Published:
31.03.2023
Annual Report
2022
Content
Approved by the Board of Directors in Hofseth BioCare ASA 30 March 2023
Hofseth BioCare ASA is committed to maintaining high standards of cor-
porate governance that will strengthen confidence in the company among
share holders, capital market and among other stakeholders, thereby con-
tributing to the greatest possible value creation over time. The aim of
corporate governance is to regulate the roles of shareholders, board and
management beyond what is required by legislation.
The company reports in accordance with the recommendation of 30 October
2014, last updated 17 October 2018 («the Recommendations») issued by the
Norwegian Corporate Governance Board (NUES). The rules on the continuing
obligations of listed companies at www.oslobors.no and guidelines are avail-
able at www.nues.no
Compliance is based on a «comply or explain» principle, which means that
the company must comply with all recommendations or explain why they
have chosen an alternative approach to specific recommendations. The
following explains the company's compliance with the 15 sections and ad-
dresses the additional requirements set out in the Accounting Act § 3-3 b.
Any deviation from the Code of Conduct will be explained under the appro-
priate section.
This report is part of the company's annual report. The report is also avail-
able on Hofseth BioCare's website www.hofsethbiocare.com, along with
more information about the company's business.
CHAPTER 1
Corporate governance 3
CHAPTER 2
The board of director’s report 2022 10
CHAPTER 3
Financial statements 17
Statement of comprehensive income 19
Statement of financial position 20
Statement of cash flows 22
Statement of changes in equity 23
Notes to the accounts 24
Declaration of the Board of Directors and Managing Director in Hofseth BioCareASA
59
CHAPTER 4
Auditors report 60
Corporate governance
CHAPTER 1
CORPORATE GOVERNANCE
Hofseth BioCare is a Norwegian public limited company and is
listed on Oslo Stock Exchange. The Norwegian Accounting Act
and the rules of the Continuing Obligations for stock listed com-
panies impose a duty on the Company to issue its principles
and practice for corporate governance in the annual report.
Values and guidelines for business
ethics and corporate social
responsibility
The company's values are an important premise for corporate
governance. Trust in HBC as a company, and in the business,
is crucial for the company's future competitiveness.
Hofseth BioCare is committed to transparency about its
guidelines for management of the Company. This strengthens
the value creation, builds internal and external confidence
and promotes a code of ethics and a sustainable approach
to business.
HBC is founded on the core value of sustainability and optimal
use of natural resources. The Company aspires to create
a healthy company culture based on these core values. The
Board of Directors has approved the Code of Conduct for
business ethics and corporate social responsibility. The
Company's tailored Code of Conduct and internal guidance
provide a suitable separation of roles and responsibilities,
promoting efficient collaboration between the company's
shareholders, the Board of Directors, and its management
team, and ensuring that the business is subject to satisfactory
controls and monitoring. An appropriate distribution of roles,
effective collaboration and satisfactory controls contributes
to the best possible value creation over time, for the benefit of
its owners and other stakeholders.
The company's code of Ethics addresses the management
of neutrality, conflict of interest situations, interactions with
clients and vendors, communication with the press, insider
trading, and pertinent personal financial interests.
The core of the concept of CSR is the company's responsibility
for people, communities and environment affected by
operations, and typically addresses:
› Human rights which means that the company carries out
its operations in accordance with the international agre-
ements and conventions that are fundamental rights for
every human being, regardless of race, gender, religion or
other status.
› Anti-corruption which means that the organization man-
dates that it should not demand, receive or accept an offer
of an improper advantage in connection with a position,
office or assignment.
› Employee relations where AMLs (Working Environment
Act) provisions concerning employment contracts, wor-
king hours, insurance, pension, vacation, sick monitor-
ing etc. embodied in internal guidelines and be followed
throughout the organization. The employees are organi-
zed, and there is established good communication chan-
nels between employee representatives and management.
› HSE (Health, Security and Environment) is the company’s
top priority. Through guidelines and incorporate routines
that safety inspections, preventive maintenance routines,
etc. all the employee are involved. A safety delegate sys-
tem is implemented in the organization.
› Discrimination where the Company endeavours to ensure
that there shall be no discrimination or unequal treatment
The Board of Directors of Hofseth BioCare ASA (HBC or the
company) has the ultimate responsibility to ensure that the
company is practicing good corporate governance. The company's
Board of Directors and management conducts a thorough review
and assessment of its principles of corporate governance annually.
4
CORPORATE GOVERNANCE
which has its basis in individuals, genders, ethnicities, na-
tionalities, religious communities and the like.
› Environmental which is a key factor in the company's so-
cial responsibility. Emissions to water and air are conti-
nuously monitored. Regular meetings are held with local
authorities and municipal bodies.
Business
The aim of Hofseth BioCare is defined in the Company's Ar-
ticles of Association, which inter alia, states:
› Hofseth BioCare's business is development, manufactu-
ring, marketing and sale of marine ingredients such as
oil, calcium and protein products, as well as cooperation
with, and the participation and ownership in businesses
engaged in related businesses.
› The Company’s board of directors shall have from 3 to
10 members according to the resolution of the General
Meeting.
› The company shall have an audit committee.
Please refer to the Articles of Association for Hofseth BioCare,
last modified 3 July 2022, which are available at the compa-
ny's website www.hofsethbiocare.com.
Equity and dividend
Equity
Hofseth BioCare shall have an equity ratio which is appropri-
ate in relation to its objectives, strategy and risk profile, and
the Board of Directors will continually assess the capital si-
tuation.
The Company's Board of Directors and management have
used the following instruments to have a customized equity
at any given time
› Private placement/capital increase
› Shareholder loans (subordinated loan) that can be dee-
med part of the company's equity
› Sales-enhancing and cost-cutting measures
As of 31 December 2022, the group had an equity of NOK
148.0 million, corresponding to an equity ratio of 36.0 %. The
board considers an equity ratio of more than 25.0 per cent to
be at a satisfactory and prudent level. The company's long-
term debt financing has financial covenant requirements of
25 % equity, including subordinated loans. The main sharehol-
ders have, if necessary, provided subordinated loans to ensure
that the company is not in breach of covenant requirements
from the banks. The board will at all times consider various
instruments to ensure that the company has sufficient equity,
including an authorization given to the board at the general
meeting on 30 august 2022 to issue up to approximately 39.5
million new shares intended to be used in the event of a need
for additional equity and liquidity. It is the Board's intention to
ask the General Meeting for a similar authorization for the co-
ming period.
Dividend
HBC aims to give its shareholders a competitive rate of return
based on the company's earnings. Dividends will be considered
in the context of HBC’s financial position, loan terms and capi-
tal requirements for existing and new projects.
Mandates of the board of directors
Mandates granted to the Board of Directors, either to increa-
se the company's share capital or to buy its own shares, will
generally be limited to defined purposes and usually limited in
time until the date of the next ordinary general meeting.
As of 31 December 2022, the Board of Directors in HBC holds
an authorization to increase the company's share capital
by issuing new shares with a total face value of up to NOK
395,081.03 equivalent to 39,508,103 shares, each with a nomi-
nal value of NOK 0.01.
The authorization can be used in connection with the issuance
of shares to investors who are considered to have strategic
importance for the company as well as to repair any issues as
a result of such, or any other private equity issues.
In accordance with this power of attorney to the Board of Dire-
ctors, the company will also be able to offer shares to the pe-
ople or companies who are not shareholders of the company.
Existing shareholders' preferential right may be waived.
The Board of Directors is given the authority to change the
Articles of Association stating the share capital size in acco-
rdance with the shares the Board decides under this authori-
zation. The authorization was granted at the Ordinary General
Assembly 30 August 2022 and is valid until the Ordinary Gene-
ral Assembly in 2023, however not longer than 30 June 2023.
Equal treatment and transactions with related
parties
Hofseth BioCare has one class of shares. Each share in the
Company carries one vote.
As a general principle, all transactions involving the company's
own shares should be conducted through the stock exchange
or at the stock market price if traded outside of the stock
exchange, or in a manner that ensures all shareholders are
treated equitably.
Transactions with related parties
Included in the rules of procedures for the Board are guide-
lines for how the members of the Board and the CEO shall
act in discussions or decisions related to issues which are of
5
CORPORATE GOVERNANCE
special personal importance to them, or to any related parties
to the member in question.
Transactions with related parties are governed by market
terms and conditions in accordance with the «arm’s length
principle».
The Company’s shareholders, Board and management and
their related parties, as well as all companies in the Hofseth
group, including RH Industri AS and Hofseth International AS,
will be related parties to Hofseth BioCare.
Transactions with related parties are further described in the
notes to the financial statements.
Freely tradable shares
All shares in Hofseth BioCare are freely tradable with no limi-
tations in the Articles of Association.
The general meeting
Through the general meeting the shareholders exercise the
highest authority in Hofseth BioCare. All shareholders are
entitled to submit items to the agenda, meet, speak and vote
at general meetings in accordance with the provisions of the
Norwegian Public Limited Companies Act. The Board of Hof-
seth BioCare strives to ensure that the general meetings are
an effective forum for communication between shareholders
and the Board, and the Board shall take steps to ensure that
as many shareholders as possible may exercise their rights
by participating in the general meetings.
The annual general meeting is held every year before the end
of May. Extraordinary general meetings may be called by the
Board at any time. Hofseth BioCare’s auditor or shareholders
representing at least five percent of the total share capital may
demand an extraordinary General Meeting to be called.
The notice for the annual general meeting is available on the
Company’s website and sent to shareholders with known ad-
dresses by post no later than 21 days prior to the date of the
meeting. Article 9 in the Company’s Article of Associations
states that documents related to matters on the agenda of
a general meeting can be made available on the Company’s
website rather than being sent to shareholders by post. The
supporting documentation will be available at the same date
as the notice and provides all the necessary information for
shareholders to form a view on the matters to be considered.
The deadline for registration for the annual General Meeting is,
at the latest, 3 days before the general meeting takes place.
Shareholders who cannot attend the general meetings in per-
son, shall be given the opportunity to vote, and the Company
shall provide information and nominate an available person
who may vote on behalf of the shareholders in this respect.
The general meeting elects the members and deputy mem-
bers of the Board, determines the remuneration of the mem-
bers of the Board, approves the annual financial statements,
discusses the Board of Director’s guidelines on management
remuneration and decides such other matters which by law or
Hofseth BioCare’s Articles of Association are to be transacted
at the General Meeting.
The Board of Directors, the Nomination Committee and the
auditor's attendance at the General Meeting is waived from
the recommendation if a review of the agenda, the availability
and physical location would suggest this is not practical. Un-
der the General Meeting for the adoption of the 2021 financial
statements for two members participated. The auditor did not
participate.
Nomination committee
The General Meeting has chosen a Nomination Committee to
ensure objectivity regarding the shareholders’ interests.
The company shall have a nomination committee consisting
of 3 members where the majority of the members shall be
independent of the board of directors and the management.
The members of the nomination committee shall be elected
for terms of two years.
The nomination committee shall propose candidates for the
board of directors and the nomination committee, including
remuneration to the board of directors and the members of
the nomination committee. Members of the Nomination
Committee are Geir Even Håberg, Lennart Clausen and Svein
Myhre.
The remuneration to the Nominating Committee shall be
determined by the General Meeting.
The nomination committee shall evaluate the need for
changes of the board and the nomination committee. To have
the best possible basis for their deliberations, the committee
should be in contact with the directors and the CEO.
Furthermore, the Nomination Committee should consult
relevant shareholders for nominations and for consensus in
its decision. The board’s evaluation report (ref. Paragraph 9
on the Board’s instructions) shall be treated separately by the
Nomination Committee.
The recommendations of the nomination committee shall
include a justification as to how the best interest of the
shareholders and the Company has been secured.
The board of directors, composition and
independence
The Board of Hofseth BioCare includes six members, of which
threefrom each gender, corresponding with the Company’s
Articles of the Associations Section 5, stating that the Board
should have from three to ten members.
6
CORPORATE GOVERNANCE
Members of the Board are selected in the light of an evaluation
of the Company’s needs for expertise, capacity and balanced
decision-making, and with the aim of ensuring that the Board
of Directors can operate independently of any special interests
and function effectively as a collegiate body.
The majority of the Board of Directors shall be independent of
Hofseth BioCare’s management and its main business conne-
ctions. At least two of the members of the Board shall be inde-
pendent of the Company’s main shareholder(s). The Board of
Directors does not include executive personnel.
Director of the Board, Roger Hofseth, is as of 31 December
2022 CEO of Hofseth International AS, one of the Company’s
largest shareholders, and director of the Board, Dr. Crawford
Currie is Head of Medical R&D in the Company. Both are rela-
ted to several of the Company’s business connections and are
thus not considered independent.
The Chair of the Board, Kristin Fjellby Grung, Director Chris-
toph Baldegger, Director Amy Novogratz and Director Torill
Standal Eliassen are considered independent of management,
business connections and the Company’s main shareholders.
The term of office for members of the Board of Directors is
two years. An updated overview of the members of the Board
of Directors of Hofseth BioCare, including their employment,
education and professional background is provided at the
Company’s website www.hofsethbiocare.com.
Members of the Board of Directors are encouraged to own
shares in the company.
The General Meeting elects the Chair of The Board of Dire-
ctors.
The work of the board of directors
The Board
The Board of Directors has the overall responsibility for the
management of Hofseth BioCare. This includes a respon-
sibility to supervise and exercise control of the Company’s
activities.
Furthermore, this includes developing the Company’s stra-
tegy and monitoring its implementation. In addition, the
Board of Directors exercises supervision responsibilities to
ensure that the company manages its business and assets
and carries out risk management in a prudent and satis-
factory manner. The Board of Directors is also responsible
for the appointment of the Chief Executive Officer (CEO).
A separate instruction for the board of directors is imple-
mented and the Board develops a yearly plan for their work.
In accordance with the provisions of Norwegian company
law, the case processing and responsibilities of the board
are governed by a set of rules and procedures. The chair of
the board is responsible for ensuring that the work of the
board is carried out in an efficient and responsible manner
in accordance with the legislation.
The board has established instructions for the work of the
CEO. A distinct division of responsibilities exists between
the board and the CEO. The CEO is responsible for the ope-
rational management of the Company.
The board conducts an annual evaluation of its work, form
of work and competence.
The Board of Directors has adopted an audit committee (the
"Audit Committee") in accordance with the Company's Ar-
ticles of Association § 6 and the Code of Practice. The Audit
Committee has a defined instrution for their work.
According to the company's articles of association, section
6, the board decides the members of the committee. The
members of the audit committee in Hofseth BioCare are To-
rill Standal Eliassen (chair) and Christoph Baldegger.
The company has established its own compensation
committee in accordance with the company's articles of
association, section 11. The members of the compensation
committee are Christoph Baldegger and Torill Standal Eli-
assen.
Risk management and internal control
The Board of Hofseth BioCare shall ensure that the Company
has sound internal control and systems for risk management
that are appropriate in relation to the extent and nature of the
Company’s activities. The internal control and the systems
should also encompass the Company’s corporate values, ethi-
cal guidelines and guidelines for corporate social responsibi-
lity.
Risk management and internal control is performed through
various processes within the Company, both through the Board
of Directors work and the operational management of the
Company.
The Board of Directors receives regular reports from manage-
ment outlining the financial and operational performance of the
Company. The administration's reporting should be based on
input according to key reporting from the chain of command, as
updated accounting and valuation of accounting items, includi-
ng relevant operating data of importance for the assessment of
accounting records. Monthly operating reports shall be evalua-
ted and decided by the overall management of the group.
There must be sufficient qualified resources to carry out ap-
propriate reports which will contribute to decision support and
7
CORPORATE GOVERNANCE
continuous control of the Group's financial performance.
During the budgeting process and budget approval, the bo-
ard ensures that internal control systems and key risk factors
the company may face are considered. Given the company's
growth strategy, the board emphasizes that the internal control
systems encompass all facets of the company's operations,
including strategic, operational, and financial risks. The board
also evaluates the necessity for additional actions concerning
risk factors.
The Board of Directors has adopted guidelines that encompass
the Company’s corporate and ethical values and corporate soci-
al responsibility, cf. Section 1 (Code of Ethics).
The preparation of interim reports and annual reports shall be
in accordance with Norwegian and international principles for
accounting and as further set out in the rules of procedure for
Board of Directors.
The Group's control environment is assessed as satisfactory,
and the Group has a satisfactory accounting and controlling
department. Parts of the payroll functions are outsourced to an
external accounting firm.
Operative internal control is safeguarded through established
procedures and guidelines to be followed up through line ma-
nagement and management reporting. Likewise, continuous
risk analysis and control activities are executed. The Board be-
lieves that the scope and level of the said areas is satisfactory
to the Group's size and complexity.
The Board of Directors, through its Audit Committee and toget-
her with its independent auditor, carries out an annual review of
the Company’s most important areas of exposure to risk and its
internal control arrangements.
The Board of Directors describes in the annual report the main
features of the Company’s internal control and risk manage-
ment systems related to the Company’s financial reporting.
Remuneration of the board of directors
The compensation to the Board shall reflect the Board’s re-
sponsibility, expertise, time commitment and the complexity
of the Company’s activities.
The remuneration paid to the members of the Board will be
decided by the General meeting. The remuneration paid to
the members of the committees will be decided by the gene-
ral meeting having considered proposals by the Board in line
with the Code. Information about the fee paid to the Board and
committees is stated in the annual report.
There is an authorization the board may use in connection
with the issuance of shares to directors and employees of the
Company. In addition to moderate board remuneration, it was
considered that options are the most appropriate way to honor
board members.
Remuneration of executive personnel
The Board of Directors prepares guidelines for the remune-
ration of the executive personnel. The guidelines have been
communicated to the general meeting through a management
salary statement. The Company’s performance-related remu-
neration of the executive personnel are linked to value creation
for shareholders or the Company’s earnings performance over
time and the Company strives to ensure that its arrangements
are in line with the guidelines.
Information and communications
Hofseth BioCare’s information policy shall be based on open-
ness and equal treatment of all shareholders and the Compa-
ny has resolved to comply with the Oslo Børs’ Code of Practice
for Reporting IR Information.
Hofseth BioCare strives to continuously publish all relevant
information to the market in a timely, effective and non-dis-
criminatory manner. All stock exchange announcements are
made available both on the Company’s website and on the
Oslo Stock Exchange news website www.newsweb.no and are
also distributed to news agencies (via Intrado/Notified).
The Company publishes its preliminary annual financial state-
ments by the end of February, together with its fourth quarter
results.
The complete annual report and financial statements are
made available to shareholders no later than three weeks prior
to the annual general meeting, or, at the latest, by 30 April each
year, which is the last date permitted by the Securities Trading
Act. For 2021 the complete annual report and financial state-
ments were approved and published 25 March 2022.
Quarterly results are normally published at the latest within
two months after the close of the quarter.
The Company’s financial calendar for the coming year is publis-
hed no later than December 31 in accordance with the rules of
the Oslo Stock Exchange. The financial calendar is available on
the company’s website and on the Oslo Stock Exchange website.
Quarterly reports and presentation material are available on
the Company’s website, www.hofsethbiocare.com.
Take-overs
It is a fundamental principle to Hofseth BioCare that all share-
holders are treated equally. Openness in respect of take-over
situations is considered to be important in ensuring equal tre-
atment of all shareholders.
The Company will not seek to hinder or obstruct take-over
bids for the Company’s activities or shares unless there are
8
CORPORATE GOVERNANCE
particular reasons for this.
In the event of a take-over bid for the Company’s shares, the
Board of Directors should not exercise mandates or pass any
resolutions with the intention of obstructing the take-over bid
unless this is approved by the general meeting following an-
nouncement of the bid.
