Published:
19.04.2024
Annual Report
2023
Content
Approved by the Board of Directors in Hofseth BioCare ASA 18 April 2024
Hofseth BioCare ASA is committed to maintaining high standards of cor-
porate governance that will strengthen confidence in the company among
share holders, capital market and among other stakeholders, thereby con-
tributing to the greatest possible value creation over time. The aim of
corporate governance is to regulate the roles of shareholders, board and
management beyond what is required by legislation.
The company reports in accordance with the recommendation of 30 October
2014, last updated 17 October 2018 («the Recommendations») issued by the
Norwegian Corporate Governance Board (NUES). The rules on the continuing
obligations of listed companies at www.oslobors.no and guidelines are avail-
able at www.nues.no
Compliance is based on a «comply or explain» principle, which means that
the company must comply with all recommendations or explain why they
have chosen an alternative approach to specific recommendations. The
following explains the company's compliance with the 15 sections and ad-
dresses the additional requirements set out in the Accounting Act § 3-3 b.
Any deviation from the Code of Conduct will be explained under the appro-
priate section.
This report is part of the company's annual report. The report is also avail-
able on Hofseth BioCare's website www.hofsethbiocare.com, along with
more information about the company's business.
CHAPTER 1
Corporate governance 3
CHAPTER 2
The board of director’s report 2023 10
CHAPTER 3
Financial statements 18
Statement of comprehensive income 20
Statement of financial position 21
Statement of cash flows 23
Statement of changes in equity 24
Notes to the accounts 25
Declaration of the Board of Directors and Managing Director in Hofseth BioCareASA
60
CHAPTER 4
Auditors report 61
Corporate governance
CHAPTER 1
CORPORATE GOVERNANCE
Hofseth BioCare is a Norwegian public limited company and is
listed on Oslo Stock Exchange. The Norwegian Accounting Act
and the rules of the Continuing Obligations for stock listed com-
panies impose a duty on the Company to issue its principles
and practice for corporate governance in the annual report.
Values and guidelines for business
ethics and corporate social
responsibility
The company's values are an important premise for corporate
governance. Trust in HBC as a company, and in the business,
is crucial for the company's future competitiveness.
Hofseth BioCare is committed to transparency about its
guidelines for management of the Company. This strengthens
the value creation, builds internal and external confidence
and promotes a code of ethics and a sustainable approach
to business.
HBC is founded on the core value of sustainability and optimal
use of natural resources. The Company aspires to create
a healthy company culture based on these core values. The
Board of Directors has approved the Code of Conduct for
business ethics and corporate social responsibility. The
Company's customization of the Code of Conduct and the
internal guidelines ensures a proper division of roles and
responsibilities and well-functioning cooperation among
the Company's shareholders, the Board of Directors and its
management, and that the business is subject to satisfactory
controls. An appropriate distribution of roles, effective
collaboration and satisfactory controls contributes to the best
possible value creation over time, for the benefit of its owners
and other stakeholders.
The company's Code of Ethics deals with the handling of
impartiality, conflicts of interest, relationships with customers
and suppliers, relations with the media, insider trading and
relevant financial interests of a personal nature. The core of
the concept of CSR is the company's responsibility for people,
communities and environment affected by operations and
typically addresses:
› Human rights which means that the company carries out
its operations in accordance with the international agre-
ements and conventions that are fundamental rights for
every human being, regardless of race, gender, religion or
other status.
› Anti-corruption which means that the organization manda-
tes that it should not demand, receive or accept an offer of
an improper advantage in connection with a position, office
or assignment.
› Employee relations where AMLs (Working Environment
Act) provisions concerning employment contracts, working
hours, insurance, pension, vacation, sick monitoring etc.
embodied in internal guidelines and be followed throug-
hout the organization. The employees are organized, and
there is established good communication channels betwe-
en employee representatives and management.
› HSE (Health, Security and Environment) is the company’s
top priority. Through guidelines and incorporate routines
that safety inspections, preventive maintenance routines,
etc. all the employee are involved. A safety delegate sys-
tem is implemented in the organization.
› Discrimination where the Company endeavours to ensure
that there shall be no discrimination or unequal treatment
which has its basis in individuals, genders, ethnicities, nati-
The Board of Directors of Hofseth BioCare ASA (HBC or the
company) has the ultimate responsibility to ensure that the
company is practicing good corporate governance. The company's
Board of Directors and management conducts a thorough review
and assessment of its principles of corporate governance annually.
4
CORPORATE GOVERNANCE
onalities, religious communities and the like.
› Environmental which is a key factor in the company's social
responsibility. Emissions to water and air are continuously
monitored. Regular meetings are held with local authorities
and municipal bodies.
Business
The aim of Hofseth BioCare is defined in the Company's Ar-
ticles of Association, which inter alia, states:
› Hofseth BioCare's business is development, manufactu-
ring, marketing and sale of marine ingredients such as
oil, calcium and protein products, as well as cooperation
with, and the participation and ownership in businesses
engaged in related businesses.
› The Company’s board of directors shall have from 3 to
10 members according to the resolution of the General
Meeting.
› The company shall have an audit committee.
Please refer to the Articles of Association for Hofseth BioCa-
re, last modified 4 January 2024, which are available at the
company's website www.hofsethbiocare.com.
Equity and dividend
Equity
Hofseth BioCare shall have an equity ratio which is appropria-
te in relation to its objectives, strategy and risk profile, and the
Board of Directors will continually assess the capital situation.
The Company's Board of Directors and management have
used the following instruments to have a customized equity
at any given time
› Private placement/capital increase
› Shareholder loans (subordinated loan) that can be dee-
med part of the company's equity
› Sales-enhancing and cost-cutting measures
As of 31 December 2023, the group had an equity of NOK
97.1 million, corresponding to an equity ratio of 10.6 %. The
board considers an equity ratio of more than 25 per cent to
be at a satisfactory and prudent level and hence the equity
ratio was not at a satisfactory level. The company's long-term
debt financing has financial covenant requirements of 25 %
equity, including subordinated loans, and the Company was
in breach with its financial covenants by 31 December 2023.
On 15 December 2023, the Board called for an extraordinary
general meeting to convert NOK 144 millions of trade
payables into equity, by issuing new class B shares towards
Hofseth International. Before 31 December, the Board had
already received the necessary voting proxies in favour of the
matter. Based on this increase of equity, by 4 January 2024,
the Company had an equity ratio of over 25 per cent and not
in breach with its financial covenants.
The board will at all times consider various instruments to
ensure that the company has sufficient equity, including an
authorization given to the board at the general meeting on 28
April 2023 to issue up to approximately 79 million new shares
intended to be used in the event of a need for additional
equity and liquidity. It is the Board's intention to ask the
General Meeting for a similar authorization for the coming
period.
Dividend
HBC aims to give its shareholders a competitive rate of return
based on the company's earnings. Dividends will be considered
in the context of HBC’s financial position, loan terms and capital
requirements for existing and new projects.
Mandates of the board of directors
Mandates granted to the Board of Directors, either to increase
the company's share capital or to buy its own shares, will gene-
rally be limited to defined purposes and usually limited in time
until the date of the next ordinary general meeting.
As of 31 December 2023, the Board of Directors in HBC holds
an authorization to increase the company's share capital by is-
suing new shares with a total face value of up to NOK 790,162
equivalent to 79,016,200 shares, each with a nominal value of
NOK 0.01.
The authorization can be used in connection with the issuance
of shares to investors who are considered to have strategic
importance for the company as well as to repair any issues as
a result of such, or any other private equity issues.
In accordance with this power of attorney to the Board of Dire-
ctors will also be able to offer shares to the people or compa-
nies who are not shareholders of the company. Existing share-
holders' preferential right may be waived.
The Board of Directors is given the authority to change the
Articles of Association stating the share capital size in acco-
rdance with the shares the Board decides under this authori-
zation. The authorization was granted at the Ordinary General
Assembly 28 April 2023 and is valid until the Ordinary General
Assembly in 2024, however not longer than 30 June 2024.
Equal treatment and transactions with related
parties
Hofseth BioCare has two classes of shares, ordinary class A
shares with voting rights, and class B shares which not hold
any voting rights but will carry a preferential right to receive
dividends and a preferred right in the case of liquidation or
other distribution of the Company's assets. Each class A share
in the Company carries one vote.
As a main rule, all transactions in the company’s own shares
5
CORPORATE GOVERNANCE
shall take place through the stock exchange or at the stock
market price if traded outside of the stock exchange, or in a
way so all shareholders shall be treated on an equal basis.
Transactions with related parties
Included in the rules of procedures for the Board are guideli-
nes for how the members of the Board and the CEO shall act in
discussions or decisions related to issues which are of special
personal importance to them, or to any related parties to the
member in question.
Transactions with related parties are governed by market
terms and conditions in accordance with the «arm’s length
principle».
The Company’s shareholders, Board and management, and
their related parties, as well as all companies in the Hofseth
group, including RH Industri AS and Hofseth International AS,
will be related parties to Hofseth BioCare.
Transactions with related parties are further described in the
notes to the financial statements.
Freely tradable shares
All ordinary class A shares in Hofseth BioCare are freely tra-
dable with no limitations in the Articles of Association. Any
transfer of B-Shares is subject to consent of the Company's
board of directors.
The general meeting
Through the general meeting the shareholders exercise the
highest authority in Hofseth BioCare. All shareholders are
entitled to submit items to the agenda, meet, speak and vote
at general meetings in accordance with the provisions of the
Norwegian Public Limited Companies Act. The Board of Hof-
seth BioCare strives to ensure that the general meetings are
an effective forum for communication between shareholders
and the Board, and the Board shall take steps to ensure that
as many shareholders as possible may exercise their rights by
participating in the general meetings.
The annual general meeting is held each year before the end
of May. Extraordinary general meetings may be called by the
Board at any time. Hofseth BioCare’s auditor or shareholders
representing at least five percent of the total share capital may
demand an extraordinary General Meeting to be called.
The notice calling the annual general meeting is made availa-
ble on the Company’s website and sent to shareholders with
known addresses by post no later than 21 days prior to the
date of the meeting. Article 9 in the Company’s Article of As-
sociations states that documents related to matters on the
agenda of a general meeting can be made available on the
Company’s website rather than being sent to shareholders by
post. The supporting documentation will be available at the
same date as the notice calling the meeting and provides all
the necessary information for shareholders to form a view on
the matters to be considered. The deadline for registration for
the annual General Meeting is at the latest 3 days before the
general meeting takes place. Shareholders who cannot attend
the general meetings in person shall be given the opportunity
to vote, and the Company shall provide information and nomi-
nate an available person who may vote on behalf of the share-
holders in this respect.
The general meeting elects the members and deputy mem-
bers of the Board, determines the remuneration of the mem-
bers of the Board, approves the annual financial statements,
discusses the Board of Director’s guidelines on management
remuneration and decides such other matters which by law or
Hofseth BioCare’s Articles of Association are to be transacted
at the General Meeting.
The Board of Directors, the Nomination Committee and the
auditor's attendance at the General Meeting is waived from
the recommendation if a review of the agenda, the availabi-
lity and physical location would suggest this is not practical).
Under the General Meeting for the adoption of the financial
statements for 2022 one members participated. The auditor
did not participate.
Nomination committee
The General Meeting has chosen a Nomination Committee to
ensure objectivity regarding the shareholders’ interests.
The company shall have a nomination committee consisting
of 3 members where the majority of the members shall be
independent of the board of directors and the management.
The members of the nomination committee shall be elected
for terms of two years.
The nomination committee shall propose candidates for the
board of directors and the nomination committee, including
remuneration to the board of directors and the members of
the nomination committee. Members of the Nomination
Committee are Geir Even Håberg, Lennart Clausen and Svein
Myhre.
The remuneration to the Nominating Committee shall be
determined by the General Meeting.
The nomination committee shall evaluate the need for
changes of the board and the nomination committee. To have
the best possible basis for their deliberations, the committee
should be in contact with the directors and the CEO.
Furthermore, the Nomination Committee should consult
relevant shareholders for nominations and for consensus
in its decision. The board’s evaluation report (ref. Paragraph
9 on the Board’s work) should be treated separately by the
Nomination Committee.
The recommendations of the nomination committee shall
include a justification as to how the best interest of the
shareholders and the Company has been secured.
6
CORPORATE GOVERNANCE
The board of directors, composition and
independence
The Board of Hofseth BioCare includes six members, of which
three are female, corresponding with the Company’s Articles
of the Associations Section 5, stating that the Board should
have from three to ten members.
Members of the Board are selected in the light of an evaluation
of the Company’s needs for expertise, capacity and balanced
decision-making, and with the aim of ensuring that the Board
of Directors can operate independently of any special interests
and function effectively as a collegiate body.
The majority of the Board of Directors shall be independent of
Hofseth BioCare’s management and its main business conne-
ctions. At least two of the members of the Board shall be inde-
pendent of the Company’s main shareholder(s). The Board of
Directors does not include executive personnel.
Director of the Board, Roger Hofseth, is as of 31 December
2023 CEO of Hofseth International AS, one of the Company’s
largest shareholders, and director of the Board, Dr. Crawford
Currie is Head of Medical R&D in the Company. Both are rela-
ted to several of the Company’s business connections and is
thus not considered independent.
The Chair of the Board, Kristin Fjellby Grung, Director Chris-
toph Baldegger, Director Amy Novogratz and Director Torill
Standal Eliassen are considered independent of management,
business connections and the Company’s main shareholders.
The term of office for members of the Board of Directors is
two years. An updated overview of the members of the Board
of Directors of Hofseth BioCare, including their employment,
education and professional background is provided at the
Company’s website www.hofsethbiocare.com.
Members of the Board of Directors are encouraged to own
shares in the company.
The General Meeting elects the Chair of The Board of Dire-
ctors.
The work of the board of directors
The Board
The Board of Directors has the overall responsibility for the
management of Hofseth BioCare. This includes a respon-
sibility to supervise and exercise control of the Company’s
activities.
Furthermore, this includes developing the Company’s stra-
tegy and monitoring its implementation. In addition, the
Board of Directors exercises supervision responsibilities to
ensure that the company manages its business and assets
and carries out risk management in a prudent and satis-
factory manner. The Board of Directors is also responsible
for the appointment of the Chief Executive Officer (CEO).
A separate instruction for the board of directors is imple-
mented and the Board develops a yearly plan for their work.
In accordance with the provisions of Norwegian company
law, the case processing and responsibilities of the board
are governed by a set of rules and procedures. The chair of
the board is responsible for ensuring that the work of the
board is carried out in an efficient and responsible manner
in accordance with the legislation.
The board has established instructions for the work of the
CEO. There is a clear separation of work between the board
and the general manager. The CEO is responsible for the
operational management of the Company.
The board conducts an annual evaluation of its work, form
of work and competence.
The Board of Directors has adopted an audit committee (the
"Audit Committee") in accordance with the Company's Ar-
ticles of Association § 6 and the Code of Practice. There is
a separate instruction for the Audit Committee.
According to the company's articles of association, section
6, the board decides the members of the committee. The
members of the audit committee in Hofseth BioCare are To-
rill Standal Eliassen (chair) and Christoph Baldegger.
The company has established its own compensation
committee in accordance with the company's articles of
association, section 11. The members of the compensation
committee are Christoph Baldegger and Torill Standal Eli-
assen.
Risk management and internal control
The Board of Hofseth BioCare shall ensure that the Company
has sound internal control and systems for risk management
that are appropriate in relation to the extent and nature of the
Company’s activities. The internal control and the systems
should also encompass the Company’s corporate values, ethi-
cal guidelines and guidelines for corporate social responsibility.
Risk management and internal control is performed through va-
rious processes within the Company, both though the Board of
Directors work and the operational management of the Compa-
ny.
The Board of Directors receives weekly reports from manage-
ment outlining the financial and operational performance of
the Company. The administration's reporting is based on input
7
CORPORATE GOVERNANCE
according to key reporting from the chain of command, as up-
dated accounting and valuation of accounting items, including
relevant operating data of importance for the assessment of
accounting records. Monthly operating reports are evaluated
and decided by the top management of the group.
There must be sufficient qualified resources to carry out appro-
priate reports which will contribute to effective decision making
and continuous control of the Group's financial performance.
In connection with the budget work and approval of the budget,
the board considers the internal control systems and the most
important risk factors are taken into account that the compa-
ny may be confronted with. In light of the company's growth
strategy, the board is ensuring that the internal control systems
apply to all aspects of the company's operations, including stra-
tegic, operational and financial risk. The board also assesses
the need for any further measures in relation to the risk factors.
The Board of Directors has adopted guidelines that encompass
the Company’s corporate and ethical values and corporate soci-
al responsibility, cf. Section 1 (Code of Ethics).
The preparation of interim reports and annual reports shall be
in accordance with Norwegian and international principles for
accounting and as further set out in the rules of procedure for
Board of Directors.
The Group's control environment is assessed as satisfactory,
and the Group has a satisfactory accounting and controlling
department. Parts of the payroll functions are outsourced to an
external accounting firm.
Operative internal control is safeguarded through established
procedures and guidelines to be followed up through line mana-
gement and management reporting. Likewise, continuous risk
analysis and control activities are executed. The Board believes
that the scope and level of the said areas is satisfactory to the
Group's size and complexity.
The Board of Directors, through its Audit Committee and toget-
her with its independent auditor, carries out an annual review of
the Company’s most important areas of exposure to risk and its
internal control arrangements.
The Board of Directors describes in the annual report the main
features of the Company’s internal control and risk manage-
ment systems related to the Company’s financial reporting.
Remuneration of the board of directors
The compensation to the Board shall reflect the Board’s re-
sponsibility, expertise, time commitment and the complexity
of the Company’s activities.
The remuneration paid to the members of the Board will be
decided by the General meeting. The remuneration paid to
the members of the committees will be decided by the gene-
ral meeting having considered proposals by the Board in line
with the Code. Information about the fee paid to the Board and
committees is stated in the annual report.
There is an authorization the board may use in connection
with the issuance of shares to directors and employees of the
Company. In addition to moderate board remuneration, it was
considered that options are the most appropriate way to honor
board members.
Remuneration of executive personnel
The Board of Directors prepares guidelines for the remune-
ration of the executive personnel. The guidelines have been
communicated to the general meeting through a management
salary statement. The Company’s performance-related remu-
neration of the executive personnel are linked to value creation
for shareholders or the Company’s earnings performance over
time and the Company strives to ensure that its arrangements
are in line with the guidelines.
Information and communications
Hofseth BioCare’s information policy shall be based on open-
ness and equal treatment of all shareholders and the Compa-
ny has resolved to comply with the Oslo Børs’ Code of Practice
for Reporting IR Information.
Hofseth BioCare strives to continuously publish all relevant
information to the market in a timely, effective and non-dis-
criminatory manner. All stock exchange announcements are
made available both on the Company’s website and on the
Oslo Stock Exchange news website www.newsweb.no and are
also distributed to news agencies (via GlobeNewswire).
The Company publishes its preliminary annual financial state-
ments by the end of February, together with its fourth quarter
results.
The complete annual report and financial statements are
made available to shareholders no later than three weeks prior
to the annual general meeting, or, at the latest, by 30 April each
year, which is the last date permitted by the Securities Trading
Act. For 2022 the complete annual report and financial state-
ments were approved and published 31 March 2023.
Quarterly results are normally published at the latest within
two months after the close of the quarter.
The Company’s financial calendar for the coming year is pu-
blished no later than 31 December in accordance with the
rules of the Oslo Stock Exchange. The financial calendar is
available on the company’s website and on the Oslo Stock
Exchange website.
8
CORPORATE GOVERNANCE
Quarterly reports and presentation material are available on
the Company’s website, www.hofsethbiocare.com.
Take-overs
It is a fundamental principle to Hofseth BioCare that all share-
holders are treated equally. Openness in respect of take-over
situations is considered to be important in ensuring equal tre-
atment of all shareholders.
