The ATP Group Annual Announcement of Financial Statements 2014

Transcription

1 The ATP Group Annual Announcement of Financial Statements DKK 5.3bn profit for the year before bonus 6.5 percent return on investment 943,500 pensioners DKK 96bn bonus potential 3.8 percent total value creation DKK 24,000 full ATP pension for a 65-year-old pensioner DKK 704bn net assets 9.7 percent average annual return for the past 20 years N1 4.9 million members The ATP Group Annual Report

2 MANAGEMENT S REVIEW was a year of plunging interest rates. We protected our guarantees; achieved a return of DKK 6.1bn on our investments; cut our administration expenses by 5 percent; and increased the ATP pension for all current pensioners. Carsten Stendevad ATP CEO ATP was established in 1964 and, through its 50 years in existence, it has evolved into one of Europe s largest pension funds. ATP now has 4.9 million members and net assets of DKK 704bn. ATP s task is to create good, stable pensions to enable ATP, along with the state-funded old-age pension system, to provide basic pensions for danish public. To that end, ATP has always been operating with pension guarantees. The guarantees have continuously been adjusted to reflect economic circumstances. This also occured in, where the ATP Supervisory Board decided to change the guaranteed return on future pensions. The purpose was to better safeguard the purchasing power of pensions, while at the same time taking the lower liquidity in parts of the financial markets into account. All existing guarantees remain unchanged. In, the financial markets were marked by a massive decline in interest rates, which caused ATP s guarantees to become DKK 109bn more expensive. However, thanks to a hedging return of DKK 132bn, all of ATP s guarantees remain fully protected. Investment activities generated a return of DKK 6.1bn, with most of ATP s investments performing well. Exceptions were oil investments and the long-term hedging strategy against rising inflation, which produced negative returns. Low expenses translate into higher pensions, and, accordingly, ATP focuses on keeping expenses as low as possible. For the second consecutive year, ATP reduced administration expenses by 5 percent, to DKK 62 per member. The return for the year resulted in tax on pension savings returns of DKK 21bn the highest tax payment in ATP s history. Total results before bonus for were DKK 5.3bn. For the second year running, the Supervisory Board decided to increase pension payouts by 1.5 percent for the current 943,500 pensioners. was a good year for ATP s administration activities, i.e. administration and disbursement of benefits under a number of large welfare schemes. The expansion of Udbetaling Danmark progressed satisfactorily, and the target of providing 33 percent savings over a two-year period is expected to be achieved. As far as other administration tasks are concerned, we also met our target of delivering competitive operations. Carsten Stendevad Chief Executive Officer

3 Five-year summary for the ATP Group DKKm Pension and investment activities: Investment activities Return on investment 6,078 15,106 12,544 16,782 23,791 Investment activity expenses (720) (668) (598) (527) (548) Tax on pension savings returns and income tax (579) (2,249) (1,752) (2,185) (3,275) Other items 0 (13) (132) (17) (127) Investment activity results 4,779 12,176 10,062 14,053 19,841 Hedging activities Change in guaranteed benefits due to discount rate and maturity reduction (112,743) 42,012 (37,018) 103,203 (39,920) Return on hedging portfolio etc. 132,221 (49,975) 45, ,889 50,419 Tax on pension savings returns (20,230) 7,646 (6,949) (16,183) (7,564) Hedging activity results (752) (317) 1,450 (11,497) 2,935 Investment and hedging activity results 4,027 11,859 11,512 2,556 22,776 Pension activities Contributions 9,049 11,587 8,554 8,602 8,293 Pension benefits (13,661) (12,741) (11,903) (11,080) (10,170) Change in guaranteed benefits due to contributions, payouts, life expectancy etc. 6,149 1,210 2,258 4,253 2,906 Administration activity expenses, ATP Pension (300) (310) (351) (336) (380) Pension activity results 1,237 (254) (1,442) 1, Pension and investment activity results 5,264 11,605 10,070 3,995 23,425 Administration activity results: Administration activity income, external parties 1,469 1, Administration activity expenses, external parties (1,426) (1,508) (780) (637) (635) Income tax 8 (3) (3) (2) 3 Administration activity results (5) Results before bonus 5,315 11,640 10,094 4,003 23,420 Change in guaranteed benefits due to change in estimated life expectancy (18,324) Bonus addition for the year (2,772) (2,472) Net profit for the year 2,543 9,168 10,094 4,003 5,096 Guaranteed benefits 608, , , , ,953 Bonus potential 95,831 93,344 84,154 74,133 70,005 Net assets 704, , , , ,958 Ratios for the ATP Group Expense ratios Administration activity expenses, ATP Pension, DKK per member Investment activity expenses, DKK per member Bonus rate Return ratios Return on investment relative to bonus potential (before expenses and tax), per cent Return on investment relative to bonus potential (after expenses and tax), per cent Value creation ratios for members, per cent Value creation from guaranteed pension Value creation from bonus potential Total value creation

