linstow: annual report 2014

Annual Report 2014

Ülemiste Shopping Centre (Tallinn, Estonia)

CONTENTS

LIST OF PROPERTIES 03

THE BOARD OF DIRECTORS’ ANNUAL REPORT 04

INCOME STATEMENT 1 JAN–31 DEC 09

BALANCE SHEET AT 31 DEC 10

CASH FLOW STATEMENT 11

ACCOUNTING PRINCIPLES AND NOTES 12

AUDITOR’S REPORT 30

LIST OF PROPERTIES

LIST OF PROPERTIES (Square meters)In

OperationUnder

ConstructionDevelopment

Possibilities Total

Norway OfficesRomerike Helsebygg, Lillestrøm 31 500 31 500 Brubakkveien 16, Oslo 4 000 4 000 Oslo S. Utvikling AS (33,3 %) 11 608 18 308 48 009 77 925Koksa Eiendom AS (12,5 %) 15 944 15 944 Bergen Lufthavn Utvikling AS (50 %) 100 000 100 000 Tollbugata 32, Oslo 6 006Depotgata 22, Lillestrøm 8 506

ParkingGalleriet Parkering, Oslo 14 792 14 792 Grønland Parkering, Oslo 17 220 17 220

ResidentialGustav Vigelands vei 24, Oslo (50 %) 720 720 Storetvedt, Bergen 1 463 1 463 Citadellet, Nesodden 9 000 9 000

TOTAL NORWAY 109 576 18 308 159 192 272 564

No. of RoomsThe Baltics Hotels

/ Russia Radisson Blu Hotel Latvija, Riga 571 43 905 43 905 Radisson Blu Hotel Olümpia, Tallinn 390 30 854 12 000 42 854 Radisson Blu Hotel Lietuva, Vilnius 291 25 792 15 000 40 792 Radisson Blu Elizabete Hotel, Riga 228 13 782 13 782 Radisson Sonya Hotel, St. Petersburg 173 8 200 8 200 Radisson Blu Ridzene Hotel, Riga 95 7 892 7 892 Park Inn by Radisson Central Tallinn 245 9 888 9 888 Park Inn by Radisson Kaunas 206 13 018 13 018 Park Inn by Radisson Klaipeda Hotel 84 2 919 2 919 Park Inn by Radisson Vilnius North 84 2 595 2 595

Shopping Ülemiste, Tallinn 94 122 94 122Origo, Riga 33 596 40 000 73 596 Galerija Centrs, Riga 33 863 33 863 Alfa Home Center, Riga 60 000 60 000 Riga Retail Park 150 000 150 000

Parking Jekaba Arcade, Riga 8 600 8 600 Tornimä Garage, Tallinn (25 %) 2 000 2 000

Residential Bisumuizas Nami, Riga 100 000 100 000

TOTAL THE BALTICS/ RUSSIA 331 026 377 000 708 026

Portugal ResortDunas Douradas 1 941 14 630 16 571

TOTAL LINSTOW GROUP 2 367 442 542 18 308 550 822 997 160


Linstow AS is one of Norway’s leading property companies. The Company owns, develops and manages property in various segments both in Norway and abroad. The Company is owned by Awilhelmsen AS, which is a family-owned investment company that has the following business areas: cruise, property, shipping & offshore, retail and financial investments.

Linstow AS and its subsidiaries (hereinafter called: Linstow AS or the Group) have a key ownership role in Norway in several major development projects, and owns and manages office and car-parking properties. Most of the Group’s activities are in the Baltic region, primarily in the hotel and shopping centre markets. The company owns a total of nine hotels and three shopping centres, centrally located in the biggest cities in the Baltic States. In addition, the Company owns a holiday complex in Portugal and a hotel in St. Petersburg. Linstow AS’ head office is located at Tjuvholmen in Oslo, Norway.

Market developmentsThe Baltics Estonia, Latvia and Lithuania have shown strong economic growth during our ownership period, but did experience a significant decli-nes from the second half of 2008 and in the subsequent downturn. Starting in 2011, the Baltic States underwent rapid growth again and were among the fastest growing economies in Europe in 2014. Latvia introduced the Euro as a means of payment starting on 1 January 2014, and Lithuania did so on 1 January 2015.

Shopping CentresLinstow AS owns three shopping centres totalling 162 000 m2 in Riga and Tallinn. The Ülemiste Shopping Centre in Tallinn was expanded by 46 000 m2 in 2014. Ülemiste was officially reopened on 23 October 2014 and is fully leased. The shopping centres had a reduced turnover in local currency of - 3 % (2013: + 4 %) compa-red with the previous year. Among other things, this reduction in turnover is attributed to the expansion work at Ülemiste, which was executed without closing the shopping centre. Linstow AS’ rental income was correspondingly reduced by - 3 % (2013: 5 %).

HotelsLinstow AS owns 10 hotels with a total of 2 367 rooms in Tallinn, Riga, Vilnius, Kaunas, Klaipeda and St. Petersburg. The hotel occupan-cy rate was 63 % in 2014 (2013: 65 %), and income in local currency was reduced by - 1 % (2013: + 9 %) compared with the previous year. The hotels are operated by the listed company, Rezidor Hotel Group, under the brand names Radisson Blu and Park Inn by Radisson.

NorwayEngagement in urban development projects is a key aspect of Linstow AS’ strategy. Linstow AS is working with the development of office, retail and residential property in Bjørvika through Oslo S. Utvikling AS (OSU), in which Linstow AS owns one third of the shares. OSU’s total development potential, including completed and sold property, is approximately 317 000 m2.

