Statement of changes in equity

                     
2011
                   
NOK 1 000
Share capital (note 22)
Share premium fund
Other paid-in equity
Total paid-in equity
Currency translation reserve
Cash flow hedge
Retained earnings
Total
retained earnings
Non-
controlling interests
Total equity
                     
Equity at 31 December 2010
183 268
3 057 405
809 905
4 050 578
- 171 336
16 053
10 834 408
10 679 125
6 051
14 735 754
       
 
         
 
Total comprehensive income 2011
 
 
 
 
- 41 254
- 47 952
- 131 283
- 220 489
1 646
- 218 843
       
 
         
 
Transactions with owners
     
 
         
 
Additions of non-controlling interests
     
 
   
 
 
12 700
12 700
Disposals of non-controlling interests
     
 
     
 
- 839
- 839
Dividend paid
     
 
   
- 12 924
- 12 924
 
- 12 924
Total transactions with owners
 
 
 
 
 
 
- 12 924
- 12 924
11 861
- 1 063
Equity at 31 December 2011
183 268
3 057 405
809 905
4 050 578
- 212 590
- 31 899
10 690 201
10 445 712
19 558
14 515 848
                     
                     
2012
                   
NOK 1 000
Share capital
Share premium fund
Other paid-in equity
Total paid-in equity
Currency translation reserve
Cash flow hedge
Retained earnings
Total
retained earnings
Non-
controlling interests
Total equity
                     
Equity at 31 December 2011
183 268
3 057 405
809 905
4 050 578
- 212 590
- 31 899
10 690 201
10 445 712
19 558
14 515 848
       
 
         
 
Total comprehensive income 2012
 
 
 
 
- 81 247
- 3 931
3 394 052
3 308 874
7 135
3 316 009
       
 
         
 
Transactions with owners
     
 
         
 
Additions of non-controlling interests
     
 
   
 
 
1 454
1 454
Disposals of non-controlling interests
     
 
   
3 254
3 254
 
3 254
Dividend paid
     
 
   
- 52 205
- 52 205
488
- 51 717
Total transactions with owners
 
 
 
 
 
 
- 48 951
- 48 951
1 942
- 47 009
Equity at 31 December 2012
183 268
3 057 405
809 905
4 050 578
- 293 837
- 35 830
14 035 302
13 705 635
28 635
17 784 848
NOTE 1
GENERAL INFORMATION AND ACCOUNTING PRINCIPLES
         
             
General information
Ferd AS is a privately owned Norwegian investment company located in Strandveien 50,Lysaker. The Company is involved in long-term and active ownerships of companies with international potential,and financial activities through investments in a wide range of financial assets.
             
Ferd is owned by Johan H. Andresen and his family. Andresen is the Chair of the Board.
             
The Company's financial statements for 2012 were approved by the Board of Directors on 8 April 2013.
             
Basis for the preparation of the consolidated financial statements
Ferd AS' consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as approved by the EU. This is the first year consolidated financial statements have been prepared for Ferd AS.
             
Summary of the most significant accounting principles
The most significant accounting principles applied in the preparation of the financial statements are described below. The accounting principles are consistent for similar transactions in the reporting periods presented,if not otherwise stated.
             
Consolidation and consolidated financial statements
The consolidated financial statements show the overall financial results and the overall financial position for the parent company Ferd AS and entities where Ferd has a direct or indirect controlling influence. A controlling interest normally exists when Ferd AS either directly or by other controlling entities has a stake exceeding 50 % of the voting capital.
             
Non-controlling interests in subsidiaries are disclosed as part of equity,but separated from the equity that can be attributed to the shareholders of Ferd AS. The non-controlling interests are either measured at fair value or at the proportionate share of identified assets and liabilities.The principle for measuring non-controlling interests is determined separately for each business combination.
             
Subsidiaries are consolidated from the date when the Group achieves control,and are excluded when such control ceases. Should there be a change in ownership in a subsidiary without loss of control,the change is accounted for as an equity transaction. The difference between the compensation and the carrying value of the non-controlling interests are directly recognised in equity and allocated to the shareholders of Ferd AS. At a loss of control,the subsidiary's assets,liabilities,non-controlling interests and any accumulated currency differences are derecognised. Any remaining interests at the date of loss of control are measured at fair value,and gain or loss is recognised in the income statement.
             
Inter-company transactions,balances and unrealised internal gains are eliminated. When required,adjustments are made to the financial statements of subsidiaries to bring their accounting principles in line with those used by the Group.
             
Business combinations
Business combinations are accounted for by the acquisition method. This implies the identification of the acquiring company,the determination of the date for the take-over,the recognition and measurement of identifiable acquired assets,liabilities and any non-controlling interests in the acquired company,and the recognition and measurement of goodwill or gain from an acquisition made on favourable terms.
             
Assets,liabilities taken over and contingent liabilities taken over or incurred are measured at fair value at the acquisition date. Goodwill is recognised as the total of the fair value of the consideration,including the value of the non-controlling interests and the fair value of former owner’s share,less net identifiable assets in the business combination. Direct costs connected with the acquisition are recognised in the income statement.
             
Any contingent consideration from the Group is recognised at fair value at the acquisition date. Changes in the value of the contingent consideration considered to be a financial liability pursuant to IAS 39,are recognised in the income statement when incurred. At step-by-step business combinations,the Group’s former stake is measured at fair value at the date of the take-over. Any adjustments in value are recognised in the income statement.
             
Investments in associates and joint ventures
Associates are entities over which the Group has significant,but not controlling,influence. Significant influence implies that the Group is involved in strategic decisions concerning the company’s finances and operations without controlling these decisions. Significant influence normally exists for investments where the Group holds between 20 % and 50 % of the voting capital. Associates are accounted for in accordance with the equity method in the consolidated financial statements.
             
A joint venture is a contractual arrangement requiring unanimous agreement between the owners about strategic,financial and operational decisions. Joint ventures are incorporated in the consolidated financial statements using the equity method.
             
Investments in associates and joint ventures are classified as non-current assets in the balance sheet.
             
The exemption clause in IAS 28 about using the equity method for investments in associated companies owned by investment entities,and the corresponding exemption in IAS 31 for joint ventures,is the basis for presenting the investments in the business area Ferd Capital. These associates are recognised at fair value with value changes through profit and loss,and are classified as current assets in the balance sheet.
             
Associates and joint ventures are accounted for using the equity method,which implies that Ferd's share of associates' profit or loss is disclosed on a seperate line in the income statement. The carrying amount of the investment includes the share of total comprehensive income in the associated company. The accounting principles are adjusted to bring them in line with those of the Group. The carrying amount of investments in associates is classified as “Investments in associated companies and joint ventures”,and includes goodwill identified at the date of acquisition,reduced by any subsequent impairments.
             
Revenue recognition
Revenue is recognised when earned. The Group’s consolidated revenue mainly includes selling goods,rendering IT services and delivering packing systems.
             
Revenue from the sale of goods is recognised when the Group has transferred to the buyer the significant risks and reward of the ownership,income from the sale can be expected and the amount can be reliably measured. Revenue from the sale of services is recognised according to the service’s level of completion,provided the progress of the service and its income and costs can be reliably measured. Should the contract contain several elements,revenue from each element is recognised separately,provided that the transfer of risk and control can be separately assessed. Contracts concerning the sale of filling machines and packing materials are commercially connected,and revenue is therefore recognised in total for the contract.
             
Revenue is measured at fair value and presented net of rebates,value added tax and similar taxes.
             
At the sale of intangible and tangible assets,gain or loss is calculated by comparing the proceeds with the residual value of the sold asset. Calculated gain/loss is included in operating income or expenses,respectively.
             
Foreign currency translation
Transactions in foreign currency in the individual Group entities are recognised and measured in the functional currency of the entity at the transaction date. Monetary items in foreign currency are translated into the functional currency at the exchange rate prevailing at the balance sheet date. Currency differences are recognised in the income statement with the exception of currency differences on loans in foreign currencies hedging a net investment and inter-company balances considered to be part of the net investment. These differences are recognised in total comprehensive income until the investment is disposed of.
             
The consolidated financial statements are presented in Norwegian kroner (NOK),which is the functional currency of the parent company. When a subsidiary in foreign currency is consolidated,income and expense items are translated into Norwegian kroner at an average weighted exchange rate throughout the year. For balance sheet items,including excess values and goodwill,the exchange rate prevailing at the balance sheet date is used. Exchange differences arising when consolidating foreign subsidiaries are recognised in total comprehensive income until the subsidiary is disposed of.
             
Classification of financial instruments
Financial instruments constitute a substantial part of Ferd’s consolidated accounts and are of considerable significance for the overall financial standing and result of the Group. Financial assets and liabilities are recognised when the Group becomes a party to the contractual obligations and rights of the instrument. Pursuant to IAS 39,all Ferd’s financial instruments are initially classified in the following categories:
 
1. Financial instruments at fair value and with changes in value recognised through profit and loss
2. Loans and receivables
3. Financial liabilities
             
Financial instruments are classified as held for trading and as part of category 1 if acquired primarily for benefiting from short-term price deviations. Derivatives are classified as held for trading unless they are part of a hedging instrument,another asset or liability. Assets held for trading are classified as current assets.
             
Pursuant to the “fair value option” in IAS 39,financial instruments can also be classified at fair value with changes in value recognised in the income statement. The instrument must initially be recognised at fair value with value changes through profit and loss and also meet certain criteria. The key assumption for applying the “fair value option” is that a group of financial assets and liabilities are managed on a fair value basis,and that management evaluates the earnings following the same principle.
             
Loans and receivables are non-derivative financial assets with fixed or determinable payments not quoted in an active market. They are classified as current assets,unless they are expected to be realised more than 12 months after the balance sheet date. Loans and receivables are presented as trade receivables,other receivables and bank deposits in the balance sheet.
             
Financial liabilities that are not included in the category held for trading and not measured at “fair value through profit and loss” are classified as other liabilities.
             
Recognition,measurement and presentation of financial instruments in the income statement and statement of financial position
Purchases and sales of financial instrument transactions are recognised on the date of the agreement,which is when the Group has made a commitment to buy or dispose of the financial instrument. Financial instruments are derecognised when the contractual rights to the cash flows from the asset expire or have been transferred to another party. Correspondingly,financial instruments are derecognised when the Group on the whole has transferred the risk and reqard of the ownership.
             
Financial instruments at “fair value through profit and loss” are initially measured at quoted prices at the balance sheet date or estimated on the basis of measurable market information available at the balance sheet date. Transaction costs are recognised in profit or loss. In subsequent periods,the financial instruments are presented at fair value based on market values or generally accepted calculation methods.
             
Loans and financial liabilities are initially measured at fair value with the addition of direct transactions costs. In subsequent periods,the assets and liabilities are measured at amortised cost by using the effective interest method. Loss on impairment of loans and receivables is recognised in the income statement.
             
Gain and loss from the realisation of financial instruments,changes in fair values and interest income are recognised in the income statement in the period they arise. Dividend income is recognised when the Group has established the right to receive payment. Net finance income related to financial instruments is classified as operating income and presented as “Income from financial investments” in the income statement.
             
Financial derivatives and hedge accounting
The Group applies financial derivatives to reduce any potential loss from exposures to unfavourable changes in exchange rates or interest rates. Financial derivatives related to a highly probable planned transaction (cash flow hedges) are recognised in accordance with the principles for hedge accounting when the hedge has been documented and meets the relevant requirements for effectiveness. Ferd is not applying hedge acounting of derivatives aquired to reduce risk in an asset or liabilities recognised in the balance sheet. Derivatives not qualified for hedge accounting are classified as financial instruments at fair value,and changes in value are recognised in the income statement.
             
Cash flow hedging is presented by recognising a change in fair value of the financial derivative applied as cash flow hedging in total comprehensive income until the underlying transaction is accounted for. The ineffective portion of the hedge is recognised immediately in profit or loss.
             
When the hedge instrument expires or is disposed of,the planned transaction is carried out,or when the hedge no longer meets the criteria for hedge accounting,the accumulated effect of the hedging is recognised in the income statement.
             
Income taxes
The income tax expense includes tax payable and changes in deferred tax. Income tax on balances recognised in other income and expenses in total comprehensive income is also set-off against other income and expenses in total comprehensive income,and tax on balances related to equity transactions are set off against equity.
             
The tax payable for the period is calculated according to the tax rates and regulations ruling at the end of the reporting period.
             
Deferred tax is calculated on temporary differences between carrying values and tax values of assets and liabilities. Deferred tax liabilities associated with the initial recognition of goodwill in business combinations are not carried in the balance sheet. No deferred tax is recognised on those investment properties at fair value that are expected to be sold as limited companies and thereby not setting off any tax liability.
             
Deferred tax assets are only recognised in the balance sheet to the extent that it is probable that there will be sufficient taxable profits to utilise the benefits of the tax reducing temporary differences. Deferred tax liabilities and assets are calculated according to the tax rates and regulations ruling at the end of the reporting period and at nominal amounts. Deferred tax liabilities and assets are recognised net when the Group has a legal right to net assets and liabilities.
             
Goodwill
Goodwill is the difference between the cost of an acquisition and the fair value of the Group’s share of net assets in the acquired business at the acquisition date. Goodwill arising on the acquisition of subsidiaries is classified as intangible assets.
             
