The financial statements for Norfund consist of the following:

  • Income statement
  • Balance sheet
  • Cash flow statement
  • Notes

In accordance with Section 25 of the Norfund Act the financial statements are presented in compliance with the Norwegian Accounting Act and Norwegian generally accepted accounting principles in effect at 31 December 2022. The financial statements provide a true and fair view of assets and liabilities, financial standing and results.

With effect from the 2022 accounting year, Norfund also manages the Government Climate Investment Fund for Renewable Energy in Developing Countries (Climate Investment Fund – CIF) on behalf of the Ministry of Foreign Affairs in accordance with instructions for management. The mission of the Climate Management Fund is to help to reduce or avoid greenhouse gas emissions by investing in renewable energy in developing countries. Resources are allocated over the government budget or from surplus capital. Norfund is to invest in its own name in appropriate financial instruments such as equity, loans, guarantees etc. Balance sheet and profit and loss items associated with the CIF are presented separately in the notes where relevant. Transactions related to the CIF will be subject to the same accounting principles as Norfund generally.

Fundamental principles

The financial statements have been prepared on the basis of fundamental principles governing historical cost accounting, comparability, the going concern assumption, congruence and prudence.

A more detailed account of the accounting policies is provided below. When actual figures are not available at the time the accounts are closed, generally accepted accounting principles require management to make the best possible estimate for use in the income statement and the balance sheet. Actual results could differ from these estimates.

Valuation and classification

The most important valuation and classification principles applied to Norfund’s balance sheet and profit and loss items are described below.

  • Transactions are recorded at their value at the time of the transaction.
  • Revenue is recognised when it accrues and expenses are matched with the related revenue.
  • Current assets/liabilities, including the bond portfolio, are recorded at the lower/higher of historical cost or fair value. The definition of fair value is estimated future sales price reduced by expected sales costs.
  • Other assets are classified as non-current assets. Non-current assets are carried in the accounts at historical cost, with deductions for depreciation.

Some exceptions are made to the general valuation rules, and these are commented upon in relevant notes. When applying the accounting policies and disclosure of transactions and other items, the “substance over form” rule is applied. Contingent losses that are probable and quantifiable are expensed. The segmentation is based on Norfund’s internal management and reporting requirements as well as on risk and earnings. Figures are presented for geographical markets, since the geographical distribution of activities is of material importance to the users of the financial statements.

Principles for revenue recognition

Operating income includes dividends, gain on sale of shares/ownership interests in other companies, interest on loans made to other companies, directors’ fees and other project income.

Gains on sales of shares/ownership interests in other companies are recognised in the year in which the sale takes place.

Changes in the value of investments in funds are calculated for the individual fund as they arise. Receipts are recorded either as dividend or as reflow of capital which is deducted from the book value.

Interest is recorded as and when it is estimated to be earned. When loans to development projects are classified as problem loans, a decision is taken as to whether interest should continue to be recorded. If the evaluation indicates that interest cannot be expected, no accrued interest is recorded. In the event of known losses, recorded interest is reversed.

Front-end fees invoiced when a loan is set up are recognised over the life of the loan. If the loan is redeemed, any remaining part of the fee recorded on the balance sheet is taken to income.

Financial income and expenses

Interest on Norfund’s liquidity reserve in Norges Bank and other banks, plus income from other liquidity deposits and seller credit, is recorded as financial income.

Project development expenses

Development expenses are entered on the balance sheet when it is probable that they will lead to future investments and a positive return on the investment. Determining such probabilities entails using judgement based on experience and best estimate of future developments. In view of Norfund’s investment strategy and geographical investment areas, expectations of future developments are shrouded in uncertainty.

Equity investments

Pursuant to Norfund’s Statute 12, Norfund’s injection of capital into a portfolio company shall not exceed 35 per cent of the company’s total equity. Norfund’s share of the equity may be higher in special cases, but nonetheless such that the Fund’s total equity holding does not exceed 49 per cent of the portfolio company’s total equity.

Norfund treats its equity investments in other companies as current assets. In other words, the equity method is not used, even though Norfund’s shareholdings provide it with considerable influence. This is because the purpose with the investments is to dispose of all or part of each investment, normally after 3–10 years. According to generally accepted accounting practice, such investments are temporary by their very nature and should therefore be included under current assets.

Substantial uncertainty is associated with the valuation of Norfund’s investments, which consist almost exclusively of equities that are not listed, or that are traded in non-liquid markets. Investments are valued on the basis of available information, in accordance with the International Private Equity and Venture Capital Valuation (IPEV) guidelines.

Equity investments in companies are valued at the lower of historical cost or assumed fair value in Norwegian kroner (NOK) on the basis of a concrete evaluation of each investment. Norfund makes individual valuations of all its investments, and adjusts the value on the basis of the assets’ assumed fair value.

Because of the nature and volume of the investment portfolio, the management calculates estimates, makes discretionary assessments and makes assumptions that affect the book values of investments. Estimates of fair value are calculated continuously and are based on historical experience, known information and other factors that are regarded as probable and relevant on balance sheet date. No group write-downs are made on the company’s equity investments.

When investments are exited wholly or in part, the gain/loss is calculated on the basis of the original cost in NOK compared with the exchange rate on the date of the exiting transaction. This means that gain or loss presented in the accounts will be a function of changes in exchange rates and the change in the value of the investment expressed in foreign currency. See also the section ‘Forex items’ below.

By “committed investments” is meant an external future commitment for a specified amount. Commitments are not entered on the balance sheet as they are uncertain, and Norfund may make them subject to the fulfilment of specific criteria.