The Company will not seek to hinder or obstruct take-over bids
for the Company’s activities or shares unless there are parti-
cular reasons for this.
In the event of a take-over bid for the Company’s shares, the
Board of Directors should not exercise mandates or pass any
resolutions with the intention of obstructing the take-over bid
unless this is approved by the general meeting following anno-
uncement of the bid.
If an offer is made for the Company’s shares, the Company’s
Board of Directors should issue a statement making a re-
commendation as to whether shareholders should or should
not accept the offer. The Board of Director’s statement on the
offer should make it clear whether the views expressed are
unanimous. If this is not the case, it should explain the basis
on which specific members of the Board of Directors have
excluded themselves from the Board of Directors’ statement.
The Board of Directors should arrange a valuation from an in-
dependent expert. The valuation should include an explanati-
on and should be made public no later than at the time of the
public disclosure of the statement.
Any transaction that is in effect a disposal of the Company’s
activities should be decided by a general meeting, except in
cases where such decisions are required by law to be decided
by the corporate assembly.
Auditor
EY is the auditor for Hofseth BioCare and is appointed by the
Assembly General Meeting.
The auditor shall annually submit to the audit committee the
main features of the plan for the auditing work. Furthermore,
the auditor shall at least once a year prepare a report contai-
ning its opinions on the Company's accounting policies and
internal control. The auditor participates in board meetings de-
aling with the consolidated financial statements for the Group
and the company.
In meetings with the audit committee and the board audi-
tor shall explain any material changes in the company's and
Group's accounting policies, the assessment of the significa-
nt estimates and all significant matters that there has been
disagreement about between the company and the auditor.
The Board has annual meetings with the auditors without the
group management teams present.
There are no written guidelines for executive management's
use of auditors for services other than auditing. This differs
from «Norwegian recommendation for corporate governan-
ce.» The auditor explains, however, the audit committee for
which services other than auditing provided the Group and
company. However, the auditor reports to the audit committee
on which non-audit services have been provided to the group
and the company. Throughout the year, the audit committee is
responsible for approving the services provided by the auditor,
as well as the fees for these.
The Audit Committee in conjunction with the annual report
in 2023 received a written confirmation from the auditor that
he satisfies established and legitimate independence require-
ments.
Information about the auditor's remuneration for auditing and
other services will be provided to the Annual General Meeting.
The auditor's remuneration is disclosed in note 5 to the finan-
cial statements.
9
The board of director’s
report 2023
CHAPTER 2
THE BOARD OF DIRECTOR’S REPORT 2023
Important events in 2023
First quarter
HBC started the year by showing strong growth compared to
earlier years, with revenues of NOK 44.8m in the first quarter, a
YoY growth of 48 per cent, compared to NOK 30.8m in the first
quarter of 2022. Both our ingredients business and finished
products channels were significantly higher, as the interest in
traceable marine ingredients surged. This resulted in solid de-
mand growth for our products, particularly from human-grade
pet food businesses and the nutraceutical categories.
We worked to strengthen our global partnerships, and this has
contributed to a growing order book and better long-term vi-
sibility. The premium pet segment, which helps diversify the
customer portfolio, displayed notable progress. All geographic
regions contributed to the growth without any single country
or continent dominating. The first quarter also saw multiple
significant business visits abroad, including to the US, with a
focus on human health products.
The Finished Goods business had a particularly positive
performance, with Q1 2023 sales amounting to NOK 10.2m
compared to NOK 5.9m in Q1 2022, reflecting a 70 per cent
growth and a positive operational margin after sales and mar-
keting costs. Brilliant™ Salmon Oil, accounting for 80 per cent
of finished goods revenues, has secured retail chain and dis-
tributor listings in over 25 countries worldwide.
Our R&D team made significant advancements at the start of
the year. Clinical trials on ProGo® to support gut and overall
health in milder forms of inflammatory bowel disease are
being planned and led by Stanford University.
The university collaboration showed that ProGo® provides
excellent protection against GI tract inflammation in standard
models of inflammatory bowel disease (IBD). This work is an-
ticipated to enable the granting of health claims for ProGo® as
medical food/medical nutrition in the management of IBD and
the protection of gut health.
Second quarter
During the second quarter, we saw a series of strong
accomplishments, reflecting financial acumen, market expan-
sion, and advances in R&D. HBC's sales revenues surged to
NOK 50.8 million and subsequently accumulated to NOK 95.3
million in the first half of the year. Though the cost of sales re-
ached NOK 27.1 million and operating expenses totalled NOK
20.1 million, cautious cost management was instrumental in
containing operational losses, culminating in an EBITDA from
ordinary operations of NOK -5.2 million, compared to -18.3 mil-
lion in the second quarter of 2022.
Despite challenges from supply limitations of salmon off-cuts
in the quarter, HBC exhibited resilience, yielding a notable 100
% year-on-year rise in quarterly revenue that exceeded the ben-
chmark of 50 million. HBC's ingredients segment generated of
NOK 38 million in revenue, attesting to the effective establish-
ment of exclusive, premium ingredients. Added to this was a
significant increase in gross margins of 44 %, a commendable
rise from the previous year's 34 %.
Our dedicated focus on R&D led to our first spin-out of a sepa-
rate company, HBC Immunology LLc (HBCI) in the US during
the second quarter. This company will continue its work on
prostate cancer as a separate entity and will have access
to external funding separate from HBC. The presentation
of the paper "Development of a Natural Protein Hydrolysate
Supplement" at the esteemed Multinational Association of
Supportive Care in Cancer (MASCC) meeting underscored the
therapeutic potential of ProGo in addressing muscle atrophy
in cancer cachexia and age-related muscle wasting. The su-
ccessful completion of preclinical trials for MA-022, targeting
eosinophilic conditions, marked a significant stride towards
potential drug treatments. The successful spin-out resulted
in HBC recognising NOK 23.5 million in revenue from sale of
patent assets in the second quarter.
Additionally, ongoing clinical trials for ProGo and CalGo pro-
mise insights into gastrointestinal health, metabolism enhan-
cement, and skeletal fortification. Investigations into immune
health showcased OmeGo softgels' proficiency in inflammati-
on resolution, indicating a promising avenue for immune reju-
venation. Collaborative studies highlighting ProGo's benefits in
skin health and hemoglobin levels attest to HBC's interdiscipli-
nary approach to healthcare innovation.
Third quarter
Further exciting progress was made in the third quarter. The
gross operating revenues in the quarter was NOK 50 million,
marking a forty percent increase compared to the same period
last year. This success is largely attributed to our market per-
formance and the positive trajectory of our Finished Goods bu-
siness, which has reported sales of NOK 11m. While this figure
may seem a step down from the previous quarter, it signifies
a 20 percent growth year-on-year, showcasing the resilience
and strength of our Brilliant™ brand. HBC sales and marketing
efforts yielded robust results and attendance at various shows
and conferences both improved our presence in the global are-
na and the relationships with key partners.
Our dedication to financial prudence has also paid off, with
net cash burn improving every quarter. Notably, our operati-
onal cash flow for Q3 was a positive NOK 11m, a significant
improvement from the second quarter.
On the research front, our R&D team deserves commendation
for successfully completing the recruitment for our bone he-
alth trials. Our focus on research and development is a testa-
ment to our commitment to advancing the health and wellness
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In the Consumer and Pet Health sector, collaborations with
Stanford and ongoing clinical trials demonstrate the potential
of SPHi peptides in gastrointestinal health, ProGo® peptides
for improved body composition, CalGo® for bone and joint
health, and OmeGo® softgels for immune health. The resear-
ch extends to addressing conditions like inflammatory bowel
disease, osteoarthritis, and restless leg syndrome, showca-
sing HBC's dedication to advancing healthcare solutions with
a focus on IP protection and potential novel therapies. The
R&D team's comprehensive efforts position HBC as a leader
in the industry, with numerous studies anticipated to provide
valuable insights and contribute to the company's long-term
success.
Days after year-end, on January 4th 2024, Hofseth Internatio-
nal invested in HBC through a new class of preference shares,
settled by converting NOK 144 million of debt. This demon-
strated our commitment to financial stability and growth and
transaction resulted in a strong financial position for HBC.
Financial results
Revenues and profits
The Group generated gross operating revenues of NOK 218.5
million in 2023, including gain on sale of assets of NOK 23.6
million, up from NOK 120.5 million in 2022. Correspondingly,
the parent company had gross revenues of NOK 218.4 million
including asset sale in 2023, up from NOK 120.0 million in
2022.
Operating costs, excluding depreciation and amortization
amounted to NOK 284.6 million in 2023, compared to NOK
218.7 million in 2022. For the parent company operating
expenses amounted to NOK 272.7 million in 2023 compared
to NOK 206.6 million in 2022. The expenses are mainly cost
of sales, salaries and other operating expenses.
The Group had an operating loss of NOK 102.5 million in
2023, compared with a loss of NOK 128.6 million in 2022.
Correspondingly, the parent company had an operating loss
of NOK 86.4 million compared to NOK 112.6 million in 2022.
Net financial result was NOK -4.2 million in 2023, compared
with NOK -8.8 million in 2022. Net financial result for the
parent company was NOK -6.6 million and -6.8 million in 2023
and 2022, respectively.
The Group had a loss before tax of NOK 106.7 million in 2023,
compared to a loss of NOK 137.4 million the year before. For
the parent company the loss before tax was NOK 93.0 million
in 2023, compared to NOK 119.4 million in 2022.
The group had a tax expense of NOK 0.0 million in both
2023 and 2022. The Group has not recognized any deferred
tax assets. Net loss for the year was NOK 106.7 million,
compared with a net loss of 137.4 million in 2022. The
parent company had a net loss of NOK 93.0 million in 2023,
of our customers.
Further highlighting our growth trajectory in 2023, we welco-
med several new team members to HBC this quarter. Their
diverse expertise spans from administration to international
sales.
A noteworthy achievement this quarter was also the success-
ful external funding of our spin-out company, HBCI, now va-
lued at NOK 225 million. With the increased valuation, HBC
registered an income from associated companies of NOK 5
million in the quarter.
Fourth quarter
In the final quarter of the year, we cemented the new level of
sales by reaching NOK 46 million for the quarter, a 26 % in-
crease YoY, contributing to a total annual revenue of NOK 190
million, a substantial growth of NOK 70 million compared to
2022. This success is attributed to strategic international pro-
motions focusing on our unique ingredients grounded in sci-
ence and circular economy principles, enabling us to penetrate
high-value human and pet markets.
Demand for HBC's oil and PHP products exceeded production
capacity and market expansion was evident, adding new co-
untries, market segments, and clients to our human nutrition
portfolio.
In the Consumer and Pet Health sector, Q4 showcased R&D
completion for new pet products and a new recyclable bottle/
pump. Despite regulatory constraints in China, B2C achieved
a 40 % YoY growth, reaching NOK 46 million in revenue. The
Brilliant™ Salmon Oil remains a significant driver of sales and
cash margin, with plans for over 50 % of total sales revenue to
come from e-commerce in 2024.
HBC's R&D division achieved significant milestones across
various projects towards the year end. Notable achievements
include the development of a protocol to assess undenatured
collagen levels in salmon bone powder and the ongoing explo-
ration of ProGo® peptides' bioactivity, revealing GLP-1 and GIP
agonist activity that may contribute to the weight loss profi-
le. Additionally, HBC's paper on the effects of SPH1 against
muscle atrophy was submitted for presentation at the Annual
Multinational Association of Supportive Care in Cancer mee-
ting in June 2024.
Clinical trials for OmeGo in allergic asthma and the lead drug
candidate MA-022s in eosinophilic asthma showed promising
results, with MA-022s demonstrating impressive activity in re-
ducing key asthma-related changes. The ongoing bone health
trial with CalGo® and the assessment of ProGo®'s potential
cognitive health benefits in collaboration with Shanxi Medical
University further underscore HBC's commitment to innovati-
on.
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Cash flows
The group's cash flow from operating activities amounted to
NOK 2.8 million in 2023, compared to NOK -45.2 million the
year before. The parent company had a positive cash flow of
NOK 15.3 million compared to negative NOK 45.2 million the
year before.
Net cash flow from investing activities amounted to NOK -15.0
million, compared to NOK -17.8 million in 2022 for the group.
In the parent company, cash flow from investing activities was
NOK -15.0 million in 2023 compared to NOK -17.3 million in
2022.
Net cash flow from financing activities amounted to NOK 3.7
million in 2023, compared to NOK 45.5 million the year before.
Corresponding figures in the parent company were NOK -8.9
million in 2023 and NOK 45.4 million in 2022. The company
completed a share issue in 2022, but did not issue any shares
in 2023.
Going concern
In accordance with the accounting act § 3-3a we confirm that
the condition for continued operations is present and that the
annual report have been prepared based on the going concern
assumption.
The company has a credit facility of 67 million, whereas 38.6
million is available as of the end of the year. Additionally, the
board has been authorized by the general meeting held on 28
April 2023 to issue up to 79,016,200 new shares. These autho-
rizations are intended to be utilized in case the parent compa-
ny requires additional equity and liquidity.
As of 31 December 2023, the parent company was in breach
with its loan agreement covenants, but the breach was repai-
red on 4 January 2024 following the General meeting resoluti-
on whereby accounts payables of 144 million were converted
into new Class B shares in HBC. As of the date of this report,
the Company is not in breach with any covenants or loan con-
ditions. Refer to note 16 for more details on the group's and
the parent company's interest-bearing debt conditions, as well
as note 18 for information on liquidity risk and maturity stru-
cture of the group's liabilities.
The operations of the Group are subject to uncertainty with
respect to its ability to sell products at favourable margins
and maintain adequate cash reserves. While the Company
has recently achieved higher margins and improved cash flow,
the Board of Directors remains vigilant about reviewing the
Company's equity and cash balance. If additional resources
are needed to ensure continuity of operations and support
planned activities aimed at generating positive cash flow and
profitability, the Board will consider appropriate measures
such as obtaining loans or equity. The current outlook indica-
tes a positive trend, and the Board will take necessary steps to
sustain this momentum. If the group and the parent company
compared to NOK 119.4 million in 2022.
Financial position
As of 31 December 2023, Hofseth BioCare had a total
consolidated balance sheet of NOK 390.1 million, down from
NOK 411.0 million at the end of 2022. The parent company
had a balance sheet total of NOK 396.7 million compared to
NOK 402.6 million in 2022.
Equity amounted to NOK 41.1 million at the end of 2023,
which corresponds to an equity ratio of 10.5 %. At the end of
2022, the group had a total equity of NOK 148.0 million and
an equity ratio of 36.0 %. The parent company had equity of
NOK 74.6 million at the end of 2023, compared to NOK 167.8
million the year before. The equity ratio was correspondingly
18.8 % in 2023 and 41.7 % at the end of 2022 in the parent
company. The equity ratio was significantly improved 4 days
after the balance sheet date following the investment made
by Hofseth International.
As of 31 December 2023, the group had cash and cash
equivalents of NOK 23.9 million, compared to NOK 32.4
million at the end of 2022. The parent company had NOK
22.7 million in cash and cash equivalents at the end of 2023,
compared to NOK 31.3 million in 2022. NOK 28.4 million of
its credit facility was drawn up as of year-end.
At the end of 2023, the group had NOK 0.3 million in long-
term interest-bearing debt and NOK 28.9 million in short-
term interest-bearing debt following the draw-down on a
credit facility, compared to NOK 0.8 million and NOK 0.5
million at the same time the year before, respectively. The
parent company had NOK 0 million and NOK 28.4 million
in long-term and short-term interest-bearing debt in 2023,
respectively. At the end of 2022, the long-term interest-
bearing debt was NOK 0.0 million and NOK 0.0 million short-
term.
The group has interest-bearing lease obligations of NOK
96.8 million for long-term lease obligations and NOK 10.8
million in short-term lease obligations at the end of the
year, compared to NOK 90.0 million and NOK 12.9 million at
the end of 2022. The parent company has interest-bearing
lease obligations of NOK 80.2million and NOK 9.0 million in
short-term lease obligations at the end of 2023, compared
to NOK 72.5 million and NOK 10.1 million at the end of 2022.
Other current liabilities at year end 2023 were NOK 157
million, including payables to Hofseth International of NOK
144 million which were converted to shares after the balance
sheet date.
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do not achieve planned market measures adequately, new loan
facilities or share issues will be established in 2024. Due to the
factors described above, there is uncertainty for the Company
to continue as a going concern over the next 12 months.
Assuming a going concern, the group's and the parent compa-
ny's assets and values are currently present. However, the va-
lue of some of the group's and the parent company's assets
may be lower than their carrying amounts in a potential forced
sale related to liquidation. This uncertainty is primarily related
to the value of intangible assets, fixed assets, financial assets,
and investments, as well as the value of inventories.
Allocation of earnings
Net loss for the parent company Hofseth BioCare ASA is NOK
-93.0 million in 2023. The board proposes the following alloca-
tion of the loss:
Uncovered loss - 93.0 million
Totalt - 93.0 million
Risk and risk management
Risk management
The industry in general is subject to several risk factors. Alt-
hough these are particularly associated with the production
process, also conditions to external suppliers, customers, re-
gulatory provisions, as well as general market trends are es-
sential.
All these risk factors may have a negative impact on the
Group's business, financial condition, results and ability to exe-
cute projects. Some of the main risk factors facing the Group
are briefly described below. We also refer to note 18 «Financial
Risk Management» in the financial statements.
Operational risk
The biotechnology industry is characterized by integration and
interdependence between different steps in the production
process. In Hofseth BioCare, there is a high degree of integrati-
on between the various stages of production. Any interruption
in one production stage can therefore result in all or part of the
production stopping. Hofseth BioCare has installed compre-
hensive monitoring and employees work continuously to op-
timize the processes to maximize operational continuity. Sig-
nificant improvements in the production lines in recent years
have given the company better opportunities for continued
production if one of the components stops. Several contingen-
cy measures have also been implemented, ensuring continued
operation in the event of any interruption of critical functions,
and this work has a high priority and is monitored in real-time.
A competent workforce is an important factor in the work of
ensuring continuity in production. Hofseth BioCare's employe-
es have extensive experience and competence in the compa-
ny's machinery and technology. New employees undergo trai-
ning and education to gain the necessary expertise.
The group's production processes are mainly located in the
Midsund plant and downtime at this plant can have a signifi-
cant impact on the company's revenues.
Market risk
Hofseth BioCare reduces its market risk through diversifying
its geographical and market presence, as well as different
market segments. Our distributors are present in more than
60 countries and know their respective local markets, enabling
them to identify the factors that are important to ensure that
Hofseth BioCare can sell products to end customers in diffe-
rent parts of the world. Consequently, in addition to selling in
broad geographic areas such as Europe, North America and
Asia, the company offers its products to various segments
of the human nutrition market (sports nutrition, supplements,
and health food), as well as to nutrition markets for the pet
and feed industry. This diversification strategy allows Hofseth
BioCare to reduce its dependence on one market segment and
geographical area.
Foreign exchange risk
Hofseth BioCare trades in several currencies, but mainly in US
dollars and Euros. Fluctuations in exchange rates can have
an impact on the company's operations, results and financial
position. Hofseth BioCare will not engage in currency specula-
tion and through currency hedging, the company can reduce
this risk with more predictable cost and revenue streams.
Interest rate risk (own financing, deposits)
Changes in general interest rates could affect the company's fi-
nancing and may have an impact on costs. Changes in interest
rates may also affect the value of the company's assets.
Credit risk
To minimize the risk of losses on receivables, customers' cre-
ditworthiness is assessed on an ongoing basis. Receivables
from all customers must be credit insured through Coface
Norway or through up-front cash payment before shipping of
goods.
Hofseth BioCare’s marketing and distribution strategy is to
seek collaboration with medium to large business associates
who have extensive knowledge of their markets. This often
implies well-established, solid companies with high credit ra-
tings.
