ANNUAL REPORT – FERD AS
Income statement 1 January - 31 December
AMOUNT (NOK 1000) | Note | 2020 | 2019 |
---|---|---|---|
OPERATING INCOME AND EXPENSES | |||
Dividend and group contribution from financial investments | 4 | 342 821 | 529 362 |
Unrealised changes in values on financial investments | 4 | 6 036 522 | 2 806 249 |
Net gain on sales of financial investments | 4 | 836 598 | 857 964 |
Other income | 3 | 29 924 | 34 041 |
Operating income | 3 | 7 245 865 | 4 227 616 |
Salary expenses | 9,15 | 247 750 | 158 053 |
Depreciation and impairment | 12,21 | 18 497 | 7 878 |
Other operating expenses | 10,11 | 135 456 | 93 868 |
Operating expenses | 401 703 | 259 799 | |
Operating profit | 6 844 163 | 3 967 817 | |
Interest income | 17,20 | 46 108 | 86 593 |
Interest expenses | 17,20,21 | -37 611 | -75 950 |
Net other financial items | 20 | -29 034 | -30 272 |
Net financial result | 20 | -20 538 | -19 512 |
Profit before tax | 6 823 625 | 3 948 305 | |
Income tax expense | 8 | -67 016 | 233 495 |
PROFIT FOR THE YEAR | 6 890 641 | 3 714 810 |
Total comprehensive income 1 January - 31 December
AMOUNT (NOK 1000) | Note | 2020 | 2019 |
---|---|---|---|
PROFIT OF THE YEAR | 6 890 641 | 3 714 810 | |
Other income and expenses not reclassified to the income statement at a later date: | |||
Estimate deviation on pensions | 15 | - | - |
Tax on estimate deviation on pensions | 8 | - | - |
TOTAL COMPREHENSIVE INCOME | 6 890 641 | 3 714 810 |
Balance sheet as at 31 December
AMOUNT (NOK 1000) | Note | 2020 | 2019 |
---|---|---|---|
ASSETS | |||
Non-current assets | |||
Tangible assets | 12 | 37 320 | 6 578 |
Right of use assets | 21 | 159 490 | 175 607 |
Investments in subsidiaries | 3,5,7 | 23 330 965 | 17 868 952 |
Long-term receivables on group companies | 5,17 | 123 475 | 133 574 |
Other receivables | 5 | 64 704 | 84 895 |
Total non-current assets | 23 715 954 | 18 269 607 | |
Current assets | |||
Short-term receivables on group companies | 5,17 | 44 441 | 17 516 |
Other short-term receivables | 5 | 106 988 | 124 152 |
Listed shares and bonds | 3,5 | 8 409 850 | 6 152 473 |
Unlisted shares and bonds | 3,5,7 | 3 898 190 | 3 355 842 |
Hedge funds | 3,5 | 3 507 678 | 4 625 047 |
Derivatives | 3,5 | 7 480 | 76 100 |
Short-term liquidity fund investments (cash equivalents) | 3,5 | 4 927 | 2 043 930 |
Bank deposits | 3,5,13 | 2 433 894 | 1 225 126 |
Total current assets | 18 413 448 | 17 620 186 | |
TOTAL ASSETS | 42 129 402 | 35 889 792 |
Balance sheet as at 31 December
AMOUNT (NOK 1000) | Note | 2020 | 2019 |
---|---|---|---|
EQUITY AND LIABILITIES | |||
Equity | |||
Share capital | 14 | 183 268 | 183 268 |
Share premium | 3 057 406 | 3 057 406 | |
Other paid-in equity | 809 905 | 809 905 | |
Other equity | 36 645 781 | 30 319 655 | |
Total equity | 40 696 360 | 34 370 233 | |
Non-current liabilities | |||
Pension liabilities | 15 | 39 040 | 36 884 |
Deferred tax | 8 | 174 103 | 337 454 |
Long term interest bearing debt | 22 | 199 531 | 93 508 |
Non-current lease liabilities | 21 | 143 948 | 159 023 |
Total non-current liabilities | 556 621 | 626 870 | |
Current liabilities | |||
Trade payables | 5 | 4 617 | 13 094 |
Income tax payable | 8 | - | 2 370 |
Public duties etc. | 5 | 12 230 | 9 591 |
Cash pool overdraft | 5,16 | 258 269 | 537 037 |
Debt to group companies | 5,17 | 375 692 | 200 379 |
Current lease liabilities | 21 | 17 856 | 17 262 |
Other current liabilities | 5 | 207 757 | 112 957 |
Total current liabilities | 876 421 | 892 690 | |
Total liabilities | 1 433 042 | 1 519 559 | |
TOTAL EQUITY AND LIABILITIES | 42 129 402 | 35 889 792 |
Oslo, 19 April 2021
The Board of Directors of Ferd AS
Signed electronically Johan H. Andresen Chairman of the Board | Signed electronically Morten Borge Board Member, CEO | |
---|---|---|
Signed electronically Tom Erik Myrland Board Member | Signed electronically Erik Rosness Board Member | Signed electronically Gry Skorpen Board Member |
Statement of changes in equity
2020
AMOUNT (NOK 1000) | Share Capital (note 14) | Share premium | Other paid-in equity | Total paid-in equity | Reserve for unrealized gains | Other equity | Total other equity | Total equity |
---|---|---|---|---|---|---|---|---|
Equity at 1 Jan. 2020 | 183 268 | 3 057 406 | 809 905 | 4 050 578 | 15 770 312 | 14 549 343 | 30 319 655 | 34 370 233 |
Profit for the year | 3 933 828 | 2 574 299 | 6 508 127 | 6 508 127 | ||||
Total comprehensive income | 3 933 828 | 2 574 299 | 6 508 127 | 6 508 127 | ||||
Transactions with owners | ||||||||
Additional dividend paid *) | -182 000 | -182 000 | -182 000 | |||||
Total transactions with owners | -182 000 | -182 000 | -182 000 | |||||
Equity at 31 Dec. 2020 | 183 268 | 3 057 406 | 809 905 | 4 050 578 | 19 704 139 | 16 941 642 | 36 645 781 | 40 696 360 |
*) Ferd AS has in 2020 paid an additional dividend of NOK 182 million to Ferd Holding AS, of which 142 million have been paid
2019
AMOUNT (NOK 1000) | Share Capital (note 14) | Share premium | Other paid-in equity | Total paid-in equity | Reserve for unrealized gains | Other equity | Total other equity | Total equity | |
---|---|---|---|---|---|---|---|---|---|
Equity at 1 Jan. 2019 | 183 268 | 3 057 406 | 809 905 | 4 050 578 | 12 838 219 | 13 863 016 | 26 701 235 | 30 751 813 | |
Profit for the year | 2 932 093 | 796 327 | 3 728 420 | 3 728 420 | |||||
Total comprehensive income | 2 932 093 | 796 327 | 3 728 420 | 3 728 420 | |||||
Transactions with owners | |||||||||
Additional dividend paid *) | -110 000 | -110 000 | -110 000 | ||||||
Total transactions with owners | -110 000 | -110 000 | -110 000 | ||||||
Equity at 31 Dec. 2019 | 183 268 | 3 057 406 | 809 905 | 4 050 578 | 15 770 312 | 14 549 343 | 30 319 655 | - | 34 370 233 |
*) Ferd AS has in 2019 paid an additional dividend of NOK 110 million to Ferd Holding AS, as well as an ordinary dividend of NOK 300 million.
Statement of cash flows 1 January - 31 December
Cash flow statement
The cash flow statement has been prepared using the direct method, i.e., the statement presents the Company's actual payments and disbursements in order to show the cash flows from ordinary operations, investing and financing activities, respectively.
Cash and cash equivalents
Cash and cash equivalents include cash, bank deposits and other short-term and easily realisable investments that will fall due within 3 months, also including restricted funds. Bank overdraft is presented as short-term debt to finance institutions in the balance sheet. In the statement of cash flows, the overdraft facility is included in cash and cash equivalents.
