Company Review 2013 Sustainability Report 2013

Transcription

1 Company Review 2013 Sustainability Report 2013 CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

2 Contents Profil history...4 Employees...12 R&D in Cermaq...18 Cermaq Canada...21 Cermaq Chile...25 Cermaq Norway...29 Cermaq ASA...33 Strategy...34 Main Events Management Team...37 Board of Directors...40 Organisation chart...43 History...44 Result 2013 and objectives Key Financial Figures...47 Sustainability Figures...49 GRI Index...50 G4-2 Impacts, risks, and opportunities...59 Map empoyees Cermaq...63 Map markets served...64 G4-10 Employees...66 G4-11 Collective bargaining agreements...67 G4-12 Supply Chain...68 G4-15 External initiatives...70 Org chart GRI G4-18 How the report has been defines...74 G4-19 Material aspects...77 G4-20 Aspects boundaries within the organisation...78 G4-21 Aspects boundaries outside the organisation...79 G4-22 Restatement from last year...80 G4-23 Changes in scope from last year...81 G4-24 List of stakeholder groups...82 CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

3 G4-25 Identification and selection of stakeholders...83 G4-26 Approach to stakeholder engagement...84 G4-27 Key topis and concerns...86 G4-32 In accordance option...89 G4-33 External assurance...93 G4-54 Ratio highest paid/median, total compensation...94 G4-55 Ratio highest paid/median, increase in compensation...95 G4-56 Values and standards...96 CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

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12 Employees READ TIME: 6 MINUTES Employees are Cermaq s most valued assets and represent the most important interaction with society. In the long run it is employees optimism, proficiency and efforts which determine the success of the company. Cermaq promotes equal work opportunities and just treatment of all its employees. Strict standards for health, safety and environment are set to ensure high level of safety. All employees are expected to contribute to a work environment free of discrimination. Lean and operative central management All operating companies are represented in Cermaq s Corporate Management Team. The team visits all of Cermaq s operating companies each year. This hands-on involvement is important to acknowledge the effort made by all employees and brings indepth insight about everyday life in our different areas of operation. The Board of Directors visits one region each year. In 2013, the Board visited Cermaq s operations in Finnmark, Norway. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

13 Employment At the end of 2013, Cermaq employed people, a reduction of employees since the end of The decrease is a consequence of the sale of Cermaq s feed division EWOS in There are strong seasonal variations in employment in farming, especially related to the harvesting and processing plants. Chile is the largest region in terms of employment. Approximately 80 percent of all Cermaq employees were located in Chile by year end The figure is influenced by the peak season at the end of the year with many seasonal workers in Chile. In 2013, a new intranet for information sharing and collaboration was rolled out in all companies. The Cermaq Intranet is a strong and useful tool not only to build company identity and share key information, but it also enables the organisation to work more efficiently across regions and functions. The content is also spread through local newsletters to reach the entire organisation. Local recruitment Cermaq strives to recruit locally when looking for qualified management. This is a strategic approach; local employees have the best knowledge of local conditions and culture. In 2013, the proportion of management hired from local communities averaged 83 percent (92 percent in 2012), ranging from 78 percent to 100 percent. Diversity CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

14 Diversity Cermaq promotes equal work for all its employees. Still, gender is a challenge we continue to face. The proportion of women in management is low, on average about 10 percent (9 percent in 2012). There is female representation in the management team of two of three subsidiaries. Whereas 27 percent of our employees are female, women have a significantly higher representation amongst the seasonal workers in the processing plants. Gender is included in the relevant indicators for sustainability reporting, in line with updates in the GRI-guidelines. Some of Cermaq s operations are located in areas inhabited by indigenous people. In Canada the protocol agreement with Ahousaht First Nation sets ambitions for employment from Ahousaht, and also provides service opportunities. In Chile indigenous people are employed in line with employees in general, while Cermaq is aware of a history of discrimination against indigenous people. Union relations Cermaq values good, constructive relations with employees and labour unions in all subsidiaries. Well-established local management structures and practices are the basis for these good relations. All employees are free to join any labour union. The proportion of employees covered by collective bargain agreements was 31 percent in 2013 (2012: 34 percent). The proportion of employees in Chile covered by collective bargain agreements was 24 percent (2012: 25 percent). The number of people covered by collective bargaining agreements does not necessarily correspond to the number of participation in labour unions. In Cermaq Chile, union leaders and joint committees started visits of on-land and shore facilities in the company in 2013, with the aim to learn more about Cermaq s operations and work processes. These visits have been very well received by the members of the unions and will continue in CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

15 Compensation Cermaq offers competitive wages. The wage system values skills, competence and seniority. In Chile where there are minimum wage levels, Cermaq s operations have a minimum entry wage level well above the legal minimum wage. At year-end 2013, the lowest entry wage in Chile was 11 percent above the legal minimum. To respond to stakeholder concerns, Cermaq reports on wage levels in processing plants in Chile as a part of the GRI reporting. Compensation is also commented in more detail in description of compensation ratios and in the description of Management Remuneration. Occupational Health and Safety Employees shall be safe and secure at work. Occupational health and safety initiatives are integral parts of the Group s risk management. All Cermaq s operating companies are certified according to OHSAS Health and Safety management system. Group lost time injury rate (H1) was 24 in This is up from 13 in 2012.The injury frequency rate (H2) was 51 in 2013, up from 35 in The level of injuries is not satisfactory, and improvement work will be a high priority in The bonus program for both management and employees for 2014 takes into account lost time injuries. The target is to reduce the number of lost time injuries by 50%. The absence rate for employees was 2.8 percent in 2013 (2.4 percent in 2012), varying from 2.3 to 5.2 percent in the operating companies. There are significant structural differences between operating companies. Each operating company identifies its own relevant and suited initiatives to reduce the level of injuries and absence due to illness. In 2013 Cermaq Chile experienced two fatal diving accidents; one which involved a Cermaq employed diver, and one which involved a contracted diver. As a result, a competence and security awareness program has been initiated in Cermaq Chile. Additionally, new equipment (removal systems for dead fish and robots to review the nets) has been acquired to reduce the number of necessary dives. In 2013, Cermaq Chile launched the Transversal Health and Occupational Safety Program, to involve all levels of the organization in health and safety in the workplace, including improved awareness regarding health and safety matters. Three different programs were conducted: the "visible leadership" with focus on the executive level, the "tutorials" for middle management and a cross-company-wide campaign called "Catch the Ball", an initiative that sought to increase the awareness regarding health and safety among all employees in Cermaq Chile. With the implementation of these programs and the commitment of the whole Chilean organization, Cermaq Chile improved their health and safety indicators the last quarter of 2013 compared to For the third year in a row, Cermaq Canada achieved an OHS award for the company s occupational health and safety management systems as well as the return to work program developed by the human resources department. Cermaq Canada was the only salmon farming company in British Columbia to achieve this award. The award program is administered by FIOSA-MIOSA, a safetyoriented industry association representing the food and manufacturing sector in BC. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

16 Rates of injury, occupational diseases, lost days and absence, and total number of work-related fatalities by region: Cermaq ASA Cermaq Norway Cermaq Chile Cermaq Canada Group (incl CEQ ASA) Number of fatalities Number of lost time injuries Total number of injuries Number of lost days from injuries Number of occupational disease cases Number of absentees days Absentee days per employee Read more OHS statistics. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

17 Training Systematic training is important for building competence according to both employees and the organisation s needs. In 2013, the average hours of training per employee were 1.1 percent (0.9 percent in 2012) of total working hours. Cermaq Norway has for several years been one of the contributing companies to a trainee program in cooperation with local education institutions and authorities, offering graduates from high school a four year trainee program. The program has been a good recruitment channel for the company. At year-end 2013, Cermaq Norway employed 4 trainees. In 2013, Cermaq Chile received recognition by the Chilean Safety Association as one of the top 20 companies in Chile with regard to occupational health and safety-related training of employees. Cermaq Chile was the only company awarded this recognition in Southern Chile (regions X, XI, XII, XIV). The top management development program initiated in 2012 was pursued in 2013, but interrupted by the EWOS sale-process. Company reputation In many farming sites employees stay on the barge for longer periods, and the housing facilities is an important aspect when it comes to attracting and recruiting skilled personnel. Cermaq has invested in modern and innovative facilities and equipment through the last years. Cermaq Norway has for several years had partnership-agreements with local schools and kindergartens, facilitating visits for school classes and kindergartens to sites and plants, teaching them about the aquaculture industry and showing them what the industry means to the local community they live in. Cermaq Chile works with local communities in which they operate and arranges sports tournaments for children, educational and training programs for, field trips to education institutions to make local youth aware of their possibilities. Transparent communication about our results and performance, both internally and externally, is important to Cermaq. During the last years, Cermaq has received recognitions and awards for our reporting and transparency. In 2013, Cermaq was ranked by Seafood Intelligence to have the most comprehensive, relevant and frequent sustainability report within the aquaculture sector for the third year in a row. Additionally, in a survey conducted by Transparency International Norway (TI) in 2013 Cermaq was ranked as number three for our reporting on subjects related to the fight against corruption among the 50 largest listed companies in Norway. This strengthens the company s reputation, and also builds pride and loyalty among employees. To make our results and performance available to all our employees and stakeholders in Chile, the integrated annual and sustainability report for 2013 will also be translated to Spanish for the first time. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

