Financial Strategy
When managing capital, the Group’s objective is to maintain a capital structure that is able to support operations and maximise shareholder value. The farming business is characterised by price volatility and challenging production dynamics. The Group must be financially solid in order to manage 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, which is defined as being in a position to meet the Group’s liabilities as they fall due, at all times. 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 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 maintaining financial flexibility and limiting refinancing risk.
The Group utilises bank loans for the purpose of providing capital for investment in the Company’s business. The Group also utilises financial instruments such as accounts receivable, accounts payable, etc. that are directly ascribable to day-to-day business operations.
Group Financing
The Bakkafrost Group has group financing which covers the Bakkafrost Group. In relation to 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 bank debt. In addition, the Group companies have a guaranteed self-debtor in solidus for the balance, without limitations for each other.
Any insurance refunds are also part of the guarantees.