Board of directors report

Group activities and location

Grieg Seafood ASA (”the Company”) is the parent Company of the Grieg Seafood Group (”the Group”). The Group’s business activities relate to production and trading in the sustainable farming of salmon and trout, and in naturally related activities.

The Group is one of the world’s largest producers of farmed salmon, with a production capacity of around 90 000 tons gutted weight annually. The Group has 100 licenses for salmon production and five licenses for smolt production. The Group shall be a leader in the area of aquaculture. The Group’s commercial development is based on profitable growth and the sustainable utilisation of nature, as well as being a preferred supplier to selected customers.

The Group has operations in Finnmark and Rogaland in Norway, in British Columbia in Canada, and in Shetland (UK). The head office is in Bergen, Norway.

Grieg Seafood ASA has been listed on the Oslo Stock Exchange since June 2007.

Main features of 2014

  • 2014 was characterised by a strong market with high market prices throughout the year, but suspension of trade with Russia has entailed a lower price than expectable towards the end of the year.
  • Production of Pacific salmon is wound up and production is geared towards Atlantic salmon.
  • The production in Grieg Seafood BC has been especially strong compared to 2013. The development at year-end is currently in line with the strategy for normal operation and level of expenses during 2015.
  • A systematic effort is done to reduce the level of expenses through improved sustainable operation and increased utilisation of capacity.
  • Grieg Seafood Finnmark has been awarded 4 green licenses.
  • Selling SalmoBreed shares

Accounts

The consolidated financial statements are prepared in accordance with international accounting principles (IFRS).

Results

The Group had a turnover of MNOK 2 665 in 2014, an increase of 11% compared with the previous year. The total harvest was 64 736 tons glutted weight, an increase of 6 675 tons from 2013, equivalent to an increase of 12%. 2014 was marked by low supply growth and good prices throughout the year. The consequence of Russia’s ban on imports of Norwegian salmon was lower prices than expected towards the end of the year. Higher increased production from Chile has also affected the supply growth and prices at the end of the year. The low harvested volume in BC has affected operating results negatively due to the furunculosis outbreak in 2012.

The operating result before fair value adjustment of biological assets was MNOK 341, compared to MNOK 348 in 2013. The operating result includes a gain on sale of shares at MNOK 63.8, of which selling the SalmoBreed shares makes up 60,3 MNOK. The result is strongly affected by events in Q3. The operating margin before fair value adjustment of biological assets was 12,8% in 2014, against 14.5% in 2013. EBIT per kilo was 5.3 against 6.0 in 2013. The reduction in operating profit compared with 2013 is due to somewhat lower achieved prices throughout the year when compared to 2013, as well as higher costs of harvested fish. The high production costs have persisted in 2014. Feed prices have increased in 2014 due to the development in commodity prices and the weakening of NOK at year-end. Feed prices are sensitive to both marine and vegetable commodity prices, which vary with seasonal harvesting and production conditions. Treatment costs against lice and preparedness to manage and treat the causes of AGD (Amoebic Gill Disease) have entailed persistent high production costs for both Norway and the UK.

The operating result after value adjustment of biological assets was MNOK 214 MNOK against MNOK 616 in 2013. Net financial items showed a loss of MNOK 56 against a loss of MNOK 73 in 2013. Interest expenses are lower than in 2013 due to positive change in the interest rate, even though net interest-bearing debt is higher. The group has had a waiver from the original loan terms on the mortgage debt until Q3 2013. This has resulted in an increased margin. The Group has been in full compliance with initial loan terms throughout 2014, entailing lower interest rates. The Group had a positive net unrealised gain in 2014 of MNOK 46, against MNOK 26 in 2013, due to current loans in GBP and CAD.

Net tax costs for the year was MNOK 23, against MNOK 114 in 2013. The low effective tax rate of 14.2% for 2014 is based on big permanent differences due to gain on sale of shares. When accounting for non-taxable gains on sale of shares, the real effective tax rate is 23.5%. Effective tax rate for 2013 was 20.9%. The Group as a whole has entered into tax position, and at year-end 2014 MNOK 51 (MNOK 1,5 for 2013) has been provisioned for tax payable related to Norwegian operations.

