Key figures
Corporate governance
The Board of Directors of LSG underlines the importance of having sound corporate governance that clearly states the distribution of roles between shareholders, the Board of Directors and the company management. The goal for Lerøy Seafood Group ASA is for all parts of the Group’s value chain to operate and achieve growth and development according to the Group’s strategy of long-term and sustainable value creation over time for shareholders, employees, customers, suppliers and society in general.

1. Implementation and reporting on corporate governance

The Group’s Corporate Governance is based on the Norwegian Code of Practice for Corporate Gover- nance (NUES), dated 30 October 2014, see also www. The structure of this chapter reflects the recommendations and, for the sake of order, each topic in the recommendation has been included. Any differences are explained.

The company's basic corporate values, ethical code of conduct and guidelines for corporate social responsibility. The Group’s basic corporate values of being creative, open, responsible and honest are based on the Group’s vision to create the world’s leading and most profitable global supplier of sustainable and high quality seafood. The Group's core activities comprise a vertically integrated value chain for the production of salmon and trout; catching whitefish; the processing of seafood; purchasing, sales and marketing of seafood; the distribution of seafood; and product development.

Lerøy Seafood Group takes a very conscious approach to its responsibility regarding ethical conduct, society at large and the environment. Lerøy Seafood Group ASA has drawn up a set of ethical guidelines for Group employees, aiming to establish common principles and regulations which govern all employees within Lerøy Seafood Group ASA and its subsidiaries. The Group's ethical code of conduct reflects the values represented by the Group and provides guidance for employees as to the use of the correct principles for business conduct, impartiality, conflicts of interest, political activity, entertaining expenses, processing information and the duty of confidentiality, relationships with business partners, corruption, whistle-blowing, bribes etc. Each employee has individual responsibility for adhering to the ethical code of conduct. The Group has prepared an Ethics Test for employees which will help them make the right decisions whenever needed. The corporate management is responsible for ensuring compliance with the regulations.

Furthermore, Lerøy Seafood Group has a general rule that the Group, along with all business partners, must comply with legislation in the Group's respective locations, and with the company's own/Lerøy Seafood Group's quality systems and procedures. The Group has a principal rule that there must be compliance with the strictest requirements. 

In the event of nonconformities, measures must be taken to improve the situation. The Group's goal is to contribute positively and constructively to improving human rights, labour rights and environmental protection, both within the Group, in relation to suppliers and subcontractors and in relation to trading partners.

Every year, the Group publishes an Environmental Report setting out the status of, and providing an overview of, all environmental aspects within the Group's value chain. The Group has stipulated target areas, key performance indicators and environmental goals. A short summary of the main content of the Environmental Report can be found under the chapter entitled "Environmental Report". The Environmental Report is published in its entirety on

2. Business

According to Lerøy Seafood Group's Articles of Association, the company's purpose is as follows: «The Company’s objectives are the acquisition and management of shares and activities related thereto». The parent company’s Articles of Association exclusively reflect that the parent company is a holding company established for the purpose of owning other companies. The Group’s goals and main strategies are presented in total in the annual report, but can be summarised as follows: «The Group's core business is the production of salmon and trout, catches of whitefish, processing, product development, marketing, sale and distribution of seafood.»

3. Equity and dividends

Technical information. LSG’s annual general meeting on 23 May 2017 decided to carry out a 1:10 share split by converting 59,577,368 shares each with a nominal value of NOK 1 to 595,773,680 shares each with a nominal value of NOK 0.1.

The number of shareholders as of 31 December 2017 was 5,297, of whom 611 were foreign shareholders. The company’s register of shareholders, see section 4-4 of the Public Limited Companies Act (Norway), was registered first with the Norwegian Central Securities Depository (Verdipapirsentralen – VPS) on 28 November 1997 and carries the VPS registration number ISIN NO-0003096208. DnB ASA, Oslo, is the account manager. The Ticker code for the Group's shares on the Oslo Stock Exchange’s main list is LSG. The company’s organisation number in the Register of Business Enterprises is 975 350 940.

Equity. The Group is financially sound with book equity of NOK 14,482,122 million as of 31 December 2017, which corresponds to an equity ratio of 56.4%. At the end of 2017, the company had 595,773,680 shares outstanding. All shares carry the same rights in the company. As of 31 December 2017, the company owned 29,776 treasury shares.

Financial goals. On-going structural changes in the global industry in which the company operates, seen in conjunction with the cyclical nature of the industry, demand that the company must maintain a satisfactory financial contingency at all times. This in turn requires a close relationship with the company’s shareholders and equity markets. The company has always stressed the importance of maintaining the confidence of its financial partners and thus also access to necessary loan capital on favourable terms. The financial goals established by the Board and management must be reflected in specified requirements for financial adequacy and yield. The established requirement for financial adequacy stipulates that the Group’s equity ratio should be at least 30% over time. The Group’s long- term goal for earnings is to generate an annual return on the Group’s average capital employed of 18% before tax.

Dividends. Lerøy Seafood Group aims to achieve satisfactory profitability in all its activities. The yield to shareholders in the form of dividends and share price performance shall reflect the company’s value creation. Distributed dividends should develop in line with the company’s financial strength, growth and profit performance.

The company’s dividend policy implies that, over time, dividends should lie in the region of 30% to 40% of profit after tax. However, care must be taken at all times to ensure that the Group has satisfactory financial contingency for new and profitable investments. In the long run, financial value creation will increasingly be in the form of higher share prices rather than in declared dividends.

The Board of Directors has proposed a dividend payment for 2017 of NOK 1.50 per share, which is NOK 0.20 higher per share than the dividend payment in 2016. The proposal complies with the company’s specified dividend policy.

Mandates granted to the Board of Directors. Mandates are granted to the Board of Directors in accordance with the Public Limited Companies Act (Norway), see in particular chapters 9 and 10 of the Act.

Mandate for the Board to purchase treasury shares. The Board was authorised for the first time to purchase treasury shares by the annual general meeting on 12 May 2000. This mandate was last exercised in 2011 with the acquisition of 100,000 treasury shares. The mandate was last renewed at the annual general meeting on 23 May 2017 and it authorises the acquisition of up to 50,000,000 shares over a period of 18 months from the date on which the resolution was adopted. Renewal of the mandate will be recommended to the annual general meeting on 23 May 2018.

Mandate to increase share capital by issuing shares for private placings with external investors, employees and individual shareholders in Lerøy Seafood Group ASA. The Board has a mandate to increase the share capital by up to NOK 5,000,000 by issuing up to 50,000,000 shares in Lerøy Seafood Group ASA, each with a face value of NOK 0.10, through one or more private placings with the company’s shareholders and/or external investors. This type of mandate was first established by the annual general meeting of 4 May 1999 and last renewed by the annual general meeting on 23 May 2017. The Board of Directors exercised this mandate on 2 June 2016 and carried out a private placement of 5,000,000 new shares at a face value of NOK 1.00 in addition to the sale of 300,000 treasury shares. The Board of Directors feels it is appropriate to retain this mandate, including authorisation for the Board to deviate from the preference rights of the shareholders, and a proposal will be made to the annual general meeting on 23 May 2018 to establish a new and equivalent mandate.

