Klaveness Combination Carriers ASA – Annual Report 2022
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Annual
Report 2022
Klaveness Combination Carriers ASA – Annual Report 2022
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03
What we do and how we create value
04
ESG 2022 in brief
05
CEO letter
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Board of Director’s Report
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Corporate Governance Report
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Consolidated Financial Statements
31
Financial Statements of the Parent Company
39
Responsibility Statement
40
Auditor’s report
Table
of Contents
Klaveness Combination Carriers ASA – Annual Report 2022
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Klaveness Combination Carriers ASA – Annual Report 2022
Klaveness Combination Carriers ASA – Annual Report 2022
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Engebret Dahm | CEO, Klaveness Combination Carriers ASA
2022 was an exciting year for KCC with solid progress across
KCC’s two business segments supported by historically
strong, but extremely volatile product tanker, dry bulk and
energy markets.
The liing of the strict Chinese COVID-19 restrictions in
January 2023 hopefully marks the end of a close to
three-year period disrupting the shipping industry and
seaborne supply chains. Strict COVID-19 restrictions for
vessels and their crew were maintained in a large part of
the world well into the second half of 2022, negatively
impacting the daily life of our seafarers. Step by step,
restrictions on crew change and shore leave were lied
during the autumn and repatriation of seafarers aer end
of service period were back to pre-COVID normal at the end
of 2022. We are immensely grateful for the sacrifices and
the dedication of our crew during this diicult three-year
period.
The year has also been marked by the brutal and
incomprehensive war in Ukraine impacting pricing, trade
flows and activity level in the product, dry bulk and energy
markets. The war has, however, had limited negative direct
eect on KCC’s business.
2022 was the first year with the full CLEANBU fleet in service
aer taking delivery of the last of eight CLEANBU newbuilds
in May 2021. The year has in many ways represented a
breakthrough for our CLEANBU business. Determined
eorts to further improve technical and operational
performance have born fruits with the CLEANBU fleet
outperforming average standard product tanker Ship
Inspection Report Programme (SIRE) and port state
inspection performance in 2022. The number of customers
having chartered the vessels doubled from 2021 to 2022
with the CLEANBUs becoming a favorite mode of transport
in LR1 product tanker trades to South America with total
seven customers having used the vessels in these trade
lanes. The trading eiciency of the CLEANBU fleet also
improved substantially with time in combination trade
increasing from 66% in 2021 to 88% and ballast decreasing
from 18% to 13% from 2021 to 2022.
We have also made progress in our CABU business which,
aer completing relocation of two vessels from South
America in second quarter 2022, is now fully dedicated to
servicing customers in trades to and from Australia. The
number of caustic soda shipments to Australia and hence
KCC’s market share grew in 2022 and has been further
increased for 2023. On-time performance of our CABU fleet
in caustic soda loading ports has been maintained at high
levels despite negative eects of widespread port
congestion and tight caustic soda logistics.
Furthermore, we have advanced well with our
decarbonization eorts which are focused on our quest for
eiciency improvements. Closer co-operation with our
customers is essential to further improve the trading
eiciency of our fleet. Aer a successful trialing in 2022, we
are pleased to have implemented the first carbon pricing
mechanism into one of our freight contracts with eect
from 2023. Multiple energy and voyage eiciency measures
have also been installed on all vessels with larger
installations being made during regular drydocking of
three vessels during the year. Contracts were concluded for
an innovative air lubrication system combined with a new
sha generator to be installed on two vessels during 2023.
Average CO2 emission per vessel year improved by 5%
from 2021 to 2022, while average carbon intensity (EEOI)
improved by 7% from 2021.
KCC has had a solid start to 2023 and the outlook for the
year is strong based on high fixed-rate and index linked
tanker market contract coverage for fleet. While the outlook
in our markets is reasonably positive, macro-economic
and geopolitical risks remain high. KCC’s business model
has over time shown resilience to market shocks and the
company is positioned to weather any storm and take
benefits of market opportunities which may arise during
the year.
Business progress
in volatile markets
Letter from CEO
Klaveness Combination Carriers ASA – Annual Report 2022
Klaveness Combination Carriers ASA – Annual Report 2022
6
Key development 2022
and future priorities
Klaveness Combination Carriers ASA (“KCC”, the
“Company”, the “Group”) delivered a record strong
financial result for 2022 and yet again demonstrated the
value of flexibility and diversification through its
combination carrier concept.
The CABU fleet delivered the highest time charter earnings
since 2011 on the back of high caustic soda solution (CSS)
volumes, a strong dry bulk market in the first half of the
year and strengthening fuel prices through the year.
The CLEANBU fleet continued to expand the number of
customers and trades in its first year with a full fleet in
operation. As a result, the CLEANBU fleet’s trading
eiciency improved substantially increasing the share of
days in combination trades and reducing time in ballast.
Furthermore, the strong recovery in the tanker market and
historically high fuel prices supported time charter
earnings for the fleet, the highest since the introduction of
the vessels.
The KCC fleet experienced no major or medium injuries or
accidents in 2022. The impact on crew and vessel
operations from COVID-19 related restrictions eased
compared to the prior two years.
KCC continued to make good headway on its
decarbonization targets during 2022. The carbon intensity
(EEOI) for the fleet was down from 7.4 in 2021 to 6.9 in
2022, while average CO2 emissions per vessel-year was
down from 18,800 mt in 2021 to 17,900 mt in 2022.
KCC’s positive trend has continued into 2023 with
conclusion of several tanker contracts during Q4 2022 and
early 2023 securing a strong base for 2023. The concluded
caustic soda shipping contracts for 2023, including
expected additional caustic soda shipments, cover the full
CABU fleet’s capacity in tanker mode in 2023. Approximately
75% of booked caustic soda shipments for 2023 are
fixed-rate contracts with average TCE earnings around 2.5
times the average TCE earnings for the caustic soda
solution shipments in 2022. One CLEANBU vessel has been
employed on a two-year time charter with a global energy
company from mid-February 2023 and a three-years index-
linked contract of areightment for the transportation of
clean petroleum and dry bulk products was secured in
January 2023.
People, health and safety
1
KCC’s main priority is to keep the crew safe, and any injury
or loss of lives is unacceptable. 2022 was a strong safety
year for the KCC fleet, with zero major or medium injures or
vessel accident. The Loss Time Incident Frequency (LTIF)
on the combination carriers, measured by every 1 million
working hours, was reduced from 0.6 in 2021 to 0.3 in 2022,
being within the target. A comprehensive safety culture
program referred to as ‘Klaveness Always Safe and Secure’
(KLASS)
2
was introduced in 2020 and has been further
developed and strengthened since the introduction.
In relation to the Transparency Act which came into force 1
July 2022, KCC evaluated and made some minor
adjustments to its Code of Conduct and Counterparty Code
of Conduct. KYC Procedures and contract clauses with
counterparties and suppliers were as well amended to
ensure compliance with the legislation. The KYC
Procedures, procedures for further due diligence and
measures to stop, mitigate or prevent were updated based
on a risk assessment. The Transparency Act report is
published as part of the ESG Performance Report for 2022.
Through the COVID-19 pandemic priority number one has
been to avoid crew from being infected and KCC has
through 2022 continued to test and quarantine crew prior
to embarking. Three vessels experienced infection on
board in 2022, without serious symptoms. By year-end
2022, 100% of crew on board KCC’s vessels were fully
Board
of Director’s
Report
vaccinated. Focus continued during 2022 to repatriate
crew at the end of their service period without delays. No
crew had per year-end 2022 been onboard for more than
12 months, and the share of the crew being on extended
contract had fallen to 4.5% at the end of the year compared
to 13% at the end of 2021.
In 2022, 41 vetting inspections were performed onboard
KCC vessels. Average number of high-risk observations
3
per inspection for the Ship Inspection Report Programme
(SIRE) vettings was 0.9, down from 1.9 in 2021 and better
than the target of 2. The fleet went through 45 Port State
Controls in 2022 with one detention due to insuicient
procedures to secure the freefall lifeboat release hook
system. Following this inspection, tests and checks were
added to improve the Company’s procedures. Average
number of deficiencies per inspection was 0.7, the same as
in 2021, slightly above the target of 0.5.
The piracy risk in the Persian Gulf/Gulf of Oman eased
further in 2022. 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 2022.
By the end of 2022, KCC had 11 employees located in Oslo
and Singapore. The work environment is good. Women
represented 27% of the workforce (2021: 33%) and absence
due to sick leave was satisfactory, averaging 0.25 % in 2022
(0.29% in 2021)
4
. The oice in Oslo was fully opened in
2022 aer several years with long periods working from
home. The employees in Singapore continued to work
partly from home also during 2022, but from 26 April 2022
the Singapore oice was in full operation again and open
for all employees.
KCC is dedicated to ensuring equal opportunities for all,
irrespective of gender, gender identification, ethnicity,
religion, sexual orientation, disability or social status (read
more in the Code of Conduct available on
www.combinationcarriers.com).
1
The vessels are on ship management to Klaveness Ship Management AS
2
Please find more information on Safety Performance in the Sustainability Report for 2022
3
High risk observation is an internal definition of a significant legislative, safety or pollution risk
4
More employee information in note 7 to the Financial Statements for 2022.
Magne Øvreås
Board member
Ernst Meyer
Chair of the Board
Brita Eilertsen
Board member
Winifred Patricia Johansen
Board member
Gøran Andreassen
Board member
Klaveness Combination Carriers ASA – Annual Report 2022
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Sustainability
KCC aims at delivering the most cost eective
decarbonization path in deep-sea shipping through being
at the forefront of implementing energy eiciency
solutions, perfecting voyage eiciency, optimizing trading
eiciency and by working in close cooperation with
customers, suppliers, regulators, and other stakeholders.
While there is movement in the regulatory environment,
the pace is slower than what is needed for the industry to
reduce its emissions in line with the Paris Agreement.
However, the first carbon price for shipping was agreed in
2022. As of 1 January 2024, emissions from voyages to,
from, and within the EU will be included in the EU Emission
Trading Scheme (EU ETS). Such regulations will strengthen
KCC’s competitive advantage, but the impact on KCC is
initially expected to be limited as KCC’s vessels only trade
occasionally to/from Europe. However, this might change
going forward. KCC is following the development closely
and has a strong voice in favour of introducing global
emission trading systems for shipping.
On the global level, the IMO continues to discuss a revision
of its climate strategy and the possible introduction of an
economic measure in the form of a global carbon tax. Some
progress has been achieved during 2022, but the decisions
on new emission targets and economic incentives will at
the earliest be made by summer 2023. In 2022, the IMO
came under a lot of criticism from the industry over the
Carbon Intensity Indicator (CII), which will come into eect
from 2023. KCC has long criticized the design of the CII, as
it rewards ballasting.
Due to its eicient combination trading, KCC is experiencing
a greater interest from its customers related to scope three
emissions including emissions from ocean freight. The Sea
Cargo Charter, to which KCC was a founding signatory,
grew with seven new members in 2022 and counts 34
signatories by year-end 2022, including some of the world’s
largest charterers. KCC signed its first sustainability linked
contract of areightment in 2022 with one of its most
important customers. One of the included measures is the
linking of the freight paid under the contract to KCC’s
emission performance compared to a baseline. The
mechanism has been trialled in close co-operation with
the customer during 2022 and will be put into force from
2023.
KCC was not able to deliver in full on its ambitious emission
reduction targets for 2022, but as a result of a broad range
of initiatives made across KCC’s business over the recent
years, KCC continued to make good headway on its
environmental performance during 2022. The carbon
intensity (EEOI) for the fleet was down from 7.4 in 2021 to
6.9 in 2022, a reduction of 7% from 2018, and average CO2
emissions per vessel-year were down from 18,800 mt in
2021 to 17,900 mt in 2022, a reduction of 14% from 2018 –
close to the target of 15% reduction from 2018. KCC will in
March 2023 publish its updated environmental strategy.
KCC has 15 ongoing energy eiciency initiatives funded
partly by USD 25 million of equity raised in November 2021.
The expected full roll-out of committed initiatives are
expected to result in a further approximately 9 % reduction
in emissions for the overall fleet assuming 2022 transport
work. KCC was allocated a grant of approximately USD 1.4
million from ENOVA
5
to part fund air lubrication of the hull
and retrofit of sha generator for two vessels, to be
implemented in 2023.
KCC is committed to full transparency related to its
environmental strategy, targets, and performance. The
Sustainability Report for 2022 is aligned with the Global
Reporting Initiative Standards (GRI) and the Task Force on
Climate-related Financial Disclosures (TCFD)
6
. The
environmental KPIs and the GHG accounts are audited
(limited assurance) by EY. KCC achieved a B score in the
category “climate change” from CDP
7
in 2022 as in 2021.
KCC adheres to the Hong Kong Convention and follows the
Norwegian Shipowners Association’s recommendation
with respect to ship recycling. No ships were sold for
recycling in 2022.
Financial results
Financial results
Profit for the year 2022 ended at USD 60.9 million, up from
USD 22.6 million in 2021, driven mainly by stronger tanker
rates and more on-hire days from a full CLEANBU fleet in
operation aer delivery of three vessels during 2021. The
2021 profit includes gain from sale of MV Banasol and
repayment of equity from Den Norske Krigsforsikring, in
total USD 7.8 million.
Net revenues from operation of vessels increased by 42%
from USD 115.9 million in 2021 to USD 164.6 million in
2022. Average TCE earnings
8
of $29,764/day for the fleet in
2022 is up 42 % from $20,961/day in 2021. The underlying
markets have been extremely volatile during 2022. KCC’s
TCE earnings for 2022 were driven by a strong dry bulk
market in first half of 2022, weakening considerably in
second half of 2022, and a substantial strengthening of the
product tanker market since the spring of 2022. KCC’s
market share for caustic soda shipments to Australia
increased in 2022 compared to 2021 with all eight CABUs
trading to and from Australia from second half of the year.
CABU TCE earnings increased by more than $5,200/day
from 2021 to 2022 and ended at $26,796/day in 2022 in line
with average standard spot earnings for MR tankers in 2022
as reported by brokers
9
. With most of the caustic soda
contracts concluded before the tanker market recovery in
Q1 2022, the CABU fleet had relatively limited positive
impact of the strong tanker market during the three last
quarters of 2023.
The CABU fleet had one less vessel in operation in 2022
versus 2021 aer the sale of a 20-years old CABU vessel in
December 2021.
Average TCE earnings for the CLEANBU fleet for 2022 ended
at $32,614/day for the year, up more than $12,400/day from
2021 mainly due to a strong product tanker market from
the spring of 2022 and a high share of capacity employed in
wet trades and more combination trading. TCE earnings for
the CLEANBU fleet were in line with average standard spot
earnings for LR1 tankers in 2022 as reported by brokers
10
.
The CLEANBU fleet had in total approximately 1.0 more
vessel year on-hire in 2022 compared to last year due to
delivery of the three last newbuilds in 2021.
Operating expenses decreased from USD 49.2 million in
2021 to USD 48.6 million in 2022 mainly due to
approximately 0.3 less vessel years.
Administrative costs for 2022 of USD 8.9 million was up by
24% compared to 2021 (USD 7.2 million) mainly due to
increased costs for service fees and salaries due to higher
activity /more man-hours and bonus provisions for 2022.
Based on solid earnings for the fleet, EBITDA for 2022
increased from USD 67.1 million in 2021 to USD 107.0
million in 2022.
Depreciation increased from USD 28.7 million in 2021 to
USD 31.3 million in 2022 mainly due to dry docking cost
being depreciated over a shorter period compared to
previous years and more CLEANBU vessels in fleet. Net
finance cost ended at USD 14.7 million, down by USD 1.1
million partly due to gain related to modification of debt of
USD 1.2 million in 2022.
Financial position
Total equity ended at USD 297.5 million at year-end 2022,
an increase of USD 43.1 million during the year. The change
is driven by strong results and positive unrealised non-cash
eects on interest rate derivatives, partly oset by
dividends paid to shareholders during the year. The equity
ratio ended at 46.4% per year-end, up from 40.4% per
year-end 2021.
Total interest-bearing debt ended at USD 319.5 million at
the end of 2022, down from USD 354.5 million at year-end
2021, reflecting ordinary debt repayments and lower bond
debt due to exchange rate changes
11
.
