the board audi-
tor shall explain any material changes in the company's and
Group's accounting policies, the assessment of the significa-
nt estimates and all significant matters that there has been
disagreement about between the company and the auditor.
The Board has annual meetings with the auditors without the
group management teams present.
There are no written guidelines for executive management's
use of auditors for services other than auditing. This differs
from «Norwegian recommendation for corporate governan-
ce.» The auditor explains, however, the audit committee for
which services other than auditing provided the Group and
company. However, the auditor reports to the audit committee
on which non-audit services have been provided to the group
and the company. Throughout the year, the audit committee is
responsible for approving the services provided by the auditor,
as well as the fees for these.
The Audit Committee in conjunction with the annual report
in 2023 received a written confirmation from the auditor that
he satisfies established and legitimate independence require-
ments.
Information about the auditor's remuneration for auditing and
other services will be provided to the Annual General Meeting.
The auditor's remuneration is disclosed in note 5 to the finan-
cial statements.
9
THE BOARD OF DIRECTOR’S REPORT 2023
Important events in 2023
First quarter
HBC started the year by showing strong growth compared to
earlier years, with revenues of NOK 44.8m in the first quarter, a
YoY growth of 48 per cent, compared to NOK 30.8m in the first
quarter of 2022. Both our ingredients business and finished
products channels were significantly higher, as the interest in
traceable marine ingredients surged. This resulted in solid de-
mand growth for our products, particularly from human-grade
pet food businesses and the nutraceutical categories.
We worked to strengthen our global partnerships, and this has
contributed to a growing order book and better long-term vi-
sibility. The premium pet segment, which helps diversify the
customer portfolio, displayed notable progress. All geographic
regions contributed to the growth without any single country
or continent dominating. The first quarter also saw multiple
significant business visits abroad, including to the US, with a
focus on human health products.
The Finished Goods business had a particularly positive
performance, with Q1 2023 sales amounting to NOK 10.2m
compared to NOK 5.9m in Q1 2022, reflecting a 70 per cent
growth and a positive operational margin after sales and mar-
keting costs. Brilliant™ Salmon Oil, accounting for 80 per cent
of finished goods revenues, has secured retail chain and dis-
tributor listings in over 25 countries worldwide.
Our R&D team made significant advancements at the start of
the year. Clinical trials on ProGo® to support gut and overall
health in milder forms of inflammatory bowel disease are
being planned and led by Stanford University.
The university collaboration showed that ProGo® provides
excellent protection against GI tract inflammation in standard
models of inflammatory bowel disease (IBD). This work is an-
ticipated to enable the granting of health claims for ProGo® as
medical food/medical nutrition in the management of IBD and
the protection of gut health.
Second quarter
During the second quarter, we saw a series of strong
accomplishments, reflecting financial acumen, market expan-
sion, and advances in R&D. HBC's sales revenues surged to
NOK 50.8 million and subsequently accumulated to NOK 95.3
million in the first half of the year. Though the cost of sales re-
ached NOK 27.1 million and operating expenses totalled NOK
20.1 million, cautious cost management was instrumental in
containing operational losses, culminating in an EBITDA from
ordinary operations of NOK -5.2 million, compared to -18.3 mil-
lion in the second quarter of 2022.
Despite challenges from supply limitations of salmon off-cuts
in the quarter, HBC exhibited resilience, yielding a notable 100
% year-on-year rise in quarterly revenue that exceeded the ben-
chmark of 50 million. HBC's ingredients segment generated of
NOK 38 million in revenue, attesting to the effective establish-
ment of exclusive, premium ingredients. Added to this was a
significant increase in gross margins of 44 %, a commendable
rise from the previous year's 34 %.
Our dedicated focus on R&D led to our first spin-out of a sepa-
rate company, HBC Immunology LLc (HBCI) in the US during
the second quarter. This company will continue its work on
prostate cancer as a separate entity and will have access
to external funding separate from HBC. The presentation
of the paper "Development of a Natural Protein Hydrolysate
Supplement" at the esteemed Multinational Association of
Supportive Care in Cancer (MASCC) meeting underscored the
therapeutic potential of ProGo in addressing muscle atrophy
in cancer cachexia and age-related muscle wasting. The su-
ccessful completion of preclinical trials for MA-022, targeting
eosinophilic conditions, marked a significant stride towards
potential drug treatments. The successful spin-out resulted
in HBC recognising NOK 23.5 million in revenue from sale of
patent assets in the second quarter.
Additionally, ongoing clinical trials for ProGo and CalGo pro-
mise insights into gastrointestinal health, metabolism enhan-
cement, and skeletal fortification. Investigations into immune
health showcased OmeGo softgels' proficiency in inflammati-
on resolution, indicating a promising avenue for immune reju-
venation. Collaborative studies highlighting ProGo's benefits in
skin health and hemoglobin levels attest to HBC's interdiscipli-
nary approach to healthcare innovation.
Third quarter
Further exciting progress was made in the third quarter. The
gross operating revenues in the quarter was NOK 50 million,
marking a forty percent increase compared to the same period
last year. This success is largely attributed to our market per-
formance and the positive trajectory of our Finished Goods bu-
siness, which has reported sales of NOK 11m. While this figure
may seem a step down from the previous quarter, it signifies
a 20 percent growth year-on-year, showcasing the resilience
and strength of our Brilliant™ brand. HBC sales and marketing
efforts yielded robust results and attendance at various shows
and conferences both improved our presence in the global are-
na and the relationships with key partners.
Our dedication to financial prudence has also paid off, with
net cash burn improving every quarter. Notably, our operati-
onal cash flow for Q3 was a positive NOK 11m, a significant
improvement from the second quarter.
