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Pioneer Property Group ASA
Annual Report • Mar 22, 2024
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Annual Report
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ANNUAL REPORT 2023
Pioneer Property Group ASA
Contents
- Consolidated statement of Comprehensive Income 46 Alternative Performance Measures (APMs)
- Consolidated statement of Financial Position Assets 47 Annual report Pioneer Property Group ASA (parent)
- Consolidated statement of Financial Position Equity and Liabilities
- Consolidated statement of Change in Equity
- Consolidated statement of Cash Flow
- Board of directors' report 15 Notes to the consolidated statements
-
-- Auditors report
The board of directors' report for Pioneer Property Group ASA (PPG) 2023
Highlights of the report
Contractual revenue for 2023 was MNOK 108.2 compared to MNOK 76.2 in 2022, an increase of 42%. The increase in rental income is mostly explained by the acquisitions in 2022, which increased lease income for 2023. In addition to the acquisitions, the rent is also CPI-adjusted, which was 6.5% for 2023.
Total revenue for 2023 was MNOK 126.2 (MNOK 77.3 in 2022).
Pre-tax profit for 2023 was MNOK 26.6 compared to MNOK 76.6 for 2022.
PPG acquired one development property over the period and acquired 50% ownership in three hotels in Sweden. PPG sold 50% of the shares in two hotels in Sweden.
PPG paid four quarterly dividends to the holders of preference shares in total NOK 10 per preference share and additional dividends of 18.069 per share held by Eidissen Consult AS and Grafo AS.
Operations and strategy
Pioneer Property Group ASA (PPG) is an investment company, mainly within real estate. PPG is a public limited company, the Company's registered office is Rådhusgata 23, 0158 Oslo, Norway. PPG has since the beginning of 2020 expanded its real estate activities into new areas. The current portfolio contains different segments, PPG reports based on the characteristics of the properties and hence report on the following segments:
-
- Preschools
-
- Hotel Properties
-
- Retail Properties
-
- Property Development
-
- Office Properties
The focus area for PPG will be to continue to invest in real estate within these segments and seek to enter into long-term triplenet leases with leading operators. The market conditions for 2023 has been demanding for real estate on a general basis with increasing interest rates, resulting in less net cash flow from the investment portfolio. The general conditions for the real estate market are viewed as stable. The cash flows and result going forward are impacted by the uncertainty related to the interest rate levels.
On the other hand, other factors such as higher estimated CPI adjustments and market rent expectations is positive factors for real estate investments. The board expects an increase in rent levels for 2024 for the investment properties.
PPG's real estate portfolio per year-end 2023 consisted of three properties in the Preschools segment, seven properties in the Retail properties segment, four properties in the Hotel properties segment, one office property in addition to six properties in the Property development segment.
Key material events during 2023
During 2023, PPG has declared quarterly dividends to the holders of preference shares in total NOK 10.00 per preference share. As per the articles of association §5, the annual preferred dividend to the holders of preference share increased by NOK 1 per preference share from 01. July 2022 to 2.500 per quarter. Furthermore PPG paid additional dividends of NOK 18.069 per share held by Eidissen Consult AS and Grafo AS.
In 2023, PPG has increased the real estate income due to the acquisitions made in 2022 and early 2023. PPG has increased its investments within the hotel segment, entering into a joint venture with Västerkulla Hotell Holding AB of owning three hotels located in Eksilstuna, Helsingborg and Jönköping in Sweden. This investment was made through the joint venture company JV Västerkulla Fastighet AB and is recognized according to the equity method.
The purchase price for the shares was MSEK 64.8, net of bank debt and other adjustments, based on a property value of MSEK 270.0 on a 100% basis.
The second largest transaction was the sale of 50% of the shares in two hotels, located respectively in Strand and Köping in Sweden. The sale generated a profit of MNOK 12.7.
Further, PPG increased its holdings in the real estate company Norlandia Holding AS from an ownership of 23.58% to an ownership of 47.80%.
PPG added one development property (combined office and warehouse) in Mo i Rana over the period, due to the acquisition of additional shares in BM3 Eiendom AS which is now regarded as a subsidiary. The transaction was made based on a property value of MNOK 26.0.
Additionally, PPG acquired development rights related to 51 500 m2 plot together with local partners in close proximity to Evenes Airport.
Preschools
| Preschool (NOKt) | 2023 | 2022 |
|---|---|---|
| Total Income | 6 719 | 1 912 |
| Fair value adjustment on investment properties | -9 500 | 797 |
| Operating profit/loss (EBIT) | -3 436 | 2 308 |
| Investment properties | 106 500 | 116 000 |
| Cash and cash equivalents | 6 852 | 7 414 |
The Preschool segment consists of three preschool properties owned by PPG as of 31.12.2023. Total lease income for the Preschool segment amounted to MNOK 6.7 in 2023, compared to MNOK 1.9 in 2022, with a fair property value based on third party valuation of the properties owned by PPG per 31.12.23 of MNOK 106.5.
Retail Properties
| Retail Properties (NOKt) | 2023 | 2022 |
|---|---|---|
| Total Income | 33 327 | 29 414 |
| Fair value adjustment on investment properties | -25 370 | -30 064 |
| Operating profit/loss (EBIT) | 502 | -7 529 |
| Investment properties | 438 000 | 461 000 |
| Cash and cash equivalents | 8 105 | 19 037 |
Pioneer Retail Properties AS was established to procure and build facilities for retail business, mainly for the Ferda group all over Norway. The Retail Properties segment consists of 7 properties owned by PPG. The building of premises for Ferda in Rana and Balsfjord was completed in February 2022 and October 2022 respectively, and has had full effect on the lease income for 2023. Currently, two additional properties are under construction at Evenes, Bare house lease contracts with Tesla and Ferda have been signed for these properties. Ferda Evenes will be completed in Q2 2024, and is regarded as Retail Properties in 2023. Tesla Evenes will be completed in Q1 2025 and is regarded as project in progress for year end 2023.
Total lease income for 2023 for the retail properties segment amounted to MNOK 33.3, with a fair property value based on third party valuations per 31.12.23 of MNOK 438.
Hotel Properties
| Hotel Properties (NOKt) | 2023 | 2022 |
|---|---|---|
| Total Income | 70426 | 42582 |
| Fair value adjustment on investment properties | -60404 | -11701 |
| Operating profit/loss (EBIT) | -5236 | 19165 |
| Investment properties | 766000 | 924029 |
| Cash and cash equivalents | 23953 | 48580 |
Pioneer Hotel Properties AS was established to acquire hotel properties through the downturn following the Covid-19 pandemic across the Nordics and Europe. The Hotel Properties segment consist of four hotel properties owned by PPG. During 2023, two hotels in Sweden was sold to partner, entering into a Joint Venture agreement. These two, in addition to four other hotel properties are owned in joint venture with local partners, and regarded as Joint Ventures in the financial statement. Total income for 2023 for the Hotel Properties segment amounted to MNOK 70.4 (MNOK 42.6 in 2022) of which contractual lease income was MNOK 52.5. The increase in total income for this segment was mainly due to profit of MNOK 12.7 from the sale of two hotels in Sweden and other income of MNOK 5.3. The fair property value for the hotel segment based on third party valuations per 31.12.23 amounted to MNOK 766.
Office Properties
| Office Properties (NOKt) | 2023 | 2022 |
|---|---|---|
| Total Income | 3 774 | 1 616 |
| Fair value adjustment on investment properties | -9 760 | 26 468 |
| Operating profit/loss (EBIT) | -6 966 | 26 909 |
| 0 | ||
| Investment properties | 61 000 | 70 000 |
| Cash and cash equivalents | 354 | 142 |
The first office property was acquired in March 2022, a seven stories tall building in Bodø. PPG has an ownership of 52 % in the property, controlling the acquired subsidiary that owns the property
Total lease income for 2023 for the office properties segment amounted to MNOK 3.8 with a fair property value based on third party valuations per 31.12.23 of MNOK 61.
Property Development
| Property Development (NOKt) | 2023 | 2022 |
|---|---|---|
| Total Income | 11 891 | 1 740 |
| Fair value adjustment on investment properties | 58 471 | 30 767 |
| Operating profit/loss (EBIT) | 65 467 | 30 078 |
| Investment properties | 385 756 | 227 681 |
| Cash and cash equivalents | 30 737 | 65 366 |
Through Pioneer Property Development AS, PPG develop properties within general commercial real estate and housing. The segment consists of 6 development properties and the lease income income for the segment is related to parking and tenants in properties that can be developed long term. PPG added one development property (combined office and warehouse) in Mo i Rana with lease income of MNOK 2.2 The main asset is Evenes Holding AS, which holds two properties in Evenes in close proximity to Evenes Airport. In 2023, PPG acquired the development rights related to the plot closest to the airport.
In addition, PPG currently holds two plots together with local partners, treated as associate company in the accounts. One is located at Ramstadsletta in Bærum. The other is located in Mo i Rana with a potential of 400 residential units.
Subsequent events since the end of 2023
There has not been any signifcant material subsequent events since the end of 2023.
Overview of the financial accounts for 2023
Total revenue was MNOK 126.2 in 2023, compared to MNOK 77.3 in 2022. Revenues consisted of rental income of MNOK 108.2 (MNOK 76.2 in 2022) and other income of 18.0 (MNOK 1.1 in 2022). Approximately 90% of rental income origins from investment properties in Norway. The increase in revenues is mainly explained by rental income from acquisitions made in 2022, with the first whole year of rental income being 2023. The increase in other income is due to sale of to hotels in Sweden, generating a profit of MNOK 12.7.
Operating profit (EBIT) for 2023 amounted to MNOK 46.6, compared to MNOK 69.8 in 2022. The difference can primarily be explained by a larger positive fair value revision of MNOK 16.7 in 2022, versus a negative adjustement of MNOK 46.6 in 2023, as interest rates increased, affecting the yields on the properties.
In 2023, a gain of MNOK 49.1 from joint ventures and associated companies was recognised. MNOK 34.0 was related to a sale of land in Ramstadsletta and the MNOK 11.6 was recognized due to a value increase of the properties acquired together with Västerkulla in Sweden. In 2022, a loss off MNOK 1.6 from joint ventures and associated companies was recognised mainly due to share of loss in Kongsparken in Mo i Rana of MNOK 2.6. Norlandia Holding contributed with a positive share of profit of MNOK 1.1.
Net financial expense for the year was MNOK 20.0 compared to a net financial income of MNOK 6.8 in 2022, where the gain recognized from joint ventures and associates was offset by increasing interest rates. Income taxes decreased from MNOK 11.8 to 1.6.
There have not been any discontinued operations in 2023 or 2022.
This year's net profit for the group was MNOK 25.0, compared to MNOK 64.8 in 2022.
Total equity amounted to MNOK 1,283.5 (1,360.6), the difference being explained by the profit for 2023, and the dividends on the ordinary and preference shares paid during the year.
The Group had total assets of MNOK 2,573.8 (2,459.6 in 2022). where MNOK 2,165.4 (1,905.8 in 2022) were related to investment property and shares in associated companies. The additions in investment property and associated company has increased non-current borrowings in PPG. Further PPG had a cash balance of MNOK 112.3 (265.2 in 2022) and MNOK 117.6 (118.9 in 2022) in other short-term investments related to bonds and high yield funds held by PPG.
Net cash flows from operating activities were MNOK 7.7 (MNOK 34.8 in 2022). The reduction is explained by a decrease in working capital, an increase in paid interest, but offset to some extent by an increase in lease income.
Net cash flows used in investing activities were MNOK 247.6 (MNOK 133.2 in 2022). Most of the cash flow is related to the purchase of additional shares In Norlandia, JV Nordväst Fastighet AB and Evenes Utvikling.
Net cash flows from financing activities were MNOK 87.0 (MNOK 133.2 in 2022).
The net change in cash and cash equivalents was MNOK -152.9 (146.9 in 2022).
The annual report gives an accurate overview of the Group's financial development throughout the year. There have not been any events after the end of the fiscal year 2023 which have had any material impact on the financial status of the Group.
Work Environment, Equal opportunities and Discrimination
There was at year end 5 employees in Pioneer Property Group ASA, all men. The sick absence rate in PPG was approximately 1%. There are no employees in any other Group-companies. PPG had no reported incidents of discrimination in 2023. The Board of Directors consists of three women and two men.
PPG strive for a safe work environment, both for our employees and for our properties and construction projects.
The Company works systematically with corporate social responsibility within the areas human rights, employee rights, environment, anti-corruption and social responsibility and integrates these in its business strategy and daily operations through including these considerations into its decision-making process. To ensure human rights and decent working conditions in its operations PPG has developed guidelines and policies.
Managers' remuneration
The board of directors has prepared a declaration on salary and other remuneration for the Company's executive management
pursuant to Section 6-16a of the Norwegian Public Limited Liability Companies Act. The declaration is based on the guidelines for the determination of salaries and other remuneration of leading personnel in the Company. The guidelines include the policies which the Company will use for the determination of salary and other remuneration to its executive management in the calendar year 2024. The declaration of salary and the guidelines guidelines for the determination of salaries and other remuneration of leading personnel are made available at the Group's webpage www.pioneerproperty.no
External Environment
The Group's operation consists of investing in and providing high-quality properties and is considered to have limited environmental impact. The company focuses on making investment and operational decisions that are in line with sustainable environmental practices.
Risks related to nature
Risks related to nature are becoming more relevant and will be monitored closely for our properties. In general, many areas could be affected: from impairment testing, to provisions to fair value measurement. The location of PPG's properties is on a general level not seen as particularly exposed to flooding. However, the property in Voss has experienced flood, and regarding the development and the refurbishment of the property, the management is considering, together with the local authorities, measurements to reduce the risk and potential damage from flooding.
Storms and floods are long-term risks, with potential to physically damage to property values could be severe. Damage to third party equipment and installations may lead to increased insurance cost and/or reduced customer satisfaction. On a general basis, we observe increased premium on insurance due to cost of the incidents and the number of incidents due to extreme weather conditions.
With respect to our portfolio of investment property, PPG actively work to reduce the CO2 consumption together with the tenants, especially within the area of energy efficiency. During 2023 a number of activities was carried out, such as installation of systems of ventilation and warming of the buildings that maintains a healthy and comfortable indoor climate while improving energy efficiency and reducing energy costs.
Reduction of energy consumption per square meter is a goal the management is working towards. In addition, bank and lending instutions are providing green financing which has lower interest rates than traditional financing.
Going concern
The financial statements have been prepared based on the going concern assumption, and the Board confirms that this assumption is valid.
Corporate Governance
Pioneer Property Group AS has prepared a report on Corporate Governance in accordance with the Norwegian Accounting Act Section 3-3b and the Norwegian Code of Practice for Corporate Governance dated 17 October 2018, and a report on Corporate Social Responsibility in accordance with the Norwegian Accounting Act Section 3-3c, both of which are made available at the Group's webpage www.pioneerproperty.no.
The Transparency Act has been incorporated in PPG and the company is reporting on the Transparency Act for 2023. The report will be available on the company's webpage www.pioneerproperty.no. The report will be published 30th June 2024.
Financial Risks
The Company is exposed towards various financial risks, yet the Board of Directors view the total exposure to be at a manageable level. Some of the most important risk factors are:
The market risk of a general increase in interest rate levels. Increasing interest rates will reduce the cashflow from the properties, as lease income is not adjusted for increasing interest rate. PPG is exposed to variable interest rates for its borrowings linked to the different investment properties.
The risk relating to banks or other financial institutions' willingness to lend money, which may restrict the Company's ability to take up new loans in the future.
Credit risk, the risk that one party to a financial instrument will cause a loss for the other party by failing to pay for its obligation.
Liquidity risk in the case of unforeseen delay of cash payments on income and/or unexpected costs.
Changes in valuation of financial assets that is owned to meet future cash needs. When managing the capital, PPG will take into account the need for sufficient liquidity reserves to meet PPG's financial obligations. These assets are subject to financial risk as price of the assets may vary.
The Board of Directors and management performs continuous assessments of the most important financial risk factors and evaluates the necessity of implementing specific measures.
Specific measures are evaluated considering the Company's total financing risk exposure. PPG has a financing policy that secures a diversified debt maturity profile.
The board of directors
The Articles of Association provide that the Board of Directors shall consist of 3 to 7 board members elected by the general meeting.
