As part of an on-going quality review of the calculation of the fair value adjustment on biological assets an error in Marine Harvest Norway as per 31 March 2011 has been detected by the company. As a consequence, the Q1 2011 statements of comprehensive income and financial position have been restated.
The error, which amounts to a negative pre-tax number of NOK 399 million, relates to a computing error in the estimation of the fair value of the biological assets required under IFRS (IAS 41).
Please note that the Q1 2011 operational EBIT and cash flows for both Marine Harvest Norway and the Marine Harvest Group are unaffected by the error.
The restatements are attached together with relevant supporting documentation such as restatements of key ratios for the Marine Harvest Group and segmental data for Marine Harvest Norway. The reported EBIT after fair value adjustment for biological assets is negatively affected by the same amount for both the Business Unit and the Group. Consequently certain subsequent lines in the statement of comprehensive income as well as certain items of the statement of financial position as highlighted in the attachment are impacted.
Information on fair value of adjustment on biological assets under IAS 41
Biological assets comprise eggs, juveniles, smolt and fish in the seawater sites. Biological assets are valued at fair value less cost to sell, unless the fair value cannot be measured reliably. Broodstock, smolt and small live fish are measured at cost less impairment losses. Live fish over approximately 1-1.5 kg is measured at fair value less cost to sell.
Effective markets for live fish do not exist so the valuation of live fish under IAS 41 implies establishment of an estimated value of the fish in hypothetical markets. The calculation of the estimated fair value is based on market prices for harvested fish and adjusted for estimated differences in accordance with IAS 41.18 b). The prices are reduced for harvesting costs and freight costs to the market, to arrive at net value back to farm. The valuation reflects the expected quality grading and size distribution. Further the valuation will take into account the stage in the life cycle, actual size and expected harvest weight of the fish. The change in estimated fair value is recognised in the statement of comprehensive income on a continuous basis, and is classified separately (not included in the cost of harvested biomass). On harvest, the fair value adjustment is reversed on the same line.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.