ECONOMY

2018 FISHING QUOTA FEE AND TAX FOOTPRINT OF HB GRANDI

Value creation from the operation of HB Grandi in 2018 amounted to ISK 26,133m and was spent on the community in various ways, such as through salary payments to employees, purchases of supplies from suppliers, dividend payments to shareholders, payment of public levies, etc.

The company’s tax burden in 2018 amounted to ISK 2,880m, whereof the fishing quota fee amounted to ISK 1,068m.

In addition to the taxes, recognised by the company as an expense, the company collected and paid taxes and dues amounting to ISK 2,824m. These were in connection with the operation and the value it creates directly.

The tax footprint of the company, therefore, was a total of ISK 5,704m in 2018.

The company is proud of its contribution to the community and the social development that takes place therein.

FINANCIAL VALUE THAT THE COMPANY CREATED THROUGH ITS OPERATION IN 2018.

HB Grandi tax footprint Unit 2018 2017 2016
Company expenses m.ISK 2.880 2.625 3.271
Fishing quota fee 1.068 756 809
Tax burden resulting from employees 1.337 1.291 1.349
Catch dues and port fees 134 184 201
Taxes on assets 103 136 106
Income tax 31 129 668
Carbon tax 206 128 138
Other taxes 1 1 -
Collected taxes: m.ISK 2.824 2.870 3.231
Employee tax burden 2.699 2.686 2.884
Withholding taxes 125 184 347
HB Grandi tax footprint m.ISK 5.704 5.495 6.502
HB GRANDI 2018 TAX FOOTPRINT (Icelandic)

INVESTMENTS INTO THE INFRASTRUCTURE AND SERVICES OF THE COMMUNITY

HB Grandi is very aware of its role when it comes to investing in infrastructure and services in the communities in which it operates. The company’s investments, e.g. in Vopnafjörður, where the development of pelagic fish processing has been taking place with increased fishing quotas, show that the company believes that such investments are an important basis for ensuring favourable living conditions in Vopnafjörður in the long term. A large proportion of direct and indirect jobs are created in the town due to the operations of HB Grandi. As a result, the municipality has had support from HB Grandi to nurture and strengthen infrastructure development and services in the community, such as in educational and cultural issues, sports, services and transportation, to mention a few.

MANAGERS FROM THE LOCAL COMMUNITY

HB Grandi has three defined operating units. They are in Reykjavík, in Akranes and in Vopnafjörður. The operation of the company outside the Reykjavík area is largely managed by management personnel from the local community.

PROCUREMENT POLICY AND SUPPLIER ASSESSMENT

It is HB Grandi’s policy to support activities in Vopnafjörður, Akranes and Reykjavík that in some manner relate to the company or are important to the communities in the area in question. When selecting suppliers and service entities, however, HB Grandi demands that quality, service, competitive prices and competition viewpoints are always given precedence. If these four elements are all in place, they lead the company to the most favorable price each time, maximum quality and improved services.

SUPPLIERS IN THE LOCAL COMMUNITY

HB Grandi defines Iceland as its local community. The proportion of Icelandic suppliers for purchased operating costs, goods and services is 96% of the total purchases of the company in 2018. This excludes the renewal of the fishing fleet. HB Grandi has in most cases made the requirement that suppliers maintain a warehouse for the operation of the company and that the delivery is in accordance with use each time. All costs and wastage as regards supplies, therefore, are kept to a minimum. The location of the company outside the greater Reykjavík area means that the company sources the services on offer locally and thereby supports its local community. This is of great importance for the company and its employees.

Over the past two years, HB Grandi has increasingly directed purchases of operating supplies through the procurement website Timian. This has been a great success. Suppliers are selected depending on whether their products and services meet the quality requirements of HB Grandi. The most advantageous price is the deciding factor as to from which supplier the company sources goods.

ENVIRONMENTAL IMPACT OF SUPPLIERS

A part of the project “The Cleaner Value Chain in Fisheries” is the collection of information on the environmental impact of the services and goods that HB Grandi purchases from its suppliers. Such information collection allows HB Grandi to build up knowledge of the emissions of greenhouse gasses from all the company’s operating units and all its value chain. Thus, the company can make an informed decision on doing business with the suppliers who cause the least environmental impact and thereby effectively reduce the negative environmental effects from the operation of the company.

In 2016, HB Grandi began to include a provision on environmental issues in its largest procurement agreements. The provision is as follows:

“HB Grandi is a party to the climate declaration of Festa, the Centre for Corporate Social Responsibility, and the City of Reykjavík that was signed by 104 companies in Höfði in 2015. By signing the declaration, the company has undertaken to reduce the release of greenhouse gases in coming years. A part of this includes mapping the effects of service providers and their operation on the operation of HB Grandi, which will be reflected in the environmental results that the company publishes each year. To support these goals, the service providers will undertake, at the beginning of each year or on a regular basis, to provide information on their environmental impact on the operation of HB Grandi during the preceding year.”