Norfund often utilises various instruments – such as options, conversion options and so forth – in investment agreements in order to reduce risk. These are taken into account when valuing the individual investment.


Loans forming part of Norfund’s investment portfolio are regarded as current assets and carried at amortised cost according to the straight-line allocation method.

When estimating write-down of loans, both the current and the anticipated future financial position of the borrower in question are considered. Key considerations when assessing whether the client will be able to repay the loan are for example the general market situation, company-specific factors, the risk of bankruptcy and associated collateral.

If it is laid down in the agreement, accrued interest will be capitalised and added to the principal.

Valuations and any write-downs are made for the individual loans. Group write-downs are not made on the company’s loan portfolio.

There will be uncertainty associated with valuation of the loan portfolio and associated collateral.


In some cases, Norfund issues guarantees in connection with investments. Accounting provisions are made when the likelihood of the guarantee being invoked is 50% or higher. On the balance sheet, the guarantee provision is entered under ‘Other current liabilities’.

Known losses on equity investments and loans

Losses as a result of insolvency, the winding-up of a company and the like, and losses on sale of shares are recorded as known losses.

Forex items

Bank deposits and other short-term investments are recorded at the exchange rate at the end of the accounting year, and any unrealised gain/loss on these is recorded as financial income or expense.

Unrealised exchange rate gain/loss on loans as part of the investment portfolio is presented as part of the operating results as gain/loss on exchange on loans to projects.

In the valuation of equity investments, changes in value as a result of the exchange rate  are presented as part of the operating results.

Since 2021 Norfund has had a fair-value hedge against USD for a bond portfolio consisting of securities denominated in EUR and GDP as well as USD. Futures contracts are used as a hedging instrument, with daily settlements that are not recorded on the balance sheet, but are recorded on the income statement as they mature.

Bank deposits and other short-term investments

Liquid assets consist of bank deposits without any kind of binding.

Other short-term investments consist of instruments (time deposits, loans and bonds) with a longer or shorter fixed term intended for temporary placement of surplus liquidity intended for investment within Norfund’s mandate. Interest income from these is recorded as other financial income.

Current receivables/Accounts receivable

Current receivables, seller credit and accounts receivable are recorded at their estimated value.

Fixed assets

Fixed assets are recorded at historical cost reduced by commercial depreciation based on the estimated economic life of the asset in question.


Rent paid under leases that are not recorded on the balance sheet is treated as an operating cost and allocated systematically over the whole term of the lease.


Norfund’s capital is divided into primary, reserve and surplus capital. This breakdown is made on the basis of the framework conditions for Norfund’s activities, which specify that the Ministry of Foreign Affairs must be notified if the institution’s losses are so great that its primary capital is affected. Any net profit is added to surplus capital, while any net losses are deducted from the surplus capital or from reserve capital if the former fund is insufficient to cover the net loss.

Government grants

Norfund receives government grants that are treated in accordance with Norwegian Accounting Standard 4 (NRS 4).  In Norfund’s view, net recording of government grants received by the institution provides the best picture of the accounts.

Related parties

Two parties are related if one party can influence the other’s decisions. Relations between such parties are regarded as normal in business.

Norfund’s related parties are classified as investments, and Norfund buys services from or sells services to these companies. The company has direct transactions with a limited number of companies in its investment portfolio. There are some transactions of an administrative nature with companies we have a stake in, including Norfinance AS, KNI India AS and KLP Norfund Investments AS. All transactions are according to separate agreements and pricing based on the arm’s length principle.

Deferred tax and tax expense

Norfund is exempt from tax pursuant to a separate section in the Taxation Act. In certain countries, Norfund is obliged to pay withholding tax on interest and dividends.

Cash flow statement

The cash flow statement is compiled using the indirect method.

Pension obligations and costs

Norfund has pension plans known as defined benefit plans which entitle employees in Norway to defined future benefits. In 2018 the company closed its defined benefit plan and introduced defined contribution plans for new employees in Norway. The company therefore has two different pension schemes for employees in Norway. In addition the company has defined contribution plans for employees at regional offices outside Norway.

Pension obligations are calculated on a straight-line earnings basis, taking into account assumptions regarding the number of years of employment, discount rate, future return on plan assets, future changes in pay, pensions and National Insurance benefits, and actuarial assumptions regarding mortality, voluntary retirement etc. The chosen principle is the IAS 19R option of NRS 6, with unamortised actuarial losses over equity.

Plan assets are stated at fair market value. Net pension obligation comprises gross pension obligation less the fair value of plan assets. Net pension obligations from underfunded pension plans are included on the balance sheet as a provision, while net plan assets in overfunded schemes are included as long-term interest-free receivables if it is likely that the overfunding can be utilised. Employer’s social security contribution is made on the basis of net plan assets.

The effect of changes in pension plans with retroactive effect not conditional on future earnings is defined as an actuarial gain or loss and charged directly to the company’s equity.

Net pension expenses, which consist of gross pension expenses less estimated return on plan assets, are classified as an ordinary operating expense and presented as part of the payroll expenses item. All actuarial gains or losses are charged directly to the company’s equity. Employer’s social security contribution is calculated on contributions paid to the pension plans.

Estimates and uncertainties

Determining estimates and probabilities entails using judgement based on experience and best estimate of future developments. Given Norfund’s investment strategy and geographical investment areas, there is a high degree of uncertainty associated with expectations regarding future developments. Specific areas that include extensive estimation and judgement are net asset value / valuation of equity investments, write-down on equity investments and provision for losses on loans to investment projects.