18 R&D in Cermaq READ TIME: 4 MINUTES In 2013 Cermaq decided to strengthen the focus on R&D and competence development within fish farming by approving a new R&D strategy, and by strengthening Cermaq's R&D organization. Today, Cermaq is one of the farming companies with highest R&D activity. Cermaq's R&D organization works across the Cermaq group, and is organized in four competence areas: Fish health and welfare, Technology, Breeding and genetics, and Feed and nutrition. The R&D is performed by highly competent fish health biologists, veterinarians and other aquaculture specialists. Cermaq s research enables the company to: Increase operating margin Reduce operational risks Ensure continuous progress towards the company s sustainable aquaculture mission Most of the challenges in fish farming are generic for the industry; therefore there is a high degree of R&D cooperation among fish farming companies, suppliers and public research in larger research project and programs. Cermaq aims to take a central role in planning and prioritizing public and/or collective R&D, but also to participate actively in projects and programs where we have a specific interest. Today, Cermaq is one of the farming companies with highest R&D activity, and the only farming company with a group of scientists dedicated for fish health research with access to advanced laboratories. Furthermore, there is an extensive R&D within each of Cermaq s operating companies in Canada, Norway and Chile. A total of 31 R&D projects were running in 2013 with a total turnover of NOK 25 million, whereof Cermaq funded NOK 17 million. Half of the projects were in cooperation with other industrial companies, whereas one third of the projects also obtained public funding. Here are some highlights from four project areas: Multiple methods to combat louse The louse combat remains one of the main priorities in our industry, and this is reflected in the R &D efforts in this area. For every delousing that can be avoided, the savings per location can be as high as MNOK 1 (in Norway). Although the louse species in Chile (Caligus) and Norway (salmon louse) are very different biologically, exchange of knowledge and methodology is of high importance. In 2013, lice skirts made of plankton nets have been successfully tested in Norway. In Chile Cermaq has applied tarpaulins as skirts. In Norway, the tested plankton nets reduced the lice levels between 50 and 75 percent dependent on the depth of the nets. The use of plankton nets did not affect fish performance and critical levels of oxygen in the cages. In Chile, the lice level has been reduced by percent in trials, and Cermaq Chile has programmed installation of these skirts in several farms for Since the tarpaulins restrict the water flow substantially, there are limitations on use with respect to depth and/or oxygen levels in the cages. Tests of supplying fresh water into the cages has successfully reduced the lice number, and is a good opportunity in locations where fresh water is available. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

19 number, and is a good opportunity in locations where fresh water is available. In Norway, lumpfish was tested as cleanerfish in one location in It was demonstrated that these fish are able to eat a high number of salmon lice, and the results indicated that at least one scheduled delousing treatment could be cancelled. Further testing will continue in Drug resistance in louse is reducing the efficiency of the treatment, and to do optimal treatment it is important to have methods to assess resistance before treatment. Based on a method developed for salmon lice in Norway, Cermaq Chile has started a project to develop a method for drug resistance testing (a bioassay) in Caligus. The bioassay has been tested at different farms in Chile, and adjusted by a PhD student. The project has revealed caligus resistance to deltamethrin (a synthetic insecticide). It has also revealded that female caligus are more resistant than males. The project continues collaboration with the Norwegian Veterinary College towards a PCR assay. Stop SRS Salmon Rickettsia Syndrome (SRS), which is caused by the bacteria Piscirickettsia salmonis, is the second largest economic loss in Chilean aquaculture estimated to at least MNOK 700 each year. The disease produces several clinical manifestations, including death. SRS is also the major cause of antibiotic use in Chilean aquaculture (82%). In 2013 Cermaq Chile initiated a 3-year R&D-program called STOP SRS. An ultimate goal for this program is to contribute to the development of an efficient vaccine. A major discovery in this project was that at least two genetically diverse groups of P. salmonis are present in Chile and one in Canada. It was also documented high differences in virulence among isolates: In a challenge experiment with salmon it was found that high virulence isolates caused 100% mortality, whereas low virulence isolates caused about 40% mortality. These results will be subject to scientific publication, and they are of high importance for management, screening programs and further development of vaccines. Parvicapsulosis Parvicapsula pseudobranchicola is a parasite causing mortality, reduced growth and downgrading of salmon in Northern Norway. The knowledge about the parasite and its life cycle is scarce, and the economic impact for Cermaq Norway is losses of at least MNOK 5 per year. In 2013 the Fisheries and Aquaculture Fund (FHF) granted MNOK 5.6 for a 2.5 year research project, with Cermaq as project leader, to increase the knowledge about the parasite s biology, and to identify preventive measures to reduce losses associated with disease outbreaks of P. pseudobranchicola. The project is in an early phase, but is expected to identify the primary host of the parasite a key for development of pharmaceutical products. Furthermore, the project aims to get better diagnosis and recommendations for production management based on field research. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

20 Oxygen Supplementation in Salt Water Longer periods of low oxygen in saltwater are causing many lost feeding days for the salmon of Cermaq Canada. A project with supplementation of oxygen in the water column of sea water show promising results for improving fish productivity during periods with low oxygen levels. Cermaq Canada is losing many feed days, and thereby fish growth, due to inadequate dissolved oxygen (DO) levels on salt water production sites. The problem is increasing due to environmental conditions and deployment of algal bloom mitigation tarps. To maintain productivity during low DO periods Cermaq Canada started a project to supplement oxygen into the water column. The oxygen generation plant and distribution system has been completed and installed. By this system oxygen is supplemented effectively to the cages in an open environment, and many potential lost feed days have been avoided. The on-farm trials are still on-going. If successful, this system would also reduce the overall risk of fish mortality as a result of low oxygen levels. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

21 Cermaq Canada READ TIME: 3 MINUTES Locations and Sites Cermaq Canada operates on the west and east coasts of Vancouver Island, British Columbia. The company produces Atlantic salmon and has 27 sea sites and three freshwater sites and one broodstock facility. Salmon is processed at a company-owned facility in Tofino and under contract at a processing plant near Campbell River. All operations are managed from the head office in Campbell River. Cermaq Canada has 240 employees. Results In 2013 Cermaq Canada produced 15.1 thousand tonnes (gwe) and delivered an EBIT of NOK 135 million. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

22 EBIT per region and per kilogram* - Cermaq Canada EBIT NOK mill (54.5) EBIT/kg/NOK 8.9 (2.8) * EBIT is pre fair value and pre non-recurring items Competitive advantages Cermaq Canada s key competitive advantage is our close proximity to the USA and Asian markets which enables us to ship fresh, premium salmon from harvest to market in hours. The Canadian brand is well respected in the USA market and is seen as being a very high quality product. This, combined with our ability to ship fresh product, gives us an advantage over other countries. Operational excellence throughout Cermaq Canada operations gives us a competitive edge over other Canadian companies. Our operations have standardized procedures and all management systems are 3rd party certified. We are the first salmon farm in the world to achieve the Global Aquaculture Alliance s Best Aquaculture Practices (BAP) certification and first to achieve the Aboriginal Principles for Sustainable Aquaculture (APSA) certification. Framework Conditions Since July 2011, the Department of Fisheries and Oceans (DFO) had an interim policy in place putting decisions on hold while the Cohen Commission of Inquiry into the Decline of Sockeye Salmon in the Fraser River undertook its work. In Oct 2013, DFO issued a business resumption letter, informing that they will resume accepting applications for new finfish aquaculture sites and amendments to existing sites. One exception is for aquaculture development in the Discovery Islands area (near Campbell River). This area will be the focus of more research and studies and no new applications will be accepted in that area. All applications are now going through a harmonized approach with both the Provincial and Federal Governments in order to streamline this process and allow the applications to be processed in a timely manner. Cermaq Canada is taking an active role nationally to foster support for a National Strategy for Responsible Aquaculture Development with the Federal Government of Canada. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

23 Risk considerations Cermaq Canada continues its proactive approach to fish health. As of last year all smolts entering the water will be vaccinated with the IHN vaccine. Naturally occurring challenges in British Columbia are environmental conditions, both algae and oxygen. Research investment to reduce risk in both fish health and environmental factors, is a priority for Cermaq Canada. Sustainability Our focus continues to be Sustainable Aquaculture and to prove this focus, all management systems are 3rd party certified. As part of the Cermaq global group, we are also working towards certification by the Aquaculture Stewardship Council (ASC). Cermaq Canada has a zero escape policy. There were no escape incidents in Sea lice levels in Cermaq Canada continued to be low for Sea lice data is posted on Cermaq Canada website and updated quarterly. The average fallowing periods for sea sites spanned from 2 to 14 months, and all operations fully respected the regulations. Antibiotics are only used when deemed absolutely necessary by a veterinarian and then only under a prescription. Measured use of antibiotics per tonne produced increased from 4.94 g API/t in 2012 to 10.2 g API/t in This increase is primarily due to a single Winter Ulcer treatment trial in pre-harvest fish. Despite this trial the 2013 antibiotic use is well below the 5 year average. Market Conditions Market conditions were favourable for Canadian salmon; especially due to a reduction on Canadian supply, the high prices for wild salmon in the summer. This year Cermaq Canada increased the volume of sales to China and Japan from less than 5 percent in the past years to around 10 percent of the total volume sold in We also opened some new smaller markets in Australia, Singapore and Indonesia. Business Development 2013 had lower harvest production due to the loss of smolts in 2012 due to IHN. Issues with low dissolved oxygen levels in 2013 hampered feeding at many sites, which resulted in lower than average growth. This also resulted in operating costs increasing during CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

