KLP Kapitalforvaltning AS
Annual report 2022
KLP Kapitalforvaltning delivered good portfolio management returns and an annual result of NOK 3.0 million in 2022. At the end of the year, the company was managing NOK 640 billion in securities and is experiencing stable growth in assets under management. The future prospects for the company are good.
KLP Kapitalforvaltning AS is 100 per cent owned by Kommunal Landspensjonskasse gjensidig forsikringsselskap (KLP). The company was founded in 1993 and operates out of the KLP Group’s headquarters in Oslo.
The company is a fund management company with a licence from the Financial Supervisory Authority of Norway to manage mutual funds and alternative investment funds, and to provide discretionary portfolio management and investment advice.
The company is the primary supplier of asset management services to the insurance business in the KLP Group. At the end of 2022, the company was the second largest fund management company in Norway measured by capital under management. The company manages 43 mutual funds with share classes for institutional clients, private individuals and distributors. Alongside the funds, discretionary portfolios are managed for companies in the KLP Group.
The company manages products with various investment strategies, including index-tracking, active and quantitative (factor-based) strategies, with investments in Norwegian and international securities. All products meet the general guidelines for responsible investments adopted by the KLP Group and the KLP funds. The company also offers a family of Nordic Swan branded funds that meet even stricter criteria for the environment, working conditions, human rights and anti-corruption.
The company’s strategy is to develop good and cost-effective management products for the insurance business in the KLP Group, which are made available to all customers in the Norwegian fund market. Economies of scale derived from management for KLP and other customers allow the company to offer low-fee fund products suitable for long-term investment for all customer groups. The company strives to maintain its position as a leading player for responsible investments.
At the end of the year, the company managed NOK 640 billion in assets, placed in financial instruments, which is a decrease of NOK 29 billion since 2021. The assets were made up of NOK 506 billion from intragroup customers and NOK 134 billion from other customers. Total assets in the KLP funds were NOK 245 billion.
The profit/loss for 2022 is NOK 2,969 thousand. It is proposed to allocate this as follows (figures in NOK thousands):
Profit/loss | 2022 |
---|---|
Net Group contribution made | - |
Transferred to other owners’ equity | 2 969 |
Total allocated | 2 969 |
The Board considers that the income statement for 2022 and the balance sheet as at 31.12.2022, with the notes, provide complete information on operations in 2022 and the financial position at the end of the year. On the basis of the annual financial statements, the Board believes that the conditions for a going concern are in place. The Board considers the company’s financial strength to be good.
At the end of the year the assets under management were broken down by asset class as follows (figures in NOK billions):
Asset class | Market value |
---|---|
Equities | 311 |
Long-term bonds | 198 |
Short-term bonds | 87 |
Money market securities | 38 |
Hedging | 6 |
Total | 640 |
The company
Asset management
The portfolio management results were marked in 2022 by the weak growth in the securities markets, which gave poor absolute returns to customers in both equity and fixed income funds. The company has consistently delivered good relative results in its portfolio management areas, in relation to its targets and to relevant benchmark indices and comparable competitors.
Sales
The company was successful in selling fund products to institutional investors and retail customers in the Norwegian market in 2022. Net new subscriptions for customers outside the KLP Group came to more than NOK 13 billion. Capital belonging to such customers accounted for about 55 per cent of the total assets in the KLP funds at the end of 2022.
Operations
The company handles a large number of transactions in financial instruments. Around 31,000 different financial instruments are valued in the portfolio system on a daily basis. In 2022, more than 1.1 million entries were registered in the company's management system, which is a slight reduction from 2021.
In 2022, 39,000 securities trades and 6,000 foreign exchange trades were carried out. 29,000 corporate actions related to financial instruments were processed in the portfolios. In 2022, share classes were started for all ordinary mutual funds. At the end of the year, 127 prices were quoted daily for share classes in a total of 43 mutual funds. The focus on strengthening the operating environment continues, to ensure secure handling of the growing complexity and scope of the asset management.
Risk
The company exposure to direct credit and market risk is limited. The company is equity-financed and does not have any interest-bearing debt. The company’s financial strength is good. The company’s financial assets are mainly invested in fixed income funds with a good diversification of risk and low credit and interest-rate risk.
The liquidity risk is very low because the company does not have any interest-bearing debt, the income from management is accrued monthly, and there are significant sums invested in fixed-income funds which can be realised at short notice. The company’s assets under management are largely related to long-term investments from customers, which under normal market conditions are a stable long-term source of income.
The company has indirect exposure to market price movements because management fees from the KLP funds are directly influenced by the amount of assets under management. This means that a general fall in market values will reduce the company’s ongoing revenue from the KLP funds. The amount of the company's equity is commensurate with this risk of loss of income, so it will be able to maintain operations even in the event of a significant loss of income and/or increased costs.
The company’s biggest risk in the short term is operational risk. This is the risk of direct or indirect losses resulting from failing internal processes or systems, errors made by employees or external events. This includes risks related to IT systems, information security and compliance with official requirements. The external threats relating to information security, complexity in the business and the scope of regulatory requirements are major drivers for such risk.
The company spends considerable resources on internal control and compliance to keep track of, manage and limit the company’s operational risks. There is ongoing work to increase the degree of automation of central processes, as well as quality assurance of procedures and systems.
Handling sustainability risk is an integral part of the company's management and decision-making processes. The company works actively to limit sustainability risk in its own operations and through its supply chains. Integration of corporate social responsibility into the management of customer funds is discussed in more detail below.
The Board has conducted an annual review of the company’s risk management and internal control, where the risk of not achieving the company’s strategic objectives is measured on the basis of identified commercial, asset management-related, financial, operational and political risks. This confirmed that the company has implemented a prudent framework for the risks in its business. The Board has also carried out an annual review of the company’s risk and capital needs, setting a capital need for the next 12 months. At the end of 2022, the company’s own funds exceeded this capital need by a good margin.
Corporate social responsibility
The basis for KLP Kapitalforvaltning’s responsible investment work is to deliver secure and competitive management of pensions and savings in a responsible and sustainable manner. The company’s influence on corporate social responsibility and sustainability is greatest through its management of pensions and savings, including its investment in and ownership of companies. The management strategy is built around accepted international standards, such as the UN Climate, Nature and Sustainable Development Goals, and the risk posed by the world’s sustainability challenges to our own activities. The strategy encompasses key issues such as human rights and labour rights, climate and environmental impact, good corporate governance, anti-corruption, tax and transparency, and other financial crime, as well as gender equality and diversity.
KLP Kapitalforvaltning AS aims to be a leading asset manager in the area of responsible investments and to integrate this into all of our operations. We have committed to this through KLP’s membership of the UN Global Compact and by signing up to the UN Principles for Responsible Investment (PRI). The company has set objectives for all portfolios to be better at sustainability than the market in general. The majority of the portfolios under management meet this requirement.