4 Hedging of pension provisions safeguards reserves DKKbn Return on hedging portfolio after tax Change in guaranteed benefits ATP s guarantees are well protected against interest rate fluctuations. HIGHLIGHTS OF THE YEAR The ATP Group recorded a profit of DKK 5.3bn in before allocation of bonus. The bonus potential was sufficient to increase pensions for all current pensioners by 1.5 percent at the beginning of After allocation of bonus, the profit was DKK 2.5bn, and the bonus rate was 15.8 percent. ATP s reserves its bonus potential increased to DKK 95.8bn. The value of pension liabilities rose by DKK 109.4bn in, to DKK 608.3bn at year-end, taking net assets to DKK 704.1bn. PENSION AND INVESTMENT ACTIVITIES Investment and Hedging Total investment and hedging activity results were a profit of DKK 4.0bn. ATP s overall objective is to provide the best possible pensions to its members in the form of a lifelong guarantee. ATP has organised its hedging activities to ensure that ATP will, at all times, be able to deliver on the guarantees made. Hedging is planned with a view to ensuring that the market value of the hedging portfolio fluctuates in line with pension liabilities when interest rates go up or down. Following the plunge in interest rates during the year, along with the maturity reduction, the market value of lifelong pensions increased by DKK 112.7bn in. The decline in interest rates also produced a positive return on the hedging portfolio of DKK 132.2bn before tax (DKK 112.0bn after tax). Hedging activity results, after substantial gross movements, were a loss of DKK 0.8bn, equivalent to less than a quarter of one percent of ATP s guaranteed benefits. The bonus potential is managed as part of ATP s investment activities. The Group s investment activity results were DKK 4.8bn. Before expenses and tax, the return totalled DKK 6.1bn, equivalent to a return of 6.5 percent on the bonus potential. Three out of five risk classes generated positive returns, and returns were boosted, in particular by equity investments, contributing a return of DKK 8.5bn to the profit for the year. Non-liquid investments in properties, infrastructure and credit-related investments also contributed positive returns. Oil investments and the long-term hedging strategy against rising inflation were the largest detractors from returns. The Supervisory Board s target for hedging activities is that ATP at any time should be able to fulfill the guarantees. In the market value of the hedging portfolio increased to the same extent as the pension guarantees, og the target was therefore met. Furthermore The Supervisory Board has set the long-term target that, over time, investment and hedging activity results must be sufficient to ensure that pensions are revalued in line with the Retail Price Index (RPI). The performance target is based on the expected rate of inflation and a premium of one percent. For, seen in isolation, the target was DKK 6.5bn. With a profit of DKK 4.0bn, the target was not met. 4

