Grieg Group annual report 2019 by GriegGroup

ANNUAL REPORT 2019

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

CONTENTS

Reflections from Chair.................. 4 This is the Grieg Group .................. 6 Highlights in 2019..........................16 Director’s report............................ 18 Profit and loss statement ��28 Balance sheet ..............................29 Cashflow statement ................. 33 Notes................................................. 34 Auditors statement....................58

Grieg Maturitas Grieg Maturitas is the parent company of the Grieg Group, and is owned by the Grieg family. The company is responsible for organizing and facilitating a good corporate structure, branding, information, as well as challenging the companies within the Group to develop strategically and profitably in a sustainable manner, and in accordance with our principles.

Grieg Maturitas Annual Report 2019

REFLECTIONS FROM CHAIR These are not ordinary times. By necessity for private and public health we are pulled apart, seeking isolation in safe distance from each other. And yet, in the long run I hope this crisis and its devastating consequences will actually bring us even closer together. That gives me hope for the future. All around the world social distance and deep-felt worries for family, friends and colleagues have become features of everyday life. We are haunted by an invisible enemy, a microscopic virus encountered in every corner of the Earth. To protect ourselves and our closest, we are seeking shelter. The foundation of livelihood for millions are threatened across national borders and industries. Around the world countries and companies are facing the same existential threat, and is learning the same lesson: Prosperity and humanity are intertwined, and none of us are truly safe and well unless we all are. There is a richness of worries and fears these days. But at the same time, I feel a strong gratitude to all those women and men bravely struggling to save lives and keep the wheels turning through this time of turmoil. All across the Grieg Group I witness an incredible spirit of courage, endurance and sacrifice. All our colleagues onboard our ships that have no alternative but to stay onboard, managers turning every stone and exploring all angels to keep the business running. The formidable efforts from everyone in the Grieg Group have touched me deeply. I am proud, yet I am not surprised. The essence of our company culture is to create value for owners, employees and the global society. Both responsibility and opportunities follow from such bold ambitions. The Grieg Groupsâ&#x20AC;&#x2122; pledge to the SDGs, our commitment to UNâ&#x20AC;&#x2122;s Global Compact, and our endeavor to help clean the oceans of plastic are tangible illustrations of how we have committed to address this responsibility. And in this time of global crisis, we practice what we preach. That is our way. Guided by our finest competences, we draw from a vast pool of experience and mobilize in joint efforts that can move both our business and the global community forward. Because we know that times of crisis also present opportunities. Over the last

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

years we have a strong record of creating successful new business built on the pillars of sustainability and cutting-edge technology. Looking at our shipping activities, Grieg Star have embarked on radical digital transformation. They have focused on the problems that Covid-19 have presented, and then rapidly re-configured the digital tools from the vessel support center to allow remote surveys, remote audits and even remote supervision of dry docking to be accomplished from home offices. In 2020, we will continue our sustainable development journey with the launch of Grieg Edge, a company within Grieg Star Group that enables other businesses to thrive in the green shift, using our accumulated knowledge from shipping, logistics and technology. As a digital salmon farming pioneer, Grieg Seafood demonstrates our ability to adapt to change and seek new opportunities. The company drives performance improvement and is a front runner for sustainable and responsible fish farming with low carbon emissions, and in 2019 we again had record earnings for Grieg Seafood. It might seem a paradox, but my hope is that what is now pulling us apart might eventually also bring us closer together. That we will leave this period behind with a stronger appreciation of the global community to which we all belong, a renewed understanding of the true depths of interdependence between people of equal value, and more motivated than ever to offer our talents and skills, resources and abilities to the benefit of our common future. Elisabeth Grieg Chair, Grieg Maturitas

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

THIS IS GRIEG The Grieg Group is rooted in a long and proud maritime tradition. In 1884 Joachim Grieg established a shipbroking company in Bergen. The company continued developing during the two world wars, and in 1960 Per Grieg sr. joined the company. He organized the company into specialized businesses. Today the Group is owned and led by 4th and 5th generation Grieg and includes 65 companies in 8 countries with 1959 employees worldwide. The Group consists of companies within seafood, shipping, shipbroking, logistics and investments. Grieg Maturitas is the parent company of the Grieg Group. The Group is owned by the Grieg family holding company, Grieg Maturitas (75%) and the nonprofit organization, Grieg Foundation (25%). The owner principles for the Grieg Group are to create lasting value for the company, its owners and employees, and for the society in which we operate. In the Grieg Group the employees’ expertise is an essential part of the business capital.

In 2019, we implemented the UN Sustainability Goals in our strategy. We have set goals and introduced measures that give the sustainability goals concrete meaning for the day-to-day work of all the companies in the group. The UN Sustainability Goals are actively used as a framework for the Grieg Group’s sustainability strategy and for innovation and entrepreneurship. The Grieg Group’s companies are represented throughout Norway, Europe, USA, Canada and Asia. The strategic management is exercised from Norway, and the head office is in Grieg-Gaarden in Bergen.

For more than 135 years, we have shown the ability to understand the world around us and adapt to the markets. This is how we have created the basis for good growth and development.

Grieg Group facts • • • •

135 years 65 companies* Main office in Bergen, Norway Consists of companies within seafood, shipping, shipbroking, logistics and investments • Strong focus on sustainability *Over 50% ownership

Grieg Maturitas Annual Report 2019

CORE BUSINESS AND KEY FIGURES Seafood

Shipping and Logistics

Investment*

At our locations in Norway, Shetland and Canada, we are producing healthy, protein rich food in optimal conditions for

Our services range from ensuring efficient port handling to designing and operating vessels. We also recycle vessels to a high ethical and environmental standard.

Thinking long term, pays off. It is the cornerstone of all our investments and each investment product must have a meaningful impact on the overall portfolio.

Revenue 2019 MNOK

Employees 2019

farming salmon and trout. Revenue 2019 MNOK

8 428

Employees 2019

918

Employees 2019

2097 990

Operating revenue business areas

Turnover based on ownership

Grieg Seafood Grieg Star Grieg Logistics Grieg Investor Grieg Shipbrokers Grieg Kapital Grieg Maturitas Grieg Aqua Figure 1

Figure 2

Adjustment in figure 2 is based on Grieg Maturitas ownership. Grieg Seafood: ownership 50,17 %, Grieg Star incl. G2 Ocean: 35 % of G2 Ocean turnover in 2019 (in total MNOK 1 193), Grieg Shipbrokers: ownership 55 %, Grieg Investor: ownership 44,5 %, Rensefisk Holding: ownership 80 %. Other minority interests are not included in this simplified listing (eg. subsidiaries in Grieg Logistics, Grieghallen Parking, etc.)

Grieg Maturitasâ&#x20AC;&#x192; AnnualGrieg Report 2019 Grieg Investor and other holding companies *Investments is inculding Kapital,

GROUP STRUCTURE

Grieg Maturitas AS

Grieg Maturitas II AS

Grieg Foundation

Grieg Group Resources AS

Grieg Investor

Grieg Kapital

Grieg Investor Holding AS

Grieg Kapital AS

Grieg Investor AS

Grieg Gaarden AS

Grieg Aqua Grieg Aqua AS

Grieghallen Parkering II AS Grieg Holdings II AS Silves Odissey Lda Grieg Newfoundland AS 1

Grieg Seafood Grieg Seafood ASA Grieg Seafood Rogaland AS Grieg Seafood Canada AS Grieg Seafood Finnmark AS Grieg Seafood Hjaltland UK Ltd Ocean Quality AS

Grieg Maturitas Annual Report 2019

Grieg Shipbrokers

Grieg Logistics

Grieg Star

Grieg Shipbrokers KS

Grieg Logistics AS

Grieg Star Group AS

Grieg Shipbrokers Valuation Services KS

Scandinavian Harbour Service AS

Grieg Star AS

Grieg Shipbrokers Ltd

Mosjøen Industriterminal AS

G2Ocean Holding AS 2

Grieg Shipbrokers Asia AS

Grieg Port Security AS

Grieg Star Bulk AS

AS Joachim Grieg & Co

Grieg Strategic Services AS

Grieg Shipowning AS

Grieg Connect AS

Grieg Green AS Grieg Star 2017 AS GriegMaas AS Grieg Star Oh Pool AS

Grieg Newfoundland AS is owned 40% of the Grieg Group 2

G2Ocean Holding AS is owned 35% of the Grieg Group

FOR MORE INFORMATION, SEE NOTE 8 AND 9

Grieg Maturitas Annual Report 2019

MAIN COMPANIES IN THE GRIEG GROUP Grieg Seafood Grieg Seafood ASA* is one of the worlds’ leading aquaculture companies, specializing in Atlantic salmon farming in North and South Norway, British Columbia (Canada) and Shetland (UK). The Group has an annual production target of 100 000 tonnes gutted weight in 2020 and 150 000 tonnes in 2025. As a digital salmon farming pioneer, Grieg Seafood drives performance improvement through continuous research and the utilization of new cuttingedge technologies. The Groups’ focus is on sustainability, fish welfare, reduction of carbon emissions and responsible farming practices. Grieg Seafood is classified with an A by the CDP classification system. Grieg Seafoood has an ambitious target for industry cost leadership in each region. Grieg Seafood was listed on the Oslo Stock Exchange in June 2007. *Grieg Seafood is owned by Grieg Maturitas through Grieg Aqua.

Grieg Star Grieg Star is a ship owning and operating company within the open hatch and dry bulk segments. They own or operate between 35 and 40 vessels at any given time, with approximately 800 employees in total. Together with Gearbulk they control the largest open hatch shipping company in the world, G2 Ocean. At the end of 2019, Grieg Star decided to establish Grieg Edge, a company set to identify, develop and commercialize new green business opportunities in the maritime industries.   Shipping is the most environmental-friendly way to move goods. But that does not mean that the way we do it today is sustainable. On the contrary, the Maritime Industry is not sustainable. We need to fix overcapacity, the emissions of greenhouse gases, the workforce shortages, lack of safety and piracy. Our industry is changing, and Grieg Star wants to lead the change. With a new focus in our core business, a keen eye for new business in Grieg Edge, and the right partners, we believe we will restore our oceans. Grieg Star will be a part of the solution.

Grieg Maturitas Annual Report 2019

Grieg Green Grieg Green is a part of Grieg Star, and is, one of few companies providing sustainable ship and rig recycling in the world. The company also specialize in Inventory of Hazardous Materials (IHM) and completed over 500 surveys in 2019. Grieg Green are one of the world’s largest providers of environmental-friendly and sustainable services to the maritime world and provides all services related to the recycling process.

Grieg Logistics Grieg Logistics is a national provider of ships services and industrial terminal operations to oil & gas, shipping, offshore, maritime and general industries. In addition, the company deliver software solutions to ports and terminals. Grieg Logistics consists of the companies Grieg Strategic Services , Grieg Connect, Mosjøen Industriterminal, Scandinavian Harbour Services og Grieg Port Security. Grieg Logistics provides end to end ship services and maritime logistics for onshore and offshore customers. They handle agency, husbandry, procurement, chartering and harbor support to port calls throughout the Norwegian coastline and world wide. Grieg Connect develops digital solutions for ports, terminals, ferry and speedboat operators and county municipalities. The main business is related to delivery of real-time planning (AIS), ferry notification systems, operational port solutions, terminal solutions and course activity. Grieg Strategic Services is supplier of logistical support and advisory services. The company operates as the Strategic partner to the Norwegian Defence. Mosjøen Industries provides logistical services to the industry and shipping for efficient operation of ports and terminals. This includes port planning, loading and offloading, internal transportation, cleaning and storage.

