Annual Report • Mar 27, 2015
Annual Report
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Flexible, attractive and environment friendly office properties
Property portfolio of
Totaling approximately
1 300 000 sqm
Portfolio market value of
NOK 28.4 billion
Average unexpired lease term of
7.7 years
Occupancy ratio of
94.6%
| This is Entra | 4 |
|---|---|
| Key figures 2014 | 5 |
| Highlights 2014 | 6 |
| Letter from the CEO | 8 |
| Management | 10 |
| The business | 12 |
| Corporate social responsibility | 22 |
| Corporate governance guidelines | 30 |
| Report of the Board of Directors | 38 |
| Board of Directors | 48 |
| Consolidated financial statements | 50 |
| Financial statements Entra ASA | 98 |
| Responsibility statement | 110 |
| Auditor's report | 112 |
| The property portfolio | 114 |
| Definitions | 118 |
Our business strategy has three pillars: customer satisfaction, profitable growth and environmental leadership.
leading buildings.
Entra is a leading owner, manager and developer of office properties in Norway, focused on centrally-located, high quality properties in Oslo, Bergen, Stavanger and Trondheim. As of 31 December 2014, Entra had a property portfolio of 105 properties totalling approximately 1.3 million square metres. The market value of the property portfolio was approximately NOK 28.4 billion. Entra has a particular expertise in the public sector, which represented approximately 76 % of the customer portfolio as of 31 December 2014.
Stavanger and Trondheim.
| 2014 1) | 2013 1) | 2012 | |
|---|---|---|---|
| OPERATIONAL | |||
| Market value of real estate portfolio (NOKm) | 28 357.9 | 24 963.3 | 24 265 |
| Total area (Gross) | 1 292 108 | 1 218 040 | 1 201 237 |
| Occupancy rate of management portfolio (%) | 94.6 | 95.8 | 95.8 |
| WAULT (years) | 7.7 | 9.2 | 9.5 |
| FINANCIAL | |||
| Rental income (NOKm) | 1 772.3 | 1 632.3 | 1 500.3 |
| Profit before value adjustments and tax (NOKm) | 789.6 | 780.6 | 984.6 |
| Profit after tax (NOKm) | 1 000.1 | 462.8 | 772.6 |
| EPRA Earnings (NOKm) | 555.0 | 403.2 | 337.0 |
| Net cash flow from investment activities (NOKm) | -1 157.0 | -999.7 | -1 238.2 |
| Net nominal interest-bearing debt (NOKm) | 13 889.8 | 14 350.1 | 13 462.2 |
| Debt ratio (LTV) (%) | 48.4 | 56.6 | 54.6 |
| Interest coverage ratio (ICR) (%) | 2.0 | 1.8 | 1.7 |
| Equity ratio (%) | 35.9 | 30.3 | 30.9 |
| Net asset value - EPRA NAV (NOKm) | 14 028.9 | 10 948.6 | 11 378.3 |
| EPRA NNNAV (NOKm) | 12 530.5 | 9 847.3 | 10 168.8 |
1) The numbers are restated as a result of a change in accounting principle for three properties from IFRIC 12 to IAS 40 "Investment properties" at 31.12.2014.
Customer satisfaction
Construction start for the project in Akersgate 34-36, involving both a new building and refurbishment of an existing building. In total a project of 6,200 sqm of offices, which is let to Amedia. The project is expecting a BREEAM Very Good classification.
The acquisition of 50 % of Hinna Park Eiendom AS in Stavanger was completed, comprising three office properties of a total of 28,000 sqm and three land plots with a total development potential of approximately 46,000 sqm office. A lease contract was signed with Wintershall for 14,000 sqm in the planned office building "Gullfaks".
Powerhouse Kjørbo in Sandvika was completed and the tenant, Asplan Viak moved into a refurbished building of 6,900 square meters. By optimizing and combining existing technologies in new ways, the office building from the 1980s was renovated into energy-positive building achieving a BREEAM Excellent classification.
Sale of Entra's 50 per cent holding in UP Entra AS to Utstillingsplassen Eiendom AS.
Signing of lease contracts with TV2, NRK, Bergensavisen, Bergens Tidene, the Media Faculty of Bergen University, and the graphics company Vizrt for the establishment of MediaCity Bergen at Lars Hillesgate 30 in Bergen (50 % owned through Entra OPF Utvikling AS).
Signing of lease contract with Husbanken and construction start for the project Papirbredden 3 in Drammen (owned 60 % through Papirbredden Eiendom AS). In total a new building project of 11,354 sqm of which some 4,000 sqm is let to Husbanken. The project has been planned and will be constructed in accordance with FutureBuilt's quality criteria, and will be a passive building with Energy class A.
Acquisition of the property Lilletorget 1 in Oslo was completed. The property is 14,000 sqm and Fellesforbundet is the largest tenant.
Completion of the project Otto Sverdrups plass 4, Sandvika, comprising an "Education and Knowledge Centre" of 11,547 square metres for Bærum Municipality and Oslo and Akershus University College. Otto Sverdrups plass 4 achieved a BREEAM Very Good classification.
Completion of the new school building of 1,967 square metres for Kristiansand International School at Kongsgård Allé 20 in Kristiansand.
Construction starts for the property Gullfaks at Hinna Park. Gullfaks is a new office building of 17,400 where Wintershall Norge AS will lease the whole building, except for the 2nd floor and commercial space in the 1st floor. The project is targeting a BREEAM Excellent classification.
Construction starts for the project Sundtkvartalet in Oslo. Sundtkvartalet will be a new office building of approximately 31,000 sqm. The project is organised through a jointly controlled company with Skanska, where Skanska and Entra own 50 per cent each. Skanska is the building contractor and has signed a lease for approximately 8,000 sqm in the building. The project is targeting a BREEAM Excellent classification.
Entra ASA was listed on the Oslo Stock Exchange on 17th of October. In connection with the listing, Entra issued new shares raising gross proceeds of approximately NOK 2.7 billion and the Norwegian Government (Ministry of Trade, Industry and Fisheries) sold shares corresponding to 50.1 % of the company post IPO.
Sale of non-core properties; Grønnegata 122 and Strandgata 41 in Tromsø, Skansegaten 2 in Stavanger and St. Olavs gate 4 in Oslo.
Construction starts for the signature project Media City Bergen in Lars Hillesgate 30 in Bergen through Entra OPF. The property consists of approximately 35,000 sqm and is planned to be extended by a further 10,000 sqm to total approximately 45,000 sqm.
Letter from the CEO
2014 will be remembered as an important year in Entra's history. After 14 years as an independent company, fully owned by the Norwegian Government, the privatisation of Entra was concluded and Entra was listed on the Oslo Stock Exchange.
The listing of Entra represents the largest Nordic real estate IPO ever. Despite challenging market conditions in October the demand for Entra shares was strong. We are particularly proud of the strong commitment among the employees – as many as 75 percent of the employees in Entra participated in the IPO.
High activity level within all business areas characterised 2014 and Entra could report a solid income and value growth. Our rental income grew by 8 % and net income from property management by 19 %. The market value of our property portfolio grew by 15 % to NOK 28.4 billion.
During 2014, Entra signed new and renegotiated leases with an annual rent totalling around NOK 170 million, and completed two major development projects – Powerhouse Kjørbo and Otto Sverdrups plass 4, both in Sandvika just outside Oslo. Projects such as Sundtkvartalet, Media City Bergen and Schweigaardsgate 16 are among ongoing projects we look forward to continue in 2015.
Entra was active in the transaction market in 2014. In line with our strategy of growth in the four largest cities in Norway and divestment of non-core assets we acquired 50 % of the shares in Hinna Park Eiendom AS in February 2014 and purchased the property Lilletorget 1 in the city centre of Oslo in July 2014. Entra furthermore sold five smaller properties in Tromsø, Stavanger and Oslo, as well as its 50 % shareholding in UP Entra during 2014.
Entra's strategic priorities are to deliver profitable growth, high customer satisfaction and to be an environmental leader. We see environmental leadership as a clear competitive advantage for our customers, our shareholders and for ourselves. In March 2014 the office building Powerhouse at Kjørbo in Sandvika was finalised. The building is refurbished into an energy positive building that produces more energy than it uses over its lifetime. We are very proud that Powerhouse has achieved the BREEAM-NOR Outstanding certification as the first property ever in Norway. We also work hard every day to reduce the energy consumption in our current buildings. During 2014 we reduced the energy consumption in our property portfolio by 10 % to 171 kWh/sqm, compared to a an average of 212 kWh/sqm for the sector according to the latest report from Enova.
Entra has a great customer portfolio of solid tenants on long leases. As of year-end 76 % of our tenants were in the public sector and the average remaining lease length was 7.7 years. Our goal is to be the best in the sector in terms of customer satisfaction. We are humble and proud that our customers seem to appreciate our efforts. In 2014 we achieved a customer satisfaction ratio of 74 against a national average of 72 for the sector.
A new era as listed company means new opportunities ahead. Along with the listing of Entra follows increased interest in the company and its operations. Entering 2015 Entra will focus on the company's core operations:profitable growth through efficient property management and letting activities, prudent project development and value accretive transactions. We will continue to work hard every day to live up to our near 7,000 new shareholder's expectations.
The workplace of the future is changing and in Entra we have considerable insight into how businesses can best handle such change processes. In line with our vision to contribute to our customers' efficiency and reputation, we are glad to share our knowledge with our customers. Based on our values – responsible, ambitious and hands-on – we will continue to do what we do best also in 2015: Office solutions and office buildings of tomorrow.
Arve Regland Acting CEO
Arve Regland has worked in Entra since January 2014. Mr Regland has a MSc in Business from the Norwegian Business School (BI) and is a state-authorised public accountant from the Norwegian School of Economics (NHH). He has previously been a partner with ABG Sundal Collier from 2004 to 2014, been a manager with Ernst & Young AS from 2002 to 2004, been listing advisor at the Oslo Stock Exchange from 2001 to 2002 and accountant with Arthur Andersen & Co from 1998 to 2001. Mr Regland held 9,230 shares in Entra as of 31.12.14
Jorunn Nerheim has worked in Entra since January 2004. Ms Nerheim has a law degree (Cand.jur) from the University of Bergen. She has previously served as administration manager and special consultant of Bergen Bygg og Eiendom AS from 1998 to 2003. Ms Nerheim held 1,538 shares in Entra as of 31.12.14
Anders Solaas has worked in Entra since August 2010. Mr Solaas has a bachelor from the University of Mannheim and a degree in finance from the University of Lund. He has previously held various positions with Hafslund ASA, including CEO of Hafslund Eiendom AS from 2006 to 2010, CFO (Markets) from 2004 to 2005, group controller from 2002 to 2003, general manager of Hafslund Energy Trading LLC from 2000 to 2002 and group controller and finance director of Hafslund Strøm AS from 1999 to 2000. In addition he has served as portfolio manager of Fondsforvaltning AS from 1994 to 1999. Mr Solaas held 461 shares in Entra as of 31.12.14
Sonja Horn has worked in Entra since August 2013. Ms Horn has a MSc in Business from the Norwegian Business School (BI). She has previously been Director and Senior Vice President (Real Estate Asset Management) at Statoil Fuel & Retail AS from 2011 to 2013, transaction advisor and partner with Union Norsk Næringsmegling AS from 2009 to 2011, head of large corporate accounts and with Fokus Bank ASA from 2004 to 2008, Director of Commercial Real Estate with the mortgage institution Fokus Kreditt AS from 2000 to 2004 and client account manager with Sparebankenes Kredittselskap AS (now DnB) from 1996 to 2000. Ms Horn held 3,846 shares in Entra as of 31.12.14
Karl Fredrik Torp has worked in Entra since March 2004. Mr Torp has a degree from the Norwegian Retail Management College (Varehandelens Høgskole). He has previously served as Director of Euro-Invest from 2000 to 2004, CEO of Eiendomsmegler 1 from 1996 to 2000 and centre director at Trondheim Torg from 1992 to 1996. Mr Torp held 2,153 shares in Entra as of 31.12.14
Hallgeir Østrem has worked in Entra since October 2013. Mr Østrem has a law degree (Cand.jur) from the University of Bergen. He has previously been a lawyer and partner with Advokatfirmaet Schjødt AS from 2001 to 2013, lawyer with OBOS from 1994 to 2001 and senior legal advisor with the municipality of Flora from 1993 to 1994. Mr Østrem held 3,846 shares in Entra as of 31.12.14
Mona Aarebrot has worked in Entra since February 2012. Ms Aarebrot has a Master of Business Administration from the Norwegian Business School (BI) and a basic university course in psychology from the University of Oslo. She has previously served as CEO of Mesta Eiendom AS from 2008 to 2012, been head of property for the south-east region of Mesta AS from 2004 to 2008 and managing director of Brækhus Dege Eiendom AS from 1999 to 2004. Ms Aarebrot held 4,615 shares in Entra as of 31.12.14
Kristin Haug Lund has worked in Entra since May 2012. Ms Haug Lund has a Master of Science from the Norwegian Technical University College (NTH) and a Master in Property Development and Management from the Norwegian University of Science and Technology (NTNU). She has previously served as managing director of Horisont from 2011 to 2012, project director of Vital Eiendom from 2005 to 2011, project manager of AF Gruppen from 2004 to 2006, project manager of NCC Property Development from 2002 to 2004 and construction manager of Veidekke ASA from 1997 to 2002. Ms Lund held 4,615 shares in Entra as of 31.12.14
Hege Njå Bjørkmann has worked in Entra since April 2013. Ms Njå Bjørkmann has a MSc in Business from the Norwegian Business School (BI). She has previously been a partner and communication advisor with Kreab Gavin Anderson from 2009 to 2013, senior communication advisor with 20/20 Communications (BWPR) from 2005 to 2009, communication advisor with JKL from 2004 to 2005 and journalist with Kapital from 2000 to 2004. Ms Bjørkmann held 2,307 shares in Entra as of 31.12.14
Entra is a leading owner, manager and developer of office properties in Norway, focused on centrally-located, high quality properties in Oslo, Bergen, Stavanger and Trondheim. As of 31 December 2014, Entra had a property portfolio of 105 properties totalling approximately 1.3 million square metres. The market value of the property portfolio was approximately NOK 28.4 billion. Entra has a particular expertise in the public sector, which represented approximately 76% of rental income at year end.
The company is a professional owner and manager of its own property portfolio. Entra operates the properties with its own staff. Through a high level of technical competence and an on-the-site presence the company's operations staff ensure that its buildings function optimally for customers every day. Entra creates additional value in its portfolio through property and project development. The company has considerable
expertise and experience in early phase design, planning and building of new, and renovation of existing, office properties.
Approximately 90 % of Entra's portfolio consists of office properties. In addition Entra owns some major cultural buildings such as the National Library and Rockheim, as well as some buildings that are used for education.
Entra has a solid track record of portfolio growth and value creation since its incorporation. Rental income grew with 8 % and net income from property management with 19 % in 2014. The market value of the property portfolio was NOK 28.4 billion as of 31 December 2014 versus NOK 25.0 as of 31 December 2013. Entra has demonstrated its ability to access external capital at competitive terms, with multiple sources of funding and a long relationship with the capital markets, having issued bonds since 2003. As of 31 December 2014, 61 % of Entra's debt financing came from the capital markets, including NOK 6.2 billion of bonds listed on the Oslo Stock Exchange.
Entra seeks to actively manage its tenant relationships in order to increase tenant satisfaction and maximise lease renewal rates. Entra works together with its tenants to design workspaces that will meet their current needs and future requirements. To build its relationships with tenants, Entra is responsible for property management for all of its management properties. Entra created a separate customer service centre in 2012 to provide consistent and timely follow-up to enquiries. Entra also targets early engagement with its existing tenants ahead of their lease maturities and works with tenants to develop customised extension strategies as necessary.
Entra benefits from the quality of its tenants, which include both a strong public and private sector tenant base. Entra actively develops its relationships with its tenants in order to increase tenant satisfaction and maximise lease renewal rates. In 2014 Entra again achieved above-average customer satisfaction (74 vs 72) according to the Norwegian Tenant Index.
Entra continues to implement and seek new environmental initiatives in order to further reduce costs and meet tenant demand for environmentally sustainable properties. These initiatives also benefit tenants by helping them to control costs and supporting their own environmental and sustainability initiatives. Entra's target is to achieve a rating of BREEAM-NOR Excellent or better for all new and fully renovated projects. Entra also enters into Green Benefit Agreements with tenants, through which Entra works with the tenant to propose investments in the property to improve its environmental sustainability. Through these and other programs, Entra has reduced the average energy consumption of its management properties by 21% from 221 kilowatt hours per square metre in 2007 to 171 kilowatt hours per square metre per 31 December 2014. In 2014, Entra completed renovating Powerhouse Kjørbo, which is expected to generate more energy than it will consume over its lifecycle.
Entra has defined three strategic pilars that create a foundation for the company's priorities and action plans.
Entra is organised in four geographic operating segments (regions): (i) Central Oslo, (ii) Greater Oslo, (iii) South/West Norway and (iv) Mid/ North Norway. Central Oslo comprises all Entra's properties located in Oslo, except for Helsfyr-Bryn and Stovner. Greater Oslo covers the properties at Helsfyr-Bryn and Stovner, as well as the properties in Drammen, Bærum, Skedsmo and Østfold. South/West Norway covers the Entra's properties in Bergen, Stavanger, Kristiansand, Arendal and Skien, while Mid/North Norway covers the properties in Trondheim, Bodø and Tromsø.
As of 31 December 2014, Entra's property portfolio comprised 105 properties, and the market value of the property portfolio was NOK 28.3 billion. A full list of the properties can be found at the back of this report.
The property portfolio consists primarily of management properties, with a significant concentration in the Oslo area. The portfolio of management properties is diversified between public sector tenants (76 %) and private sector tenants (24 %).
KRISTIANSAND
As of 31 December 2014, the management properties comprised 95 office properties with aggregate lettable area of 1,063,327 square metres. Lease maturities are staggered, and the WAULT of the management properties was 7.7 years. As of the same date, the occupancy rate was 94.6 %. A full list of the management properties can be found at the end of this report.
| Properties | Managed | Market value |
12 month rolling rent |
Net rent | Net Yield | Occupancy | WAULT | |
|---|---|---|---|---|---|---|---|---|
| Region / Location | (#) | area (sqm) | NOKm | NOKm | NOKm | % | % | Yrs |
| Oslo | ||||||||
| Central Oslo | 28 | 392 385 | 12 647 | 790 | 737 | 5.8 | 92.8 | 6.7 |
| Total Oslo | 28 | 392 385 | 12 647 | 790 | 737 | 5.8 | 92.8 | 6.7 |
| Greater Oslo | ||||||||
| Other Oslo | 8 | 109 747 | 2 482 | 171 | 159 | 6.4 | 94.9 | 9.1 |
| Sandvika | 8 | 100 721 | 2 066 | 139 | 129 | 6.2 | 95.9 | 9.3 |
| Drammen | 8 | 61 757 | 1 322 | 92 | 86 | 6.5 | 99.1 | 9.3 |
| Lillestrøm | 2 | 39 795 | 815 | 70 | 65 | 8.0 | 100.0 | 10.0 |
| Moss | 2 | 14 623 | 243 | 24 | 21 | 8.7 | 98.8 | 8.3 |
| Fredrikstad | 2 | 8 500 | 127 | 11 | 9 | 7.2 | 99.6 | 9.6 |
| Total Greater Oslo | 30 | 335 142 | 7 055 | 507 | 469 | 6.7 | 96.8 | 9.3 |
| South / West | ||||||||
| Stavanger | 8 | 80 698 | 2 139 | 147 | 138 | 6.5 | 93.0 | 8.8 |
| Bergen | 6 | 57 084 | 1 099 | 82 | 73 | 6.6 | 99.2 | 5.8 |
| Kristiansand | 8 | 46 033 | 574 | 46 | 40 | 6.9 | 91.0 | 9.9 |
| Arendal | 1 | 5 807 | 49 | 5 | 4 | 8.4 | 94.4 | 1.5 |
| Skien | 1 | 4 292 | 21 | 3 | 2 | 11.8 | 91.4 | 1.9 |
| Total South / West | 24 | 193 916 | 3 881 | 283 | 257 | 6.6 | 94.6 | 7.8 |
| Mid / North | ||||||||
| Trondheim | 9 | 117 186 | 2 270 | 173 | 155 | 6.8 | 97.9 | 7.2 |
| Tromsø | 2 | 18 225 | 248 | 17 | 14 | 5.8 | 97.1 | 9.0 |
| Bodø | 2 | 6 474 | 58 | 4 | 3 | 5.9 | 94.0 | 0.7 |
| Total Mid / North | 13 | 141 885 | 2 575 | 194 | 173 | 6.7 | 97.6 | 7.1 |
| Grand Total | 95 | 1 063 327 | 26 158 | 1 774 | 1 636 | 6.3 | 94.6 | 7.7 |
As of 31 December 2014, Entra had a portfolio of 8 larger ongoing development projects, being projects with an estimated individual investment of greater than NOK 50 million. Total project area in Entra was approximately 71,334 square metres with estimated total project cost of approximately NOK 2.3 billion. In addition Entra is involved in two large development projects through its jointly controlled entities with a project area of approximately 76,314 square metres and with estimated total project cost of approximately NOK 2.7 billion. The following table sets forth Entra ongoing development projects with an estimated individual investment of greater than NOK 50 million as of 31 December 2014. A full list of the project properties can be found at the end of this report
| Project | Ownership (%) |
Location | Expected completion |
Project area ('000 sqm) |
Occupancy % |
Estimated total project cost 1) (NOKm) |
Of which accrued 1) (NOKm) |
Yield on cost 2) |
|---|---|---|---|---|---|---|---|---|
| Group | ||||||||
| Ringstadbekkveien 105 | 100 | Sandvika | Q1-2015 | 11 923 | 84.4 | 486 | 482 | - |
| Langkaia 1 | 100 | Oslo | Q1-2015 | 8 532 | 76.1 | 161 | 161 | 13.5 |
| Schweigaards gate 16 | 100 | Oslo | Q2-2015 | 15 502 | 87.2 | 578 | 519 | 6.5 |
| Akersgata 34-36 | 100 | Oslo | Q3-2015 | 6 212 | 98.6 | 240 | 178 | 6.8 |
| Papirbredden 3 | 60 | Drammen | Q4-2015 | 11 354 | 48.3 | 266 | 98 | 8.0 |
| Gullfaks 3) | 50 | Stavanger | Q3-2016 | 17 821 | 100.0 | 539 | 92 | 6.7 |
| Total Group | 71 344 | 2 270 | 1 531 | |||||
| Jointly controlled entities | ||||||||
| Sundtkvartalet | 50 | Oslo | Q4-2016 | 31 356 | 27.5 | 1 055 | 376 | 6.7 |
| MediaCity Bergen | 50 | Bergen | Q3-2017 | 44 958 | 59.5 | 1 677 | 598 | 6.1 |
| Total Jointly controlled companies | 76 314 | 2 733 | 965 |
1) Total project cost (Including book value at date of investment decision/cost of land).
2) Estimated net rent (fully let) at completion/total project cost.
3) Gullfaks; Occupancy is reported as 100 % let due to a rental guarantee included in the purchase transaction of Hinna Park AS.
The project Ringstabekkveien 105 in Bærum municipality consists of Ringhøyden (commercial premises and apartments) and Slottshagen (apartments). Both the commercial premises and the apartments are primarily for sale. Slottshagen consists of 24 senior apartments all of which have been sold. The main part of the commercial premises at Ringhøyden of approximately 3,000 square metres is leased to Bærum municipality. The construction of 49 senior apartments was close to finalised and 28 of these were sold as of year-end. The project will be completed in the first quarter of 2015.
At Langkaia 1 in Oslo municipality the 9th and 10th floors, totalling 6,200 square metres, are being fully renovated. Approximately 5,250 square metres of this area is let to Eniro Norge AS. In addition, the old "loading balcony" is in process of being developed into office premises totalling 2,400 square metres. The project will be completed i the first quarter of 2015.
A new office building of 15,500 square metres is under construction where Statoil Fuel & Retail AS will be the largest tenant with 12,100 square metres. The project has an ambition to obtain the classification BREEAM Excellent, and will obtain energy class B. The building is expected to be completed in June 2015.
Akersgata 34/36 involves a new building and the renovation of an existing building, totalling 6,200 square metres of offices let to Amedia AS. The project expects to recieve a BREEAM Very Good classification, and energy class A. The project is expected to be completed in September 2015.
A new office building of 11,000 square meters at Papirbredden in Drammen where Husbanken has let approximately 4,000 square metres. The property has been planned and will be constructed in accordance with FutureBuilt's quality criteria. Papirbredden 3 will be a passive building with Energy class A. The project is expected to be completed in Q4 2015. The project is owned by Papirbredden Eiendom AS, where Entra owns 60% of the shares.
The 17,400 square metres office building Gullfaks at Hinna Park in Stavanger is situated close to the seashore and within a short distance of public transportation and high quality residential and commercial areas. Wintershall Norway AS will lease the whole building, except for the 2nd floor and commercial space in the 1st floor. The project, with BREEAM classification Excellent, has an estimated completion date in Q3 2016.
In Sundtkvartalet in Oslo, a new office building of approximately 31,000 square metres is under construction. The foundation work has been completed, and the concrete structures in the basement are in progress. The ambition is to obtain BREEAM classification Excellent, a passive building with Energy class A. The project is organised through a jointly-controlled company with Skanska Commercial Development Norway Holding AS, where Skanska and Entra own 50 per cent each. Skanska is the building contractor and has signed a lease for approximately 8,000 square metres in the building.
In Lars Hilles gate 30 in Bergen, MediaCity Bergen (MCB) is under development. This building comprises 45,000 square metres and will house the largest media companies in Bergen. The project will include the total renovation of the existing 35,000 square metres and an extension of 10,000 square metres. The vision behind the concept is to create an environment for innovation and knowledge development within the media industry, through establishing a cluster of media companies, technology, education and research. TV2, NRK, Bergensavisen, Bergens Tidene, the Media Faculty of Bergen University, and the graphics company Vizrt have signed lease contracts, and the letting process for the remaining areas has started. The project is owned by the jointly controlled entity Entra OPF Utvikling AS where Entra and Oslo Pensjonsforsikring own 50 per cent each.
Entra's portfolio of land and development properties contains properties with zoned development potential, but where no investment decision has been made. As of 31 December 2014, Entra had 6 properties with land and development area totalling 142,143 square metres. A full list of the properties with defined land and development potential can be found at the end of this report.
Entra also selectively gains access to development projects and manages the associated risks through its shareholding in subsidiaries with significant non-controlling interests and jointly controlled entities. Entra has demonstrated its ability to successfully work with partners to create value through such subsidiaries and jointly controlled entities. Entra's interests currently include:
The following condensed chart sets out the Entra's legal structure:
Entra's tenant base is comprised primarily of public sector tenants with long-term leases, and, as of 31 December 2014, public sector tenants accounted for approximately 76% of the rent. Entra's public sector tenants are, or are wholly owned by, governmental, county or municipal bodies. As of 31 December, Entra had more than 300 separate lease agreements with different public sector tenants, most of which run their own public tendering process and make letting decisions independently.
The market rent of the management properties was NOK 1,798 per square metre, while the 12 months rolling rent was NOK 1,774 per square metre, as of 31 December 2014. As of the same date, the management properties had more than 700 leases with weighted average unexpired lease term (WAULT) of 7.7 years. The 20 largest tenants' share of Entra's rental income amounted to 47.6 % with weighted average unexpired lease term (WAULT) of 10 years.
The following table sets forth the 20 largest tenants in Entra's management properties as of 31 December 2014
| Proportion of total contractual rent (%) |
WAULT Yrs |
Public/private sector |
|
|---|---|---|---|
| Norwegian Tax Administration | 6.0 | 10 | Public |
| Norwegian Directorate of Health | 4.1 | 4 | Public |
| Norwegian Public Road Administration | 4.0 | 8 | Public |
| National Library of Norway | 3.7 | 15 | Public |
| Oslo and Akershus University College of Applied Sciences | 2.6 | 9 | Public |
| Norwegian Directorate of Customs and Excise | 2.6 | 6 | Public |
| Norwegian Water Resources and Energy Directorate | 2.6 | 11 | Public |
| Norway Post | 2.3 | 3 | Public |
| Municipality Undertaking for Defence Buildings | 2.3 | 4 | Public |
| Borgarting Court of Appeal | 1.9 | 20 | Public |
| Bærum Municipality | 1.8 | 13 | Public |
| Buskerud and Vestfold University College | 1.7 | 11 | Public |
| County Governor of Oslo and Akershus | 1.7 | 5 | Public |
| Norwegian Petroleum Directorate | 1.6 | 18 | Public |
| Norwegian Environment Agency | 1.5 | 13 | Public |
| Asker and Bærum Police District | 1.5 | 18 | Public |
| Norwegian Directorate for Education and Training | 1.5 | 5 | Public |
| Oslo Municipality Undertaking for Social Services Buildings | 1.5 | 8 | Public |
| The National Museum of Art, Architecture and Design | 1.4 | 12 | Public |
| Norconsult AS | 1.2 | 3 | Private |
| Total | 47.6 | 10 |
Entra actively seeks to improve the quality of its property portfolio through a disciplined strategy of acquisitions and divestments. Entra currently focuses on the acquisition of large properties and projects in specific areas within its four core markets of Oslo, Bergen, Trondheim and Stavanger. Target areas include both areas in the city centres and selected clusters and communication hubs outside the city centres, allowing Entra to offer rental opportunities at a price range to its customer base. Entra's experience, financial strength and knowledge of its tenants makes the company well-positioned to make acquisitions that meet its acquisition criteria. At the same time, Entra actively divest smaller properties outside of its core
focus areas. The acquisition and divestment strategy is flexible, allowing Entra to adapt to on-going feedback from customers and market changes, and to respond to market opportunities as they arise.
Entra was active in the transaction market in 2014 and acquired 50 % of the shares in Hinna Park Eiendom AS in February 2014 and purchased the property Lilletorget 1 in the city centre of Oslo in July 2014. Entra furthermore sold five smaller properties in Tromsø, Stavanger and Oslo, as well as its 50 % shareholding in UP Entra during 2014.
Entra has a systematic approach and commitment to corporate social responsibility and has a goal to be among the sector leaders within it's key focus areas. Entra's engagement with corporate social responsibility gives value for the environment, for the customers and for society in general. By working actively on these issues Entra is also able to raise the quality of the company's property portfolio. Entra is pleased to share insights and knowledge and to contribute with inspiration.
Entra's core values are to be responsible, ambitious and hands-on. The engagement with society is reflected in these values which support the work to deliver good results, satisfy customers' expectations and collaborate well with stakeholders. Engagement in society is for Entra a natural part of all the business's processes in the value chain.
Entra, together with its main stakeholders, works in a targeted manner on the three main challenges that have been identified: global climate change, HSE risk and corruption risk. In these areas Entra can make a difference, contribute to change and inspire others.
The real estate sector represents approximately 40% of the energy consumption in Norway 1). The sector thus represents a large part of the climate challenge but at the same time has the capability to be part of the solution. Environment friendly solutions are a strategic priority in Entra. The company has worked actively on environmental measures over several years. Today Entra has lower average energy consumption in its property portfolio than the rest of the sector.
Health, safety and environment (HSE) relates to Entra's employees, partners, suppliers, customers and other stakeholders. HSE work contributes to valuable security in day-to-day activities. HSE further contributes to lower sick leave and profitable quality assurance.
Corruption involves, among other things, unethical preferential treatment and distortion of competition. Entra has zero tolerance for corruption. The company actively follows up suppliers and combating corruption. Entra has established requirements for socially responsible procurement and internal ethical guidelines that all employees must sign each year.
Entra reports its work with respect to corporate social responsibility based on the fundamental values and principles set out in the UN's Global Compact, which has as its objectives to safeguard the environment and working conditions, combat corruption and uphold human rights, as well as the UN's Guiding Principles on Business and Human Rights (UNGP).
Reporting is based on the Report to Parliament no. 27 (2013–2014) "Diverse and value-creating ownership" and the relevant section in the Accounting Act, § 3–3C.
Entra has an ambition to be an environmental leader in the sector. Based on existing technology, expertise and experience, Entra contributes to reducing energy consumption through measures in existing buildings, through refurbishment and new buildings. Entra complies with national and international environmental requirements. Entra takes an active responsibility for reducing the negative environmental impact beyond such requirements, and take responsibility outside its own value chain by contributing to the sector and to the customers' development. Entra also identifies the risk of changes in operating
parameters that follow from realistic scenarios for climate change and national and international climate measures
Entra sees no contradiction between financial profitability and its commitment on global climate change. Both customers and Entra have lower costs over time in environmentally friendly buildings, among other things through lower energy costs.
New buildings and refurbishments represent only 3% of total buildings each year. 80% of today's buildings will still be standing in 40 years' time. In order to create a lasting environmental impact Entra is therefore working not only on environmental measures in new buildings and refurbishments but also on measures in its existing building portfolio. Green Benefit Agreements are an example of an effective tool for reducing the environmental burden of the existing building portfolio.
During 2014 Entra has worked to further define the company's environment strategy, as well as establishing environment targets and completing action plans for further work. The environmental strategy forms the basis for activities in 2015 and subsequent years. Three important priorities for environmental work in Entra are set out below:
Entra's objective is always to have one innovative environmentally friendly building under development
In recent years Entra has established a leading position in the sector by developing new and renovated innovative environmentally friendly buildings. Entra will continue to build profitable, innovative, environmentally friendly buildings and harvest experience that can be used in the existing property portfolio. In 2015 Entra will set out clear, experience-based environmental criteria as a basis for future property transactions and new buildings so that environmental considerations are included in decision-making basis together with commercial considerations.
Entra's target is to save 17.6 GWh (- 11 %) in the period 2013– 2018 through measures under Green Benefit Agreements.
BREEAM-NOR is a widely recognised method for classifying sustainable buildings and is a Norwegian adaptation of the international BREEAM. The Norwegian Green Building Council administers the scheme in Norway. Buildings can be certified in accordance with various BREEAM-NOR standards.
Entra uses BREEAM-NOR as an environment classification tool. Entra aims to achieve BREEAM Excellent or better on new buildings and refurbishments. In addition Entra aim to use BREEAMNOR In-Use as a standard on all existing buildings in the portfolio by the end of 2015. The objective with BREEAM-NOR In-Use is strengthened sustainability in existing buildings. Entra is participating with a pilot building in a trial of this method.
Entra is developing buildings that are environmental leaders in a global context, irrespective of whether they are new buildings or refurbishments of existing properties. Powerhouse Kjørbo outside Oslo has attracted much attention far beyond Entra's organisation and Norway's borders. Powerhouse will produce more energy than it uses over the building's lifetime. The buildings are therefore in practice a local power station. Powerhouse Kjørbo is the first refurbished office building in Norway to achieve BREEAM-NOR certification Outstanding.