AMOUNT (NOK 1000) | Note | 2020 | 2019 |
---|---|---|---|
Operating activities | |||
Proceeds from realisations of financial assets | 4 | 10 241 061 | 5 166 900 |
Dividends from financial assets | 4 | 217 824 | 148 327 |
Purchases of financial assets | 4 | -7 705 343 | -4 278 440 |
Proceeds and disbursements from realisations of currency futures | 4 | -241 351 | -91 350 |
Salaries and operating expenses | 9, 10 | -291 628 | -241 567 |
Payments and disbursements of tax | 8 | -22 255 | -39 969 |
Net cash flows from/ used in (-) operating activities | 2 198 308 | 663 901 | |
Investing activities | |||
Payments from subsidiaries | 4, 17 | 100 159 | 802 568 |
Disbursements to subsidiaries | 17 | -680 925 | -137 707 |
Net cash flows used in investing activities | -580 766 | 664 861 | |
Financing activities | |||
Proceeds to Ferd Holding | 17 | -142 499 | -230 459 |
Payments and disbursements from external financing | 16 | 100 000 | 100 000 |
Interest, financial and foreign currency items | 2 635 | 7 936 | |
Net cash flows used in (-)/from financing activities | -39 865 | -122 523 | |
Effects of exchange rate changes cash and cash equivalents | -90 141 | -28 264 | |
Change in bank deposits | 1 487 536 | 1 177 975 | |
Bank deposits at 1 January | 1 225 126 | 423 835 | |
Bank deposits at 31 December | 2 433 894 | 1 225 126 | |
Cash pool overdraft 31.12 | -258 269 | -537 037 | |
Short-term liquidity fund investments 31.12 | 4 927 | 2 043 930 | |
Total cash and cash equivalents | 13 | 2 180 552 | 2 732 019 |
Note 1 General information and accounting principles
General information
Ferd is a family-owned Norwegian investment-company committed to value-creating ownership of businesses and investments in financial assets. In addition, Ferd has an extensive involvement in social entrepreneurship. Ferd AS is located in Dronning Mauds gate 10, Oslo.
Ferd is owned by Johan H. Andresen and his family. Andresen is the Chair of the Board. The Company's financial statements for 2020 were approved by the Board of Directors on 19 April 2021.
Basis for the preparation of the financial statements
Ferd AS’ financial statements are prepared in accordance with the Norwegian Accounting Act section 3-9 and regulation on simplified application of international accounting standards.
Investments in subsidiaries
Subsidiaries are companies where the parent company Ferd AS has direct or indirect control. Ferd has control over an investment if Ferd has the decision power over the enterprise in which it has invested, is exposed to or entitled to a variable return from the enterprise, and at the same time has the opportunity to use this decision power over the enterprise to influence on the variable return
Subsidiaries are classified as tangible assets in the balance sheet and measured at fair value. Value changes on subsidiaries, current returns like dividend and gain or loss on the realisation of subsidiaries are recognised as net operating income in the income statement.
Investments in associated companies and joint ventures
Associates are entities over which Ferd has significant influence, but not control. Significant influence implies that Ferd is involved in strategic decisions concerning the company’s finances and operations without controlling these decisions.
Significant influence normally exists for investments where Ferd holds between 20 % and 50 % of the voting capital.
A joint venture is a contractual arrangement requiring unanimous agreement between the owners about strategic, financial and operational decisions.
Investments in associates and joint ventures are recognised at fair value with value changes through profit or loss and classified as current assets in the balance sheet. Value changes on the investments, current returns like dividend and gain or loss on the realisation of investments are recognised as net operating income in the income statement.
Foreign currency translation
The financial statements are presented in Norwegian kroner (NOK), which is the functional currency of Ferd AS. Transactions in foreign currency are recognised and measured in NOK at the date of the transaction. Monetary items in foreign currency are translated to NOK on the basis of the exchange rate at the date of the balance sheet. Gain and loss due to currency changes is recognised in the result.
Dividend
Dividend and group contribution proposed by the Board is recognised as current liabilities pursuant to the exemption in the regulation to the Norwegian Accounting Act section 3-9.
Note 2 Accounting estimates and judgemental considerations
Management has used estimates and assumptions in the preparation of the financial statements. This applies for assets, liabilities, expenses and disclosures. The underlying estimates and assumptions for valuations are based on historical experience and other factors considered to be relevant for the estimate on the balance sheet date. Estimates can differ from actual results. Changes in accounting estimates are recognised in the period they arise.
The main balances where estimates have a significant impact on disclosed values are mentioned below. The methods for estimating fair value on financial assets are also described below.
In Ferd's opinion, the estimates of fair value reflect reasonable estimates and assumptions for all significant factors expected to be emphasised by the parties in an independent transaction, including those factors that have an impact on the expected cash flows, and by the degree of risk associated with them.
Determination of the fair value of financial assets
A large part of Ferd's balance sheet comprises financial assets at fair value. The fair value assessment of financial assets will at varying degrees be influenced by estimates and assumptions related to factors like future cash flows, the required rate of return and interest rate level. The most significant uncertainty concerns the determination of fair value of the unlisted financial assets.
Listed shares and bonds
The fair value of financial assets traded in active and liquid markets is determined at noted market prices on the balance sheet date (the official closing price of the market). Accordingly, the determination of the value implies limited estimation uncertainty.
Unlisted shares and bonds
The class “Unlisted shares and bonds” comprises private shares and investments in private equity funds. The fair value is determined by applying well-known valuation models. The use of these models requires input of data that partly constitutes listed market prices (like interest) and partly estimates on the future development, as well as assessments of a number of factors existing on the balance sheet date.
Hedge funds
The hedge funds are managed by external parties providing Ferd with monthly, quarterly or half-yearly estimates of the fair value. The estimates are verified by independent administrators. In addition, the total return from the funds is assessed for reasonableness against benchmark indices.
Liquidity fund investments
The fair value of the liquidity fund investment is measured on the basis of quoted market prices. If market rates are not available, the investment is measured in compliance with pricing models based on the current yield curve and external credit ratings.
Derivatives
The fair value of derivatives is based on quoted market prices.
Determination of the fair value of subsidiaries with properties
Ferd has subsidiaries with properties recognised at fair value. The fair value is based on the discounted value of future cash flows, and the estimate will be impacted by estimated future cash flows and the required rate of return. The main principles for deciding the cash flows and required rates of return are described below.
Future cash flows are based on the following factors:
Existing contracts
Expected future rentals
Expected vacancies
The required rate of return is based on a market-based rate of return for properties with the assumed best location (prime- yield CBD) with the addition of a risk premium for the property.
The risk premium is based on:
Location
Standard
Expected market development
Rent level compared to the rest of the market The tenant’s financial strength
Property specific knowledge
In the event that transactions concerning comparable properties close to the balance sheet date have taken place, these values are applied as a cross-reference for the valuation.
Commercial properties not let out and properties included in building projects are normally assessed at independent valuations.
Determination of the fair value of financial subsidiaries and subsidiaries owned by the business area Ferd Capital
Ferd AS owns investments indirectly through subsidiaries acting as holding companies for these investments. The fair value of these subsidiaries is set to the carrying value of equity, adjusted for non-recognised changes in value of the underlying investments. The underlying investments are valued according to the same principles and methods as Ferd AS' direct investments.
Note 3 Segment reporting
Ferd reports business areas in line with IFRS 8. Ferd is an investment company, and management makes decisions, is following up and evaluates the decisions based on the development in value and fair value of the Company's investment. Ferd distinguishes between business areas based on investment type/mandate, capital allocation, resource allocation and risk assessment.
Ferd has four commercial business areas:
Ferd Capital is a long-term investor working actively with the companies during the period of ownership to secure the development in value to be the best possible. Ferd Capital comprises three mandates: Non-listed companies, listed companies and Special Investment.
Ferd Capital's largest investments as of 31 December 2020 are:
- Elopak (99.9 percent ownership holding) is one of the world's leading manufacturers of packaging systems for fluid food articles. With an organisation and cooperating partners in more than 40 countries, the company's products are sold and marketed in more than 100 countries.
- Aibel (49.4 percent ownership holding) is a leading supplier to the international upstream oil and gas industry concentrating on the Norwegian shelf. The company is engaged in operating, maintaining and modifying offshore and land based plants, and is also supplying complete production and processing installations.
- Interwell (64.5 percent ownership holding) is a preeminent Norwegian supplier of high-tech well tools to the international oil and gas industry. The company's most important market is the Norwegian shelf, but it has in recent years also gained access to several significant markets internationally.