On the research front, our R&D team deserves commendation
for successfully completing the recruitment for our bone he-
alth trials. Our focus on research and development is a testa-
ment to our commitment to advancing the health and wellness
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In the Consumer and Pet Health sector, collaborations with
Stanford and ongoing clinical trials demonstrate the potential
of SPHi peptides in gastrointestinal health, ProGo® peptides
for improved body composition, CalGo® for bone and joint
health, and OmeGo® softgels for immune health. The resear-
ch extends to addressing conditions like inflammatory bowel
disease, osteoarthritis, and restless leg syndrome, showca-
sing HBC's dedication to advancing healthcare solutions with
a focus on IP protection and potential novel therapies. The
R&D team's comprehensive efforts position HBC as a leader
in the industry, with numerous studies anticipated to provide
valuable insights and contribute to the company's long-term
success.
Days after year-end, on January 4th 2024, Hofseth Internatio-
nal invested in HBC through a new class of preference shares,
settled by converting NOK 144 million of debt. This demon-
strated our commitment to financial stability and growth and
transaction resulted in a strong financial position for HBC.
Financial results
Revenues and profits
The Group generated gross operating revenues of NOK 218.5
million in 2023, including gain on sale of assets of NOK 23.6
million, up from NOK 120.5 million in 2022. Correspondingly,
the parent company had gross revenues of NOK 218.4 million
including asset sale in 2023, up from NOK 120.0 million in
2022.
Operating costs, excluding depreciation and amortization
amounted to NOK 284.6 million in 2023, compared to NOK
218.7 million in 2022. For the parent company operating
expenses amounted to NOK 272.7 million in 2023 compared
to NOK 206.6 million in 2022. The expenses are mainly cost
of sales, salaries and other operating expenses.
The Group had an operating loss of NOK 102.5 million in
2023, compared with a loss of NOK 128.6 million in 2022.
Correspondingly, the parent company had an operating loss
of NOK 86.4 million compared to NOK 112.6 million in 2022.
Net financial result was NOK -4.2 million in 2023, compared
with NOK -8.8 million in 2022. Net financial result for the
parent company was NOK -6.6 million and -6.8 million in 2023
and 2022, respectively.
The Group had a loss before tax of NOK 106.7 million in 2023,
compared to a loss of NOK 137.4 million the year before. For
the parent company the loss before tax was NOK 93.0 million
in 2023, compared to NOK 119.4 million in 2022.
The group had a tax expense of NOK 0.0 million in both
2023 and 2022. The Group has not recognized any deferred
tax assets. Net loss for the year was NOK 106.7 million,
compared with a net loss of 137.4 million in 2022. The
parent company had a net loss of NOK 93.0 million in 2023,
of our customers.
Further highlighting our growth trajectory in 2023, we welco-
med several new team members to HBC this quarter. Their
diverse expertise spans from administration to international
sales.
A noteworthy achievement this quarter was also the success-
ful external funding of our spin-out company, HBCI, now va-
lued at NOK 225 million. With the increased valuation, HBC
registered an income from associated companies of NOK 5
million in the quarter.
Fourth quarter
In the final quarter of the year, we cemented the new level of
sales by reaching NOK 46 million for the quarter, a 26 % in-
crease YoY, contributing to a total annual revenue of NOK 190
million, a substantial growth of NOK 70 million compared to
2022. This success is attributed to strategic international pro-
motions focusing on our unique ingredients grounded in sci-
ence and circular economy principles, enabling us to penetrate
high-value human and pet markets.
Demand for HBC's oil and PHP products exceeded production
capacity and market expansion was evident, adding new co-
untries, market segments, and clients to our human nutrition
portfolio.
In the Consumer and Pet Health sector, Q4 showcased R&D
completion for new pet products and a new recyclable bottle/
pump. Despite regulatory constraints in China, B2C achieved
a 40 % YoY growth, reaching NOK 46 million in revenue. The
Brilliant™ Salmon Oil remains a significant driver of sales and
cash margin, with plans for over 50 % of total sales revenue to
come from e-commerce in 2024.
HBC's R&D division achieved significant milestones across
various projects towards the year end. Notable achievements
include the development of a protocol to assess undenatured
collagen levels in salmon bone powder and the ongoing explo-
ration of ProGo® peptides' bioactivity, revealing GLP-1 and GIP
agonist activity that may contribute to the weight loss profi-
le. Additionally, HBC's paper on the effects of SPH1 against
muscle atrophy was submitted for presentation at the Annual
Multinational Association of Supportive Care in Cancer mee-
ting in June 2024.
Clinical trials for OmeGo in allergic asthma and the lead drug
candidate MA-022s in eosinophilic asthma showed promising
results, with MA-022s demonstrating impressive activity in re-
ducing key asthma-related changes. The ongoing bone health
trial with CalGo® and the assessment of ProGo®'s potential
cognitive health benefits in collaboration with Shanxi Medical
University further underscore HBC's commitment to innovati-
on.
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Cash flows
The group's cash flow from operating activities amounted to
NOK 2.8 million in 2023, compared to NOK -45.2 million the
year before. The parent company had a positive cash flow of
NOK 15.3 million compared to negative NOK 45.2 million the
year before.
Net cash flow from investing activities amounted to NOK -15.0
million, compared to NOK -17.8 million in 2022 for the group.
In the parent company, cash flow from investing activities was
NOK -15.0 million in 2023 compared to NOK -17.3 million in
2022.
Net cash flow from financing activities amounted to NOK 3.7
million in 2023, compared to NOK 45.5 million the year before.