At the end of 2022, 758 companies were excluded from the investment universe for the KLP funds because of breaches of the guidelines. For these companies, 348 issuers were included in the KLP funds' benchmark indices, and 209 issuers were included in the benchmark index of bond funds investing in credit bonds internationally. 142 new companies were excluded, and 55 companies were included. The majority of exclusions are due to violations of the product criteria for KLP and the KLP funds, and the disposal of shares in Russian companies as a result of the war in Ukraine. The rest of the exclusions were violations of other ethical criteria, including human rights and corruption.
The company has followed up 259 companies in its active ownership work on various topics related to ESG. There have been 45 improvements noted in companies that have been followed up by the company. KLP has voted at about 99 percent of all general meetings at which it had voting rights - 8,902 general meetings in all. Through 2022, the company worked to adapt its Nordic Swan eco-labelled funds to new criteria which will come into effect in March 2023, and the implementation of the SFDR.
Organisation
Håvard Gulbrandsen is the Managing Director of the company. KLP’s Chief Finance Officer, Aage Schaaning, took over as Chairman of the Board on 1 January 2023 from CEO Sverre Thornes. At the end of the year, the company had 73 permanent employees. It also had six employees in temporary positions. The employees have been represented on the Board of Directors since 2007. Work has been ongoing throughout the year on leadership development, culture and values as well as training for the company’s employees. The operational environment has been strengthened, and we are working to streamline every part of the company’s data flow.
The working environment is good, and human and employee rights are addressed in the company’s policy guidelines. Sick leave was low in 2022, at 1.26 per cent in total, split between 1.02 per cent short-term absence and 0.24 per cent long-term absence. No employees were injured or suffered any accidents at work in 2022.
The total payments of ordinary salary to the company’s employees were NOK 89.9 million in 2022. The company’s employees also have a defined-benefit pension scheme like the one KLP offers to its customers. Employees who are directly accountable for the management of clients’ assets, and their managers, are included in the company’s performance-related pay scheme. A total of 21 employees were covered by the scheme in 2022. Provisions of NOK 33.4 million have been raised in the accounts for performance-based pay accrued in 2022, excluding employer’s National Insurance contributions and financial taxes. The main features of the performance-based pay scheme are disclosed in the prospectuses for the KLP funds. The remuneration scheme in the company, including the performance-based pay scheme, has been largely retained from the previous year.
The company strives to be an inclusive workplace with a working environment characterised by diversity, gender equality and mutual respect. This strengthens value creation, increases employee satisfaction and contributes to good attitudes and actions. It is also a prerequisite for the company to achieve its goal of being a socially responsible enterprise. We expect our suppliers and partners to take gender equality and diversity seriously in their own operations and in their own supply chains. We also look out for gender discrimination in relation to workers’ rights in the investment processes.
Three out of six Board members are women, along with four out of twelve managers in the company. 34 per cent of the employees are women. Most of them work within our operating environment. Gender-based statistics on the company’s employees, salaries, job categories, working hours and parental leave were drawn up at the end of 2022. The results of this survey are set out in the KLP Group’s sustainability accounts, which are included as an appendix to the Group’s annual report for 2022.
The company has a preponderance of men, both in the number of employees and in employees in the highest paid positions. This is a challenge that exists right across the finance sector. The company is working hard to attract more women in order to achieve a better gender balance, especially in portfolio management positions and in the company’s IT function. Efforts are being made to promote gender balance through the recruitment process, including actively searching for well-qualified candidates of both sexes before hiring. An internship scheme has been established for students where one of the goals is to help recruit more talented young people of both sexes. In 2022, the company hired two of the internship candidates into permanent positions starting in summer 2023. The company also participates in professional events and lectures, as well as arranging webinars and podcasts, to raise its profile as a leading asset manager and an exciting place to work with a socially important function. KLP Kapitalforvaltning AS wants to hear from all qualified jobseekers, regardless of gender, ethnicity, religion, beliefs, disability, sexual orientation, gender identity, gender expression and age.
In order to improve the gender balance, it is also important to develop and retain female employees. The company has good parental leave arrangements and is a flexible workplace which caters for individual needs. Training and professional development are emphasised in staff appraisals. There are regular assessments of differences in pay between men and women, to ensure that these are not related to gender. The company has arranged for younger employees to have a network and a social meeting place in the enterprise, to create a sense of well-being and belonging.
The company adheres to KLP’s Group-wide equality goals linked to equal pay, career and development opportunities, and representation on committees and projects. The company has established specific targets to achieve a balance between the sexes by 2025, where balance is defined as being within 40-60 per cent split between the sexes. There is also a Group-wide goal for a similar gender balance in management and other senior positions. Please refer to the annual report for the KLP Group for a more detailed account of the Group-wide objectives.
Work towards gender equality and against discrimination is based on common guidelines and work across the Group, as well as processes at the local level within the company. The risk of discrimination or other obstacles to gender equality in the company is considered to be low, given the measures that have been established. Efforts to follow up on objectives, evaluate and implement measures will be prioritised in the future.
The company does not pollute the external environment and lays great emphasis on reducing its own climate and environmental impact through the parent company’s work with environmentally certified offices and operations.
The securities market in 2022
2022 was a weak year for most markets and asset classes. Inflation fears gradually replaced the relief at seeing the back of the pandemic, and the equity markets started to fall sharply from the end of the first quarter. The broad stock market index MSCI World (measured in local returns) fell 16 per cent through the year, while the fall in the Norwegian stock market was dampened by high energy prices and ended with a fall of 1 per cent (Oslo Børs Benchmark Index).
Long-term interest rates rose considerably through the year. Both US and Norwegian interest rates started the year below 2 per cent, before rising to around 4 per cent, and ending the year at 3.9 per cent and 3.3 per cent respectively. This movement resulted in that fixed income funds with long duration had a significant negative return in 2022, with KLP Obligasjon Global ending with a negative return of 15.4 percent.
The Norwegian krone depreciated sharply through the year. In the first quarter, it was mostly below 9.00 against the USD, but ended 2022 at almost 10.00 against the USD.
Outlook
There is normally considerable uncertainty associated with assessments of future conditions. However, the Board considers the market outlook for the company to be favourable. Over time, the KLP Group’s total assets are expected to grow, with the expectation of a great bulk of the increase being invested in products delivered by KLP Kapitalforvaltning AS. Stable good results from index-tracking and continuing increased interest from external customers provide a basis for further growth in assets under management. Developments in recent years following the introduction of tax-favoured saving in funds and restructuring of pension schemes in the private and public sectors have increased the interest in personal saving in mutual funds. The company is well positioned to take an increasing share of a growing savings market in the years ahead. The public authorities’ focus on cost-effective management products for consumers underpins this position for the company.
In terms of the general environment for the business, new or extended rules are constantly being introduced, e.g., related to sustainability, anti-money laundering and terrorist financing, as well as product pricing and distribution of funds. Most legislative initiatives come from the EU's work to create a common rulebook for the EU single market, which is an ongoing effort. Further new or extended rules may therefore be expected in the coming years. The changes to the rules require modifications to processes and systems. The company is well equipped to handle these changes in a proper manner.
