GRIEG MATURITAS ANNUAL REPORT · The Grieg Group has its beginnings in a long and proud maritime...

1 ANNUAL REPORT2018

GRIEG MATURITAS ANNUAL REPORT

WE WILL RESTORE OUR OCEANS

2018

CONTENT

Reflections from Chair ..................3Grieg Group ...................................... 4Making a difference ....................... 5Highlights in 2018 .......................... 6

Director’s report ..............................7Profit and loss statement ........13Balance sheet ...............................14Cashflow statement .................16Notes ................................................. 17Auditors statement ...................35

3 ANNUAL REPORT2018

For 135 years the Grieg Group has added value to the global community, whilst growing our compa-nies. Since the beginning in 1884, our attention has been outwards and forwards. We have found oppor-tunities at the crossroads between people, coun-tries and continents, always attentive to what chal-lenges and opportunities the future might represent.

2018 has been an exciting and rewarding year with-in the Group. We have strengthened our business-es and consolidated new partnerships. We have set new goals to guide our priorities, and high ambitions remind us that we should be bold in our efforts. The process has been an exercise in team-work. Across our companies, colleagues have been engaged in a joint effort to reformulate our mission and find new, exciting business-opportunities. We have revised our business strategy to meet the future as a more resil-ient, innovative and collaborative group of companies. We believe in shared value! In doing good for society and building a profitable business at the same time.

The UNs Sustainable Development Goals (SDGs) is our framework. To meet the goals will require action by governments, but also from the private sector. Through the strengths of our core businesses and competencies, our companies shall be engaged and committed en-ablers of the SDG’s. The goals strengthen our commit-ment to the essence of what we’re all about; fostering a great, inclusive working-environment, sound economic growth, compliance with laws and regulations, and an

inspiring, open-minded and inclusive business-spirit.

The SDGs are also a daring quest, where we challenge ourselves to stretch our abilities, minds and spirits in search for new answers and better solutions. Our choice is clear. We will help restore our oceans, and we will address climate change head on. Healthy oceans on a healthy planet is crucial for people and our business.

We all have to use our core strengths and new tech-nology as a springboard for innovative and sustainable business-solutions. That is exactly what we intend to do. We are enthused by big dreams and the ability to deliver measurable and significant results, and I trust that our ambitions and goals will serve as fertile ground where both people and ideas can flourish. That is how we will celebrate and honour our legacy, and that is how the Grieg Group will be moving forward!

REFLECTIONS FROM CHAIR

Elisabeth Grieg, Chair Grieg Maturitas

4 ANNUAL REPORT2018

GRIEG GROUP

Grieg Maturitas

Grieg Seafood

Grieg Investor

Grieg Kapital

Grieg Shipbrokers

Grieg Logistics

Grieg Star

Grieg Foundation

Grieg Maturitas II

Grieg Group Resources

The Grieg Group has its beginnings in a long and proud maritime tradition. The Grieg Group is a family owned group, where the Grieg family (Grieg Maturitas) owns 75% of the Grieg Group and Grieg Foundation owns 25%.

The Grieg Group is based on long-term partnerships, creating value in our various activities – shipping, ship-broking, maritime services & port operations, digital shipping solutions, seafood, investments and financial advisory services. By using the UN Sustainable Devel-opment Goals (SDG) as our framework, we have revised our business strategy to meet the future as a more re-silient, innovative and collaborative group of companies. Our people are our most valuable resource.

Keeping a diverse workforce and providing them with lifelong learning, will ensure that we always have the best hands and minds on board. Our existing compe-tence and expertise shall be the basis for innovative ideas that will benefit both our companies and society – now and in the future.

Only together we can create the changes the world need – and at the same time make profits while doing it.

Grieg Group is an industrial global group. The group s headquarter is located at Grieg-Gaarden, Bergen, Nor-way.

5 ANNUAL REPORT2018

In the Grieg Foundation we want to make a differ-ence. What we do is make a small, but hopefully important, contribution to the world's common agenda to ensure the sustainable development of this planet.

We often say: "What matters are the footprints we leave as we go along. We feel that fits well with the definitions the UN has set for their Sustainable Development Goals.

We have to make sure that fulfilling our needs today

does not destroy the possibilities for future genera-tions.

In the work of the Grieg Foundation, we seek to further build on the Sustainable Development Goals, the world`s largest corporate sustainability initia-tive.

TOTAL CONTRIBUTION FROM 2002-2018 NOK 593 MILL.

IN 2018 NOK 46 MILL.

MAKING A DIFFERENCE - GRIEG FOUNDATION

6 ANNUAL REPORT2018

HIGHLIGHTS IN 2018Grieg Group winner of the sustainability prize

Bergen Chamber of Commerce and Industry and Fana Sparebank awarded their first sustainability prize.

Digital focus in Grieg LogisticsSeamless and Shiplog merged into Grieg Connect focusing on digital port and harbour operations.

In support of NATO exercise Trident Juncture

Grieg Strategic Services supported The Norwegian Defense Forces and the NATO Allied Forces with planning and execution of logistical support and maritime operations during Trident Juncture.

Newfoundland Green light for continuing developing Grieg Group’s Seafood project on the east coast of Canada.

New vessel delivered to Grieg Star

STAR MAJESTY was added to the Grieg Star fleet.

Grieg Gaarden and Grieg Group Resources renewed in Eco-Lighthouse

We are now certified for three new years at Eco-lighthouse.

Winner of Entrepreneur of the Year - Norway

Per Grieg jr. and Grieg Seafood winner of the national finals in EY Entrepre-neur of the Year in Norway.

New company - Grieg Kapital

Grieg Kapital is established as a merger between Grieg International, Grieg Holding, Grieg Ltd and Grieg Property, and is an investment and asset man-agement company within the Grieg Group.

Grieg Investor

Tiril Jakobsen new CEO. Al Gore attende the sucessful Grieg Investor Conference with 250 investor discussing sustainable capitalism.

Bellona and Grieg Seafood in collaboration to reduce marine plastic

The focus of the collaboration is on the fish farming industry’s plastic con-sumption and map any leaks to the environment.

Grieg Investor elected this year’s Nordic Investment Advisor - again

For the second year in a row, Grieg Investor was awarded the “Nordic Invest-ment Consultancy of the Year” award.

New joint venture - Grieg Maas Grieg Star sells two conventional bulk carriers to a new joint venture, Grieg Maas, established with Maas Capital in the Netherlands.

Sustainable Development Goals Implementing the UN Sustainable Development Goals as our foundation and stretch goals in all our business strategies.

DIRECTORS’ REPORTGRIEG MATURITAS

1 945 16 2899269 739EMPLOYEES 31.12.2018 OPERATING REVENUE 2018

NOK mill.PROFIT BEFORE TAX 2018

NOK mill.TOTAL ASSETS 31.12.2018

NOK mill.

