COMPANY INFORMATION
ANNUAL REPORT KNI A/S 2019-2020
COMPANY INFORMATION
KNI A/S · ANNUAL REPORT 2019/20 Layout & photos: KNI Marketing Printed by: AKAPRINT A/S | Publication: August 2020 The annual report is printed on:
Annual report 2019-20
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COMPANY INFORMATION
REPORT HIGHLIGHTS
COMPANY INFORMATION
4 5 6 7 8 10
Company information Foreword, CEO Key figures The history of KNI Board of Directors and Executive Management Board Organisation structure GROUP AREAS
12 Financial development 15 Outlook 16 Business units 24 Subsidiaries 26 Service contract with the Government of Greenland 28 Shops and oil terminals
STRATEGY
39 Urbanisation 40 Investments 42 Killingusaaq 44 Branding of KNI 46 Taqqissuut 47 Leadership pipeline
48 Calendar 50 Articles
CSR
60 Social responsibility 62 Prioritised world sustainability goals 67 Environment and climate 69 Combating bribery and corruption 70 Suppliers 71 Involvement in the local community 72 Human rights 73 Staff matters 75 Women in senior positions
GOVERNANCE
76 77
Risks Board-related information ANNUAL ACCOUNTS
79
Table of contents
Annual report 2019-20
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COMPANY INFORMATION
COMPANY INFORMATION COMPANY NAME: KNI A/S SUBSIDIARY NAMES: Pilersuisoq Polaroil ADDRESS: J. M. Jensenip Aqq. 2, Postbox 319 3911 Sisimiut Tel.+299 86 24 44 Fax: +299 86 23 96 E-mail: info@kni.gl Website: www.kni.gl CVR number: 16 60 73 98 Municipality of domicile: Qeqqata Municipality Financial year: 1 April - 31 March
Capital owner
Government of Greenland, Postbox 1015, 3900 Nuuk - (ownership share: 100%)
Auditors
Deloitte Certified Accountants
Annual report 2019-20
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COMPANY INFORMATION
FOREWORD, CEO Another financial year in the KNI Group has come to an end. A year in which the focus of our employees has been both on our core tasks and on implementing new initiatives to the benefit of all our customers and the inner life of Greenland.
KNI has a joint responsibility to ensure the development of a stronger, greener and more self-sustaining Greenland. And by virtue of our responsibilities and areas of work, we take a very concrete approach to developmental work.
KNI is solid, our strategic initiatives are working, and we are moving in the right direction. This year’s result is visible proof of that. During the financial year, KNI continued to strengthen the Group’s financial foundation. With pre-tax profits of DKK 113.3 million, the Group has again shown that it can maintain the positive financial performance that has been set in motion over the past seven financial years. The result for the year is thus on a par with the best results in the Group’s history.
Attracting and retaining labour is a general challenge for Greenland, but it is probably a particularly large challenge for KNI. Our many important activities across the country require a large number of employees, and in the smaller localities, in particular, it is difficult to get the positions filled.
Greenland is changing, and KNI must adapt to these changes so that we can continue to meet the needs of our customers and society. Urbanization is a fact of life in today’s Greenland – and at the same time it is also a logical development. For KNI, this means that relocations from KNI’s sales areas will increasingly challenge the Group’s ability to maintain the necessary earnings in the Goods Division. KNIs Killingusaaq strategy is naturally therefore based on urbanisation, and actively addresses this reality through the tactical priorities described in the management report.
It is neither professionally nor financially meaningful just to bring in employees from outside. If the positions are to be filled in the optimum way, it is our conviction that this is often best done by retraining our own employees. Accordingly, KNI has developed its own training programmes under Taqqissuut and the Leadership Pipeline – and they work. Unfortunately we can see the results of climate change all over the world today, but we are also seeing a new common awareness of how to act responsibly and sustainably. For KNI, sustainability and recycling will form a natural part of our tasks and social responsibility. I believe we are standing on the threshold to a new era, in which thinking and acting in an environmentally friendly manner will be a consistent part of everyday life. Peter Grønvold Samuelsen CEO
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COMPANY INFORMATION
KEY FIGURES for the Group
Financial highlights
1/4 - 31/3 2019/20
1/4 - 31/3 2018/19
1/4 - 31/3 2017/18
1/4 - 31/3 2016/17
1/4 - 31/3 2015/16
2,535.0
2,474.6
2,428.2
2,367.4
2,393.9
Operating profit (EBIT)
138.4
151.4
158.7
142.2
142.1
Result of financial items
(25.1)
(36.0)
(55.2)
(38.8)
(40.9)
Pre-tax profit
113.3
115.4
103.4
103.4
101.2
76.1
77.7
69.3
70.6
68.5
Fixed assets
1,189.2
1,109.1
1,014.3
965.8
927.4
Inventories
1,052.9
954.2
953.9
1,015.9
969.1
76.7
81.8
81.0
61.8
78.4
1,139.2
1,173.2
1,215.6
1,061.2
786.9
2,375.6
2,235.3
2,226.2
2,209.3
2,251.5
141.8
154.3
110.6
102.4
74.9
1/4 - 31/3 2019/20
1/4 - 31/3 2018/19
1/4 - 31/3 2017/18
1/4 - 31/3 2016/17
1/4 - 31/3 2015/16
5.5%
6.1%
6.5%
6.0%
5.9%
Return on invested capital (%)
14.5%
16.3%
17.6%
17.7%
19.0%
Net revenue / Invested capital
1.9%
2.0
2.1
2.1
2.2
Financial gearing
0.7%
0.6
0.6
0.7
0.9
Return on equity (%)
6.7%
6.6%
5.7%
6.7%
8.7%
48.0%
52.5%
54.6%
48.0%
35.0%
4.0%
3.6
3.4
3.5
3.4
(DKK mill.)
Result Net revenue
Result for the year
Balance
Trade debtors Equity Balance sheet total Investments in tangible assets
Key figures EBIT - margin (%)
Solvency ratio (%) Net interest-bearing debt / EBITDA
Annual report 2019-20
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COMPANY INFORMATION
THE HISTORY OF KNI
For more than 240 years, KNI has evolved to match the requirements of changing times. Our unique history dates right back to the establishment of the Royal Greenland Trade Department (KGH) in 1774, and thereby constitutes an essential part of Greenland’s history and trade through several centuries. KGH’s state monopoly was ended in 1950, after which the company was operated independently of the administration in the then Ministry of Greenland. In the same year as the state monopoly was abolished, Polaroil became part of KGH – but many other famous Greenlandic companies have also been part of KGH over the years, including Royal Arctic Line, Air Greenland, Royal Greenland and the Greenland postal service. In 1986, ownership of KGH was transferred to Greenland Home Rule – and became KNI.
The original task of KGH was to supply the people of Greenland with groceries and household goods in those areas where it was not possible to carry on business on commercial terms. This remains one of the most important tasks of KNI today, but now this part of the company’s business is operated on the basis of customer-driven requirements and local influence – which is a big change from the former remote, monopolistic control. Today, KNI is in other words a company run on the basis of modern business principles. We are proud of our history, and of the more than 240 years of experience that we are now taking with us into the future – a time during which we will adapt to the major societal and industrial challenges that Greenland faces.
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COMPANY INFORMATION
BOARD OF DIRECTORS and management
Lars Borris Pedersen
Najaaraq Christiansen
Annette K. Sadolin
Søren Jakobsen
Lone Møller Olsen
Steen Montgomery-Andersen
Year of birth: 1975 Chairman of the Board of Directors (appointed by the Government of Greenland) since 2018. Educational background: Transport logistics and management courses at CBS Executive. Current career: Chief Commercial Officer / COO with Royal Arctic Line. Also holds other directorships in companies in Greenland. Competencies: Experienced in logistics and sales, organisation and business development, strategy formation and implementation.
Year of birth: 1947 Member of the Board of Directors (appointed by the Government of Greenland) since 2014. Educational background: LLM. Current career: Holds other directorships in large companies in Denmark. Competencies: International senior management and board positions in large companies. Also possesses extensive experience in strategy, organisation and personnel matters, legal matters, risk management, and sales and marketing.
Year of birth:1958 Member of the Board of Directors (appointed by the Government of Greenland) since 2019. Educational background:Chartered Public Accountant, MSc (Econ.), CBS. Current career:Holds other directorships in large companies in Denmark. Competencies:Deep financial insight, including in risk management, accounting, investment/ financing, taxation, etc. Insight into governance and compliance, as well as broad business experience, with strong experience in strategy and implementation.
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Year of birth: 1982 Vice-Chairman of the Board of Directors (appointed by the Government of Greenland) since 2016. Educational background: Graduate Diploma in Business Administration (accounting and financial management) and MSc in Public Administration Current career: Chief consultant with national accounts. Competencies: Experienced in work with finance and statistics.
Year of birth: 1963 Member of the Board of Directors (appointed by the Government of Greenland) since 2016. Educational background: MSc (Econ.) and MBA. Current career: Consultancy – also occupies other directorships in companies in Denmark. Competencies: Extensive experience in senior management, strategy, business development and sales.
Year of birth: 1957 Member of the Board of Directors (appointed by the Government of Greenland) since 2019. Educational background: MSC (Econ.), Senior Management Training CFL – Advanced Business Development. Current career: Also holds other directorships in companies in Greenland. Competencies: Strategic management and communication, financing, financial management, currency management, interest rate management, insurance, strategy plans, organisational development, accounts, calculations, cost analyses (ABC).
COMPANY INFORMATION
Dorthea Isaksen
Year of birth: 1971 Board member (staff representative) since 2015. Educational background: Qualified therapist, JTI testing certificate and Master Class in HRM. Current career: HR Manager in KNI A/S. Competencies: Experienced in work with organisation and training.
Jonas Aronsen
Year of birth: 1971 Board member (staff representative) since 2019. Educational background:Pre-MBA, Contra Management Training, HK programme. Current career: Regional manager for the Kitaa region, KNI A/S. Competencies: Store management and operations. Staff management. Sales and purchasing, plus inventory management.
Majaq Heilmann
Year of birth: 1986 Board member (staff representative) since 2019. Educational background: Management training in Sales and Service, Trade and Office. Current career: Head of Category, hard nonfood, KNI A/S. Competencies:Category and purchasing management. Sales and product development, and management experience at middle management level.
BOARD OF MANAGEMENT Peter Grønvold Samuelsen
Year of birth: 1960 Managing director / CEO, KNI A/S since 2014. Educational background: MSc in Public Administration, Executive MBA, Business Institute and completed board programme in Arctic Top Governance. Competencies: Experienced in operations, organisation and business development, strategy formation and implementation. Has previously held other directorships in companies in Greenland, both as chairman and as ordinary board member.
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COMPANY INFORMATION
KNI ORGANISATION STRUCTURE ADM. DIREKTØR / CEO Peter Grønvold Samuelsen
ØKONOMIDIREKTØR / CFO Jan H. Lynge-Pedersen Treasury
Naatsorsuutit
IT
LEDELSESSEKRETARIAT
Najaaraq Thorin Lange, PA/CSR Manager Jonna Lynge, Kommunikationsmedarbejder Julie Jensen, Direktionssekretær
MARKETINGSCHEF Anders Stenbakken
ANLÆGSCHEF Nuka Kristiansen
PILERSUISOQ FG. KÆDEDIREKTØR Jan H. Lynge-Pedersen
HRCHEF Mikol Heilmann
POLAROIL ENERGIDIREKTØR Githa Brask Olsen
NEQI A/S DIREKTØR Per Jensen
Pilersuisoq KNI-p ilagaa
Executive board and management KNI A/S has been led during the entire financial year 2019/20 by CEO Peter Grønvold Samuelsen.
808
The senior management at KNI has otherwise consisted of:
Finances & IT:
CFO Jan H. Lynge-Pedersen
807
795
806 791
Goods division:
Chain director Niels Andersen (1 April 2019 - 25 February 2020) Acting CEO: Jan H. Lynge-Pedersen (26 February - 31 March 2020) Brian Weuge Chemnitz has been appointed as new Chain Director with effect from 1 June 2020.
Energy Division:
Energy Director Githa Brask Olsen
Annual report 2019-20
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15/16
16/17
17/18
18/19
19/20
KNI overall – Number of full-time employees 2019/20
GROUP AREAS
Annual report 2019-20
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GROUP AREAS
FINANCIAL DEVELOPMENT
2,535,000 2,474,600
Group:
2,428,200 2,393,900
Pre-tax profit for the Group as a whole has been realised at DKK 113.3 million for the financial year, as against DKK 115.4 million the previous year. The result is thus on a par with the previous year, deviating by just 2%. 115,400
101,200
15/16
103,400
113,300
2,367,400
15/16
16/17
17/18
18/19
19/20
KNI overall - Trend in net revenue (DKK ‘000)
103,400
In the Group’s subsidiaries, revenue was realised at more or less the same level as in the previous financial year.
16/17
17/18
18/19
19/20
KNI overall - Trend in pre-tax profit (DKK ‘000)
The profit and loss account after tax amounts in all to a profit of DKK 76.1 million, as against a profit of DKK 77.7 million in the financial year 2018/19. Net profit is thus also on a par with the financial year 2018/19. The result for the year was positively impacted by DKK 1.0 million as a result of a reduced tax rate in Greenland with effect from 2020. The positive tax impact relates to the adjustment of deferred tax, which has now been incorporated at a tax rate of 26.5%, as against the previous 31.8%. The result for the year has in general been achieved with the organisation’s full focus on the strategic goals under the Killingusaaq strategy, which was launched on 1 January 2017 and will end in the coming financial year 2020/21. During the financial year 2018/19 revenue amounted to DKK 2,535 million, corresponding to a rise of DKK 60 million compared to the previous financial year. The reason for this rise in revenue of approximately 2% is to be found in both the Goods Division and the Energy Division. In the Goods Division, revenue rose by approximately DKK 36 million, while the revenue level in the Energy Division rose by around DKK 25 million.
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At the end of the current financial year, KNI had a registered outflow of DKK 742.2 million in credit facilities, as against DKK 684.0 million the previous year – an increase in the utilisation of the Company's credit facilities corresponding to DKK 58.2 million. This increase is mainly attributable to changes in working capital.
KNI, total
15/16
16/17
17/18
18/19
19/20
Cash flows from operations
100.9
127.9
121.2
165.1
102.3
Cash flows from investments
-62.2
-99.0
-93.4
-147.3
-137.9
Cash flows from financing
-31.9
-37.0
-22.6
-22.6
-22.6
Alterations in liquid funds
6.8
-8,1
5.2
-4.8
-58.2
(DKK mill.)
Cash flows from the Group’s primary operating activities amount to DKK 102.3 million, while cash flows from investment activities amount to DKK 137.9 million. Cash flows from financing activities are unaltered in relation to the previous financial year, at DKK 22.6 million. Cash flows from the Group’s operating activities include the effect of rising inventories by a total of DKK 98.7 million compared to 2018/19. This rise is as expected, and is mainly due to rising purchase prices for oil as well as the effect of increased freight charges and taxes.
GROUP AREAS
The trend in the Company’s current outflow on its credit facilities, measured at the balance sheet date, is shown in the graph below. The graph shows the trend over the past five financial years.
15/16
16/17
17/18
18/19
1,100.00
742.30
1,020.00
684.00
Credit limit
1,020.00
650.60
1,000.00
655.70
1,000.00
647.60
Credit drawings
19/20
KNI overall -Trend in credit drawing (DKK ‘000)
The current margin between the current draw on credit facilities and the credit maximum is due to the fact that the draw on credit facilities is lowest at the end of the financial year, whereas a larger part of the credit facilities is utilised during the autumn, in connection with purchases for winter supplies and the implementation of oil imports. The Company’s equity fell from DKK 1,173.2 million as of 31 March 2019 to DKK 1,139.2 million as of 31 March 2020 – an overall fall corresponding to DKK 34.0 million, or 2.9%. The equity trend is composed of the value of retained earnings for the period and changes in the market value of financial instruments, after deduction of deferred tax. 1,215,598 1,061,155
1,173,181
1,139,240
The market value of the financial instruments fell by DKK 133.1 million in the period from 31 March 2019 to 31 March 2020, before adjustments for deferred tax. The value at the end of the financial year 2019/20 was negative by DKK 224.0 million, compared to a negative value of DKK 90.9 million at the end of the financial year 2018/19. The overall negative impact of the year on equity can thus be calculated at DKK 102.6 million after deduction of deferred tax. The financial instruments are established by entering into a number of product and currency hedges on an ongoing basis, with the aim of ensuring stable consumer prices for liquid fuels. The market value of these hedges is calculated on the balance sheet date and is recognised directly in equity. The Company also enters into interest rate hedging contracts to guard against fluctuations in market interest rates. The market value of these hedges is calculated on the balance sheet date and is also directly recognised in equity, to the extent that the hedges are assessed to be effective in relation to the Company’s exposure. If the market value of the financial instruments is negative, this will also has a negative impact on the Company’s solvency ratio. It is important to stress in this connection that if the balance sheet shows negative market values in relation to product and currency hedges, this will not have a negative impact on the Company’s financial development, as these values will be implicitly recognised in consumer prices. In relation to interest rate hedges, the share relating to the Energy Division will also be implicitly included in consumer prices, whereas the share relating to the Company's Goods Division will have a direct impact on the economic development. The Company’s solvency ratio was 48% at the end of the 2019/20 financial year. The solvency ratio has thus fallen in relation to last year, precisely as a result of the trend in the aforementioned market values of the financial instruments. 54.6
52.5
48.0
786,900
48.0
35.0
15/16
16/17
17/18
18/19
19/20
KNI overall - Trend in capital and reserves (DKK ‘000)
15/16
16/17
17/18
18/19
19/20
KNI overall - Trend in solvency ratio (%)
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GROUP AREAS
Goods Division:
Energy Division:
The result for the year in the Goods Division was a pre-tax profit of DKK 54.2 million, as against a profit of DKK 48.4 million in the previous financial year. The result has thus improved by DKK 6 million, corresponding to 12%.
The result for the year in Energy Division was a pre-tax profit of DKK 53.8 million, as against a profit of DKK 66.9 million in the previous financial year. The result has thus fallen by DKK 13 million, corresponding to 19%.
The division’s revenue was realised at DKK 1,425.4 million, which is approximately DKK 36 million higher than last year – a rise corresponding to 2.6%.
The division’s revenue was realised at DKK 1,089.5 million, which is approximately DKK 25 million higher than last year – a rise corresponding to 2.4%. The increasing revenue activity is directly related to the rising purchase prices for the year’s oil imports – and have thus not had a positive effect on the year's profit before tax.
The pro forma cash flow for the year in the Goods Division may be seen in the table at the bottom of page 18. It is important to note that the cash flow statement is based on a number of assumptions and preconditions, the most important of which are: • Working capital (receivables, payables, inventory levels, etc.) remains unaltered over time • The Energy Division is burdened by dividend payments • Corporate tax falls due for payment immediately. The table shows that the change in liquid funds has fallen compared to the previous financial year – corresponding to DKK 3.7 million. This is primarily due to an increase of DKK 8 million in the level of investment.
The pro forma cash flow for the year in the Energy Division may be seen in the table at the bottom of page 22. It is important to note that the cash flow statement is based on a number of assumptions and preconditions, the most important of which are: • Working capital (receivables, payables, inventory levels, etc.) remains unaltered over time • The Energy Division is burdened by dividend payments • Corporate tax falls due for payment immediately. The table shows that the change in liquid funds has risen compared to the previous financial year – corresponding to DKK 11.5 million. This is primarily due to a fall of DKK 18 million in the level of investment.
Subsidiaries The net profit for the year in the subsidiaries – incorporated as affiliated companies under the parent company – was a profit of DKK 5.3 million, against a profit of DKK 3.6 million in the previous financial year. The result has thus risen by DKK 1.7 million, corresponding to 47%.