Name Position Served since Term expires Roger Adolfsen Chairperson 2015 2025 Sandra Henriette Riise Board member 2015 2025 Geir Hjorth Board member 2015 2025 Ane Nordahl Carlsen Board member 2023 2025 Nina Torp Høisæther Board member 2015 2025
The directors Sandra Henriette Riise and Ane Nordahl Carlsen are independent of the majority shareholder of the Company, Hospitality Invest AS, and all board members are independent of the Management. All board members attended all board meetings. The composition of the Board of Directors is in compliance with the independence requirements of the Corporate Governance Code. Effective from June 1st 2022, directors and officers are covered by a liability insurance covering personal liabilities caused by performing their duties for the group.
Brief description of the board of directors
Roger Adolfsen, Chairperson
Roger Adolfsen has broad experience from serving on various boards. Currently, he holds various board positions and has more than 30 years of experience from business and real estate development. Adolfsen is a business graduate from BI Norwegian Business School. He also holds a Master in Business and Administration (MBA) from the University of Wisconsin.
Sandra Henriette Riise, Board member
Sandra H. Riise serves as chair on the Norwegian Better Regulation Council. Riise is educated as public accountant and is former Chief Executive Officer of Accounting Norway, the Norwegian Association of Authorized Accountants, and has held the position of Chief Municipal Executive (Nw. Kommunedirektør) of Andøya municipality. Riise is educated from BI Norwegian School of Management
Geir Hjorth, Board member
Geir Hjorth currently serves on the board of directors of several different companies (including several chairperson positions). He has extensive experience from the hotel industry and has participated in several courses pertaining to marketing and human resource management.
Ane Nordahl Carlsen, Board member
Carlsen is a partner in the investment company Arctic Investment Group AS and the CEO of Grafo AS which owns 1 642 024 ordinary shares in Pioneer Property Group ASA. She has experience from various commercial positions for Philip Morris International. Carlsen has held various board positions in private companies and is currently a board member in, among others, Otiga Group AS.
Carlsen has a MSc in Economics and Business administration, an Executive MBA from the Stockholm School of Economics and has extensive experience from early- stage investing.
Nina H. Torp Høisæther, Board member
Nina H.T. Høisæter has held various board positions within the Confederation of Norwegian Enterprises ("NHO") (Nw: Næringslivets Hovedorganisasjon) and various CEO roles within the Norlandia sphere. She is currently working with business development in Norlandia Health and Care Group AS. Høisæther is educated within nursing from the University of Stavanger and University of Oslo.
Oslo, 21 March 2024
Board of Directors of Pioneer Property Group ASA
Roger Adolfsen Chairman of the Board
Nina Hjørdis Torp Høisæter Member of the Board
Member of the Board
Geir Hjorth Member of the Board
Sandra Henriette Riise Ane Nordahl Carlsen Member of the Board
John Ivar Busklein Chief Executive Officer
Responsibility Statement
We confirm to the best of our knowledge, that the set of Financial statements for the financial year ending 31. December 2023 have been prepared in accordance with IFRS and gives a fair view of the Group's assets, liabilities, financial position and profit or loss.
We also confirm to the best of our knowledge, that the management report includes a fair review of important events that have occurred during the financial period and their impact on the set of financial statements, a description of the principal risks and uncertainties, and major related parties' transactions
Oslo, 21 March 2024
Board of Directors of Pioneer Property Group ASA
Roger Adolfsen Chairman of the Board
Nina Hjørdis Torp Høisæter Member of the Board
Sandra Henriette Riise Member of the Board
Geir Hjorth
Member of the Board
John Ivar Busklein Chief Executive Officer
Ane Nordahl Carlsen Member of the Board
PIONEER PROPERTY GROUP - CONSOLIDATED
Consolidated Statement of Comprehensive Income
| NOK thousand | Note | 2023 | 2022 |
|---|---|---|---|
| Contractual rental income | 5, 13 | 108 227 | 76 176 |
| Other operating income | 5, 8 | 17 955 | 1 089 |
| Total income | 126 182 | 77 264 | |
| Operating expenses | |||
| Employee expenses | 14 | 7 258 | 4 301 |
| Property expenses | 7 416 | 6 202 | |
| Other operating expenses | 15 | 18 360 | 13 247 |
| Total operating expenses | 33 034 | 23 750 | |
| Fair value adjustments on investment properties | 5, 6 | -46 563 | 16 267 |
| Operating profit (EBIT) | 46 586 | 69 780 | |
| Share of profit (loss) of joint ventures and associates | 8 | 49 147 | -1 647 |
| Interest income | 9 | 29 372 | 17 027 |
| Interest expense | 11 | 80 263 | 42 396 |
| Other financial gains/losses (-) | 9, 16 | -18 255 | 33 805 |
| Net Finance income (+) /expenses (-) | -19 999 | 6 789 | |
| Profit before tax | 26 587 | 76 571 | |
| Income taxes | 17 | 1 550 | 11 795 |
| Profit | 25 037 | 64 775 | |
| Profit/(loss) attributable to | |||
| Shareholders of the parent | 14 796 | 38 778 | |
| Non-controlling interest | 10 241 | 25 997 | |
| Profit/(loss) for the period | 25 037 | 64 775 | |
| Other comprehensive income | |||
| Items to be reclassified to P&L in subsequent periods: | |||
| Exchange differences, from translation of foreign operations | 4 443 | -4 186 | |
| Other comprehensive income | 4 443 | -4 186 | |
| Total comprehensive income | 29 479 | 60 589 | |
| Comprehensive income attributable to | |||
| Shareholders of the parent | 19 238 | 34 592 | |
| Non-controlling interests | 10 241 | 25 997 | |
| Comprehensive income | 29 479 | 60 589 | |
| Earnings per share (NOK): | |||
| Basic earnings per ordinary share | 18 | -1,99 | 0,10 |
| Diluted earnings per share (NOK): | |||
| Diltuted earnings per ordinary share | 18 | -1,99 | 0,10 |
Consolidated Statement of Financial Position
| NOK thousands | Note | 2023 | 2022 |
|---|---|---|---|
| ASSETS | |||
| Investment properties | 6 | 1 757 256 | 1 798 709 |
| Project in progress, investment property | 7 | 35 513 | 739 |
| Other interest in property | 986 | 21 654 | |
| Other investment | 9 | 44 391 | 48 953 |
| Associated companies and joint ventures | 8 | 372 663 | 107 100 |
| Loan to associated companies and joint ventures | 9, 20 | 72 523 | 56 948 |
| Loan to other companies | 9 | 6 736 | 12 296 |
| TOTAL NON-CURRENT ASSETS | 2 290 068 | 2 046 399 | |
| Trade and other receivables | 9 | 53 836 | 29 024 |
| Other short-term investments | 9 | 117 576 | 118 954 |
| Cash and cash equivalents | 10 | 112 331 | 265 226 |
| TOTAL CURRENT ASSETS | 283 743 | 413 204 | |
| TOTAL ASSETS | 2 573 811 | 2 459 603 |
Consolidated Statement of Financial Position
| NOK thousands | Note | 2023 | 2022 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Share capital | 21 | 14 683 | 14 683 |
| Treasury shares | 21 | -988 | -988 |
| Share premium | 21 | 555 637 | 555 637 |
| Other reserve and retained earnings | 652 425 | 739 604 | |
| Non controlling interest | 61 827 | 51 703 | |
| TOTAL EQUITY | 1 283 583 | 1 360 639 | |
| LIABILITIES | |||
| Non-current borrowings | 11 | 925 924 | 834 870 |
| Other non-current liabilities | - | 1 777 | |
| Deferred tax | 17 | 46 437 | 58 338 |
| TOTAL NON-CURRENT LIABILITIES | 972 361 | 894 985 | |
| Current borrowings | 11 | 223 195 | 137 087 |
| Current tax payable | 17 | 4 471 | 6 813 |
| Other current liabilities | 12 | 90 201 | 60 082 |
| TOTAL CURRENT LIABILITIES | 317 867 | 203 980 | |
| TOTAL LIABILITIES | 1 290 229 | 1 098 965 | |
| TOTAL EQUITY AND LIABILITIES | 2 573 811 | 2 459 603 |
PIONEER PROPERTY GROUP - CONSOLIDATED
Statement of Changes in Equity
| Share | Treasury | Share | Curr. Trans. |
Retained | Non contr. |
||||
|---|---|---|---|---|---|---|---|---|---|
| NOK thousands | Notes | capital | shares | premium | Diff.* | earnings | Total | Interest | Total Equity |
| Balance at 1 January 2022 | 14 683 | -988 | 555 637 | -257 | 779 887 | 1 348 962 | 28 406 | 1 377 369 | |
| Profit/(loss) for the period | - | - | - | - | 38 778 | 38 778 | 25 997 | 64 775 | |
| Exchange diff. from foreign operations | - | - | - | -4 186 | - | -4 186 | - | -4 186 | |
| Total comprehensive Income for the period |
- | - | - | -4 186 | 38 778 | 34 592 | 25 997 | 60 589 | |
| Transactions with non controlling interests |
21 | - | - | - | - | 3 360 | 3 360 | -2 701 | 659 |
| Dividends on preference shares and ordinary shares |
21 | - | - | - | - | -78 128 | -78 128 | - | -78 128 |
| Balance at 31 December 2022 |
14 683 | -988 | 555 637 | -4 443 | 744 046 | 1 308 936 | 51 703 | 1 360 639 | |
| Profit/(loss) for the period | - | - | - | - | 14 796 | 14 796 | 10 241 | 25 037 | |
| Exchange diff. from foreign operations | - | - | - | 4 443 | - | 4 443 | - | 4 443 | |
| Total comprehensive Income for the period |
- | - | - | 4 443 | 14 796 | 19 239 | 10 241 | 29 479 | |
| Capital reduction | - | - | - | - | -1 185 | -1 185 | - | -1 185 | |
| Transaction with non controlling interests |
20 | - | - | - | - | -7 087 | -7 087 | -117 | -7 204 |
| Dividends on ordinary shares and preference shares |
21 | - | - | - | - | -98 146 | -98 146 | - | -98 146 |
| Balance at 31 December 2023 |
14 683 | -988 | 555 637 | - | 652 425 | 1 221 757 | 61 827 | 1 283 583 |
Attributable to owners of the parent
*) Other reserves
PIONEER PROPERTY GROUP - CONSOLIDATED
Statement of Cash Flow
| NOK thousands | Note | 2023 | 2022 |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Profit before tax | 26 587 | 76 571 | |
| Adjustments for: | |||
| Fair value adjustments on investment property | 6 | 46 563 | -16 267 |
| Fair value adjustments on financial instruments | 9 | 1 996 | -10 718 |
| Other adjustments | 20 865 | 4 000 | |
| Share of profit (loss) of joint ventures and associates | 8 | -49 224 | 1 647 |
| Interest net | 50 872 | 25 694 | |
| Taxes paid | -7 359 | -22 229 | |
| Exchange gains/(losses) | -2 552 | 1 066 | |
| Gain on sale bonds/shares | -14 653 | -28 477 | |
| Changes in working capital | |||
| Trade receivables | 4 | -4 112 | -3 529 |
| Trade payables | 12 | 7 594 | 20 151 |
| Other accruals | -20 790 | 7 762 | |
| CASH GENERATED FROM OPERATIONS | 55 785 | 55 672 | |
| Interest received | 16 057 | 6 799 | |
| Interest paid | -64 097 | -27 707 | |
| NET CASH FLOW FROM OPERATING ACTIVITIES | 7 746 | 34 764 | |
| INVESTING ACTIVITIES | |||
| Proceeds from sale of shares | 9 | 52 853 | 372 069 |
| Proceeds from sale of bonds and funds | 9 | 15 000 | 263 817 |
| Proceeds from loan to other companies | 11 | 48 670 | 21 291 |
| Loans to other companies | 11 | -4 213 | -12 000 |
| Purchase/sale of subsidiaries / properties | 19 | -200 968 | -284 976 |
| Purchase of shares | 9 | - | -30 741 |
| Purchase of shares in associated companies | 8 | -163 047 | -93 879 |
| Purchase of bond | 9 | - | -222 990 |
| Purchase of funds | 9 | -9 071 | - |
| Proceeds from sale of properties | 9 | 15 975 | - |
| Net purchase of receivables/debt | - | -43 535 | |
| Loans to associated companies | 9, 20 | - | -2 400 |
| Received dividend/repaid paid-in capital other shares | 9 | - | 11 532 |
| Purchase of other items | 4 | -2 826 | - |
| NET CASH USED IN INVESTING ACTIVITIES | -247 627 | -21 812 | |
| FINANCING ACTIVITIES | |||
| Proceeds from debt to financial institutions | 11 | 372 850 | 349 546 |
| Repayments of debt to financial institutions | 11 | -189 202 | -194 873 |
| Repayments other debt | 11 | -42 855 | - |
| Loans from other companies | 11 | 24 880 | 51 080 |
| Dividends on ordinary shares | 20 | -39 881 | -35 251 |
| Dividends on preference shares | 20 | -38 806 | -37 351 |
| NET CASH (USED IN) / FROM FINANCING ACTIVITES | 86 986 | 133 151 | |
| Net increase in cash and cash equivalents | -152 896 | 146 102 | |
| Cash and cash equivalents at beginning of year | 265 226 | 119 383 | |
| Exchange (losses)/gains on cash and cash equivalents | - | -259 | |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 112 331 | 265 226 |
1. About the business
Pioneer Property Group ASA (the 'Company') and its subsidiaries (together, the 'Group') invests mainly in a broad range of properties including retail properties; hotel properties; preschool properties, office properties and property development within commercial and residential real estate (currently under development). The Group leases out the investment properties on long-term leases. The current real estate portfolio is situated in Norway and Sweden.
Pioneer Property Group ASA is a public limited company incorporated and domiciled in Norway. The address of the Company's registered office is Rådhusgata 23, 0158 Oslo.
The consolidated annual financial statements cover the period from 1 January 2023 to 31 December 2023, with 2022 shown as comparative period.
These consolidated financial statements are approved by the Board of Directors 21. March 2024.
2. Key transactions and events in 2023
In 2023, PPG has increased the real estate income due to the acquisitions made in 2022 and early 2023. PPG has increased its investments within the hotel segment, entering into a joint venture with Västerkulla Hotell Holding AB of owning three hotels located in Eksilstuna, Helsingborg and Jönköping. This investment was made through the joint venture company JV Västerkulla Fastighet AB and is regarded as an joint venture company.
The purchase price for the shares was MSEK 64, net of bank debt and other adjustments, based on a property value of MSEK 270 on a 100% basis..
The second largest transaction was the sale of 50% of the shares in two hotels to partner. These investemtns is now regarded as investment in joint venture. The hotels is located respectively in Strand and Köping in Sweden. Refer to note 5, note 6 and note 8 for additional information.
Further, PPG increased its holdings in the real estate company Norlandia Holding through purchase of shares received as payment in kind for the transaction mentioned above. Refer to note 8 for additional information
PPG added one office property (combined office and warehouse) in Mo i Rana over the period due to the acquisition of additional shares in BM3 Eiendom which is now regarded as a subsidiary. Refer to note 5 and note 6 for additional information.
Additionally, PPG acquired development rights related to 51 500 m2 plot together with local partners in close proximity to Evenes Airport. Refer to note 5 and note 6 for additional information.
3. General Accounting Principles
Basis of preparation
.
The consolidated financial statements of the Group have been prepared in accordance with IFRS® Accounting standards and interpretations by the IFRS Interpretations Committee (IFRIC) as adopted by the EU. The consolidated financial statements have been prepared under the historical cost convention, except for fair value adjustments of bonds, funds, shares and investment properties.
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. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are related to valuation of investment properties as described in note 6 and the valuation of financial instruments measured at fair value as described in note 9.
The statement of cash flow has been prepared using the indirect method.
All financial numbers are presented in NOK thousand, unless otherwise stated.
Consolidation
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet, respectively.
Foreign currency translation.
The Group's presentation currency is NOK, which is also the parent company's functional currency.
Transactions in foreign currencies are initially recognised in the functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency using the exchange rate at the reporting date. All exchange differences are recognised in the consolidated income statement.
Dividend
Pioneer Property Group ASA has two classes of shares, ordinary shares and preference shares. The preference shares are entitled to annual dividend payments amounting to NOK 10.00 per preference share, in accordance with the company's Articles of Association. The board of directors approves payment of dividends based on an authorisation from the Annual General Meeting. The dividend payments have been made quarterly with NOK 2.50 over the course of 2023. The Preference shares are currently redeemable at a price of NOK 100 per share, which was valid from 1 July 2020, when it was stepped down from NOK 130 per preference share. The coupon for the preference share has reached its maximum coupon, which is set to NOK 10 per share.
Dividend distribution to Ordinary shares and Preference Shares is recognised as a liability in the Group's financial statement in the period in which the dividend is approved by the Board of Directors based on the authorisation given by the Company's shareholders in the General Assembly.