2018

8 ANNUAL REPORT2018

Highlights

2018 was a strong year for Grieg Seafood. The company reached its last guided har-vest volume of 75 000 tons, an increase of 20% compared to 2017, and revenues of more than NOK 7,5 billions. This was achieved by maintaining a strict focus on sustain-ability and driving forward improvements to Grieg Seafood’s farming operations. The main reason for the good performance was a strong market and more stable produc-tion. Globally, the supply of Atlantic salmon flattened, while underlying demand has strengthened. This has resulted in a shortage of salmon and high prices, a situation expected to persist. However, short term price fluctuations may occur. To offset the effect of these fluctuations, Grieg Seafood has adopted a policy which aims to ensure that 20-50% of all production in the coming years is hedged against price fluctuations. Currency hedging is also carried out.

Throughout the year, Grieg Seafood introduced several initiatives, including advanced sensor- and monitoring systems across their four regions. In September Grieg Seafood opened a new operations center in Rogaland, supporting their digitalization strategy utilizing big data analytics to improve overall operational performance.

Grieg Seafood is well prepared to continue executing on the growth strategy, target-ing 100 000 tons in 2020, with cost at or below industry average.

In Grieg Star improved market conditions together with increased synergies from its joint venture G2 Ocean, contributed to better earnings. G2 Ocean is now the largest open hatch shipping company in the world. After the market bottomed out in 2016, the result from the conventional dry bulk activities returned to back to black. Open hatch did also experience improved earnings through the renewal of several cargo contracts. As the company’s break bulk terminal in Squamish, Canada is no longer considered part of the core business, a sale was concluded during the year. Despite overall improved earnings, Grieg Star recorded a deficit in 2018 as expected, as the market recovery in open hatch continued to progress slowly.

Grieg Group

KEY FIGURES (NOK mill.) 2018 2017

Turnover 9 739 9 059EBIT 1 179 815Profit before tax 926 671Profit after tax 685 464

DIRECTORS’ REPORT 2018 GRIEG MATURITAS

Grieg Maturitas ASGrieg Maturitas is the parent company of the Grieg Group, and is owned by the Grieg family. The com-pany 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 sustain-able manner, and in accordance with our principles.

2018 was a good year for the Grieg Group overall, with increased turn-over in all segments. Grieg Seafood achieved record earnings driven by highest harvested volume ever, with continued strong salmon prices. Improved market conditions in shipping together with increased syn-ergies from the G2 Ocean joint venture, contributed to better earnings for Grieg Star, but the company still recorded a deficit on results before tax.

All companies within the Grieg Group delivered positive results in operation. Group turnover was NOK 9,7 bill., the operating profit NOK 1,2 bill and the profit before tax was NOK 926 mill. The Group is well positioned for the future.Grieg Shipbrokers is still expanding in Asia, and Grieg Logistics digital business merged into Grieg Connect. Grieg Investor has worked hard on establishing Sustainable Capitalism, the company made all time high profit for the year. In 2018 Grieg Kapital was established to coordinate capital- and directinvest-ments activities, to further strengthen the Group’s asset- and directinvest-ment activities.

In 2018 the Grieg Group has worked towards implementing defined UN Sus-tainable Development Goals (SDG) at Group level and within all our businesses, as part of our strategies. The Grieg Group has always strived to do business in a fair and proper way. When implementing the SDG framework we have defined SDG 8 - Good jobs and economic growth, SDG 16 – Peace and justice and SDG 17- Partnership for the goals as our foundation goals, and SDG 4 – Quality educa-tion, SDG 5 – Gender Equality, SDG 9 – Industry, innovation and infrastructure, SDG 13 – Climate action and SDG 14 – Life below water as our stretch goals.

Grieg Maturitas


Turnover 3,4 3,4EBIT -1,0 -1,7Profit before tax 89,3 415,2Profit after tax 89,5 415,4

9 ANNUAL REPORT2018

Grieg Green reinforced its position as one of the few players providing sustainable ship and rig recycling in the world. So far more than 100 ships- and offshore recycling projects have been completed, and more than 250 IHM’s have been issued.

Grieg Logistics Group made good progress in 2018. The large NATO exercise Tri-dent Juncture and several agency agreements, had a positive impact on the result in both Grieg Strategic Services, Grieg Logistics (GL) and Scandinavian Harbor Ser-vice. During the second half of 2018, GL acquired the remaining shares in Shiplog and Seamless, and merged the companies to Grieg Connect. The merger has been well received in the market and Grieg Connect’s digital position in the port and harbour market is expected to be strengthened in the future.

2018 has been a stong year for Grieg Investor. The year started with adapting to the new EU regulation MiFID II (Markets in Financial Instruments Directive). The pur-pose of this regulation has been investor protection and transparency in the financial markets. Grieg Investor has always been an independent investment advisor and the requirements for this under MiFID II has been adopted. Grieg Investor introduced the nominee service to their clients in 2018. This has made it more efficient for both the client and the company in performing fund transactions. The company’s revenue and profit has increased steady the last few years and reached an all-time high in 2018.

Grieg Shipbrokers’ operations developed satisfactory in 2018 despite somewhat poor market-conditions. The company continues to make good progress within Maritime Finance solutions and a significant number of transactions with new and existing cus-tomers was concluded during the year.

The regular Sale & Purchase/newbuilding activity was satisfactory, but in order to increase volume and sales, significant steps was taken to coordinate their activities in Norway and the UK. The Chartering activities within Dry Bulk, Gas and special-ized tankers improved during the year with significant volume achievements in all segments. 2018 was the first full operating year for Grieg Shipbroker’s subsidiaries in Hong Kong, Shanghai and Singapore, focusing on chartering large bulk carriers. 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 been increasing, but the prices achieved are still low.

Grieg Kapital was established in December 2018, as result of a merger between Grieg International, Grieg Ltd, Grieg Property and Grieg Holdings. The company is now a unifying investment and asset management company within the Grieg Group. The company’s mandate is to safeguard and develop the Group´s financial asset portfolio, and act as buffer capital for the Group companies, by maintaining a high level of avail-able liquidity in parts of the portfolio. Furthermore, Grieg Kapital will support as add-on capital for existing investments, and be an active business developer by investing in unlisted companies. The Grieg Group’s policy for responsible investments is part of the company’s business strategy.

Balance sheet, financial situation and cashflow The Grieg Group has a strong financial position. Total current assets amount to NOK 5 189 mill., of which NOK 1 341 mill. is made up of bank deposits, market based financial investments and other financial investments. Current liabilities total NOK 2 225 mill., which gives positive working capital of NOK 2 964 mill. The Group’s total fixed assets is NOK 11 141 mill., of which NOK 6 037 mill. is financed through loans from financial institutions. CashflowIn total, the Group had a positive cashflow of NOK 1 110 mill. from operations. Due to investments in fixed assets, mainly Grieg Seafood’s expansion of fish hatcheries and capacity expantion, the net cashflow from investing activities is negative at NOK 732 mill. The net cashflow from financing activities is negative at NOK 776 mill., mainly due to loan repayment and dividends paid. In total, the Group had a negative cashflow of NOK 398 mill. in 2018.