Grieg Maturitas Annual Report 2019

MAIN COMPANIES IN THE GRIEG GROUP Grieg Shipbrokers Grieg Shipbrokers was established in 1884 and is the oldest company in the Grieg Group. They provide a full range of services within all markets, covering every aspect of chartering, contracting, sale and purchase, coupled with innovative research and analysis. Grieg Shipbrokers is a worldwide provider of shipbroking service located in Bergen, Oslo, London, Shanghai and Singapore. The company has for several years allocated considerable resources to promoting effective and profitable low emission solutions for new buildings based on the latest technological developments. This is seen as increasingly important for Grieg Shipbrokers going forward as zero-emission solutions is becoming relevant for some vessel categories.

Grieg Investor Grieg Investor is an independent investment adviser. 2019 was the company´s best performance year ever. Their core business are long term investment policy, manager selection and consolidated reporting. The company is committed to full transparency and with a focus on changes happening in the world and in the markets. Long-term, accountability and sustainability are key concepts of the Company. Grieg Investor works for 90 percent of Norway´s largest institutional investors and wishes to be perceived as a leading adviser with a high level of trust.

Grieg Kapital Grieg Kapital is the Grieg Groups investment and asset management company. The company´s objective is to safeguard and develop financial assets for the family business within its long-term-vision, while also securing jobs and the opportunity for future investments. In the years ahead, our ambition is to increase the liquidity buffers in the company. At the same time the company looks ahead for new and innovative projects within the company’s value-based investment strategy, rooted in Grieg Groups sustainability goals.

Rensefiskgruppen Rensefiskgruppen is one of the leading producers of Lump Fish based on 5 production sites. They supply many of the leading salmon farmers in Norway. Lumpfish is one of the most sustainable methods for removing sea lice from farmed salmon. The lumpfish lives in the cages with the salmon, and feed on sea lice attached on the salmon. Rensefiskgruppen is part of the Grieg Kapital development portfolio. Grieg Maturitas Annual Report 2019

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SOLID

PROUD COMMITTED Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

GRIEG FOUNDATION The non-profit organization Grieg Foundation owns 25% of the Grieg Group. The foundation is anchored in the Grieg family´s lifelong commitment to corporate social responsibility, Grieg Foundation is all about providing opportunities and leaving footprints. The Foundation´s main mission is to benefit society and make a difference through the support of selected charity projects locally and internationally. In total, Grieg Foundation has donated MNOK 636,7 to various projects in accordance with the Statues of the Foundation. In 2019, MNOK 44 were distributed to selected projects. The UN Sustainable Development Goals frame the strategy and the work. The main focus is support to children and young people to ensure inclusive and equitable quality education and promote lifelong opportunities for all. Other priority areas are music and culture, medical research, environmental projects and social impact investment. Grieg Foundation is a small foundation with big ambitions. They look for projects where the support can make a difference and have enduring impact. The goal is to leave footprints in people, communities and hearts.

Largest contributions in 2019 was to SOS Children Village and the Madagascar school projects. For more information see Grieg Foundation annual report 2019.

Climate Action and other projects 17% Health and medical research 13%

Culture 18%

Children and Youth 39%

Music 14%

Grieg Foundation facts • • • •

Established in 2002 Owns 25% of the Grieg Group Distributed 44 215 000 NOK in 2019 Total contribution 630 MNOK since 2002

Grieg Maturitas Annual Report 2019

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

HIGHLIGHTS March

January Grieg Star and Maas Capital joint venture. GriegMaas is established to further strengthen our position within the Supramax and Ultramax segments, and thus further strengthen G2 Ocean’s Bulk activities.

The Grieg Group launched our SDG goals to all the companies in Grieg Group and implemented the stretch goals in the strategy. The launch came with a clear purpose: We will restore our oceans. We have lived of the ocean for generations and we must leave the company and the natural resources it benefits from, in better shape for the next generations.

May Zeeds launched – a small step towards zero emission shipping. In collaboration with five other leading industry companies, and in line with the UN sustainability goals, Grieg Star is exploring the fastest way to zero emission shipping.

February

April

June

Grieg Star recycled its first ship under new EU regulations. Grieg Green was trusted to secure the recycling of Star Gran. We believe the EU SRR is an important next step in the shipping business to secure higher levels of sustainability.

Grieg Seafood has become the first salmon farmer to install a wind turbine and solar panel array at a salmon farm, to reduce the use of all diesel generators.

Grieg Green was approved by Korean Register for IHM service. Grieg Green is now approved by all the eight main class societies to perform Inventory of Hazardous Materials.

Grieg Maturitas Annual Report 2019

August

December

The Grieg Group partnered with the Global Compact Group. In 2008 Grieg Star committed to the UN Global Compact and the principles in the areas of human rights, labor, the environment and anticorruption. In 2019, the Grieg Group expanded this agreement and signed a partner agreement which involved the Group as a whole.

First female to fill a top officer position. Laarni Espinosa is now Chief Officer at Star Lygra. “Women play a significant role in the development and progress of our economy. To be recognised as part of the workforce in this challenging world of the maritime industry is a great leap towards gender equality and an acknowledgement of our contribution. I am very grateful to Grieg Star for this opportunity,” says our fresh Chief Mate Trainee, Laarni B. Espinosa.

October Grieg Connect and Yxney Maritim has partnered with NOx-fund to build a data-driven solution for automatic collection and reporting of NOx emissions at sea.

September

November

Grieg Seafood was the winner of the prestigious Stockman award for companies that excel in investor relations. The prize is awarded to the company which is best to inform current information about its activities to the financial community and shareholders, and issued the best annual report.

Grieg Investor was elected this years’ Nordic Investment Advisor, which is the third year in a row. The price is based on a survey among Nordic and international fund management companies and includes consulting for institutional investors.

Grieg Maturitas Annual Report 2019

GRIEG MATURITAS

2019

DIRECTORS’ REPORT & GROUP RESULTS

1 959 10 609 1 036 16 799 EMPLOYEES 31.12.2019

Grieg Maturitas Annual Report 2019

OPERATING REVENUE 2019

PROFIT BEFORE TAX 2019

TOTAL ASSETS 31.12.2019

NOK MILL.

DIRECTORS’ REPORT 2019 2019 was a good year for the Grieg Group overall, with an increased turnover in most segments. Group turnover was MNOK 10 609, operating profit (ebit) MNOK 1 210, and the profit before tax MNOK 1 035 vs. MNOK 926 in 2018. The improved results are largely related to record earnings in Grieg Seafood and improved cost control in Grieg Star. Although Grieg Group is overall profitable, there are challenging market conditions and reduced profitability in some parts of the Group. Grieg Seafoods’ (GSF) profit before tax is (NGAAP) MNOK 1 062, up from MNOK 1 019 in 2018. Sales in GSF are all time high due to increased volum harvested 82 973 tonnes in 2019, compared to 74 623 tonnes in 2018. The higher volume, combined with continued strong prices, generated revenues MNOK 8 273.6, up from MNOK 7 500.3 in 2018. The higher harvested volume is a result of Grieg Seafood’s overall growth strategy, and derives mainly from higher utilization of current production capacity, in addition to improved biology and better fish health. Grieg Star’s profit before tax is negative with MNOK 64, although an improvement from - MNOK 133 previous year. Operating revenue is up MNOK 116 from 2018 to MNOK 1 499 in 2019, and combined with lower operating costs, and stable finance, result is improving. Grieg Investor deliver best results ever, due to a strong financial market and good performance. Grieg Logistics has had lower activity in 2019 than the year before, mainly due to less projects in Grieg Strategic Services. Grieg Shipbroker is facing a challenging market globally. To further improve profitability in the subsidiaries and the Group at large, Grieg Maturitas will continue to be an active owner supporting all subsidiaries and securing a robust organization for a new era. The Group is well positioned for the future. We have taken an active part in the UN’s Sustainable Developments Goals (SDG) and implemented these in our framework and strategy. We are constantly working towards our goals and have applied collaborative ways of working through the Sustainable Development Goals. We see that the green shift is strongly supported by the digital shift, and this is influencing all our companies in a positive way. 2020 has unfortunately started in a way that none of us could have foreseen. The COVID-19 (the coronavirus) pandemic has spread across the globe, and no industry is unaffected and market situation is impacted.

Key figures Grieg Group KEY FIGURES (NOK mill.)

Turnover EBIT Profit before tax Profit after tax

2018

10 609 1 210 1 036 778

9 739 1 179 926 685

Grieg Maturitas KEY FIGURES (NOK mill.)

The Grieg Groups’ operations are influenced by international trade and economy. We monitor the situation closely, but the extent and duration of these effects are still uncertain and cannot be predicted at this time.

2019

Turnover EBIT Profit before tax Profit after tax

2019

2018

1,9 -1,6 88,7 88,9

3,4 -1,0 89,3 89,5

Grieg Maturitas Annual Report 2019

Highlights Due to good market conditions and continuous improvements across all operations 2019 was a strong and eventful year for Grieg Seafood. Average spot salmon price for the period was down NOK – 2,0 compared to 2018, but higher volume contributed positively. Total harvest volume was 82 973 tonnes as guided. Grieg Seafood scales its operations towards 2025 globally, through M&A activity, with an ambition to reach 100 000 tonnes harvest with costs at or below industry average, and 150 000 tonnes by 2025. The company´s strong earnings are driven by performance in Norway, while the long-term initiatives to address biological challenges in British Columbia and Shetland continued to yield positive results. In Shetland in particular, cost remained at a high level in the fourth quarter, but biological improvements led to higher survival rates. Grieg Stars’ substantial increased earnings is a result of continuous development- and improvement process. The increased synergies from the joint venture with Gearbulk, G2 Ocean, continues to contribute to better earnings. 2019 started by establishing a new joint venture with Maas Capital. The joint venture company named GriegMaas, is a company owning Supramax- and Ultramax vessels. The joint ventures provides us with the opportunity to develop a collaborative company culture that gives us great learning, to adapt our business model to the changes in the market, and provides the company with financial robustness. A further development of this way of doing business, resulted in Grieg Star establishing of Grieg Edge. The company was established January 2020. Grieg Green is a subsidiary of the Grieg Star Group and is one of few companies providing sustainable ship and rig recycling. The company has expanded in 2019, and has over 40 employees and a turnover exceeding USD 6 million. The green recycling business is growing, and the company carried out a record number of recycling projects in Turkey. Grieg Green completed the 500th IHM survey in 2019, and in 2020 the target is to provide customers with 1000 IHM reports. Grieg Logistics Group was affected by low defense and navy activity in 2019. The company has developed cooperation with several customers to strengthen its market position. The goal now is to promote the technological development of the company, so that all tasks are carried out streamlined and in a good and safe manner. The year was marked by the establishment of Grieg Connect (GC), which took place in November 2018, through the merger of Shiplog and Seamless. GC’s main focus is to build scalable solutions that, together with the company’s ever-growing repetitive revenue base during the growth period, will make the company profitable and valuable. The company has had a breakthrough in 2019 with its machine learning technology with AIS data. In 2019, GC sales increased by 42 percent compared to 2018 sales. The company’s licensing revenues totaled NOK 15.5 million in 2019, which corresponds to 44 percent of the company’s recurring revenues.

