Annual Report
2021
2
ANNUAL REPORT 2021ATLANTIC SAPPHIRE
0
04
03
Table
of Contents
02
2021 In Review
Message from Our Chairman and CEO
of Atlantic Sapphire USA LLC
4
About Atlantic Sapphire
6
The Global Challenges Facing Seafood Production
13
Uncertainty in Pandemic Times
15
For the Health
of People and Planet
Our Commitment to Responsible Governance
17
Why Sustainability Matters to Atlantic Sapphire
21
Our ESG Framework
24
Atlantic Sapphire’s
ESG Priorities
Product Responsibility
31
Economic Responsibility
41
Environmental Responsibility
45
Social Responsibility
53
About This Report
62
GRI Content Index
63
Group Results
Board of Directors’ Report
69
Board of Directors
83
Corporate Governance
84
Atlantic Sapphire Consolidated Financial Statements
89
Atlantic Sapphire ASA Financial Statements
144
Statement of Responsibility
164
Auditor’s Report
166
01
01
2021
In Review
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ANNUAL REPORT 2021ATLANTIC SAPPHIRE
4
2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
To our stakeholders,
2021 was a year that proved our resilience as a company and as a
team. We have recovered from several challenging events to nd
that we remain rmly grounded in our values and secure in our vision
of nourishing both people and planet with healthy, sustainable, and
ocean-safe seafood.
We continue to bring that vision to life, even as we navigate new
realities along with our employees, our customers, suppliers,
investors, and local communities. We work hard to reinforce
the fundamental sustainable tenets of our business, across the
economic, environmental, and social dimensions of our enterprise.
In doing so, we continue to cultivate our capacity to deal with
uncertainty and vulnerability without losing our focus on the goal of
sustainability.
Although 2021 was a challenging year, we recovered and are back
on track. Stable operations allow us to develop dierent areas of the
business in line with our long-term ambitions for a truly sustainable
business. We’re excited to see the progress on our US Phase 2
Bluehouse under construction that will be integrated with the
current US Phase 1 facility to provide an additional 15,000t HOG of
grow-out tank capacity.
From Q1 to Q3 2021, several unexpected events aected our
operations. In the US, we experienced a mass mortality event and an
emergency harvest, while in Denmark, we experienced a devastating
re that destroyed our Denmark Bluehouse. We responded with
humility and an even ercer determination to overcome these
challenges and continue our journey to fulll our mission. As a
result, we have implemented dozens of improvements across
the operations and construction, and we are now much closer to
achieving our operational, development, and sustainability targets.
One of our great milestones in 2021 was the introduction of a novel
algae oil to replace 25% of the sh oil in our feed, which brings us
one step closer to our goal of removing marine ingredients from our
feed by 2025. Moreover, we estimate that we will sequester carbon
at a rate of 128 tons per day with US Phases 1 and 2 in operation as
we inject treated water in the Boulder zone, eectively making this
a carbon sequestration well, one of which there are only 10 in the
country to date.
Message from
Our Chairman
And CEO of Atlantic
Sapphire USA LLC
As we develop the Group’s Grand Master Plan (220,000t Head-
On-Gutted annual harvest volumes by 2031 – the equivalent of
approximately 1 billion salmon meals each year), our focus is to
improve technical solutions in day-to-day operations (for example,
sh movements), reduce energy consumption, and enhance the
design future phases to a more modular and highly scalable RAS
module. Automatization and the use of articial intelligence in our
operations represent prime examples of innovative solutions we
have implemented as we continue to optimize of our feed utilization
while simultaneously providing optimal conditions for our sh.
Since our rst US harvest in September 2020, we have expanded
our Bluehouse Salmon retail footprint to more than 2,000 locations
and achieved a signicant price premium to commodity salmon.
Our Green Finance Framework implemented in October 2020
continues to help steer the nancing of our business and promotes
low-carbon, climate-resilient, and resource-ecient development
in the seafood sector while reducing the negative impact on
biodiversity. CICERO provided a Second Party Opinion on our
Framework
1
, giving Atlantic Sapphire an overall strong CICERO
Medium Green shading and a governance score of Excellent.
Atlantic Sapphire remains strongly committed to reducing our
carbon footprint and closely follows the developments around the
EU Taxonomy for sustainable economic activities. Although neither
aquaculture in general, nor land-based salmon farming specically,
are yet dened by the EU taxonomy, it is clear to us that we are part
of the solution to several sustainability challenges facing our world
today – especially within protein production, which is one of the
largest global consumers of scarce resources such as fresh water.
We continue to engage with the growing number of investors
and other stakeholders who want insight into our sustainability
eorts and how our groundbreaking, cutting-edge technology,
and aquaculture yield a healthy product that helps eliminate
environmental concerns associated with conventional salmon
farming. As the world’s largest land-based salmon farming company
with primary operations in the US, we are thrilled to now be quoted
on a US market to further diversify our investor base as we
expand operations.
1
CICERO, Atlantic Sapphire ASA Green Finance Second Opinion October 15, 2020 https://cicero.green/public-reviews
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
We continue to grow, strengthen, and nurture our team with a
culture of diversity and inclusion. We employed 166 employees by
the end of 2021 (versus 159 employees by the end of 2020). We
strive to provide our workplace that is welcoming and committed
to our vision. At Atlantic Sapphire, we believe in bringing our most
authentic selves as people to work rather than just ourselves as
employees – that is the strength that enables us to pursue the
ambitions that we share for our business, for the industry, and
for society.
We are pleased to rearm our commitment and endorsement of the
UN Global Compact and its ten principles, and we will build on our
current activities and continue our eorts within all four areas of the
Global Compact in 2022.
I want to conclude by expressing my sincerest appreciation for
the loyalty and eort of all our employees during some tough
times. Together, we have again shown what we can achieve despite
extraordinary challenges, and it is clearer than ever that together
we are responsible, resourceful, and resilient. Thank you to all our
stakeholders for supporting Atlantic Sapphire throughout this year
and trusting us to deliver on our promise.
Johan E. Andreassen
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Miami Bluehouse, ~9,500 tons (HOG) annual
production capacity, Homestead, Florida
Denmark Bluehouse, ~2,400 tons (HOG) annual
production capacity (prior to the September 2021
re), Hvide Sande, Denmark
About
Atlantic
Sapphire
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
FOUNDED 2010
LEGAL HEADQUARTERS
VIKEBUKT, NORWAY
BUSINESS HEADQUARTERS
MIAMI, FLORIDA, US
OSLO STOCK EXCHANGE TICKER
ASA
US OTCQX TICKER
AASZF
166
Employees
311.7M
Total Assets (USD)
75%
United
States
7%
Denmark
18%
Other
Countries
Miami Bluehouse
Business Headquarters
Denmark
Bluehouse
Incorporated
Company
Facts
Atlantic
Sapphire
by
Location
Revenue by
Market
and domiciled in Vestnes, Norway, is the parent company of the Atlantic Sapphire group of
companies (collectively, “Atlantic Sapphire” or the “Group”), which includes:
• Atlantic Sapphire Denmark A/S
(“ASDK”, registered in Hvide Sande, Denmark)
• Atlantic Sapphire USA LLC
(“ASUS”, registered in Miami, Florida, US)
• AS Purchasing, LLC
(“ASP”, registered in Miami, Florida, US)
• S.F. Development, L.L.C.
(“ASSF”, registered in Miami, Florida, US)
• Atlantic Sapphire IP, LLC
(“ASIP”, registered in Miami, Florida, US)
2010
2011
2013
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire is founded by Norwegian salmon
entrepreneurs Johan Andreassen and Bjorn-Vegard
Løvik with the vision of creating a world-class
Bluehouse in the United States, the world’s largest
market for Atlantic salmon
Founding partner Thue Holm, a Danish recirculation
aquaculture expert, joins the company
The rst ova of Atlantic salmon are stocked in the
Denmark Bluehouse
After an assessment including over 12 states, Miami,
Florida is selected as the location for US operations
The rst water use and well drilling permits are
secured for the Miami Bluehouse
Atlantic Sapphire salmon sells in the US market
The rst batch of Denmark Bluehouse salmon
are harvested
Construction begins on the commercial pilot
Denmark Bluehouse, which would become the
world’s largest land-based salmon operation
upon completion
Selected Historical
Highlights
2015
2016
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOK 595m equity raise completed Well drilling and US Phase 1
Miami Bluehouse construction commences
NOK 600m equity raise completed and Atlantic
Sapphire listed on the Merkur Market in Oslo, Norway
A ‘Key to Miami-Dade County’ is received from
Miami-Dade County Mayor Carlos A. Gimenez in
recognition of bringing responsible economic
development and positive impact to the community
DNB debt nancing completed, with a guarantee
from EKF, Denmark’s export credit agency, in
alignment with IFC performance standards and
guidelines. First ‘green rated’ seafood debt for
DNB, the world’s largest seafood lender.
Atlantic Sapphire is listed in Oslo Stock
Exchange (“OSE”)
Atlantic Sapphire and Skretting enter agreement
to secure local feed supply
The rst commercial US harvest of Atlantic Salmon
raised in RAS in Florida occurs
Atlantic Sapphire introduces algal oil from Veramaris,
replacing sh oil by 25%
The rst generation of Atlantic salmon born in Florida
successfully grows through the freshwater stage and
onto the saltwater post-smolt systems
Atlantic Sapphire initiates sales of Bluehouse
Salmon from Florida in several retail chains and
food service outlets
The group’s brand, Bluehouse Salmon, gains the
“Heart Check” certication from the American
Heart Association
Atlantic Sapphire is named ‘Star of Innovation’ at
the 2019 European Small and Mid-Cap Awards
Atlantic Sapphire is listed in the US OTCQX market
Construction of grow-out systems expansion
begins in Denmark, increasing capacity from
700 metric tons to 2,900 metric tons annually
of round living weight (RLW) production
US construction management agreement is signed
The rst Atlantic salmon ova are stocked in the
Miami Bluehouse
First United States patent granted for systems and
methods of intensive recirculating aquaculture
NOK 783m equity raise completed. The Company
increases its projected capacity target from 90,000
metric tons in 2026 to 220,000 metric tons by 2031.
Atlantic Sapphire joins the UN Global Compact,
committing to respecting and promoting the ten
principles on human rights, labor rights, environmental
standards, and anti-corruption
Atlantic Sapphire Denmark A/S receives the ASC
Standard certication
2017
2018
2019
2020
2021
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Founded in 2010, Atlantic Sapphire
owns and operates land-based
Atlantic salmon farms in Hvide
Sande, Denmark and Miami,
Florida, US.
Our Story
A Bluehouse® facility (the “Bluehouse”)
is proprietary production technology
developed in collaboration with a wide
range of supply chain partners to optimize
growing conditions for Atlantic salmon.
Each Bluehouse contains the facilities
needed for a salmon’s full value chain,
from egg to fresh llets packed for retail
and food service. Consolidated operations
enable Atlantic Sapphire to control the
entire production cycle without having to
transport salmon to and from sea-based net
pens. The Group’s strategy is to produce in
the end-market, near customers, thereby
reducing the environmental impacts
and costs associated with airfreight
transportation.
The Miami Bluehouse has a designed
production capacity of approximately
9,500 tons head-on gutted (“HOG”). The
Group has a target to expand production at
the Miami Bluehouse up to 220,000 tons
of annual capacity by 2031. The global
volume of farmed Atlantic salmon reached
2.9 million metric tons in 2021, up from 2.7
million metric tons in 2020, according to
Kontali.
By the end of 2021, Atlantic Sapphire
employed 166 full time employees, and we
Our Integrated Value Chain
expect to continue increasing our workforce
as the Group scales up in the US.
Atlantic Sapphire aims to transform salmon
farming by managing an integrated value
chain of salmon production and bring full
traceability from egg to nal product.
Our activities include farming, harvesting,
processing, marketing, and sales. Through
the specialized, ecient design of the
Recirculating Aquaculture System (“RAS”),
Atlantic Sapphire can control the key drivers
of the production cycle consistently every
day of the year.
In the US, end-market production collapses
the costs inherent in the international
conventional sea-based salmon farming
value chain. Bluehouse farming has
fewer negative impacts on the coastal
environment, and for the Miami Bluehouse,
there are no coastal impacts. The innovation
of the Bluehouse allows Atlantic Sapphire
to contribute to meeting the growing
demand for sustainable, healthy,
and fresh proteins. Atlantic Sapphire
continuously invests in research and
development to ensure that the Group
remains at the forefront of transforming
market salmon production.
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Executive
Management
Johan E. Andreassen
Chairman and Co-Founder, CEO
of Atlantic Sapphire USA LLC
Johan E. Andreassen is a
Co-Founder of Atlantic Sapphire,
has served as Chairman of the
Board of Directors since 2010,
and serves as the Chief Executive
Ocer of Atlantic Sapphire USA
LLC. Mr. Andreassen has served
as the Group’s Chief Executive
Ocer from 2010 to 2012, and
from 2017 to 2020. Prior to
founding the Atlantic Sapphire,
Mr. Andreassen founded and
led Villa Organic, a 30,000-ton
capacity conventional salmon
farming company, which was
subsequently sold to Lerøy and
SalMar in 2010.
Alejandro Castro
Chief Business Ocer
Alejandro Castro, a licensed
Certied Public Accountant in the
State of Florida, is the Group’s
Chief Business Ocer and was
formerly Atlantic Sapphire’s
Group Controller since 2018.
Before joining Atlantic Sapphire,
Mr. Castro held CFO and VP
of Finance positions in high
growth international companies.
Furthermore, Mr. Castro is ex-
Deloitte where he worked in Audit
and Transaction Advisory roles.
Mr. Castro holds a Master’s in
Business Administration from The
Kellogg School of Management
at Northwestern University.
Additionally, he holds a Bachelor
of Science and a Master of
Science in Accounting from
Florida International University.
Damien Claire
Chief Sales and Marketing Ocer
Damien Claire is the Group’s
Chief Sales and Marketing Ocer.
Prior to joining Atlantic Sapphire,
Mr. Claire was the President of
Platina Seafood, Inc. Mr. Claire’s
experience includes positions
in several industries around
the world. From 2009 to 2014,
he served as Sales/Analyst for
South Pacic Specialties in
Miami. From 2004 to 2008 he
also acted as Vice President of
Business Development for Global
Outsourcing in Chile. Damien
earned a Bachelor’s Degree in
Computer Science and Business
Administration from Lander
University in South Carolina.
Thue Holm
Chief Technology Ocer
and Co-Founder
Thue Holm is a Co-Founder
of Atlantic Sapphire and is
the Group’s Chief Technology
Ocer. Mr. Holm has held several
leadership positions in Atlantic
Sapphire, including Head of
Atlantic Sapphire Denmark
A/S, and has been a thought
leader behind key technological
innovations of the Group since
2010. Mr. Holm is a trained
environmental biologist from the
Roskilde University in Denmark,
being fully dedicated as an expert
in RAS systems since 2004.
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Jon-Birger Løvik
Chief Operating Ocer
Jon-Birger Løvik is the Group’s
Chief Operating Ocer and was
formerly Atlantic Sapphire’s Director
of Aqua Technology and Deputy
COO until he was appointed COO
in March 2022. Mr. Løvik also held
the position as Managing Director
of Atlantic Sapphire Denmark A/S
from June 2015 to December 2018.
Mr. Løvik has signicant experience
in the salmon farming industry and
the broader seafood industry. Prior
to joining Atlantic Sapphire, Mr. Løvik
previously worked as a Production
Manager in Villa Organic, a 30,000-
ton capacity conventional salmon
farming company. Mr. Løvik is also
an advisor to the Norwegian salmon
smolt facility Hjelvik Settesk.
Karl Øystein Øyehaug
Chief Financing Ocer and
Managing Director of ASA
Karl Øystein Øyehaug is the
Group’s Chief Financing Ocer
and Managing Director of ASA.
Mr. Øyehaug was hired as the
Group’s Finance Director in 2018
and was elected as Managing
Director of ASA at the time of
conversion to public limited liability
company in May 2020. Prior to
joining the Group, Mr. Øyehaug
served as an Equity Analyst at
Carnegie Investment Bank in Oslo,
Norway covering the seafood
sector. Mr. Øyehaug holds a
degree in Economics and Business
Administration from the Norwegian
School of Economics (“NHH”) and
Columbia University in New York.
Svein Taklo
Chief Development and
Infrastructure Ocer
Svein Taklo is the Group’s Chief
Development and Infrastructure
Ocer since joining the Group
on 1 October 2019. Before joining
Atlantic Sapphire, Mr. Taklo held
several positions within the cruise
line industry, including most recently
as Vice President Marine & Technical
with ROW Management (The World,
Residences at Sea) and previously
as Chief Operational Ocer and
Senior Vice President of Maritime
Operations for Hurtigruten from May
2014. Mr. Taklo holds a Bachelor’s
in Safety and Maintenance from
Høgskolesenteret i Vestfold in
Norway and completed the Executive
Education Program by Wharton
School of Business of the University
of Pennsylvania.
Danielle Villoch
Chief Legal Ocer
Danielle Villoch is the Group’s Chief
Legal Ocer. Before joining Atlantic
Sapphire as Head of Legal in 2020,
Ms. Villoch was a senior associate
at Gibson, Dunn & Crutcher LLP in
New York. While at Gibson Dunn,
Ms. Villoch focused on procurement
and nancing for infrastructure
projects and various types of debt
nancing and liability management
transactions in the US and Latin
America. Ms. Villoch has a B.A. in
Politics from Princeton University
and a J.D. from the University
of Pennsylvania.
Executive
Management
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The Global Challenges
Facing Seafood Production
The past years navigating the
pandemic have shown us that the
seafood supply chain is far from im-
mune to shocks. When the COVID-19
pandemic (the “Pandemic”) hit, it
exacerbated some of the critical
conditions facing our food systems at
both global and local levels. However,
it accelerated Atlantic Sapphire’s
focus to build greater resilience into
our food systems.
Food systems need to
be reshaped to feed
our planet sustainably
with healthy proteins.
Atlantic Sapphire
views our business
as being part of the
solution, not only
by participating in
a leadership role in
navigating the world
onto a low-carbon
path for a healthier
environment, but
by also driving
resilience for a more
sustainable future.
The notion of food systems has resurfaced
as an important approach to the challenge
of creating policy that successfully integrates
nutritional and sustainability goals. Food
systems need to be reshaped to feed our
planet sustainably with healthy proteins.
Atlantic Sapphire views our business as
being part of the solution, not only by
participating in a leadership role in navigating
the world onto a low-carbon path for a
healthier environment, but by also driving
resilience for a more sustainable future.
There is an unprecedented pressure on our
natural resources, which challenges us with
providing enough food to sustain a growing
global population. The UN Sustainable
Development Goals (“SDGs”) have framed
our global environmental, social, and
economic challenges and have urged
businesses to step up with solutions that
tackle the problems – fast and at scale.
2
FAO. 2020.
The State of World Fisheries and
Aquaculture 2020. Sustainability in action.
Salmon farming emerged four decades
ago in Norway, and later in other areas with
similar oceanographic conditions,
as a consistent and reliable source of
healthy seafood. Salmon farming soon
became one of the main sources of income
and employment in many small communities,
contributing to the economic development
of remote parts of these countries.
According to the Food and Agriculture
Organization of the United Nations (“FAO”),
the growth of human consumption of sh in
the last 60 years globally has increased at
a rate signicantly higher than the growth in
world population. From 1990 to 2018 alone,
the world has seen a 122% rise in total sh
destined for human consumption (“food sh
consumption”). The same period also saw
the average annual growth rate of total food
sh consumption outpace that of all other
animal proteins such as meat, eggs, milk,
etc. In 2017, sh provided approximately
3.3 billion people with almost 20% of their
average per capita intake of animal protein,
accounting for about 17% of total animal
protein and 7% of all proteins consumed
globally. The FAO estimates that per capita
sh consumption in 2018 was 20.5 kg,
expecting it to rise to 21.3 kg in 2027
2
.
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Aquaculture Wild-Caught
Global Production
0
20
40
60
80
100
120
1950 1970 1990 2010 2017 2019 2021 2023 2025
million metric tons
Aquaculture
Meanwhile, aquaculture production is projected to grow at a
compound annual growth rate (“CAGR”) of approximately 2.6%,
reaching 109 million tons in 2030, an increase of 32% (26
million tons) over 2018. In comparison, the growth rate of wild-
caught sh is expected to remain at in this period. This will grow
aquaculture’s share of total sh supply from approximately 46%
in 2016 to approximately 53% in 2026. According to Kontali, sh
from aquaculture will grow faster than any other main source of
animal protein, with a 2014-2024E supply CAGR of 2.8%. Salmon
farming is expected to play an important role in this development.
In 2021, the production of animal proteins from Atlantic salmon was
approximately 2.9 million tons
3
.
Over the past decades, aquaculture has greatly contributed to the
protection of depleting wild stocks and is expected to continue to be
a signicant contributor in feeding the world’s increasing population.
However, there is much more to be done in protecting our
ecosystems and, in particular, our oceans. Atlantic Sapphire has
become increasingly aware of the issues facing us, and we need to
adapt to global changes and embrace new technologies as they
become available to mitigate the negative impacts that our actions
may have on our environment and society.
As a member of the UN Global Compact, Atlantic Sapphire aims
to contribute to the development of international policies that will
establish the key role that sustainable aquaculture will play in future
food systems to fulll the expanding dietary needs of the world’s
population. Atlantic Sapphire will also support the work of relevant
subgroups, such as the UN Blue Food Working Group, in the coming
years to ensure measurable progress.
3
Kontali. 2020.
Salmon Market Analysis 2020
. www.kontali.no/publications/yearly-publications#salmon-market-analysis
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2021 IN REVIEW ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Uncertainty in
Pandemic Times
Navigating the COVID-19 pandemic these past
years has introduced an unexpected new level of
uncertainty. When Atlantic Sapphire saw the Pandemic
sweep across the world, the Group took all possible
precautions to protect our employees, our customers,
our suppliers, and our local communities to mitigate
the impact on our business. Atlantic Sapphire ensured
that our communication internally and externally
was clear, regular, and responsive to stakeholders’
dierent information needs. Being able to respond to the
Pandemic in a rapid yet organized manner sent a strong
signal to all our stakeholders that Atlantic Sapphire
was prepared for the challenges to come. Thankfully,
the Pandemic also highlighted the advantages of local
production and lean, integrated operations.
Our top priority has always been our employees’ health and
well-being. Across both our Bluehouse facilities in the US and in
Denmark, we continue with precautions implemented last year
including personal protective equipment, hand sanitizer, and social
distancing at our facilities to reduce the risk of COVID-19 as well as
supporting the new ways of working remotely to the extent possible.
The Group’s Situation Response Team conducts risk assessments,
continuously monitors the situation, and reviews status regularly
with all management. As a result of the Pandemic and especially
due to the number of employees in quarantine, the Group saw an
increase in absence due to illness or quarantine in 2020. This year,
the Group had zero direct incidents related to COVID-19, and by
the end of 2021, 94% of our personnel were vaccinated. Taking care
of our employees has always been a top priority for us, and we will
continue our eorts in this regard during 2022.
The Pandemic caused delays in the construction of our US
Phase 1 Bluehouse facility and negatively impacted our system
commissioning schedule. As the realities of operations during the
Pandemic became routine, an unexpected challenge arose with the
availability of liquid oxygen, or “lox”, which was in high demand for
priority settings such as hospitals. During this period, the Group had
to reduce feeding as a precautionary measure to reduce its own
oxygen consumption and avoid putting the biomass health at risk.
However, the Group was able to secure multiple dierent sources,
including Miami-Dade County, and resumed normal production
within days. In the future, Atlantic Sapphire expects to build its own
oxygen generation unit at the Miami Bluehouse site.
Atlantic Sapphire continues to engage with several community
organizations to help reduce the impact of the Pandemic and its
economic consequences. Atlantic Sapphire’s local production in
Florida to the US market contributes greatly to a reduced carbon
emission footprint from transportation and further highlights
advantages such as supporting the local economy and community,
providing more exibility in the value chain, and maintaining constant
availability for the Group’s retail partners.
16
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
02
02
For the
Health of People
and Planet
FOR THE HEALTH OF PEOPLE AND PLANET
17
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Our Commitment
to Responsible Governance
Atlantic Sapphire is committed to high standards in corporate governance and complies with all the corporate
governance requirements that are part of the listing requirements of the Norwegian stock exchange, Oslo Børs.
Our Governance Framework
Our framework for responsible governance includes our
Environmental and Social Management System (“ESMS”), which
comprises a set of policies, procedures, and requirements for our
internal capacity to identify and manage our ESG impacts. Atlantic
Sapphire has set out a range of governance policies, including: our
Code of Conduct, our Investor Relations Policy, our Nomination
Committee Charter, and our Human Rights Policy. These are
published online.
The Board of Directors is ultimately responsible for the Group’s
sustainability performance. There is no separate board-level
committee, as the entire Board is engaged in setting the Atlantic
Sapphire’s strategic direction for sustainability and ESG as well
as monitoring performance. The daily responsibility is integrated
throughout Group’s executive management. Atlantic Sapphire lives a
culture where everyone is responsible for driving value with a focus
on engaged people, healthy sh, healthy environment, sustainable
supply chain, and nancial performance. Measurement, monitoring,
and auditing of the environmental and social management
system (“ESMS”) and coordination is conducted by the managers
accountable for all elements of our Environmental and Social Action
Plan (“ESAP”).
Atlantic Sapphire’s Board of Directors is independent from Group’
executive management. Johan Andreassen, the CEO of Atlantic
Sapphire USA LLC, is the only Group employee represented on the
Board as a non-independent member. As per Norwegian law, the
Board shall always have at least 40% of both genders represented.
In 2021, our Board comprised three female members out of seven
members in total. There are independent committees in place for
audit, nomination, and remuneration. We comply with all applicable
requirements under the Norwegian Public Limited Liability
Companies Act, including facilitating shareholder participation
through invitation to our general meetings. For our ordinary Annual
General Meeting (“AGM”) in May 2021 however, all shareholders
were encouraged to submit a voting proxy in lieu of attending the
general meeting in person due to the ongoing concern about
COVID-19. The agenda, materials, and meeting minutes were
published online in both English and Norwegian. In the 2021 AGM,
46.8% of the outstanding shares in the Group were represented.
Of all the issues presented to the AGM, at least 95% of present
shareholders voted on each of the 13 voting items.
Atlantic Sapphire’s entire leadership is passionately committed
to sustainable value creation and the Group established a Long-
Term Incentive (“LTI”) Program accordingly. The LTI Program takes
into account both nancial and non-nancial (or sustainability
performance) criteria, such as sh welfare, environmental
performance, and social impact of the Group. The targets are
measurable, set up in advance, and reviewed against progress
throughout the year.
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FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Our ESMS
Framework
Atlantic Sapphire’s ESMS was built following
an external review of our Environmental
and Social Management Plan (“ESMP”)
for compliance with the IFC Performance
Standards (“PS”) (2012), IFC EHS Guidelines
for Aquaculture (2007) and EHS General
Guidelines (2007). The ESMS comprises a
set of policies across a range of ESG topics
– from environment, health & safety, security
and emergency preparedness to employment
conditions, rights and obligations, grievance
management, whistleblower policy,
community engagement and communication.
To encourage feedback from employees and
community members, the Group expanded its
grievance mechanism to include condential
boxes for suggestions and acknowledgements.
In 2021, a total of 20 grievances, suggestions,
or acknowledgments were received through
these boxes and other communication
channels. All of them were addressed:
18 resolved and communicated to the
employee and 2 solved or addressed but not
communicated to employees.
Our Code of Conduct
Underpinning our Governance and ESMS frameworks is the central principle that the
success of Atlantic Sapphire depends on maintaining the highest standards of trust and
integrity at all levels of the organization, as well as the Group’s reputation for honesty and
transparency in its business.
Therefore, our Code of Conduct (the “Code”) sets expectations and provides guidance
for the Group’s Board of Directors, ocers, employees, independent contractors, and
consultants. It is their responsibility to understand the Code as well as exercise good
judgement and follow the Code. All employees must sign the Code. Suppliers are also
expected to understand the Code and share our commitment to integrity by following the
principles of the Code. The Code encourages reporting of any violations to management.
The Code is consistent with the Group’s core values and is aligned with Atlantic Sapphire’s
commitment to the UN Global Compact principals and SDGs.
Environmental and Social Management System
Environment
Health
& Safety
Human
Resources
Security
Emergency
Preparedness
Community
External
Communication
Internal Compliance
Monitoring
Data Collection
& Reporting
External Due
Dilligence
Certications
Grievance
Mechanism
Communication and dialogue with internal and external stakeholders
19
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Our Human Rights Policy
Atlantic Sapphire believes that it is fundamental to its business to respect and protect human
rights. Our Human Rights policy therefore elaborates on the Code of Conduct to provide
greater detail on how Atlantic Sapphire believes that it can positively impact human rights
as a business. In accordance with principles 1 and 2 of the UN Global Compact, Atlantic
Sapphire supports and respects the protection of internationally proclaimed human rights
as established in the Universal Declaration on Human Rights and the International Labor
Organization’s Core Conventions. Human Rights is an area of importance to our employees,
contractors, shareholders and investors, customers, end-consumers, civil society groups, and
the local communities in which Atlantic Sapphire operates.
Our Human Rights Policy informs employees, business partners, and customers of Atlantic
Sapphire’s commitment to respecting and promoting human rights and in making a meaningful
contribution to uphold human rights across our operations and our supply chain. Atlantic
Sapphire’s Human Rights Policy applies to all Atlantic Sapphire employees, anyone doing
business for or with Atlantic Sapphire (including suppliers), and others acting on Atlantic
Sapphire’s behalf to ensure that the Group is not complicit in human rights abuses directly or
indirectly. We focus on the following:
Diversity
Atlantic Sapphire is committed to equal
employment opportunities and does not
tolerate discrimination and harassment in
the workplace. This means:
1.
We select employees and contractors
based on qualication, experience, and
past performance.
2.
We provide equal opportunity to all
employees and applicants for employment
without regard to race, creed, color, national
origin, religion, ancestry, gender, sexual
orientation, gender identity, marital status,
familial status, or any other basis protected
by federal, state, local law, and international
conventions.
3.
We respect the personal rights and dignity
of all employees and accordingly, will not
tolerate sexual harassment or any other
forms of harassment.
Wages and Benets
Atlantic Sapphire compensates employees
competitively and equitably relative to the
industry and the local labor markets. We
operate in full compliance with applicable
wage, overtime, and benets laws.
Child Labor
Atlantic Sapphire is committed to the
abolition of child labor, in line with the ILO
conventions on Minimum Age and Worst
Forms of Child Labor. We prohibit the
hiring of individuals under the legal age of
employment in the relevant jurisdiction and
under the age of 18 for positions in which
hazardous work is expected.
Forced Labor
and Human Tracking
Atlantic Sapphire prohibits the use of all
forms of forced labor, including prison labor,
indentured labor, bonded labor, military
labor, slave labor, and any form of human
tracking in line with applicable UN and
ILO conventions as well as any applicable
Federal or State Anti-Tracking regulation.
Safe and Secure
Working Conditions
Atlantic Sapphire is committed to providing
a safe and healthy workplace in accordance
with applicable safety and health laws,
regulations, and internal requirements. In
addition, Atlantic Sapphire complies with the
International Finance Corporation’s (“IFC”)
Performance Standard 2 regarding labor
and working conditions.
Freedom
of Association
Atlantic Sapphire respects our employees’
right to join or form unions without fear of
reprisal, intimidation, or harassment.
Open Communication
and Grievance Mechanism
Atlantic Sapphire provides processes for
employees and community to use to openly
discuss any issues of concern, and we will
respond to any such grievances in a fair and
transparent manner while simultaneously
respecting the need for condentiality,
if possible.
Development
and Growth
Atlantic Sapphire encourages continuous
learning, conducts regular performance
reviews, and provides appropriate
education, training, and guidance to support
a drive towards continuous improvement.
20
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Our Human Rights
Policy (continued)
Compliance
Employees and suppliers are expected
to never infringe on human rights and are
alerted to report any situation in which
human rights infringement is suspected.
Violation of this policy or the refusal to
cooperate will result in disciplinary action,
up to and including termination and referral
to the appropriate authorities.
Privacy
The European Union (“EU”) introduced
data privacy regulation called General Data
Protection Regulation (“GDPR”) regarding
human rights related to privacy. The GDPR
is in scope as Atlantic Sapphire has oces
in the EU and collects and transfers data
from the EU to the US. Accordingly, Atlantic
Sapphire engaged a third-party consultant
to perform a GDPR Gap Assessment as
the recommendations will directly impact
Atlantic Sapphire’s GDPR compliance
posture and assist in improving the Group’s
overall data privacy and information
security maturity. Our GDPR compliance
will positively impact our stakeholders by
ensuring that their condential information
is safe and secure.
Responsible
Sourcing
Atlantic Sapphire has a large and diverse
extended supply chain. Our suppliers must
be transparent about their human rights
and labor practices and work to remedy
any shortfalls, and their commitment to
complying with our Code of Conduct
is contractually secured through their
signature of our Terms and Conditions.
We are exploring ways of monitoring their
performance and expect to have a more
formalized responsible sourcing program
in place in the future.
Our EHSS Policy
Our overarching Environmental, Health, Safety, and Security (“EHSS”) Policy commits us to
responsible governance and includes:
Ensuring compliance with all applicable EHSS laws and regulations, EHSS management
standards, and other EHSS standards to which Atlantic Sapphire subscribes.
Promoting this culture through our suppliers, vendors, and contractors.
Designing and reliably operating our aquaculture facilities with emphasis on eective
process safety programs to maintain a safe work environment, prevent accidents,
and improve eciency in the consumption of energy, water and other resources, and
material inputs.
Conducting employee training and implementing a top-down culture of
safety awareness.
Identifying, evaluating, and managing risks associated with occupational health &
safety, community health & safety, food safety, environmental compliance, and quality
of products.
Continuing to improve our processes and development of technologies to increase
the performance and sustainability of operations.
Communicating to management and all concerned any unlawful or unsafe conditions
and security lapses, and maintaining openness, transparency, and continuing dialogue
with our employees, contractors, communities, regulatory authorities, suppliers,
customers, and other stakeholders.
1
2
3
4
5
6
7
21
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Why
Sustainability
Matters
to Atlantic
Sapphire
Atlantic Sapphire was founded upon
an aspiration to find solutions to
existing global environmental, social,
and economic challenges. Through
our core business, our values, and
our behaviors, Atlantic Sapphire
recognizes that environmental,
social, and governance (“ESG”)
factors have a material impact on
the long-term financial performance
and value creation for stakeholders.
Through its daily actions, Atlantic
Sapphire seeks to leverage the
potential of its alignment with ESG
principles to minimize risk while
maximizing stakeholder value.
4
World Economic Forum. 2020.
To feed a growing world, we need to change our food systems now
. www.weforum.org/agenda/2020/11/how-to-create-sustainable-food-systems/
ESG factors are incorporated into
Atlantic Sapphire’s corporate culture and
serve as guiding principles towards our
conduct, our decisions, and our actions.
The Atlantic Sapphire team is measured
on and rewarded for its contributions to
meeting our corporate values and our four
key priorities of responsibility: Product,
Economic, Environmental, and
Social Responsibility.
Atlantic Sapphire strongly supports the UN
Sustainable Development Goals (“SDGs”).
The Group sees these goals as a blueprint
for business leadership generally as well as
for our industry because food production
lies, as described by the World Economic
Forum, at the intersection of so many major
global challenges, including natural resource
management, climate change, public health,
food security, and trade regimes
4
. Atlantic
Sapphire believes that it has a duty to nd a
balance between producing enough healthy
proteins to feed the world and protecting
the limited resources of our planet.
Atlantic Sapphire fully supports the UN
Global Compact principles and SDGs as
they relate to its business strategy, day-to-
day operations, organizational culture, and
inuence. Atlantic Sapphire identied the
eight SDGs highlighted below as targets for
the Group based on what we consider as
our highest priorities and the areas in which
it is best placed to drive positive change.
22
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Our SDG
Priority Targets
“Sustainable consumption and production is about promoting resource and energy eiciency, sustainable
infrastructure, and providing access to basic services, green and decent jobs and a better quality of life for all”
SDG 12
Atlantic Sapphire produces high quality Atlantic salmon free of antibiotics, parasites, and other medicines and free of micro-
plastics thanks to its closed-containment salmon farming technology. Our Bluehouse technology enables Atlantic Sapphire to make
a responsible use of natural resources such as water and produce a sustainable protein for consumers.
Economic Responsibility
“Sustainable economic growth will require societies to create the conditions that allow people to have quality
jobs” SDG 8
By spearheading the development of a new cross-discipline industry both in Denmark and the United States, Atlantic Sapphire has
secured the creation of quality jobs that will set the basis for a robust talent pool in the emerging land-based aquaculture sector.
In addition to the positive impact generated through employment and the economic multiplier eect, the growth of Atlantic
Sapphire and the land-based salmon farming sector generates a signicant need for skills. This leads to collaboration between
the public and private sectors to develop programs oriented to form students for the jobs of the future, engaging people of
dierent ages and backgrounds.
Product Responsibility
“Ensuring healthy lives and promoting the well-being for all at all ages is essential to sustainable development”
SDG 3
Atlantic Sapphire produces Atlantic salmon, which is high in long-chain Omega-3s fatty acids that help maintain a healthy heart
and is a rich source of vitamins and minerals. According to health authorities, a healthy, balanced diet should include at least two
portions of sh a week, including one of oily sh such as salmon.
“Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation” SDG 9
Innovation is at the heart of Atlantic Sapphire’s Transformative Purpose. By pioneering Bluehouse salmon farming, we are
contributing to the progress and development of the land-based salmon industry at large as we open the door for larger projects
and collaborate with contractors, equipment manufacturers, and suppliers to develop new solutions. We invest in research
and development (“R&D”), participate in conferences to contribute to the global understanding of the main challenges and
opportunities of this emerging industry, and continue to expand the pool of talent by recruiting people from dierent disciplines
who can help bring land-based salmon farming forward.
23
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Environmental Responsibility
“Take urgent action to combat climate change and its impacts” SDG 13
Salmon farming has the lowest carbon footprint in animal protein production. Atlantic Sapphire’s objective is to further contribute
to the reduction of the environmental impact of salmon farming by eliminating airfreight-related carbon emissions.
“Conserve and sustainably use the oceans, seas and marine resources for sustainable development” SDG 14
Atlantic Sapphire has minimal impact on the oceans, marine wildlife, and marine ecosystems. By producing salmon out of the
sea, we are protecting wild populations of salmon and other wildlife from additional escapees, parasite, and disease pressure. In
addition, the use of the Boulder Zone to discharge treated water in Miami eliminates risks of eutrophication and changes on the
seabed caused by our wastewater. Atlantic Sapphire’s recycling technology, in which more than 99% is reused, reduces the fresh
and saltwater demand on our operation. Atlantic Sapphire actively engages in reducing its reliance on marine ingredients for the
feed of its salmon and ensures that these ingredients are responsibly sourced.
Social Responsibility
“The food and agriculture sector oers key solutions for development and is central for hunger and poverty
eradication” SDG 2
As the world’s population continues to grow, our future generations need higher availability of protein. Atlantic Sapphire is
contributing to bridge the increasing gap between a stagnant growth in global supply of salmon and a rising demand by optimizing
the use of natural resources and eliminating barriers such as geographical production limitations.
“Gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous
and sustainable world” SDG 5
Equality and diversity are paramount to the creation of a balanced work culture and the base of a company for the future.
Atlantic Sapphire strives to oer equal opportunities and pay to male and female employees and to create inclusive employment
opportunities through training programs in dierent areas.
Our SDG
Priority Targets
24
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Our ESG Framework
Atlantic Sapphire is a company
where talented individuals are
empowered to do their best work
through our core values:
Passion
Purpose.
Dedication.
Courage.
Performance
Initiative.
Collaboration.
Results.
Innovation
Continuous improvement.
Solutions.
Learning.
Integrity
Accountability.
Open communication.
Care.
Balance
Healthy Fish.
Stakeholder wellness.
Sustainable planet.
Vision &
Transformative Purpose
Priorities
Organizational
Structure
Core Values
Vision
Pioneering Bluehouse Farming Locally
Transforming Protein Production Globally
Transformative Purpose
For the Health of People and Planet
Healthy
Environment
Performance
Integrity Balance
Innovation Passion
Development &
Infrastructure
People
&
Culture
Finance
&
Legal
Operations Technology
Sales
&
Marketing
Sustainable
Supply Chain
Engaged
Employees
Financial
Performance
Healthy
Fish
Atlantic Sapphire exists for one, clear purpose: to lead the global transformation of aquaculture through
innovative fish farming methods that deliver a delicious, nutritious, and sustainable product to the end-consumer.
