A nnual
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2010
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2010
The largest newbuilding programme in the history of the Grieg Group
2009
The Grieg Group celebrates its 125th anniversary.
2008
Star Shipping becomes Grieg Star Shipping and joined the Grieg Group 31/12 2008.
2007
Grieg Seafood ASA listed at Oslo Børs 21/6 2007.
2002
Grieg Foundation is established in Os outside Bergen.
2001
Grieg Logistics expands to cover global logistics services.
1999
4th. generation Grieg takes over. Per Grieg jr., Elisabeth Grieg, Camilla Grieg and Elna-Kathrine Grieg take leading roles in the Grieg Group.
1992
Grieg Seafood is established.
1991
The Grieg Group headquarters in Bergen gathered under one roof in Grieg-Gaarden.
1984
100 years! Restructured as the Grieg Group.
1969
Grieg Logistics is established as a separate business unit.
1961
Per Grieg Sr. reorganizes the company and starts widening the scope of activities. Star Shipping established.
1930s
Joachim Grieg & Co builds up a significant tanker department.
1900s
Joachim Grieg & Co is one of Europe’s leading ship broking companies.
1884
Joachim Grieg establishes ship broker business in Bergen.
F r o m t h e O w n e r s 5
Comments on 2010
The Grieg Group 6
Short summary and presentation
Company Structure
7
Companies and owners
Moving forward steadily
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Comments on our development in 2010
G r i e g G r o u p C o m p a n i e s
11 15 16 18 19 20
Grieg Shipping Group Grieg Logistics Joachim Grieg & Co Maritime Information Systems AS (MARIS) Grieg International Grieg Investor
Related Companies Grieg Seafood NorWind Installer AON Grieg Grieg Development Grieg Property
24 27 27 28 29
The Grieg Group values, ethical standards and social contributions
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Corporate Responsibility Grieg Foundation
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The Grieg Group benevolent foundation
Financial Statements
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Annual report from Grieg Maturitas
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From left: Elisabeth Grieg, Camilla Grieg, Elna-Kathrine Grieg and Per Grieg jr. 4
F ro m the o w ner s
We have just put behind us the first decade of the 21st century, and we are moving forward steadily. For the Grieg Group the 2010 results were satisfactory on the whole, and with particularly good progress for Grieg Seafood.
In February 2011 we announced that we are selling the freight forwarding part of Grieg Logistics to the Swiss listed company Panalpina AS. The transport industry is global, and nearly all the tenders are international. We want to offer a complete integrated world-wide network to our customers. The size and the world-wide presence of Panalpina enable them to compete in an increasingly global market. It is therefore our firm belief that the prospects are bright for the 100 employees that went over to the new owners, and we wish them the best of luck. Going forward Grieg Logistics AS will focus on maritime services and port operations. We clearly have ambitions for growth in this area as a natural part of the Grieg Group maritime profile.
Technological development has made it easy to share knowledge, views and experience across the globe. This represents important new possibilities for increased efficiency and democratization in many ways. It opens new doors for collaboration between different professions, different cultures and indeed between the young and the old.
When we are looking at things from a macro point of view challenges connected to sustainability are among the most striking issues. It is everyone’s duty to take turns in the work of finding more environment friendly solutions to our activities. Only then can we pass on to future generations a planet in a decent shape. Also Grieg Group companies take stakes in this work from their ends. Grieg Shipping Group is at the moment heading the work of five Norwegian shipping companies in their collaboration to find ways of reducing emissions. Grieg Foundation is sponsoring a project in Sahara where solar energy will be used to produce fresh water and biomass from seawater. In January 2011 Grieg Seafood achieved “Friend of the Sea� accreditation for its sites in Shetland and processing operation in Lerwick. Good proof that our efforts give results, although these matters sometimes move forward with small steps.
To the younger generation modern communication is a basic that they have known all their lives, and take for granted. As a Group we have to be open to and prepared for the new possibilities and challenges offered. In 2010 we established a company profile on Facebook, got a Twitter account, and a channel on YouTube. The social media channels are expected to become increasingly more important going forward. Not just for personal entertainment and communication, but also as fast and efficient professional tools. The Grieg Group wants to embrace new possibilities and make sure that we have the technical platforms, skills, tools and competence to meet future needs. Let us venture into the new decade with sustainability at the front of our minds, and with curiosity and commitment to exploring new possibilities. Our dedicated employees remain our greatest asset, and your good efforts in 2010 are much appreciated!
Elna-Kathrine Grieg
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the grieg group
The Grieg Group is a privately owned group which is engaged in global commercial activity within a broad range of business areas: shipping, logistics, shipbroking, fish farming, insurance, investment and investment advisory services, technology and renewable energy.
Grieg Maturitas is the Grieg family’s owning company for their 75% share of the Grieg Group. The remaining 25% is owned by Grieg Foundation. Grieg Maturitas is responsible for a continued healthy and profitable corporate structure going forward.
We are a global company with offices world wide. The strategic management is executed from Norway with headquarters in Bergen. By the end of 2010 the Grieg Group had 1700 employees.
The Grieg Group emphasises on creating economic and social values in a long-term perspective. The Group is engaged in international competitive business which is controlled from Norway. In order to strengthen the foundation for business and maintain and secure jobs in a long term perspective, all Grieg Group activities must have a sound financial basis for their existence. The companies in the Grieg Group are based on knowledge and production, and the employees’ qualifications constitute a substantial part of the business capital. All members of the group are independent, but close cooperation across the company borders is encouraged. This contributes to a higher knowledge level, synergies, increased solidity and new business opportunities.
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In order to maintain an ethical foundation for business and a strong and solid company culture, we have worked thoroughly for several years to implement our four core values; Solid, Proud, Open and Committed. All employees in the Grieg Group shall be aware of the significance of a common value base in their daily work. The Grieg Group emphasizes social responsibility and contributes actively to programs for humanitarian, cultural and public benefit. Grieg Foundation which owns 25% of the Grieg Group is a major sponsor for SOS Children’s Villages. Additionally Grieg Foundation supports projects within the fields of medical research and culture.
Grieg Maturitas Holding company 75%
Shipping
Fish Farming Grieg Seafood (49%)
Grieg Shipping Group Grieg Green
Navigation systems MARIS Shipbroking Joachim Grieg & Co Management ServiCes
Grieg Group Resources
Offshore Windmills NorWind Installer (40%)
Global logistics maritime Services and Port Operations Grieg Logistics
Insurance Broker AON Grieg (20%) Investments Grieg International Grieg Limited Grieg Holdings Grieg Property
Investment consulting Grieg Investor
25%
Grieg Foundation Benevolent foundation
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m o v ing for w ar d s tea d il y
The Grieg Group achieved another year of solid profit and growth in 2010, both in total and in our largest business areas - shipping and fish farming.
Grieg Maturitas AS is the Holding company within the Grieg Group and we achieved a Result before tax of NOK 567 mill. We are facing the future with a solid group of companies, healthy market conditions and a strong competence base, - and we are looking ahead!
listed GSF, and the seafood segment is one of the Groups’ long term Business Area. GSF is accounted for as an Associated Company as part of Financial Income in our Group Figures. During 2010 GSF has been awarded Prestigious Food Prices in the UK market for the branded and value added smoked salmon from the company’s plant in Scotland. At the end of 2010 GSF established a new sales company in Norway, Ocean Quality. This enables GSF to take care of the salmon all the way from sea to customer, an integration strategy that will continue to grow in 2011.
This has been a year of high investments and good profit for the Grieg Group particularly within shipping, ship broking and fish farming. Grieg Shipping Group is a fully integrated owner and operator of one of the world’s largest open-hatch fleets (26 trading vessels). In addition we operate 15-20 time charter vessels. In 2010 we entered into the largest new-building program in our history, with 10 open hatch vessels contracted and two supramax dry bulk vessels all to be delivered in the period 2012 – 2014. The ships are all with state-ofthe art environmentally friendly technology. Sound market activities, efficient ship operations and good performance on the financial portfolio, has given further confidence to the Grieg Group’s shipping business concept and investments. With a larger open hatch fleet and improved shipping markets with higher cargo volumes and freight rates as well as a substantial contribution from the conventional dry bulk operation, operating profits (EBIT) increased from NOK 85 mill in 2009 to NOK 317 mill in 2010. Turnover increased from NOK 3,5 bn to NOK 4,1 bn. Our ship broking company, Joachim Grieg & Co (JG) has expanded its activities into the gas and chemicals markets, in addition to its core business in dry cargo and sales and purchase. JG has nearly doubled their number of employees during the year, now counting 30 persons, and the company’s ambition is to continue growth into new markets and segments, including analytical work and projects. We have also increased our investment in Grieg Seafood ASA (GSF), during a year of impressive results for this industry in general and for GSF especially. GSF reported an EBIT of NOK 640 mill compared to NOK 154 mill in 2009. Turnover increased from NOK 1,6 bn in 2009 to NOK 2,5 bn in 2010. The Grieg Group owns 49% of the 8
Grieg Logistics faced a challenging year in 2010, but managed to keep up their market share, despite the general resession in the global transport market. The sale of our Freight Forwarding part to Panalpina, is to a large degree based on the assumption that it benefits our customers and employees to be part of a complete integrated world-wide transport network. We will continue to develop and invest in the remaining part of Grieg Logistics, with special focus on maritime services and port operations. Investments in Grieg Investor, equity investments in oil service and financial service industries, have been profitable during the year. The Group’s investments in MARIS and renewable energy, have been more challenging and volatile, - we are working hard to reach an improving trend and positive outlook! In total the Grieg Group achieved a turnover of NOK 5,1 bn in 2010, an increase of 12% from 2009. Including GSF’s turnover of NOK 2,5 bn, Grieg Group owned companies reached a turnover of NOK 7,5 bn in 2010 vs NOK 6,1 bn in 2009. EBIT for 2010 is NOK 321 mill, a solid increase from NOK 119 mill in 2009, mainly due to improved profit in the Group’s Shipping activities. Net finance is NOK 246 mill, of which NOK 221 mill is Financial Income from investment in Grieg Seafood. In 2009 Net Finance
for the Grieg Group was NOK 462 mill, and the reduction to 2010 is mainly caused by increased interest expenses and less financial investments, due to investments in the new shipping fleet, but also a general market reduction in returns on the financial portfolio and less gain on foreign exchange. The Grieg Group Result before tax is NOK 567 mill just below 2009 figures, and we operate with a Balance sheet of NOK 9,2 bn. vs NOK 8,1 bn in 2009, and with an Equity of NOK 5,3 bn. (58%). We are proud of the work and effort that all our 1700 employees across the Grieg Group put in every day, and we are running the business in a safe and steady manner without any major accidents. This reflects the Grieg Group culture and core values – being proud, solid, committed and open. So thank you for contributing as employees - and also to all our customers, suppliers and partners who cooperate with us in all our business areas all over the world. Let’s continue to grow and to develop a healthy and profitable Grieg Group – moving steadily forward into the future!
Wenche Kjølås Managing Director Grieg Maturitas AS
Mill. NOK
Operating revenues Operating profit (EBIT) Ordinary profit before tax
Mill. NOK
1000
6000
800
4800
600
3600
Operating revenue
Operating profit (EBIT)
(NOK 1 000)
2010
2009
2010
2009
2010
2009
2010
2009
Shipping
4 159
3 518
328
96
14
295
342
391
67
43
13
8
1
3
13
11
761
862
(0)
15
3
(0)
2
15 160
Ship broking Logistics Investments Others
400
2400
200
1200
0
2006
2007
2008
2009
2010
0
Total Grieg Group
Net financial items
Ordinary profit before tax
99
114
(30)
(7)
231
167
201
(18)
(15)
10
7
(2)
(2)
8
5
5 068
4 523
321
119
246
462
567
581
Grieg Seafood (100%) 1.)
2 456
1 621
638
154
28
48
666
318
Total Business Areas 2.)
7 524
6 144
960
273
53
470
1 012
858
1. 2.
Grieg Group’s share of Grieg Seafood as associated company is not included in Total Business Areas figures GSF in NGAAP figures (no fair value adjustment of biological assets)
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grieg s hipping group
Grieg Shipping Group is a fully integrated shipping organization and the owner of one of the world’s largest open hatch fleets.
Presently we own and operate 26 open hatch general cargo vessels and have a newbuilding programme of ten open hatch vessels to be delivered in the years 2012 to 2014. The Group also operates a fleet of 15-20 conventional dry bulk carriers including two supramax vessels on order, as well as manages a financial investment portfolio.
The Group provides transportation and logistic services for a number of industries. Particularly we have a special position in the transportation of forest products, such as wood pulp and rolled paper. Fertilizer and various metals are other important cargoes. Over the years, the Group has built up a broad customer base with a variety of different break bulk cargoes from steel products like pipes, wire rods and coils to different project cargoes as windmills and machinery. Punctuality, efficiency, quality and flexibility are the primary competitive advantages to ensure customer satisfaction.
The Group’s long-term commitment, financial strength and highly competent and dedicated people are of vital importance for the ability to deliver high-quality services and maintain the position as a world class shipping group. The organization emphasizes knowledge, skills and innovation. We recognize the environmental and social impacts of our business activities and focus on corporate responsibility and sustainable business development, both on a strategic and operational level. Our main concern at all times is the safety and security of the crew, the environment, the cargo and the vessels.
Open hatch The Group’s fleet of specialized open hatch vessels are tailor made to meet customers’ high quality transportation and logistics requirements and to deliver superior cargo care. The open hatch ships are designed with box-shaped holds, for optimal, safe and fast handling of pulp and other forestry products. Innovative features, such as removable tween decks, gantry cranes up to 70 mt., rain protection over unobstructed holds and cell guides, which allows for fast and safe handling.