Grieg Maturitas Annual Report 2019

Grieg Shipbrokers made progress within its overall activities as an increasing number of transactions were made with new and existing customers during the year. The regular Sale & Purchase/newbuilding activities developed satisfactorily, with a significant increase in the number of secondhanded transactions. Several important newbuilding projects were initiated during the year and successful conclusion of these is expected during the first half of 2020. Maritime Finance activities continued to impress with many transactions concluded, including several in cooperation with our London team. The offshore department made good progress especially in contracting, long-term chartering and purchasing/selling of service vessels for the aquaculture industry. The activity aimed at offshore service vessels has seen an increasing number of fixtures, but the prices achieved are still low. 2019 was Grieg Investor’s best year ever, both in terms of income and profit. Grieg Investor experienced strong customer growth in 2019, and the company manage assets of MRDNOK 80 for more than 100 clients including foundations, associations, family owned companies, pension funds, insurance companies and municipalities. Focus on digitization and efficiency has made Grieg Investor a leader in key areas. Investment in responsible and sustainable investments continues and is a strong focus area both internally in our own organization, towards customers as well as towards the market in general. Responsible and sustainable investments will play an increasingly central role for the company’s customers in the future. It is therefore strategically important for Grieg Investor to take a clear position in this market and be perceived as a leading advisor with a high level of trust. Grieg Kapital is a combined investment and asset management company in the Grieg Group. The company will partly run liquidity management as a buffer for its core business, as well as new business areas. In addition Grieg Kapital manage a portfolio of direct investments, including real estate and private equity. A new strategy for the company´s liquidity portfolio was established towards the end of 2018, and the portfolio was invested according to strategy at the beginning of 2019. As part of a new strategy, new guidelines for responsible investments were also implemented. These guidelines are in line with the Grieg Group’s goals and ambitions in terms of sustainability and accountability. Grieg Kapital has also assisted Grieg Maturitas II in creating an almost identical liquidity portfolio. It is the sum of these two portfolios that will constitute the Group’s total capital buffer. Due to the very good performance in the capital markets in 2019, both portfolios received a very good return the past year.

Balance sheet, financial situation and cashflow The Grieg Group has a strong financial position. Total current assets amount to NOK 5 863 mill., of which NOK 1 544 mill. is made up of bank deposits, market based financial investments and other financial investments. Current

Grieg Maturitas Annual Report 2019

Key figures Grieg Group KEY FIGURES (NOK mill.)

Equity Total assets Equity ratio

2019

2018

7 940 7 486 16 799 16 289 47% 46%

Grieg Maturitas KEY FIGURES (NOK mill.)

Equity Total assets Equity ratio

2019

2018

4 063 4 153 98%

4 064 4 155 98%

liabilities total NOK 2 192 mill,. which gives positive working capital of NOK 3 671 mill. The Groups total fixed assets is NOK 10 937 mill., of which NOK 6 078 mill. is financed through loans from financial institutions, financial leasing, and other long-term debt.

Cashflow In total, the Group had a positive cashflow of NOK 1 460 mill. from operations. Due to investments in fixed assets, the net cashflow from investing activities negative at NOK 395 mill. The net cashflow from financing is activities negative at NOK 740 mill., mainly due to loan repayment, changes in bank overdraft and dividends paid. In total, the Group had a positive cashflow of NOK 325 mill. in 2019.

Financial risk and risk management When operating in a global market across different business areas, the companies of the Grieg Group are exposed to different types and degrees of risk, ranging from market operations and financial risk to compliance and regulatory frameworks. Risk management is a continuous process, and an integrated part of the Groupâ&#x20AC;&#x2122;s governing model. Thus, we are constantly focusing on how to identify and monitor the risk areas in the Group companies, as well as developing strategies to mitigate such risk. For further information concerning financial risk, see note 17 to the Group accounts.

Organization and working environment Performing competitively in our business areas requires competent and empowered people working safely together across the Grieg Group companies. Our people are our most valuable resource. Sustainability Development Goals (SDG) 4, Quality education, is one of the Grieg Groupsâ&#x20AC;&#x2122; stretch goals. The total number of employees in 2019 was 1959. Their qualifications constitute a substantial part of the business capital. Keeping a diverse workforce and providing our employees with learning opportunities that promote competence aligned with their personal career goals, will ensure that we always have the best hands and minds on board. In 2019 a mapping of board members of the Grieg Group companies was conducted to ensure diversity and the right competence at all levels.

Gender equality We believe that a diverse and balanced working environment is crucial for success, we and strive to be in the forefront on diversity within the businesses we operate. SDG 5 Gender Equality is also one of our stretch goals in business. Grieg Group will work towards gender parity at all levels of the organization, both for onshore and offshore operations. We will also promote gender equality and diversity towards business and supply chain partners. At board level we are 52% women, and within CEO for the main companies 50% are women and 50% men.

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

We operate in industries that unfortunately does not have an equal distribution of women and men yet, but we work towards gender parity at all levels within the businesses we operate. We are also promoting gender equality and diversity towards businesses and supply chain partners. The level of success in achieving our stretch goals as a group, is defined by the work in the different companies. There are 26 percent women in the Grieg Group in Norway in total. This is a positive increase of 1 percent from 2018.

Health and safety The Grieg Group companies continuously focus on training and facilitating a safe working environment for all employees by identifying and evaluating potential risks on an ongoing basis. We are proud to have completed Grieg Greens’ pilot project in India with zero incidents and no harm to the environment. The project proved that it is possible, given the right prerequisites, to carry out green recycling of marine assets in the sub-continent. Grieg Star Group had zero injuries onshore in 2019. As in the five previous years, there were no fatal accidents at sea in 2019. But in 2019 the Grieg Star Group repatriated 3 seafarers due to injuries after accidents. All seafarers are recovered and are back at work. In 2019, Grieg Seafood had no fatal incidents, but reported 3 high consequence work-related injuries. All employees have recovered and are back at work. The injuries are caused mainly by being struck by objects, handling equipment, cuts, slips, and falls. The sick-leave presentage is still low in the Grieg Group. In 2019 the sickleave percentage was at 2,44*. We focus on preventing sick-leave by creating a good working environment and conduct close follow-ups with our employees. The Group also facilitates participation in physical activities and are also a long-term supporter of Aktiv mot Kreft and “Aktivt Kontor”. *Norwegian employees at the Grieg Group companies

Innovation Innovation, our stretch goal SDG 9, is vital to becoming sustainable. The Grieg Group companies engage in several research initiatives especially in the shipping and seafood industries. In 2019 Grieg Star took an active part in the ZEEDS initiative and will continue working with this initiative for 2020 hoping to find new, green solutions. Grieg Seafood is also in lead in several innovation projects within the industry. The Grieg Group is constantly working to improve and digitalize our work tools and methods. In 2019 the group implemented a new reporting system and will implement a new contract and compliance system for 2020. To become a positive driving force for sustainable development we must think big and bold and create a purpose-driven organisation with a culture of innovation. To achieve this, we will promote collaboration within and across

Grieg Maturitas Annual Report 2019

Health and safety Sick-leave Major injuries

2019

2018

2,4% 6

2,1% 0

all companies in The Grieg Group, inspiring, challenging and learning from each other. We will also seek cooperation both among our competitors and our existing partners.

Climate and environment Our businesses are mainly based on the sea and its resources. Recognizing that nature must be managed on behalf of future generations, we were early movers making sustainability part of our strategy. SDG 13, Climate Action, and SDG 14, Life Below Water, are also our stretch goals. We have a vision of zero net emissions operations in all industries in which we operate. We will also continue to be an advocate for zero emissions operations in all relevant industries and increase awareness internally and in dialogue with key stakeholders. In December 2019, the Grieg Group and WWF partnered to reduce ocean plastics. We set a clear ambition: 50 percent reduction of plastic pollution in three Philippine port cities by 2023. The Grieg Group was named winner of the 2019 award for best maritime sustainability strategy in Europe, by the international journal Capital Finance International (CFI). The jury´s reasoning: “CFI.co judging panel sees a purpose-driven company that has pledged to deliver bold solutions that are both sustainable and profitable”. Grieg Seafood received recognition in January 2020 from the Carbon Disclosure Project as a leader (A) on climate disclosure and actions. They are continuously strengthening their focus on sustainability, fish welfare, reduction of carbon emissions and responsible farming practices, and they remain committed to being a driving force in the industry when it comes to sustainable farming practices. Our impact on marine resources will be carefully managed and we will be open and transparent about this impact as well as the results from the efforts we make to reduce it. Our main office building, Grieg-Gaarden is certified as an Eco-lighthouse office building and our goal is that all our offices are eco-certified buildings. In addition to the annual report, the Grieg Group will publish a sustainability report this year.

Corporate Governance The Grieg Group always strive to do business in a fair and proper way. We apply the Norwegian Recommendation on Corporate Governance to ensure that the responsibility and roles between administration, the Board of Directors and the General Meeting is based on sound practice. Deviation may arise given the fact that the Group is privately owned. Our SDG goals within corporate governance is SDG 8 (Decent work and economic growth), SDG 16 (Peace, justice, and strong institution) and SDG 17 (Partnerships for the goals). In 2019 the Grieg Group signed the UN Global Compact. This implies that the Group will comply with the UN Global Compact principles on the areas of human rights, labour, the environment, and anti-corruption.

Grieg Maturitas Annual Report 2019

We will strive to be innovative to meet the challenges of the SDGs, through new partnerships and cross sector cooperation. We do this by being honest, exchange ideas and seek to understand and learn from our surroundings. We have an open-minded business approach and strive to create room for action and possibilities, which will enable strong partnerships from both civil, public, and private parts of society. Through Grieg’s more than 135 years history , it is our capacity to tackle the challenges of the times, and to innovate and adapt, that has put us in the position to drive the changes we want to see in the world today.

Going concern The Board of Directors confirm that the annual accounts have been prepared on a going concern basis, and that this assumption is valid, based on the Group’s solid financial position and expectations of future profits. The Board believes that the submitted annual accounts give a correct picture of the result, cashflow and economic situation. No events have taken place after the balance sheet date that could materially affect the accounts. COVID-19 may influence the 2020 figures going forward, see below.

Outlook The outbreak of the coronavirus (COVID-19) may cause a potential long-term reduction in activity levels in the Norwegian and international economy. Nobody knows what lies ahead or how long the impact of COVID-19 will last. The escalation of both spread and measurements taken, is currently causing high uncertainties for most of our businesses. We see that reduction in global trade is influencing on our operations going forward. Necessary action is now taken in all companies and at Group level, to secure employees, the financial situation and our customers. Seafood Although market demand on seafood remains after COVID–19, there has been a significant decrease in demand from hotel, restaurants, and catering (HoReCa) and increased demand from retail. Airfreight is a challenge, but the transport of goods between countries on trucks remains relatively good. With farming operations located in close proximity to both the European and the US market, Grieg Seafood’s dependence on cross-Atlantic distribution is limited. The global supply of Atlantic Salmon for 2019 increased by 7% compared to 2018. As a result of stable demand, the salmon price dropped from an average of NOK 59.22 in 2018 to NOK 57.21 in 2019. With outlook for demand growth of 4% in 2020, combined with limited growth potential in the short-to mid-term, prices are expected to remain stable going forward. Grieg Seafood aims to build on their existing platform to ensure continued growth and cost improvements to reach more than 150 000 tonnes harvest by 2025. To scale their global operations, they will continue to grow organically, as well as through M&A activity. They will also reposition Grieg Seafood from a pure commodity supplier to an innovation partner, increasing our presence downstream through partnerships, category development and