Entra also has other leading environmental friendly buildings in their portfolio. At Fredrik Selmers vei 4 in Oslo Entra has refurbished Norway's first commercial building to passive house standard, which satisfies energy class A and is approved as BREEAM-NOR Very Good. Papirbredden 2 in Drammen is one of the first office buildings in Norway to be built to passive house standard from the ground up and satisfies FutureBuilt's quality criteria. At Brattørkaia 15 in Trondheim Entra achieved BREEAM-NOR Excellent and energy class A. In addition in 2014 Entra opened the totally refurbished education centre in Sandvika. Energy consumption in the building has been reduced by 60 per cent through the refurbishment.
With the help of Green Benefit Agreements Entra's customers have saved roughly NOK 30 million."The environment must be made profitable. Then we will be able to make big advances," comments Arve Regland, CEO of Entra.
So far Entra has signed more than 100 Green Benefit Agreements with its customers. Since 2006 Entra has saved energy corresponding to the consumption of 2,000 Norwegian households through Green Benefit Agreements. This corresponds to a total annual saving of around NOK 30 million.
Entra finances the environmental measures, while customers pay through increased rent. The customer's share of operating costs is reduced by more than the increase in rent. As a result the total balance is in favour of the lessee. Once the investment has been paid down the customer receives the surplus. Examples of buildings with Green Benefit Agreements include Statens Hus in Bergen, Posthuset in Oslo and Kunnskapsparken in Drammen.
(kWh/sqm)
Entra continues to investigate new opportunities. In the refurbishment of both Powerhouse Kjørbo and Kunnskapsparken in Sandvika Entra has reused materials. As an example Entra used the well-known old glass facades from Kjørbo as internal office glazing. Reused materials give environmental gains as well as cost savings.
Entra undertakes environmental investments in the property portfolio through systematic cooperation with customers and through Green Benefit Agreements. Green Benefit Agreements are Entra's own scheme for working with customers on environmental measures. Entra's role is to identify the potential together with customers and finance the measures. Customers pay for the measures through the rent and obtain environmental gains that reduce their energy costs over time.
Green Benefit Agreements also function as a way of working with customers on energy management, waste reduction and cuts in water consumption. The agreements give documented positive results on energy efficiency and CO2 emissions.
Entra's goal is to develop, maintain and share leading expertise on environmentally friendly buildings in Norway
In order to be a sector leader on the environment over time Entra works actively to develop expertise and raise know-how levels on environmental gains among customers, partners and employees. Communication channels include lectures, articles, board appointments in sector organisations and environmental courses for new employees.
Energy consumption is an important factor in evaluating the environmental impact of commercial buildings. For several years Entra has worked to reduce energy consumption in the property portfolio. Energy figures from Enova for 2013 show that the aggregate consumption of office buildings in the sector amounted to 212 KWh/sqm. In comparison energy consumption in Entra's property portfolio was 171 KWh/sqm. In 2015 Entra will further systematise work on reducing energy consumption, water consumption, waste quantities and sorting, and thus also CO2.
Entra's strategic core areas are the four main cities Oslo, Bergen, Stavanger and Trondheim, together with Drammen and Kristiansand. Entra's goal in its core areas is to contribute to urban districts that are attractive, inclusive and accessible for residents. A part of Entra's environment strategy is to look for locations close to important transport intersections, thus contributing to less use of private cars to the benefit of public transport and environmentally friendly alternatives such as bicycles.
For Entra urban development means creating a good atmosphere and secure surroundings in and around buildings for the benefit of customers, visitors and others who pass through the area. Entra ensures that the space around the buildings and building sites is neat, clean and attractive. Entra give consideration to lessee composition in order to create life and variation among visitors and users of the buildings. Where it is natural Entra considers how the ground floors of buildings can be used to create life at street level.
| 2012 | 2013 | 2014 | Goal | |
|---|---|---|---|---|
| Energy consumption (KWh/m2 ) |
199 | 188 | 171 | Ambition of 150 by 2017 |
| Energy reduction through Green Benefit Agreements (GWh) |
0 | 2.6 | 6 | Goal of aggregate energy reduction of 17.6 GWh in period 2013 up to 2018 |
| Water consumption (litre/m2 ) |
254 | 262 | 260 | Goal of reduction in water consumption |
| Waste sorting (% sorted waste) | 55 | 55 | 54 | Goal of increase in waste sorting |
| CO2 emissions (kg CO2/m2 ) |
52 | 52 | 48 | Goal of reduction in CO2 emissions |
In its work on urban development Entra place emphasis on a good dialogue with partners and competitors. Entra involves neighbours, local politicians and others who live or work in the group's urban development districts in connection with new buildings and refurbishments. Involvement may constitute meetings and correspondence with neighbours, open meetings, information to the local press and a one-on-one dialogue with the selected target groups.
Examples of areas and buildings where Entra has contributed to positive urban development are the new Know-how Centre in Sandvika, Papirbredden in Drammen and Hinna Park in Stavanger. At Brattørkaia in Trondheim Entra is investing in the external space with art, sculptures and recreation facilities.
The employees in Entra represent the company's human capital. Together they create the basis for further development and growth. A clear objective is that employees should consider Entra to be a good and attractive place to work. The Entra Manual and work on health, safety and the environment (HSE) are two of several tools for taking care of employee rights and safety. Entra works to establish universal design in all its buildings and consider this to be a competitive advantage in the market.
In February 2014 the Entra Manual was launched as a tool within the organisation. The Manual describes Entra's values, management system and group policy and sets out guidelines and expectations in relation to employees and management, working conditions, ethics, procurement, corporate social responsibility, the environment, HSE, etc. The values are the foundation on which Entra build its business and express what characterises the company. In addition the intranet is used actively for information to all employees. The company's personnel manual is also available on the intranet with details of the rights and obligations of employees.
Entra observes established standards and employment legislation. Entra is a member of the Confederation of Norwegian Enterprise and tariff agreements have been established with employee organisations.
Entra has a safety officer and working environment committee. Employees are represented on Entra's board with two representatives.
The safety officer's main function is to take care of employee's interests in matters that relate to the working environment. Safety officers are elected for two years at a time from employees with experience and knowledge of working conditions in the company.
Entra's working environment committee is a decision-making and advisory body. The committee's most important function is to work towards a fully secure working environment. The committee takes up issues on its own initiative and at the request of the safety officer. All employees can approach the committee.
Employees in Entra are free to organise themselves and are organised in several different associations. Entra has established an accord with the Norwegian Engineers and Managers Association (FLT). The accord sets out agreement on a number of important matters affecting members' working lives.
Entra's value chain is broad and imposes significant requirements for relevant experience, expertise and coordination. Entra therefore acknowledges the individual employee's need for ongoing professional education suited to his/her area of work and has developed the Entra School to provide education and training programmes for all levels of the organisation. These include a management development programme that runs for 1.5 years and focuses on the responsibilities and challenges of a management role. Entra has also established an introduction course for new employees, which is intended to enable employees to orient themselves and their role in the company in a wider context. Ethics and dilemma training occupy a central position in both the management development programme and the introduction course.
Entra has carried out a number of measures to increase to contribute to good health among employees. As an example Entra has an internal sports club that is active in a number of sports such as running, cycling and curling. Sick leave in Entra in 2014 was 3.4 percent. The objective is a continued low level of sick leave.
Entra has established whistle-blowing routines. The routines involve cooperation with the law firm Steenstrup Stordrange. The law firm has been engaged as an experienced, external partner with a duty of confidentiality in order to lower the threshold compared with having to contact someone in Entra. There have been no whistle-blowing cases in 2014
Each year Entra carries out the survey "Great Place to Work", and has an ongoing programme of measures relating to employee satisfaction
Entra's goal is that no one shall be exposed to injury or become ill (physically or mentally) as a result of the company's working environment. Entra monitors risks in the working environment, and put particular emphasis on following up its employees' health and working conditions.
Entra's business covers the whole value chain in property, from acquisition of sites to zoning, planning, construction and management. This breadth represents many aspects within health, safety and environment (HSE). Entra works continuously for secure operations that protect people, the environment, the community and material assets.
HSE is well established as a natural part of day-to-day operations and is a focus area at all levels of the organisation. Entra regards HSE as a personal responsibility of all employees. Top management are directly involved in practical HSE work. Management are expected to take the lead through behaviour and practical leadership. As part of this a review of the latest HSE report is one of the first points on the agenda at each management meeting. HSE status is also the first item on the agenda at all staff meetings. A serious incident on a construction project is reported directly to the company's chief executive. The contractor's project manager is expected to attend to report on the situation, to state what the relevant person and the contractor could have done to avoid the incident and what future measures are to be implemented.
Entra's view is that accidents can be prevented and that work on HSE can always be improved. In 2015 and 2016 Entra will further develop its goals and strategy for HSE in general, will develop new HSE documents and further develop the HSE reporting system.
Learning from undesired incidents is an important element in strengthening HSE. In 2014 Entra has worked actively to increase awareness with regard to the registration of near accidents and accidents. Reporting of undesired incidents is important in order to be better, and at the same time increase awareness internally among own employees, among suppliers and customers. It is therefore positive that Entra has achieved a more than tripling of reported events in both categories.
Entra has had undesired incidents in 2014 that potentially could have had serious consequences. A lot of work has been carried out subsequently to identify and evaluate the causes and the sequence of events, draw conclusions and implement new routines where this has been necessary. The incidents have documented good readiness and knowledge of the routines.
The group management has participated in HSE inspections on building sites and in the buildings during 2014. These activities will continue in 2015. In 2014 Entra strengthened the organisation through the appointment of an HSE manager and a Safety, Health and Working Environment coordinator
In 2014 large parts of Entra's portfolio have undergone facade checks and these will be completed in 2015. In addition an overall safety assessment has been carried out of Entra's buildings. The H-value for Entra in the end of 2014 was 4.4. The H-value is a measurement of the frequency of working accidents (per one million working hours) that result in absence from work. Entra's target a H-value below 4.
Different expertise and experience contribute positively to Entra's development and to a broader and better basis for decision-making.
Therefore equal opportunities and diversity are taken into account in the company's personnel policy. It is an important management function in Entra to promote equal opportunity. Equal opportunity measures are reflected in the composition of senior management: half of the group management and three of seven board members, including the chair, were women at the end of 2014. At 31 December 2014 the Group had 167 employees, of whom 15 are employed in Hinna Park. 44 of the employees were women. The high proportion of men has its background in the sector's history where many men have worked on operations. The work in operating Entra's buildings is however moving steadily more towards service jobs and functions such as IT and customer service deliveries, so that in time Entra expects more women to work in operations. The company will also actively contribute to strengthening the proportion of women by recruiting women in these types of jobs.
Entra's employees have varied backgrounds and expertise from different professional and technical areas and an average age of 46 years.
Corruption involves unethical preferential treatment, wasting resources, misuse of power, distortion of competition and weakened confidence in democratic institutions.
Entra has a zero tolerance for corruption in all parts of the group's business.Ethical behaviour is a necessary condition for a sustainable business. Entra will conduct its business in an ethical and transparent manner, act within the law, be well within its ethical guidelines and behave in line with its fundamental values of being responsible, ambitious and hands-on.
In order to achieve this in practice, Entra requires high ethical standards from its employees, suppliers and partners. In 2014 Entra's ethics programme was reviewed in connection with an audit of the fundamental values. The ethics programme has been restated in the Entra Manual, in management evaluation and management development programmes. The ethics programme is being evaluated by the Board on an annual basis.
In addition ethics are a focus area in the Entra School. Entra has established ethical guidelines in the employment contracts. All Entra's employees each year sign the ethical guidelines, which among other things deal with corruption and the management of suppliers. The company has established guidelines for gifts and entertainment, prioritises time to evaluate difficult ethical issues and builds up expertise through training on ethical dilemmas.
Entra wishes to be a responsible purchaser in all parts of the value chain and has prepared a set of processes and routines for purchasing that include requirements on documentation, role/work division (dualism) and equal treatment of suppliers. The routines are intended to counter conflicts of interest and corruption.
All employees in operations have taken a purchasing course focusing on processes, guidelines and tools for implementing good and fair procurement processes. Anti-corruption has also been a theme on these courses. A new purchasing system will be introduced in 2015, which includes, among other things, measures against corruption.
In 2015 Entra will review "Socially responsible procurement" together with two or three suppliers in order to ensure that the guidelines are being followed. The goal is closer involvement, raising levels and increased reporting.
Entra complies with national legislation and observes established employment standards, including fair pay for the company's employees. The ILO's eight core conventions are central to Entra's work with respect to human rights. The core conventions are mainly taken into account through clauses in contracts with subcontractors (in Entra's guidelines for socially responsible procurement).
In 2013 Entra carried out a survey of purchasing categories with an emphasis on human rights, working conditions, the environment and anti-corruption. As a consequence there has been a reduction in the number of suppliers and framework agreements and work on pre-qualifying bidders has been further strengthened. In line with the fundamental values Entra wishes to have a "hands-on" relationship with key suppliers and in 2014 Entra has implemented a supplier follow-up programme, which is an established arena for dialogue and cooperation that, among other things, will focus on contributing to solving the sector's challenges relating to working conditions and corruption. The activities will continue in 2015
In order to enter into an agreement with Entra suppliers must follow the company's guidelines ("Socially responsible procurement"). Suppliers must then take responsibility for healthy and safe working conditions for their own and Entra's employees, take precautions against accidents and occupational illnesses, undertake training, and observe requirements related to HSE and a well-functioning working life.
The guidelines cover prohibitions against the use of materials from threatened species, that can harm the environment or are in conflict with the UN Convention on the Rights of the Child, the European Human Rights Convention etc. Suppliers also give undertakings in relation to their sub-suppliers.
In accordance with the guidelines suppliers must give notice of unsatisfactory conditions or suspicions of the same with respect to themselves, sub-suppliers or Entra.
No unsatisfactory conditions were reported in 2014. Entra's fundamental purchasing principle is to achieve the best possible total result through competition and the fewest possible suppliers. Purchasing is also to take advantage of economies of scale.
Entra is working actively to reduce the number of suppliers. The number has been reduced since 2012 by approximately 25% and the process is being continued in 2015. Entra chooses its suppliers after a pre-qualification process and works with a limited number of framework agreement suppliers. The number of framework agreement suppliers has been reduced by more than 30% from 2012 to 2014. Entra want long-term framework agreements in order to cooperate with suppliers on the challenges facing the sector relating to, among other things, working conditions, HSE and the working environment.
Entra wishes to contribute to diversity and equal opportunities for all and will promote, respect and prevent breaches of internationally recognised human rights.
Entra does not accept discrimination and bullying in the workplace. Everyone is to be treated with respect, irrespective of gender, religion, age, ethnicity, nationality, any disability or sexual orientation. Human rights are included in guidelines and management tools in order to secure observance in practice, including in the fundamental values, ethical guidelines, socially responsible procurement, focus on HSE and the working environment as well as IT security and personal data protection.
Ridderrennet
The group's ethical guidelines build on principles of equal opportunities for all, consideration for the environment and a view of society with an emphasis on ethics, openness, integrity and sincerity. The guidelines described the treatment of stakeholders and expectations of employees. Entra creates ethical awareness through regular training. Each year all employees must sign the ethical guidelines. Entra requires integrity and fairness in all matters that relate to the group's business. Entra has established a scheme where employees can give notice of a breach of the company's values, ethical guidelines and rules, as well as public laws and rules.
Entra's greatest opportunity is to promote, respect and prevent breaches of human rights also beyond its own business by imposing requirements relating to projects and on the purchase of goods and services. All suppliers have undertaken to follow the guidelines for socially responsible procurement. They must respect fundamental workers' rights and have a controlled relationship with their sub-suppliers.
HSE considerations have the highest priority in Entra. The group is to offer a good and secure working environment characterised by an open dialogue. Entra monitors and follow up risks in the working environment and follow up on employees' health and working conditions.
On Entra's building sites one have a duty to ensure routines against social dumping, corruption and any breach of HSE requirements.
It is a fundamental human right that everyone has space for reflection and development. Entra provides its employees with opportunities for professional and personal development. Entra undertakes know-how development to ensure that employees have the right knowledge for the job, and are able to use their expertise and take responsibility.
Entra shows respect for its employees' private life and takes into account requirements for personal data protection through secure IT and HR systems. It is planned to implement a new HR system during 2015.
No breach of the company's values, ethical guidelines and rules, as well as public laws and rules, has been notified in 2014. The ethical guidelines will continue to be reviewed and signed by all employees once a year. Entra has not been involved in any labour conflicts in 2014. The company works continuously and in a targeted fashion on the working environment and carries out each year the "Great place to work" survey as part of these measures
At the beginning of 2014 Entra began a cooperation project with the Church City Mission, which has as its objective to contribute to positive urban development. Through financial support to the Church City Mission and an open dialogue, the cooperation will strengthen the constructive measures that the Church City Mission is carrying out in connection with social challenges in the cities covered by the agreement: Oslo and the surrounding districts, Bergen and Trondheim. In Oslo Entra is involved, among other things, in the newly started "neighbour cooperation", which involves several companies in the centre of Oslo and Bjørvika. The overall objective of the cooperation project is to create a safer and better local environment for all those passing through the area.
For the 15th year running Entra has been the main sponsor of Ridderrennet. Ridderrennet is the world's largest annual winter sports week for people who are visual impaired and disabled. Ridderrennet is important for Entra in order to learn more about the everyday life of people with disabilities.
Entra's employees obtain useful experience that is directly transferable to the Group's continuous work on universal design. At the Athletics Gala 2014 Ridderrennet was awarded the honour prize for 2013.
Entra ASA ("Entra", and together with its subsidiaries, "the group') is subject to the reporting requirements on corporate governance set out in § 3–3b of the Norwegian Accounting Act and the Norwegian Code of Practice for Corporate Governance of 23 October 2012 (as amended on 30 October 2014), issued by the Norwegian Corporate Governance Board (NUES), ("the Code"). The code is available at www.nues.no.
Entra's board approved these guidelines at its board meeting on 21 January 2015 in order to express Entra's desire to demonstrate good corporate governance in accordance with the Code ("the Guidelines"). Each year the management and board of Entra evaluate the corporate governance principles and how they are incorporated in the group.
The Norwegian state, which has a substantial holding in Entra, requires that all companies where the state has a direct holding should follow the Code. As a consequence, the Report to Parliament no. 27 (2013–2014) - "Diverse and value-creating ownership" is also relevant for the group.
The following elements are central in these guidelines:
The board shall ensure that the company has good corporate governance. Entra is divided into four geographic regions/business areas: Central Oslo region, Greater Oslo region, Southern and Western region and Central and Northern region. The regions are supported by central business functions in Sales and Marketing, as well as Projects and Technical, which in
addition to acting as support functions for the regions secure a comprehensive market and growth strategy and provide technical and operational support on projects. Group and support functions have been established within accounting and finance, legal, communication and HR. The CEO has set up an authorisation structure within the group based on the board's resolution on authorisations to the CEO.
As part of the management's follow-up of the business, quarterly reports and reviews are prepared for all business areas. Reporting covers all relevant matters related to the business area, including financial results, risk assessments and monitoring of relevant key figures and objectives. The group's financial results, key figures and achievement of objectives are reported to the board quarterly and in association with each board meeting. The targets for the group's work on corporate social responsibility, ethics and HSE/the environment are included in the reporting. The reporting forms a basis for the management's control of the business and follow-up of the group, as well as business reporting to the board.
Entra builds its work in the field of corporate social responsibility on the fundamental values and principles set out in the UN's Global Compact, which is intended to protect the environment, safeguard working conditions, combat corruption and uphold human rights. Entra reports on its work with respect to corporate social responsibility in accordance with the requirements of § 3–3C of the Norwegian Accounting Act.
In Entra, corporate social responsibility involves safeguarding people's surroundings and integrating social and environmental considerations in strategic processes, decisions and day-to-day operations. Entra aims to be a responsible member of society and works continuously in a targeted fashion on sustainable solutions that are of importance for the community.
Entra's engagement is reflected in the group's values: responsible, ambitious and hands-on. Environmental leadership is one of the pillars of the group's business strategy together with profitable growth and customer satisfaction. Entra regards ethics as an integrated part of the manner in which its business is conducted and the ethical guidelines are built upon principles of equal opportunities for all, concern for the environment and
a view of society that places emphasis on openness, integrity and sincerity. Entra has established HSE as a natural part of its business and has the objective that no one should be exposed to injury or illness as a result of the group's working environment.
The report on corporate social responsibility in Entra has been approved by the board and is published at www.entra.no.
Entra's ethical guidelines set out how the group's stakeholders shall be treated and the behaviour that is expected of our employees, providing guidance and support to employees on decision-making and problem-solving issues. The guidelines support the groups corporate social responsibility activities and deal with topics such as health, safety and the environment (HSE) and business ethics, including corruption and bribery. Compulsory training in the group's ethical guidelines, including dilemma training, is held regularly, and all Entra's employees are required annually to confirm that they have read and are aware of Entra's ethical guidelines, which are available at www.entra.no.
The board shall give an overall report on Entra's corporate governance in the annual report or a document referred to in the annual report. The report shall cover each point in the Code. If the Code is not followed, any non-compliance shall be explained and a report given on how the group has acted.
Non-compliance with the Code: None
According to the Entra's Articles of Association, Entra shall own, buy, sell, operate, develop and manage real estate, and carry out other activities in this connection. The company can invest in shares or ownership interests and participate in companies engaged in the business referred to above.
The group has a clearly defined strategy, values and overall objectives. Entra's business concept is to develop, let and manage attractive and environmentally leading buildings. Entra's strategy is to actively manage existing tenants to ensure maximum retention, pursue strategic development projects, expand its commitment to environmental sustainability and optimise its property portfolio through focused acquisitions and divestments. The strategic core areas for growth are Oslo and the surrounding region, Bergen, Stavanger and Trondheim. See www.entra.no for a more detailed description of the group's business.
The purpose clause in the Articles of Association and the company's goals and main strategies are to be set out in Entra's annual report.
Non-compliance with the Code: None
Entra shall maintain a level of equity that is appropriate by reference to the group's goals, strategy and approved risk profile.
The board proposes the dividend to the general meeting. The general meeting determines the dividend in accordance with § 8-1 of the Norwegian Public Companies Act. The board of Entra has an objective to pay an annual dividend corresponding to approximately 60% of Cash Earnings, defined as net income from property management less net realised financial items and tax payable. The dividend policy is available on Entra's website.
Authorisations to the board to undertake a capital increase shall be linked to defined purposes. If the board authorisation covers several purposes, each purpose is to be considered as a separate matter in the general meeting. A board authorisation shall not be given for a period longer than until the next annual general meeting. The same applies to authorisations to purchase the company's own shares.
Non-compliance with the Code: None
Entra has only one share class. Each share in the company carries one vote and otherwise has equal rights in the company including the right to participate in general meetings.
If existing shareholders' preferential rights are to be waived on a capital increase, this is to be explained. If the board approves a capital increase with a waiver of preferential rights based on an authorisation, the reason is to be published in a stock exchange notice in connection with the capital increase.
The company's transactions in its own shares shall take place over the stock exchange or otherwise at market price. If there is limited liquidity in the share, consideration shall be given to meeting the requirement for equal treatment in other ways.
Entra considers it important to be transparent and cautious in relation to transactions where there might be considered to be a close relationship between the company and a shareholder, a shareholder's parent company, a board member, a senior employee or closely related parties of any of these. The guidelines for the board regulate the board members' duty to report any other directorships, roles and related parties. The guidelines for the board state that board members and the CEO cannot participate in discussions or decisions on issues that affect them personally or affect a related party, where they have a significant personal or financial interest in the matter. The board has also approved guidelines for transactions with related parties, describing the rules and procedures for these types of transactions.
In the case of not immaterial transactions between Entra and a shareholder, a shareholder's parent company, board member, a member of the senior management or persons related to them, the board is to ensure that a valuation is in place from an independent third party. This does not apply when the general meeting is to consider the matter in accordance with the rules in the Norwegian Public Companies Act. An independent valuation shall also be provided in the case of transactions between companies in the same group where there are minority shareholders in such companies.
Non-compliance with the Code: None
Shares in Entra shall be freely transferable. There are no restrictions on the transferability of shares in Entra in the Articles of Association.
Non-compliance with the Code: None
The board shall arrange for as many shareholders as possible to be able to exercise their rights to participate in the company's general meeting, and for the general meeting to be an effective meeting place for shareholders and the board, through, among other things, ensuring that:
Shareholders who are not able to be present at the general meeting shall be given the opportunity to vote through a proxy or through electronic participation. The company shall:
• give information on the procedure for attending by proxy;
Non-compliance with the Code: None
The company shall have an election committee. The general meeting shall elect the Chair of the committee and its members and determine their remuneration. The Articles of Association shall provide for the election committee.
The composition of the election committee shall be such that account is taken of the interests of the shareholders as a whole. The majority of the election committee shall be independent of the board and senior management. A member of the board, the group CEO or other member of the senior management shall not be a member of the committee.
The election committee shall give recommendations to the general meeting on the election of shareholder-elected members, and any deputy members, to the board, including the Chair of the board. The election committee shall also present proposals on the remuneration of members of the board. The election committee shall also present proposals for members of the election committee, including the Chair of the election committee, as well as the remuneration of the election committee's members. Reasons shall be given for the committee's recommendations.
The company shall provide information on the members of the committee, and any deadlines for presenting proposals to the committee. The election committee wishes to ensure that shareholders' views are taken into account when qualified members are nominated to the governing bodies of Entra, and shareholders are invited to provide input to the election committee. See www.entra.no for more information on the members of the company's election committee and the election committee's contact details.
Non-compliance with the Code: None
The group does not have a corporate assembly. The shareholders elect between five and seven shareholder-elected members, including the Chair, for a period of two years. The group has established a group scheme for the election of employees to the board of Entra Eiendom AS. The same employees have been elected as board members of Entra for the employees by the company's general meeting. Entra has established a group scheme for the election of employees to the board of Entra.
Emphasis shall be placed in the election committee's approach on the combined board being able to safeguard the interests of the shareholders as a whole and the company's need for
expertise within the company's main business and board work. In addition the board shall have the capacity to carry out its tasks. Consideration shall be given to the board being able to function well in a collegiate manner. Participants in the group management shall not be members of the board.
The board shall be composed so that it can act independently of special interests. The majority of the shareholder-elected members shall be independent of senior management and significant business connections. At least two of the shareholderelected members shall be independent of the company's main shareholders.
The board shall provide information in the annual report on participation at board meetings and on matters that can illustrate the board members' expertise. In addition information shall be given on which board members are considered to be independent. Board members shall be encouraged to own shares in the company.
Non-compliance with the Code: None
The board has responsibility for the management and control of the company, including determining the company's overall strategy and objectives, and ensuring proper management and organisation of the group's business. The board shall also supervise day-to-day management and the group's business in other respects. The board adopts the overall governing documents for the group's business, including, among others, the business plan and investment limits.
The board is to keep itself informed with regard to the group's financial situation and ensure that its business, financial reporting and asset management are subject to adequate controls and in accordance with applicable legislation. The board shall ensure that the group has good internal controls and appropriate systems for risk management in relation to the extent and nature of the group's business.
The board's functions also include considering all matters that in relation to the group are of an unusual nature or of major importance. The board shall further consider matters that are specifically accorded to the board by law.
The Chair of the board chairs board meetings. The board shall have a Deputy Chair who chairs meetings when the Chair cannot or should not lead the work of the board. A thematic plan for the board's work over the year has been established. Based on the annual plan, the Chair of the board – in consultation with the company's CEO – sets out the final agenda for board meetings. Emphasis is placed on the importance of good preparation for board meetings, and of allowing all board members to take part in decision-making processes. The CEO, CFO and Legal Director (Company Secretary) attend all board meetings. The company's
auditor attends when the annual financial statements are adopted or on other occasions where the auditor's expertise is relevant. The board has prepared guidelines for its work.
Each year the board assesses its own work and way of working as a basis for assessing the need for changes and other measures. This assessment includes an evaluation of the board's expertise, collectively and for each member, and how well the board works as a team.
The board has adopted guidelines that regulate the CEO's tasks and the relationship with the board. The CEO is responsible for the day-to-day management of the company's and the group's business and ensuring that the board's resolutions are implemented, as well as ensuring that the company's employees and other involved parties receive sufficient information on the board's resolutions. The CEO is responsible for ensuring that the board receives all the information that is necessary for it to be able to exercise its functions in accordance with applicable statutory requirements at the relevant time and with board procedures
The CEO is obliged to inform the Chair of the board if he/ she finds that circumstances exist that require the board to consider a matter, and he/she is to notify the board when the assumptions for a previous decision that is relevant to the business have changed significantly.
The board has established an audit committee and a remuneration committee. The board has established mandates for the work of the committees, which are subject to annual revision. In accordance with their respective mandates, the audit committee and the remuneration committee shall have two or three shareholder representatives from the current board. The representatives are to be elected by the board for two years at a time, to coincide with the board's term of office. The committees assist the board with preparing its work, but decisions are taken by the whole board.
The audit committee shall act as a preparatory body and support the board in the exercise of its responsibility relating to financial reporting, auditing, internal controls, compliance with ethical guidelines and overall risk management. The board appoints two or three persons to the audit committee from among its members. A majority of the members of the audit committee shall be independent of the business. The CFO, the group's Head of Group Accounting and the committee's secretary always attend as representatives of the management. The company's auditor also participates. The CEO and other members of the management attend as required. The audit committee has an established calendar of meetings, and meets at least five times a year.
The purpose of the remuneration committee is to act as a preparatory body for the board's consideration of compensation
issues. The remuneration committee's main task is to prepare the board's consideration of matters relating to the salary and employment terms of the CEO and senior management, as well as changes to them. In addition the remuneration committee prepares the board's consideration of principle issues relating to salary levels, result-related pay schemes (including share schemes), the pension scheme/conditions, employment contracts and similar for the group management of Entra, as well as other matters relating to compensation that are of particular importance for the group's competitive position, profile, ability to recruit, reputation etc. The CEO shall discuss the handling of individual conditions of senior management with the remuneration committee. The remuneration committee shall further discuss and present proposals to the board on guidelines for the remuneration of senior management, prepare the board's statement on the determination of salaries and other remuneration of senior management in accordance with § 6-16a of the Norwegian Public Companies Act, and deal with other statutory reporting.
The remuneration committee is composed of the Chair of the board and a shareholder-elected member of the board, and shall be independent of senior management. The CEO and CFO always attend as representatives of the management. The CEO does not participate in discussions on issues that affect the CEO personally or matters that relate to the group management as a whole. The company's head of HR shall act as the committee's secretary. A calendar of meetings has been established for the remuneration committee, which meets approximately six times a year.
Information shall be given on the use of board committees in the annual report.
Non-compliance with the Code: None
The board is responsible for ensuring that the group's business, financial reporting and asset management are subject to adequate control and in accordance with applicable law. Entra's risk management shall support the groups strategic and financial goals and help the group avoid events that may have an adverse impact on the groups operations and reputation.
Entra works systematically to ensure continuous improvement of its internal controls linked to financial reporting and efficient operation. The group has a proactive approach towards risk management, and potential risks are to be identified, assessed, quantified and managed. The management has established routines for identifying and managing the business's risk exposure. Entra has drawn up a risk chart, where the main risks are considered to be: commercial risk, operational risk, project risk and business and strategic risk. Commercial risk includes the group's financial risk and is managed in accordance with the adopted financial strategy, with financial instruments as one of the ways of limiting risk exposure. The group's commercial risk
also includes the risk associated with entering into and renegotiating contracts, which is continuously monitored. Operational risk is managed through procedures for day-to-day operations, compliance and HSE work. Project risk is managed continuously over the course of projects by monitoring progress, financial and contractual issues. Business and strategic risks include the possible impact on the group of political issues, regulation and external events.
As part of the management's follow-up of the business, quarterly reports and reviews are prepared for all business areas. Reporting covers all relevant matters related to the business area, including financial results, risk assessments and monitoring of relevant key figures and objectives. The group's financial results, key figures and achievement of objectives are reported to the board quarterly and in association with each board meeting. In addition to this the group has established systems for handling and following up health, safety and the environment as an integrated part of management reporting.
The board undertakes an annual review of the group's risk and internal control activities. The board is also informed quarterly of developments in the groups risk exposure. This, combined with the management's risk assessments and information on ongoing measures, put the board in a good position to judge whether the groups risk management procedures are satisfactory. Risk management and internal controls are also considered by the board's audit committee.
Procedures have been established for financial reporting that involve carrying out a high-level review of significant estimates, provisions and accruals in conjunction with preparation of the quarterly and annual financial statements. Separate notes to the accounts are prepared for significant accounting items and non-routine transactions, which are approved by the CFO. The valuation of the groups properties is subject to a separate review and assessment at management level at the close of each quarter. This involves, among other things, holding meetings with the external valuers, with a particular emphasis on discussing perceptions of the market, risk premiums and documentation.
The group reconciles and documents all balance sheet items in the group companies each quarter. Balance sheet items such as liabilities, bank deposits, projects and non-current assets are subject to special reviews. Projects are reviewed on a quarterly basis by the project and accounting departments together to assure the quality of the accounting and tax calculations. System-generated items linked to liabilities and interest rate hedging are subject to manual reconciliation each month. Significant profit and loss accounts are subject to reconciliation each quarter. All reconciliations are reviewed and quality assured, as well as being analysed against the group's forecasts and previous accounting periods.
The management reports significant operational and financial matters to the board at the group's board meetings. Nine ordinary board meetings are planned for 2015. Any significant matters and situations that arise outside board meetings are discussed with the Chair of the board and if necessary additional board meetings are held.
In connection with quarterly reporting, the group's external auditor performs an audit review, without issuing an audit report.
The group's quarterly and annual financial statements are reviewed by the audit committee before they are considered by the board. As part of this process management prepares a memorandum for the audit committee that describes significant accounting and financial assessments made during the quarter. The audit committee reviews annually the external auditor's audit report, as well as the findings and assessments of audits in conjunction with interim and annual reports. Significant issues in the auditor's report are presented to the whole board.
The group is managed by means of financial targets linked to the return on equity, the management of the debt portfolio and the return on the property portfolio. Risk assessments and profitability calculations are performed in connection with acquiring property and commencement of building projects, in accordance with the groups fixed calculation model and required rate of return. The present value of building projects is monitored throughout the course of the project. Long-term projections are made of expected financial developments as a component of the group's risk management, using a model with detailed assumptions concerning the business's results, cash flow and balance sheet. The projections take into account cyclical developments in the economy, financial parameters and the property market. Scenarios and simulations are prepared for various developments. The simulations provide good information for the board and management in their monitoring of developments in central balance sheet key figures and cash flow.
Allocation of capital and risk profiles are important parameters for guiding financial operations. Entra's finance policy contains a framework for the day-to-day management of the group's financial risk. Principles have been defined for borrowing, management of liquidity risk and interest rate risk, and credit and counterparty risk. The group's model for financial projections provides updated key figures, which are monitored on a continual basis. Reports are made to the management monthly in accordance with the management guidelines for the financial operations, and to the board through the business report.