Goodwill is tested for impairment annually,or more often if there are indications of impairment,and carried at cost less accumulated depreciation. Impairment losses are not reversed in subsequent periods. Goodwill arising on the acquisition of a share in an associate is included in the carrying amount of the investment and tested for impairment as part of the carrying amount of the investment. Gain or loss arising from the realisation of a business includes goodwill allocated to the business sold. For the purpose of impairment testing,goodwill is allocated to the relevant cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the combinations.
             
Intangible assets
Intangible assets acquired separately are initially carried at cost. Intangible assets acquired in a business combination are recognised at their fair value at the time of the combination. In subsequent periods,intangible costs are recognised at cost less accumulated depreciation and impairment.
             
Intangible assets with a definite economic life are depreciated over their expected useful life. Normally,straight-line depreciation methods are applied,as this generally reflects the use of the assets in the most appropriate manner. This applies for intangible assets like software,customer relations,patents and rights and capitalised development costs. Intangible assets with an indefinite life are not depreciated,but tested for impairment annually. Some of the Group’s capitalised brands have indefinite economic lives.
             
Research,development and other in-house generated intangible assets
Expenses relating to research activities are recognised in the income statement as they arise.
             
In-house generated intangible assets arising from development are recognised in the balance sheet only if the following conditions are met:
• The asset can be identified.
• It is probable that the asset will generate future cash flows.
• The development costs can be reliably measured.
             
In-house generated intangible assets are amortised over their estimated useful lives from the date when the assets are available for use. If the conditions for capitalisation are not met,the expenses are recognised in the income statement as incurred.
             
Property,plant and equipment
Property,plant and equipment are measured at cost less accumulated depreciation and impairment. The cost includes expenses directly attributable to the acquisition of the asset. Expenses incurred after the acquisition are recognised as assets when future economic benefits are expected to arise from the asset and can be reliably measured. Current maintenance is expensed.
             
Property,plant and equipment are depreciated systematically over their expected useful lives,normally on a straight-line basis. If indications of impairment exist,the asset is tested for impairment.
             
Impairment
Property,plant and equipment and intangible assets that are depreciated are considered for impairment when there are indications to the effect that future earnings cannot support the carrying amount. Intangible assets with undefined useful lives and goodwill are depreciated,but evaluated annually for impairment.
             
The difference between the carrying value and recoverable amount is charged to the income statement as a write-down. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Fair value less costs to less is the amount that can be recovered at a sale of an asset in a transaction performed at arm’s length between well informed and voluntary parties,less costs to sell. The value in use is the present value of future cash flows expected to be generated by an asset or a cash-generating unit. Impairment losses are subsequently reversed when the impairment indicator no longer exists.
             
Leasing
Leases are classified either as operating or finance leases based on the actual content of the agreements. Leases under which the lessee assumes a substantial part of risk and return are classified as finance leases. Other leases are classified as operating leases.
             
The object and liability of finance leases with the Group as the lessee is initially recognised at the lower of the object’s fair value and the present value of the minimum lease. Lease payments are apportioned between the liability and finance cost in order to achieve a constant rate of interest on the remaining balance of the liability. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term,provided that the Group will not assume ownership by the end of the lease term.
             
Finance leases with the Group as the lessor are initially recognised at the beginning of the period as a receivable equal to the Group’s net investment in the lease agreement. The lease payments are apportioned between the repayment of the main balance and finance income. The finance income is calculated and recognised as a constant periodical return on the net investment over the lease period. Direct costs incurred in connection with the lease agreement are included in the value of the asset.
             
Leasing costs in operating leases are charged to the income statement when incurred and are classified as other operating expenses.
             
Investment property
Investment properties are acquired to achieve long-term return on hiring or an increase in value,or both. Properties are measured at cost at the acquisition date,including transaction costs. In subsequent periods,investment properties are measured at fair value,based on market prices. The fair value of investment properties reflects,i.a.,rental income from existing lease contracts and the expectation of the future rental income based on the market situation on the balance sheet date.
             
Revenue from investment properties includes the period’s net change in value of the properties together with rental income of the period less property related costs in the same period.
             
Inventories
Inventories are stated at the lower of cost and net realisable value. The costs of inventories are determined on a first-in-first-out basis. The cost of finished goods and goods in progress consists of costs related to product design,consumption of materials,direct wages and other direct costs. The net realisable value is the estimated selling price less estimated variable expenses for completion and sale.
             
Accounts receivable and other receivables
Current receivables are initially recognised at fair value. In subsequent periods,provisions for actual and possible losses are considered. The Group reviews the receivables on a regular basis and prepares estimates for losses as a basis for the provisions in the balance sheet.
             
Cash and cash equivalents
Cash and cash equivalents include cash,bank deposits and other short-term and easily realisable investments that will fall due within 3 months. Restricted funds are also included. Drawings on bank overdraft are presented as current liabilities in the balance sheet. In the statement of cash flows,the overdraft facility is included in cash and cash equivalents.
             
Pension costs and pension funds/obligations
Defined benefit plans
A defined benefit plan is a pension scheme defining the pension payment an employee will receive at the time of retirement. The pension is normally determined as a part of the employee's salary. The Group's net obligation from defined benefit pension plans is calculated separately for each scheme. The obligation represents an estimate of future retirement benefits that the employees have earned at the balance sheet date as a concequence of their service in the present and former periods. The benefits are discounted to present value reduced by the fair value of the pension funds.
             
The net pension cost of the period is included in payroll costs and comprises the total of the benefits earned during the year,the interest cost on the liability,the expected return of the pension funds and the accrued social security tax. Positive and negative estimate deviations are recognised as other income and expenses in the statement of comprehensive income.
             
Changes in defined benefit obligations due to changes in pension schemes are recognised over the estimated average remaining service period when the changes are not immediately recognised. Gain or loss on a curtailment or settlement of a plan is recognised in the income statement when the curtailment or settlement occurs. A curtailment occurs when the Group decides to reduce significantly the number of employees covered by a plan or amends the terms of a defined benefit plan to the effect that a significant part of the current employees’ future earnings no longer qualify for benefits or will qualify for reduced benefits only.
 
Defined contribution plans
Contributions to defined contribution pension plans are recognised as expenses in the income statement when the employees have rendered services entitling them to the contributions.
             
Provisions
A provision is recognised when the Group has an obligation as a result of a previous event,it is probable that a financial settlement will take place and the amount can be reliably measured. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period,discounted at present value.
             
Current liabilities
Accounts payable and other current liabilities are initially recognised at fair value and subsequently measured at amortised cost. Accounts payable and liabilities are classified as current when they fall due within 12 months after the balance sheet date or are integrated in the Company’s ordinary operating activities.
             
Dividend
Dividend proposed by the Board is classified as equity and recognised as a liability when approved by the shareholders in a General Meeting.
             
Business areas
Ferd reports business areas in line with how Ferd's management makes,monitors and evaluates its decisions. The segments are identified based on whose results are regularly reviewed by management and used for allocation of capital and other resorces,and assess performance.
             
Cash flow statement
The cash flow statement has been prepared using the indirect method,implying that the basis used is the Group’s profit before tax to present cash flows generated by operating activities,investing activities and financing activities respectively.
             
Related parties
Parties are considered to be related when one of the parties has the control,joint control or significant influence over another party. Parties are also related if they are subject to a third party’s control,or one party can be subject to significant influence and the other joint control. A person or member of a person’s family is related when he or she has control,joint control or significant influence over the business. Companies controlled by or being under joint control by key executives are also considered to be related parties. All related party transactions are completed in accordance with written agreements and established principles.
             
New accounting standards according to IFRS
             
The financial statements have been prepared in accordance with standards approved by the International Accounting Standards Board (IASB) and International Financial Reporting Standards - Interpretations Committee (IFRIC) effective for accounting years starting on 1 January 2012 or earlier.
             
New and amended standards implemented by Ferd effective from the accounting year 2012:
             
Amendments to IAS 1 Presentation of Financial Statements
The amendments only concern presentation and include a requirement to group income and expenses in total comprehensive income on the basis of whether there is a potential for reclassifying them to the income statement or not. The amendment has had an impact on the presentation of comprehensive income and the statement of changes in equity.
             
Amendment to IFRS 7 Financial Instruments - disclosures
The amendment concerns disclosure requirements in connection with transfers of financial assets where the Group still has an involvement. The amendment has no significant or very limited impact for Ferd.
             
Amendment to IAS 12 Income Taxes
Under the amendments the measurement of deferred tax liability is required to reflect the tax consequences of recovering the carrying amount of an investment property entirely through sale. The change has implied that Ferd no longer recognises deferred tax on investment properties,as it is assumed that all sales of investment properties are made as sales of shares and thereby not setting-off any tax liability.
             
New and amended standards not yet implemented by Ferd:
         
             
Amendments to IAS 19 Employee Benefits
In the changed IAS 19,the ”corridor method” is not allowed for the recognition of estimate deviations. Estimate deviations shalI in their entirety be recognised in the statement of comprehensive income in the period they arise. Ferd does not apply the corridor method,hence this change has no impact for Ferd. The amended IAS 19 also has a new approach to presenting pensions. The pension earnings shall be presented in the income statement as salary expenses,whereas net interest can be included in finance items. In addition,net interest in benefit schemes shall be calculated by applying the discount interest rate on the net obligation,i.e.,the pension obligation less earned funds. This implies that return no longer shall be calculated on the funds. The changes are effective for accounting years starting on 1 January 2013. Ferd expects to implement the amended standard from this date.
             
Amendment to IFRS 7 Financial Instruments - disclosures
The amendment implies that enterprises must provide a number of quantitative information related to setting-off financial assets against financial liabilities. The amendment is effective for accounting years starting on 1 January 2013. Ferd expects to implement the changed standard from this date,but the changes are expected to have no or very limited impact for Ferd AS.
             
Amendments to IAS 32 Financial Instruments – presentation
IAS 32 has been amended to clarify the set-off requirements in the standard. The changes become effective for annual periods beginning on 1 January 2014. The Group expects to implement the amended standard from this date,but the changes are expected to have no or very limited impact for Ferd.
             
IFRS 9 Financial instruments
IFRS 9 will replace the current IAS 39. The project is divided in several phases. The first phase concerns classification and measurement and has been finalised by IASB. The classification and measurement requirements for financial liabilities in IAS 39 are continued,with the exception of financial liabilities recognised at fair value with changes in value through profit and loss (the fair value option),where changes in value connected with a company’s own credit risk is separated and recognised in other income and expenses in total comprehensive income. Phase 2 concerns impairment of financial instruments and phase 3 hedge accounting,but neither has so far been completed by IASB. IFRS 9 is effective for accounting years starting on 1 January 2015,but the standard has not yet been approved by the EU. Ferd expects to implement IFRS 9 starting on 1 January 2015. Those parts of IFRS 9 that have been completed so far,have relatively limited consequences for Ferd.
             
IFRS 10 Consolidated Financial statements
IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements and SIC-12 Consolidation — Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities. The content of the term “control” is somewhat changed compared to IAS 27. IFRS 10 becomes effective for annual periods beginning on or after 1 January 2014 (earlier adoption is allowed),and the standard has been approved by the EU. In addition,IASB has issued a proposal for amending IFRS 10 concerning an exemption to consolidate investment entities. The amendmends are also expected to be effective from 1 Januar 2014. Ferd expects to implement IFRS 10 starting on 1 January 2014,but the changes are expected to have very limited consequences for Ferd.
             
IFRS 11 Joint Arrangement
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary Contributions by Venturers. IFRS 11 concerns joint arrangements and have guidelines for accounting for two different types of joint arrangements – joint operations and joint ventures. According to IFRS 11,joint ventures shall be accounted for using the equity method pursuant to IAS 28. IFRS 11 becomes effective for annual periods beginning on or after 1 January 2014,and the EU has approved the standard. Ferd intends to implement IFRS 10 starting on 1 January 2014. Ferd must analyse all joint arrangements to clarify whether there are any arrangements qualifying to be joint activities,but Ferd expects that the consequences from applying IFRS 11 will be limited.
             
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 applies to enterprises with interests in companies that are consolidated,and companies not consolidated,but in which the enterprise nevertheless is engaged. IFRS 12 combines the disclosure requirements for subsidiaries,joint arrangements,associates and non-consolidated entities into one standard. IFRS 12 becomes effective for annual periods beginning on or after 1 January 2014 (earlier adoption is allowed),and the standard has been approved by the EU. Ferd expects to implement IFRS 12 starting on 1 January 2014,and the implementation will have an impact on Ferd's notes to the financial statements as a consequence of increased information requirements.
             
IFRS 13 Fair Value Measurement
The standard specifies principles and guidance for measuring fair value on assets and liabilities. The objective of the standard has been to establish a single source of guidance under IFRS for all fair value measurements,with a view to ensuring a common definition of fair value across all other standards and provide a uniform guidance to measuring fair value. IFRS 13 becomes effective for annual periods beginning on or after 1 January 2014 (earlier adoption is allowed),and the EU has approved the standard. Ferd expects to implement IFRS 13 starting on 1 January 2014,but it is not expected that the clarifications in IFRS 13 will have any significant consequences for Ferd.
             
Amendments to IAS 27 Separate Financial Statements (revised)
As a consequence of the new IFRS 10 and IFRS 12,amendments were made to IAS 27 coordinating this standard with the new accounting standards. IFRS 10 replaced those parts of IAS 27 that concerned consolidated financial statements. IAS 27 is now limited to accounting for the financial statements of the parent company,and will therefore not apply for the group accounts when implemented. The changes become effective for annual periods beginning on or after 1 January 2014,and the standard has been approved by the EU. Ferd expects to implement the amended standard starting on 1 January 2014.
             