If an offer is made for the Company’s shares, the Company’s
Board of Directors should issue a statement making a re-
commendation as to whether shareholders should or should
not accept the offer. The Board of Director’s statement on the
offer should make it clear whether the views expressed are
unanimous. If this is not the case, it should explain the basis
on which specific members of the Board of Directors have
excluded themselves from the Board of Directors’ statement.
The Board of Directors should arrange a valuation from an in-
dependent expert. The valuation should include an explanati-
on and should be made public no later than at the time of the
public disclosure of the statement.
Any transaction that is in effect a disposal of the Company’s
activities should be decided by a general meeting.
Auditor
EY is the auditor for Hofseth BioCare and is appointed by the
general Meeting.
The auditor shall annually submit to the audit committee the
main features of the plan for the auditing work. Furthermore,
the auditor shall at least once a year prepare a report contai-
ning its opinions on the Company's accounting policies and
internal control. The auditor participates in board meetings de-
aling with the consolidated financial statements for the Group
and the company.
In meetings with the audit committee and the board audi-
tor shall explain any material changes in the company's and
Group's accounting policies, the assessment of the significa-
nt estimates and all significant matters that there has been
disagreement about between the company and the auditor.
The Board has annual meetings with the auditors without the
group management teams present.
There are no written guidelines for executive management's
use of auditors for services other than auditing. This differs
from «Norwegian recommendation for corporate governan-
ce.» The auditor reports to the audit committee on which
non-audit services have been provided to the group and the
company. Throughout the year, the audit committee is respon-
sible for approving the non-audit services provided by the au-
ditor, as well as the fees for these.
The Audit Committee in conjunction with the annual report
in 2022 received a written confirmation from the auditor that
he satisfies established and legitimate independence require-
ments.
Information about the auditor's remuneration for auditing and
other services will be provided to the Annual General Meeting.
The auditor's remuneration is disclosed in note 5 to the finan-
cial statements.
9
The board of director’s
report 2022
CHAPTER 2
THE BOARD OF DIRECTOR’S REPORT 2022
Important events in 2022
First quarter
In the first quarter, the ingredient business saw an impressive
growth of 93.5% in sales, in comparison to the same period
in the previous year. Alongside this, the company had a reco-
rd order book, indicating a strong demand for their products.
During this quarter, the company's researchers made significa-
nt progress in their studies on SPH peptides. They published
their first preclinical assay work on the use of SPH peptides in
prostate cancer in the Marine Drugs journal. The study show-
cased the positive results of combining SPH peptides with
androgen deprivation therapy to enhance anti-tumour activity.
This breakthrough discovery opens new possibilities for trea-
ting prostate cancer.
Furthermore, the company's first clinical trial for CalGo® has
been accepted for publication in the Biomedical Journal of
Scientific and Technical Research. The trial demonstrated the
enhanced absorbability of CalGo® when compared to calci-
um carbonate, particularly in post-menopausal women. This
finding suggests that CalGo® could be an effective treatment
option for individuals with calcium deficiencies.
The company has also identified eight structurally similar pep-
tides that are responsible for driving the FTH1 actions of SPH.
These peptides have previously unknown structures and have
the potential to be claimed as a novel composition of matter.
This breakthrough could lead to a broader IP claim set for HBC
and further research into SPH peptides and their potential
uses.
Overall, the company has made significant progress in its re-
search and development efforts in the first quarter of the year.
With the positive results seen in the studies on SPH peptides
and the clinical trial for CalGo®, the company is poised to
make further strides in the health and wellness industry.
Second quarter
In the second quarter, the company faced challenges due to
a constrained supply of salmon off-cuts, which was caused
by a price spike in salmon. This resulted in unusually low pro-
duction volumes of raw materials. Despite this, the company
experienced a strong demand and favourable market prices,
resulting in net sales of NOK 25m with a gross margin of 31%.
This was an improvement compared to the same period last
year, where the gross margin was 21%.
The company made significant progress in their research and
development efforts during this quarter. They successful-
ly completed their second preclinical assay of the bioactive
peptides in SPH in prostate cancer after publishing the results
from their first preclinical assay in the journal Marine Drugs.
The results demonstrated that the addition of the peptides to
standard of care enhanced anti-tumour activity in drug-sens-
itive and drug-resistant cell lines. This breakthrough could
potentially lead to new and more effective treatments for pro-
state cancer.
In addition, the company completed the manufacturing opti-
mization of the lead eosinophilia modulating lipopeptide MA-
022. Preclinical trial work with MA-022 as a drug lead in eo-
sinophilic esophagitis is planned. This progress is significant
as eosinophilic esophagitis is a chronic inflammatory disease
of the esophagus, which is difficult to manage with existing
treatments. The development of a new treatment option could
significantly improve the quality of life for individuals with this
condition.
Overall, despite the challenges faced by the company in the
second quarter, they made significant progress in their rese-
arch and development efforts. With the successful completi-
on of preclinical assays and manufacturing optimization, the
company is poised to make further strides in the health and
wellness industry.
Third quarter
During the third quarter, HBC achieved an impressive 105%
year-on-year growth in revenue, demonstrating the strength of
their business in uncertain times. The company also signed
contracts with new salmon processors to ensure increased
access to salmon off-cut for their production process. This
move will help the company meet the growing demand for
their products and further expand their business.
In July, HBC successfully completed a private placement of
35,490,000 new shares at a subscription price of NOK 4.00 per
share, raising gross proceeds of NOK 141 million. This move
will provide the company with additional funding to support
their research and development efforts and fuel their growth
in the industry.
In August, the company appointed Mr. Jon Olav Ødegård as
CEO, following the election of Mr. Roger Hofseth as director
to the Board after the general meeting on August 30. These
changes in leadership are expected to further strengthen the
company's position in the market and help drive their growth
strategy.
Furthermore, the company delivered record organic revenue
and profits in the Consumer and Pet health segment during
the third quarter. The segment saw over a fourfold impro-
vement year-on-year, indicating the strong demand for their
products and the effectiveness of their research and develop-
ment efforts.
Overall, the third quarter was a successful period for HBC,
with significant achievements in revenue growth, fundrai-
sing, leadership appointments, and segment performance.
The company is well-positioned to continue making strides in
11
THE BOARD OF DIRECTOR’S REPORT 2022
The Group had an operating loss of NOK 128.6 million in 2022,
compared with a loss of NOK 118.6 million in 2021. Corre-
spondingly, the parent company had an operating loss of NOK
112.6 million compared to NOK 110.7 million in 2021.
Net financial result was NOK -8.8 million in 2022, compared
with NOK -7.9 million in 2021. Net financial result for the pa-
rent company was NOK -6.8 million and -11.5 million in 2022
and 2021, respectively.
The Group had a loss before tax of NOK 137.4 million in 2022,
compared to a loss of NOK 126.5 million the year before. For
the parent company the loss before tax was NOK 119.4 million
in 2022, compared to NOK 122.2 million in 2021.
The group had a tax expense of NOK 0.0 million in 2022, equal
to NOK 0.0 million in tax expense in 2021. The Group has not
recognized any deferred tax assets. Net loss for the year was
NOK 137.4 million, compared to a net loss of 126.5 million in
2021. The parent company had a net loss of NOK 119.4 million
in 2022, compared to NOK 122.3 million in 2021.
Financial position
As of 31 December 2022, Hofseth BioCare had a total conso-
lidated balance sheet of NOK 411.0 million, down from NOK
416.0 million at the end of 2021. The parent company had a
balance sheet total of NOK 402.6 million compared to NOK
394.1 million in 2021.
Equity amounted to NOK 148.0 million at the end of 2022,
which corresponds to an equity ratio of 36.0 %. At the end of
2021, the group had a total equity of NOK 140.4 million and an
equity ratio of 33.7 %. The parent company had equity of NOK
167.8 million at the end of 2022, compared with NOK 142.8
million the year before. The equity ratio was correspondingly
41.7 % in 2022 and 36.2 % at the end of 2021 in the parent
company.
As of 31 December 2022, the group had cash and cash equiva-
lents of NOK 32.4 million, compared with NOK 49.9 million at
the end of last year. The parent company had NOK 31.3 million
in cash and cash equivalents at the end of 2022, compared
with NOK 48.4 million in 2021.
At the end of 2022, the group had NOK 0.8 million in long-term
interest-bearing debt and NOK 0.5 million in short-term inte-
rest-bearing debt, compared with NOK 23.8 million and NOK
2.4 million at the same time the year before, respectively. The
parent company had NOK 0 million and NOK 6.9 million in
long-term and short-term interest-bearing debt in 2022, respe-
ctively. At the end of 2021, the long-term share was NOK 22.4
million and NOK 1.9 million short-term.
The group has interest-bearing lease obligations of NOK 90.0
million for long-term lease obligations and NOK 12.9 million
in short-term lease obligations at the end of the year, compa-
the health and wellness industry and delivering value to their
customers and shareholders.
Fourth quarter
The ingredients business of HBC showed favourable momen-
tum in Q4 with an 87% growth compared to the same quarter
last year on an underlying basis. This growth generated sales
revenues of NOK 34m, which is a significant increase from
NOK 18m in the same period last year. Additionally, the finis-
hed goods business delivered record fourth quarter and full-
year revenue and cash margin, with revenue at +68% reaching
NOK 31.7m compared to NOK 18.8m in the same period in
2021. The fourth quarter alone delivered NOK 10.7m, a signifi-
cant increase from NOK 3.7m last year.
In October, Stanford School of Medicine successfully comple-
ted pre-clinical trial work testing ProGo® bioactive peptides in
effective gut health support. This is an important development
for HBC and underscores their commitment to developing inn-
ovative products that promote overall health and wellness.
HBC has also made a significant addition to its leadership
team with the hiring of Mrs. Christel Kanli as the new CFO/
COO. She brings extensive global experience from Orkla ASA
and several start-ups and will begin her tenure in March 2023.
Finally, the first significant ProGo® order from China for iron
deficiency applications commenced in Q4, and the pipeline is
building. This highlights the growing demand for HBC's produ-
cts and the company's ability to expand its business into new
markets.
Overall, the fourth quarter was a successful period for HBC,
with strong growth in the ingredients and finished goods bu-
sinesses, significant progress in product development and re-
search, and a key addition to the leadership team. The compa-
ny's continued focus on innovation and expansion is expected
to drive growth and deliver value to customers and sharehol-
ders alike.
Financial results
Revenues and profits
The Group generated gross operating revenues of NOK 120.5
million in 2022, up from NOK 87.6 million in 2021. Correspon-
dingly, the parent company had gross revenues of NOK 120.0
million in 2022, up from NOK 88.1 million in 2021.
Operating costs, excluding depreciation and amortization
amounted to NOK 218.7 million in 2022, compared to NOK
176.8 million in 2021. For the parent company operating
expenses amounted to NOK 206.6 million in 2022 compared
to NOK 173.0 million in 2021. The expenses are mainly cost of
sales, salaries and other operating expenses.
12
THE BOARD OF DIRECTOR’S REPORT 2022
flow and profitability, the Board will consider appropriate me-
asures such as obtaining loans or equity. The current outlook
indicates a positive trend, and the Board will take necessary
steps to sustain this momentum. If the group and the parent
company do not achieve planned market measures adequa-
tely, new loan facilities or share issues will be established in
2023. Therefore there is an uncertainty with regards to the go-
ing concenr assumption.
Assuming a going concern, the group's and the parent compa-
ny's assets and values are currently present. However, the va-
lue of some of the group's and the parent company's assets
may be lower than their carrying amounts in a potential forced
sale related to liquidation. This uncertainty is primarily related
to the value of intangible assets, fixed assets, financial assets,
and investments, as well as the value of inventories.
Allocation of earnings
Net loss for the parent company Hofseth BioCare ASA is NOK
-119.4 million in 2022. The board proposes the following allo-
cation of the loss:
Uncovered loss - 119.4 million
Totalt - 119.4 million
Risk and risk management
Risk management
The industry in general is subject to several risk factors. Alt-
hough these are particularly associated with the production
process, also conditions to external suppliers, customers, re-
gulatory provisions, as well as general market trends are es-
sential.
All these risk factors may have a negative impact on the
Group's business, financial condition, results and ability to exe-
cute projects. Some of the main risk factors facing the Group
are briefly described below. We also refer to note 19 «Financial
Risk Management» in the financial statements.
Operational risk
The biotechnology industry is characterized by integration
and interdependence between different steps in the produ-
ction process. In Hofseth BioCare, there is a high degree of
integration between the various stages of production. Any
interruption in one production stage can therefore result in
all or part of the production stopping. Hofseth BioCare has
installed comprehensive monitoring and employees work con-
tinuously to optimize the processes to maximize operational
continuity. Significant improvements in the production lines in
recent years have given the company better opportunities for
continued production if one of the components stops. Several
contingency measures have also been implemented, ensuring
continued operation in the event of any interruption of critical
functions, and this continuous work has a high priority and is
monitored in real-time.
red with NOK 100.9 million and NOK 12.1 million at the end of
2021. The parent company has interest-bearing lease obligati-
ons with NOK 72.5 million and NOK 10.1 million in short-term
lease obligations at the end of 2022, compared with NOK 80.3
million and NOK 9.8 million at the end of 2021.
Cash flows
The group's cash flow from operating activities amounted to
NOK -45.2 million in 2022, compared with NOK -61.8 million
the year before. The parent company had a negative cash flow
of NOK -45.1 million compared to negative NOK 61.3 million
the year before.
Net cash flow from investing activities amounted to NOK -17.8
million, compared with NOK -38.0 million in 2021 for the group.
In the parent company, cash flow from investing activities was
NOK -17.3 million in 2022 compared to NOK -35.0 million in
2021.
Net cash flow from financing activities amounted to NOK 45.5
million in 2022, compared with NOK -23.2 million the year
before. Corresponding figures in the parent company were
NOK 45.4 million in 2022 and NOK -27.2 million in 2021. The
company completed a share issue in 2022.
Going concern
In accordance with the accounting act § 3-3a we confirm that
the condition for continued operations is present and that the
annual report have been prepared based on the going concern
assumption.
The company has an unused credit facility of NOK 37 milli-
on. Additionally, the board has been authorized by the general
meeting held on 30 August 2022 to issue up to 39,508,103
new shares. These authorizations are intended to be utilized
in case the parent company and the Group requires additional
equity and liquidity.
As of 31 December 2022, the parent company meets all requ-
irements in its loan agreements and is not in violation of any
loan conditions. Although the parent company and the Group
has negative results in the first two months of 2023, it is still
not in breach of the terms of any of the loans. Refer to note
16 for more details on the Group's and the parent company's
interest-bearing debt conditions, as well as note 19 for infor-
mation on liquidity risk and maturity structure of the group's
liabilities.
The operations of the Group are subject to uncertainty with
respect to its ability to sell sufficient product volumes at fa-
vourable margins and maintain adequate cash reserves. While
the Company has recently achieved higher margins and impro-
ved cash flow, the Board of Directors remains vigilant about re-
viewing the Company's equity and cash balance. If additional
resources are needed to ensure continuity of operations and
support planned activities aimed at generating positive cash
13
THE BOARD OF DIRECTOR’S REPORT 2022
A competent workforce is an important factor in the work of
ensuring continuity in production. Hofseth BioCare's employe-
es have extensive experience and expertise in the company's
technology, and new employees undergo training and educati-
on to build up the necessary expertise.
The group's production processes are mainly concentrated in
the Midsund plant and downtime at this plant can have a signi-
ficant impact on the company's potential revenues.
Market risk
Hofseth BioCare reduces its market risk through geographical
and market presence, and are currently selling in different mar-
ket segments. Our distributors are present in 60 countries and
know the local markets and are able to identify the factors that
are important for Hofseth BioCare to be able to sell products
to end customers in different parts of the world. In addition
to focusing on sales to Europe, North America and Asia, the
company sells its products to various segments of the human
nutrition market (sports nutrition, supplements, and health
food), as well as to the market in nutrition for the pet and feed
industry. This strategy allows Hofseth BioCare to reduce its
dependence on one market segment and geographical area.
Foreign exchange risk
Hofseth BioCare trades in several currencies, but mainly in US
dollars and Euros. Fluctuations in exchange rates can have
an impact on the company's operations, results and financial
position. Hofseth BioCare will not engage in currency specula-
tion and through currency hedging, the company can reduce
this risk with more predictable cost and revenue streams.
Interest rate risk (own financing, deposits)
Changes in general interest rates could affect the company's fi-
nancing and may have an impact on costs. Changes in interest
rates may also affect the value of the company's assets.
Credit risk
To minimize the risk of losses on receivables, customers' cre-
ditworthiness is assessed on an ongoing basis. Receivables
from all customers must be credit insured through Coface
Norway or paid before shipping goods.
Hofseth BioCare’s marketing and distribution strategy is to
seek collaboration with medium to large business associates
who have extensive knowledge of their markets. This will of-
ten mean well-established, solid companies with high credit
ratings.
Financial and liquidity risk
The Group manages its liquidity risk by strive to have suffici-
ent cash, and credit lines in banks. Moreover, preparing and
monitoring forecasts monthly to keep track of actual cash
flows.
Hofseth BioCare had cash and cash equivalents totalling
NOK 32.4 million at the end of 2022, compared with NOK
49.9 million at the same time the year before. Cash and cash
equivalents largely consist of cash and bank deposits. In ad-
dition, the company has an unused credit facility of NOK 37
million.
Risk insurance
Although Hofseth BioCare seeks to reduce the impact of ad-
verse events using its risk management system, a certain risk
remains exist which cannot be eliminated through preventive
measures. The company covers such risks to a certain extent
through the purchase of insurance. The Hofseth BioCare insu-
rance portfolio is covering areas such as business interrupti-
on, damage to equipment and property, third party liability and
other risks, product liability insurance, board liability insuran-
ce, as well as various types of personnel insurance.
Organization
Hofseth BioCare AS was founded in 2009, with the conversion
to a publicly listed company (ASA) in 2011. In 2022, Hofseth
BioCare Group had a total of 62 employees. The companys
work related to the Equality statement(ARP statement) is des-
cribed in the company`s ESG report, witch is avaliable on the
companys webpage.
Working environment
The group's working environment is considered good. The Bo-
ard emphasizes great importance and priority to reduce ab-
senteeism and preventing injuries. One work-related accident
occurred during the year that resulted in absence. Long-term
absence in 2022 was 2.65%, compared to 5.12 % in 2021, short-
term absence was 1.63 %, compared to 1.26 % in 2021.
Total absence was 4.28 % in 2022. Risk analysis is the basis
for measures to be taken to prevent damage or other adverse
events to occur. This is a key element in Hofseth BioCare's work
with HSE. Understanding risk is essential to prevent dangerous
situations. This will be handled continuously and HSE training is
considered good. Risk analysis work is being followed up conti-
nuously. If HSE non-conformities occur, measures will be put in
place to prevent such non-conformities from happening again.
Hofseth BioCare has a partnership with Medi3 who takes care
of occupational health in the Group. All employees will also in
2023 undergo a medical examination. For HBC Berkåk AS an
occupational health agreement has been established with Akti-
Med. This is a requirement for all companies that belong to our
industry group ref. Section 13 of the Regulations for organizati-
on, leadership, and participation.
14
THE BOARD OF DIRECTOR’S REPORT 2022
Injury and illness absence Berkåk
2022
Midsund
2022
Adm.
2022
Group
2022
Total absence (%) 3.55 6.56 0.62 4.28
Total working hours (all) 16 525 59 508 33 584 109 617
-specification:
Short term absence (%) 2.14 2.07 0.62 1.63
Long term absence (%) 1.40 4.49 0.00 2.65
Number of injuries 0 1 0 1
Number of work-related accidents 0 1 0 1
Equality
Hofseth BioCare aims to practice equality and avoid discrimi-
nation in all aspects of our HR and recruitment policies. Hof-
seth BioCare actively works consciously to promote recruit-
ment of female managers and employees. At the end of 2022,
13 of 62 employees in Hofseth BioCare were female, and on
the Board of Directors 3 of 6 members were female.