Our approach to doing business is sustained by our ongoing considerations of ESG factors in our decision-
making and our goal of bringing results across four key areas: our product, economic, environmental,
and social responsibility.
25
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Prioritizing
Material Risks
In 2019, the Group undertook an assessment to
determine its key stakeholders and its ESG priorities,
disclosure topics, and risk factors. Careful consideration
for guidance was included from the Global Reporting
Initiative (“GRI”) Standards, the Sustainability Accounting
Standards Board (“SASB”), the UN Global Compact, and
the UN Sustainable Development Goals (“SDGs”).
Atlantic Sapphire views all potential material ESG topics, including
both risks and opportunities, according to their time horizon (short-,
medium-, and long-term). The Group also evaluates boundaries, that
is, we consider where each of the impacts occur and the Group’s
direct or indirect involvement with such impacts.
Atlantic Sapphire then assesses the Group’s stakeholders along
its value chain, focusing on four key stakeholders and their
expectations of Atlantic Sapphire: customers, employees, suppliers,
and shareholders. Atlantic Sapphire has analyzed the Group’s
signicant impacts and stakeholder expectations across over 30
relevant and important topics, and from through an iterative process,
we prioritized the 16 topics considered most material across four
topic categories: Product Responsibility, Economic Responsibility,
Environmental Responsibility, and Social Responsibility.
The resulting list of topics and the materiality matrix are shown
below, and its mapping was validated by the executive team at
the end of 2021. Although Atlantic Sapphire has not undertaken
a formal validation of the overall matrix with external stakeholders
during 2021, we have collected direct and indirect feedback on the
priorities through our ongoing dialogue with investors and other
external stakeholders. As a result of our dialogue with stakeholders
and the mass mortality event that we experienced in 2021, we made
one change to our mapping of material issues this year and moved
Fish Health to the top right quadrant. In 2022, the Group intends to
continue its validation on the materiality assessment with selected
external stakeholders, ensuring that we continually monitor our
understanding of the dynamic and evolving landscape of risks and
opportunities in sustainable aquaculture.
Atlantic Sapphire’s Materiality Matrix
Product
Responsibility
Social
Responsibility
Environmental
Responsibility
Economic
Responsibility
Traceability
Indirect Economic Impact
Water and Local Euents
Community Impact
Logistics Benets
Anti-Competitive Behavior
Energy Consumption and Intensity
Training and Education
Fish Health / Consumer Safety
Economic Performance
GHG Emissions and Climate Change
Occupational Health and Safety
Technology and Innovation
Biodiversity
Diversity and Inclusion
Signicance of Atlantic Sapphire’s impacts on the economy, environment, and society
Impact on external stakeholders’ assessment and decisions
26
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Material ESG Risks
The material topics listed in the following
page present both potential risks and
opportunities that will inform the decisions
Atlantic Sapphire takes for our business.
The Group will increasingly capture data
on the material ESG topics for management
attention and reporting. Data collection
will increase to support additional
comprehensive and accurate disclosure
as Atlantic Sapphire approaches steady-
state operations in the US.
Two emerging risks are the availability and
costing of marine ingredients and value
chain issues due to COVID-19. The sourcing
of marine ingredients is an environmental
risk because ingredients from marine origin
such as sh oil and sh meal could become
challenging as oceans are overshed. This
could aect the cost of feed and increase
pressure on our environmental footprint.
We began to use alternative ingredients in
2021 and envision a plan and commitment
to be completely out of the ocean using
zero marine ingredients by 2025. Value
chain issues due to COVID-19 also present
an economic risk to our organization as
our oxygen supply may be impacted when
hospitalization rates go up and oxygen
shipments are prioritized accordingly. We
saw the direct impact of this in 2021 in
which ASUS had to perform an emergency
harvest to lower standing biomass of the
farm due to lack of oxygen supply. The
Group is working on establishing a larger
network of oxygen suppliers to solve
this issue in the short term, including the
sourcing of non-medical grade oxygen that
would not compete with hospitals. In the
long term, the Group is also assessing the
possibility of investing in its own in-house
oxygen production capabilities.
27
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Product Responsibility
CONSUMER SAFETY FISH HEALTH
• Food safety and certication compliance
• No antibiotics or pesticides
• Integrated production and processing quality control
• No exposure to microplastic waste
• Fish husbandry best practices
• Prevent exposure to parasites
• Prevent exposure to toxic algae or diseases
TRACEABILITY LOGISTICS BENEFITS
• Secure and integrated production cycle
• Key suppliers, including genetics and feed
• Elimination of airfreight intermediaries
• Longer fresh product shelf-life
• Single location transportation origin
• Full byproduct utilization opportunities
Environmental Responsibility
GHG EMISSIONS AND CLIMATE CHANGE WATER AND LOCAL EFFLUENTS
• In-market production, eliminating airfreight transportation
• Minimal transportation for farming and processing
• Improved feed eciency
• Advanced water treatment
• Minimal impact on coastal waters
• Responsible sludge management
ENERGY CONSUMPTION AND INTENSITY BIODIVERSITY
• Increase renewable energy supply
• Ecient energy investments
• Minimal impact on local ora and fauna
• Prevent escapees and predator issues
• Avoid microplastic contamination
Economic Responsibility
ECONOMIC PERFORMANCE ANTI-COMPETITIVE BEHAVIOR
• Financial results and shareholder return
• Financial integrity and responsibility
• Code of Conduct adherence
• Transparent reporting
INDIRECT ECONOMIC IMPACT TECHNOLOGY AND INNOVATION
• Investment and job creation impact
• Contribution to GDP growth
• Intellectual Property Rights
• Research & Development
Social Responsibility
OCCUPATIONAL HEALTH AND SAFETY COMMUNITY IMPACT
• Safe and hazard-free working environment
• Provision and use of health & safety equipment
• Local supplier engagement
• Charity, civic and research organizations engagement
TRAINING AND EDUCATION DIVERSITY AND INCLUSION
• Atlantic Sapphire Academy
• Collaboration with educational institutions
• Learning and networking events
• Equal opportunities for employees and suppliers
• Gender diversity
• Integration initiatives
“Knowing what to measure and how to
share the insights gained is paramount to
our success. Accountability, integrity, and
performance are among our core values
as an organization, and we live by them
across all functions. Whether it is corporate
governance principles, financial reporting,
or biomass measure, we place special
importance on keeping a thorough data
capturing and reporting system. In turn, this
aids in our mission to keep innovating day in
and day out.”
- Michael Cereste: Tracking and optimizing
collaboration across functions
Financial Planning and Analysis Manager
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
28
Stakeholder
Engagement
Atlantic Sapphire’s business depends on its social
license to operate, the trust and goodwill of its
stakeholders, and on its reputation for keeping its
promises. Any circumstances that publicly damage
these may lead to a broader adverse eect than solely
the monetary liability arising directly from a damaging
event by way of loss of business, trust and goodwill,
clients and consumers, employees, partners,
and neighbors.
The Group strives to build long-term relationships with all
stakeholders, and the Group’s management team engages in open
and transparent dialogue with those interested in its business
from a social, environmental, and economic perspective. The
Group proactively listens to its stakeholders, provides them with
information about Atlantic Sapphire’s projects and operations, and
addresses their needs on an ongoing basis.
Such dialogue strives to raise awareness on both the value of what
Atlantic Sapphire does and the challenges that it faces. In the past
year, the Group held valuable dialogue with stakeholders around
various topics that consisted of product attributes, environmental
and animal welfare aspects related to Bluehouse salmon farming,
technology and R&D invested in the recirculating aquaculture
systems (“RAS”), the viability of the business model, and the
socio-economic impacts of its operations in Denmark and the
US. Further, the Group employs dierent platforms to engage with
its stakeholders to provide a relevant setting and frequency of
communications while simultaneously maintaining a healthy level of
involvement and interest with, and ultimately for, the stakeholders.
29
FOR THE HEALTH OF PEOPLE AND PLANET ANNUAL REPORT 2021ATLANTIC SAPPHIRE
How Atlantic Sapphire
Engages with Stakeholders
Employees
Full-time Employees | Subcontractors | Candidates
• Ongoing and regular communication on openings and feedback
on status of applications
• Ongoing and consistent open engagement regarding professional
goals and opportunities, needs, work performance, updates
on procedures, Group and department performance, and
major events
• Frequent company-wide online and when possible, face-to-face
communications on relevant and exceptional information through
dierent platforms
• Annual employee satisfaction surveys
Shareholders
Investors | Lenders
• Regular communication, updates in Group presentations,
meetings to discuss both nancial and ESG performance, ESG
risks and opportunities (especially with institutional investors with
a strong ESG mandate), investor roadshows, and site visits
• Availability for two-way face-to-face communication, email
correspondence, and response to enquiries
• Multiple access platforms including Oslo Stock Exchange (“OSE”)
ocial channels, website, and investor relations email address
Customers
Buyers | Retailers | Food Service | Consumers
• Frequent communication through on-site visits, e-mails, and
phone calls to set common goals, response to questions
around product safety and attributes, and to provided updates
on commercial plans
• Direct communication with customers through social media
and other marketing and PR channels to answer questions about
product safety, traceability, and salmon attributes
Communities
Local Communities | Education Centers | Associations | Media
• Open dialogue responding to questions, concerns and requirements
via onsite visits, and participation in community activities (including
those focused on the improvement of social and economic indicators),
and scheduled meetings
• Engagement with organizations, such as the South Dade Chamber of
Commerce, Florida, with respect to advancing economic development
in the community
• Support to educational eorts and institutions with conservation
goals, such as the Frost Museum of Science in Florida and Omhu
in Denmark
• Provision of relevant information and updates about the progress of
our operation through email, social media, press, and announcements
• Product donations to support local communities such as the
Homestead Soup Kitchen and Camillus House
• Economic support to South Florida Special Olympics events
Business Partners
Suppliers | Contractors
• Face-to-face daily communication regarding progress on both sides
• Monthly meetings with a set agenda regarding project timelines,
requirements, budgets and technical developments, or other needs
• Support local businesses whenever possible
Industry
Industry peers | Non-Governmental Organizations (“NGOs”)
• Updates through Group presentations at conferences
and summits gathering businesses within the seafood
industry and beyond
• Notications through the OSE, market days, and on-site
visits strictly centered on pre-competitive dialogue
• Communications through specialized media
• Press releases, Company updates, and social media posts
Authorities
Local | Regional | National
• Continuous engagement informing of progress, practices,
and permissions via formal communication
• On-site visits
• Regular updates via face-to-face communication
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30
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
03
03
Atlantic
Sapphire’s
ESG Priorities
31
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Salmon has become a sought-
after product as consumers
increasingly demand more
healthy, delicious, and
sustainable protein options.
Atlantic Sapphire’s main
markets are the US and Canada.
Most of today’s seafood in North
America is imported, and the
US has a high obesity rate and
a low per capita consumption of
seafood. Salmon is an excellent
choice as a nutritious part of
a healthy diet for all ages. The
health benefits of Atlantic salmon
are widely documented and
include richness in Omega-3s,
proteins, and essential vitamins
(A, D, and B-12). Thanks to its
high level of Omega-3s, our
fish has received the American
Heart Association’s “Heart
Check” certification and our
Miami Bluehouse location in
Florida paves a path to a locally
produced and healthier diet for
American consumers.
Another meaningful product attribute to consumers across all segments is the fact that
our Bluehouse Salmon is raised completely in closed water containment which means less
contaminants such as micro plastics and no need for the use antibiotics or pesticides at
any point during its life. Our reasoning towards an even cleaner and healthier product is
simple: our Bluehouse Salmon is not exposed to viruses, diseases, or parasites that exist in
the wild because our water source comes straight from artesian aquifers which have not
been exposed to any man-made contamination.
Although the USDA has been planning to develop an organic certication standard for
seafood, such a standard has yet to be formalized in the United States. Nonetheless, the
Group believes that our sh is one of the cleanest seafood options available thanks to our
on shore closed containment technology and we will be working with the authorities as an
organic framework for seafood is being put in place in the years to come.
While our current business model and technology provide a great solution, Atlantic
Sapphire will endeavor to continuously seek ways to increase sustainability in the
production of our salmon. Bluehouse Salmon not only oers the taste and health
benets valued by consumers, but is also raised in ideal conditions from a sh welfare
and environmental perspective.
Product
Responsibility
32
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Our Bluehouse
Value Chain
Atlantic Sapphire’s production cycle starts
with the introduction of salmon ova into the
hatchery. As eggs hatch and develop, the
sh are moved between increasingly sized
freshwater tank systems until they reach the
smolt stage in the production cycle.
Smolt typically grow until approximately
50 to 100 grams in freshwater before they
are moved to saltwater tanks where the
salmon are fed and raised to the target
average harvest size of 4 to 4.5 kilograms.
Once harvested, the salmon are processed
into consumer-ready products and loaded
onto trucks for transportation to retailers,
restaurants, and other customers. The
complete production cycle takes between
18 and 22 months.
Atlantic Sapphire thrives to mimic what
it believes is ideal conditions for salmon
to thrive from hatch to harvest, and our
Bluehouses are tailored to replicate this
natural life cycle to the largest extent
possible. Salmon is an anadromous sh
that begins its natural life cycle in the wild
in freshwater rivers and migrates out to sea
after it smolties. The smoltied salmon then
spends its life at sea to grow large and will
then reproduce in the river it originated from.
Complete salmon production under one
roof shortens the value chain of salmon
production signicantly, eliminates risk of
parasites, reduces risk of diseases, simplies
logistics, and increases traceability of the
end-product.
33
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Leading
Technological
Development
Atlantic Sapphire Bluehouses deliver
maximum biological control due to
innovative technology. Our proprietary
capabilities build on collaboration and
integration with a diverse range of
technology partner solutions. All relevant
parameters are constantly monitored with an
increasing number of sensors, automation,
tools, and equipment that measure water
quality indicators such as alkalinity, carbon
dioxide, oxygen, and temperature. The
systems also measure potential risks for
the sh, such as elevated levels of toxic
gases. Early detection and mitigation of
the likelihood of toxic hydrogen sulde
formation is critical to minimize the risk of
a mortality event and continues to be a
key area of technical innovation towards
risk reduction and exposure for the Group.
Continuous improvements in technology
also allow Atlantic Sapphire to grow sh
faster with less feed and with reduced
consumption of oxygen and energy to
ensure optimum sh welfare.
Denmark
Innovation Center:
Technological
Proof of Concept
The Denmark Bluehouse, located in the
village of Hvide Sande, was the rst of its
kind when built in 2011. This commercial
pilot facility demonstrated the ability to
raise Atlantic salmon without the use of
conventional net pens in open water.
Atlantic Sapphire’s proven Bluehouse
technology also allows salmon to be raised
closer to the end consumer. Inside the
Bluehouse, water is continuously puried to
remain crystal clear by a state-of-the-art
ltration system. Furthermore, the sh are
free to swim against strong currents as they
do in the wild. Atlantic Sapphire salmon will
never come in contact with sea lice or be
exposed to wild sh diseases, allowing them
to grow strong and healthy. The Denmark
Bluehouse served as the foundation for the
Group and has been fundamental in making
the US Bluehouse possible. Unfortunately,
a re rendered the Danish Bluehouse non-
operational in 2021, and future plans for the
facility are still to be decided.
1,200 ft
The Floridan Aquifer is
1,200 feet below the
Miami Bluehouse
95 %
Over 95% of the
groundwater consumption
for farm operations will
be saltwater from the
Floridan aquifer
AI
In 2021, the Company
implemented autonomous
feeding and artificial
intelligence (AI) as part of
its new feeding system.
US Bluehouse:
In-Market
Commercial
Scale-Up
The Bluehouse located in Miami, Florida,
US is equipped with state-of-the-art
Recirculating Aquaculture System (“RAS”)
technology based on innovations and
experience from Denmark. This technology
has been further developed to combine
with the naturally given conditions of the
underground aquifers of South Florida. Our
Miami Bluehouse sources freshwater from
the Biscayne Aquifer only a few feet below
ground surface and accounts for about 5%
of our total groundwater consumption based
on the current permitted allocations.
The brackish and salty groundwater is
sourced from the Floridan Aquifer, a density
stratied artesian aquifer, and is located at
approximately 1,200 feet below the Miami
Bluehouse. The salinity of groundwater in the
aquifer increases with the increase in depth
as saline water is denser than freshwater.
Wells constructed in the Floridan Aquifer are
completed in two dierent zones: the upper
Floridan Aquifer and the middle Floridan
Aquifer. These hydrogeologic units produce
groundwater with salinities of 2.7 parts per
thousand (“ppt”) and 35 ppt, respectively.
Over 95% of the groundwater consumption
for farm operations will consist of saltwater
from the Floridan aquifer. The exchange of
groundwater entering and exiting the Miami
Bluehouse is about 10% per day. Inside
the Bluehouse, the recirculation degree of
ltered water in the tanks is above 99%.
Less than 1% of the total water that is sent
through the ltration system is discharged as
non-toxic wastewater through the injection
well and into the Boulder Zone of the lower
Floridan Aquifer, located at a depth of nearly
3,000 feet underground. The Boulder Zone
then acts as a storage zone and natural
lter with a natural current that slowly lters
the water over thousands of years until it
eventually returns to the ocean as clean
water, thus eliminating any wastewater
impact on the ecosystem.
34
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Genetics
Atlantic Sapphire imports ova from leading industry suppliers in Iceland and Norway to our
Miami and Denmark facilities. All ova supplied to Atlantic Sapphire meet the criteria of “no
genetic engineering involved” under the terms of the EU regulations. Furthermore, Atlantic
Sapphire is committed to never using genetically modied ova in its production.
Genetic development in salmon aquaculture consists of the improvement and strengthening
of salmon breeds using selection and mating techniques to ensure a higher survival rate and
resistance to the conditions to which salmon are exposed throughout the production cycle.
Atlantic Sapphire’s salmon are raised in an environment which allows the genetic work to be
focused on growth and traits more specic to Bluehouse conditions rather than attributes
such as resistance to parasites, bacteria, pathogens, or other sea-specic conditions.
Atlantic Sapphire is working with leading aquaculture genetics companies to advance
performance in its Bluehouses and to establish integrated onsite genetics operations.
5
Kontali. 2020.
Salmon Market Analysis 2020
. www.kontali.no/publications/yearly-publications#salmon-market-analysis
6
FAO. 2018.
The State of World Fisheries and Aquaculture 2018 - Meeting the sustainable development goals
. Rome. License: CC BY-NC-SA 3.0 IGO
The unique groundwater resources of South
Florida are well suited for Bluehouse farming
at scale. A stable supply of fresh, brackish,
and saline groundwater, along with a proven
and environmentally desirable method for
wastewater disposal, are critical elements. In
2018, Atlantic Sapphire was granted a United
States patent for its systems and methods
of intensive recirculating aquaculture,
incorporating the use of wells constructed for
groundwater supply and wastewater disposal.
Atlantic Sapphire is continuously working
on advancing the aquaculture industry by
being leaders in using new and advanced
technologies in our Bluehouse farming. In
2021, the Group implemented autonomous
feeding and articial intelligence (“AI”)
as part of its new feeding system. This
autonomous feeding system analyses feed
spill to determine the optimal amount of feed
to oer the sh, thereby maximizing both
sh welfare and growth while simultaneously
limiting the volume of uneaten feed that
might otherwise go to waste.
Furthermore, we are taking advantage of our
enormous amount of data of all water quality
parameters, thanks to our new AI system
that recognizes how changes in dierent
water quality parameters impacts water
quality and sh appetite. With each day,
the AI system becomes better at optimizing
water conditions for the sh, which increases
biomass gain and economic performance,
and results in even more healthy and
delicious product for the end-consumers.
The Group is also working on solutions to
separate uneaten feed from sludge to be
able to reuse the feed eliminating feed spill
all together. Lastly, the Group’s focus is on
improved and gentle sh movement, energy
consumption, and the design and concept
for a more modular, highly scalable tank
module as part of the Group’s Grand Master
Plan to reach 220,000t HOG of annual
harvest volumes a decade from now.
Developing a
Sustainable Option
The conventional aquaculture industry today generates a global supply of healthy Atlantic
salmon of an estimated 2.7 million metric tons
5
, almost all produced in sea-based net pens
or cages, primarily o the coasts of Norway and Chile due to suitable conditions
6
. However,
these industrial sea-based sh farming areas are remote from the largest end-markets,
which requires signicant transportation and logistics costs, generates an added carbon
footprint, and leads to reduced shelf life of the nal product.
In addition, the conventional industry faces numerous other challenges. Sea-based farmed
sh in net pens host diseases and parasites, including sea lice, requiring continuous
use of pesticides and other prevention methods. Farmed salmon also escape into the
surrounding waters, spreading non-native sh varieties that may intervene with the local
ocean ecosystem and wild salmon. Fish waste dissipates untreated into the coastal areas.
Bluehouse technology eliminates all these issues.
Almost all sea-based farmed salmon starts its life in a land-based facility, spending up to
half of its life there, before being transferred to a sea-based net pen or cage. An alternative
is to keep the whole farming process on land, which is the idea behind the Bluehouse. By
containing the salmon within our Bluehouses, the Group eliminates the threats to wild sh
stock and our own sh from sea lice, parasites, and other diseases being transferred, avoids
untreated sh waste being emitted into coastal areas, and the ensures that no microplastics
and other contaminants are ingested by the sh.
35
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Feed
Our commitment to sustainability starts with
what we feed our salmon. It is important
to select partners that share our view on
environmental, social, and governance issues
and have a strong focus on innovation.
Salmon feed is made from a variety of raw
materials, including grains such as wheat and
soy, and marine ingredients such as shmeal
and sh oil. Our aim is to build long-term
relationships with partners and suppliers
to collaborate on developing increasingly
sustainable feed solutions.
Raw material availability, origin, harvesting
methods, and regulations throughout the
supply chain in feed selection represent
key factors in the social, environmental, and
economic impact of the production of the
nal product. There are science and data-
based comprehensive standards regulating
the supply chain of feed ingredients in
aquaculture. In sheries for example,
scientic bodies assess wild stocks in
dierent shing grounds and establish catch
restrictions based on biomass volumes,
average size, and the natural seasonality
of the species. Atlantic Sapphire carefully
selects its feed and ingredient suppliers
to ensure that the strictest regulations and
full traceability are in place throughout
the value chain from primary raw material
production through feed ingredient
manufacturing and feed production.
Atlantic Sapphire chose to work with
feed suppliers that source their marine
ingredients from producers which fulll the
requirements of the MarinTrust, which is the
international program for marine ingredient
certication, formerly known as the Global
Standard for Responsible Supply (“IFFO
RS”), in line with the FAO Code of Conduct
for Responsible Fisheries. By engaging only
with suppliers that operate under third-
party recognized standards, the Group
ensures that all the sh used in our feed
comes from responsibly managed sheries
with well-regulated biomass stocks and
with zero-tolerance policies against Illegal,
Unreported, and Unregulated (“IUU”) shing
and full traceability systems in place.
Another major area of focus in aquaculture feed production is the use of sustainably
sourced soy. Atlantic Sapphire believes it is a joint responsibility for both feed suppliers and
salmon farmers to uphold strict requirements in the selection of soy with a strong focus on
minimizing and eliminating the risk of deforestation and with zero tolerance against
forced labor.
The soy utilized by Skretting North America (“Skretting”), our feed partner, is sourced using
sustainability criteria and primarily comes from CJ Selecta, a company that is actively working
to improve sustainability and is committed to the Amazon Soy Moratorium, an international
agreement in support of protecting the Amazon biome by blocking the acquisition of grains
from deforestation areas, together with the Brazilian Association of Grain Exporters (“ANEC”)
and the Brazilian Association of Vegetable Oil Industries (“ABIOVE”).
Skretting purchases credits from the Round Table on Responsible Soy (“RTRS credits”) for
all soy from Brazil and ensures suppliers meets their criteria for non-deforestation areas.
CJ Selecta, Skretting’s main soy supplier, has published a goal to stop entirely sourcing
soybeans from the Amazon biome by 2022.
36
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire is actively looking into the development of
alternative raw materials for our feed. The Group is engaged with
several feed suppliers and ingredient manufacturers to explore
opportunities for using ingredients such as algal oil, insect meal, and
single cell protein with the goal of eliminating sh oil and shmeal in
our feed in the future.
In 2021, we introduced a novel algae oil to replace 25% of the sh oil
in our feed. This means that we have lowered our marine ingredient
consistently over time, resulting in a 0.75 feed sh inclusion factor
(“FFIF”) and making us a net positive marine protein producer. We
also have a target to remove all marine ingredients from our feed by
2025. We will then be able to produce seafood without having any
impact on the ocean and zero of the contaminants coming from the
ocean such as metals, PCBs, or dioxins.
In 2021, Skretting signed an agreement with us with the intent of
building a feed plant locally in South Florida. Having local feed
production means that we will lower the transportation of sourcing
feed while simultaneously working in an even closer collaboration to
develop new feed ingredients that are better for our systems, for our
sh, and for the planet.
Traceability
Atlantic Sapphire’s full production cycle is carried out in its
Bluehouse, ensuring traceability from egg to nal product. The very
short value chain is also a factor as Atlantic Sapphire ships directly
to our customers with very few intermediaries ‘from egg to plate’.
Our food safety and traceability also come from internal procedures
and labelling standards. In Denmark, Atlantic Sapphire uses HACCP
to manage compliance with standards and legislation. Atlantic
Sapphire Denmark A/S holds a Grade AA BRC Global Standard
issued by Bureau Veritas Certication Holding SAS to produce fresh
head-on-gutted RAS farmed salmon delivered from its own farm
and factory.
In the US, Atlantic Sapphire experienced delays in the construction
of its processing plant due in part to COVID-19. To begin further
processing in this plant and increase product traceability even
further, Atlantic Sapphire has implemented its HACCP plan and
is in the process of obtaining its USDA System of Operational
Procedures (“SOP”) FDA registration. Additionally, Atlantic Sapphire
is in the process of obtaining a third-party food safety certication
for its US operations.
37
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Fish Welfare
The healthier our sh, the better the Group performs. Atlantic
Sapphire’s Bluehouse technology brings unprecedented
measurements and control of critical production factors. To
ensure optimal sh welfare, Atlantic Sapphire constantly monitors
all relevant water quality parameters. Over time, the Group
has continued to increase data collection to support ongoing
improvements in water quality, the general health of our sh and
growth performance. Our most powerful “sensor” is the sh itself.
A healthy sh that has good environmental conditions will have
high appetite and grow fast. In that way, you can say that the sh
welfare and protability of the company is aligned and as we say,
“a happy sh is a happy farmer”. An onsite control room allows
for close monitoring, quick detection of variations, and immediate
adjustments to maintain optimal Bluehouse conditions. Furthermore,
Atlantic Sapphire works with leading information and biotechnology
companies to analyze sh welfare and to corroborate internal
measurements and results. All the benets of Bluehouse farming
results in Atlantic Sapphire’s day-to-day mortality gures, excluding
the one-o extraordinary events of the past, being signicantly
lower than in other forms of salmon farming.
Bluehouse farming is designed to produce high-quality biomass
in a high intensity environment. With high intensity comes added
complexity, and successful operations require more from the
equipment used and the operators of this equipment. Throughout
2021 and as a direct response to the two extraordinary mortality
incidents in 2021, Atlantic Sapphire has made signicant changes to
minimize operational risks, in particular as it relates to extraordinary
mortality events:
Risk of hydrogen sulde (H2S) intoxication – the largest risk in
saltwater RAS sh farming
• H2S is a gas that can be created in all water systems with
organic material. It can aect sh growth and performance
in low concentrations, whereas it can kill sh in minutes in high
concentrations. In addition to being highly toxic in small volumes,
the gas is very volatile which makes it unpredictable and hard to
measure. The toxicity of H2S can be mitigated by adjusting
certain water quality parameters and procedures that have
successfully been implemented in our Bluehouses. Although
Atlantic Sapphire continues to focus on H2S to ensure a low-risk
environment, the Group is condent that the risk of large mortality
events has been severely reduced, though not eliminated. As a
result, we designed our farms with multiple independent systems.
Organizational restructuring
• Operational changes support better ow of communication
and allow for tighter monitoring of all RAS system parameters.
The ongrowing systems are now treated as independent farms.
Each ongrowing system is assigned its own manager, meaning
that every facet of that system is monitored in real time by the
manager that knows their system best. Directly assigning a
manager has increased accountability and has provided a strong
incentive to make sure tasks are done right the rst time, every time.
• Each system has responsibility for 24/7 coverage of stang, and
Atlantic Sapphire is now operating with a minimum of nine sta
in the Bluehouse at night and during weekends, signicantly
reducing the risk of incidents with impact on sh or property
happening outside of normal business hours.
The Facilities Operation Advisory Board (the “FOAB”)
• The FOAB was created to prevent incidents such as
extraordinary mortality from occurring again by drawing on
internal multidisciplinary resources to scrutinize and document
all novel procedures or large-scale systemic changes. Strict
protocols are established with every FOAB review.
Production input risk reduced (oxygen)
• The limited liquid oxygen (“LOX”) supply experienced in
August 2021 was a demonstration of organizational cohesion
and adaptability. While Atlantic Sapphire did not foresee that the
Pandemic would cause such a shortage, resources were
marshaled to ensure the sh themselves never wanted for
anything. Emergency protocols were rapidly developed and
vetted to mitigate oxygen demand from the sh while new
sources of liquid oxygen were sourced. Production was resumed
as normal after approximately three weeks.
• The LOX crisis taught the organization how it can keep the
Bluehouse and the sh stable with very low consumption of LOX,
and we adapted such learnings within our emergency protocols.
38
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Reducing Energy
Consumption
In 2019, the Group adopted an innovative technology
approach to optimize the cooling and ventilation systems
in its facilities and to minimize energy loss in piping of
water. Recirculating units and heat exchangers enable
the Group to maintain steady temperatures in the
aquaculture systems.
As an example, the Miami Bluehouse installed a closed-
loop cooling water well system for operation of water-
to-water heat exchangers to dissipate heat produced
by the chillers. The water-to-water heat exchange
is more ecient than the conventional water-to-air
exchange. The process uses groundwater pumped from
shallow water table wells constructed in the Biscayne
Aquifer. After passing through the heat exchanger, the
groundwater is returned into the aquifer and there is no
consumption of groundwater in the process.
This use of technology reduces the need for electrical
cooling, and hence the energy use and potential related
GHG emissions. Solar energy is also being explored as
another source to be utilized in the future. Thanks to the
large available roof space, installing solar energy will not
only be a great way to utilize the available space, but
is also estimated to reduce Atlantic Sapphire’s energy
costs. Being at the forefront of sustainable aquaculture,
Atlantic Sapphire must continue to develop technologies
and implement process enhancements to increase the
performance and sustainability of its operations.
Sustaining Trust
in Our Product
Growing a brand on a promise of sustainability does
not happen by accident. In bringing Atlantic Sapphire
product to market, the Group has engaged with a range
of carefully selected clients and business partners,
built, fostered, and maintained trust through transparent
communication, and only associated with organizations
who share the Group’s commitment to sustainable
aquaculture and product safety. Domestically raised
salmon will contribute to food safety in the value chain,
and further consumer trust. Ensuring the safety of
our product from ‘egg to plate’ is paramount. Atlantic
Sapphire follow strict protocols for testing and lab
analysis, which support our goals to ensure that
Bluehouse Salmon remains a most safe protein for
consumers to enjoy.
39
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Product
Certifications
To date, Atlantic Sapphire products are
carried by a broad range of retailers and
food service in North America, from small to
large scale. The growing demand for healthy
and sustainably produced proteins means
that retailers of every category are looking
to promote sustainable food products.
To highlight the importance of our food
product we hired a food safety auditor in
2021 with the primary role to conduct food
safety audits. This ensures quality control
among our sustainable food products.
Atlantic Sapphire believes its product also
ts in with a broader product category
oering. In some retailers today, Bluehouse
salmon is the only salmon sold due to its
health and sustainability characteristics. In
other retailers, Atlantic Sapphire accounts
for a smaller share of the product category
or our salmon is marketed as a separate
product type alongside other categories
such as conventional, organic farmed, or
wild-caught salmon.
Atlantic Sapphire is fully committed to
responsible marketing, and consumer trust
in Atlantic Sapphire’s product is vital to our
business and position as a leader in the
marketplace. For that reason, the Group is
always mindful to ensure the accuracy of
every sustainability-related claim it makes on
the product labelling and in our marketing
and to avoid any misleading claims.
Since inception,
Atlantic Sapphire
has reviewed a range
of potentially relevant
certifications and
quality standards.
Atlantic Sapphire
Denmark A/S was
BRC certified with
an AA rating, and we
strive to obtain a third-
party certification
for the US Bluehouse
in 2022.
Atlantic Sapphire Denmark A/S was
awarded the ASC certication on 9 July
2021. We are also talking with ASC about
the new RAS module they are working
on that would help dierentiate us from
conventional net pen salmon and move us
forward to certify the US Bluehouse facility
once the new standard is ready.
Further, Atlantic salmon grown in indoor
recirculating tanks worldwide such as our
Bluehouses are rated Green – Best Choice by
Seafood Watch, and Atlantic Sapphire salmon
is recommended by Ocean Wise. Such third-
party verications arm the quality and high
standards of our Atlantic salmon.
Finally, Atlantic Sapphire is now participating
in The American Heart Association(R) Heart-
Check Food Certication Program. This
certication is based on the American Heart
Association’s nutrition requirements for
heart healthy food. According to a Healthy
Living Rewards Concept Test Report (2016),
75% of consumers reported that they were
familiar with the Heart-Check symbol, a
program that guides shoppers to healthier
choices, and that they are more likely to
purchase foods that feature the Heart-
Check mark, regardless of age or number
of kids in their household⁷. After a rigorous
evaluation process, our Bluehouse Salmon
brand is now Heart-Check certied.
7
American Heart Association. 2016.
Healthy Living Rewards Concept Test Report
www.heart.org/-/media/les/healthy-living/company-collaboration/heart-check-
certication/heart-check-food-certication-guide.pdf?la=en
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
40
Processing
and Packaging
Solutions
Atlantic Sapphire’s Denmark production
includes primary processing only which
consists of slaughtering and gutting.
Secondary processing, which includes
lleting and producing other value-added
products, is carried out by contractors
who comply with European health and
safety regulations. In the United States,
our production combines both primary
processing and secondary processing.
The products produced are head-on
gutted (HOG) salmon, llets, and value-
added products. The products are stored
and transported to the end market
at a temperature between 0 and 2
degrees Celsius.
The Group has plans for use of waste and
byproducts to minimize overall waste. In
Denmark, we send our waste from farming
and whole sh processing to biogas plants.
In the US, we have commitments from pet
food processors to buy all the byproducts
from lleting.
Atlantic Sapphire is committed to using
sustainable packaging solutions across our
operations. Because our Danish facility must
meet a range of packaging requirements,
it is not yet as free to experiment with
more sustainable packaging as at our US
facility can. Here, Atlantic Sapphire’s main
packaging material for HOG salmon and
salmon llets is expected to be made of
fully recyclable or biodegradable material
for domestic transportation. Together with
a sustainability-minded supplier, we have
developed boxes using 90% cellulose ber
and will only use sustainable material such
as vegetable ink for prints. Inside every
box, we anticipate there will be a 100%
biodegradable bag or liner containing all
llets or HOG sh packed in bulk.
Selected Targets
for 2022
Consumer Health & Safety
•
Continued 100% compliance with all food safety standards
•
Apply for BRC certication in the US
•
Maintain American Heart Association Certication (US)
Packaging
•
Pack minimum 50% of our sh in biodegradable or recycled and
recyclable packaging for the transportation of harvested salmon to
lower our use of single-use plastic (US)
Production Responsibility
•
Zero waste of o-cuts and byproducts from our lleting facility (US)
•
Lower non-edible byproducts by increasing lleting yield of edible
meat to minimum 70% for Trim D llets
Selected Targets
for 2025
Consumer Health & Safety
•
Introduce an Atlantic Sapphire Bluehouse certication program
Packaging
•
Roll-out of 100% biodegradable or recycled and recyclable packaging
for the transportation of harvested salmon to eliminate our use of
single-use plastic (US)
Production Responsibility
•
Process 100% of o-cuts from farming operations and processing
(including guts, and sludge) onsite into value-added product (biogas,
protein powder, and sh oil), towards achievement of zero waste (US)
41
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire seeks to create prosperity for the
business, investors, buyers, suppliers, and employees.
The Group contributes economic value to the local
societies and communities where it operates and to
the business partners it transacts with. The Group’s
most obvious and direct contributions to driving
prosperity and economic growth are its job creation
and its payments to employees, suppliers, distributors,
authorities, and financial partners.
Atlantic Sapphire hires local and empowers local business partners
whenever possible. Some of our marketing agencies are local to
the Florida market and are women owned. Atlantic Sapphire is
sponsoring work permits for approximately 10% of our workforce,
a number lower than our original target of 30%, which implies a
positive local impact from our ability to source talent locally at
a higher extent than originally targeted. Atlantic Sapphire is fully
committed to acting responsibly in all its economic transactions.
This means, for example, that the Group pays employee wages,
supplier invoices, taxes, loan payments, and other qualied
expenses, in full and on time.
At Atlantic Sapphire, we all have a responsibility not only to act
with integrity, but also to protect shareholder value. Each employee
creates and increases the value of Atlantic Sapphire by acting in
the best interests of the Company by properly using condential
information and resources.
Generating
Economic Value
The Group’s primary investment in 2020 and 2021 has been the
Phase 1 construction of its Miami Bluehouse facility in Homestead,
Florida, and the construction of the Phase 2 expansion with started
in Q2 2021. The Phase 2 expansion will bring total annual harvest
volume capacity of the Miami Bluehouse to approximately 25,000t
HOG. Its indirect economic impacts include investment in building
the infrastructure leading to its production facilities, including roads
and new power lines build in cooperation with the power company.
Furthermore, the construction has benetted local suppliers and
business partners who the Group has engaged and supported
throughout the construction period. The Group is committed to
using local suppliers and business partners to support the local
economy where possible.
According to an independent assessment conducted by The
Washington Economics Group, Inc., Atlantic Sapphire’s business
plans are estimated to generate direct, indirect, and induced
employment of over 3,500 jobs for Miami-Dade County and the
State of Florida by 2021.
2021 Selected Financial Measures
(USD 1,000)
Revenues 16,851
Total expenses 149,144
Of which, salary and personnel costs 10,584
Total assets 311,740
Economic Value Generated
and Distributed by the Group
Atlantic Sapphire was listed on the
fully regulated main list of the Oslo
Stock Exchange in May 2020 and
was also quoted in the US on the
OTCQX market under the ticker
AASZF as of January of 2021.
Economic
Responsibility
42
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Managing Financial
Risk from Climate
Change
Supporting the
TCFD Recommendations
Atlantic Sapphire fully recognizes that
there are potential nancial implications
for its business from both climate-related
physical and transition risks, as dened by
the Taskforce on Climate-Related Financial
Disclosure (“TCFD”)
8
.
Atlantic Sapphire’s production facilities are
located close to coastal areas. As such,
the Group has assessed and prepared for
the risks of wind and water-related natural
disasters such as oods, tropical storms, or
hurricanes. In 2021, no major ‘named’ storms
aected the area.
Atlantic Sapphire’s business can also be
impacted by climate change through the
sourcing of sh feed. The Group depends
on sh feed from third parties, and this is
the single largest cost of production item.
Although feed represents a large, global
commodity, supplier prices are ultimately
based on raw marine and non-marine
materials. A future increase in such costs
to the supplier would most likely result in
direct correlation towards the Group’s cost
of production. Such factors could potentially
include climate change, increase in global
demand, and low supply increase. The Group
considers this risk to be high and is therefore
exploring alternative raw materials to reduce
dependence on marine ingredients.
Another important input to Atlantic
Sapphire’s business is electricity. Any
increase in pricing in the local electricity
market will result in higher costs for
the Group. However, Atlantic Sapphire
considers the risk of signicantly higher
energy prices in Florida as low since
Florida’s electricity market is controlled by
the Florida Public Service Commission.