- Brav (100.0 percent ownership holding) is developing, manufacturing and marketing ski wax, ski sticks, accessories and textiles for sporting and active leisure time use. The company has extensive operations in Norway and abroad.
- Mestergruppen (75,3 percent ownership holding) is a prominent actor in the Norwegian building materials market concentrating on the professional part of the market. The company's operations include the sale of building materials and developing land and projects, housing and cottage chains.
- Servi (99.7 percent ownership holding) develops and manufactures customer specific hydraulics systems, cylinders and vents to the offshore, maritime and land based industries.
- Broodstock (93,6 percent ownership holding) focused on Nordic based small and medium sized businesses in the seafood industry in general and the aquaculture supplier industry in particular.
- Simployer (72,5 percent ownership holding) is a software-as-service company which delivers a range of services related to expertise, knowledge, digital solutions, as well as training for HR and financial professionals.
- Fjord Line (44.6 percent ownership holding) is a modern shipping company offering sea transport between Norway, Denmark and Sweden. In addition to passenger traffic, Fjord Line has adequate capacity for freight of all types of utility vehicles handled by the shipping company's cargo departments in Norway and Denmark.
- Fürst (40.0 percent ownership holding) operates the largest medical laboratory in the Nordics and daily analyses blood samples from more than 10 000 patients.
- Mnemonic (41.9 percent ownership holding) is one of Europe’s largest business within the cybersecurity industry. Mnemonic helps businesses to manage and minimized their security risks, protect their data and defend themselves against internet threats.
- Benchmark Holdings (25,9 percent ownership holding) contributes to improving fish health within fish farming by manufacturing special meal, roe and vaccines.
- Nilfisk (16.7 percent ownership holding) delivers washing equipment to the professional market as well as to consumers.
- Boozt (8,9 prosent eierandel) is a Nordic technology company selling fashion and lifestyle online.
Ferd Invest mainly invests in listed Nordic limited companies. They hold a portfolio of investments in up to 25 companies, the majority of which have a market capitalisation of over NOK 15 billion. The ambition is to beat a Nordic share index.
Ferd External Managers is responsible for the company’s investments with external managers. The business area focuses on markets that complement the areas where Ferd invests directly, and invests in funds that are deemed to give attractive return over time.
Ferd Real Estate develops and operates high-quality, environmentally friendly real estate in Norway. We create value that is more than financial return through our development of sustainable communities, workplaces and apartments and projects.
Other areas mainly comprise bank deposits, short term liquidity funds, Ferd Impact investments, equity investments in Ferd Social Entrepreneurs, investments in externally managed private equity funds and hedge funds acquired in the second-hand market. Other areas also comprise some financial instruments to be utilised by management to adjust the total risk exposure. Costs to the company's management, staff and in-house bank are also included.
Result 2020
Amount (NOK 1000) | Ferd AS | Capital | Invest | External Managers | Real Estate | Other areas |
---|---|---|---|---|---|---|
Operating income | 7 245 865 | 4 684 347 | 642 787 | 783 259 | 1 104 714 | 30 758 |
Operating expenses | -401 703 | -160 611 | -12 684 | -30 023 | -33 832 | -164 553 |
Operating result | 6 844 163 | 4 523 735 | 630 104 | 753 236 | 1 070 882 | -133 795 |
Balance sheet 31 December 2020 | ||||||
Investments in subsidiaries | 23 330 965 | 18 251 739 | - | - | 4 933 750 | 145 475 |
Investments classified as current assets | 15 828 125 | 6 226 364 | 3 710 721 | 4 734 270 | 130 | 1 156 639 |
Bank deposits/drawings on group account | 2 433 894 | 0 | - | - | - | 2 433 894 |
Other assets | 536 418 | 187 775 | 4 920 | 40 232 | 44 325 | 259 165 |
Total assets | 42 129 402 | 24 665 879 | 3 715 641 | 4 774 502 | 4 978 205 | 3 995 174 |
Result 2019
AMOUNT (NOK 1000) | Ferd AS | Capital | Invest | External Managers | Real Estate | Other areas |
---|---|---|---|---|---|---|
Operating income | 4 227 616 | 2 735 808 | 350 558 | 678 216 | 455 787 | 7 248 |
Operating expenses | -259 799 | -110 743 | -9 843 | -19 509 | -32 562 | -87 142 |
Operating result | 3 967 817 | 2 625 065 | 340 715 | 658 707 | 423 224 | -68 537 |
Balance sheet 31 December 2019 | ||||||
Investments in subsidiaries | 17 868 952 | 13 918 665 | - | - | 3 857 211 | 93 076 |
Investments classified as current assets | 16 253 391 | 4 508 972 | 3 413 807 | 4 786 409 | 130 | 3 544 073 |
Bank deposits/drawings on group account | 1 225 126 | - | - | - | - | 1 225 126 |
Other assets | 542 324 | 255 682 | 10 188 | 32 023 | 3 099 | 241 332 |
Total assets | 35 889 792 | 18 683 320 | 3 423 995 | 4 818 432 | 3 860 440 | 5 103 606 |
Note 4 Income from financial investments
AMOUNT (NOK 1000) | Dividend and group contributions from financial investments | Unrealised value changes on financial investments | Net gains on sales of financial investments | Total |
---|---|---|---|---|
Investments in subsidiaries | 100 159 | 4 321 803 | - | 4 421 961 |
Listed shares and stakes | 85 991 | 2 319 858 | -184 893 | 2 220 955 |
Unlisted shares and bonds | 29 679 | -187 741 | -25 571 | -183 633 |
Hedge funds | 126 992 | -404 282 | 970 771 | 693 481 |
Liquidity fund investments | - | -13 115 | 76 291 | 63 176 |
Total 2020 | 342 821 | 6 036 522 | 836 598 | 7 215 942 |
AMOUNT (NOK 1000) | Dividend and group contributions from financial investments | Unrealised value changes on financial investments | Net gains on sales of financial investments | Total |
---|---|---|---|---|
Investments in subsidiaries | 317 727 | 2 170 202 | - | 2 487 929 |
Listed shares and stakes | 114 496 | 63 388 | 417 296 | 595 180 |
Unlisted shares and bonds | 58 889 | 365 344 | 17 442 | 441 675 |
Hedge funds | 38 250 | 185 332 | 410 535 | 634 118 |
Liquidity fund investments | - | 21 982 | 12 691 | 34 673 |
Total 2020 | 529 362 | 2 806 249 | 857 964 | 4 193 575 |
Note 5 Financial instruments and the use of fair value
Classification of financial instruments
Financial instruments constitute a substantial part of Ferd’s balance sheet and are of considerable significance for the Company's financial position and result. Financial assets and liabilities are recognised when the Company becomes a party to the contractual obligations and rights of the instrument.
Financial assets:
- Investments in equity instruments and derivatives are measured at fair value thourgh profit or loss.
- Other financial assets, including accounts receivable, are held with the intention to receive contractual cash flows and are measured at amortized cost. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not traded in an active market. They are classified as current assets, unless they are expected to be realised more than 12 months after the balance sheet date. Loans and receivables are presented as trade receivables, other receivables and bank deposits in the balance sheet.
- Derivatives are initially measured at fair value through profit or loss with the exception of derivatives which are held for hedging purposes and meet the requirements for hedge accounting.
Financial liabilities
- Derivatives are measured at fair value through profit or loss with the exception of derivatives held for hedging purposes and meet the requirements for hedge accounting.
- Other financial liabilities are measured at amortized cost. Trade payable and other liabilities are classified as current liabilities
if the payments fall due within one year or within the ordinary operating cycle. Debt that has been incurred through the use of Ferd’s
credit loan facility is presented as long-term debt if Ferd has both the opportunity and intention to repay the debt over a time period of more than 12 months after the end of the reporting period.
Purchases and sales of financial instrument transactions are recognised on the date of the contractual agreement, which is the day the Group commits itself to buy or sell the financial instrument. Financial instruments are derecognised when the contractual rights to receive the cash flows from the investmetn expire or have been transferred to another party. Correspondingly, financial instruments are derecognised when the Group on the whole has transferred the risks and rewards connected to ownership of the financial asset.