Environment
Hofseth BioCare is working to reduce the environmental im-
pact in several areas. The major environmental issues are rela-
ted to the plant in Midsund. The emissions are mainly related
to a process which also affect emissions to air and sea. HBC
aims to continuously satisfy all requirements for emissions to
air and sea. Hofseth BioCare is also working on minimizing
total energy consumption.
All organic material that has not been heat-treated goes
through a treatment plant and is acid-treated with the right pH
and holding time before it is discharged into the sea. Hofseth
BioCare has routines for sampling and measurement of was-
tewater to be within the imposed requirements.
All waste from the production at Midsund are sorted and deli-
vered to recycling, or disposal as hazardous waste.
Organic waste from the process is delivered to approved ma-
nufacturers of biogas. Residual waste is collected in a sepa-
rate compactor and delivered to the incinerator. Plastic, card-
board and paper are sorted and delivered to recycling. Waste
from our laboratory is collected and delivered in special con-
tainers as special waste. Steel and electric waste is delivered
to an approved landfill.
Hofseth BioCare transports mainly by road and sea. This ap-
plies to the inbound transport of raw materials and outbound
products to our customers around the world. Through the
optimization of transport and raw material sourcing within
Møre og Romsdal, the group aims to reduce the need for long-
haul operations. Transport of finished products are mainly to
Europe, Asia and the United States. For Europe, transport by
road and by sea is used and to the United States and Asia we
transport by sea. The group intends to transport more goods
by rail and boat if solutions for such transport can compete
with road transport regarding speed and infrastructure. A new
project started late 2022 aim to transport more goods in rail to
southern Europe in the future.
Corporate social responsibility
See separate ESG report prepared about the strategy to take
an active responsibility around our business. This is published
on the company`s webpage at the date of publication of the
Annual report.
Transparancy act
The company will publish a seperate report on the company`s
webpage before 30.06.2023.
Shareholders
At the end of the year the company had 1,407 shareholders.
For further details about the shareholders, see note 24 to Hof-
seth BioCare ASA's financial statements. The company has no
provisions restricting the right to sell the Company's shares.
Related parties
Related party transactions are made on commercial terms in
accordance with the «arm's length» principle. A complete and
detailed overview of transactions with related parties is inclu-
ded in note 6 to Hofseth BioCare ASA's financial statements.
Corporate governance
Hofseth BioCare ASA aims to maintain a high standard of cor-
porate governance. A healthy corporate culture is the key to
retain confidence in the company, ensuring access to capital
and ensuring a high degree of value creation over time.
All shareholders are treated equally and there should be a cle-
ar divide of roles and responsibilities between the Board and
management. Hofseth BioCare follows the Norwegian Code
of Practice for Corporate Governance of 30 October 2014. A
more complete description of how Hofseth BioCare follows
the recommendation and the 15 provisions, can be found on
http://www.hofsethbiocare.no/investors/cg/.
15
THE BOARD OF DIRECTOR’S REPORT 2022
has shown a strong project pipeline from APAC, Europe, and
China, and we are seeing the breadth of use for our ingredients
broaden out significantly, selling into pet, food, and health sup-
plement customers.
HBC's research work includes both clinical and preclinical
development stages with the aim of developing products for
the relief and prevention of several different clinical areas and
indications. The experiments we have carried out have had po-
sitive results that support the great potential that lies in HBC's
unique products for nutrition for humans and pets. Increased
production volumes and a larger customer base will always be
seen in connection with the group's environmental profile. Hof-
seth BioCare's vision is, and will continue to be, sustainable
production of premium bioactive ingredients with documen-
ted health effects.
Our sales strategy is the distribution of products in three seg-
ments: animal feed, pets and human. This diversification will
ensure higher revenues and cash flows in the years ahead. At
the same time, further research and development will increa-
se future sales in the core business area of ingredients and
finished products for human nutrition. HBC have seen a strong
increase in sales, and we have lowered the cost base and in-
creased gross margins on all products. We expect the current
trends to continue from H2 2022 into 2023, with revenues and
gross margins growing, as well as recurring revenues from a
strong evolving Brilliant Salmon oil business direct to the con-
sumer. New nutraceutical customer projects are being initia-
ted weekly, and the pet health business is also expected to
grow significantly next year.
Outlook
The first half of 2022 was operationally challenging due to
lower production caused by high spot salmon prices, which
spiked at the beginning of the year along with all commodi-
ties. The global business outlook and confidence also took
a hit, with significant supply chain disruptions complicating
business execution and deliveries due to the ongoing tragedy
of war in Ukraine. These factors had a noticeable impact on
our business, as well as on all other businesses involved in
raw material production, logistics, and supply. However, as the
environment began to stabilize, salmon production volumes
picked up in the second half of 2022, resulting in higher capa-
city utilization and stronger sales and margins. Furthermore,
we have diversified our sources of raw material, reducing our
dependency on just one provider to grow and broaden our bu-
siness in the coming months.
In response to the market volatility in early 2022, we proactive-
ly optimized our organization and supply chain management
by implementing an internal review of all our respective busi-
ness units at HBC. This review has resulted in several person-
nel changes and a meaningful re-organization of responsibili-
ties to improve accountability, efficiency, and communication
within the company. The project is almost completed and will
be finalized before the end of Q1 2023.
Q4 continued its positive trajectory, with growth in all major
market geographies for all ingredients. We are now selling in
all major markets across the EU, Asia (including China), and
the US, and educating nutraceutical customers about our
unique ingredients with patents and market-leading health
claims for the consumer health segment. The fourth quarter
Hofseth BioCare ASA Board of Directors,
Ålesund, 30March 2023
Kristin Fjellby Grung Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Roger Hofseth Jon Olav Ødegård
Board member Board member CEO
16
CHAPTER 3
Financial statements
Consolidated and parent company
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Content
CHAPTER 3
Financial statements 17
Statement of comprehensive income 19
Statement of financial position 20
Statement of cash flows 22
Statement of changes in equity 23
Notes to the accounts 24
Note 1: Accounting policies 24
Note 2: Accounting estimates and management judgement and assumptions 32
Note 3: Segment information 33
Note 4: Cost of sales and other operating expenses 34
Note 5: Employment costs and expenses for employees and
benefits for senior employees 35
Note 6: Related party transactions 36
Note 7: Financial income and expenses 38
Note 8: Income taxes 39
Note 9: Earnings per share 39
Note 10: Intangible asset 40
Note 11: Fixed assets 42
Note 12: Leases 43
Note 13: Changes in liabilities from financial activities 45
Note 14: Fair value measurement 46
Note 15: Financial assets 47
Note 16: Interest-bearing debt and borrowings 48
Note 17: Financial assets and liabilities by category 49
Note 18: Financial risk management 50
Note 19: Inventory 53
Note 20: Trade receivables and other current receivables 54
Note 21: Cash and cash equivalents 55
Note 22: Equity investments 55
Note 23: Accounts payable and other short-term liabilities 56
Note 24: Share capital, shareholders and dividends 57
Note 25: New accounting standards with future effective date 58
Note 26: Subsequent events 58
Declaration of the Board of Directors and Managing Director in Hofseth BioCareASA
59
18
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Operating revenues and expenses
Sales revenues
3, 6 119 128 76 878 118 815 76 689
Other income
3 1 320 10 738 1 144 11 359
Total operating revenue 120 448 87 616 119 959 88 048
Cost of sales
2, 4, 6 91 934 64 517 90 785 72 152
Salaries and other payroll expenses
5 57 043 44 713 47 206 37 796
Other operating expenses
4, 6, 14 69 677 67 600 68 617 63 100
Depreciation and Write-downs
10, 11, 12 30 412 29 350 25 965 25 710
Operating profit/loss (EBIT) -128 618 -118 565 -112 613 -110 710
Loss from associated company
22 204 31 0 0
Financial income
7 4 568 3 647 4 768 3 651
Financial expenses
6, 7, 12 13 136 11 577 11 522 15 182
Net financial expenses
15, 18 -8 772 -7 900 -6 754 -11 531
Loss before taxes -137 390 -126 464 -119 367 -122 241
Tax expense
8 0 0 0 0
Net loss for the period
2 -137 390 -126 464 -119 367 -122 241
Other comprensive income and costs 0 0 0 0
Total comprehensive income -137 390 -126 464 -119 367 -122 241
Comprehensive income attributable to:
Shareholders in HBC ASA -137 389 -126 463
Non-controlling interest -1 -1
Total -137 390 -126 464
Earnings per share (NOK) 2022 2021 2022 2021
Basic earnings per share
9 -0.37 -0.35 -0.32 -0.34
Diluted earnings per share
9 -0.37 -0.35 -0.32 -0.34
1 January – 31 December
Hofseth BioCare ASA
Statement of comprehensive income
19
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2022 31.12.2021 31.12.2022 31.12.2021
ASSETS
Non-current assets
R&D, patents etc.
2, 10 60 588 53 055 60 588 52 867
Total intangible assets 60 588 53 055 60 588 52 867
Machinery and equipment
11 57 836 63 209 51 697 56 384
Right of use assets
12 108 366 120 342 87 266 96 774
Fixtures and fittings
11 2 592 2 281 2 579 2 255
Total fixed assets
2 168 794 185 831 141 542 155 413
Investment in subsidiary
7, 22 0 0 11 231 11 231
Investment in affiliated company
22 5 559 5 764 6 517 6 517
Non-current financial assets
15 340 1 012 340 1 012
Total non-current financial assets 5 900 6 776 18 089 18 761
Total non-current assets 235 282 245 662 220 219 227 041
Current assets
Inventory
2, 6, 19 116 525 90 813 115 983 90 244
Trade receivables
2, 6, 20 14 072 10 089 13 803 9 970
Other current receivables
5, 20 12 724 19 488 21 301 18 449
Cash and cash equivalents
21 32 427 49 921 31 335 48 359
Total current assets
14, 15 175 748 170 311 182 423 167 023
Total assets
2, 25 411 030 415 973 402 642 394 064
Statement of financial position
1 January – 31 December
Hofseth BioCare ASA
20
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Hofseth BioCare ASA Board of Directors,
Ålesund, 30March 2023
Kristin Fjellby Grung Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Roger Hofseth Jon Olav Ødegård
Board member Board member CEO
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2022 31.12.2021 31.12.2022 31.12.2021
EQUITY AND LIABILITIES
Equity
Paid in equity
Share capital
5, 24 3 951 3 578 3 951 3 578
Share premium 144 765 137 485 163 872 139 187
Other paid in equity 0 0 0 0
Total paid in equity 148 716 141 063 167 823 142 765
Retained earnings
Other paid in equity 0 0 0 0
Total retained earnings (+) Uncovered loss (-)
(attributable to equity holders of the parent)
0 0 0 0
Non-controlling interests
22 -686 -685 0 0
Total equity
2, 6 148 030 140 378 167 823 142 765
Non-current liabilities
Subordinated debt
6, 13 0 22 433 0 22 433
Interest-bearing loans and borrowings
6, 13 812 1 352 0 0
Lease liabilities
6, 12, 13 89 960 100 878 72 492 80 343
Total non-current liabilities
16, 17, 18 90 772 124 662 72 492 102 776
Current liabilities
Interest-bearing loans and borrowings
6, 16, 13 540 2 420 0 6 855
Lease liabilities
6, 12, 13 12 855 12 099 10 055 9 801
Trade payables
6, 23 145 752 124 165 140 551 121 476
Other liabilities
23 13 081 12 249 11 720 10 391
Total current liabilities
16, 17, 18 172 228 150 933 162 327 148 523
Total liabilities
14, 16, 18 263 000 275 595 234 819 251 298
TOTAL EQUITY AND LIABILITIES
2, 25 411 030 415 973 402 642 394 064
21
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS) Parent company (IFRS)
(Amounts in NOK 1000) Note 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Cash flow from operating activities
Loss before tax -137 390 -126 464 -119 367 -122 241
Paid tax
8 0 0 0 0
Depreciation and impairment
2, 10, 11, 12 30 412 29 350 25 965 25 710
Impairment/reversal shares
7, 22 0 0 0 4 889
Loss from associated company
22 -204 -31 0 0
Change in inventory
19 -25 712 -17 511 -25 739 -18 019
Change in trade receivables
20 -3 983 4 178 -3 833 4 026
Change in trade payables
23 70 355 39 208 67 844 38 238
Change in other accruals 11 400 96 1 653 -2 099
Items classified as financing activities 9 954 9 394 8 359 8 175
Net cash flows from operating activities -45 168 -61 779 -45 118 -61 320
Cash flow frwom investing activities
Aquisition of tangible fixed assets
11 -4 020 -22 924 -3 534 -19 929
Investment in other companies
22 0 -188 0 -188
Investment in intangible assets
10 -13 758 -14 827 -13 758 -14 827
Net cash flow from investing activities -17 778 -37 939 -17 292 -34 945
Cash flow from financing activities
Proceeds from issue of shares 70 777 0 70 777 0
Transaction costs on issue of shares -326 0 -326 0
Payment of interest
6, 7, 13 -1 362 -1 799 -1 307 -2 277
Proceeds from new borrowings
6, 16, 13 0 1 087 0 1 087
Repayment of borrowings
6, 16, 13 -2 420 -3 421 -1 879 -2 880
Payment of lease liabilities
6, 12, 16, 13 -12 625 -11 469 -9 850 -8 686
Payment of interest on lease liabilities
12, 13 -8 592 -7 595 -7 053 -5 898
Payment borrowings from subsidiary
23 0 0 -4 976 -8 498
Net cash flow from financing activities
17 18 45 452 -23 197 45 386 -27 152
Cash and cash equivalents at 1 January 49 921 172 835 48 359 171 777
Net change in cash and cash equivalents -17 494 -122 914 -17 024 -123 418
Cash and cash equivalents at 31 December
21 32 427 49 921 31 335 48 359
Statement of cash flows
1 January – 31 December
22
FINANCIAL STATEMENTS – CONSOLIDATED AND PARENT COMPANY
Consolidated (IFRS)
(Amounts in NOK 1000) Note Share
capital
Share
premium
Other paid
in capital
Uncovered
loss
Non-
controlling
interests
Total
equity
As of 1 January 2021 3 578 236 709 8 684 15 477 -684 263 764
Share based payment program
5 0 0 3 487 0 0 3 487
Other changes 0 0 0 -409 0 -409
Net loss for the period 0 -99 224 -12 171 -15 068 -1 -126 464
Other income and costs 0 0 0 0 0 0
Total comprehensive income 0 -99 224 -12 171 -15 068 -1 -126 464
As of 31 December 2021
2, 5, 24 3 578 137 485 0 0 -685 140 378
As of 1 January 2022 3 578 137 485 0 0 -685 140 378
Share based payment program
5 0 0 2 773 0 0 2 773
Issue shares 07.07-01.08.2022 373 141 605 0 0 0 141 978
Share issue cost 0 -326 0 0 0 -326
Other chages 0 617 0 0 0 617
Net loss for the period 0 -134 616 -2 773 0 -1 -137 390
Other income and costs 0 0 0 0 0 0
Total comprehensive income 0 -134 616 -2 773 0 -1 -137 390
As of 31 December 2022
2, 5, 24 3 951 144 765 0 0 -686 148 030
Parent company (IFRS)
(Amounts in NOK 1000) Note Share
capital
Share
premium
Other paid
in equity
Uncovered
loss
Total equity
As of 1 January 2021
2, 5, 24 3 578 236 709 8 684 12 650 261 621
Share based payment program
5 0 0 3 487 0 3 487
Other changes 0 0 0 -102 -102
Net loss for the period 0 -97 522 -12 171 -12 548 -122 241
Other income and costs 0 0 0 0 0
Total comprehensive income 0 -97 522 -12 171 -12 548 -122 241
As of 31 December 2021
2, 5, 24 3 578 139 187 0 0 142 765
As of 1 January 2022 2, 5, 24 3 578 139 187 0 0 142 765
Share based payment program
5 0 0 2 773 0 2 773
Issue shares 07.07-01.08.2022 373 141 605 0 0 141 978
Share issue cost 0 -326 0 0 -326
Net loss for the period 0 -116 594 -2 773 0 -119 367
Other income and costs 0 0 0 0 0
Total comprehensive income 0 -116 594 -2 773 0 -119 367
As of 31 December 2022
2, 5, 24 3 951 163 872 0 0 167 823
Statement of changes in equity
1 January – 31 December
23
NOTES TO THE ACCOUNTS
Note 1: Accounting policies
General information
Hofseth BioCare ASA ia a public limited liability company dom-
icilied in Ålesund, Norway. The company`s headquarter is in
Kipervikgata 13 in Ålesund, with one manufacturing facility in
the municipality of Molde and one manufacturing facility in
the municipality of Rennebu. The annual financial statements
were approved for issuance by the board of directors 30 March
2023.
The Group`s operation is the processing of fish offcuts into
high quality protein and other food supplements.
The company’s consolidated financial statements for 2022
consist of the parent company and the subsidiaries HBC
Berkåk AS, HBC Therapeutics AS, HBC Switzerland GmbH and
Hofseth BioCare Rørvik AS (the Group). In addition the subsid-
iarie HBC Americas LLC, which is registered, but has no trasac-
tions and are therefore not consolidated in 2022.
Basis of preparation
The consolidated financial statements and the parent com-
pany financial statements of Hofseth BioCare ASA have been
prepared in accordance with IFRSs and related interpretations
as issued by the International Accounting Standards Board
(IASB) and as adopted by the EU as of 31 December 2022, as
well as the additional disclosure requirements following from
the Norwegian accounting act as of 31 December 2022.
The consolidated financial statements and the parent compa-
ny financial statements are prepared on the historical cost ba-
sis, with the exception of financial instruments that are meas-
ured at fair value with changes in value through profit or loss.
The consolidated financial statements and the parent compa-
ny financial statements have been prepared applying consist-
ent accounting policies for similar transactions and event.
Basis for consolidation
(i) Subsidiaries
The consolidated financial statements include Hofseth Bio-
Care ASA and companies controlled by Hofseth BioCare ASA.
Companies are determined to be controlled when the Group is
exsposed to, or has rights to, variable returns as a result of the
involvement from the Group, and the Group is able to influence
the returns through its power over the company. All the follow-
ing criteria must be fulfilled:
› power over the company
› exposed to, or have rights to, variable returns from its in-
volvement in the company invested in, and
› possibility to exercise its power over the company to influ-
ence the amount of the returns
(ii) Associated companies
Associated companies are units in which the group has sig-
nificant influence, but not control over the financial and op-
erational management (normally with an ownership share
between 20% and 50%). Significant influence is the power to
participate in financial and operational decisions in principle in
the company, but where Hofseth BioCare still has no control or
joint control. In the case of an ownership interest of less than
20%, in order to be treated as an associated company, it must
be clearly demonstrated that significant influence exists, for
example through shareholder agreements. The consolidated
financial statements include the group's share of profit from
associated companies recognized according to the equity
method from the time significant influence is achieved and
until such influence ceases. When the group's share of nega-
tive profit exceeds the value of the investment, the carrying
amount of the investment decreases to zero and recognition of
additional negative profit ceases. The exception is those cas-
es where the group has an obligation to cover negative results.
The group has no joint ventures.
(iii) Elimination of transactions in the consolidation
Group internal balances and any unrealised gains or losses
or revenues and costs related to intra Group transactions, are
eliminated in full in the consolidated financial statements.
