ANNUAL REPORT
2021
Pioneer Property Group ASA
3
Board of directors’ report
Notes to the consolidated statements
8
Consolidated statement of Comprehensive Income
43
Alternative Performance Measures (APMs)
10
Consolidated statement of Financial Position - Assets
44
Annual report Pioneer Property Group ASA (parent)
11
Consolidated statement of Financial Position – Equity
and Liabilities
56
Auditors report
12
Consolidated statement of Change in Equity
13
Consolidated statement of Cash Flow
Contents
3
PIONEER PROPERTY GROUP ASA
Highlights of the report
Total revenue from continued operations for 2021 was MNOK
45.5 compared to MNOK 2.1 in 2020.
Pre-tax profit from continued operations for 2021 was MNOK
300.7 compared to MNOK 120.9 for 2020.
PPG acquired six hotel properties and three retail properties
over the period. Further one hotel (50% owned) was acquired
31.12.2021.
PPG paid four quarterly dividends to the holders of preference
shares in total NOK 9.0 per preference share and a ordinary
dividend of NOK 3.645 to the holders of the ordinary shares, and
additional dividends held by Eidissen Consult AS and Grafo AS of
4.207 per share.
Operations and strategy
Pioneer Property Group ASA (PPG) is an investment company
with a real estate focus. PPG has since the beginning of 2020
expanded its real estate activities into new areas and the
current portfolio does no longer only contain preschool
properties spread over different geographies. Therefore, PPG
now reports based on the characteristics of the properties and
hence report on the following segments:
1.
Preschools
2.
Hotel Properties
3.
Retail Properties
4.
Property Development
The focus area for PPG will be to continue to invest in real estate
within these segments and enter into long-term triple-net leases
with leading operators. PPG may in the future establish a new
segment with a focus on investments within commercial real
estate, such as office buildings. PPG's real estate portfolio per
year-end 2021 consisted of one property in the Preschools
segment, four properties in Retail properties segment, six
properties in the Hotel properties segment in addition to three
properties in the Property development segment. Further, PPG
holds a 8.2 % stake in Odin Bidco AS, which owns a real estate
portfolio of ~256 preschools at mainly long-term triple-net
contracts primarily in the Nordics.
Key material events during 2021
COVID-19 represented an extraordinary situation which has
continued through 2021. The pandemic has impacted PPG
directly through less lease income from hotel properties were
the lease payments are based on the highest of a minimum rent
and a percentage of the hotel’s turnover. Lease agreements on
other segments are triple-net and not linked to operational
utilisation of any kind.
During 2021, PPG has declared quarterly dividends to the
holders of preference shares in total NOK 9.00 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 2021 to 2.375 per quarter.
Further PPG paid a dividend to the holders of the ordinary
shares in total of NOK 3.645 per ordinary shares, in addition to a
dividend in the amount of NOK 4.207 per relevant ordinary
share distributed to the ordinary shares held by Eidissen Consult
AS and Grafo AS. In 2021, PPG has increased the real estate
portfolio and its investment activity, especially within the hotel
property segment.
The largest single transaction was carried out in May 2021 when
PPG through Pioneer Hotel Properties AS acquired four hotel
properties from Hospitality Invest AS with a total property value
of MNOK 566.6 based on third party valuations. During 2021,
PPG carried out purchase of additionally three hotels located in
Stavanger and Voss through the subsidiary Up North Property.
The second largest transaction was the purchase of properties in
Tønsberg municipality related to Askjem Camping Center with a
total real estate value of nearly MNOK 200.
In terms of other financial investments, the bond holdings in
Norlandia Health & Care Group AS (NHC) was sold as payment in
kind for the four hotels mentioned above. PPG still holds per
31.12.21 bonds in Hospitality Invest AS (HOIN02) with a par
value of MNOK 50, and high yield funds with a purchase price of
MNOK 100.
In total, PPG has acquired investment property within the hotel,
retail, development and preschool segment with a total
property value of MNOK 1,078 and a total fair value of
Investment Property of MNOK 1,393 and project in progress
related to Investment property of MNOK 45.
The board of directors’ report for Pioneer Property Group ASA
(PPG) 2021
ANNUAL REPORT 2021
4
Preschools
The Preschool segment consists of one preschool property
owned by PPG. Further PPG owns 8.2% in Odin Bidco which
owns a total of 256 preschool properties. Total lease income for
the Preschool segment amounted to MNOK 0.4 in 2021 and
2020, with a fair property value based on third party valuation
of the property owned by PPG per 31.12.21 of MNOK 11.5.
There have been no material events for the segment during
2021.
Retail Properties
Pioneer Retail Properties AS was established to procure and
build facilities for retail properties, mainly for the Ferda group all
over Norway. The Retail Properties segment consists of 4 retail
properties owned by PPG. Total lease income for 2021 for the
retail properties segment amounted to MNOK 17.7 with a fair
property value based on third party valuations per 31.12.21 of
MNOK 428.1.
Hotel Properties
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 consists of six hotel properties owned by PPG. Total
lease income for 2021 for the Hotel Properties segment
amounted to MNOK 27.0 (acquired during 2021) with a fair
property value based on third party valuations per 31.12.21 of
MNOK 916.0.
Property Development
Through Pioneer Property Development AS, PPG develop
properties within general commercial real estate and housing.
The segment consists of 5 development projects and there is no
lease income for the segment. The main asset is Evenes
Tomteselskap, based on third party valuations the value per
31.12.21 was MNOK 37.5. PPG also has two development
projects under construction, recognised as project in progress,
investment properties. PPG currently holds two plots together
with local partners, treated as associate company in the
accounts. One is located at Ramstadsletta in Bærum, a 49 000
m2 plot and the other is located in Mo i Rana with a potential of
400 residential units.
Subsequent events since the end of 2021
PPG's has acquired Terminalveien 10 in Bodø based on a
property value of MNOK 45 together with local investors. PPG
has an ownership of 52 % in the property, controlling the
acquired subsidiary that owns the property. The transaction was
completed March 8 2022. The property consideration has been
paid in cash and the Group has incurred in a loan of MNOK 33. is
expected that this investment property will increase PPG's
annual net lease income of approximately with MNOK 3.0.
The building of premises for Ferda in Rana, rec ognised as Project
in Progress for the 2021 Financial Statement, was completed in
February 2022.
On 24 February 2022, Russia began an open military invasion of
Ukraine. The conflict in Ukraine has not affected PPG directly,
but the war will have an impact on the financial and political
situation in Europe, resulting in several heavy economic
sanctions and will have a negative impact in the Western
economies. Estimating the financial outcome of this conflict, and
the economic impact is not possible at present.
Overview of the financial accounts for 2021
Total revenues from continued operations were MNOK 45.1 in
2021 compared to MNOK 2.1 in 2020. Revenues consisted
mostly of rental revenues from investment properties in
Norway.
Operating profit from continuing operations (EBIT) for 2021
amounted to MNOK 251.5, compared to a negative MNOK 5.4 in
2020. The difference can primarily be explained by a positive fair
value revision of MNOK 220.5 in 2021.
In 2021, a loss off MNOK 4.1 from associated companies was
recognised from Ramstadsletta and Kongsparken. In 2020, a gain
of MNOK 19.5 was recognised following the derecognition of the
associated company Odin Bidco. Subsequently the investment is
recognised at fair value per 2021, and will be continued to be
5
PIONEER PROPERTY GROUP ASA
measured at fair value going forward. Please see note 8 for
more information.
Net financial income from continuing operations for the year
was MNOK 49.2 compared to MNOK 126.3 in 2020, with the
majority of the gain recognized from the sale of bonds. Due to
the realisation of bonds and fair value adjustments, income
taxes increased from MNOK 10.7 in 2020 to MNOK 72.4 in 2021
There have not been any discontinued operations in 2021.
This year’s net profit for the group was MNOK 228.3, compared
to MNOK 138.1 in 2020.
The Group had total assets of MNOK 2,186.6 where MNOK
1,902.4 were related mainly to investment property and shares
in the associated company, Odin Bidco AS. Further PPG had a
cash balance of MNOK 119.383 and MNOK 154.6 in other short-
term investments related to bonds and high yield funds held by
PPG.
Total equity amounted to MNOK 1,377.1 with the majority of
the difference being explained by the profit for 2021, and the
dividends on the ordinary and preference shares paid during
2021.