Cash and cash equivalents ended at USD 64.9 million
against USD 53.9 million as of 31 December 2021 driven by
strong EBITDA, partly oset by cost of dry docking, debt
service and dividend payments and limited changes in
working capital. Total assets were up from USD 629.9
million to USD 642.9 million.
KCC, through a subsidiary, had per year-end 2022 USD 30.1
million available and undrawn under a long-term revolving
credit facility and USD 14.8 million available and undrawn
under a 364-days overdra facility.
Cash flow
Net cash flow from operating activities was USD 105.9
million in 2022 (2021: USD 45.9 million) quite in line with
EBITDA of USD 107.0 million as net changes in working
capital were limited. Net cash flow from investments was
negative USD 10.2 million (2021: negative 105.5 million)
and relates to dry dock costs for three CABU vessels and
one CLEANBU vessel and investments in technical upgrades
and energy eiciency initiatives for the fleet. The cash flow
from financing activities was negative USD 82.5 million
(2021: positive USD 46.3 million) whereof more than half
relates to paid dividends and remaining relates to debt
repayment and interest.
Dividends
KCC paid USD 42.4 million (2021: USD 7.2 million) in
dividends to shareholders in 2022, equal to USD 0.81 per
share (2021: USD 0.15 per share).
Financing and going concern
KCC’s capital commitments are fully funded, and the
refinancing risk is limited over the next year. Discussions
regarding the refinancing of the DNB/SEB mortgage debt
facility maturing in December 2023 has been initiated with
positive initial feedback from the banks.
A secured bank facility falling due in March 2026 was during
2022 extended by one year to March 2027 and the margin
was renegotiated with a reduction of approximately 75 bps
from existing margin. The 364 days overdra facility was
renewed in December 2022 for a 364-days period and the
total amount was reduced from USD 20 million to USD 15
million.
The accounts are reported under the assumption of a going
concern. The Board considers the financial position of the
Group at year-end 2022 to be solid and the liquidity to be
satisfactory. Current cash flow, existing and committed
debt and liquidity position for the Group are considered
suicient 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 financial position of Klaveness
Combination Carriers ASA.
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
10
Average LR1 TCE earnings as reported by Clarksons. One month lag due to normal time of fixing.
11
The NOK currency exposure and NIBOR floating interest rate exposure associated with the bond loan are hedged with cross currency interest
rate swaps (“CCY IRS swaps”). The mark-to-market values of the CCY IRS swaps are presented as financial assets and/or liabilities.
5
ENOVA SF, a Norwegian government enterprise responsible for promotion of environmentally friendly production and consumption of energy
6
Read more in the Sustainability Report for 2022 published on www.combinationcarriers.com.
7
Carbon Disclosure Project (CDP)
8
Average TCE earnings is an alternative Performance Measure (APM); see reconciliation in published Q4 2022 report appendix 1 (page 26).
9
Average MR TCE earnings as reported by Clarksons. One month lag due to normal time of fixing.
Klaveness Combination Carriers ASA – Annual Report 2022
8
related party transactions and services have during 2022
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. See note 19 to the Financial Statements for
2022 for more information on related party transactions.
The parent company
The result for the parent company, Klaveness Combination
Carriers ASA, was a profit aer tax of USD 21.5 million for
2022 (2021: loss USD 7.9 million). The profit is proposed
transferred to other equity. The Board of Directors has
proposed dividends of USD 15.7 million for Q4 2022 which
has been booked as a provision in the accounts as per 31
December 2022.
Events aer the balance sheet date
In January 2023 KCC Shipowning AS, a subsidiary of KCC,
repaid USD 15 million in debt under a revolving credit
facility agreement. The amount is available to be redrawn
under this revolving credit facility agreement.
On 15 February 2023, the Company’s Board of Directors
declared to pay a cash dividend to the Company’s
shareholders of in total USD 15.7 million for fourth quarter
2022 (USD 0.30 per share).
On 22 February 2023, the CEO of Klaveness Combination
Carriers ASA, Engebret Dahm, exercised all his 38,580
options in the Company against cash settlement by the
Company. The share options were granted in December
2019 and were fully vested in December 2022 (Group note
7). The amount payable per share from the Company is
equal to NOK 81.0 per share (close on 22 February 2023)
less exercise price of NOK 32.8 per share (exercise price at
grant date less dividends paid since grant date). The option
settlement in cash of USD 0.2 million will be recognized as
payroll expenses in Q1 2023.
The business
The overall strategic target for Klaveness Combination
Carriers ASA is to provide the lowest carbon emission
shipping service at the lowest cost to our dry bulk, chemical
and product tanker clients. The company has an ambition
to grow its business by developing new investment and
acquisition opportunities that fit with the Group’s existing
business platform. The Group had a fleet of 16 vessels in
operation at year-end 2022. KCC’s registered business
address is Drammensveien 260, 0283 Oslo, Norway.
The shares are listed on Oslo Stock Exchange with ticker
KCC. The 20 largest shareholders accounted for 90.9% of
total shares by year-end 2022, of which the largest
shareholder is Rederiaksjeselskapet Torvald Klaveness
with an ownership of 53.8%.
CABU
By year-end 2022, the CABU combination carrier fleet
consisted of eight vessels. 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 and all eight vessels where from May 2022 employed
in trades to/from Australia, where the CABU fleet over time
has generated the highest earnings.
Despite continued scheduling challenges through the year
with port congestion in the Far East and negative eects of
continued COVID-19 restrictions and a tight CSS market,
the share of days in main combination trades ended at 80%
for 2022, up from 69% in 2021, mainly due to a record high
number of caustic soda (CSS) cargoes transported in 2022.
Three vessels were dry-docked in 2022 with in total 114
scheduled o-hire days. Unscheduled o-hire ended at 104
days, up from 46 days in 2021, driven by COVID-19 infection
onboard one vessel, an operational incident, crew changes
and somel minor technical incidents and operational down
time.
The CABU wet capacity is to a high degree allocated to
freight contracts with long-term COA customers. The
caustic soda solution volume exposure for 2023 has been
secured, with close to 75% fixed rate at approximately 2.5
times higher rates than wet TCE earnings for the CABU fleet
for 2022.
CLEANBU
2022 was the first full year with the entire CLEANBU fleet in
operation aer the three last vessels in the newbuild
program were delivered during 2021.
The primary focus in 2022 was to expand the customer
base and employ the vessels in eicient combination
trades. The number of trades, terminals, cargoes, and
customers increased throughout 2022. The contract of
areightment (COA) secured in 2021 was renewed in 2022
with an additional COA secured in January 2023, both
contracts with large and reputed customers in the industry.
KCC continued to make good headway in its CLEANBU
concept illustrated through the share of days in
combination trade increasing from 66% in 2021 to 87% in
2022 and ballast in percent of total on-hire days improving
from 18% in 2021 to 13% in 2022.
One vessel completed guarantee repairs in 2022 with 87
o-hire days, partly covered by loss of hire insurance. The
fleet had 18 unscheduled o-hire days in 2022 mainly
related to repair of a pump on one vessel and crew changes.
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 are 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 2022 the dry bulk earnings fell compared to 2021 as fleet
ineiciencies subsided and demand cooled o. Product
tankers on the other hand delivered the strongest year on
record driven by strong demand growth, strong refining
margins and disruptions from the war in Ukraine.
Although the 2023 outlook remains uncertain in the face of
a slowdown in global economic activity, there are several
potential positive catalysts for freight markets. Amongst
others very low orderbooks limiting supply growth, China
reopening aer the pandemic and EU ban on Russian
petroleum products imports.
Dry bulk market
12
Panamax spot dry bulk market had a strong start of the
year with earnings (P5TC
13
) of $24,798/day during first half
2022, weakening substantially to $16,590/day in second
half of the year. Average spot Panamax earnings averaged
$20,663/day in 2022, down from 2021 but still at very
healthy levels. The global dry bulk demand growth
decelerated from 3.4% in 2021 to minus 1.9% in 2022
according to Clarksons Research, while the nominal growth
in the dry bulk fleet was 2.8% in 2022, down from 3.6% in
2021.
Going into 2023 the dry bulk markets were at the weakest
levels since 2020, normally a seasonally slow part of the
year. According to Clarksons, the dry bulk market is
expected to improve through 2023, but to remain at more
moderate levels than seen in 2021 and 2022. Both vessel
demand (tonne-miles) and supply are expected to grow
about 2% while the fleet ineiciencies of 2021 and 2022
have largely been unwounded.
The demand side is expected to face pressure from
deceleration in global economic activity, continued
challenges in the Chinese economy and negative impacts
from the war in Ukraine. The COVID-19 reopening of the
Chinese economy in early 2023, however give glimmer of
hope both for the global economy and the dry bulk
markets.
The global iron ore trade is expected to remain flat over
2023 compared to a contraction of 2% in 2022 as high
energy prices and weak demand put pressure on steel
producers.
The global coal trade is expected to grow by 2% in 2023.
Europe is a potential driver of the coal trade as it substitutes
Russian imports. While the Chinese seaborne demand is
expected to only grow marginally as imports competes
against domestic production and overland imports.
Global seaborne grains trade contracted sharply in 2022
(down 4%) due to amongst others lost Ukrainian volumes
and declining Chinese soybean imports due to weak crush
margins and weather disruption to US exports. While the
grains trade is expected to rebound in 2023 uncertainty
remains, in particular with regards to Ukrainian volumes.
Minor bulks are projected to see a small improvement in
2023 compared to a fall of 4% in 2022.
On the demand side the fleet to orderbook stood at 7.4% at
start of 2023 implying moderate fleet growth for the years
to come.
Product tanker market
14
The product tanker market delivered its best year on record
according to Clarksons Research Average Tanker Earnings
Index. The 2022 average LR1 tanker earnings
15
ended at
around $32,000/day, compared to $10,600/day in 2021.
Product tanker demand increased by 3.4% from 2021 to
2022 and demand has grown beyond pre-pandemic levels.
Several factors have contributed to the strong rate
environment. Firstly, the demand for refined petroleum
products has improved as COVID-19 restrictions continued
to ease throughout the globe combined with low inventory
levels, leading to strong refinery margins and utilization
rates. Secondly, the disruptions of sourcing and trading
caused by Russia’s invasion of Ukraine have likely
contributed to increased tonne-mile demand and
ballasting for the product tanker fleet.
Oil consumption in 2022 is estimated at around 99.4mn
bbl/day, 2.3% higher than in 2021. The growth in oil
consumption is estimated to grow by around 1% in 2023.
The outlook for the product tanker market remains strong
with low fleet growth and solid demand growth.
According to Clarksons, the Product tanker demand is
expected to continue to grow in 2023 driven by longer
sailing distances due to recent refinery closures in Australia
and Europe while refinery start-ups are expected to
increase exports from Middle East Gulf and India, and
Chinese products exports are expected to increase due to
higher export quotas. The EU ban on Russian products
imports is expected to further increase sailing distances as
EU will need to replace short-sea imports from Russia with
longer distance imports.
Clarksons expects product tanker demand to grow 9% in
2023. On the supply side the product tanker orderbook is
limited with book-to-fleet ratio at around 5% and supply is
expected to grow only marginally.
Fuel market
16
Oil prices increased by 20% in 2022 from around USD 72/
bbl to around USD 86/bbl aer a volatile year where oil
traded as high as around USD 107/bbl in periods. Price
strength and volatility were driven by improved demand as
well as supply disruptions in connection to the war in
12
Source: Clarksons Dry bulk trade outlook market fundamental data and forecasts
13
Kamsarmax Soure: Baltic Exchange
14
Source: Clarksons SIN Oil and Tanker Trades outlook market January 2023 and U.S. Energy Information Administration Short-Term Energy
Outlook January 2023 for fundamental data and forecasts
15
Source: Clarksons Shipping Intelligence Network
16
Source: Bloomberg and Clarksons SIN
Klaveness Combination Carriers ASA – Annual Report 2022
9
Ukraine. Average VLSFO prices ended at around USD 750/
mt in 2022 compared to USD520/mt 2021.
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
generally on a quarterly basis. Risks are identified 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 identified that
may aect business operations, reputation, financial
condition, results of operations and, ultimately share price.
A description of the risks can be found in note 16 to the
Financial Statements for 2022. Please be reminded that the
risk picture will change over time.
• Volatile freight rates and unfavourable changes in
trade flows and volumes, either structurally or due to
events such as impact on market of the Russian
invasion of Ukraine
• Introduction of new vessel concepts such as the
CLEANBUs entails commercial and technical risks,
including but not limited to building performance of
the yard, 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
• Increased risk to vintage tonnage due to stricter
emissions regulations (e.g. CII and EEXI) and customer
requirements
• The Group will retrofit two vessels with sha generator
and air lubrication systems. Success depends on the
ability to deliver on retrofit/energy saving device
projects at the budgeted cost and time, and that the
projects deliver the estimated fuel/energy savings
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 2022
and in the climate-related risk chapter in the ESG
Performance Report for 2022:
• 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 nine meetings in 2022, whereof
four related to quarterly reports only, with an attendance
of 98% percent and the Audit Committee held six meetings.
The Board of Directors consists of five members, whereof
two women. Brita Eilertsen, Gøran Andreassen and Ernst
Meyer joined the Board of Directors, while Rebekka Glasser
Herlofsen, Lasse Kristoersen and Morten Skedsmo
stepped down during 2022. The Company’s Oicers and
Directors are covered by Rederiaksjeselskapet Torvald
Klaveness’ Commercial Management Liability Insurance
with AXA covering e.g. the Company’s Oicers’ and
Directors’ acts, errors and omissions on specified terms
and conditions, and with limitations.
The Board of Directors has an annual plan. It includes
recurring topics such as strategy review, business planning,
risk and compliance oversight, financial reporting as well
as reporting on Health, Safety and Environment. High on
the Board’s agenda in 2022 was optimizing both the CABU
and the CLEANBU business, evaluating and substantiate
the long-term strategic direction of the Company and
pursuing investments in energy eiciency measures.
This report contains certain forward-looking statements that involve risks
and uncertainties. The forward-looking statements reflect current views
about future events and are, by their nature, subject to significant risks and
uncertainties because they relate to events and depend on circumstances
that will occur in the future. There are a number of risks, uncertainties and
other factors that may cause actual results, events and developments to
dier materially from those expressed or implied by these forward-looking
statements. Although we believe that the expectations reflected 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. We, our subsidiary undertakings, and any such person’s
oicers, directors, or employees are unable to provide any assurance that
the assumptions underlying such forward-looking statements are free from
errors, nor do any of the aforementioned persons accept any responsibility
for the future accuracy of the opinions expressed in this report or the actual
occurrence of the forecasted developments described herein. Unless we are
required by law to update these statements, we will not necessarily update
any of these statements aer 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.
Ernst Meyer
Chair of the Board
Gøran Andreassen
Board member
Magne Øvreås
Board member
Oslo, 6 March 2023
Oslo, 31 December 2022
Engebret Dahm
CEO
Brita Eilertsen
Board member
Winifred Patricia Johansen
Board member
Klaveness Combination Carriers ASA – Annual Report 2022
10
Corporate Governance
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
have been included.
Deviations from the Norwegian code
of practice for corporate governance
In the Board of Directors’ assessment, KCC has one minor
deviations from the Code of Practice:
Section 6, General meetings
KCC has one deviation from this section:
“Ensure that the members of the Board of Directors …
attend at the General Meeting”: All Board members have
historically not been present at the General Meetings.
Matters under consideration at the General Meetings of
Shareholders have not up until now required this. The
Chair of the Board of Directors is always present at the
General Meetings. Other board members participate when
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 benefit 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. ESG in general
and more specifically decarbonization of KCC’s activities
are highly integrated in the Company’s strategy and is 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 suicient assurance to the debt and equity providers.
The Board regularly reviews and monitors the Company’s
capital structure to ensure it is in line with the Company’s
objectives, strategies, and risk profile. The Company has
prepared a statement of its Finance Policy, providing
information about the Company’s capital allocation
priorities, funding policy and risk management activities. 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 2022 was USD 297.5 million,
which represents an equity ratio of 46%. Cash and cash
equivalents were USD 64.9 million per year-end 2022 and
the Group has in addition USD 30.1 million in available
long-term undrawn bank debt and USD 14.8 million
available capacity under a 364-days overdra facility. The
debt sources are diversified (mortgage bank debt and bond
issue) and have a distributed maturity profile. The Board
believes the capital structure is appropriate based on its
objectives, strategies, and risk profile.