5 Equity price developments in 50 years of ATP Pension Index Q1 Q2 Q3 Q4 Note: Calculated as a five-day moving average Denmark USA Emerging Markets Europe DKKbn Contributions Payouts In, tax on pension returns for ATP was DKK 20.8bn. For the latest five-year period, tax on pension returns for ATP totals DKK 53.3bn. Pension activities At the end of, 943,500 pensioners were receiving ATP Pension, and pension payouts totalled DKK 13.7bn. For more than 50 percent of Denmark s one million old-age pensioners, ATP is their only pension income besides the state old-age pension. The full annual ATP Pension for 65-year-old pensioners who have contributed to ATP throughout their working lives, was DKK 24,000 in, equivalent to 34 percent of the basic amount of the state old-age pension. ATP s members earn guaranteed lifelong pension rights by contributing to the scheme. There is a clear link between the contributions paid to the scheme and the pension rights earned by the individual member. Contribution payments for the year amounted to DKK 9.0bn. Pension activity results were a profit of DKK 1.2bn. ATP performs an annual update of its life expectancy model. This year s update had no significant impact on results, reflecting that the observed increase in Danish life expectancy was in line with the model projections. For Denmark viewed isolated female life expectancy was up by 2.5 months, while male life expectancy improved by 2 months in. Allocation of bonus Because ATP s bonus policy, it is possible to increase pensions for all current pensioners if reserves exceed 10 percent of the value of guaranteed benefits. For the second consecutive year, the ATP Supervisory Board has decided to increase pension payouts for the current 943,500 pensioners by 1.5 percent per year, effective from 1 January This increase has a profit impact of DKK 2.8bn. After allocation of bonus, the bonus rate is 15.8 percent. Adjustment of ATP s pension product In August, the Supervisory Board decided to change the method for calculating the return on new contributions, effective from 1 January The purpose is to safeguard the purchasing power of pensions; moreover, the change took into account the decrease in liquid funds in parts of the financial markets. All existing guarantees remain unchanged. During the previsous guarantees, the return was fixed up to 80 years. Resulting in young members, in particular, being highly dependent on the interest rate level at the time of making their payment. In future, the return on ATP contribution payments will be fixed for 15-year periods for members under the age of 50. The new pension guarantees will still be fully hedged, but subject to considerably lower interest rate sensitivity compared with the existing guarantees. This adjustment regar- The ATP Group Annual Report 5

6 ATP pension liabilities DKKbn Difference between ATP s and the Danish FSA s life expectancy calculations Difference between ATP s and the Danish FSA s yield curves ATP maintains conservative approach to valuation of pension liabilities. 0 ATP s method of calculation The Danish FSA s method of calculation ding future pension guarantees is in keeping with ATP s measures in in connection with the introduction of the new discounting curve, which reduced the interest rate sensitivity of existing guarantees by 25 percent. ATP is now reaping the benefits of its structured and efficient IT support, streamlining and increased digitisation and service optimisation for customers. The international comparison of expenses in the pensions area (CEM Benchmarking) shows that ATP Pension s administration expenses are one-eighth of the average for global peer pension funds. Investment expenses ATP also focuses on keeping investment expenses low, while at the same time having its eye on capturing the return potential available from one extra DKK of cost. ATP s overall direct and indirect investment expenses amounted to DKK 1,284m, equivalent to 0.18 percent of the average assets managed by ATP in, or DKK 264 per member. Low expenses benefit the of members Low expenses provide a significant contribution to higher pensions. Administration expenses At ATP, the focus is on minimising administration expenses. In, administration expenses for ATP Pension were DKK 300m equivalent to DKK 62 per member. Once again, ATP reduced administration expenses by DKK 3 per member relative to the previous year. This is the second year running that the expense ratio for ATP Pension is reduced by 5 percent. Total investment expenses increased by just under 7 percent relative to, attributable mainly to an increase in the number of due diligence processes ahead of major investments and fortifying liquid funds in active investment strategies. The increase in expenses is expected to generate an additional return relative to the expenses incurred. A recent international comparison of expenses in the investment area (CEM Benchmarking) shows that ATP s total investment expenses are lower than those of any of its peers of a similar size in the global pension community, and 17 percent lower than the average. Conservative determination of pension liabilities ATP relies on its own custom yield curve for valuation of pension liabilities, which is more conservative than that of the Danish FSA. ATP also uses its own custom life expectancy model, which projects higher increases in life expectancy than the Danish FSA s model. ATP s pension liabilities would have been DKK 55.1bn lower and its bonus potential would have been correspondingly higher if the Danish FSA s life expectancy model and yield curve were both used. 6