The use of estimates and assessment of accounting policies when preparing the annual accounts
Estimates and assumptions
Estimated and assumptions are used by the management to asses that the value of investment property and financial instruments. These estimates may have affected assets, liabilities, revenues, expenses and information on potential liabilities. Future events may lead to these estimates being changed. Estimates and their underlying assumptions are reviewed on a regular basis and are based on best estimates and historical experience. 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.
Judgements
Management has, when preparing the financial statements; made certain significant assessments based on critical judgment when it comes to application of the accounting principles.
Material exercise of judgment and estimates relate to the following matters:
- Investment properties, note 6
- Financial instruments, note 9
4. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including fair value interest rate risk and cash flow interest rate risk), credit risk, currency risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.
Risk management is carried out by management under guidance by the Board of Directors. Management identifies, evaluates and act upon financial risks.
a) Market risk
Market risk for the Group is the risk that future cash flows in the form of interest payments change as a result of changes in market interest rates in addition to fluctuations in currencies. The level of interest rate exposure and currency risk exposure are determined based on an assessment by management and the Board of Directors of existing cash flows, general assessment of financial condition and available liquidity.
(i) Fair value interest rate risk
The Group holds interest bearing assets in terms for cash deposits and bonds. Fluctuations in interest rates would yield a higher or lower interest income. At the current level of cash deposits, a change in interest rate of +/- 1 % will not be material for the financial statements. Further, a change in interest levels may cause changes in the fair value of the real estate portfolio in addition to the performance of the bonds and bond funds held on PPG's balance sheet.
(ii) Cash flow interest rate risk
Exposure to cash flow interest rate risk is assessed when necessary. As of 31.12.2023, the Group is exposed to variable interest rates for its borrowings linked to the different investment properties. The Group also holds borrowings with fixed interest rates. See note 11 for further details.
The need for a fixed rate is periodically assessed, depending on the effects of adverse fluctuations in interest payment cash flows due to higher interest rates. Management's assessment is that the Group's current financial position does not indicate a further need for fixed interest rates.
The following table summarises how the profit or loss, before tax, and equity in the 2023 reporting period would have been affected by changes in the interest rate that Management considers are reasonably possible:
Interest rate sensitivity for reporting year 2023
| (in TNOK) | -0,50 % | -0,25 % | 0,25 % | 0,50 % |
|---|---|---|---|---|
| Change P&L/Equity | 5 302.7 | 2 651.3 | -2 651.3 | -5 302.7 |
| Interest rate sensitivity or reporting year 2022 | ||||
| (in TNOK) | -0,50 % | -0,25 % | 0,25 % | 0,50 % |
| Change P&L/Equity | 4173.2 | 2 086.6 | -2 086.6 | -4 173.2 |
(iii) Currency risk
Currency risk is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company. Currency risk also exists when the foreign subsidiary of a firm maintains financial statements in a currency other than the reporting currency of the consolidated entity. The risk is that there may be an adverse movement in the exchange rate of the denomination currency in relation to the base currency before the date when the transaction is completed.
Monetary assets and liabilities are sensitive to movements in foreign exchange rates. As the operations of the Group are located in Norway and only joint venture operations are carried out in NOK, and all financing activities are denominated in NOK (see note 11), Management considers that the exposure to foreign exchange risk is low, as all loans are nominated in NOK and the consolidated cash funds in Swedish Krona at year end was MSEK 0.
For its operating activities in Sweden, the Group manages its foreign currency risk by maintaining a policy to hold the foreign currency received to meet its future obligations in foreign currency, such as refurbishment needs.
b) Credit risk
Credit risk is the loss that the Group would suffer if a counterparty fails to perform its financial obligations. Credit risk is managed on Group basis. Credit risk arises from cash and cash equivalents; loans granted and trade receivables, including committed transactions. The Group assess the expected credit losses in relation to its financial assets taking into account its past experience and also taking into account forwards looking information
Management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Management does not expect any losses from non-performance by the contractual counterparties. The impairment analysis on trade receivables is performed at each reporting period based on a provision matrix, grouping its receivables in the number of days past due. As of the end of the 2023 and 2022 reporting periods, there has not been recorded any loss and there are no significant amount of trade receivables past due at the date of the approval of the financial statements.
Receivables due
| more than 60 days | ||||
|---|---|---|---|---|
| Total | Not due | between 1 and 60 days overdue | overdue | |
| Trade Receivables | 12 178 | 8 473 | 1 311 | 2 393 |
| Other Receivables | 41 658 | 41 658 | - | - |
| As per 31.12.2023 | 53 836 | 29 024 | 1 311 | 2 393 |
| Total | Not due | between 1 and 60 days overdue | more than 60 days overdue |
|
|---|---|---|---|---|
| Trade Receivables | 8 066 | 1 976 | 6 090 | - |
| Other Receivables | 20 958 | 20 958 | - | - |
| As per 31.12.2022 | 29 024 | 22 934 | 6090 - |
The credit quality of the issuer is also taken into consideration when acquiring bonds.
With respect to the loans to associates and other parties, the Groups applies general approach to assess the impairment of financial assets measured at amortised cost. Loans to associates are closely monitored by Management, and concludes that the credit risk, including the probability of default within the next 12 months is very low. There has not been a significant increase in the credit risk since the initial recognition.
c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its obligations at maturity without incurring a significant increase in finance cost or not being able to meet its obligations at all. The risk also includes that the Group must forfeit investment opportunities. Cash flow forecasting is performed at Group level.
Group management monitors the Group's liquidity requirements to ensure that it has sufficient cash to meet operational needs while maintaining sufficient headroom to pay out quarterly dividends to holders of preference shares. The monitoring takes into account the possibility to raise external debt, as the Group keeps unleveraged assets and properties. The Group also keeps its liquid funds in cash and cash equivalents, and in high yield funds with high liquidity.
The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:
Maturity of financial liabilities at the end of the 2023 reporting period:
| NOK thousand | <1y | 1y-2y | 2y-5y | >5y | Total |
|---|---|---|---|---|---|
| Borrowings | 223 195 | 48 431 | 507 923 | 354 347 | 1 133 896 |
| Interest on borrowings | 78 196 | 65 390 | 135 903 | 155 090 | 434 578 |
| Other current liabilities | 78 679 | 78 679 | |||
| Total | 380 070 | 113 821 | 643 826 | 509 437 | 1 647 153 |
During 2023, the Group became the counterparty to a number of loan agreements, mostly in connections with its acquisitions of investment properties. See Note 11 for further details.
As of the end of the 2023 reporting period, Management considers it highly likely that the Group will enter into refinancing agreement for one of the loans maturing in less than 12 months, with an amortised cost value of MNOK 134.5. The new agreement is expected to be paid in periodic payments over a term of 5 years. However, since at the end of the 2023 reporting period the Group has not completed the agreement (i.e. no unconditional right to defer settlement for at least 12 months after the reporting period), the loan is presented as current liabilities.
Maturity of financial liabilities at the end of the 2022 reporting period:
| NOK thousand | <1y | 1y-2y | 2y-5y | >5y | Total |
|---|---|---|---|---|---|
| Borrowings | 137 087 | 244 667 | 375 310 | 207 650 | 964 713 |
| Interest on borrowings | 50 110 | 41 027 | 84 259 | 106 550 | 281 947 |
| Other current liabilities | 51 412 | ||||
| Interest on other current liabilities | |||||
| Total | 238 608 | 285 694 | 459 569 | 314 200 | 1 246 659 |
Capital management
The group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern; to maintain an optimal capital structure to reduce the cost of capital; and to comply with all covenants agreed with the lenders to the Group. Compliance with covenants is further described in note 11.
When managing the capital, PPG will take into account the need for sufficient liquidity reserves to meet PPG's financial obligations.
Management determines that the current liquidity in the Group and the current liquidity forecasts as of 31.12.23 grants the Group enough resources to meets its obligations and continue with its current investment plan. Management continues to monitor the optimal capital structure going forward, depending on operational needs. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to repay debt.
5. Segments
Accounting principles
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses. Furthermore, the entity's component's operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance, and thus separate financial information is available. The company has determined that the Board of Directors is collectively the chief operating decision maker.
Description
During 2023, the Group has increased its investments across a broad range of properties, both in Norway and Sweden. As of the end of the reporting period, the Group's real estate portfolio was comprised of retail properties; hotel properties; preschool properties; office properties and development properties with both commercial and residential use. The Office properties segment was a new segment in 2022, as a consequence of the acquisition of an office property in Bodø (see Note 6 for further information).
Management has therefore identified five different segments, all of them held with a view to enter into lease agreements where the Group acts as a lessor.
Preschools
The Preschool segment consists of three preschool properties owned by PPG, located in Bergen and Oslo. Two preschools were acquired in September 2022 from Hi Capital AS and Hospitality Invest AS. Total lease income for the Preschool segment amounted to MNOK 1.9 in 2022 and increased to MNOK 6.7 in 2023 due to the full effect of the acquisitions. The fair property value based on third party valuation of the property owned by PPG per 31.12.23 was MNOK 106,5.
Retail Properties
The retail property segment constitutes of properties owned by the subsidiary Pioneer Retail Properties AS, which was established to procure and build facilities for retail properties, mainly for the Ferda group all over Norway. The segment consists currently of 7 retail properties owned by PPG. Total lease income for 2023 for the retail properties segment amounted to MNOK 33.3 with a fair property value based on third party valuations per 31.12.23 of MNOK 438.
Property Development
Pioneer Property Development AS develop general commercial real estate and housing. The segment consists of 6 development projects at the end of 2023.
Currently, the Group has two building projects with new premises for Ferda and Tesla in Evenes under construction. The premises consist of two buildings of 1 200 m2and 2 000 m2 respectively. The buildings will be let out on long term barehouse lease agreements. Annual lease when finished is expected to be MNOK 8 combined for the two new properties. The building of Ferda Evenes was initialized autumn 2022 and is expected to be completed by the end of spring 2024. The building of new premises for Tesla commenced in late 2023, and is expected to open in Q1 2025.
The existing development project in Evenes, Nordland of 400 000 m2 greenfield area in close proximity to Harstad/Narvik airport in Northern Norway was expanded with an additional plot of 51 500 m2 , mainly used for parking, in November 2022. In January 2023, the Group also acquired the development rights for the additional plot. For 2023, the parking activity generated an income of MNOK 10. Total lease income for 2023 for the development properties segment amounted to MNOK 11.9 with a fair property value based on third party valuations per 31.12.23 of MNOK 385.8.
Hotel Properties
The hotel properties segment included four hotels in Norway and two hotels in Sweden in the beginning of 2023. In December 2023, 50% of the shares in the two hotels in Sweden were of sold in the end of 2023, generating a profit of MNOK 12.7. The hotels in this segment are rented out to Norlandia Hotel Group AS and Up North Hospitality AS, who has a management agreement with Norlandia Hotel Group, or directly to Norlandia Hotel Group. Norlandia Hotel Group operates the hotels on franchise agreements with leading hotel brands. Norlandia Hotel Group is owned by Hospitality Invest AS.
The properties are owned by subsidiaries of Pioneer Hotel Properties AS, which was established to acquire hotel properties through the downturn following the Covid-19 pandemic across the Nordics and Europe. The Hotel Properties segment consists of four hotel properties owned by PPG. Total lease income for 2023 for the Hotel Properties segment amounted to MNOK 52.5 with a fair property value based on third party valuations per 31.12.23 of MNOK 766. Other income related to this segment were MNOK 18.0, mainly related to the profit from sale of the two hotels in Sweden.
In relation to the creation of the Hotel Properties segment, PPG also established Up North Property AS, which is 90.1% owned by Pioneer Hotel Properties and 9.9% indirectly owned by Svein Arild Mevold, who was the previous CEO of Scandic Norway. Up North Property's strategy is to acquire hotel properties in the Nordics and Europe, where there is an opportunity to change the hotel's market position through reconfigurations and renovations of the hotel to adapt it to a changed hotel market.
Currently, the hotels in Stavanger and Gardermoen are undergoing renovations. When completed, the minimum rent and the expected rent will both be increased.
Office Properties
The first office property was acquired in March 2022, a seven stories tall building in Bodø. PPG has an ownership of 52 % in the property, controlling the acquired subsidiary that owns the property. Total lease income for 2023 for the Office Properties segment amounted to MNOK 3.8 with a fair property value based on third party valuations per 31.12.23 of MNOK 61.
Other
"Other" includes activities and revenue in the parent company PPG that does not fall into the other categories.
The information provided to the chief operating decision maker during 2023 includes:
| Preschool | Retail | Development | Hotel | Office | |||
|---|---|---|---|---|---|---|---|
| NOK thousand | Properties | Properties | Properties | Properties | Properties | Other | Group |
| Contractual rental income | 6 719 | 33 327 | 11 891 | 52 450 | 3 774 | - | 108 227 |
| Other income | 5 287 | 5 287 | |||||
| Profit/loss (-) sale of property | 12 668 | 12 668 | |||||
| Fair value adjustment on investment properties |
-9 500 | -25 370 | 58 471 | -60 404 | -9 760 | - | -46 563 |
| Operating profit/loss (EBIT) | -3 436 | 502 | 65 467 | -5 236 | -6 966 | -3 746 | 46 585 |
| Investment properties | 106 500 | 438 000 | 385 756 | 766 000 | 61 000 | 1 757 256 | |
| Cash and cash equivalents | 6 852 | 8 105 | 30 737 | 23 953 | 354 | 42 332 | 112 331 |
. The comparative period for 2022 is stated below:
| Preschool | Retail | Development | Hotel | Office | |||
|---|---|---|---|---|---|---|---|
| NOK thousand | Properties | Properties | Properties | Properties | Properties | Other | Group |
| Contractual rental income | 1 912 | 29 414 | 1 740 | 42 582 | 1 616 | 0 | 77 264 |
| Fair value adjustment | |||||||
| on investment properties | 797 | -30 064 | 30 767 | -11 701 | 26 468 | 0 | 16 267 |
| Operating profit/loss | |||||||
| (EBIT) | 2 308 | -7 529 | 30 078 | 19 165 | 26 909 | -1 151 | 69 781 |
| Investment properties | 116 000 | 461 000 | 227 681 | 924 029 | 70 000 | 1 798 709 | |
| Cash and cash equivalents | 7 414 | 19 037 | 65 366 | 48 580 | 142 | 124 688 | 265 226 |
6. Investment properties
Accounting principles
..
Property held with the purpose of achieving rental income, increase in value or both are classified as investment property. Investment property also include property under development for future use as investment property. Investment property is initially recognised at cost including transaction costs.
After initial recognition the investment property is subsequently recognised at fair value. Changes in fair value are presented in the consolidated statement of comprehensive income in the reporting period when change occurs.
Subsequent costs relating to investment property are included in the carrying amount if it is probable that they will result in future economic benefits for the investment property and the costs can be measured reliably. Expenses relating to operations and maintenance of the investment property are charged to the income statement during the financial period in which they are incurred.
Investment properties are derecognised when they are sold or are permanently out of operations and have no expected future economic benefit. All gains or losses relating to sales or disposal are presented as "other operating income" in the statement of comprehensive income the same year as disposal.
Critical accounting estimates
The investment properties are valued in accordance with the fair value method and all have been valued in accordance with valuation Level 3 in the fair value hierarchy (Level 3 - where inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)), see also note 9.
The yield level of the property has been determined on the basis of the unique risk and transactions based on the respective locations.
At the end of the year, the Group commissioned external cash-flow valuations for the properties from an independent valuer, except some properties that are under development or immaterial. For these properties, the Management has estimated the property value. The property value is estimated on an individual basis using a combination of discounted cash-flow analysis and property yield level. When estimating the value, key metrics, such as price per sqm and rent levels, together with market transactions is used as reference points. The level of transactions thus influences the level of uncertainty in the assumptions used in the valuation.
The discounted cash flow method involves discounting future cash flows over a specified period using an estimated discount rate and then adding a residual value at the end of the period. Future cash flows are calculated on the basis of cash flows from signed leases, as well as estimated future cash flows based on an expected market rent at the end of the lease terms. The fair value of investment properties is therefore mainly affected by expected market rents, discount rates, inflation, and capex. Individual factors for the properties such as relevant country, the property's location in relation to a major city, net-population change, size of the property, year of build and whether the property is on leased land (Norwegian: festetomt) were applied to assess the yield for the respective property/location.
PPG provides comprehensive details on the properties, lease contracts, floor space, built year and details of any vacant premises, and up-to-date and comprehensive information about all ongoing and planned projects.
