Kapittel 2012
1 annual report selvaag bolig 2012 Kapittel
Norway’s leading housebuilder
Selvaag Bolig ASA is a residential property developer controlling the entire value chain from acquisition of land to sale of homes. Bergen The company has several thousand homes Oslo under construction at any given time, and focuses on the growth areas in and around Stockholm Stavanger Greater Oslo, Bergen and Stavanger.
Selvaag Bolig represents a continuation of the Selvaag group’s 60-year history and experience, and offers a broad variety of property types marketed under the brand names Start, Hjem and Pluss.
Selvaag Bolig is headquartered at Løren in Oslo, Norway.
www.selvaagbolig.no/investor
2 Consolidated Financannualial Statements report selvaag Selvaag bolig Bolig 2012 ASA
Contents
Organisation and board 4 CEO letter 7 Organisation 8 Selvaag Bolig – the business 12 Corporate governance
Financial: group 18 Directors’ report 24 Statement of comprehensive income 25 Statement of financial position 26 Statement of changes in equity 27 Statement of cash flows 28 Notes
Financial: company 60 Statement of comprehensive income 61 Statement of financial position 63 Statement of changes in equity 64 Accounting principles 65 Notes
Auditor’s report 76 Auditor’s report
3 CEO letter Strong year and good prospects
Selvaag Bolig strengthened its position as Norway’s leading housebuilder during 2012. It secured a listing on the Oslo Stock Exchange, and exceeded market expectations for profit, housing starts and sales.
The company experienced solid and stable housing units on the outskirts of cities in areas demand for homes in its priority areas in and experiencing growth pressures. around Greater Oslo, Stavanger and Bergen, Selvaag Bolig is very well equipped to meet where housing need is the highest in Norway. the housing market’s needs, both today and Demand was driven by good macro-economic tomorrow. It has land in the right locations, conditions combined with strong population a strong brand and an industrial approach to growth and housing shortages. Margins housebuilding, all of which provide substantial nevertheless vary widely between housing competitive advantages. About 30 per cent of developers in these regions. the company’s homes were built in 2012 with Selvaag Bolig’s very good results are partly the aid of prefabricated modules supplied by the result of its well-focused housing concepts partners. That substantially reduced construction which meet different needs in different parts of costs in this part of the portfolio, and allowed the market, its ability to deliver homes people the company to reach more home buyers. In want at a price they can afford to pay, and not line with the market’s need for cheaper homes, least the experienced and able personnel it Selvaag Bolig will step up its commitment to employs in all key positions. At the beginning of modular buildings. 2013, the company is well equipped financially, The company draws on 60 years of experience, operationally and organisationally to maintain where the aim has always been to build homes and strengthen its position as market leader. for ordinary people. “Standardisation” and In coming years, high building costs and “rational housebuilding” are the most important reduced purchasing power in certain population keys to managing just that today, as they have groups will mean that many people are unable been in the past. to afford to buy a home. The Oslo/Akershus Selvaag Bolig is looking forward to the region alone will have 370 000 new residents in continuation. 2030, with most of this growth as a consequence of labour immigration and family reunification. While the purchasing power of these groups is relatively high, it is nevertheless below the Norwegian average. In order to give as many people as possible in these groups the Baard Schumann opportunity to invest in their own home, it CEO will be necessary to build cheaper and smaller
4 Kapittel
Selvaag Bolig’s executive management: Sverre Molvik, Halvard Kverne, Anne Grethe Storaker, Baard Schumann, Haavard Rønning and Petter Cedell.
5 Organisasjon
6 Organisation
Board
Baard Schumann President and CEO*
Haavard Rønning CFO*
Trond Stensrud Petter Cedell Anne G Storaker Halvard Kverne Sverre Molvik General manager Vice president Vice president sales Vice president port- Vice president port- Selvaag Bolig property investment* and marketing* folio management* folio management* Modulbygg**
Jørgen Blix General manager Meglerhuset Selvaag**
Anders Haavik * Member of the executive management General manager ** Reports directly to the president and CEO Pluss Service**
7 the business
Selvaag Bolig – the business
Business model/strategy by external sub-contractors in Estonia high standards for quality at all levels Selvaag Bolig develops and offers and Poland, with many years of internally, and applies comprehensive housing concepts tailored for specific production experience and modern quality requirements for products and customer groups in and around the factories. A strong focus on detailed operations at its sub-contractors. That growth areas of Oslo, Stavanger and planning, standardisation, duplication helps to reduce the risk of error in its Bergen. It buys and develops new of projects and strategic site devel- projects, while ensuring that techni- housing sites and, through the purchase opment helps to ensure low building cally better houses are built and that all of services from sub-contractors, takes costs and good project margins for the homes from Selvaag Bolig are energy responsibility for the whole value chain company, and sensible house prices efficient. from buying land to selling occupation- for end customers. Selvaag Bolig sets ready homes.
Housing concepts tailored to the market Selvaag Bolig’s housing concepts
Through its Start, Hjem (Home) and • Reasonably priced flats Pluss concepts, Selvaag Bolig offers • Low-cost sites on the periphery of the big cities homes to a broad range of customer groups in the housing market. It also • Largely module-based develops housing projects which • Aimed at young first-time buyers combine the various concepts. This pro- vides a range tailored to the market and helps to optimise the sales and income • Flats and small houses in built-up areas profile of each project. • Established housing solutions with solid quality and the emphasis on the living environment Industrial approach • Modular and site-built • Single people and couples of all ages, with and Selvaag Bolig takes an industrial without children approach to housebuilding. This has helped to position it as a cost-effective • Flats in central and attractive locations in big cities player, well equipped to meet possible • High quality and standard, with a service concept fluctuations in the housing market. • Site-built The company’s housing projects • Aimed at well-off people who value comfort and are increasingly based on modules, convenience which helps to minimise construction costs. These modules are delivered
8 the business
6–36 MONTHS 6–12 MONTHS 3–9 MONTHS 12–24 MONTHS
Acquire and
o p m e n t Marketing refine land for Project design Construction e l
v and sale
R e s i d n t a l development d e a l u e e a t i o n
V Zoning Sales start Construction start Deliveries c r
Value creation at Selvaag Bolig concepts have yielded positive sales and and the rise in the share price, which a favourable selling pace. Selvaag Bolig is competitive with comparable invest- See diagram above. normally seeks to sell 60 per cent of a ments. Its long-term goal is to pay a project within a six-month sales period. dividend of up to 50 per cent of its net Value drivers That pace indicates an “appropriate” profit. Nevertheless, securing positive balance between price and housing financial freedom of action for the The company’s strategy for buying and standard in the projects. company will be important, and this developing new sites is central to value As far as possible, Selvaag Bolig seeks consideration could mean a somewhat creation at Selvaag Bolig. Its existing to utilise modules in the development lower dividend payment in the short land bank is large enough to ensure and construction of its housing projects. term than would be indicated by the a high level of activity in the time to In addition to reducing the level of costs, long-term objective. come. That allows the company to be modular construction contributes to selective in choosing new sites, and optimising operations through standardi- Risk management particularly to be critical about the way sation. The latter also permits increased such land fits with the existing portfolio re-use of building designs, with a further Selvaag Bolig works actively to minimise while also meeting the market require- reduction in costs. the risk of cost overruns and delays ments prevailing at any given time for in ongoing projects. A high degree of location, size, price and development Goals standardisation in its housing concepts, potential. Land purchases are often combined with considerable detailing structured as options, where Selvaag Selvaag Bolig aims to be Norway’s in the specifications to contractors, Bolig takes responsibility for securing leading housebuilder. It sold just over helps to reduce the risk of delays in the planning permission and the trans- 1 000 homes in 2012. A total of 776 construction process. The company also action is finalised when this has been units were delivered, while building seeks to establish long-term relation- obtained. Generally speaking, land with began for 845. Based on current and ships with a limited number of large existing planning permission is avoided planned projects, the company will contractors. Repetitive production of and any exceptions must fit well with be delivering around 1 500 homes in standardised projects involves continuous the company’s strategy before being 2015. It is experiencing generally good learning at the contractors and contributes considered. Most of the sites assessed by demand in its projects, and sees that to ever more efficient project execution Selvaag Bolig are offered directly to it its strategy helps to secure the position while further reducing the risk of errors by landowners. Generally speaking, the of market leader and to strengthen its and delays. In addition, mainly turnkey company seeks to avoid open auction competitiveness. terms are used when contracts for site- rounds since these often inflate prices. built projects are entered into. In this way, The company’s sales strategy played Dividend policy Selvaag Bolig achieves good predict- a key role in its good progress during ability in its projects. The great bulk of 2012. Segmentation of housing schemes Selvaag Bolig’s aim is to manage the project costs are normally hedged through and optimising composite projects group’s resources so that shareholders a turnkey contract when advance sales which bring together various housing secure a return, in the form of dividend reach 60 per cent and construction begins.
9 the business
External risk factors mean that many buyers turn to more favourably priced homes on the urban Macro-economic conditions for Norway fringes in these areas. The combination are good, with low interest rates, low of high immigration with the fact that unemployment, high pay growth and immigrant incomes are 20-30 per cent increased purchasing power for house- lower than the national average makes holds. Combined with high population it even more important to build a larger growth and low housing construction number of smaller homes in and around in areas experiencing growth pressures, the big cities. this contributes to a big demand for new housing and could help to boost house Key figures prices even further. Selvaag Bolig sold 1 011 homes in However, experience from earlier 2012. Construction started on 845 units, years indicates that negative shifts could and 776 were delivered to customers. occur in demand despite solid under- The company has an expressed goal lying market conditions. This is because of achieving a project margin of 12 per consumer perceptions of the market are cent for site-built homes and 16 per out of step with actual conditions. Much cent for modular buildings. An average attention paid to risk and bubble ten- project margin above these targets was dencies could help to change consumer achieved in 2012. The high margins views on the market and thereby have a achieved on projects in 2012 are negative effect on demand. regarded as extraordinary, and margins The biggest increases in house prices are expected to stay around the target and demand during 2012 occurred in percentages in years to come. and around Oslo, Stavanger and Bergen. These areas close to the respective city centres have the highest population growth in Norway. According to Sta- tistics Norway, they will have a persis- tently strong demand for new housing in coming years. High house prices could
(amounts in NOK 1 000) 2012 2011
Operating revenues 2 812 020 309 822 Operating profit 489 594 7 140 Pre-tax profit/(loss) 448 129 (28 975)
Interest-bearing debt 2 830 298 3 565 928 Total assets 5 734 865 5 424 738 Equity ratio 37.4% 24.2%
Total units sold 1 011 648 Total units started 845 776 Total units delivered 776 78 Total units completed 792 80
10 Konsernregnskap
11 Corporate governance Corporate governance in Selvaag Bolig
Selvaag Bolig wishes to maintain a high Norwegian code of practice for corporate subject is covered in the ethical guide- standard of corporate governance. This governance (the code). Listed companies lines and in policy documents related to strengthens confidence in the company, are required by the Oslo Stock Exchange the company’s values base. and contributes to long-term value crea- to provide an annual overall presentation More information related to the com- tion by regulating the division of roles of their principles for corporate govern- pany’s vision, strategy, values and CSR between shareholders, board and execu- ance in line with the prevailing code. can be found on its website at www. tive management over and above legal The current obligations for listed com- selvaagbolig.no. and regulatory requirements. panies are available at www.oslobors. The group’s general policy is that Corporate governance in Selvaag no, and the NCGB code can be found at no unequal treatment or other forms of Bolig is based on the following main www.nues.no. discrimination will occur on the basis of principles. Selvaag Bolig observes the appli- gender or ethnic background. cable code, published on 23 October Selvaag Bolig maintains a special • Relevant, reliable and identical 2012, in accordance with the “comply focus on environmental considerations communication about Selvaag or explain” principle. This means that in pursuing its housing development Bolig’s business and corporate the individual points in the code are activities, and has incorporated concern governance. observed, but possible variances are for the natural environment in its plan- • The independence of Selvaag accounted for. The company provides ning and management systems. Bolig’s board from the company’s an annual overall presentation of its executive management. principles for corporate governance in 2. The business • A clear internal division of roles and its annual report, and this information is duties between board and executive available at www.selvaagbolig.no. The business purpose of Selvaag Bolig management. is “to acquire and develop housing • All shareholders treated equally Values base, ethical guidelines and projects with a view to sale, to buy and and in accordance with applicable CSR sell real property, and other activities legislation. Ethical guidelines and other policy docu- associated with this, including business ments have been formulated in accord- property. The company can participate 1. Implementation and report- ance with the company’s values base. in other companies at home and abroad ing on corporate governance The company’s core values are concern related to housing development”. This for others and creativity, and these are appears in article 3 of the company’s Compliance well entrenched throughout the business. articles of association, which are avail- Selvaag Bolig regards corporate gov- The ethical guidelines contain gen- able on the company’s website at sel- ernance as an important subject, which eral principles for business practice and vaagbolig.no. Selvaag Bolig’s goals and deals with the relationship between personal behaviour, and are intended to principal strategies are described in this society, the shareholders, the board of serve as a starting point for the attitudes annual report and on the website at sel- directors and the executive management and basic views which will permeate vaagbolig.no. Through annual strategy of the company. Selvaag Bolig’s corporate culture. processes, the board considers whether Selvaag Bolig ASA is a Norwegian Selvaag Bolig is also concerned with the goals and guidelines derived from public limited liability company listed on its corporate social responsibility (CSR), the strategies are unambiguous, ade- the Oslo Stock Exchange. The company and wants to build homes in a positive quate, well operationalised and compre- is subject to section 3, sub-section 3b of manner which creates the greatest possi- hensible to the employees. the Norwegian Accounting Act, which ble “residential value” for its customers. requires it to provide an annual state- Continuous efforts are made to minimise 3. Equity and dividends ment of its principles and practice for emissions, discharges and environmental corporate governance. This rule speci- pollution. At the same time, the company Selvaag Bolig had an equity of NOK 2 fies the minimum information which the is an active driver in the social debate 146.6 million at 31 December 2012. The presentation must provide. on housing issues, and speaks on behalf board regards this as acceptable in rela- The Norwegian Corporate Governance of its customers. No separate guidelines tion to the company’s business purpose, Board (NCGB) has established the on CSR have been drawn up, since this strategy and risk profile.
12 Corporate governance
Dividend Selvaag Bolig has one class of shares and make this known to the shareholders. Selvaag Bolig’s aim is to manage the all the shares have equal voting rights. Transactions with close associates are group’s resources so that shareholders Emphasis is given in the work of the reported in note 23 to the financial state- secure a return, in the form of dividend board and the executive management to ments in the company’s annual report, and the rise in the share price, which treating all shareholders equally and to and in the half-year report. is competitive with comparable invest- giving them the same opportunities to ments. Its long-term goal is to pay a exercise influence. The company’s arti- Principal shareholder dividend of up to 50 per cent of its net cles of association impose no restrictions Selvaag Gruppen AS is the principal profit. Nevertheless, securing positive on voting rights. shareholder in Selvaag Bolig ASA, and financial freedom of action for the com- The company’s transactions in its Selvaag Bolig ASA is a subsidiary of pany will be important, and this consid- own shares are conducted via the stock the Selvaag Gruppen group. The board eration could mean a somewhat lower exchange or in other ways at the stock considers it positive to have an active dividend payment in the short term than market price. In the event of an increase owner which emphasises development would be indicated by the long-term in share capital, existing shareholders and value creation in the Selvaag Bolig objective. will have a pre-emptive right to subscribe group, and believes that this benefits all The board has proposed that no divi- unless special considerations justify the shareholders through long-term and dend be paid for fiscal 2012. waiving this right. Any such waivers purposeful decisions. Selvaag Gruppen will be justified and published in a stock may require information about Selvaag Purchase of Treasury shares exchange announcement in connection Bolig in order to manage the develop- The board of Selvaag Bolig was man- with the increase in share capital. ment of the Selvaag Gruppen group in a dated by the annual general meeting satisfactory manner. of 19 April 2012 to buy the company’s Transactions with close associates own shares up to a value of NOK To protect the company’s reputation, 5. Freely negotiable shares 13 637 358, corresponding to about 10 Selvaag Bolig is concerned to maintain per cent of the share capital. This man- an open and cautious approach to invest- No restrictions are placed on the negotia- date can be exercised in connection with ments on terms which could be perceived bility of shares in Selvaag Bolig ASA by possible later reductions in the share as an undesirably close transaction or its articles of association. capital with the approval of the general relationship between the company and meeting, for remunerating directors, for a director, a senior executive or close 6. General meetings incentive programmes or for settlement associates of these. This is outlined in of possible business acquisitions, and the company’s ethical guidelines and About the general meeting for purchasing shares when this is finan- instructions for the board. Each director is Shareholders exercise the highest author- cially advantageous. The mandate can duty-bound to assess at all times whether ity in Selvaag Bolig ASA through the be exercised several times, and remains conditions exist which could objectively general meeting. The board makes provi- valid until the AGM in 2013. weaken general confidence in their impar- sion to ensure that the general meeting is tiality or which could give rise to conflicts an effective forum for shareholders and Capital increase of interest. The company also monitors directors. The same AGM mandated the board to the various offices and the like held by raise the company’s share capital by up directors as a source of information for Notice to NOK 63 208 552. This mandate can the executive management in avoiding The AGM for 2012 is scheduled to take be exercised several times, and remains unintentional conflicts of interest. place on 10 April 2013. valid until the AGM in 2013. It replaces Where transactions take place with Notice of meetings is sent to the share- earlier mandates for similar purposes, close associates, they must be conducted holders by post and is made available on and embraces capital increases in at arm’s length and on market terms. The the company’s website 21 days before exchange for assets other than money or board has guidelines which ensure that the general meeting at the latest. Detailed the right to incur special obligations for executive personnel report to the board supporting documentation relating to the company. if they have a material interest, directly items on the agenda, including the nomi- or indirectly, in a contract entered into by nation committee’s recommendations, 4. Equal treatment of share- the company. In the event of not immate- are posted to the company’s website 21 holders and transactions with rial transactions between the company days before the general meeting at the close associates and close associates, the board will com- latest. See article 9 in the articles of asso- mission an independent valuation and ciation. A shareholder can nevertheless
13 Corporate governance
request that supporting documentation April, and about 74 per cent of the total must encompass relevant information for the general meeting be sent to them issued shares and votes were represented. about the candidates and an assessment by post, and this right is enshrined in the Deviation from the code: According to of their independence from the com- company’s articles of association. The the code, the board, the nomination com- pany’s executive management and board. supporting documentation must contain mittee and the auditor should attend. The The committee should also entrench its all the details required by the sharehold- chairs of the board and the nomination recommendations with the company’s ers to form a view of every item on the committee, as well as the chief executive, largest shareholders. The committee’s agenda. are always present to answer possible recommendations, with justifications, All shareholders registered in the question. The whole board will attend if are made available 21 days at the latest Norwegian Central Securities Depository this is considered necessary in view of before the general meeting takes place. (VPS) will receive the notice, and have items on the agenda. Recommendations from the committee the right to submit motions and to vote must meet the requirements for the com- directly or by proxy. A financial calendar, 7. Nomination committee position of the board which derive at any which includes the date of the AGM, is given time from applicable legislation available on the company’s website. Article 7 of the articles of association and statutory regulations. specifies that the company will have a Registration and proxy form nomination committee. Guidelines have 8. Composition and independ- Registration must be made in writing, by been established on this committee’s ence of the board post, telefax, VPS account or e-mail. The duties and composition, and on the eli- board wishes to facilitate attendance by gibility of candidates for election. These Composition of the board the largest possible number of sharehold- guidelines were adopted by the general Pursuant to article 5 of the company’s ers at the general meeting. Shareholders meeting held on 30 August 2011. articles of association, the board of who cannot attend in person are encour- Pursuant to the articles of association, Selvaag Bolig will comprise three-nine aged to appoint a proxy. Provision is the nomination committee will have members. The chair and the shareholder- made for the shareholder to specify three members elected for a two-year elected directors are elected by the gen- separate voting instructions to their proxy term. Its composition it must be inde- eral meeting, based on recommendations for every item on the agenda. All infor- pendent of the company’s board and from the nomination committee. mation on the appointment of a proxy executive management, and must act in The board currently comprises eight and the appropriate forms can be found the interests of shareholders in general. directors, of whom four are women. on the company’s website. The chair of the nomination committee Selvaag Bolig’s board is composed in is elected by the general meeting, which such a way that it meets the company’s Agenda and execution also determines the remuneration of the need for expertise, capacity and diversity. The general meeting elects its own chair. committee’s members. The nomination Weight is given to the possession by the The meeting is opened by the chair of committee itself recommends members board as a whole of a broad business the board, who also arranges for the of the committee. and management background as well as election of a chair for the meeting. The The present committee was elected in-depth understanding of the housing AGM’s duties include adopting the at the AGM of 19 April 2012, and com- industry and property development. An annual financial statements and direc- prises overview of each director’s expertise, tors’ report, and considering the board’s • Steinar Mejlænder-Larsen (chair) background and shareholding in the declaration on the determination of • Bjørn Havnes company is available on the company’s executive pay and other remuneration. • Helene Langlo Volle. website at www.selvaagbolig.no and Members of the nomination committee The duties of the nomination commit- in this annual report. Employees of the and its chair are elected by the general tee are to propose candidates for election business are represented on the board, meeting. In addition, the general meet- as directors and to recommend fees for and the number of these worker direc- ing considers such other matters as are the directors, members of board sub- tors is specified in the applicable agree- assigned to it by legislation or the articles committees and members of the nomina- ment on pay and conditions. At present, of association. The minutes of the gen- tion committee. The report of the board’s two worker directors are elected by the eral meeting are published via a stock annual self-assessment is considered employees. None of the shareholder- exchange announcement and are made by the committee. The committee will elected directors are employed by or have available on the company’s website at account for its work and present its rec- carried out work for Selvaag Bolig. www.selvaagbolig.no after the meeting. ommendations, with justifications, to the Both shareholder- and employee- The AGM in 2012 took place on 19 general meeting. The recommendations elected directors are elected for two-year
14 Corporate governance
terms. Directors’ fees are determined guidelines, and with the expectations the group’s assets are managed in an by the general meeting on the basis of a of the owners for socially responsible acceptable manner. The chief executive recommendation from the nomination operation. The board has a duty to ensure is appointed by the board of directors and committee. that the accounts and asset manage- reports to it. The chief executive is duty- ment are subject to satisfactory controls. bound to keep the board continuously Independence of the board Matters of significant strategic or finan- informed on the group’s financial posi- The composition of the board ensures cial importance are dealt with by the tion, operations and asset management. that it can act independently of special board. The board will protect the interests The pay and other benefits of the chief interests, and it must also function effec- of the shareholders while also having a executive are determined by the board. tively as a collective body to the benefit responsibility for the company’s other The authority and responsibilities of the of the shareholders in general. stakeholders. chief executive are specified in instruc- No shareholder-elected director is A total of 17 board meetings were tions adopted by the board. The board has involved in the executive management. held in 2012, including 10 conducted also approved an authority structure for The chair, Olav H Selvaag, is an execu- as electronic sessions with no physical the company which clarifies the authority tive vice president of Selvaag Gruppen, gathering. Attendance was about 90 per of the chief executive and the executive and director Karsten Bomann Jonsen is cent. All the directors were present for 10 management in terms of which issues the chief executive of Selvaag Gruppen. of the meetings. must be considered by the board. Selvaag Gruppen is the company’s prin- The board also appoints the chief cipal shareholder and, through subsidi- executive, establishes the instructions, Financial reporting aries and other investments, may have authority and conditions of employment The board receives periodic reports business relations with Selvaag Bolig as for the chief executive, and determines with comments on the company’s finan- a supplier. the chief executive’s remuneration. cial status. Where interim reporting is The other shareholder-elected direc- concerned, the company observes the tors are independent of Selvaag Bolig’s Instructions for the board deadlines specified by the Oslo Stock executive management and significant The board has adopted instructions Exchange. business relations. which specify the rules and guidelines See note 22 to the annual financial for its work and administrative proce- Board committees statements for information on the share- dures. These are reviewed annually or as The board has found it appropriate to holdings of directors in Selvaag Bolig required. The instructions for the board establish sub-committees to serve as at 31 December 2012. By virtue of their define the duties and obligations associ- preparatory and advisory bodies for the position, each director is subject to the ated with its work, and its relationship board. regulations on primary insiders, with with the chief executive. The chair is clear rules related to such issues the duty responsible for ensuring that the work of Audit committee to investigate and report in the event of the board is conducted in a correct and The audit committee is elected by and trading in the company’s shares. efficient manner. The board works on the from among the directors, and must basis of an annual plan, with specified comprise at least three directors. At least 9. The work of the board of topics and issues for board meetings. The one of these should have experience from directors board evaluates its work and competence the exercise of accounting or financial on an annual basis. This is done through management, or of auditing. Members The board’s duties a self-assessment which is summarised of the audit committee are appointed by The board of directors bears the ulti- for the nomination committee. At least the board for two-year terms or until they mate responsibility for management of once a year, the board reviews the most cease to be directors of the company. The the group and for supervising the chief important areas of risk as well as internal audit committee currently comprises the executive and the group’s operations. control in the company. following members: That makes the board responsible • Gisele Marchand (chair) for ensuring an acceptable organisation Instructions for the chief executive • Karsten Bomann Jonsen of the business and determining strate- The chief executive of Selvaag Bolig AS • Wenche Kjølås. gies, plans and budgets. Furthermore, is responsible for the executive manage- The audit committee serves as a pre- the board is responsible for establishing ment of the Selvaag Bolig group. The paratory and advisory body for the board. control systems and for ensuring that the chief executive must also ensure that It will (a) prepare the board’s follow-up group is operated in compliance with the accounts comply with legislation of the financial reporting process, (b) the established values base and ethical and other relevant provisions, and that monitor the systems for internal control