Corresponding figures in the parent company were NOK -8.9
million in 2023 and NOK 45.4 million in 2022. The company
completed a share issue in 2022, but did not issue any shares
in 2023.
Going concern
In accordance with the accounting act § 3-3a we confirm that
the condition for continued operations is present and that the
annual report have been prepared based on the going concern
assumption.
The company has a credit facility of 67 million, whereas 38.6
million is available as of the end of the year. Additionally, the
board has been authorized by the general meeting held on 28
April 2023 to issue up to 79,016,200 new shares. These autho-
rizations are intended to be utilized in case the parent compa-
ny requires additional equity and liquidity.
As of 31 December 2023, the parent company was in breach
with its loan agreement covenants, but the breach was repai-
red on 4 January 2024 following the General meeting resoluti-
on whereby accounts payables of 144 million were converted
into new Class B shares in HBC. As of the date of this report,
the Company is not in breach with any covenants or loan con-
ditions. Refer to note 16 for more details on the group's and
the parent company's interest-bearing debt conditions, as well
as note 18 for information on liquidity risk and maturity stru-
cture of the group's liabilities.
The operations of the Group are subject to uncertainty with
respect to its ability to sell products at favourable margins
and maintain adequate cash reserves. While the Company
has recently achieved higher margins and improved cash flow,
the Board of Directors remains vigilant about reviewing the
Company's equity and cash balance. If additional resources
are needed to ensure continuity of operations and support
planned activities aimed at generating positive cash flow and
profitability, the Board will consider appropriate measures
such as obtaining loans or equity. The current outlook indica-
tes a positive trend, and the Board will take necessary steps to
sustain this momentum. If the group and the parent company
compared to NOK 119.4 million in 2022.
Financial position
As of 31 December 2023, Hofseth BioCare had a total
consolidated balance sheet of NOK 390.1 million, down from
NOK 411.0 million at the end of 2022. The parent company
had a balance sheet total of NOK 396.7 million compared to
NOK 402.6 million in 2022.
Equity amounted to NOK 41.1 million at the end of 2023,
which corresponds to an equity ratio of 10.5 %. At the end of
2022, the group had a total equity of NOK 148.0 million and
an equity ratio of 36.0 %. The parent company had equity of
NOK 74.6 million at the end of 2023, compared to NOK 167.8
million the year before. The equity ratio was correspondingly
18.8 % in 2023 and 41.7 % at the end of 2022 in the parent
company. The equity ratio was significantly improved 4 days
after the balance sheet date following the investment made
by Hofseth International.
As of 31 December 2023, the group had cash and cash
equivalents of NOK 23.9 million, compared to NOK 32.4
million at the end of 2022. The parent company had NOK
22.7 million in cash and cash equivalents at the end of 2023,
compared to NOK 31.3 million in 2022. NOK 28.4 million of
its credit facility was drawn up as of year-end.
At the end of 2023, the group had NOK 0.3 million in long-
term interest-bearing debt and NOK 28.9 million in short-
term interest-bearing debt following the draw-down on a
credit facility, compared to NOK 0.8 million and NOK 0.5
million at the same time the year before, respectively. The
parent company had NOK 0 million and NOK 28.4 million
in long-term and short-term interest-bearing debt in 2023,
respectively. At the end of 2022, the long-term interest-
bearing debt was NOK 0.0 million and NOK 0.0 million short-
term.
The group has interest-bearing lease obligations of NOK
96.8 million for long-term lease obligations and NOK 10.8
million in short-term lease obligations at the end of the
year, compared to NOK 90.0 million and NOK 12.9 million at
the end of 2022. The parent company has interest-bearing
lease obligations of NOK 80.2million and NOK 9.0 million in
short-term lease obligations at the end of 2023, compared
to NOK 72.5 million and NOK 10.1 million at the end of 2022.
Other current liabilities at year end 2023 were NOK 157
million, including payables to Hofseth International of NOK
144 million which were converted to shares after the balance
sheet date.
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do not achieve planned market measures adequately, new loan
facilities or share issues will be established in 2024. Due to the
factors described above, there is uncertainty for the Company
to continue as a going concern over the next 12 months.
Assuming a going concern, the group's and the parent compa-
ny's assets and values are currently present. However, the va-
lue of some of the group's and the parent company's assets
may be lower than their carrying amounts in a potential forced
sale related to liquidation. This uncertainty is primarily related
to the value of intangible assets, fixed assets, financial assets,
and investments, as well as the value of inventories.
Allocation of earnings
Net loss for the parent company Hofseth BioCare ASA is NOK
-93.0 million in 2023. The board proposes the following alloca-
tion of the loss:
Uncovered loss - 93.0 million
Totalt - 93.0 million
Risk and risk management
Risk management
The industry in general is subject to several risk factors. Alt-
hough these are particularly associated with the production
process, also conditions to external suppliers, customers, re-
gulatory provisions, as well as general market trends are es-
sential.
All these risk factors may have a negative impact on the
Group's business, financial condition, results and ability to exe-
cute projects. Some of the main risk factors facing the Group
are briefly described below. We also refer to note 18 «Financial
Risk Management» in the financial statements.
Operational risk
The biotechnology industry is characterized by integration and
interdependence between different steps in the production
process. In Hofseth BioCare, there is a high degree of integrati-
on between the various stages of production. Any interruption
in one production stage can therefore result in all or part of the
production stopping. Hofseth BioCare has installed compre-
hensive monitoring and employees work continuously to op-
timize the processes to maximize operational continuity. Sig-
nificant improvements in the production lines in recent years
have given the company better opportunities for continued
production if one of the components stops. Several contingen-
cy measures have also been implemented, ensuring continued
operation in the event of any interruption of critical functions,
and this work has a high priority and is monitored in real-time.
