2015 was a good year for Ferd and all its business areas delivered a positive return. The returns achieved by Ferd’s portfolio of Nordic stock exchange listed companies and by its real estate portfolio were particularly strong. In 2015 Ferd generated a return of NOK 2.0 billion or 8.1%, beating the Norwegian stock market. The oil services market was challenging in 2015. Some of Ferd Capital’s oil service companies performed well in view of the market conditions, but these investments nonetheless showed a negative return. However, the performance of the portfolio companies TeleComputing and Mestergruppen meant Ferd Capital achieved a positive return in 2015. At the close of 2015, Ferd’s value adjusted equity was NOK 26.6 billion.

2015 was a good year for Ferd and all its business areas delivered a positive return

Approximately 50% of Ferd’s investments are denominated in Norwegian krone, with 15% denominated in US dollar and just under 20% in euro. Ferd recorded a currency gain of just under NOK 1 billion in 2015. Ferd’s annual return over the last five-year period is 10.4%, which is significantly better than the return for the Oslo stock market during this time. Ferd has maintained very good levels of liquidity and capital solidity for the entirety of this period.

Ferd invested in the ferry company Fjord Line in 2015 and by the end of the year owned 38.5% of the company’s share capital. Towards the end of 2014 Ferd Capital purchased a 10.1% stake in the seismic company Petroleum Geo-Services (PGS). Ferd Capital maintained its ownership percentage in PGS by participating in a share issue carried out by the company in November 2015. Ferd and the funds in which Ferd is invested made significant disposals in 2015. Several real estate investments were sold, and Ferd Real Estate generated cash in excess of NOK 500 million from disposals. Nearly NOK 1.0 billion was received in 2015 from Ferd’s investments in private equity funds and hedge funds bought in the secondary market. Ferd sold TeleComputing to IK Investments Partners in January 2016. The transaction was completed in March and Ferd realised a gain on the sale of well over NOK 1 billion. At the close of 2015, Ferd AS had credit facilities of NOK 6.0 billion available on the group’s facility. Going forward Ferd has considerable capital resources available for new investments.

Ferd’s annual return over the last five-year period is 10.4%, which is significantly better than the return for the Oslo stock market during this time.

 

Market environment

The oil price continued to fall in 2015, and by the end of the year was down 70% relative to summer 2014. The lower level of activity in the oil industry has led to significantly lower levels of activity and profitability in industries that provide goods and services to the oil industry. Growth in Norway’s mainland economy has fallen and unemployment has risen slightly, but activity levels in many industries not related to oil have remained high.

These factors played an important role in the decision by the Norwegian central bank to cut its key policy rate. The Norwegian krone continued to depreciate in 2015, falling the most against the US dollar, but also significantly against the euro and the Swedish krona. Since Norway is now in a position where a weak Norwegian krone has to be seen as a positive, the market expects Norges Bank to keep interest rates low for the foreseeable future.

With the level of investment in the oil and offshore industry down sharply in 2015 and indications of investment continuing to fall in 2016, the mainland economy will also be affected. However, the negative impact on the mainland economy will be somewhat tempered by the positive effect of the krone’s depreciation on the Norwegian export industry.

The world’s economies grew at varying rates in 2015. Growth was slower in China, and the temperature of the European economy remained low. The American economy, however, showed moderate growth. Stock markets, which are among the better indicators of future growth, also showed varying performance. Despite the outlook for growth in the American economy improving, the return generated by American shares in 2015 was low. In contrast, some of the European stock markets grew strongly. The major negative factor for global stock markets was the fear of a downturn in the Chinese financial and securities markets. In local currency terms the global index only increased by 2.1% in 2015.

Future prospects

At the start of 2016 stock markets reflected the market’s concerns over the outlook for economic growth, and the market was focused in particular on growth in the USA and China. In America the Federal Reserve announced a first increase in interest rates in December 2015, while the European economy is still in need of monetary stimulus.