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GROUP AREAS
OUTLOOK for the future Expectations for the financial year 2020/21 are that with a continued focus on the strategic objectives, the current positive development will continue. The group must ensure positive momentum with financial and organisational results that live up to the objectives set out in the Killingusaaq strategy. This means that the overall targets for the entire group will be: • Continued growth in pre-tax profits • Continued growth in return on equity • Continued positive development in the solvency ratio. Developments in return on equity and solvency ratio will be based on their key figures, excluding developments in the market values of financial instruments.
egy for Killingusaaq 2.0. The new strategy will cover the period 1 January 2021 - 31 December 2024. KNI A/S does not anticipate any major changes in its basic business activities during the financial year 2020/21. Expectations towards pre-tax profits for the next accounting period are on the order of DKK 108 - 118 million. The global Covid-19 pandemic is expected to have accounting consequences for the Group’s activities, and thereby affect the expected result for 2020/21, which is estimated above to be on the order of DKK 108 - 118 million. Within the first two months of the financial year, no negative economic effects of the Covid-19 pandemic were observed at an overall level. The situation is being closely monitored, and any necessary measures will be taken to minimise the impact.
The financial year 2020/21 will also be the year in which the company must formulate and adopt the content of the strat-
Annual report 2019-20
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GROUP AREAS
BUSINESS UNITS The KNI Group consists of four business units, all of which are managed and run on the basis of modern business principles. We supply all of Greenland with groceries, consumer goods and fuels.
KNI-p ilagaa
Greenland’s largest oil supply company As Greenland is a society undergoing rapid change, it is dependent on companies who are able – often under extreme conditions – to link the entire vast country together with deliveries of vital supplies. One of these companies is Polaroil, for whom the words safety and responsibility are deeply ingrained in both the company’s objects clause and in the minds of all its employees. Polaroil operates a total of 70 plants, divided between 16 oil terminals in the towns, 52 oil terminals and one depot in the villages, plus one import plant. All of the towns and villages have storage facilities for lubricating oils and gases. Polaroil purchases, transports, stores, distributes and sells liquid fuels adapted to consumer needs and the environment
Annual report 2019-20
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– all year round, and for the whole of Greenland. The fuels involved are mainly gas oils, aircraft fuel, paraffin and petrol. It is also Polaroil’s task to secure stable prices for the Greenlandic fuel market and the lowest possible level of cost. Local distribution of liquid fuels in the towns is partly handled by Polaroil’s own organisation, and partly through agreements with local oil dealers. In the villages, this is handled by the business unit Pilersuisoq. Another of Polaroil’s business areas is to service the international companies who operate oil exploration and mining in Greenland.
GROUP AREAS
64,096
66,881
65,477 54,107
15/16
16/17
17/18
53,813
18/19
19/20
Energy Division - Trend in pre-tax profit (DKK ‘000)
1,095.6
1,089.5
1,040.7
17/18
Polaroil has two tankers, Orasila and Oratank, which together supply the whole of Greenland with liquid fuels Consumer prices for fuels have been upwardly regulated by 25 øre per litre as of May 2019.
In October 2019, Polaroil passed an external audit in the ISO certifications 14001 (environment) and 9001 (quality)
1,015.8
16/17
Polaroil’s largest single oil tank can hold 25 million litres
Polaroil undertakes five oil imports during each financial year
1,063.9
15/16
Since 1947, Polaroil has secured stable oil supplies for Greenland. Polaroil has 70 oil facilities Polaroil has a total terminal capacity of 280 million litres.
18/19
19/20
Energy Division - Trend in net revenue (DKK ‘000)
Annual report 2019-20
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GROUP AREAS
How the money is earned in KNI DKK 86 million
- DKK 22 million
Sales from oil terminals with deduction of costs.
Tank facilities and equipment wear out and decline in value.
- DKK 11 million
DKK 54 million
Gross profit
DKK 65 million
Pre-tax profit
Gross profit including depreciation
Bank charges incurred in connection with the purchase of fuel for the tank facilities.
How the money is used in KNI DKK 54 million
- DKK 10 million Corporate tax
Payment to the Government
- DKK 44 million
- DKK 20 million
Investments in relation to tank facilities, etc. (renovations or new construction).
Payment to owner (Government of Greenland).
Investments
+ DKK 21 million.
- DKK 1 million
Depreciation repaid
Cash flow statement (pro forma) Energy Division
Dividends
Alterations in liquid funds
15/16
16/17
17/18
18/19
19/20
72.3
71.1
64.8
72.7
66.0
Cash flows from investment activities
-40.2
-55.2
-62.0
-64.9
-46.7
Cash flows from financing
-30.0
-20.0
-20.0
-20.0
-20.0
2.1
-4.1
-17.2
-12.2
-0.7
(DKK mill.)
Cash flows from operations
Alterations in liquid funds
Annual report 2019-20
18
Depreciation
Pre-tax profit
GROUP AREAS
Annual report 2019-20
19
GROUP AREAS
Pilersuisoq KNI-p ilagaa
Greenland's largest retail chain Pilersuisoq is a nationwide retail chain with 64 outlets scattered right across Greenland. From the northernmost to the southernmost shop, the distance is more than 2,000 km. The company also operates the duty-free shop chain at the international airport in Kangerlussuaq. Pilersuisoq secures supplies to everyone – even the smallest village. Deliveries are made by sea and air freight. In a country where many towns and villages are almost inaccessible for a large part of the year due to frozen fjords and harbours, this requires more than ordinary good planning. Efficient logistics and the ability to anticipate needs are therefore a high priority for the retail chain. In many places the local shop is the hub of village life, and the population is dependent on being able to obtain goods all year round – a task which is somewhat different to that of retail outlets elsewhere in the world, and a responsibility that Pilersuisoq does its utmost to live up to. In many places, in addition to retail sales, the business unit also provides a number of service functions, such as bank, post office, ship berthing, heliport, etc. In co-operation with customers and local representatives, a basis is secured for development and quality of life in the towns and villages where the Pilersuisoq shops are located. The people in the local community are those who know their own conditions and needs best, and those needs are not the same everywhere in Greenland. It is therefore important that there is local influence, taking account of both the wishes of the customers and local demographic, geographical and business conditions. Pilersuisoq aims to make its shops a positive focal point in the local community.
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66,412
48,441 34,339
15/16
54,242
38,271
16/17
17/18
18/19
19/20
Goods Division - Trend in pre-tax profit (DKK ‘000) 1,425.4 1,389.3 1,363.6 1,334.9
1,276.5
15/16
16/17
17/18
18/19
19/20
Goods Division - Trend in net revenue (DKK ‘000)
GROUP AREAS
For businesses and institutions throughout Greenland KNI Engros covers the whole of Greenland, as the company operates in both towns, villages and settlements, as well as in the area of ships’ supplies and ad hoc-established mineral exploration sites. By making use of extensive supplier networks and the purchasing volume of the KNI Group, supplies can be provided in virtually all types of product, tailored to the needs of the individual customer – and at competitive prices.
KNI Engros sells and distributes all types of products to businesses and institutions throughout the country, and the business unit holds the contract for nationwide distribution of beer and carbonated drinks. In close dialogue with its customers, KNI Engros aims to be the preferred wholesale supplier in Greenland, with easy access to the ordering system and smooth and efficient deliveries directly to the customer.
Annual report 2019-20
21
GROUP AREAS
How the money is earned in KNI DKK 91 million
- DKK 25 million
Sales in the shops, with deduction of costs.
Buildings and equipment wear out and decline in value.
- DKK 12 million
DKK 54 million
Gross profit
DKK 66 million
Interest rates
Gross profit including depreciation
Bank charges incurred in connection with the purchase of goods for the shops.
How the money is used in KNI DKK 54 million
- DKK 10 million Corporate tax
Payment to the Government
- DKK 81 million
+ DKK 25 million
Investments
Depreciation repaid
Investments in buildings, etc. (renovations or new construction).
- DKK 12 million
Alterations in liquid funds
Cash flow statement (pro forma) Goods Division
15/16
16/17
17/18
18/19
19/20
56.8
54.3
66.9
65.4
69.5
-20.9
-38.4
-42.5
-73.2
-81.0
-
-
-
-
-
35.9
15.9
24.4
-7.8
-11.5
(DKK mill.)
Cash flows from operations Cash flows from investment activities Cash flows from financing Alterations in liquid funds
Annual report 2019-20
22
Depreciation
Pre-tax profit
GROUP AREAS
Cash flow statement Neqi A/S
15/16
16/17
17/18
18/19
19/20
Cash flows from operations
0.8
-10.1
-4.2
3.3
12.4
Cash flows from investment activities
-5.3
-2.0
-1.3
-1.8
-3.3
Cash flows from financing
-
-
-
-
-
Alterations in liquid funds
-4.5
-12.1
-5.5
1.5
9.1
(DKK mill.)
Slaughterhouse in South Greenland Every year, the KNI subsidiary Neqi A/S receives sheep from more than 38 sheep farms scattered throughout South Greenland. In 2019, Neqi A/S slaughtered 21,172 lambs and sheep. In 2013 Neqi A/S underwent refurbishment for DKK 60 million kroner, and today it is a modern, EU-approved slaughterhouse. The modernised production equipment has enabled the slaughterhouse to increase its degree of processing, and in dialogue with the retail chains Pilersuisoq, Brugseni and Pisiffik, further development is continually being pursued. Neqi A/S wishes to be a valuable partner in the development of the agricultural industry in South Greenland. The company sees great potential in developing a stronger agricultural sector, encompassing not only activities in sheep and lambs, but also cattle, musk oxen, reindeer and the cultivation of root crops. 2,749 1,274
769
15/16
16/17
17/18
1,653
18/19
Neqi A/S is known for its great efforts to ensure the fine, high-quality taste of Neqi lamb. Modernised production equipment has enabled the company to refine its degree of processing, and the further development of the company’s products is steadily being pursued in dialogue with the retail chains Pilersuisoq, Brugseni and Pisiffik, as well as the wholesale market. The meat products and root vegetables from agriculture in South Greenland are of outstanding quality. Neqi A/S currently employs around 80 people during the slaughtering period, which lasts approximately eleven weeks, starting in mid-September. Neqi A/S currently has approximately 30 employees employed outside the season, but is continuously working to secure additional permanent jobs. The central employees from Narsaq and the surrounding towns and villages are highly motivated in their work, and thereby contribute to creating a seed-bed for long-term development of the slaughtering process. 37,404
32,473 29,198 25,656
19/20
15/16 -4,543
34,296
Neqi A/S - Trend in pre-tax profit (DKK ‘000)
16/17
17/18
18/19
19/20
Neqi A/S - Trend in net revenue (DKK ‘000)
Annual report 2019-20
23
GROUP AREAS
SUBSIDIARIES
NEQI A/S KNI ownership 100%
PITSAASUT ApS KNI ownership 100%
Private company capital DKK 80,000
Share capital DKK 0.6 million
PURPOSE:
PURPOSE:
Neqi A/S operates a slaughterhouse business in Narsaq. From here, the company has close contact with the district’s sheep farmers, who together produce approximately 20,000 lambs and sheep every year. The production is processed to approximately 300 tons of first-class lamb, in various cuts.
The company is located in Aalborg and functions as an element in KNI’s purchasing strategy. The primary purpose is to maintain and operate a distribution warehouse, including a duty-free warehouse, from where goods can be consolidated and sent to the KNI shops in Greenland.
KNI EJENDOMME A/S KNI ownership 100%
AKIA SISIMIUT KNI ownership 82.5%
PURPOSE:
Share capital DKK 1.0 million
The company owns 26 apartments located in Sisimiut. All of the apartments are operated and rented out as staff housing for the company’s owner.
Annual report 2019-20
24
Share capital DKK 3.0 million
PURPOSE:
The company owns 16 apartments located in Sisimiut. All of the apartments are operated and rented out as staff housing for the company’s owners.
GROUP AREAS
Annual report 2019-20
25
GROUP AREAS
SERVICE CONTRACT with the Government of Greenland Some parts of KNI’s activities cannot be carried out on commercial and market terms. Consequently, a service contract has been entered into with the Government of Greenland for payment of these tasks for society. The service contract for goods supply incorporates an annual procedure to ensure that the contract is continuously extended by one year, so that it continuously operates with a rolling framework over a four-year period. The annual payment currently amounts to DKK 18.0 million. In essence, the service contract for goods supply states the following: • KNI has a supply obligation for all villages, including Kangerlussuaq and Narsarsuaq, as well as the towns Qaanaaq, Upernavik, Uummannaq, Qeqertarsuaq, Qasigiannguit and Tasiilaq. • The service level is as shown in the following table. • The regulation of KNI’s prices in stores, kiosks, service shops and village shops of goods covered by the basic range must not exceed the change in Greenland’s consumer price index for the relevant categories by more than 2.2% for the full calendar year. • Total payment for the agreed services amounts to DKK 18.0 million annually, and covers only villages with up to 600 inhabitants. By entering into the service contract for goods supply, KNI has assumed an obligation to operate shops in villages and small towns where retail sales cannot be maintained on a profitable basis. Under the service contract for the sale of liquid fuels, the company does not receive payments, but the contract maximizes what the company may earn on the oil sold under the service contract. This service contract is entered into under
In essence, the service contract for the sale of liquid fuels states the following: • KNI has a supply obligation for Arctic gas oil, motor gas oil, petrol, kerosene and Jet A-1. • The supply obligation for the above products encompasses civil society in Greenland, i.e. villages, towns, sheep farms and reindeer farms, and selected telecommunications stations on Greenland’s south and southwest coast. • The supply obligation does not include: 1) Bunkering of cruise ships, Atlantic ships and ocean-going trawlers, ships on international routes or ships engaged in the exploration or extraction of oil, gas or minerals. 2) Fishing vessels, with the exception of GR-registered vessels of less than 200 GRT. 3) Major infrastructure works outside urban areas and mines. 4) Direct deliveries to Mittarfeqarfiit’s own oil terminals. • The supply obligation is carried out at identical prices for all consumers, calculated on the basis of a profit target. • Of the profit target, an average of DKK 24 million annually is applied to service the maintenance backlog calculated in 2009 for the oil terminals of the Energy Division. It is expected that the maintenance backlog will be completed in 2025. The following table shows the net cash flows that have been generated between the parent company and the Government of Greenland in the period from 2010/11 until the end of the financial year 2019/20. During this period, KNI thus received DKK 324.0 million in service contract payments from the Government of Greenland, while within the same period the Company repaid DKK 1,047.1 million to the Government and municipalities.
Store
Kiosk
Service shop
Village shop
Nanoq shop*
1-29
30-75
76-120
121-600
More than 600
Min. 2 hours weekly
Min. 10 hours weekly
Min. 20 hours weekly
Min. 20 hours weekly
Free
146
236
294
341
Free
Inhabitants Opening hours
precisely the same chronological terms as the service contract for the supply of goods, which means that it operates under a rolling four-year framework.
Basic assortment, minimum number of item numbers.
*Qaanaaq, Upernavik, Uummannaq, Qeqertarsuaq, Qasigiannguit & Tasiilaq
Annual report 2019-20
26
GROUP AREAS
During the period 2010/11 - 2019/20, KNI has thus contributed a positive net cash flow to the Government of Greenland amounting to DKK 723.1 million.
DKK mill.
10/11
11/12
12/13
13/14
14/15
15/16
16/17
17/18
18/19
19/20
KNI A/S, total:
-39.3
-37.0
-36.0
-36.0
-36.0
-36.0
-36.0
-31.5
-18.2
-18.0
Payments from the Government
-39.3
-37.0
-36.0
-36.0
-36.0
-36.0
-36.0
-31.5
-18.2
-18.0
8.4
12.1
24.5
25
29.2
24.5
70.0
71.5
79.9
74.5
80.9
85.0
Received via service contract:
Corporate tax: Corporate tax - KNI A/S Personal tax: Personal taxes - KNI A/S (**)
66.5
67.4
68.4
69.3
20.0
20.0
20.0
30.0
20.0
20.0
20.0
20.0
20.0
Payments to the Government
66.5
87.4
88.4
89.3
108.4
103.6
124.4
119.5
130.1
129.5
Net cash flows to the Government
27.2
50.4
52.4
53.3
72.4
67.6
88.4
88.0
111.9
111.5
Corporate dividend: Dividend - KNI A/S
Schematically, KNI’s overall activities may be illustrated as follows: Division
Segment
Market
Activity
Goods
Retail, within the service contract
Villages, incl. Narsarsuaq and Kangerlussuaq
Supply obligation for goods, with service contract payment. Service agreements*
Qaanaaq, Upernavik, Uummannaq, Qeqertarsuaq, Qasigiannguit & Tasiilaq
Supply obligation for goods, without service contract payment. Service agreements*
Retail, outside the service contract
Nanortalik, Narsaq, Paamiut & Aasiaat
Commercial activity in competition with Brugseni & Pisiffik. Service agreements*
Wholesale
Greenland
Commercial activity in competition with KK Engros and Arctic Import, amongst others. Includes beer/soft drinks distribution for Nuuk Imeq and supplies to smaller private chains, as well as catering, ships’ chandlers, etc.
Fuel, within the service contract
Towns and villages, as well as reindeer and sheep farms
Supply obligation, with requirement for identical prices
Fuel, outside the service contract
Ships and mining companies in Greenland
Commercial activity
Slaughterhouse
Greenland
Slaughtering and processing of lamb, sheep and cattle under service contract with the Government of Greenland.