Grieg Maturitas


Equity 4 064 4 065Total assets 4 155 4 358Equity ratio 98% 93%

Grieg Group


Equity 7 486 6 980Total assets 16 289 15 869Equity ratio 46% 44%

10 ANNUAL REPORT2018

Financial risk and risk managementWhen operating in a global market and 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 the regulatory framework. Risk management is a continuous process, and an integrated part of the Group’s govern-ing 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 risks. 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 resources. Their qualifications constitute a substan-tial part of the business capital. Providing them with learning opportunities that pro-mote competence aligned with their personal career goals will ensure that we always have the best hands and minds on board. Each employee should possess the skills and knowledge required to enable the Grieg companies to be in the forefront of the indus-tries in which we operate. Throughout the organization there are ongoing training and learning activities. According to employee surveys job satisfaction is generally high, and the working environment is good.

Equal opportunitiesWe believe that a diverse and balanced working environment is crucial for success, and we strive to be in the forefront on diversity within the businesses we operate. The Grieg Group will work towards gender parity at all levels of the organizations, both for onshore and offshore operations. We will also promote gender equality and diversity towards business and supply chain partners.

Health and safetyHealthy employees and a stable work force are important to enable a good working environment. The Group companies aims at reducing the risk of serious incidents. The workforce in general is stable, and both the absence and injury rates are low. Besides organizing medical follow-ups, the Group encourages and facilitates participation in physical activities.

There is continuous focus on training and facilitated working environment in the Grieg Group companies. At the end of 2018, we started a risk evaluation project for all the companies, which will be a continuous work in the following years.

Climate and environment The Grieg Group emphasizes the creation of economic and social values in a long-term perspective, recognizing the environmental and social impacts of our business activities. As well as complying with both national and international environmental regulations and laws, the Group’s companies have taken an active part in the UN’s Sustainable Development Goals and implemented these in our framework in the Group and the companies’ strategy, innovation and entrepreneurship.

The Grieg Group’s various operations entail the discharge of harmful emissions. Through our SDG stretch goals we have a vision of zero net emissions in all industries in which we operate and relevant KPIs are used in monitoring the progress. Working towards a zero net emission target will benefit both society and our companies.

We work continuously to be a visible and distinct contributor to environmental aware-ness and development.

The Grieg Group’s head office at Grieg-Gaarden finished its rebuilding in 2018 and is certified as an eco-lighthouse office building.

EMPLOYEES 31.12.2018

1 945

2018 2017

Sick-leave 2,1% 2,5%

Major injuries 0 0


2018 2017

Sick-leave 2,1% 2,5%

Major injuries 0 0

Grieg FoundationThe Grieg Group has always contributed to the society. In 2002 this was formalized trough the establishment of Grieg Foundation. The foundation owns 25% of the Grieg Group. The Foundation’s contributions mainly focus on the support and education of children and young people, both in Norway and abroad. Other main areas are musi-cal art and other cultural activities, medical research, environmental and community projects. Since its establishment, the Foundation’s total contributions amount to 59 NOK million.

Corporate GovernanceThe Grieg Group always strive to do business in a fair and proper way. We apply the Norwegian Recommendation on Corporate Governance in order to ensure that the responsibility and roles between the administration, the Board of Directors and the General Meeting is based on sound practice. Deviations may arise given the fact that the Group is privately owned.

We follow the international conventions and general principles contained in the UN Global Compact. Furthermore, we have implemented the UN Sustainable Develop-ment Goals (SDG) in our strategy, and defined SDG 8 - Good jobs and economic growth, SDG 16 – Peace and justice and SDG 17- Partnership for the goals as our foundation goals.

We approach the foundation goals by fostering a great working environment with sound economic growth, and an inviting open-minded and inclusive business-spirit (SDG 8).

The Grieg Group’s common core values are: Solid, Proud, Open and Committed. We navigate by using our common values when doing business around the world. By spreading our common values in the areas in which we work, we will continue to en-able inclusive, just and accountable business relations, and advocate for strong soci-eties and institutions (SDG 16).

Through our partnerships and cross sector cooperation we strive to be innovative and to meet the challenges of the SDG´s. We do this by having an open-minded business approach, and by creating room for action and possibilities. We believe that this will enable strong partnerships from both civil, public and private parts of society (SDG 17).

Going concernThe Board of Directors confirms 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 sub-mitted annual accounts give a correct picture of the result, cashflow and economic sit-uation. No events have taken place after the balance sheet date that could materially affect the accounts.

OutlookGlobal Atlantic salmon market is expected to continue to grow in 2019, and the un-derlying demand is strong worldwide. Profitability in the salmon industry is volatile, and there will always be uncertainty related to future prices and new prospects. Going forward, improved competence and increased capacity for disease treatment and sea lice handling, as well as increased production of large smolt, are some of the initiatives to improve biology in Grieg Seafood. Grieg Seafood target a volume of 82 000 tons in 2019, up to 100 000 tons in 2020.

The shipping market is still characterized by uncertainty. Iron ore supply is disrupted, Chinese coal import restrictions and the US-China trade wars, dispute clearly had a negative effect on the markets during 2018. In 2019 there are some improvements in the markets, and G2 Ocean work hard to improve freight earnings and reduce costs. World seaborn pulp demand is expected to continue with stable growth from America to Asia, and we expect a moderate rate scenario in open hatch going forward.

Grieg Foundation - distributions

(Amounts in NOK mill.) 2018 2002-2018

Education of children & youth 20 227

Musical art 7 85

Cultural projects 5 108

Medical research and projects 5 74

Other projects 10 99

Total 46 593


Bergen, 3rd of April 2019 The Board of Directors of Grieg Maturitas AS

Grieg Star established a new joint venture Grieg Maas, with Maas Capital, at the end of 2018. This will be our intended interventional dry bulk shipowning platform going forward.

The market outlook for green services offering, and especially IHMs, looks very prom-ising in the years to come, and Grieg Green is well positioned to continue to grow its’ business.

Globalized and exponential technology trends represent opportunities for growth and profitability. We are actively working with new technologies in several of the Grieg Group companies, and Grieg Connect is one of the companies we are expecting to grow rapidly the coming years.

Going forward, we will continue focusing and adapting to changing markets and pur-sue opportunities as they arise. Supporting new business ideas and facilitating inno-vation initiatives within the Group are highly focused. We are using the UN Sustain-able 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 the employees of the Grieg Group for their hard work and efforts throughout the year.

Elna-Kathrine Grieg (sign.) Board Member

Elisabeth Grieg (sign.) Chair

Per Grieg jr. (sign.) Board Member

Camilla Grieg (sign.) Board Member

Nina W. Grieg (sign.) Board Member

Nicolai H. Grieg (sign.) Board Member

Knut Nesse (sign.) Board Member

Wenche Kjølås (sign.) Managing Director


PROFIT AND LOSS STATEMENT

GRIEG MATURITAS AS GRIEG GROUP

(Amounts in NOK 1 000) (Amounts in NOK 1 000)