Ferd Capital’s mandates cover stock exchange listed companies, Special Investments and privately owned companies. The Special Investments mandate enables Ferd Capital to invest in financial instruments relating to most aspects of the capital structure, and its investment decisions are not subject to any requirements in respect of ownership interest or influence. At the close of 2015 Ferd Capital held investments in eight unlisted companies and two stock exchange listed companies, and had also made two smaller investments through the Special Investments mandate. When assessing investment opportunities, Ferd Capital principally bases its decisions on its evaluation of factors specific to the investment in question.

 

The group’s value-adjusted equity

Ferd holds a diversified portfolio of listed and unlisted equity investments, alternative investments and real estate. The equity investments provide good diversification between different sectors and geographical markets and between companies at different stages of the corporate lifecycle. Ferd Capital’s portfolio represented just under 40% of Ferd’s value-adjusted equity at the close of 2015.

Over the last ten years, Ferd has generated a total return of NOK 18.2 billion, equivalent to an annual return of 11.3%. It is important for the returns achieved by Ferd to be assessed in the context of the absolute return achieved over time and how this relates to the level of risk exposure that has been involved.

 

Over the last ten years, Ferd has generated a total return of NOK 18.2 billion, equivalent to an annual return of 11.3%.

Some of the companies in Ferd Capital’s portfolio performed well in 2015, while its oil service companies were reduced in value. Elopak, Ferd’s largest investment, was virtually flat in euro terms in 2015. Ferd Invest’s Nordic share portfolio generated a return of 27%, which is four percentage points less than the return on the benchmark index for this portfolio. Ferd Hedge Fund reported a good relative return in 2015. The return on the hedge fund portfolio was 1.9% in USD, which is 1.5 percentage points better than the benchmark index for this portfolio. Ferd’s real estate portfolio achieved a return of 17%, the  strong return was the result of both good returns on individual projects and the performance of Ferd Real Estate’s financial investments. In 2015 Ferd’s portfolio of hedge fund units purchased in the secondary market generated a negative return for the first time since it was set up in 2010. The return reported for 2015 was -3% in USD.

Some of the companies in Ferd Capital’s portfolio performed well in 2015, while its oil service companies were reduced in value.

Financial results for Ferd AS

Ferd AS reports operating profit of NOK 2,564 million, an increase of NOK 1,980 million relative to 2014. The most important reasons for this improvement were the higher returns generated by Ferd Invest and Ferd Capital in 2015 as compared to 2014.

For further commentary on financial results in 2015, the reader is referred to the separate sections on each business area on the following pages.

Net cash flow for 2015 was made up of cash from operating activities of NOK 307 million and cash of NOK -675 million from financing activities. Ferd AS repaid a drawing on its loan facility of NOK 500 million in 2015.

The annual accounts have been prepared on the going concern assumption and, in accordance with Section 3-3a of the Accounting Act, the Board confirms that the going concern assumption is appropriate.

The registered office of Ferd AS is in Lysaker in Bærum municipality.

 

Financial results and cash flow for Ferd (Ferd AS group)

Operating revenue from continuing operations was NOK 15.2 billion in 2015 as compared to NOK 12.7 billion in 2014. In 2015 Ferd recognised to income NOK 2.0 billion in respect of the increased value of shares and equity participations, while the equivalent figure for the increase in the value of Ferd’s financial investments in 2014 was NOK 0.6 billion.

Sales revenue increased from NOK 11.8 billion in 2014 to NOK 12.9 billion in 2015. Elopak reported operating revenue of NOK 7.5 billion in 2015, an increase of NOK 1.0 billion from 2014. The increase was due to higher revenue and to the weakness of the Norwegian krone, as Elopak’s revenue is denominated in euro.

Ferd is committed to innovation, and the group’s research and development activities are principally carried out in subsidiary companies. Development costs of NOK 90 million were expensed in 2015. The group’s financial items showed net financial expense of NOK 681 million in 2015 compared to net income of NOK 12 million in 2014. This change was principally due to currency effects.

Ferd normally has a low effective tax rate because a large part of its earnings is generated from investments in shares. Under the exemption model, gains on shares are not taxable. The group’s tax charge for 2015 was NOK 318 million as compared to a charge of NOK 463 million in 2014. The principal reason for the decrease is the reduction in the corporate tax rate in Norway.