This commission regulates publicly
owned municipal or cooperative electric
utilities and has jurisdiction regarding rate
structure, territorial boundaries, bulk power
supply operations, and planning. Atlantic
Sapphire is evaluating investments in
renewable power production by potentially
installing solar panels on-site in Florida
or in conjunction with larger solar farms
constructed by Florida Power & Light
(“FPL”). In the near future, Atlantic Sapphire
plans to transition over to renewable
sources of power as they are not based on
scarce resources and could reduce the risk
of signicant price increases for electricity
(see more in the chapter on Environmental
Responsibility for further details).
At the same time, Atlantic Sapphire is
well-positioned to expand its supply to the
8
Financial Stability Board’s Taskforce on Climate-related Financial Disclosure www.fsb-tcfd.org
market if climate change places limitations
on sea-based salmon production. The
Group’s facilities in South Florida are
not dependent on seawater, and its risk
exposure is limited by using the unique
groundwater resources in Florida. Similarly,
Atlantic Sapphire expects to be less
aected than others in the US market if
climate risk were to impact the cost of air
transportation because we supply that
market from local production and use truck
transportation.
During 2021, our corporate oces in Miami
were leased in a Leadership in Energy
and Environmental Design (“LEED”) Gold
Certied building.
43
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Green Finance
Our Green Finance Framework, which was
implemented in October 2020, continues to
help us steer the nancing of our business
and promote low-carbon, climate-resilient,
and resource-ecient development in the
seafood sector and reduce negative impact
on biodiversity. CICERO provided a Second
Party Opinion on our Framework
9
, giving
Atlantic Sapphire an overall strong CICERO
Medium Green shading and a governance
score of Excellent. Even before this was in
place, we obtained a Green Loan from DNB,
the rst of its kind by DNB to a seafood
company, in 2019. All Atlantic Sapphire’s
debt in the future will be ‘green’.
Transparency around our ESG performance
is critical for the capital markets to take on
risk and reward responsible behavior. We are
in regularly dialogue with dierent investors
to explain how we manage climate risks
and broader environmental impact, and we
engage with relevant ESG rankings to help
investors make informed decisions about
our commitment to managing ESG risks.
In September 2021, The Government
Group released its latest ratings of the ESG
reporting by the largest 100 companies
on the Oslo Stock Exchange and Atlantic
Sapphire received an A-, reecting “excellent
reporting in line with best practice”.
10
9
CICERO, Atlantic Sapphire ASA Green Finance Second Opinion October 15, 2020 https://cicero.green/public-reviews
10
The Governance Group, ESG 100: How the largest 100 companies on the Oslo Stock Exchange report on ESG, September 2021 https://c2e2.unepdtu.org/wp-content/
uploads/sites/3/2021/09/the-governance-group-esg-100-the-oslo-stock-exchange-8-september-2021.pdf
Shades of Green
Based on our review, we rate the
Atlantic Sapphire’s green nance framework CICERO Medium Green.
Included in the overall shading is an assessment of the governance structure
of the green nance framework. CICERO Shades of Green nds the governance
procedures in Atlantic Sapphire’s framework to be Excellent.
Green Bond and Green Loan Principles
Based on this review, this Framework is found in alignment with the principles.
We welcome and closely follow the expanding eorts to redirect capital ows towards
sustainable economic activities and investments, for example through the EU Taxonomy.
Although aquaculture has yet to have technical screening criteria for the environmental
objectives nalized, we are monitoring the criteria for comparable activities to understand
our potential alignment. We are also following market consultations around future disclosure
requirements such as capital and operating expenditures related to taxonomy-aligned
activities. This includes the pending Social Taxonomy with its focus on enhancing the
positive social impacts of goods and services. As our entire business and infrastructure
investments centering around sustainable food production, we welcome these requirements
along with the comparability such information will provide investors and other stakeholders.
We remain strongly committed to providing transparent and decision-useful information
to the investment community about the contribution of our activities to climate change
mitigation and adaptation.
44
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Ensuring
Responsible
Business Conduct
Atlantic Sapphire’s success depends on
maintaining the highest standards of trust
and integrity at all levels of the organization,
as well as the reputation for honesty
and transparency in its business. Atlantic
Sapphire released its Code of Conduct in
the rst half of 2020 to set expectations
and provide guidance to its Board of
Directors and ocers, employees (including
part-time, temporary, and seasonal),
independent contractors, and consultants.
The Group’s suppliers and other business
partners are expected to share our
commitment to integrity by following the
principles of our Code. In 2021, 100% of
our direct vendors and suppliers received
the Atlantic Sapphire Code of Conduct as
part of our supplier onboarding process and
were required to sign it.
The Code is consistent with the Group’s
core values, which also serve to guide
employee actions. Ethical business is our
goal, and employee conduct in performing
their respective duties on behalf of the
Group must always be honest, transparent,
lawful, and in accordance with ethical and
professional standards. The requirement of
honest, lawful, and ethical conduct is broad
and therefore must be stated in general
terms. As such, this Code does not cover
every issue that may arise, but instead sets
out basic principles to guide all employees.
Employees are expected to lead by example
and to seek guidance when necessary to
clarify any aspect of the Code.
Each employee creates and increases
Atlantic Sapphire’s value by acting in the
Group’s best interests by properly using
condential information and protecting
intellectual property. All employees are also
expected to protect and properly utilize
Group assets to ensure their ecient use
for legitimate business purposes. Ultimately,
the Group is owned by our shareholders
and all at Atlantic Sapphire have a
responsibility to act with integrity and to
protect shareholder value.
Improper Payments
and Anti-Money Laundering
Atlantic Sapphire conducts its business in compliance with all laws that prohibit money
laundering or nancing for illegal or illegitimate purposes and holds a zero-tolerance policy
against corruption. Corrupt activities not only represent a Code violation, but also represent
a serious violation of criminal and civil anti-bribery and anti-corruption laws in the countries
in which Atlantic Sapphire conducts business.
Fair Competition
Atlantic Sapphire competes fairly in full compliance with all applicable antitrust and
competition laws. Commercial policy and pricing will be set independently and will never be
agreed upon or coordinated with competitors.
Concerns related to possible violations of the Code of Conduct and any violations of
applicable laws or company policies are included as part of Atlantic Sapphire’s open
communication policy. The Group provides dierent channels for reporting and encourages
any aected party to report any violations or other concerns as early as possible. The Group
is not aware of any breach related to anti-competitive or corrupt conduct in our operations.
Selected Targets
for 2022
Economic Performance
•
Steady state US Phase 1 production (US)
Technology and innovation
•
File at least ve patents
•
Invest 5% of overall operational expense
in R&D towards environmental, nancial,
and sh welfare improvements
Indirect Economic Impact
•
Deliver over 3,500 direct and indirect
job impacts in Miami-Dade County
and Florida
Code of Conduct
•
100% of employees trained and tested
•
Require 100% of direct vendors and
suppliers to sign and adhere to Atlantic
Sapphire’s Code of Conduct
Selected Targets
for 2025
•
Invest 5-10% of overall operational
expense in R&D towards environmental,
nancial, and sh welfare improvements
•
Local salmon feed production based
on locally sourced ingredients
•
Source renewable energy at a lower
unitary cost than standard electricity
from the grid
Environmental
Responsibility
45
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Pursuing the most sustainable salmon farming technologies while
protecting the environment where it operates is fundamental to
Atlantic Sapphire. Our priorities are focused on energy and water
use eiciency, minimizing waste and emissions, and avoiding
impacting the surrounding marine and land ecosystems. We have
always taken precautionary measures through systematic risk
assessment and risk management where our activities may impact
vulnerable ecosystems or resources.
Atlantic Sapphire’s Environmental and Social Management System (“ESMS”)
requires all personnel, including Atlantic Sapphire employees and subcontractors,
to act responsibly and maintain regard for impacts on the environment and climate.
Through the ESMS, we ensure that our employees receive guidance, support,
and training to maintain the high standards we have set itself for our
environmental performance.
Pursuing the most sustainable salmon
farming technologies while protecting the
environment where it operates is fundamental
to Atlantic Sapphire. Our priorities are
focused on energy and water use eciency,
minimizing waste and emissions, and avoiding
impacting the surrounding marine and
land ecosystems. We have always taken
precautionary measures through systematic
risk assessment and risk management
where our activities may impact vulnerable
ecosystems or resources.
46
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Minimizing the Group’s
Carbon Footprint
Climate change is one of the world’s most pressing challenges. Food
production plays a major part of the climate challenges and contributes
to a signicant amount of global greenhouse gas emissions. Emissions
from food production and impacts of climate change on agriculture and
the food system will deeply aect the way the world produces food in
the future. Failure to manage environmental and climate-related risks
could harm the environment, the local community, and the Group’s
business and reputation.
Additionally, our operations are estimated to be sequestering carbon
at an average rate of 128 tons per day when US Phase 1 and 2 are
both operational thanks to the unique water environment we’re
operating in. By injecting our treated wastewater into the Boulder Zone,
we’re eectively making it a carbon sequestration well, of which there
are only about ten in the United States.
Feed Conversion
Farmed salmon has a low carbon and water footprint compared to
other sources of protein such as meat production and can contribute
to a solution to the climate challenge. The so-called Feed Conversion
Ratio is an estimate of the amount of feed required to increase the
animal’s bodyweight by one kilogram. The table here shows that beef
cattle hold the highest feed conversion rate, with an average ratio of
eight, while in contrast an industry-average salmon needs only about
1.3 kilograms of feed to increase its bodyweight by one kilogram,
making it a highly favorable conversion ratio.
In 2021, Atlantic Sapphire partnered with Veramaris to deliver
sustainable Omega-3s rich salmon to the market. Having a
sustainable EPA and DHA alternative to sh oil is critical in helping
it achieve its ambition of having zero impact on the oceans. By
working with Veramaris and Skretting, the Group is condent that it
has the right partners to achieve such ambitions. Atlantic Sapphire
will simultaneously work with Skretting on other novel ingredients to
help it minimize the carbon footprint.
Energy
Even though salmon farming emits less carbon as compared to
other livestock, Atlantic Sapphire recognizes that the full value chain
does leave a carbon footprint and seeks to minimize it. As part of
our plan to strengthen our position as a producer of land-based
farmed salmon globally, we are committed to improving eciency in
the consumption of energy, as well as exploring increasing the use
of renewable energy through direct investment in renewable energy,
a partnership with a third party, or a combination of both.
Excluding transportation, Atlantic Sapphire’s Bluehouse production
environment requires a higher use of energy than the production
of salmon at sea. Therefore, one of the Group’s main priorities to
explore, develop, and implement solutions to reduce the energy
consumption of its operations. On the logistical standpoint to
service the US market however, Atlantic Sapphire brings substantial
reductions in GHG emissions as air freight is not required to
transport harvested fresh salmon.
In the rst eight months of 2021, Atlantic Sapphire Denmark
consumed approximately 8.6 GWh of energy (through 31 August
2021, full year 2020: 12.1 GWh). The energy consumed comes from
a mix grid including renewable and non-renewable sources. At
steady state production, Denmark Bluehouse energy consumption
for all operations is targeted to be approximately 6 kWh per kilo
produced. We continue to monitor energy consumption closely,
and to determine the origin and amount of renewable energy used
in our operations. Our facility in Denmark currently exports sludge
generated from farming operations to a biogas facility that uses it to
produce energy.
Feed conversion ratio of selected
meat and sh worldwide (kg)
Cattle Pork Chicken Salmon
8
3.9
1.9
1.3
Source : Statista 2021
As of the end of 2021, the Group was still harvesting out the Initial
Batches of salmon (sh introduced into the system before the middle
of 2020) while the rst of the New Batches (sh introduced into the
facility after the middle of 2020) had reached approximately 1kg in
average weight. Preliminary gures for the Initial Batches were high
due to the challenges with the frontrunner batch that had a high
percentage of maturation. The Group expects an economic feed
conversion ratio of approximately 1.2 in steady state production.
47
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
“ We set goals with a commitment
to sustainability, and an ongoing
consideration of ESG factors in our
decision-making. Our Bluehouse
lowers the food sector’s global
carbon footprint, conserving our
oceans and delivering healthy
salmon to eaters everywhere. We
are spearheading the development
of a new and exciting industry
right here in Miami, FL. ”
Rebecca Kravetz: Setting goals with purpose
(product, environment, economic responsibility)
Marketing Coordinator
48
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Emission from
Norwegian Air Freight
Emission from
Chilean Air Freight
kg CO2e per kg Salmon Exported kg CO2e per kg Salmon Exported
UAE, Dubai UAE, Dubai
Japan, Tokyo Japan, Tokyo
China, Hong Kong China, Hong Kong
USA, New York USA, New York
0 05 10 10 20 3015
Source : SINTEF and Nordea estimates, 2019
In the US in 2021, Atlantic Sapphire consumed approximately 69.8
GWh of electricity (2020: approximately 39.9 GWh of electricity–
part of the Phase 1 facility was in construction). In Miami, the
electricity is supplied from the state grid, which is a mix of nuclear
and natural gas generated energy. With US Phase 1 construction was
fully commissioned, we expect to increase our energy consumption
in 2022 as production continues to reach steady-state capacity in
all of the 12 grow-out systems. Similar to our Danish facility, we aim
to utilize the sludge it produces as either an energy source, biogas,
or fertilizer.
Atlantic Sapphire is determined to support growth in seafood
consumption as part of lowering the global carbon footprint of the
food sector. By producing and selling fresh product ‘in-market’ and
close to the end-consumer, Atlantic Sapphire avoids the cost and
carbon footprint incurred of using airfreight transportation to reach
the end-consumer.
In 2021, no commercial shipment of our sh was made via airfreight.
This is in line with our commitment to reduce our carbon footprint
from transportation by supplying the US market from the Miami
operation and the EU market from Denmark.
Handling Water
Consumption and
Wastewater
Using recirculating aquaculture systems (“RAS”) technology, our
water is ltered before it re-enters into a tank system. Over 99%
of the water entering our tanks is recirculated and ltered, which
signicantly limits our water consumption.
There is no risk of water scarcity in either of the locations where
Atlantic Sapphire operates. Of all the water used, under 5% is
freshwater and over 95% is saline water which is not suitable for
irrigation or human consumption. Our freshwater consumption in
2021 was 120 million gallons, and our saltwater consumption was
1.5 billion gallons. In steady state production, this is estimated
to be equivalent to approximately 200 liters of freshwater
consumption per kilo of edible meat from farming operations,
processing, and feed.
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
49
Water Intake
The Denmark Bluehouse used sea water
for its saline intake water and municipal
freshwater for its freshwater requirements.
Thorough biosecurity procedures are in
place. The intake water goes through a
sophisticated “rewall” system consisting
of water ltration and UV disinfection as
preventive barriers. This process eliminates
parasites and microbes in inlet water,
completely mitigating the risk of bringing in
any disease, while also maintaining stability
within the farm.
The saltwater permits are set at 4,800 m3/d.
The Group monitors its daily freshwater and
saltwater intake, including water used for
the farming cycle, for processing, and for
the oce, and it has not exceeded those
allowances in 2019 or before.
Our Miami Bluehouse sources freshwater from the
Biscayne Aquifer only a few feet below ground surface
and accounts for about 5% of our total groundwater
consumption based on the current permitted allocations.
The brackish and salty groundwater is sourced from the Floridan
Aquifer, a density stratied artesian aquifer, and is located
at approximately 1,200 feet below the Miami Bluehouse. The
salinity of groundwater in the aquifer generally increases with the
increase in depth as saline water is denser than freshwater. Wells
constructed in the Floridan Aquifer are completed in two dierent
zones: the upper Floridan Aquifer and the middle Floridan Aquifer.
These hydrogeologic units produce groundwater with salinities of
2.7 parts per thousand (“ppt”) and 35 ppt, respectively. Over 95%
of the groundwater consumption for farm operations will consist of
saltwater from the Floridan aquifer. The exchange of groundwater
entering and exiting the Miami Bluehouse is about 10% per day.
Inside the Bluehouse, the recirculation degree of ltered water
in the tanks is above 99%. Less than 1% of the total water that
is sent through the ltration system is discharged as non-toxic
wastewater through the injection well and into the Boulder Zone of
the lower Floridan Aquifer, located at a depth of nearly 3,000 feet
underground. The Boulder Zone then acts as a storage zone and
natural lter with a natural current that slowly lters the water over
thousands of years until it eventually returns to the ocean as clean
water, thus eliminating any wastewater impact on the ecosystem.
The unique groundwater resources of South Florida are well suited
for Bluehouse farming at scale. A stable supply of fresh, brackish,
and saline groundwater, along with a proven and environmentally
desirable method for wastewater disposal, are critical elements.
In 2018, Atlantic Sapphire was granted a United States patent for
its systems and methods of intensive recirculating aquaculture,
incorporating the use of wells constructed for groundwater
supply and wastewater disposal. Further, water consumption is
comparatively much lower than other proteins, with the Group
stating a goal of 200 liters per kilogram of edible meat.
In Miami, all the water used for farming
operations comes from highly productive
aquifers with stable brackish and fresh
groundwater. The groundwater resources
for the farm have been allocated for use
by the South Florida Water Management
District (“SFWMD”) under a 20-year
water use permit. The permit provides
an allocation of groundwater from two
subsurface sources:
• The Biscayne Aquifer, which contains
fresh groundwater of very low salinity
of 0.36 ppt
• The Floridan Aquifer, which contains
brackish to saline groundwater that
varies in salinity from approximately
2.7 to 35.0 ppt.
50
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Water Recirculation
and Filtration
Water recirculation is continuously
performed throughout the dierent farming
areas and in independent systems to ensure
optimal levels of water containment in line
with Atlantic Sapphire’s de-risking strategy.
Filtration is performed through both
mechanical and biological lters.
First, water is treated in mechanical lters
(“drum lters”) that capture the solids
generated in the tanks, mainly feces and
uneaten feed pellets. Water continues to
circulate to biological lters (“biolters”)
for the nitrication of the water, a process
by which the ammonia generated by sh is
converted into nitrite and nitrate in a two-
step process.
As a second step, an FDA-approved organic
polymer is added in mixers to occulate the
solids. The sludge collected is pumped to a
sludge treatment system. Treated sludge is
collected and transported to a local waste
management facility. In the future, it is our
intention to invest in technology to convert
all sludge generated in our Bluehouses into
a resource such as agriculture fertilizer, soil
amendment, or biogas energy
Water Discharge
In Denmark, a water discharge permit is in place for the Group’s wastewater, which goes
through ltration and treatment before it is discharged.
In the US, non-hazardous aquaculture derived wastewater is stored underground through
an injection well; domestic wastewater will be disposed of on-site to two permitted septic
systems under construction. The treatment of the water consists of the separation of sludge
and solids generated during aquaculture operations, and euent water.
The parameters of aquaculture wastewater discharge are continuously monitored in both
locations. In Denmark, the water euent sampling procedure is highly automated to read key
water parameters to ensure we meet local environmental requirements.
In the US, wastewater is stored deep underground by way of an injection well. Regulatory
monitoring and reporting associated with injection well system includes both groundwater
and wastewater analytical analyses for samples collected at a permit specied frequency.
Physical data including groundwater elevation from a Floridan Aquifer monitor well and the
operating ows and pressures at the injection well are continuously recorded. All physical
and analytical laboratory data are submitted to the Florida Department of Environmental
Protection monthly.
Since the Group’s inception, we have unfortunately experienced three instances in which
plastic bio-elements from our water ltration system have been discharged with the
wastewater into the environment around our facility in Denmark. We identied the root
causes which included a lter not being replaced properly after cleaning, and an instance
where frost had destroyed a net across a water outlet. We responded immediately upon
becoming aware of the respective discharges and we are fully committed to clean-up eorts
and implementing measures to prevent future occurrences. We are in close conversation
with the local authorities who have concluded that the plastic is not acutely polluting to
nature. We have drawn up a plan with corrective actions to prevent this happening again.
We have also hired a local company to collect the pieces, and we are grateful to local
community members who helped us recover most of the bio-elements.
51
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Protecting Biodiversity
and Coastal Areas
Atlantic Sapphire has a limited impact on the local biodiversity in
the locations where it operates due to its closed production method
and ecient land occupation. For example, it can farm up to 1,000
tons annually of salmon on one acre of land, which is the highest
yield per acre of animal protein in the world.
In Denmark, environmental impact assessments are conducted to
ensure that our activities do not pose a threat to local ecosystems.
The Group does not operate near marine protected areas.
In the US, Atlantic Sapphire’s farming operation has zero harmful
impact on the ocean and its biodiversity by producing salmon on
land using its unique groundwater resources in Florida, except for
the utilization of marine ingredients in feed. This means that the sh
swimming in Atlantic Sapphire Bluehouses neither will be exposed to
parasites (e.g. sea lice) or salmon diseases from the ocean, nor will
the Bluehouse salmon contribute to increase the general sea lice or
disease pressure for other marine species including wild salmon.
The Group is working with its carefully selected feed suppliers to
increase the levels of non-marine ingredients in the feed to further
reduce its use of marine ingredients. In addition, Atlantic Sapphire
requires that its feed suppliers comply with specic requirements to
ensure that their marine raw materials are sourced from responsibly
managed sheries.
The ultimate goal is to work with alternative ingredients to be able to
produce salmon without using any shmeal or sh oil, likely through
the use of alternative ingredients such as algal oil, insect meal, and
single cell protein. Our feed partner is starting to test alternative
raw materials, starting with algae oils, and is in close dialogue with
the Group (see more in the chapter on Product Responsibility for
further details). Atlantic Sapphire is also independently looking at
other sources that may be part of the solution of the future.
Bluehouse farmed salmon cannot escape, which eliminates the risk
of interbreeding with wild strains, and any possible transmission of
disease or parasites.
Selected Targets for 2022
GHG Emissions & Climate Change
•
Zero kilos of salmon own on airplanes
•
Engage with local electricity company and develop a concrete plan
to transition to 100% renewable sources of electricity (US)
Waste
•
Start construction of a value-added facility for the Bluehouse sh
waste, eliminating sludge and viscera waste
Feed
•
Reduce Feed Fish Inclusion Factor (“FFIF”) further to maximum 0.75
11
•
Increase the inclusion of insect meal or algae-based oil in
our salmon feed
Water
•
Reduce freshwater usage from production, processing, and
feed to below 200 liters per kilo of edible meat
Selected Targets for 2025
GHG Emissions & Climate Change
•
Zero kilos of salmon own on airplanes
•
Construct and generate 5 MW of solar power on site
•
Electrical trucking and onsite production equipment of our salmon
Feed
•
Zero marine ingredients in our saltwater diets
•
100% certied deforestation-free soy in our salmon feed
•
Eliminate the carbon footprint of feed transportation by
producing feed locally
Fish Welfare
• More than 97% survival rate as a percentage of biomass gain
• Achieve a third-party animal welfare certication
Water
• Eliminate the consumption of fresh water in production by
replacing with saline water
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
52
Reducing Eluents
and Waste
In Denmark, the sludge is ltered o in the
euent management process and used for
biogas production. In Florida, belt presses and
a centrifuge will dewater the sludge to 30% dry
matter, which is accepted as a solid waste for
osite compositing or disposal by commercial
of municipal solid waste facilities. The Group is
actively looking into alternative options for handling
sludge in the future. For example, further treatment
to 90% dry matter will make it available for disposal
at a local commercially run wastewater to energy
facility. Other options for use as energy or soil
amendments are also being evaluated.
By using a closed system, we maintain a high
degree of control of our sh waste. Atlantic
Sapphire’s US operations do not discharge any
waste into the ocean which provides positive
aspects. For example, there is no risk of: water
pollution coming from antibiotics or pesticides
from operations, wild species becoming
dependent on eating salmon feed spilled from
operations, or solid waste, mainly feces and
uneaten feed, settling and solidifying on the
seabed, altering natural ecosystems.
Likewise, Atlantic Sapphire’s operations have
not had any impact on other fauna such
as seabirds or predators, and there is no
risk of detachment of farming equipment
(nets, plastics, or other artifacts) that can be
transported by the current contaminating the
water, becoming ghost gear, and potentially
harming marine fauna.
Atlantic Sapphire is committed to ensuring the
proper handling, management, and disposal
of hazardous and non-hazardous waste. This
means that the Group complies with local,
state, and federal regulations for the storage,
identication, record keeping, prevention,
reduction, reuse, recovery, recycling, removal,
and disposal requirements, as well as the
requirements of international standards, such
as the IFC Performance Standards and
EHS Guidelines.
The Group operates sludge handling systems
and mixers which allow us to keep sludge-
containing water mixed in buer tanks. By doing
so, the water that passes through the ltration
and water purifying plant does not clog up or
need frequent adjustments and cleaning of
ltration equipment.
11
The feed sh inclusion factor estimates the combined shmeal and sh oil concentration of the
feed on a dry- weight basis, relative to the wild sh. Thus an FFIF of 2 signies that the feed is
twice as concentrated in marine protein and oil as in wild sh.
53
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
An unexpected and devastating fire at the Denmark
Bluehouse on 15 September 2021 forced us to
discontinue our saltwater farming eorts in
Denmark. The damages to our flagship Bluehouse
were diicult for the Group and especially hard for
our Danish employees.
To support our team, we provided grief counselors to help navigate
the range of emotions associated with such a signicant total
loss. Following the re, 10 employees were released from their
Passion
Purpose, dedication,
and courage
• We are all Fish Farmers.
• We are positive thinkers and look for solutions.
• We share our knowledge and energy with each other.
• We are always eager to learn.
Performance
Initiative, collaboration,
and results
• Alone we go fast – together we go further.
• We make each other better.
• Our job is not done until the customer is happy.
• Good biological conditions drive nancial performance.
Innovation
Continuous improvement, solutions,
and learning
• What we do today, we do better than yesterday.
• We focus on the solution, not the problem.
• We listen deeply to understand each other.
• We share ideas with our coworkers.
Social
Responsibility
01
04
05
02
03
Integrity
Accountability, open
communication, and care
• We talk to each other, not about each other.
• We deliver what we promise.
• We stay humble and ask for help when need it.
• We speak up to solve problems because we care.
Balance
Healthy sh, wellness,
and sustainable planet
• Healthy sh are at the heart of everything we do.
• We love life, bringing our best self to life and work.
• We care for People, Fish, and the Planet.
• We do the right things in the right way.
employment contracts due to lack of farming operations. All team
members were oered job placement assistance to assist with
the transition and paid out for any unused holidays. Impacted
employees were paid between 3-5 months based on their tenure
with the Group. Additionally, Atlantic Sapphire agreed to release
all employees who obtained alternate work from their employment
contracts during the notice period.
At the end of 2021, three valued team members remained active in
Denmark as the Group continues to determine future plans.
Atlantic Sapphire is dedicated to fostering a corporate culture that
goes beyond regulatory compliance and engages and empowers all
employees around realizing our purpose and living our values. The
Group is determined to be among the industry leaders in tackling
environmental as well as social responsibility issues, consistent
with the Group’s core values. Since last year, our core values have
been extended with new sub-values to encourage and ensure our
employees live our core values every day in their dedicated eorts
to help customers realize their ambitions.
54
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire
promotes a safe,
healthy, and fair working
environment. The Group
depends deeply on all our
employees’ capabilities
and contributions, and it
is therefore committed
to providing an inclusive,
motivating, and safe
working environment,
as described in its
Human Resource Policy
and its Environmental,
Health, Safety, and
Security (“EHSS)” Policy.
Achieving our goals
while living our values
can only be done if we
collaborate and treat
each other with respect.
Atlantic Sapphire aims
to be an open, positive,
and supportive working
environment.
Engaged Employees
As of 31 December 2021, Atlantic Sapphire had 166 full time employees. In
2021, the Group maintained its headcount, as its US Phase 1 Miami Bluehouse
reached completion. In the development phase of its facilities, the Group
prioritized skills and experience in stang teams to ensure that its operations
are safe and secure.
Over time, the Group endeavors to increasingly hire full-time employees from
the communities in which it operates. In 2021, the Group made signicant
strides towards moving away from a temporary workforce and engaging
full-time employees.
Atlantic Sapphire has been working through extensive community engagement
within universities, colleges, YMCA, and other promotional activities to drive a
strong employer branding.
As part of our continuous feedback process in 2021, our Employee Satisfaction
Survey measured that 92% of employees were proud to be a part of the Group
and 88% looked forward to coming to work. The results found that less than 2%
of employees showed low engagement.
(*)JH: Group employees; TCC: contractors.
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC2021
JH - ATLANTIC SAPPHIRE TCC - ATLANTIC SAPPHIRE 1099
0
25
50
75
100
125
150
175
30
55
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Susana Gamiz: Supporting technology to enable ESG goals
IT Support Technician
“ Atlantic Sapphire depends on all its
employees’ capabilities and contributions
to support our vision of producing
delicious and healthy salmon sustainably;
we are all fish farmers. I work hard to
promote a collaborative environment and
architect seamless infrastructures by
improving our IT systems while managing
risks, ensuring business continuity. ”
56
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire is focused on driving
innovation by bringing experience from
various industries such as conventional
sea-based aquaculture, wastewater,
engineering, construction, maintenance,
and uid dynamics.
At Atlantic Sapphire, we believe that a diverse
and inclusive workforce is essential to our
success. We recruit globally for the talent and
experience that may be dicult to nd locally,
all while emphasizing gender equality and equal
employment opportunities. We are proud to count
over 20 dierent nationalities in our workforce.
We onboard people who bring professional
experience and t our corporate culture, and
in whom we see potential for growth. Our
goal is to build a diverse workforce as Atlantic
Sapphire grows – with both ethnic diversity
and gender diversity. Atlantic Sapphire has set
representation goals to increase diversity across
the Group and will focus on three key targeted
areas: targeted recruitment, development, and
retention and promotion paths.
Pioneering in an industry also involves building
up inexistent competences in the eld. Driving
performance while we retain talent throughout
the organization in such an operationally
geared industry is essential.
To drive a well-balanced performance driven
organization while we also retain talent over
time Atlantic Sapphire built an incentive
program, with the support of Korn Ferry, which
aligns our need to drive the performance in the
short term with our long-term ambitions.
Therefore, we have established a combination
of Short-Term Incentive Program (Feeding
Culture), which is a performance option
program driven primarily by economic and
biological performance, and a Long-Term
Incentive Program (Performance Over
Time) driving performance of our economic,
biological, environmental, and social targets
in equal parts. All management (C-suite and
senior management) and employees (technical
experts and individual contributors) not eligible
for overtime are eligible to participate in the
Performance Over Time Incentive Program.
Metrics included in the Performance Over
Time consist economic performance and
budget achievement, biological performance
and sh survivability rates, environmental
targets, safety, diversity, and inclusion.
“Through our Health, Safety, and Environmental
Guiding Principles, we oversee the health and safety
of our employees in the workplace, predominantly
through ongoing auditing, monitoring, and evaluation
of activities to ensure compliance. We actively
promote a strong safety culture with employees,
suppliers, vendors, and contractors, meaning that
our focus is not only internal, but we also ensure the
best conditions for stakeholders that participate in
our operations. Healthy sh is central to our mission
and daily behavior, but this starts with the support,
training, and supervision we give each and every
one of our employees. We always strive for the best
working conditions and environment, enabling our
daily operations and innovative practices. Moreover,
we proactively enforce the ‘Think Safe, Act Safe, Be
Safe’ mindset at every opportunity.”
- Carlos Fidalgo: HSE role in everything we do
Director of Health, Safety and Environmental
I look foward to coming to work.
Strongly agree. (55%)
Disagree. (4%)
Strongly Disagree. (1%)
Neither Agree or Disagree. (8%)
Agree (33%)
Although Atlantic Sapphire complies with applicable international and national laws,
regulations and standards, there could be risks within the Group’s activities that may
potentially have a negative impact on its people and communities and therefore, by
extension, on its business. These relate primarily to occupational health and safety,
training and education, and diversity and inclusion.
57
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Ensuring
Occupational
Health & Safety
Atlantic Sapphire works to ensure a safe
and healthy environment for all employees,
contractors, and visitors. We proactively
reinforce the mindset “Think Safe, Act Safe,
Be Safe” at every opportunity throughout
the organization.
For the year ended 31 December 2021,
approximately 343,000 total work hours were
recorded throughout the organization, of which
1,000 hours were attributed to sick leave.
The Environmental and Social Management
System (“ESMS”) helps ensure that the Group
takes extensive precautionary measures to
reduce the risks. These include training of
employees and a relentless focus on personal
protective equipment and safe handling of
hazardous materials together with systematic
controls of its working processes.
Employees are encouraged to always
speak up and raise a concern and refuse to
perform work if:
• asked to do a task you consider unsafe,
• asked to do a job you think you are not
properly trained to perform and that may
harm you or others,
• they see someone performing a task that
you think is unsafe or that the person is
not properly trained to do,
• they suspect that a piece of equipment
is not operating properly and may
be unsafe, or
• they observe or are made aware of an
unsafe condition or a potential danger to
yourself or others.
Atlantic Sapphire actively manages and
mitigates health and safety risks in its
production facilities including accidents,
injuries and occupational diseases, and
exposure to chemical hazards. The Group
designs and operates its production
facilities with an emphasis on eective
process safety programs to maintain a safe
work environment and prevent accidents.
The Group maintains general oversight
of the health and safety of its employees
predominantly through ongoing auditing,
monitoring, and evaluation of activities to
ensure compliance, and it actively promotes
a strong safety culture with its suppliers,
vendors, and contractors.
In 2019, the Group established the KPI Lost
Time Incident (“LTI”), which is also part of the
Performance Over Time Incentive program.
The formula is as follows: (number of lost time
injuries in the reporting period) multiplied
by 200,000/total hours worked. A tracking
tool was implemented both in the US and in
Denmark. In 2021, our lost time rate was 1.75,
down 12.5% from a rate of 2 in 2020.
Atlantic Sapphire oers comprehensive
medical insurance plans along with a host
of additional health and welfare benets for
its employees and their families. Employees
in the US are covered under the Group
Medical Plan including in-patient and
out-patient services covering medical,
dental, vision, and company-paid benets
such as life insurance and short and long-
term disability insurance. Employees in
Denmark are covered for dierent kinds
of hospital treatment including intensive
health problems, out-patient examinations,
and physical and mental treatments. All
employees are entitled to include members
of their families in their insurance coverage
in both locations.
Investing
in Life-Long
Competence
Development
At Atlantic Sapphire, we believe in the value
of lifelong learning. The Atlantic Sapphire
Academy (the “Academy”) ensures that
we can develop talent in a systematic and
continuous way to support our scaling
up. We know that the best learning comes
from direct experience, and our programs
are developed with a 70% hands-on, 20%
shadowing, and 10% online or classroom
approach. We use both the best internal
and external sources to train and develop
our employees, with collaboration at the
core of our Academy’s approach. Through
our Academy platform, employees are
continuously tracking their personal
development which positions them to grow
meaningful careers.
In 2021, all our employees documented
a total of 1,012 hours of training which
included safety, technical and managerial
competencies, and skills for personal
development. This number is lower than
last year due to fewer training sessions
to onboard new sta. It is tracked by our
Atlantic Sapphire Academy, which was
created to support the multi-faceted
development needs of our employees and
our Group.
Harassment and Discrimination Prevention
training was provided for all employees. This
training focused on cultural sensitivity and
reinforced the Group’s zero tolerance policy
on harassment and discrimination.
Employees receive Occupational Health and
Safety (“OHS”) induction training upon hire,
which teaches about the minimum safety,
environmental, and security precautions
required before gaining access to our
facilities. Additionally, all employees are
informed throughout the year of onsite
hazards and controls, the location of
reghting and rst aid equipment,
and our emergency response and
evacuation procedures.
As our organization prepares for projected
growth and expansion, we realize that we
need to train and develop high-potential
employees who will lead future teams.
In 2021, we focused on equipping our
employees with the tools to help them
develop professionally and to support
the anticipated needs of our growing
organization. We created a Management
Development Program with targeted
training for current mid-level managers and
prospective future leaders in which 24% of
full-time employees, representing 100% of
our mid-level managers, participated in
this initiative.
58
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Fostering Diversity
and Inclusion
The Group continues its commitment to fostering a culture of diversity and
inclusion. In 2021, the percentage of female employees in the workforce held
strong at 24%, and the share of women in all management positions, including
middle and top management, increased to 28% from 25% in the prior year.
As part of the overall commitment to human rights, Atlantic Sapphire is
committed to providing equal opportunity to all employees and applicants
for employment without regard to gender, sexual orientation, race, creed,
color, national origin, religion, ancestry, gender identity, marital status, familial
status, or any other basis protected by law of US, Denmark, or Norway, as
applicable. Through a multifaceted approach which includes strong support
from our leadership and culture and by establishing policies, talent attraction
programs, awareness and training programs, and rewarding employees through
Performance Over Time incentive, we are implementing our commitment to
fostering a work environment that is free from harassment of any kind as well
as oensive or disrespectful conduct. Other examples include providing, when
possible, an equal number of female and male candidates for job interviews to
reduce possible bias, and we have started tracking recruitment diversity metrics
on gender, race, disability, and veteran status.
Gender Jun-19 Dec-19 Dec-20 Dec-21
Male
87% 78% 76% 76%
Female
13% 22% 24% 24%
Human Resource
Information System
In 2019, Atlantic Sapphire implemented a
centralized Human Resource Information
System (“HRIS”) and lifecycle experience
process. Through this process, every new hire
is onboarded into Atlantic Sapphire with the
principle of setting them up for success through
alignment with our values, our vision, and our
Code of Conduct as well as our environmental
and social management systems.
To further ensure their success, all
employees are guided into our performance
development program. Here, employees
dene goals and targets subject to a yearly
performance review and development
conversation with their managers.
Employees also provide feedback on
other peers. We saw increased employee
engagement in 2021 over prior years.
In December 2021, 94% of employees
completed the performance review tool, an
increase from 75% in March 2020.
Employees and our temporary workforce
are updated on a weekly basis with respect
to the Group’s status and the biological
performance of our salmon. Other regular
communications informing employees on
vacancies, healthcare, safety, production,
and maintenance are shared centrally
through our internal communication tool.
In addition to this, management maintains
regular communication and update
meetings. As part of driving further
recommendations from improvement
and growth, grievance mechanisms and
suggestion boxes have been actively
promoted and solutions have been
communicated and updated to all
employees through our centralized channel.
Atlantic Sapphire understands that the core
of the success is the ability from our team
members and partners to perform. In 2021,
Atlantic Sapphire enhanced its Atlantic
Sapphire Academy to further support
development and growth of our employees
from a technical, managerial and leadership,
and a common perspective to all our
employee competence programs.
59
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Engaging Local
Communities
By pioneering full-cycle salmon farming
on land, Atlantic Sapphire is spearheading
the development of an entire new industry.
Building and maintaining its social license
to operate is a critical success factor.
Our stakeholder engagement is based on
open communication with neighbors and
other stakeholders to promote sustainable
production of salmon, to create quality
jobs, and to educate communities on the
importance and possibilities of aquaculture.
Both in Denmark and the US, our Group
organizes visits to the farm by schools,
university students, researchers, local
neighbors, and authorities wanting to
learn about Atlantic Sapphire’s operations.
Group employees have also collaborated
with universities and presented in classes
in dierent academic elds related to
the business. In Miami, an area of our
Bluehouse is specially designed to receive
visitors and provide tours through the
facilities without interrupting operations or
compromising safety. This facility design
provides unparalleled transparency into our
operations for the community and includes
a reception room for presentations, and
walkways with windows overlooking various
stages of the salmon growth cycle. In
2021, visitors had to be limited due to the
COVID-19 pandemic. However, we intend to
resume tours of the Miami Bluehouse once
a normal situation resumes.
Despite the Pandemic, we engaged with the
South Dade Chamber of Commerce, Miami
Waterkeeper, and the University of Miami-
where over 70 students carried out research
projects on Atlantic Sapphire as part of
their curriculum.
The Group has always participated in
local events in support of the community
and local economic development. During
the Pandemic, we reached out to several
community organizations to help reduce
their tremendous suering due to combined
impacts of the Pandemic and its economic
consequences, especially among the local
agricultural community. We all found it
immensely rewarding to help others in need
and to remind ourselves of the positive
outcomes achieved when we come together
to support each other in a crisis.
During 2021, Atlantic Sapphire supported several causes that are close to our mission and
also spoke of our commitment to improve the lives of consumers and communities around us.
For instance, we donated our healthy salmon to the Homestead Soup Kitchen and to Camillus
House, making an impact upon those in need. We have also contributed to the South Florida
Special Olympics organization as we strive to push forward a society that values inclusion
and diversity.