The commercial operation is organized as a pool and is characterized by long-term contracts of affreightments where the ability to establish optimal sailing patters and cargo combinations is the most critical success factor. The pool operates a considerable network of trades with regular sailings and frequencies adapted to customers’ requirements. Multi-year contracts with shippers enable us to operate regular liner services in key trade lanes. Being customer-focused, long-term and industrial, the objective is to be the preferred carrier. The open hatch vessels are designed, developed and maintained to secure optimal operation through out their effective life. By continuous focus on quality routines and procedures, together with onboard training and drills verified by audits, the vessels are at all times in compliance with our high quality standard as well as all relevant national and international regulations.
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Operating revenues
Operating profit (EBIT)
Mill. NOK
Ordinary profit before tax
Mill. NOK
800
5000 4000
600
3000
400 2000
200 0
The vessels are manned by highly qualified Philippine seafarers, recruited through our manning agency Grieg Philippines Inc. We are proud of a high return rate of our crew which both indicates satisfaction with general working conditions as well as secures a crew that is familiar with our vessels and operational standards. As part of the open hatch’ logistic chain, the Group also owns a purposebuilt break-bulk terminal, Squamish Terminals, in Squamish, British Columbia, Canada. With two berths, three warehouses, specialized handling equipment, and intermodal transportation infrastructure, Squamish Terminals efficiently handles imports and exports cargo from and to major markets worldwide. The terminal is also for public use.
Conventional Bulk Carriers We also operate a modern fleet of 15-20 geared and grab-supplied handymax and supramax dry bulk vessels. The vessels are chartered from the market on short and long-term time charter agreements and are operated in contract trades and the spot market worldwide. As part of a growth strategy for the dry bulk business, the Group will take delivery of two supramax newbuildings in 2012.
12
1000
2006
2007
2008
2009
2010
0
Financial Asset Management The Group owns and manages a financial investment portfolio. Besides its main purpose to generate adequate risk adjusted returns, the portfolio serves as a long-term buffer for the shipping activity, providing overall solidity to the Group. The investment policy is founded on the Group’s business principles and long-term strategy. The management of the financial investment portfolio follows a traditional asset allocation approach.
M o d e r n C o m p a n y - P r o u d Tr a d i t i o n s Grieg Shipping Group is located in Bergen and Oslo, Norway with offices and representation in Atlanta, Mobile, Savannah, Charleston, Long Beach, Rotterdam, Brussels, Livorno, Gothenburg, Rio de Janeiro, Sydney, Seoul, Shanghai, Tokyo, Vancouver B.C, Squamish and Manila. In 2010, the Group employed 849 persons, of whom 625 are sailing personnel and 224 are office personnel. The Group is based on years of tradition, high technological standards and professional seamanship. We make use of this expertise and knowledge to pave the way in a continuous development towards a modern, competitive and sustainable business.
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Loading cargo at Mosjøen Industriterminal AS (MIT).
grieg logi s ti c s
Grieg Logistics is a leading logistics provider to Norwegian oil & gas, shipping, maritime and general industries on a local and global basis. Our products range from Freight Management, Contract Logistics, Project Logistics, Ship Services and Terminal Operations to Project Development Services.
In Norway, Grieg Logistics serves the whole country with a large number of offices, based on our policy of “going where the customer is”. Internationally we are established with own offices in Rotterdam, Singapore and Shanghai and provide our clients with total logistics services based on a worldwide partnership network with CEVA Global Logistics having more than 1000 offices on all continents.
sea and strengthen the competitive position of short sea shipping in intermodal transport chains.
2010 - a challenging year Grieg Logistics in 2010 experienced another very challenging year with reduced activity in all oil&gas related segments (Maintenance, drilling and projects) and nearly full stop in new orders in the ship building segment. The global transport market (air, sea and road) also continued with reduced volumes compared to 2008 level. In this context Grieg Logistics has experienced a 15% reduction in turnover. High activity in sales together with continuous focus on costs, quality and customer satisfaction, has made 2010 an acceptable year for Grieg Logistics. Increased activity in the North Sea Basin during the last months of the year has improved the activity level in our oil base branches along the coast. Statoil is still the driving force in this segment, but more and more other clients get into our logistics divisions portfolio.
Mosjøen Industriterminal AS (MIT) MIT has maintained a sound activity managing all harbour and plant related logistics on contract to the Alcoa Aluminium and Anode plants in Mosjøen.
Sale to Panalpina In February 2011 we announced that we are selling the freight forwarding part of Grieg Logistics to the Swiss listed company Panalpina AS. The transport industry is global, and nearly all the tenders are international. We want to offer a complete integrated world-wide network to our customers. The size and the world-wide presence of Panalpina enable them to compete in an increasingly global market. It is therefore our firm belief that the prospects are bright for the 100 employees that went over to the new owners, and we wish them the best of luck. Going forward Grieg Logistics AS will focus on maritime services and port operations. We clearly have ambitions for growth in this area as a natural part of the Grieg Group maritime profile. Operating revenues
Operating profit (EBIT)
Vestbase and Aker Subsea came in as our largest new clients in 2010. Good relations with ship yards, ship equipment suppliers and shipping companies resulted in a sound activity within our Freight Forwarding department.
Ordinary profit before tax Mill. NOK
Mill. NOK
1000
20
We also experienced low activity in our Project Division where the largest project has been supporting Odfjell Drilling with the mobilisation of the newbuilt drilling rig Deep Sea Atlantic.
800
15
600
10
R e s e a r c h p r o j e c t “ s hift ”
400
In our project development department we have together with Marintek, DnV and other partners, started a new research project “SHIFT”.
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The main objective for the project is to pave the way for successful new short sea shipping business initiatives that will shift cargo from land to T HE
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joa c hi m grieg & c o
Joachim Grieg & Co is an international ship broking company working out of the Grieg Group’s main office in Bergen, Norway. The company was established in 1884 and is today serving ship owners and charterer’s from around the world.
In 2009 the company worked in two units - a dry cargo department and a sale and purchase department. Since January 2010 a gas department and a chemical department have been added.
is the basis for the commercial decisions Joachim Grieg & Co makes in consultation with Star Shipping.
Dry cargo department The dry cargo department consists of 13 brokers and 2 operators. The dry cargo department is divided in a Competitive desk and a Grieg Star Shipping desk. The Grieg Star Shipping desk is divided into 2 sections, the specialised “open hatch” division and the conventional bulk carriers division. Each division has its own dedicated brokers with top market knowledge. The competitive desk offers broker services and expertise to their customers in competition with brokers all over the world. The desk has built a substantial portfolio of external customers during the recent years. Among the customers on the competitive market are charterers like Rio Tinto, Hydro Aluminium, Elkem and owners like United Bulk Carriers, Ugland Bulk Carriers, TBS, Clipper. The company’s main focus is on the handysize/handymax/supramax market (vessels from 10-60.000 dwt). Recently Joachim Grieg & Co also took over all chartering activities for our sister company Grieg Logistics. Joachim Grieg & Co holds exclusive authority to act on behalf of Grieg Star Shipping. It is vital that the department is at all times updated with regards to the cargoes, vessels and contracts that circulate in the market. This information 16
Sale and Purchase Department With the same number of brokers (4), the department has succeeded in increasing the number of succesful transactions by approximately 25 % on 2009. A large portion has been recycling of mainly chemicaltankers including 5 for account stocklisted Odfjell SE, however also several resale newbuilding bulkcarriers are represented.
Gas Department The gas department started its activity with three brokers 5th January 2010, of which two in Oslo and one in Bergen. Two additional brokers, one operations manager and one researcher joined the team 8th April, increasing the team to a total of seven. In addition one broker joined the gas and liquid chemical team in Bergen on a consultancy basis in September. The team has covered all segments of the gas market, LPG, NH3 and Petchem on spot, COA, TC, S&P and Newbuildings. It must be added though that our coverage on the fully ref spot/COA market has been insufficient due to lack of manpower. The department is making plans to amend this by adding one dedicated broker for this if/when such qualified broker can be found.
Ship broker Erlend Holm.
Operating revenues
The gas markets started out at quite a low ebb and improved somewhat after the summer, especially in the sub 20000 cbm size bracket. Despite this the department has coped quite well and on an invoiced commission basis made a profit for the year. The Gas Department has also started building up a forward book which is an important element of the department strategy.
Operating profit (EBIT)
Mill. NOK
Ordinary profit before tax
Mill. NOK
100
20
The department is also dragging some interesting projects under development over into 2011, the closure of which might lay a good revenue foundation for this year.
80
15
60
It is expected that the gas markets will continue improving over 2011, but one must be realistic when it comes to the extent of this.
10 40
Ta n k D e p a r t m e n t
5
In May 2010 Joachim Grieg & Co established a new tank department. The department currently employs three people, and we are expecting to expand further with a few more brokers and an operator during 2011.
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a Grieg Group company
m ari s
MARIS is focusing on safety and fuel optimalization systems and is a among the leading companies in supply of electronic chart systems, data recorders, radar processing systems and digital services. More than 4,000 systems have been delivered to end-users in 40 countries.
MARIS is a private limited company with head office in Tønsberg, Norway, with subsidiaries in St. Petersburg and Singapore and with distributors in more than 20 countries. The company was founded in 1997 by a group of engineers with world-class experience in maritime onboard systems focusing on radar tracking systems and electronic charts. Grieg International became a shareholder in 1999 and have since 2001 been a major owner and active in developing the company to what it is today. Innovative engineering from people in MARIS has added several ‘world’s firsts’ to the global list of milestones. More than 40% of the company employees are working in research and development. MARIS has delivered the largest sea surveillance system in the world. Other world’s firsts are: • • • • •
Type approved automatic radar system based on a PC Certified Flat Panel Computer (FPC) to be used onboard vessels Certified ECDIS based on a FPC Approval from United Kingdom Hydrographic Office (UKHO) on update of certified electronic charts Wheelmark certified electronic chart system/data recorder
In 2009 MARIS was awarded a 7 year contract by UKHO as the supplier of an ordering, management and maintenance system for marine navigational products and services. This development part of this contract will be concluded during 2011. The UKHO is a Government Trading Fund and part of the Ministry of Defence and has been charting the world’s oceans for over 200 years providing navigational products and services to the Royal Navy and merchant marine in compliance with Safety Of Life At Sea (SOLAS) regulations. MARIS executed a significant R&D effort in 2010 which will lead to launch of new products and product updates during 2011. MARIS turnover amounted to NOK 60.4 mill. The turbulent times are challenging but mandatory implementation of electronic chart systems from 2012, the long-term contract with UKHO, new products and services like fuel optimalization and digital services, MARIS is in an excellent position for future growth.
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grieg inter national
Grieg International is a private equity (PE) investment company. The overall objective for the investment portfolio is to provide competive returns for the company.
Private equity investments (unlisted papers) are characterized by active ownership and long investment horizons and are often considered less liquid than listed papers. PE investments have historically yielded above-average returns.
Oil services and financial services currently account for almost 60% of the direct investment portfolio. However, going forward there will be more emphasis on investing in clean-tech/renewables and real estate.
Grieg International´s portfolio consists of both direct investments in companies and investments in PE funds, with a targeted split of 60% and 40% respectively. Investments in funds are made to balance the risk of the overall portfolio. Direct investments are primarily directed towards the following industries; • • • •
Oil services Clean-tech and Renewable energy Real estate Financial services
When evaluating investment opportunities, as a single-handed effort or together with co-investors, Grieg International considers factors like sustainability, growth potential, uniqueness, management and synergies. Projects with a clear and predictable path towards a positive cash-flow and a certain degree of maturity are prioritized. A majority stake is not required, but Grieg International prefers to have a strong influence in projects undertaken, which is often attained through board representation. Grieg International will enter into ventures with co-investors given common objectives. In order to meet objectives and realize synergies, it will be important to utilize the competence, knowledge and network of the Grieg Group. Grieg International is located at Skøyen, Oslo and has three employees.
Grieg International is part owner of Stril Offshore - an investment within the oil service segment
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grieg in v e s tor Independent Institutional Investment Services
About the Company
About 2010
Grieg Investor works with a broad range of institutional clients like family offices, foundations, municipalities, pension funds, life insurance- and non-life insurance companies as well as shipping companies. The total asset under management is approximately USD 5 billion.
2010 was somewhat more volatile than 2009, but we saw positive return in most asset classes, which ended up in positive return for all clients, as in 2009.
In our segment we have the number one position in the Norwegian market. Grieg Investor’s investment services can be divided into four different categories: 1. Investment strategy: We assist our clients to uncover their long term objectives and risk tolerance in order for them to set up an overall investment strategy for their assets. 2. Investment manager selection: We help our clients to implement their investment strategy by identifying which fund managers to invest with. We also assist in all matters regarding the actual transactions with fund managers. 3. Performance measurement and attribution analysis: We review the investments on a monthly basis on behalf of our clients. Through monthly performance reports and attribution analysis we evaluate the total result as well as the performance of the fund managers. 4. ALM-modelling: We also do asset-liability-modelling for pension funds, and we have built our own model for this purpose. In brief, we provide a full scale professional investment service within the asset management area, including outsourcing of consulting services from our offices in Oslo, Stavanger, Bergen and Trondheim. In total there are 16 investment professionals working in the company.
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Grieg Investor is an investment consultancy regulated by Finanstilsynet (The Financial Supervisory Authority of Norway). The company provides independent investment services to institutional investors, focusing on customised solutions for a demanding client group.