Energy
Neqi
*Service agreements are commercial agreements for the provision of a number of functions on behalf of third parties, as follows: 1. Government of Greenland, money supply 4. Greenland Airports, helistops 2. Government of Greenland, harbour authorities 5. distribution 3. Air Greenland, aircraft, passenger and cargo handling
7. POST Greenland, post handling Arctic Umiaq Line, ship tickets 8.
Polaroil,
6. Royal Arctic Line, freight handling
Annual report 2019-20
27
GROUP AREAS
SHOPS AND OIL TERMINALS overview
REGION Avannaa
AAPPILATTOQ (UPV)
Proprietor: Simon Petersen Built: 1991 Size: 480 m2 Number of employees: 8 Number of residents: 152
NUUSSUAQ
Proprietor: Else Eliassen Built: 1997 Size: 495 m2 Number of employees: 7 Number of residents: 175
SIORAPALUK
Built: 1968/94/97 Capacity: 220 m3 Number of tanks: 4 Administered by: Pilersuisoq
Annual report 2019-20
AAPPILATTOQ
Built: 1984/97/20/14 Capacity: 400 m3 Number of tanks: 7 Administered by: Pilersuisoq
NUUSSUAQ
Built: 1984/90/00 Capacity: 350 m3 Number of tanks: 6 Administered by: Pilersuisoq
TASIUSAQ
Proprietor: Susanne Kristiansen Built: 1996 Size: 440 m2 Number of employees: 7 Number of residents: 258
28
INNAARSUIT
Proprietor: Mette Kristensen Built: 1990/00 Size: 410 m2 Number of employees: 7 Number of residents: 172
QAANAAQ
Proprietor: Larsigne Kvist Built: 1999/00 Size: 1,156 m2 Number of employees: 12 Number of residents: 630
TASIUSAQ
Built: 1980/97/06 Capacity: 1070 m3 Number of tanks: 8 Administered by: Pilersuisoq
INNAARSUIT
Built: 1986/97/01 Capacity: 400 m3 Number of tanks: 5 Administered by: Pilersuisoq
QAANAAQ,
Tank manager: Anda Peter Karlsen (acting) Built: 1954/84/94/10/16 Capacity: 3,126 m3 Number of tanks: 10
UPERNAVIK
Proprietor: Uthilie Karlsen Built: 1954/01 Size: 2,240 m2 Number of employees: 35 Number of residents: 1,099
KANGERSUATSIAQ
Proprietor: Jørgen Christensen Built: 1997/98 Size: 280 m2 Number of employees: 6 Number of residents: 151
QEQERTAT
Proprietor: Nukappiannguaq Jerimiassen Built: 1965 Size: 30 m2 Number of employees: 2 Number of residents: 26
UPERNAVIK
Tank manager: Roberth Juliussen Built: 1969/75/13 Capacity: 5,800 m3 Number of tanks: 8
KANGERSUATSIAQ
Built: NN/1982/2001 Capacity: 440 m3 Number of tanks: 60 Administered by: Pilersuisoq
SAVISSIVIK
KULLORSUAQ
Proprietor: Edvard N. Aronsen Built: 1964/97/12/16 Size: 515 m2 Number of employees: 12 Number of residents: 422
SAVISSIVIK
Proprietor: Helene Ivik Eliassen Built: 1974/98 Size: 465 m² Number of employees: 3 Number of residents: 61
Built: 1979/97 Capacity: 350 m³ Number of tanks: 4 Administered by: Pilersuisoq
UPERNAVIK KUJALLEQ
UPERNAVIK KUJALLEQ
Proprietor: Justus Josvassen Built: 1973/97 Size: 345 m² Number of employees: 5 Number of residents: 197
KULLORSUAQ
Built: 1969/83/99/08 Capacity: 960 m3 Number of tanks: 4 Administered by: Pilersuisoq
SIORAPALUK
Proprietor: Sauninnguaq Uvdloriak Built: 1992 Size: 200 m² Number of employees: 3 Number of residents: 43
Built: NN/1982 Capacity: 325 m³ Number of tanks: 6 Administered by: Pilersuisoq
Annual report 2019-20
29
REGION Kangia
ISERTOQ
Proprietor: Peter Ignatiussen Built: 1967 Size: 240 m2 Number of employees: 3 Number of residents: 64
ITT., POLAROIL
Tank manager: Jan Lorentzen Built: 1976/83/11 Capacity: 2,730 m3 Number of tanks: 2 Number of employees: 2
KUUMMIUT
Proprietor: Otto J. Umerineq Built: 1996 Size: 350 m2 Number of employees: 9 Number of residents: 248
TASIILAQ
Proprietor: Martha Mikaelsen Built: 2002 Size: 2,984 m2 Number of employees: 50 Number of residents: 1,985
Annual report 2019-20
ISERTOQ
Built: 1986/98/05 Capacity: 250 m3 Number of tanks: 4 Administered by: Pilersuisoq
KULUSUK
Proprietor: Karoline Sianiale (acting) Built: 1980/01 Size: 275 m2 Number of employees: 8 Number of residents: 241
KUUMMIUT
Built: 1971/80/08 Capacity: 1100 m3 Number of tanks: 5 Administered by: Pilersuisoq
TASIILAQ
Tank manager: Kaagaaq Uitsatikitseq Built: 1968/76/83/05 Capacity: 7.074 m3 Number of tanks: 10 Number of employees: 5
30
ITTOQQORTOORMIIT
Proprietor: Naja Pike (acting) Built: 1964/99/12 Size: 650 m2 Number of employees: 12 Number of residents: 345
KULUSUK
Built: 1971/1980/2006 Capacity: 1010 m3 Number of tanks: 5 Administered by: Pilersuisoq
SERMILIGAAQ
Proprietor: Harald Bajare Built: 1979/98 Size: 460 m2 Number of employees: 5 Number of residents: 209
TIILERILAAQ
Proprietor: Rosalia Korneliussen Built: 1981 Size: 220 m2 Number of employees: 4 Number of residents: 96
SERMILIGAAQ
Built: 1984/86/98/04 Capacity: 520 m3 Number of tanks: 9 Administered by: Pilersuisoq
TIILERILAAQ
Built: 1985/98/07 Capacity: 440 m3 Number of tanks: 8 Administered by: Pilersuisoq
REGION Uummannap sullua
IKERASAK
Proprietor: Birthe Eriksen Built: 1970/96 Size: 300 m2 Number of employees: 7 Number of residents: 233
NIAQORNAT
Proprietor: Thea Mørch Built: 2012 Size: 250 m2 Number of employees: 3 Number of residents: 35
QAARSUT
Built: 1969/82/88/99 Capacity: 450 m3 Number of tanks: 8 Administered by: Pilersuisoq
UKKUSISSAT
Built: 1984/1999 Capacity: 345 m3 Number of tanks: 5 Administered by: Pilersuisoq
IKERASAK
Built: 1968/71/84/00 Capacity: 410 m3 Number of tanks: 9 Administered by: Pilersuisoq
NIAQORNAT
Built: NN/1974/02 Capacity: 180 m3 Number of tanks: 6 Administered by: Pilersuisoq
SAATTUT
Proprietor: Marie Kristiansen Built: 1971/99 Size: 600 m2 Number of employees: 8 Number of residents: 226
UUMMANNAQ
Proprietor: Mette Zeeb Built: 1987 Size: 1,200 m2 Number of employees: 33 Number of residents: 1,407
QAARSUT
Proprietor: Ane Louise Jensen Nielsen Built: 1979/95 Size: 410 m2 Number of employees: 7 Number of residents: 174
UKKUSISSAT
Proprietor: Monika Svendsen (acting) Built: 1972 Size: 360 m2 Number of employees: 8 Number of residents: 154
UUMMANNAQ
Tank manager: Villads H. Kristiansen Built: 1968/74/84 Capacity: 8,446 m3 Number of tanks: 11 Number of employees: 5
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31
REGION Qeqertarsuup tunua
AASIAAT
Proprietor: Ove Jeremiassen Built: 1961/82 Size: 1,245 m2 Number of employees: 34 Number of residents: 3,069
IKAMIUT
Proprietor: Cecilie L. Abelsen Built: 1988 Size: 210 m2 Number of employees: 3 Number of residents: 86
KANGAATSIAQ
Proprietor: Aqissiaq Berthelsen (acting) Built: 2007 Size: 1,409 m2 Number of employees: 17 Number of residents: 520
OQAATSUT
Built: NN/2001 Capacity: 140 m3 Number of tanks: 6 Administered by: Pilersuisoq
Annual report 2019-20
AASIAAT
Tank manager: Søren Olsvig Built: 1948/67/82/14 Capacity: 20,000 m3 Number of tanks: 10 Number of employees: 4
IKAMIUT
Built: 1984/NA Capacity: 200 m3 Number of tanks: 3 Administered by: Pilersuisoq
KANGAATSIAQ
Built: NN/1978/1998 Capacity: 1,765 m3 Number of tanks: 5 Administered by: Pilersuisoq
QASIGIANNGUIT
Proprietor: Kristian Lyberth Built: 1961/02 Size: 1.386 m2 Number of employees: 22 Number of residents: 1,081
32
AKUNNAAQ
Proprietor: Julianne Olsen Built: 1951 Size: 275 m2 Number of employees: 3 Number of residents: 66
IKERASAARSUK
Proprietor: Marie Gerda Petersen Built: 1993 Size: 358 m2 Number of employees: 4 Number of residents: 90
KANGERLERUK
Proprietor: Jensine Olsen Built: 1984 Size: 462 m2 Number of employees: 2 Number of residents: 11
QASIGIANNGUIT
Tank manager: Jens Aqqaluk Brandt Built: 1964/72 Capacity: 8,570 m3 Number of tanks: 9 Number of employees: 2
AKUNNAAQ
Built: NN/1983 Capacity: 300 m3 Number of tanks: 5 Administered by: Pilersuisoq
IKERASAARSUK
Built: NN/1993 Capacity: 140 m3 Number of tanks: 3 Administered by: Pilersuisoq
KITSISSUARSUIT
Proprietor: Nanna L. Abelsen Built: 1945/03 Size: 354 m2 Number of employees: 4 Number of residents: 50
QEQERTARSUAQ
Proprietor: Karl Brandt Built: 2006 Size: 1,510 m2 Number of employees: 27 Number of residents: 839
ATTU
Proprietor: Peter Alaufesen Built: 1959 Size: 645 m2 Number of employees: 8 Number of residents: 203
ILIMANAQ
Proprietor: Jane Villadsen Built: 1959 Size: 462 m2 Number of employees: 3 Number of residents: 53
KITSISSUARSUIT
Built: NN/993 Capacity: 280 m3 Number of tanks: 6 Administered by: Pilersuisoq
QEQERTARSUAQ
Tank manager: Frederik Broberg Built: 1950/72/86/03 Capacity: 5,130 m3 Number of tanks: 10 Number of employees: 4
ATTU
Built: 1987/2002 Capacity: 440 m3 Number of tanks: 5 Administered by: Pilersuisoq
ILIMANAQ
Built: NN/1996 Capacity: 160 m3 Number of tanks: 5 Administered by: Pilersuisoq
NIAQORNAARSUK
Proprietor: Kiistaaraq Frederiksen Built: 1969 Size: 750 m2 Number of employees: 9 Number of residents: 249
QEQERTAQ
Proprietor: Edvard Frederiksen Built: 1963/85 Size: 538 m2 Number of employees: 7 Number of residents: 114
IGINNIARFIK
Proprietor: Ulrikka Vetterlain Built: 1993 Size: 150 m2 Number of employees: 3 Number of residents: 76
ILULISSAT, ENGROS
Department head: Lars Wille Built: 2019 Size: 195 m2 Number of employees: 2 Number of residents: 4,442
NIAQORNAARSUK
Built: NN/1987/2008 Capacity: 444 m3 Number of tanks: 4 Administered by: Pilersuisoq
QEQERTAQ
Built: NN/1994 Capacity: 380 m3 Number of tanks: 5 Administered by: Pilersuisoq
IGINNIARFIK
Built: NN/1984 Capacity: 140 m3 Number of tanks: 3 Administered by: Pilersuisoq
ILULISSAT
Tank manager: Flemming Karlo Lassen Built: 1957/66/76/15 Capacity: 20,525 m3 Number of tanks: 8 Number of employees: 4
OQAATSUT
Proprietor: Anine Olsen Built: 1990/94 Size: 271.5 m2 Number of employees: 2 Number of residents: 29
SAQQAQ
Proprietor: Katrine Frederiksen (acting) Built: 1952/99 Size: 738 m2 Number of employees: 7 Number of residents: 132
SAQQAQ
Built: NN/1994/2013/2018 Capacity: 500 m3 Number of tanks: 6 Administered by: Pilersuisoq
Annual report 2019-20
33
REGION Kitaa
ATAMMIK
Proprietor: Anthonette Jakobsen Built: 2005 Size: 592 m2 Number of employees: 8 Number of residents: 190
KAPISILLIT
Proprietor: Inger Lukassen Built: 1939/97 Size: 556.9 m2 Number of employees: 3 Number of residents: 52
PAAMIUT
Tank manager Leif Kristiansen Built: 1962/72/04 Capacity: 7,820 m3 Number of tanks: 6 Number of employees: 2
Annual report 2019-20
ATAMMIK
Built: 2000/2015 Capacity: 400 m3 Number of tanks: 5 Administered by: Pilersuisoq
KAPISILLIT
Built: 1974/98/00 Capacity: 240 m3 Number of tanks: 5 Administered by: Pilersuisoq
QEQERTARSUATSIAAT
Proprietor: Otto Larsen Built: 1969/09 Size: 550 m2 Number of employees: 8 Number of residents: 169
34
ITILLEQ
Proprietor: Elias Dahl Built: 1987/97 Size: 330 m2 Number of employees: 4 Number of residents: 89
MANIITSOQ
Tank manager: Finn Løvstrøm Built: 1932/96 Capacity: 16,400 m3 Number of tanks: 10 Number of employees: 3
QEQERTARSUATSIAAT
Built: 1974/15 Capacity: 302 m3 Number of tanks: 4 Administered by: Pilersuisoq
ITILLEQ
Built: NN/1984 Capacity: 170 m3 Number of tanks: 4 Administered by: Pilersuisoq
NAPASOQ
Proprietor: Nielsine Johnsen Built: 1978 Size: 120 m2 Number of employees: 4 Number of residents: 89
SARFANNGUIT
Proprietor: Freda Kajussen Built: 1922 Size: 230 m2 Number of employees: 5 Number of residents: 126
KANGAAMIUT
Proprietor: Signe Kreutzmann Larsen Built: 1967/98 Size: 401 m2 Number of employees: 12 Number of residents: 353
NAPASOQ
Built: 1983/NN Capacity: 320 m3 Number of tanks: 4 Administered by: Pilersuisoq
SARFANNGUIT
Built: NN/1975/96 Capacity: 238 m3 Number of tanks: 6 Administered by: Pilersuisoq
KANGAAMIUT
Built: 1982/2012 Capacity: 950 m3 Number of tanks: 4 Administered by: Pilersuisoq
NUUK
KANGERLUSSUAQ
Proprietor: Marie T. Larsen Built: 1967 Size: 506 m2 Number of employees: 16 Number of residents: 499
NUUK, ENGROS
Tank manager: René Lyberth Møller Built: 1932/96 Capacity: 48,500 m3 Number of tanks: 10 Number of employees: 3
Head of wholesale: Jens Bang Built: 1932/96 Size: 247.2 m2 Number of employees: 3 Number of residents: 17,635
SISIMIUT
SISIMIUT, SERVICE CENTRE
Tank manager: Hans Johansen Built: 1932/96 Capacity: 26,500 m3 Number of tanks: 13 Number of employees: 5
KANGERLUSARSORUSEQ
Tank manager: Kim Davidsen Built: 1950/65/68/84/16 Capacity: 43,700 m3 Number of tanks: 9 Number of employees: 3 Number of residents: 5
PAAMIUT
Proprietor: Jørgen Mørch Built: 1987 Size: 411 m2 Number of employees: 17 Number of residents: 1,308
Built: 1970 Size: 6,479 m2 Number of employees: 5 Number of residents: 5,582
Annual report 2019-20
35
REGION Kujataa
AAPPILATTOQ
Proprietor: Isakke Benjaminsen Built: 1978/00 Size: 627 m2 Number of employees: 3 Number of residents: 103
ARSUK
Built: NN/73/11 Capacity: 400 m3 Number of tanks: 4 Administered by: Pilersuisoq
NARSAQ
Proprietor: Paninnguaq Boassen (Ass. manager) Built: 1958 Size: 1,600 m2 Number of employees: 19 Number of residents: 1,374
QASSIARSUK
Built: 1972/96 Capacity: 218 m3 Number of tanks: 4 Administered by: Pilersuisoq
Annual report 2019-20
AAPPILATTOQ
Built: 1971/16 Capacity: 240 m3 Number of tanks: 4 Administered by: Pilersuisoq
EQALUGAARSUIT
Proprietor: Kristine Poulsen Built: 1963/99 Size: 195 m2 Number of employees: 3 Number of residents: 50
NARSAQ
Tank manager: Kristian Stach Olsen Built: 1970 Capacity: 8,540 m3 Number of tanks: 8 Number of employees: 2
QASSIMIUT
Proprietor: Angaju Lorentzen Built: 1938 Size: 411 m2 Number of employees: 1 Number of residents: 18
36
ALLUITSUP PAA
Proprietor: Aqqa Pavia Josefsen Built: 1952/98 Size: 857 m2 Number of employees: 8 Number of residents: 194
EQALUGAARSUIT
Built: 1983/NN Capacity: 250 m3 Number of tanks: 3 Administered by: Pilersuisoq
NARSARMIJIT
Proprietor: Julius Jakobsen Built: 1968 Size: 281 m2 Number of employees: 3 Number of residents: 62
QASSIMIUT
Built: 1982/NN Capacity: 220 m3 Number of tanks: 3 Administered by: Pilersuisoq
ALLUITSUP PAA
Built: 1972/01 Capacity: 950 m3 Number of tanks: 5 Administered by: Pilersuisoq
IGALIKO
Proprietor: Asa Egede Built: 1932/96 Size: 247.2 m2 Number of employees: 3 Number of residents: 24
NARSARMIJIT
Built: 1972/08 Capacity: 203 m3 Number of tanks: 4 Administered by: Pilersuisoq
SAARLOQ
Proprietor: Kristine Poulsen (acting) Built: 1970 Size: 240 m2 Number of employees: 2 Number of residents: 23
AMMASSIVIK
Proprietor: Paniaraq Frederiksen Jensen Built: 1963/86 Size: 283 m2 Number of employees: 2 Number of residents: 36
IGALIKO
Built: 1970/12 Capacity: 116 m3 Number of tanks: 2 Administered by: Pilersuisoq
NARSARSUAQ
Proprietor: Sørine Isaksen Built: ???? Size: 254 m2 Number of employees: 15 Number of residents: 124
SAARLOQ
Built: 1972/00 Capacity: 123 m3 Number of tanks: 4 Administered by: Pilersuisoq
AMMASSIVIK
Built: 1972/13 Capacity: 51 m3 Number of tanks: 2 Administered by: Pilersuisoq
NANORTALIK
Proprietor: Henriette Josefsen Built: 1984 Size: 1,345 m2 Number of employees: 21 Number of residents: 1,264
QAQORTOQ
Tank manager: Ingivaq Nielsen Built: 1961/78/15 Capacity: 24,790 m3 Number of tanks: 10 Number of employees: 3
TASIUSAQ
Proprietor: Mariane S. Heilmann Built: 1925 Size: 441 m2 Number of employees: 2 Number of residents: 44
ARSUK
Proprietor: Hanne Jakosen Built: 1992 Size: 410 m2 Number of employees: 4 Number of residents: 83
NANORTALIK
Tank manager: Jafet Rosing Built: 1970 Size: 4,960 m3 Number of tanks: 9 Number of employees: 2
QASSIARSUK
Proprietor: Jakobine Nielsen Built: 1964 Size: 298.6 m2 Number of employees: 3 Number of residents: 37
TASIUSAQ
Built: 1968/97 Capacity: 81 m3 Number of tanks: 6 Administered by: Pilersuisoq
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STRATEGY
FOTO HORISONT
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STRATEGY
URBANISATION A large part of KNI’s commercial business is based on activities in villages and small towns, where the population has been declining for decades. Over the past five years alone, the population of the villages and smaller towns has reduced by around 1,300 people, corresponding to a decrease of around 5.5%. The population statistics as of 1 January 2020 show a modest increase in the total population in Greenland since 2019, corresponding to 0.2% – but for KNI’s sales areas, there is still a fall in population. The decline from 2019 to 2020 can be calculated at 416 people, corresponding to a reduction of 1.9%.
ment of Greenland, KNI has entered into an agreement on a supply obligation – and that is an agreement that we comply with at all times. But the fact remains that relocations from KNI’s sales areas will increasingly challenge the Group’s ability to create sufficient earnings to cover the costs of the supply of goods. Urbanization is a fact of life in today’s Greenland – and it is also a logical development. KNI’s Killingusaaq strategy is based on the urbanisation trend, and actively addresses this reality through tactical priorities.
Urbanisation is a major challenge for KNI’s earnings, let alone growth opportunities. The Group’s fixed costs remain unchanged, as it is of course not an option to simply close down unprofitable shops. In the service contract with the Govern-
Trend Inhabited localities
2015
2016
2017
2018
2019
2020
2019-20
Town retail outside KNI
32,720
32,953
33,214
33,477
33,641
34,162
521
KNI 4K
7,383
7,319
7,200
7,076
7,116
6,908
-208
KNI town service contract
7,156
6,951
6,923
7,021
7,050
7,050
0
KNI village service contract
8,555
8,468
8,382
8,167
8,063
7,855
-208
169
155
141
136
122
106
-16
55,983
55,846
55,860
55,877
55,992
56,081
89
-0.2%
0.0%
0.0%
0.2%
0.2%
Outside town/village Total Change from previous year
Trend KNI’s sales area
2015
2016
2017
2018
2019
2020
2019-20
KNI 4K
7,383
7,319
7,200
7,076
7,116
6,908
-208
KNI town service contract
7,156
6,951
6,923
7,021
7,050
7,050
0
KNI village service contract
8,555
8,468
8,382
8,167
8,063
7,855
-208
23,094
22,738
22,505
22,264
22,229
21,813
-416
-1.5%
-1.0%
-1.1%
-0.2%
-1.9%
KNI’s sales area, total Change from previous year
Source: Statistics Greenland: Population statistics, 1 January 2020
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STRATEGY
INVESTMENTS There is a renovation backlog in both the Goods and Energy divisions. This is a situation that Killingusaaq also actively addresses – because the renovation backlog must be reduced.
that can be achieved through, for example, the introduction of energy-efficient solutions. This will place further pressure on the earnings of the Goods Division in the long term.