The Board’s mandates are valid for a period exceeding one year and are not limited to specifically defined objectives as recommended by the NUES. This is principally for operational reasons, but also in order to clearly show that the company is growth-oriented and that shares are regarded as potential means of payment. This practice is established to ensure an optimum strategic business development for the company. However, the company has established the practice of having the mandates renewed annually at each annual general meeting.

4. Equal treatment of shareholders and transactions with related parties

The company has only one class of shares and each share carries one vote at the annual general meeting. Shareholders’ rights are governed by the Public Limited Companies Act (Norway), see in particular chapter 4 of the Act. Lerøy Seafood Group's Articles of Association and agreements are all worded to ensure equal treatment of shareholders.

Equal treatment of shareholders and transactions with close associates. Lerøy Seafood Group ASA has a strict policy of providing correct and open information to shareholders, potential shareholders and other stakeholders.

Not immaterial transactions between the company and shareholders, a shareholder’s parent company, members of the Board of Directors, executive personnel or close associates of any such parties. Should such transactions occur, they are documented and executed according to the arm's length principle. The company has prepared guidelines to ensure notification by board members and executive personnel to the Board of Directors of any significant interest in an agreement signed by the company. If enterprises with associations to board members perform work for Lerøy Seafood Group ASA’s Board of Directors, the question of independence is treated specifically by the Board.

5. Freely negotiable shares

According to the company's Articles of Association, there are no restrictions on the negotiability of Lerøy Seafood Group's shares.

6. General meetings

Notice of and holding annual general meetings. Lerøy Seafood Group ASA held its annual general meeting in the company's head office at Bontelabo, Bergen on 23 May 2017. The notice of the meeting with a proposed agenda, attendance slip and proxy form were distributed to all shareholders with a registered address three weeks prior to the date Investor relations Lerøy Seafood Group Annual report 2017 Corporate governance of the general meeting. The notice of the general meeting was formatted in accordance with the requirements of the Public Companies Act in Norway and the regulation relating to general meetings which governs the content and availability of supporting information. Pursuant to the company's Articles of Association, all documents to be discussed at the general meeting were made available on the company's website: www.

This information was published on the website 21 days prior to the date of the general meeting.

The supporting information was sufficiently detailed and comprehensive to allow the shareholders to form a view on all matters to be considered at the meeting. The deadline for registration of participation was set for the day prior to the general meeting. Prior to distribution of the notice of the general meeting, the Board of Directors and meeting chairperson had performed a quality control of the procedures for registration and voting, and of the proxy form for participation and voting on behalf of other shareholders.

The Chairman of the Board represented the Board of Directors at the general meeting. In addition, the CEO and other members of the corporate management were present. By agreement with the Chairperson of the Nomination Committee, the Chairman of the Board presented the committee's recommendation.

Independent chairing of the general meeting is ensured by the general meeting appointing a chairperson for the meeting and one person to co-sign the minutes of the meeting.

The notice and holding of the annual general meeting in 2017 complied with the practice established by Lerøy Seafood Group ASA in recent years.

Participation by proxy. The Public Companies Act in Norway and the regulation relating to general meetings allows for several methods whereby shareholders can participate in and vote at the general meeting, without actually being present. In the notice of the general meeting, Lerøy Seafood Group has allowed shareholders to vote by proxy. The proxy was designed so as to permit votes to be cast for each individual item discussed, and for candidates up for election. The company has procedures which ensure full control and overview of participation and voting at general meetings.

The company publishes the signed set of minutes immediately after the general meeting has been closed.No extraordinary general meetings were held in 2017.

At general meetings, the Board of Directors is normally represented by the Chairman of the Board, who also represents the majority shareholder in LSG. Due to the very limited capacity for other shareholders to physically participate at general meetings, it has not been deemed necessary for all board members to take part in the general meeting. 

7. Nomination Committee

The Nomination Committee consists of three members elected by the general meeting for a period of two years. The company’s nomination committee is charged with preparing proposals for the composition of a shareholder-elected board of directors and to submit recommendations to the shareholders’ meeting for appointments to the board. At present, the members of the Nomination Committee are Helge Møgster (Chairman), Benedicte Schilbred Fasmer and Aksel Linchausen. The company has not established specific guidelines for the Nomination Committee. However, the composition of the Nomination Committee is such that the interests of the shareholders in general are taken into account in that the majority within the committee is independent of the Board and other executive personnel, and that the company’s Articles of Association also specify the framework for the work of the Committee.

The Nomination Committee makes a recommendation regarding remuneration to the members of the board. The general meeting makes the final decision regarding fees to be paid to the members of the company's board and Nomination Committee.

Information on the members of the Nomination Committee is published at The Nomination Committee will be facilitated contact with the shareholders, the board members and the CEO when working on the recommendation of candidates. In addition, shareholders are permitted to recommend candidates to the Committee.

The recommendation of the Nomination Committee is included in the supporting documentation for the general meeting, which is published within the 21-day deadline for notice of the general meeting.

8. Corporate assembly and board of directors; composition and independence

Corporate assembly. Lerøy Seafood Group ASA does not have a corporate assembly.

Composition and independence of the Board of Directors. In its central position between owners and management, it is the Board of Directors’ function to safeguard the shareholders’ need for strategic governance and operational control. The function and focus of the Board will always vary somewhat depending on circumstances within the company and on developments in external framework conditions.

The transformation of the Lerøy Group from a family company to a listed public limited company has been guided by the owners’ clear awareness of the type of Board the company needs. Since the early 1990s, the majority of the board members have been independent of the Group’s management team in order to protect the Board’s ability to challenge management practices. In part because of the Board’s composition (size and independence from management and main owners, etc.), it has to date been deemed unnecessary to establish so-called board committees, with the exception of the statutory requirement for an audit committee. Pursuant to the Norwegian Public Companies Act, the Chief Executive Officer is not permitted to be a board member. The Norwegian Code of Practice is also very clear in its recommendation that neither the CEO nor other executive personnel in the company should be board members. In Lerøy Seafood Group ASA, neither the CEO nor other executive personnel are members of the Board of Directors.

Nomination period and term of office. Both the Chairman of the Board and other board members are elected for a period of two years at a time. The Nomination Committee submits its recommendation to the general meeting, which appoints the Chairman of the Board and other board members.

Information on the members of the board. The Chairman of the Board, Helge Singelstad (1963), was appointed to the Board by the extraordinary general meeting on 26 November 2009. Helge Singelstad holds a degree in computer engineering, a degree in Business Administration from the Norwegian School of Economics (NHH) and took a foundation course in law at the University of Bergen. Helge Singelstad has previously held positions as CEO, Vice CEO and CFO of Lerøy Seafood Group. Consequently, he has broad knowledge of the Group and the industry. Helge Singelstad is Chairman of the Board of Austevoll Seafood ASA and Vice Chairman of the Board of DOF ASA. He is the Managing Director of Laco AS. Laco AS is a majority shareholder of Austevoll Seafood ASA. Helge Singelstad owns no shares or options in Lerøy Seafood Group ASA as of 31 December 2017, but as a shareholder in Austevoll Seafood ASA he indirectly owns shares in the Group.

