Annual Report
2021
Table of contents
03 What we do and how we create value
04 ESG 2021 in brief
05 CEO letter
06 Board of Director’s Report
08 Corporate Governance Report
10 Consolidated Financial Statements
28 Financial Statements of the Parent Company
35 Responsibility Statement
36
Auditor’s report
2
Klaveness Combination Carriers ASA – Annual Report 2021
What we do and how we create value
Klaveness Combination Carriers ASA (KCC, Company) is the
world leader in combination carriers. The eet consists of 16
vessels, eight CABU vessels and eight CLEANBU vessels.
The CABU (Caustic Soda-bulk) and CLEANBU (Clean
Petroleum Product-bulk) vessels mainly transport Clean
Petroleum Products (CPP) or Caustic Soda Solution (CSS)
from reneries and production plants located in Middle
East/India, Far East or US Gulf to end users or distributors in
Australia and South America, the world’s main export hubs
of dry bulk commodities. On the return voyage the
combination carriers transport dry bulk commodities
including alumina, bauxite, grains, salt, iron ore and coal.
One of KCC’s trades
Note: For the same round voyage, a
standard tanker and dry bulk vessel would
typically ballast for 10-20 days, while a
combination carrier is around 4 days.
1.
Lower carbon emissions: Fuel consumption and hence emissions are 30-40% lower than standard tanker
and bulk vessels per ton-mile transported cargo
2.
Lower earnings volatility: Diversied market exposure as the vessels transport both dry bulk and tanker
products and a positive correlation to bunker prices
3.
Premium earnings: Higher asset utilization compared to standard vessels due to two laden legs,
giving a higher number of revenue days
The aluminum/alumina industry through the trans-
portation of Caustic Soda Solution (CSS), bauxite and
alumina accounted for 46% of KCC’s transported
volumes in metric tons (MT) in 2021. Iron ore shipments
for mining companies or steel plants accounted for 17%
in 2021. KCC had 9 coal shipments in 2021 (7%), and
total fossil fuel shipments including coal accounted in
total for 17%.
KCC strives to solve ineiciencies by consecutively switching between
dry and wet cargo shipments with minimum ballast between the
laden voyages.
Split of cargoes transported by KCC in 2018 –2021
+++++=
+++++=
+++++=
++++0+=
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2021
2020
2019
2018
Caustic soda
Alumina and bauxite
Iron ore
Fossil fuels*
Agriculture products
Other cargos
31%
37%
36%
41%
15%
21%
18%
29%
17%
17%
18%
13%
17%
18%
17%
9%
10%
5%
8%2%
8%
0%
9%
3%
Illustration of KCC’s place in the value chain
*Fossil fuels include gasoil, coal, gasoline and jet fuel and other CPP. Naphta and condensate to the petrochemical industry included in other cargo
3
Klaveness Combination Carriers ASA – Annual Report 2021
For denition and more information related to ESG, see Sustainability Report 2021.
Score: B
Low carbon
future
Decarbonization is the main
task of our generation
Always safe and
secure
Safety is priority number one
Trusted and
responsible
partner
We set high standards on how
we conduct our business
We aim to be a driver in the transition towards low carbon
shipping through our own eet, new solutions and close
co-operations with customers, suppliers and other
stakeholders.
Area of focus
• Emission reductions from our vessels
We strive to have a high level of corporate governance
securing predictability and transparency for all
stakeholders.
Area of focus
• Anti-corruption and business ethics
• Responsible ship recycling
Our goal is that no one shall be injured doing work for
Klaveness. Everyday we work to improve our safety
performance, believing that operational accidents are
preventable.
Area of focus
• Crew health and safety
• Vessel safety
• Spills to the environment
• Human capital development
ESG 2021 in brief
Environmental performance Sustainability Priorities
Social performance
Governance performance
Carbon intensity
EEOI 7.4
0% Y-o-Y
CO
2
/vessel
18,800 tons
-9% Y-o-Y
• Sustainability-
linked COA signed
• USD 25 million
equity issued to
fund energy
eiciency
initiatives
• Sustainability-
linked bank facility
signed
LTIF 0.6
-76% Y-o-Y
Target < 1
0
COVID-19
infections
on-board
Average high-risk
SIRE observations
1.9
0% Y-o-Y
Target < 2
26
Demands for
and avoided
facilitation
payments
0
conrmed
incidents of
corruption
Online
whistleblowing
channel
launched, open
for external parties
4
Klaveness Combination Carriers ASA – Annual Report 2021
Engebret Dahm
CEO
Klaveness Combination Carriers ASA
Letter from the CEO
2021 has been a year where Klaveness Combination Carriers ASA (KCC)
has passed a number of important milestones while experiencing many
operational challenges from increasing port congestions and COVID-19
related restrictions.
We took delivery of the eight and last CLEANBU newbuilding, MV Balzani,
in May 2021 marking the end of KCC’s newbuilding program where we
have taken delivery of in total eleven CABU and CLEANBU newbuldings
over the ve years period 2016-2021. With the full eet on water from July
2021, a new chapter has begun for our company.
The COVID-19 situation has continued to severely aect the daily lives of
our seafarers and the operation of our eet. KCC and its ship manager
Klaveness Ship Management (KSM) has spared no eorts to minimize
the eects of the COVID-19 situation for our seafarers including securing
repatriation of seafarers with minimal delays aer the end of their service
period onboard and minimizing risks of COVID19 contamination from
shore. We have through frequent vessel deviations carried through a high
share of planned crew changes without delays and there have been no
COVID-19 cases onboard our vessels in 2021. We are also pleased to have
maintained a high quality service to our customers throughout the year
with a 92% on-time performance in tanker mode in 2021.
Our business model continued to prove its strength in the past year. The
exibility of our combination carriers, servicing both tanker and dry bulk
trades, and our eicient combination trading, have made it possible to
both take benet of the strong dry bulk market from early last spring
and limit the worst negative eects of a historical weak tanker market.
While maintaining a high proportion of our eet in combi-trading, we
temporarily allocated more capacity into the dry bulk market during part
of the year when the tanker market was at its most depressed levels. We
also used the strong dry bulk market to continue renewing of our CABU
eet, by selling our oldest CABU vessel, MV Banasol, built January 2001,
as a dry bulk vessel during Q4-2021. 2021 result before tax ended at USD
22.6 million, including a sales gain of USD 6.4 million.
The pressure on the shipping industry to decarbonize its business has
increased further in 2021. IMO’s short term measures were approved
at the MEPC76 meeting in June and the EU Commission presented its
proposal for including shipping into its ETS scheme in July. We believe
this is just the start of a development with ever stricter international
regulations and customer requirements for the shipping industry. In KCC
we are scrutinizing every possibility to improve carbon eiciency across
our business to prepare for this development and to improve our lead as
the lowest carbon shipping provider in the tanker and dry bulk market.
In KCC we start to see positive results from our eorts with an around
9% improvement in average CO
2
emission per vessel in 2021 relative to
2020. As part of our energy eiciency improvement program, we raised
USD 25 million new equity in November 2021 which will be allocated
exclusively for these eorts which are described in more detailed in our
3rd Sustainability report released together with this Annual Report.
The rst quarter of 2022 has been marked by the sad and incompre-
hensible Russian invasion of Ukraine severely impacting both commodity
and shipping markets. While the immediate eect on KCC’s markets
is positive, the medium-term outlook for both the tanker and dry bulk
market is more uncertain with possible negative demand eects from
spiking commodity feeding through the world economy. KCC’s business
model remains more resilient to these uncertainties than standard
shipping with its eicient trading pattern based, strong customer
relations and freight contracts, positive diversication eects from three
markets and a strong balance sheet.
We are future bound!
Future bound
Our business model continued to
prove its strength in the past year.
The exibility of our combination
carriers, servicing both tanker
and dry bulk trades, and our
eicient combination trading, have
made it possible to both take
benet of the strong dry bulk
market from early last spring and
limit the worst negative eects of a
historical weak tanker market.
Board of Directors
LasseKristoersen
Chair of the Board
Winifred Patricia Johansen
Board Member
Morten Skedsmo
Board Member
Magne Øvreås
Board Member and
Member of Audit Committee
Rebekka Glasser Herlofsen
Board Member and
Chair of Audit Committee
5
Klaveness Combination Carriers ASA – Annual Report 2021
Key developments 2021
and future priorities
Klaveness Combination Carriers (KCC, Company, Group) delivered a
record strong nancial result for 2021 despite a challenging tanker
market and continued operational challenges related to COVID-19. 2021
was another year where KCC demonstrated the value of exibility and
diversication through its combination carrier concept.
The CABU eet delivered the highest TCE earnings since 2015 on the back
of high caustic soda volumes and strong dry bulk markets. The 2001-built
CABU vessel, MV Banasol, was sold as a dry bulk vessel and delivered to
new owners in December 2021, with a positive eect on prot and cash.
The CLEANBU eet continued to expand its activities. A milestone was
achieved in July 2021 as KCC secured clean petroleum product (CPP)
contract of areightment (COA) with one of the main players in the
industry. Despite an increase in share of days in combination trading
and improved ballast percentage, TCE earnings decreased year-on-year
because of the weaker tanker market in 2021. Three CLEANBU newbuilds
were delivered in 2021 marking the end of this newbuild program.
COVID-19 continued to impact KCC’s operations in 2021 mainly in relation
to delivery of newbuilds and crew changes. No vessels experienced any
infection cases onboard in 2021.
As a result of several initiatives made across KCC’s business over the
recent years, KCC made good headway on its environmental performance
during 2021. While the carbon intensity (EEOI) for the eet was stable
compared to 2020 at 7.4, average CO2 emissions per vessel decreased
by 9% to 18,800 mt. KCC in 2021 submitted for the rst time to CDP and
received a score B in the category “climate change”.
KCC believes that a key challenge and opportunity for the shipping
industry going forward is decarbonization. KCC raised USD 25 million
in equity in November 2021 to fund energy eiciency measures on the
existing eet and the ambition is to deliver sizeable cuts in emissions
over the next years.
People, health and safety
1
KCC’s main priority is to keep the crew safe and any injury or loss of lives
are unacceptable. Despite our eorts, we are not always able to live
up to targets and it is with great sadness we report that a deck cadet
tragically lost his life aer a fall accident on board one of the CLEANBU
vessels in 2021. This has been investigated in full and revealed no breach
in safety procedures or systems. However, several actions have been
implemented eet-wide based on the accident and the investigation.
The Loss Time Incident Frequency (LTIF) on the combination carriers,
measured by every 1 million working hours, was reduced from 2.5 in
2020 to 0.6 in 2021, within the target of KCC. The improvement is mainly
a result of a comprehensive safety culture program referred to as
‘Klaveness Always Safe and Secure’ (KLASS)
2
.
The COVID-19 pandemic had signicant impact in 2021 as in 2020.
Priority number one through the COVID-19 pandemic has been to avoid
crew from being infected. Due to extensive measures taken, KCC did
not experience any infection cases onboard in 2021. The main COVID-19
related challenges were taking delivery of newbuilds in China and limited
possibilities for crew changes during operation. Focus during the year
was on repatriating crew at the end of their service period without delays.
At year-end 2021, 13% of KCC’s crew was on extended contracts but non
above 12 months. Crew mental health has been a focus area during the
pandemic and the ship manager Klaveness Ship Management AS (KSM)
has implemented several initiatives to support the crew in relation to
their mental health.
In 2021, there were 31 vetting inspections of the CABU and CLEANBU
combination carriers. Average number of high-risk observations
3
per
inspection for the Ship Inspection Report Programme (SIRE) vettings
were 1.9, stable compared to 2021 and better than the target of 2.
The eet went through 33 Port State Controls in 2021 without any
detentions. Average number of deciencies per inspection was 0.7, a 42%
improvement from 2020, but still slightly above the target of 0.5.
The piracy risk in the Persian Gulf/Gulf of Oman eased in 2021. The
threat for merchant vessels is considered moderate by Den Norske
Krigsforsikring for Skib (DNK). No approaches or boarding attempts were
reported for KCC vessels in 2021.
By the end of 2021, KCC had nine employees located in Oslo and
Singapore. The work environment is good. Women represented 33% of
the workforce (2020: 33%) and absence due to sick leave was satisfactory,
averaging 0.29 % for the Group in 2021 (0.08% in 2020)
4
. COVID-19 and
consequent measures have also in 2021 put additional pressure on
all employees and on-shore personnel worked from home oice for
substantial parts of the year.
KCC is dedicated to ensuring equal opportunities for all, irrespective
of gender, gender identication, ethnicity, religion, sexual orientation,
disability or social status (read more in the Code of Conduct available on
www.combinationcarriers.com).
Sustainability
Decarbonization is the main task of our generation and a central pillar in
the KCC strategy. KCC aims at being a shaper in the transition towards low
carbon shipping through its eet, being at the forefront of introducing
new solutions, and by working in close cooperation with customers,
suppliers, and other stakeholders.
The regulatory push for shipping decarbonization continued, most
notably through the inclusion of shipping in the EU emission trading
scheme as of 2023. Progress in the International Maritime Organization
(IMO) remains slow, but 2021 produced consensus on the need to
strengthen the initial greenhouse gas (GHG) strategy. KCC has been
outspoken in support of a strategy that aligns shipping emissions with
the 1.5C target in the Paris Agreement, and it is encouraging to see that
the shipping industry now starts rallying behind the introduction of a
meaningful carbon levy in the IMO. In 2021, the IMO also agreed to start
rating vessels on energy eiciency as of 2023 and to require compliance
with an energy eiciency index for existing ships.
KCC aims at having a carbon neutral operation within 2030 and to reach
a zero-emission operation by 2050. In addition, KCC has short-term
emission reduction ambitions for 2022, including a reduction of 15%
in absolute emissions per vessel compared to actual 2018 and a 25%
reduction in carbon intensity Energy Eiciency Operational Indictor
(EEOI) compared to actual 2018. This would reach IMO’s 2030 carbon
intensity target in 2022. While KCC is well on track to meet its CO2
emission reduction target, the EEOI-target for 2022 will likely not be met
for the entire eet. Part of the eet looks, however, likely to have an EEOI
in line with or below this target in 2022.
In November 2021, KCC raised USD 25 million in equity to fund energy
Board of Directors’ report 2021
eiciency initiatives on its existing eet. Initiatives such as the Becker
Mewis Ducts, Wartsila EnergoProFins and Shipshave ITCH have been
tested and/or implemented on part of the eet during 2021 and
additional measures will be implemented over the next years.
KCC is committed to full transparency on its environmental strategy,
targets, and performance. The Sustainability Report for 2021 is aligned
with the Global Reporting Initiative Standards (GRI) Core option and the
Task Force on Climate-related Financial Disclosures (TCFD)
5
. In its rst
year of submitting to the CDP, KCC achieved a B score in the category
“climate change”.
KCC adheres to the Hong Kong Convention and the EU Ship Recycling
Regulation. No ships were sold for recycling in 2021.
Financial results
Financial results
Prot for the year ended at USD 22.6 million for 2021, up from USD 15.2
million in 2020. The 2021 prot includes gain from sale of MV Banasol
and repayment of equity from Den Norske Krigsforsikring, in total USD
7.8 million. Delivery of three newbuilds in the rst half of 2021 was
challenging during the pandemic with extra costs and delayed start
of trading. Total COVID-19 eects are estimated to be approximately
USD 6.3 million in lost earnings and higher than normal costs for 2021,
of which approximately 45% of the impact related to delivery of the
newbuilds.
Net revenues from operation of vessels increased by 27% from USD 91.1
million in 2020 to USD 115.9 million in 2021, mainly driven by a larger
eet. Average TCE earnings
6
of $20,961/day for the eet for 2021 ended
in line with 2020, however the underlying markets were substantially
dierent with a strong dry bulk market and weak tanker market in 2021
and the opposite in 2020.
CABU TCE earnings increased by almost $1,700/day in 2021 and ended at
$21,571/day in 2021, a multiple of 3.4 to standard spot earnings for MR
tankers in 2021 as reported by brokers
7
. The main drivers were a strong
dry bulk market and a high contract coverage for caustic soda shipments.
Average TCE earnings for the CLEANBU eet for 2021 ended at $20,195/
day for the year, a multiple of 1.9 to standard spot earnings for
standard LR1-tankers
8
in 2020 as reported by brokers. Earnings ended
approximately $3,650/day lower than in 2020 due to xing of three
vessels on tanker time charters at the market peak in second quarter
of 2020.
Operating expenses increased from USD 37.2 million in 2020 to USD
49.2 million in 2021 mainly due to a larger eet. COVID-19 impacts on
operating expenses (crew costs, deviations, forwarding cost for spare
parts and supplies) for 2021 was in line with 2020.
Administrative costs for 2021 of USD 7.2 million was up by 22% compared
to 2020 (USD 5.6 million) mainly due to higher activity and project team
costs being accounted for over prot and loss and not capitalized on
vessels as in 2020.
Based on solid earnings for the eet, 2021 turned out to be a strong year
for the Group with an Operating prot before depreciations (EBITDA) of
USD 67.1 million (2020: USD 48.1 million). The increase is mainly driven
by a larger CLEANBU eet representing an increase of 3.4 vessel-years
compared to 2020 and gain from sale of the CABU vessel, MV Banasol.
Depreciation increased from USD 19.2 million in 2020 to USD 28.7 million
in 2021 and net nancial result in 2021 ended at negative USD 15.8 million
compared to negative USD 13.8 million in 2020, both mainly driven by a
larger eet.
Financial position
At year-end 2021, the consolidated book equity was USD 254.4 million
(2020: USD 216.5 million), corresponding to a book equity ratio of 40%
(2020: 39%). Total interest-bearing debt ended at USD 354.5 million at the
end of 2021, up from USD 309.9 million at year-end 2020. Cash and cash
equivalents ended at USD 53.9 million against USD 65.7 million as of 31
December 2020 and total assets were up from USD 549.0 million to USD
629.9 million. Delivery of the three last CLEANBUs in 2021 impacts the
equity ratio, interest-bearing debt, total assets and cash development.
Cashow
Net cash ow from operating activities was USD 45.8 million in 2021
(2020: USD 39.5 million) due to positive EBITDA oset by negative
changes in working capital and non-cash eect gain on sale of vessels.
Net cash ow from investments was negative USD 105.5 million (2020:
negative 92.9 million) due to dry dock costs for four CABU vessels and
yard installments and other costs related to the newbuilding program
partly o-set by cash proceeds from sale of vessels. The cash ow from
nancing activities was positive USD 46.3 million (2020: USD 63.8 million)
whereof proceeds from equity raise and mortgage debt exceed debt
repayment, interests and paid out dividends.
Dividends
KCC paid USD 7.2 million (2020: USD 4.8 million) in dividends to
shareholders in 2021, equal to USD 0.15 per share (2020: USD 0.10 per
share).
Financing and going concern
KCC’s capital commitments are fully funded, and the renancing risk is
limited over the next year as the rst mortgage debt facility falls due in
December 2023. During the year, the Group renanced a bank facility
into a senior secured sustainability linked term loan credit facility to
nance the six newest CABU vessels. A 364-days overdra facility was
renewed in 2021.
The accounts are reported under the assumption of a going concern. The
Board considers the nancial position of the Group at year-end 2021 to
be solid and the liquidity to be satisfactory. Current cash ow, existing
and committed debt and liquidity position for the Group are considered
suicient to cover all commitments.
There have been no major transactions or events following the closing
date that would have a negative impact on the evaluation of the nancial
position of Klaveness Combination Carriers.
Related parties’ transactions
KCC purchases services related to business administration, ship
management, project management and commercial operations from
related parties in the Torvald Klaveness Group. All services are priced
on arm’s length basis and related party transactions and services have
during 2021 been included as a recurring item in most of the Audit
Committee meetings. The services are benchmarked on an annual basis
and the benchmark is presented to the Board of Directors
9
. See note 19
to the Financial Statements for 2021 for more information on related
party transactions.
The parent company
The result for the parent company, Klaveness Combination Carriers ASA,
was a prot aer tax of USD 2.8 million for 2021 (2020: prot USD 0.1
million). The prot is proposed transferred to other equity. The Board of
Directors has proposed dividends of USD 5.2 million for Q4 2021 which
has been booked as a provision in the accounts as per 31 December 2021.
Eventsaerthebalancesheetdate
KCC has received the news of the Russian invasion of Ukraine with shock
and sadness. KCC has no exposure to Russia or Belarus and has decided
to not conduct any business with companies owned or controlled by
Russian or Belarusian interests. Further, KCC has exempted all Russian
ports, in addition to the war zone in the Black Sea.
On 17 February 2022, the Board of Directors declared to pay a cash
dividend to the Company’s shareholders of USD 5.2 million (USD 0.10 per
share).
1
The vessels are on ship management to Klaveness Ship Management AS
2
Please nd more information on Safety Performance in the Sustainability Report for 2021
3
High risk observation is an internal denition of a signicant legislative, safety or pollution risk
4
More employee information in note 7 to the Financial Statements for 2021.
6
Klaveness Combination Carriers ASA – Annual Report 2021
The business
The objective of Klaveness Combination Carriers is to provide
transportation for dry bulk, chemical and product tanker clients, as
well as to develop new investment and acquisition opportunities that t
with the Group’s existing business platform. The Group had a eet of 16
vessels in operation at year-end 2021. KCC’s registered business address
is Drammensveien 260, 0283 Oslo, Norway.
The shares are listed on Oslo Stock Exchange with ticker KCC. The ten
largest shareholders account for 87.2% of total shares, of which the
largest shareholder is Rederiaksjeselskapet Torvald Klaveness with an
ownership of 53.8%.