The company will continue to streamline its operational systems and procedures in 2023.
It is important for the company to have the skills to cope with changes in its own and its customers’ regulatory framework. The company sets great store by close relationships with its customers to enable it to offer products and financial solutions that meet their needs.
The Board believes that the company is well equipped to meet its future challenges.
Income statementKLP Kapitalforvaltning AS
NOTE | NOK THOUSANDS | 2022 | 2021 |
---|---|---|---|
3 | Management fees securities funds | 482 811 | 487 435 |
3,4 | Fees from other securities management | 123 944 | 120 412 |
Total operating income | 606 756 | 607 847 | |
5 | Personnel expenses | -172 307 | -147 605 |
6 | Other operating expenses | -429 603 | -406 090 |
Total operating expenses | -601 911 | -553 695 | |
Operating profit/loss | 4 845 | 54 152 | |
7 | Net financial income | 385 | 2 063 |
Profit before tax | 5 230 | 56 215 | |
8 | Total tax costs | -2 260 | -13 084 |
INCOME FOR THE YEAR | 2 969 | 43 131 | |
TRANSFERS AND ALLOCATIONS: | |||
Transferred to other owners’ equity | 2 969 | 43 131 | |
Total transfers and allocations | 2 969 | 43 131 |
BalanceKLP Kapitalforvaltning AS
NOTE | NOK THOUSANDS | 31.12.2022 | 31.12.2021 |
---|---|---|---|
ASSETS | |||
FIXED ASSETS | |||
9 | Intangible assets | 26 346 | 19 329 |
8 | Deferred tax assets | 42 745 | 39 957 |
Total intangible assets | 69 091 | 59 286 | |
CURRENT ASSETS | |||
4 | Receivables group companies | 41 745 | 54 369 |
Other receivables | 6 | 53 | |
Total receivables | 41 751 | 54 422 | |
10 | Shares in equity funds | 42 221 | 39 095 |
10 | Shares in fixed-income funds | 394 388 | 415 588 |
Total investments | 436 608 | 454 683 | |
Deposits | 87 216 | 67 389 | |
Total deposits | 87 216 | 67 389 | |
TOTAL ASSETS | 634 666 | 635 780 |
NOTE | NOK THOUSANDS | 31.12.2022 | 31.12.2021 |
---|---|---|---|
EQUITY AND LIABILITIES | |||
Share capital | 11 000 | 11 000 | |
Share premium capital | 58 100 | 58 100 | |
Total Paid-up | 69 100 | 69 100 | |
11 | Retained equity | 324 120 | 310 235 |
Total retained earnings | 324 120 | 310 235 | |
TOTAL EQUITY | 393 220 | 379 335 | |
LIABILITIES | |||
12 | Pension obligations | 98 915 | 104 277 |
Total provision for liabilities | 98 915 | 104 277 | |
CURRENT LIABILITIES | |||
Accounts payable | 3 177 | 4 160 | |
Public charges due | 21 364 | 17 755 | |
4 | Liabilities to companies in the same Group | 296 | 8 365 |
13 | Other short term liabilities | 117 694 | 121 889 |
Total current liabilities | 142 531 | 152 168 | |
TOTAL EQUITY AND LIABILITIES | 634 666 | 635 780 |
Changes in Owners’ equityKLP Kapitalforvaltning AS
2022 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners’ equity |
---|---|---|---|---|
Owners’ equity 31.12.2021 | 11 000 | 58 100 | 310 235 | 379 335 |
Estimate difference, pension costs, own employees | 14 555 | 14 555 | ||
Tax effect estimate difference | -3 639 | -3 639 | ||
Performance | 2 969 | 2 969 | ||
Owners' equity 31.12.2022 | 11 000 | 58 100 | 324 120 | 393 220 |
2021 NOK THOUSANDS | Share capital | Share premium | Other equity | Total owners’ equity |
---|---|---|---|---|
Owners' equity 31.12.2020 | 11 000 | 58 100 | 265 464 | 334 564 |
Estimate difference, pension costs, own employees | 2 186 | 2 186 | ||
Tax effect estimate difference | -547 | -547 | ||
Performance | 43 131 | 43 131 | ||
Owners' equity 31.12.2021 | 11 000 | 58 100 | 310 235 | 379 335 |
The company’s share capital as at 31.12.2022 amounts to NOK 11,000,000, divided by 1,000 shares at NOK 11,000. The company has one share class, and there are no provisions in the Articles of Association about any restrictions in voting rights.
All of the shares are owned by Kommunal Landspensjonskasse gjensidig forsikringsselskap.
Statement of cash flowsKLP Kapitalforvaltning AS
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
CASH FLOWS FROM OPERATIONAL ACTIVITIES | ||
Receipts of remuneration from customers | 559 275 | 558 707 |
Interest received | 854 | 67 |
Payment to other suppliers for products and services | -386 904 | -350 905 |
Payment to staff, pension schemes, employer's socia security contribution etc. | -134 253 | -129 029 |
Payment of tax | 0 | -60 |
Payments on the sale of shares and equity funds | -14 417 | -21 897 |
Receipts on the sale of fixed income securities | 48 318 | 11 893 |
Receipts of interest from fixed income securities | -22 371 | -38 038 |
Net cash flows from operating activities | 50 502 | 30 738 |
CASH FLOWS FROM INVESTMENT ACTIVITIES | ||
Payments on the purchase of tangible fixed assets etc. | -14 056 | -4 976 |
Net cash flows from investment activities | -14 056 | -4 976 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments of group contribution | -16 620 | -20 998 |
Net cash flows from financing activities | -16 620 | -20 998 |
Net changes in cash and bank deposits | 19 827 | 4 764 |
Holdings of cash and bank deposits at start of period | 67 389 | 62 625 |
Holdings of cash and bank deposits at end of period | 87 216 | 67 389 |
NotesKLP Kapitalforvaltning AS
Note 1 Accounting principles
1. General information
KLP Kapitalforvaltning AS offers a wide range of investment and management services. The company is one of Norway’s biggest investment management companies and offers both index-tracking and active securities management.
The company is a wholly owned subsidiary of Kommunal Landspensjonskasse (KLP). The Company has an office in Dronning Eufemias gate 10, 0191, Oslo.
The annual financial statements are available at klp.no.
Below follows a description of the most important accounting principles used in the company financial statements. These have been used consistently for all periods presented.
2. Fundamental principles
The accounts have been prepared according to the “Act regarding annual accounts (the Accounting Act)“ of 1998, “Regulation on annual accounts etc. for asset management companies” of 1999, and good accounting practice.
The company financial statements have been prepared based on the principle of historic cost, with the exception of financial assets which have been measured at fair value over profit or loss.
To prepare the accounts, management has to make accounting estimates and approximate valuations. This may affect the value of the assets and liabilities, income and expenses recognised in the financial statements. Actual figures may differ from the estimates used, and areas in which discretionary valuations and estimates of material significance for the company have been shown are described in Note 2.
The financial statements have been prepared in accordance with the going concern assumption.