The annual report gives an accurate overview of the Group’s
financial development throughout the year. There have been no
events after the end of the fiscal year 2021 which have had any
material impact on the financial status of the Group.
Research and Development
The group is not involved in any R&D activities.
Work Environment, Equal opportunities and Discrimination
There was at year end 3 employees in Pioneer Property Group
ASA. There are no employees in any other Group-companies.
The Board of Directors consists of two women and three men.
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 includes the policies
which the Company will use for the determination of salary and
other remuneration to its executive management in the
calendar year 2021. The declaration is 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.
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 .
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.
Credit 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.
Liquidity risk in the case of unforeseen delay of cash payments
on income and/or unexpected costs.
Changes in valuation of financial securities that is owned
through optimising capital management. When managing the
capital, PPG will take into account the need for sufficient
liquidity reserves to meet PPG's financial obligations.
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.
ANNUAL REPORT 2021
6
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
2023
Sandra Henriette
Riise
Board member
2015
2023
Geir Hjorth
Board member
2015
2023
Even Carlsen
Board member
2015
2023
Nina Torp
Høisæther
Board member
2015
2023
The directors Sandra Henriette Riise and Even 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. Currently, there are no directors
and officers liability insurance covering legal personal liability for
financial damage caused by their performance of their duties.
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 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. Ms. Riise is a former Chief Executive Officer
of Accounting Norway, the Norwegian Association of Authorized
Accountants, and has held the position of Chief Municipal
Executive (
Nw. Rådmann
) of Andøya municipality. Ms. Riise is
educated from BI Norwegian School of Management, and is a
registered certified public accountant since 1980.
Geir Hjorth, Board member
Geir Hjorth currently serves on the board of directors of 27
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.
Even Carlsen, Board member
Even Carlsen has served on the board of directors of Private
Barnehagers Landsforbund (
En. the Private Kindergartens
National Association
), which he also participated in the start-up
of. He has held various board positions in private companies.
Mr. Carlsen is the co-founder of Tromsø Barnehagedrift AS,
which was later merged into Acea AS, and he served as the Chief
Executive Officer of the company from 2003 until 2008.
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 and as a
board member at NHO Service and Trade and Chairman of the
board of directors of Health and Welfare within NHO Service
and Trade. Ms. Høisæther is educated within nursing from the
University of Stavanger and University of Oslo.
7
PIONEER PROPERTY GROUP ASA
We confirm to the best of our knowledge, that the set of Financial statements for the financial year ending 31. December 2021 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, 29 March 2022
Board of Directors of Pioneer Property Group ASA
Roger Adolfsen
Chairman of the Board
Sandra Henriette Riise
Member of the board
Even Carlsen
Member of the Board
Nina Hjørdis Torp Høisæter
Member of the Board
Geir Hjorth
Member of the Board
John Ivar Busklein
Chief Executive Officer
Responsibility Statement
ANNUAL REPORT 2021
8
PIONEER PROPERTY GROUP - CONSOLIDATED
Consolidated Income Statement
NOK thousand
Note
2021
2020
Contractual rental income
13
Other operating income
Total income
Operating expenses
Employee expenses
14
Property expenses
Other operating expenses
15
Total operating expenses
Fair value adjustments on investment properties
7
Operating profit (EBIT)
-5 365
Gain/Loss from associated companies
8
-4 106
Interest income
9
Interest expense
11
Other financial gains/losses (-)
16
Net Finance income (+) /expenses (-)
Profit before tax
Income taxes
17
Profit
Profit/(loss) discontinued operations, net of tax
23
-27 835
Profit/(loss) for the period, total operations
Profit/(loss) attributable to
Shareholders of the parent
Non-controlling interest
Profit/(loss) for the period
Other comprehensive income
Items to be reclassified to P&L in subsequent periods:
Exchange differences, from translation of foreign operations
-257
Items reclassified to P&L in the period:
Exchange differences, from translation of foreign operations
-7 088
Other comprehensive income
-257
-331
Total comprehensive income
Comprehensive income attributable to
Shareholders of the parent
Non-controlling interests
Comprehensive income
9
PIONEER PROPERTY GROUP ASA
Earnings per share (NOK) for profit from continuing operations:
Basic earnings per ordinary share
18
Earnings per share (NOK) for profit from total operations:
Basic earnings per ordinary share
18
Weighted average ordinary shares
18
ANNUAL REPORT 2021
10
PIONEER PROPERTY GROUP
Consolidated Statement of Financial Position
NOK thousands
Note
2021
2020
ASSETS
Investment properties
6
Project in progress, investment property
7
Other investment
9
Associated company
8
Loan to associated company
9, 20
Loan to other companies
9
TOTAL NON-CURRENT ASSETS
Trade and other receivables
9
Other short-term investments
9
Cash and cash equivalents
10
TOTAL CURRENT ASSETS
TOTAL ASSETS
11
PIONEER PROPERTY GROUP ASA
PIONEER PROPERTY GROUP
Consolidated Statement of Financial Position
NOK thousands
Note
2021
2020
EQUITY AND LIABILITIES
Share capital
21
Treasury shares
21
-988
-988
Share premium
21
Other reserve and retained earnings
Non controlling interest
TOTAL EQUITY
LIABILITIES
Non-current borrowings
11
Deferred tax
17
TOTAL NON-CURRENT LIABILITIES
Current borrowings
11
Current tax payable
17
Associated company
8
Other current liabilities
12
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
ANNUAL REPORT 2021
12
PIONEER PROPERTY GROUP - CONSOLIDATED
Statement of Changes in Equity
Attributable to owners of the parent
NOK thousands
Notes
Share
capital
Treasury
shares
Share
premium
Curr.
Trans.
Diff.
Retained
earnings
Total
Non-
contr.
Interest
Total Equity
Balance at 1 January 2020
-1 631
Profit/(loss) for the period
Exchange diff. from foreign operations
-7 088
-7 088
-7 088
Exchange diff. from associated company
Exchange differences reclassified to
Income statement on disposal
Total comprehensive Income
for the period
-331
Capital reduction
-1 631
Proportion of non-contr. interests
Acquisition of treasury shares
21
-988
-100 081
-101 069
-101 069
Dividends on preference shares
and ordinary shares
21
-647 249
-580 752
-1 228 001
-1 228 001
Balance at 31 December 2020
-988
Profit/(loss) for the period
Exchange diff. from foreign operations
-257
-257
-257
Total comprehensive Income
for the period
-257
Capital reduction
Transaction with non-controlling
interests
21
-2 196
-2 196
-744
-2 940
Dividends on ordinary shares and
preference shares
21
-79 727
-79 727
-79 727
Balance at 31 December 2021
-988
-257
13
PIONEER PROPERTY GROUP ASA
PIONEER PROPERTY GROUP - CONSOLIDATED
Statement of Cash Flow
NOK thousands
Note
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax total operations (incl.discontinued operations in 2020)
Adjustments for:
Fair value adjustments on investment property
6
-220 462
-1 638
Other adjustments
9
-80 913
Profit from associated companies
8
-19 498
Interest net
-24 645
Taxes paid
-6 655
Exchange gains/(losses)
-6 552
Profit/loss on sale of discontinued operations
23
-17 695
Gain on sale bonds
-93 489
Changes in working capital
Trade receivables
-36
Trade payables
-16 770
-38 063
Other accruals
-1 598
CASH GENERATED FROM OPERATIONS
-36 204
Interest received
Interest paid
-12 917
-3 997
NET CASH FLOW FROM OPERATING ACTIVITIES
-12 893
INVESTING ACTIVITIES
Proceeds from sale of shares
23
Proceeds from sale of bonds
9
Purchase of subsidiaries / properties
19
-741 546
-33 656
Purchase of shares
9
-25 488
Purcase of shares in assosiated companies
8
-50
Purchase of bond
9
-279 708
Purchase of funds
9
-3 120
-100 000
Purchase of other items
-627
Purchase of receivables
-15 596
Loans to associated companies
9, 20
-57 700
-5 500
Received dividend/repaid paid-in capital other shares
9
Proceeds from transfer of receivables
4
NET CASH USED IN INVESTING ACTIVITIES
-450 542
-132 004
FNANCING ACTIVITIES
Proceeds from debt to financial institutions
11
Repayments of debt to financial institutions
11
-178 128
-587
Repayments other debt
11
-1 151
Loans from other companies
11
Purchase of own shares
20
-101 069
Dividends on ordinary shares
20
-44 802
-1 200 015
Dividends on preference shares
17
-33 955
-27 984
NET CASH (USED IN) / FROM FINANCING ACTIVITES
-1 329 656
Net increase in cash and cash equivalents
-266 875
-1 474 554
Cash and cash equivalents at beginning of year
Exchange (losses)/gains on cash and cash equivalents
-1
CASH AND CASH EQUIVALENTS AT END OF YEAR
ANNUAL REPORT 2021
14
Notes to the Financial Statements
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 , 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 2021 to 31 December 2021, with 2020 shown as
comparative period.