Net cash flow for 2015 was made up of NOK 1,415 million from operating activities, cash of NOK -806 million from investment activities, and cash of NOK -284 million from financing activities.

 

Strategy

The overall vision for Ferd’s activities is to ‘create enduring value and leave clear footprints’. Ferd’s corporate mission statement is that the group is ‘committed to value-creating ownership of businesses and investment in financial assets in situations that enable us to make good use of our expertise and the competitive advantages that result from our family ownership’. Ferd will accordingly strive to maximise its value-adjusted equity capital over time.

The approach to risk exposure taken by the owner and the Board of Directors is one of the most important parameters for Ferd’s activities. It defines Ferd’s risk-bearing capacity, which is an expression of the maximum risk exposure permitted across the composition of Ferd’s overall portfolio. Ferd’s risk willingness, which determines how much of its risk-bearing capacity should be used, will vary over time, reflecting both the availability of attractive investment opportunities and the company’s view on general market conditions.

The Board keeps Ferd's risk capacity under continuous review. The assessment of how Ferd’s risk capital is allocated represents one of the Board’s most important tasks, since risk exposure and return are largely determined by the assets in which Ferd invests. The allocation of new capital, as well as the reallocation of capital between business areas, represents a systematic approach to making use of the group's capital base and risk-bearing capacity.

It is Ferd’s intention that its allocation of capital should be characterised by a high equity exposure and good risk diversification. Good risk diversification helps to ensure that Ferd can maintain its exposure to equity investments, even at times when other players have less access to capital. In addition, maintaining strong liquidity enables us to maintain our freedom to operate as we wish even in more difficult times.

Ferd’s equity capital investments represent a well-diversified portfolio, and the overall performance shows a relatively strong correlation with the performance of Norwegian and international stock markets. Ferd Real Estate and Ferd Hedge Fund help to reduce the group’s overall risk exposure because these investments involve less risk than investing in equities.

Asset allocation must be consistent with the owner’s willingness and ability to assume risk. This provides guidance on how large a proportion of equity can be invested in asset classes with a high risk of fall in value. The risk of fall in value is measured and monitored with the help of stress testing. The risk of a fall in value at the start of 2016 was a little lower than both the average risk for 2015 and the average risk over the last five years.

Ferd aims to maintain sound creditworthiness at all times in order to ensure that it has freedom of manoeuvre and can readily access low-cost financing at short notice when it wishes. Ferd's objective is that its main banking connections will rate Ferd’s creditworthiness as equivalent to ‘investment grade’. In order to protect Ferd’s other equity from risk, Ferd Capital and Ferd Real Estate carry out their investments as stand-alone projects. Maintaining good liquidity is important to ensuring Ferd has the freedom to manoeuvre as it wishes. Ferd has always held liquidity comfortably in excess of the minimum liquidity requirements we impose internally and the requirements to which we are committed by loan agreements at the parent company level. Ferd has a proactive approach to currency exposure. We work on the assumption that Ferd will always have a certain proportion of its equity invested in euro, US dollar and Swedish krona denominated investments, and accordingly do not normally hedge currency exposure against the Norwegian krone.

Further information on Ferd’s strategy can be found here.

 

Corporate governance

Ferd is a relatively large corporate group, with one controlling family owner. Despite this, the Board of Directors of Ferd Holding AS has substantially the same responsibilities and authority as the board of a public company.

Not all the sections of the Norwegian Code of Practice for Corporate Governance are relevant to a family-owned company such as Ferd, but Ferd complies with the Code insofar as it is relevant and appropriate. Further information is provided in a separate article on Ferd’s website. The Board of Directors of Ferd Holding held seven Board meetings in 2015.

 

Ferd Capital

When making investment decisions, Ferd attaches little weight to the overall macroeconomic outlook. Factors specific to each investment opportunity play the crucial role when deciding whether or not an investment is an attractive proposition. Ferd Capital assessed various stock exchange listed companies in 2015 and at the close of 2015 held investments in two stock exchange listed companies, PGS and Scatec.

Ferd Capital invested in the ferry company Fjord line in 2015 and by the end of the year owned 38% of the company’s share capital. Fjord Line carried out a private placement with Ferd, and a voluntary offer was made to purchase shares from minority shareholders at the same share price as the private placement Ferd completed with the company.