2.1 Accounting principles that have not entered into force
There are no new and/or changed standards with material effect adopted by the company in 2022.
3. Income and cost accounting principles
The management fees are calculated in relation to management agreements entered into. These are included in the results in line with the part of the contract period that accrued on the balance sheet date.
Principles of revenue recognition in connection with securities is described in more detail in section 4.2.1
Costs are recognised in the same period in which they are incurred.
4. Classification of assets
Assets recognised as current assets or use are classified as fixed assets. Other assets are classified as current assets.
4.1 Fixed assets
Fixed assets are valued at acquisition costs, adjusted for depreciation and any write-downs. An assessment of the need for write-down will be made where there is an indication of a fall in value that is anticipated to be permanent.
4. 1.1 IT Systems
The Company’s intangible assets generally comprise capitalised IT systems and software. On the purchase of a new IT system, directly attributable costs for the system/software, assistance from external consultant and costs of having the system installed and readied for use are capitalised.
On further development of IT systems and software both external and internal costs are capitalised in accordance with the above. System changes regarded as maintenance are taken to expenses as they occur.
When an IT system is operational the capitalised costs are depreciated by straight line over the expected life. In the event of subsequent capitalisation because of further development, this is depreciated over the original lifetime unless the expenditure increases the total expected life of the system.
If there are indications that the book value of a capitalised IT system is higher than the recoverable amount an impairment test is carried out. If the book value is higher than the recoverable sum (present value on continued use/ownership), the asset is depreciated to the recoverable amount.
4.2 Current assets
4.2.1 Securities
The company’s holding of securities is managed as a group, and earnings are assessed and reported to management on a fair value basis. The size of the portfolios is determined by the company’s desired risk exposure to the equity and interest rate markets, respectively.
The securities are recognised in the balance sheet at fair value on the trading date.
During subsequent measurements, the securities are valued at fair value. Fair value is set daily based on an observable purchase price in active markets or, where such a purchase price is not available, through theoretical valuation models based on external data. The prices are read at given closing points in each individual market on the last trading day up until the balance sheet date. Theoretical valuation methods are based for example on information on recently completed transactions on business terms and conditions, reference to trading in similar instruments and pricing using externally collected yield curves and spread curves.
Change in fair value is recognised on the line “Net financial income”.
During the sale of securities, the realised profit/loss is calculated as the difference between the sales price and the acquisition cost. The acquisition cost is calculated based on the first in, first out principle (FIFO principle) for investments in securities, while the acquisition cost is allocated according to the average method for interchangeable financial assets such as bonds and certificates. Realised gains are recognised on the line “Net financial income”.
Coupons on interest-bearing securities is presented in the line “Net financial income” in the P/L statement.
4.2.2 Cash and bank deposits
Cash holdings and bank deposits associated with daily operations are shown as cash and bank deposits. The statement of cash flows has been set out in accordance with the direct method.
4.2.3 Other current assets
Other current assets are valued at the lowest value of nominal and fair value. Other current assets consists mainly of trade receivables, internal accounts with group companies and other current receivables.
5. Classification of debt
Liabilities that must be repaid within a year are classified as current liabilities.
5.1 Current liabilities
Current liabilities are valued at the highest of nominal and fair value. Current liabilities consist mainly of accounts payable, incurred or overdue public fees, debts to intra-group companies and other current liabilities.
5.2 Non-current liabilities
5.2.1 Pension obligations
The company’s pension obligations are mainly insurance-covered through the parent company KLP’s public sector occupational pensions through membership of the joint pension scheme for municipalities and enterprises (‘Fellesordningen’). Pension liability beyond these schemes is covered through operations. The Company has a defined-benefit pension scheme for its employees.
The accounting liability for defined benefit schemes is the present value of the obligation on the reporting date, with deduction for fair value of the pension assets. The gross obligation is calculated by an actuary who uses the linear method for the calculation. The gross obligation is discounted to present value using the interest rates on Norwegian high-quality bonds. Gains and losses arising on recalculation of the obligation as a result of known deviation and changes in actuarial assumptions are charged directly to owners’ equity during the period in which they arise.
When presenting the pension costs in the income statement, there is a three-way distribution of the costs. The pension cost is divided into pension cost, a net interest element and an estimated difference (actuarial gains and losses). In the income statement there is a choice to classify the net interest element either as an operational cost or as a financial cost. The option the company adopts must be followed consistently for later periods. The Company has presented the pension costs under the accounting line ‘Salary costs’, whilst the net interest element is presented in the accounting line ‘Net financial income’. The estimated difference is posted directly to owners’ equity.
6. Tax
The tax cost in the income statement covers both the period’s payable tax and change in deferred tax. Deferred tax is calculated with 25% of the basis of the temporary differences that exist between the accounting and taxable values, and tax deficit for performance at the end of the accounting year. Tax increasing and reducing temporary differences that reverse or can reverse in the same period are settled. Net deferred tax assets are capitalised to the extent it is likely that they could be utilized.
The Company is a part of a financial services group and a tax group. Any tax-related surplus may, with exception for the limitations pursuant to the Financial Institutions Act, be submitted in their entirety to parent company and subsidiaries as group contribution with tax effect.
The company is covered by the rules of capital activity tax. Capital activity tax are calculated on the company’s total employer taxable benefits in addition to the salary benefits etc. that were earned in 2022, but were not paid until later years
7. Owners’ equity
The Company’s owners’ equity comprises share capital, share premium and other owners’ equity. The company was established by Kommunal Landspensjonskasse, which owns all the shares in the Company. The Company’s shares are an assignable equity capital instrument but are not listed on the stock market or other marketplace.
Other owners’ equity comprises Group contributions received and retained earnings.
Allocations from the Company are governed through ordinary company law provisions.
8. Translation of transactions in foreign currency
8.1 Functional currency and presentation currency
The Company’s accounts are presented in NOK, which is the functional currency of the Company.
8.2 Transactions and statement of financial position items
Transactions in foreign currency have been translated to NOK by using the exchange rate on the date of the transaction. Currency gains and losses on transactions in foreign currency are recognised through profit or loss. This also applies to translation of monetary items (assets and liabilities) at the end of the reporting period.
Translation differences on non-monetary items is included as a part of the assessment of fair value. Translation differences associated with non-monetary items, such as shares at fair value through profit and loss, are included as an element of value change taken to profit/loss.
Note 2 Important accounting estimates and valuations
When preparing the company’s accounts, the management performs estimates, approximate assessments and assumptions on future conditions. This will affect the recognised amounts for assets, liabilities, income and costs. These are evaluated continuously and are based on historical experience data.
It may be expected that the estimates will deviate from the final outcome and the areas where there is significant risk of substantial changes in capitalised values in future periods are discussed below.
2.1 Pension obligations
The present value of the Company’s net pensions liability in regard to its employees depends on a range of economic and demographic assumptions. The Company complies with the “Guidance for determining pension assumptions” published by the Norwegian Accounting Standards Board (NASB). Updated guidance published in January 2023 has been used as the basis for updated measurement of best-estimate accrued obligations and assets as at 31 December 2022.