CABU
By year-end 2021, the CABU combination carrier eet consisted of eight
vessels. To optimize earnings in the strong dry bulk market one CABU
vessel was reallocated from combination trades to/from Brazil to the dry
bulk market and was employed in the MaruKlav Baumarine Panamax dry
bulk pool from late August until the end of the year. The CABU service
to/from Brazil was terminated from the end of 2021 mainly because of
decreasing north bound dry bulk volumes over the last years.
Following the sale of MV Banasol and return of one vessel from the
MaruKlav Baumarine Panamax dry bulk pool, all eight vessels will from
April/May 2022 be employed in trades to/from Australia, where the CABU
eet over time has generated the highest earnings.
The share of days in main combination trades ended at 69% for 2021,
down from 75% in 2020. The CABU’s faced some scheduling challenges
through the year with increasing port congestion in the Far East and
negative eects of a tight CSS market. To maintain on-time service to
the caustic soda customers, CLEANBU vessels lied seven CSS cargoes
in 2021. Consequently, CABU eet capacity was reallocated to dry bulk
trading, explaining a lower-than-normal share of days in combination
trade.
Four vessels were dry-docked in 2021 with in total 143 scheduled o-hire
days. Unscheduled o-hire ended at 46 days, down from 77 days in 2020,
mainly due to less COVID-19 related o-hire from quarantine.
The CABU wet capacity is to a high degree based on freight contracts
with long-term COA relations. The caustic soda contract booking for
2022 is high with a contract coverage for rst half of 2022 of 88% (71%
xed rate coverage), and 88% (58% xed rate coverage) for second half.
CLEANBU
Following the delivery of the eighth and last CLEANBU vessel in May 2021,
the full CLEANBU eet was in operation from the third quarter of 2021.
The primary focus for 2021 was to expand the customer base and employ
the vessels in eicient combination trades. The number of trades,
terminals, cargoes, and customers have increased through 2021 and
in July 2021, KCC reached a milestone when signing a new contract of
areightment for its CLEANBU eet with a major international charterer
in the tanker market.
The share of days in main combination trades strengthened through
the year and ended at an average of 66% for 2021, up from 59% in 2020.
O-hire was 105 days, whereof 85 days related to guarantee repairs for
Barramundi and waiting related to a cancelled dry-dock.
The delivery and takeover of the CLEANBU vessels from the shipyard
in China were impacted by the COVID-19 pandemic in 2021 as in 2020.
It was not possible to get KCC’s crew into China, hence Chinese crew
were employed to sail the three delivered newbuilds to South Korea for
crew change. Phase-in of the three CLEANBUs in rst half of 2021 took in
average 40 days from delivery from yard until start of trading.
Market developments and outlook
Earnings of KCC’s combination carriers are driven by the Panamax dry
bulk market, MR and LR1 product tanker markets and fuel markets.
Freight rates for global seaborne transportation is highly volatile and
cyclical. The demand for global seaborne transportation depends on
global economic growth, and in particular the development in the
energy and commodities markets.
In 2021 the dry bulk market delivered strong earnings driven by solid
demand growth and eet ineiciencies, while product tanker earnings
remained muted as oil consumption and production is still recovering
from the COVID-19 pandemic.
The 2022 outlook remains solid for both dry bulk and product tanker
rates as demand growth is expected to outpace that of supply. However,
the outlook remains uncertain. For example, disruptions of trade and
commodities ows and impact on economic growth due to the Russian
invasion of Ukraine, the COVID-19 pandemic, rising ination and the
global energy crunch can all have material impact on the demand for
seaborne transportation.
Dry bulk market
Dry bulk freight rebounded strongly in 2021 and delivered the highest
earnings since 2008 with an average P5TC
10
of $26,735/day. The global
dry bulk demand growth accelerated from 2.1% in 2020 to 4.9% in 2021
according to Klaveness Research, while the nominal growth in the dry
bulk eet was 3.5% in 2021, down from 3.9% in 2020.
Despite volatility, dry bulk freight rates are expected to remain at
elevated levels in 2022. The eet is expected to grow by 2.1% in 2022 and
eet ineiciency, such as congestion, is expected to continue to reduce
the availability of vessels. The order book to eet ratio is low and overall
speed reduction for the eet is expected in the coming years due to
introduction of new emissions IMO regulations from 2023. This will likely
keep the eet growth low for several years.
On the demand side the growth in demand for commodities are expected
to remain resilient. High commodity prices will incentivize exporters to
produce and to ship as much as possible in the seaborne market.
Specically, the long-distance Brazilian iron ore trade is expected to
grow while minor bulks will remain supported by a continued recovery
in global industrial production and strong container rates leading to an
inux of cargoes that normally would be containerized. Furthermore, the
Bauxite trade is likely to grow driven by production expansion in Guinea.
For the coal and grains trade the ongoing invasion of Ukraine by Russia
is expected to have signicant impact. The EU will likely reduce Russian
coal purchases while other regions will ramp up. The demand eect,
although highly uncertain, is expected to be positive as the increase in
average sailing distance will oset lower volumes.
The loss of grains exports from the Black Sea is expected to have negative
eect on demand. The negative eect of lost volumes can only partly
be oset by increased exports in other regions and increased sailing
distances.
Product tanker market
2021 was an overall weak year for product tankers. The 2021 average
TC5 TCE
11
ended at around $6,200/day, down from $19,400/day in 2020.
Product tanker demand increased by 8%
12
from 2020 to 2021 but is still
well below 2019 and 2018 levels. Hence over-capacity in the product
tanker market persisted. Product tanker earnings were as well negatively
impacted by increased competition from crude tanker newbuilds liing
CPP cargos in response to the low rates for crude tankers and destocking
of oil inventories.
Consumption increased quarter-over-quarter during the year as travel
restrictions in Europe and US were relaxed into the summer and autumn
and oil consumption in 2021 is estimated to be around 97.5mn bbl/day,
while the consumption increased to around 101.6mn bbl/day at the end
of 2021
13
.
The outlook for the product tanker market remains strong with low eet
growth and solid demand growth.
On the demand side oil consumption has increased to just shy of pre-
COVID levels and is expected to grow further during 2022. Oil production
is expected to expand as the Organization of the Petroleum Exporting
Countries (OPEC+) is expected to increase production quotas by 400,000
bbl/day per month until September 2022. Commercial crude oil and
rened products inventories are at multi-year lows and further renery
dislocations will continue to drive ton-mile demand for product tankers.
When it comes to the ongoing Russian invasion of Ukraine it is still
unknown what the market impact will be for product tankers. Initially
arbitrage opportunities have emerged with elevated product prices in
Europe causing freight rates to increase. It is highly uncertain if these can
persist over time and if they can make up for lost Russian volumes.
Clarksons expects product tanker demand to grow 7% in 2022. On the
supply side the product tanker orderbook is limited with book-to-eet
ratio at around 5% and an expected supply growth of 1% in 2022.
Fuel market
Oil prices increased by around 50% during 2021 from around USD 52/bbl
to around USD 78/bbl. Strong demand growth during the year combined
with lagging production and inventory drawdowns have le the oil
markets in a tight supply/demand situation. Average VLSFO prices ended
at around USD 520/mt in 2021 compared to USD340/mt 2020. Fuel prices
have risen signicantly year-to-date, reaching around USD 800m/mt by
the middle of March.
Risk review and risk management
It is important for the Board of Directors that the right risk reward
assessment is made and that internal control routines are good. Main
risks related to KCC are discussed with the Audit Committee and the
Board of Directors on a quarterly basis. Risks are identied and assessed
based on a probability and impact matrix and mitigating actions are
outlined for the main risks. Risks related to vessel technical operation
and crew safety are assessed, monitored and handled by the ship
manager, Klaveness Ship Management AS.
Below is a list of some of the principal risks identied that may aect
business operations, reputation, nancial condition, results of
operations and, ultimately share price. A description of the risks can be
found in note 16 to the Financial Statements for 2021. Please be reminded
that the risk picture will change over time and based on events.
• Introduction of new vessel concepts such as the CLEANBUs
entails commercial and technical risks, including but not limited
to building experience, trades and brand in the clean petroleum
market and obtaining acceptance and/or exemptions from clients
and terminals to operate in combination trades where the vessels
trade consecutively with dry bulk and clean petroleum product
(CPP) cargoes
• Dependency on a limited number of customers and renewal of
key/material contracts of areightment for caustic soda
• Volatile freight rates and unfavourable changes in trade ows
and volumes, either structurally or due to events such as impact on
market of the Russian invasion of Ukraine
In a longer-term perspective, the current assessment includes the
following risks. A description of the risks can be found in note 16 to the
Financial Statements for 2021 and in the climate-related risk chapter in
the Sustainability Report for 2021:
• Global economic growth and the impact on energy and
commodity markets
• Impact of a low-carbon future with introduction of emission
regulations, zero-emission vessels and lower demand for
transportation of fossil fuels
Board development
The Board of Directors held ten meetings in 2021, whereof four related
to quarterly reports only, with an attendance of 100% percent and the
Audit Committee held six meetings. The Board of Directors consists of
ve members, whereof two women. Winifred Patricia Johansen joined,
while Lori Wheeler Næss stepped down during 2021. The Company’s
Oicers and Directors are covered by Rederiaksjeselskapet Torvald
Klaveness’ Commercial Management Liability Insurance with AXA.
The Board of Directors has an annual plan. It includes recurring topics
such as strategy review, business planning, risk and compliance
oversight, nancial reporting as well as reporting on Health, Safety and
Environment. High on the Board’s agenda in 2021 was the delivery and
phase-in of CLEANBU vessels, optimizing the CABU business by selling a
vessel and focusing trading to Brazil, and pursuing investments in energy
eiciency measures to meeting KCC’s ambitious emissions reduction
targets.
This report contains certain forward-looking statements that involve
risks and uncertainties. The forward-looking statements reect current
views about future events and are, by their nature, subject to signicant
risks and uncertainties because they relate to events and depend on
circumstances that will occur in the future. There are a number of factors
that could cause actual results and developments to dier materially
from those expressed or implied by these forward-looking statements.
Although we believe that the expectations reected in the forward-
looking statements are reasonable, we cannot assure you that our
future results, level of activity, performance or achievements will meet
these expectations. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of the forward-looking
statements. Unless we are required by law to update these statements,
we will not necessarily update any of these statements aer the date of
this report, either to make them conform to actual results or changes
in our expectations. You should therefore not place undue reliance on
forward looking statements.
Oslo, 28 March 2022
Oslo, 31 December 2021
LasseKristoersen
Chair of the Board
Rebekka Glasser Herlofsen
Board member
Engebret Dahm
CEO
Morten Skedsmo
Board member
Winifred Patricia Johansen
Board member
Magne Øvreås
Board member
10 Kamsarmax Soure: Baltic Exchange
11 LR1 Middle East to Japan as reported by Baltic Exchange
12 Source: Clarksons Shipping Intelligence Network
13 Source: U.S. Energy Information Administration Short-Term Energy Outlook March 2022
7
Klaveness Combination Carriers ASA – Annual Report 2021
1 Annual General Meeting (AGM)
Klaveness Combination Carriers ASA (“KCC” or the “Company”) strives
to protect and enhance shareholder values through openness, integrity
and equal shareholder treatment, and sound corporate governance is a
key element in KCC.
The corporate governance principles of the Company are adopted by
the Board of Directors of Klaveness Combination Carriers ASA (the
Board). The principles are based on the Norwegian Code of Practice for
Corporate Governance, dated 14 October 2021 (the «Code of Practice»).
The below description follows the same structure as the Code of Practice
and covers all sections thereof.
The corporate governance report follows the “comply and explain”
principles. Where KCC does not fully comply with the Code of Practice,
an explanation of the reason for the deviation and what solution the
Company has selected has been included.
Deviations from the Norwegian code of
practice for corporate governance
In the Board of Directors’ assessment, KCC has two minor deviations
from the Code of Practice:
Section 3, Equity and dividends
KCC has one deviation from this section:
“The background to any proposal for the Board of Directors to be given a
mandate to approve the distribution of dividends should be explained”:
The background for the authorisation to the Board of Directors to
approve distribution of dividends was not explained in the AGM
1
in 2021,
the reason being that the Company has an established and disclosed
dividend policy as basis for the Board of Directors’ dividend assessment.
Section 6, General meetings
KCC has one deviation from this section:
“Ensure that the members of the Board of Directors … attend the General
Meeting”: All Board members have historically not been present at the
General Meetings. Matters under consideration at the General Meeting
of Shareholders have not previously required this. The Chair of the Board
of Directors is always present at the meeting. Other board members
participate as needed. The Board of Directors considers this to be
adequate.
1. Implementation and reporting on
Corporate Governance
The Board of Directors ensures that appropriate goals and strategies are
adopted, that the adopted strategies are implemented in practice, and
that the results achieved are subject to measurement and follow-up. The
principles also contribute to ensure that the activities of the Company
are subject to adequate controls. An appropriate distribution of roles
and adequate controls contribute to the largest possible value creation
over time, for the benet of the shareholders and other stakeholders.
The Company maintains a high ethical standard in its business concept and
relations with customers, suppliers, employees and other stakeholders.
Klaveness Code of Conduct (published on www.combinationcarriers.com)
applies to the Company and all services provided to the Company under
service or management agreements between the Company or any of its
subsidiaries and Torvald Klaveness companies.
No deviations from the Code of Practice.
2. Business
According to the Company’s articles of association, its purpose is to
invest in- and operate wet- and dry bulk combination carriers and
everything associated with such, including by participating in other
companies that own or operate wet- and dry bulk combination carriers.
The principal objectives and strategies of the Company are presented
in the Annual Report, and on the Company’s web site and are subject
to annual assessments. Sustainability in general and more specically
decarbonization of KCC’s activities are highly integrated in the
Company’s strategy and a focus area in everything from daily operations
to Board decisions.
No deviations from the Code of Practice.
3. Equity and dividends
Given the cyclical nature of the shipping industry and to accommodate
the business strategy, the Company needs to maintain a solid capital
structure at levels which will give suicient assurance to the debt and
equity providers that the Company is solid and sustainable. The Board
regularly reviews and monitors the Company’s capital structure to
ensure it is in line with the Company’s objective, strategy, and risk
prole. The Company has prepared a statement of its Finance Policy,
providing details of the Company’s handling of nancial risks, hedging,
funding policies, etc. A summary of the Finance Policy can be found on
www.combinationcarriers.com.
The book equity of the Klaveness Combination Carriers Group as per 31
December 2021 was USD 254.4 million, which represents an equity ratio
of 40%. Cash and cash equivalents were USD 53.9 million per year-end
2021 and the Group has in addition USD 30 million in available long-
term undrawn bank debt and USD 17.6 million available capacity under
a 364-days overdra facility. The debt sources are diversied (mortgage
bank debt and bond issue) and have a well distributed maturity prole.
The Board believes the capital structure is appropriate based on its
objectives, strategies, and risk prole.
The Board has established a clear dividend policy based on a targeted
quarterly dividend distribution. Although there can be no assurance of
any such distribution being made, the Company currently intends to
distribute a minimum 80% of free cash ow generation to equity aer
debt service and maintenance cost as dividends to its shareholders,
provided that all known, future capital and debt commitments are
accounted for, and the Company’s nancial standing remains acceptable.
The Company further intends for any new material investments to be
subject to separate funding through equity, debt or otherwise.
At the Annual General Meeting (AGM) in April 2021, the Board was granted
an authorization to resolve distribution of dividends. The authorization
is valid until the Annual General Meeting in 2022, however no longer
than 30 June 2022. Dividends of USD 15 cents per share, in total USD 7.2
million, were approved and distributed to shareholders in 2021.
The Board’s authorisations to increase the share capital and to buy own
shares shall normally not be granted for periods longer than until the
next Annual General Meeting of the Company.
At the AGM in 2021, the Board was granted an authorisation to acquire
own shares, with a total nominal value of up to NOK 4,820,700, which
equalled 10% of the share capital at the date of the AGM and equals 9% of
the current share capital. The authorisation can be used for investment
purposes, to realise the shares, use the shares as consideration in
connection with acquisitions, mergers, demergers or other transactions
or in connection with incentive programs, or to cancel the shares and
consequently decrease the Company’s share capital. The authorisation
is valid until the AGM in 2022 but will last no longer than 30 June 2022. No
shares have been repurchased during 2021.
Furthermore, at the AGM in 2021, the Board was granted an authorisation
to increase the share capital by up to NOK 20,000,000. The authorisation
may only be used to raise additional capital for future investments
or for general corporate purposes, or to issue shares in connection
with acquisitions, mergers, demergers or other transactions. The
authorisation is valid until the AGM in 2022, but no longer than 30 June
2022. The Company in November 2021 issued 4,345,000 shares in a
private placement, each with a nominal value of NOK 1.
Corporate Governance Report
Deviations from the Code of Practice: See “Deviations from the
Norwegian code of practice for corporate governance” section on the
rst page of this report.
4. Equal treatment of shareholders
The shares of KCC are listed on Oslo Børs (on Euronext Expand until
21 December 2021). All issued shares carry equal shareholder rights
in all respects, including the right to participate and vote in general
meetings, and there are no restrictions on transfer of shares. The articles
of association place no restrictions on voting rights.
In an Extraordinary General Meeting held on 24 September 2018, the
Company issued 229,088 non-transferable warrants, each of which
entitle the holder to subscribe one new share of the Company at a
subscription price of NOK 44.38 per share. More information about the
warrants is provided in note 18 in Annual Report 2021.
No deviations from the Code of Practice.
5. Shares and negotiability
KCC’s shares are freely tradable and there are no restrictions on the
sale and purchase of the Company’s shares beyond those pursuant to
Norwegian law.
Each share carries one vote.
No deviations from the Code of Practice.
6. General meetings
The Annual General Meeting will normally be held before 30 April every
year. Notice of the meeting shall be sent to the shareholders no later than
21 days prior to the meeting.
The notices for such meetings shall include documents providing the
shareholders with suicient detail in order for the shareholders to make
an assessment of all the cases to be considered as well as all relevant
information regarding procedures of attendance and voting.
Notices for General Meetings shall provide information on the procedures
shareholders must observe in order to participate in and vote at the
General Meeting. The notice should also set out: (i) the procedure for
representation at the meeting through a proxy, including a form to
appoint a proxy, and (ii) the right for shareholders to propose resolutions
in respect of matters to be dealt with by the General Meeting.
The cut-o for conrmation of attendance shall be set as short
as practically possible and the Board will arrange matters so that
shareholders who are unable to attend in person, will be able to vote by
proxy. The form of proxy will be distributed with the notice.
The Chair of the Board and the CEO are present at the meeting, and the
Chair of the Nomination Committee and the auditor are normally present
as well. An independent person has historically been elected to chair the
Annual General Meeting.
Deviations from the Code of Practice: See “Deviations from the
Norwegian code of practice for corporate governance” section on the
rst page of this report.
7. Nomination Committee
According to the articles of association the Company shall have a
Nomination Committee which is elected by the General Meeting. The
Nomination Committee has the responsibility of proposing members to
the Board of Directors and members of the Nomination Committee. The
Nomination Committee also proposes fee payable to the members of the
Board and the members of the Nomination Committee.
The members of the Nomination Committee are selected to take into
account the interests of shareholders in general. The current three
members of the Nomination Committee are considered independent of
the Board and the executive management team. Members of the Board
of Directors and the executive management team are not members of
the Nomination Committee. Instructions for the Nomination Committee
is approved by the Company’s General Meeting.
The members of the Nomination Committee’s period of service is
two years unless the Annual General Meeting decides otherwise. The
Nomination Committee is to maintain contact with shareholder groups,
members of the Board of Directors and the Company’s executive
personnel in its works with proposing members to the Board of Directors.
The Annual General Meeting held on 26 April 2021 elected the current
Nomination committee consisting of Trond Harald Klaveness (elected for
a period of one year), Espen Galtung Døsvig (elected for a period of two
years) and Anne Lise Gryte (elected for a period of two years), hence one
member is up for election in the AGM in April 2022.
No deviations from the Code of Practice.
8. The Board of Directors:
Composition and independence
In appointing members to the Board, it is emphasised that the Board
shall have the requisite competency to independently evaluate the cases
presented by the executive management team as well as the Company’s
operation. It is also considered important that the Board can function
well as a body of colleagues and that they meet the Company’s need for
expertise and diversity.
The Directors are elected for a period of two years, with the possibility of
re-election. Board Members are encouraged to own shares in the Company.
The Board currently consists of ve Board Members. The Board
Members work together to exercise proper supervision of the Company’s
business, compliance, performance, and work done by the Company’s
management. The Chair of the Board is elected by the shareholders.
Two out of ve of the Board Members are independent of the Company’s
main shareholders and the majority of the Board Members are
independent of the Company’s material business contacts and executive
management. The Company’s executive management is not represented
on the Board.
The Board consists of the following members: Lasse Kristoersen (Chair),
Magne Øvreås, Winifred Patricia Johansen (independent), Rebekka
Glasser Herlofsen (independent) and Morten Skedsmo. An introduction
to the members of the Board of Directors and their expertise can be
found on www.combinationcarriers.com.
No deviations from the Code of Practice.
9. The work of the Board of Directors
Instructions have been issued for the Board of Directors, the Audit
Committee, and the CEO.
The Board prepares an annual plan for its work with special emphasis on
goals, strategy and implementation. The Board’s primary responsibility
is to (i) participate in the development and approval of the Company’s
strategy, (ii) perform necessary monitoring functions and (iii) act as an
advisory body for the executive management team. Its duties are not
static, and the focus will depend on the Company’s ongoing needs. The
Board is also responsible for ensuring that the operation of the Company
compliant with the Company’s values and ethical guidelines. The Board
shall ensure that the Company has a competent management with clear
internal distribution of responsibilities and duties. The Board is regularly
briefed on the Company’s nancial situation. The Board performs
evaluation of its work aer every Board meeting. For information on
how related party transactions are handled, see the Board of Directors
Report and note 19 in Annual Report 2021.
