Annual Report • Apr 30, 2014
Annual Report
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| This is Entra | 4 |
|---|---|
| Key Figures and Highlights of 2013 | 5 |
| Introduction from the CEO | 6 |
| The business | 7 |
| Group management | 13 |
| Corporate social responsibility | 14 |
| The board | 21 |
|---|---|
| Board report | 22 |
| Corporate governance | 32 |
| Consolidated financial statements Entra Eiendom | 40 |
| Financial statements Entra Eiendom AS | 87 |
| Auditor's report | 120 |
Entra is one of Norway's leading real estate companies. We develop, let and manage high quality office buildings with good locations. At the end of the year the company owns and manages approximately 1.2 million square metres, divided between more than 100 buildings. Each day more than 30,000 people work in buildings owned by Entra. At the end of year the real estate portfolio had a market value of around NOK 25 billion. Public sector tenants represents approximately 79 % of the customer portfolio.
The company is organised in four regions: Central Oslo, Greater Oslo, Southern and Western Norway and Mid- and Northern Norway. Entra has its head office in Oslo and regional offices in Bergen and Trondheim.
Our vision is to enhance the efficiency and reputation of our customers.
Our business concept is to develop, let and manage attractive and environmentally leading office buildings.
Our business strategy has three pillars: customer satisfaction, profitable growth and environmental leadership.
Our strategic areas of concentration are Oslo and the surrounding area, Bergen, Stavanger and Trondheim.
Our core values are to be responsible, ambitious and hands-on.
| All amounts in NOK million | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|
| Financial | |||||
| Rental income | 1 544 | 1 500 | 1 435 | 1 422 | 1453 |
| Profit from property management | 1 107 | 1 068 | 1 004 | 999 | 1006 |
| Profit before value changes and tax | 778 | 985 | 472 | 552 | |
| Profit after tax | 467 | 773 | 579 | 699 | 747 |
| Market value property portfolio | 24 963 | 24 265 | 23 145 | 21 494 | 20 249 |
| Net nominal interest-bearing debt | 14 350 | 13 462 | 12 646 | 11 966 | 11 130 |
| Debt ratio (%) | 56.6 | 54.6 | 54.6 | 56.2 | 57.6 |
| Interest coverage ratio | 1.9 | 1.8 | 1.7 | ||
| Equity ratio (%) | 30.0 | 30.9 | 31.1 | 31.3 | 30.6 |
| Net value of assets – EPRA NAV | 11 178 | 11 440 | 11 115 | ||
| Operational | |||||
| Total area (Gross) | 1 218 040 | 1 201 237 | 1 214 181 | 1 206 178 | 1 152 127 |
| Occupancy level management portfolio (%) | 95.8 | 95.8 | 96.3 | 95.1 | 96.1 |
| Weighted remaining lease term (years) | 9.2 | 9.5 | 9.9 | 10.6 | 9.8 |
| Energy consumption (kWh per square metre) | 188 | 200 | 202 | 208 | 211 |
| Proportion of public sector tenants (%) | 79 | 81 | 80 | 79 | 80 |
| LTI value* | 7.1 | 3.7 | 6.3 | 6.9 | 7.1 |
* Number of injuries involving absence from work per million hours worked last 12 months.
2013 has been an exciting year for Entra and represents in many ways the start of a new era in the company's history. Since its demerger from Statsbygg in 2000 Entra has developed into one of the country's leading real estate companies and is today the leader in office property in Norway. We face with humility the challenge of maintaining this position as we begin the process of privatisation. Entra is however well prepared and the company has a set strategy with regard to profitability, customer satisfaction and our commitment to green buildings.
We are particularly proud of our ambition to be our industry's environmental leader. The challenge of climate change is real and our sector accounts for some 40 % of the world's energy consumption. The use of existing technology however can make a significant difference, and the sector can thus become part of the solution instead of being part of the problem. We look upon environmental leadership as a clear competitive advantage for our customers, our shareholders and ourselves. In Entra we are proud of working in a company that develops buildings that are environmentally leading in a global context. One example is Powerhouse at Kjørbo outside Oslo that over its life will produces more energy than it uses. At Fredrik Selmers vei 4 in Oslo in 2013 we have refurbished the first commercial building in Norway that achieves passive building standard and satisfies Energy class A and is certified as BREEAM Very Good.
HSE is our most important priority. Very many people work in our buildings, and we have responsibility for a number of ongoing construction projects. Our first thought must always be to remove the risk of injuries occurring. This is a personal responsibility. Reporting of undesired events, a focus on injury risks, increased training and the ability to promote HSE as a clear management responsibility are areas where we are following a targeted programme.
Entra is also a company that is close to its customers, something that is positively reflected in customer satisfaction surveys. In 2013 the company had a customer satisfaction score of 72 against a sector average of 69 according to
the Norwegian Tenant Index. An experienced operating organisation and the new customer call centre are important reasons for the good feedback from customers.
Entra works actively on portfolio management and has divested non-strategic properties at the same time as strengthening the company's position in core areas. Entra's strategy is to build on our presence in the four main cities in Norway, in central districts close to public transport. The year's largest transaction was the purchase of 50 % of Hinna Park Eiendom AS in Stavanger. We look forward to further developing this exciting area in the coming years. In Oslo, through our partly owned company Oslo S Utvikling, we have developed the Opera quarter to be one of Norway's most attractive office locations.
In spite of global challenges we now see some bright spots in the world economy. Norway has managed very well through the financial crisis and with continued population growth and urbanisation, we believe that demand for office premises in central districts will remain good.
In Entra we are concerned both as to how we work and what we deliver. Through clear result responsibility, good cooperation and a strong team spirit, we wish to continue in the future to be an important partner for our customers. Our vision is to contribute to our customers' efficiency and reputation. The workplace of the future is changing and in Entra we have considerable insight into how businesses can best handle such change processes. We are happy to share our knowledge with our customers to enable them to be as well equipped as possible in attracting and developing the expertise of tomorrow. In Entra, office solutions and office buildings are what we do best.
Klaus-Anders Nysteen
Entra is a leading owner, manager and developer of office property in Norway. The company has a fully integrated property platform with expertise that covers the entire value chain. At the end of 2013 Entra owned 109 buildings, and was the largest owner of office property in Oslo and one of the largest in Norway. The company had 152 employees at the end of the year.
The company is a professional owner and manager of its own property portfolio. Entra has particular expertise on the public sector, which also represents approximately 80 % of Entra's customers and tenants. Entra has a high level of customer satisfaction and has established its own customer centre, which arranges the professional handling of all customer requests with a rapid and efficient response time.
Entra operates all its properties with its own staff. Through a high level of technical competence and an on-the-spot presence the company's operations staff ensure that its buildings function optimally for customers every day.
Entra creates 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 property. In addition Entra owns several major cultural buildings such as the National Library and Rockheim, as well as some buildings that are today used for education.
The property portfolio consisted as at 31.12.13 of approximately 1,200,000 square meters divided by 109 buildings with at total market value of NOK 24.9 billion.
Total square metres as at 31.12.13
Market value as at 31.12.13 (NOK billion)
Since the start of 2014 Entra has completed the purchase of 50 % of Hinna Park Eiendom AS, enhancing the company's market position in Stavanger. See comments on Hinna Park Eiendom AS below.
management portfolio as at 31.12.13
Geographic breakdown of market value in the management portfolio as at 31.12.13
The company is organised into four regions around the four largest cities in Norway: Central Oslo, Greater Oslo, Southern and Western, and Central and Northern Norway. The Central Oslo region has responsibility for all the company's properties located in Oslo except for Helsfyr-Bryn. The Greater Oslo region covers the company's properties at Helsfyr-Bryn as
well as Drammen, Bærum, Skedsmo and in Østfold. The Southern and Western region covers Entra's properties in Bergen, Kristiansand and Arendal and the Central and Northern region covers the company's properties in Trondheim, Bodø and Tromsø.
| Number of properties |
Area (Thousand sqm.) |
Contract rent (NOKm) |
Occupancy (%) |
Market value (NOKm) |
|
|---|---|---|---|---|---|
| Central Oslo | 34 | 435 | 893 | 95.5 | 12 34 |
| Greater Oslo | 36 | 389 | 413 | 96.7 | 6 933 |
| Southern and Western | 23 | 190 | 230 | 93.8 | 2 989 |
| Central and Northern | 16 | 203 | 201 | 97.8 | 2 700 |
| Total | 109 | 1 218 | 1 684 | 95.8 | 24 963 |
Entra's property portfolio as at 31.12.13 including IFRIC 12 properties and properties used by the owner.
One of Entra's strategic objectives is to be the best in terms of customer-experienced quality. The company seeks to stay close to its customers on a daily basis. Entra aims to achieve efficient and environment friendly operation of its properties and to be predictable so that customers know what they can expect. The company has satisfied customers. Figures from the Norwegian Tenant Index shows that Entra in 2013 achieved an aggregate customer satisfaction score of 72 points against a sector average of 69 points.
Approximately 80 % of Entra's tenants are from the public sector. The management portfolio has an occupancy level of around 96 % and vacancy in the portfolio has remained at a stable low level over time. The weighted remaining term of the company's leases was 9.2 years at the end of 2013. The maturity profile of the company's leases is illustrated in the figure below.
Entra has extensive experience and expertise in planning, design, renovation and construction of office buildings. The Development and Technology department is responsible for concept studies and development work, as well as management and execution of renovation and new building projects.
Entra has an extensive project portfolio. In 2013 Entra completed the following major projects
The largest ongoing projects in the portfolio in 2014 are:
In addition planning, concept stucies and tenant negotiations for new projects are ongoing. The largest relate to the Tullin and Sundt quarters in Oslo as well as Lars Hilles gate 30 in Bergen where work is continuing on developing the concept of MediaCity Bergen in cooperation with Oslo Pensjonsforsikring through Entra OPF.
Fredrik Selmers vei 4, Helsfyr (left) Brattørkaia 15, Trondheim
Schweigaardsgate 16 i Oslo (left), Powerhouse Kjørbo, and Otto Sverdrups plass 4 in Sandvika.
The overall legal structure is described in the figure below together with a short summary of the companies in which Entra is involved.
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 per cent let. Marketing work is being carried out in order to prepare for a possible start on Papirbredden 3 and architectural work has been carried out on Kreftingsgate 33 in Drammen as a basis for planned zoning.
On 1 February 2014 Entra took over 50 % of the shares in the newly established Hinna Park Eiendom AS. The company is owned together with Camar AS and Eføy Investering AS. Hinna Park Eiendom AS owns three fully let office buildings totalling 28,000 square metres, as well as a site with development potential for a further 46,000 square metres zoned for office use. It has recently been decided to commence construction of a new office building of 18,000 square metres following signature of a lease with Wintershall for approximately 80 % of the space. In addition Hinna Park Eiendom AS has its own marketing and operations organisation employing 13 people.
Entra Eiendom AS and Oslo Pensjonsforsikring (OPF) own the jointly controlled company Entra OPF Utvikling AS (50 % each). The company owns the properties Lars Hilles gate 30 and Allehelgens gate 6 in Bergen.
Allehelgens gate 6 is fully let to the police, which recently exercised an option to renew the lease for a further five years. In the case of Lars Hilles gate 30 plans are far advanced to develop the concept Media City Bergen. Currently final negotiations are taking place with the media companies (TV2, NRK, Bergen University, Bergensavisen, Bergens Tidene og Vizrt) for around 65 % of the space.
UP Entra AS develops and manages some 70,000 square metres in the Hamar region, Kongsvinger and Lillehammer.
Oslo S Utvikling (OSU) is a property development company that is carrying out the development of parts of the Bjørvika central business district in Oslo. OSU is responsible for the development of around 350,000 square metres above ground and around 105,000 square metres below ground. OSU had completed some 163,000 square metres above ground and around 55,000 square metres below ground at the end of 2013.
The Norwegian state, through the Ministry of Trade, Industry and Fisheries, owns 100 per cent of the shares in Entra Eiendom AS through Entra Holding AS. The shares in the company cannot be sold without special authorisation from the Norwegian parliament.
On 9 June 2011 the Norwegian parliament gave the government authorisation to reduce ownership in Entra down to 33.4 per cent in connection with a partial sale and/or listing of the company. In the supplemental proposal to the State Budget for 2014 the government was given an extended authorisation to sell its entire holding in Entra. On 14 January 2014 the Ministry of Trade, Industry and Fisheries announced that preparations were being made to privatise Entra and that the privatisation process could be implemented without the sale of properties from Entra. On 11 March 2014 it was announced that ABG Sundal Collier, Goldman Sachs and Swedbank had been selected as financial advisors and managers for the privatisation process.
Klaus-Anders Nysteen CEO Born: 1966 Employed: 2013 Education: Norwegian School of Economics, Naval Academy and Administrative Research Institute / Solheim.
Arve Regland CFO Born: 1972 Employed: 2014 Education: Business degree, BI Norwegian Business School, State authorised auditor, Norwegian School of Economics.
Hallgeir Østrem EVP Legal Born: 1967 Employed: 2013 Education: Law graduate.
Hege Njå Bjørkmann EVP Communication Born: 1977 Employed: 2013 Education: Business degree BI Norwegian Business School.
Sonja Horn EVP Central Oslo Born: 1973 Employed: 2013 Education: Business degree, BI Norwegian Business School.
Mona Arebrot EVP Greater Oslo Born: 1968 Employed: 2012 Education: Business degree, BI Norwegian Business School.
Jorunn Nerheim EVP Southern/Western Born: 1965 Employed: 2004 Education: Law graduate, Bergen University.
Karl Fredrik Torp EVP Central/Northern Born: 1958 Employed: 2004 Education: College of Retailing.
Kristin Haug Lund EVP Development and Technology Born: 1965 Employed: 2012 Education: Civil engineering degree, Norwegian Institute of Technology, Masters degree, Real Estate Development and Management, Norwegian University of Science and Technology.
Anders Solaas EVP Sales and Markets Born: 1963 Employed: 2010 Education: Mannheim University, Germany, Lund University, Sweden.
For Entra corporate social responsibility involves taking care of our surroundings and integrating social and environmental considerations into our strategic processes, decisions and day-to-day operations. We look to the future in our work with sustainable solutions that are relevant to society.
For Entra this means that we aim to secure long-term profitability and growth through being a responsible member of the community within four different dimensions
Entra has an objective to be an environmental leader in its sector and to contribute to reducing the sector's environmental footprint. Buildings account for approximately 40 % of the world's energy consumption. By reducing energy consumption, the sector can go from being a large part of the challenge to becoming part of the solution.
Entra's goal is to be the property company that customers, investors and suppliers consider to be an environmental leader over time. The Group develops expertise and works to raise the level of know-how regarding environmental benefits among customers, suppliers, partners and its own employees. Taking the environment into consideration is an important part of Entra's strategy and practical work, and is expected to give the group a clear competitive advantage. It should be profitable to choose environmentally correct solutions both for Entra and for our customers. Customers who choose environmentally friendly buildings will have lower occupancy costs over time through, among other things, lower total energy costs.
• World-class environmentally sustainable buildings Entra develops environmentally leading buildings – both new buildings and refurbishment of existing properties. Powerhouse at Kjørbo in Sandvika will produce more energy than it uses over the building's lifetime. The building is the first in Norway to be certified as BREEAM-NOR Outstanding and as such is characterised among
the world's most environmentally friendly office buildings. In Fredrik Selmers vei 4 in Oslo Entra has refurbished the first commercial building in Norway to passive building standard. The building satisfies Energy Class A and is certified as BREEAM-NOR Very Good. At Brattørkaia 15 in Trondheim Entra has achieved BREEAM-NOR Excellent and Energy Class A. The office building Papirbredden 2 in Drammen has been built as one of Norway's first passive buildings, and satisfies FutureBuilt's quality criteria.
In 2013 Entra reduced aggregate energy consumption to 188 kWh per square metre (199 in 2012). In comparison the sector average in 2012 was 220 kWh, according to Enova. In addition the group continues to work to reduce carbon emissions, reduce water consumption and increase waste sorting.
Entra requires in its contracts that important suppliers are environment certified or have established an environment strategy. Suppliers who do not have this undertake to establish an environment strategy within six months from the beginning of a contract. Entra considers terminating supplier relationships where this requirement is not satisfied.
Entra aims to contribute to urban developments for the benefit of those who live and work in them. The objective is to create urban districts in the strategic core areas that are attractive, inclusive and accessible for residents. In the case of new projects urban development, the environment and atmosphere occupy central roles in planning. In the case of refurbishment of existing buildings work is carried out from both a preservation and a renewal perspective. Entra has a good dialogue with partners and competitors in areas where urban development work is carried out. Entra is concerned about the local environment and involves neighbours, local politicians and others who live or work in the Group's urban development areas in connection with new buildings and refurbishments. Examples of activities that are carried out include neighbour meetings, neighbour letters, open meetings, information to the local press and a one-to-one dialogue with selected target groups.
Entra is an important promoter of the view that urban areas should be planned for effective development of public transport and increased provision for cyclists and pedestrians. Cultural monuments in Entra's buildings are protected in accordance with applicable laws and regulations. Examples of urban development areas where Entra is an important contributor include Sandvika, Helsfyr and Tøyen in Oslo, Brattørkaia in Trondheim and Papirbredden in Drammen.
In 2013 Entra decided to enter into a formal cooperation agreement with the Church City Mission in Norway. The agreement will contribute to positive urban development in the company's strategic areas, Oslo and surrounding region, Bergen and Trondheim. As a part of the agreement Entra is participating in a newly started neighbourhood cooperation initiative to create a safer and better local environment in the centre of Oslo/Bjørvika.
HSE is an integrated part of Entra's business operations. All employees, contract workers and suppliers are notified of their HSE responsibility and are engaged in HSE activities in the workplace.
Entra's ambition is that it should be safe to work in and visit an Entra building. The objective is that no one should be exposed to injury or become ill (physically or mentally) as a result of inadequate safety.
Entra has increased its emphasis on HSE notification in 2013 and the LTI-value rose to 7.1 (number of injuries resulting in absence from work per million hours worked). Entra is not satisfied with this level and a number of measures have been implemented to strengthen the HSE programme in Entra.
• Increased emphasis on HSE internally and externally Following up HSE has highest priority in Entra. This involves, among other things, having HSE as a topic at all group management meetings, management gatherings, company staff meetings and department meetings. Entra has put HSE on the agenda at important industry gatherings and has contributed to raising the HSE debate. Stronger prioritisation of HSE follow-up has led to an increase in the number of reported undesired events. All events are evaluated and followed up with relevant measures. If necessary the events are followed up with an investigation.
Entra has clear requirements and guidelines for its suppliers and works systematically to ensure that these are observed. The Group has prepared guidelines and requirements that suppliers should work systematically on
HSE and working conditions. In addition suppliers are prequalified in order to demonstrate the requirements for following up on HSE matters. Supplier relationships where HSE requirements are not observed are terminated.
In 2013/14 Entra is strengthening its work to secure the facades of the Group's buildings. Annual condition surveys of all buildings in the property portfolio are carried out in accordance with the Norwegian standard. In addition extra reviews are carried out to reduce the risk of fall-out's from facades. In 2013 Entra carried out risk mapping in addition to the normal annual internal control process. Two pilot projects have been completed and Entra is working now on risk mapping all properties.
Entra is a member of NHO and tariff agreements have been signed with employee organisations. Entra has clear guidelines on equal treatment irrespective of gender, age, ethnic background or religion.
Entra places requirements on its suppliers to have wage and working conditions that fulfil the statutory requirements in accordance with applicable general resolutions.
Entra is an IA company (Inclusive working life) pursuant to which it undertakes to work systematically to develop an inclusive workplace. This includes, among other things, measures to reduce absence through sickness and increase the employees' well-being in the workplace. Sick leave in Entra was 3.3 % in 2013.
Entra's values are built on the idea of equal opportunities for all, care of the environment and a view of society that places emphasis on ethics, openness, honesty and sincerity. The ethical guidelines form the basis for all other company policies and procedures. Entra aims to have a corporate culture based on responsibility, respect, cooperation, feedback and preventive health measures.
Entra has developed ethical guidelines with which all employees are familiar. All employees confirm annually that they are aware of the contents of Entra's ethical guidelines and undertake to observe them. Exercises involving ethical guidelines are regularly carried out.
Entra is against all forms of discrimination. The subject of human rights is particularly relevant in relation to the rights of employees of Entra's suppliers and is dealt with in Entra's guidelines for socially responsible procurement.
Entra has zero tolerance for corruption in all parts of the Group's business. Entra's employees must never offer, give or receive money or other benefits wrongfully in order to obtain or maintain advantages for Entra or the individual employee.
Entra has clear requirements on suppliers with regard to, among other things, corruption, bribes, illegal price cooperation and cartel activities. The requirements are set out in the Group's guidelines for socially responsible procurement and supplier relationships where the requirements are not observed are terminated.
A condition for entering into an agreement with Entra is that suppliers confirm in writing that they observe Entra's requirements on socially responsible procurement. In 2013 Entra carried out an overall risk assessment on procurement areas that could be most exposed to, among other things, corruption. As a result of the analysis further work is being carried out on specific measures and requirements on suppliers.
For the 14th year running Entra is the main sponsor of Ridderrennet. Each year 500 participants with disabilities come from Norway and abroad to Beitostølen in order to take part in activities and competitions in cross country and downhill skiing, biathlon and snowboarding. The highlight is the Ridderrennet race on the closing Saturday. Ridderrennet enables Entra to learn more about the challenges faced by disabled people every day and Entra's employees obtain useful experience that is directly transferable to the Group's continuous work on universal design. Ridderrennet was awarded the "Honour Prize for 2013" at the 2014 Norwegian Athletics Gala.
Entra will continue its work within the areas HSE, ethics, urban development and the environment. In particular Entra wants to prioritise:
Tullin quarter, Oslo
20 Entra Annual Report 2013
Siri Hatlen Chair since 2012
Martin Mæland Deputy Chair Board member since 2007
Arthur Sletteberg Board member since 2012
Ingrid Tjøsvold Board member since 2012
Kjell Bjordal Board member since 2012
Tore Benediktsen Employee representative Board member since 2008
Birthe Smedsrud Skeid Employee representative Board member since 2012
Focus on operations, the environment and preparations for privatisation
Entra Eiendom group ("Entra") had operating revenue in 2013 of NOK 1,575.4 (NOK 1,532.7) million. The profit from property management was NOK 1,107.0 (NOK 1,067.8) million. The improvement in the result is due to increased rental income and lower rental costs, partly offset by higher administrative costs as a result of a reorganisation and preparations for privatisation in 2013. Negative value changes in the portfolio and a reduction in the share of the result from partly owned companies contributed to the Group's operating profit being NOK 847.4 (NOK 1,705.5) million. Lower net realised financial costs combined with a positive unrealised value change on financial instruments gave reduced net financial items of NOK -381.3 (NOK -864.0) million. The profit before tax was NOK 466.1 (NOK 841.5) million.
Entra completed several major development projects in 2013. In February the Environment Directorate moved into a newly built office building with a high environmental standard, passive house and BREEAM-NOR certification Excellent. In November the Tax Administration moved into Fredrik Selmers vei 4, the first refurbished commercial building that achieves passive building standard and a BREEAM Very Good classification.
Targeted and innovative environment work has resulted in innovative solutions. At Kjørbo outside Sandvika an office building is being 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 BREEAM-NOR certification Outstanding. The building will be completed during the first quarter of 2014. In addition, construction of a new head office for Statoil Fuel & Retail in Schweigaardsgate 16 and a education centre for Bærum Municipality at Øvre Torg in Sandvika has proceeded steadily.
In 2013 Entra acquired Vahlsgate 1–3 and the project in Schweigaardsgate 16, as well as signed an agreement to acquire 50 % of the shares in Hinna Park Eiendom AS. As part of its adjustment of the portfolio, Entra sold eight properties during 2013, of which six were transferred to new buyers before year-end.
Entra is one of Norway's leading real estate companies, focusing on high quality, flexible office buildings with good locations. The property portfolio is characterised by solid tenants, long leases and a high occupancy ratio. The company owns and manages approximately 1.2 million square metres divided between more than 100 buildings. Each day more than 30,000 people work in buildings owned by Entra. At the end of year the real estate portfolio had a market value of around NOK 25 billion. The public sector represents approximately 80 % of the customer portfolio.
Entra's business concept is to develop, let and manage attractive and environmentally leading buildings. The company's business strategy has three pillars: customer satisfaction, profitable growth and environmental leadership. Entra is a value-driven group. The values responsibility, proactivity and engagement are to characterise all activities in the Group. 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, Southern and Western Norway and Central and Northern Norway. Entra has its head office in Oslo and regional offices in Bergen and Trondheim. More than 75 % of the properties by value are located in the Oslo area.
During 2013 the Board reviewed and adopted Entra's overall strategy, objectives and investment limits. In addition the Board has supervised the management and organisation of the Group's business. In 2013 particular focus was directed to organisational changes in order to strengthen Entra's position
as the leading real estate group in Norway. On 29 January 2013 Klaus-Anders Nysteen was appointed to the position of chief executive of Entra. During the year the Group introduced a regional model with clear result responsibility, after a period with a functional organisation.
In addition focus was directed towards preparations for the forthcoming privatisation of Entra. On 9 June 2011 the Norwegian parliament gave the government authorisation to reduce ownership in Entra Eiendom AS down to 33.4 % in connection with a partial sale and/or listing of the company. In the supplemental proposal to the State Budget for 2014 the government was given an extended authorisation to sell its entire holding in Entra. On 14 January 2014 the Ministry of Trade, Industry and Fisheries announced that preparations were being made to privatise Entra and that the privatisation process could be implemented without the sale of properties from Entra.
Rents in Oslo rose by 5 % in 2013 compared with 7 % in 2012. As with the previous year it was high-quality office premises in central Oslo that achieved the greatest increase. Letting activity was slightly lower in 2013 compared with 2012. At the end of the year office vacancy for the Oslo area was approximately 7.5 %, up from 7 % in 2012. Weaker employment growth, an increased supply of office property and greater uncertainty in the Norwegian economy were all factors behind the rise in office vacancy.
93.8 % and highest with 97.8 % in the Central and Northern region. The Central Oslo and Greater Oslo regions had occupancy levels of 95.8 % and 95.5 % respectively.
At the end of 2013 the Group managed in excess of 1.2 million square metres divided between 109 properties. The average remaining lease period at this date was 9.2 (9.5) years. In 2013 Entra signed leases with aggregate annual rents of NOK 137.9 million, divided between 64,200 square metres, of which the largest contracts were:
Entra's goal is to be the best in its sector in terms of customerexperienced quality. The Norwegian Tenant Index is used to measure customer satisfaction. Entra achieved an aggregate customer satisfaction score of 72 (71) in 2013 against a national average for the sector of 69 (68). Entra's customers believe that the Group's properties have the sector's best location. On environmental questions in the survey Entra achieved a score of 74 (70), compared with a national average of 62 (62). It is pleasing that customers value Entra's environmental efforts.
Rents in Bergen were relatively stable again in 2013. There was good demand for modern centrally located office premises. Office vacancy increased slightly and was around 7 % at the end of the year.