Board member Arne Møgster (1975) was appointed to the Board by the annual general meeting on 26 May 2009. Arne Møgster holds a Bachelor degree in Business Administration and an MSc in International Shipping. Arne Møgster is the CEO of Austevoll Seafood ASA and board member in a number of companies. As a shareholder in Laco AS, Arne Møgster indirectly owns shares in Lerøy Seafood Group ASA.

Board member Britt Kathrine Drivenes (1963) was Investor relations Corporate governance appointed to the Board by the annual general meeting on 20 May 2008. Britt Kathrine Drivenes holds a Bachelor of Business Administration from the Norwegian School of Management (BI) and a Master of Business Administration in Strategic Management from the Norwegian School of Economics (NHH). She is the CFO of Austevoll Seafood ASA and is also a board member in a number of companies. She indirectly owns shares in Lerøy Seafood Group ASA as a shareholder in Austevoll Seafood ASA.

Board member Hege Charlotte Bakken (1973) was appointed to the Board by the extraordinary general meeting on 12 December 2008. Hege Charlotte Bakken holds an MSc degree from the Norwegian University of Life Sciences and an Executive MBA from ESCP EAP European School of Management in Paris. She is a Senior Advisor at Hemingway Corporate Finance, Amsterdam and Senior Advisor within strategy and management with Stella Polaris. She has previously held the positions of Chief Operating Officer of Marvesa Holding NV and Managing Director of Marvesa Rotterdam N.V. She also has experience from companies such as Pronova BioPharma Norge AS, FishMarket International AS, FrioNor AS and Norway Seafoods ASA. Hege Charlotte Bakken has also served as a member of the boards of Pronova Biopharma Norge AS and Pronova BioPharma ASA. She owns no shares in the company as of 31 -December 2017.

Board member Didrik Munch (1956) was appointed to the Board by the annual general meeting on 23 May 2012. Didrik Munch has a degree in law from the University of Bergen and qualified as a police officer at the Norwegian Police University College in Oslo. He has worked in a number of positions within the Norwegian police force (1977–1986). From 1986 to 1997, he worked in finance, primarily in the DnB system. Towards the end of this period, he was part of DnB's corporate management, as Director for the Corporate Customer division. From 1997 to 2008, Didrik Munch was CEO of Bergens Tidende AS (a Norwegian newspaper). In 2008, he took on the role of CEO for Media Norge AS (the company changed its name to Schibsted Norge AS in April 2012) and held this position until 28 February 2018. Today, Didrik Munch is self-employed and has positions on several boards, including Chairman of the Board for Storebrand ASA, board member for Grieg Star Group AS and board member for Schibsted Media AS. Throughout his career, he has held numerous positions as both Chairman of the Board and board member for different companies. He owns no shares in the company as of 31 December 2017.

Karoline Møgster (1980) was appointed to the Board by the annual general meeting on 23 May 2017. Karoline Møgster has a law degree from the University of Bergen (Candidata juris). She also has a Masters’ degree in accounting and auditing (MRR) from the Norwegian School of Economics. She has worked as a lawyer with Advokatfirmaet Thommessen AS and is now employed as a lawyer for the Møgster Group. She is a board member for Laco AS and has experience of board work from DOF ASA and other companies in the DOF Group. Karoline Møgster indirectly owns shares in Lerøy Seafood Group ASA as a shareholder of Laco AS.

Board Member Hans Petter Vestre (1966) was appointed to the Board as the employees’ representative at the annual general meeting on 24 April 1995. Hans Petter Vestre is a graduate of the Norwegian College of Fishery, University of Tromsø. He was employed by Hallvard Lerøy AS as a sales manager in 1992 and is today departmental head in Lerøy Seafood AS. Hans Petter Vestre owned 120 shares in the company as of 31 December 2017.

The Group structure, with autonomous entities in different regions, is supervised through participation by Group management in the administrative bodies of the various companies. The employees also contribute to sound operational development through their representation on the boards of the subsidiaries. The Board has not elected a Vice Chairman and so far the Chairman of the Board has always been present. In case of his absence, the Board will make satisfactory arrangements for chairing the meeting.

Encouraging the board members to own shares in the company. The majority of board members Investor relations Corporate governance in Lerøy Seafood Group ASA own shares in the company, either directly or indirectly.

9. The work of the board of directors

The tasks assigned to the Board of Directors. The Board of Directors shall establish an annual plan for its work, with a focus on goals, strategy and execution, in order to ensure continuous follow-up and further development of the company. For several years, as well as in its eight meetings in 2017, the Board has maintained a particular focus on the connection between practical operations and strategic business development. The Board works purposefully together with the company management to make the Group the most profitable, fully integrated global seafood company. This work has for a considerable time been carried out in accordance with our public announcements. The Board’s work reflects this strategy and the results are shown through management implementation. Although the strategic development of the company is a continuous process and part of the work of the Board of Directors, the company also holds dedicated strategy meetings. Strategy meetings were held in 2017.

Instructions for the Board of Directors and management. A set of instructions has been prepared for the work of the Board of Directors. The scope of the work of the CEO is laid down in a separate set of instructions and in close dialogue with the company’s Chairman of the Board.

Independent consideration of business of a significant nature, where the Chairman of the Board plays an active role. The Chairman of the Board is not involved in cases where he/she has a personal interest. Such business is dealt with by one of the other board members. There has been no business of this nature during the year.

Board committees. Audit committee. Pursuant to section 6-41 (1) of the Norwegian Public Companies Act, companies listed on the Stock Exchange are obliged to establish an audit committee which prepares business for and submits recommendations to the Board of Directors. Lerøy Seafood Group ASA's audit committee consists of Didrik Munch (Chairman) and Britt Kathrine Drivenes. The audit committee reports to the Chairman of the Board. The audit committee conducts quality assurance of internal control and reporting. It is also responsible for the Board of Directors' dialogue with and monitoring of the external auditor. The auditor reports on his work in writing to the company administration and the Board through the audit committee. The company does not have a so-called remuneration committee.

Assessment of the Board’s work. When recruiting board members, the company’s owners follow a long-standing strategy of assessing the company’s need for varied competency, continuity, renewal and changes in ownership structure. It will always be in the company’s interest to ensure that the composition of the Board varies in line with the demands and expectations made on the Group. The Board’s assessment of its own performance and of Group management must of necessity be seen in conjunction with the Group’s performance. To date, the Board has not issued reports on its assessment of its own work; this is a conscious priority decision and must be viewed in connection with other announcements in the company’s communications to the public. Moreover, external assessments of the Board’s work are probably the most influential and are likely to remain so in the future.