The Board has established an Audit Committee consisting of Rebekka
Glasser Herlofsen (Chair) and Magne Øvreås. The function of the Audit
Committee is to prepare matters to be considered by the Board and to
support the Board in the exercise of its management and supervisory
responsibilities relating to nancial reporting, statutory audit and
internal control. The Audit Committee has prepared an annual plan of
topics to be covered including internal audit procedures. The Company’s
CFO is the secretary of the Committee. The auditor participates in
discussions of relevant agenda items in meetings of the Audit Committee
and the Committee holds separate meetings with the auditor several
times each year.
No deviations from the Code of Practice.
8
Klaveness Combination Carriers ASA – Annual Report 2021
10. Risk management and internal control
The Board shall ensure that the Company has sound internal control
and systems for risk management that are appropriate in relation to the
extent and nature of the Company’s activities. The internal control and
the systems shall also encompass the Company’s corporate values and
ethical guidelines. The objective of the risk management and internal
control is to manage exposure to risks to ensure successful conduct of the
Company’s business and to support the quality of its nancial reporting.
Governing documents, code of conduct, policies, guidelines, processes,
and procedures are documented and available to the Company’s
employees and to employees of the main service providers, and shall
ensure:
– that the Company facilitates targeted and eective operational
arrangements and makes it possible to manage commercial risk,
operational risk, climate related risks, the risk of breaching applicable
legislation and regulations as well as all other forms of risk that may be
material for achieving the Company’s commercial objectives
– the quality of internal and external reporting
– that the Company operates in accordance with the relevant
legislation and regulations as well as with its internal guidelines for its
activities, including the Company’s ethical guidelines and corporate
values
The Board on a quarterly basis reviews the Company’s most important
areas of exposure to risk. Internal control and risk exposure are regularly
tested and evaluated by the Audit Committee. Some of the main risks are
presented in the Board of Directors report and note 16 in Annual Report
2021.
KCC encourages whistleblowing regarding blameworthy activities
or circumstances within its business. The whistleblower shall be
protected against retaliation because of such whistleblowing. The
Chief Compliance Oicer in Torvald Klaveness is the contact person for
whistleblowing for KCC and whistleblowing may be done anonymously.
The Chief Compliance Oicer noties the Audit Committee about
notications related to KCC.
No deviations from the Code of Practice.
11. Remuneration of the Board of
Directors
Remuneration of Directors is determined by the Annual General Meeting.
The fee reects the responsibilities of the board, its expertise, the
amount of time devoted to board-related work, and the complexity of
the Company’s businesses. To maintain the Board’s independence, the
Board’s remuneration is not linked to the Company’s performance, nor
does the Company grant share options, similar instruments or retirement
benets to board members as consideration for their work.
In connection with the sales process of MV Banasol in second half of
2021, Board Member Morten Skedsmo contributed in the work to nd a
buyer. Compensation for the work was paid to Klaveness AS (a related
party of the Company), Mr. Skedsmo’s employer. For more information,
see note 7 and note 19 in Annual Report 2021. None of the other Directors
have performed assignments for the Company in addition to their
appointment as member of the Board of Directors.
More information about the remuneration of the individual directors is
provided in note 7 in Annual Report 2021.
No deviations from the Code of Practice.
12. Salary and other remuneration for
executive personnel
The Board determines the salary and other compensation to the CEO.
The CEO’s salary, options granted and bonus shall be determined on
the basis of an evaluation with emphasis on the following factors:
Progress towards and achievement of strategic business goals; Overall
protability of the Company; Development of the Company’s shares; and
adherence to the Company’s main values. Any fringe benets shall be in
line with market practice and should not be substantial in relation to the
CEO’s basic salary. The CEO determines the remuneration of executive
employees. The remuneration is based on a base salary, bonus and share
options. The Board of Directors’ guidelines and the report regarding
compensation to key management executives is on the agenda of the
Annual General Meeting in April 2022.
For information about remuneration of executive personnel see note 7 in
Annual Report 2021 and the Remuneration Guidelines approved by the
Annual General Meeting in 2021 are available one the Company’s website.
No deviations from the Code of Practice.
13. Information and communication
The Company has developed Investor Relations Guidelines and the
Company aims to keep analysts, investors and other stakeholders
continuously updated on the Company’s operations and performance.
The Company provides information to the market through quarterly
and annual reports; investor- and analyst presentations open to the
media and by making operational and nancial information available
on the Company’s website. Information of importance is made available
to the stock market through notication to the Oslo Stock Exchange
in accordance with the Stock Exchange regulations. Information is
provided in English. All stock exchange announcements and press
releases, including the nancial calendar, are made available on the
Company’s website.
No deviations from the Code of Practice.
14. Take-overs
The Company has established key principles for how to act in the event of
a take-over. In the event of a take-over process, the Board has a duty to
ensure that the Company’s shareholders are treated equally and that the
Company’s activities are not unnecessarily interrupted. The Board will
also ensure that the shareholders have suicient information and time
to assess the oer.
In the event of a take-over bid, the Board will, in addition to complying
with relevant legislation and regulations, seek to comply with the
recommendations in the Norwegian Code of Practice for Corporate
Governance.
No deviations from the Code of Practice.
15. Auditor
The auditor participates in most Audit Committee meetings. Annually,
the auditor submits an audit workplan to the Audit Committee.
The auditor is present at Board meetings where the annual accounts
are on the agenda. The auditor will assess any important accounting
estimates and matters of importance on which there has been
disagreement between the auditor and the Company’s executive
management and/or the Audit Committee. The auditor shall present to
the Board or the Audit Committee a review of the Company’s internal
control procedures, including identied weaknesses and proposals for
improvement. Further, the Board normally holds a meeting with the
auditor at least once a year at which no representative of the executive
management is present.
The auditor is required to annually conrm his or her independence in
writing to the Audit Committee.
There were no disagreements between management or the Audit
Committee and the auditor, EY, during 2021. For the nancial year 2021,
Johan Lid Nordby was the Company’s engagement partner from EY.
The auditor’s fee is approved by the Annual General Meeting. Auditor’s
fees are disclosed in note 6 in Annual Report 2021.
No deviations from the Code of Practice.
9
Klaveness Combination Carriers ASA – Annual Report 2021
Consolidated Financial Statements
Klaveness Combination Carriers ASA – Consolidated Group
INCOME STATEMENT
Year ended 31 December
(USD ‘000) Notes 2021 2020
Freight revenue 3 155 564 142 289
Charter hire revenue 3 41 909 20 442
Other revenue 3 482 -
Total revenues, vessels 3 197 955 162 731
Voyage expenses 4 (82 087 ) (71 592 )
Net revenues from operations of vessels 115 868 91 139
Gain on sale of vessels 3, 9 6 360 -
Other income 3 1 422 -
Operating expenses, vessels 5 (49 212 ) (37 193 )
Group commercial and administrative services 19 (3 709 ) (3 538 )
Salaries and social expense 7 (2 374 ) (1 327 )
Tonnage tax 21 (221 ) (180 )
Other operating and administrative expenses 6, 7 (1 069 ) (776 )
Operatingprotbeforedepreciation(EBITDA) 67 064 48 125
Depreciation 9 (28 666 ) (19 155 )
Operatingprotaerdepreciation(EBIT) 38 398 28 971
Finance income 8 74 529
Finance costs 8 (15 866 ) (14 317 )
Protbeforetax(EBT) 22 606 15 182
Income tax expenses 22 (7 ) -
Protaertax 22 600 15 182
Attributable to:
Equity holders of the parent company 22 600 15 182
Total 22 600 15 182
Attributable to:
Basic earnings per share 0.46 0.32
Diluted earnings per share 0.46 0.32
STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December
(USD ‘000)
Notes
2021 2020
Prot/(loss)oftheperiod 22 600 15 182
Other comprehensive income to be reclassied to prot or loss
Net movement fair value on cross-currency interest rate swaps (CCIRS) 13 (404 ) 1 253
Reclassication to prot and loss (CCIRS) 2 773 (3 715 )
Net movement fair value on interest rate swaps
13
Net movement fair value bunker hedge 13 (69 ) 87
Net movement fair value FFA hedge
13
(7 730 ) (1 814 )
Net changes on cost of hedging FFA hedge 13 (714 ) -
Netothercomprehensiveincometobereclassiedtoprotorloss (1 644 ) (6 679 )
Totalcomprehensiveincome/(loss)fortheperiod,netoftax 20 955 8 503
Attributable to:
Equity holders of the parent company 20 955 8 503
Total 20 955 8 503
Klaveness Combination Carriers ASA – Consolidated Group
10
Klaveness Combination Carriers ASA – Annual Report 2021
STATEMENT OF FINANCIAL POSITION
Assets
(USD ‘000)
Notes 31 Dec 2021 31 Dec 2020
Non-current assets
Vessels 9 536 864 404 258
Newbuilding contracts 10 - 48 441
Right-of-use assets 11 1 553 1 672
Long-term receivables 7 70 70
Long-term nancial assets 13 4 048 3 427
Total non-current assets 542 535 457 868
Current assets
Short-term nancial assets 13 678 87
Inventories 12 12 279 6 159
Trade receivables and other current assets 14 18 484 18 501
Short-term receivables from related parties 19 2 018 742
Cash and cash equivalents 15 53 937 65 685
Total current assets 87 396 91 174
Total assets 629 931 549 043
Klaveness Combination Carriers ASA – Consolidated Group
STATEMENT OF FINANCIAL POSITION
Equity and liabilities
(USD ‘000)
Notes 31 Dec 2021 31 Dec 2020
Equity
Share capital 18 6 235 5 725
Share premium 153 732 130 155
Other reserves (8 154 ) (6 511 )
Retained earnings 17 102 605 87 162
Total equity 254 417 216 532
Non-current liabilities
Mortgage debt 13 249 993 206 813
Long-term nancial liabilities 13 2 017 5 409
Long-term lease liabilities 1 008 1 239
Bond loan 13 78 205 80 649
Total non-current liabilities 331 223 294 109
Current liabilities
Short-term mortgage debt 13 23 936 22 473
Interest bearing liabilities 13 2 409 -
Short-term nancial liabilities 13 - 757
Short-term lease liabilities 618 493
Trade and other payables 16 199 13 165
Short-term debt to related parties 19 895 1 339
Tax liabilities 21 233 175
Total current liabilities 44 291 38 401
Total equity and liabilities 629 931 549 043
LasseKristoersen
Chair of the Board
Rebekka Glasser Herlofsen
Board member
Engebret Dahm
CEO
Oslo, 28 March 2022
Oslo, 31 December 2021
Morten Skedsmo
Board member
Winifred Patricia Johansen
Board member
Magne Øvreås
Board member
Klaveness Combination Carriers ASA – Consolidated Group
11
Klaveness Combination Carriers ASA – Annual Report 2021
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
2021
(USD ‘000)
Share
capital
Other paid
in capital
Treasury
shares
Hedging
reserve
Cost of
hedging
reserve
Retained
earnings
Total
Equity 1 January 2021 5 725 130 155 (147 ) (6 363 ) - 87 162 216 532
Prot (loss) for the period - - - - - 22 600 22 600
Other comprehensive income for the period - - - (931 ) (714 ) - (1 644 )
Share option program - - - - - 47 47
Dividends - - - - - (7 204 ) (7 204 )
Capital increase (November 4, 2021) 510 23 576 - - - - 24 086
Equity at 31 December 2021 6 235 153 732 (147 ) (7 294 ) (714 ) 102 605 254 417
2020
(USD ‘000)
Share
capital
Other paid
in capital
Treasury
shares
Hedging
reserve
Cost of
hedging
reserve
Retained
earnings
Total
Equity 1 January 2020 5 725 130 155 - 316 - 76 744 212 941
Prot (loss) for the period - - - - - 15 182 15 182
Other comprehensive income for the period - - - (6 679 ) - - (6 679 )
Purchase of own shares - - (147 ) - - - (147 )
Share option program - - - - - 39 39
Dividends - - - - - (4 803 ) (4 803 )
Equity at 31 December 2020 5 725 130 155 (147 ) (6 363 ) - 87 162 216 532
Klaveness Combination Carriers ASA – Consolidated Group Klaveness Combination Carriers ASA – Consolidated Group
CASH FLOW STATEMENT
Year ended 31 December
(USD ’000) Notes 2021 2020
Prot before tax 22 606 15 182
Tonnage tax expensed 221 180
Depreciation 9 28 666 19 155
Amortization of upfront fees bank loans 882 693
Financial derivatives unrealised loss / gain (-) 8 82 (342 )
Gain on sale of vessel 9 (6 360 ) -
Gain /loss on foreign exchange 8 726 (4 )
Interest income 8 (74 ) (271 )
Interest expenses 8 14 175 11 884
Change in current assets (8 797 ) (3 797 )
Change in current liabilities 2 038 (3 438 )
Collateral paid/refunded on FFA (variation margin) (8 390 ) -
Interest received 74 271
A:Netcashowfromoperatingactivities 45 850 39 513
Acquisition of other tangible assets 9 (13 783 ) (4 271 )
Installments and other cost on newbuilding contracts* 10 (105 322 ) (88 634 )
Cash proceeds from sale of vessels 6 13 800 -
Transaction costs related to sale of vessels (212 ) -
B:Netcashowfrominvestmentactivities (105 517 ) (92 905 )
Proceeds from mortgage debt 13 169 000 60 450
Proceeds from bond loan (KCC04) 13 - 76 390
Buyback of bond loan (KCC03) 13 - (33 861 )
Transaction costs on issuance of loans 13 (1 944 ) (1 914 )
Repayment of mortgage debt 13 (123 041 ) (17 367 )
Terminated nancial instruments 13, 8 - (3 101 )
Interest paid 8 (13 970 ) (11 276 )
Repayment of lease liabilities 11 (582 ) (454 )
Interest paid leasing 8 (103 ) (94 )
Purchase of own shares - (147 )
Paid in registered capital increase 18 24 977 -
Transaction costs on capital increase (878 ) -
Dividends 18 (7 204 ) (4 802 )
C:Netcashowfromnancingactivities 46 254 63 822
Net change in liquidity in the period (A+B+C) (13 414 ) 10 431
Eect of exchange rate changes on cash (742 ) -
Cash and cash equivalents at beginning of period 65 685 55 254
Cash and cash equivalents at end of period 51 529 65 685
Net change in cash and cash equivalents in the period (13 414 ) 10 431
Cash and cash equivalents 53 937 65 685
Other interest bearing liabilities (overdra facility)** 2 409 -
Cashandcashequivalents(aspresentedincashowstatement) 51 529 65 685
* Related to delivery of newbuildings MV Baiacu, MV Bass and MV Balzani in 2021.
** Cash and cash equivalents include overdra facility of USD 2.4 million presented as other interest bearing liabilities in the balance sheet.
12
Klaveness Combination Carriers ASA – Annual Report 2021
Notes
01 Accounting policies
02 Segment reporting
03
Revenue from contracts
with customers
04 Voyage expenses
05 Operating expenses
06
Other operating and
administrative expenses
07 Salary
08 Financial items
09 Vessels
10 Newbuildings
11 Leasing
12 Inventories
13
Financial assets and
nancial liabilities
14
Trade receivables and
other current assets
15
Cash and cash
equivalents
16
Financial risk
management
17 Share option program
18
Share capital,
shareholders,
dividends and reserves
19
Transactions with
related parties
20 List of subsidiaries
21 Taxes
22
Events aer the balance
sheet date
Corporate information
These consolidated financial statements of Klaveness Combination
for the period ended 31 December 2021 were authorized by the Board
of Directors on March 28, 2022. Klaveness Combination Carriers ASA
(”The Company”/”The Parent Company”) is a private limited company
domiciled and incorporated in Norway .
The Parent Company has headquarters and is registered in
Exchange (transferred from Euronext Expand as per 21 December 2021)
with ticker KCC. The Parent Company was established on 23 March, 2018,
as a 100 % subsidiary of Klaveness Ship Holding AS.
platform (see note 2 for more information).
The ultimate parent of the Company is Rederiaksjeselskapet Torvald
parent is available at www.klaveness.com.
Basis of preparation
The consolidated nancial statements of the Group have been prepared
in accordance with International Financial Reporting Standards (”IFRS”)
as endorsed by the European Union.
The Group’s consolidated nancial statements comprise Klaveness
Combination Carriers ASA (KCC) and all subsidiaries over which the
Group has control. Control is normally obtained when the Group owns
more than 50 % of the shares in the company or through agreements
are capable of exercising control over the company. Non-controlling
interests are included in the Group’s equity.
Subsidiaries are consolidated from the date of acquisition, being the
date on which the Group obtains control, and consolidation is continued
until the date when such control ceases. The nancial statements of the
subsidiaries are prepared for the same accounting period as the Parent
Company, using consistent accounting principles for similar transactions
and events under otherwise similar circumstances.
All intra-group balances, transactions, unrealized gains and losses
resulting from intra-group transactions and dividends are eliminated.
The consolidated nancial statements are based on historical cost,
except for derivative nancial instruments which are measured at fair
value. The consolidated nancial statements are prepared under the
going concern assumption.
ESEF/iXBRL reporting
The Company is required to prepare and le the annual report in the
European Single Electronic Format (ESEF), and the Annual Report for
2021 is therefore prepared in the XHTML format that can be displayed in a
standard browser. The primary statements in the consolidated nancial
statements are tagged using inline eXtensible Business Reporting
Language (iXBRL). The iXBRL tags comply with the ESEF taxonomy,
which is included in the ESEF Regulation and developed based on the
IFRS taxonomy published by the IFRS Foundation. Where a nancial
statement line item is not dened in the ESEF taxonomy, an extension to
the taxonomy has been created. Extensions are anchored to elements in
the ESEF taxonomy, except for extensions which are subtotals.
The Annual Report submitted to the Norwegian Financial Supervisory
Authority consists of the XHTML document together with certain
technical les.
Signicant accounting judgements,
estimates and assumptions
Preparing nancial statements in conformity with IFRS requires the
management to make judgments, use of estimates and assumptions
which aect the application of the accounting policies and the reported
amounts of assets and liabilities, revenues and expenses.
Management has made estimates and assumptions which have
signicant eect on the amounts recognised in the nancial statements.
In general, accounting estimates are considered signicant if:
- the estimates require assumptions about matters that are highly
uncertain at the time the estimates are made
- dierent estimates could have been used
- changes in the estimates have a material impact on Klaveness
Combination Carriers ASA nancial position
The areas in which The Company is particularly exposed to material
uncertainty over the carrying amounts as at the end of 2021 are included
within the individual notes outlined below:
Note 9 – Useful life, residual value, cash-generating units and impairment
testing
Functional and
presentation currency
The presentation currency for the Group is US Dollar (USD). The Group
companies, including the Parent Company, have USD as their functional
currency. Each entity in the Group determines its own functional
currency and items included in the nancial statements of each entity
are measured using that functional currency.
Foreign currency
transactions
Transactions in foreign currencies are recorded in the functional currency
rate at the date of the transaction. Monetary assets and liabilities in
foreign currency are translated at the functional currency rate prevailing
at the balance sheet date. Exchange dierences arising from translations
into functional currency are recorded in the income statement.
Non-monetary assets and liabilities measured at historical cost in
foreign currency are translated into the functional currency using the
historical exchange rate. Non-monetary assets and liabilities recognised
at fair value are translated using the exchange rate on the date of the
determination of the fair value.
Income and expenses in NOK are converted at the rate of exchange on
the transaction date. The average exchange rate was 8.5973 USD/NOK in
2021 (2020: 9.4264). At 31 December 2021 an exchange rate of USD/NOK
8.8363 (2020: 8.5375) was used for the valuation of balance sheet items.
Financial assets
Initial recognition and measurement
At initial recognition, nancial assets are classied, in the following
categories: at amortised cost, fair value through other comprehensive
income (OCI), and fair value through prot or loss.
The classication of nancial assets at initial recognition depends on the
nancial asset’s contractual cash ow characteristics and the Group’s
business model for managing them. Except for those trade receivables
that do not contain a signicant nancing component and are measured
at the transaction price in accordance with IFRS 15, all nancial assets
Accounting policies
01
13
Klaveness Combination Carriers ASA – Annual Report 2021
are initially measured at fair value adjusted for transaction costs. Trade
receivables that do not contain a signicant nancing component or for
which the Group has applied the practical expedient, are measured at
the transaction price determined under IFRS 15.
In order for a nancial asset to be classied and measured at amortised
cost or fair value through OCI, it needs to give rise to cash ows that
are solely payments of principal and interest on the principal amount
outstanding.
Subsequent measurement
For purposes of subsequent measurement, nancial assets are classied
in two categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through prot or loss
Financial assets at amortised cost
This category is the most relevant to the Group. The Group measures
nancial assets at amortised cost if both of the following conditions are
met:
- The nancial asset is held within a business model with the
objective to hold nancial assets in order to collect contractual
cash ows
- The contractual terms of the nancial asset give rise on specied
dates to cash ows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using
the eective interest method and are subject to impairment. Gains and
losses are recognised in prot or loss when the asset is derecognised,
modied or impaired.
The Group’s nancial assets at amortised cost include trade receivables
and loan to related parties.