In Stavanger office vacancy rose from around 5 % in 2012 to around 7 % in the autumn of 2013. There has been a lot of new building In Stavanger at the same time as the prospects for oil related companies have weakened slightly. Rents have nevertheless remained at a high level.
Fredrik Selmers vei 4 is the first refurbished commercial building in Norway to achieve passive building standard.
The rental market in Trondheim has been affected by strong competition from new-
ly completed buildings, which contributed to dampening the increase in rents. Rents were slightly higher for central office buildings and vacancy was stable with a level around 6 % at the end of 2013.
The proportion of vacant premises in Entra's portfolio was unchanged from the previous year and the Group had an occupancy level of 95.8 % as at 31.12.2013. The occupancy level was lowest in the Southern and Western region at
In the autumn of 2012 Entra opened a customer centre, which has been very well received by customers. The score for handling fault reports increased to 76 (69). The national average in the sector is 68 (69) points. The customer centre contributes to increasing customer satisfaction and lays the foundation for more efficient management of Entra's properties.
Entra has worked further on plans for developing the Tullin quarter.
At Kjørbo in Bærum building work continues on the world's most northerly energy positive refurbished office building for completion on 25 April 2014
The new office building at Brattørkaia 15 in Trondheim was completed in March 2013 and the Enviroment Directorate moved in. The building has a total of around 20,000 square metres and achieved passive building standard BREEAM-NOR Excellent certification and satisfies Energy Class A. In Fredrik Selmersvei 4 in Oslo building phase 1 consisting of 30,800 square metres was completed in November and the Tax Administration moved in. Fredrik Selmers vei 4 is the first refurbished commercial building in Norway that has achieved passive building standard. The building satisfies Energy Class A and achieved a BREEAM Very Good certification. The project was nominated for the City Prize 2014.
In the first quarter of 2013 Entra signed an agreement on the purchase of Schweigaardsgate 16 AS. Erection of a new office building of 15,000 square metres with Statoil Fuel & Retail as the main tenant has commenced and is scheduled to be completed in June 2015.
At Otto Sverdrups plass 4 in Sandvika refurbishment of an existing and construction of a new building totalling 15,500 square metres is in progress, where a "Know-how Centre" will be established for Bærum Municipality and Oslo and Akershus University College. The project is planned to be completed in August 2014.
At Kjørbo in Bærum building work continues on the world's most northerly energy positive refurbished office building for completion at the end of March 2014. Over its life the building will produce more energy than it uses. A lease has been signed with Asplan Viak for all the space of around 6,850 square metres. Powerhouse Kjørbo was the first building in Norway to receive the BREEAM-NOR certification Outstanding.
At Ringstabekkveien 105 construction has commenced of 72 senior apartments for sale, as well as some 3,000 square metres of commercial premises for letting to Bærum Municipality. The project is planned to be completed in December 2014.
At Havnelageret in Oslo work has begun on the renovation of the loading balcony. The project involves upgrading the space on two floors on the seaward side for letting as offices and a restaurant, replacement of the glass facade and establishing a new main entrance to Havnelageret. It has also been decided to begin a total refurbishment of around 5,500 square metres on the 9th and 10th floors with an expected construction start in April 2014. A lease contract has been signed with Eniro for around 5,200 square meters.
Building has also started an on a new school in Kongsgård allè 20 in Kristiansand. The building covers 2,000 square metres and is 100 % let to Kristiansand Municipality.
At Akersgaten 34–36 in Oslo work will begin on a new building at Akersgaten 36 combined with a total refurbishment of Akersgaten 34. A lease has been signed with Amedia for almost all the space of 6,500 square metres.
During 2013 Entra in addition 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.
Through the jointly controlled company Entra OPF Utvikling Entra has worked on developing the new concept "MediaCity Bergen" at Lars Hilles gate 30. The concept involves a co-location of the main media companies in Bergen. Development of the property includes refurbishment and extensions totalling approximately 45,000 square metres.
Entra has also worked further on plans to develop the Tullin and Sundt quarters in Oslo. In the Tullin quarter Entra is in dialogue with Oslo University in connection with a new building for the law faculty.
At the end of 2013 Entra's project portfolio extended to some 67,000 square metres.
Sales of commercial property in Norway in 2013 totalled approximately NOK 40 billion, down from around NOK 50 billion in 2012 according to Entra's consensus report. The transaction volume in 2013 in office property amounted to around NOK 20 billion.
The Norwegian interest and credit market gradually improved in 2013 even though there is still considerable differentiation in the market and big differences between the various banks. The bond market was strong and active in 2013. All this had a positive impact on the transaction market and the trend is expected to continue in 2014.
Property investors are still looking for quality properties with good locations and secure cash flows, as well as property with development potential. This means that centrally located properties in the main cities are still very attractive, while in the smaller cities and towns it is more difficult to achieve good values. Several sales were put on hold during 2013 in expectation that the market would improve. Slightly rising market rent levels continue to contribute positively to values in the prime segment. The prime yield has since 2011 been flat at around 5.25 % in central Oslo.
During the year Entra purchased a development project in Schweigaardsgate 16, Statoil Fuel & Retail's new head office which will be completed in 2015.
As part of its portfolio management and in accordance with the Group's strategy, Entra both acquired and sold properties and companies in 2013. All the property purchases were within defined growth areas for the Group.
Based on Entra's focus on the area around Oslo S/Bjørvika the Group purchased during the year both a development project in Schweigaards gate 16, Statoil Fuel & Retail's new head office which will be completed in 2015, as well as a property in Vahls gate 1-3 where the Planning and Building Agency is tenant. The properties were acquired for respectively NOK 190 million and NOK 416 million.
Towards the end of 2013 Entra entered into an agreement to acquire 50 % of the shares in the newly established holding company Hinna Park Eiendom AS which again owns 100 % of Hinna Park AS. The takeover was completed on 1 February 2014. The price is based on total gross property values of approximately NOK 1.3 billion. Entra will consolidate Hinna Park with effect from 1 February 2014.
During 2013 Entra signed contracts to sell the following eight properties: Wergelandsveien 27 in Oslo, Spelhaugen 12 in Bergen, Entra's 51 % interest in Gimlemoen 19 (Sørlandet Kunnskapspark Eiendom AS) in Kristiansand, Welhavensgate 2 in Moss, Grev Wedels Plass 3/Nedre Storgate 18 in Drammen as well as Torggata 3–5, Nittedalsgata 2B and Storgata 14 in Lillestrøm. At the year-end all the properties had been transferred to new owners with the exception of Wergelandsveien 27 and Storgata 14, which were transferred in January and February 2014 respectively.
Oslo S Utvikling AS (OSU) (33.33 % ownership) OSU is a property development company that is undertaking the development of parts of the central business district Bjørvika in Oslo. In total around 900,000 square metres are to be developed above ground in Bjørvika. OSU will be responsible for around 350,000 square metres above ground and around 105,000 square metres below ground. Approximately 163,000 square metres above ground and approximately 55,000 square metres below ground had been developed by OSU by the end of 2013. There was a high level of activity in 2013 and a total of NOK 881 million was invested during the year, and office and residential properties were sold for a total of NOK 1,463 million. The Deloitte building represented the main sale, while the last of the DNB buildings was also delivered towards the end of 2013. Entra's share of the result from OSU in 2013 amounted to NOK 222.8 million.
OSU's strategy of developing properties for sale means that the properties are not recorded in the financial statements at fair value, but at historic cost. In the consolidated financial statements the investment is included using the equity method, and equity after tax is recorded at NOK 617.9 million in the consolidated financial statements as at 31.12.2013.
The market value of the properties and projects in OSU is estimated at approximately NOK 2.9 billion (100 %). Entra's ownership of 33.33 % gives a market value of approximately NOK 1.0 billion. The estimate is based on corresponding
Marketing work is continuing in order to pave the way for the possible commencement of Papirbredden 3 in Drammen.
principles to those used for Entra's other valuations of investment properties. Entra's share of the net asset value as at 31.12.2013 was NOK 0.9 billion after taking into account estimated latent deferred tax of 10 %.
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.
On 7 February 2013 it was announced that the main media companies in Bergen had jointly decided to enter into final negotiations with Entra OPF Utvikling AS on a lease of Lars Hilles gate 30 in Bergen and development of the concept MediaCity Bergen. Since then extensive discussions have been held with regard to the use requirements and at the year-end the company was in final negotiations with the media companies (TV2, NRK, Bergen University, Bergensavisen, Bergens Tidene and Vizrt) for approximately 65 % of the space. Allehelgens gate 6 is fully let to the police, which recently exercised its option to lease the building for a further 5 years.
Under the agreement between Entra and Oslo 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.
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. Marketing work is continuing in order to pave the way for the possible commencement of Papirbredden 3 and parallel assignments have been carried out by architects for the property Kreftingsgate 33 in Drammen as a basis for planned zoning work.
UP Entra AS develops and manages approximately 70,000 square metres in the Hamar region, Kongsvinger and Lillehammer. During 2013 the company disposed of its interest in Storhamargata 42 AS, which owns a site for residential development. Also in 2013 the company improved the letting situation in the portfolio, which resulted in increased income and reduced costs. Refurbishment of the old Nestlé factory is planned to be completed in the second quarter of 2014. The project extends to around 6,200 square metres of which 4,700 square metres were let at the year-end.
Entra's corporate social responsibility work is in line with the goals and expectations which the state, in its capacity as owner, has expressed in the Government's Ownership Report, (Report no. 13 (2010–2011)). It is here decleared that "companies with state ownership shall be leading companies in the efforts to promote corporate social responsibility in areas where it is natural for that business".
In Entra corporate social responsibility covers:
Environment – Entra is an environmental leader in its sector Urban development – Entra contributes to shaping and developing cities for the benefit of those who live and work in them HSE and working conditions – it is safe to work in an Entra building
Ethics – Entra is honest and responsible in everything we do.
Reference is also made to a separate report on corporate social responsibility.
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 2013. Entra's LTI rate (the number of work-related injuries resulting in absence per million work-hours) was 7.1 in 2013, compared with 3.7 in 2012. Entra is not satisfied that the LTI rate has increased over the last year and, among other things, is carrying out audis of security, health and work environment of large ongoing building projects in order to increase awareness as well as making improvements aiming to reduce the number of injuries involving absence from work.
At the close of 2013, the Group had 152 employees in total, corresponding to 150 full-time equivalents. Staff turnover in 2013 was 20 %. Adjusted for retirements, turnover was 15 %, compared with 6.8 % in 2012. The increase is due to the fact that an organisation and development project was carried out that led to a reduction in the overall number of employees in Entra.
Sickness absence at Entra Eiendom AS was 3.3 % in 2013, down by 0.5 percentage points compared with 2012. 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. The group has established its own policy for older workers.
Under its new chief executive Entra has implemented the project "Organisation and Development". The background to the project was that the new management saw a need for a more efficient organisation through, among other things, placing greater result responsibility with line managers. As part of the project thorough assessments were made of the optimal line structure and improvements in the organisation, roles and responsibility of the staff. Based on the project a regional model was introduced in the group where the regions are given responsibility for financial results and growth targets. The region directors form part of the new Group management. In addition a reorganisation and clarification of responsibilities and duties in the staff functions was carried out, and a decision taken to establish a separate legal department.
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 contents of the guidelines and undertakes to observe them. The ethical guidelines must therefore be signed by all employees annually and on new appointments.
Cooperation with employee organisations was good and constructive during 2013, and made a positive contribution to the operations of Entra.
At 31 December 2013, 32 % (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 company's recruitment procedures. In 2013, over 40 % of the Board members were women. In the group management there are as many women as men.
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 opportunity.
Entra 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 1,543.9 (NOK 1,500.3) million. Other operating revenues amounted to NOK 31.5 (NOK 32.4) million. The Group's total operating revenues amounted to NOK 1,575.4 (NOK 1,532.7) million.
Total operating expenses were virtually unchanged compared to the previous year at NOK 468.4 (NOK 464.9) million. Other property costs fell to NOK 88.2 (NOK 117.1) million as a result of lower rental costs. At the same time, administrative ownership costs increased to NOK 222.9 (NOK 194.7) million in 2013. The change was mainly due to the organisation project carried out.
The profit from property management was NOK 1,107.0 (NOK 1,067.8) million in 2013.
The Group had a negative value change on investment properties of NOK 495.1 (NOK 129.0) million. The net yield on the management portfolio was 6.6 % at the close of the year. Market conditions were largely unchanged throughout the year. Factors linked to individual properties, including uncertainty regarding the extension of leases and higher cost estimates on building projects, contributed to the negative value change for investment properties. The long weighted remaining term of the lease portfolio helps to minimise the impact of changes in the market rent on property values compared with shorter leases.
The Group's share of profit from associates and jointly controlled entities amounted to NOK 235.5 (NOK 508.7) million. The share of the profit mainly relates to Oslo S Utvikling AS ("OSU") which in 2013 recorded income from the sale of the Deloitte building and the third and last bank building to DNB Life. In 2012 OSU recorded income on the sale of the first two bank buildings to DNB.
The Group's operating profit was NOK 847.4 (NOK 1,705.1) million.
Net financial items were NOK -381.3 (NOK -864.0) million. Net realised financial items were stable at NOK 565.0 (NOK 591.9) million. The average interest rate on financing was reduced to 4.47 (5.13) % in 2013, but at the same time net interestbearing debt increased by NOK 849.4 million in 2013.
Net unrealised changes in the value of financial instruments amounted to NOK 183.7 (NOK -272.0) million. The positive development is due to the fact that the value change on the Group's borrowings contributed to a reduced market-valued liability in 2013 compared with 2012. In addition the marketvalued liability on the Group's interest hedging fell in 2013 compared to 2012. The background to this development is that market interest rates generally rose during 2013 compared with 2012.
The Group's profit before tax in 2013 was NOK 466.1 (NOK 841.5) million. The tax expense for the year totalled NOK 3.9 (NOK -103.8) million. The profit after tax was NOK 470.0 (NOK 737.8) million.
The Group's profit after tax was NOK 467.1 (NOK 772.6) million.
The Group's total book equity at the close of the year was NOK 26,646.1 (NOK 25,710.8) million. The balance sheet value of the Group's investment properties and investment properties held for sale rose by NOK 596.2 million in 2013 to NOK 23,532.9 million. Investment properties are valued at fair value, based on the average of two external, independent valuations. Properties valued in accordance with the IFRIC 12 rules amounted to NOK 1,122.0 (NOK 1,122.6) million.
Investment in associates and jointly controlled entities was stable at NOK 1,128.3 (NOK 1,100.3) million.
In 2013 the Group had an increase in net interest-bearing debt of NOK 849.4 million to NOK 14,431.0 (NOK 13,581.6) million, mainly in order to finance property investments.
The Group's equity capital was NOK 7,993.4 (NOK 7,942.9) million as at 31.12.2013. Deferred tax was NOK 2,463.9 (NOK 2,472.7) million. Deferred tax is calculated as the difference between the tax and market value of the Group's investment properties, with a nominal tax rate of 27 % with effect from 31.12.2013. The Group had an equity ratio of 30.0 (30.9) % at the end of the year. The board considers the Group's financial strength to be satisfactory.
Cash flow
The Group's net cash flow from operating activities was reduced to NOK 508.4 (NOK 656.0) million, mainly as a result of a change in working capital and other accruals. The difference between net cash flow from operations and the operating result is largely explained by the value change on investment property and financial instruments and interest and fees paid on loans to financial institutions.
Net cash flow from investment activities was NOK -999.7 (NOK -1,238.2) million. Net investments in particular relate to refurbishment projects and new buildings in 2013, as the purchase and sale of property was virtually at the same level. Net cash flow from financing activities for 2013 amounted to NOK 603.9 (NOK 598.8) million. The increased financing requirement relates in particular to ongoing projects. The net change in liquid assets for the year amounted to NOK 112.6 (16.5) million.
The financial statements have been prepared on the basis of 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 31.12.2013. There have been no events since 31 December 2013 that affect the financial statements.
Financial markets overall developed positively in 2013. The markets' development has been affected by the expansive monetary policies of the leading central banks with low and falling base rates. In addition the US Federal Reserve Bank further stimulated the world economy with substantial injections of liquidity. This situation has contributed to a good development in stock and credit markets, at the same time as interest rate levels have been kept low. The measures appear to have contributed to an improved macroeconomic situation. The main indicators regarding the outlook for the leading economies signalled positive growth prospects at the end of the year.
The Group has adopted a conservative financial strategy with a sound equity ratio that secures financial flexibility throughout an economic cycle.
Entra is exposed to developments in the financial markets and in 2013 experienced falling prices in the credit markets for new loan agreements. The market for commercial paper remained very liquid throughout the year. Entra is well established as an attractive borrower in the bond market and had a high level of activity in this market during 2013. The proportion of the Group's financing from the bond market increased significantly during the year, and amounted to 55 % of outstanding loans as at 31.12.13.
The Group's average interest cost as at 31.12.13 was 4.47 (5.13) %. As at 31.12.2013, 62 (62) % 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 3.0 (3.2) years.
Financing is divided between various bank and capital market instruments. The loans have a diversified maturity structure. The Group's liquid assets amounted to NOK 177.4 (NOK 64.8) million as at 31.12.13. In addition the group had committed, unutilised financing facilities with Norwegian banks totalling NOK 3.4 (NOK 4.1) billion. The Group's aggregate debt as at 31.12.13 was NOK 18,652.7 (NOK 17,767.9) million. Aggregate nominal interest-bearing debt at the same date was NOK 14,528 (NOK 13,527) million, corresponding to 54.5 (52.6) % of total capital.
Corporate governance at Entra is based on the principles set out by the Norwegian Corporate Governance Committee (NUES) in its Norwegian Code of Practice for Corporate Governance.
In 2013, there were 10 Board meetings. The Board consists of the following members: Siri Hatlen (Chair), Martin Mæland (Deputy Chair), Arthur Sletteberg, Ingrid Tjøsvold, Kjell Bjordal, Birthe Smedsrud Skeid (Employee representative) and Tore Benediktsen (Employee representative).
Entra's overall goals and strategy are set by the Board. Ethical guidelines approved by the Board form the foundation for Entra's business and the basis for good company management. Guidelines, procedures and authorisation structures form part of Entra's governing documents. These integrate strategy, objectives and overall principles with routines and requirements as to documentation for staff and business areas.
See the section of this report on corporate governance for a more detailed discussion of the corporate governance principles and reporting pursuant to Section 3-3b of the Norwegian Accounting Act.
The Norwegian state, through the Ministry of Trade, Industry and Fisheries, owns 100 % of the shares in Entra Eiendom AS through Entra Holding AS. The shares in the company cannot be sold without special authorisation from the Norwegian parliament.
On 9 June 2011 the Norwegian parliament gave the government authorisation to reduce ownership in Entra down to 33.4 % in connection with a partial sale and/or listing of the company. In the supplemental proposal to the State Budget for 2014 the government was given an extended authorisation to sell the state's entire holding in Entra. On 14 January 2014 the Ministry of Trade, Industry and Fisheries announced that preparations were being made to privatise Entra and that the privatisation process could be implemented without the sale of properties from Entra.
The shareholder has set a dividend policy for Entra Eiendom AS. The annual dividend shall constitute 50 % of the Group's profit after tax and non-controlling interests as calculated under the Norwegian Accounting Act and generally accepted accounting principles, or be equivalent to at least 2 % of book equity after non-controlling interests under IFRS at the start of the financial year. The expected dividend from Entra
Eiendom AS is presented each year in the State Budget and for the 2013 financial year a figure of NOK 250 million has been proposed. In addition an extraordinary dividend of NOK 650 million has been proposed, subject to a privatisation being implemented in 2013.
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 company aims to reduce rental risks through systematic customer support, by keeping track of when contracts expire and planning how to find new tenants. Some 80 % of the Group's customers are from the public sector and changes in operating parameters and efficiency improvements in the public sector may affect the company's risk exposure. The market value of the Group's property portfolio is affected by cyclical fluctuations in the economy. A decrease in the market value 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 company 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 an adequately 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 means that credit and counterparty risk is limited. The 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 company 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 yield 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 dayto-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 non-recurring events. The Group has identified strategic risk factors, and considers these to be carefully managed through ongoing work and the measures implemented.
In 2013, Entra Eiendom AS made a profit after tax of NOK 410.5 (NOK 538.4) million, as set out in the financial statements prepared in accordance with the Norwegian Accounting Act and Norwegian generally accepted accounting principles.
The Board proposes that Entra Eiendom AS's profit for the year, in accordance with the owner's defined dividend policy, is distributed as follows:
The board confirms that the company has sufficient equity and liquidity following payment of the proposed dividend.
In 2014 privatisation and new ownership are on the agenda. On 14 January 2014 the Ministry of Trade, Industry and Fisheries announced that preparations were being made to privatise Entra and that the privatisation process could be implemented without properties being sold by Entra. Entra is well prepared to support the Ministry of Trade, Industry and Fisheries in the forthcoming privatisation process.
A slightly weaker macro-economic development is expected in Norway as a result of a lower growth contribution from the oil sector. Office vacancy is expected to remain roughly unchanged as a result of a low level of new building. Entra expects slightly rising rents for centrally located modern premises.
Property investors are still looking for quality properties with good locations and secure cash flows, as well as property
with development potential. In today's selective transaction market centrally located properties in the main cities are still very attractive, while in the smaller cities and towns it is more difficult to achieve good prices.
The development in Entra's equity ratio is stable and the group has a long term and differentiated debt financing profile. Transactions, in particular in the bond market i 2013, have shown that Entra is an attractive borrower.
Entra has, in the opinion of the Board, a solid financial platform and will maintain a balanced financial risk profile. Entra will use its position to continue growing profitably in accordance with the Group's strategy. The Board is of the opinion that the Group has good foundations for further growth and development.
Oslo, 31 March 2014 The Board of Entra Eiendom AS
Siri Hatlen
Chair
Arthur Sletteberg Board member
Birthe Smedsrud Skeid Board member
Martin Mæland Deputy Chair
Kjetil Bjordal Board member
Ingrid Tjøsvold
Board member
Tore Benediktsen Board member
Klaus-Anders Nysteen Chief Executive
Entra Eiendom AS ("the Company") is owned by the Norwegian state through Entra Holding AS. The state exercises and manages its ownership through the Ministry of Trade, Industry and Fisheries (MTIF).
Each year, the Board of Directors and management of Entra ("Entra", " the Group") review the Company's corporate governance principles and evaluate how they are working in the Group. Entra reports on corporate governance in accordance with section 3-3b of the Norwegian Accounting Act and the Norwegian Code of Practice for Corporate Governance of 23 October 2012. Further information about the recommendations published by the Norwegian Corporate Governance Committee is available at www.nues.no.
There are some minor differences from the recommendations. These are referred to under the individual sections below and are due to the fact that the state is the Company's only shareholder.
MTIF's management of the state's ownership is based on generally accepted principles of corporate governance and the distribution of roles among the shareholders, the Board of Directors and the management under Norwegian company law. In addition, the state has drawn up principles for good corporate governance, which essentially harmonise with NUES's requirements relating to transparency and information about the company. The state's ownership policy is summarised in chapter 5 of the Government's Ownership Report, no. 13 (2010–2011) to the Norwegian parliament. The shareholder appoints a Board of Directors to safeguard the interests of the shareholder, as well as to ensure that the company's needs for expertise, capacity and diversity are met. The state is a proactive shareholder with respect to setting clear goals for the Company. It is also important that there are well functioning systems in place for monitoring the Company's financial situation, corporate social responsibility and ethical management.
Entra's overall objectives and strategy are set by the Board. The ethical guidelines adopted by the Board are the foundation on which Entra's activities are built and form the basis for good corporate governance. Guidelines, procedures and authorisation structures can be found in Entra's system of governing documents that integrate strategy, goals and overall principles with routines and documentation requirements for the administration and business areas.
Entra has carried out organisational changes in 2013 in order to strengthen its position as the leading office real estate company in Norway. The Group has introduced a regional model with clear result responsibility, following a period with a functional organisation. 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 Markets, as well as Projects and Technology, which in addition to acting as support functions for the regions secure a uniform market and growth strategy and provide technical and operational support on projects. Group and support functions have been established within accounting and finance, legal, communications and HR. The CEO has set up an authorisation structure within the Group based on the Board's resolution on authorisations to the CEO. Entra uses the balanced scorecard system as an important tool in managing its business. Based on the Group's strategy, score indicators have been defined that represent the business's balanced scorecard. Scorecards have been established for each business area and for support functions. The targets for the Group's work on corporate social responsibility and the environment are included in the scorecards. The system provides a basis for the management's control of the business and follow-up of the Group, as well as business reporting to the Board.
State-owned companies face strict requirements in fulfilling corporate social responsibilities. Entra's ambition is to be an industry leader in implementing environmentally sustainable solutions, and this sets the goals for the Group's environmental work. Entra's environment strategy describes goals and focus areas. The following key areas have also been defined for the Group's corporate social responsibility work:
Urban development, HSE, the environment and ethics. Corporate social responsibility is an integrated part of Entra's corporate governance.
Entra's corporate social responsibility policy also applies to suppliers. The Board has adopted guidelines on socially responsible procurement. The guidelines set out procedures for procurement in the Group in which high ethical standards must be demonstrated, with competitive bidding processes in which all bidders are treated equally. Suppliers must undergo annual supplier verification and accept the Group's guidelines for socially responsible procurement in order to qualify as an Entra supplier. Entra aims to further increase procurement expertise and raise awareness about socially responsible procurement. The requirements in relation to corporate social responsibility and the environment will be clearly communicated to the Group's suppliers. Both manufacturing processes and finished products must meet defined environmental standards, and the fundamental rights of employees must be respected by all the links in Entra's chain of suppliers. The Group's environmental criteria for suppliers and the policy document on socially responsible procurement are available on www.entra.no.
Entra's ethical guidelines set out how the Group's stakeholders shall be treated and the behaviour that is expected of employees, providing guidance and support to employees on decision-making and problem-solving issues. The guidelines support the Company's corporate social responsibility activities and deal with topics such as health, safety and the environment and business ethics, including corruption and bribery. The ethical guidelines were last updated and approved by the Board on 10 November 2011. 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.
Non-compliance with the recommendations: None
According to the Company's articles of association, Entra Eiendom AS shall own, buy, sell, operate 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 similar activities. The company shall be run on commercial principles.
The Company's main purpose is to provide premises to meet government needs, and to operate on commercial principles similar to those of private sector participants in the industry.
The Group has a clearly defined strategy, values and overall objectives. Entra's business concept is to develop and manage attractive and environmentally leading buildings as well as carrying out active portfolio management through the purchase and sale of properties. Entra's strategy has three pillars: delivering profitability and growth, customer satisfaction and environmental leadership. The geographic growth areas are Oslo and the surrounding region, Bergen, Stavanger and Trondheim. See www.entra.no for a more detailed description of the Group's strategy.
Non-compliance with the recommendations: None
Entra shall maintain a level of equity that is appropriate by reference to the Group's goals, strategy and desired risk profile. The Group's equity at 31.12.2013 was NOK 7,993.4 (7,942.9) million, equivalent to an equity ratio of 30 (30.8) per cent. The Group's financial strength is considered satisfactory.