2017 2018 Note 2018 2017

3 431 3 423 2 Operating Revenue 9 739 430 9 058 834

Operating Costs

-3 858 -3 359 4 Payroll and social security costs -899 295 -872 703

- - 6,7 Depreciation -602 794 -596 761

- - 6 Reversal (write-down) fixed assets - -2 974

- - 3 Operating costs - shipping -834 464 -864 608

- - 3 Cost of sales - fish farming -3 874 968 - 3 754 704

- 1 306 -1 074 3,23 Other operating expenses -2 349 071 -2 151 641

- 5 164 -4 433 Total operating expenses -8 560 591 - 8 243 391

- 1 733 -1 010 2 Operating profit - EBIT 1 178 839 815 444

Financial items

416 014 90 000 8 Income from investments in subsidiaries - -

932 360 10 Other Financial income 210 688 156 217

- - 14 Change in value of market based assets -109 642 34 309

- - 9 Results of investments in associated companies 3 362 -55 013

-2 -1 10 Other Financial expenses -357 709 -279 951

416 944 90 359 2 Net financial items -253 301 -144 439

415 211 89 349 2 Profit before tax 925 537 671 005

- 177 -114 19 Tax -240 483 -207 362

415 387 89 463 20 Profit for the year 685 054 463 643

To minority interests 486 124 394 415

Majority proportion 198 930 69 228


BALANCE SHEET



2017 2018 Note 2018 2017

Assets

Fixed assets

Intangible assets

- - 7 Other intangible assets 19 577 28 480

- - 7 Contracts 32 114 39 867

149 262 19 Deferred tax assets - -

- -- 7 Goodwill 14 659 19 283

- 7 Licenses 1 163 095 1 087 834

149 262 Total intangible assets 1 229 444 1 175 464

Tangible assets

- - Land and real estate 921 162 1 091 720

- - Vessels 6 661 739 6 463 659

- - Vehicles, machinery and equipment 1 922 848 1 535 086

- - 6 Total tangible assets 9 505 749 9 090 465

Long-term financial assets

4 021 796 4 021 796 8 Investments in subsidiaries - -

- - 9 Investments in associated companies 116 507 78 834

- - 13 Loans to associated companies 207 626 28 033

- - 11 Shareholding and other investments 28 767 51 774

- - 13 Other receivables 12 169 20 230

4 021 796 4 021 796 Total long-term financial assets 365 070 178 872

4 021 995 4 022 059 Total fixed assets 11 100 263 10 444 801

Current assets

- - 12 Inventory and biological assets 2 400 345 2 150 716

Accounts receivable 1 141 122 862 455

292 500 90 239 Receivables from subsidiaries - -

93 89 Other receivables 306 791 545 847

292 593 90 328 Total receivables 1 447 913 1 408 302

- - 11 Shareholding and other investments 162 873 148 330

- - 14 Market based financial investments 661 206 802 891

Total financial Investments 824 079 951 221

43 660 42 665 16 Cash and bank deposits 516 603 914 140

336 253 132 993 Total current assets 5 188 940 5 424 379

4 358 198 4 155 052 Total assets 16 289 203 15 869 180


BALANCE SHEET



2017 2018 Note 2018 2017

Equity and liabilities

Equity

Paid-up equity

1 124 1 124 21 Share capital (1 123 530 shares of NOK 1) 1 124 1 124

409 763 409 763 Share premium 409 763 409 763

410 887 410 887 Total 410 887 410 887

Retained earnings

3 653 699 3 653 161 Other equity/group reserves 4 085 958 3 833 459

- - Minority interests 2 989 320 2 735 613

3 653 699 3 653 161 Total retained earnings 7 025 278 6 569 070

4 064 585 4 064 048 20 Total equity 7 486 163 6 979 957

Liabilities

Provisions

- - 5 Pension liabilities 56 843 60 191

- - 19 Deferred tax 475 019 408 960

- - Other provisions 9 572 10 276

- - Total provisions 541 435 479 427

Other long-term liabilities

- - 15,16 Liabilities to financial institutions 6 015 511 5 959 416

- - 15 Other long-term liabilities 21 579 67 952

- - Total long-term liabilities 6 037 091 6 027 368

Current liabilities

- - 16 Bank overdrafts 655 857 541 848

138 87 Accounts payable 781 834 673 691

14 24 Accounts payable group companies - -

- - 19 Taxes payable 140 456 165 587

289 271 Public duties payable 80 160 58 118

292 500 90 000 20 Dividend 127 813 398 233

672 621 Other current liabilities 438 395 544 952

293 613 91 003 Total current liabilities 2 224 514 2 382 428

293 613 91 003 Total liabilities 8 803 040 8 889 224

4 358 198 4 155 052 Total equity and liabilities 16 289 203 15 869 180

Bergen, 3rd of April 2019 The Board of Directors of Grieg Maturitas AS

Elna-Kathrine Grieg (sign.) Board Member

Elisabeth Grieg (sign.) Chair

Per Grieg jr. (sign.) Board Member

Camilla Grieg (sign.) Board Member

Nina W. Grieg (sign.) Board Member

Nicolai H. Grieg (sign.) Board Member

Knut Nesse (sign.) Board Member

Wenche Kjølås (sign.) Managing Director


CASHFLOW STATEMENT


(Amounts in NOK 1 000) (Amounts in NOK 1000)

2017 2018 2018 2017

Cashflow from operations

415 211 89 349 Profit before tax 925 537 671 005

-115 - Taxes paid -165 587 -177 956

-416 014 -90 000 Dividends receivable taken to income - -

- - Ordinary depreciation 602 794 635 506

- - Write-down (reversal) of fixed assets - -273

- - Unrealised gain/loss market based investments 109 642 -34 309

- - Change in inventory -249 629 -281 449

-81 -1 Change in accounts receivable -278 667 121 676

105 -42 Change in accounts payable 108 143 61 616

40 -301 Change in accruals -704 - 2 148

- - Difference in expenses pensions and payment in/out 35 008 -2 862

- - Effect of change in exchange rate -2 205 8 468

- - Share of profit from associated companies and joint ventures -3 362 55 013

- - Gain/loss on sales of shares without cash effect - -134 827

- - Change in other provisions 140 546 -176 987

- - Gain/loss from sale of market based investments -111 066 -

-855 -995 Net cashflow from operations 1 110 451 742 473

Cashflow from investing activities

- - Sale of fixed assets 216 190 10 908

- - Purchase of fixed assets/newbuilding contracts -913 120 -777 512

- - Fixed assets financed by leasing 169 216 -

- - Purchase of intangible assets -72 651 -31 467

Loan to associate -198 490 -

198 039 292 500 Payments from other group companies - -

- - Sale of shares 418 889 963 700

- - Purchase of shares and securities -351 961 -237 618

198 039 292 500 Net cashflow from investing activities -731 927 -71 989

Cashflow from financing activities

- - Net change in bank overdraft 114 009 27 465

- - Loan repayment (short/long-term) -2 865 503 -705 058

- - Loan proceeds 2 616 146 400 759

-298 039 -292 500 Dividends paid -640 713 -650 515

-298 039 -292 500 Net cashflow from financing activities -776 061 -927 349

-100 855 -995 Net cashflow for the period -397 537 - 256 866

144 515 43 660 Opening balance of cash and cash equivalents 914 140 1 171 006

43 660 42 665 Cash and equivalents 31.12 516 603 914 140

43 660 42 665 Cash and equivalents 31.12 - from balance sheet 516 603 914 140

NOTESNOTE 1 Accounting principles 18

NOTE 2 Segment information 20

NOTE 3 Other operating expenses 20

NOTE 4 Payroll costs, number of employees, remuneration etc. 21

NOTE 5 Pensions and pension commitments 22

NOTE 6 Fixed tangible assets 23

NOTE 7 Fixed intangible assets 24

NOTE 8 Investments in subsidiaries 24

NOTE 9 Investments in associated companies and joint ventures 26

NOTE 10 Financial items 26

NOTE 11 Shareholdings and other investments 27

NOTE 12 Inventories and biological assets 28

NOTE 13 Receivables due in more than one year 28

NOTE 14 Market based financial investments 28

NOTE 15 Debt payable after 5 years 28

NOTE 16 Mortgages/guarantee liability/restricted funds 29

NOTE 17 Financial risk 30

NOTE 18 Contingencies and subsequent events 31

NOTE 19 Taxes 31

NOTE 20 Equity 33

NOTE 21 Share capital and share information 33

NOTE 22 Related parties 34

NOTE 23 Remuneration to auditor 35


Note 1 Accounting principlesThe Annual Accounts for Grieg Maturitas AS have been prepared in accor-dance with Norwegian Accounting Act and generally accepted accounting principles.