Systematic monitoring of the general economic situation and its impact on the group's financial risk is carried out. Based on expected developments in the economy and analysis of the company's financial position, expected developments in both short-term and long-term interest rates, the strategy for interest rate positioning, capital requirements and planned financing activities are discussed, as well as opportunities in the financing market. 11.5 Monitoring of risk management and internal controls In consultation with the audit committee, the management defines areas where the group shall carry out a review of internal controls. Both internal and external resources are used on these reviews. The results of the most important reviews related to internal control are presented to the audit committee and the board on an annual basis. An internal control plan is presented to the board.
The group follows up issues relating to ethical guidelines and corporate social responsibility. The environmental perspective is an integral part of the assessments made in connection with the groups potential investments. Special requirements have been defined for the groups suppliers in the document "Socially responsible procurement", and a supplier verification process is conducted each year to ensure that the group's suppliers are familiar with and adhere to the contractual conditions.
In order to follow up on the groups requirements regarding corporate social responsibility in the supply chain, the Entra uses external consultants to perform supplier audits on selected projects. These audits include a focus on Entra's standard requirements for corporate social responsibility and the suppliers' follow-up of these standards, e.g. those related to procurement processes, environmental monitoring and waste segregation as well as further control of pay, and working and living conditions in accordance with laws and regulations.
Internal controls linked to Entra's core values, ethical guidelines and corporate social responsibility policy are under development and are implemented in the group's businesses on an ongoing basis. The management continuously strives to prevent corruption and undesirable incidents, with a focus on the groups values and ethical guidelines. Systematic training in ethical guidelines and dilemma training for all employees contributes to increase awareness among Entra's employees.
Entra's Legal Director is the recipient of, and follows up, notifications submitted via the group's reporting system. The ethical guidelines set out how employees can report breaches of the company's ethical guidelines or legislation, and this information is also available on the company's intranet. Employees are encouraged to report unsatisfactory situations. In addition to internal reporting, the company has also established an external reporting channel to a firm of lawyers, who can receive notifications on behalf of the company. The board is informed annually of any "whistle blowing" cases.
Non-compliance with the Code: None
The general meeting determines each year the remuneration of the board based on the election committee's proposal. The board's remuneration shall reflect the board's responsibilities, expertise, and use of time and the complexity of the business. Remuneration shall not be dependent on results and no options shall be issued to board members.
Board members or companies to which they are connected should not undertake separate assignments for the group in addition to the board appointment. If nevertheless they do so, the whole board shall be informed. Fees for such assignments shall be approved by the board. If remuneration has been paid above the normal board fee, this is to be specified in the annual report.
Non-compliance with the Code: None
The board shall prepare a statement on the determination of salaries and other remuneration of senior management in accordance with § 6–16a of the Norwegian Public Companies Act. The statement is to be presented to the general meeting. The statement shall set out the main principles for the company's senior management salary policy, and shall seek to contribute to the alignment of interests between the shareholders and senior management. The statement shall specify the guidelines that are advisory for the board and any that are mandatory.
The board assesses the CEO's terms and conditions of employment once a year following a recommendation from the board's remuneration committee. The CEO consults the remuneration committee in connection with the annual adjustment of the salaries of the group's senior management team.
Remuneration of senior management dependent on results in the form of any options, bonus programmes or similar, shall be linked to value creation for the shareholders or the development in the groups results over time. Such schemes, including option schemes, shall be performance-related and based on measurable criteria that the employee can influence. A ceiling is to be placed on performance-related remuneration.
Non-compliance with the Code: None
The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as approved by the EU. Reporting must fulfil statutory requirements and provide sufficient information to allow the company's stakeholders to form as accurate a picture of the business as possible. Entra shall report in accordance with the rules in the
Norwegian Securities Trading Act, as well as with the requirements specified by the Oslo Stock Exchange for companies with listed shares and bonds.
The company shall at all times provide its shareholders, the Oslo Stock Exchange and the financial market in general with timely and precise information. Such information will be given in the form of annual reports, quarterly reports, press releases, stock exchange notices and investor presentations. The group's report on corporate social responsibility shall be integrated in the annual report. The board has set guidelines for the company's reporting of financial and other information.
The company shall publish each year a financial calendar with details of the dates of important events such as the general meeting, publication of interim reports, open presentations and payment of the dividend.
The board has approved insider rules relating to the handling of inside information.
The group considers that it is very important to inform the company's shareholders about the group's development and economic and financial status. The management (CEO and Investor Relations Officer) shall make themselves available for discussions with important shareholders in order to develop a balanced understanding of such shareholders' situation and focus, subject however to the provisions in legislation and regulations. The Chair of the board shall ensure that the shareholders' viewpoints are communicated to the whole board.
Information to the company's shareholders shall be published on the company's website at the same time as it is sent to the shareholders. The board shall set guidelines for the company's contact with shareholders outside the general meeting.
Non-compliance with the Code: None
The Board will handle takeover bids in accordance with Norwegian law and the Norwegian Code of Practice for Corporate Governance. In a bid situation, Entra's board of directors and management have an independent responsibility to help ensure that shareholders are treated equally, and that the company's business activities are not disrupted unnecessarily. The Board will not hinder or obstruct take-over bids for the company's activities or shares. The Board will ensure that shareholders are given sufficient information and time to form an opinion on an offer. If a take-over offer is made, the Board will issue a statement making a recommendation as to whether shareholders should or should not accept the offer.
Non-compliance with the Code: None
The general meeting elects the group's auditor.
Each year the auditor presents a plan for his work to the audit committee, which in turn informs the board of its most important aspects.
The auditor attends the meetings of the audit committee, as well as board meetings to consider and adopt the annual report and financial statements. At the meetings the auditor shall go through any significant changes in the company's accounting principles, the evaluation of material accounting estimates and all material matters where there has been disagreement between the auditor and the management. There is one annual meeting between the audit committee and the auditor, and one meeting between the whole board and the auditor, which is not attended by representatives of the group management.
When presenting the results of the interim audit to the audit committee, the auditor focuses on the groups internal controls, identified weaknesses and proposals for improvements. The auditor summarises the findings and assessments of the annual audit for the group management and audit committee. Material issues are summarised for the board.
Each year the auditor's independence is assessed by the audit committee. The board has drawn up guidelines on the engagement of the external auditor, governing what work the auditor can do for the company in view of the requirement for independence. Any major assignments other than statutory audits shall be approved by the audit committee in advance. The management informs the audit committee of additional services supplied by the external auditor under a fixed item on the agenda at each meeting.
The auditor attends the annual general meeting for considera tion of the annual financial statements. The auditor's fee for the statutory audit and other services is approved by the general meeting.
Non-compliance with the Code: None
2014 represents an important milestone in Entra's history. The Norwegian Government decreased its shareholding to 49.9 per cent and Entra was listed on the Oslo Stock Exchange. The board wishes to take this opportunity to welcome more than 6,700 new shareholders who have invested in the company.
In 2014 Entra had operating revenues of NOK 1,772.3 (NOK 1,632.3) million. The net income from property management was NOK 1,399.2 (NOK 1,188.7) million. Positive value changes in the portfolio of investment properties of NOK 1,194.5 (NOK - 506.7) million and share of profit from associates and jointlycontrolled entities of NOK 35.6 (NOK 235.5) million contributed to the Group's operating profit being NOK 2,629.3 (NOK 917.5) million. Net realised financial costs of NOK - 645.2 (NOK - 643.6) million and negative unrealised change in value on financial instruments of NOK - 607.0 (NOK 183.7) million gave net financial items of NOK - 1,252.2 (NOK - 460.0) million. The profit before tax was NOK 1,377.1 (NOK 457.6) million.
During 2014 Entra signed new and renegotiated leases with an annual rent totaling NOK 171 million (85,900 square metres) and received notices of termination on leases with an annual rent of NOK 15 million (10,700 square metres). Entra also completed three major development projects. In March 2014, the office building "Powerhouse" at Kjørbo in Sandvika was finalised. The building has been refurbished into an energy positive building, one that produces more energy than it uses over its lifetime. The office building is the first in Norway to obtain a Breeam Outstanding certification. Otto Sverdrups plass 4 in Sandvika, comprising a total 15,500 square metres, was finalised in August 2014 containing an "Education and Knowledge Centre" for Bærum Municipality and Oslo and Akershus University College. Otto Sverdrups plass 4 achieved a Breeam Very Good certification. Kongsgård Allé 20 in Kristiansand has been extended by 2,000 square metres to a total of 12,000 square metres and was finalised in August 2014. The property house three educational institutions, Kristiansand International School (KIS), Adult Education/Kongsgård School Centre as well as a Reception school.
Entra has been active in the transaction market in 2014, in line with the strategy of growth in the four largest cities in Norway and divestment of non-core assets. The acquisition of 50 % of the shares in Hinna Park Eiendom AS was completed in February 2014 and the purchase of the property Lilletorget 1 in the city centre of Oslo was completed in July 2014. Entra has furthermore sold five smaller properties in Tromsø, Stavanger and Oslo as well as its 50 % shareholding in UP Entra during 2014.
Entra is one of Norway's leading real estate companies, focusing on high quality, flexible office buildings with central locations close to transportation hubs. The property portfolio is characterised by solid tenants, long leases and a high occupancy ratio. As of 31 December 2014 Entra owned and managed approximately 1.3 million square metres, divided between 105 buildings. At the end of the year the real estate portfolio had a market value of NOK 28.4 billion and the average remaining lease period was 7.7 years. The public sector represented approximately 76 % of the customer portfolio.
Entra is a solid and well-run Group. The values responsible, ambitious and hands-on are to characterise all activities in the Group. Entra's business concept is to develop, let and manage attractive and environmentally leading buildings. The Group's business strategy has three pillars: customer satisfaction, profitable growth and environmental leadership.
Entra's strategic areas of concentration are Oslo and the surrounding districts, Bergen, Stavanger and Trondheim. The Group is organised into four regions: Central Oslo, Greater Oslo, South/West Norway and Mid/North Norway. Entra has its head office in Oslo and regional offices in Bergen and
Trondheim. Approximately 70 % of the property value is located in the Oslo area.
The Board has supervised the management and followed up the Group's business. The Board's work in 2014 was influenced by the privatisation process including preparations for being a listed company. The Board set up a privatisation committee who worked closely with Entra's management and the Ministry of Trade, Industry and Fisheries in the privatisation process. In addition the Board focused on active portfolio management (acquisitions and divestments), new and ongoing development projects, health environment and safety (HES) and management training.
On 2 February 2015 it was announced that Klaus-Anders Nysteen would resign from his position as CEO of Entra to take on the position as CEO of Lindorff Group. Mr. Nysteen resigned with immediate effect and the board appointed CFO Arve Regland as acting CEO.
Rent levels increased by around 5 % in 2014 compared to around 9 % in 2013. As in the previous year it was high-quality office premises in central Oslo that saw the highest growth. The letting activity in the market was lower in 2014 compared to 2013. This can to a large extent be explained by few large expirations in 2015 and 2016 as well as uncertainty about the outlook for the Norwegian economy. In the end of 2014 the rental growth showed signs of flattening out. At the end of the year office vacancy for the Oslo area had increased to around 8 % compared to around 7.5 % at the end of 2013.
Rents in Bergen were relatively stable again in 2014. There was good demand for modern centrally located office premises. Office vacancy increased slightly and was around 8 % at the end of the year.
In Stavanger, office vacancy continued to rise to a level of around 8 % at the end of the year, up from around 7 % in 2013. Lower activity within the oil and oilservice sector may contribute to a further increase in the vacancy level. The Forus area is particularly exposed towards this trend and has started experiencing downward pressure on rents. In Stavanger city and at Hinna Park the vacancy rate is lower and rent levels remain more stable.
The rental market in Trondheim was relatively stable throughout 2014. Strong competition in the new building market put pressure on rental growth and contributed to somewhat higher office vacancies at the end of 2014 compared to 2013. The vacancy level was around 6 % at the end of the year.
In 2014 Entra signed leases with an aggregate annual rent of NOK 171 million, divided between 85,900 square metres of which the largest contracts were:
The proportion of vacant premises in Entra's portfolio has increased slightly and the Group had an occupancy level of 94.6 % as at 31 December 2014 compared to 95.8 % at 31 December 2013. The vacancy level was lowest in the Mid/ North region at 2.7 % and highest with 7.2 % in the Central Oslo region. The Greater Oslo and South and West regions had vacancy levels of 3.1 % and 5.2 %, respectively.
Entra's goal is to be the best in its sector in terms of customer satisfaction. The Norwegian Tenant Index is used to measure customer satisfaction. Entra achieved an aggregate customer satisfaction score of 74 (72) in 2014 against a national average for the sector of 72 (71). On environmental questions in the survey Entra achieved a score of 76 (74), compared with a national average of 65 (63). It is pleasing that customers value Entra's environmental efforts.
In the autumn of 2012 Entra opened a customer service centre, which has been very well received by the customers. The score for handling fault reports increased to 78 (76). The national average in the sector is 72 (70) points. The customer centre contributes to increasing customer satisfaction and lays the foundation for more efficient management of Entra's properties.
The following projects are the most important projects Entra completed in 2014:
The following projects are the most important projects that were started up or were ongoing during 2014:
At the end of 2014 Entra's project portfolio contained 86,637 square metres.
In addition, Entra worked on a number of projects that are at an early phase where an investment decision has not yet been taken. The most important projects are referred to below:
Commercial property transactions in Norway in 2014 totalled approximately NOK 57 billion, up from approximately NOK 40 billion in 2013. The transaction market is active and driven by favourable financing terms for property investors. International investors are showing increased interest in the Norwegian market. The interest for modern and central properties close to transportation hubs is high. However, also more normal properties outside the most central office clusters are in demand and the historically high gap between prime and normal yield properties is contracting. The prime yield in Oslo decreased to around 4.75 % (5.25%) by the end of 2014. The yield gap is at a record high as a result of decreasing interest rates
In accordance with the strategy of growth in the four largest cities Entra acquired the following properties/companies during 2014:
Entra has furthermore taken advantage of the strong transaction market and sold several of its non-core properties. During 2014 Entra signed contracts to sell the following properties/property companies: 50 % holding in UP Entra AS, Pilestredet 30 AB CD in Oslo, St. Olavs gate 4 in Oslo, Grønnegata 122 AS, Strandgata 41 in Tromsø and Skansegaten 2 in Stavanger. At the year-end all the properties had been transferred to new owners with the exception of Skansegaten 2 and Grønnegata 122 AS, which will be transferred in January and April 2015 respectively.
On 22 January 2015 it was announced that Entra had entered into an agreement with Hemfosa Fastigheter AB regarding the sale of a portfolio of six properties in Østfold and Lillestrøm. The total property value was NOK 1.375 bn, which was about 15 per cent above book values as at 31.12.14.
Oslo S Utvikling AS (OSU) (33.33 % ownership)
OSU is a property development company that is undertaking the development of parts of the city district Bjørvika in Oslo. OSU is developing around 350,000 square metres above ground and around 105,000 square metres below ground, of which approximately 177,000 square metres above ground and approximately 70,000 square metres below ground have been developed.
OSU's strategy of developing properties for sale means that the properties are not accounted at fair value in the financial statements, but at historical cost. In the consolidated financial statements the investment is included using the equity method, and equity after tax is recorded at NOK 578.1 million in the consolidated financial statements as at 31 December 2014.
The market value of the properties and projects in OSU is estimated at approximately NOK 3.5 billion (100 per cent). Entra's ownership of 33.33 per cent gives a market value of NOK 1.2 billion of the properties and projects in OSU. The estimate is based on corresponding principles to those used for Entra's other valuations of investment properties. Entra's share of the net asset value as at 31 December 2014 was NOK 0.8 billion after taking into account estimated latent deferred tax of 10 per cent, which gives an excess value of approximately NOK 0.2 billion compared to book values of OSU.
Entra and Oslo Pensjonsforsikring (OPF) own the jointly controlled enterprise Entra OPF Utvikling AS (50 % each). The company owns the properties Allehelgens gate 6 and Lars Hilles gate 30 in Bergen.
In Lars Hilles gate 30, Media City Bergen (MCB) is under development as described under project development above. The property Allehelgens gate 6 is fully let to the police, with a remaining lease term of just above 4 years as of 31 December 2014.
Pensjonsforsikring, Entra OPF Utvikling AS is not to be financed with debt, and any capital requirements in addition to the company's ongoing profits are to be financed with equity contributions from the owners. In addition the contract provides that the company as a general rule will distribute the previous year's profit after providing for any capital requirements in the year in which the distribution is made.
Hinna Park Eiendom AS is owned by Entra Eiendom (50%) and Camar Eiendom AS (50%). Entra Eiendom acquired its 50 per cent interest in the newly established Hinna Park Eiendom AS
in February 2014 based on a property value of approximately NOK 1.3 billion (100%).
The company owns Hinna Park AS of which owns eight subsidiaries. Fjordpiren AS, Troll Næring AS and HP Stadionblokken C AS are property companies holding individual existing properties. The companies Gullfaks AS, Oseberg Næring AS and Ormen Lange AS are all project companies holding individual land plots. Hinna Park Logistikk AS has commenced building parking hall no 2 (Gullhallen). In Gullfaks AS the construction of Gullfaks has been initiated. The project, with BREEAM classification Excellent, has an estimated completion date in Q3 2016.
Due to the fact that Entra Eiendom holds 51% of the votes at Hinna Park Eiendom AS' general meeting as set forth in the shareholders' agreement governing the parties' joint shareholding, Hinna Park Eiendom AS is consolidated in the Group's financial statements.
Entra Eiendom AS and Drammen Municipality own Papirbredden Eiendom AS. The company owns the properties Grønland 51, Grønland 56, Grønland 58, Grønland 60 and Kreftingsgate 33 in Drammen. All the properties are 100 % let.
The construction of Papirbredden 3 on parts of the site Grønland 51 in Drammen has commenced as described under project development above. Zoning work is ongoing for the property Kreftingsgate 33 in Drammen.
Entra reports its work with respect to corporate social responsibility based on the fundamental values and principles set out in the UN's Global Compact, which has as its objectives to safeguard the environment and working conditions, combat corruption and uphold human rights, as well as the UN's Guiding Principles on Business and Human Rights (UNGP).
See the separate section in the annual report on corporate social responsibility for a more detailed discussion and reporting based on the Report to Parliament no. 27 (2013–2014) and the relevant section in the Accounting Act, § 3–3C.
Entra is responsible for ensuring the safety of its customers, suppliers, employees and guests. Entra's goal of being a zero-harm workplace for people, the environment and society underpins all the Group's health, safety and environmental work. The main HSE requirements for the business are specified in the Group's HSE policy.
No serious personal injuries were registered in 2014. Entra's LTI rate (the number of work-related injuries resulting in absence per million work-hours) was 4.4 in 2014, compared with 7.1 in 2013. Entra has implemented several initiatives to improve the HSE situation both in on-going projects and in the operations. HSE is an important focus area for the Board. The Board is
satisfied with the dedicated HSE work in the organisation and the initiatives taken to prevent serious incidents.
At the end of 2014, the Group had 167 employees (corresponding to 167 full-time equivalents), of whom 15 are employed in Hinna Park. Staff turnover in 2014 was 11.7 % compared to 20 % in 2013. The high level in 2013 is explained by an organisation and development project that was carried out.
Sickness absence at Entra Eiendom AS was 3.4 % in 2014, which was at the same level as in 2013. The group works systematically to prevent sickness absence, as stipulated in the agreement on an Inclusive Workplace, and monitors the progress of staff on sick leave closely.
As part of Entra's work to prevent corruption and undesirable incidents, the group has developed ethical guidelines. Irrespective of whether changes are made to the ethical guidelines, it is important to the group that everyone who works in Entra is familiar with the content of the guidelines and undertakes to observe them. The ethical guidelines are signed by all employees annually and on new appointments.
Cooperation with employee organisations was good and constructive during 2014, and made a positive contribution to the operation of the Group.
At 31 December 2014, 44 (32) of the Group's employees were women. Entra aims to increase the number of women working in the Group, and this goal has been incorporated into the Group's recruitment procedures. In 2014 three out of seven Board members were women. As of 31 December 2014 there were as many women as men in the group management and three out of the four regional directors were women.
Employee benefits, such as flexible working hours and full pay during illness and parental leave regardless of the National Insurance scheme's limits are regarded as important measures in the efforts to ensure equal opportunities.
The Group believes in the benefits of diversity, and this goal has been incorporated into Entra's recruitment procedures. The Group's recruitment processes encourage all qualified candidates to apply, regardless of their age, gender, ethnic background or any disabilities.
The Group's rental income amounted to NOK 1,772.3 million in 2014 compared to NOK 1,632.3 million in 2013. The growth in rental income was 8.6 per cent, of which underlying like-forlike growth amounted to 3.3 per cent. The increase in rental income relates to the purchase of Hinna Park Eiendom AS with effect from 1 February 2014, Lilletorget 1 in July 2014 and the purchase of Vahlsgate 1-3 in July 2013. In addition, completion of the projects at Fredrik Selmers vei 4 in Oslo, Otto Sverdrups plass 4 in Sandvika and Brattørkaia 15 in Trondheim, has
contributed significantly to higher rental income compared to 2013. The increase in rental income was partly offset by the divestment of the properties Spelhaugen 12 in Bergen, Wergelandsveien 27 in Oslo and Storgata 14 in Lillestrøm.
Other operating revenue amounted to NOK 224.9 million against NOK 24.9 million in 2013. The Group delivered 25 apartments at Ringhøyden and 8 apartments at Slottshagen at Ringstabekk to buyers and thus recognised an income of NOK 177.3 million in 2014. Otherwise other operating income consists mainly of income from administration charges and invoicing of additional services to tenants.
Maintenance and operating costs amounted to NOK 148.1 million in 2014 against NOK 157.4 million in 2013. Other property costs amounted to NOK 223.0 million in 2014 compared to NOK 88.2 million in 2013. Other property costs in 2014 mainly consist of apartments sold at Ringstabekk (as referred to above) of NOK 189.4 million. In 2013 other property costs were affected by rental costs related to the rebuilding of Fredrik Selmers vei 4.
Administrative owner costs amounted to NOK 227.0 million in 2014 against NOK 223.0 million in 2013. In 2014 the administrative owner costs have been affected by the consolidation of Hinna Park Eiendom AS, as well as NOK 15.3 million related to the IPO. In 2013 the item was affected by costs related to the reorganisation project.
For 2014 the net income from property management totalled NOK 1,399.2 million compared to NOK 1,188.7 million in 2013.
The valuation of the property portfolio resulted in positive value changes of NOK 1,194.5 million in 2014 compared with NOK -506.7 million in 2013. The positive value changes are mainly due to decreasing yield levels as well as commencement and completion of projects.
The share of the result from associated companies and jointly controlled entities amounted to NOK 35.6 million in 2014 against NOK 235.5 million in 2013. In 2013 the result was impacted by the sale of the Deloitte building by Oslo S Utvikling AS. In 2014, the results have been affected by a positive contribution from Oslo S Utvikling, offset by a negative change in the market value of the property Lars Hillesgate 30 in Entra OPF, mainly due to revised assumptions in relation to the start-up of the renovation project "MediaCity Bergen".
The net unrealised negative value change on financial instruments was NOK – 607.0 million (NOK 183.7 million) in 2014. The negative development is mainly due to falling market interest rates and increased liabilities on the Group's fixed rate loans as a result of a reduction in market valued credit margins.
Net realised financial costs amounted to NOK -645.2 million (NOK -643.6 million). After the IPO in October, the Group repaid NOK 1.9 billion of debt and at year end 2014 debt was at about the same level as at year end 2013. However, the average interest bearing debt during the year has been higher than in 2013.
Falling market interest rates and the expiry of historical interest hedging agreements have contributed to only a minor increase in realised financial expenses.
For 2014 the profit before tax totalled NOK 1,377.1 million, against NOK 457.6 million in 2013, and total comprehensive income after tax was NOK 1,000.1 million against NOK 462.8 million in 2013.
The Group's assets amounted to NOK 30,849.6 (NOK 26,809.1) million as at 31 December 2014. Of this, investment property amounted to NOK 26,679.5 (NOK 24,429.8) million and investment property held for sale to NOK 1,550.8 (NOK 388.2) million. Nine properties were classified as held for sale as at 31 December 2014.
The Group has recognised goodwill of NOK 145.9 million (NOK 0) in connection with the acquisition of 50 per cent of Hinna Park Eiendom AS. The purchase of Hinna Park was a purchase of a business and the provision of the excess value of identifiable assets is recognised as non-identifiable goodwill.
Investments in associated companies and jointly controlled entities were NOK 1,074.5 (NOK 1,128.3) million. The decrease is mainly due to the sale of Entra's shares in the associated company UP Entra.
The Group's interest-bearing debt as of 31 December 2014 was NOK 14,646.7 (NOK 14,608.5) million. During the year 2014 the Group has increased interest bearing debt to finance property projects and improvements, the purchase of Hinna Park, payment of a dividend of NOK 900 million (of which NOK 650 million was paid from paid-in capital in connection with the IPO) and the acquisition of Lilletorget 1 for a net purchase price of NOK 287.3 million. Interest bearing debt was however reduced by net proceeds from the IPO in connection with the listing on Oslo Stock Exchange of Entra ASA in October 2014.
The pension liability was NOK 81.8 (NOK 53.1) million as of year-end 2014. The increase is due to changes in actuarial assumptions, particularly impacted by a lower discount rate on the pension liability.
Trade payables and other payables were NOK 520.7 (NOK 457.9) million. The increase is due to a higher level of investments particularly impacted by projects run by Hinna Park and dividend not yet paid to shareholders of NOK 25 million in Hinna.
The Group's equity capital, including non-controlling interests, was NOK 11,064.0 (NOK 8,131.3) million as at 31 December 2014 which corresponds to an equity ratio of 35.9 per cent (30.3 per cent). The IPO in October resulted in a net increase of the equity of NOK 2,660.1 million, after IPO costs of NOK 39.9 million after tax. In connection with the acquisition of Hinna Park, the Group has recorded a non-controlling ownership interest of NOK 257.4 million.
The Group's cash flow from operations for 2014 amounted to NOK 668.2 (NOK 508.4) million. The change from 2013 is mainly due to an increased profit from property management.
The net cash flow from investments was NOK -1,157.0 (NOK -999.7) million.
Proceeds from sales of investment properties, companies and housing-units include proceeds from sale of investment properties and sales of housing-units at Ringstabekk totalling NOK 511.4 (NOK 596.9) million in 2014.
The Group had a net negative cash effect of NOK 213.3 million related to the purchase of 50 per cent of the shares in Hinna Park of NOK 218.9 million and a net positive cash effect of NOK 5.5 million from the purchase of the remaining shares in Sørlandet Kunnskapspark Eiendom AS.
Investments in the property portfolio amounted to NOK 1.587.9 (NOK 1,798.8) million, of which NOK 1,106.5 (NOK 998.0) million is related to improvements of the existing property portfolio. NOK 287.3 million was related to the purchase of the investment property Lilletorget 1 in 2014. In 2013 NOK 592.1 million was related to the purchase of Schweigaardsgate 16.
The Group received net payments from associates and jointly controlled entities of NOK 132.7 (NOK 202.2) million in 2014 of which NOK 125.2 is related to proceeds from the sale of the shares of UP-Entra. In addition, the Group has received a dividend from Entra OPF of NOK 79.6 million in 2014.
Net cash flow from financing was NOK 509.6 (NOK 603.9) million. During 2014 the Group increased its interest bearing debt related to the purchase of Hinna Park in the first quarter, to the purchase of Lilletorget 1 in the second quarter, to improvements to the existing property portfolio, and to dividend payments of NOK 900 million to the Norwegian Ministry of Trade, Industries and Fisheries and of NOK 60 million to the non-controlling shareholder in Hinna. In connection with the net share issue proceeds of NOK 2.645.4 million in the fourth quarter of 2014, the Group repaid approximately NOK 1.9 billion of interest bearing debt.
The net change in liquid assets was NOK 20.7 (NOK 112.6) million in 2014.
The financial statements have been prepared based on the going concern assumption, and the Board confirms that this assumption is valid. The company is in a healthy financial position, and has good liquidity. The Board confirms that the company had sufficient equity and liquidity as at 31 December 2014. There have not been any events since 31 December 2014 that have significant impact on the financial statements.
The Group´s financing is diversified between various bank and capital market instruments. At year-end 2014 the nominal interest-bearing debt was NOK 14.088 (NOK 14.528) million. The interest-bearing debt has a diversified maturity structure, with an average term to maturity of 5 years. Entra's financing is based on negative pledge of the Group´s assets, a structure which enables a broad and flexible financing mix.
The capital markets funding as at 31 December 2014 consisted of bonds and commercial paper outstanding of respectively NOK 7,300 million and NOK 1,350 million, which accounted for 61 per cent of total interest-bearing debt. Bank funding of NOK 5,438 million represents the remaining part of the financing mix. The Group´s bank facilities are mainly revolving credit facilities, which enable an active liquidity management by adjusting the revolving facilities according to any ongoing cash needs or surplus. The Group's liquid assets amounted to NOK 198.2 (NOK 177.4) million as at 31 December 2014. In addition, the Group had committed, unutilised credit facilities totalling NOK 3,965 (NOK 3.425) million.
The Group's average interest cost as at 31 December 2014 was 4.45 (4.47) per cent. As at 31 December 2014, 63 (62) per cent of the Group's total interest-bearing debt was subject to fixed interest rates. At the same time, the effective term to maturity of the Group's interest rate hedging instruments was 3.2 (3.0) years. Market interest rates have fallen significantly during 2014, as the market discounts lower growth in the Norwegian economy. However, the average interest rate on the Group funding has only been subject to a minor reduction. This effect is explained by lower interest-bearing debt and reduced floating interest rate exposure, as IPO proceeds was used to repay floating rate debt.
The Group has adopted a conservative financial strategy with a moderate loan to value ratio that secures financial flexibility throughout an economic cycle. Entra will in this regard target a loan to value ratio of approximately 50 per cent. The Group´s loan to value ratio as at 31 December 2014 was 48.4 per cent, reduced from 56.6 per cent in 2013. The reduction in the loan to value ratio is mainly due to debt repayment from the IPO proceeds. Approximately NOK 1,900 million of interest-bearing debt was repaid in connection with the IPO in the fourth quarter 2014.
The Group manages financial risks in accordance with a framework included in the financial policy. The main financial risks, in addition to financial leverage above, are financing risk, interest rate risk, credit risk and currency exposure. The Group's financial policy has been adopted by the Board and is up for revision on an annual basis.
Entra's board has approved guidelines for good corporate governance in accordance with the Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board (NUES)
The following elements are central in these guidelines:
| 31.12.2014 | Financial policy | |
|---|---|---|
| Financial leverage | ||
| Loan to value | 48% | approx. 50 % |
| Financing risk | ||
| Unutilised credit facilities and cash/short-term interest-bearing debt | 142% | at least 100% |
| Weighted average time to maturity | 5.0 | at least 4 years |
| Short-term interest-bearing debt/total interest-bearing debt | 20% | max 30% |
| Interest rate risk | ||
| Interest coverage ratio | 2.0 | at least 1.65 times |
| Duration | 3.2 | 2-5 years |
| Interest rate maturity within next 12 months | 37% | max 50% |
| Credit risk/currency exposure | ||
| Counterpart's credit rating | Fulfilled | at least A-/A3 |
| Share of debt per counterparty | 13% | max 30% |
| Currency exposure | 0 | 0 |
See the section of this annual report on corporate governance for a more detailed description of the corporate governance principles and reporting pursuant to Section 3-3b of the Norwegian Accounting Act.
Entra's share capital is NOK 183,732,461 divided into 183,732,461 shares, with each share having a par value of NOK 1.00. All the shares have been issued in accordance with the Norwegian Public Limited Companies Act and are fully paid. Entra has one class of shares. All shares provide equal rights, including the right to any dividends. Each of the shares carries one vote. There are no share options or other rights to subscribe for or acquire shares issued by Entra. Neither Entra nor any of its subsidiaries directly or indirectly owns shares in the company.
As of 31 December 2014 Entra had 6,709 shareholders, with 66 % of the shares being held by Norwegian investors and 34 % by foreign investors. The 10 largest shareholders as of 31 December 2014 were as set out in the table below.
Entra targets a dividend payout ratio of approximately 60 % of Cash Earnings, defined as the result from property management less net realised financial items and payable tax. In line with the dividend policy, the board of Entra proposes a dividend of NOK 2.50 per share for 2014.
Entra assesses risk on an ongoing basis and draws up risk maps for the business. The main risks are considered to be commercial risk, operational risk, project risk and business and strategic risk.
Entra's commercial risk includes the risk associated with signing and renegotiating contracts. Economic downturns may lead to changes in market rents. The Group achieves stable and predictable cash flows through long-term leases with a balanced maturity profile. The Group aims to reduce rental risks through systematic customer support, by keeping track of when contracts expire and planning how to find new tenants. 76 % of the Group's customers are from the public sector as of 31.12.14 and changes in operating parameters and efficiency improvements in the public sector may affect the Group's risk exposure. The market value of the Group's property portfolio is affected by cyclical fluctuations in the economy amongst other factors. A decrease in the market value of the portfolio will reduce the Group's equity ratio.
Commercial risk includes the Group's financial risk. The Group is exposed to financial risk through the liabilities on its balance sheet. The management of its financing activities is regulated by the limits set in the Group's finance policy. Changes in interest rate levels will have an impact on the Group's cash flows. The Group seeks to manage this risk by actively using various interest rate hedging instruments and by spreading maturities. Liquidity risk and refinancing risk are reduced by entering into long-term loan agreements, as well as by maintaining diversified maturity structure and using a variety of different credit markets and counterparties. Entra does not expose itself to currency risk. A high proportion of public sector tenants mean that credit and counterparty risk is limited. The
| NAME | SHAREHOLDING | % |
|---|---|---|
| MINISTRY OF TRADE, INDUSTRY AND FISHERIES | 91,668,389 | 49.9 % |
| GEVERAN TRADING CO LTD | 18,400,000 | 10.0 % |
| FOLKETRYGDFONDET | 8,375,000 | 4.6 % |
| J.P. MORGAN CHASE BANK N.A. LONDON | 4,556,194 | 2.5 % |
| JP MORGAN CLEARING CORP. | 4,356,045 | 2.4 % |
| BNP PARIBAS SEC. SERVICES S.C.A | 2,736,133 | 1.5 % |
| J.P. MORGAN CHASE BANK N.A. LONDON | 2,568,221 | 1.4 % |
| CITIBANK, N.A. | 2,376,427 | 1.3 % |
| VARMA MUTUAL PENSION INSURANCE | 2,162,000 | 1.2 % |
| DANSKE INVEST NORSKE INSTIT. II. | 2,129,748 | 1.2 % |
| SUM 10 LARGEST | 139,328,157 | 75.8 % |
| OTHER | 44,404,304 | 24.2 % |
| TOTAL | 183,732,461 | 100.0 % |
creditworthiness of other customers is continuously monitored. If a customer does not possess sufficient financial strength, adequate security is required.