10. Risk management and internal control

Risk management and internal control. The Group’s activities are varied, depending on each entity’s position in the value chain, and consequently require differentiated forms of management and follow-up. Good internal management systems are essential for success, and these must be continuously developed in order to accommodate fluctuating conditions. The Group’s regional structure with independent entities, also in respect of short-term reporting, facilitates good control and a powerful focus. Internal control is based on daily and weekly reports that are summarised into monthly reports tailored to the individual company, and at Group level. There is an emphasis on developing uniform reporting procedures and formats in order to ensure correct reporting from all entities and up to an aggregate level.

As Lerøy Seafood Group is an international seafood corporation with decentralised operations and a significant volume of biological production, the company is exposed to a number of risk factors. The Board of Directors therefore works hard to ensure that the Group implements all measures required to control risk, to limit individual risk and to keep risk as a whole within acceptable constraints.

Operating risk. Fish farming takes place in relatively open seas which provide the best conditions for fish farming in terms of the environment and health of the fish. However, this places significant demands on both personnel and equipment. The production plants are continuously subjected to the forces of nature, representing a certain risk of damage to equipment which, in turn, may result in accidental release of fish. The company reported three incidents involving the accidental release of fish in 2017, cf. the more detailed description in the Group's Environmental Report. Keeping animals in intensive cultures will always entail a certain risk of illness. Fish are particularly vulnerable to illness when they start life at sea, as they are exposed to stress during this period and have to adapt to a completely new environment. The risk of illness can be reduced by ensuring high quality smolt, vaccinations, good conditions and the correct locations for the fish. The Group also has a focus on sustainable feed.

For more comments on biological production, please refer to the Group's Environmental Report.

Market risk. The Group's result is strongly reliant on the developments in global salmon and trout prices and now increasingly on whitefish prices, in particular cod. The Group seeks to reduce this risk factor by ensuring that a certain proportion of sales are so-called contract sales.

In addition, Norwegian fish farming and the fish processing industry in Norway and the EU have a history of exposure to the risk represented by the constant threat of long-term political trade barriers imposed by the EU Commission. In 2008, the EU Commission abolished the programme which involved so-called minimum prices for Norwegian salmon and punitive duties on Norwegian trout. In 2011, punitive duties on whole salmon exported to the USA were also lifted. Russia introduced a ban on imports of salmon and trout from Norway on 7 August 2014. As Russia is normally a major market for Norwegian salmon and trout, the import ban had a negative impact on realised prices for trout also in 2017.

Currency risk. The Group has international operations and is thus exposed to currency risk. The Group makes use of currency derivatives combined with withdrawals/deposits in multi-currency accounts in order to minimise currency risk on outstanding trade receivables, signed sales contracts and ongoing contractual negotiations. The Group’s long-term liabilities are mainly in Norwegian kroner.

Credit risk. Pursuant to the Group’s strategy for managing credit risk, the Group’s trade receivables are mainly covered by credit insurance or other forms of security. All new customers are subjected to a credit rating.

Interest rate risk. The majority of the Group’s long-term debt is at floating rates of interest, representing exposure to increases in the market interest rate. Interest rate swap agreements are signed to reduce interest rate risk.

Liquidity risk. The most significant individual factor related to liquidity risk is fluctuation in salmon prices and now, to an increasing degree, prices for whitefish and in particular cod. Liquidity is also affected by fluctuations in production and slaughter volumes and changes in feed prices, which is the most prominent single factor on the cost side. Feed costs are impacted by the developments in prices for marine raw materials and agricultural products.

Review by the Board of Directors. A significant share Investor relations Corporate governance of the work of the Board of Directors involves ensuring that the company management is familiar with and understands the Group's risk areas and that risk is managed by means of appropriate internal control. Frequent evaluations and assessments are conducted of both the management's and Board's understanding of risk and internal control. The audit committee plays an important role in these evaluations and assessments.

Description of the main elements of risk management and internal control related to financial reports. Internal control within the Group is based on the recommendation from the "Committee of Sponsoring Organizations of the Treadway Commissions" (COSO), and covers control environment, risk assessment, control activities, information and communication, and monitoring. The content of these different elements is described in detail below.

Control environment. The core of an enterprise is the employees' individual qualities, ethical values and competence, in addition to the environment in which they work.

Guidelines for financial reporting. On behalf of the CFO, the Chief Accountant for the Group provides guidelines to entities within the Group. These guidelines place requirements on both the content of and process for financial reporting.

Organisation and responsibility. The Chief Accountant for the Group reports to the CFO and is responsible for areas such as financial reporting, budgets and internal control of financial reporting within the Group.

The Directors of the reporting entities are responsible for continuous financial monitoring and reporting. The entities all have management groups and financial functions which are adapted to their organisation and business. The entity managers shall ensure implementation of appropriate and efficient internal control and are responsible for compliance with requirements.

The audit committee shall monitor the process of financial reporting and ensure that the Group's internal control and risk management systems function efficiently. The audit committee shall also ensure that the Group has an independent and effectivet external auditor.

The financial statements for all companies in the Group are audited by an external auditor, within the framework established in international standards for auditing and quality control.

Risk assessment. The Chief Accountant for the Group and the CFO identify, assess and monitor the risk of errors in the Group's financial reports, together with the managers of each entity.

Control activities. Reporting entities are responsible for the implementation of adequate control actions in order to prevent errors in the financial reports. Processes and control measures have been established to ensure quality assurance of financial reports. These measures comprise mandates, division of work, reconciliation/documentation, IT controls, analyses, management reviews and Board representation within subsidiaries.

The Chief Accountant for the Group provides guidelines for financial reporting to the different Group entities. The Chief Accountant for the Group ensures that reporting takes place in accordance with prevailing legislation, accounting standards, established accounting principles and the Board's guidelines.

The Chief Accountant and the CFO continuously assess the Group's and the entities' financial reports. Analyses are carried out in relation to previous periods, between different entities and in relation to other companies within the same industry.

Review by the Group management. The Group management reviews the financial reports on a monthly basis, including the development in figures for profit/loss and balance sheet.

Reviews by the audit committee, Board and general meeting. The audit committee and Board review the Group's financial reports on a quarterly basis. During such reviews, the audit committee has discussions with the management and external auditor. At least once a year, the Board holds a meeting with the external auditor, without the presence of the administration.

The Board reviews the interim accounts per quarter and the proposal for the financial statements. The financial statements are adopted by the annual general meeting.

Information and communication. The Group has a strict policy of providing correct and open information to shareholders, potential shareholders and other stakeholders. Item 13, "Information and communication" contains more detailed information.

Follow-up of reporting entities. Those persons responsible for entities which issue reports shall ensure appropriate and efficient internal control in accordance with requirements and are responsible for compliance with such requirements.

Group level. The Chief Accountant and CFO review the financial reports issued by the entities and the Group, and assess any errors, omissions and required improvements.

External auditor. The external auditor shall provide the audit committee with a description of the main elements of the audit from the previous financial year, in particular significant weak points identified during internal control related to the process of financial reporting.

The Board of Directors. The Board, represented by the audit committee, monitors the process of financial reporting.

11. Remuneration of the board of directors

Board remuneration is not performance based. The Board members elected by the shareholders have no share options. If enterprises that board members are associated with perform work for the company’s Board, the question of independence is treated specifically by the Board.