The Goods Division has a building stock of more than 400 buildings that require various degrees of renovation. In the Energy Division, it is a question of performing the renovation and maintenance tasks that are necessary to keep the production apparatus in a responsible and sound condition for production and safety.
At least DKK 40-50 million is currently allocated each year for investments in the Goods Division. In order to reduce the renovation backlog over, for example, a 20-year period, another DKK 15-20 million will need be allocated each year for investments. Investment at this level will require a strong strategic focus on obtaining the necessary liquidity from the Company’s earnings.
Work has been done on a renovation plan in the Energy Division for the past 10 years, aimed at remedying a total renovation backlog of around DKK 500 million. At the end of the financial year 2019/20, there remains a backlog of approximately DKK 120 million which will have to be implemented over the next 5 years.
Large sums of money are set aside annually for these renovations, but making full use of the investment framework is not without its challenges. Delays can occur due to lack of planning permission, or because it is not possible to source qualified contractors in the villages.
In the Goods Division, the total renovation backlog was estimated in the financial year 2016/17 to be around DKK 300 million. At the end of the financial year 2019/20, the figure is between DKK 300 - 350 million.
As the following table shows, it has not been possible to implement the budgeted investments in the Goods Division over the past four financial years, for the reasons described above.
All else being equal, reduction of the renovation backlog will ultimately increase costs in the Goods Division going forward, as depreciation will increase more than the operating savings
The renovation backlog from the past four financial years, corresponding to DKK 84 million, is expected to be implemented over the coming financial years.
Investments – Goods Division (DKK mill.)
2019/20
2018/19
2017/18
2017/18
Total
107.8
81.7
58.8
70.5
318.8
Implemented investments
81.0
73.3
42.5
38.4
235.2
Unused budgeted funds
26.8
8.4
16.3
32.1
83.6
Budgeted investments
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STRATEGY
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STRATEGY
KILLINGUSAAQ KNI’s strategy KNI’s mission is to operate a profitable trading and service company to the benefit of our customers, employees and owners, and the sustainable development of Greenlandic society. The vision is that KNI must be able to accommodate both being an innovative and globally based group, and at the same time possess a deep understanding of the everyday needs of even the smallest village.
within the four overall strategic focus areas. Three-quarters of the strategy period has been completed, and significant results have been created in all four areas: Earnings, Growth, Taqqissuut and Investments.
Killingusaaq sets the overall direction and vision for KNI, and acts as a lodestar for the Group’s work areas and organisation. It secures an overall plan for KNI’s strategic focus and co-ordination of its tactical efforts in the strategy period 2017 - 2020.
The continuous work with the strategic focus areas ensures that KNI is constantly moving forward, and thus remains in tune with the changing needs of the customers and the general development of society. KNI’s core activity naturally remains ensuring security of supply, but our strategic priorities must ensure that the Group meets the challenges of the future with innovative thinking and ever-better supply solutions – to the benefit of our customers and Greenlandic society.
In the financial year 2019/20, work has therefore continued on implementing and anchoring processes and policies
KNI is present with one or more business units throughout Greenland, and as such, we are an integral part of
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Greenland’s everyday life. We are therefore very aware of the fact that KNI has a special role to play as an active participant in the development of society – and in order to be able to carry out that role effectively, it is necessary that KNI is also a profitable group. Over the past six financial years, with a clear strategy implemented through selected tactical efforts, KNI has become a well-functioning and profitable group, which at the same time has acquired an ever-increasing focus on customer needs. This does not mean that KNI has arrived at its goal – the goal moves as society develops – but it does mean that the strategic course that has been set is the right one. KNI is constantly working to optimise its internal processes and business procedures, while in parallel, the potentials for growth within the given framework for KNI’s operations in Greenland are investigated and developed.
STRATEGY
Vision KNI wishes to be a dynamic and profitable company that understands its customers and their needs, and it must be: • The preferred choice of customers •The best workplace in Greenland •An active player in the development of society
STRATEGIC INITIATIVES EARNINGS • Optimisation of purchasing Category management • Logistical optimisation of goods reception • Property optimisation warehouse structure • Neqi Improve earnings
GROWTH
TAQQISSUUT
• Pilersuisoq Growth in the competition towns • Pilersuisoq growth in service contract area
• Skills enhancement, focusing on training shopkeepers, warehouse managers and oil terminal managers • Sales training
• Engros growth • Marketing Marketing strategy that can support growth
• Strengthening traineeships to enhance internal recruitment • Value implementation with focus on operations personnel
INVESTMENTS •Construction strategy for Pilersuisoq with a view to supporting renovation and growth • Continue construction strategy, but also invest to optimise logistics in Polaroil • Upgrading of ERP system in KNI to support more effective business procedures
Values
Customer-oriented | Responsible | Innovative | Co-operation
Mission
KNI’s task is to operate a trading and service company to the benefit of our customers, employees and owners, and the development of society.
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STRATEGY
BRANDING OF KNI For 246 years, KNI has been an important cornerstone in the infrastructure and livelihood of Greenland. It si therefore deeply rooted in our DNA to be relevant and accessible to the people of Greenland – regardless of whether they live in a large town or a small village. For us, the task is the same: To secure supplies and preserve livelihoods right out in the small communities. Not because such areas offer great financial rewards, but because it is from here that an important part of our national identity springs. And this is where our world begins in everything we do. Including when it comes to the communication and activation of KNI as a brand.
KNI is Greenland Our long history gives us a unique opportunity to position ourselves as significantly more Greenlandic than the competition. Accordingly, the focal point of KNI's branding work is: “The inner Greenlandic life”, on the basis of a deep understanding of Greenland’s history and contemporary culture. This in turn is translated into products and services that match the culture of Greenland and its everyday challenges. So when we work with branding, it takes place from the outside and inwards: What is important for our target group? What do they need? What challenges do they face in everyday life? This means that there must always be a natural
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balance in what we do and what we say. We must be where our customers need us, with services, basic commodities and products that match their everyday lives and budget. Just as our communication must be informative, useful and inspiring – so that the customers can see and feel that we really are there for them and understand their needs. And this succeeds only when the balance is in order.
Communication in words, images and products If our communication is to function as a bridge-builder between our customers and KNI, it must always be relevant and down to earth. And our words must be backed up by concrete actions: One of our most important tasks is to ensure customers feel at home in Pilersuisoq’s stores. In concrete terms, we do this by documenting the everyday life of Greenland in pictures and using them in our shop decorations, which vary locally. In this way, the shop space also functions as a medium that helps to create a sense of belonging. Another way to support our Greenlandic identity is through KNI Design, where we launch relevant products designed in collaboration with Green-
landic artists: products that receive a more lasting place in Greenlandic living rooms than the basic commodities we otherwise offer. By introducing a new deposit system on packaging from Polaroil, KNI gives money back to the customers to thank them for keeping Greenland tidy. With our sponsorships of sports clubs and dog sled culture, we help to give back to society and preserve an important part of the culture of Greenland. Through our recipe universe, Mamarisavut, we help to inspire daily cooking and lifestyles, but based on ingredients and commodities to which everyone has access. Last but not least, we communicate with our customers every week through the Pilersuisoq fliers, where we provide recipes, tips and info about current events or public holidays in Greenland.
A good image does not come by itself At the end of the day, our image is the sum total of all the positive and negative experiences that our customers have with Polaroil, Pilersuisoq, KNI Wholesale, Neqi, Pisisa and the Service Centre. If we have done things well, customers will experience a single coherent narrative about Greenlandic life, which they can take home with them from the shop and place on the dining table, hang on the wall or enjoy in their free time and in the natural surroundings. They should feel that we have made an effort to understand them and contribute positively to their everyday lives. And the bonus for us is that we acquire a good image; because we do not own our image – we have to earn it every single day.
STRATEGY
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STRATEGY
TAQQISSUUT Taqqissuut, KNI’s skills enhancement programme, is one of the four strategic focus areas that supports the strategy process Killingusaaq. Taqqissuut includes a concrete plan for training and skills enhancement for all employees in the Company. We offer all of our employees both personal and professional development opportunities. We ensure that the individual staff member undergoes a carefully planned development process, focused on securing both the personal and professional ambitions of the employees. This development process applies to our shops, oil terminals, slaughterhouse and service centre.
For KNI, it is crucial that all employees develop their skills, so that the Company’s level of service and competitiveness can continually be enhanced. Globalisation and other developments in our surroundings mean that we cannot make do with the current level of skills. We must continuously develop our employees to ensure they can meet the standards that the outside world demands of us.
71 56
The skills enhancement programme aims to develop several different types of skills, as it is the combination of these that creates the ideal employee. These are divided into the following categories: • Professional skills • Personal skills • Social skills
15/16
79
62 50
16/17
17/18
18/19
19/20
KNI overall - Trend in number of trainees
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STRATEGY
LEADERSHIP PIPELINE Since the financial year 2018/2019, KNI has been working to establish and implement the management philosophy behind the Leadership Pipeline. We wish to develop and implement the quality and cohesion of management through the Leadership Pipeline model, as the internal recruitment of managers and systematic management development are important to build effective leadership at all levels and ensure good business management.
Purpose: • To ensure that managers on every level of the organisation to know their roles and responsibilities. • To define the essential (cultural/professional) indicators for good management in the organisation. • To support and ensure that all managers are dedicated to their roles and responsibilities, and to train them in the most common transition challenges. • To develop systems that continuously follow up and ensure that the organisation’s leaders and management talents are evaluated and assessed on an ongoing basis in relation to their defined roles and competencies.
Pipeline: 1. Good leadership depends on what is managed: Each level requires its own work values (that is, what you need to succeed at), priorities (what you need to spend time on to succeed), and skills (what you need to be able to do). 2. The transition from one level of management to another can be a challenge: in moving from one level of management to another, there are things to be learned and things to be unlearned. 3. Management quality is built up through a coherent chain of support activities for management. The Leadership Pipeline can help to create a link between leadership, management development and strategy implementation.
The three main points of the Leadership
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HIGHLIGHTS
2019
Read more on page 52
KNI Niuffanneq 2019
KNI Katerinneq Read more on page 52
enhancement
Skills
Read more on page 53
Sponsor
Read more on page 50
Shop design Annual report 2019-20
48
Read more on page 51
HIGHLIGHTS
Read more on page 55
Neqi 100% organic Read more on page 58
HEALTHY EVERY DAY
Polaroil and safety Read more on page 52
Read more on page 57
Mamarisavut
Read more on page 26
ILLIT PILLUTIT ATAVUGUT Vi er til for dig
CSR news
CSR
Own products
Read more on page 54
Read more on page 57
2020
A greener KNI
Price campaign Read more on page 56
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HIGHLIGHTS
KNI’S SPONSORSHIPS We support the whole of Greenland – locally and nationally Greenlandic everyday life is our workplace. Our tasks are distributed right throughout Greenland, from the capital to the smallest village. It is therefore natural for us to engage in the life and daily activities that go on around us, both large and small. That’s why we are happy to support the good initiatives and ideas we encounter in our daily lives.
Nagdlunguak´
Support for a very special community KNI is the main sponsor of the sports club Nagdlunguak´, which is much more than an ordinary sports club. It is also a group of volunteers who make huge and wholehearted sporting and social efforts. Their focus is on children and young people, but Nagdlunguak´ also offers many activities for seniors, which creates a great community across all ages and stages of life. The club also does a great deal of social work that goes far beyond sport. Members of Nagdlunguak´ also for example act as ‘night ravens’, showing care for children and young people who are out
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at night. At KNI we have great respect for their work, which is why we have committed ourselves as the main sponsor of Nagdlunguak´.
AVANNAATA QIMUSSERSUA Preserving dog sled culture
There are many beautiful symbols of Greenlandic culture – the women’s boats, kayaks, women’s knives and harpoons. These symbols also include the unique Greenlandic sled dog, which has loyally served our people for millennia. With its incredible strength and resilient nature, it has become an important
part of our self-understanding. The sled dog is still here, but it is unfortunately declining as the world changes rapidly in our time. The winter ice is thinner and disappears ever earlier, for which reason many people have replaced the labour-intensive dog team with the faster and less demanding snowmobiles. We are of course, aware that new times require new solutions, but at the same time we believe that it is important that we preserve the unique elements of our identity that make us who we are. Accordingly, KNI supports the Greenlandic dog sled culture as main sponsor of the Greenlandic dog sled championships.
HIGHLIGHTS
SHOP DESIGN
PILERSUISOQ
THE GREENLAND FACE OF KNI
A shop design inspired by everyday life
Wherever people live, you’ll find us: from the smallest village to the capital. But because we are part of some very small communities, we are often the only shopping and meeting-place in the area. As part of everyday life, it’s inevitable that we are taken for granted. We know this, and we see it as part of our identity. Conversely, it also provides part of our authenticity and helps to strengthen Greenland’s self-image. And it is precisely Greenlandic everyday life and culture that has provided the inspiration to create a unique shop design for Pilersuisoq.
Because the shops must reflect the daily life of which we are a part and the people we serve. And they must reflect our common identity, but also accommodate regional differences. All of this, we call: the Inner Greenlandic Life.
Unique from shop to shop The starting point and idea has been to create a common retail space which nevertheless differs from region to region. The design makes use of three simple visual elements from the everyday life of Greenlanders: Wooden walls, photographs of people and nature, and illustrations of iconic objects.
2019 KNI and Pilersuisoq. The top signs of the shop shelves feature motifs of customers, nature and everyday situations from all parts of Greenland. The large environmental photos feature motifs from the region in which the shop is located. Illustrations of Greenlandic icons are used on the blue wooden walls and hanging signs. If you visit Pilersuisoq in the different regions, you will therefore find that the shops are both the same and different. The blue wooden walls and the use of Greenlandic photographs and illustrations are common to all Pilersuisoq shops.
2020
SHOP 2019 DESIGN INSTALLATION OVERVIEW
April: Engros shop Nuuk May: Pilersuisoq Alluitsup Paa May: Polaroil Kiosk Qeqertarsuaq June: Polaroil Kiosk Kangaatsiaq September: Engros shop Ilulissat October: Pilersuisoq Paamiut October: Pilersuisoq Qeqertarsuaq November: Pilersuisoq Narsaq November: Pilersuisoq Nanortalik
But each shop has its own variations and regional photos. As a result, every single shop will be a new experience to explore.
The blue wooden walls come from the classic wooden houses that are found in the towns and villages, and along the coast. At the same time, the calm blue colour creates a visual link between
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HIGHLIGHTS
KNI KATERINNEQ 2019 On 10-14 June, 130 KNI employees from all over Greenland met in Ilulissat for Katerinneq. Once a year, the Group’s managers and middle managers meet for five joint working days, in which the past year is evaluated and upcoming tasks are presented and discussed. In addition to the professional content, Katerinneq also has great value for the common identity, and thereby the cohesiveness, of KNI. For most of the participants, this is the only time in the year that they will meet each other. The days therefore also provide a forum for many practical discussions and an opportunity to listen to others’ experiences of their common daily challenges.
KNI NIUFFANNEQ 2019
• 15 June - Ilulissat • 29 June - Qasigiannguit • 31 August - Qeqertarsuaq
KNI NIUFFANNEQ 2019 Niuffanneq is KNI’s travelling market day, which visits an average of three towns on the coast each year during the summer and autumn months. The concept is to bring together Pilersuisoq and Polaroil, KNI Engros and Neqi under one roof in a big one-day event in the town’s sports hall. Here the visitors – of which there are always many – can find some really good bargains. And there is a lot to choose between – from Poca dinghies and rifles to half lambs, Arabic coffee, bed linen and
Safety First Planning & tank cleaning 8 hours Safety equipment for tank cleaning Elementary fire fighting 4 hours First aid in the Arctic Rescue of persons from a tank
4 hours 8 hours 24 hours 16 hours
soft ice cream. In addition to choosing from among the many good offers, visitors can eat in the KNI cafe while being entertained by Greenlandic musicians and comedians.
Niuffanneq is a valuable branding event for KNI, because the many visitors obtain a positive and coherent experience of KNI as a whole At the same time, the market day also provides a new and extremely useful forum for customers and employees to talk to each other – so that everyone can learn more about what can be improved, and what is good about KNI.
POLAROIL AND SAFETY Working at an oil terminal is not without risk – but with proper training it can be made a safe workplace. In October 2019, KNI held a safety and rescue course for Polaroil employees. The course, which combined theory with practical experience, lasted eight days and was held at the oil terminal in Maniitsoq.
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HIGHLIGHTS
SKILLS ENHANCEMENT Better, more skilled and more self-supporting It is a common task for Greenlandic society for Greenland to become more self-sustaining, and one cornerstone in this is an adapted education system. At KNI, we wish to help create more educational opportunities, internships and career paths, so that our younger generation can see a future in many places in Greenland. Our training courses have a very broad range, so that both those with commercial talent and those with a more creative talent can find the right training with us.
Many career opportunities at KNI Every year, we train around 70 new trainees, and we have created more than 163 approved internships in KNI’s various companies. This is actually the largest number in the country.
It is a continuous challenge for KNI to be able to secure the recruitment of competent labour, so we have a strong focus on training and further educating our own employees. All training takes place at our service centre in Sisimiut, which also functions as a training and course centre, offering everything from truck courses to MBAs.
and safety. The course consists of three modules, the first of which is taken at KNI’s Service Centre. Module number two consists of a study trip to Denmark and Sweden. The third and final module takes place in the Service Centre, with a concluding examination. Since the course was established in 2018, 16 oil tank managers have been trained.
NIUERTUNNGORNIARNEQ AQUTSISUNNGORNIARNEQ Commercial training programme Internal Management Training This is a theoretical and practical training course under Taqqissuut, intended for the skills enhancement of shop managers and as basic training for future shop managers. The course takes place over nine months, with three modules at the Service Centre in Sisimiut and home study in the two intermediate periods. Since the course was established in 2016, 48 shop managers have been trained.
This is KNI’s latest training course under Taqqissuut, and also consists of three modules, all of which are taken at the Service Centre. The course is aimed at current or future managers in KNI, and aims to develop the participants’ professional and personal management skills. The training course was established in 2019, with a capacity of 12 participants annually. The first year group will complete the management training by autumn 2020.
IKUMMATISSAASIVILERISUNNGORNIARNEQ / Oil terminal manager training
This is a training course for all employees of Polaroil’s oil terminals, aimed at skills enhancement in management
COMPLETED TRAINING & COURSES AT KNI, 2019/2020 • • • •
190 persons took an external course 223 took internal training / courses 45 took a statutory course or training 17 completed an external course of training • 11 completed a pre-MBA • 2 completed an MBA
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HIGHLIGHTS
In 2019, we brought together KNI’s product development in applied art, textiles and clothing under the brand name KNI Design. With a single brand, we can seriously communicate and strengthen the breadth and brand value of the products we develop and produce ourselves.
More than just part of daily life Products from KNI Design are developed with Greenlandic identity as their focal point. This makes the products popular with the general population, and we experience great demand and interest when we launch new design products. This means that we can be even more present in Greenlandic homes; not just in the refrigerator, but also as a coffee set on the coffee table, or graphics on the wall. So as well as providing essential goods and fuels for everyday life, KNI can now also become part of Greenland’s self-understanding.
The popular KNI Design bed linen comes in two versions – one for men and one for women. The women’s bedding is adorned with women's knives and the men's with harpoon tips. Both versions also have seals hidden in the pattern.