The Group is exposed to project risk in conjunction with the construction and renovation of properties. The Group takes this type of risk into account in its investment analysis prior to deciding to start work on a project, as well as by continuously monitoring the risk throughout the project period. A risk premium is added to the equity return requirement related to, among other things, cost developments during the construction period, delays and contract matters. When making investment decisions, market risk is also taken into account when determining cash flow and the required rate of return
Operational risk is managed through procedures for day-to-day operations, compliance and HSE work. Business and strategic risks include the possible impact on the Group's operations of political decisions, regulations and significant unforeseen nonrecurring events. The Group has identified strategic risk factors, and considers these to be carefully managed through ongoing work and the measures implemented.
In 2014, Entra ASA made a profit after tax of NOK 487.8 (NOK 250) million, as set out in the financial statements prepared in accordance with the Norwegian Accounting Act and Norwegian generally accepted accounting principles.
In accordance with the defined dividend policy the Board proposes that Entra ASA distributes profit for the year as follows:
The board confirms that the company has sufficient equity and liquidity following payment of the proposed dividend.
In 2015 Entra will focus on its core operations hereunder property management and project development as well as further streamlining of an efficient organisation. Going into 2015 Entra is well established as a listed company. In the latter part of 2014 and beginning of 2015 Entra has taken advantage of the favourable market conditions in the transaction market and the divestment of non-core assets strategy is far progressed. Entra will focus on profitable growth through efficient property management and letting activities as well as value accretive project development and transactions.
A weaker macro-economic development is expected in Norway. The current economic situation with lower oil prices is expected to lead to higher unemployment and increased uncertainty.
Office vacancies have increased slightly throughout 2014 despite the low volume of new buildings being completed. Sub markets with a high level of international tenants and oil exposure are expected to experience further increase in vacancies and pressure on rents. As seen in previous periods, modern offices located near public transportation still attract tenants and obtain solid rents compared to premises located in fringe areas. Rental growth is however expected to see a slow-down in 2015 compared to previous years.
Property investors seek quality properties with good locations and/ or long and secure cash flows. Centrally located properties with development potential are also greatly in demand. Entra is experiencing a favourable credit market environment with low interest rates and contracting credit margins. The market is characterised by high competition and willingness to lend, both by banks and in the debt capital markets. Entra expect these market conditions to continue and to support a positive value development for Entra's property portfolio.
Oslo, 25 March 2015 The Board of Directors of Entra ASA
Siri Hatlen
Chair of the Board
Arthur Sletteberg Board member
Birthe Smedsrud Skeid
Board member
Martin Mæland
Deputy Chair
Kjell Bjordal Board member
Ingrid Tjøsvold
Board member
Frode Halvorsen
Board member
Arve Regland
Acting CEO
Siri Beate Hatlen has been the Chair of the board of directors of Entra ASA (Entra Eiendom AS) since May 2012. Ms Hatlen has a Master of Science from the Norwegian University of Science and Technology (NTNU) and a Master of Business Administration from INSEAD. In her early career she worked for Statoil on larger offshore projects, later as management for hire and as board member/chair of the board of directors for numerous companies in Norway. From 2007 to 2009 she was Executive Vice President of Statkraft, and was the CEO of Oslo University Hospital from 2009 to 2011. Ms Hatlen currently also serves as the chair of the board of directors of among others Sevan Marine ASA and is a board member of Norske Skogindustrier ASA, Kitron ASA and Eksportkreditt AS. Ms Hatlen held 1.091 shares in Entra as of 31.12.14
Kjell Bjordal has been a member of the board of directors of Entra ASA (Entra Eiendom AS) since 2012. Mr Bjordal has a Master of Business Administration from the Norwegian School of Economics (NHH). He is an independent business advisor and serves as the chair of the board of directors of Sparebank 1 SMN, AXESS Holding AS, Brødr Dyrøy AS and Norsk Landbrukskjemi AS. Mr Bjordal held 14,551 shares in Entra as of 31.12.14
Frode Erland Halvorsen has been an employee representative of the board of directors of Entra ASA (Entra Eiendom AS) since 2014. He serves as manager of operations (Oslo) of the Group. He also serves as the local labour union leader for Forbundet for Ledelse og Teknikk (FLT). Mr Halvorsen held 230 shares in Entra as of 31.12.14
Martin Mæland has been a member of the board of directors of Entra ASA (Entra Eiendom AS) since 2007. Mr Mæland has a Master of Science (Cand.mag) and a Master of Economics (Cand.oecon) from the University of Oslo. He also serves as the CEO of OBOS and the chair of the board of directors of Veidekke ASA, BWG Homes AS, Block Watne AS and Eika Boligkreditt AS. Mr Mæland held 2.183 shares in Entra as of 31.12.14
Arthur Sletteberg has been a member of the board of directors of Entra ASA (Entra Eiendom AS) since 2012. Mr Sletteberg has a Master of Business Administration from the Norwegian School of Economics (NHH) and a Master of International Economics from the Kiel Institute for the World Economy. He also serves as CEO of The Norwegian Microfinance Initiative, a board member of DNB Livsforsikring AS and Ness, Risan & Partners AS. Mr Sletteberg held 727 shares in Entra as of 31.12.14
Ingrid Therese Tjøsvold has been a member of the board of directors of Entra ASA (Entra Eiendom AS) since 2012. Ms Tjøsvold has a Master of Business Administration from the University of Strathclyde. She also serves as Executive Vice Presient (Business Support) of Mesta AS, a board member of Mesta Eiedom AS and a board member of W. Giertsen Tunnel AS. Ms Tjøsvold held 437 shares in Entra as of 31.12.14
Birthe Helén Smedsrud Skeid has been an employee representative of the board of directors of Entra ASA (Entra Eiendom AS) since 2012. Ms Smedsrud Skeid has a Master of Technology from the Norwegian University of Science and Technology (NTNU). She serves as an investment analyst in the Group. Ms Skeid held 2,307 shares in Entra as of 31.12.14
| Statement of total comprehensive income | 51 |
|---|---|
| Balance sheet - assets | 52 |
| Balance sheet - equity and liabilities | 53 |
| Consolidated statement of changes in equity | 54 |
| Consolidated statement of cash flows | 55 |
| Notes | 57 |
All amounts in NOK million
| Note | 2014 | 2013 | |
|---|---|---|---|
| Rental income | 6 | 1 772.3 | 1 632.3 |
| Other operating revenue | 10 | 224.9 | 24.9 |
| Total operating revenue | 1 997.3 | 1 657.2 | |
| Repairs & maintenance | 52.5 | 65.9 | |
| Operating costs | 11 | 95.6 | 91.5 |
| Other property costs | 12 | 223.0 | 88.2 |
| Administrative owner costs | 13, 14 | 227.0 | 223.0 |
| Total operating costs | 598.0 | 468.5 | |
| Net income from property management | 1 399.2 | 1 188.7 | |
| Changes in value from investment properties | 19 | 1 194.5 | -506.7 |
| Share of profit from associates and jointly controlled entities | 20 | 35.6 | 235.5 |
| Operating profit | 2 629.3 | 917.5 | |
| Interest and other finance income | 16 | 21.2 | 14.5 |
| Interest and other finance expense | 16 | -666.3 | -658.1 |
| Net realised financials | -645.2 | -643.6 | |
| Unrealised changes in value of financial instruments | -607.0 | 183.7 | |
| Net financial items | -1 252.2 | -460.0 | |
| Profit before tax | 1 377.1 | 457.6 | |
| Tax payable | 27 | - | - |
| Change in deferred tax | 27 | -351.4 | 8.1 |
| Profit for year | 1 025.7 | 465.7 | |
| Pension estimate difference | 26 | 35.0 | 4.0 |
| Change in deferred tax on comprehensive income | 27 | - 9.4 | -1.1 |
| Total comprehensive income for the year | 1 000.1 | 462.8 | |
| Profit attributable to: | |||
| Equity holders of the Company | 1 026.8 | 449.1 | |
| Non-controlling interest | -1.1 | 16.6 | |
| Total comprehensive income attributable to: Equity holders of the Company |
1 001.2 | 446.2 | |
| Non-controlling interest | -1.1 | 16.6 | |
| Earnings per share | |||
| Continuing operations | |||
| Basic=Diluted (NOK) | 35 | 21.7 | 3 137.7 |
Notes 1 through to 36 form an integral part of the consolidated financial statements.
| Note | 31.12.2014 | 31.12.2013 | 01.01.2013 | |
|---|---|---|---|---|
| NON-CURRENT ASSETS | ||||
| Goodwill | 17 | 145.9 | - | - |
| Other intangible assets | 18 | 34.3 | 30.9 | 36.3 |
| Total intangible assets | 180.2 | 30.9 | 36.3 | |
| Investment property | 19 | 26 679.5 | 24 429.8 | 23 499.1 |
| Property used by owner | 18 | 7.0 | 6.7 | 5.8 |
| Other operating assets | 18 | 34.4 | 30.5 | 26.2 |
| Total property, plant & equipment | 26 720.8 | 24 467.0 | 23 531.1 | |
| Investments in associates and jointly controlled entities | 20 | 1 074.5 | 1 128.3 | 1 100.3 |
| Loan to associates and jointly controlled entities | 32 | 62.4 | - | 6.7 |
| Financial derivatives | 7 | 550.1 | 203.5 | 214.3 |
| Other long-term receivables | 48.9 | 63.1 | 6.8 | |
| Total financial assets | 1 735.9 | 1 394.9 | 1 328.1 | |
| TOTAL NON-CURRENT ASSETS | 28 637.0 | 25 892.8 | 24 895.5 | |
| CURRENT ASSETS | ||||
| Housing-units for sale | 196.6 | 227.0 | 120.2 | |
| Trade receivables | 21 | 44.6 | 27.9 | 20.1 |
| Other receivables | 22 | 222.5 | 95.8 | 49.9 |
| Total current receivables | 463.7 | 350.6 | 190.2 | |
| Cash and bank deposits | 23 | 198.2 | 177.4 | 64.8 |
| TOTAL CURRENT ASSETS | 661.9 | 528.1 | 255.0 | |
| Investment property held for sale | 19 | 1 550.8 | 388.2 | 734.2 |
| TOTAL ASSETS | 30 849.6 | 26 809.1 | 25 884.8 |
Notes 1 through to 36 form an integral part of the consolidated financial statements.
All amounts in NOK million
| Note | 31.12.2014 | 31.12.2013 | 01.01.2013 | |
|---|---|---|---|---|
| EQUITY | ||||
| Paid-in equity | 24 | 3 739.4 | 1 729.3 | 2 145.9 |
| Retained earnings | 24 | 7 038.8 | 6 287.5 | 5 841.2 |
| Non-controlling interests | 285.8 | 114.6 | 98.0 | |
| TOTAL EQUITY | 11 064.0 | 8 131.3 | 8 085.1 | |
| LIABILITIES | ||||
| Interest-bearing debt | 25 | 11 825.5 | 11 799.4 | 9 736.5 |
| Pension liability | 26 | 81.8 | 53.1 | 58.0 |
| Deferred tax liability | 27 | 2 984.3 | 2 515.1 | 2 528.1 |
| Financial derivatives | 7 | 1 352.7 | 848.0 | 1 005.2 |
| Other liabilities | 28 | 129.0 | 100.1 | 102.6 |
| Total non-current liabilities | 16 373.3 | 15 315.7 | 13 430.4 | |
| Trade payables and other payables | 29 | 520.7 | 457.9 | 379.2 |
| Interest-bearing debt | 25 | 2 821.2 | 2 809.1 | 3 910.0 |
| Tenant prepayments and provisions | 30 | 70.4 | 95.0 | 80.1 |
| Total current liabilities | 3 412.4 | 3 362.1 | 4 369.3 | |
| TOTAL LIABILITIES | 19 785.6 | 18 677.7 | 17 799.7 | |
| TOTAL EQUITY AND LIABILITIES | 30 849.6 | 26 809.1 | 25 884.8 |
Notes 1 through to 36 form an integral part of the consolidated financial statements.
Oslo, 25 March 2015 The Board of Directors of Entra ASA
Siri Hatlen
Chair of the Board
Arthur Sletteberg Board member
Birthe Smedsrud Skeid Board member
Martin Mæland
Deputy Chair
Kjell Bjordal Board member
Ingrid Tjøsvold
Board member
Frode Halvorsen Board member
Arve Regland Acting CEO
All amounts in NOK million
| Share | Other paid-in |
Retained | Non controlling |
Total | |
|---|---|---|---|---|---|
| capital | capital | earnings | interest | equity | |
| Equity at 31.12.2012 | 142.2 | 2 003.7 | 5 698.7 | 98.0 | 7 942.6 |
| Change in accounting principles IFRIC 12 | 142.5 | 142.5 | |||
| Equity at 01.01.2013 | 142.2 | 2 003.7 | 5 841.2 | 98.0 | 8 085.1 |
| Profit for the year | 449.1 | 16.6 | 465.7 | ||
| Other comprehensive income | -2.9 | -2.9 | |||
| Repaid paid-in capital | -416.6 | -416.6 | |||
| Equity at 31.12.2013 | 142.2 | 1 587.1 | 6 287.5 | 114.6 | 8 131.3 |
| Capital increase | 41.5 | 2 658.5 | 2 700.0 | ||
| Share issue cost net of tax | -39.9 | -39.9 | |||
| Additions with non-controlling interests | 257.4 | 257.4 | |||
| Profit for the year | 1 026.8 | -1.1 | 1 025.7 | ||
| Other comprehensive income | -25.5 | - | -25.5 | ||
| Dividend paid | -650.0 | -250.0 | - | -900.0 | |
| Repaid paid-in capital non-controlling interests | -85.0 | -85.0 | |||
| Equity at 31.12.2014 | 183.7 | 3 555.7 | 7 038.8 | 285.8 | 11 064.0 |
Notes 1 through to 36 form an integral part of the consolidated financial statements.
All amounts in NOK million
| Note | 2014 | 2013 | |
|---|---|---|---|
| Profit before tax | 1 377.1 | 457.7 | |
| Net expensed interest and fees on loans from financial institutions | 694.9 | 687.5 | |
| Interest and fees paid on loans from financial institutions | -739.7 | -705.4 | |
| Share of profit from associates and jointly controlled entities | 20 | -35.6 | -235.5 |
| Depreciation and amortisation | 16.1 | 44.8 | |
| Change in market value investment properties | 19 | -1 199.9 | 506.7 |
| Change in market value financial instruments | 7, 25 | 607.0 | -183.7 |
| Change in working capital | -51.8 | -63.7 | |
| Net cash flow from operating activities | 668.2 | 508.4 | |
| Proceeds from sales of property plant and equipment and housing-units | 511.4 | 596.9 | |
| Purchase of business net of cash | 9 | -213.3 | - |
| Purchase of investment properties | 19 | -287.3 | -592.1 |
| Cost of upgrades of investment properties | 19 | -1 106.5 | -998.0 |
| Investment in housing units for sale | -154.0 | -106.8 | |
| Purchase of intangible assets and other plant and equipment | 18 | -40.1 | -101.8 |
| Repayment of loans to associates and jointly controlled entities | 20 | -62.2 | -5.2 |
| Net payments in associates and jointly controlled entities | 20 | 115.3 | - |
| Dividends from associates and jointly controlled entities | 20 | 79.6 | 207.4 |
| Net cash flow from investment activities | -1 157.0 | -999.7 | |
| Proceeds interest-bearing debt | 25 | 11 910.0 | 10 412.0 |
| Repayment interest-bearing debt | 25 | -13 085.8 | -9 391.5 |
| Proceeds from issuance of shares | 24 | 2 645.4 | - |
| Dividends paid | 36 | -960.0 | -416.6 |
| Net cash flow from financing activities | 509.6 | 603.9 | |
| Change in cash and cash equivalents | 20.7 | 112.6 | |
| Cash and cash equivalents at beginning of period | 177.4 | 64.8 | |
| Cash and cash equivalents at end of period | 23 | 198.2 | 177.4 |
Notes 1 through to 36 form an integral part of the consolidated financial statements.
| NOTE 1 General information | 57 |
|---|---|
| NOTE 2 Accounting policies | 57 |
| NOTE 3 Critical accounting estimates and subjective judgements | 64 |
| NOTE 4 Financial risk management | 66 |
| NOTE 5 Risk lease management | 69 |
| NOTE 6 Segment information | 70 |
| NOTE 7 Categories of financial instruments | 71 |
| NOTE 8 Information about fair value | 72 |
| NOTE 9 Business combination | 73 |
| NOTE 10 Other operating revenue | 74 |
| NOTE 11 Operating costs | 75 |
| NOTE 12 Other property costs | 75 |
| NOTE 13 Administrative owner costs | 75 |
| NOTE 14 Personnel costs | 76 |
| NOTE 15 Statement on the determination of salaries and other remuneration of senior executives | 76 |
| NOTE 16 Financial items | 80 |
| NOTE 17 Goodwill | 80 |
| NOTE 18 Intangible assets, property used by owner and other property, plant and equipment | 81 |
| NOTE 19 Investment properties | 81 |
| NOTE 20 Associates and jointly controlled entites | 83 |
| NOTE 21 Trade receivables | 86 |
| NOTE 22 Other receivables | 86 |
| NOTE 23 Bank deposits | 86 |
| NOTE 24 Share capital and shareholder information | 87 |
| NOTE 25 Interest-bearing liabilities and accrued interest | 88 |
| NOTE 26 Pension | 90 |
| NOTE 27 Tax | 92 |
| NOTE 28 Other liabilities | 94 |
| NOTE 29 Trade payables and other liabilities | 94 |
| NOTE 30 Tenant prepayments and provisions | 95 |
| NOTE 31 Subsidiaries | 95 |
| NOTE 32 Related parties | 96 |
| NOTE 33 Contingencies | 96 |
| NOTE 34 Auditor's fee | 97 |
| NOTE 35 Earnings per share | 97 |
| NOTE 36 Dividend per share and dividend policy | 97 |
Entra ASA ("the company") was listed on the Oslo Stock Exchange on 17 October 2014. The largest shareholder with 49.9 per cent of the shares is the Ministry of Trade, Industry and Fisheries. The comany's head office is located at Biskop Gunnerusgate 14, Oslo, Norway.
Entra ASA and its subsidiaries (together "the Group") are engaged in the development, letting, management, operation, purchase and sale of real estate in Norway. Entra is one of Norway's largest property companies, with a total property portfolio of 1,292,107 square metres and 1,063,327 square metres under management. The management portfolio's economic occupancy level was 94.6 per cent at the year-end. Entra's head office is situated in Oslo. Regional offices are located in Oslo, Bergen and Trondheim.
The Group mainly has public-sector tenants, and at 31 December 2014 the proportion of public-sector tenants was 76 (81) per cent.
The consolidated financial statements were adopted by the company's Board on 25 March 2015.
The most important accounting principles applied in the preparation of the annual financial statements are described below. These principles are applied in the same way for all periods presented, unless otherwise indicated in the description.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations by the IFRS Interpretation Committee (IFRIC), as adopted by the EU, as well as additional Norwegian reporting requirements pursuant to the Norwegian Accounting Act.
The consolidated financial statements have been prepared on the basis of the historical cost principle, with the following modifications: investment properties as well as financial assets and financial liabilities have been measured at fair value. Financial instruments measured at fair value include the Group's non-current borrowings at fixed interest rates and derivatives.
Presenting the accounts in accordance with IFRS requires the management to make certain assessments and assumptions. The application of the company's accounting principles also requires management to exercise judgement. Estimates and subjective judgements are based on past experience and other factors that are considered appropriate. Actual results may deviate from these estimates.
Estimates and underlying assumptions are continuously reassessed. Changes in accounting estimates are recognised in the period in which the changes occur if they apply only to that period. If the changes also apply to future periods, the impact is distributed over the current and future periods. Note 3 details items in the accounts that are based on a significant amount of ubjective judgement.
The consolidated financial statements have been presented on the assumption of the business being a going concern.
No new or amended IFRS or IFRIC interpretations came into effect for the 2014 financial year that have a significant impact on the consolidated financial statements.
The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of "currently has legally enforceable right of set-off" and "simultaneous realisation and settlement". The amendments have been applied retrospectively. As the Group does not have any financial assets and financial liabilities that qualify for offset, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements.
The amendment removed certain disclosures of the recoverable amount of cash-generating unit (CGU) to which goodwill and other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new discloures include fair value hierachy, jey assumptions and valuation technicques used which are in line with the disclosure required by IFRS 13 Fair Value Measurements. The applications of these amendments has had no material impact on the disclosures in the Group's consolidated financial statements.
The amendment considers legislative changes to 'over-the-counter' derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The Group has applied the amendment and there has been no significant impact on the Group consolidated financial statements as a result.
The interpretation sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The amendments have been applied retrospectively. The Group is not currently subjected to significant levies so the impact on the Group's consolidated financial statements is not material.
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:
The standard addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model
All amounts in NOK million
that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ""hedged ratio"" to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The Group is yet to assess IFRS 9's full impact.
The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The Group is assessing the impact of IFRS 15.
There are no other IFRS standards or IFRIC interpretations that have not yet come into effect that are expected to have a significant impact on the Group's consolidated financial statements.
The Group has changed accounting principle for the three properties, Vøyenenga school, Borgarting Court of Appeal and the National Library from IFRIC 12 to IAS 40 "Investment properties" at 31 December 2014.
In order to present comparable figures, the Group has restated accounting periods starting after 31 December 2012 and presents comparable figures at 1 January 2013. The implications for the Group's accounting of the change in principle for the financial year ended 2013 is set out below.
| Before change in principle 2013 |
After change in principle 2013 |
Change 2013 |
Before change in principle 01.01.2013 |
After change in principle 01.01.2013 |
Change 01.01.2013 |
||
|---|---|---|---|---|---|---|---|
| Total operating revenue | 1 575.4 | 1 657.2 | 81.8 | Investment property | 22 202.5 | 23 499.1 | 1 296.8 |
| Total operating costs | 468.7 | 468.5 | -0.2 | Other long-term receivables | 1 129.5 | 6.8 | -1 122.6 |
| Net income from property | |||||||
| management | 1 106.8 | 1 188.7 | 82.1 | Total assets | 25 710.8 | 25 884.8 | 174.0 |
| Changes in value from investment | |||||||
| properties | -495.1 | -506.7 | -11.7 | Total equity | 7 942.6 | 8 085.1 | 142.5 |
| Operating profit | 847.2 | 917.5 | 70.3 | Deferred tax liability | 2 472.7 | 2 528.1 | 55.4 |
| Interest and other finance income | 109.9 | 14.5 | -95.4 | Other non-current liabilities | 126.5 | 102.6 | -23.9 |
| Interest and other finance expense | -674.8 | -658.1 | 16.7 | Total equity and liabilities | 25 710.8 | 25 884.8 | 174.1 |
| Profit before tax | 466.0 | 457.6 | -8.4 | ||||
| Total comprehensive income | 467.0 | 462.8 | -4.2 |
Subsidiaries are all entities over which the Group exercises control of financial and operating policies, normally through ownership of more than half the capital with voting rights. When deciding whether control exists, the effect of potential voting rights that can be exercised or converted on the balance sheet date is taken into consideration.
The Group also assesses whether there is control in entities over which it does not have more than 50 % of the voting rights, but in which it is nevertheless able to influence financial and operational guidelines in practice ("de facto control"). De facto control can exist in situations where the other voting rights are spread over a large number of shareholders who are not realistically capable of organising their voting. In the assessment of whether the Group has de facto control over a subsidiary, decisive importance is attached to whether the Group can choose the Board it wants.
Subsidiaries are consolidated from the date on which control is transferred to the Group, and are deconsolidated when control ceases.
The acquisition method is used to account for purchases of subsidiaries that constitute a business. The consideration given is measured at the fair value of the transferred assets, the equity instruments that have been issued, liabilities assumed on the transfer of control and direct costs relating to the actual purchase. The cost of acquisition also includes the fair value of all assets or liabilities that are the result of an agreement on contingent consideration.
Identifiable purchased assets, assumed liabilities and contingent liabilities are recognised at fair value on the date of acquisition. The costs associated with the business combination are expensed when they are incurred.
If the aggregate of the consideration, the carrying amount of non-controlling interests and the fair value on the acquisition date of any previously held ownership interests exceeds the fair value of the acquired entity's identifiable net assets, the difference is capitalised as goodwill. If the aggregate is less than the company's net assets, the difference is immediately recognised in profit or loss.
Contingent consideration is recognised at fair value on the date of acquisition. Subsequent changes in the fair value of the contingent consideration are recognised in profit or loss or recognised as a change in other comprehensive income, if the contingent consideration is classified as an asset or a liability. Contingent consideration classified as equity is not re-measured, and subsequent settlement is recognised in equity.
For accounting purposes, acquisitions of subsidiaries that do not constitute a business as defined in IFRS 3, such as subsidiaries that only consist of a building, are treated as asset acquisitions. The cost of acquisition is then attributed to the individual identifiable assets and liabilities based on their relative fair values on the acquisition date. Expenses associated with the transaction are capitalised under the property. In such cases no provision is made for deferred tax (cf. exceptions in IAS 12).
Intra-group transactions, balances and unrealised gains are eliminated. Unrealised losses are eliminated, but are considered evidence of impairment in terms of writing down the value of the transferred asset. If necessary, the accounting policies at subsidiaries are changed in order to bring them into line with the Group's accounting policies.
Transactions with non-controlling interests in subsidiaries are treated as equity transactions. If shares are acquired from a non-controlling interest, the difference between the payment and the proportion of the carrying amount of the subsidiary's net assets attributable to the shares is recognised in the equity of the parent company's owners. Gains and losses arising from the sale of shares to non-controlling interests are similarly recognised in equity.
If the Group loses control, any residual holding is re-measured at fair value through profit or loss. Thereafter, the fair value is used as the acquisition cost for accounting purposes, and the holding is treated as an investment in an associate, in a jointly controlled entity or in a financial asset. Amounts previously included in comprehensive income that relate to the company are treated as if the Group had disposed of the underlying asset and liability. This may result in amounts that were previously included in comprehensive income being reclassified to the income statement.
Jointly controlled entities are companies where the Group shares control with other parties, and where an agreement between the parties ensures that strategic decisions on financial and operating policies are unanimous. This applies to companies where a shareholder agreement ensures joint control of the business. The Group's interests in jointly controlled entities are measured using the equity method. If necessary, the accounting policies at jointly controlled entities are changed in order to bring them into line with the Group's accounting policies. Jointly controlled entities where the Group controls the entity are consolidated in the Group. This will occur when the Group has the power over the jointly controlled entity, and where the Group has the exposure, or rights, to variable returns from its involvement with the jointly controlled entity and the ability to use its power over the jointly controlled entity to affect the amount of the investor's.
The proportion of any gains and losses on the sale of assets to jointly controlled entities that is attributable to other owners (outside the Group) of the jointly controlled entity is recognised in profit or loss. When assets are acquired from a jointly controlled entity, any gain or loss is only recognised in profit or loss when the asset is sold by the Group. A loss is recognised immediately if the transaction indicates that the value of the company's current or non-current assets has fallen.
Associates are companies over which the Group has significant influence but not control. Significant influence normally exists where the Group's investment represents between 20 and 50 per cent of the capital with voting rights. Investments in associates are initially recognised on the acquisition date at the acquisition cost, and thereafter using the equity method. Investments in associates include any excess values and goodwill identified at the time of acquisition, less any subsequent impairment losses.
The Group's share of the profit and loss of associates is recognised and added to the carrying amount of the investments together with the portion of unrecognised equity changes. The Group's share of the comprehensive income of associates is recognised in the Group's comprehensive income and added to the carrying amount of the investments. The Group does not recognise its share of a loss if this would result in a negative carrying amount for the investment (including the entity's unsecured receivables), unless the Group has taken over obligations or made payments on behalf of the associate.
The Group's share of unrealised gains on transactions between the Group and its associates is eliminated. This also applies to unrealised losses, unless there is a permanent loss of value. Where necessary, the accounts of associates have been brought into line with the Group's accounting policies. Gains and losses arising from the dilution of ownership interests in associates are recognised in profit or loss.
If the Group no longer has significant influence, any residual holding is re-measured at fair value through profit or loss. Thereafter, the fair value is used as the acquisition cost for accounting purposes, and the holding is treated as a financial asset. Amounts relating to the company that were previously recognised in comprehensive income are treated as if the associate had disposed of the underlying assets and liabilities. This may result in amounts that were previously included in comprehensive income being reclassified to the income statement. If the Group reduces its shareholding but retains significant influence, a proportionate share of the amounts previously recognised in comprehensive income is reclassified to the income statement.
The Group's presentation currency is NOK. This is also the functional currency of the parent company and all of its subsidiaries.
Foreign currency transactions are translated at the exchange rate on the date of the transaction. Monetary foreign currency items are translated to NOK at the exchange rate on the balance sheet date. Non-monetary items that are measured at cost in a foreign currency are translated to NOK using the exchange rate on the transaction date. Non-monetary items that are measured at fair value in a foreign currency are translated to NOK using the exchange rate on the balance sheet date. Exchange rate fluctuations are recognised in profit or loss as they arise.
Operating segments are reported in the same way as in internal reports to the Group's highest decision-making authority. The Group's highest decision-making authority, which is responsible for allocating resources and assessing the profitability of the operating segments, has been identified as the group management and the CEO.
Investment property is owned with the aim of achieving a long-term return from rental income and increase in value. Properties used by the Group are valued separately under property, plant and equipment. Investment property is recognised at fair value, based on market values identified by independent valuers. Gains or losses as a result of changes in the market value of investment properties are recognised in profit or loss as they arise, and are presented on a separate line after net income from property management.
Initial measurement also takes into consideration the property's cost price, which includes direct transaction costs such as document duty and other public duties, legal fees and due diligence costs. Transaction costs associated with properties acquired through business combinations (as defined in IFRS 3) are expensed.
Subsequent expenditure is added to the investment property's carrying amount, if it is probable that future financial benefits associated with the expenditure will flow to the Group and the expense can be measured reliably. Other maintenance costs are recorded through the income statement in the period in which they are incurred. When investment properties are disposed of, the difference between the net sales proceeds and carrying amount is recognised as change in value from investment properties.
Investment properties are valued at each reporting date. The values are estimated by independent valuers. The valuation is based on the individual property's assumed future cash flows, and property values are arrived at by discounting cash flows with an individual risk-adjusted required rate of return.
The required rate of return for each property is defined as being a long-term risk-free interest rate plus a property-specific risk supplement. The latter is defined on the basis of the property segment to which the property belongs, its location, standard, occupancy rate, tenants' financial reliability and remaining lease term. Known market transactions with similar properties in the same geographical area are also taken into consideration.
Changes in fair value are recognised as "changes in value from investment property".
Property, plant and equipment are recognised at acquisition cost, less depreciation. The acquisition cost includes costs directly related to the acquisition of the asset. Buildings under construction that do not qualify as investment properties are recognised at historical cost, adjusted for write-downs. The acquisition cost includes costs directly related to the acquisition of the asset.
Subsequent expenditure is added to the asset's carrying amount or recognised separately, when it is probable that future financial benefits attributable to the expenditure will flow to the Group and the expense can be measured reliably. Amounts relating to replaced parts are recognised in the income statement. Other maintenance costs are recorded through the income statement in the period in which they are incurred.
Sites that are not considered to be investment properties (and buildings under construction) are not depreciated. Other assets are depreciated in a straight line over their anticipated remaining useful life.
The assets' remaining useful life and residual value are reassessed on each balance sheet date and changed if necessary. If the carrying amount of an asset is higher than its recoverable amount, the value of the asset is written down to the recoverable amount.
Gains and losses on disposals are recognised through profit or loss, and are calculated as the difference between the sales price and the carrying amount at the time of disposal.
Non-current assets held for sale and discontinued operations Non-current assets and groups of non-currents assets and liabilities are classified as held for sale if their carrying amount will be recovered through a sales transaction rather than through their continuing use. This condition is regarded as met if the sale is highly probable and the non-current asset (or groups of non-current assets and liabilities) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups). For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset (or disposal group), and an active programme to locate a buyer and complete the plan must have been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification
Non-current assets and groups of non-current assets and liabilities classified as held for sale are measured at the lower of their previous carrying amount and fair value less selling costs. Investment properties classified as held for sale are measured at fair value in the same way as other investment properties.
Housing projects involve the development and construction of residential housing, with individual units being handed over to the purchaser when they are completed. During their construction these projects are classified as current assets. When the homes are completed and handed over to the buyer, the sales price and cost of construction are recognised in the income statement.
Sales of property projects are measured at cost and presented under inventories. The sales price is recognised in the income statement on handover. For construction contracts where the design and delivery schedule have been negotiated with the buyer, costs and revenues are recognised in the income statement in accordance with the percentage of completion method described in IAS 11.
Borrowing costs for capital used to finance buildings under construction are capitalised under the asset in question. When calculating the capitalised borrowing costs, the average interest rate on the company's debt portfolio over the course of the year is used, unless there is separate financing for the specific project. In such cases the specific borrowing cost for the loan in question is used. When calculating the average interest rate to be used for the capitalisation of borrowing costs, loans taken out for specific projects are not included.
Goodwill is the difference between the cost and the fair value of the Group's share of net identifiable assets in the entity on the acquisition date. Goodwill arising from the acquisition of subsidiaries is classified as an intangible asset. For the purposes of impairment testing, goodwill is allocated to the relevant cash flow generating units. Goodwill is allocated to the cash flow generating units or groups of cash flow generating units that are expected to benefit
from the acquisition from which the goodwill arose. Goodwill is tested for impairment annually and is recognised at cost less any impairment losses. Impairment of goodwill is not reversed. Gains and losses on the sale of an operation include the carrying amount of goodwill relating to the sold operation.
Goodwill arising from the purchase of shares in associates and jointly controlled entities is included under the investment in the associate or jointly controlled entity, and is tested for impairment as part of the carrying amount of the investment.
Purchased software is recognised at cost (including expenditure on making programs operative) and is amortised over the expected useful life. Expenses directly associated with the development of identifiable and unique software owned by the Group and which is likely to generate net financial benefits for more than one year are capitalised as intangible assets, and are depreciated over the expected useful life, normally 5 years. Expenses relating to the maintenance of software are expensed as incurred.
Activities related to the application of knowledge to a plan or in relation to a concept or project prior to being taken into use/production, are classified as development activities that are capitalised as intangible assets when the Group considers it likely that the skills developed will generate net financial benefits. Expenses that are capitalised as development projects are directly attributable expenses relating to the development of the new skills.