Financial and liquidity risk
The Group manages its liquidity risk by striving to have suffi-
cient cash, and credit lines in banks. Moreover, preparing and
monitoring forecasts monthly to keep track of actual cash
flows.
Hofseth BioCare had cash and cash equivalents totalling
NOK 23.9 million at the end of 2023, compared with NOK
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32.4 million at the same time the year before. Cash and cash
equivalents largely consist of cash and bank deposits. In ad-
dition, the company has a credit facility of NOK 67 million.
Risk insurance
Although Hofseth BioCare seeks to reduce the impact of ad-
verse events using its risk management system, a certain bu-
siness risk remains which cannot be eliminated through pre-
ventive measures. The company covers such risks to a certain
extent through our insurance policies. The Hofseth BioCare
insurance portfolio is covering areas such as business inter-
ruption, damage to equipment and property, third party liability
and other risks, product liability insurance, board of directors
liability insurance, as well as various types of personnel insu-
rance.
Organization
Hofseth BioCare AS was founded in 2009, with the
conversion to a publicly listed company (ASA) in 2011. At
the end of 2023, Hofseth BioCare Group had a total of 69
employees.
Working environment
The group's working environment is considered good. The Bo-
ard emphasizes great importance and priority to reduce ab-
senteeism and preventing injuries. One work-related accident
occurred during the year that resulted in absence. Long-term
absence in 2023 was 2.32%, compared to 2.65 % in 2022, short-
term absence was 1.55 %, compared to 1.63 % in 2022.
Total absence was 3.87 % in 2023. Risk analysis is the basis
for measures to be taken to prevent damage or other adverse
events to occur. This is a key element in Hofseth BioCare's work
with HSE. Understanding risk is essential to prevent dangerous
situations. This will be handled continuously and HSE training is
considered good. Risk analysis work is being followed up conti-
nuously. If HSE non-conformities occur, measures will be put in
place to prevent such non-conformities from happening again.
Further training on preventive measures, food safety procedu-
res and emergency drills were initiated during 2023.
Hofseth BioCare has a partnership with Medi3 who takes care
of occupational health in the Group. All employees will also in
2024 undergo a medical examination. For HBC Berkåk AS an
occupational health agreement has been established with Fal-
ck. This is a requirement for all companies that belong to our in-
dustry group ref. Section 13 of the Regulations for organization,
leadership, and participation.
Injury and illness absence Berkåk
2023
Midsund
2023
Adm.
2023
Group
2023
Total absence (%) 2.94 5.09 1.24 3.87
Total working hours (all) 14 831 69 935 27 182 111 948
-specification:
Short term absence (%) 1.43 1.85 0.83 1.55
Long term absence (%) 1.51 3.23 0.41 2.32
Number of injuries 0 1 0 1
Number of work-related accidents 0 3 0 3
Equality
Hofseth BioCare aims to practice equality and avoid
discrimination in all aspects of our HR and recruitment policies.
Hofseth BioCare actively works consciously to equally promote
recruitment of female and male managers and employees.
At the end of 2023, 17 of 69 employees in Hofseth BioCare
were female, 2 of 5 members of the management team were
female, and on the Board of Directors, 3 of 6 members were
female.
Environment
Hofseth BioCare is working to reduce its environmental impact
in several areas. The main environmental impact is related to
the plant in Midsund. The emissions are mostly associated
with the production process which incur some emissions to
air and sea, although we aim to always satisfy the restrictions
for such emission. Hofseth BioCare is also working on minimi-
zing its total energy consumption.
All organic material that has not been heat-treated goes
through a treatment plant and is treated with acid with the
right pH and holding time before it is discharged into the sea.
Hofseth BioCare has routines for sampling and measurement
of wastewater to be within the imposed requirements.
All waste from the production at Midsund are sorted and deli-
vered to recycling, or disposal as hazardous waste.
Organic waste from the process is delivered to approved ma-
nufacturers of biogas. Residual waste is collected in a sepa-
rate compactor and delivered to the incinerator. Plastic, card-
board and paper are sorted and delivered to recycling. Waste
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description of how Hofseth BioCare follows the recommenda-
tion and the 15 provisions, can be found on http://www.hof-
sethbiocare.no/investors/cg/.
Outlook
Hofseth BioCare enters into 2024 with a commitment to
further build upon the sustainable business model that is in
our mission statement so that we can accomplish our vision
which is to improve lives through marine nutrition. Our strong
confidence is based on our accomplishments and strategic
goals that we reached in 2023 and our belief in our offering.
Throughout 2023, HBC demonstrated strong sustainable
growth, achieved significant market expansion, and remained
true on our pursuit of advancing health and wellness through
innovative research and building good business practices. As
we look ahead to 2024 and beyond, several key strategic prio-
rities will guide our efforts.
HBC will continue to prioritize market expansion, leveraging its
diverse portfolio of traceable marine ingredients and finished
products. With a focus on high-value human and pet markets,
we hope to penetrate new territories, segments, and client re-
lationships. This will be supported by targeted international
promotions and strategic e-commerce initiatives, continu-
ed partnership work with DKSH and IMCD, aligning with our
overarching goal of sustainable growth and global reach.
The cornerstone of HBC's success lies in its unwavering
commitment to R&D. Collaborating with esteemed institutions
and research partners, such as Stanford, we will advance our
understanding of the therapeutic potential of our products
across various health domains. Clinical trials and ongoing stu-
dies will provide valuable insights, paving the way for novel
therapies and new health claims on top of what we already
have built. By remaining at the forefront of healthcare innova-
tion, HBC aims to drive positive impact and improve patient
outcomes worldwide.
With a strengthened financial position following the invest-
ment made by Hofseth International in preference shares, HBC
is poised for sustainable growth and financial stability in 2024.
HBC targets a further 50 % growth in sales following new sales
initatives and employees as well as higher capacity utilization
through new raw material access. This may enable us to de-
liver a positive EBITDA. Our commitment to prudent financial
management and long-term value creation for our stakehol-
ders remains. Reference is made to going concern section.
Innovation remains a key driver of differentiation and market
leadership for HBC. We will continue to invest in product de-
velopment, with a focus on addressing evolving consumer
needs and environmental considerations. From recyclable
from our laboratory is collected and delivered in special contai-
ners as special waste. Steel and electric waste is delivered to an
approved landfill.
Hofseth BioCare transports mainly by road and sea. This applies
to both inbound transport of raw materials and outbound produ-
cts to our customers around the world. Through the optimization
of transport and raw material sourcing within Møre og Roms-
dal, the group aims to reduce the need for long-haul operations.
Transport of finished products are mainly to Europe, Asia and the
United States. For Europe, transport by road, by railway, or sea.
To the United States and Asia we transport by sea. The group in-
tends to transport more goods by rail and boat if solutions for
such transport can compete with road transport regarding speed
and infrastructure.
Corporate social responsibility
See separate ESG report prepared about the strategy to take an
active responsibility around our business. This is published on
the company`s webpage at the date of publication of the Annual
report.
Transparancy act
The company will publish a seperate report on the company`s we-
bpage before 30.06.2024.
Shareholders
At the end of the year the company had 1,475 shareholders. For
further details about the shareholders, see note 24 to Hofseth
BioCare ASA's financial statements. The company has no provisi-
ons restricting the right to sell the Company's shares.
Related parties
Related party transactions are made on commercial terms in
accordance with the «arm's length» principle. A complete and de-
tailed overview of transactions with related parties is included in
note 6 to Hofseth BioCare ASA's financial statements.
Corporate governance
Hofseth BioCare ASA aims to maintain a high standard of corpo-
rate governance. A healthy corporate culture is the key to retain
confidence in the company, ensuring access to capital and en-
suring a high degree of value creation over time.
All shareholders are treated equally and there should be a clear
divide of roles and responsibilities between the Board and mana-
gement. Hofseth BioCare follows the Norwegian Code of Practice
for Corporate Governance of 30 October 2014. A more complete
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Hofseth BioCare ASA Board of Directors,
Ålesund, 18April 2024
Roger Hofseth Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Jon Olav Ødegård
Board member CEO
packaging solutions to new formulations targeting prevalent
health conditions for humans and pets, our dedication to pro-
duct excellence and sustainability will remain unwavering.
We recognize the importance of global partnerships and
collaborative initiatives in driving forward our mission. By
fostering alliances with leading research institutions, uni-
versities, and healthcare professionals, we aim to continue
healthcare innovation and knowledge exchange. In addition
to the spin-out of patents to HBCI during 2023, and potential
new spin-offs in the future, collaborative efforts will focus on
addressing critical health challenges and advancing health-
care solutions with a global impact. New medical lead spin-
out candidates will come to leverage on external funding and
expertise to create more value for our shareholders.
HBC remains committed to further growth, based on a busi-
ness model highly focused on sustainability and circular eco-
nomy. With a dedicated team, a diverse portfolio of products,
and a clear strategic vision, we are well-positioned to achieve
new heights of success and make a meaningful impact in
the global healthcare landscape. We are here to transform
fresh marine products into high value nutrition, founded on
real sustainability.
17
CHAPTER 3
Financial statements
Consolidated and parent company
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Content
CHAPTER 3
Financial statements 18
Statement of comprehensive income 20
Statement of financial position 21
Statement of cash flows 23
Statement of changes in equity 24
Notes to the accounts 25
Note 1: Accounting policies 25
Note 2: Accounting estimates and management judgement and assumptions 33
Note 3: Segment information 34
Note 4: Cost of sales and other operating expenses 35
Note 5: Employment costs and expenses for employees and
benefits for senior employees 36
Note 6: Related party transactions 37
Note 7: Financial income and expenses 39
Note 8: Income taxes 40
Note 9: Earnings per share 40
Note 10: Intangible asset 41
Note 11: Fixed assets 43
Note 12: Leases 44
Note 13: Changes in liabilities from financial activities 46
Note 14: Fair value measurement 47
Note 15: Financial assets 48
Note 16: Interest-bearing debt and borrowings 49
Note 17: Financial assets and liabilities by category 50
Note 18: Financial risk management 51
Note 19: Inventory 54
Note 20: Trade receivables and other current receivables 55
Note 21: Cash and cash equivalents 56
Note 22: Equity investments 56
Note 23: Accounts payable and other short-term liabilities 57
Note 24: Share capital, shareholders and dividends 58
Note 25: New accounting standards with future effective date 59
Note 26: Subsequent events 59
Declaration of the Board of Directors and Managing Director in Hofseth BioCareASA
60
19
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
Operating revenues and expenses
Sales revenues
3, 6 190 815 119 128 190 720 118 815
Gain on sale of assets
3, 6 23 637 0 23 637 0
Other income
3 4 059 1 320 4 061 1 144
Total operating revenue 218 511 120 448 218 418 119 959
Cost of sales
2, 4, 6 150 686 91 934 149 196 90 785
Salaries and other payroll expenses
5 58 275 57 043 51 659 47 206
Other operating expenses
4, 6, 14 75 665 69 677 71 821 68 617
Depreciation and Write-downs
10, 11, 12 36 413 30 412 32 188 25 965
Operating profit/loss (EBIT) -102 529 -128 618 -86 445 -112 614
Profit/loss(-) from associated company
22 2 541 -204 0 0
Financial income
7 6 597 4 568 7 933 4 768
Financial expenses
6, 7, 12, 22 13 293 13 136 14 484 11 522
Net financial expenses
15, 18 -4 155 -8 772 -6 551 -6 754
Loss before taxes -106 684 -137 390 -92 996 -119 367
Tax expense
8 0 0 0 0
Net loss for the period
2 -106 684 -137 390 -92 996 -119 367
Other comprensive income and costs 0 0 0 0
Total comprehensive income -106 684 -137 390 -92 996 -119 367
Comprehensive income attributable to:
Shareholders in HBC ASA -106 683 -137 389
Non-controlling interest -1 -1
Total -106 684 -137 390
Earnings per share (NOK) 2023 2022 2023 2022
Basic earnings per share
9 -0.27 -0.37 -0.24 -0.32
Diluted earnings per share
9 -0.27 -0.37 -0.24 -0.32
1 January – 31 December
Hofseth BioCare ASA
Statement of comprehensive income
20
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
ASSETS
Non-current assets
R&D, patents etc.
2, 10 55 284 60 588 55 284 60 588
Total intangible assets 55 284 60 588 55 284 60 588
Machinery and equipment
11 52 775 57 836 48 135 51 697
Right of use assets
12 109 638 108 366 90 762 87 266
Fixtures and fittings
11 3 290 2 592 3 290 2 579
Total fixed assets
2 165 703 168 794 142 187 141 542
Investment in subsidiary
7, 22 0 0 11 231 11 231
Investment in affiliated company
22 37 691 5 559 33 033 6 517
Non-current financial assets
15 439 340 439 340
Total non-current financial assets 38 130 5 900 44 703 18 089
Total non-current assets 259 116 235 282 242 174 220 219
Current assets
Inventory
2, 6, 19 82 542 116 525 81 439 115 983
Trade receivables
2, 6, 20 14 849 14 072 14 094 13 803
Other current receivables
5, 20 9 721 12 724 36 259 21 301
Cash and cash equivalents
21 23 890 32 427 22 751 31 335
Total current assets
14, 15 131 003 175 748 154 543 182 423
Total assets
2, 25 390 119 411 030 396 716 402 642
Statement of financial position
1 January – 31 December
Hofseth BioCare ASA
21
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Hofseth BioCare ASA Board of Directors,
Ålesund, 18April 2024
Roger Hofseth Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Jon Olav Ødegård
Board member CEO
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
EQUITY AND LIABILITIES
Equity
Paid in equity
Share capital
5, 24 3 951 3 951 3 951 3 951
Share premium 37 876 144 765 70 661 163 872
Other paid in equity 0 0 0 0
Total paid in equity 41 827 148 716 74 612 167 823
Retained earnings
Other paid in equity 0 0 0 0
Total retained earnings (+) Uncovered loss (-)
(attributable to equity holders of the parent)
0 0 0 0
Non-controlling interests
22 -687 -686 0 0
Total equity
2, 6 41 140 148 030 74 612 167 823
Non-current liabilities
Interest-bearing loans and borrowings
6, 13 271 812 0 0
Lease liabilities
6, 12, 13 96 831 89 960 80 248 72 492
Total non-current liabilities
16, 17, 18 97 102 90 772 80 248 72 492
Current liabilities
Interest-bearing loans and borrowings
6, 16, 13 28 893 540 28 353 0
Lease liabilities
6, 12, 13 10 794 12 855 8 950 10 055
Trade payables
6, 23 55 161 145 752 49 037 140 551
Other liabilities
23 157 029 13 081 155 518 11 720
Total current liabilities
16, 17, 18 251 877 172 228 241 857 162 327
Total liabilities
14, 16, 18 348 979 263 000 322 104 234 819
TOTAL EQUITY AND LIABILITIES
2, 25 390 119 411 030 396 716 402 642
22
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2023 31.12.2022 31.12.2023 31.12.2022
Cash flow from operating activities
Loss before tax -106 684 -137 390 -92 996 -119 367
Paid tax
8 0 0 0 0
Gain on sale of assets
22 -23 488 0 -23 488 0
Depreciation and impairment
2, 10, 11, 12 36 413 30 412 32 188 25 965
Result from associated company
22 2 541 -204 0 0
Change in inventory
19 33 983 -25 712 34 544 -25 739
Change in trade receivables
20 -777 -3 983 -291 -3 833
Change in trade payables
23 -90 591 70 355 -91 514 67 844
Change in other accruals 141 870 11 400 149 260 1 653
Items classified as financing activities 9 493 9 954 7 626 8 359
Net cash flows from operating activities 2 761 -45 168 15 328 -45 118
Cash flow from investing activities
Aquisition of tangible fixed assets
11 -8 194 -4 020 -8 187 -3 534
Gain on sale of fixed assets 685 0 685 0
Investment in associated company -1 615 0 -1 615 0
Investment in intangible assets
10 -5 868 -13 758 -5 868 -13 758
Net cash flow from investing activities -14 992 -17 778 -14 985 -17 292
Cash flow from financing activities
Proceeds from issue of shares 0 70 777 0 70 777
Transaction costs on issue of shares -215 -326 -215 -326
Payment of interest
6, 7, 12, 13 -9 493 -9 954 -7 626 -8 359
Proceeds from new borrowings
6, 16, 13 28 353 0 28 353 0
Repayment of borrowings
6, 16, 13 -541 -2 420 0 -1 879
Payment of lease liabilities
6, 12, 16, 13 -13 639 -12 625 -11 230 -9 850
Payment borrowings from subsidiary
23 -771 0 -18 210 -4 976
Net cash flow from financing activities
17 18 3 694 45 452 -8 928 45 386
Cash and cash equivalents at 1 January 32 427 49 921 31 335 48 359
Net change in cash and cash equivalents -8 537 -17 494 -8 585 -17 024
Cash and cash equivalents at 31 December
21 23 890 32 427 22 751 31 335
Statement of cash flows
1 January – 31 December
23
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS)
(Amounts in NOK 1000) Note Share
capital
Share
premium
Other paid
in capital
Uncovered
loss
Non-
controlling
interests
Total
equity
As of 1 January 2022 3 578 137 485 0 0 -685 140 378
Share based payment program
5 0 0 2 773 0 0 2 773
Issue shares 07.07-01.08.2022 373 141 605 0 0 0 141 978
Share issue cost 0 -326 0 0 0 -326
Other changes 0 617 0 0 0 617
Net loss for the period 0 -134 616 -2 773 0 -1 -137 390
Other income and costs 0 0 0 0 0 0
Total comprehensive income 0 -134 616 -2 773 0 -1 -137 390
As of 31 December 2022
2, 5, 24 3 951 144 765 0 0 -686 148 030
As of 1 January 2023 3 951 144 765 0 0 -686 148 030
Share based payment program
5 0 0 0 0 0 0
Share issue cost 0 -215 0 0 0 -215
Other chages 0 9 0 0 0 9
Net loss for the period 0 -106 682 0 0 -1 -106 684
Other income and costs 0 0 0 0 0 0
Total comprehensive income 0 -106 682 0 0 -1 -106 684
As of 31 December 2023
2, 5, 24 3 951 37 876 0 0 -687 41 140
Parent company (IFRS)
(Amounts in NOK 1000) Note Share
capital
Share
premium
Other paid
in equity
Uncovered
loss
Total equity
As of 1 January 2022
2, 5, 24 3 578 139 187 0 0 142 765
Share based payment program
5 0 0 2 773 0 2 773
Issue shares 07.07-01.08.2022 373 141 605 0 0 141 978
Share issue cost 0 -326 0 0 -326
Net loss for the period 0 -116 594 -2 773 0 -119 367
Other income and costs 0 0 0 0 0
Total comprehensive income 0 -116 594 -2 773 0 -119 367
As of 31 December 2022
2, 5, 24 3 951 163 872 0 0 167 823
As of 1 January 2023 2, 5, 24 3 951 163 872 0 0 167 823
Share based payment program
5 0 0 0 0 0
Share issue cost 0 -215 0 0 -215
Net loss for the period 0 -92 996 0 0 -92 996
Other income and costs 0 0 0 0 0
Total comprehensive income 0 -92 996 0 0 -92 996
As of 31 December 2023
2, 5, 24 3 951 70 661 0 0 74 612
Statement of changes in equity
1 January – 31 December
24
NOTES TO THE ACCOUNTS
Note 1: Accounting policies
General information
Hofseth BioCare ASA ia a public limited liability company dom-
icilied in Ålesund, Norway. The company`s headquarter is in
Keiser Wilhelmsgate 24 in Ålesund, with one manufacturing
facility in the municipality of Molde and one manufacturing
facility in the municipality of Rennebu. The annual financial
statements were approved for issuance by the board of direc-
tors 18 April 2024.
The Group`s operation is the processing of fish offcuts into
high quality protein and other food supplements.