Financialassetsatfairvaluethroughprotorloss
Financial assets at fair value through prot or loss include nancial assets
held for trading, nancial assets designated upon initial recognition at
fair value through prot or loss, or nancial assets mandatorily required
to be measured at fair value. Financial assets are classied as held for
trading if they are acquired for the purpose of selling or repurchasing in
the near term. Derivatives, including separated embedded derivatives,
are also classied as held for trading unless they are designated as
eective hedging instruments. Financial assets with cash ows that
are not solely payments of principal and interest are classied and
measured at fair value through prot or loss, irrespective of the business
model. Notwithstanding the criteria for debt instruments to be classied
at amortised cost or at fair value through OCI, as described above, debt
instruments may be designated at fair value through prot or loss on
initial recognition if doing so eliminates, or signicantly reduces, an
accounting mismatch.
Financial assets at fair value through prot or loss are carried in the
statement of nancial position at fair value with net changes in fair value
recognised in the statement of prot or loss. This category includes
derivative instruments which the Group had not irrevocably elected to
classify at fair value through OCI.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classied, at initial recognition, as nancial
liabilities at fair value through prot or loss, amortised cost, or as
derivatives designated as hedging instruments in an eective hedge, as
appropriate.
All nancial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group’s nancial liabilities include trade and other payables, loans
and borrowings including bank overdras, and derivative nancial
instruments.
Subsequent measurement
The measurement of nancial liabilities depends on their classication,
as described below:
Financialliabilitiesatfairvaluethroughprotorloss
Financial liabilities at fair value through prot or loss include nancial
liabilities held for trading and nancial liabilities designated upon initial
recognition as at fair value through prot or loss.
Financial liabilities are classied as held for trading if they are incurred for
the purpose of repurchasing in the near term. This category also includes
derivative nancial instruments entered into by the Group that are not
designated as hedging instruments in hedge relationships as dened by
IFRS 9. Separated embedded derivatives are also classied as held for
trading unless they are designated as eective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the
statement of prot or loss.
Financial liabilities designated upon initial recognition at fair value
through prot or loss are designated at the initial date of recognition, and
only if the criteria in IFRS 9 are satised. The Group has not designated
any nancial liability as at fair value through prot or loss.
Financial liabilities at amortised cost
This is the category most relevant to the Group. Aer initial recognition,
interest-bearing loans and borrowings are subsequently measured at
amortised cost. Gains and losses are recognised in prot or loss when
the liabilities are derecognised as well as through the EIR amortization
process.
Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the
eective interest rate (EIR). The EIR amortization is included as nance
costs in the statement of prot or loss.
This category generally applies to interest-bearing loans and borrowings.
For more information, refer to Note 13.
Derecognition
A nancial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing nancial liability
is replaced by another from the same lender on substantially dierent
terms, or the terms of an existing liability are substantially modied,
such an exchange or modication is treated as the derecognition of the
original liability and the recognition of a new liability. The dierence in
the respective carrying amounts is recognised in the statement of prot
or loss.
Share issuance
Share issuance costs related to a share issuance transaction are
recognised directly in equity. If share issuance costs, for tax purposes,
can be deducted from other taxable income in the same period as they
are incurred, the costs are recognised net aer tax.
Treasury shares
Where KCC has acquired own shares under a share buy-back program,
the amount of consideration paid, including directly attributable costs,
is recognised as a change in equity and classied as treasury shares. No
gain or loss are recognised in prot and loss related to the purchase, sale,
issue, reissue or cancellation of KCC’s own equity instruments.
Dividends
Dividend payments are recognised as a liability in the Group’s nancial
statements from the date when the dividend is approved by the General
Meeting.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, when it is more likely
than not that an outow or resources representing economic benets
will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
Events aer balance sheet date
New information on the Group’s nancial position at the balance sheet
date is taken into account in the annual nancial statements. Subsequent
events that do not aect the Group’s position at the balance sheet date,
but which will aect the Group’s position in the future, are disclosed if
signicant.
Classication of items in
the balance sheet
Current assets and short-term liabilities include items due less than one
year from the balance sheet date, as well as items due more than one
year from the balance sheet date, that are related to the operating cycle.
Liabilities with maturity less than one year from the balance sheet date
are classied as current. All other debt is classied as long-term debt.
The rst year’s repayment of long-term debt is classied as current.
Cash ow statements
The cash ow statements are based on the indirect method.
Standards, amendments
and interpretations
The nancial statements have been prepared based on standards,
amendments and interpretations eective for 2021. There was no
material impact of new accounting standards or amendments adopted
in the period.
The Group has not early adopted the mandatory amendments and
interpretations to existing standards that have been published and
are relevant to the Group’s annual accounting periods beginning on 1
January 2022 or later periods.
14
Klaveness Combination Carriers ASA – Annual Report 2021
The Group is an owner and operator of combination carriers and
operates mainly within the dry bulk shipping industry and the product
tanker industry. The Group owns eight CABUs and eight CLEANBUs.
The CABUs are from 72,456 dwt to 80,344 dwt and have the capacity
to transport caustic soda solution (CSS), oating fertilizer (UAN) and
molasses as well as all types of dry bulk commodities.
The CLEANBUs have approximately 82,500 dwt carrying capacity. The
CLEANBUs are both full-edged LR1 product tankers and Kamsarmax
bulk carriers transporting clean petroleum products (CPP), heavy liquid
cargoes such as CSS, UAN and molasses as well as all types of dry bulk
products.
Alternative performance measures (APMs)
Average TCE earnings per onhire day is an alternative performance measure. Description and denition can be found on the company’s homepage:
https://www.combinationcarriers.com/alternative-performance-measures.
Accounting policy
The operating segments are reported in a manner consistent with the internal nancial reporting provided to the chief operating decision-
maker, who is responsible for allocating resources, making strategic decisions and assessing performance. The chief operating decision-
maker has been identied as the Board of the Company.
The reporting of the combination carriers results separates the CABUs and CLEANBUs as two segments, to better follow up on the performance
of the dierent vessel concepts. CABU vessels are combinations carriers that transport caustic coda solution, oating fertiliser, molasses and all
types of dry cargo. The CLEANBUs are combination carriers that transport clean petroleum products, heavy liquid cargoes and all types of dry
bulk products like alumina, bauxite. Iron ore, salt and coal. The Group identies and reports its segments based on information provided to the
Management and the Board of Directors. Resources are allocated and decisions are made based on this information.
Segment reporting
02
Disaggregated revenue information
The Group has income from COA contracts, spot voyages and TC contracts. Set out below is the disaggregation of the Group’s revenue from contracts
with customers.
Other income of USD 1.4 million in 2021 relates to equity distribution from the Norwegian Shipowners’ Mutual War Risks Insurance Association (Den
Norske Krigsforsikring for Skib, DNK).
The Group had four customers in 2021 that each represented more than ve percent of operating revenue in the Group (USD 44.4 million, USD 18.4
million, USD 11.6 million and USD 11.6 million respectively).
Geographical information
Revenue for the shipping activities is distributed based on the port of discharge for all vessels operated by the Group, including leased vessels on time
charter agreements.
The table below presents revenue based on the port of discharge.
Revenue from contracts with customers
03
Operating income and operating
expenses per segment
(USD ‘000)
2021 2020
CABU CLEANBU Total CABU CLEANBU Total
Operating revenue, vessels 116 218 81 255 197 473 122 208 40 523 162 730
Other revenue - 482 482 - - -
Voyage expenses (50 099) (31 989) (82 087) (60 281) (11 311) (71 592)
Net revenue from operations of vessels 66 119 49 749 115 868 61 926 29 212 91 139
Gain on sale of vessels (note 9) 6 360 - 6 360 - - -
Other income (note 3) 1 422 - 1 422 - - -
Operating expenses, vessels (24 684) (24 537) (49 221) (23 829) (13 364) (37 193)
Group commercial and administrative services (1 860) (1 849) (3 709) (2 251) (1 287) (3 538)
Salaries and social expense (1 191) (1 184) (2 374) (844) (483) (1 327)
Tonnage tax (126) (88) (214) (134) (46) (180)
Other operating and administrative expenses (536) (533) (1 069) (503) (272) (776)
Operatingprotbeforedepreciation(EBITDA) 45 505 21 559 67 064 34 364 13 760 48 125
Depreciation (13 362) (15 303) (28 665) (11 643) (7 513) (19 155)
Operatingprotaerdepreciation(EBIT) 32 142 6 256 38 398 22 722 6 248 28 971
(USD ‘000)
2021 2020
CABU CLEANBU Total CABU CLEANBU Total
Net revenue from operations of vessels 66 119 49 749 115 868 61 926 29 212 91 139
Adjustment * 177 213 390 (234) (512) (746)
Other revenue - (482) (482) - (134) (134)
Net revenue ex adjustment 66 297 49 479 115 776 61 692 28 566 90 259
Onhiredays 3 073 2 450 5 523 3 102 1 198 4 300
AverageTCEearningsperonhireday(USD/d) 21 571 20 195 20 961 19 886 23 851 20 990
Revenue types (USD ’000) Classication 2021 2020
Revenue from COA contracts Freight revenue 83 626 100 659
Revenue from spot voyages Freight revenue 71 938 41 631
Revenue from TC contracts Charter hire revenue 41 909 20 308
Other revenue Other revenue 482 134
Total revenue, vessels 197 955 162 731
Region (USD ’000) 2021 2020
North East Asia
North East Asia 69 992 31 584
Middle East 51 669 35 284
Australia / Oceania 41 160 52 258
South America 23 025 23 756
Europe 10 472 1 688
South East Asia 7 341 9 574
North America 6 036 2 194
South asia 5 344 2 301
Africa 2 466 1 233
Total revenue, regions 217 504 159 873
Gain/(loss) on FFAs (19 642) 1 977
Adjustments (390) 746
Other revenue 482 134
Total revenue, vessels 197 955 162 731
Other income (USD ’000) Classication 2021 2020
Gain on sale of vessels (note 9) Gain on sale of vessels 6 360 -
Other income Other income 1 422 -
Total other income 7 782 -
Reconciliation of average TCE earnings per onhire day
*Adjustment: Net revenue in Income Statement is recognized from load-to-discharge, while revenue basis for average TCE earnings is based on discharge-
to-discharge. The dierence/adjustment relates to days in ballast from discharge to loading on next voyage.
15
Klaveness Combination Carriers ASA – Annual Report 2021
Technical expenses are costs related to spare parts, consumables,
cargo handling, power supply, navigation and communication. Crew
costs include sea personnel expenses such as wages, social costs,
travel expenses and training. Costs related to technical management,
maintenance and crewing services are recognised as operating expenses,
see note 19 for transactions with related parties.
The pandemic has impacted operating costs in 2020 and 2021 with
higher crew costs, forwarding costs for spare parts and suppliers and
bunkers costs during o-hire due to deviations or time in quarantine for
crew change. Higher than normal costs due to COVID - 19 are estimated
to be approximately USD 3.7 million in 2021 (2020: USD 2.8 million).
Operating Expenses
05
Other operating and administrative expenses
06
(USD ‘000) 2021 2020
Salaries and other remuneration 2 006 1 123
Social security tax 185 124
Pension benet 83 66
Other social costs 85 5
Other personel ralated expenses 16 8
Salaries and social expense 2 374 1 327
(USD ‘000) 2021 2020
Technical expenses 14 040 11 753
Crewing expenses 24 760 17 483
Insurance 3 004 2 600
Crewing agency fee to Klaveness Ship Management AS 1 469 1 101
Ship management fee to Klaveness Ship Management AS 3 979 3 100
IT fee to Klaveness Ship Managment AS 81 63
Other operating expenses 1 886 1 093
Total operating expenses 49 219 37 193
Remuneration to the auditor
(USD ‘000) 2021 2020
Statutory audit 179 109
Other assurance services 29 30
Total 208 139
Auditor’s fee are stated excluding VAT.
Salary
07
(USD ‘000) 2021 2020
Freight expenses 20 210 16 184
TC-hire 1 952 2 001
Voyage expenses 59 009 52 048
Fuel hedge settlement (224) 608
Various expenses 1 140 750
Total voyage costs, vessels 82 087 71 592
Voyage expenses
04
Accounting policy
The Group is in the business of transporting cargo at sea.
Contractsofareightment
The combination carriers are employed on both long and short term
contracts of areightments (COAs) as well as in the spot market. The
Company’s intention is to own tonnage which will to a larger extent
be operated under COAs in the wet product market and to a larger
degree in the spot market in the dry bulk market, in order to give the
COA customers a high degree of exibility. In addition, the mix of COAs
and spot business creates exibility in optimizing the trading of the
eet. The COA contracts have duration between 1-6 years. Revenue
from the Group’s COA commitments are classied as freight revenue
in the Income Statement.
Revenue from contracts with customers is recognised when control of
the goods is transferred to the customer at an amount that reects the
consideration to which the Group expects to be entitled in exchange
for those goods. The Group has concluded that the performance
obligation under a voyage charter is satised over time, and begins
from the point at which cargo is loaded until the point at which a cargo
is discharged at the destination port.
Other revenue from services, such as demurrage, is recognised when
earned and is included in freight revenue.
Performance obligations
IFRS 15 requires the Group to identify the performance obligations,
determine the transaction price, allocate the transaction price
to performance obligations for each contract with a customer to
the extent that the contract covers more than one performance
obligation, determine whether revenue should be recognised
over time or at a point in time and recognise revenue when or
as performance obligations are recognised. The Groups’ voyage
charters and time charter (TC) contracts qualify for recognition over
time. The nature of the Group’s revenue from TC contracts with its
customers is categorised in two groups, the leasing element of the
vessel and the service element related to the leased vessel.
Expenses between discharge and load are deferred and amortised
over the voyage to the extent it qualies as cost to full under IFRS 15.
Time charter (TC) agreements
The time charter revenue is generated from xed rate time charter
contracts. Revenue from time charters are accounted for as lease
in accordance with IFRS 16 and is classied as charter hire revenue
in the Income Statement. The Group’s time charter contracts have
normally a duration of 1-3 months and a signicant portion of the
risks and rewards of ownership are retained by the lessor (KCC),
hence the lease is classied as operating lease. In 2020, the Group
entered into one TC agreement with 9 months duration with end date
early February 2021. Payments received under operating leases are
recognised as revenue on a straight line basis over the lease term.
Contract assets are accrued income related to ongoing voyages (revenue recognised from load-to-discharge). Total income related to ongoing voyages
as per 31 December 2021 to be recognized in 2022 is USD 10.8 million. Contract liabilities are prepaid revenue from customers.
For dry bulk cargo lied, payment is generally due within 10 days aer the cargo is loaded, while payment for wet cargo is due immediately upon
discharge.
Voyage expenses include bunkers cost, port costs and other voyage related expenses. TC-hire is payment for vessels hired in on short-term TCs (1-3
months).
Contract balances
(USD ‘000) 31 Dec 2021 31 Dec 2020
Trade receivables from charterers (Note 14) 7 421 7 470
Contract assets (Note 14) 3 437 3 204
Contract liabilities 3 477 2 369
Revenue from contracts with customers
03
16
Klaveness Combination Carriers ASA – Annual Report 2021
Salary
07
Remuneration to the Board of Directors
(USD ‘000) 2021 2020
Lasse Kristoersen (Chair of the Board)* 57 53
Magne Øvreås (Board member and member of Audit Committee) 38 32
Morten Skedsmo (Board member)* 34 32
Rebekka G. Herlofsen (Board member and Chair of Audit Committee) 39 21
Winifred Patricia Johansen (Board member from 26 April 2021) 23 -
Stephanie S. Wu (Board member until 27 April 2020) - 11
Lori W. Næss (Board member until 26 April 2021) 11 32
Total 203 180
*Remuneration paid to Klaveness AS, a wholly owned subsidiary of the main shareholder Rederiaksjeselskapet Torvald Klaveness. The persons are
employed by Klaveness AS. Compensation for Board work is thus included in the regular salary since such positions are a part of their regular employment.
The Group has nine employees as per year end 2021. As from 1 June 2021, the commercial and operational team of four employees were transferred
to the newly established subsidiary Klaveness Combination Carriers Asia Pte Ltd (Singapore).
The Company has provided a loan to CEO Engebret Dahm of USD 50k.
Interest on the loan is set to the Norwegian tax administration normal
interest rate for the taxation of low-cost loans.
The Board has drawn up guidelines for determining remuneration to
executive personnel. The remuneration is based on a base salary, bonus
and option scheme. The Company’s CEO has an agreement of 12-month
severance payment including a 6-month period of notice in case of
involuntary resignation or by redundancy.
Bonus scheme
The current bonus scheme is valid for the accounting years 2020 and
2021 and new bonus scheme has been rolled-out for 2022 - 2023. Bonus
is distributed on an annual basis and is divided into two: i) Formula bonus
based on return on equity for the relevant year, and ii) Discretionary
element. The cap payment is set at 12 months xed salary for the CEO
and nine months for the CFO. Total bonus, included any discretionary
element and holiday allowance, can in no circumstances exceed the
individual cap. If not employed for a full year, the cap will be pro-rated
according to number of months employed. The cap is reached at 20 %
return on equity. The CFO is part of the overall discretionary bonus pool
that is distributed among all employees included in the bonus scheme.
The discretionary bonus pool is usually capped at 50% of total formula
bonus for the employees included in the bonus pool, however, the BOD
decided to distribute a discretionary bonus for the pool members of in
total 74% of the formula bonus for 2021, to be paid in 2022. Provisions
have been made for the main part in the 2021 accounts. The discretionary
bonus is based on goal achievements and individual performance. Any
discretionary bonus to the CEO to be set by the Board, however, total
bonus to CEO should never be above the cap.
Share Op
tion Program
The CFO and the CEO were granted 65,280 options in December 2019,
each of one share, in total equal to 0.1 % of the share capital. The options
are vested over a period of three years from the grant date, 1/3 per
year and rst vesting to take place one year aer the grant date. Vested
options may be exercised at any time as long as the option holder acts
within all applicable securities legislation and internal guidelines and
is still employed by the Company. KCC is entitled to, rather than issuing
shares, to settle in cash. Unvested options immediately lapse and
expire when an employee becomes a former employee, while the vested
options will lapse on the date four months aer the employee becomes
a former employee as long as this complies with applicable securities
legislation. The exercise price is set in NOK based on the average close
trading price of the KCC share the last ten days before the grant date. The
option scheme includes provisions related to public oers and mergers,
adjustments related to changes in share capital among others. The share
option program has been accounted for based on equity- settlement.
See note 17 for more information.
Pension scheme for all employees
The Group has defined contributions plan for all employees in Norway.
The contribution plan includes full-time and part- time employees with
more than 20 % of a full time position and comprise 5 % of salary up until
7.1G and 20 % of salary between 7.1G and 12G. As of 31.12.2021 there were
six members of the dened contribution plan. The expense recognised in
the current nancial period in relation to the contribution plan was USD
83k (2020: USD 69k). KCC does not make any pension contributions to
employees in Singapore in line with national legal requirements.
Board remuneration is proposed by the Nomination Committee and
approved by the Annual General meeting. The Directors receive a xed
payment for the year based on the Board position, i.e. the Chair receives
higher pay than the Board Members, which have an equal pay. The
Directors do not receive prot-related remuneration, share options or
retirement benets. Board Members participating in committees such
as the Audit Committee have received extra payment for these tasks for
2021.
In connection with the sales process of MV Banasol in 2021, Board
member Morten Skedsmo has contributed in the work to nd a buyer.
Compensation for the work, USD 31k, has been paid to Klaveness AS, see
note 19.
In appointing members to the Board, it is emphasised that the Board
shall have the requisite competency to independently evaluate the
cases presented by the executive management team as well as the
Company’s operation. It is also considered important that the Board
can function well as a body of colleagues and that they meet the
Company’s need for expertise and diversity. An introduction to the
members of the Board of Directors and their expertise can be found on
www.combinationcarriers.com.
Accounting policy
Pension obligations
The Group is required to provide a pension plan towards its
employees in Norway, and the Group has implemented a dened
contribution plan. The plan complies with the requirements in the
Man dator y O ccupat i onal Pe nsion a ct i n No r w ay (“Lov o m obl i gator isk
tjenestepensjon”). A dened contribution plan is a pension plan
under which the Group pays xed contributions into a separate legal
entity. The Group has no legal or constructive obligations to pay
further contributions if the fund does not hold suicient assets to
pay all employees the benets relating to employee service in the
current and prior periods.
Employee share options scheme
Employee share options are calculated at fair value at the time
they are granted and charged to expense over the vesting period
as payroll cost with a corresponding increase in equity. The market
value of the employee share options are estimated based on the
Black-Scholes-Merton model.
Remuneration to the management
Diversity of employees
2021 2020
Number Percentage Number Percentage
Women 3 33 % 2 33 %
Men 6 67 % 4 67 %
Total employees in KCC 9 100 % 6 100 %
Avarage number of employees in KCC 8 - 5 -
KCC ASA in Norway 6 67 % 6 100 %
KCC Asia in Singapore 3 33 % - -
Nationalities 3 - 1 -
Sick leave - 0.29 % - 0.08 %
Diversity of Board of Directors
2021 2020
Number Percentage Number Percentage
Women 2 40 % 2 40 %
Men 3 60 % 3 60 %
(USD ’000) Base Salary Bonus Pensionbenet Total
Engebret Dahm (CEO) 373 79 16 468
Liv Hege Dyrnes (CFO) 259 38 16 312
Total 632 118 31 781
17
Klaveness Combination Carriers ASA – Annual Report 2021
Additions
Three CLEANBU vessels MV Baiacu, MV Bass and MV Balzani were
delivered from Jiangsu New Yangzi Shipbuilding Co.Ltd respectively
11 January 2021, 25 March 2021 and 25 May 2021. Four CABU vessels
have performed scheduled dry-docking in 2021 with a total cost of USD
8.3 million. Technical upgrade of USD 4.0 million is related to general
improvement of the technical performance of the vessels and energy
eiciency initiatives (USD 3.4 million) and yard repairs of one CLEANBU
(MV Barramundi; USD 0.6 million).