Design that creates loyalty The five requirements toBy creating unique Greenlandic applied wards KNI Design products art, we can contribute to Greenland’s contemporary culture and identity. This allows us to position ourselves as innovative and more Greenlandic than our competitors.
In the larger picture, it also helps to strengthen our brand and customer loyalty. This is precisely what makes the products a valuable tactical tool in the work of strengthening KNI's brand.
A product from KNI Design must always: • Possess a clear Greenlandic identity that creates recognition and pleasure. • Be oriented towards the broad national public. • Possess branding and commercial value for KNI. • Be affordable for everyone. • Only be sold at KNI and a few other selected outlets.
In 2019, KNI Design launched the first card game that pays homage to Greenlandic culture. The cards are based on the national and costumes from Qaanaaq, East Greenland, West Greenland and South Greenland.
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HIGHLIGHTS
UPDATED WEBSITE Many of Pilersuisoq’s customers do not have access to high-speed, submarine cable internet. According ly, a new, lighter version of Mamarisavut was laun ched in the first quarter of 2020 which is faster to download and navigate in.
mamarisavut.g
1 April 2019 - 31 April 2019
mamarisavut.g
It must be easy to eat healthily
1 March 2020 – 31 March 2020
Mamarisavut is Pilersuisoq’s online recipe universe, created in 2018. Here we meet the customers and their everyday lives in a down-to-earth manner. Mamarisavut is based on Pilersuisoq’s product range, as it is all the way out in the small villages. So even if you only have access to a limited selection of imported foods, you can still make these recipes and create a varied and dependable everyday diet. Mamarisavut is thus for everyone, but its primary target groups are families with young children, where the everyday routine is often busy, and young people, who may have limited experience in the kitchen.
Mamarisavut’s mission is to inspire customers to eat a varied everyday diet, partly by using Greenlandic ingredients from nature and combining them with Pilersuisoq’s commodities from the basic product range.
HEALTHY LIVING As a natural extension of the improvements in Mamarisavut, Pilersuisoq focused on healthy lifestyles with the campaign: “Make health your everyday life”. The campaign embraced healthy lifestyles, without rejecting all the fun: healthy living does not have to be expensive or boring. The campaign focused on good and healthy alternatives that can easily be integrated as a regular part of everyday life, together with clear and easy recipes that will suit even the busiest family with children, and those who live on a tight budget.
The campaign elements The easy alternative to fast food The young people like to buy ready meals and fast food at Pilersuisoq. It is not our job to act as ‘food police’, but we can inspire them with an easy and healthy alternative. So Mamarisavut has many healthy and simple dishes that can be made in less than half an hour.
The campaign message “Make health your everyday life” is communicated via Pilersuisoq shops, fliers, posters, Facebook, TVC and on web banners on external sites, as well as via Mamarisavut on both the website, Facebook and in newsletters. The message is further expressed in easy everyday recipes, tips and tricks to get more out of the basic commodities, and via simple physical and mental training exercises you can practise at home in 10 minutes.
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HIGHLIGHTS
MORE AFFORDABLE EVERYDAY LIFE Greenland is in general an expensive country to live in, and people’s money often has to go a long way. This is especially true in the smaller towns and villages, where the economic room for manoeuvre is usually smallest. KNI is familiar with this, because we ourselves are part of everyday life in the outlying areas. This is where many of our customers live and our employees work. In many places Pilersuisoq is the only grocery shop, which gives KNI a double obligation: we must both ensure that customers obtain the basic goods they need in their everyday lives, and that the pricing is the best possible for them.
Supply obligation to fair prices It is obviously more expensive to transport goods to remote villages than to our capital. Then, once the goods have arrived, considerable storage capacity is required to store them until the next half-yearly ship call. This naturally results in a higher cost per product. But Pilersuisoq does not just exist to earn the maximum profit on its products. With 64 Pilersuisoq shops spread across most of Greenland, it is KNI’s responsibility to ensure the supply of goods to the population. It is a basic business principle for KNI that there must always be a responsible balance between Group earnings and customers being able to buy their groceries at reasonable prices.
Price reductions on groceries In 2018, we at KNI decided to make everyday life a little more affordable for all our customers, no matter where they lived. The management of Pilersuisoq simply reviewed the entire range of groceries. The best-selling items
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were marked, and then the sale prices were compared with the prices of similar items at other grocery stores in the large towns. We then adjusted the price to the same level or lower. This resulted in a price reduction in a total of 146 everyday commodities,
making it a little more affordable to live in the outlying areas of Greenland. The price reductions on selected groceries are made continuously in all Pilersuisoq stores, even when we are the only shop in the town or village. In the 2019/20 financial year, DKK 10 million was used for promotional discounts.
HIGHLIGHTS
WE’RE HERE FOR YOU EVERY DAY The 2019 CSR report became a newspaper insert in Sermitsiaq KNI is about much more than supply obligation and logistics. As a large company we must naturally act responsibly and engage in society, but many people are not aware of exactly how we contribute. So in November 2019 we decided to publish our CSR report as an insert in the country’s largest newspaper, Sermitsiaq, under the heading ‘We’re here for you’. KNI's work areas, values a nd social responsibility were presented in a magazine-inspired layout with photos and infographics, as well as articles and interviews in everyday language. The insert was thus aimed, in a lively and down to earth manner, at all citizens in Greenland.
About KNI on KNR In 2019, in order to communicate KNI’s core messages to a younger and wider audience, KNI produced a partially animated commercial for KNR. The three-minute film introduced viewers to KNI’s core tasks and ended with two CSR statements.
A GREENER KNI For KNI, sustainability and recycling must form a natural part of our tasks and social responsibility. We see it as a major shared responsibility to reduce the consumption of plastic in everyday life. In concrete terms, this means that all unnecessary plastic must be removed and replaced by environmentally friendly alternatives. So the plastic we use is collected and recycled, rather than allowed to pollute the environment. For us, this is the start of a new era at KNI, where thinking and acting in an environmentally friendly manner is always part of everyday life.
From plastic to bamboo and cotton In 2019, Pilersuisoq’s disposable plastic tableware was replaced with disposable tableware in cardboard and bamboo. While we still sell plastic shopping bags, produced in the least harmful materials, customers also have an opportunity to buy a shopping net in recycled cotton.
From scrap to gold Like many other places in the world, plastic in the environment is a problem in Greenland, too. In order to encourage a change in behaviour, Polaroil introduced a new returnable deposit scheme in mid-November 2019. But instead of introducing a kind of environmental tax, we chose to refund DKK 3 when the customer returns empty plastic cans of engine and gear oil. So by recycling, our customers save money. In the period from when the scheme came into force on 11 November 2019 until 1 April 2020, 4,052 cans of Texaco lubricating oil were returned.
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HIGHLIGHTS
NEQI 100% ORGANIC In August, Neqi purchased 105 tons of potatoes, which meant potato production in South Greenland was back on a par with 2016 and 2017. After a short drying period, some of the potatoes are packed in the new paper bags or nets, which are both more environmentally friendly and better able to preserve the potatoes than the former plastic bags. The other potatoes are sent to regional warehouses under KNI Engros for further sale and distribution. Optimal handling, storage and distribution means more potatoes, of higher quality, that stay fresh for longer. That is the key to increased earnings in South Greenlandic potatoes. Consequently, the handling and processing of the potatoes was improved once more in 2019 – this time optimising all stages from purchase to delivery in the shops, to avoid damage, moisture and mould formation during transport and storage. Via KNI Engros, regional distribution warehouses for Neqi’s potatoes and meat products were set up in Nuuk, Sisimiut and Ilulissat. This means faster delivery of better Neqi products to the customers.
Year
Number of lambs
Number of sheep
Lamb slaughter takes place in September and October, and with the almost 20,000 animals, this is Neqi’s largest single activity. In the other months of the year, cuts and processing takes place in the purchased mutton. This becomes 300 tons of high-quality meat in various cuts, and in products such as sausages, pies, etc. It is a strategic decision to work continuously to increase the amount of refined Neqi products.
Av. weight (kg.)
Total lambs
Reindeer
The product development must take place in close dialogue with the sales chain, so that there is always a commercial focus when creating new, high-quality products from South Greenland’s agriculture.
Musk oxen
Cattle
Potatoes
2014
20,072
2,258
14.68
294,657
29
-
29
-
2015
18,425
1,513
13.36
246,158
87
-
46
-
2016
17,458
1,183
15.93
278,108
73
57
23
100
2017
18,818
1,758
15.38
289.468
-
-
41
111
2018
18,020
1,680
15.05
271,144
62
-
40
51
2019
19,396
1,776
14.95
289,986
159
-
37
105
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HIGHLIGHTS
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CSR
SOCIAL RESPONSIBILITY We’re here for you KNI is a central part of society, so social responsibility is also an integral part of our activities. It is our goal to make the greatest possible contribution to the community, including being able to attract and develop committed employees. Contributing and helping is a core element of our Greenlandic culture, which has always been characterised by co-operation and community – because our ancestors could not have survived without each other’s help.
The culture of contribution has always been at our core, and long before the concept of CSR, the culture of Greenlanders was centred around responsibility for the community. KNI works actively with CSR, and we have a major focus on supporting social, cultural and sporting activities. In a country with limited resources and an expensive infrastructure, it is natural for us to contribute towards the promotion of activities that are important to society. The KNI mentality is characterised by social responsibility and dedication to solving the vital supply and service tasks. This applies no matter how small the village may be, and despite the fact that in some places there is no real commercial basis for carrying on trade all year round. KNI exists to secure supplies for everyone in Greenland. At KNI, we are also aware of the need to develop a corporate culture that is based on responsibility, collaboration, customer focus and innovation. The Company’s values have their roots in an
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understanding of and respect for the Inner Greenlandic Life. We wish to play an active role, both nationally and in all local communities, in promoting the positive development of our country. KNI is therefore happy to collaborate with other stakeholders in order to achieve a stronger boost for shared social responsibility.
KNI’s social responsibility policy focuses on those areas where we can make the biggest difference with our core competencies, and where we can see that the societal needs are greatest.
CSR
Sustainability At KNI, we wish to create the greatest possible value within the framework of sustainable development. This means that we continuously work to reduce the negative environmental impacts of our daily activities.
We believe through solid efforts in sustainability, we can optimise KNI’s earnings and at the same time lay down a healthy environmental, social and societal foundation.
During the financial year, we began work on developing a sustainability strategy across the departments of the KNI organisation. The CSR steering committee consists of the CEO, the HR manager, the marketing manager and the CSR Manager, and it holds meetings every financial quar-
Board of directors (approval)
CEO and management team (final decisions)
ter. The steering committee is chaired by the CEO, with the CSR manager as facilitator. Sustainability activities pass through the process sketched below – precisely to ensure that the entire group is involved in the activities.
CSR steering committee, led by CEO (projects and status)
Sustainability team, led by CSR manager (facilitates, implements and reports)
Divisions and departments (implementation)
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CSR
PRIORITISED WORLD SUSTAINABILITY GOALS KNI’s work with social responsibility and sustainability takes its natural starting-point in the UN’s 17 World Goals for Sustainable Development.
The world goals are distributed and prioritised according to KNI’s areas of work and competency, as well as where there are the greatest societal needs.
ACTION
ACTION
Maintain focus
Increase efforts to achieve the greatest effect
ACTION
ACTION
Monitor developments
Continues focus, and examine the possibilities for partnerships to maximize the effect
The above matrix shows that KNI has chosen to place special focus on four of the UN’s world goals. In the following sections, we will describe KNI’s efforts within the four selected goals.
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CSR
NO. 3 Health & Well-being World goal no. 3 is about promoting a healthy life and well-being for all age groups. We have a great responsibility for our customers’ health, as we are often the only supplier of food. That is why it is very important for us to inspire our customers to adopt a healthy lifestyle with healthy food. And by inspiring our customers to a healthy life, we can also secure better well-being. The health and well-being of our employees is also very important to us, with physical events all year round, gatherings and other initiatives and offers – and their well-being also means a lot to the Company’s environment and results. • Healthy Everyday Life is the headline for several linked KNI initiatives, all of which aim to boost health and well-being in our country.
• In 2018, in order to promote the use of healthy staples in cooking – rather than quick but unhealthy fast food – KNI reduced the prices of 146 groceries in all Pilersuisoq shops. In addition, price campaigns were carried out in 2019/20 for a total of DKK 10 million. • In the Healthy May campaign, exercise races were organised all over Greenland. In the same campaign, KNI also raised money for the Danish Cancer Society. • Every two years, KNI conducts an employee satisfaction survey in Greenland, to evaluate the employees’ satisfaction with their job content and co-operation.
• Mamarisavut is a Greenlandic online food universe that aims to inspire a simple, inexpensive and nutritious diet. • Pilersuisoq’s five dietary recommendations are aimed at schoolchildren and their parents, and focus on breakfasts and packed lunches.
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CSR
NO. 4 Quality education World goal no. 4 is about quality education and the need to create equal opportunities for education. Our employees people are our most important resource, only through their efforts can we create the quality and efficiency that we seek. Consequently, we systematically work to optimise the skills of our employees, partly through the development and training of our existing employees, but naturally also through new appointments. Many Greenlandic children never receive secondary or vocational education. KNI works actively to ensure that more Greenlanders receive an education, and can thereby contribute to strengthening society. We always focus on recruiting locally right across Greenland, and KNI has its own skills enhancement programme, Taqqissuut. Our highest priority is to be able to upskill our own employees, as this gives us a robust and safer workforce.
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• At KNI, we have three internal training courses: Niuertunngorniarneq (commercial training), Ikummatissaasivilerisunngorniarneq (oil terminal manager training) and Aqutsisunngorniarneq (management training), and a wide range of upskilling courses. • With the implementation of the Leadership Pipeline, we have now also created better framework conditions for lifelong learning, so that employees can create a career with the company.
CSR
NO. 11 Sustainable cities and communities World goal no. 11 is about making cities, local communities and villages inclusive, safe, robust and sustainable. Local communities must be included, so that we all share in our responsibility for a better environment. As KNI plays a leading role in Greenlandic society, we also have a responsibility to act as a role model by minimising our environmental impact and thinking sustainably. For Polaroil, this means ISO certifications and environmental approvals.
• In November 2019, a return deposit was introduced on oil cans sold at Polaroil and Pilersuisoq, in order to remove oil cans from the natural surroundings. The deposit represents a real saving for the customer, as KNI alone bears the cost of the deposit.
• KNI is in the process of optimising the energy usage of its many buildings across the country, and in renovations, low-energy solutions are always chosen. • Every year, KNI arranges and co-ordinates waste collections in the towns and villages.
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CSR
NO. 12 Responsible consumption and production World goal no. 12 is about ensuring sustainable consumption and forms of production. KNI’s goal is always to think sustainably in all our companies. We are developing a sustainability strategy that will significantly reduce our environmental footprint through more responsible consumption, as this is where we can seriously secure a sustainable future. The amount of waste we produce must be reduced to a minimum, and a large part of it must be compostable or recyclable. Neqi A/S is subject to strict requirements for the handling of slaughterhouse waste. In 2019, the company received a new environmental approval to maximise the utilisation rate of usable material. Since 2017, Neqi A/S has used parts of its slaughterhouse waste from lambs and sheep in the production of dog food. This makes a positive contribution to the environment and has created new jobs. Neqi’s plastic packaging for Greenlandic potatoes has been
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replaced with breathable paper bags or nets. This both reduces the environmental impact and improves the storage conditions of the potatoes – with fewer rejects as a result. • By the end of 2019, all plastic tableware in Pilersuisoq will be phased out and replaced by 100% compostable materials. • Since 2018, Pilersuisoq has produced all its fliers in Sisimiut. This both ensures a smaller CO2 footprint during production and helps to maintain local jobs. • KNI Design is Greenlandic product development – created by KNI, often in collaboration with Greenlandic graphic artists and artists. With its identity-creating products, KNI Design contributes to Greenlandic contemporary culture and creates jobs internally in Greenland. • In 2019, the subsidiary Neqi A/S received environmental approval for the future management of slaughterhouse waste. The approval is valid for a period of 8 years.
CSR
ENVIRONMENT AND CLIMATE We work determinedly to minimise our negative environmental impact by reducing our energy consumption and exploring the possibilities for making more use of environmentally-friendly technology wherever this can be done. In collaboration with our employees and customers, we wish to reduce waste in all our activities and contribute wherever we can to a cleaner local community through better and more precise product ordering, information and concrete activities.
RISK ASSESSMENT
We create a climatic and environmental footprint in connection with the production of raw materials, transport of goods and fuel, as well as the operation of shops and oil terminals. The risk of climate change and environmental problems means that at KNI, we have a responsibility to reduce our climate footprint.
EFFORTS
Food waste
Efforts to reduce food waste have always been a part of our daily work. Reducing food waste includes drawing attention to heavily discounted, but still edible, foods.
Polaroil return payments
In the campaign ‘A greener KNI’, KNI introduced a return payment of DKK 3 for returned cans of Texaco lubricating oil can sold at Polaroil and Pilersuisoq. The scheme was introduced in November 2019, and was an immediate success.
Polaroil ISO 14001 certified
The certificate deals with environmental management. Every year, Polaroil delivers environmentally improving results in accordance with its environmental policy commitments.
OBJECTIVES / INDICATORS
Good products should not be wasted, so the prices of those that are about to expire are reduced. Signage and information materials highlight the initiative. It must be easy for customers to find the discounted items, so that food waste in the shop can be kept to a minimum. Each month it is reported how many cans have been returned to Pilersuisoq or Polaroil. In the period from when the scheme came into force on 11.03.2019 until 31.03.2020, 4,052 cans of Texaco lubricating oil were returned: i.e. 61% of the cans sold during this period were returned. In December 2013, Polaroil could add another certification, ISO 14001: 2004 (now ISO 14001: 2015 version), which means: By introducing environmental management, KNI is targeting its efforts towards the most important environmental factors, such as waste and chemicals. We work with improvements that produce concrete results – also on the bottom line.
YEAR
STATUS
UN WORLD GOAL
Ongoing
100%
Ongoing 70%
Ongoing 100%
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CSR
EFFORTS
Less plastic
Another initiative under ‘A greener KNI’ is a new green alternative to the existing Pilersuisoq plastic disposable tableware. The new tableware is 100% plastic-free and fully biodegradable. The tableware is produced from bamboo pulp, and the cutlery from birch wood. Traditional plastic bags have been replaced with environmentally-friendly bags made from recycled plastic and plant fibre. Alternatively, tote bags in recycled cotton are sold.
Greener energy
We continuously optimise our shops and buildings to be more energy efficient.
A cleaner Greenland
Greenland is a beautiful country, and we at KNI have a joint responsibility to ensure that it continues to be so.
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OBJECTIVES / INDICATORS
Phasing out of all unnecessary plastic in KNI. The ‘green’ tableware is used in fast food and sold in shops. The disposable plastic tableware is also being phased out and purchasing of them has ceased.
YEAR
STATUS
Ongoing
60%
We are replacing our lighting with more energy-friendly LED lighting. We are replacing our old freezers on an ongoing basis with more environmentally-friendly versions. At the same time, we are working to insulate our buildings even better. Cleaner Greenland Greenland is a beautiful country, and we at KNI have a joint responsibility to ensure that it continues to be so.
Ongoing 50%
Every year
100%
UN WORLD GOAL
CSR
COMBATING BRIBERY AND CORRUPTION Like all other companies, KNI also has a clear responsibility to ensure that our business does not engage in corrupt behaviour.
RISK ASSESSMENT
Corruption is a threat to the stability of the company. Because of our infrastructure, there are long distances between the shops. KNI buys most of its goods through Danish suppliers, and a small proportion of the non-food products are bought through countries other than Greenland and Denmark. According to international analyses, there is a risk of violations of labour and human rights, as well as corruption, in certain areas.