We also experienced continued growth on the client side, so we have had a good growth in our client base. We trust that this is a sign of confidence in what we do. Our business model is solidly based on real independence, and on the client’s best interest. We aim to further develop our strong client relationships and to provide even better services in the future. Many of our employees have been with the firm for 10 years or more, and the culture is strong.
Co-operation With Rockefeller Philanthropy Advisors Grieg Investor has entered into co-operation with Rockefeller Philanthropy Advisors (RPA) for the joint delivery of donor-, foundation- and family office consulting resources. RPA has a solid reputation worldwide, and generations of experience within mission related strategy. The ambition is to combine this with the high quality independent investment services from Grieg Investor.
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relate d c o m panie s
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Grieg Seafood NorWind Installer AON Grieg Grieg Development
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grieg s eafoo d The Group is today present in Norway, British Columbia (Canada) and in Shetland (UK), employing approximately 530 people. Grieg Seafood ASA was listed at the Oslo Stock Exchange (OSEBX) in June 2007. Our headquarters are located in Bergen, Norway. The business development of Grieg Seafood ASA focuses on profitable growth, sustainable use of resources and being the preferred supplier to selected customers.
Grieg Seafood ASA is one of the world’s leading fish farming companies, specializing in salmon and trout. The company has an annual production capacity of more than 90,000 tons gutted weight.
Outlook In accordance with existing production plans, Grieg Seafood expects to harvest 64,800 tons in 2011. This includes an increase of 1,800 tons attributable to the acquisition of Erfjord Stamfisk and is otherwise in accordance with previous guiding. Operating revenues
2010 shows the best annual result ever for Grieg Seafood. This is due to both external and internal factors. The salmon price has been high and stable throughout the year. The demand has been higher than the supply on the world market, increasing prices for our products. In addition, all regions have been able to maintain a high production and stable and good biological development. Ocean Quality AS, the new sales organization for Grieg Seafood and Bremnes Seashore, was established late in 2010. The company’s main office is located in Bergen, while two regional offices operate in Alta in Northern Norway and Bømlo on the south west coast of Norway. Grieg Seafood holds 60 %, while Bremnes Seashore holds the remaining 40 % of Ocean Quality AS.
Grieg Seafood BC owns and operates 21 growout licences. The company has its own smolt production and hatchery. We employ about 130 people during peak time, including part time help.
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GSF Hjaltland currently operates 37 growout licences with harvesting and processing facilities. The company also manages its own sales department, in addition to a smokehouse. We employ about 160 people.
Mill. NOK
Operating profit (EBIT)
Grieg Seafood in 2010
2500
Ordinary profit before tax
2000
Mill. NOK
800
1500
600 1000
400
500
200 0
0
-200 -400
2006
2007
GSF Rogaland operates 20 growout licences with smolt production. GSF Rogaland is also responsible for harvesting. Grieg Seafood ASA recently bought all the shares in Erfjord Stamfisk AS, a broodstock (roe) company in Rogaland. We employ about 90 people.
2008
2009
2010
GSF Finnmark produces salmon and trout based on 24 growout licences, complete with harvesting facilities, in addition to 1 smolt production facility. We employ about 150 people.
From the world’s end… Our farm sites are situated in clean, cold waters with optimal natural conditions for farming salmon and trout. These conditions are found in extremely remote areas – at the world’s end – where the fish farming industry provides important jobs to small communities. …to the big city The salmon or trout from Grieg Seafood may end up on an exclusive sushi restaurant in Tokyo or London, or on a healthy dinner plate in a San Francisco home.
T HE
GRIEG
GROUP
ANN UAL
REPO RT
201 0
25
NorWind turnkey contractor (design, fabrication and installation of six jacket foundations) at Germany’s first offshore wind project, Alpha Ventus.
26
N or w in d in s taller
Norwind Installer offers market leading installation services to the offshore wind market
NorWind Installer currently employs 11 staff members who bring expertise and competence from the oil and gas sector and the marine industry. NorWind Installer develops state of the art tools and methods for the installation of foundations for the offshore wind industry.
Our aim is to bring the cost of transportation and installation of foundations down to the level required for offshore wind to be profitable without subsidies.
We combine our methods with the speed and sea-keeping ability of existing construction support vessels. Therefore we can offer significantly faster and more predictable installation of piles for foundations than our competitors. This service targets one of the initial and most critical phases in the development of windfarms. The ability to install in harsh weather conditions is a significant success factor when constructing a windfarm.
To ensure access to the leading, most cost-effective solutions and vessels, NorWind Installer is building alliances and partnerships with key specialist contractors within the oil & gas and offshore construction industry. NorWind Installer AS is owned and supported by Grieg Group (40%), Scatec (40%) and Trønderenergi Invest (20%).
NorWind Installer is also continuing its development of a dedicated installation vessel that will improve the efficiency of the transport and installation of foundations and also contribute significantly to increased speed and cost reduction.
A O N grieg
Aon Grieg is Norway’s largest insurance broker, with a market share of 30 per cent. The company was established as Duo Insurance Brokers in 1874 – primarily offering services to the marine industry. The Grieg Group owns 20% of Aon Grieg.
The company was bought by Rollins Hudig Hall in 1993, and the name changed to Aon Norway in 1996. Grieg Insurance (established 1975) was acquired in 1998, when the name was changed again. Today Aon Grieg provides solutions for a wide variety of clients: Shipping, the oil industry, all business and industry segments, towns, municipalities, museums, galleries and many
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GRIEG
different organizations. Services include risk management consulting, insurance and reinsurance brokerage as well as pension and other HR-related consulting services. Aon Grieg’s total operating revenue (2010) was NOK 283 million. Aon Grieg has approximately 145 employees.
GROUP
ANN UAL
REPO RT
201 0
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grieg d e v elop m ent Our sole investment – Grieghallen Parkering AS is the ownership company to a combined three story underground parking facility (named GriegPark) where one of the parking levels easily can be converted to an attractive and well equiped exhibition area/event venue.
and marketing of GriegPark. Q-Park is a Dutch public company and one of the largest parking companies in Europe targeting the “high end” of the parking market – witch means strong focus on consumer service, security and facility maintenance. Grieg Development is working in strong relations with Q-Park to reach and maintain common goals.
GriegPark is situated next to the famous Grieghallen in Bergen and was opened to the general public in august 2006. The demand for proper parking facilities in the centre of Bergen has proven right as well as all our economical estimates has been above initial expectations. Visitors to both parking facilities and the exhibition area is showing steadily growing numbers. We consider our long term ownership as financial sound and the return on our investment to be solid.
Grieghallen AS is also a vital partner for GriegPark – taking care of the daily ownership responsibilities on behalf of Grieghallen Parkering AS. Grieghallen have the exclusive management rights in all matters concerning the exhibition area. The “three-party partnership” is perceived as a successful collaboration between commercial and public interests – giving revenues to all parties involved. High quality indoorparking is facing increased demand in the years to come. We consider our investment to have a continuous and prosperous yield in the year to come.
“Edvard Grieg’s Plass” is the top level/roof of the parking facilities. It was finished during July/August 2010 and has shown its value as a new public area in the centre of Bergen. The final stage in upgrading Grieghallen’s surrounding areas will be completed the spring of 2011. Our partner and only tenant Q-Park is keeping the daily management
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Grieg Development is a project based company with main focus on development and ownership of parking facilities.
grieg propert y
Grieg Property is a Grieg Group Company, owning the majority of the Grieg Group’s real estates, buildings and art collection.
This includes the headquarter Grieg Gaarden in Bergen, where many of the Grieg Group’s companies are situated. Grieg Property is also in charge of a financial portefolio. The company will continue developing the Grieg Group’s real estates in a modern and environmentally way, to secure the Grieg Group’s further expansions.
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GRIEG
GROUP
ANN UAL
REPO RT
201 0
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c orporate re s pon s ibilit y The general public often perceives the Grieg Group as one company, while it in fact is comprised of several autonomous businesses owned by Grieg Maturitas and Grieg Foundation. Therefore, each company needs to be responsible for building and maintaining the Group’s brand and reputation to the public. We acknowledge the need for a common strategic approach to Corporate Responsibility with improved internal follow-up mechanisms and routines within all our business entities. We are proud of what we have achieved over the past years, and we are committed to doing our part to ensure we leave the earth in good condition for future generations. Ethical Guidelines The Grieg Group has implemented common ethical guidelines. As part of an active, international business environment, the Grieg Group accepts a particular responsibility for ethical awareness. Our activities are closely connected to the community which we are a part of and we wish to broadcast what the Grieg Group is doing to raise ethical awareness among our employees. The Group emphasises a high ethical standard. We acknowledge that the practice of an unambiguous and national “Code of Conduct” is challenging in a diverse business with international operation. Thus, our ethical guidelines are developed with the intention to be a tool to maintain a high ethical standard relative to Norwegian circumstances, and at the same time give clear guidance when our employees’ dilemmas are in conflict with other management- and business cultures. The guidelines are based on simple principles of transparency and reporting. As an alternative to writing a complex set of detailed rules, we instruct our employees to document and report to superiors when facing corruption, facility payments and other situations that challenge ethical principles. This contributes to an internal discussion of difficult subjects and thus maintaining an ethical awareness. The Grieg Shipping Group has in addition developed detailed rules for employees who face particularly challenging dilemmas concerning corruption.
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Va l u e s The Grieg Group companies operate within diversified business segments. This creates great opportunities for synergies and knowledge sharing, but also creates challenges related to information flow and how the public perceives the Grieg brand. The Grieg Group’s values have developed during our long history, and in 2002 the group initiated a shared project with focus on our common values in order to develop and strengthen a sound business culture and the sense of community within the group. In addition to being a common basis for ideas and decisions, the values generate important discussions and serve as a foundation for business ethics and other related issues. The integrity of our employees and our shared values define the compass by which we navigate when doing business across the world: Open, Solid, Proud and Committed. The Grieg Group keeps the values on the agenda; they are debated, and interpreted so that every employee gets a chance to reflect on what the Grieg Group values means - for the company and for the individual.
Grieg Foundation The Grieg Group is proud to be owned 25 per cent by the Grieg Foundation. Through Grieg Foundation one quarter of the values created by the Grieg Group will be endowed to society. Please refer to the Grieg Foundation’s section on the next pages.
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GROUP
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grieg foun d ation
The Grieg Foundation was established in its present form in the autumn of 2002 and owns 25 per cent of the Grieg Group’s operative companies. It has no voting power, but is guaranteed a dividend. This secures that a proportion of the values created by the Grieg Group will benefit the society.
Grieg Foundation contributes substantial amounts to a wide range of activities. Internationally and in Norway, there is an increasing need to support children and youth. Many of the projects Grieg Foundation support are in the intersection between youth work and culture work. Other contributions are given mainly towards health, research and other benevolent projects in Western Norway.
Grieg Foundation contributed to national and international projects with about NOK 50 million during 2010, and is committed to considerable additional funds for accepted projects over the next years. Since 2002 Grieg Foundation has awarded a total of NOK 305 million to various projects. The Grieg Group is proud to have a shareholder like Grieg Foundation and the work it represents.
Selected contributions 2010 CARF
Bellona: The Sahara Forest Project
Children at Risk Foundation (CARF) works with children and teens in the favela areas of São Paulo, Brasil. This is a deprived area with a lot of street children, poverty, alcoholism and crime. The CARF project uses art and culture as tools to combat the negative influences, and aims to give the children self-confidence and belief in their own abilities. Grieg Foundation has supported CARF for several years.
The Sahara Forest Project has a vision of creating re-vegetation and green jobs through profitable production of food, water, clean electricity and biomass in desert areas. The plan is to do this by combining already existing and proven environmental technologies, such as evaporation of fresh water from seawater, and solar thermal technologies.
Contribution 2010: NOK 2.5 million
The project will now start to build a plant in Jordan where solar energy will be used to produce fresh water and biomass in the form of algae from seawater. The biomass can be used to produce food and energy. The humidity surrounding the plant will create vegetation in the desert sand. Norwegian authorities will contribute NOK 3.6 million to the pre-study and test plant. The Grieg Foundation is contributing NOK 2.1 million. Contribution 2010: NOK 2.1 million
Opera Projects Grieg Foundation has supported several opera projects during 2010. We have co-operated with: • • •
Opera Bergen Den Nye Opera (Opera for Children) Opera Omnia (Os)
Contribution 2010: NOK 1.8 million
32
Children from the SOS Children’s Village in Mekelle, Etiopia. Grieg Foundation contributed with NOK 10 million to a renovating project in the Village. Photo: Berit Bakkane
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GRIEG
GROUP
ANN UAL
REPO RT
201 0
33
FINANCIAL statements GRIEG GROUP 2010 Operating revenues Operating profit (EBIT) Operating revenues
Operating Ordinary profit before tax revenues Operating profit (EBIT) Ordinary profit Grieg Group beforematuritas tax
Operating profit (EBIT) Ordinary profit grieg shipping group
Mill. NOK
Mill. NOK
1000
6000
800
4800
before tax
Mill. NOK
Mill. NOK
800
5000 4000
600 600
3600
400
2400
200
1200
0
2006
2007
2008
2009
0
2010
3000
400 2000
200 0
1000
2006
2007
2008
2009
2010
0
Operating revenues
Operating profit (EBIT) Ordinary profit grieg logistics group before tax
grieg seafood group Operating revenues
Mill. NOK
Mill. NOK
20 15
1000
Operating profit (EBIT)
800
Ordinary profit before tax
600
10 400
5
200
Mill. NOK
Mill. NOK
2500 2000
800
1500
600 1000
400
500
200 0
2006
2007
2008
2009
2010
0
0
Operating revenues
-200
Operating profit (EBIT)
-400
ks Ordinary Joachim profit grieg & co Mill. NOK
0
before tax
2006
2007
2008
2009
2010
Mill. NOK
100
20
80
15
60
10 40
5 0
34
20
2006
2007
2008
2009
2010
0
the grieg group financial statementS 2010
directors’ report 2010 Grieg Maturitas AS is the parent company of the Grieg Group which is based in Grieg-Gaarden in Bergen. The activities of the Grieg Group is mainly releated to shipping, logistics, shipbroking, fish farming, investment and investment advisory services, technology and renewable energy.