Financial instruments at “fair value over profit and loss” are initially measured at quoted prices at the balance sheet date or estimated on the basis of measurable market information available at the balance sheet date. Transaction costs are recognised in the income statement. In subsequent periods, the financial instruments are measured at fair value based on market values or generally accepted calculation methods. Changes in fair value are recognised in the income statement.
Loans and receivables are initially measured at fair value with the addition of direct transactions costs. In subsequent periods, the assets and liabilities are measured at amortised cost by using the effective interest method, less any decline in value. A provision for a decline in value is made for actual and possible losses on receivables. The Group regularly reviews receivables and prepares estimates for losses, as the basis for the provisions in the financial statements. When preparing the estimate, historical data is used for losses on receivables, which are classified according to the same risk characteristics that are used as a basis within the Group. Based on historical observable default rates, an expectation is made for future losses, for which a provision is recognized. Losses from declines in value are recognised in the income statement.
Gain and loss from the realisation of financial instruments, changes in fair values and interest income are recognised in the income statement in the reporting period as incurred. Dividend income is recognised when the Group has the legal right to receive payment. Net income related to financial instruments is classified as operating income and presented as “Income from financial investments” in the income statement.
Hedge accounting
Ferd can apply financial derivatives to reduce the financial loss from exposures to unfavourable changes in exchange rates or interest rates. Derivatives are recognized as financial instruments at fair value through profit or loss. Ferd does not have any hedge accounting in the parent company accounts.
Ferd's principles in the measurement of fair value, in general
Ferd applies the valuation method that is considered to be the most representative estimate of an assumed sales value. Such a sale shall be carried out in an orderly transaction at the balance sheet date. As a consequence, all assets for which there is observable market information, or where a transaction recently has been carried out, these prices are applied (the market method). When a price for an identical asset is not observable, the fair value is calculated by another valuation method. In the valuations, Ferd applies relevant and observable data at the largest possible extent.
For all investments where the value is determined by another method than the market method, analyses of changes in value from period to period are carried out. Thorough analyses on several levels are made, both overall within the business area, by Ferd's group management and finally by Ferd's Board. Sensitivity analyses for the most central and critical input data in the valuation model are prepared, and in some instances recalculations of the valuation are made by using alternative valuation methods in order to confirm the calculated value.
Ferd is consistent in the application of valuation method and normally does not change the valuation principles. A change of principles will deteriorate the reliability of the reporting and weaken the comparability between periods. The principle for the valuation and use of method is determined for the investment before it is carried out, and is changed only exceptionally and if the change results in a measurement that under the circumstances is more representative for the fair value.
Valuation methods
The value of subsidiaries is determined on the basis of the companies' recorded equity and adjust for changes in value not recognised. Underlying investments are valued according to the same principles as investments directly owned by Ferd AS, as described below.
Investments in listed shares are valued by applying the market method. The quoted price for the most recent carried- out transaction on the market place is the basis.
Investments in unlisted shares managed in-house are normally valued on the basis of an earnings multiple. In calculating the value (Enterprise Value - EV), ratios like EV/EBITDA, EV/EBITA, EV/EBIT and EV / EBITDA-CAPEX) are applied. Ferd obtains relevant mutiples for comparable companies. The multiples for the portfolio companies are adjusted if the assumptions are not the same as the peer group. Such assumptions can include a control premium, a liquidity discount, growth assumptions, margins or similar. The company's result applied in the valuation is normalised for one-off effects. Finally, the equity value is calculated by deducting net interest-bearing debt. In the event that an independent transaction in the market has taken place, this is normally used as a basis for our valuation.
The valuation of investments in externally managed private equity and hedge funds is based on value reports received from the funds (NAV).
The part of the hedge funds portfolio reported under Other areas is acquired in the second-hand market, often at a considerable discount compared to the reported value from the funds (NAV). In the measurement of these hedge funds, estimates from several external brokers are obtained to evaluate at which discount these hedge funds are traded, compared to the most recently reported NAV. Ferd makes an assessment of the broker estimates, makes a best estimate for discount and uses this estimate in the valuation of the hedge funds.
Rental properties are valued by discounting future expected cash flows. The value of properties being part of building projects is valued at an assumed sales value on a continuous basis. There is often a shift in value at achieved milestones. Our calculated values are regularly compared to independent valuations.
The table below is an overview of carrying and fair value of the Company's financial instruments and how they are recognised in the financial statements. It is the starting point for additional information on the Company's financial risk and refers to notes to follow.
AMOUNT (NOK 1000) | Financial instruments at fair value over profit and loss | Financial instruments measured at amortized cost: | Total | Fair value |
---|---|---|---|---|
Non-current assets | ||||
Investments in subsidiaries | 23 330 965 | - | 23 330 965 | 23 330 965 |
Long-term receivables on group companies | - | 123 475 | 123 475 | 123 475 |
Right-to-use assets | - | 159 490 | 159 490 | 159 490 |
Current receivables | - | 64 704 | 64 704 | 64 704 |
Total 2020 | 23 330 965 | 347 669 | 23 678 634 | 23 678 634 |
Total 2019 | 17 868 952 | 218 469 | 18 087 422 | 18 087 422 |
Current assets | ||||
Short-term receivables on group companies | - | 44 441 | 44 441 | 44 441 |
Other short-term receivables | - | 106 988 | 106 988 | 106 988 |
Listed shares and bonds | 8 409 850 | - | 8 409 850 | 8 409 850 |
Unlisted shares and bonds | 3 898 190 | - | 3 898 190 | 3 898 190 |
Hedge funds | 3 507 678 | - | 3 507 678 | 3 507 678 |
Derivatives | 7 480 | - | 7 480 | 7 480 |
Liquidity fund investments | 4 927 | - | 4 927 | 4 927 |
Bank deposits | - | 2 433 894 | 2 433 894 | 2 433 894 |
Total 2020 | 15 828 125 | 2 585 323 | 18 413 448 | 18 413 448 |
Total 2019 | 16 253 391 | 1 366 794 | 17 620 186 | 17 620 186 |
Short-term debt | ||||
Trade accounts payable | - | 4 617 | 4 617 | 4 617 |
Public duties etc. | - | 12 230 | 12 230 | 12 230 |
Cash pool overdraft | - | 258 269 | 258 269 | 258 269 |
Debt to group companies | - | 375 692 | 375 692 | 375 692 |
Lease liabilities | - | 17 856 | 17 856 | 17 856 |
Other short-term debt | - | 207 757 | 207 757 | 207 757 |
Total 2020 | - | 858 565 | 858 565 | 858 565 |
Total 2019 | - | 873 058 | 873 058 | 873 058 |
Fair value hierarchy - financial assets and liabilities
Ferd classifies assets and liabilities measured at fair value in the balance sheet by a hierarchy based on the underlying object for the valuation. The hierarchy has the following levels:
Level 1: Valuation based on quoted prices in active markets for identical assets without adjustments. An active market is characterised by the fact that the security is traded with adequate frequency and volume in the market. The price information shall be continuously updated and represent expected sales proceeds. Only listed shares are considered to be level 1 investments.
Level 2: Level 2 comprises investments where there are quoted prices, but the markets do not meet the requirements for being characterised as active. Also included are investments where the valuation can be fully derived from the value of other quoted prices, including the value of underlying securities, interest rate level, exchange rate etc. In addition, financial derivatives like interest rate swaps and currency futures are considered to be level 2 investments. Ferd's hedge fund portfolio is assessed to meet the requirements of level 2. These funds comprise composite portfolios of shares, interest securities, raw materials and other negotiable derivatives. For such funds the value (NAV) is reported on a continuous basis, and the reported NAV is applied on transactions in the fund.
Level 3: All Ferd's other securities are valued on level 3. This concerns investments where all or parts of the information about value cannot be observed in the market. Ferd is also applying valuation models for investments where the share has little or no trading. Securities valued on the basis of quoted prices or reported value (NAV), but where significant adjustments are required, are assessed on level 3. For Ferd this concerns all private equity investments and funds investments reported under Other areas, where reported NAV has to be adjusted for discounts. A reconciliation of the movements of assets on level 3 is shown in a separate table.
Ferd allocates each investment to its respective level in the hierarchy at the acquisition. Transfers from one level to another are made only exceptionally and only if there have been changes of significance for the level classification concerning the financial asset. This can be the case when an unlisted share has been listed or correspondingly. A transfer between levels will then take place when Ferd has become aware of the change.