The Board proposes the dividend to the Annual General Meeting. Section 20–4 (4) of the Companies Act states that the Annual General Meetings of state-owned companies do not have to adopt the dividend allocations proposed by the Board. The Annual General Meeting determines the dividend in accordance with Section 8–1 of the Norwegian Companies Act.
The shareholder has set a dividend policy for Entra under which the annual dividend shall constitute 50 per cent of the Group's profit after tax and non-controlling interests as calculated in accordance with the Accounting Act and generally accepted accounting principles, or be equivalent to at least two per cent of book equity after non-controlling interests in accordance with IFRS at the start of the financial year. The expected dividend from Entra Eiendom AS is presented each year in the State Budget.
In the State Budget for 2014 a dividend of NOK 250 million is proposed for Entra Eiendom AS for the financial year 2013. In addition a dividend of NOK 650 million is proposed on privatisation.
The Board is not authorised to raise new capital or to buy back company shares.
Non-compliance with the recommendations: None
1) Report to the Norwegian parliament, no. 29 (2008–2009).
All of the shares in the Company are owned by the Norwegian state through the MTIF via Entra Holding AS, and there is only one class of shares. The section in the recommendations about waiving the pre-emptive rights of shareholders during capital increases is not relevant to the Company. Entra considers it important to be transparent and conservative in relation to transactions where there might be considered to be a close relationship between the Company and a Board member, key 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 adopted a policy for transactions with related parties, describing the rules and procedures for these types of transactions.
The Company has a number of public sector tenants. Lease contracts with them have been entered into on market terms.
Non-compliance with the recommendations: None
According to the recommendations, the company's shares should in principle be freely transferable. However, since Entra Eiendom AS is 100 per cent owned by Entra Holding AS, which is wholly owned by the Norwegian state, this requirement is not relevant.
In the Government's Ownership Report, Report no. 13 (2010–2011) to the Norwegian parliament, the Government indicated that it may permit the company to finance its equity requirements in the private market. This may entail a government sell-down as part of a structural transaction and/or stock exchange listing. The Government therefore requested the Norwegian parliament for an authorisation to be able to list and/or sell up to 2/3 of the shares in Entra / Entra Holding AS.
On 9 June 2011, the Norwegian parliament adopted a resolution to authorise the Government to reduce the ownership in Entra Holding AS down to 33.4 per cent in connection with a sell-down and/ or stock exchange listing of the company.
As part of the consideration of the supplemental proposal to the State Budget 2014 Proposition 1S Supplement 1 and Recommendation 8S (2013–2014) the Government was authorised to sell all its shares in Entra Holding AS.
Non-compliance with the recommendations: None
§ 5-5 of the Companies Act regulates the Annual General Meeting of limited companies.
The Board sets the date of the Annual General Meeting. The management of Entra Eiendom AS prepares the agenda and the relevant documentation for the Annual General Meeting in accordance with §§ 8 and 10 of the company's Articles of Association and sends out the notice of meeting. The notice sets out what items are on the agenda. The notice is sent to the shareholder, the Chair of the Board and the company's auditor. In 2013 the deadline for registering for the Annual General Meeting was set as close as practicably possible to the date of the Annual General Meeting.
The Chair of the meeting is elected by the Annual General Meeting. The Chair of the Board chaired the Annual General Meeting in 2013.
The Board of Entra Holding AS represents the shareholder Entra Holding AS at the Annual General Meeting of Entra. The Board's participation at the meeting is agreed with the shareholder. The company's auditor always attends the Annual General Meeting. The CEO and CFO attend on behalf of the management.
The Company does not have an election committee. Board members are appointed by the shareholder.
Non-compliance with the recommendations: The Company does not have an election committee as Board members are appointed by the shareholder.
The Group does not have a corporate assembly.
The shareholder elects between five and seven shareholderelected members, including the Chair, for a period of two years through the Annual General Meeting. The Board of Directors was elected/re-elected at the 2012 Annual General Meeting, with five shareholder-elected members. No new Board members were elected in 2013.The Board also contains two members who are chosen by and from the employees, who sit for the same length of time as the shareholder-elected members.
The composition of the Board at the end of 2013 was as follows: Siri Hatlen (Chair), Martin Mæland (Deputy Chair), Arthur Sletteberg, Ingrid Tjøsvold, Kjell Bjordal, Tore Benediktsen and Birthe Smedsrud Skeid. The last two are chosen by and from the employees. The proportion of female members of the Board is around 43 per cent.
Emphasis is placed on the fact that the Board as a whole should have experience of working on boards and of the Group's main business in order to make a positive contribution to the ability of the Group to add value. The Board must also have the capacity required to perform its duties. No participants in the Group management are Board members.
All shareholder-elected members are considered to be independent and not connected with the Group management, important business partners and the shareholder. Detailed information about the Board members is provided in the annual report and is also available at www.entra.no.
Non-compliance with the recommendations: The Company is wholly owned by the Norwegian state and it is not possible for Board members to own shares in the Company.
The Board has overall 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, accounts and asset management are subject to adequate controls and in accordance with applicable in regulations. The Board is obliged to ensure that the Group has systems for the observance of directives applicable at any time. 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 has elected 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 EVP Legal (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.
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 results of the evaluation are presented to the shareholder.
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 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 established board procedures. Each month, either at a meeting or in writing, the CEO is to provide the Board members with information on the Group's business situation and the development in results.
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 of Directors. The representatives are 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 acts as a preparatory body and helps the Board to assess issues 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. The CFO, the Head of Group Accounting and the Company 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. In 2013, the audit committee held seven meetings.
The remuneration committee acts 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 CEO's salary and employment terms, as well as changes to them. In addition it prepares the Board's consideration of principle issues relating to salary levels, profit-related pay 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 Company's competitive position, profile, ability to recruit, reputation etc.
The remuneration committee is composed of the Chair of the Board of Directors and a shareholder-elected member of the Board. The CFO and CEO always attend as representatives of the management. The CEO does not participate in discussions on issues that affect the CEO personally. The Company's head of HR attends as required. A calendar of meetings has been established for the remuneration committee, which normally meets between three and four times a year. The remuneration committee held three meetings in 2013.
Non-compliance with the recommendations: None
The Board is responsible for ensuring that the business, financial reporting and asset management are subject to adequate control. The Group's risk management shall support the Company's strategic and financial goals and help the Group avoid events that may have an adverse impact on the Group's operations and reputation. Risk management and internal controls at Entra are described in the Group's system of governing documents.
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 administration has established routines for identifying and managing the exposure to risk entailed by the Group's activities. The Group 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 non-recurring events.
In conjunction with the management's reviews of the company's operations, risk matrices are drawn up within each business and support area to provide an overall picture of the Group's exposure to risk. The Group's financial status is monitored by reviews of the accounts compared with previous periods, the budget and projections, and performance is reported using balanced scorecards in all the business and support areas. The Group has established systems for managing and monitoring issues related to health, safety and the environment as an integrated part of its management reporting.
The Board performs an annual review of the Group's risk and established internal controls as part of the Company's target and budget process. The Board is also informed of developments in the Group's risk exposure in quarterly business reports. The management's risk assessments and the information that they provide about corrective measures put the Board in a good position to judge whether the Group's 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 preparing 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 Company's properties is subject to a separate review and assessment at management level at the close of each quarter. This involves holding meetings with the external valuers, with a particular
focus on discussing perceptions of the market, risk premiums and documentation. The Group's actual financial performance is monitored against the budget each month, and projections are updated on an ongoing basis.
Entra reconciles and documents all balance sheet items in the Group companies at the close of 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.
In connection with quarterly reporting, the Group's external auditor performs audit tasks equivalent to equivalent to review of the quarterly reporting, but without confirmation.
The Group's quarterly and annual financial reports are reviewed by the audit committee before they are approved by the Board. 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 Board.
The Group is managed by means of financial targets linked to, among other things, 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, using the Group's 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 expected 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 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 continous 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 Group'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.
See the description in the annual report for a more detailed presentation of the Group's financial position and risk.
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 internal reviews 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 integrated part of the assessments made in connection with potential investments. Special requirements have been defined for Entra's 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 Entra's requirements regarding corporate social responsibility in the supply chain, the Group 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 on an ongoing basis. The management continuously strives to prevent corruption and undesirable incidents, with a focus on the Company's values and ethical guidelines. Systematic training in ethical guidelines and dilemma training for all employees has helped to increase awareness among Entra's employees.
The EVP Legal 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 intranet. Employees are encouraged to report unsatisfactory situations. In addition to internal reporting, Entra has also established an external reporting channel to a firm of lawyers, who can receive notifications on behalf of the Group. The Board is informed annually of any such "whistle blowing" cases.
Non-compliance with the recommendations: None
Each year, the Annual General Meeting determines the remuneration of the Board. For information about remuneration of the Board in 2013, see Note 25 to the consolidated financial statements of Entra Eiendom AS. The remuneration of the Board is not performance-related, and no options have been issued to Board members.
For a discussion of the Board's independence, see Section 8.
Non-compliance with the recommendations: None
With effect from 1 April 2011, the Government's guidelines concerning the state's position on senior management remuneration in state-owned companies from 2006 were replaced by new guidelines, issued in connection with the Report to the Norwegian parliament no. 13 (2010–2011) Active ownership and appendix no. 1 Guidelines for terms of employment for senior management in state-owned enterprises and companies. The primary objective of the guidelines is to ensure that senior management remuneration levels within companies with a state shareholding are competitive, but not above those of other similar companies. The companies shall promote moderation in executive pay. The principal element in the remuneration scheme for senior management should be the fixed basic salary. The guidelines also lay down that the sum total of the individual components in a pay package must be assessed as a whole, including fixed basic salary, any variable pay and other benefits such as pensions and severance pay. It is the responsibility of the entire Board to adopt guidelines for the remuneration of senior management.
The Annual General Meeting of 27 June 2011 adopted an amendment to the Articles of Association of Entra Eiendom AS to ensure compliance with the Government's revised guidelines on remuneration of senior management. Effective from the 2012 Annual General Meeting, the Board shall submit a statement on the determination of salaries and other remuneration of senior management. The general meeting dealt with this statement for the first time at the general meeting of 14 May 2012. The statement for 2013 is included in note 25 to the Group's annual financial statements
The CEO receives a fixed annual salary in accordance with the state's guidelines for senior management remuneration and receives no performance-related pay. A pension agreement for a defined-contribution pension will be entered into for cover over and above 12G, which complies with the state's guidelines on senior management remuneration. It is the view of the Board that the overall conditions comply with the state's guidelines on senior management remuneration.
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 group. See the presentation of the remuneration committee in Section 9.
The other members of the senior management group have a performance-related pay scheme, with an upper limit of 25 per cent of their annual salaries. There are no share option schemes for senior management.
The remuneration of the Group's senior management and the Board of Directors is described in more detail in note 25 to the annual financial statements.
The general performance-related pay scheme for employees of Entra is linked to defined targets related to the return on equity, owner costs, economic rents, occupancy rates, customer satisfaction and energy consumption, as well as defined individual goals. The extent to which the Group achieves its goals over the course of the year can be seen from the Group's business reporting. Total performancerelated pay from the scheme cannot exceed 12.3 percent of the employee's annual salary in any given year.
Non-compliance with the recommendations: None
The financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS). Reporting must fulfil statutory requirements and provide sufficient information to allow the Group's stakeholders to form as accurate a picture of the business as possible. Entra Eiendom AS has publicly traded bonds, and its reporting conforms to the rules in the Securities Trading Act, as well as with the requirements specified by the Oslo Stock Exchange for companies with listed bonds.
The Group publishes the interim report for the fourth quarter in February, while the annual financial statements and the Board's annual report are considered by the Board of Directors in March. The annual report is prepared and sent to the shareholder and is also published on Entra's website in April. In addition to this, the Group reports accounting figures every quarter. The quarterly figures and annual results are published through stock exchange notices and press releases. The Group's report on corporate social responsibility will be integrated in the annual report for 2013. The financial calendar is published on Entra's website and is also stated in the Group's annual report.
The Group considers it very important to inform the shareholder about the Group's performance and its financial position. Regular meetings are held between representatives of the shareholder and Company at which the annual and interim financial statements are presented. The CEO and CFO always attend on behalf of the Company. In addition, there are regular meetings between shareholder representatives, the Chair of the Board and the CEO.
Non-compliance with the recommendations: None
Entra Holding AS is wholly owned by the Norwegian state through the MTIF. The owner cannot sell shares in the Company without special authorisation from the Norwegian parliament.
Non-compliance with the recommendations: Section 14 of the recommendations is not considered to be relevant to the Company.
The annual general meeting elects the Group's auditor. Deloitte AS has been the Group's auditor since 2012.
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 review and adopt the annual report and financial statements. 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 Group's 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. Significant issues are summarised for the Board.
On submitting the auditor's report for 2013, the auditor provided a written declaration of compliance with the specified independence requirements; cf. the Auditing and Auditors Act. Each year the auditor's independence is also 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 Group in view of the requirement for independence. Any major tasks 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 meetings.
The auditor attends the Annual General Meeting for consideration of the annual report and financial statements. The auditor's fee for statutory auditing and other services is approved by the Annual General Meeting.
Non-compliance with the recommendations: None
Entra Eiendom Consolidated Financial Statements 2013
All amounts in NOK million
| Note | 2013 | 2012 | |
|---|---|---|---|
| Rental income | 23 | 1 543.9 | 1 500.3 |
| Other operating revenue | 24 | 31.5 | 32.4 |
| Total operating revenue | 1 575.4 | 1 532.7 | |
| Maintenance | 65.9 | 66.2 | |
| Operating expenses | 26 | 91.5 | 86.9 |
| Other property costs | 7, 10, 27 | 88.2 | 117.1 |
| Administrative owner costs | 25, 28 | 222.9 | 194.7 |
| Total operating expenses | 468.4 | 464.9 | |
| Net income from property management | 1 107.0 | 1 067.8 | |
| Adjustment to value of investment property | 8 | -495.1 | 129.0 |
| Share of profit from associates and jointly controlled entities | 12, 13 | 235.5 | 508.7 |
| Operating profit | 847.4 | 1 705.5 | |
| Interest and other finance income | 4-3 | 109.9 | 98.2 |
| Interest and other finance expense | 4-3 | -674.9 | -690.2 |
| Net realised financial items | -565.0 | -591.9 | |
| Unrealised changes in value of financial instruments | 4 | 183.7 | -272.0 |
| Net financial items | -381.3 | -864.0 | |
| Profit before tax | 466.1 | 841.5 | |
| Tax expense | 29 | 3.9 | -103.8 |
| Profit/loss for the year | 470.0 | 737.8 | |
| Pension estimate difference | 18 | 4.0 | -48.3 |
| Tax adjustment on comprehensive income | 29 | 1.1 | -13.5 |
| Total comprehensive income for the year | 467.1 | 772.6 | |
| Profit for the year allocated to: | |||
| Shareholders in the parent company | 453.4 | 703.3 | |
| Non-controlling interests | 16.6 | 34.5 | |
| Total comprehensive income for the period allocated to | |||
| Shareholders in the parent company | 450.5 | 738.1 | |
| Non-controlling interests | 16.6 | 34.5 | |
| Earnings per share (NOK) | |||
| Continuing operations | |||
| Ordinary = Diluted | 32 | 453 395.1 | 4.9 |
Notes 1 through to 33 form an integral part of the consolidated financial statements
All amounts in NOK million
| Note | 31.12.2013 | 31.12.2012 | 01.01.2012 | |
|---|---|---|---|---|
| Non-current Assets | ||||
| Other intangible assets | 7 | 30.9 | 36.3 | 16.5 |
| Total intangible assets | 30.9 | 36.3 | 16.5 | |
| Investment properties | 3, 8 | 23 144.8 | 22 202.5 | 21 843.9 |
| Property used by owner | 10 | 6.7 | 5.8 | 6.0 |
| Other property, plant and equipment | 10 | 30.5 | 26.2 | 25.4 |
| Total property, plant and equipment | 23 182.0 | 22 234.5 | 21 875.3 | |
| Investments in associates and jointly controlled entities | 12, 13 | 1 128.3 | 1 100.3 | 502.0 |
| Loans to associates and jointly controlled entities | 31 | – | 6.7 | 14.2 |
| Financial derivatives | 4-2 | 203.5 | 214.3 | – |
| Other non-current receivables | 14 | 742.8 | 1 129.5 | 1 107.5 |
| Total non-current financial assets | 2 074.6 | 2 450.8 | 1 623.6 | |
| Total non-current assets | 25 287.5 | 24 721.5 | 23 515.4 | |
| Current Assets | ||||
| Housing units for sale | 9 | 227.0 | 120.2 | – |
| Trade receivables | 15 | 27.9 | 20.1 | 34.5 |
| Other receivables | 15 | 538.1 | 49.9 | 105.6 |
| Total current receivables | 793.0 | 190.2 | 140.1 | |
| Cash and bank deposits | 16 | 177.4 | 64.8 | 48.3 |
| Total current assets | 970.4 | 255.0 | 188.4 | |
| Investment properties held for sale | 8 | 388.2 | 734.2 | 36.5 |
| Total Assets | 26 646.1 | 25 710.8 | 23 740.3 |
Notes 1 through to 33 form an integral part of the consolidated financial statements.
All amounts in NOK million
| Note | 31.12.2013 | 31.12.2012 | 01.01.2012 | |
|---|---|---|---|---|
| Equity | ||||
| Paid-in equity | 17 | 1 414.2 | 1 414.2 | 1 414.2 |
| Other equity | 6 464.6 | 6 430.7 | 5 845.6 | |
| Non-controlling interests | 114.6 | 98.0 | 119.2 | |
| Total equity | 7 993.4 | 7 942.9 | 7 379.0 | |
| Liabilities | ||||
| Interest-bearing liabilities | 20 | 11 799.4 | 9 736.5 | 9 086.3 |
| Pension liabilities | 18 | 53.1 | 58.0 | 102.1 |
| Deferred tax | 29 | 2 463.9 | 2 472.7 | 2 347.6 |
| Financial derivatives | 4–2 | 848.0 | 1 005.2 | 769.5 |
| Other liabilities | 19 | 126.6 | 126.5 | 63.8 |
| Total non-current liabilities | 15 291.0 | 13 398.9 | 12 369.3 | |
| Trade payables and other payables | 21 | 457.6 | 378.9 | 374.4 |
| Interest-bearing liabilities | 20 | 2 809.1 | 3 910.0 | 3 492.7 |
| Prepayments and provisions | 22 | 95.0 | 80.1 | 124.9 |
| Total current liabilities | 3 361.7 | 4 369.0 | 3 992.0 | |
| Total liabilities | 18 652.7 | 17 767.9 | 16 361.3 | |
| Total Equity And Liabilities | 26 646.1 | 25 710.8 | 23 740.3 |
Notes 1 through to 33 form an integral part of the consolidated financial statements
Siri Hatlen Chair
Arthur Sletteberg Board member
Birthe Smedsrud Skeid Board member
Oslo, 31 March 2014 The Board of Entra Eiendom AS
Martin Mæland Deputy Chair
Kjetil Bjordal Board member
Ingrid Tjøsvold
Board member
Tore Benediktsen Board member
Klaus-Anders Nysteen Chief Executive
All amounts in NOK million
| Paid-in equity | Retained earnings | Total majority | Non-controlling interests |
Total equity | |
|---|---|---|---|---|---|
| Equity at 31.12.2011 | 1 414.2 | 5 858.0 | 7 272.2 | 119.2 | 7 391.4 |
| Change in accounting principle, see note 2 | -12.4 | -12.4 | -12.4 | ||
| Equity at 01.01.2012 | 1 414.2 | 5 845.6 | 7 259.7 | 119.2 | 7 379.0 |
| Total comprehensive income | 738.1 | 738.1 | 34.5 | 772.6 | |
| Dividend paid | -137.0 | -137.0 | -137.0 | ||
| Change in non-controlling interests | -15.9 | -15.9 | -55.7 | -71.7 | |
| Equity at 31.12.2012 | 1 414.2 | 6 430.7 | 7 844.9 | 98.0 | 7 942.9 |
| Total comprehensive income | 450.5 | 450.5 | 16.6 | 467.1 | |
| Dividend paid | -416.6 | -416.6 | -416.6 | ||
| Equity at 31.12.2013 | 1 414.2 | 6 464.6 | 7 878.8 | 114.6 | 7 993.4 |
Notes 1 through to 33 form an integral part of the consolidated financial statements.
All amounts in NOK million
| Note | 2013 | 2012 | |
|---|---|---|---|
| Cash flows from operating activities | 33 | 1 213.8 | 1 366.1 |
| Interest paid on loans from financial institutions | -694.6 | -679.0 | |
| Payment of loan fees | -10.8 | -31.1 | |
| Net cash flows from operating activities | 508.4 | 656.0 | |
| Proceeds from sales of property, plant and equipment | 596.3 | 185.7 | |
| Sales of operations, net liquidity | 11 | 0.1 | 28.0 |
| Purchase of investment properties | 8 | -592.1 | -396.0 |
| Cost of upgrades of investment properties | 8 | -998.0 | -1 067.1 |
| Purchase of intangible assets and other property, plant and equipment | 7, 10 | -101.8 | -103.6 |
| Investment in housing units for sale | -106.8 | -24.2 | |
| Repayment of loans to associates and jointly controlled entities | 31 | -5.2 | 7.7 |
| Investments in associates and jointly controlled entities | – | -191.0 | |
| Dividends from associates and jointly controlled entities | 12, 13 | 207.4 | 322.3 |
| Net cash flows from investing activities | 999.7 | 1 238.2 | |
| New non-current liabilities | 20 | 7 770.0 | 4 380.0 |
| Repayment of non-current liabilities | 20 | -6 509.5 | -2 662.6 |
| New current liabilities | 20 | 2 642.0 | 3 200.0 |
| Repayment of current liabilities | 20 | -2 882.0 | -4110.0 |
| Purchase of non-controlling interests | – | -71.7 | |
| Dividends paid | 17 | -416.6 | -137.0 |
| Net cash flows from financing activities | 603.9 | 598.8 | |
| Net change in cash and cash equivalents | 112.6 | 16.5 | |
| Cash and cash equivalents at the start of the period | 64.8 | 48.3 |
Notes 1 through to 33 form an integral part of the consolidated financial statements.
Entra Eiendom AS was established on 01.07.2000. Entra is 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 1,218,040 square metres and 1,018,143 square metres under management. The management portfolio's economic occupancy level was 95.8 % at the year-end. Entra's head office is situated in Oslo. Regional offices are located in Oslo, Bergen and Trondheim.
All of the shares in the company are owned through Entra Holding AS by the Norwegian state, represented by the Ministry of Trade, Industry and Fisheries. The Board consists of five shareholder-elected members and two employee representatives. Entra operates in direct competition with private sector companies on a commercial basis.
The Group has 81(81) per cent public sector tenants as of 31.12.2013.
The consolidated financial statements were adopted by the company's Board on 31.03.2014.
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 Group'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 subjective 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 2013 financial year that have a significant impact on the consolidated financial statements.
The following amendments to standards with an impact on Entra's consolidated financial statements have been implemented with effect for 2013:
This standard was amended in June 2011. The amendments entail that all actuarial gains and losses are recognised in comprehensive income as they arise (no corridor), an immediate recognition of all costs relating to pension liabilities accrued in previous periods, and the replacement of interest expenses and anticipated return on pension assets with a net interest amount, calculated by applying the discount rate to the net pension liability (asset). The Group has applied the amended standard with effect from 01.01.2013 with a restatement of comparable figures with implementation effect as at 01.01. 2012. Implementation of the new standard involved an increase in the pension liability of NOK 17.3 million, a reduction in deferred tax of NOK 4.8 million
and a net effect on equity of NOK 12.4 million. Application of the new standard involved reduced administrative owner costs for 2012 of NOK 0.4 million, increased interest costs of NOK 1.9 million and an estimate difference after tax included in comprehensive income of NOK 34.8 million.
The standard is based on the existing principles defining control as the decisive factor in determining whether a company is to be included in the consolidated accounts of the parent company. The standard provides extensive guidance on determining whether control exists in difficult cases. The standard is not expected to have any significant consequences for the Group. The Group is applying the standard to accounting periods beginning on 01.01.2013, although the EU does not require its application until 01.01.2014.
The standard replaces IAS 31 "Interests in Joint Ventures" and SIC 13 "Jointly Controlled Entities – Non-monetary Contributions by Venturers". IFRS 11 has two main categories of joint arrangements: joint operations and joint ventures. Proportional consolidation is no longer permissible (the gross method). The equity method of accounting must be used for interests in jointly controlled entities. For arrangements classified as joint operations, the parties recognise their share of the assets and liabilities in the collaboration. The classification of joint arrangements is determined by the nature and terms of the arrangement, as opposed to its formal structure. The standard is not expected to entail any significant changes for the Group. The Group is applying the standard to accounting periods beginning on 01.01.2013, although the EU does not require its application until 01.01.2014.
The standard contains the disclosure requirements for financial interests in subsidiaries, jointly controlled entities, associates, special purpose entities (SPE) and other unconsolidated entities. The Group is applying the standard to accounting periods beginning on 01.01.2013, although the EU does not require its application until 01.01.2014.
The standard provides a precise definition of fair value for use in IFRS, provides a single framework describing how to measure fair value in IFRS, and defines what additional information must be disclosed when fair value is used. The standard does not expand the area of application for the use of fair value; rather it provides guidance on how it should be applied when fair value measurement is already required or permitted by other IFRSs. The Group measures certain assets and liabilities at fair value. The Group is applying the
standard to accounting periods beginning on 01.01.2013. The standard has no consequences for balance sheet amounts as at 31.12.2013.
The following standards, changes and interpretations of existing standards have been published and will be mandatory for the Group's financial statements that begin on or after 01.01.2014, but the Group has not chosen early implementation with effect for the 2013 financial year.
This standard has been amended with the result that items in comprehensive income are to be divided into two groups: those which are potentially re-classifiable to profit or loss subsequently and those which are not. This amendment does not affect which items are to be included in comprehensive income.
IFRS 9 was published in November 2009 and October 2010, replacing the rules in IAS 39 on recognition, classification and measurement of financial instruments. Under IFRS 9, financial assets are divided into two categories depending on how they are measured: those measured at fair value and those measured at amortised cost. Classification is made on initial recognition. Classification will depend on the business model the Group uses to handle its financial instruments and the contractual cash flow characteristics of the instrument. The rules for financial liabilities are largely the same as under IAS 39. The most significant change in cases where financial liabilities are measured at fair value is that part of gains or losses in the fair value of these instruments attributable to changes in the Group's own credit risk are to be presented in other comprehensive income, as opposed to in the income statement, as long as this does not result in accrual errors in the measurement of profit or loss. The Group intends to adopt IFRS 9 once the standard comes into force and has been approved by the EU. The standard comes into force for accounting periods starting on or after 1 January 2018. The Group will also examine the consequences of the remaining stages of IFRS 9 once these have been completed by the IASB. The Group has not yet assessed the full impact of IFRS 9.