In accounting for pension schemes in accordance with IAS 19 and NRS 6, a range of actuarial assumptions must be specified. This specification involves significant elements of judgement and practical approximations. Weight has been placed on the assumptions being mutually consistent. The assumptions for the Company's pension obligations are set in accordance with the guidelines, see note 12 for more information regarding pension obligations.
2.2 Fair value of financial assets
Financial assets classified as assets at fair value are taken to profit/loss are largely assets traded in a market, so that the market value can be determined with a great deal of certainty. For listed securities with little turnover, assessment is made whether the observable price can be taken as realistic.
Note 3 Fee income
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Equity funds | 408 443 | 400 946 |
Fixed-income funds | 74 368 | 86 489 |
Total Management fees securities funds | 482 811 | 487 435 |
Management fees KLP Skadeforsikring AS | 1 967 | 1 884 |
Management fees Kommunal Landspensjonskasse | 121 783 | 118 346 |
Management fees KLP Banken AS | 87 | 84 |
Management fees KLP Kommunekreditt AS | 74 | 70 |
Management fees KLP Boligkreditt | 19 | 17 |
Management fees KLP Eiendom AS | 15 | 11 |
Total fees from other securities management | 123 944 | 120 412 |
Total | 606 756 | 607 847 |
Note 4 Transactions with related parties
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Income | ||
Management fees | 123 944 | 120 412 |
Total | 123 944 | 120 412 |
Expenses | ||
Rent/Cleaning | 9 043 | 8 716 |
Pension premium | 15 612 | 12 761 |
Staff services | 62 470 | 59 945 |
Interest subsidised employee loans | 1 203 | 1 111 |
Total | 88 328 | 82 533 |
Balance sheet assets | ||
Kommunal Landspensjonskasse | 3 272 | 11 109 |
KLP Skadeforsikring AS | 492 | 292 |
KLP Kommunekreditt AS | 0 | 32 |
KLP Boligkreditt AS | 0 | 9 |
KLP Eiendom AS | 15 | 11 |
KLP Banken AS | 0 | 32 |
KLP funds | 37 966 | 42 884 |
Total | 41 745 | 54 369 |
Balance sheet liabilities | ||
KLP Banken AS | -108 | -129 |
KLP Boligkreditt AS | -188 | -176 |
Kommunal Landspensjonskasse | 0 | -8 060 |
Total | -296 | -8 365 |
Instalment plan for intra-Group items has not been agreed as these are settled on an ongoing basis. The company has no pledged assets, securities or guarantees with undertakings in the same Group.
Note 5 Number of employees, personnel expenses
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Number of permanent employees 31 December | 73 | 70 |
Average number of employees | 72 | 69 |
Total number of full time equivalents | 73 | 70 |
Personel expences - income statement: | ||
Salary | 89 854 | 82 193 |
Pension costs | 17 564 | 14 475 |
Social security tax | 18 324 | 16 487 |
Capital activity tax | 7 162 | 6 048 |
Allowance for salary incl. Social security tax | 39 404 | 28 402 |
Total personnel expenses | 172 307 | 147 605 |
Note 6 Other operating expenses
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Rent | 8 637 | 8 183 |
IT-expenses | 107 082 | 97 733 |
Major customer discount | 139 183 | 144 386 |
Distributor allowance | 35 134 | 24 958 |
Other operating expenses | 139 568 | 130 830 |
Total other operating expenses | 429 603 | 406 090 |
Note 7 Net financial income
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Interest income bank | 854 | 67 |
Interest income fixed-income funds | 4 379 | 4 926 |
Profit from the sale of sharesfunds | 1 857 | 1 978 |
Unrealised change in value on fixed-income funds | -4 097 | -2 741 |
Other financial expenses | 0 | -56 |
Financial costs pension calculation | -2 446 | -2 112 |
Loss on the sale of sharesfunds | -161 | 0 |
Total net financial income | 385 | 2 063 |
Note 8 Tax
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Accounting income before taxes | 5 230 | 56 215 |
Differences between accounting and tax income: | ||
Pension obligations recognised directly against owners’ equity | 14 555 | 2 186 |
Tax gain on shares and other financial instruments | 485 | 638 |
Reversal of value increase financial assets | 7 333 | -790 |
Reversed accounting gain through realisation of shares and other securities | -1 857 | -1 978 |
Reversed accounting loss through realisation of shares and other securities | 161 | 0 |
Other permanent differences | 484 | 440 |
Change in differences affecting relationship between book and taxable income | 8 359 | 9 767 |
Taxable income | 34 750 | 66 478 |
Group contribution paid with tax effect | -34 750 | -66 478 |
Base for tax payable | 0 | 0 |
Tax-increasing temporary differences: | ||
Securities | 0 | 743 |
Total tax-increasing temporary differences: | 0 | 743 |
Tax-reducing temporary differences: | ||
Fixed assets | 0 | -11 |
Bonus accrual | -70 015 | -56 282 |
Pension obligation, salary etc. | -98 915 | -104 277 |
Securities | -2 052 | 0 |
Total tax-reducing temporary differences: | -170 981 | -160 570 |
Net temporary differences | -170 981 | -159 827 |
Basis for deferred tax | -170 981 | -159 827 |
Capitalised deferred tax asset (25%) | -42 745 | -39 957 |
Distribution of the tax cost: | ||
Tax on Group contribution payment made | -8 688 | -16 620 |
Change in deferred tax | 2 789 | 3 050 |
Corrected error earlier years | 0 | -60 |
Total tax costs | -5 899 | -13 630 |
Distributed among the following items: | ||
Tax on Group contribution payment made | -8 688 | -16 620 |
Tax payable earlier years | 0 | -60 |
Change in deferred tax in the income statement | 6 427 | 3 596 |
Total recognised tax cost | -2 260 | -13 084 |
Tax on estimate deviation, posted directly to owners’ equity | -3 639 | -547 |
Total tax cost posted directly to owners’ equity | -3 639 | -547 |
Total distributed tax cost | -5 899 | -13 630 |
Profit/loss after tax amounted to 1 per cent of the company’s capital assets in 2022.