Grieg Maturitas Annual Report 2019

brand cultivation. For 2020, Grieg Seafood has guided on a total harvest of 100 000 tonnes gutted weight equivalent (GWT) with cost at or below industry average. The full medium- and long-term implications of the coronavirus pandemic remain uncertain. However, based on the current situation, the Company will harvest according to the Q1 guiding of 16 800 tonnes, and the Company’s volume target for 2020 remains in place. Shipping – logistics and shipbroking Throughout 2019 shipping markets, and especially the dry bulk market, have been challenging. Demand for medium-sized supramax and ultramax vessels, which is closely linked to economic growth, is expected to remain low going forward. However, a reduction in deliveries after first half of 2020 should, on the other hand, contribute positively to the supply demand balance. In respect of open hatch, world seaborne pulp demand seems sound and is expected to continue with stable growth, primarily from the Americas to Asia. From January this year, a new business unit, Grieg Edge, is established to identify and develop new business opportunities within shipping, ship owning and related maritime segments, with a strong emphasis on sustainability. A multidisciplinary team with broad experience from shipping, finance, technology, and start-ups are in place. With an increased focus on sustainability, transparency, and a green transition of the maritime industry. Given the COVID-19 situation shipping market is still challenging and necessary action is taken to secure all employees on land and sea, operations, and liquidity. Within Grieg Logistics we see emerging potentials within digital solutions in harbors and shipping segments, and also of strategic services within logistics. Outlook for our Shipbroking company varies within the shipping segments. In all our shipping activities, we are monitoring the risks and follow the markets closely both with respect to valuation in currencies and customers’ credibility. Investments Thinking long term pays off. It is the cornerstone of all our investments and each investment product must have a meaningful impact on the overall portfolio. To become a positive driving force for sustainable development, we must think big and bold and create a purpose-driven organisation with a culture of innovation. To achieve this, we will continue promoting collaboration within and across all companies in the Grieg Group, inspiring, challenging and learning from each other. We will also seek cooperation both among our competitors and our existing partners. The unstable financial market we have seen so far in 2020 is impacting on our financial portfolios negatively. But our risk profile is balanced, and we are handling the portfolio in a secure manner. Going forward, we will continue focusing and adapting to changing markets

Grieg Maturitas Annual Report 2019

and pursue opportunities as they arise, given the uncertainty in the global economy. Securing our businesses, employees health and cash situation will be given highest priority. But we still think supporting new business ideas and facilitating innovation initiatives within the Group is of even more importance in these new circumstances. We are using the UN Sustainable Development Goals (SDG) as our framework for our strategy, and we strongly believe that we will act as an inspiration to other companies, organizations, partners and the rest of the community to join our pledge: We will restore our oceans.

The Board of Directors would like to express our thanks to all employees in all our companies for their solid dedication and contribution to the Grieg Group.

Bergen, 21st of April, 2020 The Board of Directors of Grieg Maturitas AS

Elisabeth Grieg Chair

Camilla Grieg Board Member

Elna-Kathrine Grieg Board Member

Per Grieg jr. Board Member

Nina W. Grieg Board Member

Nicolai H. Grieg Board Member

Knut Nesse Board Member

Rolv-Erik Spilling Board Member

Sirine Fodstad Managing Director

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

PROFIT AND LOSS STATEMENT GRIEG MATURITAS AS

GRIEG GROUP

(Amounts in NOK 1 000)

2018

2019

Note

2018

3 423

1 973

10 609 404

9 739 430

-3 359

-2 848

Payroll and social security costs

-987 483

-899 295

6,7

Depreciation

-683 075

-602 794

Operating costs - shipping

-882 808

-834 464

Cost of sales - fish farming

-4 215 235

-3 874 968

-1 074

782

3,23

Other operating expenses

-2 630 698

-2 349 071

-4 433

-3 630

-1 010

-1 657

Total operating expenses

-9 399 300

-8 560 591

1 210 104

1 178 839

90 000

Income from investments in subsidiaries

360

390

Other Financial income

118 120

210 688

Change in value of market based assets

47 790

-109 642

Results of investments in associated companies

4 327

3 362

-1

Other Financial expenses

-344 617

-357 709

90 359

90 389

Net financial items

-174 380

-253 301

89 349

88 731

Profit before tax

-114

-215

89 463

88 947

Operating Revenue

Operating Costs 4

Operating profit - EBIT Financial items

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

1 035 724

925 537

Tax

-257 237

-240 483

Profit for the year

778 487

685 054

To minority interests

515 182

486 124

Majority proportion

263 305

198 930

BALANCE SHEET GRIEG MATURITAS AS

GRIEG GROUP

(Amounts in NOK 1 000)

2018

(Amounts in NOK 1 000)

2019

2018

Other intangible assets

18 419

19 577

22 555

32 114

Note

Assets Fixed assets Intangible assets -

Contracts

262

478

Deferred tax assets

Goodwill

9 340

14 659

Licenses

1 162 036

1 163 095

262

478

Total intangible assets

1 212 350

1 229 444

Tangible assets -

1 013 714

921 162

Vessels

6 254 010

6 661 739

Vehicles, machinery and equipment

2 103 092

1 922 848

Total tangible assets

9 370 816

9 505 749

174 072

116 507

Land and real estate

Long-term financial assets 4 021 796

4 021 796

Investments in subsidiaries

Investments in associated companies

Loans to associated companies

4 021 796

Total long-term financial assets

4 022 059

4 022 274

Total fixed assets

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

81 125

207 626

Shareholding and other investments

46 445

28 767

Other receivables

52 462

12 169

354 104

365 070

10 937 271

11 100 263

GRIEG MATURITAS AS

GRIEG GROUP

(Amounts in NOK 1 000)

2018

(Amounts in NOK 1 000)

2019

Note

2019

2018

2 895 834

2 400 345

659 757

1 141 122

762 935

306 791

1 422 692

1 447 913 162 873

Current assets -

Inventory and biological assets Accounts receivable

90 239

90 000

90 328

90 015

Shareholding and other investments

87 481

Market based financial investments

614 029

661 206

Total financial Investments

701 510

824 079

42 665

41 035

Cash and bank deposits

842 161

516 603

132 993

131 050

5 862 197

5 188 940

4 155 052

4 153 324

16 799 468

16 289 203

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

Receivables from subsidiaries Other receivables Total receivables

Total current assets

Total assets

BALANCE SHEET GRIEG MATURITAS AS

GRIEG GROUP

(Amounts in NOK 1 000)

2018

(Amounts in NOK 1 000)

2019

Note

2019

2018

1 124

Equity and liabilities Equity Paid-up equity 1 124

1 124

409 763

Share premium

409 763

410 887

Total

410 887

Other equity/group reserves

4 275 241

4 085 958

Minority interests

3 253 908

2 989 320

Total retained earnings

7 529 149

7 025 278

7 940 037

7 486 163

Share capital (1.123.530 shares of NOK 1)

Retained earnings 3 653 161

3 652 109

3 653 161

3 652 109

4 064 048

4 062 995

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

Total equity

GRIEG MATURITAS AS

GRIEG GROUP

(Amounts in NOK 1 000)

2018

(Amounts in NOK 1 000)

2019

2018

55 091

56 843

524 607

475 019

9 137

9 572

588 836

541 435

6 061 383

6 015 511

17 069

21 579

6 078 452

6 037 091

Bank overdrafts

438 322

655 857

947 985

781 834

222 632

140 456

96 913

80 160

Dividend

129 365

127 813

Other current liabilities

356 926

438 395

Note

Liabilities Provisions -

Pension liabilities

Deferred tax

Other provisions

Total provisions

Other long-term liabilities -

15,16

Liabilities to financial institutions Other long-term liabilities Total long-term liabilities

Current liabilities -

Accounts payable

Accounts payable group companies

271

90 000

621

219

91 003

90 329

Total current liabilities

2 192 143

2 224 514

91 003

90 329

Total liabilities

8 859 431

8 803 040

4 155 052

4 153 324

16 799 468

16 289 203

Taxes payable Public duties payable

Total equity and liabilities

Bergen, 21st of April, 2020 The Board of Directors of Grieg Maturitas AS Elisabeth Grieg Chair

Camilla Grieg Board Member

Elna-Kathrine Grieg Board Member

Per Grieg jr. Board Member

Nina W. Grieg Board Member

Nicolai H. Grieg Board Member

Knut Nesse Board Member

Rolv-Erik Spilling Board Member

Sirine Fodstad Managing Director

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

CASHFLOW STATEMENT GRIEG MATURITAS AS

GRIEG GROUP

(Amounts in NOK 1 000)

2018

(Amounts in NOK 1000)

2019

2018

Cashflow from operations 89 349

88 731 Profit before tax

-90 000

Taxes paid -90 000 Dividends receivable taken to income

- Ordinary depreciation

- Write-down (reversal) of fixed assets

- Unrealised gain/loss market based investments

- Change in inventory

-1

1 Change in accounts receivable

-42 -301

-31 Change in accounts payable -331 Change in accruals

1 035 722

925 537

-140 456

-165 587

683 075

602 794 -

-47 790

109 642

-495 503

-249 629

481 365

-278 667

166 151

108 143

-435

-704

-2 513

35 008

- Difference in expenses pensions and payment in/out

- Effect of change in exchange rate

-1 337

-2 205

- Share of profit from associated companies and joint ventures

-4 327

-3 362

- Gain/loss on sales of shares without cash effect

-29 905

- Change in other provisions

179 669

140 546

- Gain/loss from sale of market based investments

-9 247

-111 066

1 460 157

1 110 451

708 681

216 190

-974 969

-743 904

-4 196

-72 651

-210 256

-198 490

-995

-1 629 Net cashflow from operations

Cashflow from investing activities -

- Sale of fixed assets

- Purchase of fixed assets/newbuilding contracts

- Purchase of intangible assets Loan to associates

292 500 292 500

90 000 Payments from other group companies - Sale of shares - Purchase of shares and securities 90 000 Net cashflow from investing activities

295 956

418 889

-210 079

-351 961

-394 863

-731 927

Cashflow from financing activities -

- Net change in bank overdraft

-217 535

114 009

- Loan repayment (short/long-term)

-1 200 129

-2 865 503

- Loan proceeds

1 048 220

2 616 146

-292 500

-90 000 Dividends paid

-370 293

-640 713

-292 500

-90 000 Net cashflow from financing activities

-739 737

-776 061

325 558

-397 537

43 660

-995

42 665 Opening balance of cash and cash equivalents

-1 661 Net cashflow for the period

516 603

914 140

42 665

41 035 Cash and equivalents 31.12

842 161

516 603

42 665

41 035 Cash and equivalents 31.12 - from balance sheet

842 161

516 603

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

NOTES NOTE 1 Accounting principles 35 NOTE 2 Segment information 37 NOTE 3 Other operating expenses 38 NOTE 4

Payroll costs, number of employees, remuneration etc.

NOTE 5

Pensions and pension commitments

NOTE 6 Fixed tangible assets 42 NOTE 7 Fixed intangible assets 43 NOTE 8

Investments in subsidiaries

NOTE 9

Investments in associated companies and joint ventures

NOTE 10 Financial items 47 NOTE 11

Shareholdings and other investments

NOTE 12

Inventories and biological assets

NOTE 13

Receivables due in more than one year

NOTE 14

Market based financial investments

NOTE 15

Debt payable after 5 years

NOTE 16

Mortgages/guarantee liability/restricted funds

NOTE 17 Financial risk 51 NOTE 18

Contingencies and subsequent events

NOTE 19 Taxes 53 NOTE 20 Equity 55 NOTE 21

Share capital and share information

NOTE 22 Related parties 56 NOTE 23

Remuneration to auditor

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

NOTE 1 ACCOUNTING PRINCIPLES The Annual Accounts for Grieg Maturitas AS have been prepared in accordance with Norwegian Accounting Act and generally accepted accounting principles.