Group AccountsThe 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 company’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 transac-tion 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 av-erage 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 sepa-rately.

Operating RevenueOperating 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 – main ruleAssets 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.

InventoriesInventories 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.

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

01.01.2018 31.12.2018 Average 2018

CAD 6,5432 6,3751 6,2773

GBP 11,0910 11,1213 10,8463

EUR 9,8403 9,9483 9,5962

USD 8,2050 8,6885 8,1338 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 receivableAccounts receivable are stated at nominal value less provisions for expect-ed losses. The loss provision is based on an individual assessment of each accounts receivable.

Investments in subsidiariesA company is defined as a subsidiary if the Group has a decisive influ-ence 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 write-down 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 partnershipsInvestments 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 lim-ited 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.

Investments in portfolio and private equity companiesA portfolio of investments is 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-party-trades, or with a reference to the fair value of similar investments.

Investments in associated companies and joint venturesAn 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. In-vestments in associated companies and joint ventures are recorded on the basis of the equity method in the consolidated accounts, unless the invest-ment value is immaterial. 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 assetsFixed assets are valued at acquisition cost, but are written down to fair mar-ket 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. Cur-rent 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 assetsGoodwill 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 eco-nomic 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 impairmentsAssets 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-generating units).

In 2017 Grieg Star Shipping AS established a joint venture with Gearbulk AS called G2 Ocean Holding AS, which markets and operates the Group’s vessels in a 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 plansThe 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 planSome companies have defined benefit plans, including AFP. A defined ben-efit plan is a pension scheme that defines the pension payment an employ-ee 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 assetsShort-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 re-ceived and other distributions are entered as income under other financial income.

EstimatesWhen 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. Contin-

gent losses which are likely and quantifiable are charged against income on an ongoing basis.

LeasingThe companies differentiates between financial leasing and operational leasing based on an evaluation of the lease contract at the time of incep-tion. 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.

TaxationThe 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 differ-ences 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 statementThe 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 Operating profit Net financial Items Profit before tax

2018 2017 2018 2017 2018 2017 2018 2017Grieg Seafood (NGAAP) 7 548 7 038 1 096 904 -76 -15 1 019 889

Grieg Star 1,383 1 335 51 -121 -183 -132 -133 -253

Grieg Logistics 488 397 7 -6 -1 -44 5 -50

Grieg Investor 79 75 17 12 0 0 17 12

Grieg Shipbrokers 126 115 0 9 -1 1 -1 10

Grieg Kapital 2 148 143 15 15 113 383 128 398

Other 1 -32 -43 -7 3 -105 -337 -112 -334

Sum Grieg Group 9 739 9 059 1 179 815 -253 -144 926 671

1 Other includes the Groups’ holding company, management service company and eliminations.

2 The Grieg Kapital segment was established in 2018 after a merger of Grieg Holdings AS, Grieg Ltd. AS, Grieg International AS and Grieg Property AS. The 2017 figures are restated to reflect the current Group segments.

Note 3 Other operating expenses

GROUP(Amounts in NOK 1 000)

Operating costs - shipping 2018 2017Voyage costs - shipping 21 669 77 633

Timecharter costs - shipping 262 582 240 847

Ship operating costs 550 213 546 128

Operating costs - shipping 834 464 864 608

Cost of sales - fish farming 2018 2017

Cost of sales - fish farming 4 122 188 4 106 865

Change in inventories -247 220 -352 161

Cost of sales - fish farming 3 874 968 3 754 704

Other operating expenses 2018 2017Freight and cost of services 351 464 285 997

Other operating expenses 1 997 608 1 865 644

Other operating expenses 2 349 071 2 151 641

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

2018 Duration Number of vessels Operating lease expense

Long-term time charter 0-4 years 5 195 491

Bare-boat hire 1-14 years 4 112 082

Other lease amount charged in the year 2-10 years 204 036

Total lease amount charged 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 2018 2017Salaries and other benefits 2 763 3 093

Social security costs 414 463

Pension costs 150 163

Other benefits 31 139

Total 3 359 3 858

The Managing Director is the only employee in the company. There has been no renumeration to the Board of Directors in Grieg Maturitas. Total remu-neration to Managing Director is specified under renumeration to executives below.


Payroll and social security costs 2018 2017Salaries 712 618 656 585

Social security costs 65 411 69 451

Pension costs 40 985 47 662

Other benefits 80 281 99 005

Total 899 295 872 703

Number of employees 1 180 1 138

Number of sailing personnel1 765 743

Total 1 945 1 8811 Salary costs are recognised in the P&L as operating costs - shipping.

Remuneration to executives

In 2018 total payments to salary, pension premium and other remuneration to Managing Director was NOK 2,9 mill. and to present Board members NOK 14,9 mill. Remuneration to the Board members and Managing Director is paid from the companies where the Director is employed or a member of the Board.

2017 Duration Number of vessels Operating lease expense

Long-term time charter 0-4 years 5 185 918

Bare-boat hire 1-14 years 4 106 593

Other lease amount charged in the year 2-10 years 177 775

Total lease amount charged 470 285


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 2018 one person was covered by the scheme. The contribution charged in the accounts for 2018 amount-ed to TNOK 150 (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.

Total pension costs distributed as follows 2018 2017Defined contribution pension 34 328 35 238

Defined benefit pension, incl. AFP 923 6 083

Pension costs - discontinued operations 4 994 6 361

Total 40 245 47 662

Defined contribution based pension scheme

The defined contribution based pension scheme covers full-time and part-time employees and amounts to between 7% and 20% of salary up to 12G (national insurance basic amount). The contribution charged in the accounts in 2018 amounted to NOK 34,3 mill. (excluding National Insurance Contribu-tions).

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 2018 a total of 72 persons (including pensioners and persons on early retirement) were covered by the benefits based scheme.