24 Outlook 2014 Volume supply to the US market is forecasted to remain stable and low until the fall of This will lead to a stable price situation, and together with a forecasted strong US dollar gives some confidence for a stable market situation for Wild salmon forecast is just slightly over last year s forecast when prices were record high, and which helped the farm salmon prices trend up. High prices are also expected for wild salmon in The Mainstream Canada Brand is seen as a premium brand with a focus on quality. Increasing supply and maintaining quality is a key focus for Cermaq Canada will keep its focus on maximizing the biological performance on each farm, and ensuring consistent high quality and optimal product yield. Present production capacities per region REGION SMOLT (MILLIONS) CURRENT FARMING CAPACITY (TONNES LWE) ADDITIONAL FARMING POTENTIAL (TONNES LWE) TOTAL THEORETICAL FARMING CAPACITY (TONNES LWE) PROCESSING (TONNES GWE) Cermaq Chile Cermaq Canada Cermaq Norway Total CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

25 Cermaq Chile READ TIME: 4 MINUTES Locations and sites Cermaq Chile has diversified in three species in (Atlantic salmon, coho salmon and trout) and covers the whole value chain from brood fish to value added processing. The company has 13 land based freshwater sites and is present in 2 lakes (Llanquihue & Puyehue) for smolt production for trout and coho salmon. For several years the company has produced all Atlantic smolt stocked in land based facilities, including the fish produced in the new Magallanes Region operation. For on-growing in sea the company has 89 licenses, and the company has three processing plants located in the Chiloe Island. Currently Cermaq Chile s operations are located in three areas; Chiloé area in Region X, Puerto Aysen area in Region XI and Puerto Arenas area in Region XII. Including the fresh water production Cermaq Chile s operations span from the Maule Region (Region VII) to the Magallanes y la Antartica Chilena (Region XII), covering more than 2000 kilometers of Chilean territory. Cermaq Chile is managed from Puerto Montt in Region X. Cermaq Chile has 3,500 employees in the peak season and approximately 2,500 employees in the low season. Results In 2014 Cermaq Chile produced 76.1 thousand tonnes (gwe) and delivered an EBIT of NOK 31 million. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

26 EBIT per kilogram* - Cermaq Chile EBIT NOK mill 30.8 (164.2) EBIT/kg/NOK** 0.4 (3.3) *EBIT is pre fair value and pre non-recurring items **EBIT/kg is average for all species Competitive advantages A strategy of diversified production contributes to reducing the company s market and fish health risks. On the basis of the Group s production in major salmon producing countries, Cermaq Chile s significant production of coho and trout in addition to Atlantic salmon, high level of aquaculture competence and years of business experience make Cermaq Chile a stable and important supplier to the global market. In addition to the species diversification, the balance between the productive regions plays an important role in the risk diversification. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

27 Framework conditions In 2013 Chilean authorities introduced new regulations which regulate the maximum fish stocked in each site from the performance of the site in the last production cycle. Weak performance in one cycle leads to lower smolts stocking in the site the subsequent cycle. Both biological and environmental criteria are considered when performance level is evaluated. Following the election in December a new President will take seat during March The Government has a positive view on fish farming, and the industry s importance in Chile is growing in export value and in employment. Risk consideration The biological risk in the Chilean operations is mainly linked to parasites (Calligus) and the disease SRS, which have significantly impacted the biological performance negatively in Lack of efficient coordination within the neighborhoods and in the larger macro-zones is a risk for Chilean farming. Cermaq has addressed this through several actions of which coordinated treatment in the industry and sharing best practice from Norway has shown encouraging improvements. Cermaq Chile also applies company measures as screening of broodstock, vaccination and close monitoring and testing of the sanitary situation. With a production cycle of approximately two years for Atlantic salmon, production is not very adaptive to changing prices. Cermaq Chile addresses this risk by producing three species, where Coho and trout have a shorter production cycle, and entering into sales contracts when assumed profitable and/or risk-reducing. Sustainability Sustainable aquaculture is the vision and the basis for Cermaq s operations, where ISO management standards, sustainability indicators, and internal reporting are essential. Cermaq Chile works within local environmental rules, ensuring that production does not exceed the sustainable licensed site capacities. Cermaq operates with a zero escapes strategy. In 2013 Cermaq Chile had 3 escape incidents (2 in the southern part of Chiloé, 1 in the Calbuco area). 55 thousand fish escaped in total. In accordance with local regulations, sea lice data are reported regularly. Cermaq has a preventive strategy to keep the sea lice levels within local regulations. Still sea lice levels increased significantly the first part of 2013 before a sharp decrease from midyear. The Caligus sea lice still remain a challenge for the fish health and welfare of the farmed salmon in Chile. Antibiotics are only used when deemed absolutely necessary by a veterinarian and then only under a prescription. Antibiotic use in Chile increased significantly during the first half of 2013, due to increased number of outbreaks of the bacterial disease SRS. Parasite levels and the use of antibiotics decreased during the second half of 2013 in Chile, mainly as a result of better coordination between the various players in the industry, along with a wider range of chemical and non-chemical tools. These are the first measurable results from the Global Salmon Initiative that was launched in Cermaq Chile conducted a Human Right Impact Assessment (HRIA) in 2013 with focus on the operations in the XII region. Human Rights Impact Assessment is a process for systematically identifying, predicting and responding to the potential human rights CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

28 impacts of a business operation, capital project, government policy, or trade agreement. The HRIA is conducted by NomoGaia, a nonprofit research and policy organization. NomoGaia plans a second field visit to measure impact over time. In 2013, Cermaq Chile assigned Futuro Sostenible an independent non-profit organization - to conduct an independent evaluation of the company s CSR activities with a focus on sustainability with the purpose of identifying areas of improvement. The evaluation included review of relevant information, visit to Cermaq Chile s operations and interviews, as well as, as well as meetings with trade union representatives and stakeholders directly involved with CSR programs The report was well received in the Chilean organization, and improvement projects have already been initiated. Market conditions The good market conditions for trout and coho the second part of the year drives the improvement of Cermaq Chile s results in The Brazilian market continued the positive trend for Atlantic salmon and added during 2013 an important portion of the Coho sale from Cermaq Chile. Also the Russian market for Coho is growing. The main markets for Atlantic salmon have been USA and Brazil. Business development During 2013, the CMC operations acquired in 2012 have been fully integrated in Cermaq Chile. In December 2013 Cermaq filed an application for the construction of a new processing plant in region XII (Punta Arenas). Outlook 2014 A continued high demand for salmon and lower growth in harvest volumes is expected in This combination will have a positive effect on prices for the next two years. Cermaq Chile will continue concentrating on the efficiency and improvement of its operations, especially in sea water where a target has been set for improvement in ex-cage costs for Atlantic salmon in Key elements are preventive fish health and development of non-chemicals tools for combating the two main biological challenges; Caligus and SRS. Present production capacities per region REGION SMOLT (MILLIONS) CURRENT FARMING CAPACITY (TONNES LWE) ADDITIONAL FARMING POTENTIAL (TONNES LWE) TOTAL THEORETICAL FARMING CAPACITY (TONNES LWE) PROCESSING (TONNES GWE) Cermaq Chile Cermaq Canada Cermaq Norway Total CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

29 Cermaq Norway READ TIME: 3 MINUTES Locations and sites Cermaq Norway produces Atlantic salmon with operations in Nordland (17 own licences, in addition to two partially owned licenses and two processing plants) and in Finnmark (27 licences and one processing plant). The three freshwater sites are all located in Nordland, and in addition the company has three partially owned brood fish licenses in Nordland. The head office is located in Steigen, Nordland. Cermaq Norway has 550 employees. Results In 2013, Cermaq Norway produced 51 thousand tonnes (gutted weight) and delivered an EBIT of NOK 445 million. EBIT per region og per kilogram* - Cermaq Norway CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

30 EBIT per region og per kilogram* - Cermaq Norway EBIT NOK mill EBIT/kg/NOK** *EBIT is pre fair value and pre non-recurring items ** EBIT/kg is average for all species Competitive advantages All of Cermaq Norway s sites are located north of the Arctic Circle. The regions of the north have traditionally performed well with low presence of sea lice and good feed conversion. The processing plant located in Hammerfest, Finnmark is well positioned for supplying the Russian market. In Cermaq s operations in Nordland County the location of the company s sites enables Cermaq to control a larger area and thus apply long term coordinated management of the areas, which we experience being the foundation for good fish health and biological performance. Framework conditions Cermaq Norway has applied for new green licenses with higher requirements related to sea lice levels and escapes than ordinary licenses. The new licences, a total of 45, are expected to be awarded in Improvements in the regulation for aquaculture are constantly sought. One example is a potential change in the regulation of MAB (maximum allowed biomass), announced in the fall of 2013, where the industry is split in the view of the favourable regulation. Risk considerations Fish health will always represent a risk, and Cermaq has a preventive fish health strategy which is based on knowledge and competence as close to the fish as possible. Area management is crucial for effective fish health measures, giving the possibility to work preventive and with long-term strategies. In Norway all sites are included in area management agreements. In 2013 SAV-virus (PD) was detected at two sites in Finnmark. Both sites were immediately depopulated to prevent further spread of the virus. With a production cycle of approximately one and a half years, production is not very adaptive to changing prices. Cermaq Norway addresses this risk inter alia by entering into sales contracts when assumed profitable and/or risk-reducing. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