Through its stake in OSU, Linstow AS is a key player in the de-velopment of Barcode (near Oslo’s new opera house). In addition to the residential dwellings in Barcode, OSU shall develop over 1 200 residential dwellings in the Bjørvika neighbourhood. As per mid-February 2015, 334 out of 385 flats in Barcode had been sold.

Bergen Lufthavn Utvikling AS (50 % owned by Linstow AS) is a long-term joint venture project, where Linstow AS and Flesland Holding AS are co-operating on the development of a modern busi-ness park at the largest traffic hub in Western Norway, Flesland Air-port. The area, measuring about 120 decares (about 30 acres), lies next to the new terminal that is being built at Flesland, where Ber-gen Light Rail also will have its terminal station. Flesland Business Park, where development of about 200 000 m2 of commercial space is planned, will include an airport hotel and modern offices adapted to the business operations of tomorrow in the Bergen region.

Linstow AS has a stake of 12.5 % in Koksa Eiendom AS, for-merly IT Fornebu Properties AS. The company’s objective is to contribute to the transformation of the former airport area at Fornebu into a modern residential and commercial neighbour-hood. In 2014, Koksa Eiendom sold 30 % of the Statoil Building to Madison International Realty.

In the spring of 2014, Linstow AS acquired Depotgata 22 AS, a company that had a commercial building under construction that lies within walking distance of the railroad station in Lillestrøm, Norway. The construction project was completed and taken over for use by a tenant in the middle of November 2014. The property has a total leased space of about 8 500 m2, including a basement car park. The cost price of the building and site amounts to NOK 190 million.

Linstow AS acquired Tollbugaten 32 AS in September 2014 for a property value equivalent to NOK 170 million. The company owns a property of about 6 000 m2 at a central location in the northern part of the Kvadraturen neighbourhood in downtown Oslo in the immediate vicinity of the Norwegian Parliament.


Linstow AS manages a portfolio of properties in Norway measur-ing 198 000 m2 and has a strong focus on good technical operation of the properties and good service for our tenants. The properties owned by the Group measure 110 000 m2 and are primarily made up of Romerike Helsebygg and the Galleriet and Grønland Torg car parks. The Company manages approx. 88 000 m2 for third parties.

Other businessLinstow AS is engaged in the management of a holiday and leisure complex in Portugal, as well as the sale of completed villas and flats in the complex.

Health, safety and the environmentLinstow AS had 26 employees at year-end 2014, and 27 FTEs were performed in 2014. At year-end 2014, the Group had 1 189 em-ployees (2013: 1 155) in approximately 1 005 FTEs (2013: 1 008 FTEs). In 2014, the absence due to illness at Linstow AS was 2.5 % (2013: 1.5 %). The Company has a good working environment. Twelve minor injuries to the Group’s employees were reported in 2014 in connection with our hotel operations. One minor workplace accidents was registered at our construction sites in 2014.

Linstow AS is working to promote sustainable social development. In all of our activities, we promote long-term quality assurance and environmental efforts. We do this by:

• Working determined and systematically to reduce our environ-mental impact.

• Erecting buildings with good environmental solutions.• Linstow AS is a major player in and contributor to the de-

velopment of high profile buildings, e.g. through the urban

development project at Bjørvika in Oslo, where the work is in conformity with the principle of environmentally controlled de-velopment. Determined and systematic efforts are being made to minimise energy use in the buildings and to utilise environment-friendly materials.

• An energy monitoring programme has been implemented at all Linstow AS hotels and shopping centres, where the energy consumption is regularly measured and analysed.

Linstow AS’ activities affect the external environment through the handling of waste in connection with the demolition of old proper-ties, as well as the construction and operation of new properties. Throughout the organisation, Linstow AS has a strong focus on complying with all government requirements and recommenda-tions relating to the environment. Our projects have clear goals for energy consumption, pollution, use and reuse of materials, indoor climate, development, and use of space. Linstow AS requires that all contractors follow a comprehensive programme for sorting demolition waste for recycling.

All of Linstow AS’ hotels are members of “GREEN KEY”, an international organisation that provides certification for environ-ment-friendly hotels. This requires that the hotels adhere to speci-fic guidelines on energy consumption, waste segregation and staff training. Linstow AS has been operating its own energy monitoring programme for the hotels since 2006. In 2014, energy consumption was reduced by 0.2 GWh relative to 2013, a reduction of 0.4 %. During the period 2011-2014, a savings in energy consumption of 27.8 GWh was achieved relative to the reference year of 2010 (adjusted for room occupancy rate). That is equivalent to a 12 % reduction in the energy consumption.

Hotel Radisson Blu Lietuva, Vilnius

In 2008, a shopping centre project was initiated that focused on re-ducing energy consumption by 15 % in 3 years. This goal has been more than reached, as the energy consumption has been reduced by approximately 40 % since the reference year. In 2014, energy consumption was reduced by about 3.4 % relative to the previous year. Work on improving energy efficiency continues.

The property industry in general has previously been male domina-ted. Linstow AS has approximately 37 % female employees. The Company’s owners and Board of Directors have a positive attitude towards a high level of female representation among employees and managers and appreciate the benefits of having a balanced workforce. The Board’s express goal is to have no discrimination relating to gender or anything else. The Board of Directors of Linstow AS is composed of 3 men.

Report on the annual financial statements (2013 figures in brackets)Pursuant to Section 3-3a of the Norwegian Accounting Act, we confirm that the financial statements have been prepared on the going concern assumption. The annual report includes statements about future operations that are associated with risks and uncertain-ties. These statements about the future reflect the current view on future conditions and are by nature subject to risks and uncertainties because they are tied to events and depend on conditions that will occur in the future. For various reasons, our actual results may diverge significantly from the expectations that are expressed in the statements on future conditions.