A competent workforce is an important factor in the work of
ensuring continuity in production. Hofseth BioCare's employe-
es have extensive experience and competence in the compa-
ny's machinery and technology. New employees undergo trai-
ning and education to gain the necessary expertise.
The group's production processes are mainly located in the
Midsund plant and downtime at this plant can have a signifi-
cant impact on the company's revenues.
Market risk
Hofseth BioCare reduces its market risk through diversifying
its geographical and market presence, as well as different
market segments. Our distributors are present in more than
60 countries and know their respective local markets, enabling
them to identify the factors that are important to ensure that
Hofseth BioCare can sell products to end customers in diffe-
rent parts of the world. Consequently, in addition to selling in
broad geographic areas such as Europe, North America and
Asia, the company offers its products to various segments
of the human nutrition market (sports nutrition, supplements,
and health food), as well as to nutrition markets for the pet
and feed industry. This diversification strategy allows Hofseth
BioCare to reduce its dependence on one market segment and
geographical area.
Foreign exchange risk
Hofseth BioCare trades in several currencies, but mainly in US
dollars and Euros. Fluctuations in exchange rates can have
an impact on the company's operations, results and financial
position. Hofseth BioCare will not engage in currency specula-
tion and through currency hedging, the company can reduce
this risk with more predictable cost and revenue streams.
Interest rate risk (own financing, deposits)
Changes in general interest rates could affect the company's fi-
nancing and may have an impact on costs. Changes in interest
rates may also affect the value of the company's assets.
Credit risk
To minimize the risk of losses on receivables, customers' cre-
ditworthiness is assessed on an ongoing basis. Receivables
from all customers must be credit insured through Coface
Norway or through up-front cash payment before shipping of
goods.
Hofseth BioCare’s marketing and distribution strategy is to
seek collaboration with medium to large business associates
who have extensive knowledge of their markets. This often
implies well-established, solid companies with high credit ra-
tings.
Financial and liquidity risk
The Group manages its liquidity risk by striving to have suffi-
cient cash, and credit lines in banks. Moreover, preparing and
monitoring forecasts monthly to keep track of actual cash
flows.
Hofseth BioCare had cash and cash equivalents totalling
NOK 23.9 million at the end of 2023, compared with NOK
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32.4 million at the same time the year before. Cash and cash
equivalents largely consist of cash and bank deposits. In ad-
dition, the company has a credit facility of NOK 67 million.
Risk insurance
Although Hofseth BioCare seeks to reduce the impact of ad-
verse events using its risk management system, a certain bu-
siness risk remains which cannot be eliminated through pre-
ventive measures. The company covers such risks to a certain
extent through our insurance policies. The Hofseth BioCare
insurance portfolio is covering areas such as business inter-
ruption, damage to equipment and property, third party liability
and other risks, product liability insurance, board of directors
liability insurance, as well as various types of personnel insu-
rance.
Organization
Hofseth BioCare AS was founded in 2009, with the
conversion to a publicly listed company (ASA) in 2011. At
the end of 2023, Hofseth BioCare Group had a total of 69
employees.
Working environment
The group's working environment is considered good. The Bo-
ard emphasizes great importance and priority to reduce ab-
senteeism and preventing injuries. One work-related accident
occurred during the year that resulted in absence. Long-term
absence in 2023 was 2.32%, compared to 2.65 % in 2022, short-
term absence was 1.55 %, compared to 1.63 % in 2022.
Total absence was 3.87 % in 2023. Risk analysis is the basis
for measures to be taken to prevent damage or other adverse
events to occur. This is a key element in Hofseth BioCare's work
with HSE. Understanding risk is essential to prevent dangerous
situations. This will be handled continuously and HSE training is
considered good. Risk analysis work is being followed up conti-
nuously. If HSE non-conformities occur, measures will be put in
place to prevent such non-conformities from happening again.
Further training on preventive measures, food safety procedu-
res and emergency drills were initiated during 2023.
Hofseth BioCare has a partnership with Medi3 who takes care
of occupational health in the Group. All employees will also in
2024 undergo a medical examination. For HBC Berkåk AS an
occupational health agreement has been established with Fal-
ck. This is a requirement for all companies that belong to our in-
dustry group ref. Section 13 of the Regulations for organization,
leadership, and participation.
Injury and illness absence Berkåk
2023
Midsund
2023
Adm.
2023
Group
2023
Total absence (%) 2.94 5.09 1.24 3.87
Total working hours (all) 14 831 69 935 27 182 111 948
-specification:
Short term absence (%) 1.43 1.85 0.83 1.55
Long term absence (%) 1.51 3.23 0.41 2.32
Number of injuries 0 1 0 1
Number of work-related accidents 0 3 0 3
Equality
Hofseth BioCare aims to practice equality and avoid
discrimination in all aspects of our HR and recruitment policies.
Hofseth BioCare actively works consciously to equally promote
recruitment of female and male managers and employees.
At the end of 2023, 17 of 69 employees in Hofseth BioCare
were female, 2 of 5 members of the management team were
female, and on the Board of Directors, 3 of 6 members were
female.
Environment
Hofseth BioCare is working to reduce its environmental impact
in several areas. The main environmental impact is related to
the plant in Midsund. The emissions are mostly associated
with the production process which incur some emissions to
air and sea, although we aim to always satisfy the restrictions
for such emission. Hofseth BioCare is also working on minimi-
zing its total energy consumption.
All organic material that has not been heat-treated goes
through a treatment plant and is treated with acid with the
right pH and holding time before it is discharged into the sea.