7 Administration expenses for ATP Pension Index ATP Average of peer pension funds ATP reaps efficiency gains, reducing administration expenses from DKK 65 in to DKK 62 per member. Note: CEM Benchmarking VALUE CREATION In, the overall value creation for ATP s members was 3.8 percent, reflecting the value creation from guarantees and ATP s profit during the year. The value creation from the guarantees promised to ATP s members was 3.9 percent, while the value creation from ATP s bonus potential, which will enable an increase in pensions over time, was 3.6 percent. The ratio is driven primarily by investment returns, but is impacted also by ATP s ability to hedge pension liabilities and predict life expectancy. ADMINISTRATION ACTIVITIES In addition to the administration of ATP Pension, the ATP Group performs administration tasks on behalf of the social partners, the Danish government and local authorities. These tasks, which are performed as part of ATP s administration activities, are assigned to ATP on a cost-recovery basis i.e. without profit to ATP and without any risk of expense. Operating expenses are managed based on ambitious objectives of ensuring efficient and competitive operations. Digitisation, optimisation, structured work processes and efficient operations management once again ensured low operating expenses in. Administration activities incurred expenses of DKK 1.4bn, which were re-invoiced primarily on a cost-recovery basis. Administration activity results were DKK 51m. The focus on Udbetaling Danmark remains steadfast. As from March 2015, the annual expenses associated with the services initially assigned must be reduced by close to DKK 300m, equivalent to savings of 33 percent, achieved over a two-year period. This target is still expected to be met. New benefit disbursement services will be assigned to Udbetaling Danmark on 1 May 2015 in the form of international health insurance services, funeral benefits, benefits regarding the flexible job scheme (benefits paid for less demanding, publicly supported jobs), survivor lump-sum benefits and partial pensions. The potential expense reduction is expected to be 45 percent after nine months of operations. On 1 May 2015, Udbetaling Danmark will launch a new joint data unit to ensure a better basis for and binding cooperation on the control of municipal social benefits. RISKS ATP is committed to identifying and managing the most significant risks relating to ATP Pension and the Group s other activities. Responsibility for including the most significant risks and weighing the various risks in relation to each other rests with the ATP Supervisory Board. The Supervisory Board bestows particular importance to ensuring that ATP s financial flexibility remains intact even in very difficult situations. 7

8 ATP member assets DKKbn Bonus potential reserves Pension liabilities ATP disburses a monthly life-long pension to its members. Consequently, the increase in life expectancy is the greatest pension risk facing ATP. ATP relies on a custom life expectancy model, based on comparable data from 18 OECD countries, for managing the longevity risk. In addition to factoring in already observed increases in life expectancy, the model allows for expected future increases. Investment risks are primarily market risks assumed by ATP in relation to investment and hedging activities. The market risks assumed by ATP are closely aligned with its investment strategy, consisting of four main components: Hedging of the interest rate risk of pension liabilities, appropriate risk levels, risk diversification and hedging arrangements to protect against significant decline in value. ATP is not covered by the Solvency II Directive, but has chosen to follow the rules of the Directive as this will enhance risk management, among other things. ATP applies an internal model to calculate reserve requirements, and this model is used in the overall risk management. ATP is dependent on efficient financial markets, and any changes that result in a decrease of liquid funds in markets where ATP is represented, may affect ATP. SOCIAL RESPONSIBILITY ATP practises business-driven social responsibility in investment decisions to achieve the optimum risk-adjusted return for the benefit of members. This is reflected in the Supervisory Board s Policies of Social Responsibility in Investments and Corporate Governance. ATP supports the UN-supported Principles for Responsible Investment (PRI), which, in terms of procedure, underpin ATP s work on business-driven social responsibility in investment. ATP is a signatory of the United Nations Global Compact. As a signatory, ATP prepares an annual Communication on Progress, for further Information go to CORPORATE GOVERNANCE ATP s corporate governance framework is stipulated in the Danish ATP Act. For further information on ATP s corporate governance, including ATP s compliance with the Recommendations on Corporate Governance and ATP s salary policy, go to 8

9 OUTLOOK FOR 2015 ATP s investment strategy is to ensure that ATP attains a fair share of the continued increase in the financial markets, while, at all times, being able to meet the guarantees issued to members. The ATP Supervisory Board has set the long-term target that, over time, hedging and investment activity results must be sufficient to ensure that pensions are revalued in line with the Retail Price Index (RPI). So far, the performance target has been based on the expected rate of inflation and a premium of one percent. The ATP Supervisory Board has decided to apply a new long-term target as from This target will be based on the ambitious principles underlying the old target, while at the same time remaining resilient to changes in interest rates and inflation. In order to achieve the desired long-term value creation, the future performance target after tax and expenses has been set at 7 percent of the bonus potential at the beginning of the year, equivalent to just over 9 per- cent before tax and expenses. In the previous target was to net DKK 6.5bn. With the new methode of setting targets, the performance target for 2015 will be DKK 6.7bn, and therefore largely unchanged compared to. Had the new target been applied in, it would have resulted in the same absolute target as the old performance target. Based on ATP s bonus policy, the current bonus rate and the outlook for 2015, the ATP Supervisory and Executive Boards currently expect that it will be possible, yet again, to increase pensions for existing pensioners next year. The ATP Supervisory and Executive Boards also expect ATP Pension administration expenses to be maintained at the level in Moreover, a small increase in investment expenses is expected in connection with activity expansions. Jørgen Søndergaard Jørgen Søndergaard Chairman Carsten Stendevad Chief Executive Officer 9