31 addresses this risk inter alia by entering into sales contracts when assumed profitable and/or risk-reducing. Sustainability Sustainable aquaculture is the vision and the basis for Cermaq s operations, where ISO management standards, sustainability indicators, and internal reporting are essential. Cermaq Norway s units work within local environmental rules, ensuring that production does not exceed the sustainable licensed site capacities. Cermaq operates with a zero escapes strategy, and key elements are extensive training procedures, operators awareness, solid equipment and technical maintenance. Cermaq Norway had zero escape incidents in In accordance with local regulations, sea lice data are reported regularly. Cermaq Norway has a preventive strategy to keep the sea lice levels within local regulations. Coordinated stocking, fallowing and treatment of our sites are the core elements of this strategy. Cermaq Norway experienced overall no significant changes in the sea lice levels in Norway in However, due to higher than normal sea temperatures the use of bath treatment and feed treatment increased in All treatments were after protocol and in accordance with local area management. Cermaq Norway is testing several new technologies for decreasing lice levels, such as lice skirts and lumpfish used as cleaner fish. The company has attention on competence transfer between the operating companies to ensure that best practice is implemented quickly. Cermaq Norway s average fallowing periods for sea sites spanned from 2 to 12 months, and all operations fully respected the regulations. Antibiotics are used only when deemed absolutely necessary by a veterinarian and then only under a prescription. Measured use of antibiotics per tonne produced fish increased from 0.04 g API/t in 2012 to 4.4 g API/t in Cermaq Norway was certified according to ISO on external environment, and ISO on food safety. In December, the company achieved a Global G.A.P certification. Market conditions Cermaq Norway experienced a relatively strong market in Russia and other Eastern European markets in Prices in the European and Russian markets were very good due to lower volumes, and the market was stronger than anticipated. With the Global Gap certification we expect to be able to reach new customers in the European market. Business development 2013 was a good year for Cermaq Norway, with good market conditions and strong biological performances. The approach in 2013 was to further strengthen the sustainability measures, improve the cost base and concentrate on good operations. In Norway, operating cost has increased during Especially sanitary challenges due to PD in Finnmark region causing preliminary harvest and the fallow of two sites with PD, but also lower than average growth due to unusual cold spring have resulted in higher operating costs in Measures taken during 2013 include new methods of preventive fish health to improve sanitary conditions to reduce mortality and improve growth. Costs are expected to be reduced in 2014 compared to Outlook 2014 CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

32 Outlook 2014 A continued high demand for salmon and lower growth in harvest volumes is expected in This combination will have a positive effect on the prices. The biological performance of the on-growing fish is very good. With new green licenses we expect to minimize the MAB pressure which we normally see in the third quarter each year. Present production capacities per region REGION SMOLT (MILLIONS) CURRENT FARMING CAPACITY (TONNES LWE) ADDITIONAL FARMING POTENTIAL (TONNES LWE) TOTAL THEORETICAL FARMING CAPACITY (TONNES LWE) PROCESSING (TONNES GWE) Cermaq Chile Cermaq Canada Cermaq Norway Total CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

33 Cermaq ASA READ TIME: < ONE MINUTE Cermaq's vision is to be a global fish farming company that is leading in sustainable production of salmonides. Cermaq's company structure is based on operating companies in Chile, Canada and Norway, and a lean head office located in Oslo, Norway. At 31 December 2013 Cermaq ASA head office employed 51 people, covering central finance, central it and corporate functions (legal, HR, communication and sustainability). The company is listed on the Oslo Stock Exchange (OSE), Norway. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

34 Strategy READ TIME: 2 MINUTES As a global farming company Cermaq s strategy is based on operational excellence and growth strategies. In this way Cermaq is well positioned to take advantage of increasing demand for aquaculture products as well as of continued consolidation in the farming industry. The purpose of Cermaq is to create value to shareholders and the community through sustainable production of farmed salmon and salmonids. Cermaq s part of the larger value chain is illustrated below. Cermaq's part of the value chain is illustrated in blue. Operational excellence Cermaq has a diversified exposure to salmon markets worldwide through presence in all the main production regions for salmon; with production in Norway, Chile, and Canada. This enables Cermaq to diversify operational risks related to environmental and fish health factors. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

35 Cermaq farms three species in Chile to spread risk, and in all regions Cermaq applies a suit of measures to reduce sanitary and environmental risk at all stages throughout the value chain. This is the basis for being leading in risk adjusted cost in all regions. A significant investment in research and development is seen as key to success in sustainable aquaculture. As fish health and welfare are the basis for efficient growth and quality, preventive fish health is at the centre of Cermaq s strategy. We believe in competence and empowerment as close to the fish as possible. Cermaq sees coordination within the global industry as necessary to manage global biological challenges and consequently a foundation for long term value creation. Growth Cermaq aims to develop into the second largest farming company, seeking profitable growth in selected areas and remaining open to participate in industry consolidation. Dividend policy The dividend policy was amended by the board in December 2010 and states that the average dividend over a period of several years should comprise between 30 to 50 percent of the company's net profit (adjusted for the effect of fair value and financial instruments). Following the sale of EWOS the company will increasingly also look at the projected free cash flow and NIBD/EBITDA level as well as the available unused financial headroom. Cermaq will continue to create shareholder value by focusing on: Delivering solid operational and financial results Profitable growth within salmon farming Sound financing and ability to reap benefits of growth opportunities Committing to significant research and development to promote efficiency and quality within fish farming Acting responsibly in relation to sustainable use of natural resources, environmental and social concerns in the communities in which we operate Taking care of occupational safety and health and working conditions of its employees By maintaining focus on a strong balance sheet and effective operational management, Cermaq is well positioned to take advantage of increasing demand for aquaculture products as well as of continued consolidation in the farming industry. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

36 Main Events 2013 READ TIME: 1 MINUTE Cermaq Chile sold the processing plant in Calbuco, Chile to Australis Seafoods (April) Marine Harvest announces its intention to buy all shares in Cermaq (April) Cermaq bought shares in the fish meal company Copeinca with the intention to make a voluntary offer for all shares in the company, but the transaction was turned down by Cermaq s Annual General Meeting, and Cermaq sold its shareholding in Copeinca (June) Cermaq Chile harvested its first generation of salmon in region XII Magallanes in Chile (July) Cermaq sold its feed division EWOS to the private equity funds Altor and Bain Capital (July) Cermaq s subsidiary Norgrain AS, where Cermaq holds 72.5 percent of the shares, sold its shareholding of 49 percent of the shares in Denofa AS to Brazilian company Amaggi (September) Cermaq announced its partnership in the Global Salmon Initiative (GSI) (September) Cermaq won the Farmand gold price for the best annual report for listed companies in Norway (September) Seafood Intelligence rated Cermaq s sustainability report to be the best in a benchmark amongst the 36 largest salmon farming companies globally (September) Cermaq Canada achieved a three-star certification to the Global Aquaculture Alliance s Best Aquaculture Practices as a consequence of its feed supplier, EWOS, certification (October) Cermaq s farming division Mainstream changed name to Cermaq (November) Cermaq arranged Capital Markets Day in Chile (November) Cermaq invited all stakeholders to give input on priorities for our sustainability reporting (November) Cermaq reorganised its management team (December) Cermaq refinanced its outstanding debt (December)Cermaq Norway achieved Global Gap Certification (December) Transparency International Norway ranked Cermaq as #3 out of the 50 largest companies listed on the Oslo Stock Exchange for its openness on anti-corruption programs and disclosure of company information (December) So far 2014 Extraordinary dividend of NOK 51 per share following the sale of EWOS (January) CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

37 Management Team Jon Hindar (1956) Chief Executive Officer Jon Hindar took up the position as CEO of Cermaq in March Mr. Hindar holds a Master of Science in Chemical Engineering from the Norwegian University of Science and Technology, and has supplementary management education at IMD from Lausanne, Switzerland. He was previously the CEO of Norsun AS, Senior Vice President of Invitrogen Corp., CEO of Dynal Biotech ASA, and Partner and Managing Director of Fondsfinans ASA. Jon Hindar is on the board of Photocure ASA. Synne Homble (1972) Chief Officer Legal and Corporate Functions Synne Homble joined Cermaq ASA in 2006, and has held different management positions. As Chief Officer legal and corporate functions she is responsible for legal affairs, communication, HR, corporate responsibility and sustainability reporting. From 1998 to 2006 Homble was employed as attorney at law in the Norwegian law firm Wikborg, Rein & Co. Mrs. Homble has her law degree from the University of Oslo, with special classes from Hamline School of Law, Minnesota, USA. Homble is a member of the board at Statnett SF. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