EFFORTS
Whistleblower scheme
We combat corruption and corporate crime. Reporting violations is important and helps to prevent financial loss and damage to our reputation.
Internal auditing
The Company has established an internal auditing function, which is amongst other things intended to reduce losses due to criminal actions committed by employees, customers or others.
OBJECTIVES / INDICATORS
At KNI, we have a whistleblower scheme so that serious matters can be reported, such as bribery, extortion, embezzlement, theft, accounting fraud, etc.
Internal auditing helps to minimise the risk of fraud, strengthen reporting to management, and improve business procedures.
YEAR
STATUS
UN WORLD GOAL
Ongoing
100%
Every year 100%
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CSR
SUPPLIERS Responsible supplier management is the basis of our purchasing policy. That means that we actively address social, environmental and ethical issues in the supply chain.
RISK ASSESSMENT
According to international analyses, there is a risk of violations of labour and human rights, as well as corruption, in certain areas. Work is therefore underway to develop a Code of Conduct which will require suppliers to comply with ethical and internationally recognised human and employee rights.
OBJECTIVES / INDICATORS
EFFORTS
Purchasing policy
The purchasing policy ensures that we live up to our obligations regarding security of supply in goods and fuels, and as a purchaser of agricultural products, in accordance with the Company's service contracts with the Government of Greenland. We thus have the opportunity to provide the best and most inexpensive purchases of goods and services – to the benefit of all.
Code of Conduct
We wish to ensure that our customers can shop safely and ethically in our stores. Accordingly, it is important to us that our suppliers live up to a good and ethically sound standard.
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On the basis of the purchasing policy, recurring purchases of goods and/or services from a supplier which exceed an annual purchase of DKK 250,000 must be supported by an agreement describing the parties’ rights and duties. The agreements must accord with industry standards.
YEAR
STATUS
Ongoing
70%
In future, we must prioritise and develop a Code of Conduct. 2021 20%
UN WORLD GOAL
CSR
INVOLVEMENT IN THE LOCAL COMMUNITY KNI helps to support development both nationally and locally in the towns and villages. This is done by getting involved and actively contributing to social tasks, in collaboration with relevant stakeholders.
RISK ASSESSMENT
KNI is represented everywhere in Greenland. We are more or less in contact with the entire population of Greenland, which was approximately 56,000 persons in 2019. Consequently, we have committed ourselves to promoting development in the villages and small towns and creating a good environment, particularly for children and young people. The population is also involved in our activities, to play an active role in the development of a good and healthy society.
EFFORTS
Mamarisavut
In 2018, KNI Pilersuisoq decided to create an inspiring food universe, on the basis that you cannot always buy the ingredients that many recipes require when you live in a village or small town – – either because the shops do not stock the goods, or because they are too expensive.
Trade fairs
The KNI trade fairs function as a big market day, filled with great offers from KNI’s various business units, refreshments, entertainment and joint activities for the customers.
Sponsorships
KNI prioritises sponsoring associations, etc., that harmonise with our values regarding ‘the inner Greenlandic life’. KNI is for example the main sponsor of the sports club Nagdlunguak´. This is primarily due to the club’s great social commitment and their focus on children and young people.
Pilersuisoq run
A recurring annual event in connection with ‘Make May Healthy’. Aims to create a different kind of contact with the customers and the desire to create a healthier life for everyone.
OBJECTIVES / INDICATORS
Mamarisavut, focuses on combining fresh Greenlandic ingredients with good imported commodities from the shops.
YEAR
STATUS
UN WORLD GOAL
Ongoing
100%
As part of its inclusion policy, KNI holds trade fairs in various places in Greenland.
2019 100%
The associations that KNI supports, and which are in accordance with KNI’s own values and interests, must, as far as possible, cover most places in Greenland.
Ongoing
70%
The Pilersuisoq run is held every year, and involves the entire community. In many places Pilersuisoq is the only shop, and we therefore wish to be a good meeting-point for the local community.
Ongoing 100%
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CSR
OBJECTIVES / INDICATORS
EFFORTS
Local Pilersuisoq shop councils
Pilersuisoq prioritises the involvement of the local community. Via the shop council, local citizens can have an influence on the range of goods in the shops.
The shop council and Pilersuisoq arrange meetings every financial quarter.
YEAR
STATUS
UN WORLD GOAL
Every year
60%
HUMAN RIGHTS KNI’s products are produced in several different parts of the world. This entails a risk of human rights violations in particularly vulnerable countries and under certain production methods. We have a responsibility to continuously identify risks in our supply chain and reduce the risk of human rights violations.
RISK ASSESSMENT
Cultures, laws and traditions in the rest of the world are different from those we know in Greenland and Denmark. Consequently, no matter where or with whom we trade, we have a responsibility to ensure that human rights are respected. Human rights must be respected, and we as a company must show responsibility. The financial year 2020/21 will be a period in which we must focus on our Code of Conduct in a more structured manner.
OBJECTIVES / INDICATORS
EFFORTS
Responsible supplier management
In order to reduce the risk of human rights violations, we must continuously ensure responsible supplier management – including ensuring that our suppliers act in a socially responsible manner.
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Our efforts must ensure the screening of high-risk suppliers, in order to avoid entering into cooperation agreements with suppliers that do not respect recognized principles for human and labour rights, the environment and anti-corruption.
YEAR
STATUS
2021
20%
UN WORLD GOAL
CSR
STAFF MATTERS KNI is one of Greenland’s largest workplaces. We therefore have a duty to ensure that our employees and the people who work with us have a safe working day, and are in possession of the right equipment, training and knowledge for them to be able to perform their work without risk of injuries or accidents. We strive to create a good working environment in which our employees will thrive and enjoy their work – and where our customers will be glad to buy from us. We secure good opportunities for the personal and professional development of our employees on the basis of individual and company needs. Everyone in KNI has equal opportunities to pursue a career, irrespective of gender or ethnicity.
RISK ASSESSMENT
At KNI, we have approximately 1,000 employees along the coast. If an employee is injured, this can be painful and costly for both the employee and KNI. We have therefore established a safety organization to ensure that both physical and psychological work injuries are kept at a minimal level. We regard our employees as our most important resource; only through their efforts can we create the quality and efficiency that we seek. Accordingly, we constantly strive to maintain a workforce that can continue to place us among the best. We do this through the development and training of our existing employees.
EFFORTS
Staff Handbook
The staff handbook describes the duties, rights and values that KNI wishes the employee to experience. These are fixed guidelines that ensure that the Company’s requirements are adhered to, and that employees are treated in a uniform and structured manner.
KNI’s safety organisation
According to the Working Environment Act, companies are obliged to create healthy and safe working environments for their employees. KNI is a large workplace which is scattered all over the coast of Greenland in various business units, and the task is therefore quite extensive. We can create a healthy and safe workplace when all of our employees, across the organization, make efforts to comply with the working environment legislation.
OBJECTIVES / INDICATORS
The staff handbook must ensure that all employees know their rights and duties in the Company, and thus also become co-responsible for ensuring that the personnel policy is implemented in the workplace.
YEAR
STATUS
UN WORLD GOAL
Ongoing
70%
We have established a safety organization, which consists of a main safety committee, a safety committee in the two divisions, and regional safety groups. The safety organisation is structured so as to make it simple and practical to co-operate on matters of safety and health. In practice, this means that there is a co-ordinating body in each of the Group’s individual organisational units. With this initiative, we wish to secure the workplace and our employees in the best possible way, and keep work-related injuries to a minimum.
Ongoing
70%
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CSR
EFFORTS
Skills enhancement
Taqqissuut is the name of KN’s skills enhancement programme, and thus of all KNI’s courses and training activities. KNI maintains a great focus on the skills development of employees through several annual courses and training opportunities for the staff.
KNI gathering
Around 130 KNI employees meet every year in Ilulissat to get to know each other better while participating in various workshops, activities and tours. The week-long gathering helps to give the employee a good and educational experience about development and knowledge sharing.
Staff satisfaction
Since 2014, KNI A/S has held staff satisfaction surveys every two years.
Leadership pipeline
KNI wishes to develop and implement the quality and cohesion of management through the Leadership Pipeline.
OBJECTIVES / INDICATORS
In recent years KNI has established its own internal training programmes in Taqqissuut, and thus far there are three permanent courses: Niuertunngorniarneq, Ikummatissaasivilerisunngorniarneq and Aqutsisunngorniarneq.
YEAR
Every year
Each year, a minimum of one Niuertunngorneq course, one Ikummatissaasivilerisunngorniarneq course and one Aqutsisunngorniarneq course must be held. The KNI gathering is held annually, with participants from all along the coast.
The staff satisfaction survey is held every second year.
The goal is to create better visibility and understanding of management, including specific roles and responsibilities.
STATUS
100%
Every year
100%
Every year
100%
2021 50%
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UN WORLD GOAL
CSR
WOMEN IN SENIOR POSITIONS MANAGEMENT LEVEL
Board
OBJECTIVES We encourage equal numbers of women and men to apply.
YEAR
Ongoing
2019/20 44% women 55% men
The board is democratically elected.
Management
KNI’s management board consists of just one person, so there is no goal in this area.
Ongoing
Executive Group
The best qualified
Ongoing
Regional managers and regional oil terminal managers
Shop managers and oil terminal managers
Regional managers are 33% women, while 66% are men. Regional oil terminal managers are 100% men.
The best qualified
The best qualified
30% women 70% men
Ongoing
67.19% of shop managers are women, while 32.81% are men. Oil terminal managers are 100% men.
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GOVERNANCE
RISKS
Internal controls and business ethics The Company has established an “internal auditing” function, which is amongst other things intended to reduce losses due to criminal actions committed by employees, customers or others. KNI is at risk as a result of its trading in commodities, including beer, wine and tobacco, and in sales for cash. KNI undertakes regular internal checks to detect, prevent and reduce fraud. During the financial year, these checks uncovered a small number of cases of fraud by employees, who were subsequently prosecuted. All employees of KNI have a duty to report any suspected irregularities to the management. Internal auditors follow up on all reports and act on their own initiative to uncover possible fraud, including unannounced auditing visits and checks of cash holdings in the shops. In the financial year 2018/19 KNI established a whistleblower scheme which can be accessed by anyone from KNI’s website.
Risk management KNI buys oil and oil-based products. Such products are traded at world market prices, which are highly volatile. In order to guard against the risk of price fluctuations, and to ensure stable prices for consumers, KNI undertakes hedging of the risk of fluctuations in both oil prices and the currencies used. Prices are at the moment secured with a horizon of up to one year, but have previously had longer securing periods. The Company’s debt financing is largely subject to variable interest rates. To hedge this risk, the Company has taken out hedging contracts that convert floating interest rates to fixed rates. At the conclusion of the financial year, the interest rate risk is half-hedged. The Company’s cash resources are assessed to be of a sufficient size to ensure the Company can meet its obligations. Contingency is available in the form of unutilised drawing rights. To reduce the risk the collapse of debt financing, KNI makes use of a number of reputable and solid banks and credit institutions in Greenland and abroad. No one bank may provide more than 33% of KNI’s overall loan facilities.
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76
KNI has taken out comprehensive insurance to cover the damages and incidents for which insurance coverage is available. The Company makes use of insurance brokers in the ongoing optimisation of its insurance programme. The board of directors and executive board work continuously to identify and hedge business risks. During the financial year, a risk profile has been established that identifies the main risk factors. This profile is used to identify any risks which have a higher probability or more serious potential consequences than are acceptable, for which countermeasures are then instituted.
GOVERNANCE
BOARD-RELATED INFORMATION KNI complies with the guidelines of the Government of Greenland for good corporate governance in companies owned by the government. These guidelines accord with the OECD recommendations for state-owned companies, and to a large extent also with the recommendations for listed companies. The management of KNI consists of a board of directors and an executive board. The board of directors has nine members, three of whom are employee representatives elected for a period of four years, while the other six are elected by the general meeting and stand for election every year. The six board members elected by the general meeting are independent, according to the definition contained in the recommendation of the “Committee for Good Corporate Governance”. There is no age limit for members of the board of directors. The board members represent a wide spectrum of experience from Greenlandic, Danish and international business life, and of course Greenlandic society. The board is chaired by board chairman Lars Borris Pedersen. The chairman is appointed for a period of one year at a time. The board has established two committees: The audit committee The remuneration committee
Remuneration The remuneration of members of the board of directors is subject to the approval of the annual general meeting, and is specified in note 4. The remuneration consists entirely of a basic fee. The remuneration of the executive board is negotiated with the board of directors and consists of a fixed basic salary, a performance bonus and other customary non-monetary benefits, such as a company car, etc. The remuneration of the executive board is specified in note 4. There are no unusual severance agreements in the employment contract of the executive board.
Evaluation An annual evaluation is undertaken of the board of directors. Every second year, this takes place on the basis of an external evaluation process.
Activities The board of directors held four ordinary meetings during the financial year. One of these meetings was held as a conference call, while the other meetings were held in Greenland, Denmark and the Faroe Islands.
The executive board consists of CEO Peter Grønvold Samuelsen.
The audit committee held two meetings. In addition to the annual report and audit minutes, the committee also considers financial policy, risk and insurance policies, internal audits, financial factors and audit evaluation.
For other positions of the members of the board of directors and executive board, see note 22.
The Company does not purchase goods or services from board members or their relatives.
Annual report 2019-20
77
Annual report 2019-20
78
GOVERNANCE
ANNUAL ACCOUNTS 80 Management statement 81 Independent auditor’s report 83 Profit and loss account 84 Balance sheet 86 Capital and reserves statement 88 Cash flow statement 89 Notes 100 Segment accounts 104 Accounting policies
Annual report 2019-20
79
ANNUAL ACCOUNTS
MANAGEMENT STATEMENT As of today’s date, the Board of Directors and the Executive Board of Management have considered and approved the annual report for KNI A/S for the financial year 1 April 2019 - 31 March 2020. The annual report is presented in conformity with the Financial Statements Act. In our opinion, the consolidated accounts and year-end statement give a true and fair view of the assets, liabilities and financial position of the Group and Company as of 31 March 2020, and of the results of the operations of the Group and Company and cash flows for the Group for the financial year 1 April 2019 - 31 March 2020. It is also our opinion that the management report provides a true and fair account of the development of the Group’s and the Company’s activities and financial conditions, the profit for the year and the financial position of the Group and the Company. The annual report will be submitted to the general meeting for approval. Sisimiut, 26 June 2020
Management:
Peter Grønvold Samuelsen
Board of Directors:
Lars Borris Pedersen Chairman
Najaaraq Christiansen Vice Chairman
Søren Jakobsen
Lone Møller Olsen
Steen Montgomery-Andersen
Dorthea Isaksen
Jonas Aronsen
Majaq Heilmann
Annual report 2019-20
80
INDEPENDENT AUDITOR'S REPORT To the capital owner of KNI A/S Auditors’ opinion We have audited the consolidated accounts and year-end statement of KNI A/S for the financial year 1 April 2019 - 31 March 2020, which encompasses the accounting policies, income statement, balance sheet, capital and reserves calculation and notes for both the Group and the Company, plus the cash flow statement for the Group. The consolidated accounts and year-end statement are presented in conformity with the Danish Financial Statements Act. In our opinion, the consolidated accounts and year-end statement provide a true and fair view of the assets, liabilities and financial position of the Group and the Company as of 31.03.2020, and of the results of the operations of the Group and the Company, and cash flows for the Group for the financial year 1 April 2019 - 31 March 2020, in accordance with the Financial Statements Act.
Basis for the auditors’ opinion We have conducted our audit in accordance with international auditing standards and the additional requirements that apply in Greenland. Our responsibilities in accordance with these standards and requirements are described in more detail in the section of the auditors’ report entitled “Auditor’s responsibility for the audit of the financial statements”. It is our view that the audit evidence obtained provides a sufficient and appropriate basis for our opinion.
Independence We are independent of the Group, in accordance with the international ethical rules for auditors (the IESBA code of ethics) and the additional requirements that apply in Greenland, and we have fulfilled our other ethical obligations in accordance with these rules and requirements.
Management’s responsibility for the accounts The management is responsible for drawing up consolidated accounts and a year-end statement that provide a true and fair view in accordance with the Financial Statements Act. The management is also responsible for such internal control as the management deems necessary in order to draw up an accounts that are free from material misstatement, whether due to fraud or error. In drawing up the financial statements, the management is responsible for assessing the ability of the Group and the Company’s to continue operations, to disclose matters relating to continued operations, where applicable, and to draw up the financial statements on the basis of the accounting principle for continued operations, unless the management intends to liquidate the Group or Company or discontinue operations, or has no realistic alternative but to do so.
Auditor’s responsibility 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 the auditor’s opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with international standards on auditing and the further requirements that apply in Greenland will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and may be considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of the users taken on the basis of the financial statements. As part of an audit in accordance with international standards on auditing and the further requirements that apply in Greenland, we exercise professional judgment and maintain professional scepticism throughout the audit. In addition, we: Identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error, design and carry out 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 overriding of internal control. Obtain an understanding of the 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 internal control of the group or company. Evaluate the appropriateness of the accounting policies used by the management and the reasonableness of the accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists relating to events or conditions that may cast significant doubt on the ability of the group or company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our auditor’s conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or Company to cease to continue as a going concern.
Annual report 2019-20
81
Evaluate the overall presentation, structure and content of the financial statements, including the note information, and whether the financial statements represent the underlying transactions and events in a manner that provides a true and fair view. Obtain sufficient and appropriate audit evidence regarding the financial information of the companies or business activities within the Group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We are solely responsible for our auditors’ opinion. We communicate with the senior management on, 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 the audit.
Statement on the Management Report The management is responsible for the Management Report. Our opinion on the financial statements does not include the Management Report, and we do not express any kind of conclusion with certainty on the Management Report. In connection with our audit of the financial statements, it is our responsibility to read the Management Report and, in this connection, consider whether the Management Report is materially inconsistent with the financial statements or with our knowledge obtained in the audit, or otherwise appears to contain material misstatement. Our responsibility is also to consider whether the Management Report contains the information required in accordance with the Financial Statements Act. On the basis of the work performed, it is our opinion that the Management Report is in accordance with the financial statements and has been drawn up in accordance with the requirements of the Financial Statements Act. We did not find any material misstatement in the Management Report. Nuuk, 26 June 2020
Annual report 2019-20
82
PROFIT AND LOSS ACCOUNT 1 April 2019 - 31 March 2020 PARENT COMPANY Note
Net revenue
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
1
2,514,914
2,453,245
2,534,969
2,474,554
18,015
18,181
23,015
23,181
2
85,977
83,612
86,238
83,757
(1,999,288)
(1,944,339)
(2,002,081)
(1,951,834)
(170,659)
(157,246)
(169,270)
(156,758)
448,960
453,453
472,871
472,900
4
(264,462)
(257,594)
(276,031)
(269,025)
10.11
(53,465)
(47,629)
(58,453)
(52,488)
131,033
148,230
138,387
151,387
5,303
3,585
-
-
Payment from the national treasury for social tasks Other operating income Goods consumption costs Other external costs
3
Gross profit Personnel costs Depreciation and write-downs
GROUP
Profit before financial items Profit in affiliated companies
5
Financial revenue
6
3,249
2,293
1,799
570
Financial costs
7
(26,226)
(35,201)
(26,932)
(36,599)
113,358
118,907
113,254
115,358
(34,999)
(37,812)
(36,887)
(37,454)
78,359
81,095
76,367
77,904
Pre-tax profit for the year Tax on net profit for the year
8
Profit after tax for the year Minority interests' share of profit/loss after tax of group enterprises Result for the year
9
-
-
(303)
(216)
78,359
81,095
76,064
77,688
Annual report 2019-20
83
BALANCE SHEET 31 MARCH 2020 ASSETS
PARENT COMPANY Note
Trademarks Software Intangible fixed assets
10
GROUP
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
0
0
1,269
1,692
20,377
25,307
20,377
25,307
20,377
25,307
21,646
26,999
Buildings
391,561
381,055
520,243
511,942
Plant and machinery
382,774
309,300
387,987
312,249
Other equipment, operating plant and fixtures
94,970
84,453
101,994
91,742
Tangible fixed assets under establishment
157,152
165,072
157,201
165,938
1,026,457
939,880
1,167,425
1,081,870
21,697
16,394
-
-
Property, plant and equipment
11
Investments in affiliated companies Deposits, etc. Financial fixed assets
12
Fixed assets, total Consumables Raw materials and consumables
164
203
164
203
21,861
16,597
164
203
1,068,695
981,784
1,189,235
1,109,072
7,664
5,505
7,664
5,505
0
0
16,277
10,572
Retail and wholesale goods
611,672
572,540
633,821
595,681
Liquid fuels, etc.