In 2014, the Group had rental income of NOK 241 million (227 million). Revenue from hotels and other operations was

NOK 644 million (598 million). Project revenue amounts to NOK 41 million (0 million).

Operating costs were NOK 747 million (664 million). The net impairment was NOK 6 million (4 million). Net impairment is cal-culated per property and is based on the average of two valuations made by independent appraisers. Project costs amounted to NOK 36 million (0 million).

Net financial items amount to NOK -124 million (+133 million). The profit or loss from associates amounts to NOK -2 million (+117), where the profit from OSU in 2013 included substantial profits from the sale of commercial properties, e.g. a share of the Deloitte building at Bjørvika, whereas OSU has not realised any similar profits in 2014. In 2014, dividends were received from Koksa Eiendom (formerly IT Fornebu) worth NOK 43 million (107 million). In addition, losses on interest rate swaps amounted to NOK -34 million (+20 million) and exchange rate losses came to NOK -31 million (-15 million).

The Group’s profit before tax was NOK 56 million (295 million). After tax and minority interests, the profit for the year was NOK 75 million (265 million).

Linstow AS’ profit after tax amounted to NOK 403 million (583 million) and included profits from subsidiaries and associated companies worth NOK 453 million (562 million).

AppropriationsLinstow AS’ profit after tax amounted to NOK 403.3 million. After Group contributions after tax amounting to NOK 518.3 mill were


Bergen Business Park, Flesland

received from the Awilhelmsen Group and NOK 211.7 million were transferred to other equity, the Board of Directors recommends that a dividend of NOK 710 million be paid to A/S Møllegaarden.

InvestmentIn 2014, the Group invested NOK 730 million (80 million). The expansion of the Ülemiste Shopping Centre in Tallin (NOK 270 mil-lion), the acquisition of Tollbugata 32 in Oslo (NOK 170 million) and the investment in Depotgata 22 (NOK 190 million) are the largest items in 2014.

Equity and cash flowThe Group’s recognised equity is NOK 1 145 million (1 286 million). The net cash flow from operations is NOK 178 million (485 million). At year-end 2014, total bank deposits and cash equivalents amounted to NOK 445 million (1 118 million).

Financing and liquidityAt year-end 2014, the Group had long-term liabilities of NOK 4 333 million (3 722 million). The Group has a strong balance sheet. The equity ratio was 18 % (23 %) at year-end 2014. The Group’s property portfolio is valuated annually by two independent appraisers. The valuations indicate that the market value of the Group’s property portfolio is significantly higher than its carrying amount.

RiskFinancial riskLinstow AS is exposed to exchange rate fluctuations, as the Group’s Baltic, Portuguese and Russian operations are in foreign currency. As far as possible, Linstow AS aims to align its liabilities with underlying assets and income.

Linstow AS is also exposed to changes in interest rates. At year-end 2014, approximately 66 % of its long-term loans had variable interest rates, and approximately 34 % had fixed rates. Linstow AS is also exposed to changes in the amount for which our properties can be sold on the market. These amounts are largely dependent on performance, interest rates and the attractiveness of the properties.

The risk that partners and tenants would be financially unable to meet their obligations decreased during the year. Most rental agreements are covered by a bank guarantee or a cash deposit equivalent to three months rent. The Board of Directors considers the liquidity of the Group to be good, and sees no reason to take measures to significantly change the liquidity risk.

Project riskContracts for the Group’s projects have been entered into with large, well-established contractors. Standard performance bonds have been provided for these projects.

Other riskThe financial results of our hotel business are largely dependent on the occupancy rate and the room prices that can be obtained in the market. The risk in our shopping centre business is related to the economic development in the countries in which the centres are located, the attractiveness of individual shopping centres, their popularity with tenants, the tenants’ ability to pay, vacancy rates and the market rents that can be charged.

Property portfolioAt year-end 2014, the Group owned 443 000 m2 of property. This comprised 331 000 m2 of property in the Baltic region and Russia,


Bergen Business Park, Flesland

The Board of Directors of Linstow AS Oslo, 17 March 2015

Sigurd E. Thorvildsen Chairman

Knut I. Nossen Board Member

Henrik Fougner Board Member

Per Tore Mortensen CEO


whereas the operations in Norway amounted to 110 000 m2. Linstow AS also manages a property portfolio of approximately 88 000 m2 in Norway and approximately 158 000 m2 in the Baltic region for other owners.

OutlookIn 2014, the Baltic States underwent substantial economic growth compared with the rest of Europe. The economic development in 2015 is also expected to be stronger than in the Euro zone. Linstow AS has invested substantial amounts in the property market in the Baltic States and expects that the expansion of the Ülemiste Shopping Centre in Tallin will yield increased rental income in the coming years. A growth in

income is also expected for the hotel business in 2015, among other things because the Value Added Tax rate for hotel services in Lithuania has been reduced from 21 % to 9 % starting in 2015 and because Latvia will have the EU presidency in the first half of 2015.

The growth in the Norwegian economy is expected to diminish in 2015. The level of interest rates is low, and there are good financing opportunities. In Norway, the construction of a hotel at Bergen Airport Flesland is planned to be initiated during 2015. Through the purchases of Tollbugaten 32 in Oslo and Depotgata 22 in Lillestrøm in 2014, Linstow AS has laid the foundation for further growth in rental income in the period ahead.

Depotgata 22, Lillestrøm

INCOME STATEMENT 1 JAN – 31 DEC.

