Annual Report • Apr 5, 2016
Annual Report
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MULTICONSULT ANNUAL REPORT 2015 5
Net operating revenues 2 247.7 1 986.5 Growth (%) 13.1 % 10.2 % EBITDA, underlying 263.4 246.5 EBITDA, margin (%), underlying 11.7 % 12.4 % EBIT, underlying 225.8 211.8 EBIT margin (%), underlying 10.0 % 10.7 % Basic earnings per share (NOK) 5.73 6.35 Average number of shares after split 1:10 26 186 588 26 245 781 Net interest bearing debt (negative is asset) (223.2) (438.2) Cash and cash equivalents 233.0 448.6 OPERATIONAL Order intake 2 808.0 2 598.0 Order backlog 1 727.5 1 506.9
| FY 2015 | FY 2014 |
|---|---|
| 2 247.7 | 1 986.5 |
| 13.1 % | 10.2 % |
| 263.4 | 246.5 |
| 11.7 % | 12.4 % |
| 225.8 | 211.8 |
| 10.0 % | 10.7 % |
| 5.73 | 6.35 |
| 26 186 588 | 26 245 781 |
| (223.2) | (438.2) |
| 233.0 | 448.6 |
| 2 808.0 | 2 598.0 |
| 1 727.5 | 1 506.9 |
| 68.2 % | 67.1 % |
| 2 110 | 1 724 |
Kampflybasen (Forsvarsbygg) and Nyhamna (Kværner).
• Acquisition of remaining shares in LINK arkitektur: Multiconsult, acquired the remaining shares of LINK arkitektur in September 2015, resulting in full ownership of the company. The total purchase price for the remaining 68 per cent stake was NOK 108.8 million, settled in cash.
Key figures Key figuresLetter from CEO Directors' report Corporate governance Group accounts Notes to the group accounts Parent company accounts Notes to parent company accounts Board and management
There is no doubt that our listing on Oslo Børs was successful. Even prior to the listing, there was a large interest in Multiconsult. Many were aware of our qualities and have chosen to invest in the company. This has given us long-term, strategic owners, and we are very pleased with our new shareholder structure.
Our listing on Oslo Børs was both the final chapter of a long process and the starting point for the next phase of our development. The listing has opened the door to new and exciting opportunities. The new ownership structure has given Multiconsult more flexibility in terms of entering new markets, forming new alliances and exploiting attractive opportunities for growth. We receive new impulses from our owners in Norway and overseas. We are getting more attention from the media, and we are being invited to participate towards the development of the society on more influential arenas.
Our new owners want a good return on their investments. This means that we need to have an even more business oriented mindset. Over the past year, we have increased the proportion of billable hours. That bears witness to strong project execution and our ability to take on new challenges in a way that is profitable.
For the first time we have also been able to offer everyone who works at the Multiconsult group an employee share purchase programme, which was very well received. A total of 777 employees signed up for shares through the programme and our employees now own approximately 22 per cent of the shares in the company. We have thus succeeded in maintaining a high level of employee ownership, which was an important goal throughout the listing process.
Multiconsult continued growing in 2015. When including our 100 per cent ownership interest in LINK arkitektur, our num-
The year 2015 will forever stand as a milestone in Multiconsult's long history. This was the year that we made a big leap towards becoming the number one company in our industry in Norway. On 22 May 2015, Multiconsult became the first engineering consultancy company to be listed on Oslo Børs. This resulted in a number of changes for us, including a more flexible ownership structure, a higher visibility and an even more professional approach. Overall, this provides an excellent foundation for future growth and continued profitability, even in increasingly turbulent markets.
«If you want to be the number one, you need to set the right foundations. I believe that we have done that. Multiconsult has a flexible business model and offers a wide range of services.»
Anne Harris CFO
Christian Nørgaard Madsen President and Chief Executive
Steinar Mejlænder-Larsen Chair of the board
dely, particularly in southwestern Norway. The uncertain market has only had a relatively small impact on Multiconsult, and excess capacity in oil and gas has been transferred to and utilised in other business areas. We have become more competitive both internationally and in Norway due to a weaker Norwegian krone. This lays a strong foundation for future growth, particularly in the international energy market.
In Norway, our business areas Buildings & Properties and Transportation & Infrastructure have been very busy. The politicians are expressing a will to continue investing heavily in infrastructure, in line with the National Transport Plan. Multiconsult's Industry business area experienced strong growth, driven by Hydro's pilot project at Karmøy, which politicians are praising as a great example of the transition to a greener economy.
In September 2015, we acquired all of the remaining shares in Norway's biggest architect environment, LINK arkitektur AS. Multiconsult first acquired an ownership interest in the company in 2008, based on a belief in closer collaboration between architects and engineers during the concept phase. That belief has been vindicated, and the time is now ripe for going a step further. This kind of collaboration is becoming ever more important in the context of the growing emphasis on sustainable urban planning. I have a strong belief in our collective strength in this area.
There is also growing demand from both the private and public sectors for integrated engineering and architectural services, with high demands on architecture, landscape architecture, analysis and a variety of engineering disciplines. Closer collaboration between our subsidiary Analyse & Strategi, the parent company and LINK arkitektur will enable us to add significantly more value through integrated planning, particularly in relation to complex buildings such as hospitals.
Over the past year, the transition to a green economy has moved right up the political agenda, both in Norway and internationally, which is reflected in the market. For us it has contributed to several new renewable energy contracts witFor a number of years, Multiconsult has been involved in projects in Nepal, and many of our employees wanted to help after the earthquake last spring. Our staff in Nepal chose to stay in the country to help, while in Norway staff organised a spontaneous collection on behalf of the victims. This initiative resulted in a NOK 400,000 contribution towards rebuilding the country. This is a demonstration of the fact that our employees are responsible people who care about the world around them.
If you want to be the number one, you need to set the right foundations. I believe that we have done that. Multiconsult has a flexible business model and offers a wide range of services. We also have the resources and capabilities needed to achieve the goals that we set ourselves. We are able to adapt to the changing demands of the industry. We have the best technical experts, which we demonstrate every day through our projects, as well as through the awards won by both individuals and big teams at the company.
A great example of someone who combines technical expertise with a willingness to think outside the box is Arnt Gunvald Fredriksen, who in 2015 won the Association of Consulting Engineers' prestigious award for Young Consulting Engineer of the Year. He is a dedicated and innovative technical expert with a PhD in marine hydrodynamics, who has understood the importance of radical innovation, drawing on offshore technology to solve the challenges involved in building infrastructure across deep fjords.
All companies and owners want to have a strong balance sheet, but the most important asset on Multiconsult's balance sheet is invisible: it is intellectual capital. And on that metric, we are already #1.
Christian Nørgaard Madsen President and Chief Executive
ber of employees have risen by approximately 400. In the perspective of Norwegian consulting engineering business, this is a significant growth. Growth can be challenging, both for our individuals and for the company as a whole. However, our clear strategy and strong values will help us overcome this challenge. We anticipate further profitable growth in 2016, in line with our 3-2-1 strategy.
According to Universum's 2015 survey, we have fortified our position as the most attractive employer in our industry. Towards the end of the year, we also reached the final in the Employer of the Year category in the European Business Awards. Equally important, our employees are proud to work at the company. Our employee satisfaction survey in autumn 2015 found that 9 out of 10 employees would recommend other people to apply for a job with us.
Multiconsult is also growing outside Norway. The biggest contribution has come from the acquisition of LINK arkitektur, with their Swedish business with almost 150 colleagues. Our acquisition of LINK adds a major architectural business in Sweden and Denmark to our traditional international presence in renewable energy, oil and gas. There is a growing attention towards industrialisation of the construction industry. Over the course of the year we increasingly integrated our highly qualified staff at Multiconsult Polska into Norwegian highway projects by giving them a thorough introduction to our customers' and Multiconsult's project execution models.
We also made changes to our organisational structure that will lay the foundations for expanding our international presence. Our international operations are a separate segment, and our new EVP for International Business is a member of the group's senior management team.
2015 was a turbulent year, both globally and in Norway. The weak oil price has created serious challenges for the oil and gas industry. This has particularly affected suppliers to the industry, but the knock-on effects have been felt more wihin hydro, wind and solar. The latter technology is perhaps the one that has had the highest profile in 2015. Our leading experts on solar- and wind power are in high demand, and their opinions are sought after in important discussions.
Forward-looking clients and owners have noticed that sustainability is becoming far more important to customers, both in the design and construction phases. BREEAM certification has become a must. Multiconsult has been actively involved in developing the BREEAM methodology in Norway, and we are leaders in this area.
Sustainability is also a priority within our own business, and environmental management is becoming increasingly important. All of our offices with more than five employees are now Eco-Lighthouse certified. We have defined goals for energy consumption, waste, procurement and travel, and the senior management team monitors progress towards these.
The past year represents a turning point in the industry in many ways. We are experiencing a customer-driven shift towards the use of large Engineering Procurement Construction (EPC) contracts and Public-Private Partnerships (PPP). This requires our industry to change and to establish new ways of working together. In this context, it is vital to have a highly professional attitude and to systematically build up the expertise in project and design management. Multiconsult is well positioned to do this.
The way in which we work is also changing. Digitalisation and efficient technology solutions are becoming ever more widely used. Multiconsult is right at the forefront of these developments. For example, our work on Smisto hydro power station has taken the concept of drawingless design during the construction phase further than any other energy project in Norway. The project has received international attention, and among other places, we presented our work to a large international audience during the Autodesk University conference in Las Vegas.
For more than a century, we have built up a reputation for being responsible, honest and reliable in everything we do. Customers shall be confident that they will receive good advice, including on areas such as health, the working environment, environmental impacts and ethical business conduct. Our employees shall receive the training and support they need in order to fulfil Multiconsult's social responsibilities.
| High activity and strong operational performance | 12 |
|---|---|
| Highlights of 2015 | 13 |
| Overview of the business | 13 |
| Financial review | 16 |
| Segment information | 17 |
| Research and development | 20 |
| Financial risk and risk management | 20 |
| Going concern | 21 |
| Parent company results and allocation of net profit | 21 |
| Corporate governance | 21 |
| Corporate social responsibility | 21 |
| Employees, organisation and equal opportunities | 24 |
| Share and shareholder matters | 27 |
| Outlook | 28 |
MULTICONSULT ANNUAL REPORT 2015 11
Consolidated net operating revenues amounted to NOK 2 247.7 million (NOK 1 986.5 million), up 13.1 per cent from 2014. The increase was driven by high project activity combined with the revenue effect of LINK arkitektur AS (LINK arkitektur) being incorporated into the group's consolidated accounts from 1 September. Organic revenue growth excluding LINK arkitektur was 7.2 per cent. All business areas were characterised by higher project activity, except Oil & Gas. Consolidated results from associated companies were NOK 20.9 million (NOK 7.0 million), following gains on the ownership interest in LINK arkitektur prior to the full takeover in September 2015.
High project activity throughout the year and increased production capacity enabled revenue growth coming from the solid and growing order backlog. Positive impact on revenues was also yielded through improved project execution. Multiconsult continued to win important contracts and frame agreements during the year, confirming the group's strong market position and acknowledged expertise. Although there were variations among the different geographical and business areas during 2015, overall market activity and demand for engineering consultancy services were high. Demand in the Transportation & Infrastructure and Buildings & Properties business areas was good and stable, although activity within Buildings & Properties showed regional variations. Demand within the Energy area remained strong both in Norway and internationally. Slight improvement was seen in the Industry area, which was positively impacted towards the end of the year by the weakening of the Norwegian currency, generating better market opportunities for the export industry and dampening international competition in Norway. Demand within Oil & Gas declined throughout the year, following a significant drop in investment and activity on the Norwegian Continental Shelf.
Focus on improving the capacity utilisation and project execution resulted in a significant improvement in the group's billing ratio and results. This, in combination with increased capacity and high project activity, resulted in strong earnings for the year. Realising the attractive strategic fit, Multiconsult acquired the remaining shares in LINK arkitektur in September 2015. The acquisition offers potential for significant value creation through operational synergies as well as a further strengthened value proposition to customers. Strong operations, solid cash flow and a robust financial position forms the basis for the board of directors' dividend proposal of NOK 2.90 per share for 2015, in line with the dividend policy.
Cash flows in 2015 reflect strong operational performance, financing of ordinary and extraordinary dividend payments, acquisition of LINK arkitektur and IPO-expenses. Interest-bearing debt is still low at NOK 9.8 million at year-end. Consolidated net interest-bearing debt amounted to an asset of NOK 223.2 million (asset of NOK 438.2 million at yearend 2014).
The overall market outlook for 2016 remains fairly robust, despite the current slowdown in the Norwegian economy. Multiconsult's strong market position, flexible business model and broad service offering provides a healthy base for further growth, both domestic and international. The solid and growing order backlog, generated from a robust and diversified customer base, provides a strong foundation for continued growth. The order backlog at year-end 2015 was NOK 1 727.5 million (NOK 1 506.9 million), an increase of 14.6 per cent year on year. LINK arkitektur was included in the group order backlog as of 30 September 2015 and contributes positively to the increase.
• Frame agreements from The Norwegian Coastal Administration for consultancy services related to geological and environmental projects at harbours and entry lanes in various regions in Norway.
• A contract from The Norwegian Public Roads Administration for the Svegatjørn-Rådal section of E-39, the new main road between Os and Bergen in Western Norway.
The board of directors' report for the Multiconsult group ("Multiconsult" or "the group") embraces Multiconsult ASA ("the parent company") with subsidiaries in Norway and internationally.
The parent company, Multiconsult ASA, is a Norwegian public limited company with its head office in Oslo, Norway. International activities are pursued through foreign subsidiaries, project offices managed from Oslo and foreign partners. The group has 45 offices in Norway and abroad and had 2 110 employees as of 31 December 2015, including about 250 employed in wholly owned subsidiaries outside Norway.
Multiconsult is one of Norway's leading specialists in engineering design, consultancy and architecture services. Its business concept is to deliver multidisciplinary advice, creating value for customers, shareholders, employees and the group.
The group's principal activities involve multidisciplinary con-
The Multiconsult group recorded solid growth and strong earnings in 2015, driven by high activity and good operational performance. The group is on track to achieve its 2017 strategic objectives and will maintain a strong focus on further operational improvements going forward. Following the successful initial public offering in May 2015, Multiconsult has increased its shareholder base. Significant shareholder value was created in 2015 and the board will propose a dividend of NOK 2.90 per share for 2015, in line with the dividend policy.
Growth in revenues and EBIT, from 2012 to 2015, demonstrates that the group is making good progress towards its 2017 targets. It is also developing well in terms of brand visibility and a leading position in the sector.
The enabling culture in Multiconsult is regarded as one of the biggest success factors in meeting the group's strategic goals. Multiconsult has a strong platform for success; acknowledged technical expertise, substantial project execution capacity, good reputation, solid customer base and the resources needed to make a long term commitment.
In the light of the new shareholder structure and the 2017 timeframe for the current strategic goals approaching, management is currently in a process to further develop this strategy.
Market conditions were generally good in 2015, both in Norway and in Multiconsult's international markets. The uncertainty following the negative development in the oil sector has increased, and there have been significant variations between the different market segments and geographical regions where Multiconsult operates.
The overall competitive landscape is changing towards a growing trend for more engineering, procurement and construction (EPC) contracts and private public partnerships (PPP). Competition in Norway is strong, also with a notable presence of international players, particularly in the transportation and infrastructure markets.
The buildings and properties market includes among others commercial buildings (offices, retail, hotels and resorts, industry), welfare infrastructure (health, education, culture, sports and leisure) and residential buildings. One of the main drivers in this market is population growth, especially in large urban areas such as Norway's capital, Oslo, where the activity is higher than in less densely populated areas. Public sector economic activity tends to be used as a political tool in order to stimulate investments. Large maintenance and development needs have been identified in the Norwegian public sector for hospitals, educational buildings and prisons, creating an interesting market potential for Multiconsult. Demand for Multiconsult's services in the building and property market sectors in 2015 has been good and stable, but with regional variations.
The Norwegian markets for transportation and infrastructu-
sultancy, design, planning, project supervision, management, geotechnical site surveys, verification and controls in addition to architecture services in Norway and internationally.
The group's business is organised by a geographical dimension and comprises the following reporting segments:
A detailed description of each segment is presented under segment information.
Multidisciplinary consulting engineering companies offer their services across a large variety of market segments, which often have different market drivers.
Multiconsult comprises seven business areas, which correspond to the group's key market segments and which operate across geographical reporting segments:
re are also recognised as growth markets, partly as a consequence of public investment budgets being re-allocated as a consequence of the slow oil sector. As an example, the current National Transportation Plan allocates considerable new investment to the development, construction and maintenance of roads and railways. Work will also commence on the heavy maintenance backlog for different infrastructure assets, creating new opportunities for Multiconsult.
Industries where Norway currently possesses a competitive advantage are fish farming, mining and metals, pharmaceuticals and food, oil and gas and shipbuilding. These are also the industries in which Norwegian consulting engineering companies are world-leading and highly recognised. Hydro's next-generation pilot plant for electrolysis technology at Karmøy is an example of large projects under development. The onshore industry sector in Norway has experienced more favourable export conditions lately, following the weakening of the Norwegian currency towards major trading partner currencies.
The engineering consultancy market in the energy sector remained strong in 2015, both in Norway and internationally. The Norwegian energy market is characterised by large investment requirements. A major need for grid investments by Statnett and regional utility companies are key drivers for the power market in Norway. Statnett alone is expected to invest NOK 5-7 billion each year for the next ten years. Power production in Norway is mainly related to hydropower, with new capacity in the form of small greenfield hydropower plants. Norwegian consulting engineers are in the forefront on this particular field and are engaged in relation to construction, maintenance and upgrades worldwide. In the Norwegian market there is also potential for wind power development. In 2015 there has been low activity in this area due to unfavourable power and environmental certificate price levels. However, in the beginning of 2016, Statkraft, Trønder Energi, and Nordic Windpower DA started a collaboration to build Europe's largest land-based windfarm in mid-Norway. About NOK 11 billion will be invested in six windfarms with a total capacity of 1 000 MW. Construction work will begin in the second quarter 2016 and all the windfarms will be completed by 2020.
The oil and gas industry encompasses both land based and offshore activities. Consulting engineering is an integral part of the planning and development of land based structures and facilities such as terminals, landfalls and pipelines, docks and harbours, storage facilities, process plants, supply bases and electrification. However, engineering services are equ-
The group's business model is mainly based on consultancy fee revenues generated from own employees. In certain projects, services are also purchased from external consultants ("sub-consultants"). In some projects several partners have entered into cooperation agreements to bid collectively, where partners recognise their share of revenues. In all cases, there is a clear division of responsibility between Multiconsult and the partner or sub consultant. Projects can vary in duration, and long-term projects may extend over a number of years. The scope and duration of these projects are also often extended through supplementary orders.
Multiconsult has developed into a complete provider of multidisciplinary engineering consultancy and design services. The group represents a Norwegian powerhouse with an international scope. In Norway, the group has concentrated on being present with big multidisciplinary units in the largest cities.
The group has growth ambitions, particularly within the transportation, infrastructure and energy sectors, leveraging on the group's strong expertise in these areas.
Adopted in 2013, the current strategy is concentrated on achieving three principal goals by 2017 expressed as the "3- 2-1 strategy", with an ambition of tripling profits, doubling revenues and taking the number one brand position in the Norwegian market.
| STRATEGIC OBJECTIVE 2012–2017 |
2017 FINANCIAL TARGETS |
STRATEGIC PRIORITIES |
|---|---|---|
| 3 x profit | NOK 300 million EBIT and 10% EBIT margin |
• Improve billing ratio • Optimise project portfolio • Offshoring • Focus on key customers • Enhanced project execution |
| 2 x turnover | NOK 3 billion revenues | • Focus on business areas with growth potential, like Energy and Transportation & Infrastructure • Expand our international exports in niches of world class expertise, inter alia geotechnics and Arctic engineering • Accelerate growth through M&A |
| #1 brand | N/A | • Preferred Norwegian partner to our strategic clients • We set the standards within multidisciplinary civil engineering • The most attractive employer for consulting engineers in Norway |
Net financial items amounted to NOK 1.8 million (NOK 8.8 million), impacted by a lower cash reserves following the acquisition of LINK arkitektur and dividend payments of NOK 275.6 million during the year.
Profit before income taxes came to NOK 197.9 million (NOK 227.6 million). Profit for the period was NOK 150.1 million (NOK 166.7 million).
Other comprehensive income recognised against equity was NOK 59.3 million (negative NOK 128.1 million), mainly related to re-measurement of defined pension benefit obligations and tax.
Total non-current assets amounted to NOK 347.3 million (NOK 284.9 million) at 31 December, the increase driven mainly by higher goodwill at NOK 173.0 million (NOK 71.4 million) following the acquisition of the remaining 68 per cent ownership interest in LINK arkitektur. Reclassification of the 32 per cent stake in LINK arkitektur prior to this transaction led to a decline in Associated companies and joint ventures to NOK 7.3 million (NOK 42.2 million).
Total current assets came to NOK 910.3 million (NOK 1 013.3 million), the decline being attributed to a lower cash reserves at NOK 233.0 million (NOK 448.6 million), following the LINK acquisition at NOK 108.8 million as well as dividend payments of NOK 275.6 million. Working capital, consisting of receivables less current non-interest-bearing debt, came to negative NOK 39.2 million (negative NOK 54.9 million).
Total shareholders' equity was NOK 350.2 million (NOK 419.9 million) at 31 December, corresponding to an equity ratio of 27.8 per cent (32.3 per cent), mainly affected by dividend payments, profit for the year and other comprehensive income.
Total liabilities were NOK 907.4 million (NOK 878.3 million). Total interest-bearing debt amounted to NOK 9.8 million (NOK 10.4 million). Net interest bearing debt amounted to an asset of NOK 223.2 million (asset of NOK 438.2 million at year-end 2014). The group has a credit facility of NOK 120 million with Nordea Bank and an additional three-year revolving credit facility of NOK 80 million. The revolving credit facility remained undrawn at 31 December 2015.
Net cash flow from operational activities amounted to NOK 206.2 million (NOK 149.7 million). The payment of IPO
ally important with regards to offshore activity, focusing on subsea structures and foundations, offshore and arctic concrete structures, marine steel structures for fixed and floating units and topsides including living quarters and different kind of modules (process, utility, drilling). The negative oil price development has further slowed down the oil and gas sector during 2015, causing declining investment activity among the big oil companies. This has influenced the market for engineering consulting services and hence the Oil & Gas business area.
Multiconsult strives to maintain good, long-term customer relations. Our customer portfolio comprises about 4 000 customers. The 15 largest of these account for about half of the group's annual operating revenues, and represent large, reputable companies and public entities. The biggest customers are considered loyal and have been placing orders with Multiconsult for many years. The majority of the group's ten largest customers are solid public enterprises with predictable investment plans and very limited credit risk. During 2015, there was an increasing trend towards the use of frame agreements with significant revenue potential.
The group's robust and diversified customer base forms the basis for the solid order backlog and provides a strong foundation for continued growth.
The following financial review is based on the consolidated financial statements of Multiconsult ASA and its subsidiaries. The statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU as well as the Norwegian accounting legislation.
In the view of the board, the income statement, the statements of comprehensive income, changes in equity and cash flow, the balance sheet and the accompanying notes provide satisfactory information about the operations, financial results and position of the group and the parent company at 31 December.
Consolidated operating revenues in 2015 amounted to NOK 2 554.7 million (NOK 2 265.6 million). Net operating revenues, consisting of operating revenues less sub consultants and charges, came to NOK 2 247.7 million (NOK 1 986.5 million). The 13.1 per cent increase primarily reflects the strong order situation, which coupled with capacity expansion and increexpenses was more than offset by reduced payments to the pension fund and a positive development in working capital as defined in the statement of cash flows. Net cash flow from investing activities in 2015 was negative NOK 132.7 million (negative NOK 15.3 million), impacted by the acquisition of LINK arkitektur as well as investments related to ordinary replacement of assets. Net cash flow from financing activities came to negative NOK 293.4 million (negative NOK 45.6 million), mainly impacted by dividend payments and acquisitions of own shares in connection with the employees' share purchase programme.
Order intake in 2015 amounted to NOK 2 808.0 million (NOK 2 598.0 million). The group recorded a strong order backlog at year-end of NOK 1 727.5 million (NOK 1 506.9 million), an increase of 14.6 per cent year on year. LINK arkitektur contributed positively to the increase. Multiconsult won contracts within all business areas during the year, confirming the group's strong competitive position. Besides new contracts in Norway such as the Hydro Karmøy, Intercity Haug – Halden and E-39 Svegatjørn – Rådal projects, the majority of the order intake came from add-ons to existing contracts such as Campus Ås, Kampflybasen, and Nyhamna in Norway as well as Mt. Coffee in Liberia.
The group's activities are organised in three geographical segments. The group's fourth segment, Other Business comprises LINK arkitektur. Segment revenues and expenses reflect the geographical base of employees, which does not necessarily coincide with the location where the project has been executed. Overhead expenses such as administrative services, rent of premises and depreciation are allocated to individual segments.
This segment offers services in six business areas and comprises the central area of eastern Norway, with regional offices in Oslo, Fredrikstad and Drammen. Greater Oslo is the largest segment, accounting for 50.4 per cent of group net operating revenues in 2015.
Net operating revenues in 2015 rose 6.3 per cent to NOK 1 132.7 million (NOK 1 066.1 million), primarily enabled by increased capacity and strong project execution. Higher activity within Buildings & Properties, Transportation & Infrastructure as well as the Industry business area was partly offset
ased billing ratio has lead to an increase in billable hours. LINK arkitektur, which was consolidated from 1 September, contributed significantly to the rise in net operating revenues year-on-year. All business areas, with the exception of Oil & Gas experienced revenue growth in 2015. Total revenues for Buildings & Properties were NOK 789.6 million (NOK 751.2 million), Energy recorded NOK 427.9 million (NOK 361.8 million), Industry grew to NOK 145.7 million (99.3 million), Environment & Natural resources were NOK 84.1 million (NOK 81.4 million), while Oil & Gas was NOK 184.3 million (NOK 280.8 million). Largest growth was seen in Transportation & Infrastructure with revenues of NOK 796.0 million (NOK 691.1 million). LINK arkitektur represented NOK 127.2 million (2014: N/A)
Operating expenses before depreciation, amortisation and impairment charges came to NOK 2 035.0 million (NOK 1 740.0 million). The increase was mainly related to higher employee benefit expenses, recorded at NOK 1 649.2 million (NOK 1 449.6 million), driven by a rise in headcount. Multiconsult acted upon favourable labour market conditions, further strengthening key competence areas and adding project execution capacity during the year. Other operating expenses amounted to NOK 385.7 million (NOK 290.4 million), primarily impacted by IPO expenses of NOK 50.7 million, recorded in the first and second quarter of 2015, and higher office rental expenses due to the growing organisation.
Operating profit before depreciation and amortisation (EBIT-DA) amounted to NOK 212.7 million (NOK 246.5 million).
Underlying EBITDA, adjusted for IPO expenses of NOK 50.7 million, was NOK 263.4 million (NOK 246.5 million), driven by higher net operating revenues as well as a strong improvement in the billing ratio and solid project execution across all segments.
Operating profit (EBIT) for the year was NOK 175.1 million (NOK 211.8 million). Underlying EBIT, adjusted for IPO expenses, was NOK 225.8 million (NOK 211.8 million), representing an underlying EBIT margin of 10.0 per cent (10.7 per cent). The EBIT margin was negatively impacted by unsatisfactory results in LINK arkitektur and the international segment in the fourth quarter.
Results from associated companies and joint ventures contributed NOK 20.9 million in 2015 (NOK 7.0 million), the increase being attributed to the gain on the ownership interest in LINK arkitektur prior to the acquisition of the remaining 68 per cent in September 2015.
EBITDA for the year was NOK 188.8 million (NOK 167.7 milli on), positively impacted by high project activity and an im proved billing ratio, but partly offset by operating expenses related to increased head count. Acting on opportunities in the labour market, Multiconsult further strengthened its pool of expertise and project execution capacity during 2015.
Order intake for the segment in 2015 was NOK 1 524.8 mil lion (NOK 1 581.3 million). Order backlog for the segment at year-end 2015 rose 4.3 per cent to NOK 944.5 million (NOK 905.9 million). Multiconsult won several significant road and rail contracts within Transportation & Infrastructure and Energy during the year; however, demand in the sector was negatively impacted by delays in tender processes organi sed by the Norwegian public road entities.
The segment offers services in six business areas and comprises regional offices in Kristiansand, Stavanger, Ber gen, Trondheim and Tromsø. Regions Norway accounted for 40.5 per cent of group net operating revenues in 2015.