The Board has established a 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 flow generation to equity aer 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
financial standing remains acceptable. The Company
further intends for any new material investments to be
subject to separate funding through equity and debt.
At the Annual General Meeting (AGM) in April 2022, the
Board was granted an authorization to resolve distribution
of dividends. The authorization is valid until the Annual
General Meeting in 2023, however no longer than 30 June
2023. Dividends of USD 81 cents per share, in total USD 42.4
million, were approved and distributed to shareholders in
2022.
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 2022, the Board was granted an authorisation
to acquire own shares, with a total nominal value of up to
NOK 5,237,200, which equalled 10% of the 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 2023 but will last no longer than 30 June 2023.
No shares were repurchased in 2022.
Furthermore, at the AGM in 2022, the Board of Directors
was granted an authorisation to increase the share capital
by up to NOK 10,474,400. 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
2023, but no longer than 30 June 2023. No shares were
issued in 2022.
No deviations from the Code of Practice.
4. Equal treatment of shareholders
The shares of KCC are listed on Oslo Børs. 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.
Corporate
Governance
Report
Klaveness Combination Carriers ASA – Annual Report 2022
11
Transactions involving own shares have been executed on
the stock exchange. Buybacks of own shares have been
executed at the current market rate.
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 the Annual Report 2022.
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 suicient detail for the
shareholders to assess all the cases to be considered as
well as all relevant information regarding procedures of
attendance and voting, including: (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 confirmation 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 Chair of the Board and the CEO are present at the
Annual General 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 first 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
Annual 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 consider the interests of shareholders in general. The
current three members of the Nomination Committee are
considered independent of the Board of Directors 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 are approved by the Company’s
Annual General Meeting.
The service period 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
management team in its work with proposing members to
the Board of Directors.
The current members of the Nomination Committee are:
• Trond Harald Klaveness (Chair) – until 2024
• Espen Galtung Døsvig – until 2023
• Anne Lise Gryte – until 2023
No deviations from the Code of Practice.
8. Board of Directors:
Composition and independence
In appointing members to the Board of Directors, 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 five 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 five 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 of Directors.
The Board of Directors currently consists of the following
five members:
• Ernst Andre Meyer (Chair) – until 2024
• Magne Øvreås – until 2023
• Winifred Patricia Johansen (independent) – until 2023
• Brita Eilertsen (independent) – until 2024
• Gøran Andreassen – until 2024
An introduction to the members of the Board of Directors
and their experience 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 is compliant
with the Company’s values and ethical guidelines in
addition to the relevant legislative frameworks. 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 financial situation. The Board performs
evaluation of its work aer most Board meetings. For
information on how related party transactions are handled,
see the Board of Directors Report and note 19 in Annual
report 2022.
The Board of Directors has established an Audit Committee
consisting of Brita Eilertsen (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 financial 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 Audit Committee.
The auditor participates in discussions of relevant agenda
items in meetings of the Audit Committee and the Audit
Committee holds separate meetings with the auditor
several times every year.
No deviations from the Code of Practice.
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 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 financial 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 eective
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 in line
with its internal guidelines for its activities, including
the Company’s ethical guidelines and corporate values
The Board of Directors several times every year 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 2022.
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
Oicer in Torvald Klaveness is the contact person for
whistleblowing for KCC and whistleblowing may be done
anonymously. The Chief Compliance Oicer notifies the
Audit Committee about notifications 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 remuneration reflects 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 benefits
to Board Members as consideration for their work.
Klaveness Combination Carriers ASA – Annual Report 2022
12
None of the current Directors have performed assignments
for the Company in addition to their appointment as
member of the Board of Directors in 2022.
More information about the remuneration of the individual
Directors is provided in note 7 in Annual report 2022.
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, long-term incentive program
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
profitability of the Company; growth in shareholder value;
and adherence to the Company’s values and ethical
standards. Any fringe benefits shall be in line with market
practice, be simple and transparent, competitive while
well-balanced, and reflect the performance of the
individual. The CEO determines the remuneration of
executive employees. The remuneration is based on a base
salary, bonus and a long-term incentive program.
For information about remuneration of executive personnel
see note 7 in the Annual report 2022. The “Guidelines
regarding stipulation of salary and other remuneration to
the executive management” and the “Report on salary and
other remuneration to the executive management”
approved by the Annual General Meeting in 2022 are
available one the Company’s website.
No deviations from the Code of Practice.
13. Information and communications
The Company has established 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 financial information
available on the Company’s website. Information of
importance is made available to the stock market through
notification 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 financial calendar, are made
available on the Company’s website.
No deviations from the Code of Practice.
14. Take-overs
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 suicient information and time to
assess the oer.
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 have 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 identified
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 confirm 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 2022. For
the financial year 2022, Johan Lid Nordby was the
Company’s engagement partner from EY.
The auditor’s fees are approved by the Annual General
Meeting. Auditor’s fees are disclosed in note 6 in the Annual
report 2022.
No deviations from the Code of Practice.
Klaveness Combination Carriers ASA – Annual Report 2022
13
Consolidated
Financial Statements
Klaveness Combination Carriers ASA – Annual Report 2022
14
Klaveness Combination Carriers ASA – Consolidated Group
Income Statement
Year ended 31 December Year ended 31 December
Statement of Comprehensive Income
(USD ‘000) Notes 2022 2021
Profit/ (loss) of the period 60 869 22 600
Other comprehensive income to be reclassified to profit or loss
Net movement fair value on cross-currency interest rate swaps (CCIRS) 13 (3 707) (404)
Reclassification to profit and loss (CCIRS) 8 559 2 773
Net movement fair value on interest rate swaps
13
11 663 4 500
Net movement fair value bunker hedge 13 (231) (69)
Net movement fair value FFA futures
13
8 240 (7 730)
Net change on cost of hedging FFA option 13 - (714)
Net change on intial value of FFA option 13 123 -
Net other comprehensive income to be reclassified to profit or loss 24 647 (1 644)
Total comprehensive income/(loss) for the period, net of tax 85 515 20 955
Attributable to:
Equity holders of the parent company 85 515 20 955
Total 85 515 20 955
(USD ‘000) Notes 2022 2021
Freight revenue 3 205 769 155 564
Charter hire revenue 3 54 509 41 909
Other revenue 3 396 482
Total revenue, vessels 3 260 674 197 955
Voyage expenses 4 (96 054) (82 087)
Net revenue from operations of vessels 164 620 115 868
Gain on sale of vessels 3, 9 - 6 360
Other income 3 - 1 422
Operating expenses, vessels 5 (48 575) (49 212)
Group commercial and administrative services 19 (4 203) (3 709)
Salaries and social expense 7 (3 458) (2 374)
Tonnage tax 21 (188) (221)
Other operating and administrative expenses 6, 7 (1 242) (1 069)
Operating profit before depreciation (EBITDA) 106 955 67 064
Depreciation 9 (31 344) (28 666)
Operating profit after depreciation (EBIT) 75 611 38 398
Finance income 8 3 516 74
Finance costs 8 (18 257) (15 866)
Profit before tax (EBT) 60 869 22 606
Income tax expenses 21 - (7)
Profit after tax 60 869 22 600
Attributable to:
Equity holders of the parent company 60 869 22 600
Total 60 869 22 600
Earnings per Share (EPS):
Basic earnings per share 1.16 0.46
Diluted earnings per share 1.16 0.46
Consolidated Financial Statements
Klaveness Combination Carriers ASA – Annual Report 2022
15
Ernst Meyer
Chair of the Board
Gøran Andreassen
Board member
Magne Øvreås
Board member
Oslo, 6 March 2023
Oslo, 31 December 2022
Engebret Dahm
CEO
Brita Eilertsen
Board member
Winifred Patricia Johansen
Board member
Klaveness Combination Carriers ASA – Consolidated Group
Statement of Financial Position
Assets
(USD ‘000)
Notes 31 Dec 2022 31 Dec 2021
Non-current assets
Vessels 9 516 072 536 864
Right-of-use assets 11 - 1 553
Long-term receivables 7 70 70
Long-term financial assets 13 7 762 4 048
Total non-current assets 523 905 542 535
Current assets
Short-term financial assets 13 4 923 678
Inventories 12 18 898 12 279
Trade receivables and other current assets 14 30 061 18 484
Short-term receivables from related parties 19 202 2 018
Cash and cash equivalents 15 64 918 53 937
Total current assets 119 002 87 396
Total assets 642 906 629 931
Equity and liabilities
(USD ‘000)
Notes 31 Dec 2022 31 Dec 2021
Equity
Share capital 18 6 235 6 235
Share premium 153 732 153 732
Other reserves 16 490 (8 154)
Retained earnings 17 121 087 102 605
Total equity 297 545 254 417
Non-current liabilities
Mortgage debt 13 156 534 249 993
Long-term financial liabilities 13 2 466 2 017
Long-term lease liabilities - 1 008
Bond loan 13 69 975 78 205
Total non-current liabilities 228 975 331 223
Current liabilities
Short-term mortgage debt 13 92 769 23 936
Other interest bearing liabilities 13 233 2 409
Short-term financial liabilities 13 249 -
Short-term lease liabilities - 618
Trade and other payables 22 250 16 199
Short-term debt to related parties 19 693 895
Tax liabilities 21 193 233
Total current liabilities 116 387 44 291
Total equity and liabilities 642 906 629 931
Klaveness Combination Carriers ASA – Annual Report 2022
16
Klaveness Combination Carriers ASA – Consolidated Group
Statement of Changes in Equity Cash Flow Statement
2022
(USD ‘000)
Share
capital
Other paid
in capital
Treasury
shares
Hedging
reserve
Cost of
hedging
reserve
Retained
earnings
Total
Equity 1 January 2022 6 235 153 732 (147) (7 294) (714) 102 605 254 417
Profit (loss) for the period - - - - - 60 869 60 869
Other comprehensive income for the period - - - 24 647 - - 24 647
Share option program - - - - - 35 35
Dividends - - - - - (42 421) (42 421)
Equity at 31 December 2022 6 235 153 732 (147) 17 351 (714) 121 087 297 545
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
Profit (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
Attributable to equity holders of the parent
(USD ’000) Notes 2022 2021
Profit before tax 60 869 22 606
Tonnage tax expensed 188 221
Depreciation 9 31 344 28 666
Amortization of upfront fees bank loans 1 352 882
Financial derivatives unrealised loss / gain (-) 8 (232) 82
Gain related to modification of debt 8 (1 175) -
Gain on sale of vessel 9 - (6 360)
Gain /loss on foreign exchange 8 207 726
Interest income 8 (3 284) (74)
Interest expenses 8 16 698 14 175
Change in current assets (16 504) (8 797)
Change in current liabilities 4 488 2 038
Collateral paid/refunded on FFA (variation margin) 8 901 (8 390)
Interest received 3 030 74
A: Net cash flow from operating activities 105 883 45 850
Acquisition of other tangible assets 9 (10 238) (13 783)
Installments and other cost on newbuilding contracts 10 - (105 322)
Cash proceeds from sale of vessels 6 - 13 800
Transaction costs related to sale of vessels - (212)
B: Net cash flow from investment activities (10 238) (105 517)
Proceeds from mortgage debt 13 - 169 000
Transaction costs on issuance of loans 13 (193) (1 944)
Repayment of mortgage debt 13 (24 049) (123 041)
Interest paid 13 (15 378) (13 970)
Repayment of lease liabilities 13 (382) (582)
Interest paid leasing 13 (66) (103)
Paid in registered capital increase 18 - 24 977
Transaction costs on capital increase - (878)
Dividends 18 (42 421) (7 204)
C: Net cash flow from financing activities (82 489) 46 254
Net change in liquidity in the period (A+B+C) 13 156 (13 414)
Effect of exchange rate changes on cash - (742)
Cash and cash equivalents at beginning of period 51 529 65 685
Cash and cash equivalents at end of period 64 685 51 529
Net change in cash and cash equivalents in the period 13 156 (13 414)
Cash and cash equivalents 64 918 53 937
Other interest bearing liabilities (overdraft facility)* 233 2 409
Cash and cash equivalents (as presented in cash flow statement) 64 685 51 529
Year ended 31 December
* Cash and cash equivalents include overdraft facility of USD 0.2 million presented as other interest bearing liabilities in the balance sheet as per 31 December 2022.
Klaveness Combination Carriers ASA – Annual Report 2022
17
Accounting policies
01
Corporate information
These consolidated financial statements of Klaveness Combination
Carriers ASA and its subsidiaries (collectively referred to as “The Group”)
for the period ended 31 December 2022 were authorized by the Board of
Directors on 6 March 2023. 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 Drammensveien
260, 0283 Oslo. The share is listed on Oslo Stock Exchange with ticker KCC.
The Parent Company was established on 23 March, 2018.
The objectives of the Group are to provide transportation for dry bulk,
chemical and petroleum tanker clients, as well as to develop new
investment and acquisition opportunities that fit the Group’s existing
business platform (see note 2 for more information).
The ultimate parent of the Company is Rederiaksjeselskapet Torvald
Klaveness. The consolidated financial statement for the ultimate parent is
available at www.klaveness.com.
Basis of preparation
The consolidated financial statements of the Group have been prepared
in accordance with International Financial Reporting Standards (“IFRS”)
as adopted by the European Union.
The Group’s consolidated financial statements comprise Klaveness
Combination Carriers ASA (KCC) and all subsidiaries over which the Group
has control.
ESEF/iXBRL reporting
The Company is required to prepare and file the annual report in the
European Single Electronic Format (ESEF), and the Annual Report for
2022 is therefore prepared in the XHTML format that can be displayed in a
standard browser. The primary statements in the consolidated financial
statements and notes to the consolidated financial 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 financial statement line item is not defined 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
files.
Significant accounting judgements, estimates and
assumptions
Preparing financial statements in conformity with IFRS requires the
management to make judgments, use of estimates and assumptions
which aect 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 significant
eect on the amounts recognised in the financial statements. In general,
accounting estimates are considered significant if:
- the estimates require assumptions about matters that are highly
uncertain at the time the estimates are made
- dierent estimates could have been used
- changes in the estimates have a material impact on Klaveness
Combination Carriers ASA’s financial position
The areas in which The Company is particularly exposed to material
uncertainty over the carrying amounts as at the end of 2022 are included
within the individual note 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 financial statements of each entity are measured
using that functional currency.
Income and expenses in NOK are converted at the rate of exchange on the
transaction date. The average exchange rate was 9.6197 USD/NOK in 2022
(2021: 8.5973). At 31 December 2022 an exchange rate of USD/NOK 9.9066
(2021: 8.8363) was used for the valuation of balance sheet items.
Cash flow statements
The cash flow statements are based on the indirect method.
Standards, amendments and interpretations
The financial statements have been prepared based on standards,
amendments and interpretations effective for 2022.
The Group has early adopted amendments to IAS 1 and IFRS Practice
Statement 2 regarding disclosure of material accounting policy
information instead of significant accounting policies.
There was no material impact of new accounting standards or
amendments adopted in the period.
The Group has not early adopted other than above mentioned 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 2023 or later periods.