LINSTOW AS LINSTOW GROUP2014 2013 (NOK 000) Notes 2014 2013

OPERATING INCOMERental income, properties 240 983 227 094

355 429 Profit from sale of fixed assets 1 706 610Project income 40 673

18 392 15 525 Hotel revenues and other operating income 2 644 463 598 21918 747 15 953 Total operating income 926 825 825 922

OPERATING EXPENSES-58 631 -57 822 Wages, salaries, employer’s contributions and pension costs 3 -228 226 -217 021-13 509 -14 304 Other administrative expenses 2 -254 646 -240 917

Cost of materials -49 468 -48 243-431 -608 Operating costs for properties and bad debts -40 417 -27 874

Project expenses -36 100 -3 729Losses on sale of fixed assets 1 -2 -22

34 117 110 911 Impairment/(reversal) of fixed assets 1,5 -6 269 -4 273-1 057 -237 Depreciation 5 -132 075 -122 302

-39 511 37 940 Total operating expenses -747 203 -664 381

-20 764 53 894 Operating profit 179 623 161 541

FINANCIAL ITEMS452 771 562 346 Profit/loss from group companies and associates 4 -1 790 116 827118 389 181 005 Finance income 6 93 380 180 222

-184 875 -281 955 Finance expense 6 -215 396 -163 581386 285 461 396 Net financial items -123 806 133 468

365 522 515 290 Profit before tax 55 816 295 009

37 851 68 203 Tax 7 19 077 -30 469

403 372 583 493 Profit for the year 8 74 893 264 539

Minority interests 164403 372 583 493 Profit for the year after minority interest 75 057 264 539

APPROPRIATIONS-211 672 -283 493 Transferred to other equity-710 000 -300 000 Accrued dividend518 300 Received group contributions after tax

-403 372 -583 493 Total appropriations 8

BALANCE SHEET AT 31 DEC.

LINSTOW AS LINSTOW GROUP2014 2013 (NOK 000) Notes 2014 2013

ASSETSNon-current assetsIntangible assetsIntangible assets 5 43

99 129 Deferred tax assets 7 124 121Fixed assets

14 387 12 686 Real property 5 3 890 221 3 180 0173 026 2 960 Projects in progress 5 64 155 81 8334 230 1 761 Machinery, fixtures/fittings and vehicles 5 90 116 68 287

Financial assets2 537 141 1 979 925 Shares in subsidiaries 4

376 924 443 336 Receivables from Group companies 314 234 314 234 Shares in associates 4 541 772 589 22347 562 37 610 Receivables from associates 47 562 37 610

131 077 131 077 Other shares 4 131 081 131 245Other long-term receivables 9 30 227 32 211

3 428 582 3 022 718 Total non-current assets 4 795 134 4 244 591Current assets

11 842 1 012 Current receivables 9 79 761 59 5691 017 988 Receivables from group companies 1 017 988

Projects for sale 5 113 350 113 477191 947 866 504 Bank deposits, Group account 12 444 645 1 118 293

1 221 777 867 517 Total current assets 1 655 744 1 291 3394 650 359 3 890 235 Total assets 6 450 878 5 535 929

EQUITY AND LIABILITIESEquity

817 808 817 808 Share capital (1 264 600 shares – par value NOK 647) 817 808 817 808405 333 405 333 Other paid-in capital 405 333 405 333772 166 560 493 Retained earnings -79 929 61 471

Minority interests 1 438 1 2411 995 307 1 783 635 Total equity 8 1 144 650 1 285 853

Long-term liabilitiesProvisions for liabilities

932 Deferred tax 7 171 250 148 47457 704 51 303 Other commitments 10 123 244 63 211

Other non-current liabilities938 526 1 220 216 Liabilities to group companies180 730 178 128 Debt instrument loans and credit facilities 10 180 730 178 128706 384 322 889 Secured debt 10 3 857 622 3 332 017

1 884 276 1 772 536 Total long-term liabilities 4 332 847 3 721 829Current liabilities

770 776 334 064 Other current liabilities 11 973 381 528 247770 776 334 064 Total current liabilities 973 381 528 247

4 650 359 3 890 235 Total equity and liabilities 6 450 878 5 535 929

Oslo, 17 March 2015

Sigurd E. Thorvildsen Chairman

Knut I. Nossen Board Member

Henrik Fougner Board Member

Per Tore Mortensen CEO

LINSTOW AS LINSTOW GROUP(NOK 000) 2014 2013 2014 2013

Profit before tax 365 522 515 290 55 816 295 009- Tax payable -16 090 -7 100- Profit from sale of fixed assets -355 -429 -706 -610+/- Net loss/profit from sale of projects -4 573 3 729- Profit/loss from associates 1 790 63 840+ Loss on sale of fixed assets 2 22+ Depreciation 1 057 237 132 075 122 302+ Impairment/reversal of fixed assets -34 117 -110 911 6 269 4 273+/- Change in accounts receivable -782 1 538 -7 560 17 446+/- Change in accounts payable 1 056 -111 7 297 13 083+/- Change in interest 389 308 -623 -656+/- Change in other accruals -5 802 9 138 4 203 -26 249NET CASH FLOW FROM OPERATING ACTIVITIES (A) 326 967 415 060 177 900 485 088+ Sale of tangible assets and projects 180 42 949 5 480- Investment in tangible assets and projects -3 643 -1 106 -729 623 -79 735+ Payments in from investments in shares 72 080 78 357 50 225- Investment in shares -286 740 -4 923 -595+/- Changes in other receivables/intra-group balances -567 912 -29 054 -7 969 102 188NET CASH FLOW FROM INVESTING ACTIVITIES (B) -786 035 43 274 -644 417 27 338+/- Change in external long-term liabilities 392 498 19 827 575 085 252 126+- Exchange rate differences -174 516 -303 316- Equity transactions and loans to parent company -607 988 -607 988 796+ Change in minority through acquisitions, payments and incorporation . 289NET CASH FLOW FROM FINANCING ACTIVITIES (C) -215 490 19 827 -207 130 -50 394

NET CHANGE IN CASH &CASH EQUIVALENTS DURING YEAR (A+B+C) -674 558 478 161 -673 647 462 032

Cash & cash equivalents 1 Jan (*) 866 504 388 343 1 118 293 656 261Cash & cash equivalents 31 Dec (*) 191 947 866 504 444 646 1 118 293

(*) Cash and cash equivalents are largely related to Group bank account and thus represent a receivable with the parent company under the Group banking account scheme.