Net operating revenues in 2015 rose 4.6 per cent to NOK 909.5 million (NOK 869.3 million), due to improvement in the billing ratio and stronger project execution capacity, particularly within Buildings & Properties and Transportati on & Infrastructure. Project activity within Oil & Gas declined year-on-year, reflecting weak demand from this sector.
EBITDA in 2015 decreased 1.3 per cent to NOK 77.7 million (NOK 78.7 million). The positive impact from an improved billing ratio was offset by an increase in operating expenses and lower billing rates.
Order intake for the segment in 2015 was NOK 963.9 million (NOK 963.7 million). Order backlog for the segment at yearend 2015 was 471.5 million (NOK 456.1 million). Buildings & Properties and Transportation & Infrastructure recorded an increase in order intake compared with 2014, with important contracts and frame agreements confirming the company's strong position in the region. Order intake within Oil & Gas de creased year-on-year, in light of the weak market demand.
The international segment comprises the subsidiaries Multi consult UK, Multiconsult Asia and Multiconsult Polska. Mul ticonsult UK primarily offers services in the energy sector, while Multiconsult Asia in Singapore concentrates mainly on the oil and gas sector. Multiconsult Polska offers services in the transport and infrastructure, environment and natural resources, and oil and gas sectors. The international seg ment accounts for 3.0 per cent of the group's net operating revenues.
Net operating revenues amounted to NOK 67.0 million (NOK 36.1 million), the increase being driven by Multiconsult Pol ska which was consolidated into the group accounts from September 2014. Multiconsult Asia recorded higher revenu es year-on-year, whereas revenues from Multiconsult UK declined significantly compared to 2014 following lower pro ject activity at the end of the year.
EBITDA for the year was a loss of NOK 3.3 million (gain of NOK 3.6 million), negatively impacted by low project activity and resultant decline in the billing ratio in Multiconsult UK.
The other business segment comprises LINK arkitektur. LINK arkitektur is one of the leading architect firms in Scandinavia, with presence in major cities and regions in Norway, Sweden and Denmark. The company has a strong track record, driven by steady growth based on a solid financial position. LINK arkitektur has approximately 180 employees in Norway and 150 employees in a wholly owned subsidiary in Sweden.
Multiconsult has owned 32 per cent of the shares since 2008 and acquired the remaining 68 per cent of the shares with effect from 1 September 2015. LINK represents an excel lent strategic fit for Multiconsult, offering the potential for significant value creation through operational synergies as well as a further strengthened value proposition to custo mers. Stronger ties and enhanced cooperation will enable Multiconsult and LINK arkitektur to jointly meet the growing demand from both public and private sector for integrated engineering and architectural consultancy services.
LINK arkitektur is included as a wholly-owned subsidiary in Muliticonsult's consolidated accounts from 1 September 2015.
LINK arkitektur's net operating revenues recorded in Multi consult's consolidated financial statements in 2015 amoun ted to NOK 117.5 million.
LINK arkitektur's EBITDA since being consolidated into the group accounts on 1 September was NOK 2.5 million, with sound operations in Sweden being offset by lower billing ra tes in Norway.
The market for architectural services in the Nordic countries is changing rapidly with growing demand for quality, competence and capacity. Several companies in this industry have established a Scandinavian presence, considering the whole region as their home market.
Multiconsult pursues both internal and external R&D projects. Internal activities are conducted by the company's expertise networks or as separate projects. External R&D activities are pursued and financed primarily in collaboration with Norwegian and international research institutions, strategic partners and customers. Multiconsult conducted 19 R&D projects during the year, with the support of external funding.
Spending on the company's R&D projects totalled NOK 16.9 million (NOK 13.0 million). NOK 1.2 million per year has been invoiced to customers. Support to development activities related to PhD programmes amounted to NOK 1.9 million in 2015.
The company also pursues and measures a number of other development activities, which are general in nature for the whole group. These involve typical support processes, which are not considered to meet the accounting definition of research and development, but which are important for the company's development. Spending on these activities totalled NOK 12.4 million in 2015 (NOK 8.0 million).
Through its business activities, Multiconsult manages a considerable contract portfolio of engineering, architectural and advisory services that are exposed to a wide variety of risk factors. The group has established a systematic approach to risk management, in particular project risks. The other operational risks are related to HSE and are mitigated by contingency plans, continuous training and management focus in the organisation.
The risk of disagreements and legal disputes related to the possible cost of delays and project errors is always present in the consultancy business. Multiconsult has good insurance policies and routines for following up such cases. The company's insurance cover for project liability is mainly based on collective policies for engineering consultancies. This insurance takes the form of standard policies for engineering projetcs, with an excess of NOK 300 000 per claim and normally with a maximum cover of up to 150 times the Norwegian national insurance base rate (G) – about NOK 13.5 million. Further details are provided in note 19 to the consolidated financial statements.
Credit risk arises primarily from transactions with clients and from bank deposits. The group's losses on accounts receivable because customers are unable to meet their obligations have been modest for a number of years.
New customers are subject to credit assessment and approval before credit is granted. Responsibility for credit management in the parent company is centralised, and routines are incorporated in the group's quality assurance system.
Accounts receivables represent about 34.0 per cent (32.4 per cent) of the group's total assets. The group has established routines for assessing the creditworthiness of the customer, and the possible need for bank guarantees or other risk-reducing measures. As approximately 55% of the turnover in 2015 come from customers in the public sector, credit risk is considered to be very limited.
The group is exposed to currency risk through ongoing projects abroad with fees agreed in foreign currencies. Hedging contracts have been entered into for certain projects to reduce this risk. Currency risk is regarded as insignificant.
The group's interest-bearing debt is small, and it accordingly has a low interest-rate risk related to debt.
Financial non-current assets relate nearly entirely to investment in associated companies and joint ventures, while current assets consist almost entirely of bank deposits and current receivables. Non-current liabilities consist primarily of pension commitments related to the parent company's defined benefit plan. The defined benefit plan had 287 (314) active members and 202 (184) pensioners at 31 December. The present value of this pension commitment is sensitive to changes in the discount rate.
The group's liquidity risk is limited. Liquidity management is followed up actively through budgets and regular forecasting. To ensure sufficient freedom of action in terms of liquidity, and moderate liquidity risk, a credit facility of NOK 120 million has been established with the company's bank. In addition, a three-year revolving credit facility of NOK 80 million has been established. The revolving credit facility remained undrawn at 31 December 2015. Financial risk for the group is considered moderate.
Estimates are made in connection with revenues, hours and costs in projects and in the measurement of project progress. The main uncertainty relating to the assessment of contract revenue is associated with the recoverable amount related to overruns, change orders, claims and incentives. Although the group has considerable experience in project management and measurement, there is an inherent risk associated with such estimates.
See note 2b for further information on risks related to accounting estimates and policies.
The annual accounts have been prepared on a going concern assumption. The board has confirmed that this assumption can be made on the basis of the group's budgets and long-term forecasts.
The annual financial statements for the parent company are prepared in accordance with the Norwegian Accounting Act and the regulations on simplified application of international accounting standards (IFRS), as amended in November 2014.
Since the parent company accounts for 91 per cent (96 per cent in 2014) of total revenues and 85 per cent (93 per cent in 2014) of total assets in the group, the board of directors perceives the comments on the group's financial statements to be applicable also to the financial statements for the parent company.
The parent company's profit before income taxes came to NOK 184.6 million (NOK 218.9 million), while net profit was NOK 138.5 million (NOK 158.9 million).
Transferred to other equity NOK 62.4 million Dividend NOK 76.1 million
Following an evaluation, the board has concluded that the group will have an equity and liquidity after paying the proposed dividend, which is acceptable in relation to the risks and scope of its activities.
Good corporate governance provides the foundation for long-term value creation, to the benefit of shareholders, employees and other stakeholders. The board of directors of Multiconsult has established a set of governance principles in order to ensure a clear division of roles between the board of directors, the executive management and the shareholders. The principles are based on the Norwegian Code of Practice for Corporate Governance.
Multiconsult is subject to annual corporate governance reporting requirements under section 3-3b of the Norwegian Accounting Act and the Norwegian Code of Practice for Corporate Governance, cf. section 7 on the continuing obligations of stock exchange listed companies. The Accounting Act may be found (in Norwegian) at www.lovdata.no. The Norwegian Code of Practice for Corporate Governance, which was last revised on 30 October 2014, may be found at www.nues.no.
The annual statement on corporate governance for 2015 has been approved by the board and can be found on page 30 in this annual report.
Corporate social responsibility (CSR) is about running the business in a responsible and sustainable manner over time, and in a way that contributes to a positive, trust based relationship between Multiconsult and the group's stakeholders. Multiconsult has identified ethics, anti-corruption and health, safety and environment (HSE) as particularly relevant components of the group's CSR, and makes structured efforts to continuously strengthen these areas.
business partners before entering into any commercial agreements. Compliance with these procedures are sub ject to audits on a regular basis. Three audits were per formed in 2015, confirming progress compared to last year, but with room for further improvements in respect of compliance.
Ethics is also a key topic in the group's onboarding program me for new employees. A designated e-learning programme with special emphasis on anti-corruption dilemmas is part of the mandatory training for all employees. The program me will also be implemented in new subsidiaries to include all employees across the group.
Starting in 2015, all partners and subcontractors have to sign a declaration of ethical business conduct as part of their contract with Multiconsult. Key people are also requ ested to complete Multiconsult's anti-corruption e-learning programme mentioned above.
As part of the compliance programme, Multiconsult esta blished a whistleblowing portal in 2015. The portal is availa ble via www.multiconsult.no and ensures that both internal and external sources can report possible misconduct to the group's compliance function. The portal stores and handles information in accordance with the requirements set forth in the license from the Norwegian Data Protection Authority. Sources can choose whether they want to identify themsel ves or to report anonymously. The compliance programme has led to increased awareness and expertise in risk identifi cation, pro-active risk management and improved control of risks associated with business partners as well as a climate for discussing and seeking advice with regard to difficult si tuations and ethical dilemmas.
Multiconsult participates in the Eco-Lighthouse scheme, which is Norway's most widely used certification scheme for enterprises seeking to document their environmental efforts and demonstrate social responsibility. Multiconsult has par ticipated since 2013.
Multiconsult's goal is to enhance environmental awareness among all its employees, both in day-to-day operations and in executing assignments. This work has concentrated so far on the parent company, which accounts for 91 per cent of consolidated revenues and 82 per cent of employees. The strategies, goals and measures described below therefore apply only to the parent company. In 2016, emphasis will be
Considerations relating to the work environment, sick leave and occupational injuries are included in the section on "em ployees and the organisation".
The group's compliance function is responsible for follow up of the group's code of conduct, anti-corruption programme and whistleblowing portal, and for providing guidance and integrity due diligence-services to the organisation. Training programmes for employees at all levels have been imple mented since 2012. A dedicated corporate CSR policy has also been developed, with associated supplier- and personal declarations.
Following recent acquisitions, the implementation of group CSR policies and action plans is ongoing. Consequently, not all data are yet available at group level.
Sustainable development forms one of the key elements in the group's strategy under the slogan "green in all we do". HSE takes precedence over financial considerations. This year Multiconsult launched a booklet that describes though ts about and actions in support of corporate responsibility. A gap analysis was conducted in 2015 according to the guidance in the Global Reporting Initiative (GRI).
Multiconsult ASA supports the ten principles of the UN Glo bal Compact on human rights, labour, environment and an ti-corruption, and will search UN GC for active membership in 2016. The group has a dedicated function for CSR. Goals, strategies and action plans are established and will be follo wed up and further developed going forward.
A strong focus on business ethics and integrity is a prerequi site for Multiconsult's role and reputation as an independent and trusted advisor.
The risk picture is constantly changing within the project portfolio, and most of our employees meet clients, vendors and business partners. The group has therefore established a compliance program, which seeks to ensure awareness and competence in handling of ethical risks across the entire organisation, with special emphasis on anti-corruption. All employees have to sign Multiconsult's ethical code of con duct. Adherence to the code is followed up by the compli ance function, supported by a dedicated ethics committee.
All projects are screened for business ethical risks, and integrity due diligence is performed on new and unknown
Environmental reporting for the parent company is based on the following factors:
Multiconsult is a knowledge based business with highly educated employees. Statistics per 31 December 2015 show that 26 per cent of the employees hold a Bachelor's degree, 61 per cent hold a Master's degree, 2 per cent hold a PhD, while 11 per cent have other educational backgrounds. 31 per cent of the new recruits during the year had graduated in 2014 or 2015.
Multiconsult group had a total work force of 2 110 (1 724) employees at 31 December. Following the acquisition of LINK Arkitektur, with 332 employees, and net recruitment, the number of employees has increased by 386 during the year.
The parent company Multiconsult ASA had 1 639 (1 575) employees at year end. As a consequence of increased activity level during the year, the work force has had a net increase of 64 employees in 2015. Staff turnover was 7.87 (7.40) per cent, in line with the target, which is a range from five to ten per cent.
given to developing environmental strategies and measures for other the parts of the group.
During 2013-2015 work on Eco-Lighthouse certification was completed, when all offices in Norway with more than five employees were certified in accordance with the Eco-Lighthouse Foundation's head-office model. This is purely a Norwegian scheme. The larger offices were certified in earlier years. The next audit is due in 2017.
A nationwide programme to educate personnel in the Norwegian construction client regulations was conducted in 2014 and followed up again in 2015 with further action.
Multiconsult participates actively in the development of Building Research Establishment Environmental Assessment Methodology (BREEAM), and has developed significant expertise in this system for certifying the sustainability of buildings. The head office in Nedre Skøyen vei is the first commercial building in Norway classified in accordance with all three parts of "BREEAM in use".
Specific performance targets have been set for emissions, discharges and energy consumption. Measurements show that emissions have been relatively stable in recent years. However, there is progress in some environmental aspects, such as procurement, travel habits, energy consumption, and waste generation and handling. The environmental accounting for the parent company is presented in the table below.
Energy consumption in buildings has been reduced over the last three years. Data earlier than 2013 is not reliable. From 2013–2015, energy reduction is about 520 kWh/m2 (about 9 per cent). Energy consumption varies from year to year, depending on the climatic conditions.
One of the effects of the Eco-Lighthouse programme is that the internal attention to the environmental aspects of procurement has increased. This has in turn contributed to an increased use of environmentally labelled products, environmentally certified suppliers and ecological goods. Paper consumption, measured by the quantity purchased annually, remained virtually unchanged from 2014 to 2015.
Carbon emissions, expressed in tonnes per work-year, are at about the same level as the last five years. This means that the total emissions have increased along with the increase in number of employees. An action plan with the aim to reduce the group's carbon emissions has been decided upon and will be implemented in 2016.
| ENVIRONMENTAL INDICATOR Unit1 |
2011 | 2013 | 2014 | 2015 | |
|---|---|---|---|---|---|
| ENERGY | |||||
| Area efficiency1 | m2/work-year | 36 | 30 | 30 | 34 |
| Energy consumption in buildings1 | kWh/work-year | 4 890 | 5 583 | 5 031 | 5 066 |
| Energy consumption in buildings | kWh/m2 | 136 | 185 | 165 | 151 |
| TRANSPORT AND MACHINERY | |||||
| Work driving by car | km/work-year | 2 685 | 1 876 | 1 679 | 1 794 |
| Work driving by el-cars | km/work-year | 33 | |||
| Flights, domestic | number/work-year | 3.0 | 2.9 | 4.2 | 2.9 |
| Flights, foreign | number/work-year | 0.5 | 0.3 | 0.6 | 0.4 |
| Fuel consumption, machinery | litres/work-year | 77 | 47 | 45 | 43 |
| PROCUREMENT AND MATERIAL CONSUMPTION |
|||||
| Total paper consumption1 | kg/work-year | 31 | 22 | 24 | 21 |
| WASTE | |||||
| Total waste2 | kg/work-year | 114 | 121 | 113 | 113 |
| Residual waste | % | 52% | 53% | 47% | 46 % |
| Waste for recycling | % | 48% | 47% | 50% | 49 % |
| EMISSIONS TO THE AIR | |||||
| Carbon emissions | tonnes/work-year | 1.7 | 1.5 | 1.7 | 1.5 |
1 All work-years performed for Multiconsult ASA are included in the accounts. Consumption figures for offices with fewer than five employees are excluded from the accounts – in other words, consumption figures by office area, energy and paper consumption, and waste. The figures presented per work-year for these consumption items are accordingly rather more favourable than the reality.
2 A major relocation process conducted in Oslo during 2013 generated an unusually large amount of waste.
Environmental accounts for the parent company (last 3 years in addition to 2011, which is a reference year):
As a result of recent acquisitions, not all data is yet available at group level and most data refers to Multiconsult ASA (the parent company). Around 80 per cent of all employees are employed in the parent company and the data and information reported for the parent company therefore apply to the vast majority of the group's activities.
The group is well positioned to recruit employees with required educational backgrounds, both in terms of new graduates as well as more experienced candidates.
Multiconsult ranks as an attractive employer in the annual surveys conducted among students by Universum. The company was ranked as number four and five respectively among the most attractive workplaces for engineering students in 2015, and reconfirmed the top spot among consultants. In a similar survey conducted for seasoned engineering professionals, Multiconsult ranked as number seven in Norway and was awarded the title "climber of the year" (having climbed from number 25 in 2014).
Of the 208 new employees in the parent company, 28 per cent have a BSc, 59 per cent have MSc, 2 per cent have a PhD and 11 per cent have other educational backgrounds. Close collaboration with selected universities and colleges continued in 2015, with a substantial presence at both career fairs and company presentations. The commitment to provide attractive summer programmes/jobs was maintained, and feedback from students shows that Multiconsult offers very attractive summer posts.
Recruitment capability, employee satisfaction and expertise development are important factors for Multiconsult's success. This is reflected in the group's day-to-day operations. A system for IT supported annual staff appraisals was introduced in 2015 to further strengthen Multiconsult's ability to develop its employees. The portfolio of courses on offer was also further developed. As in earlier years, a management development programme was conducted for selected managers under the title "Expanding your leadership".
Multiconsult has a constant need to strengthen its expertise and capacity, both in line management and in project management. Great emphasis is accordingly given to the development of managers, and substantial resources are devoted to this work. During 2015, a large number of people completed various internal courses and programmes for project managers. In the same period, the group put significant effort into revising the existing programmes. In 2016, the group will continue to develop these programmes further and offer training to existing and potential line and project managers in order to build both capacity and excellence in the group's management pool.
Multiconsult believes that employee ownership promotes long-term commitment and loyalty to the business and that these factors influence the group's performance over time. With the desire of creating a benefit that seeks to align the group and the employees in expectations of future value creation, the Board of Multiconsult ASA decided to introduce an employee share purchase programme from 2015. The programme was successfully completed in the fourth quarter. Approximately 37% of employees across the Multiconsult group subscribed for shares through the programme and the available shares were over-subscribed.
Multiconsult strives to ensure a healthy and productive work environment for its employees. To make sure that the group efforts address the employees' needs, Multiconsult aims to ensure a high level of employee participation at all levels of the group. A permanent collaboration committee, comprising of central union officials and representatives of the corporate management, is in place at group level. The committee holds regular meetings, in which management informs of planned actions affecting the working environment and invites the committee members to present their views and engage in discussion. In instances where the planned actions have local impact, or otherwise a more narrow scope, the group holds meetings at the relevant unit/level.
In 2015, Multiconsult conducted an employee satisfaction survey. The survey is conducted biannually, and the overall results in 2015 were very good and show positive improvements from the 2013 survey. Multiconsult scores better than benchmark in all significant areas, at both industry level and national level.
The board considers the working environment and collaborative relationship with union officials in the group to be positive and constructive.
Multiconsult works systematically with HSE. Multiconsult makes concerted efforts to mitigate health risks and prevent injuries. Dedicated action plans have been established, and followed up closely by both central and regional offices. Multiconsult's working environment committee (AMU Norway) receives periodic reports on the activities and progress of HSE action plans.
Multiconsult arranged its second HSE-week in November 2015. During the week, several seminars and workshops were available to both employees and external stakeholders. The participants were presented with a range of relevant topics, including 'Safe Job Analysis on Site' and 'HSE in design'. The HSE e-learning course was made obligatory for all new employees in order to ensure that employees are well informed of the group's HSE policies and procedures.
Sickness leave in the parent company was 3.9 per cent, which is somewhat higher than the 3.3 percent goal for 2015. All sickness leave is monitored and reported and Multiconsult continues to work towards a goal of 3.3 per cent.
Seven injuries from working accidents were reported in 2015 against eleven in 2014. The company monitors absence due to injuries caused by working accidents or incidents. The key performance indicator which expresses days of absence in relation to the total number of hours worked, was 1.1 in 2015 (0.8).
The purpose of Norway's Anti-Discrimination Act is to promote equal opportunities and rights, and to prohibit discrimination on the grounds of ethnicity, skin colour, language, religion and beliefs. Multiconsult works actively to promote the objectives of the Act in the group.
37 per cent of the group's 2 110 employees at 31 December were female and 63 per cent were male.
34 per cent of the parent company's 1 639 employees at 31 December were female and 66 per cent were male. The technical departments had 32 per cent female staff and 68 per cent male staff. The corresponding proportions for the administrative departments were 65 and 35 per cent. Women accounted for 30 per cent of middle managers. The group is working to increase the proportion of female employees. The distribution was respectively 34 per cent female and 66 per cent male for new recruits in 2015.
Multiconsult aims to be a workplace with no discrimination on the grounds of disability. Active efforts are made to design and customise physical conditions so that the group's various functions can be used by as many as possible. Workplaces and jobs are customised on an individual basis for employees or job applicants with disabilities.
Nine per cent of employees in Multiconsult ASA had a native language other than Norwegian at 31. December, with a total of 32 different languages being represented.
The group does not discriminate on the grounds of gender, disability, ethnicity, religion or the like. The board and the executive management are conscious of this in recruitment, appointment, pay and customisation of working conditions, and in work on developing attitudes.
| CHANGES TO THE EXECUTIVE MANAGEMENT AND |
|---|
| BOARD OF DIRECTORS |
| Mr Torbjørn Blom-Hagen was appointed Executive Vice Pre |
| sident International in September 2015 |
The annual general meeting on 16 April elected the following board of directors: Mr Nigel K Wilson (deputy chair, 2 years), Ms Line Haugen (director, 2 years), Mr Arne Fosen (director, 1 year), Ms Vibeke Strømme (director, 1 year). The chair person of the board was not up for election.
A separate employee election took place on 16 – 20 March. Three employee representatives were elected for the period 2015 to 2017: Ms Kari Medby Loland, Mr Freddy Holstad, and Ms Elisabeth Lokshall.
The company applied for admission to trading of its shares on Oslo Børs on 30 April 2015, and the board of directors of Oslo Børs approved the listing application on 6 May 2015. The listing approval was followed by a successful initial public offering of the company's shares during May. Stiftelsen Multiconsult and other selling shareholders sold a total of 12 190 000 shares in the offering, representing approximately 46 per cent of the company's shares. No new shares were issued in the offering. The shares were priced at NOK 78 per share, implying a market capitalisation of Multiconsult ASA of approximately NOK 2 047 million. The shares were listed on the Oslo Børs on 22 May, and trading commenced on the same day under ticker symbol "MULTI" at an opening price of NOK 92.75.
The board of directors and CEO Multiconsult ASA Oslo, 31 March 2016
Steinar Mejlænder–Larsen
Chair of the board
Christian Nørgaard Madsen
President and Chief Executive
Arne Fosen
Director
Nigel Wilson Deputy chair
Vibeke Strømme Director
Kari Medby Loland Director
Freddy Holstad Director
Line Karin Haugen Director
Elisabeth Lokshall Director
Of the total shares sold, 11 678 556 were allotted to investors in the institutional offering and 511 444 to investors in the retail offering. Following completion of the offering, the shareholder base increased from 572 to more than 2 000. Multiconsult ASA had 1 861 shareholders registered in the Norwegian Central Securities Depository (VPS) at 31 December 2015.
The share had a closing price on 30 December (last trading day of 2015) of NOK 108, implying a share price increase of 38 per cent compared to the offer price and an increase of 16 per cent compared to the opening price at Oslo Børs on 22 May 2015.
The shares are registered in the VPS. The company's registrar is DNB Markets. The shares carry the securities number ISIN NO 001 073433.8.
The Annual General Meeting on 16 April 2015 resolved payment of ordinary dividends related to the 2014 financial year of NOK 84 million to be paid to shareholders registered at this date. This equals NOK 32 per share before split of the shares and NOK 3.2 per share after the 1:10 share split. The dividends were paid on 20 April 2015.
In addition, the same Annual General Meeting resolved payment of an extraordinary dividend of NOK 191.6 million to be paid to the shareholders registered on 16 April 2015. This equals NOK 73 per share before split and NOK 7.3 per share after the 1:10 share split. The distribution was conditional on listing of the shares. Multiconsult was listed on the Oslo Børs on 22 May 2015. The dividends were paid on 22 May 2015.
The Annual General Meeting held on 16 April 2015 resolved to authorise the board of directors to acquire own shares with a maximum aggregate nominal value of NOK 1 312 460, equal to 2 624 920 shares. The maximum and the minimum amounts, which may be paid per share, are NOK 250 and NOK 5, respectively. The authorisation is valid until the Annual General Meeting in 2016, however, no longer than to 30 June 2016.
Based on this authority, the board of directors of Multiconsult resolved to initiate a share repurchase programme in order to use own shares in connection with the company's employee share purchase programme. The programme was completed during the period 3 September to 5 November 2015.
These forward looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances in the future.
The overall market outlook for 2016 remains fairly robust despite the current slowdown in the Norwegian economy. In Norway, the Industry segment is moving towards more favorable prospects. Buildings & Properties is expected to have a slow, but stable growth. Demand from the Oil & Gas industry is expected to continue at a low level because of lower investment activity on the Norwegian continental shelf. Public sector investment is driving a strong outlook for Transportation & Infrastructure within road and rail. However, in the short term, there is an increasing concern that tender processes from the Norwegian public roads entities are being delayed. The Energy market remains strong in Norway, especially within transmission and hydropower. International clean energy markets continue to grow, providing new business opportunities for Multiconsult. The overall competitive landscape is migrating towards more Engineering Procurement Construction (EPC) contracts and Private Public Partnerships (PPP). Strong competition may lead to increased price pressure on large projects in Norway. The weaker NOK is contributing to a better competitive position for Norwegian exports and industry projects as well as weaker international competition in Norway.
Multiconsult's strong market position, flexible business model and broad service offering provides a sound base for further growth, both domestic and international. Resources from Multiconsult Polska are gradually being phased into ongoing projects to strengthen competitiveness. The acquisition of LINK arkitektur is expected to generate top line synergies by further strengthening the group's value proposition to customers.
The stable order backlog, generated from a broad and robust customer base, provides a strong foundation for continued growth.
Multiconsult will continue to focus on further improvement of the billing ratio in addition to strong project execution and cost efficiency throughout the organisation to drive improved profitability. The group is well positioned to achieve its strategic objectives for 2017, expressed through an EBIT-margin target of 10 per cent, a revenue target of NOK 3 billion, and the ambition of becoming Norway's number one brand.
Multiconsult is subject to annual corporate governance reporting requirements under section 3-3b of the Norwegian Accounting Act and the Norwegian Code of Practice for Corporate Governance, cf. section 7 on the continuing obligations of stock exchange listed companies. The Accounting Act may be found (in Norwegian) at www.lovdata.no. The Norwegian Code of Practice for Corporate Governance, which was last revised on 30 October 2014, may be found at www. nues.no .
The annual statement on corporate governance for 2015 follows below. The statement has been approved by the board of directors on 31 March 2016.
The board of directors is committed to building a sound and trust-based relationship between Multiconsult ASA and the company's shareholders, the capital market participants, and other stakeholders.
The group's overall principles for corporate governance have been approved by the board of directors and can be found at www.multiconsult-ir.com/corporate-governance. The group complies with the Norwegian Code of Practice for Corporate Governance (the code) issued by the Norwegian Corporate Governance Board, latest edition of 30 October 2014.
The board of directors' annual statement on how Multiconsult has implemented the code is set out below. The presentation covers each section of the code, and deviations from the code, if any, are specified under the relevant section.
Multiconsult's organisational values form the basis for some important principles for corporate governance. Multiconsult has defined three core corporate values, which form the foundation for building a positive corporate culture:
The board has formulated guidelines for ethics and corporate social responsibility (CSR) in accordance with the group's corporate values.
More information about our values, ethical guidelines and CSR can be found in the annual CSR report, which is an integral part of the board of directors' report.
Multiconsult's articles of association are available on the group's website.