Amendments to IAS 28 Investments in Associates and Joint Ventures (revised)
IAS 28 has been extended to include investments in joint ventures. The standard describes the accounting for such investments and how to apply the equity method. The changes become effective for annual periods beginning on or after 1 January 2014,and the standard has been approved by the EU. The Group expects to implement IFRS 10 starting on 1 January 2014,but the consequences are expected to be insignificant,as Ferd presently applies the equity method on joint ventures.
NOTE 2
ACCOUNTING ESTIMATES AND JUDGMENTAL CONSIDERATIONS
         
             
Management has used estimates and assumptions in the preparation of the consolidated financial statements. This applies for assets, liabilities, income, expenses and disclosures. The underlying estimates and assumptions for valuations are based on historical experience and other factors considered to be relevant for the estimate on the balance sheet date. Estimates can differ from actual results. Changes in accounting estimates are recognised in the period they arise. The main balances where estimates have a significant impact on disclosed values are mentioned below. The methods for estimating fair value on financial assets are also described below.
             
Determination of the fair value of financial assets
The balance sheet of the Ferd Group includes a large part of financial assets at fair value. The fair value assessment of financial assets will at varying degrees be influenced by estimates and assumptions related to factors like future cash flows, the required rate of return and interest rate level. The most significant uncertainty concerns the determination of fair value of the unlisted financial assets.
             
Listed shares
Fair value on financial assets with standard terms traded in active and liquid markets are determined at noted market prices on the balance sheet date (the official closing price of the market).
             
Unlisted shares and investments in other equity instruments
The class “Unlisted shares and bonds” comprises private shares and investments in private equity funds. Fair value is determined by applying well-known valuation models. The input to the valuation models is related to future estimates and assessments of a number of factors existing on the balance sheet date.
             
Ferd is of the opinion that estimates of fair value reflect estimates and assumptions that the parties in an independent transaction are expected to consider relevant, including the factors impacting expected cash flows and the degree of risk associated with them.
             
Hedge funds
The hedge funds are managed by external parties providing Ferd with monthly, quarterly or half-yearly estimates of the fair value. The estimates are verified by independent administrators. In addition, the total return from the funds is assessed for reasonableness against benchmark indices.
             
Investments in debt instruments
The fair value of interest-bearing investments is determined on the basis of quoted prices. If such prices are not available, the investment is valued in accordance with price models based on the current yield curve and external credit ratings.
             
Derivatives
The fair value of derivatives is based on quoted market prices. If such prices are not available, the investment is valued in accordance with price models based on the current yield curve and external credit ratings.
             
Determination of the fair value of investment properties
The Ferd Group has several investment properties recognised at fair value. The fair value is based on the discounted value of future cash flows, and the estimate will be impacted by estimated future cash flows and the required rate of return. The main principles for determining the cash flows and required rates of return are described below.
             
Future cash flows are based on the following factors:
• Existing contracts
• Expected future rentals
• Expected vacancies
             
The required rate of return is based on a risk-free interest with the addition of a risk premium for the property.
             
The risk premium is based on:
• Location
• Standard
• Expected market development
• Rent level compared to the rest of the market
• The tenant’s financial strength
• Property specific knowledge
             
In the event that transactions concerning comparable properties close to the balance sheet date have taken place, these values are applied as a cross-reference for the valuation.
             
Impairment considerations of goodwill
Goodwill is tested annually for impairment by discounting expected future cash flows of the cash-generating unit to which goodwill is allocated. If the discounted value of future cash flows is lower than the carrying value, goodwill is written down to the recoverable amount. The impairment tests are based on assumptions of future expected cash flows and estimates of the discount interest rate.
             
Note 8 has details on the impairment considerations for goodwill .
             
Depreciation and impairment of tangible and intangible assets
Tangible and intangible assets with definite lives are recognised at cost. The acquisition cost less the residual value is depreciated over the expected useful economic life. The carrying values will depend on the the Group’s estimates on useful lives and residual values. These assumptions are estimated on the basis of experience, history and judgemental considerations. The estimates are adjusted if the expectations change.
             
Testing for impairment is undertaken when indicators of a permanent decline in value of tangible or intangible assets are identified. These tests are based on estimates and assumptions on future cash flows and discount interest rate.
             
Pension funds and obligations
The calculation of pension obligations implies the use of judgements and estimates on a number of financial and demographical assumptions. Note 17 has details on the assumptions used. Changes in assumptions can result in significant changes in pension obligations and funds in the balance sheet.
             
Deferred tax assets
Deferred tax assets of tax losses to carry forward and other tax-reducing differences are recognised in the balance sheet to the extent that it is probable that the deferred tax assets can be utilised against future taxable income. Management is required to use significant judgement to determine the size of the deferred tax assets recognised in the balance sheet, the basis being the expectation of the future taxable income, the expected time for utilising the deferred tax asset and future tax planning strategies.
             
Provision for losses on receivables
The provision for losses on receivables is estimated on the risk for not recovering the outstanding amounts due. The assessment is based on historical experience, the aging of the receivable and the counterparty’s financial situation.
NOTE 3
BUSINESS AREAS
       
               
Ferd's segment reporting complies with IFRS 8. Ferd is an investment company, and the Company's management makes decisions and monitors and evaluates these decisions based on the fair value of the Company's investments and their changes in value. The operating segments are identified on the basis of capital and resource allocation. Ferd is divided into the following five business areas:
               
Ferd Capital is an active and long-term investor in privately owned and listed companies. Ferd has a general approach to investments in the area going from late-venture to "buy-out". Those companies where Ferd Capital has control have been consolidated into the consolidated financial statements, and the business area reporting therefore comprises the consolidated results from these companies, as well as the value changes and management costs of the non-consolidated companies. The value of the investments and the value changes are shown in the accounts of Ferd AS, where Ferd Capital reports MNOK 1 640 in operating result. The value of Ferd Capital's portfolio constitutes MNOK 6 342 at 31 December 2011 and MNOK 8 913 at 31 December 2012 measured at fair value.
               
Ferd Capital prioritises investments in companies where we have the relevant expertise. The team comprises highly qualified staff with operational experience from active owner funds, manufacturing, business development, finance and strategic consultancy. Ferd Capital manages the Group's long-term active equity investments, the largest investments being:
               
- Elopak (97 percent stake) is one of the world's leading manufacturers of packing systems for fluid food articles. With an organisation and cooperating partners in more than 40 countries, the company's products are sold and marketed in more than 100 countries on all continents.
               
- TeleComputing (97 percent stake) is a leading supplier of IT services to small and medium-sized enterprises in Norway and Sweden. The company supplies a broad range of netbased applications and customised operating and outsourcing services in addition to system development, customer assistance and other consultancy services.
               
- Swix Sport (100 percent stake) is developing, manufacturing and marketing ski wax, ski poles, accessories and textiles for sporting and active leasure time use under the brands Swix, Ulvang and Bavac, Toko, Original and Lundhags. The company has extensive operations in Norway as well as abroad through subsidiaries in, i.a., Sweden, USA, Japan and Germany.
               
- Mestergruppen (94,5 percent stake) is a prominent participant in the Norwegian building materials market concentrating on the professional part of the market. The company's operations include developing land and projects, housing and cottages and the sale of building materials.
               
- Aibel (49 percent stake) is a leading supplier to the international upstream and gas industry with the emphasis on the Norwegian shelf. The company is engaged in operating, maintaining and modifying offshore and land based plants, and is also supplying complete production and processing installations.
               
- Interwell (34 percent stakel) is a preeminent Norwegian supplier of high-tech well tools to the international oil and gas industry. The company's most important market is the Norwegian shelf, but it has in recent years also gained access to several significant markets internatinally both in Europe and the Middle-East.
               
Ferd Invest is an active investor managing a considerable portfolio of Nordic listed shares. The business area primarily invests in individual shares, which are assumed to have a large potential, and is measured against a total Nordic index.
               
Ferd Special Investments (SI) has a wide mandate to make investments, but so far only hedge fund in the second-hand market have been purchased. SI makes investments where Ferd achieves particular opportunities other investors are not able to utilise, either due to the requirement for capital, long-term conditions or other.
               
Ferd Hedgefond invests in various types of hedge funds managed by hedge fund environments abroad. The business area shall provide a satisfactory risk-adjusted return and ensure a risk diversification for Ferd.
               
Ferd Eiendom is an active property investor responsible for the Group's investments in property. Operations include developing, leasing and managing office, warehouse and logistic properties and developing housing property for sale, mainly in the Oslo area. The projects are partly carried out internally, partly together with selected external cooperating partners. Ferd Eiendom also invests in foreign property funds.
               
Other mainly comprises investments in externally managed private equity funds that do no require much daily follow-up and are monitored by management rather than allocated to a separate business area. Hence, these securities are part of Other. Other also comprises some financial instruments management may acquire to adjust the total risk exposure. Additionally, operating expenses related to Ferd's management and internal bank are included .
               
NOK 1 000
Ferd AS
Group
Ferd
Capital
Ferd
Invest
Ferd Special
Investments
Ferd
Hedgefond
Ferd
Eiendom
Other
Result 2012
             
Sales income
10 465 326
10 464 382
 
 
 
944
 
Income from financial investments
3 234 991
1 081 221
654 655
182 447
137 678
- 52 774
1 231 764
Other income
483 836
39 445
 
 
 
444 082
310
Operating income
14 184 153
11 585 048
654 655
182 447
137 678
392 252
1 232 074
               
Operating expenses excl. depreciation and impairment
9 872 908
9 719 959
23 928
12 852
8 255
39 845
68 069
EBITDA
4 311 246
1 865 089
630 727
169 595
129 422
352 407
1 164 005
               
Depreciation and impairment
452 849
451 398
77
58
37
368
911
Operating profit
3 858 396
1 413 691
630 650
169 537
129 385
352 039
1 163 094
               
Share of profit from associated companies and joint ventures
87 010
56 965
 
 
 
30 045
 
Profit before finance items and income tax expense
3 945 406
1 470 656
630 650
169 537
129 385
382 083
1 163 094
               
               
Statement of financial position 31 December 2012
         
Intangible assets
1 731 348
1 731 348
 
 
 
 
 
Tangible assets and investment properties
3 377 888
1 381 850
117
 
442
1 991 498
3 981
Investments accounted for by the equity method
599 321
258 732
 
 
 
340 590
 
Investments classified as current asset
15 388 186
4 140 076
3 473 772
1 480 585
1 607 396
319
4 686 039
Other assets*
5 439 300
3 982 241
52 839
291 122
79 027
296 752
737 320
Total assets
26 536 044
11 494 246
3 526 728
1 771 707
1 686 865
2 629 158
5 427 340
               
*) The business area's net bank overdraft are included here and deducted from the other assets.
               
NOK 1 000
Ferd AS
Group
Ferd
Capital
Ferd
Invest
Ferd Special
Investments
Ferd
Hedgefond
Ferd
Eiendom
Other
Income statement 2011
             
Sales income
9 320 120
9 320 120
 
 
 
 
 
Income from financial investments
- 314 447
301 789
- 654 377
130 931
- 59 005
 
- 33 785
Other income
141 956
15 855
 
 
20
125 261
820
Operating income
9 147 629
9 637 763
- 654 377
130 931
- 58 985
125 261
- 32 964
               
Operating expenses
8 612 814
8 492 366
7 895
15 823
10 425
45 535
40 772
EBITDA
534 815
1 145 398
- 662 272
115 108
- 69 410
79 727
- 73 736
               
Depreciation and impairment
374 168
373 122
77
61
54
292
561
Operating profit
160 647
772 276
- 662 349
115 047
- 69 464
79 434
- 74 296
               
Income on investments accounted for by the equity method
32 237
12 082
 
 
 
20 155
 
Profit before finance items and income tax expense
192 884
784 358
- 662 349
115 047
- 69 464
99 589
- 74 296
               
               
Statement of financial position 31 December 2011
         
Intangible assets
1 751 449
1 751 449
 
 
 
 
 
Tangible assets and investment properties
2 956 514
1 433 015
194
 
537
1 519 070
3 698
Investments accounted for by the equity method
657 004
329 130
 
 
 
311 406
16 468
Investments classified as current asset
13 476 441
3 028 666
2 938 422
1 395 973
1 492 666
476
4 620 239
Other assets*
5 226 231
4 437 450
 
99 332
69 814
132 781
486 853
Total assets
24 067 639
10 979 711
2 938 616
1 495 305
1 563 016
1 963 733
5 127 258
               
*) The business area's net bank overdraft are included here and deducted from the other assets.
NOTE 4
GEOGRAPHICAL ALLOCATION OF REVENUES
   
       
NOK 1 000
2012
2011
Norway
4 084 030
2 931 817
Sweden
1 042 339
745 450
Germany
942 905
921 506
Netherlands
477 232
415 217
USA
385 779
132 359
Russia
376 298
381 975
Canada
365 511
643 480
Austria
349 948
401 044
Denmark
282 573
404 971
Spain
233 214
210 139
Great Britain
213 881
290 790
France
186 094
419 192
Rest of the world
1 525 522
1 422 182
Total revenue
10 465 326
9 320 120
       
Sales revenues are allocated on the basis of where the customers live.
 