Net pension costs, including National Insurance Contribution 2018 2017

Present value of pension entitlements 635 3 410

Interest expenses on pension entitlements 2 854 2 006

Return on pension fund assets -3 750 -2 137

Accounting effect of estimate divergences and plan changes 79 1 858

This year’s change, provision for undercoverage CPA - -

Administration expenses 1 103 926

Pension costs for the year 923 6 083

Pension fund assets/liabilities 2018 2017Calculated pension commitments -149 373 - 153 492

Pension fund assets (at market value) 91 342 93 127

Unposted effect of estimate divergences 1 188 175

Net pension fund assets/(liabilities) -56 843 -60 190

of which unfunded obligations -27 293 - 28 685

2018 2017Financial assumptions: Norway Norway

Discount rate 2,60% 2,40%

Anticipated rise in salaries 2,75% 2,50%

Anticipated return on pension fund assets 4,30% 4,10%

Anticipated increase of pensions 2,50% 2,25%

Anticipated rise in pensions, regulation of National Insurance Base rate 2,50% 2,25%


Note 6 Fixed tangible assets

GROUP


Land and real estate

Vehicles, machinery and

equipment Vessels Total

Purchase cost at 01.01. 1 522 866 3 243 688 10 927 093 15 693 646

Currency translations differences 23 866 1 378 647 918 673 162

Additions 57 293 635 851 219 975 913 120

Disposals -324 263 -86 734 - -410 997

Purchase cost at 31.12. 1 279 763 3 794 183 11,794,986 16 868 931

Accumulated depreciation -35 202 -1 829 374 -4 884 125 -7 071 701

Accumulated write-down -399 -41 960 -249 122 -291 481

Balance sheet value at 31.12. 921 162 1 922 848 6 661 739 9 505 749

Depreciation 41 513 220 275 313 525 575 312

Write-down (reversal) - - - -

Economic lifetime 20-50 years 3-20 years 10 years 25-30 years

Depreciation plan Linear Linear Linear Linear

Land & Real Estate: Investments is mainly related to Grieg Seafood and expansion of fish hatcheries in Rogaland and Finnmark and a new operations center in Rogaland.

Disposals is related to the sale of the break bulk terminal in Canada, which Grieg Star Group concluded in the first half of 2018.

Vehicles, machinery and equipment: Additions is mainly related to equipment for Grieg Seafood’s expansion of fish hatcheries in Finnmark and Rogaland such as aeration systems, algal monitoring and general maintenance.

Vessels: Additions is mainly related to Grieg Star Group and the purchase of the semi-open hatch vessel Star Majesty.

Financial lease agreements: Grieg Seafood has financial lease agreements on real estate, vehicles, machinery and other equipment, with book value of NOK 412 mill. per 31.12.18 Total depreciation on financial lease agreements in Grieg Seafood in 2018 is NOK 38,9 mill.

Estimated total lease amount on financial lease agreements for Grieg Seafood is NOK 400 mill, with NPV of NOK 360 mill.


Note 8 Investments in subsidiaries

COMPANY(Amounts in NOK 1 000)

Subsidiary Registered office OwnershipProportion of

voting shares, %Book

equity 100% Book value Dividend

Grieg Maturitas II AS Bergen 75% 100% 5 114 237 4 0217 96 90 000

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:

Grieg Maturitas II AS owns the following companies: Registered officeDirectly

ownership %Directly and indirectly

ownership %Proportion of voting

shares, %

Grieg Star Group AS Bergen 100% 100% 100%

Grieg Logistics AS Bergen 100% 100% 100%

Grieg Kapital AS Oslo 100% 100% 100%

Grieg Aqua AS Bergen 100% 100% 100%

Grieg Shipbrokers KS Bergen 45% 55% 55%

AS Joachim Grieg & Co Bergen 100% 100% 100%

Grieg Investor Holding AS Oslo 45% 45% 80%

Grieg Group Resources AS Bergen 100% 100% 100%

Note 7 Fixed intangible assets

GROUP


Licenses Goodwill ContractsOther

intangible assets Total

Purchase cost at 01.01 1 160 646 173 207 152 852 23 742 1 510 446

Currency translations differences -2 548 3 740 8 835 10 027

Additions 67 996 - - 4 655 72 6551

Disposals - - - - -

Purchase cost at 31.12 1 226 093 176 946 161 688 28 397 1 593 124

Accumulated depreciation -62 999 -72 685 -129 574 -8 820 -274 078

Accumulated write-down - -89 603 - - -89 603

Balance sheet value at 31.12. 1 163 095 14 659 32 114 19 577 1 229 444

Depreciation 8 389 5 213 9 458 4 420 27 481

Write-down (reversal) - - - - -

Economic lifetime 5-25 years/unlimited 3-20 years 10 years 3-10 years

Depreciation plan Linear/none Linear Linear Linear

Contracts: represent excess values related to the vessels’ contracts of affreightment through the participation in the G2 Ocean pool and purchased divi-dend 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 to fish-farming licenses in Grieg Seafood and Rensefiskgruppen. Most licenses have an unlimited economic lifetime, but is subject to a yearly value assessment to determine if write-downs are required.


Grieg Kapital AS owns the following companies: Registered office Ownership %Proportion of voting

shares, %

Grieg Holdings II AS Bergen 100% 100%

Rensefiskgruppen AS Finnøy 80% 80%

Ryfylke Rensefisk AS Finnøy 100% 100%

Finnmark Rensefisk AS Alta 100% 100%

Marin Innovasjon AS Finnøy 100% 100%

Talgje Rensefisk AS Finnøy 100% 100%

Lønningdal Rensefisk AS Os 60% 60%

Austevoll Rensefisk AS Austevoll 72% 72%

Rogaland Havbrukspark Eiendom AS Finnøy 50% 50%

AS Nestun Uldvarefabrik Bergen 100% 100%

Silves Odissey Inv. and Techn. Lda. Portugal 74% 90%

Grieg Gaarden AS Bergen 100% 100%

Grieghallen Parkering II AS Bergen 47,52% 47,52%

Grieghallen Parkering AS Bergen 100% 100%

Maris Reinvest AS Oslo 93,15% 93,15%

Grieg Star Group AS owns the following companies: Registered office Ownership %Proportion of voting

shares, %

Grieg Shipowning AS Bergen 100% 100%

Grieg Shipping II AS Bergen 100% 100%

Grieg International II AS Oslo 100% 100%

Grieg Star 2017 AS Bergen 100% 100%

Grieg Star AS Bergen 100% 100%

Grieg Star Philippines inc. Philippines 100% 100%

Grieg Star Bulk AS Bergen 100% 100%

Grieg Green AS Oslo 100% 100%

Grieg Green Consulting and Advisory Company Limited China 100% 100%

Grieg Shipping III AS Bergen 100% 100%

Grieg Logistics AS owns the following companies: Registered office Ownership %Proportion of voting

shares, %

Scandinavian Harbour Service AS Tønsberg 100% 100%

Mosjøen Industriterminal AS Mosjøen 100% 100%

Grieg Connect AS Kristiansund 100% 100%

Grieg Strategic Services AS Bergen 100% 100%

Grieg Port Security AS Bergen 100% 100%

Registered officeGrieg Aqua owns the following companies: Ownership %Proportion of voting