Article 3 of these articles, the group's business purpose states: "The business activities of the group are to engage in consulting engineering business, property management and other business activities in connection therewith, including ownership in other companies".
Multiconsult's work with professional ethics and integrity is based on the principles of the UN Global Compact, ISO 26000 and guidelines from Transparency International. All Multiconsult employees need to be aware of and adhere to the Multiconsult Code of Conduct, which describes the principles of business and the conduct among employees and other representatives for Multiconsult. Multiconsult's corporate social responsibility policy is based on two pillars: The dividend policy is based on an ambition to distribute at least 50 per cent of the group's net profit annually. When deciding the annual dividend level the board of directors will take into consideration expected cash flows, capital expenditure plans, financing requirements and appropriate financial flexibility.
Within the framework of its articles of association, Multiconsult has established goals and strategies for its business. Multiconsult's objectives and strategies are presented in the board of directors' report in the section "Overview of the business".
As of 31 December 2015 the group had a consolidated equity of NOK 350 million, corresponding to an equity ratio of 28 per cent.
The board of directors considers that the group has an equity capital that is appropriate to its objectives, strategy and risk profile.
At the ordinary general meeting of the company on 16 April 2015 the board of directors was authorised to increase the share capital of the group by up to NOK 1 312 460. The mandate is restricted to issue shares as consideration in connection with a) acquisitions, b) raise new equity to finance such acquisitions, c) in connection with a share purchase programme for the employees in the group or d) in connection with the over-allotment option granted in connection with the company's initial public offering. The authorisation is valid until the next ordinary general meeting in 2016, but no longer than until 30 June 2016.
Good corporate governance provides the basis for long-term value creation, to the benefit of shareholders, employees and other stakeholders. The board of directors of Multiconsult has established a set of governance principles in order to ensure a clear division of roles between the board of directors, the executive management and the shareholders. The principles are based on the Norwegian Code of Practice for Corporate Governance.
Multiconsult has only one share class, and all shares have equal rights in the company.
No share issues were made by Multiconsult in 2015.
Pursuant to the code, the reasons for waiving the pre-emptive right in connection with a share capital increase must be published in a stock exchange announcement. The board will endeavour to comply with this recommendation if such circumstances should arise.
In connection with the employee share purchase programme, Multiconsult has purchased own shares in 2015. All such transactions have been carried out via the stock exchange at market prices.
The board and the executive management are concerned to ensure equal treatment of all the company's shareholders and that transactions with related parties take place on an arm's length basis. Note 22 to the consolidated financial statements provides details about transactions with related parties. Financial relationships related to the directors and executive personnel are described in note 8.
Guidelines in respect of conflicts of interest are included in the instructions to the company's board of directors, and require that directors inform the board if they have a significant direct or indirect interest in an agreement being entered into by the group.
To avoid unintentional conflicts of interest, the group has drawn up an overview which identifies the various roles of its directors, the offices they hold and so forth. This overview is updated as and when required and in the event of changes in the board's composition.
The company's shares are freely negotiable. The articles of association do not impose any restriction on the negotiability of the shares.
The board makes provision for as many as possible of its shareholders to exercise their rights by attending the general meeting. The annual general meeting will take place on 26 April 2016. The group's financial calendar is published via Oslo Børs and in the investor relations section of the group's website.
Notice of the general meeting, with comprehensive documentation including the recommendations of the nomination committee, is made available to shareholders on the group's website no later than 21 days before a meeting takes place. Shareholders who want the attachments sent by post can apply to the company for this to be done. The documentation must contain all the information required for the shareholders to form a view on every item to be considered. Shareholders must register intention to attend by the specified deadline. The deadline for registering attendance is set as close to the meeting as possible, and, pursuant to the articles of association; no sooner than five days in advance.
Notices with documentation are made available on the group's website immediately after the documentation has been issued as a stock exchange announcement.
General-meeting notices provide information on the procedures to be observed for attendance and voting, including the use of proxies. Shareholders who cannot attend in person are encouraged to appoint a proxy.
A proxy form, where a proxy has been named, is framed in such a way that the shareholder can specify how the proxy should vote on each issue to be considered. The notices have included information on the right to raise issues for consideration at the general meeting, including the relevant deadlines.
Shareholders may cast a written vote in advance in matters to be discussed at the general meetings of the company. Such votes may also be cast through electronic communication.
The access to cast votes in advance is subject to the presence of a safe method of authenticating the sender. The board of directors decides whether such a method exists before each individual general meeting.
The notice of the general meeting must state whether votes in advance are permitted and which guidelines, if any, that have been issued for such voting.
The company's articles of association sets forth that no shareholder, including such shareholder's close associates, may vote for more than 25 per cent of the shares at the general meeting. This restriction can be removed by the general meeting at any time by a 2/3 majority.
General meetings will normally be chaired by the chair person of the board. The board will however evaluate in respect of each general meeting whether it is appropriate to engage an external chair person to chair the meeting.
The group's chair person of the board and chief executive are required to attend, and the complete board of directors is encouraged to attend the general meetings, following the instructions for the board.
The nomination committee is encouraged to attend those meetings where the election and remuneration of directors and members of the nomination committee are to be considered. The group's auditor is present at the annual general meeting.
The general meeting elects the members of the nomination committee as well as the shareholder-elected directors on the board. In its work, the nomination committee gives emphasis to ensuring that the board functions optimally as a collective body, those legal requirements for gender representation can be met, and that the directors complement each other in terms of their background and expertise. The general meeting is therefore normally invited to vote for a complete shareholder-elected board. As a result, no opportunity has been provided to vote in advance for individual candidates.
Minutes from general meetings are published as soon as practicable via the stock exchange's reporting system (www. newsweb.no, ticker code: MULTI) and in the investor relations section of the group's website.
The group shall, according to its articles of association, article 6, have a nomination committee consisting of three members. The nomination committee is elected by the general meeting and the members have a period of service for two years unless the general meeting determines otherwise. The nomination committee's tasks are set out in the articles of association and include to; nominate new board members to the general meeting, propose remuneration to the board members at the general meeting, propose remuneration to the members of the nomination committee, and to nominate new members of the nomination committee to the general meeting.
The remuneration of the committee is determined by the general meeting. The general meeting may issue further guidelines for the nomination committee's work.
Pursuant to the code, the composition of the nomination committee must take account of the interests of shareholders in general.
The present nomination committee was elected before the public listing of the company, at the annual general meeting of 16 April 2015. It comprises Nils Erik Forsén, Eli Grøttheim (chair person) and Johan Henrik Bertnes. No directors or members of executive management are represented on the nomination committee.
Procedures for shareholders to submit nominations to the nomination committee will be implemented in advance of the annual general meeting in 2017. Further details and deadlines for submission will be published on the company's website.
Multiconsult does not have a corporate assembly.
Pursuant to the articles of association, the board of directors may comprise seven to nine members. The board currently has five shareholder-elected directors and three employeeelected directors.
Two alternate directors have also been elected.
Directors and the chair person of the board are currently elected by the general meeting for either one or two-year terms.
The composition of the board is intended to secure the interests of the shareholders in general, while the directors also collectively possess a broad business and management background as well as in-depth sector understanding and expertise in investment, financing and capital markets. Weight is also given to the board's ability to make independent judgements of the business in general and of the individual matters presented by the executive management. Consideration has also been given to gender representation and independence of directors from the company and its management.
The general meeting on 16 April 2015 set the term of office for each of the current members of the board of directors at either one or two years. It is the group's intention that terms of office of board members will not exceed two years.
The board of directors does not include executive personnel. All shareholder elected directors are independent of the group's executive management and commercial partners. Four out of five shareholder elected directors are independent of the largest shareholders. Mr Nigel Wilson has a commercial consultancy assignment for Stiftelsen Multiconsult, the largest shareholder at 31 December 2015.
Details on background, experience and independence of directors are presented on the group's website.
14 board meetings were held in 2015. Each board member's attendance at board meetings is recorded by the company.
Members of the board are encouraged to own shares. The shareholding of each board member can be found in note 8 to the consolidated financial statements and in the biography of each board member on www.multiconsult-ir.com/ corporate-governance/board-of-directors.
The board of directors has overall responsibility for managing the group and for supervising the chief executive and the group's activities.
The board of directors establishes annual plans for its work, with particular emphasis on business objectives, strategy and implementation. The board of directors has established instructions for its own work as well as for the executive management with particular emphasis on clear allocation of responsibilities and duties.
The principal tasks of the board include determining the group's strategy and monitoring how it is implemented. The work of the board also includes monitoring control functions necessary to ensure acceptable management of the group's assets.
The board appoints the group's chief executive officer. Instructions which describe the rules of procedure for the board's work and its consideration of matters have been adopted by the board. The division of labour between the board and the chief executive is specified in greater detail in the instructions. The chief executive is responsible for the group's executive management. Responsibility for ensuring that the board conducts its work in an efficient and correct manner rests with the chair person of the board.
The board establishes an annual plan for its meetings, and evaluates its work and expertise once a year. The annual plan specifies topics for board meetings, including reviewing and following up the group's goals and strategy, budgets, reporting of financial information, the notice for the general meeting with associated documentation, and the board's meeting with the auditor.
The board of directors has elected an audit committee amongst the members of the board of directors.
The committee currently comprises of Nigel Wilson as the chair person and Line Haugen and Steinar Mejlænder-Larsen as members. All three members of the audit committee are independent of the group.
Pursuant to section 6-43 of the Norwegian Public Limited Liability Companies Act, the audit committee shall:
The group has established a remuneration committee that consists of two members of the board. The members of the remuneration committee are and shall be independent of the group's executive management. The committee currently consists of Steinar Mejlænder-Larsen as the leader and Vibeke Strømme as member.
The remuneration committee is an advisory committee for the board that shall prepare matters for the board's consideration and decisions regarding the remuneration of, and other matters pertaining to the group's management. The recommendations of the remuneration committee shall cover all aspects of remuneration to the management, including but not limited to salaries, allowances, bonuses, long term equity incentive plans and benefits-in-kind.
The board has adopted separate instructions for the remuneration committee setting out further details on the duties, composition and procedures of the committee.
The board currently evaluates its own work and that of the chief executive and reports its findings to the nomination committee.
In the event that the chair person of the board is, or has been, personally involved in matters of material character, the board's consideration of such matters will be chaired by some other member of the board.
The group has in place processes and routines for internal control over risk management and financial reporting. During 2015, these processes have been under review to fully comply with the code.
Through its business activities, Multiconsult manages an extensive project contract portfolio of engineering, architectural and advisory services that are exposed to substantial risk factors, such as risk of disagreements or legal disputes with its customers related to possible cost of delays or project errors that are always present in our business.
The organisation comprises a relatively large number of employees. The group's management model is based on an appropriate delegation of authority, clearly defined market and operating parameters, in addition to effective internal control.
Overall goals and strategies are periodically reviewed and updated. Based on the current strategy, the corporate values and ethical guidelines, instructions have been established by the board that specify delegation of authority to defined roles in the organisation. Risk management processes are established to identify, evaluate and report risk in a systematic manner for the group's activities with particular focus on project and other operational risks.
Financial risk is managed in accordance with the group's financial strategy, which is described under the section "Financial risk and risk management" in the board of directors' report.
The board is responsible for ensuring to that the enterprise, financial reporting and asset management are subject to satisfactory controls. Overall policies, governing processes and routines have been established for day-to-day management. The board periodically reviews the company's risk management documentation and the most important risk areas and the internal controls established to mitigate these risks.
The group has in place processes and routines for internal control over financial reporting. The main principles are transparency, segregation of duties, analytical controls and systemtatic and thorough management reviews. The periodic review meetings between senior financial and operational management focus on revenue recognition, possible liability costs as well as performance reviews of both financial and operational targets.
Management prepares periodic reports on business and operational developments to the board, which are discussed at board meetings. These reports are based on the results of the review process and include status of key performance indicators, update of market developments, operational issues, financial results and highlights of organisational issues. Financial position and results are followed up in monthly accounting reports, compared to prior year, budgets and forecasts. Reporting also includes non-financial key performance indicators related to each business area. In addition, management prepares a long term forecast of financial trends, showing profits and cash flow development.
The interim reports and annual financial statements are reviewed by the audit committee in advance of consideration and discussion in the board. Financial risk management and internal control are also addressed by the board's audit committee. The latter reviews the external auditor's findings and assessments after the interim and annual financial audits. Significant issues in the auditor's report, if any, are also reviewed by the board.
The remuneration to the board of directors is described in note 8 to the financial statements.
Directors' fees are determined by the general meeting on the basis of recommendations from the nomination committee. These recommendations have been based on the board's responsibility, expertise and the complexity of the business, and are related to results. The directors have not been awarded share options or any other form of remuneration.
None of the directors have undertaken any special assignments for the group other than their work on the board. Di-
rectors are unable to accept such assignments without approval from the board in each case.
An overview of shares owned by the directors and their close associates is included in note 8 to the consolidated financial statements.
The board has established a remuneration committee to assist it with the employment terms of the chief executive as well as the strategy and main principles for remunerating the group's senior executives.
The chief executive (CEO) normally participates in the meetings, unless the committee discusses issues relating to the CEO. The committee provides advice to the board of directors and the CEO. The main responsibilities are evaluations and advice to the board of directors relating to principles, systems for the total remuneration (including bonus) to the CEO and other members of the group management.
The group's guidelines for the remuneration of senior executives are described in note 8 to the consolidated financial statements. This note also provides further details about remuneration in 2015 for certain senior executives. The guidelines are presented annually to the general meeting in connection with the presentation of the annual report.
The guidelines specify the main principles for the group's executive pay policy, and have been prepared with the aim of ensuring that the interests of shareholders and senior executives are aligned as far as possible. No options have been issued to employees or elected officers of the group.
Total remuneration to the executive management team consists of a fixed element and a variable performance based bonus, a share purchase programme for employees, plus pension and insurance arrangements.
Fixed remuneration to members of the executive management team consists of base salary (main element) and fringe benefits. A bonus programme has been established, with maximum payout for the CEO equal to four months' salary and maximum one month salary for other members of the executive management team. The bonus criteria are linked to financial targets, agreed action plans and relevant key performance indicators. Members of the executive management team participate in the group's general share purchase programme for employees, in which they are offered to purchase shares at a discount of 20 per cent.
The board of directors has decided to implement a share based bonus arrangement for the group management, effective to bonus earned in 2016. More details are described in note 8.
The board has established guidelines for investor communication. Multiconsult's communication with the capital markets is based on the principles of transparency, full disclosure and equality.
CEO, CFO and IRO are responsible for the main dialogue with the investor community, hereunder the company's shareholders.
Information to the stock market is published in the form of annual and interim reports, press releases, stock exchange announcements and investor presentations. All information considered to be relevant and significant for valuing the company's shares will be distributed and published in English via Oslo Børs disclosure system, www.newsweb.no, and via the group's website www.multiconsult.no simultaneously. Multiconsult holds public presentations in connection with the announcement of quarterly and annual financial results. The presentations are also available as live presentations via the internet. Presentation material is made available via Oslo Børs' news site www.newsweb.no and www.multiconsult.no.
Multiconsult gives weight to maintaining an open and ongoing dialogue with the investor community, here-under frequent meetings with investors, fund managers, analysts and journalists. The company is also present at relevant investor conferences and seminars. All public presentations held at such events are made public via www.multiconsult.no.
The guidelines for investor communication states that the company should have limited contact with the investor community and the business press during the last three weeks ahead of its quarterly reporting.
Reporting of financial and other information shall be timely and accurate. The main purpose of this information present a complete picture of the group's financial results and position as well as articulating the group's long-term goals and potential, including its strategy, value drivers and important risk factors.
The group publishes a financial calendar every year with an overview of the dates of important events, including the AGM, publication of interim reports and open presentations. This calendar is made available as a stock exchange announcement and on the group's website as soon as it has been approved by the board.
The board has established guiding principles for responding to possible takeover bids.
In the event of a take-over bid being made for the company, the board will follow the overriding principle of equality of treatment for all shareholders, and will seek to ensure that the group's business activities are not disrupted unnecessarily. The board will strive to ensure that shareholders are given sufficient information and time to form a view of the offer.
The board will not seek to prevent any take-over bid unless it believes that the interests of the group and the shareholders justify such actions. The board will not exercise mandates or pass any resolutions with the intention of obstructing any take-over bid unless this is approved by the general meeting following the announcement of the bid.
If a take-over bid is made, the board will issue a statement in accordance with statutory requirements and the recommendations in the code.
In the event of a take-over bid, the board will obtain a valuation from an independent expert.
Any transaction that is in effect a significant disposal of the group's activities will be submitted to the general meeting for its approval.
The group's auditor, Deloitte AS, submits of its overall plan for the annual audit of the group to the audit committee to consideration.
The group's auditor, Deloitte AS, has been involved with the board of directors as follows in relation to the fiscal year 2015:
Deloitte attended 5 meetings with the audit committee, which included reviewing the main features of the plan for executing the audit for the year and presenting results from the interim audit in preparation for the year-end closing of accounts for 2015.
Pursuant to the code, the board has established guidelines for the group's management use of the auditor for substantial assignments other than ordinary auditing services.
The board reports annually to the annual general meeting on the auditor's overall fees, broken down between audit work and other services. The annual general meeting approves the auditor's fees for the parent company.
| Consolidated statement of income | 40 |
|---|---|
| Consolidated statement of comprehensive income | 41 |
| Consolidated balance sheet | 42 |
| Consolidated statement of cash flows | 44 |
| Consolidated statement of changes in equity | 45 |
| Notes to the consolidated financial statements | 46 |
Auditors' report 90
| Note 1 - General information and basis for the pre paration of the consolidated financial statements |
46 |
|---|---|
| Note 2 A - Significant accounting policies | 46 |
| Note 2 B - Significant judgements in the applica tion of group accounting policies and accounting estimates |
50 |
| Note 3 - Financial risk management | 51 |
| Note 4 - Business combinations | 56 |
| Note 5 - Segments | 59 |
| Note 6 - Research and development | 62 |
| Note 7 - Other operating expenses | 62 |
| Note 8 - Employee benefits expenses, number of employees, remuneration, loans to employees etc. |
63 |
| Note 9 - Financial items | 67 |
| Note 10 - Taxes | 68 |
| Note 11 - Pensions | 70 |
| Note 12 - Accounts receivable and other current receivables |
75 |
| Note 13 - Intangible assets and goodwill | 76 |
| Note 14 - Property, plant and equipment | 78 |
| Note 15 - Cash and cash equivalents | 79 |
| Note 16 - Associated companies and joint arrangements |
79 |
| Note 17 - Leasing and other payment obligations | 81 |
|---|---|
| Note 18 - Other current liabilities | 83 |
| Note 19 - Provisions, disputes and contingent obligations |
83 |
| Note 20 - Guarantees | 84 |
| Note 21 - Shareholder information | 85 |
| Note 22 - Related parties | 86 |
| Note 23 - Earnings per share | 87 |
| Note 24 - Events after the reporting period | 87 |
MULTICONSULT ANNUAL REPORT 2015 39
| Amounts in NOK thousand, except earnings per share | Note | 2015 | 2014 |
|---|---|---|---|
| OPERATING REVENUES AND EXPENSES | |||
| Operating revenues | 5 | 2 554 701 | 2 265 627 |
| Expenses for sub contractors and disbursements | 307 033 | 279 118 | |
| Net operating revenues | 2 247 668 | 1 986 509 | |
| Employee benefits expenses Other operating expenses Operating expenses excluding depreciation, amortisation and impairment |
8, 11 7 |
1 649 240 385 726 2 034 966 |
1 449 600 290 443 1 740 043 |
| Operating profit before depreciation, amortisation and impairment (EBITDA) | 212 702 | 246 466 | |
| Depreciation, amortisation and impairment | 13, 14 | 37 616 | 34 625 |
| Operating profit (EBIT) | 175 086 | 211 841 | |
| Share of profit from associated companies and joint ventures | 16 | 20 945 | 6 961 |
| FINANCIAL INCOME AND EXPENSES | |||
| Financial income | 9 | 8 882 | 11 629 |
| Financial expenses | 9 | 7 049 | 2 823 |
| Net financial items | 1 832 | 8 806 | |
| Profit before income taxes | 197 863 | 227 608 | |
| Income tax expenses | 10 | 47 754 | 60 899 |
| Profit for the period | 150 109 | 166 708 | |
| Attributable to: Owners of Multiconsult ASA Earnings per share: 1) Basic |
23 | 150 109 5.73 |
166 708 6.35 |
| Diluted | 23 | 5.73 | 6.35 |
| Amounts in NOK thousand | Note | 2015 | 2014 |
|---|---|---|---|
| Profit for the period | 150 109 | 166 708 | |
| Other comprehensive income | |||
| Remeasurement of defined benefit obligations | 11 | 87 298 | (177 749) |
| Income taxes | 10 | (29 695) | 47 992 |
| Total items that will not be reclassified subsequently to profit or loss | 57 603 | (129 757) | |
| Currency translation differences | 1 722 | 1 684 | |
| Total items that may be reclassified subsequently to profit or loss | 1 722 | 1 684 | |
| Total other comprehensive income for the period | 59 325 | (128 073) | |
| Total comprehensive income for the period | 209 433 | 38 636 |
1) The Annual General Meeting held on 16 April 2015 resolved a 1:10 split of the shares. The number of shares used in the per share calculations are retrospectively adjusted for this split.
Key figures Letter from CEO Directors' report Corporate governance Group accounts Notes to the group accounts Parent company accounts Notes to parent company accounts Board and management
| Amounts in NOK thousand | Note | 31.12.2015 | 31.12.2014 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 21 | 13 125 | 13 125 |
| Treasury shares | (9) | 0 | |
| Share premium | 13 320 | 13 320 | |
| Total paid-in equity | 26 436 | 26 445 | |
| Other equity | 323 745 | 393 469 | |
| Total shareholders' equity | 350 181 | 419 914 | |
| Non-current liabilities | |||
| Pension obligations | 11 | 161 344 | 211 531 |
| Provisions | 19 | 19 697 | 36 777 |
| Non-current interest-bearing liabilities | 3 | 7 190 | 6 943 |
| Total non-current liabilities | 188 231 | 255 251 | |
| Current liabilities | |||
| Accounts payable | 121 054 | 109 252 | |
| Current tax liabilities | 10 | 54 676 | 51 897 |
| Public duties payable | 225 973 | 192 706 | |
| Current interest-bearing liabilities | 3 | 2 614 | 3 471 |
| Other current liabilities | 18 | 314 900 | 265 729 |
| Total current liabilities | 719 217 | 623 055 | |
| Total liabilities | 907 448 | 878 306 | |
| TOTAL EQUITY AND LIABILITIES | 1 257 629 | 1 298 221 |
| Amounts in NOK thousand Note |
31.12.2015 | 31.12.2014 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Deferred tax assets 10 |
66 722 | 82 109 |
| Intangible assets 13 |
9 304 | 6 783 |
| Goodwill 13 |
173 023 | 71 427 |
| Property, plant and equipment 14 |
84 783 | 76 510 |
| Total non-current non-financial assets | 333 832 | 236 828 |
| Investments in associated companies and joint ventures 16 |
7 258 | 42 204 |
| Other non-current financial assets | 6 221 | 5 902 |
| Total non-current assets | 347 311 | 284 935 |
| Current assets | ||
| Accounts receivables 12 |
427 448 | 420 391 |
| Work in progress 12 |
192 781 | 103 501 |
| Other current receivables and prepaid expenses 12 |
57 135 | 40 783 |
| Total receivables | 677 364 | 564 675 |
| Cash and cash equivalents 15 |
232 954 | 448 611 |
| Total current assets | 910 318 | 1 013 286 |
| TOTAL ASSETS | 1 257 629 | 1 298 221 |
The Board and CEO of Multiconsult ASA Oslo, 31 March 2016
Steinar Mejlænder–Larsen Chair of the board
Christian Nørgaard Madsen President and Chief Executive
Arne Fosen Director
Nigel Wilson Deputy chair
Vibeke Strømme Director
Kari Medby Loland Director
Freddy Holstad
Director
Line Karin Haugen
Director
Elisabeth Lokshall Director
Attributable to equity holders of Multiconsult ASA
| Amounts in NOK thousand | Share capital |
Treasury shares |
Share premium |
Total paid in capital |
Retained earnings |
Remea surement pensions |
Currency translation differences |
Total equity |
|---|---|---|---|---|---|---|---|---|
| 31 December 2013 | 13 125 | (7) | 13 320 | 26 438 | 557 184 | (157 521) | (227) | 425 874 |
| Disposal of treasury shares | 0 | 7 | 0 | 7 | 0 | 0 | 0 | 7 |
| Dividend | 0 | 0 | 0 | 0 | (44 602) | 0 | 0 | (44 602) |
| Comprehensive income | 0 | 0 | 0 | 0 | 166 708 | (129 757) | 1 684 | 38 636 |
| 31 December 2014 | 13 125 | 0 | 13 320 | 26 445 | 679 290 | (287 278) | 1 457 | 419 914 |
| Treasury shares Employee share purchase |
0 | (9) | 0 | (9) | (1 750) | 0 | 0 | (1 759) |
| programme | 0 | 0 | 0 | 0 | (1 791) | 0 | 0 | (1 791) |
| Dividend | 0 | 0 | 0 | 0 | (275 617) | 0 | 0 | (275 617) |
| Comprehensive income | 0 | 0 | 0 | 0 | 150 109 | 57 603 | 1 722 | 209 434 |
| 31 December 2015 | 13 125 | (9) | 13 320 | 26 436 | 550 241 | (229 675) | 3 179 | 350 181 |
| Amounts in NOK thousand Note + are cash increasing and - are cash reducing effects |
2015 | 2014 |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Profit before income taxes | 197 863 | 227 608 |
| Income taxes paid during the period | (55 601) | (48 347) |
| Depreciation, amortisation and impairment 13,14 |
37 616 | 34 625 |
| Pension expenses with no cash effect | 33 984 | (10 944) |
| Results from associated companies and joint ventures 16 |
(20 945) | (6 961) |
| Changes in current assets, liabilities and other non-cash effects | 13 251 | (46 263 ) |
| Net cash flows from operating activities | 206 169 | 149 718 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Proceeds from disposal of property, plant and equipment and shares | 99 | 504 |
| Payments on acquisition of property, plant and equipment and intangible assets | (42 052) | (39 240) |
| Proceeds/payments related to equity accounted investments 16 |
4 690 | 4 142 |
| Net cash effect of business combinations 4 |
(95 485) | 19 309 |
| Net cash flows from investing activities | (132 748) | (15 285) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Payment of non-current liabilities | (610) | 0 |
| Dividends paid 23 |
(275 617) | (45 615) |
| Purchase treasury shares 8 |
(25 797) | 0 |
| Sale treasury shares 8 |
8 608 | 0 |
| Net cash flows from financing activities | (293 416) | (45 615) |
| Foreign currency effects on cash and cash equivalents | 4 337 | 3 576 |
| Net change in cash and cash equivalents Cash and cash equivalents at the beginning of the period 15 |
(215 657) 448 611 |
92 393 356 218 |
| Cash and cash equivalents at the end of the period 15 |
232 954 | 448 611 |
See note 8 for information about treasury shares and employee share purchase programme.
The consolidated financial statements have been prepared based on the historical cost basis, except for derivatives and pension assets that are measured at fair value, and pension liabilities that are measured at present value. The consolidated financial statements are presented in Norwegian kroner (NOK). Amounts are rounded to the closest thousand, unless stated otherwise. As a result of such rounding differences, amounts and percentages may not add up to the total.
The consolidated financial statements incorporate Multiconsult ASA and companies that Multiconsult ASA (directly or indirectly) control (the group). Control is achieved when the group is exposed or has rights to variable returns from its involvement with a company in which it has invested, and has the ability to use its power to affect its returns from this company. All subsidiaries are 100% owned and there are no non-controlling interests.
The consolidated financial statements have been prepared using uniform accounting policies. All material transactions and balances between group entities have been eliminated.
Shares in subsidiaries are eliminated in the consolidated financial statements in accordance with the acquisition method. This entails that the consideration, as well as the acquired entity's assets and liabilities (with some exceptions as determined by IFRS 3 Business Combinations), are measured at fair value on the date of acquisition, and any excess consideration is classified as goodwill. Historically, it has been considered that most of the consideration in excess of carrying amount on net assets relates to employees and expectations of future profits, and the excess is therefore recognised as goodwill. Acquisition-related costs are recognised in profit or loss as incurred. Refer to note 4 for more information relating to business combinations in 2015 and 2014.
Such activities are recognised on a line-by-line basis in accordance with the group's share, similar to joint operations. There are no significant differences in the group's accounting for activities in arrangements without limited liability, whether within the scope of IFRS 11 or not.