15 Corporate governance
and risk management, (c) maintain ongo- reporting and compliance with applicable processes and projects are integrated in ing contact with the company’s elected legislation and regulations. The board is the Selvaag Bolig group’s commercial auditor concerning the audit of the annual required to conduct an annual review of operation. Construction projects report accounts, and (d) assess and monitor Selvaag Bolig’s risk management and systematically to the group management. the independence and objectivity of the internal control. Internal control also Selvaag Bolig’s consolidated financial auditor in relation to the company, and embraces the company’s values base, statements are prepared in accordance particularly the extent to which services CSR and ethical guidelines, which apply with the applicable IFRS. The board other than audit provided by the auditor to all employees. receives periodic reports on the group’s represent a threat to the latter’s independ- financial results as well as a descrip- ence and objectivity in relation to the Board reviews and reporting tion of the status of the most important company. The audit committee met three An annual strategy meeting is held by individual projects. In addition, quar- times in 2012. Selvaag Bolig to lay the basis for the terly financial reports are prepared and board’s consideration and decisions reviewed by the board ahead of interim Compensation committee during the year. The most important risk reporting. The auditor attends meetings A compensation committee has also been exposure areas and the internal control of the audit committee and board meet- established, comprising two directors system are reviewed at this meeting. ings related to the presentation of the who are independent of the company’s A comprehensive survey of the com- interim annual financial statements. The executive management. The members pany’s risk factors and management was company’s key risk factors are described of the compensation committee are initiated in the autumn of 2012 and com- in the directors’ report. appointed by the board for two-year pleted in February 2013. This exercise terms or until they cease to be directors will occupy a key place at the board’s 11. Remuneration of the board of the company. The compensation com- strategy meeting for 2013, and define the of directors mittee currently comprises the following direction of further work on the com- members: pany’s risk management. An overarching The general meeting determines direc- • Olav H Selvaag management model has been established tors’ fees annually on the basis of a • Ole Rettedal. for continuous follow-up, based on the recommendation from the nomination The compensation committee serves as group’s strategy, values base and ethical committee. a preparatory and advisory body for the guidelines. In addition, principles have A total of NOK 980 000 was paid in board, which prepares issues for consid- been drawn up for reporting in the key directors’ fees for 2012. Fees paid to each eration and decision by the board con- areas, as well as guidelines for central director are presented in note 22 to the cerning remuneration for the company’s processes and activities. An authority annual financial statements. Directors’ executive management and associated matrix has also been established for del- fees are not linked to the group’s perfor- matters. The compensation committee egating responsibilities to defined roles mance. No options are awarded to direc- helps the board to shape principles and in the organisation. All employees have tors, and shareholder-elected directors strategies for remunerating senior execu- clear guidelines on the scope of their own have no agreement on a pension plan or tives. While the compensation committee authority and on the next level up for payment after their period of service has reports and makes recommendations to decisions or approvals. ended. None of the shareholder-elected the board, the latter is responsible for Selvaag Bolig has established a set of directors do work for the company in acting on such proposals. The company internal procedures and systems which addition to their directorship. has drawn up separate instructions for the are intended to secure uniform and reli- Directors observe general insider compensation committee’s work, which able financial reporting and operations. regulations for trading in the company’s contain further details on the committee’s A quality assurance system has also been shares. See note 22 to the consolidated duties, composition and procedures. established to safeguard quality when financial statements for an overview of executing the group’s projects. One shares owned by directors. 10. Risk management and component of this system is a review, internal control conducted at least once a quarter, of risk 12. Remuneration of executive in the projects and other parts of the personnel Responsibility and purpose of the board business with a view to securing reliable Risk management and internal control financial reporting and, if required, speci- As mentioned in section 9, a compensa- in Selvaag Bolig are intended to help fying necessary risk measures. Planning, tion committee comprising two direc- ensure that the company takes a coher- management, execution and financial tors has been established to support ent approach to its operations, financial follow-up of construction and production the board’s work on the conditions of
16 Corporate governance
employment for the chief executive and of April at the latest. Interim figures are 15. Auditor on the strategy for and main principles of reported within 60 days of the end of the remuneration for the company’s senior quarter, in accordance with the rules of The group’s auditor is elected by the executives. The group’s guidelines for the Oslo Stock Exchange. general meeting. The board’s audit the remuneration of executive personnel A financial calendar is published by the committee will present its report when are described in note 22 to the consoli- company for a year at a time, before 31 the general meeting comes to elect dated financial statements. December as required by the rules of the the auditor. Selvaag Bolig’s auditor is The main element in the remuneration Oslo Stock Exchange. This calendar is PricewaterhouseCoopers. scheme is fixed basic pay. Variable pay available on the websites of the company takes the form of bonus payments, based and the Oslo Stock Exchange. Auditor’s relationship with board and on objective, definable and measurable The primary purpose of information audit committee criteria. Such variable pay (bonuses) from the company will be to clarify the No qualifications have ever been made in cannot exceed 60 per cent of basic pay company’s long-term goals and potential, the auditor’s report. for the executive management and 67 per including its strategy, value drivers and The auditor gives the board an account cent for the chief executive. No options important risk factors. The company’s of its work and provides an assessment have been awarded to employees or guidelines for investor relations provide of the company’s financial reporting elected officers of the company. more detailed specifications for the way and internal control in connection with These guidelines are presented annu- information is handled in the group. Who the annual financial statements. At this ally to the general meeting in connection will act as the company’s spokesperson meeting, the board is briefed on which with its consideration of the financial on various matters has been defined. The services in addition to auditing have been statements. chief executive of Selvaag Bolig will be provided during the year. The auditor the primary spokesperson to the financial meets the board at least once a year with- 13. Information and communi- market on behalf of the company. out the executive management being pre- cation sent. The auditor has the right to attend 14. Take-overs Selvaag Bolig’s general meeting. Written Selvaag Bolig endeavours to ensure confirmation must be provided once a that all reporting of financial and other The company’s articles of association year by the auditor to the board that the information is timely and correct, and place no restrictions on the purchase of specified requirements for the independ- based on openness and equal treatment shares in the company. In the event of ence of the auditor have been met. of players in the securities market. [The a take-over bid, the board will help to The auditor attends the meetings of the company observes the recommendations ensure that the company’s shareholders audit committee. Once a year, the audi- of the Oslo Stock Exchange on reporting are treated equally and that the group’s tor must present the committee with the investor information, which came into day-to-day operations are not disrupted main features of the plan for conducting force on 1 January 2012.] Information unnecessarily. The board will seek to the audit work. The auditor will review from Selvaag Bolig is published in the help ensure that the shareholders have possible significant changes in Selvaag form of annual and interim reports, press sufficient information and adequate time Bolig’s accounting principles, assessment releases, stock exchange announcements to form an opinion on a take-over bid. of significant accounting estimates and and investor presentations. All informa- The instructions for the board of all significant conditions where disagree- tion regarded as significant for the valu- Selvaag Bolig ASA specify how the ment has occurred between the auditor ation of the company is distributed and company will respond should an offer be and the executive management. At least published by Thomson Reuters, the Oslo made for the company’s shares. In such once a year, the auditor must review Stock Exchange messaging system and cases, the board will issue a statement Selvaag Bolig’s internal control system the company’s website at which contains an assessment of the offer with the audit committee – including www.selvaagbolig.no/en/investor. and a recommendation to the sharehold- identifiable weaknesses and proposals for The company presents its interim ers on whether they should accept it. In improvement. annual results by the end of February. this assessment, the board should take The board briefs the general meet- Full financial statements, together with account of such considerations as the ing on the auditor’s fee, broken down the directors’ report and the rest of the way a possible take-over would affect between audit work and other services in annual report, are made available to long-term value creation in the company. addition to auditing. shareholders every year at least three A justification of the recommendation weeks before the AGM, and by the end must be provided.
17 Directors’ report Directors’ report
the board of directors of Selvaag Bolig: Anne-Kari Drønen Mathiesen, Baard Schumann, Anne Breive, Ole Jarl Rettedal, Karsten Bomann Jonsen, Gisele Marchand, Olav Hindahl Selvaag, Christopher Brunvoll and Wenche Kjølås.
Selvaag Bolig had a good year in 2012, with more than 1 000 homes sold ening this reserve through the addition and a total turnover of NOK 2.8 billion. The level of activity in the group was of sites in primary areas. It will concen- high, and the order backlog is good. More than 1 000 homes with a combined trate great attention on sale launches sales value of NOK 3.6 billion were in production at 31 December. The and construction starts in the time to company has a solid land bank and a number of interesting development come. Macro-economic indicators projects, and is well positioned to maintain its good progress. The board has remain strong, and Selvaag Bolig is well proposed that no dividend be paid for fiscal 2012. positioned to maintain its good progress in 2013.
Overview of 2012 the year, and 792 were completed. Important transactions in 2012 Selvaag Bolig has a high level of Stock exchange listing Highlights production, and is experiencing strong Selvaag Bolig was listed on the Oslo The level of activity in Selvaag Bolig demand for homes in its priority areas in Stock Exchange with effect from 14 was high during 2012, with many and around Greater Oslo, Stavanger and June. An initial public offering of NOK construction projects under way and Bergen. 500 million took place in connection increased sales of homes. A total of Selvaag Bolig was listed on the with the listing, through the issue of 1 011 homes with a combined sales Oslo Stock Exchange during 2012, 25 031 030 new shares. In accordance value of NOK 3.45 billion were sold and carried out a number of transac- with an over-allotment (greenshoe) during the year. The group had 1 067 tions to strengthen its position as one of option agreed earlier, a further 547 862 units under construction at 31 December, Norway’s leading housebuilders. With new shares were issued at the end of of which 86 per cent were sold. Con- a land bank for about 9 500 homes, the the price stabilisation period on 13 struction started on 845 homes during company wants to continue strength- July. That transaction provided Selvaag
18 Directors’ report
Bolig with additional capital of NOK dekke Bostad AB. Other companies in present portfolio embraces a total area 11 million. The capital expansion was the group include Meglerhuset Selvaag, of about 80 000 square metres for devel- registered on 17 July 2012. which pursues regular estate agency and opment as commercial premises. letting activities, Selvaag Bolig Mod- Purchase of new sites ulbygg AS, which delivers complete Financial review A contract covering the purchase of two housing projects based on modules, and pieces of land in Bærum local authority Selvaag Pluss Service AS, which offers The figures for 2012 are not directly was entered into by Selvaag Bolig in services related to Selvaag Bolig’s comparable with those for earlier years July, with payment due when planning Pluss concept. The group’s housing because projects were formerly owned permission has been obtained. These development business embraces both largely through part-owned (associate) sites cover a total area of 15.5 hectares wholly and partly owned projects, some companies. Following the merger with and can collectively provide some 1 000 of which take the form of joint ventures Hansa Property Group AS and the homes. The purchase was important for with external investors. acquisition of Selvaag Pluss Eiendom the company’s commitment to Bærum, Selvaag Bolig does not build itself, KS during the third quarter of 2011, one of its geographical priority areas. but awards construction contracts on a and the acquisition of Bo En in the project-by-project basis. That gives it a fourth quarter of that year, the majority Sale of commercial property high level of flexibility by being able to of the projects are now consolidated in Selvaag Bolig entered into a NOK 77 select the best option for each project. Selvaag Bolig ASA. million sales contract in February with This approach also requires less organi- two Nordic property funds covering sation, which improves cost-efficiency Income statement a commercial building at Kaldnes in while increasing flexibility in relation to (Figures for 2011 are presented in Tønsberg. market fluctuations. Using external con- brackets) tractors also ties up less capital and cuts Sale of sites execution risk during the construction Operating revenue A contract was entered into in June with phase. Consolidated operating revenue for 2012 the City of Oslo on the sale of parts of Selvaag Bolig possesses unique totalled NOK 2 812 million (NOK 309.8 the company’s site at Lillohøyden in expertise through its Selvaag Bolig Mod- million). The increase from the year Nydalen for NOK 212.5 million. Title ulbygg subsidiary in the development of before reflected a marked rise in homes to the land was transferred in December blocks of flats and terrace houses with completed and delivered. During 2012, 2012 and provided the company with an the aid of modules. With a modern and 776 (78) homes were delivered, including accounting gain of NOK 57 million. industrial approach to housebuilding, 704 from the consolidated project In August, a contract was entered into Selvaag Bolig Modulbygg helps to help companies. Units delivered accounted with Lørenskog local authority on the keep construction costs low. Modules for NOK 2 292.9 million (NOK 115.8 sale of half the two-hectare commercial are delivered by external sub-contractors million) in revenues. Total revenues for site owned by Selvaag Bolig at Skår- in Estonia and Poland with many years 2011 included NOK 55.1 million from erødegaarden in Lørenskog for NOK 50 of production experience and modern external module deliveries, while no million. This agreement also includes an factories. Quality is high, and indoor such deliveries were made in 2012. option to sell the other half of the land. production helps to reduce the risk of fabrication errors. Operating costs The group’s business The group’s main focus and primary Operating costs totalled NOK 2 322.4 source of revenue in the future will million (NOK 302.7 million), with Selvaag Bolig is one of Norway’s relate to the housing development project costs accounting for NOK leading housing developers. It buys business. Its portfolio of land at 31 2 141.3 million (NOK 199 million). and develops new housing land, and is December 2012 had the potential for The latter relate mainly to construction responsible for the whole value chain developing 9 496 housing units, with costs for homes delivered in the period. from acquisition of land to completion roughly 6 787 in Greater Oslo. The Payroll costs accounted for NOK 76.8 and sale of homes. The group con- remaining 2 709 were spread between million (NOK 76.3 million). centrates on the areas in and around other regions of Norway. Selvaag Bolig Other operating costs came to NOK Greater Oslo, Bergen and Stavanger. It also owns some land for commercial 135.9 million (NOK 96.7 million), of also has projects under development in use, primarily related to the devel- which NOK 69.9 million (NOK 32 Stockholm in collaboration with Vei- opment of major housing projects. The million) related to sales and marketing.
19 Directors’ report
Spending on the latter increased pri- (negative at NOK 354.9 million). The interest-bearing debt amounted to NOK marily because Selvaag Bolig continued change in net cash flow primarily 2 830.3 million (NOK 3 565.9 million), promoting the group as Norway’s largest reflects a sharp increase in units of which NOK 1 461.5 million (NOK housebuilder during 2012, and started delivered and advance payments from 2 376.3 million) was non-current and sales for a number of projects. customers. This was partly offset by the NOK 1 368.8 million (NOK 1 189.6 The item for gain (loss), net associates sale of land to the City of Oslo, where million) was current. The reduction in and joint ventures includes gains of the settlement of NOK 212.5 million interest-bearing debt primarily reflects NOK 53.4 million (NOK 75.4 million). was held in the estate agent’s client the repayment of construction loans in These derive primarily from the part- account at 31 December. projects with delivered units, and the owned Kjørbo West and Tangen projects, Net cash flow from investing activ- repayment of a top-up loan following embracing the delivery of 47 and 25 units ities was NOK 18 million (NOK 32.9 the IPO for the stock exchange listing of respectively (Selvaag Bolig’s share). million). Payments primarily took the June 2012. form of dividends from part-owned Consolidated other current non- Operating profit businesses, offset to some extent by interest-bearing debt amounted to NOK The group made an operating profit of settlements for businesses acquired in 362.4 million (NOK 264.8 million), of NOK 489.6 million (NOK 7.1 million). 2011. which advance payments by customers Net cash flow from financing accounted for NOK 145.5 million (NOK Financial items activities was negative at NOK 319.5 24.5 million). Net financial expenses came to NOK million (positive at NOK 703.7 million). 41.5 million (NOK 36.1 million). Payments related to the repayment of Financing debt. Net proceeds from the share issue, The group has an unsecured credit Pre-tax profit after transaction costs and including facility of NOK 224 million in the parent Profit before tax expense was NOK the over-allotment option in the third company. NOK 39 million falls due on 448.1 million (loss of NOK 29 million). quarter, came to NOK 440.1 million. 31 December 2013, NOK 50 million on Net tax expense was NOK 101.8 million This was applied to the repayment of 31 December 2014 and the remaining (income of NOK 23.3 million). Con- debt. Other cash flows correspond to the NOK 150 million at the end of 2015. solidated tax expense does not include net draw-down of credits. The group has an overdraft facility tax liability for tax objects which are Cash and cash equivalents increased of NOK 150 million, of which NOK not part of the Selvaag Bolig group. by NOK 162.8 million to NOK 558 128.4 million had been drawn down at Tax on the minority share of profit for million (NOK 395.2 million). 31 December 2012. In addition comes the period is included in the minority’s an overdraft facility of NOK 150 million share of profit and equity. Balance sheet to finance the start-up of new projects. The consolidated net profit came to Assets in Selvaag Bolig at 31 December NOK 85 million had been drawn down NOK 346.4 million (loss of NOK 5.7 2012 totalled NOK 5 734.9 million on this facility at 31 December. million), of which NOK 278.4 million (NOK 5 424.7 million). The carried Consolidated interest-bearing debt can is attributable to the shareholders of amount of consolidated inventories largely be divided into three categories Selvaag Bolig ASA and NOK 68 million (land, housing under construction and – top-up, land and construction loans. to minority shareholders. completed homes) at 31 December At 31 December 2012, the group had was NOK 3 910.7 million (NOK 4 211 top-up loans of NOK 430.5 million, land Parent company Selvaag Bolig ASA million). loans of NOK 1 565.8 million and con- Operating revenues for Selvaag Bolig Equity at 31 December was NOK struction loans of NOK 833.8 million. ASA, the parent company, came to NOK 2 146.6 million (NOK 1 310.6 million), Top-up loans consisted primarily of an 116.4 million (NOK 87.3 million), and corresponding to an equity ratio of 37.4 unsecured credit facility of NOK 224 the operating loss to NOK 8.6 million per cent (24.2 per cent). million as well as NOK 213.4 million in (NOK 49.7 million). Ordinary net profit The group held cash and cash drawn-down overdraft facilities. for the year was NOK 86.1 million (loss equivalents of NOK 558 million at 31 Each project in Selvaag Bolig is of NOK 43.2 million). December (NOK 395.2 million). Selvaag organised as a separate single purpose Bolig ASA, the parent company, held vehicle (SPV). In addition to financing Cash flow cash and cash equivalents of NOK 12 from the parent company, this implies Consolidated net cash flow from opera- million at 31 December (NOK 0). that each company seeks its own tional activities was NOK 464.3 million At 31 December, consolidated external capital financing for the devel-
20 Directors’ report
opment of a project. Land credits will routines and control systems to limit large, well-established players which be converted to construction loans as and reduce overall risk exposure to an have a solid financial position and expe- the projects start up. Building costs are acceptable level. rience, and which can document quality wholly financed by loans, and increased A comprehensive survey of the various work. In addition, standardised and activity in the companies will accord- risk factors affecting the company was detailed construction plans developed ingly mean that construction loans rise initiated in the autumn of 2012, based by Selvaag Bolig are used to reduce the in line with progress. on the company’s defined strategies risk of errors, misunderstandings and and goals. The aim was to increase the delays by the contractor. Events after the balance sheet date attention devoted to risk management Furthermore, Selvaag Bolig is The agreement between Selvaag Bolig and internal control in the company, and exposed to increases in the level of ASA, AVA Eiendomspartner AS and to contribute to raising awareness and prices for construction contracts and to Varner Kapital AS on developing a handling of the most significant risks cost overruns. central area of Sandnes was formalised for the company. The findings from this Since the company mainly enters into in March 2013. The part of the site des- survey lay the basis for further plans turnkey contracts for site-built pro- ignated for housing could accommodate related to risk management. jects, costs are secured before sales and 450-600 homes. The primary risk factors can be construction begins. That makes it easier categorised as market, operational and to maintain an overview of costs. In the Going concern financial risk. event of big fluctuations in construction Pursuant to section 3-3a of the Nor- costs, the company also has the oppor- wegian Accounting Act, the board con- Market risk tunity to use modular construction. This firms that the going concern assumption Housing demand is influenced by a represents a cheaper form of production is realistic and that the financial state- large number of factors at both micro than site-build. ments for 2012 have been prepared on and macro level. It may be affected by that assumption. This view rests on the substantial fluctuations in the general Planning risk group’s long-term strategy and fore- level of interest rates and/or significant Planning changes at various levels by casts. The group’s financial position is changes in other financial variables to the relevant public authorities could good. which potential housebuyers might be affect Selvaag Bolig’s various projects, exposed. Changes in housing demand including the interest of future buyers in Allocation of the net profit could furthermore affect Selvaag Bolig’s the properties. Such changes could also The parent company, Selvaag Bolig opportunities to sell homes at budgeted limit opportunities to continue devel- ASA, made a net profit of NOK 86.1 prices within the planned time frames. oping the properties. That can also boost million for 2012 (loss of NOK 43.2 Were the pace of sales to be lower than costs. million). The parent company’s equity expected because of changes in market amounted to NOK 1 892.8 million at 31 conditions, planned developments could Financial risk December, of which NOK 290.1 million be postponed. The company accord- Credit risk was non-restricted. ingly has internal requirements related The group’s credit risk relates largely to The board proposes that no dividend to advance sales, which require 60 per the settlement of its accounts receivable, be paid for 2012. cent of a project to be sold before con- which primarily involve private struction starts. customers as housebuyers. Buyers are Risk and risk management required to pay a 10 per cent deposit in Operational risk advance when a sale is agreed, and to Risk management Risk related to contractors document satisfactory financing for the As a housing developer, the group is Selvaag Bolig draws on external property. exposed to various risk factors related construction companies and service to land development, sales and the exe- providers in connection with developing Foreign exchange risk cution of construction projects. These and building new projects. As a result, Virtually all the group’s activities are factors can affect the group’s business it is exposed to the risk of loss and addi- based in Norway. However, the group activities and financial position. The tional project cost if a contractor/sup- buys modules from abroad in euros. board of Selvaag Bolig accordingly plier finds itself in financial difficulties. When purchase contracts are signed with gives a high priority to dealing with To reduce this risk, the company mainly foreign module suppliers, the exchange and managing risk, and has established enters into construction contracts with rate is locked in by ordering foreign cur-
21 Directors’ report
rency at a fixed rate for future settlement to financial and liquidity risk at 31 Equal opportunities based on the supplier’s payment plan. As December. Cash and cash equivalents a result, the group has limited exposure in Selvaag Bolig at 31 December The general policy of the group is that to foreign exchange risk. amounted to NOK 557.9 million no unequal treatment or other form of (NOK 395.2 million) for the group and discrimination related to gender, age Interest rate risk NOK 12.1 million (NOK 0 million) or ethnic background will occur. The (own financing, deposits) for the parent company. Liquid assets group gives emphasis to expertise rather Interest rate risk relates primarily to the consisted primarily of cash and bank than gender or ethnic background when group’s liquidity. Big changes in interest deposits. Further reference is made to making appointments. Women account rates are also significant for the group’s the comments on financing above and for 41 per cent (39 per cent) of the borrowing costs, and could affect the to note 16 to the consolidated financial group’s workforce. valuation of its assets. The company statements for an overview of loans, has opted not to enter into any form maturities and loan terms. No financial Corporate social responsibility of hedging contract, since land credits covenants apply at the overall group (CSR) are converted to construction loans as level. building proceeds. Organisation Selvaag Bolig is concerned with its CSR Financing risk (access to capital) and with opportunities for combining Selvaag Bolig depends on access to Selvaag Bolig ASA was established in value creation with socially beneficial capital in order to acquire sites and 2008 as an independent housing devel- measures. Selvaag Bolig’s goal is to build homes. Where external capital is opment unit in the Selvaag Gruppen build good homes with the highest concerned, the company has good and group. It is the parent company for the possible “residential value” for house- close relations with its principal banks, underlying group subsidiaries, which buyers, and works to ensure that as which are well-capitalised Nordic are responsible for operations. At 31 many people as possible can afford to institutions. Although the banks have December 2012, the Selvaag Bolig buy their own home. become more restrictive over lending, group had a total of 99 employees, The group also seeks to be a driving the company has secured access to the including 57 in the parent company and force in the social debate in order to necessary financing for its projects. It 42 in the subsidiaries. promote the housing issue and to speak also utilises other solutions for new on behalf of its customers by commu- land purchases, including agreements Working environment nicating its views and being prepared with landowners on options for future to stand up for them. Its chief executive is a visible and active participant in purchasing. The working environment in the group debates on housing issues. The overall is regarded as good. Ensuring that efforts Liquidity risk message is that it must become cheaper to reduce sickness absence and prevent to build so that ordinary people can own Conservative liquidity management injuries have a high priority in the their home. means having sufficient liquid assets company is given emphasis by the board. and available financing through lines of Sickness absence was 2.7 per cent (2.2 Impact on the natural credit to meet the group’s obligations. per cent) for the group and 3.1 per cent The group refinanced large parts of its (2.9 per cent) for the parent company. No environment loans during 2011, and raised NOK 500 injuries were sustained in 2012. million in connection with the stock Through the Norwegian construction Selvaag Bolig pays special attention market listing in June 2012. Selvaag client and internal control regulations, to environmental considerations when Bolig administers liquidity actively, and Selvaag Bolig fulfils the requirements pursuing its housing development manages its liquidity risk by maintaining posed for construction clients to monitor activities, and has taken account of the adequate cash in hand, bank services health, safety and the working envi- natural environment in its planning and credit limits, primarily in the form ronment (HSWE) at building sites. and control systems. Its environmental of group overdraft facilities, and by Contracts for all projects accord with impact relates primarily to energy continuous monitoring of forecast and the regulatory requirements, and HSWE consumption, materials, waste, and actual cash flows. performance is reported regularly to the interventions in and use of natural The board takes the view that the chief executive and board as specified resources. group had a well-balanced exposure by the guidelines to the regulations.