The external valuer has set the following net yields and market rent per square meter in their valuation report:
| Preschool | Retail | Development | Hotel | Office | ||
|---|---|---|---|---|---|---|
| Properties | Properties | Properties* | Properties | Properties | Total | |
| Net yield | 6.2% | 7.6% | 8.1% | 6.0% | 6.4% | 6.8% |
| Market rent in NOK per sqm | 3 214 | 1 215 | n/a | 2 211 | 2 102 | 1 872 |
*For the development property segment, the only property included is the property in Evenes which generates lease income from parking for the net yield calculation. The market rent per square meter is not relevant for this segment as most of the value is related to larger plots without buildings or rental income.
As of the end of the 2023 reporting period, the following gross yield for the investment properties is observed for the properties and the valuation of the properties implies the following gross yields:
| Preschool | Retail | Developmen | Hotel | Office | ||
|---|---|---|---|---|---|---|
| Properties | Properties | t Properties | Properties | Properties | Total | |
| 4.8% - | 7.3% - | 6.0% - | 7.2% - | 4.8% - | ||
| Gross yield range 2023 | 6.7% | 8.5% | n/a | 8.5% | 7.2% | 8.5% |
| Weighted average gross yield | ||||||
| 2023 | 6.4% | 7.9% | n/a | 7.0% | 7.2% | 7.2% |
| 3.7% - | 6.5% - | 5.4% - | 6.2% - | 3.7% - | ||
| Gross yield range 2022 | 5.6% | 7.7% | n/a | 8.1% | 6.2% | 8.1% |
| Weighted average gross yield | ||||||
| 2022 | 5.3% | 7.1% | n/a | 6.7% | 6.2% | 6.5% |
The calculated weighted average gross yield is based on annual contractual lease income of 2024 of MNOK 99.3 after refurbishment of Forum and Voss and is based on an CPI-adjustment of contractual lease of 4.8%.
Description
As of 31.12.23 the Groups investment property portfolio consists of three preschool properties, seven retail properties, four hotels in Norway, one office property, one large parking lot and a warehouse, and land in Oslo, Rana, Evenes and Indre Østfold. The Group owns and manages a total area of approximately 60.500 square meters, not including associated companies and development properties.
Overview of account movements 2023
| Preschool | Retail | Development | Hotel | Office | ||
|---|---|---|---|---|---|---|
| NOK thousand | Properties | Properties | Properties | Properties | Properties | Group |
| Fair value in the beginning of | 116 000 | 461 000 | 227 681 | 924 029 | 70 000 | 1 798 710 |
| the year | ||||||
| Investment in subsidiaries | 2 370 | 115 516 | 51 693 | 760 | 170 338 | |
| /properties | ||||||
| Effect of curr. exch. differences | 11 653 | 11 653 | ||||
| in foreign operations | ||||||
| Sale of operations | -15 912 | -160 970 | -176 882 | |||
| Fair value adjustments on | -9 500 | -25 370 | 58 471 | -60 404 | -9 760 | -46 563 |
| investment properties | ||||||
| Fair value in the end of the year | 106 500 | 438 000 | 385 756 | 766 000 | 61 000 | 1 757 256 |
| Net change in unrealized gain | -9 500 | -22 000 | 58 471 | -60 404 | -9 760 | -46 563 |
The segment of hotel properties represented the biggest share of value of properties in the Group at year end of 2023. The largest acquisitions in 2023 were purchase of development rights related to additional land close to Evenes. The investments is also related to groundworks at Evenes. During 2023, it was also sold real estate/housing for a value of MNOK 15.9.
For Hotel Properties, the investments in 2023 is mainly related to the renovation of Forum Hotell, which will be completed in Q1 2024.
With respect to the retail properties, the additions made during 2023 is related to the additional investments in the existing buildings, such as improvement of technical installations.
In summary the total Group's portfolio as of 31 December 2023 was valued to MNOK 1 757.2 MNOK, a decrease from MNOK 1 798.7 from year-end 2022.
Overview of account movements 2022
As of 31.12.22 the Groups investment property portfolio consisted of three preschool properties, seven retail properties, four hotels in Norway, two in Sweden, and land in Rana and Evenes.
| Preschool | Retail | Development | Hotel | Office | ||
|---|---|---|---|---|---|---|
| NOK thousand | Properties | Properties | Properties | Properties | Properties | Group |
| Fair value in the beginning of | ||||||
| the year | 11 500 | 428 070 | 37 500 | 915 971 | - | 1 393 041 |
| Completed project in progress, | ||||||
| transferred to Investment | ||||||
| Property | 44 882 | 44 882 | ||||
| Investment in subsidiaries | ||||||
| /properties | 103 703 | 18 112 | 159 414 | 24 372 | 43 532 | 349 134 |
| Effect of currency exchange | ||||||
| differences in foreign | ||||||
| operations | -4 614 | -4 614 | ||||
| Fair value adjustments on | ||||||
| investment properties | 797 | -30 064 | 30 767 | -11 701 | 26 468 | 16 267 |
| Fair value in the end of the year | 116 000 | 461 000 | 227 681 | 924 029 | 70 000 | 1 798 709 |
| Net change in unrealized gain | 797 | -30 064 | 30 767 | -11 701 | 26 468 | 16 267 |
Commitments
As of the end of the 2023, there were refurbishments ongoing in Forum Hotel and Guard Hotel, and the planned renovation of Park Hotel Vossevangen. During renovation, it is limited rent income contributions from the properties as the rent is based on a lower percentage of the hotel turnover in the renovation period, agreed with its tenants. When renovation is completed, the annual minimum rent will increase, as well the turnover-based rent.
The Group had similar commitments of this type at the end of the 2022 reporting period, with both Park Hotel Vossevangen, Guard Hotel and Forum Hotel under renovation.
Total property operating expenses
The Group did not incur any direct operating expenses (including repairs and maintenance) in any investment property that did not generate rental income during the 2023 and 2022 reporting periods. As for the investment properties that did generate rental income during the 2023 and 2022 reporting periods, there were no material direct operating expenses incurred during the period, as most of the contracts are triple net (i.e. net of insurance, taxes and maintenance).
Climate related matters
Storms and floods are long-term risks, with potential to inflict physical damage to properties, something that could severely reduce property value. However, all properties are insured. In general, extreme weather, flood and drought are potential risks to our business. In 2022, a flood in Voss caused damage on some equipment and installations, however all costs have been covered by the insurance company. However, climate change and extreme weather lead to increased insurance cost. We have not experienced similar matters in 2023.
Sensitivity analysis
A property analysis is an estimate of the value that an investor is willing to pay for the property at a given time. The valuation is made on the basis of generally accepted models and certain assumptions on different parameters.
The tables below give an indication of the effects on the value of the property portfolio if yield levels change with 0.5% or rental income change with 5% NOI is defined as net operating income, meaning all revenue from properties minus all reasonable operating expenses.
Preschool properties
As of 31 December 2023, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | |||||
|---|---|---|---|---|---|---|
| -0,5% | 0,0% | 0,5% | ||||
| -5 % | 110 | 101 | 94 | |||
| NOI sensitivity | 0 % | 116 | 107 | 99 | ||
| 5 % | 121 | 112 | 104 |
Preschool properties - Comparative period 2022
As of 31 December 2022, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | |||||
|---|---|---|---|---|---|---|
| -0,5% | 0,0% | 0,5% | ||||
| -5 % | 122 | 110 | 101 | |||
| NOI sensitivity | 0 % | 128 | 116 | 106 | ||
| 5 % | 134 | 122 | 111 |
Retail properties
As of 31 December 2023, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | ||||
|---|---|---|---|---|---|
| -0,5% | 0,0% | 0,5% | |||
| NOI sensitivity | -5 % | 444 | 416 | 391 |
| 0 % | 468 | 438 | 412 | |
|---|---|---|---|---|
| 5 % | 491 | 460 | 433 |
Retail properties - Comparative period 2022
As of 31 December 2022, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | |||
|---|---|---|---|---|
| -0,5% | 0,0% | 0,5% | ||
| -5 % | 471 | 438 | 409 | |
| NOI sensitivity | 0 % | 496 | 461 | 431 |
| 5 % | 521 | 484 | 452 |
Development properties
The fair value of the properties classified as property development use the same significant unobservable inputs as the other categories presented. However, for this segment, most of the properties does not generate lease income. The valuation of the properties in this segment is not to the same extent as the other segments yield based valuations. Hence, sensitivity regards change in yield and NOI is not considered relevant.
Hotel properties
As of 31 December 2023, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | |||
|---|---|---|---|---|
| -0,5% | 0,0% | 0,5% | ||
| -5 % | 784 | 728 | 679 | |
| NOI sensitivity | 0 % | 825 | 766 | 715 |
| 5 % | 866 | 804 | 751 |
Hotel Properties - Comparative period 2022
As of 31 December 2022, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | |||
|---|---|---|---|---|
| -0,5% | 0,0% | 0,5% | ||
| -5 % | 948 | 878 | 817 | |
| NOI sensitivity | 0 % | 998 | 924 | 860 |
| 5 % | 1 048 | 970 | 903 |
Office properties
As of 31 December 2023, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | |||
|---|---|---|---|---|
| -0,5% | 0,0% | 0,5% | ||
| -5 % | 62 | 58 | 54 | |
| NOI sensitivity | 0 % | 66 | 61 | 57 |
| 5 % | 69 | 64 | 60 |
As of 31 December 2022, the Group had the following sensitivity to changes in these identified significant inputs:
| NOK million | Yield sensitivity | ||
|---|---|---|---|
| -0,5% | 0,0% | 0,5% | |
| -5 % | 72 | 67 | 62 |
| NOI sensitivity 0 % |
76 | 70 | 65 |
| 5 % | 80 | 74 | 68 |
7. Projects in progress, investment properties
Accounting principles
The Group measures its investment properties under development ("project in progress, investment properties") following the same fair value model as for the investment property. There have been no adjustments to the fair value in 2023 and management anticipates that historical cost reflects the fair value of the projects in progress. For the current projects in progress, the cost is mainly related to groundworks and engineering in Evenes and Brennemoen, costs that are likely to be compensated with approximately the same amount as the historical cost of the ground works.
Description
.
.
| Project in progress, investment properties | |||
|---|---|---|---|
| NOK in thousand | 2023 | 2022 | |
| Cost 1 January | 739 | 45 383 | |
| Additions | 34 774 | 238 | |
| Completed projects, transferred to investment properties | -44 882 | ||
| Depreciation | |||
| Exchange differences | |||
| Carrying value 31 December | 35 513 | 739 |
The project in progress is mainly related to groundworks and construction of additional 550 parking lots in Evenes, and the Studio City Project in Brennemoen, Indre Østfold.
8. Associated companies and joint ventures
Accounting principles
Associated companies are all entities over which the company has significant influence, but not control or joint control. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but without the ability to have control over those policies.
Joint ventures are those companies that are jointly controlled by the Group and another party.
Investments in associates and joint ventures are accounted for using the equity method of accounting, after initially being recognized at cost.
Description
Kongsparken AS - joint venture
Kongsparken AS was established 11 September 2020 by Eiendomsselskapet Ranheim AS and the Group. Both owns 50% of the company and contributed each with kroner 50.000. Kongsparken AS have acquired an old closed school, which shall be demolished and replaced by approximately 400 apartments.
The Group is controlling 50 of the votes in the Board of Directors. The project management and daily operations are performed by Eiendomsselskapet Ranheim AS, thus it is PPG consideration that the group does not have control in Kongsparken.
Forus Holdco AS - joint venture
Forus Holdco AS was established by Vico Eiendom AS and Up North Property AS to acquire 100 % of the shares in Forusveien 31 - Hotell AS from Vico Eiendom AS. Forusveien 31 - Hotell AS owns Scandic Forus Hotel in Stavanger municipality. The hotel is let out to Scandic Hotels AS The owners of Vico Eiendom AS is Hauglandgruppen, a family office located in Bergen.
The Group is controlling 50 % of the votes in the Board of Directors. Project management and daily operations are performed by Hauglandgruppen. It is the Group's evaluation that PPG does not have control in Forus Holdco AS and is regarded as an associated company. Forus Holdco AS was acquired on 29.12.2021.
Ramstadsletta Utvikling AS – associated company
During the first half of 2021 PPG, through Pioneer Development AS, acquired a 49 000 m2 plot together with local partners at Ramstadsletta in Bærum, Norway. The plot has an expected potential to develop around 70 000 m2 of residential and commercial real estate, and PPG has an ownership in the project of 40.08% as of 31.12.2023. Daily operations is carried out by ORO Eiendom as business manager, which also holds a 10% share of the company. PPG Is represented in the board, wich consists of four members. It is the Group's evaluation that PPG does not have control in Ramstadsletta Utvikling AS and is treated as an associated company.
Norlandia Holding AS – associated company
In September 2022 PPG acquired 23,58% of the shares in Norlandia Holding AS. In December 2023 PPG acquired additional 24.22% increasing its holdings to 47,80%. Norlandia Holding is an investment company within hotels and development properties. Through its subsidiaries the company owns 21 properties and has 9 associated companies. The net profit in the company was MNOK 9.8 and the total book value of equity was MNOK 393.3. The company is treated as an associated company.
Vossevangen utvikling AS – associated company
In July 2023, PPG acquired 41,49% of the shares in Vossevangen Utvikling. The company owns three properties in Voss which shall be developed to residentials. The company has four board members, where PPG has one representative in the board. It is the Group's evaluation that PPG does not have control in Vossevangen Utvikling and the company is regarded as an associated company.
JV Nordväst Fastighet AB - joint venture
In July 2023 PPG acquired 50,00% of the shares in JV Norväst AB. JV Nordväst AB was established together with the Swedish property company Västerkulla Hotell Holding AB, and has acquired three hotels in Jönköping, Eskilstuna and Helsingborg, a total of 319 hotel rooms and 13.551 sqm. The net profit in the company was MSEK 24.1 and the total book value of equity was MSEK 154.6.
The Group is controlling 50 % of the votes in the Board of Directors. Project management and daily operations are performed by Västerkulla Hotell Holding AB. It is the Group's evaluation that PPG does not have control in JV Nordväst Fastighet AB and is regarded as an associated company.
Strand Hotell Borgholm AB - joint venture
PPG sold 50% of the shares in Strand Hotell Borgholm to Norlandia Fastighet AB in December 2023. For the accounts of 2022, the company was regarded as a subsidiary. The sale of the 50% share and reclassification in the accounts to joint venture company was made in December 2023. The sale of the 50% share generated a profit, refer to table below.
The company owns a hotel property in Sweden. The net profit in the company was MSEK 2.1 and the total book value of equity was MSEK 4.6. The Group is controlling 50 % of the votes in the Board of Directors. Project management and daily operations are performed by Norlandia Fastighet AB. It is the Group's evaluation that PPG does not have control in Strand Hotell Borgholm AB and the company is regarded as an associated company.
Köping Hotellfastighet AB - joint venture
PPG sold 50% of the shares in Köping Hotellfastighet AB to Norlandia Fastighet AB in December 2023. For the accounts of 2022, the company was regarded as a subsidiary. The sale of the 50% share and reclassification in the accounts to joint venture company was made in December 2023. The sale of the 50% share generated a profit, refer to table below.
The company owns a hotel property in Sweden. The net profit in the company was MNOK 0.9 and the total book value of equity was MSEK 6.2. The Group is controlling 50 % of the votes in the Board of Directors. Project management and daily operations are performed by Norlandia Fastighet AB. It is the Group's evaluation that PPG does not have control in Köping Hotellfastighet AB and the company is regarded as an associated company.