(iv) The non-controlling interest in the consolidated financial
statements is the non-controlled share of the Group’s equity.
In business combinations the non-controlling interest is meas-
ured including the non-controlling interest’s share of the ac-
quired entity’s identifyable net assets. The subsidiary’s annual
result, together with the individual components recognized
in other comprehensive income, is attributable to the parent
company and the non-controlling interests. Total comprehen-
sive income is attributed to the share holders of the parent
company and to the non-controlling interests even if this re-
sults in negative non-controlling interests.
Functional currency and presentation currency
The Group’s presentation currency is NOK, which is also the
functional currency of all companies in the Group. All amounts
are presented in NOK 1 000 unless specifically noted.
Use of estimates when preparing the annual financial
statements
Management has to some extent used estimates and as-
sumptions which have affected assets, liabilities, revenues,
expenses, and information of potential commitments. Fu-
ture events may cause changes in the estimates. Estimates
and the underlying assumptions are assessed continuously.
Changes in accounting estimates are recognized in the period
the changes occur. To the extent the changes also affect fu-
ture periods, the effect is allocated over the current and future
periods. See note 2.
Foreign currency
Transactions in foreign currency are translated at the exchange
rates prevailing at the date of the transaction. Monetary items
in foreign currency are translated to Norwegian kroner at the
exchange rate at the balance sheet date. Currency exchange
24
NOTES TO THE ACCOUNTS
gains and losses are recognized in the income statement and
presented as financial income/financial expense.
Revenue recognition policies
Revenues are primarily generated from manufactured own
goods within the following product types:
› Salmon oil (OmeGo®)
› Water-soluble protein (ProGo®)
› Calcium (CalGo®)
› Non-soluble protein (PetGo™)
Revenue from contracts with customers is recognized when
control of goods or services is transferred to the customers
with an amount that reflects the consideration that the Group
expects to be entitled to in exchange for delivered goods and
services. Control is normally transferred to the customer when
goods are sent from the warehouse to the customer.
To the extent the customers enter into a contract for the pur-
chase of goods, which the customers wish to continue to store
at Hofseth BioCares' warehouse, the consideration is recog-
nized as revenue when control has passed to the purchasing
party. The customers have a desire to continue storing on the
group's stock as a result of requirements for moisture, temper-
ature, etc. when storing the goods, especially Calcium and Pro-
tein. In such sales, there is an agreement of control transfer to
the customers for the actual delivery of the goods. The parent
company and the group also earn revenues from the service
of storing the goods, which are recognized at a fixed price per
month in storage.
The Group assesses whether there are obligations in the sales
contracts that are separate performance obligations, and for
which parts of the transaction price must be allocated or agreed
variable payment terms in the contracts. The parent company
and the group have offered rights of return when selling from
the web-stores to customers in the human market and have fac-
tored in an estimated level of returns when calculating revenue.
Furthermore, the Group also assesses whether there are sig-
nificant financing components in the sales contracts (advance
payment, extra long credit terms, etc.).
Contract assets
The Group's right to remuneration in exchange for goods or
services that the group has transferred to a customer when
this right is conditional on other factors than merely the pas-
sage of time (for example, the company's future delivery).
Trade receivables
A receivable represents the Group's right to payment of an
amount which is unconditional (i.e. the agreed credit time be-
fore payment of the consideration falls due). See accounting
principles for financial assets’ initial recognition and subse-
quent measurement. Payment terms in the group's customer
contracts vary from 0 days to 60 days.
Contract liabilities
A contract liability may be an obligation to deliver goods or
services to the customer, from whom the group has received
consideration (or an amount of the consideration is overdue).
If a customer pays the consideration before the Group delivers
goods or services to the customer, a contractual obligation is
recognized at the time of payment or at the time payment of
the consideration is due (whichever takes place first). Contract
liabilities are not recognized until the Group delivers goods
and services in accordance with the contract. The group has
not identified contractual obligations in the delivery contracts
entered into as of 31 December 2022.
Segments
An operating segment is a component of the Group that en-
gages in business activities from which it earns revenues and
incurs expenses. The Group’s operating results are regularly
reviewed by the managing director to monitor the Group’s re-
sults and make decisions about resource allocations.
As the Group has one common and not separable manufactur-
ing process for its products, management focuses its financial
review on revenues and quality generated from the manufac-
turing process. Management monitors the financial results at
Group level and, hence, the Group only has one segment.
Information about products is presented in note 3.
Government grants
Government grants are recognised at the time it is reasonably
certain that the company complies with the requirements stat-
ed to be eligible for the grants and will receive payment. Grants
relating to operating expenditures are recognised systemati-
cally over the grant period. Grants are recognised against the
costs the grant is meant to cover. Grants for investments are
recognised systematically over the asset’s useful lives. Grants
for investments are recognised as a reduction to the related
assets’ carrying amount.
Employee benefits
Defined contribution pension plan
A defined contribution pension plan is an arrangement in
which the employer pays fixed constributions to a fund or a
pension fund, and in which the parent company and the group
has no further legal or constructive obligations to pay addi-
tional contributions. The contributions are recognized in the
income statement as salary related costs in the period in
which the employee renders the service.
25
NOTES TO THE ACCOUNTS
AFP pension plan
The group is affiliated with the AFP scheme, which is a col-
lective pension scheme for the collectively agreed sector in
Norway.
Accounting-wise, the scheme is considered a defined benefit
multi-employer scheme. However, the group is unable to iden-
tify its share of the scheme's underlying financial position and
performance with sufficient reliability. Therefore, the scheme
is accounted for as a defined contribution scheme. As a result,
obligations from the AFP scheme are not recognized on the
balance sheet. Premiums to the scheme are expensed as they
accrue.
Share based payment arrangements for consultant
The parent company has entered into a share-based payment
arrangement with a hired consultant. The arrangement is an
option plan with settlement in shares of the company.
The method of recognition varies depending on whether the
consultant is determined to be an employee or not. The con-
sultant is determined to be an employee when the agreement
for servies relates to an individual delivering personal services,
and that the individual (consultant) either:
• is determined to be employed for legal or tax purposes
• works for the company under directives from managing
bodies and is managed in the same way as if the individual
was legally employed
• delivers services of similar nature to the services delivered
by legally employed individuals
To the extent the consultant is determined to be employed, in
accordance with the the above description, the share option
program is measured at fair value at the time of grant. The
calculated fair value of the granted options are accrued and
recognised as an expense over the period in which the consult-
ant’s right to receive the options is vested, which is over the
agreed future service period (vesting period). For transactions
which are settled in the company’s own equity instruments
(equity settled arrangements) the value of the granted options
is recognized in the period as salary expenses in the profit or
loss with the offsetting entry to other paid in equity.
Obligations for bonuses related to the value of the company’s
shares, for which cash settlement has been agreed, are meas-
ured at fair value each balance sheet date until the time of
settlement, and changes in fair value are recognized in prof-
it or loss. The company is not obliged to pay social security
when the consultant is not determined to be employed by the
company for tax purposes.
Financial income and financial expenses
Financial income consists of interest income, dividends, foreign
exchange gains and gains from sale of financial instruments. In-
terest income is recognised when earned, calculated using the
effective interest rate method, while dividends are recognised on
the date of the general meeting approving the dividends.
Financial expenses consist of interest expenses, guarantee
commissions, foreign exchange losses and losses from sale
of financial instruments. Interest expenses and guarantee
commissions are recognized when incurred, calculated using
the effective interest rate method.
Income taxes
Income tax expenses consist of current taxes payable and
changes in deferred taxes. Current taxes payable are taxes
payable or tax receivables related to taxable income or loss
for the year, based on tax rates substantively enacted at the
balance sheet date. Changes in calculated current taxes paya-
ble related to prior years are included in the amount.
Deferred tax/deferred tax assets are calculated on all tempo-
rary differences between carrying amounts and tax bases for
all assets and liabilities on the balance sheet date.
Deferred taxes are calculated using the tax rate expected to be
applicable at the time of reversal of the temporary differences.
Deferred tax assets are recognised to the extent the company
is expected to have sufficient taxable income in future periods
to utilize the tax benefit. The companies recognize previously
unrecognized deferred tax assets to the extent it has become
likely that the company may utilize the deferred tax benefit.
Likewise, the company will reduce deferred tax assets to the
extent the company no longer expects that it will be able to
utilise the deferred tax benefit.
Deferred tax and deferred tax assets are measured at nomi-
nal values. Deferred tax liabilities are presented as provisions/
long term liabilities in the balance sheet, while deferred tax as-
sets are presented as intangible assets.
Intangible assets
Intangible assets acquired separately are recognised at their
cost price. The cost price for intangible assets acquired are
recognised at fair value in the Group. Recognised intangible
assets are accounted for at cost less any depreciation and im-
pairment write-down.
Internally generated intangibe assets, except for recognised
development costs, are not recognised, but expensed as in-
curred.
Intangible assets with finite useful life are depreciated over
their useful lives and tested for impairment when impairment
indicators are present. Depreciation methods and useful lives
are assessed annually as a minimum. Changes to deprecia-
tion method and/or useful life are accounted for as estimate
changes.
Patents and licences
Acquisition costs for patents and licences are recognised and
depreciated over their estimated useful lives.
26
NOTES TO THE ACCOUNTS
Development activities
Expenditures on research are recognised in the income state-
ment as incurred. Expenditures on development activities, in-
cluding product development (new or improved products) are
recognized when all the following criteria are fullfilled:
› It is technically possible to complete the asset / product
in such a way that the Group may use or sell the asset /
product in the future
› It is management’s intention to complete the asset / prod-
uct, as well as to use or sell the asset / product
› It is possible to use the asset / sell the product
› How the asset / product will generate future revenues can
be proven
› The Group has sufficient technological and financial res-
sources available to complete the asset / development of
the product
› The costs can be reliably measured
Recognised costs include cost of material, consultant fees
and direct salary costs. Other development costs are rec-
ognized in the income statement as incurred. Previously ex-
pensed development costs are not subsequently capitalized.
Recognised development costs are depreciated on a straight-
line basis over the assets / products estimated useful lives.
Fixed assets
Fixed assets are measured at cost, less accumulated de-
preciations and impairment write- downs. Fixed assets are
derecognized when sold or disposed of and any gains or loss-
es are recognized in the income statement.
Acquisition cost for fixed assets is the cost price and costs
directly associated wih getting the asset ready for its intended
use.
Expenditures incurred after recognition of the fixed asset,
such as day-to-day maintenance, are recognized in the income
statement as incurred, while expenditures expected to gener-
ate future economic benefits are recognized in the carrying
amount. Depreciation period, depreciation method and residu-
al values are assessed annually.
Fixed assets are carried at cost until manufacturing or devel-
opment has been completed. Fixed assets under construction
are not depreciated until the assets are ready for their intend-
ed use.
When significant components of a property, plant and equip-
ment are determined to have different useful lives, they are
accounted for as separate components.
Each component of property, plant and equipment is depreci-
ated on a straight-line basis over its estimated useful life, as
this is considered to best represent the consumption of the fu-
ture economic benefits of the assets. Land is not depreciated.
Estimated useful life for the current period and depreciation
periods are disclosed in note 11. Depreciation method, useful
life and residual values are reassessed at the balance sheet
date and adjusted if found necessary. When the carrying
amount of a fixed asset or a cash-generating unit is higher
than the recoverable amount, the asset is written-down to its
recoverable amount. Recoverable amount is the higher of val-
ue in use and fair value less costs of disposal.
Investment in subsidiaries and associated companies
Investments in subsidiaries and associated companies are
assessed according to the cost method in the company fi-
nancial statements. Investments are valued at acquisition
cost, unless impairment has been necessary. Write-downs
have been made at fair value when impairment is due to rea-
sons that cannot be expected to be temporary. Impairment
losses are reversed when the basis for impairment is no
longer present.
Dividends and other distributions are recognized as income
when adopted at the general meeting of the subsidiaries. If
dividends exceed the retained earnings after the acquisition,
the excess part represents repayment of invested capital, and
the dividends are deducted from the value of the investment
in the balance sheet.
Leases
For contracts constituting or containing a lease, the company
and the group separate lease components if the underlying
asset may be used either on its own or together with other
resources easily available to the company and the group, and
the underlying asset is neither dependent nor interrelated on
other underlying assets in the contract. The company and the
group then account for each single lease component in the
contract as one lease contract separately from the non-lease
component in the contract.
At the time of commencement of a lease contract the compa-
ny and the group recognize a lease liability and a correspond-
ing right of use asset for all leases, except for the following
excemptions elected under the standard:
› Short-term leases (lease term of 12 months or less)
› Low value assets
For such leases the company and the group recognize the
lease payments as other operating expenses in the profit or
loss when incurred.
Lease liabilities
The company and the group measure the lease liabilities at
the present value of the lease payments to be made over the
lease term at the commencement date. The lease term is the
non-cancellable period of the lease, in addition to periods cov-
ered by options to extend or terminate the lease if it is reason-
ably certain that the group will (will not) exercise the option.
The lease payments included in the measurement of the lease
liability consist of:
27
NOTES TO THE ACCOUNTS
› Fixed lease payments (including in substance fixed pay-
ments), less any lease incentives receivable
› Variable lease payments which are dependant on an index
or rate, measured for the first time using the index or rate
applicable at the commencement date
› Amounts expected to be payable by the company and the
group under residual value guarantees
› The exercise price for an option to purchase the asset, if it
is reasonably certain that the company and the group will
exercise this option
› Termination fee, if the lease term has been determined on
the basis that the company and the group will exercise an
option to terminate the lease
The lease liability is subsequently remeasured by increasing
the carrying amount by an accretion amount on the lease
liability, and reduce the carrying amount for lease payments
made, as well as potential reassessments or changes to the
lease agreement, or to reflect adjustments to lease payments
as a result of a change in an index or a rate.
The company and the group do not include variable lease
payments in the lease liability. Variable payments are recog-
nized in the profit or loss as incurred. The company and the
group presenter the lease liabilities in separate line items in
the statement of financial position.
Right of use assets
The company and the group measures right of use assets at
cost, less accumulated depreciations and impairment losses,
adjusted for potential new measurements of the lease liability.
Cost for the right of use assets comprise:
› The amount established at initial recognition of the lease
liabiilty
› All lease payments made at or before the commencement
date, less lease incentives received if any
› All direct expenditures incurred for the company and the
group related to entering into the agreement
The group applies the depreciation provisions in IAS 16 Proper-
ty, plant and equipment when depreciating the right of use as-
set, except for the fact that the right of use asset is depreciated
from the date of commencement until the end of the lease peri-
od or the end of the asset’s useful life, whichever is expected to
take place first, unless there is an option to purchase the asset
which has been determined to be exercised with reasonable
certainty, in which case the right of use asset is depreciated
over the expected economic life of the underlying asset.
The group applies IAS 36 «Impairment of assets» in order to
determine whether the right of use asset has been impaired
and, if this is the case, write it down for impairment.
Impairment of non-financial assets
Depreciable fixed assets and intangible assets are assessed
for impairment when impairment indicators are identified. Im-
pairment write-downs for the difference between the carrying
amount and the recoverable amount are recognised in the in-
come statement.
The recoverable amount for an asset or a cash generating
unit is the higher of value in use and fair value less costs of
disposal. When assessing value in use, estimated future cash
flows are discounted to net present value using a pre-tax mar-
ket-based discount rate. The discount rate includes the time
value of money and asset specific risk. When testing for im-
pairment, assets which are not tested individually are tested at
a Group level representing the lowest level of identifiable cash
flows which are independent of cash flows from other assets
or Groups of assets (cash generating units or CGUs).
Impairment write-downs are recognised to the extent the car-
rying amount of an asset or cash generating unit exceed the
estimated recoverable amount. When recognizing impairment
write-downs related to cash generating units, any goodwill
impairment is recognized first. Any remaining impairment
amount is split pro-rata on other assets in the cash generating
unit (Group of cash generating units). Impairments are pre-
sented in the line item depreciations and impairments.
For other assets an assessment as to whether there are indi-
cations that the impairment is no longer present or reduced is
made on the balance sheet date (reporting date). Impairments
are reversed if the estimates in the calculation have favoura-
bly changed the recoverable amount. Impairment reversals are
limited to the carrying amounts being equal to what it would
have been if no impairment had been recognised.
Financial assets
Financial assets are classified at initial recognition and are
subsequently measured at amortized cost, at fair value
through other comprehensive income (OCI) or at fair value
through profit or loss.
The classification of financial assets on initial recognition de-
pends on both the characteristics of the financial assets' con-
tractual cash flows and the Group's business model for manag-
ing these. The Group's business model for managing financial
assets refers to how the Group manages its financial assets to
generate cash flows. The business model determines whether
cash flows will arise by receiving contractual cash flows, or by
selling the financial assets or both.
Accounts receivables that do not contain a significant financing
component are measured at the transaction price determined in
accordance with IFRS 15, see the accounting policies in section
on revenue from contracts with customers, and then measured
at amortized cost.
Other long-term and short-term receivables, as well as cash and
cash equivalents, are recognized at fair value on initial recogni-
28
NOTES TO THE ACCOUNTS
tion and subsequently at amortized cost.
Financial assets at fair value through profit or loss include finan-
cial assets held for trading, financial assets designated at fair
value through profit or loss, or financial assets that are required
to measure at fair value. Financial assets are classified as held
for trading if they are purchased for the purpose of being sold or
repurchased within a short period of time. Derivatives are also
classified as held for trading.
Financial assets at fair value through profit or loss are recog-
nized in the balance sheet at fair value with net changes in fair
value recognized in the income statement. The category in-
cludes derivative instruments (forward contracts in foreign cur-
rency) and long-term equity investments. Dividends on equity
investments are recognized as financial income in the income
statement when there is a right to payment of dividends.
Financial assets are derecognised when the rights to receive
cash flows from the assets have expired or the Group has
transferred its rights to receive cash flows from the assets.
Impairment of financial assets
For accounts receivables and contract assets, the Group uses
a simplified approach to calculating expected credit losses
(ECL). The Group therefore does not track changes in credit
risk, but instead recognizes a loss provision based on expect-
ed credit losses over the life of the trade receivable and the
contract asset on each reporting date. The Group has estab-
lished a provision matrix that is based on historical losses,
adjusted for future-oriented factors that are specific to the
debtors and the economic environment.
The Group considers a financial asset to be in default when it is
more than 60 days overdue. In some cases, however, the Group
may also consider that a financial asset is in default when inter-
nal or external information indicates that the Group is unable to
receive the outstanding contract amounts in its entirety before
taking into account any credit insurance that the Group has. A
financial asset is recognized as a loss when there is no reason-
able expectation of receiving contractual cash flows.
Further information on any impairment of financial assets is
provided in notes 20, 21 and 22.
Inventory
Inventories are measured at the lower of cost and net realisa-
ble value. Net realisable value has been estimated as selling
price in the ordinary course of business less the estimated
costs of completion and the estimated costs for marketing
and distribution. Cost is allocated using the FIFO-method and
includes expenditures incurred in purchasing the goods, raw
material, costs to bring the goods and the raw material to their
current condition and location. Owned goods are valued at
manufacturing cost and include raw material costs, as well as
other variable and fixed production costs that can be allocated
based on normal capacity utilization. See note 2 and 19 for
more information.
Cash and cash equivalents
Cash includes cash in hand and bank deposits. Cash equiva-
lents are short term highly liquid investments which can im-
mediately be converted to a known amount of cash, and with
a maximum duration of 3 months from the date of acquisition.
Financial liabilities
Financial liabilities are initially recognized as financial liabil-
ities at fair value through profit or loss, subordinated loans,
interest-bearing liabilities, lease liabilities, derivatives, trade
payables, or other current liabilities.