Atlantic Sapphire partners with Omhu, an organization that is a leader in conservation, in
Hvide Sande, Denmark. We share and support their beach cleanup eorts and their mission
to educate young people on sourcing seafood sustainably, where students continue to learn
about the UN’s goals to keep life below water thriving.
Atlantic Sapphire continues to extend its stakeholder engagement plan that includes
educational activities for students from schools and universities, researchers, NGOs, and the
public. It also includes participation in local events whose principles and objectives align
with the Group’s values, such as initiatives focused on the oceans.
60
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
“ Our workforce is full of passionate
and innovative leaders who are
empowered to do their best work through
our core values. At Atlantic Sapphire,
we believe in lifelong learning and investing
in the training, development, and total
wellbeing of our employees. We foster
a culture of open communication and
engagement that supports professional
goals and opportunities together
with diversity and inclusion. ”
Valerie Leath: Supporting our employees and investing in their success
Director, HR and Benets
Selected Targets
for 2022
Diversity
•
5% improvement in the share of female employees
represented company-wide
Occupational Health & Safety
•
Experience zero fatalities or serious work-related injuries
•
Reduce number of Lost Time Incidents to 2.51
Training and Education
•
Minimum 40 hours of training and development for new
employees through our Atlantic Sapphire Academy
•
Minimum 20 hours of training and development per
employee per year through our Atlantic Sapphire Academy
•
25% of employees to complete management
development training
•
Develop clear career development paths and focus on
recruitment to provide more high-quality jobs in the rural
areas where we operate
Community Engagement
•
Support local community development, increasing the
number of involvements with community organizations
•
Introduce a company-wide
Atlantic Sapphire Impact Day
where employees engage in non-prot, volunteer work
Selected Targets
for 2025
Diversity
•
Minimum 30% women in management roles
Occupational Health & Safety
•
Lost Time Incident number of 0.95
61
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Ailiations and Recognition
We are committed to continuous improvement in our
operations, and the pursuit of our sustainability goals.
We aim for transparency and ongoing engagement
with our stakeholders, including customers, seafood
industry colleagues, as well as the local and global
community in which we serve. Selected stakeholder
ailiations, endorsements, and voluntary initiatives
are listed below:
12
12
All logos, registered trade, and service marks are used for supporting informative
purposes only and are property of their respective owners.
Top 25
Seafood Sustainability
and Conversion
Star of Innovation
European Small
and Mid-Cap Awards
Recommended
Ocean Wise
Recommended
USA Raised
Grown and Harvested
Fresh from Florida
Heart Healthy
American Heart Association
Hearth-Check Certied
Participant
UN Global Compact
Partner
NASDAQ ESG
Transparency
62
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
About
This Report
This ESG Report covers the relevant and signicant ethical,
social, and environmental issues for the nancial year 1 January
to 31 December 2021 of Atlantic Sapphire ASA. This represents
Atlantic Sapphire’s second ESG report, which we intend to publish
annually. The ESG Report provides our stakeholders with an
overview of this years’ ESG performance, complementing our
Annual Report, which primarily covers nancial and economic
performance. It complies with the statutory reporting requirements
of the Norwegian Supervisory Authority (“Finanstilsynet”) and
those for companies listed on the Oslo Stock Exchange regarding
corporate social responsibility, as well as in accordance with the
Norwegian Accounting Act (“Regnskapsloven”) and the Norwegian
Corporate Governance Code. The ESG Report also shows Atlantic
Sapphire’s Communication on Progress to the UN Global Compact
and represents the Group’s commitment to the principles of the
UN Global Compact and its endeavor to impact the Sustainable
Development Goals.
This report has been prepared in accordance with the Global
Reporting Initiative (“GRI”) Standards: Core option. The analysis
in 2021 of material ESG topics and stakeholder expectations
has informed the content of this report. It has been prepared on
the basis of the GRI reporting principles and guidance on topic
boundaries, considering for each topic where the impact occurs
and Atlantic Sapphire’s involvement with the impacts (for example,
if the Group caused or contributed to an impact, or is it directly
linked through its business relationships). The GRI Content Index at
the end of this report provides references to sections in this report
where GRI disclosures are presented.
Atlantic Sapphire continues to work on improving data quality
and related processes to enhance reporting and comprehensive
disclosure going forward. Unless otherwise stated, data and
statements in this report cover Atlantic Sapphire’s activities in
Norway, Denmark, and the US.
We welcome feedback and recommendations on our sustainability
eorts as they ensure that we fully understand, maintain up to date,
and communicate our key issues accordingly. Feedback or questions
on this ESG Report should be sent to esg@atlanticsapphire.com.
63
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
GRI Content Index
GRI Standard Disclosure Page Number / Comment
GRI 102 GENERAL DISCLOSURE
102-1 Name of organization
7
102-2 Activities, brands, products, and services
10
102-3 Location of headquarters
7
102-4 Location of operations
7
102-5 Ownership and legal form
7
102-6 Markets served
7
102-7 Scale of the organization
7
102-8 Information on employees and other workers
7, 54
102-9 Supply chain
10, 29
102-10 Signicant changes to the organization and its supply chain
12
102-11 Precautionary Principle or approach
None
102-12 External initiatives
21-23
102-13 Membership of associations
61
Strategy
102-14 Statement from senior decision-maker
4, 5
102-15 Key impacts, risks, and opportunities
13, 14, 15, 25, 26
Ethics and Integrity
102-16 Values, principles, standards, and norms of behavior
17-24
102-17 Mechanisms for advice and concerns about ethics
44
Governance
102-18 Governance structure
7
102-19 Delegating authority
17, 18
102-20 Executive-level responsibility for economic, environmental, and social topics
17, 18
102-21 Consulting stakeholders on economic, environmental, and social topics
29
64
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
GRI Content Index
GRI Standard Disclosure Page Number / Comment
GRI 102 GENERAL DISCLOSURE
Stakeholder Engagement
102-40 List of stakeholder groups
29
102-41 Collective bargaining agreements
None
102-42 Identifying and selecting stakeholders
29
102-43 Approach to stakeholder engagement
29
102-44 Key topics and concerns raised
29
Reporting Practice
102-45 Entities included in the consolidated nancial statements
7
102-46 Dening report content and topic Boundaries
25
102-47 List of material topics
25
102-48 Restatements of information
There is no restatement of ESG information.
102-49 Changes in reporting
There are no signicant changes from the
prior report in the list of material topics and
topic boundaries.
102-50 Reporting period
Fiscal year 31 December 2021
102-51 Date of most recent report
Half-year 30 June 2021
102-52 Reporting cycle
Annual
102-53 Contact point for questions regarding the report
esg@atlanticsapphire.com
102-54 Claims of reporting in accordance with the GRI Standards
62
102-55 GRI Content Index
63-66
102-56 External assurance
We have not obtained assurance for this
ESG report.
65
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
GRI Content Index
GRI Standard Disclosure Page Number / Comment
GRI 103 MANAGEMENT APPROACH
103-1 Explanation of the material topic and its Boundary
22, 23, 25, 26
103-2 The management approach and its components
17, 18
103-3 Evaluation of the management approach
17, 18, 25, 26, 44
GRI 201 ECONOMIC PERFORMANCE
201-1 Direct economic value generated and distributed
41
201-2
Financial implications and other risks and opportunities
due to climate change
42
201-4 Financial assistance received from government
43
GRI 203 INDIRECT ECONOMIC IMPACTS
203-1 Infrastructure investments and services supported
41
203-2 Signicant indirect economic impacts
41
GRI 205 ANTI-CORRUPTION
205-2
Communication and training about anti-corruption policies and
procedures
44
205-3 Conrmed incidents of corruption and actions taken
We are not aware of any incidents of
corruption during the nancial year.
GRI 206 ANTI-COMPETITIVE BEHAVIOR
206-01
Legal actions for anti-competitive behavior, anti-trust,
and monopoly practices
We are not aware of any legal action for such
breaches during the nancial year.
GRI 302 ENERGY
302-1 Energy consumption within the organization
46
302-4 Reduction of energy consumption
46
GRI 303 WATER
303-1 Interactions with water as a shared resource
48, 49, 50
303-2 Management of water discharge-related impacts
48, 49, 50
303-3 Water withdrawal
48, 49, 50
66
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
GRI Content Index
GRI Standard Disclosure Page Number / Comment
303-4 Water discharge
48, 49, 50
303-5 Water consumption
48, 49, 50
GRI 304 BIODIVERSITY
304-2 Signicant impacts of activities, products, and services on biodiversity
51
GRI 306 EFFLUENTS & WASTE
306-1 Water discharge by quality and destination
50
GRI 307 ENVIRONMENTAL COMPLIANCE
307-1 Non-compliance with environmental laws and regulations
We are not aware of any non-compliance with
environmental laws and regulations.
GRI 403 OCCUPATIONAL HEALTH & SAFETY
403-2
Types of injury and rates of injury, occupational diseases, lost days,
and absenteeism, and number of work-related fatalities
57
GRI 404 TRAINING & EDUCATION
404-3
Percentage of employees receiving regular performance and career
development reviews
58
GRI 405 DIVERSITY & EQUAL OPPORTUNITY
405-1 Diversity of governance bodies and employees
17, 58
GRI 406 NON-DISCRIMINATION
406-1 Incidents of discrimination and corrective actions taken
We have not encountered any incidents of
discrimination within the Group in 2021.
GRI 413 LOCAL COMMUNITIES
413-1
Operations with local community engagement, impact assessments,
and development programs
61
GRI 416 CUSTOMER HEALTH & SAFETY
416-2
Incidents of non-compliance concerning the health and safety impacts
of products and services
We are not aware of any non-compliance with
health and safety standards for our products.
67
ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The following table provides an overview of the UNGC principles and the page(s) each principle is covered in the report.
Human Rights Read more on page
1
Business should support and respect the protection of internationally proclaimed
human rights; and
19, 20
2
Make sure that they are not complicit in human rights abuse
19, 20
Labor Standards Read more on page
3
Businesses should uphold the freedom of association and the eective recognition
of the right to collective bargaining,
19
4
The elimination of all forms of forced and compulsory labor;
19
5
The eective abolition of child labor; and
19
6
The elimination of discrimination in respect of employment and occupation.
19
Environment Read more on page
7
Businesses should support a precautionary approach to environmental challenges;
45-52
8
Undertake initiatives to promote greater environmental responsibility; and
45-52
9
Encourage the development and diusion of environmentally friendly technologies
45-52
Anti-corruption Read more on page
10
Businesses should work against corruption in all its forms, including extortion
and bribery.
44
United Nations Global
Compact Table
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ATLANTIC SAPPHIRE’S ESG PRIORITIES ANNUAL REPORT 2021ATLANTIC SAPPHIRE
04
04
Group
Results
ATLANTIC SAPPHIRE’S ESG PRIORITIES
69
BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Board of
Directors’ Report
70
BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
To our stakeholders,
Atlantic Sapphire ASA (“ASA”) is a Norwegian company
headquartered in Vikebukt, Norway and listed on the Oslo Stock
Exchange with the ticker symbol ASA. ASA owns the following
subsidiaries (collectively, “Atlantic Sapphire” or the “Group”):
• Atlantic Sapphire Denmark A/S (“ASDK”,
registered in Hvide Sande, Denmark)
• Atlantic Sapphire USA LLC
(“ASUS”, registered in Miami, Florida, US)
• AS Purchasing, LLC
(“ASP”, registered in Miami, Florida, US)
• S.F. Development, L.L.C.
(“ASSF”, registered in Miami, Florida, US)
• Atlantic Sapphire IP, LLC
(“ASIP”, registered in Miami, Florida, US)
The Group owns and operates land-based Atlantic salmon farms
in Hvide Sande, Denmark (the “Denmark Bluehouse” facility)
and Homestead, Florida, US (the “Miami Bluehouse” facility). A
Bluehouse® facility (the “Bluehouse”) is proprietary production
technology developed by the Group in collaboration with a wide
range of supply chain partners to optimize growing conditions for
Atlantic salmon. Each Bluehouse contains the facilities needed to
grow and produce Atlantic salmon from egg hatchery to grow-out
tanks to primary processing. The Miami Bluehouse also incorporates
value-added processing. Consolidated operations enable the Group
to control the entire production cycle without having to transport
salmon to and from ocean-based net pens. The Denmark Bluehouse
(prior to the September 2021 re) and the Miami Bluehouse (Phase
1) have annual production capacities of approximately 2,400 tons
HOG
1
and 9,500 tons HOG, respectively.
Strategy and Objectives
The Group’s goal is to strengthen its position as the leading
producer of land-based farmed salmon globally. To achieve this
objective, the Group intends to focus on innovation and execution
of the following key strategies:
• Reduce cost by developing integrated facilities in market.
• Capitalize on consumer trends and branding towards premium,
healthy, and sustainable products.
• Develop and protect patents and other intellectual property rights
related to the Bluehouse facilities.
• Expand production capacity at the Miami Bluehouse to
approximately 220,000 tons HOG annually by 2031.
• Partner in vertical integration opportunities including value-added
products, genetics, feed, renewable energy, sustainable
packaging, and oxygen production.
Farm Operations
Substantial completion of US Phase 1 Bluehouse allows for ne-tuning
of systems and stable production. Towards the second half of 2021,
the US Phase 1 Bluehouse saw signicant improvements in overall
operational conditions, including water quality and temperatures,
and has seen stable operations after a long period of commissioning
eorts and construction challenges. These eorts help set the stage
for continued good biological performance in 2022.
Ramp-up in US operational performance: US batches introduced
into the US Bluehouse from mid-2020 (the “New Batches”) have
experienced more stable conditions in comparison to the US
Phase 1 start-up initial batches introduced prior to mid-2020. As
a result, the New Batches continued to show improved biological
performance throughout 2021 when compared to the initial batches.
The New Batches show no signs of maturation and are in line with
the Group’s 2022 budget.
The Group has focused on and invested in risk mitigation strategies
to address key operational and systemic risks. The creation of the
Facilities Operation Advisory Board was an outcome of the Group’s
risk mitigation process and was developed to prevent future incidents
by creating a group of highly experienced employees to review and
approve all nonstandard procedures. The Group continues to invest
in risk mitigation strategies in all areas of its business.
Improvements were made to the US Bluehouse’s temporary chiller
system in 2021. The temporary chillers were connected to the
commercial electrical grid, which decreased operational risk,
environmental impact, and achieved signicant nancial savings. The
temporary power solution will be completely phased out once the
Group completes construction of the new chiller plant as part of the
Group’s ongoing Phase 2 expansion.
1
HOG – “Head-On-Gutted” sh, a term used industry-wide, is approximately 83% of live weight sh.
71
BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The Group saw increased pressure on its supply chain throughout
2021 due to the global supply chain crisis and high ination rates
in the global economy generally, and in South Florida specically.
To mitigate production cost increases as best as possible, the
Group actively reviews and adjusts its procurement strategy. To
demonstrate the Group’s ongoing commitment to controlling
production costs, the Group entered into an agreement with its feed
supplier Skretting as discussed below.
The Group and its global feed supplier, Skretting, have entered
into an agreement to secure local feed supply. Skretting intends to
construct a specialized state-of-the-art feed plant for land-based
salmon in Florida to serve the Group’s US operations with market-
leading feeds specialized for Bluehouse farming. A local feed
plant will minimize the carbon footprint of transporting the feed to
the facility, and is expected to cut the Group’s logistics cost, and
thereby its cost of production, by approximately USD 0.3/kg HOG.
Processing
The Group increased its total harvest volume in 2021 to 2,374t
HOG. When compared to 2020, this is an incremental 1,385t HOG
harvested. As the Group continues to reach steady-state operations
in 2022, the Group is expected to continue to increase
harvest volumes.
Sales and Marketing
The Group has worked for more than seven years to position
itself with strong relationships with retailers, food service players,
distributors, and other selected partners.
Since September 2020, the Miami Bluehouse has been harvesting
every week, and currently supplies approximately 2,000 retail
locations with continued strong demand for locally raised salmon in
the US.
For the year ended 31 December 2021, premium Bluehouse
Salmon consistently achieved an average US price achievement
of approximately 12 USD / kg on a return to farm basis (net of
outbound freight costs) for sh graded as superior and above 3kg.
In comparison, the commodity Fishpool index price during the same
period, converted to USD, averaged approximately 7 USD / kg.
Brand Development
The Group has taken strides to promote brand awareness and
recognition with the purpose of generating product desirability,
gaining strong traction from mainstream media of public relations
eorts, and supporting a price premium via dierentiated attributes
and communication of environmental benets.
The Group has continued to promote our mission of Sustainable
Protable Growth by being relevant and top of mind, meeting
consumers at the point of sale, and engaging consumers with
social media and education. We have found that such methods
have been successful in achieving consumer engagement above
benchmark levels.
Construction
US Phase 2 construction is focused on optimizing quality, reliability,
and eciency, while taking advantage of all previous learnings from
US Phase 1 construction and has taken various steps to achieve
such focus. First, the Group determined appropriate stang levels
to meet the demands of a large-scale project. Contrary to when the
US Phase 1 construction project was started, the Group now has a
large in-house team responsible for US Phase 2 construction and is
therefore no longer heavily dependent on third party professionals.
Further, we changed the project approach to optimize quality and
eciency. The Group strategically partnered with Hazen & Sawyer,
an engineering company with extensive and proven experience in
designing large scale US wastewater projects, as our US Phase 2
construction design consultants. The Group also selected
Wharton-Smith, a construction contractor with vast experience
on water facilities, as our construction partner who has worked
together with Hazen & Sawyer on numerous water treatment
infrastructure projects.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Subsequent Events
The Group has evaluated subsequent events from 31 December 2021
through the date in which the consolidated nancial statements were
issued (see Note 23 – Subsequent Events for further details).
On 3 March 2022, ASUS terminated its Suite 2400 oce lease
ahead of the original lease term. In connection with the early lease
termination, ASUS agreed to pay approximately USD 280k, which
consisted of USD 120k in the equivalent of three-monthly rent
installments and USD 160k in commissions and other
administrative costs.
On 31 March 2022, the Group’s 2020 Credit Facility was amended
to provide an additional three-month credit facility in an aggregate
amount of up to USD 25m (the “Facility”) as a next step towards a fully
nanced US Phase 2 Construction with DNB Capital, LLC as lender.
The Facility will be secured by a second priority security interest and
lien on all assets and equity interests held by the Group and carries
an annualized borrowing rate of LIBOR plus an applicable margin of
7.0% from 31 March 2022 to 30 April 2022, 7.5% from 1 May 2022
to 31 May 2022, and 8.0% from 1 June 2022 to 30 June 2022. The
Facility provides the Group with additional liquidity while the details
of the overall long-term nancing are being nalized. Further, the
Group’s minimum EBITDA covenant was adjusted towards all credit
facilities, and a limited waiver was provided in this respect until
30 June 2022.
Currently, the Group and DNB, as Administrative Agent on behalf
of the Lenders (DNB and Farm Credit), are working on an additional
amendment of the 2020 Credit Facility which is expected to be
Intellectual Property Rights
The Group, through its direct, wholly owned subsidiary Atlantic Sapphire IP, LLC, owns and controls intellectual property. This intellectual
property includes, but is not limited to, patents, proprietary information, and applications that in the aggregate are material to the Group’s
business. The Group holds, and continues to seek and protect, numerous patents, trade secrets, or other intellectual property rights covering
its processes, designs, or inventions in general.
nalized prior to 30 June 2022. The provisions of the amendment
are expected to provide an extension of maturity dates, access
to additional borrowings, and revised terms such as updated
nancial covenants.
On 1 April 2022, the Danish police (Midt- og Vestjyllands Politi)
announced that their investigation on the 15 September 2021
Denmark Bluehouse re was concluded. Their conclusion was that the
cause of the re was inconclusive, and they further stated that there
was no evidence of arson in connection with the incident. The Group
will continue nalizing the insurance claim process and its future plans
for ASDK. The Group expects to recover USD 33m, the full book value
of the Danish facility insured against the re, less the value of the
assets that were unaected, and subsequently booked the insurance
claim receivable in 2022.
Group Financial Performance
Going Concern
The Board conrms that it is appropriate to prepare the Annual
Report based on a going concern assumption pursuant to section
3-3a of the Norwegian Accounting Act. This conrmation is based
on the Group’s forecasted performance in 2022 and the Group’s
plans to receive external nancing to support funding of the Phase
2 expansion.
Patent title
Geographical
area
Application
number
Patent
number Issued
Expiration
date
Systems and Methods of Intensive Recirculating Aquaculture US
15/867,100 10,034,461
Issued on
31 July
2018
17 May
2036
Systems and Methods of Intensive Recirculating Aquaculture US
15/157,296 10,694,722
Issued on
30 June
2020
17 May
2036
Grading Apparatuses for Aquaculture Systems US
15/862,573 10,959,411
Issued on
30 March
2021
4 January
2038
The Group is currently working on numerous other patent applications which are currently pending.
73
BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Group net loss for the years ended 31 December 2021 and 2020
was USD 132.8m and USD 55.2m, respectively, which represents
a USD 77.6m increase in net losses over the prior year. Overall,
the Group increased revenues from the continuation of its US
harvests and experienced increased costs from its ramp-up of
operations, write-down of production costs from biomass incidents
and underutilized plant capacity, and recognition of an impairment
allowance for non-current assets following the September 2021
Denmark Bluehouse re.
(USD 1,000)
31 December
2021
31 December
2020
Change
in USD
As a %
of 2021
revenue
As a %
of 2020
revenue
Revenue
16,851 6,270 10,581 100% 100%
Cost of materials
Fair value adjustment on biological assets
Salary and personnel costs
Other operating expenses
Impairment of non-current assets
Depreciation and amortization
Operating loss (EBIT)
Finance income
Finance expense
Loss before income tax benet
Income tax benet
Net loss
Non-IFRS measures
Operating loss (EBIT)
Add back: depreciation and amortization
EBITDA
Add back: fair value adjustment on biological assets
Add back: impairment of non-current assets
EBITDA, adjusted
(65,607)
1,429
(10,584)
(24,572)
(34,754)
(15,056)
(132,293)
3,362
(3,847)
(132,778)
-
(132,778)
(132,293)
15,056
(117,237)
(1,429)
34,754
(83,912)
(18,169)
(9,478)
(7,448)
(11,025)
-
(6,745)
(46,595)
889
(9,487)
(55,193)
-
(55,193)
(46,595)
6,745
(39,850)
9,478
-
(30,372)
(47,438)
10,907
(3,136)
(13,547)
(34,754)
(8,311)
(85,698)
2,473
5,640
(77,585)
-
(77,585)
(85,698)
8,311
(77,387)
(10,907)
34,754
(53,540)
-389%
8%
-63%
-146%
-206%
-89%
-785%
20%
-23%
-788%
0%
-788%
-785%
89%
-696%
-8%
206%
-498%
-290%
-151%
-119%
-176%
0%
-108%
-743%
14%
-151%
-880%
0%
-880%
-743%
108%
-636%
151%
0%
-484%
Revenue and Harvest Volume
The Group’s revenue for the years ended 31 December 2021 and
2020 was USD 16.9m and USD 6.3m, respectively, which represents
a USD 10.6m increase over the prior year. The Group’s harvest
volumes for the years ended 31 December 2021 and 2020 were
2,374 and 989 tons HOG, respectively, which represents a 1,385-ton
HOG increase from prior year. The higher harvest gures in 2021
in comparison to 2020 were primarily attributed to the ramp-up
of US production oset by biomass incidents and the Denmark
Bluehouse re in 2021. The revenue volume increase from 2020 to
2021 was primarily attributed to the commencement of US harvest
from the Miami Bluehouse in Q3 2020 and overall higher sales price
achievement in the US than in Denmark during 2020 and 2021.
Group Operations
Below are the Group’s consolidated statements of operations for the years ended 31 December 2021 and 2020:
The Group believes it has sucient nancing to achieve steady-
state biomass and generate positive cash ow from operations.
As it relates to US Phase 2 expansion, additional nancing will be
needed, however, the Group has full discretion over the speed of
the construction which allows the Group to better manage liquidity.
On 31 March 2022, the Group’s 2020 Credit Facility was amended
to provide an additional three-month credit facility in an aggregate
amount of up to USD 25m (the “Facility”) as it nalizes the details of
its fully nanced US Phase 2 Construction.
Currently, the Group and its lenders are working on an additional
amendment of the 2020 Credit Facility which is expected to be
nalized prior to 30 June 2022. The provisions of the amendment
are expected to provide an extension of maturity dates, access to
additional borrowings, and revised terms such as updated nancial
covenants. Although unlikely, there would be a breach of nancial
covenants if the Credit Facility is not updated prior to 30 June 2022
to reect updated projections. See Note 23 – Subsequent Events
for further details.
74
BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Cost of Materials
The Group’s cost of materials for the years ended 31 December
2021 and 2020 was USD 65.6m and USD 18.2m, respectively, which
represents a USD 47.4m increase over the prior year. The increase
in the Group’s cost of materials was attributed to the 2021 biomass
incidents that ultimately resulted in a USD 12.1m total write-o (USD
4.4m and USD 7.7m in Denmark and US, respectively) versus the 2020
biomass incidents that resulted in USD 8.4m total write-o (USD
2.8m and USD 5.6m in Denmark and US, respectively). ASUS’s initial
batches carried higher costs due to underutilization of plant capacity
as operations were ramping up which continued from 2020 to 2021.
Fair Value Adjustment on Biological Assets
The Group’s fair value adjustment on biological assets for the
years ended 31 December 2021 and 2020 was a positive fair
value adjustment of USD 1.4m and negative fair value adjustment
of USD 9.5m, respectively, which represents a positive USD 10.9m
year-over-year change. The positive fair value adjustment in 2021
was primarily attributed to the realization of cost of materials from
ASUS’s initial batches recognized as either sold or written o
through cost of mortality.
Salary and Personnel Costs
The Group’s salary and personnel costs for the years ended
31 December 2021 and 2020 were USD 10.6m and USD 7.4m,
respectively, which represents a USD 3.2m increase over the prior
year. The increase was attributed to the overall ramp-up in US
operations of which outsourced labor increased by USD 2.4m and
overall head count increased by 35 year over year.
Other Operating Expenses
The Group’s other operating expenses for the years ended 31
December 2021 and 2020 were USD 24.6m and USD 11.0m,
respectively, which represents a USD 13.6m increase over the prior
year. The increase was primarily attributed to USD 11.0m in short-
term costs including temporary chiller leases and generator fuel and
supplies attributed to a breakdown in ASUS’s internal chiller plant
causing temporary temperature instability.
Impairment of Non-Current Assets
The Group recognized an impairment allowance of USD 34.8m
for the year ended 31 December 2021 attributed to a re that
broke out in the Denmark Bluehouse on 15 September 2021 that
destroyed substantially all property, plant, and equipment related
to its saltwater ongrowing systems. Although the Group believed
that the insurance claim was probable as of 31 December 2021,
the Group was not virtually certain of the insurance claim prior to
the subsequent conclusion of the police report on 1 April 2022
indicating that there was no evidence of arson. As such, the Group
did not recognize an insurance claim receivable as of 31 December
2021. While the insurance claim process remains ongoing, the
Group expects to recover approximately USD 33m, the full book
value of the Danish facility insured against the re, less the value
of the assets that were unaected, and subsequently booked the
insurance claim receivable in 2022. See Note 9 – Property, Plant,
and Equipment and Note 23 – Subsequent Events for further details.
Depreciation and Amortization
The Group’s depreciation and amortization for the years ended
31 December 2021 and 2020 was USD 15.1m and USD 6.7m,
respectively, which represents a USD 8.4m increase over the
prior year. The increase in depreciation was primarily attributed to
further commissioning of sh systems in the Miami Bluehouse and
depreciation from changes in biomass.
Financial Items
The Group’s nancial losses for the years ended 31 December
2021 and 2020 were USD 0.5m and USD 8.6m, respectively, which
represents a USD 8.1m decrease of nancial losses over the prior
year. The decrease in nancial losses was primarily attributed to the
one-time USD 8.2m nance cost write-o of previously unamortized
debt issuance costs in 2020.
Group Financial Position
The Group’s total assets as of 31 December 2021 and 2020 were
USD 311.7m and USD 321.0m, respectively, which represents a USD
9.3m decrease compared to the prior year. The decrease is primarily
driven by capital expenditures in connection with US Phase 2
construction of the Miami Bluehouse (USD 43.7m) oset by the
USD 34.8m impairment allowance on the Denmark Bluehouse, and
continued ramp-up and sale of biological assets.
The Group’s total equity as of 31 December 2021 and 2020 were
USD 239.6m and USD 255.5m, which represents a decrease of USD
15.9m compared to prior year. The decrease was primarily attributed
to proceeds of the 10 September 2020 and 3 June 2021 capital
raises oset by net losses.
The Group completed capital raises on 10 September 2020 for
NOK 905.5m (USD 100.4m) and on 3 June 2021 for NOK 1,016m
(USD 121m). As of 31 December 2021, 91,048,551 shares were issued
and outstanding.
The Group’s total liabilities as of 31 December 2021 and 2021
were USD 72.2m and USD 65.5m, respectively, which represents
an increase of USD 6.7m compared to prior year. The increase
is primarily attributed to an increase amount of trade and other
payables in current year versus prior year.
The Group’s debt to equity ratio as of 31 December 2021 and 2020
was 30.1% and 25.6%, respectively, which represents an increase of
4.5% compared to prior year. The increase was primarily attributed
to a relatively steady amount of debt in comparison to the increase
in accumulated net losses from 2020 to 2021.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
On 18 April 2020, ASUS obtained a two-year loan payable to PNC
Bank, National Association (“PNC”) under the Paycheck Protection
Program (the “Program”) as part of the Coronavirus Aid, Relief, and
Economic Security (“CARES”) Act passed in March 2020 (the “PPP
Loan”). The full outstanding amount on the PPP Loan was forgiven
under the Program on 7 September 2021.
As of 31 December 2021, the 2020 Credit Facility totaled USD 200m
of which USD 102m was committed and USD 98m uncommitted
through an accordion facility. Of the committed amounts, USD
50m was outstanding as of 31 December 2021. Remaining undrawn
committed amounts consist of a USD 16m US revolving credit facility
(“RCF”), USD 4m DK RCF, and USD 32m committed term loan for
Phase 2 capital expenditures. Further, the Lenders allowed a portion
of the US RCF and DK RCF to be used as standby Letters of Credit
towards equipment nancing.
Group Cash Flows
Group cash outows from operations for the years ended 31
December 2021 and 2020 were USD 67.9m and USD 47.0m,
respectively, which represents an increase in cash outows of USD
20.9m over the prior year. The increase in Group cash outows from
operations was primarily due to continued biomass buildup in the
US, and the write-down of production costs from biomass incidents
and underutilized plant capacity. The primary dierence between
the Group’s 2021 net loss and net cash outows from operations is
attributed to the non-cash xed asset impairment and depreciation
and amortization.
Group cash outows from investing activities for the years ended
31 December 2021 and 2020 were USD 57.9m and USD 60.9m,
respectively, which represents a decrease in cash outows of USD
3.0m over the prior year. The decrease in Group cash outows from
investment activities was primarily attributed to the shift from US
Phase 1 to Phase 2 construction of the Miami Bluehouse.
Group cash inows from nancing activities for the years ended
31 December 2021 and 2020 were USD 114.9m and USD 112.0m,
respectively, which represents an increase of USD 2.9m over the
prior year. The increase in Group cash inows from nancing
activities was primarily attributed to the proceeds from the 2021
capital raise in comparison to those from the 2020 capital raise.
Although the Group’s overall 2021 liquidity was lower than that
of 2020, the Group believes it has access to additional nancing
until steady-state biomass is achieved to provide cash inows from
operations. Subsequently on 31 March 2022, the Group amended
its 2020 Credit Facility to provide an additional USD 25m in debt
nancing and is actively working with its banks towards additional
borrowings (see Note 23 – Subsequent Events).
Parent Company Operations
For the years ended 31 December 2021 and 2020, ASA generated
revenue of NOK 10.9m (USD 1.3m) and NOK 10.1m (USD 1.1m),
respectively, mainly related to management fee income from the
Group entities. For the years ended 31 December 2021 and 2020,
ASA had a net loss of NOK 328.7m (USD 38.2m) and NOK 8.1m
(USD 861k), respectively, which was primarily attributed to nancial
income and expense generated from intercompany loans to the
Group entities and in 2021, a write-down of ASA’s investment in
and receivables from ASDK following the September 2021 re.
As of 31 December 2021 and 2020, ASA’s total assets were NOK
3,680.8m (USD 417.7m) and NOK 3,006.4m (USD 350.5m), of which
NOK 3,560.6m (USD 404.1m) and NOK 2,855.4m (USD 332.9m)
were related to shares and loans to Group entities. ANSO’s debt to
equity ratio as of 31 December 2021 and 2020 was 0.1% and 0.0%,
respectively.
Related Party Transactions
During the ordinary course of business, the Group engages in
certain arm’s length transactions with related parties.
During the ordinary course of business, Langsand Processing AS
(“LPAS”), a related party, provides harvesting services for ASDK.
Although the Group holds a minority ownership interest in LPAS,
the Group does not hold control over LPAS for consolidation
purposes. For the years ended 31 December 2021 and 2020, ASDK
incurred harvesting costs of USD 427k and USD 544k, respectively.
Such amounts are included as part of cost of materials in the
accompanying consolidated statements of operations.
During the ordinary course of business, the Group sells salmon
products to Platina Seafood, Inc. (“Platina”), an entity under
majority ownership by a related party of Johan E. Andreassen, the
Group’s Chairman of the Board and CEO. For the years ended 31
December 2021 and 2020, the Group sold USD 1.1m and USD 925k,
respectively, of salmon products to Platina.
The Group held a non-exclusive commercial relationship with Platina
for sales and distribution services. In exchange, Platina received a
sales commission equal to 7% of gross revenue earned on sales of
salmon purchased from the Group. For the year ended 31 December
2020, total commissions earned and paid to Platina were USD
26k, respectively, and the amounts are recognized against the
Group’s revenue in the accompanying consolidated statements of
operations. No commissions were earned and paid to Platina during
2021 and the non-exclusive commercial relationship was concluded.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Reporting Segments
US Operations
The Group’s US production facility in Homestead, Florida is located
approximately 35 miles southwest of the City of Miami, Florida.
The US operations are managed through ASUS. The land in which
the Miami Bluehouse is constructed on is owned by ASSF. Both
ASUS and ASSF are wholly owned subsidiaries of the Group. All sh
systems from US Phase 1 construction were substantially complete
as of 31 December 2021.
ASUS selected Homestead, Florida as the location for its operations
in the US because it is uniquely situated above abundant sources
of both stable fresh and saline groundwater from dierent layers of
the Florida aquifers. ASUS accesses freshwater from the Biscayne
Aquifer and saline water from the Floridan Aquifer. Discharge
wastewater from the Miami Bluehouse is sustainably disposed to
the Boulder Zone, a lower Floridan Aquifer. ASUS expects that
the use of groundwater will reduce the risk of contamination and
increase the stability in operations. ASUS has secured groundwater
infrastructure rights and received a discharge permit for 19.93 million
gallons of water per day. ASUS extracts fresh and saline water from
right below the surface and 2,000 ft, respectively. After use, ASUS
treats and disposes the water through disposal wells 3,000 ft below
the surface.
The processes and technologies used by ASUS to extract and
dispose of the water used in its operations are currently patented
through the year 2038.
Phase 1 of the Miami Bluehouse is expected to have an annual
production capacity of approximately 9,500 tons HOG and a tank
volume of approximately 66,000 m³, distributed across seven
freshwater systems (six sets of tank systems plus a hatchery) and
twelve grow-out systems (three grow-out tanks in each system),
totaling 19 independent water systems.
ASUS commenced a capacity expansion project at the Miami
Bluehouse (“US Phase 2”) in Q2 2021 that will add an additional
estimated 15,000 tons HOG of annual production capacity, for a
total capacity of approximately 25,000 tons HOG. The Group’s
goal is to achieve an annual production capacity of approximately
220,000 tons HOG by 2031.
Fish processed from the Miami Bluehouse is transported via
ground freight to most states within the US, as well as to Canada
and Mexico.
From an operational standpoint, US Phase 1 conditions have
stabilized after a long period of commissioning eorts and
construction challenges, and we continue to see the importance of
high smolt quality and avoiding stressors to ensure good biological
results in the ongrowing stage of production.
The Group established the Facilities Operation Advisory Board to
prevent future incidents by reviewing and approving all nonstandard
procedures with experts with dierent backgrounds to ensure all risk
areas are covered.
The initial US batches were exposed to suboptimal conditions due
to production happening in parallel with US Phase 1 construction.
This exposure to suboptimal conditions resulted in a negative
trickle-down eect later in their life cycle. The US batches
introduced from mid-2021 and onwards have experienced more
stable conditions and we expect these newer batches will raise
the bar on biological performance. Further, current biomass in the
ongrowing systems is being optimized to ensure consistent supply
to customers.
The Group expects to achieve steady-state US Phase 1 operations
in Q3 2022. From then onwards, US Phase 1 is expected to produce
the equivalent of 9,500 tons HOG of annualized harvest volumes in
the US.
Denmark Operations
The Group’s initial production facility in Hvide Sande, Denmark is
a wholly owned subsidiary located on the west coast of Denmark
and has been in operation since 2011. Since commencement of
operations, approximately 45 batches of Atlantic salmon were
introduced into the Denmark Bluehouse. The Denmark Bluehouse
had an annual production capacity of approximately 2,400 tons
HOG and a tank volume of approximately 17,000 m³, distributed
across twenty grow out tanks.
Danish operations in 2021 consisted of continued biomass ramp-
up following the 29 February 2020 incident. On 9 July 2021, ASDK
experienced an incident in one of its grow-out systems in the
Denmark Bluehouse that resulted in a loss of approximately 500
tons (HOG). On 15 September 2021, a re broke out in the Denmark
Bluehouse. All employees were reported safe without injuries
but substantially all property, plant, and equipment related to its
saltwater ongrowing systems and standing biomass in the ongrowing
systems were lost in the re. While the insurance claim process
remains ongoing, the Group expects to recover approximately
USD 33m, the full book value of the Danish facility insured against
the re, less the value of the assets that were unaected, and
subsequently booked the insurance claim receivable in 2022.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Principal Risks
And Uncertainties
Atlantic Sapphire is pioneering Bluehouse® (land-raised)
salmon farming, locally, and transforming protein production,
globally. As pioneers in the land-based salmon farming industry,
there are inherent challenges that arise as the Group continues
to develop and improve upon its infrastructure, technology, and
operating procedures.
The Group established its innovation center in Denmark in 2011
with a focus on developing sustainable, environmentally friendly
farming methods that enable the Group to produce at scale in
consumer end markets. Since its inception, the Group has identied
and developed strategies to mitigate key operational, systemic, and
diversication risks.
The Group faced operational risk through a fragmented
subcontractor network, a smaller internal team, rapid organizational
growth, and initial operational procedures that were yet to be
established and ne-tuned. As Atlantic Sapphire continues
to mature as a company, critical in-house systems have been
established related to design, construction, and automation.
The Group also faced systemic risk through subpar equipment that
resulted in frequent alarms (among other things), unnished design
at construction commencement, and production while constructing
in the same systems. After many challenges and a long period of
commissioning work, the Group is now experiencing stable US
Phase 1 conditions.
The Group further faced diversication risk towards potential
biomass incidents and has diligently worked in splitting its sh
systems. For example, US Phase 1 originally commissioned six
ongrowing systems with six tanks each. Today, each US Phase 1
ongrowing system has been split in two to provide twelve ongrowing
systems with three tanks each.
The successful construction of the Group’s Bluehouse facilities and
continuous improvements towards its operational procedures are
critical for Group to successfully achieve its business plan. Material
delays, cost overruns, or errors in design and execution on the Group’s
Bluehouse facilities could result in an adverse situation that may hinder
the Group’s ability to successfully achieve its business plan.
Capital Management and Financial Risk
Capital management represents the Group’s policy to assess,
acquire, and utilize its capital base eciently towards satisfactory
operations and future development of the business to foster and
maintain investor, lender, and market condence. The Group’s capital
management contemplates available alternatives, the cyclical nature
of the sh farming industry, and current socioeconomic factors.
Access to borrowings is monitored periodically and the Group
engages in dialogue continuously with its lenders.