These consolidated financial statements are approved by the Board of Directors 29. March 2022.
2. Key transactions and events in 2021
PPG acquired a hotel portfolio of four hotels, two in Norway and two in Sweden with an estimated property value of MNOK
566.6 and interest bearing debt 222.2. in first half of 2021. PPG has continued to grow its real estate portfolio with the
acquisition of three additional hotels. Forum, Vossevangen Hotel and Scandic Forus. Further information has been included in
notes 6 and 11.
The subsidiary Pioneer Retail Properties AS has purchased 5 properties over the course of 2021, the largest transaction being
Ås Næring AS and Askjem Eiendom AS for a total share purchase price of approximately MNOK 120. Further information has
been included in note 6.
PPG sold bonds in Norlandia Health & Care Care Group ASA (NHC01 and NHC02) and Hospitality Invest AS (HOIN02) with par
values of MNOK 196.0 (NHC01), MSEK 134.0 (NHC02). Further information has been included in notes 9 and 16.
Additionally, PPG has invested in a 49 000 m2 plot together with local partners at Ramstadsletta in Bærum, Norway. Further
information has been included in note 8.
3. General Accounting Principles
Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU. The consolidated financial statements have been prepared under the historical cost
convention, except for fair value adjustments of bonds 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
15
PIONEER PROPERTY GROUP ASA
Subsidiaries are all entities (including structured 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.
Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated.
Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit
or loss, statement of comprehensive income, statement of changes in equity and balance sheet, respectively.
Transactions with non-controlling interests in subsidiaries are treated as equity transactions. If shares are acquired from a non-
controlling interest, the difference between the payment and the proportion of the carrying amount of the subsidiary’s net
assets attributable to the shares is recognized in the equity of the parent company’s owners. Gains and losses arising from the
sale of shares to non-controlling interests are recognized in equity.
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.
The Group has foreign entities with functional currency other than NOK. At the reporting date, the assets and liabilities of
foreign entities with functional currencies other than NOK are translated into NOK at the rate of exchange at the reporting
date and their income statements are translated at the average exchange rates for the year. The translation differences arising
from the translation are recognized in other comprehensive income until disposal, at which time they are recognized 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 8.50 per preference share which stepped up to NOK 9.50 per
preference share from 01 July 2021, if the board of directors approves payment of dividends through an authorisation from
the General Meeting. The dividend payments has been made quarterly with NOK 2.125 per preference share in first half of
2021, and NOK 2.375 over the second half of 2021. The Preference shares are currently redeemable at a price of NOK 100 per
share, which was valid from 1 July 2020 when it stepped down from NOK 130 per preference share. The coupon for the
preference share will be increased annually with NOK 1 per annum. Maximum coupon is set to NOK 10 per share.
The quarterly dividend distribution to the preference shares is recognised as equity in the Group's financial statements in the
period in which the dividends are approved by the General Assembly.
Dividend distribution to Ordinary shares is recognised as a liability in the Group's financial statement in the period in which the
dividend is approved by the Company's shareholders in the General Assembly to payment.
Leasing
The Group as a lessee
Leases are recognized as a right -of-use asset and a corresponding liability at the date at which the leased asset is available for
use by the Group (the commencement date). Each lease payment is allocated between the liability and finance cost. The right-
of-use asset is depreciated over thelease term on a straight-line basis. Assets and liabilities arising from a lease are initially
measured on a present value basis. The lease payments are discounted using the interest rate implicit in the lease, if that rate
can be determined, or the lessee’s incremental borrowing rate.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. The Group has only short-term
leases.
ANNUAL REPORT 2021
16
Interest rate sensitivity
(in TNOK)
-0,50 %
-0,25 %
0,25 %
0,50 %
Change P&L/Equity
1 413
706
-706
-1 413
The Group as a lessor
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 use of estimates and assessment of accounting policies when preparing the annual accounts
Estimates and assumptions
Management has used estimates and assumptions that 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 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 yield 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 31.12.2021, 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 2021 reporting period would have been
affected by changes in the interest rate that Management considers are reasonably possible:
17
PIONEER PROPERTY GROUP ASA
(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 most the operations of the Group are
located in Norway, 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 cash funds in Swedish Krona at year end
was MSEK 8.9
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. The Group places credit limits on its customers. No credit limits were exceeded during the reporting period, and
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 2021 and 2020 reporting periods, there has not been recorded any loss and there are no
significant amount of trade receivables past due.
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 2021 reporting period:
During 2021, 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.
ANNUAL REPORT 2021
18
As of the end of the 2021 reporting period, Management considers 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 148. The new
agreement is expected to be paid in periodic payments over a term of 5 years. However, since at the end of the 2021 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 2020 reporting period:
For the year ended 31. December 2020 the maturities were limited to other current liabilities which will be settled in less than
one year.
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 31.12.21 grants the
Group with 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 2021, the Group has made different investments across a broad range of properties, mainly in Norway and in Sweden
to a more limited extent. As of the end of the reporting period, the Group’s real estate portfolio was comprised of retail
properties; hotel properties; preschool properties; and development properties with both commercial and residential use.
Following this change in its real estate portfolio, the Group decided to change the basis over which the reportable segments
are provided to the chief operating decision maker, from a geographical disaggregation to a disaggregation based on economic
characteristics such as their nature and use. Management has therefore identified four different segments, all of them held to
with a view to enter into lease agreements where the Group acts as a lessor.
Preschools
The Preschool segment consists of one preschool property owned by PPG, located in Bergen. Further PPG owns 8.2% in Odin
Bidco which owns a total of approximately 256 preschool properties. The Odin Bidco investment is held as a financial
investment and therefore not consolidated into the PPG numbers. Total lease income for the Preschool segment amounted to
MNOK 0.4 in 2021 and 2020, with a fair property value based on third party valuation of the property owned by PPG per
31.12.21 of MNOK 11.5. There have been no material events for the segment during 2021.
Retail Properties
19
PIONEER PROPERTY GROUP ASA
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 4 retail properties owned by PPG. Total lease income for 2021 for the retail properties segment
amounted to MNOK 17.7 with a fair property value based on third party valuations per 31.12.21 of MNOK 428.1.
Over the period PPG's subsidiary Pioneer Retail Properties AS acquired Ås Næring AS and Askjem Eiendom AS for a total share
purchase price of approximately MNOK 120, settled in cash and the by way of a vendor note with three years duration. The
acquired companies own real properties in Tønsberg municipality, and rent these out to Ferda Norge AS on a 15-year triple-net
lease, which uses the properties in its business within sale and rental of caravans and motorhomes. The combination of a new
lease agreement, supported by the Ferda Group, in addition to a rent level on updated market terms resulted in a higher third
party valuation per 31.12.21 and thus PPG has recognised a positive fair value revaluation over the year. In terms of property
count Ås Næring AS and Askjem Eiendom AS has been counted as one property in the PPG portfolio and it is expected to
increase PPG's annual lease income with approximately MNOK 16.4.
In July 2021, PPG acquired Caravan Eiendom Grimstad AS which owns a property outside of Grimstad which is used for sale
and rental of caravans and motorhomes and rented out to Ferda. The annual rent is MNOK 3.6.
Further, PPG acquired Bobil Eiendom Balsfjord AS for MNOK 1,5 and Bobil Eiendom Fauske AS for MNOK 20 before
adjustments for taxes, current assets and debt. Bobil Eiendom Balsfjord AS is constructing new premises for Ferda and is
estimated to be completed by the end of 2022. Bobil Eiendom Fauske AS owns a 1.600 m
2
year barehouse lease agreement. Annual lease for 2022 is expected to be MNOK 1.3 for Bobil Eiendom Fauske AS.
Property Development
Pioneer Property Development AS develop general commercial real estate and housing. The segment consists of 5
development projects and there is no lease income for the segment.
In the beginning of 2021 PPG, through Pioneer Development AS, acquired a 49 000 m
2
Ramstadsletta in Bærum, Norway. The plot has an expected potential to develop around 70 000 m
2
commercial real estate and PPG has an ownership in the project of approximately 40%. The company is treated as an
associated company in the accounts.