CASH FLOW STATEMENT

ACCOUNTING PRINCIPLES


GeneralThe annual financial statements have been prepared in accordance with current legislation and generally accepted accounting prin-ciples. Accounting standards for medium-sized enterprises have been used. With respect to the parent company financial statements, Linstow AS uses the cost method for valuing shares and interests in subsidiaries and associates. Acquisition and disposal of subsidiaries is part of the company’s ordinary operation. Comparative figures have therefore not been prepared.

Basis of consolidationShares and participating interests in subsidiaries are eliminated in ac-cordance with the purchase method. This means that the cost price of the shares and interests is set off against the subsidiaries’ equity at the date of acquisition. Any added/negative values of individual proper-ties arising from this process are depreciated using the same principles as for the underlying properties. Profit/loss from the purchase/sale of subsidiaries and associates is included from/to the date of acquisition/disposal. For gradual investment in/acquisition of subsidiaries, values at the date of group establishment are generally used. The minority interests’ share of income and equity is shown as a separate line on the income statement and balance sheet. Internal receivables, liabilities and profit/loss items are eliminated in the consolidated accounts.

In the parent company accounts, the cost method is used for all com-panies, regardless of structure and ownership share. Group contribu-tions and dividend received which lie inside and outside the subsidiar-ies’ accrued earnings in the ownership period are recognised in the parent company’s income statement and recognised directly in the balance sheet as an investment respectively. Group contributions from the parent company to a subsidiary are considered as investments in subsidiaries and are capitalised as part of the cost of the shares. Group companies are fully consolidated in the accounts, while associates are accounted for using the equity method. More information can be found in note 4 where shares and ownership interests are specified.

Translation of foreign companiesIn the consolidated accounts, the accounts of foreign subsidiaries and associates are aligned with the parent company’s accounting principles as far as possible. When these companies’ accounts are converted from local currencies to Norwegian kroner (NOK), balance sheet items are translated using the exchange rate prevailing at the balance sheet date, while income statement items are mainly are trans-lated using the average rate for each quarter. The difference arising when the company’s opening equity is translated based on this method is recognised as a correction to the Group’s equity.

Financial instrumentsThe Group hedges a significant part of its variable interest rates by entering into forward rate agreements. The agreements are valued at fair value by external parties. Current payments are presented as in-terest cost. The effect of value changes is recognised on the income statement; see below for duration as well as note 6.

Revenue recognitionTransactions are recognised at the value of the compensation at the time of delivery. Income is recognised when it is accrued, i.e. when the service is provided. Income is presented after deduction of VAT, rebates and discounts. Costs are matched with accrued income.

Redemption amounts from leases are recognised as income when the premises are released and the new rent covers costs. If the premises remain leased continuously, the income is accrued over the original lease term. If costs are partially covered, the buyout revenues are recognised as income proportionately.

Gains/losses/impairment losses on fixed assetsProfit/loss and impairment losses on fixed assets are classified as ordinary operating income/expense in the income statement.

Maintenance and improvementsOngoing maintenance costs to keep the properties in the best state of repair during the Group’s ownership are included in operating expenses. Alterations for specific tenants and general work on the buildings which increase their rental value are depreciated over their expected useful life. The cost is included in depreciation. Rehabili-tation expenditure raising the property standard from best state of repair during the Group’s ownership and increasing future rental in-come is capitalised and depreciated with the building over its normal depreciation period.

Current/fixed assetsCurrent/long-term liabilitiesItems are classified as fixed assets/long-term liabilities if they are intended for long-term ownership or use or their settlement date is after the end of the next accounting period. The first year’s instal-ments for long-term liabilities are accounted for as long-term liabili-ties. Other items are classified as current assets/current liabilities. Current assets are recognised in the balance sheet at the lower of cost and fair value. See separate note on the valuation of fixed assets. The group account arrangement is classified as a bank deposit.

Projects for saleProjects defined as for sale are treated in accordance with Norwe-gian accounting standard NRS 2, construction contracts. Linstow

AS utilises current revenue recognition based on expected revenue. In proportion to the stage of completion of the contract and sale. The result for the period is the expected final result multiplied by the stage of completion of the contract and sale. Projects expected to make a loss are recognised as an expense. Accrued costs at the reporting date comprise recognised costs allowing for any invoicing lag. Income comprises accrued costs plus the project margin. Income is not recognised until a substantial part of the project has been sold and the construction is well in progress, making it possible to give a reliable estimate of profit. If in doubt, the project is booked without profit. The same principle is applied, where natural, in the parent company accounts.

Fixed assetsFixed assets are recognised at cost less accumulated depreciation and impairment losses. Leased assets which qualify as finance leases are capitalised and depreciated with other fixed assets. In general, fixed as-sets are valued as a whole and written down if their fair value as defined in the Norwegian Accounting Act is lower than their carrying amount.

At some of the companies’ properties, new rental projects are under construction. The cost of these projects, including interest on capital expenditure, is capitalised until the projects are completed/have full rental coverage. Interest on capital expenditure on projects acquired through the purchase of companies is capitalised. For projects where a decision has been taken to delay/halt the construction process, the interest on capital expenditure is expensed as it arises.

Development projects and major conversions are transferred to proper-ties and depreciated from the time the premises have been put into use.