The Group has obtained capital primarily from equity raises
and interest-bearing borrowings. The Group’s interest-bearing
borrowings requires certain nancial covenants to be maintained
and the Group was in compliance with all nancial covenants as of
31 December 2021 (see Note 19 – Borrowings).
As of 31 December 2021 and 2020, the Group’s consolidated equity
consisted of USD 239.6m and USD 255.5m, respectively, equity
share, which comprise of total equity divided by total assets, was
77% and 80%, respectively, and net interest-bearing debt, which
comprise of total interest-bearing borrowings excluding the eects
of
IFRS 16
, was USD 33.0m and USD 22.6m, respectively. The
Group’s Board of Directors considers the Group’s capital base as
adequate given the scale of its operations.
On 11 June 2020, ASA’s Board of Directors were given proxy to
increase the share capital with up to NOK 1,000,000 through the
issuance of up to 10,000,000 new shares, with a face value of NOK
0.10. On 12 May 2021, the 11 June 2020 authorization was withdrawn,
and the Group’s Board of Directors was given the authority to
increase total authorized share capital with up to NOK 1,600,000
through the issuance of up to 16,000,000 total shares, with a face
value of NOK 0.10. The authorization may be used several times
within this limit.
The Group holds nancial instruments necessary for its operations.
The Group’s principal nancial liabilities, other than interest-bearing
borrowings and excluding the eects of
IFRS 16
, consist of trade
and other payables and comprise most of the Group’s third-party
nancing. The Group’s principal nancial assets consist of trade and
other receivables, cash and restricted cash, and other investments.
The Group’s risk management is carried out by the Group’s Finance
Department. The Group is exposed to market risk, credit risk, and
liquidity risk.
Market Risk
The Group is exposed to interest rate risk and exchange rate risk.
The Group’s interest rate risk relates primarily from borrowings from
nancial institutions with variable rate interest. When possible, the
Group manages its interest rate risk by entering xed-interest loans.
The Group currently holds debt with a oating interest rate and does
not maintain a program to hedge this exposure. Changes in the
interest rate may aect future investment opportunities.
The Group’s foreign currency risk relates to the Group’s operating,
investing, and nancing activities denominated in a foreign currency.
This includes the Group’s revenues, expenses, capital expenditures, and
net investments in foreign subsidiaries. The Group’s reporting currency
is the United States dollar (“USD”), and the predominant currencies
transacted by the Group’s subsidiaries are the USD, the Norwegian
krone (“NOK”), the Danish krone (“DKK”), and the EU euro (“EUR”).
The Group manages its foreign currency risk by maintaining cash
balances in foreign denominated bank accounts, analyzing future
obligations by currency, and transferring available funds as needed.
The Group has not entered into derivative or other agreements to
reduce the exchange rate risk and the related market risk.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Credit Risk
The Group is exposed to credit risk from its operating activities,
primarily from cash and trade receivables. Cash is maintained with
major nancial institutions. Management regularly monitors trade
receivables for aging. The Group trades only with recognized and
creditworthy third parties.
The Group subjects all potential customers to credit verication
procedures as part of its policy and monitors its outstanding trade
receivable balances on an ongoing basis. Further, the Group’s trade
receivables are credit insured unless an exception is approved
by the CEO. The Group monitors exposure towards individual
customers closely and was not substantially exposed in relation to
any individual customer or contractual partner as of 31 December
2021 and 2020.
Liquidity Risk
The Group continuously monitors liquidity and nancial projections
through budgets and monthly updated forecasts. The Group’s
nancial position depends signicantly on salmon spot prices
which have historically been volatile. Other liquidity risks include
the impacts from uctuations in production and harvest volumes,
biological issues, and changes in feed prices. Feed prices generally
correlate to the marine and agricultural commodity prices of the
main ingredients.
Delays in continued construction towards the expansion of future
phases of construction of the Miami Bluehouse may aect the
Group’s ability to achieve its operational plan and full schedule
of production, thereby impacting the Group’s future business and
results of operations.
The provisions of the 2020 Credit Facility contain nancial
covenants to be maintained by the Group. As of 31 December 2021,
the Group was in compliance with all nancial covenants (see Note
19 – Borrowings).
Corporate Governance
Atlantic Sapphire believes good corporate governance is paramount
to create and maximize sustainable, long-term shareholder value
and maintain investor, lender, and market condence. The Group’s
Board of Directors (the “Board”) is responsible for the development
and implementation of internal procedures and regulations to
ensure that the Group follows applicable principles and maintains
good corporate governance. We believe that our current procedures
and regulations eected towards corporate governance are
consistent with the latest version of the Norwegian Code of
Practice for Corporate Governance. The Group has a Directors
and Ocers liability insurance policy for an aggregate of up to USD
1m of claims against all persons who were, are, or shall become
appointed directors, managers, ocers, in-house general counsel,
or controller of the Group. The Group’s assessment of the various 15
issues covered by the Norwegian Code is detailed in the Corporate
Governance section following the Board of Directors’ Report.
Board Composition
On 4 May 2020, Tone Bjørnov and Ellen Marie Sætre were elected
as new Board directors, and Bjørn-Vegard Løvik and Peter Skou
stepped down as directors. The Board’s composition remained
consistent from 2020 to 2021.
Information regarding the background and competence of the
Group’s board members is detailed later in the Annual Report and
available on Atlantic Sapphire’s website: atlanticsapphire.com.
Statement on Remuneration
of Executive Management
The Group’s Board of Directors determines the principles applicable
to the Group’s policy for compensation of executive management
and presented its statement on such principles for the 2021
nancial year during the Group’s Annual General Meeting (“AGM”)
in accordance with Section 6-16a of the Norwegian Public Limited
Liability Companies Act. The Board of Directors’ Statement on
Remuneration of Executive Management is included in Note 6 –
Salary and Personnel Costs of the Group’s notes to the consolidated
nancial statements.
Sustainability, Environmental,
and Social Responsibility
Sustainability Actions and Joining the UN
Global Compact
The Group supports the UN Sustainable Development Goals
(the “UN SDG Goals”) and sees them as a blueprint for business
leadership. Food production lies at the intersection of almost all
major global challenges encapsulated in the UN SDG Goals. The
Group believes it has a duty to nd a balance between producing
enough healthy proteins to feed the world and protecting the limited
resources of the planet. The Group joined the UN Global Compact
in support of their Ten Principles for human rights, labor, the
environment, and anti-corruption.
Environmental Responsibility
Activities from the Group’s production facilities are believed to
meet all regulatory requirements in the countries in which they
operate. For further information, please refer to the “Environmental
Responsibility” section within Atlantic Sapphire’s ESG Priorities.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Social Responsibility
Atlantic Sapphire holds the utmost respect for human rights, labor
rights and social conditions, the external environment, and anti-
corruption eorts in our business strategies insofar as it pertains to
our daily operations and our stakeholders. Accordingly, the Group’s
ESMS was built following an external review of our Environmental
and Social Management Plan (“ESMP”) for compliance with
the International Finance Corporation’s (“IFC”) Performance
Standards (“PS”) (2012), IFC Environmental, Health, and Safety
(“EHS”) Guidelines for Aquaculture (2007) and EHS General
Guidelines (2007). The Environmental and Social Management
System (“ESMS”) comprises a set of policies across a range of
ESG topics – from environment, health and safety, security and
emergency preparedness to employment conditions, rights and
obligations, grievance management, whistleblower policy, community
engagement and communication.
For the years ended 31 December 2021 and 2020, the Group
employed 166 and 159 permanent employees, respectively. No
employee work-related accidents resulting in signicant material
damage or personal injury occurred during 2021 and 2020.
The Group’s ESMS helps ensure that extensive precautionary
measures are taken to reduce risks in the working environment.
These measures include the training of its employees and a focus
on personal protective equipment and safe handling of hazardous
materials, together with systematic controls of our working
processes. The Group maintains general oversight of the health and
safety of its employees predominantly through ongoing auditing,
monitoring, and evaluation of activities to ensure compliance. The
Group actively promotes a strong safety culture with employees,
suppliers, vendors, and contractors.
The Group is an equal opportunity employer that celebrates
diversity and is committed to creating an inclusive environment for
all employees. The Group does not discriminate based upon race,
religion, color, national origin, gender, sexual orientation, gender
identity, gender expression, age, status as a protected veteran,
status as an individual with a disability, or other applicable legally
protected characteristics.
From 2020 to 2021, the Group’s share of female employees was
consistent at 24% and the share of women in all management
positions, including middle and top management, increased from
25% to 28%.
For further information, please refer to the “Social Responsibility”
section within Atlantic Sapphire’s ESG Priorities.
Outlook
US Biological Outlook
Batches introduced prior to mid-2020 (the “Initial Batches”) are
expected to continue to show mixed biological performance moving
into 2022 as they were farmed in the middle of construction
activity, which resulted in unstable conditions with water quality and
temperature uctuations. For example, these Initial Batches had a
considerably higher share of mature sh than the Group expects in
normal, stable production, which leads to lower growth, higher feed
conversion ratio and lower product quality at harvest. During H1
2022, the Group expects the remainder of the Initial Batches to be
fully harvested.
The Group is looking forward to harvesting its newer and higher
performing batches introduced into the farm after mid-2020 (the
“New Batches”) as early as Q2 2022. The US Bluehouse has seen
drastic improvement in overall biological performance in all batches
introduced after mid-2020 compared to the Initial Batches. The rst
of the newer batches, B I, has seen an approximately 35% or greater
increase in overall average growth when compared to the Initial
Batches after 15 months from being introduced into the start feed
section of the freshwater stage. All the other New Batches have been
following B I’s performance or are performing even better. To contribute
to this success, the US Bluehouse has seen improvements in overall
operational conditions (including water quality and temperatures)
and stable systems after a long period of commissioning eorts and
construction challenges. Improved biological performance is a positive
indicator that demonstrates the ability to produce high quality product
and future nancial performance.
Total biomass gain for 2021 was 3,000 tons RLW. As the New
Batches continue to grow and the Initial Batches are fully harvested,
monthly biomass gain is expected to increase gradually throughout
H1 2022 until the Group reaches approximately 4,200t RLW of
standing biomass and approximately 950t RLW of biomass gain per
month (“steady state”). The Group is expected to reach US Phase 1
steady state standing biomass during Q3 2022.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Sales and Marketing Outlook
The Group continues to invest in the development of the Bluehouse
Salmon brand and in the education of buyers and consumers.
Since our rst US harvest in September 2020, Atlantic Sapphire
has consistently achieved a revenue per kg of approximately USD
12 for sh graded as superior and above 3kg. Notably, the price
achievement has been stable despite signicant uctuations in the
salmon commodity price, proving that Bluehouse Salmon is not seen
as a direct substitute for other farmed Atlantic salmon. The product
has been met by high demand, both among existing customers and
potential new customers, giving the Group condence that premium
price achievement will be sustained.
The Group is expected to harvest around 1,000t HOG in Q2 2022.
Monthly harvest volumes are expected to increase through H2 2022
until the Group reaches steady state operations and is producing
the equivalent of 9,500t HOG of annualized harvest volumes.
Key Developments on Risk Mitigation
Atlantic Sapphire has taken large steps in minimizing operational risks,
most notably against mortality events. Bluehouse farming is designed
to produce high-quality biomass at scale. With high intensity farming
comes added complexity. Atlantic Sapphire has developed an
industry-leading experience in identifying and mitigating risks that
come with scaling RAS technologies to large size.
Today, Atlantic Sapphire is more robust than at any other point
in its past. Tangible and quantiable changes have been made in
response to historical incidents and operational experience. Recent
initiatives include:
• Operational changes in water chemistry to reduce the risk of
hydrogen sulde intoxication (H2S)
• Changes to organizational structure
• Development of protocols to mitigate supply chain risk such as
oxygen demand increases
• Streamlining of the temporary chiller system by powering them
to the commercial electrical grid, which decreases operational
and environmental risk, and achieves signicant nancial savings
• Creation of the Facilities Operation Advisory Board which draws
from internal multidisciplinary talent to scrutinize and document
non-routine activities in operations
US Phase 2 Construction
We have changed our approach on the US Phase 2 construction
project to optimize quality and eciency. In contrast to the US
Phase 1 project, we now have the appropriate stang level for
a large-scale project, we have strategically selected a design
consultant with proven experience on water facilities, and we have
partnered with a construction contractor with vast experience in
constructing water treatment facilities.
The US Phase 2 budget is estimated at USD 225m, of which USD
210m is attributed to approximately 15,000t HOG of production
expansion and USD 15m is allocated to the Group’s Grand Master
Plan initiatives that will benet subsequent buildouts. The rst sh is
expected to be introduced into the US Phase 2 systems in the start
of 2023.
Processing Plant Upgrades
The US Bluehouse is working towards building and completing
its new in-house lleting line by summer 2022 to further improve
the overall harvesting process and reduce lleting costs. The US
Bluehouse has been relying on external processing companies to
llet its product. By bringing in-house, the Group will signicantly
reduce processing costs and have better control over its product
yields and product quality.
Grand Master Plan
The Group is working on a detailed plan for the full buildout of the
160 acres of land it owns in Homestead, FL (the “Grand Master
Plan”) that is expected to be presented later in 2022. The Grand
Master Plan will include an overview of centralized functions and
a more modular approach to building out additional grow-out
capacity. These initiatives are expected to reduce the construction
time and capex/kg of new capacity in the future, as the Group
continues on its path to 220,000t HOG of harvest volume in 2031.
Outlook for Atlantic Sapphire
and its Associates
The Group expects to make a decision later in 2022 on the future
of its Danish facility following the re in September 2021. The site
in Hvide Sande with all infrastructure, permits and water allocations
is seen as a valuable aquaculture asset. Further, Atlantic Sapphire
Denmark A/S has a signicant tax loss carryforward for tax purposes.
Salmon Market Outlook
US consumption of fresh, farmed Atlantic salmon increased by a
double-digit percentage number in 2021, despite only single-digit
global supply growth, highlighting the relative attractiveness of the
US salmon market. With the Group’s otake focused on the North
American market, it is ideally positioned to take advantage of the
strong growth in demand that is expected to continue.
The global commodity market for farmed Atlantic salmon is expected
to continue to be strong for the rest of 2022, supporting the sales
eorts of the Group. At the time of writing, salmon commodity spot
prices are at all-time-high levels and the FishPool forward price for
H2 2022 is at approximately NOK 65/kg. Further, due to ongoing
value chain and logistics issues globally, combined with higher fuel
prices, airfreight prices for commodity salmon are high for fresh,
imported salmon from South America or Europe, which further
improves the competitiveness of the Group’s product in the North
American market.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The Board’s Assessment
After a challenging construction and commissioning phase of the
US Phase 1 facility in 2020 and H1 2021, the Group has since the
middle of 2021 had good, stable conditions for farming, which is
expected to lead to steady-state production in the US from Q3
2022. At this point in time, the Group expects to become protable
measured on an EBITDA basis, a groundbreaking milestone for the
Group, but also for land-based full-cycle salmon farming globally.
With its Phase 2 expansion, which will bring total annual harvest
volume capacity up to approximately 25,000t HOG, Atlantic
Sapphire is leading the technological development of
large-scale land-based salmon farming globally. Although supply
chain challenges, inationary pressure, and COVID-19 is likely
to continue to impact the Group in 2022, the Group is well
positioned to handle these challenges both on the operational and
construction side.
With a scalability that is unmatched thanks to the unique water
infrastructure that the Group has secured in South Florida, growth
is set to continue in all the foreseeable future, with cost of capital
being the main consideration in determining the speed
of construction.
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BOARD OF DIRECTORS’ REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Vikebukt, 21 April 2022
Johan E. Andreassen
Chairman
Alexander Reus
Director
Patrice Flanagan
Director
André Skarbø
Director
Runar Vatne
Director
Ellen Marie Sætre
Director
Tone Bjørnov
Director
Karl Øystein Øyehaug
Managing Director of ASA
83
BOARD OF DIRECTORS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Board of Directors
Johan E. Andreassen, CHAIRMAN
Johan E. Andreassen is one of Atlantic Sapphire’s Co-Founders and
has served as the Group’s Chairman from 2010 to 2012 and from
2017 to 2021. He has served as Chairman of the Board of Directors
since 2010 and serves as the Chief Executive Ocer of Atlantic
Sapphire US. Before the founding of the Group, Mr. Andreassen
founded and led Villa Organic, a 30,000-ton capacity salmon
farming company, which was subsequently sold to Lerøy and SalMar
in 2010. Mr. Andreassen is a Norwegian citizen, currently residing in
Miami, Florida, US.
André Skarbø, DIRECTOR
André Skarbø has served as a director since 2015. Mr. Skarbø is
owner and managing director of Platina Seafood AS, a Norwegian
sh distribution company headquartered in Stranda, Norway. Mr.
Skarbø has been involved in the salmon processing and sales
industry for 30 years. Mr. Skarbø is a Norwegian citizen, currently
residing in Stranda, Norway.
Alexander Reus, DIRECTOR
Alexander Reus has served as a director since 2018. Mr. Reus is the
founder and managing partner of DRRT, an international law rm
specializing in securities litigation with oces in Miami, London,
Frankfurt, and Paris. Mr. Reus previously served on the board of
directors of TotalBank prior to its acquisition by City National Bank
of Florida. He holds a B.A. from Gymnasium Karlsbad, a J.D. from
University of Heidelberg School of Law, a L.L.M. from University of
Miami School of Law, and a J.D. from University of Miami School
of Law. Mr. Reus is also a real estate investor. Mr. Reus is a German
citizen, currently residing in Miami, Florida, US.
Runar Vatne, DIRECTOR
Runar Vatne has served as a director since 2019. Mr. Vatne is the
principal and owner of Vatne Capital, a family oce investing in
nancial assets and real estate. He has extensive experience from
the real estate sector, primarily from Søylen Eiendom, an Oslo
based real estate company which he co-founded in 2004. Prior to
Søylen Eiendom, Mr. Vatne was a Partner and stockbroker in Pareto
Securities. Mr. Vatne also serves as board member of the listed
company Gentian Diagnostics AS. Mr. Vatne is a Norwegian citizen,
currently residing in Oslo, Norway.
Patrice Flanagan, DIRECTOR
Patrice Flanagan has served as a director since 2019. Ms. Flanagan
has more than 35 years of experience in the US seafood industry.
Ms. Flanagan worked for Slade Gorton & Co., a US seafood
distributor, importer, and manufacturer, for over 36 years. She most
recently served as the Vice President of Fresh Seafood & Business
Development until stepping down in 2019. She holds a degree in
business management from Cambridge College. Ms. Flanagan is a
US citizen, currently residing in Boston, Massachusetts, US.
Tone Bjørnov, DIRECTOR
Tone Bjørnov is a full-time board member serving on the boards of
several public and private companies. Her background is in bank
and nance, including having served as an executive with DNB Bank.
Ms. Bjørnov holds a business degree from the Norwegian School
of Management (BI). Tone Bjørnov is a Norwegian citizen, currently
residing in Oslo, Norway.
Ellen Marie Sætre, DIRECTOR
Ellen Marie Sætre is an educated veterinary from the Norwegian
School of Veterinary Science (2006) and has since then worked
as a consultant towards the sh farming industry in the company
Åkerblå AS, with a particular focus on sh health. Ms. Sætre is a
Norwegian citizen, currently residing in Vikebukt, Norway.
84
ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Corporate
Governance
85
CORPORATE GOVERNANCE ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The Group follows the Norwegian Code of Practice for Corporate Governance (the “Norwegian Code”), and a full description of the
Norwegian Code is available on the Oslo Stock Exchange’s website (euronext.com/nb/markets/oslo).
The Group has addressed the various 15 issues covered by the Norwegian Code as follows:
The Group has reviewed its reporting on Corporate Governance based on the latest Code of Practice and is fully compliant with the
Norwegian Code, except Section 14 regarding lack of explicit guidelines for dealing with take-over bids.
The following sections detail how the Group has addressed the various 15 issues covered by the Norwegian Code:
Norwegian Code Compliance to the Code
1.
2.
3.
4.
5.
6.
7.
8.
9.
10
11.
12.
13.
14.
15.
Implementation and Reporting on Corporate Governance Principles
Business
Equity and Dividends
Equal Treatment of Shareholders
Shares and Negotiability
General Meetings
Nomination Committee
Board of Directors: Composition and Independence
The Work of the Board of Directors
Risk Management and Internal Control
Remuneration of the Board of Directors
Remuneration of Executive Personnel
Information and Communications
Take-overs
Auditor
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Compliant
Partly Compliant
Compliant
Implementation and
Reporting of Corporate
Governance Principles
The Group’s Board of Directors (the “Board”) is responsible for
the development and implementation of internal procedures and
regulations to ensure that the Group follows applicable principles and
maintains good corporate governance. The Group’s overall position
with such principles is assessed annually by the Board and reported
accordingly in the Group’s Annual Report in accordance with the
requirements for listed companies and the Norwegian Code. The Board
has dened the Group’s overall vision as “For the Health of People and
Planet” which is further exemplied through the Group’s core values of
passion, performance, innovation, integrity, and balance:
• Passion – Purpose. Dedication. Courage.
• Performance – Initiative. Collaboration. Results.
• Innovation – Continuous improvement. Solutions. Learning.
• Integrity – Accountability. Open communication. Care.
• Balance – Healthy Fish. Stakeholder wellness. Sustainable planet
Our central principle is that Atlantic Sapphire’s success depends
on maintaining the highest standards of trust and integrity at all
levels of the organization, as well as its reputation for honesty
and transparency in its business. Further, the Group is made up
of diverse individuals with dierent backgrounds such as national
origins, cultures, religions, and other customs. The Group’s Code
of Conduct (the “Code”), which was updated in January 2022,
sets expectations and provides guidance for the Group’s Board
of Directors, ocers, employees, independent contractors, and
consultants. It is their responsibility to understand the Code as
well as exercise good judgement and follow the Code. The Code
must be signed by all employees, and suppliers are also expected
to understand the Code and share our commitment to integrity
by following the principles of the Code. The Code encourages
reporting of any violations to management. The Code is consistent
with the Group’s core values and is aligned with Atlantic Sapphire’s
commitment to the UN Global Compact principals and the UN SDGs.
Business
The Group’s objective is dened in Article 3 of ASA’s Articles
of Association as follows: “The objective of the Company is to
engage and participate in land-based salmon production, both
nationally and internationally, including through investments in other
companies, and other activities in relation to this.”
01
02
86
CORPORATE GOVERNANCE ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The Group aims to transform salmon farming by managing
an integrated value chain of salmon production and bring full
traceability from egg to nal product. Our activities include farming,
harvesting, processing, marketing, and sales of its products. Through
the specialized, ecient design of the Recirculating Aquaculture
System (“RAS”), The Group can consistently control the key drivers
of the production cycle with the ultimate goal of creating value
for shareholders in a sustainable manner. Such key drivers consist
of routinely assessing the Group’s objectives, strategies, and risk
proles which are detailed in the Board of Directors’ Report.
Equity and Dividends
As of 31 December 2021, the Group’s total equity totaled USD
239.6m, which represents 77% of the Group’s total assets. The
Group’s objective is to maintain an equity level that is appropriate
for the Group’s objectives, strategy, and risk prole.
The Group is focused on developing and commercializing its products,
production methods and technology, as well as increasing facility
capacity, and intends to retain future earnings to nance development
activities, operations, and growth of the business. As a result, the Group
does not expect to pay any dividend in the near future.
Any future decision to pay a dividend will also depend on the
Group’s nancial position, operating prot, capital requirement, and
the terms and conditions of the Group’s debt facilities. The Group
has not previously distributed any dividends to its shareholders.
On 11 June 2020, ASA’s Board of Directors were given proxy to
increase the share capital with up to NOK 1,000,000 through the
issuance of up to 10,000,000 new shares, with a face value of NOK
0.10. On 12 May 2021, the 11 June 2020 authorization was withdrawn,
and the Group’s Board of Directors was given the authority to increase
total authorized share capital with up to NOK 1,600,000 through the
issuance of up to 16,000,000 total shares, with a face value of NOK
0.10. The authorization may be used several times within this limit.
Equal Treatment of Shareholders
The Group has one class of shares. Any purchase or sale by the
Group of its own shares will be carried out either through the Oslo
Stock Exchange or at prices quoted on the Oslo Stock Exchange.
General Meetings
Through the general meeting, shareholders exercise supreme
authority in a Norwegian company. In accordance with Norwegian
law, the annual general meeting of shareholders is required to be
held each year on or prior to 30 June. Norwegian law requires
that written notice of annual general meetings setting forth the
time of, the venue for, and the agenda of the meeting be sent to
all shareholders with a known address no later than 21 days before
the annual general meeting of a Norwegian private limited liability
company shall be held, unless ASA’s Articles of Association stipulate
a longer deadline, which is not currently the case for the Group.
A shareholder may vote at the general meeting either in person
or by proxy appointed at their own discretion. In accordance with
the requirements of the Norwegian Securities Trading Act, the
Group will include a proxy form with notices of general meetings.
All of the Group’s shareholders who are registered in the register
of shareholders maintained with the Norwegian Central Securities
Depository (“VPS”) as of the date of the general meeting, or who
have otherwise reported and documented ownership to Shares, are
entitled to participate at general meetings, without any requirement
of pre-registration.
Apart from the annual general meeting, extraordinary general
meetings of shareholders may be held if the Board of Directors
considers it necessary. An extraordinary general meeting of
shareholders must also be convened if, to discuss a specied
matter, the auditor or shareholders representing at least 5% of
the share capital demands this in writing. The requirements for
notice and admission to the annual general meeting also apply
to extraordinary general meetings. However, the annual general
meeting of a Norwegian public limited liability company may with
a majority of at least two-thirds of the aggregate number of votes
cast as well as at least two-thirds of the share capital represented
at a general meeting resolve that extraordinary general meetings
may be convened with a fourteen days’ notice period until the next
annual general meeting provided the Group has procedures in place
allowing shareholders to vote electronically.
03
04
06
Shares and Negotiability
The Group has one class of Shares in issue, and in accordance
with the Norwegian Private Limited Liability Companies Act and the
Norwegian Public Limited Liability Companies Act, all Shares in that
class provide equal rights in the Group. Each share has a nominal
value of NOK 0.10 and carries one vote. The Group’s shares are
freely transferable.
05
Nomination Committee
Article 6 of ASA’s Articles of Association provide for a Nomination
Committee composed of two or three members. The members
of the Nomination Committee, including its chair, are elected
by the AGM for a term of two years. The Nomination Committee
is responsible for proposing candidates for the Board and the
Nomination Committee and hold individual discussions with each
Board member.
As of 31 December 2021, the Nomination Committee comprised
of Bjørn-Vegard Løvik (Chair) and Kjell Bjordal, none of which are
active Board members.
07
87
CORPORATE GOVERNANCE ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Board of Directors: Composition
and Independence
ASA’s Articles of Association provide that the Board shall consist
of between three and seven members of the Board elected by the
Group’s shareholders. The Group’s registered business address,
Daugstadvegen 445, 6392 Vikebukt, Norway, serves as the business
address for the Board with respect to their directorships. The
Chairman of the Board together with one Director jointly have the
right to sign for and on behalf of the Group. The Board may grant
procuration. Board members are elected for a period of two years at
a time.
The Board is independent to the Group management. Johan E.
Andreassen, the CEO of Atlantic Sapphire USA LLC, and Ellen Marie
Saetre, related party of nomination committee member Bjørn-Vegard
Løvik, are the only employees of the Group represented on the
Board and non-independent members. As per Norwegian law, the
Board shall always have at least 40% of both genders represented.
In 2021, the Group’s Board comprised of three female members out
of seven in total.
The Work of the Board of Directors
According to the Norwegian Public Limited Liability Companies
Act, the Board has overall responsibility for the management of the
Group, and the supervision of the Group’s business activities and
daily management. The Board is also responsible for approving the
Group’s plans and budgets and ensuring that the Group’s activities
are well organized.
Members of the Board owe a duciary duty to the Group and its
shareholders, and their principal task is to safeguard the interests
of the Group. Such duciary duty requires that the Board act in
the best interests of the Group when exercising their functions and
exercise a general duty of loyalty and care towards the Group. This
includes a continuous assessment of the Group’s related parties
and any agreements and transactions conducted with them. Any
transaction between the Group and a related party will be of arm’s
length. The Group will make sure that major transactions with related
parties are approved by the AGM in accordance with the Norwegian
Public Limited Liability Companies Act. Related party transactions
are discussed in Note 21 in the Group’s consolidated nancial
statements.
The Board has formally assessed its performance, expertise, and
capacity to carry out its duties both individually and as a group in
2021 as recommended by the Norwegian Code.
The Board conducted one formal shareholder Annual General
Meeting on 21 May 2021. The overall shareholder attendance rate
was 46.8%, with all Board members in attendance.
10
11
12
08
09
Risk Management
and Internal Control
The Board shall annually review the Group’s most important areas of
risk exposure and the internal control arrangement in place for such
areas. The review shall pay attention to any material shortcomings
or weaknesses in the Group’s internal control systems and how
risks are being managed. Internal controls consist of guidelines,
processes, duties, conduct, and other matters related to the
Group’s commercial objectives, internal and external reporting,
and compliance with relevant legislation, regulations, and internal
guidelines in Group operations.
The Finance Department performs closing procedures on a monthly
basis towards internal and external reporting and actively monitors
the Group’s internal control systems throughout to identify risks
and proactive solutions to mitigate them. Such ndings are then
communicated to the Board and Audit Committee for further
feedback and action plan accordingly. The Group’s Finance
Department consists of approximately 8 full-time employees of which
three are Certied Public Accountants (“CPA”) licensed in the State
of Florida. Accounting advisory service rms are engaged as needed
to support the Finance Department in wide range of complex
accounting transactions including adherence to new and revised
IFRS standards.
Remuneration of
the Board of Directors
The remuneration payable to the Board is approved by the AGM.
Board remuneration shall reect the Board’s responsibilities,
competence, time spent, and the complexity of the business.
Board remuneration is not performance-related and contains no
share option element. Additional information relating to Board
remuneration can be found in Note 6 in the Group’s consolidated
nancial statements.
Remuneration of
Executive Personnel
The Board determines the principles applicable to the Group’s
policy for compensation of executive management and presented its
statement on such principles for the 2021 nancial year during the
Group’s AGM in accordance with Section 6-16a of the Norwegian
Public Limited Liability Companies Act.
The principles supporting the Group’s remuneration policy are as follows:
• Oer executive compensation that is competitive, both on
industry and national (US) levels, to attract and retain top
managerial talent.
88
CORPORATE GOVERNANCE ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Information and Communications
The Group strives to build long-term relationships with its
stakeholders; the management team therefore meets on an ongoing
basis in open and transparent dialogue with all stakeholders
interested in its business from a social, environmental, or economic
perspective. The Group proactively engages them through dierent
platforms to address their needs, listening, and providing information
about the Group’s projects.
The dialogue always strives to raise awareness of both the value
and the challenges of what the Group does. In 2021, the Group
has had valuable dialogue with stakeholders around various topics,
including: product attributes, environmental, and animal welfare
aspects related to Bluehouse salmon farming, technology, the
R&D investment in Recirculating Aquaculture Systems (“RAS”), the
viability of the business model, nancial aspects of the business,
and the socio-economic impacts of its operations in Miami and
Denmark. The Group uses dierent platforms to communicate with
stakeholders on a regular basis, the frequency of communications
depending on the interest and the level of involvement of
these stakeholders.
The Group also complies with the Oslo Stock Exchange’s investor
relations recommendations by publishing its nancial calendar, on
an annual basis, which provides the dates on which it will present
its Half-Year Report, Annual Report, and when the AGM will be
held. The Group publicly discloses all information concerning
major events on its website (atlanticsapphire.com) and through the
distribution channels of the Oslo Stock Exchange, in line with the
requirements of the Oslo Stock Exchange. All nancial reports and
other information are prepared and disclosed in such a way as to
ensure that the Group’s stakeholders are treated equally and receive
accurate, clear, relevant, and up-to-date information in a timely
manner. The Group holds public presentations of its results
semi-annually.
Take-overs
In a bid situation, the Group’s Board of Directors and management
have an independent responsibility to ensure that the interests of
shareholders are safeguarded, all shareholders are treated equally,
and that operations are not disrupted unnecessarily. The Board
should not hinder or obstruct any take-over bid, unless it believes
such an action is justied to protect the interests of the Group and
its shareholders.
The Board has not yet determined specic guidelines or principles
with respect to dealing with take-over bids as recommended by the
Norwegian Code.
Auditor
The Group has engaged BDO as its external auditor. BDO is
independent from the Group and was appointed by the Board
during the AGM.
The AGM’s selection of the auditor contemplated several
factors including the rm’s competence, size, global availability,
and expected audit fee. Accordingly, the AGM also approved
the auditor’s fee (see Note 7 in the Group’s consolidated
nancial statements).
The Group’s Audit Committee Charter was formally approved by
the Board on 27 October 2021 and was established to continuously
improve corporate governance and the quality and compliance
of the Group’s nancial reporting. In turn, the auditor presents its
plan regarding the preparation of the annual accounts and audited
nancial statements to the Group’s Audit Committee and Finance
Department. The Finance Department holds regular meetings with
the auditor without the presence of management prior to summary
communication to the Board and Audit Committee to ultimately sign
o on the Group’s nancials and corporate governance report.
In addition to the audit fee, the Group’s remuneration to the auditor
may be split with other non-audit services such as advisory and
authorization services. Such non-audit services are assessed on
an ad-hoc basis to ensure that there are no conicts of interest
towards independence.
BDO AS has been our auditor since 2015. Roald Viken has been the
lead audit partner for the Group since 2015 and 2021 represents his
seventh year as lead partner.
13
14
15
• Emphasize a collaborative culture and a lean organizational
structure.
• Provide incentives that foster the creation of sustainable, long
term shareholder value.
• Ensure that the Group’s executive management is aligned with key
organizational goals.
In compliance with the Norwegian Public Limited Liability
Companies Act, the Board prepares a statement regarding the
remuneration of the executive management team for consideration
by the AGM. The remuneration package for corporate executive
sta consists of the following main elements:
• Fixed Compensation
• Variable Compensation
• Long-Term Incentive Program
• Retirement Benets
• Severance Pay
• Benets in Kind
89
ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire
Consolidated
Financial
Statements
90
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED 31 DECEMBER 2021 AND 2020
(USD 1,000) Note 2021 2020
Revenue
3 16,851 6,270
Expenses
Cost of materials
Fair value adjustment on biological assets
Salary and personnel costs
Other operating expenses
Impairment of non-current assets
Depreciation and amortization
Total expenses
Operating loss
Finance income
Finance expense
Loss before income tax benet
Income tax benet
Net loss
Earnings per share:
Basic earnings per share
Diluted earnings per share
5,15
5
6,18,20
4,7,8
9,23
9
10
10,19
11
(1,429 )
(132,293 )
(3,847 )
(132,778 )
(132,778 )
(1.53 )
(1.53 )
(46,595 )
(9,487 )
(55,193 )
(55,193 )
(0.74 )
(0.74 )
Accompanying notes are an integral part of the consolidated nancial statements.
91
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Accompanying notes are an integral part of the consolidated nancial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
YEARS ENDED 31 DECEMBER 2021 AND 2020
(USD 1,000) Note 2021 2020
Net loss
Exchange dierence on translation of foreign operations
Total comprehensive loss
(132,778 )
(3,904 )
(136,682 )
(55,193 )
(52,792 )
92
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 DECEMBER 2021 AND 2020
Accompanying notes are an integral part of the consolidated nancial statements.
(USD 1,000) Note 2021 2020
ASSETS
Non-current assets
Property, plant, and equipment, net
Right of use asset
Security deposits
Other investments
Trade and other receivables (non-current)
Total non-current assets
Current assets
Prepaid and other current assets
Inventories, net
Biological assets
Trade and other receivables, net
Restricted cash
Cash
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Employee stock options
Accumulated decit
Accumulated translation dierences
Total equity
Non-current liabilities
Borrowings (non-current)
Lease liability (non-current)
Total non-current liabilities
Current liabilities
Lease liability (current)
Trade and other payables
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
9
8
13
13,14
15
5
13,14
13,16
13,16
17,18
17,18
17,18
13,19
8
8
13
(215,403 )
(4,089 )
(82,625 )
(185 )
93
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
YEARS ENDED 31 DECEMBER 2021 AND 2020
Accompanying notes are an integral part of the consolidated nancial statements.
(USD 1,000) Note
Share
capital
Share
premium
Employee
stock options
Accumulated
decit
Accumulated
translation
dierences
Total
equity
Balance at 1 January 2020
Contributions from issuance of capital
Contributions from employee stock options
Net loss
Foreign currency translation adjustments
Balance at 31 December 2020
Contributions from issuance of capital
Contributions from employee stock options
Net loss
Foreign currency translation adjustments
Balance at 31 December 2021
17,18
17,18
17,18
17,18
(27,432 )
(55,193 )
(82,625 )
(132,778 )
(215,403 )
(2,586 )
(185 )
(3,904 )
(4,089 )
(55,193 )
(132,778 )
(3,904 )
94
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED 31 DECEMBER 2021 AND 2020
Accompanying notes are an integral part of the consolidated nancial statements.
(USD 1,000) Note 2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization
Bad debt
Inventory write-down
Fair value adjustment on biological assets
Forgiveness of borrowings
Fixed asset impairment
(Gain) loss from disposition of other assets
Net interest received and paid
Non-cash employee stock options
Net foreign currency exchange rate dierences
Changes in operating assets and liabilities
Trade and other receivables
Biological assets, at cost
Inventories, at cost
Prepaid and other current assets
Security deposits
Trade and other payables
Interest received
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant, and equipment
Payments towards property, plant, and equipment
Other investments
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Payments towards borrowings
Payments towards lease liability
Proceeds from issuance of capital
Interest paid
Net cash provided by nancing activities
Net (decrease) increase in cash and restricted cash
Cash and restricted cash at beginning of year
Eects of exchange rate on cash and restricted cash
Cash and restricted cash at end of year
9
15
5
19
9
9
10
18
13,14
5,15
15
13
10
9
9
19
19
8
17
10
(132,778 )
(1,429 )
(1,156 )
(5 )
(563 )
(5,068 )
(24 )
(67,876 )
(58,077 )
(57,911 )
(10,495 )
(347 )
(3,847 )
(10,928 )
(501 )
(55,193 )
(1,570 )
(627 )
(18,943 )
(1,015 )
(95 )
(46,959 )
(60,881 )
(60,851 )
(74,001 )
(2,058 )
95
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Vikebukt, 21 April 2022
Johan E. Andreassen
Chairman
Alexander Reus
Director
Patrice Flanagan
Director
André Skarbø
Director
Runar Vatne
Director
Ellen Marie Sætre
Director
Tone Bjørnov
Director
Karl Øystein Øyehaug
Managing Director of ASA
96
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Information
Atlantic Sapphire ASA (“ASA”) is a Norwegian company headquartered in Vikebukt, Norway and listed on the Oslo Stock Exchange with the
ticker symbol ASA. ASA owns the following subsidiaries (collectively, “Atlantic Sapphire” or the “Group”):
• Atlantic Sapphire Denmark A/S (“ASDK”, registered in Hvide Sande, Denmark)
• Atlantic Sapphire USA LLC (“ASUS”, registered in Miami, Florida, US)
• AS Purchasing, LLC (“ASP”, registered in Miami, Florida, US)
• S.F. Development, L.L.C. (“ASSF”, registered in Miami, Florida, US)
• Atlantic Sapphire IP, LLC (“ASIP”, registered in Miami, Florida, US)
The Group owns and operates land-based Atlantic salmon farms in Hvide Sande, Denmark (the “Denmark Bluehouse” facility) and
Homestead, Florida, US (the “Miami Bluehouse” facility). A Bluehouse
®
facility (the “Bluehouse”) is proprietary production technology
developed by the Group in collaboration with a wide range of supply chain partners to optimize growing conditions for Atlantic salmon.
Each Bluehouse contains the facilities needed for a salmon’s full growth cycle, from egg hatchery to grow-out tanks to harvest processing.
Consolidated operations enable the Group to control the entire production cycle without having to transport salmon to and from ocean-
based net pens. The Denmark Bluehouse (prior to the September 2021 re) and the Miami Bluehouse (Phase 1) have annual production
capacities of approximately 2,400 tons HOG
1
and 9,500 tons HOG, respectively.