The company’s consolidated financial statements for 2023
consist of the parent company and the subsidiaries HBC
Berkåk AS, HBC Therapeutics AS, HBC Switzerland GmbH,
Hofseth Biocare UK Limited. Hofseth Biocare Americas Hold-
ings Inc. and Hofseth BioCare Rørvik AS (the Group).
Basis of preparation
The consolidated financial statements and the parent com-
pany financial statements of Hofseth BioCare ASA have been
prepared in accordance with IFRS® Accounting Standards and
related interpretations as issued by the International Account-
ing Standards Board (IASB) and as adopted by the EU as of 31
December 2023, as well as the additional disclosure require-
ments following from the Norwegian accounting act as of 31
December 2023.
The consolidated financial statements and the parent compa-
ny financial statements are prepared on the historical cost ba-
sis, with the exception of financial instruments that are meas-
ured at fair value with changes in value through profit or loss.
The consolidated financial statements and the parent compa-
ny financial statements have been prepared applying consist-
ent accounting policies for similar transactions and event.
Basis for consolidation
(i) Subsidiaries
The consolidated financial statements include Hofseth Bio-
Care ASA and companies controlled by Hofseth BioCare ASA.
Companies are determined to be controlled when the Group is
exsposed to, or has rights to, variable returns as a result of the
involvement from the Group, and the Group is able to influence
the returns through its power over the company. All the follow-
ing criteria must be fulfilled:
› power over the company
› exposed to, or have rights to, variable returns from its in-
volvement in the company invested in, and
› possibility to exercise its power over the company to influ-
ence the amount of the returns
(ii) Associated companies
Associated companies are units in which the group has sig-
nificant influence, but not control over the financial and op-
erational management (normally with an ownership share
between 20% and 50%). Significant influence is the power to
participate in financial and operational decisions in principle in
the company, but where Hofseth BioCare still has no control or
joint control. In the case of an ownership interest of less than
20%, in order to be treated as an associated company, it must
be clearly demonstrated that significant influence exists, for
example through shareholder agreements. The consolidated
financial statements include the group's share of profit from
associated companies recognized according to the equity
method from the time significant influence is achieved and
until such influence ceases. When the group's share of nega-
tive profit exceeds the value of the investment, the carrying
amount of the investment decreases to zero and recognition of
additional negative profit ceases. The exception is those cas-
es where the group has an obligation to cover negative results.
The group has no joint ventures.
(iii) Elimination of transactions in the consolidation
Group internal balances and any unrealised gains or losses
or revenues and costs related to intra Group transactions, are
eliminated in full in the consolidated financial statements.
(iv) The non-controlling interest in the consolidated financial
statements is the non-controlled share of the Group’s equity.
In business combinations the non-controlling interest is meas-
ured including the non-controlling interest’s share of the ac-
quired entity’s identifyable net assets. The subsidiary’s annual
result, together with the individual components recognized
in other comprehensive income, is attributable to the parent
company and the non-controlling interests. Total comprehen-
sive income is attributed to the share holders of the parent
company and to the non-controlling interests even if this re-
sults in negative non-controlling interests.
Functional currency and presentation currency
The Group’s presentation currency is NOK, which is also the
functional currency of all Norwegian companies in the Group.
The Companies abrouad uses local currency as their function-
al currency, this has immaterial value. All amounts are pre-
sented in NOK 1 000 unless specifically noted.
Use of estimates when preparing the annual financial
statements
Management has to some extent used estimates and as-
sumptions which have affected assets, liabilities, revenues,
expenses, and information of potential commitments. Fu-
ture events may cause changes in the estimates. Estimates
and the underlying assumptions are assessed continuously.
Changes in accounting estimates are recognized in the period
the changes occur. To the extent the changes also affect fu-
ture periods, the effect is allocated over the current and future
periods. See note 2.
Foreign currency
Transactions in foreign currency are translated at the exchange
rates prevailing at the date of the transaction. Monetary items
25
NOTES TO THE ACCOUNTS
in foreign currency are translated to Norwegian kroner at the
exchange rate at the balance sheet date. Currency exchange
gains and losses are recognized in the income statement and
presented as financial income/financial expense.
Revenue recognition policies
Revenues are primarily generated from manufactured own
goods within the following product types:
› Salmon oil (OmeGo®)
› Water-soluble protein (ProGo®)
› Calcium (CalGo®)
› Non-soluble protein (PetGo™)
Revenue from contracts with customers is recognized when
control of goods or services is transferred to the customers
with an amount that reflects the consideration that the Group
expects to be entitled to in exchange for delivered goods and
services. Control is normally transferred to the customer when
goods are sent from the warehouse to the customer.
To the extent the customers enter into a contract for the pur-
chase of goods, which the customers wish to continue to store
at Hofseth BioCares' warehouse, the consideration is recog-
nized as revenue when control has passed to the purchasing
party. The customers have a desire to continue storing on the
group's stock as a result of requirements for moisture, temper-
ature, etc. when storing the goods, especially Calcium and Pro-
tein. In such sales, there is an agreement of control transfer to
the customers for the actual delivery of the goods. The parent
company and the group also earn revenues from the service
of storing the goods, which are recognized at a fixed price per
month in storage.
The Group assesses whether there are obligations in the sales
contracts that are separate performance obligations, and for
which parts of the transaction price must be allocated or agreed
variable payment terms in the contracts. The parent company
and the group have offered rights of return when selling from
the web-stores to customers in the human market and have fac-
tored in an estimated level of returns when calculating revenue.
Furthermore, the Group also assesses whether there are sig-
nificant financing components in the sales contracts (advance
payment, extra long credit terms, etc.).
Trade receivables
A receivable represents the Group's right to payment of an
amount which is unconditional (i.e. the agreed credit time be-
fore payment of the consideration falls due). See accounting
principles for financial assets’ initial recognition and subse-
quent measurement. Payment terms in the group's customer
contracts vary from 0 days to 90 days.
Segments
An operating segment is a component of the Group that en-
gages in business activities from which it earns revenues and
incurs expenses. The Group’s operating results are regularly
reviewed by the managing director to monitor the Group’s re-
sults and make decisions about resource allocations.
As the Group has one common and not separable manufactur-
ing process for its products, management focuses its financial
review on revenues and quality generated from the manufac-
turing process. Management monitors the financial results at
Group level and, hence, the Group only has one segment.
Information about products is presented in note 3.
Government grants
Government grants are recognised at the time it is reasonably
assurance that the company complies with the requirements
stated to be eligible for the grants and will receive payment.
Grants relating to operating expenditures are recognised
systematically over the grant period. Grants are recognised
against the costs the grant is meant to cover. Grants for invest-
ments are recognised systematically over the asset’s useful
lives. Grants for investments are recognised as a reduction to
the related assets’ carrying amount.
Employee benefits
Defined contribution pension plan
A defined contribution pension plan is an arrangement in
which the employer pays fixed constributions to a fund or a
pension fund, and in which the parent company and the group
has no further legal or constructive obligations to pay addi-
tional contributions. The contributions are recognized in the
income statement as salary related costs in the period in
which the employee renders the service.
AFP pension plan
The group is affiliated with the AFP scheme, which is a col-
lective pension scheme for the collectively agreed sector in
Norway.
Accounting-wise, the scheme is considered a defined benefit
multi-employer scheme. However, the group is unable to iden-
tify its share of the scheme's underlying financial position and
performance with sufficient reliability. Therefore, the scheme
is accounted for as a defined contribution scheme. As a result,
obligations from the AFP scheme are not recognized on the
balance sheet. Premiums to the scheme are expensed as they
accrue.
Share based payment arrangements for consultant
The parent company has entered into a share-based payment
arrangement with a hired consultant. The arrangement is an
option plan with settlement in shares of the company.
The method of recognition varies depending on whether the
consultant is determined to be an employee or not. The con-
sultant is determined to be an employee when the agreement
26
NOTES TO THE ACCOUNTS
for servies relates to an individual delivering personal services,
and that the individual (consultant) either:
• is determined to be employed for legal or tax purposes
• works for the company under directives from managing
bodies and is managed in the same way as if the individual
was legally employed
• delivers services of similar nature to the services delivered
by legally employed individuals
To the extent the consultant is determined to be employed, in
accordance with the the above description, the share option
program is measured at fair value at the time of grant. The
calculated fair value of the granted options are accrued and
recognised as an expense over the period in which the consult-
ant’s right to receive the options is vested, which is over the
agreed future service period (vesting period). For transactions
which are settled in the company’s own equity instruments
(equity settled arrangements) the value of the granted options
is recognized in the period as salary expenses in the profit or
loss with the offsetting entry to other paid in equity.
Obligations for bonuses related to the value of the company’s
shares, for which cash settlement has been agreed, are meas-
ured at fair value each balance sheet date until the time of
settlement, and changes in fair value are recognized in prof-
it or loss. The company is not obliged to pay social security
when the consultant is not determined to be employed by the
company for tax purposes.
Financial income and financial expenses
Financial income consists of interest income, dividends, foreign
exchange gains and gains from sale of financial instruments. In-
terest income is recognised when earned, calculated using the
effective interest rate method, while dividends are recognised on
the date of the general meeting approving the dividends.
Financial expenses consist of interest expenses, guarantee
commissions, foreign exchange losses and losses from sale
of financial instruments. Interest expenses and guarantee
commissions are recognized when incurred, calculated using
the effective interest rate method.
Income taxes
Income tax expenses consist of current taxes payable and
changes in deferred taxes. Current taxes payable are taxes
payable or tax receivables related to taxable income or loss
for the year, based on tax rates substantively enacted at the
balance sheet date. Changes in calculated current taxes paya-
ble related to prior years are included in the amount.
Deferred tax/deferred tax assets are calculated on all tempo-
rary differences between carrying amounts and tax bases for
all assets and liabilities on the balance sheet date.
Deferred taxes are calculated using the tax rate expected to be
applicable at the time of reversal of the temporary differences.
Deferred tax assets are recognised to the extent the company
is expected to have sufficient taxable income in future periods
to utilize the tax benefit. The companies recognize previously
unrecognized deferred tax assets to the extent it has become
likely that the company may utilize the deferred tax benefit.
Likewise, the company will reduce deferred tax assets to the
extent the company no longer expects that it will be able to
utilise the deferred tax benefit.
Deferred tax and deferred tax assets are measured at nomi-
nal values. Deferred tax liabilities are presented as provisions/
long term liabilities in the balance sheet, while deferred tax as-
sets are presented as intangible assets.
Intangible assets
Intangible assets acquired separately are recognised at their
cost price. The cost price for intangible assets acquired are
recognised at fair value in the Group. Recognised intangible
assets are accounted for at cost less any depreciation and im-
pairment write-down.
Internally generated intangibe assets, except for recognised
development costs, are not recognised, but expensed as in-
curred.
Intangible assets with finite useful life are depreciated over
their useful lives and tested for impairment when impairment
indicators are present. Depreciation methods and useful lives
are assessed annually as a minimum. Changes to deprecia-
tion method and/or useful life are accounted for as estimate
changes.
Patents and licences
Acquisition costs for patents and licences are recognised and
depreciated over their estimated useful lives.
Development activities
Expenditures on research are recognised in the income state-
ment as incurred. Expenditures on development activities, in-
cluding product development (new or improved products) are
recognized when all the following criteria are fullfilled:
› It is technically possible to complete the asset / product
in such a way that the Group may use or sell the asset /
product in the future
› It is management’s intention to complete the asset / prod-
uct, as well as to use or sell the asset / product
› It is possible to use the asset / sell the product
› How the asset / product will generate future revenues can
be proven
› The Group has sufficient technological and financial res-
sources available to complete the asset / development of
the product
› The costs can be reliably measured
Recognised costs include cost of material, consultant fees
and direct salary costs. Other development costs are rec-
ognized in the income statement as incurred. Previously ex-
pensed development costs are not subsequently capitalized.
27
NOTES TO THE ACCOUNTS
Recognised development costs are depreciated on a straight-
line basis over the assets / products estimated useful lives.
Fixed assets
Fixed assets are measured at cost, less accumulated de-
preciations and impairment write- downs. Fixed assets are
derecognized when sold or disposed of and any gains or loss-
es are recognized in the income statement.
Acquisition cost for fixed assets is the cost price and costs
directly associated wih getting the asset ready for its intended
use.
Expenditures incurred after recognition of the fixed asset,
such as day-to-day maintenance, are recognized in the income
statement as incurred, while expenditures expected to gener-
ate future economic benefits are recognized in the carrying
amount. Depreciation period, depreciation method and residu-
al values are assessed annually.
Fixed assets are carried at cost until manufacturing or devel-
opment has been completed. Fixed assets under construction
are not depreciated until the assets are ready for their intend-
ed use.
When significant components of a property, plant and equip-
ment are determined to have different useful lives, they are
accounted for as separate components.
Each component of property, plant and equipment is depreci-
ated on a straight-line basis over its estimated useful life, as
this is considered to best represent the consumption of the fu-
ture economic benefits of the assets. Land is not depreciated.
Estimated useful life for the current period and depreciation
periods are disclosed in note 11. Depreciation method, useful
life and residual values are reassessed at the balance sheet
date and adjusted if found necessary. When the carrying
amount of a fixed asset or a cash-generating unit is higher
than the recoverable amount, the asset is written-down to its
recoverable amount. Recoverable amount is the higher of val-
ue in use and fair value less costs of disposal.
Investment in subsidiaries and associated companies
Investments in subsidiaries and associated companies are
assessed according to the cost method in the company fi-
nancial statements. Investments are valued at acquisition
cost, unless impairment has been necessary. Write-downs
have been made at fair value when impairment is due to rea-
sons that cannot be expected to be temporary. Impairment
losses are reversed when the basis for impairment is no
longer present.
Dividends and other distributions are recognized as income
when adopted at the general meeting of the subsidiaries. If
dividends exceed the retained earnings after the acquisition,
the excess part represents repayment of invested capital, and
the dividends are deducted from the value of the investment
in the balance sheet.
Leases
For contracts constituting or containing a lease, the company
and the group separate lease components if the underlying
asset may be used either on its own or together with other
resources easily available to the company and the group, and
the underlying asset is neither dependent nor interrelated on
other underlying assets in the contract. The company and the
group then account for each single lease component in the
contract as one lease contract separately from the non-lease
component in the contract.
At the time of commencement of a lease contract the compa-
ny and the group recognize a lease liability and a correspond-
ing right of use asset for all leases, except for the following
excemptions elected under the standard:
› Short-term leases (lease term of 12 months or less)
› Low value assets
For such leases the company and the group recognize the
lease payments as other operating expenses in the profit or
loss when incurred.
Lease liabilities
The company and the group measure the lease liabilities at
the present value of the lease payments to be made over the
lease term at the commencement date. The lease term is the
non-cancellable period of the lease, in addition to periods cov-
ered by options to extend or terminate the lease if it is reason-
ably certain that the group will (will not) exercise the option.
The lease payments included in the measurement of the lease
liability consist of:
› Fixed lease payments (including in substance fixed pay-
ments), less any lease incentives receivable
› Variable lease payments which are dependant on an index
or rate, measured for the first time using the index or rate
applicable at the commencement date
› Amounts expected to be payable by the company and the
group under residual value guarantees
› The exercise price for an option to purchase the asset, if it
is reasonably certain that the company and the group will
exercise this option
› Termination fee, if the lease term has been determined on
the basis that the company and the group will exercise an
option to terminate the lease
The lease liability is subsequently remeasured by increasing
the carrying amount by an accretion amount on the lease
liability, and reduce the carrying amount for lease payments
made, as well as potential reassessments or changes to the
lease agreement, or to reflect adjustments to lease payments
as a result of a change in an index or a rate.
28
NOTES TO THE ACCOUNTS
The company and the group do not include variable lease
payments in the lease liability. Variable payments are recog-
nized in the profit or loss as incurred. The company and the
group presenter the lease liabilities in separate line items in
the statement of financial position.
Right of use assets
The company and the group measures right of use assets at
cost, less accumulated depreciations and impairment losses,
adjusted for potential new measurements of the lease liability.
Cost for the right of use assets comprise:
› The amount established at initial recognition of the lease
liabiilty
› All lease payments made at or before the commencement
date, less lease incentives received if any
› All direct expenditures incurred for the company and the
group related to entering into the agreement
The group applies the depreciation provisions in IAS 16 Proper-
ty, plant and equipment when depreciating the right of use as-
set, except for the fact that the right of use asset is depreciated
from the date of commencement until the end of the lease peri-
od or the end of the asset’s useful life, whichever is expected to
take place first, unless there is an option to purchase the asset
which has been determined to be exercised with reasonable
certainty, in which case the right of use asset is depreciated
over the expected economic life of the underlying asset.
The group applies IAS 36 «Impairment of assets» in order to
determine whether the right of use asset has been impaired
and, if this is the case, write it down for impairment.
Impairment of non-financial assets
Depreciable fixed assets and intangible assets are assessed
for impairment when impairment indicators are identified. Im-
pairment write-downs for the difference between the carrying
amount and the recoverable amount are recognised in the in-
come statement.
The recoverable amount for an asset or a cash generating
unit is the higher of value in use and fair value less costs of
disposal. When assessing value in use, estimated future cash
flows are discounted to net present value using a pre-tax mar-
ket-based discount rate. The discount rate includes the time
value of money and asset specific risk. When testing for im-
pairment, assets which are not tested individually are tested at
a Group level representing the lowest level of identifiable cash
flows which are independent of cash flows from other assets
or Groups of assets (cash generating units or CGUs).
Impairment write-downs are recognised to the extent the car-
rying amount of an asset or cash generating unit exceed the
estimated recoverable amount. When recognizing impairment
write-downs related to cash generating units, any goodwill
impairment is recognized first. Any remaining impairment
amount is split pro-rata on other assets in the cash generating
unit (Group of cash generating units). Impairments are pre-
sented in the line item depreciations and impairments.
For other assets an assessment as to whether there are indi-
cations that the impairment is no longer present or reduced is
made on the balance sheet date (reporting date). Impairments
are reversed if the estimates in the calculation have favoura-
bly changed the recoverable amount. Impairment reversals are
limited to the carrying amounts being equal to what it would
have been if no impairment had been recognised.
Financial assets
Financial assets are classified at initial recognition and are
subsequently measured at amortized cost, at fair value
through other comprehensive income (OCI) or at fair value
through profit or loss.
The classification of financial assets on initial recognition de-
pends on both the characteristics of the financial assets' con-
tractual cash flows and the Group's business model for manag-
ing these. The Group's business model for managing financial
assets refers to how the Group manages its financial assets to
generate cash flows. The business model determines whether
cash flows will arise by receiving contractual cash flows, or by
selling the financial assets or both.
Accounts receivables that do not contain a significant financing
component are measured at the transaction price determined in
accordance with IFRS 15, see the accounting policies in section
on revenue from contracts with customers, and then measured
at amortized cost.
Other long-term and short-term receivables, as well as cash and
cash equivalents, are recognized at fair value on initial recogni-
tion and subsequently at amortized cost.
Financial assets at fair value through profit or loss include finan-
cial assets held for trading, financial assets designated at fair
value through profit or loss, or financial assets that are required
to measure at fair value. Financial assets are classified as held
for trading if they are purchased for the purpose of being sold or
repurchased within a short period of time. Derivatives are also
classified as held for trading.
Financial assets at fair value through profit or loss are recog-
nized in the balance sheet at fair value with net changes in fair
value recognized in the income statement. The category in-
cludes derivative instruments (forward contracts in foreign cur-
rency) and long-term equity investments. Dividends on equity
investments are recognized as financial income in the income
statement when there is a right to payment of dividends.
Financial assets are derecognised when the rights to receive
cash flows from the assets have expired or the Group has
transferred its rights to receive cash flows from the assets.