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
financial 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 after the balance
sheet date
Notes
Klaveness Combination Carriers ASA – Annual Report 2022
18
Region (USD ’000) 2022 2021
Middle East 76 237 51 669
Australia / Oceania 67 618 41 160
North East Asia 47 386 69 992
South America 41 667 23 025
North America 18 303 6 036
Europe 9 200 10 472
Africa 4 091 2 466
South East Asia 2 239 7 341
South Asia - 5 344
Total revenue, regions 266 741 217 504
Gain/(loss) on FFAs (4 324) (19 642)
Adjustments (2 139) (390)
Other revenue 396 482
Total revenue, vessels 260 674 197 955
Other income (USD ’000) Classification 2022 2021
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
Revenue types (USD ’000) Classification 2022 2021
Revenue from COA contracts Freight revenue 92 852 83 626
Revenue from spot voyages Freight revenue 112 917 71 938
Revenue from TC contracts Charter hire revenue 54 509 41 909
Other revenue Other revenue 396 482
Total revenue, vessels 260 674 197 955
(USD ‘000)
2022 2021
CABU CLEANBU Total CABU CLEANBU Total
Net revenue from operations of vessels 72 436 92 183 164 620 66 119 49 749 115 868
Adjustment * - - - 177 213 390
Other revenue - (396) (396) - (482) (482)
Net revenue ex adjustment 72 436 91 787 164 223 66 297 49 479 115 776
Onhiredays 2 703 2 814 5 518 3 073 2 450 5 523
Average TCE earnings per onhire day ($/d) 26 796 32 614 29 764 21 571 20 195 20 961
Operating income and operating
expenses per segment
(USD ‘000)
2022 2021
CABU CLEANBU Total CABU CLEANBU Total
Operating revenue, vessels 127 455 132 823 260 278 116 218 81 255 197 473
Other revenue - 396 396 - 482 482
Voyage expenses (55 018) (41 036) (96 054) (50 099) (31 989) (82 087)
Net revenue from operations of vessels 72 436 92 183 164 620 66 119 49 749 115 868
Gain on sale of vessels (note 9) - - - 6 360 - 6 360
Other income (note 3) - - - 1 422 - 1 422
Operating expenses, vessels (22 917) (25 657) (48 575) (24 684) (24 537) (49 221)
Group commercial and administrative services (1 983) (2 220) (4 203) (1 860) (1 849) (3 709)
Salaries and social expense (1 631) (1 826) (3 458) (1 191) (1 184) (2 374)
Tonnage tax (105) (83) (188) (126) (88) (214)
Other operating and administrative expenses (586) (656) (1 242) (536) (533) (1 069)
Operating profit before depreciation (EBITDA) 45 214 61 740 106 955 45 505 21 559 67 064
Depreciation (12 465) (18 880) (31 344) (13 362) (15 303) (28 665)
Operating profit after depreciation (EBIT) 32 749 42 860 75 611 32 142 6 256 38 398
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 CABU vessels and eight CLEANBU
vessels.
The CABUs are from 72,456 dwt to 80,344 dwt and have the capacity
to transport caustic soda solution (CSS), floating 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-fledged 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 definition can be found on the Company’s homepage:
https://www.combinationcarriers.com/alternative-performance-measures.
Segment reporting Revenue from contracts with customers
0302
Disaggregated revenue information
The Group has income from Contract of Affreightment (COA) contracts, spot voyages and Time Charter (TC) contracts (mainly one voyage only). Set
out below is the disaggregation of the Group’s revenue from different contracts with customers.
Other revenue of USD 0.4 million in 2022 (2021: USD 0.5 million) is related to off-hire compensation for guarantee work on the CLEANBU vessels.
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 (four) customers in 2022 (2021) that each represented more than five percent of operating revenue in the Group (USD 38.0 million
(USD 44.4 million), USD 27.6 million (USD 18.4 million), USD 23.4 million (USD 11.6 million) and USD 19.5 million (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.
Reconciliation of average TCE earnings per onhire day
* Adjustment: Net revenue in Income Statement for 2022 and 2021 is recognized from load-to-discharge in line with IFRS. Revenue basis for average TCE earnings per day is
based on load-to-discharge for 2022 and discharge-to-discharge for 2021. The difference/adjustment relates to days in ballast from discharge to loading on next voyage. The
effect on TCE earnings for 2021 is immaterial (approximately 70 $/d for both segments), hence the Company has concluded not to adjust comparative figures for 2021.
Accounting policy
The operating segments are reported in a manner consistent with the internal financial 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 identified as the Board of Directors.
The reporting of the financial results separates the CABUs and CLEANBUs as two segments, to better evaluate and follow up on the
performance of the different vessel concepts. The Group identifies 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.
Klaveness Combination Carriers ASA – Annual Report 2022
19
(USD ‘000) 2022 2021
Salaries and other remuneration 3 141 2 006
Social security tax 200 185
Pension benefit 79 83
Other social costs 15 85
Other personel related expenses 22 16
Salaries and social expense 3 458 2 374
(USD ‘000) 2022 2021
Statutory audit 135 179
Other assurance services 34 29
Total 169 208
(USD ‘000) 2022 2021
Technical expenses 14 387 14 040
Crewing expenses 23 418 24 760
Insurance 3 366 3 004
Crewing agency fee to Klaveness Ship Management AS 1 565 1 469
Ship management fee to Klaveness Ship Management AS 3 819 3 979
IT fee to Klaveness Ship Managment AS - 81
Other operating expenses 2 019 1 886
Total operating expenses 48 575 49 219
(USD ‘000) 2022 2021
Freight expenses 21 538 20 210
TC-hire 1 449 1 952
Voyage expenses 72 486 59 009
Fuel hedge settlement (456) (224)
Various expenses 1 036 1 140
Total voyage costs, vessels 96 054 82 087
(USD ‘000) 31 Dec 2022 31 Dec 2021
Trade receivables from charterers (note 14) 13 629 7 421
Contract assets (note 14) 9 663 3 437
Contract liabilities 4 485 3 477
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 2022 to be recognized in 2023 is USD 27.3 million. Contract liabilities are prepaid revenue from customers.
For dry bulk cargo lifted, payment is generally due within 10 days after the cargo is loaded, while payment for wet cargo is generally 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).
Revenue from contracts with customers
03
Contract balances
Voyage expenses
04
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.
”COVID-19 has impacted operating costs in 2022 and 2021 with higher
crew costs, forwarding costs for spare parts and bunkers costs during
off-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 1.7 million in 2022 (2021: USD 3.7 million). COVID-19 costs in 2021 was
higher mainly due to challenges related to delivery of three newbuildings
during the pandemic.”
Operating expenses
Other operating and administrative expenses
Salary
05
06
07
Remuneration to the auditor
Auditor’s fee are stated excluding VAT.
Accounting policy
The Group is in the business of transporting cargo at sea.
Contracts of affreightment
The combination carriers are employed on both long and short term
contracts of affreightment (COAs) as well as in the spot market.
The ambition is to have a large part of the wet exposure covered by
contracts of affreightment (COA) and to a larger extent employ the
vessels in the spot market when trading dry. The mix of COA and
spot business creates ability to optimize the trading of the fleet
and provide the CoA customers with the flexibility they need in
their logistics. The COA contracts have duration between 1-6 years.
Revenue from the Group’s COA commitments are classified 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
reflects 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 satisfied 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 Group’s 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 they qualify as cost to fulfil under IFRS
15.
Time charter (TC) agreements
The time charter revenue is generated from fixed rate time charter
contracts. Revenue from time charters is accounted for as lease in
accordance with IFRS 16 and is classified as charter hire revenue in
the Income Statement. The Group’s time charter contracts have
normally a duration of 1-3 months and a significant portion of the
risks and rewards of ownership are retained by the lessor (KCC),
hence the lease is classified as operating lease. In 2021 and 2022, the
Group had no TC agreements with longer than 3 months duration.
Payments received under operating leases are recognised as revenue
on a straight line basis over the lease term.
Klaveness Combination Carriers ASA – Annual Report 2022
20
(USD ‘000) 2022 2021
Ernst Meyer (Chair of the Board from 29 April 2022)* 36 -
Lasse Kristoffersen (Chair of the Board until 29 April 2022)* 18 57
Magne Øvreås (Board member and member of Audit Committee) 37 38
Morten Skedsmo (Board member until 29 April 2022)* 11 34
Gøran Andreassen (Board member from 29 April 2022)* 21 -
Rebekka G. Herlofsen (Board member and Chair of Audit Committee until 29 April 2022) 13 39
Winifred Patricia Johansen (Board member from 26 April 2021) 32 23
Brita Eilertsen (Board member and Chair of Audit Committee from 29 April 2022) 26 -
Lori W. Næss (Board member until 26 April 2021) - 11
Total 195 203
(USD ’000) Base Salary Bonus Pension benefit Total
Engebret Dahm (CEO) 370 149 15 534
Liv Hege Dyrnes (CFO) 260 79 15 354
Total 630 227 31 888
Diversity of employees
2022 2021
Number Percentage Number Percentage
Women 3 27% 3 33%
Men 8 73% 6 67%
Total employees in KCC at year end 11 100% 9 100%
Average number of employees 10.3 7.6
KCC ASA in Norway 6 55% 6 67%
KCC Asia in Singapore 5 45% 3 33%
Nationalities 5 3
Sick leave - 0.25% - 0.29%
The Group has eleven employees as per year-end 2022. Two new employees started during 2022. 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).
Bonus shown in the above table is earned in 2021 and paid in 2022.
The Company has provided a loan to CEO Engebret Dahm of USD 50k.
Interest on the loan is set to the Norwegian tax administration is normal
interest rate for the taxation of low-cost loans. The loan falls due in 2028.
The Board has established guidelines for determining remuneration
to executive personnel. The remuneration is based on a base salary,
bonus and share option scheme. The 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 bonus scheme applicable for 2022 is based on annual distribution
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 fixed 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 bonus cap is reached at 20 % return on equity. 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 bonus cap. The CFO is part of the
overall discretionary bonus pool that is distributed among all employees
included in the bonus scheme. The return on equity was above 20%
for 2022, hence the bonus cap of respectively 12 months and 9 months
payment for the CEO and the CFO was reached under the formula bonus
on a standalone basis and no discretionary bonus was awarded. A
limited discretionary bonus element was distributed to other employees
other than the CEO and the CFO. Bonus provision for 2022 has been made
in the 2022 accounts and will be paid in 2023. The existing bonus scheme
is as well applicable for 2023 and 2024 and the cap and other terms of the
bonus scheme remain unchanged for the CEO and the CFO. The bonus
cap for other employees will be evaluated and potentially increased for
the other employees.
Long-term incentive program
The CFO and the CEO were in total granted 65,280 share options in
December 2019, each giving the right to subscribe one share per option.
Total granted options are 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
with first vesting one year after the grant date. The program was fully
vested in December 2022. 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
after the employee becomes a former employee as long as this complies
with applicable securities legislation. The exercise price was 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 offers 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.
A new long-term incentive program for management and employees will
be presented for approval by the Annual General Meeting in April 2023.
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 and
comprises 5 % of salary up until 7.1G and 20 % of salary between 7.1G
and 12G. As of 31 December 2022 there were six members of the defined
contribution plan. The expense recognised in the current financial
period in relation to the contribution plan was USD 79k (2021: USD 83k).
KCC does not make any pension contributions to employees in Singapore
in line with national legal requirements.
Salary
07
Remuneration to the management
Remuneration to the Board of Directors
*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.
Diversity of Board of Directors
2022 2021
Number Percentage Number Percentage
Women 2 40% 2 40%
Men 3 60% 3 60%
Board remuneration is proposed by the Nomination Committee and
approved by the Annual General Meeting. The Directors receive a fixed
remuneration for the year based on the Board position, i.e. the Chair
receives higher remuneration than the Board Members, which have
an equal remuneration. The Directors do not receive profit-related
remuneration, share options or retirement benefits. Board Members
participating in committees such as the Audit Committee have received
extra remuneration for these tasks. In connection with the sales process
of MV Banasol in 2021, prior board member Morten Skedsmo contributed
in the sales process. Compensation for the work, USD 31k, was paid to
Klaveness AS in 2021 (see note 19).
In appointing members to the Board of Directors, 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.
Finance income
(USD ‘000)
2022 2021
Other interest income 2 109 74
Fair value changes interest rate swaps 232 -
Gain related to modification of debt (note 13) 1 175 -
Finance income 3 516 74
Finance cost
(USD ‘000)
2022 2021
Interest expenses mortgage debt 11 769 9 477
Interest expenses bond loan 4 767 4 371
Interest expenses lease liabilities 66 103
Amortization capitalized fees on loans 1 352 882
Other financial expenses 97 224
Fair value changes and realization effects of interest rate swaps - 82
Loss on foreign exchange 207 726
Finance cost 18 257 15 866
Financial items
08
Klaveness Combination Carriers ASA – Annual Report 2022
21
Reconciliation of depreciations
(USD '000)
2022 2021
Depreciation vessels 31 029 28 083
Depreciation right of use assets 315 582
Depreciations for the period 31 344 28 666
Vessels
(USD '000)
31 Dec 2022 31 Dec 2021
Cost price 1.1 734 955 599 826
Delivery of newbuildings - 153 763
Adjustment acquisition value newbuildings delivered - 1 408
Dry docking 5 620 8 342
Technical upgrade 4 617 4 032
Disposal of vessel (2 472) (32 416)
Cost price end of period 742 721 734 955
Acc. Depreciation 1.1 198 092 195 568
Disposal of vessel (2 472) (25 560)
Depreciation vessels 31 029 28 083
Acc. Depreciation end of period 226 649 198 092
Carrying amounts end of period* 516 072 536 864
*) carrying value of vessels includes dry-docking
No. of vessels 16 16
Useful life vessel 25 25
Useful life Dry Docking 2-3 3-5
Depreciation schedule Straight-line Straight-line
Vessels
09
Additions
Three CABU vessels and one CLEANBU vessel have completed scheduled
dry- docking in 2022 with total cost of USD 5.6 million. Technical upgrade
of USD 4.0 million is related to general improvement of the technical
performance of the vessels and energy efficiency initiatives, deducted
by grants from ENOVA of in total USD 0.3 million recognised as per year
end 2022. KCC has secured in total approximately USD 1.4 million in
grants from ENOVA to finance investments in energy saving solutions for
one CABU vessel and one CLEANBU vessel.
During 2022, KCC has purchased previously leased satellite equipment on
board the vessels of a total value of USD 0.6 million. The equipment has
from 2022 been capitalized as vessel, depreciated over the same period
as each vessel’s dry-dock component. The derecognition of right of use
assets with corresponding lease liability had an insignificant impact on
the results for the year.
Pledged vessels
All owned vessels except MV Bangor and MV Barcarena are pledged to
secure the various debt facilities (refer to note 13 for further information).
Disposals
MV Banasol was sold and delivered to new owners 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
Identification 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 fleet, vessel opex, operating profit, technological
development, change in regulations, interest rates and discount rate.
The rise in interest rates increases the discount rate used in calculation
of recoverable amount. As previous sensitivity analysis of recoverable
amount shows that the decrease in recoverable amount is unlikely to
result in a material impairment loss, as per IAS 36.16, this has not been
considered an impairment indicator. Expected future TCE earnings
for both fleets of CABUs and CLEANBUs, diversified market exposure,
development in secondhand prices and the combination carriers’
trading flexibility support the conclusion of no impairment indicators
identified as per 31 December 2022.
ENOVA = A Norwegian government enterprise responsible for promotion of environmentally friendly production and consumption of energy.
Newbuildings, net carrying amount
(USD '000)
31 Dec 2022 31 Dec 2021
Cost 1.1 - 48 441
Borrowing cost - 84
Yard installments paid - 97 650
Other capitalized cost - 7 586
Delivery of newbuildings - (153 763)
Net carrying amount - -
Newbuildings
10
The Group has no newbuilding commitments as per year end 2022. The Group took delivery of three CLEANBU vessels during 2021 (note 9), which
completed the newbuilding programme at Jiangsu New Yangzi Shipbuilding Co., Ltd in China.
Accounting policy
Significant accounting estimates
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 defined as directly attributable cost
plus borrowing cost during the construction period.
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).
Based on the updated dry docking schedule, the vessels are planned
for dry docking with a limited scope during each intermediated
survey, first time approximately 2.5 years after delivery. Docking
depreciation has previously been based on docking every five years
during the first ten years of operation. The change was effective from
1 August 2022 and impacted 2022 depreciation with approximately
USD 2.6 million and estimated to impact with approximately USD 2
million for 2023 and onwards.
KCC commits to perform recycling of its vessels in compliance
with the Hong Kong convention, the Norwegian Shipowner’s
Association’s guidelines and when relevant the EU Ship Recycling
Regulation. Annual assessment of residual value is based on
observable market prices and available scrapping alternatives as
of today. Residual value estimates for the KCC vessels have been
calculated based on average price for Turkey and India, deducted
by best estimate of direct costs for scrapping. There is a high degree
of uncertainty in net green pricing for recycling. KCC has concluded
to retain a scrap value of USD 3.8/5.3/5.9 million for CABUI/CABUII/
CLEANBU for 2023.