22 Directors’ report
Shareholder information A detailed statement on the way the respective city centres have the Selvaag Bolig implements the 15 sec- highest population growth in Norway. The company was listed on the Oslo tions of the code can be found at According to Statistics Norway, they Stock Exchange on 28 June 2012. It www.sboasa.no/en/Eierstyring_og_ will have a persistently strong demand had 651 shareholders at 31 December selskapsledelse.aspx and in this annual for new housing in coming years. High (96), of whom 46 were foreign (4). See report. house prices could mean that many note 14 to the consolidated financial buyers turn to more favourably priced statements for Selvaag Bolig ASA for Pay and other remuneration of homes on the urban fringes in these detailed shareholder information. senior executives areas. Higher deposits required from housebuyers and high immigration contribute to increased demand for Transactions with close Pay and other remuneration of senior cheaper housing. That makes it even associates executives in the group are presented more important to build more smaller in note 22 to the consolidated financial and less expensive homes in and around statements. This note also outlines the A contract was entered into in late 2012 the big cities. principles on which executive remu- on the sale of a commercial property at Stricter requirements announced by neration is based. Løren to Selvaag Eiendom AS, a wholly the Financial Supervisory Authority owned subsidiary of Selvaag Gruppen Annual general meeting of Norway for capital adequacy in the AS. The total compensation was NOK banks could affect the lending policies 27.7 million. and interest rates of the latter. House See note 23 to the consolidated The AGM for 2012 will take place on prices grew by an average of 4.5 per financial statements for further infor- 10 April 2013. cent during the first two months of 2013. mation on transactions with close Selvaag Bolig expects that sales will associates. Outlook remain good, but with some slowdown in price growth later in 2013. Should Corporate governance Macro-economic conditions for Norway the growth in prices slow down, more are good, with low interest rates, low people would have the opportunity to Selvaag Bolig is committed to maintaining unemployment, high pay growth and buy a new home. Selvaag Bolig has a high standard of corporate governance. good purchasing power for households. three defined housing concepts tailored A healthy corporate culture is essential for Combined with high population growth to the needs and purchasing power of safeguarding confidence in the company, and low housing construction in areas different households, a land bank with securing access to capital and ensuing experiencing growth pressures, this the potential to provide more than 9 good value creation over time. All share- contributes to a big demand for new 500 homes in and around Oslo, Sta- holders will be treated equally, and a clear housing and could help to boost house vanger and Bergen, and the capacity division of labour will exist between the prices even further. and experience to handle large develop- board and the company’s executive man- The biggest increases in house prices ments. The board takes the view that agement. Selvaag Bolig complies with the and demand during 2012 occurred in the company is well positioned to meet Norwegian code of practice for corporate areas in and around Oslo, Stavanger market conditions both today and in governance of 23 October 2012. and Bergen. These areas close to coming years.
Oslo, 19 March 2013
Olav Hindahl Selvaag Ole Jarl Rettedal Karsten Bomann Jonsen Anne Breive Chair Director Director Director
Wenche Kjølås Gisele Marchand Christopher Brunvoll Anne-Kari Drønen Mathiesen Baard Schumann Director Director Director* Director* President and CEO
* Elected by the employees
23 Consolidated Financial Statements Selvaag Bolig Group Statement of comprehensive income for the financial period ended 31 December
(amounts in NOK 1 000, except earnings per share) Note 2012 2011
Sales revenues 2 2 758 044 251 885 Other revenues 5 53 976 57 937 Total revenues 2 812 020 309 822
Project expenses 5 (2 141 346) (199 002) Salaries and personnel expenses 7 (76 806) (76 319) Depreciation and amortisation 10, 11 (21 861) (5 770) Other operating expenses 8 (135 905) (96 665) Other gain (loss), net 73 (299) Share of income (losses) and gains (losses) on disposal from associated companies and joint 24 53 419 75 373 ventures Total operating expenses (2 322 426) (302 682) Operating profit (loss) 489 594 7 140
Financial income 9 23 861 19 447 Financial expenses 9 (65 326) (55 562) Net financial expenses (41 465) (36 115) Profit (loss) before income taxes 448 129 (28 975) Income tax (expense) income 19 (101 782) 23 265 Profit (loss) for the period 346 347 (5 710)
Other comprehensive income Foreign currency translation 41 4
Total comprehensive income for the period 346 388 (5 706)
Profit (loss) for the period attributable to: Non-controlling interests 67 960 (1 016) Shareholders of Selvaag Bolig ASA 278 387 (4 694)
Total comprehensive income for the period attributable to: Non-controlling interests 67 960 (1 016) Shareholders of Selvaag Bolig ASA 278 428 (4 690)
Earnings per share for profit (loss) attributable to shareholders of the Selvaag Bolig ASA Earnings per share (basic and diluted, in NOK) 3.39 (0.15)
24 Consolidated Financial Statements Selvaag Bolig Group Statement of financial position at 31 December
(amounts in NOK 1 000) Note 2012 2011
ASSETS Non-current assets Goodwill 10 389 183 389 183 Other intangible assets 10 70 421 90 163 Property, plant and equipment 11 6 454 5 642 Investments in associated companies and joint ventures 24 158 369 141 707 Loans to associated companies and joint ventures 23, 24 35 500 35 500 Other non-current assets 12 116 916 36 784 Total non-current assets 776 843 698 979
Current assets Inventory property 5 3 910 684 4 211 025 Trade receivables 12 199 676 31 436 Other current receivables 12 289 673 88 091 Cash and cash equivalents 13 557 989 395 207 Total current assets 4 958 022 4 725 759 TOTAL ASSETS 5 734 865 5 424 738
EQUITY AND LIABILITIES Equity Equity attributable to shareholders of the company 14 2 072 200 1 304 198 Non-controlling interests 74 421 6 461 Total equity 2 146 621 1 310 659
Liabilities Non-current liabilities Pension obligations 372 327 Deferred tax liabilities 19 105 620 13 934 Provisions 20 92 112 92 112 Other non-current non-interest-bearing liabilities 15 000 28 304 Non-current interest-bearing liabilities 16 1 461 463 2 376 300 Total non-current liabilities 1 674 567 2 510 977
Current liabilities Current interest-bearing liabilities 16 1 368 835 1 189 628 Trade payables 17 181 379 148 682 Current income taxes payable 19 1 106 - Other current non-interest-bearing liabilities 17 362 357 264 792 Total current liabilities 1 913 677 1 603 102 Total liabilities 3 588 244 4 114 079 TOTAL EQUITY AND LIABILITIES 5 734 865 5 424 738
Oslo, 19 March 2013
Olav Hindahl Selvaag Ole Jarl Rettedal Karsten Bomann Jonsen Anne Breive Chair Director Director Director
Wenche Kjølås Gisele Marchand Christopher Brunvoll Anne-Kari Drønen Mathiesen Baard Schumann Director Director Director* Director* President and CEO
25 Consolidated Financial Statements Selvaag Bolig Group Statement of Changes in Equity
Equity attributed to share- Share Cumulative holders in Non- Share premium Other paid- translation Other Retained Selvaag controlling Total (amounts in NOK 1 000) capital account in capital differences reserves earnings Bolig ASA interests equity
EQUITY AT 1 JANUARY 2012 136 353 957 938 699 132 1 153 3 528 (493 906) 1 304 198 6 461 1 310 659
Transactions with owners: Share issue in connection with IPO 50 062 449 938 - - - - 500 000 - 500 000 Transaction costs related to IPO - (22 722) 621 - - - (22 101) - (22 101) Capital increase from over-allotment option Greenshoe 1 096 9 703 876 - - - 11 675 - 11 675
Total comprehensive income/(loss) for the period: Net income/(loss) for the period - - - - - 278 387 278 387 67 960 346 347 Other comprehensive income/(loss) for the period - - - 41 - - 41 - 41 EQUITY AT 31 DECEMBER 2012 187 511 394 857 700 629 1 194 3 528 (215 519) 2 072 200 74 421* 2 146 621
EQUITY AT 1 JANUARY 2011 159 7 286 699 132 1 149 3 528 (389 212) 322 042 - 322 042
Transactions with owners: Share issue in connection with business combinations 53 781 933 065 - - - - 986 846 - 986 846 Conversion of liabilities to equity 82 413 17 587 - - - - 100 000 - 100 000 Group contribution paid (after tax) - - - - - (100 000) (100 000) - (100 000) Business combination ------7 477 7 477
Total comprehensive income/(loss) for the period: Net income/(loss) for the period - - - - - (4 694) (4 694) (1 016) (5 710) Other comprehensive income/(loss) for the period - - - 4 - - 4 - 4 EQUITY AT 31 DECEMBER 2011 136 353 957 938 699 132 1 153 3 528 (493 906) 1 304 198 6 461 1 310 659
* Non-controlling interests includes tax from profits in companies subject to partnership taxation. Income taxes in the group do not include taxes from tax subjects outside the Selvaag Bolig Group.
26 Consolidated Financial Statements Selvaag Bolig Group Statement of cash flows for the financial period from 1 January to 31 December
(amounts in NOK 1 000) Note 2012 2011
CASH FLOW FROM OPERATING ACTIVITIES Profit (loss) before income taxes 448 129 (28 975) Depreciation and amortisation 10, 11 21 861 5 770 Other (gains) losses, net (73) 299 Share of (income) losses from associated companies and joint ventures 24 (53 419) (75 373) Change in inventory property 5 271 688 (510 572) Change in trade receivables 12 (167 340) (42 624) Change in trade payables 17 36 387 74 435 Changes in other working capital assets (248 272) 53 219 Changes in other working capital liabilities 155 345 168 959 Net cash flow from operating activities 464 306 (354 862)
CASH FLOW FROM INVESTING ACTIVITIES Proceeds from disposal of tangible and intangible fixed assets 106 - Payments for acquisition of tangible and intangible fixed assets (3 087) (151) Proceeds from disposal of businesses and subsidiaries, net of cash disposed 13 - 17 404 Payments for acquisitions of businesses and subsidiaries, net of cash acquired 13 (15 359) 251 370 Payments for acquisition of associated companies and joint ventures 24 (15) (90 156) Proceeds from disposal of other investments and repayments on loans given 3 124 - Payments for acquisition of other investments and loans given (11 132) (147 265) Dividends and distributions from associated companies and joint ventures 24 44 352 1 650 Net cash flow from investing activities 17 989 32 852
CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings 16 1 223 906 1 402 499 Repayments of borrowings 16 (2 115 982) (356 576) Net change in bank overdraft 16 132 446 (444 001) Proceeds from share issue 14 440 117 101 770 Net cash flow from financing activities (319 513) 703 692
Net change in cash and cash equivalents 162 782 381 682 Cash and cash equivalents at 1 January 13 395 207 13 525 Cash and cash equivalents at 31 December 13 557 989 395 207
For further specifications refer to note 13.
27 Consolidated Financial Statements Selvaag Bolig Group Notes to the consolidated financial statements
Note 1: General information
Selvaag Bolig ASA (the company) and Selvaag Bolig ASA is listed at the Oslo Stock its subsidiaries (together the group) is a Exchange. The company’s ultimate controlling property development group, involved in the party is Selvaag Gruppen AS. construction of residential property for sale in The registered office of the company is the ordinary course of business. Lørenvangen 22, 0580 Oslo.
Note 2: Significant accounting policies
2.1 Statement of compliance cost in a foreign currency are not retranslated the non-controlling interests are adjusted to The group’s consolidated financial statements in subsequent periods. reflect the changes in their relative interests have been prepared in accordance with Inter- in the subsidiaries. Any difference between national Financial Reporting Standards (IFRS) 2.4 Consolidation the amount by which the non-controlling and interpretations issued by the Interna- The consolidated financial statements include interests are adjusted and the fair value of the tional Accounting Standards Board (IASB) and the financial statements of the company and consideration paid or received is recognised endorsed by the EU at 31 December 2012. entities (including special purpose entities) directly in equity and attributed to owners of These group consolidated financial state- controlled by the company (its subsidiaries). the company. ments were authorised for issue by the board Control is achieved where the company has When the group loses control of a subsidi- of directors on 19 March 2013. the power to govern the financial and operat- ary, the profit or loss on disposal is calculated ing policies of an entity so as to obtain benefits as the difference between (i) the aggregate 2.2 Basis of preparation from its activities. This is generally presumed of the fair value of the consideration received The group consolidated financial statements to exist when the company holds more than and the fair value of any retained interest and have been prepared on a going concern and 50% of the voting rights. The existence and (ii) the previous carrying amount of the assets historical cost basis, except for derivatives effect of potential voting rights that are cur- (including goodwill), and liabilities of the which are recognised at fair value through rently exercisable or convertible are consid- subsidiary and any non-controlling interests. profit or loss. ered when assessing whether the company When assets of the subsidiary are carried at controls another entity. fair values and the related cumulative gain or 2.3 Functional and presentation currency The results of subsidiaries acquired or loss has been recognised in other compre- (a) Functional and presentation currency disposed of during the year are included in hensive income and accumulated in equity, Items included in the individual financial the consolidated income statement from the amounts previously recognised in other statements of each of the group’s entities are the effective date of acquisition or up to the comprehensive income and accumulated in measured using the currency of the primary effective date of disposal, as appropriate. equity are accounted for as if the company economic environment in which the entity Total comprehensive income of subsidiaries is had directly disposed of the relevant assets operates (‘the functional currency’). The con- attributed to the owners of the company and (i.e. reclassified to profit or loss or transferred solidated financial statements are presented to the non-controlling interests even if this directly to retained earnings as specified by in NOK, which is the company’s functional and results in the non-controlling interests having applicable IFRSs). The fair value of any invest- the group’s presentation currency. a deficit balance. ment retained in the former subsidiary at the When necessary, adjustments are made date when control is lost is regarded as the (b) Transactions and balances to the financial statements of subsidiaries to fair value on initial recognition for subsequent In preparing the financial statements of each bring their accounting policies into line with accounting under IAS 39 Financial Instru- individual group entity, transactions in curren- those used by other members of the group. ments: Recognition and Measurement or, cies other than the entity’s functional currency All intra-group transactions, balances, when applicable, the cost on initial recognition are translated into the functional currency income and expenses are eliminated in full on of an investment in an associate or a jointly using the exchange rates prevailing at the consolidation. controlled entity. dates of the transactions. At the end of each Changes in the group’s ownership interests reporting period, monetary items denominated in subsidiaries that do not result in the group 2.5 Segment information in foreign currencies are retranslated at the losing control over the subsidiaries are Operating segments are reported in a manner rates prevailing at that date. Non-monetary accounted for as equity transactions. The consistent with the internal reporting provided items that are measured in terms of historical carrying amounts of the group’s interests and to the CEO and management group. This group
28 Consolidated Financial Statements Selvaag Bolig Group
is responsible for allocating resources and When a group entity transacts with its asso- and the liabilities assumed. Part of goodwill is assessing performance of the operating seg- ciate, profits and losses resulting from the due to the recognition of deferred tax obliga- ments. For the purposes of internal reporting transactions with the associate are recognised tion at nominal value. the group utilises the percentage of comple- in the group’ consolidated financial statements When a business combination is achieved tion method for which the degree of comple- only to the extent of interests in the associate in stages, the group’s previously held equity tion is estimated based on expenses incurred that are not related to the group. interest in the acquiree is remeasured to fair relative to total estimated cost. Operating Accounting policies of associates have been value at the acquisition date (i.e. the date profit (loss) under the percentage of comple- changed where necessary to ensure consist- when the group obtains control) and the tion method also includes an estimated profit ency with the policies adopted by the group. resulting gain or loss, if any, is recognised in element. Share of income (loss) from associated profit or loss. companies is included within operating profit Any contingent consideration to be trans- 2.6 Investments in associates (loss) as this is considered integral to the ferred by the acquirer will be recognised at An associate is an entity over which the group group’s operations. fair value at the acquisition date. Subsequent has significant influence and that is neither a changes to the fair value of any contingent subsidiary nor an interest in a joint venture. 2.7 Investments in jointly controlled entities consideration classified as liability will be Significant influence is the power to partici- A joint venture is a contractual arrangement recognised in profit or loss. pate in the financial and operating policy deci- whereby the group and other parties undertake sions of the investee but is neither control nor an economic activity that is subject to joint 2.9 Intangible assets joint control over those policies. Significant control (i.e. when the strategic financial and a) Goodwill influence is generally presumed to exist when operating policy decisions relating to the activi- Goodwill arising on an acquisition of a busi- the company holds between 20% and 50% of ties of the joint venture require the unanimous ness is carried at cost price as established at the voting rights. consent of the parties sharing control). the date of acquisition of the business (see The results and assets and liabilities Joint venture arrangements that involve the note 2.8 above). Goodwill is not amortised, of associates are incorporated in these establishment of a separate entity in which but is tested for impairment annually. For the financial statements using the equity method each venturer has an interest are referred to purposes of impairment testing, goodwill is of accounting. Under the equity method, as jointly controlled entities. The group reports allocated to each of the group’s cash-gener- investments in associates are carried in the its interests in jointly controlled entities using ating units (or collections of cash-generating consolidated statement of financial position at the equity method, as described in note 2.6 units) expected to benefit from synergies of cost and adjusted thereafter to recognise the Investments in associates above, except when the business combination. group’s share of the profit or loss and other the investment is classified as held for sale, in A cash-generating unit to which goodwill comprehensive income of the associate. When which case it is accounted for in accordance has been allocated is tested for impairment the group’s share of losses of an associate with IFRS 5 Non-current Assets Held for Sale annually, or more frequently when there is exceeds the group’s interest in that associate, and Discontinued Operations. indication that the unit may be impaired. If the the group discontinues recognising its share Share of income (loss) from joint ventures is recoverable amount of the cash-generating of further losses. Additional losses are rec- included within operating profit (loss) as this is unit is less than its carrying amount, the ognised only to the extent that the group has considered integral to the group’s operations. impairment loss is allocated first to reduce incurred legal or constructive obligations or the carrying amount of any goodwill allocated made payments on behalf of the associate. 2.8 Business combinations to the unit and then to the other assets of the Any excess of the cost of acquisition over Where property is acquired through the unit pro rata based on the carrying amount of the group’s share of the net fair value of the acquisition of entities, management consider each asset in the unit. Any impairment loss for identifiable assets, liabilities and contingent the substance of the assets and activities goodwill is recognised directly in profit or loss liabilities of an associate recognised at the acquired. When acquiring a group of assets in the consolidated statement of comprehen- date of acquisition is recognised as goodwill, or net assets that do not constitute a busi- sive income. An impairment loss recognised which is included within the carrying amount ness, the cost price is allocated between the for goodwill is not reversed in subsequent of the investment. Any excess of the group’s individual identifiable assets and liabilities periods. share of the net fair value of the identifiable acquired based on their relative fair values as On disposal of the relevant cash-generating assets, liabilities and contingent liabilities over at the acquisition date. unit, the attributable amount of goodwill is the cost of acquisition, after reassessment, is Business combinations are accounted for included in the determination of the profit or recognised immediately in profit or loss. using the acquisition method. The acquisition loss on disposal. The requirements of IAS 39 are applied is recognised at the aggregate of the consid- Cash-generating units are defined in to determine whether it is necessary to eration transferred, measured at acquisition accordance with group internal reporting. recognise any impairment loss with respect to date fair value, and the amount of any non- the group’s investment in an associate. When controlling interest in the acquiree. For each b) Other intangible assets necessary, the entire carrying amount of the business combination, the acquirer measures Other intangible assets are initially recognised investment (including goodwill) is tested for the non-controlling interest in the acquiree at fair value. The asset’s residual value and impairment in accordance with IAS 36 Impair- either at fair value or at the proportionate expected useful life are reviewed on an annual ment of Assets as a single asset by comparing share of the acquiree’s identifiable net assets. basis and adjusted if necessary. If an asset’s its recoverable amount (higher of value in use Acquisition costs incurred are expensed. carrying value exceeds the recoverable amount, and fair value less costs to sell) with its carry- Goodwill is measured as the excess of the the asset will immediately be written down to ing amount. Any impairment loss recognised sum of the consideration transferred, the the recoverable amount. Any gain or loss aris- forms part of the carrying amount of the amount of any non-controlling interests in the ing from the disposal of an asset will be deter- investment. Any reversal of that impairment acquiree, and the fair value of the acquirer’s mined as the difference between the asset’s loss is recognised in accordance with IAS 36 to previously held equity interest in the acquiree sales price and carrying value, and recognised the extent that the recoverable amount of the (if any) over the net of the acquisition-date in the consolidated statement of comprehen- investment subsequently increases. amounts of the identifiable assets acquired sive income as Other net profit (loss).