Hofseth BioCare has routines for sampling and measurement
of wastewater to be within the imposed requirements.
All waste from the production at Midsund are sorted and deli-
vered to recycling, or disposal as hazardous waste.
Organic waste from the process is delivered to approved ma-
nufacturers of biogas. Residual waste is collected in a sepa-
rate compactor and delivered to the incinerator. Plastic, card-
board and paper are sorted and delivered to recycling. Waste
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description of how Hofseth BioCare follows the recommenda-
tion and the 15 provisions, can be found on http://www.hof-
sethbiocare.no/investors/cg/.
Outlook
Hofseth BioCare enters into 2024 with a commitment to
further build upon the sustainable business model that is in
our mission statement so that we can accomplish our vision
which is to improve lives through marine nutrition. Our strong
confidence is based on our accomplishments and strategic
goals that we reached in 2023 and our belief in our offering.
Throughout 2023, HBC demonstrated strong sustainable
growth, achieved significant market expansion, and remained
true on our pursuit of advancing health and wellness through
innovative research and building good business practices. As
we look ahead to 2024 and beyond, several key strategic prio-
rities will guide our efforts.
HBC will continue to prioritize market expansion, leveraging its
diverse portfolio of traceable marine ingredients and finished
products. With a focus on high-value human and pet markets,
we hope to penetrate new territories, segments, and client re-
lationships. This will be supported by targeted international
promotions and strategic e-commerce initiatives, continu-
ed partnership work with DKSH and IMCD, aligning with our
overarching goal of sustainable growth and global reach.
The cornerstone of HBC's success lies in its unwavering
commitment to R&D. Collaborating with esteemed institutions
and research partners, such as Stanford, we will advance our
understanding of the therapeutic potential of our products
across various health domains. Clinical trials and ongoing stu-
dies will provide valuable insights, paving the way for novel
therapies and new health claims on top of what we already
have built. By remaining at the forefront of healthcare innova-
tion, HBC aims to drive positive impact and improve patient
outcomes worldwide.
With a strengthened financial position following the invest-
ment made by Hofseth International in preference shares, HBC
is poised for sustainable growth and financial stability in 2024.
HBC targets a further 50 % growth in sales following new sales
initatives and employees as well as higher capacity utilization
through new raw material access. This may enable us to de-
liver a positive EBITDA. Our commitment to prudent financial
management and long-term value creation for our stakehol-
ders remains. Reference is made to going concern section.
Innovation remains a key driver of differentiation and market
leadership for HBC. We will continue to invest in product de-
velopment, with a focus on addressing evolving consumer
needs and environmental considerations. From recyclable
from our laboratory is collected and delivered in special contai-
ners as special waste. Steel and electric waste is delivered to an
approved landfill.
Hofseth BioCare transports mainly by road and sea. This applies
to both inbound transport of raw materials and outbound produ-
cts to our customers around the world. Through the optimization
of transport and raw material sourcing within Møre og Roms-
dal, the group aims to reduce the need for long-haul operations.
Transport of finished products are mainly to Europe, Asia and the
United States. For Europe, transport by road, by railway, or sea.
To the United States and Asia we transport by sea. The group in-
tends to transport more goods by rail and boat if solutions for
such transport can compete with road transport regarding speed
and infrastructure.
Corporate social responsibility
See separate ESG report prepared about the strategy to take an
active responsibility around our business. This is published on
the company`s webpage at the date of publication of the Annual
report.
Transparancy act
The company will publish a seperate report on the company`s we-
bpage before 30.06.2024.
Shareholders
At the end of the year the company had 1,475 shareholders. For
further details about the shareholders, see note 24 to Hofseth
BioCare ASA's financial statements. The company has no provisi-
ons restricting the right to sell the Company's shares.
Related parties
Related party transactions are made on commercial terms in
accordance with the «arm's length» principle. A complete and de-
tailed overview of transactions with related parties is included in
note 6 to Hofseth BioCare ASA's financial statements.
Corporate governance
Hofseth BioCare ASA aims to maintain a high standard of corpo-
rate governance. A healthy corporate culture is the key to retain
confidence in the company, ensuring access to capital and en-
suring a high degree of value creation over time.
All shareholders are treated equally and there should be a clear
divide of roles and responsibilities between the Board and mana-
gement. Hofseth BioCare follows the Norwegian Code of Practice
for Corporate Governance of 30 October 2014. A more complete
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Hofseth BioCare ASA Board of Directors,
Ålesund, 18April 2024
Roger Hofseth Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Jon Olav Ødegård
Board member CEO
packaging solutions to new formulations targeting prevalent
health conditions for humans and pets, our dedication to pro-
duct excellence and sustainability will remain unwavering.
We recognize the importance of global partnerships and
collaborative initiatives in driving forward our mission. By
fostering alliances with leading research institutions, uni-
versities, and healthcare professionals, we aim to continue
healthcare innovation and knowledge exchange. In addition
to the spin-out of patents to HBCI during 2023, and potential
new spin-offs in the future, collaborative efforts will focus on
addressing critical health challenges and advancing health-
care solutions with a global impact. New medical lead spin-
out candidates will come to leverage on external funding and
expertise to create more value for our shareholders.
HBC remains committed to further growth, based on a busi-
ness model highly focused on sustainability and circular eco-
nomy. With a dedicated team, a diverse portfolio of products,
and a clear strategic vision, we are well-positioned to achieve
new heights of success and make a meaningful impact in
the global healthcare landscape. We are here to transform
fresh marine products into high value nutrition, founded on
real sustainability.