The effects from sale/derecgnition of subisiary to joint venture is shown in the table below
| Köping hotellfastighet | Strand Hotell | ||
|---|---|---|---|
| NOK thousand | AB | Borgholm AB | Total |
| Investment property | 55.0 | 105.6 | |
| Trade and other receivables | 0.4 | 4.8 | |
| Cash and cash equivalents | 5.3 | 0.4 | |
| Deferred tax | -2.1 | -4.1 | |
| Loan to group companies | -13.3 | -38.5 | |
| Other current liabilities | -0.9 | -3.6 | |
| Net assets | 44.5 | 65.0 | |
| Exit value (100% basis) | 46.7 | 75.4 | |
| Gain recognized from sale of 50% of shares | 2.2 | 10.4 | 12.6 |
As of year end, the Group's shares of the financial positions in the companies owned is shown below:
| NOK thousand | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Goodwill | ||
| Deferred tax | -78 245 | -63 195 |
| Licenses, patents, rights | 18 348 | 19 047 |
| Investment properties | 1 313 630 | 783 910 |
| Other non-current loans | 207 306 | 157 702 |
| Other non-current assets | 84 904 | 318 841 |
| Cash | 82 721 | 21 160 |
| Other current assets | 4 160 | 38 889 |
| Borrowings (current and non-current) | -1 203 064 | -835 964 |
| Other current liabilities | -28 120 | -19 142 |
| Net assets | 401 640 | 421 249 |
| Share of ownership | 372 663 | 107 100 |
| Distribution of loss unevenly between share classes | ||
| Carrying amount (at percentage of part. by the Group) | 372 663 | 107 100 |
Changes in the Group's carrying amount in the periods:
| NOK thousand | 2023 | 2022 |
|---|---|---|
| Carrying amount at 01.01 | 107 100 | 14 869 |
| Invested capital in Norlandia Holding AS | 92 884 | 87 783 |
| Invested/repaid (-) capital in Ramstadsletta Utvikling AS | -2 695 | 2 795 |
| Interest free loan to Ramstadsletta Utvikling AS (refer to note 20) | -1 811 | |
| Invested capital in Forus Holdco AS | - | - |
| Invested capital Bm3 Eiendom AS /change to subsidiary | -3 377 | 3 301 |
| Invested capital in Vossevangen Utvikling AS | 9 921 | - |
| Invested capital in JV Nordväst Fastighet AB | 62 903 | - |
| 107 100 | |
|---|---|
| 49 223 | -1 647 |
| 36 895 | - |
| 21 619 | - |
| 372 663 |
The share of profit (loss) is calculated in the following table, showing the breakdown by Joint Ventures (JV) and associated companies and its contribution to the current year consolidated income statement of the Group, for the year 2023:
| JV | JV | JV | JV | JV | |
|---|---|---|---|---|---|
| NOK | Kongsparken | JV Nordväst | Forus Holdco | Köping Hotellfastighet | Strand Hotell |
| thousand | AS | Fastighet AB | AS | AB | Borgholm AB |
| Net income | 3 174 | 23 132 | 5 798 | ||
| The Group' share of ownership | 50,00 % | 50,00 % | 50,00 % | 50,00 % | 50,00 % |
| Share of profit or loss in the | |||||
| owner period | -1 587 | 11 566 | 2 899 |
| Associates | Associates | Associates | Associates | ||
|---|---|---|---|---|---|
| NOK | Ramstadsletta | Vossevangen | Bm3 | Norlandia | |
| thousand | Utvikling AS | Utvikling AS | Eiendom AS | Holding AS | Total |
| Net income | 84 754 | 146 | 10 083 | 120 738 | |
| The Group' share of ownership | 40,08 % | 41,49 % | 30,71 | 48,10 % | |
| Share of profit or loss in the | |||||
| owner period | 33 969 | 45 | 2 332 | 49 147 |
Share of profit (loss) is calculated in the following table, showing the breakdown by joint venture and associates and its contribution to the current year consolidated income statement of the Group, for the year 2022 is calculated as:
| JV | Associates | JV | Associates | Associates | ||
|---|---|---|---|---|---|---|
| NOK | Kongsparken | Ramstadsletta | Forus Holdco | Norlandia | Bm3 Eiendom | |
| thousand | AS | Utvikling AS | AS | Holding AS | AS | Total |
| Net income The Group' share of ownership |
-5 145 50,00 % |
-53 40,08 % |
-430 50,00 % |
4 795 23,58 % |
103 30,71 % |
-730 |
| Share of profit or loss in the owner period |
-2 573 | -21 | -215 | 1 131 | 32 | -1 647 |
9. Financial Instruments
Accounting principles
.
.
A financial instrument is a contract that gives rise to both a financial asset for one entity and a financial liability or equity instrument for another entity. Financial instruments are generally recognized as soon as the group becomes a party to the terms of the financial instrument.
Financial assets
Financial assets include cash and cash equivalents, trade receivables and other loans and receivables. Financial instrument classification is based on the business model in which the instruments are held as well as the structure of the contractual cash flows.
Financial assets measured at amortized cost
Financial assets measured at amortized cost in the Group consist of loans and receivables, trade receivables or cash and cash equivalents.
After initial recognition, these financial assets are measured at amortized cost using the effective interest method less impairment.
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss, comprise financial assets whose cash flows do not relate solely to payments of interest and repayments of principal on the outstanding nominal amount. Gains or losses on these financial assets are recognized through profit or loss.
Financial liabilities
Financial liabilities regularly give rise to a redemption obligation in cash or another financial asset. These include in particular bonds and other securitized liabilities, trade payables, liabilities to banks, liabilities to affiliated companies and derivatives designated as hedges. Financial liabilities are classified into the following categories:
- Financial liabilities measured at fair value through profit or loss, and
- Financial liabilities measured at amortized cost.
Upon initial recognition, all financial liabilities are measured at fair value. Trade payables and other non-derivative financial liabilities are generally measured at amortized cost using the effective interest method.
Fair Value
The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Financial instruments and investment properties that are measured at fair value in the financial statements require disclosure of fair value measurements by level based on the following fair value measurement hierarchy:
- Level 1 quoted prices (unadjusted) in active markets for identical assets and liabilities;
- Level 2 inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices); and
- Level 3 inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
Critical accounting estimates
For the shares in Pancom, the estimated value is based on assumptions of future cash flow in the companies and its subsidiaries. Pancom is an investment company within the real estate and construction sector and key metrics such as yield, future cash flow and EBITDA-multiples are assessed to estimate the value of the investment. For Hospitality Invest, the same type of estimates are made, with the book value of equity of the company as reference point, of which the financial statements have been prepared in accordance with International Financial Reporting Standards.
Specification of financial assets and liabilities:
The Group holds the following financial assets and liabilities:
| NOK thousand | 31.12.2023 | 31.12.2022 | |
|---|---|---|---|
| Financial assets at amortised cost | |||
| Loan to associated companies | 72 523 | 56 948 |
| Loan to other companies | 6 736 | 12 296 |
|---|---|---|
| Cash and cash equivalents | 112 331 | 265 226 |
| Trade and other receivables | 53 836 | 29 024 |
| Financial assets at fair value through profit or loss | ||
| Other investments 1) | 117 576 | 118 954 |
| Other Shares 2) | 44 391 | 48 953 |
| Sum | 411 956 | 531 401 |
| Financial liabilities at amortised cost | ||
| Borrowings | 1 149 120 | 971 955 |
| Other current liabilities | 75 492 | 49 936 |
| Sum | 1 224 612 | 1 021 891 |
1) Other investments are measured at fair value as level 1 in the fair value hierarchy in accordance with quoted prices
2) Other Shares included other investments in shares where the company have no significant influence or control, which is measured according to level 3 in the hierarchy.
Specification of investments measured at fair value held as of 31 December 2023:
1) Bonds are measured at fair value as level 2 in the fair value hierarchy in accordance with observed prices.
2) Funds are measured at fair value as level 1 in the fair value hierarchy in accordance with quoted prices.
3) Investments in shares where the company have no significant influence or control, is measured according to level 3 in the hierarchy. The shares are not traded, not quoted.
| NOK 3) Hospitality |
|||||
|---|---|---|---|---|---|
| thousand | 1) Bonds | 2) Funds | Invest AS | 3)Pancom AS | Total |
| Fair value in the beginning of the year | 62 000 | 56 954 | 18 212 | 30 741 | 167 907 |
| Purchase in 2023 | 9 071 | 9 071 | |||
| Sold in 2023 | -13 015 | -13 015 | |||
| Fair value adjustments | 620 | 1 946 | -4 562 | -1 996 | |
| Fair value in the end of the year | 62 620 | 54 956 | 13 650 | 30 741 | 161 967 |
Specification of investments measured at fair value held as of 31 December 2022:
| 3) | ||||||
|---|---|---|---|---|---|---|
| Odin | ||||||
| NOK | Bidco | 3)Hospitality | ||||
| thousand | 1) Bonds | 2) Funds | AS | Invest AS | 3)Pancom AS | Total |
| 357 | ||||||
| Fair value in the beginning of the year | 49 625 | 104 600 | 900 | 7 541 | 519 666 | |
| Purchase in 2022 | 222 990 | 2 758 | - | 30 741 | 256 490 | |
| -346 | ||||||
| Sold in 2022 | -210 615 | -50 451 | 368 | -607 434 | ||
| -11 | ||||||
| Repaid capital | 532 | - | -11 532 | |||
| Fair value adjustments | 47 | 10 670 | 10 718 | |||
| Fair value in the end of the year | 62 000 | 56 954 | 0 | 18 210 | 30 741 | 167 907 |
| NOK thousand | 31.12.2023 |
10. Cash and cash equivalents
Accounting principles
Cash comprises demand deposits. Cash equivalents are short-term, highly liquid investments that are convertible to cash in three months or less to known amounts of cash and which are subject to an insignificant risk of changes in value. The Group had no cash equivalents as of the end of the periods presented.
Description
.
Cash and cash equivalents include bank deposits:
| NOK in thousand | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Bank deposits | 112 231 | 265 226 |
| Total | 112 231 | 265 226 |
All interest income relates to interest on bank deposits.
The bank deposits include restricted cash related to tax withholding account of TNOK 241 per 31 December 2023 (TNOK 224 per 31 December 2022).
11. Borrowings
Accounting principles
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Description
Borrowings and available cash and cash equivalents constitute the capital of the Group. The Group's main source of financing are bank loans and trade credit.
The Group had the following borrowing as of 31 December 2023:
| NOK thousand | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Non-current | ||
| Commercial bank loans | 881 902 | 736 761 |
| Other loans | 28 799 | 98 107 |
| Total | 910 701 | 834 869 |
| NOK thousand | 31.12.2023 | 31.12.2022 |
| Current | ||
| Commercial bank loans | 122 503 | 84 248 |
| Other loans | 100 692 | 52 838 |
| Total | 223 195 | 137 087 |
| NOK thousand | 31.12.2023 | 31.12.2022 |
| Total non-current and current | ||
| Commercial bank loans | 1 004 405 | 821 010 |
| Other loans | 129 491 | 150 946 |
| Total | 1 133 896 | 971 955 |
The borrowings the Group holds as of the end of 2023 and 2022 are linked to the investment properties owned by the Group. The following assets have been pledged as security for liabilities:
| NOK thousand | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Investment property | 1 792 909 | 1 637 880 |
| Total pledged assets | 1 792 909 | 1 637 880 |
For the properties that are pledged as security for liabilities, the amount pledged corresponds to the fair value of the investment properties. (see note 6 for further information).
Relevant terms and conditions
Out of the total amortised cost value of all borrowings held as of 31.12.2023, MNOK 88,5 have a fixed annual interest rate that ranges from 1 to 4%. The rest of the borrowings are subject to an interest rate structure that is comprised of a variable interest rate based on the 3-month NIBOR plus a margin that typically approximates 2-3% annually. On average, the annual average interest rates realised for 2023 has been 7,62%. All loans are denominated in NOK.
See note 4 for the maturity of financial liabilities at the end of the period, and for a description of the financial risks arising from changes in the interest rates.
Compliance with covenants
The borrowing agreements typically include covenants that the Group must fulfil. The nature and characteristics of the covenants vary from agreement to agreement, but the typical financial covenants are loan-to-value ratios ranging from 60 to 70%; and minimum liquidity requirements in the subsidiary that is the counterparty to the borrowing agreement with the lender.
Management has determined that, as of the end of the 2023 reporting period, the Group is in compliance with all the covenants required by the lender.
Changes in borrowings from financing activities:
| NOK thousand | Non-current borrowings | Current borrowings | Total |
|---|---|---|---|
| At 1 January 2023 | 834 869 | 137 087 | 971 955 |
| Cash flows | |||
| Cash flow received | 397 730 | 397 730 | |
| Repayments | -94 969 | -137 087 | -232 056 |
| Non-cash: | |||
| Reclassification from 2022 to 2023 | -14 060 | ||
| Borrowing classified as non-current at 31 December | |||
| 2022 becoming current during 2023 | -221 869 | 221 869 | |
| Purchase of operations | 16 243 | 1 326 | 17 569 |
| Interest | 7 982 | 7 982 | |
| At 31 December 2023 | 925 924 | 223 195 | 1 149 120 |
| At 1 January 2022 | 520 483 | 176 854 | 697 336 |
| Cash flows | |||
| Cash flow received | 367 001 | 33 624 | 400 626 |
| Repayments | -16 000 | -178 873 | -194 873 |
| Non-cash: |
| At 31 December 2022 | 834 869 | 137 087 | 971 955 |
|---|---|---|---|
| Interest | 7 437 | 7 437 | |
| Purchase of operations | 58 529 | 2 900 | 61 429 |
| 2021 becoming current during 2022 | -102 582 | 102 582 | - |
| Borrowing classified as non-current at 31 December |
12. Other current liabilities
.
| 31.12.2023 | 31.12.2022 |
|---|---|
| 36 503 | 28 909 |
| -1 703 | -1 379 |
| 12 665 | 8 537 |
| 34 200 | 14 742 |
| 1 482 | 1 226 |
| 7 052 | 8 047 |
| 90 200 | 60 082 |
Dividend relates to Q4 2023 dividend approved by the board 12. October 2023, with payment date in January 2024.
13. Rental income
Accounting principles
The Group enters into lease agreements where it acts as a lessor. This constitutes the Group's main source of income. See note 13 for the description of the Group's accounting policies on Rental Income. The Group enters into lease agreements where it acts as a lessor. This constitutes the Group's main source of income. All leases held by the Group are considered operating leases. This is the case because, even though lease agreements have a typical duration of several years, the lease term is substantially shorter than the asset's economic life, and the minimum lease payments does not amount to substantially all of the fair value of the investment property. Management has not identified any other indications that the Group has transferred substantially all of the risks and rewards incidental to ownership of its investment properties.
Revenue consists of rental income, which is typically recognised on a straight-line basis over the period of the lease agreements with its lessees (see note 3 for further information). Revenues are presented net of VAT, discounts, and rebates. Service charge expenses are charged to tenants and recognised in the balance sheet together with payments on account of tenants, and therefore does not affect the result beyond an administrative premium recognised under revenue.
Description
.
The group holds twenty revenue generating properties per year end, in general leased out on long-term triple net contracts.
The group is the lessor of investment properties. The group's contractual rental income is distributed as follows, where the numbers are adjusted annually to reflect the change in CPI. The rent in the table below are adjusted with an annual CPIadjustment of 2%:
| NOK in thousand | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Within 1 year | 101 425 | 94 966 |
| Year 2 | 102 442 | 81 946 |
| Year 3 | 104 491 | 83 585 |
| Year 4 | 101 520 | 80 648 |
| Year 5 | 98 709 | 77 442 |
| After 5 years | 777 776 | 619 784 |
| Total | 1 384 270 | 1 038 372 |
The Group typically rents out the investment properties to tenants on long term triple-net contracts where the operator has the main responsibility for annual maintenance, insurance, and other directly related property. All agreements are fully adjusted annually to reflect the change in CPI. However, the hotel investment properties typically have the characteristic that rental income is subject to certain positive variables over an agreed minimum lease payment: lease payments are based on the highest of a minimum rent and a percentage of the hotel's turnover.
All revenue during 2023 and 2022 has been originated in Norway and Sweden.
14. Employee expenses and management remuneration
| NOK | 2023 | 2022 |
|---|---|---|
| Salary | 6 091 596 | 3 620 160 |
| Payroll tax | 967 781 | 583 585 |
| Pension benefits | 94 012 | 61 149 |
| Other benefits | 104 016 | 35 744 |
| Total salary and pension costs | 7 257 505 | 4 300 638 |
| Average Employees | 4 | 3 |
The remuneration to the management in 2023:
| Other | |||||
|---|---|---|---|---|---|
| NOK | Salary | benefits | Bonus | Pension benefits | Total compensation |
| John Ivar Busklein (CEO) | 560 048 | - | 166 667 | 8 204 | 734 919 |
| Øystein B. Grini (CFO) | 1 416 000 | 4 392 | 126 000 | 26 312 | 1 572 704 |
| Total management remuneration | 1 976 048 | 292 667 | 34 516 | 2 307 623 |
The remuneration to the management in 2022:
| Other | |||||
|---|---|---|---|---|---|
| NOK | Salary | benefits | Bonus | Pension benefits | Total compensation |
| John Ivar Busklein (CEO) | 525 713 | 150 000 | 7 299 | 683 012 | |
| Øystein B. Grini (CFO) | 1 282 000 | 4 392 | 150 000 | 24 757 | 1 461 149 |
| Total management remuneration | 1 807 713 | 4 392 | 300 000 | 32 056 | 2 144 161 |
John Ivar Busklein has been CEO of Pioneer Property Group ASA in a part time position at 28,4%. Øystein Grini was appointed as new CFO of the Group as of 1. September 2021.