29 Consolidated Financial Statements Selvaag Bolig Group
2.10 Revenue recognition The cost of inventories comprises all costs on the classification of the assets. The group Revenue comprises the fair value of the of purchase, costs of conversion and other classifies its financial assets in the following consideration received or receivable for the costs incurred in bringing the inventories to categories: “at fair value through profit or sale of property and related transactions in their present condition. The cost of conver- loss” and “loans and receivables”. The clas- the ordinary course of the group’s activities, in sion includes costs directly related to the sification depends on the nature and purpose accordance with IAS 18 Revenues. construction of the property (such as amounts of the financial assets and is determined by paid to sub-contractors for construction) and management at the time of initial recognition. (a) Sale of property an allocation of fixed and variable overheads The group has no material financial assets Revenue from sale of residential property incurred during development and construc- classified at fair value through profit or loss. (including any sale of projects under develop- tion. Borrowing costs directly attributable to ment and undeveloped land) is recognised at the acquisition, construction or production of Loans and receivables the transaction date, when all the conditions property, are added to the cost of those assets, Loans and receivables are non-derivative for recognition have been satisfied. The trans- until such time as the assets are substantially financial assets with fixed or determinable fer of risk and control is completed at the time ready for their intended use or sale. Capitalisa- payments that are not quoted in an active of delivery. tion commences when it is more likely than not market. Loans and receivables (including Property may be sold with a degree of that the project will be realised – assuming that trade and other receivables, bank balances continuing involvement by the seller, which the plot is regulated. Other costs are included and cash) are measured at amortised cost may be commitments to complete construc- in the cost of inventories only to the extent that using the effective interest method, less any tion of the property, or a seller guarantee they are directly attributable to bringing the impairment. of occupancy of a housing cooperative for inventories to their present location and condi- a certain period of time. The group recog- tion, including e.g. planning and design costs. Impairment of financial assets nises revenue when the significant risks and Net realisable value is the estimated selling Financial assets, other than those at fair value rewards of ownership of property sold are price in the ordinary course of business, based through profit or loss are assessed for indica- transferred to the buyer, the group retains on market prices at the reporting date and tors of impairment at the end of each report- neither continuing managerial involvement to discounted for the time value of money if mate- ing period. Financial assets are impaired the degree usually associated with ownership rial, less the estimated costs of completion where there is objective evidence that, as a nor effective control over the goods sold, the and the estimated costs necessary to make the result of one or more events that occurred amount of revenue can be measured reliably sale. When inventories are sold, the carrying after the initial recognition of the financial and it is probable that the economic benefits amount is recognised as an expense (presented asset, the estimated future cash flows of the associated with the transaction will flow as project expense) in the period in which the investment have been impacted. to the group. The amount of revenue is not related revenue is recognised. The carrying amount of the financial asset considered to be reliably measurable until all is reduced by the impairment loss directly material contingencies relating to the sale 2.12 Property, plant and equipment for all financial assets with the exception of have been resolved. Property, plant and equipment are recognised trade receivables, where the carrying amount at historical cost less accumulated depre- is reduced through the use of an allowance (b) Lease revenues ciation and impairment losses. Historical account. When a trade receivable is consid- Rental income from leasing of property (oper- cost includes expenditure that is directly ered uncollectible, it is written off against the ating leases in which the group is a lessor) is attributable to the acquisition of the items. allowance account. Subsequent recoveries of recognised on a straight-line basis over the Subsequent costs are included in the asset’s amounts previously written off are credited term of the relevant lease and included in carrying amount or recognised as a separate against the allowance account. Changes in the Other revenues. asset, as appropriate, only when it is probable carrying amount of the allowance account are that future economic benefits associated with recognised in profit or loss. c) Sale of services the item will flow to the group and the cost of Revenue from sale of services is recognised the item can be measured reliably. The car- De-recognition of financial assets when the service is performed. Estate agent rying amount of the replaced part is derecog- The group derecognises a financial asset services directly associated with sale of nised. All other repairs and maintenance is only when the contractual rights to the cash property are included in Sales revenue. Other recognised as an expense during the period in flows from the asset expire, or it transfers services are included in Other revenue. which it is incurred. Depreciation is calculated the financial asset and substantially all the on a straight-line basis, generally 3-10 years. risks and rewards of ownership of the asset to 2.11 Inventory property The asset’s residual values and useful another entity. If the group neither transfers Under IAS 2 Inventories, inventories are lives are reviewed annually, and adjusted if nor retains substantially all the risks and assets held for sale in the ordinary course appropriate. An asset’s carrying amount is rewards of ownership and continues to control of business, in the process of production for written down immediately to its recoverable the transferred asset, the group recognises such sale, or as materials or supplies to be amount if the asset’s carrying amount exceeds its retained interest in the asset and an associ- consumed in the production process or in the its estimated recoverable amount. Any gain ated liability for amounts it may have to pay. rendering of services. Inventories include land or loss arising on the disposal or retirement If the group retains substantially all the risks and other property held for resale. of an item of property, plant and equipment and rewards of ownership of a transferred The group has property which is land and is determined as the difference between the financial asset, the group continues to recog- buildings intended for sale in the ordinary sales proceeds and the carrying amount of the nise the financial asset and also recognises course of business or which is in the process asset and is recognised in profit or loss (other a collateralised borrowing for the proceeds of construction or development for such sale. gain/(loss), net). received. Inventories thus comprise land, property held for resale, and property under development 2.13 Financial assets 2.14 Financial liabilities and construction. Inventories are measured at Financial assets are initially recognised at fair The group classifies its financial liabilities as the lower of cost and net realisable value. value. Subsequent measurement depends either financial liabilities at “fair value through
30 Consolidated Financial Statements Selvaag Bolig Group
profit or loss” or “other financial liabilities”. shares, any consideration received (net of any laws) that have been enacted or substantively The classification depends on the nature and directly attributable incremental transaction enacted by the end of the reporting period. purpose of the financial assets and is deter- costs and the related income tax effects) is The measurement of deferred tax liabilities mined by management at the time of initial included in Equity attributable to shareholders and assets reflects the tax consequences recognition. of the company. that would follow from the manner in which Ordinary shares are classified as equity. the group expects, at the end of the report- Borrowings ing period, to recover or settle the carrying Borrowings are recognised initially at fair 2.17 Income tax amount of its assets and liabilities. value, net of transaction costs incurred. Bor- Income tax expense represents current tax Deferred income tax assets and liabilities rowings are subsequently stated at amortised expense and changes in deferred tax expense. are offset when there is a legally enforce- cost; any difference between the proceeds (net able right to offset current tax assets against of transaction costs) and the redemption value Current tax current tax liabilities and when the deferred is recognised in the income statement over the The tax currently payable is based on taxable income tax assets and liabilities relate to period of the borrowings using the effective profit for the year. Taxable profit differs from income taxes levied by the same taxation interest method. profit as reported in the consolidated state- authority on either the same taxable entity Borrowings are classified as current liabili- ment of comprehensive income because of or different taxable entities where there is ties unless the group has an unconditional right items of income or expense that are taxable an intonation to settle the balances on a net to defer settlement of the liability for at least 12 or deductible in other years and items that basis. months after the end of the reporting period. are never taxable or deductible. The group’s liability for current tax is calculated using tax Current and deferred tax for the year Trade and other payables rates that have been enacted or substantively Current and deferred tax are recognised in Trade and other payables are recognised ini- enacted by the end of the reporting period. profit or loss, except when they relate to items tially at fair value and subsequently measured that are recognised in other comprehensive at amortised cost using the effective interest Changes in deferred tax income or directly in equity, in which case, the method. If the interest element is insignificant, Deferred tax is recognised on temporary current and deferred tax are also recognised trade payables are carried at the original differences between the carrying amounts in other comprehensive income or directly invoice amount. of assets and liabilities in the consolidated in equity respectively. Where current tax or financial statements and the corresponding deferred tax arises from the initial account- Derivatives tax bases used in the computation of taxable ing for a business combination, the tax effect Derivatives are recognised initially and in profit. Deferred tax liabilities are gener- is included in the accounting for the business subsequent reporting periods at fair value. ally recognised for all taxable temporary combination. Changes in fair value are recognised as Other differences. Deferred tax assets are gener- financial expense or –income. ally recognised for all deductible temporary 2.18 Provisions differences to the extent that it is probable Provisions, e.g. for warranties or infrastruc- De-recognition of financial liabilities that taxable profits will be available against ture, are recognised when the group has a The group derecognises financial liabilities which those deductible temporary differences present legal or constructive obligation as a when, and only when, the group’s obligations can be utilised. Such deferred tax assets and result of past events; it is probable that an are discharged, cancelled or they expire. The liabilities are not recognised if the temporary outflow of resources will be required to settle difference between the carrying amount of the difference arises from goodwill or from the the obligation; and the amount can be reliably financial liability derecognised and the consid- initial recognition (other than in a business estimated. Provisions are not recognised for eration paid and payable is recognised in profit combination) of other assets and liabilities in future operating losses. or loss (financial expense or –income). a transaction that affects neither the taxable The amount recognised as a provision is the profit nor the accounting profit. best estimate of the consideration required to 2.15 Cash and cash equivalents Deferred tax is recognised for taxable settle the present obligation at the end of the Cash and cash equivalents as presented in the temporary differences associated with invest- reporting period, taking into account the risks statement of cash flows include cash in hand, ments in subsidiaries and associates, and and uncertainties surrounding the obligation. bank deposits, and other short-term highly interests in joint ventures, except where the When a provision is measured using the cash liquid investments with original maturities group is able to control the reversal of the flows estimated to settle the present obliga- of three months or less. In the statement of temporary difference and it is probable that tion, its carrying amount is the present value financial position, bank overdrafts are pre- the temporary difference will not reverse in of those cash flows (where the effect of the sented within borrowings in current liabilities. the foreseeable future. The group recognises time value of money is material). deferred tax for associated companies and 2.16 Equity jointly controlled entities subject to partner- 2.19 Leases An equity instrument is any contract that ship taxation. Deferred tax is not recognised Leases are classified as finance leases when- evidences a residual interest in the assets of for limited companies. ever the terms of the lease transfer substan- an entity after deducting all of its liabilities. The carrying amount of deferred tax assets tially all the risks and rewards of ownership to Equity instruments issued by the group are is reviewed at the end of each reporting period the lessee. All other leases are classified as recognised at the proceeds received, net of and reduced to the extent that it is no longer operating leases. The group is currently not direct issue costs (net of income tax). probable that sufficient taxable profits will be party to any finance lease arrangements. Repurchase of the company’s own equity available to allow all or part of the asset to be Rental income from operating leases (in instruments is recognised and deducted recovered. which the group is a lessor) is recognised on directly in equity. No gain or loss is recognised Deferred tax assets and liabilities are meas- a straight-line basis over the term of the rel- in profit or loss on the purchase, sale, issue ured at the tax rates that are expected to apply evant lease and included in Other revenue. or cancellation of the company’s own equity in the period in which the liability is settled or Operating lease payments (in which the instruments. On subsequent disposal of own the asset realised, based on tax rates (and tax group is a lessee) are recognised as an
31 Consolidated Financial Statements Selvaag Bolig Group
expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which eco- nomic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. The group is currently not party to any material operating lease arrangements.
2.20 Employee benefits Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Obligations related to early retirement pensions (AFP) are part of a multi-employer defined benefit plan. The company’s share of the liability is, however, not measurable and the plan is thus accounted for as is it were a defined contribution plan.
2.21 Adoption of new and revised standards and interpretations
Issued accounting standards and interpretations effective for annual periods beginning on 1 January 2012 The following new and revised/amended IFRSs and interpretations have been adopted in these consolidated financial statements. The application has not had any material impact on the amounts reported, but may affect the accounting for future transactions or arrangements.
Applicable to accounting periods Interpretation Title Date of issue commencing on or after Amendments to IFRS 7 Disclosures – Transfers of Financial Assets October 2010 1 July 2011 Amendments to IAS 12 Deferred Tax – Recovery of Underlying Assets December 2010 1 January 2012
Issued accounting standards and interpretations not effective for the year ended 31 December 2012 As at the date of authorisation of these financial statements, the Standards and Interpretations in the table below had been issued by the IASB but were not effective for the financial year ended 31 December 2012. The directors anticipate that these Standards and Interpretations will be adopted in the group’s financial statements for the period beginning 1 January 2013 or later. Effective dates are as applicable for IFRSs as adopted by the European Union as these in some cases will deviate from the effective dates as issued by the IASB. The directors have not yet considered the potential impact of the adoption of these new and revised/amended IFRSs and Interpretations. Standards that are not clearly relevant for the consolidated financial statements (for example amendments to IFRS 1 First-time adoption of IFRSs) are not included in the table below.
Applicable to accounting periods Interpretation Title Date of issue commencing on or after IFRS 10 Consolidated Financial Statements May 2011 1 January 2014 IFRS 11 Joint Arrangements May 2011 1 January 2014 IFRS 12 Disclosure of Interests in Other Entities May 2011 1 January 2014 IFRS 13 Fair Value Measurement May 2011 1 January 2013 Amendments to IAS 1 Presentation of Items of Other Comprehensive Income June 2011 1 July 2012 IAS 19 (revised in 2011) Employee Benefits June 2011 1 January 2013 IAS 27 (revised in 2011) Separate Financial Statements May 2011 1 January 2014 IAS 28 (revised in 2011) Investments in Associates and Joint Ventures May 2011 1 January 2014 Amendments to IFRS 7 Disclosures - Offsetting Financial Assets and Financial December 2011 1 January 2013 Liabilities Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities December 2011 1 January 2014 Amendments to IFRS Amendments to transitional guidance June 2012 1 January 2013 10, 11 and 12 (not approved by the EU) Amendments to IFRS Amendments for investment entities October 2012 1 January 2014 10, IFRS 12 and IAS 27 (not approved by the EU) Improvements to IFRSs Improvements to IFRSs May 2012 1 January 2013 (various Standards and (not approved by the EU) Interpretations) IFRS 9 Financial Instruments November 2009, and subsequent amendments to IFRS 7 and IASB mandatory IFRS 9 issued December 2011 date 1 January 2015 postponed by the EU
32 Consolidated Financial Statements Selvaag Bolig Group
Note 3: Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. Estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources will be required. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. The estimates will, by definition, rarely equal the related actual results. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Certain amounts included in or affecting the financial statements and related disclosure must be estimated, requiring management to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared.
Estimation of net realisable value for inventory property: The property development projects are assets held for sale in the ordinary course of business or in the process of production for such sale. Such assets are classified as inventory in accordance with IAS 2. Inventories comprise land, properties held for resale, properties under development and construction, and are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. In determining the net realisable value, management carries out assessment of important factors relevant for the valuation, including macroeconomic factors such as expected housing prices and rental levels, as well as expected yields, approvals from authorities, construction costs and project progression. When considered appropriate, management uses reports from external valuation experts to estimate property values or to corroborate the company’s own estimates. Changes in circumstances and in management’s assessment and assumptions will result in amendments to the estimated net realisable value. Also refer to note 5.
Estimated impairment of goodwill The group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in note 2.9. The recoverable amounts of cash-generating units are determined based on fair value or useful value. These calculations require the use of estimates. No impairment charges have been made for the 2011 through 2012 financial periods and management has determined that any reasonably possible change in key assumptions, such as discount rate and estimated cash flows, would not cause the need to reduce the carrying amount of goodwill. Also refer to note 10.
Provisions The group has made provisions for contract obligations, e.g. infrastructure and construction of parking areas. The provision is based on present obligation, but of uncertain timing and amount. The size of the provision is estimated based on individual contracts and circumstances. Also refer to note 20.
33 Consolidated Financial Statements Selvaag Bolig Group
Note 4: Segment information
Management has determined the operating segments based on reports reviewed by the CEO and management group and which are used to make strategic decisions. The figures below were reported to the CEO and the management group at the end of the reporting period. The main segments are defined as Property Development (”Boligutvikling”) within three geographic regions: Greater Oslo, the Rest of Norway, and Other Countries. In addition the Other segment consists of Services and Estate Agent, as well as unallocated revenues and costs. The group utilises the percentage of completion method in its internal reporting for which the degree of completion is estimated based on expenses incurred relative to total estimated costs and sales rate. Operating revenues under the percentage of completion method also includes an estimated profit element for sold units. The group consolidated income statement is based on the completed contract method, in which revenue is recognised at the time of transfer of risk and control, being the point of delivery of the property. A reconciliation of this effect (from percentage of completion to completed contract) can be found in the segment reporting under ”Reconciliation EBITDA to operating profit (loss)”. Group management considers segment results based on the percentage of completion method for determining EBITDA. The method of measurement is defined as operating profit (loss) before “Depreciation and amortisation”, “Other gain (loss), net”, and “Share of income (losses) from disposals from associated companies and joint ventures”. Financial income and expenses are not allocated to operating segments since this type of activity is managed by a central finance function focused on managing the group’s liquidity.
Property development At 31 December 2012 Greater Rest of Other Other Total (amounts in NOK 1 000) Oslo Norway countries Operating revenues 2 330 926 878 524 1 390 44 327 3 255 167 Project expenses (1 681 291) (727 755) - (6 264) (2 415 310) Other operating expenses (76 449) (15 340) (1 774) (119 146) (212 709) EBITDA (percentage of completion) 573 186 135 429 (384) (81 083) 627 148
Reconciliation EBITDA to operating profit (loss): EBITDA (percentage of completion) 573 186 135 429 (384) (81 083) 627 148 Sales revenues (adjustment effect of percentage of completion) (1 875 529) (860 471) - - (2 736 000) Sales revenues (completed contract) 1 631 705 661 147 - - 2 292 852 Project expenses (adjustment effect of percentage of completion) 1 369 158 686 366 - - 2 055 524 Project expenses (completed contract) (1 241 820) (539 745) - - (1 781 565) Depreciation - - - (21 861) (21 861) Share of income (loss) from associated companies and joint 36 350 13 798 (793) - 49 355 ventures Other gain (loss), net - 4 067 - 73 4 140 Operating profit (loss) 493 051 100 591 (1 177) (102 871) 489 594
Segment revenues by category Property development by percentage of completion 1 875 529 860 471 - - 2 736 000 Sale of land and commercial buildings 417 900 - - - 417 900 Other revenues 37 497 18 053 1 390 44 327 101 267 Total operating revenues 2 330 926 878 524 1 390 44 327 3 255 167
Units in production 834 194 39 NA 1 067 Units delivered 580 196 - NA 776
Property development At 31 December 2011 Greater Rest of Other Other Total (amounts in NOK 1 000) Oslo Norway countries Operating revenues 844 343 218 199 546 143 754 1 206 842 Project expenses (630 374) (184 789) - (70 612) (885 775) Other operating expenses (23 122) (4 956) (629) (144 278) (172 985) EBITDA (percentage of completion) 190 847 28 454 (83) (71 136) 148 082
34 Consolidated Financial Statements Selvaag Bolig Group
Reconciliation EBITDA to operating profit (loss): EBITDA (percentage of completion) 190 847 28 454 (83) (71 136) 148 082 Sales revenues (adjustment effect of percentage of completion) (822 168) (217 063) - - (1 039 231) Sales revenues (completed contract) 136 103 - - - 136 103 Project expenses (adjustment effect of percentage of completion) 620 523 184 789 - - 805 312 Project expenses (completed contract) (118 421) - - - (118 421) Depreciation - - - (5 770) (5 770) Share of income (loss) from associated companies and joint 8 045 - - 67 029 75 074 ventures Other gain (loss), net - - - 5 991 5 991 Operating profit (loss) 14 929 (3 820) (83) (3 886) 7 140
Segment revenues by category Property development by percentage of completion 822 168 217 063 - - 1 039 231 Sale of land and commercial buildings 6 000 - - - 6 000 Other revenues 16 175 1 136 546 143 754 161 611 Total operating revenues 844 343 218 199 546 143 754 1 206 842
Units in production 730 284 - NA 1 014 Units delivered 78 - - NA 78
Within the Greater Oslo-segment, the project ”Løren 2B” makes a material contribution towards EBITDA. However, this project is 70% guaranteed by the non-controlling interests with an ownership of 3.7%. Guarantee fees are not reported as project expense, but as an allocation of profit and thus not reflected in EBITDA. This implies that profits for this project are shared approximately 50/50 between Selvaag Bolig and the non-controlling interests and not in accordance with the ownership interests. At 31 December, the cumulative minority (guarantor) share of the profit from this project was put at NOK 58.8 million, of which NOK 41.3 million relates to 2012. Project costs in segment property development the rest of Norway includes an impariment charge of NOK 20.8 million on a site in Tromsø.
Note 5: Inventory property Capitalised Borrowing cost project ex- (amounts in NOK 1 000) Land of land penses Total At 1 January 2011 356 291 - 9 531 365 822 Additions 5 096 13 488 538 328 556 911 Acquisition of subsidiaries (note 6) 2 025 530 69 168 1 323 844 3 418 542 Reclassifications of land to capitalised project expenses (97 651) - 97 651 - Inventory expenses on delivered units - - (125 351) (125 351) Annual impairment losses (4 900) - - (4 900) Carrying amount at 31 December 2011 2 284 366 82 656 1 844 003 4 211 025
Additions 14 189 65 449 1 747 739 1 827 377 Acquisition of subsidiaries (note 6) 12 210 - 1 419 13 629 Reclassifications of land to capitalised project expenses (295 060) (7 866) 302 926 - Inventory expenses on delivered units (project expenses) (176 516) (7 024) (1 923 989) (2 107 529) Annual impairment losses (1 905) (9 524) (22 387) (33 817) Carrying amount at 31 December 2012 1 837 283 123 691 1 949 710 3 910 685
(amounts in NOK 1 000) 2012 2011 Land (undeveloped) 1 960 974 2 367 022 Work in progress 1 831 718 1 749 358 Finished projects 117 992 94 645 Carrying amount at 31 December 3 910 684 4 211 025
Capitalisation rates utilised to determine the amount of borrowing costs eligible for capitalisation were between 4% and 5% during 2012. Corresponding rates were between 3.85% and 5.75% during 2011.
35 Consolidated Financial Statements Selvaag Bolig Group
Valuation of properties Plots of land are considered part of inventory and are valued to the lowest of acquisition cost and net realisable value. An internal assessment of the value of inventory property is prepared annually at year-end in order to determine net realisable value for individual plots/properties. Additionally, and at the group’s request, external valuations performed by Akershus Eiendom, of properties have been performed as of 31 Decem- ber 2012. Group management has determined the most significant assumptions relevant to the valuation of individual plots/properties, including size, geographic location, current regulation, potential for development, and timing of sale. The external valuation indicates excess values of NOK 725 million beyond the carrying amonts related to the properties included in land (undeveloped).
Impairment test inventory property The group has recognised impairment losses on inventory property (buildings and land) amounting to NOK 33.8 million in 2012, compared to NOK 4.9 million for 2011. See note 16 for inventory property pledged as collateral for borrowings from financial institutions.
Other revenues (amounts in NOK 1 000) 2012 2011 Lease revenues * 36 905 23 552 Service revenue 8 694 11 399 Other operating revenues 8 377 22 986 Total other revenues 53 976 57 937
* As of 31 December 2012 and 2011, all operating leases where the group acts as a lessor are cancellable.
Note 6: Business combinations
Acquisitions during the year There were no significant transactions in 2012.
2011 Main business activity Date of business combination Proportion of voting equity acquired Selvaag Pluss Eiendom KS Development and sale of properties 23.8.2011 66.7% Hansa Property Group AS Development and sale of properties 22.8.2011 69.8% Bo En AS Development and sale of properties 25.11.2011 37.5%
The above companies (with subgroups) have been acquired with the purpose of continuing expansion of the group’s activities, which focus on devel- opment and sale of residential properties in and around the largest cities in Norway, as well as in other selected areas. On 10 June 2011 the Annual General Meetings in Selvaag Bolig ASA and Hansa Property Group AS approved a merger of the two companies. Selvaag Bolig ASA is the continuing entity that will operate after the merger and the acquirer for financial reporting purposes. The merger was implemented on 22 August 2011 which is also the date for transfer of control. As a condition for the merger between Selvaag Bolig ASA and Hansa Property Group AS the company has undertaken a private placement to the owners in Selvaag Pluss Eiendom KS. The share issue was implemented on 23 August 2011 and has resulted in Selvaag Bolig ASA currently holding a 100% ownership interest in the company. In agreement with other shareholders in Bo En AS, Selvaag Bolig ASA assumed 37.5% of the shares. Bo En AS was instituted as a wholly-owned subsidiary upon approval from the extraordinary general meeting held 21 November 2011. The transfer of control for these shares was completed on 25 November 2011.
Consideration (amounts in NOK 1 000) Selvaag Pluss Eiendom KS Hansa Property Group AS Bo En AS Shares in Selvaag Bolig ASA 375 281 502 532 90 000 Cash - - 40 000 Future consideration in shares or cash - - 40 000 Fair value of existing ownership share in aqcuired business 187 612 301 045 255 360 Total consideration 562 893 803 577 425 360
The fair value of shares issued as part of the consideration for Selvaag Pluss Eiendom KS is estimated based on a valuation of the companies involved in the transactions and the exchange ratios between these companies. The valuation is based on management’s pricing of the properties and projects within each company, as well as the value of Selvaag Bolig ASA on a going concern basis. The transaction costs of NOK 11 million are not included in the consideration amount transferred, but is recognised as an expense in the third quarter, as part of ”Other operating expenses” in comprehensive income.