29
NOTES TO THE ACCOUNTS
Impairment of financial assets
For accounts receivables and contract assets, the Group uses
a simplified approach to calculating expected credit losses
(ECL). The Group therefore does not track changes in credit
risk, but instead recognizes a loss provision based on expect-
ed credit losses over the life of the trade receivable and the
contract asset on each reporting date. The Group has estab-
lished a provision matrix that is based on historical losses,
adjusted for future-oriented factors that are specific to the
debtors and the economic environment.
The Group considers a financial asset to be in default when it is
more than 60 days overdue. In some cases, however, the Group
may also consider that a financial asset is in default when inter-
nal or external information indicates that the Group is unable to
receive the outstanding contract amounts in its entirety before
taking into account any credit insurance that the Group has. A
financial asset is recognized as a loss when there is no reason-
able expectation of receiving contractual cash flows.
Further information on any impairment of financial assets is
provided in notes 20, 21 and 22.
Inventory
Inventories are measured at the lower of cost and net realisa-
ble value. Net realisable value has been estimated as selling
price in the ordinary course of business less the estimated
costs of completion and the estimated costs for marketing
and distribution. Cost is allocated using the FIFO-method and
includes expenditures incurred in purchasing the goods, raw
material, costs to bring the goods and the raw material to their
current condition and location. Owned goods are valued at
manufacturing cost and include raw material costs, as well as
other variable and fixed production costs that can be allocated
based on normal capacity utilization. See note 2 and 19 for
more information.
Cash and cash equivalents
Cash includes cash in hand and bank deposits. Cash equiva-
lents are short term highly liquid investments which can im-
mediately be converted to a known amount of cash, and with
a maximum duration of 3 months from the date of acquisition.
Financial liabilities
Financial liabilities are initially recognized as financial liabili-
ties at fair value through profit or loss.
Interest-bearing debt and other liabilities are recognized at fair
value less transaction costs at the time of establishment. In
subsequent periods, loans are recognized at amortized cost
using the effective interest rate. For more information see note
16.
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading purposes and financial lia-
bilities designated at initial recognition at fair value through
profit or loss. Financial liabilities are classified as held for trad-
ing purposes if they are contractual for the purpose of being
sold or repurchased within a short period of time. This cat-
egory also includes derivative instruments (currency forward
contracts). Gains or losses on liabilities held for trading are
recognized in the income statement, see note 7.
Derivatives
The Group uses financial forward exchange contracts (deriv-
atives) to hedge the Group's currency risk. The forward ex-
change contracts are recognized in the balance sheet at fair
value at the time the contract is entered into with the credit in-
stitutions, and subsequently the portfolio of forward exchange
contracts is adjusted continuously at fair value through profit
or loss. The forward exchange contracts are capitalized as
financial assets when fair value is positive and as financial
liabilities when fair value is negative. See notes 7, 15 and 18.
The Group does not have forward exchange contracts or other
derivatives that are considered hedging instruments in hedg-
ing terms as defined in IFRS 9.
Provisions
A provision is recognised when the company has an obligation
(legal or constructive) as a result of a past event, it is likely
(more likely than not) that payment will be made as a result
of the liability and the amount can be measured reliably. If the
effect is significant, the provision is measured at the discount-
ed value of future cash outflows using a pre-tax discount rate
reflecting the market’s pricing of the time value of money and,
if relevant, the risks specifically related to the liability.
A provision for a guarantee is recognised when the under lying
products or services are sold. The provision is based on histor-
ical information about guarantees and a weighting of potential
outcomes against their likelihood of occuring.
Provisions for onerous contracts are recognised when the
company’s expected revenues from a contract is lower than
the unavoidable costs of meeting the obligations under the
contract.
Contingent liabilities and contingent assets
Contingent liabilities for which it is not likely that the liability
will incur are not recognized in the financial statements. Signi-
ficant contingent liabilities are disclosed, except for contin-
gent liabilities related to which it is remote that payment will
have to be made.
Contingent assets are not recognised in the financial state-
ments unless they are virtually certain. Other contingent
assets are disclosed if it is likely that an economic benefit will
be received by the Group.
Going concern
In accordance with the accounting act § 3-3a we confirm that
30
NOTES TO THE ACCOUNTS
the condition for continued operations is present and that the
annual report have been prepared based on the going concern
assumption.
The company has a credit facility of 67 million, whereas 38.6
million is available as of the end of the year. Additionally, the
board has been authorized by the general meeting held on 28
April 2023 to issue up to 79,016,200 new shares. These autho-
rizations are intended to be utilized in case the parent compa-
ny requires additional equity and liquidity.
As of 31 December 2023, the parent company was in breach
with its loan agreement covenants, but the breach was repai-
red on 4 January 2024 following the General meeting resoluti-
on whereby accounts payables of 144 million were converted
into new Class B shares in HBC. As of the date of this report,
the Company is not in breach with any covenants or loan con-
ditions. The loan with covenant is classified as short term
both when the company are in breach or not. Refer to note
16 for more details on the group's and the parent company's
interest-bearing debt conditions, as well as note 18 for infor-
mation on liquidity risk and maturity structure of the group's
liabilities.
The operations of the Group are subject to uncertainty with
respect to its ability to sell products at favourable margins
and maintain adequate cash reserves. While the Company
has recently achieved higher margins and improved cash flow,
the Board of Directors remains vigilant about reviewing the
Company's equity and cash balance. If additional resources
are needed to ensure continuity of operations and support
planned activities aimed at generating positive cash flow and
profitability, the Board will consider appropriate measures
such as obtaining loans or equity. The current outlook indica-
tes a positive trend, and the Board will take necessary steps to
sustain this momentum. If the group and the parent company
do not achieve planned market measures adequately, new loan
facilities or share issues will be established in 2024. Due to the
factors described above, there is uncertainty for the Company
to continue as a going concern over the next 12 months.
Assuming a going concern, the group's and the parent compa-
ny's assets and values are currently present. However, the va-
lue of some of the group's and the parent company's assets
may be lower than their carrying amounts in a potential forced
sale related to liquidation. This uncertainty is primarily related
to the value of intangible assets, fixed assets, financial assets,
and investments, as well as the value of inventories.
Financial implications of climate change
While it is widely recognized that continued emission of green-
house gases will cause further warming of the planet and this
warming could lead to damaging economic and social conse-
quences, the exact timing and severity of physical effects for
HBC are difficult to quantify. The large-scale and long-term na-
ture of the problem makes it uniquely challenging, especially
in the context of economic decision making.
While changes associated with a transition to a lower-carbon
economy present risk, HBC also create significant oppor-
tunities in the nature of our business model. Turning waste
streams into high-end human and pet nutrition is important for
the environment and out teams at the facilities are focused on
climate change mitigation and adaptation of new technology
solutions.
Circular economy initiatives which HBC is a part of, and the
strive to reduce greenhouse gases is high on the agenda with
the Board and management of HBC and the Group has invest-
ed significant amounts in both machinery and knowledge
since we joined the Global Reporting Initiative (GRI) in 2019.
In a carbon constraint world, climate change is confronting
HBC with totally new challenges. One way the Group deal
with the impacts of climate change is to comprehend them
as risks and analyse possible effects as we do elsewhere
in our organization by the combination of probability and
its consequence. Therefore, HBC view climate risks as the
possible impacts of climate change with the potential to
influence positively or negatively the future development of the
HBC Group, and together with the rest of the Hofseth Group.
The risks and opportunities for HBC from climate change
are classified as direct or indirect. Direct climate risks and
opportunities are resulting out of changing natural conditions
as rising temperatures, sea levels or an increasing number
of extreme weather events. Indirect climate risks and
opportunities seems to have much more implications than
the direct ones. Examples of indirect risks are regulatory or
litigation, credit risk, market risk and reputation risk.
As previously mentioned, these risks are also great
opportunities for HBC. However, risks and opportunities HBC
as an organization face today related to climate change,
are difficult to estimate, and mitigate or explore. HBC has a
work group among the management team, led by the head
of Sustainability, that analyse climate risks and utilize the
opportunities that arise from climate change. As of the end
of 2023, the financial implications of climate change are
very limited. As of today, there are few requirements for
sustainability in the finished product, no distinctly strict
emission rules at the factories, no external influence (e.g.
sea level rise). The management expect increased focus on
impairment testing as the Group grow and increase its asset
base in the future.
Subsequent events
New information subsequent to the balance sheet date about
the Group’s and the parent company’s financial position at
the balance sheet date are taken into account in the financial
statements. Events subsequent to the balance sheet date
which do not influence the Group’s or the parent company’s
financial position at the balance sheet date, but which will in-
fluence the Group’s or the parent company’s position in the
future, have been disclosed in the notes if significant.
31
NOTES TO THE ACCOUNTS
New accounting standards
Definition of Accounting Estimates - Amendments to IAS 8
The amendments to IAS 8 clarify the distinction between
changes in accounting estimates, changes in accounting
policies and the correction of errors. They also clarify how
measurement techniques and inputs to develop accounting
estimates.
The amendment had no impact on the Group`s consolidated
financial statements.
Disclosure of Accounting Policies - Amendments to IAS 1 and
IFRS Practice Statement 2
The amendments to IAS 1 and IFRS Practice Statement 2 Mak-
ing Materially Judgements provide guidance and examples to
help entities apply materiality judgements to accounting poli-
cy disclosures. The amendments aim to help entites provide
accounting policy disclosures that are more useful by replac-
ing the requirements for entities to disclosure their "signifi-
cant" accounting poilicies with a requirement to disclose their
"material" accounting policies and adding guidance on how
entities apply the concept of materially in making decisions
about accounting policy disclosures.
The amendments have had an impact on the Groupg`s disclo-
sure of accounting policies, but not in the measurement, rec-
ognition or presentation of any items in the Group`s financial
statements.
32
NOTES TO THE ACCOUNTS
Note 2: Accounting estimates and management judgement and assumptions
The preparation of financial statements in accordance with
IFRS requires management to make judgments when choos-
ing and applying accounting principles. Further, IFRS requires
the management to make estimates based on judgments, and
that estimates and assumptions are realistic. All estimates are
considered to be the expected value based on the manage-
ment’s best knowledge.
The Group’s most significant accounting estimates and areas
of judgment are the following:
› Allocation of production costs in manufactruring cost of
finished product cost
› Transactions with related parties
› Recognition of intangible assets
› Inventory - obsolescence
Allocation of production costs in manufactruring cost of
finished product cost
Four types of finished products are produced from a common
production process based on the same input factors. The
value of the individual finished product is based on the allo-
cation of production costs determined based on the finished
product's relative share of production yield multiplied by the
expected sales value. The same model has been used for allo-
cating production costs over several years. The determination
of expected sales value as a basis for allocating production
costs has significant discretionary assessments and has a
significant effect on the calculation of the cost of production
of the various finished product products. The group and the
parent company are still in a start-up and development phase,
but management's judgment has based on agreed prices in
historical sales transactions and expected sales value at the
reporting date. See notes 4, 6 and 19.
Transactions with related parties
Transactions with related parties constitute a significant part
of the Group's and the parent company's ordinary operating
revenues and costs, and where the determination of arm's
length pricing is largely based on judgment. The transactions
also affect liquidity and financial carrying capacity for the
Group's and the parent company's operations.
The most significant transactions with related parties are
sale of finished goods, purchase of raw materials (fish trim-
mings), ongoing rental obligations related to production equip-
ment and factory buildings Midsund and Berkåk, as well as
agreements on short-term, long-term and subordinary loan
financing.
Hofseth BioCare ASA has a 5 years agreement starting
01.01.2022, and gives the company the exclusive right to buy
all the by-products from the production of Hofseth Sales AS.
Judgment has been applied when setting conditions for the
purchase of raw materials. See notes 4 and 6.
Hofseth BioCare ASA has sold finished goods to related parties
in 2022 and 2023. Prices are determined on the basis of current
and historical transactions with independent parties in 2022
and 2023. Discretion has been used in determining conditions
for the sale of finished goods, see notes 3 and 6.
Leases of production equipment, leases of factory facilities at
Midsund and Berkåk, as well as agreements for long-term and
subordinated loans. When agreeing financial terms in leases,
agreements for long-term loans in 2019 and 2020 a subordi-
nated loan in 2019, historical terms with third parties, achieved
by the group and the parent company, have been referred to.
Judgement has been applied when setting the financial terms.
See notes 6, 12, 13, 16 and 18.
Recognition of intangible assets
The Group has come far in the development phase of estab-
lishing production at the targeted level and with the quality that
the business model has been based on. The Group invests in
research and development activities on an ongoing basis.
Uncertainties exist relating to the timing of when the require-
ments for recognition of intangible assets have been met. The
management’s starting point is that development activities are
capitalized when there is an identifiable asset or product that
is controlled by the company that is expected to result in fu-
ture economic benefits. Uncertainties also exist relating to the
assessment and estimation of the cost price for the intangible
assets, and mainly relating to the estimation of cost price for
developing intangible assets and product development. Devel-
opment activities that qualify for capitalization are capitalized
both in the Group and parent company. See note 10.
Inventories
Goods in stock are valued at the lower of cost and net realisa-
ble value. It is used judgment in relation to quality and durabil-
ity. The Group uses a model in which provision is made for ob-
solescence gradually if goods in stock approach the expiration
of the shelf life. It is set aside TNOK 39,646 for obsolescence,
see note 19.
33
NOTES TO THE ACCOUNTS
Note 3: Segment information
The processing plants of the parent company are situated in Nor-
way, where the production is adjusted to meet the standard for
human consumption. The Group operates solely in the produc-
tion of four main products, namely salmon oil (OmeGo®), solu-
ble protein (ProGo®), Calcium (CalGo®), and non-water-soluble
protein (PetGo™), all of which are produced in the Midsund plant.
For the production of salmon oil, the raw material is sourced
fresh, and a closed feeding system is employed to maintain high
quality with low oxidation levels. The oil is stored in nitrogen-filled
tanks to preserve its quality after the manufacturing process. The
unique production process involves the release of oil from the
raw material using enzymes, resulting in fresh salmon oil with a
long shelf life.
The Group also produces hydrolyzed salmon protein, which is
quickly absorbed by the body and has good solubility in water.
The manufacturing process has been optimized for increased
capacity and quality in earlier years and smaller improvements
are made on a continuous basis. The Midsund factory expansion,
completed in 2021, has replaced the drying process previously
carried out at Berkåk.
In 2018, the Group installed a fully automated process line to pro-
duce calcium powder, resulting in increased yield and improved
quality and reliability in 2019-2022. The process involves the sep-
aration of bone fraction, which is then dried and milled to pure
calcium powder.
The non-soluble protein, known as the PHP fraction, is separated
and dried to produce high-quality fishmeal.
Although all four products are produced in the same process and
from the same raw material supply, the revenue is split by product
for informational purposes. The management monitors the cost
of sales as total cost of sales but split in this way. The Production
Manager manages production by tracking the raw material input
and finished goods output of the four product types to calculate
the margin by product.
REVENUE PER PRODUCT Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 By product ® Salmon Oil (OmeGo) 129 469 77 759 129 730 77 759® Soluble Protein Hydrolysate (ProGo) 23 901 12 598 23 901 12 598® Calcium (CalGo) 2 603 2 914 2 603 2 914 Non-soluble Protein (PetGo™) 33 254 25 480 33 254 25 480 Other income 2 387 1 697 2 033 1 208 Sum revenue 191 614 120 448 191 521 119 959 Gain on sale of asset 23 637 0 23 637 0 Insurance claim settlement*3 260 0 3 260 0Total revenues218 511 120 448 218 418 119 959 By region Norway 9 096 6 991 8 742 6 502 UK 19 890 14 537 20 151 14 537 France 40 342 13 117 40 342 13 117 Belgium 26 493 31 026 26 493 31 026 Europe excl. No, UK, FR, BE 25 048 21 312 25 048 21 312 Japan 18 331 11 294 18 331 11 294 Asia excl. JP 5 775 1 040 5 775 1 040 USA 46 639 21 131 46 639 21 131Total revenues191 614 120 448 191 521 119 959
* the group recieved TNOK 3 260 in 2023 for calcium and non-soluble protein damaged in 2023.
In 2023 goods totaling TNOK 106,768 were sold to three cus-
tomers, each of which accounted for more than 10 % of to-
tal turnover. The sales to each of these customers are TNOK
40,342, TNOK 39,933, and TNOK 26,493, respectively. In 2022,
goods totaling TNOK 59,196 were sold to three customers,
each of which accounted for more than 10 % of total turnover.
The sales to each of these customers are TNOK 28,329, TNOK
17,750 and TNOK 13,117. The company has no contractual as-
sets or liabilities as of 31 December 2023.
34
NOTES TO THE ACCOUNTS
Note 4: Cost of sales and other operating expenses
COST OF SALES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Raw material 58 356 55 704 59 011 55 662 Freight33 066 26 252 32 590 26 252 Purchased services24 044 26 953 22 374 25 846 Obsolescence cost20 501 8 537 20 501 8 537 Change in inventory 14 721 -25 512 14 721 -25 512 Total cost of sales 150 686 91 934 149 196 90 785OTHER OPERATING EXPENSES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Leases of equipment 2 342 1 707 2 179 1 611Leases of warehouses and factories 2 151 2 239 2 164 2 094Travelling cost3 310 2 651 3 226 2 510Internal consultant fees9 481 6 442 9 481 6 442Consultant fees and tax advisory 2 341 2 110 2 094 1 956Lawyers2 651 1 263 2 651 1 263Consulting7 520 8 057 7 315 10 486Advertising 13 486 15 042 12 306 15 040R&D and patents11 012 13 635 10 998 13 630Repair and maintenance 14 311 10 555 12 749 9 007Other operating expenses 7 889 7 855 7 488 6 419Public grants-830 -1 879 -830 -1 840 Total75 665 69 677 71 821 68 617
The Group recieved public grants of TNOK 2,255 (TNOK 4,324
in 2022), split by TNOK 830 in other operating expenses and
TNOK 1,674 in salaries. Corresponding numbers was TNOK
2,255 (TNOK 4,132 in 2022) for parent company, split by TNOK
580 in other operating expenses and TNOK 1,674 in salaries.
See note 5.
35
NOTES TO THE ACCOUNTS
Note 5: Employment costs and expenses for employees and
benefits for senior employees
SALARIES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Salaries 47 773 44 346 42 235 35 346Social security costs 6 096 5 369 5 685 4 972Pension costs 3 924 5 387 3 513 5 024Share based payments and bonus costs consultant 0 2 346 0 2 346Other employee benefits 2 157 2 039 1 901 1 808Public grants -1 674 -2 445 -1 674 -2 292Total employee benefit expenses 58 275 57 043 51 659 47 205Average number of FTE`s 65 62 57 53 REMUNERATION TO EXECUTIVE MANAGEMENT TEAM(Amounts in NOK 1000) - Group 2023 2022Management teamSalaries 9 172 7 152Bonus 1 229 0Benefits in kind 81 191Pension costs 230 173Share based payments 0 2 346Other employee benefits 5 924* 4 778*Total remuneration 16 635 14 640
* Includes remuneration of TNOK 5 924 for managing R&D (TNOK 4 138 in 2022). Remuneration for R&D is split in other operating expenses and capi-
talized development costs in 2023 and 2022
No loans or guarantees are granted to members of the management team, Board of Directors or other elected bodies. Reference is
made to the Executive Remuneration Report which will be available on the company's website before the annual general meeting.
Defined contribution pension scheme
The parent company and the group have a statutory obligation
to comply with the law on mandatory occupational pensions
and have a pension scheme that satisfies the requirements of
this Act. Contributions have been expensed in the Group by
TNOK 3,420 in 2023 (TNOK 2,787 in 2022), in the parent compa-
ny TNOK 3,009 (TNOK 2,424 in 2022). The parent company and
the group had cost for AFP of TNOK 504 in 2023 (TNOK 2,620 in
2022). The cost in 2022 had provisions for the year 2017-2021
of TNOK 2,131, and TNOK 489 for 2022.