After tax, the Group as a whole recorded a profit of MNOK 138 in 2014, against MNOK 431 in 2013.

Grieg Seafood ASA

The financial statements for the parent company have been prepared in accordance with generally accepted accounting principles in Norway (NGAAP). The Company recorded an operating result for 2014 of MNOK -36 MNOK (MNOK -32). The increase in loss is partly due to exercised options during 2014, at a higher cost than provisioned for, due to increased share price at the date of exercising the options. The Company has provided loans to subsidiaries in foreign currency which carry a positive unrealised net gain of MNOK 121 in 2014, against MNOK 66 in 2013. In 2014 a recognised group contribution of MNOK 34 (MNOK 88) contributes to the positive financial result, in addition to the gain on foreign currency.

The parent company’s profit after tax for the year was MNOK 59 against MNOK 90 in 2013.

Segment report 

Rogaland

Operating profit before fair value adjustment of biological assets was MNOK 77, corresponding to NOK 6.1/kg. The equivalent in 2013 was MNOK 145 (NOK 9.6/kg). The decrease of the result is caused by lower harvesting volume compared to 2013, at 2 310 tons. Most of the harvesting in Rogaland was in the first half of the year. The output price is high due to harvesting of sites with PD (Pancreas Disease) in 2013 and AGD (Amoebic Gill Disease). Harvested volume has also been affected by new cases of PD in 2014, which entailed high extraordinary mortality. The consequence was 4 000 tons lower harvested volume than projected in 2014. PD also led to lower production in sea. In addition, unusually high sea temperatures had a negative impact on growth during the summer. Underlying cost increases, especially regarding feeds, treatment and preparedness to reduce PD, AGD and other biological challenges, lead to increased production costs. Rogaland uses wrasse against sea lice, which has proven to be very effective, making problems with sea lice small in Rogaland.

Finnmark

The operating result before fair value adjustment of biological assets was MNOK 206, corresponding to NOK 7.8/kg. The equivalent for 2013 was MNOK 218 (NOK 9.4/kg). The latest generation of trout in Finnmark was harvested in the first quarter of 2014 on an external harvesting plant, due to lack of export licenses to Russia. This entailed increased harvest costs. Hereafter, Finnmark only produces Atlantic salmon. Finnmark has experienced problems with fish maturation especially in Q3, leading to downgrading and weaker price achievement in Q4. Internal procedures will be amended to avoid similar events in the future. In Finnmark, there was an escape from a site totaling 11 100 fish. A recapture was initiated to minimise biological challenges. GSF continuously strives to improve internal procedures in order to avoid this type of deviations in the future. The production in sea has been satisfactory throughout the year, with the exception of a few sites infected with IPN (Infectious Pancreatic Necrosis).

Finnmark has been awarded 4 green licenses in 2014.

Roy-Tore Rikardsen took office in July 2014 as regional director, succeeding Håkon Volden, who resigned at the same date. Rikardsen has 15 years of experience in aquaculture, the last 6 years as production manager sea at Lerøy Aurora in Troms.

BC

The operating result before fair value adjustment showed MNOK -48, corresponding to NOK

-7.8/kg, against MNOK -8 (NOK -1.2/kg) in 2013. The negative result is due to low harvested volume at 6 257 tons, equalling a reduction of 482 tons from the previous year. In summer 2014, algae bloom in one of the production areas led to increased extraordinary mortality, resulting in 500 tons lower harvested volume than projected, and increased write-down costs due to mortality.

BC used to produce Pacific salmon within a strong supply situation, leading to falling prices and a difficult market. The Pacific salmon has been stored freeze. In 2014, the freeze storage has been subject to write-downs totalling MNOK 22, against MNOK 8 in 2013. The production of Pacific salmon is being wound up in BC, and as from Q4 2015 only Atlantic salmon will be harvested. The proportion of Pacific salmon was 33% in 2014, but it will be substantially lower in 2015 (6%). With the current high prices of Atlantic salmon, profitability is negatively affected by Pacific salmon.