Existing projects within the segments include developing a 400 000 m
2
in Northern Norway. This project has agreed a term sheet with Perishable Center North to build a airfreight terminal for the
salmon industry.
The housing project of 400 – 450 units in Mo i Rana is still under development. Both projects are joint ventures with local
partners. Evenes is being consolidated into the accounts whilst the project in Mo i Rana is treated as an associated company.
Further PPG is currently building new retail properties in Evenes, Balsfjord and Mo i Rana, which will be leased out to Ferda
upon completion. The development projects are recognized as Project in progress, investment properties and is accounted in
accordance with the cost model. Please refer to note 7.
All projects are long term in nature and are developing according to plan.
Hotel Properties
The hotel properties segment is hotels in both Norway and Sweden, rented out to 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 is 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 six hotel properties owned by PPG. Total lease income for 2021 for the Hotel Properties segment amounted to MNOK 27.0
with a fair property value based on third party valuations per 31.12.21 of MNOK 916.0.
ANNUAL REPORT 2021
20
PPG acquired in May 2021 through Pioneer Hotel Properties AS four hotel properties from Hospitality Invest AS:
I) Brennemoen Hotel Eiendom AS, which owns Scandic Brennemoen Hotel;
II) Guard Hotell AS and Guard Hotell II AS, which own Park Inn by Radisson Airport Hotel;
III) Strand Hotel Borgholm Fastighets AB, which owns Strand Hotel Borgholm; and
IV) Köping Hotellfastighet AB, which owns Best Western Hotel Scheele.
The total property valuation of the companies was MNOK 566.6 based on third party valuations, while the total purchase
price, adjusted for net debt and other customary balance sheet adjustments, including repayment of shareholder loans to
Hospitality Invest AS, was MNOK 389.7. The purchase price has been settled through a cash consideration of MNOK 30.8 and
through bonds in Norlandia Health & Care Group AS (“NHC”) as payment in kind.
The hotel lease agreements are triple-net in nature, while the lease income is derived from the highest of a minimum lease
and a percent of the hotel turnover. The total annual minimum rent from the acquired hotel properties is approximately
MNOK 35 which is expected to increase to a turnover based rent above the minimum level post Covid-19 as restrictions are
lifted.. The four acquired hotels are rented out to Norlandia Hotel Group, who operates the hotels on franchise agreements
with leading hotel brands. Norlandia Hotel Group is owned by Hospitality Invest AS. The Guard and Brennemoen hotels were
already financed on an 50-60% LTV basis, while Strand and Köping are unencumbered. Further debt may be obtained on these
properties for overall liquidity purposes going forward.
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 hotels market position through reconfigurations and renovations for the hotel to adapt to a changed hotel market. Up
North Property’s first acquisition was done in May when it acquired Forum Hotellbygg AS, which owns the hotel property
Forum Stavanger – a 182 room 23 story signal building with close proximity to Stavanger Forum. The hotel had a lease
agreement with Scandic that expired in September 21, and a new lease agreement with Up North Hospitality AS, who has a
management agreement with Norlandia Hotel Group was entered into in September 2021. The hotel will further undergo
renovations in 2022 with limited rent income contributions expected from the property over the renovation period.
In July 2021 Up North Property acquired 50% of Park Hotel Eiendom AS, together with a local partner, which owns the
property Park Hotel Vossevangen in Voss city centre in Norway. The hotel consists of 122 rooms and the hotel is situated right
next to the lake and just across the street from the new gondola. The hotel operating company was simultaneously acquired
by Up North Hospitality AS. The hotel will undergo renovations through 2022 and 2023 with limited rent income contributions
expected from the property over the renovation period. Further, the company has entered a new lease agreement with Up
North Hospitality AS, who has a management agreement with Norlandia Hotel Group.
The rent payment in the lease contract of the hotel properties are based on the highest of a minimum rent and a percentage
of the hotel’s turnover. As the pandemic is expected to continue to slow down, it is projected that the lease income from the
Hotel Properties segment will increase above minimum rent.
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 2021 includes:
The Group has chosen to restate the 2020 comparative period in the same basis as for 2021:
21
PIONEER PROPERTY GROUP ASA
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.
Transaction costs include stamp duty, lawyer's fees and commission to bring the property to the condition that is necessary to
put the property into operation. Recognised value also includes replacement cost for parts of the existing investment property
at the time when the cost is incurred and the terms for recognition has been met.
After initial recognition the investment property is subsequently recognised at fair value. Changes in fair value are presented in
the income statement 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 in the income statement the same year
as disposal. Gains or losses from disposal of investment property is the difference between net selling price and the carrying
amount of the asset.
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 that are not under
development, from an independent valuer. The independent valuer has in these reports valuated the properties on an
individual basis using a combination of discounted cash-flow analysis and property yield level. Individual factors for the
properties were applied to assess the yield for the respective property/location. Factors, 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 or not the
property is on leased land (Norwegian: festetomt).
As of the end of the 2021 reporting period, the gross yield for preschool property is 3.4%. For the hotel segment, the gross
yield ranges from 5.3% to 9.6%, with a weighted average gross yield of 6.2%. For the retail properties segment, the gross yield
ranges from 5.7% to 6.8%, with a weighted average of 6.1%. As of the end of the 2021 reporting period, the calculated
weighted average gross yield for the investment property portfolio was 6.2%, based on annual contractual lease income of
MNOK 75.8 after refurbishment of Forum, expected annual inflation of 2% and market rent at the end of lease period.
Description
As of 31.12.21 the Groups investment property portfolio consists of one preschool property, six retail properties, four hotels in
Norway, and two hotels in Sweden and land in Evenes and Balsfjord. The Group owns and manages a total area of
approximately 66.700 square meters, not including associated compan ies, project in progress and development properties.
ANNUAL REPORT 2021
22
NOK thousand
Preschool
Properties
Retail
Properties
Developement
Properties
Hotel
Properties
Group
Fair value in the beginning of the year
11 500
45 000
37 500
94 000
Investment in subsidiaries /properties
-
265 633
2 043
810 903
1 078 579
Fair value adjustments on investment properies
-
117 437
-2 043
105 068
220 462
Fair value in the end of the year
11 500
428 070
37 500
915 971
1 393 041
Net change in unrealized gain
-
117 437
-2 043
105 068
220 462
NOK thousand
Preschool
Properties
Retail
Properties
Developement
Properties
Hotel
Properties
Group
Fair value in the beginning of the year
191 453
-
-
191 453
- - - -
Investment in subsidiaries /properties
-
44 690
36 872
81 562
Effect of currency exchange differences in foreign operations
7 447
-
-
7 447
Sale of operations
-188 100
-
-
-188 100
Fair value adjustments on investment properies
700
310
628
1 638
Fair value in the end of the year
11 500
45 000
37 500
94 000
Net change in unrealized gain
700
310
628
1 638
Overview of account movements 2021
The category of hotel properties concentrated represented the biggest share of the total additions by the Group during 2021.
The hotels acquired, included the Scandic Brennemoen Hotel; the Park Inn by Radisson Airport Hotel; the Strand Hotel
Borgholm; and the Best Western Hotel Scheele. These properties represented additions for an amount of MNOK 566.6. PPG
also established Up North Property AS. Up North Property AS acquired Forum in Stavanger and Vossevangen Park Hotel
Vossevangen in Voss city centre in Norway with property value of MNOK 244.3.
With respect to the retail properties, the additions made during 2021 mainly related to properties located outside Grimstad, in
Fauske and in Balsfjord. Also, Ås/Askjem was acquired, whose property (located in the Tønsberg municipality) is being used by
the lessee for its business within sale and rental of caravans and motorhomes, and its real estate value was MNOK 195.8 at the
time of acquisition.
Overview of account movements 2020
As of 31.12.20 the Groups investment property portfolio consists of one preschool property, one retail property and one plot
near Evenes, all located in Norway. In summary the total Group’s portfolio as of 31 December 2020 was valued to MNOK 94, a
decrease from MNOK 191 as of year-end 2019. The change is explained by the sale of most of the Group’s operations as
described in note 23 discontinued operations.
Commitments
As of the end of the 2021, it is planned refurbishment of Park Hotel Vossevangen and Forum Hotel with limited rent income
contributions from the property over the renovation period as the rent is based on a lower percentage of the hotel turnover in
the renovation period, agreed with its lessees. When renovation is completed, the annual minimum rent will increase, as well
the turnover-based rent.