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.
Identification 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 fleet, vessel opex, operating profit,
technological development, change in regulations, interest rates
and discount rate. As per year end 2021 and 2022 no indicators for
impairment were identified.
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 normally not negotiated based on
a specific 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 defined the fleet of CABUs and the fleet of CLEANBUs
as two separate cash generating units.
Klaveness Combination Carriers ASA – Annual Report 2022
22
Inventories
(USD '000)
31 Dec 2022 31 Dec 2021
Bunkers 17 254 10 810
Spare parts 99 116
Luboil 1 545 1 302
Inventories 18 898 12 279
Right-of-use assets
(USD ‘000)
31 Dec 2022 31 Dec 2021
Cost price 1.1 2 973 2 510
Addition of right-of-use assets - 538
Disposals (2 973) (75)
Costprice end of period - 2 973
Acc. Depreciation 1.1 1 420 838
Depreciation right of use assets 382 582
Disposals (1 802) -
Acc. Depreciation end of period - 1 420
Carrying amounts end of period - 1 553
Leasing
11
The leases do not contain any restrictions on the Group’s dividend policy or financing. The Group does not have significant residual value guarantees
related to its leases to disclose.
The Group as a lessee
During 2022, KCC has purchased previously leased satellite equipment on board the vessels of a total value of USD 0.6 million. The equipment has
been capitalized as vessel in 2022, depreciated over the same period as each vessel’s dry dock component. Derecognition of right of use assets with
corresponding lease liability had an insignificant impact on the results for the year.
Inventories relate to bunkers, spare parts and luboil on board vessels.
Undiscounted lease liabilities and maturity of cash outflows
(USD ‘000)
31 Dec 2022 31 Dec 2021
Less than 1 year - 662
1-5 years - 1 107
More than 5 years - -
Total undiscounted lease liabilities at 31 December - 1 769
Inventories
12
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 profit 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 (first in, first
out principle).
Klaveness Combination Carriers ASA – Annual Report 2022
23
Book value of collateral and mortgaged assets (USD ’000) 2022 2021
Vessels 500 009 520 063
Bunkers 17 254 10 810
Accounts receivables 30 061 18 484
Total book value of collateral and mortgaged assets 547 324 549 357
Bond loan
Face value
(NOK ’000)
Maturity date
Carrying amount
(USD ’000)
KCC04 700 000 11.02.2025 76 390
Exchange rate adjustment (5 730)
Capitalized expenses (527)
Bond discount (158)
Total bond loan 700 000 69 975
Mortgage debt
(USD '000)
Description Interest rate Maturity Carrying amount
DNB/SEB facility Term loan, USD 105 mill LIBOR + 2.3 % December 2023 76 978
SEB/SR-Bank/SPV facility Term loan/RCF, 90.675 mill LIBOR + 2.3 % October 2025 53 338
Nordea/Crédit Agricole facility* Term loan/RCF, 60 mill Term SOFR + 2.25 % March 2027 50 824
Nordea/ Danske facility** Term loan, USD 80 mill LIBOR + 2.1 % December 2026 71 294
Capitalized loan fees (3 131)
Mortgage debt 31 December 2022 249 303
In June 2022 the Group agreed to amend certain terms in the Nordea /
Crédit Agricole USD 60 million facility. The reference rate and margin
were adjusted to Term SOFR + 2.25%, implying a LIBOR equivalent
margin reduction of approximate 75 bps, while the repayment date
was extended by one year, until March 2027. Refinanced debt has been
accounted for as modification of existing agreement. A modification gain
of USD 1.2 million has been recognized in profit and loss in 2022, based
on the difference of the net present value of the related cash flows using
the original effective interest and the carrying amount of the debt prior
to modification.
In December 2022 the 364-days overdraft facility was extended by
additional 364 days (December 2023). The commitment under the
overdraft facility was reduced from USD 20 million to USD 15 million
based on the Group’s reevaluated need.
Discussions regarding the refinancing of the DNB/SEB facility maturing
in December 2023 has been initiated and the Group targets completing a
refinancing within first half of 2023.
Interest bearing liabilities
(USD '000)
Fair value
31 Dec 2022
Carrying amount
31 Dec 2022
Carrying amount
31 Dec 2021
Mortgage debt 159 664 159 664 252 547
Capitalized loan fees - (3 131) (2 554)
Bond loan 71 160 70 660 79 219
Bond premium - (158) (234)
Capitalized expenses bond loan - (527) (779)
Total non-current interest bearing liabilties 230 825 226 509 328 198
Mortgage debt, current 92 769 92 769 23 936
Overdraft facility (Secured) 233 233 2 409
Total interest bearing liabilities 323 827 319 511 354 543
Financial assets and financial liabilities
13
The below tables present the Group’s financing arrangements as per 31 December 2022.
The Group has available revolving credit facility capacity of USD 30.1 million related to the SEB/SR-Bank/SPV facility and USD 14.8 million available
capacity under a 364-days overdraft facility.
Maturity profile of financial liabilities at 31 December 2022 is presented in note 16.
* 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.
Risk management activities
To reduce interest rate risk, the Group has entered into various 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 profit 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 floating bunkers cost to a
fixed cost for bunkers to reduce the Group’s exposure to changes in
bunker prices. Similarly, the Group can use FFAs to fix freight rates in
a future period to reduce its exposure to the dry bulk or tanker freight
market (via open capacity and index linked COA commitments).
Covenants
As per 31 December 2022, the Group is in compliance with all financial
covenants. On Group level financial 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 profit (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 first priority
security in all except two vessels, in earnings accounts, and assignment
of the earnings and insurances of the vessels in favour of the creditors.
Financial assets
(USD '000)
31 Dec 2022 31 Dec 2021
Financial instruments at fair value through OCI
Cross-currency interest rate swap
1 272 2 556
Interest rate swaps
11 110 1 421
Fuel hedge - 18
Forward freight agreements (FFA) - 660
Financial instruments at fair value through P&L
Interest rate swaps 303 71
Financial assets 12 685
4 727
Current 4 923 678
Non-current 7 762 4 048
Financial liabilities
(USD '000)
31 Dec 2022 31 Dec 2021
Financial instruments at fair value through OCI
Cross-currency interest rate swap 2 466 43
Interest rate swaps - 1 973
Fuel Hedge - -
Forward freight agreements (FFA)
249
-
Financial liabilities
2 715 2 017
Current 249 -
Non-current 2 466 2 017
Klaveness Combination Carriers ASA – Annual Report 2022
24
31 December 2022
Assets (USD ’000)
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss
Interest rate swaps - 303 - 303
Financial assets at fair value through OCI
Fuel hedge - - - -
Cross-currency interest rate swap - 1 272 - 1 272
Forward freight agreements - - - -
Interest rate swaps - 11 110 - 11 110
(USD ‘000)
Carrying amount
31 Dec 2022
Carrying amount
31 Dec 2021
Fair value
31 Dec 2022
Fair value
31 Dec 2021
Financial assets at fair value through OCI
Interest rate swaps 11 110 1 421 11 110 1 421
Forward freight agreements - 660 - 660
Fuel hedge - 18 - 18
Cross-currency interest rate swap 1 272 2 556 1 272 2 556
Financial assets at fair value through profit or loss
Forward freight agreements - - - -
Interest rate swaps 303 71 303 71
Total financial assets at fair value 12 685 4 727 12 685 4 727
Financial assets measured at amortised costs
Accounts receivable
13 629 7 667
13 629 7 667
Receivables from related parties 202 2 018 202 2 018
Total financial assets measured at amortised costs 13 831 9 685 13 831 9 685
Cash and cash equivalents 64 918 53 937 64 918 53 937
Total financial assets 91 434 68 349 91 434 68 349
Total current 83 602 64 301 83 602 64 301
Total non-current 7 832 4 048 7 832 4 048
(USD ‘000)
Carrying amount
31 Dec 2022
Carrying amount
31 Dec 2021
Fair value
31 Dec 2022
Fair value
31 Dec 2021
Financial liabilities at fair value through OCI
Interest rate swaps - 1 973 - 1 973
Cross-currency interest rate swap 2 466 43 - -
Forward freight agreements 249 - 249 -
Total financial liabilities at fair value 2 715 2 017 249 1 973
Other financial liabilities at amortised cost
Accounts payable 3 940 4 361 3 940 4 361
Interest bearing debt, non-current 156 534 249 993 159 664 252 547
Interest bearing debt, current 92 769 23 936 92 769 23 936
Bond loan 69 975 78 205 71 160 75 456
Overdraft facility 233 2 409 233 2 409
Current debt to related parties 693 895 693 895
Total financial liabilities at amortised cost 324 144 359 799 328 460 359 603
Total financial liabilities 326 858 361 815 328 709 361 577
Total current 97 884 31 601 97 884 31 601
Total non-current 228 975 330 215 230 825 329 976
The fair value of the financial 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 financial 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 financial liabilities is estimated
by discounting future cash flows 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.
• Fair value of the bond loan is based on transaction price on Oslo Stock
Exchange (bond loan listed)
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial assets included in the financial statements.
Financial assets and financial liabilities
13
Fair value hierarchy
The Group uses financial hierarchy under IFRS 13 for determining and disclosing the fair value of financial instruments by valuation techniques. Below
table presents fair value measurements to the Group’s assets and liabilities at 31 December 2022.
31 December 2022
Liabilities (USD ’000)
Level 1 Level 2 Level 3 Total
Financial liabilities at fair value through profit or loss
Interest rate swaps - - - -
Financial liabilities not measured at fair value, but for which fair value is disclosed
Mortgage debt, non-current - - 159 664 159 664
Mortgage debt, current - - 92 769 92 769
Overdraft facility - - 233 233
Bond loan - 71 160 - 71 160
Financial liabilities at fair value through OCI
Forward freight agreements - 249 - 249
Interest rate swaps - - - -
Accounting policy
Derivative financial instruments and hedge accounting
The Group uses derivative financial 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 financial
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 financial assets
when the fair value is positive and as financial liabilities when the
fair value is negative.
For the purpose of hedge accounting, hedges are classified as:
• Fair value hedges when hedging the exposure to changes in the
fair value of a recognised asset or liability or an unrecognised firm
commitment
• Cash flow hedges when hedging the exposure to variability in cash
flows 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 firm commitment
As per 31 December 2022 all the Group hedges are classified as cash
flow 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
identification 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 effectiveness
requirements (including the analysis of sources of hedge
ineffectiveness and how the hedge ratio is determined). A hedging
relationship qualifies for hedge accounting if it meets all of the
following effectiveness requirements:
• There is an economic relationship between the hedged item and
the hedging instrument.
• The effect 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 effective portion of the gain or loss on the hedging instrument
is recognised directly as other comprehensive income in the cash
flow hedge reserve, while any ineffective portion is recognised
immediately in profit and loss. Amounts recognised as other
comprehensive income are transferred to profit and loss when
the hedged transaction affects profit and loss, such as when the
hedged financial income or expense is recognised or when a forecast
transaction occurs.
Derivative financial instruments that are designated as, and are
effective hedging instruments are separated into a current and non-
current portion consistent with the classification of the underlying
item.
Klaveness Combination Carriers ASA – Annual Report 2022
25
(USD '000)
Interest
payable
Current
lease
liabilites
Interest
bearing
short-term
debt
Interest
bearing
long-term
debt
Share
capital/
premium/
reserve
Other equity Total
Balance at 1 January 2022 - 618 26 345 328 198 159 819 94 597 568 104
Repayment of mortgage debt - - - (24 049) - - (24 049)
Proceeds from mortgage debt - - - - - - -
Reclassification as short-term debt - - 68 833 (68 833) - - -
Transaction costs on issuance of loans - - - (193) - - (193)
Interest paid (15 378) - - - - - (15 378)
Paid in registered capital increase - - - - - - -
Transaction costs on capital increase - - - - - - -
Repayment of overdraft facility - - (2 176) - - - (2 176)
Repayment of lease - (382) - - - - (382)
Interest paid lease - (66) - - - - (66)
Dividends - - - - - (42 421) (42 421)
Total changes from financing cash flow (15 378) (448) 66 657 (93 075) - (42 421) (84 665)
Liability-related
Expensed capitalised borrowing costs - - - (1 352) - - (1 352)
Gain related to modification of debt - - - 1 175 - - 1 175
Non-cash movement - (170) - (8 437) - - (8 607)
Total liability-related changes - (170) - (8 614) - - (8 784)
Total equity-related other changes - - - - 1 85 549 85 550
Balance at 31 December 2022 - - 93 002 226 509 159 820 137 725 560 204
(USD '000)
Interest
payable
Current
lease
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 - 24 977
Transaction costs on capital increase - - - - (878) - (878)
Repayment of lease - (582) - - - - (582)
Interest paid lease - (103) - - - - (103)
Dividends - - - - - (7 204) (7 204)
Total changes from financing cash flow (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
31 Dec 2021
Assets (USD ’000)
Level 1 Level 2 Level 3 Total
Financial assets at fair value through profit or loss
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
Financial assets and financial liabilities
31 Dec 2021
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 - - 252 547 252 547
Mortgage debt, current - - 23 936 23 936
Overdraft 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
13
Reconciliation of movements of liabilities and equity to cash flow arising from financing activities.
Liabilities
Liabilities
Equity
Equity
Total
Total
Accounting policy
Fair value measurement
Derivatives are measured at fair value. The fair value of financial
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 financial
instruments not traded in active markets is determined using
appropriate evaluation techniques.
A fair value measurement of a non-financial asset takes into account
a market participant’s ability to generate economic benefits 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 sufficient 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 financial statements are categorized within the fair value
hierarchy, described as follows, based on the lowest level input that
is significant 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 significant to the fair value measurement is directly or indirectly
observable
Level 3 – Valuation techniques for which the lowest level input that
is significant to the fair value measurement is unobservable.
The fair value of financial 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 specific estimates. If all significant inputs
required to fair value an instrument are observable, the instruments
are included in level 2.
If one or more of the significant 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.
Klaveness Combination Carriers ASA – Annual Report 2022
26
(USD '000) 31 Dec 2022 31 Dec 2021
Trade receivables from charterers 13 629 7 421
Contract assets 9 663 3 437
Prepaid expenses 3 437 2 467
Claims 165 378
Other short term receivables 3 167 4 780
Trade receivables and other current assets 30 061 18 484
Trade receivables and other current assets
14
Accounts receivable comprise all items that fall due for payment within
one year after the balance sheet date. For dry bulk cargo lifted, payment
is generally due within 10 days after the cargo is loaded, while payment
for wet cargo is due immediately upon discharge. Trade receivables are
non-interest bearing. The increase in trade receivables from 2021 to 2022
is mainly related to a considerably stronger tanker market.
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.
The Group has bank deposits in the following currencies:
Capital management
The Group intends to maintain an efficient capital structure, provide
financial ability to execute on the strategy and ensure the Group has
sufficient liquidity to meet liabilities and commitments as they fall due.
KCC targets to have an equity ratio above 40% and gearing ratio (NIBD/
EBITDA adjusted for delivery/sale of vessels) of below 5x with flexibility
to stretch key ratios in growth periods. Furthermore, KCC shall have
sufficient funds to withstand twelve months of weak markets/ earnings.
The equity ratio as of 31 December 2022 was 46 % (2021: 40 %) and cash
was USD 64.9 million (2021: USD 53.9 million). In addition, the Group
had USD 44.9 million in undrawn revolving and overdraft credit facilities
available as of 31 December 2022. 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
flows. Available cash, loan covenants and the balance sheet composition
are monitored to make sure that the Group has the necessary financial
strength to continue operating as a going concern.
The Group aims to spend free cash flows as follows:
• Maintain and/or improve financial capacity and flexibility. 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 sufficient assurance to the debt and equity
providers that the Group’s financial position is solid and sustainable.
• Maintain an attractive dividend policy. KCC targets to distribute a
substantial part of the free cash flow to the shareholders.