36 Consolidated Financial Statements Selvaag Bolig Group
Identifiable assets and liabilities recognised on the date of the business combination - Selvaag Pluss Eiendom KS
(amounts in NOK 1 000) Carrying amount Fair value adjustment Fair value ASSETS Non-current assets Deferred tax assets 5 797 (38 248) (32 451) Other intangible assets * - 50 000 50 000 Property, plant and equipment - - - Investments in associated companies and joint ventures 39 458 5 000 44 458 Loans to associated companies and joint ventures 35 000 - 35 000 Other non-current assets 4 129 - 4 129 Total non-current assets 84 384 16 752 101 136
Current assets Inventory property 569 396 30 000 599 396 Trade receivables 865 - 865 Other current receivables 83 867 - 83 867 Cash and cash equivalents 83 042 - 83 042 Total current assets 737 170 30 000 767 170 TOTAL ASSETS 821 554 46 752 868 306
LIABILITIES Non-current liabilities Pension obligations - - - Deferred tax liabilities 610 - 610 Provisions - - - Other non-current non-interest-bearing liabilities - - - Non-current interest-bearing liabilities 427 403 - 427 403 Total non-current liabilities 428 013 - 428 013
Current liabilities Current interest-bearing liabilities - - - Trade payables 7 079 - 7 079 Current tax payables - - - Provisions - - - Other current non interest-bearing liabilities 15 286 - 15 286 Total current liabilities 22 365 - 22 365 TOTAL LIABILITIES 450 378 - 450 378
Fair value of net assets 417 928
* Other intangible assets consists of trademark Selvaag Pluss
Identifiable assets and liabilities recognised on the date of the business combination - Hansa Property Group AS
(amounts in NOK 1 000) Carrying amount Fair value adjustment Fair value ASSETS Non-current assets Deferred tax assets 209 767 (137 841) 71 926 Other intangible assets ** 6 357 35 730 42 087 Property, plant and equipment 472 - 472 Investments in associated companies and joint ventures 308 839 - 308 839 Loans to associated companies and joint ventures - - Other non-current assets 49 873 - 49 873 Total non-current assets 575 309 (102 111) 473 198
37 Consolidated Financial Statements Selvaag Bolig Group
Current assets Inventory property 2 018 260 - 2 018 260 Trade receivables 1 922 - 1 922 Other current receivables 12 267 - 12 267 Cash and cash equivalents 187 735 - 187 735 Total current assets 2 220 184 - 2 220 184 TOTAL ASSETS 2 795 494 (102 111) 2 693 383
LIABILITIES Non-current liabilities Pension obligations - - - Deferred tax liabilities - - - Provisions 68 390 - 68 390 Other non-current non.interest-bearing liabilities - Non-current interest-bearing liabilities 1 869 759 - 1 869 759 Total non-current liabilities 1 938 149 - 1 938 149
Current liabilities Current interest-bearing liabilities - Trade payables 42 050 - 42 050 Current tax payables - - - Provisions - - - Other current non interest-bearing liabilities 39 064 - 39 064 Total current liabilities 81 114 - 81 114 TOTAL LIABILITIES 2 019 263 - 2 019 263
Fair value of net assets 674 119
** Other intangible assets consists of long term rental contracts.
Identifiable assets and liabilities recognised on the date of the business combination - Bo En AS
(amounts in NOK 1 000) Carrying amount Fair value adjustment Fair value Non-current assets Deferred tax assets 1 335 - 1 335 Other intangible assets 2 545 - 2 545 Property, plant and equipment 121 - 121 Investments in associated companies and joint ventures 679 - 679 Loans to associated companies and joint ventures - - - Other non-current assets 100 - 100 Total non-current assets 4 780 - 4 780
Current assets Inventory property 800 886 - 800 886 Trade receivables 289 - 289 Other current receivables 849 - 849 Cash and cash equivalents 10 593 - 10 593 Total current assets 812 617 - 812 617 TOTAL ASSETS 817 397 - 817 397
Non-current liabilities Pension obligations - - - Deferred tax liabilities - 83 494 83 494 Provisions 34 274 - 34 274 Other non current non interest-bearing liabilities 842 - 842 Non-current interest-bearing liabilities 149 775 - 149 775 Total non-current liabilities 184 891 83 494 268 385
38 Consolidated Financial Statements Selvaag Bolig Group
Current liabilities Current interest-bearing liabilities 157 937 - 157 937 Trade payables 20 153 - 20 153 Current tax payables - - - Provisions - - - Other current non interest-bearing liabilities 45 840 - 45 840 Total current liabilities 223 930 - 223 930 TOTAL LIABILITIES 408 821 83 494 492 315
Fair value of net assets 325 082
Assets and liabilities assumed in connection with the business combination of Selvaag Pluss Eiendom KS, Hansa Property Group AS and Bo En AS have been recognised at the estimated fair value on the date of the business combination. The measurement of identifiable assets and liabilities is based on provisional values determined by management, pending final valuations. The fair value of trade receivables and other receivables in Selvaag Pluss Eiendom KS is NOK 84.7 million and includes trade receivables with a fair value of NOK 0.9 million. No provisions have been made for impairment. The fair value of trade receivables and other receivables in Hansa Property Group AS is NOK 4.2 million and includes trade receivables with a fair value of NOK 1.8 million. The nominal value of the trade receivables is NOK 7.0 million, of which NOK 5.2 million is considered to be impaired. The fair value of trade receivables and other receivables in Bo En AS is NOK 1.1 million and includes trade receivables with a fair value of NOK 0.3 million. No provisions have been made for impairment.
Goodwill
(amounts in NOK 1 000) Selvaag Pluss Eiendom KS Hansa Property Group AS Bo En AS Consideration transferred 562 893 803 577 425 360 Non-controlling interests 5 975 1 501 - Fair value of identifiable net assets acquired (417 928) (674 119) (325 082) Goodwill 150 940 130 959 100 278
Goodwill arising from business combinations is primarily related to anticipated synergies from on-going operations and the benefit of integrating the entire business into the group (control premium). Part of goodwill can be attributed to recognising deferred tax obligation at nominal value. Goodwill that has arisen as part of business combinations is not tax deductible. Non-controlling interests at the date of transfer of control are measured at the fair value of net identifiable assets attributable to non-controlling shareholders.
Effect on group results The group has recognised a gain of NOK 62.6 million which resulted from a prior 33.3% ownership interest in Selvaag Pluss Eiendom KS, and which was re-measured at fair value in the business combination. Similarly, a gain of NOK 14.6 million was recognised when re-measuring the prior own- ership interest in Hansa Property Group AS at fair value. Finally, a prior 62.5% ownership interest in Bo En AS gave rise to a gain of NOK 1.5 million when re-measured at fair value. The total gain of 78.7 million is included in the item ”share of profit and gains (losses) on disposal of associated companies and joint ventures” in the statement of comprehensive income. From 24 August 2011 Selvaag Pluss Eiendom KS has contributed NOK 1.5 million in sales revenues and NOK -2.4 million to loss for the period in the statement of comprehensive income. Hansa Property Group AS has from 24 August 2011 contributed NOK 81.4 million in sales revenue and NOK -11.6 million to loss for the period in the statement of comprehensive income. Bo En AS has from 26 November 2011 contributed 0.2 million in sales revenue and -1.2 million to loss for the period in the statement of comprehensive income. If these businesses had been consolidated from 1 January 2011 the sales revenues for the group would have been NOK 357.5 million and the loss for the group in 2011 would have been NOK -53.7 million.
Note 7: Salaries and personnel expenses
(amounts in NOK 1 000) 2012 2011 Wages and salaries (82 866) (64 970) Social security tax (12 771) (9 466) Pension costs (defined contribution plans) (3 979) (2 952) Other benefits (3 449) (2 678) Salary expense capitalised to inventory 26 260 3 747 Total salaries and personnel expenses (76 806) (76 319)
As of 31 December 2012, the group had 99 employees. In 2012, the average number of employees (and full-time equivalents) was 93.
39 Consolidated Financial Statements Selvaag Bolig Group
Specification of pension costs (amounts in NOK 1 000) 2012 2011 Pension cost - defined contribution and disability pension plan (3 475) (2 816) Other pension costs (including early retirement (AFP)) (504) (136) Net pension costs (3 979) (2 952)
As of 31 December 2012, there were 91 employees included in the defined contribution plan. 54 current employees were included in the early retirement (AFP) plan. Also refer to note 10 for Selvaag Bolig ASA. Companies in Norway are required to offer a pension plan in line with the Act relating to occupational pensions (”lov om obligatorisk tjenestepensjon”), and the group’s companies have a pension plan that meets these requirements. Basis for earned pension rights under the defined contribution plan is 3.5% of salary between 1 and 6 times the social security base amount (G) and 6.5% between 6 and 12 G.
Note 8: Other operating expenses
(amounts in NOK 1 000) Note 2012 2011 Operation and maintenance (25 082) (17 139) Consultancy expenses (23 231) (36 202) Commisions and other sales related expenses (69 984) (32 002) Losses on receivables 12 74 (628) Other operating expenses (17 681) (10 694) Total other operating expenses (135 904) (96 665)
Operation and maintenance includes expences related to lease contracts and operation of the Selvaag Group headquarters purchased from Selvaag Gruppen of NOK 8.1 million, compared to NOK 8.2 million in 2011. Consultancy expenses during 2011 were material and not directly comparable with a typical operating year. The group has employed extensive manpower related to large transactions, preparations for the company’s initial public offering, as well as general marketing. The increase in commisions and other sales related expenses follows Selvaag Bolig’s continued promotion as Norway’s leading housebuilder, and the start to sales in a number of projects during the year. Other operating expenses primarily consist of administrative expenses, including services purchased from Selvaag Gruppen of NOK 3.5 million in 2012 and NOK 2.2 million in 2011.
Note 9: Financial income and expenses
(amounts in NOK 1 000) Note 2012 2011 Interest income on financial assets measured at amortised cost 21 739 21 005 Net foreign currency gains 1 526 1 100 Other financial income 596 (2 658) Total financial income 23 861 19 447
Interest expenses on financial liabilities measured at amortised cost (127 936) (60 413) Capitalised interest 5 65 449 13 488 Total interest expenses (62 487) (46 925) Net foreign currency losses (1 095) (1 354) Other financial expenses (1 744) (7 283) Total financial expenses (65 326) (55 562)
Net financial expenses (41 465) (36 115)
40 Consolidated Financial Statements Selvaag Bolig Group
Note 10: Intangible Assets Other intangible (amounts in NOK 1 000) Goodwill Trademarks assets Total Cost of acquisition Cost at 31 December 2010 7 007 - - 7 007 Additions 382 176 50 000 44 545 476 721 Disposals - - - - Cost at 31 December 2011 389 183 50 000 44 545 483 728 Additions - - - - Disposals - - - - Cost at 31 December 2012 389 183 50 000 44 545 483 728
Accumulated amortisation Accumulated amortisation at 31 December 2010 - - - - Write-downs - - - - Amortization - (2 500) (1 882) (4 382) Accumulated amortisation at 31 December 2011 - (2 500) (1 882) (4 382) Write-downs - Amortization (10 000) (9 742) (19 742) Accumulated amortisation at 31 December 2012 - (12 500) (11 624) (24 124)
Carrying amount at 31 December 2011 389 183 47 500 42 663 479 346 Carrying amount at 31 December 2012 389 183 37 500 32 921 459 604
Estimated useful life - 5 years* 5 years* Amortisation method - Straight-line Straight-line
* Estimated useful life until September 2016.
The change in the carrying value of goodwill from 2010 and 2011 relates to the acquisitions of Selvaag Eiendom Pluss KS and Bo En AS, as well as to the merger with Hansa Property Group AS. Please refer to note 6 - Business combinations for further details. The value of the trademark relates to the brand Selvaag Pluss, while other intangible assets are related to long-term property leases. The value of intangible assets is tested for impairment annually, or more often when there is indication that the value may be impaired. If the recoverable amount is less than the carrying amount, the asset is written down to its recoverable amount.
Impairment testing of goodwill and other intangible assets The group tests goodwill for impairment annually, or more often if internal or external indications of impairment exist. Other intangible assets, including the trademark ”Selvaag Pluss” and long-term property leases will be amortised over their expected useful life and tested for impairment if events during the period indicate that the value may be impaired. a) Goodwill Goodwill arisen from business combinations is allocated to each of the group’s cash-generating segments as follows:
2012 Goodwill Property development - Greater Oslo 213 309 Property development - The rest of Norway 168 867 Other 7 007 Total 389 183
2011 Goodwill Property development - Greater Oslo 213 309 Property development - The rest of Norway 168 867 Other 7 007 Total 389 183
41 Consolidated Financial Statements Selvaag Bolig Group
Following the acquisitions of Hansa Property Group, Selvaag Pluss Eiendom KS and the remaining shares of Bo En AS during the third and fourth quarter of 2011, the group altered its operating segment reporting to Property development across three geographic areas - Greater Oslo, The rest of Norway, Other countries, and Other. Goodwill allocated to the ”Other” segment originated from the acquisition of Meglerhuset Selvaag in 2010. Refer to note 4 for segment information and note 6 for further information on business combinations. The key assumptions in the calculation of value in use are development in property prices, project costs, sales volume and discount rate. As described in note 5 the company has significant excess values related to land available for development. The excess values are allocated to segments property development greater Oslo and the rest of Norway. The company expects the excess values to be realized through development during the nest 5 to 10 years. No reasonable fall in property prices or volume, increase in project costs or discount rate will trigger a write-down of goodwill. b) trademark The trademark ”Selvaag Pluss” was included in the acquisition of Selvaag Pluss Eiendom KS detailed in note 6. The recoverable amount of the asset is calculated based on the expected future value generated by the concept. The liquidity forecasts used in the estimates are based on management’s estimate of the expected excess value of the ”Pluss-concept” during a five-year period. Future cash flows are discounted using a discount rate of 15% (before tax). c) Other intangible assets Other intangible assets include specific long-term property leases in acquired businesses detailed in note 6. The recoverable amount of the asset is calculated based on the expected future value of the property lease. Liquidity forecasts are based on management’s estimate of future expected cash flows generated by property leases in the course of a five-year period. Value assessments are based on the number of square meters leased, the amount of idle leasable space, lease income per square meter and variable lease expenses. Future cash flows are discounted at a rate of 10% after tax.
Note 11: Property, plant and equipment
(amounts in NOK 1 000) Residential properties Other equipment Total Cost at 31 December 2010 2 000 2 998 4 998 Additions 2010 - 3 255 3 255 Disposals 2010 - - - Translation differences - 1 1 Cost at 31 December 2011 2 000 6 254 8 254 Additions 2011 4 993 4 993 Disposals 2011 (2 000) (2 000) Translation differences (62) (62) Cost at 31 December 2012 - 11 185 11 185 - Accumulated depreciation at 31 December 2010 - (1 224) (1 224) Depreciation 2011 - (1 388) (1 388) Accumulated depreciation at 31 December 2011 - (2 612) (2 612) Depreciation 2012 - (2 119) (2 119) Accumulated depreciation at 31 December 2012 - (4 731) (4 731) - Carrying amount at 31 December 2011 2 000 3 642 5 642 Carrying amount at 31 December 2012 - 6 454 6 454
Estimated useful life - 3-5 years Depreciation method - straight-line
Note 12: Trade and other receivables
(amounts in NOK 1 000) 2012 2011 Receivables from sale of land to Lørenskog municipality 47 214 - Seller credits 26 446 25 429 Other loans and receivables 43 256 11 355 Other non-current assets 116 916 36 784
42 Consolidated Financial Statements Selvaag Bolig Group
(amounts in NOK 1 000) 2012 2011 Trade receivables 199 676 31 436
Current non-interest-bearing receivables from the Selvaag Group 1 332 130 Interest-bearing receivables from associated companies and joint ventures 205 205 Other receivables 276 284 57 941 Other current financial receivables 277 821 58 276 Prepaid expenses 11 854 29 815 Total other current receivables 289 675 88 091
The carrying amounts of trade and other receivables are denominated in NOK.
Analysis of trade receivables overdue at the end of the reporting period 31.12.2012 31.12.2011 Not overdue 195 149 36 712 Overdue 1-100 days 4 033 1 214 Overdue > 100 days 7 478 6 259 Gross trade receivables 206 661 44 185 Total allowance for doubtful debts* 6 984 12 748 Net trade receivables 199 676 31 436
* Additions related to business combinations were NOK 10.5 million in 2011.
Losses on receivables 31.12.2012 31.12.2011 Movement in allowance for doubtful debts 5 764 (431) Receivables written off during the year as uncollectible (5 690) (197) Losses on receivables in the statement of comprehensive income 74 (628)
Note 13: Additional information to the statement of cash flows
Acquisitions of businesses and subsidiaries The table below shows the effects on the consolidated statement of financial position from acquisitions of businesses and subsidiaries:
(amounts in NOK 1 000) 2012 2011 Associated companies and joint ventures - 353 976 Other non-current assets - 607 315 Current assets 23 448 3 799 971 Liabilities (14 208) (2 961 956) Non-controlling interests - (7 476) Total consideration 9 240 1 791 830
Cash payments related to acquisitions (15 564) (30 000) Cash in subsidiaries acquired 205 281 370 Payments for acquisitions of businesses and subsidiaries, net of cash acquired (15 359) 251 370
Acquisitions in 2012 consist of Bo Emmaus AS. In addition, cash payments in 2012 includes payments for acquisitions of businesses recognised in 2011. Acquisitions in 2011 consist of Hansa Property Group AS, Selvaag Pluss Eiendom KS and Bo En AS, see note 6.
Disposal of businesses and subsidiaries The table below shows the effects on the consolidated statement of financial position from disposal of businesses and subsidiaries:
(amounts in NOK 1 000) 2012 2011 Current assets - 7 994 Liabilities - (420)
43 Consolidated Financial Statements Selvaag Bolig Group
Gains (losses) on disposal of businesses and subsidiaries - (202) Total consideration - 7 372
Cash proceeds related to disposals of businesses and subsidiaries - 18 448 Cash in subsidiaries disposed of - (1 044) Payments for acquisitions of businesses and subsidiaries, net of cash acquired - 17 404
Disposals in 2011 consist of Selvaaghus AB. In addition, cash proceeds in 2011 include payment from disposal of businesses recognised in previous years.
Significant non-cash transactions In 2011, consideration for the acquisitions of businesses and subsidiaries largely comprise issue of new shares.
Cash and cash equivalents
(amounts in NOK 1 000) 31.12.2012 31.12.2011 Restricted bank accounts - - Non-restricted bank deposits and cash 557 989 395 207 Total 557 989 395 207
Interest payments Payments and proceeds of interest are classified as operating activities. Payments were NOK 222.1 million and NOK 69.0 million in 2012 and 2011, respectively. Proceeds of interests were NOK 8.3 million in 2012 and NOK 8.1 million in 2011.
Note 14: Additional information to the statement of changes in equity and shareholders
Paid-in capital Number of Share Share Other paid-in Total paid-in (amounts in NOK 1 000, except number of shares) shares capital premium capital capital Equity as of 1 January 2011 100 159 7 286 699 132 706 577 Share capital increase through conversion of debt 41 285 820 82 413 17 587 - 100 000
Share capital increases related to business combinations: - acquisition of Selvaag Pluss Eiendom KS 10 814 568 21 629 376 982 - 398 611 - acquisition of Hansa Property Group AS 13 644 552 27 289 475 631 - 502 920 - acquisition of Bo En AS 2 441 756 4 884 85 116 - 90 000 - expenses directly attributable to share capital increases (after taxes) - - (4 297) - (4 297)
Purchase of treasury shares related to business combinations (10 531) (21) (367) (388) Equity as of 31 December 2011 68 176 265 136 353 957 938 699 132 1 793 423 Share capital increase related to initial public offering 25 031 030 50 062 449 938 500 000 Expenses directly attributable to initial public offering (after taxes) (22 722) 621 (22 101)
Share capital increase from Greenshoe option 547 862 1 096 9 703 876 11 675 Equity as of 31 December 2011 93 755 157 187 511 1 394 857 700 629 2 282 997
As of 31 December 2012, the share capital of the company (net of treasury shares) was NOK 187 510 314, comprising 93 755 157 fully-paid ordinary shares with a par value of NOK 2.00. As of 31 December 2011, the share capital of the company (net of treasury shares) was NOK 136 352 530, com- prising 68 176 265 fully-paid ordinary shares with a par value of NOK 2.00. All issued shares carry equal rights. The company holds 10 531 treasury shares as of 31 December 2012 (10 531 treasury shares as of 31 December 2011). Other paid-in capital consists of group contribution received from companies in the Selvaag Group, and equity effects related to mergers, initial public offering and share capital increases.
Other equity reserves Other reserves in the statement of changes in equity consist of the group’s share of transactions with owners in associated companies and joint ventures.
44 Consolidated Financial Statements Selvaag Bolig Group
Non-controlling interests (NCI)
NCI ownership in % NCI share of profit (loss) NCI carrying amount as of (amounts in NOK 1 000) 31.12.12 31.12.11 2012 2011 31.12.12 31.12.11 Nesttun Pluss AS/KS 25.0% 25.0% 12 392 (1 010) 17 357 4 966 Løren 2B AS/IS 3.7% 3.7% 55 568 (6) 57 064 1 495 67 960 (1 016) 74 421 6 461
The project Løren 2B is partly guaranteed by external investors. The guarantee, which is significant in this project, leads to a substancial share of the profit to be distributed based on the share of the guarantee rather than the ownership share.
Ownership structure As of 31 December 2012, the group had 651 shareholders, of which 46 shareholders outside Norway. As of 31 December 2011, the group had 96 shareholders, of which 4 shareholders outside Norway.
The 20 largest shareholders as of 31 Desember 2012 were as follows:
Shareholder Ordinary shares Ownership/ voting share % Selvaag Gruppen AS 50 180 087 53.5% Skandinaviska Enskilda Banken 5 321 953 5.7% Havfonn AS 3 604 856 3.8% IKM Eiendom AS 3 575 624 3.8% MP Pensjon PK 3 480 000 3.7% Skips AS Tudor 3 235 517 3.5% TS Eiendom AS 1 782 568 1.9% Storebrand Verdi 1 527 853 1.6% Pareto AS 1 490 000 1.6% Toluma Invest AS 813 318 0.9% Holberg Norge 800 000 0.9% Holta Invest AS 750 000 0.8% Investire Invest AS 750 000 0.8% JPMorgan Chase Bank 750 000 0.8% Sundt AS 550 000 0.6% Hustadlitt A/S 501 449 0.5% Verdipapirfondet Omega Investment 500 000 0.5% Verdipapirfondet DnB SMB 490 000 0.5% Storebrand Aksje Innland 465 279 0.5% Banan 450 000 0.5% Total 20 largest shareholders 81 018 504 86.4% Other shareholders (including treasury shares) 12 747 184 13.6% Total ordinary shares 93 765 688 100.0%
The 20 largest shareholders as of 31 Desember 2011 were as follows:
Shareholder Ordinary shares Ownership/ voting share % Selvaag Gruppen AS 41 285 920 60.5% Ferd Eiendomsinvest AS 3 604 856 5.3% Havfonn AS 3 604 856 5.3% Skips AS Tudor 3 235 517 4.7% IKM Eiendom AS 3 058 938 4.5% Storebrand Livsforsikring 2 741 388 4.0% Svithun Finans AS 1 181 968 1.7% TS Eiendom AS 1 181 968 1.7% Toluma Invest AS 813 318 1.2% Veidekke Eiendom AS 753 238 1.1% Rotac AS 710 033 1.0% Lema AS 534 501 0.8%
45 Consolidated Financial Statements Selvaag Bolig Group
MP Pensjon 522 829 0.8% SEB Enskilda ASA 383 225 0.6% AS Wingana 353 359 0.5% Hustadlitt AS 351 449 0.5% Megaron AS 340 924 0.5% Jasto AS 278 089 0.4% Statoil Pensjon 261 960 0.4% Leif Hubert Eiendom 254 507 0.4% Total 20 largest shareholders 65 452 843 96.0% Other shareholders (including treasury shares) 2 733 953 4.0% Total ordinary shares 68 186 796 100.0%
The members of the board of directors and the Chief Executive Officer held no share options in the company during the years 2011 and 2012. See note 22 for an overview of the members of the board of directors’ and the Chief Executive Officer’s share ownership in the company during the years 2011 and 2012.
Note 15: Earnings per share
Earnings per share are calculated by dividing the profit (loss) for the period by the weighted average number of shares in issue. There are no diluting effects related to the share capital in the years 2012 and 2011.
2012 2011 Profit (loss) for the period attributable to shareholders of the company in NOK 1 000 278 387 (4 694) Weighted average number of shares outstanding during the period 82 183 326 31 097 944 Basic earnings per share in NOK 3.39 (0.15) Diluted earnings per share in NOK 3.39 (0.15)
Note 16: Interest-bearing liabilities
Specification of interest-bearing liabilities
(amounts in NOK 1 000) 2012 2011 Non-current liabilities Bank loans 1 461 463 2 341 843 Other non-current liabilities - 34 457 Total non-current interest-bearing liabilities at amortised cost 1 461 463 2 376 300 Current liabilities Bank loans 1 357 227 1 001 498 Bond issue - 22 000 Other current liabilities 11 608 166 130 Total current interest-bearing liabilities at amortised cost 1 368 835 1 189 628 Total interest-bearing liabilites at amortised cost 2 830 298 3 565 928
Net proceeds of NOK 440 million from the initial public offering was applied to redemption of loans. Outstanding amount from the bond issue of NOK 22 million has been repaid. Other reductions in interest bearing liabilities are related to repayments of construction loans from completed projects.