The financial statements of the individual companies in the group are measured in the currency which is predominantly used in the economic environment in which the company operates (functional currency). The consolidated financial statements are presented in Norwegian kroner (NOK), which is the functional currency and the presentation currency of the parent company.
Transactions in foreign currencies are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Currency gains and losses arising on the payment of such transactions and on translation of monetary items in foreign currencies at the exchange rates prevailing at the end of the reporting period, are recognised in profit or loss as financial items.
For companies with a functional currency other than Norwegian kroner, income and expense items are translated based on the average exchange rates, and assets and liabilities are translated using the exchange rates prevailing on the end of the reporting period. Exchange differences are recognised in other comprehensive income.
The majority of the group's revenue is generated from rendering of services. When the outcome can be estimated reliably, and it is probable that the economic benefits associated with the transaction will flow to the entity, revenue is recognised in accordance with the stage of completion of the transaction, as at the end of the reporting period.
The company's rendering of services consists of agreements that are either time-based, time-based with a cap, or fixed price. The company has no construction contracts. Revenue recognition occurs when the service is rendered, in line with the work being performed. Revenue is recognised at the estimated value of the consideration at the time of the transaction, exclusive of value added tax, rebates, discounts and fees that are not expected to be realised. Contracts that are remunerated based on hours incurred are recognised during the period in which the work is performed. Fixed price contracts and time-based contracts with a cap are recognised with reference to the stage of completion. The stage of completion is normally estimated as hours incurred as a percentage of expected total hours and milestones in the project. The total scope is evaluated on an on-going basis. When it is probable that a project will incur a loss (total direct costs exceed total revenue), the estimated loss is recognised immediately. Direct costs include predominantly costs for own personnel and sub contractors.
In working partnerships not organised as separate legal entities, and where the group is the project manager with no overall responsibility for the engagement, the group invoices the client and subsequently pays the fee to the other parties for the work performed by them. The group only recognises its own share of revenue and expenses in such arrangements (refer also to the description above).
Investments in associated companies and joint ventures over which the group exercises significant influence or joint control, are accounted for using the equity method. The difference between cost price of the shares and the group's share of equity is allocated to the company's net assets, and any excess as goodwill. In accordance with the equity method, investments are initially recognised in the statement of financial position at cost and adjusted thereafter for changes in the group's share of net assets (i.e. total comprehensive income and equity adjustments (including dividends)) less any impairment charges on investments. Corrections are made when it is necessary to adjust the accounting policies to match group accounting policies. Any goodwill included in the investment amount is not amortised, but is reviewed for impairment as part of the investment. At the end of the reporting period, the group assesses whether there are any indications that the investment may be impaired. If any such indication exists, the recoverable amount of the investment is estimated in order to determine the extent of the impairment loss, if any. Transactions between a group company and an associated company or a joint venture are eliminated or deferred in proportion to the group's ownership. The group's share of profit or loss after tax, including amortisation, impairment loss and reversal of impairment loss on the investment is presented as a single line item in the statement of income, classified between operating profit and financial items. Refer to note 16 for more information.
The group enters into working partnerships in certain projects where more parties collaborate to offer a joint deliverable. Each participant is responsible for, and has rights to, the fee from its part of the deliverables (agreements related to project collaboration). The individual parties utilise their resources through the use of employees and sub-contractors. Some of these arrangements are considered to be joint operations within the scope of IFRS 11, and for which the group recognises its share of income and expenses, and its own assets and liabilities. Certain arrangements are not jointly controlled. Rental income which relates to sublease of office space is recognised on a straight-line basis in profit or loss over the relevant duration of the rental agreement. Other operating income comprises payment for various services and expenditure incurred, and is recognised when the services are rendered or the expenses incurred.
Interest income that reflects the effective return on an asset is recognised as income over the period earned and classified as financial income in the statement of income. Dividends received on investments are recognised as income when the group's right to receive payment has been established. Dividends from investments that are recognised using the equity method are recognised as a reduction of the investment.
An asset is classified as current when it is expected to be realised or sold, or to be used in the group's normal operating cycle, or falls due or is expected to be realised within 12 months after the end of the reporting period. Other assets are classified as non-current. Liabilities are classified as current when they are expected to be settled in the normal operating cycle of the group, are held for trading, are expected to be settled within 12 months of the end of the reporting period, or if the group does not have an unconditional right to postpone settlement for at least 12 months after the reporting date. Provisions for obligations and other liabilities are classified as non-current. Derivatives are classified as current items.
Property, plant and equipment are recognised at cost less accumulated depreciation. Cost of acquisition includes costs directly attributable to the acquisition of the fixed asset. Subsequent expenditure is added to the carrying value of the asset or is recognised separately when it is probable that future economic benefits related to the expenditure will flow to the group, and the cost can be measured reliably. The carrying amount related to replaced parts is expensed. Other repair and maintenance costs are recognised in profit or loss in the period during which the cost is incurred. Property, plant and equipment are depreciated on a straight-line basis. The cost of acquisition of property, plant and equipment is depreciated to their expected residual value, which in general is estimated to be nil. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period and changed if necessary. When the carrying amount of an item of property, plant and equipment is higher than its estimated recoverable amount (the higher of fair value less costs to sell and value in use), the carrying amount is reduced to the recoverable amount and recognised as impairment in the statement of income. Gains and losses on disposal of property, plant and equipment are recognised in the income statement as the difference between the sales price and the carrying amount. These amounts are insignificant in the periods presented.
Intangible assets consist mainly of standard software and licences used by the company. The company has no internally generated intangible assets with a remaining carrying value at the end of the reporting period. Intangible assets are recognised at cost of acquisition less amortisation. Intangible assets are amortised on a straight-line basis to an estimated residual value of nil. When the carrying amount of an intangible asset is higher than its estimated
Multiconsult ASA (the company) is a Norwegian Public limited liability company. The Annual General Meeting held on 16 April 2015 resolved to transform the company from a private limited liability company to a public limited liability company. The shares of the company were listed on Oslo Stock Exchange on 22 May 2015. The company's head office is located in Nedre Skøyenvei 2, 0276 Oslo.
The company and its subsidiaries (together the Multiconsult group/ the group) are among the leading suppliers of consultancy and design services in Norway and the Nordic region. The group has some activity and subsidiaries outside the Nordic region, including
Multiconsult Polska which was acquired in September 2014. The principal activities of the group are described in note 5 Segments. These consolidated financial statements were approved by the Board of Directors on 31 March 2016 for adoption by the Annual General Meeting on 26 April 2016.
The group prepares the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU (IFRS) and the Norwegian Accounting Act. References to «IFRS» in these financial statements mean IFRS as adopted by the EU.
recoverable amount, the carrying amount is reduced to the recoverable amount and recognised as impairment in the statement of income.
Goodwill arising upon a business combination is not amortised. Goodwill does not generate cash flows that are independent of other assets or groups of assets, and is allocated to the cash-generating units that are expected to benefit from the synergies of the combination that gave rise to goodwill. Cash-generating units to which goodwill has been allocated are reviewed for impairment on an annual basis, or more frequently if there are indications of impairment. If the recoverable amount of the cash-generating unit is less than its carrying value, the impairment loss is allocated first to reduce the carrying value of goodwill and then to the other assets in the cash-generating unit pro rata based on the carrying amount of each asset in the unit. The carrying value of individual assets is not reduced below nil. An impairment loss recognised for goodwill is not reversed in subsequent periods if the recoverable amount of the cash-generating unit increases. Any impairment is recognised as part of impairment in the statement of income.
A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash flows that are largely independent of cash inflows from other assets or groups of assets. In order to identify whether cash flows from an asset (or a group of assets) are independent of cash flows from other assets (or groups of assets), management assesses various factors, including how operations are monitored, e.g. based on service- or product areas, businesses or geographical areas. Each CGU or group of CGUs to which goodwill has been allocated represent the lowest level in the entity where goodwill is monitored for internal management purposes. The group of CGUs are in all instances no larger than an operating segment as defined in IFRS 8 Operating Segments.
The group has financial assets in the category loans and receivables, primarily accounts receivables and other receivables. Loans and receivables are non-derivative financial assets with fixed payments that are not quoted in an active market. Such financial assets are initially recognised at fair value with the addition of transaction costs, and subsequently measured at amortised cost applying the effective interest rate method adjusted for impairment. Impairment is recognised when there are objective indicators that the group will not receive payment in accordance with the original terms. Specific receivables are impaired when management considers that they cannot be collected, fully or partially. The company has insignificant investments in available for sale shares.
The group has financial liabilities measured at amortised cost and fair value through profit or loss. Financial liabilities at amortised cost comprise largely accounts payable, other current liabilities and interest-bearing liabilities. These obligations are initially recognised at fair value less transaction costs, and subsequently measured at amortised cost through using the effective interest method.
Financial liabilities at fair value through profit or loss consist of derivatives. The company uses, to a certain extent, foreign currency forward contracts in order to hedge future cash flows in foreign currencies. The company does not use hedge accounting. Derivatives The effect of changes in measurement of defined benefit obligations (losses and gains due to changes in actuarial and financial assumptions or underlying data) is recognised in other comprehensive income, net of deferred tax. Changes in defined benefit obligations resulting from past service costs (plan amendments), curtailments and settlements, are recognised immediately in profit or loss. Social security tax is included as part of the defined benefit obligation and the pension cost in the statement of comprehensive income. Plan assets are measured at fair value as at the end of the reporting period.
Net pension assets in plans with surplus assets are classified as non-current assets. Net pension obligations in plans with a deficit and in unfunded plans are classified as non-current liabilities. The net pension cost for the period is split between employee benefit expense and net interest expense where the service cost for the period is classified as an employee benefit expense and the net interest expense of the estimated obligation is classified as part of net financial items.
For defined contributions plans, the group pays contributions to private, administered insurance plans for pensions on a statutory, contractual or voluntary basis. The group has no additional obligations after the contributions have been paid. Contributions to defined contribution plans are expensed as incurred. The company has no early retirement plans.
Assets and liabilities related to current tax payable are measured at the amount expected to be received from or paid to the taxation authorities. Deferred tax assets and liabilities are calculated based on the liability method, including all temporary differences between the carrying amounts and tax bases of assets and liabilities in the consolidated financial statements, including losses carried forward. Deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. For investments in subsidiaries, associated companies or joint ventures, deferred tax liabilities are not recognised for taxable temporary differences when the group is able to control the timing of reversal of temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future. Similarly, deferred tax assets are only recognised for such investments if it is probable that the temporary difference will reverse in the foreseeable future and that sufficient taxable income will be available to allow the asset to be recovered.
Deferred tax assets are recognised to the extent that it is probable that the tax assets will be utilised. Tax rates that are enacted or substantially enacted at the end of the reporting period and undiscounted amounts are used. Deferred tax assets and liabilities are recognised net when there is a legal right to offset payable tax assets and liabilities, and the group is able to and intends to settle payable income tax net.
The group considers expenses as tax deductible and income as not taxable based on interpretation of applicable legislation and regulations and when it is considered probable that the treatment will be accepted by the taxation authorities. The group provides for uncertain and contested tax positions based on the expected payment. The income tax expense for a period consists of income tax payable and deferred tax. Income tax is recognised in profit or loss, except
are measured at fair value. Gains and losses arising as a result of changes in fair value are recognised in the statement of income as financial income and financial expenses. Derivatives are recognised on a gross basis as assets when the fair value is positive and as liabilities when the fair value is negative, as long as the group does not have a legal right to and intention of settling the contracts on a net basis.
An embedded derivative shall not be separated from the host contract and recognised as a derivative if the economic characteristics and the economic risks of the embedded derivative are closely related to the economic characteristics and the economic risk of the host contract. The company has certain sales contracts in a currency that is not the functional currency of either of the parties to the contract. The company has determined that the currency used in the relevant contracts is a currency frequently used in contracts related to acquisition or disposal of non-financial assets in the economic environment in which the transaction takes place, and has therefore not separated a currency derivative. The company is further of the opinion that this would only have been relevant for contracts with minimum obligations. If a separate currency derivative had been recognised, this could affect the timing of recognition in profit or loss, as a derivative instrument would have been recognised at fair value through profit or loss. This would not affect cash flows or the final result of the sales contract over the contract period.
Cash and cash equivalents include cash, bank deposits, money market funds and other cash equivalents with a maturity of less than three months at the date.of acquisition. Bank deposits include restricted funds if these can be released within three months.
Provisions for obligations such as restructuring, onerous contracts and legal claims are recognised when the group, as a result of a past event, has an existing legal or constructive obligation, it is probable that the group will be required to settle the obligation, and the amount can be measured reliably. Provisions are measured at management's best estimate of the expenditure required to settle the obligation at the reporting date. The estimate is made based on the actual circumstances related to each individual item.
Provision for project liabilities for completed projects are measured at the expected cost for to settle the obligation, or a net cost if the company is covered for losses incurred through an insurance company and it is virtually certain that the company will receive compensation.
The group has various pension plans, including both defined benefit pension plans and defined contribution pension plans. Pension costs and pension obligations for defined benefit plans are estimated on an annual basis by independent actuaries using a straight-line earnings profile and the expected salary at retirement date as the basis for calculation, based on assumptions of discount rates, future salary adjustments, state pensions and other social security payments, as well as actuarial assumptions related to mortality, disability and voluntary retirement. The discount rate is determined based on the interest rate of high quality corporate bonds adjusted to consider the average remaining payment period.
for when it relates to items that are recognised in equity, either directly or through other comprehensive income.
The statement of cash flows has been prepared in accordance with the indirect method. Cash and cash equivalents consist of cash, postal giros, bank deposits and money market funds. Receipts and payments are presented separately for investing and financing activities, whilst operating activities include both cash and non-cash line items. Interest received and paid and dividends received are reported as part of operating activities. Dividends paid are presented as part of financing activities.
Lease agreements are classified as finance leases when the terms of the lease transfers substantially all risks and rewards of ownership to the lessee. Other lease arrangements are classified as operating leases. The company has not, as at the reporting dates, identified any finance leases. Lease payments under operating leases are recognised on a straight-line basis in profit or loss over the relevant lease term.
Dividends to the company's shareholders are classified as a liability when the dividends proposed have been approved by the Annual General Meeting.
At the time of the issue of these financial statements, the following standards and interpretations, which may be relevant for the group, had been issued, but were not yet effective:
• IFRS 9 Financial Instruments (effective for accounting periods commencing on or after 1 January 2018, but not yet adopted by the EU). This standard may change the classification and measurement of financial assets. The group has not yet assessed the impact of this standard.
• IFRS 15 Revenue from Contracts with Customers (effective for accounting period commencing on or after 1 January 2018, but not yet approved by the EU). This standard establishes revenue recognition guidance in one standard. The standard introduces a five-step approach for analysis of transactions with customers, focusing on transfer of control. There are two methods for recognising income; at a point in time or over time. Adoption of the standard may require significant assessments and notes disclosures. The group has not yet assessed the impact of this standard.
• IFRS 16 Leases will replace the present IAS 17 and IFRIC 4. The new standard requires lessees to recognise right-of-use assets and liabilities for all leases, with the exception of some leases with lease periods of less than one year or where the underlying assets are of low value. Depreciation, amortisation and impairment losses as well as interest expenses must be recognised in the statement of income. The standard also somewhat changes the definition of when an agreement is or contains a lease. The accounting requirements for lessors are largely unchanged, however a sublease shall be classified as financing or operating lease by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.
for the estimation of the present value of the cash flows. Refer to note on intangible assets and goodwill for further discussion. The company has historically recognised only minor losses on receivables related to customer solvency. Many of the company's Norwegian customers are in the public sector. The company has some large non-public sector customers, and loss events may occur that entail impairment in subsequent periods. Refer to note on financial risk for further discussion.
The calculation of net defined benefit pension obligations (the difference between defined benefit pension obligations and pension assets) requires the use of estimates and assumptions. The discount rate is one of the most significant assumptions. The Norwegian Accounting Standards Board has assessed that there is a market for high quality corporate bonds in Norway from 2012, and has thereby opened for the use of either high quality corporate bonds or government bonds as the basis for determining the discount rate. The company uses high quality corporate bonds as the basis for determining the discount rate. Note 11 includes a sensitivity analysis
The preparation of financial statements in accordance with IFRS requires that management makes assessments, estimates and assumptions that impact reported amounts for revenues, expenses, assets and liabilities and presentation of contingent liabilities at the end of the reporting period.
Judgements that management have made as part of the application of the entity's accounting policies and that have the most significant impact on the amounts recognised in the financial statements are as follows:
The company assess on a continuous basis opportunities for strategic acquisitions of businesses within the consultant and advisory market. Historically, it has been considered that most of the consideration in excess of carrying amount of net assets relates to workforce and expectations of future profits, and the excess is therefore recognised as goodwill. Refer to note 4 for more information about business combinations in 2015 and 2014. Business combinations that occurred before 1 January 2013 have not been restated to comply with IFRS. Goodwill is not amortised and is tested for impairment on an annual basis, whilst intangible assets will normally be amortised, allocating the cost of acquisition to profit or loss on a systematic basis.
The company carries out a range of research and development activities and projects, none of which are individually significant. Refer to note 6 for more information. Some expenses incurred in the development phase of an intangible asset shall be recognised in the balance sheet if specific criteria in IAS 38 have been satisfied. Costs that do not satisfy these criteria are recognised as expenses in the statement of income as incurred and may not be recognised in the balance sheet at a later date. For a consultant and advisory company, it is challenging to make an assessment as to whether development of a service delivery process or service would satisfy the criteria for recognition in the balance sheet. Consequently, there may be development costs that are not recognised as an asset because the company has not demonstrated that the criteria are satisfied at relevant points in time. Historically, the company has expensed all costs as incurred, with the exception of certain software developed for own use in prior years.
Sources of estimation uncertainty with a significant risk of a material adjustment to the carrying amount in the following period:
The company performs a range of engagements that cover several financial reporting periods. The percentage of completion method requires that estimates are made for total revenues and hours and costs in the project and in the measurement of progress. The principal uncertainty relating to the assessment of contract revenue is associated with the recoverable amount related to overruns, change orders, claims and incentives. Remaining hours and costs depend on the productivity and cost of input. Remuneration of own empoyees, sub-contractors and others, soil and weather conditions, foreign currency rates etc. may impact the costs and estimates made. Measurement of progress based on hours and costs incurred has an inherent risk related to whether the hours and costs reflect progress and the estimate of total hours and costs as mentioned above. Even though the company has considerable experience in project management and measurement, there is an inherent risk associated with all these estimates. In addition, any claims discussed as part of Provisions are relevant.
The group performs a large number of engagements which vary in size. When performing an engagement, defects or damage that arise as a consequence of the deliverable may be discovered and result in a claim against the company. The time horizon from reporting a case until final settlement may be several years. The size of the settlements may vary considerably. The company performs a thorough review of each claim. Claims made by customers for project responsibility will often be contested by the company. Project responsibility cases will as such give rise to both recognised provisions for obligations and contingent liabilities that are not recognised as the company has assessed that it is not probable (under 50% probability) that the company will be required to pay compensation. The actual outcome may differ materially from the estimates used. Refer to note 19 Provisions, disputes and contingent liabilities.
Cash-generating units are reviewed for impairment when indicators exists and on an annual basis when it includes goodwill. The estimated recoverable amounts are affected by assumptions in connection with the estimation of future cash flows, as well as the discount rate for changes in certain actuarial assumptions and how the pension obligation is affected. Note 11 also includes information on how other assumptions have been determined.
The company conducts activities both within and outside Norway. There is a risk that the tax authorities may make assessments that differ from the group with regard to the amount of income tax and indirect tax payable. The group provides for income tax and indirect taxes based on the best estimate of the amounts payable for obligations that are probable, assuming that the group and the tax authorities have access to the same information. The group is not familiar with any significant disagreements upon issue of these consolidated financial statements.
The group has recognised a deferred tax asset in the parent company, of which the major amount relates to defined benefit obligations. The parent company has a long history of significant profits and the company considers it probable that the deferred tax asset will be realised.
The group's exposure to financial risk is primarily related to credit risk, liquidity risk, currency risk and interest risk. The group's pension assets are also exposed to market risk and the present value of gross pension liabilities is affected by the discount rate. Refer to note 11 for further information.
Risk management in the group aims to support value creation in the group and to secure a continuing solid financial platform through visibility and strategic management of both financial and operational risk factors. Operational risk relates mainly to larger projects, which are continuously reviewed by group management.
Credit risk is the risk that customers are not able to settle their payment obligations. Credit risk is considered to be part of business risk and is reviewed as part of ongoing operations. Most of the group's activities as of 31 December 2015 are within the parent company. The company has established procedures for credit assessment for larger customers as well as for suppliers. The risk that customers do not have the financial ability to sette their obligations is considered to be low. Historically, only minor losses on receivables have been realised due to customers experiencing financial difficulties. The company's clients are to a large extent public sector or well-established companies. The company has a central credit policy and, for example, external credit information is obtained for customers of a significant size applying for credit with the company. The company has a few large contracts that, to a certain extent, leads to a concentration of risk within a small number large customers. The largest proportion of the group's customers are Norwegian, thus creating a geographical concentration of risk. The company has a large number of customers, however relatively few large customers. Out of the parent company's individual customers, the five largest individual customers comprised approximately one third of the parent company's operating revenues in 2015 and 2014, and accounts receivables
as at 31 December 2015 and 2014. The fifteen largest customers comprised about half of operating revenues and accounts receivables. About half of the parent company's operating revenues and accounts receivables arose from public sector customers and public sector entities in Norway and abroad for both years. The parent company's customers, in addition to the public sector, are mainly industrial companies (and other consulting engineers). The group's maximum credit exposure comprises the carrying amount of receivables and cash and cash equivalents. All current receivables mature within one year. Normal payment terms are 30 days after invoicing. Non-current receivables comprise limited amounts and have no fixed maturity date. The company assesses that the risk for recognised accounts receivable and accrued revenues not being realised relates mainly to disputes regarding consideration and changes in estimates related to progress in projects. The company has made estimates regarding these issues, but the nature of estimates means that changes can occur in either a positive or a negative direction. The company does not have historical information that enables provisions for losses on a portfolio of accounts receivable. The company performs individual assessments of accounts receivable over a certain size, with a particular focus on those which are more than 90 days overdue. Generally, the company invoices customers continuously for hours worked on the assignments. The assessment of whether revenue has been earned is, in some cases, also performed after the hours have been invoiced, with a reduction of revenues and accounts receivable. In some cases, the assessment has been that the invoiced revenue amounts have been earned, but where a dispute arises over consideration at a later point in time. The most significant portion of allowances for losses on receivables relates to these instances. To the degree that these losses have been realised in the form of a credit note, revenues have been reduced, instead of recognising the adjustment as a realised loss. Realised losses in the table below are therefore related to bankruptcies etc. at customers.
IFRS 16 will apply from 1 January 2019, but early adoption is permitted if IFRS 15 is adopted on or before the same date. The standard has not yet been endorsed by the EU. The company rents office premises, and it can be expected that assets and liabilities will be recognised in this connection and that another profile for recognition and classification in the income statement will be used. If the company has subleases at the time of implementation, the classifiation of such subleases may change. See note 17.
• A number of limited scope amendments and interpretations have been issued. These amendments and interpretations have been assessed to have no material impact on the group.
Management expects to implement these standards, amendments and interpretations on the aforementioned effective dates, assuming that the standards and interpretations have then been adopted by the EU.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Opening balance allowance for losses on receivables | 9 754 | 11 057 |
| Opening balance LINK arkitektur AS | 4 798 | 0 |
| Change in allowances for losses on accounts receivable during the year | (437) | (1 303) |
| Closing balance allowance for losses on receivables | 14 115 | 9 754 |
| Realised losses in the event of bankruptcy etc. | 712 | 2 285 |
| Loss on receivables in the statement of income | 275 | 982 |
Liquidity risk is the risk of being unable to settle financial obligations at maturity. Liquidity risk arises if there is no correspondence between the cash flows from the business and the financial obligations. Managing liquidity risk is performed through development of liquidity management strategies, which are operationalised through liquidity budgets and are continuously reviewed. Historically, the group has had a surplus liquidity and has continuously paid dividends to the owners. The group's cash flows from operations in 2015 and 2014 were positive. The operations in Multiconsult are exposed to normal fluctuations that affect the cash flows during the year. The majority of payments relate to employees and sub contractors. As of 31 December 2015, the group had interest bearing cash and cash equivalents less interest bearing debt of NOK 223 million (2014: NOK 438 million). In addition, as of 31 December 2015, the company had a bank overdraft facility of NOK 120 million (2014: NOK 40 million), and a NOK 80 million three year revolving credit facility. No amounts were drawn on these facilities at 31 December 2015. The bank overdraft facility is renewed annually. The revolving credit facility was established in July 2015. As of 31 December 2015, the
The group has an immaterial amount of forward currency contracts with negative fair value of NOK 646 thousand at 31 December 2015 (2014: negative NOK 688 thousand) with terms to 2019. All other current financial obligations have a maturity within one year.
company had a guarantee facility of NOK 120 million, of which NOK 60 million was drawn (2014: NOK 70 million). The guarantee facility is renewed annually. Separate guarantees included in the limit may have a term of up to five years. In total, this secures the group adequate access to liquidity. The facilities contain negative pledge and cross default clauses, and limitations in entering into new loan agreements without the consent of Nordea Bank Norge ASA.
The company's subsidiary in the United Kingdom (Multiconsult UK Ltd) has a loan from Nordea UK with a remaining amount of GBP 750 thousand (2014: GBP 900 thousand), with a term until 2018 and with a guarantee from the company. Multiconsult UK also has an uncommitted bank overdraft of GBP 200 thousand and an uncommitted guarantee limit of GBP 1 million, with a guarantee from the company. The maturities of non-current and current liabilities are disclosed below.