Extensive measures have been taken in the BC young fish plant, which has considerably improved the management and biosecurity at the facility. The measures were implemented in early 2013, and the production in 2014 has been stable with the exception of one outbreak of Furunculosis in Jan 2014, leading to the destruction of smolt and fallowing of the building. Grieg Seafood BC has implemented agreements on external smolt supply to ensure adequate backup of smolts in order to avoid negative output consequences of any new cases of disease in the young fish plant. This creates larger smolt costs than normal and a consecutive need to destroy and write down the backup smolts. Resulting from the backup system on smolt deliveries, Grieg Seafood has released the projected number of smolts and continues to expect a harvesting volume of about 13,000 tons in 2015.

Shetland

In Shetland the operating result before fair value adjustment was MNOK 81, corresponding to NOK 4.2/kg. The equivalent for 2013 was MNOK 27 (NOK 2.1/kg). The improved result is mainly due to increased harvested volume with 6 073 tons from 2013 (46%). In Q2 Ocean Quality UK Ltd. was established and assumed all sales of fish from Shetland, something that also contributed to the raise of margins for the region. The turnaround in Shetland initiated in early 2013 has provided significant improvement both in terms of results and biological situation. Sea lice levels are significantly reduced after implementation, but remain a challenge. The efforts to keep sea lice levels on a satisfactory level have implied high treatment costs. There have been no signs of AGD at any site in 2014. Seals remain a big challenge, as well as gill problems, which have entailed high extraordinary mortality and high write-down costs during the year. The cost level in Shetland remains high. Further measures have been identified and are currently being implemented to improve production and reduce costs in Shetland in the proceeding.

The completion of the new young fish plant is ending and the first delivery of smolt is scheduled for spring 2015.

Ocean Quality AS Group

Ocean Quality AS is the sales company that is owned by Grieg Seafood ASA (60%) and Bremnes Seashore AS (40%). The company was established in 2010 and has its main office in Bergen, Norway. As from the second quarter of 2014 Ocean Quality UK Ltd. was established as a 100% owned subsidiary of Ocean Quality AS. Ocean Quality is a joint venture and its accounts are prepared on the basis of the equity method in the Group. Ocean Quality sells all fish for Bremnes Fryseri AS and for Grieg Seafood Norway and UK. The Group had an average of 30 employees at year-end, of whom 22 men and 8 women.

Ocean Quality Group recorded an operating profit of MNOK 13 in 2014, against MNOK 8 in 2013. Turnover for 2014 stood at MNOK 3 564 against MNOK 2 990 for 2013. Volatile market prices have led to more difficult and variable earning conditions for sales activities towards the end of the year. In addition, a ban on imports of Norwegian salmon to Russia entailed re-allocation of bigger volumes to other markets and lower-than-expected prices in the last quarter of 2014. A larger volume from Chile than expected has also implied somewhat lower prices compared to 2013, but in general, demand has been good in 2014.

Ocean Quality Group´s equity as at 31 December 2014 was MNOK 40 (MNOK 26).

Research and development

Grieg Seafood makes provisions for and utilise substantial funds for research and development each year. This relates to various activities ranging from active participation in steering committees in national research projects to local test and trial projects in the regions. These activities focus on finding solutions to biological and technical challenges both short and long term, which in turn helps us increase the efficiency of daily operation of our plants. The Group is working on many different projects, ranging from improving fish health and welfare, efficient operation of large units, feeding control and optimization of young fish production in large recycling plants.

Balance Sheet

The Group had total assets of MNOK 5 042 as at 31. December 2014, against MNOK 4 591 at year-end 2013. Of this, goodwill accounted for MNOK 1066 and licenses MNOK 109. Investments in tangible fixed assets relate mainly to young fish plant in Shetland and maintenance investments. Fair value adjustment of biological assets was positive due to expected future sales prices that will exceed the accrued production costs.