Going concern
The Annual Accounts for 2010 have been prepared on a going concern basis.
Annual Accounts Grieg Maturitas AS Grieg Maturitas AS is a holding company with revenues mainly in the form of financial income and dividends from subsidiaries. Operations resulted in a loss of NOK 4.9 million, against a loss of NOK 3.4 million in 2009. Net financial items showed a profit of NOK 120.1 million against NOK 65.9 million in 2009. The pre-tax profit rose to NOK 115.3 million from NOK 62.5 million in the previous year. Total assets amounted to NOK 603 million, against NOK 546 million in 2009. The increase was mainly attributable to accounts receivable from Group companies. The company’s equity rose by NOK 16 million to NOK 501 million and at year-end the equity ratio stood at 83%, against 89% in 2009. The company’s liquidity is satisfactory. The Board believes that the annual accounts give a correct view of Grieg Maturitas AS and of the Group’s assets and liabilities, financial position and results. Group accounts 2010 was another good year for the Grieg Maturitas Group with pre-tax profits of NOK 567 million on a turnover of NOK 5 068 million. The corresponding figures for 2009 were pre-tax profits of NOK 581 million and a turnover of NOK 4 523 million. The net cash flow in 2010 totalled NOK 19 million. Group liquidity is at a good level and at year-end the equity ratio stood at 58%, against 63% in 2009. For a more detailed account of the consolidated accounts we refer to the comments on the annual accounts of subsidiaries in the sections below.
Main companies Grieg Shipping Group Based on a stronger shipping market and despite lower financial income due to payments on newbuilding contracts, the Grieg Shipping Group can report sound pre-tax profits of NOK 338 million against NOK 370 million in 2009. Freight revenues totalled NOK 4 160 million, an improvement of NOK 645 million on the previous year. The increase was due to higher transport volumes and freight rates for the open-hatch vessels, as well as better earnings from conventional dry bulk activities.
the GRIEG group financial statements 2010
The higher level of activity also entailed an increase in operating costs of NOK 410 million from NOK 3 433 million in 2009 to NOK 3 843 million in 2010. A substantial part of this increase was due to voyage-related costs in general, especially bunker costs, while the depreciation charge has increased because of the delivery of new vessels. The Group’s operating profit was NOK 317 million, up from NOK 85 million in 2009. Net financial items made a positive contribution of NOK 22 million which was substantially lower than the NOK 300 million recorded in 2009. Last year’s figure included foreign currency gains of NOK 175 million, while the corresponding figure in 2010 was insignificant. The return on the investment portfolio was NOK 105 million, which was NOK 79 million down on the previous year. The increase in interest costs from NOK 60 million in 2009 to NOK 85 million in 2010 was due to new loans to finance the vessels delivered in 2010 and the Group’s newbuilding programme. At year-end 2010 the Group had total assets of NOK 7 098 million, reflecting an increase of NOK 857 million, most of which comprised vessels and newbuilding contracts. At the same time, current assets were NOK 85 million lower at NOK 1 935 million. Aggregate debt was NOK 779 million higher at NOK 3 585 million, mainly due to an increase in mortgage loans and tax payable on the transition to the new tonnage tax scheme. Book equity at yearend stood at NOK 3 513 million, an increase of NOK 78 on the previous year. Grieg Logistics Group Turnover fell by NOK 97 million from NOK 862 million to NOK 765 million in 2010. The decline in operating income was due to a lower level of activity in all of the Group’s business areas. Operating costs fell from NOK 846 million in 2009 to NOK 764 million, thereby reducing the operating profit by NOK 15 million to NOK 1 million. Net financial items contributed NOK 6 million to the pre-tax profit for the year which totalled NOK 7 million, up NOK 2 million from 2009. The result of financial items was greatly affected by a net gain on the realisation of subsidiaries and associated companies. However, the company’s share of the loss recorded by associated companies contributed negatively. Parts of the business were transferred to a newly established Group company at the end of 2010. As a result, total assets were down compared with 2009. Total assets ended the year NOK 52 million lower at NOK 124 million, with current assets amounting to NOK 118 million, against NOK 142 million in 2009. Total debt and liabilities came to NOK 81 million, against NOK 124 million in 2009. Equity totalled NOK 43 million, against NOK 53 million in 2009. The equity ratio stands at 35%, up 5% from 2009. KS Joachim Grieg & Co Operating revenues in 2010 were NOK 24 million higher at NOK 67 million. NOK 16 million of the improvement was attributable to the new departments that have been established for broking of gas and chemicals, which provided NOK 14 million and NOK 2 million, respectively. The
35
remaining increase in sales was largely due to a generally stronger market for dry cargo broking activities, as well as increased activity in purchases and sales of ships. Operating costs rose from NOK 36 million in 2009 to NOK 55 million, mainly due to higher payroll and operating costs which reflected an increase in both manpower and the level of activity. This resulted in an operating profit of NOK 13 million which was an improvement of NOK 5 million on the previous year. Net financial income was NOK 2 million down on 2009 and totalled NOK 1 million. The decline was due to lower exchange gains on the USD. Pretax profits totalled NOK 13 million, which was NOK 3 million up on 2009. Total assets were NOK 11million higher at year-end, totalling NOK 36 million. Total debt and liabilities were NOK 12 million higher at NOK 32 million due to an increase in debt to owners and public authorities. Equity stands at NOK 5 million, unchanged from 2009 GRIEG INTERNATIONAL GROUP Operating income fell by NOK 20 million to NOK 62 million in 2010. Operating costs were unchanged from the previous year NOK 87 million. The operating result was a loss of NOK 26 million, which was NOK 21 million down on 2009. Net financial items showed a positive result amounting to NOK 31 million compared with NOK 64 million in 2009. Well over half of the net financial result related to dividends from the company’s shareholdings in other companies of the Grieg Group. The remainder was attributable largely to value changes in mutual fund investments. The pre-tax profit was NOK 5 million against NOK 59 million in 2009. Total assets at year-end amounted to NOK 990 million which was a decline of NOK 25 million from 2009. Current assets accounted for NOK 301 million, which includes an increase of NOK 5 million in liquid funds. Group debt amounted to NOK 96 million, against NOK 73 million in 2009, while equity fell by NOK 48 million to NOK 894 million, mainly due to a provision for dividends. Grieg Investor AS Sales in 2010 totalled NOK 36 million, reflecting an increase of NOK 6 million on the previous year. The operating profit rose by NOK 5 million from the previous year and totalled NOK 7 million. The pre-tax profit was NOK 7 million, an increase of NOK 2 million on the previous year. Total assets came to NOK 25 million, unchanged from 2009, with current assets accounting for NOK 24 million. Total debts and commitments were NOK 2 million higher at NOK 15 million. Book equity at year-end stood at NOK 10 million, against NOK 11 million in 2009. Grieg Seafood Group The Grieg Maturitas Group has a 49% shareholding in Grieg Seafood ASA, and the company is incorporated in the consolidated accounts as an associated company. 2010 was a historically good year for Grieg Seafood with considerable progress made in all European regions, especially in Shetland. The contribution from Canada was somewhat lower. An increase in both the harvested volume and
36
salmon prices, in addition to better biological production, was the main reason for the improved results. The consolidated result (NGAAP) was a profit of NOK 666 million before tax, which was an improvement of NOK 485 million from 2009, and total turnover was NOK 2.446 mill. Book equity (NGAAP) is NOK 1 740 million and the total balance sheet is NOK 3.650 mill. Grieg Seafood Group’s financial position improved considerably in 2010 in relation in terms of both the capital base and liquidity.
Financial risk
The Grieg Maturitas Group is exposed to financial risk. A large proportion of the Group’s revenues, assets and liabilities are denominated in foreign currency, mainly USD. Changes in exchange rates therefore affect the accounts which are prepared in NOK. The Group companies involved have strategies and procedures which reduce both the foreign exchange risk and the interest rate risk and use various financial derivatives to hedge against undesired risk. Several of the Group companies have considerable investments in securities, and changes in the value of these investments have a direct effect on the financial result. The funds are managed in accordance with a long-term strategy with a defined mandate and adopted risk parameters. The Group’s liquidity exposure is considered to be low. The risk that the Group’s counterparties will be unable to meet their financial obligations is considered to be relatively low due to their financial strength and the diversified customer portfolio, and the fact that, historically, the level of losses on receivables has been low. In those parts of the Group which have a large customer portfolio the risk is reduced thanks to good procedures for assessing creditworthiness.
The market and prospects ahead
As 2010 started, our expectations of the shipping market were moderately optimistic, but the year turned out better than expected. Average freight rates for supramax dry bulk carriers stood at USD 23 000 per day in 2010 compared with USD 17 000 in 2009. Economic indicators have pointed gradually upwards, despite increasing concern about private and public debt and high unemployment in the industrialised countries. China continued to be the locomotive of growth and again had a considerable effect on world trade and seaborne transportation. The Grieg Shipping Group experienced a 23% increase in cargo volumes in 2010, the biggest contributor being wood pulp. The recent decline in Chinese imports, combined with unusual weather conditions which have placed a brake on Australian exports in conjunction with the delivery of a considerable number of newbuildings, has so far had the effect of depressing freight rates in 2011. It is also unclear how great the growth of the dry bulk fleet is going to be. There is therefore great uncertainty about 2011 and a sharp decline in the dry bulk market recently is in line with the somewhat pessimistic market outlook for the coming year, mainly driven by the supply side. One positive sign is the fact that global growth indicators continue to point upwards. The Group is well placed to benefit from any opportunities that might
the grieg group financial statementS 2010
arise and our ambitious newbuilding programme for 10 open hatch vessels shows that we take a positive view of the likely development in the longer term. Joachim Grieg & Co is in a process of strong development and 3 new departments were established in 2010 in the area of gas, chemicals and research. The company, as the exclusive broker for Grieg Star Shipping and as a competitive dry cargo broker, is affected by the same factors which apply to the Grieg Shipping Group, as described above. The gas market has been very weak and characterised by catching up after the financial crisis, but it has made some recovery recently. The chemicals market has been very low for the last couple of years and it is still characterised by too many vessels which means that another few years will have to elapse before an acceptable level of rates can be expected. In the business areas dealing with ship sales/purchases and projects the shipping markets in general and restrictive access to financing have affected activities and the prospects for the coming year are mixed. The activities of Grieg Logistics are mainly targeted on the Norwegian petroleum and maritime industry. Maritime services and port operations were at a low level in 2010 compared with previous years. The freight forwarding business was characterised by a low level of activity among customers in the first half-year, but picked up as the year progressed. At the same time, the company met hard competition in the market, from both local and international players. As a result of our focus on quality, flexibility and service-mindedness a high percentage of contract tenders have been won. By the end of 2010 Grieg Logistics had signed a number of long-term logistics contracts which will form the basis of the company’s earnings in 2011. In February 2011 Grieg announced the sale of the freight forwarding business to the listed Swiss company Panalpina. The Grieg Group will continue to provide maritime services and port operations through a newly established company. The Grieg International Group consists of the companies Grieg International AS, Grieg Athena AS and Maris. Grieg International and Grieg Athena have a number of direct investments in companies and private equity funds, where the main activities relate to oil/offshore, finance and renewable energy. Steps are in hand to increase the proportion of investments in the area of renewable energy. In 2010, Maris was mainly focused on the development of new electronic ship navigation systems, in addition to the upgrading of the existing systems. The market for these products is considered to have considerable potential in the coming years and the company is considered to be competitively well placed. The focus on independent financial advice is expected to impact positively on the development of Grieg Investor and the company sees good potential for further growth. In the period ahead the company will continue to have a diversified customer base comprising local authorities, foundations, pension funds, insurance- and non-life insurance companies, as well as family-owned investment companies.
the GRIEG group financial statements 2010
With regards to Grieg Seafood ASA, 2010 was a historically good year in the salmon market. The low harvested volume in Chile led to a small reduction in the global supply of salmon which coincided with strong demand in both the established and the emerging markets. The improvement in the biological situation in Chile is likely to lead to increased supply from the end of the year. On the other hand, there is little to indicate that there will be any significant increase in production in Norway in the next couple of years. Combined with further good growth in demand in the main markets and increasing demand in emerging markets, the market prospects are good in both the short and longer term. Grieg Seafood expects a slightly higher harvested volume in 2011, compared with last year. Based on a probably increase in feed prices, but with a strong price level for salmon, the conditions are right for another good year in 2011. With reference to the above remarks, the Board of Grieg Maturitas AS wishes to stress that, as a rule, there is considerable uncertainty attached to assessments of future conditions.