NOTE 5
INCOME FROM FINANCIAL INVESTMENTS
   
       
Income from financial investments by the varous investments categories:
 
       
NOK 1 000
2012
2011
Listed shares
576 907
- 680 555
Unlisted shares and investments in other equity instruments
2 349 321
299 469
Hedge funds
50 099
53 105
Investments in debt instruments
258 664
13 534
Total income from financial investments
3 234 991
- 314 447
NOTE 6
SALARIES AND REMUNERATIONS
       
                 
NOK 1 000
2012
2011
           
Salaries
1 797 351
1 456 274
           
Social security tax
230 146
207 117
           
Pension costs (note 17)
81 520
52 502
           
Other benefits
56 217
88 491
           
Total
2 165 234
1 804 384
           
                 
Average number of man-labour years
3 570
3 486
           
                 
                 
Salary and remuneration to group management
               
 
2012
2011
NOK 1 000
Salary
Bonus
Benefits
in kind
Pension
Salary
Bonus
Benefits in
kind
Pension
Group CEO, Johan H. Andresen
(from 1 Jan. 2012 until 30 Sept. 2012)
991
 
140
 
1 312
 
149
 
Group CEO, John Giverholt
(from 1 Oct. 2012 until 31 Dec. 2012)
825
 
51
228
       
Other members of group management
(from 1 Jan. 2012 until 30 Sept. 2012)
5 917
907
546
2 132
7 122
6 656
490
2 268
Other members of group management
(from 1 Oct. 2012 until 31 Dec. 2012)
1 125
 
82
682
       
Sum
8 858
907
819
3 042
8 434
6 656
639
2 268
                 
Ferd's group management has changed considerably during 2012. Dag Opedal resigned from group management in the spring of 2012. Effective from 1 October, Ferd was reorganised, and Johan H. Andresen and Arthur Sletteberg resigned from group management. Tom Erik Myrland became Chief Investment Director and Erik Rosness Chief Financial Officer. Former CFO,John Giverholt, became the new Group Chief Executive Officer. The above remunerations represent payment up until 1 October for the former group management and after 1 October for the new.
                 
The Group CEO's bonus scheme is limited to one year's salary. Bonus is based on the results achieved in the Group.
                 
The Group CEO participates in Ferd's collective pension schemes and is thereby entitled to a defined benefit pension. He also has an additional arrangement for a pension basis higher than 12 G and and an early retirement pension scheme giving him the opportunity to retire when he is 65.
                 
The Group CEO is entitled to 9 months pay after termination of employment if he has to resign from his position.
                 
Ferd AS has a receivable on the CEO of NOK 600 000, which is subject to interest on market based terms. Ferd has adequate security for the loan. The loan has no defined instalment plan.
                 
Fees to the Board
No specific fees have been paid for board positions in Ferd AS.
NOTE 7
INTANGIBLE ASSETS
             
NOK 1 000
2012
2011
       
Goodwill (note 8)
1 013 715
1 044 102
       
Other intangible assets
717 633
707 347
       
Carrying amount at 31 December
1 731 348
1 751 449
 
 
   
             
             
2012
           
NOK 1 000
Software
Brands
Patents
and rights
Capitalised
development
costs
Customer
relations
Total
             
Cost at 1 January
295 468
136 376
225 659
74 578
409 609
1 141 691
Additions
19 272
37 462
123
40 152
20 940
117 949
Disposals
- 1 836
 
 
 
 
- 1 836
Exchange difference
- 4 116
 
- 12 085
- 4 478
 
- 20 679
Cost at 31 December
308 788
173 838
213 697
110 252
430 550
1 237 125
             
Acc. amortisation and impairment at 1 January
231 853
2 680
169 730
8 832
21 250
434 345
Additions of amortisations at acquisitions
         
 
Current year amortisation charge
38 886
4 020
28 270
- 6 598
46 639
111 217
Disposals
- 1 836
 
 
 
 
- 1 836
Exchange differences
- 14 850
 
- 9 384
   
- 24 234
Accumulated amortisation at 31 December
251 077
6 700
188 616
2 234
67 889
516 516
Accumulated impairment at 31 December
2 976
       
2 976
           
 
Carrying amount at 31 December
54 735
167 138
25 081
108 018
362 661
717 633
             
Economic life
3-5 years
> 20 years to indefinite
3-10 years
10 years
10-15 years
 
 
Amortisation method
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
 
             
             
2011
           
NOK 1 000
Software
Brands
Patents
and rights
Capitalised
development
costs
Customer
relations
Total
             
Cost at 1 January
265 214
55 976
226 276
43 490
 
590 957
Additions
30 237
80 400
 
31 396
409 609
551 642
Disposals
- 62
 
 
 
 
- 62
Exchange difference
79
 
- 617
- 308
 
- 846
Cost at 31 December
295 468
136 376
225 659
74 578
409 609
1 141 691
             
Acc. amortisation and impairment at 1 January
227 608
 
164 043
8 832
 
400 483
Additions of amortisations at acquisitions
 
 
 
 
 
 
Current year amortisation charge
7 052
2 680
6 048
 
21 250
37 030
Disposals
- 2 976
 
 
 
 
- 2 976
Exchange differences
169
 
- 361
 
 
- 192
Accumulated amortisation at 31 December
228 877
2 680
169 730
8 832
21 250
434 344
Accumulated impairment at 31 December
2 976
       
 
           
 
Carrying amount at 31 December
63 615
133 696
55 930
65 746
388 360
707 347
             
Economic life
3-5 years
> 20 years to indefinite
3-10 years
10 years
10-15 years
 
             
Amortisation method
Straight-line
Straight-line
Straight-line
Straight-line
Straight-line
 
             
Research and development
Costs expensed to research and development in fiscal year 2012 totalled MNOK 118. The corresponding cost for 2011 was MNOK 114.
 
NOTE 8
GOODWILL AND INFORMATION ON BUSINESS COMBINATIONS
     
                     
Pursuant to IFRS 3 Business combinations, the net assets of acquired companies have been assessed at fair value at the acquisition date. The remaining part of the consideration after allocating the consideration to identifiable assets and liabilities, is recognised as goodwill. The table below shows the values and movements in the the various goodwill items in the Group.
     
                     
2012
                   
NOK 1 000
   
Norrwin AB
(Lundhags)
Alf Valde
Elopak Europa
Seco Invest
(TeleComputing)
Total
     
Cost at 1 January
       
470 719
621 776
1 092 495
     
Additions
   
1 385
16 053
 
 
17 438
     
Disposals
       
 
- 27 807
- 27 807
     
Exchange differences
       
- 22 148
 
- 22 148
     
Cost at 31 December
   
1 385
16 053
448 571
593 969
1 059 978
     
                     
Accumulated impairment at 1 January
 
48 393
 
48 393
     
Impairment
     
563
 
 
563
     
Disposal of subsidiary
       
 
 
 
     
Exchange differences
       
- 2 693
 
- 2 693
     
Accumulated impairment at 31 December
563
45 700
 
46 263
     
                     
Carrying amount at 31 December
1 385
15 490
402 871
593 969
1 013 715
     
                     
Changes in 2012:
     
In 2012, Ferd (through Swix) has acquired Norrwin AB and Original Teamwear AS with accounting effect from 1 January 2012. The acquisitions have increased intangible assets (brands and patents) by a total of MNOK 37,6 (note 7), in addition to goodwill amounting to appr. one million. The cost of the shares in Norrwin AB constituted MNOK 66,8, whereas the shares in Original Teamwear AS were purchased in two steps. Original was an associate with a carrying value of MNOK 8,8 at the beginning of 2012, and in addition MNOK 28,4 were paid in 2012. The companies have contributed to Ferd's consolidated financial statements with MNOK 142 in turnover and MNOK 19 in profit before tax in 2012.
     
                     
During 2012, Ferd (through Mestergruppen) acquired Alf Valde AS with accounting effect from 1 July 2012. The acquisition has increased Ferd's goodwill by MNOK 16. The cost for the shares constituted MNOK 23. Alf Valde has contributed to Ferd's consolidated financial statements with MNOK 33 in turnover og MNOK 2 in profit before tax in 2012.
     
                     
There are minor changes in the purchase price allocations of Mestergruppen and Telecomputing (acquisitions in 2011). The changes have resulted in a reduction in goodwill of MNOK 28, whereas customer relations have increased by MNOK 20 (note 7).
     
                     
2011
                   
NOK 1 000
       
Elopak Europa
Seco Invest
(TeleComputing)
Total
     
Cost at 1 January
       
472 282
 
472 282
     
Additions
       
 
621 776
621 776
     
Disposals
       
 
 
 
     
Exchange differences
       
- 1 563
 
- 1 563
     
Cost at 31 December
       
470 719
621 776
1 092 495
     
                     
Accumulated impairment at 1 January
 
48 590
 
48 590
     
Impairment
       
 
 
 
     
Disposal of subsidiary
       
 
 
 
     
Exchange differences
       
- 197
 
- 197
     
Accumulated impairment at 31 December
 
48 393
 
48 393
     
                     
Carrying amount at 31 December
 
422 326
621 776
1 044 102
     
                     
Changes in 2011:
     
In 2011, Ferd acquired Mestergruppen and the Telecomputing Group (Seco Invest), effective from 1 May 2011.
     
                     
The acquisition of Telecomputing has increased the Group's goodwill by MNOK 622. Before the acquisition, Ferd had a stake of 46 % and recognised the investment in Telecomputing at fair value. The acquisition of Telecomputing has also increased intangible assets of MNOK 134,8 in customer relations and MNOK 80,4 in brands as well as minor additions of patents and rights (note 7). The cost of Ferd's shares in Telecomputing was MNOK 461. The acquisition of Telecomputing has contributed positively to the Group's result before tax with MNOK 85,2 in 2011.
     
                     
The acquisition of Mestergruppen has increased the Group's carrying amount of customer relations by MNOK 230,1 (note 7). The cost of Ferd's shares in Mestergruppen was MNOK 396. Mestergruppen has contributed to the Group's result before tax with MNOK 83,6 in 2011.
     
                     
Impairment testing for goodwill:
     
Goodwill is allocated to the Group's cash generating units, and is tested for impairment annually or more frequently if there are indications of impairment. Testing for impairment implies determining the recoverable amount of the cash generating unit. The recoverable amount is determined by discounting future expected cash flows, based on the cash generating unit's business plans. The discount rate applied to the future cash flows is based on the Group's weighted average cost of capital (WACC), adjusted to the market's appreciation of the risk factors for each cash generating unit. Growth rates are used to project cash flows beyond the periods covered by the business plans.
 
                     
Cash generating units
     
The goodwill items specified above are mainly related related to Elopak and Telecomputing, in addition to two minor goodwill items related to new acquisitions in 2012 in the sub-groups Swix and Mestergruppen.
 
                     
Goodwill related to Elopak is allocated to the cash generating unit Europe, which consists of Elopak's European markets, including the internal production and supply organisation. This goodwill has a carrying value of MNOK 302 at 31 December 2012. The rationale for determining Europe as one cash-generating unit is the inherent dynamics of this market. The trend is that customers are merging, and have easy access to the supply in Europe. Elopak adapts to its customers by distributing the production of cartons for the various markets according to the optimal production efficiency in Europe. The historical geographical criteria for production and demands from customers are no longer as important. As a consequence of this development, the split of margins along Elopak's value chain will be subject to change from one year to another. Hence, one European business unit will be the best indicator for assessing any impairment of goodwill.
 
                     
Goodwill related to Telecomputing concerns Telecomputing's operations in Norway and Sweden. The goodwill has a carrying amount of MNOK 594 as at 31 December 2012. For impairment purposes, Telecomputing is considered to be one cash generating unit due to similar activities.
 
                     
Goodwill in Mestergruppen concerns the acquisition of Alf Valde in 2012. The goodwill amounts to MNOK 16 and is considered as a separate cash generating unit at impairment testing. This goodwill has not been tested for impairment in 2012.
 
                     
Impairment testing and assumptions:
     
The recoverable amount for the cash generating unit is calculated on the basis of the present value of expected cash flows. The cash flows are based on assumptions about future sales volumes, selling prices and direct costs. These assumptions are based on historical experience from the market, adopted budgets and the Group's expectations of market changes. Having carried out impairment testing, the Group does not expect significant changes in current trade. This implies that expected future cash flows mainly are a continuation of observed trends.
 
                     
Determined cash flows are discounted at a discount interest rate. The rate applied and other assumptions are shown below.
 
                     
Calculated recoverable amounts in the impairment tests are positive, and based on the tests, the conclusion is that no impairment is required in2012. The inherent uncertainty connected with the assumptions on which the impairment testing is based is illustrated by sensitivity analyses. The conclusions are tested for changes in discount and growth rates. The sensitivity analyses show robust conclusions for impairment testing.
 
                     
Detailed description of the assumptions used:
     
                     
     
Discount rate after tax (WACC)
Discount rate before tax
Growth rate 2-5 years
Long-term growth rate
     
2012
2011
2012
2011
2012
2011
2012
2011
Europe
   
4,5 %
5,4 %
6,3 %
7,5 %
2,0 %
2,0 %
0,0 %
0,0 %
Seco Invest
   
5,8 %
6,4 %
6,5 %
7,2 %
2,0 %
2,0 %
2,5 %
2,0 %
                     
The discount rate reflects the market's assessment of the risk specific to the cash generating unit. The rate is based on the weighted average cost of capital for the industry. This rate has been further adjusted to reflect the specific risk factors related to the cash generating unit, which has not been reflected in the cash flows.
 
                     
The average growth rate in the period 2 to 5 years is based on Ferd's expectations for the development in the market in which the business operates. Ferd uses a stable growth rate to extrapolate the cash flows beyond 5 years.
 