Group equity at 31 December 2014 stood at MNOK 2 222, against MNOK 1989 at year-end 2013. The equity ratio at year-end 2014 was 44% (43%). Positive earnings in 2014 contribute to the increased solidity.

Funding

The Group’s net interest-bearing debt was increased from MNOK 1 445 to MNOK 1 604 by year-end 2014. This equals an increase of MNOK 159. In June 2014 the Group´s credit facilities were refinanced through a bank syndicate of Nordea and Danske Bank. The new syndicated loan matures in 5 years and comprises a long-term loan of MNOK 900 with 10 years repayment profile, and a revolving credit of MNOK 600. Simultaneously with the draw-up of the new syndicate, the old syndicated loan was repaid by a total of MNOK 1 025 in 2014. When establishing the new syndicated loan the long-term loan of MNOK 900 was established. The revolving credit is utilised with MNOK 200 at year-end. Further drawing rights amount to MNOK 400. The revolving credit of the new syndicated loan is classified as non-current, as there is no appointment to roll over the credit facility once a year. The new term loan has been repaid with MNOK 45 in 2014. The bond loan of MNOK 400 is scheduled for full redemption in December 2015. An effort to renew the bond loan has been initiated. The Group mainly uses finance leasing by investing in new feeding barges and other operational equipment. The Group has a leasing facility of MNOK 350, of which MNOK 290 has been utilised. The Group has been in compliance with all covenants in 2014.

Cash flow

The net cash flow from operations was reduced by MNOK 160 to MNOK 157 in 2014, from MNOK 317 in 2013. The increase in working capital is related to biomass accumulation and increases in accounts receivable, as well as positive earnings from operations in 2014. Net cash flow from investing activities in 2014 was MNOK -234 against MNOK -147 in 2013. Investment payments related to fixed assets amounted to MNOK 312. The equivalent for 2013 was MNOK 164. Net cash flow from financing was MNOK 52 against MNOK -249 in 2013. There has been a net drawdown of debt as mentioned under “Funding”, implying a positive cash flow from financing in 2014 when compared to 2013, when a net repayment was carried through.

For 2014 there was a net change in cash and cash equivalents of MNOK -25. As at 31 December 2014 the disposable cash balance was MNOK 144.

Grieg Seafood ASA

The parent company’s net cash flow from operations was MNOK 106 against MNOK 141 in 2013. The cash flow from investing activities was negative with MNOK 121 against positive with MNOK 52 in 2013. There has been a net positive payment of Group receivables in 2014. Net cash flow from financing activities was MNOK -8 (MNOK -265). In 2014, new long-term debt has been drawn down, and the original interest-bearing loan has been repaid. For 2014 there was a net cash and cash equivalents by MNOK -22.

As at 31 December 2014 the disposable cash balance was MNOK 96.

Going concern assumption

For 2014 the Group achieved a net profit of MNOK 138 after tax. All original loan terms were met throughout 2014, and the Group has honored its debt under the financing agreements. Forecasting is carried out for the next three years, which show a positive and good cash flow based on conservative salmon price estimates.

It is the view of the Board that the financial statements give a true and fair presentation of the Group’s assets and liabilities, financial position and accounting results. Based on the above account of the Group’s results and position, and in accordance with the Norwegian Accounting Act, the Board confirms that the annual financial statements have been prepared on a going concern basis, and that the requirements for so doing are met.

Accounting results and allocations – Grieg Seafood ASA

The Group´s strategy for dividend is that the annual dividend should correspond to around 25% of the Group’s profit after fair value adjustment for biomass and after tax. Due to weak results and ongoing accumulation of working capital there has not been paid dividends since 2011. The Board will propose a dividend of NOK 0.50 per share, corresponding to around 25% of the adjusted profit for 2014. The Board will ask the General Assembly for a mandate to consider a further dividend payment after the second quarter of 2015, above the mentioned NOK 0.50 per share. A further dividend will depend on liquidity and profit.