10 The ATP Group Income statement DKKm Q4 Q4 Pension and investment activities Investment Income from associates Income from investment properties Consulting fee and fee income Interest income and dividends etc. 4,269 6,625 1, Fee income Market value adjustments 2,301 8,416 (4,377) 3,165 Interest expenses (2,415) (1,315) (707) (307) Transferred to unit-linked contracts 0 (13) 0 (1) Investment activity expenses (720) (668) (227) (239) Investment activity results before tax on pension savings returns 5,358 14,425 (3,376) 3,683 Tax on pension savings returns in respect of investment activities (579) (2,248) 588 (609) Income tax in respect of investment activities 0 (1) (34) 4 Investment activity results after tax on pension savings returns 4,779 12,176 (2,822) 3,078 Hedging Interest income and dividends etc. 18,213 17,549 4,530 4,963 Market value adjustments 114,013 (67,483) 45,646 (12,426) Interest expenses (5) (41) 0 (40) Tax on pension savings returns in respect of hedging activities (20,230) 7,646 (7,677) 1,148 Change in guaranteed benefits due to change in discount rate (102,304) 53,198 (39,695) 11,092 Change in guaranteed benefits due to maturity reduction (10,439) (11,186) (2,309) (3,004) Hedging activity results (752) (317) 495 1,733 Pension Contributions 1 9,049 11,587 2,337 2,194 Fees Benefit payouts (13,661) (12,741) (3,456) (3,222) Change in guaranteed benefits due to contributions and pension benefits 1 6,061 3,665 1,282 1,535 Change in provisions for claims outstanding (18) 0 (18) 0 Interest income related to pension activities Administration activity expenses, ATP (300) (310) (93) (101) Tax on pension savings returns in respect of pension activities (2) (1) (1) 0 Results before change in life expectancy 1,141 2, Change in guaranteed benefits due to life expectancy update 96 (2,465) 0 0 Pension activity results 1,237 (254) Total pension and investment activity results 5,264 11,605 (2,271) 5,220 Administration Administration activity income, external parties 1,469 1, Administration activity expenses, external parties (1,426) (1,508) (390) (496) Income tax in respect of administration activities 8 (3) 11 (1) Administration activity results (10) (54) Results before bonus 5,315 11,640 (2,281) 5,166 Bonus addition for the year (2,772) (2,472) (2,772) (2,472) Net profit for the year 2,543 9,168 (5,053) 2,694 1 SUPP pensions are included in the comparative figures following the conversion to ATP as at 1 January 10

11 The AT P Group Statement of comprehensive income DKKm Net profit for the year 2,543 9,168 (5,053) 2,694 Q4 Q4 Items that may be reclassified to results: Translation adjustment of foreign subsidiaries Total Items that may not be reclassified to results: Revaluation of owner-occupied properties Other Total Other comprehensive income Comprehensive income for the year 2,549 9,190 (5,053) 2,942 Minority interests share of net results for the year The ATP Group s share of net results for the year 2,487 9,190 (5,055) 2,942 Allocated comprehensive income 2,549 9,190 (5,053) 2,942 11

12 The ATP Group Statement of financial position DKKm ASSETS Cash and demand deposits 5,234 3,786 Bonds 515, ,085 Equity investments 78,095 65,456 Mutual fund units 6,603 6,294 Financial derivatives 116,725 44,065 Other loans 0 4 Loans to portfolio companies 5,142 1,402 Investments in associates 10,328 9,840 Intangible assets Investment properties 17,871 13,834 Owner-occupied properties Operating equipment Income tax and deferred tax Tax receivable on pension savings returns 0 40 Deferred tax on pension savings returns 0 5,326 Interest receivable and accrued rent 4,633 4,554 Contributions receivable 2,408 2,235 Receivables from credit institutions 55,835 56,251 Other receivables 2, Other prepayments Total assets 823, ,528 LIABILITIES Financial derivatives 69,934 38,335 Payables to credit institutions 18,995 35,243 Other payables 30,120 11,380 Total payables 119,049 84,958 Guaranteed benefits 608, ,951 Provisions for claims outstanding Bonus potential 95,831 93,344 Provisions for unit-linked contracts Total pension provisions 704, ,566 Total minority interests Total liabilities 823, ,528 1 Provisions for unit-linked contracts in respect of deposits of remaining SP account holders, administered by ATP. The ATP Group Annual Report 12