PensionsPension costs are accounted for in compliance with Norwegian accounting standards. Gross earned pension liabilities, less pen-sion funds, are booked as a liability at the start of the year based on actuarial calculations. Changes in the underlying economic and actuarial assumptions are systematically distributed over the remain-ing service period. Linstow AS also has unfunded pension liabilities, and their present value is entered on the balance sheet in the same way. The pension cost for the year is included in wages, salaries, etc. in the income statement, and comprises the current service cost, plus interest on pension liabilities less the return on pension funds. For unfunded pension liabilities under settlement, the pension cost for the year is mainly interest on the accrued liabilities. Estimate discrepancies are accrued. When non-amortised estimate variances exceed 10 % of the higher of obligations including employer’s national insurance contributions and pension fund assets, the excess amount is amortised over the average remaining earning period.

Deferred taxDeferred tax is calculated on the basis of the temporary differences that exist at the end of the financial year between accounting and taxable values. Temporary differences which reverse or may reverse in the same period are offset. Deferred tax is generally recognised at nominal value using the enacted tax rate on the balance sheet date. Deferred tax on value added arising from acquisitions is valued at the present value, due to the long reversal time. Deferred tax liabili-ties and assets abroad are not offset against deferred tax benefits in Norway. In accordance with the exemption model, tax on temporary differences in share values is not recorded. Deferred tax assets/li-abilities are classified respectively as fixed assets and provision for liabilities. Change in deferred tax for the year is entered as a tax expense in the income statement.

OTHER

Financial market riskThe Group’s market risk can be related to interest rate risk, currency risk and other risk. Reference is made to the Board of Directors’ an-nual report for a more detailed description.

Interest rate riskPlease refer to note 10, where the repayment schedule for long-term liabilities is described. Below is an overview of the principal amounts owed by the Group and the time of interest rate adjustments. Aver-age rates presented in the table are equal to the sum of margin and reference rates (3m NIBOR etc.) as of 31 December 2014 for each individual loan.

Year Subtotal Average

interest ratePercentage of portfolio

Accumulated percentage

1 year 1 355 596 2,5 % 34 % 34 %2 years 896 717 2,2 % 22 % 56 %3 years 870 917 2,3 % 22 % 77 %4 years 784 003 2,0 % 19 % 97 %5 years 13 644 1,9 % 0 % 97 %6 years + 117 475 1,3 % 3 % 100 %Total 4 038 352 2,26 % 100 %


In order to reduce interest rate risk, the Group has entered into rate swap agreements and agreements on rate ceilings. Presented below is the maturity structure for rate swap agreements in the Group.

Year Amount

(NOK 000)

Fixed interest rate

(average)Percentage

of totalAccumulated

percentage1 year 433 752 1,1 % 31 % 31 %2 years 31 %3 years 30 000 2,5 % 2 % 33 %4 years 370 497 1,0 % 27 % 60 %5 years 260 548 1,5 % 19 % 79 %6 years + 290 000 4,2 % 21 % 100 %Total 1 384 796 1,8 % 100 %

Currency riskThe Group has made material investments outside Norway, mainly in Estonia, Latvia and Lithuania, but also in Portugal, Slovakia and Russia. All these investments are long-term investments. Due to the undefined timeframe of the investments and as the local currencies are pegged to the Euro, which is the currency used for prospective investments, there has been no significant currency hedging of these investments. Only a minor net cash flow as dividends or interest income is expected during the investment period and the companies’ exchange rate risk is therefore mainly associated with the exchange rate at a future date of disposal.

Exchange losses of NOK 24,686 million on Linstow AS’ internatio-nal investments were recognised equity in 2014.

Exchange rates used at 31 Dec. were:

2014 2013I USD = NOK 7.4332 6.0800 1 LTL = NOK 2.6172 2.4278 1 EUR = NOK 9.0365 8.3825 1 SEK = NOK 0.9597 0.9472 1 RUB = NOK 0.1284 0.1850

Large individual transactionsThe Group has a total of NOK 729,6 million in investments. The three most material investments, the purchase of Depotgata 22 and Tollbu-gata 32 and the expansion of the Ülemiste Shopping Centre in Tallinn, constitute the most substantial share of the investments. Project income is related to the sale of villas and a flat in Portugal.The most substantial part of the net profit or loss from group companies in the parent com-pany are dividends from wholly-owned subsidiaries.


NOTES

NOTE 1 PROFIT AND LOSS ON SALE OF FIXED ASSETS, IMPAIRMENT AND REVERSALS

Profit from sale of fixed assets Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Profit from sale of properties 226 429 226 429Profit from sale of fixtures, fittings and vehicles 130 480 181Total 355 429 706 610

Loss on sale of fixed assets Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Loss on disposal of fixtures, fittings and vehicles -2 -22Total 0 0 -2 -22

Impairment of fixed assets and reversals Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Impairment projects -68 600Impairment/reversal of shares 30 073 116 370Impairment/reversal of fixed assets 2 343 -5 032 248 -21 116Impairment/reversal of properties 1 701 -428 -6 517 85 444Total 34 117 110 911 -6 269 -4 273

Impairment/reversal are shown as net in the Linstow Group above. Please refer to segment information for further information.

NOTE 2 HOTEL REVENUES AND OTHER OPERATING INCOME – OTHER ADMINISTRATIVE EXPENSES

Hotel revenues and other operating income This includes income from the Group’s international hotel operations, with the main items being restaurant and room revenues. The Group also receives fees for the management of properties in Portugal and Norway. See also the distribution of group income by segment.

Other administrative expensesInternational operations also include costs related to running of the Group’s hotels. Costs such as maintenance, marketing and cleaning are therefore included.