The Group had no commitments of this type at the end of the 2020 reporting period.
Total property operating expenses
The Group did not incur in direct operating expenses (including repairs and maintenance) in investment property that did not
generate rental income during the 2021 and 2020 reporting periods. As for the investment properties that did generate rental
income during the 2021 and 2020 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).
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.
23
PIONEER PROPERTY GROUP ASA
Preschool properties
As of 31 December 2021, the Group had the following sensitivity to changes in these identified significant inputs:
Retail properties
As of 31 December 2021, the Group had the following sensitivity to changes in these identified significant inputs:
Development properties
The fair value of the properties classified as property development use the same significant unobservable inputs as the other
categories presented. However, due to their immaterial amount, the sensitivity analysis is not provided, as no change in
significant unobservable inputs would cause a change in fair value that would significantly affect the results of the Group.
Hotel properties
As of 31 December 2021, the Group had the following sensitivity to changes in these identified significant inputs:
Comparative period 2020
As of 31 December 2020, the Group had the following sensitivity to changes in these identified significant inputs:
ANNUAL REPORT 2021
24
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 already, unless the fair value of a project in progress cannot be reliably
measured in a continuing basis. In that case, the Group decides to account for the project in progress in accordance with the
cost model, until the moment the project has been completed (i.e. when the property is in the condition necessary for it to be
capable of operating in the manner intended by management) and there fair value of the property can be reliably measured.
When applying the cost model, the carrying value of the project in progress includes its purchase price, and any costs directly
attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management; and also the initial estimate of the costs of dismantling and removing the item and restoring the
site on which it is located, if applicable.
Description
Bobil Eiendom Balsfjord AS and Bobil Eiendom Rana AS is building premises of approx. 1 250 sqm each, 2.500 sqm in total, for
sale and rental of caravans and motorhomes in Rana and Balsfjord in Northern Norway. The expected completion of the
building process is Q1 2022 and Q3 2022 respectively.
Management determines that the fair value of the projects in progress cannot be estimated reliably, due to the special
characteristics of the projects where the annual rent is calculated based on total building cost multiplied with a fixed
percentage, having large impact on the market value. However, management concludes that it is highly likely that the projects
in progress have a fair value that is higher than the carrying amount recognised under the cost model. Once completed, the
Group will estimate the fair value of the investment properties.
Management has not detected any indication of impairment for the projects in progress.
8. Associated companies
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. This is generally the case where the group holds between 20% and 50% of the voting
rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognized at
cost.
Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter to recognize
the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s share of movements
in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from
associates and joint ventures are recognized as a reduction in the carrying amount of the investment. When the group’s share
of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-
term receivables, the group does not recognize further losses, unless it has incurred obligations or made payments on behalf
of the other entity. Unrealized gains on transactions between the group and its associates are eliminated to the extent of the
group’s interest in these entities. Unrealized losses are also eliminated, unless the transaction provides evidence of an
impairment of the asset transferred.
Description
Kongsparken AS
25
PIONEER PROPERTY GROUP ASA
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 instead 250 to 400 apartments shall be built.
The Group is controlling 50 of the votes in the Board of Directors. Project management and daily operations are performed by
Eiendomsselskapet Ranheim AS. It is the Group’s evaluation that Eiendomsselskapet Ranheim AS have significant influence in
Kongsparken AS.
Forus Holdco AS
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. Vico Eiendom AS and the Group. Both owns 50 % of the company and the purchase price of the
shares is MNOK 180.1 on a 100 % basis.
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 Hauglandgruppen have significant influence in Forus Holdco AS. Forus
Holdco AS was acquired on 29.12.2021.
Ramstadsletta Utvikling AS
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 31.12.2021. The company is treated as an
associated company.
The Group’s shares of the financial positions in the companies owned per year end 2021 and 2020:
Changes in the Group’s carrying amount in the periods:
ANNUAL REPORT 2021
26
NOK
thousand
Kongsparken AS
Ramstadsletta
utvikling AS Forus Holdco AS
Net income -2 855 -6 713 -
The Group' share of ownership as of 31.12
50 %
40 %
50 %
Share of loss in the owner period
-1 428
-2 690
-
NOK thousand
Shares
Net income allocated to shares in Kongsparken AS
-541
The Group' share of equity per 31.12
50 %
Share of loss in the owner period
-270
NOK thousand
A - shares
B-Shares
C-shares
Total
Net income allocated to share classes in Odin Bidco AS
12 242
15 143
132 923
160 308
The Group' share of different share classes per 31.12
0 %
100 %
1 %
Share of gain in the owner period
-
15 143
1 178
16 321
The share of profit (loss) is calculated in the following table, showing the breakdown by associate and its contribution to the
current year consolidated income statement of the Group, for the year 2021:
Share of loss in Kongsparken AS for 2020 is calculated as:
Share of gain/loss in Odin Bidco AS for 2020 is calculated as:
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 are non-derivative financial assets with contractual payments that consist
exclusively of payments of interest and principal on the outstanding nominal amount and are held with the objective of
collecting the contractually agreed cash flows, such as loans and receivables, trade receivables or cash and cash equivalents
(the “hold” business model).
After initial recognition, these financial assets are measured at amortized cost using the effective interest method less
impairment. Gains and losses are recognized in profit or loss when the loans and receivables are impaired or derecognized.
Interest effects from the application of the effective interest method and effects from currency translation are also recognised
through profit or loss.
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:
27
PIONEER PROPERTY GROUP ASA
• Financial liabilities measured at fair value through profit or loss, and
• Financial liabilities measured at amortized cost.
Upon initial recognition, financial liabilities are measured at fair value. The transaction costs directly attributable to the
acquisition are also recognized for all financial liabilities that are subsequently measured at fair value not through profit or
loss. Trade payables and other non-derivative financial liabilities are generally measured at amortized cost using the effective
interest method. A financial liability is derecognized when the obligation underlying the liability is discharged, cancelled, or
expires.
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. This applies regardless of whether the price is directly observable or estimated
using a valuation method.
The fair value is not always available as a market price but must be calculated on the basis of a range of valuation parameters.
For this purpose, various categories are established in which, depending on the availability of observable parameters and the
significance of these parameters for determining the fair value as a whole, the following levels apply:
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).
Valuation of investment properties is categorised as level 3 in the fair value hierarchy as the valuation requires the use of
significant unobservable inputs. An explanation of the valuation methodologies and the inputs to the valuation model is
provided in note 6.
Critical accounting estimates
The shares in Odin Bidco AS is measured by an independent valuation expert in relation to issuance of shares. Odin Bidco AS
owns preschool properties in Norway, Sweden, Finland and Netherlands. Fair value is measured using an income approach,
meaning discounted cash flow to equity until an exit in 2045.
Revenue is based on rental agreements adjusted for the consumer price index and it is assumed that the contracts are
renewed at expire. The rental agreements are triple net contracts where the operator has the main responsibility for annual
maintenance, insurance, and other directly related property. Average EBITDA-margin is estimated to 96.8% (95% in 2020).
Finance expense is based on the current borrowing structure. In addition, growth based on future acquisitions are included.
The equity discount rate applied is 9.80% (10.05% in 2020).
corresponding value of the Group’s share of Odin will increase/decrease with approximately 4.5% (5% in 2020).
ANNUAL REPORT 2021
28
The Group holds the following financial assets and liabilities:
1)
Other investments are measured at fair value as level 1 in the fair value hierarchy in accordance with quoted prices
2)
Other Shares includes the ownership share in Odin Bidco AS and 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 2021:
Specification of investments measured at fair value held as of 31 December 2020:
1 and 3) Bonds and funds are measured at fair value as level 1 in the fair value hierarchy in accordance with quoted prices.
2 and 4) Other Shares includes the ownership share in Odin Bidco AS and other investments in shares where the company have no
significant influence or control, which is measured according to level 3 in the hierarchy.
10. Cash and cash equivalents
Accounting principles
Cash comprises cash on hand and 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.
Description
29
PIONEER PROPERTY GROUP ASA
Cash and cash equivalents include bank deposits:
All interest income relates to interest on bank deposits.
The bank deposits include restricted cash related to tax withholding account of TNOK 140 per 31 December 2021 (TNOK 465
per 31 December 2020).
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. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the income statement over the duration of the borrowings.