                     
EBITDA represents operating profit before depreciation and is based on the expected future market development. Committed operating efficiency improvement measures are taken into account. Changes in the outcomes for these initiatives may influence future estimated EBITDA.
 
                     
Investment costs necessary to meet expected future growth are taken into account. Based on management's assessment, the estimated investment costs do not include investments that improve the current assets' performance. The related cash flows are treated correspondingly.
 
NOTE 9
TANGIBLE ASSETS
   
         
2012
       
NOK 1 000
Buildings and
property
Machines and
installations
Fixtures and
equipment
Total
Cost at 1 January
416 174
3 699 376
230 081
4 345 631
Additions
34 771
361 125
15 204
411 100
Disposals
- 24 756
- 211 006
- 8 528
- 244 290
Exchange differences
- 15 702
- 151 859
- 6 247
- 173 808
Cost at 31 December
410 487
3 697 636
230 510
4 338 633
         
Accumulated depreciation and impairment at 1 January
262 631
2 462 125
179 288
2 904 044
Accumulated depreciation on acquisition
     
 
Depreciation of the year
13 937
303 885
20 849
338 671
Impairment of the year
 
2 394
4
2 398
Derecognised depreciation
- 17 427
- 158 558
- 6 605
- 182 590
Exchange differences
- 10 993
- 103 868
- 5 064
- 119 925
Accumulated depreciation at 31 December
248 148
2 505 978
188 472
2 942 598
Accumulated impairment at 31 December
2 100
26 462
238
28 800
         
Carrying amount at 31 December
162 339
1 191 658
42 038
1 396 035
         
         
Estimated economic life of depreciable assets
5-50 years
5-15 years
3-13 years
 
Amortisation method
Straight-line
Straight-line
Straight-line
 
         
         
2011
       
NOK 1 000
Buildings and
property
Machines and
installations
Fixtures and
equipment
Total
Cost at 1 January
364 009
3 025 470
206 413
3 595 892
Additions
64 673
868 063
53 642
986 378
Disposals
- 12 381
- 167 840
- 29 401
- 209 622
Exchange differences
- 127
- 26 317
- 573
- 27 017
Cost at 31 December
416 174
3 699 376
230 081
4 345 631
         
Accumulated depreciation and impairment at 1 January
239 655
2 047 317
148 514
2 435 486
Accumulated depreciation on acquisition
10 379
258 067
27 350
295 796
Depreciation of the year
13 763
303 449
21 329
338 541
Impairment of the year
2 112
- 539
 
1 573
Derecognised depreciation
- 3 439
- 131 305
- 17 500
- 152 244
Exchange differences
161
- 14 864
- 405
- 15 108
Accumulated depreciation at 31 December
262 631
2 462 125
179 288
2 904 044
Accumulated impairment at 31 December
2 265
25 449
246
27 960
         
Carrying amount at 31 December
153 543
1 237 251
50 793
1 441 587
         
         
Estimated economic life of depreciable assets
5-50 years
5-15 years
3-13 years
 
Amortisation method
Straight-line
Straight-line
Straight-line
 
NOTE 10
OTHER OPERATING EXPENSES
   
       
NOK 1 000
2012
2011
Sales and administration costs
164 519
109 950
Lease of buildings etc.
213 686
109 781
Travel expenses
139 040
159 849
Losses and change in write-downs of trade receivables
16 362
8 215
Fees to auditors, lawyers, consultants
130 080
120 976
Other expenses
425 750
442 447
Total
1 089 437
951 218
NOTE 11
AUDIT FEES
         
             
Ernst & Young is Ferd's Group auditor. Some minor Group companies are audited by other audit firms.
             
NOK 1 000
 
Audit fee
Other
assurance
services
Tax services
Other
non-audit
services
Total
             
2012
           
Ernst & Young
 
8 891
451
790
2 271
12 403
Others
 
471
17
74
11
573
Total
 
9 362
468
864
2 282
12 976
             
2011
           
Ernst & Young
 
8 245
66
270
5 359
13 939
Others
 
408
 
456
76
940
Total
 
8 653
66
726
5 435
14 879
             
Fees are exclusive of VAT.
           
             
Other non-audit services mainly comprise due diligence services and assistance in the facilitation and quality assurance of data in connection with Ferd's implementation of a new consolidation tool. All amounts are exclusive of VAT.
NOTE 12
INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT VENTURES
Associates and joint ventures are accounted for using the equity method.
A list of all associates and joint ventures and shareholdings is presented in note 20.
                 
2012
               
NOK 1 000
Al-Obeikan Elopak factory for Packaging Co
Elopak South Africa Ltd
Lala Elopak S.A. de C.V.
Tiedemanns-
byen DA
Harbert European Real Estate Fund II
Harbert European Real Estate Fund III
Others
Total
Ownership and voting share
49 %
50 %
49 %
50 %
26 %
22 %
   
                 
Cost at 1 January
54 100
25 692
153 093
106 768
133 253
44 000
111 910
628 815
Share of result at 1 January
62 782
55 316
83 685
2 332
37 020
4 721
- 3 106
242 750
Accumulated impairment of goodwill at 1 January
- 12 600
- 2 200
 
 
 
 
- 1 085
- 15 885
Transfer from the company
- 15 308
- 26 029
- 61 827
 
- 13 342
 
- 5 865
- 122 371
Net exchange differences/eliminations
- 21 143
- 11 918
- 28 348
 
- 3 053
- 293
- 11 551
- 76 306
                 
Carrying amount at 1 January
67 831
40 861
146 603
109 100
153 877
48 428
90 303
657 004
                 
Additions
         
35 664
14 464
50 128
Disposals
 
- 41 373
   
- 21 251
- 28 523
- 25 300
- 116 447
Sale during the year
           
 
 
Share of the result of the year*
13 960
5 599
17 215
6 641
17 074
6 331
- 2 615
64 204
Transfers from the company
- 14 571
 
- 23 136
     
 
- 37 707
Net exchange differences/eliminations
- 8 873
- 5 087
- 1 058
     
- 2 843
- 17 861
                 
Carrying amount at 31 December
58 347
 
139 624
115 741
149 700
61 900
74 009
599 321
                 
*) Gain on the sale of Elopak South Africa Ltd constitutes 22 806.
                 
2011
               
NOK 1 000
Al-Obeikan Elopak factory for Packaging Co
Elopak South Africa Ltd
Lala Elopak S.A. de C.V.
Tiedemanns-
byen DA
Harbert European Real Estate Fund II
Harbert European Real Estate Fund III
Others
Total
Ownership and voting share
49 %
50 %
49 %
50 %
26 %
22 %
   
                 
Cost at 1 January
54 100
25 692
153 093
106 768
122 284
 
122 277
584 214
Share of result at 1 January
88 667
45 921
57 653
 
23 918
 
- 11 011
205 148
Accumulated impairment of goodwill at 1 January
- 12 600
- 2 200
 
 
 
 
- 1 085
- 15 885
Transfer from the company
- 15 308
- 9 697
   
- 13 342
 
- 5 865
- 44 212
Net exchange differences/eliminations
- 21 616
- 2 501
- 8 684
 
 
 
- 11 178
- 43 979
                 
Carrying amount at 1 January
93 243
57 215
202 062
106 768
132 860
 
93 138
685 286
                 
Additions
 
 
 
 
10 969
44 000
67 807
122 775
Disposals
           
- 45 271
- 45 271
Sale during the year
 
 
 
 
 
 
- 27 803
- 27 803
Share of the result of the year
- 25 885
9 395
26 032
2 332
13 102
4 721
2 540
32 237
Impairment of goodwill
 
 
 
 
 
 
 
 
Transfers from the company
 
- 16 332
- 61 827
 
   
 
- 78 159
Recognised directly in equity
           
 
 
Net exchange differences/eliminations
473
- 9 417
- 19 664
 
- 3 053
- 293
- 108
- 32 062
                 
Carrying amount at 31 December
67 831
40 861
146 603
109 100
153 877
48 428
90 303
657 004
                 
The table below shows a summary of financial information related to Ferd's largest investments in associates and joint ventures on a 100 percent basis. The stated figures represent fiscal year 2012. The figures are unaudited.
 
                 
NOK 1 000
Al-Obeikan Elopak factory for Packaging Co
Elopak South Africa Ltd
Lala Elopak S.A. de C.V.
Tiedemanns-
byen DA
Harbert European Real Estate Fund II
Harbert European Real Estate Fund III
   
Operating revenue
215 520
40 765
230 347
475 665
30 084
127 037
   
Operating profit
19 262
7 828
28 130
40 910
21 684
74 494
   
Profit after tax and minority
13 960
5 599
17 215
20 589
26 957
78 810
   
Total assets
158 368
 
160 727
779 634
582 150
663 970
   
Total liabilities
109 943
 
47 368
549 007
563
28 573
   
                 
Ownership share, transactions and balances with enterprises accounted for by the equity method:
   
Stake/voting share
Sales from equity investees to Ferd
Ferd's net receivables / payables towards equity investees
Ferd's guarantees to equity investees
NOK 1 000
 
2012
2012
2011
2012
2011
2012
2011
                 
Al-Obeikan Elopak factory for Packaging Co
 
49,0 %
 
 
26 992
77 734
105 642
62 857
Boreal GmbH
 
20,0 %
 
 
 
 
 
 
Elocap Ltd.
 
50,0 %
94 249
126
- 8 419
- 11 815
   
Elopak South Africa Ltd
 
50,0 %
 
 
 
22 156
 
 
Frogn Næringspark AS
 
50,0 %
           
Harbert European Real Estate Fund II
 
25,9 %
 
 
 
 
 
 
Harbert European Real Estate Fund III
 
22,2 %
 
 
 
 
 
 
Hunstad Sør Tomteselskap AS
 
31,6 %
 
 
 
 
 
 
Impresora Del Yaque
 
51,0 %
 
10 424
23 488
1 243
   
Kråkeland Hytteservice AS
 
33,5 %
 
 
 
 
 
 
Lala Elopak S.A. de C.V.
 
49,0 %
20 182
825
2 659
2 224
 
 
Lofoten Tomteselskap AS
 
35,0 %
 
 
 
 
 
 
Madla Byutvikling AS
 
33,3 %
 
 
 
 
 
 
Nordic Material Purchase AB
 
50,0 %
 
 
 
 
 
 
Original AS
 
20,0 %
 
 
 
 
 
 
Solheim Byutviklingselskap AS
 
33,1 %
 
 
 
 
 
 
Tastarustå Byutvikling AS
 
33,3 %
 
 
 
 
 
 
Tiedemannsbyen DA
 
50,0 %
 
 
 
 
 
 
Total
   
114 431
11 375
44 720
91 542
105 642
62 857
NOTE 13
SPECIFICATION OF FINANCE INCOME AND EXPENSE
   
       
Finance income
     
NOK 1 000
2012
2011
Interest income from bank deposits
78 598
28 982
Interest income from related parties
63 794
12 608
Other interest income
23 893
3 227
Foreign exchange gain and other finance income
66 311
10 258
Total
232 597
55 075
       
Finance expense
   
NOK 1 000
2012
2011
Interest expense to finance institutions
210 701
172 992
Interest expense to related parties
17 658
12 921
Other interest expense
72 871
60 224
Foreign exchange loss and other finance expenses
264 092
29 887
Total
565 323
276 024
       
None of the financial items originate from financial instruments measured at fair value.
 
NOTE 14
INCOME TAXES
 
     
Specification of income tax expense
   
NOK 1 000
2012
2011
     
Tax payable of net profit
   
Income tax payable for the year
138 917
63 635
Adjustments of prior periods
8 826
- 5 387
Total tax payable
147 743
58 248
     
Deferred tax expense
   
Change in deferred tax recognised in the income statement
34 990
- 24 645
Effects of changes in tax rates and prior years' taxes
3 881
678
Total deferred tax
38 872
- 23 967
     
Income tax expense
186 615
34 280
     
     
Reconciliation of nominal to effective tax rate
   
NOK 1 000
2012
2011
Profit before tax
3 612 680
- 28 065
Estimated income tax expense at nominal tax rate (28 %)
1 011 550
- 7 858
Losses and other deductions without any net tax effect
7 039
- 11 518
Non-taxable income related to securities
- 810 164
87 992
Other non-taxable income, incl. value changes in investment property
- 26 049
- 43 594
Effect of changes in tax legislation and tax rates
- 268
- 1 704
Adjustment of prior periods
12 707
- 4 598
Tax effect of other permanent differences
- 8 201
15 561
Income tax expense
186 615
34 280
     
Effective tax rate
5,2 %
-122,1 %
   
 
Tax recognised in other comprehensive income
   
NOK 1 000
2012
2011
Actuarial losses on pension obligations
959
14 333
Cash flow hedges
2 378
10 458
Total tax recognised in other comprehensive income
3 337
24 791
     
Deferred tax assets and liabilities
   
NOK 1 000
2012
2011
Inventories
21 414
24 899
Receivables
6 678
6 510
Stocks and bonds
10 636
- 23 622
Other differences
32 266
- 78 658
Fixed assets
- 153 123
- 37 867
Intangible assets
- 128 457
- 107 403
Net pensions
65 931
70 207
Tax losses to carry forward
190 785
223 341
Total
46 130
77 409
Unrecognised deferred tax assets
- 233 373
- 252 294
Net carrying value at 31 December of deferred tax assets (+)/liabilities (-)
- 187 243
- 174 885
     
Deferred tax assets are reviewed on each balance sheet date, and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow for a part or all of the deferred tax asset to be utilised.
     