Company (amounts in NOK 1 000) Loan instrument Lender 2012 Currency Maturity date Selvaag Bolig ASA Land loan DNB 494 400 NOK 01.07.2016 * Selvaag Bolig ASA Equity Bridge DNB 224 000 NOK 2013- 2015 ** Selvaag Bolig ASA Working capital fascility DNB 128 383 NOK Ikke spesifisert Selvaag Bolig ASA Revolving credit fascility DNB 85 000 NOK 25.08.2014 Selvaag Bolig Lillohøyden AS Land loan DNB/Handelsbanken 191 500 NOK 31.12.2013 Skårer Bolig AS Land loan Storebrand 195 000 NOK 19.11.2015 Selvaag Bolig Løren 5 AS Land loan DNB / Handelsbanken 117 943 NOK 31.12.2013
46 Consolidated Financial Statements Selvaag Bolig Group
Lade Allé 67 / 69 Holding AS Land loan DNB 73 700 NOK 30.06.2013 Jaasund AS Land loan SR Bank 69 718 NOK 31.12.2018 Lervik Brygge Land loan SR Bank 58 300 NOK 31.12.2015 Nyhavn Pluss Land/construction loan DNB 53 247 NOK 30.06.2014 Selvaag Bekkebakken AS Construction loan DNB 119 575 NOK 01.07.2013 Selvaag Bolig Bjørnåsen Syd II AS Construction loan DNB 57 530 NOK 31.03.2013 Selvaag Bolig Bjørnåsen Syd II AS Construction loan DNB 97 641 NOK 30.06.2013 Selvaag Løren 7 AS Construction loan DNB 65 276 NOK 28.02.2014 Selvaag Bolig Glassverket AS Construction loan DNB 63 925 NOK 30.06.2013 Selvaag Skullerud AS Construction loan DNB 52 885 NOK 30.07.2013 Selvaag Bolig Kornmoenga AS Construction loan DNB / Handelsbanken 52 348 NOK 30.06.2014 Selvaag Fernanda Nissen AS Construction loan DNB 49 773 NOK 15.02.2014 Nesttun Pluss KS Construction loan DNB 79 733 NOK 30.09.2013 Lervik Brygge Construction loan SR Bank 124 874 NOK 31.12.2013 Øvrige selskaper i Stor-Oslo Land loan DNB/Sparebanken Øst 103 815 NOK 2013 - 2015 Øvrige selskaper i Stor-Oslo Construction loan DNB 13 316 NOK 2012 - 2013 Øvrige selskaper i Resten av Norge Land loan DNB/SR Bank 137 172 NOK 2013 - 2017 Øvrige selskaper i Resten av Norge Construction loan SR Bank 57 258 NOK 2013 - 2015 Øvrige selskaper Other loans DNB/Sparebanken Øst/Bancaja 63 986 - 2013 - 2022 Total interest-bearing liabilities 2 830 298
Interest rates are based on 3 month NIBOR with a margin added on. As per 31 December 2012 the average interest rate for land loans was 4.05%, construction loans 3.95% and other loans 4.85%. The differences between the disclosed nominal interest rates and effective interest rates are deemed insignificant. Duration of contruction loans follows the completion rate and delivery of housing units, hence final redemption is when the project is completed. * NOK 144.4 millioner matures in 2013, NOK 50 millioner in 2014 and 2015 respectively, while the remaining NOK 250 millioner matures in 2016. ** NOK 39 millioner matures in 2013, NOK 50 millioner in 2014 and NOK 135 millioner in 2015. If the company raise new capital this must be used to repay the equity bridge. This loan must also be repaid before the company can start paying dividends.
Company (amounts in NOK 1 000) Loan instrument Lender 2011 Currency Maturity date Selvaag Bolig ASA Land loan DNB 546 150 NOK 01.07.2016 Selvaag Bolig ASA Equity Bridge DNB 484 000 NOK 01.12.2012 * Selvaag Bolig ASA Loan Selvaag Gruppen 166 130 NOK 31.12.2012 ** Selvaag Bolig ASA Bond issue Bond holders 22 000 NOK 31.12.2012 Selvaag Bolig Lillohøyden AS Land loan DNB/Handelsbanken 191 500 NOK 31.12.2013 Skårer Bolig AS Land loan Storebrand 195 000 NOK 19.11.2015 Løren 2 B AS Construction loan DNB/Handelsbanken 221 721 NOK 30.09.2012 Selvaag Bolig Kornmoenga AS Construction loan DNB/Handelsbanken 186 203 NOK 30.06.2014 Selvaag Bolig Løren 5 AS Construction loan DNB/Handelsbanken 146 826 NOK 31.12.2013 Nesttun Pluss KS Construction loan DNB 178 542 NOK 30.09.2013 Lervik Brygge AS Construction loan SR Bank 115 854 NOK 31.12.2012 Other companies in Greater Oslo Land loan DNB/Handelsbanken/Storebrand 251 093 NOK 2013 - 2015 Other companies in Greater Oslo Construction loan DNB/storebrand 273 093 NOK 2012 - 2013 Other companies in the rest of Norway Land loan DNB/SR Bank 360 894 NOK 2013 - 2017 Other companies in the rest of Norway Construction loan SR Bank 76 295 NOK 2012 - 2015 Other companies Other loans - 150 627 NOK 2013 - 2022 Total interest-bearing liabilities 3 565 928
Interest rates are based on 3 month NIBOR with a margin added on. As per 31 December 2011 the average interest rate for land loans was 5.0%, construction loans 4.85% and other loans 6.15%. The differences between the disclosed nominal interest rates and effective interest rates are deemed insignificant. Duration of contruction loans follows the completion rate and delivery of housing units, hence final redemption is when the project is completed. * According to plan, this loan will be paid in part or fully in the case of a share issue with subsequent initial public offering, with the option to post- pone the maturity date to 30 June 2014 at the company’s request. If this option is used, the lender will receive the right to convert any remaining balance into shares in the company. ** The loan has no set maturity date, but can be converted into Company shares in the case of a share issue and subsequent initial public offering, planned for 2012.
47 Consolidated Financial Statements Selvaag Bolig Group
Non-current interest-bearing liabilites
Maturity schedule for non-current loans:
Period 2012 2011 To be repaid during 2013 - 1 067 190 To be repaid during 2014 463 548 382 909 To be repaid during 2015 445 381 266 778 To be repaid during 2016 250 000 546 150 To be repaid during 2017 or later 302 534 113 273 Total 1 461 463 2 376 300
Current interest-bearing liabilities The table below includes liabilities maturing within 12 months subsequent to the reporting period
Maturity schedule for current loans:
Period 2012 2011 Repayable within 0-6 months after period-end 436 586 290 679 Repayable within 6-12 months after period-end 932 249 898 949 Total 1 368 835 1 189 628
Collateral and guarantees etc.
Secured loans 2012 2011 Bank loans - financial institutions 2 323 936 2 742 882
Carrying value of land pledged as security on bank loans 2012 2011 Land 3 517 922 3 925 669
Note 17: Trade and other payables
(amounts in NOK 1 000) 2012 2011 Trade payables 181 379 148 682
Current non-interest-bearing liabilities payable to the Selvaag Group - 1 293 Accrued expenses * 235 580 76 197 Other current financial liabilities 10 772 78 141 Total other current non-interest-bearing financial liabilities 246 352 155 630 Other current liabilities 116 005 109 162 Total other current non-interest-bearing liabilities 362 357 264 792
* The increase must be seen i relation to significantly increased project activities.
Trade payables The group’s trade payables have the following maturity structure at 31 December:
Maturity 2012 2011 Repayable 0-3 months after the end of the reporting period 181 379 148 682 Repayable 3-6 months after the end of the reporting period - - Net trade payables 181 379 148 682
48 Consolidated Financial Statements Selvaag Bolig Group
Note 18: Managing capital and financial risk management
18.1 Financial risk factors The group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management activities seek to minimise potential adverse effects on the group’s financial performance. The CEO and management group identify and evaluate financial risks on an on-going basis.
(a) Market risk (i) Foreign exchange risk. Projects outside Norway are financed in local currency through subsidiaries. The current policy is not to hedge foreign currency exposure. The company is a Norwegian real estate developer, focusing on Norwegian development projects and properties. The group has certain invest- ments in foreign operations, whose net assets are exposed to foreign currency translation risk, however to a limited degree. Projects outside Norway are financed in local currency through subsidiaries. The current policy is not to hedge foreign currency exposure.
(ii) Price risk The group is generally exposed to property price risk, and the group is mainly exposed geographically in Norway. In addition, the group has invested in one ongoing and one future project in Sweden, in addition to one project in Spain. The group is also exposed to risks related to construction costs and material prices. The profit margin of each project will vary depending on the development of sales income per square meter for the residential properties. The group’s exposure to price risk is partly hedged as presales is limited until construction contracts have been signed. “ The degree of risk associated with the prices of goods and services varies depending on contract type. Projects often span over several years and material prices and salary expenses may increase during the construction period. Most contracts are based on fixed prices for the construction period, but certain contracts contain index clauses allowing price increases.
(iii) Interest rate risk The group’s interest rate risk arises largely from long term borrowings. Borrowings issued at variable rates expose the group to interest rate fluctua- tions affecting cash flows. The group capitalises interest cost as part of development projects (inventory property) as the projects progress, in accord- ance with IAS 23 Borrowing Costs. Refer to note 16 Interest-bearing liabilities for details of the group’s borrowings.
(b) Credit risk Credit risk is managed on a group level. The group is exposed to counterparty risk when group companies enters into agreements regarding sales of residential property. Credit risk also arises from outstanding receivables, such as loans to associated companies. Credit risk related to sale of property is considered to be limited since sales take place through professional estate agents. Normally, a 10% deposit is required from home buyers upon entering a contract. The balance is settled upon transfer of title. Based on the above, the group assesses credit risk associated with financial assets to be low. The group’s maximum exposure to credit risk comprises the classes ‘trade receivables and other current and non-current receivables’, and ‘cash and cash equivalents’. See note 18.3 for carrying amounts of these classes as of 31 December 2011 and 2012.
(c) Liquidity risk The group aims to maintain sufficient liquidity to meet its foreseeable obligations as well as securing a reasonable capacity to meet its funding and liquidity management requirements. The group manages its liquidity risk by maintaining adequate cash reserves, banking facilities and borrowing facilities, mainly through the Selvaag Bolig Group cash pool facility, and by continuously monitoring forecast and actual cash flows. The forecasts take into consideration the group’s financing plans and covenant compliance.
See note 16 ‘Interest-bearing liabilities’ and note 17 ‘Trade and other payables’ for maturity analysis of financial liabilities. The majority of current non-interest bearing liabilities are repayable within 6 months.
Maturity schedule for the group’s liabilities (nominal values)
Interest-bearing liabilities (amounts in NOK 1 000) Note Total per 31.12.2012 < 1 year 1-3 years 3-6 years 6-10 years > 10 years Bank loans * 16 3 069 417 1 404 717 1 046 600 466 940 151 161 - Other interest-bearing liabilities 16 11 608 11 608 - - - - Total interest-bearing liabilities 3 081 025 1 416 325 1 046 600 466 940 151 161 -
* Including estimated interest payments.
49 Consolidated Financial Statements Selvaag Bolig Group
Non-interest-bearing liabilities (amounts in NOK 1 000) Note Total per 31.12.2012 < 1 year 1-3 years 3-6 years 6-10 years > 10 years Trade payables 17 181 379 181 379 - - - - Current non-interest-bearing liabilities payable to the 17 ------Selvaag Group Accrued expenses 17 235 580 235 580 - - - - Other current financial liabilities 17 10 772 10 772 - - - - Other current liabilities 17 116 005 116 005 - - - - Other non-current non-interest-bearing liabilities 18.3 15 000 - 15 000 - - - Total non-interest-bearing liabilities 558 736 543 736 15 000 - - -
Interest-bearing liabilities (amounts in NOK 1 000) Note Total per 31.12.2011 < 1 year 1-3 years 3-6 years 6-10 years > 10 years Bank loans * 16 3 758 260 1 063 430 1 866 726 784 745 - 43 359 Other interest-bearing liabilities 16 222 587 188 130 34 457 - - - Total interest-bearing liabilities 3 980 847 1 251 560 1 901 183 784 745 - 43 359
* Including estimated interest payments.
Non-interest-bearing liabilities (amounts in NOK 1 000) Note Total per 31.12.2011 < 1 year 1-3 years 3-6 years 6-10 years > 10 years Trade payables 17 148 682 148 682 - - - - Current non-interest-bearing liabilities payable 17 1 293 1 293 - - - - to the Selvaag Group Accrued expenses 17 76 197 76 197 - - - - Other current financial liabilities 17 78 141 78 141 - - - - Other current liabilities 17 109 162 109 162 - - - - Other non-current non-interest-bearing liabilities 18.3 28 304 - 28 304 - - - Total non-interest-bearing liabilities 441 778 413 474 28 304 - - -
18.2 Capital risk management The group’s objective when managing its capital is to ensure the ability of the entities in the group to continue as going concerns while providing returns for shareholders and benefits for other stakeholders and maintaining an optimal capital structure. In achieving this objective, the group focuses on the profitability of the various projects. As a main rule a 12% margin is required in the projects, except for module projects which requires 16%. In order to optimise the capital structure, management evaluates all available funding sources on an on-going basis. Capital requirements are mainly funded through a cash pool arrangement in which selected entities in the Selvaag Bolig Group participates. In addition, the company has a facility related to start-up of new projects.
18.3 Financial assets and liabilites Classification of financial assets and liabilities 2012 2011 Fair value through Loans and Fair value through Loans and (amounts in NOK 1 000) Note profit and loss receivables profit and loss receivables Financial assets Loans to associated companies and joint ventures - 35 500 - 35 500 Other non-current assets 12 - 116 917 36 784 Financial non-current assets - 152 417 - 72 284 Trade receivables - 151 191 - 31 436 Other current financial receivables 12 - 277 821 - 58 276 Cash and cash equivalents - 557 989 - 395 207 Financial current assets - 987 001 - 484 919 Financial assets - 1 139 418 - 557 203
50 Consolidated Financial Statements Selvaag Bolig Group
Fair value through Financial liabilities Fair value through Financial liabilities profit and loss at amortised cost profit and loss at amortised cost Financial liabilities Non-current interest-bearing liabilities 16 - 1 461 463 - 2 376 300 Other non-current non-interest-bearing liabilities - 15 000 - 28 304 Financial non-current liabilites - 1 476 463 - 2 404 604 Current interest-bearing liabilities - 1 368 835 - 1 189 628 Trade payables - 181 379 - 148 682 Other current non-interest-bearing financial liabilities 17 3 829 246 352 10 948 155 630 Financial current liabilites 3 829 1 796 566 10 948 1 493 940 Financial liabilites 3 829 3 273 029 10 948 3 898 544
Classes of financial assets and liabilities (amounts in NOK 1 000) Note 2012 2011 Trade receivables and other current and non-current financial assets Loans to associated companies and joint ventures 35 500 35 500 Other non-current assets 12 116 917 36 784 Trade receivables 151 191 31 436 Other current financial receivables 12 277 821 58 276 Total trade receivables and other current and non-current financial assets 581 429 161 996
Cash and cash equivalents Cash and cash equivalents 557 989 395 207
Trade payables and other non-interest-bearing financial liabilities Other non-current non-interest-bearing liabilities 15 000 28 304 Trade payables 181 379 148 682 17 246 352 155 630 Total trade payables and other non-interest-bearing financial liabilities 442 731 332 616
Interest-bearing liabilities Non-current interest-bearing liabilities 16 1 461 463 2 376 300 Current interest-bearing liabilities 16 1 368 835 1 189 628 Total interest-bearing liabilities 2 830 298 3 565 928
Derivatives (interest rate swap) * 3 829 10 948 Other current non-interest-bearing financial liabilities 17 3 829 10 948
* Change in fair value of interest rate swap is included in financial income/expense.
Sensitivity analysis Interest rate risk 2012 Adjustment to interest level in basis points 50 100 150 Effect - Bank loans (15 405) (30 810) (46 215) Effect - Other loans (585) (1 171) (1 756) Effect on cash flow (in NOK 1 000) (15 991) (31 981) (47 972)
2011 Adjustment to interest level in basis points 50 100 150 Effect - Bank loans (4 986) (9 972) (14 957) Effect - Bank overdraft to the Selvaag Group (2 047) (4 093) (6 140) Effect - Other loans (305) (610) (915) Effect on cash flow (in NOK 1 000) (7 337) (14 675) (22 012)
51 Consolidated Financial Statements Selvaag Bolig Group
The above tables detail the group’s sensitivity to a decrease or increase in interest rates by 50, 100 and 150 basis points, respectively. The effects are calculated on a pre-tax basis and based on the average outstanding amounts during the period. Profit or loss and equity effects are expected to be approximately similar to the effects on cash flow after taxes.
Foreign exchange risk The group is to a limited degree exposed to foreign currency risk. Fluctuations in the amount of +/- 5% as of 31 December 2012 and 2011 would cause immaterial changes to the group’s profit and loss, and will affect the consolidated statement of changes in equity only with immaterial amounts.
18.4 Fair values of financial instruments
Principles for estimating fair values Based on the characteristics of the financial instruments that are recognised in the consolidated financial statements, the financial instruments are grouped into classes as described below. The estimated fair values of the group’s financial instruments are based on available market prices where applicable and the valuation methodologies per class are described below.
Fair value hierarchy The group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in measuring the fair value of financial instruments.
Level 1: Quoted prices (unadjusted) in active markets for identical financial instruments Level 2: Inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs).
Trade receivables and other current and non-current financial assets For trade receivables and other current and non current financial assets, the nominal amount, adjusted for allowance for bad debt, is assessed to be a reasonable approximation of fair value. The effect of not discounting is considered to be immaterial for this class of financial instruments.
Cash and cash equivalents The fair value for this class of financial instruments is assessed to be equal to the nominal amount.
Trade payables and other non-interest-bearing financial liabilities For trade payables and other non-interest-bearing financial liabilities, the nominal amount is assessed to be a reasonable approximation of fair value. The effect of not discounting is considered to be immaterial for this class of financial instruments.
Interest-bearing liabilities The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.
Derivatives Fair values of foreign currency forward contracts are retrieved from external financial institutions based on the applicable foreign currency rates in the market at the end of the reporting period. Fair values of interest rate swap contracts are retrieved from external financial institutions based on the applicable interest rates in the market at the end of the reporting period. The derivatives are measured using level 2 inputs. The carrying amounts for the assets and liabilities of all classes are assessed to be a reasonable approximation of fair values, and a table showing the carrying amounts and fair values per class is not considered necessary.
Note 19: Income taxes
Specification of income tax (expense) income:
(amounts in NOK 1 000) 2012 2011 (amounts in NOK 1 000) (1 106) (4 952) Current income taxes payable (141) - Under-allocated the year before (100 535) 28 217 Changes in deferred taxes (101 782) 23 265 Income taxes in profit (loss)
The group’s business activities are mainly related to Norway with only insignificant amounts arising in other countries. An allocation of income tax expense between countries is thus not considered necessary.
52 Consolidated Financial Statements Selvaag Bolig Group
Specification of current income taxes payable: (amounts in NOK 1 000) 2012 2011 Income taxes payable - expense for the period 1 106 (4 952) Income taxes on Group contribution given - 4 952 Current income taxes payable in the statement of financial position 1 106 -
Reconciliation from nominal to effective income tax rate: (amounts in NOK 1 000) 2012 2011 Profit (loss) before income taxes 448 129 (28 975)
Estimated income taxes according to nominal tax rate (28%) (125 476) 8 113
Taxable income related to the exemption method, in accordance with the 5 188 6 373 Norwegian taxation act § 2-38 Other non-deductible expenses (7 065) (6 275) Other non-taxable income 19 921 2 747 Other items (236) (4 944) Unrecognised deferred tax assets 4 975 (1 532) Share of income from associated companies and joint ventures 910 18 784 Income tax income (expense) (101 782) 23 265 Effective income tax rate * -22.7% -80.3%
* The low effective tax rate primarily reflects substantial profits in subsidiaries with minority interests which are subject to partnership taxation. Consolidated tax expense does not include tax liabilities for taxable entities which are not part of the Selvaag Bolig group. Tax on the minority’s share of profit for the period is included in the minority’s share of profit and equity. Consolidated. The difference between effective tax rate and nominal tax rate in 2011 is primarily due to gains from step acquisitions excluded from the tax base.
Share of income from associated companies and joint ventures Share of income from associated companies and joint ventures which are not limited partnerships is recognised on an after tax basis and therefore does not impact the group’s income tax expense, see note 24.
Deferred tax assets and liabilities as of 31 December 2012 2011 (amounts in NOK 1 000) Asset Liability Asset Liability Non-current assets - 16 044 - 20 273 Inventory property - 206 431 - 211 377 Receivables 2 885 - 11 502 - Current liabilities 4 488 - 21 451 - Non-current liabilities 20 186 - 5 080 - Losses carried forward 92 616 - 188 782 - Total temporary differences 120 175 222 475 226 815 231 650 Unrecognised deferred tax assets 3 320 9 099 - Net deferred tax assets (liabilities) in the statement of financial position (105 620) (13 934) -
Deferred tax assets are included in the statement of financial position to the extent that the realisation of the related tax benefit through future tax- able profits is probable. There are no expiration dates on losses carried forward.
The net movement of deferred tax assets (liabilities) is as follows: (amounts in NOK 1 000) 2012 2011 Net deferred tax assets (liabilities) as of 1 January (13 934) 3 847 Acquisition of subsidiaries (50) (42 717) Recognised in the statement of comprehensive income (100 535) 23 265 Recognised directly in the statement of changes in equity 8 898 1 671 Net deferred tax assets (liabilities) as of 31 December (105 620) (13 934)
53 Consolidated Financial Statements Selvaag Bolig Group
Note 20: Provisions
(amounts in NOK 1 000) 2012 2011 Provision for contractual infrastructure 92 112 92 112 Other non-current provisions 92 112 92 112 Total non-current provisions for other liabilities
The provision for contractual infrastructure is related to infrastructure and construction of parking areas in Lørenskog. The obligations falls due when the projects are realized.
Development during the period (amounts in NOK 1 000) 2012 2011 As of 1 January 92 112 84 364 Obligations arising during the year and effects of changes in estimates - - Amounts utilised - (1 262) Reclassification after business combinations - (83 102) Reclassification of pension obligations - - Obligations in acquired companies - 92 112 As of 31 December 92 112 92 112
Companies with active development projects have obligations to build infrastructure etc. as a consequence of regulatory requirements and develop- ment plans. These obligations are reflected in the carrying value of the various projects and are not recognised separately as provisions.
Note 21: Contingent liabilities and guarantees
The group is subject to the following contingent liabilities due to ownership interests in subsidiaries and associated companies:
(amounts in NOK 1 000) 2012 2011 Guarantees to vendors 47 376 10 899 Capital not called up - limited partnerships 40 414 35 394 Total contingent liabilities 87 790 46 293
The group has given personal guarantees of NOK 12.6 million in 2012, and NOK 113 million during 2011. The group fulfills legal requirements (pursuant to ”Bustadoppføringsloven” § 12) with respect to purchased bank guarantees and other guarantees. Corresponding liabilities included in the statement of financial position are not included in the above amounts.
Note 22: Remuneration and fees to management, board of directors and auditors
This statement of remuneration is valid for work performed by leading employees in the group. In accordance with the Public Limited Companies Act §6-16a, the board of directors shall prepare a statement on determination of salary and other remuneration to the CEO and other senior management. The group has the following principles regarding the determination of remuneration to the CEO and Management group: In the opinion of the board of directors, salary and other remuneration to the CEO and management should be competitive, and total remuneration should reflect the extent of their responsibilities. The CEO may receive remuneration as a bonus in addition to basic salary, conditional on fulfilment of certain performance criteria, as well as ordinary additional remuneration for this type of position. All managers are members of the ordinary pension scheme of the group. The group has no specific remuneration arrangement for the CEO or other managers connected to the shares or the development of the share price, including options. In the event of dismissal, the CEO will receive 12 months’ salary.
Specification of remuneration to management (amounts in NOK 1 000): 2012 Position Salary Bonus Pension Other Total Baard Schumann CEO 2 562 1 200 46 245 4 053 Haavard Rønning CFO 1 781 750 46 59 2 636 Halvard Kverne 1) Portfolio Director 1 650 750 46 58 2 504 Sverre Molvik Portfolio Director 1 611 500 46 44 2 201 Anne Grethe Storaker Market and Sales Director 1 108 300 46 48 1 502 Petter Cedell Real Estate Investments Director 1 125 300 46 24 1 494 Total - group management 9 836 3 800 276 477 14 389
54 Consolidated Financial Statements Selvaag Bolig Group
2011 Position Salary Bonus Pension Other Total Baard Schumann CEO 2 315 1 474 46 54 3 889 Haavard Rønning CFO 1 439 700 47 6 2 192 Halvard Kverne 1) Portfolio Director 752 350 50 3 1 155 Sverre Molvik Portfolio Director 1 413 - 47 6 1 466 Anne Grethe Storaker Market and Sales Director 997 300 52 6 1 355 Petter Cedell Real Estate Investments Director 1 020 200 49 6 1 275 Total - group management 7 936 3 024 291 81 11 332
1) From February 2010 to June 2011, Halvard Kverne has been engaged part-time as Project Director in Hansa Property Group AS.