Elopak
Elopak is a supplier of packaging systems for liquid food products. The company is a total system supplier, developing carton packaging solutions for both fresh and aseptic products.

Elopak’s business is in general less cyclical than many other industries, and should therefore not experience any major loss of volume as a result of changes in economic conditions. However, the company expects carton sales for the juice market to be more volatile. Demand for these products is affected both by the state of consumers' finances and changing preferences between juices and competing beverage products.

Elopak’s total revenue in 2015 was NOK 7,542 million as compared to NOK 6,471 million in 2014. The increase in reported revenue was principally due to higher carton sales, particularly roll fed aseptic cartons, and to the average euro exchange rate being higher in 2015 than in 2014. In euro terms, Elopak’s revenue was EUR 856 million in 2015 as compared to EUR 776 million in 2014.

Elopak reported EBITDA of NOK 608 million as compared to NOK 612 million in 2014, while in euro terms this decrease in earnings was nearly EUR 6 million. The decrease was principally due to non-recurring costs incurred in connection with restructuring the European organisation.

Elopak continued to focus on roll fed cartons in 2015 and the commercial roll out to Elopak’s customers is now fully underway. The company’s new fully aseptic filling machinery successfully completed a comprehensive testing program for dairy products, and commercial sales to this market segment have begun.

The company decided in 2013 to upgrade and expand its production capacity in Canada. Commercial production started at Elopak’s new factory in Montreal in 2015, and full production capacity will be reached in 2016.

The markets for Elopak’s products are expected to be relatively stable compared to 2015. Of the countries in which Elopak operates, Russia is the country where the uncertainty surrounding political and economic developments in 2016 is the greatest. 

Aibel
Aibel is a supplier of services related to oil, gas and renewable energy. The company is one of the largest Norwegian service companies involved in engineering design, construction, maintenance and modification of oil and gas production facilities for the upstream oil and gas industry.

Aibel reported revenue of NOK 7,150 million in 2015 as compared to NOK 8,554 million in 2014. EBITDA was NOK 391 million, representing an increase of NOK 207 million from 2014.

The oil services market was challenging in 2014, and a further fall in the price of oil between 2014 and 2015 increased the scale of the challenges. The whole industry has been through a period of cost cutting and capacity adjustments. 

Aibel was one of the first companies in the industry to take action, which included significantly reducing the use of hired-in workers and reducing employee numbers. In order to improve its competitiveness, the company worked on improving its efficiency and reducing its cost base.

In February 2015 Aibel was awarded the contract to construct the deck of the drilling platform for the Johan Sverdrup field, with the contract worth an estimated NOK 8 billion. Statoil also showed its continuing confidence in Aibel by awarding it a framework agreement for maintenance and modification services. The new agreement runs for six years and includes the option to extend for a further four years. Aibel assesses the value of the agreement to be around NOK 7.5 billion.

Although Aibel anticipates that the market will continue to be challenging in 2016, in the slightly longer term it expects the market to improve. The aging stock of platforms on the Norwegian continental shelf is increasing the need for maintenance and modification services. Fields such as Johan Sverdrup will also lead to significant investment in the Norwegian continental shelf in the years to come. Aibel’s presence in Southeast Asia is opening up a range of expansion opportunities internationally.

Aibel’s ambition for the future is to use the challenging market conditions to strengthen its position as one of the leading service companies in oil and gas on the Norwegian continental shelf by further enhancing the company’s competitiveness and thereby positioning the company for new growth.

Interwell
Interwell is a leading Norwegian supplier of high-technology well solutions for the international oil and gas industry. The company’s most important market is the Norwegian continental shelf. In recent years, Interwell has also expanded its presence in a number of important international markets such as the UK, the Middle East and the USA.

Interwell delivered a satisfactory performance in 2015 in view of the challenging market conditions facing the industry. The company completed the development of several new products in 2015 in order to expand its range of products, and it continued work on developing a commercial product for permanent well plugging.

Interwell reported revenue of NOK 807 million in 2015, a decrease of 6% from 2014. EBITDA for 2015 was NOK 206 million, a decrease of 29% relative to 2014.