Remuneration of the Chairman of the Board and other board members is recommended by the Nomination Committee and adopted by the annual general meeting. The annual general meeting on 23 May 2017 adopted remuneration of the Board of Directors as follows: Annual remuneration of the Chairman of the Board, NOK 375,000. Annual remuneration of the other board members, NOK 200,000. However, no remuneration is paid to the Chairman of the Board that represents a duty to report. Lerøy Seafood Group ASA is invoiced for the services of the Chairman, and for consultancy fees related to the role as working Chairman of the Board from the Group’s leading company, Laco AS, where the Chairman of the Board is an employee.

It is recommended that remuneration for any additional work carried out by members of the Board of Directors' sub-committees be paid separately in addition to the basic fees for board members of NOK 40,000 per year.

Annual remuneration of the members of the Nomination Committee totalled NOK 35,000 per member.

12. Remuneration of executive personnel

This item is referred to in the chapter regarding the Board of Directors’ Statement on Salaries and other Remuneration of Executive Personnel.

The annual general meeting will vote individually on the recommended and binding guidelines.

13. Information and communication

Lerøy Seafood Group ASA has a strict policy of providing correct and open information to shareholders, potential shareholders and other stakeholders. Timely, relevant, consistent and current information is the basis upon which all interested parties will assess the value of the company’s shares. The company’s most important medium for distributing information is the Oslo Stock Exchange reporting system, but the company will also hold presentations for investors and analysts. Lerøy Seafood Group keeps its share Investor relations Corporate governance holders informed via the Board of Directors’ report, quarterly reports and at appropriate presentations. In addition, press releases are sent out regarding important events on the company’s markets, or about other relevant circumstances.

Every year, Lerøy Seafood Group ASA publishes the company's financial calendar, showing the dates for presentation of the interim financial statements and the date of the annual general meeting. The date for payment of dividends is decided by the company's annual general meeting.

The company's website is continuously updated with information that is distributed to shareholders. The company’s website is at: No specific guidelines have been compiled for the company’s contact with shareholders outside the general meeting. This is due to the fact that the current integrated practice within this area is deemed satisfactory.

14. Take-overs

Lerøy Seafood Group ASA has no restrictions in its Articles of Association regarding company take-overs. As of 3 June 2002, the shares in Lerøy Seafood Group ASA have been quoted on the main listing of the Oslo Stock Exchange and are freely negotiable within the provisions of Norwegian law. The company has only one class of shares and each share carries one vote at the general meeting.

If a take-over bid is made for the company, the Board of Directors will make a statement prior to the expiry of the bid. The Board of Director's statement will also include a recommendation as to whether or not the shareholders should accept the bid. The Board of Directors will emphasise equal treatment of the shareholders and no unnecessary disturbance of the company's operations. 

15. Auditor

Auditor - yearly plan. For a number of years, Lerøy Seafood Group ASA has engaged the services of PriceWaterhouseCoopers AS as Group auditor. The company's auditor follows an auditing plan which has been reviewed in advance together with the audit committee and management. The auditor and audit committee perform an annual audit of the company’s internal control, including identified weak points and recommended improvements. The Board is informed of the general nature of the services the administration buys from the auditor.

Treatment of the financial statements. The auditor holds meetings with the audit committee and management subsequent to the interim audit and in connection with the company's presentation of interim reports for the fourth quarter. The auditor attends board meetings where the financial statements are to be approved, and also holds a meeting on the subject of the annual report with the Board of Directors, at which the management does not attend. During these meetings, the auditor reviews any significant changes in the company’s accounting policies, evaluations of significant accounting estimates and all significant factors on which the auditor and management disagree. To date, there has been no such disagreement on any factors.

Auditor – other services. The auditor prepares a written confirmation of independence for the audit committee, with written disclosure to the audit committee of all other services provided in addition to mandatory auditing. The auditing company utilised is a large company and practices internal rotation, in compliance with the requirement for independence.

Moreover, the auditor is available for questions and comments concerning the financial statements and other matters at the Board’s discretion.

Remuneration of the auditor. Invoiced fees from the auditor are presented in a separate note to the financial statements. The company's annual general meeting is also notified of remuneration of the auditor. No specific guidelines have been established for the CEO’s mandate to make use of the auditor for services other than auditing. The Board of Directors is instead continuously informed of the main aspects of the services purchased by the administration from the auditor.

Board of directors´ statement
Regarding salaries and other remuneration of executive personnel in Lerøy Seafood Group ASA.

The guidelines for financial year 2016 have been followed by the company. Application of the same guidelines is recommended for the upcoming financial year.

The guidelines are recommended for the Board with the exception of the items related to options and other benefits based on shares or development in the share price in the Group, which are binding.

Main principles of the Company's salary policy

The Group’s development is closely linked to the Group’s ability to recruit and retain managerial staff and the Group employs various models for remuneration of executive personnel on competitive terms. Executive personnel receive salary according to market terms. Remuneration varies over time both in respect of level and method of payment. In addition to the annual salary, the Group also pays performance-based bonuses limited to one annual wage, lump sum payments, so-called sign-on fees, arranged leave of absence, educational opportunities and option agreements. The Group does not currently have an option programme. The Group has collective pension plans. For logical reasons and to date, the Chairman of the Board has handled all practical matters in respect of agreements with the Group CEO on behalf of the Board. Remuneration of other members of the corporate management is determined by the CEO in consultation with the Chairman of the Board. Remuneration is reviewed annually, but on a long-term perspective, ref. the requirement for continuity.

Principles of remuneration in addition to base salary

The base salary. Salaries to executive personnel must be competitive – Lerøy Seafood Group aims to attract and retain the most talented management. The base salary is normally the main element of executive personnel salaries. There is at present no particular limit on the total remuneration a senior staff member may earn.

Additional remuneration: bonus scheme. The salary earned by executive personnel must inspire high performance and must be structured to motivate extra efforts towards continuous improvement of operations and the company’s performance. The Group utilises performance-based bonuses of maximum of one year's salary.

Options. The Group does not currently have an option programme.

Pension plans. All companies in the Group satisfy the requirements in the Act relating to mandatory occupational pensions (Norwegian: OTP). At the time of writing, the Group only practises defined contribution pension plans. The Group’s executive personnel participate in the company’s collective pension plans.

Severance pay. The Board limits the use of so-called severance pay agreements, but these have been practised in a few cases, albeit limited to two years’ salary. Severance pay may at times be a good alternative for all parties involved.

Non-pecuniary benefits. Executive personnel will normally receive non-pecuniary benefits commensurate with their positions. There are no particular limitations on the type of non-pecuniary benefits that can be agreed.

Other benefits. In connection with public share issues, the first of which took place in 1998, the company’s employees have been granted the right to subscribe to a limited number of shares at a discounted price (20%).

Procedure for stipulating executive pay

Introduction. Please see the note to the financial statements for information on remuneration of individual executive personnel.

Stipulation of salary for Group CEO. Remuneration of the Group CEO is determined annually by the Chairman of the Board according to a mandate issued by the Board.