On 15 September 2021, a re broke out in the Denmark Bluehouse. All employees were reported safe without injuries. Substantially all
property, plant, and equipment related to its saltwater ongrowing systems and approximately 170 tons of standing biomass in the Danish
facility’s ongrowing systems with a book value of USD 0.8m were lost in the re (see Note 5 – Biological Assets). While the insurance claim
process remains ongoing, the Group expects to recover approximately USD 33m, the full book value of the Danish facility insured against
the re, less the value of the assets that were unaected, and subsequently booked the insurance claim receivable in 2022. See Note 9 –
Property, Plant, and Equipment and Note 23 – Subsequent Events for further details.
Basis for Preparation of the Annual Accounts
The consolidated nancial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted
by the European Union (“EU”) and mandatory for nancial years beginning on or after 1 January 2021, and additional Norwegian disclosure
requirements under the Norwegian Accounting Act as of 31 December 2021. References to “IFRS” in these consolidated nancial statements
refer to IFRS as adopted by the EU.
The consolidated nancial statements have been prepared based on uniform accounting principles for similar transactions and events under
otherwise similar circumstances and are expressed in United States (“US”) dollars (“USD”). The consolidated nancial statements are based
on historical cost, except for biological assets at fair value less cost to sell.
New and Amended IFRS Standards Adopted by the Group
There are numerous standards, amendments to standards, and interpretations in 2021 that have been issued by the IASB that are eective in
future accounting periods. The Group has decided not to early adopt any as they are not expected to have signicant eect on the Group’s
consolidated nancial statements.
The Group did not adopt any new standards, amendments to standards, and interpretations in 2021 that would impact the Group’s
consolidated nancial statements for the year ended 31 December 2021.
Other amendments, interpretations, and changes based on the annual improvement cycle were also adopted by the Group but had no
material impact nor were they expected to signicantly aect the current or future reporting periods.
1
HOG – “Head-On-Gutted” sh, a term used industry-wide, is approximately 83% of live weight sh.
97
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Consolidation
Subsidiaries are all entities over which the Group has control. The Group considers control over an entity to exist when the Group is
exposed to, or has the right to, variable returns from its involvement with the entity and can aect those returns through its ability to direct
the operations of the entity. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary.
The accompanying consolidated nancial statements include the accounts of ASA, ASDK, ASUS, ASP, ASSF, and ASIP. When necessary,
adjustments are made to the local nancial statements of the Group subsidiaries to conform with the consolidated Group’s accounting
policies presented under IFRS.
All intercompany balances, transactions, and unrealized gains from intercompany transactions are eliminated upon consolidation. Unrealized
losses from intercompany transactions are also eliminated upon consolidation unless the transaction provides evidence of an impairment of
the transferred asset.
The assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated
nancial statements from the date in which the Group gains control until the date in which the Group ceases to control the subsidiary.
Foreign Currency
Items included in the respective nancial statements of each entity within the Group are measured using the functional currency of the
primary economic environment in which the entity operates. The accompanying consolidated nancial statements are presented in USD.
Foreign currency transactions are translated using the applicable exchange rate at the time of the transaction. Receivables, debt, and other
monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation dierences are
recognized as part of the Group’s consolidated net prot or loss. Other assets in foreign currencies are translated at the exchange rate in
eect on the transaction date.
Upon consolidation, exchange dierences arising from the translation of non-USD denominated Group entities and non-USD denominated
investments are recognized as part of consolidated other comprehensive income or loss (“OCI”). When a foreign operation is sold, the
associated exchange dierences related to the gain or loss on sale are reclassied to prot or loss.
The prot and loss transactions of non-USD denominated Group entities are translated to the presentation currency using the average
exchange rate for the reporting period. The assets and liabilities of respective entities are translated at the exchange rate at the end of the
reporting period.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing exchange rate.
Use of Estimates and Judgements
The preparation of the consolidated nancial statements in accordance with IFRS requires management to make accounting estimates and
assumptions that aect the recognized amounts of consolidated assets, liabilities, income, and expenses. The estimates and underlying
assumptions are based on the Group’s prior experience and information perceived to be relevant and probable when the judgments are made.
Estimates are reviewed on an ongoing basis and actual values and results may deviate from these estimates. Adjustments to accounting
estimates are recognized in the period in which the estimates are revised.
The evaluations and estimates deemed to be of greatest signicance for the Group are as follows:
Fair Value Adjustment of Biomass
Biological assets are measured at fair value less costs to sell, with any change therein recognized in prot or loss. The estimated fair value
of the biological assets is based on historical prices achieved and the most relevant forward prices for salmon at the reporting period date
in the respective markets in which the Group operates. The fair value calculation considers estimates of biomass volumes, quality, size
distribution, production cost, mortality, and normal costs of harvest and sale (see Note 5 – Biological Assets).
98
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Share-Based Compensation Benets
Share options have been allotted to management and selected key employees. Each share option allows for the subscription of one share in
Atlantic Sapphire ASA on a future date at a predetermined strike price. Subscribing normally requires continued employment. The fair value
of the options is calculated when they are allotted and expensed over the vesting period. The fair value at grant date is determined using an
adjusted form of the Black Scholes Model, which considers the exercise price, the term of the option, the impact of dilution (where material),
the share price at the grant date, expected price volatility of the underlying share, and risk-free interest (see Note 18 – Share Option Program).
Provisions
A provision is recognized when the Group has a legal or constructive obligation as a result of a past event, it is likely that there will be a
nancial settlement as a result of this obligation, and the amount can be reliable. If the eect is signicant, the provision is calculated by
discounting future cash ows using a discounted pre-tax rate that reects market assessments of time, value of money, and if relevant, risks
specically related to the obligation. Provisions are reviewed at each reporting period date and their level reects the best estimate of the
liability. Changes in best estimates are recognized in the accompanying consolidated statements of operations.
Classication of Current vs. Non-Current Items
Assets are classied as current when they are expected to be realized or sold, to be used in the Group’s normal operating cycle, falls due, or
is expected to be realized within 12 months after the end of the reporting period date. Other assets are classied as non-current. Liabilities
are classied as current when they are expected to be settled in the normal operating cycle of the Group, are expected to be settled within
12 months of the end of the reporting period, or if the Group does not have an unconditional right to postpone settlement for at least 12
months after the reporting period date.
Revenue Recognition
The Group operates proprietary Bluehouse facilities for land-based salmon farming and derives revenue from the sale of salmon. Revenue
from salmon sales is recognized when the customer obtains control of the goods transferred and there is no unfullled obligation that could
aect the customer’s acceptance of the goods upon delivery (i.e. at a point in time). The Group grants certain customers sales incentives
such as rebates or discounts and treats these as a reduction of revenue at the time the sale is recognized.
A receivable is recognized when the goods are delivered as this is the point in time in which consideration is unconditional and only the
passage of time is required before payment is due. Depending on credit assessment, customers are generally provided 30-day payment terms.
Leases
Leases are recognized under
IFRS 16
, Leases in which all leasing agreements with a duration exceeding 12 months are to be capitalized as
nancial leases. The Group assesses whether a legally enforceable contract is or contains a lease at the inception date of the contract. The
assessment includes several criteria to be determined based on judgment that includes whether there is an identiable asset in connection
to the lease, whether the Group has the right to control the use of the identiable asset, and whether the Group can obtain substantially all
economic benets from the identiable asset.
The Group recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date. The lease liability is calculated
based on the present value of the contractual minimum lease payments using the implicit interest rate of the lease. The Group uses the
incremental borrowing rate in the case the implicit rate cannot be readily determined from the lease contract. The contractual minimum
lease payments consist of xed or variable payments, including those resulting from options in which management is reasonably certain it
will exercise during the lease term. The lease liability is subsequently measured at amortized cost under the eective interest rate during the
lease term and may also be adjusted to management’s reassessment of future lease payments based on options exercised, renegotiations, or
changes of an index rate.
The ROU asset is calculated based on the lease liability, plus initial direct costs towards the lease, and less any incentives granted by the
lessor. The ROU asset is subsequently amortized under the straight-line method under the shorter of the lease term or the useful life of the
underlying asset and is included as part of depreciation and amortization in the accompanying consolidated statements of operations.
Leases that fall under the
IFRS 16
short-term exception are recognized on a straight-line method over the lease term.
99
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Ta xes
Tax expense consists of the tax payable and changes to deferred tax. Tax is recognized in the accompanying consolidated statements of
operations, except to the extent that it relates to items recognized in consolidated OCI or directly in consolidated equity.
Deferred tax assets and liabilities are calculated based on the temporary dierences between the carrying amount of assets and liabilities in
the consolidated nancial statements and their tax bases, together with tax losses carried forward at the consolidated statement of nancial
position date. Deferred tax assets and liabilities are calculated based on the applicable tax rates and legislations that are expected to apply
when the assets are realized or the liabilities are settled, based on the tax rates and legislations that have been enacted or substantially
enacted on the consolidated statement of nancial position date. Deferred tax assets are recognized only when convincing evidence can
support the availability of future taxable prots will be available, against which the assets can be utilized. Deferred tax assets and liabilities
are not discounted. Deferred tax assets and liabilities are oset when there is a legally enforceable right to oset current tax assets against
current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same
taxable entity. The entities included in the Group’s consolidated nancial statements are subject to income tax in the respective countries in
which they are domiciled.
Investments and Other Financial Assets
The Group classies its nancial assets based on the following measurement categories:
• Those to be measured at amortized cost,
• Those to be measured subsequently at fair value (through other comprehensive income or loss), and
• Those to be measured subsequently at fair value (through prot or loss).
Upon initial recognition, the Group measures a nancial asset at its fair value plus, in the case of a nancial asset not at fair value through
prot or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the nancial asset. Transaction costs of nancial
assets carried at FVPL are expensed in the accompanying consolidated statements of operations.
Financial Assets at Amortized Cost
Trade receivables consist of amounts due from customers for goods sold in the ordinary course of business and are generally due
for settlement within 30 days and classied as current. Trade receivables are initially recognized at the amount of consideration that
is unconditional and when no element of nancing is present. The Group holds the trade receivables with the objective to collect the
contractual cash ows and therefore measures them subsequently at amortized cost using the eective interest method.
Other nancial assets are classied at amortized cost only if both of the following criteria are met:
• The asset is held within a business model whose objective is to collect the contractual cash ows, and
• The contractual terms give rise to cash ows that are solely payments of principal and interest.
Financial Assets at Fair Value Through Other Comprehensive Income or Loss
Financial assets at fair value through other comprehensive income or loss (“FVOCI”) comprise of equity securities that are not held for
trading, and in which the Group has irrevocably elected at initial recognition to recognize in this category. These are strategic investments,
and the Group considers this classication to be more relevant.
Upon disposal of such equity investments, any related balance within the FVOCI reserve is reclassied to retained earnings.
Dividends from such equity instruments are recognized as part of other income in the accompanying consolidated statements of operations.
Financial Assets at Fair Value Through Prot or Loss
The Group has no nancial assets measured in this category.
100
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Property, Plant, and Equipment
Property, plant, and equipment is capitalized at acquisition cost, which includes capitalized borrowing costs under
IAS 23, Borrowing Costs
,
less accumulated depreciation and impairment losses, if any. Acquisition costs include expenditures that are directly attributable to the
acquisition and placement of xed assets in service. Costs of major replacements and renewals that substantially extend the economic life
and functionality of xed asset are capitalized. Costs associated with normal maintenance and repairs are expensed as incurred.
Assets are normally considered property, plant, and equipment if the useful economic life exceeds one year. Straight-line depreciation is
applied over the useful life of property, plant, and equipment based on the asset’s historical cost and estimated residual value at disposal.
If a substantial part of an asset has an individual and dierent useful life, that portion is depreciated separately. The asset’s residual
value and useful life are evaluated annually. Gains or losses arising from the disposal or retirement of an asset are determined as the
dierence between the sales proceeds and the carrying amount of the asset and recognized as part of other income in the accompanying
consolidated statements of operations.
Depreciation is charged to expense when the property, plant or equipment is ready for use or placed in service. As such, assets under
construction are not depreciated.
Impairment
Management reviews long-lived assets for impairment annually, or more frequently, whenever events or changes in circumstances indicate
that the carrying value may not be recoverable. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value
in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identiable cash
inows, which are largely independent of the cash inows from other assets or groups of assets (cash-generating units).
If an evaluation is required, the estimated future undiscounted cash ows associated with the asset are compared to the asset’s carrying
value to determine if an adjustment for impairment to such asset is necessary. The eect of any impairment would be to expense the
dierence between the fair value of such asset and its carrying value. Non-nancial assets that suered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period. As of 31 December 2021, management considered an allowance for
impairment necessary for long-lived assets lost in the September 2021 Denmark re (see Note 4 – Other Operating Expenses and Note 9 –
Property, Plant, and Equipment).
Inventories
Inventories consist of feed, raw materials, packaging, spare parts, and processed sh. Inventories are measured at the lower of cost or net
realizable value under the rst-in-rst-out principle. Cost price includes both the production or acquisition costs for goods and the costs
of bringing goods into saleable condition. Net realizable value consists of estimated sales price less remaining costs to sell. Generally, feed,
raw materials, packaging, and spare parts are maintained at cost whereas processed sh is recognized at net realizable value. Live sh are
accounted for separately as biological assets under
IAS 41, Agriculture
and
IFRS 13, Fair Value Measurement
.
Biological Assets
Under the provisions of
IAS 41, Agriculture
and
IFRS 13, Fair Value Measurement
, biological assets (“biomass”) are measured at fair value less
cost to sell, unless fair value is not readily measured. Biomass comprises of salmon roe and live sh in tanks from fry to adult grow-out. Fish
held in tanks with a live weight over 1kg are considered harvestable and are therefore measured at fair value less cost to sell. Salmon roe
and biomass with a live weight below 1 kg is considered non-harvestable due to its little biological conversion and are therefore measured
at cost. Fish measured at cost are routinely assessed for impairment losses whenever events or changes in circumstances indicate that the
carrying value may not be recoverable.
The cost of biological assets (“production costs”) includes all costs required to raise salmon from roe to harvest on a historical basis. Direct
production costs, which include salmon roe and other raw materials, are allocated fully to production costs. Indirect production costs, which
consist of salary and personnel costs, depreciation, and other overhead costs, are allocated based on a ratio of actual vs hypothetical
feed capacity per sh system that approximates normal capacity under
IAS 2
. Underutilized portions of indirect production costs due to
underutilized Bluehouse tank capacity are recognized as period cost of materials in the accompanying consolidated statements
of operations.
101
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The valuation of biological assets under
IAS 41
is based on an implied estimated fair value of the sh in a hypothetical market. The estimate
of the unrealized fair value adjustment under
IFRS 13
is based on several factors such as changes in the nal market destinations of sh sold,
changes in forward market price and biomass costs, changes in biology, and dierences in anticipated quality and size. The key element in
approximating fair value is the assumed market price expected to be achieved on the future date in which the sh is to be harvested. Such
market prices are based on a variety of sources including, but not limited to, the Group’s historical sales prices achieved and quoted forward
market prices as per the NASDAQ salmon index. The market prices are then reduced for harvesting and freight costs required to sell to arrive
at a net value back to farm. The dierence between the fair value and the associated cost to sell is recognized under fair value adjustments
in the accompanying consolidated statements of operations.
Incident-based mortality is recognized when a Bluehouse facility experiences elevated or substantial mortality due to an incident out of
expected normal capacity. In such cases, mortality expense is included as part of cost of materials in the accompanying consolidated
statements of operations, and the fair value associated with the aected biomass is then adjusted under fair value adjustments in the
accompanying consolidated statements of operations.
For further information regarding the Group’s biological assets, see Note 5 – Biological Assets.
Trade and Other Receivables
Trade receivables are initially recognized at amortized cost, less a provision for expected credit losses. Credit loss provisions are based on
individual customer assessments over a 12-month period.
Cash and Restricted Cash
Cash includes cash on hand and bank deposits. Restricted cash is not available for immediate or general business use and is presented
separately in the accompanying consolidated statements of nancial position. Cash equivalents consist of short-term investments that can
be converted into a known amount in cash within three months and contain an insignicant risk element. The Group did not hold any cash
equivalents as of 31 December 2021 and 2020.
Borrowings
Borrowings are recognized at fair value when proceeds have been received, less transaction costs. In subsequent periods, borrowings
are recognized at amortized cost calculated using the eective interest method. The dierence between the proceeds from borrowings
received (less transaction costs) and its redemption value is reected over the term of the borrowing as part of nancial expense in the
accompanying consolidated statements of operations.
Trade and Other Payables
Trade and other payables represent unpaid liabilities for goods and services provided to the Group prior to the end of the nancial year
and are presented as current liabilities unless payment is not due within 12 months after the reporting period. Trade and other payables are
recognized initially at their fair value and are subsequently measured at amortized cost using the eective interest method.
Employee Benets
Liabilities for wages and salaries, including non-monetary benets and accumulating sick leave, are recognized with respect to employees’
services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
Such amounts are generally expected to be settled in full within 12 months after the end of the reporting period in which the employees
render the related service, and liabilities for wages and salaries are presented as part of trade and other payables in the accompanying
consolidated statements of nancial position.
Pensions
The Group oers a dened contribution plan to its employees and pays contributions to publicly or privately administered pension insurance
plans on a mandatory, contractual, or voluntary basis. The Group has no further payment obligations once the contributions have been paid.
102
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Contributions are recognized as employee benet expense when they are due and are included as part of salary and personnel costs in the
accompanying consolidated statements of operations. Prepaid contributions are recognized as an asset to the extent in which a cash refund
or a reduction in the future payments is available.
Share Option Program
Share-based compensation benets are provided to employees through an employee share scheme (see Note 18 – Share Option Program).
The total expense is recognized over the vesting period, which is the period over which all specied vesting conditions are to be satised. At
the end of each period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting
and service conditions and recognizes the impact of the revision to original estimates, if any, in the accompanying consolidated statements
of operations, with a corresponding adjustment to equity. Social security contributions payable in connection with an option grant are
considered an integral part of the grant itself and the charges are treated as cash-settled transactions.
Grants
Grants are recognized when there is reasonable assurance that the grant will be received and when the Group satises all conditions
attached. When the grant relates to an expense item, it is recognized as income over the period that the costs it is intended to compensate
are expensed. When the grant relates to an asset, it is deducted from the carrying amount of the asset and ultimately reduces the
depreciation charge associated with the asset over its estimated useful life.
Statements of Cash Flows
The accompanying consolidated statements of cash ows are prepared in accordance with the indirect method.
Reclassication
Certain amounts in the Group’s 2020 consolidated nancial statements have been reclassied to conform to the 2021 presentation. The
reclassications have no eect on the Group’s consolidated nancial position or previously reported results of consolidated operations.
103
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 2 – CAPITAL MANAGEMENT AND FINANCIAL RISK
Capital management represents the Group’s policy to assess, acquire, and utilize its capital base eciently towards satisfactory operations
and future development of the business to foster and maintain investor, lender, and market condence. The Group’s capital management
contemplates available alternatives, the cyclical nature of the sh farming industry, and current socioeconomic factors. Access to borrowings
is monitored periodically and the Group engages in dialogue continuously with its lenders.
The Group has obtained capital primarily from equity raises and interest-bearing borrowings. The Group’s interest-bearing borrowings
requires certain nancial covenants to be maintained and the Group was in compliance with all nancial covenants as of 31 December 2021
(see Note 19 – Borrowings).
As of 31 December 2021 and 2020, the Group’s consolidated equity consisted of USD 239.6m and USD 255.5m, respectively, equity share,
which comprise of total equity divided by total assets, was 77% and 80%, respectively, and net interest-bearing debt, which comprise of total
interest-bearing borrowings excluding the eects of
IFRS 16
, was USD 33.0m and USD 22.6m, respectively. The Group’s Board of Directors
considers the Group’s capital base as adequate given the scale of its operations.
On 11 June 2020, ASA’s Board of Directors were given proxy to increase the share capital with up to NOK 1,000,000 through the issuance
of up to 10,000,000 new shares, with a face value of NOK 0.10. On 12 May 2021, the 11 June 2020 authorization was withdrawn, and the
Group’s Board of Directors was given the authority to increase total authorized share capital with up to NOK 1,600,000 through the issuance
of up to 16,000,000 total shares, with a face value of NOK 0.10. The authorization may be used several times within this limit.
The Group holds nancial instruments necessary for its operations. The Group’s principal nancial liabilities, other than interest-bearing
borrowings and excluding the eects of
IFRS 16
, consist of trade and other payables and comprise most of the Group’s third-party nancing.
The Group’s principal nancial assets consist of trade and other receivables, cash and restricted cash, and other investments. The Group’s
signicant accounting policies regarding nancial instruments are disclosed in Note 1 – Signicant Accounting Policies, and the Group’s
nancial instruments are detailed in Note 13 – Financial Instruments.
The Group believes it has sucient nancing to achieve steady-state biomass and generate positive cash ow from operations. As it relates
to US Phase 2 expansion, additional nancing will be needed, however, the Group has full discretion over the speed of the construction
which allows the Group to better manage liquidity. On 31 March 2022, the Group’s 2020 Credit Facility was amended to provide an
additional three-month credit facility in an aggregate amount of up to USD 25m (the “Facility”) as it nalizes the details of its fully nanced
US Phase 2 Construction.
Currently, the Group and its lenders are working on an additional amendment of the 2020 Credit Facility which is expected to be nalized
prior to 30 June 2022. The provisions of the amendment are expected to provide an extension of maturity dates, access to additional
borrowings, and revised terms such as updated nancial covenants. Although unlikely, there would be a breach of nancial covenants that
would lead to an event of default in which all outstanding amount of principal, accrued interest, and all other obligations would become
immediately due and payable if the Credit Facility is not updated prior to 30 June 2022 to reect updated projections. See Note 23 –
Subsequent Events for further details.
The Group’s risk management is carried out by the Group’s Finance Department. The Group is exposed to market risk, credit risk, and liquidity risk.
Market Risk
Interest Rate
The Group’s interest rate risk relates primarily from borrowings from nancial institutions with variable rate interest. When possible, the Group
manages its interest rate risk by entering xed-interest loans. The Group through ASUS holds the US Term Loan which carried an annualized
borrowing rate of LIBOR plus 4.0% as of 31 December 2021 (see Note 19 – Borrowings). The margin grid calls for a maximum of 4.0% and
allows for a lower margin upon reaching certain milestones. Currently, the Group does not maintain a program to hedge its variable rate
exposure. Changes in the interest rate can aect future investment opportunities.
104
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The Group manages its foreign currency risk by maintaining cash balances in foreign currency denominated bank accounts, analyzing future
obligations by currency, and transferring funds as needed. The Group has not entered into derivative or other agreements to reduce the
exchange rate risk and the related market risk.
As of 31 December 2021 and 2020, the Group’s cash balances were held in the following currencies:
As of 31 December 2021 and 2020, all of the Group’s long-term interest-bearing borrowing balances were held in USD.
Foreign Currency Sensitivity
For the years ended 31 December 2021 and 2020, the Group’s main source of sensitivity to exchange rate movement was due to the NOK-
denominated capital raise to fund USD-denominated construction and other expenses in the US and Denmark as follows:
(USD 1,000) 2021 2020
Capital raise eect in USD from a 10% reduction in the value of NOK to USD
(11,904) (9,863)
(USD 1,000) 2021 2020
USD
NOK
DKK
EUR
Total cash
15,920
816
137
139
17,012
25,477
1,634
956
456
28,523
(USD 1,000) 2021 2020
Interest expense eect on a 1% increase on oating interest rate
517 588
Foreign Currency
The Group’s foreign currency risk relates to the Group’s operating, investing, and nancing activities denominated in a foreign currency. This
includes the Group’s revenues, expenses, capital expenditures, and net investments in foreign subsidiaries. The Group’s reporting currency is
the United States dollar (“USD”), and the predominant currencies transacted by the Group’s subsidiaries are the USD, the Norwegian krone
(“NOK”), the Danish krone (“DKK”), and the EU euro (“EUR”).
Credit Risk
Financial instruments, which potentially subject the Group to credit risk, consist principally of cash and trade receivables. Cash is maintained
with major nancial institutions. The Group extends credit to some of its customers and management recognizes that extending credit and
setting appropriate reserves for accounts receivable is largely a subjective decision based on knowledge of the customer. Accordingly, the
Group trades only with recognized and creditworthy third parties and does not require collateral on trade receivables from its customers.
Management periodically evaluates credit exposure in the aggregate and by individual credit and periodically reviews the creditworthiness of
its customers to ensure the overall quality of the Group’s credit portfolio. Further, the Group’s trade receivables are credit insured unless an
exception is approved by the CEO. The Group has not experienced any material losses on its trade receivables. Credit risk associated with
revenue is limited to the amount of trade receivables outstanding for each customer.
Interest Rate Sensitivity
For the years ended 31 December 2021 and 2020, the following represents the Group’s potential interest expense eect based on a 1%
increase on the oating interest rate:
105
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The following are the remaining contractual maturities of the Group’s nancial liabilities as of 31 December 2021 and 2020, which include
gross undiscounted principal and interest payments and exclude the impact of netting agreements:
The Group completed equity capital raises in the amount of NOK 1,016m (USD 121m) on 3 June 2021 and NOK 905.5m (USD 100.4m) on 10
September 2020.
As of 31 December 2021, the 2020 Credit Facility totaled USD 200m of which USD 102m was committed and USD 98m uncommitted
through an accordion facility (see Note 19 – Borrowings).
As of 31 December 2021
(USD 1,000)
Trade and
other payables Borrowings
Up to 3 months
Between 3 and 12 months
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
Total nancial liabilities
19,018
-
-
-
-
19,018
579
1,769
50,772
-
-
53,120
As of 31 December 2020
(USD 1,000)
Trade and
other payables Borrowings
Up to 3 months
Between 3 and 12 months
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
Total nancial liabilities
10,771
-
-
-
-
10,771
586
1,789
3,531
50,781
-
56,687
Liquidity Risk
The Group continuously monitors liquidity and nancial projections through budgets and monthly updated forecasts. The Group’s nancial
position depends signicantly on salmon spot prices which have historically been volatile. Other liquidity risks include the impacts from
uctuations in production and harvest volumes, biological issues, and changes in feed prices. Feed prices generally correlate to the marine
and agricultural commodity prices of the main ingredients.
Delay in the completion of the construction of the Miami Bluehouse may aect the Group’s ability to achieve its operational plan and full
schedule of production, thereby adversely impacting the Group’s business and results of operations.
The provisions of the 2020 Credit Facility contain nancial covenants to be maintained by the Group. As of 31 December 2021, the Group
was in compliance with all nancial covenants (see Note 19 – Borrowings).
106
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 3 – SEGMENTS
The Group has two strategic divisions, which represent its reportable segments. The Group’s executive management reviews the internal
management reports of each division. As of 31 December 2021 and 2020, the Group’s reportable segments consisted of the following:
Fish Farming (Denmark)
The Group owns and operates a proprietary Bluehouse land-based salmon farm in Hvide Sande, Denmark through ASDK. Principal operations
comprise of the production and sale of salmon. On 15 September 2021, a re broke out in the Denmark Bluehouse in which substantially all
property, plant, and equipment related to its saltwater ongrowing systems were lost (see Note 9 – Property, Plant, and Equipment).
Fish Farming (US)
The Group owns the land in Homestead, FL US through ASSF and operates the proprietary Bluehouse land-based salmon farm through
ASUS. All sh systems from US Phase 1 construction of the Miami Bluehouse were substantially complete as of 31 December 2021 and is
projected to reach steady-state US Phase 1 operations in Q3 2022 when the Group commences producing the equivalent of 9,500 tons
HOG of annualized harvest volumes in the US. The US Phase 2 expansion project is currently under construction and is expected to add an
additional estimated 15,000 tons HOG of annual production capacity, for a total capacity of approximately 25,000 tons HOG.
For the years ended 31 December 2021 and 2020, the Group’s segment information consisted of the following:
Year ended 31 December 2021
(USD 1,000)
Fish farming
Other and
eliminations ConsolidatedDenmark US
Revenue from sale of salmon
EBITDA
EBITDA, pre-fair value adjustment on biological assets
EBITDA, adjusted*
Pre-tax loss
Total assets
Total liabilities
Depreciation and amortization
Interest income
Interest expense
Impairment of non-current assets
Capital expenditures
Cash ows from operating activities
Cash ows from investing activities
Cash ows from nancing activities
3,560
(43,461)
(45,062)
(10,308)
(48,076)
1,488
40,045
2,899
-
1,716
34,754
1,908
(3,386)
(2,674)
5,198
13,291
(71,403)
(71,231)
(71,231)
(89,528)
298,617
154,216
12,157
1,388
7,356
-
55,549
(63,725)
(55,238)
112,805
-
(2,373)
(2,373)
(2,373)
4,826
11,635
(122,077)
-
1,974
(5,225)
-
-
(765)
1
(3,144)
16,851
(117,237)
(118,666)
(83,912)
(132,778)
311,740
72,184
15,056
3,362
3,847
34,754
57,457
(67,876)
(57,911)
114,859
* EBITDA adjusted for fair value adjustment on biological assets and impairment of non-current assets
107
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Year ended 31 December 2020
(USD 1,000)
Fish farming
Other and
eliminations ConsolidatedDenmark US
Revenue from sale of salmon
EBITDA
EBITDA, pre-fair value adjustment on biological assets
EBITDA, adjusted*
Pre-tax loss
Total assets
Total liabilities
Depreciation and amortization
Interest income
Interest expense
Capital expenditures
Cash ows from operating activities
Cash ows from investing activities
Cash ows from nancing activities
5,041
(8,111)
(6,355)
(6,355)
(12,465)
44,868
36,600
2,563
1
1,792
2,514
(7,693)
(2,810)
9,551
1,729
(30,645)
(22,923)
(22,923)
(45,071)
259,888
141,759
4,182
19
10,263
52,041
(41,038)
(58,047)
92,659
(500)
(1,094)
(1,094)
(1,094)
2,343
16,203
(112,859)
-
869
(2,568)
-
1,772
6
9,754
6,270
(39,850)
(30,372)
(30,372)
(55,193)
320,959
65,500
6,745
889
9,487
54,555
(46,959)
(60,851)
111,964
For the years ended 31 December 2021 and 2020, signicantly all the Group’s revenue consisted of the sale of salmon, and the Group’s
disaggregation of revenue with customers consisted of the following:
* EBITDA adjusted for fair value adjustment on biological assets and impairment of non-current assets
For the years ended 31 December 2021 and 2020, the Group’s concentration of revenue consisted of the following:
(USD 1,000) 2021 2020
Revenue from external customers in:
United States
Denmark
Netherlands
Other countries
Total revenue from external customers
12,716
1,168
730
2,237
16,851
1,964
1,490
1,193
1,623
6,270
(USD 1,000) 2021 2020
Sales per customer:
Customer A
Customer B
Customer C
Customer D
Customer E
Other customers
Total revenue from signicant customers
4,735
1,184
1,100
854
793
8,185
16,851
191
467
925
83
252
4,352
6,270
108
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 4 – OTHER OPERATING EXPENSES
For the years ended 31 December 2021 and 2020, the Group’s other operating expenses consisted of the following:
With the nalization of US Phase 1 construction, the Group incurred USD 1.3m in property taxes (USD 0.9m through ASUS and USD
0.4m through ASSF) for the year ended 31 December 2021. No amounts were incurred in 2020 as the overall construction of the US
Phase 1 project was still considered to be in process for property tax purposes. The amounts are included as part of selling, general, and
administrative expenses within the Group’s other operating expenses.
In January 2021, ASUS experienced a breakdown in its internal chiller plant causing temporary temperature instability. As a result, ASUS
incurred USD 11.0m for the year ended 31 December 2021 in short-term costs including USD 8.1m on temporary chiller leases (see Note 8
– Leases) and USD 2.9m on generator fuel and supplies. The amounts exclude any future insurance or claim proceeds and are included as
part of leases and maintenance and supplies, respectively, within the Group’s other operating expenses. The Group subsequently incurred
approximately USD 1.3m in similar short-term costs as of the date of this report.
(USD 1,000) Note 2021 2020
Selling, general, and administrative
Professional fees
Leases
Maintenance and supplies
Total other operating expenses
7
8
7,663
4,071
8,927
3,911
24,572
4,556
3,517
1,175
1,777
11,025
109
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 5 – BIOLOGICAL ASSETS
Fair Value Measurement of Biological Assets
Under the provisions of
IAS 41
, the fair value of the Group’s biological assets is calculated based on the market price for the relevant sh
quality and size on the reporting period date. As the biomass input is mostly unobservable, biomass valuation is categorized at Level 3 in the
fair value hierarchy under
IFRS 13
. As of 31 December 2021, all biological assets weighing above 1 kg are classied as Level 3 and there were
no transfers to or from Level 1 or Level 2 during the year. The estimated market price in each market is normally derived from the Group’s
latest price achievement and overall understanding of the quality of the batch being harvested. In addition, quoted forward prices from Fish
Pool, a third-party, are considered in the estimation to improve reliability and comparability of the price estimation.
The valuation model for the Group’s biological assets calculates the net present value of the expected cash ows from harvested biomass
based on the actual number of sh as a starting point. The time to market for live sh is based on a growth table for each generation of sh.
The Group considers a live sh weight of 4.5 kg to be the optimal harvest weight with an expected growth period of 21 months. Expected
mortality rates are used to estimate the expected volume of biomass that will reach optimal harvest weight. On average, an estimated 64% of
the number of sh is expected to reach the optimal harvest weight. This considers both natural mortality and culling. The Group’s price and
net expected cash ows are based on future price estimates at the time of harvest less estimated remaining costs to produce and sell. The
discount rate used towards the Group’s net present value calculation is based on a discount rate of 9.5%. The stated interest rate is based
on an interest rate grid that allows for a lower interest rate to be implemented in the future, upon reaching certain milestones.
As of 31 December 2021 and 2020, the Group’s biological assets consisted of the following:
The following represents a reconciliation of changes in the carrying amount of the Group’s consolidated biological assets for the years
ended 31 December 2021 and 2020:
(USD 1,000) 2021 2020
Cost of biological assets
Fair value adjustments
Total biological assets
Cost of biological assets (harvestable sh)
Fair value adjustments
Total biological assets of harvestable sh
Cost of biological assets (non-harvestable sh)
Total biological assets
24,688
(7,893)
16,795
16,240
(7,893)
8,347
8,448
16,795
33,987
(9,377)
24,610
28,949
(9,377)
19,572
5,038
24,610
(USD 1,000) 2021 2020
Biological assets at beginning of year
Gain (loss) arising from changes in fair value less costs to sell
Increases due to production and purchases
Net changes in production depreciation
Decreases due to harvest
Decreases due to mortality
Decreases due to underutilized plant capacity
Net exchange rate dierences
Biological assets at end of year
24,610
1,429
53,064
(792)
(32,657)
(12,011)
(16,616)
(232)
16,795
11,275
(9,478)
36,820
3,254
(8,531)
(8,375)
-
(355)
24,610
110
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
As of 31 December 2021 and 2020, the Group’s physical volumes of biological assets consisted of the following:
Sensitivity Analysis
Although the Group has acquired expertise in assessing various factors regarding biomass, the estimate of unrealized fair value adjustment
under
IFRS 13
is based on several uncertain assumptions, and the realized prot ultimately achieved upon the sale of inventory may
dier from the calculations of fair value accordingly. Such assumptions include biomass volume and growth rate, biomass quality and size
distribution, biomass costs, sh mortality, and market price.
Biomass Volume and Growth Rate:
Biomass volume and growth rate is estimated from the changes between known tank density prior to the release of sh in tanks and the
current tank density with live sh. The dierence in densities is then used to estimate growth between any given period, which gives little
uncertainty with respect to biomass volume and growth rate.
Biomass Quality and Size Distribution:
Biomass quality prior to harvest is estimated based on periodic samples obtained throughout the life of a given batch. However, the actual
biomass quality for the entire batch population is dicult to assess prior to harvest and some degree of variation of quality is expected.
Fair value is rst assessed as superior quality sh and the estimated price per kg is reduced on downgraded ordinary and production grade
sh based on standard rates from industry benchmarks. Biomass size distribution prior to harvest is estimated from counting and grading
systems prior to harvest. Although some degree of variation is expected, actual sh size is not expected to deviate substantially from the
average distribution for the overall batch and therefore, the Group’s estimated value of biomass with this respect.
Production Costs:
Estimated future biomass costs are based on the Group’s prognoses taking into consideration factors such as uncertainty with feed prices
or other biomass cost developments. Changes in the Group’s estimation towards biomass costs would inuence the value of biomass and is
recognized accordingly as part of the fair value adjustments in the accompanying consolidated statements of operations.
Fish Mortality:
Mortality under normal capacity is expected and directly aects the fair value estimates as it ultimately results in a reduction in harvestable
biomass volumes. Further, overall biomass costs for a given batch includes the cost of sh that will perish under expected mortality.
2021 2020
Live weight of biomass (in tons RLW)
Non-harvestable sh
Harvestable sh
Total live weight of biomass (in tons RLW)
Number of sh (in thousands)
Non-harvestable sh
Harvestable sh
Total number of sh (in thousands)
Volume of sh harvested during the year (tons gutted weight)
882
1,691
2,573
4,581
488
5,069
2,374
614
3,273
3,887
4,064
1,271
5,335
989
111
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Market Price:
The key element in the fair value model of biological assets is the estimated forward market price that is expected to be received in the
future when the sh is harvested. The estimated market price in each market is normally derived from the Group’s latest price achievement
and overall understanding of the quality of the batch being harvested. An increase in anticipated forward market prices would increase the
fair value of the biological assets and vice versa. A change in production costs will generally have lesser impact on the estimated fair value
calculation that a similar change in anticipated forward market prices.
The fair value of the Group’s biological assets was calculated based on dierent parameters.
As of 31 December 2021 and 2020, the estimated eect on the book value of biological assets was as follows:
Incident-Based Mortality
On 29 February 2020, ASDK experienced a mass mortality event in one of its grow-out systems that resulted in approximately 227,000
salmon lost due to excessive nitrogen levels in the water. As a result of the event, the Group’s next harvest revenue was pushed back by
approximately ve months. The value of the biomass represented by the aected sh was insured and ASDK incurred a loss net of insurance
proceeds of USD 2.4m from the incident.
On 28 July 2020, ASUS initiated an emergency harvest from one of its partially commissioned grow-out systems. As a result of the event,
approximately 200,000 salmon with a total weight of approximately 400 tons HOG were harvested. Other grow-out systems of the Miami
Bluehouse were unaected. The Group is still assessing potential insurance proceeds to be received.
On 23 March 2021, ASUS experienced an incident in one of its grow-out systems in the Miami Bluehouse that resulted in approximately 500
tons (HOG) of sh lost with an average weight of approximately 1kg, equivalent of around 5% of annualized US Phase 1 harvest volumes.
Other independent systems in the Miami Bluehouse were unaected. The value of the biomass represented by the aected sh was USD
4.6m and the insurance claim is still ongoing. Prior to this incident, ASUS had identied a center drain design issue with all US Phase 1 grow-
out systems. Although work had commenced to rectify the issue prior to this incident, the aected system had not yet been modied. Today,
among other risk-mitigating initiatives, ASUS split all its six independent US Phase 1 grow-out systems into twelve.
On 9 July 2021, ASDK experienced an incident in one of its grow-out systems in the Denmark Bluehouse that resulted in a loss of
approximately 500 tons (HOG). Other independent systems in the Denmark Bluehouse were unaected. The nancial impact of the incident
after expected insurance proceeds was USD 2.8m. The Group’s preliminary analysis, which remains subject to change, indicates that
maintenance work performed in the ltration system caused water quality to quickly deteriorate, resulting in elevated mortality.
On 15 September 2021, a re broke out in the Denmark Bluehouse. All employees were reported safe without injuries. Approximately 170 tons
of standing biomass in the Danish facility’s ongrowing systems with a book value of USD 0.8m were lost.
(USD 1,000)
Increase
Eect on estimated fair value
2021 2020
Change in biomass size
Change in forward price
Change in discount rate
2%
2%
2%
217
272
(48)
751
837
(209)
112
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 6 – SALARY AND PERSONNEL COSTS
During the ordinary course of business, the Group capitalizes portions of total salary and personnel costs towards biological assets and
assets under construction.
For the years ended 31 December 2021 and 2020, the Group’s salary and personnel costs consisted of the following:
For the years ended 31 December 2021 and 2020, the Group employed 166 and 159 full-time employees, respectively.