Working environment
Grieg Maturitas AS has one female employee, and no sick leave in 2010. At 31 December 2010 the Grieg Group had 1700 employees. Of those, the crews of vessels owned by the Grieg Group accounted for 37% and employees employed by Grieg Seafood 35%. Health and environment The Grieg Group encourages and facilitates participation in physical activity through in-house training facilities or economic support for external activities. Absence from work in the Norwegian part of the Group is distributed as follows:
Total absence
Total absence(%)
Grieg Logistics Group
2 319
5.1
Grieg Shipping Group
810
2.5
Joachim Grieg & Co
154
2.4
33
0.9
Company
Grieg Investor Other companies
220
1.6
Total
3 536
3.5
Of which proportion of long term sick leave
2 058
2.0
37
One injury was reported on land. Among the sailing personnel, 3 crew members had to sign off due to injury. There is a continuous focus on training and performance of work processes in order to reduce the risk of serious occurrences in the future. Equal opportunities The company and the Group do not accept discrimination on the basis of gender, religion, cultural background, race, or in any other form. We wish to have a business based on respect and complete equality for all employees. Of the Group’s 418 employees in Norway, 36% are women. The company’s Board of Directors comprises three women and one man. The Board of Directors is chaired by a woman.
Profit for the year and allocations
Grieg Maturitas AS recorded a profit for the year of NOK 115 984 000 which the Board proposes to allocate as follows: Dividends Other equity
NOK 100 000 000 15 984 000
Total allocation
115 984 000
Distributable equity at 31.12.2010
236 480 000
The Board would like to thank all employees of the Group for their untiring efforts in 2010.
External environment
The activities of Grieg Maturitas AS do not pollute the external environment. A number of the company’s subsidiaries are engaged in activities which entail a risk that the external environment could be polluted or affected. Our long-term vision is no emissions into the sea or the atmosphere. As well as complying with both national and international environmental regulations, laws and rules, the companies strive to play a proactive role in implementing environmental procedures and technology in order to reduce the risk of environmental damage. The most effective way of reducing CO2 emissions in the future is to reduce the fleet’s total energy consumption. A number of development projects and investments were carried out in 2010 in order to improve the fleet’s environmental performance, including the further installation of fuel-reducing equipment on the vessels. The treatment of ballast water, the management of waste and the recycling of vessels are important matters which are being actively addressed. All areas of Group activity have a continuous focus on steps that can be taken to make improvements in relation to the environment. Post year-end events The Grieg Group has sold one of its areas of business under Grieg Logistics and reference is made to the section above headed ”The market and prospects ahead”. The sale was effected in 2011 and does not affect the accounts for 2010.
Bergen, 24 March 2011 The Board of Directors of Grieg Maturitas AS
Elna-Kathrine Grieg Chair
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Elisabeth Grieg Board member
Camilla M. Grieg Board member
Per Grieg jr. Board member
Wenche Kjølås Managing Director
the grieg group financial statementS 2010
profit and loss statement 01.01-31.12 grieg maturitas as grieg maturitas group Figures in NOK 1 000 Figures in NOK 1 000 2010 1 000
2009 -
1 000
-
2 765 3 122
518 2 885
5 887
3 403
-4 887
-3 403
119 688 5 451 -4
65 310 649 -35
120 140
65 924
115 253
62 521
731
593
115 984
63 114
100 000 15 984
60 000 3 114
Note
operating Revenues
2010 4 159 006 908 935
2009 3 514 264 1 008 929
5 067 941
4 523 193
2 069 166 706 600 401 884 32 988 588 257 511 407 275 927 161 193
1 721 117 806 542 376 842 37 231 669 970 410 087 227 173 155 513
4 747 422
4 404 474
320 519
118 719
30 258 65 717 46 201 -6 348 217 695 -97 019 -10 153
25 642 336 447 265 841 -10 528 4 649 -73 114 -86 751
Total
246 351
462 186
Ordinary profit before tax
566 870
580 905
-199 421
435 559
367 448
1 016 465
117 486 249 962 -
346 583 669 882 -
Gross freight revenues - shipping Other operating revenues
Note 2 2
Total
OPERATING COSTS
4 4
Voyage costs - shipping Timecharter costs - shipping Ship operating costs Cost of sales Freight and cost of services Payroll and social security costs Ordinary depreciation Other operating costs
3 4, 5 6, 7 4, 6
Total Operating profit
FINANCIAL ITEMS 8 10
20
Distributions from subsidiaries Interest income from subsidiaries Interest income Other financial income Change in value of market-based assets Write-down of financial fixed assets Result of investment in associated companies Interest expenses Other financial expenses
Tax income/(- cost) PROFIT FOR THE YEAR
10 10
9 10 10
20
OTHER INFORMATION To minority interests Majority proportion Proposed dividend Transferred to other equity
the GRIEG group financial statements 2010
39
Balance Sheet as of 31.12 grieg maturitas as grieg maturitas group Figures in NOK 1 000 Figures in NOK 1 000 2010
2009
Note
Note
2010
2009
13 417 91 085 46 788
14 209 99 248 57 656
151 289
171 113
269 682 39 585 982 654 3 798 210 78 205
265 328 34 711 558 815 3 217 440 92 336
5 168 336
4 168 630
979 836 31 873 187 620 49 954 -
670 269 37 675 172 593 75 753 22 705
ASSETS FIXED ASSETS
40
Intangible assets Research and development Contracts Deferred tax assets Goodwill
3 259 -
2 528 -
3 259
2 528
-
-
Operating assets Land and real estate Loading and discharging equipment Newbuilding contracts Vessels Vehicles, machinery and equipment
-
-
Total
465 397 -
465 326 -
465 397
465 326
Total
1 249 283
978 995
468 656
467 854
Total fixed assets
6 568 908
5 318 738
142 497
110 014
20
7 7 7
Total
8
Long-term financial assets Shareholdings in subsidiaries Investments in associated companies Loans to associated companies Shareholdings and other investments Other receivables Pension fund assets
6 6 6 6 6
9 14 12 4,14 5
-
-
CURRENT ASSETS Stocks Stocks and bunkers
-
-
Total
142 497
110 014
119 688 86
65 270 61
Receivables Customer accounts receivable Shipping tax receivable Receivables from subsidiaries Receivables from associated companies Other receivables
223 974 32 115 186 522
103 701 104 904 13 187 229 341
119 774
65 331
Total
442 611
451 133
-
-
Investments Market-based shares Market-based bonds Other financial instruments
5 426 207 820 1 425 213
33 880 371 050 1 452 756
-
-
Total
1 638 458
1 857 687
14 367
12 420
408 936
390 286
134 141
77 751
Total current assets
2 632 501
2 809 120
602 797
545 606
TOTAL ASSETS
9 201 409
8 127 858
17
Cash and bank deposits
13
15 15 15
17
the grieg group financial statementS 2010
grieg maturitas as grieg maturitas group Figures in NOK 1 000 Figures in NOK 1 000 2010
2009
Note
Note
2010
2009
1 005 260 515
1 005 260 515
261 521
261 521
3 415 562 1 656 725
3 267 013 1 581 250
5 072 288
4 848 263
21
5 333 808
5 109 784
5 20
19 749 20 112 19 307
51 482 10 076
59 168
61 558
2 814 674 124 831 5 297
2 263 857 39 269
2 944 802
2 303 126
17 714 128 654 105 039 40 197 3 523 148 429 420 074
16 770 114 495 19 818 31 080 112 553 358 673
863 631
653 390
EQUITY AND LIABILITIES EQUITY
22
Paid-up equity Share capital (1 005 388 shares of NOK 1) Share premium reserve
1 005 260 515
1 005 260 515
261 521
261 521
Total
239 739 -
223 755 -
Retained earnings Other equity/group reserves Minority interests
239 739
223 755
Total
501 259
485 276
21
Total equity
22
21
LIABILITIES -
-
Provisions for commitments Pension liabilities Deferred tax Other commitments
-
-
Total
-
-
Other long-term liabilities Mortgage loans Long-term shipping tax Other long-term liabilities
-
-
Total
238 289 100 000 1 010
146 142 60 000 42
101 537
60 330
Total
101 537
60 330
Total liabilities
3 867 601
3 018 074
602 797
545 606
TOTAL EQUITY AND LIABILITIES
9 201 409
8 127 858
21
Current liabilities Bank overdrafts Supplier accounts payable Taxes payable Public debt Debt to subsidiaries Debt to associated companies Dividend Other current liabilities
16, 17 20 16
17 20
21
Bergen, 24 March 2011 The Board of Directors of Grieg Maturitas AS
Elna-Kathrine Grieg Chair
Elisabeth Grieg Board member
the GRIEG group financial statements 2010
Camilla M. Grieg Board member
Per Grieg jr. Board member
Wenche Kjølås Managing Director
41
cash flow analysis grieg maturitas as Figures in NOK 1 000 2010
2009
115 253 -119 688 1 061 -3 374
62 521 -65 244 188 -2 536
65 270 -24 -71 65 174
158 301 -137 153 21 148
CASH FLOW FROM INVESTing activities Sale of fixed assets Purchase of fixed assets/newbuilding contracts Purchase of intangible assets Payments from other group companies Payments on other claims (short/long-term) Net cash flow from addition of subsidiary Sale of shares and units Payments on purchase of shares in group companies Purchase of shares and securities Net cash flow from investing activities
-60 000 -59 854 1 947 12 420
-32 000 -32 328 -13 715 26 135
14 367
12 420
CASH FLOW FROM FINANCing activities Net change in bank overdraft Repayment of debt to group companies Loan repayment (short/long-term) Loan proceeds Equity payment received Repayment of equity Dividends paid Net cash flow from financing activities Net cash flow for the period Opening balance of cash and cash equivalents Cash and cash equivalents received on acquisition of subsidiary as of 31.12 Cash and cash equivalents 31.12
14 367
12 420
THIS CONSIST OF: Bank deposits, cash in hand, etc.
-328 146
42
CASH FLOW FROM OPERATION ACTIVITIES Profit before tax Taxes paid Gain/loss on sales of fixed assets Dividends receivable taken to income Ordinary depreciation Ordinary depreciation of docking costs Write-down of fixed assets Items classified as investment or financial activities Change in inventory Change in accounts receivable from customers Change in accounts payable to suppliers Change in accruals Effect of change in exchange rate Share of profit from associated companies (equity method) Net cash flow from operation activities
grieg maturitas group Figures in NOK 1 000 2010
2009
566 870 -18 125 -60 442 275 927 45 585 6 348 -46 201 -32 482 -120 273 14 847 227 514 80 008 -217 695 721 881
580 905 -93 068 -9 549 227 174 32 402 12 099 -135 158 -21 611 9 731 -59 202 -37 853 73 138 -4 649 574 360
2 779 -1 296 038 -3 794 53 671 353 174 -5 020 -178 202 -1 073 430
21 116 -862 368 -4 684 -29 720 731 959 -674 057 -817 754
944 -260 618 743 073 49 -113 249 370 199 18 650 390 286 408 936
447 -146 329 286 279 55 556 -1 751 -127 388 66 814 -176 580 568 882 -2 016 390 286
408 936
390 286
the grieg group financial statementS 2010
note 1
accounting principles
GENERAL
The annual accounts for Grieg Maturitas AS have been prepared in accordance with Norwegian accounting legislation and on the basis of Norwegian accounting standards and generally accepted accounting practice.
OPERATING REVENUES
Operating revenues are entered as income at the time of delivery. The time of delivery is understood to mean the time of transfer of risk and control related to the delivery. Freight revenues from voyages are recognised on the basis of the number of days the voyage lasts.
CLASSIFICATION OF ASSETS AND LIABILITIES – MAIN RULE
FOREIGN EXCHANGE HEDGING
Derivatives purchased in order to reduce the currency risk for the sub-group Grieg Shipping Group are recognised as hedging transactions. Gains/losses of foreign exchange contracts are therefore recorded in the same period as the hedged transactions. Please refer to note 18.
INTEREST RATE HEDGING
Interest rate hedging contracts are recognised and classified in the same way as the related mortgage loan. The interest received/paid under the contract is therefore recognised in the interest period in question and is included in interest cost/income for the period.
ACCOUNTS RECEIVABLE
Assets intended for long-term ownership or use are classified as fixed assets. Other assets are classified as current assets. Receivables due within one year are classified as current assets. The corresponding criteria are applied to classify liabilities.
Accounts receivable are stated at nominal value less provisions for expected losses. The loss provision is based on an individual assessment of each account receivable.
Fixed assets are valued at acquisition cost, but are written down to fair market value where the decline in value is not expected to be temporary. Fixed assets with a limited economic lifetime are depreciated. Long-term liabilities are stated in the balance sheet at the nominal amount on the establishment date. Current assets are valued at the lower of acquisition cost and fair market value. Current liabilities are stated in the balance sheet at the nominal amount on the establishment date. Certain items are stated on the basis of special valuation rules, in accordance with accountancy legislation, as detailed below. Other assets and liabilities are classified as fixed assets and long-term liabilities, respectively.
A company is defined as a subsidiary if the Group has a decisive influence on its operations. This is normally the case where the Group holds more than 50% of the voting share capital.
INVESTMENTS IN SUBSIDIARIES
INVESTMENTS IN LIMITED PARTNERSHIPS
Shareholdings which are strategic investments are classified as fixed assets.
Investments in limited partnerships are recorded on the basis of the cost method whereby the investment is stated at cost in the balance sheet. The distribution of profits/contribution to cover losses from investments in limited partnerships is taken to income/charged against profits under financial items. Profits from investments in limited partnerships are taxable in the hands of the respective participants. Reference is made to separate specifications in this connection.