At present, there are seventeen agreements with the largest suppliers that contain this provision.

AT PRESENT, SEVENTEEN AGREEMENTS WITH THE LARGEST SUPPLIERS CONTAIN AN ENVIRONMENTAL PROVISION

DIGITAL SOLUTIONS AND INNOVATION

Digital solutions and the fourth industrial revolution will transform the fisheries industry as well as other sectors. We at HB Grandi are well aware of this technological development and work together with a number of companies on innovation and interesting solutions in the field of digital technology.

HI-TECH VESSELS

DEFINITION OF CATCH QUOTA ON BOARD A FISHING VESSEL

The Technology Development Fund (Tækniþróunarsjóður) has provided grants to develop equipment that defines catch quotas which would be approved by the authorities immediately on board fishing vessels. The basis for this system is the development of computer-assisted vision which is already present on board the company’s fishing vessels. Participants in the project, in addition to HB Grandi, are Skaginn 3X, FISK Seafood, Iceprotein and Fiskistofa.

DISSEMINATION OF OCEAN WEATHER MEASUREMENTS FROM VESSELS

HB Grandi has signed a declaration of intent on collaboration with the Icelandic Meteorological Office (Veðurstofa Íslands) and BitVinci ehf. about the dissemination and registration of ocean weather measurements from the company’s vessels. Ocean weather measurements are key studies that make it possible for the Icelandic Meteorological Office to carry out its safety role as it should, e.g. in connection with weather forecasts and warnings, as well as relating to research into climate change. HB Grandi wishes to take an active part in the collection of measurements that can make ocean weather forecasts more accurate, which will be of use to research into climate changes and in studies of the viability of marine resources in the future. BitVinci ehf. manages the project.

FISHING GEAR

Last autumn, Akurey took on board a new four-panel codend from Hampiðjan. The codend has proved to work well. It places less pressure on the fish and results in fish brought on board alive, which again means that the quality of the raw material is increased.

During the year, HB Grandi participated in two developmental projects that have the goal of achieving better success with bottom trawl fishing. One is called the “Breiðvarpan” (broad trawl) and is a collaborative project with Hampiðjan. The other project is the development of a new type of trawl boards in collaboration with ECCO trawl boards.

Both projects have the goal of increasing the productivity of the company by increasing catch per unit effort (CPUE), achieving higher catch values with improved catch quality, lower fuel costs and decreasing carbon emissions.

RENEWAL OF FISHING FLEET

In 2013, HB Grandi decided to renew its fleet of vessels. In 2017, the company accepted delivery of three new wetfish trawlers and began the operation of two of these in 2018: Akurey AK and Viðey RE. Engey RE began operations in 2017. The pelagic fleet was fully renewed in 2015. Investments in the fleet of vessels as of 2013 have amounted to EUR 157m. Approximately EUR 35m of this amount was paid in 2018.

Significant technological advances have taken place with the new high-tech vessels owned by the company, given that it is the largest development project in the Icelandic fisheries industry to date. The results are internationally revolutionary solutions where it has been made possible to maintain the quality of the product better than before and at the same time, to eliminate the most dangerous and tiresome jobs on board.

Each fish is photographed after gutting, where its species is analysed and measurements taken of its volume and length. The fish is then cooled using a SUB Chilling cooling process without ice, which maintains quality and shelf-life. After the ice-free chilling, the fish is transferred automatically into numbered storage tubs on the processing deck of the vessel. The storage tub is then automatically transferred into the hold of the vessel – no human hands are involved. When arriving back at port, the vessel itself sees to the unloading.

By using the Trackwell software, captains record the catch and species in each individual haul. These records replaced the old method of keeping a catch log manually. It has the option of listing how the catch is divided in size, as well as various other information that can prove valuable at a later date.

AUTOMATIC PROCESSING

A new and fully equipped packaging station for frozen products was brought into service in 2018. The new packaging station is in Ísbjörninn and replaces an older packaging facility that was in the fish processing plant in Reykjavík. With the establishment of the new packaging station, there were considerable improvements, as it is much more efficient and automated than the previous station.

HB Grandi and Valka ehf. began working together in 2009 to develop an x-ray–controlled water-jet trimming machine which removes the pin bones automatically from redfish fillets. In 2017, Valka delivered a new water-jet trimming machine together with a sorting machine for redfish. It is more than twice as fast as the older machine and is, moreover, much more automated. In the meantime, HB Grandi purchased the water-jet trimmer that was used to cut cod, a move that also proved successful. This new technology has revolutionised the processing of groundfish and created new opportunities for processing plants to maximise the value of their catches.