For the years ended 31 December 2021 and 2020, total compensation to the Group’s Board of Directors consisted of the following:
(USD 1,000) 2021 2020
Salaries, including holiday pay and bonuses
Payroll taxes
Pension costs
Share-based compensation benets
Temporary labor
Other benets
Total salary and personnel costs
Less: production labor capitalized towards biological assets
Less: construction labor capitalized towards assets under construction
Less: processing labor towards cost of materials
Total salary and personnel costs
17,702
1,155
488
1,559
2,416
716
24,036
(10,455)
(1,275)
(1,722)
10,584
13,173
748
411
339
-
384
15,055
(5,403)
(2,204)
-
7,448
(USD 1,000) 2021 2020
Johan E. Andreassen, Chairman of the Board and CEO
André Skarbø, Director
Alexander Reus, Director
Patrice Flanagan, Director (1)
Runar Vatne, Director (2)
Tone Bjørnov, Director (3)
Ellen Marie Sætre, Director (3)
Bjørn-Vegard Løvik, Director (4)
Peter Skou, Director (4)
Total Board of Directors
(1) Elected as new director 1 August 2019
(2) Elected as new director 12 November 2019
(3) Elected as new directors 4 May 2020
(4) Stepped down as directors 4 May 2020
-
68
82
68
72
68
68
-
-
426
-
98
107
79
77
54
54
49
44
562
113
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
For the years ended 31 December 2021 and 2020, the Group’s remuneration to executive management consisted of the following:
Total remuneration to executive management is included as part of total salary and personnel costs in the accompanying consolidated
statements of operations.
A bonus scheme is in place for executive management based on the Group’s revenue, operating prots, and commensurate performance.
The Group’s remuneration to executive management consists of the Group’s ordinary pension schemes (see Note 20 – Pensions) and
no additional pension scheme for executive management is in place. There are severance clauses in each respective executive ocer’s
employment agreements with varying terms based on termination for cause or not-for-cause.
For the year ended 31 December 2021, USD 110k was paid to Dharma Rajeswaran, who stepped down as the Group’s COO on 16 August
2021, and USD 90k was paid to Cristina Espejo, who stepped down as the Group’s CPO on 11 August 2021. For the year ended 31 December
2020, USD 175k was paid as severance to Jose Prado, who stepped down as the Group’s CFO on 9 September 2020.
Board of Directors’ Statement on Remuneration of Executive Management
The Group’s Board of Directors determines the principles applicable to the Group’s policy for compensation of executive management and
presented its statement on such principles for the 2021 nancial year during the Group’s Annual General Meeting (“AGM”) in accordance
with Section 6-16a of the Norwegian Public Limited Liability Companies Act.
Pursuant to Section 5-6 (3) of the Norwegian Public Limited Companies Act, the Group’s AGM held a consultative vote over this statement.
However, the guidelines related to share-based incentive schemes (see “Long-Term Incentive Program” below) was voted on and binding for
the Group’s Board of Directors (cf. Section 5-6 (3) of the Norwegian Public Limited Companies Act).
The following principles guide the determination of compensation and other incentive awards regarding the remuneration of the
Group’s executive management. The Group’s remuneration policy seeks to promote growth, reward performance, and motivate executive
management to maximize the creation of sustainable, long-term shareholder value.
Executive management
(USD 1,000) Salary Bonus
Pension
contribution
Other
benets Total
Share-based
compensation
Year ended 31 December 2021
Johan E. Andreassen, CEO
Dharma Rajeswaran, COO (Stepped down on 16 August 2021)
Svein Taklo, CDIO
Karl Øystein Øyehaug, CFO and Managing Director
Alejandro Castro, CBO
Cristina Espejo, CPO (Stepped down on 11 August 2021)
Danielle Villoch, CLO
Total remuneration to executive management
Year ended 31 December 2020
Johan E. Andreassen, CEO
Jose Prado, CFO (Stepped down on 9 September 2020)
Dharma Rajeswaran, COO
Svein Taklo, CDIO
Karl Øystein Øyehaug, Interim CFO and Managing Director
Cristina Espejo, CPO
Danielle Villoch, CLO
Total remuneration to executive management
502
176
286
238
238
157
251
1,848
500
300
275
275
155
172
180
1,857
-
-
-
-
-
-
-
-
-
-
28
28
45
17
28
146
12
11
11
8
9
10
10
71
18
17
8
-
7
-
2
52
-
110
-
-
-
90
-
200
-
175
-
-
-
-
-
175
514
297
297
246
247
257
261
2,119
518
492
311
303
207
189
210
2,230
591
-
-
-
-
-
-
591
351
44
143
143
12
30
99
822
114
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Guidelines for Executive Management Compensation
Atlantic Sapphire’s long-term goal is to transform the salmon farming industry and become a global leader in sustainable, high-quality
protein production through innovation and the responsible implementation of land-based aquaculture technology. Executive management
plays a critical role in achieving this goal.
The principles supporting the Group’s remuneration policy are as follows:
• Oer executive compensation that is competitive, both on industry and national (US) levels, to attract and retain top managerial talent.
• Emphasize a collaborative culture and a lean organizational structure.
• Provide incentives that foster the creation of sustainable, long term shareholder value.
• Ensure that the Group’s executive management is aligned with key organizational goals.
Fixed Compensation
Fixed compensation comes in the form of base salaries paid to executive management and are intended to attract and retain talented
individuals. It is set to reect market standards, each executive’s respective roles and responsibilities within the Group, as well as such
person’s experience as it relates to his or her position. Over time, Atlantic Sapphire expects the base salaries of executive management to be
at or around the market median for comparable positions in the industry and in the US.
The Group may pay above or below the market median for certain individuals for a variety of reasons, including, but not limited to, knowledge
and skill, scarcity of qualied candidates, individual capabilities and contributions, time in the industry and organization, importance of the
role to the Group overall and potential for future growth.
Variable Compensation
The Group oers a short-term annual cash incentive program plan designed to drive desired performance and business results throughout
the Group. This program is based on predetermined goals and key performance indicators for each scal year with corresponding
compensation awards determined at a “minimum”, “target”, or a “maximum” level. The program for 2021 was comprised of the following three
performance areas: US construction costs, biomass growth, and EBITDA. This program has a maximum payout for any senior executive at 12%
of such individual’s annual base salary.
Long-Term Incentive Program
The key objectives of Atlantic Sapphire’s long-term incentive (“LTI”) program are to align the interests of executive management, employees
and shareholders and provide the Group’s employees an opportunity to share in the value creation and long-term development of the
Group.
The Group has a share option scheme that was approved by the Group’s Annual General Meeting in 2021, which authorized up to
2,000,000 shares. In 2021, the Board of Directors approved issuance of 1,354,570 new share options to employees under the share option
scheme, and no options were granted as part of the Group’s annual long-term incentive program.
Individual LTI grants will be determined based on the Group’s performance, comparable market practices and performance. At this time, the
LTI grants provided by the Group include the following: 1) Share options granted at the ve-day trading average as of the date of grant, and
2) Performance-based share options granted at a strike price of 30% above the ve-day trading average as of the date of grant. All share
options referenced above and granted under the LTI program are subject to a four-year vesting period and certain other requirements.
Retirement Benets
The Group has a 401(k) plan, which is open to all employees after the rst three months of employment. The Group will make a matching
contribution on each employee’s behalf equal to (1) 100% of such employee’s contribution up to 3% of such employee’s base salary, plus
(2) 50% of the amount of such employee’s contribution that exceeds 3% of base salary, up to 5% of the employee’s base salary, for the
calendar year. The 401(k) plan has no vesting requirements.
Severance Pay
The Group has individual employment agreements with executive management, which also provide for certain terms and conditions with
respect to notice periods and severance pay should the Group terminate or request the resignation of the executive.
115
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Benets in Kind
In addition to xed and variable compensation, members of executive management are provided with other benets, such as a mobile phone,
laptop, and a transportation reimbursement. Executive management also receive health, vision, and dental insurance, as well as short-term
and long-term disability and life insurance. Other than health insurance, the total value of these benets are de minimis and account only for
a limited portion of each executive’s total remuneration package.
116
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 7 – AUDITOR’S FEES
For the years ended 31 December 2021 and 2020, remuneration to the Group’s auditors, excluding VAT, consisted of the following:
Total amounts towards auditor’s fees are included as part of professional fees in other operating expenses (see Note 4 – Other
Operating Expenses).
(USD 1,000) 2021 2020
Statutory auditing services
Tax advisory services
Other services
Total auditor’s fees
343
-
-
343
273
9
2
284
117
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 8 – LEASES
The Group leases certain land, oces, vehicles, and equipment under various lease agreements with lessors under
IFRS 16
, Leases in which the
Group establishes a right-of-use asset and lease liability for material leases. The Group’s leases do not contain variable lease payment terms.
For the years ended 31 December 2021 and 2020, total rent expense recognized under the short-term exemption under
IFRS 16
consisted of
USD 8.9m and USD 1.2m, respectively, and is included as part of leases in other operating expenses (see Note 4 – Other Operating Expenses).
In January 2021, ASUS experienced a breakdown in its internal chiller plant causing temporary temperature instability. As a result, ASUS
incurred USD 8.1m on temporary chiller leases. The amounts exclude any future insurance or claim proceeds and are included as part of
leases in other operating expenses.
For the years ended 31 December 2021 and 2020, the reconciliation of the Group’s right-of-use asset and liability consisted of the following:
For the years ended 31 December 2021 and 2020, amortization of the Group’s right-of-use assets was USD 450k and USD 133k,
respectively, and is included as part of depreciation and amortization in the accompanying consolidated statements of operations. Lease
liability interest expense for the years ended 31 December 2021 and 2020 was USD 176k and USD 47k, respectively, and is included as part
of nance expense in the accompanying consolidated statements of operations.
Land Lease
The Denmark Bluehouse is built upon land that is leased under an agreement with a third party. The lease commenced on 1 April 2018 and
expires on 31 October 2037.
Year ended 31 December 2021
(USD 1,000)
Right-of-use
asset
Lease
liability
Carrying amount, opening balance
Amortization
Lease payments
Termination of agreements
Currency eects
Carrying amount, closing balance
3,337
(450)
-
(242)
(41)
2,604
3,573
-
(349)
-
(58)
3,166
Year ended 31 December 2020
(USD 1,000)
Right-of-use
asset
Lease
liability
Carrying amount, opening balance
New contracts
Amortization
Lease payments
Deferred interest expense
Currency eects
Carrying amount, closing balance
355
3,083
(133)
-
-
32
3,337
379
3,093
-
(10)
74
37
3,573
118
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Oce Leases
ASUS holds lease arrangements of corporate premises in Miami, Florida. The total minimum lease contract payments for the two lease
arrangements consisted of approximately USD 3.2m and were assessed for as one lease contract with two underlying components in
accordance with
IFRS 16
. The two underlying components consisted of two separate oce suites (Suite 510 and Suite 2400) in the same
building owned by the same lessor. Subject to the provisions of the lease contract, the Suite 510 lease commenced on 1 August 2019 and
expired within 5 days from 1 January 2020, the commencement date of the Suite 2400 lease.
ASUS continued to occupy Suite 510 and the Group allocated the total minimum lease payments of the lease contract between Suite 510
and Suite 2400 using the respective estimated standalone lease value of the two underlying components. ASUS applied the short-term
exemption of
IFRS 16
on Suite 510 and for the year ended 31 December 2020, recognized the allocated minimum lease payments as rent
expense of approximately USD 368k as part of other operating expenses in the accompanying consolidated statements of operations. ASUS
recognized the present value of the allocated minimum lease payments for Suite 2400 as a right-of-use asset and the related lease liability
on the Suite 2400 commencement date of 23 September 2020. The Suite 2400 lease was subsequently terminated in 2022 (see Note 23 –
Subsequent Events).
For the years ended 31 December 2021 and 2020, total oce lease expense was USD 200k and USD 467k, respectively, and the amounts
are included as part of leases in other operating expenses.
Vehicle Leases
During the ordinary course of business, the Group leases certain vehicles under lease agreements with third parties to facilitate operations.
During the year ended 31 December 2020, ASDK recognized the present value of the allocated minimum lease payments towards a
forklift as a right-of-use asset and the related lease liability. All other vehicle rent is included as part of other operating expenses in the
accompanying consolidated statements of operations as the Group considers the overall potential right-of-use assets and lease liabilities
associated with vehicles to have a marginal eect on the consolidated nancial statements as a whole. For the years ended 31 December
2021 and 2020, total vehicle lease expense was USD 10k and USD 12k, respectively, and the amounts are included as part of leases in other
operating expenses.
Equipment Leases
During the ordinary course of business, the Group leases certain equipment under lease agreements with third parties to facilitate
operations. During the year ended 31 December 2020, ASDK recognized the present value of the allocated minimum lease payments
towards its automated feed system as a right-of-use asset and the related lease liability. As a result of the September 2021 Denmark re, an
impairment was recognized over the right-of-use asset and the related lease liability was settled subsequently in 2022. All other equipment
rent is included as part of other operating expenses in the accompanying consolidated statements of operations as the Group considers the
overall potential right-of-use assets and lease liabilities associated with equipment to have a marginal eect on the consolidated nancial
statements as a whole. For the years ended 31 December 2021 and 2020, total equipment lease expense was USD 252k and USD 367k,
respectively, and the amounts are included as part of leases in other operating expenses .
119
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
(USD 1,000) Land Oce Vehicles Equipment Tot al
As of 31 December 2021
Less than one year
Between one and ve years
More than ve years
Total future lease payments
As of 31 December 2020
Less than one year
Between one and ve years
More than ve years
Total future lease payments
36
168
694
898
35
163
763
961
432
1,862
501
2,795
429
1,845
987
3,261
19
32
-
51
20
64
-
84
277
-
-
277
213
311
-
524
764
2,062
1,195
4,021
697
2,383
1,750
4,830
Future Lease Payments
As of 31 December 2021 and 2020, the Group’s future lease payments under non-cancellable leases consisted of the following:
As of 31 December 2021, the total amount of USD 2.8m in future oce lease payments was related to the Suite 2400 lease under ASUS that
was subsequently terminated in 2022 (see Note 23 – Subsequent Events).
120
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 9 – PROPERTY, PLANT, AND EQUIPMENT
As of 31 December 2021 and 2020, the Group’s property, plant, and equipment, net consisted of the following:
(USD 1,000) Land Buildings
Production,
plant, and
machinery
Equipment
and other
movables Software
Assets under
construction Total
At 1 January 2021
Cost
Less: accumulated depreciation
Net book amount
Year ended 31 December 2021
Opening net book amount
Additions
Reclassications
Disposals
Depreciation and amortization charge
Reversed depreciation and amortization
Impairment loss
Net exchange rate dierences
Closing net book amount
At 31 December 2021
Cost
Less: accumulated depreciation,
amortization, and impairment
Net book amount
8,714
-
8,714
8,714
-
-
-
-
-
-
-
8,714
8,714
-
8,714
134,641
(4,983)
129,658
129,658
-
20,602
-
(5,184)
-
(14,738)
(410)
129,928
154,833
(24,905)
129,928
84,323
(9,738)
74,585
74,585
-
12,685
-
(8,215)
-
(19,461)
(392)
59,202
96,616
(37,414)
59,202
1,379
(565)
814
814
48
25
(81)
(201)
60
(182)
(7)
476
1,364
(888)
476
561
(62)
499
499
221
-
-
(225)
-
-
-
495
782
(287)
495
42,810
-
42,810
42,810
57,188
(33,312)
-
-
-
(373)
(679)
65,634
66,007
(373)
65,634
272,428
(15,348)
257,080
257,080
57,457
-
(81)
(13,825)
60
(34,754)
(1,488)
264,449
328,316
(63,867)
264,449
121
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
(USD 1,000) Land Buildings
Production,
plant, and
machinery
Equipment
and other
movables Software
Assets under
construction Total
At 1 January 2020
Cost
Less: accumulated depreciation
Net book amount
Year ended 31 December 2020
Opening net book amount
Additions
Reclassications
Disposals
Depreciation and amortization charge
Reversed depreciation and amortization
Net exchange rate dierences
Closing net book amount
At 31 December 2020
Cost
Less: accumulated depreciation,
amortization, and impairment
Net book amount
Economic life
Depreciation plan
8,714
-
8,714
8,714
-
-
-
-
-
-
8,714
8,714
-
8,714
(Non-depreciable)
(Non-depreciable)
15,218
(1,317)
13,901
13,901
-
118,109
-
(3,666)
-
1,314
129,658
134,641
(4,983)
129,658
15-25 years
20 Years
22,840
(3,746)
19,094
19,094
-
60,042
(341)
(6,054)
62
1,782
74,585
84,323
(9,738)
74,585
10-15 years
15 Years
1,019
(362)
657
657
223
115
-
(203)
-
22
814
1,379
(565)
814
3-7 years
5 Years
180
-
180
180
382
-
-
(62)
-
(1)
499
561
(62)
499
3 Years
3 Years
167,070
-
167,070
167,070
53,950
(178,266)
-
-
-
56
42,810
42,810
-
42,810
(Not in service)
(Not in service)
215,041
(5,425)
209,616
209,616
54,555
-
(341)
(9,985)
62
3,173
257,080
272,428
(15,348)
257,080
Debt Secured by Borrowings
Substantially all the Group’s property, plant, and equipment are secured by its borrowings (see Note 19 – Borrowings).
Depreciation and Amortization Expense
For the years ended 31 December 2021 and 2020, the Group’s depreciation and amortization consisted of the following:
(USD 1,000) 2021 2020
Property, plant, and equipment depreciation and amortization
Right of use amortization
Gross depreciation and amortization
Net change in depreciation allocated to and from biomass
Total depreciation and amortization
13,825
439
14,264
792
15,056
9,846
153
9,999
(3,254)
6,745
Gross depreciation attributed to the US Phase 1 Bluehouse is capitalized to biological assets during production and subsequently expensed
as period cost upon the harvest of live sh out of the Bluehouse. As such, the total depreciation and amortization expense presented on the
Group’s accompanying consolidated statements of operations includes the net eect of biomass depreciation from production and harvest.
122
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Capitalized Financial Expenses
Under
IAS 23, Borrowing Costs
, the Group capitalizes nancial expenses directly attributable to the acquisition, construction, and production
as part of the qualifying asset’s cost basis. A ‘qualifying asset’ is one that takes a substantial period to complete and place in service. For
the year ended 31 December 2020, the Group included USD 4.5m of capitalized borrowing costs consisting of interest, commitment fees,
and debt issuance cost amortisation, as part of the Group’s property, plant, and equipment in the accompanying consolidated statements
of nancial position. Upon amending the US Term Loan under the 2020 Credit Facility, ASUS wrote o remaining debt issuance costs of
USD 8.2m in accordance with
IFRS 9
, Financial Instruments as part of nance expense in the accompanying consolidated statements of
operations. No debt issuance costs were capitalized as part of the Group’s property, plant, and equipment for the remainder of 2020 and for
the year ended 31 December 2021 (see Note 19 – Borrowings).
Contractual Commitments
The Group has built, or is in the process of building, Bluehouse facilities in Hvide Sande, Denmark and in Homestead, Florida, US. As of
31 December 2021 and 2020, signicant capital expenditures contracted for at the end of the reporting periods, but not recognized as
liabilities, were as follows:
As of 31 December 2021, signicantly all contractual commitments were related to US Phase 2 construction based on signed bid packages.
Such amounts are based on projected billings on work completed based on the speed of construction determined solely at the Group’s
discretion. The Group expects to incur only demobilization costs should the scope of work not be completed.
Impairment of Non-Current Assets
Atlantic Sapphire USA LLC
As of December 31, 2021, the recoverable amount substantially exceeded the carrying amount of the cash generating unit (the “CGU”) based
on projected cash ows for US Phase 1 and US Phase 2. The cash ows projected were based on forecasts for the next 8.5 years, with a
terminal value thereafter, discounted using a rate of 9.5%.
The projected cash ows were subjected to dierent scenario analyses. Inputs included changes in the cost of production, revenue (harvest
volume or price achievement), and changes in the discount rate. For the recoverable amount to equal the total carrying amount and reduce
the estimated headroom to zero, holding all other inputs constant:
(USD 1,000) 2021 2020
Property, plant, and equipment in Hvide Sande, Denmark
Property, plant, and equipment in Homestead, Florida, US
Total contractual commitments
-
94,433
94,433
812
6,594
7,406
Input description Overall NPV
NPV at
steady state
Cost of production would need to increase by:
Revenue would need to decrease by:
The discount rate would need to increase from:
6.0%
2.5%
9.5% to 10.2%
6.8%
2.8%
N/A
123
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire Denmark A/S
On 15 September 2021, a re broke out in the Denmark Bluehouse. Substantially all property, plant, and equipment related to its saltwater
ongrowing systems were lost in the re and an impairment of non-current assets of USD 34.8m was recognized. The Danish facility is insured
against re for the full book value of the facility of approximately USD 33m. Although the Group believed that the insurance claim was probable
as of 31 December 2021, the Group was not virtually certain of the insurance claim prior to the subsequent conclusion of the police report on 1
April 2022 indicating that there was no evidence of arson. As such, the Group did not recognize an insurance claim receivable as of 31 December
2021. While the insurance claim process remains ongoing, the Group expects to recover approximately USD 33m, the full book value of the
Danish facility insured against the re, less the value of the assets that were unaected, and subsequently booked the insurance claim receivable
in 2022 (see Note 23 – Subsequent Events).
124
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 10 – FINANCE INCOME AND EXPENSE
For the years ended 31 December 2021 and 2020, nance income and expense, net consisted of the following:
On 21 April 2020, total unamortized debt issuance costs presented against borrowings were USD 2.4m. Upon amending the US Term Loan
under the 2020 Credit Facility, ASUS incurred USD 5.8m in new debt issuance costs (See Note 19 – Borrowings). In accordance with
IFRS
9, Financial Instruments
, the previously unamortized debt issuance costs of USD 2.4m and USD 5.8m in new debt issuance costs were
recognized as part of nance expense in the accompanying consolidated statements of operations.
As of 31 December 2020, Phase 1 construction of the Miami Bluehouse was signicantly completed and no proceeds from borrowings were
obtained in 2021 towards construction. As such, borrowing costs were no longer capitalized under
IAS 23, Borrowing Costs
and expensed as
period cost as interest expense during the year ended 31 December 2021.
For the year ended 31 December 2021, other nance income consisted of USD 1.2m in complete forgiveness of outstanding principal on the
PPP Loan (see Note 19 – Borrowings).
(USD 1,000) 2021 2020
Interest income
Interest expense
Debt issuance costs (amortisation)
Loan commitment fees
Other nance income
Other nance expense
Currency exchange eects
Total nance expense, net
19
(2,626)
-
(1,221)
1,156
-
2,187
(485)
33
(145)
(8,196)
(1,115)
-
(31)
856
(8,598)
125
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 11 – TAXES
For the years ended 31 December 2021 and 2020, the Group’s income tax expense consisted of the following:
For the years ended 31 December 2021 and 2020, the reconciliation of the Group’s tax expense with the Norwegian tax rate consisted of
the following:
(USD 1,000) 2021 2020
Reconciliation of tax benet with the nominal tax rate
(Loss) prot before tax
Nominal tax rate
Expected tax benet using nominal tax rate
Non-deductible expenses (income)
Eect from dierent tax rate in other countries
Tax losses for which no deferred tax asset is recognized
Non-deductible share-based payment expenses
Income tax benet
(132,778)
22.00%
(29,211)
(708)
(2,995)
32,571
343
-
(55,193)
22.00%
(12,142)
(625)
(1,508)
14,201
74
-
(USD 1,000) 2021 2020
Income tax expense
Current tax
Deferred tax
Income tax expense (benet)
Current tax on prots for the year
Current tax
Deferred tax due to changes in temporary dierences
Tax losses for which no deferred tax asset is recognized
Deferred tax
Eective tax rate
-
-
-
-
-
(31,526)
31,526
-
0.00%
-
-
-
-
-
(15,263)
15,263
-
0.00%
126
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Changes in Tax Rate
The nominal tax rate in Norway remained at 22% in 2020 and 2021.
As of 31 December 2021 and 2020, the Group’s deferred tax balances consisted of the following:
As of 31 December 2021 and 2020, the Group’s carry forward of tax losses consisted of the following:
(USD 1,000) 2021 2020
Deferred tax balances
The balance comprises temporary dierences attributable to:
Deferred tax assets:
Tax losses
Property, plant, and equipment
Other
Set-o tax
Net deferred tax assets after set-o
Unrecognized deferred tax assets
Net deferred tax assets
Deferred tax liabilities:
Property, plant, and equipment
Other
Set-o tax
Net deferred tax liabilities
46,996
8,590
2,697
(621)
57,662
(57,662)
-
612
9
(621)
-
36,157
82
2,570
(12,673)
26,136
(26,136)
-
12,673
-
(12,673)
-
(USD 1,000) 2021 2020
Tax losses carried forward
Expires (2033 and forward)
Never expires
Total tax losses carried forward
Tax losses for which deferred tax asset is recognized
Tax losses for which no deferred tax asset is recognized
Potential tax benet
4,320
189,921
194,241
-
194,241
46,996
4,320
153,588
157,908
-
157,908
36,157
127
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 12 – EARNINGS PER SHARE
Basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period, while
diluted earnings per share calculations are performed using the average number of common shares and dilutive common shares equivalents
outstanding during each period.
Options are dilutive when they result in the issue of ordinary shares for less than the average market price of ordinary shares during the period.
The dierence between the number of ordinary shares issued and the number of ordinary shares that would have been issued at the average
market price in the period is treated as an issue of ordinary shares for no consideration.
For the years ended 31 December 2021 and 2020, the Group’s earnings per share consisted of the following:
* The options that would result in issue of 12,677 ordinary shares in 2021 (164,909 ordinary shares in 2020) are not included in the calculation
of diluted earnings per share because they are anti-dilutive and would decrease loss per share.
2021 2020
Loss attributable to the ordinary equity holders of the Group
Loss for calculation of diluted earnings per share
Average number of shares outstanding used for calculation of earnings per share
Options*
Average number of ordinary shares and potential ordinary shares for diluted earnings per share
Basic earnings per share (USD per share)
Diluted earnings per share (USD per share)
(132,778,000)
(132,778,000)
86,729,384
-
86,729,384
(1.53)
(1.53)
(55,193,000)
(55,193,000)
74,281,917
-
74,281,917
(0.74)
(0.74)
128
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 13 – FINANCIAL INSTRUMENTS
As of 31 December 2021 and 2020, the Group’s nancial instruments consisted of the following:
Financial assets
(USD 1,000) Amortized cost
Fair value
through OCI Tot al
As of 31 December 2021
Trade and other receivables
Cash
Restricted cash
Other investments
Total nancial assets
As of 31 December 2020
Trade and other receivables
Cash
Restricted cash
Other investments
Total nancial assets
1,475
17,012
468
-
18,955
1,899
28,523
386
-
30,808
-
-
-
6
6
-
-
-
7
7
1,475
17,012
468
6
18,961
1,899
28,523
386
7
30,815
Cash and restricted cash
(USD 1,000) 2021 2020
A+ or better
17,480 28,909
Financial liabilities
(USD 1,000) Amortized cost
Fair value
through OCI Tot al
As of 31 December 2021
Trade and other payables
Borrowings
Total nancial liabilities
As of 31 December 2020
Trade and other payables
Borrowings
Total nancial liabilities
19,018
50,000
69,018
10,771
51,156
61,927
-
-
-
-
-
-
19,018
50,000
69,018
10,771
51,156
61,927
129
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 14 – TRADE AND OTHER RECEIVABLES
As of 31 December 2021 and 2020, the Group’s trade and other receivables consisted of the following:
As of 31 December 2021 and 2020, the Group’s trade and other receivables were due within one year and considered fully collectible.
Accordingly, the fair value of the Group’s trade and other receivables was equal to nominal value, no material bad debt was recognized for the
years then ended, and management did not consider a provision for uncollectible accounts necessary.
Receivables denominated in foreign currencies are valued at the daily rate. Due to the short-term nature of current receivables, their carrying
amount is considered equal to their fair value.
As of 31 December 2021 and 2020, the Group’s trade and other receivables, specied by currencies, consisted of the following:
(USD 1,000) 2021 2020
Trade receivables
Other current receivables
Other non-current receivables
Total trade and other receivables, net
1,403
46
26
1,475
1,776
93
30
1,899
(USD 1,000) 2021 2020
USD
DKK
EUR
NOK
Total trade and other receivables
1,253
148
48
26
1,475
1,223
266
405
5
1,899
130
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 15 – INVENTORIES
As of 31 December 2021 and 2020, the Group’s inventories consisted of the following:
The Group’s inventory consists primarily of raw materials, spare parts, and nished products. Raw materials comprise mainly of feed for smolt
and marine-phase sh production, and packaging materials used towards processing. Spare parts comprise of consumables to be used at a
future date through operations. Finished goods inventory comprise of all salmon products ready for sale which include fresh head-on-gutted
salmon, processed salmon products, and frozen salmon products.
For the year ended 31 December 2021 and 2020, the Group recognized a USD 1.2m and USD 1.6m write-o of its frozen nished goods
inventory, respectively, attributed to excess costs above the expected selling price minus future costs to sell.
(USD 1,000) 2021 2020
Raw materials
Spare parts inventory
Finished goods inventory
Total inventories
742
1,472
4,376
6,590
691
688
1,334
2,713
131
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 16 – CASH AND RESTRICTED CASH
As of 31 December 2021 and 2020, the Group’s cash consisted of USD 17.0m and USD 28.5m, respectively.
As of 31 December 2021 and 2020, the Group’s restricted cash consisted of the following:
The Group’s short-term restricted cash was obtained in connection with agency bonding requirements for water well permits in Florida.
The Group’s long-term restricted cash was released to the Group upon signing of the 2020 Credit Facility (see Note 19 – Borrowings).
(USD 1,000) 2021 2020
Restricted cash (short-term)
Total restricted cash
468
468
386
386
132
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 17 – SHARE CAPITAL AND SHAREHOLDERS
Atlantic Sapphire ASA has one class of shares that confer the same rights in the Group. As of 31 December 2021 and 2020, the Group’s share
capital consisted of the following:
On 10 September 2020, the Group completed a capital raise of NOK 905.5m (USD 100.4m), issuing 8,877,451 new shares and bringing the total
shares outstanding to 80,153,551, each with par value of NOK 0.10.
For the year ended 31 December 2020, 510,000 shares were issued related to the Group’s employee share option program, bringing the total
shares outstanding to 80,663,551, each with par value of NOK 0.10.
On 3 June 2021, the Group raised approximately NOK 1,016m (USD 121m) in gross proceeds through a private placement of 10,300,000
new shares, at a price per share of NOK 98.60, which is approximately equal to the last closing price on 2 June 2021. Net proceeds from the
transaction were NOK 985m (USD 119m).
For the year ended 31 December 2021, 85,000 shares were issued related to the Group’s employee share option program, bringing the total
shares outstanding to 91,048,551, each with par value of NOK 0.10.
For the years ended 31 December 2021 and 2020, transaction costs arising on share issues amounted to USD 3.5m and USD 3.5m, respectively.
Such amounts are net against the Group’s share premium balance in the accompanying consolidated statements of nancial position.
(USD 1,000) 2021 2020
Total number of shares as of 1 January
Shares issued during the year
Total number of shares as of 31 December
Nominal value as of 31 December (NOK)
Share capital (total number of shares at nominal value) (NOK 1,000)
Share capital (total number of shares at nominal value) (USD 1,000)
80,663,551
10,385,000
91,048,551
0.10
9,105
1,051
71,276,100
9,387,451
80,663,551
0.10
8,066
917
133
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
As of 31 December 2021 and 2020, the Group’s total number of shares issued and outstanding consisted of the following:
Shareholder
2021 2020
Number of
shares
% of
shares
Number of
shares
% of
shares
Alsco AS
Vatne Equity AS
Skagen Kon-Tiki Verdipapirfond
The Bank of New York Mellon
Morgan Stanley & Co. Int. Plc.
UBS AG
Citibank, N.A.
RBC Investor Services Bank S.A.
J.P. Morgan Bank Luxembourg S.A.
State Street Bank and Trust Comp
The Northern Trust Comp, London Branch
Joh Johannson Eiendom AS
Pershing LLC
U.S. Bank National Association
J.P. Morgan Bank Luxembourg S.A.
JEA Invest AS
ASINVEST AS
Clearstream Banking S.A.
Norsk Landbrukskjemi AS
Brown Brothers Harriman (Lux.) SCA
Total number of shares attributed to the 20 largest shareholders
Total number of shares attributed to other shareholders
Total number of shares issued and outstanding
9,939,540
5,000,000
4,931,417
4,199,153
3,639,145
3,413,062
2,884,992
2,738,168
2,142,370
1,909,436
1,779,000
1,698,967
1,453,168
1,347,598
1,266,454
1,073,770
1,062,915
1,005,006
900,000
805,966
53,190,127
37,858,424
91,048,551
10.92%
5.49%
5.42%
4.61%
4.00%
3.75%
3.17%
3.01%
2.35%
2.10%
1.95%
1.87%
1.60%
1.48%
1.39%
1.18%
1.17%
1.10%
0.99%
0.89%
58.42%
41.58%
100.00%
9,699,540
4,552,778
4,224,465
4,360,478
3,174,756
-
2,864,592
-
-
3,248,663
-
1,509,598
-
2,008,733
-
1,073,770
812,206
364,134
700,000
-
38,593,713
32,682,387
80,663,551
12.02%
5.64%
5.24%
5.41%
3.94%
0.00%
3.55%
0.00%
0.00%
4.03%
0.00%
1.87%
0.00%
2.49%
0.00%
1.33%
1.01%
0.45%
0.87%
0.00%
47.85%
40.52%
100.00%
134
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
As of 31 December 2021 and 2020, shares directly or indirectly held by members of the Board of Directors, Chief Executive Ocer, and
Executive Management consisted of the following:
Name and title
2021 2020
Number of
shares
% of
shares
Number of
shares
% of
shares
Johan E. Andreassen, Chairman of the Board and CEO
Runar Vatne, Member of the Board
Bjørn-Vegard Løvik, Chair of the Nomination Committee
Alexander Reus, Member of the Board
Andre Skarbø, Member of the Board
Thue Holm, CTO
Jose Prado, CFO (As of 9 September 2020 Step-Down Date)
Svein Taklo, CDIO
Karl Øystein Øyehaug, CFO and Managing Director
Dharma Rajeswaran, COO (As of 9 August 2021 Step-Down Date)
Tone Bjørnov, Member of the Board
Patrice Flanagan, Member of the Board
Cristina Espejo, CPO (As of 10 August 2021 Step-Down Date)
Alejandro Castro, CBO
Danielle Villoch, CLO
6,043,540
5,400,000
4,969,770
1,635,051
1,062,915
697,899
-
35,058
17,655
11,935
7,650
4,900
3,300
920
487
6.64%
5.93%
5.46%
1.80%
1.17%
0.77%
0.00%
0.04%
0.02%
0.01%
0.01%
0.01%
0.00%
0.00%
0.00%
5,923,540
4,552,778
4,849,770
1,601,051
812,206
694,699
320,570
13,558
9,405
11,270
3,750
4,000
1,300
920
487
7.34%
5.64%
6.01%
1.98%
1.01%
0.86%
0.40%
0.02%
0.01%
0.01%
0.00%
0.00%
0.00%
0.00%
0.00%
135
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 18 – SHARE OPTION PROGRAM
In accordance with the authorization granted by the Group’s AGM, the Group’s Board of Directors introduced a share option program for
senior executives and key personnel employed by the Group and its subsidiaries (the “Program”).
As of 31 December 2021 and 2020, the Program included up to 1,650,535 and 683,438 shares, respectively, with a term between three and
four years as follows:
The exercise price of options outstanding as of 31 December 2021 ranged between NOK 28 and NOK 400 and their weighted average
contractual life was 4.5 years. The exercise price of options outstanding as of 31 December 2020 ranged between NOK 28 and NOK 176 and
their weighted average contractual life was 4.5 years.
As of 31 December 2021 and 2020, the total number of options outstanding that had vested and were exercisable were 12,677 and 164,909,
respectively.
As of 31 December 2021 and 2020, the weighted average fair value of each option granted during the year was NOK 17.53 (USD 2.04) and
NOK 35.27 (USD 3.76), respectively.
The following information is relevant in the determination of the fair value of options granted for the years ended 31 December 2021 and 2020:
2021 2020
Weighted
average exercise
price (NOK)
Number of
shares
Weighted
average exercise
price (NOK)
Number of
shares
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Lapsed during the year
Outstanding at 31 December
111.98
222.61
102.73
28.00
98.44
208.88
683,438
1,354,570
(266,242)
(85,000)
(36,231)
1,650,535
36.89
149.40
48.23
28.00
-
111.98
809,000
408,126
(23,688)
(510,000)
-
683,438
2021 2020
Option pricing model used
Weighted average share price at grant date (NOK)
Exercise price (NOK)
Weighted average contractual life (days)
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Black Scholes
94.16
87.70
1,646
31.00%
0.00%
0.65%
Black Scholes
134.60
109.34
1,646
31.20%
0.00%
1.26%
136
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 19 – BORROWINGS
DNB Credit Agreement
On 19 February 2019, the Group closed on a USD 86m credit facility (the “2019 DNB Credit Facility”) with DNB Bank ASA (“DNB”), EKF
Denmark’s Export Credit Agency (“EKF”), and DNB Capital, LLC. ASUS and ASDK are listed as borrowers (the “Borrowers”), and ASA, ASSF,
and ASP are listed as guarantors (the “Guarantors”) under the 2019 DNB Credit Facility.
The 2019 DNB Credit Facility was amended during the year ended 31 December 2020 (the “2020 Credit Facility”). On 21 April 2020, the
2019 DNB Credit Facility was amended to increase the total credit facility from USD 86m to USD 210m with a maturity date of 23 April 2023.
The amendment increased the US Term Loan from USD 54m to USD 70m to fund the ongoing construction of US Phase 1 of the Miami
Bluehouse, granted the Group with a delayed draw term loan in an aggregate amount of up to USD 110m to fund the construction of US
Phase 2, and increased the US RCF from USD 11m to USD 26m. On 27 August 2020, USD 30m of the USD 110m US Phase 2 delayed draw
term loans were converted and drawn as a short-term facility. On 9 September 2020, the existing US RCF was reduced from USD 26m to
USD 16m. Following the 10 September 2020 equity raise, the USD 30m short-term facility was paid o and USD 20m of the US Term Loan
was paid down to USD 50m.
On 23 December 2020, the 2020 Credit Facility was labeled as “Green”. As of 31 December 2020, the amended 2020 Credit Facility
consisted of the USD 50m US Term Loan, USD 16m US RCF, USD 4m DK RCF, and USD 80m in delayed draw term loans.
On 28 January 2021, the Group’s 2020 Credit Facility was amended to increase the total credit facility from USD 150m to USD 200m
comprising of the existing USD 50m US Term Loan, USD 16m US RCF, USD 4m DK RCF, USD 32m committed term loan for Phase 2 capital
expenditures, and a USD 98m uncommitted accordion facility on the same terms and conditions as the Group’s committed term loans.
As of 31 December 2021, the 2020 Credit Facility totaled USD 200m of which USD 102m was committed and USD 98m uncommitted
through an accordion facility. Of the committed amounts, USD 50m was outstanding as of 31 December 2021. Remaining undrawn
committed amounts consist of a USD 16m US revolving credit facility (“RCF”), USD 4m DK RCF, and USD 32m committed term loan for Phase
2 capital expenditures.
PPP Loan
On 18 April 2020, ASUS obtained a two-year loan payable to PNC Bank, National Association (“PNC”) under the Paycheck Protection
Program (the “Program”) as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed in March 2020 (the “PPP
Loan”). The full outstanding amount on the PPP Loan was forgiven under the Program on 7 September 2021.
137
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
(USD 1,000) 2021 2020
ASUS has an amended USD 50m term loan with DNB (the “US Term Loan”).
The US Term Loan bears an amended interest rate of LIBOR plus an applicable
margin (4.0% at 31 December 2021) and the maturity date was amended to
21 April 2023. USD 50m was outstanding on the US Term Loan as of 31 December 2021.
ASUS has an amended three-year USD 16m revolving credit facility commitment
with DNB (the “US RCF”). The US RCF will nance ASUS’ working capital requirements,
and no funds were outstanding as of 31 December 2021.
ASDK has a three-year USD 4m revolving credit facility commitment with DNB
(the “DK RCF”). The DK RCF will nance ASDK’s working capital requirements, and no
funds were outstanding as of 31 December 2021.