Group Accounts The consolidated accounts include the subsidiaries specified in note 8 and shows the accounts of the parent company and the subsidiaries as a single economic unit. Shareholdings and investments in subsidiaries are eliminated on the basis of the acquisition method. The cost of shareholdings and investments in subsidiaries is eliminated against the book equity of the shares/investments at the date of acquisition. Any difference arising is posted to the identifiable assets. Any surplus value that cannot be attributed to specific assets, or the companyâ&#x20AC;&#x2122;s own intangible assets, is described as goodwill and is depreciated over its estimated lifetime. Intra-group transactions and internal balances are eliminated. Companies that are bought or sold during the year, is included in the group accounts from the time of control arises or ceases. Changed owner share in subsidiaries, where the company after the transaction still is a subsidiary, is an equity transaction for the Group. The income statements and balance sheets of the group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities are converted at the closing rate on the date of the balance sheet, (ii) income and expense items in the income statement are converted at average exchange rates for the period (unless this average is not a reasonable estimate of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated on the dates of the transactions), (iii) translation differences are recorded against equity and specified separately.

Operating Revenue Operating revenues are entered as income at the time of delivery. The time of delivery is understood as the time of transfer of risk and control related to the delivery. Freight revenues from voyages are recognised on the basis of the number of days the voyage lasts. Revenue is shown, net of value added tax, returns and discounts.

Classification of assets and liabilities â&#x20AC;&#x201C; main rule Assets intended for long-term ownership or use are classified as fixed assets. Other assets are classified as current assets. Receivables due within one year are classified as current assets. The corresponding criteria are applied to classify liabilities. Certain items are stated on the basis of special valuation rules, in accordance with accounting legislation, as detailed below. Other assets and liabilities are classified as fixed assets and long-term liabilities, respectively.

Inventories Inventories are recognised at the lower of cost and fair value. Goods in progress, and finished goods are recognised at the lower of full cost and net sales value. The net sales value of finished goods is calculated as sales value less sales costs. The stock of bunkers consists of fuel and diesel and are recognised at cost on the basis of the FIFO method.

conversion of monetary items in foreign currency on the day of balance is allocated. Transactions in foreign currencies is recalculated to transaction rate. Foreign exchange hedging derivatives purchased in order to reduce the currency risk for the sub-group Grieg Star and Grieg Shipbrokers are recognised as hedging transactions. Gains/losses of foreign exchange contracts are therefore recorded in the same period as the hedged transactions. Please refer to note 17. Unrealized gain/loss on the hedging contracts is not posted on the balance sheet. Foreign exchange rates (NOK)

01.01.2019

31.12.2019

Average 2019

6,3751

6,7570

6,6329

GBP

11,1213

11,5936

11,2336

EUR

9,9483

9,8638

9,8511

USD

8,6885

8,7803

8,8015

CAD

Interest rate hedging Interest rate hedging contracts are recognised and classified in the same way as the related mortgage loan. The interest received/paid under the contract is therefore recognised in the interest period in question, and is included in interest cost/income for the period. Unrealized gain/loss on the hedging contracts is not posted on the balance sheet.

Accounts receivable Accounts receivable are stated at nominal value less provisions for expected losses. The loss provision is based on an individual assessment of each accounts receivable.

Investments in subsidiaries A company is defined as a subsidiary if the Group has a decisive influence on its operations. This is normally the case where the Group holds more than 50% of the voting share capital. Subsidiaries are posted in the company accounts applying the cost method. The investment is stated at historical cost of the shares unless a writedown has been necessary. The investment is written down to fair value when the reduced value is due to causes which are not deemed to be temporary. Write-downs are reversed when the grounds for the write-down no longer exist. Dividends and other distributions are recognised in the year in which they are provided for in the accounts of the subsidiary. If the dividend exceeds the profit after the acquisition, the surplus amount represents repayment of the capital investment and the distributions are deducted from the amount of the investment in the balance sheet.

Investments in limited partnerships Investments in limited partnerships are recorded on the basis of the cost method whereby the investment is stated at cost in the balance sheet. The distribution of profits/contribution to cover losses from investments in limited partnerships is taken to income/charged against profits under financial items. Profits from investments in limited partnerships are taxable in the hands of the respective participants.

Foreign currency Assets and liabilities denominated in foreign currencies are stated at the year-end exchange rate. Agio, or disagio, on settlements or

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

Investments in portfolio and private equity companies A portfolio of investments are recorded as a current asset, and is valued at the lower of cost price and estimated fair value for the portfolio as a whole when the intention behind the portfolio is to diversify the risk through a balanced portfolio with respect to time, branches and geography. For unlisted investments, with no observable price, the fair value is determined by recently third partytrades, or with a reference to the fair value of similar investments. Investments with significant and permanent impairment is removed from the portfolio.

Investments in associated companies and joint ventures An associated company is a company where the Group has significant influence, but not control. Significant influence is deemed to exist for investments where the Group has between 20% to 50% of voting capital. Investments in associated companies and joint ventures are recorded on the basis of the equity method in the consolidated accounts, unless the investment value is immaterial. Investments in 50/50% joint ventures are stated according to gross method.The share of the results in associated companies is posted separately under financial items. The investments in associated companies are posted as a financial asset. The Group’s share of a loss is not posted in the income statements if this means that value of the investment in the balance sheet becomes negative. Provisions will be made if the Group has undertaken an obligation on behalf of the associate.

Fixed assets Fixed assets are valued at acquisition cost, but are written down to fair market value where the decline in value is not expected to be temporary. Fixed assets with a limited economic lifetime are depreciated on a straight-line basis over the expected lifetime of the asset. Long-term liabilities are stated in the balance sheet at the nominal amount on the establishment date. Current assets are valued at the lower of acquisition cost and fair market value. Current liabilities are stated in the balance sheet at the nominal amount on the establishment date. Periodic classification and maintenance costs are posted in the balance sheet and depreciated on a straight-line basis until the next planned docking. The docking costs are included in the balance sheet along with the value of the ship. The depreciation of docking costs is included in operating costs.

Intangible assets Goodwill is depreciated over its economic lifetime. The surplus value attached to the fleet’s contracts of employment and the company’s right to renominate Grieg Star tonnage is defined as “contracts” in the balance sheet and is depreciated over 20 years. Licenses with unlimited economic lifespan is subject to an annual impairment test. Licenses with limited economic lifespan is depreciated annually. Expenses related to the company’s own development are recorded in the balance sheet from the point when it is likely that the development work will result in an identifiable intangible asset.

Asset impairments Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cashflows (cash-

Grieg Maturitas Annual Report 2019

generating units). The Group’s open hatch vessels are sailing in a pool, which are market and operated by G2 Ocean AS. Also for the bulk activities, consisting of cargo contracts, owned and chartered vessels, G2 Ocean AS markets and operates the vessels in Grieg Star Bulk and GriegMaas in a dry bulk supramax/ultramax pool. Having the vessels sail in a pool means that the operational use of the vessels, including optimization of routes, is combined for the fleet. Earnings of each individual vessel is therefore affected by the earnings of other vessels in the pool. The open hatch fleet and the bulk fleet are therefore considered to be the respective cash-earnings of other vessels in the pool. The open hatch fleet and the bulk fleet are therefore considered to be the respective cash-generating units. Newbuilding contracts are included in the fleet impairment and unpaid installments are deducted. Non-financial assets other than goodwill which have been impaired are reviewed for possible reversal of the impairment at each date.

Pension commitments Defined contribution plans The Group’s main pension scheme is a defined contribution plan, for which the companies pay contributions to an insurance company. The companies have no further payment obligations once the contributions have been paid. Contributions are recorded as payroll expenses. Defined benefit plan Some companies have defined benefit plans, including AFP. A defined benefit plan is a pension scheme that defines the pension payment an employee will receive on reaching retirement age. The pension payment normally depends on one or more factors, such as age, period of service with the company and salary level. The pension commitment under defined benefit schemes posted in the balance sheet is the present value of the defined benefit schemes at year-end less the fair value of the pension fund assets, adjusted for unposted deviations from estimate. The pension commitment is calculated annually by an independent actuary based on a linear accrual of pension entitlements. Changes in benefits under the pension plan are posted in the profit and loss account on an ongoing basis. The pension schemes are funded through payments to insurance companies or financed through operations. Post-employment benefit obligations associated with the early retirement pension (AFP), under the LO/ NHO arrangement, are a multi-employer defined benefit plan, but the plan is recorded as defined contribution, as it is not measurable.

Market based financial assets Short-term investments in shares and mutual funds are regarded as part of the trading portfolio and are stated at fair value at year-end. Dividends received and other distributions are entered as income under other financial income.

Estimates When preparing the annual accounts in accordance with good accounting practice, the management make estimates and assumptions which affect the profit and loss account and the valuation of assets and liabilities as well as information about contingent assets and liabilities at year-end. Contingent losses which are likely and quantifiable are charged against income on an ongoing basis.

Leasing The companies differentiates between financial leasing and operational leasing based on an evaluation of the lease contract at the time of inception. A lease contract is classified as a financial lease when the terms of the lease transfer substantially all the risk and reward of ownership to the lessee. All other leases are classified as operational leases. When a lease contract is classified as a financial lease where the company is the lessee, the rights and obligations relating to the leasing contracts are recognised in the balance sheet as assets and liabilities. The interest element in the lease payment included in the interest costs and the capital amount of the lease payment is recorded as repayment of debt. The lease liability is the remaining part of the principal. For operational leases, the rental amount is recorded as an operating cost.

Taxation The tax charge in the profit and loss account consists of the tax payable and the change in net deferred tax. Taxes are charged when

they arise. Deferred tax in the balance sheet is calculated on the basis of timing differences between values for taxation and accounting purposes. Taxable and tax-deductible timing differences which are reversed or can be reversed within the same period are netted against each other and entered net. Some of the companies of the Group are subject to shipping taxation under the Norwegian tonnage tax system pursuant to chapter 8 of the Taxation Act.

Cashflow statement

The statement of cashflows is prepared on the basis of the indirect method. Accordingly, the cashflows from investment and financing activities are reported gross, while the accounting result is reconciled against the net cashflow from operations. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments that can immediately and with no major exchange rate risk be converted into a known amount and maturing less than three months from the transaction date.

NOTE 2 SEGMENT INFORMATION GROUP (Amounts in NOK mill.)

Operating revenue 2019 2018

Operating profit 2019 2018

Net financial Items 2019 2018

Profit before tax 2019 2018

Grieg Seafood (NGAAP)

8 304

7 548

1 081

1 096

-19

-76

1 062

1 019

Grieg Star

1 499

1,383

118

-182

-183

-64

-133

Grieg Logistics

464

488

-4

-1

-5

Grieg Investor

Grieg Shipbrokers

134

126

-4

-1

Grieg Kapital 1

169

148

113

128

Other 2 Sum Grieg Group

-50

-32

-26

-7

-105

-112

10 609

9 739

1 210

1 179

-174

-253

1 036

926

1 In 2018, Grieg Kapital received dividend from Grieg Seafood ASA. Late 2018, the shares in Grieg Seafood ASA was transferred to Grieg Aqua AS (part of “Other”). This is the main driver for the reduction in net financial items in Grieg Kapital from 2018 to 2019 2 Other includes the Groups’ holding company, management service company and eliminations.