HB Grandi uses the Innova production system in its production management of groundfish processing in the plant in Reykjavík. When the fish is delivered into the plant, it is recorded for processing in the system, which then manages the production digitally and maintains traceability back to the vessel.

The RapidFish quality inspection is a dynamic system for recording the quality of the catch and helps HB Grandi to ensure that all quality standards are complied with.

The fish meal and oil processing plant in Vopnafjörður has adopted Near Infrared Analysis technology or NIR. NIR measuring devices use infrared beams to measure the chemical composition of the fish meal, such as protein, fat, salt, TVN and more. Such a device has been in use in the laboratories of the company for several years. The new device is different in that it is located on the production line and is network based.

SMART ENVIRONMENTAL MANAGEMENT

HB Grandi has been a pioneer in the adoption of automatic, smart environmental management which involves, among other things, automatically collecting data on the environmental aspects of the company and distributing information to stakeholders. A part of the smart environmental management has been making information processes that are mandatory for vessels according to environmental legislation, including MARPOL, electronic. In addition, electronic monitoring equipment for supervisory bodies has been installed where supervisory authorities can carry out their monitoring duties electronically through a web interface instead of having to be physically present. HB Grandi, moreover, has setup smart containers and smart scales in the waste sorting stations of the company. This equipment records, in real time, the recycling of raw materials and waste and transmits the information electronically to the environmental database of the company.

TELEMEDICINE EQUIPMENT

Over the past few years, HB Grandi has been engaged, in collaboration with Radíómiðun, Síminn and Akureyri Hospital, in installing telemedicine equipment in the company’s vessels. Such a system has now been installed on board both pelagic vessels, Víking AK and Venus NS, and will soon be installed in other vessels operated by the company. When accidents or illness occur on board and the equipment in the on board hospital room has been turned on, all accessible network connections in the area will be directed toward the hospital room. From the hospital room, it will then be possible to send live images of the patient together with all the main vital signs the doctor needs to assess the condition of the patient. This equipment can make all the difference when assessing whether the helicopter needs to be sent or not. In addition, it supports ships’ officers in the care of the patient.

HB Grandi has also taken up a digital accident registration system which is accessible through the company’s intraweb. The object of the system is to make it easier for employees to register accidents and to ensure that the safety management of the company has an overview of what accidents occur, that they are examined and that the appropriate measures taken to prevent further accidents.

CORPORATE GOVERNANCE

The Board of Directors and Directors of HB Grandi place great importance on maintaining good management practices so as to ensure that the work of the Board, as well as the operation of the company as whole, meets the criteria that apply to good governance. The company is listed in the main market of the NASDAQ exchange in the Nordic countries and follows the communication rules that apply there. An Annual General Meeting is held every year, and investor meetings are held four times a year.

Below you can access information on the Board of Directors, the governance statement (only in Icelandic) and the rules of procedure of the Board. These contain information on the composition of the Board, division of power and decision making.

The principal decisions made by the Board of Directors in 2018 were:

  • Guðmundur Kristjánsson recruited as CEO of HB Grandi.
  • Purchase of the company Ögurvík ehf., which operates Vigri RE. The decision was confirmed at a shareholders’ meeting.
  • Approval of new organisational chart.

Sub-committees appointed by the Board of Directors:

Audit Committee
Eggert Benedikt Guðmundsson Chairman, is a member of the Board of Directors
Anna G. Sverrisdóttir Member of the Board of Directors
Gunnar Ásgeirsson Independent
Remuneration Committee
Magnús Gústafsson Chairman, is a member of the Board of Directors
Danielle Pamela Neben Member of the Board of Directors
Kristrún Heimisdóttir Member of the Board of Directors
CORPORATE GOVERNANCE STATEMENT (ICELANDIC)
BOARD’S RULES OF PROCEDURE (ICELANDIC)
EXECUTIVE MANAGEMENT AND BOARD OF DIRECTORS (ICELANDIC)

OPERATING RESULTS

Unit 2018 2017
Revenue EUR(000) 189.986 193.198
Operating expenses EUR(000) 170.712 175.792
Other operating income EUR(000) 12.342 10.592
Operating profits 31.616 27.998
Wages and benefits paid in Iceland EUR(000) 67.684 71.125
Payment to owners EUR(000) 10.359 16.338
Interest payments to creditors EUR(000) 5.764 3.959
Significant financial support from public entities EUR(000) - -
Tax benefit due to innovation and development projects EUR(000) 675 349
Proportion of managers from the local community % 100 100
Proportion of suppliers in the local community % 96 96