There is significant uncertainty in the market given the oil price and the cash flow challenges faced by oil companies. Despite this, Interwell is well-positioned to achieve underlying growth. The company principally delivers services to the well intervention market, which has historically been less influenced by the cyclicality of the oil services market, and the company’s products and services help improve oil companies’ cash flows. The company is diversified internationally and therefore has limited exposure to each region.

Interwell remains committed to being a technological leader in its niche areas and recognises the importance of continuous technological development in the years ahead. In today’s market, it is critical that the technology currently offered by Interwell as well as its future technologies help oil companies to increase their revenues or reduce their costs.

Mestergruppen
Mestergruppen is a leading supplier of building products, primarily to the B2B market.

Mestergruppen reported revenue from its building products activities of NOK 2,700 million in 2015, approximately in line with 2014. The regions varied in terms of the levels of revenue generated relative to 2014. While market conditions in south-western Norway, particularly in Rogaland, were more challenging, other regions grew or performed in line with 2014. Mestergruppen continued its work to streamline and improve the efficiency of its activities, particularly by introducing a more cost-efficient IT system. Mestergruppen started a strategic collaboration with Gausdal Landhandleri on procurement and distribution.

There is uncertainty about the outlook for the building materials market in 2016 due to signs of weakness in parts of the Norwegian economy. The situation may deteriorate if the slowdown in Rogaland spreads to the rest of the country. In the medium term, the building materials industry is expected to grow on average in line with the historic trend. The building materials industry in Norway is fragmented, competitive and exposed to economic cycles. 

Swix Sport
Swix Sport develops, produces and markets innovative products for sporting and other recreational pursuits, both in Norway and internationally.

Revenue increased from NOK 813 million in 2014 to NOK 917 million in 2015. In 2015, approximately 53% of Swix’s revenue was generated outside Norway. Swix Sport reported EBITDA of NOK 35 million in 2015 as compared to NOK 58 million in 2014. This decline in earnings was the result of higher operating costs in 2015 principally due to the weakness of the Norwegian krone.

In December 2015 Swix Sport entered into an agreement to purchase the bicycle manufacturer Hard Rocx AS. One of Swix’s targets is to smooth out its revenue streams across the seasons. It is achieving this through the outdoor segment with brands such as Lundhags and Ulvang and through the cycle segment by purchasing Hard Rocx. Swix is also committed to maintaining its leading position in the winter sports segment.

Servi Group
Servi develops and produces customer-specific hydraulic systems, cylinders and valves for offshore, maritime and land-based industries.

Servi Group reported revenue of NOK 797 million in 2015 as compared to NOK 893 million in 2014. The company experienced difficult market conditions in the offshore segment, particularly in new build rigs. Due to its reduced order intake and profitability, Servi had to reduce its workforce of slightly over 400 employees by more than 100. EBITDA for 2015 was NOK -3 million as compared to NOK 113 million in 2014.

Servi expects the market to continue to be challenging in 2016, with downward pressure on prices from customers. Despite the challenging market conditions, Servi is well positioned for organic growth when the market returns. Although the level of activity in relation to the new build offshore segment is expected to remain low, Servi is experiencing a solid flow of orders from other segments.

The company has set up a new organisation in Houston, and this has given Servi a stronger platform from which to grow its customer base in the American market. Servi continued to target potential European customers in 2015 and has already secured several new contracts.

Fjord Line
Fjord Line is a modern shipping company that offers safe and environmentally friendly sea transport between Norway, Denmark and Sweden.

Revenue increased from NOK 745 million in 2014 to NOK 899 million in 2015. Fjord Line reported EBITDA of NOK 46 million in 2015 as compared to EBIDTA of NOK -71 million in 2014. During 2015 the company introduced a new organisational model and carried out efficiency projects, with significant cost savings achieved.

The markets for Fjord Line’s products are expected to be relatively stable in 2016. The weaker Norwegian krone may lead to Norwegians travelling abroad slightly less, but equally this also makes it more attractive for non-Norwegians to travel to Norway on holiday.