Grieg Maturitas Annual Report 2019

NOTE 3 OTHER OPERATING EXPENSES GROUP (Amounts in NOK 1 000)

2019

2018

21 669

Timecharter costs - shipping

287 670

262 582

Ship operating costs

595 138

550 213

882 808

834 464

Operating costs - shipping Voyage costs - shipping

Operating costs - shipping

2019

2018

4 817 204

4 122 188

Change in inventories

-601 969

-247 220

Cost of sales - fish farming

4 215 235

3 874 968

Cost of sales - fish farming Cost of sales - fish farming

2019

2018

Freight and cost of services

339 009

351 464

Other operating expenses

2 291 689

1 997 608

Other operating expenses

2 630 698

2 349 071

Other operating expenses

The Group has the following long term operating lease agreements related to chartering of vessels, offices, plant and machinery. 2019

Duration

Number of vessels

Annual operating lease expense

Long-term time charter

0-5 years

189 231

Bare-boat hire

1-14 years

Other lease amount charged in the year

2-10 years

478 666

Total lease amount charged

2018

100 337 189 098

Duration

Number of vessels Annual operating lease expense

Long-term time charter

0-4 years

195 491

Bare-boat hire

1-14 years

112 082

Other lease amount charged in the year

2-10 years

Total lease amount charged

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

204 036 511 609

NOTE 4 PAYROLL COSTS, NUMBER OF EMPLOYEES, REMUNERATION ETC. PARENT COMPANY (Amounts in NOK 1 000)

Total payments for salary, pension premium and other remuneration to Managing Director: Payroll and social security costs

2019

2018

Salaries and other benefits

2 390

2 763

351

414

Pension costs

150

Other benefits

2 848

3 359

Social security costs

Total

The Managing Director has been employeed in Grieg Maturitas II from 01.06.2019. There has been no remuneration to the Board of Directors in Grieg Maturitas. Total remuneration to Managing Director is specified under renumeration to executives below.

GROUP (Amounts in NOK 1 000)

Payroll and social security costs Salaries

2019

2018

780 180

712 618

Social security costs

69 134

65 411

Pension costs

48 681

40 985

Other benefits

89 488

80 281

987 483

899 295

1 239

1 180

Total Number of employees Number of sailing personnel

Total 1

720

765

1 959

1 945

Salary costs are recognised in the P&L as operating costs - shipping.

Remuneration to executives In 2019 total payments to salary, pension premium and other remuneration to present Managing Director was NOK 2 mill. and to present Board members NOK 17 mill. (NOK 1,4 mill. are Board remuneration and NOK 15,6 mill. are salaries from companies in the group). Remuneration to the Board members and Managing Director is paid from the companies where the Director is employed or a member of the Board. The Group CEO is entitled to 6 monthsâ&#x20AC;&#x2122; severance pay after termination of the employment relationship by the Company. Remuneration to prior Managing Director is presented in note 4, Parent Company.

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

NOTE 5 PENSIONS AND PENSION COMMITMENTS PARENT COMPANY Defined contribution based pension scheme The defined contribution based pension scheme covers all full-time and part-time employees and amounts to between 7% and 20% of salary up to 12G (national insurance basic amount). At year-end the company has no employees covered by the scheme. The contribution charged in the accounts for 2019 amounted to TNOK 91 (excluding National Insurance Contributions).

GROUP (Amounts in NOK 1 000)

The Group companies in Norway have pension schemes which meet the requirements of the Act relating to compulsory occupational pension schemes. Most of existing employees in Group companies in Norway are now transferred from having a defined benefit based pension scheme to having a defined contribution based pension scheme. All new employees are offered a contribution based pension scheme. Most of the Group companies abroad have a defined contribution based pension scheme.

2019

2018

40 765

34 328

Defined benefit pension, incl. AFP

4 520

923

Pension costs - discontinued operations

3 396

4 994

48 681

40 245

Total pension costs distributed as follows Defined contribution pension

Total

Defined contribution based pension scheme The defined contribution based pension scheme covers full-time and part-time employees and amounts to between 2% and 20% of salary. The contribution charged in the accounts in 2019 amounted to NOK 40,8 million (excluding National Insurance Contributions).

Defined benefit based pension scheme Some companies in the Group have defined benefit pension scheme. The Group pension scheme is funded through the accumulation of pension fund assets in an insurance company or through operations. The scheme gives an entitlement to defined future benefits. In 2019 a total of 73 persons (including pensioners and persons on early retirement) were covered by the benefits based scheme.

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

Net pension costs, including National Insurance Contribution

2019

2018

Present value of pension entitlements

4 648

635

Interest expenses on pension entitlements Return on pension fund assets Accounting effect of estimate divergences and plan changes This yearâ&#x20AC;&#x2122;s change, provision for undercoverage CPA Administration expenses Pension costs for the year

2 916

2 854

-3 696

-3 750

-67

719

1 103

4 520

923

Pension fund assets/liabilities

2019

2018

Calculated pension commitments

-138 024

-149 373

83 509

91 342

Pension fund assets (at market value)

-576

1 188

Net pension fund assets/(liabilities)

-55 091

-56 843

of which unfunded obligations

-28 969

-27 293

2019

2018

Unposted effect of estimate divergences

Financial assumptions:

Norway

Discount rate

2.30%

2,60%

Anticipated rise in salaries

2.25%

2,75%

Anticipated return on pension fund assets

3.80%

4,30%

Anticipated increase of pensions

2.00%

2,50%

Anticipated rise in pensions, regulation of National Insurance Base rate

2.00%

2,50%

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

NOTE 6 FIXED TANGIBLE ASSETS GROUP (Amounts in NOK 1 000)

Land and real estate

Vehicles, machinery and equipment

Vessels

Total

1 276 801

3 797 145

11 794 986

16 868 931

7 704

38 293

124 791

170 788

Additions

140 729

522 098

573 266

1 236 093

Disposals

-52 275

-112 346

-1 326 343

-1 490 964

1 372 960

4 245 189

111 166 699

16 784 848

-358 847

-2 100 137

-4 912 689

-7 371 673

-399

-41 960

-42 359

1 013 714

2 103 092

6 254 009

9 370 816

48 118

271 666

335 531

655 316

Economic lifetime

20-50 years

3-20 years

10 years

25-30 years

Depreciation plan

Linear

Purchase cost at 01.01. Currency translations differences

Purchase cost at 31.12. Accumulated depreciation Accumulated write-down Balance sheet value at 31.12. Depreciation Write-down (reversal)

Land & Real Estate: Current year investments mainly relate to Grieg Seafoods hatchery in Adamselv. The asset under construction has been recognised as “Vehicles, machinery and equipment" until commissioning of the completed facility in 2019. Grieg Seafood also invested in expansion of smolt plant in BC, new locations, operations center in Rogaland, digitalization, new equipment such as aeration systems, algal monitoring and general maintenance. These investments are the main additions under “Vehicles, machinery and equipment” Financial lease agreements: Grieg Seafood has financial lease agreements on real estate, vehicles, machinery and other equipment , with a book value of NOK 491 million, total depreciation in 2019 is NOK 43,0 million. The corresponding amount of lease liabilities recognized is NOK 452 million and the undiscounted amount of future lease payments is NOK 509 million as of 31.12.2019. Out of the total balance sheet amount for vessels the share of leased operating assets held by Grieg Star Group is NOK 1 083 million as of 31.12.2019 and the long-term financial lease liability recognized amounts to NOK 537 million as of year-end 2019.

Grieg Maturitas Annual Report 2019

NOTE 7 FIXED INTANGIBLE ASSETS GROUP (Amounts in NOK 1 000)

Purchase cost at 01.01 Currency translations differences

Licenses

Goodwill

Contracts

Other intangible assets

Total

1 226 093

176 946

161 688

28 397

1 593 124

13 386

717

1 700

15 803

Additions

2 607

3 353

5 961

Disposals

-8 307

1 233 780

177 663

163 387

31 750

1 606 580

-71 744

-78 720

-140 832

-13 331

-304 627

-89 603

1 162 036

9 340

22 555

18 419

1 212 350

8 745

4 561

9 940

4 511

27 759

Economic lifetime

5-25 years/unlimited

3-20 years

10 years

3-10 years

Depreciation plan

Linear/none

Linear

Purchase cost at 31.12 Accumulated depreciation Accumulated write-down Balance sheet value at 31.12. Depreciation Write-down (reversal)

Contracts: represent excess values related to the vesselsâ&#x20AC;&#x2122; contracts of affreightment through the participation in the G2 Ocean pool and purchased dividend rights in the Grieg Shipbrokers Group. Other intangible assets relates to logistic systems in Grieg Logistics Group and new digital software solutions in Grieg Investor. Licenses: relates primarly to fish-farming licenses in Grieg Seafood. Most licenses have an unlimited economic lifetime, but is subject to a yearly value assessment to determine if write-downs are required.

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

NOTE 8 INVESTMENTS IN SUBSIDIARIES COMPANY (Amounts in NOK 1 000)

Subsidiary

Registered office

Ownership

Proportion of voting shares, %

Book equity 100%

Book value

Dividend

Bergen

75%

100%

5 210 432

4 021 796

90 000

Grieg Maturitas II AS

Grieg Maturitas II AS, which is owned 75% by Grieg Maturitas AS and 25% by Grieg Foundation, is the common holding company of the Group.

GROUP The consolidated financial statements comprise the company Grieg Maturitas AS and Grieg Maturitas II AS with the following subsidiaries: Directly ownership %

Directly and indirectly ownership %

Proportion of voting shares, %

Bergen

100%

Grieg Logistics AS

Bergen

100%

Grieg Kapital AS

Oslo

100%

Grieg Aqua AS

Bergen

100%

Grieg Shipbrokers KS

Bergen

45%

55%

AS Joachim Grieg & Co

Bergen

100%

Grieg Investor Holding AS

Oslo

44,5%

80%

Grieg Group Resources AS

Bergen

100%

Ownership %

Proportion of voting shares, %

Grieg Maturitas II AS owns the following companies:

Registered office

Grieg Star Group AS

Grieg Kapital AS owns the following companies:

Registered office

Grieg Holdings II AS

Bergen

100%

Finnøy

80%

Rensefiskgruppen AS

Finnøy

100%

Finnmark Rensefisk AS

Ryfylke Rensefisk AS

Alta

100%

Marin Innovasjon AS

Finnøy

100%

Talgje Rensefisk AS

Finnøy

100%

100% 60%

Lønningdal Rensefisk AS

60%

Austevoll Rensefisk AS

Austevoll

72%

100%

AS Nestun Uldvarefabrik

Bergen

Silves Odissey Inv. and Techn. Lda.

Portugal

74%

90%

Grieg Gaarden AS

Bergen

100%

Grieghallen Parkering II AS

Bergen

47,52%

100%

93,15%

Grieghallen Parkering AS Maris Reinvest AS

Grieg Maturitas Annual Report 2019

Bergen Oslo

Grieg Star Group AS owns the following companies:

Registered office

Grieg Shipowning AS

Ownership %

Proportion of voting shares, %

Bergen

100%

Grieg Shipping II AS

Bergen

100%

Grieg International II AS

Oslo

100%

Grieg Shipping III AS

Bergen

100%

Grieg Star 2017 AS

Bergen

100%

Grieg Star AS

Bergen

100%

Philippines

100%

Grieg Star Bulk AS

Grieg Star Philippines inc.

Bergen

100%

Grieg Star OH Pool AS

Bergen

100%

Grieg Green AS

Oslo

100%

Grieg Green Consulting and Advisory Company Limited China Bergen

50%

GriegMaas Supramax AS

Bergen

50%

GriegMaas Ultramax AS

Bergen

50%

GriegMaas AS

Grieg Maas AS, (owned 50% by Grieg Star Group AS) is a new established company, owning 100% of GriegMaas Supramax AS and GriegMaas Ultramax AS

Ownership %

Proportion of voting shares, %

Tønsberg

100%

Mosjøen Industriterminal AS

Mosjøen

100%

Grieg Connect AS

Kristiansund

100%

Grieg Strategic Services AS

Bergen

100%

Grieg Port Security AS

Bergen

100%

Grieg Aqua owns the following companies:

Registered office

Ownership %

Proportion of voting shares, %

Grieg Seafood ASA

Bergen

50,17%

Grieg Seafood Rogaland AS

Bergen

100%

Grieg Seafood Finnmark AS

Alta

100%

Grieg Seafood Canada AS

Bergen

100%

Grieg Seafood BC Ltd.