The table shows at what level in the valuation hierarchy the different measurement methods for the Group's financial assets at fair value are considered to be:
2020
AMOUNT (NOK 1000) | Level 1 | Level 2 | Level 3 | Total 2020 |
---|---|---|---|---|
Investments in subsidiaries | - | - | 23 330 965 | 23 330 965 |
Listed shares and bonds | 8 409 850 | - | - | 8 409 850 |
Unlisted shares and bonds | - | - | 3 898 190 | 3 898 190 |
Hedge funds | - | 3 132 404 | 375 274 | 3 507 678 |
Derivatives | - | 7 480 | - | 7 480 |
Liquidity fund investments | - | 4 927 | - | 4 927 |
Derivatives | - | - | - | - |
Total 2020 | 8 409 850 | 3 144 811 | 27 604 428 | 39 159 090 |
2019
AMOUNT (NOK 1000) | Level 1 | Level 2 | Level 3 | Total 2019 |
---|---|---|---|---|
Investments in subsidiaries | - | - | 17 868 952 | 17 868 952 |
Listed shares and bonds | 6 152 473 | - | - | 6 152 473 |
Unlisted shares and bonds | - | - | 3 355 842 | 3 355 842 |
Hedge funds | - | 4 138 383 | 486 663 | 4 625 047 |
Derivatives - assets | - | 76 100 | - | 76 100 |
Liquidity fund investments | - | 2 043 930 | - | 2 043 930 |
Derivatives - liabilities | - | -0 | - | -0 |
Total 2019 | 6 152 473 | 6 258 413 | 21 711 458 | 34 122 343 |
Reconciliation of movements in assets on level 3
2020
AMOUNT (NOK 1000) | OB 1 Jan. 2020 | Purchases /share issues | Sales and proceeds from investments | Unrealised gains and loss, recognised in the P&L | recognised in the result | CB 31 Dec. 2020 |
---|---|---|---|---|---|---|
Investments in subsidiaries | 17 868 952 | 1 117 523 | -70 264 | 4 309 643 | 105 110 | 23 330 965 |
Unlisted shares and bonds | 3 355 842 | 1 430 626 | -1 020 291 | 861 008 | -728 995 | 3 898 190 |
Hedge funds | 486 663 | 1 394 | -158 173 | -27 721 | 73 111 | 375 274 |
Total | 21 711 458 | 2 549 543 | -1 248 728 | 5 142 930 | -550 774 | 27 604 428 |
2019
AMOUNT (NOK 1000) | OB 1 Jan. 2019 | Purchases /share issues | Sales and proceeds from investments | Unrealised gains and loss, recognised in the P&L | recognised in the result | CB 31 Dec. 2019 |
---|---|---|---|---|---|---|
Investments in subsidiaries | 15 588 307 | 110 443 | - | 2 170 202 | - | 17 868 952 |
Unlisted shares and bonds | 2 492 626 | 578 222 | -203 327 | 442 056 | 46 266 | 3 355 842 |
Hedge funds | 645 464 | 1 335 | -71 521 | -149 125 | 60 511 | 486 663 |
Total | 18 726 397 | 689 999 | -274 847 | 2 463 133 | 106 776 | 21 711 457 |
Specification of applied indata and sensitivity analysis
The table below gives an overview over the most central assumptions used when measuring the fair value of Ferd's investments, allocated to level 3 in the hierarchy. We also show how sensitive the value of the investments is for changes in the assumptions
AMOUNT (NOK 1000) | Balance sheet value at 31 Dec 2020 | Applied and implicit EBITDA multiples | Value, if the multiple is reduced by 10 % | Value, if the multiple is increased by 10 % | Applied discount rate | Value, if the interest is increased by 1percentage point | Value, if the interest is reduced by 1percentage point |
---|---|---|---|---|---|---|---|
Investment in Ferd Eiendom AS | 4 934 242 | - | - | - | 6,7 %-12,0 % | 3 449 942 | 7 145 742 |
Other investments in subsidiaries sensitive to multiples | 15 401 951 | 7,8‑ 21,5 | 13 524 725 | 17 150 956 | - | - | - |
Unlisted shares and bonds sensitive to multiples | 2 522 606 | 8,6 ‑ 23,9 | 2 027 491 | 3 017 721 | - | - | - |
1) Investments in companies with an ownership interest of less than 50% |
Note 6 Risk management – investing activities
There have been no significant changes related to the Company's risk management in the period.
IMPAIRMENT RISK AND CAPITAL ALLOCATION
Ferd's allocation of capital shall be in line with the owner's risk tolerance. One measure of this risk tolerance is the size of the decline in value in kroner or percent that the owner accepts if any of the markets Ferd is exposed to should experience very heavy and quick downfalls. The impairment risk regulates how large part of equity that can be invested in assets with high risk for impairment. This is measured and followed up by stress tests. The loss risk is assessed as a possible total impairment expressed in kroner and as a percentage of equity. Due to Ferd's long-term approach, the owner can accept significant fluctuations in value-adjusted equity.
CATEGORIES OF FINANCIAL RISK
Liquidity risk
Ferd's current and estimated future liquidity needs are continuously analyzed and assessed. Ferd requires that under normal market conditions at least NOK 4 billion of the financial investments consists of assets that can be realized within the next three months. This is primarily achieved through investments in listed shares and highly liquid hedge fund investments.
Foreign currency risk
Ferd is well aware of foreign currency risks. We assume that Ferd always will have a certain part of equity invested in euro, USD and Swedish kroner, and is therefore normally not hedging the currency exposure to Norwegian kroner.
Ferd has no outstanding currency derivatives on the parent company level as at 31 December 2020.
SENSITIVITY ANALYSIS, IMPAIRMENT RISK IN INVESTMENT ACTIVITIES
The stress test is based on a classification of Ferd's equity in different asset classes, exposed for impairment as follows:
- The Norwegian stock market declines by 30 percent
- International stock markets decline by 20 percent
- Property declines by 10 percent
- The Norwegian krone appreciates by 10 percent
In order to refine the calculations, it is considered whether Ferd's investments will decline more or less than the market. As an example, it is assumed that the unlisted investments in a stress test scenario have an impairment loss of 1.0-1.3 times the Norwegian market.
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Price risk: Norwegian shares declined by 30 percent | -8 300 000 | -6 300 000 |
Price risk: International shares decline by 20 percent | -2 100 000 | -2 100 000 |
Price risk: Property declines by 10 percent | -1 000 000 | -500 000 |
Currency risk: The Norwegian krone appreciates 10 percent | -2 500 000 | -1 600 000 |
Total impairment in value-adjusted equity | -13 900 000 | -10 500 000 |
Impairment as a percentage of value-adjusted equity | 34% | 30% |
Note 7 Shares and stakes in other companies with ownerships in excess of 10 %
Subsidiary | Segment | Business office | Stake |
---|---|---|---|
Elopak AS | Ferd Capital | Spikkestad | 99,9 % |
Ferd Aibel Holding AS - Holdingcompany for the investment Aibel* | Ferd Capital | Oslo | 100,0 % |
Ferd MG Holding AS - Holdingcompany for the investment Mestergruppen | Ferd Capital | Oslo | 98,8 % |
1912 Top Holding AS - Holdingcompany for the investment Servi | Ferd Capital | Oslo | 99,7 % |
Ferd Lab Invest AS - Holdingcompany for the investment Fürst* | Ferd Capital | Oslo | 100,0 % |
Ferd Mnemonic Holding AS - Holdingcompany for the investment Mnemonic* | Ferd Capital | Oslo | 100,0 % |
FC-Invest AS | Ferd Capital | Oslo | 100,0 % |
Brav AS | Ferd Capital | Oslo | 100,0 % |
Ferd Simployer Holding AS - Holdingcompany for the investment Simployer* | Ferd Capital | Oslo | 100,0 % |
Broodstock Capital AS | Ferd Capital | Molde | 93,6 % |
FC Holding VII AS | Ferd Capital | Oslo | 100,0 % |
FC Holding VIII AS | Ferd Capital | Oslo | 100,0 % |
FC Holding IX AS | Ferd Capital | Oslo | 100,0 % |
Ferd Eiendom AS - Holding for real estate investments | Real Estate | Oslo | 100,0 % |
Ferd Social Entrepreneurs | Other areas | Oslo | 100,0% |
Unicus AS | Other areas | Bærum | 70,0 % |
Norse Crown Company Ltd. AS | Other areas | Oslo | 100,0 % |
*) See note 3 for direct ownership in the investments
Multiple of the investments has a high ownership level,but are pure financial investments. Investments are not classified as subsidiary or associates when we lack control ower the investments. See note 1 for description of control.