13 The ATP Group Cash flow statement DKKm Cash flows from operating activities Cash flows from pension activities (4,834) (4,047) Cash flows from investment and hedging activities 20,242 15,345 Cash flows from administration activities 10 (3) Income tax paid and tax paid on pension savings returns 16 (3) Total 15,434 11,292 Net cash flow from investment activities Purchase and sale of investment assets 5,949 60,963 Intangible assets, property, plant and equipment and owner-occupied properties (22) 3 Acquisition of companies 17 (1,918) Total 5,927 59,048 Cash flow from financing activities Loans from credit institutions (19,792) (72,832) Total (19,792) (72,832) Change in cash and cash equivalents 1,569 (2,492) Foreign currency translation adjustments (121) (35) Cash and cash equivalents, beginning of period 3,786 6,313 Cash and cash equivalents, end of period 5,234 3,786 13

14 The ATP Group Note 1: Accounting policies The ATP Group's annual announcement of financial statements for has been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and in accordance with additional Danish disclosure requirements as set out in the Executive Order on Financial Reporting by the Danish Labour Market Supplementary Pension Scheme (Bekendtgørelse om finansielle rapporter for Arbejdsmarkedets Tillægspension available in Danish only). The accounting policies applied in this annual announcement of financial statements are consistent with the accounting policies in the annual report for. Significant risks faced by the Group and significant accounting estimates made by the Supervisory and Executive Boards which may affect the Group are described in detail in the annual report for. The ATP Group Note 2: Contingent liabilities DKKm Collateral Collateral in respect of financial derivatives and repo transactions 109,829 64,739 Investment and loan commitments Investment commitments, equity investments and commitments made by ATP Private Equity Partners 12,750 11,901 Investment commitments, real estate funds 1,393 1,121 Investment commitments, domestic properties Investment commitments, infrastructure funds 2,203 2,033 Investment commitments, credit funds 2,182 1,612 Investment commitments, biotech companies 1, Investment commitments, unlisted equity investments 336 2,747 Loan commitments, credit institutions 1,869 0 Other contingent liabilities Rental/lease obligations Potential deferred tax related to real estate Under certain conditions, the ATP Group is not subject to income tax on the activities of its subsidiaries ATP Ejendomme A/S and Ejendomsselskabet Vangede A/S as of and including If the conditions for tax exemption are not met, provisions are made for both current and deferred tax in the company. In, ATP Ejendomme A/S met the conditions for tax exemption. 2 ATP has joint VAT registration with a number of subsidiaries. These subsidiaries are jointly and severally liable for the payment of VAT and payroll tax included in the joint registration for VAT. 14

15 The ATP Group Note 3: Pension provisions DKKm Guaranteed benefits Market value, beginning of period 498, ,691 Change in provisions for the year: Current contributions 9,049 8,832 Contributions resulting from conversion of SUPP savings 0 2,755 Total contribution income 9,049 11,587 of which transferred to bonus potential (1,810) (2,173) Pension benefits (13,661) (12,741) Change due to life expectancy update (96) 2,465 Change due to change in discount rate 102,304 (53,198) Change due to maturity reduction 10,439 11,186 Bonus addition for the period 2,772 2,472 Other changes 361 (338) Total change in provisions for the year 109,358 (40,740) Market value, end of period 608, ,951 Provisions for claims outstanding Balance, beginning of period Change in provisions for the year 18 0 Balance, end of period Bonus potential Bonus potential: Balance, beginning of period 93,309 84,141 Changes during the year 2,481 9,168 Balance, end of period 95,790 93,309 Adjustment pool: Balance, beginning of period 0 (13) Changes during the year 0 13 Balance, end of period 0 0 Revaluation reserve: Balance, beginning of period Changes during the year 6 9 Balance, end of period Total bonus potential 95,831 93,344 Provisions for unit-linked contracts Balance, beginning of period 180 2,938 Changes during the year 1 (6) (2,758) Balance, end of period Total pension provisions 704, ,566 1 For, changes during the year include conversion of SUPP savings to ATP. 15