Canada

100%

Grieg Seafood Shetland Ltd.

100%

Isle of Sky Salmon Ltd

100%

60%

Grieg Logistics AS owns the following companies:

Registered office

Scandinavian Harbour Service AS

Grieg Seafood Hjaltland UK Ltd.

Ocean Quality AS

Bergen

Ocean Quality UK Ltd.

100%

Ocean Quality North America Inc.

Canada

100%

Canada

100%

Ocean Quality USA Inc.

USA

100%

Shanghai International Trade Co. Ltd.

Kina

100%

Ocean Quality Premium Brands Inc.

Grieg Maturitas Annual Report 2019

Ownership %

Proportion of voting shares, %

Bergen

90%

Grieg Shipbrokers Ltd.

55%

Grieg Shipbrokers Asia AS

Bergen

100%

Grieg Shipbrokers KS owns the following companies:

Registered office

Grieg Shipbrokers Valuation Services KS

Grieg Shipbrokers Asia Pte. Ltd.

Singapore

100%

Grieg Shipbrokers Asia Ltd.

Hong Kong

100%

Ownership %

Proportion of voting shares, %

AS Joachim Grieg & Co. owns the following companies:

Registered office

Grieg Shipbrokers KS

Bergen

10%

Grieg Shipbrokers Valuation Services KS

Bergen

10%

Grieg Investor Holding AS owns the following companies:

Registered office

Ownership %

Proportion of voting shares, %

Grieg Investor AS

Oslo

100%

Joachim Grieg Star KS changed name to Grieg Shipbrokers Valuation Services KS

NOTE 9 INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT VENTURES GROUP (Amounts in NOK 1000)

Addition

Other changes

Book value 31.12

Excess value incl. in book value 31.12.

2 281

-219

Ownership %

Fram Marine AS 1

25.00%

Oslo

2 281

Tytlandsvik Aqua AS

33.33%

Hjelmeland

37 122

1 516

38 638

Nordnorsk Smolt AS 2

50.00%

Hasvik

43 737

-1 304

42 433

Grieg Newfoundland AS 3

40.00%

Bergen

42 050

42 065

G2 Ocean Holding AS

35.00%

Bergen

76 589

4 119

-32 539

48 155

Rogaland Havbrukspark Eiendom AS

50.00%

Finnøy

500

116 507

94 692

-4 574

-32 539

174 072

-219

Sum

Book value 01.01

Share of profit/loss for the year

Registered office

Booked according to the cost method. 2019, Grieg Seafood acquired 50% of the company shares. During 2019 an expansion of the smolt facility was financed by the shareholders. The loan was converted to equity at the end of 2019. 3 Grieg Newfoundland AS (GNF) is an associated company as of 31.12.2019. In 2019, the shareholders in GNF converted part of the shareholders loan into equity. In March 2020, transactions were carried out which resulted in GNF being a subsidiary from the same time. The consideration in the transaction is based on values that far exceed the book value of the share in GNF as at 31.12.2019. GNF’s consolidated financial statements have not yet been prepared at the time of reporting. GNF has currently no income and its main asset is the development of fish farming in Newfoundland. In 2019, GNF’s share of profits is not recognized as an associated company, as most of the costs are assumed to be capitalized. 1

Grieg Maturitas Annual Report 2019

NOTE 10 FINANCIAL ITEMS (Amounts in NOK 1000)

Other Financial Income

Parent company 2019 2018

Group 2019

2018

38 571

29 266

390

360

Gain on sale of investments

33 739

94 691

Other financial income

45 809

86 731

390

360

118 119

210 688

Parent company 2019 2018

2019

2018

Interest income

Total financial income

Other Financial Expenses

Group

275 821

268 896

Write-down of financial fixed assets

40 044

Loss on sale of investments

Other financial expenses

28 744

88 813

Total financial expenses

344 618

357 709

Ownership

Purchase cost

Rem Nor AS

8.82%

3 000

Blueye Robotics AS

3.81%

5 000

F 14 Invest AS

1.73%

4 663

Karihaugveien 22 Holding AS

6.70%

1 456

Interest expenses

NOTE 11 SHAREHOLDINGS AND OTHER INVESTMENTS GROUP (Amounts in NOK 1 000)

Shareholdings and other investments - classified as current assets Book value 31.12. Company

Civita AS

0.29%

180

10.00%

6 587

2.10%

1 150

Argentum Investment Partner IS

7.62%

27 225

Union Real Estate Fund AS

0.94%

816

Holmen Industri Invest I AS

26.66%

26 672

Proximar Seafood AS Sahara Forest Project AS

Voxtra East Africa Agribusiness Fund DNB Private Equity III ( IS) Total - classified as current assets 1

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

5.44%

5 740

1.41%

4 993 87 481

87 481

Shareholdings and other investments - classified as fixed assets Book value 31.12. Company Mercell Holding AS FSN Capital Ltd P.ship II Maris Reinvest/Navico Holding AS Incentra (co-operative)

Ownership

Purchase cost

15.34%

31 008

1.32%

6 764

93.15%

60 913

7 570

2.7%

Star Blue Holding Inc

25.00%

UACC Ross Tanker DIS

3.00%

Other investments Total - classified as fixed assets 2

1 985

5 775

106 552

46 445

Portfolio investments: the portfolio of investments on the list is valued at the lower of cost price and estimated fair value (market value). The investments are treated as a portfolio where gains and losses are off-set, and the cost price are measured against the estimated fair value on the total portfolio. Investments assessed to have considerable and permanent decrease in value will be removed from the portfolio. 2 Direct share investments: the shares are valued on the basis of the cost method at an individual basis, and written down if fair value is lower than the cost price. Write-downs are reversed when the basis for the write-down no longer exist. 1

NOTE 12 INVENTORIES AND BIOLOGICAL ASSETS GROUP (Amounts in NOK 1 000)

Raw materials - fish farming Goods in progress - fish farming Finished goods Bunkers and lube oil Total inventories and biological assets

2019

2018

180 323

141 441

2 684 933

2 226 458

111

186

30 468

32 260

2 895 834

2 400 345

NOTE 13 RECEIVABLES DUE IN MORE THAN ONE YEAR GROUP (Amounts in NOK 1 000)

2019

2018

Loan to associated companies

81 125

207 626

Other receivables

52 462

12 169

Total

133 587

219 795

The reduction in loan to associated companies due in more than one year is related to a loan to G2 Ocean from Grieg Star.

Grieg Maturitas Annual Report 2019

NOTE 14 MARKET BASED FINANCIAL INVESTMENTS GROUP (Amounts in NOK 1 000)

Purchase cost

Market value 31.12.2019

5 999

8 532

Mutual funds

216 329

259 330

Bonds

154 784

165 899

Money market funds

174 918

180 269

552 030

614 029

Individual shareholdings

Total Unrealised gain this year of market based financial investments

47 790

NOTE 15 DEBT PAYABLE AFTER 5 YEARS GROUP (Amounts in NOK 1 000)

Long-term debt - maturity more than 5 years

2019

2018

603 709

253 789

NOTE 16 MORTGAGES/GUARANTEE LIABILITY/RESTRICTED FUNDS PARENT COMPANY (Amounts in NOK 1 000)

Restricted deposits related to employees’ tax deduction

2019

2018

172

GROUP (Amounts in NOK 1 000)

Restricted deposits related to employees’ tax deduction Debt secured by mortgage (including overdraft facilities) Mortgaged debt - long term Factoring and short term debt Total mortgaged debt

2019

2018

30 237

28 851

2019

2018

6 048 139

6 006 617

437 775

629 255

6 485 915

6 635 871

Out of the total long-term mortgaged debt, NOK 916 million is long-term financial lease liabilities. For further details on leased assets see note 6. Group assets have been given as mortgage security.

Grieg Maturitas Annual Report 2019

Balance sheet value of mortgaged assets Receivables Vessels and newbuildings Real estate Other assets

2019

2018

522 595

957 545

5 452 601

6 551 072

915 064

738 293

2 018 858

1 913 106

Licences

1 133 630

1 146 839

Inventories

2 865 255

2 367 899

12 908 004

13 674 754

2019

2018

918 572

1 026 265

Total Pledges include shares in subsidiaries. The book value of these shares is 0 in the consolidated accounts. Undrawn borrowing facilities

Loan covenants The covenants of Grieg Seafoodâ&#x20AC;&#x2122;s credit facility are an equity ratio in excess of 35% (in the Group, excluding Ocean Quality), and a revolving NIBD/EBITDA ratio of 5.0 if the equity ratio is higher than 40% and 4.5 if the book equity ratio is between 35% and 40%. As at 31 December 2019, the NIBD/EBITDA for the Group excluding Ocean Quality was 1.4 and the equity ratio was 51%. Consequently, Grieg Seafood fully complies with all covenants at the year-end. Grieg Star Group (GSG) is per year end 2019 required to have minimum liquid funds of USD 25 mill / 5% of total interest bearing debt. A common covenant for all mortgage loans is that GSG must continue to be controlled by the Grieg family and have a book equity ratio >25%. GSG has met its loan covenant commitments throughout the year. In addition to the guarantees listed above, Grieg Shipowning AS is providing guarantees in the amount of USD 31.1m per 31.12.2019 for Grieg International II AS vessels, USD 75m for the Grieg Shipping II AS vessels, USD 9.6 for the Grieg Shipping III AS vessel and USD 51.9m for the GriegMaas Ultramax AS vessels. Grieg Shipping II AS and Grieg International II AS are providing guarantees in the amount of USD 188.3 m for Grieg Shipowning AS.

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

NOTE 17 FINANCIAL RISK The Group is exposed to a range of financial risks; market risk (including currency risk, cashflow interest rate risk, fair value interest rate risk and price risk), credit risk and liquidity risk. The Group make use of financial derivatives to manage the financial risk.

Market risk Several of the Group’s companies hold significant financial investment portfolios, and changes in the value of international securities and interest rates directly affect the valuation of these. The portfolios are managed in accordance with long-term strategies and within defined mandates, also reflecting the Group’s business principles.

Foreign exchange risk A large proportion of the Group’s revenues, assets and liabilities are in foreign currencies, mainly USD and EUR. Changes in foreign exchange rates therefore affect the group accounts presented in NOK. The Group companies have strategies and procedures in place to reduce the exchange rate risk. Grieg Star Group hedges expenditures in currencies other than USD through forward contracts. At 31.12.19 the company had entered into hedging agreements through the use of currency swaps for USD 7.8m. Total unrealized MTM value, not recognized in the balance sheet, at 31.12.19 was USD 0.2m. Grieg Seafood apply hedge accounting to foreign currency contracts relating to non-current physical delivery contracts. The company do not utilize hedge accounting for its short-term foreign currency forward contracts. Total unrealized MTM value, not recognized in the balance sheet, at 31.12.19 was 0,8 MNOK. Grieg Shipbrokers had 31.12.19 forward contracts to hedge a total of USD 17,975 m, with an unrealized not recognised loss of NOK 9,7 m.

Credit and counterparty risk The Group’s credit risk that counterparties do not have financial ability to meet their obligations is relatively low due to solid customers, and a diversified portfolio. Historical losses on receivables have been minor amounts. The Group strive to mitigate the counterparty credit risk by making use of procedures and systems, and developing these on an ongoing basis. In specific parts of the Group with a large customer portfolio, the risk is reduced by maintaining robust procedures for assessing counterparty risk and credit rating.

Liquidity risk The Group constantly monitors liquidity reserves and needs. The Group’s liquidity risk has increased, but strong liquidity and a focus on cash management ensure that there is sufficient liquidity to meet the Group’s obligations when they mature.