There are no significant restrictions on the company's ability to access or use the group's assets or to settle the group's liabilities.
| Maturities of receivables that have not been impaired | ||||||||
|---|---|---|---|---|---|---|---|---|
| Amounts in NOK thousand | Carrying amount |
Not due | 0-30 days |
30-60 days |
60-90 days |
>90 days | ||
| Accounts receivables | 441 563 | 357 786 | 35 355 | 8 935 | 6 167 | 16 056 | 17 264 | |
| Work in progress | 192 781 | 192 781 | 0 | 0 | 0 | 0 | 0 | |
| Other current receivables 1) | 34 756 | 34 756 | 0 | 0 | 0 | 0 | 0 | |
| Other non-current receivables | 5 683 | 5 683 | 0 | 0 | 0 | 0 | 0 | |
| Allowance for losses on receivables | (14 115) | 0 | 0 | 0 | 0 | 0 | (14 115) | |
| Total accounts and other receivables | 660 669 | 591 005 | 35 355 | 8 935 | 6 167 | 16 056 | 3 148 |
1) Other current receivables do not include prepayments, which are not considered financial assets.
| Maturities of receivables that have not been impaired | |||||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK thousand | Carrying amount |
Not due | 0-30 days |
30-60 days |
60-90 days |
>90 days | |
| Accounts receivables | 430 144 | 374 984 | 26 232 | 7 786 | 4 350 | 2 806 | 13 985 |
| Work in progress | 97 658 | 93 226 | 1 215 | 1 076 | 405 | 1 736 | 0 |
| Other current receivables 1) | 27 355 | 27 355 | 0 | 0 | 0 | 0 | 0 |
| Other non-current receivables | 5 934 | 5 934 | 0 | 0 | 0 | 0 | 0 |
| Allowance for losses on receivables | (9 754) | 0 | 0 | 0 | 0 | 0 | (9 754) |
| Total accounts and other receivables | 551 337 | 501 500 | 27 447 | 8 862 | 4 755 | 4 542 | 4 230 |
1) Other current receivables do not include prepayments, which are not considered financial assets.
| Maturity | |||||
|---|---|---|---|---|---|
| Amounts in NOK thousand | Carrying amount | 1 year | 2 years | 3 years | Total payments |
| Interest-bearing liabilities | 9 804 | 2 614 | 2 614 | 4 575 | 9 804 |
| Interest on interest-bearing liabilities 1) | 295 | 207 | 96 | 598 | |
| Total interest-bearing liabilities incl. Interest |
9 804 | 2 909 | 2 822 | 4 671 | 10 402 |
1) Calculated using the interest rate as of 31 December 2015
c) Currency risk The company is, to a certain extent, influenced operationally by currency fluctuations, mainly relating to revenues from assignments abroad. The risk relates to the delivery of engineering services from Norway to other countries. Several ongoing foreign assignments have agreed rates in currencies other than NOK, mainly EUR and USD. When a significant currency risk arises, the risk is assessed separately, but so far the risks have only been mitigated to a certain degree through the use of forward contracts. The group had limited amounts of forward currency contracts as of 31 December 2015 and 2014. The company has, to a limited degree, bank accounts, accounts receivable and accounts payable in foreign currency. The subsidiaries holds monetary items primarily in their functional currency. Changes in currency rates between NOK and foreign currencies may influence the company's statement of income and equity. The group's operations are primarily run in and from Norway. The group's subsidiaries in the United Kingdom, Singapore and Russia have had limited activity. The group acquired a subsidiary in Poland in September 2014. Therefore, the group, for accounting purposes, is exposed to currency translation risk from GBP, SGD, Russian Ruble and Polish Zloty (PLN). In addition, the group has insignificant investments in associated companies outside Norway. Equity in foreign entities are not currency hedged, and currency changes affect the group's equity. The currency rate effects have until now been limited. The effect on monetary items from a reasonably possible change in currency rates compared to the separate group entities' functional currency would be insignificant as of 31 December 2015 and 2014.
| Amounts in NOK thousand | Available for sale |
Loans and receivables |
Total | Estimated fair value |
Level in the fair value hierarchy |
|---|---|---|---|---|---|
| ASSETS | |||||
| Shares and equity interests | 538 | 0 | 538 | 538 | 3 |
| Other non-current receivables | 0 | 5 683 | 5 683 | 5 683 | N/A |
| Accounts receivables and other current receivables 1) |
0 | 654 986 | 654 986 | 654 986 | N/A |
| Cash and cash equivalents | 0 | 232 954 | 232 954 | 232 954 | N/A |
| Total assets | 538 | 893 623 | 894 161 | 894 161 | |
| Estimated fair value | 538 | 893 623 | 894 161 | 894 161 |
| Amounts in NOK thousand | Available for sale |
Loans and receivables |
Total | Estimated fair value |
Level in the fair value hierarchy |
|---|---|---|---|---|---|
| ASSETS | |||||
| Shares and equity interests | 570 | 0 | 570 | 570 | 3 |
| Other non-current receivables | 0 | 5 364 | 5 364 | 5 364 | N/A |
| Accounts receivables and other current receivables 1) |
0 | 545 404 | 545 404 | 545 404 | N/A |
| Cash and cash equivalents | 0 | 448 611 | 448 611 | 448 611 | N/A |
| Total assets | 570 | 999 379 | 999 949 | 999 949 | |
| Estimated fair value | 570 | 999 379 | 999 949 | 999 949 |
| Amounts in NOK thousand | Fair value through profit or loss |
Other financial liabilities at amortised cost |
Total | Estimated fair value |
Level in the fair value hierarchy |
|---|---|---|---|---|---|
| LIABILITIES | |||||
| Derivatives | 646 | 0 | 646 | 646 | 2 |
| Interest-bearing liabilities | 0 | 9 804 | 9 804 | 9 804 | 2 |
| Accounts payable and other current liabilities 2) |
0 | 562 547 | 562 547 | 562 547 | N/A |
| Total liabilities | 646 | 572 351 | 572 997 | 572 997 | |
| Estimated fair value | 646 | 572 351 | 572 997 | 572 997 |
1) Prepayments are excluded since this analysis is only required for financial instruments.
2) Prepaid revenues and income taxes payable are excluded from accounts payable and other liabilities, since this analysis is is only required for financial instruments.
| Amounts in NOK thousand | Fair value through profit or loss |
Other financial liabilities at amortised cost |
Total | Estimated fair value |
Level in the fair value hierarchy |
|---|---|---|---|---|---|
| LIABILITIES | |||||
| Derivatives | 688 | 0 | 688 | 688 | 2 |
| Interest-bearing liabilities | 0 | 10 414 | 10 414 | 10 414 | 2 |
| Accounts payable and other current liabilities 2) |
0 | 498 541 | 498 541 | 498 541 | N/A |
| Total liabilities | 688 | 508 955 | 509 643 | 509 643 | |
| Estimated fair value | 688 | 508 955 | 509 643 | 509 643 |
1) Prepayments are excluded since this analysis is only required for financial instruments. 2) Prepaid revenues and income taxes payable are excluded from accounts payable and other liabilities, since this analysis is is only required for financial instruments.
financial instruments.
Fair value estimates and the fair value hierarchy The group measures fair value based on the following hierarchy that reflects the input used in measuring fair value: Level 1: Quoted prices (unadjusted) in active markets for identical Level 2: Inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for assets or liabilities that are not based on obser-
vable marked data (unobservable inputs).
The net carrying amounts of accounts receivables, other receivables, cash and cash equivalents and accounts payable are deemed to approximate fair value. Fair value of interest-bearing liabilities is estimated by discounting future cash flows with a deemed market interest rate for similar financial instruments. Due to the limited amounts for these liabilities, it is presumed that the carrying amount is a good approximation to fair value. Shares and equity interests that are not listed, have a low value and it is assumed that the carrying amounts approximate fair value. Fair value of derivatives (forward contracts) are calculated based on the present value of future cash flows, calculated using interest rate curves, currency exchange rates and currency spreads as of the reporting date.
The group's operating revenues and cash flows from operating activities are to a limited degree directly affected by interest rate changes. The group's interest risk is related to variable interest on bank accounts and deposits in addition to variable interest on liabilities in the English subsidiary. The group holds no fixed interest deposits or liabilities, and is therefore not exposed to fair value interest risk. The group will assess the capital structure on an ongoing basis going forward. As of 31 December 2014, a change in interest rates of one percentage point would result in an annual net interest income of NOK 4 million, calculated on the amount of net interest-bearing cash. As the group has not held any net interest-bearing liabilities, no policy for managing interest rate risk has yet been developed.
The group has the following categories of financial instruments:
| Values at the acquisition date in NOK thousand 1) | LINK group |
|---|---|
| Current receivables and accrued revenues | 106 834 |
| Deferred tax assets | 3 462 |
| Property, plant and equipment | 6 303 |
| Other assets | 1 181 |
| Cash and cash equivalents | 13 315 |
| Total identifiable assets | 131 094 |
| Non-current liabilities | 219 |
| Current liabilities | 74 606 |
| Total identifiable liabilities | 74 825 |
| Net identifiable assets | 56 269 |
| Goodwill | 103 731 |
| Total consideration for 100% of the shares | 160 000 |
| Fair value of the previously held 32% ownership interest 2) | 51 200 |
| Consideration paid in cash | 108 800 |
| Net cash paid | 95 485 |
1) Pending final information, the purchase price allocations are preliminary. 2) The previously held 32% ownership interest has been valued at fair value. The increase in value of the previously held interest was recognised as a gain in the consolidated statement of income in the line item «Share of profit from associated companies and joint ventures» with NOK 15.7 million in 2015.
On 15 September 2015 Multiconsult ASA acquired the remaining 68% of the shares in LINK arkitektur AS with subsidiares (LINK). The shares were acquired for NOK 108.8 million, paid in cash, which corresponds to a value of NOK 160 million for 100% of the shares. LINK is one of the leading architect offices in Scandinavia, with a pan-Nordic presence in major cities and regions in Norway, Sweden and Denmark. The company has a strong track record on returns, driven by steady growth on the basis of a solid financial position. Recognised goodwill relates to the competence of the employees,
expected synergies and future profits. Goodwill is not deductible for income tax purposes.
Transaction costs related to the acquisition of NOK 628 thousand have been expensed as part of other operating expenses.
LINK reported consolidated operating revenues of NOK 367.7 million for the full year 2015 (2014: NOK 361.2 million) with a profit after tax of NOK 9.0 million (NOK 14.7 million). In 2015, LINK contributed from the acquisition date NOK 127,165 thousand to the group's operating revenues and NOK 2,366 thousand to profit before income taxes. Had LINK been consolidated from 1 january 2015, the group's operating revenues would have been approximately NOK 2.778.532 thousand and profit before income taxes would have been approximately NOK 208,191 thousand, excluding any effects from financing of the cash payment.
LINK represents an excellent strategic fit for Multiconsult, offering the potential for significant value creation through operational synergies as well as further strengthened value proposition to customers. Stronger ties and enhanced cooperation will enable Multiconsult and LINK to jointly meet the growing demand from both the public and private sector for integrated engineering and architect consultancy services. At the end of 2015, LINK had 332 employees. For practical purposes, LINK is consolidated from 1 September 2015. Business combinations in 2014
On 15 September 2014, the Company acquired 100 % of the shares in Multiconsult Polska (formerly WS Atkins-Polska), located in Warsaw. The consideration was EUR 3,500 thousand converted to NOK 28,643 thousand at the transaction date exchange rate. The acquired company consists of approximately 80 advisors with competence within the market areas Transportation and Oil and Gas. The business operates from Poland and is an integrated part of the group's total professional environment within Transportation, Oil and Gas.
On 15 April 2014, the acquisition of 100% of the shares in Helge Lindeflaten AS was completed. The consideration was NOK 4.2 million. The acquirer was Multiconsult's 100 % owned subsidiary Vest Consult AS.
| Amounts in NOK thousand (except percentages) | 2015 | 2014 |
|---|---|---|
| Cash and cash equivalents | 232 954 | 448 611 |
| Less interest-bearing liabilities | (9 804) | (10 414) |
| Net interest-bearing cash | 223 150 | 438 197 |
| Equity | 350 181 | 419 914 |
| Equity ratio group | 28 % | 32 % |
| Equity ratio parent company | 24 % | 28 % |
The group has until now followed up its capital structure by securing adequate free liquidity in the form of cash, bank placements and bank overdraft, to be able to continuously service its obligations without significant loan financing, have adequate equity and to have available liquidity to be able to, amongst others, make strategic acquisitions.
Prior to the listing of the Oslo Børs in May 2015, the company paid estraordinary dividends to reduce its excess cash. The company has a dividend policy of paying approximately 50% of the group's profit after tax as annual dividends. The group will assess its capital structure going forward.
| Amounts in NOK thousand | Multiconsult Polska | Other business combinations |
|
|---|---|---|---|
| Accounts receivable | 6 249 | 487 | |
| Deferred tax assets 1) | 9 547 | 15 | |
| Intangible assets | 59 | 0 | |
| Property, plant and equipment | 874 | 86 | |
| Other assets | 873 | 309 | |
| Cash and cash equivalents | 51 000 | 1 152 | |
| Total identifiable assets | 68 602 | 2 049 | |
| Non-current liabilities | 2 301 | 0 | |
| Prepayments from customers | 35 373 | 0 | |
| Other current liabilities | 3 263 | 444 | |
| Total identifiable liabilities | 40 937 | 444 | |
| Net identifiable assets | 27 665 | 1 605 | |
| Goodwill 1) | 978 | 2 595 | |
| Total consideration for the shares, paid in cash | 28 643 | 4 200 |
| Special items | 2015 | 2014 | Segment |
|---|---|---|---|
| IPO expenses | 50 662 | 0 | Unallocated |
| Total special items | 50 662 | 0 |
1) Recognised goodwill relates to the synergy that arises between the Norwegian and Polish professional environments, earnings related to projects across country borders, and the value of employees, which are intangible assets that do not fulfil the criteria for separate recognition. In 2015, the purchase price allocation was adjusted by increasing deferred tax assets and decreasing goodwill by NOK 2,135 thousand. Goodwill acquired as part of the acquisition is not tax deductible.
Deferred tax assets relate mainly to prepayments from customers. Transaction costs related to the acquisition of NOK 1,080 thousand have been expensed as part of other operating expenses.
Multiconsult Polska has a divergent financial year from 1 April to 31 March. Interim financial statements ending 31 December 2014 have been used in the consolidation for 2014. From the acquisition date 15 September 2014, Multiconsult Polska contributed NOK 12,512 thousand to the group's revenues and NOK -186 thousand to profit before income taxes in the owned period (3.5 months). Had Multiconsult Polska contributed with a full 12-month period, the group's revenues would have increased by approximately NOK 36,236 thousand and profit before income taxes would have increased by NOK 3,720 thousand.
| NOTE 5 SEGMENTS | ||
|---|---|---|
| The group's business is divided into four segments: | ||
|---|---|---|
The segments are organised into geographical divisions and correspond with the internal reporting to the group's chief operating decision maker, the CEO. Assignments are staffed across segments. Revenues and expenses are reported in a segment based on where the employee is based.
Internally, the group also reports revenues divided by market areas:
Greater Oslo Area and Regional Norway offer services within the whole service spectrum.
International: Multiconsult UK primarily offer services within Energy, whilst the company in Poland primarily offers services within the market areas Transportation and Oil & Gas. Multiconsult Asia and Multiconsult Russia primarily offers services within Oil & Gas.
Unallocated consists mainly of some unallocated group expenses and the subsidiary Analyse & Strategi AS, in addition to IPO expenses of NOK 50 662 thousand in 2015.
Expenses for administrative services, rent, depreciation etc. are allocated to the segments. The allocation of expenses is not reported as intercompany revenue and expenses. Assets are not reported internally divided by segments. The information is the same as group management uses to allocate resources and evaluate performance. The accounting policies for the segments are the same as the policies for the group.
| YEAR 2015 | Greater Oslo Area |
Regions Norway |
Inter national |
Other Business |
Not allocated |
Elimi nations |
Total |
|---|---|---|---|---|---|---|---|
| External revenues | 1 366 755 | 973 803 | 68 632 | 127 165 | 18 345 | 2 554 701 | |
| Internal revenues | 7 192 | 84 | 24 191 | 6 759 | 5 396 | (43 622) | 0 |
| Total operating revenues | 1 373 947 | 973 887 | 92 823 | 133 924 | 23 741 | (43 622) | 2 554 701 |
| Net operating revenues | 1 132 735 | 909 456 | 66 994 | 117 490 | 20 993 | 2 247 668 | |
| Operating expenses 1) | 943 985 | 831 710 | 70 291 | 114 975 | 74 005 | 2 034 966 | |
| EBITDA | 188 751 | 77 746 | (3 297) | 2 515 | (53 012) | 212 702 | |
| Depreciation, amortisation, impairment | 12 789 | 22 319 | 1 677 | 830 | 0 | 37 616 | |
| EBIT | 175 962 | 55 427 | (4 975) | 1 685 | (53 012) | 175 086 | |
| Associates and joint ventures | (63) | 2 764 | 2 561 | 15 683 | 20 945 | ||
| Receivables 2) | 294 568 | 207 572 | 36 976 | 99 990 | 3 428 | (8 190) | 634 344 |
| # employees | 811 | 741 | 113 | 332 | 113 | 2 110 |
1) IPO expenses of NOK 50.7 million recorded as not allocated operating expenses
2) Receivables includes accounts receivables (before provision for loss) and accrued revenues.
| YEAR 2014 | Greater Oslo Area |
Regions Norway |
Inter national |
Other Business |
Not allocated |
Elimi nations |
Total |
|---|---|---|---|---|---|---|---|
| External revenues | 1 273 989 | 942 741 | 32 339 | 16 559 | 2 265 627 | ||
| Internal revenues 1) | 0 | 0 | 12 399 | 742 | (13 141) | 0 | |
| Total operating revenues 1) | 1 273 989 | 942 741 | 44 738 | 17 301 | (13 141) | 2 265 627 | |
| Net operating revenues 1) | 1 066 098 | 869 251 | 36 121 | 15 039 | 1 986 509 | ||
| Operating expenses | 898 396 | 790 514 | 32 526 | 18 606 | 1 740 043 | ||
| EBITDA | 167 702 | 78 737 | 3 595 | (3 567) | 246 466 | ||
| Depreciation, amortisation, impairment | 12 874 | 20 906 | 845 | 0 | 34 625 | ||
| EBIT | 154 827 | 57 831 | 2 750 | (3 567) | 211 841 | ||
| Associates and joint ventures | 786 | 0 | 1 455 | 4 720 | 0 | 6 961 | |
| Receivables 2) | 302 074 | 203 643 | 19 125 | 2 962 | 527 803 | ||
| # employees | 778 | 737 | 102 | 107 | 1 724 |
1) Compared to the table included in note 5 to the consolidated financial statements for 2014, internal revenues are included and total and net operating revenue have been adjusted between the segments. Furthermore, associates and joint ventures previously not allocated are now a part of the Greater Oslo Area and Other
Business. 2) Receivables includes accounts receivables (before provision for loss) and accrued revenues.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| REVENUES PER MARKET AREA | ||
| Buildings & Properties | 789 564 | 751 219 |
| Energy | 427 938 | 361 819 |
| Industry | 145 660 | 99 337 |
| Environment & Natural resources | 84 117 | 81 374 |
| Oil & Gas | 184 279 | 280 782 |
| Transportation & Infrastructure | 795 978 | 691 096 |
| LINK arkitektur AS | 127 165 | 0 |
| Total | 2 554 701 | 2 265 627 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| REVENUES PER GEOGRAPHY The table below shows revenues distributed by geography, based on the customer's location: |
||
| Norway | 2 228 280 | 2 050 766 |
| Abroad | 326 421 | 214 861 |
| Total | 2 554 701 | 2 265 627 |
Customer location is based on the invoice address. Non-current assets are mainly located in Norway.
INFORMATION ON THE GROUP'S REPORTABLE SEGMENTS Of total revenues in 2015 and 2014, more than 13% related to a public sector customer. Revenues are distributed between the segments Gre-
The company performs a number of research and development activities. Based on the definition in IFRS and the Norwegian Accounting Act, the company has divided the activities into the following categories:
Total expenses for these activities were NOK 16,9 million in 2015 and NOK 13 in 2014, of which NOK 1,2 million was invoiced to customers for 2015 and NOK 2 million in 2014. No development expenses have been capitalised.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Rental expenses (operating lease) | 115 078 | 90 938 |
| Other real estate expenses | 20 107 | 23 905 |
| Consultants | 32 423 | 25 945 |
| IPO expenses related to listing on Oslo Stock Exchange | 50 662 | 0 |
| Technical equipment | 37 751 | 36 223 |
| Office expenses, IT | 42 760 | 39 585 |
| Telecommunications services | 16 222 | 15 335 |
| Travel and per diem allowance | 25 644 | 23 155 |
| Marketing | 12 186 | 10 512 |
| Losses on receivables | 275 | 982 |
| Other | 32 619 | 23 864 |
| Total other operating expenses | 385 726 | 290 443 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| EMPLOYEE BENEFIT EXPENSES | ||
| Salaries | 1 274 523 | 1 147 501 |
| Social security tax | 187 726 | 155 894 |
| Pension expenses (see note 11) | 100 307 | 81 593 |
| Other employee benefit expenses | 86 683 | 64 613 |
| Total employee benefit expenses | 1 649 240 | 1 449 600 |
| Number of full time employees during the year | 1 814 | 1 593 |
| Number of employees as of 31 December | 2 110 | 1 724 |
Number of full time employees during the year includes employees of LINK arkitektur from 1 September 2015.
| Amounts in NOK thousand | Deloitte | Other |
|---|---|---|
| Statutory audit services | 2 717 | 192 |
| Tax advisory services | 696 | - |
| Other assurance services | 219 | - |
| Other non-audit services | 312 | 494 |
The amounts above are excluding VAT. Other non-audit services includes assistance related to financial due diligence and advice related to employees located abroad.
Fees paid to Deloitte AS and affiliated companies for 2015:
| Amounts in NOK thousand | |||
|---|---|---|---|
| ------------------------- | -- | -- | -- |
Multiconsult ASA has introduced a share purchase programme for employees of the group. Through the share purchase programme the company offers employees shares in Multiconsult ASA with a discount of 20%. Shares purchased through the programme will be subject to a two year lock-in period. For this purpose the company purchased 265,000 shares in the market for NOK 25,797 thousand during the third and fourth quarter, and sold 246,933 shares to the employees (of which 239,047 shares to employees of the parent company) at the end of the fourth quarter. The sales price was NOK 19,962 (of which NOK 19,325 from employees of the parent company), with receipt of cash of NOK 8,608 thousand from employees of the parent company. Employees have been granted loan (maximum 3/5G, NOK 54 thousand) for the remaining payment for the shares, with outstanding balance at 31 December 2015 of NOK 12,353 tho-
Remuneration to the group management shall reflect the responsibilities of the CEO and other members for the management in Multiconsult, considering the complexity of the company, growth and sustainability. The company's strategy is to offer competitive remuneration, but not to be in the forefront.
As a basis for determination of remuneration for the group management, it is used statistics for remuneration and comparison with other entities in the industry and other relevant entities. As the Group's main business is conducted in Norway, the reference is to the Norwegian market.
usand (of which NOK 11,158 thousand for employees of the parent company). The loans are interest free and will be repaid through monthly deductions to salary over 12 months. NOK 1.791 thousand (NOK 1,668 thousand for the parent company) has been recognised to equity in the line item "Employee share purchase programme (net of tax)" as a loss on sale of shares. NOK 1,296 thousand has been reported as "Other employee benefit expenses" for the group in 2015 (of which NOK 1,198 thousand for the parent company). There is no remaining unamortised expense related to the shares sold. Remaining treasury shares at 31 December 2015 was 18,067 and is reported in the statement of equity at the purchase price of NOK 1,759 thousand as an equity transaction. It is expected that the main part of these will be sold to employees at the beginning of 2016.
Total remuneration to the CEO and other members of the group management consist of a fixed part and a part varying with performance (bonus), share purchase programme for employees, pension and insurance arrangements. Fixed remuneration to members of the group management consists of base salary (main element) and fringe benefits.
A bonus programme has been established, with maximum payout for the CEO equal to four months' salary and one month for other members of the group management. This is based on targets for financial margins and agreed action plans and relevant KPIs.
Multiconsult ASA has two pension arrangements in Norway, one defined benefit plan and one defined contribution plan. The defined benefit plan was closed for new members in 2006 in connection with the establishment of the defined contribution plan. Everyone employed subsequent to the closing of the defined benefit plan is a member of the defined contribution plan. Five of the eight members of the group management, including the CEO, are members of the defined contribution plan. The group management has the same insurance arrangements as other employees of Multiconsult ASA. The CEO has in addition a pension arrangement for salary above 12 G. This is an annual extra benefit, which is paid in cash. The board of directors has decided to change the pension arrangement for the CEO for salary above 12 G from an additional cash paid benefit to be included in the fixed salary from 1 January 2016.
The board of directors has decided to implement a share based bonus arrangement for the group management, effective for bonus earned in 2016. If defined targets are met, a part of the earned bonus will be paid in 2017 in the form of shares with a discount of 30% and a three year lock-in period. The maximum four months' salary to the CEO will be continued in 2016, while the maximum bonus is increased to two months' salary for other members of group management.
Members of group management participate in the company's general share purchase programme for employees, in which they are offered to purchase shares at a discount of 20% and a two lock-in period.
Except the item described below, the remuneration policy during 2015 has been based on the principles described in section 1. above.
As a consequence of the successful listing of Multiconsult ASA on Oslo Børs in the spring of 2015, the board of directors decided on an extraordinary bonus to the CEO and CFO that was paid in December 2015.
The share based bonus arrangment described in section 1.2. above had not been implemented in 2015.
Total remuneration to the group management paid in 2015 is shown in the table below.
The CEO has an agreement which, in the event that he has to resign, gives him the right (unless he has shown gross negligence of his duties according to laws), to receive salary until he enters a new position, maximum 12 months. There are no other agreements for special compensation in the event of resignation, termination or change in the employment or position for other leading employees or board members.
Remuneration to the board of directors consist of payment of board fees and reimbursement of travel expenses in relation to meetings in which they physically participate. The board of directors has no share option arrangements or share based payments. Only employee board members have loans from the company. These are a part of the company's share purchase programme for employees.
The board fee is determined by the members' positions. Board fee is paid in retrospect, for members elected by shareholders twice a year and for employee elected board members once a year. For the period from the Annual General Meeting in 2015 to the Annual General Meeting in 2016, the board fee is determined by the Annual General Meeting in 2016. The board fees determined by the Annual General Meeting in 2015 is NOK 400,000 for the chair, NOK 200,000 for members elected by shareholders and NOK 40,000 for employee elected board members.
Total board fees and remuneration paid in 2015 for the separate board members are shown in the table below.
| Amounts in NOK | Base salary 1) |
Salary paid 2) |
Other benefit paid 2) |
Compen sation pension paid 3) |
Bonus paid incl. profit sharing 4) |
Pension 5) | Shares 6) | Loans 7) |
|---|---|---|---|---|---|---|---|---|
| CEO Christian Nørgaard Madsen |
2 667 600 | 2 774 996 | 125 240 | 269 028 | 514 759 | 76 134 | 46 554 | 16 128 |
| Other members of the group management |
||||||||
| Grethe Bergly | 1 560 000 | 1 541 665 | 53 399 | 0 | 114 427 | 267 910 | 22 659 | 36 311 |
| Torbjørn Blom-Hagen 8) | 1 600 000 | 400 000 | 16 411 | 0 | 0 | 18 429 | 0 | 0 |
| Ola Dalen | 1 382 022 | 1 439 808 | 50 756 | 0 | 110 452 | 155 210 | 50 000 | 0 |
| Anne Harris 9) | 1 621 080 | 1 528 406 | 11 687 | 0 | 147 031 | 75 799 | 8 759 | 36 311 |
| Øyvind Holtedahl | 1 539 000 | 1 587 060 | 101 037 | 0 | 114 427 | 74 966 | 6 572 | 21 789 |
| Lars Opsahl | 1 430 000 | 1 406 288 | 84 731 | 0 | 114 594 | 224 168 | 56 720 | 36 311 |
| Elisabeth M. Stene | 1 425 000 | 1 438 590 | 27 414 | 0 | 112 177 | 78 549 | 8 492 | 0 |
| Total | 13 224 702 | 12 116 813 | 470 674 | 269 028 | 1 227 867 | 971 165 | 199 756 | 146 849 |
1) Annual base salary per 31 December, or per the date of leaving the group management. 2) Salary is amount paid during the year presented, including holiday pay. Other benefit include all other cash and non-cash benefit received during the year and includes taxable parts of; insurance premiums; discount on shares purchased; company car; car allowance; per diem allowance; compensation for work abroad; and telecommunication.
3) Compensation pension paid; the pension arrangement for the CEO for salary above 12 G is an additional benefit paid in cash. 4) Bonus is an amount earned in the year prior to the year presented, and holiday pay is paid in the year after the year presented. The same applies to profit sharing paid. For 2014, the CEO renounced the four months' bonus potential and agreed with the board of directors a maximum two months' bonus potential. For Christian N Madsen and Anne Harris it includes extraordinary bonus for successful IPO; NOK 150,000 and NOK 100,000, respectively. An estimated provision for bonus at 31.12.15 in the amount of NOK 1,2 million is not allocated to the individual in the group management at the date the board of directors approved the
financial statements. 5) Pension: Grethe Bergly, Ola Dalen and Lars Opsahl are members of the defined benefit plan. The other members of the group management are included in the
defined contribution plan. 6) Shares owned by the members of the group management with related parties. 7) Short term loans for purchase of shares through to the company's share purchase programme, on the same terms as other employees of the company. 8) T. Blom-Hagen, employeed and a member of the group management from 1.10.2015. 9) A. Harris, employeed and a member of the group Management from 01.09.2014. Holiday pay is calculated for 4 months in 2014, but deduction for vacation
spent is for 5 weeks in 2015.
| Per 31 Desember 2015 | |||||
|---|---|---|---|---|---|
| Amounts in NOK | Function | Payment 2) | Loan for share purchase | Shares 3) | |
| Steinar Mejlænder-Larsen 4) | Chair, elected by shareholders | 700 000 | 0 | 6 410 | |
| Nigel Wilson | Deputy chair, elected by shareholders | 133 000 | 0 | 6 410 | |
| Arne Fosen | Elected by shareholders | 133 000 | 0 | 3 205 | |
| Line Karin Haugen | Elected by shareholders | 133 000 | 0 | 3 846 | |
| Freddy Holstad | Elected by employees | 40 000 | 21 789 | 24 872 | |
| Elisabeth Lokshall 5) | Elected by employees | 0 | 0 | 100 | |
| Kari Medby Loland | Elected by employees | 40 000 | 0 | 134 | |
| Vibeke Strømme | Elected by shareholders | 133 000 | 0 | 2 564 | |
| Total | 1 312 000 | 21 789 | 47 541 |
1) Members of the board after the Annual General Meeting in 2015. 2) Total board fees paid in 2015 was NOK 1,440,000, including fees to board members that retired from the board in 2015.
Due to administrative reasons, the board fee to Nigel Wilson will be paid in April 2016 instead of December 2015. 3) Shares owned by the members of the board, including shares owned by the related parties. 4) Ordinary board fee is NOK 400,000. In addition it was paid NOK 300,000 as compensation for the work related to owners processes up to the IPO.
5) Elisabeth Lokshall was elected as board member by the Annual General Meeting in 2015. The first payment of fees will be made in May 2016.