395,129
342,466
395,129
342,468
1,014,465
920,513
1,052,891
954,226
73,764
79,052
76,745
81,759
1,924
0
-
-
0
0
6,658
8,040
23,981
21,424
23,981
21,424
6,552
28,897
6,838
41,262
18,209
14,270
18,237
14,309
124,430
143,643
132,460
166,794
107
5,220
966
5,220
1,139,002
1,069,376
1,186,316
1,126,240
2,207,697
2,051,160
2,375,552
2,235,312
Inventories Trade receivables Receivables from affiliated companies Deferred tax assets
15
Forward transactions, USD Other receivables Prepayments Receivables Cash holdings Current assets, total Assets, total
Annual report 2019-20
84
BALANCE SHEET 31 MARCH 2020 LIABILITIES
PARENT COMPANY Note
Share capital
13
Provisions for revaluation by the equity method Special reserve at the disposal of the general meeting Retained earnings
14
Proposed dividend Capital and reserves, total Minority interests, total Provision for deferred tax
15
Provisions, total Mortgage debt Other credit institutions Long-term debt obligations
16
Short-term portion of long-term liabilities other than provisions
GROUP
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
310,000
310,000
310,000
310,000
17,621
12,318
-
-
283,163
283,163
283,163
283,163
519,998
557,677
526,077
560,018
20,000
20,000
20,000
20,000
1,150,782
1,183,158
1,139,240
1,173,181
-
-
1,822
1,519
5,249
32,514
9,184
36,427
5,249
32,514
9,184
36,427
0
0
42,396
45,095
550,000
550,000
550,000
550,000
550,000
550,000
592,396
595,095
0
0
2,699
2,673
Credit institutions
76,064
0
193,226
139,237
Suppliers of goods and services
107,873
92,548
108,590
93,282
0
2,147
-
-
19,957
24,146
20,442
24,526
45,408
49,799
48,389
52,525
13,117
27,909
13,117
27,909
234,829
84,437
234,829
84,437
4,418
4,502
11,618
4,502
501,666
285,488
632,910
429,091
Liabilities other than provisions, total
1,051,666
835,488
1,225,306
1,024,186
Liabilities, total
2,207,697
2,051,160
2,375,552
2,235,312
Payables to group enterprises Corporate tax Other debt
17
Interest rate hedging Product hedging Prepayments Short-term liabilities
Contingent liabilities, guarantees
18
Fees to auditors appointed by the general meeting
19
Derivatives
14
Related parties and ownership
21
Managerial position
22
Annual report 2019-20
85
Total
Proposed dividend
Special reserve at the disposal of the general meeting
Retained earnings
Share capital
Reserve for net revaluation after equity value method
PARENT COMPANY CAPITAL AND RESERVES
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
310,000
8,733
593,702
283,163
20,000
1,215,598
Profit after tax for the year
0
3,585
57,510
0
0
61,095
Proposed dividend
0
0
0
0
20,000
20,000
Dividends paid to shareholders
0
0
0
0
(20,000)
(20,000)
Tax value of dividends
0
0
6,360
0
0
6,360
Regulation of derivatives
0
0
(99,895)
0
0
(99,895)
310,000
12,318
557,677
283,163
20,000
1,183,158
Profit after tax for the year
0
5,303
53,056
0
0
58,359
Proposed dividend
0
0
0
0
20,000
20,000
Dividends paid to shareholders
0
0
0
0
(20,000)
(20,000)
Regulation of derivatives
0
0
(102,605)
0
0
(102,605)
Effect of altered tax rate
0
0
11,870
0
0
11,870
310,000
17,621
519,998
283,163
20,000
1,150,782
Capital and reserves 31 March 2018
Capital and reserves 31 March 2019
Capital and reserves 31 March 2020
Annual report 2019-20
86
Share capital
Reserve for net revaluation under the equity method
Retained earnings
Special reserve at the disposal of the general meeting
Proposed dividend
Total
CAPITAL AND RESERVES STATEMENT FOR THE GROUP
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
310,000
0
602,435
283,163
20,000
1,215,598
Profit after tax for the year
0
0
57,688
0
0
57,688
Proposed dividend
0
0
0
0
20,000
20,000
Dividends paid to shareholders
0
0
0
0
(20,000)
(20,000)
Tax value of dividends
0
0
6,360
0
0
6,360
Regulation of derivatives
0
0
(99,895)
0
0
(99,895)
Adjustment to net asset value - Pitsaasut ApS
0
0
(6,570)
0
0
(6,570)
310,000
0
560,018
283,163
20,000
1,173,181
Profit after tax for the year
0
0
56,064
0
0
56,064
Proposed dividend
0
0
0
0
20,000
20,000
Dividends paid to shareholders
0
0
0
0
(20,000)
(20,000)
Regulation of derivatives
0
0
(102,605)
0
0
(102,605)
Effect of altered tax rate
0
0
11,870
0
0
11,870
Adjustment to net asset value - Pitsaasut ApS
0
0
730
0
0
730
310,000
0
526,077
283,163
20,000
1,139,240
Capital and reserves 31 March 2018
Capital and reserves 31 March 2019
Capital and reserves 31 March 2020
Annual report 2019-20
87
CASH FLOW STATEMENT FOR THE GROUP 1 April 2019 - 31 March 2020 Note
Profit before financial items Depreciation and write-downs Changes in working capital
20
Cash flow from primary activities Interest payments received, etc. Interest payments made, etc. Interest rate hedging
2020
2019
(DKK ‘000)
(DKK ‘000)
138,387
151,387
58,453
52,488
(44,866)
26,436
151,974
230,311
1,799
570
(18,211)
(18,266)
(8,721)
(18,333)
(24,526)
(29,206)
Cash flows from operations
102,315
165,076
Purchases of tangible assets
(141,757)
(154,320)
3,833
6,685
Corporate tax
Sales of tangible assets Lending, financial fixed assets
39
376
Cash flows from investment activities
(137,885)
(147,259)
Dividends paid to shareholders
(20,000)
(20,000)
Repayment of long-term loans
(2,673)
(2,649)
Cash flows from financing activities
(22,673)
(22,649)
Alterations in liquid funds
(58,243)
(4,832)
(684,017)
(650,553)
Cash and cash equivalents, beginning of year Recognition relating to Pitsaasut ApS, start of year Cash and cash equivalents, end of year
0
(28,632)
(742,260)
(684,017)
Cash and cash equivalents, end of year Cash holdings, year-end Credit institutions
Annual report 2019-20
88
966
5,220
(743,226)
(689,237)
(742,260)
(684,017)
NOTES PARENT COMPANY
1
GROUP
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
Net revenue Products
1,422,562
1,387,759
1,422,562
1,387,759
Liquid fuels, etc.
1,089,475
1,063,934
1,089,475
1,063,934
2,878
1,552
2,878
1,552
0
0
19,563
20,826
Pisisa Neqi Rental income
0
0
492
483
2,514,914
2,453,245
2,534,969
2,474,554
Service agreements
32,088
28,903
32,088
28,903
Rental income
31,098
28,376
31,742
28,938
Fee income
13,666
14,887
13,666
14,887
5,857
5,985
5,857
5,985
300
300
0
0
2,967
5,161
2,885
5,045
85,977
83,612
86,238
83,757
Business trips
13,549
13,210
13,792
13,362
Course costs
10,676
11,720
10,676
11,725
Net marketing costs
16,380
14,377
16,380
14,377
8,980
9,982
9,045
10,081
KNI A/S operates only in a geographic market
2 Other operating income
Hiring-out of equipment Group contributions Misc.
3 Other external costs
Office costs Insurance Foreign services Small acquisitions
7,242
6,825
7,554
7,132
21,945
21,063
22,928
21,934
6,640
5,341
6,693
5,398
37,525
38,456
39,594
40,855
Repair and maintenance costs
23,175
20,084
23,618
20,579
Rent costs
23,533
14,721
17,634
9,886
1,015
1,467
1,356
1,429
170,659
157,246
169,270
156,758
Operation and maintenance of machinery and equipment
Misc.
4 Personnel costs Wages and salaries
236,453
229,706
247,221
240,500
Pensions
17,180
16,273
17,837
16,905
Other personnel costs
10,829
11,614
10,973
11,620
264,462
257,594
276,031
269,025
1,418
1,391
3,468
3,373
307
290
3,775
3,663
773
759
806
791
Of which salaries and fees for the Executive Board and Board of Directors: Board of Directors Executive management board: Fixed salary, including pension Variable salary (bonus payment)
Average number of staff members employed The Executive Board is remunerated with a fixed annual salary, including 10% pension and company car The Executive Board has no defined benefit-based pension plan. The Executive Board may obtain a bonus payment, which may amount to up to 10% of the fixed annual salary each year. There are no special severance schemes attached to the Executive Board’s salary and terms of employment other than the normal notice period of 12 months.
Annual report 2019-20
89
NOTES, CTD. PARENT COMPANY
5 Profit share in affiliated undertakings Akia Sisimiut A/S Neqi A/S KNI Ejendomme A/S Change in intra-group profit
6 Financial revenue Interest income, purchase contracts Interest income, bank Intra-group interest
7 Financial costs Interest expenditure, bank Interest expenditure, mortgage debt Other interest expenditure Interest rate hedging Other bank costs
8 Tax on net profit for the year Current tax for the year Adjustments to deferred tax Effect of altered tax rate
9 Proposal for allocation: Proposed dividend Allotted to revaluation reserve after equity value method Transfer to next year
Annual report 2019-20
90
GROUP
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
1,428 1,367 1,830 678 5,303
1,019 1,126 1,327 113 3,585
0 0 0 0 0
0 0 0 0 0
313 1,486 1,450 3,249
470 100 1,723 2,293
313 1,486 0 1,799
470 100 0 570
11,998 0 0 8,721 5,506 26,226
10,911 0 0 18,333 5,957 35,201
12,042 591 29 8,721 5,550 26,932
11,250 663 21 18,333 6,331 36,599
19,957 16,091 (1,049) 34,999
24,146 13,666 0 37,812
20,442 17,776 (1,330) 36,887
24,516 12,939 0 37,454
20,000 5,303 53,056 78,359
20,000 3,585 57,510 81,095
20,000 56,064 76,064
20,000 57,688 77,688
Software
Trademarks
Total
NOTES, CTD.
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
Cost price, 1 April 2019 Additions during the year Transferred from current Disposals during the year Acquisition price, 31 March 2020
127,750 0 824 0 128,574
0 0 0 0 0
127,750 0 824 0 128,574
Depreciation and write-downs, 1 April 2019 Depreciation and write-downs for the year Depreciation and write-downs on sold assets Depreciation and write-downs, 31 March 2020
102,443 5,754 0 108,197
0 0 0 0
102,443 5,754 0 108,197
Book value, 31 March 2020
20,377
0
20,377
Book value, 1 April 2019
25,307
0
25,307
10 Intangible fixed assets
Software
Trademarks
Total
PARENT COMPANY
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
Cost price, 1 April 2019 Additions during the year Transferred from current Disposals during the year Acquisition price, 31 March 2020
127,750 0 824 0 128,574
2,115 0 0 0 2,115
129,865 0 824 0 130,689
Depreciation and write-downs, 1 April 2019 Depreciation and write-downs for the year Depreciation and write-downs on sold assets Depreciation and write-downs, 31 March 2020
102,443 5,754 0 108,197
423 423 0 846
102,866 6,177 0 109,043
Book value, 31 March 2020
20,377
1,269
21,646
Book value, 1 April 2019
25,307
1,692
26,999
10 Intangible assets (ctd.)
GROUP
Annual report 2019-20
91
Total
Tangible fixed assets under construction
Other equipment, operating plant and fixtures
PARENT COMPANY
Plant and machinery
11 Property, plant and equipment
Buildings
NOTES, CTD.
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
698,882 0 28,857 (2,927) 724,812
616,158 0 89,403 0 705,561
399,969 0 27,051 (2,913) 424,107
165,072 138,215 (146,135) 0 157,152
1,880,081 138,215 (824) (5,840) 2,011,632
Depreciation and write-downs, 1 April 2019 Depreciation and write-downs for the year Depreciation and write-downs on sold assets Depreciation and write-downs, 31 March 2020
317,827 16,003 (579) 333,251
306,857 15,930 0 322,787
315,515 16,534 (2,913) 329,136
0 0 0 0
940,201 48,466 (3,492) 985,175
Book value, 31 March 2020
391,561
382,774
94,970
157,152
1,026,457
Book value, 1 April 2019
381,055
309,300
84,453
165,072
939,880
Cost price, 1 April 2019 Additions during the year Transferred from current Disposals during the year Acquisition price, 31 March 2020
Depreciation and write-downs Depreciation and write-downs for the year may be specified as follows:
Buildings Plant and machinery Other equipment, operating plant and fixtures Loss/(profit) on sales of fixed assets Depreciation and write-downs for the year, total
Annual report 2019-20
92
2020
2019
(DKK ‘000)
(DKK ‘000)
16,003 15,930 16,534 (755) 47,711
15,817 14,845 13,391 (3,101) 40,952
Total
Tangible fixed assets under construction
Other equipment, operating plant and fixtures
GROUP
Plant and machinery
11 Property, plant and equipment (continued)
Buildings
NOTES, CTD.
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
Cost price, 1 April 2019 Additions during the year Transferred from current Disposals during the year Acquisition price, 31 March 2020
857,496 0 29,847 (2,927) 884,416
636,163 0 92,138 0 728,301
412,556 0 27,685 (2,913) 437,328
165,938 141,757 (150,494) 0 157,201
2,072,153 141,757 (824) (5,840) 2,207,246
Depreciation and write-downs, 1 April 2019 Depreciation and write-downs for the year Depreciation and write-downs on sold assets Depreciation and write-downs, 31 March 2020
345,554 19,198 (579) 364,173
323,916 16,401 0 340,317
320,814 17,434 (2,913) 335,335
0 0 0 0
990,284 53,032 (3,492) 1,039,823
Book value, 31 March 2020
520,243
387,987
101,994
157,201
1,167,425
511,942
312,249
91,742
165,938
1,081,870
Book value, 1 April 2019
Depreciation and write-downs Depreciation and write-downs for the year may be specified as follows:
Buildings Plant and machinery Other equipment, operating plant and fixtures Loss/(profit) on sales of fixed assets Depreciation and write-downs for the year, total
2020
2019
(DKK ‘000)
(DKK ‘000)
19,198 16,401 17,434 (755) 52,276
19,069 15,058 14,362 (3,101) 45,388
Annual report 2019-20
93
Participating interests in affiliated undertakings
Deposits, etc.
Total
NOTES, CTD.
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
8,792 0 0 8,792
733 0 (39) 694
9,525 0 (39) 9,486
Revaluation, 1 April 2019 Additions during the year Disposals during the year Result share Revaluation, 31 March 2020
9,069 0 0 4,625 13,694
(530) 0 0 0 (530)
8,539 0 0 4,625 13,164
Intra-group profit, 1 April 2019 Change in intra-group profit Intra-group profit, 31 March 2020
(1,467) 678 (789)
0 0 0
(1,467) 678 (789)
Book value, 31 March 2020
21,697
164
21,861
Book value, 1 April 2019
16,394
203
16,597
12 Financial fixed assets
PARENT COMPANY Cost price, 1 April 2019 Additions during the year Disposals during the year Acquisition price, 31 March 2020
Ownership share as % Domicile
2020
2019
Subsidiaries consist of the following: Neqi A/S Akia Sisimiut A/S KNI Ejendomme A/S Pitsaasut ApS
Annual report 2019-20
Kujalleq Municipality Qeqqata Municipality Qeqqata Municipality Aalborg Municipality
94
100 82.5 100 100
100 82.5 100 100
Share capital
Equity 31/3 2020
(DKK ‘000)
(DKK ‘000)
0 3,000 1,000 80
6,817 10,409 7,082 (16,525)
Deposits, etc.
Total
NOTES, CTD.
(DKK ‘000)
(DKK ‘000)
733 0 (39) 694
733 0 (39) 694
(530) 0 0 0 (530)
(530) 0 0 0 (530)
Book value, 31 March 2020
164
164
Book value, 1 April 2019
203
203
12 Financial fixed assets (ctd.)
GROUP Cost price, 1 April 2019 Additions during the year Disposals during the year Acquisition price, 31 March 2020 Revaluation, 1 April 2019 Additions during the year Disposals during the year Result share Revaluation, 31 March 2020
2020
2019
(DKK ‘000)
(DKK ‘000)
310,080
310,000
13 Share capital The Company’s share capital consists of shares of DKK 1,000 or multiples thereof. No shares are associated with special rights. There have been no changes in the share capital in the past 5 years.
14 Retained earnings Regulation of derivatives
Open positions: Product hedging Interest rate hedging Forward transactions, USD Deferred tax: Deferred tax on financial instruments
PARENT COMPANY / GROUP Displacement, 2020 2019 total (DKK ‘000) (DKK ‘000) (DKK ‘000) (234,829) (13,117) 23,981 (223,965)
(84,437) (27,909) 21,424 (90,922)
(150,392) 14,792 2,557 (133,043)
59,351 (164,614)
28,913 (62,009)
30,438 (102,605)
Annual report 2019-20
95
NOTES, CTD. 15 Deferred tax
PARENT COMPANY
Book value
Buildings Plant and machinery Other equipment, operating plant and fixtures Financial fixed assets Inventories Receivables Provision for deficit in subsidiary Declared dividend Basis of calculation
Tax value
(DKK ‘000)
(DKK ‘000)
391,561 382,774 115,347 21,861 0 0 0 0 911,543
261,457 325,755 60,549 9,486 6,000 4,522 20,000 (20,000) 667,769
Balance difference (DKK ‘000) 130,104 57,019 54,798 12,375 (6,000) (4,522) (20,000) 20,000 243,774
Deferred tax, 31 March 2020, 26.5% Deferred tax on capital and reserves, cf. note 13 Provision for deferred tax, 31 March 2020
64,600 (59,351) 5,249
GROUP
Book value
Trademarks Buildings Plant and machinery Other equipment, operating plant and fixtures Financial fixed assets Inventories Receivables Prepayments Liabilities Provision for deficit in subsidiary Declared dividend Loss carry-forwards Basis of calculation
Tax value
(DKK ‘000)
(DKK ‘000)
60 520,243 382,774 127,583 21,861 9,832 11 28 0 0 0 0 1,062,392
71 377,930 325,755 79,728 9,486 15,832 22,516 0 90 20,000 (20,000) 11,909 843,317
Balance difference (DKK ‘000) (11) 142,313 57,019 47,855 12,375 (6,000) (22,505) 28 (90) (20,000) 20,000 (11,909) 219,075
Deferred tax, 31 March 2020, 26.5% Deferred tax, 31 March 2020, 22% Deferred tax on capital and reserves, cf. note 13 Adjustment in deferred tax recognised under assets - Pitsaasut ApS Provision for deferred tax, 31 March 2020
66,004 (6.599) (59,351) 2,472 2,526
The change in deferred tax for the period is composed as follows: PARENT COMPANY
Deferred tax, start of year Deferred tax on annual result Changes in deferred tax on capital and reserves, cf. note 13 Adjustment in deferred tax, previous years Tax value of dividends Effect of altered tax rate Deferred tax, end of year Recognised as follows: Assets Liabilities
Annual report 2019-20
96
GROUP
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
32,514 16,091 (42,308) 0 0 (1,049) 5,249
78,147 13,666 (46,579) (6,360) (6,360) 0 32,514
28,387 17,776 (42,308) 0 0 (1,330) 2,526
76,810 12,939 (46,579) (8,424) (6,360) 0 28,387
0 (5,249) (5,249)
0 (32,514) (32,514)
6,658 (9,184) (2,526)
8,040 (36,427) (28,387)
NOTES, CTD. 16 Long-term debt obligations
PARENT COMPANY Credit institutions Due after 5 years: Credit institutions
Due after more Due within one than one year year
Amortised debt, total
Nominal debt, total
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
0 0
550,000 550,000
550,000 550,000
550,000 550,000
550,000 42,396 592,396
743,226 45,095 788,321
743,226 45,095 788,321
0 0
GROUP Credit institutions Mortgage debt Due after 5 years: Credit institutions Mortgage debt
193,226 2,699 195,925 0 31,334 31,334
PARENT COMPANY
GROUP
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
18,821 18,775 7,812 45,408
17,883 12,973 18,943 49,799
19,938 19,666 8,785 48,389
18,770 13,434 20,321 52,525
17 Other debt Holiday allowance owed Due A-tax and pensions, etc. Other debt
18 Contingent liabilities, other financial liabilities and guarantees The parent company has guaranteed the debt of the subsidiaries Neqi A/S, Akia Sisimiut A/S, KNI Ejendomme A/S and Pitsaasut ApS to the Bank of Greenland. The subsidiary Pitsaasut ApS has a deficit of DKK 16.5 million, cf. the annual report for 2019/20. The overall equity is expected to be restored via own earnings.