Interest rate risk Interest rate risk arises in the short and long term as most parts of the Group’s debt are at a floating rate of interest. A change in interest rates will therefore impact the interest expense. The application of interest rate derivatives increases the predictability of the financing cost. A change in interest rates will also affect the returns on the investment portfolio and the rates on cash deposits. The Group’s strategy is to employ a certain level of hedging using interest rate swap agreements to ensure low volatility in the Group’s interest expenses. Grieg Star Group hedges part of its interest rate exposure. Gains and losses arising from valuation of interest rate swaps in Grieg Star Group are recognised in the same period as the related interest expense. At 31.12.19 the Grieg Star Group held interest rate swap agreements of USD 244,7m. Total unrealised MTM value, not recognised in the balance sheet, was USD -5.6m. Gains and losses arising from interest rate swaps in Grieg Seafood are not subject to hedge accounting and are recognised at the lower of cost and fair value. Grieg Seafood had interest swap agreements totalling NOK 1 060 mill. at 31.12.19. Unrealized gain attached to these agreements, not recognised in the balance sheet, amounts to NOK 5,5 m. Interest rate swap agreements have a horizon of 4 years and whether these periods are to be rolled over is a matter of constant evaluation.

Grieg Maturitas Annual Report 2019

Freight rate risk The Group’s ship earnings are to a large extent related to cargo transportation contracts as a considerable share of the shipping activities are of an industrial character. The open hatch fleet’s earnings are to a large extent related to long term cargo contracts. This implies that revenues are less volatile than in the spot market, and that changing market conditions generally have a delayed effect on the results. The group’s dry bulk activity is on the other hand more exposed to general spot market movements. Forward Freight Agreements (FFA) are from time to time used as a risk management instrument in order to smooth out freight volatility. The FFA contracts are settled as an adjustment of operating income. At 31.12.19, the Grieg Star Group had sold one supramax FFA contract for the calendar year 2020. Total unrealized MTM value, not recognized in the balance sheet, was USD 0,49 mill.

Salmon prices The Group is also exposed to fluctuations in the spot prices for salmon, which is mainly determined by global supply. Although the effect of changing prices is somewhat reduced through Grieg Seafood’s geographical diversification, the long production cycles makes it challenging to respond rapidly to changing market prices. Salmon is primarily traded at spot prices. The price risk is partly hedged through financial sales and purchase contracts.

NOTE 18 CONTINGENCIES AND SUBSEQUENT EVENTS Inspection – European Commission The European Commission DG (Director General) Competition performed an inspection at Grieg Seafood Shetland on the 19th of February 2019 to explore potential anti-competitive behavior in salmon industry. Grieg Seafood aims to be open, transparent and forthcoming and will provide all necessary information requested by the European Commission DG Competition on its investigation. There is no new information as of the Group annual accounts approval date.

Sale and acquisition of Grieg Newfoundland AS On 7 February 2020, Grieg Seafood announced that it had signed Sales and Purchase Agreements (SPA) for the acquisition of Grieg Newfoundland AS in Newfoundland, Canada. The project currently comprises licenses for 11 sea sites across four areas in Placentia Bay, Newfoundland. Grieg Newfoundland AS was owned by Grieg Kapital AS (39%), which is a fully owned subsidiary of Grieg Maturitas, in addition to Kvasshøgdi AS (39%), Ocean Choice International Ltd. (OCI) (19.5%) and Knut Skeidsvoll (2.5%).

COVID-19 Outbreak At the time of signing the annual report for 2019 the COVID-19 virus is classified by the WHO as a pandemic. Consequently, the world is facing a financial crisis due to restrictions and the collapse in the global oil-price. However, the outbreak of COVID-19 does not have an impact on the 2019 consolidated financial statements for Grieg Maturitas. For 2020, Grieg Seafood ASA has guided on a total harvest of 100 000 tonnes GWT, and the company volume target remains in place. Grieg Seafood ASA is currently running as normal, considering the circumstances. For Grieg Star, the short- to medium-term impact is hard to predict given the current situation, but it is expected that the original expectation for 2020 will be lowered. The board of directors and group management have taken measure to mitigate the COVID-19 crisis. First and foremost, actions related ensure the health and safety for all our employees have been but in place. Furthermore, the group is closely monitoring the liquidity situation and has implemented a plan, as a part of continuous risk assessment, to secure that the Group remains solid throughout the crisis.

Grieg Maturitas Annual Report 2019

NOTE 19 TAXES PARENT COMPANY (Amounts in NOK 1 000)

Tax expense consists of: Ordinary result before tax Permanent differences Change in temporary differences

2019

2018

88 731

89 349

-89 712

-89 896

-31

-965

-578

Tax losses carried forward

Basis for payable taxes in the income statement

Basis of tax payable in profit and loss account

Components of the income tax expense Payable tax on this year’s result

Change in deferred tax

-216

-114

Tax expense (-income)

-216

-114

2019

2018

Deferred tax Taxable differences Tax-deductible differences

Tax credit carried forward

-2,233

-1 268

Basis for deferred tax

-2,174

-1 194

478

262

Deferred tax assets in the balance sheet

Grieg Maturitas Annual Report 2019

GROUP (Amounts in NOK 1 000)

Tax expense consists of: Profit before tax Profit before tax, companies subject to shipping tax Profit before tax, companies not subject to shipping tax

2019

2018

1 035 724

925 537

-52 727

14 585

1 088 451

910 952

36 645

184 007

-242 693

-451 705

91 272

-8 788

Basis of tax payable, companies not subject to shipping tax

973 675

634 465

Tax payable, companies not subject to shipping tax

227 636

140 463

Permanent differences Change in temporary differences Change in tax loss carried forward

Tax charge in profit and loss account Tax payable Increase / (decrease) in deferred tax Tax charge for the year on ordinary result Tax payable in balance sheet Tax payable, companies not subject to shipping tax Tonnage tax

227 636

140 463

29 602

100 021

257 237

240 483

2019

2018

221 606

137 569

3 486

3 849

Other adjustments (treasure trove)

-2 460

-962

Total tax payable in balance sheet

222 632

140 456

Deferred tax Taxable timing differences Tax-deductible timing differences Tax loss to be carried forward Net timing differences Deferred tax on net timing differences Unposted deferred tax assets Net deferred tax in balance sheet

2019

2018

2 803 317

2 361 274

-64 433

-73 897

-849 451

-760 157

1 889 433

1 527 220

447 213

397 374

77 394

77 644

524 607

475 019

2019

2018

Norway, companies not subject to shipping tax

-343 586

-288 497

-152 846

-84 857

Companies subject to shipping tax

-353 019

-386 803

Total

-849 451

-760 157

Loss carried forward

Grieg Maturitas Annual Report 2019

NOTE 20 EQUITY PARENT COMPANY Share capital Share premium

(Amounts in NOK 1 000)

Equity - Opening Balance

Other equity

Total 4 064 048

1Â 124

409 763

3 653 162

88 947

Profit of the year

-90 000

1 124

409 763

3 652 109

4 062 995

Share capital

Share premium

Group reserves

Minority interests

Total 7 486 163

Provision for dividend Equity - Closing Balance

GROUP (Amounts in NOK 1 000)

1 124

409 763

4 085 958

2 989 320

Profit for the year

Equity - Opening Balance

263 305

515 182

778 487

Provision for dividend at year end

-90 000

-39 365

-129 365

Dividend paid during the year

-240 271

Effect of changed ownership in subsidiaries

-8 791

-13 209

-22 000

Currency translation differences

26 928

8 747

35 675

Equity transactions 2

26 781

45 665

72 446

Other changes 3

-28 939

-12 160

-41 099

1 124

409 763

4 275 241

3 253 908

7 940 037

Equity - Closing Balance

Currency translation differences: This is primarily the effect of converting subsidiaries from local currencies into NOK, and the major effect is from Grieg Star Group.

Equity transactions: The total amount is similar to the OCI (other comrehencive income) from Grieg Seafood ASA in their IFRS financial statements, which is converted to NGAAP for consolidation purposes in Grieg Maturitas Group. 2

Other changes: The main change is due to a reduction in the carrying value of associate G2 Ocean. For further details refer to note 9.

NOTE 21 SHARE CAPITAL AND SHARE INFORMATION At 31 December 2019 the share capital of Grieg Maturitas AS consisted of 1 123 530 shares of nominal value NOK 1. The share capital consists of the following share classes: Class

Number of shares

Nominal

Book value

A-shares

201 600

1,-

201 600

B-shares

921 930

1,-

921 930

Total

1 123 530

The A class shares carry both voting and dividend rights. The B class shares carry no voting rights, but are entitled to dividends.

Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

The company’s shareholders are as follows:

Ownership %

A-shares

B-shares

Total

Kvasshøgdi AS

4,37 %

10 480

38 631

49 111

Thomas WG AS

4,50 %

9 980

40 579

50 559

Joachim WG AS

4,50 %

9 980

40 579

50 559

Benedicte WG AS

4,50 %

9 980

40 579

50 559

Nina WG. AS

4,50 %

9 980

40 579

50 559

Salthavn AS

15,64 %

35 224

140 440

175 664

6,74 %

15 176

60 507

75 683

GMC Invest AS

22,37 %

50 400

200 947

251 347

Suletind AS

22,37 %

50 400

200 947

251 347

Capelka AS

10,52 %

118 142

100 %

201 600

921 930

1 123 530

Salthavn Invest AS

Total

Through the companies specified above, the shareholders and their families have control of 100% of the shares in Grieg Maturitas AS.

NOTE 22 RELATED PARTIES PARENT (Amounts in NOK 1000)

Transactions

Operating revenue

Operating cost

Financial income*

Financial expenses

Accounts payable

Current receivables*

1 973

376

90 000

* Dividend from subsidiaries

GROUP (Amounts in NOK 1000)

Members of the board and managing director of the parent company, including their related parties, are with companies in the Group considered as closely related parties. Transactions and intercompany balances with Group companies are eliminated in the Group accounts, and is not mentioned below. Remuneration to directors and managing director, see Note 4.

Operating revenue Associated companies Other related parties Total

Operating cost

Financial income

Financial expenses

Receivables

1 389 421

11 400

449 973

2 941

36 504

337 276

3 929

44 113

1 425 925

337 276

11 400

453 902

47 054

Liabilities

Transactions with related parties are governed by market terms and conditions in accordance with the arm’s length principle.

Grieg Maturitas Annual Report 2019

NOTE 23 REMUNERATION TO AUDITOR Specification of Group auditor’s fee (Amounts in NOK 1 000)

Parent company 2019 2018

Group 2019

2018

7 350

6 301

Taxation advice

1 789

1 700

Other assurance services

867

494

Other assistance

1 597

1 237

Total (except VAT)

11 604

9 733

1 823

1 462

Auditor Statutory audit (incl. technical assistance annual accounts and notes)

The amount above includes remuneration to other auditors with:

Grieg Maturitas Annual Report 2019

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Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019

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OUR HISTORY

1884

1994

Joachim Grieg establishes ship broker business in Bergen.

Grieg International established.

1984

100 years! Restructured as the Grieg Group.

1999

4th generation Grieg take over.

1992

Grieg Seafood established.

1969

Grieg Logistics established as a separate business unit.

1998

Grieg Investor established.

2020

2014

2002

Grieg Edge established.

The Grieg Group celebrates 130 years anniversary!

Grieg Foundation established.

2008

2018

Star Shipping becomes Grieg Star Shipping and joins the Grieg group.

Grieg Kapital established

2017

2007

G2Ocean established 1st May, joint venture between Grieg Star and Gearbulk.

Grieg Seafood gets listed on the Oslo Stock exchange.

2010

Grieg Green established.

2019

Grieg Connect established.

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Grieg Maturitasâ&#x20AC;&#x192; Annual Report 2019