17
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Content
CHAPTER 3
Financial statements 18
Statement of comprehensive income 20
Statement of financial position 21
Statement of cash flows 23
Statement of changes in equity 24
Notes to the accounts 25
Note 1: Accounting policies 25
Note 2: Accounting estimates and management judgement and assumptions 33
Note 3: Segment information 34
Note 4: Cost of sales and other operating expenses 35
Note 5: Employment costs and expenses for employees and
benefits for senior employees 36
Note 6: Related party transactions 37
Note 7: Financial income and expenses 39
Note 8: Income taxes 40
Note 9: Earnings per share 40
Note 10: Intangible asset 41
Note 11: Fixed assets 43
Note 12: Leases 44
Note 13: Changes in liabilities from financial activities 46
Note 14: Fair value measurement 47
Note 15: Financial assets 48
Note 16: Interest-bearing debt and borrowings 49
Note 17: Financial assets and liabilities by category 50
Note 18: Financial risk management 51
Note 19: Inventory 54
Note 20: Trade receivables and other current receivables 55
Note 21: Cash and cash equivalents 56
Note 22: Equity investments 56
Note 23: Accounts payable and other short-term liabilities 57
Note 24: Share capital, shareholders and dividends 58
Note 25: New accounting standards with future effective date 59
Note 26: Subsequent events 59
Declaration of the Board of Directors and Managing Director in Hofseth BioCareASA
60
19
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
Operating revenues and expenses
Sales revenues
3, 6 190 815 119 128 190 720 118 815
Gain on sale of assets
3, 6 23 637 0 23 637 0
Other income
3 4 059 1 320 4 061 1 144
Total operating revenue 218 511 120 448 218 418 119 959
Cost of sales
2, 4, 6 150 686 91 934 149 196 90 785
Salaries and other payroll expenses
5 58 275 57 043 51 659 47 206
Other operating expenses
4, 6, 14 75 665 69 677 71 821 68 617
Depreciation and Write-downs
10, 11, 12 36 413 30 412 32 188 25 965
Operating profit/loss (EBIT) -102 529 -128 618 -86 445 -112 614
Profit/loss(-) from associated company
22 2 541 -204 0 0
Financial income
7 6 597 4 568 7 933 4 768
Financial expenses
6, 7, 12, 22 13 293 13 136 14 484 11 522
Net financial expenses
15, 18 -4 155 -8 772 -6 551 -6 754
Loss before taxes -106 684 -137 390 -92 996 -119 367
Tax expense
8 0 0 0 0
Net loss for the period
2 -106 684 -137 390 -92 996 -119 367
Other comprensive income and costs 0 0 0 0
Total comprehensive income -106 684 -137 390 -92 996 -119 367
Comprehensive income attributable to:
Shareholders in HBC ASA -106 683 -137 389
Non-controlling interest -1 -1
Total -106 684 -137 390
Earnings per share (NOK) 2023 2022 2023 2022
Basic earnings per share
9 -0.27 -0.37 -0.24 -0.32
Diluted earnings per share
9 -0.27 -0.37 -0.24 -0.32
1 January – 31 December
Hofseth BioCare ASA
Statement of comprehensive income
20
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
ASSETS
Non-current assets
R&D, patents etc.
2, 10 55 284 60 588 55 284 60 588
Total intangible assets 55 284 60 588 55 284 60 588
Machinery and equipment
11 52 775 57 836 48 135 51 697
Right of use assets
12 109 638 108 366 90 762 87 266
Fixtures and fittings
11 3 290 2 592 3 290 2 579
Total fixed assets
2 165 703 168 794 142 187 141 542
Investment in subsidiary
7, 22 0 0 11 231 11 231
Investment in affiliated company
22 37 691 5 559 33 033 6 517
Non-current financial assets
15 439 340 439 340
Total non-current financial assets 38 130 5 900 44 703 18 089
Total non-current assets 259 116 235 282 242 174 220 219
Current assets
Inventory
2, 6, 19 82 542 116 525 81 439 115 983
Trade receivables
2, 6, 20 14 849 14 072 14 094 13 803
Other current receivables
5, 20 9 721 12 724 36 259 21 301
Cash and cash equivalents
21 23 890 32 427 22 751 31 335
Total current assets
14, 15 131 003 175 748 154 543 182 423
Total assets
2, 25 390 119 411 030 396 716 402 642
Statement of financial position
1 January – 31 December
Hofseth BioCare ASA
21
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Hofseth BioCare ASA Board of Directors,
Ålesund, 18April 2024
Roger Hofseth Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Jon Olav Ødegård
Board member CEO
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
EQUITY AND LIABILITIES
Equity
Paid in equity
Share capital
5, 24 3 951 3 951 3 951 3 951
Share premium 37 876 144 765 70 661 163 872
Other paid in equity 0 0 0 0
Total paid in equity 41 827 148 716 74 612 167 823
Retained earnings
Other paid in equity 0 0 0 0
Total retained earnings (+) Uncovered loss (-)
(attributable to equity holders of the parent)
Non-controlling interests
22 -687 -686 0 0
Total equity
2, 6 41 140 148 030 74 612 167 823
Non-current liabilities
Interest-bearing loans and borrowings
6, 13 271 812 0 0
Lease liabilities
6, 12, 13 96 831 89 960 80 248 72 492
Total non-current liabilities