Intangible assets with an uncertain useful life are not depreciated and are instead tested annually for impairment. Property, plant and equipment and intangible assets that are depreciated are also tested for impairment if there is any indication to suggest that future cash flows cannot justify the carrying amount of the asset. Write-downs are recorded through the income statement as the difference between the carrying amount and the recoverable amount. The recoverable amount is the value in use or fair value, whichever is the higher, less selling costs. When testing for impairment, non-current assets are grouped at the lowest possible level at which it is possible to identify independent cash flows (cash flow generating units). In conjunction with each financial report, the company assesses whether it is possible to reverse past writedowns of non-financial assets (except goodwill).
A financial instrument is defined as being any contract that gives rise to a financial asset at one entity and a financial liability or equity instrument at another entity. Financial instruments are recognised on the transaction date, i.e. the date on which the Group commits to buying or selling the asset.
Financial assets are classified in the following categories: at fair value through profit or loss, loans and receivables and available for sale. Financial assets at fair value through profit or loss are assets held for trading purposes, and include derivatives. Loans and receivables are unquoted non-derivative financial assets with fixed or determinable payments. Available-for-sale financial assets are assets designated as available for sale or assets that do not fall under any of the other categories, including minor shareholdings.
Financial liabilities are classified as financial liabilities at fair value through profit or loss and financial liabilities at amortised cost. Financial liabilities at fair value through profit or loss comprise loans designated at fair value upon initial recognition (fair value option) and derivatives. Financial liabilities at amortised cost consist of liabilities that do not fall under the category at fair value through profit or loss.
Financial assets and liabilities are classified upon initial recognition based on their characteristics and purposes. In order to avoid an accounting mismatch, Entra has used the fair value option for the Group's long-term borrowing at fixed interest rates raised to finance the acquisition of investment properties measured at fair value. Liabilities designated at fair value through profit or loss are typically debt incurred to finance the acquisition of investment properties measured at fair value.
Trade receivables and other financial assets are classified as loans and receivables and are measured at fair value upon initial recognition, and thereafter at amortised cost. Interest is ignored if it is insignificant. A provision for bad debts is recognised if there is objective evidence that the Group will not receive payment in accordance with the original conditions. Any subsequent payments received against accounts for which a provision has previously been made are recognised in the income statement. Trade receivables and other financial assets are classified as current assets, unless they are due more than twelve months after the balance sheet date. If so, they are classified as non-current assets.
Cash and cash equivalents consist of bank deposits and other short-term, highly liquid investments with an original term to maturity of no more than three months.
The Group uses derivatives to manage its interest rate risk. Derivatives are initially recognised at fair value on the date on which the contract was signed, and subsequently at fair value. Gains or losses on re-measurement at fair value are recognised in the income statement. Regular payments are presented as interest and other finance expenses. Changes in the value of the derivatives are presented under "Unrealised changes in value of financial instruments".
The fair value of interest rate swaps is the estimated amount the Group would receive or pay to redeem the contracts on the balance sheet date. This amount will depend on interest rates and the contracts' remaining term to maturity. The derivatives are classified on the balance sheet as current liabilities or non-current liabilities, depending on whether they are expected to be redeemed under or over 12 months from the balance sheet date.
Trade payables and other non-interest-bearing liabilities are classified as financial liabilities at amortised cost, and are measured at fair value upon initial recognition, and subsequently at amortised cost using the effective interest rate method. Interest is ignored if it is insignificant.
Interest-bearing liabilities that satisfy the criteria for using the fair value option under IAS 39 are classified in the category at fair value through profit or loss. Entra uses the fair value option for interest-bearing liabilities at fixed interest rates incurred to finance the acquisition of investment properties. Interest-bearing liabilities are recognised at fair value when the loan is received. Subsequently loans are measured at fair value through the income statement and are presented under net financial items. Ordinary interest expenses are presented on the income statement under net financial items.
Interest-bearing liabilities with variable interest rates are classified as financial liabilities at amortised cost, and are measured at fair value upon initial recognition, and subsequently at amortised cost using the effective interest rate method.
Interest-bearing liabilities are classified as current liabilities where the debt is due for repayment less than 12 months from the balance sheet date.
The Group has both defined benefit and defined contribution pension schemes. A defined benefit pension scheme is a pension arrangement that defines the pension payment an employee will receive on retirement. The pension benefit payable is dependent on a number of factors, such as the employee's age, number of years of membership of the Norwegian Public Service Pension Fund and salary.
The recognised pension obligation relating to defined-benefit plans is the present value of the defined-benefit on the balance sheet date less the fair value of the plan assets. The gross pension obligation is calculated annually by an independent actuary using the projected credit unit method. The gross obligation is discounted using a discount rate based on bonds with preference rights, which mature around the same time as the related pension obligations.
Changes to benefits payable under the pension plan are recognised in the income statement as they arise.
Actuarial gains/losses resulting from new information or changes to actuarial assumptions are recognised against equity via comprehensive income in the period they arise.
Contributions to defined contributions plans are recognised in the income statement in the period in which they accrue.
Redundancy packages are payments made when a contract of employment is terminated by the Group before the normal retirement age or when an employee voluntarily agrees to leave in return for such a payment. The Group expenses redundancy packages when it has a proven obligation to either terminate the contract of current employees in accordance with a formal, detailed plan that cannot be withdrawn by the Group, or to make redundancy payments as a result of an offer made to encourage voluntary redundancy. Redundancy packages that are due for payment over 12 months after the balance sheet date are discounted to their present value.
The tax expense consists of tax payable and deferred tax. Tax is charged to the income statement, except where it relates to items that are recognised directly in equity. In such cases, the tax is either recognised in comprehensive income or directly in equity.
Deferred tax is calculated using the liability method for all temporary differences between the tax values and consolidated accounting values of assets and liabilities. Any deferred tax arising from the initial reporting of a liability or asset in a transaction which is not a business combination and which on the transaction date does not affect accounting or tax results is not recognised on the balance sheet. Deferred tax is defined using tax rates and laws which are enacted or likely to be enacted on the balance sheet date, and which are expected to be used when the deferred tax asset is realised or when the deferred tax is utilised.
Deferred tax is calculated and provided or reduced in the event of adjustments to the value of investment properties at a nominal tax rate of 27 per cent from 31 December 2013. For investment properties acquired through the purchase of shares in property companies or not acquired through a business combination, in the event of an adjustment in value, deferred tax is calculated on the property's fiscal value.
A deferred tax asset is recognised to the extent that it is likely that future taxable profit will be available against which the temporary differences can be offset.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaires and associates, and interests in jointly controlled entities, except where the Group is able to control the reversal of the temporary differences and it is probable that the temprorary difference will not reverse in the forseeable future. Nor is a liability for deferred tax calculated upon initial recognition of assets or liabilities obtained through an acquisition of a subsidiary not classified as a business combination.
The Group recognises provisions for lease agreements and legal claims when a legal or self-imposed obligation exists as a result of past events, it is likely on a balance of probabilities that an outflow of resources will be required to settle the obligation and its amount can be estimated with a sufficient degree of reliability. There is no provision for future bad debts.
In cases where there are several obligations of the same nature, the likelihood of settlement is determined by assessing the Group as a whole. A provision for the Group is recognised even if there is little likelihood of settlement of the Group's individual elements.
Provisions are measured at the present value of expected payments to settle an obligation. A discount rate before tax is used which reflects the present market situation. Any increase in an obligation as a result of a changed time value is reported as a financial expense.
Operating revenue consists of rental income and other operating revenue. Gains on the sale of property are presented as part of the change in value. Rental income encompasses the fair value of the payments received for services that fall within the ordinary activities of the company. Rental income is presented net of VAT, rebates and discounts. Shared costs are capitalised alongside payments on account from tenants and therefore have no impact on the income statement. Shared costs are settled after the balance sheet date.
Rental income is recognised over the duration of the lease. If a rent exemption is agreed, or if the tenant receives an incentive in conjunction with the signing of the lease, the cost or loss of rent is spread over the duration of the lease, and the resulting net rent is recognised in equal instalments. The accrued loss of rent or costs is presented under other receivables.
Lease contracts that are terminated are valued on an individual basis. Payments relating to the termination of contracts are recognised in the period from the contract being entered into until the date of its termination.
Lease contracts where a significant proportion of the risks and benefits of ownership remain with the lessor are classified as operating leases. Revenue recognition under a lease commences when the tenant has a right to use the leased asset. Generally, this occurs on the lease inception date or, where the partnership is required to make additions to the property in the form of tenant improvements which enhance the value of the property, upon substantial completion of those improvements. Rent payments for operating leases (less any financial incentives given by the lessor) are expensed in a straight line over the duration of the lease.
Lease contracts for property, plant and equipment where the Group has all of the risks and benefits of ownership are classified as finance leases. Finance leases are recognised at the start of the lease term at the lower of fair value and the present value of the minimum lease payments.
The statement of cash flows is prepared using the indirect method. This means that the statement is based on the Group's profit before tax in order to present cash flows from operating, investing and financing activities respectively. Dividends paid to shareholders and non-controlling interests are presented under financing activities.
Dividend payments to the company's shareholders are classified as debt from the date on which a resolution regarding the dividend is passed by the Annual General Meeting.
Investment properties are measured at their fair value based on external, independent valuations.
Each quarter, all the properties are valued by two independent, external valuers. The valuations at 31 December 2014 were obtained from Akershus Eiendom AS and DTZ Realkapital Verdivurdering AS. The valuations are mainly based on the discounted cash flow method, which involves discounting future cash flows over a specified period using an estimated discount rate and then adding a residual value at the end of the period. Future cash flows are calculated on the basis of cash flows from signed leases, as well as future cash flows based on an expected market rent at the end of the lease terms. The fair value of investment properties is therefore mainly affected by expected market rents, discount rates and inflation. The market rent for each property takes into account the property's situation, standard and leases signed for comparable properties in the area. For the duration of existing lease terms, the discount rate is mainly based on an assessment of the individual tenants' financial solidity and classification. After the end of the lease term, cash flows are discounted using a discount rate that takes into account the risk relating to letting and location. Inflation is estimated using the consensus of a selection of banks and official statistics.
When carrying out their valuations, the valuers receive comprehensive details of the leases for the properties, floor space and details of any vacant premises, and up-to-date information about all ongoing projects. Any uncertainties relating to the properties/ projects and leases are also clarified verbally and in writing as and when required. The Group management performs internal controls to ensure that all relevant information is included in the valuations.
The valuers perform their valuations on the basis of the information they have received, and estimate future market rents, yields, inflation and other relevant parameters. Each individual property is assessed in terms of its market position, rental income (contractual rents versus market rents) and ownership costs, with estimates being made for anticipated vacancy levels and the need for alterations and upgrades. The remaining term of the leases is also assessed for risk, along with any special clauses in the contracts. Each property is also compared with recently sold properties in the same segment (location, type of property, mix of tenants, etc.)
The table below shows to what extent the value of the property portfolio is affected by inflation, market rents, discount rates (interest rates) and exit yields (market yields), assuming that all other factors are equal.
| Change variable | Change in percent |
Value change (NOKm)1) |
|---|---|---|
| Inflation | + 1.00 | 286.0 |
| Market rent | + 10.00 | 2 180.8 |
| Discount rates | + 0.25 | -818.7 |
| Exit yield | + 0.25 | -519.4 |
1) Estimates by DTZ Realkapital Verdivurdering AS in conjunction with valuations at 31 December 2014.
The Group values liabilities with fixed interest rates and financial derivatives at fair value in the Group's balance sheet. The Group's interest-bearing debt is measured at fair value using valuation methods where all of the parameters that have a significant impact on measuring fair value are either directly or indirectly observable.
The fair value of both listed and unlisted bonds with fixed interest rates is set at the tax value (as determined by a committee appointed by the Norwegian Securities Dealers' Association, www.nfmf.no).
The fair value of commercial paper is estimated as its nominal value, due to the short term to maturity. For more information on how the Group values its financial assets and liabilities see note 8.
The table below shows the overall impact on the Group's financing costs of a parallel shift in market rates for NOK of +/- 1 percentage point, based on the Group's debt portfolio and interest rate derivatives on the balance sheet date. The figure quoted for the change in the fair value of debt and derivatives reflects what the market value of the portfolio would be on the balance sheet date if the yield curve were 1 per cent higher or lower, based on discounted future cash flows from the various instruments.
| 31.12.2014 | Total change in profit after tax 1) |
Change in the Group's interest expense (annualised) |
Change in the fair value of bonds and derivatives (after tax) |
|---|---|---|---|
| Market rates increase by 1 percentage point | 333.0 | -28.3 | 361.3 |
| Interest-bearing debt | 134.7 | -64.6 | 199.3 |
| Derivatives | 198.2 | 36.2 | 162.0 |
| Market rates fall by 1 percentage point | -347.6 | 28.3 | -375.9 |
| Interest-bearing debt | -134.7 | 64.5 | -199.3 |
| Derivatives | -212.9 | -36.2 | -176.6 |
1) A positive figure signifies an increase in profit after tax.
| 31.12.2013 | Total change in profit after tax 1) |
Change in the Group's interest expense (annualised) |
Change in the fair value of bonds and derivatives (after tax) |
|---|---|---|---|
| Market rates increase by 1 percentage point | 269.6 | -30.8 | 300.3 |
| Interest-bearing debt | 123.3 | -60.3 | 183.6 |
| Derivatives | 146.3 | 29.6 | 116.7 |
| Market rates fall by 1 percentage point | -270.4 | 30.8 | -301.1 |
| Interest-bearing debt | -123.3 | 60.3 | -183.6 |
| Derivatives | -147.1 | -29.6 | -117.5 |
1) A positive figure signifies an increase in profit after tax.
The present value of pension obligations is dependent on several different factors that are determined by a number of actuarial assumptions.
The assumptions used to calculate net pension costs (revenue) include the discount rate. Any changes to these assumptions will affect the carrying amount of the pension obligations.
The Group determines the relevant discount rate at the end of each year. This is the interest rate used to calculate the present value of the future estimated outgoing cash flows required to fulfil the pension obligations. When determining the relevant discount rate, the Group looks at the interest rate for high-quality corporate bonds or bonds with preference rights, which mature around the same time as the related pension obligations. At 31 December 2014, the discount rate was determined on the basis of bonds with preference rights.
The table below sets out a sensitivity analysis for the assumptions used to calculate pension assets and liabilities.
| Discount rate | Impact on liabilities |
Impact as a percentage |
|
|---|---|---|---|
| 0.5 percentage point reduction | 1.80 % | 16.9 | 8.7 % |
| Discount rate at 31.12.2014 | 2.30 % | - | - |
| 0.5 percentage point increase | 2.80 % | -14.8 | -7.7 % |
| Wage growth | Impact on liabilities |
Impact as a percentage |
|
| 0.5 percentage point reduction | 2.25 % | -6.9 | -3.5 % |
Expected wage growth at 31.12.2014 2.75 % - - 0.5 percentage point increase 3.25 % 6.4 3.3 %
All amounts in NOK million
The Board of Entra ASA has defined limits for the financial exposure of the Group through the financial directive. The financial directive regulates the following:
There is a responsibility and authority matrix for the Finance area, which defines authority for the day-to-day management of financial transactions within the overall framework of financial management.
The Group must ensure that there is adequate operational risk management and internal control through clear areas of responsibility and segregation of duties. The procedures relate in particular to the management of financial exposure and the division of responsibility between the various roles in the treasury department and the department's financial systems. There are guidelines for managing financial exposure, which include checklists related to the control of current transactions.
Entra has established an internal finance committee, which is a forum for updates on and discussion of the macroeconomic climate, as well as for discussing the company's financial risks and opportunities. Long-term projections are made of financial developments as a component of the Group's risk management, using a model with detailed assumptions concerning the Group's financial performance, cash flow and balance sheet. The projections take into account cyclical developments in the economy, financial parameters and the property market. Scenarios and simulations are developed for various development life cycles. The simulations are intended to provide good information for the Board and the executive management in their monitoring of developments in central key figures and cash flow.
The Group's finance strategy shall ensure that the Group has financial flexibility and that it achieves competitive financial terms. The Group is exposed to financial risk and has defined the following relevant risk areas:
Financing risk is the risk that the Group will be unable to meet its financial obligations when they are due and that financing will not be available at a reasonable price.
The company seeks to limit financing risk through:
The main purpose of the Group's capital management is to maintain a good balance between debt and equity, in order to maximise the value of the shares in the company, while also maintaining a good credit rating and obtaining loan terms with lenders that reflect the risk profile of the Group. The Group has defined a target for the Loan-To-Value ratio of approximately 50 per cent over the economic cycle. There are covenants in the Group's loan agreements that specify requirements in relation to the company's financial strength.
Interest rate risk arises from the loan portfolio's exposure in debt instruments being affected by changes in market rates. Interest rate risk affects the Group's cash flows and the market value of the Group's liabilities. The main purpose of the Group's strategy to manage interest rate risk is to ensure that the Group achieves a balance between the desired interest expense and interest rate risk. The Group's interest rate risk is managed through the requirements for fixed interest rates for at least 50 per cent of the debt portfolio, an average duration in the range of 2–5 years and diversification of the maturity structure for fixed interest rates.
Stable, predictable and long-term access to capital is critical for Entra. Entra considers that the ability of creditors to behave predictably over the long term is often dependent on their creditworthiness. For this reason, Entra wants the Group's creditors to be of a good credit quality and has established credit rating limits for the Group's creditors. The credit ratings of the Group's financial counterparties are continuously monitored.
The Group shall not incur any currency risk and at 31 December 2014, the Group had no currency exposure.
There are covenants in the Group's bank loan agreements relating to the value-adjusted equity ratio (VEK), interest cover ratio (ICR) and the loan-to-value of property (LTV). At 31 December 2014, the Group was not in breach of any covenants.
There are no covenants in relation to the Group's bond or commercial paper loans.
| REMAINING TERM | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31.12.2014 | Under 3 months |
4-12 months |
1-2 years |
2-4 years |
4-6 years |
6-8 years |
8-10 years |
Over 10 years |
Total |
| Interest-bearing bank loans – principal | - | 250.0 | 1 950.0 | 1 050.0 | 1 500.0 | 145.2 | - | 339.0 | 5 234.2 |
| Interest-bearing bank loans – amortising | 5.3 | 15.9 | 21.2 | 42.4 | 42.4 | 28.6 | 24.0 | 24.0 | 203.8 |
| Interest-bearing bank loans – estimated interest | 34.1 | 102.8 | 132.2 | 161.8 | 58.4 | 18.5 | 14.8 | 14.4 | 537.1 |
| Bonds – principal | - | 1 200.0 | - | 2 800.0 | 1 700.0 | - | 500.0 | 1 100.0 | 7 300.0 |
| Bonds – estimated interest | 52.7 | 215.0 | 233.5 | 385.9 | 247.4 | 151.6 | 126.6 | 304.9 | 1 717.8 |
| Commercial paper – principal | 850.0 | 500.0 | - | - | - | - | - | - | 1 350.0 |
| Commercial paper – estimated interest | 11.8 | 5.2 | - | - | - | - | - | - | 16.9 |
| Financial instruments | |||||||||
| - interest rate derivatives | 56.1 | 127.0 | 160.1 | 226.5 | 87.7 | 1.9 | -34.9 | -88.7 | 535.7 |
| Trade payables | 323.7 | 323.7 | |||||||
| Other financial liabilities | 90.5 | 90.5 | |||||||
| Total | 1 424.3 | 2 415.8 | 2 497.1 | 4 666.7 | 3 635.9 | 345.9 | 630.5 | 1 693.6 | 17 309.9 |
| REMAINING TERM | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31.12.2013 | Under 3 months |
4-12 months |
1-2 years |
2-4 years |
4-6 years |
6-8 years |
8-10 years |
Over 10 years |
Total |
| Interest-bearing bank loans – principal | - | - | 1 215.0 | 2 790.0 | 240.0 | 195.0 | - | 495.0 | 4 935.0 |
| Interest-bearing bank loans – estimated interest | 33.7 | 100.9 | 130.2 | 114.6 | 37.0 | 31.1 | 20.1 | 30.9 | 498.5 |
| Bonds – principal | - | 1 142.5 | 1 200.0 | 1 600.0 | 1 700.0 | 700.0 | 500.0 | 1 100.0 | 7 942.5 |
| Bonds – estimated interest | 50.7 | 251.6 | 259.5 | 432.8 | 292.2 | 181.4 | 151.6 | 355.7 | 1 975.6 |
| Commercial paper – principal | 800.0 | 850.0 | - | - | - | - | - | - | 1 650.0 |
| Commercial paper – estimated interest | 18.0 | 19.2 | - | - | - | - | - | - | 37.2 |
| Financial instruments | |||||||||
| - interest rate derivatives | 54.3 | 110.2 | 151.8 | 229.3 | 119.2 | 23.6 | -33.1 | -95.5 | 559.8 |
| Trade payables | 290.0 | - | - | - | - | - | - | - | 290.0 |
| Other financial liabilities | 58.8 | - | - | - | - | - | - | - | 58.3 |
| Total | 1 304.9 | 2 474.5 | 2 956.6 | 5 166.7 | 2 388.4 | 1 131.0 | 638.6 | 1 886.1 | 17 946.9 |
The table is based on undiscounted contractual cash flows. The maturity analysis is based on the earliest possible redemption for instruments where the counterparty has a choice as to when to redeem the instrument. Estimated interest is based on the interest rate on the individual loan/ instrument on the balance sheet date. In order to manage its liquidity risk, the Group has available, unused credit facilities with Norwegian and international banks, as well as available liquid assets.
| TERM TO MATURITY | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31.12.2014 | Under 3 months |
4-12 months |
1-2 years |
2-4 years |
4-6 years |
6-8 years |
8-10 years |
Over 10 years |
Total |
| Unused credit facilities Entra Eiendom AS | - | 250.0 | 1 500.0 | 1 650.0 | - | - | - | - | 3 400.0 |
| Unused credit facilities subsidiaries | - | - | - | 350.0 | 160.0 | 55.0 | - | - | 565.0 |
| Total unused credit facilities | - | 250.0 | 1 500.0 | 2 000.0 | 160.0 | 55.0 | - | - | 3 965.0 |
| TERM TO MATURITY | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31.12.2013 | Under 3 months |
4-12 months |
1-2 years |
2-4 years |
4-6 years |
6-8 years |
8-10 years |
Over 10 years |
Total |
| Unused credit facilities Entra Eiendom AS | - | - | 250.0 | 2 410.0 | 700.0 | - | - | - | 3 360.0 |
| Unused credit facilities subsidiaries | - | - | - | - | - | 65.0 | - | - | 65.0 |
| Total unused credit facilities | - | - | 250.0 | 2 410.0 | 700.0 | 65.0 | - | - | 3 425.0 |
At 31 December 2014, the Group had NOK 161.7 (NOK 142.2) million of available liquid assets. See Note 23.
The Group's liabilities are subject to fixed interest rates (63 per cent of liabilities). The Group uses a variety of derivatives to adapt its portfolio to the chosen fixed rate structure. The choice of fixed interest profile is based on an evaluation of the Group's financial strength and ability to generate long-term, stable cash flow.
At 31 December 2014, the weighted average duration was 3.2 (3.0) years. The average credit interest rate was 4.45 (4.47) per cent at 31 December 2014.
The table below shows the nominal value of outstanding current and non-current interest-bearing debt including derivatives.
| At 31 Dec 2014 | 31.12.2015 31.12.2016 31.12.2018 31.12.2020 31.12.2022 31.12.2024 31.12.2024+ | |||||||
|---|---|---|---|---|---|---|---|---|
| Term to maturity | Up to 1 year |
1-2 years | 2-4 years | 4-6 years | 6-8 years | 8-10 years | Over 10 years |
Total |
| Percentage | 37 % | 5 % | 14 % | 24 % | 7 % | 9 % | 4 % | 100 % |
| Amount | 5 166.0 | 770.0 | 2 042.0 | 3 350.0 | 1 000.0 | 1 250.0 | 510.0 | 14 088.0 |
| At 31 Dec 2013 | 31.12.2014 31.12.2015 31.12.2017 31.12.2019 31.12.2021 | 31.12.2023 31.12.2023+ | ||||||
| Up to | Over | |||||||
| Term to maturity | 1 year | 1-2 years | 2-4 years | 4-6 years | 6-8 years | 8-10 years | 10 years | Total |
| Percentage | 38 % | 5 % | 13 % | 22 % | 15 % | 2 % | 4 % | 100 % |
| Amount | 5 565.5 | 750.0 | 1 852.0 | 3 250.0 | 2 250.0 | 350.0 | 510.0 | 14 527.5 |
| 2014 | 2013 | |
|---|---|---|
| Nominal value of interest rate derivatives on the balance sheet date 1) | 13 972.0 | 13 554.5 |
| of which | ||
| - Fixed-to-variable swaps 1) | 3 300.0 | 3 992.5 |
| - Variable-to-variable swaps | 0.0 | 0.0 |
| - Variable-to-fixed swaps | 10 672.0 | 9 512.0 |
| - Options or option-related products | 0.0 | 50.0 |
| Range of fixed interest rates | From 2.116 % to 5.950 % | From 2.377 % to 5.950 % |
| Variable rate basis | NIBOR | NIBOR |
| Average fixed rate excl. forward starting swaps | 4.44 % | 4.67 % |
| Average fixed rate incl. forward starting swaps | 3.90 % | 4.49 % |
| Fair value of derivatives on the balance sheet date (NOKm) | 802.5 | 644.5 |
| Change in fair value of bank loans over the year | 0.0 | 0.0 |
| Change in fair value of bonds over the year | -477.7 | 38.5 |
| Change in fair value of interest rate derivatives over the year | -129.3 | 146.4 |
| Premiums/discounts, loan drawings | -1.2 | |
| Total change in fair value of financial instruments | -607.0 | 183.7 |
1) NOK 3 300 (NOK 3 993) million of swaps linked to the fixed-interest bonds issued by the Group are included in the volume of interest rate swaps. These bonds are swapped to a variable rate in order to ensure that the Group is in a position to manage its interest rate fixing independently of the bonds. The real volume used for interest rate fixing is therefore NOK 10 672 (NOK 9 562) million. At 31 December 2014 the Group has no interest rate options or option-related products.
The Group mainly enters into contracts with a fixed rent for the lease of property.
| 2014 | 2013 | |
|---|---|---|
| ≤ 1 year | 1 686.0 | 1 650.7 |
| 1 year < 5 years | 6 515.7 | 5 442.4 |
| ≥ 5 years | 5 259.8 | 7 941.7 |
| Total 1) | 13 461.5 | 15 034.7 |
| 2014 | 2013 | |||||
|---|---|---|---|---|---|---|
| Remaining term | No. of contracts |
Contract rent |
Contract rent, % |
No. of contracts |
Contract rent |
Contract rent, % |
| ≤ 1 year | 188 | 77.9 | 4 | 127 | 59.9 | 4 |
| 1 year < 5 years | 285 | 601.3 | 34 | 329 | 342.6 | 21 |
| 5 years < 10 years | 127 | 557.6 | 32 | 127 | 557.9 | 35 |
| ≥ 10 years | 51 | 514.3 | 29 | 62 | 656.3 | 41 |
| Total | 651 | 1 751.1 | 100 | 645 | 1 616.7 | 100 |
The table above shows the remaining non-terminable contractual rent for current leases without taking into account the impact of any options.
1) The rent is stated as the annualised contractual rent, and is therefore not reconcilable with the rental income for the year for accounting purposes.
| 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| Area (sqm) |
Occupancy (%) |
Wault (yrs) |
Share of public sector tenants (%) |
Area (sqm) |
Occupancy (%) |
Wault (yrs) |
Share of public sector tenants (%) |
|
| Region Central Oslo | 392 385 | 92.8 | 6.7 | 73 | 395 732 | 95.2 | 7.6 | 73 |
| Region Greater Oslo | 335 142 | 96.8 | 9.3 | 82 | 310 335 | 96.9 | 9.4 | 85 |
| Region South and West | 193 916 | 94.6 | 7.8 | 66 | 164 583 | 93.7 | 8.4 | 89 |
| Region Central and Northern | 141 885 | 97.5 | 7.1 | 89 | 147 485 | 97.7 | 7.5 | 91 |
| Total management portfolio | 1 063 327 | 94.6 | 7.7 | 76 | 1 018 136 | 95.7 | 8.2 | 81 |
| Project portfolio | 86 637 | 11.0 | 10 | 67 495 | 11.1 | 34 | ||
| Regulated development sites | 142 143 | 0.6 | 62 | 123 602 | 0.0 | 0 | ||
| Total property portfolio | 1 292 107 | 8.0 | 1 209 233 | 8.3 |
On account of the high occupancy rate, the high proportion of public sector tenants and the relatively long average remaining contract term, the risk to the Group's cash flow is considered low.
Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The accounting policies of the reportable segments are the same as for the Group's accounting policies. The Group reports its business under four geographic operating segments in line with IFRS 8: Central Oslo, Greater Oslo, South/West Norway and Mid/North Norway. Each of the operating segments has its own profit responsibility.
Segment information is reported to the group management team and to the CEO, which are the Group's highest decision-making authority.
Costs related to staff and support functions for the operating segments and group eliminations are included in the segment Group.
| 31.12.2014 | Central Oslo | Greater Oslo | South/West | Mid/North | Group | Consolidated |
|---|---|---|---|---|---|---|
| Rental income | 781.1 | 501.9 | 285.1 | 204.3 | - | 1 772.3 |
| Other operating revenue | 7.0 | 184.0 | 25.7 | 6.5 | 1.6 | 224.9 |
| Total operating revenue | 788.2 | 685.8 | 310.8 | 210.8 | 1.6 | 1 997.3 |
| Repairs & maintenance | 24.7 | 14.4 | 9.6 | 3.8 | - | 52.5 |
| Operating costs | 31.2 | 25.1 | 21.3 | 17.6 | 0.4 | 95.6 |
| Other property costs | 18.2 | 187.4 | 0.8 | 1.6 | 15.0 | 223.0 |
| Administrative owner costs | 14.4 | 13.1 | 26.4 | 6.9 | 166.1 | 227.0 |
| Total operating costs | 88.5 | 239.9 | 58.2 | 29.9 | 181.6 | 598.0 |
| Net income from property management | 699.6 | 445.9 | 252.7 | 180.9 | -179.9 | 1 399.2 |
| Carrying amount of investment property | ||||||
| Investment property | 13 704.3 | 6 172.0 | 4 291.4 | 2 511.9 | - | 26 679.5 |
| Investment property held for sale | - | 1 193.1 | 110.0 | 247.7 | - | 1 550.8 |
| 31.12.2013 | Central Oslo | Greater Oslo | South/West | Mid/North | Group | Consolidated |
| Rental income | 745.2 | 463.6 | 222.4 | 201.2 | -0.1 | 1 632.3 |
| Other operating revenue | 15.2 | 1.7 | 3.5 | 3.7 | 0.8 | 24.9 |
| Total operating revenue | 760.4 | 465.3 | 226.0 | 204.9 | 0.7 | 1 657.2 |
| Repairs & maintenance | 33.4 | 10.4 | 13.6 | 8.5 | 0.0 | 65.9 |
| Operating costs | 34.3 | 25.6 | 16.6 | 15.1 | -0.1 | 91.5 |
| Other property costs | 27.5 | 28.9 | 3.4 | 2.3 | 26.0 | 88.2 |
| Total operating costs | 108.4 | 77.5 | 44.7 | 39.5 | 198.5 | 468.6 |
|---|---|---|---|---|---|---|
| Net income from property management | 652.0 | 387.8 | 181.3 | 165.4 | -197.8 | 1 188.6 |
| Carrying amount of investment property | ||||||
Administrative owner costs 13.2 12.6 11.0 13.6 172.6 223.1
| Investment property | 12 080.0 | 6 658.9 | 2 990.7 | 2 700.1 | - | 24 429.8 |
|---|---|---|---|---|---|---|
| Investment property held for sale | 264.2 | 44.0 | 80.0 | - | - | 388.2 |
All amounts in NOK million
| 31.12.2014 | Loans and receivables |
Financial assets available for sale |
Financial assets at fair value through profit or loss |
Total | Financial liabilities at fair value through profit or loss |
Financial liabilities at amortised cost |
Total | ||
|---|---|---|---|---|---|---|---|---|---|
| Held for sale |
Held for sale |
Designated upon initial recognition |
|||||||
| Assets | Liabilities | ||||||||
| Financial investments - shares |
0.0 | Interest-bearing non-current liabilities |
3 858.7 | 7 966.8 | 11 825.5 | ||||
| - other financial assets |
0.0 | Interest-bearing current liabilities |
1 350.0 | 1 471.2 | 2 821.2 | ||||
| Financial derivatives | 550.1 | 550.1 | Financial derivatives | 1 352.7 | 1 352.7 | ||||
| Trade receivables | 44.6 | 44.6 | Trade payables | 323.7 | 323.7 | ||||
| Other current receivables | 222.5 | 222.5 | Other current liabilities | 90.5 | 90.5 | ||||
| Cash and cash equivalents | 198.2 | 198.2 | |||||||
| Total financial assets | 465.2 | 0.0 | 550.1 | 1 015.4 | Total financial liabilities | 1 352.7 | 5 208.7 | 9 852.3 | 16 413.6 |
| 31.12.2013 | Loans and receivables |
Financial assets available for sale |
Financial assets at fair value through profit or loss |
Total | Financial liabilities at fair value through profit or loss |
Financial liabilities at amortised cost |
Total | ||
|---|---|---|---|---|---|---|---|---|---|
| Held for sale |
Held for sale |
Designated upon initial recognition |
|||||||
| Assets | Liabilities | ||||||||
| Financial investments - shares |
- | 0.6 | - | 0.6 | Interest-bearing non-current liabilities |
- | 3 365.7 | 8 435.0 | 11 800.7 |
| - other financial assets |
62.6 | - | - | 62.6 | Interest-bearing current liabilities |
- | 2 357.7 | 450.0 | 2 807.7 |
| Financial derivatives | - | - | 203.5 | 203.5 | Financial derivatives | 848.00 | 0.0 | - | 848.0 |
| Trade receivables | 27.9 | - | - | 27.9 | Trade payables | 0.0 | - | 290.0 | 290.0 |
| Other current receivables | 95.8 | - | - | 95.8 | Other current liabilities | - | - | 58.6 | 58.6 |
| Cash and cash equivalents | 177.4 | - | - | 177.4 | |||||
| Total financial assets | 363.7 | 0.6 | 203.5 | 567.7 | Total financial liabilities | 848.0 | 5 723.5 | 9 233.6 | 15 805.1 |
Investment properties are valued at fair value based on independent external valuations.
Bank and bond loans with variable interest rates are valued at amortised cost.
The fair value of both listed and unlisted bonds with fixed interest rates is set at the tax value (as determined by a committee appointed by the Norwegian Securities Dealers' Association, www.nfmf.no).
The fair value of commercial paper is estimated as its amortised cost, due to the short term to maturity.