IFRIC 21egulates the accounting of liabilities to pay special levies. The interpretation does not apply to tax on income. The interpretation sets out what events give rise to an accounting liability. The Group is not obliged to pay significant special levies, so the impact on the accounts will be insignificant.
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 consolidated financial statements.
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 ("actual control"). Actual 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 actual 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 remeasured, 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 profit or loss.
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 principles at jointly controlled entities are changed in order to bring them into line with the Group's accounting principles.
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 % 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 principles. 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 profit or loss. If the Group reduces its shareholding but retains significant influence, a proportionate share of the amounts previously recognised in comprehensive income is reclassified to profit or loss.
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 company's highest decision-making authority. The company'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.
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 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 through profit or loss.
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 propertyspecific 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 the value of investment property".
For properties where the Group is involved in constructing and/or upgrading public infrastructure, and where the Group operates and maintains the infrastructure for an agreed period of time, the infrastructure itself is not included in the Group's accounts, but is instead treated as a financial or intangible asset, depending on whether the Group has a public liability to pay/guarantee cash flows. In those cases where the Group has a contractual right to receive a specific amount or other financial asset from the public sector, in return for constructing or upgrading and subsequently maintaining/operating the asset for an agreed period, the infrastructure is deemed a financial asset as defined in IAS 39. If the Group is entitled to charge users of a public asset that it has constructed/upgraded, and it is responsible for maintaining and operating it for an agreed period, the entitlement is deemed an intangible asset as defined in IAS 38. The total amount recognised in income varies depending on the use of the asset. The Group has three properties classified as financial assets under IFRIC 12.
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 and groups of non-current 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. The management must be intending to sell the asset and must expect the sale to be completed within a year of the balance sheet date.
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 Group'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. 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 utility value 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 write-downs 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 "Adjustment to 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 pension schemes that are defined-benefit plans. A defined-benefit plan 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 definedbenefit 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 unit credit 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.
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.
In principle, deferred tax is not calculated on temporary differences arising from investments in subsidiaries and associates. This does not apply in cases where the Group 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. 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 Group. 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. 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 2013 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 % | Value change (NOKm)* |
|---|---|---|
| Inflation | + 1.00 % | 258.2 |
| Market rent | + 10.00 % | 1 911.0 |
| Discount rates | + 0.25 % | -654.4 |
| Exit yield | + 0.25 % | -439.9 |
* Estimates by DTZ Realkapital Verdivurdering AS in conjunction with valuations at 31 Desember 2013
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 4–2.
The carrying amount of financial liabilities classified at fair value through profit or loss will increase by NOK 300.3 million or decrease by NOK 301.1 million in the event of a parallel shift in market interest rates of +/- 1 percentage point.
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 2013, the discount rate was determined on the basis of bonds with preference rights.
If a discount rate is used which deviates from the management estimates by +/- 0.5 per cent, the carrying amount of the pension obligations will be NOK 11.1 million lower or NOK 11.2 million higher.
See Note 18 for more details on pensions and estimates.
IFRIC 12 regulates the building of public infrastructure by private operators commissioned by public authorities. The infrastructure is also to be operated by the private sector for a period, although the public sector retains control of the residual value. Entra has three properties regulated by these rules.
The value of the receivable has been calculated using estimates to which uncertainty is attached. The uncertainty relates to future rent payments. There is also uncertainty surrounding the property-specific estimates of future ownership costs, investments and purchase options.
All amounts in NOK million
The Board of Entra Eiendom AS 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 expected 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 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:
Liquidity 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 Group seeks to limit liquidity 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 company. The Group has defined a target range for its equity ratio of 25–35 per cent over the economic cycle. This means that the Group will normally aim for the median value of the target range, i.e. an equity ratio of 30 per cent. 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 company's cash flows and the market value of the company's liabilities. The main purpose of the company's strategy to manage interest rate risk is to ensure that the company 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 60 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, the Group wants the company'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 company's financial counterparties are continuously monitored.
The Group shall not incur any currency risk and at 31.12.2013 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 31.12.2013, the Group was not in breach of any covenants.
There are no covenants in relation to the Group's bond or commercial paper loans.
| 31.12.2013 | Remaining Term | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 | 58.3 | – | – | – | – | – | – | – | 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 |
| Total | 1 375.4 | 3 448.9 | 1 929.5 | 4 766.9 | 2 334.7 | 764.6 | 335.8 | 1 971.1 | 16 926.9 |
|---|---|---|---|---|---|---|---|---|---|
| Other financial liabilities | 79.8 | – | – | – | – | – | – | – | 79.8 |
| Trade payables | 191.4 | – | – | – | – | – | – | – | 191.4 |
| Financial instrument – interest rate derivatives |
27.5 | 178.5 | 160.9 | 292.8 | 197.3 | 98.3 | 11.2 | -89.7 | 876.8 |
| Commercial paper – estimated interest |
31.6 | 27.0 | – | – | – | – | – | – | 58.7 |
| Commercial paper – principal | 982.0 | 908.0 | – | – | – | – | – | – | 1 890.0 |
| Bonds – estimated interest | 21.6 | 209.4 | 226.8 | 294.8 | 191.7 | 127.9 | 101.6 | 406.6 | 1 580.5 |
| Bonds – principal | – | – | 1 425.0 | 1 200.0 | 1 600.0 | 500.0 | – | 1 100.0 | 5 825.0 |
| Interest-bearing bank loans – estimated interest |
41.6 | 125.9 | 116.8 | 184.3 | 50.7 | 38.4 | 27.9 | 47.2 | 632.8 |
| Interest-bearing bank loans – principal |
– | 2 000.0 | – | 2 795.0 | 295.0 | – | 195.0 | 507.0 | 5 792.0 |
| 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 | |
| 31.12.2012 | Remaining Term ' |
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 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31.12.2013 | 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 |
| Parent company's unused credit facilities |
– | – | 250.0 | 2 410.0 | 700.0 | – | – | – | 3 360.0 |
| Subsidiaries' unused credit facilities | – | – | – | – | – | 65.0 | – | – | 65.0 |
| Total unused credit facilities | – | – | 250.0 | 2 410.0 | 700.0 | 65.0 | – | – | 3 425.0 |
| Unused credit facilities | Term to Maturity ' | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31.12.2012 | 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 |
| Parent company's unused credit facilities |
– | – | – | 1 500.0 | 2 455.0 | – | – | – | 3 955.0 |
| Subsidiaries' unused credit facilities | – | – | – | 60.0 | – | – | 65.0 | – | 125.0 |
| Total unused credit facilities | – | – | – | 1 560.0 | 2 455.0 | – | 65.0 | – | 4 080.0 |
At 31.12.2013, the Group had NOK 142.2 (NOK 31.7) million of available liquid assets. See Note 16.
The Group's liabilities are subject to fixed interest rates (62 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 longterm, stable cash flow.
At 31 December 2013, the weighted average duration was 3.0 (3.2) years. The average credit interest rate was 4.47 (5.13) per cent at 31 December 2013.
The table below shows the nominal value of outstanding current and non-current interest-bearing debt including derivatives.
| As at 31.12.2013 | 31.12.2014 | 31.12.2015 | 31.12.2017 | 31.12.2019 | 31.12.2021 | 31.12.2023 | 31.12.2023+ | Total |
|---|---|---|---|---|---|---|---|---|
| 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 | |
| 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 |
| As at 31.12.2012 | 31.12.2013' | 31.12.2014 | 31.12.2016 | 31.12.2018 | 31.12.2020 | 31.12.2022 | 31.12.2022+ | Total |
| 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 | |
| Percentage | 39 % | 4 % | 15 % | 14 % | 18 % | 5 % | 6 % | 100 % |
| Amount | 5 215.0 | 600.0 | 2 020.0 | 1 832.0 | 2 450.0 | 650.0 | 760.0 | 13 527.0 |
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.
| 31.12.2013 | Total change in profit/loss (after tax) * |
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 |
| 31.12.2012 | Total change in profit/loss (after tax) |
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 | 283.0 | -33.1 | 316.1 |
| Interest-bearing debt | 81.3 | -62.0 | 143.4 |
| Derivatives | 201.7 | 29.0 | 172.7 |
| Market rates fall by 1 percentage point | -303.4 | 33.1 | -336.5 |
| Interest-bearing debt | -81.3 | 62.0 | -143.4 |
| Derivatives | -222.1 | -29.0 | -193.2 |
* A positive figure signifies an increase in profit after tax.
| Key figures for the Group's financial instruments | 2013 | 2012 |
|---|---|---|
| Nominal value of interest rate derivatives on the balance sheet date** | 13 554.5 | 14 087.0 |
| of which | ||
| - Fixed-to-variable swaps** | 3 992.5 | 3 075.0 |
| - Variable-to-variable swaps | 0.0 | 700.0 |
| - Variable-to-Fixed swaps | 9 512.0 | 8 612.0 |
| - Options or option-related products | 50.0 | 1 700.0 |
| Range of fixed interest rates | From 2.377 % to 5.950 % | From 2.94% to 5.950 % |
| Variable rate basis | NIBOR | NIBOR |
|---|---|---|
| Average fixed rate excl. futures contracts | 4.67 % | 4.92 % |
| Average fixed rate incl. futures contracts | 4.49 % | 4.66 % |
| Fair value of derivatives on the balance sheet date (NOKm) | 644.5 | 790.8 |
| Change in fair value of bank loans over the year | 0.0 | -136.2 |
| Change in fair value of bonds over the year | 38.5 | -98.2 |
| Change in fair value of interest rate derivatives over the year | 146.4 | -21.4 |
| Premiums/discounts, loan drawings | -1.2 | -16.1 |
| Total change in fair value of financial instruments | 183.7 | -272.0 |
** NOK 3 993 (NOK 3 075) 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 9 562 (NOK 10 312) million. NOK 9 512 (NOK 10 312) million of this consists of pure interest rate swaps, whilst NOK 50 (NOK 1,700) million is interest rate options or option-related products. Option-related products are used either to put a ceiling on parts of the Group's future interest rate expenses, or to reduce the current interest rate on the portfolio by issuing options that expose the company to a limited amount of risk. The majority of the Group's option-related agreements are standard interest rate swaps where the bank has an option to extend the maturity date of the contracts.
All amounts in NOK million
| Total financial assets | 1 485.7 | 0.6 | 203.5 | 1 689.7 | Total financial liabilities |
848.0 | 5 723.5 | 9 233.3 | 15 804.8 |
|---|---|---|---|---|---|---|---|---|---|
| Cash and cash equivalents |
177.4 | – | – | 177.4 | |||||
| Other current receivables | 538.1 | – | – | 538.1 | Other current liabilities |
– | – | 58.3 | 58.3 |
| Trade receivables | 27.9 | – | – | 27.9 | Trade payables | – | – | 290.0 | 1290.0 |
| Financial derivatives | – | – | 203.5 | 203.5 | Financial derivatives |
848.0 | – | – | 848.0 |
| – other financial assets | 742.3 | –' | – | 742.3 | Interest-bearing current liabilities |
– | 2 357.7 | 450.0 | 2 807.7 |
| – shares | –' | 0.6 | – | 0.6 | Interest-bearing non-current liabilities |
– | 3 365.7 | 8 435.0 | 11 800.7 |
| Financial investments | |||||||||
| Assets | Liabilities | ||||||||
| Held for sale | Held for sale |
Designated upon initial recognition |
|||||||
| 31.12.2013 | Loans and receivables |
Finacial assets available for sale |
Finacial assets at fair value through profit and loss |
Total | Financial liabilities at fair value through profit or loss |
Financial liabilities at amor tised cost |
Total |
| 31.12.2012 | Loans and receivables |
Finacial assets available for sale |
Finacial assets at fair value through profit and loss |
Total | Financial liabilities at fair value through profit or loss |
Financial liabilities at amor tised cost |
Total | ||
|---|---|---|---|---|---|---|---|---|---|
| Held for sale | Held for sale |
Designated upon initial recognition |
|||||||
| Assets | Liabilities | ||||||||
| Financial investments | |||||||||
| – shares | – | 0.4 | – | 0.4 | Interest-bearing non-current liabilities |
– | 3 194.5 | 6 542.0 | 9 736.5 |
| – other financial assets | 1 129.1 | – | – | 1 129.1 | Interest-bearing current liabilities |
– | 1 910.0 | 2 000.0 | 3 910.0 |
| Financial derivatives | – | – | 214.3 | 214.3 | |||||
| Trade receivables | 20.1 | – | – | 20.1 | Financial derivatives |
1 005.2 | – | – | 1 005.2 |
| Other current receivables | 49.9 | – | – | 49.9 | Trade payables | – | – | 191.4 | 191.4 |
| Cash and cash equivalents |
64.8 | – | – | 64.8 | Other current liabilities |
– | – | 79.8 | 79.8 |
| Total financial assets | 1 263.9 | 0.4 | 214.3 | 1 478.6 | Total financial liabilities |
1 005.2 | 5 104.5 | 8 813.1 | 14 922.8 |
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.
| Financial assets at fair value | 31.12.2013 | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Financial assets at fair value through profit or loss |
||||
| – Derivatives | 203.5 | – | 203.5 | – |
| Financial assets available for sale | ||||
| – Equity instruments | 0.6 | – | – | 0.6 |
| Total | 204.0 | – | 203.5 | 0.6 |
| Financial liabilities at fair value | 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 | – |
| Financial assets at fair value | 31.12.2012 | Level 1 | Level 2 | Level 3 |
| Financial assets at fair value through profit or loss |
||||
| – Derivatives | 214.3 | – | 214.3 | – |
| Financial assets available for sale | ||||
| – Equity instruments | 0.4 | – | – | 0.4 |
| Total | 214.6 | – | 214.3 | 0.4 |
| Financial liabilities at fair value | 31.12.2012 | Level 1 | Level 2 | Level 3 |
| Financial liabilities at fair value through profit or loss |
||||
| – Derivatives | 1 005.2 | – | 1 005.2 | – |
| – Bank loans | – | – | – | – |
| – Bonds | 3 194.5 | – | 3 194.5 | – |
| – Commercial paper | 1 890.0 | – | 1 890.0 | – |
| – Other | 20.0 | – | – | 20.0 |
| 2013 | 2012 | |||
|---|---|---|---|---|
| Fair value | Carrying amount | Fair value | Carrying amount | |
| Loans to associates | 204. – |
– – |
26.7 | 6.7 |
| Financial assets – service concession arrangements (IFRIC 12) | 1 285.0 | 1 122.0 | 1 296.7 | 1 122.6 |
| Trade receivables | 27.9 | 27.9 | 20.1 | 20.1 |
| Closing balance | 1 312.9 | 1 149.9 | 1 323.5 | 1 149.5 |
The fair value is the same as the carrying amount for loans to 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. For service concession arrangements, fair value has been set as the average of two external valuers' estimates of the fair values of the properties in question; see Note 3.
The difference between the fair value and the amortised cost of interest-bearing liabilities with variable interest rates is described in note 20. Other financial liabilities are short term and the difference between the fair value and the amortised cost is marginal.
All amounts in NOK million
| 2013 | 2012 | |
|---|---|---|
| Interest income* | 108.5 | 298.2 |
| Other finance income | 1.4 | 0.0 |
| Total interest and other finance income | 109.9 | 98.2 |
| Interest expenses | 686.9 | 690.7 |
| – of which capitalised loan arrangement fees | -45.3 | -43.9 |
| Other finance expenses | 33.2 | 43.4 |
| Total interest and other finance expense | 674.9 | 690.2 |
| Average interest on capitalised loan arrangement fees | 4.9 % | 5.5 % |
Interest income consists mainly of the impact of IFRIC 12 on financial assets where the Group's counterparty is the state. Accrued interest from IFRIC 12 is NOK 95.4 million (NOK 96.1 million). The effective interest rate based on the asset's cash flow is used to calculate the finance income for the period.
The Group established a regional model at the end of the second quarter of 2013. With effect from the fourth quarter of 2013 the business reports under four geographic operating segments in line with IFRS 8: Central Oslo, Greater Oslo, Southern and Western Norway and Central and Northern 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 operational management and decision-making body.
Expenses related to staff and support functions for the operating segments and group eliminations are included in the segment Group. Finance expenses, finance income and tax are handled at Group level.
| 31.12.2013 | Central Oslo | Greater Oslo | South & West | Central & North | Group | Consolidated |
|---|---|---|---|---|---|---|
| Rental income | 667.3 | 453.0 | 222.4 | 201.2 | (0.1) | 1 543.9 |
| Other operating revenue | 18.2 | 5.3 | 3.5 | 3.7 | – | 30.7 |
| Total operating revenue | 685.5 | 458.3 | 226.0 | 204.9 | (0.1) | 1 574.6 |
| Maintenance | 33.2 | 10.6 | 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 |
| Administrative owner costs | 13.2 | 12.6 | 11.0 | 13.6 | 171.6 | 222.1 |
| Total operating costs | 108.2 | 77.7 | 44.7 | 39.5 | 197.5 | 467.6 |
| Profit from property management | 577.3 | 380.6 | 181.3 | 165.4 | (197.6) | 1 107.0 |
| 31.12.2012 | Central Oslo | Greater Oslo | South & West | Central & North | Group | Consolidated |
|---|---|---|---|---|---|---|
| Rental income | 691.9 | 445.8 | 201.9 | 161.2 | (0.6) | 1 500.2 |
| Other operating revenue | 17.7 | 6.0 | 4.6 | 4.1 | – | 32.4 |
| Total operating revenue | 709.6 | 451.9 | 206.5 | 165.3 | (0.6) | 1 532.7 |
| Maintenance | 33.4 | 17.2 | 9.0 | 8.0 | (1.3) | 66.2 |
| Operating costs | 29.1 | 22.1 | 13.6 | 16.7 | 5.4 | 86.8 |
| Other property costs | 75.6 | 21.8 | 10.2 | 2.6 | 6.9 | 117.1 |
| Administrative owner costs | 7.3 | 10.3 | 10.9 | 10.5 | 155.6 | 194.7 |
| Total operating costs | 145.4 | 71.5 | 43.7 | 37.7 | 166.5 | 464.9 |
| Profit from property management | 564.1 | 380.4 | 162.9 | 127.6 | (167.1) | 1 067.8 |
There were no major transactions in 2013 or 2012.
| 2013 | Concept development | Options | Other intangible assets* | Total intangible assets |
|---|---|---|---|---|
| Acquisition cost at 01.01.2013 | 15.5 | 3.5 | 43.2 | 62.2 |
| Acquisitions | 10.6 | – | 5.9 | 16.5 |
| Disposals | -14.0 | – | – | -14.0 |
| Acquisition cost at 31.12.2013 | 12.1 | 3.5 | 49.2 | 64.7 |
| Accumulated depreciation and write-downs at 01.01.2013 |
– | – | 25.9 | 25.9 |
| Depreciation and write-downs | 14.0 | 0.5 | 7.5 | 22.0 |
| Disposals | -14.0 | – | – | -14.0 |
| Accumulated depreciation and write-downs at 31.12.2013 |
– | 0.5 | 33.4 | 33.9 |
| Carrying amount at 31.12.2013 | 12.1 | 3.0 | 15.8 | 30.9 |
| Anticipated useful life | 5 years | |||
| Depreciation schedule | Linear | |||
| 2012 | Concept development | Options | Other intangible assets* | Total intangible assets |
| Acquisition cost at 01.01.2012 | – | 3.5 | 40.1 | 43.6 |
| Acquisitions | 79.1 | – | 12.2 | 91.3 |
| Disposals | -63.6 | – | -9.1 | -72.7 |
| Acquisition cost at 31.12.2012 | 15.5 | 3.5 | 43.2 | 62.2 |
| Accumulated depreciation and write-downs at 01.01.2012 |
– | – | 27.1 | 27.1 |
| Depreciation and write-downs | 25.4 | – | 7.8 | 33.2 |
| Disposals | -25.4 | – | -9.1 | -34.5 |
| Accumulated depreciation and write-downs at | ||||
| 31.12.2012 | – | – | 25.9 | 25.9 |
| Carrying amount at 31.12.2012 | 15.5 | 3.5 | 17.3 | 36.3 |
| Anticipated useful life | 5 years |
* Other intangible assets relate to software.
All amounts in NOK million
| Value of investment properties | 2013 | 2012 |
|---|---|---|
| Opening balance at 1.1 | 22 936.7 | 21 880.4 |
| Other movements | ||
| New acquisitions | 591.2 | 412.8 |
| Improvements | 1 045.4 | 984.0 |
| Capitalised loan arrangement fees | 45.3 | 43.9 |
| Disposals | -590.5 | -420.7 |
| Reclassified as housing units for sale | – | -92.8 |
| Value change operational leases | -39.8 | -25.4 |
| Value change investment property | -455.2 | 154.3 |
| Closing balance 31.12 | 23 533.0 | 22 936.7 |
| Of which investment properties held for sale | 388.2 | 734.2 |
| Investment properties | 23 144.8 | 22 202.5 |
Investment properties held for sale comprise 5 (7) 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 2013, the Group has identified four 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 4-2.
For information about valuations and fair value calculations for investment properties, see Note 3 "Critical accounting estimates and subjective judgements".
The design and construction of housing units for sale began in 2012. Until the units are completed and transferred to buyers, they are treated as current assets. Their total carrying amount at 31.12.2013 was NOK 227 million (NOK 120.2 million).
All amounts in NOK million
| 2013 | Property used by owner | Other plant and equipment | Total |
|---|---|---|---|
| Acquisition cost at 01.01.2013 | 7.5 | 68.0 | 75.5 |
| Acquisitions | 1.0 | 21.7 | 22.7 |
| Disposals | – | -40.7 | -40.7 |
| Acquisition cost at 31.12.2013 | 8.5 | 49.0 | 57.5 |
| Accumulated depreciation and write-downs at 01.01.2013 |
1.8 | 41.8 | 43.5 |
| Depreciation | 0.1 | 4.8 | 4.9 |
| Disposals | – | -28.1 | -28.1 |
| Accumulated depreciation and write-downs 31.12.2013 |
1.8 | 18.5 | 20.3 |
| Carrying amount at 31.12.2013 | 6.7 | 30.5 | 37.2 |
| Anticipated useful life | 20–50 years | 1–5 years | |
| Depreciation schedule | Linear | Linear | |
| 2012 | Property used by owner | Other plant and equipment | Total |
| Acquisition cost at 01.01.2012 | 7.5 | 60.7 | 68.2 |
| Acquisitions | – | 13.3 | 13.3 |
| Disposals | – | -6.0 | -6.0 |
| Acquisition cost at 31.12.2012 | 7.5 | 68.0 | 75.5 |
| Accumulated depreciation and write-downs at 01.01.2012 |
1.5 | 35.3 | 36.8 |
| Depreciation | 0.2 | 6.8 | 7.0 |
| Disposals | – | -0.3 | -0.3 |
| Accumulated depreciation and write-downs 31.12.2012 |
1.8 | 41.8 | 43.5 |
| Carrying amount at 31.12.2012 | 5.8 | 26.2 | 32.0 |
| Anticipated useful life | 20–50 years | 1–5 years |
| Subsidiary | Acquisition date | Business office | Shareholding/voting rights |
|---|---|---|---|
| Oslo Z AS | 20.09.2000 | Oslo | 100 % |
| Biskop Gunnerusgt. 14 AS | 26.03.2001 | Oslo | 100 % |
| Universitetsgaten 2 AS | 03.09.2001 | Oslo | 100 % |
| Kunnskapsveien 55 AS | 17.12.2001 | Oslo | 100 % |
| Entra Kultur 1 AS | 28.02.2002 | Oslo | 100 % |
| Kristian Augustsgate 23 AS | 01.02.2003 | Oslo | 100 % |
| Nonnen Utbygging AS | 10.02.2003 | Oslo | 100 % |
| Langkaia 1 AS | 21.11.2003 | Oslo | 100 % |
| Kjørboparken AS | 21.12.2005 | Oslo | 100 % |
| Brattørkaia AS* | 31.01.2006 | Oslo | 100 % |
| Ribekk AS | 02.10.2006 | Oslo | 100 % |
| Bispen AS | 24.10.2007 | Oslo | 100 % |
| Pilestredet 28 AS | 07.05.2008 | Oslo | 100 % |
| Hagegata 22 og 24 AS | 01.10.2008 | Oslo | 100 % |
| Hagegata 23 AS | 29.03.2010 | Oslo | 100 % |
| Holtermanns veg 1–13 AS | 24.09.2010 | Oslo | 100 % |
| Karoline Kristiansen vei 2 AS | 15.02.2011 | Oslo | 100 % |
| Youngskvartalet AS | 30.03.2011 | Oslo | 100 % |
| Brødrene Sundt Verktøimaskinfabrik AS | 01.10.2011 | Oslo | 100 % |
| Tullinkvartalet AS | 21.11.2011 | Oslo | 100 % |
| Universitetsgaten 7 AS | 01.04.2012 | Oslo | 100 % |
| Greenfield Datacenter AS | 10.04.2012 | Oslo | 100 % |
| Wexelsplass Garasje AS | 11.06.2012 | Oslo | 100 % |
| Kristian Augustsgate 19 AS | 04.05.2012 | Oslo | 100 % |
| Papirbredden Eiendom AS | 12.01.2011 | Oslo | 60 % |
| Schweigaardsgate 16 AS | 20.02.2013 | Oslo | 100 % |
| Vahlsgate 1–3 KS** | 01.07.2013 | Oslo | 90 % |
| Vahlsgate 1–3 AS | 01.07.2013 | Oslo | 100 % |
| Hinna Park Eiendom AS | 20.12.2013 | Oslo | 100 % |
| 04.02.2005 | Drammen | 100 % |
|---|---|---|
| 12.01.2011 | Drammen | 100 % |
| 12.01.2011 | Drammen | 100 % |
| 12.01.2011 | Drammen | 100 % |
| 30.12.2010 | Drammen | 100 % |
| 31.01.2006 | Trondheim | 100 % |
| 31.01.2006 | Trondheim | 100 % |
| 31.01.2006 | Trondheim | 100 % |
| 31.01.2006 | Trondheim | 100 % |
| 03.02.2012 | Trondheim | 100 % |
| Ribekk AS | |||
|---|---|---|---|
| Ringstabekk AS | 30.06.2006 | Oslo | 100 % |
* Entra Eiendom AS increased its shareholding from 52 per cent to 100 per cent of the shares in Brattørkaia AS on 24.10.2012.