Fjord Line has a new, modern fleet. As customers are becoming more aware of the company’s routes and the service provided on board continues to improve, passenger growth is again expected in 2016. Fjord Line’s target for 2016 is further revenue growth.

 

Ferd Invest

Ferd Invest invests in listed Nordic shares. Its target is to generate a return that is higher than the return on its Nordic benchmark index. Ferd Invest’s mandate does not stipulate limits with regard to the allocation of investments between countries or sectors and the portfolio differs significantly in its composition from the benchmark index.

Ferd Invest reported an operating profit of NOK 1,411 million in 2015 as compared to an operating profit of NOK 657 million in 2014. Most Nordic stock markets delivered positive returns in 2015. As in 2014, the Danish stock market was the best performing stock market in the Nordic region with a rise of 36%. In local currency terms, the Finnish market was up 13%, the Oslo market was up 6%, and the Swedish market was down 1%. The overall performance of the Nordic stock markets in 2015 was even greater when measured in Norwegian krone terms.

 

Ferd Invest’s portfolio generated a return of 26.7% in 2015, which is 3.6 percentage points weaker than the benchmark index. The business area’s most successful investments were Novo Nordisk, Axis Communications, Svenska Cellulosa Aktiebolaget (SCA), Transmode and Autoliv. Opera Software was the business area’s least successful investment by far and alone reduced the portfolio’s performance by more than seven percentage points compared to Ferd Invest’s benchmark index.

At the close of 2015, the market value of the Ferd Invest portfolio was NOK 6.3 billion. The largest investments at year-end 2015 were Novo Nordisk, Autoliv, ISS, Marine Harvest and Opera Software. These investments accounted for just under 40% of the total value of the portfolio.

 

Ferd Hedge Fund

Ferd’s objective for its hedge fund portfolio is to achieve a good risk-adjusted return over time, both relative to the market and in absolute terms. In order to achieve good risk diversification, it is important that the composition of the portfolio features a range of funds which generate returns that are not dependent on the same risk factors. In addition, as part of risk diversification for Ferd’s overall portfolio, the hedge fund portfolio normally has a relatively small weighting in funds that are heavily exposed to the stock market.

Ferd Hedge Fund’s portfolio achieved a return of 1.9% in USD in 2015, which is 1.5 percentage points higher than the return for the benchmark index against which the performance of the portfolio is measured. The return for the year was NOK 70 million. The market value of the portfolio at the end of 2015 was NOK 3.6 billion.

Ferd Hedge Fund continued its work to concentrate the portfolio in 2015. The ten largest positions represented 63% of the portfolio’s total assets at the end of 2015. The target for the portfolio is for it to remain a well-diversified hedge fund portfolio and for managers to be selected such that the portfolio delivers a higher return than its benchmark index.

Ferd Hedge Fund made two new investments through its new mandate, Global Fund Opportunities. One of the funds invests in unlisted companies that are seeking to list within a few years. The other fund principally takes over distressed loans from banks in Asia. The market value of this portfolio at 31 December 2015 was NOK 370 million.

 

Ferd Real Estate

Ferd Real Estate is an active real estate investor that principally works in real estate development. Its most important segments are residential real estate, office premises and warehouses/logistics facilities.

2015 was a very good year for Ferd Real Estate. Demand for real estate as an investment class was high and many foreign investors wanted to invest in the Nordic real estate market. Ferd Real Estate reported an operating profit of NOK 321 million as compared to NOK 254 million in 2014, and its value-adjusted equity was NOK 1.9 billion at the end of 2015. The portfolio generated a return of 17% in 2015.

There are several reasons for the strong profit reported by Ferd Real Estate in 2015. One is that Ferd Real Estate sold several properties for more than their previous valuations, including an office building leased to Aibel in Bergen. A development project in Lysaker outside Oslo also generated a good return. Ferd Real Estate’s financial investments also performed very strongly.

Ferd Real Estate’s largest residential project is Tiedemannsbyen at Ensjø in Oslo. The Tiedemannsbyen project is for around 1,400 units and will be carried out over a period of between 10 and 15 years. Tiedemannsbyen DA is developing the first 660 or so units, while the next 350 will be developed by Tiedemannsfabrikken AS. Tiedemannsfabrikken AS is owned 50/50 by Ferd Real Estate and Selvaag Bolig. The remainder of the project is owned by Ferd Real Estate. In total 115 residential units were sold in Tiedemannsbyen in 2015.