The Group’s capital structure consists of mortgage debt (note 13), bond
loan (note 13), overdraft facility (note 13), cash and cash equivalents and
equity attributable to the shareholders.
Cash and cash equivalents
Financial risk management
15
16
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 financial
reporting.
The risk assessment is a multi-disciplinary process generally performed
on a quarterly basis. The value chain is assessed both upstream and
downstream in addition to direct effects on KCC’s business activities.
All relevant risks are assessed based on defined impact and probability
levels and focus on the next 12 months shown in the table below:
In addition to the specific assessment for the rolling 12 months period,
an assessment of the long-term risk is included from time to time and
at least on an annual basis. The risk management process includes the
following:
* Normally on a quarterly basis the finance team (in close
corporation with commercial, technical and management) assesses
the overall risk development with focus on main risks and new risks
discovered, including assessing impact and probability for each risk
and define potential mitigating actions for the main risks
* The main risks are reported and discussed with the Audit
Committee and the Board of Directors. A main risk is a risk already
identified and well understood that could materially impact the
financial 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, after 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.
(USD '000) 31 Dec 2022 31 Dec 2021
Bank deposits, NOK 1 861 9 340
Bank deposits, USD 58 782 44 092
Bank deposits, EUR 3 730 -
Bank deposits, other 65 42
Cash 410 389
Payroll withholding tax account (restricted cash, NOK) 69 74
Total cash and cash equivalents 64 918 53 937
Risk Probability Impact
Low < 3% < USD 3 million
Medium 3 -30% USD 3 - 15 million
High > 30% > USD 15 million
Risk Description Risk type
Main risks next 12 months
Weak freight rates and
changes in trade flows
Freight rates are the main earnings driver for the Group. A fall in freight rates for dry bulk commodities, caustic soda
or clean petroleum products can have a material impact on the financials of the Group. The effect of lower freight
is somewhat offset by low historical correlation between dry bulk and product tankers freight rates. High fixed rate
contract coverage for the CABU fleet for 2023 reduces the freight rates risks next 12 months. KCC is dependent on
certain trade flows in order to obtain efficient combination trading. Production issues at plants, mines, and refineries
in export regions, difference in regional commodity prices (arbitrage opportunities) as well as regional and global wars
and conflicts may impact these trade flows.
This is exemplified by Russia’s war on Ukraine, having a material impact on the trades flows for both dry bulk
commodities and clean petroleum products. As a major exporter of dry bulk commodities (e.g. grains and iron ore)
from the Black Sea the direct impact on the demand for dry bulk shipping was negative. While for product tankers the
impact was positive as importers reshuffled their sourcing.
Market
CLEANBU commercial
and technical
performance
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 one to three cargoes to avoid cargo contamination or where
policies exclude the use of combination carriers like the CLEANBU vessels.
Introduction of new ship types or concepts will normally require technical adjustments and modifications, which
will take time and may lead to off-hire and delayed deliveries.
There are outstanding guarantee items relating to one of the CLEANBU vessels, implying additional off-hire
related to the repairs in 2023. While the shipyard is obliged to bear the cost of repairs, additional related costs
may incur, and off-hire will be borne by KCC unless covered by KCC’s loss of hire insurance.
Operational
& technical
Vessel age
Due to stricter environmental regulations and customer requirements, older tonnage is in danger of both being
rerated and losing competitiveness to more modern tonnage. The consequences for older tonnage can be lower
capacity due to speed restrictions and lower utilization due to more waiting time.
For the Group this can result in less flexibility and lower net revenue for the oldest vessels in the fleet. As per
year-end 2022, the Group owns three CABU vessels above 20 year age.
Operational
& technical
Retrofit project risk
In 2023 KCC will retrofit two vessels with air lubrication system and shaft generator to reduce fuel consumption.
One of the main pillars of KCC’s strategy is to improve the energy efficiency and consequently the environmental
footprint of the fleet. Success depends on the ability to deliver on retrofit/energy saving device projects at the
budgeted cost and time, and that the retrofits deliver the estimated fuel/energy savings.
Operational
& technical
Klaveness Combination Carriers ASA – Annual Report 2022
27
Risk Description Risk type
The following table presents the risks considered to be main longer-term risks for KCC
Global economic
growth and the
impact on energy
and commodity
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. The Group is exposed to changes in trade flows and in particular changes in flows in the
Group’s main trades in the alumina value chain.
Furthermore, the demand for seaborne transportation is dependent on open economies and low barriers to
trade. Trade restrictions such as tariffs and embargos can have a negative impact on the demand for seaborne
transportation.
Market
Impact of a low-
carbon future with
introduction of
emission regulations,
zero-emission vessels
and lower demand
for transportation of
fossil fuels
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 competitiveness of
the Group’s existing fleet and might result in lower revenue and/or impairment of vessel values
• New regulations can lead to material cost related to upgrades and retrofits to comply with regulations and / or
material impairment of operational flexibility and / or operational limitations
• New regulations, such as the EU taxonomy, can reduce and restrict 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
Climate-
related
Financial risk management
16
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 approves 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 and technical risk
Operational risks are mainly related to the operation of vessels. The
Group’s vessels are on technical management to Klaveness Ship
Management AS (affiliated company) which ensures compliance
with IMO, flag and port state regulations. Quality and safety
audits are performed regularly and the crew and officers 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
financial impact of a total loss of a vessel will not be material for the Group.
The COVID-19 pandemic continued impacting vessel operations in 2022,
however to a lesser extent than in 2021.
Market risk
Ownership of vessels involves risks related to vessel values, future vessel
employment, freight rates and costs. Freight rates are volatile and a fall
in freight rates may impact financial results of the Group negatively. Over
time, vessel values may fluctuate, 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 affreightment and forward freight
agreements (FFA) covering part of the Group’s future fleet capacity for
the nearby year and covering part of the exposure for the next 1-2 years.
A significant expense for transport at sea is bunkers. The price of fuel
is unpredictable and fluctuates based on events outside the Group’s
control. To reduce the risk of fluctuations 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 i s the fun ctio nal curre ncy of a ll signif icant e ntitie s in the Gr oup.
Fluctuations in USD against NOK may affect the Group’s tax payable, which
will be calculated and paid in NOK. This effect is considered to be limited.
The Group’s interest bearing debt is exposed to floating 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-effect is currently fixed to USD and the floating interest
rate exposure has been converted to a fixed USD interest rate. Long term
mortgage debt bears interest at LIBOR/SOFR plus an applicable margin.
In order to hedge the risk, the Group has entered into interest rate swaps.
At 31 December 2021, 43% of the floating interest mortgage debt loans
are hedged including undrawn RCF commitments. 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 Offered 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.
As recommended by the Alternative Reference Rates Committee (a
committee convened by the Federal Reserve), Secured Overnight
Financing Rate (SOFR) will replace LIBOR as a standard interest rate
benchmark. The Group has amended one of the debt facility agreements
to replace LIBOR with CME Term SOFR/SOFR. The Group expects to
initiate negotiations with the remainder of counterparties to transition
from LIBOR to an alternative benchmark within first half of 2023 for
relevant agreements. 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 profit before tax for the
Group from changes in interest rates in 2022 and 2021, with all other
variables held constant. The changes are estimated based on a change in
variable interest rate index given capital structure and hedges as of year-
end 2022 and year-end 2021. In 2022 for every 100 bps increase in index
interest rate, interest costs on debt increases by approx. USD 1.3 million.
Counterparty/credit risk
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, a contract, may have
material adverse consequences on the contract portfolio earnings. The
counterparty’s financial strength will thus be very important.
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 flows and volumes may adversely affect the Group’s earnings
and financial position.
Counterparty risk is managed by mandates approved Board of Directors
and know your counterparty (KYC) procedures. The counterparty
mandates set out the exposure (amount and duration) permitted for a
given counterparty based on that counterparty’s credit standing.
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 financial consequences.
Further, the Group is exposed to credit risk through its deposits.
Deposits are currently made with investment grade financial institutions
with A rating or higher from public rating agencies. However, there are
concentration risk as deposits are held with only a few institutions.
Total unrisked credit exposure at 31 December 2022 amounts to USD 95.0
million, 2021: USD 72.4 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 fulfil its
liabilities when they fall due.
Volatility in freight rates, daily settlement of cleared derivatives and the
potential need for posting collateral related to certain OTC derivatives
are significant sources to liquidity risk. The Group manages these risks by
hedging mandates setting out the permitted position and stress testing.
The Group has capital commitments relating to borrowings and
investments.
The liquidity risk is considered to be limited as the deposits, committed
bank debt and estimated cash flow are considered sufficient for all
needs in the foreseeable future. The Group’s bank financing is subject
to financial and non-financial covenants. The Group keeps its liquidity
reserves mainly in cash and bank deposits
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments. Interest bearing
debt includes interest payments and is net of interest rate and cross currency derivative hedges.
Loan facilities to be refinanced during the next 12 months are included in <1 year.
Change in bps (effect in USD’000) 2022 2021
+100 - 1 314 - 1 680
+50 - 657 - 840
-50 657 120
-100 1 314 - 70
Maturity profile financial liabilities
31 Dec 2022
< 1 year 1-3 years 3-5 years > 5 years Total
Mortgage debt (incl interests) 105 989 87 133 88 196 - 281 317
Bond loan (incl interest) 4 757 81 867 - - 86 624
Other interest bearing liabilities 233 - - - 233
Trade and other payables 22 250 - - - 22 250
Current debt to related parties 693 - - - 693
133 923 169 000 88 196 - 391 118
Maturity profile financial liabilities
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
Klaveness Combination Carriers ASA – Annual Report 2022
28
Name Position Number of shares
Engebret Dahm Chief Executive Officer 20 532 (held through E Dahm Invest AS)
Liv Hege Dyrnes Chief Financial Officer 6 500
Magne Øvreås Board member Indirectly owns 9.9 % of EGD Shipping Invest AS which holds 8 805 128 shares
Largest shareholders at 31 December 2022
Ownership
Number of shares
Ownership
In %
Rederiaksjeselskapet Torvald Klaveness 28 154 231 53.8%
EGD Shipping Invest AS 8 805 128 16.8%
Goldman Sachs & Co. LLC (nominee) 2 579 841 4.9%
Hundred Roses Corporation 2 227 250 4.3%
J.P. Morgan SE (nominee) 1 139 992 2.2%
Verdipapirfondet Nordea Norge Verd 851 873 1.6%
T.D. Veen AS 710 000 1.4%
Jed AS 433 080 0.8%
Verdipapirfondet Nordea Avkastning 400 000 0.8%
Six Sis AG (nominee) 371 836 0.7%
Other 6 698 769 12.8%
Total 52 372 000 100%
31 Dec 2022 31 Dec 2021
Weighted average number of ordinary shares for basic EPS 52 372 000 48 677 360
Effects of dilution from:
Share options 65 280 65 280
Warrants 229 088 229 088
Weighted average number of ordinary shares for the effect of dilution 52 666 368 48 971 728
Date Shares Notional (NOK) Share capital (NOK)
Shares and sharecapital at 31 December 2020 48 027 000 48 027 000
Shares issued 4 November 2021 4 345 000 1 48 027 000
Shares and sharecapital at 31 December 2021 52 372 000 52 372 000
Shares and share capital at 31 December 2022 52 372 000 52 372 000
Model inputs
Dividend yield (%) -
Expected volatility (%)* 40%
Risk-free interest rate (%)** 1.28%
Expected life of share options (year) 5
Weighted average share price (NOK) 45.9
Climate-related risks
Climate-related risks include both transition risks and physical risks with
focus on transition risks as this is considered to have a larger impact and
probability for KCC. Transition risk mainly relate to effect of reduced
demand for the Group’s services and the risk of stranded assets and new
regulations as the fleet moves to low-carbon fuel. For 2022 (2021), total
fossil fuel shipments accounted for xx % (17 %) of the Group’s transported
volumes in metric tons.
Compliance risk
The legal and regulatory requirements of the Group are 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,
laws related to human rights and working conditions 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 financial
position.
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 five 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 program was
fully vested in December 2022.
The fair value of the share options granted was calculated on the Black-Scholes-Merton method at the time of grant. The significant assumptions used
to estimate the fair value of the share options are set out below:
Financial risk management
16
Share option program
17
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 2022 is USD 35k (2021: USD 42k).
*The expected volatility reflects the assumption that the historical shipping industry average is indicative of future trends, which may not necessarily be the actual outcome.
**Average five-year Norwegian Government bond risk-free yield-to-maturity rate of 1,28 % as of 2019 was used as an estimate for the risk-free rate to match the expected five
year term of the share options.
Number of shares Average exercise price 2022 2021
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
Dividends of in total USD 42.4 million were paid to the shareholders in 2022 (in average USD 0.81 per share).
A capital increase of USD 25 million was completed on 4 November 2021 through a private placement to fund energy efficiency initiatives for the
existing fleet. The Board approved the allocation of 4 345 000 shares in the private placement at a price of NOK 49.00 per share.
Share capital
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 are 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
Klaveness Combination Carriers ASA – Annual Report 2022
29
Type of service/transaction
(USD ’000)
Provider* Receiver* Price method 2022 2021
Technical management fee (opex) KSM KCCS Fixed fee per vessel 3 819 3 979
Crewing and IT fee (opex) KSM KCCS Fixed fee per vessel 1 565 1 550
Supervision fee and project management fee (newbuilding) KSM KCCS Partly cost and partly cost + 7.5% - 1 333
Board member fee (administrative expenses) KAS KCC
Fixed fee as per annual general
meeting
85 94
Sales support, sale of vessel (gain on sale of vessels) (note 7) KAS KCCS Cost for time used + 7.5% - 31
Technical management fee for termination of agreement
(gain on sale of vessels)
KSM KCCS 3 months temination period - 44
Total other services/ transactions 5 468 7 031
Holder No. Of Warrants
Subscription price
(NOK)
Exercise Levels (NOK)* Expiry
Rederiaksjeselskapet Torvald Klaveness 159.377 44.38 55.48/66.57/77.67 September 2023
EGD Shipholding AS 55.691 44.38 55.48/66.57/77.67 September 2023
Hundred Roses Corporation 14.020 44.38 55.48/66.57/77.67 September 2023
Total 229.088
Share capital, shareholders, dividends and reserves
18
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.
* Not adjusted for dividends
Transactions with related parties
19
The ultimate owner of the Group is Rederiaksjeselskapet Torvald Klaveness (RASTK), which owns 53.8 % of the shares in Klaveness Combination
Carriers ASA.
Relets of dry bulk cargoes between KCC Chartering AS and AS Klaveness Chartering (related party in the Torvald Klaveness Group) are made at spot pricing without any
compensation either way.
** Hire from BAU to KCCC less pool managememnt fee. MV Bangor entered the pool in August 2021 and exited the pool agreement on 3 January 2022.
*** Fixture fee applicable for fixtures in 1h 2022. From 1 July 2022 the service fee is based on time spent (cost + 7.5%) and included in ”Total group commercial and
administrative services”.
Net revenue from operation of vessels
Group commercial and administrative services
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 (parent company). Prior to the transfer, commercial 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 profit margin is added to the transactions, but a service
fee is charged on a cost + 7.5 % basis reflecting the time spent by the
bunkering team and charged as part of the Commercial Services from
Klaveness Dry Bulk AS.
Type of service/transaction
(USD ’000)
Provider* Receiver* Price method 2022 2021
Business administration services KAS
KCC ASA,
on behalf of KCC companies
Cost + 5% 1 641 1 457
Business administration services KA Ltd KCCA Ltd Cost + 5% 160 119
Commercial services KSM KCCC Cost + 7.5% 825 1 203
Subscription Cargo Value
(linked to COA with external party)
CIA KCC Fixed fee 60 -
FFA trading/Dry bulk chartering KDB KCCC
0.1% of transaction
value/Cost + 7.5%
279 49
Project management KSM KCCS, KCC Cost + 7.5% 1 237 881
Total group commercial and administrative services 4 202 3 708
Type of service/transaction
(USD ’000)
Provider* Receiver* Price method 2022 2021
Pool Participation BAU KCCC Standard pool agreement** 49 3 735
Dry bulk chartering KDB KCCC 1.25% of transaction value*** (472) (255)
Total net revenue from related parties (423) 3 480
Other services/transactions
KCCC has a bunkers derivative position of 4 800 tons (Cal-23) towards KC (a related party in the Torvald Klaveness Group) at a cost of USD 12 720 to
cover margin requirments etc. Market value of the portfolio with KC was negative USD 250k as per 31 December 2022 and presented as a financial asset
in Statement of Financial Position.