** Remaining 10 % of interests are owned by Vahlsgate 1-3 AS.
Investments in associates are recognised using the equity method.
| 31.12.2013 | Acquisition date | Business office | Shareholding/ voting rights |
Carrying amount | Share of profit/ loss |
Of which value changes under IFRS * |
|---|---|---|---|---|---|---|
| Associated companies | ||||||
| Ullandhaug Energi AS | 07.07.09 | Stavanger | 44.00 % | 6.7 | 0.2 | – |
| Tverrforbindelsen AS*** | 24.04.09 | Trondheim | 33.33 % | – | -0.2 | – |
| Greenfield Property AS** | 26.09.11 | Oslo | 33.00 % | – | – | – |
| Youngstorget Parkeringshus AS | 16.11.05 | Oslo | 21.26 % | – | – | – |
| Total associated companies | 6.8 | 0.0 | – | |||
| 31.12.2012 | Acquisition date | Business office | Shareholding/ voting rights |
Carrying amount | Share of profit/ loss |
Of which value changes under IFRS * |
| Associated companies | ||||||
| Ullandhaug Energi AS | 07.07.09 | Stavanger | 44.00 % | 6.6 | 0.5 | – |
| Tverrforbindelsen AS | 24.04.09 | Trondheim | 33.33 % | 0.2 | -0.1 | – |
| Greenfield Property AS** | 26.09.11 | Oslo | 33.00 % | – | -12.6 | – |
| Youngstorget Parkeringshus AS | 16.11.05 | Oslo | 21.26 % | – | -0.1 | – |
| Total associated companies | 6.7 | -12.3 | – |
* Changes in value under IFRS consist of changes in the value of property, loans and interest rate hedging instruments, plus calculated deferred tax on the changes. ** Entra sold down in Greenfield Property AS, where Norwegian Datasenter Group AS bought 67 % of the company.
*** Tverrforbindelsen AS was wound up on 17.12.2013.
| Movement in carrying amount of associates | Carrying amount 31.12.2012 |
Share of profit/ loss for 2013 |
Dividend 2013 | Capital injection/ reduction |
Carrying amount 31.12.2013 |
|---|---|---|---|---|---|
| Associated companies | |||||
| Ullandhaug Energi AS | 6.6 | 0.2 | – | – | 6.7 |
| Tverrforbindelsen AS | 0.2 | -0.2 | – | – | – |
| Greenfield Property AS | – | – | – | – | – |
| Youngstorget Parkeringshus AS | – | – | – | – | – |
| Total associated companies | 6.7 | 0.0 | – | – | 6.8 |
| Movement in carrying amount of associates | Carrying amount 31.12.2011 |
Share of profit/ loss for 2012 |
Dividend 2012 | Capital injection/ reduction |
Carrying amount 31.12.2012 |
|---|---|---|---|---|---|
| Associated companies | |||||
| Ullandhaug Energi AS | 6.1 | 0.5 | – | – | 6.6 |
| Tverrforbindelsen AS | 0.3 | -0.1 | – | – | 0.2 |
| Greenfield Property AS | – | -12.6 | – | 12.6 | – |
| Kunnskapsbyen Eiendom AS | 5.7 | – | – | -5.7 | – |
| Youngstorget Parkeringshus AS | 0.1 | -0.1 | – | – | – |
| Total associated companies | 12.2 | -12.3 | – | 6.9 | 6.7 |
| Aggregate financial information about associates | ||
|---|---|---|
| (Figures stated refer to Entra's ownership interest) | 2013 | 2012 |
| Operating revenue | 4.0 | 3.7 |
| Profit after tax | 0.2 | -12.3 |
| Total comprehensive income | 0.2 | -12.3 |
| Total assets 145.4 71.5 43.7 |
26.2 | 1628.8 |
| Equity | 6.6 | 6.7 |
| Total liabilities | 19.6 | 22.0 |
Investments in jointly controlled entities are recognised using the equity method.
| 31.12.2013 | Acquisition date | Business office | Shareholding/ voting rights |
Carrying amount | Share of profit/ loss |
Of which value changes under IFRS * |
|---|---|---|---|---|---|---|
| Jointly controlled entities | ||||||
| Sørlandet Kunnskapspark Eiendom AS | 02.06.2005 | Kristiansand | 51.00 % | 6.1 | 1.7 | 2.8 |
| UP Entra AS | 31.12.2003 | Hamar | 50.00 % | 103.9 | -9.2 | -15.9 |
| Entra OPF Utvikling AS | 21.04.2012 | Oslo | 50.00 % | 393.7 | 20.1 | -8.0 |
| Oslo S Utvikling AS | 01.07.2004 | Oslo | 33.33 % | 617.9 | 222.8 | -9.7 |
| Total jointly controlled entities | 1 121.6 | 235.4 | -30.7 |
| 31.12.2012 | Acquisition date | Business office | Shareholding/ voting rights |
Carrying amount | Share of profit/ loss |
Of which value changes under IFRS * |
|---|---|---|---|---|---|---|
| Jointly controlled entities | ||||||
| Sørlandet Kunnskapspark Eiendom AS | 02.06.2005 | Kristiansand | 51.00 % | 4.3 | -5.7 | -7.4 |
| UP Entra AS | 31.12.2003 | Hamar | 50.00 % | 113.1 | -11.6 | -14.5 |
| Entra OPF Utvikling AS | 21.04.2012 | Oslo | 50.00 % | 403.3 | 15.8 | -0.3 |
| Oslo S Utvikling AS | 01.07.2004 | Oslo | 33.33 % | 572.8 | 522.6 | -11.4 |
| Total jointly controlled entities | 1 093.5 | 521.1 | -33.6 |
* Changes in value under IFRS consist of changes in the value of property, loans and interest rate hedging instruments, plus calculated deferred tax on the changes.
| Movement in carrying amount of jointly controlled entities |
Carrying amount 31.12.2012 |
Share of profit/ loss for 2013 |
Dividend 2013 | Capital injection/ reduction |
Carrying amount 31.12.2013 |
|---|---|---|---|---|---|
| Jointly controlled entities | |||||
| Sørlandet Kunnskapspark Eiendom AS | 4.3 | 1.7 | – | – | 6.1 |
| UP Entra AS | 113.1 | -9.2 | – | – | 103.9 |
| Entra OPF Utvikling AS | 403.3 | 20.1 | -29.7 | – | 393.7 |
| Oslo S Utvikling AS | 572.8 | 222.8 | -177.7 | – | 617.9 |
| Total jointly controlled entities | 1 093.5 | 235.4 | -207.4 | 0.0 | 1 121.6 |
| Movement in carrying amount of jointly controlled entities |
Carrying amount 31.12.2011 |
Share of profit/ loss for 2012 |
Dividend 2012 | Capital injection/ reduction |
Carrying amount 31.12.2012 |
|---|---|---|---|---|---|
| Jointly controlled entities | |||||
| Sørlandet Kunnskapspark Eiendom AS | 10.0 | -5.7 | – | – | 4.3 |
| UP Entra AS | 107.3 | -11.6 | – | 17.5 | 113.1 |
| Entra OPF Utvikling AS | 145.4– | 15.8 | 43. – | 387.5 | 16403.3 |
| Oslo S Utvikling AS | 372.5 | 522.6 | -322.3 | – | 572.8 |
| Total jointly controlled entities | 489.8 | 521.1 | -322.3 | 405.0 | 1 093.5 |
| Aggregate financial information about jointly controlled entities | 2013 | 2012 |
|---|---|---|
| (Figures stated refer to Entra's ownership interest) | ||
| Operating revenue | 873.9 | 1 670.2 |
| Profit after tax | 235.4 | 532.4 |
| Total comprehensive income | 235.4 | 532.4 |
| Total assets | 1 619.7 | 1 898.9 |
| Equity | 1 120.2 | 1 031.5 |
| Total liabilities | 499.5 | 867.4 |
The Group owns 33.33 per cent of Oslo S Utvikling AS, which represents a significant asset to the Group.
There has not been any change in the share of ownership or voting rights in this jointly controlled company in 2013.
The Group received NOK 177.7 million (NOK 291.6 million) in dividends from OSU in 2013. In 2012 the Group also received the repayment of paid-in capital of NOK 30.7 million after reduction of the share premium reserve.
| Summary of significant accounting items in the consolidated financial statements of Oslo S Utvikling AS after IFRS adjustments for 2013 and 2012 (100 %) |
2013 | 2012 | |
|---|---|---|---|
| Balance sheet: | |||
| Current assets | 1 987.2 | 2 761.9 | |
| of which cash and cash equivalents | 62.7 | 32.0 | |
| Non-current assets | 242.8 | 227.1 | |
| Current liabilities | 285.5 | 434.0 | |
| of which current financial liabilities other than accounts payable and provisions | 0.0 | 325.8 | |
| Non-current liabilities | 245.9 | 1 020.7 | |
| of which non-current financial liabilities other than accounts payable and provisions |
245.9 | 1 020.7 | |
| Income statement: | |||
| Operating revenue | 2 329.2 | 3 720.4 | |
| Operating expenses | -1 640.4 | -2 094.2 | |
| of which depreciation and write-downs | -0.7 | -0.8 | |
| Net financial items | -21.3 | -88.0 | |
| of which interest income | 1.3 | 2.6 | |
| of which interest expenses | -40.1 | -36.2 | |
| Profit before tax | 667.5 | 1 538.1 | |
| Tax expense | 29.8 | 63.8 | |
| Profit after tax | 697.2 | 1 601.9 | |
| Total comprehensive income | 697.2 | 1 601.9 | |
| Reconciliation of carrying amount | Shareholding | 2013 | 2012 |
| Net assets | 100 % | 1 698.6 | 1 534.4 |
| Group's shareholding in the company | 33.33 % | 566.1 | 511.4 |
| Added value | 33.33 % | 51.7 | 61.4 |
| Carrying amount of Group's shareholding | 33.33 % | 617.8 | 572.8 |
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.
At 31.12.2013, OSU was on course to develop approx. 300,000 square metres, which is around one-third of the total area being developed at Bjørvika. OSU's most important projects are described below.
Up to the end of 2012 OSU had completed the PwC-building, the KLP-building, the Visma-building and two DNB-buildings. The gain on the sales, taking into account the seller's future commitments, is recognised in the completion year.
In 2013 a housing project (B 11), the last of the three DNB buildings and the Deloitte building were completed. All the apartments in the housing project have been sold apart from the show apartment. In the case of the two other buildings the office parts are fully let. The two office parts were taken over by their respective purchasers on completion. Sales gains, taking into account seller's future obligations, were recognised in 2013.
Barcode Basement AS, a subsidiary of OSU, is a separate company that owns, and which is developing and building, all of the underground areas in the Barcode zone (gross area of 70,000 square metres, just over 50 per cent of which Basement will be responsible for), and the business will lease out storage, parking spaces and plant/plant rooms for the buildings above. At year-end 2013, the areas from the western limit (under the PwC Building) to and including the DNB buildings had been completed and for the most part leased. The remaining areas will be completed over the period 2014–2015.
Building work is taking place in what is referred to as Zone B 13. A total of approximately 230 apartments are to be built here together with retail and some office space. At the end of 2013 two of the three residential blocks had been commenced/committed. Completion of these is expected in the autumn of 2014 and autumn of 2015 respectively. With regard to the part that is mainly residential and retail space, procurement contracts have been entered into for approximately 67% of the project.
OSU owns 34 per cent of Bjørvika Utvikling/Bjørvika Infrastruktur. These companies are mainly involved in building infrastructure at Bjørvika, with an estimated cost of NOK 2,000–2,500 million. The costs are covered by developers, who pay a fixed amount per square metre of development, as well as by a contribution of NOK 300 million from the City of Oslo. Payments are due at certain milestones, with 30 per cent due when work above ground level starts, 50 per cent on completion of the buildings' structures and 20 per cent on their completion. The infrastructure contributions have been incorporated into the cost estimates for the various buildings. All infrastructure is to be transferred to the City of Oslo free of charge.
All contractual obligations on the balance sheet date that have not been capitalised are included in the table below.
| Contractual obligations | 2013 | 2012 |
|---|---|---|
| Property, plant and equipment | 192 | 269 |
| Total contractual obligations | 192 | 269 |
All amounts in NOK million
| Total other non-current receivables | 742.8 | 1 129.5 |
|---|---|---|
| Other non-current receivables | 63.1 | 6.8 |
| Financial assets – service concession arrangements (IFRIC 12) |
679.7 | 1 122.6 |
| 2013 | 2012 | |
All amounts in NOK million
| 2013 | 2012 | |
|---|---|---|
| Trade receivables | 30.1 | 23.0 |
| Provisions for bad debts | -2.2 | -2.9 |
| Net trade receivables | 27.9 | 20.1 |
| Other current receivables | 538.1 | 49.9 |
At 31.12.2013, NOK 21 (NOK 20.1) million in trade receivables were overdue. Provisions for a loss of NOK 2.2 (NOK 2.9) million have been made for overdue trade receivables. Trade
receivables relate to various customers who historically have not had problems with meeting their obligations. The age analysis of these trade receivables is as follows:
| Trade receivables | 2013 | 2012 |
|---|---|---|
| Up to 3 months | 7.3 | 3.5 |
| Over 3 months | 13.9 | 16.6 |
| Total overdue | 21.2 | 20.1 |
| arrangements (IFRIC 12) | ||
|---|---|---|
| Financial receivables – service concession | 442.3 | – |
| Other current receivables | 16.0 | 11.6 |
| Accrued interest | 39.0 | 2.6 |
| VAT owed | 38.7 | – |
| Advance payments and accruals | 2.0 | 31.1 |
| Shared costs to be distributed amongst tenants |
– | 4.6 |
| Other current receivables | 2013 | 2012 |
All amounts in NOK million
| 2013 | 2012 | |
|---|---|---|
| Bank deposits | 142.2 | 31.7 |
| Tied bank deposits | 35.2 | 33.1 |
| Total bank deposits | 177.4 | 64.8 |
Tied bank deposits relate to the withholding tax account and guarantees for loans.
The Group has paid-in equity of NOK 1,414.2 million, consisting of NOK 142.2 million in share capital and NOK 1,272 million in share premium reserve. There have been no equity transactions with the shareholders in the parent company in 2013. In November 2013 the 142 194 existing shares were amalgamated into a single share.
The share capital of NOK 142,194,000 consists of one share with a face value of NOK 142,194,000. All shares enjoy equal rights. All of the shares are owned by the Norwegian state represented by the Ministry of Trade, Industry and Fisheries through Entra Holding AS.
No provision is made for dividends in the consolidated accounts until the Annual General Meeting has been held and the dividend has been decided. In 2013, Entra Eiendom AS paid the adopted dividend for 2012 of NOK 416.6 million (NOK 2 929.80 per ordinary share).
All amounts in NOK million
The Group has pension schemes that cover a total of 152 (166) current employees and 54 (48) pensioners. The schemes provide an entitlement to 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 Group also has a contractual early-retirement scheme (AFP). At 31 December 2013, 11 (11) former employees had chosen to make use of the AFP scheme.
Entra's employees are members of the Norwegian Public Service Pension Fund. This is a defined-benefit pension scheme that gives all employees a guaranteed level of pension in the future. As a member of the Norwegian Public Service Pension Fund, the guaranteed pension level provides security for the amount of the retirement pension. 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 company's pension scheme satisfies the requirements of the Norwegian Act on Compulsory Occupational Pensions.
Entra operates an early retirement pension scheme (AFP) from the age of 62. 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 2013, the net pension liabilities associated with the AFP scheme amounted to NOK 7.4 (NOK 7.0) million, which is included under total pension liabilities in the table below.
Employees are also insured against incapacity and death.
The Chief Executive Officer, has an uninsured defined-benefit supplemental pension under which the company 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.
| Net pension liabilities on the balance sheet at 31.12 | 53.1 | 58.0 | 102.1 |
|---|---|---|---|
| Employers' NICs accrued | 6.5 | 6.3 | 11.6 |
| Fair value of pension scheme assets | -107.3 | -96.5 | -85.8 |
| Present value of accrued pension liabilities in defined-benefit schemes in unit trusts | 153.9 | 148.3 | 176.3 |
| The balance sheet liabilities have been calculated as follows | 2013 | 2012 | 01.01.2012 |
| Pension liabilities at 31.12 | 153.9 | 148.3 | 176.3 |
|---|---|---|---|
| Pension benefits paid | -4.7 | -4.4 | -4.3 |
| Actuarial losses/(gains) | -4.9 | -47.2 | 2.3 |
| Interest expense | 5.4 | 4.3 | 4.7 |
| Present value of pensions earned this year | 9.8 | 19.2 | 20.3 |
| Pension liabilities at 01.01 | 148.3 | 176.3 | 153.4 |
| Change in defined-benefit pension liabilities over the year | 2013 | 2012 | 01.01.2012 |
| Pension scheme funds at 31.12 | 107.3 | 96.5 | 85.8 |
|---|---|---|---|
| Pension benefits paid | -4.7 | -4.4 | -4.3 |
| Contributions from employer | 19.8 | 17.5 | 14.1 |
| Actuarial (gains)/losses | -8.5 | -4.8 | -2.8 |
| Anticipated return on pension scheme assets | 4.1 | 2.4 | 4.4 |
| Pension scheme assets at 01.01 | 96.5 | 85.8 | 74.4 |
| Change in fair value of pension scheme assets | 2013 | 2012 | 01.01.2012 |
| Total cost recognised in the income statement | 2013 | 2012 |
|---|---|---|
| Cost of pension benefits accrued during current period | 10.2 | 19.5 |
| Employers' National Insurance contributions | 2.7 | 3.1 |
| Total pension benefits accrued during the period | 12.9 | 22.6 |
| Net interest expense | 1.3 | 1.9 |
| Total pension benefits accrued in income statement | 14.2 | 24.6 |
| Estimate difference recorded in comprehensive income | 4.0 | -48.3 |
| Total pension benefits accrued in total comprehensive income | 18.2 | -23.8 |
The actual return on pension scheme assets was NOK - 4.4 million (NOK -2.3 million).
| The following economic assumptions have been used | 2013 | 2012 | 2011 |
|---|---|---|---|
| Discount rate | 4.00 % | 3.90 % | 2.60 % |
| Anticipated return on pension scheme assets | 4.40 % | 4.00 % | 4.10 % |
| Annual wage growth | 3.75 % | 3.50 % | 3.50 % |
| Annual adjustment to the National Insurance Scheme's basic amount ("G") | 3.50 % | 3.25 % | 3.25 % |
| Annual adjustment of pensions | 2.75 % | 2.50 % | 2.50 % |
| Mortality rates | K2013 | K2005 | K2005 |
| Disability rates | 200 % * K63 | 200% * K63 | 200% * K63 |
| Proportion of entitled employees making use of AFP | 20 % | 20 % | 40 % |
The actuarial assumptions are based on generally accepted assumptions in the insurance industry with regard to demographic factors.
| Total | 100 % | 100 % | 100 % |
|---|---|---|---|
| Other | 0 % | 0 % | 0 % |
| Property | 0 % | 0 % | 0 % |
| Shares | 0 % | 0 % | 0 % |
| Corporate bonds | 0 % | 0 % | 0 % |
| Government bonds | 100 % | 100 % | 100 % |
| Percentage distribution of the pension scheme assets by investment category at 31.12. | 2013 | 2012 | 2011 |
| Net defined-benefit pension liabilities | 46.6 | 51.7 | 90.5 | 60.4 | 66.9 |
|---|---|---|---|---|---|
| Fair value pension funds 31.12 | -107.3 | -96.5 | -85.8 | -74.4 | -66.5 |
| Gross defined-benefit pension liabilities | 153.9 | 148.3 | 176.3 | 134.8 | 133.4 |
| Amounts for the current year and for the four previous years | 2013 | 2012 | 2011 | 2010 | 2009 |
Sensitivity analysis for the assumptions used to calculate pension assets and liabilities
| Discount rate | Impact on liabilities | Impact in % | |
|---|---|---|---|
| 0.5 percentage point reduction | 3.50 % | 11.2 | 7.3 % |
| Discount rate at 31.12.2013 | 4.00 % | – | – |
| 0.5 percentage point increase | 4.50 % | -11.1 | -7.2 % |
| Wage growth | Impact on liabilities | Impact in % | |
| 0.5 percentage point reduction | 3.25 % | -5.7 | -3.7 % |
| Expected wage growth at 31.12.2013 | 3.75 % | – | – |
| 0.5 percentage point increase | 4.25 % | 5.6 | 3.7 % |
Expected payments to the defined-benefit pension plan for the period 01.01.2014 - 31.12.2014 are NOK 16.2 million.
| Total other liabilities | 126.6 | 126.5 |
|---|---|---|
| Provisions for non-current liabilities | 31.6 | 25.5 |
| Prepayments from customers | 95.0 | 101.0 |
| 2013 | 2012 |
| 2013 | Provision for rents/loss making contracts |
Maintenance provision (IFRIC 12) |
Other provisions | Total |
|---|---|---|---|---|
| Movements in provisions | ||||
| Opening balance at 01.01.2013 | – | 23.9 | 1.6 | 25.5 |
| Additional provisions during the year | – | 3.6 | 3.5 | 7.1 |
| Provisions used during the year | – | – | – | – |
| Unused provisions reversed during the year | – | -1.0 | – | -1.0 |
| Discounting of provisions | – | – | – | – |
| Transferred to current | – | – | – | – |
| Closing balance at 31.12.2013 | 0.0 | 26.5 | 5.1 | 31.6 |
| 2012 | Provision for rents/loss making contracts |
Maintenance provision (IFRIC 12) |
Other provisions | Total |
|---|---|---|---|---|
| Movements in provisions | ||||
| Opening balance at 01.01.2012 | 15.6 | 18.8 | 0.3 | 34.6 |
| Additional provisions during the year | – | 5.2 | 3.7 | 8.9 |
| Provisions used during the year | -3.7 | – | -0.3 | -4.0 |
| Unused provisions reversed during the year | -7.7 | – | -2.1 | -9.7 |
| Discounting of provisions | 0.5 | – | – | 0.5 |
| Transferred to current | -4.7 | – | – | -4.7 |
| Closing balance at 31.12.2012 | 0.0 | 23.9 | 1.6 | 25.5 |
As at 31.12.2013 Entra Eiendom had no provision for leased properties. At the end of 2012 there was a provision for Akersgata 55 and Dronningensgate 10-14 in Oslo. These rental liabilities were short-term as at 31.12.2012 and are included in note 22.
An assessment is made of the relationship between the rent paid by Entra Eiendom and the rental income that can be achieved by leasing out these premises. This assessment is based on the rental cost and rental income specified in current leases, as well as an evaluation of future rental income for vacant premises and for contracts that are expiring.
For properties leased by Entra, the company calculates the net cash flow over the duration of the lease. The present value of future cash flows is calculated using a discount rate of six per cent.
In the accounts, a provision is made at 31.12 equal to the estimated present value. Changes in the present value compared to the previous year are recorded through the income statement.
The contracts that the Group has signed with Vøyenenga school, Borgarting Court of Appeal and the National Library specify that the Group undertakes to maintain the buildings. A regular provision is therefore made in accordance with IAS 37 to cover future maintenance requirements.
All amounts in NOK million
| Non-current interest-bearing liabilities |
Nominal value 2013 |
Market value 2013 |
Carrying amount 2013 |
Nominal value 2012 |
Market value 2012 |
Carrying amount 2012 |
|---|---|---|---|---|---|---|
| Bank loans | 4 935.0 | 4 935.0 | 4 918.4 | 3 792.0 | 3 684.3 | 3 792.0 |
| Bonds | 6 800.0 | 7 003.1 | 6 881.0 | 5 825.0 | 5 936.2 | 5 944.5 |
| Total non-current interest-bearing liabilities |
11 938.1 | 11 799.4 | 9 620.5 | 9 736.5 | ||
| Current interest-bearing liabilities | Nominal value 2013 |
Market value 2013 |
Carrying amount 2013 |
Nominal value 2012 |
Market value 2012 |
Carrying amount 2012 |
| Bank loans | 16.6 | 16.6 | 16.6 | 2 000.0 | 1 992.9 | 2 000.0 |
| Bonds | 1 142.5 | 1 157.7 | 1 142.5 | – | – | – |
| Commercial paper | 1 650.0 | 1 650.0 | 1 650.0 | 1 890.0 | 1 890.0 | 1 890.0 |
| Other liabilities | – | – | – | 20.0 | 20.0 | 20.0 |
| Total current interest-bearing liabilities |
2 824.3 | 2 809.1 | 3 902.9 | 3 910.0 |
The average loan margin on the Group's loans at 31.12.2013 was 0.99 % (0.86 %).
The Group's bonds and commercial paper are subject to the following terms
| The Group's bonds at 31.12.2013 | ||||||
|---|---|---|---|---|---|---|
| ISIN | Issue limit | Coupon rate | Term to maturity | Amount issued* | Repurchased* | Net balance* |
| 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* | Repurchased* | Net balance* |
|---|---|---|---|---|---|---|
| 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 |
| ISIN | Issue limit | Coupon rate | Term to maturity | Amount issued* | Repurchased* | Net balance* |
|---|---|---|---|---|---|---|
| NO0010552458 | 1 500.0 | 4.95 % | 25.11.2014 | 975.0 | – | 975.0 |
| 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 |
| NO0010282031 | 1 100.0 | 4.62 % | 29.05.2030 | 1 100.0 | – | 1 100.0 |
| 5 825.0 |
| ISIN | Issue limit | Coupon rate | Term to maturity | Amount issued* | Repurchased* | Net balance* |
|---|---|---|---|---|---|---|
| NO0010637473 | 400.0 | 3.40 % | 10.01.2013 | 400.0 | 23.0 | 377.0 |
| NO0010638232 | 400.0 | 3.35 % | 11.02.2013 | 400.0 | 135.0 | 265.0 |
| NO0010642093 | 400.0 | 3.05 % | 11.03.2013 | 400.0 | 60.0 | 340.0 |
| NO0010649627 | 400.0 | 3.20 % | 10.04.2013 | 400.0 | – | 400.0 |
| NO0010656424 | 400.0 | 2.93 % | 10.05.2013 | 400.0 | 222.0 | 178.0 |
| NO0010656416 | 400.0 | 2.93 % | 10.07.2013 | 300.0 | 170.0 | 130.0 |
| NO0010659683 | 400.0 | 2.68 % | 12.08.2013 | 200.0 | – | 200.0 |
| 1 890.0 |
* nominal values
In general the Group's financing is based on the parent company borrowing from external parties using negative pledge clauses. Wholly-owned subsidiaries are generally financed using intra-group loans.