The overall unemployment rate in Norway is expected to increase slightly in 2016, but with large regional differences. This will affect both the commercial and residential real estate markets. The expectation is that residential property prices will fall somewhat in regions with many oil-related companies and that the office market in such areas will make weak progress. Other regions, however, are expected to grow at a steadier rate. The exception to this is probably the Oslo region where the increase in unemployment will be more limited. This, coupled with the prospect of persistently low interest rates, will probably lead to the region continuing to see strong price growth in both the office and residential markets.

 

Ferd Social Entrepreneurs

Ferd Social Entrepreneurs (FSE) invests in social entrepreneurs who reflect Ferd’s vision of creating enduring value and leaving a clear footprint. It is taking time to establish a market for social entrepreneurs in Norway, and the market continues to be immature. The companies FSE comes across that have innovative ideas for social benefits are either at a very early stage or are in the process of setting up.

FSE has chosen to apply a focused strategy to its social entrepreneurship efforts. The social entrepreneurs Ferd invests in must be able to play a part in solving social problems while at the same time demonstrating a good likelihood that their activities will be financially self-sufficient over a time horizon of 3 to 6 years. FSE principally supports social entrepreneurs who work with children and young people.

The Board of Ferd Holding AS has allocated up to NOK 25 million annually for work with social entrepreneurship. In addition, Ferd's other business areas and subsidiaries support social entrepreneurs with expertise, time and commitment as board members, and through other assistance.

Ferd Social Entrepreneurs had seven companies in its portfolio at the end of 2015, and three companies transferred to the Alumni portfolio during the year. The Alumni portfolio consists of companies that have previously been FSE portfolio companies and currently contains seven companies. The FSE portfolio currently comprises the following companies: Monsterbedriften, Seema AS, Lyk-z & døtre, Lærervikaren, Intempo, Drive for Life and Change Factory.

For more information on FSE’s portfolio companies click here.

Social entrepreneurship is a strongly growing area internationally that is also attracting increasing interest in Norway. FSE is being approached by a large number of parties interested in the area who want to learn from FSE’s experience and to collaborate on potential projects.

 

Health, safety, environmental matters and employment equality

Recent years have seen an increasing emphasis on environmental issues in industrialised countries. None of the group’s activities produces discharges that require licensing and environmental monitoring. Ferd is committed to ensuring that the companies it owns operate in a sustainable manner and demonstrate environmental awareness.

Elopak is continuing its commitment to environmental issues and is working continually on increasing the proportion of renewable raw materials it purchases from certified suppliers and on reducing its greenhouse gas emissions by using less fossil fuel energy sources. Other companies in the group strive to limit their impact on the external environment to the greatest extent commercially possible, including by sorting waste and ensuring the proper disposal of specialist waste created by production processes.

The Ferd group had 4,497 employees at the end of 2015, and after including employees of Aibel the total number for 2015 was 8,797. The proportion of female employees was 29%. Sick leave amounted to 3.4% for the Ferd group in 2015. The working environment at Ferd AS is considered to be good. Ferd AS had 38 employees at the close of 2015, of whom 26 are male and 12 are female. The Board of Directors of Ferd AS comprises one female director and four male directors. No serious accidents or injuries took place or were reported at Ferd AS in 2015. For the group as a whole, there were no accidents that led to loss of life, but there were individual cases of injuries at work that resulted in short periods of sick leave.

It is the company’s policy to treat female and male employees equally. This is reflected in a policy of equal salaries for equal responsibilities and a recruitment policy that emphasises the selection of candidates with the right expertise, experience and qualifications to meet the requirements of the position in question. The company strives to be an attractive employer for all employees, regardless of gender, disability, religion, lifestyle, ethnicity or national origin.

 

Allocation of profit for the year

It is proposed that the profit for the year of NOK 1,821 million is transferred to other equity.

 

 

Lysaker, 21 April 2016

The Board of Directors of Ferd AS