For employee elected board members, only fees for being a member of the board and any board committees are included. Remuneration as an employee of the company is consequently not included.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| FINANCIAL INCOME | ||
| Other interest income | 6 933 | 9 852 |
| Other financial income | 1 949 | 1 620 |
| Dividends | 0 | 157 |
| Financial income | 8 882 | 11 629 |
| FINANCIAL EXPENSES | ||
| Other interest expenses | 513 | 153 |
| Interest on net pension obligations (see note 11) | 4 857 | 1 803 |
| Losses on derivatives | 42 | 139 |
| Other financial expenses | 1 638 | 728 |
| Financial expenses | 7 049 | 2 823 |
| Net financial items | 1 832 | 8 806 |
| 2015 | 2014 |
|---|---|
| 82 109 | 27 5 23 |
| 6 1 9 3 | (1310) |
| 3 4 6 2 | 7435 |
| 1892 | $\mathbf 0$ |
| (29695) | 47992 |
| 2 1 3 5 | 469 |
| 627 | $\mathbf 0$ |
| 66722 | 82 109 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Income taxes payable | 55 753 | 56 990 |
| Net withholding tax after tax credit | 1 220 | 2 029 |
| Regulation of previous years' taxes | (1 133) | 571 |
| Change in deferred taxes | (6 193) | 1 310 |
| Effect of change in tax rate | (1 892) | 0 |
| Income tax expense | 47 754 | 60 899 |
The income tax expense for the year was as follows:
| Amounts in NOK thousand (except percentages) | 2015 | 2014 |
|---|---|---|
| Profit before income taxes | 197 864 | 227 608 |
| Expected income tax based on nominal tax rate in Norway (27 %) | 53 423 | 61 454 |
| Tax effect of the following items: | ||
| Non-deductible expenses | 1 435 | 405 |
| Non-taxable income | (367) | (359) |
| Share of profit from associated companies | (5 655) | (1 879) |
| Not recognised/reversal of previously not recognised deferred tax assets | 597 | (299) |
| Effect of change in tax rate | (1 892) | 0 |
| Excess tax provided for in prior years | (1 133) | 571 |
| Net withholding tax after tax credit | 1 220 | 2 029 |
| Other items | 125 | (1 023) |
| Income tax expense | 47 754 | 60 899 |
| Effective tax rate | 24,1 % | 26,8 % |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Non-current assets | 5 888 | 5 428 |
| Current assets | 6 | 2 404 |
| Liabilities and provisions | 17 492 | 16 885 |
| Pension obligations | 40 485 | 57 079 |
| Taxable losses carried forward | 5 515 | 1 597 |
| Deferred tax assets not recognised in the balance sheet | (2 665) | (1 284) |
| Deferred tax asset/liability in the balance sheet | 66 722 | 82 109 |
| Deferred tax assets are recognised based on expected future taxable profits. Deferred tax assets in Multiconsult UK have not been recognised. |
| Amount in NOK thousand | 2015 | 2014 |
|---|---|---|
| Deferred tax assets 1 January | 82 109 | 27 523 |
| Changes in deferred taxes recognised in the statement of income | 6 193 | (1 310) |
| Deferred taxes arising from acquisitions | 3 462 | 7 435 |
| Effects of changes in tax rate in the statement of income | 1 892 | 0 |
| Deferred taxes included in other comprehensive income 2) | (29 695) | 47 992 |
| Reclassification 1) | 2 135 | 469 |
| Currency | 627 | 0 |
| Deferred tax assets in the balance sheet (net) as of 31 December | 66 722 | 82 109 |
| 1) Reclassification in 2015, see note 4 |
2) Change in deferred taxes recognised in other comprehensive income is tax on remeasurement of defined benefit obligations. The amount recognised in 2015 includes the effect of change in tax rate from 27% to 25% in Norway from 2016 on the accumulated remeasurements, including the amount recognised at transition to IFRS. The accumulated remasurement effect is larger than the temporary difference on defined benefit plans in the balance sheet. The difference has reduced the change in deferred tax assets recognised in the statement of income.
The group's Norwegian companies have established pension plans that comply with the requirements in the Act on Mandatory Company Pensions. The parent company (Multiconsult ASA) has two company pension plans: a defined contribution plan and a defined benefit plan. The benefits in the risk coverage in the two plans are the same. Paid-up policies on risk benefits were closed on 30 June 2013. The group's subsidiaries both in Norway and abroad have defined contribution plans, except for a defined benefit plan in LINK arkitektur AS.
Multiconsult ASA's defined benefit plan was closed in 2006, and all employees after this date are registered in the defined contribution plan. There were 1,370 active members and 18 retirees in the defined contribution plan at the end of 2015 (2014: 1,320). Annual contributions to the plan are 5 % for contribution basis between 1G and 6G, and 8 % of the contribution basis between 6G and 12G (G is a base amount annually approved by the Norwegian parliament and was NOK 90.068 per 31 December 2015). The premium expense for the defined contribution plan for 2015 was NOK 55,709 thousand (2014: NOK 48,855 thousand), including social security tax. This includes a For 86 employees in Sweden the defined benefit pension commitments for retirement and family pensions are secured in the ITP 2 plan through insurance with Alecta. The group has not had access to information in order to report its proportional share of the plan's obligations, plan assets and costs, and is therefore reported as a defined contribution plan. The expected contribution to the plan (premium) in 2016 is NOK 5,600 thousand. The premium is calculated individually and is dependent on factors including salary, previously earned pension and expected remaining service period. The group's share of the total contributions to the plan amounted to 0.03 percent in 2015. The collective funding ratio is the market value of Alecta's assets as a percentage of insurance commitments calculated according to Alecta's actuarial methods and assumptions,
risk premium in the defined benefit plan of NOK 1,450 thousand in 2015 (NOK 1,297 thousand in 2014).
Multiconsult ASA's defined benefit plan had 287 (2014: 314) active members and 202 (2014: 184) retirees as of 31 December 2015. The defined benefit plans provides rights to future benefits. These benefits are mainly dependent on the number of years of service, salary levels at the age of retirement and the size of the benefits from National Insurance. In addition, the Multiconsult ASA has two individual defined benefit plans that are unfunded, with recognised liabilities of NOK 7,562 thousand at the end of 2015 (2014: NOK 7,668 thousand). The expenses and obligations are included in the tables for defined benefit plans below.
LINK arkitektur AS was acquired in September 2015. The parent company LINK arkitektur AS has a defined benefit plan that is closed, and includes 7 active members and 3 retirees as of 31 December 2015. Other plans in LINK arkitektur group are plans accounted for as contribution plans. This includes a multiemployer plan in LINK arkitektur AB (ITP 2 plan) which is a defined benefit plan.
which are not consistent with IAS 19. The collective funding ratio is normally allowed to vary between 125 and 155 percent. If Alecta's collective funding ratio is below 125 percent or exceeds 155 percent, action should be taken for consolidation level returning to the normal range. At low funding ratio, measures can be to raise the agreed price for new and existing contracts. At high funding ratio a measure may be to reduce premiums. At the end of 2015, the collective funding ratio was 153 percent.
Social security tax is calculated based on the pension plan's net financing and included in the gross pension obligations. Pension expenses include related social security tax.
| Amount in NOK thousand | 2015 | 2014 |
|---|---|---|
| Expensed income taxes payable | (55 753) | (56 990) |
| Prepaid taxes | 2 919 | 3 961 |
| Income taxes payable from acquisitions | (4 180) | 0 |
| Income tax on employee share programme recognised in equity | 1 011 | 0 |
| SkatteFUNN (government R&D tax incentive scheme) | 1 326 | 1 132 |
| Income tax payable recognised in the statement of financial position | (54 676) | (51 897) |
Due to losses and/or the excemption method, there are no significant temporary differences resulting in deferred taxes on retained earnings in subsidiaries, associated companies or joint ventures.
| Amount in NOK thousand | Gross | Taxes | Net |
|---|---|---|---|
| 31 December 2013 | (215 783) | 58 261 | (157 521) |
| Change 2014 | (177 749) | 47 992 | (129 757) |
| 31 December 2014 | (393 531) | 106 253 | (287 278) |
| Change 2015 | 87 298 | (29 695) | 57 603 |
| 31 December 2015 | (306 233) | 76 558 | (229 676) |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Pension expenses retirement defined benefit plan | 40 967 | 30 113 |
| Recognised as financial expenses (note 9) | (4 857) | (1 803) |
| Pension expenses defined contribution plan incl. risk premium defined contribution plan | 64 197 | 53 283 |
| Pension expenses in profit before taxes (note 8) | 100 307 | 81 593 |
| Effect of remeasurement of defined benefit obligations | (87 298) | 177 749 |
| Pension expenses in total comprehensive income | 13 009 | 259 342 |
LINK arkitektur AS was acquired in September 2015, and pension expenses for the LINK Group is included in the profit before tax in 2015 with NOK 5,703 thousand, primarily for defined contribution plans.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Present value of the current year service cost | 31 830 | 24 485 |
| Interest expenses on the pension obligations | 21 065 | 27 533 |
| Interest income on the pension assets | (16 208) | (25 730) |
| Net pension expenses before social security tax | 36 687 | 26 288 |
| Accrued social security tax | 4 280 | 3 825 |
| Net pension expenses after social security tax | 40 967 | 30 113 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Gross pensions obligations at the beginning of the period | 925 336 | 696 837 |
| Pension obligations from acqusitions | 15 175 | 0 |
| Expenses related to the current year service cost | 36 110 | 28 310 |
| Interest expenses | 21 065 | 27 533 |
| Social security tax on paid-in premiums | (525) | (4 487) |
| Ordinary payments from the plans | (18 252) | (16 385) |
| Remeasurement of gross pension obligations | (84 117) | 193 529 |
| Gross pension obligations at the end of the period | 894 792 | 925 336 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Pension assets at the beginning of the period | 713 805 | 655 465 |
| Pension assets from acqusitions | 14 542 | 0 |
| Interest income | 16 209 | 25 730 |
| Paid-in premiums | 4 414 | 37 702 |
| Social security tax on paid-in premiums | (525) | (4 487) |
| Ordinary payments from the plans | (18 177) | (16 385) |
| Remeasurement of pension assets | 3 180 | 15 780 |
| Pension assets at the end of the period | 733 448 | 713 805 |
| Amounts in NOK thousand | 31.12.2015 | 31.12.2014 |
|---|---|---|
| Calculated pension obligations (incl. social security tax) Pension assets (at market value) |
(894 792) 733 448 |
(925 008) 713 805 |
| Pension obligations in the financial statements | (161 344) | (211 531) |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Effect from change in discount rate | (71 884) | 277 582 |
| Effect from change in other actuarial assumptions | (14 438) | (70 881) |
| Effect from changes in other actuarial assumtions for the pension obligations | 2 205 | (13 172) |
| Effect from change in actuarial assumptions for the plan assets | (3 180) | (15 780) |
| Total effect from remeasurement of defined benefit obligations | (87 298) | 177 749 |
| 31.12.2015 | 31.12.2014 | 31.12.2013 | |
|---|---|---|---|
| Expected return on pension assets | 2.70 % | 2.30 % | 4.00 % |
| Discount rate | 2.70 % | 2.30 % | 4.00 % |
| Expected salary regulation | 2.00 % | 2.25 % | 3.25 % |
| Expected G regulation | 2.25 % | 2.50 % | 3.50 % |
| Expected pension regulation | 0.70 % | 0.70 % | 0.70 % |
| Demographic assumptions: disability tariff mortality table |
KU K2013BE |
KU K2013BE |
KU K2005 |
| (percentage share of total) | 31.12.2015 | 31.12.2014 |
|---|---|---|
| Bonds | 74.7 % | 80.5 % |
| Shares | 8.6 % | 9.3 % |
| Real estate | 12.1 % | 8.7 % |
| Other | 4.6 % | 1.5 % |
| NOK million | Maturity |
|---|---|
| Year 1 | 20.9 |
| Year 2 | 24.1 |
| Year 3 | 26.3 |
| Year 4 | 29.0 |
| Year 6 - 10 | 196.7 |
| NOK million | 31.12.2015 Gross pension obligations |
31.12.2014 Gross pension obligations |
|
|---|---|---|---|
| Discount rate | +1% | (142) | (161) |
| Discount rate | - 0,5% | 92 | 98 |
| Salary adjustment | +1% | 88 | 98 |
| G regulation | +1% | (29) | (40) |
| Pension regulation | +0,3% | 38 | 36 |
The pension assets have been invested based on guidelines for life insurance companies. The investments in bonds are issued by the Norwegian government, Norwegian municipalities, financial institutions and companies. Bonds in foreign currency are mainly currency hedged. Investments have been made in both Norwegian and foreign shares. Currency hedging of foreign shares are assessed per investment.
In 2015, Multiconsult ASA utilised the possibilty to make reduced payments (paid-in premiums) to the pension fund, see table above for change in pension assets. Multiconsult ASA expects to pay approximately NOK 35 million in pension premiums to the defined benefit plans in 2016, and LINK Arkitektur AS NOK 1 million.
The weighted average duration of Multiconsult ASA's pension obligations as of 31 December 2015 is 17.2 years, and has the following maturity structure for the next 10 years:
The table below shows an estimated change in NOK million in the pension obligations of the defined benefit plan of Multiconsult ASA of changes in key assumptions at the end of the calculation period.
The assumptions as of 31 December have been used to calculate gross pension obligations, including the effect of remeasurement of the pension obligations, and the pension expenses in the statement of income for the subsequent year. In the calculation of the pension obligations, the recommended calculation assumptions from the guidance published by Norwegian Accounting Standards Board (NASB) as of the year end have been used, adapted to the company's circumstances. Expected salary growth in the defined benefit plans have been set lower than the average in the NASB guidance, based on assessments of the company's circumstances including a relatively high age composition (average age 55 years). The discount rate is based on Norwegian covered bonds (OMF - Obligasjoner med fortrinnsrett).
In the calculations, the augmented risk table for mortality K2013 BE has been used based on a best estimate for the population in Norway. The risk table for disabilities, KU, gives a reasonable reflection of the disability risk in the group. Since the defined benefit plan has been closed, the estimated future salary regulation is lower than the guidance from NASB.
The pension assets for Multiconsult ASA's plan are managed by Storebrand and are invested as follows as of the reporting date:
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Accounts receivable | 441 563 | 430 145 |
| Allowance for losses on receivables | (14 115) | (9 754) |
| Total accounts receivable | 427 448 | 420 391 |
| Work in progress | 192 781 | 103 501 |
| Prepaid expenses | 22 379 | 19 271 |
| Other | 34 756 | 21 512 |
| Total other current receivables | 249 916 | 144 284 |
| Amounts in NOK thousand | Software | Goodwill |
|---|---|---|
| Acquisition cost 1 January 2014 | 39 691 | 145 962 |
| Additions | 4 841 | 0 |
| Additions from acquisitions | 59 | 5 713 |
| Currency translation differences | 80 | 0 |
| Acquisition cost 31 December 2014 | 44 671 | 151 675 |
| Additions | 7 181 | 0 |
| Additions from acquisitions | 0 | 101 596 |
| Currency translation differences | 22 | 0 |
| Acquisition cost 31 December 2015 | 51 874 | 253 271 |
| Accumulated amortisation and impairment 1 January 2014 | 32 966 | 80 248 |
| Amortisation for the year | 4 892 | 0 |
| Currency translation differences | 30 | 0 |
| Accumulated amortisation and impairment 31 December 2014 | 37 888 | 80 248 |
| Amortisation for the year | 4 666 | 0 |
| Currency translation differences | 17 | 0 |
| Accumulated amortisation and impairment 31 December 2015 | 42 571 | 80 248 |
| Carrying amount 1 January 2014 | 6 725 | 65 714 |
| Additions | 4 841 | 0 |
| Additions from acquisitions | 59 | 5 713 |
| Amortisation and impairment for the year | 4 892 | 0 |
| Currency translation differences | 50 | 0 |
| Carrying amount 31 December 2014 | 6 783 | 71 427 |
| Additions | 7 181 | 0 |
| Additions from acquisitions | 0 | 101 596 |
| Amortisation and impairment for the year | 4 666 | 0 |
| Currency translation differences | 5 | 0 |
Carrying amount 31 December 2015 9 304 173 023
Software is standard software and licenses that are amortised on a straight-line basis over three years.
The group performs an assessment for impairment of goodwill at year end, or more often if there are indicators of impairment. The impairment test is based on identified cash generating units (CGUs) in the group. A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs are changed if businesses are integrated. CGUs are on a lower level than the segment classification and follows regions or separate companies, given that separate financial information is available. CGUs identified to assess the value of the group's goodwill in 2015 are disclosed in the table below. The carrying amounts of these cash generating units include property, plant and equipment, intangible assets and allocated goodwill.
In 2015 Multiconsult ASA acquired LINK arkitektur AS and the acquisition generated an excess value of NOK 103,7 million. The excess value is allocated to goodwill and is related to the competence of the staff.
Goodwill related to the acquisitions Barlindhaug Consult (2011) and Vest Consult (2013) is included in region North, and Multiconsult Stord AS, a part of region West, respectively (both regions are a part of the segment Regional Norway). Allocation of other goodwill is shown in the table below. For most cash generating units, the carrying amount of property, plant and equipment and goodwill is low. In relation to historic and expected future earnings for these cash generating units, it has been concluded that there is no impairment.
The recoverable amount is estimated based on expected value in use, based on discounted future cash flows. Future cash flows inclu-
NOTE 13 INTANGIBLE ASSETS AND GOODWILL ded in the impairment tests at the end of 2015 are based on Board approved budgets for 2016 and the company's strategy plan for the subsequent periods. The growth in the forecast period of 2016 – 2020 is not higher than the long-term expected growth in the economy in which the company operates. For growth in the terminal value after the forecast period, a moderate growth of 0,5 % is used.
The EBIT margin is based on historic achieved margin, but is adjusted for expected future margins in the market.
Reinvestments in property, plant and equipment have been set equal to depreciation for the purposes of the analysis. The business is not investment heavy, and the basis for maintaining the capacity for future cash flows mainly lies in the investment in employees, which
is reflected in the annual forecasted cash flows from operations. Therefore, EBIT is used as an estimate of cash flows.
The discount rate in the analysis is set to 5.3 % after tax based on a calculation of the weighted average cost of capital (WACC). The same discount rate has been used for all cash generating units since the asset beta has been deemed the same in all segments that the Company operates in.
The impairment tests have not resulted in any impairment needs for goodwill or property, plant and equipment related to any of the cash generating units. Management has evaluated that a reasonably possible change in key assumptions would not give rise to impairment at 31 December 2015.
Amounts in NOK thousand
| Company | Acquisition year |
Carrying amount | Cash generating unit | Belongs to segment |
|---|---|---|---|---|
| Kompas AS | 2009 | 2 573 | West | Regional Norway |
| Multiconsult Voss AS | 2012 | 2 400 | West | Regional Norway |
| Industriplan AS | 2010 | 0 | Oslo | Greater Oslo Area |
| Hydpro AS | 2011 | 383 | Oslo | Greater Oslo Area |
| Infratech AS | 2013 | 5 800 | Oslo | Greater Oslo Area |
| Stensrud AS | 2010 | 1 728 | Middle | Regional Norway |
| NTE Energiutvikling | 2013 | 2 113 | Middle | Regional Norway |
| Barlindhaug Consult AS | 2011 | 39 716 | North | Regional Norway |
| Multiconsult Stord AS | 2013 | 11 000 | MC Stord | Regional Norway |
| Multiconsult Polska | 2014 | 3 113 | MC Polska | International |
| Helge Lindeflaten AS | 2014 | 2 600 | MC Stord | Regional Norway |
| Carrying amount 31 December 2014 |
71 427 | |||
| Multiconsult Polska 1) | 2015 | (2 135) | MC Polska | International |
| LINK arkitektur AS | 2015 | 103 731 | LINK arkitektur | Other Business |
| Carrying amount 31 December 2015 |
173 023 |
1) In 2015, the purchase price allocation was adjusted by increasing deferred tax assets and decreasing goodwill by NOK 2,135 thousand. New allocated value of goodwill is NOK 978 thousand .
The Company's strategy has been to merge Norwegian subsidiaries into the parent company whenever practically possible and appropriate. Therefore, the majority of companies mentioned above do not exist as of 31 December 2015. Refer to note 15 to the parent company's financial statements for more information on subsidiaries.
| Buildings | Other machines, | Total property, | ||
|---|---|---|---|---|
| and other | plant, fixtures | Leasehold | plant and | |
| Amounts in NOK thousand | real estate | and fittings | improvements | equipment |
| Acquisition cost 1 January 2014 | 5 649 | 241 346 | 47 981 | 294 975 |
| Additions | 0 | 32 272 | 2 127 | 34 399 |
| Additions from acquisitions | 200 | 759 | 0 | 959 |
| Currency translation differences | 0 | 159 | 14 | 173 |
| Disposals | 0 | 314 | 0 | 314 |
| Acquisition cost 31 December 2014 | 5 849 | 274 222 | 50 121 | 330 192 |
| Additions | 0 | 28 443 | 6 215 | 34 659 |
| Additions from acquisitions | 0 | 6 303 | 0 | 6 303 |
| Currency translation differences | 37 | 782 | 52 | 871 |
| Disposals | 0 | 1 792 | 1 384 | 3 177 |
| Acquisition cost 31 December 2015 | 5 886 | 307 957 | 55 004 | 368 847 |
| Acc. depreciation and impairment 1 Jan. 2014 | 3 745 | 191 998 | 28 203 | 223 947 |
| Depreciation for the year | 110 | 23 715 | 5 816 | 29 641 |
| Impairment for the year | 0 | 50 | 0 | 50 |
| Currency translation differences | 0 | 38 | 3 | 42 |
| Acc. depreciation and impairment 31 Dec. 2014 |
3 855 | 215 803 | 34 023 | 253 681 |
| Depreciation for the year | 161 | 26 303 | 6 018 | 32 463 |
| Impairment for the year | 0 | 468 | 0 | 468 |
| Currency translation differences | 25 | 15 | 29 | 88 |
| Disposals | 0 | 1 792 | 825 | 2 617 |
| Acc. depreciation and impairment 31 Dec. 2015 |
4 040 | 240 797 | 39 246 | 284 084 |
| Carrying amount 1 January 2014 | 1 904 | 49 400 | 19 777 | 71 081 |
| Additions | 0 | 32 272 | 2 127 | 34 399 |
| Additions from acquisitions | 200 | 759 | 0 | 959 |
| Depreciation and impairment for the year Currency translation differences |
110 | 23 799 | 5 816 | 29 725 |
| Disposal | 0 0 |
102 314 |
8 0 |
110 314 |
| Carrying amount 31 December 2014 | 1 994 | 58 420 | 16 095 | 76 510 |
| Additions | 0 | 28 443 | 6 215 | 34 659 |
| Additions from acquisitions | ||||
| Depreciation and impairment for the year | 0 161 |
6 303 26 771 |
0 6 018 |
6 303 32 950 |
| Currency translation differences | 12 | 813 | (3) | 822 |
| Disposal | 0 | 0 | 560 | 560 |
| Carrying amount 31 December 2015 | 1 846 | 67 208 | 15 729 | 84 783 |
| Same as | ||||
| Useful life | 10 - 50 years | 3 - 8 years | equivalent assets, | |
| Depreciation plan | Straight-line | Straight-line | max leasing period |
There have been no significant changes in depreciation period, depreciation method or estimated residual values in 2015 or 2014.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Cash and bank deposits | 145 868 | 217 678 |
| Money market funds | 0 | 154 575 |
| Restricted funds | 87 086 | 76 358 |
| Total cash and cash equivalents | 232 954 | 448 611 |
Restricted funds are mainly employee tax deduction funds. In addition it includes restricted funds in projects in Multiconsult Polska of NOK 17,389 thousand.
Refer to note 15 of the parent company for an overview of associated companies and joint ventures.
| Amounts in NOK thousand | FPS | Concorcio SAM SpA |
Newplan | Norplan Tanzania |
Norplan | LINK arkitektur |
Total |
|---|---|---|---|---|---|---|---|
| Opening balance 1 January 2014 | 365 | 0 | 272 | 1 079 | 3 111 | 34 526 | 39 352 |
| Investments during the year | 0 | 32 | 0 | 0 | (375) | 0 | (343) |
| Dividends paid in 2014 | 0 | 0 | 0 | 0 | (2 166) | (1 600) | (3 766) |
| Share of profit for the year | 649 | 0 | 541 | 913 | 137 | 4 720 | 6 961 |
| Closing balance 31 December 2014 | 1 014 | 32 | 813 | 1 992 | 707 | 37 646 | 42 204 |
| Investments during the year | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Gain increase of fair value 1) | 0 | 0 | 0 | 0 | 0 | 15 683 | 15 683 |
| Dividends paid in 2015 | 0 | 0 | 0 | 0 | 0 | (4 690) | (4 690) |
| Share of profit for the year | (63) | 217 | 1 034 | 1 443 | 70 | 2 561 | 5 262 |
| Disposal | 0 | 0 | 0 | 0 | 0 | (51 200) | (51 200) |
| Closing balance 31 December 2015 | 951 | 249 | 1 847 | 3 435 | 777 | 0 | 7 258 |
1) On 15 September 2015 Multiconsult ASA acquired the remaining 68% of the shares in LINK arkitektur AS (LINK) and the previously held 32% ownership interest has been valued at fair value. The increase in value of the previously held interest was recognised as a gain in the consolidated statement of income in the line item «Share of profit from associated companies and joint ventures» with NOK 15.7 million in 2015.
None of the company's joint ventures and associated companies are deemed significant for the group,, whether separately or combined.
The group has for some projects, entered into partnership agreements. Some of these have been assessed as joint operations. Participants have worked together to deliver a project in cooperation through a common project group. There are no assets in these project groups. Each participant is responsible for delivering the services that they have agreed to deliver, as well as being responsible for their own expenses and having a right to agreed revenues from the services the participant performs. Each participant uses their own assets, and there are only limited obligations in the operation, except that parts of the fee may be held back to cover common shared expenses (for example insurance premiums and travel expenses). One of the parties is typically appointed project manager with specific responsibilities in the project group. The participants have often agreed that they are jointly and separately liable for the project deliverables. The main projects that are organised in this manner that are considered joint operations where the group is the project manager are Campus Ås and Kampflybasen, both in Norway. Total revenues in these two projects were approximately NOK 273 million in 2015 (NOK 192 million in 2014), of which approximately NOK 141 million in 2015 (NOK 103 million in 2014) were recognised as the group's share of the revenues.
The amounts in the table are not discounted.
See note 7 Other operating expenses for leasing expenses in 2015 and 2014. In most agreements, the annual lease payment is index regulated. Future index regulations are not included in the amounts in the tables.
| Amounts in NOK thousand | Office premises | Property, plant and equipment |
Total |
|---|---|---|---|
| Due within 1 year | 126 595 | 2 517 | 129 113 |
| Due more than 1 year, but within 5 years | 425 838 | 0 | 425 838 |
| Due more than 5 years | 543 468 | 0 | 543 468 |
| Total | 1 095 902 | 2 517 | 1 098 419 |
| Amounts in NOK thousand | Office premises | Property, plant and equipment |
Total |
|---|---|---|---|
| Due within 1 year | 97 067 | 3 960 | 101 027 |
| Due after more than 1 year, but within 5 years | 382 340 | 0 | 382 340 |
| Due after more than 5 years | 514 221 | 0 | 514 221 |
| Total | 993 628 | 3 960 | 997 588 |
Liabilities for operating leases of assets are not recognised in the balance sheet. Future minimum payments under non-cancellable operating lease agreements, including costs for services:
| Amounts in NOK thousand | Annual lease | Duration | Option |
|---|---|---|---|
| Nedre Skøyenveien 2 (head office) | 29 200 | 2028 | no |
| Hoffsveien Skøyen (part of head office) | 3 100 | 2018 | + 5 years |
| Skøyen Atrium (part of head office) | 21 000 | 2018/2023 | 5 + 5 years |
| Fredrikstad | 5 600 | 2019 | 5 + 5 years |
| Drammen | 4 100 | 2018 | 5 + 5 years |
| Nesttun Bergen | 8 600 | 2030 | 5 + 5 years |
| Nesttun Bergen | 12 800 | 2030 | 5 + 5 years |
| Midt Sluppenvn. | 11 500 | 2021 | + 3 years |
| Nord, Kvaløyvn | 10 300 | 2026 | no |
There are no significant restrictions imposed through the leasing arrangements regarding distribution of dividends, obtaining additional debt, entering into additional leasing agreements or other arrangements.