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the liability shall be settled or the asset be realised, based on tax rates and legislation prevailing at the balance sheet date.
     
Tax losses to carry forward, gross
   
NOK 1 000
2012
 
2013
10 071
 
2014
12 445
 
2015
13 794
 
After 2015
232 136
 
Without expiration
623 832
 
Total tax losses to carry forward
892 278
 
     
Change in net deferred tax in balance sheet
   
NOK 1 000
2012
2011
Carrying value at 1 January
- 174 885
- 109 394
Currency differences
- 1 529
1 546
Acquisition of subsidiary
- 30 464
- 98 882
Recognised in income statement during the period
- 38 872
23 967
Tax recognised in other comprehensive income
3 337
24 791
Other changes *
55 170
- 16 913
Carrying value at 31 December
- 187 243
- 174 885
*) Other changes mainly relate to implementation effects, the tax effect of internal gains and corrections of previous years' errors.
NOTE 15
INVESTMENTS IN SHARES WITH OWNERSHIP IN EXCESS OF 10 %
     
Subsidiaries
Business office
Ownership
Det Oversøiske Compagnie AS
Bærum
100,0 %
Elopak AS med datterselskaper
Røyken
97,2 %
Ferd Aibel Holding AS
Bærum
100,0 %
Ferd Eiendom AS med datterselskaper
Bærum
100,0 %
Norse Crown Company Ltd. AS
Bærum
100,0 %
Swix Sport AS med datterselskaper
Oslo
100,0 %
Ferd Malta Holdings Ltd
Malta
100,0 %
FC Well Invest AS
Bærum
100,0 %
FC-Invest AS
Bærum
100,0 %
Seco Invest AS med datterselskaper (Telecomputing)
Asker
96,1 %
Ferd Capital Partners AS
Bærum
100,0 %
Ferd Sosiale Entreprenører AS
Bærum
100,0 %
Ferd MG Holding AS
Bærum
96,6 %
Mestergruppen AS med datterselskaper
Oslo
91,3 %
Kapole II AS
Bærum
18,2 %
     
Joint ventures
   
Impresora del Yaque
Dominican Republic
51,0 %
Elocap Ltd
Israel
50,0 %
Frogn Næringspark AS
Trondheim
50,0 %
     
Associated companies
   
Al-Obeikan Elopak factory for Packaging Co
Saudi Arabia
49,0 %
Elopak South Africa Ltd
South Africa
50,0 %
Lala Elopak S.A. de C.V.
Mexico
49,0 %
Harbert European Real Estate Fund II
London
25,9 %
Harbert European Real Estate Fund III
London
9,8 %
Tiedemannsbyen DA
Oslo
50,0 %
Lofoten Tomteselskap AS
Bodø
35,0 %
Hunstad Sør Tomteselskap AS
Bodø
31,6 %
Tastarustå Byutvikling AS
Stavanger
33,3 %
Madla Byutvikling AS
Stavanger
33,3 %
Boreal GmbH
Germany
20,0 %
Solheim Byutviklingselskap AS
Stavanger
33,3 %
Kråkeland Hytteservice AS
Sirdal
33,5 %
Sirdal Boligutleie
Klepp
7,0 %
     
Financial non-current assets with more than 10 % ownership
   
Herkules Capital I AS
 
40,0 %
NMI AS
 
12,5 %
     
Financial current assets with more than 10 % ownership
   
ARKeX Ltd
 
17,3 %
Bidco Holding AS (Aibel)
 
49,0 %
CF Engine AS
 
37,9 %
Energy Ventures AS
 
31,8 %
Energy Ventures IS
 
19,1 %
Energy Ventures II AS
 
26,0 %
Energy Ventures II KS
 
22,1 %
Energy Ventures III AS
 
25,0 %
Energy Ventures III GP LP
 
25,0 %
Energy Ventures III LP
 
18,7 %
Eniram Ltd
 
27,6 %
Help Forsikring AS
 
17,0 %
Herkules Private Equity Fund I (GP-I) Ltd
 
40,0 %
Herkules Private Equity Fund I (GP-II) Ltd
 
40,0 %
Herkules Private Equity Fund I (LP-I) Limited
 
76,1 %
Herkules Private Equity Fund II (GP-I) Ltd
 
40,0 %
Herkules Private Equity Fund II (GP-II) Ltd
 
40,0 %
Herkules Private Equity Fund II (LP-I) Limited
 
74,5 %
Herkules Private Equity Fund III (GP-I) Ltd
 
4,2 %
Herkules Private Equity Fund III (GP-II) Ltd
 
4,2 %
Herkules Private Equity Fund III (LP-I) Limited
 
25,1 %
Intera Fund I
 
12,0 %
Interwell AS
 
34,0 %
Marical Inc
 
22,4 %
Napatech AS
 
39,8 %
NRP Fleetfinance IV D.I.S
 
20,0 %
SPV Herkules II LP
 
81,5 %
Streaming Media AS
 
16,6 %
The Cloud Ltd
 
14,8 %
Vensafe ASA
 
18,5 %
NOTE 16
INVESTMENT PROPERTY
       
Investment property
NOK 1 000
2012
2011
Balance at 1 January
1 514 927
684 778
Acquisitions
65 136
499 285
Additions through improvements
65 418
291 814
Disposals
- 6 963
- 13 900
Net change in investment property valuation
343 335
52 950
Carrying amount at 31 December
1 981 853
1 514 927
     
Income from investment property
   
NOK 1 000
2012
2011
Rental income from properties
98 850
59 743
Costs directly attributable to the investment properties
- 6 472
- 7 304
Net change in property revaluation
343 335
52 950
Total
435 713
105 389
       
The fair value of investment property
The investment properties are measured at fair value. Fair value is the amount for which an asset could be traded between knowledgeable, voluntary parties in an arm's length transaction. Market prices are considered when determining the market rent and required rate of return.
 
All of the Group's investment properties are measured yearly based on cash flow models. Future cash flows are calculated on the basis of signed contracts, as well as future cash flows based on expected market prices. No external valuations have been obtained. Note 2 gives a detailed description of the parameters used to calculate the fair value.
NOTE 17
PENSION COSTS AND LIABILITIES
   
       
THE GROUP'S PENSION PLANS
The Group's companies have established pension plans in accordance with local laws. Employees in the Group's companies in Norway are participating in defined benefit or defined contribution pension plans that comply with the rules for mandatory occupational pension.
       
Defined benefit plans
Defined benefit plans provide employees with the right to defined future pension benefits. The Group's net obligation in respect of defined benefit pension plans is calculated separately for each pension plan. The amount is an estimate of future benefits that employees have earned based on years of service and salary at retirement. Benefits are discounted to present value, and the recognised obligation is reduced by the fair value of plan assets for funded pension schemes. Changes in assumptions, staff numbers and variances between estimated and actual salary increases and return on assets result in actuarial gains and losses. Actuarial gains and losses and gains and losses resulting from a curtailment or termination of pension plans, are recognised immediately in the income statement.
       
The defined benefit pension plans consist of group schemes as well as some additional arrangements, including employees with a retirement basis over 12 G, and AFP.
       
Defined contribution plans
For defined contribution plans, the Group's obligations are limited to making specific contributions. Payments to defined contribution pension plans are recognised as expenses in the income statement when the employees have rendered services entitling them to the contribution.
       
Other service related long-term benefits
In addition to the pension schemes described above, Ferd has obligations related to future health contributions for some groups of employees in USA.
       
ECONOMIC ASSUMPTIONS
       
Ferd has defined benefit plans in several countries with varying economic conditions affecting the assumptions that are the basis for calculating pension obligations. The parameters are adapted to conditions in each country. The discount rate is determined as a weighted average of the yields at the reporting date on AA-rated corporate bonds, or government bonds in cases where there is no market for AA-rated corporate bonds. The government bond interest rate is applied for Norwegian schemes. To the extent that the bond does not have the same maturity as the obligation, the discount rate is adjusted. The weighted average discount rate at 31 December 2012 was 2,3 percent. Actuarial assumptions for demographic factors and retirement are based on generally accepted principles in the insurance business. Future mortality rates are based on statistics and mortality tables. The weighted average long-term expected return on plan assets is 3,8 percent. The expected long-term return is based on the total portfolio, not on the returns of individual pension asset categories. The return is based exclusively on historical returns, without adjustments.
       
Economic assumptions in Norwegian companies at 31 December
     
   
2012
2011
Discount rate
 
2,20 %
2,60 %
Expected return on pension assets
 
3,60 %
4,10 %
Expected wage growth
 
0-3,25%
3,50 %
Future expected pension regulation
 
1,75 %
1,30 %
Expected regulation of base amount (G)
 
3,00 %
3,25 %
       
Interval for the economic assumptions at 31 December
     
   
2012
2011
Discount rate
 
2.00-4.15
2.50-4.70
Expected return on pension assets
 
2.75-7.00
2.75-7.00
Expected wage growth
 
0.00-1.00
0.00-4.00
Future expected pension regulation
 
0.00-0.55
0.00-1.75
       
PENSION OBLIGATIONS
     
Reconciliation of net liability against balance sheet
     
NOK 1 000
 
2012
2011
Pension liabilities for defined benefit pension plans
 
- 211 528
- 254 890
Pension assets for defined benefit pension plans
 
9 505
15 457
Total defined benefit obligation recognised in the consolidated statement of financial position
 
- 202 023
- 239 433
       
DEFINED BENEFIT PLANS
     
Specification of the recognised liablity
     
NOK 1 000
 
2012
2011
Present value of unfunded pension liabilities
 
- 69 469
- 91 456
Present value of wholly or partly funded obligations
 
- 469 621
- 590 197
Total present value of defined benefit obligations
 
 
- 539 091
- 681 653
Fair value of pension assets
 
337 068
442 220
Total defined benefit obligation recognised in the consolidated statement of financial position
 
- 202 023
- 239 433
       
Movements in liabilities for defined benefit pension plans
     
NOK 1 000
 
2012
2011
Liability for defined benefit pension plans at 1 January
 
681 653
713 725
Fair value of current service cost
 
24 635
29 670
Interest expenses on the pension liability
 
20 487
38 503
Actuarial (gains) / losses on the pension liabilities
 
12 768
60 220
Settlement of pension plans
 
- 17 936
- 209 839
Curtailment of pension schemes
 
115
- 16 809
Plan changes
 
- 32 370
 
Change in liability due to acquisition/sale of subsidiaries
   
81 818
Benefits paid
 
- 128 361
- 24 528
Social security tax
 
113
 
Exchange differences on foreign plans
 
- 22 015
8 893
Liability for defined benefit pension plans at 31 December
 
539 091
681 653
       
Movement in fair value of pension assets for defined benefit pension plans
     
NOK 1 000
 
2012
2011
Fair value of pension assets at 1 January
 
442 221
515 175
Expected return from pension assets
 
14 725
28 569
Actuarial gains / (losses) on the pension assets
 
- 14 791
- 21 405
Contributions from employer
 
22 212
44 506
Administration expenses
 
- 645
- 1 814
Contributions from employees
 
2 838
1 982
Increase in pension funds due to the acquisition of subsidiaries
   
79 421
Settlements
   
- 178 949
Benefits paid
 
- 114 239
- 47 153
Exchange difference on foreign plans
 
- 15 253
21 890
Fair value of pension assets at 31 December
 
337 068
442 221
       
Pension assets include the following
     
NOK 1 000
 
2012
2011
Equity instruments
 
54 630
114 206
Liability instruments
 
92 103
103 116
Managed by insurance
 
138 418
63 433
Property Investments
 
271
593
Bank deposits
 
343
445
Other assets
 
51 303
160 428
Total pension assets
 
337 068
442 221
       
Actuarial (gains) / losses recognised in comprehensive income
     
NOK 1 000
 
2012
2011
Current year actuarial (gains) / losses on liabilities (defined benefit schemes)
 
12 768
60 220
Current year actuarial (gains) / losses on pension assets (defined benefit schemes)
 
14 791
21 405
Total actuarial (gains) / losses recognised in comprehensive income (defined benefit schemes)
 
27 559
81 625
       
PENSION COSTS
     
NOK 1 000
 
2012
2011
Defined benefit plans
 
- 2 582
5 950
Defined contribution plans
 
85 028
44 666
Early retirement and other schemes
 
- 927
1 887
Total pension costs recognised in current year payroll costs
 
81 520
52 502
       
DEFINED BENEFIT PLAN PENSION COSTS
     
Pension costs recognised in income statement
     
NOK 1 000
 
2012
2011
Present value of this year's pension earned
 
24 635
29 670
Contribution from employees
 
- 2 838
 
Curtailment of pension schemes and plan changes
 
- 32 255
- 36 654
Interest expenses on the pension liability
 
20 487
38 503
Expected return on pension assets
 
- 14 725
- 28 570
Social security tax
 
113
 
Administration costs
 
1 999
3 000
Total pension costs recognised in the Group's income statement
 
- 2 582
5 950
NOTE 18
INVENTORIES
     
         
2012
       
NOK 1 000
Raw materials
Work in progress
Finished goods
Total
Cost at 31 December
334 416
434 828
980 334
1 749 578
Provision for obsolescence at 1 January
10 777
 
123 273
134 050
Write-down
2 240
1 280
2 754
6 274
Provision for obsolescence at 31 December
13 017
1 280
126 027
140 324
         
Carrying value at 31 December
321 399
433 548
854 307
1 609 254
         
2011
       
NOK 1 000
Raw materials
Work in progress
Finished goods
Total
Cost at 31 December
389 618
213 297
1 022 061
1 624 976
Provision for obsolescence at 1 January
47 698
611
89 017
137 326
Write-down
2 366
 
34 561
36 927
Reversed write-down
- 1 113
- 611
- 5 129
-6 853
Provision for obsolescence at 31 December
48 951
 
118 449
167 400
         
Carrying value at 31 December
340 667
213 297
903 612
1 457 576
NOTE 19
CURRENT ASSETS
 
     
NOK 1 000
2012
2011
Prepayments
85 835
80 968
VAT and tax receivables
111 049
134 026
Current interest-bearing receivables
52 121
41 906
Other current receivables
391 260
164 879
Carrying amount at 31 December
640 265
421 779
     
NOK 1 000
2012
2011
Accounts receivable, gross
1 020 040
1 156 734
Allowances
- 33 295
- 47 664
Carrying amount at 31 December
986 745
1 109 070
     
Total current receivables
1 627 010
1 530 849
     
Overdue accounts recievables by age
   
NOK 1 000
2012
2011
Up to 30 days
111 522
125 503
30-60 days
30 274
64 062
60-90 days
21 026
38 881
Over 90 days
30 147
56 321
Total
192 970
284 767
NOTE 20
FINANCIAL INSTRUMENTS
The following is a summary of the carrying value and fair value of the Group's financial instruments and how these have been treated in the accounts. The table is the basis for further information on the Group's financial risk and refers to subsequent notes.
             