38 Geir Molvik (1958) Chief Operating Officer Norway Mr. Molvik joined the Cermaq group as Managing Director for EWOS Norway in 2006 and was appointed Chief Operating Officer Farming from June 2010, and Chief Operating Officer Norway from November He holds a MSc. from the University of Tromsø, Norway, and has broad experience in aquaculture from Hydrotech-gruppen, Hydro Seafood and Noraqua in Norway and from Georgia Sea Farms Ltd. in Canada and Tassal Ltd. in Tasmania, Australia. Mr. Molvik was Senior Vice President in Christiania Bank og Kreditkasse for several years. Francisco Miranda Morales (1975) Chief Operating Officer Chile With Veterinarian studies Miranda joined Cermaq s farming operations in Chile in In 2004 he transferred to Canada and took on responsibility for the sea water operations and was appointed managing director for Cermaq s farming operations in Scotland In 2009 he was appointed managing director for the farming operations in Chile, and was appointed Chief Operating Officer Chile from November Fernando Villarroel (1974) Chief Operating Officer Canada Villarroel joined Cermaq in 1998 and held different financial positions in Mainstream Chile before he transferred to Mainstream Scotland where he worked as a financial controller. From 2005 to 2007 Villarroel worked as business controller for Mainstream Group. In 2007 he took over responsibility as managing director for the farming operations in Canada, and was appointed Chief Operating Officer Canada from November Villarroel is a financial accounting auditor with a degree in management. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

39 Tore Valderhaug (1960) Chief Financial Officer Mr. Valderhaug was appointed CFO of Cermaq ASA in November He is a Norwegian State Authorized Public Accountant and has long audit experience inter alia from Arthur Andersen & Co. Mr. Valderhaug has broad experience as CFO in listed companies, including EDB Business Partner ASA, Proxima ASA, and Ocean Rig ASA. Mr. Valderhaug was acting CEO in Cermaq from July 2011 to March CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

40 Board of Directors Bård Mikkelsen (1948) Chair of the board Mikkelsen graduated from the Military Academy in 1972, the Norwegian School of Management in 1981 and the INSEAD Executive Programme in He has been CEO of Statkraft AS ( ) and Oslo Energi Gruppen, the Ulstein Group, and Widerøe. Mikkelsen is chair of the board of Powel AS, Bore Tech AB and Clean Energy Group AS, and is also a board member of Saferoad AS. Mikkelsen has been a board member of Cermaq ASA since May Rebekka Glasser Herlofsen (1970) Deputy chair of the board Herlofsen holds a Master of Science in Economics and Business Administration from NHH (Norwegian School of Economics and Business Administration). Herlofsen is CFO in Torvald Klaveness Group. She has been CFO in Noreco ASA and was Director Business Development Division in BW Gas ASA. Herlofsen also has experience from various positions in Enskilda Securities in Norway and London. Herlofsen is a board member at DNV GL, The DNV Foundation and Handelsbanken Norge. Herlofsen has been a board member at Cermaq since May CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

41 Åse Aulie Michelet (1952) Director Michelet holds a cand.pharm degree from Oslo and Zürich. Michelet is CEO of Teres Medical Group. She was CEO of Marine Harvest ASA from 2008 to Michelet has also held international leading positions in GE Healthcare, and was Managing Director of the company from 2004 to In addition she has held leading positions in Amersham and Nycomed. She is chair of the board of Photocure ASA. Michelet has been a board member of Cermaq ASA since May Helge Midttun (1955) Director Midttun holds a Master of Science in Economics and Business Administration from Norwegian School of Economics and Business Administration (1979). He was CEO of Aker BioMarine ASA and before that CEO of Fjord Seafood ASA and CEO of Det Norske Veritas AS. Midttun is engaged in various board activities and he is chair of the board of Hent AS and deputy chair of the board of Aibel AS. Midttun has been a board member of Cermaq ASA since May Lise Caroline Mortensen (1973) Employee elected director Lise Mortensen is a Processing Manager at Cermaq Norway s processing plant in Alsvåg, Finnmark. She started as a production worker at Alsvåg Fiskeprodukter in 2002, became production manager in Cermaq Norway in 2009, and was the acting processing manager at the processing plant in Hammerfest for a period in Lise Mortensen has work experience from the fishery industry since 1991, she holds a certificate of completed apprenticeship in seafood production, and she has undertaken studies in Aquaculture and Management at the University of Nordland, Norway. Lise Mortensen was elected as a board member of Cermaq ASA in CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

42 Jan Robert Røli-Gjervik (1963) Employee elected director Jan Robert Røli-Gjervik is production manager at Cermaq Norway s processing plant in Skutvik. He joined Cermaq in 2004 as a production worker, and became production manager in Røli-Gjervik comes from the transport and machine industry, has long experience within transport of salmon from processing plants, and holds a certificate of completed apprenticeship in seafood production. Jan Robert Røli-Gjervik was elected as a board member in Cermaq ASA in Ketil Olsen (1954) Employee elected director Ketil Olsen has been working in Cermaq Norway since Jun 2008, and is currently controller located in Alsvåg in Nordland. Before he joined Cermaq Norway, Olsen worked as office manager at Artic Seafood Holding. Ketil Olsen has experience from banking and the whitefish industry, including pelagic and trawling industries. Ketil Olsen was elected as deputy board member to Cermaq s board in 2013, and was full member as of November 1st CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

43 Organisation chart READ TIME: < ONE MINUTE CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

44 History READ TIME: < ONE MINUTE The history of Cermaq ASA starts where the Norwegian state monopoly on grain import ended. What started out as an agricultural company with import and domestic operations, took a distinct new direction in 2000 and has developed into a global leader within aquaculture. The historic events that transformed the company are presented on Today the company structure is based on fish farming, with some remains from the company s past within agriculture. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

45 Results 2013 and objectives 2014 READ TIME: 2 MINUTES Objectives 2014: 1. Organic growth in all regions 2. Reduce ex-cage cost for Atlantic salmon in Chile as well as cost in Finnmark region 3. Significantly improvement in OHS performance, and 50 percent reduction in Lost Time Injuries 4. Control sea lice levels through improved procedures and increased use of new alternative technology 5. Zero escapes For further description on how Cermaq will deliver shareholder values see our strategy. OBJECTIVES 2013 RESULTS 2013 Take the lead on forming an industry committee to work on the AMA in the Broughton area and obtain government involvement. Maintain zero escapes Further focus on optimization of operations and operating costs All work in the Broughton area was delayed until October 2013 due to lack of response by the Federal Department of Fisheries and Oceans (DFO) on the Cohen Commission recommendations. Work in the Broughton area is expected to commence in There were three incident in Chile where a total of 59,000 fish escaped Operating cost increased in all regions. In Chile several new measures were taken to stop and reverse the development, including new methods for avoiding and treating against sea lice, general measures to improve sanitary situation and collaborating with the industry on new initiatives. Costs went down last quarter of The Canadian program to optimise operations and operating costs was very successful. However and as expected, due to the 2012 losses to IHN, less fish were harvested. This and lower than average growth due to unusual environmental conditions have resulted in higher operating costs for In Norway, sanitary challenges due to PD in Finnmark region caused preliminary harvest and fallow of two sites with PD, but also lower than average growth due to unusual cold spring have resulted in higher operating costs in Measures taken during 2013 include new methods of preventive fish health to improve sanitary CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

46 include new methods of preventive fish health to improve sanitary conditions to reduce mortality and improve growth. Control sea lice within local action levels Integrate Cultivos Marinos Chiloé into Mainstream Chile and create a strong organisation and operational structure Realize synergies from the acquisition of CMC Strengthen the R&D-efforts in Mainstream and implement new R&D organisation Aim for zero lost time injuries and maintain low absence rate Zero incidents of noncompliance with law and regulations Average number of sea lice has been below the local action levels in all regions i Form 1 st January 2013 Norway introduced a lower action level (0.5 adult female lice throughout the year). CMC has been integrated and today the operations in Chile are operating as one company. Synergies are in line with estimates, adjusted for the updated production plan Cermaq established a new R&D organization within the fields of Fish Health and Welfare, Technology, Nutrition and feeding, Genetics and Breeding. This included recruitment of new R&D manager and researchers. The project activity was strengthened in 2013, especially on lice (salmon lice and caligus), SRS and parvicapsulosis Low absentees rates were maintained (2.8 percent). Lost time injuries was 24 and is considered very high by management. There were two incidents of non-compliance in In addition four incidents from 2012 and one incident from 2011 were finalized in CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

47 Key Financial Figures Amounts in NOK Income statement Pro forma 2013 Pro forma Operating revenues EBITDA 1) ( ) EBITDA margin 15.4 % (4.2 %) 14.5 % 17.8 % 9.6 % 3.8 % 13.1 % 20.8 % EBIT pre fair value adjustments 2) ( ) EBIT margin pre fair value adjustments 10.5 % (6.0 %) 11.8 % 14.4 % 5.8 % 0.6 % 9.7 % 17.4 % EBIT 3) ( ) Net result continuing operations 4) (55 080) Net result discontinued operations 4) ( ) - - (45 035) (2 938) - - Net result 4) (58 017) Financial position Non-current assets Current assets Total assets Equity, excl. non-controlling interests Non-controlling interests Non-current liabilities Current liabilities Total equity and liabilities Capital employed pre fair value adjustments 5) Financing Total equity Equity ratio 6) 69.8 % 47.0 % 59.5 % 59.8 % 52.7 % 42.0 % 57.3 % 61.9 % Net interest bearing debt 7) ( ) CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