Agreed sublease revenues
The group does not have any other significant committed minimum payment obligations. The agreements with sub contractors are mainly such that if an assignment is discontinued, then the obligation to purchase services from the sub contractors is also discontinued. In some agreements, there may be a minimum period during which the group must pay sub contractors if an assignment is discontinued.
| As of 31 December | |||
|---|---|---|---|
| Amounts in NOK thousand | 2015 | 2014 | |
| Due within 1 year | 4 385 | 4 203 | |
| Due after more than 1 year, but within 5 years | 9 645 | 11 662 | |
| Due after more than 5 years | 0 | 1 593 | |
| Total | 14 030 | 17 457 |
PROVISIONS
| Additions during the year | |
|---|---|
| Reversal of provisions | |
| Utilised provisions during the year |
| Amounts in NOK thousand | Project responsibility |
Other | Total |
|---|---|---|---|
| Provisions 1 January 2014 | 43 000 | 3 606 | 46 606 |
| Additions during the year | 7 135 | 4 786 | 11 921 |
| Reversal of provisions | (6 050) | 0 | (6 050) |
| Utilised provisions during the year | (15 700) | 0 | (15 700) |
| Provisions 31 December 2014 1), 2) | 28 385 | 8 392 | 36 777 |
| Additions during the year | 9 005 | 1 095 | 10 100 |
| Reversal of provisions | (18 035) | 0 | (18 035) |
| Utilised provisions during the year | (900) | (8 245) | (9 145) |
| Provisions 31 December 2015 2) | 18 455 | 1 242 | 19 697 |
1) «Other» at 31 December 2014 mainly consists of long-term profit sharing to selling shareholders in previous business combinations and were paid in 2015.
2) The date for settlement of project responsibility cases is often outside the group's control and it is not possible to make a reliable estimate of settlement dates. The processes are extensive with negotiations with many parties and often results in long legal processes.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Salaries payable, holiday pay, bonus, earnings distribution etc. | 186 002 | 151 703 |
| Payable to sub contractors and fees | 18 840 | 13 461 |
| Other accrued expenses | 5 954 | 22 893 |
| Received prepayments of revenues | 98 734 | 69 146 |
| Other | 5 370 | 8 527 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Salaries payable, holiday pay, bonus, earnings distribution etc. | 186 002 | 151 703 |
| Payable to sub contractors and fees | 18 840 | 13 461 |
| Other accrued expenses | 5 954 | 22 893 |
| Received prepayments of revenues | 98 734 | 69 146 |
| Other | 5 370 | 8 527 |
| Total other current liabilities | 314 900 | 265 729 |
The group completes a significant number of assignments during a year. Normally, the company enters into an agreement with the customer limiting its responsiblities. During the execution of an assignment, defects or damages as a result of the deliveries may be identified that could lead to claims being made towards the group. When it is probable (over 50 %) that a claim will result in outflow of economic resources from the group, a provision for the estimated liability is recognised. The time period from reporting a case to final settlement can take several years.
The size of the settlement can vary considerably. The provision related to a claim is calculated on the basis of the expected compensation including legal fees, own risk deductibles, claim amount and interest. As a consequence of the inherent uncertainty in both amount and timing of the settlement, the provision is not discounted.
The company's insurance coverage for project responsibilities is primarily based on a collective agreement for engineering consultants. The insurance coverage is standard for such agreements, with an own risk deductible of NOK 300 thousand per case and normally a maximum coverage of up to 150 G (approximately NOK 13.5 million at 31 December 2015). Based on an assessment of the nature of the insurance arrangement, settlement dynamics and risk distribution, the company has disclosed the obligations net of
the amount that is covered by the insurance.
Claims from customers for project responsibilities are often disputed by the group. The company performs a thorough review of each claim. Project responsibility cases therefore lead to both recognised provisions and contingent liabilities where no provision has been recognised because the group has assessed the probability of an outflow of economic resources from the group to be below 50%.
The largest current claim is approximately NOK 263 million related to Grønneviksøren. In January 2015, the company was found not liable by the court (Bergen Tingrett), but the plaintiff has appealed to a higher court (Lagmannsretten) and the verdict is therefore not enforcable. The case is scheduled to August 2016.The company has performed a renewed assessment of the case and the consequences for the financial statements in connection with the annual financial statements as of 31 December 2015. The provision is unchanged from 31 December 2014.
During 2015, several claims have been resolved without the company being held responsible for errors and injuries. The company has had a positive trend with a reduced number of claims. This has contributed to reversal of previously recognised provisions with a positive effect on the statement of income in 2015.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Bank guarantee - guarantees towards customers | 46 225 | 30 659 |
| Bank guarantee - guarantees for other obligations | 33 783 | 39 594 |
| Parent company guarantees - for associates and joint ventures | 3 600 | 3 600 |
| Parent company guarantees - for subsidiaries | 27 451 | 24 299 |
| Other | 266 | 213 |
| Total guarantees | 111 324 | 98 365 |
Bank guarantees towards customers are related to assignments where the customer demands security for contract responsibilities.
Bank guarantees for other obligations are mainly guarantees for rent of premises.
Parent company guarantees towards subsidiaries relates to bank loans, guarantee limit for bank overdraft and guarantee limit for Multiconsult UK.
The parent company's bank facility agreements with Nordea bank Norge ASA includes a negative pledge clause.
For restricted funds, refer to note 15 Cash and cash equivalents.
| Number of shares | Ownership share | |
|---|---|---|
| Stiftelsen Multiconsult | 5 377 958 | 20.5 % |
| Obos Bbl | 1 374 534 | 5.2 % |
| Stenshagen Invest AS | 1 319 407 | 5.0 % |
| Odin Norge | 1 048 786 | 4.0 % |
| Swedbank Robur Småbolagsfond | 1 000 000 | 3.8 % |
| Protector Forsikring ASA | 744 042 | 2.8 % |
| Verdipapirfondet Handelsbanken | 674 287 | 2.6 % |
| Tycoon Industrier ASA | 535 525 | 2.0 % |
| Verdipapirfondet Alfred Berg Norge | 505 855 | 1.9 % |
| Verdipapirfondet Alfred Berg Gamba | 447 494 | 1.7 % |
| Glover Brian James | 390 000 | 1.5 % |
| Lindemark Jan Reidar Henrik | 320 590 | 1.2 % |
| State Street Bank and Trust Co. | 314 885 | 1.2 % |
| Morgan Stanley & Co. International | 265 540 | 1.0 % |
| Brekke Dan Evert | 262 990 | 1.0 % |
| Other | 11 667 307 | 44.4 % |
| Total number of shares | 26 249 200 | 100,0 % |
The Annual General Meeting held on 16 April 2015 resolved to transform the company from a private limited liability company to a public limited liability company. The shares of the company were listed on Oslo Børs on 22 May 2015.
Par value is NOK 0.5 per share, subsequent to the 1:10 split resolved by the Annual General Meeting held on 16 April 2015. The number of treasury shares at the end of 2015 is 18,067. At the end of 2014, there were zero treasury shares. All shares that are part of the parent company's share capital belong to the same share class with the same rights.
The company's articles of association sets forth that no shareholder, including such shareholder's close associates, may vote for more than 25 per cent of the shares at the general meeting.
The following shareholders owned one percent or more of the total issued shares in Multiconsult ASA as of 31 December 2015:
Key management personnel, close members of the family of a person and entities that are controlled or jointly controlled by any of these. Key management personnel are defined as the Board of Directors and the group management. See note 8 Employee benefits expenses for information on remuneration for key management personnel and information on share ownership. There were no other transactions with key management personnel in 2015 and 2014.
Owners with significant influence; WSP Europe AB (WSP) had an ownership share of 24.7%, and Stiftelsen Multiconsult 21.2% at 31 December 2014. WSP sold all of its shares in connection with the listing of the shares of Multiconsult ASA in May 2015. Up to the date of sale of their shares, WSP was considered to be a related party. Stiftelsen Multiconsult had an ownership share of 20.5% at 31 December 2015, and the company's assessment is that Stiftelsen Multiconsult has significant influence. The WSP group is a competing consultancy
FPS AS was established in October 2013 for the purpose of fulfilling a frame agreement with Jernbaneverket for the Follobane project. Multiconsult ASA is one of the owners, and is engaged by FPS to deliver parts of the contract to FPS AS, i.e. those parts where Multiconsult is «Primary consultant». One of the other owners of FPS has also engaged Multiconsult. Sales in the table above only includes the deliveries from Multiconsult in the areas where Multiconsult is the primary consultant (and do not include deliveries through other owners in areas where that company is the primary consultant).
company. Multiconsult has not recognised any revenues for sales to the WSP group in 2015 (NOK 850 thousand in 2014) and purchase of services for NOK 2,496 thousand for the first five months of 2015 (NOK 14,635 thousand in 2014). As of 31 December 2014, Multiconsult had receivables of NOK 28 thousand and liabilities of NOK 797 thousand. Multiconsult has recognised revenues from sales to Stiftelsen Multiconsult of NOK 2,047 thousand in 2015 (NOK 776 thousand in 2014), and had receivables of NOK 2 thousand as of 31 December 2015 (NOK 4 thousand as of 31 December 2014).
The group's joint ventures and associated companies. Refer to note 16 Associated companies and joint arrangements for more information on these related parties.
The company and its subsidiaries are also considered related parties. Transactions and balances are eliminated in the consolidated financial statements and are not disclosed in this note for the group.
Purchase and sale of shares and capital contributions and distributions (dividends, group contributions) in 2015 and 2014:
| Receivables from | Liabilities to | Purchases from Sales to |
Guarantees given | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in NOK thousand |
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| LINK arkitektur AS 2) | N/A | 2 278 | N/A | 1 675 | 9 932 | 12 434 | 4 264 | 6 277 | 0 | 0 |
| Norplan AS | 5 | 637 | 0 | 0 | 175 | 250 | 110 | 8 101 | 500 1) | 500 1) |
| Norplan Tanzania Ltd | 1 503 | 1 817 | 182 | 278 | 1 629 | 2 165 | 0 | 327 | 0 | 0 |
| Newplan Ltd | 2 232 | 1 343 | 0 | 0 | 872 | 655 | 415 | 482 | 0 | 0 |
| Consorcio SAM SpA | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| FPS AS | 5 736 | 2 867 | 0 | 0 | 0 | 0 | 21 092 | 26 271 | 3 600 | 3 600 |
| TOTAL | 9 476 | 8 941 | 182 | 1 953 | 12 608 | 15 504 | 25 881 | 41 457 | 4 100 | 4 100 |
1) Bank guarantee
2) Amounts for Link arkitektur AS are for the first 8 months of 2015
In 2015 and 2014, there were no potential dilutive effects on earnings that are attributable to owners of Multiconsult ASA or on the number of shares. Basic and diluted earnings per share are therefore the same.
The number of shares has been adjusted for treasury shares. The Annual General Meeting held on 16 April 2015 resolved a 1:10 split of the shares. The number of shares used in the per share calculations are retrospectively adjusted for this split.
After the reporting period ended on 31 December 2015 and up to the date these financial statements have been approved for issue, no events have been identified that require disclosure.
| 2015 | 2014 | |
|---|---|---|
| Profit after tax attributable to owners of Multiconsult ASA (NOK thousand) | 150 109 | 166 708 |
| Weighted average number of shares (excl. treasury shares) | 26 186 588 | 26 245 781 |
| Earnings per share | 5.73 | 6.35 |
| DIVIDENDS PER SHARE | ||
| Dividends paid to owners of Multiconsult ASA (NOK thousand) 1) | 275 617 | 44 602 |
| Number of outstanding shares, including treasury shares | 26 249 200 | 26 249 200 |
| Dividends per share | 10.50 | 1.70 |
| 76 123 |
|---|
| 2.90 |
Dividends proposed after 31 December 2015 (NOK thousand) 2) 76 123
Dividends proposed after 31 December 2015 (per share) 2) 2.90
1) Dividends paid in 2015 consisted of an ordinary dividend of NOK 83,997 thousand (NOK 3.20 per share) and an extraordinary dividend prior to the listing of the shares of NOK 191,619 thousand (NOK 7.30 per share).
2) Dividends to be adopted by the Annual General Meeting in April 2016
Auditors' report 120
MULTICONSULT ANNUAL REPORT 2015 91
| Statement of income | ||||
|---|---|---|---|---|
| Statement of comprehensive income | 93 | |||
| Balance sheet | 94 | |||
| Statement of cash flows | 96 | |||
| Statement of changes in equity | 97 | |||
| Notes to the financial statements | 98 | |||
| Note 1 - General information and basis for the preparation of the parent company's financial statements |
98 | |||
| Note 2 - Basis for preparation | 98 | |||
| Note 3 - Financial risk management | 98 | |||
| Note 4 - Operating revenues for the parent company |
99 | |||
| Note 5 - Research and development | 100 | |||
| Note 6 - Employee benefits expenses, number of employees, remuneration, loans to employees, pensions etc. |
100 | |||
| Note 7 - Other operating expenses | 101 | |||
| Note 8 - Financial items | 102 | |||
| Note 9 - Pensions | 102 | |||
| Note 10 - Taxes | 107 | |||
| Note 11 - Accounts receivable and other current receivables |
109 | |||
| Note 12 - Intangible assets and goodwill | 109 | |||
| Note 13 - Property, plant and equipment | 111 | |||
Note 14 - Restricted bank deposits guarantees,
pledges
Note 15 - Subsidiaries, associated companies,
joint ventures
Note 16 - Leasing and other payment obligations
Note 17 - Other current liabilities
Note 18 - Provisions and non-current receivables
and shares
Note 19 - Related parties
Note 20 - Events after the reporting period
112
113
114 115 115
116 117
92 MULTICONSULT ANNUAL REPORT 2015 MULTICONSULT ANNUAL REPORT 2015 93
| Amounts in NOK thousand | Note | 2015 | 2014 |
|---|---|---|---|
| Profit for the period | 138 450 | 158 945 | |
| Other comprehensive income | |||
| Remeasurement of defined benefit obligations | 9 | 85 917 | (177 749) |
| Income taxes | 10 | (29 350) | 47 992 |
| Total items that will not be reclassified subsequently to profit or loss | 56 567 | (129 757) | |
| Total comprehensive income for the period | 195 017 | 29 188 |
| Amounts in NOK thousand | Note | 2015 | 2014 |
|---|---|---|---|
| OPERATING REVENUES AND EXPENSES | |||
| Operating revenues | 4 | 2 336 743 | 2 181 111 |
| Expenses for sub contractors and disbursements | 304 677 | 281 630 | |
| Net operating revenues | 2 032 066 | 1 899 481 | |
| Employee benefits expenses | 6, 9 | 1 473 535 | 1 385 437 |
| Other operating expenses | 7 | 346 442 | 274 090 |
| Operating expenses excluding depreciation, amortisation and impairment | 1 819 977 | 1 659 527 | |
| Operating profit before depreciation, amortisation and impairment (EBITDA) | 212 088 | 239 954 | |
| Depreciation, amortisation and impairment | 12, 13 | 35 026 | 33 511 |
| Operating profit (EBIT) | 177 062 | 206 443 | |
| FINANCIAL INCOME AND EXPENSES | |||
| Financial income | 8 | 13 724 | 14 822 |
| Financial expenses | 8 | 6 164 | 2 325 |
| Net financial items | 7 560 | 12 497 | |
| Profit before income taxes | 184 622 | 218 940 | |
| Income tax expenses | 10 | 46 172 | 59 995 |
| Profit for the period | 138 450 | 158 945 |
| Amounts in NOK thousand | Note | 31.12.2015 | 31.12.2014 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Deferred tax assets | 10 | 53 182 | 73 300 |
| Intangible assets | 12 | 8 310 | 6 478 |
| Goodwill | 12 | 55 014 | 52 314 |
| Property, plant and equipment | 13 | 73 923 | 74 150 |
| Total non-current non-financial assets | 190 430 | 206 242 | |
| Investments in subsidiaries | 15 | 197 318 | 51 431 |
| Investments in associates and joint ventures | 15 | 3 297 | 42 143 |
| Other non-current financial assets | 18 | 9 924 | 8 183 |
| Total non-current financial assets | 210 539 | 101 756 | |
| Total non-current assets | 400 969 | 307 998 | |
| Current assets | |||
| Accounts receivable | 11 | 358 293 | 392 337 |
| Other current receivables | 11 | 170 869 | 136 276 |
| Total receivables | 529 162 | 528 613 | |
| Cash and cash equivalents | 14 | 134 834 | 371 492 |
| Total current assets | 663 996 | 900 105 | |
| TOTAL ASSETS | 1 064 965 | 1 208 103 |
| EQUITY AND LIABILITIES | ||
|---|---|---|
| Equity | ||
| Non-current liabilities | ||
| Pension obligations | ||
| Provisions | ||
| Current liabilities | ||
| Accounts payable | ||
| Current tax liabilities | ||
| Public duties payable | ||
| Dividends payable | ||
| Other current liabilities | ||
| Amounts in NOK thousand | Note | 31.12.2015 | 31.12.2014 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Total paid-in equity | 26 436 | 26 445 | |
| Other equity | 231 622 | 305 881 | |
| Total equity | 258 057 | 332 326 | |
| Non-current liabilities | |||
| Pension obligations | 9 | 161 941 | 211 532 |
| Provisions | 18 | 11 855 | 28 385 |
| Total non-current liabilities | 173 796 | 239 917 | |
| Current liabilities | |||
| Accounts payable | 108 069 | 99 688 | |
| Current tax liabilities | 10 | 49 659 | 51 033 |
| Public duties payable | 193 219 | 185 520 | |
| Dividends payable | 76 123 | 83 997 | |
| Other current liabilities | 17 | 206 043 | 215 621 |
| Total current liabilities | 633 112 | 635 859 | |
| Total liabilities | 806 908 | 875 777 | |
| Total equity and liabilities | 1 064 965 | 1 208 103 |
The Board and CEO of Multiconsult ASA Oslo, 31 March 2016
Steinar Mejlænder–Larsen Chair of the board
Christian Nørgaard Madsen
President and Chief Executive
Arne Fosen
Director
Nigel Wilson
Deputy chair
Vibeke Strømme Director
Kari Medby Loland Director
Freddy Holstad Director
Line Karin Haugen
Director
Elisabeth Lokshall Director
| Amount in NOK thousand Note + are cash increasing and - are cash reducing effects |
2015 | 2014 |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Profit before income taxes | 184 622 | 218 940 |
| Income taxes paid during the period | (55 091) | (47 078) |
| Depreciation, amortisation and impairment 12,13 |
35 026 | 33 511 |
| Pension expenses with no cash effect | 34 778 | (10 877) |
| Changes in accounts receivable and other receivables | 10 370 | (4 625) |
| Changes in accounts payable | 8 237 | 10 006 |
| Changes in provisions and current liabilities | (28 307) | (55 180) |
| Net cash flows from operating activities | 172 146 | 144 697 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Proceeds from disposal of property, plant and eqiupment and shares | 680 | 504 |
| Payments on acquisition of property, plant and equipment and intangible assets | (36 585) | (38 642) |
| Net cash effect of acqusition of shares and mergers | (97 582) | (30 648) |
| Net cash flows from investing activities | (133 487) | (68 786) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Purchase treasury shares | (25 797) | 0 |
| Sale treasury shares | 8 608 | 0 |
| Dividends paid | (275 617) | (44 615) |
| Net cash flows from financing activites | (292 806) | (44 615) |
| Net change in cash and cash equivalents | (236 658) | 31 296 |
| Cash and cash equivalents at 1 January 14 |
371 492 | 340 196 |
| Cash and cash equivalents at 31 December 14 |
134 834 | 371 492 |
| Amounts in NOK thousand | Share capital |
Treasury shares |
Share premium |
Total paid in equity |
Retained earnings |
Remeasure ment pensions |
Total equity |
|---|---|---|---|---|---|---|---|
| 31 December 2013 | 13 125 | (7) | 13 320 | 26 438 | 518 211 | (157 521) | 387 128 |
| Disposal of treasury shares | 0 | 7 | 0 | 7 | 0 | 0 | 7 |
| Dividend | 0 | 0 | 0 | 0 | (83 997) | 0 | (83 997) |
| Comprehensive income | 0 | 0 | 0 | 0 | 158 945 | (129 757) | 29 188 |
| 31 December 2014 | 13 125 | 0 | 13 320 | 26 445 | 593 159 | (287 278) | 332 326 |
| Treasury shares | 0 | (9) | 0 | (9) | (1 750) | 0 | (1 759) |
| Merger reserve | 0 | 0 | 0 | 0 | 1 883 | 0 | 1 883 |
| Employee share purchase | |||||||
| programme (net of tax) | 0 | 0 | 0 | 0 | (1 668) | 0 | (1 668) |
| Dividend | 0 | 0 | 0 | 0 | (267 742) | 0 | (267 742) |
| Comprehensive income | 0 | 0 | 0 | 0 | 138 450 | 56 567 | 195 017 |
| 31 December 2015 | 13 125 | (9) | 13 320 | 26 436 | 462 332 | -230 711 | 258 057 |
See note 8 to the consolidated financial statements for information about treasury shares and employee share purchase programme.
The company is the parent in the Multiconsult ASA group. The main part of the activities of the group are conducted by the parent company. The information provided in the consolidated financial statements also covers the company to a significant degree. Please refer to the consolidated financial statements for the group for a description of the company and its activities. A copy of the consolidated financial statements can be obtained from the company's head office in Nedre Skøyenvei 2, 0276 Oslo.
dance with International Financial Reporting Standards as adopted
The group prepares the consolidated financial statements in accor-These financial statements were approved by the Board of Directors on 31 March 2016 for adoption by the Annual General Meeting on 26 April 2016
by the EU (IFRS) and the Norwegian Accounting Act. References to «IFRS» in these financial statements mean IFRS as adopted by the EU. The company prepares the company financial statements in accordance with the Norwegian Accounting Act and regulation for simplified application of International Financial Reporting Stan-
dards (simplified IFRS), as amended in November 2014.
The financial statements have been prepared on a historical cost basis, except for derivatives and pension assets that are measured at fair value, and pension obligations that are measured at present value. The company financial statements are presented in Norwegian kroner (NOK), which is also the functional currency of the company. Amounts are rounded to the nearest thousand, unless stated otherwise. As a result of such rounding differences, amounts and percentages may not add up to the total.
Principles for recognition and measurement are in accordance with IFRS and the policies are applied as described in the consolidated financial statements, except as specified in the regulation for simplified IFRS. Furthermore, merger of subsidiaries are based on the carrying values of the group, and the difference between the carrying value of shares before the merger and the net assets related to the merged subsidiary is recognised as a merger reserve in equity. This is because this is regarded as a common control transaction. Comparative figures are note restated. Disclosure requirements are in accordance with the requirements in the Norwegian Accounting Act with additions as specified in the regulation for simplified IFRS. Presentation of the primary financial statements is similar to the
group. Options in the regulation for simplified IFRS that have not been applied are not relevant to the company. The option in the regulation for simplified IFRS which the company has utilised in recognition and measurement and which differ from the consolidated financial statements are:
Dividends and group contributions are recognised in accordance with the Accounting Act, which entails that dividends and group contributions are recognised in the reporting period to which they relate.
Investment in subsidiaries, associated companies and joint ventures are recognised using the cost method. In accordance with the cost method, the investment is recognised at historical cost less any impairment. Dividends and group contributions are recognised as financial income. Group contributions to subsidiaries are recognised as part of cost of investment.
The company's exposure to and management of financial risk is primarily the same as disclosed for the group, and is not repeated in this note. Refer to note 3 in the consolidated financial statements.
The company holds no financial assets recognised at fair value through profit or loss or held-to-maturity investments, and very limited amounts for financial assets available for sale.
of NOK 120 million and an additional revolving credit facility of NOK 80 million for three years in Nordea Bank Norge ASA, as described in group's note 3. At December 31, 2015 the company also had a guarantee facility of NOK 120 million, of which NOK 60 million was drawn.
The carrying amount of the company's financial instruments mainly comprise current receivables and liabilities, and is a reasonable approximation to fair value. The company's credit risk is considered limited. See the group's note on financial risk for additional information.
The company mainly holds receivables and financial liabilities (current liabilities) measured at amortised cost. The company also holds some currency derivatives that are financial liabilities at fair value through profit or loss. The derivatives are disclosed in the group's note.
AS of 31 December 2015, the company had an unused credit facility
Realised losses on accounts receivables due to customer payment difficulties have been limited (NOK 0.7 million in 2015 and NOK 2.3 million in 2014). The company has recognised allowances for losses on accounts receivables of NOK 9.4 million as of 31 December 2015 and NOK 9.7 million as of 31 December 2014. This is based on individual assessments of larger receivables past their due date. The basis for the allowances is normally not related to the customers' ability to pay, but due to fee discussions. Accounts receivables that have been credited during the year have been recognised as revenue reductions and not as operating expenses.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| PER SEGMENT | ||
| Greater Oslo area | 1 373 947 | 1 273 963 |
| Regions Norway | 953 580 | 907 148 |
| International | 23 | 0 |
| Not allocated | 9 193 | 0 |
| Total operating revenues | 2 336 743 | 2 181 111 |
| PER BUSINESS AREA | ||
| Buildings & Properties | 771 482 | 732 193 |
| Energy | 419 799 | 342 151 |
| Industry | 146 107 | 99 337 |
| Environment & Natural resources | 69 380 | 79 045 |
| Oil & Gas | 162 559 | 276 337 |
| Transportation & Infrastructure | 767 417 | 652 048 |
| Total operating revenues | 2 336 743 | 2 181 111 |
| GEOGRAPHICAL PER CUSTOMER LOCATION | ||
| Norway | 2 132 694 | 2 012 385 |
| Outside Norway | 204 049 | 168 726 |
| Total operating revenues | 2 336 743 | 2 181 111 |
The group's research and development activities are performed in the parent company, and are described in the note to the consolidated financial statements. The expected total earnings from ongoing research and development is assumed to correspond to total accrued expenses.
NOTE 5 RESEARCH AND DEVELOPMENT
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Salaries | 1 142 228 | 1 094 132 |
| Social security tax | 159 914 | 149 029 |
| Pension expenses | 91 669 | 78 815 |
| Other employee benefit expenses | 79 720 | 63 461 |
| Total employee benefit expenses | 1 473 532 | 1 385 437 |
| Number of full time employees during the year | 1 572 | 1 537 |
| Number of employees as of 31 December | 1 639 | 1 575 |
Refer to note 8 in the consolidated financial statements for information on remuneration and share ownership related to management and the Board of Directors, share purchase programme and loans to employees.
| Rental expenses (operating lease) | |
|---|---|
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Rental expenses (operating lease) | 103 629 | 87 631 |
| Other overhead expenses / expenses for premises | 14 655 | 22 305 |
| IPO expenses related to listing on Oslo Stock Exchange | 50 662 | 0 |
| Consultants | 28 813 | 23 300 |
| Technical equipment | 36 460 | 35 443 |
| Office expenses, IT | 38 483 | 38 526 |
| Telecommunications services | 14 228 | 14 599 |
| Travel and per diem allowance | 22 784 | 20 646 |
| Marketing | 10 955 | 10 219 |
| Losses on receivables | 452 | 1 032 |
| Other | 25 321 | 20 389 |
| Total other operating expenses | 346 442 | 274 090 |
| Amounts in NOK thousand | Deloitte |
|---|---|
| Statutory audit services | 2346 |
| Tax advisory services | 632 |
| Other assurance services | 219 |
| Other non-audit services | 246 |
| Total | 3442 |
The amounts above are excluding VAT. Other non-audit services include assistance related to financial due diligence and advice related to employees located abroad.