Pledged vessels
All owned vessels except MV Bangor and MV Barcarena are pledged to
secure the various loan facilities (refer to note 13 for further information).
Disposals
MV Banasol was sold and delivered to new owner in December 2021, a gain
of USD 6.4 million was recognised in 2021. Gain is calculated as sales price
less book value of the vessel at time of sale less any direct costs of sale.
Impairment assessment
Identication of impairment indicators is based on an asessment of
development in market rates (dry bulk, MR tanker, LR1 tanker and fuel),
TCE earnings for the eet, vessel opex, operating prot, technological
development, change in regulations, interest rates and discount rate.
Expected future TCE earnings for both eets of CABUs and CLEANBUs,
diversied market exposure, development in secondhand prices and
the combination carriers’ trading exibility support the conclusion of no
impairment indicators identifed as per 31 December 2021.
Reconciliation of depreciations
(USD '000)
2021 2020
Depreciation vessels 28 083 18 702
Depreciation right of use assets 582 453
Depreciations for the period 28 666 19 155
Financial items
08
Vessels
09
Finance income
(USD ‘000)
2021 2020
Other interest income 74 398
Gain on foreign exchange - 131
Finance income 74 529
Finance cost
(USD ‘000)
2021 2020
Interest expenses mortgage debt 9 477 7 729
Interest expenses bond loan 4 371 4 062
Interest expenses lease liabilities 103 94
Amortization capitalized fees on loans 882 693
Other nancial expenses 224 906
Fair value changes in forward freight agreements - 21
Fair value changes and realization eects of interest rate swaps 82 687
Loss on foreign exchange 726 126
Finance cost 15 866 14 317
Vessels
(USD '000)
31 Dec 2021 31 Dec 2020
Cost price 1.1 599 826 492 075
Delivery of newbuildings 153 763 103 708
Adjustment acquisition value newbuildings delivered 1 408 (809)
Dry-docking 8 342 4 852
Technical upgrade 4 032 -
Disposal of vessel (32 416) -
Cost price end of period 734 955 599 826
Acc. depreciation 1.1 195 568 176 866
Disposal of vessel (25 560) -
Depreciation vessels 28 083 18 702
Acc. Depreciation end of period 198 092 195 568
Carrying amounts end of period* 536 864 404 258
*) carrying value of vessels includes dry-docking
No. of vessels 16 14
Useful life vessel 25 25
Useful life dry-docking 3-5 3-5
Depreciation schedule Straight-line Straight-line
Signicantaccountingestimates
Useful life and residual values
The carrying amount of vessels is based on management’s
assumptions of useful life. Useful life for the combination carrier
vessels is reassessed on an annual basis. Useful life may change due to
change in technological developments, competition, environmental
and legal requirements, freight rates and steel prices. Management
has also considered the impact of decarbonisation and climate
related risks on the existing assets’ useful lives. Such risks include new
climate related legislation restricting the use of certain assets, new
technology demanded by climate related legislation and customer
requirements (see note 16).
KCC commits to perform recycling of its vessels in compliance with
the Hong Kong convention and Norwegian Shipowner’s Association’s
guidelines. Obtained steel prices for residual value assessment are
in line with our strategy. In the assessment of residual value as per 1
January 2022 there is a high degree of uncertainty in current market
prices for green recycling. Based on the assessment, the Group
concluded to retain a scrap price of USD320/ltd as from 1 January
2022.
Impairment testing
At the end of each reporting period the Group will assess whether there
is any indication of impairment. If any indication exists, the Group will
estimate the recoverable amount of the asset. Recoverable amount
is set as the highest of fair value less cost to sell and value in use. If
carrying value exceeds the estimated recoverable amount, impairment
is recognised. Impairments are reversed in a later period if recoverable
amount exceeds carrying amount.
Identication of impairment indicators is based on an assessment
of development in market rates (dry bulk, MR tanker, LR1 tanker
and fuel), TCE earnings for the eet, vessel opex, operating prot,
technological development, change in regulations, interest rates
and discount rate. As per year end 2021 and 2020 no indicators for
impairment were identied.
Cash-generating units
The Group operates combination carrier vessels that can switch
between dry and wet cargo. The CABUs have the same characteristics
in respect of what cargo to transport, number of cargo holds and
size of the vessel. All the CLEANBUs are identical vessels with
same characteristics. CLEANBU vessels have higher cargo carrying
capacity than the CABUs, and can in addition transport other types
of wet commodities. All the CABU vessels are interchangeable, same
for all the CLEANBU vessels. Investment, continuance and disposal
decisions are made by class of vessels. The CABU and CLEANBU
vessels are operated by KCC Chartering AS (KCCC). Contracts (COAs)
are not negotiated based on a specic vessel. It is the sum of vessel
capacity at any time that determines the optimization of voyages.
A portion of the voyages are also executed in the spot market, and
KCCC is dependent on operating the vessels as a portfolio according
to free vessel capacity and available cargos.
The Group has dened the eet of CABUs and the eet of CLEANBUs
as two separate cash generating units.
Accounting policy
Non-current assets such as vessels, the cost of dry-docking and
newbuildings are carried at cost less accumulated depreciation and
impairment charges. Cost is dened as directly attributable cost
plus borrowing cost during the construction period.
Depreciation of vessels
Depreciation is calculated on a straight-line basis over the estimated
useful life of a vessel taking its residual value into consideration.
Useful life is estimated to be 25 years for the Group’s eet. Certain
capitalized elements like costs related to periodic maintenance/
dry-docking have shorter estimated useful lives and are depreciated
until the next planned dry-docking, typically over a three to ve
years period. When newbuildings are delivered a portion of the cost
is classied as dry-docking.
Costs of day-to-day ser vicing, maintenance and repairs are expensed.
Impairment of vessels and newbuildings
On a quarterly basis the balances are assessed whether there is an
indication that vessels and newbuilding contracts may be impaired.
If indicators are concluded to be present, an impairment test is
performed. If the recoverable amount is lower than the book value,
an impairment charge is recorded. Impairment losses are recognised
in the prot and loss statement. An impairment loss recognised in
prior periods for an asset is reversed if, and only if, there has been a
change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised.
18
Klaveness Combination Carriers ASA – Annual Report 2021
The Group took delivery of three CLEANBU vessels, MV Baiacu, MV Bass and MV Balzani in January, March and May 2021 (note 9), which completed the
newbuilding programme at Jiangsu New Yangzi Shipbuilding Co., Ltd in China.
Newbuildings, net carrying amount
(USD '000)
31 Dec 2021 31 Dec 2020
Cost 1.1 48 441 62 316
Borrowing cost 84 1 023
Yard installments paid 97 650 80 851
Other capitalized cost 7 586 7 960
Delivery of newbuildings (153 763) (103 708)
Net carrying amount - 48 441
Newbuildings
10
Inventories relate to bunkers, spare parts and luboil on board vessels.
Inventories
12
Inventories
(USD '000)
31 Dec 2021 31 Dec 2020
Bunkers 10 810 5 075
Spare parts 166 166
Luboil 1 302 918
Inventories 12 279 6 159
The Group as a lessee
Right-of-use assets
The Group has leasing agreements related to satellite communication and IT equipment onboard the vessels. The Group’s right-of-use assets are
presented in the table below:
The leases do not contain any restrictions on the Group’s dividend policy or nancing. The Group does not have signicant residual value guarantees
related to its leases to disclose.
As a lessee, the Group leases mainly satellite communication and IT equipment onboard the vessels.
Leasing
11
Accounting policy
Newbuildings
Vessels under construction are classied as non-current assets and recognised at the cost incurred in relation to the non-current asset when
paid. Newbuildings are not depreciated until delivery. Borrowing costs directly attributable to the construction of vessels are added to the
cost of the vessels, until such time as the vessels are ready for their intended use.
Accounting policy
Right of use assets
The Group applies the recognising exemptions proposed by the
standard on lease contracts with a term of less than 12 months, and
lease contracts for which are the underlying asset is of low value.
Lease payments associated with short-term leases and leases of low-
value assets are recognised on a straight-line basis as an expense in
prot or loss. Lease contracts which is not part of the exemptions
are measured at the present value of remaining lease payments,
discounted using the incremental borrowing rate. The right-of-use
assets are measured at an amount equal to the lease liability at the
date of implementation. The right-of-use asset is depreciated on a
straight line basis over the lease term.
Accounting policy
Bunkers and lubricant oil on board vessels are recorded in the balance sheet at acquisition cost. Acquisition cost is based on FIFO (rst in,
rst out principle). Inventories are valued at the lower of cost and net realizable value. Impairment losses are recognised if the net realizable
value is lower than the cost price.
Right-of-use assets
(USD ‘000)
31 Dec 2021 31 Dec 2020
Cost price 1.1 2 510 2 150
Addition of right-of-use assets 538 360
Disposals (75) -
Costprice end of period 2 973 2 510
Accumulated depreciation 1.1 838 385
Depreciation right of use assets 582 453
Accumulated depreciation end of period 1 420 838
Carrying amounts end of period 1 553 1 672
Lease liabilities
Undiscountedleaseliabilitiesandmaturityofcashoutows
(USD ‘000)
31 Dec 2021 31 Dec 2020
Less than 1 year 662 579
1-5 years 1 107 1 300
More than 5 years - -
Total undiscounted lease liabilities at 31 December 1 769 1 879
19
Klaveness Combination Carriers ASA – Annual Report 2021
During 2021 the Group made a drawdown of USD 25 million under the
SEB/SR- Bank/SPV facility in relation to the delivery of MV Baiacu and
USD 60 million under the term loan facility of Nordea/Credit Agricole
Sustainability Linked Term loan in relation to delivery of MV Bass and MV
Balzani and revolving credit facilities. In addition the Group renanced
the USD100 million Nordea/Danske Bank facility into a USD 80 million
senior secured sustainability linked term loan credit facility agreement
with Nordea and Danske Bank. The interest rate on the new facility will
be LIBOR + 210bps. The margin will be adjusted, up or down, based on
the Group’s sustainability performance, as dened by the Group’s ability
to meet its goal of reducing CO2 emissions per ton of transported cargo
per nautical mile (EEOI) and reducing absolute CO2 emissions per vessel.
The new facility will renance the CABU vessels MV Bantry, MV Bakkedal,
MV Bain, MV Ballard and MV Balboa built 2005-2017. The vessels MV
Bangor and MV Barcarena, which were nanced under the USD100
million Nordea/Danske Bank facility, will be le unencumbered. The
new facility will mature in December 2026 and has a repayment prole
of 9.2 years reecting an age adjusted eighteen to zero repayment prole
based on the average age of the vessels.
Furthermore, the Group repaid USD 2.7 million in debt prior to the sale
of MV Banasol under the USD105 million DNB/SEB facility, and the Group
repaid USD 30 million under a revolving credit facility and remaining part
of USD 65.4 million under the USD 100 million Nordea/Danske Bank facility.
Financial assets and nancial liabilities
13
ThebelowtablespresenttheGroup’snancingarrangementsasper31December2021.
Maturityproleofnancialliabilitiesat31December2021ispresentedinnote 16.
Bond loan
Face value
(NOK ’000)
Maturity date
Carrying amount
(USD ’000)
KCC04 700 000 11.02.2025 80 649
Exchange rate adjustment (1 430)
Capitalized expenses (779)
Bond discount (234)
Total bond loan 700 000 78 205
Interest bearing liabilities
(USD '000)
Fair value
31 Dec 2021
Carrying amount
31 Dec 2021
Carrying amount
31 Dec 2020
Mortgage debt 252 547 252 547 208 052
Capitalized loan fees - (2 554) (1 239)
Bond loan 75 456 79 219 81 991
Bond premium - (234) (310)
Capitalized expenses bond loan - (779) (1 032)
Total non-current interest bearing liabilties 328 003 328 198 287 462
Mortgage debt, current 23 936 23 936 22 473
Overdra facility (Secured) 2 409 2 409 -
Total interest bearing liabilities 354 347 354 543 309 934
Mortgage debt
(USD '000)
Description Interest rate Maturity Carrying amount
Nordea/Danske facility Term loan, USD 100 mill LIBOR + 2.3 % March 2022 -
DNB/SEB facility Term loan, USD 105 mill LIBOR + 2.3 % December 2023 83 344
SEB/SR-Bank/SPV facility Term loan/RCF, 90.675 mill LIBOR + 2.3 % October 2025 85 786
Nordea/Crédit Agricole facility* Term loan/RCF, 60 mill LIBOR + 2.75 % March 2025 27 353
Nordea/ Danske facility** Term loan, USD 80 mill LIBOR + 2.3 % December 2026 80 000
Capitalized loan fees (2 554)
Mortgage debt 31 December 2021 273 929
* Potential margin adjustments up to +/- 10 bps once every year based on sustainability KPIs.
** Potential margin adjustments up to +/- 5 bps once every year based on sustainability KPIs.
The Group has available undrawn revolving credit facility capacity of USD 30 million and USD 17.6 million available capacity under a 364-days
overdra faciliy.
Risk management activities
To reduce interest rate risk, the Group has entered into vairous interest
rate swaps derivatives, such as interest rate swaps, caps and cross-
currency interest rate swap (CCIRS). Interest rate swaps and CCIRS
qualify for hedge accounting. These instruments have combined notional
value of USD 213 million and duration until 2023-2028. Interest rate
swaps qualifying for hedge accounting are recognised at fair value with
changes through other comprehensive income. The Group also holds
interest rate options recognised at fair value through prot and loss.
The Group has entered into bunker fuel swaps and forward freight
agreements (FFA) that qualify for hedge accounting. The Group uses
bunker fuel swaps to hedge a portion of its oating bunkers cost to a
xed cost for bunkers to reduce the Group’s exposure to changes in
bunker prices. Similarly, the Group can use FFAs to x freight rates in a
future period to reduce its exposure to the dry bulk freight market (via
open capacity and index linked COA commitments).
Book value of collateral and mortgaged assets (USD ’000) 2021 2020
Vessels 520 063 404 258
Bunkers 10 810 5 075
Accounts receivables 18 484 18 501
Total book value of collateral and mortgaged assets 549 357 427 833
Covenants
As per 31 December 2021, the Group is in compliance with all nancial
covenants. On Group level nancial covenants relate to minimum
equity (USD 125 million), equity ratio (30%), and cash (USD 15 million).
Financial covenants on KCC Shipowning AS level relate to minimum
cash (the higher of USD 10 million and 5 % of net interest-bearing debt)
and net interest-bearing debt to EBITDA (NIBD/EBITDA) of max 7x.
The NIBD/EBITDA ratio can be higher than 7x for one reporting period
(measured semi-annually) provided that the NIBD/EBITDA was below
7x in the prior reporting period. The loan agreements also include
a dividend restriction of 50% of net prot (based on audited annual
consolidated accounts) if the equity ratio is below 35%. In addition, all
secured loans contain minimum value clauses related to the value of the
vessel compared to outstanding loan and a change of control clause. In
case of KCC Shipowning AS a change of control event occurs if it ceases to
be owned, directly or indirectly, 100% (in issued shares and voting rights)
by KCC and in case of KCC, if it ceases to be owned, directly or indirectly,
33.1/3% (in issued shares and voting rights) by Trond Harald Klaveness
and/or his direct lineal descendants or if any other person or group of
persons acting in concert, other than Trond Harald Klaveness and/or his
direct lineal descendants, directly or indirectly, gain control of 33.1/3%
or more of the shares and/or voting rights in KCC.
Securities
As security for the mortgage debt, the Group has included a rst priority
security in all vessels except two vessels and earnings accounts, and
assignment of the earnings and insurances of the vessels in favour of the
creditors.
Financial assets
(USD '000)
31 Dec 2021 31 Dec 2020
Financial instruments at fair value through OCI
Cross-currency interest rate swap
2 556 2 917
Interest rate swaps
1 421 356
Fuel hedge 18 87
Forward freight agreements (FFA) 660 -
Financial instruments at fair value through P&L
Interest rate swaps 71 154
Financial assets 4 727
3 515
Current 678 87
Non-current
4 048
3 427
Financial liabilities
(USD '000)
31 Dec 2021 31 Dec 2020
Financial instruments at fair value through OCI
Cross-currency interest rate swap 43 -
Interest rate swaps 1 973 5 409
Fuel hedge - -
Forward freight agreements (FFA) -
757
Financial liabilities
2 017 6 166
Current - 757
Non-current 2 017 5 409
20
Klaveness Combination Carriers ASA – Annual Report 2021
Financial assets and nancial liabilities
13
The fair value of the nancial assets and liabilities is recognised as the
value at which they could be exchanged in a transaction between willing
parties other than in forced or liquidation transactions. The following
methods and assumptions were used to estimate the fair value of each
class of nancial instrument:
- Cash and restricted cash, trade receivables, trade payables and other
current liabilities are recognised at their carrying amounts largely due to
the short term maturities of these instruments.
- Fair value of loans from banks and other nancial liabilities is estimated
by discounting future cash ows using rates currently available for debt
on similar terms, credit risk and remaining maturities.
- Fair value of derivatives is based on mark to market reports received
from banks.
(USD ‘000)
Carrying amount
31 Dec 2021
Carrying amount
31 Dec 2020
Fair value
31 Dec 2021
Fair value
31 Dec 2020
Financial assets at fair value through OCI
Interest rate swaps 1 421 356 1 421 356
Forward freight agreements 660 - 660 -
Fuel hedge 18 87 18 87
Cross-currency interest rate swap 2 556 2 917 2 556 2 917
Financialassetsatfairvaluethroughprotorloss
Forward freight agreements - - - -
Interest rate swaps 71 154 71 154
Totalnancialassetsatfairvalue 4 727 3 515 4 727 3 515
Financial assets measured at amortised costs
Accounts receivable
7 667 7 577
7 667 7 577
Receivables from related parties 2 018 742 2 018 742
Totalnancialassetsmeasuredatamortisedcosts 9 685 8 319 9 685 8 319
Cash and cash equivalents 53 937 65 685 53 937 65 685
Totalnancialassets 68 349 77 518 68 349 77 518
Total current 64 301 74 091 64 301 74 091
Total non-current 4 048 3 427 4 048 3 427
(USD ‘000)
Carrying amount
31 Dec 2021
Carrying amount
31 Dec 2020
Fair value
31 Dec 2021
Fair value
31 Dec 2020
Financial liabilities at fair value through OCI
Interest rate swaps 1 973 5 409 1 973 5 409
Cross-currency interest rate swap 43 - - -
Forward freight agreements - 757 - 757
Totalnancialliabilitiesatfairvalue 2 017 6 166 1 973 6 166
Othernancialliabilitiesatamortisedcost
Accounts payable 4 361 937 4 361 937
Interest bearing debt, non-current 249 993 206 813 252 547 208 052
Interest bearing debt, current 23 936 22 473 23 936 22 473
Bond loan 78 205 80 649 75 456 78 097
Overdra facility 2 409 - 2 409 -
Current debt to related parties 895 1 339 895 1 339
Totalnancialliabilitiesatamortisedcost 359 799 312 210 359 603 310 896
Totalnancialliabilities 361 815 318 375 361 577 317 062
Total current 31 601 24 748 31 601 24 748
Total non-current 330 215 293 627 329 976 292 314
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s nancial assets included in the nancial statements.
Fair value hierarchy
The Group uses nancial hierarchy under IFRS 13 for determining and disclosing the fair value of nancial instruments by valuation techniques. Below
table presents fair value measurements to the Group’s assets and liabilities at 31 December 2021.
Accounting policy
Derivativenancialinstrumentsandhedgeaccounting
The Group uses derivative nancial instruments, such as forward
currency contracts, fuel contracts and interest rate swaps to hedge
its foreign currency risks, interest rate risks and to reduce exposure
to volatile and potentially rising fuel costs. Such derivative nancial
instruments are initially recognised at fair value on the date on
which a derivative contract is entered into and are subsequently
remeasured at fair value. Derivatives are carried as nancial assets
when the fair value is positive and as nancial liabilities when the
fair value is negative.
For the purpose of hedge accounting, hedges are classied as:
- Fair value hedges when hedging the exposure to changes in the
fair value of a recognised asset or liability or an unrecognised rm
commitment
- Cash ow hedges when hedging the exposure to variability in cash
ows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction
or the foreign currency risk in an unrecognised rm commitment
As per 31 December 2021 all the Group hedges are classied as cash
ow hedges.
At the inception of a hedge relationship, the Group formally designates
and documents the hedge relationship to which it wishes to apply
hedge accounting and the risk management objective and strategy for
undertaking the hedge. The documentation includes identication
of the hedging instrument, the hedged item, the nature of the risk
being hedged and how the Group will assess whether the hedging
relationship meets the hedge eectiveness requirements (including
the analysis of sources of hedge ineectiveness and how the hedge
ratio is determined). A hedging relationship qualies for hedge
accounting if it meets all of the following eectiveness requirements:
- There is an economic relationship between the hedged item and
the hedging instrument.
- The eect of credit risk does not dominate the value changes that
result from that economic relationship.
- The hedge ratio of the hedging relationship is the same as that
resulting from the quantity of the hedged item that the Group
actually hedges and the quantity of the hedging instrument that the
Group actually uses to hedge that quantity of hedged item.
The eective portion of the gain or loss on the hedging instrument
is recognised directly as other comprehensive income in the cash
ow hedge reserve, while any ineective portion is recognised
immediately in prot and loss. Amounts recognised as other
comprehensive income are transferred to prot and loss when
the hedged transaction aects prot and loss, such as when the
hedged nancial income or expense is recognised or when a forecast
transaction occurs.
Derivative nancial instruments that are designated as, and are eective
hedging instruments are separated into a current and non-current
portion consistent with the classication of the underlying item.