Note 9 Intangible assets
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Acquisition cost 01.01. | 63 343 | 58 366 |
Total additions | 14 056 | 4 976 |
Disposals | 0 | 0 |
Acquisition cost 31.12. | 77 399 | 63 343 |
Accumulated depreciation and write-downs 01.01. | -44 013 | -38 454 |
Ordinary depreciation for the year | -7 040 | -5 559 |
Book value 31.12. | 26 346 | 19 329 |
Depreciation period | 4-7 år | 4-7 år |
Note 10 Equity- and fixed income funds
2022 NOK THOUSANDS | Number | Acquisition cost | Unrealized value 31.12.2022 | Fair value |
---|---|---|---|---|
KLP Aksjeglobal indeks IV | 1 109 | 2 088 | 943 | 3 031 |
KLP Aksjeglobal mer samfunnsansvar | 3 976 | 4 497 | 2 222 | 6 719 |
KLP Aksjeglobal mer samfunnsansvar II | 1 861 | 1 886 | 391 | 2 277 |
KLP Aksjeglobal flerfaktor | 2 | 2 | 0 | 2 |
KLP Lang Horisont | 31 049 | 30 306 | -115 | 30 191 |
Total equity funds | 38 780 | 3 441 | 42 221 | |
KLP FRN | 45 610 | 45 277 | 242 | 45 519 |
KLP Kredittobligasjon | 104 328 | 108 325 | -3 340 | 104 985 |
KLP Likviditet S | 198 820 | 197 979 | 1 | 198 844 |
KLP Obligasjon 1 år Mer Samfunnsansvar | 44 668 | 44 813 | 227 | 45 040 |
Total fixed income funds | 396 393 | -2 005 | 394 388 | |
Total funds | 435 173 | 1 436 | 436 608 |
2021 NOK THOUSANDS | Number | Acquisition cost | Unrealized value 31.12.2021 | Fair value |
---|---|---|---|---|
KLP Aksjeglobal indeks IV | 1 469 | 2 703 | 2 227 | 4 929 |
KLP Aksjeglobal mer samfunnsansvar | 3 976 | 4 497 | 2 994 | 7 491 |
KLP Aksjeglobal mer samfunnsansvar II | 1 861 | 1 886 | 935 | 2 820 |
KLP Lang Horisont | 11 138 | 20 734 | 3 121 | 23 855 |
Total equity funds | 29 819 | 9 275 | 39 095 | |
KLP FRN | 52 198 | 54 369 | 487 | 54 857 |
KLP Kredittobligasjon | 102 674 | 109 665 | -990 | 108 675 |
KLP Pengemarked | 197 413 | 197 495 | 0 | 197 495 |
KLP Obligasjon 1 år Mer Samfunnsansvar | 54 436 | 54 566 | -5 | 54 561 |
Total fixed income funds | 416 095 | -507 | 415 588 | |
Total funds | 445 914 | 8 769 | 454 683 |
Note 11 Capital adequacy
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
OWN FUNDS | ||
Share capital | 11 000 | 11 000 |
Share premium | 58 100 | 58 100 |
Other owners’ equity | 324 120 | 310 235 |
Intangible assets | -26 346 | -19 329 |
= Core capital | 366 875 | 360 005 |
Supplementary capital/Tier 2 capital | -6 058 | -3 956 |
= Own funds | 360 817 | 356 049 |
Capital requirements – the standard method | Assets | Risk-weighted balance: | ||
---|---|---|---|---|
2022 | Weight | 2022 | 2021 | |
Assets that are weighted 10% | 0 | 10 % | 0 | 0 |
Assets that are weighted 20% | 424 581 | 20 % | 84 916 | 85 745 |
Assets that are weighted 100% | 12 027 | 100 % | 12 027 | 147 769 |
Risk-weighted calculation base | 436 608 | 96 944 | 233 514 | |
Capital requirements according to the standard method (A) | 7 755 | 18 681 |
Capital requirement – method based on 25% of last year’s fixed costs | Basis | Basis |
---|---|---|
2022 | 2021 | |
Last year’s fixed costs | 389 643 | 356 780 |
Capital requirements according to the cost method (B) | 97 411 | 89 195 |
Capital adequacy ratio in % | 29,63 % | 31,93 % |
According to the capital requirements regulations, the Company must have net own funds that exceeds (A) 8 % of the risk weighted calculation basis, and (B) 25 % of last years fixed costs.
Supplementary capital requirements | 2022 | 2021 |
---|---|---|
105 838 | 99 888 |
According to Section 2-7 of the Alternative Investment Services Act and Section 2-2 of the regulation of the Act on Securities Fund, the company has a supplementary requirement for own funds:
Own funds shall at any time constitute an amount in NOK that is at least equivalent to EUR 120.000 and an amount that corresponds to 0.02 % of the management company's managed capital in addition to EUR 250 million, limited to an amount in NOK equivalent to EUR 10 million.
Note 12 Pension obligations, own employees
The majority of the pension obligation is covered through KLP’s joint pension scheme for local authorities and enterprises (“Fellesordningen”). The Company also offers a pension scheme in addition to Fellesordningen. This obligation is covered through operation. Fellesordningen is a defined-benefits-based pension scheme that satisfies the requirements for mandatory occupational pensions (“obligatorisk tjenestepension”, or OTP). The Company has a contractual early retirement (AFP) scheme. The accounting treatment of pension obligations is described in more detail in Note 1 and 2.
NOK THOUSANDS | Joint scheme | Via operation | Total 2022 | Joint scheme | Via operation | Total 2021 |
---|---|---|---|---|---|---|
Pension costs | ||||||
Present value of accumulation for the year | 14 833 | 1 951 | 16 784 | 12 042 | 1 714 | 13 756 |
Administration cost | 279 | 0 | 279 | 269 | 0 | 269 |
Plan change | 0 | 0 | 0 | 0 | 0 | 0 |
Social security contributions - pension costs | 2 131 | 275 | 2 406 | 1 736 | 242 | 1 977 |
Capital activity tax - pension tax | 756 | 98 | 853 | 616 | 86 | 701 |
Pension costs taken to profit/loss incl. social security, capital activity tax and admin. | 17 999 | 2 324 | 20 323 | 14 662 | 2 041 | 16 704 |
Net financial costs | ||||||
Interest cost | 5 362 | 781 | 6 143 | 4 181 | 605 | 4 786 |
Interest income | -4 265 | 0 | -4 265 | -3 175 | 0 | -3 175 |
Management costs | 175 | 0 | 175 | 162 | 0 | 162 |
Net interest cost | 1 273 | 781 | 2 054 | 1 168 | 605 | 1 773 |
Social security contributions - net interest cost | 179 | 110 | 290 | 165 | 85 | 250 |
Capital activity tax - net interest cost | 64 | 39 | 103 | 58 | 30 | 89 |
Net interest cost including social security contributions and capital activity tax | 1 516 | 930 | 2 446 | 1 391 | 721 | 2 112 |
Estimate deviation pensions | ||||||
Actuarial gains (losses) | -9 839 | -2 382 | -12 221 | -4 806 | 2 970 | -1 836 |
Social security contributions | -1 387 | -336 | -1 723 | -678 | 419 | -259 |
Capital activity tax | -492 | -119 | -611 | -240 | 149 | -92 |
Actuarial gains (losses) including social security contributions and capital activity tax | -11 718 | -2 837 | -14 555 | -5 724 | 3 537 | -2 186 |
Total pension costs including interest costs and estimate deviation | 7 797 | 417 | 8 214 | 10 329 | 6 300 | 16 629 |