shares, %

Grieg Seafood ASA Bergen 50,17% 50,17%

Grieg Seafood Rogaland AS Bergen 100% 100%

Grieg Seafood Finnmark AS Alta 100% 100%

Grieg Seafood Canada AS Bergen 100% 100%

Grieg Seafood BC Ltd. Canada 100% 100%

Grieg Seafood Hjaltland UK Ltd. UK 100% 100%

Grieg Seafood Shetland Ltd. UK 100% 100%

Ocean Quality AS Bergen 60% 60%

Ocean Quality UK Ltd. UK 100% 100%

Ocean Quality North America Inc. Canada 100% 100%

Ocean Quality Premium Brands Inc. Canada 100% 100%

Ocean Quality USA Inc. USA 100% 100%


Grieg Shipbrokers KS owns the following companies: Registered office Ownership %Proportion of voting

shares, %

Joachim Grieg Star KS Bergen 90% 90%

Grieg Shipbrokers Ltd. UK 55% 55%

Grieg Shipbrokers Asia AS Bergen 100% 100%

Grieg Shipbrokers Asia Pte. Ltd. Singapore 100% 100%

Grieg Shipbrokers Asia Ltd. Hong Kong 100% 100%

AS Joachim Grieg & Co. owns the following companies: Registered office Ownership %Proportion of voting

shares, %

Grieg Shipbrokers KS Bergen 10% 10%

Joachim Grieg Star KS Bergen 10% 10%

Grieg Investor Holding AS owns the following companies: Registered office Ownership %Proportion of voting

shares, %

Grieg Investor AS Oslo 100% 100%

Note 9 Investments in associated companies and joint ventures

GROUP(Amounts in NOK 1000)

Ownership %Registered

officeBook value

01.01 Addition

Share of profit/loss

for the yearOther

changesBook value

31.12

Excess value incl. in book

value 31.12.

Fram Marine AS1 25% Oslo 2 281 - - - 2 281 -219

Tytlandsvik Aqua AS2 33.33% Hjelmeland 9 450 30 000 -2 328 - 37 122 -

Grieg Newfoundland AS 40% Bergen 15 - - - 15 -

G2 Ocean Holding AS 35% Bergen 66 588 - 5 694 4 307 76 589 -

Rogaland Havbrukspark Eiendom AS 50% Finnøy 500 - - - 500 -

Sum 78 834 30 000 3 366 4 312 116 507 -219

1 Booked according to the cost method. 2 In 2018, the Group, through Grieg Seafood Rogaland AS, has invested NOK 30 mill. in Tytlandsvik Aqua AS to acquire 16,66 of the company s shares, now owning a total of 33.33% of the company’s shares.

Note 10 Financial items(Amounts in NOK 1000)

Parent company GroupOther Financial Income 2018 2017 2018 2017Interest income 360 932 29 266 25 700

Gain on sale of investments - - 94 691 80 773

Other financial income - - 86 731 49 745

Total financial income 360 932 210 688 156 217

Parent company GroupOther Financial Expenses 2018 2017 2018 2017Interest expenses - - 268 896 257 857

Write-down of financial fixed assets - - - -

Other financial expenses 1 2 88 813 22 094

Total financial expenses 1 2 357 709 279 951


Note 11 Shareholdings and other investments


Shareholdings and other investments - classified as current assets

Company Ownership Purchase costAcc. write-down

1.1.Write-down this

yearBook value 31.12.

Maris Reinvest / Navico Holding AS 93,15% / 0,18% 60 913

Argentum Investment Partners I 7,62% 27 630

Holmen Industri Invest I AS 26,66% 23 378

Bryggen Holding AS 7,29% 21 742

Utleiebolig AS 17,49% 11 947

FSN Capital Ltd. P.ship II 1,32% 6 764

Voxtra East Africa Agribusiness Fund 5,44% 5 740

F14 Invest AS 1,73% 5 261

DNB Private Equity III ( IS) 1,41% 5 458

Blueye Robotics AS 1,84% 5 000

Rem Nor AS 8,82% 3 000

Proximar Seafood AS 10% 2 500

Karihaugveien 22 Holding AS 6,70% 1 456

Sahara Forest Project AS 1,34% 1 150

Union Real Estate Fund 1,53% 816

Civita AS 0,31% 180

Total - classified as current assets 1 182 935 -32 767 12 705 162 873

Shareholdings and other investments - classified as fixed assets

Company Ownership Purchase costAcc. write-down

1.1.Write-down this

year Book value 31.12.

Mercell Holding AS 15,34% 21 010 - - 21 010

Incentra (co-operative) 2.7% 21 - - 21

Grieg Philippines Inc. 25,00% 464 - - 464

Star Blue Holding Inc 25% 85 - - 85

Grieg Star Philippines Inc. 100% 1 738 - - 1 738

GriegMaas AS 50% 15 - - 15

UACC Ross Tanker DIS 3% 2 235 - - 2 235

Other investments 3 198 - - 3 198

Total - classified as fixed assets 2 28 767 - - 28 767

1 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.


Note 13 Receivables due in more than one year

GROUP


2018 2017Loan to associated companies 207 626 28 033

Other receivables 12 169 20 230

Total 219 795 48 263

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

Note 14 Market based financial investments


Purchase costMarket value

31.12.2018

Individual shareholdings 15 524 13 217

Mutual funds 128 241 137 991

Bonds 170 079 172 541

Money market funds 341 886 337 457

Total 655 730 661 206

Unrealised loss this year of market based financial investments 109 642

Note 15 Debt payable after 5 years


2018 2017Long-term debt - maturity more than 5 years 253 789 736 761

Note 12 Inventories and biological assets

GROUP


2018 2017Raw materials - fish farming 141 441 94 619

Goods in progress - fish farming 2 226 458 2 025 593

Finished goods 186 50

Bunkers and lube oil 32 260 30 454

Total inventories and biological assets 2 400 345 2 150 716


Note 16 Mortgages/guarantee liability/restricted funds

PARENT COMPANY(Amounts in NOK 1 000)

2018 2017Restricted deposits related to employees’ tax deduction 172 188


2018 2017Restricted deposits related to employees’ tax deduction 28 851 32 188

Debt secured by mortgage (including overdraft facilities) 2018 2017Mortgaged debt - long term 6 006 617 5 922 420

Factoring and short term debt 629 255 509 849

Total mortgaged debt 6 635 871 6 432 269

Group assets have been given as mortgage security

Balance sheet value of mortgaged assets 2018 2017Receivables 957 545 783 146

Vessels and newbuildings 6 551 072 6 388 909

Real estate 738 293 643 843

Other assets 1 913 106 1 490 903

Licences 1 146 839 1 068 552

Inventories 2 367 899 2 117 908

Total 13 674 754 12 493 260

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

2018 2017Total guarantee liability 551 720 489 553

Undrawn borrowing facilities 1 026 265 609 650

Loan covenants

Grieg Star Group (GSG) is per year end 2018 required to have minimum liquid funds of USD 25 mill. 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 47.4m per 31.12.2018 for the Grieg Interna-tional II AS vessels, and in addition USD 103.5m for the Grieg Shipping II AS vessels. Grieg Shipping II AS is providing guarantees in the amount of USD 10.4m per 31.12.2018 for the Grieg Shipping III AS vessel, and Grieg Shipping II AS and Grieg International II AS is providing guarantees in the amount of USD 43m for Grieg Shipowning AS.