NOTES

NOTE 3 WAGES, SALARIES, EMPLOYER’S NATIONAL INSURANCE CONTRIBUTIONS AND PENSION COSTS

Wages, salaries and employer’s national insurance contributions Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Wages/salaries and pensions -51 454 -50 725 -190 017 -175 699Public duties payable -7 176 -7 096 -39 641 -41 001Other 1 431 -321Total -58 631 -57 822 -228 226 -217 021

Pension expense Linstow AS Linstow Group

Net pension expense 2 014 2 013 2 014 2 013Current service cost -5 823 -4 172 -6 222 -4 406Cost of interest on pension liabilities -3 174 -2 347 -3 174 -2 347Return on plan assets 1 762 1 394 1 762 1 394Accrued employer national insurance contributions -1 020 -723 -1 020 -723Administration -525 -464 -525 -464Recognised changes in plan -77 -2 414 -77 -2 414Recognised actuarial gains/losses -1 495 323 -1 495 323Net pension expense -10 353 -8 403 -10 752 -8 637

Pension liabilities – funded pension plansCalculated pension liabilities 74 157 62 688 74 157 62 688Plan assets -40 733 -38 933 -40 733 -38 933Employer’s national insurance contributions 4 713 3 349 4 713 3 349Unrecognised changes in plan -24 894 -15 149 -24 894 -15 149Net pension liabilities 13 243 11 954 13 243 11 954

Pension liabilities – unfunded pension plansCalculated pension liabilities 22 581 17 389 24 294 19 084Employer’s national insurance contributions 3 161 2 428 3 161 2 428Unrecognised actuarial gains/losses -3 719 -1 778 -3 719 -1 778Net pension liabilities 22 023 18 039 23 736 19 734

Composition of pension fund assetsShares 12,3 % 11 % 12,3 % 11,4 %Bonds 53,4 % 52 % 53,4 % 51,7 %Money market 25,1 % 26 % 25,1 % 25,5 %Property 9,2 % 12 % 9,2 % 11,5 %

Figures for 2014 are as of 30 September 2014.

Financial assumptions: Linstow AS Linstow Group

2014 2013 2014 2013Discount rate 2,30 % 4,00 % 2,30 % 4,00 %Annual wage increases 2,75 % 3,75 % 2,75 % 3,75 %Annual pension increases 1,73 % 2,75 % 1,73 % 2,75 %Annual increase in NI base rate 2,50 % 3,50 % 2,50 % 3,50 %Expected return on plan assets 3,20 % 4,40 % 3,20 % 4,40 %Mortality table K2013 K2013 K2013 K2013

The Company’s occupational pension scheme fulfils legal requirements. Linstow AS has a defined benefit pension scheme for all employees in Norway in the form of a collective pension insurance for pay up to 12 G (G = the National Insurance scheme’s basic amount). Full pension requires an earning period of 30 years and gives the right to a retirement pension of the difference between 70 % of pay and calculated National Insurance benefits. This scheme fulfils the requirements of the Occupational Pensions Act. The Company’s defined-benefit pension scheme was closed as of 1 January 2012. Those employed after this date have a contributory pension scheme. In 2014, five persons are connected with this scheme.

Linstow AS also has obligations relating to pay over 12 G and agreements regarding early retirement for certain employees. Obligations relating to pay over 12 G and early retirement pensions are financed from operations in the Company. Effective 1 May 2014, pensions being paid out are adjusted in line with pay growth and a fixed factor deduction of 0,75 % has therefore been made. Subsidiaries outside Norway only have pension schemes for their employees to a limited extent. Such schemes are mainly defined contribution plans.

Number of employeesThe number of employees in the Group at year-end 2014 was 1 189 (about 1 005 FTEs), compared with 1 155 (about 1 008 FTEs) the previous year, excluding associated companies. The parent company had 27 full-time equivalents in 2014, compared with 24 the previous year.

Remuneration of key management personnel – auditor’s fees

Auditors fees Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Auditor's fees (incl. VAT) -623 -500 -2 749 -2 650Attestations and other fees - audit (incl. VAT) -162 -65 -637 -553Total -786 -565 -3 387 -3 204

Remuneration of key management personnel and/or the Board of Directors Linstow AS

(NOK 000) 2014 2013Board fees -150 -150Salary CEO -3 716 -3 681Bonus scheme paid to CEO -2 269 -1 563Bonus scheme accrued to CEO -257 -3 176Pension CEO -1 107 -673Total -7 499 -9 242

There are no agreements for the Board or CEO with regard to special compensation on termination of employment.

There is a bonus scheme for the Company’s CEO and other key management personnel based on the underlying value development of Linstow AS. Payment of the accrued bonus scheme is dependent on future value development for the Group. Payment is based on value-adjusted equity at 31.12.2009 and on future growth in this exceeding the return on 5-year government bonds. As of 31.12.2012 and for subsequent years payment is made of 20 % of the increase in value and corresponding new shares are also awarded. It is a condition for payment and award of shares that the employee remains in the position. In total, NOK 8 254 000 net including employer’s national insurance contributions was expensed for the scheme in 2014, compared with NOK 14 754 000 the previous year. The bonus scheme has been valued in accordance with NRS 15A.

NOTES

NOTE 4 RESULTS AND INVESTMENTS IN ASSOCIATES - INVESTMENTS IN GROUP COMPANIES Profit/loss from associated companies is presented below under shares in associated companies. The parent company’s profit represents group contributions received and dividends from subsidiaries.