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 2021:
The borrowings the Group holds as of the end of 2021 and 2020 are linked to the investment properties owned by the Group.
The following assets have been pledged as security for liabilities:
The amounts pledged as security for liabilities corresponds to the value of the completed investment properties. (see note 6
for further information).
Relevant terms and conditions
ANNUAL REPORT 2021
30
Out of the total amortised cost value of all borrowings held as of 31.12.2021, MNOK 105 have a fixed annual interest rate that
ranges from 3 to 4%. The rest of the borrowings are subject to an interest rate structure that is comprised of a variable interest
rate based the 3-month NIBOR plus a margin that typically approximates 3% annually. On average, the annual average interest
rates realised for 2021 has been 2,98%. 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 65 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 2021 reporting period, the Group is in compliance with all the
covenants required by the lender.
Changes in borrowings from financing activities:
12. Other current liabilities
Dividend relates to Q4 2021 dividend approved by the board, with payment date in January 2022.
13. Rental income
Accounting principles
31
PIONEER PROPERTY GROUP ASA
Revenue is recognised when it is probable that transactions will generate future economic benefits that will flow to the
company and the amount can be reliably estimated. Revenues are presented net of value added tax and discounts.
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 is the lessor of investment properties. The group’s contractual rental income is distributed as follows, where the
numbers are adjusted annually to reflect CPI. The rent in the table below are adjusted with an annual increase of 2% yields:
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 CPI. However, the hotel investment properties typically have the characteristic that rental income
is subject to certain positive variabily 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 2021 and 2020 has been originated in Norway and Sweden.
Government grants related to income
The Group received Government grants during 2021 for an amount of MNOK 2.05, as a compensation from the local
municipality in Sweden, to partially compensate its loss in revenue due to the COVID restrictions. This grant related to
income has been presented as part of the consolidated income statement, under the line item “rental income”, as it is the loss
of rental income that the grant compensated.
14. Employee expenses and management remuneration
The remuneration to the management in 2021:
ANNUAL REPORT 2021
32
The remuneration to the management in 2020:
John Ivar Busklein has been CEO of Pioneer Property Group ASA in a part time position at 28,4%. Ole-Kristofer Bragnes held
the position as CFO from 24 October 2019 until 31. August 2021. 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 will use for the determination of salary and
other remuneration to its executive management in the calendar year 2021 as published on the company's web page
pioneerproperty.no. These policies shall be subject to an advisory vote by the general meeting.
The remuneration to the Board of Directors:
15. Other operating expenses
16. Other financial gains (losses)
The gains on sale of bonds are in relation to the bonds sold in Norlandia Health & Care Group ASA (NHC01 and NHC02) and
Hospitality Invest AS (HOIN02) with par values of MNOK 196.0 (NHC01), MSEK 134.0 (NHC02) at the following bond prices
(based on broker quotes): i) NHC01: 100.375 and ii) NHC02: 100.375.
A majority of the bonds were bought during the Covid-19 financial downturn in March 2020 with an overall average cost of
low 70s, and thus significant fair value revaluations has since been recorded prior to, and in relation to, the sale of the bonds.
33
PIONEER PROPERTY GROUP ASA
17. Income taxes
Accounting principles
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except when
related to items recognised in other comprehensive income or directly in equity. In such cases, the tax amount is also
recognised in other comprehensive income or directly in equity.
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. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
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. Deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance
sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Changes in deferred tax liabilities:
Income tax expense:
ANNUAL REPORT 2021
34
Reconciliation of tax expense:
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 2021
is MNOK 151.5 (MNOK 1.3 in 2020).
18. Earnings per share
Accounting principles
The Group's preference shares are entitled to a fixed dividend of NOK 9.50 per annum from 01 July 2021, 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 continuing operations.
Earnings per share from discontinued operations:
Earnings per share from total operations:
35
PIONEER PROPERTY GROUP ASA
Diluted
As per 31 December 2021 no rights are issued which 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
Business combinations:
The acquisition method of accounting is used to account for business combinations by the group. The consideration
transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, liabilities incurred to the
former owners of the acquired business, equity interests issued by the Group, fair value of any asset or liability resulting from
a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the acquisition date. The group recognizes any non-controlling interest in
the acquired entity on an acquisition-by-acquisition basis either at fair value, or at the non-controlling interest’s proportionate
share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
Acquisition of subsidiaries not viewed as a business combination
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.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with
the Group’s accounting policies
Upon purchase of property management assess whether the purchase constitute purchase of a business or purchase of an
asset in accordance with IFRS 3.
Acquisition of companies regarded as asset purchase:
In the first half of 2021 PPG acquired indirectly ~51% of the shares in Evenes Tomtes elskap AS through an 53% owned SPV.
Within retail properties, PPG made a three minor acquisitions. The acquisition of Caravan Eiendom Grimstad AS AS, who owns
a property outside Grimstad through the company Bobil Eiendom Grimstad AS, was completed in July. The property is let out
on a remaining 5-year lease agreement with Ferda. In late 2021, PPG also acquired two additional properties through the
acquisitions of Bobil Eiendom Fauske AS and Bobil Eiendom Balsfjord AS. The property in Fauske is a 1.600 sqm property let
out to Ferda. The property in Balsfjord has a 1 250 sqm property under construction, estimated to be completed in Q3 2022.
When completed, it will be let out to Ferda on a 15 year triple net lease contract.
ANNUAL REPORT 2021
36
Companies bought or incorporated in 2021:
Companies bought or incorporated in 2020:
The Group consists of the following subsidiaries per 31 December 2021:
37
PIONEER PROPERTY GROUP ASA
The Group consists of the following subsidiaries per 31 December 2020:
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 31.12.2021:
The Group had the following related parties as of 31.12.2020:
ANNUAL REPORT 2021
38
NOK in thousand
31.12.2021
31.12.2020
Norlandia companies
25 974
Kongsparken AS
12 714
Ramstadsletta Utvikling AS
37 886
Ferda Norge
211 17
Acea Invest AS
8 879
8 456
Indirect ownership of shares by board member per the balance sheet date:
The Group had the following material transactions with related parties:
Transactions made between the related parties are made on terms equivalent to those that prevail in the market at arm
length.
For compensation to key management personnel, see note 14.
Preference share buy-back program (see also note 21).
Loans to associate entities
During the 2021 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 48. The contract does not contamplate
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 38. 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 an amount of MNOK 5.
21. Share capital and shareholder information
The Company have two classes of shares, ordinary shares and preference shares. As of 31 December 2021, 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.
39
PIONEER PROPERTY GROUP ASA
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%
10,27%
0,49%
Nordnet Bank AB
0,00%
7,56%
0,36%
Avanza Bank AB
0,00%
7,52%
0,36%
The Bank of New York Mellon
0,00%
6,90%
0,33%
Other Shareholders
0,00%
67,75%
3,20%
Total
100 %
100 %
100 %
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 8.50 per
preference share per annum which stepped up to NOK 9.50 on 01 July 2021. Dividend payments are made quarterly with NOK
2.175 per preference share (NOK 2.375 after 01 of July), if approved 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 2.125 per preference share (NOK 2.375 after 01. of July) during a quarter, the difference between paid dividends and NOK
2.135 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.
As part of the Group’s buy back of own preference shares program, the Group acquired in March 2020 987,966 own
preference shares in PPG at 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.
Further PPG holds 987,966 own preference shares.
10 largest shareholders registered in VPS as of 31 December 2021:
ANNUAL REPORT 2021
40
10 largest shareholders registered in VPS as of 31 December 2020:
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. Discontinued Operations
Accounting principles
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose
of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the statement of profit or loss.
Discontinued operations 2021
There have been no effects from any discontinued operations during 2021.
Discontinued operations 2020
On 18 December the Group entered into an agreement of selling 100% of the shares in PPGI's wholly owned subsidiary PPG
Netherlands Holding B.V. ("PPGNH") to Kinland Finland Oy for a cash consideration of MNOK 60.9 in addition to a repayment
of the shareholder loans given by Pioneer Property Group International AS. PPGNH has subsidiaries in the Netherlands, Poland
and Sweden, which again respectively own a portfolio of 12 preschool properties in said countries. The transaction was closed
30 December 2021.
The group had internal receivable on PPGNH, this receivable was sold at the same time as the shares. The receivable was sold
at carrying amount of MNOK 159.7. No gain or loss were recognised.
The Group recognized a gain on sale of shares in PPGNH of MNOK 7.8.