Options
The fair value of Jon Olav Ødegård's options have been calcu-
lated at the time of grant, 30 August 2022, and expensed over
the vesting period up until 1 November 2022. The fair value
of the program has been estimated to TNOK 1,170 in 2022.
Fair value of the options has been estimated using the Black-
Scholes option pricing model. The options exerciable up until
31 October 2025. Other inputs used in the model are:
-Spot price: NOK 3.39 per option
-Strike price: NOK 3.63 per option
-Volatility: 48.0%
-Dividend: 0.0%
-Risk-free rate: 3.58%
The fair values of James Berger's options have been calculat-
ed at the time of grant, 17 October 2019, and was expensed
over the vesting period of 36 months. The fair value of the
program was estimated to TNOK 12,342 in 2019. Fair value
of the options was estimated using the Black-Scholes option
pricing model.
A total of TNOK 0 (TNOK 1,176 in 2022) was expensed in con-
nection with the option program in 2023. No share options
were exercised in 2022 and 2023, and per 31.12.23 all options
under this agreement has expired.
As partial payment for work performed for the company, Ten-
et Brandlogic Corp. was granted options in the company. The
options are expensed over the vesting period in 2021(TNOK
1,462). Total expensed in 2023 is TNOK 0 (TNOK 0 in 2022).
The options under this agreement is exerciable per year end,
and there is TNOK 172 options outstanding per 31.12.2023.
36
NOTES TO THE ACCOUNTS
OPTIONS(Amounts in NOK 1000) (Amounts in NOK 1000) 2023 2022 2023 20222023 2023 2022 2022 GROUPnumberWAEPnumberWAEPOutstandig 01.01. 1 172 3.10 5 523 0.01Exerciable 01.01 1 172 3.10 172 0.01Granted during the year 0 0 1 000 3.63Forfeited during the year 0 0 0 -Exercised during the year 0 0 0 -Expired during the year 0 0 5 351 0.01Outstandig 31.12. 1 172 3.10 1 172 3.10Exerciable 31.12. 1 172 3.10 1 172 3.10AUDITOR’S FEES Group ParentAudit fees 1 804 1 621 1 632 1 537Other confirmations 0 45 0 45Tax advice 0 0 0 0Other services 0 0 0 0Total 1 804 1 666 1 632 1 582
VAT is not included in the amounts above.
Note 6: Related party transactions
The Group's related parties include shareholders, board mem-
bers and the senior management and their related parties. RH
Industri AS, Hofseth Property AS, Hofseth International AS,
Hofseth Logistics AS, Hofseth AS, Hofseth Sales AS, Hofseth
Aalesund AS, Hofseth North America, Hofseth Asia, Hofseth
Processing AS, Ålesund Kipervikgate 13 AS and Hofseth Aqua
AS are considered to be related parties to Hofseth BioCare
ASA. In these companies, CEO (up until 29.07.2022), board
member and shareholder in Hofseth Biocare ASA, Roger Hof-
seth, has significant influence through ownership interests,
leading positions and board memberships. Further is share-
holder Yokorei CO. Ltd. considered a related party.
All related party transactions have been made in the ordinary
course of the business at the arms length principle. The main
transactions made in 2022 and 2023:
› Purchase of raw materials from Hofseth Sales AS. See fur-
ther details in the agreement below.
› 15 of the company's (18 in the group) lease agreement for
production equipment that are active in 2023 have been
entered into with Hofseth AS, Hofseth International AS and
RH Industri AS and subleased to Hofseth BioCare ASA with
a mark-up of 5-10 % on monthly instalments.
› Other minor administration costs are invoiced from Hof-
seth International AS.
› RH Industri AS had provided a subordinated loan to the group
with an outstanding amount of TNOK 22,432 as of 31 De-
cember 2021. The loan expired 30 September 2024 and car-
ries an interest rate of Nibor + 4.5 %, but the full amount was
converted to shares in he share issue in July 2022.
› Hofseth North America has purchased goods worth TNOK
39,933 in 2023 (TNOK 17,750 in 2022).
› Yokorei Co. Ltd. has purchased goods worth TNOK 47 in
2023 (TNOK 247 in 2022).
› The Group rents factory buildings at Midsund and Berkåk
from Hofseth Property AS at a cost of TNOK 12,070 in
2023 (TNOK 12,071 in 2022). The agreement is signed for
15 years, until 2032.
The statement of profit and loss and the balance sheet include
the following transactions with shareholders and related par-
ties to shareholders:
37
NOTES TO THE ACCOUNTS
BALANCE SHEET ITEMS Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Right of use assets 106 574 108 938 88 829 88 176 Trade receivables 3 458 2 354 3 458 2 243 Loan from shareholders -144 000 0 -144 000 0 Other receivables 0 0 27 787 9 577 Leasing liabilities -99 050 -101 661 -80 734 -81 929 Trade payables -41 828 -125 842 -37 485 -122 979 Total -174 846 -116 210 -142 145 -104 913PROFIT AND LOSS ITEMS Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Sales revenue 41 391 18 881 41 391 18 881 Total revenue 41 391 18 881 41 391 18 881 Cost of sales 55 651 51 381 55 651 51 381 Other operating expenses 8 675 5 353 5 817 5 271 Financial expenses 8 507 7 960 6 618 6 562 Total costs 72 833 64 694 68 086 63 214
Raw Material agreement
The company has a 5-year agreement with Hofseth Sales AS
on exclusive rights to all by-products from Hofseth Sales`s
suppliers starting 01.01.2022. Hofseth Sales AS is a 100 %
subsidiary of RH Investments AS, which is closely related to
Roger Hofseth.
The statement of profit and loss and the balance sheet in-
clude the following transactions between parent companies,
subsidiaries and associated companies:
BALANCE SHEET ITEMS Parent PROFIT AND LOSS ParentITEMS(Amounts in NOK 1000) 2023 2022 2023 2022Loan from parent to Sold services and goodsHBC Berkåk AS 24 283 9 477 0 40HBC Therapeutics AS 0 25 0 0Hofseth Biocare Rørvik AS 0 75 0 0Hofseth Biocare UK Limited 2 733 0 2 647 0HBC Immunology Inc. 771 0 0 0Trade receivables from parentBought servicesHBC Berkåk AS 0 0 220 996Hofseth Biocare UK Limited 0 0 607 0 HBC Switzerland GmbH -156 0 378 3 447 Total 27 787 9 577 2 867 1 036
38
NOTES TO THE ACCOUNTS
Note 7: Financial income and expenses
FINANCIAL INCOME Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Interest income 550 651 1 890 855 Foreign exchange gains 6 047 3 917 6 043 3 913 Total 6 597 4 568 7 933 4 768FINANCIAL EXPENSES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Interest expenses 7 543 9 954 5 506 8 359Impairment of shares in associated company 0 0 3 074 0Impairment of financial assets 0 0 162 0Foreign exchange losses 5 750 3 182 5 742 3 163Total 13 293 13 136 14 484 11 522
39
NOTES TO THE ACCOUNTS
Note 8: Income taxes
INCOME TAXES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Income tax expense Prior year taxes 0 0 0 0 Tax expense 0 0 0 0 Calculation of taxable income Loss before tax -106 684 -137 390 -92 996 -119 367 Permanent differences 1 230 -1 937 1 230 -1 937 Change in temporary differences 32 555 22 581 21 840 10 505 Taxable result -72 899 -116 745 -69 926 -110 799 Temporary differences Fixed assets 6 839 19 546 711 2 703 Loss carry forward -1 107 683 -1 034 784 -1 041 082 -971 157 Other temporary differences -40 372 -20 524 -40 372 -20 524 Total -1 141 216 -1 035 763 -1 080 743 -988 978 Calculated deferred tax asset 22 % 251 068 227 868 237 763 217 575
Deferred tax assets are not recognised in the balance sheet.
RECONCILITATION OF TAX EXPENSE Konsern Morselskap(Amounts in NOK 1000) 2023 2022 2023 2022 Loss before tax -106 684 -137 390 -92 996 -119 367 Tax 22% -23 470 -30 226 -20 459 -26 261 Permanent differences 271 -426 271 -426 Defered tax assest, not recognized 23 200 30 652 20 189 26 687 Total tax expense 0 0 0 0
Note 9: Earnings per share
The Group’s earnings per share are calculated by dividing the
profit for the year attributable to share holders by the weighted
average number of shares outstanding during the year.
Diluted earnings per share are calculated by dividing the pro fit
attributable to the share holders by the weighted average num-
ber of shares outstanding during the year.
EARNINGS PER SHARE Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Profit attributable to share holders -106 684 -139 390 -92 996 -119 367 Weighted average number of shares outstanding 395 081 374 737 395 081 374 737 Earnings per share-ordinary -0.27 -0.37 -0.24 -0.32-diluted -0.27 -0.37 -0.24 -0.32
40
NOTES TO THE ACCOUNTS
Note 10: Intangible asset
2022 Group and Parent(Amounts in NOK 1000) R&D IT-systems Patents Other SumCost at 01.01.2022 66 341 4 425 4 914 2 627 78 307Additions 0 2 355 0 0 2 355Internally developed 11 237 0 0 0 11 237Cost at 31.12.2022 77 579 6 780 4 914 2 627 91 899Depreciation at 01.01.2022 18 169 759 3 622 2 627 25 178Depreciation charge of the year 5 282 531 132 0 5 945Impairment 0 188 0 0 188Impairment and depreciation at 31.12.2022 23 451 1 478 3 754 2 627 31 311Net book value at 31.12.2022 54 128 5 302 1 159 0 60 588Economic life 10 years 5-10 years 10 years 5-10 years 5-10 years Method of depreciaton Straigt line Straigt line Straigt line Straigt line Straigt line depreciation depreciation depreciation depreciationdepreciation2023 Group and Parent(Amounts in NOK 1000) R&D IT-systems Patents Other SumCost at 01.01.2023 77 579 6 780 4 914 2 627 91 899Additions 0 325 0 0 325Internally developed 5 543* 0 0 0 5 543Disposal 4 486** 0 0 0 4 486Cost at 31.12.2023 78 635 7 105 4 914 2 627 93 281Depreciation at 01.01.2023 23 451 1 478 3 754 2 627 31 311Depreciation charge of the year 5 333 1 208 145 0 6 686Impairment 0 0 0 0 0Impairment and depreciation at 31.12.2023 28 784 2 686 3 899 2 627 37 996Net book value at 31.12.2023 49 851 4 418 1 014 0 55 284Economic life 10 years 5-10 years 10 years 5-10 years 5-10 years Method of depreciaton Straigt line Straigt line Straigt line Straigt line Straigt line depreciation depreciation depreciation depreciationdepreciation
* Some development projects is under development.
**Project sold to HBCI, see note 23 for more information.
Throughout 2023, HBC R&D has focused on developing, im-
proving, and refining their products and processes. Through
extensive research, positive health effects have been uncov-
ered in the ingredients, making development a critical aspect
that sets HBC's products apart from others. Core activities
such as research, development, and documentation are in-
tegral to HBC's R&D work. Additionally, ongoing investments
were made in 2023 towards documenting and testing the
trademarked products including ProGo®, CollaGo®, OmeGo®,
and CalGo®. This work is vital to demonstrate the efficacy and
unique properties of the products for marketing and sales.
Research and development
R&D is crucial for the production of the company's products,
which involves advanced equipment with downtime needed
during the testing and production of new, efficient solutions
to enhance profits and reduce costs. The aim to increase the
processing volume of raw materials necessitates the optimi-
zation of all production stages.
In 2023, HBC continued to enhance their knowledge through
studies and analyzing the ingredients' fractions that provide
the desired biological effect. The laboratory and factory spent
more time studying and testing these effects, resulting in
some health effects being recognized by international health
authorities.
The company's operations and products must meet environ-
mental and health requirements, regulations, agreements, and
conventions. Meeting these standards required extensive de-
41
NOTES TO THE ACCOUNTS
velopment activities. The company has ongoing R&D efforts to
develop more efficient production methods and improve the
products' human use.
The R&D process consists of five steps, which are to fur-
ther develop the enzymatic hydrolysis of salmon off-cuts to
produce products with unique health effects, optimize the
handling of raw materials and finished products in the value
chain, develop technology to produce higher quality product
fractions of protein, calcium, and oil, identify, research, and
document bioactivity in the products, and document biosafe-
ty, bioavailability, and biological effects through "in-vitro" and
"in-vivo" studies.
Total research and development costs for 2023 were TNOK
20,917 (2022 TNOK 28,521). Of this, TNOK 5,543 has been
capitalized in 2023 (2022: TNOK 11,237).
The following were the most significant development projects
with related capitalized development expenditures:
The R&D process is divided into tree steps:
1. OmeGo® as a natural anti-allergic treatment, that, de-
crease inflammation in the body. Our efforts at developing
a pharmaceutical lead program around eosinophilic inflam-
mation control is on-going. Our lead analog, MA-022, has
shown a clinically significant and enhanced level of eosino-
phil control in in-vitro and in vivo. Initial development will fo-
cus on eosinophilic esophagitis (EoE), an orphan condition
that causes pain and difficulty in swallowing. Work for the
scaling up of MA-022 synthesis is complete and preclinical
in vitro and in vivo work commenced in 2023. There are no
licensed oral options for EoE and exclusion diets and topi-
cal steroids have limited impact on symptoms. The capital-
ized development costs for 2023 were TNOK 2,541.
2. HBC's OmeGo whole salmon oil's underlying drivers of im-
mune health, respiratory & overall health. The broad inflam-
mation-resolving profile of OmeGo®, as demonstrated by
our prior research, is expected to help reduce lung irritation
with an improvement in lung function and quality of life.
Particulate matter pollution is a global health problem im-
pacting lung, cardiovascular and overall health. The capital-
ized development costs for 2023 were TNOK 3,002.
3. The Clinical Trial Unit (CTU) in Ålesund has performed sev-
eral clinical trials whitch are still ongoing. This includes
studies for Asthma, Osteopenia(early bone thinning) and
Osteoarthritis. The costs related to the CTU in 2022 have
not been capitalized in 2022.
Trademarks
The Group has registered its trademarks under the interna-
tional Madrid Protocol. The trademarks are ProGo®
for hydro-
lyzed protein, CalGo® for Calcium, PetGo™ for non-soluble
protein and OmeGo® and Brilliant™ for salmon oil.
42
NOTES TO THE ACCOUNTS
Note 11: Fixed assets
2022 Group Parent(Amounts in NOK 1000) Machinery and Fixtures and Total Machinery and Fixtures and TotalequipmentfittingsequipmentfittingsCost at 01.01.2022 186 084 13 432 199 516 176 356 11 282 187 639Additions 2 631 2 149 4 780 1 746 2 149 3 895Cost at 31.12.2022 188 715 15 581 204 296 178 102 13 431 191 534Depreciations at 01.01.2022 124 916 9 110 134 027 119 972 9 027 129 000Depreciations for the year 7 692 2 149 9 841 6 109 2 149 8 258Depreciations at 31.12.2022 132 608 11 259 143 868 126 081 11 176 137 258Book value 31.12.2022 56 107 4 322 60 428 52 021 2 255 54 276Economic life 5-10 years 3-10 years 5-10 years 3-10 years Method of depreciation Straigt line Straigt line Straigt line Straigt line depreciationdepreciationdepreciationdepreciation2023 Group Parent(Amounts in NOK 1000) Machinery and Fixtures and Total Machinery and Fixtures and TotalequipmentfittingsequipmentfittingsCost at 01.01.2023 188 715 15 581 204 296 178 102 13 431 191 534Additions 8 194 0 8 194 8 187 0 8 187Cost at 31.12.2023 196 909 15 581 212 490 186 289 13 431 199 720Depreciations at 01.01.2023 132 608 11 259 143 868 126 081 11 176 137 258Depreciations for the year 11 608 949 12 557 10 101 936 11 038Depreciations at 31.12.2023 144 216 12 209 156 425 136 183 12 113 148 295Book value 31.12.2023 52 693 3 372 56 065 50 107 1 318 51 425Economic life 5-10 years 3-10 years 5-10 years 3-10 years Method of depreciation Straigt line Straigt line Straigt line Straigt line depreciationdepreciationdepreciationdepreciation
The company has pledged assets as collateral for loans. See more in note 16.
43
NOTES TO THE ACCOUNTS
Note 12: Leases
The company and the group as lessee
The company and the group’s right of use assets include manufacturing facilities, machinery and equipment and fixtures and fittings:
2022 Group Parent(Amounts in NOK 1000) Manu-Machinery Fixtures and Total Land, manu-Machinery Fixtures and Totalfac turing and fittingsfac turing and fittingsfacilitiesequipmentfacilitiesequipmentCost 01.01.2022 100 594 55 949 2 118 158 661 77 054 50 438 1 585 129 077Additions 0 2 464 0 2 464 0 2 254 0 2 254Disposals 0 0 0 0 0 0 0 0Costs at 31.12.2022100 594 58 416 2 118 161 125 77 054 52 692 1 585 131 331Depreciations 01.01.2022 16 990 20 799 532 38 321 12 366 19 416 478 32 303Depreciations for the year 8 682 5 711 45 14 438 6 799 4 918 45 11 762Disposals 0 0 0 0 0 0 0 0Depreciations per 31.12.2022 25 672 26 510 577 52 759 19 165 24 377 523 44 065Carrying amounts 31.12.2022 74 922 31 903 1 541 108 366 57 889 28 315 1 062 87 266Shortest of lease term or 15 years 5 years 3-5 years 15 years 5 years 3-5 yearseconomiclifeDepreciation method Straigt line Straigt line Straigt line Straigt line Straigt line Straigt line 2023 Group Parent(Amounts in NOK 1000) Manu-Machinery Fixtures and Total Land, manu-Machinery Fixtures and Totalfac turing and fittingsfac turing and fittingsfacilitiesequipmentfacilitiesequipmentCost 01.01.2023 100 594 58 413 2 118 161 125 77 054 52 692 1 585 131 331Additions 7 608 10 834 0 18 442 7 608 10 352 0 17 960Disposals 0 0 0 0 0 0 0 0Costs at 31.12.2023108 202 69 247 2 118 179 567 84 662 63 044 1 585 149 291Depreciations 01.01.2023 25 672 26 510 577 52 759 19 165 24 377 523 44 065Depreciations for the year 9 267 7 858 45 17 170 7 413 7 006 45 14 464Disposals 0 0 0 0 0 0 0 0Depreciations per 31.12.2023 34 939 34 368 622 69 929 26 578 31 383 568 58 529Carrying amounts 31.12.2023 73 263 34 879 1 496 109 638 58 084 31 661 1 017 90 762Shortest of lease term or 15 years 5 years 3-5 years 15 years 5 years 3-5 yearseconomiclifeDepreciation method Straigt line Straigt line Straigt line Straigt line Straigt line Straigt line depreciation depreciation depreciation depreciation depreciation depreciation
44
NOTES TO THE ACCOUNTS
Lease liabilities:
Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Undiscounted lease liabilities and due dates for paymentsLess than 1 year 15 423 19 496 11 890 14 6532-5 years 56 527 54 272 50 315 45 237More than 5 years 23 583 49 479 19 098 39 576Total undiscounted lease liabilities 31.12 95 534 123 247 81 303 99 465 Changes in lease liabilities Total lease liabilities 1.1 102 815 112 977 82 547 90 144 New/changed lease liabilities recognized in the period 18 442 2 464 17 960 2 254 Payment of principal amounts-13 632 -12 625 -11 310 -9 850 Payment of interest amounts-8 775 -8 592 -7 000 -7 053 Interest related to the lease liabilities8 775 8 592 7 000 7 053 Total lease liabilities 31.12107 625 102 815 89 197 82 547 Current lease liabilities 31.12 (note 16) 10 794 12 855 8 950 10 055 Non-current lease liabilities 31.12 (note 16)96 831 89 960 80 248 72 492 Cash outflows for lease liabilities-22 414 -19 496 -18 230 -14 653 Total cash outflows for leases-23 480 -22 924 -20 381 -16 892
The lease agreements do not restrict the parent company’s
and the group’s dividend policy or financing opportunities. The
parent company and the group do not have significant residual
value guarantees in the lease agreements.