     
Financial instruments measured at amortised cost
   
NOK 1 000
 
Financial instruments measured at fair value through profit and loss
Lending and receivables
Financial obligation
Total
Fair value
             
Non-current assets
           
Other financial non-current assets
51 599
233 660
 
285 259
285 259
Total 2012
 
51 599
233 660
 
285 259
285 259
Total 2011
 
158 917
256 300
 
415 217
415 217
             
Current assets
           
Short-term receivables
 
 
1 627 010
 
1 627 010
1 627 010
Listed shares
 
3 476 584
 
 
3 476 584
3 476 584
Unlisted shares and investments in other equity instruments
8 699 217
 
 
8 699 217
8 699 217
Hedge funds
 
3 078 721
 
 
3 078 721
3 078 721
Investments in debt instruments
133 664
 
 
133 664
133 664
Bank deposits
   
1 683 997
 
1 683 997
1 683 997
Total 2012
 
15 388 186
3 311 007
 
18 699 193
18 699 193
Total 2011
 
13 476 441
3 164 030
 
16 640 471
16 640 471
             
Long-term debt
           
Long-term interest-bearing debt
 
5 283 103
5 283 103
5 283 103
Other long-term debt
 
 
350 309
350 309
350 309
Total 2012
 
 
 
5 633 412
5 633 412
5 633 412
Total 2011
 
 
 
5 909 002
5 909 002
5 909 002
             
Short-term debt
           
Short-term interest-bearing debt
 
 
362 440
362 440
362 440
Other short-term debt
 
 
 
1 855 693
1 855 693
1 855 693
Total 2012
 
 
 
2 218 133
2 218 133
2 218 133
Total 2011
 
 
 
2 923 114
2 923 114
2 923 114
             
Fair value hierachy - Financial assets and liabilities
             
Ferd classifies instruments measured at fair value in the balance sheet by a fair value hierachy. The hierarchy has the following levels:
             
Level 1: Valuation based on quoted prices in active markets for identical assets without adjustments. An active market is characterised by the fact that the security is traded with adequate frequency and volume in the market. The price information shall be continuously updated and represent expected sales proceeds. Only listed shares owned by Ferd Invest are considered to be level 1 investments.
             
Level 2: Investments where there are quoted prices, but the markets do not meet the requirements for being characterised as active. In addition, investments where the valuation can be fully derived from the value of other quoted prices, including the value of underlying securities, interest rate level, exchange rate etc. Financial derivatives like interest rate swaps and currency futures are also considered to be level 2 investments. Some funds in Ferd's hedge fund portfolio are considered to meet the requirements of level 2. These funds comprise composite portfolios of shares, unit trust funds, interest securities, raw materials and other negotiable derivatives. For such funds the value (NAV) is reported on a continuous basis, and the reported NAV is applied on transactions in the fund.
             
Level 3: All Ferd's other securities are valued on level 3. The valuation is based on valuation models where parts of the utilised information cannot be observed in the market. Securities valued on the basis of quoted prices or reported value (NAV), but where significant adjustments are required, are assessed on level 3. Shares with little or no trading, where an internal valuation is required to determine the fair value, are assessed on level 3. For Ferd this concerns all venture investments, private equity investments and funds where reported NAV need to be adjusted. A reconciliation of the movements of assets on level 3 is shown in a separate table.
             
The table shows at what level in the valuation hierarchy the different measurement methods for the Group's financial instruments at fair value is considered to be:
 
             
NOK 1 000
   
Level 1
Level 2
Level 3
Total 2012
             
Assets
           
Other financial non-current assets
     
51 599
51 599
Listed shares
   
3 476 584
   
3 476 584
Unlisted shares and investments in other equity instruments
 
6 448
8 692 769
8 699 217
Hedge funds
     
1 600 948
1 477 773
3 078 721
Investments in debt instruments
   
133 664
 
133 664
Total 2012
   
3 476 584
1 741 060
10 222 141
15 439 785
             
NOK 1 000
   
Level 1
Level 2
Level 3
Total 2011
             
Assets
           
Other financial non-current assets
     
158 917
158 917
Listed shares
   
2 895 122
 
 
2 895 122
Unlisted shares and investments in other equity instruments
9 042
 
6 658 405
6 667 447
Hedge funds
   
 
1 310 539
1 477 781
2 788 320
Investments in debt instruments
 
 
1 125 553
 
1 125 553
Total 2011
   
2 904 164
2 436 092
8 295 103
13 635 358
             
Specification of assets in level 3
NOK 1 000
Opening bal. 1 Jan. 2012
Purchases
Sales
Transfers from level 3
Recognised in P/L 2012
Closing bal. 31 Dec. 2012
             
Other financial non-current assets
158 917
 
- 63 578
 
- 43 740
51 599
Unlisted shares and investments in other equity instruments
6 658 405
186 454
- 347 180
- 120 380
2 315 470
8 692 769
Hedge funds
1 477 781
690 982
- 490 577
- 359 707
159 295
1 477 773
Total
8 295 103
877 436
- 901 335
- 480 087
2 431 025
10 222 142
             
NOK 1 000
Opening bal. 1 Jan. 2011
Purchases
Sales
Transfers from level 3
Recognised in P/L 2011
Closing bal. 31 Dec. 2011
             
Other financial non-current assets
91 921
66 996
     
158 917
Listed shares
6 976
 
 
- 6 976
 
 
Unlisted shares and investments in other equity instruments
7 449 579
215 636
- 856 169
- 331 072
180 431
6 658 405
Hedge funds
584 142
1 521 043
- 689 884
 
62 479
1 477 781
Total
8 132 619
1 803 675
-1 546 052
- 338 048
242 910
8 295 103
             
Transfers from level 3 are mainly due to the step-by-step acquisition of Telecomputing in 2011.
             
Valuation of assets classified in level 3
             
Financial assets in level 3 include investments managed in-house, venture investments, private equity funds and hedge funds. The values at the balance sheet date are shown below.
NOK 1 000
       
2012
2011
             
Industrial investments and venture investments
   
4 191 993
2 915 310
External private equity funds
   
4 552 375
3 902 012
Hedge funds
     
1 477 773
1 477 781
             
Total
       
10 222 142
8 295 103
             
Investments in unlisted shares managed in-house are valued on the basis of an earnings multiple, adjusted by a liquidity discount reduction and the addition of a control premium. The corrections are made directly on the multiple. Finally, the equity value is calculated by deducting net interest-bearing debt.
             
A significant part of venture investments constitutes companies with no positive cash flows. This implies a greater degree of uncertainty in the valuations of the companies. Valuations are based on international guidelines (EVCA guidelines), i.e., the lower of cost and fair value unless a transaction at a higher value has taken place.
The valuation of investments in externally managed private equity and hedge funds is based on value reports received from the funds. The hedge funds in the SI portfolio are adjusted for estimated discount on the funds based on estimates made by brokers.
NOTE 21
RISK MANAGEMENT - INVESTMENT ACTIVITIES
   
There have been no significant changes concerning the Group's risk management in the area during the period.
Risk management concerning operations, primarily Elopak, is accounted for in note 26.
       
CAPITAL ALLOCATION AND IMPAIRMENT RISK
The capital allocation in Ferd is decided by the Board each year. The allocation of capital is one of the Board's most important responsibilities, as the return and risk to a high degree is determined by the classes of assets Ferd is investing in, and the allocation between these classes. A structured capital allocation secures a conscious relationship to the diversification and use of Ferd's capital base and ability to manage risk. Ferd's management is, on a regular basis, assessing Ferd's available risk capacity and whether the distribution of the funds at all times is in line with the assumptions and requirements that are the basis for the allocation.
       
Ferd's overall strategic allocation aims at maintaining a balance between industrial and financial investments.
       
The allocation shall be in line with the owner's willingness and ability to take risk. One measure of this risk willingness is the size of the decline in value in kroner or percent the owner accepts if any of the markets Ferd is exposed to should experience very heavy and quick downfalls. This has an impact on how much equity that can be invested in assets with a high risk of decline in value and is measured and followed up by stress tests.
       
The loss risk is assessed as a potential total impairment expressed in kroner and as a percentage of equity. Ferd's long-term strategy contributes to the fact that the owner can accept large fluctuations in net asset value.
       
CATEGORIES OF FINANCIAL RISK
Liquidity risk
Ferd has a strong focus on liquidity and is of the opinion that the return from financial investments shall contribute to cover current interest costs. Hence, it is important that Ferd's balance sheet is liquid, and that the possibility to realise assets corresponds well with when Ferd's debt is due. The Group has determined that under normal market conditions, at least 4 billion kroner of the financial investments shall comprise assets that can be realised within a quarter of a year. This is primarily managed by investments in listed shares and hedge funds.
       
Currency risk
Ferd has defined intervals for exposure in Norwegian kroner, euro, USD and Swedish kroner. As long as the exposure is within these intervals, Ferd is not making any currency adjustments. If Ferd's exposure exceeds these intervals, steps are taken to adjust the exposure to the established currency curve.
       
SENSITIVITY ANALYSIS, IMPAIRMENT RISK IN INVESTMENT ACTIVITIES
The stress test is based on a classification of the Group's equity in different asset classes, exposed for impairment as follows:
 
- The Norwegian stock markets decline by 30 percent
     
- International stock markets decline by 20 percent
     
- The market value of property declines by 10 percent
     
- The interest rate curve shifts by 1 percentage point
     
- The Norwegian krone appreciates by 10 percent
     
       
In order to refine the calculations, it is considered whether Ferd's investments will decline more or less than the market. As an example, it is assumed that private investments in a stress test scenario have an impairment loss of 1.5 - 2 times the market (30-60 percent in Norway and 20-40 percent abroad).
 
The impairment risk is presented as an impairment expressed in NOK and as a percentage of equity. The table below shows the estimated impairment risk in 201 and 2012.
       
NOK 1 000
 
2012
2011
Price risk: Norwegian shares decline by 30 percent
 
-4 400 000
-4 100 000
Price risk: International shares decline by 20 percent
 
-1 100 000
- 700 000
Price risk: The market value of property declines by 10 percent
 
- 200 000
- 200 000
Interest rate risk: The interest rate curve increases by 1 percentage point
 
 
 
Currency risk: The Norwegian krone appreciates 10 percent
 
- 600 000
- 500 000
Total impairment in value-adjusted equity
 
-6 300 000
-5 500 000
       
Impairment as a % of net asset value
 
32 %
34 %
       
In the sensitivity analyses, Ferd's exposure in Aibel in 2012 is reduced to 49 % compared to 2011, when it amounted to appr. 80 %, as a consequence of the transaction with Ratos made in December 2012. Ferd's exposure in Pronova will not be reduced until 2013, as the sale of shares transaction takes place in the new year.
NOTE 22
SHARE CAPITAL AND SHAREHOLDER INFORMATION
       
The share capital of the Company consists of 183.267.630 shares at a nominal value of NOK 1.-.
       
Owner structure
       
Shareholders as at 31 December 2012:
   
Number of shares
Stake
Ferd Holding AS
 
176 629 907
96,38 %
Dref Lojal AS
 
2 649 588
1,45 %
Dref Lojal II AS
 
1 381 898
0,75 %
Dref Lojal III AS
 
2 244 577
1,22 %
Dref Lojal IV AS
 
361 660
0,20 %
Total number of shares
 
183 267 630
100,00 %
       
Ferd AS is a subsidiary of Ferd Holding AS, being a subsidiary of Ferd JHA AS. Ferd shares offices with its parent companies in Lysaker, Bærum. The consolidated financial statements of the parent company are available upon request.
       