For projects/properties with special characteristics, separate mortgage-based financing can be arranged. At 31 December 2013, 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.
| 2013 | 2012 | |
|---|---|---|
| Carrying amount of liabilities secured through mortgages | 2 660.6 | 2 675.6 |
| Carrying amount of mortgaged assets | ||
| Buildings and sites | 126. 3 544.2 | 12 3 482.3 |
All amounts in NOK million
| 2013 | 2012 | |
|---|---|---|
| Trade payables | 290.0 | 191.4 |
| Holiday pay owed | 13.5 | 13.5 |
| Unpaid government taxes and duties | 126. 12.7 | 12 20.2 |
| Shared costs for buildings, owed to tenants | 27.3 | 37.1 |
| Interest accrued | 109.3 | 107.8 |
| Other liabilities | 4.7 | 9.0 |
| Total trade payables and other liabilities | 457.6 | 378.9 |
| 2013 | 2012 | ||
|---|---|---|---|
| Prepayments from customers | 67.3 | 54.8 | |
| Provisions for current liabilities | 27.8 | 25.2 | |
| Total prepayments and provisions | 95.0 | 80.1 | |
| Movements in provisions for current liabilities | Provisions for salaries and fees | Other | Total |
| Movements in provisions | |||
| Opening balance at 01.01.2013 | 18.2 | 7.0 | 25.2 |
| Additional provisions during the year | 25.2 | 1.8 | 27.0 |
| Provisions used during the year | -17.5 | -5.8 | -23.4 |
| Unused provisions reversed during the year | -0.7 | -0.4 | -1.1 |
| Transferred from non-current | – | – | – |
| Closing balance at 31.12.2013 | 25.2 | 2.5 | 27.8 |
| 2012 | Provisions for salaries and fees | Other | Total |
| Movements in provisions | |||
| Opening balance at 01.01.2012 | 19.1 | – | 19.1 |
| Additional provisions during the year | 21.3 | 2.6 | 23.9 |
| Provisions used during the year | -21.7 | – | -21.7 |
| Unused provisions reversed during the year | -0.5 | -0.3 | -0.8 |
| Transferred from non-current | – | 4.7 | 4.69 |
| Closing balance at 31.12.2012 | 18.2 | 7.0 | 25.2 |
The Group mainly enters into contracts with a fixed rent for the lease of property.
| Sum** | 15 034.7 | 14 767.7 |
|---|---|---|
| ≥ 5 years | 7 941.7 | 8 081.8 |
| 1 year < 5 years | 5 442.4 | 5 128.9 |
| ≤ 1 year | 1 650.7 | 1 557.0 |
| The Group's future accumulated rent from non-terminable operational lease contracts at 31.12 | 2013 | 2012 |
The Group's lease contracts at 31.12 have the following maturity structure measured in annual rent*
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Remaining term | No. of contracts |
Contract rent | Contract rent, % | No. of contracts |
Contract rent | Contract rent, % |
| ≤ 1 year | 99 | 167.5 | 10 % | 104 | 104.9 | 7 % |
| 1 year < 5 years | 173 | 223.4 | 14 % | 236 | 366.4 | 24 % |
| 5 years < 10 years | 147 | 572.3 | 35 % | 110 | 525.4 | 32 % |
| ≥ 10 years | 71 | 687.5 | 42 % | 49 | 560.3 | 36 % |
| Total** | 490 | 1 650.7 | 100 % | 499 | 1 557.0 | 100 % |
The table above shows the remaining non-terminable contractual rent for current leases without taking into account the impact of any options.
* The rent is stated as the annualised contractual rent, and is therefore not reconcilable with the rental income for the year for accounting purposes.
** Rent includes rent from IFRIC 12 properties classified under net finance in the income statement.
| Other parameters relating to the Group's lease portfolio | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Occupancy rate of the management portfolio* | 95.8 % | 95.8 % |
| Share of public sector tenants | 80.6 % | 79.0 % |
| Weighted average remaining contract term | 9.2 years | 9.5 years |
* In 2013 and 2012, the economic occupancy rate is stated in accordance with EPRA standards.
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.
| 2013 | 2012 | |
|---|---|---|
| Sales of maintenance services to tenants | 8.4 | 10.4 |
| Administrative charges | 8.8 | 8.8 |
| Service concession arrangements (IFRIC 12) recognised in the income statement |
6.6 | 7.1 |
| Other operating revenue | 6.9 | 6.1 |
| Total other operating revenue | 30.7 | 32.4 |
All amounts in NOK million
| Personnel costs | 2013 | 2012 |
|---|---|---|
| Salaries, performance-related pay and other taxable benefits* |
148.1 | 128.7 |
| Employers' National Insurance contributions | 20.7 | 18.8 |
| Pension expenses | 12.9 | 21.1 |
| Other personnel costs | 12.5 | 9.3 |
| Total personnel costs | 194.3 | 177.9 |
| Of which capitalised as projects under development | -13.1 | -15.7 |
| Of which shared costs to be distributed amongst tenants | -38.3 | -39.4 |
| Of which related to the ongoing operation of properties | -5.7 | -13.8 |
| Total salary and personnel costs | 137.2 | 109.1 |
| Number of employees/full-time equivalents | 2013 | 2012 |
| Number of employees at 31.12. | 152 | 163 |
| Number of full-time equivalents at 31.12. | 150 | 161 |
| Average number of employees | 148 | 159 |
* Salaries, performance-related pay and other taxable benefits includes a NOK 8.8 (NOK 13.8) million provision for performance-related pay for all employees in 2013, which has not yet been paid out.
The Board of Directors' statement on the determination of salaries and other remuneration of senior executives is presented to the Annual General Meeting. The statement is structured as follows:
General guidelines on the compensation of senior executives The Norwegian state has laid down guidelines for terms of employment for senior executives in state-owned enterprises and companies, cf. Report no. 13 (2010–2011) to the Norwegian parliament, Appendix 1. These guidelines form the basis for the Board's pay policy at Entra, and provide guidance concerning recruitment and employment processes and in connection with the annual review of the salaries of the Group's senior management team and the CEO.
Compensation of senior executives is based on the Group's general HR strategy and pay policy. Entra wants to be an attractive employer that attracts the best candidates and is able to retain and develop professional employees. To this end, Entra needs to be able to offer good pay packages,
including competitive salaries, to ensure the company can recruit and retain attractive expertise. The guidelines on remuneration stress in particular that the overall compensation shall be competitive, but not above those of other similar companies in Norway. The principal element of the compensation package should be a fixed basic salary and the total remuneration shall be considered together as a whole. To the extent that performance-related pay schemes are used, the targets shall be objective, measurable and identifiable, and there must be a clear correlation between the company's targets and the targets in the performance-related pay scheme.
The Board has established a remuneration committee consisting of two representatives from the current 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 remuneration committee monitors the remuneration of senior executives in relation to the state's guidelines for terms of employment for senior executives in state-owned enterprises and companies. The committee evaluates the company's pay schemes and recommends guidelines for determining salaries prior to final determination by the Board. The Board determines the Chief Executive Officer's salary on an annual basis in the light of a recommendation from the remuneration committee. The CEO consults the remuneration committee in connection with determining the salaries of the Group's senior executives.
The fixed basic salary is the principal element in the remuneration of the Group's senior executives and the Chief Executive Officer. The CEO has no performance-related pay scheme. The total performance-related pay for other members of the Group's senior management team cannot exceed 25 per cent of their annual salary. For the Group's senior management team, performance-related pay in 2013 is based on targets defined at company and business level, as well as predefined personal targets. The company targets for 2013 are based on return on equity, owner costs, achieved rents, occupancy rates, customer satisfaction and energy consumption. Group management, excluding the CEO, have a defined-benefit pension limited to 12 x the National Insurance basic amount ("12G"), in line with the other employees. The CEO, in line with the state's guidelines, has a supplemental pension under which the company provides for an annual pension amounting to 30 % of annual salary above 12G. 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 employment. No agreement on severance pay has been made with other members of the group management. There are no option or share schemes for senior executives.
Senior executives have company car or mileage agreements. The Group also covers other benefits to the management team in line with the benefits offered to the other employees at Entra and in accordance with normal practice at Norwegian companies.
The Chief Executive Officer and the rest of the management group have a number of internal directorships. They do not receive special remuneration for these directorships.
In 2013 severance pay was paid until October to the former CEO Kyrre Olaf Johansen, who stepped down from his post
in mid-April 2012. The former CEO Rune Olsø received salary until April 2013 and severance pay for 3 months after resigning from his position on 17 October 2012. The former EVP Communications and Corporate Social Responsibility, Ingrid Schiefloe, who left her post at Entra on 30 June 2012 received one month of severance pay in 2013. The former CFO Anne Harris resigned from her position on 30.11.2013. An agreement was reached to pay salary during the notice period until 30.06.2014 and subsequently severance pay for 12 months. Anne Harris did not receive performance-related pay.
The CEO had a fixed salary of NOK 2.85 million in 2013, while salary for 2014 is determined by the Board after input from the remuneration committee and in accordance with the state's guidelines. The CEO is not covered by the company's performance-related pay scheme.
If the owner decides that Entra is to be listed, and such a process is initiated, the Board will recommend to the Annual General Meeting the establishment of a long-term incentive scheme linked to shares and/or bonuses for senior executives in accordance with the prevailing state guidelines on senior executive remuneration.
The Board will in principle use the same guidelines for compensation of senior executives in 2014 as it did in 2013. The targets for the performance-related pay scheme of the Group's senior executives are to be expanded to include all the company targets according to the scorecard for 2014 approved by the Board. Individual targets are also set. The annual determination of pay for senior executives is based on assessment of the individual employee.
| Payments to senior executives | Salary | Performance related pay** |
Benefits in kind |
Commuting costs |
Estimated pension costs |
Total remuneration 2013 |
|---|---|---|---|---|---|---|
| Senior executives as at 31.12.2013 | ||||||
| Klaus-Anders Nysteen, CEO from 29.01.2013**** | 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 Arebrot, EVP Greater Oslo *** | 1 261 | 81 | 139 | – | 175 | 1 656 |
| Karl Fredrik Torp, EVP Central/Northern*** | 1 119 | 127 | 144 | – | 175 | 1 565 |
| Sonja Horn, EVP Central Oslo from 19.08.2013 | 593 | – | 51 | – | 69 | 713 |
| Jorunn Nerheim, EVP Southern/Western*** | 1 088 | 116 | 151 | – | 175 | 1 530 |
| Astrid Tveten - Acting CFO from 01.11.2013 tl 31.01.2014 | 1 748 | 380 | 140 | – | 175 | 2 443 |
| Total | 12 197 | 1 078 | 1 133 | – | 1 452 | 15 860 |
| Senior executives 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* | 3 022 | 612 | 141 | – | 175 | 3 950 |
| Nils Fredrik Skau, Tech. EVP to 01.09.2013, Projects EVP to 01.11.2013 |
1 565 | 328 | 134 | 178 | 175 | 2 380 |
| Bjørn Holm, EVP Projects and Development to 31.08.2013 | 1 279 | 313 | 96 | – | 115 | 1 803 |
| Ingrid Schiefloe, EVP Comm. and CSR., left the company 30.06.2012* |
161 | – | – | – | – | 161 |
The Group appointed a temporary EVP Communications and Corporate Social Responsibility in part of 2013.
* 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.
** Performance-related pay is based on targets met in 2012, which was paid in 2013.
*** Member of group management after reorganisation effective 1.7.2013.
**** In addition there is an estimated pension cost for an individual scheme above the State Employees Pension Fund of NOK 419,000 excluding employer's National Insurance contributions.
Total 11 221 1 253 420 190 522 13 606
Overview of total remuneration to senior executives in 2012
| Payments to senior executives | Salary | Performance related pay** |
Benefits in kind |
Commuting costs |
Estimated pension costs |
Total remuneration 2012 |
|---|---|---|---|---|---|---|
| Senior executives | ||||||
| Kyrre Olaf Johansen, CEO, left the company 17.04.2012* | 3 496 | 611 | 204 | – | 131 | 4 442 |
| Rune Olsø, Deputy, Acting and CEO, left the company 17.10.2012* |
2 810 | 497 | 166 | 330 | 158 | 3 961 |
| Anne Harris, CFO and acting CEO from 17.10.2012 | 2 684 | 512 | 115 | – | 158 | 3 469 |
| Nils Fredrik Skau, Technical EVP | 1 503 | 280 | 114 | 171 | 158 | 2 226 |
| Bjørn Holm, EVP Projects and Development | 1 655 | 346 | 144 | – | 158 | 2 303 |
| Anders Solaas, EVP Marketing | 1 524 | 287 | 172 | – | 158 | 2 141 |
| Ingrid Schiefloe, EVP Comm. and CSR, left the company 30.6.2012* |
1 132 | 149 | 70 | – | 78 | 1 429 |
| Total | 14 803 | 2 682 | 985 | 502 | 999 | 19 971 |
The Group appointed a temporary Director of Communications and Corporate Social Responsibility in 2012.
* Salaries and other remuneration during the notice period, as well as severance pay to be paid in 2013 are not included in the table above.
** Performance-related pay is based on targets met in 2011, which was paid in 2012.
*** Costs associated with established commuting arrangements did not previously form part of the overview of payments to senior executives, but are included in the overview from the 2012 financial year.
| Board | Board fees | Committee fees | Total remuneration 2013 |
Total remuneration 2012 |
|---|---|---|---|---|
| Siri Hatlen, Chair | 380 | 41 | 421 | – |
| Martin Mæland, Deputy Chair | 191 | 45 | 236 | 210 |
| Ingrid Tjøsvold (from 15.10.12) | 143 | 30 | 173 | – |
| Arthur Sletteberg (from 15.10.12) | 143 | 39 | 182 | – |
| Kjell Bjordal (from 15.10.12) | 143 | 17 | 160 | – |
| Tore Benediktsen, employee representative** | 191 | – | 191 | 187 |
| Birthe Smedsrud Skeid, employee representative** | 191 | – | 191 | – |
| Grace Reksten Skaugen, Chair | – | – | – | 413 |
| Finn Berg Jacobsen, Board member (to 15.10.12) | – | – | – | 243 |
| Ida Helliesen, Board member (to 15.10.12)* | – | – | – | 313 |
| Ottar Brage Guttelvik, Board member (to 15.10.12)* | – | – | – | 299 |
| Ketil Fjerdingen, Board member (to 15.10.12)* | – | – | – | 323 |
| Åse Koll Lunde (to 29.12.11) | – | – | – | 113 |
| Mari Fjærbu Åmdal, employee representative** | – | – | – | 187 |
| Frode Halvorsen, employee representative (half period)** | – | – | – | 94 |
| Total* | 1 382 | 172 | 1 554 | 2 380 |
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.
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
* Total remuneration paid for the period between the Annual General Meeting in 2011 and the Annual General Meeting in 2012, as well as for the period up to the date when the Board members left the Board in the period from 2012 to 2013.
** Does not include ordinary salary.
The Group has a performance-related pay scheme that covers all employees. Payments are based on the results achieved by the Group, customer satisfaction and individual goals.
| Total auditor's fee (excl. VAT) | 2 581 | 1 682 |
|---|---|---|
| Other certification services | 489 | 45 |
| Other services not related to auditing | 250 | 138 |
| Tax advice | 24 | 9 |
| Statutory audit | 1 818 | 1 490 |
| Auditor's fee | 2013 | 2012 |
| Total operating expenses | 91.5 | 86.9 |
|---|---|---|
| Other operating costs | 8.0 | 9.2 |
| Operating expenses | 37.8 | 22.1 |
| Payroll and personnel expenses | 5.3 | 13.8 |
| Administrative costs | 40.3 | 41.7 |
| Operating expenses | 2013 | 2012 |
* A total of NOK 0.4 (NOK 1.7) million of the total operating expenses are related to properties that do not generate any income.
| Other property costs | 2013 | 2012 |
|---|---|---|
| Rental costs | 34.1 | 44.6 |
| Project operating expenses | 21.3 | 32.7 |
| Development costs | 0.1 | -0.1 |
| Depreciation and write-downs | 32.7 | 40.0 |
| Total other property costs | 88.2 | 117.1 |
| Total administrative owner costs | 222.9 | 194.7 |
|---|---|---|
| Other administrative owner costs | 17.8 | 19.7 |
| Consultancy fees | 45.2 | 39.9 |
| Office expenses, furnishings and equipment | 27.1 | 26.3 |
| Payroll and personnel expenses | 132.8 | 108.7 |
| Administrative expenses | 2013 | 2012 |
All amounts in NOK million
Deferred tax is stated net if the Group has a legal right to offset deferred tax assets against the deferred tax on the balance sheet, and if the deferred tax is owed to the same tax authority. The following net value was recognised:
| Net deferred tax | 2 463.9 | 2 472.7 |
|---|---|---|
| Deferred tax assets | 335.7 | 383.2 |
| Deferred tax | 2 799.6 | 2 855.9 |
| 2013 | 2012 |
| Change in deferred tax (+)/ deferred tax assets (-) |
Non-current assets* |
Financial instruments |
Current assets |
Gains/losses account |
Provisions | Loss carried forward |
Total |
|---|---|---|---|---|---|---|---|
| 31.11.2011 | 2 854.0 | -175.8 | -2.4 | 33.2 | -28.4 | -328.1 | 2 352.5 |
| Principle change, pensions | -4.8 | -4.8 | |||||
| 01.01.2012 | 2 854.0 | -175.8 | -2.4 | 33.2 | -33.2 | -328.1 | 2 347.7 |
| Recognised in profit or loss | -161.3 | 231.1 | 20.3 | 49.1 | -3.1 | -32.3 | 103.8 |
| Recognised in comprehensive income | – | – | – | – | 13.5 | – | 13.5 |
| Acquisition and disposal of subsidiaries | 7.8 | – | – | – | – | – | 7.8 |
| 31.12.2012 | 2 700.5 | 55.3 | 17.8 | 82.3 | -22.7 | -360.4 | 2 472.7 |
| Recognised in profit or loss | -89.9 | 63.7 | 1.3 | 76.1 | 0.5 | 35.6 | 87.4 |
| Recognised in comprehensive income | – | – | – | – | -1.1 | – | -1.1 |
| Acquisition and disposal of subsidiaries | -3.8 | – | – | – | – | – | -3.8 |
| Effect of change in tax rate | -93.1 | -4.3 | -0.7 | -5.7 | 0.8 | 11.6 | -91.3 |
| 31.12.2013 | 2 513.6 | 114.8 | 18.4 | 152.7 | -22.5 | -313.2 | 2 463.9 |
* 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 31.12.2013 is NOK 1 874.8 million (NOK 2 078.7 million).
| Tax payable is calculated as follows | 2013 | 2012 |
|---|---|---|
| Profit before tax | 466.1 | 841.5 |
| Share of profit/loss at associates and jointly controlled entities | -212.4 | -508.7 |
| Other permanent differences | 57.7 | 37.6 |
| Changes in loss carry-forwards | -127.3 | 115.4 |
| Changes in temporary differences* | -184.2 | -485.8 |
| Profit for tax purposes | 0.0 | 0.0 |
Tax payable on the balance sheet – –
| Tax payable on the balance sheet | – | – |
|---|---|---|
| The tax expense for the year is calculated as follows | 2013 | 2012 |
| Tax payable | – | – |
| Change in deferred tax in profit or loss | -3.9 | 103.8 |
| Change in deferred tax in comprehensive income | -1.1 | 13.5 |
| Tax expense for the year | -5.0 | 117.3 |
From the income year 2014 the tax rate on normal income is reduced to 27 %. Deferred tax as at 31.12.2013 is measured using the new rate. The effect on tax for the period is NOK 91.2 million.
| Reconciliation of tax expense with profit multiplied by nominal tax rate | 2013 | % | 2012 | % |
|---|---|---|---|---|
| Profit for accounting purposes multiplied by nominal tax rate | 130.5 | 28.0 % | 235.6 | 28.0 % |
| Tax on share of profit/loss at associates and jointly controlled entities | -59.5 | -12.8 % | -142.4 | -16.9 % |
| Tax on permanent differences | 16.2 | 3.5 % | 10.5 | 1.3 % |
| Effect of corrections to previous years | 0.2 | 0.0 % | – | 0.0 % |
| Effect of change in tax rate | -91.3 | -19.6 % | 0.0 | 0.0 % |
| Tax expense for accounting purposes | -3.9 | -0.8 % | 103.8 | 12.3 % |
Due to a disagreement beween the shareholders in Greenfield Property AS («GFP») Entra has sued Norwegian Data Group AS («NDG») and GFP. After receiving the writ NDG and GFP have brought their own claim aganst Entra.
EVRY has issued a writ against Entra alleging that Entra has defaulted on a guarantee to build Greenfield Datacenter and/ or a promise to support a computer centre project.
Entra considers it unlikely that the claims of NDG/GFP and EVRY will succeed.
All amounts in NOK million
Entra is owned by the Norwegian state represented by the Ministry of Trade, Industry and Fisheries through Entra Holding AS. Most of the company's premises are leased to public-sector tenants. Lease contracts are signed on commercial terms. NOK 1.303 million (1.192 million) of the Group's annual rental income is generated by leases where the state is the tenant, through various ministries.
The Group's transactions and balances with associates and jointly controlled entities in 2013 mainly related to loans and interest payments on loans. The aggregate figures are shown in the table below.
| Interest income | 2013 | 2012 |
|---|---|---|
| Jointly controlled entities | – | – |
| Associates | 0.1 | 0.3 |
| Total interest income | 0.1 | 0.3 |
| Receivables | 2013 | 2012 |
| Jointly controlled entities | – | – |
| Associates | – | 6.7 |
| Total receivables | 0.0 | 6.7 |
Earnings per share are calculated as the profit for the year attributable to the shareholder of NOK 453.4 (NOK 703.3) million divided by the weighted average number of outstanding ordinary shares over the course of the financial year, which was 1 (142,194).
There are no dilution effects, so the diluted earnings per share are the same as the earnings per share.
| 2013 | 2012 | |
|---|---|---|
| Total comprehensive income for the year attributable to shareholders of the parent company (NOK million) |
453.4 | 703.3 |
| Average number of outstanding shares (Note 17) | 1 | 142 194 |
| Earnings per share (NOK thousand) | 453 395.1 | 4.9 |
| 2013 | 2012 | |
|---|---|---|
| Profit before tax | 466.1 | 841.5 |
| Expensed interest on loans from financial institutions | 668.0 | 683.0 |
| Accrued, not paid interest income | -0.3 | -0.2 |
| Share of profit from associates and jointly controlled entities | -235.5 | -508.7 |
| Ordinary depreciation | 17.9 | 14.8 |
| Write-downs of non-current assets | 26.9 | 47.8 |
| Non-cash impact of IFRIC 12 | 3.2 | -10.9 |
| Adjustment to value of investment property | 495.1 | -129.0 |
| Changes in the market value of financial derivatives | -183.7 | 272.0 |
| Changes in trade receivables | 0.1 | 16.0 |
| Changes in trade payables | 31.3 | 28.1 |
| Difference between pension expense and payments into/out of pension schemes | -4.9 | 4.2 |
| Change in other accruals | -70.3 | 107.4 |
| Total cash flows from operating activities | 1 213.8 | 1366.1 |
Financial statements Entra Eiendom AS
| Note | 2013 | 2012 | |
|---|---|---|---|
| Rental income | 17 | 848 071 | 851 717 |
| Other operating income | 18 | 439 104 | 134 317 |
| Total operating revenue | 1 287 175 | 986 034 | |
| Maintenance | 36 053 | 43 939 | |
| Operating expenses | 20 | 58 959 | 60 679 |
| Other property costs | 3, 4, 21 | 280 443 | 360 412 |
| Administrative owner costs | 19, 22, 26 | 224 315 | 192 180 |
| Total operating expenses | 599 769 | 657 209 | |
| Operating profit | 687 405 | 328 825 | |
| Income from investments in subsidiaries | – | 382 323 | |
| Income from investments in jointly controlled entities | 200 805 | 120 231 | |
| Interest income from Group companies | 26 | 215 508 | 205 809 |
| Other interest received | 11 967 | 2 470 | |
| Other finance income | 23 | 1 187 | 211 676 |
| Interest expense | -524 835 | -543 750 | |
| Other finance expenses | 24 | -84 083 | -89 325 |
| Net financial expenses | -179 450 | 289 436 | |
| Profit before tax | 507 955 | 618 261 | |
| Tax expense | 16 | 97 500 | 79 887 |
| Profit/loss for the year | 410 455 | 538 374 |
| Note | 31.12.2013 | 31.12.2012 | 01.01.2012 | |
|---|---|---|---|---|
| Non-current assets | ||||
| Intangible assets | 3 | 18 814 | 22 763 | – |
| Total intangible assets | 18 814 | 22 763 | – | |
| Sites, buildings and other real property | 4 | 6 223 531 | 6 520 013 | 6 438 233 |
| Buildings under construction | 4 | 1 157 244 | 666 649 | 485 750 |
| Other property, plant and equipment | 4 | 46 975 | 20 281 | 40 902 |
| Total property, plant and equipment | 7 427 751 | 7 206 943 | 6 964 885 | |
| Investment in subsidiaries | 5 | 2 801 178 | 2 188 528 | 1 386 071 |
| Investments in associates and jointly controlled entities | 5 | 646 530 | 653 258 | 454 052 |
| Loans to Group companies | – | – | 41 921 | |
| Loans to associates and jointly controlled entities | 6 | – | 4 187 | 11 761 |
| Investments in shares/interests | 50 | 50 | 50 | |
| Receivables from Group companies | 6, 13 | 5 429 642 | 4 024 959 | 3 879 593 |
| Other non-current receivables | 6 | 88 091 | 43 361 | 65 778 |
| Total non-current financial assets | 8 965 492 | 6 914 343 | 5 839 227 | |
| Total non-current assets | 16 412 057 | 14 144 049 | 12 804 112 | |
| Current assets | ||||
| Trade receivables | 7, 13 | 20 932 | 13 040 | 17 551 |
| Receivables from Group companies | 13 | 26 220 | 535 212 | 130 327 |
| Other receivables | 8 | 61 857 | 25 161 | 19 158 |
| Total current receivables | 109 009 | 573 413 | 167 036 | |
| Cash and bank deposits | 14 | 74 719 | 21 452 | 49 181 |
| Total current assets | 183 729 | 594 865 | 216 217 | |
| Total assets | 16 595 785 | 14 738 914 | 13 020 330 |
| Note | 31.12.2013 | 31.12.2012 | 01.01.2012 | |
|---|---|---|---|---|
| Equity | ||||
| Share capital | 2 | 142 194 | 142 194 | 142 194 |
| Share premium reserve | 2 | 1 271 984 | 1 271 984 | 1 271 984 |
| Total paid-in equity | 1 414 178 | 1 414 178 | 1 414 178 | |
| Other equity | 2 | 782 863 | 625 309 | 468 739 |
| Total equity | 2 197 041 | 2 039 487 | 1 882 917 | |
| Liabilities | ||||
| Interest-bearing liabilities | 9 | 9 040 000 | 6 970 000 | 7 520 000 |
| Pension liabilities | 15 | 53 129 | 57 990 | 102 114 |
| Deferred tax | 16 | 357 278 | 260 906 | 165 954 |
| Other liabilities | 10 | 111 601 | 104 284 | 36 706 |
| Total non-current liabilities | 9 562 008 | 7 393 180 | 7 824 774 | |
| Trade payables and other payables | 11, 13 | 268 482 | 287 181 | 249 421 |
| Interest-bearing liabilities | 9 | 2 792 500 | 3 910 000 | 2 800 000 |
| Liabilities to group companies | 13 | 1 458 503 | 631 648 | 15 305 |
| Proposed dividend | 2 | 250 000 | 416 600 | 137 000 |
| Prepayments and provisions | 12 | 67 252 | 60 818 | 110 912 |
| Total current liabilities | 4 836 736 | 5 306 247 | 3 312 638 | |
| Total liabilities | 14 398 745 | 12 699 427 | 11 137 412 | |
Total equity and liabilities 16 595 785 14 738 914 13 020 330
Siri Hatlen
Chair
Arthur Sletteberg Board member
Birthe Smedsrud Skeid Board member
Oslo, 31 March 2014 The Board of Entra Eiendom AS
Martin Mæland Deputy Chair
Kjetil Bjordal Board member
Ingrid Tjøsvold
Board member
Tore Benediktsen Board member
Klaus-Anders Nysteen Chief Executive
| Note | 2013 | 2012 | |
|---|---|---|---|
| Profit before tax | 507 955 | 618 261 | |
| Ordinary depreciation | 3, 4 | 184 242 | 163 599 |
| Write-down of shares and property, plant and equipment | 3, 4, 23, 24 | 98 708 | 104 746 |
| Loss/gain on the sale of shares and property, plant and equipment | -422 149 | -246 336 | |
| Group contribution recognised but not received | – | -382 323 | |
| Dividend from jointly controlled entities recognised but not received | -200 805 | -120 231 | |
| Difference between pension expense and payments into/out of pension schemes |
15 | 4 095 | 4 203 |
| Net expensed interest on loans from financial institutions | 554 257 | 542 001 | |
| Net interest paid on loans from financial institutions | -579 971 | -538 587 | |
| Changes in trade receivables | -7 892 | 4 511 | |
| Changes in trade payables | 20 211 | 21 287 | |
| Change in other accruals | -93 987 | 82 109 | |
| Net cash flows from operating activities | 64 663 | 253 239 | |
| Proceeds from sales of property, plant and equipment | 597 952 | 184 917 | |
| Payments made for the purchase/upgrading of property, plant and equipment | -575 520 | -680 746 | |
| Purchase of other property, plant and equipment | 4 | -33 733 | -4 309 |
| Purchase of intangible assets | 3 | -11 602 | -27 317 |
| Sales of shares and interests in other enterprises | 57 | 27 589 | |
| Purchase of shares in subsidiaries | -348 150 | -517 415 | |
| Payments received on loans to subsidiaries | 16 177 | 35 636 | |
| Payments made on loans to subsidiaries | -250 720 | -23 723 | |
| Repayment of loans to associates and jointly controlled entities | 170 | 7 716 | |
| Income from investments in associates and jointly controlled entities | 207 367 | 322 291 | |
| Investments in associates and jointly controlled entities | -8 000 | -191 011 | |
| Group contributions paid/received | 113 395 | 119 464 | |
| Net change in cash pool balance | -254 689 | 62 939 | |
| Net cash flows from investing activities | -547 296 | -683 969 | |
| New non-current liabilities | 9 | 7 350 000 | 4 075 000 |
| Repayment of non-current liabilities | 9 | -4 157 500 | -2 625 000 |
| New current liabilities | 9 | 2 860 000 | 3 200 000 |
| Repayment of current liabilities | 9 | -5 100 000 | -4 110 000 |
| Dividends paid | -416 600 | -137 000 | |
| Net cash flows from financing activities | 535 900 | 403 000 | |
| Net change in cash and cash equivalents | 53 267 | -27 729 | |
| Cash and cash equivalents at the start of the period | 21 452 | 49 181 | |
| Cash and cash equivalents at the end of the period | 74 719 | 21 452 |
The annual financial statements have been prepared in accordance with the Norwegian Accounting Act of 1998 and good Norwegian accounting practice.