*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 Dry Bulk AS (KDB), Klaveness Combination
Carriers Asia Pte.Ltd (KCCA Ltd), Baumarine AS (BAU), Cargo Intelligence AS (CIA) and Klaveness Digital AS (KD).
Short term assets and debt related parties
(USD ’000)
31 Dec 2022 31 Dec 2021
Klaveness Ship Management AS 137 1 502
Klaveness AS - 12
Baumarine AS - 505
Klaveness Chartering AS 65
Short-term receivables from related parties 202 2 018
AS Klaveness Chartering - 660
Short- term financial assets - 660
Klaveness AS 197 212
Klaveness Ship Management AS 273 341
Klaveness Chartering AS 201 312
Klaveness Asia Pte.Ltd 21 30
Short-term debt to related parties 693 895
Accounting policy
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the party
in making financial and operating decisions. Parties are also related if they are subject to common control or common significant influence.
Related parties transactions are recorded to estimated fair value.
Klaveness Combination Carriers ASA – Annual Report 2022
30
(USD ‘000)
Tax payable
Income
31 Dec 2022
Tax effect
Income
31 Dec 2021
Tax effect
Profit / loss (-) before taxes, incl OCI 85 515 18 813 20 955 4 610
Income from shipping activity, tonnage tax system (62 064) (13 654) (35 688) (7 851)
Change in temporary differences (9 221) (2 029) 5 137 1 130
Change in tax losses carried forward 6 905 1 519 1 858 409
Exchange rate differences / Other permanent differences (21 136) (4 650) 7 737 1 702
Tax payable foreign subsidiaries - - - 7
Tax payable in the balance sheet - - - 7
Effective tax rate - 0% - 0%
Tonnage tax (included in operating profit) - 188 - 221
Correction prior year tonnage tax - 5 - 5
Total tax payable in the balance sheet - 193 - 233
Company name Location
Ownership interest
per 31 Dec 2022
Ownership interest
per 31 Dec 2021
KCC Shipowning AS Oslo, Norway 97% Directly / 100 % Indirectly 100%
KCC KBA AS Oslo, Norway - 100%
KCC Chartering AS Oslo, Norway 100% 100%
Klaveness Combination Carriers Asia Pte. Ltd Singapore 100% 100%
Income taxes for the year
(USD ‘000)
31 Dec 2022 31 Dec 2021
Income taxes payable - 7
Change in deferred tax - -
Total tax expense / income (-) reported in the income statement - 7
Tax on net (gain)/loss on revaluation of cash flow hedges - -
Deferred tax charged to OCI - -
List of subsidiaries
20
The merger of Klaveness Combination Carriers ASA and the 100% owned subsidiary, KCC KBA AS, was registered and finalized on 4 August 2022. The
subsidiary had no activities, and the merger has no effect on the consolidated figures.
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 chartering and commercial and operation team of four employees was 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.
Taxes
Events aer the balance sheet date
21
22
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 financial year 2022 KCC Shipowning AS and KCC Chartering AS have
payable tonnage taxes of USD 188k.
Ordinary taxation
The Parent Company (Klaveness Combination Carriers ASA) is under
ordinary taxation rules in Norway. The ordinary rate of corporation
tax in Norway is 22 % for 2022 (2021: 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 2022. For the
financial year 2022 Klaveness Combination Carriers Asia Pte Ltd has a
payable tax expense of USD 0.3k.
Deferred tax assets
Deferred tax assets are only recognised to the extent that future
utilisation within the Group can be justified as per 31 December 2022.
As a consequence, a tax position of USD 9.2 million per 31 December
2022 has not been recognised in the balance sheet. The tax position is
mainly due to accumulated financial 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.
In January 2023 KCC Shipowning AS, a subsidiary of KCC, repaid USD 15 million in debt under a revolving credit facility agreement. The amount is,
however, available to be redrawn under this revolving credit facility agreement.
On 15 February 2023, the Company’s Board of Directors declared to pay a cash dividend to the Company’s shareholders of USD 15.7 million for Q4 2022
(USD 0.30 per share).
On 22 February 2023, the CEO of Klaveness Combination Carriers ASA, Engebret Dahm, exercised all his 38,580 options in the Company against cash
settlement by the Company. The share options were granted in December 2019 and were fully vested in December 2022 (Group note 7). The amount
payable per share from the Company is equal to NOK 81.0 per share (close on 22 February 2023) less exercise price of NOK 32.8 per share (exercise price
at grant date less dividends paid since grant date). The option settlement in cash of USD 0.2 million will be recognized as payroll expenses in Q1 2023.
There are no other events after the balance sheet date that have material effect on the financial statement as of 31 December 2022.
Companies subject to tonnage tax regimes are exempt from ordinary tax on their shipping income. Within the Group, the subsidiaries KCC Shipowning
AS and KCC Chartering AS are subject to tonnage taxation. Companies within the tonnage tax system pay a tonnage fee based on the deadweight
tonnage of the vessels. The fee is recognized as an operating expense. Financial income is taxed under the Norwegian tonnage tax regime, however
only a portion of the interest cost and net currency expenses are deductible.
(USD ‘000)
Temporary differences - ordinary taxation
Temporary
difference
31 Dec 2022
Tax effect
Temporary
difference
31 Dec 2021
Tax effect
Temporary differences (5 678) (1 249) (14 899) (3 278)
Tax losses carried forward (35 961) (7 911) (29 057) (6 392)
Deferred tax asset not recognised in the balance sheet 41 639 9 161 43 956 9 670
Net temporary differences - deferred tax liability/asset (-) - - - -
Deferred tax asset in balance sheet - - - -
Deferred tax liability in balance sheet - - - -
Accounting policy
Under the tonnage tax regime, profit 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 profit & loss. Taxable profit
is calculated on the basis of financial income after deduction of a
portion of financial expenses (based on financial 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 differences 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 offset 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.
Klaveness Combination Carriers ASA – Annual Report 2022
31
Financial Statements
of the Parent Company
Klaveness Combination Carriers ASA – Annual Report 2022
32
(USD ‘000) Notes 2022 2021
Profit after tax 21 527 (7 893)
Other comprehensive income to be reclassified to profit or loss
Net movement fair value on interest rate swaps (3 707) (404)
Reclassification to profit and loss (CCIRS) 8 559 2 773
Other comprehensive income/(loss) for the period, net of tax 4 852 2 368
Total comprehensive income/(loss) for the period, net of tax 26 378 (5 525)
Attributable to:
Equity holders of the parent company 26 378 (5 525)
(USD ‘000) Notes 2022 2021
Service and management fee revenue 5 865 828
Other revenue 5 6 -
Total revenues 871 828
Group commercial and administrative services 5 (1 481) (1 299)
Salaries and social expenses 6 (1 987) (1 780)
Other operating and administrative expenses 2 (980) (650)
Operating profit (EBITDA) (3 576) (2 900)
Operating profit after depreciation (EBIT) (3 576) (2 900)
Finance income 9 30 718 1 204
Finance costs 9 (5 615) (5 828)
Profit before tax from continued operations 21 527 (7 524)
Income tax expenses 7 - 1 848
Profit after tax from continued operations 21 527 (5 676)
Profit/(loss) from discontinued operations 10 - (2 217)
Profit for the year 21 527 (7 893)
Statutory Financial Statements
Klaveness Combination Carriers ASA – Parent Company
Income Statement
Statement of Comprehensive Income
Year ended 31 December Restated*
Year ended 31 December Restated*
*2021 is restated due to merger between companies under common control (note 10).
*2021 is restated due to merger between companies under common control (note 10).
Assets
(USD ‘000)
Notes 31 Dec 2022 31 Dec 2021
Non-current assets
Investment in subsidiaries 3 247 850 247 850
Long-term loan to related parties 5 11 820 15 000
Long-term financial assets 8 528 2 556
Other long-term receivables 5 70 70
Total non-current assets 260 268 265 476
Current assets
Inventories 99 166
Short-term financial assets 744 -
Trade receivables and other current assets 258 78
Cash and cash equivalents 4 10 044 21 221
Short-term loan to related parties 5 - 6 165
Short-term receivables from related parties 5 592 56
Total current assets 11 737 27 686
Total assets 272 005 293 162
Equity and liabilities
(USD ‘000)
Notes 31 Dec 2022 31 Dec 2021
Equity
Share capital Group 18 6 234 6 234
Share premium 243 054 243 054
Other reserves 4 521 (330)
Retained earnings (72 171) (40 796)
Equity attributable to equity holders of the parent 181 637 208 162
Non-current liabilities
Bond loan 8 69 975 78 205
Financial liabilities 8 2 466 43
Total non-current liabilities 72 441 78 248
Current liabilities
Short-term debt to related parties 5 210 215
Trade and other payables 11 17 717 6 536
Total current liabilities 17 927 6 751
Total equity and liabilities 272 005 293 162
Statement of Financial Position
Restated*
Restated*
*2021 is restated due to merger between companies under common control (note 10).
Ernst Meyer
Chair of the Board
Gøran Andreassen
Board member
Magne Øvreås
Board member
Oslo, 6 March 2023
Oslo, 31 December 2022
Engebret Dahm
CEO
Brita Eilertsen
Board member
Winifred Patricia Johansen
Board member
Klaveness Combination Carriers ASA – Annual Report 2022
33
2022
(USD ‘000)
Share
capital
Other paid
in capital
Treasury
shares
Hedging
reserve
Retained
earnings
Total
equity
Equity at 1 January 2022 6 234 243 054 (147) (184) (40 795) 208 162
Profit (loss) for the period - - - - 21 527 21 527
Other comprehensive income for the period - - - 4 852 - 4 852
Dividends - - - - (52 933) (52 933)
Share option program (Group note 17) - - - - 30 30
Equity at 31 December 2022 6 234 243 054 (147) 4 668 (72 171) 181 637
Klaveness Combination Carriers ASA – Parent Company
Statement of Changes in Equity
Attributable to equity holders of the Parent Company
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
Business combination under common control (note 10) - - - - (5 885) (5 885)
Restated Equity at 1 January 2021 5 724 219 478 (147) (2 552) (21 985) 200 518
Profit (loss) for the period - - - - (7 893) (7 893)
Other comprehensive income for the period - - - 2 368 - 2 368
Dividends - - - - (10 964) (10 964)
Capital increase 510 23 576 - - - 24 086
Share option program (Group note 17) - - - - 47 47
Equity at 31 December 2021 6 234 243 054 (147) (184) (40 795) 208 162
Cash Flow Statement
Restated*
*2021 is restated due to merger between companies under common control (note 10).
(USD ‘000) Notes 2022 2021
Profit before tax 21 527 (7 524)
Interest income (1 618) (1 204)
Interest expenses 5 102 5 050
Dividends from subsidiaries 9 (29 100) -
Amortization of transaction cost on issuance on loans 253 253
Gain (-) /loss on foreign exchange 211 525
Change in current assets (113) 102
Change in current liabilities 530 215
Change in other working capital (549) 1 242
Interest received 1 525 1 089
A: Net cash flow from operating activities (2 232) (253)
Investment in subsidiaries 3 - (300)
Received dividends from subsidiaries 29 100 -
Long term loan to related parties 5 - (17 790)
Repayment of loan to related parties 5 9 345 10 500
B: Net cash flow from investment activities 38 445 (7 590)
Interest paid (4 968) (5 041)
Paid in registered capital increase Group 18 - 24 977
Transaction costs on capital increase Group 18 - (878)
Group contribution - 2 756
Dividends Group 18 (42 421) (7 204)
C: Net cash flow from financing activities (47 390) 14 609
D: Net cash flow from discontinued operations 10 - (7 373)
Net change in liquidity in the period (A + B + C + D) (11 177) (607)
Net foreign exchange difference - (742)
Cash and cash equivalents at beginning of period 21 221 22 569
Cash and cash equivalents at end of period 4 10 044 21 221
Net change in cash and cash equivalents in the period (11 177) (607)
Klaveness Combination Carriers ASA – Annual Report 2022
34
Accounting policies
01
Basis of preparation
Klaveness Combination Carriers ASA (referred to as the Company/the
Parent Company/KCC) 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.
The financial statements as per 31 December 2022 of Klaveness
Combination Carriers ASA have been prepared in accordance with
simplified IFRS pursuant to the Norwegian Accounting Act §3-9 and
regulations regarding simplified 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 income 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/group contribution
Dividend income and/or Group contribution are recognised in Company’s
financial statements as financial income and current assets per year- end.
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 financial year that the proposal of dividend relates to.
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 financial liabilities
09
Financial items
10
Restatement of 2021
11
Events after the balance sheet date
Notes
Klaveness Combination Carriers ASA – Annual Report 2022
35
(USD '000) 31 Dec 2022 31 Dec 2021
Bank deposits, USD 5 867 12 474
Bank deposits, NOK 1 443 8 672
Bank deposits, EUR 2 665 -
Payroll withholding tax account (restricted cash, NOK) 69 74
Total cash and cash equivalents 10 044 21 221
(USD '000) 2022 2021
Statutory audit 97 107
Other assurance services from auditor 33 26
Total 130 133
(USD '000) Location
Voting share/
ownership
2022 2021
KCC Chartering AS Oslo, Norway 100% 7 456 7 456
KCC Shipowning AS Oslo, Norway 97% 240 093 240 093
KCC Asia Pte. Ltd Singapore 100% 300 300
Investment in subsidiaries 247 850 247 850
Book value of shares
- common control merger in 2022 (note 10)
Voting share/
ownership
2022 2021
KCC KBA AS (note 10) 100% - 6 100
Operating expenses
Investment in subsidiaries
Cash and cash equivalents
02
03
04
Shares in subsidiaries in Parent Company accounts are recorded at cost.
The Company owns KCC Shipowning AS 100 % indirectly through KCC Chartering AS. 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).
Auditor’s fee is stated excluding VAT.
The Company has bank deposits in the following currencies:
Type of service/transaction Receiver* Price method 2022 2021
Business administration services KCCS Cost + 5 % 467 325
Business administration services KCCC Cost + 5 % 392 364
Commercial management services KCCC Cost + 7.5 % 6 139
Board member fee KD Fixed fee 6 -
Service and management fee revenue 871 828
Type of service/transaction Receiver* Price method 2022 2021
Business administration services KAS Cost + 5% or overhead per employee (794) (780)
Business administration services KSM Cost + 5% or overhead per employee (60) -
Project management KSM Cost + 7.5% (482) (424)
Subscription Cargo Value
(linked to COA with external party)
CIA Fixed fee (60) -
Board member fee KAS Fixed fee as per annual general meeting (85) (94)
Group administrative services (1 481) (1 299)
Type of service/transaction Receiver* Price method 2022 2021
Interest income loan to related party KCCS 2.2 % 64 183
Interest income loan to related party KCCC 3.65 % (3.4 % prior to 29.2.21) 477 394
Guarantee commission KCCS 0.2 % 536 577
Interest cost loan agreement KCCS Libor 3M + 2.2 % (49) -
Interest income and expenses to related party (note 9) 1 028 1 154
Type of service/transaction Counterparty * 31 Dec 2022 31 Dec 2021
Short- term receivables from related parties KCCS 555 34
Short- term receivables from related parties KCCC 37 22
Short- term loan to related parties KCCS - 6 165
Current assets related parties 592 6 221
Type of service/transaction Counterparty * 31 Dec 2022 31 Dec 2021
Long-term loan to related parties KCCC 11 820 15 000
Other long-term receivables (loan to employees) Employees 70 70
Long- term assets related parties 11 890 15 070
Transactions with related parties
05
Service agreements
The Parent Company has six employees as per year end 2022. The Parent Company delivers administrative and business management services and
commercial management services to subsidiaries. The level of fees is based on cost + a margin in accordance with the arm’s length principle and OECD
guidelines.
Klaveness AS and Klaveness Ship Management AS deliver administrative, commercial and project management services such as accounting, legal,
IT, project and office services to the Parent Company. The level of fees is based on cost + a margin in accordance with the arm’s length principle and
OECD guidelines.