31 December 2021
Assets (USD ’000)
Level 1 Level 2 Level 3 Total
Financialassetsatfairvaluethroughprotorloss
Interest rate swaps 71 71
Financial assets at fair value through OCI
Fuel hedge 18 18
Cross-currency interest rate swap 2 556 2 556
Forward freight agreements 660 660
Interest rate swaps 1 421 1 421
31 December 2021
Liabilities (USD ’000)
Level 1 Level 2 Level 3 Total
Financialliabilitiesatfairvaluethroughprotorloss
Interest rate swaps - -
Financial liabilities not measured at fair value, but for which fair value is disclosed
Mortgage debt, non-current 252 547 252 547
Mortgage debt, current 23 936 23 936
Overdra facility 2 409 2 409
Bond loan 75 456 75 456
Financial liabilities at fair value through OCI
Forward freight agreements - -
Interest rate swaps 1 973 1 973
21
Klaveness Combination Carriers ASA – Annual Report 2021
Financial assets and nancial liabilities
13
31 Dec 2020
Assets (USD ’000)
Level 1 Level 2 Level 3 Total
Financialassetsatfairvaluethroughprotorloss
Interest rate swaps 356 356
Financial assets at fair value through OCI
Fuel hedge 87 87
Cross-currency interest rate swap 2 917 2 917
Interest rate swaps 154 154
31 Dec 2020
Liabilities (USD ’000)
Level 1 Level 2 Level 3 Total
Financial liabilities not measured at fair value, but for which
fair value is disclosed
Mortgage debt, non-current 208 052 208 052
Mortgage debt, current 22 473 22 473
Overdra facility
Bond loan 78 097 78 097
Financial liabilities at fair value through OCI
Forward freight agreements 757 757
Interest rate swaps 5 409 5 409
Accounting policy
Fair value measurement
Derivatives are measured at fair value. The fair value of nancial
instruments traded in active markets is determined by reference
to quoted market prices or dealer price quotations, without
any deduction for transaction costs. The fair value of nancial
instruments not traded in active markets is determined using
appropriate evaluation techniques.
A fair value measurement of a non-nancial asset takes into account
a market participant’s ability to generate economic benets by
using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best
use. The Group uses valuation techniques that are appropriate in the
circumstances and for which suicient data are available to measure
fair value, maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed
in the nancial statements are categorized within the fair value
hierarchy, described as follows, based on the lowest level input that
is signicant to the fair value measurement as a whole:
Level 1 – Quoted (unadjusted) market prices in active markets for
identical assets and liabilities
Level 2 – Valuation techniques for which the lowest level input that
is signicant to the fair value measurement is directly or indirectly
observable
Level 3 – Valuation techniques for which the lowest level input that
is signicant to the fair value measurement is unobservable.
The fair value of nancial instruments that are not traded in an active
market (for example over-the-counter derivatives) is determined by
using valuation techniques. These valuation techniques maximise
the use of observable market data where it is available and rely as
little as possible on entity specic estimates. If all signicant inputs
required to fair value an instrument are observable, the instruments
are included in level 2.
If one or more of the signicant inputs are not based on observable
market data, the instrument is included in level 3. During the
reporting periods there were no transfers between any of the
levels.
Reconciliation of movements of liabilities and equity to cash ow arising from nancing activities.
Liabilities Equity Total
(USD '000)
Interest
payable
Current lea-
se liabilites
Interest
bearing
short-term
debt
Interest
bearing
long-term
debt
Share
capital/
premium/
reserve
Other equity Total
Balance at 1 January 2021 493 22 473 287 462 135 734 80 799 499 456
Repayment of mortgage debt (22 473) (100 568) (123 041)
Proceeds from mortgage debt 169 000 169 000
Transaction costs on issuance of loans (1 944) (1 944)
Interest paid (13 970) (13 970)
Paid in registered capital increase 24 977
Transaction costs on capital increase (878)
Repayment of lease (582) (582)
Interest paid lease (103) (103)
Dividends (7 204) (7 204)
Totalchangesfromnancingcashow (13 970) (685) (22 473) 66 488 24 099 (7 204) 46 254
Liability-related
Expensed capitalised borrowing costs 882 882
Non-cash movement 811 26 345 (26 633) 522
Total liability-related changes 811 26 345 (25 751) 1 404
Total equity-related other changes (13) 21 002 20 989
Balance at 31 December 2021 - 618 26 345 328 198 159 819 94 597 568 104
Liabilities Equity Total
(USD '000)
Interest
payable
Current lea-
se liabilites
Interest
bearing
short-term
debt
Interest
bearing
long-term
debt
Share
capital/
premium/
reserve
Other equity Total
Balance at 1 January 2020 407 17 367 203 140 136 197 76 744 417 721
Repayment of mortgage debt (11 370) (17 367) (28 737)
Proceeds from mortgage debt 60 450 60 450
Repayment bond loans (33 861) (33 861)
Proceeds from bond loan 76 390 76 390
Transaction costs on issuance of loans (1 914) (1 914)
Purchase of own shares (147) (147)
Repayment of lease (454) (454)
Terminated nancial instruments (3 101) (3 101)
Dividends (4 802) (4 802)
Totalchangesfromnancingcashow (11 370) (454) (17 367) 101 064 (147) (7 903) 63 823
Liability-related
Expensed capitalised borrowing costs 693 693
Non-cash movement 540 22 473 (17 435) 5 578
Total liability-related changes 540 22 473 (16 742) 6 271
Total equity-related other changes (316) 11 958 11 642
Balance at 31 December 2020 493 22 473 287 462 135 734 80 799 499 456
22
Klaveness Combination Carriers ASA – Annual Report 2021
Accounts receivable comprise all items that fall due for payment within
one year aer the balance sheet date. For dry bulk cargo lied, payment
is generally due within 10 days aer the cargo is loaded, while payment
for wet cargo is due immediately upon discharge. Trade receivables are
non-interest bearing.
Claims consist of yard claims for vessels delivered in 2019 and are
expected to be settled when all three vessels have completed guarantee
repairs.
Cash includes cash in hand, bank deposits and other highly liquid
investments with original maturities of three months or less.
Trade receivables and other current assets
14
The Group has bank deposits in the following currencies:
Cash and cash equivalents
15
Capital management
The Group intends to maintain an eicient capital structure, provide
nancial ability to execute on the strategy and ensure the Group has
suicient liquidity to meet liabilities and commitments as they fall due.
KCC aims at having an equity ratio above 40% and NIBD/EBITDA adjusted
for delivery/sale of vessels below 5x but will be above during certain
periods and the ability to withstand 12 months with weak markets/
earnings. The equity ratio as of 31 December 2021 was 40 % (2020: 39
%) and cash was USD 53.9 million (2020: USD 65.7 million). In addition,
the Group had USD 47.6 million in undrawn revolving and overdra credit
facilities available as of 31 December 2021. The Group's covenants are
described in note 13.
The capital structure and dividend payments are considered in view of
debt service ability, capital commitments and expectations of future cash
ows. Available cash, loan covenants and the balance sheet composition
are monitored to make sure that the Group has the necessary nancial
strength to continue as a going concern.
The Group aims to spend free cash ows as follows:
- Maintain and/or improve nancial capacity and exibility. To
accommodate the business strategy, the Group needs to maintain
a solid capital structure at all times and an acceptable level of free
liquidity, at levels which will give suicient assurance to the debt
and equity providers that the Group’s nancial position is solid and
sustainable.
- Maintain an attractive dividend policy. KCC targets to distribute a
substantial part of the free cash ow to the shareholders.
The Group's capital structure consists of mortgage debt (note 13), bond
loan (note 13), overdra facility (note 13), cash and cash equivalents and
equity attributable to the shareholders.
Risk Management
The objective for the Company’s risk management and internal control
is to manage, rather than eliminate exposure to risks to successfully
conduct the Group’s business and to support the quality of its nancial
reporting.
The risk assessment is a multi-disciplinary process performed on
a quarterly basis. The value chain is assessed both upstream and
downstream in addition to direct eects on KCC’s business activities.
All relevant risks are assessed based on dened impact and probability
levels and focus on the next 12 months shown in the table below:
Financial risk management
16
(USD '000) 31 Dec 2021 31 Dec 2020
Trade receivables from charterers 7 421 7 470
Contract assets 3 437 3 204
Prepaid expenses 2 467 4 538
Claims 378 167
Other short term receivables 4 780 3 122
Trade receivables and other current assets 18 484 18 501
(USD '000) 31 Dec 2021 31 Dec 2020
Bank deposits, NOK 9 340 653
Bank deposits, USD 44 092 64 670
Bank deposits, SGD 42 -
Cash 389 291
Payroll withholding tax account (restricted cash, NOK) 74 70
Total cash and cash equivalents 53 937 65 685
In addition to the specic assessment for the rolling 12 months period,
an assessment for the main risks from 12 months – 10 years is included
from time to time and at least on an annual basis. The risk management
process includes the following:
* On a quarterly basis a cross-functional team (nance, commercial,
operations, management) discusses the overall risk development
with focus on main risks and new risks discovered, including assessing
impact and probability for each risk and dene potential mitigating
actions for the main risks
* The main risks are reported and discussed with the Audit Committee
and the Board of Directors on a quarterly basis, or more oen if
needed. A main risk is a risk already identied and well understood
that could materially impact the nancial results, reputation, business
model, or strategy
* When the combination of probability and impact is higher than
what is accepted, mitigating actions are implemented either based on
management decision or if relevant, aer discussions with the Board
of Directors
Main risks
The following table presents the risks considered to be the main risks for KCC over the next 12 months and the main longer-term risks.
Time horizon Probability Impact
Low < 3% < USD 2 million
Medium 3 -30 % USD 2 - 10 million
High > 30 % > USD 10 million
Risk Description Risk type
Main risks next 12 months
CLEANBU introduction
Introduction of new vessel concepts such as the CLEANBUs entails commercial and technical risks.
Acceptance and/or exemptions in relation to the CLEANBU vessels from clients and terminals where policies
require clean petroleum products (CPP) as the last two or three cargoes to avoid cargo contamination or
where policies excludes use of combination carriers like the CLEANBU vessels.
Introduction of new ship types or concepts will normally require technical adjustments and modications,
which will take time and may lead to o-hire and delayed deliveries.
There are outstanding guarantee items relating to two of the CLEANBU vessels, implying additional o-hire
related to the repairs in 2022 and 2023. While the shipyard is obliged to bear the cost of repairs, additional
related costs may incur, and o-hire will be borne by KCC unless covered by KCC’s loss of hire insurance.
Operational
Weak freight rates and
changesintradeows
Freight rates are the main earnings driver for the Group. A fall in freight rates for dry bulk commodities
or clean petroleum products can have a material eect on the nancials of the Group. The eect of
lower freight is somewhat oset by low historical correlation between dry bulk and product tankers
freight rates. KCC is dependent on certain trade ows in order to obtain eicient combination trading.
Production issues at plants and reneries in export regions as well as dierence in regional commodity
prices (arbitrage opportunities) may impact these trade ows.
Market
Caustic soda freight
contract renewals
The Group is, to a certain degree, dependent on a limited number of key customers and renewal of key/
material contracts with these customers, particularly related to caustic soda transportation. Unfavorable
changes in trade ows and volumes may adversely aect the Group’s earnings and nancial position.
Market
Russian invasion of
Ukraine
Russian invasion of Ukraine has caused major disruptions in trade ows and nancial markets as,
amongst others, European Union, United States and the United Kingdom have imposed strict sanctions
on the Russian Federation economy. Example of sanctions imposed are excluding several banks from
the SWIFT payment system and imposing an embargo on import of oil and gas (US and UK). Furthermo-
re, the war has negatively impacted the trade of commodities from/to Ukraine and Russia for key dry
bulk commodities and for the oil and oil products trade as Ukraine ports have been closed and there is
a general skepticism among oil companies, traders and shipowners to liing oil.
The Group does not have outstanding balances nor contracts with Ukrainan, Belarus or Russian
companies and is as such not directly impacted by the war in Ukraine.
Counterparty/
credit, Market
Operational,
Compliance
23
Klaveness Combination Carriers ASA – Annual Report 2021
Risk types
The risks have been divided into the following categories
Financial risk
The Group is exposed to e.g. freight rate risk, bunker fuel price risk, as
well as risks relating to foreign currency exchange rates, interest rate,
counterparties (including credit), operations, technical, regulations
and other risks. The Group’s executive management oversees that the
management of these risks are governed by appropriate policies and
procedures. The Board of Directors reviews and agrees policies for
managing these risks. Risk management activities to reduce interest rate
risk, freight rate risk and bunker fuel risk are further described in note 13.
Operational risk
Operational risks are mainly related to the operation of vessels. The
Group’s vessels are on technical management to Klaveness Ship
Management AS (ailiated company) which ensures compliance with
IMO, ag and port state regulations. Quality and safety audits are
performed regularly and the crew and oicers onboard are trained to
ensure that regulatory requirements are met.
Operational risk is managed through quality assurance procedures and
systematic training of crew and land-based employees. All vessels sailing
through piracy exposed areas take necessary steps to mitigate the threat
of such attacks. Operational risk is also covered by insurance where
relevant to cover loss of assets, revenues and contract commitments.
The vessels are insured for loss of hire, protection and indemnity (P&I),
physical damage to vessel and its equipment (Hull and Machinery) and
total loss. The latter is aligned with vessel values and loan agreements.
The nancial impact of a total loss of a vessel will not be material for the
Group.
The COVID-19 pandemic continued to have signicant impact on vessel
operations in 2021. The COVID-19 management plan with strict testing,
quarantine procedures and routines for crew and visitors onboard the
vessels worked as intended in 2021 with no infection cases onboard.
Market risk
Ownership of vessels involves risks related to vessel values, future
vessel employment, freight rates and costs. Over time, vessel values
may uctuate, which may result in an impairment of the book value of
the Group’s vessels. These risks are to some extent managed through
contracts of areightment and forward freight agreements (FFA)
covering part of the Group’s future eet capacity for the nearby year and
covering part of the exposure for the next 1-2 years.
A signicant expense for transport at sea is bunkers. The price of fuel
is unpredictable and uctuates based on events outside the Group’s
control, including geopolitical developments, supply and demand for oil
and gas, actions of OPEC and other energy producers, war and unrest in
oil producing countries and regions, regional production patterns and
environmental concerns. To reduce the risk of uctuations in bunker
fuel prices, the Group may decide to hedge the bunker price exposure
by the use of bunker fuel swaps or options to hedge the inherent fuel oil
exposure in its freight contracts or include bunker adjustment factors
(BAF) in the contracts.
Foreign currency risk and interest rate risk
The Group’s revenues and costs are denominated primarily in US Dollar
(USD) which is the functional currency of all signicant entities in the
Group. Fluctuations in USD against NOK may aect the company’s
tax payable, which will be calculated and paid in NOK. This eect is
considered to be limited.
The Group’s interest bearing debt is exposed to oating interest rate,
and the Group has some of its costs in other currencies than USD. The
Group has bond debt denominated in NOK with NIBOR + 475 bps margin,
however, the FX-eect is currently xed to USD and the oating interest
rate exposure has been converted to a xed USD interest rate. Long term
mortgage debt bears interest at LIBOR plus an applicable margin. In
order to hedge the risk, the Group has entered into interest rate swaps.
At 31 December 2021, 39 % of the oating interest mortgage debt loans
are hedged. The Group evaluates on an ongoing basis the need to adjust
interest rate exposure.
As of December 31, 2021 the publication of the one-week and two-month
US Dollar (USD) London Interbank Oered Rate (LIBOR) ceased to be
published on a representative basis. The remaining tenors of US Dollar
LIBOR will cease to be published on a representative basis on June 30,
2023. The Group is exposed to LIBOR mainly in US dollar denominated
debt and interest rate derivatives with interest rates indexed to LIBOR.
The Group expects to initiate negotiations with counterparties to
transition from LIBOR to an alternative benchmark within rst half of
2023 for relevant agreements. As recommended by the Alternative
Reference Rates Committee (a committee convened by the Federal
Reserve), Secured Overnight Financing Rate (SOFR) will likely replace
LIBOR as a standard interest rate benchmark. The impact on the Group
of the transition from LIBOR to SOFR or any other alternative rates is still
uncertain but may potentially lead to increased cost of debt.
The table below shows estimated changes in prot before tax for the
Group from changes in interest rates in 2021 and 2020, with all other
variables held constant. The changes are estimated based on a change in
LIBOR given capital structure and hedges as of year-end 2021.
Counterparty/creditrisk
The performance of the Group depends on its counterparties’ ability to
perform their obligations under agreed contracts, a continued client
need for the services performed by the combination carriers and KCC’s
ability to renew contracts with these clients. Default by a cargo customer
counterparty of its obligations under, mainly cargo customers (CoA’s),
may have material adverse consequences on the contract portfolio
earnings. The counterparty’s nancial strength will thus be very
important. If the Group has a legal right to insurance coverage the Group
will make provision for the deductible amount. As such, default by an
insurance institution may have material nancial consequences.
Further, the Group is exposed to credit risk through its deposits.
Deposits are currently made with investment grade nancial institutions
with A rating or higher from public rating agency. However, there are
concentration risk as deposits are held with only a few institutions.
Total unrisked credit exposure at 31 December 2021 amounts to USD 72.4
million, 2020: USD 84.2 million (book value of trade receivables, other
current assets and bank deposits).
Liquidity risk
Liquidity risk is the risk that the Group may not be able to full its
liabilities when they fall due.
The Group has capital commitments relating to borrowings. The Group
keeps its liquidity reserves mainly in cash and bank deposits. The
liquidity risk is considered to be limited as the deposits, committed bank
debt and estimated cash ow are considered suicient for all needs in
the foreseeable future. The Group’s bank nancing is subject to nancial
and non-nancial covenants. The table below illustrates the timing and
magnitude of the Group’s nancial liabilities.
Changeinbps(eectinUSD’000) 2021 2020
+100 - 1 680 - 1 220
+50 - 840 - 610
-50 120 180
Financial risk management
16
Main long-term risks
Global economic
growth and the impact
on energy and commo-
dity markets
Freight rates for global seaborne transportation is highly volatile and cyclical. The demand for global
seaborne transportation depends on global economic growth, and in particular the development in
the energy and commodities markets.
Furthermore, the demand for seaborne transportation is dependent on open economies and low bar-
riers to trade, trade restrictions such as taris and embargos can have a negative eect on the demand
for seaborne transportation.
Market
Impact of a low-carbon
future with intro-
duction of emission
regulations, zero-emis-
sion vessels and lower
demand for transpor-
tation of fossil fuels
At COP26 in November 2021 it was agreed to secure global net zero by 2050. A move to a low-carbon
economy can potentially have material negative impact on the Group through several channels.
- Emerging propulsion technologies and fuels might have a material negative impact on the competiti-
veness of the Group’s existing eet
- New regulations can lead to material cost related to upgrades and retrots to comply with regulations
and / or material impairment of operational exibility and / or operational limitations
- New regulations, such as the EU taxonomy, can reduce and restrict the access to capital
- The demand for transportation of fossil fuels might be materially negatively impacted and hence the
demand for dry bulk and product tanker vessels
- New customer requirements can have a negative impact on the Group’s competitive position
However, KCC’s combination carriers have a substantial carbon eiciency advantage versus existing
standard vessels due to two trading legs, minimal ballast and trading exibility, and this advantage will
be strengthened further through KCC’s ongoing energy eiciency program. Based on this eiciency
advantage, KCC’s combination carriers are likely to remain competitive throughout the next decades
during which zero emission vessels are likely to be introduced to the market. Best estimate of the
vessel life is expected to be 25 years.
Climate-related
Maturityproleofnancialliabilities
The table below summarises the maturity prole of the Group’s nancial
liabilities based on contractual undiscounted payments. Interest bearing
debt includes interest payments.
Maturityprolenancialliabilities
31 Dec 2021
< 1 year 1-3 years 3-5 years > 5 years Total
Mortgage debt (incl interests) 33 815 129 950 178 242 - 342 007
Bond loan (incl interest) 4 757 9 515 77 110 - 91 382
Other interest bearing liabilities 2 409 - - - 2 409
Trade and other payables 16 199 - - - 16 199
Current debt to related parties 895 - - - 895
58 075 139 465 255 352 - 452 892
Loan facilities to be renanced during the next 12 months are included in <1 year.
Maturityprolenancialliabilities
31 Dec 2020
< 1 year 1-3 years 3-5 years > 5 years Total
Mortgage debt (incl interests) 29 422 167 733 52 920 - 250 075
Bond loan (incl interest) 4 757 9 515 80 678 - 94 950
Trade and other payables 13 165 - - - 13 165
Current debt to related parties 1 339 - - - 1 339
48 683 177 248 133 598 - 359 529
24
Klaveness Combination Carriers ASA – Annual Report 2021
Climate-related risks
Climate-related risks includes both transition risks and physical risks
with focus on transition risks as this is considered to have a larger impact
and probability for KCC. The risk mainly relates to eect of reduced
demand for the Group’s services and the risk of stranded assets and new
regulations as the eet moves to low-carbon fuel. For 2021, total fossil
fuel shipments accounted for 17 % of the Group’s transported volumes
in metric tons.
Compliance risk
The legal and regulatory requirements of the company is increasingly
challenging and complex. The Group has established systems and
processes to ensure that all relevant laws and regulations are met, such
as tax-laws, anti-corruption laws, securities laws, anti-trust laws and
international sanctions. Two of the Group’s subsidiaries are subject to
the Norwegian tonnage tax regime. Non-compliance with the qualifying
rules of this regime will have material negative impact on the Group’s
nancial position.