Shares indirectly owned by the CEO and board members of Ferd AS:
Position
 
Stake
Johan H. Andresen
Chair of the Board
 
15,14 %
John Giverholt
CEO/board member
 
0,29 %
Erik Rosness
Board member
 
0,06 %
Gry Skorpen
Board member
 
0,05 %
       
The children of Johan H. Andresen own appr. 85 % of Ferd AS indirectly by ownership of shares in Ferd Holding AS.
NOTE 23
NON-CURRENT LIABILITIES
       
Long-term interest-bearing debt
     
NOK 1 000
Amount in
currency 2012
Amount in
NOK 2012
Amount in
NOK 2011
NOK
2 273 899
2 273 899
2 562 972
USD
202 500
1 126 990
1 282 184
EUR
145 855
1 070 757
1 163 261
DKK
380 000
374 905
438 219
GBP
10 000
90 248
102 057
SEK
374 743
321 304
195 247
CHF
4 100
25 000
35 747
Carrying value at 31 December 2012
 
5 283 103
5 779 687
       
Other long-term debt
 
350 309
129 315
Total non-current liabilities
 
5 633 412
5 909 002
       
Instalments determined in contracts
   
NOK 1 000
 
2012
 
2014
 
273 265
 
2015
 
2 743 152
 
2016
 
179 863
 
2017
 
2 437 132
 
Total
 
5 633 412
 
       
The first year's instalment of long-term debt is presented as part of the short-term interest-bearing debt.
NOTE 24
OTHER CURRENT LIABILITIES
   
       
NOK 1 000
2012
2011
Trade payables
755 698
826 359
Public duties etc.
229 784
181 174
Other short-term debt
1 043 002
1 134 390
Total
2 028 484
2 141 923
NOTE 25
SECURED BORROWINGS, GUARANTEES AND CONTINGENT LIABILITIES
   
       
Secured borrowings
     
NOK 1 000
2012
2011
Loan facilities
1 418 637
3 218 120
Factoring
19 872
63 638
Total
1 438 509
32 817 586
       
Loan facilities comprise various credit facilities in the Group, normally secured by receivables, inventories, tangible assets and investment property. Interest terms are floating interest rates.
       
Carrying amounts of pledged assets
   
NOK 1 000
2012
2011
Investment property
1 611 814
953 349
Other tangible assets
142 886
 
Inventories
213 678
 
Receivables
377 867
696 375
Total
2 346 245
1 649 724
       
Maximum exposure to the above assets
2 346 245
1 649 724
Issued guarantees
 
92 005
       
Guarantees and off-balance sheet liabilities
   
NOK 1 000
2012
2011
Commited capital to fund investments
993 986
1 402 557
Commitment to provide loans
3 283
18 000
Guarantees without security
665 210
2 005
Clauses on minimum purchases in agreements with supplier
152 408
 
Other obligations*
82 044
575 050
Sum
1 896 931
1 997 611
*) Other obligations mainly concern repurchase commitments on sales of machines and investment obligations relating to developing investment property and the building of a manufacturing plant.
       
Ferd AS has been sued by Amorin in connection with Ferd's former engagement in TiMar (Portugal). In 2013, Ferd agreed to a settlement involving an insignificant amount.
NOTE 26
RISK MANAGEMENT - OPERATIONS
   
           
Risk relating to the investment activities of Ferd is described in note 21.
           
Currency risk
Contracted currency flows from operations are normally secured in their entirety, while projected cash flows are hedged to a certain extent. Interest payments related to the Group's foreign currency loans are mostly secured by corresponding cash flows from the Group's activities. Instruments such as currency forward contracts, currency swaps and options can be used to manage Ferd Group's currency exposure.
           
Outstanding foreign exchange forward contracts
   
Currency
NOK
NOK
Currency
Purchase
Sale
Purchase
Sale
 
CAD
5 818
- 19 829
32 601
- 111 118
 
CHF
3 579
- 604
21 822
- 3 681
 
EUR
43 155
- 111 091
317 620
- 817 632
 
JPY
3 053 200
- 944 710
197 535
- 61 120
 
NOK
336 339
- 84 533
336 339
- 84 533
 
RUB
 
- 224 950
 
- 41 191
 
SEK
134 497
- 70 172
115 238
- 60 124
 
CZK
10 080
 
2 956
 
 
GBP
 
- 3 661
 
- 33 039
 
DKK
 
- 16 971
 
- 16 744
 
ILS
5 454
 
8 153
 
 
USD
42 695
- 9 683
238 059
- 53 991
Total
     
1 270 323
-1 283 173
           
Interest rate risk
     
Ferd's interest rate risk relates to short-term borrowings and is managed by the Group's internal bank in accordance with separate guidelines. The Group has short-term fixed interest rates on long-term funding. This applies for loans in Norwegian kroner, as well as in foreign currency. The Group uses interest rate swaps to reduce interest rate exposure by switching from floating rates to fixed rates for a portion of the loans.
           
Interest rate swaps
     
NOK
Currency
Amount
Receives
Pays
Time remaining
to maturity
 
DKK
100 000
6M CIBOR
Fixed 2,97% - 4,15%
2,7 - 4,5 years
 
EUR
65 000
3M-6M EURIBOR
Fixed 1,25 - 2,88%
1,5 - 5,0 years
 
GBP
10 000
6M LIBOR
Fixed 2,46% - 3,12%
0,5 - 4,2 years
 
NOK
200 000
1M-6M NIBOR
Fixed 4,91% - 5,72%
1,6 - 3,0 years
 
RUB
160 000
3M MOSPRIME
 
1,0 year
 
SEK
50 000
3M STIBOR
 
4,0 years
The table includes derivatives for hedging.
           
Credit risk
Credit risk is the risk that a counterparty will default on his/her contractual obligations resulting in financial loss to the Group. Ferd has adopted a policy that the Group only shall be exposed to credit-worthy counterparties, and independent credit analyses are obtained for all counterparties when such analyses are available. If not, the Group uses other publicly available financial information and its own trade to assess creditworthiness.
 
NOTE 27
HEDGE ACCOUNTING - OPERATIONS
                     
The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedges related to hedged transactions that have not yet taken place. Movements in the hedging reserve are described in the table below.
 
     
2012
2011
NOK 1 000
Interest rate swaps
Currency futures
Commodity derivatives
Total
Interest rate swaps
Currency futures
Commodity derivatives
Total
Opening balance
- 23 938
11 050
- 19 011
- 31 899
- 16 705
13 037
19 721
16 053
Gain/loss on cash flow hedges
 
   
11 394
59 593
- 56 202
13 315
- 19 512
14 064
- 22 205
- 27 653
Income/expense recognised in the income statement
- 16 379
- 83 635
80 390
- 19 624
10 527
- 15 661
- 25 623
- 30 757
Deferred tax (note 14)
935
4 510
- 4 537
2 378
1 752
- 390
9 096
10 458
Effect of cash flow hedging in comprehensive income
- 4 051
- 19 532
19 651
- 3 931
- 7 233
- 1 987
- 38 732
- 47 952
Closing balance
- 27 989
- 8 482
640
- 35 830
- 23 938
11 050
- 19 011
- 31 899
Negative amounts represent a liability and a reduction in equity.
                     
Gain/loss transferred from other income and expenses in the income statement is included in the following items in the income statement:
 
NOK 1 000
2012
2011
     
Sales revenue
- 727
2 485
     
Raw material costs and changes in inventories
8 486
28 801
     
Other operating expenses
375
10 498
     
Net financial result
11 490
- 11 027
     
Total
19 624
30 757
     
Negative amounts represent income.
     
NOTE 28
LIQUIDITY RISK
       
           
Liquidity risk - operations
         
Liquidity risk concerning operations relates primarily to the risk that Elopak, Telecomputing, Mestergruppen and Swix will not be able to service their financial obligations as they fall due. This risk is managed by maintaining adequate cash reserves and overdraft opportunities in banking and credit facilities, as well as continuously monitoring future and actual cash flows.
 
The following tables provide an overview of the Group's contractual maturities of financial liabilities. The tables are compiled based on the earliest date the Group may be required to pay.
           
31.12.12
         
NOK 1 000
 
Less than 1 year
1-3 years
3-5 years
Total
Finance institutions
 
362 440
2 840 370
2 442 733
5 645 543
Accounts payable
 
755 698
   
755 698
Related parties
   
11 498
32 731
44 229
Other non-current liabilities
   
164 550
141 530
306 080
Other current liabilities
 
1 106 157
   
1 106 157
Total*
 
2 224 295
3 016 418
2 616 994
7 857 707
           
31.12.11
         
NOK 1 000
 
Less than 1 year
1-3 years
3-5 years
Total
Finance institutions
 
890 131
2 161 922
3 617 765
6 669 818
Accounts payable
 
826 359
 
 
826 359
Other non-current liabilities
   
129 315
 
129 315
Other current liabilities
 
1 315 564
 
 
1 315 564
Total*
 
3 032 054
2 291 237
3 617 765
8 941 056
*) The table does not include lease obligations, guarantees and off-balance sheet liabilities, ref. notes 25 and 29 respectively.
           
The table below shows the anticipated receipts and payments on derivatives:
           
31.12.12
         
NOK 1 000
 
Less than
1 year
1-3 years
Over 3 years
Total
Net settlement
       
 
Interest rate swaps
 
51 446
   
51 446
Currency futures
 
10 252
   
10 252
Commodity derivatives
 
- 600
   
- 600
Total
 
61 098
 
 
61 098
           
31.12.11
         
Beløp i NOK 1 000
 
Less than
1 year
1-3 years
Over 3 years
Total
Net settlement
       
 
Interest rate swaps
 
- 16 524
- 28 831
- 5 458
- 50 813
Currency futures
 
22 841
 
 
22 841
Commodity derivatives
 
22 256
 
 
22 256
Total
 
28 573
- 28 831
- 5 458
- 5 716
           
Credit facilities
The table below shows a summary of used and unused credit facilities at 31 December:
           
 
2012
 
2011
 
Used
Unused
 
Used
Unused
Overdraft:
         
Secured
47 078
314 940
 
318
109 682
Unsecured
54 982
440 696
 
 
100 000
Credit facilities:
         
Secured
1 604 440
1 567 090
 
575 922
383 132
Unsecured
     
3 300 000
1 700 000
Factoring:
         
Secured
4 311
15 561
 
63 638
37 263
Unsecured
391 113
416 599
 
366 727
376 484
Total secured
1 655 829
1 897 591
 
639 878
530 077
Total unsecured
446 095
857 295
 
3 666 727
2 176 484
NOTE 29
OPERATING AND FINANCE LEASES
   
       
The Group as lessor, operating leases
The Group leases fixtures and equipment under operating leases. Essentially, equipment is rented out to Elopak's customers who use them in their own production.
       
Specification of income from operating leases
2012
2011
Total variable leases recognised as income
 
90 229
 
Minimum leases (including fixed leases) recognised as income
   
66 600
Total variable leases recognised as income
 
90 229
66 600
       
At the balance sheet date, the Group has contracted the following future minimum leases:
2012
2011
Totally due next year
 
70 128
61 839
Totally due in 2-5 years
 
175 879
121 333
Totally due after 5 years
 
28 075
26 276
Total
 
274 082
209 448
The amounts have not been discounted.
       
The Group as lessor, finance leases
       
Specification of income from finance leases
2012
2011
Total variable leases recognised as income
     
Finance income from agreements on finance leasing
 
1 476
384
Total income fra finance leases
 
1 476
384
       
Gross investment compared to the present value of outstanding minimum leases:
2012
2011
Gross receivables from leasing agreements
 
17 714
8 331
Finance income not yet earned
 
- 2 969
- 1 145
Net investment from finance leases (present value)
 
14 745
7 186
       
The Group as lessee, operating leases
       
Specification of expenses from operating leases
2012
2011
Total variable leases recognised as expenses
 
184 846
98 676
Minimum leases (including fixed leases) recognised as expense
 
47 979
58 657
Subleases recognised as cost reductions
 
- 899
 
Total leasing costs
 
231 926
157 333
       
Due for payment
 
2012
2011
Total costs next year
 
238 682
162 697
Total costs 2-5 years
 
736 636
508 175
Total costs after 5 years
 
478 246
340 168
Total
 
1 453 564
1 011 039
The amounts have not been discounted.
       
Distribution of the same leasing obligation on leasing objects
2012
2011
Buildings and land
 
751 031
916 448
Machines and plants
 
16 839
 
Fixtures, vehicles and equipment
 
685 694
94 591
Total leasing obligations related to operating lease commitments
 
1 453 564
1 011 039
       
The Group as lessee, finance leasing
       
Specification of leasing costs
2012
2011
Total variable leases recognised as expenses
 
7 263
 
Total leasing costs
 
7 263
 
       
Future minimum leases and corresponding present values, by due dates:
Minimum lease
Calculated interest
Present value
Total due in one year
9 399
7 504
1 895
Total due in year 2-5
7 876
7 580
296
total due after 5 years
 
 
 
Total leasing obligations related to finance leasing
 
15 084
2 191
       
Net carrying value of leased assets, by asset class
 
2012
2011
Buildings and property
     
Machines and plants
 
3 362
 
Fixtures, vehicles and equipment
 
19 470
1 497
Total carrying value of leased assets
 
22 832
1 497
The fixed assets are also included in note 9.
NOTE 30
RELATED PARTIES
           
               
Associated companies and joint ventures
Transactions with associated companies and joint ventures are accounted for in note 12.
               
The Board and executives
The board members' rights and obligations are stated in the Articles of Association and Norwegian law. The Group has no significant contracts in which a board member has a substantial interest. Ownership in Ferd AS by board members is stated in note 22, and information on fees to board members and executives in note 6.
Ferd

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