Listed companies and shares | Segment | Stake |
---|---|---|
Benchmark Holdings plc | Ferd Capital | 25,9 % |
Nilfisk A/S | Ferd Capital | 19,9 % |
Unlisted companies and shares | Segment | Stake |
---|---|---|
Fjord Line AS | Ferd Capital | 44,6 % |
Credo Invest nr 10 AS | Ferd Capital | 91,3 % |
Credo Invest nr 14 AS | Ferd Capital | 42,7 % |
Rolighedsvej, 9990 Skagen ApS | Ferd Capital | 50,0 % |
SPV Verdane Winds | Ferd Capital | 43,6 % |
Founders Fund II AS | Other areas | 13,5 % |
Energy Ventures II AS | Other areas | 26,0 % |
Energy Ventures II KS | Other areas | 13,2 % |
Energy Ventures III AS | Other areas | 25,0 % |
Energy Ventures III GP LP | Other areas | 25,0 % |
Energy Ventures III LP | Other areas | 18,7 % |
Herkules Private Equity Fund II (LP-I) Limited | Other areas | 74,5 % |
Herkules Private Equity Fund III (LP-I) Limited | Other areas | 25,1 % |
Intera Fund I | Other areas | 12,0 % |
Nordic Microfinance Initiative AS | Other areas | 14,2 % |
Norwegian Microfinance Initiative AS | Other areas | 12,5 % |
NMI Frontier | Other areas | 11,3 % |
NMI Fund III | Other areas | 15,4 % |
NMI Global | Other areas | 11,3 % |
NMI Fond IV KS | Other areas | 11,2 % |
NMI GP IV AS | Other areas | 12,4 % |
StartupLab Founders AS | Other areas | 10,6 % |
Note 8 Income taxes
The income tax expense includes tax payable and changes in deferred tax. Income tax on other income and expense items in other comprehensive income is also recognised in total comprehensive income, and tax on balances related to equity transactions are set off against equity.
The tax payable for the period is calculated according to the tax rates and regulations ruling at the end of the reporting period. Tax payable for the period is calculated on the tax basis, which deviates from the "Profit before tax" as a consequence of amounts that shall be recognised as income or expense in another period (temporary differences) or income statement amounts never to be subject to tax (permanent differences).
Deferred tax is calculated on temporary differences between book and tax values of assets and liabilities in the financial statements and any tax effects of losses carried forward at the reporting date.
Deferred tax assets are only recognised in the balance sheet to the extent that it is probable that there will be sufficient taxable profits to utilise the benefits of the tax reducing temporary differences. Deferred tax liabilities and assets are calculated according to the tax rates and regulations ruling at the end of the reporting period and at nominal amounts. Deferred tax liabilities and assets are recognised net when the Company has a legal right to net assets and liabilities, and is able to and intend to settle the tax obligation net.
The tax expense comprises:
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Income tax payable | 96 566 | 50 516 |
Change in deferred tax | -163 351 | 153 776 |
Tax concerning prior periods | -10 294 | 17 845 |
Withholding tax paid | 10 062 | 11 358 |
Tax expense | -67 016 | 233 495 |
Tax payable in balance sheet
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Tax payable of the year | 96 566 | 50 516 |
Group contribution rendered | -96 566 | -48 146 |
Tax payable in balance sheet | - | 2 370 |
Reconciliation of nominal to effective tax rate
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Profit before tax | 6 441 110 | 3 961 915 |
Expected tax expense according to nominal tax rate (22 %) | 1 417 044 | 871 621 |
Non-taxable gain/loss and return on securities | -166 833 | -63 352 |
Unrealised changes in value of securities | -1 333 762 | -612 539 |
Adjustment of tax from prior periods | -10 294 | 17 845 |
Withholding tax paid | 10 062 | 11 358 |
Effect of change in tax rate | - | - |
Tax effect of other permanent differences | 16 766 | 8 562 |
Tax expense | -67 016 | 233 495 |
Effective tax rate | -1,0 % | 5,9 % |
Deferred tax
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Receivables | -4 597 | -16 880 |
Gain and loss account | 885 | 1 106 |
Financial instruments | 1 920 | 19 957 |
Tangible assets | 1 107 | 1 136 |
Provisions | -46 536 | -12 927 |
Net pensions | -8 589 | -8 115 |
Shares and bonds | 229 913 | 353 176 |
Balance sheet value at 31 Dec., deferred tax liability | 174 103 | 337 454 |
Change in net deferred tax recognised in balance sheet
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Balance sheet value at 1 January | 337 454 | 183 677 |
Charged in period | -163 351 | 153 776 |
Balance sheet value at 31 December | 174 103 | 337 454 |
Note 9 Salaries and remuneration
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Salaries | 221 193 | 131 067 |
Social security tax | 11 002 | 10 213 |
Pension costs (note 15) | 11 362 | 9 776 |
Other benefits | 4 193 | 6 998 |
Total | 247 750 | 158 053 |
Average number of employees | 52 | 41 |
Salary and remuneration to Group CEO
AMOUNT (NOK 1000) | Salary and bonus | Benefits in kind | Pension |
---|---|---|---|
Morten Borge | 10 583 | 280 | 872 |
The Group CEO participates in Ferd's annual and long term bonus scheme. Bonus is based on the results achieved in the Group.
The Group CEO participates in Ferd's collective pension schemes for salaries below 12 G. This is a contribution scheme (cf. note 15). The Group CEO also has a benefit scheme for a pension basis higher than 12 G, together with an early retirement pension scheme giving him the opportunity to retire at 65 years.
The Group CEO is entitled to 9 months severance pay if he has to resign from his position.
Fees to the Board
No specific fees have been paid for board positions in Ferd AS.
Note 10 Other operating expenses
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Lease of buildings etc. | 3 218 | 424 |
Fees to lawyers, consultants and auditors | 85 775 | 60 244 |
Travel expenses | 2 971 | 4 416 |
Loss and change in write-downs of receivables | - | -57 |
Other expenses | 43 491 | 28 841 |
Total | 135 456 | 93 868 |
Note 11 Audit fees charged to the income statement
Specification of fees to the Company's auditors PwC:
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Audit fees | 811 | 904 |
Certification services | - | 30 |
Tax services | 313 | 35 |
Other non-audit services | 1 338 | 6 403 |
Total | 2 462 | 7 372 |
Other non-audit services mainly comprise due diligence services. | ||
All amounts are exclusive of VAT. |
Note 12 Tangible assets
Tangible assets
Tangible assets are stated at cost less accumulated depreciation and impairment. The cost includes expenses directly attributable to the acquisition of the asset. Expenses incurred after the acquisition are recognised as assets when future economic benefits are expected to arise from the asset and can be reliably measured, whereas current maintenance is expensed.
Tangible assets are depreciated systematically over their expected useful lives, normally on a straight-line basis. If indications of impairment exist, the asset is tested for impairment.
Impairment
Tangible assets are considered for impairment when there are indications to the effect that future earnings cannot support the carrying amount.
In the assessment of a decline in value, the first step is to calculate or estimate the assets' recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Fair value less costs to sell is the amount that can be achieved at a sale of an asset in a transaction performed at arm’s length between well informed and voluntary parties, less costs to sell. The value in use is the present value of future cash flows expected to be generated by an asset or a cash-generating unit.
In the event that the carrying amount exceeds the recoverable amount, the difference is recognised as a write-down. Impairment losses are subsequently reversed when the impairment indicator no longer exists.