48 Profitability Operating margin 8) 23.2 % (12.3)% 8.7 % 19.5 % 6.1 % 1.6 % 6.4 % 17.1 % EPS adjusted, basic/diluted continuing operations 9) (1.37) /10.35 Dividend per share (paid and proposed) Return on equity 10) 50.8 % 4.1 % 13.3 % 30.0 % 7.8 % (1.3)% 11.6 % 23.7 % Return on capital employed 11) 10.3 % 4.6 % 22.1 % 21.7 % 8.0 % 0.8 % 14.2 % 28.4 % EBIT pre fair value adjustments/kg - fish farming 12) EBIT pre fair value adjustments/tonne - fish feed 13) 3.8 (1.6) (1.3) ) EBITDA: Earnings before interest, taxes, depreciation and amortisation 2) EBIT pre fair value adjustments and non-recurring items: Earnings before interest, tax and fair value adjustments 3) EBIT: Earnings before interest and taxes 4) In accordance with reported figures in the income statement. See Note 5 for further information 5) Capital employed: Total equity + net interest bearing debt - fair value adjustment on biological assets 6) Equity ratio: Total equity/total assets in percent 7) Net interest bearing debt: Long term and short term interest bearing debt - cash balance 8) Operating margin: EBIT/operating revenues in percent 9) EPS: Earnings per share adjusted for unrealised fair value adjustments. Diluted EPS reflects the dilutive potential of share options 10) Return on equity: Net result/average total equity in percent 11) Return on capital employed: (EBIT pre fair value + income from associates)/capital employed in percent For 2011, 2010 and month average is used for capital employed, year end balances for prior years 2010 figure excludes material gains on sale of business/assets 12) EBIT pre fair value and non-recurring items per kg, gutted weight equivalent, in NOK 13) EBIT pre fair value per tonne in NOK CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

49 Sustainability Figures Topic Unit Employees number Fatalities number Absentee rate percent of total working days Injury rate (H2-value) Injuries per million hours worked Lost-time injury rate (H1- value/tri) Lost-time injuries per million hours worked Total energy consumption GJ Global GHG emissions tonnes of CO2 e Escapes number of fish Non-compliance with environmental regulations* Non-compliance with food-safety regulations* number number Non-compliance with other societal regulations* number Non-complaince with product and service regulations* number * Figures from 2011 and 2010 include EWOS CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

50 GRI Index READ TIME: 6 MINUTES Extent: Full Partial Strategy and analyses 4-1 Statement from the most senior decision-maker of the organisation (such as CEO) CEO comment 4-2 Description of key impacts, risks, and opportunities. Impacts, risks and opportunities Organisational profile 4-3 Name of the organisation Cermaq ASA 4-4 Primary brands, products, and services Farmed Atlantic salmon, Coho salmon and trout, also under the Mainstream brand 4-5 Location of the organisation s headquarters CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

51 Dronning Eufemiasgt. 16, 0102 Oslo, Norway 4-6 Number of countries where the organisation operates, and names of countries where either the organisation has significant operations or that are specifically relevant to the sustainability topics covered in the report. Cermaq has significant operations in Norway, Canada and Chile. Map with info graphics (employees) 4-7 Nature of ownership and legal form Cermaq ASA is a public company listed on the Oslo Stock Exchange. The Norwegian State is the principal shareholder in Cermaq ASA with a shareholding of percent as of 31 December Markets served Map with markets Cermaq Norway Cermaq Canada Cermaq Chile 4-9 The scale of the organisation Key financial figures Accounts, note 4 Map with info graphics (employees) 4-10 Total number of employees by employment contract and gender. Employees 4-11 Percentage of total employees covered by collective bargaining agreements Collective bargaining agreements 4-12 The organization s supply chain. Supply Chain 4-13 CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

52 4-13 Significant changes during the reporting period regarding the organisation s size, structure, ownership, or its supply chain The main change was the divesting of EWOS from end October 2013, impacting the business areas, size of organisation and the supply chain. The divest was followed by a refinancing of the company and a large extraordinary dividend. Annual accounts, Note How the precautionary approach or principle is addressed by the organization Cermaq follows a precautionary approach to the management of all risk areas (including sustainability) through its routine risk assessment and reporting model. The model allocates responsibility for risk mitigating activities connected with any identified critical or significant risks (see section GRI 4-2 ). Furthermore, the company s guidelines for ethical and corporate responsibility explicitly state that "If doubts arise as to whether an activity is permitted or justifiable on the basis of the ethical and corporate responsibility guidelines, the person in question should seek advice from his/her immediate superior 4-15 Externally developed economic, environmental and social charters, principles, or other initiatives to which the organisation subscribes or which it endorses External initiatives 4-16 Memberships of associations (such as industry associations) and national or international advocacy organisations Norwegian Seafood Federation (FHL); British Columbia Salmon Farmers Association (BCSFA) ; Canadian Aquaculture Industry Alliance (CAIA); Salmon Chile, and Global Salmon Initiative (GSI). Identified material aspects and boundaries 4-17 Entities included in the organisation s consolidated financial statements Organisation charts Annual Accounts, Note The process for defining the report content and the Aspect Boundaries How the report has been defined 4-19 The material Aspects identified in the process for defining report content Material aspects CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

53 4-20 The Aspect Boundary within the organisation for each material aspect Aspects and boundaries within the organisation 4-21 The Aspect Boundary outside the organisation for each material Aspect Aspects and boundaries outside the organisation 4-22 The effect of any restatements of information provided in previous reports, and the reasons for such restatements Restatement from last year 4-23 Significant changes from previous reporting periods in the Scope and Aspect Boundaries Changes in scope Stakeholder engagement 4-24 List of stakeholder groups engaged by the organisation Stakeholder groups 4-25 The basis for identification and selection of stakeholders with whom to engage. Identification and selection of stakeholders 4-26 The organiszation s approach to stakeholder engagement Approach to stakeholder engagement 4-27 Key topics and concerns that have been raised through stakeholder engagement Key topics and concerns Report profile CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

54 4-28 Reporting period Cermaq's reporting period follows the calendar year Date of most recent previous report The previous GRI report is included in Cermaq's Annual Report 2012 published in April Reporting cycle Cermaq's GRI reporting cycle is annual 4-31 The contact point for questions regarding the report or its contents. Please contact: Lise Bergan, Director Corporate Affairs The in accordance option the organization has chosen, the GRI Content Index, and the reference to the External Assurance Report 'In accordance' option 4-33 The organization s policy and current practice with regard to seeking external assurance for the report. External assurance Governance 4-34 The governance structure of the organization Corporate Governance, sections 6 General meetings, 7 Nomination committee, and 8 Corporate assembly and Board of Directors 4-35 The process for delegating authority from the highest governance body Authority is delegated from the CEO to the senior management CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

55 Executive-level position or positions with responsibility for economic, environmental and social topics. Senior management with responsibility for economic, environmental and social topics report to the CEO, who in turn reports to the Board of Directors Processes for consultation between stakeholders and the highest governance body Corporate Governance, Sections 6 General meeting and 9 The work of the Board of Directors 4-38 The composition of the highest governance body and its committees Corporate Governance, Sections 7 Nomination Committee, 8 Corp.assemble and BoD: Composition and independence, and 9 The work of the BoD. Board of Directors 4-39 Whether the Chair of the highest governance body is also an executive officer The Chair of the Board of Director and the CEO are different persons The nomination and selection processes for the highest governance body and its committees Corporate Governance, Sections 7 Nomination Committee and 8 Corporate assembly and Board of Directors: Composition and independence According to Norwegian legislation the board shall consist of minimum 40 percent women and 40 percent men Processes for the highest governance body to ensure conflicts of interest are avoided and managed Corporate Governance, Section 8 Corporate assembly and Board of Directors: Composition and independence. Ethical and corporate responsibility guidelines 4-42 The highest governance body s and senior executives roles in the development, approval, and updating of the organisation s purpose, value or mission statements, strategies, policies, and goals related to economic, environmental and social impacts Corporate Governance Section 9 The work of the Board of Directors and Rules of Procedures of the Board of Directors 4-43 Measures taken to develop and enhance the highest governance body s collective knowledge of economic, environmental and social topics Corporate Governance Section 9 The work of the Board of Directors and Rules of Procedures of the Board of Directors 4-44 CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

56 4-44 Processes for evaluation of the highest governance body s performance with respect to governance of economic, environmental and social topics. Corporate Governance Section 9 The work of the Board of Directors 4-45 The highest governance body s role in the identification and management of economic, environmental and social impacts, risks, and opportunities BoD report, section Risk and risk management, Impacts, risks and opportunities 4-46 The highest governance body s role in reviewing the effectiveness of the organisation s risk management processes BoD report, section Risk and risk management, and Impacts, risks and opportunities 4-47 Frequency of the highest governance body s review of economic, environmental and social impacts, risks, and opportunities The Board of Directors reviews key risks on a quarterly basis 4-48 The highest committee or position that formally reviews and approves the organization s sustainability report The Board of Directors formally reviews and approves Cermaq s sustainability report 4-49 Process for communicating critical concerns to the highest governance body The senior management provides critical concerns to the Board of Directors The nature and total number of critical concerns that were communicated to the highest governance body and the mechanism(s) used to address and resolve them There were no whistleblower issues reported to the Board of Directors in However, the BoD manages critical concerns on an ongoing basis Remuneration policies for the highest governance body and senior executives Corporate Governance Sections 10 Remuneration of the Board of Directors and Remuneration of the executive management. Annual accounts, note CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