Intercompany balances
* Klaveness AS (KAS), Klaveness Ship Management AS (KSM), KCC Shipowning AS (KCCS), KCC Chartering AS (KCCC), Klaveness Dry Bulk AS (KDB),
Cargo Intelligence AS (CIA) and Klaveness Digital AS (KD).
Klaveness Combination Carriers ASA – Annual Report 2022
36
(USD ’000) Counterparty * 31 Dec 2022 31 Dec 2021
Short-term debt to related parties KAS 83 128
Short-term debt to related parties KCCC 13 57
Short-term debt to related parties KCCS - 25
Short-term debt to related parties KSM 98 5
Short-term debt to related parties KDB 16 -
Current debt to related parties 210 215
* Klaveness AS (KAS), Klaveness Ship Management AS (KSM), KCC Shipowning AS (KCCS), KCC Chartering AS (KCCC), Klaveness Dry Bulk AS (KDB),
Cargo Intelligence AS (CIA) and Klaveness Digital AS (KD).
(USD '000) 2022 2021
Salaries and other remuneration (1 892) (1 679)
Pension benefit (79) (83)
Other social costs (6) (7)
Other personel related expenses (9) (11)
Salaries and social expense (1 987) (1 780)
Salary
06
The Company has six employees as per year end 2022. For more information related to salary expenses - see Group note 7.
Temporary differences - ordinary taxation
(USD ‘000)
Temporary
difference
2022
Tax effect
Temporary
difference
2021
Tax effect
Temporary differences - - - -
Intercepted interest carry forward (1 185) (261) (1 329) (292)
Tax losses carried forward (19 033) (4 187) (14 047) (3 090)
Gains and losses account (11 518) (2 534)
Unrealised gain/loss financial instruments (1 194) (263) 2 513 553
Deferred tax asset not recognised in the balance sheet 32 930 7 245 12 862 2 830
Net temporary differences - deferred tax liability/asset (-) - - - -
Deferred tax asset/liability in balance sheet - - - -
Tax payable
(USD ‘000)
Income
2022
Tax effect
Income
2021
Tax effect
Profit / loss (-) before taxes, incl OCI 26 378 5 803 939 207
Non-deductible expenses 78 17 2 0
Transaction cost capital increase charged over equity - - (863) (190)
Dividends/group contribution from investments covered by the tax exemption model (29 739) (6 543) (8 398) (1 848)
Unrealized gain/loss on financial instruments valued at fair value - - 305 67
Change in tax losses carried forward 6 511 1 432 (1 580) (348)
Total tax basis and tax payable before group contribution 3 229 710 (9 595) (2 111)
Group contribution from KCC KBA AS - - 8 398 1 848
Exchange rate differences (3 229) (710) 1 196 263
Tax payable in the balance sheet - - - -
Effective tax rate - 0% - 0%
Income taxes for the year
(USD ‘000)
2022 2021
Tax payable - -
Effect of the Group contribution - 1 848
Total tax expense / income (-) reported in the income statement - 1 848
Tax on net (gain)/loss on cash flow hedges - -
Deferred tax charged to OCI - -
The Company is regulated by ordinary taxation rules in Norway. The ordinary rate of corporation tax in Norway is 22 % for 2022 (22 % in 2021). The
Company has a positive result before tax, however a dividend of USD 29.7 million is recognised as financial income, but tax exempt under the tax
exemption method, and therefore not part of taxable income. Deferred tax assets are only recognised to the extent that future utilization can be
justified which is not probable as per 31 December 2022. Tax expense for 2022 is zero.
Tax
07
Transactions with related parties
05
KCC, as lender, has provided a loan to KCC Chartering AS (USD 11.8 million). The loan falls due at the end of 2024.
Loans to employees (and affiliates to employees) have been made in connection with employees’ purchase of shares in the Company. Interest on the
loan is set to the Norwegian tax administration is normal interest rate for the taxation of low-cost loans.
Klaveness Combination Carriers ASA – Annual Report 2022
37
Maturity profile
(USD ‘000)
< 1 year 1-3 years 3-5 years > 5 years Total
Bond loan (incl interests) 4 757 81 867 - - 86 624
Financial assets
(USD ‘000)
2022 2021
Financial instruments at fair value through OCI
Cross-currency interest rate swap 1 272 2 556
Financial assets 1 272 2 556
Current 744 -
Non-current 528 2 556
Financial liabilities
(USD ‘000)
2022 2021
Financial instruments at fair value through OCI
Cross-currency interest rate swap 2 466 43
Financial liabilities 2 466 43
Current - -
Non-current 2 466 43
(USD ‘000) 2022 2021
Mortgage debt 249 303 273 929
Net MtM hedging agreements 11 110 553
Accrued unpaid interest 2 541 1 355
Book value of guarantees provided 262 954 275 837
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 fixed rate (cross currency
interest rate swaps /CCIRS). The cross-currency interest rate swaps
qualify for hedge accounting and are recognised at fair value with
changes through other comprehensive income.
Maturity profile to financial liabilities at 31 December 2022
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments including interest
payments and interest hedge.
Covenants
As per 31 December 2022, the Company is in compliance with all financial covenants. Covenants relate to minimum equity (USD 125 million), equity
ratio (30%), and cash (USD 15 million) on a consolidated basis.
KCC guarantees on behalf of KCC Shipowning AS (part of the KCC Group) to the lending banks for the mortgage debt including unpaid interest, costs and
hedging agreements. As of 31.12.2022 sum of loans, accrued interest and net mark-to-mark on hedging contracts amounts to USD 263.0 million.
Financial assets and financial liabilities
08
Bond loan (KCC04)
Face value
NOK’ 000
Year of maturity
Carrying amount
USD’ 000
KCC04 700 000 11.02.2025 76 390
Exchange rate adjustment (5 730)
Capitalized expenses (527)
Bond discount (158)
Total bond loan 700 000 69 975
Finance cost
(USD ‘000)
2022 2021
Interest paid to related parties (note 5) (49) -
Other interest expenses (382) (589)
Interest expenses bond loan (4 767) (4 371)
Amortization capitalized fees on loans (253) (253)
Other financial expenses 46 (90)
Loss on foreign exchange (211) (525)
Finance expenses (5 615) (5 828)
Finance income
(USD ‘000)
2022 2021
Interest income 541 50
Interest income from related parties (note 5) 541 577
Income from investments in subsidiaries 29 100 -
Other financial income from related parties (note 5) 536 577
Finance income 30 718 1 204
In 2022, the Company has receieved dividends of USD 29.1 million from it subsidiary KCC Shipowning AS (note 3).
Financial items
09
Klaveness Combination Carriers ASA – Annual Report 2022
38
The merger of KCC ASA and KCC KBA AS (a 100% owned subsidiary)
was registered 3 August 2022. The merger was made as KCC KBA AS
had no remaining business activities. The merger has been treated
in the accounts based on pooling of interest method due to business
combination under common control, continuation as from 1 January
2022 and restatement of prior period (2021) to reflect as if the companies
were combined as per beginning of the comparable period.
As KCC KBA AS owned and operated one CLEANBU vessel until it was sold
in February 2021, loss for 2021 is classified as discontinued operations.
Restatement of 2021
10
Income statement
(USD ‘000)
KCC ASA KCC KBA AS #1 #2 #3 2021 Restated
Operating revenue, vessels - 1 300 (1 300) - - -
Service and management fee revenue 842 - - - (14) 828
Total revenues 842 1 300 (1 300) - (14) 828
Voyage costs - 77 (77) - - -
Operating expenses, vessels - (452) 452 - - -
Loss on sale of assets - (777) 777 - - -
Group administrative services (1 299) (48) 48 - - (1 299)
Salaries and social expenses (1 780) - - - - (1 780)
Other operating and administrative expenses (650) (18) 18 - - (650)
Operating profit (EBITDA) (2 886) 83 (83) - (14) (2 900)
Depreciation - (185) 185 - - -
Operating profit after depreciation (EBIT) (2 886) (102) 102 - (14) (2 900)
Finance income 9 652 2 (2) (8 398) (50) 1 204
Finance expenses (5 828) (334) 334 - - (5 828)
Profit before tax from continued operations 939 (433) 433 (8 399) (64) (7 524)
Income tax expenses 1 848 (1 848) 1 848 - - 1 848
Profit after tax from continued operations 2 787 (2 281) 2 281 (8 399) (64) (5 676)
Profit after tax from discontinued operations - - (2 281) - 64 (2 217)
Profit after tax 2 787 (2 281) - (8 398) - (7 893)
Comments to adjustments
#1) Elimination of discontinued operations
#2) Elimination of group contribution from KCC KBA recognised as finance income in KCC ASA.
#3) Elimination of intercompany transactions
Assets
(USD ‘000)
KCC ASA KCC KBA AS #4 #5 2021 Restated
Investment in subsidiaries 263 357 - (15 507) - 247 850
Long-term loan to related parties 15 000 - - - 15 000
Financial assets 2 556 - - - 2 556
Other long-term receivables 70 - - - 70
Total non-current assets 280 983 - (15 507) - 265 476
Inventories 166 - - - 166
Trade receivables and other current assets 77 1 - - 78
Cash and cash equivalents 21 029 192 - - 21 221
Short-term loan to related parties 6 465 - - (300) 6 165
Short-term receivables from related parties 45 895 - (884) 56
Total current assets 27 782 1 088 - (1 184) 27 686
Total assets 308 765 1 088 (15 507) (1 184) 293 162
Liabilities
(USD ‘000)
KCC ASA KCC KBA AS #4 #5 2021 Restated
Share capital 6 234 1 109 (1 109) - 6 234
Share premium 243 054 6 091 (6 091) - 243 054
Other reserves (330) - - - (330)
Retained earnings (26 077) (6 412) (8 307) - (40 796)
Equity attributable to equity holders of the parent 222 881 788 (15 507) - 208 162
Bond loan 78 205 - - - 78 205
Financial liabilities 43 - - - 43
Total non-current liabilities 78 248 - - - 78 248
Current debt to related parties 1 099 300 - (1 184) 215
Trade and other payables 6 536 - - - 6 536
Total current liabilities 7 636 300 - (1 184) 6 751
Total equity and liabilities 308 765 1 088 (15 507) (1 184) 293 162
Comments to adjustments
#4) Elimination of shares in KCC KBA AS as per 31 December 2021
#5) Intercompany balances between the two merging companies as per 31 December 2021
Klaveness Combination Carriers ASA – Annual Report 2022
39
Cash flow statement
(USD ‘000)
2021
KCC KBA AS
Profit before tax (435)
Loss/ (gain) on sale of fixed assets 777
Ordinary depreciation 185
Exchange rate (125)
Interest income (2)
Interest expenses 272
Change in current assets 195
Change in current liabilities (2 193)
Interest received 2
A: Net cash flow from operating activities (1 324)
Sale of asset 3 182
B: Net cash flow from investment activities 3 182
Proceeds from loan from related parties 300
Repayment of loan from related parties (6 500)
Interest paid (272)
Group contribution (2 756)
Repayment of financial lease liabilities (3)
C: Net cash flow from financing activities (9 231)
Net change in liquidity in the period (A + B + C) (7 373)
Cash and cash equivalents at beginning of period 7 565
Cash and cash equivalents at end of period 192
Net change in cash and cash equivalents in the period (7 373)
Net cash flow from discontinued operations (7 373)
Reconciliation of cash flow from discontinued operations in restated cash flow statement
On 15 February 2023, the Company’s Board of Directors declared to pay a cash dividend to the Company’s shareholders of USD 15.7 million for Q4 2022
(USD 0.30 per share). A provision of USD 15.7 million has been included as trade and other payabels as per 31 December 2022.
On 22 February 2023, the CEO of Klaveness Combination Carriers ASA, Engebret Dahm, exercised all his 38,580 options in the Company against cash
settlement by the Company. The share options were granted in December 2019 and were fully vested in December 2022 (Group note 7). The amount
payable per share from the Company is equal to NOK 81.0 per share (close on 22 February 2023) less exercise price of NOK 32.8 per share (exercise price
at grant date less dividends paid since grant date). The option settlement in cash of USD 0.2 million will be recognized as payroll expenses in Q1 2023.
There are no other events after the balance sheet date that have material effect on the Financial Statement as of 31 December 2022.
Events aer the balance sheet date
11
Restatement of 2021
10
We confirm that, to the best of our knowledge, the consolidated financial
statements for the period 1 January to 31 December 2022 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, financial position and profit. We
also confirm, to the best of our knowledge, that the Board of Directors’
Report includes a fair review of important events that have occurred
during the financial year and their impact on the consolidated financial
statements of Klaveness Combination Carriers ASA, and a description of
the principal risks and uncertainties for 2023.
FINAL Annual Report 2022.pdf
Name Method Signed at
Johansen, Winifred P Loum BANKID_MOBILE 2023-03-06 18:02 GMT+01
Andreassen, Gøran BANKID_MOBILE 2023-03-06 17:09 GMT+01
Øvreås, Magne BANKID_MOBILE 2023-03-06 17:03 GMT+01
Dahm, Engebret BANKID 2023-03-06 16:48 GMT+01
MEYER, ERNST ANDRÉ BANKID_MOBILE 2023-03-06 16:41 GMT+01
Eilertsen, Brita BANKID 2023-03-06 19:57 GMT+01
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The responsibility statement includes the Board of Directors
and the CEO’s approval of Annual Report 2022.
The CEO and Board of Directors of Klaveness Combination Carriers ASA
Responsibility Statement
Klaveness Combination Carriers ASA – Annual Report 2022
40
Statsautoriserte revisorer
Ernst & Young AS
Dronning Eufemias gate 6a, 0191 Oslo
Postboks 1156 Sentrum, 0107 Oslo
Foretaksregisteret: NO 976 389 387 MVA
Tlf: +47 24 00 24 00
www.ey.no
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
statement of financial position as at 31 December 2022 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 statement of financial position as at 31
December 2022, 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 2022 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 2022 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 5 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 2022. 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
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Independent auditor's report - Klaveness Combination Carriers ASA 2022
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 accounting estimates for vessels 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.
Management considers the fleet of CLEANBU and
the fleet of CABU as two separate cash generating
units (“CGUs”) in their assessment of impairment
indicators. Management did not identify indicators of
impairment for any CGU, 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, available
data for green recycling, experience from prior years
and plans for docking and maintenance. We further
recalculated depreciations for the year.
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 disclosures regarding these
judgments, which are included in note 9 of the
Group’s consolidated financial statements.
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
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Auditor’s report
Klaveness Combination Carriers ASA – Annual Report 2022
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Independent auditor's report - Klaveness Combination Carriers ASA 2022
A member firm of Ernst & Young Global Limited
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.
• 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
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Independent auditor's report - Klaveness Combination Carriers ASA 2022
A member firm of Ernst & Young Global Limited
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 the audit of the financial statements of Klaveness Combination Carriers ASA we have
performed an assurance engagement to obtain reasonable assurance about whether the financial
statements included in the annual report, with the file name KCCASA-2022-12-31-en.zip, have 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
pursuant to 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.
Management’s responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
Regulation. This responsibility comprises an adequate process and such internal control as management
determines is necessary.
Auditor’s responsibilities
Our responsibility, based on audit evidence obtained, 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. We conduct our work in accordance with the International Standard for Assurance
Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial
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Klaveness Combination Carriers ASA – Annual Report 2022
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Independent auditor's report - Klaveness Combination Carriers ASA 2022
A member firm of Ernst & Young Global Limited
information”. The standard requires us to plan and perform procedures to obtain reasonable assurance
about whether the financial statements included in the annual report have been prepared in accordance
with the ESEF Regulation.
As part of our work, we perform procedures to obtain an understanding of the company’s processes for
preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial
statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL
tagging of the consolidated financial statements and assess management’s use of judgement. Our
procedures include 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, 6 March 2023
ERNST & YOUNG AS
The auditor's report is signed electronically
Johan Lid Nordby
State Authorised Public Accountant (Norway)
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2023-03-06 19:27:43 UTC
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Klaveness Combination Carriers ASA – Annual Report 2022
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© Annual Report 2022
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