Stipulation of salary for the corporate management group. Remuneration of the individual members of the corporate management group is determined by the CEO in consultation with the Chairman of the Board. The Board of Directors shall be subsequently informed of the decision.

Establishment of incentive schemes. General schemes for payment of variable benefits, including bonus schemes, are established by the Board of Directors. The Group CEO allocates such incentive schemes and other benefits to the Group’s executive personnel within the boundaries established by the Board.

Remuneration of the Board of Directors. Board remuneration is not performance based. The Board members have no options. The Board’s remuneration is determined annually by the annual general meeting.

Stipulation of salary for executive personnel in other group companies

Other companies in Lerøy Seafood Group shall adhere to the main principles in the Group’s executive personnel salary policy as they are described in item one above.

Bergen, 19 April 2018
The Board of Directors of Lerøy Seafood Group ASA

Financial information
Board of Directors' report 2017

Financial matters
Lerøy Seafood Group reported revenue in 2017 of NOK 18,624 million, up from NOK 17,269 million in 2016. This is the highest revenue ever reported by the Group. The growth in Group revenue is mainly attributed to an increased level of activity within whitefish, the increase in harvest volume from Farming, good market conditions for salmon and a positive development in the Group’s downstream activities.

As a result of the acquisitions within whitefish, concluded in the second half of 2016, the Group is now a fully and vertically integrated corporation within both redfish and whitefish. Lerøy Seafood Group is the leading seafood group in Norway and thereby one of the leading seafood companies in the world. The Group has a clear ambition to further develop this position in the years to come.

The Group's operating profit before fair value adjustment related to biological assets was NOK 3,717 million in 2017 compared with NOK 2,843 million in 2016. Profit before tax and fair value adjustment related to biological assets was NOK 3,805 million in 2017 compared with NOK 2,926 million in 2016. Earnings per share before fair value adjustment related to biological assets and minority interests totalled NOK 4.90 compared with NOK 3.84 per share in 2016.

In October 2016, Lerøy Seafood Group obtained 100% ownership of both Havfisk ASA (Havfisk) and Norway Seafoods Group AS. As a result of this transaction, both companies were consolidated into Lerøy Seafood Group as of 1 September 2016. These companies comprise the Wild Catch and Whitefish segment. Norway Seafoods Group AS subsequently changed its name to Lerøy Norway Seafoods AS (LNWS).

Havfisk's primary business is wild catches of whitefish. Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to more than 30% of the total quota allocated to the trawler fleet. After taking over the trawler Nordtind from the shipyard in January 2018, Havfisk has ten trawlers in operation. Havfisk owns several processing plants, which are mainly leased out to LNWS on long-term contracts. Havfisk’s trawler licences stipulate an operational obligation for these processing plants.

For 2017 as a whole, Havfisk’s total catch volume was 66,729 tonnes, up 5% from 2016. The company reported stable and good operations throughout the year.

LNWS’s primary business is processing wild-caught whitefish. The company has use of eight processing plants in Norway, five of which are leased from Havfisk. LNWS is the largest purchaser of cod from the coastal fishing fleet in Norway. LNWS previously owned two facilities in Denmark, but these were sold at the start of 2017 to Seafood International A/S – a Danish seafood corporation in which Lerøy Seafood Group ASA owns 33 % of the shares.

The Farming segment reported a record-high operating profit before fair value adjustment related to biological assets of NOK 2,942 million in 2017. This represents an increase of NOK 523 million when compared with the operating profit of NOK 2,419 million in 2016.

In 2017, the Group harvested 158,000 tonnes of salmon and trout, up from 150,000 tonnes in 2016. The prices for Atlantic salmon and trout remained strong in 2017, but with a high level of volatility throughout the year. Biological production in Norway saw a considerable improvement in 2017 when compared with the year before, resulting in increased supply and some pressure on prices towards the end of the year. For the year as a whole, the Group’s prices realised on salmon and trout were up 9% from 2016 to 2017. Import restrictions in Russia and neighbouring countries since 7 August 2014 have had a negative impact on prices realised for trout. Trout prices were on the increase in 2016 and were on a level with salmon prices at the start of 2017, but unfortunately fell against salmon prices throughout 2017. Prices realised for trout by the Group in 2017 were approx. NOK 4 lower per kg than the corresponding prices for salmon.

Release from stock costs for the Norwegian fish farming industry and Lerøy saw a negative development after 2013 due to adaptations to new political regulations. Throughout 2017, there have been indications that this negative development may have turned around. The Group's biological production was better in 2017 than in recent years. A reduction in production costs has also been demonstrated throughout the year. At the time of writing, there are clear indications that the trend for lower production costs will continue in 2018. We will have access to more specific figures once the biomass in the sea has been harvested.

Given the major differences in biological framework conditions, there are major variations in release from stock costs between the regions. Lerøy Aurora still reports one of the lowest cost levels in the industry, and Lerøy Midt has achieved considerable improvements in costs, while Lerøy Sjøtroll experienced significant challenges in the autumn of 2017 and a cost level that is not satisfactory. Lerøy Sjøtroll has implemented the construction of a new RAS/ post-smolt facility in Kjærelva in Fitjar municipality, Hordaland. The plan is to introduce eggs to the facility in the second quarter of 2018 and to have the first delivery/release from the facility in 2019. The Group has high expectations for the yield from this investment, based on e.g. knowledge of similar facilities in the Group.

The VAPS&D segment was formerly two separate segments: Value-added Processing (VAP) and Sales & Distribution (S&D), but both were merged to one segment in 2017 as their activities had an increasing number of overlaps.

Lerøy Seafood Group has major downstream activities and a clearly defined goal to drive demand for seafood in the form of new products and market development. The Group sells, processes and distributes own-produced salmon and trout along with whitefish from its own fleet of trawlers, but also has substantial activities in cooperation with third parties. As a result, the Group now supplies a wide range of seafood products. The Group has identified positive synergy effects in its marketing work as a result of the acquisition within whitefish.

The segment reported a positive development in 2017, and operating profit before fair value adjustment related to biological assets is up from NOK 399 million in 2016 to NOK 435 million in 2017. The Group expects the segment to sustain this positive development both in the level of activities and earnings in 2018.

Prior to fair value adjustment related to biological assets, the Group's income from associates totalled NOK 298 million in 2017, up NOK 84 million compared with an income of NOK 214 million in 2016. The most important contribution to this figure comes from Norskott Havbruk, Scotland's second largest fish farming company, which is 50% owned by the Group.

The Group's net financial items for 2017 were negative at NOK 210 million compared with a negative figure of NOK 131 million in 2016. The Group has increased financial expenses due to a slight increase in debt caused by major acquisitions. The profit achieved in 2017 corresponds to a profit before fair value adjustment related to biological assets of NOK 4.90 per share, compared with NOK 3.84 per share in 2016. The Board of Directors intends to recommend a dividend payment for 2017 of NOK 1.50 per share to the company's annual general meeting in 2018. This recommendation is in line with the company's dividend policy and reflects the Group's financial adequacy, strong financial position and projections for increased profit. The Board of Directors also underlines the importance of continuity and predictability for the company's shareholders.