As of 31 December 2012 the CEO has a NOK 2 million loan from Selvaag Bolig ASA. The interest rate is equal to the norm rate published by The Norwegian Ministry of Finance.
Specification of Board fees (amounts in NOK 1 000):
(amounts in NOK 1 000) Positon 2012 2011 Olav Hindahl Selvaag Chairman 270 - Karsten Bomann Jonsen Board member 170 - Ole Jarl Rettedal Board member 170 - Wenche Kjølås Board member 170 - Anne Breive Board member 170 - Gisele Marchand 1) Board member - - Christopher Brunvoll 1) Board member (Employee representantive) - - Anne -Kari Drønen Mathiesen Board member (Employee representantive) 15 - Maria Terese Hosen 2) Board member (Employee representantive) 15 - Total - Board members 980 -
1) New Board member in 2012. 2) Left the board in 2012.
Specification of fees paid to the auditor:
(amounts in NOK 1 000) 2012 2011 Statutory audit services to the parent company 1 700 382 Statutory audit services to subsidiaries 1 841 190 Other assurance services 763 2 190 Tax advisory services 128 42 Other non-audit services 120 525 Total fees paid to the auditor (exclusive of VAT) 4 551 3 329
The following Board members and group management personnell have shares in Selvaag Bolig ASA 31 December (number of shares):
Position 2012 2011 Olav Hindahl Selvaag 1) Chairman 50 231 661 41 285 920 Karsten Bomann Jonsen Board member 5 000 - Ole Jarl Rettedal Board member - - Wenche Kjølås Board member 5 000 - Anne Breive Board member - - Gisele Marchand Board member 5 000 - Anne -Kari Drønen Mathiesen Board member (Employee representantive) 6 250 - Christopher Brunvoll Board member (Employee representantive) 6 250 -
55 Consolidated Financial Statements Selvaag Bolig Group
Position 2012 2011 Baard Schumann 2) CEO 31 323 - Haavard Rønning 2) CFO 37 300 - Halvard Kverne Portfolio Director 6 250 - Sverre Molvik Portfolio Director 6 250 - Anne Grethe Storaker Market and Sales Director 6 250 - Petter Cedell Real Estate Investments Director 656 -
1) Includeres shares owned by Selvaag Gruppen AS and other related parties. 2) Includeres shares owned by related parties.
The board’s statement on determination of salary and other remuneration to leading personnel in Selvaag Bolig ASA The following statement of salary and other remuneration to members of the group’s management will be presented for a consultative vote at the ordinary general meeting in April 2013.
Guidelines for management remuneration Leading personnel includes the Chief Executive Officer (CEO) and other senior management. For the purposes of these guidelines, the remuneration package signifies total compensation, including one or more of the following elements: fixed base sal- ary, variable pay (including bonus), and other benefits (including pension contribution, termination benefits, fringe benefits and other benefits-in-kind). Severance pay comprises compensation related to resignation, and may include termination payments, other financial compensation and payment in kind.
Main principles for determination of remuneration packages Remuneration to management in Selvaag Bolig ASA should be competitive, but not leading compared to similar companies. The primary element of a remuneration package shall be the fixed base salary. The remuneration packages must be designed as to avoid unreasonable compensation due to external circumstances outside management’s control. The individual elements in a remuneration package, including fixed base salary, any variable pay or other benefits such as pension contributions and severance, must be considered in the context of total compensation. The board must maintain an overview of the total value of each manager’s agreed compensation and ensure that management’s remuneration packages do not have adverse consequences for the company or in other ways are detrimental to the company’s reputation. Individuals in the group’s management shall not receive specific compensation for Board positions within wholly owned subsidiaries.
Variable pay Any variable pay shall be based on the following principles: Clear connections must exist between the goals determining variable pay and the objectives of the company. Variable pay must be based on objective, definable and measurable criteria. For the management group, variable pay (bonus) may not exceed 60% of fixed base salary (67% for the CEO). The criteria shall be based on circumstances which are possible for management to influence and set forth a distinct period for which variable pay will be determined. A system for variable pay must be transparent and easily comprehensible.
Pension contributions The terms for determining management’s pension should be equal to those of other employees. Retirement age for leading personell is 67 years.
Severance pay In the case of a pre-established agreement through which the Chief Executive Officer waives the protection against dismissal as set forth by the working environment act (“Arbeidsmiljøloven”), an agreement regarding severance can be reached. Severance payments should not be utilised in the event of voluntary resignation, except if warranted by special circumstances. Severance pay should not exceed 12 months’ fixed base salary in addition to any compensation during the period of notice. Severance pay should be withheld if conditions for dismissal exist, or if during the period in which severance pay is provided, irregularities or acts of negligence are discovered that may result in liabilities for damages or the individual being indicted for violation of the law.
Note 23: Related party transactions
Receivables, liabilities and transactions between Selvaag Bolig ASA and its subsidiaries, which are related parties to the company, have been eliminated on consolidation and are not disclosed in this note. Details of significant transactions between the group and other related parties are disclosed below.
During the year, group entities entered into the following transactions with related parties: (amounts in NOK 1 000) 2012 2011 Sales of goods and services Selvaag Gruppen AS (parent company) 898 976 Associated companies - 23 750 Joint ventures 3 000 41 848 Other related parties (including subsidiaries of parent company) 3 327 1 677
56 Consolidated Financial Statements Selvaag Bolig Group
Purchase of goods and services Selvaag Gruppen AS (parent company) (10 137) (9 111) Other related parties (including subsidiaries of parent company) (14 757) (157 735)
Financial income Selvaag Gruppen AS (parent company) - - Joint ventures - 5 310 Associated companies - 704 Other related parties (including subsidiaries of parent company) - -
Financial expenses Selvaag Gruppen AS (parent company) (4 689) (18 164)
The following receivables and liabilities were outstanding as of 31 December: (amounts in NOK 1 000) 2012 2011 Receivables Selvaag Gruppen AS (parent company) 225 284 Associated companies * 35 500 35 705 Other related parties (including subsidiaries of parent company) 1 779 2 400
Liabilities Selvaag Gruppen AS (parent company) (88) (166 212) Other related parties (including subsidiaries of parent company) (8 707) (39 479)
In 2011, a net negative account balance of NOK 170 million in the Selvaag Group cash pool was converted into current interest-bearing liabilities, as reflected in the table above - liabilities to Selvaag Gruppen AS.
Other related party transactions Sale of Løren 5 Næring AS In october 2012 the group sold the ownership interests in the wholly owned subsidiary Løren 5 Næring AS to Selvaag Eiendom AS, a subsidiary of Selvaag Gruppen AS, for a consideration of NOK 27.7 million. The transaction was completed in 2012.
Note 24: Investments in associated companies and joint ventures Ownership and voting power Company / (amounts in NOK 1 000) Year of acquisition Registered office 2012 2011 Sandvika Boligutvikling KS 2008 Norway 33.3% 33.3% Sandvika Boligutvikling AS 2008 Norway 37.0% 37.0% Lørenplatået 1 KS 2008 Norway 27.0% 27.0% Lørenplatået 1 Komplementar AS 2008 Norway 30.0% 30.0% Stord Industribygg AS * 2011 Norway 66.0% 66.0% Stord Industribygg Holding AS * 2011 Norway 66.0% 66.0% HEBO AS 2011 Norway 50.0% 50.0% Bo Emmaus AS ** 2011 Norway 100.0% 50.0% Tangen pluss AS 2011 Norway 50.0% 50.0% Union Pluss KS 2011 Norway 50.0% 50.0% Union Pluss Komplementar AS 2011 Norway 50.0% 50.0% Projektbolaget Sädesälan AB 2011 Sweden 50.0% 50.0% Nordic Residential S.L. 2011 Spain 50.0% 50.0% Kaldnes Boligutviklng AS 2012 Norway 50.0% 50.0% Fredensborgveien KS 2012 Norway 50.0% 50.0%
* Classified as joint venture as the shareholder agreement does not grant the majority control of the company. ** Consolidated as subsidiary from the second quarter in 2012.
57 Consolidated Financial Statements Selvaag Bolig Group
Specifications of investments in associated companies and joint ventures: Ownership Carrying amount Additions/ Equity adjustments Carrying amount Company / (amounts in NOK 1 000) share 01.01.12 disposals Share of profit and dividends 31.12.12 Sandvika Boligutvikling KS 33.3% 32 207 - 34 445 (33 300) 33 352 Sandvika Boligutvikling AS 37.0% 3 843 - 504 - 4 347 Lørenplatået 1 KS 27.0% 7 034 - 935 (2 322) 5 647 Lørenplatået 1 Komplementar AS 30.0% 1 106 - (8) - 1 098 Kaldnes Boligutviklng AS 50.0% - 15 562 (659) 14 903 Stord Industribygg AS 66.0% 52 414 - (2 937) (3 124) 46 353 Stord Industribygg Holding AS 66.0% (18) - (186) - (204) HEBO AS 50.0% 156 - 348 - 504 Bo Emmaus AS 50.0% 377 (555) 178 - - Tangen pluss AS 50.0% 5 177 - 16 416 - 21 593 Union Pluss KS 50.0% 12 062 - 1 146 (9 400) 3 808 Union Pluss Komplementar AS 50.0% 44 - (37) 670 677 Projektbolaget Sädesälan AB 50.0% 8 519 (236) - - 8 283 Nordic Residential S.L. 50.0% 18 697 - (793) 17 904 Other 90 15 - - 105 Total 141 707 14 786 49 352 (47 476) 158 369 Profits at realisation1) 4 067 Total 53 419
1) Profits at realisation is related to step acquisition of Bo Emmaus AS.
Specifications of investments in associated companies and joint ventures: Ownership Carrying amount Additions/ Equity adjustments Carrying amount Company / (amounts in NOK 1 000) share 01.01.11 disposals Share of profit and dividends 31.12.11 Selvaag Pluss Eiendom KS 33.3% 65 339 (59 360) (5 979) - - Sandvika Boligutvikling KS 33.3% 24 161 - 8 046 - 32 207 Sandvika Boligutvikling AS 37.0% 3 843 - - - 3 843 Lørenplatået 1 KS 27.0% 8 370 - (121) (1 215) 7 034 Lørenplatået 1 Komplementar AS 30.0% 1 141 - (35) - 1 106 Mortensrudhøyden 2 KS 18.0% 38 (38) 185 (185) - Mortensrudhøyden 2 Komplementar AS 20.0% 449 (436) (13) - - Moss Glassverk 1 KS 22.5% - (330) 330 - - Moss Glassverk 1 Komplementar AS 25.0% 333 (285) 202 (250) - Selvaag Bolig Mortensrudhøyden AS 30.0% 6 831 (8 735) 1 904 - - Selvaag Bolig Bjørnåsen Syd II AS 30.0% 25 270 (24 815) (455) - - Selvaag Bolig Lillohøyden AS 30.0% 8 065 (7 995) (70) - - Selvaag Bolig Løren 2B AS 30.0% 3 577 (3 091) (486) - - Selvaag Bolig Løren 5 AS 30.0% 28 870 (28 807) (63) - - Selvaag Bolig Kornmoenga AS 30.0% 4 314 (4 165) (149) - - Hansa Property Group AS 29.7% 190 614 (181 405) (9 209) - - Stord Industribygg AS 66.0% - 53 140 (726) - 52 414 Stord Industribygg Holding AS 66.0% - - (18) - (18) Bo En AS 62.5% - 334 (334) - - HEBO AS 50.0% - 152 4 - 156 Bo Emmaus AS 50.0% - 527 (150) - 377 Tangen pluss AS 50.0% - 5 177 - - 5 177 Union Pluss KS 50.0% - 14 364 398 (2 700) 12 062 Union Pluss Komplementar AS 50.0% - 136 (92) - 44 Projektbolaget Sädesälan AB 50.0% - 8 509 10 - 8 519 Nordic Residential S.L. 50.0% - 19 045 (349) - 18 697 Other 238 95 (243) - 90 Total 371 452 (217 982) (7 414) (4 350) 141 707 Profits at realisation1) 82 787 Total 75 373
58
1) Share of income (losses) and gains (losses) on disposal from associated companies and joint ventures primarily include profits on realisation of associated companies and joint ventures related to step acquisitions.
Summarised financial information (100%) of associated companies and joint ventures as of 31 December
(amounts in NOK 1 000) 2012 2011 Total assets 676 034 878 497 Total liabilities 446 574 606 564 Net assets 229 460 271 933
Total revenues 431 949 503 231 Total profit (loss) for the year 90 284 79 983
Note 25: Events after the reporting period
In March 2013, Selvaag Bolig ASA completed an agreement with AVA Eiendomspartner AS and Varner Kapital AS to develop an area in the centre of Sandnes following a successful due dilligence performed by Sandnes Eiendom Invest, The housing section of the property is expected to be in the region of 450 - 600 units.
59 Consolidated Financial Statements Selvaag Bolig ASA Income Statement Selvaag Bolig ASA
(figures in NOK 1 000) Note 2012 2011
Operating revenues and operating expenses Sales revenue 18 44 013 46 693 Rental revenue 16 14 811 18 732 Other operating income 57 585 21 886 Total revenue 116 410 87 310
Raw materials and consumables used 6 956 24 932 Salaries and personnel expenses 8, 10 63 692 47 359 Depreciation and amortisation 1, 2 4 902 4 736 Other operating expenses 10 49 482 59 995 Total operating expenses 125 033 137 022 Driftsresultat -8 623 -49 712
Financial income and financial expenses Interest income from group companies 49 913 14 929 Other interest income 3 963 10 803 Other financial income 183 949 20 820 Interest paid to group companies 12 661 19 521 Other interest expenses 59 397 30 030 Other financial expense 15 9 472 6 423 Net financial income 156 295 -9 423
Profit before tax 147 671 -59 135
Income tax expense 9 61 600 -15 935
Net profit 86 071 -43 200
Net profit of the year 86 071 -43 200
Allocations Allocated to/ (from) other eqity 86 071 -43 200 Total allocation of net profit for the year 86 071 -43 200
60 Consolidated Financial Statements Selvaag Bolig ASA Balance sheet Selvaag Bolig ASA
(figures in NOK 1 000) Note 2012 2011
Assets Non-current assets Intangible assets Deferred tax asset 9 10 694 63 396 Goodwill 1 9 000 13 500 Total intangible assets 19 694 76 896
Property, plant and equipment Land, buildings and other properties 2, 4 170 054 171 226 Operating equipment, inventory etc. 2 1 555 1 312 Total property, plant and equipment 171 609 172 538
Financial non-current assets Investments in subsidiaries 3 1 428 395 1 409 646 Investments in associated companies 3 37 607 37 569 Other receivables 5, 13 1 077 990 1 049 997 Total financial non-current assets 2 543 992 2 497 212
Total non-current assets 2 735 296 2 746 646
Receivables Trade receivables Other intercompany receivables 4, 13 29 478 30 205 Other receivables 13 255 159 111 937 Total receivables 5 42 543 28 517 327 180 170 659 Cash and cash equivalents 12 063 3 Total current assets 339 243 170 662
Total assets 3 074 538 2 917 308
61 Consolidated Financial Statements Selvaag Bolig ASA Balance sheet (cont.)
(figures in NOK 1 000) Note 2012 2011
Equity and liabilities Paid-in capital Share capital 6, 7 187 531 136 374 Treasury shares -21 -21 Share premium 6 1 395 478 957 939 Other paid-in capital 6 309 791 222 843 Total paid-in capital 1 892 780 1 317 135
Total equity 1 892 780 1 317 135
Liabilities Provisions Pension obligations 8 327 327 Other provisions 11 33 729 75 699 Total provisions 34 056 76 026
Other non-current liabilities Liabilities to financial institutions 4 800 041 664 350 Other non-current liabilities 4, 13 79 635 71 239 Total ther non-current liabilities 879 676 735 589
Current liabilities Bond issue 4 0 21 870 Liabilities to financial institutions 4 183 400 478 500 Trade payables 13 16 187 5 457 Taxes and fees 8 611 6 121 Intercompany liabilites 13 33 101 173 643 Other current liabilities 17 26 727 102 967 Total current liabilities 268 027 788 558
Total liabilities 1 181 759 1 600 173
Total aquity and liabilities 3 074 538 2 917 308
Oslo, 19 March 2013
Olav Hindahl Selvaag Ole Jarl Rettedal Karsten Bomann Jonsen Anne Breive Chairman Board member Board member Board member
Wenche Kjølås Gisele Marchand Christopher Brunvoll Anne-Kari Drønen Mathiesen Baard Schumann Board member Board member Board member Board member Board member (Employee representantive) (Employee representantive)
62 Consolidated Financial Statements Selvaag Bolig ASA Cash flow
(figures in NOK 1 000) Note 2012 2011
Cash flow from operating activities Profit/(loss) before taxes 147 671 -59 135 Other gains (losses), net -57 283 -21 886 Depreciation and amortisation 2, 3 4 902 4 736 Share of profits/(losses) from associated companies and subsidiaries net of distributions - 946 Changes in trade receivables 3 328 -35 431 Changes in trade payables 10 730 -2 288 Changes in other operating working capital -194 258 -86 608 Net cash flow from operating activities -84 910 -199 666
Cash flow from investing activities Proceeds from sale of property, plant and equipment and intangible assets - 11 460 Purchases of PPE and intangible assets -13 133 -151 Proceeds from disposal of businesses and subsidiaries - 7 372 Purchases of businesses and subsidiaries -12 250 -121 712 Proceeds from sale of other investments and repayment of accounts receivable 82 129 - Purchases of group receivables -60 880 - Purchases of other investments and accounts receivable - -201 487 Net cash flow from investment activities -4 134 -304 518
Cash flow from financing activities Net change in bank overdrafts (group account) 151 009 -444 001 Proceeds from borrowings (group companies) 8 395 - Proceeds from other borrowings - 1 138 918 Repayments of borrowings to credit institutions -498 418 -292 500 Proceeds from share issues 440 117 101 770 Net cash flow from financing activities 101 103 504 187 Net change in cash and cash equivalents 12 059 3 Cash and cash equivalents at start of period 3 - Cash and cash equivalents at end of period 12 062 3
63 Consolidated Financial Statements Selvaag Bolig ASA
down of goodwill, are reversed if the condi- Accounting principles tions for the write-down is no longer present. Inventory and work in progress Goods are valued at the lower of cost (based on the FIFO-method) and fair value. The cost of manufactured goods includes direct materi- als and salary costs, in addition to a propor- The financial statement for Selvaag Bolig ASA Intangible assets tionate share of indirect cost. is prepared in accordance with Norwegian Costs related to internal development activi- For housing projects the percentage of generally accepted accounting principles (N ties are expensed as they incurr. completion method is applied, from which GAAP). Costs related to other intangible assets are recognition of revenue is limited to the relative capitalized if there are identifiable future share of the project sold. Use of estimates economic benefits related to development of The practical consequence of the applied The preparation of financial statements in an identifiable intangible asset and the costs accounting principle is that during the project accordance with NGAAP requires use of can be measured reliably. period total project costs are expensed as estimates. Further the application of the project expenses, and project value (costs company’s accounting principles requires Property, plant and equipment and share of profit margin) are recognized management to exercise its judgement . Land and residential properties are not as revenue and included in the balance Areas which are largely affected by manage- subject to depreciation. Other fixed assets are sheet. Project value less prepayments from ment judgement, high degree of complexity or capitalized and depreciated to the residual customers are included as work in progress. areas where assumptions and estimates are value using the straight line method based If payments from customers exceed earned significant for the financial statements, are on the estimated useful life. Changes in the contract revenue the excees amount is shown described in the notes disclosures. depreciation plans are implemented prospec- as prepayments from customers. tively, hence the effect is distributed over the At project completion, the cost of unsold Revenue recognition remaining depreciation period. Costs related units are transferred to finished goods, which Revenues from sales of goods and services to maintenance of fixed assets are expensed then reduce revenues and project expenses are measured at the fair value of the consid- as operating costs as they incurr. Additions by the cost of the unsold units. This may in eration, net of value added tax (VAT). Sales and enhancements are added to the cost some cases cause a low or negative revenue/ of goods are reconized when the goods are price and depreciated as a part of the asset. project cost in the company’s annual financial delivered to the customer and there are no The differentiation between maintenance and statement. remaining obligations which could affect the additions/enhancements is made with refer- customer’s accept of delivery. Accruals for ence to the assets specification at the time of Construction contracts guarantees are recognized as expenses and purchase. Work in progress related to fixed price con- accruals for obligations. Services are recog- Rented (leased) assets are capitalized as tracts with long contruction time are reported nized as revenue when they are delivered. fixed assets if the contract is deemed as a according to the percentage of completion financial lease. method.The percentage of completion calcu- Classification of balance sheet items lated based on accumulated costs as percent- Assets held for long term ownership or use Investment in other companies age of estimated total costs. The total cost is are classified as fixed assets. Assets included Except for short term investment in stock re-evaluated on an ongoing basis. For projects in the operating cycle are classified as current listed shares the cost method is applied as with anticipated losses, the estimated loss is assets. Other receivables are classified as principle for investment in other companies. expensed immediately. current assets if they are due within one year. The cost price increases through capital Equivalent criterias are applied for liabilities. increases, or when group contribution is given Receivables However repayments due the first year from to a subsidiary. Received distributions are Trade receivables are included in the balance non-current receivables and liabilities are not normally recognized as income. Distributions sheet less allowance for doubtful debts. Allow- classified as current assets and liabilities. exceeding share of retained earnings during ances for doubtful debts are based on individ- the period of ownership are deducted from the ual assessments and an additional allowance Historical cost of assets cost price. Dividends/group contributions are for other remaining losses. Significant finan- Historical cost of assets includes the purchase recognized in the same year as the subsidi- cial problems for the customer, probability price, less bonuses, discounts etc. Directly ary accrue the amount. Dividends from other of bankrupcy or financial restructuring and attributable costs (freight, customs duties, companies are recognized as financial income delays and incomplete payments are deemed non-refundable taxes and other directly attrib- at the time of Board decision. as indicatiors of doubtful receivables. utable costs) are included in the historical Other receivables, both non-current and cost. Assets acquired in foreingn currencies Impairment of fixed assets current, are valued at the lower of nominal are translated into Norwegian Krone (NOK) When there are indications that the carrying and fair value. Fair value is the net present using the exchange rates prevailing at the amount of a fixed asset exceeds fair value, a value of future proceeds. However discounting dates of the transactions. test for impairment is performed. The test is is not made when the effect is insignificant. For fixed assets and intangible assets the performed on the lowest level of assets that Doubtful debts are evaluated based on the historical cost also includes directly attribut- have independent cash flows. If the carry- same criterias as trade receivables. able for making the asset ready for intended ing amount exceeds both sales value and use, for example costs related to testing of the recoverable amount (net present value in use/ Foreign currency asset. ownership), the asset is written down to the Receivables and liabilities in foreign currren- Interest expenses related to production of higher amount of sales value and recoverable cies are measured using the currency rates at fixed assets are expensed. amount. Previous write-downs, except write year end. Currency gains and losses related to
64 Consolidated Financial Statements Selvaag Bolig ASA
the purchase and sale of goods are recognized but is adjusted for anticipated differences deferred tax assets based on net tax reducing as revenues and costs of goods sold. from for example change in quality routines or temporary differences which are not offset and change in product specifications. The accrual deferred losses, are based on the assumption Futures contracts is included in ”Other short term liabilites” and of expected future profits. Deferred taxes and The company and the group use futures con- changes are expensed. deferred tax assets are accounted as a net tracts on foreign currency to hedge a future amount in the balance sheet. exchange rates on excisting receivables/liabili- Pensions Tax reductions from group contribu- ties (value hedge), or fairly probable proceeds The accounting of pensions is in line with Nor- tion given, and tax from group contribution or payments in foreign currencies (cash flow wegian Accounting Standard ”Pension cost”. received which are accounted for as a reduc- hedge). Defined contribution plans follow the tion of cost price or directly against equity, are Futures contracts hedging future proceeds matching principle. Payments made during recognised directly agaist taxes in the balance or payments, are not recognized. the current year are expensed. sheet (against taxes payable if the group Early retirement obligations (”AFP”) within contribution affects taxes payable and against Borrowings the LO/NHO-plan is a multi-employer defined deferred tax if the group contribution affects Loans are initially recognized at fair value less benefit plan, but it is accounted for as a deferred tax). transaction costs. Loans are then measured defined contribution plan as the company’s Deferred tax is recognised as a nominal at amotized cost; differences between the share of the obligation is not measurable. amount. received loan amount (less transaction cost) and redemption value is recognised in the Taxes Cash flow income statement over the period of the bor- Income tax expense represents current tax The statement of cash flow is based on the rowings using the effective interest method. expense and changes in deferred tax expense. indirect method. Cash and cash equivalents Borrowings are classified as current liabilities Deferred tax is calculated using the relevant include cash, bank deposits and other short unless the group has an unconditional right to tax rate and is based on the temporary dif- term, liquid placements which can be imme- defer settlement of the liability for at least 12 ferences between the carrying amounts of diately converted into cash with insignificant months after the end of the reporting period. assets and liabilities in the consolidated exposure to currency rate fluctuations, and financial statements and the corresponding with original maturity of three months or less. Guarantee works/customer complaints tax bases used in the computation of taxable Guarantee works/customer complaints related profit, in addition to deferrable tax losses to completed sales are measured at the best if any. Temporary differences increasing or estimate for the cost. The estimate is based decreasing taxes which are or can be reversed on historical amounts for guarantee works, in the same period are offset. Recognition of
Note 1: Intangible assets
Intangible assets Goodwill Cost at 1 January 22 500 Additions 0 Disposals 0 Cost at 31 December 22 500 Accumulated amortisation at 31 December 13 500 Carrying amount at 31 December 9 000
Amortization current year 4 500
Estimated useful life 5 år Amortisation method Lineær
Selvaag Bolig ASA acquired employees from Selvaag-Bygg in December 2009. Goodwill related to this transaction is recognised in the balance sheet in the financial statements for the company where it is amortized over the expected useful life. In the consolidated financial statement goodwill related to this transaction was expensed.