The parent company, Grieg Seafood ASA, recorded a profit for 2014 of MNOK 59, which the Board proposes to the General Assembly to dispense as follows:

  • Transfer to dividend (NOK 0.50 per share)    MNOK 55
  • Transfer to retained equity                             MNOK   4
  • Total dispensed                                               MNOK 59

Risk and risk management

The Group is exposed to risks in a number of areas, such as biological production, changes in salmon prices, the risk of political trade barriers, as well as financial risks such as changes in interest and exchange rates and liquidity.

The Group’s internal control and risk exposure are subject to continuous observation and improvement, and the work of reducing risk in different areas has a high priority.

The management has set parameters for managing and eliminating most of the risks that could prevent the company from achieving its goals. For further information, we refer to the document of principle relating to corporate governances as practised by Grieg Seafood ASA.

Financial risk

The Group operates within an industry characterised by great volatility which entails greater financial risk. 2014 has been a tight financial market, like it was in 2013, due to financial institutions´ increased demands from external authorities to satisfy their own requirements for solvency and liquidity. This has resulted in less excess liquidity available in the market and increased demands towards the borrowers. Financial and contractual hedging as is a matter of constant consideration, in combination with operational measures. The company draws up rolling liquidity forecasts extending over three years. These forecasts incorporate conservative estimates of salmon prices, and this is used as a basis when calculating the liquidity requirement. It is this forecast that forms the basis of the need for financial parameters. With the financing of the Group at year-end, the level of this risk is considered to be satisfactory. The bond loan is scheduled for refinancing in the course of 2015, and the management has initiated efforts to install a new loan within the first half of 2015. There is always a market risk associated with such a disposition.

The new long-term financing agreement includes a revolving credit facility totaling MNOK 600. It is flexible, as it can be drawn down within 1 month or a longer period, depending on the Group´s need for liquidity. In 2014, drawdowns have been made within a 3 months´ period, corresponding to the period of the interest rate swap agreements. The following sections provide further information about the individual risk areas.

Currency risk

In converting the accounts of foreign subsidiaries, the Group’s greatest exposure relates to CAD and GBP. Our main strategy is to reduce the currency risk by funding the business in the local currency. All long-term loans from the parent company to subsidiaries are in the local currency and loans of this kind are regarded as a net investment, since the loans are not repayable to the parent company. The subsidiaries will always require long-term funding. The currency effect of the net investment is incorporated in the consolidated statement of comprehensive income (OCI).

Income for the Norwegian operation is denominated in NOK, and the translation risk is transferred to the sales company. The case is similar for UK. In the case of BC, income is denominated in USD. In order to reduce the translation risk between USD and CAD forward currency contracts are entered into in order to hedge against volatility. At year-end contracts stretching to June 2015 have been entered into. The currency situation is continuously assessed against the volatility of the currencies. The remaining net exposure is frequently monitored. For further information, refer to Note 3 to the consolidated financial statements.

Interest rate risk

The Group is exposed to interest rate risk through its loan activities and to fluctuating interest rate levels in connection with funding of its activities in all regions.

Most of the Group’s existing loans are based on floating rates, but separate fixed rate contracts have been entered into in order to reduce the interest rate risk. It is group policy to have a certain percentage of the Group’s interest-bearing debt hedged through interest rate swap agreements. A given proportion shall be at a floating rate, while consideration will be given to the use of hedging contracts for the remainder.

Liquidity risk

The Company´s equity has improved in 2014, and interest-bearing debt has increased from 2013, due to a high rate of investing in 2014 and accumulation of biomass. The management monitors the Group’s liquidity reserve which comprises a loan facility and cash, as well as cash equivalents based on expected cash flows. This is carried out at Group level in collaboration with the operating companies. The management and Board seek to maintain a high equity ratio in order to be well equipped to meet financial and operational challenges. Considering the dynamic nature of the industry, the Group aims to maintain flexibility of funding. A refinancing was carried out in June 2014, providing the Group with a significantly increased flexibility and funding of the Group´s expansion plans.