In order to, among others, partly finance the transaction described herein, a share issue in Odin Bidco AS directed towards its
shareholders was carried out, in which PPG has committed to invest NOK 40 million to retain its 10% ownership of which NOK
17.9m has already been invested.
The Group owns 10% of Kinland's parent company, Odin Bidco AS after the sale. The share issue described above was
conducted in C shares, which dilutes PPG's B shares which carry 2 votes per share. Following the share issue PPG had 18.63%
of the votes.
41
PIONEER PROPERTY GROUP ASA
PPG has received the full earn-out of MNOK 100 in January 2020 from the sale to Odin Bidco AS in 2019. Following this and
additional expenses, an adjusted gain of MNOK 9.8 were recognised in 2020 in relation to the sale to Odin Bidco AS in 2019.
The following table shows the cash flow from the discontinued operations:
ANNUAL REPORT 2021
42
24. New standards not yet adopted
There are no new or amended standards that affect the Group as of the year 2021.
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.
25. Subsequent events
PPG's has acquired Terminalveien 10 in Bodø based on a property value of MNOK 45 together with local investors. PPG has an
ownership of 52 % in the property, controlling the acquired subsidiary that owns the property. The transaction was completed
8 March 2022. The property consideration has been paid in cash and the Group has incurred in a loan of MNOK 33. is expected
that this investment property will increase PPG's annual net lease income of approximately with MNOK 3.0.
The building of premises for Ferda in Rana was completed in March 2022.
In January 2022, the omicron variant of the COVID -19 virus resulted in new restrictions, affecting PPG directly through less
lease income from hotels. Government has lifted all covid restrictions, PPG anticipates that the virus will have limited impact
of the performance in 2022.
The current geopolitical situation affecting Russia and Ukraine, are causing macroeconomic repercussions, affecting businesses
globally, and with unknown effects in the foreseeable future. However, in light of the current circumstances, it is not expected
that these events will significantly affect the Group’s operations.
43
PIONEER PROPERTY GROUP ASA
Alternative Performance Measures
The company reports the following alternative performance measures (APMs):
EBITDA – Margin
Earnings before interest, depreciation and
amortization divided by lease income
EBIT
Earnings before interest
Gross yield
Gross yield for a property or portfolio of properties is
calculated as contractual annualised rental income for
the upcoming financial year divided by the market
value as of balance sheet date.
Weighted average gross yield
The weighted average gross yield calculated by
adjusting for property value
NOI
Net Operating Income, meaning all revenue from
properties minus all reasonable direct property related
expenses.
.
ANNUAL REPORT 2021
44
ANNUAL REPORT
(PARENT COMPANY)
2021
PIONEER PROPERTY GROUP ASA
45
PIONEER PROPERTY GROUP ASA
PIONEER PROPERTY GROUP ASA
STATEMENT OF INCOME
Note
2021
2020
OPERATING REVENUE AND EXPENSE
Revenue
1
4 124 453
-
TOTAL OPERATING REVENUE
4 124 453
-
Employee benefits expense
2
2 844 664
3 187 214
Depreciation and amortisation expense
3
5 743
-
Other operating expenses
2
5 982 633
5 522 584
TOTAL OPERATING EXPENSES
8 833 040
8 709 798
OPERATING PROFIT OR LOSS
-4 708 588
-8 709 798
FINACIAL INCOME AND EXPENSES
Financial income
Changes in market value of fin. cur. assets
4,5
11 301 327
86 695 090
Income from subsidiaries
5
994 910
12 882 518
Interest received from group companies
1,5
23 141 361
9 630 928
Other interest
5
13 136 938
28 554 309
Other financial income
5
98 289 996
800 133
Total financial income
146 864 532
138 562 977
Financial expenses
Changes in market value of fin. cur. assets
4,5
78 878 891
5 782 052
Interest paid to group companies
1,5
360 651
-
Other interest
5
-
3 276 044
Other financial expense
5
8 791 528
-
Total financial expenses
88 031 070
9 058 096
NET FINANCE
58 833 462
129 504 881
ORDINARY RESULT BEFORE TAX
54 124 874
120 795 082
Tax on ordinary result
6
26 775 800
6 606 687
PROFIT
27 349 074
114 188 395
ATTRIBUTABLE TO
To ordinary dividends payable
-
35 773 743
To additional dividends payable
43 953 128
580 753 161
To other equity
-16 604 053
-502 338 508
Net brought forward
27 349 074
114 188 395
ANNUAL REPORT 2021
46
PIONEER PROPERTY GROUP ASA
Balance sheet pr. 31.12.2021
Note
2021
2020
ASSETS
Fixed assets
Tangible assets
Fixtures and fittings, office machinery etc.
3
20 100
-
Total tangible assets
20 100
-
Financial fixed assets
Investments in subsidiaries
7
31 088 422
16 600 588
Loans to group companies
1
671 831 771
29 257 271
Investments in shares or units
310 985 144
297 392 507
Total financial fixed assets
1 013 905 337
343 250 366
TOTAL FIXED ASSETS
1 013 925 437
343 250 366
CURRENT ASSETS
Receivables
Receivables on group companies
1
1 928 666
3 591 379
Other short-term receivables
11 368 909
8 455 909
Total receivables
13 297 575
12 047 288
Investments
Quoted bonds
4
49 625 000
396 813 372
Other financial Instruments
4
104 600 066
94 217 948
Total receivables
154 225 066
491 031 320
Cash and bank deposits
8
49 709 708
379 773 825
TOTAL CURRENT ASSETS
217 232 349
882 852 433
TOTAL ASSETS
1 231 157 786
1 226 102 799
47
PIONEER PROPERTY GROUP ASA
PIONEER PROPERTY GROUP ASA
Balance sheet pr. 31.12.2021
Note
2021
2020
EQUITY AND LIABILITIES
Equity
EQUITY AND LIABILITIES
Share capital
9,10,11
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
586 819 482
593 815 182
TOTAL EQUITY
1 156 151 438
1 163 147 138
Liabilities
Provision
Deferred tax
6
442
-
Total provisions
442
-
Other non-current liabilities
Liabilities to group companies
1
9 017 897
9 987 524
Total other non-current liabilities
9 017 897
9 987 524
TOTAL NON-CURRENT LIABILITIES
9 018 339
9 987 524
Current liabilities
Accounts payable
1 019 678
397 763
Income tax payable
6
18 905 888
6 655 427
Dividends payable
9 216 394
44 019 991
Liabilities to group companies
1
35 770 318
318 379
Other current liabilities
870 166
957 573
TOTAL SHORT-TERM LIABILITIES
65 988 009
52 968 138
TOTAL LIABILITIES
75 006 348
62 955 662
TOTAL EQUITY AND LIABILITIES
1 231 157 786
1 226 102 799
Oslo, 29 March 2022
Board of Directors of Pioneer Property Group ASA
Roger Adolfsen
Chairman of the Board
Sandra Henriette Riise
Member of the board
Even Carlsen
Member of the Board
Nina Hjørdis Torp Høisæter
Member of the Board
Geir Hjorth
Member of the Board
John Ivar Busklein
Chief Executive Officer
ANNUAL REPORT 2021
48
PIONEER PROPERTY GROUP ASA
Statement of Cash Flow
Note
2021
2020
Cash flows from operating activities
Profit before tax
54 124 874
120 795 082
Taxes paid
-6 655 427
-
Gains and losses on sale bonds
4
-93 488 770
-
Depreciation
3
-5 743
-
Gains and losses on sale shares
5 744
-10 000 000
Group contributions
1
-994 910
-3 051 454
Exchange gains/(losses)
7 105 053
5 628 775
Fair value adjustmenst on quoted bonds
4
67 577 564
-80 913 038
Trade receivables
-933 756
Trade payables
621 914
-1 551 159
Other accruals
-2 700 857
-133 250 664
Net cash flow from operating activities
24 655 686
-102 342 458
Cash flows from investing activities
Payments for purchase of shares
-13 622 637
-32 752 345
Payments for purchase of other investments
3
-25 843
-
Payments of loan to group companies
1
-644 473 553
-26 788 677
Proceeds from sale of shares
23 045 624
-
Proceeds from issuance of long term debt
-
194 531 081
Proceeds from sale of bonds
4
358 960 824
-
Payments to buy other investments
-3 120 495
-
Proceeds from sale of other investments
-
-379 707 848
Net cash flow from investments activities
-279 236 080
-244 717 789
Cash flow from financing activities
Payments for purchase of own shares
-
-101 069 335
Dividends paid
-78 756 725
-580 753 160
Repayment of share premium reserve
-
-450 287 884
Group contributions paid
-318 379
-2 201 536
Group contributions received
3 591 379
-
Received share premium
-
3 058 963
Net cash flow from financing activities
-75 483 725
-1 131 252 952
Net change in cash and cash equivalents
-330 064 119
-1 478 313 198
Cash and cash equivalents at the beginning of the period
379 773 825
1 858 087 023
Cash and cash equivalents at the end of the period
49 709 706
379 773 825
49
PIONEER PROPERTY GROUP ASA
Notes to the financial statements 2021
Accounting Principles:
The financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in
Norway.