On the instructions of the Government of Greenland, KNI operates activities at locations where there is a risk that buildings and facilities may at a future time may be closed down in accordance with the Government’s decisions in this regard. According to the land use legislation in Greenland, it is the rights holder’s responsibility to clean up and re-establish the site when the right of use ceases. However, as it is the Government of Greenland that has the supply obligation and decision-making competence regarding which towns and villages KNI must serve, it is not currently possible for KNI to calculate the scope of the obligation reliably in relation to the actual need for cleaning up and re-establishment, the amount required, or the time of implementation.
Annual report 2019-20
97
NOTES, CTD. PARENT COMPANY
GROUP
2020
2019
2020
2019
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
(DKK ‘000)
645 442 1,087
629 519 1,148
789 521 1,310
769 596 1,365
(98,665) 35,510 18,289 (44,866)
(300) 18,216 8,520 26,436
19 Fees to auditors appointed by the general meeting Auditor’s fee Other assistance
20 Changes in working capital Changes in inventories Changes in receivables Changes in debt to suppliers and other debt, etc.
21 Parent company’s related parties and ownership Controlling influence Government of Greenland
Basis Sole shareholder
Other related parties Neqi A/S Akia Sisimiut A/S KNI Ejendomme A/S Pitsaasut ApS
Affiliated company in the KNI group Affiliated company in the KNI group Affiliated company in the KNI group Affiliated company in the KNI group
Lars Borris Pedersen Najaaraq Christiansen Annette K. Sadolin Søren Jakobsen Lone Møller Olsen Steen Montgomery-Andersen Dorthea Isaksen Jonas Aronsen Majaq Heilmann
3905 Nuussuaq 3905 Nuussuaq 2900 Hellerup 2950 Vedbæk 1911 Frederiksberg 3900 Nuuk 3911 Sisimiut 3911 Sisimiut 3911 Sisimiut
Board Chairman Board member Board member Board member Board member Board member Board member Board member Board member
Peter Grønvold Samuelsen
3911 Sisimiut
General Manager
Transactions Apart from intra-group transactions, which are eliminated in the consolidated financial statements of KNI, no transactions have been carried out with the Board of Directors, the Executive Board, senior executives, the shareholder, affiliated companies or other related parties that have not been conducted on market terms.
Annual report 2019-20
98
NOTES, CTD. 22 Managerial position Members of the Company’s management occupy the following managerial positions in other limited companies: Peter Grønvold Samuelsen
Neqi A/S - board chairman Akia Sisimiut A/S - board chairman KNI Ejendomme A/S - board chairman Pitsaasut ApS - board chairman
Lars Borris Pedersen
Sikuki Nuuk Harbour A/S - board member
Annette K. Sadolin
DSV A/S - board member DSB - vice-chairman
Lone Møller Olsen
BankInvest - board member Karnov Group AB (publ.) - board member Jetpak Top Holding AB (publ.) - board member
Steen Montgomery-Andersen
Ejendomsselskabet Suliffik A/S - managing director
23 Events following the conclusion of the financial year No events have occurred after the balance sheet date that would influence the evaluation of this annual report. The outbreak and spread of COVID-19 in early 2020 has brought about a number of restrictions and a partial lockdown of society. The restrictions are not as a whole expected to have a significant impact on the Company's financial position or development for the year as a whole.
Annual report 2019-20
99
PROFIT AND LOSS ACCOUNT 1 April 2019 - 31 March 2020 GOODS DIVISION
Net revenue
2020
2019
(DKK ‘000)
(DKK ‘000)
1,425,440
1,389,311
Payment from the national treasury for social tasks
18,015
18,181
Other operating income
77,209
72,637
(1,078,874)
(1,053,714)
(168,505)
(156,696)
273,284
269,719
Goods consumption costs Other external costs Gross profit Personnel costs
(182,405)
(176,773)
Depreciation and write-downs
(25,076)
(24,142)
Profit before financial items
65,803
68,804
Financial revenue
313
466
(2,929)
(2,651)
Intra-group interest
(8,944)
(18,178)
Pre-tax profit for the year
54,242
48,441
Financial costs
BALANCE 31 March 2020 GOODS DIVISION 2020
2019
(DKK ‘000)
(DKK ‘000)
1,046,649
965,134
75,410
50,167
The following assets and liabilities may be directly attributed to the segment accounts of the Goods Division: Assets, total Total liabilities
Annual report 2019-20
100
PROFIT AND LOSS ACCOUNT 1 April 2019 - 31 March 2020 ENERGY DIVISION
Net revenue Other operating income Goods consumption costs Other external costs
2020
2019
(DKK ‘000)
(DKK ‘000)
1,089,475
1,063,934
2,620
3,170
(920,414)
(890,626)
(49,846)
(43,549)
Gross profit
121,835
132,929
Personnel costs
(35,388)
(34,132)
Depreciation and write-downs
(21,292)
(19,379)
Profit before financial items
65,155
79,418
Financial costs
(210)
(180)
Intra-group interest
(11,132)
(12,357)
Pre-tax profit for the year
53,813
66,881
BALANCE 31 March 2020 ENERGY DIVISION 2020
2019
(DKK ‘000)
(DKK ‘000)
Assets, total
957,032
878,275
Total liabilities
256,057
103,078
The following assets and liabilities may be directly attributed to the segment accounts of the Energy Division:
Annual report 2019-20
101
PROFIT AND LOSS ACCOUNT 1 April 2019 - 31 March 2020 STAFFS
Other operating income
2020
2019
(DKK ‘000)
(DKK ‘000)
5,848
7,505
Other external costs
47,992
43,300
Gross profit
53,841
50,805
(46,670)
(46,688)
(7,096)
(4,107)
75
10
Personnel costs Depreciation and write-downs Profit before financial items Financial revenue
23,013
31,912
(23,087)
(31,920)
0
0
2020
2019
(DKK ‘000)
(DKK ‘000)
Assets, total
204,016
207,751
Equity, total
1,150,782
1,183,158
Total liabilities
725,448
714,757
Financial costs Pre-tax profit for the year
BALANCE 31 March 2020 STAFFS
The following assets and liabilities that are not directly related to the activities of the Goods Division or the Energy Division may be attributed to the segment accounts for Staffs:
Annual report 2019-20
102
PROFIT AND LOSS ACCOUNT 1 April 2019 - 31 March 2020 AFFILIATED COMPANIES 2020
2019
(DKK ‘000)
(DKK ‘000)
Profit in affiliated companies
5,303
3,585
Pre-tax profit for the year
5,303
3,585
BALANCE 31 March 2020 AFFILIATED COMPANIES 2020
2019
(DKK ‘000)
(DKK ‘000)
167,855
184,152
1,822
1,519
166,033
182,636
The following assets and liabilities may be directly attributed to the segment accounts of affiliated companies: Assets, total Capital and reserves, minority interests Total liabilities
Annual report 2019-20
103
COMPANY INFORMATION
ACCOUNTING POLICIES The annual report for the KNI group is presented in conformity with the provisions of the Financial Statements Act for class D companies.
constructive obligation, and it is probable that future financial benefits will be deducted from the Group, and the value of the liability can be reliably measured.
The new Financial Statements Act has been adopted with effect for financial years beginning 1 July 2018 or later. All consequences of the new Act have been implemented for the financial year 2019/20 and thereafter. In addition to changes in the presentation and classification of the financial statements, the implementation has brought about a change in accounting policies regarding the accounting treatment of tax deductions for paid-out dividends, as a result of changed rules of interpretation regarding this matter.
On initial recognition, assets and liabilities are valued at cost price. Subsequently, assets and liabilities are valued as described below for each item of the accounts. In recognition and measurement, account is taken of predictable losses and risks that arise before the presentation of the report, and which confirm or deny conditions that existed at the balance sheet date.
Previously, the tax value was recognised as an income directly in the equity in the financial year to which the dividend related. Going forward, the tax value will be recognised as an income in the profit and loss account under tax on the profit for the year in the financial year in which the dividend payment is approved by the general meeting. With the exception of the above, the annual report is presented in accordance with the same accounting policies as last year. Assets are recognised in the balance sheet when, as the result of a past event, it is likely that future financial advantages will accrue to the group, and when the value of the assets can be reliably measured. Liabilities have been recognised in the balance sheet when the Group, as the result of a past event, has acquired a legal or
Annual report 2019-20
104
In the profit and loss account, revenues are recognised as they are earned, while costs are recognised at the amounts relating to the financial year.
Consolidated accounts The consolidated group accounts encompass KNI A/S (the parent company) and those companies (affiliated undertakings) that are controlled by the parent company. Such control is achieved when the parent company directly or indirectly possesses more than 50% of the voting rights, or in any other manner can exercise or actually exercises a controlling influence. Companies in which the Group directly or indirectly possesses between 20% and 50% of the voting rights and exercises significant influence, but not control, are regarded as associated companies.
Principles of consolidation The consolidated financial statements are prepared on the basis of the financial statements of KNI A/S and its subsidiaries. The consolidated statements are prepared by combining entries of a uniform nature. On consolidation, intra-group income and expenses, internal accounts, and gains and losses on transactions between the consolidated companies are eliminated. The accounts used for consolidation are prepared in accordance with the Group’s accounting policies. Capital interests in subsidiaries are offset against the proportionate share of the subsidiaries’ net assets at the acquisition date, calculated at market value.
Minority interests The entries of the subsidiaries are recognised at 100% in the consolidated accounts. The share of the subsidiaries’ annual profit/loss and equity attributable to minority interests is recognised under separate items in the profit and loss account and balance sheet.
Conversion of foreign currencies Transactions conducted in foreign currencies have been calculated on first recognition according to the rate on the date of the transaction. Receivables, liabilities other than provisions and other monetary entries in foreign currency which are not settled on the balance sheet date are converted at the exchange rate of the balance sheet date. Any exchange rate differences occurring between the exchange rate prevailing on the transaction day and the rate prevailing on the balance sheet date are recognised in the profit and loss accounts as financial items. Tangible and intangible fixed assets, inventories and other non-monetary assets acquired in foreign currencies are converted at historic rates.
Derivatives Derivative financial instruments are initially recognised in the balance sheet at cost price, and subsequently at market value. Derivatives are recognised under receivables and short-term debt obligations, respectively. Alterations in the market value of derivatives that are designated and qualify as hedges of future transactions are recognised directly in equity. When the hedged transactions are realised, the cumulative alterations are recognised as part of the cost price of the relevant entries. Alterations in the market value of derivative financial instruments that do not qualify as hedging instruments are recognised on an ongoing basis in the profit and loss account as financial items.
PROFIT AND LOSS ACCOUNTS Net revenue Net revenue comprises net cash and invoiced sales for the year, less returns and discounts directly related to sales.
Payment from the national treasury for social tasks
This includes payments from the Government of Greenland for community tasks, in the amounts approved in the annual state budget.
Other operating income Other operating income encompasses income and costs of a secondary character in relation to the Group’s main activities.
Other external costs Other external costs encompass costs relating to distribution, sales, advertising, administration, premises, bad debts, etc.
Staff costs Staff costs encompass wages and salaries as well as social costs, pensions, etc., for the Group’s personnel.
Depreciation and write-downs Depreciation and write-downs of tangible and intangible fixed assets consists of depreciation and write-downs during the financial year, calculated on the basis of the residual values and useful lives of the individual assets and implemented impairment tests, and gains and losses on the sale of property, plant and equipment.
Financial items Financial items include interest income and expenses, realised and unrealised gains and losses on securities, payables and transactions denominated in foreign currencies.
Tax The tax for the year, which consists of the current tax for the year and any changes in the deferred tax, is recognised in the profit and loss account in the proportion attributable to the net profit for the year, and directly in equity capital in the proportion attributable to entries recognised directly in equity. Current tax liabilities and tax receivables are recognised in
Annual report 2019-20
105
the balance sheet as the calculated tax on the year’s taxable income. Deferred tax is recognised using the balance-oriented liability method on all temporary differences between accounting and tax values of assets and liabilities, where the tax value of the assets is calculated on the basis of the planned use of the individual asset. Alterations in deferred tax as a consequence of alterations in tax rates are recognised in the profit and loss account. Deferred tax assets, including the tax value of tax losses allowed for carry-forward, are recognised at the value at which the asset is expected to be realised, either by offsetting in deferred tax liabilities or as net tax assets.
Other equipment, operating plant and fixtures 3-10 years Tangible fixed assets are written down to the recoverable amount, if this is lower than the book value. Gains and losses on disposal of tangible fixed assets are calculated as the difference between the sales price minus sales costs and the book value at the time of sale. Gains or losses are recognised in the profit and loss account as an adjustment of depreciation and impairment, or under other operating income if the sales price exceeds the original cost.
BALANCE
Capital interests in subsidiaries and associated companies
Intangible fixed assets
Capital interests in subsidiaries and associates are recognised and valued under the equity method, which implies that capital interests are valued at the proportionate share of the companies’ book equity value, plus or minus unamortised positive or negative group goodwill, plus or minus unrealised intra-group profit and losses.
Software and trademarks are assessed at cost price after deduction of accumulated depreciation and write-downs. The cost price comprises the price of acquisition and expenses directly attributable to the acquisition, plus the preparation costs for the asset until such time as the asset is ready to be placed in service. The depreciation is based on the cost price, amortised linearly over an estimated useful life of from three to ten years. Intangible assets are written down to the recoverable amount, if this is lower than the book value.
Tangible fixed assets Land and buildings, production equipment and machinery, as well as other plant, operating fittings and fixtures, are measured at cost price less accumulated depreciation and impairment. Land is not depreciated. The cost price comprises the price of acquisition and expenses directly attributable to the acquisition, plus the preparation costs for the asset until such time as the asset is ready to be placed in service. The depreciation period and the residual value are determined at the time of acquisition and reassessed annually. If the residual value exceeds the book value of the asset, the depreciation ceases. The basis of depreciation is the cost price less the estimated residual value at the end of its useful life. Linear depreciation is conducted, based on the following assessment of the estimated useful lives of the assets: Buildings
20-50 years
Plant and machinery
10-40 years
Annual report 2019-20
106
In the profit and loss account, the parent company’s share of the companies’ results is recognised after the elimination of unrealised intra-group profit and losses, plus or minus the amortisation of positive or negative Group goodwill. Subsidiaries and associates with negative book equity value are valued at zero, and any receivables from these enterprises are written down by the parent company’s share of the negative equity, to the extent that they are assessed to be irrecoverable. If the negative equity exceeds the amount owed, the remaining amount is recognised under provisions to the extent that the parent has a legal or constructive obligation to cover the liabilities of the company in question. The net revaluation of capital interests in subsidiaries and associates is transferred to the revaluation reserve for capital interests, to the extent that the book value exceeds the cost price.
Inventories Inventories are valued at cost price using the FIFO method, or at the net realisable value, if this is lower. The cost price of commodities, raw materials and consumables consists of the purchase price plus transportation costs. The cost price of finished goods and work in progress consists of the cost of raw materials, consumables, direct wages and indirect production costs. Indirect production costs consist of indirect materials and wages, maintenance and depreciation costs for production machinery, factory buildings and equipment, plus costs for factory management and administration. Financial costs are not included in the cost price.
The net realisable value of inventories is calculated as the anticipated sales price, less completion costs and sales expenses.
Cash flows from operations are calculated as operating profit for the year adjusted for non-cash operating items, changes in working capital and paid corporate tax.
Receivables
Cash flows relating to investment activities encompass outgoing payments in connection with the purchase and sale of companies, activities and financial assets, as well as the purchase, development, improvement and sale, etc., of intangible and tangible assets, including acquisition of assets under finance leases.
Receivables are assessed at the amortised cost price, which usually corresponds to the nominal value, less write-downs to counter expected losses.
Accruals Accruals recognised under assets include costs incurred for subsequent financial years. Accruals are valued at cost price.
Liquid holdings Liquid holdings comprise cash and bank balances.
Equity Dividends are recognised as a liability at the time of adoption by the general meeting. The proposed dividend for the financial year is shown as a separate item under equity.
Mortgage debt Mortgage debt is valued at the time of borrowing at cost price, corresponding to the proceeds received after deduction of transaction costs. Mortgage debt is subsequently valued at amortised cost price. This means that the difference between the proceeds and the nominal amount to be repaid is recognised in the profit and loss account over the term of the loan as a financial expense, using the effective interest method.
Cash flows relating to financial activities encompass alterations in the size or composition of the Group’s share capital and associated costs, as well as the raising of loans, entering into financial leasing agreements, instalments on interest-bearing debt, acquisition of own shares and the payment of dividends. Cash and cash equivalents include cash at bank and in hand and short-term securities with insignificant price risk, less short-term bank debt.
Segment information Information is provided on business segments. The segment information accords with the Group’s accounting policies, risks and internal financial management. Fixed assets in the segments comprise assets used directly in the operation of each segment, including intangible assets, property, plant and equipment, and capital interests in associates. Segment liabilities include debt liabilities and other provisions that are derived from the operation of each segment, including trade payables and other debt. Deferred tax is not included in segment liabilities.
Key figures
Key figures are calculated as in the table below:
Other financial liabilities Other financial liabilities are valued at amortised cost price, which usually corresponds to the nominal value.
Prepayments received from customers
Prepayments received from customers comprise amounts received from customers prior to the delivery time.
EBIT margin (%)
=
EBIT x 100 Net revenue
Accruals
Return on invested capital (%)
=
EBITDA x 100 Invested capital
Accruals recognised under liabilities include receivables recognised in subsequent financial years. Accruals are valued at cost price.
Net revenue / Invested capital
=
Net revenue Invested capital
Financial gearing
=
Net interest-bearing debt Capital and reserves
Return on equity (%)
=
Net profit/loss for the year x 100 Capital and reserves
Solvency ratio (%)
=
Capital and reserves x 100 Total assets
Cash flow statement The cash flow statement is presented on the basis of the indirect method, and indicates cash flows associated with operations, investments and financing, as well as liquid funds at the beginning and end of the year.
Annual report 2019-20
107
ANNUAL ACCOUNTS
Annual report 2019-20
108