Operating risk

Operating risk was acceptably managed throughout 2014, but the Board recognises the importance of focusing on further improvement related to biological development. Implementing the turnaround in Shetland in 2013 has yielded positive development in 2014. Seal and sea lice remains a challenge in Shetland. Procedures for treatment against lice have been implemented and are continuously monitored. There have been no occurrences of AGD in 2014. BC had an accidental outbreak of Furunculosis in January 2014, but in the following the young fish plant has had a successful production rate. The challenge in BC is low levels of oxygen in the sea, with algae blooming, resulting in high mortality in BC in late summer. The production in BC has otherwise been good. As for Rogaland, high sea temperatures have resulted in low growth rates and outbreak of PD with subsequent high mortality. Finnmark has delivered good production in the course of the year, with an exception of maturing of fish, which resulted in a reduction in quality. Group policy is zero tolerance for escape. There have been three escapes in Finnmark in 2014. Staff training is emphasised in order to achieve improved biological knowledge and internal procedures.

For further information about financial risks (currency, interest rate, credit and liquidity), refer to Note 3 to the consolidated financial statements.

Corporate social responsibility and the environment

The Group´s main cost drivers, risks and opportunities are increasingly connected with managing our impact on the environment, our personnel and the local communities where we operate. Systematic efforts to secure a balanced sustainability are therefore fundamental in order to facilitate a long-term profitable growth. These efforts are increasingly material for the industry´s viability. The Group has in 2013 conducted an assessment in order to accentuate priority areas for sustainability, an assessment which has been further followed up in 2014. Our priorities will ensure that our efforts respond to our main stakeholders´ expectations of us, as well as being resource efficient in terms of our strategy and long-term value creation. The priorities also take into account our long-term liabilities through Global Salmon Initiative. A comprehensive statement of the Group´s approach, efforts, results and ambitions towards sustainability priorities is available in the Sustainability report. The Group´s sustainability priorities treated in the report are divided into three main areas; external environment, working environment, and social relations. Within external environment fish health, sea lice, and escape are focused areas. In the domain of the soft factors, HSE and working environment are priorities. Social relations are divided into three main areas, comprising quality and food safety, the ripple effect in communities, and anti-corruption and integrity.

Employees

Of the Group´s 651 employees at year-end 2014, 341 were in Norway, 222 in Shetland and 88 in Canada. The Board wishes to thank the employees for good work in the past year.

The Group has a majority of male executives and employees. Of the Group’s 651 employees, 523 are male and 128 female. The employee policy is to take the steps necessary to retain and attract qualified personnel of both genders.

Grieg Seafood’s position as an international concern is also reflected in the fact that 36 different nationalities are represented in the Group’s workforce. A total of 173 employees originate from a country different from the country where they work. The Group accepts no kind of discrimination related to gender, religion, cultural or ethnic background, disability, or in any other way. Our aim is to conduct our activities on the basis of equality and respect. Regarding human rights and equal treatment, the Group is not exposed to substantial risk. A focused effort is made to secure equal treatment and to avoid discrimination.

The incidence of short-term sick leave within the Group was 3.57% while the figure for long-term sick leave was 2.0%. For further information, refer to the Sustainability report, in the section about employee safety and working environment.

All management of human resources is managed locally according to local rules and instructions, and in accordance with Group guidelines. The working environment in the Group is considered satisfactory, at the same time as we work actively to reduce sick leave and injury.

Grieg Seafood ASA

The parent company had 14 employees in its main office in Bergen, of which five men and a woman in senior positions. Short-term sick leave in the parent company was 0.84%, while long-term sick leave was 0.0%. No injuries/accidents were registered in the Company in 2014. The Company does not pollute the external environment.