NOK THOUSANDS | Joint scheme | Via operation | Total 2022 | Joint scheme | Via operation | Total 2021 |
---|---|---|---|---|---|---|
Pension obligations | ||||||
Gross accrued pension obligations | 273 562 | 39 486 | 313 048 | 267 702 | 39 170 | 306 872 |
Pension assets | 229 996 | 0 | 229 996 | 219 318 | 0 | 219 318 |
Net liability before social security costs and capital activity tax | 43 565 | 39 486 | 83 052 | 48 384 | 39 170 | 87 554 |
Social security contributions | 2 178 | 1 974 | 4 153 | 2 419 | 1 959 | 4 378 |
Capital activity tax | 6 143 | 5 568 | 11 710 | 6 822 | 5 523 | 12 345 |
Gross accrued obligations incl. social security costs and capital activity tax | 281 883 | 47 028 | 328 911 | 276 944 | 46 652 | 323 595 |
Net liability incl. social security costs and capital activity tax | 51 886 | 47 028 | 98 915 | 57 626 | 46 652 | 104 277 |
NOK THOUSANDS | Joint scheme | Via operation | Total 2022 | Joint scheme | Via operation | Total 2021 |
---|---|---|---|---|---|---|
Reconciliation pension obligation | ||||||
Capitalized net liability/(assets) 01.01. | 57 626 | 46 652 | 104 277 | 64 438 | 40 391 | 104 828 |
Pension costs taken to profit/loss | 17 999 | 2 324 | 20 323 | 14 662 | 2 041 | 16 704 |
Financial costs taken to profit/loss | 1 516 | 930 | 2 446 | 1 391 | 721 | 2 112 |
Actuarial gains and losses included social security contributions and capital activity tax | -11 718 | -2 837 | -14 555 | -5 724 | 3 537 | -2 186 |
Social security contributions paid in premiums/supplement | -1 602 | -5 | -1 607 | -2 029 | -5 | -2 034 |
Capital activity tax paid in premiums/supplement | -568 | -2 | -570 | -720 | -2 | -721 |
Premium/supplement paid-in including admin | -11 365 | -34 | -11 399 | -14 393 | -32 | -14 425 |
Capitalized net liability/(assets) 31.12. this year | 51 886 | 47 028 | 98 915 | 57 626 | 46 652 | 104 277 |
NOK THOUSANDS | Joint scheme | Via operation | Total 2022 | Joint scheme | Via operation | Total 2021 |
---|---|---|---|---|---|---|
Change in pension obligations | ||||||
Gross pension assets 01.01. before plan change | 276 943 | 46 652 | 323 595 | 244 541 | 40 391 | 284 932 |
Plan change | 0 | 0 | 0 | 0 | 0 | 0 |
Gross pension assets 01.01 after plan change | 276 943 | 46 652 | 323 595 | 244 541 | 40 391 | 284 932 |
Present value of accumulation for the year | 14 833 | 1 951 | 16 784 | 12 042 | 1 714 | 13 756 |
Interest cost | 5 362 | 781 | 6 143 | 4 181 | 605 | 4 786 |
Actuarial losses (gains) gross pension obligation | -15 572 | -2 837 | -18 409 | 16 956 | 3 537 | 20 494 |
Social security contributions - pension costs | 2 131 | 275 | 2 406 | 1 736 | 242 | 1 977 |
Social security contributions - net interest cost | 179 | 110 | 290 | 165 | 85 | 250 |
Social security contributions paid in premiums/supplement | -1 602 | -5 | -1 607 | -2 029 | -5 | -2 034 |
Capital activity tax - pension costs | 756 | 98 | 853 | 616 | 86 | 701 |
Capital activity tax - net interest cost | 64 | 39 | 103 | 58 | 30 | 89 |
Capital activity tax paid in premiums/supplement | -568 | -2 | -570 | -720 | -2 | -721 |
Payments | -644 | -34 | -678 | -603 | -32 | -635 |
Gross pension obligation 31.12. | 281 881 | 47 029 | 328 909 | 276 943 | 46 652 | 323 595 |
NOK THOUSANDS | Joint scheme | Via operation | Total 2022 | Joint scheme | Via operation | Total 2021 |
---|---|---|---|---|---|---|
Change in pension assets | ||||||
Pension assets 01.01 | 219 318 | 0 | 219 318 | 180 103 | 0 | 180 103 |
Interest income | 4 265 | 0 | 4 265 | 3 175 | 0 | 3 175 |
Actuarial (loss) gain on pension assets | -3 854 | 0 | -3 854 | 22 680 | 0 | 22 680 |
Administration cost | -279 | 0 | -279 | -269 | 0 | -269 |
Financing cost | -175 | 0 | -175 | -162 | 0 | -162 |
Premium/supplement paid-in including admin | 11 365 | 34 | 11 399 | 14 393 | 32 | 14 425 |
Payments | -643 | -34 | -677 | -602 | -32 | -634 |
Pension assets 31.12 | 229 996 | 0 | 229 996 | 219 318 | 0 | 219 318 |
NOK THOUSANDS | Joint scheme | Via operation | Total 2022 | Joint scheme | Via operation | Total 2021 |
---|---|---|---|---|---|---|
Pension scheme’s over-/under-financing | ||||||
Present value of the defined benefits pension obligation | 281 881 | 47 029 | 328 909 | 276 943 | 46 652 | 323 595 |
Fair value of the pension assets | 229 996 | 0 | 229 996 | 219 318 | 0 | 219 318 |
Net pensions liability | 51 884 | 47 029 | 98 913 | 57 625 | 46 652 | 104 277 |
31.12.2022 | 31.12.2021 | |
---|---|---|
Financial assumptions (common to all pension schemes) | ||
Discount rate | 3,00 % | 1,90 % |
Salary growth | 3,50 % | 2,75 % |
The National Insurance basic amount (G) | 3,25 % | 2,50 % |
Pension increases | 2,60 % | 1,73 % |
Social security contribution | 14,10 % | 14,10 % |
Capital activity tax | 5,00 % | 5,00 % |
The assumptions as at 31 December 2022 have been applied to measurement of the cost of pension for 2021, whilst for calculation of the pension obligation on 31 December 2022, the assumptions and membership numbers as at 31 December 2022 have been applied. The assumptions are based on the market situation as at 31 December 2022 and are in accordance with the recommendations of the Norwegian Accounting Standards Board (NASB).
Actuarial assumptions
KLP’s joint pension scheme for local authorities and enterprises (“Fellesordningen”):
An important part of the basis of pension costs and pension obligations is how mortality and disability develop amongst the members of the pension scheme.
KLP uses best estimate based on mortality and disability figures in KLPs customer base.
Withdrawal of contractual early retirement (AFP) (per cent in relation to remaining employees):
The costs of AFP depend on how many in each year-group take AFP. On reaching 62 years there are 42.5 per cent who retire with an AFP pension. It is only those who are employed and working right up to retirement who are entitled to AFP. This is taken into account in the calculation of the AFP obligation.
Voluntary termination for “Fellesordning” (in %) | ||||||
---|---|---|---|---|---|---|
Age (in years) | <24 | 24-29 | 30-39 | 40-50 | 51-55 | >55 |
Turnover | 25 % | 15 % | 7,5 % | 5 % | 3 % | 0 % |
Pensions via operations
AFP/early retirement is not relevant to this scheme. In regard to mortality the same estimates have been used as for “Fellesordningen”.