CONSOLIDATED ACCOUNTS
JOINTLY CONTROLLED ACTIVITIES
The consolidated accounts include the subsidiaries specified in note 8 and show the accounts of the parent company and the subsidiaries as a single economic unit. Shareholdings and investments in subsidiaries are eliminated on the basis of the acquisition method. The cost of shareholdings and investments in subsidiaries is eliminated against the book equity of the shares/ investments at the date of acquisition. Any difference arising is posted to the identifiable assets. Any surplus value that cannot be attributed to specific assets, or the company’s own intangible assets, is described as goodwill and is amortised over its estimated lifetime. Intra-group transactions and internal balances are eliminated. On the consolidation of foreign subsidiaries, the profit and loss accounts are translated into NOK at the average exchange rate for the year. The balance sheets are translated at the year-end rates. Any translation differences are posted directly to Group equity.
STOCKS
Stocks of goods are stated at cost or at written down value to take account of obsolescence. The stock of bunkers consists of fuel and diesel and recognised at cost on the basis of the FIFO method.
FOREIGN CURRENCY
Assets and liabilities denominated in foreign currencies are stated at the yearend exchange rate.
the GRIEG group financial statements 2010
In the case of investments in companies where two or more of the participants have joint control of the business regulated through a cooperation agreement between the participants, the investment is recorded on the basis of the gross method. None of the participants have a decisive influence. The proportion of costs, income, assets and liabilities is incorporated in the accounts on the respective lines. The figures are specified for each main group in a note to the accounts.
INVESTMENTS IN ASSOCIATED COMPANIES
Investments in associated companies are recorded on the basis of the equity method in the consolidated accounts. The share of the results recorded by associated companies is posted separately under financial items. The investments in associated companies are posted as a financial asset.
SHAREHOLDINGS
Long-term shareholdings are recorded on the basis of the cost method whereby the investment is stated at cost in the balance sheet. Share dividends are recorded as other financial income.
FIXED ASSETS
Fixed assets that can be depreciated are stated in the balance sheet at cost and depreciated on a straight-line basis over the expected lifetime of the asset. Periodic classification and maintenance costs are posted in the balance sheet and amortised on a straight-line basis until the next planned docking. The docking costs are included in the balance sheet along with the value of the ship. The amortisation of docking costs is included in operating costs.
43
note 1
accounting principles (continued)
NEWBUILDING CONTRACTS
Shipyard instalments paid are posted as fixed assets in pace with the payment schedule.
INTANGIBLE ASSETS
Goodwill is amortised over its economic lifetime. The surplus value attached to the fleet’s contracts of employment and the company’s right to renominate Star Shipping tonnage is defined as ”Contracts of employment” in the balance sheet and is amortised over 20 years. Expenses related to the company’s own development are recorded in the balance sheet from the point when it is likely that the development work will result in an identifiable intangible asset. Research and development relates to the development of electronic computerised mapping systems with radar integration. These costs are amortised over 5 years.
WRITE-DOWN OF FIXED ASSETS
Where there is reason to believe that the book value of a fixed asset is higher than its fair value, an impairment test is carried out. The test is carried out on the lowest level of fixed assets with independent cash flows. If the book value is higher than both the sale value and recoverable amount (present value in the event of continued use/lease), the asset is written down to the higher of the sale value and the recoverable amount. Previous write-downs are reversed if the basis for the write-down no longer exists (exceptions include write-downs of goodwill).
PENSION COMMITMENTS
FINANCIAL CURRENT ASSETS
Short-term investments in shares and mutual funds are regarded as part of the trading portfolio and are stated at fair value at year-end. Dividends received and other distributions are entered as income under other financial income.
TAXATION
The tax charge in the profit and loss account consists of the tax payable and the change in net deferred tax. Taxes are charged when they arise. Deferred tax in the balance sheet is calculated on the basis of timing differences between values for taxation and accounting purposes. Taxable and tax-deductible timing differences which are reversed or can be reversed within the same period are netted against each other and entered net. Some of the companies of the Group are subject to shipping taxation pursuant to chapter 8 of the Taxation Act. In connection with the transition to the new shipping tax the company has chosen the settlement scheme. For further information, please refer to note 20.
STATEMENT OF CASH FLOWS
The statement of cash flows is prepared on the basis of the indirect method. Accordingly, the cash flows from investment and financing activities are reported gross, while the accounting result is reconciled against the net cash flow from operations. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments that can immediately and with no major exchange rate risk be converted into a known amount and maturing less than three months from the transaction date.
Most of the companies of the Group have a defined contribution based pension scheme. In addition, some of the companies have benefits based plans, contribution based plans and a compulsory occupational pension scheme (OTP). The pension schemes are generally funded through payments to insurance companies. Under defined contribution plans, including OTP, the Group pays contributions to publicly or privately administered insurance plans for pensions that are either compulsory, contractual or voluntary. The Group has no other pension commitments after the contributions have been paid. The contributions are posted as a payroll expense when due. A defined benefits scheme is a pension scheme which defines the pension payment which an employee will receive on reaching retirement age. The pension payment normally depends on one or more factors, such as age, the period of service with the company and the salary level. The pension commitment under defined benefits schemes posted in the balance sheet are the present value of the defined benefits schemes at yearend less the fair value of the pension fund assets, adjusted for unposted estimate divergences. The pension commitment is calculated annually by an independent actuary based on a linear accrual of pension entitlements. Changes in benefits under the pension plan are posted in the profit and loss account on an ongoing basis.
ESTIMATES
When preparing the annual accounts in accordance with good accounting practice, the management make estimates and assumptions which affect the profit and loss account and the valuation of assets and liabilities. Contingent losses which are likely and quantifiable are charged against income on an ongoing basis.
44
the grieg group financial statementS 2010
note 2 operating revenues Specified by area of Activity Figures in NOK 1 000
GROUP Freight revenues Freight forwarding and clearance services Maritime information technology Shipbroking Investment consulting fee Total operating revenues specified by area of activity Other operating revenues Total other operating revenues Total operating revenues
note 3
2010 4 159 006 757 447 58 434 35 193 35 367 5 045 447
2009 3 514 264 858 175 78 617 14 865 28 835 4 494 756
22 494 22 494
28 437 28 437
5 067 941
4 523 193
Geographic area Global Global Global Global Norway
Cost of sales, specified
Figures in NOK 1 000
GROUP Consumption of goods purchased Total
2010 32 988 32 988
2009 37 231 37 231
The consumption of goods purchased relates to Maritime Information Systems AS.
the GRIEG group financial statements 2010
45
note 4
PAYROLL COSTS, NUMBER OF EMPLOYEES, REMUNERATION, LOANS TO EMPLOYEES ETC.
Figures in NOK 1 000
PARENT COMPANY
2010 2 331 341 78 15 2 765
Salaries Social security costs Pension costs Other benefits Total
2009 453 65 518
Payroll costs relate to the managing director. No remuneration was paid to the Board of Directors in 2010. The company’s Board members have received salaries and other remuneration totalling NOK 10.4 million from the respective companies in which they are employed.
group 2010 357 966 49 404 79 524 24 513 511 407
2009 311 099 42 126 33 546 23 316 410 087
Average number of employees Payroll costs to the managing director is as reported for the parent company.
535
507
Average number of sailing personnel Salary costs related to sailing personnel , NOK 125 million, are included in ship’s operating costs.
625
593
31.12.2010 45 666 17 658 17 406 2 238 82 968
31.12.2009 45 784 13 781 13 982 2 188 75 735
Salaries Social security costs Pension costs Other benefits Total
LOANS TO SHAREHOLDERS AND OTHER CLOSELY RELATED PARTIES Silves Odissey Lda (Portugal) Vitare AS Salthavn AS AS Polycorp Total No loans/guarantees have otherwise been given to shareholders or other closely related parties. AUDITOR Statutory audit Technical accounting assistance Taxation advice Other non-audit services Other confirmation services Total remuneration to Group auditor Remuneration to other auditors
46
2010 Parent 230 240 49 519 -
Group 2 215 774 216 145 195 3 544 411
2009 Parent 190 239 429 -
Group 1 903 519 163 988 183 3 756 3 090
the grieg group financial statementS 2010
note 5
PENSION COSTS, PENSION FUND ASSETS AND PENSION COMMITMENTS
PARENT COMPANY Defined contribution based pension scheme The defined contribution based pension scheme covers all full-time and part-time employees and amounts to between 5% and 8% of salary. At year-end 2010 one person was covered by the scheme. The contribution charged in the accounts in 2010 amounted to NOK 78 220 (excluding national insurance contributions).
GROUP Most of the Group companies have a defined contribution based pension scheme. All of the Group companies have pension schemes which meet the requirements of the Act relating to compulsory occupational pension schemes. Defined contribution based pension scheme The defined contribution based pension scheme covers all full-time and part-time employees and amounts to between 5% and 8% of salary. At year-end 2010 a total of 438 employees were covered by the scheme. The contribution charged in the accounts in 2010 amounted to NOK 15 483 000 (excluding national insurance contributions). Defined benefits based pension scheme Effective from 1 January 2011 the Grieg Star Shipping Group (Norway and Canada) has terminated its main scheme for benefits based pensions and switched to a defined contribution based scheme for all employees. The cost of terminating the scheme consists of the accounting charge related to estimate divergences and the accounting income arising from the change in the pension plan. This has been posted along with other payroll and personnel costs. Following the switch to the contribution based scheme, the Grieg Shipping Group has 64 persons who are covered by the remaining benefits based schemes. Mosjøen Industriterminal AS has a defined benefits based pension scheme which covered 10 people in 2010. The net pension fund assets for these subsidiaries is included in the balance sheet figures at 31.12.10. The group pension scheme is funded through the accumulation of pension fund assets with an insurance company. The schemes give an entitlement to defined future benefits. These benefits depend mainly on the number of pensionable years, the level of salary on reaching retirement age and the amount of the benefits from the National Insurance. The accounting treatment of pension costs, pension commitments and pension fund assets is in accordance with the Norwegian Accounting Standard for Pension Costs. The estimate divergence is amortised over remaining contribution time. In 2010 a total of 127 persons (including pensioners and persons on early retirement) were covered by the benefits based scheme.
Figures in NOK 1 000 Net pension expenses, including National Insurance contributions Present value of pension entitlements Interest expenses on pension entitlements Return on pension fund assets Accounting effect of estimate divergences and plan changes* Administrative expenses Pension expenses for the year
Calculated pension commitments Pension fund assets (at market value) Unposted effect of estimate divergences Net pension fund assets/ (liabilities)
2010 13 270 9 584 -8 299 48 167 1 319 64 041
2009 12 471 9 542 -7 882 3 707 1 471 19 309
31.12.2010 -133 444 93 117 20 578 -19 749
31.12.2009 -211 418 143 912 90 211 22 705
* Including the cost of switching from a benefits based to a contribution based scheme.
the GRIEG group financial statements 2010
47
note 5
PENSION COSTS, PENSION FUND ASSETS AND PENSION COMMITMENTS (CONTINUED)
Financial assumptions
2010 Norway Canada 4,60 % 6,10 % 3,50 % 3,25 % 5,40 % 3,25 % 50,00 %
Discount rate Anticipated rise in salaries Anticipated return on pension fund assets Anticipated rise in pensions, regulation of National Insurance base rate CPA acceptance rate
note 6
2009 Norway Canada 5,40 % 7,25 % 4,25 % 3,25 % 5,60 % 4,00 % 50,00 %
fixed assets
Figures in NOK 1 000
Group
Acquisition cost at 01.01.10 Additions Disposals Acquisition cost at 31.12.10 Depreciation at 01.01.10 Ordinary depreciation Depreciation - docking Depreciation on disposals Accumulated depreciation at 31.12.10 Balance sheet value Economic lifetime Depreciation plan Group tonnage (TDW) Annual lease of unposted fixed assets Lease period
Vehicles, machinery and equipment 124 209 11 437 -10 495 125 151
Loading and discharging equipment 41 364 11 661 53 025
Land and real estate 313 209 14 704 -205 327 708
31 873 15 413 -340 46 946 78 205 3-20 years Linear
6 653 6 787 13 440 39 585 10 years Linear
47 882 10 159 -15 58 026 269 682 13-50 years Linear
956 3 years
3 393 0-3 years
11 421
Vessels 5 571 882 846 305 -14 164 6 404 023
Total 6 050 664 884 107 -24 864 6 909 907
2 354 443 219 951 45 585 -14 165 2 605 814 3 798 210 27 years Linear 1 105 973 713 107 0-5 years
2 440 852 252 310 45 585 -14 520 2 724 227 4 185 680
The Group owns 25 vessels as well as a 50% interest in Star Eviva from the company ANS Billabong II which is employed under a joint venture. The vessels are depreciated on the basis of an expected economic lifetime of 27 years, and based on a residual value corresponding to the expected scrap value. Capitalised docking costs are depreciated over the period between two dockings. The depreciation charge for docking is posted as an operating cost. At 31.12 the Group had newbuilding contracts for 12 vessels, of which 10 are of 49.000 TDW and 2 are of 57.000 TDW. 4 of the vessels are due for delivery in 2012, 5 in 2013 and the last 3 in 2014. The outstanding balance payable on the remaining newbuilding contracts amounts to NOK 2 143 million.