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.
Non-current assets are measured at cost, but are written down to their recoverable value if the latter is lower than the carrying amount, and the impairment is expected to be other than temporary. Non-current assets with a limited useful life are depreciated according to a schedule.
Other non-current liabilities and current liabilities are measured at their face value.
Investments in subsidiaries and jointly controlled entities 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. The same applies to investments in associates.
Dividends 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.
Dividends from associates and jointly controlled entities are recognised as income from the investment in the associates and jointly controlled entities in the year that the dividend is received. Dividends that exceed the retained earnings over the period of ownership are considered repayments of the acquisition cost.
Monetary foreign currency items on the balance sheet are translated at the exchange rate on the balance sheet date.
Operating revenue consists of rental income and other operating revenue. 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 are 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.
Costs are normally reported in the same period as the related income. Where there is no clear link between expenditure and income, allocation is determined on the basis of assessment criteria.
The company has pension schemes that are defined-benefit plans. A defined-benefit plan 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 by an independent actuary using a linear earnings 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 obligation.
Changes to benefits payable under the pension plan are recognised in the income statement as they arise. Gains/ losses resulting from new information or changes to actuarial assumptions are recognised against equity.
The tax expense on the income statement covers both tax payable for the period and changes in deferred tax. Deferred tax is calculated at 28 % in 2012 and 27 % in 2013 on the basis of the temporary differences that exist between accounting and tax values, as well as any losses carried forward for tax purposes at year-end. Temporary differences which increase or reduce tax and are reversed or may be reversed in the same period have been eliminated. Net deferred tax assets are shown on the balance sheet in so far as they are likely to be utilised.
Tax on group contributions that is recorded as raising the cost price of shares in other companies, and tax on received group contributions that is recorded as a reduction in the cost of the shares, is entered directly against tax on the balance sheet (the entry is made under tax payable if the group contribution affects tax payable, and under deferred tax if the group contribution affects deferred tax).
Property, plant and equipment are recognised on the balance sheet and are depreciated to a schedule over the anticipated useful life of the assets. Direct maintenance of property, plant and equipment is recognised in the income statement on an ongoing basis. Additions or improvements are added to the asset's cost price and are depreciated in line with the asset.
Expenses related to construction projects are capitalised as buildings under construction. The financing costs for capital linked to the development of non-current assets are recognised on the balance sheet for accounting purposes, but are counted as an expense for tax purposes. Projects are recognised on the balance sheet and depreciated from the date of completion and when the non-current asset is brought into use.
Development costs are recognised as assets on the balance sheet to the extent that a future financial benefit can be associated with the development of an identifiable intangible asset and the costs can be measured reliably. If this is not the case, they are expensed on an ongoing basis. Intangible assets are written down to the recoverable amount where the expected economic benefit does not justify the carrying amount. Recognised development is depreciated on a straight-line basis over the useful life.
Trade 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 receivable.
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 company has an account in a Group cash pooling arrangement and finances its subsidiaries' liquidity requirements.
The company has a certain number of lease agreements where it is the tenant. These contracts are included in the letting activities. Under Norwegian Accounting Standards on contingent liabilities and assets, provision must be made for losses in the event that such premises remain vacant or partially vacant. The company has calculated the necessary provision as of 31.12 The cost of leasing the premises, the duration of the lease and the sub-lease's value have been taken into account for the calculation of the present value. Assumptions have also been made about the letting of vacant properties using the estimated vacancy period. An estimated rental price has been set based on lease agreements achieved.
Non-current liabilities are shown on the balance sheet at nominal value on the initial date.Premiums and discounts in connection with taking on non-current liabilities, as well as arrangement fees, are accrued over the period of the loan. Similarly, in the event of the repurchase of bonds, premiums and discounts are accrued over the remaining term to maturity for the relevant liabilities.
All of the company's debt is subject to variable rates (including fixed rate bonds, which are swapped to a variable rate). The company has then used interest rate swaps to convert its debt to fixed rate loans with varying maturities. For information on maturities, please see Note 9. The company accrues these interest-rate swaps in such a way that the fixed rate is expensed in the income statement. On the termination of interest rate swap agreements, the profit or loss is accrued over the remaining term to maturity of the agreement in question.
The company has chosen to apply accounting principles which mean that changes in the value of the company's interest rate swaps are not recognised in the income statement. Hedged items are carried at their nominal value.
In general, the Group's financing is based on negative pledge clauses.
The statement of cash flows is prepared according to the indirect method. Cash and cash equivalents includes cash in hand, bank deposits and other short-term, highly liquid investments with insignificant price risk which can be converted to known amounts of cash and which have a remaining maturity of less than three months from the date of acquisition.
The company has changed the principle for accounting for estimate differences. Estimate differences and the effect of changed assumptions have previously been amortised over the expected remaining earnings period to the extent they exceeded 10% of the greater of the pension obligation and the pension funds (corridor). The new principle means that estimate differences and the effect of changed assumptions are posted against equity. Comparative figures for 2012 have been amended correspondingly. See note 2 for the effect of the implementation on equity
Entra Eiendom AS is the parent company of a group of companies. The consolidated accounts can be obtained by writing to Entra Eiendom AS, Postboks 52, Økern NO–0508 Oslo.
| Share capital | Share premium reserve | Other equity | Total | |
|---|---|---|---|---|
| Equity 31.12.2011 | 142 194 | 1 271 984 | 507 594 | 1 921 772 |
| Principle change pension liability | - 38 855 | - 38 855 | ||
| Equity 01.01.2012 | 142 194 | 1 271 984 | 468 739 | 1 882 917 |
| Equity effect estimate difference pensions | 34 796 | 34 796 | ||
| Profit/loss for the year | 538 374 | 538 374 | ||
| Proposed dividend | - 416 600 | - 416 600 | ||
| Equity 01.01.2013 | 142 194 | 1 271 984 | 625 309 | 2 039 487 |
| Equity effect estimate difference pensions | - 2 901 | - 2 901 | ||
| Profit/loss for the year | 410 455 | 410 455 | ||
| Proposed dividend | - 250 000 | - 250 000 | ||
| Equity 31.12.2013 | 142 194 | 1 271 984 | 782 863 | 2 197 041 |
The share capital is NOK 142 194 000 consisting of one share of NOK 142 194 000 par value. All shares have equal rights. All of the shares are owned by Entra Holding AS, which is in turn owned by the Norwegian state acting through the Ministry of Trade, Industry and Fisheries.
| Concept development* |
Software | Options* | Total intangible assets |
|
|---|---|---|---|---|
| Acquisition cost at 01.01.2013 | 8 363 | 40 163 | 3 500 | 52 026 |
| Acquisitions | 3 205 | 8 397 | - | 11 602 |
| Disposals | 6 203 | 6 203 | ||
| Acquisition cost at 31.12.2013 | 5 366 | 48 560 | 3 500 | 57 426 |
| Accumulated depreciation and write-downs at 01.01.2013 |
6 127 | 23 136 | - | 29 263 |
| Depreciation | - | 9 611 | - | 9 611 |
| Write-downs | 5 441 | - | 500 | 5 941 |
| Disposals accumulated depreciation and write-downs | -6 203 | - | - | -6 203 |
| Accumulated depreciation and write-downs at 31.12.2013 |
5 366 | 32 746 | 500 | 38 612 |
| Carrying amount at 31.12.2013 | - | 15 814 | 3 000 | 18 814 |
| Anticipated useful life | 3 years | |||
| Depreciation schedule | linear |
* Concept development and options are not depreciated
All amounts in NOK thousand
| Sites* | Buildings | Plant & equipment |
Art* | Buildings under construction* |
Total property, plant and equipment |
|
|---|---|---|---|---|---|---|
| Acquisition cost at 01.01.2013 | 512 192 | 7 266 839 | 44 737 | 5 406 | 666 649 | 8 495 823 |
| Acquisitions | 229 | 82 030 | 32 509 | 1 224 | 602 348 | 718 341 |
| Disposals | 37 614 | 186 218 | 532 | 111 444 | 335 807 | |
| Acquisition cost at 31.12.2013 | 474 807 | 7 162 652 | 76 714 | 6 631 | 1 157 554 | 8 878 357 |
| Accumulated depreciation and write-downs at 01.01.2013 |
16 | 1 259 002 | 29 862 | - | - | 1 288 880 |
| Correction OB depreciation and write-downs at 01.01.2013 |
13 600 | -13 600 | - | |||
| Accumulated depreciation and write-downs at 01.01.2013 |
13 616 | 1 245 402 | 29 862 | - | - | 1 288 880 |
| Depreciation** | 8 | 168 831 | 6 870 | - | - | 175 710 |
| Transferred to intangible assets | - | |||||
| Write-downs for the year | - | 35 302 | - | - | 2 665 | 37 967 |
| Disposals | - | -49 232 | -363 | - | -2 356 | -51 951 |
| Accumulated depreciation and write-downs 31.12.2013 | 13 624 | 1 400 303 | 36 370 | - | 309 | 1 450 606 |
| Carrying amount at 31.12.2013 | 461 183 | 5 762 349 | 40 345 | 6 631 | 1 157 244 | 7 427 751 |
| Anticipated useful life | 69 years | 50 years | 3, 4, 10 years |
Acquisitions of buildings includes NOK 31,522 (NOK 29,951) thousand of interest on capitalised construction loans.
Depreciation schedule Linear Linear Linear
* No depreciation is charged against sites and buildings under construction and art. The figure for depreciation of sites pertains to capitalised costs linked to infrastructure on leased land.
** The difference between the year's depreciation set out in the note and the total depreciation on the income statement is NOK 1,079 (NOK 1,642) thousand. This relates to fixtures and fittings that have been included on the balance sheet where the depreciation is charged to joint tenant expenses.
All amounts in NOK thousand
Investments in subsidiaries, associates and jointly controlled entities are recognised using the cost method.
| Subsidiary | Acquisition date |
Business office | Shareholding/ voting rights |
Carrying amount 31.12 |
|---|---|---|---|---|
| Oslo Z AS | 20/09/00 | Oslo | 100 % | 83 418 |
| Biskop Gunnerusgt. 14 AS | 26/03/01 | Oslo | 100 % | 250 432 |
| Universitetsgaten 2 AS | 03/09/01 | Oslo | 100 % | 185 000 |
| Kunnskapsveien 55 AS | 17/12/01 | Oslo | 100 % | 58 714 |
| Entra Kultur 1 AS | 28/02/02 | Oslo | 100 % | 111 275 |
| Kristian Augustsgate 23 AS | 01/02/03 | Oslo | 100 % | 29 078 |
| Nonnen Utbygging AS | 10/02/03 | Oslo | 100 % | 38 301 |
| Langkaia 1 AS | 21/11/03 | Oslo | 100 % | 120 060 |
| Kjørboparken AS | 21/12/05 | Oslo | 100 % | 230 014 |
| Brattørkaia AS | 31/01/06 | Oslo | 100 % | 150 974 |
| Ribekk AS | 02/10/06 | Oslo | 100 % | 444 600 |
| Bispen AS | 24/10/07 | Oslo | 100 % | 100 967 |
| Pilestredet 28 AS | 07/05/08 | Oslo | 100 % | 22 359 |
| Hagegata 22 og 24 AS | 01/10/08 | Oslo | 100 % | 10 763 |
| Hagegata 23 AS | 29/03/10 | Oslo | 100 % | 94 643 |
| Holtermanns veg 1-13 AS | 24/09/10 | Oslo | 100 % | 14 303 |
| Karoline Kristiansen vei 2 AS | 15/02/11 | Oslo | 100 % | 2 269 |
| Youngskvartalet AS | 30/03/11 | Oslo | 100 % | 1 035 |
| Brødrene Sundt Verktøimaskinfabrik AS | 01/10/11 | Oslo | 100 % | 84 490 |
| Tullinkvartalet AS | 21/11/11 | Oslo | 100 % | 12 116 |
| Universitetsgaten 7 AS | 01/04/12 | Oslo | 100 % | 224 074 |
| Entra Newco AS | 10/04/12 | Oslo | 100 % | 120 |
| Wexelsplass Garasje AS | 11/06/12 | Oslo | 100 % | 13 892 |
| Kristian Augustsgate 19 AS | 04/05/12 | Oslo | 100 % | 109 446 |
| Schweigaardsgate 16 AS | 20/02/13 | Oslo | 100 % | 182 315 |
| Vahlsgate 1-3 KS | 01/07/13 | Oslo | 90 % | 149 219 |
| Vahlsgate 1-3 AS | 01/07/13 | Oslo | 100 % | 16 493 |
| Hinna Park Eiendom AS | 20/12/13 | Oslo | 100 % | 122 |
| Papirbredden Eiendom AS | 12/01/13 | Oslo | 60 % | 60 686 |
| Total | 2 801 178 |
| Papirbredden Eiendom AS | Acquisition date | Business office | Shareholding/ voting rights |
Carrying amount 31.12 |
|---|---|---|---|---|
| Grønland 51 AS | 04/02/2005 | Drammen | 100 % | 208 470 |
| Grønland 56 AS | 12/01/2011 | Drammen | 100 % | 11 800 |
| Grønland 58 AS | 12/01/2011 | Drammen | 100 % | 370 295 |
| Grønland 60 AS | 12/01/2011 | Drammen | 100 % | 156 962 |
| Kreftingsgate 33 AS | 30/12/2010 | Drammen | 100 % | 39 269 |
| Total | 786 795 |
| Brattørkaia AS | Acquisition date | Business office | Shareholding/ voting rights |
Carrying amount 31.12 |
|---|---|---|---|---|
| Brattørkaia 14 AS | 31/01/2006 | Trondheim | 100 % | 96 000 |
| Brattørkaia 15AB-16 AS | 31/01/2006 | Trondheim | 100 % | 334 000 |
| Brattørkaia 17A AS | 31/01/2006 | Trondheim | 100 % | 4 900 |
| Brattørkaia 17B AS | 31/01/2006 | Trondheim | 100 % | 294 000 |
| Brattørkaia Energi AS | 03/02/2012 | Trondheim | 100 % | 1 616 |
| Total | 730 516 |
| Ribekk AS | Acquisition date | Business office | Shareholding/ voting rights |
Carrying amount 31.12 |
|---|---|---|---|---|
| Ringstadbekk AS | 30/06/2006 | Oslo | 100 % | 297 104 |
| Total | 297 104 |
| Jointly controlled entities | Acquisition date |
Business office |
Shareholding/ voting rights |
Carrying amount |
Carrying amount of equity 31.12.2013 |
Profit after tax 2013 |
|---|---|---|---|---|---|---|
| Sørlandet Kunnskapspark Eiendom AS | 06/02/2005 | Kristiansand | 51.00 % | 5 271 | 11 660 | -2 076 |
| UP Entra group | 31/12/2003 | Hamar | 50.00 % | 48 797 | 185 513 | 26 098 |
| Entra OPF Utvikling group | 21/04/2012 | Oslo | 50.00 % | 380 949 | 859 505 | 56 167 |
| Oslo S. Utvikling group | 01/07/2004 | Oslo | 33.33 % | 204 562 | 1 706 444 | 363 940 |
| Associates | Acquisition date |
Business office |
Shareholding/ voting rights |
Carrying amount |
Carrying amount of equity 31.12.2013 |
Profit after tax 2013 |
| Ullandhaug Energi AS | 07/07/2009 | Stavanger | 44.00 % | 6 490 | 15 067 | 542 |
| Greenfield Property AS | 26/09/2011 | Oslo | 33.00 % | - | - | - |
| Youngstorget Parkeringshus AS | 16/11/2005 | Oslo | 21.26 % | 463 | 98 | -9 |
| 646 530 |
All amounts in NOK thousand
| Proportion of receivables which fall due after more than one year | 2013 | 2012 |
|---|---|---|
| Loans to Group companies | 245 025 | - |
| Receivables from Group companies | 5 184 618 | 4 024 959 |
| Loans to associates and jointly controlled entities | - | 4 187 |
| Receivable buy-out agreement | 22 929 | - |
| Prepaid fees | 25 510 | 20 589 |
| Prepaid costs | 30 747 | 22 771 |
| Other non-current receivables | 8 905 | - |
| Total non-current receivables | 5 517 734 | 4 072 507 |
| 2013 | 2012 | |
|---|---|---|
| Gross trade receivables | 22 023 | 13 637 |
| Provisions for bad debts | -1 091 | -597 |
| Total net trade receivables | 20 932 | 13 040 |
| Trade receivables | 2013 | 2012 |
| Up to 3 months | 976 | 4 353 |
| Over 3 months | 7 552 | 2 610 |
| Total overdue | 8 528 | 6 963 |
| Other current receivables | 2013 | 2012 |
|---|---|---|
| Prepaid costs | 6 150 | 16 925 |
| Receivable in connection with sale of property | - | 4 971 |
| VAT owed | 35 714 | - |
| Accrued interest | 12 076 | - |
| Other current receivables | 7 917 | 3 265 |
| Total other current receivables | 61 857 | 25 161 |
All amounts in NOK thousand
| 2013 | 2012 | |
|---|---|---|
| Non-current interest-bearing liabilities | ||
| Bank loans | 3 340 000 | 2 245 000 |
| Bond loans | 5 700 000 | 4 725 000 |
| Total non-current interest-bearing liabilities | 9 040 000 | 6 970 000 |
| Current interest-bearing liabilities | ||
| Bank loans | - | 2 000 000 |
| Bond loans | 1 142 500 | - |
| Commercial paper | 1 650 000 | 1 890 000 |
| Other debt | - | 20 000 |
| Total current interest-bearing liabilities | 2 792 500 | 3 910 000 |
| Maturity structure of non-current liabilities | Year | 2013 Loan amount |
2012 Loan amount |
|---|---|---|---|
| 2014 | 1 425 000 | ||
| 2015 | 1 510 000 | 1 200 000 | |
| 2016 | 2 690 000 | 1 950 000 | |
| 2017 | 1 700 000 | 1 895 000 | |
| 2018 | 1 440 000 | - | |
| Later than 5 years | 1 700 000 | 500 000 | |
| Total | 9 040 000 | 6 970 000 |
At 31.12.2013, the maturity structure of the company's new unused credit facilities was as follows:
| Total | 3 360 000 | 3 955 000 | |
|---|---|---|---|
| 2019 | - | - | |
| 2018 | 700 000 | 1 000 000 | |
| 2017 | 1 650 000 | 1 455 000 | |
| 2016 | 760 000 | 1 000 000 | |
| 2015 | 250 000 | 500 000 | |
| 2014 | - | ||
| Maturity structure of committed, unused credit facilities | Year | 2013 Loan amount |
2012 Loan amount |
In general, the financing is based on negative pledge clauses.
Interest rate hedging at Entra is part of the Group's overall risk management, and must be viewed in that context. Interest-rate positions should support the company's strategic development, risk profile and anticipated future market interest rates based on the Group's interest rate
view. The Group's guidelines on managing interest rate risk are expressed as a preferred interest rate structure (standard portfolio). The standard portfolio specifies the Group's requirements with respect to the weighted term and time segments.
At 31.12.2013 the weighted average duration was 3.1 years (3.2 years). The company's average interest rate was 4.6% (5.3 %) at 31.12.2013.
| 2013 Loan amount |
2012 Loan amount |
||
|---|---|---|---|
| Up to 1 year | 34 % | 4 082 500 | 4 560 000 |
| 1–2 years | 6 % | 750 000 | 350 000 |
| 2–4 years | 14 % | 1 650 000 | 1 900 000 |
| 4–6 years | 24 % | 2 800 000 | 1 100 000 |
| 6–8 years | 16 % | 1 850 000 | 1 900 000 |
| Over 8 years | 6 % | 700 000 | 1 050 000 |
| Total | 100 % | 11 832 500 | 10 860 000 |
The effect of interest rate hedges is shown in the income statement. The fair value of the company's portfolio of interest rate hedges is not shown on the balance sheet.
Interest-bearing liabilities associated with hedging activities Entra Eiendom AS uses interest rate derivatives to manage the interest rate risk arising from its interest-bearing liabilities.
The company's debt financing consists of bank loans, as well as commercial paper and bonds. The bank loans are subject to variable interest rates. Commercial paper is subject to variable interest rates. The company has issued both fixedrate and variable-rate bonds. Outstanding fixed-rate bonds are hedged using fixed-to-variable interest rate swaps. As a result, the hedged bonds are classified as part of the company's portfolio of variable rate loans.
The company's exposure to variable interest rates is hedged for cash flow risk using variable-to-fixed interest rate swaps.
Entra Eiendom AS's liabilities are directly or indirectly subject to variable interest rates. Entra Eiendom AS uses variable- -to-fixed interest rate derivatives to manage the company's interest rate risk. Cash flows are hedged by matching the terms and volumes of the interest rate derivatives with the expected maturity profile of the company's interest-bearing liabilities. The expected maturity profile of Entra Eiendom AS's interest- bearing liabilities is based on an assessment of the need to refinance existing liabilities and to obtain additional financing.
The table below shows that after taking into account cash flow hedges, 70 per cent of the company's interest-bearing liabilities are effectively subject to fixed interest rates.
Changes in NIBOR rates will therefore affect the interest expense on 30 per cent of the company's interest-bearing liabilities.
| 8 300 000 3 532 500 |
7 450 000 3 410 000 |
|---|---|
| 11 832 500 | 10 860 000 |
| 2013 | 2012 |
| Change in value | 2013 | 2012 |
|---|---|---|
| Opening balance – market value of liability | 884 053 | 824 782 |
| Change in value | -176 121 | 59 270 |
| Closing balance – market value of liability | 707 932 | 884 053 |
The fair value of the company's interest rate swaps used as cash flow hedges specifies the present value of the contractual fixed-interest rate agreements. The present value represents the market value of the company's liabilities to the counterparty of the interest rate swaps. The change in value over the financial year represents the change in the market value of liabilities. The reason for the reduction in the market value of the company's liabilities for the 2013 financial year was rising market interest rates and a shorter remaining term for the interest hedges.
Entra Eiendom AS has the following fair value hedges for the company's outstanding fixed-rate bonds:
| Fair value hedging 2013 | Total | Maturity structure up to 1 year |
Maturity structure 1–5 years |
Maturity structure >5 years |
|---|---|---|---|---|
| Hedged item | ||||
| Fixed interest rate liabilities | 2 892 500 | 692 500 | 500 000 | 1 700 000 |
| Hedge | ||||
| Interest rate swaps (fixed-to-variable) | 2 892 500 | 692 500 | 500 000 | 1 700 000 |
| Hedge ratio (unhedged position) | 0 | 0 | 0 | 0 |
| Hedge ratio (% hedged) | 100 % | |||
| Fair value hedging 2012 | Total | Maturity structure up to 1 year |
Maturity structure 1–5 years |
Maturity structure >5 years |
| Hedged item | ||||
| Fixed interest rate liabilities | 1 975 000 | 0 | 1 475 000 | 500 000 |
| Hedge | ||||
| Interest rate swaps (fixed-to-variable) | 1 975 000 | 0 | 1 475 000 | 500 000 |
| Hedge ratio (unhedged position) | 0 | 0 | 0 | 0 |
| Hedge ratio (% hedged) | 100 % |
| Change in value | 2013 | 2012 |
|---|---|---|
| Opening balance – market value of liabilities (+) /receivables (-) | -115 115 | -74 984 |
| Change in value | 20 967 | -40 131 |
| Closing balance – market value of liabilities (+) /receivables (-) | -94 148 | -115 115 |
At 31.12.2013, the market value of the company's fair value hedges represented a receivable for the company.
All amounts in NOK thousand
| 2013 | 2012 | |
|---|---|---|
| Provisions for non-current liabilities | 4 435 | 3 316 |
| Accrued fees on bond issues | 12 190 | - |
| Prepaid rent | 94 976 | 100 969 |
| Total other liabilities | 111 601 | 104 284 |
| 2013 | Provision for rent/other | Total |
| Movements in provisions | ||
| Opening balance at 01.01.2013 | 3 316 | 3 316 |
| Provisions used during the year | -353 | -353 |
| Further provisions in the period | 1 472 | 1 472 |
| Closing balance at 31.12.2013 | 4 435 | 4 435 |
| 2012 | Provision for rent/other | Total |
| Movements in provisions | ||
| Opening balance at 01.01.2012 | 15 398 | 15 398 |
| Provisions used during the year | -7 389 | -7 389 |
| Transferred to current | -4 693 | -4 693 |
| Closing balance at 31.12.2012 | 3 316 | 3 316 |
As at 31.12.2013 Entra Eiendom AS has made a provision for rent on Kristian Augustgate 19, Oslo.