NUMBER | Joint scheme | Via operation | Total 2022 | Joint scheme | Via operation | Total 2021 |
---|---|---|---|---|---|---|
Membership status | ||||||
Number active | 75 | 10 | 85 | 71 | 12 | 83 |
Number deferred (previous employees with deferred entitlements) | 92 | 13 | 105 | 84 | 13 | 97 |
Number of pensioners | 6 | 1 | 7 | 7 | 1 | 8 |
2022 | 2021 | |
---|---|---|
Composition of the pension assets: | ||
Property | 14,7 % | 13,8 % |
Lending | 12,0 % | 11,9 % |
Shares | 30,2 % | 30,9 % |
Long-term/HTM bonds | 29,0 % | 27,7 % |
Short-term bonds | 12,2 % | 13,8 % |
Liquidity/money market | 1,9 % | 1,9 % |
Total | 100,0 % | 100,0 % |
The pension funds are based on KLP’s financial funds in the common portfolio. The table shows percentage placing of the pension funds administered by KLP at the end of the year. Value-adjusted return on the assets was -1,14 per cent in 2022 and 8,36 per cent in 2021.
Expected payment into benefits plans after cessation of employment for the period 1 January 2023 – 31 December 2023 is NOK 25,6 million.
Sensitivity analysis as at 31 December 2022 | |
---|---|
The discount rate is reduced by 0.5 % | Increase |
Gross pension obligation | 10,2 % |
Accumulation for the year | 16,3 % |
Salary growth increases by 0.25% | Increase |
Gross pension obligation | 0,5 % |
Accumulation for the year | 1,3 % |
Mortality is strengthened by 10 % | Increase |
Gross pension obligation | 2,8 % |
Accumulation for the year | 2,1 % |
The sensitivity analysis above is based on all other assumptions being unchanged. In practice that is an unlikely scenario and changes in some assumptions are correlated. The calculation of gross pension obligation and accumulation for the year in the sensitivity analysis has been done using the same method as in calculating gross pension obligation in the financial position statement.
The duration in the Joint scheme is estimated at 18,9 years.
Note 13 Other short term liabilities
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Provisioned salary | 58 786 | 47 256 |
Tax payable | 8 688 | 16 620 |
Provisioned holiday pay | 9 452 | 8 664 |
Provisioned unused holiday | 2 239 | 1 866 |
Accrued operating expenses | 38 529 | 47 483 |
Total other short term liabilities | 117 694 | 121 889 |
Note 14 Salary and obligations towards senior management etc.
NOK THOUSANDS | 2022 | 2021 | ||
---|---|---|---|---|
Managing director | The Boards of Directors | Managing director | The Boards of Directors | |
Salary, fees etc. | 3 566 | 359 | 3 427 | 351 |
Other benefits | 179 | 0 | 213 | 0 |
Annual pension | 1 163 | 0 | 1 086 | 0 |
Total | 4 908 | 359 | 4 727 | 351 |
The KLP Board of Directors has laid down principles and guidelines for remuneration that apply for the entire Group and set up a remuneration committee as a subcommittee of the Board. The committee reports on and carries out checks that the remuneration schemes in the Group are in line with the Board's principles and guidelines.
There are no obligations to provide the Managing director and the Chairman of the Board special consideration or other benefits on termination or change of the appointment. The Managing director has no agreement on performance pay (bonus) in addition to salary.
The Managing director has a retirement age of 65 years of retirement and a pension plan which pays 66 per cent of eligible salary in pension assuming a full accrual period.
Fees to Board members are determined by the Corporate Assembly. Board members employed in the KLP Group, not having been elected by and from the employees, do not receive a fee for the Board appointment
All benefits are shown without the addition of social security contributions and capital activity tax.
The Company has not granted any loans or security to the Managing Director, the Chair of the Board or other related parties
Note 15 Fixed- and variable costs
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Total income | 606 756 | 607 847 |
Result before taxes | 5 230 | 56 215 |
Variable costs | 166 290 | 164 052 |
Fixed costs | 435 621 | 389 643 |
Fixed costs is calculated according to the capital requirements regulations.
Note 16 Liquidity risk
2022 NOK THOUSANDS | ||||||
---|---|---|---|---|---|---|
Agreed term to maturity | Within 1 month | 1-12 months | 1-5 years | Over 5 years | Without agreed term to maturity | Total |
Receivables | 41 751 | 41 751 | ||||
Equity funds | 42 221 | 42 221 | ||||
Fixed income funds | 394 388 | 394 388 | ||||
Bank deposits | 87 216 | 87 216 | ||||
Pension obligations | -98 915 | -98 915 | ||||
Accounts payable | -3 177 | -3 177 | ||||
Liabilities group companies | -296 | -296 | ||||
Public charges due | -21 364 | -21 364 | ||||
Other short term liabilities | -117 694 | -117 694 | ||||
Total | -100 780 | 0 | 0 | -98 915 | 523 824 | 324 129 |
2021 NOK THOUSANDS | ||||||
---|---|---|---|---|---|---|
Agreed term to maturity | Within 1 month | 1-12 months | 1-5 years | Over 5 years | Without agreed term to maturity | Total |
Receivables | 54 422 | 54 422 | ||||
Equity funds | 39 095 | 39 095 | ||||
Fixed income funds | 415 588 | 415 588 | ||||
Bank deposits | 67 389 | 67 389 | ||||
Pension obligations | -104 277 | -104 277 | ||||
Accounts payable | -4 160 | -4 160 | ||||
Liabilities group companies | -8 365 | -8 365 | ||||
Public charges due | -17 755 | -17 755 | ||||
Other short term liabilities | -121 889 | -121 889 | ||||
Total | -97 747 | 0 | 0 | -104 277 | 522 072 | 320 048 |
The company does not have any interest-bearing liabilities but is fully funded by equity. Of the company’s investments as at 31 December 2022, 75,3 % are invested in fixed-income funds, 8,1% are invested in equity funds and the rest is cash or cash equivalents.
Because the company is not funded by debt, the liquidity obligations are limited to payment of ongoing operating expenses. Because the company’s assets essentially consist of easily transferable securities and bank deposits, the liquidity risk is considered to be very small.
The company has no investments in foreign currency and is therefore not exposed to exchange rate risk.
Note 17 Auditor’s fee
NOK THOUSANDS | 2022 | 2021 |
---|---|---|
Ordinary audit | 1 026 | 1 379 |
Certification services | 213 | 0 |
Non-audit services | 426 | 313 |
The audit fee is expensed according to received invoice. The amounts above include VAT.
Independent Auditor’s report
Contact information
KLP KAPITALFORVALTNING AS
A company in the KLP Group
Organisation number: 968 437 666
VISITOR ADDRESS:
Dronning Eufemiasgate 10, Oslo
Pb. 400 Sentrum, 0103 Oslo
Tlf.: +47 55 54 85 00