The return on the Group’s capital employed before adjustment related to biological assets in 2017 was 25.8% compared with 23.9% in 2016. The Group is financially sound with book equity of NOK 14,482 million, equivalent to an equity ratio of 56%. The Group's strong cash flows in 2017 led to a reduction in net interest-bearing debt of NOK 1,171 million, leaving a figure of NOK 2,262 million at the end of 2017, compared with NOK 3,433 million at year-end 2016.

In connection with the acquisition of Havfisk AS and Norway Seafoods Group AS, Lerøy Seafood Group carried out a private placement on 2 June 2016, issuing 5,000,000 new shares and selling 300,000 treasury shares at a price of NOK 415 per share. After the share issue, there were 59,577,368 outstanding shares in the company. LSG’s annual general meeting on 23 May 2017 decided to carry out a 1:10 share split by converting 59,577,368 shares each with a nominal value of NOK 1 to 595,773,680 shares each with a nominal value of NOK 0.1. The company owns 297,760 treasury shares.

Cash flow from operating activities in 2017 was strong at NOK 3,688 million. A total of NOK 834 million has been paid in dividends, in addition to tax payments totalling NOK 494 million. The Group has made net investment in fixed assets totaling NOK 1,464 million in 2017. The Group has a balance sheet total of NOK 25,658 million as of 31 December 2017 compared with NOK 25,079 million as of year-end 2016. The Group’s financial position is strong and shall continue to be utilised to ensure increased value creation through organic growth, new alliances and acquisitions. The Group compiles its financial reports in accordance with the international accounting standards, IFRS.

Key risk factors
The Group’s results are closely linked to developments in the markets for seafood. The price for Atlantic salmon and trout is of particular importance, but also to an increasing degree the price for whitefish and particularly cod. The development in prices for salmon and trout in recent years has been very positive. As a result of its significant marketing activities, the Group has in-depth knowledge of the end market and believes that the strong growth in demand for seafood in general, and fresh seafood in a consumer-friendly format in particular, gives grounds for optimism for operations in the future. The strong prices for salmon and trout reflect high demand but must also be assessed within the context of the lack of growth in production of these products.

After the acquisitions of Havfisk AS and Norway Seafoods Group AS (now renamed Lerøy Norway Seafoods or LNWS), Lerøy Seafood Group has substantial exposure in relation to catches of different species of wild fish according to Norwegian quotas. The Group faces political risk linked to decisions by the authorities, including framework conditions for fish farming and licence terms related to fisheries legislation.

Industrial developments and employment in capital-intensive activities exposed to global competition such as fish farming, fisheries and processing represent challenges and require a long-term perspective by businesses and politicians at a national level. Short-term perspectives are contradictory to the requirements for successful industrial development, employment and value creation. The Group’s strategy centres on a long-term perspective, irrespective of framework conditions, to ensure a globally competitive organisation, which will be able to continue to ensure industrial development in the numerous local communities where the Group has operations.

At the end of 2017, the Group had live fish worth around NOK 4 billion on its balance sheet. Biological risk has been and will continue to be a substantial risk for Group operations. Assessing and managing biological risk must therefore be a part of the Group's core expertise.

The industry also faces other financial and operational risks, including the development in prices for input factors. The Norwegian seafood industry and the fish-processing industry in Norway and the EU have a history of exposure to the risk represented by the constant threat of long-term political trade barriers imposed by the European Commission. The political trade barriers currently blocking exports of Norwegian salmon and trout to Russia, and the complexity of trading with China provide an illustration of political risk in practice. This situation represents a short-term obstacle to the Group’s marketing goals and value creation. However, the market for high-quality seafood is global and is experiencing strong growth. Over time, this growth has largely compensated for political trade barriers, providing grounds for an optimistic outlook and our belief that the Group is well positioned to continue its positive long-term development.

The Board of Directors maintains a strong focus on purposeful and systematic management of risk in all parts of the organisation. This policy is seen as essential in securing long-term value creation for shareholders, employees and society in general. The Group’s overall financial strategy ensures balance and financing, suitable financial covenants, liquidity, customer credit, currency and market risk. Considerable importance is also attached to having efficient and sustainable solutions in all parts of the Group’s value chain.

Structural conditions
The Group aims to create lasting value through its activities. For this reason, stringent requirements are imposed on risk management and the ability to plan for the long term in the development of sustainable strategic business processes. As a consequence of organic growth and a series of acquisitions carried out since the Group was listed on the Stock Exchange in the summer of 2002, the Group is now one of the world’s largest producers of Atlantic salmon and trout. With the acquisitions of Havfisk ASA and Norway Seafoods Group AS, the Group is now the largest supplier of whitefish in Norway, and a major supplier worldwide. In recent years, the Group has also developed and consolidated its position as a central actor in the distribution of seafood in Norway and abroad. The Group plays an active role in developing the value chain for seafood, with an increasingly large global reach.

The acquisitions of Havfisk ASA and Norway Seafoods Group AS (now renamed Lerøy Seafoods Group AS) were completed in Q4 2016. Lerøy Seafood Group's investments in the Norwegian whitefish sector are based on an industrial, eternal perspective. The industrial facilities receive raw materials from the Group’s own trawlers and from suppliers in the coastal fleet. Appropriate framework conditions, including predictability, are absolutely decisive to allow us to assume our responsibilities as an industrial organisation. The whitefish sector fluctuates according to seasons and requires vast amounts of capital. We firmly believe that we will only be able to build a sustainable industry and create attractive jobs if we have appropriate framework conditions, investment capacity, product development and access to the global market. The Board of Directors regrets and finds it sad that the tabloid debate on regulatory factors in the whitefish sector is predominately based on lack of knowledge and innumerable attempts to mislead political management, including input from professors. We hope and believe that it is possible to create an understanding among national political management of what is required to create jobs and value in the decades to come. We now assume that any future adjustments to framework conditions will irrespectively be based on knowledge and insight, preventing impairment of the companies’ industrial foundations for operations.

The investments made by Lerøy Seafood Group within the whitefish sector will contribute towards a forward-looking development and have significantly boosted the Group's position as a global total supplier of seafood. Lerøy Seafood Group's well-established, integrated value chain for redfish provides substantial potential for increased value creation via the development of the market for whitefish. This involves boosting the Group's position as a supplier of fresh/“refreshed” seafood with a full range of seafood products. The Board of Directors is still of the opinion that the acquisitions related to whitefish will in time strengthen the industrial development of the businesses involved, and will create value for society, employees and the Group's shareholders.

The Group’s financial position is very strong, and the Board attaches importance to the Group, through all its operations, retaining the confidence of participants in the different parts of the global capital market. The Group’s strong balance sheet in conjunction with current earnings enables the Group to continue as a leading participant in the global and national value-generating structural changes within the seafood industry. Lerøy Seafood Group will continue to selectively consider possible investment and merger opportunities, as well as alliances, that could strengthen the basis for further profitable growth and sustainable value creation. This includes investment opportunities both upstream and downstream. The Group shall continue its strategy for growth, implying continuous developments and improvements to operating segments throughout the entire value chain.