The parent company and the group’s leases of machinery and
equipment include, in addition to lease payments, a requirement
to maintain and secure the assets (right of use assets). The
terms in the lease agreements varies from 3-7 year, and several
of the agreements include an option to extend the lease. At the
expiry date of the main term of the lease, the lease og the ma-
chinery and equipment may be continued for a lease payment
of 1/12 of the lease payments in the main lease period. The
company may also request to purchase the equipment.
The company and the group’s leases of manufacturing facilities
(Midsund og Berkåk) have lease terms of 15 years, no extension
options, and the leases expire 31 March 2032. When entering
into an agreement the group assesses whether it is reasonably
certain to exercise an option to purchase the assets. The leases
of the manufacturing facilities have no options to purchase.
Leases of fixtures and fittings in the table above contain no ex-
tension or purchase options. The group’s potential future lease
payments which have not been included in the lease liabilities re-
lating to purchase options were TNOK 0 as of 31 December 2023.
Applied practical expedients
The company and the group lease warehouses in which both
the lessor and the company / group have the right to terminate
the agreements on a 3-6 months notice period. For such agree-
ments the company and the group do not recognize lease liabil-
ities and related right of use assets. Such lease payments are
expensed when incurred.
Lease payments for the abovementioned leases amounted to
TNOK 1,066 (TNOK 1,707 in 2022) for fixture and fittings for
the Group and TNOK 2,151 (TNOK 2,239 in 2022) for storage,
and for the parent company TNOK 903 (TNOK 1,611 in 2022)
for fixture and fittings TNOK 2,164(TNOK 2,094 i 2022) for
storage (see note 4). Cash flow from these lease obligations is
approximately equal to the amount expensed and is included
in net cash flow from operating activities.
45
NOTES TO THE ACCOUNTS
Note 13: Changes in liabilities from financial activities
GROUP(Amounts in NOK 1000) 1.1.2022 Downpayment Withdrawals New leases Adjustments 31.12.2022Short-term interestbearing liabilities 3 425 -3 425 0 0 540 540(excl. posts below)Short-term leasing liabilities 12 099 0 0 0 756 12 855Long-term interest-bearing debt 1 352 -540 0 0 0 812(excl. posts below)Long-term leasing liabilities 100 878 -12 625 0 2 464 -757 89 960Subordinary loan 22 433 -1 879 0 0 -20 554 0Total 140 187 -18 469 0 2 464 26 836 104 167PARENT(Amounts in NOK 1000) 1.1.2022 Downpayment Withdrawals New leases Adjustments 31.12.20221 879 -1 879 0 0 0 0Short-term interest-bearing liabilities(excl. posts below)Short term leasing liabilities 9 801 0 0 0 254 10 055Long-term interest-bearing debt 0 0 0 0 0 0(excl. posts below)Long-term leasing liabilities 80 343 -9 850 0 2 254 -255 72 492Subordinary loan 22 433 -1 879 0 0 -20 554 0Total114 456 -13 608 0 2 464 -20 555 82 547GROUP(Amounts in NOK 1000) 1.1.2023 Downpayment Withdrawals New leases Adjustments 31.12.2023Short-term interestbearing liabilities 540 -540 28 353 0 540 28 893(excl. posts below)Short-term leasing liabilities 12 855 -13 632 0 0 11 571 10 794Long-term interest-bearing debt 812 0 0 0 -540 -272(excl. posts below)Long-term leasing liabilities 89 960 0 0 18 442 -11 571 96 831Total 104 167 -14 172 28 353 18 442 0 136 790PARENT(Amounts in NOK 1000) 1.1.2023 Downpayment Withdrawals New leases Adjustments 31.12.20230 0 28 353 0 0 28 353Short-term interest-bearing liabilities(excl. posts below)Short-term leasing liabilities 10 055 -11 310 0 0 10 205 8 950Long-term interest-bearing debt 0 0 0 0 0 0(excl. posts below)Long-term leasing liabilities 72 492 0 0 17 960 -10 205 80 247Total 82 547 -11 310 28 353 17 960 0 117 550
46
NOTES TO THE ACCOUNTS
Note 14: Fair value measurement
The following tables provide fair value measurement hierarchy of the group's financial liabilities.
The fair value of financial assets is not disclosed as the fair value is approximately book value.
LIABILITIES MEASURED AT FAIR VALUE, GROUP(Amounts in NOK 1000) Date of Amount Active markets Observed market Non-observed measurement(Level 1)prices (Level 2)input (Level 3)Liabilities in which fair value is stated in note 18:Interest-bearing loansInterest-bearing loans floating interest rate 31.12.22 1 352 0 0 1 352Interest-bearing loans fixed interest rate 31.12.22 0 0 0 0LIABILITIES MEASURED AT FAIR VALUE, PARENT COMPANY(Amounts in NOK 1000) Date of Amount Active markets Observed market Non-observed measurement(Level 1)prices (Level 2)input (Level 3)Liabilities in which fair value is stated in note 18:Interest-bearing loansInterest-bearing loans floating interest rate 31.12.22 0 0 0 0Interest-bearing loans fixed interest rate 31.12.22 0 0 0 0Interest-bearing loans floating interest rate from 31.12.22 0 0 0 0subsidiariesLIABILITIES MEASURED AT FAIR VALUE, GROUP(Amounts in NOK 1000) Date of Amount Active markets Observed market Non-observed measurement(Level 1)prices (Level 2)input (Level 3)Liabilities of which the fair value has been provided in note 18:Interes-bearing loanInterest-bearing loan floating interest rates 31.12.23 811 0 0 811Interest-bearing loan fixed interest rates 31.12.23 0 0 0 0LIABILITIES MEASURED AT FAIR VALUE, PARENT COMPANY(Amounts in NOK 1000) Date of Amount Active markets Observed market Non-observed measurement(Level 1)prices (Level 2)input (Level 3)Liabilities of which the fair value has been provided in note 18:Interes-bearing loanInterest-bearing loan floating interest rates 31.12.23 0 0 0 0Interest-bearing loan fixed interest rates 31.12.23 0 0 0 0Interest-bearing loan from subsidiary floating interest 31.12.23 0 0 0 0rates
47
NOTES TO THE ACCOUNTS
Note 15: Financial assets
FINANCIAL ASSETS Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Amortized cost receivables:Accounts receivable 14 849 14 072 14 094 13 803Other current receivable 771 0 27 787 9 577Total financial assets 15 620 14 072 41 881 23 380Total current financial assets 15 620 14 072 41 881 23 380Total non-current financial assets 0 0 0 0
IFRS 9 requires the Group's to recognize a provision for expect-
ed credit losses for all debt instruments that are not held at
fair value through profit or loss, and for contract assets. The
company and the group have a high degree of collateral for
credit insurance on all accounts receivables and collaterals on
other receivables and loans and, hence, no significant provi-
sions have been made in relation to these, see note 20.
48
NOTES TO THE ACCOUNTS
Note 16: Interest-bearing debt and borrowings
NON-CURRENT DEBT Group Parent(Amounts in NOK 1000) Effective Maturity 2023 2022 2023 2022interest rate Rennebu Municipality NIBOR+2.0% 2025- 271 812 0 0 Lease liability 6% - 8% 2025- 96 831 89 960 80 248 72 492 Total 97 102 90 772 80 248 72 492CURRENT DEBT Group Parent(Amounts in NOK 1000) Effective Maturity 2023 2022 2023 2022interest rate Rennebu Municipality NIBOR+2,0% 2024 540 540 0 0 Credit facility 6.6% 2024 28 353 0 28 353 0 Lease liability 6% - 8% 2024 10 794 12 855 8 950 10 055 Total 39 687 13 395 37 303 10 055 Sum interest-bearing debt 136 789 104 167 117 550 82 548
The parent company has a credit facility in bank with a credit
limit of TNOK 67,000. As of 31 December 2023 the company
have used TNOK 28,353 of this credit (TNOK 0 as of 31 De-
cember 2022)
In addition to the above, the parent company had a current
interest- bearing liabilities towards the subsidiary HBC Berkåk AS
amounting to
TNOK 24,283 as of 31 December 2023 (TNOK
9,477 as of 31 December 2022). The interest rate had been
agreed to NIBOR + 3 %.
Collaterals
Credit facility in parent company is secured in trade receivable and inventory.
(Amounts in NOK 1000) 2023 2022Fixed assets 51 425 54 276Trade receivable 14 094 13 803Inventory 81 439 115 983 Total 146 958 184 062
The Group insures significant receivables against credit risk. The insurance is limited to a maximum of TNOK 13,600 and a
coverage rate of 90 %.
Financial
covenants
Credit facility Sparebank1 Nordmøre
As of 30 June and 31 December each year, the company will
have a liquidity reserve of at least NOK 5 million in the form of
cash and unused drawing rights in operating credit facility. The
book value of equity in Hofseth BioCare ASA shall at all times
amount to at least 25 % of the book value of the company's
assets. The company had an equity ratio of 18.8 % and was
thus in breach of covenants given in the loan agreement with
Sparebank1 per 31 December 2023. the breach was fixed after
the general meetning held 4th January 2024, where Hofseth
International AS`s investment was approved.
49
NOTES TO THE ACCOUNTS
Note 17: Financial assets and liabilities by category
Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Financial assets at amortized cost:Long-term financial lending and deposit 0 0 0 0Accounts receivable 14 849 14 072 14 094 13 803Other financial loans (see note 15) 771 0 27 787 9 577Total financial assets amortized cost 15 620 14 072 41 881 23 380Total financial assets 15 620 14 072 41 881 23 380Fair value is equal to carrying amount.Financial liabilities at amortized cost:Interest-bearing short-term debt 0 0 0 0Accounts payable 55 161 145 752 49 037 140 551Interest-bearing short-term debt subsidiaries 0 0 0 0Other short-term debt (note 23) 157 029 13 081 155 518 11 720Non-current interest-bearing debt 271 812 0 0Non-current leasing obligations 96 831 89 960 80 248 72 492Total financial liabilities amortized cost 309 292 249 605 248 802 224 764LEVEL 3, PARENT 2023 2022(Amounts in NOK 1000) Booked value Fair value Booked value Fair valueCurrent interest-bearing liabilities 37 303 37 303 10 055 10 055Non-current interest-bearing liabilities 80 248 80 248 72 492 72 492LEVEL 3, GROUPCurrent interest-bearing liabilities 39 687 39 687 13 395 13 395Non-current interest-bearing liabilities 97 102 97 102 90 772 90 772
Presentation of fair value measurements by level in the fair
value hierarchy:
Level 1: Quoted prices in active markets for identical assets
or liabilities
Level 2: Valuation based on other observable factors either di-
rectly (price) or indirectly (derived from price) than the quoted
price (used in level 1) for the asset or liability
Level 3: Valuation based on factors not obtained from observ-
able market data (unobservable conditions)
The fair value of interest-bearing current and long-term fixed
rate debt (level 3) is calculated by comparing the Group and
parent company's conditions with market terms for debt with
similar maturity and credit risk.
The company has no other financial instruments measured at
fair value, except for forward exchange contracts. The carrying
value of cash and cash equivalents, short-term receivables, and
short-term payables approximates fair value as these instru-
ments have short maturities, and «ordinary» conditions.
50
NOTES TO THE ACCOUNTS
Note 18: Financial risk management
Financial risk
Through its activities, the Group is exposed to various types of
financial risks: market risk, credit risk and liquidity risk. Man-
agement monitors these risks continuously and establishes
guidelines for their management. The Group's overall risk man-
agement program focuses on the unpredictability of the finan-
cial markets and seeks to minimize potential adverse effects
on the Group’s financial results.
The Group may use financial derivatives to hedge against cer-
tain risks. The company has loans from credit institutions and
financial leasing arrangements with the purpose of obtaining
capital for investments in the Groups operations. In addition,
the company has financial instruments such as accounts re-
ceivable and accounts payable, etc., which are directly related
to the daily operational activities.
Interest rate risk
Since the company and the group have no significant inter-
est-bearing assets, the exposure to interest rate risk is through
their financing activities. The company's and the group's inter-
est rate risk is related to non-current interest-bearing loans,
current interest-bearing loans and lease liabilities. Loans with
floating interest rates lead to interest rate risk for the company's
and the Group's cash flow. See note 17 for the book value and
fair value of the financing activities and note 16 for interest rate
terms relating to interest-bearing financing obligations as of 31
december 2023.
For the company's and the Group's loan portfolios that have
floating interest rates, this means that the company is affected
by changes in the interest rate level. The loans are recognized
at amortized cost.
The following table shows the Group's sensitivity to interest rate
fluctuations. The calculation includes all interest-bearing instru-
ments and financial interest rate derivatives to the extent that
they are present.
Interest rate – sensitivity year Effect on interest rate – basis-point Effect on profit – before tax (Amounts in NOK 1000)2022 +100 -1 042-100 1 0422023 +100 -1 344-100 1 344Average interest rates on financial instruments were as follows:Average interest rate in % 2023 2022 Loan from shareholders n/a 4.00 Credit line 7.99 n/a Secured debt 6.73 6.64 Lease liabilities 5.45 5.30
The following table shows the parent company's sensitivity to interest rate fluctuations. The calculation includes all interest-
bearing instruments and financial interest rate derivatives to the extent that they are present.
Interest rate – sensitivity year Effect on interest rate – basis-point Effect on profit – before tax (Amounts in NOK 1000)2022 +100 -1 036-100 1 0362023 +100 -1 176-100 1 176
Foreign exchange risk
The parent company and the group had a foreign exchange
loan in JPY (repaid in full in 2022) and a large part of their op-
erating income in foreign currency and, to a lesser extent, the
purchase of input factors in foreign currency, and are there-
fore exposed to currency risk. Management has monitored
movements in the foreign exchange market and has assessed
hedging strategies in 2023 based on the parent company's
and the group's contractual and predictable income streams.
The parent company and the group therefore entered into for-
ward exchange contracts both in 2022 and in 2023 in order
to secure the Group's budgeted future sales in foreign curren-
cy (Euro and USD), but have not used hedge accounting. The
Group and the parent company had the following forwards per
31.12.2023:
51
NOTES TO THE ACCOUNTS
Date amount Rate15.02.24 EUR 300,000 11.91225.04.24 EUR 300,000 11.92213.06.24 EUR 300,000 11.92622.08.24 EUR 300,000 11.928
The parent company and the group had no positions per 31
December 2022.
The below table demonstrates the sensitivity of possible
changes in EUR, USD and GBP when all other variables are
constant. The effect on the parent company's and the Group's
profit before tax is due to changes in the fair value of monetary
assets and liabilities, including forward exchange contracts. If
the company had used hedge accounting, a currency change
would also have resulted in changes to the OCI. The company
does not use hedge accounting.
Change in currency Change in NOK Effect on profit before tax Effect on balance(Amounts in NOK 1000) to foreign EUR USD GBP USD EUR JPYcurrency6 864 3 174 1 452 n/a n/a n/a2022 +10%-10 % -6 864 -3 174 -1 452 n/a n/a n/a2023 +10% 9 722 6 414 1 941 n/a 1 355 n/a-10 % -9 722 -6 414 -1 941 n/a -1 355 n/a
Credit risk
The parent company and the Group are exposed to credit risk
primarily related to accounts receivable, non-current financial
loans, current financial loans, as well as other financial activi-
ties including cash and cash equivalents (bank deposits).
The Group limits its exposure to credit risk through a credit rat-
ing of its customers before credit is given. The Group has cred-
it insurance for all its significant accounts receivable through
Coface Norway (see 20 for further information on credit expo-
sure and maturity analyzes on accounts receivable).
The maximum risk exposure of trade receivables for the group
as of 31 December 2023 is TNOK 14,849 (TNOK 14,072 as of
31 December 2022), and for parent company TNOK 14,094
(TNOK 13,803 as of 31 December 2022). The risk of loss on
accounts receivable is considered low and there has been no
need to provide for losses. See note 20 for further information.
Loan to subsidary of TNOK 27,787 (TNOK 9,577 in 2022),
where credit risk is considered low. (see note 15, 17 and 20
for further information on financial loans and other current
receivables).
Credit risk for cash and cash equivalents, including bank de-
posits, is managed by the Group's management. The Group's
surplus liquidity is invested by bank deposits with a financial
counterparty with low credit risk. The Group has no investments
in excess liquidity in debt or equity instruments.
The Group has not provided any guarantees for third-party debt.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet
its financial obligations as they fall due. The Group's approach
to liquidity management is to ensure, to the extent possible,
that it will always have sufficient liquidity to meet its liabili-
ties when due, both under normal and stressed conditions,
without incurring unacceptable losses or risking damage to
the Group’s reputation. Cash flows are regularly monitored
by the finance department to ensure that the parent company
has sufficient cash to meet operational commitments, and at
any time to maintain sufficient flexibility in the form of credit
facilities so that it does not violate limits or covenants for any
of the loans. The parent company and the Group aims to have
sufficient cash, cash equivalents or credit opportunities in the
medium term to cover interest and principal payments in the
short term. Please also refer to note 1 section Going concern.
As of 31 December 2023 the group had MNOK 23,9 in cash,
of which MNOK 3,0 were restricted cash as of 31 December
2023. As of 31 December 2022 the group had MNOK 32,4 in
cash, of which MNOK 2,6 were restricted cash.
The group expects to have a stable production level with sta-
ble quality which satisfies the requirements for human quality.
The activities to increase sales to existing customers, as well
as the expectation of increased sales of oil, water-soluble pro-
tein, non-soluble protein and calcium could result in significant
improvement in the company’s cash flows. Expected cash
flows are subject to uncertainties related to achieved sales
prices and volume.
Risk factors should be considered in conjunction with the risk
factors described in note 2 accounting estimates.
The table below shows the maturity profile of the Group's fi-
nancial liabilities, both interest and installments, based on
contractual undiscounted payments, classified according to
maturity structure, that is, taken into account contracts with
fixed maturity dates. When the counterparty can make an elec-
tion of when an amount is to be paid, the liability is included
in the basis covering the earliest date on which the entity can
be required to pay. Financial liabilities that may be required to
52
NOTES TO THE ACCOUNTS
be paid on demand are included in the «within 1-3 months» column.
