In 2010 it was decided to divide the operation into a fleet section (HAVFISK ASA) and a distribution section that was to be organised into a new group with Norway Seafoods as the parent company. Norway Seafoods undertook to lease existing processing facilities from HAVFISK (then Aker Seafoods) and continue the processing activities that had earlier been run by the Aker Seafoods group. By leasing the facilities in question and their operating equipment to Norway Seafoods, HAVFISK fulfils the activity obligations associated with the respective facilities. Norway Seafoods rents facilities and premises for the acceptance, processing, packing and shipping of fish and fish products, with all fixtures, machines, production equipment, spare parts and other inventory. The tenant is responsible for all expenses for the operation and use of the facility, including official requirements and orders. The lease runs for 15 years. The tenant is also entitled to extend the lease on unchanged terms for two further periods of 10 and 5 years respectively. The lease cannot be terminated during the lease period, with the following exceptions: The landlord may terminate the agreement with written notice to the tenant and with immediate effect if termination in the landlord's reasonable assessment is necessary to avoid a breach of the prevailing requirements for the landlord's activities in law, regulations and licence conditions, and corresponding lease agreements between one or more of the landlord's associated companies and one or more of the tenant's associated companies would also be terminated. In such a case the landlord is free to start activities in the facility. If the lease is terminated as above, the tenant must pay an amount to the landlord corresponding to any losses before tax the landlord may suffer in each of the first five financial years from and including the year in which the lease is terminated. The amount must be paid no later than 15 January the following year based on accounts approved by the board. For accounting purposes, operating equipment is considered sold by instalments. For financial leases, the receivable rent is split into instalments and financial income. The book value of the receivables as at 01 January 2015 was NOK 71.9 million. Instalments for 2015 amount to NOK 8.4 million, made up of NOK 3.2 million in financial income and NOK 5.2 million in instalment payments. At the end of 2015 the residual value of the contracts in relation to the annuity was NOK 66.7 million. Unaccrued financial income for the remainder of the lease period amounts to NOK 17.5 million. For accounting purposes, the processing facilities are considered as lease of assets. For operational leases, the rent is entered on a straight line basis over the lease period. With effect from the third quarter of 2015, a supplement was added to the lease agreement for the processing facilities whereby quarterly rent was determined based on the EBITDA achieved by Norway Seafoods in the last four quarters. The rent is determined based on a scale of 0 to 130% of the original rent. This means that rent is zero with negative EBITDA and thereafter is set on the basis of a scale that goes up to 130% of the original rent. To achieve 100% of the original rent, Norway Seafoods must deliver EBITDA of over NOK 50 million. The maximum rent (130%) arises when EBITDA exceeds NOK 80 million. Because of the changing rental conditions, an external valuation has been obtained for the facilities with the highest book value. The valuation exceeds book value. With effect from the third quarter of 2015, the rent in Hammerfest also changed, with the replacement of the Rypefjord plant with that in Forsøl. The Rypefjord plant is now for sale and Norway Seafoods has no rent obligations for this plant with effect from July this year. Based on the rent being 100 % of the original rent, the annual rent with effect from Q3 2015 is NOK 8.4 million. Future rent, based on the lease period expiring after 15 years, amounts to NOK 79 million. Annual rent and the remaining amount of rent will increase or decrease according to the above-mentioned scale for calculation of rent; ref. also note 28 transactions and agreements with related parties. |