Financial risk management
16
In December 2019, the Board approved the adoption of a share option
program, and 65,280 share options to senior management (CEO and CFO)
were issued at the same date. The share options have an exercise price
of NOK 46.14, adjusted for any distribution of dividends made before the
relevant options are excercised. The share options have a ve year term
and vest over a three year period equally at a rate of 1/3 of the number of
share options granted on each annual anniversary of the date of grant,
subject to the option holder continuing to be employed by the Company
from the grant date through the applicable vesting date. The share
options have no voting or other shareholder rights.
The following table summarizes the unvested option activity for the year ended December 31, 2021:
A capital increase of USD 25 million was completed on 4 November 2021
through a private placement to fund energy eiciency initiatives for the
existing eet. The Board approved the allocation of 4 345 000 shares in
the private placement at a price of NOK 49.00 per share.
Dividends of in total USD 7.2 million were paid to the shareholders in
2021 (in average USD 0.15 per share).
Share capital
The fair value of the share options granted is calculated to USD 100k, i.e USD 1.542 per share option. The cost incurred in 2021 is USD 42k (2020: USD 39k).
The fair value of the share options granted was calculated on the Black-Scholes-Merton method. The signicant assumptions used to estimate the fair
value of the share options are set out below:
Share options program
17
All shares have equal voting rights and equal rights to dividends. The
ordinary shares are listed on Oslo Stock Exchange. KCC owns a total of
40,078 in treasury shares, corresponding to 0.0765 % of the total number
of issued shares.
Basic earnings per Share (EPS) in Income Statment is calculated based
on the weighted average number of ordinary shares for the period,
whereas diluted earnings per Share (EPS) is based on all outstanding
shares including dilutive shares if all convertible shares were excercised.
Management and members of the Board which hold shares in the Company are set out below.
In an Extraordinary General Meeting held on 24 September 2018, the Company issued 229,088 non-transferable warrants, each of which entitles the
holder to subscribe one new share of the Company at a subscription price of NOK 44.38 per share.
Share capital, shareholders, dividends and reserves
18
Date Shares Notional (NOK) Share capital (NOK)
Shares and sharecapital at 31 December 2019 48 027 000 48 027 000
Shares and sharecapital at 31 December 2020 48 027 000 48 027 000
Shares issued 4 November 2021 4 345 000 1 4 345 000
Shares and share capital at 31 December 2021 52 372 000 52 372 000
31 Dec 2021 31 Dec 2020
Weighted average number of ordinary shares for basic EPS 48 677 360 47 994 938
Eects of dilution from:
Share options 65 280 65 280
Warrants 229 088 229 088
Weightedaveragenumberofordinarysharesfortheeectofdilution 48 971 728 48 289 306
Largest shareholders at 31 December 2021
Ownership
Number of shares
Ownership
In %
Rederiaksjeselskapet Torvald Klaveness 28 154 231 53,8 %
EGD Shipholding AS 8 805 128 16,8 %
Goldman Sachs & Co. LLC (nominee) 2 579 841 4,9 %
Hundred Roses Corporation 2 227 250 4,3 %
T.D. VEEN AS 1 000 000 1,9 %
Verdipapirfondet Nordea Norge Verd 851 873 1,6 %
J.P. Morgan Bank Luxembourg S.A. (nominee) 727 066 1,4 %
Morgan Stanley & Co.Int. Plc 492 908 0,9 %
SIX SIS AG (nominee) 463 933 0,9 %
Verdipapirfondet Nordea Norge Kapital 353 900 0,7 %
Other 6 715 870 12,8 %
TOTAL 52 372 000 100 %
Number of shares Average exercise price 2021 2020
Outstanding at 1 January NOK 46.14 65 280 65 280
Granted during the year - -
Exercised during the year - -
Forfeited during the year - -
Expired during the year - -
Outstanding at 31 December 65 280 65 280
Model inputs
Dividend yield (%) -
Expected volatility (%)* 36 %
Risk-free interest rate (%)** 2.05 %
Expected life of share options (year) 3
Weighted average share price (NOK) 48
*The expected volatility reects the assumption that the historical shipping industry average is indicative of future trends,
which may not necessarily be the actual outcome.
**Average ve-year Norwegian Government bond risk-free yield-to-maturity rate of 2.05 % as of 2021 was used as an estimate
for the risk-free rate.
25
Klaveness Combination Carriers ASA – Annual Report 2021
The ultimate owner of the Group is Rederiaksjeselskapet Torvald Klaveness (RASTK), which owns 53.8 % of the shares in Klaveness Combination
Carriers ASA.
Net revenue from operation of vessels
Relets of dry bulk cargoes between KCC Chartering AS and AS Klaveness Chartering (related party in the Torvald Klaveness Group) is made at spot
pricing without any compensation either way.
** Hire from BAU to KCCC less pool fee from KCCC to BAU.
As of 1 June 2021, employment of four key employees in Singapore
were transferred from Klaveness Asia Pte. Ltd to the newly established
company, Klaveness Combination Carriers Asia Pte Ltd, 100 % owned by
KCC ASA (parent company). Prior to the transfer, the services of these
employees were purchased through Klaveness AS.
All bunkers purchase is done through AS Klaveness Chartering (KC), a
related party in the Torvald Klaveness Group, which holds the bunker
contracts with the suppliers. The bunker purchase process has been
centralized to enhance negotiating and purchasing power towards the
suppliers. No prot margin is added to the transactions, but a service fee
is charged on a cost-plus basis reecting the time spent by the bunkering
team and charged as part of the Business administration services from
Klaveness AS.
Otherservices/transactions
Transactions with related parties
19
KCC Chartering AS sold 105 days P4TC FFAs OTC for November and December 2021 to Baumarine AS, and 180 days P4TC for Q3 and Q4 2022 to
AS Klaveness Chartering, related parties in the Torvald Klaveness Group, at screen market pricing. Credit premium has not been included as the
companies have the same rating. Market value of portfolio with AS Klaveness Chartering was USD 660k as per 31 December 2021 presented as nancial
assets in Statement of Financial Position.
Accounting policy
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise signicant inuence over the party
in making nancial and operating decisions. Parties are also related if they are subject to common control or common signicant inuence.
Related parties transactions are recorded to estimated fair value.
*Klaveness AS (KAS), Klaveness Ship Management AS (KSM), Klaveness Asia Pte.Ltd (KA Ltd), Klaveness Combination Carrier ASA (KCC), KCC Shipowning AS
(KCCS), KCC Chartering AS (KCCC), Klaveness Combination Carriers Asia Pte.Ltd (KCCA Ltd), Baumarine AS (BAU)
Typeofservice/transaction
(USD ’000)
Provider* Receiver* Price method 2021 2020
Pool Participation BAU KCCC
Standard pool
agreement**
3 735 -
Dry bulk KAS KCCC
1.25% of
transaction value
(255) (199)
Total net revenue from related parties 3 480 (199)
Typeofservice/transaction
(USD ’000)
Provider* Receiver* Price method 2021 2020
Business administration services KAS
KCC ASA, on behalf of
KCC companies
Cost + 5% or overhead per
employee
1 457 1 754
Business administration services KA Ltd KCCA Ltd Cost + 5% 119 -
Commercial management KSM, KAS KCCC Cost + 7.5% 1 203 1 588
FFA trading KAS KCCC 0.1% of transaction value 49 16
Project management KSM, KAS KCCS, KCC Cost + 7.5% 881 180
Total group commercial and administrative
services
3 708 3 538
The warrants for each subscriber may be exercised with one third from
such time as when the Company’s shares on a volume-weighted basis
have traded at a price equal to minimum NOK 55.48 for ten consecutive
trading days with an aggregate trading volume over such ten days of a
minimum of USD 1 million. Another third may be exercised when there
has been such trading at a price equal to a minimum of NOK 66.57, and
the last third when there has been such trading at a price equal to a
minimum of NOK 77.67. The warrants must be exercised no later than
24 September 2023. The exercise price and the threshold trading prices
which trigger the right to exercise warrants shall be adjusted for paid
dividends or other distributions to the shareholders.
26
Klaveness Combination Carriers ASA – Annual Report 2021
Taxes
21
Tonnage tax
The vessel owning company (KCC Shipowning AS) and KCC Chartering
AS are subject to taxation under the Norwegian tonnage tax regime. For
the nancial year 2021 KCC Shipowning AS and KCC Chartering AS have
payable tonnage taxes of USD 221k.
Ordinary taxation
The Parent Company (Klaveness Combination Carriers ASA) and the
subsidiary KCC KBA AS are under ordinary taxation rules in Norway. The
ordinary rate of corporation tax in Norway is 22 % for 2021 (2020: 22 %).
The subsidiary Klaveness Combination Carriers Asia Pte. Ltd is subject to
ordinary taxation in Singapore. The ordinary tax rate in Singapore is 17
% for 2021. For the nancial year 2021 KCC Asia Pte. Ltd has a payable tax
expense of USD 7k.
The subsidiary KCC KBA AS has net taxable prot mainly as a consequence
of exchange rate eects following an internal vessel sale within the
Group. This is oset against tax losses carried forward in the holding
company. MV Barracuda was resold to KCC Shipowning AS in February
2021, and no further taxable prots are expected in the future for this
company.
Deferred tax assets
Deferred tax assets are only recognised to the extent that future
utilisation within the Group can be justied as per 31 December 2021.
As a consequence, a tax position of USD 9.7 million per 31 December
2021 has not been recognised in the balance sheet. The tax position is
mainly due to accumulated nancial costs deductible under the tonnage
tax regime as well as a tax loss on the internal vessel sales which will be
deductible at a rate of 20 % annually going forward.
On 17 February 2022, the Company’s Board of Directors declared to pay
a cash dividend to the Company’s shareholders of USD 5.2 million for Q4
2021 (USD 0.1 per share).
KCC has no exposure to Russia or Belarus and has decided to not
conduct any business with companies owned or controlled by Russian
or Belarusian interests. Further, KCC has exempted all Russian ports,
in addition to the war zone in the Black Sea. While the eect of the war
has been strengthening dry bulk, product tanker and fuels markets, the
indirect longer-term eects of the war on KCC’s markets are uncertain.
There are no other events aer the balance sheet date that have material
eect on the nancial statement as of 31 December 2021.
Events aer the balance sheet date
22
Accounting policy
Under the tonnage tax regime, prot from operations are tax
exempt. Companies within the tonnage tax system pay a tonnage tax
based on the deadweight tonnage of the vessels. The tonnage tax
is recognised as an operating expense in the prot & loss. Taxable
prot is calculated on the basis of nancial income aer deduction
of a portion of nancial expenses (based on nancial assets in
percent of total assets).
For companies subject to ordinary taxation, tax expense comprises
tax payable and changes in deferred tax assets. Tax payable
corresponds to the amount expected to be paid to authorities while
deferred tax assets/liabilities are calculated based on temporary
dierences at the reporting date. Deferred tax assets are recognised
to the extent that future utilisation is probable. Deferred tax
liabilities/deferred tax assets within the same tax system that may
be oset are recorded on a net basis. Income tax relating to items
recognised directly in equity is included directly in equity and not in
the statement of income.
Income taxes for the year
(USD ‘000)
31 Dec 2021 31 Dec 2020
Income taxes payable 7 -
Change in deferred tax - -
Totaltaxexpense/income(-)reportedintheincomestatement 7 -
Tax on net (gain)/loss on revaluation of cash ow hedges - -
Deferred tax charged to OCI - -
(USD ‘000)
Tax payable
Income
31 Dec 2021
Taxeect
Income
31 Dec 2020
Taxeect
Prot / loss (-) before taxes, incl OCI 20 955 4 610 8 503 1 871
Income from shipping activity, tonnage tax system (35 688) (7 851) (26 779) (5 891)
Change in temporary dierences 5 137 1 130 5 787 1 273
Change in tax losses carried forward 1 858 409 9 917 2 182
Exchange rate dierences / Other permanent dierences 7 737 1 702 2 572 566
Tax payable foreign subsidiaries 7
Tax payable in the balance sheet - 7 - -
Eective tax rate 0 % 0 %
Tonnage tax (included in operating prot) 221 180
Correction prior year tonnage tax 5 (5)
Total tax payable in the balance sheet 233 175
(USD ‘000)
Temporarydierences-ordinarytaxation
Temporary
dierence
31 Dec 2021
Taxeect
Temporary
dierence
31 Dec 2020
Taxeect
Temporary dierences (14 899) (3 278) (9 761) (2 148)
Tax losses carried forward (29 057) (6 392) (27 199) (5 984)
Deferred tax asset not recognised in the balance sheet 43 956 9 670 36 960 8 131
Nettemporarydierences-deferredtaxliability/asset(-) - - - -
Deferred tax asset in balance sheet - - - -
Deferred tax liability in balance sheet - - - -
Klaveness Combination Carriers Asia Pte Ltd (Singapore) was incorporated on 22 March 2021 based on capital injection of USD 300 000 from Klaveness
Combination Carriers ASA (100% ownership, 300 000 shares). The commercial and operation team of four employees were transferred from Klaveness
Asia Pte Ltd to this company on 1 June 2021.
Klaveness Combination Carriers ASA Group comprises of several subsidiaries. Below is a list of subsidiaries within the Group.
List of subsidiaries
20
Company name Location
Ownership interest
per 31 Dec 2021
Ownership interest
per 31 Dec 2020
KCC Shipowning AS Oslo, Norway 100 % 100 %
KCC KBA AS Oslo, Norway 100 % 100 %
KCC Chartering AS Oslo, Norway 100 % 100 %
Klaveness Combination Carriers Asia Pte. Ltd Singapore 100 % -
27
Klaveness Combination Carriers ASA – Annual Report 2021
Klaveness Combination Carriers ASA – Parent Company
INCOME STATEMENT
Year ended 31 December
(USD ‘000) Notes 2021
Restated*
2020
Service and management fee revenue 5 842 763
Total revenues 842 763
Group administrative services 5 (1 299) (1 232)
Salaries and social expenses 6 (1 780) (1 327)
Other operating and administrative expenses 2 (650) (647)
Operatingprot(EBITDA) (2 886) (2 442)
Operatingprotaerdepreciation(EBIT) (2 886) (2 442)
Finance income 9 9 652 9 152
Finance expenses 9 (5 828) (8 421)
Protbeforetax 939 (1 712)
Income tax expenses 7 1 848 1 810
Protaertax 2 787 98
STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December
(USD ‘000) Notes 2021 2020
Protaertax 2 787 98
Othercomprehensiveincometobereclassiedtoprotorloss
Net movement fair value on cross-currency interest rate swaps (CCIRS) (404) (5 379)
Reclassication to prot and loss (CCIRS) 2 773 2 917
Othercomprehensiveincome/(loss)fortheperiod,netoftax 2 368 (2 462)
Totalcomprehensiveincome/(loss)fortheperiod,netoftax 5 155 (2 363)
Attributable to:
Equity holders of the parent company (5 155) (2 363)
*2020 is restated due to change from IFRS to simplied IFRS (note 11).
Financial statements of
the Parent Company
28
Klaveness Combination Carriers ASA – Annual Report 2021
LasseKristoersen
Chair of the Board
Rebekka Glasser Herlofsen
Board member
Engebret Dahm
CEO
Oslo, 28 March 2022
Oslo, 31 December 2021
Morten Skedsmo
Board member
Winifred Patricia Johansen
Board member
Magne Øvreås
Board member
Klaveness Combination Carriers ASA – Parent Company
STATEMENT OF FINANCIAL POSITION
Assets
(USD ‘000)
Notes 31 Dec 2021
Restated*
31 Dec 2020
Non-current assets
Investment in subsidiaries 3 263 357 253 649
Deferred tax asset 7 - -
Long-term loan to related parties 5 15 000 6 500
Financial assets 8 2 556 2 917
Other long-term receivables 5 70 70
Total non-current assets 280 982 263 137
Current assets
Inventories 166 166
Trade receivables and other current assets 77 179
Cash and cash equivalents 4 21 029 15 004
Short-term loan to related parties 5 6 465 7 510
Short- term receivables from related parties 5 45 3 825
Total current assets 27 782 26 685
TOTAL ASSETS 308 764 289 822
Equity and liabilities
(USD ‘000)
Notes 31 Dec 2021
Restated*
31 Dec 2020
Equity
Share capital Group 18 6 234 5 724
Share premium 243 054 219 478
Other reserves (330) (2 699)
Retained earnings (26 077) (16 100)
Equity attributable to equity holders of the parent 222 880 206 403
Non-current liabilities
Bond loan 8 78 205 80 649
Financial liabilities 8 43 -
Total non-current liabilities 78 248 80 649
Current liabilities
Current debt to related parties 5 1 099 180
Trade and other payables 6 536 2 590
Total current liabilities 7 636 2 770
Total equity and liabilities 308 764 289 822
Klaveness Combination Carriers ASA – Parent Company
*2020 is restated due to change from
IFRS to simplied IFRS (note 11).
CASH FLOW STATEMENT
Year ended 31 December
(USD ‘000) Notes 2021
Restated*
2020
Prot before tax 939 (1 712)
Interest income (1 254) (88)
Interest expenses 5 050 4 078
Group Contribution 9 (8 398) (8 231)
Amortization of transaction cost on issuance on loans 253 373
Financial derivatives loss / gain (-) - 1 632
Gain (-) /loss on foreign exchange 525 791
Change in current assets 102 (25)
Change in current liabilities 215 167
Change in other working capital 1 226 (8 806)
Interest received 1 089 88
A:Netcashowfromoperatingactivities (253) (11 731)
Investment in subsidiaries 3 (300) -
Long term loan to related parties 5 (17 790) (19 570)
Repayment of loan to related parties 5 10 500 13 000
B:Netcashowfrominvestmentactivities (7 590) (6 570)
Proceeds from bond loan 8 - 76 390
Transaction costs on issuance of loans - (1 715)
Repayment of bond loan 8 - (33 861)
Interest paid (5 041) (4 117)
Terminated nancial instruments - (3 101)
Purchase of own shares Group 18 - (147)
Paid in registered capital increase Group 18 24 977 -
Transaction costs on capital increase Group 18 (878) -
Group contribution 2 756 -
Dividends Group 18 (7 204) (4 802)
C:Netcashowfromnancingactivities 14 609 28 646
Net change in liquidity in the period (A + B + C) 6 766 10 346
Net foreign exchange dierence (742)
Cash and cash equivalents at beginning of period 15 004 4 659
Cash and cash equivalents at end of period 4 21 029 15 004
Net change in cash and cash equivalents in the period 6 766 10 346
*2020 is restated due to change from IFRS to simplied IFRS (note 11).
29
Klaveness Combination Carriers ASA – Annual Report 2021
01 Accounting policies
02 Operating expenses
03 Investment in subsidiaries
04 Cash and cash equivalents
05
Transactions with related
parties
06 Salary
07 Tax
08
Financial assets and
nancial liabilities
09 Financial items
10
Events aer the balance
sheet date
11 Restatement of 2020
Klaveness Combination Carriers ASA – Parent Company
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the parent
2021
(USD ‘000)
Share
capital
Other paid
in capital
Treasury
shares
Hedging
reserve
Retained
earnings
Total
equity
Equity at 1 January 2021 5 724 219 478 (147) (2 552) (16 100) 206 403
Prot (loss) for the period 2 787 2 787
Other comprehensive income for the period 2 368 2 368
Dividends (10 964) (10 964)
Capital increase (4 November 2021) 510 23 576 24 086
Tax eect of group contribution received (1 848) (1 848)
Share option program (Group note 17) 47 47
Equity at 31 December 2021 6 234 243 054 (147) (183) (26 077) 222 880
2020
(USD ‘000)
Share
capital
Other paid
in capital
Treasury
shares
Hedging
reserve
Retained
earnings
Total
equity
Equity at 1 January 2020 5 724 219 478 - (91) (8 184) 216 928
Prot (loss) for the period 98 98
Other comprehensive income for the period (2 462) (2 462)
Purchase of own shares (Group note 18) (147) (147)
Dividends (6 243) (6 243)
Tax eect of group contribution received (1 810) (1 810)
Share option program (Group note 17) 39 39
Restated* Equity at 31 December 2020 5 724 219 478 (147) (2 552) (16 100) 206 403
*2020 is restated due to change from IFRS to simplied IFRS (note 11).
Notes
30
Klaveness Combination Carriers ASA – Annual Report 2021
Basis of preparation
Klaveness Combination Carriers ASA (”Parent Company”) is a public
limited company domiciled and incorporated in Norway. The Parent
Company is headquartered
and registered in Drammensveien 260,
0283 Oslo. Klaveness Combination Carriers ASA was established March
23, 2018. The share is listed on Oslo Stock Exchange with ticker KCC
(transferred from Euronext Expand as per 21 December 2021).
The nancial statements as per 31 December 2021 of Klaveness
Combination Carriers ASA (referred to as the Company/the Parent
Company) have been prepared in accordance with simplied IFRS
pursuant to the Norwegian Accounting Act §3-9 and regulations
regarding simplied application of IFRS issued by the Norwegian Ministry
of Finance on 3 November 2014.
Accounting principles for the consolidated statement of Klaveness
Combination Carriers ASA (the Group) also apply to the Parent Company
except treatment of the dividends – see accounting policies related to
dividend presented as part of the consolidated Group accounts.
The main activity of the Company is to be a holding company in the
Group, which owns and operates combination carriers.
Dividend income
Dividend income and/or Group contribution (for the year ended 31
December 2021) are recognised in Company’s nancial statements as
nancial income and current assets per year- end 2021.
Dividend distribution/Group contribution
Distribution of dividends are approved by the Board of Directors based
on authorisation from the Annual General Meeting. Dividend distribution
to the Company’s shareholders is recognised as a liability at the reporting
date of the nancial year that the proposal of dividend relates to (i.e.
dividends for 2021, approved by the Board of Directors 17 February 2022,
are recognised as a liability as per 31 December 2021).