Interest-bearing debt and other liabilities are recognized at fair
value less transaction costs at the time of establishment. In
subsequent periods, loans are recognized at amortized cost
using the effective interest rate. For more information see note
16.
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading purposes and financial lia-
bilities designated at initial recognition at fair value through
profit or loss. Financial liabilities are classified as held for trad-
ing purposes if they are contractual for the purpose of being
sold or repurchased within a short period of time. This cat-
egory also includes derivative instruments (currency forward
contracts). Gains or losses on liabilities held for trading are
recognized in the income statement, see note 7.
Derivatives
The Group uses financial forward exchange contracts (deriv-
atives) to hedge the Group's currency risk. The forward ex-
change contracts are recognized in the balance sheet at fair
value at the time the contract is entered into with the credit in-
stitutions, and subsequently the portfolio of forward exchange
contracts is adjusted continuously at fair value through profit
or loss. The forward exchange contracts are capitalized as
financial assets when fair value is positive and as financial
liabilities when fair value is negative. See notes 7, 15 and 18.
The Group does not have forward exchange contracts or other
derivatives that are considered hedging instruments in hedg-
ing terms as defined in IFRS 9.
Provisions
A provision is recognised when the company has an obligation
(legal or constructive) as a result of a past event, it is likely
(more likely than not) that payment will be made as a result
of the liability and the amount can be measured reliably. If the
effect is significant, the provision is measured at the discount-
ed value of future cash outflows using a pre-tax discount rate
reflecting the market’s pricing of the time value of money and,
if relevant, the risks specifically related to the liability.
A provision for a guarantee is recognised when the under lying
29
NOTES TO THE ACCOUNTS
products or services are sold. The provision is based on histor-
ical information about guarantees and a weighting of potential
outcomes against their likelihood of occuring.
Provisions for onerous contracts are recognised when the
company’s expected revenues from a contract is lower than
the unavoidable costs of meeting the obligations under the
contract.
Contingent liabilities and contingent assets
Contingent liabilities for which it is not likely that the liability
will incur are not recognized in the financial statements. Signi-
ficant contingent liabilities are disclosed, except for contin-
gent liabilities related to which it is remote that payment will
have to be made.
Contingent assets are not recognised in the financial state-
ments unless they are virtually certain. Other contingent
assets are disclosed if it is likely that an economic benefit will
be received by the Group.
Going concern
In accordance with the accounting act § 3-3a we confirm that
the condition for continued operations is present and that the
annual report have been prepared based on the going concern
assumption.
The company has an unused credit facility of NOK 37 million.
Additionally, the board has been authorized by the general
meeting held on 30 August 2022 to issue up to 39,508,103
new shares. These authorizations are intended to be utilized
in case the parent company and the Group requires additional
equity and liquidity.
As of 31 December 2022, the parent company meets all requ-
irements in its loan agreements and is not in violation of any
loan conditions. Although the parent company and the Group
has negative results in the first two months of 2023, it is still
not in breach of the terms of any of the loans. Refer to note
16 for more details on the group's and the parent company's
interest-bearing debt conditions, as well as note 19 for infor-
mation on liquidity risk and maturity structure of the Group's
liabilities.
The operations of the Group are subject to uncertainty with
respect to its ability to sell sufficient product volumes at fa-
vourable margins and maintain adequate cash reserves. While
the Company has recently achieved higher margins and impro-
ved cash flow, the Board of Directors remains vigilant about re-
viewing the Company's equity and cash balance. If additional
resources are needed to ensure continuity of operations and
support planned activities aimed at generating positive cash
flow and profitability, the Board will consider appropriate me-
asures such as obtaining loans or equity. The current outlook
indicates a positive trend, and the Board will take necessary
steps to sustain this momentum. If the group and the parent
company do not achieve planned market measures adequa-
tely, new loan facilities or share issues will be established in
2023. Therefore there is an uncertainty with regards to th ego-
ing concern assumption.
Assuming a going concern, the Group's and the parent compa-
ny's assets and values are currently present. However, the va-
lue of some of the group's and the parent company's assets
may be lower than their carrying amounts in a potential forced
sale related to liquidation. This uncertainty is primarily related
to the value of intangible assets, fixed assets, financial assets,
and investments, as well as the value of inventories.
Financial implications of climate change
While it is widely recognized that continued emission of green-
house gases will cause further warming of the planet and this
warming could lead to damaging economic and social conse-
quences, the exact timing and severity of physical effects for
HBC are difficult to quantify. The large-scale and long-term na-
ture of the problem makes it uniquely challenging, especially
in the context of economic decision making.
While changes associated with a transition to a lower-carbon
economy present risk, HBC also create significant oppor-
tunities in the nature of our business model. Turning waste
streams into high-end human and pet nutrition is important for
the environment and out teams at the facilities are focused on
climate change mitigation and adaptation of new technology
solutions.
Circular economy initiatives which HBC is a part of, and the
strive to reduce greenhouse gases is high on the agenda with
the Board and management of HBC and the Group has invest-
ed significant amounts in both machinery and knowledge
since we joined the Global Reporting Initiative (GRI) in 2019.
In a carbon constraint world, climate change is confronting
HBC with totally new challenges. One way the Group deal
with the impacts of climate change is to comprehend them
as risks and analyse possible effects as we do elsewhere
in our organization by the combination of probability and
its consequence. Therefore, HBC view climate risks as the
possible impacts of climate change with the potential to
influence positively or negatively the future development of the
HBC Group, and together with the rest of the Hofseth Group.
The risks and opportunities for HBC from climate change
are classified as direct or indirect. Direct climate risks and
opportunities are resulting out of changing natural conditions
as rising temperatures, sea levels or an increasing number
of extreme weather events. Indirect climate risks and
opportunities seems to have much more implications than
the direct ones. Examples of indirect risks are regulatory or
litigation, credit risk, market risk and reputation risk.
As previously mentioned, these risks are also great
opportunities for HBC. However, risks and opportunities HBC
as an organization face today related to climate change,
30
NOTES TO THE ACCOUNTS
are difficult to estimate, and mitigate or explore. HBC has a
work group among the management team, led by the head
of Sustainability, that analyse climate risks and utilize the
opportunities that arise from climate change. As of the end
of 2022, the financial implications of climate change are
very limited. As of today, there are few requirements for
sustainability in the finished product, no distinctly strict
emission rules at the factories, no external influence (e.g.
sea level rise). The management expect increased focus on
impairment testing as the Group grow and increase its asset
base in the future.
Financial implications of the war in Ukraine
Apart from a general increase in energy-prices, the Group is
not direct affected by the conflict.
Subsequent events
New information subsequent to the balance sheet date about
the Group’s and the parent company’s financial position at
the balance sheet date are taken into account in the financial
statements. Events subsequent to the balance sheet date
which do not influence the Group’s or the parent company’s
financial position at the balance sheet date, but which will in-
fluence the Group’s or the parent company’s position in the
future, have been disclosed in the notes if significant.
New accounting standards
Standards with changes that apply to the accounting period
January 1, 2022 has not had any material impact for the finan-
cial year 2022. The group and the company have not imple-
mented early standards released but not yet active.
31
NOTES TO THE ACCOUNTS
Note 2: Accounting estimates and management judgement and assumptions
The preparation of financial statements in accordance with
IFRS requires management to make judgments when choos-
ing and applying accounting principles. Further, IFRS requires
the management to make estimates based on judgments, and
that estimates and assumptions are realistic. All estimates are
considered to be the expected value based on the manage-
ment’s best knowledge.
The Group’s most significant accounting estimates and areas
of judgment are the following:
› Allocation of production costs in manufactruring cost of
finished product cost
› Transactions with related parties
› Recognition of intangible assets
› Inventory - obsolescence
› Assessment of losses on accounts receivables
Allocation of production costs in manufactruring cost of
finished product cost
Four types of finished products are produced from a common
production process based on the same input factors. The
value of the individual finished product is based on the allo-
cation of production costs determined based on the finished
product's relative share of production yield multiplied by the
expected sales value. The same model has been used for allo-
cating production costs over several years. The determination
of expected sales value as a basis for allocating production
costs has significant discretionary assessments and has a
significant effect on the calculation of the cost of production
of the various finished product products. The group and the
parent company are still in a start-up and development phase,
but management's judgment has based on agreed prices in
historical sales transactions and expected sales value at the
reporting date. See notes 4, 6 and 19.
Transactions with related parties
Transactions with related parties constitute a significant part
of the Group's and the parent company's ordinary operating
revenues and costs, and where the determination of arm's
length pricing is largely based on judgment. The transactions
also affect liquidity and financial carrying capacity for the
Group's and the parent company's operations.
The most significant transactions with related parties are
sale of finished goods, purchase of raw materials (fish trim-
mings), ongoing rental obligations related to production equip-
ment and factory buildings Midsund and Berkåk, as well as
agreements on short-term, long-term and subordinary loan
financing.
Hofseth BioCare ASA has a 5 years agreement startig
01.01.2022, and gives the parent company the exclusive right
to get all the by-products from the production of Hofseth Sales
AS's suppliers. Judgment has been applied when setting con-
ditions for the purchase of raw materials. See notes 4 and 6.
Hofseth BioCare ASA has sold finished goods to related parties
in 2021 and 2022. Prices are determined on the basis of current
and historical transactions with independent parties in 2021
and 2022. Discretion has been used in determining conditions
for the sale of finished goods, see notes 3 and 6.
Leases of production equipment, leases of factory facilities at
Midsund and Berkåk, as well as agreements for long-term and
subordinated loans. When agreeing financial terms in leases,
agreements for long-term loans in 2019 and 2020 a subordi-
nated loan in 2019, historical terms with third parties, achieved
by the group and the parent company, have been referred to.
Judgement has been applied when setting the financial terms.
See notes 6, 12, 13, 16 and 18.
Recognition of intangible assets
The Group has come far in the development phase of estab-
lishing production at the targeted level and with the quality
that the business model has been based on. The Group in-
vests in research and development activities on an ongoing
basis. Uncertainties exist relating to the timing of when the
requirements for recognition of intangible assets have been
met. The management’s starting point is that research and
development activities are capitalized when there is an identi-
fiable asset or product that is controlled by the company that
is expected to result in future economic benefits. Uncertain-
ties also exist relating to the assessment and estimation of
the cost price for the intangible assets, and mainly relating to
the estimation of cost price for developing intangible assets
and product development. Development activities that qualify
for capitalization are capitalized both in the Group and parent
company. See note 10.
Inventories
Goods in stock are valued at the lower of cost and selling
price. It is used judgment in relation to quality and durability.
The Group uses a model in which provision is made for obso-
lescence gradually if goods in stock approach the expiration
of the shelf life. It is set aside for obsolescence, see note 20.
Assessment of loss relating to accounts receivables
At the end of 2022, the Group had no significant overdue ac-
counts receivables. All significant accounts receivables are
credit secured by Coface Norway, limited to a maximum of
TNOK 13,600 and with a coverage rate of 90 %. When analyz-
ing future information about the Group's customers and mar-
kets, future challenges are not listed today, which indicate that
there will be a significant credit loss in the future. See note 18
on credit risk and note 20 on accounts receivables and other
receivables.
32
NOTES TO THE ACCOUNTS
Note 3: Segment information
The processing plants of the parent company are situated in Nor-
way, where the production is adjusted to meet the standard for
human consumption. The Group operates solely in the produc-
tion of four main products, namely salmon oil (OmeGo®), solu-
ble protein (ProGo®), Calcium (CalGo®), and non-water-soluble
protein (PetGo™), all of which are produced in the Midsund plant.
For the production of salmon oil, the raw material is sourced
fresh, and a closed feeding system is employed to maintain high
quality with low oxidation levels. The oil is stored in nitrogen-filled
tanks to preserve its quality during the manufacturing process.
The unique production process involves the release of oil from
the raw material using enzymes, resulting in fresh salmon oil with
a long shelf life.
The Group also produces hydrolyzed salmon protein, which is
quickly absorbed by the body and has good solubility in water.
The manufacturing process has been optimized for increased
capacity and quality, with improvements made in 2021 and 2022.
The Midsund factory expansion, completed in 2021, has replaced
the drying process previously carried out at Berkåk.
In 2018, the Group installed a fully automated process line to pro-
duce calcium powder, resulting in increased yield and improved
quality and reliability in 2019-2022. The process involves the sep-
aration of bone fraction, which is then dried and milled to pure
calcium powder.
The non-soluble protein, known as the PHP fraction, is separated
and dried to produce high-quality fishmeal.
Although the products are produced in the same process and
from the same raw material supply, the revenue is split by product
for informational purposes. The management monitors the cost
of sales as total cost of sales but split by product. The Production
Manager manages production by tracking the raw material input
and finished goods output of the four product types to calculate
the margin by product.
REVENUE PER PRODUCT Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
By product
Salmon Oil (OmeGo
®
) 77 759 43 433 77 759 43 433
Soluble Protein Hydrolysate (ProGo
®
) 12 598 9 504 12 598 9 504
Calcium (CalGo
®
) 2 914 2 716 2 914 2 716
Non-soluble Protein (PetGo™) 25 480 20 920 25 480 20 920
Other income 1 697 5 696 1 208 6 128
Sum revenue 120 448 82 268 119 959 82 700
Insurance claim settlement
0 5 348 0 5 348
Total revenues
120 448 87 616 119 959 88 048
By region
Norway 6 991 13 772 6 502 14 207
Asia 14 164 3 974 14 164 3 974
Europe excl Norway 78 162 39 974 78 162 39 974
America 21 131 24 548 21 131 24 548
Total revenues
120 448 82 268 119 959 82 700
* the group recieved TNOK 5 348 in 2021 for calcium damaged in 2021.
In 2022 goods totaling TNOK 59.196 were sold to three custom-
ers, each of which accounted for more than 10 % of total turn-
over. The sales to each of these customers are TNOK 28,329,
TNOK 17,750, and TNOK 13,117, respectively. In 2021, goods
totaling TNOK 44,472 were sold to three customers, each of
which accounted for more than 10 % of total turnover. The sales
to each of these customers are TNOK 20,219, TNOK 14,282 and
TNOK 9,971. The company has no contractual assets or liabili-
ties as of 31 December 2022.
33
NOTES TO THE ACCOUNTS
Note 4: Cost of sales and other operating expenses
COST OF SALES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Raw material 55 704 38 559 55 662 38 559
Freight
26 252 17 700 26 252 17 750
Purchased services
26 953 24 374 25 846 32 009
Obsolescence cost
8 537 399 8 537 399
Change in inventory
-25 512 -16 515 -25 512 -16 566
Total cost of sales 91 934 64 517 90 785 72 152
OTHER OPERATING EXPENSES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Leases of equipment 1 707 1 159 1 611 1 046
Leases of warehouses and factories
2 239 1 450 2 094 1 062
Travelling cost
2 651 1 187 2 510 1 008
Consultant fees and tax advisory
2 110 1 671 1 956 1 577
Lawyers
1 263 2 354 1 263 2 354
Consulting
14 498 18 921 16 927 18 069
Advertising
15 042 13 031 15 040 13 031
R&D and patents
13 635 8 869 13 630 8 800
Repair and maintenance
10 555 12 533 9 007 10 950
Other operating expenses
7 855 9 319 6 419 7 792
Government grants
-1 879 -2 894 -1 840 -2 587
Total
69 677 67 600 68 617 63 100
The Group recieved grants from skattefunn of TNOK 4 324
(TNOK 4 509 in 2021), split by TNOK 1 879 in other operating
expenses and TNOK 2 445 in salaries. Corresponding num-
bers was TNOK 4 132 (TNOK 4 122 in 2021) for parent compa-
ny, split by TNOK 1 840 in other operating expenses and TNOK
2 292 in salaries. See note 5.
34
NOTES TO THE ACCOUNTS
Note 5: Employment costs and expenses for employees and
benefits for senior employees
SALARIES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Salaries 44 346 38 172 35 346 32 000
Social security costs 5 369 4 836 4 972 4 407
Pension costs 5 387 2 272 5 024 1 950
Share based payments and bonus costs consultant 2 346 1 634 2 346 1 634
Other employee benefits 2 039 1 369 1 808 1 187
Capitalized cost in associated with development 0 -1 954 0 -1 847
Public grants from Skattefunn -2 445 -1 615 -2 292 -1 535
Total employee benefit expenses 57 043 44 714 47 205 37 796
Average number of FTE`s 62 57 53 47
REMUNERATION TO EXECUTIVE MANAGEMENT TEAM
(Amounts in NOK 1000) - Group 2022 2021
Management team
Salaries 6 622 5 615
Benefits in kind 191 80
Pension costs 173 142
Share based payments 2 346 1 634
Other employee benefits 4 778* 16 169*
Total remuneration 14 110 23 640
* Includes remuneration of TNOK 4 138 for managing R&D (TNOK 15 209 in 2021). Remuneration for R&D is split in other operating expenses and
capitalized development costs in 2022 and 2021
No loans or guarantees are granted to members of the management team, Board of Directors or other elected bodies. Reference is
made to the Executive Remuneration Report which will be available on the company's website before the annual general meeting.
Defined contribution pension scheme
The parent company and the group have a statutory obligation
to comply with the law on mandatory occupational pensions
and have a pension scheme that satisfies the requirements of
this Act. Contributions have been expensed in the Group by
TNOK 2 787 in 2022 (TNOK 2 272 in 2021), in the parent com-
pany TNOK 2 424 (TNOK 1 950 in 2021). The parent company
and the group had cost for AFP of TNOK 2 620 in 2022 (TNOK
0 in 2021). The cost in 2022 had provisions for the year 2017-
2021 of TNOK 2 131, and TNOK 489 for 2022.
Options
The fair value of Jon Olav Ødegård's options have been calcu-
lated at the time of grant, 30 August 2022, and expensed over
the vesting period up until 1 November 2022. The fair value
of the program has been estimated to TNOK 1 170 in 2022.
Fair value of the options has been estimated using the Black-
Scholes option pricing model. The options exerciable up until
31 October 2025. Other inputs used in the model are:
-Spot price: NOK 3.39 per option
-Strike price: NOK 3.63 per option
-Volatility: 48.0%
-Dividend: 0.0%
-Risk-free rate: 3.58%
The fair values of James Berger's options have been calculat-
ed at the time of grant, 17 October 2019, and was expensed
over the vesting period of 36 months. The fair value of the
program was estimated to TNOK 12 342 in 2019. Fair value
of the options was estimated using the Black-Scholes option
pricing model.
A total of TNOK 1,176 (TNOK 1,633 in 2021) was expensed in
connection with the option program in 2022. No share options
were exercised in 2022, and per 31.12.22 all options under this
agreement has expired.
As partial payment for work performed for the company, Ten-
et Brandlogic Corp. was granted options in the company. The
options are expensed over the vesting period in 2021. Total ex-
pensed in 2022 is TNOK 0 (TNOK 1,462 in 2021). The options
under this agreement is exerciable per year end, and there is
TNOK 172 options outstanding per 31.12.2022.
35
NOTES TO THE ACCOUNTS
OPTIONS
(Amounts in NOK 1000)
GROUP
2022
number
2022
WAEP
2021
number
2021
WAEP
Outstandig 01.01. 5 523 0.01 5 351 0.01
Exerciable 01.01 172 0.01 0 -
Granted during the year 1 000 0.01 172 0.01
Forfeited during the year 0 - 0 -
Exercised during the year 0 - 0 -
Expired during the year 5 351 0.01 0 -
Outstandig 31.12. 1 172 0.01 5 523 0.01
Exerciable 31.12. 1 172 0.01 172 0.01
AUDITOR’S FEES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Audit fees 1 621 1 260 1 537 1 215
Other confirmations 45 0 45 0
Tax advice 0 33 0 31
Other services 0 6 0 6
Total 1 666 1 299 1 582 1 252
VAT is not included in the amounts above. TNOK 24 of the total amount is capitalized direct against equity.