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 recognised 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 recognised in the same year as they are recognised in the financial
statement of the provider. If dividends / group contribution exceed 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 recognised 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.
ANNUAL REPORT 2021
50
Note 1 - Liabilities to/receivables from group companies
Interest received from group companies is NOK 23 141 361 and interest paid to group companies is NOK 360 651. Total income on
management fee to group companies is NOK 4 124 453, included in this amount is accrued income with NOK 1 675 611.
Receivables
Per 31.12.
Per 01.01.
Accounts receivable
933 756
0
Group contributions
994 910
3 591 379
Loans to group companies
671 831 771
29 257 271
Total receivables
673 760 437
32 848 650
Liabilities
Group contributions
35 770 318
318 379
Other liabilities
9 017 897
9 987 524
Total Liabilities
44 788 215
10 305 903
Note 2 - Management and auditor compensation
The company's auditor expenses (VAT included) :
2021
2020
Statutory audit
609 227
791 123
Other services
115 607
277 813
Total
724 833
1 068 936
2021
2020
Payroll
2 614 263
2 551 940
Payroll expenses (employer tax)
374 396
334 855
Pension cost
37 002
9 484
Other payments
-180 997
290 935
Total
2 844 664
3 187 214
It's been paid remuneration for directors with NOK 540 000.
Roger Adolfsen (Chairman of the board)
110 000
Geir Hjorth (board member)
110 000
Sandra Riise (board member)
110 000
Even Carlsen (board member)
100 000
Nina Høisæter (board member)
110 000
The company has two employees in 100% and 28.4% position and fall under the Act on Mandatory occupational pensions act, and they have
established mandatory occupational pensions for the employees.
Ole-Kristofer Bragnes was the CFO of Pioneer Property Group ASA until 31th August 2021, then Øystein Grini became the CFO of Pioneer Property
Group ASA in a full time position.
51
PIONEER PROPERTY GROUP ASA
NOK
Bonus
Salary
Total Compensation
Ole-kristofer Bragnes
(former CFO)
250 000
320 801
570 801
Øystein B. Grini (CFO)
409 797
409 797
John Ivar Busklein (CEO)
0
506 798
506 798
Total
250 000
1 237 396
1 487 396
John Ivar Busklein (CEO) received a bonus of NOK 28 400 in Januar 2022 for his performance as CEO in Pioneer Property Group ASA.
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 a determination of salary and other remuneration to the executive management, in accordance with
applicable law. The declaration includes the policies which PPG will use for the determination of salary and other remuneration to its executive
management in the calendar year 2022 as published on the company’s web page pioneerproperty.no. These policies shall be subject to an
advisory vote by the general meeting.
Note 3 - Fixtures and fittings, office machinery etc.
Fixtures and fittings, office
machinery
etc.
Acquisition cost as at. 1/1 0
+ Additions 25 843
Acquisition cost as at. 31/12 25 843
Accumulated depreciation 1/1 0
+ Depreciation for the year 5 743
Accumulated depreciation 31/12 5 743
Net Value 31/12 20 100
Percentage depreciation 33
ANNUAL REPORT 2021
52
Note 4 - Quoted bonds
Financial instruments has 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
Marked Value
HOIN02
37 500 000
12 125 000
49 625 000
Total
37 500 000
12 125 000
49 625 000
Funds:
Acquisition cost
Change in
value
Marked Value
Holdberg Kreditt A Fond
52 914 704
1 233 946
54 148 650
First Fondene AS
50 205 791
245 625
50 451 416
Total
103 120 495
1 479 571
104 600 066
Quoted bonds sold in 2021:
Acquisition
cost
Change in
value previous
years
Change in
value this
year
Sale
Gain
NHC02
123 883 611
31 390 436
-31 390 436
162 508 631
38 625 020
NHC01
141 871 250
44 573 750
-44 573 750
196 735 000
54 863 750
Total
265 754 861
75 964 184
-75 964 186
359 243 631
93 488 770
53
PIONEER PROPERTY GROUP ASA
Note 5 - Financial income and expenses
2021
2020
Financial income:
Change in marked value of fin.cur.assets
11 301 327
86 695 090
Group contribution
994 910
3 051 454
Gain on sale of subsidiaries
0
9 831 064
Interest received from group companies
23 141 361
9 630 928
Other interest
13 136 938
28 554 309
Currency gain
1 680 731
800 133
Other financial income
3 120 495
0
Gain on sale quoted bonds
93 488 770
0
Total financial income
146 864 532
138 562 977
Financial expenses:
Change in marked value of fin.cur.assets
78 878 891
5 782 052
Interest paid to group companies
360 661
0
Other interest
0
3 276 044
Currency loss
8 785 784
0
Loss on sale of shares
5 744
0
Total financial expenses
88 031 069
9 058 096
Note 6 - Tax
Calculation of this years tax basis:
Net profit/loss before tax expense
54 124 874
+ Permanent differences
66 588 397
+ Changes in temporary differences
-2 010
+ Received group contributions
994 910
- Paid group contributions
35 770 318
= Income
85 935 854
This years income tax expense consist of:
Estimated tax of net profit
26 775 358
= Tax payable
26 775 358
+/- Change in deferred tax
442
= Total tax expense
26 775 800
Tax rate
22%
current tax liability:
Tax payable
26 775 358
+/- Effect on tax of group contributions
-7 869 470
= Tax payable
18 905 888
ANNUAL REPORT 2021
54
Note 7 - Investments in subsidiaries
Subsidiaries are valued at cost in the companys accounts.
The company has shares in the following subsidiary:
Subsidiary, office location:
Owner-
ship %
Voting
rights %
Net profit last
year
Equity
last year
Pioneer Preschools AS, Oslo
100,00 %
100,00 %
-218 693
194 525
Pioneer Property Group International AS, Oslo
100,00 %
100,00 %
212 571
8 865 765
Pioneer Hotel Properties AS, Oslo
100,00 %
100,00 %
-9 632 474
30 000
Pioneer Retail Properties AS, Oslo
100,00 %
100,00 %
479 705
1 073 133
Pioneer Property Development AS, Oslo
100,00 %
100,00 %
-1 142 234
30 000
Note 8 - Bank deposits
Employees tax deduction, deposited in a separate bank account with total amount 31.12.21 NOK 139 967.
Note 9 - Other equity
Share capital
Own Shares
Share premium
reserve
Other equity
Total equity
Per 1.1
14 683 023
-987 966
555 636 899
593 815 182
1 163 147 138
Ordinary result
27 349 074
27 349 074
Dividends
-9 027 848
-9 027 848
allocated
Dividends
-34 925 280
-34 925 280
Other Changes
9 608 354
9 608 354
Per 31.12
14 683 023
-987 966
555 636 899
586 819 4482
1 156 151 438
Other changes:
Gain on sold shares/company within the group.
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
55
PIONEER PROPERTY GROUP ASA
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 4 biggest shareholders pref.shares :
Shareholders:
Pref.Shares
Pioneer Property Group ASA
-987 966
Skandinaviska Enskilda Banken AB
500 000
Nordnet Bank AB
368 050
Avanza Bank AB
366 177
Indirectly owned shares of executives in the company:
Ordinary shares
Pref. shares
Roger Adolfsen (Chairman)
3 160 192
0
Even Carlsen (Board member)
1 642 024
0
Note 11 - Transactions with related parties
The Group has various transactions with associated companies. All the transactions have been carried out as part of the ordinary operations and at
arms -length prices. The most significant transactions are as follows:
Hospitality Invest AS, management fee NOK 2 678 575
GROUP WEB PAGES
PARENT & SUBSIDIARIES
Pioneer Property Group ASA
www.pioneerproperty.no
WEB:
WWW.PIONEERPROPERTY.NO