16, 17, 18 97 102 90 772 80 248 72 492
Current liabilities
Interest-bearing loans and borrowings
6, 16, 13 28 893 540 28 353 0
Lease liabilities
6, 12, 13 10 794 12 855 8 950 10 055
Trade payables
6, 23 55 161 145 752 49 037 140 551
Other liabilities
23 157 029 13 081 155 518 11 720
Total current liabilities
16, 17, 18 251 877 172 228 241 857 162 327
Total liabilities
14, 16, 18 348 979 263 000 322 104 234 819
TOTAL EQUITY AND LIABILITIES
2, 25 390 119 411 030 396 716 402 642
22
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
Cash flow from operating activities
Loss before tax -106 684 -137 390 -92 996 -119 367
Paid tax
8 0 0 0 0
Gain on sale of assets
22 -23 488 0 -23 488 0
Depreciation and impairment
2, 10, 11, 12 36 413 30 412 32 188 25 965
Result from associated company
22 2 541 -204 0 0
Change in inventory
19 33 983 -25 712 34 544 -25 739
Change in trade receivables
20 -777 -3 983 -291 -3 833
Change in trade payables
23 -90 591 70 355 -91 514 67 844
Change in other accruals 141 870 11 400 149 260 1 653
Items classified as financing activities 9 493 9 954 7 626 8 359
Net cash flows from operating activities 2 761 -45 168 15 328 -45 118
Cash flow from investing activities
Aquisition of tangible fixed assets
11 -8 194 -4 020 -8 187 -3 534
Gain on sale of fixed assets 685 0 685 0
Investment in associated company -1 615 0 -1 615 0
Investment in intangible assets
10 -5 868 -13 758 -5 868 -13 758
Net cash flow from investing activities -14 992 -17 778 -14 985 -17 292
Cash flow from financing activities
Proceeds from issue of shares 0 70 777 0 70 777
Transaction costs on issue of shares -215 -326 -215 -326
Payment of interest
6, 7, 12, 13 -9 493 -9 954 -7 626 -8 359
Proceeds from new borrowings
6, 16, 13 28 353 0 28 353 0
Repayment of borrowings
6, 16, 13 -541 -2 420 0 -1 879
Payment of lease liabilities
6, 12, 16, 13 -13 639 -12 625 -11 230 -9 850
Payment borrowings from subsidiary
23 -771 0 -18 210 -4 976
Net cash flow from financing activities
17 18 3 694 45 452 -8 928 45 386
Cash and cash equivalents at 1 January 32 427 49 921 31 335 48 359
Net change in cash and cash equivalents -8 537 -17 494 -8 585 -17 024
Cash and cash equivalents at 31 December
21 23 890 32 427 22 751 31 335
Statement of cash flows
1 January – 31 December
23
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS)
(Amounts in NOK 1000) Note Share
capital
Share
premium
Other paid
in capital
Uncovered
loss
Non-
controlling
interests
Total
equity
As of 1 January 2022 3 578 137 485 0 0 -685 140 378
Share based payment program
5 0 0 2 773 0 0 2 773
Issue shares 07.07-01.08.2022 373 141 605 0 0 0 141 978
Share issue cost 0 -326 0 0 0 -326
Other changes 0 617 0 0 0 617
Net loss for the period 0 -134 616 -2 773 0 -1 -137 390
Other income and costs 0 0 0 0 0 0
Total comprehensive income 0 -134 616 -2 773 0 -1 -137 390
As of 31 December 2022
2, 5, 24 3 951 144 765 0 0 -686 148 030
As of 1 January 2023 3 951 144 765 0 0 -686 148 030
Share based payment program
5 0 0 0 0 0 0
Share issue cost 0 -215 0 0 0 -215
Other chages 0 9 0 0 0 9
Net loss for the period 0 -106 682 0 0 -1 -106 684
Other income and costs 0 0 0 0 0 0
Total comprehensive income 0 -106 682 0 0 -1 -106 684
As of 31 December 2023
2, 5, 24 3 951 37 876 0 0 -687 41 140
Parent company (IFRS)
(Amounts in NOK 1000) Note Share
capital
Share
premium
Other paid
in equity
Uncovered
loss
Total equity
As of 1 January 2022
2, 5, 24 3 578 139 187 0 0 142 765
Share based payment program
5 0 0 2 773 0 2 773
Issue shares 07.07-01.08.2022 373 141 605 0 0 141 978
Share issue cost 0 -326 0 0 -326
Net loss for the period 0 -116 594 -2 773 0 -119 367
Other income and costs 0 0 0 0 0
Total comprehensive income 0 -116 594 -2 773 0 -119 367
As of 31 December 2022
2, 5, 24 3 951 163 872 0 0 167 823
As of 1 January 2023 2, 5, 24 3 951 163 872 0 0 167 823
Share based payment program
5 0 0 0 0 0
Share issue cost 0 -215 0 0 -215
Net loss for the period 0 -92 996 0 0 -92 996
Other income and costs 0 0 0 0 0
Total comprehensive income 0 -92 996 0 0 -92 996
As of 31 December 2023
2, 5, 24 3 951 70 661 0 0 74 612
Statement of changes in equity
1 January – 31 December
24
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59
THE B
O
ARD
OF
DIRE
CT
OR
’
S
REPOR
T
2
0
2
3
Declaration of the Board of Directors and CEO in Hofseth BioCare ASA
We confirm that the financial statements for the period 1 Jan-
uary to 31 December 2023 to the best of our knowledge, have
been prepared in accordance with IFRS® Accounting Stand-
ards as adopted by the EU / applicable accounting standards
and that the financial statements give a true and fair view of
the Group's assets, liabilities, financial position and results of
operations, and that the annual report gives a fair view of the
financial performance and position of the Group, together with
a description of the main risks and uncertainties faced by the
Group.