57 Process for determining remuneration. The remuneration committee, a sub-committee to the Board of Directors, works as an advisory and preparing body for the Board s work on matters regarding remuneration systems and on remuneration to senior management How stakeholders views are sought and taken into account regarding remuneration The Norwegian state presents its view through the guidelines from the Ministry of Trade, Industry and Fisheries (Retningslinjer for ansettelsesvilkår for ledere i statlige foretak og selskaper). The General Meeting is invited to comment on, and vote over, the Board of Director s statement on salaries and other remuneration for senior management The ratio of the annual total compensation for the organiszation s highest-paid individual in each country of significant operations to the median annual total compensation for all employees (excluding the highest-paid individual) in the same country Ratio of the annual total compensation 4-55 The ratio of percentage increase in annual total compensation for the organisation s highest-paid individual in each country of significant operations to the median percentage increase in annual total compensation for all employees (excluding the highestpaid individual) in the same country Ratio of percentage increase in annual total compensation Ethics and integrity 4-56 The organisation s values, principles, standards and norms of behaviour The following codes and guidelines have been fully implemented and widely distributed throughout the Cermaq group and are available at Cermaq.com: Cermaq Values Sustainability principles Ethical and corporate responsibility guidelines Whistle blowing guidelines 4-57 Internal and external mechanisms for seeking advice on ethical and lawful behaviour Ethical and corporate responsibility guidelines 4-58 CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

58 Report the internal and external mechanisms for reporting concerns about unethical or unlawful behaviour Whistle blowing guidelines CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

59 G4-2 Impacts, risks, and opportunities. READ TIME: 4 MINUTES Cermaq's materiality analysis identifies the sustainability aspects that management consider to be of greatest impact to the organisation and of greatest concern to stakeholders. These aspects are taken into the Group's annual risk assessment and reporting model. Cermaq s approach is based upon a risk assessment matrix, where management judges the probability of a risk to occur and the consequence of a potential risk (reputational as well as financial impact) for each material sustainability aspect. The perceived sustainability risk exposure is then categorised into critical, significant, and insignificant risk areas. The risks are subject to discussion and approval in Central management meetings and the outcome is presented to the Board of Directors on a yearly basis. The outcome is described below including a description of mitigating activities, performance in 2013 and targets for RISK AREAS RISK MITIGATING ACTIVITIES PERFORMANCE 2013 TARGETS 2014 Fish health Risk of unfavorable biological conditions like disease outbreaks and high sea lice levels and/or high mortality Vaccination programme Screening of fish Use of functional feeds supporting fish health Sea lice treatments, including new preventive non-chemical measures like sea lice skirts and lump fish Area management agreements (e.g. coordination of sea-lice treatment in all regions) R&D projects, e.g. contagious disease projects, sea-lice projects and projects on improving the environment (e.g. oxygen supplement) Improved routines and procedures by sharing best practice across region Our performance within fish health in 2013 is described in the following indicators: CEQ 1 Mortality rate CEQ 2 Sea lice CEQ 4 Medicine use CEQ 5 Vaccination CEQ 6 Area Management Agreements Cermaq has targets in place for all important elements related to fish health: Be compliant with local action levels for sea lice counts Reduce the level of Active Pharmaceutical Ingredients from treatments by tonne of production Reduce the 12 months mortality rate for Atlantic salmon in all regions: -Chile: <=7.5% -Norway: <= 4% -Canada: <= 5% -Group: <= 5.6% 100% of sites committed to an Area Management Agreement CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

60 Escapes ( impact on biodiversity) External conditions like climate change can cause extreme weather conditions. Sites can be exposed to rough storms etc. which increases the risk of damaged equipment and difficult working conditions that increase the risk of escapes. Investments in equipment, preventive routines and procedures, training and maintenance. Upgrading of net pens in Chile: The net around the lift up mortality system has been strengthened (100% of the sites now have double nets at the bottom). Regular monitoring of the farm by using ROV system See indicator CEQ 7 for information about escapes in escapes in all regions Occupational Health & Safety (OHS) Risk of fatalities, injuries and high absence rate as a result of work-related incidents. Risk of noncompliances/fines, less attractive employer, negative attention from the community, and damaging reputation as a result. ISO standard has been implemented by all Cermaq companies. Cermaq Chile has introduced the following mitigating actions for divers: Investing in new equipment (ROV) to reduce the number of dives needed, safety training program for divers and competency assessment for commercial divers, Cermaq Chile has introduced the following mitigating activities for all employees: monthly safety inspections by management, ranking of performance, safety tutorials, safety committees where employees reflect about safety, safety awareness program and BAPPTM (governmental safety body) training and coaching. Cermaq Canada has focused on identifying cause and type of injury and implemented measures to reduce the number of injuries and the work will continue in Cermaq Norway has focused on OHS training in See indicator LA 5 and LA 6 for information about OHS performance in The long-term target is zero injuries. For 2014 the target is to reduce the number of Lost Time Injuries (LTI) by 50% and Total Recordable Injuries (TRI) by 60% for the group. Group absence rate target is to be below 4%. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

61 focused on OHS training in addition to OHS inspections and controls in different operating areas in Establish a crossborder functional OHS team that will focus on sharing best-practice and be a driver for improvements Non-compliance with environmental, social, product and service and food quality regulations. Salmon farming is subject to extensive regulations in all areas of operations. A lot of the regulations are adressing measures to secure sustainable farming. Significant fines and damage to the reputation may be a consequence of serious non-compliances. Management systems such as ISO 9001, 22000, and OHSAS are in place in all Cermaq companies. Cermaq is committed to obtain the ASC- standard through the Global Salmon Initiative membership and all sites have started to prepare for the process Details of noncompliances with regulations are described in indicators EN 29, SO 8, PR 2 PR 9, and CEQ 13 Zero non-compliances Consumer Health & Safety Cermaq is producing food for direct human consumption. Noncompliance (food safety) incidents could lead to significant fines/litigation. ISO standard has been implemented by all Cermaq companies. This standard is a complete food safety management system incorporating the elements of prerequisite programs for food safety, HACCP and quality management systems. In addition Cermaq Chile has implemented IFS (International Food safety) in the processing plants Quemchi and Ancud, and Global GAP in the same processing plants and 5 sites. Also, Cermaq Chile complies with Walmart s own food safety standard. Cermaq Norway is certified according to Global GAP standard. Overview of management systems can be found in CEQ 13 and information about non-compliance related to food safety is found in PR 2. Zero non-compliances with food-safety regulations Sourcing/risk of nonsustainable feed supplies EWOS has implemented a Cermaq has established a cross-regional project group that is in the Information about feed ingredients and sustainable raw materials Cermaq supplier policy and supplier follow-up system in place CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

62 EWOS has implemented a supplier follow-up system based on UN GC 10 principles in addition to raw material quality monitoring and control systems. At present, there is no similar follow-up system towards suppliers in Cermaq after the sale of EWOS. group that is in the process of developing a supplier conduct and supplier follow-up system. sustainable raw materials used in Cermaq farming is found in EWOS 8 system in place Corruption Cermaq is exposed to markets that rank high on the Transparency Corruption Index in the supply chain and in our sales markets Cermaq has a zerotolerance policy for corruption and has defined ethical guidelines on corruption and procedures for whistle blowing. Cermaq is a member of Transparency International to support anti-corruption work. A new web-based e- learning tool was rolled out to the whole organisation in 2012 and completed in Openness in itself about organisational ownership, management and operations, is regarded as important to combat corruption and Cermaq reports Country-by- Country information Details of training for anticorruption are given in GRI indicator SO 4 and information about whistle blowings in CEQ 12. Country-by-country information is found in CEQ 15 Zero incidents of corruption incidents Anticorruption expectations included in sourcing policy Cermaq's management approach towards sustainability reflects a growing interest amongst stakeholders towards the group's social and environmental impacts. In order to manage the long term influence of this on the organisation, sustainability risks and opportunities are systematically managed, as described above. Management of the following risks is presented in the Board of Directors report: currency risk, interest rate risk, credit risk and liquidity risk. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

63 Map employees READ TIME: < ONE MINUTE CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

64 Map - markets served READ TIME: < ONE MINUTE Market areas, Chile Market areas, Norge CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

65 Market areas, Canada CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

66 G4-10 Employees READ TIME: 1 MINUTE Our 4357 employees represent a diverse group both in terms of culture and type of work. Still, a common set of core values unite our international and diversified activities. Recruiting the right people is essential for the future success of our operations. Competent and dynamic human resources management plays a key role in our industry. Our operations are based on local recruitment of management. In 2013 the proportion of management hired from local communities averaged 83 percent (91 percent in 2012). This is in line with Cermaq's philosophy to trust local employees who best know the local conditions and culture. Possibilities for international assignments contribute to personal development as well as developing our corporate culture. Total workforce in Cermaq group (incl ASA) by employment type, employment contract, region and gender, per 31 December Norway Chile Canada Total Total employees % % % % Total supervised workers 4 1 % % 0 0 % % Total - Workforce % % % % Total Indefinate or Permanent employees % % % % Total temporary or fixed term employees % % 0 0 % % Total Full time employees % % % % Total Part time employees % 0 0 % 0 0 % % Management and administration employees % % % % Other employees % % % % Female employees % % % % Male employees % % % % During summer time Chile (November until February) and Norway typically have a high proportion of temporary workers to assist with processing of harvested fish. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

