Financial
Performance

Iceland Seafood International activities are exposed to variety of risk factors related to its operations and financials. Effective risk management is important to minimize the risk of material misstatements and for the business to perform. Detailed information on risk factors can be found in the Prospectus which was published in relation to the Nasdaq Main Market listing in October 2019 and is available on the Company’s website.

The following description of risk factors is not complete and is not listed in any order of priority.

• CURRENCY RISK: The reporting currency of the Group is the Euro, therefore the Group has a currency risk related to the operation of subsidiaries in UK and Argentina, which operate and report in a different currency. Additionally, individual subsidiaries use forward contracts to mitigate currency risk, e.g. when buying raw material in a foreign currency to the local market. In certain markets, predominantly Iceland, purchases are made in the currency in which the goods are sold, providing a natural currency hedge.

• SUPPLIER RISK: The Group is exposed to risks regarding suppliers, in both the wild and farmed seafood sector, as it sources its products from specific origins and production methods. This potentially limits the number of suppliers the Group can purchase from in some instances, although the Group has a wide supply base. Currently four large Icelandic seafood companies, which hold a considerable percentage of the national fishing quotas in Iceland are significant strategic shareholders in Iceland Seafood which the Company believes mitigates the risk considerably. In Argentina the Company is cooperating with raw material brokers and vessel owners that hold licences for fishing Argentinean shrimp. To secure the raw material needed for the production, agreements have been made where these counterparties are obliged to sell the raw material they catch to the Company’s operation for a defined period of time. As consideration for this commitment, the Company provides pre- payment to the counterparties for the raw material.

• CREDIT RISK: The credit risk of the Group mainly relates to accounts receivables, i.e. those customers are not able to pay for goods that the Group has sold to them. The Group controls this risk carefully, with the vast majority of all receivables credit insured. The Group does not take uninsured positions against a customer without going through an appropriate risk assessment procedure.

• LIQUIDITY RISK: The Group manages liquidity risk by ensuring sufficient liquidity is available from current bank facilities to meet foreseeable needs and to invest cash assets safely and profitably. The Group´s main sources of financing are a multicurrency revolving credit facility with an Icelandic financial institution, a 4-year unsecured bond listed on Nasdaq Iceland, two six months bills listed on Nasdaq Iceland, credit facilities with a number of banks in Spain which finance the Southern Europe division and credit facilities with a foreign bank which finance the Northen Europe division. At the end of 2024 the total funding headroom of the Group was €38.9 million including cash.

• INSURANCE RISK: The Group has appropriate insurance policies in place, which provides insurance cover against product and property damage, certain delays, general liability and environmental liability in accordance with normal practice within the industry. Additionally, the Company maintains Directors and Officers insurance for its executive management.

• POLITICAL RISK: Political and economic instability in different markets could have a negative impact on the Group’s operations. The Current crisis in Ukraine and related economic impacts have significantly affected the seafood industry and therefore the Group’s operations. The Group’s diversification both in terms of markets and customer base helps when comes to mitigate this risk.

• INFORMATION SECURITY RISK: The risk of failure when comes to securing information systems and data is evident, which can cause operational disruptions and financial losses. The risk of cybercriminals breaking into our suppliers’ systems, directing payments from us to fake bank account is also evident. The Group has taken significant measures to protect it’s systems against cyber-attacks and ensuring appropriate security levels in relation to payment transfers. The Group has also implemented the appropriate processes and procedures to control this risk and ensure appropriate actions in terms of adverse events.

• CLIMATE RISK: Ocean acidification – Majority of the global carbon cycle is circulated through the ocean which absorbs the greater part of excess heat from GHG emissions causing acidification. The ocean is the home to a vast variety of marine species and acidification disrupts the balance of life found in the ocean which can affect seafood supplies. Extreme weather events – Climate change increases the frequency of extreme weather events. This can affect the availability of seafood due to dangerous sea conditions as well as delaying transportation of seafood from producer to the end consumer.