16 ATP Income statement DKKm Q4 Q4 Pension and investment activities Investment Income from subsidiaries 7,526 3, ,218 Income from associates Income from investment properties Interest income and dividends etc. 1,662 4, Consulting fee and fee income Market value adjustments (2,449) 6,564 (4,177) 2,484 Interest expenses (2,347) (1,283) (733) (306) Transferred to unit-linked contracts 0 (13) 0 (1) Investment activity expenses (264) (258) (51) (80) Investment activity results before tax on pension savings returns and income tax 5,332 14,447 (3,399) 3,690 Tax on pension savings returns in respect of investment activities (579) (2,248) 588 (609) Investment activity results after tax on pension savings returns and income tax 4,753 12,199 (2,811) 3,081 Hedging Interest income and dividends etc. 18,213 17,549 4,530 4,963 Market value adjustments 114,013 (67,483) 45,646 (12,426) Interest expenses (5) (41) 0 (40) Tax on pension savings returns in respect of hedging activities (20,230) 7,646 (7,677) 1,148 Change in guaranteed benefits due to change in discount rate (102,304) 53,198 (39,695) 11,092 Change in guaranteed benefits due to maturity reduction (10,439) (11,186) (2,309) (3,004) Hedging activity results (752) (317) 495 1,733 Pension Contributions 1 9,049 11,587 2,337 2,194 Fees Benefit payouts (13,661) (12,741) (3,456) (3,222) Change in guaranteed benefits due to contributions and pension benefits 1 6,061 3,665 1,282 1,535 Change in provisions for claims outstanding (18) Interest income related to pension activities Pension activity expenses (300) (310) (93) (101) Tax on pension savings returns in respect of pension activities (2) (1) (1) 0 Pension activity results before change in life expectancy 1,141 2, Change in guaranteed benefits due to change in life expectancy 96 (2,465) 0 0 Pension activity results 1,237 (254) Total pension and investment activity results 5,238 11,628 (2,242) 5,222 Administration activities Other income 1,462 1, Other expenses (1,447) (1,527) (397) (505) Administration activity results (23) (57) Results before bonus 5,253 11,640 (2,265) 5,165 Bonus addition for the period (2,772) (2,472) (2,772) (2,472) Net results for the period 2,481 9,168 (5,037) 2,693 Danish FSA ratios (per cent) Return before tax on pension savings returns N (5.7) 7.0 (0.6) Return after tax on pension savings returns 19.8 (4.8) 6.0 (0.5). Members (number in thousands) 4,901 4,839 4,901 4,839 Expenses Pension activity expenses per member (DKK) Investment activity expenses per member (DKK) SUPP pensions are included in the comparative figures following the conversion to ATP as at 1 January 16

17 AT P Statement of comprehensive income DKKm Net results for the period 2,481 9,168 (5,037) 2,693 Q4 Q4 Items that may be reclassified to results: Translation adjustment of foreign subsidiaries Total Items that may not be reclassified to results: Revaluation of owner-occupied properties Other Total Other comprehensive income Comprehensive income for the period 2,487 9,177 (5,037) 2,941 The ATP Group Annual Report 17

18 ATP Statement of financial position DKKm ASSETS Cash and demand deposits 2,033 2,958 Bonds 488, ,636 Equity investments 37,504 30,494 Financial derivatives 116,657 43,243 Loans to portfolio companies 4,572 1,060 Loans to subsidiaries 2,755 0 Receivables from subsidiaries 1, Investments in subsidiaries 78,842 72,774 Investments in associates 7,157 6,674 Intangible assets Investment properties 7,507 7,566 Owner-occupied properties Operating equipment Deferred tax on pension savings returns 0 5,326 Interest receivable and accrued rent 4,208 4,272 Contributions receivable 2,408 2,235 Receivables from credit institutions 55,835 56,251 Tax receivable on pension savings returns 0 40 Other receivables 1, Other prepayments Total assets 812, ,497 LIABILITIES Payables to subsidiaries Financial derivatives 68,169 38,278 Tax payable on pension savings returns 15,428 0 Payables to credit institutions 18,995 35,243 Other payables 5,304 10,535 Total payables 108,010 84,931 Guaranteed benefits 608, ,951 Provisions for claims outstanding Bonus potential 95,831 93,344 Provisions for unit-linked contracts Total pension provisions 704, ,566 Total liabilities 812, ,497 18