48
the grieg group financial statementS 2010
note 7
INTANGIBLE ASSETS
Figures in NOK 1 000
Group Acquisition cost at 01.01.10 Additions Acquisition cost at 31.12.10 Amortisation at 01.01.10 Amortisation Accumulated amortisation at 31.12.10 Balance sheet value Economic lifetime Amortisation plan
Goodwill 107 597 107 597 49 943 10 868 60 811 46 788 5-20 years Linear
Contracts 163 265 163 265 64 017 8 163 72 180 91 085 20 years
Research and development 34 481 3 794 38 275 20 272 4 586 24 858 13 417 5 years Linear
Total 305 344 3 794 309 138 134 232 23 617 157 849 151 289
Contracts are surplus values related to the vessels’ contracts of employment. Parts of goodwill relate to the companies’ right to renominate Grieg Star Shipping tonnage. Research and development relates to the development of electronic computerised mapping systems as a replacement for paper charts. Product development costs approved under the SkatteFunn tax deduction scheme are capitalised. GOODWILL RELATED TO THE FOLLOWING COMPANIES IS AMORTISED OVER MORE THAN 5 YEARS:
Grieg International II AS Grieg Shipping Group Maritime Information Systems AS Grieg Investor AS Mosjøen Industriterminal AS Total
Acquisition cost 2010 2009 72 274 72 274 9 996 9 996 14 379 14 379 12 058 12 058 -1 110 -1 110 107 597 107 597
On the purchase of the shareholding the amortisation period was defined as being in accordance with the expected economic lifetime.
the GRIEG group financial statements 2010
49
note 8
INVESTMENTS IN SUBSIDIARIES
Figures in NOK 1 000
Parent company Company Grieg Shipping Group AS Grieg Property AS Grieg International AS Grieg Holdings AS Grieg Ltd AS Grieg Logistics AS Grieg Logisitcs II AS Grieg Group Resources AS Total
Registered office Bergen Bergen Oslo Bergen Bergen Bergen Bergen Bergen
Ownership % 64,46 61,60 90,83 71,58 78,78 59,09 59,09 100,00
Proportion of voting shares, % 85,27 82,13 90,83 95,44 78,78 78,78 78,78 100,00
Book equity 100% 2 598 475 227 157 805 596 670 724 351 836 39 798 99 3 180 4 696 865
Book value 27 648 36 627 107 607 204 427 85 955 83 71 2 980 465Â 397
Dividend 13 027 47 141 9 419 40 647 9 454 119 688
Ownership %
Proportion of voting shares %
Bergen Vancouver B.C., Canada Atlanta, USA Gothenburg, Sweden Livorno, Italy Rio de Janeiro, Brazil Bergen Oslo Bergen Oslo Bergen
100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00
100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00
Bergen Bergen Bergen Bergen
100,00 100,00 100,00 36,25
100,00 100,00 100,00 36,25
Bergen Oslo Tønsberg Oslo
24,38 75,00 87,32 40,00
32,25 100,00 89,53 40,00
Grieg Holdings AS owns the following companies: AS Joachim Grieg & Co KS Joachim Grieg & Co Grieg Trade KS Grieg Cod Farming AS / Grieg Cod Juveniles AS
Bergen Bergen Bergen Bergen
100,00 55,00 100,00 100,00
100,00 55,00 100,00 100,00
Grieg Ltd AS owns the following companies: Grieg Shipping Group AS Grieg Property AS Grieg Holdings AS Grieg Development AS / Grieghallen Parkering AS Grieg Investor Holding AS / Grieg Investor AS
Bergen Bergen Bergen Bergen Oslo
30,09 38,90 16,13 11,27 20,00
39,81 51,87 21,51 11,27 20,00
Ownership includes both direct and indirect ownership
Group Grieg Shipping Group AS owns the following companies: Grieg Star Shipping AS Grieg Star Shipping (Canada) Ltd.* Grieg Star Shipping (USA) Inc. Grieg Star Shipping AB Grieg Star Shipping SRLV Grieg Star Shipping Comercio Maritimo Ltda Grieg Shipping AS Grieg Green AS Grieg Shipowning AS Grieg International II AS Grieg Shipping II AS * Grieg Star Shipping (Canada) Ltd. has a 100% shareholding in Squamish Terminals Ltd. Grieg Property AS owns the following companies: Grieg Gaarden KS AS Nestun Uldvarefabrik CSG15 AS Grieg Development AS / Grieghallen Parkering AS Grieg International AS owns the following companies: Grieg Shipping Group AS Grieg Athena AS Maritime Information Systems AS Grieg Investor Holding AS / Grieg Investor AS
50
Registered office
the grieg group financial statementS 2010
note 8
INVESTMENTS IN SUBSIDIARIES (continued)
Grieg Logistics AS owns the following company: Grieg Logistics Triangle B.V.
Registered office Netherlands
Grieg Logistics II AS owns the following companies: Slagen Harbour Service AS Grieg Logistics Pte Ltd Mosjøen Industriterminal AS
note 9
Ownership % 51,00
Proportion of voting shares % 51,00
100,00 100,00 81,00
100,00 100,00 81,00
Tønsberg Singapore Mosjøen
INVESTMENTS IN ASSOCIATED COMPANIES
Figures in NOK 1 000
Group These investments are incorporated in the consolidated accounts applying the equity method. Grieg Seafood ASA
Aon Grieg AS
NorWind AS
NorWind Installer AS
OceanWind AS
Grieg Star Nortrans Pte Ltd
1992
1998 Lysaker 20 % 20 %
2008 Bergen/ Oslo 40 % 40 %
2008 Bergen/ Oslo 50 % 46 %
2010
Bergen 49 % 49 %
2007 Bergen/ Oslo 40 % 40 %
Singapore 50 % 50 %
Analysis of surplus values Equity on acquisition Equity effect of re-stated opening balance Attributable surplus values Goodwill Acquisition cost Disposals at cost Total acquisition cost at 31.12
690 543 83 887 36 983 811 413 811 413
36 130 551 6 040 42 721 42 721
22 719 7 281 30 000 30 000
4 000 4 000 4 000
5 055 5 055 5 055
Profit/loss for the year Share of profit/loss Estimate changes, previous years Write-down of excess value Amortised goodwill Profit/loss for the year
243 372 -16 965 -5 321 221 086
13 811 866 -412 14 265
-12 181 -1 -728 -12 910
-1 989 -1 989
Book value at 31.12. Opening balance at 01.01. Additions Capital increase Profit/loss for the year Dividend Other changes Closing balance at 31.12.
638 863 89 578 221 086 -12 417 2 379 939 488
17 206 14 265 102 31 573
13 419 -12 910 -510 -
Unamortised proportion Excess values 31.12
82 707
1 097
5 015
Miscellaneous information Year of acquisition Registered office Ownership 31.12 Proportion of voting shares 31.12
Others
Total
2 054 2 054 2 054
2 914 4 036 6 950 6 950
761 361 551 83 887 56 394 902 194 902 194
-
-2 231 -2 231
-526 -526
240 255 866 -16 965 -6 461 217 695
4 000 -1 989 510 2 521
-
2 054 2 966 -2 231 2 789
781 2 500 -526 710 3 465
670 270 98 132 2 966 217 695 -12 417 3 190 979 836
-
-
2 054
-
90 872
Excess values related to goodwill in associated companies are depreciated over 1-10 years based on the expected remaining economic lifetime.
the GRIEG group financial statements 2010
51
note 10
SPECIFICATION OF FINANCIAL ITEMS
Figures in NOK 1 000 Interest income Interest income from Group companies Interest income from associated companies Other interest income Total interest income
Parent Company 2010 2009 5 55 451 594 456 649
Group 2010 2 348 27 910 30 258
2009 2 674 22 968 25 642
Interest expences Other interest expenses Total interest expenses
-
-
97 019 97 019
73 114 73 114
Other financial income Gain on sale of securities Gain on debt conversion for Grieg Seafood ASA Foreign exchange gain Other finacial income Total
-
-
58 600 7 117 65 717
11 300 138 600 167 800 18 747 336 447
-4 -4
-35 -35
-6 600 -1 300 -2 253 -10 153
-70 700 -16 051 -86 751
Other financial expences Loss on sale of securities Foreign exchange loss Other financial expences Total
52
the grieg group financial statementS 2010
note 11
INVESTMENTS IN JOINTLY CONTROLLED ACTIVITIES
Figures in NOK 1 000
Group The Group has the following investments: Company ANS Billabong II
Date of acquisition 15.10.92
Registered office Bergen
Ownership and voting rights 50 %
Joint and several liability* 2 686
* The joint and several liability relates to book debt for ANS Billabong II as at 31.12.10. The main figures included in the accounts in accordance with the gross method are specified below: Share of Profit and Loss Items Revenues Vessel operating costs Operating profit Net financial items Profit Distributed Share of Balance Sheet items Vessels Receivables Total assets Current liabilities Net share Net share Net share at 01.01.10 Share of profit Distributed Net share at 31.12.10
the GRIEG group financial statements 2010
2010 12 571 -10 196 2 375 153 2 528 2 419 31.12.10 5 205 7 804 13 009 -1 343 11 667
11 558 2 528 -2 419 11 667
53
note 12
SHAREHOLDINGS AND OTHER INVESTMENTS
Figures in NOK 1 000
Group Company
Ownership
Silver Pensjonsforsikring AS KS Brage Supplier Holmen Industri Invest I AS Mercell Holding AS FSN Capital Stril Offshore AS Nordenergie Renewable Technocean Argentum Primary Fund Borea Opportunity II AS Atlantic Cod Farms AS Stochasto Holding AS S책korn Invest AS Sundry investments in funds Sundry shareholdings Sundry investments in hedgefunds Total shareholdings and investments
7,66 % 12,50 % 26,66 % 13,94 % 1,30 % 4,50 % 1,85 % 8,60 % 7,60 % 1,55 % 4,66 % <10% 2,93 %
Acquisition cost
Book value
55 989 24 000 23 378 21 058 14 367 11 250 10 306 10 000 4 000 3 960 11 918 1 347 375 8 413 9 242 525 210 128
55 989 24 000 23 378 11 789 14 367 11 250 10 306 10 000 4 000 3 632 426 300 375 8 421 8 865 523 187 620
Share investments are valued on the basis of the cost method. The investments are written down to market value if the decline in value is not considered to be temporary.
note 13
stocks and bunkers
Figures in NOK 1 000
Group Stocks of finished goods Stocks of bunkers Total stocks and bunkers
2010 7 568 134 929 142 497
2009 9 771 100 243 110 014
Valuation principles Stocks of finished goods are valued at the lower of full processing cost and fair market value. Stocks of bunkers consist of fuel and diesel which are booked at cost on the basis of the FIFO-method.
54
the grieg group financial statementS 2010
note 14
RECEIVABLES DUE IN MORE THAN ONE YEAR
Figures in NOK 1 000
Group 2010 31 873 49 954 81 827
Loans to associated companies Other receivables (fixed assets) Total
note 15
2009 37 675 75 753 113 428
MARKET-BASED FINANCIAL INVESTMENTS
Figures in NOK 1 000
Group Cost 3 613 237 364 1 280 818 1 521 795
Market-based shares Market-based bond investments Other financial instruments Total
Market value 5 426 207 820 1 425 213 1 638 458
Financial investments are recorded on the basis of the market value at year-end. Change in value of market-based assets of NOK 46.2 million is posted in the profit and loss account in 2010. The foreign currency effect is posted under other financial income or financial expenses.
note 16
DEBT PAYABLE IN MORE THAN 5 YEARS
Figures in NOK 1 000
Group Vessel mortgage debt Other mortgage debt Other long-term debt Total
the GRIEG group financial statements 2010
2010 1 761 078 108 860 3 411 1 873 349
2009 1 260 476 126 674 5 248 1 392 398
55
note 17
MORTGAGES / GUARANTEE LIABILITY
Parent company
Restricted bank deposits (tax deductions) was NOK 155 701.
Group
Figures in NOK 1 000 Debt secured by mortgage (including overdraft facilities) Vessel mortgage debt Other mortgage debt - long-term Total mortgaged debt - long-term Overdraft facilities - short-term Total mortgaged debt
2010 2 677 528 137 146 2 814 674 17 714 2 832 388
2009 2 115 841 148 016 2 263 857 16 770 2 280 627
2010 38 818 4 064 988 110 928 82 855 7 027 4 304 616
2009 46 792 2 992 249 89 148 6 781 4 381 9 429 3 148 780
Group assets have been given as mortgage security. Balance sheet value of mortgaged assets Receivables Vessels and newbuilding contracts Real estate Operating equipment Equities* Stocks Total
* Some of the Group companies have given a charge on their shares in other Group companies as security for mortgage debt. The value of the shares is stated at the book value of the equity in the underlying company plus the underlying mortgage loan less any other assets upon which there is a charge. Group Total guarantee liability Share of uncalled limited partnership capital Restricted advance tax deductions Overdraft limit of which overdraft utilised
56
2010 43 769
2009 76 957
3 240
4 320
18 549
15 063
115 246
73 528
17 714
16 770
the grieg group financial statementS 2010
note 18
FINANCIAL RISK
Liquidity risk
Liquidity risk is the risk that the Group is unable to fulfil its financial obligations when they mature. The Group’s strong liquidity and liquiditymanagement secures that necessary liquidity is available at all times.
Market risk
The Group is exposed to market risk and uses various financial derivatives to manage its financial market risk. This includes forward contracts, options, interest rate swaps and freight forward agreements (FFA).