2020
AMOUNT (NOK 1000) | Buildings and land | Fixtures and equipment | Total |
---|---|---|---|
Cost at 1 January | 4 184 | 20 871 | 25 055 |
Additions | - | 33 122 | 33 122 |
Cost at 31 December | 4 184 | 53 993 | 58 177 |
Accumulated depreciation and impairment at 1 January | 18 477 | 18 477 | |
Depreciation of the year | 2 379 | 2 379 | |
Disposal of depreciation | - | - | |
Accumulated depreciation and impairment at 31 December | - | 20 857 | 20 857 |
Carrying amount at 31 December | 4 184 | 33 136 | 37 320 |
Estimated economic life of depreciable assets | - | 4-10 years | |
Depreciation method | Straight-line |
2019
AMOUNT (NOK 1000) | Buildings and land | Fixtures and equipment | Total |
---|---|---|---|
Cost at 1 January | 4 184 | 20 088 | 24 272 |
Additions | - | 783 | 783 |
Cost at 31 December | 4 184 | 20 871 | 25 055 |
Accumulated depreciation and impairment at 1 January | 16 837 | 16 837 | |
Depreciation of the year | 1 640 | 1 640 | |
Disposal of depreciation | - | - | |
Accumulated depreciation and impairment at 31 December | - | 18 477 | 18 477 |
Carrying amount at 31 December | 4 184 | 2 394 | 6 578 |
Estimated economic life of depreciable assets | - | 4-10 years | |
Depreciation method | Straight-line |
Note 13 Bank deposits
The following amounts included in bank deposits concern restricted funds:
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Employees' tax withheld | 5 530 | 3 885 |
Note 14 Share capital and shareholder information
The share capital of the Company consists of 183 267 630 shares at nominal value NOK 1, - at 31 December 2020.
Owner structure
The shareholder as at 31 December 2020 was: | Number of shares | Stake |
---|---|---|
Ferd Holding AS | 183 267 630 | 100.00 % |
Ferd AS is a subsidiary of Ferd Holding AS, being a subsidiary of Ferd JHA AS. Ferd shares offices with Ferd Holding AS and Ferd JHA AS in Oslo. Please contact Ferd for the consolidated financial statements of Ferd JHA AS.
Shares owned indirectly by the board members of Ferd AS:
Voting rights | Stake | |
---|---|---|
Johan H. Andresen (Ferd JHA AS) | 69.98 % | 15.21 % |
Katharina G. Andresen and Alexandra G. Andresen have a combined indirect ownership holding of 84,8 % of Ferd AS as a result of their share ownership in Ferd Holding AS through their holding companies Ferd KGA AS and Ferd AGA AS. |
Note 15 Pension costs and liabilities
FERD'S PENSION PLANS
Defined Contribution scheme
Obligations to make contributions to contribution based pension plans are recognised as costs in the income statement when the employees have rendered services entitling them to the contribution.
Defined benefit plan
For salaries exceeding 12 G, Ferd has established a pension scheme implying that the employees earn a pension right each year. The scheme was closed for new hires when established. The right comprises a share of the salary in excess of 12 G together with a return component depending on the employee's chosen risk profile. The pension plan has many similarities with a contribution scheme, but as Ferd is not making current payments to a fund, but has elected to take the risk of return itself, the scheme shall be classified as a benefit scheme for accounting purposes. Ferd has recognised the obligation as a pension liabiity and is expensing the current deposits and the current return as incurred.
In addition, Group management has an early retirement pension scheme giving them the opportunity to retire at 65 years. This is also a benefit scheme.
A defined benefit plan is a pension scheme defining the pension payment an employee will receive at the time of retirement. The pension is normally determined as a part of the employee's salary. The Company's net obligation from defined benefit pension plans is calculated separately for each scheme. The obligation is calculated by an actuary and represents an estimate of future retirement benefits that the employees have earned at the balance sheet date as a consequence of their service in the present and former period. The benefits are discounted to present value reduced by the fair value of the pension funds.
The portion of the period's net cost that comprises the current year's pension earnings, curtailment and settlement of pension schemes, plan changes and accrued social security tax is included in payroll costs in the period during which the employees have worked and thereby earned the pension rights. The net interest expense on the pension obligation less expected return on the pension funds is charged to the income statement as finance costs in the same period. Positive and negative estimate deviations are recognised as other income and costs in total comprehensive income in the period when they were identified.
Changes in defined benefit obligations due to changes in pension schemes are recognised over the estimated average remaining service period when the changes are not immediately recognised. Gain or loss on a curtailment or settlement of a plan is recognised in the result when the curtailment or settlement occurs. A curtailment occurs when the Company decides to reduce significantly the number of employees covered by a plan or amends the terms of a defined benefit plan to the effect that a significant part of the current employees’ future earnings no longer qualify for benefits or will qualify for reduced benefits only.
Financial assumptions at 31 December | 2020 | 2019 |
---|---|---|
Discount interest rate | 2.00 % | 1.90 % |
Expected wage growth | 2.50 % | 2.50 % |
Future expected pension regulation | 1.75 % | 1.75 % |
Expected regulation of base amount (G) | 2.25 % | 2.25 % |
DEFINED BENEFIT PLANS
Specification of the recognised liability
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Present value of unfunded pension liabilities | 39 040 | 36 884 |
Fair value of pension funds | - | - |
Total defined benefit obligation recognised in the balance sheet at 31 Dec. | 39 040 | 36 884 |
Movement in liabilities for defined benefit pensions plans
Estimate deviation recognised in total comprehensive income
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Estimate deviation on the pension obligation (benefit schemes) of the year | - | - |
Net estimate deviation for benefit schemes recognised in comprehensive income | - | - |
Pension costs recognised in the income statement
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Present value of this year's pension earnings | 2 793 | 4 877 |
Pension costs on contribution schemes | 8 569 | 4 899 |
Pension costs on defined benefit plan recognised in other comprehensive income | - | - |
Total pension costs recognised in the income statement | 11 362 | 9 776 |
Note 16 Short-term interest-bearing debt
AMOUNT (NOK 1000) | Loan amount in NOK 2020 | Loan amount in NOK 2019 |
---|---|---|
NOK | 258 269 | 537 037 |
Short-term interest-bearing debt at 31 Dec. at nominal value | 258 269 | 537 037 |
Carrying amount at 31 December | 258 269 | 537 037 |
Ferd AS has a multi-currency group cash pool agreement. Short-term interest-bearing debt at 31 December 2020 is a net overdraft on the group account arrangement for the Company against the other Group companies. The cash pool as a whole has positive det deposits as of 31 December 2020.
Note 17 Transactions and balances with group companies
Parties are considered to be related when one of the parties has the control, joint control or significant influence over another party. Parties are also related if they are subject to a third party’s control, or one party can be subject to significant influence and the other to joint control. A person or member of a person’s family is related when he or she has control, joint control or significant influence over the business. Companies controlled by or being under joint control by key executives are also considered to be related parties. All related party transactions are carried in accordance with written agreements and established principles.
Ferd AS has the following loans and balances with group companies:
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Receivables | ||
Long-term receivables on group companies | 123 475 | 133 574 |
Short-term receivables on group companies | 44 441 | 17 516 |
Total receivables | 167 916 | 151 090 |
Debt | ||
Short-term debt to group companies | 375 692 | 200 379 |
Total debt | 375 692 | 200 379 |
All group balances bear an interest of 6 months NIBOR + 1,5 percentage points. | ||
Long-term loans have interest rates at assumed market terms. |
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Dividends and group contribution | ||
Dividends | 100 159 | 317 550 |
Group contribution | - | 177 |
Total income from financial investments | 100 159 | 317 727 |
AMOUNT (NOK 1000) | 2020 | 2019 |
Services billed to group companies | ||
Staff services | 1 533 | 4 734 |
Property management | 27 314 | 20 811 |
Total income | 28 847 | 25 545 |
Interest income on intercompany loans and balances | ||
Interest income | 7 622 | 3 654 |
Net interest income | 918 | 3 654 |
Note 18 Contingent liabilities and obligations not recognised in balance sheet
Provisions
A provision is recognised when the Company has an obligation as a result of a previous event, it is probable that a financial settlement will take place and the amount can be reliably measured. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, discounted at present value if the discount effect is significant.