2022 Group(Amounts in NOK 1000)1-3 months 4-6 months 7-9 months 10-12 2024 2025 2026 2027 > 5 years TotalmonthsInterest bearing debt to financial institutions0 291 0 287 561 274 0 0 0 1 412Loan and subordinated loan from shareholders0 0 0 0 0 0 0 0 0 0Lease libilities4 659 4 593 4 464 4 429 16 089 13 867 12 540 11 777 49 479 121 895Trade payables145 752 0 0 0 0 0 0 0 0 145 752Other current liabilities8 692 4 389 0 0 0 0 0 0 0 13 081Total 159 103 9 273 4 464 4 715 16 650 14 141 12 540 11 777 49 479 282 1402023 Group(Amounts in NOK 1000)1-3 months 4-6 months 7-9 months 10-12 2025 2026 2027 2028 > 5 years TotalmonthsInterest bearing debt to financial institutions0 298 0 289 280 0 0 0 0 866Credit line28 353 0 0 0 0 0 0 0 0 28 353Lease libilities5 311 5 171 4 996 4 924 18 828 17 876 17 128 14 157 39 857 128 247Trade payables50 160 0 0 0 0 0 0 0 0 50 160Other current liabilities7 851 5 178 0 0 0 0 0 0 0 13 029Total 86 675 10 646 4 996 5 213 19 107 17 876 17 128 14 157 39 857 220 6552022 Parent(Amounts in NOK 1000)1-3 months 4-6 months 7-9 months 10-12 2024 2025 2026 2027 > 5 years TotalmonthsInterest bearing debt to financial institutions 0 0 0 0 0 0 0 0 0 0Loan and subordinated loan from shareholders0 0 0 0 0 0 0 0 0 0Lease libilities3 740 3 680 3 629 3 605 13 263 11 576 10 541 9 856 39 576 99 465Trade payables140 551 0 0 0 0 0 0 0 0 140 551Other current liabilities7 817 3 903 0 0 0 0 0 0 0 11 720Total 152 108 7 538 3 629 3 605 13 263 11 576 10 541 9 856 39 576 251 7372023 Parent(Amounts in NOK 1000)1-3 months 4-6 months 7-9 months 10-12 2025 2026 2027 2028 > 5 years TotalmonthsInterest bearing debt to financial institutionsCredit line28 353 0 0 0 0 0 0 0 0 28 353Lease libilities4 342 4 200 4 103 4 038 15 747 15 008 14 264 11 329 23 383 96 414Trade payables49 001 0 0 0 0 0 0 0 0 49 001Other current liabilities6 952 4 566 0 0 0 0 0 0 0 11 518Total 83 648 8 766 4 103 4 038 15 747 15 008 14 264 11 329 23 383 185 285
53
NOTES TO THE ACCOUNTS
The group and the parent company signed in December 2023
a increased credit facility for up until TNOK 67,000 with Spare-
Bank 1 Nordmøre for working capital need related to future
sales contracts. In addition to the available cash and cash
equivalents as of 31 December 2023, this secures the group
and the company sufficient liquidity for 2024. See note 16 on
interest-bearing debt for further information.
In the future, the management and the board will continue to
prioritize the work on an appropriate and long-term financing
of Hofseth BioCare ASA.
Capital structure and equity
The group and the parent company's objectives with respect
to capital management is to ensure the continuation as a
going concern, to provide returns to shareholders and other
stakeholders, and to maintain an optimal capital structure to
reduce capital costs. By ensuring sound ratios between equity
and debt the group and the parent company will support its
operations, thus maximizing the value of its shares.
The parent company manages its capital structure and makes
necessary changes to it on the basis of an ongoing assess-
ment of the financial conditions under which the business is
run, and the prospects seen in the short and medium term,
including any adjustment of dividend shares, buyback of own
shares, reduction of share capital or issuance of new shares.
There has been no change in the policy in this area in 2023.
The Group's equity ratio was 10.6 % as of 31 December 2023
and (36.0 % as of 31 December 2022). The parent company's
equity ratio was 18.8 % as of 31 December 2023 (41.7 % as
of 31 December 2022). The Group completed a convertion of
debt to equity 4 January 2024, and strengthened the equity with
TNOK 144,000.
Note 19: Inventory
INVENTORY Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Salmon oil 10 645 4 803 10 645 4 803 Soulible protein 29 735 32 083 29 735 32 083 Calcium 15 499 48 268 15 499 48 268 Non-soluble protein and other 1 913 3 558 1 913 3 558 Consumer products 10 488 11 694 9 817 11 694 Total finished goods 68 280 100 407 67 610 100 407 Packaging and auxiliary materials 14 262 16 118 13 829 15 577 Total inventory 82 542 116 525 81 439 115 983
Provision for obsolescence of TNOK 39,646 as of 31 Decem-
ber 2023 compared to TNOK 19,145 as of 31 December 2022.
Profit effect change in obsolescence provisions is included
in cost of goods with TNOK 20,501 in 2023 (TNOK 8 537 in
2022). See notes 2, 3 and 4 for more information.
The Group has stored water-soluble protein and calcium. The
contracted sales value amounts to TNOK 64,035 and has
been recognized as revenue in 2017, 2018 and 2019, as and
when the customers are taking over the risk and control of the
goods. Of an incoming stock of 1,785 tonnes, 128 tonnes were
taken out of stock during 2023 (49 tonnes in 2022, 589 tonnes
in 2021, and 689 tonnes in 2020) It has not been sales through
2021,2022 and 2023 that have increased the stock.
54
NOTES TO THE ACCOUNTS
Note 20: Trade receivables and other current receivables
TRADE RECEIVABLES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Trade receivables USA 3 458 1 087 3 458 1 087Trade receivables France 4 170 3 845 4 170 3 845Trade receivables other 7 220 9 140 6 466 8 871Sum trade receivables 14 849 14 072 14 094 13 803Trade receivables related parties 3 458 2 243 3 458 2 243Provision for expected credit losses 0 0 0 0
Accounts receivable are not interest-bearing receivables and
general terms and conditions for payment are from 7 to 120
days. All significant accounts receivables are credit secured
by Coface Norway, limited to a maximum of MNOK 11.5 and
with a coverage rate of 90 %. Historical credit losses for cus-
tomers over the past five years are approximately TNOK 210.
AGING OF TRADE RECEIVABLES - Group
(Amounts in NOK 1000) Total Not due <30d 30-60d 60-90d >90d2023Accounts receivables 14 849 13 287 692 345 32 492Credit-secured share 10 260 8 746 692 316 31 475Expected credit loss 0 0 0 0 0 02022Accounts receivables 14 072 10 449 2 657 196 35 734Credit-secured share 11 453 7 850 2 842 170 27 564Expected credit loss 0 0 0 0 0 0
AGING OF TRADE RECEIVABLES - PARENT
(Amounts in NOK 1000) Total Not due <30d 30-60d 60-90d >90d2023Accounts receivables 14 094 12 532 692 345 32 492Credit-secured share 10 260 8 746 692 316 31 475Expected credit loss 0 0 0 0 0 02022Accounts receivables 13 803 10 181 2 657 196 35 734Credit-secured share 11 453 7 850 2 842 170 27 564Expected credit loss 0 0 0 0 0 0
The Group has established a model in which the Group calcu-
lates provisions for credit losses by multiplying the expected
credit losses by the proportion of non-credit-secured accounts
receivable. The Group uses an increasing factor for expected
credit losses according to maturity analyzes above. When
analyzing future information about the Group's customers and
markets, no future challenges are listed today which indicate
that there will be a significant credit loss in the future (see and
note 18 on credit risk). The Group and the parent company
have TNOK 0 in provisions for losses on accounts receivable
both in 2023 and 2022.
55
NOTES TO THE ACCOUNTS
Note 21: Cash and cash equivalents
Deposits with a credit institution totaled TNOK 23,890 as of 31
December 2023 and TNOK 32,427 as of 31 December 2022
and the Group earns interest income according to agreed
floating interest rate terms.
At 31 December 2023, restricted funds for the Group amount-
ed to TNOK 3,019 which derives from the employees' tax de-
ductions. As of 31 December 2022, this amounted to TNOK
2,546.
Note 22: Equity investments
Subsidiaries Country Head Share Owner-Voting Earnings Equity officecapitalshipshare202331.12.2023HBC Berkåk AS Norway Rennebu 100 100% 100% -17 492 -23 547HBC Therapeutics AS Norway Ålesund 2 000 100% 100% -22 -289HBC Switzerland GmbH Switzerland Zürich CFH20 100% 100% 38 79Hofseth BioCare Rørvik AS Norway Rørvik 100 51% 51% 3 -1 418Hofseth Biocare Americas Holdings Inc. USA Mendham, NJ 0 100% 100% n/a n/aHofseth Biocare UK Ltd. UK Brentford 0 100% 100% -1 301 -1 301Company Country Head office Share capital Ownership Voting shareHBC Immunology Inc. USA Delaware071% 50%Atlantic Delights Ltd. Hong Kong Hong Kong HKD 6 163 34% 34%
Atlantic Delights ltd
The parent company and the group acquired 34 % of Atlantic
Delights Ltd., Hong Kong on 27 August 2020, through a share
issue with a nominal value of TNOK 6,517 in the company. Es-
timated surplus value related to customer base amounts to
TNOK 3,395 calculated at the time of acquisition and which is
depreciated on a straight-line basis over 5 years. Profit share
from the company in the ownership period is included after tax
expense and amortization of surplus value.
HBC Immunology Inc.
During Q2 2023 HBC established HBCI. HBC transfered one
patent, and a licence free non-exclusive right to apply data
from another of HBC`s patent. Hofseth Biocare ASA’s contri-
bution in kind of intangible assets was accounted as a partial
gain, since the ownership after the transaction was 75%. 25%
gain on the transaction of TNOK 23,488 is classified as other
income.
The Group has as at 31 December 2023 71% interest in HBCI,
a joint venture that aims to develop a co-treatment for use in
treatment of prostate cancer. Since HBC only votes for 50%
of the shares, and one other party votes for the remaining
50%, the interest is accounted for under the equity method in
the consolidated financial statements. During Q3 and Q4 the
ownership percentage has been diluted from 75% to 71% own-
ership as a result of external capital increases in HBCI. The
dilution effect is accounted for under share of profit and loss.
Summarised financial information of the joint venture, based
on its IFRS financial statements, and reconciliation with the
carrying amount of the investment in the consolidated finan-
cial statements are set out below:
OTHER CURRENT RECEIVABLES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022 Prepayments 2 551 1 505 2 585 1 209 VAT receivable 3 292 6 110 2 906 5 580 Intercompany Group 0 0 27 016 9 577 Benefit funds 2 255 4 383 2 255 4 209 Other 1 623 726 1 497 727 Total 9 721 12 724 36 259 21 301
56
NOTES TO THE ACCOUNTS
Note 23: Accounts payable and other short-term liabilities
ACCOUNTS PAYABLE Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Accounts payable 13 560 19 910 11 787 17 572Accounts payable related companies 41 601 125 842 37 249 122 979Total 55 161 145 752 49 037 140 551
Accounts payable are not interest-bearing and normal maturity is from 0 to 60 days. For settlement and terms for accounts
payable with related parties, see information in note 6.
OTHER SHORT-TERM LIABILITIES Group Parent(Amounts in NOK 1000) 2023 2022 2023 2022Public duties payable 4 903 4 003 4 251 3 476Accrued holiday pay 5 178 4 546 4 566 3 903Other accrued costs 2 948 4 532 2 701 4 340Short-term debt to related companies 144 000 0 144 000 0Total 157 029 13 081 155 518 11 720
INVESTMENT IN ASSOCIATED COMPANY Group ParentATLANTIC DELIGHTS LTD(Amounts in NOK 1000) 2023 2022 2023 2022Net asset 1.1. 5 559 5 764 6 517 6 517Access 0 0 0 0Amitization added value -679 -679 0 0Profit share after tax -1 438 474 0 0Impairment shares 0 0 -3 074 0Net asset 31.12. 3 443 5 559 3 443 6 517INVESTMENT IN ASSOCIATED COMPANY Group ParentHBC IMMUNOLOGY INC.(Amounts in NOK 1000) 2023 2022 2023 2022Net asset 1.1. 0 n/a 0 n/aAccess 29 589 n/a 29 589 n/aDillution effect 5 789 n/a 0 n/aProfit share after tax -1 130 n/a 0 n/aNet asset 31.12. 34 247 n/a 29 589 n/aFINANCIAL INFORMATION IN ASSOCIATED COMPANY Atlantic Delights Ltd. HBC Immunology Inc.(Amounts in NOK 1000) 2023 2022 2023 2022Current assets 3 358 9 886 8 801 n/aFixed assets 65 3 863 0 n/aCurrent liabilities 1 468 -2 0 n/aNon-current liabilities 9 595 -2 717 1 020 n/aOperating revenue 1 700 2 668 0 n/aTotal earnings -4 228 777 -1 602 n/a
57
NOTES TO THE ACCOUNTS
Note 24: Share capital, shareholders and dividends
As of 31 December 2023, Hofseth BioCare ASA had NOK
3,950,810 in share capital, divided into 395,081,030 shares,
each with a nominal value of NOK 0.01. All shares are fully paid.
There is only one class of shares and all shares have equal vot-
ing rights and equal rights to dividends. The 20 largest share-
holders of Hofseth BioCare ASA as of 31 December 2023 are:
Largest shareholders # of shares % shareSIX SIS AG 81 625 211 20.66RH INDUSTRI AS 69 300 190 17.54 HOFSETH INTERNATIONAL AS 59 176 565 14.98YOKOREI CO. LTD 40 951 333 10.37 GOLDMAN SACHS INTERNATIONAL 22 450 000 5.68 BRILLIANT INVEST AS 11 000 000 2.78 CREDIT SUISSE (SWITZERLAND) LTD. 9 566 920 2.42GOLDMAN SACHS & CO. LLC 9 251 830 2.34CITIBANK, N.A. 7 871 762 1.99THE BANK OF NEW YORK MELLON SA/NV 5 060 227 1.28JPMORGAN CHASE BANK, N.A., LONDON 4 823 941 1.22UBS SWITZERLAND AG 3 937 425 1.00BOMI FRAMROZE HOLDING AS 3 453 370 0.87SAXO BANK A/S 3 354 431 0.85LGT BANK AG 3 266 329 0.83THE NORTHERN TRUST COMP, LONDON BR 2 433 865 0.62VERDIPAPIRFONDET DNB SMB 2 372 594 0.60ØDEGÅRD PROSJEKT AS 2 174 039 0.55INTERACTIVE BROKERS LLC 1 905 107 0.48CLEARSTREAM BANKING S.A. 1 890 896 0.48In total, the 20 largest shareholders345 866 035 87.54 Total others49 214 995 12.46 Total number of shareholders 395 081 030 100.00
Total no. of shareholders: 1,475
Shares owned by CEO and the Board 2023 2022Jon Olav Ødegård* 3 084 039 2 964 039Roger Hofseth* 128 863 421 128 444 968Christoph Baldegger 800 000 700 000Kristin Fjellby Grung 0 0Torill Standal Eliassen* 200 000 200 000Crawford Currie* 750 000 750 000Total 156 147 460 154 449 007
*Includes shares owned by related companies and persons.
58
NOTES TO THE ACCOUNTS
Note 25: New accounting standards with future effective date
The standards and interpretations that have been adopted up
to the time of presentation of the consolidated financial state-
ments, but where the date of entry into force is forthcoming,
are stated below. The Group's intention is to implement the
relevant changes at the date of entry into force, provided that
the EU approves the changes before the presentation of the
consolidated financial statements.
Note 26: Subsequent events
On January 4th the General meeting approved the transac-
tion converting NOK 144m short therm debt to preference
B-shares. The equity ratio of HBC consequently imporoved.
59
THE B
O
ARD
OF
DIRE
CT
OR
’
S
REPOR
T
2
0
2
3
Declaration of the Board of Directors and CEO in Hofseth BioCare ASA
We confirm that the financial statements for the period 1 Jan-
uary to 31 December 2023 to the best of our knowledge, have
been prepared in accordance with IFRS® Accounting Stand-
ards as adopted by the EU / applicable accounting standards
and that the financial statements give a true and fair view of
the Group's assets, liabilities, financial position and results of
operations, and that the annual report gives a fair view of the
financial performance and position of the Group, together with
a description of the main risks and uncertainties faced by the
Group.
Hofseth BioCare ASA Board of Directors,
Ålesund, 18April 2024
Roger Hofseth Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Jon Olav Ødegård
Board member CEO
60
CHAPTER 4
Auditors report
AUDITORS REPORT
Statsautoriserte revisorer
Ernst & Young AS
Thormøhlens gate 53 D, 5006 Bergen
Postboks 6163, 5892 Bergen
Foretaksregisteret: NO 976 389 387 MVA
Tlf: +47 24 00 24 00
www.ey.no
Medlemmer av Den norske Revisorforening
A member firm of Ernst & Young Global Limited
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Hofseth Biocare ASA
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Hofseth Biocare ASA (the Company), which comprise the
financial statements of the Company and the consolidated financial statements of the Company and its
subsidiaries (the Group). The financial statements of the Company and the Group comprise the statement
of financial position as at 31 December 2023, the statement of comprehensive income, statement of cash
flows and statement of changes in equity for the year then ended, and notes to the financial statements,
including material accounting policy information.
In our opinion the financial statements comply with applicable legal requirements and give a true and fair
view of the financial position of the Company and the Group as at 31 December 2023 and their financial
performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as
adopted by the EU.
Our opinion is consistent with our additional report to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Company and the Group in
accordance with the requirements of the relevant laws and regulations in Norway and the International
Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 10 years from the election by the general meeting of the
shareholders on 22 July 2014 for the accounting year 2014.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements and the Board of Director’s report, which
describes that the Company and Group are dependent on increased production and sales with a higher
average price, and or additional capital inflows through loans or equity in 2024 to continue as going
concern. These events or conditions, along with other matters as set forth in note 1, indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for 2023. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
AUDITORS REPORT
62
AUDITORS REPORTAUDITORS REPORT
2
Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
matters to be communicated in our report. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the financial statements.
Allocation of production costs as part of manufacturing cost of finished products
Our audit response
We evaluated the management`s sales values in
the model, by comparing the sales values against
representative prices achieved through sales in
2023. We tested the production yield in the
model against reported numbers from factory,
and production costs in the model against actual
costs. We tested the model for allocation of
production costs being mathematically correct.
We refer to note 2, 3, 6 and 19.
Recognition of intangible assets
Our audit response
We assessed management`s principles and
assumptions for recognition of development cost
with criteria in IAS 38, especially the criteria for
recognition and the transition from research to
development. We evaluated this year’s
development projects against available
information about the progress of the
development of the product. We compared the
management's assessments of the projects
against the company's strategy and plans.
Further on we tested a sample of all recognized
development cost against underlying
documentation and evaluated if the criteria for
recognition was met. We refer to note 2 and 10.
63
AUDITORS REPORTAUDITORS REPORT
3
Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
Other information
Other information consists of the information included in the annual report other than the financial
statements and our auditor’s report thereon. Management (the board of directors and the chief executive
officer) is responsible for the other information. Our opinion on the financial statements does not cover the
other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information,
and, in doing so, consider whether the board of directors’ report, the statement on corporate governance
and the statement on corporate social responsibility contain the information required by applicable legal
requirements and whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that the other information is materially inconsistent with the
financial statements, there is a material misstatement in this other information or that the information
required by applicable legal requirements is not included in the board of directors’ report, the statement
on corporate governance or the statement on corporate social responsibility, we are required to report
that fact.
We have nothing to report in this regard, and in our opinion, the board of directors’ report, the statement
on corporate governance and the statement on corporate social responsibility are consistent with the
financial statements and contain the information required by applicable legal requirements.
Responsibilities of management for the financial statements
Management is responsible for the preparation of the financial statements that give a true and fair view in
accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
64
AUDITORS REPORTAUDITORS REPORT
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Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company and the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with regulation on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Hofseth Biocare ASA we have performed an assurance
engagement to obtain reasonable assurance about whether the financial statements included in the
annual report, with the file name hofsethbiocareasa-2023-12-31-en.zip, have been prepared, in all
material respects, in compliance with the requirements of the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to
Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material
respects, in compliance with the ESEF Regulation.
65
AUDITORS REPORT
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Independent auditor's report - Hofseth Biocare ASA 2023
A member firm of Ernst & Young Global Limited
Management’s responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
Regulation. This responsibility comprises an adequate process and such internal control as management
determines is necessary.
Auditor’s responsibilities
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material
respects, the financial statements included in the annual report have been prepared in accordance with
the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance
Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial
information”. The standard requires us to plan and perform procedures to obtain reasonable assurance
about whether the financial statements included in the annual report have been prepared in accordance
with the ESEF Regulation.
As part of our work, we perform procedures to obtain an understanding of the company’s processes for
preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial
statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL
tagging of the consolidated financial statements and assess management’s use of judgement. Our
procedures include reconciliation of the iXBRL tagged data with the audited financial statements in
human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Bergen, 18 April 2024
ERNST & YOUNG AS
___________________
Jørn Knutsen
State Authorised Public Accountant (Norway)
66
Hofseth BioCare ASA
Keiser Wilhelms gate 24, 6003 Aalesund, Norway
www.hofsethbiocare.com
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