Note 6: Related party transactions
The Group's related parties include shareholders, board mem-
bers and the senior management and their related parties.
RH Industri AS, Hofseth Property AS, Hofseth International
AS, Hofseth Logistics AS, Seafood Farmers of Norway AS,
Hofseth AS, Hofseth Sales AS, Hofseth Aalesund AS, Hofseth
North America, Hofseth Asia, Hofseth Processing AS, Ålesund
Kipervikgate 13 AS and Hofseth Aqua AS are considered to be
related parties to Hofseth BioCare ASA. In these companies,
CEO (up until 29.07.2022), board member and shareholder
in Hofseth Biocare ASA, Roger Hofseth, has significant influ-
ence through ownership interests, leading positions and board
memberships. Further is shareholder Yokorei CO. Ltd. consid-
ered a related party.
All related party transactions have been made in the ordinary
course of the business at the arms length principle. The main
transactions made in 2021 and 2022:
› Purchase of raw materials from Hofseth Sales AS. See fur-
ther details in the agreement below.
› 13 of the company's (16 in the group) lease agreement for
production equipment that are active in 2022 have been
entered into with Hofseth AS, Hofseth International AS and
RH Industri AS and subleased to Hofseth BioCare ASA with
a mark-up of 5-10 % on monthly instalments.
› Other minor administration costs are invoiced from Hof-
seth International AS.
36
NOTES TO THE ACCOUNTS
› Yokorei Co. Ltd. had a loan to the Group wich has been re-
paid in full during 2022 (TNOK 1,879 as of 31 December
2021). The loan expired on 30 September 2022 and had a
fixed interest rate of 4 %.
› RH Industri AS had provided a subordinated loan to the
group with an outstanding amount of TNOK 22,432 as of 31
December 2021. The loan expired 30 September 2024 and
carries an interest rate of Nibor + 4.5 %, but the full amount
has been convertes to shares in he share issue in July 2022.
› RH Industri AS and Hofseth Sales AS have paid storage
rent of TNOK 0 in 2022 (TNOK 646 in 2021), for goods pur-
chased from the company in 2020.
› Hofseth BioCare ASA had a agent agreement with Hofseth
International AS, Hofseth Sales AS and RH Industri AS re-
cieved agent fees of total TNOK 0 (TNOK 190 in 2021) for
sale of goods stored at the companys storage.
› Hofseth North America has purchased goods worth TNOK
17,750 in 2022 (TNOK 9,971 in 2021).
› Yokorei Co. Ltd. has purchased goods worth TNOK 247 in
2022 (TNOK 207 in 2021).
› The Group rents factory buildings at Midsund and Berkåk
from Hofseth Property AS at a cost of TNOK 12,071 in
2022 (TNOK 10,150 in 2021). The agreement is signed for
15 years, until 2032.
The statement of profit and loss and the balance sheet include the following transactions with shareholders and related parties
to shareholders:
BALANCE SHEET ITEMS Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Right of use assets 108 938 109 917 88 176 89 085
Trade receivables 2 354 2 325 2 243 2 325
Subordinated loan 0 -22 433 0 -22 433
Loan from shareholders 0 -1 879 0 -1 879
Other receivables 0 0 9 577 75
Leasing liabilities -101 661 -109 917 -81 929 -89 085
Trade payables -125 842 -107 094 -122 979 -106 086
Total -116 210 -128 074 -104 913 -127 999
PROFIT AND LOSS ITEMS Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Sales revenue
18 881 14 269 18 881 14 269
Total revenue 18 881 14 269 18 881 14 269
Cost of sales 51 381 68 548 51 381 68 548
Other operating expenses 5 353 12 910 5 271 10 675
Financial expenses 7 960 8 383 6 562 6 762
Total costs 64 694 89 840 63 214 85 985
Raw Material agreements
The company has a 5-year agreement with Hofseth Sales AS
on exclusive rights to all by-products from Hofseth Sales`s
suppliers starting 01.01.2022. Hofseth Sales AS is a 100 %
subsidiary of RH Investments AS, which is closely related to
Roger Hofseth.
Transactions and balances between parent companies and
subsidiaries
The company has sold goods and services to subsidiaries
HBC Berkåk AS for TNOK 40 in 2022 (TNOK 815 in 2021).
The subsidiaries HBC Switzerland GmbH has sold services to
the parent company of TNOK 3 447 (TNOK 0 in 2021) and HBC
Berkåk AS for TNOK 996 in 2022 (TNOK 10 211 in 2021).
The company has agreed on a loan to with HBC Berkåk with a
balance of TNOK 0 as of 31 December 2022 (TNOK 4 976 as
of 31 December 2021), with an agreed interest rate of Nibor
+ 3.0 %. Balance to HBC Therapeutics AS was TNOK 25 as of
31 December 2022 (TNOK 0 as of 31 December 2021) and a
Balance to Hofseth Biocare Rørvik AS was TNOK 75 as of 31
December 2022 (TNOK 75 as of 31 December 2021) Balance
to HBC Switzerland GmbH was TNOK 0 as of 31 December
2022 (TNOK 0 as of 31 December 2021).
37
NOTES TO THE ACCOUNTS
Note 7: Financial income and expenses
FINANCIAL INCOME Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Interest income 651 613 855 617
Foreign exchange gains 3 917 3 034 3 913 3 034
Total 4 568 3 647 4 768 3 651
FINANCIAL EXPENSES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Interest expenses 9 954 9 394 8 359 8 175
Impairment of financial assets 0 0 0 4 889
Foreign exchange losses 3 182 2 120 3 163 2 118
Total 13 136 11 577 11 522 15 182
38
NOTES TO THE ACCOUNTS
Note 8: Income taxes
INCOME TAXES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Income tax expense
Prior year taxes 0 0 0 0
Tax expense 0 0 0 0
Calculation of taxable income
Loss before tax -137 390 -126 464 -119 367 -122 241
Permanent differences -1 937 4 050 -1 937 4 437
Change in temporary differences 22 581 -16 588 10 505 3 544
Taxable result -116 745 -139 002 -110 799 -114 260
Temporary differences
Fixed assets 19 546 33 932 7 533 9 862
Loss carry forward -1 034 784 -918 039 -976 315 -865 516
Other temporary differences -20 524 -12 329 -20 524 -12 348
Total -1 035 763 -897 436 -989 306 -868 002
Calculated deferred tax asset 22 % 227 868 197 436 217 647 190 960
Deferred tax assets are not recognised in the balance sheet.
RECONCILITATION OF TAX EXPENSE Konsern Morselskap
(Amounts in NOK 1000) 2022 2021 2022 2021
Loss before tax -137 390 -126 464 -119 367 -122 241
Tax 22% -30 226 -27 822 -26 261 -26 893
Permanent differences -426 891 -426 976
Defered tax assest, not recognized 30 652 26 931 26 687 25 917
Total tax expense 0 0 0 0
Note 9: Earnings per share
The Group’s earnings per share are calculated by dividing the
profit for the year attributable to share holders by the weighted
average number of shares outstanding during the year.
Diluted earnings per share are calculated by dividing the pro fit
attributable to the share holders by the weighted average num-
ber of shares outstanding during the year.
EARNINGS PER SHARE Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Profit attributable to share holders -137 390 -126 464 -119 367 -122 241
Weighted average number of shares outstanding 374 737 357 831 374 737 357 831
Earnings per share
-ordinary -0.37 -0.35 -0.32 -0.34
-diluted -0.37 -0.35 -0.32 -0.34
39
NOTES TO THE ACCOUNTS
Note 10: Intangible asset
2021 Group and Parent
(Amounts in NOK 1000) R&D IT-systems Patents Other Sum
Cost at 01.01.2021 53 743 3 438 3 671 2 627 63 480
Additions 0 987* 1 243 0 2 229
Internally developed 12 598 0 0 0 12 598
Cost at 31.12.2021 66 341 4 425 4 914 2 627 78 307
Depreciation at 01.01.2021 14 843 452 3 341 2 409 21 046
Depreciation charge of the year 3 325 307 281 218 4 132
Impairment
0 0 0 0 0
Impairment and depreciation at 31.12.2021 18 169 759 3 622 2 627 25 178
Net book value at 31.12.2021 48 172 3 666 1 292 0 53 055
Economic life 10 years 5-10 years 10 years 5-10 years 5-10 years
Method of depreciaton Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
2022 Group and Parent
(Amounts in NOK 1000) R&D IT-systems Patents Other Sum
Cost at 01.01.2022 66 341 4 425 4 914 2 627 78 307
Additions 0 2 355* 0 0 2 355
Internally developed 11 237 0 0 0 11 237
Cost at 31.12.2022 77 579 6 780 4 914 2 627 91 899
Depreciation at 01.01.2022 18 169 759 3 622 2 627 25 178
Depreciation charge of the year 5 282 531 132 0 5 945
Impairment
0 188 0 0 188
Impairment and depreciation at 31.12.2022 23 451 1 478 3 754 2 627 31 311
Net book value at 31.12.2022 54 128 5 302 1 159 0 60 588
Economic life 10 years 5-10 years 10 years 5-10 years 5-10 years
Method of depreciaton Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
* Some development projects and IT system is under development.
Included in the group’s intangible assets is a webshop de-
veloped in the subsidiary HBC Therapeutics AS, the carrying
amount was TNOK 0 as of 31 December 2022 (TNOK 188 as
of 31 December 2021). The asset in the subsidiary was written
down in full in 2022.
Throughout 2022, HBC R&D has focused on developing, im-
proving, and refining their products and processes. Through
extensive research, positive health effects have been uncov-
ered in the ingredients, making development a critical aspect
that sets HBC's products. Core activities such as research,
development, and documentation are integral to HBC's R&D
work. Additionally, significant investments were made in 2022
towards documenting and testing the trademarked products
including ProGo®, CollaGo®, OmeGo®, and CalGo®. This
work is vital to demonstrate the efficacy and unique properties
of the products during marketing and sales.
Research and development
is crucial for the industrial process of producing the compa-
ny's products, as it involves advanced equipment that may ex-
perience downtime during the testing and production of new,
efficient solutions to enhance profits and reduce costs. The
aim to increase the volume of raw materials necessitates the
optimization of all production stages.
In 2022, HBC continued to enhance their knowledge through
studies and analyzing the ingredients' elements that provide
the desired biological effect. The laboratory and factory spent
more time studying and testing these effects, resulting in
some health effects being recognized by international health
authorities.
The company's operations and products must meet environ-
mental and health requirements, regulations, agreements, and
40
NOTES TO THE ACCOUNTS
conventions. Meeting these standards required extensive de-
velopment activities. The company has ongoing R&D efforts to
develop more efficient production methods and improve the
products' human use.
The R&D process consists of five steps, which are to further
develop the enzymatic hydrolysis of salmon cutting to pro-
duce unique products with proven health effects, optimize the
handling of raw materials and finished products in the value
chain, develop technology to produce higher quality product
fractions of protein, calcium, and oil, identify, research, and
document bioactivity in the products, and document biosafe-
ty, bioavailability, and biological effects through "in-vitro" and
"in-vivo" studies.
Total research and development costs for 2022 were TNOK
28,521 (2021 TNOK 26,859). Of this, TNOK 11,237 has been
capitalized in 2022 (2021: TNOK 12,598).
The following were the most significant development projects
with related capitalized development expenditures:
The R&D process is divided into four steps:
1. The development of ProGo® peptides for Gastro-Intestinal
(GI) health. The collaboration with Stanford has shown that
SPH provides excellent protection against GI tract inflam-
mation in standard models of inflammatory bowel disease
(IBD). The mode of action is an upregulation of the an-
ti-inflammatory gene system, HMOX1. A proof-of-concept
clinical trial in IBD patients at Stanford is expected to com-
mence during 2023. The capitalized development costs for
2022 were TNOK 3,027.
2. OmeGo® as a Novel anti-eosinophilic therapeutic, as it has
shown through clinical studies to decrease inflammation
in the body. Our efforts at developing a pharmaceutical
lead program around eosinophilia inflammation control is
on-going. Our lead analog, MA-022, has shown a clinical-
ly significant and enhanced level of eosinophil control in
in-vitro. Initial development will focus on eosinophilic eso-
phagitis, an orphan condition that causes pain and difficul-
ty in swallowing. Work for the scaling up of MA-022 synthe-
sis is complete and preclinical in vitro and in vivo work will
commence in 2023. There are no licensed oral options for
EoE and exclusion diets and topical steroids have limited
impact on symptoms. The capitalized development costs
for 2022 were TNOK 2,572.
3. HBC's OmeGo whole salmon oil's underlying drivers of im-
mune health, respiratory & overall health. The broad inflam-
mation-resolving profile of OmeGo®, as demonstrated by
our prior research, is expected to help reduce lung irritation
with an improvement in lung function and quality of life.
Particulate matter pollution is a global health problem im-
pacting lung, cardiovascular and overall health. The capital-
ized development costs for 2022 were TNOK 5,638.
4. The Clinical Trial Unit (CTU) in Ålesund has performed sev-
eral clinical trials and they are still ongoing. This includes
studies for Asthma, Osteopenia and Arthritis. The costs re-
lated to the CTU in 2022 have not been capitalized in 2022.
Trademarks
The Group has registered its trademarks under the interna-
tional Madrid Protocol. The trademarks are ProGo®
for hydro-
lyzed protein, CalGo® for Calcium, PetGo™ for non-soluble
protein and OmeGo® and Brilliant™ for salmon oil.
41
NOTES TO THE ACCOUNTS
Note 11: Fixed assets
2021 Group Parent
(Amounts in NOK 1000) Machinery and
equipment
Fixtures and
fittings
Total Machinery and
equipment
Fixtures and
fittings
Total
Cost at 01.01.2021 165 637 10 955 176 593 156 863 10 846 167 709
Additions 22 487 436 22 924 19 493 436 19 929
Cost at 31.12.2021 188 125 11 392 199 516 176 356 11 283 187 639
Depreciations at 01.01.2021 111 709 8 822 120 531 108 126 8 752 116 878
Depreciations for the year 13 207 288 13 495 11 846 275 12 121
Depreciations at 31.12.2021 124 916 9 111 134 027 119 972 9 028 129 000
Book value 31.12.2021 63 209 2 281 65 489 56 384 2 255 58 639
Economic life 5-10 years 3-10 years 5-10 years 3-10 years
Method of depreciation Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
2022 Group Parent
(Amounts in NOK 1000) Machinery and
equipment
Fixtures and
fittings
Total Machinery and
equipment
Fixtures and
fittings
Total
Cost at 01.01.2022 186 084 13 432 199 516 176 356 11 282 187 639
Additions 2 631 2 149 4 780 1 746 2 149 3 895
Cost at 31.12.2022 188 715 15 581 204 296 178 102 13 431 191 534
Depreciations at 01.01.2022 124 916 9 110 134 027 119 972 9 027 129 000
Depreciations for the year 7 692 2 149 9 841 6 109 2 149 8 258
Depreciations at 31.12.2022 132 608 11 259 143 868 126 081 11 176 137 258
Book value 31.12.2022 56 107 4 322 60 428 52 021 2 255 54 276
Economic life 5-10 years 3-10 years 5-10 years 3-10 years
Method of depreciation Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
The company has pledged assets as collateral for loans. See more in note 16.
42
NOTES TO THE ACCOUNTS
Note 12: Leases
The company and the group as lessee
The company and the group’s right of use assets include manufacturing facilities, machinery and equipment and fixtures and fittings:
2021 Group Parent
(Amounts in NOK 1000) Manu-
fac turing
facilities
Machinery
and
equipment
Fixtures and
fittings
Total Land, manu-
fac turing
facilities
Machinery
and
equipment
Fixtures and
fittings
Total
Cost 01.01.2021 66 078 38 321 2 118 106 517 42 538 35 121 1 585 79 244
Additions 34 516 17 628 0 52 144 34 516 15 317 0 49 833
Disposals 0 0 0 0 0 0 0 0
Costs at 31.12.2021
100 594 55 949 2 118 158 661 77 054 50 438 1 585 129 077
Depreciations 01.01.2021 10 037 16 103 457 26 597 6 867 15 491 446 22 803
Depreciations fot the year 6 953 4 696 75 11 723 5 499 3 925 32 9 457
Disposals 0 0 0 0 0 0 0 0
Depreciations per 31.12.2021 16 990 20 798 532 38 320 12 366 19 416 478 32 303
Carrying amounts 31.12.2021 83 604 35 151 1 586 120 342 64 688 31 022 1 107 96 774
Shortest of lease term or economic
life
15 years 5 years 3-5 years 15 years 5 years 3-5 years
Depreciation method Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
2022 Group Parent
(Amounts in NOK 1000) Manu-
fac turing
facilities
Machinery
and
equipment
Fixtures and
fittings
Total Land, manu-
fac turing
facilities
Machinery
and
equipment
Fixtures and
fittings
Total
Cost 01.01.2022 100 594 55 949 2 118 158 661 77 054 50 438 1 585 129 077
Additions 0 2 464 0 2 464 0 2 254 0 2 254
Disposals 0 0 0 0 0 0 0 0
Costs at 31.12.2022
100 594 58 416 2 118 161 125 77 054 52 692 1 585 131 331
Depreciations 01.01.2022 16 990 20 799 532 38 321 12 366 19 416 478 32 303
Depreciations fot the year 8 682 5 711 45 14 438 6 799 4 918 45 11 762
Disposals 0 0 0 0 0 0 0 0
Depreciations per 31.12.2022 25 672 26 510 577 52 759 19 165 24 377 523 44 065
Carrying amounts 31.12.2022 74 922 31 903 1 541 108 366 57 889 28 315 1 062 87 266
Shortest of lease term or
economiclife
15 years 5 years 3-5 years 15 years 5 years 3-5 years
Depreciation method Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
Straigt line
depreciation
43
NOTES TO THE ACCOUNTS
Lease liabilities:
Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Undiscounted lease liabilities and due dates for payments
Less than 1 year 19 496 19 496 14 653 15 939
2-5 years 54 272 62 288 45 237 50 369
More than 5 years 49 479 52 968 39 576 41 154
Total undiscounted lease liabilities 31.12 123 247 134 752 99 465 107 462
Changes in lease liabilities
Total lease liabilities 1.1 112 977 72 302 90 144 48 997
New/changed lease liabilities recognized in the period
2 464 52 144 2 254 49 833
Payment of principal amounts
-12 625 -11 469 -9 850 -8 686
Payment of interest amounts
-8 592 -7 595 -7 053 -5 898
Interest related to the lease liabilities
8 592 7 595 7 053 5 898
Total lease liabilities 31.12
102 815 112 977 82 547 90 144
Current lease liabilities 31.12 (note 16)
12 855 12 099 10 055 9 801
Non-current lease liabilities 31.12 (note 16)
89 960 100 878 72 492 80 343
Cash outflows for lease liabilities
19 496 19 064 14 653 14 584
The lease agreements do not restrict the parent company’s
and the group’s dividend policy or financing opportunities. The
parent company and the group do not have significant residual
value guarantees in the lease agreements.
The parent company and the group’s leases of machinery and
equipment include, in addition to lease payments, a requirement
to maintain and secure the assets (right of use assets). The
terms in the lease agreements varies from 3-7 year, and several
of the agreements include an option to extend the lease. At the
expiry date of the main term of the lease, the lease og the ma-
chinery and equipment may be continued for a lease payment
of 1/12 of the lease payments in the main lease period. The
company may also request to purchase the equipment.