Corporate Governance

The activities of Grieg Seafood ASA are conducted in accordance with Norwegian law and regulations for good corporate governance (Norwegian Corporate Government Board’s Code of Practice). The Company seeks to comply with all relevant laws and regulations and the Norwegian Code of Practice for Corporate Governance. This also applies to all other companies which are controlled by the Group. The document of principle which is enclosed along with the Annual Report therefore applies to all companies of the Group, in as far as it goes.

Statement from the Board of Directors and CEO

We hereby confirm that the financial statements for the period from 1 January to 31 December 2014 to the best of our knowledge have been prepared in accordance with applicable accounting standards and give a true and fair view of the Group and of the Group’s assets, liabilities, financial position and overall results. We also confirm that the Directors’ Report gives a true and fair view of the development and performance of the business and the position of the Company and the Group, as well as a description of the principal risks and uncertainties facing the Company and the Group.

Post-balance sheet development

At the beginning of 2015 the price level was relatively high, but the first quarter has shown high volatility in the prices. This is partly due to harvesting caused by MTB (maximum permitted biomass), when the industry in Norway was temporary granted increased MTB, running through Q1 2015. Furthermore, the winter has been relatively mild, which has also contributed to increased production. The suspension of the Russian market still affects the price negatively. This effect will diminish in the future. The total supply growth expected in 2015 is still lower than the historical growth in demand. A continued weak NOK is also expected to contribute to higher prices in Europe and the USA. But the volatility in currency markets remains high.

Ocean Quality expands its sales to include Grieg Seafood’s fish in BC. This is implemented from and including 2015. Ocean Quality North America Inc. is 100% owned by Ocean Quality AS.

The biological situation has been good at the beginning of 2015. This is especially true for BC and Finnmark. Bad weather conditions in Shetland has incurred some lost feeding days. 

Outlook

The fish farming industry is very volatile and it will always be considerable uncertainty when projecting for future conditions. The consequence of Russia’s ban on imports turned into a bigger effect towards the end of the year, with lower prices than expected in the fourth quarter. The result is a continued re-allocation of bigger volumes to Europe and Asia. The weak economy of Russia has changed consumer patterns, which in the long run can imply bigger uncertainty for the European market on supply growth. The Chilean volume has increased more than expected and Chile has returned more rapidly with a high volume. At the same time, individual consumers in the US experience a better economic situation, which may provide higher demand for salmon. The total supply growth expected in 2015 still is lower than historical growth in demand. We register a positive change of the individual consumer´s eating habits, pointing towards more fresh fish than other foods, which in the long term can provide a sustained higher demand.

Grieg Seafood expects a harvest volume of 72 000 tons in 2015, based on current production plans. This represents an increase of 7 264 tons (11.2%) from 2014. BC will be back with a normalised harvest volume of around 13 000 tons. The production in BC has been very good in 2014, which implies lower production costs in sea in 2015. In Shetland and Finnmark harvest volumes will fall slightly in 2015. This reflects an adjustment to the structure of zones and localities in these regions, and will lead to somewhat higher costs in 2015. The harvest volume for the two regions is expected to increase again in 2016. Rogaland plans for increased harvest volume in 2015.

Grieg Seafood Finnmark´s 4 new green licenses make a basis for significant growth in this region.

In 2014 Grieg Seafood decided to wind up the production of Pacific salmon in BC, and to focus the operation on production of Atlantic salmon in all regions.

Grieg Seafood has an untapped production potential from existing licenses, in addition to the potential growth from new licenses, including green licenses. Grieg Seafood´s main objective is to improve the utilisation of licenses, and at the same time reduce costs through a continuous improvement of the biological presentations. An ongoing effort is made to improve internal procedures and to train the employees. The strategic priority is to continue to increase production from existing licenses in Norway, and to complete the turnaround in Shetland.

Andreas Kvame has been appointed CEO and will begin no later than 1 June 2015. He has extensive experience in managing major operational units in the aquaculture industry.

 

Bergen, 23 March 2015

The Board of Directors of Grieg Seafood ASA

 

GSF sign 2014 eng