The covenants of Grieg Seafood’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 2018, the NIBD/EBITDA for the Group excluding Ocean Quality was 1.3 and the equity ratio was 53%. Consequently, Grieg Seafood fully complies with all covenants at the year-end.

A factoring agreement has been concluded with Ocean Quality AS in Norway and UK. Credit-insured receivables are transferred to the factoring compa-nies. This ensures early settlement of receivables. The Group retains the risk relating to trade receivables. Funding received from the factoring company before the counterparty has paid is recognized as factoring liabilities, which is interest-bearing. The factoring agreement includes covenants stipulating minimum book equity in Ocean Quality AS of 12% of the appropriated financing limit. As at 31 December 2018, Ocean Quality AS was in compliance with the covenant.


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 riskSeveral 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 riskA large proportion of the Group’s revenues, assets and liabilities are in foreign currencies, mainly USD and EUR. Changes in foreign exchange rates there-fore 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 31.12.18 the company had entered into hedging through the use of currency swaps for USD 10,8 mill. Total unrealised MTM value, not recognised in the balance sheet, at 31.12.18 was USD – 0,4 mill.

Grieg Shipbrokers had 31.12.18 forward contracts at a total of USD 18,9 mill., where USD 13,7 mill. applies to hedging of reasonable secure transactions. The forward contracts had an unrealized not recognised loss of NOK 6,6 mill. at 31.12.18.

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, a diversified portfo-lio. Historical losses on receivables have not been significant. 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 riskThe 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 riskInterest 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 31.12.18 the Grieg Star Group held interest rate swap agreements of USD 220 mill. Total unrealised MTM value, not recognised in the balance sheet, was USD – 1,7 mill.

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 660 mill. at 31.12.18. Unrealized gain attached to these agreements, not recognised in the balance sheet, amounts to NOK 0,9 mill. 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.

Freight rate riskThe 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 indus-trial 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.

Salmon pricesThe 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. The effect of price changes is reduced by geographical diversification, but due to the long production cycle it can be difficult to respond rapidly to global trends in market prices. Salmon is primarily traded at spot prices. The price risk is partly hedged through financial sales and purchase contracts.


Note 19 Taxes

PARENT COMPANY


Tax expense consists of: 2018 2017Ordinary result before tax 89 349 415 211

Permanent differences -89 896 -415 974

Change in temporary differences -31 73

Basis of tax payable in profit and loss account -578 -690

Tax losses carried forward - -

Basis for payable taxes in the income statement - -

Components of the income tax expense

Payable tax on this year’s result - -

Change in deferred tax -114 -177

Tax expense (-income) -114 -177

Deferred tax 2018 2017Taxable differences 74 93

Tax-deductible differences - -50

Tax credit carried forward -1 268 -690

Basis for deferred tax -1 194 -647

Deferred tax assets in the balance sheet 262 149

Note 18 Contingencies and subsequent events

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 the salmon industry. Grieg Seafood aims to be open, transparent and forthcoming and will provide all necessary information requested by the European Commission DG Competition in its investigation. There is no new information as of the Group annual accounts approval date.



Tax expense consists of: 2018 2017Profit before tax 925 537 671 005

Profit before tax, companies subject to shipping tax 14 585 -425 414

Profit before tax, companies not subject to shipping tax 910 952 1 096 419

Permanent differences 184 007 -183 034

Change in temporary differences -451 705 -225 102

Change in tax loss carried forward -8 788 31 302

Group contribution - -

Basis of tax payable, companies not subject to shipping tax 634 465 719 586

Tax payable, companies not subject to shipping tax 140 463 174 017

Tax charge in profit and loss account - -

Tax payable 140 463 174 017

Increase / (decrease) in deferred tax 100 021 33 344

Adjustment prior year -

Tax charge for the year on ordinary result 240 483 207 362

Tax payable in balance sheet 2018 2017Tax payable, companies not subject to shipping tax 137 569 164 743

Tonnage tax 3 849 3 757

Tax prepaid - -4 491

Other adjustments (treasure trove) -962 1 577

Total tax payable in balance sheet 140 456 165 587

Deferred tax 2018 2017Taxable timing differences 2 361 274 2 009 784

Tax-deductible timing differences 72 160 -13 615

Tax loss to be carried forward -760 157 -748 643

Net timing differences 1 673 277 1 247 526

Deferred tax on net timing differences 397 374 322 883

Unposted deferred tax assets 77 644 86 077

Net deferred tax in balance sheet 475 019 408 960

Loss carried forward 2018 2017Norway, companies not subject to shipping tax -288 417 -305 870

UK -84 857 -92 427

Companies subject to shipping tax -386 803 -350 346

Total -760 077 -748 643


Note 21 Share capital and share information

At 31 December 2018 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 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.

Note 20 Equity

PARENT COMPANY(Amounts in NOK 1 000) Share

capital Share premium Other equity Total

Equity - Opening Balance 1 124 409 763 3 653 699 4 064 585

Profit of the year - - 89 463 -

Provision for dividend - - -90 000 -

Equity - Closing Balance 1 124 409 763 3 653 161 4 064 048

GROUP(Amounts in NOK 1 000) Share

capitalShare

premiumGroup

reservesMinority interests Total

Equity - Opening Balance 1 124 409 763 3 833 459 2 735 613 6 979 957

Profit for the year - - 198 930 486 124 685 054

Provision for dividend at year end - - -90 000 -37 813 -127 813

Dividend paid during the year - - - -242 480 -242 480

Effect of changed ownership in subsidiaries - - -3 600 -1 433 -5 033

Currency translation differences 1 - - 145 564 48 093 193 657

Equity transactions 2 - - 906 1 477 2 383

Other changes - - 698 -260 437

Equity - Closing Balance 1 124 409 763 4 085 958 2 989 320 7 486 163

1 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.

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


The company’s shareholders are as follows: Ownership % A-shares B-shares Total

PG JR 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 15,63 % 35 224 140 440 175 664

Salthavn Invest AS 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 % - 118 142 118 142

Total 100 % 201 600 921 930 1 123 530

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)

Operating revenue

Operating cost

Financial income*

Financial expenses

Accounts payable

Current receivables*

Transactions 3 101 221 90 000 - 24 90 239

* 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

Operating cost

Financial income

Financial expenses Receivables Liabilities

Associated companies 1 308 079 - 2 364 - 357 048 119 022

Other related parties 40 866 253 671 - - 21 954 17 028

Total 1 348 945 253 671 - - 379 002 136 050

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


Note 23 Remuneration to auditor

Specification of Group auditor’s fee


Parent company Group

Auditor 2018 2017 2018 2017Statutory audit (incl. technical assistance annual accounts and notes) 36 16 6 301 6 424

Taxation advice 25 - 1 700 578

Other assurance services - - 494 1 297

Other assistance 7 - 1 237 940

Total (except VAT) 68 16 9 733 9 239

The amount above includes remuneration to other auditors with: 1 462 1 364

grieg.no

GRIEG MATURITAS ANNUAL REPORT · The Grieg Group has its beginnings in a long and proud maritime...

Documents

Transcript of GRIEG MATURITAS ANNUAL REPORT · The Grieg Group has its beginnings in a long and proud maritime...