ASUS had a two-year loan payable (the “PPP Loan”) to PNC Bank, National Association
(“PNC”). The PPP Loan was obtained on April 2020 under the Paycheck Protection
Program (the “Program”) as part of the Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act passed in March 2020. The PPP Loan bore an interest rate of 1% and
the full outstanding amount was forgiven under the Program on 7 September 2021.
Total borrowings
Less: current portion of borrowings
Non-current portion of borrowings
50,000
-
-
-
50,000
-
50,000
50,000
-
-
1,156
51,156
-
51,156
The following are the remaining contractual maturities on the Group’s borrowings as of 31 December 2021 and 2020:
As of 31 December 2021 and 2020, the Group’s borrowings consisted of the following:
(USD 1,000) 2021 2020
Up to 3 months
Between 3 and 12 months
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
Tot al
579
1,769
50,772
-
-
53,120
586
1,789
3,531
50,781
-
56,687
138
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
The above amounts are presented as gross and include undiscounted principal payments, contractual interest payments, and exclude the
impact of netting agreements.
On 21 April 2020, total unamortized debt issuance costs presented against borrowings were USD 2.4m. Upon amending the US Term Loan
under the 2020 Credit Facility, ASUS incurred USD 5.8m in new debt issuance costs. In accordance with
IFRS 9, Financial Instruments
, the
previously unamortized debt issuance costs of USD 2.4m and USD 5.8m in new debt issuance costs were recognized as part of nance
expense in the accompanying consolidated statements of operations.
the 2020 Credit Facility is secured by substantially all Group’s assets, which includes existing and after-acquired personal and real property
held, the equity interest held by the Borrowers and the Guarantors in their respective subsidiaries, certain receivables, and certain bank
accounts perfected under First Priority security. EKF partially guaranteed the US Term Loan subject to the provisions of the 2019 DNB Credit
Facility.
The provisions of the 2020 Credit Facility require, among other things, certain nancial performance covenants to be maintained as
dened in the agreements. This includes certain covenants that limit the Group’s ability to, among other things, grant liens, incur additional
indebtedness, make acquisitions or investments, dispose of certain assets, make dividends and distributions, change the nature of their
businesses, enter certain transactions with aliates, or amend the terms of material indebtedness. As of 31 December 2021, the Group was in
compliance with all nancial covenants.
The borrowing base on the USD 16m US RCF and the USD 4m DK RCF is tied to the amount of outstanding trade receivables and standing
biomass. This calculation is reviewed periodically, and the balance is adjusted accordingly. The USD 32m committed undrawn term loan
for US Phase 2 construction also has certain restrictions. Before amounts can be drawn, certain nancial conditions and construction
milestones must be met.
Subsequent to 31 December 2021, the Group’s 2020 Credit Facility was amended (see Note 23 – Subsequent Events).
For the years ended 31 December 2021 and 2020, the Group’s cash ows from nancing activities related to borrowings and equity
consisted of the following:
Liabilities Equity
(USD 1,000) Borrowings
Share
capital
Share
premium
Employee
stock options
Accumulated
decit
Accumulated
translation
dierences Tot al
Balance at 1 January 2021
Changes from nancing cash ows
Proceeds from issuance of capital
Proceeds from borrowings
Payments towards borrowings
Total changes from nancing cash ows
Other changes
Eects of exchange rate on cash
Non-cash employee stock options
Interest paid
Forgiveness of debt
Net loss
Balance at 31 December 2021
51,156
-
10,495
(10,495)
51,156
-
-
-
(1,156)
-
50,000
917
134
-
-
1,051
-
-
-
-
-
1,051
335,337
118,919
-
-
454,256
-
-
-
-
-
454,256
2,015
-
-
-
2,015
-
1,726
-
-
-
3,741
(82,625)
-
-
-
(82,625)
-
-
(3,847)
1,156
(130,087)
(215,403)
(185)
-
-
-
(185)
(3,904)
-
-
-
-
(4,089)
306,615
119,053
10,495
(10,495)
425,668
(3,904)
1,726
(3,847)
-
(130,087)
289,556
139
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Liabilities Equity
(USD 1,000) Borrowings
Share
capital
Share
premium
Employee
stock options
Accumulated
decit
Accumulated
translation
dierences Tot al
Balance at 1 January 2020
Changes from nancing cash ows
Proceeds from issuance of capital
Proceeds from borrowings
Payments towards borrowings
Total changes from nancing cash ows
Other changes
Eects of exchange rate on cash
Non-cash employee stock options
Interest paid
Write-down of debt issuance costs
Forgiveness of debt
Net loss
Balance at 31 December 2020
27,398
-
89,404
(74,001)
42,801
-
-
-
8,355
-
-
51,156
818
99
-
-
917
-
-
-
-
-
-
917
236,819
98,518
-
-
335,337
-
-
-
-
-
-
335,337
1,060
-
-
-
1,060
-
955
-
-
-
-
2,015
(27,432)
-
-
-
(27,432)
-
-
(2,058)
-
-
(53,135)
(82,625)
(2,586)
-
-
-
(2,586)
2,401
-
-
-
-
-
(185)
236,077
98,617
89,404
(74,001)
350,097
2,401
955
(2,058)
8,355
-
(53,135)
306,615
140
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 20 – PENSIONS
The Group’s employees are covered by dierent pension plans that vary from country to country depending on the respective subsidiary’s
location. All pension plans are assessed to be dened contribution plans. In Norway, ASA is subject to the requirements of the Mandatory
Company Pensions Act, and ASA’s pension plan follows its requirements. In the US, the Group oers a Safe Harbor 401(k) salary deferral
participation retirement plan to all employees. As of 31 December 2021, 95 employees participated in the Group’s pension plans.
The Group’s pension plan provisions require the Group to pay premiums to public or private administrative pension plans on a mandatory,
contractual, or voluntary basis. There are no further obligations once the annual premiums are paid. The premiums are accounted for as
personnel expenses as soon as they are incurred. Prepaid premiums are accounted for as an asset to the extent that future benets can be
determined as plausible.
For the years ended 31 December 2021 and 2020, the Group’s total pension cost consisted of USD 488k and USD 411k, respectively, and are
included as part of salary and personnel costs in the accompanying consolidated statements of operations.
141
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 21 – RELATED PARTY TRANSACTIONS
During the ordinary course of business, the Group engages in certain arm’s length transactions with related parties.
During the ordinary course of business, Langsand Processing AS (“LPAS”), a related party, provides harvesting services for ASDK. Although
the Group holds a minority ownership interest in LPAS, the Group does not hold control over LPAS for consolidation purposes. For the years
ended 31 December 2021 and 2020, ASDK incurred harvesting costs of USD 427k and USD 544k, respectively. Such amounts are included
as part of cost of materials in the accompanying consolidated statements of operations.
During the ordinary course of business, the Group sells salmon products to Platina Seafood, Inc. (“Platina”), an entity under majority
ownership by a related party of Johan E. Andreassen, the Group’s Chairman of the Board and CEO. For the years ended 31 December 2021
and 2020, the Group sold USD 1.1m and USD 925k, respectively, of salmon products to Platina.
The Group held a non-exclusive commercial relationship with Platina for sales and distribution services. In exchange, Platina receives a sales
commission equal to 7% of gross revenue earned on sales of salmon purchased from the Group. For the year ended 31 December 2020,
total commissions earned and paid to Platina were USD 26k, respectively, and the amounts are recognized against the Group’s revenue
in the accompanying consolidated statements of operations. No commissions were earned and paid to Platina during 2021 and the non-
exclusive commercial relationship was concluded.
142
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 22 – CONTINGENCIES AND LEGAL CLAIMS
The Group was not aware of any material pending or threatening legal disputes or claims against the Group as of 31 December 2021.
On 15 September 2021, a re broke out in the Denmark Bluehouse that destroyed substantially all property, plant, and equipment related to
its saltwater ongrowing systems. The insurance claim process remains ongoing, and the Group expects to recover USD 33m, the full book
value of the Danish facility insured against the re, less the value of the assets that were unaected. See Note 9 – Property, Plant, and
Equipment and Note 23 – Subsequent Events for further details.
143
CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 23 – SUBSEQUENT EVENTS
The Group has evaluated subsequent events from 31 December 2021 through the date in which the consolidated nancial statements were issued.
On 3 March 2022, ASUS terminated its Suite 2400 oce lease ahead of the original lease term. In connection with the early lease termination,
ASUS agreed to pay approximately USD 280k, which consisted of USD 120k in the equivalent of three-monthly rent installments and USD 160k in
commissions and other administrative costs.
On 31 March 2022, the Group’s 2020 Credit Facility was amended to provide an additional three-month credit facility in an aggregate amount of
up to USD 25m (the “Facility”) as a next step towards a fully nanced US Phase 2 Construction with DNB Capital, LLC as lender. The Facility will be
secured by a second priority security interest and lien on all assets and equity interests held by the Group and carries an annualized borrowing
rate of LIBOR plus an applicable margin of 7.0% from 31 March 2022 to 30 April 2022, 7.5% from 1 May 2022 to 31 May 2022, and 8.0% from 1
June 2022 to 30 June 2022. The Facility provides the Group additional liquidity while the details of the overall long-term nancing are being
nalized. Further, the Group’s minimum EBITDA covenant was adjusted towards all credit facilities, and a limited waiver was provided with this
respect to until 30 June 2022.
Currently, the Group and DNB, as Administrative Agent on behalf of the Lenders (DNB and Farm Credit), are working on an additional amendment
of the 2020 Credit Facility which is expected to be nalized prior to 30 June 2022. The provisions of the amendment are expected to provide an
extension of maturity dates, access to additional borrowings, and revised terms such as updated nancial covenants.
On 1 April 2022, the Danish police (Midt- og Vestjyllands Politi) announced that their investigation on the 15 September 2021 Denmark Bluehouse
re was concluded. Their conclusion was that the cause of the re was inconclusive, and they further stated that there was no evidence of arson
in connection with the incident. As the police investigation is now concluded, the Group will continue nalizing the insurance claim process and its
future plans for ASDK. The Group expects to recover USD 33m, the full book value of the Danish facility insured against the re, less the value of
the assets that were unaected, and subsequently booked the insurance claim receivable in 2022.
144
ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Atlantic Sapphire ASA
Financial Statements
145
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
ATLANTIC SAPPHIRE ASA
STATEMENTS OF OPERATIONS
YEARS ENDED 31 DECEMBER 2021 AND 2020
Accompanying notes are an integral part of the nancial statements.
(NOK 1,000) Note 2021 2020
Management fee revenue
Expenses
Other operating expenses
Salary and personnel costs
Total expenses
Operating loss
Finance income
Finance expense
Impairment of non-current assets
Loss before income tax benet
Income tax benet
Net loss
Allocation to controlling interest
Application and allocation
To accumulated decit
Total application and allocation
8
2,8
2
3,8
3
3,4,8
5
6
10,850
15,789
8,934
24,723
(13,873)
69,623
(19)
(384,474)
(328,743)
-
(328,743)
(328,743)
(328,743)
(328,743)
10,070
10,903
7,108
18,011
(7,941)
23,155
(23,290)
-
(8,076)
-
(8,076)
(8,076)
(8,076)
(8,076)
146
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
ATLANTIC SAPPHIRE ASA
STATEMENTS OF FINANCIAL POSITION
31 DECEMBER 2021 AND 2020
Accompanying notes are an integral part of the nancial statements.
(NOK 1,000) Note 2021 2020
ASSETS
Non-current assets
Investment in subsidiaries
Due from related parties (non-current)
Trade and other receivables (non-current)
Total non-current assets
Current assets
Due from related parties (current)
Trade and other receivables (current)
Cash
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Employee stock options
(Accumulated decit) retained earnings
Total equity
Current liabilities
Trade payables
Other current payables and liabilities
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
4,11
8
8
7
6,9
6,9
6,9
6
2,548,856
1,011,738
22
3,560,616
15,642
198
104,314
120,154
3,680,770
9,105
3,937,282
32,630
(300,387)
3,678,630
727
1,413
2,140
2,140
3,680,770
1,899,893
955,449
22
2,855,364
11,749
542
138,731
151,022
3,006,386
8,066
2,950,828
17,761
28,356
3,005,011
174
1,201
1,375
1,375
3,006,386
147
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
ATLANTIC SAPPHIRE ASA
STATEMENTS OF CASH FLOWS
YEARS ENDED 31 DECEMBER 2021 AND 2020
Accompanying notes are an integral part of the nancial statements.
(NOK 1,000) Note 2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Impairment of current and non-current assets
Changes in operating assets and liabilities
Trade and other receivables
Trade and other payables
Other liabilities
Net provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Contributions towards investment in subsidiaries
Proceeds from other investments
Loans to subsidiaries
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of capital
Net cash provided by nancing activities
Net (decrease) increase in cash and restricted cash
Cash and restricted cash at beginning of year
Cash and restricted cash at end of year
4,8
4
8
6
(328,743)
391,431
344
553
212
63,797
(978,083)
-
(107,624)
(1,085,707)
987,493
987,493
(34,417)
138,731
104,314
(8,076)
-
(517)
(153)
(2,418)
(11,164)
(100,223)
40
(677,669)
(777,852)
887,952
887,952
98,936
39,795
138,731
148
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Vikebukt, 21 April 2022
Johan E. Andreassen
Chairman
Alexander Reus
Director
Patrice Flanagan
Director
André Skarbø
Director
Runar Vatne
Director
Ellen Marie Sætre
Director
Tone Bjørnov
Director
Karl Øystein Øyehaug
Managing Director of ASA
149
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Information
Atlantic Sapphire ASA (“ASA”) is a Norwegian company headquartered in Vikebukt, Norway and listed on the Oslo Stock Exchange with the
ticker symbol ASA. ASA owns the following subsidiaries (collectively, the “Group”):
• Atlantic Sapphire Denmark A/S (“ASDK”, registered in Hvide Sande, Denmark)
• Atlantic Sapphire USA LLC (“ASUS”, registered in Miami, Florida, US)
• AS Purchasing, LLC (“ASP”, registered in Miami, Florida, US)
• S.F. Development, L.L.C. (“ASSF”, registered in Miami, Florida, US)
• Atlantic Sapphire IP, LLC (“ASIP”, registered in Miami, Florida, US)
The Group owns and operates land-based Atlantic salmon farms in Hvide Sande, Denmark (the “Denmark Bluehouse” facility) and
Homestead, Florida, US (the “Miami Bluehouse” facility). A Bluehouse® facility (the “Bluehouse”) is proprietary production technology
developed by the Group in collaboration with a wide range of supply chain partners to optimize growing conditions for Atlantic salmon.
Each Bluehouse contains the facilities needed for a salmon’s full growth cycle, from egg hatchery to grow-out tanks to harvest processing.
Consolidated operations enable the Group to control the entire production cycle without having to transport salmon to and from ocean
based net pens. The Denmark Bluehouse (prior to the September 2021 re) and the Miami Bluehouse (Phase 1) have annual production
capacities of approximately 2,400 tons HOG
1
and 9,500 tons HOG, respectively.
On 15 September 2021, a re broke out in the Denmark Bluehouse. All employees were reported safe without injuries. Substantially all
property, plant, and equipment related to its saltwater ongrowing systems and approximately 170 tons of standing biomass in the Danish
facility’s ongrowing systems with a book value of USD 0.8m were lost in the re (see Note 5 – Biological Assets). While the insurance claim
process remains ongoing, the Group expects to recover approximately USD 33m, the full book value of the Danish facility insured against
the re, less the value of the assets that were unaected, and subsequently booked the insurance claim receivable in 2022. See Note 9 –
Property, Plant, and Equipment and Note 23 – Subsequent Events for further details.
Basis for Preparation of the Annual Accounts
The nancial statements were prepared in accordance with the Norwegian Accounting Act and accounting principles generally accepted in
Norway (“Norwegian GAAP”). The nancial statements have been prepared based on uniform accounting principles for similar transactions
and events under otherwise similar circumstances and are expressed in Norwegian kroner (“NOK”).
Foreign Currency
Foreign currency transactions are translated using the applicable exchange rate at the time of the transaction. Receivables, debt, and other
monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation dierences
are recognized as part of ASA’s net prot or loss. Other assets in foreign currencies are translated at the exchange rate in eect on the
transaction date.
Revenue Recognition
ASA’s revenue consists of intercompany management fees charged to its aliates and is recognized when services are rendered. A
receivable is recognized accordingly as this is the point in time in which consideration is unconditional and only the passage of time is
required before the payment is due.
Use of Estimates and Judgements
The preparation of the nancial statements in accordance with Norwegian GAAP requires management to make accounting estimates and
assumptions that aect the recognized amounts of assets, liabilities, income, and expenses. The estimates and underlying assumptions are
based on ASA’s prior experience and information perceived to be relevant and probable when the judgments are made.
1
HOG – “Head-On-Gutted” sh, a term used industry-wide, is approximately 83% of live weight sh.
150
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Estimates are reviewed on an ongoing basis and actual values and results may deviate from these estimates. Adjustments to accounting
estimates are recognized in the period in which the estimates are revised.
Ta xes
Tax expense consists of the tax payable and changes to deferred tax. Tax is recognized in the accompanying statements of operations,
except to the extent that it relates to items recognized in equity.
Deferred tax assets and liabilities are calculated based on the temporary dierences between the carrying amount of assets and liabilities
in the nancial statements and their tax bases, together with tax losses carried forward at the statement of nancial position date. Deferred
tax assets and liabilities are calculated based on the applicable tax rates and legislations that are expected to apply when the assets
are realized or the liabilities are settled, based on the tax rates and legislations that have been enacted or substantially enacted on the
statement of nancial position date. Deferred tax assets are recognized only when convincing evidence can support the availability of future
taxable prots will be available, against which the assets can be utilized. Deferred tax assets and liabilities are not discounted. Deferred tax
assets and liabilities are oset when there is a legally enforceable right to oset current tax assets against current tax liabilities and when the
deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Subsidiaries
ASA’s investment in subsidiaries is valued at the cost of the shares in each respective subsidiary, less any impairment losses. In accordance with
Norwegian GAAP, an impairment loss is recognized if the impairment is not considered temporary. Impairment losses are reversed if the reason
for the impairment loss disappears in a later period.
Classication of Current vs. Non-Current Items
Assets are classied as current when they are expected to be realized or sold, to be used in ASA’s normal operating cycle, falls due, or is
expected to be realized within 12 months after the end of the reporting period date. Other assets are classied as non-current. Liabilities
are classied as current when they are expected to be settled in ASA’s normal operating cycle, are expected to be settled within 12 months
of the end of the reporting period, or if ASA does not have an unconditional right to postpone settlement for at least 12 months after the
reporting period date.
Cash and Restricted Cash
Cash includes cash on hand and bank deposits. Restricted cash is not available for immediate or general business use and is presented
as part of cash balances as the amounts are not material to ASA’s nancial statements as a whole. Cash equivalents consist of short-term
investments that can be converted into a known amount in cash within three months and contain an insignicant risk element. ASA did not
hold any cash equivalents as of 31 December 2021 and 2020.
Trade and Other Receivables
Trade receivables are initially recognized at amortized cost, less a provision for expected credit losses. Credit loss provisions are based on
individual customer assessments over each reporting period and not on a 12-month period. As of 31 December 2021 and 2020, management
did not consider a provision for doubtful accounts or impairment necessary.
Statements of Cash Flows
The accompanying statements of cash ows are prepared in accordance with the indirect method.
Reclassication
Certain amounts in ASA’s 2020 nancial statements have been reclassied to conform to the 2021 presentation. The reclassications have
no eect on ASA’s nancial position or previously reported results of operations.
151
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 2 – OPERATING EXPENSES
Other Operating Expenses
For the years ended 31 December 2021 and 2020, ASA’s other operating expenses consisted of the following:
Auditor Fees
For the years ended 31 December 2021 and 2020, remuneration to ASA’s auditors, excluding VAT, consisted of the following:
Total amounts towards auditor’s fees are included as part of professional fees in other operating expenses.
Salary and Personnel Costs
For the years ended 31 December 2021 and 2020, ASA’s salary and personnel costs consisted of the following:
For the years ended 31 December 2021 and 2020, ASA employed three and two full-time employees, respectively.
For the years ended 31 December 2021 and 2020, remuneration to members of the Board consisted of NOK 3.7m and NOK 5.5m, respectively.
(NOK 1,000) 2021 2020
Selling, general, and administrative
Professional fees
Leases
Maintenance and supplies
Total other operating expenses
11,434
4,180
111
64
15,789
6,190
4,702
-
11
10,903
(NOK 1,000) 2021 2020
Statutory auditing services
Total auditor’s fees
1,490
1,490
1,387
1,387
(NOK 1,000) 2021 2020
Salary
Employer’s national insurance contribution
Pension costs
Other personnel expenses
Total salary and personnel costs
7,873
845
167
49
8,934
6,558
534
2
14
7,108
152
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Pensions
ASA satises the requirements of the Mandatory Company Pensions Act related to mandatory occupational pensions (Norwegian: OTP).
The schemes are mainly established as dened contribution schemes. ASA’s pension plan provisions require ASA to pay premiums to public
or private administrative pension plans on a mandatory, contractual, or voluntary basis. There are no further obligations once the annual
premiums are paid. The premiums are accounted for as personnel expenses as soon as they are incurred. Prepaid premiums are accounted
for as an asset to the extent that future benets can be determined as plausible.
For the years ended 31 December 2021 and 2020, the ASA’s total pension cost consisted of NOK 167k and NOK 2k, respectively, and are
included as part of salary and personnel costs in the accompanying statements of operations.
Board of Directors’ Statement on Remuneration of Executive Management
The Group’s Board of Directors determines the principles applicable to the Group’s policy for compensation of executive management and
presented its statement on such principles for the 2021 nancial year during the Group’s Annual General Meeting (“AGM”) in accordance
with Section 6-16a of the Norwegian Public Limited Liability Companies Act. The Board of Directors’ Statement on Remuneration of
Executive Management is included in Note 6 – Salary and Personnel Costs of the Group’s notes to the consolidated nancial statements.
153
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 3 – FINANCE INCOME AND EXPENSE
For the years ended 31 December 2021 and 2020, ASA’s nance income and expense, net consisted of the following:
Impairment of Non-Current Assets
On 15 September 2021, a re broke out in the Denmark Bluehouse. Substantially all property, plant, and equipment related to its saltwater
ongrowing systems were lost in the re. As a result, ASA recognized a total impairment of non-current assets of NOK 384.7m towards ASA’s
investment in ASDK and intercompany loan due from ASDK (see Note 8 – Related Party Transactions).
(NOK 1,000) 2021 2020
Interest income
Interest income - intercompany
Interest expense
Impairment of non-current assets - intercompany
Currency exchange eects
Currency exchange eects - intercompany
Total nance income (expense), net
159
44,970
(19)
(384,474)
16,975
7,519
(314,870)
125
23,030
(34)
(7,382)
(15,874)
(135)
154
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 4 – INVESTMENT IN SUBSIDIARIES
As of 31 December 2021 and 2020, ASA’s investment in subsidiaries consisted of the following:
On 15 September 2021, a re broke out in the Denmark Bluehouse that destroyed substantially all property, plant, and equipment related to
its saltwater ongrowing systems. As a result, ASA recognized a full impairment of its investment in ASDK of NOK 344.0m and the amount is
included as part of total impairment of non-current assets in ASA’s statements of operations (see Note 8 – Related Party Transactions).
(NOK 1,000)
Company
Registered
oce
Voting
share
Ownership
share
Equity at 31
December
2021
Net loss for
year ended 31
December 2021
Balance sheet
in parent
company
Atlantic Sapphire Denmark A/S
Atlantic Sapphire USA LLC
S.F. Development, L.L.C.
Atlantic Sapphire IP LLC
Employee stock options
Hvide Sande, DK
Miami FL, US
Miami FL, US
Miami FL, US
100%
100%
100%
100%
100%
100%
100%
100%
(339,733)
1,196,484
75,818
-
(413,965)
(768,049)
(2,893)
-
-
2,433,610
82,616
-
32,630
(NOK 1,000)
Company
Registered
oce
Voting
share
Ownership
share
Equity at 31
December
2020
Net loss for
year ended 31
December
2020
Balance sheet
in parent
company
Atlantic Sapphire Denmark A/S
Atlantic Sapphire USA LLC
S.F. Development, L.L.C.
Atlantic Sapphire IP LLC
Employee stock options
Hvide Sande, DK
Miami FL, US
Miami FL, US
Miami FL, US
100%
100%
100%
100%
100%
100%
100%
100%
70,897
936,618
76,695
-
(143,948)
(423,034)
(235)
-
343,989
1,455,527
82,616
-
17,761
155
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 5 – TAXES
For the years ended 31 December 2021 and 2020, ASA’s income tax calculation consisted of the following:
For the years ended 31 December 2021 and 2020, the specication of the basis for ASA’s deferred tax consisted of the following:
(NOK 1,000) 2021 2020
Temporary dierences:
Fixed assets
Decit that can be carried forward
Total temporary dierences
Tax rate
Potential deferred tax not recorded in the statements of nancial position
(3,194)
(76,090)
(79,284)
22%
(17,442)
(3,194)
(108,311)
(111,505)
22%
(24,531)
(NOK 1,000) 2021 2020
Tax payable calculation:
Current year loss before tax
Permanent dierences
Change in temporary dierences
Utilization of tax losses carried forward from prior years
Taxable base
Tax payable
Tax expense distribution:
Tax payable
Change in deferred tax due to change in basis for calculation
Change in deferred tax due to new tax rate
Too much or too little allocated earlier years
Total tax expense
Tax payable in the statements of nancial position:
Tax payable on current year prot
Tax eect from contributions
Total tax payable
(328,743)
360,964
-
(32,221)
-
-
-
-
-
-
-
-
-
-
(8,076)
(31,807)
-
-
(39,883)
-
-
-
-
-
-
-
-
-
156
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 6 – EQUITY AND SHAREHOLDER INFORMATION
For the years ended 31 December 2021 and 2020, changes in ASA’s equity consisted of the following:
Atlantic Sapphire ASA has one class of shares that confer the same rights in ASA. As of 31 December 2021 and 2020, the Group’s share
capital consisted of the following:
On 10 September 2020, ASA completed a capital raise of NOK 905.5m (USD 100.4m), issuing 8,877,451 new shares and bringing the total
shares outstanding to 80,153,551, each with par value of NOK 0.10.
For the year ended 31 December 2020, 510,000 shares were issued related to the Group’s employee share option program, bringing the
total shares outstanding to 80,663,551, each with par value of NOK 0.10.
On 3 June 2021, the Group raised approximately NOK 1,016m (USD 121m) in gross proceeds through a private placement of 10,300,000
new shares, at a price per share of NOK 98.60, which is approximately equal to the last closing price on 2 June 2021. Net proceeds from the
transaction were NOK 985m (USD 119m).
For the year ended 31 December 2021, 85,000 shares were issued related to the Group’s employee share option program, bringing the total
shares outstanding to 91,048,551, each with par value of NOK 0.10.
For the years ended 31 December 2021 and 2020, transaction costs arising on share issues amounted to NOK 30.5m (USD 3.5m) and NOK 32.7m
(USD 3.5m), respectively. Such amounts are net against the ASA’s share premium balance in the accompanying statements of nancial position.
(NOK 1,000)
Share
capital
Share
premium
Employee
stock options
Retained
earnings
(accumulated
decit)
Total
equity
Balance at 1 January 2020
Contributions from issuance of capital
Accumulated contributions from employee stock options
Net loss
Balance at 31 December 2020
Contributions from issuance of capital
Contributions from employee stock options
Net loss
Balance at 31 December 2021
7,128
938
-
-
8,066
1,039
-
-
9,105
2,063,814
887,014
-
-
2,950,828
986,454
-
-
3,937,282
-
-
17,761
-
17,761
-
14,869
-
32,630
36,432
-
-
(8,076)
28,356
-
-
(328,743)
(300,387)
2,107,374
887,952
17,761
(8,076)
3,005,011
987,493
14,869
(328,743)
3,678,630
2021 2020
Total number of shares as of 1 January
Shares issued during the year
Total number of shares as of 31 December
Nominal value as of 31 December (NOK)
Share capital (total number of shares at nominal value) (NOK 1,000)
Share capital (total number of shares at nominal value) (USD 1,000)
80,663,551
10,385,000
91,048,551
0.10
9,105
1,051
71,276,100
9,387,451
80,663,551
0.10
8,066
917
157
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
As of 31 December 2021 and 2020, the total number of shares issued and outstanding consisted of the following:
As of 31 December 2021 and 2020, shares directly or indirectly held by members of the Board of Directors, Chief Executive Ocer, and
Executive Management consisted of the following:
Name and title
2021 2020
Number of
shares
% of
shares
Number of
shares
% of
shares
Johan E. Andreassen, Chairman of the Board and CEO
Runar Vatne, Member of the Board
Bjørn-Vegard Løvik, Chair of the Nomination Committee
Alexander Reus, Member of the Board
Andre Skarbø, Member of the Board
Thue Holm, CTO
Jose Prado, CFO (As of 9 September 2020 Step-Down Date)
Svein Taklo, CDIO
Karl Øystein Øyehaug, CFO and Managing Director
Dharma Rajeswaran, COO (As of 9 August 2021 Step-Down Date)
Tone Bjørnov, Member of the Board
Patrice Flanagan, Member of the Board
Cristina Espejo, CPO (As of 10 August 2021 Step-Down Date)
Alejandro Castro, CBO
Danielle Villoch, CLO
6,043,540
5,400,000
4,969,770
1,635,051
1,062,915
697,899
-
35,058
17,655
11,935
7,650
4,900
3,300
920
487
6.64%
5.93%
5.46%
1.80%
1.17%
0.77%
0.00%
0.04%
0.02%
0.01%
0.01%
0.01%
0.00%
0.00%
0.00%
5,923,540
4,552,778
4,849,770
1,601,051
812,206
694,699
320,570
13,558
9,405
11,270
3,750
4,000
1,300
920
487
7.34%
5.64%
6.01%
1.98%
1.01%
0.86%
0.40%
0.02%
0.01%
0.01%
0.00%
0.00%
0.00%
0.00%
0.00%
Shareholder
2021 2020
Number of
shares
% of
shares
Number of
shares
% of
shares
Alsco AS
Vatne Equity AS
Skagen Kon-Tiki Verdipapirfond
The Bank of New York Mellon
Morgan Stanley & Co. Int. Plc.
UBS AG
Citibank, N.A.
RBC Investor Services Bank S.A.
J.P. Morgan Bank Luxembourg S.A.
State Street Bank and Trust Comp
The Northern Trust Comp, London Branch
Joh Johannson Eiendom AS
Pershing LLC
U.S. Bank National Association
J.P. Morgan Bank Luxembourg S.A.
JEA Invest AS
ASINVEST AS
Clearstream Banking S.A.
Norsk Landbrukskjemi AS
Brown Brothers Harriman (Lux.) SCA
Total number of shares attributed to the 20 largest shareholders
Total number of shares attributed to other shareholders
Total number of shares issued and outstanding
9,939,540
5,000,000
4,931,417
4,199,153
3,639,145
3,413,062
2,884,992
2,738,168
2,142,370
1,909,436
1,779,000
1,698,967
1,453,168
1,347,598
1,266,454
1,073,770
1,062,915
1,005,006
900,000
805,966
53,190,127
37,858,424
91,048,551
10.92%
5.49%
5.42%
4.61%
4.00%
3.75%
3.17%
3.01%
2.35%
2.10%
1.95%
1.87%
1.60%
1.48%
1.39%
1.18%
1.17%
1.10%
0.99%
0.89%
58.42%
41.58%
100.00%
9,699,540
4,552,778
4,224,465
4,360,478
3,174,756
-
2,864,592
-
-
3,248,663
-
1,509,598
-
2,008,733
-
1,073,770
812,206
364,134
700,000
-
38,593,713
32,682,387
80,663,551
12.02%
5.64%
5.24%
5.41%
3.94%
0.00%
3.55%
0.00%
0.00%
4.03%
0.00%
1.87%
0.00%
2.49%
0.00%
1.33%
1.01%
0.45%
0.87%
0.00%
47.85%
40.52%
100.00%
158
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 7 – CASH AND RESTRICTED CASH
As of 31 December 2021 and 2020, ASA’s cash consisted of NOK 103.8m and NOK 138.2m, respectively.
As of 31 December 2021 and 2020, ASA held restricted cash in tax withholding accounts of NOK 465k and NOK 564k, respectively, and are
presented as part of ASA’s cash balances in the accompanying statements of nancial position.
159
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 8 – RELATED PARTY TRANSACTIONS
During the ordinary course of business, ASA engages in certain arm’s length transactions with subsidiaries within the Group.
During the ordinary course of business, ASA performs management and administrative tasks on behalf of subsidiaries within the Group.
For the years ended 31 December 2021 and 2020, ASA charged management fees of NOK 10.9m and NOK 10.1m, respectively. As of 31
December 2021 and 2020, total outstanding amounts due from related parties in connection to such transactions consisted of NOK 21.0m
and NOK 10.1m, respectively.
During the ordinary course of business, ASA may loan amounts or pay expenses on behalf of subsidiaries within the Group. Such
transactions create amounts due from and to related parties. As of 31 December 2021 and 2020, total outstanding amounts due from
related parties in connection with amounts loaned consisted of NOK 1.1b and NOK 995.4m, respectively. Such transactions may result in
intercompany nance income and expense (see Note 3 – Finance Income and Expense).
On 15 September 2021, a re broke out in the Denmark Bluehouse that destroyed substantially all property, plant, and equipment related to
its saltwater ongrowing systems. Although the Group believed that the insurance claim was probable as of 31 December 2021, the Group was
not virtually certain of the insurance claim prior to the subsequent conclusion of the police report on 1 April 2022 indicating that there was
no evidence of arson (see Note 10 – Contingencies and Legal Claims and Note 12 – Subsequent Events).
As a result, ASA recognized a NOK 391.4m impairment for the year ended 31 December 2021 that consisted of a NOK 344.0m write-down
of its investment of ASDK to zero, a NOK 6.9m write-down of its intercompany receivable from ASDK to zero, and a NOK 40.5m write-down
of its intercompany loan due from ASDK to reect a value of NOK 290.8m (USD 33m), the expected full book value of the Danish facility
insured against the re, less the value of the assets that were unaected.
160
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 9 – SHARE OPTION PROGRAM
In accordance with the authorization granted by ASA’s AGM, the Group’s Board of Directors introduced a share option program for senior
executives and key personnel employed by the Group and its subsidiaries (the “Program”).
As of 31 December 2021 and 2020, the Program included up to 1,650,535 and 683,438 shares, respectively, with a term between 3 and 4
years as follows:
The exercise price of options outstanding as of 31 December 2021 ranged between NOK 28 and NOK 400 and their weighted average
contractual life was 4.5 years. The exercise price of options outstanding as of 31 December 2020 ranged between NOK 28 and NOK 176 and
their weighted average contractual life was 4.5 years.
As of 31 December 2021 and 2020, the total number of options outstanding that had vested and were exercisable were 12,677 and 164,909,
respectively.
As of 31 December 2021 and 2020, the weighted average fair value of each option granted during the year was NOK 17.53 (USD 2.04) and
NOK 35.27 (USD 3.76), respectively.
The following information is relevant in the determination of the fair value of options granted for the years ended 31 December 2021 and 2020:
2021 2020
Weighted
average exercise
price (NOK)
Number of
shares
Weighted
average exercise
price (NOK)
Number of
shares
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Lapsed during the year
Outstanding at 31 December
111.98
222.61
102.73
28.00
98.44
208.88
683,438
1,354,570
(266,242)
(85,000)
(36,231)
1,650,535
36.89
149.40
48.23
28.00
-
111.98
809,000
408,126
(23,688)
(510,000)
-
683,438
2021 2020
Option pricing model used
Weighted average share price at grant date (NOK)
Exercise price (NOK)
Weighted average contractual life (days)
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Black Scholes
94.16
87.70
1,646
31.00%
0.00%
0.65%
Black Scholes
134.60
109.34
1,646
31.20%
0.00%
1.26%
161
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 10 – CONTINGENCIES AND LEGAL CLAIMS
ASA was not aware of any material pending or threatening legal disputes or claims against ASA as of 31 December 2021.
On 15 September 2021, a re broke out in the Denmark Bluehouse that destroyed substantially all property, plant, and equipment related to
its saltwater ongrowing systems. Although the Group believed that the insurance claim was probable as of 31 December 2021, the Group was
not virtually certain of the insurance claim prior to the subsequent conclusion of the police report on 1 April 2022 indicating that there was no
evidence of arson. As such, the Group did not recognize an insurance claim receivable as of 31 December 2021. The insurance claim process
remains ongoing, and the Group expects to recover NOK 290.8m (USD 33m), the full book value of the Danish facility insured against the re,
less the value of the assets that were unaected (see Note 12 – Subsequent Events).
162
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 11 – COMMITMENTS
The 2020 Credit Facility is secured by substantially all Group’s assets, which includes existing and after-acquired personal and real property
held, the equity interest held by the Borrowers and the Guarantors in their respective subsidiaries, certain receivables, and certain bank
accounts perfected under First Priority security. EKF partially guarantees the US Term Loan subject to the provisions of the 2020 Credit Facility.
163
ASA FINANCIAL STATEMENTS ANNUAL REPORT 2021ATLANTIC SAPPHIRE
NOTE 12 – SUBSEQUENT EVENTS
ASA has evaluated subsequent events from 31 December 2021 through the date in which the nancial statements were issued.
On 31 March 2022, the Group’s 2020 Credit Facility was amended to provide an additional three-month credit facility in an aggregate amount
of up to USD 25m (the “Facility”) as a next step towards a fully nanced US Phase 2 Construction with DNB Capital, LLC as lender. The Facility
will be secured by a second priority security interest and lien on all assets and equity interests held by the Group and carries an annualized
borrowing rate of LIBOR plus an applicable margin of 7.0% from 31 March 2022 to 30 April 2022, 7.5% from 1 May 2022 to 31 May 2022, and
8.0% from 1 June 2022 to 30 June 2022. The Facility provides the Group additional liquidity while the details of the overall long-term nancing
are being nalized. Further, the Group’s minimum EBITDA covenant was adjusted towards all credit facilities, and a limited waiver was provided
with this respect to until 30 June 2022.
Currently, the Group and DNB, as Administrative Agent on behalf of the Lenders (DNB and Farm Credit), are working on an additional
amendment of the 2020 Credit Facility which is expected to be nalized prior to 30 June 2022. The provisions of the amendment are expected
to provide an extension of maturity dates, access to additional borrowings, and revised terms such as updated nancial covenants.
On 1 April 2022, the Danish police (Midt- og Vestjyllands Politi) announced that their investigation on the 15 September 2021 Denmark
Bluehouse re was concluded. Their conclusion was that the cause of the re was inconclusive, and they further stated that there was no
evidence of arson in connection with the incident. As the police investigation is now concluded, the Group will continue nalizing the insurance
claim process and its future plans for ASDK. The Group expects to recover USD 33m, the full book value of the Danish facility insured against
the re, less the value of the assets that were unaected, and subsequently booked the insurance claim receivable in 2022.
164
ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Statement of
Responsibility
165
STATEMENT OF RESPONSIBILITY ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Vikebukt, 21 April 2022
Johan E. Andreassen
Chairman
Alexander Reus
Director
Patrice Flanagan
Director
André Skarbø
Director
Runar Vatne
Director
Ellen Marie Sætre
Director
Tone Bjørnov
Director
STATEMENT OF RESPONSIBILITY
We conrm that, to the best of our knowledge, the consolidated nancial statements for the period from 1 January to 31 December 2021 have
been prepared in accordance with IFRS as adopted by the EU, with such additional information as required by the Norwegian Accounting Act and
give a true and fair view of the Group’s consolidated and ASA’s assets, liabilities, nancial position, and results of operations. We conrm that the
Board of Directors’ report provides a true and fair view of the development and performance of the business and the position of the Group and
ASA, together with a description of the key risks and uncertainty factors that the Group and ASA are facing.
Karl Øystein Øyehaug
Managing Director of ASA
166
ANNUAL REPORT 2021ATLANTIC SAPPHIRE
Auditor’s
Report
167
AUDITOR'S REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
168
AUDITOR'S REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
169
AUDITOR'S REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
170
AUDITOR'S REPORT ANNUAL REPORT 2021ATLANTIC SAPPHIRE
atlanticsapphire.com
ABOUT ATLANTIC SAPPHIRE
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Karl Øystein Øyehaug,
Chief Financing Officer and Managing Director
1-786-292-3632
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