Interest rate risk
Interest rate risk arises in the short and long term as parts of the Group’s liquidity and debt are at floating rate of interest. The Group’s strategy is to hedge the company’s net interest rate exposure (cash flow hedging). Non-interest bearing financial instruments are regarded as natural hedging which reduces the need for direct hedging of interest rates. The strategy is to have a certain level of hedging (at least 30%) using market based hedging instruments. In this case, interest rate swap agreements are mainly used. The interest rate hedging agreements are recognised and classified in the same way as the related mortgage loan. At 31.12.10 the sub-group Grieg Shipping Group was party to interest rate swap agreements totalling USD 200 million (including interest rate swaps with forward start), directly hedging 43% of the sub-group’s future interest rate risk. At the same date, the unrealised loss attached to these agreements, and not posted in the balance sheet, was NOK 13.5 million, with a weighted average period of maturity of 7.8 years. In addition there is a fixed interest rate agreement of NOK 64.8 million for a loan of NOK 80.5 million and an interest rate swap of NOK 15.8 million for a loan of NOK 20.1 million. The unrealised loss for these agreements was immaterial as per 31.12.2010 and expires in 2016 and 2015 respectively.
Foreign exchange risk
The Group’s main focus in relation to foreign exchange hedging is to ensure that costs and liabilities are denominated in the same currency as revenues and assets. The basic currency for the shipping activity is the USD, and the Group’s strategy is to ensure that it covers its currency exposure related to administration costs, operating costs, tax and dividend payments that are denominated in another currency than USD. In this connection, the sub-group is mainly exposed to NOK, followed by EUR and CAD and this exposure is largely covered through forward foreign exchange contracts. Gains/ losses on foreign exchange contracts are booked in the same period as the period when the hedged transactions are settled. Non-USD denominated
note 19
financial investments which are part of the sub-group’s financial investment portfolio are also taken into consideration when the sub-group’s net foreign exchange exposure is assessed. At 31.12.10 the Grieg Shipping Group had entered into forward contracts to hedge a total of USD 12.6 million. At the same time, the unrealised gain on these contracts amounted to USD 1.2 million with the following average exchange rates: NOK 6.5107, CAD 1.2723 and EUR 1.0685, hedging 17% of the Group’s budgeted operational foreign exchange requirements for 2011. In addition KS Joachim Grieg had forward contracts of total USD 0.6 million with an average exchange rate of NOK 6.50 giving a currency gain of NOK 0.4 million.
Freight rate risk
The shipping industry is very cyclical and characterised by large and unforeseeable fluctuations in freight rates. The Group’s shipping activities are of an industrial nature which makes it possible to cover exposure to spot rates by entering into long-term time-charter contracts for the vessels. As a result, the Group’s revenues fluctuate less than is the case with spot rates in the general dry bulk market. The Group also uses FFA-contracts as a risk management instrument. As at 31.12.10 the Grieg Shipping Group had two FFA contracts which runs from 1.1.2011 to 31.12.2012. The FFA contracts are accounted for on an ongoing basis during the hedging period. At the end of 2010 the unrealised gain of these contracts amounts to USD 1.5 million and is not posted in the balance sheet, but will be accounted for during the hedging period.
Bunker prices
The Group uses derivative contracts to hedge bunker prices. The exposure to bunkers is defined as the annual consumption of bunkers in contracts of affreightment with no bunkers clause. The result of the hedging contracts is classified as an adjustment of operating costs and accounted for during the hedging period. The average at 31.12.2010, including bunkers clauses, was 67%. As at 31.12.10 the Grieg Shipping Group had derivative contracts to hedge bunker prices for a total of 12 000 mt. The contracts showed an unrealised gain of USD 0.6 million which is not posted in the balance sheet.
Options
As at 31.12.10 the Group held no options.
CONTINGENCIES AND EVENTS AFTER YEAR-END
The Grieg Group is neither a party to any court case nor the subject of any other litigation.
the GRIEG group financial statements 2010
57
note 20
taxation
Figures in NOK 1 000
Parent company The following is a specification of the difference between the accounting result before tax and the tax base for the year. Ordinary result before tax Permanent differences (including dividends received) Change in timing differences Basis of tax payable in profit and loss account Losses brought forward Tax base for the year Tax payable in the balance sheet Division of tax charge Increase / (decrease) in deferred tax Tax charge / (recovery) on ordinary result
2010 115 253 -117 863 -787 -3 397 3 397 -
2009 62 521 -64 498 -399 -2 376 2 376 -
-
-
-731 -731
-593 -593
DEFERRED TAX Deferred tax is calculated on the basis of the differences between values for accounting and taxation purposes at year-end. Deferred tax has been calculated on the basis of the following items: 31.12.2010 442 1 502 1 944
31.12.2009 553 604 1 157
Tax loss carried forward Tax credit carried forward Total tax-deductible differences
-11 677 -1 906 -13 583
-8 279 -1 906 -10 185
Basis of calculation of deferred tax (assets) Deferred tax / (assets) on net timing differences
-11 639 -3 259
-9 028 -2 528
Profit and loss account Taxable dividends Total taxable differences
In accordance with the accounting standard for the treatment of taxation, taxable and tax-deductible timing differences which are reversed or can be reversed within the same period are netted against each other and entered net.
58
the grieg group financial statementS 2010
note 20
taxation (continued)
Group TAX CHARGE FOR GROUP The following is a specification of the difference between the accounting result before tax and the tax base for the year. Profit before tax Profit before tax, companies subject to shipping tax Profit before tax, companies not subject to shipping tax Permanent differences Change in temporary differences Application of tax loss carried forward Basis of tax payable, companies not subject to shipping tax Tax payable, companies not subject to shipping tax
2010 566 870 -338 095 228 775 -180 181 -2 308 -7 352 38 934 10 901
2009 580 905 -370 103 210 802 -162 745 -1 293 -4 228 42 536 11 910
Tax payable in profit and loss account Tax payable on profit for the year, companies not subject to shipping tax Tax payable (on financial income), companies subject to shipping tax Tax payable related to changes in the shipping tax regime Utilisation of tax loss carried forward under own tax scheme (shipping) Change in tax provisions in previous year Increase / (decrease) in deferred tax Tax charge for the year on ordinary result
10 901 34 053 187 246 3 099 -35 878 199 421
11 910 8 726 -446 538 -11 604 -5 601 7 548 -435 559
3 324
2 848
31.12.2010 10 901 -4 735 36 457 62 416 105 039
31.12.2009 11 910 -4 683 -1 786 -13 14 446 -56 19 818
The tonnage tax for the year is charged against profits under operating costs Tax payable in balance sheet Tax payable, companies not subject to shipping tax Tax effect of Group contribution Transferred from non-shipping tax liable to shipping tax liable activity Tax payable, companies not subject to shipping tax, arising through demerger/merger Tax payable, companies subject to shipping tax Short-term tax payable under the settlement scheme (1/3) Tax payable in advance Total tax payable in balance sheet
SHIPPING TAX On 12 February 2010, the Supreme Court ruled that the transition rules for companies under the new tonnage tax regime were unconstitutional. Accordingly, new transition rules were introduced. These were announced in a press release on 26 March 2010. Under the new transition rules, a company under the tonnage tax scheme can choose to pay tax on untaxed capital , estimated on entry into the new tonnage tax regime in 2007, either as a final settlement tax (“settlement regime”) or as a distribution tax (“basic regime”) corresponding to the main principles in the old tonnage tax scheme. The tonnage taxed companies in Grieg Shipping Group have selected the settlement regime, whereby untaxed capital from the pre-2007 shipping tax regime incurs 6.67% tax to be paid over a three year period. For the company, this means an overall tax charge under the settlement scheme amounting to NOK 187.2 million, of which NOK 62.4 million is payable for financial year 2010. Balance on settlement account at 01.01.07 Taxable (settlement account divided by 2.8) Short-term tax payable under the settlement scheme (1/3) Long-term tax payable under the settlement scheme (2/3)
the GRIEG group financial statements 2010
1 872 461 668 736 62 416 124 831
59
note 20
taxation (continued)
DEFERRED TAX FOR GROUP Parts of the Groupâ&#x20AC;&#x2122;s activities fall within the shipping taxation scheme. Deferred tax for non-shipping taxation Deferred tax for shipping taxation Deferred tax in balance sheet
31.12.2010 -1 186 21 298 20 112
31.12.2009 -3 612 55 094 51 482
A) Deferred tax for non-shipping taxation Deferred tax is calculated on the basis of the differences between values for accounting and taxation purposes at year-end. Deferred tax has been calculated on the basis of the following items: Taxable timing differences Tax-deductible timing differences Tax loss to be carried forward Net timing differences that can be netted Deferred tax on net timing differences Unposted deferred tax assets Net deferred tax in balance sheet
31.12.2010 45 577 -45 689 -190 477 -190 588 -53 365 52 179 -1 186
31.12.2009 42 224 -54 798 -166 973 -179 548 -50 273 46 661 -3 612
In accordance with the accounting standard for the treatment of taxation, taxable and tax-deductible timing differences which are reversed or can be reversed within the same period are netted against each other and entered net.
B) Deferred tax related to activities that fall within the shipping taxation scheme Deferred tax is calculated on the basis of the differences between values for accounting and taxation purposes at year-end. Deferred tax has been calculated on the basis of the following items: Timing differences related to financial items Revaluation account Deferred tax account - profit and loss Other temporary differences Financial loss carried forward Total Deferred tax at 28% for companies subject to shipping taxation
60
31.12.2010 64 321 36 991 -1 630 -23 619 76 063 21 298
31.12.2009 86 867 46 239 71 907 -8 248 196 765 55 094
the grieg group financial statementS 2010
note 21
equity
Figures in NOK 1 000
Parent company Equity - Opening Balance Profit of the year Provision for dividend Equity - Closing Balance
Share-capital 1 005 1 005
Share premium reserve 260 515 260 515
Other equity 223 755 115 984 -100 000 239 739
Total 485 276 115 984 -100 000 501 259
Share premium reserve 260 515 260 515
Group reserves 3 267 013 249 962 -100 000 604 -2 017 3 415 562
Minority interests 1 581 250 117 486 -696 -48 429 6 799 315 1 656 725
Total 5 109 784 367 448 -696 -148 429 6 799 919 -2 017 5 333 808
Group Equity - Opening Balance Profit for the year Payment of extraordinary dividend Provision for dividend Increase / decrease in minority interest Currency conversion differences Other changes Equity - Closing Balance
Share-capital 1 005 1 005
note 22 SHARE CAPITAL AND SHAREHOLDER’S INFORMATION At 31 December 2010 the share capital of Grieg Maturitas AS consisted of 1 005 388 shares of nominal value NOK 1. THE SHARE CAPITAL CONSISTS OF THE FOLLOWING SHARE CLASSES: Class A-shares B-shares Total
Number of shares 201 600 803 788 1 005 388
Nominal 1,1,-
Book 201 600 803 788 1 005 388
B-shares 112 755 88 192 200 947 200 947 200 947 803 788
Total 163 155 88 192 251 347 251 347 251 347 1 005 388
The A class shares carry both voting and dividend rights. The B class shares carry no voting rights, but are entitled to dividends. THE COMPANY’S SHAREHOLDERS ARE AS FOLLOWS:
Kvasshøgdi AS Ystholmen AS Salthavn III AS GMC Invest AS Suletind AS Total
the GRIEG group financial statements 2010
Ownership 16,23 8,77 25,00 25,00 25,00 100,00
A-shares 50 400 50 400 50 400 50 400 201 600
61
PricewaterhouseCoopers AS P.O. Box 3984 - Dreggen NO-5835 Bergen Telephone 02316
To the Annual Shareholders’ Meeting of Grieg Maturitas AS
Independent Auditor’s report for 2010 Report on the Financial Statements We have audited the accompanying financial statements of Grieg Maturitas AS, which comprise the financial statements of the parent company, showing a profit of NOK 115 983 867, and the financial statements of the group, showing a profit of NOK 367 448 443. The financial statements of the parent company and the financial statements of the group comprise the balance sheet as at 31 December 2010, and the income statement and cash flow statement, for the year then ended, and a summary of significant accounting policies and other explanatory information. The Board of Directors and the Managing Director’s Responsibility for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these financial statements in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the parent company and the group Grieg Maturitas AS as at 31 December 2010, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.
Report on Other Legal and Regulatory Requirements Opinion on the Board of Directors’ report Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report concerning the financial statements and the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations. Opinion on Registration and documentation Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements ISAE 3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, it is our opinion that the company’s management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company’s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway. Bergen, 24 March 2011 PricewaterhouseCoopers AS Jon Haugervåg State Authorised Public Accountant (Norway) Note: This translation from Norwegian has been prepared for information purposes only. Alta Arendal Bergen Bodø Drammen Egersund Florø Fredrikstad Førde Gardermoen Gol Hamar Hardanger Harstad Haugesund Kongsberg Kongsvinger Kristiansand Kristiansund Lyngseidet Mandal Mo i Rana Molde Mosjøen Måløy Namsos Oslo Sandefjord Sogndal Stavanger Stryn Tromsø Trondheim Tønsberg Ulsteinvik Ålesund PricewaterhouseCoopers and “PwC” refer to the international network of member firms of PricewaterhouseCoopers International Limited (PwCIL). Members of The Norwegian Institute of Public Accountants • Register of Business Enterprises: NO 987 009 713 • www.pwc.no
62
the grieg group financial statementS 2010
Photos by Hung Ngo
www.grieg.no
Bergen, Norway
Oslo, Norway
Grieg-Gaarden P.O. Box 234 Sentrum C. Sundtsgate 17/19 5804 BERGEN, NORWAY
Karenslyst Allé 2 P.O. Box 513 Skøyen 0214 OSLO, NORWAY
Tel.: +47 55 57 66 00 Fax.: +47 55 57 68 55
Tel.: +47 23 27 41 00 Fax.: +47 23 27 41 01
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