The company and the group’s leases of manufacturing facilities
(Midsund og Berkåk) have lease terms of 15 years, no extension
options, and the leases expire 31 March 2032. When entering
into an agreement the group assesses whether it is reasonably
certain to exercise an option to purchase the assets. The leases
of the manufacturing facilities have no options to purchase.
Leases of fixtures and fittings in the table above contain no ex-
tension or purchase options. The group’s potential future lease
payments which have not been included in the lease liabilities re-
lating to purchase options were TNOK 0 as of 31 December 2022.
Applied practical expedients
The company and the group lease warehouses in which both
the lessor and the company / group have the right to terminate
the agreements on a 3-6 months notice period. For such agree-
ments the company and the group do not recognize lease liabil-
ities and related right of use assets. Such lease payments are
expensed when incurred.
Lease payments for the abovementioned leases amounted
to TNOK 1,707 (TNOK 1,159 in 2021) for fixture and fittings
for the Group and TNOK 2,239 (TNOK 1,450 in 2021) for stor-
age, and for the parent company TNOK 1,611 (TNOK 1,046 in
2021) for fixture and fittings TNOK 2,094 (TNOK 1,062 i 2021)
for storage (see note 4). Cash flow from these lease obliga-
tions is approximately equal to the amount expensed and is
included in net cash flow from operating activities.
44
NOTES TO THE ACCOUNTS
Note 13: Changes in liabilities from financial activities
GROUP
(Amounts in NOK 1000) 1.1.2021 Downpayment Withdrawals New leases Other adjustments 31.12.2021
Short-term interestbearing liabilities
(excl. posts below)
64 078 -3 428 0 0 3 425 3 425
Short-term leasing liabilities 8 224 0 0 0 3 875 12 099
Long-term interest-bearing debt
(excl. posts below)
3 768
-2 416 0 0 0 1 352
Long-term leasing liabilities 64 078 -10 255 0 50 980 -3 925 100 878
Subordinary loan 21 346 0 1 087 0 0 22 433
Total 100 844 -16 099 1 087 50 980 3 375 140 187
PARENT
(Amounts in NOK 1000) 1.1.2021 Downpayment Withdrawals New leases Otherdjustments 31.12.2021
Short-term interest-bearing
liabilities(excl. posts below)
2 884 -2 884 0 0 1 879 1 879
Short term leasing liabilities 6 427 0 0 0 3 374 9 801
Long-term interest-bearing debt
(excl. posts below)
1 875 -1 875 0 0 0 0
Long-term leasing liabilities 42 570 -6 761 0 48 940 -4 406 80 343
Subordinary loan 21 346 0 1 087 0 0 22 433
Total 75 102 -11 520 1 087 48 940 847 114 456
GROUP
(Amounts in NOK 1000) 1.1.2022 Downpayment Withdrawals New leases Other adjustments 31.12.2022
Short-term interestbearing liabilities
(excl. posts below)
3 425 -3 425 0 0 540 540
Short-term leasing liabilities 12 099 0 0 0 756 12 855
Long-term interest-bearing debt
(excl. posts below)
1 352
-540 0 0 0 812
Long-term leasing liabilities 100 878 -12 625 0 2 464 -757 89 960
Subordinary loan 22 433 -1 879 0 0 -20 554 0
Total 140 187 -18 469 0 2 464 26 836 104 167
PARENT
(Amounts in NOK 1000) 1.1.2022 Downpayment Withdrawals New leases Other adjustments 31.12.2022
Short-term interest-bearing
liabilities(excl. posts below)
1 879 -1 879 0 0 0 0
Short-term leasing liabilities 9 801 0 0 0 254 10 055
Long-term interest-bearing debt
(excl. posts below)
0 0 0 0 0 0
Long-term leasing liabilities 80 343 -9 850 0 2 254 -255 72 492
Subordinary loan 22 433 -1 879 0 0 -20 554 0
Total 114 456 -13 608 0 2 464 -20 555 82 547
45
NOTES TO THE ACCOUNTS
Note 14: Fair value measurement
The following tables provide fair value measurement hierarchy of the group's financial liabilities.
The fair value of financial assets is not disclosed as the fair value is approximately book value.
LIABILITIES MEASURED AT FAIR VALUE, GROUP
(Amounts in NOK 1000) Date of
measurement
Amount Active markets
(Level 1)
Observed market
prices (Level 2)
Non-observed
input (Level 3)
Liabilities in which fair value is stated in note 18:
Interest-bearing loans
Interest-bearing loans floating interest rate 31.12.21 23 784 0 0 23 784
Interest-bearing loans fixed interest rate 31.12.21 1 879 0 0 1 879
LIABILITIES MEASURED AT FAIR VALUE, PARENT COMPANY
(Amounts in NOK 1000) Date of
measurement
Amount Active markets
(Level 1)
Observed market
prices (Level 2)
Non-observed
input (Level 3)
Liabilities in which fair value is stated in note 18:
Interest-bearing loans
Interest-bearing loans floating interest rate 31.12.21 22 433 0 0 22 433
Interest-bearing loans fixed interest rate 31.12.21 1 879 0 0 1 879
Interest-bearing loans floating interest rate from
subsidiaries
31.12.21 4 979 0 0 4 979
LIABILITIES MEASURED AT FAIR VALUE, GROUP
(Amounts in NOK 1000) Date of
measurement
Amount Active markets
(Level 1)
Observed market
prices (Level 2)
Non-observed
input (Level 3)
Liabilities of which the fair value has been provided
in note 18:
Interes-bearing loan
Interest-bearing loan floating interest rates 31.12.22 1 352 0 0 1 352
Interest-bearing loan fixed interest rates 31.12.22 0 0 0 0
LIABILITIES MEASURED AT FAIR VALUE, PARENT COMPANY
(Amounts in NOK 1000) Date of
measurement
Amount Active markets
(Level 1)
Observed market
prices (Level 2)
Non-observed
input (Level 3)
Liabilities of which the fair value has been provided
in note 18:
Interes-bearing loan
Interest-bearing loan floating interest rates 31.12.22 0 0 0 0
Interest-bearing loan fixed interest rates 31.12.22 0 0 0 0
Interest-bearing loan from subsidiary floating interest
rates
31.12.22 0 0 0 0
46
NOTES TO THE ACCOUNTS
Note 15: Financial assets
FINANCIAL ASSETS Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Amortized cost receivables:
Accounts receivable 14 072 10 089 13 803 9 970
Other current receivable 0 0 9 577 75
Total financial assets 14 072 10 089 23 380 10 045
Total current financial assets 14 072 10 089 23 380 10 045
Total non-current financial assets 0 0 0 0
IFRS 9 requires the Group's to recognize a provision for expect-
ed credit losses for all debt instruments that are not held at
fair value through profit or loss, and for contract assets. The
company and the group have a high degree of collateral for
credit insurance on all accounts receivables and collaterals on
other receivables and loans and, hence, no significant provi-
sions have been made in relation to these, see note 20.
47
NOTES TO THE ACCOUNTS
Note 16: Interest-bearing debt and borrowings
NON-CURRENT DEBT Group Parent
(Amounts in NOK 1000) Effective
interest rate
Maturity 2022 2021 2022 2021
Rennebu Municipality NIBOR+2,0% 2024- 812 1 352 0 0
Loan from shareholder 4,0% 2024- 0 0 0 0
Subordinary loan NIBOR+4,5% 2024- 0 22 433 0 22 433
Lease liability 6% - 8% 2024- 89 960 100 878 72 492 80 343
Total 90 772 124 662 72 492 102 776
CURRENT DEBT Group Parent
(Amounts in NOK 1000) Effective
interest rate
Maturity 2022 2021 2022 2021
Rennebu Municipality NIBOR+2,0% 2023 540 541 0 0
Loan from shareholder* 4,0% 2023 0 1 879 0 1 879
Subordinary loan 6,6% 2023 0 0 0 0
Lease liability 6% - 8% 2023 12 855 12 099 10 055 9 801
Total 13 395 14 519 10 055 11 680
Sum interest-bearing debt 104 167 139 181 82 548 114 456
*Loan is issued in JPY - unrealized loss calculated to TNOK 0 per 31.12.2021, repaid per 31.12.2022.
The parent company has a credit facility in bank with a credit
limit of TNOK 37,000. The credit limit was unused as of 31
December 2022.
In addition to the above, the parent company had a current
interest- bearing liabilities towards the subsidiary HBC Berkåk AS
amounting to
TNOK 0 as of 31 December 2022 (TNOK 4,976
as of 31 December 2021). The interest rate had been agreed to
NIBOR + 3 %.
Collaterals
Credit facility in parent company is secured in trade receivable andinventory.
(Amounts in NOK 1000) 2022 2021
Trade receivable 13 803 9 970
Inventory 115 983 90 244
Total 129 786 100 215
The Group insures significant receivables against credit risk. The insurance is limited to a maximum of TNOK 13,600 and a
coverage rate of 90 %.
Financial covenants
Credit facility Sparebank1 Nordvest
As of 30 June and 31 December each year, the company will
have a liquidity reserve of at least NOK 5 million in the form of
cash and unused drawing rights in operating credit facility. The
book value of equity in Hofseth BioCare ASA shall at all times
amount to at least 25 % of the book value of the company's
assets. The company had an equity ratio of 41.7 % and was
thus not in breach of covenants given in the loan agreement
with Sparebank1 per 31 December 2022.
48
NOTES TO THE ACCOUNTS
Note 17: Financial assets and liabilities by category
Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Financial assets at amortized cost:
Long-term financial lending and deposit 0 987 0 987
Accounts receivable 14 072 10 089 13 803 9 970
Other financial loans (see note 15) 0 0 9 577 75
Total financial assets amortized cost 14 072 11 076 23 380 11 033
Total financial assets 14 072 11 076 23 380 11 033
Fair value is equal to carrying amount.
Financial liabilities at amortized cost:
Interest-bearing short-term debt 0 1 879 0 1 879
Accounts payable 145 752 124 165 140 551 121 476
Interest-bearing short-term debt subsidiaries 0 0 0 4 976
Other short-term debt (note 23) 13 081 12 249 11 720 15 367
Non-current interest-bearing debt 812 23 784 0 22 433
Non-current leasing obligations 89 960 100 878 72 492 80 343
Total financial liabilities amortized cost 249 605 262 955 224 764 246 473
LEVEL 3, PARENT 2022 2021
(Amounts in NOK 1000) Booked value Fair value Booked value Fair value
Current interest-bearing liabilities 10 055 10 055 11 680 11 663
Non-current interest-bearing liabilities 72 492 72 492 102 776 103 511
Interest-bearing short-term debt of subsidiaries 0 0 4 976 4 881
LEVEL 3, GROUP
Non-current interest-bearing liabilities 13 395 13 395 14 519 14 502
Interest-bearing short-term debt of subsidiaries 90 772 90 772 124 662 125 398
Presentation of fair value measurements by level in the fair
value hierarchy:
Level 1: Quoted prices in active markets for identical assets
or liabilities
Level 2: Valuation based on other observable factors either di-
rectly (price) or indirectly (derived from price) than the quoted
price (used in level 1) for the asset or liability
Level 3: Valuation based on factors not obtained from observ-
able market data (unobservable conditions)
The fair value of interest-bearing current and long-term fixed
rate debt (level 3) is calculated by comparing the Group and
parent company's conditions with market terms for debt with
similar maturity and credit risk.
The company has no other financial instruments measured at
fair value, except for forward exchange contracts. The carrying
value of cash and cash equivalents, short-term receivables, and
short-term payables approximates fair value as these instru-
ments have short maturities, and «ordinary» conditions.
49
NOTES TO THE ACCOUNTS
Note 18: Financial risk management
Financial risk
Through its activities, the Group is exposed to various types of
financial risks: market risk, credit risk and liquidity risk. Man-
agement monitors these risks continuously and establishes
guidelines for their management. The Group's overall risk man-
agement program focuses on the unpredictability of the finan-
cial markets and seeks to minimize potential adverse effects
on the Group’s financial results.
The Group may use financial derivatives to hedge against cer-
tain risks. The company has loans from credit institutions and
financial leasing arrangements with the purpose of obtaining
capital for investments in the Groups operations. In addition,
the company has financial instruments such as accounts re-
ceivable and accounts payable, etc., which are directly related
to the daily operational activities.
Interest rate risk
Since the company and the group have no significant inter-
est-bearing assets, the exposure to interest rate risk is through
their financing activities. The company's and the group's inter-
est rate risk is related to non-current interest-bearing loans,
current interest-bearing loans and lease liabilities. Loans with
floating interest rates lead to interest rate risk for the company's
and the Group's cash flow. See note 17 for the book value and
fair value of the financing activities and note 16 for interest rate
terms relating to interest-bearing financing obligations as of 31
december 2022.
For the company's and the Group's loan portfolios that have
floating interest rates, this means that the company is affected
by changes in the interest rate level. The loans are recognized
at amortized cost.
The following table shows the Group's sensitivity to interest rate
fluctuations. The calculation includes all interest-bearing instru-
ments and financial interest rate derivatives to the extent that
they are present.
Interest rate – sensitivity year Effect on interest rate – basis-point Effect on profit – before tax (Amounts in NOK 1000)
2021 +100 -1 130
-100 1 130
2022 +100 -1 042
-100 1 042
Average interest rates on financial instruments were as follows:
Average interest rate in % 2022 2021
Loan from shareholders 4.00 4.00
Secured debt 6.64 5.09
Lease liabilities 5.30 5.97
The following table shows the parent company's sensitivity to interest rate fluctuations. The calculation includes all interest-
bearing instruments and financial interest rate derivatives to the extent that they are present.
Interest rate – sensitivity year Effect on interest rate – basis-point Effect on profit – before tax (Amounts in NOK 1000)
2021 +100 -901
-100 901
2022 +100 -1 036
-100 1 036
Foreign exchange risk
The parent company and the group had a foreign exchange
loan in JPY (repaid in full in 2022) and a large part of their op-
erating income in foreign currency and, to a lesser extent, the
purchase of input factors in foreign currency, and are there-
fore exposed to currency risk. Management has monitored
movements in the foreign exchange market and has assessed
hedging strategies in 2022 based on the parent company's
and the group's contractual and predictable income streams.
The parent company and the group therefore entered into for-
ward exchange contracts both in 2021 and in 2022 in order to
secure the Group's budgeted future sales in foreign currency
(Euro and USD), but have not used hedge accounting. The par-
ent company and the group had no positions per 31 December
2022 or 31 December 2021.
50
NOTES TO THE ACCOUNTS
The below table demonstrates the sensitivity of possible
changes in EUR, USD and JPY when all other variables are
constant. The effect on the parent company's and the Group's
profit before tax is due to changes in the fair value of monetary
assets and liabilities, including forward exchange contracts. If
the company had used hedge accounting, a currency change
would also have resulted in changes to the OCI. The company
does not use hedge accounting.
Change in currency Change in NOK Effect on profit before tax Effect on balance
(Amounts in NOK 1000) to foreign
currency
EUR USD JPY USD EUR JPY
2021 +10%
2 581 2 425 -8 n/a n/a 188
-10 % -2 581 -2 425 8 n/a n/a -188
2022 +10% 556 306 -5 n/a n/a n/a
-10 % -556 -306 5 n/a n/a n/a
Credit risk
The parent company and the Group are exposed to credit risk
primarily related to accounts receivable, non-current financial
loans, current financial loans, as well as other financial activi-
ties including cash and cash equivalents (bank deposits).
The Group limits its exposure to credit risk through a credit rat-
ing of its customers before credit is given. The Group has cred-
it insurance for all its significant accounts receivable through
Coface Norway (see 20 for further information on credit expo-
sure and maturity analyzes on accounts receivable).
The maximum risk exposure of trade receivables for the group
as of 31 December 2022 is TNOK 14,072 (TNOK 10,089 as of
31 December 2021), and for parent company TNOK 13,803
(TNOK 9,970 as of 31 December 2021). The risk of loss on
accounts receivable is considered low and there has been no
need to provide for losses. See note 20 for further information.
Loan to subsidary of TNOK 9,577 (TNOK 75 in 2021), where
credit risk is considered low. (see note 15, 17 and 20 for further
information on financial loans and other current receivables).
Credit risk for cash and cash equivalents, including bank de-
posits, is managed by the Group's management. The Group's
surplus liquidity is invested by bank deposits with a financial
counterparty with low credit risk. The Group has no investments
in excess liquidity in debt or equity instruments.
The Group has not provided any guarantees for third-party debt.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet
its financial obligations as they fall due. The Group's approach
to liquidity management is to ensure, to the extent possible,
that it will always have sufficient liquidity to meet its liabili-
ties when due, both under normal and stressed conditions,
without incurring unacceptable losses or risking damage to
the Group’s reputation. Cash flows are regularly monitored
by the finance department to ensure that the parent company
has sufficient cash to meet operational commitments, and at
any time to maintain sufficient flexibility in the form of credit
facilities so that it does not violate limits or covenants for any
of the loans. The parent company and the Group aims to have
sufficient cash, cash equivalents or credit opportunities in the
medium term to cover interest and principal payments in the
short term. Please also refer to note 1 section Going concern.
As of 31 December 2022 the group had MNOK 32,4 in cash,
of which MNOK 2,6 were restricted cash as of 31 December
2022. As of 31 December 2021 the group had MNOK 49.9 in
cash, of which MNOK 2,7 were restricted cash.
The group expects to have a stable production level with sta-
ble quality which satisfies the requirements for human quality.
The activities to increase sales to existing customers, as well
as the expectation of increased sales of oil, water-soluble pro-
tein, non-soluble protein and calcium could result in significant
improvement in the company’s cash flows. Expected cash
flows are subject to uncertainties related to achieved sales
prices and volume.
Risk factors should be considered in conjunction with the risk
factors described in note 2 accounting estimates.
The table below shows the maturity profile of the Group's
financial liabilities based on contractual undiscounted pay-
ments, classified according to maturity structure, that is, taken
into account contracts with fixed maturity dates. When the
counterparty can make an election of when an amount is to be
paid, the liability is included in the basis covering the earliest
date on which the entity can be required to pay. Financial liabil-
ities that may be required to be paid on demand are included
in the «within 1-3 months» column.