Guarantees and obligations not recognised in the balance sheet
AMOUNT (NOK 1000) | 2020 | 2019 |
---|---|---|
Commitments to supply subsidiaries and other enterprises with equity | - | - |
Other commitments to subsidiaries | 3 550 000 | 200 000 |
Not paid, but committed capital to funds investments | 1 174 440 | 946 431 |
Total | 4 724 440 | 1 146 431 |
On 26 February 2020, Ferd entered into an agreement to acquire NRK's property at Marienlyst, where Ferd is expected to develop apartments and workplaces in line with the adopted prospects of the property. The regulatory work is in progress where Ferd is in dialogue with the agency for planning and building services in Oslo municipality, where the final decision will be made by the politicians in Oslo municipality. The agreement gives NRK a minimum price of NOK 3.75 billion, but the final price depends on which regulation is adopted for the area. Settlement and takeover gives NRK sufficient time to find a new and modern headquarters and NRK is now in the process of finding a new site for relocating its business.
Contingent obligations and litigation
Ferd AS is presently not involved in any litigation.
Note 19 New accounting standards according to IFRS
The financial statements have been prepared in accordance with standards approved by the International Accounting Standards Board (IASB) and International Financial Reporting Standards - Interpretations Committee (IFRIC) effective for accounting years starting on 1 January 2020 or earlier.
New and amended standards applied by Ferd effective from the accounting year 2020:
There are no new standards in 2020 that will have a significant effect on the consolidated financial statements.
Note 20 Specification of financial income and financial
Interest income
Amounts in NOK 1000 | 2020 | 2019 |
---|---|---|
Interest income from bank deposits | 38 486 | 77 603 |
Internal interest income | 7 622 | 3 654 |
Other interest income | - | 5 337 |
Sum | 46 108 | 86 593 |
Interest expense
Amounts in NOK 1000 | 2020 | 2019 |
---|---|---|
Interest expense to banks | -43 410 | -75 890 |
Other interest expense | -1 849 | 57 |
Sum | -37 611 | -75 833 |
Other net financial items
Amounts in NOK 1000 | 2020 | 2019 |
---|---|---|
Currency gains and other financial income | 113 468 | 33 090 |
Currency losses | -217 521 | -30 998 |
Currency futures | -307 496 | -18 754 |
Sum | -411 549 | -16 662 |
Note 21 Right of use assets and lease liabilities
Identification of a lease
When entering into a contract, Ferd assesses whether the contract is or contains a lease agreement. A contract is or contains a lease agreement if the contract transfers the right to control the use of an identified asset for a period in exchange for a consideration.
Ferd as a lessee
Separation of the components of a lease
For contracts that constitute or contain a lease, Ferd separates lease components if it can benefit from the use of an underlying asset either alone or together with other resources that are readily available to the company, and the underlying asset is neither highly dependent on nor closely linked to other underlying assets in the contract. Ferd then accounts for each individual rental component in the contract as a lease separately from non-leased components in the contract.
Recognition of leases
At the time of implementation of a lease, Ferd recognizes a lease obligation and a corresponding right of use for all its leases, with the exception of the following exceptions applied:
- Short-term leases (lease period of 12 months or less)
- Low value assets
For these leases, the company recognizes the lease payments as other operating expenses in the income statement when they incur.
Lease liabilities
Ferd measures lease obligations at the time of implementation at the present value of the lease payments that are not paid at this time. The lease period represents the non-cancellable period of the lease, in addition to periods covered by an option either to extend or terminate the lease if Ferd with reasonable certainty will exercise this option. The rental payments that are included in the measurement of the rental obligation consist of:
- Fixed rental payments minus any receivables in form of rental incentives
- Variable rental payments that depend on an index or an interest rate, first measured using the index or the interest rate at the time of implementation
- Amounts expected to be paid to the company in accordance with residual value guarantees
- The exercise price for a call option, if the company will exercise this option with reasonable certainty
- Payment of a fine for termination of the lease, if the lease period reflects that the company will exercise an option to terminate the lease
The lease liability is subsequently measured by increasing the carrying amount to reflect the interest on the lease liability, reducing the carrying amount to reflect lease payments and measuring the carrying amount again to reflect any revaluations or changes to the lease, or to reflect adjustments in lease payments such as follows from adjustments in indices or rates.
Ferd does not include variable rental payments in the rental obligation. Instead, the company recognizes these variable rental costs in the income statement.
Ferd presents its lease obligations on its own lines in the balance sheet.
Right of use assets
Ferd measures right-of-use assets at acquisition cost, less accumulated depreciation and impairment losses, adjusted for any new measurements of the lease obligation. Acquisition cost for the right of use assets includes:
- The amount from the initial measurement of the lease obligation
- All rental payments at or before the time of implementation, less any rental incentives received
- All direct expenses for entering into an agreement were incurred by the company
- An estimate of the expenses incurred by the tenant for the dismantling and removal of the underlying asset, the restoration of the place where the unit is located, or the restoration of the underlying asset to the condition required by the terms of the lease, unless these expenses are incurred during the production of the goods.
Ferd applies the depreciation requirements in IAS 16 Property, plant and equipment when depreciating the right-of-use asset, except that the right-of-use asset is depreciated from the date of implementation until what occurs first of the end of the lease term and the end of the useful life of the right-of-use assets.
The company applies IAS 36 "Impairment of assets" to determine whether the usufruct asset has been impaired and to account for any proven impairment losses.
Right of use assets
Amount (NOK 1000) | Buildings | Total |
---|---|---|
Cost at 1 January | 181 845 | 181 845 |
Additions | - | - |
Cost at 31 December | 181 845 | 181 845 |
- | - | |
Accumulated depreciation and impairment at 1 January | -6 238 | -6 238 |
Depreciation of the year | -16 118 | -16 118 |
Accumulated depreciation and impairment at 31 December | -22 355 | -22 355 |
Carrying amount at 31 December | 159 490 | 159 490 |
Lease liabilities
Amount (NOK 1000) | 2020 |
---|---|
Undiscounted lease liabilities and payment | |
Less than 1 year | 18 187 |
1-2 years | 18 551 |
2-3 years | 19 300 |
3-4 years | 20 080 |
4-5 years | 41 372 |
More than 5 years | 63 539 |
Total undiscounted lease liabilities 31 December | 181 029 |
Changes in lease liabilities | - |
Lease liabilities 1 January (implementation effect) | 176 285 |
New / changed lease liabilities in the period | - |
Current year lease payments | -12 633 |
Interest expense on lease liabilities | -1 849 |
Total lease liabilities 31 December | 161 803 |
whereof current lease liabilities < 1 year | 17 856 |
whereof non-current lease liabilities > 1 year | 143 948 |
Other lease expenses in profit & loss | - |
Variable lease payments expensed in the period | 3 218 |
Total lease expenses included in operating expenses | 3 218 |
Practical solutions applied
Ferd has decided not to recognize leases where the underlying asset has a low value (NOK 200,000), and thus does not recognize lease liability and right-to-use assets for any of these leases. Instead, the lease payments are expensed when they occur. The company also does not recognize lease obligations and right-to-use assets for short-term leases (less than 12 months), as presented in the table above.
Options to extend a lease
Ferds lease agreements for buildings have lease periods that vary between 1 and 10 years. Several of the agreements contain a right to extension that can be exercised during the last period of the agreement. When entering into an agreement, the company assesses whether the right to extension with reasonable security will be exercised.
Note 22 Non-current interest-bearing debt
Amount (NOK 1000) | Amount in NOK 2020 | Amount in NOK 2019 |
---|---|---|
Non-current interest bearing debt to Den Nordiske Investeringsbanken | 200 000 | 100 000 |
Non-current interest bearing debt - carrying amount 31 December | 200 000 | - |
Activated start-up costs | -469 | -6 492 |
Carrying amount 31 December | 199 531 | 93 508 |
Ferd AS has a loan facility of NOK 7 billion. As of 31 December 2020, a draw-down of NOK 200 million has been made on one of the loan facilities. Loan expenses are amortized over the loan term.
Ferd has financial covenants with requirements related to 1) Equity ratio, 2) Book equity and 3) Cash and cash equivalents. At 31 December 2020, Ferd had a good margin for these requirements.
Note 23 Hendelser etter balansedagen
The coronavirus
Since the balance sheet date, Covid-19 restrictions in Norway have been further tightened, and there is still uncertainty as to how long the economic recovery will take and when the coronary restrictions can be eased or lifted. The changes in the Covid-19 restrictions after the balance sheet date will not have a significant impact on the consolidated financial statements for 2020.