Financial derivatives are measured at fair value using valuation methods where the significant parameters are obtained from quoted market data.
The Group uses the following hierarchy to classify financial instruments, based on the valuation methods used to measure and disclose their fair value.
Level 1: Quoted (unadjusted) prices in active markets for identical assets and liabilities.
Level 2: Other techniques where all of the parameters that have a significant impact on measuring fair value are either directly or indirectly observable.
Level 3: Valuation techniques that use parameters that significantly affect the valuation, but which are not observable.
| 31.12.2014 | Level 1 | Level 2 | Level 3 | |
|---|---|---|---|---|
| Financial assets at fair value through profit or loss | ||||
| - Investment properties | 26 679.5 | 26 679.5 | ||
| - Derivatives | 550.1 | 550.1 | ||
| Financial assets available for sale | ||||
| - Investment properties | 1 550.8 | 1 550.8 | ||
| - Equity instruments | 0.6 | 0.6 | ||
| Total | 28 781.0 | 550.1 | 28 230.8 |
| 31.12.2014 | Level 1 | Level 2 | Level 3 | |
|---|---|---|---|---|
| Financial liabilities at fair value through profit or loss | ||||
| - Derivatives | 1 352.7 | - | 1 352.7 | - |
| - Bank loans | - | - | - | - |
| - Bonds | 3 858.7 | - | 3 858.7 | - |
| - Commercial paper | 1 350.0 | - | 1 350.0 | - |
| - Other | - | - | - | |
| Total | 6 561.4 | - | 6 561.4 | - |
| 31.12.2013 | Level 1 | Level 2 | Level 3 | |
|---|---|---|---|---|
| Financial assets at fair value through profit or loss | ||||
| - Investment properties | 24 429.8 | - | - | 24 429.8 |
| - Derivatives | 203.5 | - | 203.5 | - |
| Financial assets available for sale | - | - | - | - |
| - Investment properties | 388.2 | - | - | 388.2 |
| - Equity instruments | 0.6 | - | - | 0.6 |
| Total | 25 022.0 | - | 203.5 | 24 818.5 |
| 31.12.2013 | Level 1 | Level 2 | Level 3 | |
|---|---|---|---|---|
| Financial liabilities at fair value through profit or loss | ||||
| - Derivatives | 848.0 | - | 848.0 | - |
| - Bank loans | - | - | - | - |
| - Bonds | 4 073.5 | - | 4 073.5 | - |
| - Commercial paper | 1 650.0 | - | 1 650.0 | - |
| - Other | - | - | - | - |
| Total | 6 571.5 | - | 6 571.5 | - |
| 2014 | 2013 | |||
|---|---|---|---|---|
| Fair value | Carrying amount |
Fair value | Carrying amount |
|
| Loans to associates | 62.4 | 62.4 | - | - |
| Trade receivables | 44.6 | 44.6 | 27.9 | 27.9 |
| Closing balance | 107.0 | 107.0 | 27.9 | 27.9 |
The fair value is the same as the carrying amount for jointly controlled entities and associates, as the interest rate is adjusted continuously and no changes in credit margins have been identified. Trade receivables have a short anticipated term, so the fair value is the same as the carrying amount.
The difference between the fair value and the amortised cost of interest-bearing liabilities with variable interest rates is described in note 25. Other financial liabilities are short term and the difference between the fair value and the amortised cost is marginal.
In the fourth quarter of 2013 an agreement was signed to purchase 50 per cent of the shares in Hinna Park Eiendom AS. The shareholders agreement gives Entra control from 1 February 2014 and consolidation takes place with effect from this date. Comparative figures have not been restated.
Hinna Park Eiendom AS owns 100 per cent of the shares in HP Stadionblokken C AS, Fjordpiren AS, Troll Næring AS, Gullfaks AS, Ormen Lange AS, Oseberg Næring AS, Hinna Park Logistikk AS and Hinna Park Utvikling AS through Hinna Park AS. The Hinna Park group has a marketing and operating organisation consisting of 15 people and manages its own properties as well as properties for other owners in the Hinna Park area.
In the Hinna Park group there are 3 properties with existing leases (Stadionblokken C building, Fjordpiren building and Troll building), a development project under construction (Gullfaks building) and two sites (Oseberg and Ormen Lange).
The purchase strengthens Entra's presence in the South/West region.
| Carrying value acquired company |
Net additional value |
Acquisition balance sheet |
|
|---|---|---|---|
| Goodwill | 1.0 | 144.9 | 145.9 |
| Investment properties | 783.4 | 509.4 | 1 292.8 |
| Trade and other receivables | 48.5 | 48.5 | |
| Cash | 75.5 | 75.5 | |
| Pension liability | -1.9 | -1.9 | |
| Deferred tax | -10.9 | -130.8 | -141.7 |
| Other provisions | -36.0 | -36.0 | |
| Debt to credit institutions | -713.8 | -28.7 | -742.5 |
| Trade payables | -9.8 | -9.8 | |
| Taxes due, other current liabilities | -46.0 | 3.9 | -42.1 |
| Net identified assets and liabilities | 90.0 | 498.7 | 588.7 |
| Consideration for shares | 294.3 | ||
| Cash taken over | -75.5 | ||
| Net outgoing cash flow | 218.9 |
| Operating revenue | 92.6 |
|---|---|
| Net income from property management | 35.1 |
2014
| 2014 | |
|---|---|
| Operating revenue | 2 005.7 |
| Net income from property management | 1 401.8 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Sales of maintenance services to tenants | 8.4 | 8.4 |
| Administrative mark-ups | 11.2 | 8.8 |
| Sales of housing-units | 177.4 | 0.0 |
| Other operating revenue | 27.9 | 7.7 |
| Total other operating revenue | 224.9 | 24.9 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Operating costs | ||
| Administrative costs | 40.0 | 40.3 |
| Payroll and personell expenses | 0.9 | 1.2 |
| Rent related expenses | 5.5 | 6.8 |
| Operating expenses | 47.7 | 43.2 |
| Other operating costs | 1.4 | -0.0 |
| Total operating costs | 95.6 | 91.5 |
1) A total of NOK 1.6 (NOK 0.4 ) million of the total operating expenses are related to properties that do not generate any income.
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Other property costs | ||
| Rental costs | 17.3 | 34.1 |
| Project operating expenses | 2.7 | 21.3 |
| Development costs - housing-units for sale | 184.4 | 0.1 |
| Depreciation and write-downs | 18.5 | 32.7 |
| Total other property costs | 223.0 | 88.2 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Administrative expenses | ||
| Payroll and personnel expenses | 126.6 | 132.8 |
| Office expenses, furnishings and equipment | 25.2 | 27.1 |
| Consultancy fees | 49.6 | 45.2 |
| Other administrative owner costs | 25.6 | 17.9 |
| Total administrative owner costs | 227.0 | 223.0 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Salaries, performance-related pay and other taxable benefits 1) | 144.2 | 148.1 |
| Employers' National Insurance contributions | 22.1 | 20.7 |
| Pension expenses | 13.7 | 12.9 |
| Other personnel costs | 14.1 | 12.5 |
| Total personnel costs | 194.2 | 194.3 |
| Of which capitalised as projects under development | -17.6 | -13.1 |
| Of which shared costs to be distributed amongst tenants | -43.9 | -38.3 |
| Of which related to the ongoing operation of properties | -6.1 | -5.7 |
| Total salary and personnel costs | 126.6 | 137.2 |
| Number of full-time equivalents at 31.12 | 169 | 150 |
1) Salaries, performance-related pay and other taxable benefits includes a NOK 11.4 (NOK 8.8) million provision for performance-related pay for all employees in 2014, which has not yet been paid out.
The statement on the remuneration of the company's Chief Executive Officer (CEO) and other senior executives has been prepared in accordance with the provisions of the Norwegian Public Limited Companies Act.
Basis for Entra's senior management remuneration in 2014
The Norwegian state has set guidelines on senior executive remuneration in companies in which the State has a shareholding. Until October 2014 Entra was 100 per cent owned by the Norwegian state and these guidelines formed the basis for the Board's remuneration policy.
Remuneration of senior executives is based on the Group's general HR strategy and remuneration policy in accordance with the Norwegian state guidelines and is determined in accordance with the following general principles:
Moderation in the development of salaries of the Group's employees is of importance, amongst other to avoid any negative impact on the Group's reputation.
Management remuneration shall be competitive, but not leading.
The Board has established a remuneration committee consisting of two representatives from the Board of Directors to follow up on the remuneration of the Group's senior executives. The remuneration committee is chaired by the Chair of the Board.
The committee considers the Group's remuneration principles and systems and recommends guidelines for remuneration before final approval by the Board.
Each year the Board sets the CEO's remuneration based on a recommendation made by the remuneration committee, without the presence of the CEO. The CEO consults the remuneration committee when determining the remuneration of the Group's other senior executives.
Total remuneration consists of fixed salary and variable benefits and includes the following elements:
The base salary is the main element in the remuneration of the Group's senior executives and CEO.
The Group management has a defined benefit pension in the State Pension Fund with a limit of 12 x the National Insurance basic amount ("12G"), in line with other employees. In addition, the CEO, in line with the state's guidelines (valid in 2014), has a defined contribution pension covered from operations, which amounts to 30 per cent of the annual fixed salary above 12G.
For several years the Group has operated performance-related pay schemes for senior executives. The annual performance-related pay for the Group management cannot exceed 25 per cent of their annual base salary. The CEO had no performance-related pay scheme in 2014 but was awarded an extraordinary bonus for his achievements in 2014.
For the Group's senior management team, performance-related pay in 2014 is based on targets defined at Group and business level, as well as predefined personal targets.
There were no option or share schemes in place for senior executives in 2014.
Senior executives have company car or mileage agreements. Entra also provides other benefits to senior management in line with the benefits offered to the other employees in Entra and in accordance with normal practice in Norwegian companies.
Senior executives have insurance coverage at the same level as other employees.
The CEO and the rest of the management group have a number of internal directorships in subsidiaries and partly-owned companies. They do not receive special remuneration for these directorships.
Employee-elected members of the Board of Entra ASA receive fees in line with shareholder-elected Board members.
The CEO has the right to 6 months' severance pay based on the base salary in cases where the Board takes the initiative to terminate the employment. No other members of the group management have severance pay agreements.
In connection with the listing of Entra in October 2014 all Entra employees, including management, received an offer to buy shares on terms corresponding to those for other private investors. The employees were given the opportunity to take up an interest-free
loan of maximum NOK 50,000 related to the share purchase, to be paid down in equal instalments over the following 12 months.
Determination of senior executive remuneration for 2014 has been carried out in accordance with the above-mentioned guidelines. The CEO's base salary was increased by 4.5 per cent in 2014.
Following the stock exchange listing, the Board has undertaken a review of the senior executive remuneration in Entra. The proposed remuneration is in accordance with the Norwegian state's revised guidelines for senior executive remuneration published at 15 February 2015. For companies where state ownership is below 90 per cent the state expects the companies to comply with the guidelines, or explain why the guidelines are not applied.
In general, the Board will apply guidelines to remuneration for the Group management in 2015 corresponding to those in 2014. The Board will update the existing performance-related pay scheme ("STI") for 2015. In addition, the Board will propose to the Annual General Meeting to establish a long-term performance based share incentive program for Group management ("LTI").
The STI scheme is based on set targets at Group and business level in accordance with Board approved scorecards for 2015, as well as predefined personal targets. The Board sets individual targets for the CEO and assess the actual achievements. Individual targets and the corresponding assessment of achievement for the Group management is made by the CEO and approved by the Board.
For the CEO the STI scheme is proposed to have a maximum limit of 50 per cent of base salary and for other members of group management the proposed maximum limit is 30 per cent of base salary. The expected payout for the STI scheme in 2015 is approximately 50 per cent of the maximum limit for both CEO and group management.
The proposed LTI scheme is based on a return on equity target and a Total Shareholder Return target, each weighting 50 per cent. LTI remuneration will be share-based and have a vesting period of one year and a lock-up period of three years. LTI remuneration will not be taken into account when determining the basis for pensionable salary.
For the CEO the LTI scheme is proposed to have a maximum limit of 30 per cent of base salary and for other members of group management the proposed maximum limit is 20 per cent of base salary. The expected payout for the LTI scheme in 2015 is approximately 50 per cent of the maximum limit for both CEO and group management.
It is proposed to establish a share saving scheme in 2015, offering all employees, including management, the opportunity to purchase shares in Entra ASA at a 20 per cent discount.
Following the stock exchange listing Entra no longer fulfill the conditions for membership in the State Pension Scheme (SPK). Entra considers the establishment of a contribution-based service pension scheme for all employees, and is in dialogue with SPK in order to find a solution for closing the current defined benefitbased scheme for all or the majority of the current employees.
In connection with an appointment of new CEO or other senior executives, the basis for the contribution pension scheme will not exceed 12G which is in compliance with the state's guidelines for senior executive remuneration from 15 February 2015.
| All amounts in NOK thousand | Salary | Performance related pay 1) 2) |
Benefits in kind |
Commuting costs |
Estimated pension costs |
Total remunderation 2014 |
|---|---|---|---|---|---|---|
| Senior executives as at 31.12.2014 | ||||||
| Klaus-Anders Nysteen, CEO | 3 015 | 500 | 133 | - | 767 | 4 415 |
| Arve Regland, CFO from 01.02.2014 | 2 166 | 413 | 128 | - | 166 | 2 873 |
| Anders Solaas, EVP Sales and Markets | 1 680 | 361 | 139 | - | 181 | 2 361 |
| Hege Njå Bjørkmann, EVP Communication | 1 408 | 294 | 141 | - | 181 | 2 024 |
| Hallgeir Østrem, EVP Legal | 2 046 | 388 | 142 | - | 181 | 2 757 |
| Kristin Haug Lund, EVP Development and Technology | 1 643 | 354 | 130 | - | 181 | 2 308 |
| Mona Aarebrot, EVP Greater Oslo | 1 340 | 292 | 141 | - | 181 | 1 954 |
| Karl Fredrik Torp, EVP Mid/North Norway | 1 162 | 257 | 139 | - | 181 | 1 739 |
| Sonja Horn, EVP Central Oslo | 1 690 | 366 | 135 | - | 181 | 2 372 |
| Jorunn Nerheim, EVP South/West Norway | 1 166 | 258 | 137 | - | 181 | 1 742 |
| Total | 17 316 | 3 483 | 1 365 | - | 2 381 | 24 545 |
1) The CEO had no performance-related pay scheme in 2014 but was awarded an extraordinary bonus for his achievements in 2014.
2) Performance-related pay is based on a provision based on targets met in 2014, which will be paid out in 2015.
The above amounts are subject to National Insurance contributions of 14.1 per cent.
The former CFO, Anne Harris, has received salary during the notice periode until 30 June 2014 of NOK 1,290 and severance pay for the six months ending 31 December 2014 of NOK 1,290. She will receive severance pay until 30 June 2015.
Total loans given by Entra to senior executives were NOK 201 at 31 December 2014. The loans are interest free and will be repaid within a year.
The Group does not have any share-based long-term incentive program or option scheme for its executive management.
| Performance | Benefits | Commuting | Estimated pension |
Total remunderation |
||
|---|---|---|---|---|---|---|
| All amounts in NOK thousand | Salary | related pay 2) | in kind | costs | costs | 2013 |
| Senior executives as at 31.12.2013 | ||||||
| Klaus-Anders Nysteen, CEO from 29.01.2013 4) | 2 436 | - | 121 | - | 161 | 2 718 |
| Anders Solaas, EVP Sales and Markets | 1 622 | 330 | 164 | - | 175 | 2 291 |
| Hege Njå Bjørkmann, EVP Communication from 02.02.2013 | 796 | - | 109 | - | 133 | 1 038 |
| Hallgeir Østrem, EVP Legal from 01.10.2013 | 410 | - | 1 | - | 44 | 455 |
| Kristin Haug Lund, EVP Development and Technology from 01.10.2013 1 124 | 44 | 113 | - | 170 | 1 451 | |
| Mona Aarebrot, EVP Greater Oslo 3) | 1 261 | 81 | 139 | - | 175 | 1 656 |
| Karl Fredrik Torp, EVP Mid/North Norway 3) | 1 119 | 127 | 144 | - | 175 | 1 565 |
| Sonja Horn, EVP Central Oslo from 19.08.2013 | 593 | - | 51 | - | 69 | 713 |
| Jorunn Nerheim, EVP South/West Norway 3) | 1 088 | 116 | 151 | - | 175 | 1 530 |
| Astrid Tveten - Acting CFO from 01.11.2013 to 31.01.2014 | 1 748 | 380 | 140 | - | 175 | 2 443 |
| Total | 12 197 | 1 078 | 1 133 | - | 1 452 | 15 860 |
| Senior excutives prior to 31.12.2013 | ||||||
| Kyrre Olaf Johansen, CEO, left the company 17.04.2012 | 2 926 | - | - | - | - | 2 926 |
| Rune Olsø, Deputy, Acting and CEO, left the company 17.10.2012 | 2 268 | - | 49 | 12 | 57 | 2 386 |
| Anne Harris, Acting CEO to 20.01.2013, CFO to 30.11.2013 1) | 3 022 | 612 | 141 | - | 175 | 3 950 |
| Nils Fredrik Skau, Tech. Dir. to 01.09.2013, Projects Dir. to 01.11.2013 1 565 | 328 | 134 | 178 | 175 | 2 380 | |
| Bjørn Holm, Director of Projects and Development to 31.08.2013 | 1 279 | 313 | 96 | - | 115 | 1 803 |
| Ingrid Schiefloe, Dir. Comm. and CSR., left the company 30.06.2012 | 161 | - | - | - | - | 161 |
| Total | 11 221 | 1 253 | 420 | 190 | 522 | 13 606 |
The Group appointed a temporary Director of Communications and Corporate Social Responsibility in part of 2013.
1) Salaries and other remuneration during the notice period, as well as severance pay to be paid in 2014 are not included in the table above.
2) Performance-related pay is based on targets met in 2012, which was paid in 2013.
3) Member of group management after reorganisation effective 1.7.2013.
4) In addition there is an estimated pension cost for an individual scheme above the State Employees Pension Fund of NOK 419 excluding employer's National Insurance contributions.
The above amounts are subject to National Insurance contributions of 14.1 per cent.
| All amounts in NOK thousand | Board fees |
Committee fees 1) |
Total remuneration 2014 2) |
Total remuneration 2013 3) |
|---|---|---|---|---|
| Board | ||||
| Siri Hatlen, Chair | 402.5 | 102.3 | 505 | 421 |
| Martin Mæland, Deputy Chair | 202.3 | 42.8 | 245 | 236 |
| Ingrid Tjøsvold | 202.3 | 42.8 | 245 | 173 |
| Arthur Sletteberg | 202.3 | 135.8 | 338 | 182 |
| Kjell Bjordal | 202.3 | 24.5 | 227 | 160 |
| Birthe Smedsrud Skeid, employee representative 4) | 202.3 | - | 202 | 191 |
| Tore Benediktsen, employee representative until 25 August 2014 4) | 99.3 | - | 99 | 191 |
| Frode Halvorsen, employee representative from 25 August 2014 4) | 103.0 | - | 103 | - |
| Total 1) | 1 616 | 348 | 1 964 | 1 554 |
1) Include fees for the privatisation committee paid to the chair of the commitee, Siri Hatlen, of NOK 59.5 and the member of the commitee, Arthur Sletteberg, of NOK 75.0.
2) The overview of the remuneration of the Board of Directors shows remuneration earned in 2014.
3) The overview of the remuneration of the Board of Directors shows remuneration paid in 2013 for the period between the dates of the Annual General
Meetings in 2012 and 2013. 4) Does not include ordinary salary.
The Board and committee members received no other compensation than what is set out in the table. The above amounts are subject to National Insurance contributions of 14.1 per cent.
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Interest income | 21.1 | 13.1 |
| Other finance income | 0.1 | 1.4 |
| Total interest and other finance income | 21.2 | 14.5 |
| Interest expenses | 681.6 | 670.2 |
| - of which capitalised borrowing costs | -37.5 | -45.3 |
| Other finance expenses | 22.2 | 33.2 |
| Total interest and other finance expense | 666.3 | 658.1 |
| Average interest on capitalised borrowing costs | 4.2 % | 4.9 % |
| 2014 | 2013 | |
|---|---|---|
| Opening balance at 01.01 | - | - |
| Additional amounts recognised from business combination occuring during the year (note 9) | 145.9 | - |
| Closing balance at 31.12 | 145.9 | - |
The goodwill relates to the acquisition of 50 percent of the shares of the business in Hinna Park Eiendom AS with effect from 1 February 2014. The excess value between the purchase price and the carrying amount of the business at the date of the acquisition has been allocated on the properties in the company. The goodwill derive from the deferred tax provision on the allocated excess value and is not identifiable. There are no indication of impairment related to the goodwill as at 31 December 2014.
| 2014 | 2013 | |||||
|---|---|---|---|---|---|---|
| Intangible assets 1) |
Property used by owner |
Other property, plant and equipment |
Intangible assets 1) |
Property used by owner |
Other property, plant and equipment |
|
| Acquisition cost at 01.01. | 64.7 | 7.3 | 49.0 | 62.2 | 7.5 | 68.0 |
| Acquisitions | 15.4 | 0.4 | 10.3 | 16.5 | 1.0 | 21.7 |
| Disposals | -2.5 | 0.0 | -0.1 | -14.0 | -1.2 | -40.7 |
| Acquisition cost at 31.12. | 77.6 | 7.6 | 59.2 | 64.7 | 7.3 | 49.0 |
| Accumulated depreciation and write-downs at 01.01. | 33.9 | 0.6 | 18.5 | 25.9 | 1.8 | 41.8 |
| Depreciation and write-downs | 11.9 | 0.1 | 6.4 | 22.0 | 0.1 | 4.8 |
| Disposals | -2.5 | 0.0 | -0.1 | -14.0 | -1.2 | -28.1 |
| Accumulated depreciation and write-downs at 31.12. | 43.3 | 0.6 | 24.8 | 33.9 | 0.6 | 18.5 |
| Carrying amount at 31.12. | 34.3 | 7.0 | 34.4 | 30.9 | 6.7 | 30.5 |
1) Intangible assets mainly relate to software.
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Closing balance previous year | 24 818.0 | 22 936.6 |
| Change in accounting principle IFRIC 12 (note 2) | 1 296.8 | |
| Opening balance at 01.01 | 24 818.0 | 24 233.4 |
| Other movements | ||
| Purchase of investment property | 1 581.2 | 591.2 |
| Investment in the property portefolio | 1 076.5 | 1 045.4 |
| Capitalised borrowing costs | 37.5 | 45.3 |
| Sale of investment property | -477.3 | -590.5 |
| Change in value from operational lease | 36.0 | -39.8 |
| Change in value from investment properties | 1 158.5 | -466.9 |
| Closing balance at 31.12 | 28 230.3 | 24 818.0 |
| Of which investment properties held for sale | 1 550.8 | 388.2 |
| Investment properties | 26 679.5 | 24 429.8 |
Investment properties held for sale comprise 9 (5) investment properties for which the sales process had started, but not been completed, on the balance sheet date. Assuming that acceptable offers are received, the properties are expected to be sold within 12 months. In 2014, the Group has identified 9 new investment properties held for sale.
Investment properties are valued at fair value based on independent external valuations. The valuation method is included at level 3 in the valuation hierarchy. Reference is made to note 8.
For information about valuations and fair value calculations for investment properties, see Note 3 "Critical accounting estimates and subjective judgements".
Certain of the Group's properties are subject to purchase options, as described below.
Pursuant to the lease agreements entered into between Entra Eiendom and the Norwegian Ministry of Culture on 22 April 2005, 15 October 2003 and 30 June 2005, respectively, the tenant has an option to acquire the three buildings comprising the National Library in Henrik Ibsens gate 110/Observatoriegaten 1 in Oslo municipality (the rehabilitated building, the "Magazine" and the office building "Halvbroren"). The tenant has the right to acquire the rehabilitated building and the "Magazine" at expiry of each 25 year lease period (expiring on 6 June 2030 and 31 December 2029, respectively). The leases include an unlimited number of 25-year extension periods, at market rents. Further, the tenant has the right to, upon six months' notice, acquire "Halvbroren" if the tenant itself leases and uses more than 50% of the building. As of 31 December 2014, the tenant leased and used 65% of the building. The purchase price for all three buildings shall equal the market value of the buildings based on the capitalised future rental income based on the assumption that the lease agreements are continuously prolonged in accordance with the renewal clause in the lease agreements. The market value of the properties was NOK 1,429.5 million as of 31 December 2014.
Pursuant to the lease agreement entered into between Entra Eiendom and Bærum municipality on 23 June 2005, which expires on 27 January 2027, the tenant has an option to acquire Vøyenenga School in Bærum municipality. The option is exercisable after ten years lease at a purchase price of NOK 97,137,500; after fifteen years lease at a purchase price of NOK 86,912,000; and after 20 years lease at a purchase price of NOK 63,285,000. The market value of the property was NOK 105.2 million as of 31 december 2014.
Pursuant to the lease agreement entered into between Entra Eiendom and Østfold Police District on 22 May 2002, which expires on 31 December 2019, the Norwegian Government by Statsbygg (or another state entity nominated by the Norwegian Government) has an option to acquire Prins Christian Augusts plass 3-5 in Moss municipality. The option includes the right to purchase the ground lease agreement and the buildings at a price equal to 11.5 times the annual contractual rent (after deduction of the ground lease rent), and is exercisable at any time during the lease period in the event of (i) a sale of the buildings (in whole or in part with 60
days' notice to the Ministry of Justice) or (ii) at any time during the lease period with 12 months' prior notice. The market value of the property was NOK 74.2 million as of 31 December 2014.
Pursuant to the lease agreement entered into between Entra Eiendom and the Embassy of the Republic of Indonesia on 2 May 2005, which expires on 1 July 2015, the tenant has an option to acquire the Indonesian Embassy in Fritznersgate 12 in Oslo municipality. The option is exercisable at any time during the lease period at a purchase price calculated based on a price of NOK 23 million as of 31 December 2006 and thereafter adjusted for 100% of the changes in the CPI until the option is exercised. The market value of the property was NOK 27.3 million as of 31 December 2014.
Pursuant to deed registered in the Land Registry on 18 August 1980, Bergen municipality has an option to acquire Kunsthåndverkskolen in Strømgaten 1 in Bergen municipality. Bergen municipality has claimed the right to exercise the option effective from the point in time Kunsthåndverkskolen vacates the property and the property shall at such time be returned to Bergen municipality without any compensation. The lease agreement expires on 31 December 2015. The market value of the property was NOK 4.1 million as of 31 December 2014.
Pursuant to the ground lease agreement entered into between Entra Eiendom and Oslo Havn KF on 4 October 1979 relating to the Langkaia properties, the ground lessor has an option to acquire the buildings without any compensation and free of any encumbrances upon expiry of the ground lease agreement on 1 January 2031. As the property is valued based on the cash flow until expiry of the ground lease agreement (i.e. no residual value), there will be an ongoing decrease in the balance sheet value until 2030. The market value of the property was NOK 711.7 million as of 31 December 2014.
In addition, certain of the Group's properties are subject to preemptive rights, including:
The ground lessor under the ground lease agreement dated 8 July 1936 regarding Lømslandsvei 23 in Kristiansand municipality has a pre-emptive right to acquire the buildings on the premises in the event of a sale of the buildings. In the event the pre-emptive right is enforced, the purchase price shall equal the value of the buildings as determined by an appraisal commission.
Kristiansand municipality has a pre-emptive right to acquire Vestre Strandgate 21 in Kristiansand municipality at market price in the event of a sale of the property.
Based on a pre-emptive right registered in the Land Registry in 1951, six private persons have a personal pre-emptive right to the property Vogts gate 17 in Moss municipality on the same terms as another potential buyer.
Trondheim municipality has pre-emptive rights to acquire certain properties in Trondheim municipality which the Group acquired in February 2011 (the aggregate purchase price for the properties were NOK 5 million).
Investments in associates and jointly controlled entities are recognised using the equity method.
| 31.12.2014 | Acquisition date |
Business office |
Shareholding/ voting rights |
|---|---|---|---|
| Associated companies | |||
| Ullandhaug Energi AS | 07.07.2009 | Stavanger | 44.00 % |
| Greenfield Property AS | 26.09.2011 | Måløy | 33.00 % |
| Youngstorget Parkeringshus AS | 16.11.2005 | Oslo | 21.26 % |
| Jointly controlled entities | |||
| Entra OPF Utvikling AS | 21.04.2012 | Oslo | 50.00 % |
| Sundtkvartalet Holding AS | 02.01.2014 | Oslo | 50.00 % |
| Oslo S Utvikling AS | 01.07.2004 | Oslo | 33.34 % |
| 31.12.2013 | Acquisition date |
Business office |
Shareholding/ voting rights |
| Associated companies | |||
| Ullandhaug Energi AS | 07.07.2009 | Stavanger | 44.00 % |
| Tverrforbindelsen AS 1) | 24.04.2009 | Trondheim | 33.33 % |
| Greenfield Property AS | 26.09.2011 | Oslo | 33.00 % |
| Youngstorget Parkeringshus AS | 16.11.2005 | Oslo | 21.26 % |
| Jointly controlled entities | |||
| Sørlandet Kunnskapspark Eiendom AS | 02.06.2005 | Kristiansand | 51.00 % |
| UP Entra AS | 31.12.2003 | Hamar | 50.00 % |
| Entra OPF Utvikling AS | 21.04.2012 | Oslo | 50.00 % |
| Oslo S Utvikling AS | 01.07.2004 | Oslo | 33.34 % |
1) Tverrforbindelsen AS was wound up on 17 December 2013.
| Carrying amount 31.12.2013 |
Share of profit for 2014 |
Capital injection/ reduction |
Carrying amount 31.12.2014 |
Change in value in share of profit 1) |
|
|---|---|---|---|---|---|
| Associated companies | 6.8 | 0.4 | 0.0 | 7.1 | 0.0 |
| Jointly controlled entities | |||||
| Sørlandet Kunnskapspark Eiendom AS 2) | 6.1 | -0.2 | -5.9 | 0.0 | - |
| UP Entra AS 3) | 103.9 | 21.3 | -125.2 | 0.0 | 13.5 |
| Entra OPF Utvikling AS | 393.7 | -11.3 | -19.7 | 362.7 | -23.4 |
| Sundtkvartalet Holding AS | 0.0 | 15.1 | 111.4 | 126.5 | 15.5 |
| Oslo S Utvikling AS | 617.9 | 10.3 | -50.0 | 578.1 | - |
| Total associates and jointly controlled entities | 1 128.3 | 35.6 | -89.4 | 1 074.5 | 5.5 |
| Carrying amount 31.12.2012 |
Share of profit for 2013 |
Capital injection/ reduction |
Carrying amount 31.12.2013 |
Change in value in share of profit 1) |
|
|---|---|---|---|---|---|
| Associated companies | 6.7 | 0.0 | 0.0 | 6.8 | 0.0 |
| Jointly controlled entities | |||||
| Sørlandet Kunnskapspark Eiendom AS | 4.3 | 1.7 | - | 6.1 | 2.8 |
| UP Entra AS | 113.1 | -9.2 | - | 103.9 | -15.9 |
| Entra OPF Utvikling AS | 403.3 | 20.1 | -29.7 | 393.7 | -8.0 |
| Oslo S Utvikling AS | 572.8 | 222.8 | -177.7 | 617.9 | -9.7 |
| Total associates and jointly controlled entities | 1 100.3 | 235.5 | -207.4 | 1 128.3 | -30.7 |
1) Changes in value consist of changes in the value of property, loans and interest rate hedging instruments, plus calculated deferred tax on the changes.
2) Entra increased its shareholding from 51 per cent to 100 per cent of the shares in Sørlandet Kunnskapspark Eiendom AS on 20 November 2014.
3) UP-Entra AS was sold 15 May 2014.
| Associates and Jointly controlled entities | |||
|---|---|---|---|
| 2014 | 2013 | ||
| Total operating revenue | 376.1 | 873.9 | |
| Total operating expenses | -337.5 | -586.1 | |
| Net income from property management | 38.6 | 287.8 | |
| Adjustment to value from investment property | 66.9 | -29.1 | |
| Net financial items | -31.2 | -23.7 | |
| Profit before tax | 74.3 | 235.0 | |
| Tax expense | -39.1 | 0.4 | |
| Profit after tax | 35.2 | 235.4 | |
| Total comprehensive income | 35.2 | 235.4 | |
| Total assets | 1 713.3 | 1 619.7 | |
| Equity | 1 148.6 | 1 120.2 | |
| Total liabilities | 564.8 | 499.5 |
The Group owns 33.33 per cent of Oslo S Utvikling AS, which represents a significant asset to the Group. Oslo S. Utvikling AS (OSU) is a property development company established for the purpose of developing properties at Bjørvika, Oslo. OSU is jointly controlled by the Group, and is accounted for using the equity method. Sales of property projects are measured at cost and presented under inventories. The sales price is recognised in the income statement on handover.
There has not been any change in the share of ownership or voting rights in OSU in 2014.
| Income statement: Rental income 66.4 51.5 Other operating revenue 992.3 2 277.7 Operating revenue 1 058.7 2 329.2 Operating costs 32.8 28.8 Other property costs 767.9 1 568.3 of which depreciation and write-downs 120.9 0.7 Administrative owner costs 40.6 43.3 Total operating costs 841.3 1 640.4 Net income from property management 217.4 688.7 Interest and other finance income 3.1 0.4 Interest and other finance expense -97.8 -21.6 Net financial items -94.7 -21.3 Profit before tax 122.7 667.5 Tax expense 88.9 -29.8 Profit after tax 33.7 697.2 Total comprehensive income 33.7 697.2 Balance sheet: Current assets 2 813.2 1 987.2 of which cash and cash equivalents 56.5 62.7 Non-current assets 66.3 242.8 Current liabilities 907.4 285.5 of which current financial liabilities other than accounts payable and provisions 0.0 0.0 Non-current liabilities 389.7 245.9 of which non-current financial liabilities other than accounts payable and provisions 389.7 245.9 |
2014 | 2013 |
|---|---|---|
| Shareholding | 2014 | 2013 | |
|---|---|---|---|
| Net assets | 100 % | 1 582.3 | 1 698.6 |
| Group's shareholding in the company | 33.33 % | 527.4 | 566.1 |
| Added value | 33.33 % | 50.7 | 51.7 |
| Carrying amount of Group's shareholding | 33.33 % | 578.1 | 617.8 |
All contractual obligations on the balance sheet date that have not been capitalised are included in the table below
| 2014 | 2013 | |
|---|---|---|
| Property, plant and equipment | 138.3 | 192.0 |
| Total contractual obligations | 138.3 | 192.0 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Trade receivables | 51.0 | 30.1 |
| Provisions for bad debts | -6.4 | -2.2 |
| Net trade receivables | 44.6 | 27.9 |
At 31 December 2014, NOK 29.2 (NOK 21.2) million in trade receivables were overdue. Provisions for a loss of NOK 6.4 (NOK 2.2) million have been made for overdue trade receivables. The age analysis of these trade receivables is as follows:
| 2014 | 2013 | |
|---|---|---|
| Up to 3 months | 7.3 | 7.3 |
| Over 3 months | 22.0 | 13.9 |
| Total overdue | 29.2 | 21.2 |
All amounts in NOK million
| 2014 | 2013 |
|---|---|
| 38.7 | 38.7 |
| 38.2 | 39.0 |
| 83.8 | 0.0 |
| 38.4 | 0.0 |
| 7.3 | 2.0 |
| 16.1 | 16.0 |
| 222.5 | 95.8 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Bank deposits | 161.7 | 142.2 |
| Tied bank deposits | 36.5 | 35.2 |
| Total bank deposits | 198.2 | 177.4 |
Tied bank deposits relate to the withholding tax account and guarantees for loans.