Accounting policies
01
Klaveness Combination Carriers Asia Pte Ltd (Singapore) was incorporated on 22 March 2021 with a capital injection of USD 300 000 from Klaveness
Combination Carriers ASA (100% ownership, 300 000 shares).
The Company has bank deposits in the following currencies:
Operating expenses
Investment in subsidiaries
Cash and cash equivalents
02
03
04
Accounting policy
Shares in subsidiaries
Shares in subsidiaries in the Parent Company accounts are recorded
at cost. These investments are reviewed for impairment when there
are indicators that carrying amount may not be recoverable.
Use of estimates
The preparation of nancial statements in conformity with IFRS
requires management to exercise its judgment in the process of
applying the Company’s accounting policies. It also requires the use
of accounting estimates and assumptions that aect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the nancial statements, and the
reported amounts of revenues and expenses during the nancial
year. Although these estimates are based on management’s best
knowledge of current events and actions, actual results may
ultimately dier from those estimates.
Shares in subsidiaries and intercompany receivables are subject to
impairment testing at the end of each reporting period. Valuation
is subject to assessment of the recoverability in the underlying
investment or receivable. Management’s assessment can aect the
level of impairment loss, or reversal of such, that is recognized in
prot or loss.
(USD '000) 2021 2020
Statutory audit 107 71
Other assurance services from auditor 26 15
Total 133 86
Auditor’s fee are stated excluding VAT.
(USD '000)
Businessoice,
country
Votingshare/
ownership
2021 2020
KCC Chartering AS Oslo, Norway 100 % 7 456 7 456
KCC Shipowning AS Oslo, Norway 97 % 240 093 240 093
KCC KBA AS Oslo, Norway 100 % 15 507 6 100
KCC Asia Pte. Ltd Singapore 100 % 300 -
Investment in subsidiaries 263 357 253 649
(USD '000) 31 Dec 2021 31 Dec 2020
Bank deposits, USD 12 282 14 804
Bank deposits, NOK 8 672 130
Payroll withholding tax account (restricted cash, NOK) 74 70
Total cash and cash equivalents 21 029 15 004
31
Klaveness Combination Carriers ASA – Annual Report 2021
Typeofservice/transaction Receiver* Price method 2021 2020
Business administration services KCCS Cost + 5 % 325 286
Business administration services KCC KBA AS Cost + 5 % 14 32
Business administration services KCCC Cost + 5 % 364 81
Commercial management services KCCC Cost + 7.5 % 139 364
Service and management fee revenue 842 763
Typeofservice/transaction Receiver* 31 Dec 2021 31 Dec 2020
Short- term receivables from related parties KCCS 23 578
Short- term receivables from related parties KCCC 22 458
Short- term receivables from related parties KCC KBA - 96
Net Group Contribution KCC KBA - 2 694
Short- term loan to related parties KCCC - 7 510
Short- term loan to related parties KCCS 6 165 -
Short- term loan to related parties KCC KBA 300 -
Current assets to related parties 6 510 11 335
(USD ’000) Counterparty * 31 Dec 2021 31 Dec 2020
Long-term receivables to related parties KCCC 15 000 -
Long-term receivables to related parties KCC KBA - 6 500
Other long-term receivables (loan to employees) Employees 70 70
Long- term assets to related parties 15 070 6 570
(USD ’000) Counterparty * 31 Dec 2021 31 Dec 2020
Short-term debt to related parties KAS 128 62
Short-term debt to related parties KCCC 57 -
Short-term debt to related parties KCCS 25 -
Short-term debt to related parties KSM 5 118
Short-term debt to related parties KCC KBA 2 -
Net Group Contribution KCC KBA 882 -
Current debt to related parties 1 099 180
Klaveness AS and Klaveness Ship Management AS delivers administrative, commercial and project management services such as accounting, legal, IT,
project and oice services to Parent Company.The level of fees are based on cost + a margin in accordance with the arm’s length principle and OECD
guidelines.
Service agreements
The Parent Company has six employees as per year end 2021. The Parent
Company delivers administrative and business management services
and commercial management services to subsidiaries. The level of
fees are based on cost + a margin in accordance with the arm’s length
principle and OECD guidelines.
Intercompany balances
Transactions with related parties
05
KCC, as lender, has provided loans to subsidiaries KCC Chartering AS (USD 15 million), KCC Shipowning AS (USD 6.1 million) and KCC KBA AS (USD 300k).
Loan to employees (and ailiates to employees) has been made in connection with employees purchase of shares in the company. Interest rate in the
loans are set in accordance with “Normal interest rate for the taxation of low-cost loans from an employer”.
Klaveness Combination Carriers ASA receives a Group Contribution with tax eect of MNOK 74.2 (USD 8.4 million) for 2021 and provides a Group
Contribution without tax eect of MNOK 82 (USD 9.3 million) in 2021, both towards the subsidiary KCC KBA AS. Refer also to Changes in Equity and note 7)
Taxes.
The Company has six employees as per year end 2021. For more information related to salary expenses - see Group note 7.
Salary
06
(USD ‘000) 2021 2020
Salaries and other remuneration 1 679 1 247
Pension benet 83 66
Other social costs 7 5
Other personel ralated expenses 11 8
Salaries and social expense 1 780 1 327
*Klaveness AS (KAS), Klaveness Ship Management AS (KSM), KCC Shipowning AS (KCCS), KCC Chartering AS (KCCC), KCC KBA AS (KCC KBA)
32
Klaveness Combination Carriers ASA – Annual Report 2021
The Company holds a bond loan of NOK 700 million (KCC04) which is
listed on Oslo Stock Exchange. The bond loan has a bullet structure
with no repayment until maturity in February 2025. The bond carries a
coupon of 3 months NIBOR plus a margin of 4.75 % p.a with quarterly
interest payments.
The total bond loan was swapped to USD with xed rate (cross currency
interest rate swaps /CCIRS). The CCIRS qualify for hedge accounting and
are recognised at fair value with changes through other comprehensive
income.
Maturityproletonancialliabilitiesat31December2021
The table below summarises the maturity prole of the Company's nancial liabilities based on contractual undiscounted payments including interest
payments and interest hedge.
Covenants
As per 31 December 2021, the Company is in compliance with all nancial covenants. Covenants relate to minimum equity (USD 125 million), equity
ratio (30%), and cash (USD 15 million) on a consolidated basis.
Financial assets and nancial liabilities
08
Financial assets
(USD ‘000)
31 Dec 2021 31 Dec 2020
Financial instruments at fair value through OCI
Cross-currency interest rate swap 2 556 2 917
Financial assets 2 556 2 917
Current - -
Non-current 2 556 2 917
Financial liabilities
(USD ‘000)
31 Dec 2021 31 Dec 2020
Financial instruments at fair value through OCI
Cross-currency interest rate swap 43 -
Financial liabilities 43 -
Current - -
Non-current 43 -
(USD ‘000) 31 Dec 2021 31 Dec 2020
Loans 273 929 230 524
Net MtM hedging agreements 553 5 053
Accrued unpaid interest 1 355 1 262
Total 275 837 236 839
Bond loan (KCC03)
Face value
NOK’ 000
Year of maturity
Carrying amount
USD’ 000
KCC04 700 000 11.02.2025 80 649
Exchange rate adjustment (1 430)
Capitalized expenses (779)
Bond discount (234)
Total bond loan 700 000 78 205
Maturityprole
(USD ‘000)
< 1 year 1-3 years 3-5 years > 5 years Total
Bond loan (incl interests) (4 757) (9 515) (77 110) - (91 382)
Temporarydierences-ordinarytaxation
(USD ‘000)
Temporary
dierence
2021
Taxeect
Temporary
dierence
2020
Taxeect
Temporary dierences - - - -
Intercepted interest carry forward (1 329) (292) (1 375) (303)
Tax losses carried forward (14 047) (3 090) (16 174) (3 558)
Unrealised gain/loss nancial instruments 2 513 553 2 917 642
Deferred tax asset not recognised in the balance sheet 12 862 2 830 14 632 3 219
Nettemporarydierences-deferredtaxliability/asset(-) - - - -
Deferredtaxasset/liabilityinbalancesheet - - - -
Tax payable
(USD ‘000)
Income
2021
Taxeect
Income
2020
Taxeect
Prot / loss (-) before taxes, incl OCI 939 207 (1 712) (377)
Non-deductible expenses 2 0 7 2
Transaction cost capital increase charged over equity (863) (190) - -
Dividends/group contribution from investments covered by the tax exemption model (8 398) (1 848) (8 228) (1 810)
Unrealized gain/loss on nancial instruments valued at fair value 305 67 (2 917) (642)
Change in tax losses carried forward (1 580) (348) 6 999 1 540
Total tax basis and tax payable before group contribution (9 595) (2 111) (5 851) (1 287)
Group contribution from KCC KBA AS 8 398 1 848 8 228 1 810
Exchange rate dierences 1 196 263 (2 377) (523)
Tax payable in the balance sheet - - - -
Eective tax rate 0 % 0 %
KCC guarantees on behalf of KCC Shipowning AS (part of the KCC Group) to the lending banks for the mortgage vessels loans including unpaid interest,
costs and hedging agreements. As of 31.12.2021 sum of loans, accrued interest and net mark-to-mark on hedging contracts amounts to USD 276 million.
The Company is regulated by ordinary taxation rules in Norway. The
ordinary rate of corporation tax in Norway is 22 % for 2021 (22 % in
2020). The Company has a positive result before tax, however a group
contribution with tax eect of USD 8.4 million is recognised as nancial
income, but tax exempt under the tax exemption method, and therefore
not part of taxable income. As a consequence of this contribution, the
company has a net positive tax expense of USD 1.8 million.
Tax
07
Income taxes for the year
(USD ‘000)
2021 2020
Tax payable - -
Eect of the Group contribution 1 848 1 810
Totaltaxexpense/income(-)reportedintheincomestatement 1 848 1 810
Tax on net (gain)/loss on cash ow hedges - -
Deferred tax charged to OCI - -
33
Klaveness Combination Carriers ASA – Annual Report 2021
Restatement of 2020
11
Klaveness Combination Carriers ASA (Parent Company) changed
from IFRS to simplied IFRS reporting as per 31 December 2021 with
retrospective eect. Income Statement, Statement of Comprehensive
Income, Statement of Financial Position and Statement of Changes in
Equity for 2020 have been restated to reect the change in accounting
policy for dividends/group contribution. For the Cash Flow Statement,
the adjustment results in eects on prot before tax and group
contribution with no eects on net cash ow from operation activities
for 2020.
Income Statement
(USD ‘000)
31 Dec 2020 Adjustment
Restated
31 Dec 2020
Operatingprotaerdepreciation(EBIT) (2 442) (2 442)
Finance income 921 8 231 9 152
Finance costs (8 421) - (8 421)
Protbeforetax (9 943) 8 231 (1 712)
Income tax expenses 1 810 - 1 810
Protaertax (8 133) 8 231 98
2020
(USD ‘000)
Share
capital
Share
premium
Treasury
Shares
Hedging
reserve
Retained
earnings
Total equity
Equity at 1 January 2020 5 724 219 478 0 (91) (8 184) 216 927
Prot (loss) for the period (8 133) (8 133)
Other comprehensive income for the period (2 462) (2 462)
Purchase of own shares (Group note 18) (147) (147)
Dividends (4 803) (4 803)
Share option program (Group note 17) 39 39
Equity at 31 December 2020 5 724 219 478 (147) (2 552) (21 080) 201 423
Adjustments
Prot (loss) for the period 8 231 8 231
Net group contribution received/ (paid)
with tax eect (2020)
(1 810) (1 810)
Dividends (1 440) (1 440)
Restated* Equity at 31 December 2020 5 724 219 478 (147) (2 552) (16 100) 206 403
Statement of Financial Position
(USD ‘000)
31 Dec 2020 Adjustment
Restated
31 Dec 2020
Non-current assets
Investment in subsidiaries 248 115 5 534 253 649
Deferred tax asset 1 810 (1 810) -
Total non-current assets 259 413 3 724 263 137
Current assets
Short- term receivables from related parties 1 129 2 696 3 825
Total current assets 23 989 2 696 26 685
TOTAL ASSETS 283 402 6 420 289 822
Equity
Share capital 5 724 - 5 724
Share premium 219 478 - 219 478
Other reserves (2 699) - (2 699)
Retained earnings (21 080) 4 980 (16 100)
Total equity 201 423 4 980 206 403
Total non-current liabilities 80 649 - 80 649
Trade and other payables 1 150 1 440
Total current liabilities 1 330 1 440 2 770
TOTAL EQUITY AND LIABILITIES 283 402 6 420 289 822
Statement of Comprehensive Income
(USD ’000)
31 Dec 2020 Adjustment
Restated
31 Dec 2020
Totalcomprehensiveincome/(loss)fortheperiod (10 594) 8 231 (2 363)
On 17 February 2022, the Company’s Board of Directors declared to pay
a cash dividend to the Company’s shareholders of USD 5.2 million for Q4
2021 (USD 0.1 per share).
There are no other events aer the balance sheet date that have material
eect on the Financial Statement as of 31 December 2021.
Events aer the balance sheet date
10
Financial items
09
Finance income
(USD ‘000)
2021 2020
Other interest income 50 702
Gain on foreign exchange - -
Group contribution (note 5) 8 398 8 231
Other nancial income from related parties (note 5) 1 204 219
Finance income 9 652 9 152
Finance cost
(USD ‘000)
2021 2020
Interest paid to related parties - 16
Other interest expenses 589 581
Interest expenses bond loan 4 371 4 062
Amortization capitalized fees on loans 253 373
Other nancial expenses 90 844
Loss on foreign exchange 525 -
Fair value changes and interest rate swaps - 2 546
Finance expenses 5 828 8 421
34
Klaveness Combination Carriers ASA – Annual Report 2021
We conrm that, to the best of our knowledge, the consolidated nancial
statements for the period 1 January to 31 December 2021 have been
prepared in accordance with International Financial Reporting Standards
(IFRS) as endorsed by the European Union and give a true and fair view
of the Company’s assets, liabilities, nancial position and prot. We
also conrm, to the best of our knowledge, that the Board of Directors’
Report includes a fair review of important events that have occurred
during the nancial year and their impact on the consolidated nancial
statements of Klaveness Combination Carriers ASA, and a description of
the principal risks and uncertainties for 2022.
Responsibility statement
The responsibility statement includes the Board of Directors and the CEO’s approval
of Annual Report 2021.
The CEO and Board of Directors of Klaveness Combination Carriers ASA
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Klaveness Combination Carriers ASA – Annual Report 2021
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Independent auditor's report - Klaveness Combination Carriers ASA 2021
A member firm of Ernst & Young Global Limited
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the financial statements.
Accounting estimates related to vessels
Basis for the key audit matter
The Group has eight CLEANBU vessels and eight
CABU vessels in operation as of year-end 2021 after
completing the newbuilding program during the year.
The accounting estimates for these assets have a
material impact for the Group due to their cumulative
value and long-lived nature. The key estimates
requiring judgment include determination of useful
lives and residual values, identification of cash
generating units (CGU), evaluation of indicators of
impairment, and if present, testing carrying values
for impairment based on estimated recoverable
amounts. As these estimates have material impact
for the Group, this was considered a key audit
matter.
Management estimated useful lives based on
experience as well as industry practice for
conventional dry bulk and tanker vessels
respectively and considering the risk of assets
becoming stranded. The residual value has been
based on an average of observable recycling prices,
considering the expected impact of the EU Ship
Recycling Regulation for safer and greener
recycling. We compared the estimates of useful lives
and residual values to industry practice, available
data for green recycling, experience from prior years
and plans for docking and maintenance. We further
recalculated depreciations for the year.
Management considers the fleet of CLEANBU and
the fleet of CABU as separate cash generating units
(“CGUs”) in their assessment of impairment
indicators. Management did not identify indicators of
impairment for the CGUs, and therefore no
impairment test was performed. The assessment
included an evaluation of external and internal
factors, including market rates, changes in
technological, economic or legal environment,
changes to discount rates, market capitalization,
physical damage and actual utilization of the
vessels.
Our audit response
Based on our understanding of the nature of the
Group’s business and the economic environment in
which its vessels operate, we assessed the
determination of the different CGUs that make up the
Group.
We evaluated the management’s estimation of
useful lives and residual value, and compared these
to industry practice, experience with similar type of
vessels and environmental developments.
We reviewed the potential indicators of impairment
that would require impairment testing of CGUs and
evaluated management’s assessment of indicators.
Finally, we read the disclosure regarding these
judgments, which are included in note 9 of the
Group’s consolidated financial statements.
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Auditors report
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Medlemmer av Den norske Revisorforening
A member firm of Ernst & Young Global Limited
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Klaveness Combination Carriers ASA
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Klaveness Combination Carriers ASA (the Company) which
comprise the financial statements of the Company and the consolidated financial statements of the
Company and its subsidiaries (the Group). The financial statements of the Company comprise the
balance sheet as at 31 December 2021 and the income statement, statement of comprehensive income,
statement of cash flows and statement of changes in equity for the year then ended and notes to the
financial statements, including a summary of significant accounting policies. The consolidated financial
statements of the Group comprise the balance sheet as at 31 December 2021, the income statement,
statement of comprehensive income, statement of cash flows and statement of changes in equity for the
year then ended and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion
• the financial statements comply with applicable legal requirements,
• the financial statements give a true and fair view of the financial position of the Company as at 31
December 2021 and its financial performance and cash flows for the year then ended in
accordance with simplified application of international accounting standards according to section
3-9 of the Norwegian Accounting Act,
• the consolidated financial statements give a true and fair view of the financial position of the
Group as at 31 December 2021 and its financial performance and cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Company and the Group in
accordance with the requirements of the relevant laws and regulations in Norway and the International
Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 4 years from the election by the general meeting of the
shareholders in 2018
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for 2021. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
Penneo Dokumentnøkkel: G5T54-4JTZE-O56NA-UVKOU-78ILA-TFYAP
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Klaveness Combination Carriers ASA – Annual Report 2021
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Independent auditor's report - Klaveness Combination Carriers ASA 2021
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• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company and the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirement
Report on compliance with regulation on European Single Electronic Format (ESEF)
Opinion
As part of our audit of the financial statements of Klaveness Combination Carriers ASA we have
performed an assurance engagement to obtain reasonable assurance whether the financial statements
included in the annual report, with the file name KCCASA-2021-12-31-en, has been prepared, in all
material respects, in compliance with the requirements of the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation given with legal
basis in Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements included in the annual report have been prepared, in all material
respects, in compliance with the ESEF Regulation.
Penneo Dokumentnøkkel: G5T54-4JTZE-O56NA-UVKOU-78ILA-TFYAP
Auditors Report
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Independent auditor's report - Klaveness Combination Carriers ASA 2021
A member firm of Ernst & Young Global Limited
Other information
Other information consists of the information included in the annual report other than the financial
statements and our auditor’s report thereon. Management (the board of directors and the Chief Executive
Officer) is responsible for the other information. Our opinion on the financial statements does not cover
the other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information,
and, in doing so, consider whether the board of directors’ report, the statement on corporate governance
and the statement on corporate social responsibility contain the information required by applicable legal
requirements and whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information or
that the information required by applicable legal requirements is not included, we are required to report
that fact.
We have nothing to report in this regard, and in our opinion, the board of directors’ report, the statement
on corporate governance and the statement on corporate social responsibility are consistent with the
financial statements and contain the information required by applicable legal requirements.
Responsibilities of management for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements of the
Company in accordance with simplified application of international accounting standards according to
section 3-9 of the Norwegian Accounting Act and of the consolidated financial statements of the Group in
accordance with International Financial Reporting Standards as adopted by the EU, and for such internal
control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Penneo Dokumentnøkkel: G5T54-4JTZE-O56NA-UVKOU-78ILA-TFYAP
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Klaveness Combination Carriers ASA – Annual Report 2021
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På vegne av: Ernst & Young AS
Serienummer: 9578-5997-4-729076
IP: 213.52.xxx.xxx
2022-03-29 07:37:17 UTC
Penneo Dokumentnøkkel: G5T54-4JTZE-O56NA-UVKOU-78ILA-TFYAP
Auditors Report
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Independent auditor's report - Klaveness Combination Carriers ASA 2021
A member firm of Ernst & Young Global Limited
Management’s responsibilities
Management is responsible for the preparation of an annual report and iXBRL tagging of the consolidated
financial statements that complies with the ESEF Regulation. This responsibility comprises an adequate
process and such internal control as management determines is necessary to enable the preparation of
an annual report and iXBRL tagging of the consolidated financial statements that is compliant with the
ESEF Regulation.
Auditor’s responsibilities
Our responsibility is to express an opinion on whether, in all material respects, the financial statements
included in the annual report have been prepared in accordance with the ESEF Regulation based on the
evidence we have obtained. We conducted our engagement in accordance with the International
Standard for Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or
reviews of historical financial information”. The standard requires us to plan and perform procedures to
obtain reasonable assurance that the financial statements included in the annual report have been
prepared in accordance with the ESEF Regulation.
As part of our work, we performed procedures to obtain an understanding of the company’s processes for
preparing its annual report in XHTML format. We evaluated the completeness and accuracy of the iXBRL
tagging and assessed management’s use of judgement. Our work comprised reconciliation of the iXBRL
tagged data with the audited financial statements in human-readable format. We believe that the
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Oslo, 29 March 2022
ERNST & YOUNG AS
The auditor's report is signed electronically
Johan Lid Nordby
State Authorised Public Accountant (Norway)
Penneo Dokumentnøkkel: G5T54-4JTZE-O56NA-UVKOU-78ILA-TFYAP
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Klaveness Combination Carriers ASA – Annual Report 2021
© Annual Report 2021