Hofseth BioCare ASA Board of Directors,
Ålesund, 18April 2024
Roger Hofseth Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Jon Olav Ødegård
Board member CEO
60
AUDITORS REPORT
Statsautoriserte revisorer
Ernst & Young AS
Thormøhlens gate 53 D, 5006 Bergen
Postboks 6163, 5892 Bergen
Foretaksregisteret: NO 976 389 387 MVA
Tlf: +47 24 00 24 00
www.ey.no
Medlemmer av Den norske Revisorforening
A member firm of Ernst & Young Global Limited
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Hofseth Biocare ASA
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Hofseth Biocare ASA (the Company), which comprise the
financial statements of the Company and the consolidated financial statements of the Company and its
subsidiaries (the Group). The financial statements of the Company and the Group comprise the statement
of financial position as at 31 December 2023, the statement of comprehensive income, statement of cash
flows and statement of changes in equity for the year then ended, and notes to the financial statements,
including material accounting policy information.
In our opinion the financial statements comply with applicable legal requirements and give a true and fair
view of the financial position of the Company and the Group as at 31 December 2023 and their financial
performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as
adopted by the EU.
Our opinion is consistent with our additional report to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Company and the Group in
accordance with the requirements of the relevant laws and regulations in Norway and the International
Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 10 years from the election by the general meeting of the
shareholders on 22 July 2014 for the accounting year 2014.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements and the Board of Director’s report, which
describes that the Company and Group are dependent on increased production and sales with a higher
average price, and or additional capital inflows through loans or equity in 2024 to continue as going
concern. These events or conditions, along with other matters as set forth in note 1, indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for 2023. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
AUDITORS REPORT
62
AUDITORS REPORTAUDITORS REPORT
2
Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
matters to be communicated in our report. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the financial statements.
Allocation of production costs as part of manufacturing cost of finished products
Basis for the key audit matter
The Hofseth BioCare Group had inventory of
TNOK 82 542 and the parent company had
inventory of TNOK 81 439 per 31 December
2023. Four types of finished goods are produced
from a common production process based on the
same input factors. Allocation of production costs
is calculated on the basis of the expected sales
values of the individual finished products
multiplied with the relative share of the
production yield. As the allocation of production
costs involve significant judgement, this was a
key audit matter.
Our audit response
We evaluated the management`s sales values in
the model, by comparing the sales values against
representative prices achieved through sales in
2023. We tested the production yield in the
model against reported numbers from factory,
and production costs in the model against actual
costs. We tested the model for allocation of
production costs being mathematically correct.
We refer to note 2, 3, 6 and 19.
Recognition of intangible assets
Basis for the key audit matter
The Group`s recognized intangible assets was
TNOK 55 284 for group and for the parent
company per 31 December 2023, where
additions related to capitalized development
costs in 2023 were TNOK 5 543 in group and in
parent. Management exercises judgement in
determining when the recognition criteria for the
intangible assets is met. The group start to
capitalize when there is an identifiable intangible
asset or product, which is in the group`s control,
and probable future economic benefits is
expected. Management also exercises
judgement in determining the cost of the product
development to be capitalized. Based on the size
of this year`s additions and the recognition of
developed intangible assets is based on
management`s judgment and assumptions, this
was a key audit matter.
Our audit response
We assessed management`s principles and
assumptions for recognition of development cost
with criteria in IAS 38, especially the criteria for
recognition and the transition from research to
development. We evaluated this year’s
development projects against available
information about the progress of the
development of the product. We compared the
management's assessments of the projects
against the company's strategy and plans.
Further on we tested a sample of all recognized
development cost against underlying
documentation and evaluated if the criteria for
recognition was met. We refer to note 2 and 10.
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AUDITORS REPORTAUDITORS REPORT
3
Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
Other information
Other information consists of the information included in the annual report other than the financial
statements and our auditor’s report thereon. Management (the board of directors and the chief executive
officer) is responsible for the other information. Our opinion on the financial statements does not cover the
other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information,
and, in doing so, consider whether the board of directors’ report, the statement on corporate governance
and the statement on corporate social responsibility contain the information required by applicable legal
requirements and whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that the other information is materially inconsistent with the
financial statements, there is a material misstatement in this other information or that the information
required by applicable legal requirements is not included in the board of directors’ report, the statement
on corporate governance or the statement on corporate social responsibility, we are required to report
that fact.
We have nothing to report in this regard, and in our opinion, the board of directors’ report, the statement
on corporate governance and the statement on corporate social responsibility are consistent with the
financial statements and contain the information required by applicable legal requirements.
Responsibilities of management for the financial statements
Management is responsible for the preparation of the financial statements that give a true and fair view in
accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
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AUDITORS REPORTAUDITORS REPORT
4
Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company and the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with regulation on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Hofseth Biocare ASA we have performed an assurance
engagement to obtain reasonable assurance about whether the financial statements included in the
annual report, with the file name hofsethbiocareasa-2023-12-31-en.zip, have been prepared, in all
material respects, in compliance with the requirements of the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to
Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material
respects, in compliance with the ESEF Regulation.
65
AUDITORS REPORT
5
Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
Management’s responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
Regulation. This responsibility comprises an adequate process and such internal control as management
determines is necessary.
Auditor’s responsibilities
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material
respects, the financial statements included in the annual report have been prepared in accordance with
the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance
Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial
information”. The standard requires us to plan and perform procedures to obtain reasonable assurance
about whether the financial statements included in the annual report have been prepared in accordance
with the ESEF Regulation.
As part of our work, we perform procedures to obtain an understanding of the company’s processes for
preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial
statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL
tagging of the consolidated financial statements and assess management’s use of judgement. Our
procedures include reconciliation of the iXBRL tagged data with the audited financial statements in
human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Bergen, 18 April 2024
ERNST & YOUNG AS
___________________
Jørn Knutsen
State Authorised Public Accountant (Norway)
66