On 17th October, Entra ASA was listed on the Oslo Stock Exchange. In connection with the listing the Norwegian Government (Ministry of Trade, Industry and Fisheries (MTIF)) sold 50,525,611 of its shares in a public offering of new and existing shares in Entra. In addition, Entra issued 41,538,461 new shares in connection with the transaction raising gross proceeds of approximately NOK 2.7 billion. The share price of the issued shares was NOK 65 per share. As of 31 December 2014 there are a total of 183,732,461 shares outstanding in the company. The MTIF's shareholding post the offering is 91,668,389 shares corresponding to 49.9 per cent of the outstanding share capital.
The table below sets out the change in share capital in connection with the listing of Entra ASA on the Oslo Stock Exchange, the number of shares in the last two years, the largest shareholders at year end, and shares owed by directors at 31 December 2014.
| No. of shares |
Share capital (NOKm) |
Share premium (NOKm) |
Face value (NOK) |
|
|---|---|---|---|---|
| Balance at 01.01.2013 | 142 194 | 142.2 | 2 003.7 | 1 000 |
| Capital decrease to other paid in equity | - | - | -2 003.7 | 1 000 |
| Beginning of year 01.01.2014 | 142 194 | 142.2 | 1 000 | |
| Share split (1:1000) | 142 194 000 | 142.2 | 1 | |
| Issue of shares | 41 538 461 | 41.5 | 2 658.5 | 1 |
| IPO costs | - | - | -39.9 | 1 |
| End of year 31.12.2014 | 183 732 461 | 183.7 | 2 618.6 | 1 |
Paid-in capital amounts to NOK 3,739.4 million (NOK 1,729.3 million) and consists of NOK 183.7 million (NOK 142.2 million) in share capital and NOK 3,555.7 million (NOK 1,587.1 million) in other paid-in capital. In 2013 the share premium reserve was reduced by NOK 2,003.7 million, of which NOK 416.6 million was paid out to the shareholder.
Entra ASA has one class of shares and each of the shares carries one vote. All shares provide equal right including the right to any dividend.
For other changes in shareholders' equity, see the consolidated statements of changes in equity.
The 20 largest shareholders as registered in the VPS as of 31 December 2014 were as follows:
| Shareholder | No of shares per 31.12.2014 |
Shareholding % | Account type |
Country |
|---|---|---|---|---|
| Norwegian Government Ministry of Trade, Industry and Fisheries | 91 668 389 | 49.9 | Norway | |
| Geveran Trading Co Ltd | 18 400 000 | 10.0 | Cyprus | |
| Folketrygdfondet | 8 375 000 | 4.6 | Norway | |
| JPMorgan Chase Bank N.A. London | 4 556 194 | 2.5 | NOM | UK |
| JPMorgan Clearing Corp. | 4 356 045 | 2.4 | NOM | US |
| BNP Paribas Sec. Services S.C.A | 2 736 133 | 1.5 | NOM | France |
| JPMorgan Chase Bank N.A. London | 2 568 221 | 1.4 | NOM | UK |
| Citibank, N.A. | 2 376 427 | 1.3 | NOM | UK |
| Varma Mutual Pension Insurance | 2 162 000 | 1.2 | UK | |
| Danske Invest Norske Instit. II. | 2 129 748 | 1.2 | Norway | |
| State Street Bank & Trust Company | 2 041 612 | 1.1 | NOM | US |
| The Bank of New York Mellon SA/NV | 1 986 659 | 1.1 | NOM | Belgium |
| State Street Bank & Trust Company | 1 776 703 | 1.0 | NOM | US |
| Goldman Sachs & Co Equity Segregat | 1 462 083 | 0.8 | NOM | US |
| State Street Bank and Trust Co | 1 297 632 | 0.7 | NOM | US |
| Danske Invest Norske Aksjer Inst | 1 165 567 | 0.6 | Norway | |
| MP Pensjon PK | 1 000 000 | 0.5 | Norway | |
| Fondsfinans Spar | 800 000 | 0.4 | Norway | |
| The Northern Trust Co. | 785 919 | 0.4 | NOM | UK |
| KLP Aksje Norge Indeks VPF | 756 474 | 0.4 | Norway | |
| Total 20 largest shareholders | 152 400 806 | 82.9 | ||
| Total | 183 732 461 | 100.0 |
| Shareholder | Position | Number of shares |
|---|---|---|
| Board of directors | ||
| Siri Hatlen | Chair | 1 091 |
| Martin Mæland | Deputy Chair | 2 183 |
| Ingrid Tjøsvold | Board member | 437 |
| Kjell Bjordal | Board member | 14 551 |
| Arthur Sletteberg | Board member | 727 |
| Birthe Smedsrud Skeid | Employee representative | 2 307 |
| Frode Halvorsen | Employee representative | 230 |
| Senior executives | ||
| Klaus-Anders Nysteen | Chief Executive Officer | 9 230 |
| Arve Regland | Chief Financial Officer | 9 230 |
| Hallgeir Østrem | EVP Legal | 3 846 |
| Hege Njå Bjørkmann | EVP Communication | 2 307 |
| Sonja Horn | EVP Central Oslo | 3 846 |
| Mona Aarebrot | EVP Greater Oslo | 4 615 |
| Jorunn Nerheim | EVP South/West Norway | 1 538 |
| Karl Fredrik Torp | EVP Mid/North Norway | 2 153 |
| Anders Solaas | EVP Sales and Markets | 461 |
| Kristin Haug Lund | EVP Development and Technology | 4 615 |
| Shares held by board of directors and senior executives | 63 367 |
| Nominal value 2014 |
Market value 2014 |
Carrying amount 2014 |
Nominal value 2013 |
Market value 2013 |
Carrying amount 2013 |
|
|---|---|---|---|---|---|---|
| Bank loans | 5 166.8 | 5 162.7 | 5 166.8 | 4 935.0 | 4 935.0 | 4 918.4 |
| Bonds | 6 100.0 | 6 710.2 | 6 658.7 | 6 800.0 | 7 003.1 | 6 881.0 |
| Total non-current interest-bearing liabilities | 11 873.0 | 11 825.5 | 11 938.1 | 11 799.4 |
| Nominal value 2014 |
Market value 2014 |
Carrying amount 2014 |
Nominal value 2013 |
Market value 2013 |
Carrying amount 2013 |
|
|---|---|---|---|---|---|---|
| Bank loans | 271.2 | 271.2 | 271.2 | 16.6 | 16.6 | 16.6 |
| Bonds | 1 200.0 | 1 209.4 | 1 200.0 | 1 142.5 | 1 157.7 | 1 142.5 |
| Commercial paper | 1 350.0 | 1 350.0 | 1 350.0 | 1 650.0 | 1 650.0 | 1 650.0 |
| Total current interest-bearing liabilities | 2 830.6 | 2 821.2 | 2 824.3 | 2 809.1 |
The average risk premium on the Group's loans at 31.12.2014 was 0.94 per cent (0.99 per cent).
| ISIN | Issue limit | Coupon rate | Term to maturity |
Amount issued 1) |
Repurchased 1) | Net balance 1) |
|---|---|---|---|---|---|---|
| NO0010552466 | 1 500.0 | 5.55 % | 25.11.2019 | 500.0 | - | 500.0 |
| NO0010592363 | 1 500.0 | 4.70 % | 06.12.2017 | 500.0 | - | 500.0 |
| NO0010662869 | 1 500.0 | 3M Nibor + 1.22% | 09.11.2015 | 1 200.0 | - | 1 200.0 |
| NO0010641806 | 1 500.0 | 3M Nibor + 1.25% | 10.04.2017 | 1 100.0 | - | 1 100.0 |
| NO0010673700 | 1 500.0 | 3M Nibor + 1.25% | 20.09.2018 | 1 200.0 | - | 1 200.0 |
| NO0010686660 | 1 500.0 | 4.25 % | 02.09.2020 | 700.0 | - | 700.0 |
| NO0010670995 | 1 500.0 | 5.00 % | 08.02.2023 | 500.0 | - | 500.0 |
| NO0010715931 | 1 500.0 | 3M Nibor + 0.61% | 08.08.2019 | 500.0 | - | 500.0 |
| NO0010282031 | 1 100.0 | 4.62 % | 29.05.2030 | 1 100.0 | - | 1 100.0 |
| 7 300.0 |
| ISIN | Issue limit | Coupon rate | Term to maturity |
Amount issued 1) |
Repurchased 1) | Net balance 1) |
|---|---|---|---|---|---|---|
| NO0010723539 | 400.0 | 1.90 % | 11.05.2015 | 300 | - | 300.0 |
| NO0010720006 | 400.0 | 1.95 % | 10.04.2015 | 200 | - | 200.0 |
| NO0010716012 | 400.0 | 2.00 % | 10.03.2015 | 300 | - | 300.0 |
| NO0010709744 | 400.0 | 2.02 % | 12.01.2015 | 250 | - | 250.0 |
| NO0010713282 | 400.0 | 2.18 % | 10.02.2015 | 300 | - | 300.0 |
| 1 350.0 |
| ISIN | Issue limit | Coupon rate | Term to maturity |
Amount issued 1) |
Repurchased 1) | Net balance 1) |
|---|---|---|---|---|---|---|
| NO0010552458 | 1 500.0 | 4.95 % | 25.11.2014 | 975.0 | (282.5) | 692.5 |
| NO0010552441 | 1 500.0 | 3M Nibor +0 80% | 25.11.2014 | 450.0 | - | 450.0 |
| NO0010662869 | 1 500.0 | 3M Nibor +1 22% | 09.11.2015 | 1 200.0 | - | 1 200.0 |
| NO0010592363 | 1 500.0 | 4.70 % | 06.12.2017 | 500.0 | - | 500.0 |
| NO0010641806 | 1 500.0 | 3M Nibor +1 25% | 10.04.2017 | 1 100.0 | - | 1 100.0 |
| NO0010552466 | 1 500.0 | 5.55 % | 25.11.2019 | 500.0 | - | 500.0 |
| NO0010670995 | 1 500.0 | 5.00 % | 08.02.2023 | 500.0 | - | 500.0 |
| NO0010673700 | 1 500.0 | 3M Nibor +1 25% | 20.09.2018 | 1 200.0 | - | 1 200.0 |
| NO0010686660 | 1 500.0 | 4.25 % | 02.09.2020 | 700.0 | - | 700.0 |
| NO0010282031 | 1 100.0 | 4.62 % | 29.05.2030 | 1 100.0 | - | 1 100.0 |
| 7 942.5 |
| ISIN | Issue limit | Coupon rate | Term to maturity |
Amount issued 1) |
Repurchased 1) | Net balance 1) |
|---|---|---|---|---|---|---|
| NO0010675101 | 400.0 | 2.30 % | 10.01.2014 | 300 | - | 300.0 |
| NO0010679442 | 400.0 | 2.20 % | 10.02.2014 | 250 | - | 250.0 |
| NO0010685514 | 400.0 | 2.17 % | 10.03.2014 | 250 | - | 250.0 |
| NO0010686876 | 400.0 | 2.20 % | 10.04.2014 | 250 | - | 250.0 |
| NO0010687494 | 400.0 | 2.24 % | 09.05.2014 | 300 | - | 300.0 |
| NO0010694011 | 400.0 | 2.30 % | 10.06.2014 | 300 | - | 300.0 |
| 1 650.0 |
1) nominal values
The net proceeds from issuance of the new shares in the NOK 1,700 million offering in connection with the listing on Oslo Stock Exchange was used to repay all credit facilities in Brattørkaia AS as with a total outstanding amount of NOK 905 million. The remaining amount was used to reduce borrowings outstanding under revolving credit facilities in Entra Eiendom, including revolving credit facilities drawn to pay an extraordinary dividend of NOK 650 million to the selling shareholder Norwegian Government Ministry of Trade, Industry and Fisheries.
In general the Group's financing is based on the parent company borrowing from external parties using negative pledge clauses. Whollyowned subsidiaries are generally financed using intra-group loans.
For projects/properties with special characteristics, separate mortgage-based financing can be arranged. At 31 December 2014, a long-term bond of NOK 1,100 million is secured against the National Library and associated buildings, located at Henrik Ibsens gate 110 in Oslo. The lender also has a mortgage on the rental income from the property.
For subsidiaries that are not wholly-owned by Entra Eiendom AS, separate financing is generally arranged without any guarantee from the shareholders. This kind of financing is generally secured through a mortgage.
| 2014 | 2013 | |
|---|---|---|
| Carrying amount of liabilities secured through mortgages | 2 992.5 | 2 660.6 |
| Carrying amount of mortgaged assets | ||
| Buildings and sites | 4 039.4 | 3 544.2 |
The Group has both defined contribution and defined benefit pension plans. The defined benefit pension plan cover a total of 162 (152) current employees and 59 (54) pensioners. The defined benefit contribution plan include 5 employees in Hinna Park.
Defined contribution plans comprise arrangements whereby the Group makes annual contributions to the employees' pension plans, and where the future pension is determined by the amount of the contributions and the return on the pension plan assets. In the defined contribution pension plans, the cost is equal to the contributions to the employees' pension savings in the accounting period.
The defined benefit pension plans provide an entitlement to guaranteed defined future benefits. These benefits are mainly dependent on number of years of contributions, salary level on reaching retirement age and the level of benefits from the National Insurance Scheme. Commitments are covered through the Norwegian Public Service Pension Fund. The guarantee means that employees will receive at least 66 per cent of their pension qualifying salary. Any income over and above 12 times the National Insurance Scheme's basic amount is not included in the qualifying salary. The pension benefit payable is based on the employee's salary, average percentage of full-time equivalents and length of service (30 years' service qualifies for a full pension). The Group's pension scheme satisfies the requirements of the Norwegian Act on Compulsory Occupational Pensions.
The Group also has a contractual early-retirement scheme (AFP) from the age 62. At 31 December 2014, 14 (11) former employees had chosen to make use of the AFP scheme. Employees can cut back on their working week or retire completely. If they choose to cut back, they must continue to work 60 per cent of a full-time position. Between the ages of 62 and 65, pensions are calculated in accordance with the National Insurance Scheme's stipulations. On reaching the age of 65, the pension is calculated using either the National Insurance Scheme's rules or the Norwegian Public Service Pension Fund's rules, depending on which is better for the member. At 31 December 2014, the net pension liabilities associated with the AFP scheme amounted to NOK 8.6 (NOK 7.4) million, which is included under total pension liabilities in the table below.
The cost for the accounting period shows the employees' pension entitlement of the agreed future pension in the financial year.
The Chief Executive Officer, has a supplemental pension contribution plan under which the Group provides an annual pension premium of 30% of fixed salary above 12 times the National Insurance Scheme's basic amount. The pension scheme is in accordance with the state's guidelines for senior management salaries.
| 2014 | 2013 | |
|---|---|---|
| Present value of accrued pension liabilities in defined-benefit schemes in unit trusts | 198.1 | 153.9 |
| Fair value of pension scheme assets | -126.4 | -107.3 |
| Employers' NICs accrued | 10.1 | 6.5 |
| Net pension liabilities on the balance sheet at 31.12 | 81.8 | 53.1 |
| Pension liabilities at 31.12 | 198.1 | 153.9 |
|---|---|---|
| Actuarial losses/(gains) | 28.7 | -4.9 |
| Plan amendment | -7.2 | 0.0 |
| Pension benefits paid | -6.0 | -4.7 |
| Interest expense | 5.9 | 5.4 |
| Present value of pensions earned this year | 18.2 | 9.8 |
| Pension liabilities at 01.01 | 158.5 | 148.3 |
| 2014 | 2013 |
| 2014 | 2013 | |
|---|---|---|
| Pension scheme assets at 01.01 | 111.1 | 96.5 |
| Anticipated return on pension scheme assets | 4.7 | 4.1 |
| Contributions from employer | 19.1 | 19.8 |
| Pension benefits paid | -6.0 | -4.7 |
| Actuarial (gains)/losses | -2.5 | -8.5 |
| Pension scheme funds at 31.12 | 126.4 | 107.3 |
| 2014 | 2013 | |
|---|---|---|
| Cost of pension benefits accrued during current period | 18.4 | 10.2 |
| Impact on this years plan assets | -7.2 | 0.0 |
| Employers' National Insurance contributions | 1.8 | 2.7 |
| Contribution scheme | 0.7 | 0.0 |
| Total pension benefits accrued during the period | 13.7 | 12.9 |
| Net interest expense | 1.3 | 1.3 |
| Total pension benefits accrued in income statement | 15.0 | 14.2 |
| Estimate difference accrued in comprehensive income | 35.0 | 4.0 |
The actual return on pension scheme assets was NOK 2.0 million (NOK -4.4 million).
| 2014 | 2013 |
|---|---|
| Discount rate 2.30 % |
4.00 % |
| Anticipated return on pension scheme assets 2.30 % |
4.40 % |
| Annual wage growth 2.75 % |
3.75 % |
| Annual adjustment to the National Insurance Scheme's basic amount ("G") 2.50 % |
3.50 % |
| Annual adjustment of pensions 1.75 % |
2.75 % |
| Mortality rates K2013 |
K2013 |
| Disability rates 200 % * K63 |
200 % * K63 |
| Proportion of entitled employees making use of AFP 20 % |
20 % |
The actuarial assumptions are based on generally accepted assumptions in the insurance industry with regard to demographic factors.
| 2013 |
|---|
| 100 % |
| 0 % |
| 0 % |
| 0 % |
| 0 % |
| 100 % |
| 2014 | 2013 | 2012 | 2011 | 2010 | |
|---|---|---|---|---|---|
| Gross defined-benefit pension liabilities | 198.1 | 153.9 | 148.3 | 148.3 | 176.3 |
| Fair value pension funds 31.12 | -126.4 | -107.3 | -96.5 | -96.5 | -85.8 |
| Net defined-benefit pension liabilities | 71.7 | 46.6 | 51.7 | 51.7 | 90.5 |
Expected payments to the defined-benefit pension plan for the period 1 January 2015 - 31 December 2015 are NOK 22.3 (NOK 16.2) million.
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Tax payable | - | - |
| Change in deferred tax on profit and loss | 351.4 | -8.1 |
| Change in deferred tax on comprehensive income | -9.4 | -1.1 |
| Income tax expense | 342.0 | -9.2 |
| 2014 | 2013 | |
|---|---|---|
| Profit before tax | 1 377.1 | 457.6 |
| Share of profit/loss at associates and jointly controlled entities | -35.6 | -212.4 |
| Other permanent differences | -14.5 | 57.7 |
| Changes in loss carry-forwards | -279.1 | -127.1 |
| Changes in temporary differences | -1 047.9 | -175.8 |
| Profit for tax purposes | 0.0 | 0.0 |
| Tax payable on the balance sheet | - | - |
| Tax payable on the balance sheet | - | - |
The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:
| 2014 | % | 2013 | % | |
|---|---|---|---|---|
| Profit for accounting purposes multiplied by nominal tax rate | 371.8 | 27.0 | 128.1 | 28.0 |
| Tax on share of profit/loss at associates and jointly controlled entities | -9.6 | -0.7 | -59.5 | -13.0 |
| Tax on permanent differences | -3.9 | -0.3 | 16.1 | 3.5 |
| Effect of corrections to previous years | - | 0.0 | 0.2 | 0.0 |
| Effect of change in tax rate | - | 0.0 | -92.8 | -20.3 |
| Reversal of write-down of deferred tax asset | -6.9 | -0.5 | -0.1 | 0.0 |
| Tax expense for accounting purposes | 351.4 | 25.5 | -8.1 | -1.8 |
From the income year 2014 the tax rate on normal income is reduced to 27 per cent. Deferred tax as at 31 December 2013 was measured using the new rate. The effect on tax for the period is NOK 92.8 million.
The Group has offset deferred tax assets and deferred tax liabilities on the balance sheet as the Group has a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority. The following net value was recognised:
| Net deferred tax | 2 984.3 | 2 515.1 |
|---|---|---|
| Deferred tax assets | 787.7 | 516.8 |
| Deferred tax liability | 3 772.0 | 3 031.9 |
| 2014 | 2013 |
| Non-current | Financial | Current | Gains/ losses |
Loss carried | |||
|---|---|---|---|---|---|---|---|
| assets 1) | instruments | assets | account | Provisions | forward | Total | |
| 31.12.2012 | 2 700.5 | 55.3 | 17.8 | 82.3 | -22.7 | -360.4 | 2 472.7 |
| Principle change, IFRIC 12 properties | 362.1 | -314.2 | - | - | 7.4 | - | 55.4 |
| 01.01.2013 | 3 062.6 | -258.8 | 17.8 | 82.3 | -15.3 | -360.4 | 2 528.1 |
| Recognised in profit and loss | -92.2 | 63.7 | 1.3 | 76.1 | 0.3 | 35.5 | 84.8 |
| Recognised in comprehensive income | - | - | - | - | -1.1 | - | -1.1 |
| Acquisition and disposal of subsidiaries | -3.8 | - | - | - | - | - | -3.8 |
| Effect of change in tax rate | -105.9 | 7.0 | -0.7 | -5.7 | 0.8 | 11.6 | -92.8 |
| 31.12.2013 | 2 860.6 | -188.1 | 18.4 | 152.7 | -15.4 | -313.3 | 2 515.1 |
| Recognised in profit and loss | 595.2 | -141.4 | -13.1 | 3.8 | -10.9 | -75.3 | 358.3 |
| Recognised in comprehensive income | - | - | - | - | -9.4 | - | -9.4 |
| Recognised directly to equity | - | - | - | - | - | -14.8 | -14.8 |
| Acquisition and disposal of subsidiaries | 148.2 | -7.7 | 4.3 | -0.2 | -0.4 | -2.0 | 142.2 |
| Previously, not recognised deferred tax assets | -0.1 | 2.1 | -8.8 | -6.9 | |||
| 31.12.2014 | 3 604.0 | -337.2 | 9.5 | 158.5 | -36.1 | -414.3 | 2 984.4 |
1) The Group has applied the main rule for recognition of deferred tax in connection with the purchase of shares in property companies that are not acquired through a business combination. This means that deferred tax is recognised as the difference between the tax value and consolidated accounting value of investment properties. Deferred tax linked to the retrospective accumulated change in the value of investment properties at 31 December 2014 is NOK 2,615.5 million (NOK 1,874.8 million).
All amounts in NOK million
| 2014 | 2013 | 01.01.2013 | |
|---|---|---|---|
| Prepayments from customers | 101.3 | 95.0 | 95.0 |
| Provisions for non-current liabilities | 27.6 | 5.1 | 7.6 |
| Total other liabilities | 129.0 | 100.1 | 102.6 |
| 2014 | 2013 | |
|---|---|---|
| Movements in provisions | ||
| Opening balance at 01.01. | 5.1 | 1.6 |
| Additional provisions during the year | 36.0 | 3.5 |
| Provisions used during the year | -13.5 | - |
| Unused provisions reversed during the year | - | - |
| Closing balance at 31.12. | 27.6 | 5.1 |
As at 31.12.2014 and 31.12.2013 Entra had no provision for leased properties.
Hinna Park AS has signed an agreement with Stavanger municipality to acquire and develop municipal development areas in the southern part of Jåttåvågen. The Group has recognised a liability of NOK 24.0 at 31 December 2014, which represents the Group's best estimate of the remaining infrastructure obligation to Stavanger municipality.
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Trade payables | 323.7 | 290.0 |
| Holiday pay owed | 15.0 | 13.5 |
| Unpaid government taxes and duties | 15.0 | 12.7 |
| Shared costs for buildings, owed to tenants | 24.2 | 27.3 |
| Interest accrued | 106.5 | 109.3 |
| Other liabilities | 36.3 | 5.0 |
| Total trade payables and other liabilities | 520.7 | 457.9 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Movements in provisions | ||
| Opening balance at 01.01. | 27.8 | 25.2 |
| Additional provisions during the year | 20.5 | 27.0 |
| Provisions used during the year | -29.8 | -23.4 |
| Unused provisions reversed during the year | 0.0 | -1.1 |
| Closing balance at 31.12. | 18.4 | 27.8 |
Provisions mainly consist of provisions for salaries and fees.
The Group comprise of the following legal entities at 31 December 2014
| Langkaia 1 AS | Papirbredden Eiendom AS 2) | Schweigaardsgate 15 AS |
|---|---|---|
| Kjørboparken AS | Schweigaardsgate 16 AS | Vestre Strandgate 21 AS |
| Brattørkaia AS | Vahlsgate 1-3 KS | Lømslands vei 6 AS |
| Ribekk AS | Vahlsgate 1-3 AS | Lømslands vei 23 AS |
| Bispen AS | Vahlsgate 1-3 ANS | Kvartal 71 AS |
| Pilestredet 28 AS | Hinna Park Eiendom AS 1) | Moloveien 10 AS |
| Hagegata 22 og 24 AS | Tollbugata 1A AS | Tollbugata 2 AS |
| Hagegata 23 AS |
| Papirbredden Eiendom AS** | Brattørkaia AS | Ribekk AS |
|---|---|---|
| Grønland 51 AS | Brattørkaia 14 AS | Ringstabekk AS |
| Grønland 56 AS | Brattørkaia 15AB-16 AS | |
| Grønland 58 AS | Brattørkaia 17A AS | |
| Grønland 60 AS | Brattørkaia 17B AS | |
| Kreftingsgate 33 AS | Brattørkaia Energi AS | |
1) Entra Eiendom AS owns 50 per cent of the shares in Hinna Park Eiendom AS (taken over as at 1 February 2014). The remaining 50 per cent is owned by Camar Eiendom AS.
2) Papirbredden Eiendom AS is owned by Entra Eiendom AS with voting and owner shares of 60% and Drammen Municipality with 40%.
The Group's transactions and balances with associates and jointly controlled entities in 2014 mainly related to administrative fees, loans, interest payments on loans and dividend. The aggregate figures are shown in the table below.
| 2014 | 2013 | |
|---|---|---|
| Other operating revenue | ||
| Jointly controlled entities | 9.0 | |
| Associates | - | - |
| Total operating revenue | 9.0 | 0.0 |
| Dividend | ||
| Jointly controlled entities | 79.8 | - |
| Associates | - | 0.1 |
| Total dividend | 79.8 | 0.1 |
| Interest and other finance income | ||
| Jointly controlled entities | - | - |
| Associates | 0.2 | 0.1 |
| Total interest and other finance income | 0.2 | 0.1 |
| Receivables | ||
| Jointly controlled entities | 1.6 | - |
| Associates | - | - |
| Total receivables | 1.6 | 0.0 |
| Loans | ||
| Jointly controlled entities | 62.4 | - |
| Associates | - | - |
| Total loans | 62.4 | 0.0 |
Entra is currently involved in legal or arbitration proceedings or disputes with Norwegian Datasenter Group AS, Greenfield Property AS, Evry ASA/Evry AS, Skanska Norge AS and Caverion Norge AS.
The legal and arbitration proceedings between Entra and each of Norwegian Datasenter Group AS, Greenfield Property AS and Evry ASA/ Evry AS relate to the development of a data centre through Greenfield Property AS. Norwegian Datasenter Group AS and Greenfield Property AS have filed a claim against the Group for compensation in the range of NOK 500 million related to alleged material breach of the shareholders' agreement between Entra Eiendom AS, Norwegian Datasenter Group AS and Greenfield Property AS. The hearing of the dispute took place in Oslo District Court in January 2015 and Entra prevailed on all counts. The judgment is not yet enforceable.
Evry ASA/Evry AS, the prospective tenant for the data centre, has filed a claim against the Group for alleged damages suffered by Evry ASA/ Evry AS as a result of the termination of the agreement between Greenfield Property AS and Evry ASA/Evry AS. The claim from Evry ASA/Evry AS is an action for declaration only, meaning that the amount of any liability will be determined in a subsequent proceeding. The hearing of the dispute took place in Oslo District Court in February 2015 and the judgment is expected end of March 2015.
The legal proceeding with Skanska Norge AS relates to a claim by the Group for compensation from Skanska Norge AS in the amount of approximately NOK 39.5 million relating to construction defects at Nonnesetergaten 4 in Bergen.
The arbitration proceeding with the contractor Caverion Norge AS relates to the renovation of Fredrik Selmers vei 4, and involves several claims by Caverion Norge AS against Entra relating to additional work and delay and disruption of Caverion Norge AS' work at Fredrik Selmers vei 4 totalling approximately NOK 91 million and a counterclaim by Entra against Caverion Norge AS of approximately NOK 11 million.
Entra cannot predict with certainty the outcome or effect of any claim or other legal or arbitration proceedings. The ultimate outcome of any legal or arbitration proceeding and the potential costs associated with prosecuting or defending such legal or arbitration proceedings, including the diversion of the management's attention to these matters, could have a material and adverse effect on the Group's business, financial condition, results of operations and cash flows.
Entra has not made any provision for the claims as the Group considers it not probable that an outflow of resources embodying economic benefits will be required to settle the obligation.
All amounts in NOK thousand
| 2014 | 2013 | |
|---|---|---|
| Statutory audit | 2 379 | 1 868 |
| Tax advice | 1 638 | 24 |
| Other services not related to auditing | 825 | 250 |
| Other assurance services | 2 458 | 614 |
| Total auditor's fee (excl. VAT) | 7 299 | 2 756 |
Other assurance services have been impacted by services provided by the auditor in connection with the IPO process for the Group and certifications related to the process of re-organising properties into single purpose entities.
Basic earnings per share is calcuated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares outstanding during the year.
Entra has not issued options or other financial instruments which have a dilutive effect on outstanding shares.
| 2014 | 2013 | |
|---|---|---|
| Total comprehensive income for the year attributable to equity holders of the Company (NOK million) | 1 001.2 | 446.2 |
| Average number of outstanding shares (Note 24) | 46 039 065 | 142 194 |
| Basic earnings per share (NOK) | 21.7 | 3 137.7 |
Entra target a dividend pay-out ratio of approximately 60 per cent of cash earnings (defined as net income from property management less net realised financials and payable tax).
In 2014, for the fiscal year 2013, Entra paid out a dividend of NOK 250 millions (NOK 1.8 per share). On 26 September 2014, the General Meeting resolved to distribute an extraordinary dividend of NOK 650 million to the Selling Shareholder, subject to completion of the Listing.
In 2015, for the fiscal year 2014, the board of Entra ASA will suggest for the general meeting a dividend of NOK 2.50 per share (NOK 459.3 million).
No provision is made for dividends in the consolidated accounts until the Annual General Meeting has been held and the dividend has been decided.
| Statement of income | 99 |
|---|---|
| Balance sheet - assets | 100 |
| Balance sheet - equity and liabilities | 101 |
| Statement of cash flows | 102 |
| Notes | 104 |
All amounts in NOK million
| Note | 2014 | 2013 |
|---|---|---|
| 3, 10 | 17.5 | 0.2 |
| 17.5 | 0.2 | |
| -17.5 | -0.2 | |
| 5 | 500.0 | 250.0 |
| 4, 5 | 0.8 | 0.0 |
| 500.8 | 250.0 | |
| 483.3 | 249.8 | |
| 9 | -4.5 | -0.1 |
| 487.8 | 250.0 | |
All amounts in NOK million
| Note | 31.12.2014 | 31.12.2013 | |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Deferred tax assets | 9 | 19.4 | 0.1 |
| Total intangible assets | 19.4 | 0.1 | |
| Investment in subsidiary | 5 | 3 679.6 | 1 729.6 |
| Loan to Group companies | 6 | 35.9 | - |
| Total non-current financial assets | 3 715.5 | 1 729.6 | |
| Total non-current assets | 3 734.9 | 1 729.7 | |
| CURRENT ASSETS | |||
| Receivables on Group companies | 6 | 500.0 | 250.0 |
| Other receivables | 0.1 | - | |
| Total current receivables | 500.1 | 250.0 | |
| Total current assets | 500.1 | 250.0 | |
| TOTAL ASSETS | 4 234.9 | 1 979.7 |
| Note | 31.12.2014 | 31.12.2013 | |
|---|---|---|---|
| EQUITY | |||
| Share capital | 183.7 | 142.2 | |
| Share premium reserve | 2 618.6 | - | |
| Other paid-in capital | 937.1 | 1 587.1 | |
| Total Paid-in capital | 3 739.4 | 1 729.3 | |
| Retained earnings | 28.4 | - | |
| Total equity | 7 | 3 767.8 | 1 729.3 |
| CURRENT LIABILITIES | |||
| Trade payables and other payables | 6 | 5.4 | - |
| Liabilities to Group companies | 6 | 2.3 | 0.4 |
| Proposed dividend | 459.3 | 250.0 | |
| Total current liabilities | 467.1 | 250.4 | |
| Total liabilities | 467.1 | 250.4 | |
| TOTAL EQUITY AND LIABILITIES | 4 234.9 | 1 979.7 |
Oslo, 25 March 2015 The Board of Directors of Entra ASA
Siri Hatlen
Chair of the Board
Arthur Sletteberg
Board member
Birthe Smedsrud Skeid Board member
Martin Mæland Deputy Chair
Kjell Bjordal Board member
Ingrid Tjøsvold
Board member
Frode Halvorsen Board member
Arve Regland Acting CEO
All amounts in NOK million
| Note | 2014 | 2013 | |
|---|---|---|---|
| Profit before tax | 483.3 | 249.8 | |
| Income from investment in subsidiary | -500.0 | -250.0 | |
| Change in working capital | 5.3 | - | |
| Net cash flow from operating activities | -11.4 | -0.2 | |
| Proceeds from subsidiary | 250.0 | 416.6 | |
| Investment in subsidiary | -1 950.0 | - | |
| Net cash flow from investing activities | -1 700.0 | 416.6 | |
| Net change in overdraft facility | -34.0 | 0.2 | |
| Proceeds from issue of shares | 2 645.4 | - | |
| Dividends paid | 7 | -900.0 | -416.6 |
| Net cash flow from financing activities | 1 711.5 | -416.4 | |
| Net change in cash and cash equivalents | - | - | |
| Cash and cash equivalents at beginning of period | - | - | |
| Cash and cash equivalents at end of period | - | - |
| NOTE 1 General information | 104 |
|---|---|
| NOTE 2 Accounting principles | 104 |
| NOTE 3 Administrative owner costs | 105 |
| NOTE 4 Financial items | 105 |
| NOTE 5 Subsidiary | 105 |
| NOTE 6 Intra-group items and related party transactions | 106 |
| NOTE 7 Equity | 106 |
| NOTE 8 Share capital and shareholder information | 107 |
| NOTE 9 Tax | 108 |
| NOTE 10 Salary costs, total employees and remuneration | 109 |
Entra ASA ("the company") was listed on the Oslo Stock Exchange on 17 October 2014. The largest shareholder with 49.9 % of the shares is the Ministry of Trade, Industry and Fisheries. The company's head office is located at Biskop Gunnerusgate 14, Oslo, Norway.