An assessment is made of the relationship between the rent paid by Entra Eiendom AS and the rental income that can be achieved by leasing out these premises. This assessment is based on the rental cost and rental income specified in current leases, as well as an evaluation of future rental income for vacant premises and for contracts that are expiring. For properties leased by Entra, the company calculates the net cash flow over the duration of the lease contract. The present value of future cash flows is calculated using a discount rate of six per cent.
In the accounts, a provision is made at 31.12 equal to the estimated present value. Changes in the present value in relation to the previous year are recorded through the income statement.
All amounts in NOK thousand
| 2013 | 2012 | |
|---|---|---|
| Trade payables | 151 759 | 131 548 |
| Holiday pay owed | 13 435 | 13 399 |
| Unpaid government taxes and duties | 12 733 | 24 129 |
| Shared costs for buildings, owed to tenants | 8 213 | 19 015 |
| Interest accrued | 74 517 | 94 078 |
| Other liabilities | 7 827 | 5 012 |
| Total trade payables and other liabilities | 268 482 | 287 181 |
All amounts in NOK thousand
| Total prepayments and provisions | 67 252 | 60 818 |
|---|---|---|
| Provisions for current liabilities | 25 851 | 22 179 |
| Prepayments from customers | 41 400 | 38 640 |
| 2013 | 2012 |
| 2013 | Provisions for salaries and fees |
Other | Total |
|---|---|---|---|
| Movements in provisions | |||
| Opening balance at 01.01.2013 | 17 751 | 4 427 | 22 179 |
| Additional provisions during the year | 24 823 | 1 028 | 25 851 |
| Provisions used during the year | -19 708 | -4 427 | -24 136 |
| Unused provisions reversed during the year | 1 957 | - | 1 957 |
| Closing balance at 31.12.2013 | 24 823 | 1 028 | 25 851 |
| 2012 | Provisions for salaries and fees |
Other | Total |
|---|---|---|---|
| Movements in provisions | |||
| Opening balance at 01.01.2012 | 16 826 | - | 16 826 |
| Additional provisions during the year | 20 849 | - | 20 849 |
| Transferred from non-current | 4 693 | 4 693 | |
| Provisions used during the year | -19 385 | -266 | -19 650 |
| Unused provisions reversed during the year | -540 | - | -540 |
| Closing balance at 31.12.2012 | 17 751 | 4 427 | 22 179 |
| Receivables | 2013 | 2012 |
|---|---|---|
| Trade receivables | 2 353 | 4 977 |
| Current receivables, Group companies | 26 220 | 535 212 |
| Non-current receivables, Group companies | 5 429 642 | 4 024 959 |
| Total | 5 458 215 | 4 565 148 |
| Liabilities | 2013 | 2012 |
| Trade payables | 2 332 | 2 600 |
| Current liabilities to Group companies | 1 458 503 | 631 648 |
| Total | 1 460 835 | 634 249 |
The company has established a group cash pooling arrangement. The net bank deposits are presented as Entra Eiendom AS's cash at bank. The company has signed long-term loan agreements with its subsidiaries. Loans to subsidiaries are classified as current financial assets (short-term element) and non-current financial assets (long-term element).
Cash in hand and at bank at the end of the period is shown in the balance sheet.
| Total | 10 301 | 8 155 |
|---|---|---|
| Other tied deposits | 76 | 75 |
| Tax withholding account | 10 225 | 8 080 |
| 2013 | 2012 |
The company has pension schemes that cover a total of 152 (166) current employees and 54 (48) pensioners. The schemes provide an entitlement to 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 company also has a contractual early-retirement scheme (AFP). At 31 December 2013, 11 (11) former employees had chosen to make use of the AFP scheme.
Entra Eiendom AS's employees are members of the Norwegian Public Service Pension Fund. This is a definedbenefit pension scheme that gives all employees a guaranteed level of pension in the future. As a member of the Norwegian Public Service Pension Fund, the guaranteed pension level provides security for the amount of the retirement pension. 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 company's pension scheme satisfies the requirements of the Norwegian Act on Compulsory Occupational Pensions.
Entra Eiendom AS operates an early retirement pension scheme (AFP) from the age of 62. 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 2013, the net pension liabilities associated with the AFP scheme amounted to NOK 7.4 (NOK 7.0) million, which is included under total pension liabilities in the table below.
Employees are also insured against incapacity and death.
The Chief Executive Officer, has an uninsured defined-benefit supplemental pension under which the company 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.
| 2013 | 2012 | 1/1/2012 | |
|---|---|---|---|
| Present value of accrued pension liabilities in defined-benefit schemes in unit trusts |
153 901 | 148 262 | 176 312 |
| Fair value of pension scheme assets | -107 279 | -96 524 | -85 819 |
| Employers' NICs accrued | 6 506 | 6 251 | 11 620 |
| Net pension liabilities on the balance sheet at 31.12 | 53 129 | 57 990 | 102 114 |
| Pension liabilities at 31.12 | 153 901 | 148 262 | 176 312 |
|---|---|---|---|
| Pension benefits paid | -4 681 | -4 382 | -4 267 |
| Actuarial losses/(gains) | -4 921 | -47 158 | 2 287 |
| Interest expense | 5 402 | 4 317 | 4 667 |
| Present value of pensions earned this year | 9 839 | 19 173 | 20 270 |
| Pension liabilities at 01.01 | 148 262 | 176 312 | 153 356 |
| 2013 | 2012 | 1/1/2012 | |
| 2013 | 2012 | 1/1/2012 | |
|---|---|---|---|
| Pension scheme assets at 01.01 | 96 524 | 85 819 | 74 366 |
| Anticipated return on pension scheme assets | 4 060 | 2 402 | 4 439 |
| Actuarial (gains)/losses | -8 453 | -4 803 | -2 779 |
| Contributions from employer | 19 828 | 17 488 | 14 060 |
| Pension benefits paid | -4 681 | -4 382 | -4 267 |
| Pension scheme funds at 31.12 | 107 279 | 96 524 | 85 819 |
| 2013 | 2012 | |
|---|---|---|
| Cost of pension benefits accrued during current period | 10 206 | 19 518 |
| Employers' National Insurance contributions | 2 664 | 3 117 |
| Total pension benefits accrued during the period | 12 870 | 22 636 |
| Net interest expense | 1 342 | 1 915 |
| Total pension benefits accrued in income statement | 14 212 | 24 551 |
| Estimate difference posted directly against equity | 4 030 | -48 327 |
| Pension benefits accrued in the year | 18 242 | -23 776 |
| 2013 | 2012 | 2011 | |
|---|---|---|---|
| Discount rate | 4.00 % | 3.90 % | 2.60 % |
| Anticipated return on pension scheme assets | 4.40 % | 4.00 % | 4.10 % |
| Annual wage growth | 3.75 % | 3.50 % | 3.50 % |
| Annual adjustment to the National Insurance Scheme's basic amount ("G") |
3.50 % | 3.25 % | 3.25 % |
| Annual adjustment of pensions | 2.75 % | 2.50 % | 2.50 % |
| Mortality rates | K2013 | K2005 | K2005 |
| Disability rates | 200 % * K63 | 200 % * K63 | 200 % * K63 |
| Proportion of entitled employees making use of AFP | 20 % | 20 % | 40 % |
The actuarial assumptions are based on generally accepted assumptions in the insurance industry with regard to demographic factors.
| 2013 | 2012 | 2011 | |
|---|---|---|---|
| Government bonds | 100 % | 100 % | 100 % |
| Corporate bonds | 0 % | 0 % | 0 % |
| Shares | 0 % | 0 % | 0 % |
| Property | 0 % | 0 % | 0 % |
| Other | 0 % | 0 % | 0 % |
| Total | 100 % | 100 % | 100 % |
| Fair value pension funds 31.12 Net defined benefit pension liabilities |
-107 279 46 623 |
-96 524 51 738 |
-85 819 90 494 |
|---|---|---|---|
| Gross defined benefit pension liabilities | 153 901 | 148 262 | 176 312 |
| 2013 | 2012 | 2011 |
| Discount rate | Impact on liabilities |
Impact in % | |
|---|---|---|---|
| 0.5 percentage point reduction | 3.50 % | 11.2 | 7.3 % |
| Discount rate at 31.12.2013 | 4.00 % | - | - |
| 0.5 percentage point increase | 4.50 % | -11.1 | -7.2 % |
| Wage growth | Impact on liabilities |
Impact in % | |
|---|---|---|---|
| 0.5 percentage point reduction | 3.25 % | -5.7 | -3.7 % |
| Expected wage growth at 31.12.2013 | 3.75 % | - | - |
| 0.5 percentage point increase | 4.25 % | 5.6 | 3.7 % |
Expected payments to the defined-benefit pension plan for the period 01.01.2014–31.12.2014 amount to NOK 16.2 million.
| Tax for the year breaks down as follows | 2013 | 2012 |
|---|---|---|
| Tax impact of group contributions entered against investments | - | -1 533 |
| Change in deferred tax | 97 500 | 81 420 |
| Total tax | 97 500 | 79 887 |
| Calculation of the tax base for the year | 2013 | 2012 |
| Profit before tax | 507 955 | 618 261 |
| Taxable group contributions received | - | 5 476 |
| Non-taxable income* | -178 854 | -386 747 |
| Non-taxable expenses* | 65 763 | 53 797 |
| Basis for tax for the year | 394 864 | 290 787 |
| Change in temporary differences on pensions charged directly against equity | -4 030 | 48 327 |
| Change in temporary differences included in the calculation of deferred tax | -390 834 | -339 114 |
| Tax base for the year | - | -0 |
| Overview of temporary differences and loss carried forward |
Change | 2013 | 2012 |
|---|---|---|---|
| Receivables | 494 | -1 091 | -597 |
| Non-current assets | -72 627 | 1 395 431 | 1 322 804 |
| Provisions in accordance with generally accepted accounting principles |
-4 332 | -2 963 | -7 295 |
| Pensions | -4 860 | -53 129 | -57 990 |
| Financial instruments | -738 | 39 746 | 39 008 |
| Income from interests in partnerships | 3 036 | -18 405 | -15 369 |
| Gains and losses | -284 009 | 575 589 | 291 580 |
| Net temporary differences | -363 037 | 1 935 178 | 1 572 141 |
| Loss carried forward | -28 408 | -611 926 | -640 333 |
| Basis for deferred tax on the balance sheet | -391 445 | 1 323 252 | 931 807 |
| Deferred tax* | -96 372 | 357 278 | 260 906 |
* From the income year 2014 the tax rate on normal income is reduced to 27 %. Deferred tax as at 31.12.2013 is measured using the new rate.
| Change in deferred tax over income statement | 97 500 | 81 420 |
|---|---|---|
| Change in deferred tax for pensions charged directly against equity | -1 128 | 13 532 |
| Total change in deferred tax | 96 372 | 94 952 |
| Reconciliation of nominal and effective tax rates | 2013 | 2012 |
| 28% tax on profit before tax | 142 228 | 173 113 |
| Correction of deferred tax | 171 | - |
| Effect of change in tax rules | -13 233 | - |
| Non-taxable income* | -50 079 | -108 289 |
| Non-taxable expenses* | 18 414 | 15 063 |
| Calculated tax | 97 500 | 79 887 |
| Effective tax rate | 19.2 % | 13.0 % |
* Includes: Non-deductible expenses, such as entertainment, gains on the sale of shares and write-downs of shares and dividends.
| Geographical distribution | 2013 | 2012 |
|---|---|---|
| Central Oslo | 275 909 | 320 887 |
| Greater Oslo | 272 319 | 269 462 |
| Southern and Western Norway | 198 417 | 175 757 |
| Central and Northern Norway | 101 425 | 85 611 |
| Total | 848 071 | 851 717 |
The company has four geographic operating segments.
| 17 931 | 20 076 |
|---|---|
| 421 173 | 114 241 |
| 2013 | 2012 |
All amounts in NOK thousand
| Personnel costs | 2013 | 2012 |
|---|---|---|
| Salaries, performance-related pay and other taxable benefits* | 147 049 | 128 467 |
| Employers' National Insurance contributions | 20 576 | 18 676 |
| Pension expenses | 12 857 | 21 450 |
| Other personnel costs | 12 455 | 9 752 |
| Total | 192 936 | 178 346 |
| Of which capitalised as projects under development | -13 150 | -14 876 |
| Of which shared costs to be distributed amongst tenants | -41 534 | -42 129 |
| Of which related to the ongoing operation of properties | -5 697 | -10 672 |
| Total salary and personnel costs | 132 556 | 110 668 |
| Number of employees/full-time equivalents | 2013 | 2012 |
| Number of employees at 31.12. | 152 | 163 |
| Number of full-time equivalents at 31.12. | 150 | 161 |
| Average number of employees | 148 | 159 |
* Salaries, performance-related pay and other taxable benefits includes a NOK 8.8 (NOK 13.8) million provision for performance-related pay for all employees in 2013, which has not yet been paid out.
The Board of Directors' statement on the determination of salaries and other remuneration of senior executives is presented to the Annual General Meeting. The statement is structured as follows:
The Norwegian state has laid down guidelines for terms of employment for senior executives in state-owned enterprises and companies, cf. Report no. 13 (2010–2011) to the Norwegian parliament, Appendix 1. These guidelines form the basis for the Board's pay policy at Entra, and provide guidance concerning recruitment and employment processes and in connection with the annual review of the salaries of the Group's senior management team and the CEO.
Compensation of senior executives is based on the Group's general HR strategy and pay policy. Entra wants to be an attractive employer that attracts the best candidates and is able to retain and develop professional employees. To this end, Entra needs to be able to offer good pay packages, including competitive salaries, to ensure the company can recruit and retain attractive expertise. The guidelines on remuneration stress in particular that the overall compensation shall be competitive, but not above those of other similar companies in Norway. The principal element of the compensation package should be a fixed basic salary and the total remuneration shall be considered together as a whole. To the extent that performancerelated pay schemes are used, the targets shall be objective, measurable and identifiable, and there must be a clear correlation between the company's targets and the targets in the performance-related pay scheme.
The Board has established a remuneration committee consisting of two representatives from the current Board of Directors. The remuneration committee is chaired by the Chair of the Board. The remuneration committee monitors the remuneration of senior executives in relation to the state's guidelines for terms of employment for senior
executives in state-owned enterprises and companies. The committee evaluates the company's pay schemes and recommends guidelines for determining salaries prior to final determination by the Board. The Board determines the Chief Executive Officer's salary on an annual basis in the light of a recommendation from the remuneration committee. The CEO consults the remuneration committee in connection with determining the salaries of the Group's senior executives.
The fixed basic salary is the principal element in the remuneration of the Group's senior executives and the Chief Executive Officer. The CEO has no performance-related pay scheme. The total performance-related pay for other members of the Group's senior management team cannot exceed 25 per cent of their annual salary. For the Group's senior management team, performance-related pay in 2013 is based on targets defined at company and business level, as well as predefined personal targets. The company targets for 2013 are based on return on equity, owner costs, achieved rents, occupancy rates, customer satisfaction and energy consumption. Group management, excluding the CEO, have a defined-benefit pension limited to 12 x the National Insurance basic amount ("12G"), in line with the other employees. The CEO, in line with the state's guidelines, has a supplemental pension under which the company provides for an annual pension amounting to 30 % of annual salary above 12G. 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 employment. No agreement on severance pay has been made with other members of the group management. There are no option or share schemes for senior executives.
Senior executives have company car or mileage agreements. The company also covers other benefits to the management team in line with the benefits offered to the other employees at Entra and in accordance with normal practice at Norwegian companies.
The Chief Executive Officer and the rest of the management group have a number of internal directorships. They do not receive special remuneration for these directorships.
In 2013 severance pay was paid until October to the former CEO Kyrre Olaf Johansen, who stepped down from his post in mid-April 2012. The former CEO Rune Olsø received salary until April 2013 and severance pay for 3 months after resigning from his position on 17 October 2012. The former EVP Communications and Corporate Social Responsibility, Ingrid Schiefloe, who left her post at Entra on 30 June 2012 received one month of severance pay in 2013. The former CFO Anne Harris resigned from her position on 30.11.2013. An agreement was reached to pay salary during the notice period until 30.06.2014 and subsequently severance pay for 12 months. Anne Harris did not receive performance-related pay.
The CEO had a fixed salary of NOK 2.85 million in 2013, while salary for 2014 is determined by the Board after input from the remuneration committee and in accordance with the state's guidelines. The CEO is not covered by the company's performance-related pay scheme.
If the owner decides that Entra is to be listed, and such a process is initiated, the Board will recommend to the Annual General Meeting the establishment of a long-term incentive scheme linked to shares and/or bonuses for senior executives in accordance with the prevailing state guidelines on senior executive remuneration.
The Board will in principle use the same guidelines for compensation of senior executives in 2014 as it did in 2013. The targets for the performance-related pay scheme of the Group's senior executives are to be expanded to include all the company targets according to the scorecard for 2014 approved by the Board. Individual targets are also set. The annual determination of pay for senior executives is based on assessment of the individual employee.
| Payments to senior executives All amounts in NOK thousand |
Salary | Performance related pay** |
Benefits in kind |
Commuting costs |
Estimated pension costs |
Total remuneration 2013 |
|---|---|---|---|---|---|---|
| Senior executives as at 31.12.2013 | ||||||
| Klaus-Anders Nysteen, CEO from 29.01.2013**** | 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 Technical from 01.10.2013 |
1 124 | 44 | 113 | - | 170 | 1 451 |
| Mona Arebrot, EVP Greater Oslo *** | 1 261 | 81 | 139 | - | 175 | 1 656 |
| Karl Fredrik Torp, EVP Central/Northern*** | 1 119 | 127 | 144 | - | 175 | 1 565 |
| Sonja Horn, EVP Central Oslo from 19.08.2013 | 593 | - | 51 | - | 69 | 713 |
| Jorunn Nerheim, EVP Southern/Western*** | 1 088 | 380 | 151 | - | 175 | 1 530 |
| Astrid Tveten - Acting CFO from 01.11.2013 tl 31.01.2014 |
1 748 | 380 | 140 | - | 175 | 2 443 |
| Total | 12 197 | 1 078 | 1 133 | - | 1 452 | 15 860 |
| Senior executives 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 compa ny 17.10.2012* |
2268 | - | 49 | 12 | 57 | 2 386 |
| Anne Harris, Acting CEO to 20.01.2013, CFO to 30.11.2013* |
3 022 | 612 | 141 | - | 175 | 3 950 |
| Nils Fredrik Skau, Tech. EVP to 01.09.2013, Projects Dir. to 01.11.2013 |
1 565 | 328 | 134 | 178 | 175 | 2 380 |
| Bjørn Holm, EVP Projects and Development to 31.08.2013 |
1 279 | 313 | 96 | - | 115 | 1 803 |
| Ingrid Schiefloe, EVP Comm. and CSR., left the company 30.06.2012* |
161 | - | - | - | - | 161 |
The Group appointed a temporary EVP Communications and Corporate Social Responsibility in part of 2013.
* 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.
** Performance-related pay is based on targets met in 2012, which was paid in 2013.
*** Member of group management after reorganisation effective 1.7.2013.
**** In addition there is an estimated pension cost for an individual scheme above the State Employees Pension Fund of NOK 419,000 excluding employer's National Insurance contributions.
| Payments to senior executives All amounts in NOK thousand |
Salary | Performance related pay** |
Benefits in kind |
Commuting costs |
Estimated pension costs |
Total remuneration 2013 |
|---|---|---|---|---|---|---|
| Senior executives | ||||||
| Kyrre Olaf Johansen, CEO, left the company 17.04.2012* |
3 496 | 611 | 204 | - | 131 | 4 442 |
| Rune Olsø, Deputy, Acting and CEO, left the company 17.10.2012* |
2 810 | 497 | 166 | 330 | 158 | 3 961 |
| Anne Harris, CFO and acting CEO from 17.10.2012 | 2 684 | 512 | 115 | - | 158 | 3 469 |
| Nils Fredrik Skau, Technical EVP | 1 503 | 280 | 114 | 171 | 158 | 2 226 |
| Bjørn Holm, EVP Projects and Development | 1 655 | 346 | 144 | - | 158 | 2 303 |
| Anders Solaas, EVP Marketing | 1 524 | 287 | 172 | - | 158 | 2 141 |
| Ingrid Schiefloe, EVP Comm. and CSR, left the company 30.6.2012* |
1 132 | 149 | 70 | - | 78 | 1 429 |
| Total | 14 803 | 2 682 | 985 | 502 | 999 | 19 971 |
The Group appointed a temporary EVP Communications and Corporate Social Responsibility in 2012.
* Salaries and other remuneration during the notice period, as well as severance pay to be paid in 2013 are not included in the table above.
** Performance-related pay is based on targets met in 2011, which was paid in 2012.
*** Costs associated with established commuting arrangements did not previously form part of the overview of payments to senior executives, but are included in the overview from the 2012 financial year.
| Board fees | Committee fees | Total remuneration 2013 |
Total remuneration 2012 |
|
|---|---|---|---|---|
| Board | ||||
| Siri Hatlen, Chair | 380 | 41 | 421 | - |
| Martin Mæland, Deputy Chair | 191 | 45 | 236 | 210 |
| Ingrid Tjøsvold (from 15.10.12) | 143 | 30 | 173 | - |
| Arthur Sletteberg (from 15.10.12) | 143 | 39 | 182 | - |
| Kjell Bjordal (from 15.10.12) | 143 | 17 | 160 | - |
| Tore Benediktsen, employee representative** | 191 | - | 191 | 187 |
| Birthe Smedsrud Skeid, employee representative** | 191 | - | 191 | - |
| Grace Reksten Skaugen, Chair | - | - | - | 413 |
| Finn Berg Jacobsen, Board member (to 15.10.12) | - | - | - | 243 |
| Ida Helliesen, Board member (to 15.10.12)* | - | - | - | 313 |
| Ottar Brage Guttelvik, Board member (to 15.10.12)* | - | - | - | 299 |
| Ketil Fjerdingen, Board member (to 15.10.12)* | - | - | - | 323 |
| Åse Koll Lunde (to 29.12.11) | - | - | - | 113 |
| Mari Fjærbu Åmdal, employee representative** | - | - | - | 187 |
| Frode Halvorsen, employee representative (half period)** | - | - | - | 94 |
| Total* | 1 382 | 172 | 1 554 | 2 380 |
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.
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
* Total remuneration paid for the period between the Annual General Meeting in 2011 and the Annual General Meeting in 2012, as well as for the period up to the date when the Board members left the Board in the period from 2012 to 2013.
** Does not include ordinary salary
The company has a performance-related pay scheme that covers all employees. Payments are based on the results achieved by the Group, customer satisfaction and individual goals.
| Auditor's fee | 2013 | 2012 |
|---|---|---|
| Statutory audit | 1 022 | 910 |
| Other certification services | 443 | 45 |
| Tax advice | 24 | 9 |
| Other services not related to auditing | 236 | 125 |
| Total auditor's fee (excl. VAT) | 1 725 | 1 089 |
All amounts in NOK thousand
| Total operating expenses | 58 959 | 60 679 |
|---|---|---|
| Other operating costs | 7 873 | 8 533 |
| Operating expenses | 28 663 | 31 297 |
| Administrative costs | 22 423 | 20 849 |
| Operating expenses | 2013 | 2012 |
| Total other property costs | 280 443 | 360 412 |
|---|---|---|
| Write-downs of property, plant and equipment and intangible assets | 43 909 | 116 827 |
| Depreciation of property, plant and equipment and intangible assets | 184 242 | 163 599 |
| Development costs | 158 | 4 |
| Project operating expenses | 20 355 | 29 970 |
| Rental costs | 31 780 | 50 012 |
| Other property costs | 2013 | 2012 |
All amounts in NOK thousand
| Total administrative owner costs | 224 315 | 192 180 |
|---|---|---|
| Other administrative owner costs | 17 779 | 18 942 |
| Consultancy fees | 38 114 | 29 134 |
| Office expenses, furnishings and equipment | 37 033 | 33 810 |
| Payroll and personnel expenses | 131 389 | 110 294 |
| Administrative expenses | 2013 | 2012 |
| Total other finance income | 1 187 | 211 676 |
|---|---|---|
| Other finance income | - | 34 |
| Reversal of previous write-downs of shares | - | 71 407 |
| Gain on sale of shares | 1 187 | 140 235 |
| Other finance income | 2013 | 2012 |
| Total other finance expenses | 84 083 | 89 325 |
|---|---|---|
| Other finance expenses | 1 701 | 4 112 |
| Accrued fees and premiums | 27 371 | 17 747 |
| Write-downs of financial assets | 12 299 | 22 614 |
| Write-downs of shares | 42 500 | 36 712 |
| Loss on the sale of shares | 211 | 8 141 |
| Other finance expenses | 2013 | 2012 |
Due to a disagreement beween the shareholders in Greenfield Property AS («GFP») Entra Eiendom AS has sued Norwegian Data Group AS («NDG») and GFP. After receiving the writ NDG and GFP have brought their own claim aganst Entra Eiendom AS.
EVRY has issued a writ against Entra Eiendom AS alleging that the company has defaulted on a guarantee to build Greenfield Datacenter and/or a promise to support a computer centre project.
The company considers it unlikely that the claims of NDG/GFP and EVRY will succeed.
Entra Eiendom is owned by the Norwegian state represented by the Ministry of Trade, Industry and Fisheries through Entra Holding AS. Most of the company's premises are leased to public-sector tenants. Lease contracts are signed on commercial terms.
| Transactions with related parties | Counterparty | 2013 | 2012 |
|---|---|---|---|
| Rental cost | Subsidiary | 30 656 | 23 313 |
| General manager fees* | Subsidiary | 5 595 | 4 639 |
| General manager fees* | Jointly controlled entity | 1 020 | 1 535 |
| General manager fees* | Associate | 0 | 20 |
| Project management** | Subsidiary | 10 808 | 5 634 |
| Project management** | Jointly controlled entity | 2 231 | 667 |
| Project management** | Associate | 40 | 2 712 |
| Invoiced payroll expenses ** | Subsidiary | 20 238 | 16 170 |
| Invoiced payroll expenses ** | Jointly controlled entity | 2 203 | 1 165 |
| Invoiced operating expenses** | Subsidiary | 9 165 | 6 274 |
| Invoiced operating expenses** | Jointly controlled entity | 377 | 449 |
| Invoiced operating expenses** | Associate | 3 606 | 7 675 |
| Interest income | Subsidiary | 215 508 | 205 809 |
| Interest income | Associate | 284 | 512 |
| Finance expense | Associate | 12 299 | 0 |
The Group's balances with subsidiaries, associates and jointly controlled entities are described in Notes 6 and 13.
* The company recognises this income as a reduction in expenses (offsetting).
** Some of the expenses are passed on to the tenants as shared costs.
Biskop Gunnerus gate 14b 0185 Oslo
P.O. Box 52, Økern 0508 Oslo Phone: +47 21 60 51 00 Fax: +47 21 60 51 01 Email: [email protected]
Email: [email protected] Phone: +47 800 36 872
WWW.ENTRA.NO
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