No member of the management has in their agreement that they will get any right to compensation after termination of employment. No loans or guarantees have been given to any members of the management, the Board of directors or other corporate bodies.
The board of directors of PPG has prepared a determination of salary and other remuneration to the executive management, in accordance with applicable law. The declaration includes the policies which PPG uses for the determination of salary and other remuneration to its executive management in the calendar year 2023 as published on the company's web page pioneerproperty.no.
The remuneration to the Board of Directors:
NOK 2023 2022
| Roger Adolfsen (Charirman of the board) | 120 000 | 130 000 |
|---|---|---|
| Geir Hjorth (board member) | 130 000 | 130 000 |
| Sandra Riise (board member) | 130 000 | 130 000 |
| Even Carlsen (board member) | 110 000 | 130 000 |
| Nina Høisæter (board member) | 130 000 | 130 000 |
| Total remuneration | 620 000 | 650 000 |
15. Other operating expenses
| NOK in thousand | 2023 | 2022 |
|---|---|---|
| Accounting fees, auditing, legal expenses and other fees | 10 799 | 5 908 |
| Other operating expenses | 7 561 | 7 339 |
| Total other operating expenses | 18 360 | 13 247 |
Fees from the auditor:
.:
.
Fees from the auditor
| NOK in thousand | 2022 | 2022 |
|---|---|---|
| Auditing fees | 2 393 | 1 203 |
| Other fees from the auditor | 0 | 25 |
| Total auditing fees | 2 393 | 1 227 |
16. Other financial gains (losses)
| NOK thousand | 2023 | 2022 |
|---|---|---|
| Currency gain/loss | 2 227 | -1 065 |
| Gain on sale shares | - | 25 701 |
| Gain on sale bonds | 1 985 | 3 385 |
| Loss on sale funds | - | -609 |
| Loss on sale of properties | - 61 | - |
| Changes in fair value (see note 9) | - 1 996 | 10 718 |
| Other adjustments | -22 609 | -4 000 |
| Other financial income | 456 | - |
| Other financial expenses | 0 | -325 |
| Sum | -19 999 | 33 805 |
The gain on sale of bonds is related to the sale of the shares in Holberg Kreditt.
Other adjustments are related to reduced value of the option to buy additional land in Brennemoen.
Gain form sale of subsidiary is related to sale of 50% of the shares in Strand Hotell Borgholm AB and Köping Hotellfastighet AB, which is recognized as associated company as of year end.
The change in fair value is mainly related to the shares in Hospitality Invest AS.
17. Income taxes
Accounting principles
The tax expense for the period comprises current and deferred tax.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
The Group has applied the main rule for recognition of deferred tax in connection with the purchase of shares in property companies that are not acquired through a business combination. This means that deferred tax is recognised as the difference between the tax value and accounting value of investment property in the subsidiary, and value changes of the investment property. Not recognised deferred tax linked to initial recognition exemption for investment properties per 31 December 2023 is MNOK 155.5 (MNOK 175.1 in 2022).
Changes in deferred tax liabilities:
| NOK in thousand | Investment property | Other items | Total |
|---|---|---|---|
| 01.01.2022 | 54 423 | -205 | 54 218 |
| Recognized deferred tax | 9 544 | -5 424 | 4 120 |
| 31.12.2022 | 63 967 | -5 629 | 58 338 |
| Recognized deferred tax | -3 630 | -2 549 | -6 179 |
| Loss of control in subsidiary | -5 722 | -5 722 | |
| 31.12.2023 | 63 967 | -8 178 | 46 437 |
Income tax expense:
| NOK in thousand | 2023 | 2022 |
|---|---|---|
| Tax payable | 4 471 | 6 812 |
| Change in deferred tax | -6 179 | 4 120 |
| Changes related to loss of control in subsidiary | 1 690 | |
| Changes related to currency translation | 0 | 135 |
| Other changes | 1 568 | 729 |
| Income tax expense | 1 550 | 11 795 |
Reconciliation of tax expense:
.
| NOK in thousand | 2023 | 2022 |
|---|---|---|
| Profit before income tax | 26 587 | 76 571 |
| Tax expense based on standard rate of | ||
| Norwegian (22%) | 5 849 | 16 846 |
| Adjustments for: | ||
| Effect of tax rates outside Norway | 65 | 377 |
| Changes related to currency translation | 135 | |
| Permanent differences | -4 146 | -5 305 |
| Other differences | -218 | -258 |
| Income tax expense for the period | 1 550 | 11 795 |
18. Earnings per share
Accounting principles
The Group's preference shares are entitled to a fixed dividend of NOK 10.00 per annum from 01 July 2022, if the General Assembly approves payment of dividends. To calculate the earnings per share the entitled dividend to the preference shares is deducted from comprehensive income for the period. The earnings per ordinary share is the remaining comprehensive income deducted the preference share dividend divided by the weighted average number of shares in issue during the period.
Earnings per share from total operations.
| NOK | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Profit/(loss) attributable to shareholders of parent | 19 238 251 | 38 778 290 |
| Less pref share dividends | -38 805 870 | -37 835 722 |
| Profit attributable to ord shares | -9 567 619 | 942 568 |
| Weighted average ordinary shares | 9 814 470 | 9 814 470 |
| EPS to ordinary shares | -1,99 | 0,10 |
Diluted
As per 31 December 2023 no rights are issued which would cause diluted earnings per share to be different to basic earnings per share. Refer to note 21 for information related to the classes of shares.
19. Group structure and acquisition of companies
Accounting Principles
Acquisition of subsidiaries not viewed as a business combination
Upon purchase of property management assess whether the purchase constitute purchase of a business or purchase of an asset in accordance with IFRS 3. The Group assesses whether companies acquired constitute a business, which is when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs.
An acquisition of entities not comprising any business activities is viewed as a purchase of assets. The acquisition cost is allocated to the acquired assets and no deferred tax is calculated for temporary differences that arise at their initial recognition. Acquisition related costs are capitalized with the asset.
All acquisition of subsidiaries made by the Group were classified as purchase of assets, as no substantive processes have been identified.
Acquisition of companies regarded as asset purchase:
Within the property development segment, PPG increased its ownership to 88% in BM3 Eiendom AS.
The non-controlling interest in PPG is related to the shares in Park Hotel Holdco, Evenes Tomteselskap AS, T10 Holdco AS and BM3 Eiendom AS. For 2023, the transactions with non-controlling interest have been purchase of additional shares in Bm3 AS.
| NOK in thousand | 2023 | 2022 |
|---|---|---|
| Purchase of subsidiaries/Properties -cash | 200 968 | 287 722 |
| Cash acquired companies | 375 | 18 620 |
| Debt acquired companies | 17 569 | 108 968 |
| Sale of subsidiaries/Properties -cash | -52 853 |
Companies bought or incorporated in 2023:
| Company | Location | Share of | Share of |
|---|---|---|---|
| Name | ownership | voting rights | |
| BM3 Eiendom AS | Norway | 88% | 88% |
| Evenes Utvikling AS | Norway | 100% | 100% |
| Companies sold in 2023: | |||
| Köping Hotellfastighet AB | Sweden | 50% | 50% |
| Strand Hotell Borgholm Fastighets AB | Sweden | 50% | 50% |
| PPG Hylle 2 AS | Norway | 100% | 100% |
Companies bought or incorporated in 2022:
| Company | Location | Share of | Share of |
|---|---|---|---|
| Name | ownership | voting rights | |
| T10 Holdco AS | Norway | 52% | 52% |
| T10 Eiendom AS | Norway | 100% | 100% |
| ET Nord AS | Norway | 100% | 100% |
| ET Midt AS | Norway | 100% | 100% |
| ET Øst N AS | Norway | 100% | 100% |
| ET Øst S AS | Norway | 100% | 100% |
| ET Vest N AS | Norway | 100% | 100% |
| ET Vest S AS | Norway | 100% | 100% |
| PPG Hylle 1 AS | Sweden | 100% | 100% |
| PPG Hylle 2 AS | Norway | 100% | 100% |
| PPG Hylle 3 AS | Norway | 100% | 100% |
| Gaustadskogen Eiendom AS | Norway | 100% | 100% |
| Tjuvholmen Eiendom AS | Norway | 100% | 100% |
| Norab Eiendom Vest AS | Norway | 100% | 100% |
| Neptun Eiendom Invest AS | Norway | 100% | 100% |
| Steinbekkhaugen AS | Norway | 100% | 100% |
| Brennemoen Eiendom AS | Norway | 100% | 100% |
The Group consists of the following subsidiaries per 31 December 2023:
| Company | Location | Share of | Share of |
|---|---|---|---|
| Name | ownership | voting rights | |
| Pioneer Property Group International AS | Norway | 100% | 100% |
| Pioneer Preschools AS | Norway | 100% | 100% |
| Kidsa Ospeli Eiendom AS | Norway | 100% | 100% |
| Gaustadskogen Eiendom AS | Norway | 100% | 100% |
| Tjuvholmen Eiendom AS | Norway | 100% | 100% |
| Pioneer Retail Properties AS | Norway | 100% | 100% |
| Bobil Eiendom Rana AS | Norway | 100% | 100% |
| Bobil Eiendom Evenes AS | Norway | 100% | 100% |
| Håhjem AS | Norway | 100% | 100% |
| Ås Næring AS | Norway | 100% | 100% |
| Askjem Eiendom AS | Norway | 100% | 100% |
| Bobil Eiendom Grimstad AS | Norway | 100% | 100% |
| Bobil Eiendom Fauske AS | Norway | 100% | 100% |
| Bobil Eiendom Balsfjord AS | Norway | 100% | 100% |
| Pioneer Property Development AS | Norway | 100% | 100% |
| Bm3 Eiendom AS | Norway | 100% | 100% |
|---|---|---|---|
| Brennemoen Eiendom AS | Norway | 100% | 100% |
| Steinbekkhaugen AS | Norway | 100% | 100% |
| Norab Eiendom Vest AS | Norway | 100% | 100% |
| Neptun Eiendom Invest AS | Norway | 100% | 100% |
| Evenes Holding AS | Norway | 53% | 53% |
| Evenes Tomteselskap AS | Norway | 100% | 100% |
| ET Nord AS | Norway | 100% | 100% |
| ET Midt AS | Norway | 100% | 100% |
| ET Øst N AS | Norway | 100% | 100% |
| ET Øst S AS | Norway | 100% | 100% |
| ET Vest N AS | Norway | 100% | 100% |
| ET Vest S AS | Norway | 100% | 100% |
| PPG Hylle 1 AS | Norway | 100% | 100% |
| Evenes Utvikling AS | Norway | 85% | 85% |
| Pioneer Hotel Properties AS | Norway | 100% | 100% |
| Up North Property AS | Norway | 90% | 90% |
| Forum Holdco AS | Norway | 100% | 100% |
| Forum Hotellbygg AS | Norway | 100% | 100% |
| Park Hotel Holdco AS | Norway | 50% | 50% |
| Park Hotel Eiendom AS | Norway | 50% | 50% |
| Brennemoen Hotel Eiendom AS | Norway | 100% | 100% |
| Guard Hotel AS | Norway | 100% | 100% |
| PPG Hylle 3 AS | Norway | 100% | 100% |
| T10 Holdco AS | Norway | 52% | 52% |
| T10 Eiendom AS | Norway | 100% | 100% |
The Group consists of the following subsidiaries per 31 December 2022:
| Company | Location | Share of | Share of |
|---|---|---|---|
| Name | ownership | voting rights | |
| Pioneer Property Group International AS | Norway | 100% | 100% |
| Pioneer Preschools AS | Norway | 100% | 100% |
| Kidsa Ospeli Eiendom AS | Norway | 100% | 100% |
| Gaustadskogen Eiendom AS | Norway | 100% | 100% |
| Tjuvholmen Eiendom AS | Norway | 100% | 100% |
| Pioneer Retail Properties AS | Norway | 100% | 100% |
| Bobil Eiendom Rana AS | Norway | 100% | 100% |
| Bobil Eiendom Evenes AS | Norway | 100% | 100% |
| Håhjem AS | Norway | 100% | 100% |
| Ås Næring AS | Norway | 100% | 100% |
| Askjem Eiendom AS | Norway | 100% | 100% |
| Caravan Eiendom Grimstad AS | Norway | 100% | 100% |
| Bobil Eiendom Grimstad AS | Norway | 100% | 100% |
| Bobil Eiendom Fauske AS | Norway | 100% | 100% |
| Bobil Eiendom Balsfjord AS | Norway | 100% | 100% |
| Pioneer Property Development AS | Norway | 100% | 100% |
| Brennemoen Eiendom AS | Norway | 100% | 100% |
| Steinbekkhaugen AS | Norway | 100% | 100% |
| Norab Eiendom Vest AS | Norway | 100% | 100% |
| Neptun Eiendom Invest AS | Norway | 100% | 100% |
| Evenes Holding AS | Norway | 53% | 53% |
| Evenes Tomteselskap AS | Norway | 85% | 85% |
| ET Nord AS | Norway | 100% | 100% |
| ET Midt AS | Norway | 100% | 100% |
| ET Øst N AS | Norway | 100% | 100% |
|---|---|---|---|
| ET Øst S AS | Norway | 100% | 100% |
| ET Vest N AS | Norway | 100% | 100% |
| ET Vest S AS | Norway | 100% | 100% |
| PPG Hylle 1 AS | Norway | 100% | 100% |
| Pioneer Hotel Properties AS | Norway | 100% | 100% |
| Up North Property AS | Norway | 90% | 90% |
| Forum Holdco AS | Norway | 100% | 100% |
| Forum Hotellbygg AS | Norway | 100% | 100% |
| Park Hotel Holdco AS | Norway | 50% | 50% |
| Park Hotel Eiendom AS | Norway | 50% | 50% |
| Brennemoen Hotel Eiendom AS | Norway | 100% | 100% |
| Guard Hotel AS | Norway | 100% | 100% |
| Guard Hotel II AS | Norway | 100% | 100% |
| Köping Hotellfastighet AB | Sweden | 100% | 100% |
| Strand Hotell Borgholm Fastighets AB | Sweden | 100% | 100% |
| PPG Hylle 2 AS | Norway | 100% | 100% |
| PPG Hylle 3 AS | Norway | 100% | 100% |
| T10 Holdco AS | Norway | 52% | 52% |
| T10 Eiendom AS | Norway | 100% | 100% |
20. Related party transactions
.
Balances and transactions between the company and its subsidiaries, which are related parties to the company, have been eliminated on consolidation and are not disclosed in this note.