Entra ASA and its subsidiaries are engaged in the development, letting, management, operation, purchase and sale of real estate in Norway. Entra is one of Norway's largest property Group, with a total property portfolio of 1,292,107 square metres and 1,063,327 square metres under management. The management portfolio's economic occupancy level was 94.6 per cent at the year-end. Entra's head office is situated in Oslo. Regional offices are located in Oslo, Bergen and Trondheim.
The financial statements were adopted by the company's Board on 25 March 2015.
The most important accounting principles applied in the preparation of the annual financial statements are described below. These principles are applied in the same way for all periods presented, unless otherwise indicated in the description.
The annual financial statements have been prepared in accordance with Norwegian Accounting Act of 1998 and good accounting practice (NGAAP).
The annual financial statements have been prepared on the basis of the historical cost principle.
Presenting the accounts in accordance with NGAAP requires the management to make certain assessments and assumptions. The application of the company's accounting principles also requires management to exercise judgement. Estimates and subjective judgements are based on past experience and other factors that are considered appropriate. Actual results may deviate from these estimates.
Estimates and underlying assumptions are continuously reassessed. Changes in accounting estimates are recognised in the period in which the changes occur if they apply only to that period. If the changes also apply to future periods, the impact is distributed over the current and future periods.
The annual financial statements have been presented on the assumption of the business being a going concern.
Assets intended for long-term ownership or use are classified as
non-current assets. Other assets are classified as current assets. Receivables that are repayable within a year are classified as current assets. When classifying current and non-current liabilities, equivalent criteria have been applied.
Current assets are valued at the lower of the acquisition cost and fair value.
Investments in subsidiaries are included in the company accounts using the cost method. Investments are written down to their fair value if the reduction in value is other than temporary and the write-down appears to be necessary in accordance with generally accepted accounting principles.
Dividend and group contributions from subsidiaries are recognised as income from the investment in the subsidiary in the year that the allocation is made by the subsidiary. Dividends and group contributions from subsidiaries that exceed the retained earnings over the period of ownership are considered repayments of the acquisition cost.
Trade receivables and other receivables are reported at nominal value after deduction of loss provisions. Loss provisions are made on the basis of an individual assessment of each receivables.
The company has a overdraft facility in a Group account system.
Costs are normally reported in the same period as the related income. Where there is no clear link between expenditure income, allocation is determined on the basis of assessment criteria.
The tax expense consists of tax payable and deferred tax. Tax is charged to the income statement, except where it relates to items that are recognised directly in equity. In such cases, the tax is recognised directly in equity.
Deferred tax is calculated using the liability method for all temporary differences between the tax values and accounting values of assets and liabilities. Deferred tax is defined using tax rates and laws which are enacted or likely to be enacted on the balance sheet date, and which are expected to be used when the deferred tax asset is realised or when the deferred tax is utilised.
A deferred tax asset is recognised to the extent that it is likely that future taxable profit will be available against which the temporary differences can be offset.
In principle, deferred tax is not calculated on temporary differences arising from investments in subsidiaries. This does not apply in cases where the company is not in control of when the temporary differences will be reversed, and it is probable that they will be reversed in the foreseeable future.
The statement of cash flows is prepared using the indirect method. This means that the statement is based on the company's profit before tax in order to present cash flows from operating, investing and financing activities respectively. Dividends paid to shareholders are presented under financing activities.
Entra ASA is the parent company of a Group of companies. The consolidated financial statements can be obtained from Entra ASA, Postboks 52, Økern NO-0508 Oslo.
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Office expenses, furnishings and equipment | 0.6 | - |
| Consultancy fees | 11.9 | 0.2 |
| Other administrative owner costs | 5.0 | 0.0 |
| Total administrative owner costs | 17.5 | 0.2 |
All amounts in NOK million
| 2014 | 2013 | |
|---|---|---|
| Income from investment in subsidiary | 500.0 | 250.0 |
| Interest income from group companies | 0.8 | 0.0 |
| Net financial items | 500.8 | 250.0 |
| Subsidiary | Acquisition date |
Business office |
Shareholding and voting rights |
|---|---|---|---|
| Entra Eiendom AS | 20.12.2012 | Oslo | 100 % |
All amounts in NOK million
| 2014 | 2013 |
|---|---|
| Receivables | |
| Loan to subsidiary 35.9 |
- |
| Proposed dividend from subsidiary 500.0 |
250.0 |
| Total 535.9 |
250.0 |
| Liabilities | |
| Payables to Group companies 1.6 |
0.4 |
| Current liabilites to Group companies 2.3 |
- |
| Total 3.9 |
0.4 |
| Administrative owner costs | |
| Management fee to subsidiary 1.6 |
- |
| Total 1.6 |
- |
| Financial items | |
| Income from investment in subsidiary 500.0 |
250.0 |
| Interest income from Group companies 0.8 |
0.0 |
| Total 500.8 |
250.0 |
| Share capital |
Share premium reserve |
Other paid-in capital |
Retained earnings |
Total equity |
|
|---|---|---|---|---|---|
| Equity at 31.12.2012 | 142.2 | 2 003.7 | 0.0 | 0.0 | 2 145.9 |
| Capital decrease to other paid in equity | -2 003.7 | 2 003.7 | - | ||
| Repayment to shareholder | -416.6 | -416.6 | |||
| Profit for the year | 250.0 | 250.0 | |||
| Dividend | -250.0 | -250.0 | |||
| Equity at 31.12.2013 | 142.2 | - | 1 587.1 | - | 1 729.3 |
| Capital increase | 41.5 | 2 658.5 | 2 700.0 | ||
| Share issue costs net of tax | -39.9 | -39.9 | |||
| Dividend | -650.0 | -459.3 | -1 109.4 | ||
| Profit for the year | 487.8 | 487.8 | |||
| Equity at 31.12.2014 | 183.7 | 2 618.6 | 937.1 | 28.4 | 3 767.8 |
On 17th October, Entra ASA was listed on the Oslo Stock Exchange. In connection with the listing the Norwegian Government (Ministry of Trade, Industry and Fisheries (MTIF)) sold 50,525,611 of its shares in a public offering of new and existing shares in Entra. In addition, Entra issued 41,538,461 new shares in connection with the transaction raising gross proceeds of approximately NOK 2.7 billion. The share price of the issued shares was NOK 65 per share. As of 31 December 2014 there are a total of 183,732,461 shares outstanding in the company. The MTIF's shareholding post the offering is 91,668,389 shares corresponding to 49.9 % of the outstanding share capital.
The table below sets out the change in share capital in connection with the listing of Entra ASA on the Oslo Stock Exchange, the average number of shares in the last two years, the largest shareholders at year end, and shares owed by directors at 31 December 2014.
| No. of shares | Share capital (NOKm) |
Share premium (NOKm) |
Face value (NOK) |
|
|---|---|---|---|---|
| Balance at 01.01.2013 | 142 194 | 142.2 | 2 003.7 | 1 000 |
| Capital decrease to other paid in equity | - | - | -2 003.7 | 1 000 |
| Beginning of year 01.01.2014 | 142 194 | 142.2 | 1 000 | |
| Share split (1:1,000) | 142 194 000 | 142.2 | 1 | |
| Issue of shares | 41 538 461 | 41.5 | 2 658.5 | 1 |
| IPO costs | - | -39.9 | 1 | |
| End of year 31.12.2014 | 183 732 461 | 183.7 | 2 618.6 | 1 |
Paid-in capital amounts to NOK 3,739.4 million (NOK 1,729.3 million) and consists of NOK 183.7 million (NOK 142.2 million) in share capital and NOK 3,555.7 million (NOK 1,587.1 million) in other paid-in capital. In 2013 the share premium reserve was reduced by NOK 2,003.7 million, of which NOK 416.6 million was paid out to the shareholder.
Entra ASA has one class of shares and each of the shares carries one vote. All shares provide equal right including the right to any dividend.
The 20 largest shareholders as registered in the VPS as of 31 December 2014 were as follows:
| Shareholder | No of shares | per 31.12.2014 Shareholding % | Account type |
Country |
|---|---|---|---|---|
| Norwegian Government (Ministry of Trade, Industry and Fisheries ) | 91 668 389 | 49.9 | Norway | |
| Geveran Trading Co Ltd | 18 400 000 | 10.0 | Cyprus | |
| Folketrygdfondet | 8 375 000 | 4.6 | Norway | |
| JPMorgan Chase Bank N.A. London | 4 556 194 | 2.5 | NOM | UK |
| JPMorgan Clearing Corp. | 4 356 045 | 2.4 | NOM | US |
| BNP Paribas Sec. Services S.C.A | 2 736 133 | 1.5 | NOM | France |
| JPMorgan Chase Bank N.A. London | 2 568 221 | 1.4 | NOM | UK |
| Citibank, N.A. | 2 376 427 | 1.3 | NOM | UK |
| Varma Mutual Pension Insurance | 2 162 000 | 1.2 | UK | |
| Danske Invest Norske Instit. II. | 2 129 748 | 1.2 | Norway | |
| State Street Bank & Trust Company | 2 041 612 | 1.1 | NOM | US |
| The Bank of New York Mellon SA/NV | 1 986 659 | 1.1 | NOM | Belgium |
| State Street Bank & Trust Company | 1 776 703 | 1.0 | NOM | US |
| Goldman Sachs & Co Equity Segregat | 1 462 083 | 0.8 | NOM | US |
| State Street Bank and Trust Co | 1 297 632 | 0.7 | NOM | US |
| Danske Invest Norske Aksjer Inst | 1 165 567 | 0.6 | Norway | |
| MP Pensjon PK | 1 000 000 | 0.5 | Norway | |
| Fondsfinans Spar | 800 000 | 0.4 | Norway | |
| The Northern Trust Co. | 785 919 | 0.4 | NOM | UK |
| KLP Aksje Norge Indeks VPF | 756 474 | 0.4 | Norway | |
| Total 20 largest shareholders | 152 400 806 | 82.9 | ||
| Total | 183 732 461 | 100.0 |
| Shareholder | Position | Number of shares |
|---|---|---|
| Board of directors | ||
| Siri Hatlen | Chair | 1 091 |
| Martin Mæland | Deputy Chair | 2 183 |
| Ingrid Tjøsvold | Board member | 437 |
| Kjell Bjordal | Board member | 14 551 |
| Arthur Sletteberg | Board member | 727 |
| Birthe Smedsrud Skeid | Employee representative | 2 307 |
| Frode Halvorsen | Employee representative | 230 |
| Senior executives | ||
| Klaus-Anders Nysteen | Chief Executive Officer | 9 230 |
| Arve Regland | Chief Financial Officer | 9 230 |
| Hallgeir Østrem | EVP Legal | 3 846 |
| Hege Njå Bjørkmann | EVP Communication | 2 307 |
| Sonja Horn | EVP Central Oslo | 3 846 |
| Mona Aarebrot | EVP Greater Oslo | 4 615 |
| Jorunn Nerheim | EVP South/West Norway | 1 538 |
| Karl Fredrik Torp | EVP Mid/North Norway | 2 153 |
| Anders Solaas | EVP Sales and Markets | 461 |
| Kristin Haug Lund | EVP Development and Technology | 4 615 |
| Shares held by board of directors and senior executives | 63 367 |
| 2014 | 2013 | |
|---|---|---|
| Tax expense | ||
| Change in deferred tax recognised in profit and loss | -4.5 | -0.1 |
| Total tax expense | -4.5 | -0.1 |
| Income tax payable is calculated as follows | ||
| Profit before tax | 483.3 | 249.8 |
| Share issue costs | -54.6 | -0.3 |
| Dividend received | -500.0 | -250.0 |
| Change in temporary differences | 71.4 | 0.4 |
| Profit for tax purposes | - | - |
| 31.12.2014 | -19.4 |
|---|---|
| Recognised in equity | -14.7 |
| Recognised in profit and loss | -4.5 |
| 31.12.2013 | -0.1 |
| Recognised in profit and loss | -0.1 |
| 01.01.2013 | 0.0 |
| Loss carried forward |
The tax on profit before tax differ from the theoretical amount that would arise using the weighted average tax rate applicable to profits as follows:
| 2014 | % | 2013 | % | |
|---|---|---|---|---|
| Profit for accounting purposes multiplied with tax rate | 130.5 | 27.0 % | 70.0 | 28.0 % |
| Tax on income from investment in subsidiary | -135.0 | -27.9 % | -70.0 | -28.0 % |
| Reversal of write-down of deferred tax asset | - | 0.0 % | -0.1 | 0.0 % |
| Calculated tax expense | -4.5 | -0.9 % | -0.1 | 0.0 % |
From the income year 2014 the tax rate on normal income is reduced to 27 %. Deferred tax as at 31 December 2013 was measured using the new rate.
The company has no employees. No remuneration has been paid to the board.
See note 15 "Statement on the determination of salaries and other remuneration of senior executives" to the consolidated financial statements for the Entra Group for information and details related to remuneration for senior executives and the Board of Director's.
| 2014 | 2013 | |
|---|---|---|
| Remuneration to auditor | ||
| Statutory audit (excluding VAT) | 0.2 | 0.1 |
| Other assurance services (excluding VAT) | 1.1 | 0.1 |
Oslo, 25 March 2015 The Board of Directors of Entra ASA
Siri Hatlen
Chair of the Board
Arthur Sletteberg Board member
Birthe Smedsrud Skeid Board member
Martin Mæland
Deputy Chair
Kjell Bjordal Board member
Ingrid Tjøsvold
Board member
Frode Halvorsen Board member
Arve Regland Acting CEO
Deloitte AS Dronning Eufemias gate 14 Postboks 221 Sentrum NO-0103 Oslo Norway
Tlf: +47 23 27 90 00 Faks: +47 23 27 90 01 www.deloitte.no
To the Annual Shareholders' Meeting of Entra ASA
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying financial statements of Entra ASA, which comprise the financial statements of the parent company and the financial statements of the group. The financial statements of the parent company comprise the balance sheet as at December 31, 2014, the statement of income and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements of the group comprise the balance sheet as at December 31, 2014, and the statement of total comprehensive income, consolidated statement of changes in equity and consolitated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
The Board of Directors and the Managing Director's Responsibility for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these financial statements in accordance with the Norwegian accounting act and accounting standards and practices generally accepted in Norway for the company accounts and in accordance with International Financial Reporting Standards as adopted by EU for the group accounts, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/no/omoss for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Registrert i Foretaksregisteret Medlemmer av Den norske Revisorforening Organisasjonsnummer: 980 211 282
Page 2 Independent Auditor's Report to the Annual Shareholders' Meeting of Entra ASA
In our opinion, the financial statements of the parent company are prepared in accordance with the law and regulations and give a true and fair view of the financial position of Entra ASA as at December 31, 2014, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian accounting act and accounting standards and practices generally accepted in Norway.
In our opinion, the financial statements of the group are prepared in accordance with the law and regulations and give a true and fair view of the financial position of the group Entra ASA as at December 31, 2014, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by EU.
Opinion on the Board of Directors' report and the statements on Corporate Governance and Corporate Social Responsibility
Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report concerning the financial statements and in the statements on Corporate Governance and Corporate Social Responsibility, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.
Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, «Assurance Engagements Other than Audits or Reviews of Historical Financial Information», it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.
Oslo, 25 March 2015 Deloitte AS
Eivind Skaug
State Authorised Public Accountant (Norway)
The following table sets forth the management properties per region as of 31 December 2014.
| Property name | City | Region | Type of asset |
Occupancy (%) |
Total area (sqm) |
Freehold/ leasehold |
|---|---|---|---|---|---|---|
| Biskop Gunnerus' gate 14 | Oslo | Central Oslo | Office | 84.6 | 50 575 | Freehold |
| Langkaia 1A | Oslo | Central Oslo | Office | 99.3 | 30 931 | Leasehold |
| Cort Adelers gate 30 - Office building | Oslo | Central Oslo | Office | 97.0 | 12 553 | Freehold |
| Cort Adelers gate 30 - Schoolbuilding | Oslo | Central Oslo | Education | 100.0 | 3 546 | Freehold |
| Wergelandsveien 29 | Oslo | Central Oslo | Office | 100.0 | 3 374 | Freehold |
| Tordenskioldsgate 12 | Oslo | Central Oslo | Office | 99.0 | 12 920 | Freehold |
| Middelthuns gate 29 | Oslo | Central Oslo | Office | 100.0 | 21 606 | Freehold |
| Pilestredet 19-21 | Oslo | Central Oslo | Office | 99.7 | 7 067 | Freehold |
| Universitetsgaten 2 | Oslo | Central Oslo | Office | 97.3 | 27 297 | Freehold |
| Munchs gate 4 / Keysers gate 13 | Oslo | Central Oslo | Office | 100.0 | 10 839 | Freehold |
| Keysersgate 15 | Oslo | Central Oslo | Office | 97.1 | 2 779 | Freehold |
| Henriks Ibsens gate 110 | Oslo | Central Oslo | Culture | 100.0 | 18 723 | Freehold |
| Observatoriegaten 1 | Oslo | Central Oslo | Office | 100.0 | 7 110 | Freehold |
| Observatoriegaten 1 - Magasinet | Oslo | Central Oslo | Culture | 100.0 | 10 600 | Freehold |
| Fritzners gate 12 | Oslo | Central Oslo | Office | 100.0 | 820 | Freehold |
| Kristian Augusts gate 15 | Oslo | Central Oslo | Office | 82.0 | 6 231 | Freehold |
| Kristian Augusts gate 23 | Oslo | Central Oslo | Office | 100.0 | 8 736 | Freehold |
| Kristian Augusts gate 21 | Oslo | Central Oslo | Education | 0.0 | 3 514 | Freehold |
| Hagegata 22 | Oslo | Central Oslo | Office | 69.1 | 11 886 | Freehold |
| Schweigaardsgate 15 | Oslo | Central Oslo | Office | 100.0 | 22 797 | Freehold |
| Tollbugata 1A | Oslo | Central Oslo | Office | 100.0 | 8 526 | Freehold |
| Biskop Gunnerus' gate 6 | Oslo | Central Oslo | Office | 100.0 | 9 300 | Leasehold |
| Akersgaten 32 | Oslo | Central Oslo | Office | 77.0 | 2 109 | Freehold |
| Akersgaten 51 / Apotekergaten 6 | Oslo | Central Oslo | Office | 96.6 | 17 849 | Freehold |
| Schweigaards gate 15B | Oslo | Central Oslo | Office | 99.8 | 14 492 | Freehold |
| Pilestredet 28 | Oslo | Central Oslo | Office | 100.0 | 3 590 | Freehold |
| Hagegata 24 | Oslo | Central Oslo | Office | 73.7 | 1 054 | Freehold |
| Hagegata 23 | Oslo | Central Oslo | Office | 77.3 | 10 676 | Freehold |
| Universitetsgaten 7 | Oslo | Central Oslo | Office | 79.5 | 12 957 | Freehold |
| Kristian Augustsgate 19 | Oslo | Central Oslo | Office | 47.1 | 7 169 | Freehold |
| Wexels plass | Oslo | Central Oslo | Other | 100.0 | 1 035 | Freehold |
| Vahls gate 1-3 | Oslo | Central Oslo | Office | 100.0 | 14 857 | Freehold |
| Lilletorget 1 | Oslo | Central Oslo | Office | 84.9 | 14 867 | Freehold |
| Property name | City | Region | Type of asset |
Occupancy (%) |
Total area (sqm) |
Freehold/ leasehold |
|---|---|---|---|---|---|---|
| Otto Sverdrups plass 4 | Sandvika | Oslo | Education | 93.0 | 16 038 | Freehold |
| Malmskriverveien 2 | Sandvika | Oslo | Office | 100.0 | 2 957 | Freehold |
| Malmskriverveien 4 | Sandvika | Oslo | Office | 99.9 | 5 675 | Freehold |
| Brochs gate 3 | Fredrikstad | Oslo | Office | 99.2 | 4 130 | Freehold |
| Konggata 51 | Drammen | Oslo | Education | 100.0 | 3 576 | Freehold |
| Vogts gate 17 | Moss | Oslo | Office | 98.3 | 9 582 | Freehold |
| Gunnar Nilsens gate 25 | Fredrikstad | Oslo | Office | 100.0 | 4 370 | Freehold |
| Hans Kiærs gate 1 B og C | Drammen | Oslo | Office | 54.0 | 2 225 | Freehold |
| Kunnskapsveien 55 | Lillestrøm | Oslo | Education | 100.0 | 27 135 | Freehold |
| Prins Chr. Augusts plass 3 | Moss | Oslo | Office | 100.0 | 5 041 | Freehold |
| Borkenveien 1-3 | Sandvika | Oslo | Education | 100.0 | 6 668 | Freehold |
| Jonas Lies gate 20-28 | Lillestrøm | Oslo | Office | 100.0 | 12 660 | Leasehold |
| Grenseveien 92 | Oslo | Oslo | Office | 68.8 | 14 698 | Freehold |
| Strømsveien 96 | Oslo | Oslo | Office | 96.4 | 18 162 | Freehold |
| Aasta Hansteens vei 10 | Oslo | Oslo | Office | 100.0 | 5 913 | Leasehold |
| Brynsengfaret 4 og 6 AB+F | Oslo | Oslo | Office | 99.8 | 35 505 | Freehold |
| Tvetenveien 22 | Oslo | Oslo | Office | 100.0 | 4 126 | Leasehold |
| Malmskriverveien 18-20 | Sandvika | Oslo | Office | 100.0 | 9 163 | Freehold |
| Fredrik Selmers vei 4 | Oslo | Oslo | Office | 100.0 | 30 544 | Freehold |
| Grønland 32 | Drammen | Oslo | Office | 100.0 | 7 353 | Leasehold |
| Grønland 58 | Drammen | Oslo | Education | 100.0 | 21 281 | Freehold |
| Kjørboveien 12-26 | Sandvika | Oslo | Office | 99.9 | 22 424 | Freehold |
| Grønland 60, Union Scene | Drammen | Oslo | Culture | 99.6 | 8 854 | Freehold |
| Brynsengfaret 6 C og D "leilighetene" | Oslo | Oslo | Residential | 100.0 | 349 | Freehold |
| Kjørboveien 3, Parkeringshus | Sandvika | Oslo | Other | 81.8 | 16 353 | Freehold |
| Kjørboveien 1 Gjesteparkering | Sandvika | Oslo | Other | 100.0 | - | Freehold |
| Kjørboveien 15, 30-33, Politi og Låve | Sandvika | Oslo | Office | 99.4 | 14 670 | Freehold |
| Kjørboveien 10, Tomt | Sandvika | Oslo | Other | - | Freehold | |
| Kjørbo gård | Sandvika | Oslo | Office | 0.0 | 1 399 | Freehold |
| Kjørboveien, friluftstomt | Sandvika | Oslo | Other | 10.0 | - | Freehold |
| Kreftingsgate 33 | Drammen | Oslo | Office | 100.0 | 2 540 | Freehold |
| Karoline Kristiansens vei 2 | Oslo | Oslo | Office | 94.5 | 450 | Freehold |
| Grønland 56 | Drammen | Oslo | Office | 100.0 | 504 | Freehold |
| Grønland 51 | Drammen | Oslo | Office | 99.6 | 15 424 | Freehold |
| Ringstabekkveien 105 | Sandvika | Oslo | Office | 76.9 | 5 375 | Freehold |
| Property name | Ownership (%) |
City | Type of asset |
Occupancy (%) |
Total area (sqm) |
Freehold/ leasehold |
|---|---|---|---|---|---|---|
| Kongsgård Allé 20 | 100 | Kristiansand | Education | 100.0 | 14 141 | Freehold |
| Kirkegaten 2B | 100 | Arendal | Office | 94.4 | 5 807 | Freehold |
| Kalfarveien 31 | 100 | Bergen | Office | 99.9 | 8 441 | Freehold |
| Nytorget 1 | 100 | Stavanger | Office | 100.0 | 5 205 | Freehold |
| Prof. Olav Hanssens vei 10 | 100 | Stavanger | Office | 84.0 | 36 946 | Freehold |
| Tordenskioldsg 65 | 100 | Kristiansand | Office | 89.6 | 24 587 | Freehold |
| Vestre Strandgate 21 | 100 | Kristiansand | Office | 100.0 | 2 014 | Freehold |
| Skansegaten 2 | 100 | Stavanger | Office | 81.9 | 2 891 | Freehold |
| Tollbuallmenningen 2A | 100 | Bergen | Office | 100.0 | 1 823 | Freehold |
| Strømgaten 1 / Marken 37 | 100 | Bergen | Education | 100.0 | 6 366 | Freehold |
| Kaigaten 9 | 100 | Bergen | Office | 100.0 | 9 991 | Freehold |
| Lervigsveien 32 / Tinngata 8 | 100 | Stavanger | Office | 100.0 | 6 398 | Freehold |
| Valkendorfsgaten 6 | 100 | Bergen | Office | 96.6 | 13 257 | Freehold |
| Lømslands vei 23 | 100 | Kristiansand | Office | 58.3 | 1 432 | Leasehold |
| Lømslands vei 6 | 100 | Kristiansand | Office | 0.0 | 1 445 | Freehold |
| Lømslands vei 24 | 100 | Kristiansand | Office | 100.0 | 172 | Freehold |
| Fjellanlegg | 100 | Kristiansand | Other | 0.0 | 1 120 | Freehold |
| Tordenskjolds gate 67 | 100 | Kristiansand | Office | 72.3 | 656 | Freehold |
| St. Hans gate 1 | 100 | Kristiansand | Office | 100.0 | 469 | Freehold |
| Telemarksgaten 11 / Lundegaten 4 | 100 | Skien | Office | 91.4 | 4 292 | Freehold |
| Skansegaten 2 - Tollpakkhuset | 100 | Stavanger | Office | 100.0 | 1 488 | Freehold |
| Nonnesetergaten 4 | 100 | Bergen | Office | 100.0 | 17 207 | Freehold |
| Laberget 22 | 50 | Stavanger | Office | 99.9 | 13 211 | Freehold |
| Jåttåvågveien 7 | 50 | Stavanger | Office | 97.8 | 5 381 | Freehold |
| Jåttåvågveien 18 | 50 | Stavanger | Office | 99.9 | 9 179 | Freehold |
| Property name | Ownership (%) |
City | Type of asset |
Occupancy (%) |
Total area (sqm) |
Freehold/ leasehold |
|---|---|---|---|---|---|---|
| Tungasletta 2 | 100 | Trondheim | Office | 98.1 | 14 822 | Freehold |
| Kongens gate 87 | 100 | Trondheim | Office | 100.0 | 7 453 | Freehold |
| Kongens gate 87 - Driftssentralen | 100 | Trondheim | Office | 70.8 | 927 | Freehold |
| Kongens gate 85 | 100 | Trondheim | Office | 83.6 | 916 | Freehold |
| Erling Skakkesgate 60 | 100 | Trondheim | Office | 70.5 | 853 | Freehold |
| Grønngata 122 | 100 | Tromsø | Office | 100.0 | 6 664 | Freehold |
| Brattørkaia 13B | 100 | Trondheim | Office | 100.0 | 6 333 | Freehold |
| Tollbugata 2 | 100 | Bodø | Office | 100.0 | 943 | Freehold |
| Dronningens gate 2 | 100 | Trondheim | Office | 100.0 | 5 158 | Freehold |
| Moloveien 10 | 100 | Bodø | Office | 92.7 | 5 531 | Leasehold |
| Brattørkaia 17B | 100 | Trondheim | Office | 97.7 | 19 652 | Leasehold |
| Brattørkaia 15A og B | 100 | Trondheim | Office | 94.4 | 20 031 | Leasehold |
| Strandvegen 13 | 100 | Tromsø | Office | 95.7 | 11 561 | Freehold |
| Erling Skakkes gate 25 | 100 | Trondheim | Office | 99.0 | 3 868 | Freehold |
| Prinsens gate 1 | 100 | Trondheim | Office | 99.4 | 29 994 | Freehold |
| Brattørkaia 14 | 100 | Trondheim | Culture | 100.0 | 7 180 | Leasehold |
The following table sets forth the properties with project property area as of 31 December 2014.
| Property name | City | Type of asset |
Primary classification |
Total management area (sqm) |
Total project area (sqm) |
Freehold/ leasehold |
|---|---|---|---|---|---|---|
| Langkaia 1A | Oslo | Office | Management property | 30 931 | 8 532.0 Leasehold | |
| Akersgaten 34-36 | Oslo | Office | Project property | - | 6 212.0 | Freehold |
| Kjørboveien 12-26 | Sandvika | Office | Management property | 22 424 | 3 388.0 | Freehold |
| Grønland 51 | Drammen | Office | Management property | 15 424 | 11 015.0 | Freehold |
| Ringstabekkveien 105 | Sandvika | Office | Project property | 5 375 | 11 923.0 | Freehold |
| Schweigaardsgt 16 | Oslo | Office | Project property | - | 15 493.5 | Freehold |
| Oseberg | Stavanger | Office | Project property | - | 5 948.7 | Freehold |
| Gullfaks | Stavanger | Office | Project property | - | 24 125.3 | Freehold |
| 74 154.2 | 86 637.5 |
The following table sets forth the properties with land and development area as of 301 December 2014.
| Property name | City | Type of asset |
Primary classfication |
Occupancy (%) |
Total management area (sqm) |
Total project area (sqm) |
Total land and development area (sqm) |
Freehold/ leasehold |
|---|---|---|---|---|---|---|---|---|
| Brattørkaia 16 | Trondheim | Office | Land and devolopment property |
- | - | 8 800.0 Leasehold | ||
| Brattørkaia 17A | Trondheim | Office | Land and devolopment property |
- | - | 13 500.0 Leasehold | ||
| Tordenskioldsg 65 | Kristiansand | Office | Management property | 89.6 | 24 587 | - | 14 000.0 | Freehold |
| Lervigsveien 36 | Stavanger | Office | Land and devolopment property |
- | - | 16 602.0 | Freehold | |
| Jonas Lies gate 20-28 | Lillestrøm | Office | Management property | 100.0 | 12 660 | - | 5 000.0 | Freehold |
| Brynsengfaret 4 og 6 AB+F | Oslo | Office | Management property | 99.8 | 35 505 | - | 13 600.0 | Freehold |
| Fredrik Selmers vei 4 | Oslo | Office | Management property | 100.0 | 30 544 | - | 7 643.0 | Freehold |
| Holtermanssveg 1-13 | Trondheim | Office | Land and devolopment property |
- | - | 34 700.0 | Freehold | |
| Oseberg (tomt) | Stavanger | Office | Land and devolopment property |
- | 5 948.7 | 16 808.0 | Freehold | |
| Ormen Lange (tomt) | Stavanger | Office | Land and devolopment property |
- | - | 11 489.6 | Freehold |
| 12 months rolling rent | The contractual rent of the management properties of the Group for the next 12 months as of a certain date, adjusted for (i) signed new contracts and contracts expiring during such period, (ii) contract based CPI adjustments based on Independent Appraisers' CPI estimates and (iii) the Independent Appraisers' estimates of letting of current and future vacant areas. |
|---|---|
| Contractual rent | Annual cash rental income being received as of relevant date |
| EPRA Earnings | Net income after tax excluding value changes on investment properties, unrealised changes in the market value of financial derivatives and gains/losses on the sale of properties and their associated tax effects. All adjustments are also made for jointly controlled entities. EPRA earnings are intended to give an indication of the underlying development in the property portfolio |
| EPRA NAV | Net asset value adjusted to include market value of all properties in the portfolio and interest-bearing debt, and to exclude certain items not expected to crystallise in a long-term investment property business model such as e.g. financial derivatives and deferred tax on the market value of investment properties. The objective with EPRA NAV is to demonstrate the fair value of net assets given a long-term investment horizon |
| EPRA NNNAV | EPRA NNNAV is EPRA NAV adjusted to reflect the fair value of debt and derivatives and in order to include deferred tax on value changes. The objective with EPRA NNNAV is to report the fair value of net assets in the Group on the basis that these are immediately realised |
| Gross yield | 12 months rolling rent divided by the market value of the management portfolio |
| Independent Appraisers | Akershus Eiendom and DTZ |
| Land and development properties | Property / plots of land with planning permission for development |
| Like-for-like | The percentage change in rental income from one period to another given the same income generating property portfolio in the portfolio. The figure is thus adjusted for purchases and sales of properties and active projects |
| Loan-to-value ("LTV") | Net nominal value of interest-bearing liabilities divided by the market value of the property portfolio and the market value of the jointly controlled entity Entra OPF Utvikling |
| Management properties | Properties that are actively managed by the company |
| Market rent | The annualised market rent of the management properties, fully let as of the relevant date, expressed as the average of market rents estimated by the Independent Appraisers |
| Market value of property portfolio | The market value of all the properties owned by the parent company and subsidiaries, regardless of their classification for accounting purposes. Does not include the market value of properties in associates and jointly controlled entities |
| Net rent | 12 months rolling rent less the Independent Appraisers' estimate of ownership costs of the management properties of the Group |
| Net yield | Net rent divided by the market value of the management properties of the Group |
| Occupancy | Estimated market rent of occupied space of the management properties, divided by the market rent of the total space of the management portfolio. Based on EPRA standard |
| Project properties | Properties where it has been decided to start construction of a new building and/or renovation |
| Interest Coverage Ratio ("ICR") | Net income from property management excluding depreciation and amortisation for the Group including Entra OPF, divided by net interest on interest-bearing nominal debt and fees and commitment fees related to financing activites |
| Total area | Total area including the area of management properties, project properties and land / development properties |
| WAULT | Weighted Average Unexpired Lease Term measured as the remaining contractual rent amounts of the current lease contracts of the management properties of the Group, including areas that have been re-let and signed new contracts, adjusted for termination rights and excluding any renewal options, divided by Contractual Rent, including renewed and signed new contracts |
Head office Biskop Gunnerus gate 14b 0185 Oslo
Postal address Postboks 52, Økern 0508 Oslo
Tel: (+47) 21 60 51 00 Fax: (+47) 21 60 51 01 E-mail: [email protected]
Customer service centre E-mail: [email protected] Tel: (+47) 800 36 872
www.entra.no
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