67 G4-11 Collective bargaining agreements READ TIME: < ONE MINUTE Good and constructive relations with employees and labour unions are essential to Cermaq, and are managed through well-established local management structures and practices. All employees are free to join any labour union. It is important to note that collective agreements do not necessarily reflect the actual participation in unions. Percentage of employees covered by collective bargaining agreements Cermaq ASA 0% 14.6% 13.2% 20% Cermaq Norway 77.6% 92.5% 93.4% 93.7% Cermaq Chile 17.9% 18.6% 25.4% 23.8% Cermaq Canada 0% 0% 0% 0% Cermaq Group (ex ASA) 26.7% 26.9% 34.% 31% Employees covered by collective bargaining is calculated as a percentage of all employees, both temporary and permanent employees. If temporary workers are excluded in the calculation for Cermaq Chile, which employs a large proportion of seasonal workers, 33 percent of the employees in Cermaq Chile are covered by collective bargaining agreements. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

68 G4-12 Supply Chain READ TIME: 2 MINUTES Cermaq s main suppliers are feed suppliers and approximately 50 percent of the purchasing cost in salmon farming is related to fish feed. Until 31 October 2013, Cermaq owned EWOS, but from 1 November 2013 EWOS is our main supplier. Some key environmental issues within feed processing is to ensure that the raw materials used are not overexploited and that ecological and carbon footprint are minimised. EWOS indicators about marine and terrestrial raw material use are presented in the GRI performance section ( EWOS 8 ). Information about EWOS energy use is found in EN 4 and CO2 emissions in EN 17. EWOS main suppliers are fish meal and fish oil processing companies and other raw material providers, such as companies supplying e.g. soy proteins, rapeseed oil, wheat and wheat gluten. EWOS has developed a supplier policy and Code of Conduct based on UN Global Compact 10 principles. Raw material suppliers must sign a self-assessment form and EWOS performs regular supplier audits. In addition, EWOS supports and encourages suppliers of marine ingredients to qualify as certified IFFO Responsible Sourcing. The value chain behind Cermaq's farming operations. st st Other information about what we buy and our suppliers in each region is described below: Cermaq Norway CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

69 Cermaq Norway Cermaq Norway spent NOK 1.43 billion on goods and services and the total number of suppliers was around 1200 suppliers. The 100 largest suppliers account for approximately 90 percent of the total amount. The 10 largest suppliers account for approximately 67 percent. All the suppliers are registered in Norway except for one company registered in Island. Feed from EWOS counts for 55 percent of the total amount spent on goods and services. Other important purchasing categories are logistics (e.g. well boats and other forms of transportation of fish and customs) (18%), technical equipment (7%), smolt and eggs (6%), energy (e.g. electricity, diesel etc.) (5%), maintenance of infrastructure and investments (5%), fish health (e.g. medicines) (2%), and processing plant services (2%). Cermaq Chile Cermaq Chile spent 173,759,619,170 CLP on goods and services. The total number of suppliers was around 4 580, of which 10 are international suppliers from Denmark, Germany, Canada and USA. The 100 largest suppliers account for 76 percent of the total amount spent whereas the 10 largest account for 60 percent of the total amount. Feed from EWOS represents 50 percent of the total amount spent on goods and services. Other relevant items are transportation of feed and fish (8%), fish health (6%), equipment (maintenance, nets, feeding equipment, anchorage) (5%), fuel and oils (3%) and impregnation and net cleaning (0.5%). Cermaq Canada Cermaq Canada spent approximately CAD$ 96 million on goods and services in the year with a supplier base of approximately 900 suppliers. The top ten suppliers accounted for approximately 64 percent of the purchases made. Feed from EWOS accounted for 44 percent of our total purchases, maintenance and operational costs accounted for 40 percent of the expenditures with contracted processing, health and biology, diving, fuel and insurance accounting for another 16 percent of our expenditures. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

70 G4-15 External initiatives READ TIME: 3 MINUTES Cermaq is committed to support global initiatives aiming at improving environmental, social and economic conditions worldwide. Global initiatives contribute to creating a sustainable global environment on which the company is dependent. Cermaq s engagement includes overarching programs as well as more targeted programs e.g. industry specific, climate, or anti-corruption. Global initiatives Cermaq endorses include: United Nations Global Compact (UN GC) Through the membership in UN GC, Cermaq is committed to aligning its operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. Cermaq became a member of UN GC and joined the Nordic UN GC network in The ten principles: 1. Businesses should support and respect the protection of internationally proclaimed human rights; and 2. make sure that they are not complicit in human rights abuses. 3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; 4. the elimination of all forms of forced and compulsory labour; 5. the effective abolition of child labour; and 6. the elimination of discrimination in respect of employment and occupation. 7. Businesses should support a precautionary approach to environmental challenges; 8. undertake initiatives to promote greater environmental responsibility; and 9. encourage the development and diffusion of environmentally friendly technologies. 10. Businesses should work against corruption in all its forms, including extortion and bribery Cermaq s approach and response to the ten principles are summarized in Cermaq's Communication on Progress (COP). Information in the various parts of this report is tagged according to Global Compact's ten Principles. The ambition is that the symbols will guide and assist the reader finding the most relevant information. Principles 1-2, Human rights Principles 3-6, Labour standards Principles 7-9, Fish health CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

71 Principles 7-9, Fish health Principles 7-9, Environmental impact Principle 10, Anti-corruption Community impact Transparency International (TI) Corruption undermines democracy and the rule of law. It also distorts national and international trade. In 2011, Cermaq became a member of TI Norway. Through the membership Cermaq supports TI's anti-corruption work. In addition TI is a channel for Cermaq to share its experience with other businesses and draw on other companies experience in the regions where the company is present. Cermaq has implemented a zero-tolerance policy towards corruption within all its operations. To ensure that the policy is understood and implemented, regular training of management and other employees in vulnerable positions is performed. An e- learning training program on anti-corruption has been developed and all regions have been through the program in 2012 and In 2013, TI Norway initiated a survey with the aim to rank openness about anti-corruption programs, organizational structure and country-by country reporting among the largest companies listed at Oslo Stock exchange. Cermaq was ranked as #3 out of the largest 50 companies listed on the Oslo Stock Exchange Carbon Disclosure Project (CDP) Cermaq acknowledges the need for reducing carbon emissions in order to combat climate change. In support of this, Cermaq has submitted its carbon emissions to the CDP annually since The CDP disclosure process has increased the awareness of the company s emissions throughout the operations and it has enabled Cermaq to better define activities and set targets. Cermaq obtained a CDP score of 75 B in 2013 (based on 2012 emission figures). (CDP's rating on disclosure is from and on performance from A-E). Global Reporting Initiative (GRI) GRI's Sustainability Reporting Framework enables all companies and organizations to measure and report their sustainability performance. By reporting transparently and with accountability, organisations can increase the trust that stakeholders have in them, and in the global economy. It also makes it possible to compare individual companies' performance. Cermaq started to report according to the GRI standard for 2009 and discloses its fifth report for Cermaq recognizes the value of external auditing of its report, and seeks external assurance for its sustainability reporting. The 2013 report meets the requirements of Comprehensive. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

72 International agreements agreements and conventions and conventions Cermaq endorses a suit of international agreements and conventions. Some of the most central ones are the OECD Guidelines for Multinational Enterprises, the ILO Convention 169 and the UN Declaration of Indigenous Peoples (UNDRIP), UN Guiding principles on business and human rights and the eight ILO core conventions of the "Declaration of Fundamental Principles and Rights at Work" These conventions are the basis for Cermaq s operations in all parts of the Group. Cermaq s reporting, e.g. management approach and performance indicators address central part of the scope in these conventions. Global Salmon Initiative (GSI) the social contribution. The Global Salmon Initiative ( GSI) is a leadership initiative by global farmed salmon producers, focusing on making significant progress towards providing a highly sustainable source of healthy protein to feed a growing global population, whilst minimizing the environmental footprint, and continuing to improve GSI was initiated in April 2012, when Cermaq and 14 other global farmed salmon companies joined together in a commitment to substantial change. GSI was formally launched in August The members of GSI cover 70 percent of the global salmon production and are committed to significant improvements in the sustainability of their operations. GSI is concentrating their efforts on three priority areas facing the industry: bio security, feed sourcing and meeting industry standards, and has the intention to bring farms operated by the GSI members up to the Aquaculture Stewardship Council (ASC) standards by CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT

73 Org Chart GRI4-17 READ TIME: < ONE MINUTE The entities included in the consolidated financial statement is found in Note 4 to the accounts. The non-core business is not included in the GRI report. There are 4 employees in the Cermaq's non-core businesses. CERMAQ GROUP AS COMPANY REVIEW AND SUSTAINABILITY REPORT