The Group has the following related parties as of 31.12.2023:
| Related party | Relation to the Group |
|---|---|
| Roger Adolfsen | Chairman of the Board and owner of Mecca Invest AS |
| Sandra Henriette Riise | Board member |
| Geir Hjort | Board member |
| Ane Nordahl Carlsen | Board member and owner of Grafo AS |
| Nina Hjørdis Torp Høisæter | Board member |
| John Ivar Busklein | Chief Executive Officer |
| Øystein Grini | Chief Financial Officer |
| Hospitality Invest AS | Substantial shareholder |
| Grafo AS | Substantial shareholder |
| Klevenstern AS | Substantial shareholder |
| Mecca Invest AS | Substantial shareholder |
| Norlandia Health & Care Group AS | Controlled by substantial shareholders, refer to note 21 |
| Norlandia Holding AS | Controlled by substantial shareholders, refer to note 21 |
| Kara Invest AS | Controlled by substantial shareholders, refer to note 21 |
| Ferda Norge AS | Controlled by substantial shareholders, refer to note 21 |
| Acea Invest AS | Controlled by substantial shareholders, refer to note 21 |
| Kidprop AS | Controlled by substantial shareholders, refer to note 21 |
| Caravan Eiendom AS | Controlled by substantial shareholders, refer to note 21 |
| Norlandia Hotel Group | Controlled by substantial shareholders, refer to note 21 |
| Up North Hospitality AS | Controlled by substantial shareholders, refer to note 21 |
| Kongsparken AS | Associated company |
| Forus Holdco AS | Associated company |
| Ramstadsletta Utvikling AS | Associated company |
The Group had the following related parties as of 31.12.2022:
| Related party | Relation to the Group |
|---|---|
| Roger Adolfsen | Chairman of the Board and owner of Mecca Invest AS |
| Sandra Henriette Riise | Board member |
| Geir Hjort | Board member |
| Even Carlsen | Board member and owner of Grafo AS |
| Nina Hjørdis Torp Høisæter | Board member |
| John Ivar Busklein | Chief Executive Officer |
| Øystein Grini | Chief Financial Officer |
| Hospitality Invest AS | Substantial shareholder |
| Grafo AS | Substantial shareholder |
| Klevenstern AS | Substantial shareholder |
| Mecca Invest AS | Substantial shareholder |
| Norlandia Health & Care Group AS | Controlled by substantial shareholders, refer to note 21 |
| Norlandia Holding AS | Controlled by substantial shareholders, refer to note 21 |
| Kara Invest AS | Controlled by substantial shareholders, refer to note 21 |
| Ferda Norge AS | Controlled by substantial shareholders, refer to note 21 |
| Acea Invest AS | Controlled by substantial shareholders, refer to note 21 |
| Kidprop AS | Controlled by substantial shareholders, refer to note 21 |
| Caravan Eiendom AS | Controlled by substantial shareholders, refer to note 21 |
| Norlandia Hotel Group | Controlled by substantial shareholders, refer to note 21 |
| Up North Hospitality AS | Controlled by substantial shareholders, refer to note 21 |
| Kongsparken AS | Associated company |
| Forus Holdco AS | Associated company |
| Ramstadsletta Utvikling AS | Associated company |
Indirect ownership of shares by board member per the balance sheet date:
| 2023 | 2022 | ||||
|---|---|---|---|---|---|
| Ord. Shares | Pref. shares | Ord. Shares | Pref. shares | ||
| Roger Adolfsen | 3 160 192 | - | 3 160 192 | - | |
| Ane Nordahl Carlsen | 311 985 | - | 0 | - |
The Group had the following material transactions with related parties:
| NOK in thousand | 2023 | 2022 |
|---|---|---|
| Rent revenue from Norlandia Health & Care Group AS including subsidiaries | 7 417 | 1 912 |
| Rent revenue from Ferda Norge AS | 33 312 | 29 414 |
| Rent revenue from Norlandia Hotel group | 57 738 | 42 582 |
| Management fee from Up North Hospitality AS | 1 342 | 1 875 |
| Management fee from Oslo Corporate Holding AS | 909 | 423 |
| M&A services and Management fee to Hospitality Invest AS | 4 889 | 2 877 |
| Interest income from associated companies | 3 417 | 2 300 |
| Sale of bonds to related parties | - | 153 500 |
| Sale of receivables to related parties | 251 | - |
| Purchase of shares and properties from related parties | 106 132 | 194 498 |
Transactions made between the related parties are made on terms equivalent to those that prevail in the market at arm's length.
Receivables from related parties
| NOK in thousand | 31.12.2023 | 31.12.2022 |
|---|---|---|
| Norlandia companies | 4 585 | 9 260 |
| Kongsparken AS | - | 14 644 |
| Ramstadsletta Utvikling AS | 12 000 | 48 000 |
| Smedplassen Eiendom AS | - | 1 432 |
|---|---|---|
| HI Capital AS | 18 163 | - |
| Wayfare Invest AS | - | 12 270 |
| Liabilities to related parties | ||
| NOK in thousand | 31.12.2023 | 31.12.2021 |
| Norlandia companies | 10 679 | 30 742 |
For compensation to key management personnel, see note 14.
Loans to associate entities
During the 2023 reporting period, the Group lent its associates funds in the form of loans to finance its investments, in agreement with the other shareholders of the associates.
The loan to its associate Ramstadsletta Utvikling AS has a nominal amount of MNOK 12.0 The contract does not contemplate the payment of interests. As a consequence, the amount of the loan has been re-calculated to reflect the present value of all future cash receipts discounted using an interest rate similar to the ones beared by the Group (see note 11 for further information), resulting in an amortised cost value of MNOK 10.8. As the contributions from the other shareholders were of a different nature and amount, the difference between the increase in net assets for the Group, and the contribution made has been considered a financial expense in the consolidated income statement. For 2022, this amounted to MNOK 7.1, for 2023 the amount is MNOK 1.2 As there were a downpayment of MNOK 36.0 in 2023, the amortised cost value has changed, the contribution made has been considered a financial gain for an amount of MNOK 5.9 for 2023.
21. Share capital and shareholder information
The Company have two classes of shares, ordinary shares and preference shares. As of 31 December 2023, Pioneer Property Group ASA had a share capital of NOK 14,683,023, divided into 9,814,470 ordinary shares and 4,868,553 preference shares with a nominal value of NOK 1 per share for both categories.
The differences between the share classes are differing voting rights and differing rights to the Company's profit. The regulations on voting rights and dividends are decided upon by the Shareholders' Meeting and can be found in the Articles of Association.
The ordinary share
The Company's ordinary share confers one vote unlike the preference shares that confer one-tenth of a vote.
The preference shares
The Company's preference shares confer a preferential right over ordinary shares to an annual dividend of NOK 10.00 per preference share per annum. Dividend payments are made quarterly with NOK 2.500 per preference share, if approved by the Board of Directors based on the authorisation given by the General Assembly. The preference share does not otherwise confer a right to dividend. If the general meeting decided not to pay dividends or to pay dividends that fall below NOK 2.500 per preference share during a quarter, the difference between paid dividends and NOK 2.500 per preference share shall be accumulated and adjusted upwards with an annual interest rate of 5 per cent until full dividends have been distributed. No dividends may be distributed to the ordinary shareholders until the preference shareholders have received full dividends including the withheld amount.
| Share value in NOK | ||||||
|---|---|---|---|---|---|---|
| Number of | Ordinary Preference |
Treasury | Total | |||
| shares | shares | shares | Share premium | shares | ||
| At 1 January 2022 | 14 683 023 | 9 814 470 | 4 868 553 | 555 636 899 | -987 966 | 569 331 956 |
| Capital reduction | - | |||||
| Payment premiums 2022 | - | |||||
| Acquisition of treasury shares | - |
| At 31 December 2023 | 14 683 023 | 9 814 470 | 4 868 553 | 555 636 899 | -987 966 | 569 331 956 |
|---|---|---|---|---|---|---|
| Capital reduction | - | - | - | - | - | |
| Payment premiums 2023 | - | - | - | - | - | - |
| Acquisition of treasury shares | - | - | - | - | - | - |
| At 31 December 2023 | 14 683 023 | 9 814 470 | 4 868 553 | 555 636 899 | -987 966 | 569 331 956 |
PPG holds 987,966 preference shares in PPG at purchased a price of NOK 102.00 per preference share. This equals approximately 6.73% of the share capital, which represents 0.96% of the votes. Detailed information regarding dividends, issues and redemption can be found in the Company's Articles of Association, available in the prospectus at the Company's website.
During 2023, PPG has declared quarterly dividends to the holders of preference shares, in total MNOK 38.8. Furthermore PPG paid dividends to holders of the ordinary shares of MNOK 59.3.
10 largest shareholders registered in VPS as of 31 December 2023:
| Ordinary | Preference | Voting | |
|---|---|---|---|
| shares | shares | share | |
| Hospitality Invest AS | 32,62% | 0,00% | 31,08% |
| Eidissen Consult AS | 16,73% | 0,00% | 15,94% |
| Grafo AS | 16,73% | 0,00% | 15,94% |
| Mecca Invest AS | 15,78% | 0,00% | 15,04% |
| Klevenstern AS | 15,78% | 0,00% | 15,04% |
| HI Capital AS | 2,34% | 0,00% | 2,23% |
| Skandinaviska Enskilda Banken AB | 0,00% | 12,88% | 0,61% |
| Nordnet Bank AB | 0,00% | 9,85% | 0,47% |
| Avanza Bank AB | 0,00% | 9,54% | 0,45% |
| The Bank of New York Mellon | 0,00% | 7,54% | 0,36% |
| Other Shareholders | 0,00% | 60,18% | 2,84% |
| Total | 100 % | 100 % | 100% |
10 largest shareholders registered in VPS as of 31 December 2022:
| Ordinary shares |
Preference shares |
Voting share |
|
|---|---|---|---|
| Hospitality Invest AS | 32,62% | 0,00% | 31,08% |
| Eidissen Consult AS | 16,73% | 0,00% | 15,94% |
| Grafo AS | 16,73% | 0,00% | 15,94% |
| Mecca Invest AS | 15,78% | 0,00% | 15,04% |
| Klevenstern AS | 15,78% | 0,00% | 15,04% |
| HI Capital AS | 2,34% | 0,00% | 2,23% |
| Skandinaviska Enskilda Banken AB | 0,00% | 12,88% | 0,61% |
| Avanza Bank AB | 0,00% | 10,25% | 0,48% |
| Nordnet Bank AB | 0,00% | 8,44% | 0,40% |
| The Bank of New York Mellon | 0,00% | 7,54% | 0,36% |
| Other Shareholders | 0,00% | 60,88% | 2,88% |
| Total | 100 % | 100 % | 100% |
22. Contingent liabilities
.
The group has not been involved in any legal or financial disputes in the period covered by these consolidated financial statements, where an adverse outcome is considered more likely than remote.
23. New standards not yet adopted
There are no new or amended standards that affect the Group as of the year 2023.
There are a number of standards, amendments to standards, and interpretations which have been issued by the International Accounting Standards Board (IASB) that are effective in future accounting periods that the Group has decided not to adopt early. None of these would be expected to have a material impact on the entity in the future reporting periods and on foreseeable future transactions.
24. Subsequent events
No significant subsequent events has occurred in 2024.
Alternative Performance Measures
Pioneer Property Group ASA reports Alternative Performance Measures (APMs) as a supplement, but not as a substitute, to the financial statements prepared in accordance with IFRS. Financial APMs are intended to enhance comparability of the results and cash flows from period to period. The financial APMs reported by PPG are the APMs that, in management's view, provide relevant supplemental information of the company's financial position and performance. Operational measures such as, but not limited to, occupancy and WAULT are not defined as financial APMs according to ESMA's guidelines.
The company reports the following alternative performance measures (APMs):
| APM amounts in NOK thousand |
Explanation | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| EBIT | Earnings before interest and taxes | 46 586 | 23 750 | 251 535 | |
| Weighted average | The weighted average gross yield on | Preschool | 6.4% | 5.3% | 3.4% |
| gross yield | estimated rent calculated by adjusting for property value. Gross yield for a |
Hotel | 7.2% | 6.8% | 6.2% |
| property or portfolio of properties is | Retail | 7.9% | 7.1% | 6.1% | |
| calculated as contractual annualised rental income for the upcoming |
Office | 7.2% | 6.2% | n/a | |
| financial year divided by the market value as of balance sheet date. |
|||||
| NOI | Net Operating Income, meaning all revenue from properties minus all reasonable direct property related expenses. |
118 766 | 69 974 | 41 256 | |
| Market value of the property portfolio |
The market value of the Groups investment properties |
1 757 256 | 1 798 709 | 1 393 041 | |
| Effective leverage | Total interest bearing debt divided by total assets | 44.6% | 39.5% | 31.9% |
ANNUAL REPORT (PARENT COMPANY) 2023
PIONEER PROPERTY GROUP ASA
47 PIONEER PROPERTY GROUP ASA
STATEMENT OF INCOME
| OPERATING REVENUE AND EXPENSE Revenue 1 12 092 860 9 689 910 TOTAL OPERATING REVENUE 12 092 860 9 689 910 Employee benefits expense 2 7 191 448 4 752 215 Depreciation and amortisation expense 3 27 572 12 Other operating expenses 2 8 592 853 6 802 962 TOTAL OPERATING EXPENSES 15 811 873 11 567 456 OPERATING PROFIT OR LOSS -3 719 013 -1 877 546 FINACIAL INCOME AND EXPENSES Financial income Changes in market value of fin. cur. assets 4,5 2 565 674 47 160 Income from subsidiaries 5 1 726 910 1 692 676 Interest received from group companies 1,5 16 554 489 34 561 471 Other interest 5 14 715 353 10 276 108 Other financial income 5 2 426 274 83 542 310 Total financial income 37 988 700 130 119 724 Financial expenses Changes in market value of fin. cur. assets 4,5 - - Interest paid to group companies 1,5 528 229 391 355 Other interest 5 261 721 43 578 Other financial expense 5 325 460 609 227 Total financial expenses 1 115 410 1 044 160 NET FINANCE 36 873 289 129 075 565 ORDINARY RESULT BEFORE TAX 33 154 276 127 198 019 Tax on ordinary result 6 7 291 088 13 545 387 PROFIT 25 863 188 113 652 632 ATTRIBUTABLE TO To additional dividends payable 98 146 187 78 127 825 Given intra-group contribution 11 637 716 35 524 807 To other equity -83 920 715 - Net brought forward 25 863 187 113 652 631 |
Note | 2023 | 2022 |
|---|---|---|---|
Balance sheet pr. 31.12.2022
| Note | 2023 | 2022 | |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Tangible assets | |||
| Fixtures and fittings, office machinery etc. | 3 | 41 431 | 51 793 |
| Total tangible assets | 41 431 | 51 793 | |
| Financial fixed assets | |||
| Investments in subsidiaries | 7 | 636 059 247 | 585 011 829 |
| Loans to group companies | 1 | 252 316 976 | 321 152 191 |
| Investments in associates | 7 | 87 782 718 | 87 782 718 |
| Investments in shares or units | 38 282 669 | 38 282 669 | |
| Total financial fixed assets | 1 014 441 610 | 1 032 229 407 | |
| TOTAL FIXED ASSETS | 1 014 483 041 | 1 032 281 200 | |
| CURRENT ASSETS | |||
| Receivables | |||
| Receivables on group companies | 1 | 18 110 418 | 2 299 170 |
| Other short-term receivables | 2 615 318 | 9 202 846 | |
| Total receivables | 20 725 736 | 11 502 016 | |
| Investments | |||
| Quoted bonds | 4 | 62 620 000 | 62 000 000 |
| Other financial Instruments | 4 | 54 956 108 | 56 953 866 |
| Total receivables | 117 576 108 | 118 953 866 | |
| Cash and bank deposits | 8 | 42 280 425 | 124 545 576 |
| TOTAL CURRENT ASSETS | 180 582 269 | 255 001 458 | |
| TOTAL ASSETS | 1 195 065 310 | 1 287 282 658 |
Balance sheet pr. 31.12.2021
| Note | 2023 | 2022 | |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| EQUITY AND LIABILITIES | |||
| Share capital | 9,10 | 14 683 023 | 14 683 023 |
| Treasury shares | 9 | -987 966 | -987 966 |
| Share premium reserve | 9 | 555 636 899 | 555 636 899 |
| TOTAL PAID-IN EQUITY | 569 331 956 | 569 331 956 | |
| Other equity | 9 | 550 061 290 | 622 344 289 |
| TOTAL EQUITY | 1 119 393 245 | 1 191 676 245 | |
| Liabilities | |||
| Provision | |||
| Deferred tax | 6 | 846 055 | 283 680 |
| Total provisions | 846 055 | 283 680 | |
| Other non-current liabilities | |||
| Liabilities to group companies | 1 | 9 332 054 | 9 136 724 |
| Total other non-current liabilities | 9 332 054 | 9 136 724 | |
| TOTAL NON-CURRENT LIABILITIES | 10 178 109 | 9 420 404 | |
| Current liabilities | |||
| Accounts payable | 3 137 398 | 3 912 344 | |
| Income tax payable | 6 | 4 168 415 | 6 961 967 |
| Public duties payable | 411 373 | 94 621 | |
| Dividends payable | 34 200 466 | 14 742 481 | |
| Liabilities to group companies | 1 | 11 637 716 | 28 637 189 |
| Other current liabilities | 11 938 588 | 31 837 408 | |
| TOTAL SHORT-TERM LIABILITIES | 65 493 955 | 86 186 010 | |
| TOTAL LIABILITIES | 75 672 064 | 95 606 414 | |
| TOTAL EQUITY AND LIABILITIES | 1 195 065 310 | 1 287 282 658 |
Oslo, 21 March 2024 Board of Directors of Pioneer Property Group ASA
Roger Adolfsen Chairman of the Board
Nina Hjørdis Torp Høisæter Member of the Board
Sandra Henriette Riise Member of the Board
Geir Hjorth Member of the Board
Ane Nordahl Carlsen Member of the Board
John Ivar Busklein Chief Executive Officer
Statement of Cash Flow
| Note | 2023 | 2022 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit before tax | 33 154 276 | 127 198 018 | |
| Taxes paid | -6 961 967 | -18 905 888 | |
| Gains and losses on sale bonds | 4 | -1 985 076 | -3 385 000 |
| Gains and losses on sale funds | 4 | - | 609 227 |
| Depreciation | 3 | 27 572 | 12 279 |
| Gains and losses on sale shares | - | -80 157 310 | |
| Group contributions | 1 | -1 726 910 | -1 692 676 |
| Exchange gains/(losses) | 211 497 | - | |
| Fair value adjustmenst on quoted bonds | 4 | -2 565 674 | -47 160 |
| Trade receivables | -15 970 711 | 933 756 | |
| Trade payables | -774 946 | 2 892 666 | |
| Other accruals | -13 013 933 | 1 699 835 | |
| Net cash flow from operating activities | -9 605 872 | 29 157 747 | |
| Cash flows from investing activities | |||
| Payments for purchase of shares | -42 000 000 | -650 140 606 | |
| Payments for purchase of other investments | 3 | -17 209 | -43 972 |
| Payments from other loans | - | 30 741 488 | |
| Proceeds from loan to group companies | 1 | 69 030 545 | 350 798 408 |
| Proceeds from sale of shares | 30 000 | 383 631 273 | |
| Proceeds from sale of funds | 4 | 15 000 000 | 49 816 734 |
| Proceeds from sale of bonds | 4 | - | 214 000 000 |
| Payments to buy other investments | -9 071 492 | -2 758 056 | |
| Payments for purchase of quoted bonds | - | -222 990 000 | |
| Net cash flow from investments activities | 32 971 844 | 153 055 269 | |
| Cash flow from financing activities | |||
| Payments for purchase of own shares | - | - | |
| Dividends paid | -78 686 610 | -72 601 738 | |
| Repayment of share premium reserve | - | - | |
| Group contributions paid | -28 637 189 | -35 770 318 | |
| Group contributions received | 1 692 676 | 994 910 | |
| Received share premium | - | - | |
| Net cash flow from financing activities | -105 631 123 | -107 377 146 | |
| Net change in cash and cash equivalents | -82 265 151 | 74 835 869 | |
| Cash and cash equivalents at the beginning of the period | 124 545 576 | 49 709 708 | |
| Cash and cash equivalents at the end of the period | 42 280 425 | 124 545 576 |
Notes to the financial statements 2023
Accounting Principles:
The financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway. The Company's financial statements are prepared on a going concern basis.