Viewed against the background of the Group’s many years of investments in sustainable production methods, developing alliances, quality products, new markets, brands and quality assurance, the Board feels that the outlook for generating increased value is good. In coming years, the Group will continue to work towards sustainable value creation by focusing on strategic commercial developments combined with improvements to the Group’s operational efficiency. Based on customer requirements, this work will ensure continuity of supply, quality and cost efficiency and, consequently, increased profitability. Improving operational efficiency at all stages is an ongoing process aimed at further developing the Group’s national and international competitiveness.

Being listed on the Stock Exchange affords the company a marketplace for its shares, improved access in the future to venture capital as well as the opportunity to use the company’s shares as a payment medium in future acquisitions or business combinations. As of 31 December 2017, the company had 5,297 shareholders against a comparison figure of 4,215 shareholders at the end of December 2016.


The parent company Lerøy Seafood Group ASA has its head office in Bergen, Norway. In addition to the Group’s CEO, the parent company has 11 employees. All personnel functions are handeled administratively via the wholly-owned subsidiary Lerøy Seafood AS. At year-end 2017, the the group employed 4,298 work years in 2017, comprising 2,880 men and 1,418 women. 825 of the group's work years are outside Norway. The proportion of women is 33.0%, representing a minor increase on the previous year.

Independently of the demand for equal opportunities for men and women, the Group has always emphasised individual skills, performance and responsibility in its recruitment policy and salary systems. Furthermore, the Group at all times ensures equal employment opportunities and rights for all employees, and works hard to prevent discrimination based on national origin, ethnicity, colour, language, religion or personal philosophy. One of the company’s goals is to provide a workplace without discrimination based on disabilities. The company will arrange for individually adapted workplaces and work tasks where possible for employees or work applicants with disabilities.

The company is a player in a global industry and the company’s working environment changes continuously. This requires flexible employees who are dynamic and willing to adapt and learn.

As in previous years, the Board of Directors would like to take this opportunity to praise the employees' efforts, their understanding of the need for a results-oriented operational focus and for their willingness to adapt to change throughout the organisation. The Board of Directors would like to thank all employees for their hard work in 2017.

Health, safety and the environment

There was an undesired incident in the subsidiary Lerøy. Midt during work on the company's silage-ma- king installation. This resulted in injury to two of our employees and it shows that we must continue to focus on routines and compliance with these, as well as on measures that preserve the safety of our employees. This work is a continuous process in our effort to achieve our vision of zero injuries.

A total sick leave was reported of 5.97% in 2017, which is an increase from 4.4% in 2016. Sick leave comprises 3.79% long-term absence and 2.18% short-term absence. The Board is pleased to observe that the Group works actively to keep sick leave low. The organisations in the individual subsidiaries are continuously being developed to ensure that they can deal with new challenges and changes in framework conditions. The working environment and cooperative atmosphere are good.

External environment
From a national and global perspective, the Board is of the opinion that its production of Atlantic salmon and trout is one of the most sustainable and environmentally- friendly forms of food production to be found. At the same time, the Board and Group maintain a high focus on potential challenges relating to point source pollution. This type of pollution is therefore monitored by means of continuous investigations at the company’s localities. The Group’s operations are closely linked to natural conditions in Norwegian and international fresh and salt waters. The Group's operations rely on access to clean fresh and sea waters. The Board and Group are confident that operations in 2017 have been sustainable, and have compiled a comprehensive report on the environment as part of the consolidated financial statements, available at In addition, the Group documents its sustainability in several national and international reports on fish farming and fisheries. The Group invests in minimising its impact on the external environment, and continuously works hard to encourage both management and employees to maintain a proactive approach towards environmental protection.

Result and allocations in Lerøy Seafood Group ASA
The company and the Group’s financial statements are submitted on assumption of going concern. In 2017, Lerøy Seafood Group ASA reported an annual profit after tax of NOK 2,775 million, against a comparative amount of NOK 1,503 million in 2016. The Board proposes the following allocation of the 2017 annual profit (NOK 1,000): 

  • Dividend (NOK 1.50 per share): 893 661
  • Transferred to other equity: 1 881 239
  • Total allocations: 2 774 899

The Group's parent company is financially sound with a book equity ratio of 81.8% and it has satisfactory financing and liquidity compatible with the Group’s strategy and operational plans.

Market and outlook
The Group and the Norwegian fish farming industry have experienced a positive development in biological production of salmon in 2017 and the first months of 2018. This has allowed for increased growth, resulting in an increase in harvest volume of salmon in Norway towards the end of 2017. The Group has close links with the end market for seafood, including salmon, and can confirm that the trend for increased demand remains strong. The Group therefore highlights the unique opportunities that could be provided by appropriate framework conditions based on knowledge of the industry’s global, environmental competitive strength. The fish farming industry in Norway has developed over several decades into something quite unique – a Norwegian global food producer that can compete both on costs and environmental protection.

It will always be absolutely essential for the Norwegian authorities to understand, when laying down regulations, what is required to ensure the Norwegian seafood industry can remain globally competitive over time. The Group will continue in its efforts to contribute towards a knowledge-based dialogue that creates value for society, regarding the need for appropriate framework conditions in the near future.

Industries that are exposed to global competition are unable to withstand in the long term specifically Norwegian profit-based taxes and duties.

The Group has identified room for operational improvements in all three regions where the Group carries out fish farming. The Group's investments will provide organic growth in volume in all the regions, and projected substantial reductions in production costs in two of the regions. The current estimate for harvest volume in 2018, including the share of LSG's volume from associates, is 182,000 GWT. For many reasons, the harvest volume may vary, but any differences from estimates shall, under normal circumstances, not vary to any significant degree from the figures reported by the Group in recent years.

Developments within whitefish in 2017 have been positive, even though industrial development and processing of whitefish in Norway remain difficult. This situation is impacted by political framework conditions, but the Group has a clear ambition to improve competitiveness and earnings for whitefish, with the prevailing conditions by means of investments, improved marketing and improvements to operational efficiency. The process of industrial development of whitefish requires patience, a long- term perspective and considerable investments. Such investments are only possible if framework conditions are predictable, and the Group and its employees fervently hope to be able to carry out such work without any obstacles in the years to come. The Norwegian quotas for cod and haddock were reduced by 12.3% and 12.6% respectively for 2018 when compared with 2017. The quotas allocated to the Group's vessels were reduced by slightly more, partly due to a buffer quota that has not yet been allocated. The Group expects to see further allocation of quotas in 2018 and has a solid position in relation to shrimp fishing. At the time of writing, the best estimate for the catch volume of whitefish and shrimp in 2018 is approximately 65,000 tonnes. The Board of Directors currently expects to see satisfactory earnings in 2018.

Bergen, 19 April 2018

Consolidated Financial Statements 2017
Financial Statements for the parent company 2017
Responsibility statement
Auditor´s report