51
NOTES TO THE ACCOUNTS
2021 Group
(Amounts in NOK 1000)
1-3 months 4-6 months 7-9 months 10-12
months
2023 2024 2025 2026 > 5 years Total
Interest bearing debt to
financial institutions
0 299 0 295 577 561 274 0 0 2 006
Loan and subordinated
loan from shareholders
864 858 947 252 1 009 22 517 0 0 0 26 448
Lease libilities
4 920 4 890 4 859 4 828 17 863 16 045 15 252 13 128 52 968 134 752
Trade payables
124 165 0 0 0 0 0 0 0 0 124 165
Other current liabilities
7 921 4 328 0 0 0 0 0 0 0 12 249
Total
137 870 10 374 5 806 5 375 19 450 39 122 15 526 13 128 52 968 299 619
2022 Group
(Amounts in NOK 1000)
1-3 months 4-6 months 7-9 months 10-12
months
2024 2025 2026 2027 > 5 years Total
Interest bearing debt to
financial institutions
0 291 0 287 561 274 0 0 0 1 412
Loan and subordinated
loan from shareholders
0 0 0 0 0 0 0 0 0 0
Lease libilities
4 659 4 593 4 464 4 429 16 089 13 867 12 540 11 777 49 479 121 895
Trade payables
145 752 0 0 0 0 0 0 0 0 145 752
Other current liabilities
8 692 4 389 0 0 0 0 0 0 0 13 081
Total
159 103 9 273 4 464 4 715 16 650 14 141 12 540 11 777 49 479 282 140
2021 Parent
(Amounts in NOK 1000)
1-3 months 4-6 months 7-9 months 10-12
months
2022 2023 2024 2025 > 5 years Total
Interest bearing debt to
financial institutions 0 0 0 0 0 0 0 0 0 0
Loan and subordinated
loan from shareholders
864 858 947 252 1 009 22 517 0 0 0 26 448
Lease libilities
4 025 3 998 3 971 3 944 14 460 12 833 12 187 10 889 41 154 107 462
Trade payables
121 476 0 0 0 0 0 0 0 0 121 476
Other current liabilities
11 715 3 652 0 0 0 0 0 0 0 15 367
Total
138 080 8 509 4 918 4 196 15 470 35 350 12 187 10 889 41 154 270 753
2022 Parent
(Amounts in NOK 1000)
1-3 months 4-6 months 7-9 months 10-12
months
2024 2025 2026 2027 > 5 years Total
Interest bearing debt to
financial institutions 0 0 0 0 0 0 0 0 0 0
Loan and subordinated
loan from shareholders
0 0 0 0 0 0 0 0 0 0
Lease libilities
3 740 3 680 3 629 3 605 13 263 11 576 10 541 9 856 39 576 99 465
Trade payables
140 551 0 0 0 0 0 0 0 0 140 551
Other current liabilities
7 817 3 903 0 0 0 0 0 0 0 11 720
Total
152 108 7 538 3 629 3 605 13 263 11 576 10 541 9 856 39 576 251 737
52
NOTES TO THE ACCOUNTS
The group and the parent company signed in February 2020 a
new credit facility for up until TNOK 37,000 with SpareBank 1
Nordvest for working capital need related to future sales con-
tracts. In addition to the available cash and cash equivalents
as of 31 December 2022, this secures the group and the com-
pany sufficient liquidity for 2023. See note 16 on interest-bear-
ing debt for further information.
In the future, the management and the board will continue to
prioritize the work on an appropriate and long-term financing
of Hofseth BioCare ASA.
Capital structure and equity
The group and the parent company's objectives with respect
to capital management is to ensure the continuation as a
going concern, to provide returns to shareholders and other
stakeholders, and to maintain an optimal capital structure to
reduce capital costs. By ensuring sound ratios between equity
and debt the group and the parent company will support its
operations, thus maximizing the value of its shares.
The parent company manages its capital structure and makes
necessary changes to it on the basis of an ongoing assess-
ment of the financial conditions under which the business is
run, and the prospects seen in the short and medium term,
including any adjustment of dividend shares, buyback of own
shares, reduction of share capital or issuance of new shares.
There has been no change in the policy in this area in 2022.
The Group's equity ratio was 36.0 % as of 31 December 2022
and (33.7 % as of 31 December 2021). The parent company's
equity ratio was 41.7 % as of 31 December 2022 (36.2 % as of
31 December 2021).
Note 19: Inventory
INVENTORY Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Salmon oil 4 803 1 611 4 803 1 611
Soulible protein 32 083 34 492 32 083 34 492
Calcium 48 268 43 517 48 268 43 517
Non-soluble protein and other 3 558 2 647 3 558 2 647
Webshop products 11 694 1 164 11 694 1 164
Total finished goods 100 407 83 431 100 407 83 431
Packaging and auxiliary materials 16 118 7 382 15 577 6 813
Total inventory 116 525 90 813 115 983 90 244
Provision for obsolescence of TNOK 19,145 as of 31 Decem-
ber 2022 compared to TNOK 10,608 as of 31 December 2021.
Profit effect change in obsolescence provisions is included in
cost of goods with TNOK 8 537 in 2022 (TNOK 400 in 2021).
See notes 2, 3 and 4 for more information.
The Group has stored water-soluble protein and calcium. The
contracted sales value amounts to TNOK 64,035 and has
been recognized as revenue in 2017, 2018 and 2019, as and
when the customers are taking over the risk and control of the
goods. Of an incoming stock of 1,785 tonnes, 49 tonnes were
taken out of stock during 2022 (589 tonnes in 2021, and 689
tonnes in 2020) It has not been sales through 2021 and 2022
that have increased the stock.
53
NOTES TO THE ACCOUNTS
Note 20: Trade receivables and other current receivables
TRADE RECEIVABLES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Trade receivables related parties 2 243 2 324 2 243 2 324
Trade receivables other 11 827 7 765 11 560 7 646
Sum trade receivables 14 072 10 089 13 803 9 970
Provision for expected credit losses 0 0 0 0
Accounts receivable are not interest-bearing receivables and
general terms and conditions for payment are from 7 to 120
days. All significant accounts receivables are credit secured
by Coface Norway, limited to a maximum of MNOK 11.5 and
with a coverage rate of 90 %. Historical credit losses for cus-
tomers over the past five years are approximately TNOK 210.
AGING OF TRADE RECEIVABLES - Group
(Amounts in NOK 1000) Total Not due <30d 30-60d 60-90d >90d
2022
Accounts receivables 14 072 10 449 2 657 196 35 734
Credit-secured share 11 453 7 850 2 842 170 27 564
Expected credit loss
2021
Accounts receivables 10 089 8 346 1 743 0 0 0
Credit-secured share 7 625 5 896 1 729 0 0 0
Expected credit loss 0 0 0 0 0 0
AGING OF TRADE RECEIVABLES - PARENT
(Amounts in NOK 1000) Total Not due <30d 30-60d 60-90d >90d
2022
Accounts receivables 13 803 10 181 2 657 196 35 734
Credit-secured share 11 453 7 850 2 842 170 27 564
Expected credit loss 0 0 0 0 0 0
2021
Accounts receivables 9 970 8 271 1 699 0 0 0
Credit-secured share 7 625 5 896 1 729 0 0 0
Expected credit loss 0 0 0 0 0 0
The Group has established a model in which the Group calcu-
lates provisions for credit losses by multiplying the expected
credit losses by the proportion of non-credit-secured accounts
receivable. The Group uses an increasing factor for expected
credit losses according to maturity analyzes above. When
analyzing future information about the Group's customers and
markets, no future challenges are listed today which indicate
that there will be a significant credit loss in the future (see and
note 18 on credit risk). The Group and the parent company
have TNOK 0 in provisions for losses on accounts receivable
both in 2022 and 2021.
OTHER CURRENT RECEIVABLES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Prepayments 1 505 1 610 1 209 1 356
VAT receivable 6 110 5 535 5 580 5 063
Intercompany Group 0 0 9 577 75
Benefit funds 4 383 4 509 4 209 4 122
Other 726 7 833 727 7 833
Total 12 724 19 488 21 301 18 449
54
NOTES TO THE ACCOUNTS
Note 21: Cash and cash equivalents
Deposits with a credit institution totaled TNOK 32,427 as of
31 December 2022 and TNOK 49,921 as of 31 December 2021
and the Group earns interest income according to agreed
floating interest rate terms.
At 31 December 2022, restricted funds for the Group amount-
ed to TNOK 2,546 which derives from the employees' tax de-
ductions. As of 31 December 2021, this amounted to TNOK
2,710.
Note 22: Equity investments
Subsidiaries Country Head
office
Share
capital
Owner-
ship
Voting
share
Earnings
2022
Equity
31.12.2022
HBC Berkåk AS Norway Rennebu 100 100% 100% -17 117 -6 074
HBC Therapeutics AS Norway Ålesund 2 000 100% 100% -266 -267
HBC Switzerland GmbH Switzerland Zürich CFH20 100% 100% -185 3
Hofseth BioCare Rørvik AS Norway Rørvik 100 51% 51% -3 -1 411
Hofseth Biocare Americas Holdings Inc. USA Mendham, NJ 0 100% 100% n/a n/a
Current liabilities to subsidiaries amount to TNOK 0 as of 31
December 2022 (current liabilities TNOK 4,976 in 2021). The
shares in the subsidiary HBC Berkåk AS have been written
down to book equity as of 31 December 2021.
Company Country Head office Share capital Ownership Voting share
Atlantic Delights Ltd. Hong Kong Hong Kong HKD 6 163 34% 34%
Atlantic Delights ltd
The parent company and the group acquired 34 % of Atlantic
Delights Ltd., Hong Kong on 27 August 2020, through a share
issue with a nominal value of TNOK 6,517 in the company. Es-
timated surplus value related to customer base amounts to
TNOK 3,395 calculated at the time of acquisition and which is
depreciated on a straight-line basis over 5 years. Profit share
from the company in the ownership period is included after tax
expense and amortization of surplus value.
INVESTMENT IN ASSOCIATED COMPANY
ATLANTIC DELIGHTS LTD
Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Net asset 1.1. 5 764 5 733 6 517 6 517
Access 0 0 0 0
Amitization added value -679 -679 0 0
Profit share after tax 475 709 0 0
Dividend 0 0 0 0
Net asset 31.12. 5 560 5 764 6 517 6 517
FINANCIAL INFORMATION IN ASSOCIATED COMPANY
ATLANTIC DELIGHTS LTD
Group
(Amounts in NOK 1000) 2022 2021
Current assets 9 886 6 456
Fixed assets 3 863 5 083
Current liabilities -2 -636
Non-current liabilities -2 717 -1 268
Operating revenue 2 668 3 220
Total earnings 777 -456
55
NOTES TO THE ACCOUNTS
Note 23: Accounts payable and other short-term liabilities
ACCOUNTS PAYABLE Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Accounts payable 19 910 17 071 17 572 15 390
Accounts payable related companies 125 842 107 094 122 979 106 086
Total 145 752 124 165 140 551 121 476
Accounts payable are not interest-bearing and normal maturity is from 0 to 60 days. For settlement and terms for accounts
payable with related parties, see information in note 6.
OTHER SHORT-TERM LIABILITIES Group Parent
(Amounts in NOK 1000) 2022 2021 2022 2021
Public duties payable 4 003 4 101 3 476 3 507
Accrued holiday pay 4 546 4 328 3 903 3 652
Other accrued costs 4 532 3 820 4 340 3 232
Short-term debt to group companies 0 0 0 4 976
Total 13 081 12 249 11 720 15 367
56
NOTES TO THE ACCOUNTS
Note 24: Share capital, shareholders and dividends
As of 31 December 2022, Hofseth BioCare ASA had NOK
3,950,810 in share capital, divided into 395,081,030 shares,
each with a nominal value of NOK 0.01. All shares are fully paid.
There is only one class of shares and all shares have equal vot-
ing rights and equal rights to dividends. The 20 largest share-
holders of Hofseth BioCare ASA as of 31 December 2022 are:
Largest shareholders # of shares % share
SIX SIS AG 77 528 323 19.62
RH INDUSTRI AS 69 300 190 17.54
HOFSETH INTERNATIONAL AS 58 944 778 14.92
YOKOREI CO. LTD 40 951 333 10.37
GOLDMAN SACHS INTERNATIONAL 22 450 000 5.68
BRILLIANT INVEST AS 11 000 000 2.78
GOLDMAN SACHS & CO. LLC 9 251 830 2.34
CREDIT SUISSE(Switzerland) LTD. 9 195 181 2.33
CITIBANK, N.A. 8 015 022 2.03
The Bank of New York Mellon SA/NV 4 959 151 1.26
JPMorgan Chase Bank, N.A., London 4 919 301 1.25
UBS Switzerland AG 3 968 288 1.00
LGT BANK AG 3 447 692 0.87
BOMI FRAMROZE HOLDING AS 3 253 370 0.82
The Bank of New York Mellon 2 802 952 0.71
Saxo Bank A/S 2 693 890 0.68
INITIA AB 2 636 340 0.67
CLEARSTREAM BANKING S.A. 2 486 470 0.63
VERDIPAPIRFONDET DNB SMB 2 482 035 0.63
The Northern Trust Comp, London Br 2 433 865 0.62
In total, the 20 largest shareholders
342 720 011 86.75
Total others
52 361 019 13.25
Total number of shareholders
395 081 030 100.00
Total no. of shareholders: 1,407
Shares owned by CEO and the Board 2022 2021
Jon Olav Ødegård* 2 964 039 2 894 039
Roger Hofseth* 128 444 968 110 723 444
Christoph Baldegger 700 000 700 000
Kristin Fjellby Grung 0 0
Torill Standal Eliassen* 200 000 200 000
Crawford Currie* 750 000 750 000
Amy Novogratz* 22 450 000 12 100 000
Total 154 449 007 127 437 483
*Includes shares owned by related companies and persons.
57
NOTES TO THE ACCOUNTS
Note 25: New accounting standards with future effective date
The standards and interpretations that have been adopted up
to the time of presentation of the consolidated financial state-
ments, but where the date of entry into force is forthcoming,
are stated below.
The Group's intention is to implement the relevant changes at
the date of entry into force, provided that the EU approves the
changes before the presentation of the consolidated financial
statements.
Note 26: Subsequent events
No major events have occoured between 31.12.2022 and the
date of this Annual report.
58
THE BOARD OF DIRECTOR’S REPORT 2022
Declaration of the Board of Directors and CEO in Hofseth BioCare ASA
We confirm that the financial statements for the period 1 Jan-
uary to 31 December 2022 to the best of our knowledge, have
been prepared in accordance with IFRS as adopted by the EU
/ applicable accounting standards and that the financial state-
ments give a true and fair view of the Group's assets, liabili-
ties, financial position and results of operations, and that the
annual report gives a fair view of the financial performance
and position of the Group, together with a description of the
main risks and uncertainties faced by the Group.
Hofseth BioCare ASA Board of Directors,
Ålesund, 30March 2023
Kristin Fjellby Grung Torill Standal Eliassen Crawford Currie Christoph Baldegger
Chair of the board Board member Board member Board member
Amy Novogratz Roger Hofseth Jon Olav Ødegård
Board member Board member CEO
59
CHAPTER 4
Auditors report
AUDITORS REPORTAUDITORS REPORT
Statsautoriserte revisorer
Ernst & Young AS
Thormøhlens gate 53 D, 5006 Bergen
Postboks 6163, 5892 Bergen
Foretaksregisteret: NO 976 389 387 MVA
Tlf: +47 24 00 24 00
www.ey.no
Medlemmer av Den norske Revisorforening
A member firm of Ernst & Young Global Limited
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Hofseth Biocare ASA
Opinion
We have audited the financial statements of Hofseth Biocare ASA (the Company), which comprise the
financial statements of the Company and the consolidated financial statements of the Company and its
subsidiaries (the Group). The financial statements of the Company and the Group comprise the statement
of financial position as at 31 December 2022 and the statement of comprehensive income, statement of
cash flows and statement of changes in equity for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies.
In our opinion, the financial statements comply with applicable legal requirements and give a true and fair
view of the financial position of the Company and the Group as at 31 December 2022 and their financial
performance and cash flows for the year then ended in accordance with International Financial Reporting
Standards as adopted by the EU.
Our opinion is consistent with our additional report to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Company and the Group in
accordance with the requirements of the relevant laws and regulations in Norway and the International
Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 9 years from the election by the general meeting of the
shareholders on 22.07.2014 for the accounting year 2014.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements and the Board of Director’s report, which
describes that the Company and Group are dependent on increased production and sales with a higher
average price, and or additional capital inflows through loans or equity in 2023 to continue as going
concern. These events or conditions, along with other matters as set forth in note 1 and the Board of
Director’s report, indicate that a material uncertainty exists that may cast significant doubt on the
Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for 2022. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
61
AUDITORS REPORTAUDITORS REPORT
2
Independent auditor's report - Hofseth Biocare ASA 2022
A member firm of Ernst & Young Global Limited
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the financial statements.
Allocation of production costs as part of manufacturing cost of finished products
Basis for the key audit matter
The Group had inventory of TNOK 116 525 and
the parent company had inventory of TNOK 115
983 per 31 December 2022. Four types of
finished goods are produced from a common
production process based on the same input
factors. Allocation of production costs is
calculated on the basis of the expected sales
values of the individual finished products
multiplied with the relative share of the production
yield. As the allocation of production costs involve
significant judgement, this was a key audit matter.
Our audit response
We evaluated the management`s sales values in
the model, by comparing the sales values against
representative prices achieved through sales in
2022. We tested the production yield in the model
against reported numbers from factory, and
production costs in the model against actual
costs. We tested the model for allocation of
production costs being mathematically correct.
We refer to note 2, 3, 6 and 19.
Recognition of intangible assets
Basis for the key audit matter
The Group`s recognized intangible assets was
TOK 60 588 for the group and for the parent
company per 31 December 2022, where additions
related to capitalized development costs in 2022
were TNOK 11 237 in group and in parent.
Management exercises judgement in determining
when the recognition criteria for the intangible
assets is met. The group start to capitalize when
there is an identifiable intangible asset or product,
which is in the group`s control, and probable
future economic benefits is expected.
Management also exercises judgement in
determining the cost of the product development
to be capitalized. Based on the size of this year`s
additions and the recognition of developed
intangible assets is based on management`s
judgment and assumptions, this was a key audit
matter.
Our audit response
We assessed management`s principles and
assumptions for recognition of development cost
with criteria in IAS 38, especially the criteria for
recognition and the transition from research to
development. We evaluated this year’s
development projects against available
information about the progress of the
development of the product. We compared the
management's assessments of the projects
against the company's strategy and plans. Further
on we tested a sample of all recognized
development cost against underlying
documentation and evaluated if the criteria for
recognition was met. We refer to note 2 and 10.
62
AUDITORS REPORTAUDITORS REPORT
3
Independent auditor's report - Hofseth Biocare ASA 2022
A member firm of Ernst & Young Global Limited
Other information
Other information consists of the information included in the annual report other than the financial
statements and our auditor’s report thereon. Management (the board of directors and the chief executive
officer) is responsible for the other information. Our opinion on the financial statements does not cover the
other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information,
and, in doing so, consider whether the board of directors’ report, the statement on corporate governance
and the statement on corporate social responsibility contain the information required by applicable legal
requirements and whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that the other information is materially inconsistent with the
financial statements, there is a material misstatement in this other information or that the information
required by applicable legal requirements is not included in the board of directors’ report, the statement
on corporate governance or the statement on corporate social responsibility, we are required to report
that fact.
We have nothing to report in this regard, and in our opinion, the board of directors’ report, the statement
on corporate governance and the statement on corporate social responsibility are consistent with the
financial statements and contain the information required by applicable legal requirements.
Responsibilities of management for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards as adopted by the EU, and for such internal
control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
63
AUDITORS REPORTAUDITORS REPORT
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Independent auditor's report - Hofseth Biocare ASA 2022
A member firm of Ernst & Young Global Limited
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company and the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with regulation on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Hofseth Biocare ASA we have performed an assurance
engagement to obtain reasonable assurance about whether the financial statements included in the
annual report, with the file name hofsethbiocareasa-2022-12-31-en.zip, have been prepared, in all
material respects, in compliance with the requirements of the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to
Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material
respects, in compliance with the ESEF Regulation.
64
AUDITORS REPORT
5
Independent auditor's report - Hofseth Biocare ASA 2022
A member firm of Ernst & Young Global Limited
Management’s responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
Regulation. This responsibility comprises an adequate process and such internal control as management
determines is necessary.
Auditor’s responsibilities
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material
respects, the financial statements included in the annual report have been prepared in accordance with
the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance
Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial
information”. The standard requires us to plan and perform procedures to obtain reasonable assurance
about whether the financial statements included in the annual report have been prepared in accordance
with the ESEF Regulation.
As part of our work, we perform procedures to obtain an understanding of the company’s processes for
preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial
statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL
tagging of the consolidated financial statements and assess management’s use of judgement. Our
procedures include reconciliation of the iXBRL tagged data with the audited financial statements in
human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Bergen, 30 March 2023
ERNST & YOUNG AS
Jørn Knutsen
State Authorised Public Accountant (Norway)
65
Hofseth BioCare ASA
Kipervikgata 13, 6003 Aalesund, Norway
www.hofsethbiocare.com
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