Sales revenue
Revenue is recognized from the sale of goods at the time of delivery. Services are recognized
as revenue as they are delivered.
Balance sheet classification
Current assets and short term liabilities consist of receivables and payables due within one year, and items related to the inventory cycle. Other balance sheet items are classified as fixed assets / long term liabilities.
Current assets are valued at the lower of cost and fair value. Short term liabilities are recognized at nominal value.
Fixed assets are valued at cost, less depreciation and impairment losses. Long term liabilities are recognized at nominal value.
Subsidiaries and investment in associates
Subsidiaries and investments in associates are valued at cost in the company accounts. The investment is valued as cost of the shares in the subsidiary, less any impairment losses An impairment loss is recognized if the impairment is not considered temporary, in accordance with generally accepted accounting principles. Impairment losses are reversed if the reason for the impairment loss disappears in a lather period.
Dividends, group contributions and other distributions from subsidiaries are recognized in the same year as they are recognized in the financial statement of the provider. If dividends / group contribution exceeds withheld profits after the acquisition date, the excess amount represents repayment of invested capital, and the distribution will be deducted from the recorded value of the acquisition in the balance sheet for the parent company.
Accounts receivable and other receivables
Accounts receivable and other current receivables are recorded in the balance sheet at nominal value less provisions for doubtful accounts. Provisions for doubtful accounts are based on an individual assessment of the different receivables. For the remaining receivables, a general provision is estimated based on expected loss.
Income tax
The tax expense consists of the tax payable and changes to deferred tax. Deferred tax/tax assets are calculated on all differences between the book value and tax value of assets and liabilities. Deferred tax is calculated as 22 percent of temporary differences and the tax effect of tax losses carried forward. Deferred tax assets are recorded in the balance sheet when it is more likely than not that the tax assets will be utilized. Taxes payable and deferred taxes are recognized directly in equity to the extent that they relate to equity transactions
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss comprise financial assets whose cash flows do not relate solely to payments of interest and repayments of principal on the outstanding nominal amount. Gains or losses on these financial assets are recognized through profit or loss.
Foreign currency translation
Transactions in foreign currency are translated at the rate applicable on the transaction date. Monetary items in a foreign currency are translated into NOK using the exchange rate applicable on the balance sheet date. Non-monetary items that are measured at their historical price expressed in a foreign currency are translated into NOK using the exchange rate applicable on the transaction date. Non-monetary items that are measured at their fair value expressed in a foreign currency are translated at the exchange rate applicable on the balance sheet date. Changes to exchange rates are recognised in the income statement as they occur during the accounting period.
Cash
The cash flow statement is presented using the indirect method. Cash and cash equivalents includes cash, bank deposits and other short term, highly liquid investments with maturities of three months or less.
Note 1 - Liabilities to/receivables from group companies
Interest received from group companies is NOK 16 554 489 and interest paid to group companies is NOK 528 299. Total income on management fee to group companies is NOK 12 092 860. Management fee income from Swedish subsidiaries is NOK 958 763, and management fee income from Norwegian subsidiaries is NOK 11 134 097.
| 2023 | 2022 | |
|---|---|---|
| Receivables | ||
| Accounts receivable | 15 970 711 | 0 |
| Group contributions | 1 726 910 | 1 692 676 |
| Other short term receivables | 412 797 | 606 494 |
| Loans to group companies | 252 316 976 | 321 152 191 |
| Total receivables | 276 282 283 | 323 451 361 |
| Liabilities | ||
| Group contributions | 11 637 716 | 28 637 189 |
| Other liabilities | 9 332 054 | 9 136 724 |
| Total Liabilities | 20 969 770 | 37 773 913 |
Note 2 - Management and auditor compensation
The company's auditor expenses (VAT included) :
| 2023 | 2022 | |
|---|---|---|
| Statutory audit | 749 666 | 610 940 |
| Other services | 9 090 | 0 |
| Total | 758 756 | 610 940 |
| 2023 | 2022 | |
| Payroll | 6 091 596 | 4 070 852 |
| Payroll expenses (employer tax) | 967 781 | 583 585 |
| Pension cost | 94 012 | 61 149 |
| Other payments | 38 060 | 36 629 |
| Total | 7 191 448 | 4 752 215 |
It's been paid remuneration for directors with NOK 620 000.
| Roger Adolfsen (Chairman of the board) | 120 000 |
|---|---|
| Geir Hjorth (board member) | 130 000 |
| Sandra Riise (board member) | 130 000 |
| Even Carlsen (board member) | 110 000 |
| Nina Høisæter (board member) | 130 000 |
The company has five employees, four in full time positions and one employee in part time position (28.4%) and is regulated under the Act on Mandatory occupational pensions act, and the company has established mandatory occupational pensions and contribution pension for the employees.
| NOK | Salary | Bonus | Other benefits | Pension cost | Total Compensation |
|---|---|---|---|---|---|
| Øystein B. Grini (CFO) | 1 416 000 | 126 000 | 4392 | 26 312 | 1 572 794 |
| John Ivar Busklein (CEO) (28,4% part time position) |
560 048 | 166 667 | 0 | 8 204 | 734 919 |
| Total | 1 976 048 | 292 667 | 4 392 | 34 516 | 2 307 623 |
John Ivar Busklein (CEO) and Øystein Grini (CFO) received a bonus of NOK 166 667 and NOK 126 000 respectively for their performance in Pioneer Property Group ASA. Both bonuses were paid in first quarter of 2024.
No member of the management have in their agreement that they will get any right to compensation after termination of employment.
No loans or guarantees have been given to any members of the management, the Board of directors or other corporate bodies.
The board of directors of PPG has prepared guidelines for a determination of salary and other remuneration to the executive management, in accordance with applicable law. The guidelines include the policies which PPG uses for the determination of salary and other remuneration to its executive management. The guidelines are published on the company's web page pioneerproperty.no.
Note 3 - Fixtures and fittings, office machinery etc.
| Fixtures and fittings, office | ||
|---|---|---|
| machinery | ||
| etc. | ||
| Acquisition cost as at. 1/1 | 69 815 | |
| + Additions | 17 209 | |
| Acquisition cost as at. 31/12 | 87 024 | |
| Accumulated depreciation 1/1 | 18 021 | |
| + Depreciation for the year | 27 572 | |
| Accumulated depreciation 31/12 | 45 594 | |
| Net Value 31/12 | 41 431 | |
| Depreciation percentage / estimated useful life | 33% - 3 years |
Assets are depreciated on a straight line basis
Note 4 - Quoted bonds
Financial instruments have been assessed at fair value.
The fair value has been set in accordance with the value observable in the market at the balance sheet date.
| Quoted bonds: | Acquisition cost | Change in value |
Market Value |
|---|---|---|---|
| Hospitality Invest AS | 62 000 000 | 620 000 | 62 620 000 |
| Total | 62 000 000 | 620 000 | 62 620 000 |
| Funds: | Acquisition cost | This year change in value |
Market Value |
| Holberg Kreditt Fond | 46 729 328 | 1 444 368 | 49 454 801 |
| Valmue Private Debt | 5 000 000 | 501 307 | 5 501 307 |
Funds purchased/redeemed in 2023:
| Purchase Sale |
Realized gain | |||
|---|---|---|---|---|
| Holberg Kreditt | 4 071 492 | 13 014 925 | 1 985 075 | |
| Valmue | 5 000 000 | |||
| Total | 9 071 492 | 13 014 925 | 1 985 075 |
Note 5 - Financial income and expenses
| 2023 | 2022 | |
|---|---|---|
| Financial income: | ||
| Change in market value of financial current assets | 2 565 674 | 47 160 |
| Group contribution | 1 726 910 | 1 692 676 |
| Interest received from group companies | 16 554 489 | 34 561 471 |
| Other interest | 14 715 353 | 10 276 108 |
| Currency gain | 15 485 | 0 |
| Other financial income | 425 714 | 0 |
| Gain on sale quoted bonds | 1 985 075 | 83 542 310 |
| Total financial income | 37 988 700 | 130 119 725 |
| Financial expenses: | ||
| Interest paid to group companies | 528 229 | 391 355 |
| Other interest | 261 721 | 43 579 |
| Currency loss | 325 460 | 0 |
| Loss on sale of shares | 0 | 609 277 |
| Total financial expenses | 1 115 410 | 1 044 161 |
Note 6 - Tax
| Calculation of this years tax basis: | |
|---|---|
| Net profit/loss before tax expense | 33 154 276 |
| + Permanent differences | -2 578 593 |
| + Changes in temporary differences | 9 376 |
| + Received group contributions | 1 692 676 |
| - Paid group contributions | -11 637 716 |
| = Income | 18 947 342 |
| This years income tax expense consist of: | |
| Estimated tax of net profit | 6 728 713 |
| = Tax payable | 6 728 713 |
| +/- Change in deferred tax | 562 375 |
| = Total tax expense | 7 291 088 |
| Tax rate | 22% |
| Current tax liability: | |
| Tax payable | 6 348 792 |
| +/- Effect on tax of group contributions | -2 180 378 |
| = Tax payable | 4 168 415 |
Temporary differences:
| 2023 | 2022 | Change | |
|---|---|---|---|
| Fixed assets | - 1 027 | 8 349 | 9 376 |
| Quoted bonds and other financial instruments | 3 846 730 | 1 281 106 | -2 565 624 |
| Sum temporary differences | 3 845 704 | 1 289 455 | -2 556 249 |
| Deferred tax | 846 055 | 283 680 | -562 375 |
Note 7 - Investments in subsidiaries
Subsidiaries are valued at cost in the company's accounts.
The company has shares in the following subsidiaries:
| Subsidiary, office location: | Owner ship % |
Voting rights % |
Net profit 2023 |
Equity 2023 |
|---|---|---|---|---|
| Pioneer Preschools AS, Oslo | 100,00 % | 100,00 % | -2 546 676 | 48 411 193 |
| Pioneer Property Group International AS, Oslo | 100,00 % | 100,00 % | 370 943 | 8 865 765 |
| Pioneer Hotel Properties AS, Oslo | 100,00 % | 100,00 % | 18 839 304 | 337 701 969 |
| Pioneer Retail Properties AS, Oslo | 100,00 % | 100,00 % | 4 012 088 | 75 769 518 |
| Pioneer Property Development AS, Oslo | 100,00 % | 100,00 % | 1 686 375 | 154 982 317 |
| T10 Holdco AS | 52,00 % | 52,00 % | - 515 569 | 9 815 747 |
| PPG Hylle 3 AS | 100,00 % | 100,00 % | 0 | 24 000 |
| The company has shares in the following associates: | Owner ship % |
Voting rights % |
Net profit 2023 | Equity 2023 |
| Norlandia Holding AS | 23,58 % | 23,58 % | 9 761 640 | 393 256 938 |
Note 8 - Bank deposits
Employees tax deduction, deposited in a separate bank account with total amount 31.12.23 NOK 241 259.
Note 9 - Other equity
| Share capital | Own Shares | Share premium | Other equity | Total equity | |
|---|---|---|---|---|---|
| reserve | |||||
| Per 1.1 | 14 683 023 | -987 966 | 555 636 899 | 622 344 289 | 1 191 676 245 |
| Ordinary result | 25 863 188 | 25 863 188 | |||
| Dividends | -98 146 187 | -98 146 187 | |||
| Per 31.12 | 14 683 023 | -987 966 | 555 636 899 | 550 061 290 | 1 119 393 245 |
Note 10 - Share capital
The company have 14 683 023 shares with a book value NOK 1 per share, and total share capital is NOK 14 683 023.
The company have two classes of shares, ordinary shares and preference shares:
| Class of shares | shares | Total value |
Voting rights |
|---|---|---|---|
| Ordinary shares | 9 814 470 | 9 814 470 | Each share has 1 vote |
| Preference shares | 4 868 553 | 4 868 553 | Each share has 0,1 vote |
| Total | 14 683 023 | 14 683 023 |
The company's shareholders ordinary shares:
| Shareholders | Ord. shares |
|---|---|
| Hospitality Invest AS | 3 201 926 |
| Eidissen Consult AS | 1 642 024 |
| Grafo AS | 1 642 024 |
| Klevenstern AS | 1 549 214 |
| Mecca Invest AS | 1 549 219 |
| Hi Capital AS | 230 068 |
The company's largest shareholders pref.shares (>1%) :
| Shareholders: | Pref.Shares |
|---|---|
| Pioneer Property Group ASA | -987 966 |
| Skandinaviska Enskilda Banken AB | 500 000 |
| Nordnet Bank AB | 382 109 |
| Avanza Bank AB | 370 110 |
| The Bank of New York Mellon | 292 714 |
| Union Bancaire Privee | 141 304 |
| Danske Bank A/S | 124 040 |
| SIX SIS AG | 113 000 |
| Skandinaviska Enskilda Banken AB – Lux Branch | 96 138 |
| The Bank of New York Mellon | 68 307 |
| Nordnet Livsforsikring | 63 767 |
| Swedbank AB | 59 667 |
Indirectly owned shares of executives in the company:
| Ordinary shares | Pref. shares | |
|---|---|---|
| Roger Adolfsen (Chairman) | 3 160 192 | 0 |
| Ane Nordahl Carlsen (Board member) | 311 985 | 0 |
Note 11 - Transactions with related parties
The company has various transactions with associated companies. All the transactions have been carried out as part of the ordinary operations and at arm's length prices. The most significant transactions are as follows: Hospitality Invest AS, management fee NOK 4 138 945 Hospitality Invest AS, Other short-term receivables NOK 285 990
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| Description of the key audit matter | How the key audit matter was addressed in the audit |
|---|---|
| Valuation of investment properties | |
| The Group's value of investment properties in the financial statements amounts to TNOK 1 757 256, equivalent to 68,3 % of the group's total assets. The valuation of the properties is performed by an external, independent party and is described in note 6 to the financial statements. The significant amount, the complexity and the judgements involved in the valuation, lead us to identify this as a risk area in our audit. |
Our audit procedures included, among others, involving our internal valuation specialists to assist in evaluating the assumptions and methodologies used by the independent party, in particular those relating to the discounted cash flow model and marked based yield for the rental properties. We also focused on the adequacy of the Group's disclosures about those assumptions to which the outcome of the valuation is most sensitive, i.e., those that have the most significant effect on the determination of the value of the properties. We have also evaluated the independent party's competence and independence in performing the valuation of the investment properties. |
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GROUP WEB PAGES
PARENT & SUBSIDIARIES
Pioneer Property Group ASA www.pioneerproperty.no
WEB: WWW.PIONEERPROPERTY.NO
PIONEER PROPERTY GROUP ASA RÅDHUSGATA 23 0158 OSLO NORWAY