65 Consolidated Financial Statements Selvaag Bolig ASA
Note 2: Property, plant and equipment
Property, plant and equipment Land Residential properties Other equipment Total Cost at 1 January 169 226 2 000 1 548 172 774 Additions 12 487 0 645 13 132 Disposals 11 659 2 000 0 13 659 Cost at 31 December 170 054 0 2 193 172 247 Accumulated depreciation at 31 December 0 0 638 638 Accumulated write-downs at 31 December 0 0 0 0 Carrying amount at 31 December 170 054 0 1 555 171 609
Depreciation current year 0 0 402 402
Land and residential properties are not depreciated. Other equipment is depreciated using the straigth-line method from 3 to 5 years.
Note 3: Investment in subsidiaries, associated companies and joint ventures
Investment in subsidiaries, associated companies and joint ventures are accounted for using the cost method. Ownership Equity Profit and loss Subsidiary Registered office and voting power last year (100%) last year (100%) Carrying amount Selvaag Pluss AS Oslo 100% 167 094 -1 873 191 872 Selvaag Bolig Modulbygg AS Oslo 100% 4 765 3 622 3 600 Selvaag Utsikten AS Oslo 100% 24 760 3 349 24 700 Selvaag Boligutvikling I AS Oslo 100% 2 176 809 2 176 Selvaag Boligmegling AS Oslo 100% 3 112 -346 10 656 Selvaag Boligutleie AS Oslo 100% 690 639 607 Selvaag Eiendomsoppgjør AS Oslo 100% 1 458 1 144 1 024 Selvaag Bolig Glassverket AS Oslo 100% 14 921 -1 280 18 049 Selvaag Bolig Lørenskog AS Oslo 100% 4 077 -1 097 5 200 Selvaag Bolig Ormerud AS Oslo 100% 1 971 -150 2 200 Selvaag Bekkebakken AS Oslo 100% 3 531 -3 484 8 000 Selvaag Skullerud AS Oslo 100% 2 985 -1 089 5 000 Selvaag Bjørnåsen Nord AS Oslo 100% 13 000 -1 842 14 920 Selvaag Løren 7 AS Oslo 100% 1 972 -830 5 300 Selvaag Fernanda Nissen AS Oslo 100% 18 089 -3 711 21 900 Selvaag Bolig Øst AS 1) Oslo 30% 277 506 -94 83 328 Selvaag Bolig Rogaland AS 2) Stavanger 37.5% 180 871 3 964 170 821 Selvaag Pluss Eiendom KS 3) Oslo 66.7% 357 480 -51 481 375 281 HPG Øst AS Oslo 100% 319 883 3 157 452 696 HPG Vest AS Oslo 100% 28 605 -7 649 7 190 H-Pro 5 AS Oslo 100% 5 744 2 940 20 734 Løren 2B AS 4) Oslo 25.1% 745 400 112 Løren 2B IS 5) Oslo 24.8% 82 536 58 172 0 Lørenskog Næringspark AS Oslo 100% 763 -236 1 000 Selvaag Bolig Ballerud AS Oslo 100% 468 -531 1 000 Selvaag Bolig Avløs AS Oslo 100% 952 -48 1 000 Selvaag Bolig Tomt 1 AS Oslo 100.0% 30 0 30 Carrying amount at 31 December 1 428 395
In 2012 group contributions of TNOK 32 700 is booked as investment in subsidiaries.
1) Company owned 30.0% by parent and 70.0% by subsidiary 2) Company owned 37.5% by parent and 62.5% by subsidiary 3) Company owned 66.7% by parent and 33.3% by subsidiary 4) Company owned 25.1% by parent and 71.3% by subsidiary 5) Company owned 24.8% by parent and 71.6% by subsidiary
66 Consolidated Financial Statements Selvaag Bolig ASA
Selvaag Bolig ASA has capital not called up from limited partnership of tNOK 10 054 related to ownership share in Løren 2B IS. The company agre- ement for Løren 2B IS specifies profit sharing unproportional with the ownership share of the participants, where Selvaag Bolig ASA and subsidiaries are entitled to approximately 50%.
Ownership and vot- Equity last year Profit and loss last Associated company Registered office ing power (100%) year (100%) Carrying amount Sandvika Boligutvikling KS Oslo 33.3% 92 759 56 911 29 684 Sandvika Boligutvikling AS Oslo 37.0% 6 919 4 172 4 290 Lørenplatået 1 KS Oslo 27.0% 21 039 3 587 1 845 Lørenplatået 1 Komplementar AS Oslo 30.0% 4 721 593 1 750 Fredensborgveien 24 AS Oslo 50.0% 30 0 15 Fredensborgveien 24 KS Oslo 45.0% 100 0 23 Carrying amount at 31 December 37 607
Selvaag Bolig ASA has capital not called up from limited partnership of tNOK 17 760 related to ownership share in Sandvika Boligutvikling KS. Selvaag Bolig ASA has capital not called up from limited partnership of tNOK 6 000 related to ownership share in Lørenplatået 1 KS.
Subsidiaries owned through other subsidiaries Registered office Ownership and voting power Aase Gaard AS Stavanger 100% Administrasjonsbygget AS Stavanger 100% Alfaz Del Sol Services SL Spania 100% Hinna Komplementar AS Stavanger 100% Hinna Pluss KS Stavanger 100% Jaasund AS Stavanger 100% Jaassund Bolig I AS Stavanger 100% Kaldnes Brygge Syd AS Tønsberg 100% Kaldnes Eiendom AS Tønsberg 100% Kaldnes K2 AS Tønsberg 100% Kaldnes K3 AS Tønsberg 100% Kaldnes K4 AS Tønsberg 100% Lade Alle 67-69 Holding AS Oslo 100% Lervig Brygge AS Stavanger 100% Løren 2B Næring AS Oslo 96% Lørenskog Sentrum Vest AS Oslo 100% Nesttun Pluss Komplementar AS Oslo 75% Nesttun Pluss KS Oslo 75% Nyhavn Pluss KS Oslo 100% Selvaag Bolig Bjørnåsen Syd II AS Oslo 100% Bjørnåsen Syd 3 AS Oslo 100% Selvaag Bolig Kornmoenga AS Oslo 100% Selvaag Bolig Lillohøyden AS Oslo 100% Selvaag Bolig Løren 2B AS Oslo 100% Selvaag Bolig Løren 5 AS Oslo 100% Selvaag Bolig Mortensrudhøyden AS Oslo 100% Selvaag Bolig Vestfold AS Tønsberg 100% Selvaag Pluss International Holding AS Oslo 100% Selvaag Pluss Komplementar AS Oslo 100% Selvaag Pluss Service AS Oslo 100% Skårer Bolig AS Oslo 100% SPEKS Property SL Spania 100% Strandkanten Komplementar I AS Oslo 100% Strandkanten Komplementar II AS Oslo 100% Strandkanten Pluss I KS Oslo 100% Strandkanten Pluss II KS Oslo 100% Vestparken AS Oslo 100% Vestparken Næring AS Oslo 100% Vestparken Parkering AS Oslo 100% Øya Lervig Brygge AS Stavanger 100% Bo Emmaus AS Stavanger 100%
67 Consolidated Financial Statements Selvaag Bolig ASA
Note 4: Receivables and liabilities
Trade receivables 2012 2011 Trade receivables nominal valus 29 573 30 826 Allowance for doubtful debts -95 -621 Net trade receivables 29 478 30 205
Current interest-bearing liabilites 2012 2011 Bonds (specified below) 0 21 870 Bank loans (specified below) 183 400 478 500 Total 183 400 500 370
Current interest-bearing liabilites Lender Currency Maturity date Interest rate Amount Property loan DNB Bank ASA NOK 1) NIBOR 3m + 2.25pp 144 400 Equity Bridge DNB Bank ASA NOK 31.12.13 NIBOR 3m + 4.00pp 39 000 Total 183 400
1) NOK 44.4 million matures 30. june 2013, NOK 50 million 30. september 2013 and NOK 50 million 31. december 2013.
Non-current liabilities maturing within 5 years 2012 2011 Bank loans (specified below) 800 041 664 350 Total 800 041 664 350
Bank loans Lender Currency Maturity date Interest rate Amount Overdraft facility DNB Bank ASA NOK 01.07.2014 NIBOR 3m + 2.00pp 186 876 Revolver DNB Bank ASA NOK 25.08.2014 NIBOR 3m + 2.50pp 85 000 Equity Bridge DNB Bank ASA NOK 1) NIBOR 3m + 4.00pp 181 190 Property loan DNB Bank ASA NOK 2) NIBOR 3m + 2.25pp 346 975 Total 800 041
1) NOK 50 million matures 31. december 2014, while the remaining matures 31. december 2015. 2) NOK 50 million matures 31. december 2014, NOK 50 million 31. december 2015 while the remaining matures 23. august 2016.
Non-current liabilities maturing beyond 5 years 2012 2011 Other non-current liability to group company 79 635 71 239 Total 79 635 71 239
Period 2012 2011 To be repaid during 2014 371 876 120 867 To be repaid during 2015 181 190 0 To be repaid during 2016 246 975 543 483 To be repaid during 2017 or later 0 0 To be repaid during 2018 or later 79 635 71 239 Total 879 676 735 589
Secured loans 2012 2011 Loans 983 441 1 142 850
Carrying value of assets pledged as security on bank loans 2011 2011 Land 156 837 156 613
68 Consolidated Financial Statements Selvaag Bolig ASA
Note 5: Receivables on associated companies Current Non-current 2012 2011 2012 2011 Stord Industribygg AS 105 105 0 0 Kaldnes Boligutvikling AS 203 0 0 0 Total 308 105 0 0
Note 6: Equity
Other paid-in Changes in equity Share capital Own shares Share premium capital Total Equity as of 1 January 136 374 -21 957 939 222 843 1 317 135 Profit for the period 0 0 0 86 071 86 071 Share issue in connection with IPO june 2012 50 062 0 449 938 0 500 000 Capital increase from over-allotment option Greenshoe 1 096 0 9 703 876 11 675 Transaction costs related to IPO 0 0 -22 101 0 -22 101 Equity at 31 December 187 532 -21 1 395 479 309 790 1 892 780
In connection with the stock exchange listing 14. of June, a capital expansion of NOK 500 million was conducted through the issue of 25 031 030 new shares. A further 547 862 new shares were also issued in accordance with the previously approved greenshoe option at the expiry of the price stabili- sation period on 13 July 2012. This transaction secured Selvaag Bolig additional issue proceeds of NOK 11.7 million.
Note 7: Share capital and shareholder information
The share capital was NOK 187 531 376 comprising of 93 765 688 shares with a par value of NOK 2.00.
20 largest share holders at 31 December 2012 # of shares % share SELVAAG GRUPPEN AS 50 180 087 53.5% SKANDINAVISKA ENSKILDA BANKEN 5 321 953 5.7% HAVFONN AS 3 604 856 3.8% IKM EIENDOM AS 3 575 624 3.8% MP PENSJON PK 3 480 000 3.7% SKIPS AS TUDOR 3 235 517 3.5% T S EIENDOM AS 1 782 568 1.9% STOREBRAND VERDI 1 527 853 1.6% PARETO AS 1 490 000 1.6% TOLUMA INVEST AS 813 318 0.9% HOLBERG NORGE 800 000 0.9% HOLTA INVEST AS 750 000 0.8% INVESTIRE INVEST AS 750 000 0.8% JPMORGAN CHASE BANK 750 000 0.8% SUNDT AS 550 000 0.6% HUSTADLITT A/S 501 449 0.5% VERDIPAPIRFONDET OMEGA INVESTMENT 500 000 0.5% VERDIPAPIRFONDET DNB SMB 490 000 0.5% STOREBRAND AKSJE INNLAND 465 279 0.5% BANAN 450 000 0.5% Total 20 largest shareholders 81 018 504 86.4% Other shareholders 12 747 184 13.6% Total number of shares 93 765 688 100.0%
69 Consolidated Financial Statements Selvaag Bolig ASA
Note 8: Pensions
In accordance with the Accounting Act § 7-30 a), companies in Norway are required to offer a pension plan in line with the Act relating to occupational pensions (”lov om obligatorisk tjenestepensjon”), and the group’s companies have a pension plan that meets these requirements.
Defined contribution plan Selvaag Bolig ASA has a defined contribution plan covering all employees.
Early retirement pension (”AFP”) The company also has a early retirement plan (AFP) covering 54 employees. The new early retirement, starting 1 January 2011, is a multi-employer defined benefit plan, but is accounted for as a defined contribtion plan until reliable and sufficient information is available enabling the company to account for its proportionate share of pension cost, pension oblgation and pension funds in the plan. Hence the comany’s obligations are not accoun- ted for as liabilities. The obligation related to the previous early retirement plan was originally accounted for as a liability, which was reversed as a gain in the profit and loss in 2010, except the part of the obligation related to expected remaining payments in the previous plan.
Other non-funded plans The company also has other non-funded plans where the obligation is calculated and accounted for annually.
Pensjonskostnader 2012 2011 Pension cost - defined contribution/disability 1 867 1 338 Other pension costs (incl. early retirement) 0 0 Net pension cost 498 342 Netto pensjonskostnader 2 365 1 680
Pension obligations 2012 2011 Early retirement pension (AFP) 211 211 Other pension obligations 116 116 Net pension obligations 327 327
Assumtions for pension calculation Active employees - early retirement 54 42 Active employees - other non-funded plans 2 2
Discount rate 4.20% 3.90% Future salary increase 3.50% 4.00% Future incerase in social security base amount 3.25% 3.75% Expected early retirement rate 50.00% 50.00%
Note 9: Taxes
Calculation of deferred tax asset/deferred tax liability Temporary differences 2012 2011 Fixed assets and intangible assets -358 1 690 Net pension assets/ -obligations -327 -327 Receivables -95 -5 995 Accruals -3 531 -7 238 Interest swap -3 829 -10 948 Gains and losses -40 -50 Net temporary differences -8 180 -22 868 Tax losses carried forward -30 014 -203 548 Basis for deferred tax asset -38 194 -226 416
28% deferred tax asset -10 694 -63 396 Of which not recognised deferred tax asset 0 0 Deferred tax/tax asset -10 694 -63 396
Deferred tax assets are fully recognised in the balance sheet as the company consider it probable that it can be utilised against future profits.
70 Consolidated Financial Statements Selvaag Bolig ASA
Bases for tax cost, change in deferred tax and tax payable 2012 2011 Profit before taxes 147 671 -59 135 Permanent differences -81 503 2 211 Bases for tax cost current year 66 168 -56 924 Change in temporary differences from profit and loss -14 688 21 330 Bases for taxes payable in the profit and loss 51 480 -35 594 Items recognised directly against equity with tax effect -31 779 -16 484 Group contribution 153 833 0 Utilisation of tax losses carried forward -173 534 0 Taxable income (basis for taxes payable in the balance sheet) 0 -52 078
Specification of tax cost 2012 2011 Taxes payable on profit current year 0 0 Total taxes payable 0 0 Change in deferred tax 61 600 -15 935 Tax cost 61 600 -15 935
Reconciliation of tax cost 2012 2011 28% of profit before tax 41 348 -16 558 Permanent differences (28%) -22 821 623 Tax effect on group contribution 43 073 0 Total 61 600 -15 935
Reconciliation of deferred tax asset 2012 2011 Deferred tax/ - tax asset 1 January -63 396 4 366 Addition deferred tax asset from business combination 0 -50 156 Deferred tax asset from costs related to increase in share capital recognised directly against equity -8 898 -1 671 Change in deferred tax 61 600 -15 935 Deferred tax/ - tax asset 31 December -10 694 -63 396
Note 10: Salary costs, number of employees, allowances, loans to employees etc.
Personnel cost 2012 2011 Salary cost 48 131 38 398 Social security tax 8 815 5 817 Pension costs 2 365 1 680 Other personnel expenses 4 382 1 464 Total 63 692 47 359 Number of employees 42 28
Salary Bonus Pension Other Total Remuneration CEO 2 562 1 200 46 245 4 053
As of 31 December 2012 the CEO has a NOK 2 million loan from Selvaag Bolig ASA. The interest rate is equal to the norm rate published by The Norwegian Ministry of Finance. For remuneration of other leading employees and shares held by leading employees and board members refe- rence is made to note 22 in the consolidated financial statements for Selvaag Bolig ASA. Bonus is given on a disrectionary basis to leading employees related to profits, management in line with the company’s value base and other qualita- tive and quantitative criterias which the person can influence. In the event of dismissal, the CEO will receive 12 months’ salary. The emloyees have no share based salary. In 2012 NOK 980 thousand were paid in Directors fee.
71 Consolidated Financial Statements Selvaag Bolig ASA
Expensed auditor fees 2012 2011 Statutory audit (incl. technical assistance with annual accounts) 1 700 966 Other assurance services 681 2 032 Tax advisory services (incl. technical assitance with tax papers) 49 0 Other non-audit services 120 653 Total fees paid to the auditor 2 550 3 651
Note 11: Other accruals and obligations
The company has an accrual of NOK 33.7 million as of 31 December related to obligations for demolishion of buildings and rebuilding of land based on agreements with 6 subsidiaries.
Note 12: Transactons with related parties
Details of transaction between Selvaag Bolig ASA and other related parties are specified below. Receivables, liabilities and transactions between Selvaag Bolig ASA and its subsidiaries, which are related parties to the Company, are not disclosed in this note.
Sales of goods and services 2012 2011 Selvaag Gruppen AS (parent company) 898 976 Associated companies (incl. subsidiaries of parent company) 327 1 677
Purchase of goods and services 2012 2011 Selvaag Gruppen AS (parent company) 8 990 5 091 Other related parties (including subsidiaries of parent company) 8 958 17 170
Financial income 2012 2011 Selvaag Gruppen AS (parent company) 0 0 Other related parties (including subsidiaries of parent company) 0 704
Financial expenses 2012 2011 Selvaag Gruppen AS (parent company) 4 689 18 164
The following receivables and liabilities were outstanding as of 31 December:
Receivables 2012 2011 Selvaag Gruppen AS (parent company) 225 284 Associated companies (including subsidiaries of parent company) 1 357 5 620
Liabilities 2012 2011 Selvaag Gruppen AS (parent company) 0 166 130 Other related parties (including subsidiaries of parent company) 2 095 1 773
Goods and services to related parties are sold at the same prices and conditions as external third parties. Administrative services are purchased from the parent compant at market price.
Note 13: Receivables and liabilites on group companies Trade receivables Other receivables Current receivables 2012 2011 2012 2011 Group companies 21 579 20 506 255 159 111 937 Total 21 579 20 506 255 159 111 937
72 Consolidated Financial Statements Selvaag Bolig ASA
Other receivables Receivables with more than 1 year to maturity 2012 2011 Group companies 1 028 748 1 049 997 Total 1 028 748 1 049 997
Other current liabilites Trade payables Current liabilities 2012 2011 2012 2011 Group companies 33 101 173 643 2 122 792 Total 33 101 173 643 2 122 792
Other non-current liabilites Non-current liabilities with more than 1 year to maturity 2012 2011 Group companies 79 635 71 239 Total 79 635 71 239
Note 14: Contingent liabilities and guarantees 2012 2011 Capital not called up - limited partnerships 33 814 27 894 Total contingent liabilities 33 814 27 894
Capital not called up is related to investments in internal companies and limited partnerships (note 3)
Selvaag Bolig ASA has given the following guarantees: Amount Tax warranty 5 900 Personal guarantees (Lørenplatået 1 KS) 3 045 Guarantee in line with Bustadsoppføringsloven § 12 53 949 Payment guarantee to vendors (import rembursement) 47 376 Total 110 270
Note 15: Other financial expenses
Other financial expenses consists of: 2012 2011 Currency 300 129 Other financial expenses (i.e. guarantees) 9 172 6 294 Total 9 472 6 423
Note 16: Other rental revenues
The company has an obligations to demolish and prepare land areas sold to subsidiaries, see note 11. On some of the land there are commercial buildings rented out. Selvaag Bolig ASA will receive rental revenues from these and own land until a decision to demolish the buildings and prepara- tion for housing purposes. In 2012 rental revenues were TNOK 14.811, compared to TNOK 18.732 in 2011. Several of the contracts are terminated in 2012 resulting in lower rental revenues going forward.
Note 17: Sales revenue
Sales revenue are originated in Norway.
Sales revenue consists of: 2012 2011 Construction revenues 0 20 618 Project management and business management fee 31 082 23 785 Other sales revenue 12 931 2 290 Total 44 013 46 693
73
Consolidated Financial Statements Selvaag Bolig ASA
75 Auditor’s report
To the Annual Shareholders' Meeting of Selvaag Bolig ASA
Independent auditor’s report
Report on the Financial Statements
We have audited the accompanying financial statements of Selvaag Bolig ASA, which comprise the financial statements of the parent company and the financial statements of the group. The financial statements of the parent company comprise the balance sheet as at 31 December 2012, and the income statement and cash flow statement, for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements of the group comprise the balance sheet at 31 December 2012, income statement, changes in equity and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.
The Board of Directors and the Managing Director’s Responsibility for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the financial statements of the parent company in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and fair presentation of the financial statements of the group in accordance with International Financial Reporting Standards as adopted by EU and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
PricewaterhouseCoopers AS, P. O. Box 748 Sentrum, NO-0106 Oslo T: 02316 (+47 95 26 00 00), org.no.: NO 987 009 713 MVA, www.pwc.no State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised accounting firm
76 Auditor’s report
Independent auditor's report - 2012 - Selvaag Bolig ASA, page 2
Opinion on the financial statements of the parent company
In our opinion, the financial statements of the parent company are prepared in accordance with the law and regulations and present fairly, in all material respects, the financial position for Selvaag Bolig ASA as at 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.
Opinion on the financial statements of the group
In our opinion, the financial statements of the group present fairly, in all material respects, the financial position of the group Selvaag Bolig ASA as at 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by EU.
Report on Other Legal and Regulatory Requirements
Opinion on the Board of Directors’ report and statement of corporate governance principles and practices
Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report and statement of corporate governance principles and practices concerning the financial statements and the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.
Opinion on Registration and Documentation
Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements ISAE 3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company’s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.
Oslo, 19 March 2013 PricewaterhouseCoopers AS
Thomas Fraurud State Authorised Public Accountant (Norway)
Note: This translation from Norwegian has been prepared for information purposes only.
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77 Consolidated Financial Statements Selvaag Bolig ASA
78 Selvaag Bolig ASA Photos and illustrations: Postal address: APELAND P O Box 544 Økern Oxivisuals NO-0512 Oslo Invisio 3D eksperten Visiting address: Lørenvangen 22 Consulting, design NO-0512 Oslo and production: APELAND Phone: +47 23 13 70 00 E-mail: [email protected] English translation: www.selvaagbolig.no Rolf E Gooderham