Compensation to Deloitte AS for 2015:
NOTE 8 FINANCIAL ITEMS
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| FINANCIAL INCOME | ||
| Interest income from group companies | 116 | 106 |
| Other interest income | 6 132 | 9 305 |
| Other financial income | 1 102 | 1 497 |
| Gains on derivatives | 42 | 0 |
| Dividends | 6 331 | 3 914 |
| Financial income | 13 724 | 14 822 |
| FINANCIAL EXPENSES | ||
| Other interest expenses | 152 | 68 |
| Interest on net pension obligations | 4 857 | 1 803 |
| Losses on derivatives | 0 | 139 |
| Other financial expenses | 1 155 | 315 |
| Financial expenses | 6 164 | 2 325 |
| Net financial items | 7 560 | 12 497 |
| Amounts in NOK thousand | 2015 | 2015 |
|---|---|---|
| Effect from change in discount rate | (70 504) | 277 582 |
| Effect on pension obligations from change in actuarial and financial assumptions | (14 438) | (70 881) |
| Experience adjustments on pension obligations | 2 205 | (13 172) |
| Effect on plan assets from change in actuarial assumptions | (3 180) | (15 780) |
| Total remeasurement effects on net defined benefit obligations | (85 917) | 177 749 |
Multiconsult ASA has established pension plans that comply with the requirements in the Act on Mandatory company pensions. The company has two pension plans, a defined contribution plan and a defined benefit plan. The benefits in the risk coverage in the two plans are the same. Paid-up policies on risk benefits were closed on 30 June 2013.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Pension expenses defined benefit plans (see below) | 40 817 | 30 113 |
| Recognised as financial expenses (note 3) | (4 857) | (1 803) |
| Pension expenses defined contribution plans incl. risk premium defined benefit plan | 55 709 | 50 505 |
| Pension expenses in profit before taxes (note 6) | 91 669 | 78 815 |
| Effect of remeasurement of defined benefit obligations | (85 917) | 177 749 |
| Pension expenses in total comprehensive income | 5 752 | 256 564 |
| 2015 | 2014 | |
| 31 680 | 24 485 | |
| PENSION EXPENSES DEFINED BENEFIT PLANS Amounts in NOK thousand Present value of the current year service cost Interest expenses on pension obligations |
21 065 | 27 533 |
| Interest income on pension assets | (16 208) | |
| Net pension expenses before social security tax | 36 537 | |
| Accrued social security tax | 4 280 | (25 730) 26 288 3 825 |
Multiconsult ASA' defined benefit plan was closed in 2006, and all employees after this date are registered in the defined contribution plan. There were 1,370 active members and 18 retirees in the defined contribution plan at the end of 2015. Annual contributions to the plan are 5 % for contribution basis between 1G and 6G, and 8 % of the contribution basis between 6G and 12G. G is a base amount annually approved by the Norwegian parliament, and was NOK 90.068 per 31 December 2015. The premium expense for the defined contribution plan was NOK 55,709 thousand for 2015 and NOK 50.505 thousand for 2014, including social security tax. This inclu-
des a risk premium in the defined benefit plan of NOK 1,450 thousand in 2015 (NOK 1,297 thousand in 2014).
The defined benefit plan had 287 active members and 202 retirees as of 31 December 2015. The defined benefit plan provides rights to defined future benefits. These benefits are mainly dependent on the number of years of service, salary levels at the age of retirement and the size of the benefits from National Insurance. In addition, the company has two individual defined benefit plans that are unfunded, with recognised liabilities of NOK 7,562 thousand at the end of 2015 (NOK 7,668 thousand at the end of 2014). The expenses and obligations are included in the tables for defined benefit plans below
Social security tax is calculated based on the pension plan's net financing and included in the gross pension obligations. Pension expenses include related social security tax.
CHANGE IN TOTAL COMPREHENSIVE INCOME DURING THE PERIOD
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Gross pension obligations at the beginning of the period | 925 336 | 696 837 |
| Expenses related to the current year service cost | 35 960 | 28 310 |
| Interest expenses | 21 065 | 27 533 |
| Social security tax on paid-in premiums | (525) | (4 487) |
| Ordinary payments from the plans | (18 252) | (16 385) |
| Remeasurement of gross pension obligations | (82 737) | 193 529 |
| Gross pension obligations at the end of the period | 880 846 | 925 336 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Pension assets at the beginning of the period | 713 805 | 655 465 |
| Interest income | 16 209 | 25 730 |
| Paid-in premiums | 4 414 | 37 702 |
| Social security tax on paid-in premiums | (525) | (4 487) |
| Ordinary payments from the plans | (18 177) | (16 385) |
| Remeasurement of pension assets | 3 180 | 15 780 |
| Pension assets at the end of the period | 718 905 | 713 805 |
| Amounts in NOK thousand | 31.12.2015 | 31.12.2014 |
|---|---|---|
| Calculated pension obligations (incl. social security tax) | (880 846) | (925 336) |
| Pension assets (at market value) | 718 905 | 713 805 |
| Net pension obligations including social security tax | (161 941) | (211 531) |
GROSS PENSION OBLIGATIONS DEFINED BENEFIT PLANS (INCL. SOCIAL SECURITY TAX)
| 31.12.2015 | 31.12.2014 | 31.12.2013 | |
|---|---|---|---|
| Expected return on pension assets | 2.70 % | 2.30 % | 4.00 % |
| Discount rate | 2.70 % | 2.30 % | 4.00 % |
| Expected salary regulation | 2.00 % | 2.25 % | 3.25 % |
| Expected G regulation | 2.25 % | 2.50 % | 3.50 % |
| Expected pension regulation | 0.70 % | 0.70 % | 0.70 % |
| Demographic assumptions: disability tariff mortality table |
KU K2013BE |
KU K2013BE |
KU K2013BE |
| 31.12.2015 | 31.12.2014 | |
|---|---|---|
| Bonds | 74.7 % | 80.5 % |
| Shares | 8.6 % | 9.3 % |
| Real estate | 12.1 % | 8.7 % |
| Other | 4.6 % | 1.5 % |
The assumptions as of 31 December have been used to calculate gross pension obligations, including the effect of remeasurement of the pension obligations, and the pension expenses in net income for the subsequent year. In the calculation of the pension obligations, the recommended calculation assumptions from the guidance published by Norwegian Accounting Standards Board (NASB) as of the year end have been used, adapted to the company's circumstances. Expected salary growth in the defined benefit plans have been set lower than the average in the NASB guidance, based on assessments of the company's circumstances including a relatively high age composition (average age 55 years). The discount rate is based on Norwegian covered bonds (OMF - Obligasjoner med fortrinnsrett).
In the calculations, the augmented risk table for mortality K2013 BE has been used based on a best estimate for the population in Norway. The risk table for disabilities, KU, gives a reasonable reflection of the disability risk in the group. Since the defined benefit plan has been closed, the estimated future salary regulation is lower than the guidance from NASB.
The pension assets are managed by Storebrand and are invested as follows as of the end of the reporting period:
| (NOK million) | Maturity |
|---|---|
| Year 1 | 20.9 |
| Year 2 | 24.1 |
| Year 3 | 26.3 |
| Year 4 | 29.0 |
| Year 5 | 31.2 |
| Year 6 - 10 | 196.7 |
| NOK million | 31 December 2015 Gross pension obligation |
31 December 2014 Gross pension obligation |
|
|---|---|---|---|
| Discount rate | +1% | (142) | (161) |
| Discount rate | - 0,5% | 92 | 98 |
| Salary adjustment | +1% | 88 | 98 |
| G regulation | +1% | (29) | (40) |
| Pension regulation | +0,3% | 38 | 36 |
The pension assets have been invested based on guidelines for life assurance companies. Bonds are issued by the Norwegian government, Norwegian municipalities, financial institutions and corporations. Bonds in foreign currency are mainly currency hedged. Investments have been made in both Norwegian and foreign shares. Currency hedging of foreign shares are assessed per investment.
In 2015, the company utilised the possibility to make reduced payments (paid-in premiums) to the pension fund, see table above for change in pension assets. The group expects to pay approximately NOK 35 million in pension premiums to the defined benefit plans in 2016.
The weighted average duration of the group's pension obligations as of 31 December 2015 is 17.2 years, and has the following maturity structure for the next 10 years:
The table below shows estimated changes in NOK million in the pension obligations of the defined benefit plan of changes in key assumptions at the end of the reporting periods.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Income taxes payable | 55 714 | 56 124 |
| Paid withholding taxes | 800 | 1 306 |
| Regulation of previous years' income taxes | (1 136) | 571 |
| Changes in deferred taxes | (7 308) | 1 995 |
| Effects from changes in tax rate | (1 898) | 0 |
| Income tax expenses | 46 172 | 59 995 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Profit before income taxes | 184 622 | 218 940 |
| 27 % | 27 % | |
| Expected income tax expenses based on nominal tax rate in Norway (27%) | 49 848 | 59 116 |
| Tax effect of the following items: | ||
| Non-deductible expenses | 622 | 386 |
| Non-taxable income | (367) | (312) |
| Paid withholding taxes | 800 | 1 306 |
| Gain on disposal of shares | 0 | (47) |
| Dividends received, not taxable | (1 697) | (1 025) |
| Effect of change in tax rate 1) | (1 898) | 0 |
| Regulation of previous years' income taxes | (1 136) | 571 |
| Income tax expenses | 46 172 | 59 995 |
| Effective tax rate | 25,0 % | 27,4 % |
Software is standard software and licenses that are amortised on a straight-line basis over 3 years. Goodwill is not amortised, but assessed annually for impairment, or more often if there are indicators of impairment. Refer to the note to the consolidated financial statements for more information.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Accounts receivables | 367 687 | 401 991 |
| Allowance for losses | (9 394) | (9 654) |
| Total accounts receivables | 358 293 | 392 337 |
| Work in progress | 123 428 | 91 606 |
| Prepaid expenses | 17 479 | 14 492 |
| Other | 29 962 | 30 178 |
| Total other current receivables | 170 869 | 136 276 |
| Amounts in NOK thousand | Software | Goodwill |
|---|---|---|
| Acquisition cost 1 January 2014 | 39 112 | 131 962 |
| Additions | 4 772 | |
| Acquisition cost 31 December 2014 | 43 884 | 131 962 |
| Additions | 6 016 | |
| Additions from mergers and acquisition | 0 | |
| Acquisition cost 31 December 2015 | 49 900 | 134 662 |
| Accumulated amortisation and impairment 1 January 2014 | 32 767 | 79 648 |
| Amortisation for the year | 4 639 | |
| Accumulated amortisation and impairment 31 December 2014 | 37 406 | 79 648 |
| Amortisation for the year | 4 184 | |
| Accumulated amortisation and impairment 31 December 2015 | 41 590 | 79 648 |
| Carrying amount 1 January 2014 | 6 345 | 52 314 |
| Additions | 4 772 | |
| Amortisation and impairment for the year | 4 639 | |
| Carrying amount 31 December 2014 | 6 478 | 52 314 |
| Additions | 6 016 | |
| Additions from mergers and acquisition | 0 | |
| Amortisation and impairment for the year | 4 184 | |
| Carrying amount 31 December 2015 | 8 310 | 55 014 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Non-current assets | 5 732 | 5 539 |
| Current assets | 2 121 | 2 327 |
| Liabilities and provisions | 4 845 | 8 355 |
| Defined benefit obligations | 40 485 | 57 079 |
| Deferred tax assets/liabilities in the balance sheet | 53 182 | 73 300 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Deferred tax assets 1 January | 73 327 | 27 303 |
| Change in deferred taxes recognised in the income statement | 7 308 | (1 995) |
| Effect of changes in tax rate | 1 898 | 0 |
| Change in deferred taxes recognised in other comprehensive income 1) | (29 350) | 47 992 |
| Deferred tax assets in the balance sheet (net) as of 31 December | 53 182 | 73 300 |
1) Change in deferred taxes recognised in other comprehensive income is tax on remeasurement of defined benefit obligations. The amount recognised in 2015 includes the effect of change in tax rate from 27% to 25% in Norway from 2016 on the accumulated remeasurements, including the amount recognised at transition to IFRS. The accumulated remasurement effect is larger than the temporary difference on defined benefit plans in the balance sheet. The difference has reduced the change in deferred tax assets recognised in the statement of income.
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Expensed income taxes payable | (55 714) | (56 124) |
| Prepaid taxes | 2 733 | 3 961 |
| Tax on group contribution provided | 985 | 0 |
| Income tax on employee share purchase programme recognised in equity | 1 011 | 0 |
| SkatteFUNN (government R&D tax incentive scheme) | 1 326 | 1 130 |
| Income taxes payable in the balance sheet | (49 659) | (51 033) |
Deferred tax assets are recognised based on expectation of future taxable profit.
The accumulated deferred tax benefit recognised on remeasurement of defined benefit obligations through other comprehensive income is NOK 76,904 thousand per 31 December 2015 (NOK 106,253 thousand per 31 December 2014). In 2015, current tax benefit of NOK 1,011 thousand was recognised to equity related to the employee share purchase programme.
| Amounts in NOK thousand | Buildings and other property |
Other machines, plant, fixtures and fittings |
Leasehold improvements |
Total property, plant and equipment |
|---|---|---|---|---|
| Acquisition cost 1 January 2014 | 5 649 | 238 201 | 47 663 | 291 513 |
| Additions | 0 | 31 801 | 2 069 | 33 870 |
| Disposal | 0 | 123 | 0 | 123 |
| Acquisition cost 31 December 2014 | 5 649 | 269 879 | 49 732 | 325 260 |
| Additions | 0 | 24 699 | 6 215 | 30 915 |
| Additions from mergers and acquisitions | 0 | 258 | 0 | 258 |
| Disposal | 0 | 1 792 | 1 384 | 3 177 |
| Acquisition cost 31 December 2015 | 5 649 | 293 044 | 54 563 | 353 255 |
| Acc. depreciation and impairment 1 Jan. 2014 | 3 745 | 190 309 | 28 183 | 222 237 |
| Depreciation for the year | 110 | 22 965 | 5 747 | 28 822 |
| Impairment for the year | 0 | 50 | 0 | 50 |
| Acc. depreciation and impairment 31 Dec. 2014 | 3 855 | 213 324 | 33 930 | 251 109 |
| Depreciation for the year | 110 | 24 323 | 5 941 | 30 374 |
| Impairment for the year | 0 | 468 | 0 | 468 |
| Disposal | 0 | 1 792 | 825 | 2 617 |
| Acc. depreciation and impairment 31 Dec. 2015 | 3 964 | 236 323 | 39 047 | 279 334 |
| Carrying amount 1 January 2014 | 1 904 | 47 892 | 19 480 | 69 276 |
| Additions | 0 | 31 801 | 2 069 | 33 870 |
| Depreciation and impairment for the year | 110 | 23 015 | 5 747 | 28 872 |
| Disposal | 0 | 123 | 0 | 123 |
| Carrying amount 31 December 2014 | 1 794 | 56 555 | 15 802 | 74 151 |
| Additions | 0 | 24 699 | 6 215 | 30 915 |
| Additions from mergers and acqusitions | 0 | 258 | 0 | 258 |
| Depreciation and impairment for the year | 110 | 24 791 | 5 941 | 30 842 |
| Disposal | 0 | 0 | 560 | 560 |
| Carrying amount 31 December 2015 | 1 685 | 56 721 | 15 517 | 73 923 |
| Same as equiva | ||||
| Useful lives | 10 - 50 years | 3 - 8 years | lent assets, max leasing period |
|
| Depreciation plan | Straight-line | Straight-line |
There have been no significant changes in depreciation period, depreciation method or estimated residual values in 2015 or 2014.
| Company | Acquisition year | Carrying amount | Cash generating unit |
|---|---|---|---|
| Kompas AS | 2009 | 2 573 | West |
| Stensrud AS | 2010 | 1 728 | Middle |
| Hydpro AS | 2011 | 383 | Oslo |
| Barlindhaug Consult AS | 2011 | 39 716 | North |
| Infratech AS | 2013 | 5 800 | Oslo |
| NTE Energiutvikling | 2013 | 2 113 | Middle |
| Carrying amount 31 December 2014 | 52 314 | ||
| Multiconsult Voss | 2015 | 2 400 | West |
| Rambøll, Narvik | 2015 | 300 | North |
| Carrying amount 31 December 2015 | 55 014 |
The company's strategy has been to merge Norwegian subsidiaries into the parent company when practically possible and appropriate. Thus, the companies mentioned above are all merged into Multiconsult ASA. See note 15 for more information.
NOTE 14 CASH AND CASH EQUIVALENTS AND GUARANTEES
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Cash and bank deposits | 73 414 | 153 110 |
| Money market funds | 0 | 154 575 |
| Bank deposits - employee tax deduction obligations | 61 420 | 63 807 |
| Total cash and cash equivalents | 134 834 | 371 492 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Bank guarantee - guarantees towards customers | 26 276 | 30 659 |
| Bank guarantee - guarantees for other obligations | 33 783 | 39 594 |
| Parent company guarantees - for associates and joint ventures | 3 600 | 3 600 |
| Parent company guarantees - for subsidiaries | 27 451 | 24 299 |
| Other | 266 | 213 |
| Total guarantees | 91 375 | 98 365 |
Bank guarantees towards customers are related to assignments where the customer demands security for contract responsibilities. Bank guarantees for other obligations are mainly guarantees for rent of premises. Parent company guarantees for subsidiaries relates to bank loans, guarantee limit for bank overdraft and guarantee limit for Multiconsult UK Ltd. The change from 2014 to 2015 is currency effect. The company's bank facility agreements with Nordea Bank Norge ASA include a negative pledge clause.
| Acquisition date |
Business office |
Voting share |
Owner ship share |
2015 | 2014 | |
|---|---|---|---|---|---|---|
| LINK arkitektur AS 1) | 2008 | Oslo | N/A | N/A | 0 | 38 845 |
| Norplan AS 2) | 2003 | Oslo | 50.0% | 50.0% | 598 | 598 |
| Norplan Tanzania Ltd | 2013 | Tanzania | 49.0% | 49.0% | 2 050 | 2 050 |
| Newplan Ltd | 2013 | Uganda | 40,0% | 40,0% | 250 | 250 |
| Consorcio SAM SpA | 2014 | Chile | 27,5% | 27,5% | 32 | 32 |
| FPS AS | 2013 | Oslo | 36.0% | 36.0% | 367 | 367 |
| Total associated companies and joint ventures | 3 297 | 42 142 |
1) LINK arkitektur AS is a subsidiary from September 2015. Previous ownership share was 32%. 2) Norplan AS is a joint venture, the others are associated companies.
1) On 15 September 2015 Multiconsult ASA acquired the remaining 68 % of the shares in LINK arkitektur AS 2) Previously wholly owned sbusidiary, merged into Multiconsult ASA on 1 January 2015. Effects on the statement of income and balance sheet were limited for 2015
| SUBSIDIARIES OWNED BY SUBSIDIARIES |
Acquisition date |
Business office |
Voting share |
Ownership share |
|---|---|---|---|---|
| LINK arkitektur AB 5) | 2008 | Stockholm, Sweden |
100 % | 100 % |
| LINK arkitektur Aps 5) | 2013 | Copenhagen, Denmark |
100 % | 100 % |
| Helge Lindeflaten AS 6) | 2014 | Stord, Norway | N/A | N/A |
3) Previously Vest Consult AS and merged into
Multiconsult ASA on 1 January 2016
4) Previously Norplan Hydropower Ltd
5) Subsidiaries of LINK arkitektur AS
6) Merged into Multiconsult Stord AS on 1 January 2015
| SUBSIDIARIES | At 31 December 2015 | Carrying amount 31 December |
||||
|---|---|---|---|---|---|---|
| Acquisition date |
Business office |
Voting share |
Owner ship share |
2015 | 2014 | |
| LINK arkitektur AS 1) | 2015 | Oslo, Norway | 100 % | 100 % | 147 645 | 0 |
| Multiconsult Voss AS 2) | 2012 | Voss, Norway | N/A | N/A | N/A | 4 422 |
| Multiconsult Stord AS 3) | 2013 | Stord, Norway | 100 % | 100 % | 12 500 | 12 500 |
| Multiconsult UK Ltd 4) | 2012 | London, UK | 100 % | 100 % | 3 937 | 3 937 |
| Multiconsult Asia Pte.Ltd | 2013 | Singapore | 100 % | 100 % | 933 | 932 |
| Analyse & Strategi AS | 2010 | Oslo, Norway | 100 % | 100 % | 3 518 | 855 |
| Multiconsult Polska Z.O.O. | 2014 | Warsaw, Poland | 100 % | 100 % | 28 641 | 28 641 |
| LLC Multiconsult Rus | 2009 | Russia | 100 % | 100 % | 145 | 144 |
| Total subsidiaries | 197 318 | 51 431 |
Refer to the group's note 4 on business combinations. There are no significant restrictions on the company's ability to gain access to or use the group's assets and settle the group's obligations.
NOTE 16 LEASING AND OTHER PAYMENT OBLIGATIONS
| As of 31 December 2015 | ||||||
|---|---|---|---|---|---|---|
| Amounts in NOK thousand | Office premises |
Property, plant and equipment |
Total | |||
| Due within 1 year | 122 092 | 2 517 | 124 609 | |||
| Due more than 1 year, but within 5 years | 412 069 | 0 | 412 069 | |||
| Due more than 5 years | 543 468 | 0 | 543 468 | |||
| Total | 1 077 629 | 2 517 | 1 080 146 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Due within 1 year | 4 385 | 4 203 |
| Due more than 1 year, but within 5 years | 9 645 | 11 662 |
| Due more than 5 years | 0 | 1 593 |
| Total | 14 030 | 17 457 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Salaries payable, vacation pay, bonus, earnings distribution etc. | 159 778 | 146 694 |
| Owed to subconsultants and fees | 15 054 | 13 461 |
| Other accrued expenses | 5 177 | 25 561 |
| Received prepayment of revenues | 19 709 | 27 954 |
| Other | 6 586 | 2 083 |
| Total other current liabilities | 206 304 | 215 752 |
| Amounts in NOK thousand | 2015 | 2014 |
|---|---|---|
| Shares | 533 | 534 |
| Other non-current receivables | 9 391 | 7 649 |
| Total non-current receivables | 9 924 | 8 183 |
| Provisions for project responsibilities 1) | 11 855 | 28 385 |
| Total provisions | 11 855 | 28 385 |
1) Refer to note 19 to the consolidated financial statements for a description of provisions for project responsibilities.
| As of 31 December 2014 | ||||
|---|---|---|---|---|
| Amounts in NOK thousand | Office premises |
Property, plant and equipment |
Total | |
| Due within 1 year | 97 067 | 3 960 | 101 027 | |
| Due more than 1 year, but within 5 years | 382 340 | 0 | 382 340 | |
| Due more than 5 years | 514 221 | 0 | 514 221 | |
| Total | 993 628 | 3 960 | 997 588 |
The amounts in the table are not discounted.
See note 7 Other operating expenses for leasing expenses in 2015 and 2014. Leasing of office premises mainly concerns the company's premises in Norway. In most agreements, the annual lease payment is index regulated. Future index regulations are not included in the amounts in the tables.
| LOCATION | Annual lease | Duration | Option |
|---|---|---|---|
| Nedre Skøyenveien 2 (head office) | 29 200 | 2028 | no |
| Hoffsveien Skøyen (part of head office) | 3 100 | 2018 | + 5 years |
| Skøyen Atrium (part of head office) | 21 000 | 2018/2023 | 5 + 5 years |
| Fredrikstad | 5 600 | 2019 | 5 + 5 years |
| Drammen | 4 100 | 2018 | 5 + 5 years |
| Nesttun Bergen | 8 600 | 2030 | 5 + 5 years |
| Nesttun Bergen | 12 800 | 2030 | 5 + 5 years |
| Midt Sluppenvn. | 11 500 | 2021 | + 3 years |
| Nord, Kvaløyvn | 10 300 | 2026 | no |
There are no significant restrictions imposed through the leasing arrangements regarding distribution of dividends, obtaining additional debt, entering into additional leasing agreements or other arrangements.
| OFFICE PREMISES IN OSLO AND FREDRIKSTAD ARE SUBLET |
|---|
| Agreed sublease income |
The group does not have any other significant committed minimum payment obligations. The agreements with sub contractors are mainly such that if an assignment is discontinued, then the obligations to purchase services from the sub contractors are also discontinued. In some agreements there may be a minimum period during which the group must pay sub contractors if an assignment should be discontinued.
Liabilities for operating leases of assets are not recognised in the balance sheet. Future minimum payments under non-cancellable operating lease agreements, including costs for services:
116 MULTICONSULT ANNUAL REPORT 2015 MULTICONSULT ANNUAL REPORT 2015 117
NOTE 19 RELATED PARTIES
Amounts in NOK thousand
| 2015 | 2014 | |
|---|---|---|
| Revenues | 25 881 | 33 242 |
| Expenses | 12 608 | 15 504 |
| Dividends and distributions received | 4 690 | 4 141 |
| Receivables | 9 476 | 8 224 |
| Liabilities | 182 | 1 953 |
| Guarantees provided | 3 600 | 3 600 |
| Bank guarantees | 500 | 500 |
Link Arkitektur AS is included for 8 months in 2015 as associated company, and thereafter it became a subsidiary. LINK arkitektur AS paid dividends to the company in 2015. In 2014, Norplan AS repaid NOK 375 thousand of the paid-in capital and paid NOK 2,167 thousand in dividends to the company. Refer to the note 22 to the consolidated financial statements for more details on transactions with joint ventures and associated companies.
The Company's related parties are the same as mentioned in note 22 to the consolidated financial statements, in addition to the company's subsidiaries. Refer to note 8 to the consolidated financial statements for information on transactions with and remuneration to key management personnel and owners with significant influence.
| Receivables | Liabilities | Purchases | Sales | Guarantees | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in NOK thousand | 2 015 | 2 014 | 2 015 | 2 014 | 2 015 | 2 014 | 2 015 | 2 014 | 2 015 | 2 014 |
| Multiconsult Voss AS 1) | N/A | 41 | N/A | 137 | N/A | 918 | N/A | 229 | N/A | 0 |
| Multiconsult Stord AS 2) | 1 945 | 2 340 | 86 | 0 | 84 | 0 | 467 | 211 | 0 | 0 |
| Multiconsult UK Ltd 3) | 501 | 205 | 367 | 677 | 17 228 | 7 405 | 43 | 363 | 27 451 | 24 299 |
| Multiconsult Asia Pte Ltd | 2 115 | 119 | 2 812 | 828 | 5 820 | 828 | 0 | 230 | 0 | 0 |
| LINK arkitektur AS 4) | 3 517 | N/A | 2 844 | N/A | 6 759 | N/A | 4 282 | N/A | 0 | N/A |
| Analyse & Strategi AS | 954 | 503 | 4 578 | 211 | 5 396 | 742 | 1 566 | 2 586 | 0 | 0 |
| Multiconsult Polska | 71 | 0 | 561 | 0 | 1 143 | 0 | 834 | 0 | 0 | 8 674 |
| Helge Lindeflaten AS 5) | N/A | 0 | N/A | 0 | N/A | 0 | N/A | 0 | N/A | 0 |
| Total | 9 103 | 3 208 | 11 248 | 1 853 | 36 430 | 9 893 | 7 192 | 3 619 | 27 451 | 32 973 |
1) Merged into Multiconsult ASA on 1 January 2015
2) Previously Vest Consult AS, merged into Multiconsult ASA on 1
January 2016
3) Previously Norplan Hydropower Ltd. Change in guarantee amount is currency effect.
4) On 15 September 2015 Multiconsult ASA acquired the remaining 68 % of the shares in LINK arktitektur AS
5) Merged into Multiconsult Stord AS on 1 January 2015
In addition to the amounts in the table above, Multiconsult ASA received dividends from Multiconsult Polska in 2015 of NOK 1,641 thousand and decided to distribute group contribution to Analyse & Stategi in the amount of NOK 3,648 thousand.
Purchases of shares in the companies from external parties are not included, since that is not considered related party transactions.
After the reporting period ended on 31 December 2015 and up to the date these financial statements have been approved for issue, no events have been identified that require disclosure.
The Board and CEO of Multiconsult ASA Oslo, 31 March 2016
We confirm that the financial statements for 2015 have, to the best of our knowledge, been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the group as a whole. The Board of Directors' report includes a fair review of the development and performance of the business and the position of the company and the group as a whole, together with a description of the principal risks and uncertainties that they face.
Steinar Mejlænder–Larsen Chair of the board
Christian Nørgaard Madsen
President and Chief Executive
Arne Fosen Director
Nigel Wilson
Deputy chair
Vibeke Strømme Director
Kari Medby Loland Director
Freddy Holstad
Director
Line Karin Haugen Director
Elisabeth Lokshall Director
STEINAR MEJLÆNDER-LARSEN CHAIR OF THE BOARD
CHRISTIAN NØRGAARD MADSEN PRESIDENT AND CHIEF EXECUTIVE
GRETHE BERGLY EVP GREATER OSLO AREA
THORBJØRN BLOM-HAGEN EVP INTERNATIONAL
OLA DALEN EVP CORPORATE PROJECTS
LARS OPSAHL EVP REGIONS NORWAY
KARI MEDBY LOLAND DIRECTOR
VIBEKE STRØMME DIRECTOR
LINE KARIN HAUGEN DIRECTOR
ELISABETH LOKSHALL DIRECTOR
ANNE HARRIS CFO
ØYVIND HOLTEDAHL EVP
MARKET, STRATEGY & INNOVATION
ELISABETH M. STENE EVP HR & ORGANISATIONAL DEVELOPMENT
DIRECTOR
ARNE FOSEN DIRECTOR
PROJECT: HYDRO KARMØY
Nedre Skøyen vei 2, 0276 Oslo P O Box 265 Skøyen, 0213 Oslo Telephone 21 58 50 00 Fax 21 58 50 01
[email protected] www.multiconsult.no Org no 910 253 158
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