The Group’s objective, when managing capital, is to maintain a capital structure able to support the operations and maximise shareholder value. The farming business is characterized by price volatility and challenging production dynamics. The Group must be financially solid to be able to cope with fluctuations in profits and financial position, and the Group’s equity ratio shall not be less than 35 percent.
The main objective of Bakkafrost’s financial strategy is to ensure the ongoing liquidity of the Group, defined as being at all times in a position to meet the Group’s liabilities as they fall due. This also includes being able to meet financial covenants on the Group’s debt under normal circumstances.
Liquidity risk arises from the Group’s potential inability to meet its financial obligations towards suppliers and debt capital providers. The Group’s liquidity situation is closely monitored, and rolling forecasts of cash flows and cash holdings are prepared regularly. Liquidity risk management includes maintaining flexibility in funding by securing available committed credit lines provided by banks and sufficient liquid assets.
The Group seeks to maintain committed facilities to cover forecast borrowings for the next 12 months, plus financial headroom to cover the planned investments and unforeseen movements in cash requirements.
Bakkafrost continuously monitors funding options available in the capital markets as well as trends in the availability and cost of such funding with a view to maintain financial flexibility and limiting refinancing risk.
The Group has bank loans for the purpose of providing capital for investment in the company’s business. The Group also has financial instruments such as accounts receivables, accounts payable, etc. that are ascribable directly to day-to-day business operations.
The Bakkafrost Group has a group financing covering the Bakkafrost Group. In connection with this, P/f Bakkafrost has together with other Group companies pledged licenses, property, plant and equipment, shareholdings, inventory and receivables as security for the Group’s total debt to the banks. In addition, the Group companies have a guaranteed self-debtor in solidus for the balance without limitations for each other.
As part of the guarantees are also any insurance refunds.