Shares in subsidiaries

CompanyReg’d office

Linstow AS number of shares

Linstow AS shares/votes %

Linstow AS Carrying amount

(NOK 000)Viesnica Latvija SIA Riga 12 800 000 100,0 % 333 461Linstow Center Development AS Oslo 100 100,0 % 285 320Romerike Helsebygg AS Oslo 157 874 100,0 % 269 072Olümpia Holding Nederland B.V. Amsterdam 40 100 100,0 % 248 522Tollbugaten 32 AS Oslo 1 000 100,0 % 158 166Elizabetes Centrs SIA Riga 139 213 100,0 % 133 403Grønland Torg Parkering AS Oslo 30 751 100,0 % 130 517Galleriet parking AS Oslo 25 658 100,0 % 124 744Depotgata 22 AS Oslo 100 000 100,0 % 124 113Onistus Ltd (*) Nicosia 99 999 100,0 % 122 186Central Holding Nederland B.V. Amsterdam 40 100 100,0 % 103 515Viesbutis "Lietuva" UAB Vilnius 845 612 100,0 % 96 848Saliena Retail SIA Riga 1 223 823 100,0 % 59 895Linstow Fastigheter AB Malmön 3 000 100,0 % 50 641Attistibas Agentura SIA Riga 11 573 586 100,0 % 41 425Ülemiste Holding Nederland B.V. Amsterdam 40 100 100,0 % 38 935Wilhreal SIA Riga 661 172 100,0 % 34 373Hotel Neris UAB Kaunas 1 000 000 100,0 % 31 600Brubakkveien 16 AS Oslo 10 000 100,0 % 28 548Baltijos Parkai UAB Vilnius 1 600 000 100,0 % 25 518Saliena Retail II SIA Riga 308 998 100,0 % 15 691Linstow Airport Bratislava s.r.o. Bratislava 1 100,0 % 13 738A/S Storetvedt Utbyggingsselskap Oslo 24 990 100,0 % 12 544Dunas Holding AS Oslo 300 000 100,0 % 12 520Viesnica Ridzene SIA Riga 768 100,0 % 11 978Riga Retail Park Holdings SIA Riga 1 799 701 100,0 % 11 908Linstow Center Management SIA Riga 40 850 100,0 % 9 783Linstow Eiendom AS Oslo 1 000 100,0 % 3 306Prastico Ltd Nicosia 1 100,0 % 2 598Linstow Drift AS Oslo 500 100,0 % 1 757Linstow Eiendomsmegling AS Oslo 500 100,0 % 500Reval Hotel Management OÜ Tallinn 1 100,0 % 19Linstow Baltic SIA Riga 4 986 200 100,0 %Total 2 537 141

(*) Via this company, Linstow AS owns 100 % of the Russian company LLC Liteiny 5, which is the owner of Sonya Hotel in St. Petersburg.

Shares and interests in associated companies


Linstow Group number of shares

Linstow Group shares/votes %

Linstow AS Carrying amount

(NOK 000)Baltic Park AS Oslo 1 375 50,0 % 9 500Bergen Lufthavn Utvikling AS Oslo 1 200 50,0 % 9 401Oslo S. Utvikling AS Oslo 3 000 33,3 % 295 333Total 314 234

NOTES

Company

Linstow Group Carrying amount

2013 (NOK 000)

Linstow Group Profit/Loss (NOK 000)

Linstow Group Acquisitions and other

(NOK 000)


2014 (NOK 000)Baltic Park AS 20 409 6 700 -8 995 18 114Bergen Lufthavn Utvikling AS (*) -13 157AS “Infrastruktūras FINCO” 177 177Oslo S. Utvikling AS 568 815 4 666 -50 000 523 481Total 589 223 -1 790 -58 818 541 771

(*) The Group’s negative book equity is included as a provision in the consolidated balance sheet.

Other shares


Linstow AS number of shares

Linstow AS shares/votes %


(NOK 000)Koksa Eiendom AS Oslo 16 146 670 12,5 % 131 077Norefjell Golfbane AS Krødsherad 61 6,1 %Total Linstow AS 131 077

Other 4Total Linstow Group 131 081

NOTE 5 INTANGIBLE ASSETS AND FIXED ASSETS

Intangible assets Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Cost, 1 Jan 43 43Disposals -43Total 0 0 0 43

Fixed assets – Linstow AS

(NOK 000)

Machinery, fixtures and

vehicles Properties LandProjects in

progress TotalCost, 1 Jan 5 548 14 387 2 960 22 895Additions 3 577 66 3 643Disposals -755 -755Cost, 31 Dec 8 370 0 14 387 3 026 25 783Accumulated amortisation and impairment, 1 Jan -3 787 -1 701 -5 488Depreciation for the year -1 057 -1 057Impairment losses for the year 1 701 1 701Disposal of depreciation and impairment 705 705Accumulated depreciation and impairment, 31 Dec -4 140 0 -4 140

Carrying amount, 31 Dec 4 230 0 14 387 3 026 21 643

Interest on capital expenditure in 2014 recognised in balance sheetDepreciation rates 20-30 % 0 % 0 %

NOTES

Fixed assets – Linstow Group

(NOK 000)

Machinery, fixtures and

vehicles Properties LandProjects in

progress TotalCost, 1 Jan 363 276 4 055 589 1 022 584 109 685 5 551 134Transferred from/to projects in progress 11 953 495 665 -13 602 -508 475 -14 458Exchange differences 23 455 200 494 30 029 997 254 975Additions 28 441 113 067 87 241 494 669 723 418Disposals -24 743 522 730 12 579 -1 872 508 695Cost, 31 Dec 402 383 5 387 545 1 138 831 95 004 7 023 763Accumulated Depreciation and impairment, 1 Jan -294 989 -1 475 236 -422 921 -27 852 -2 220 998Depreciation for the year -20 674 -111 401 -132 075Impairment/reversal for the year -20 668 8 782 -2 862 -14 747Exchange differences -20 822 -78 401 -99 223Disposal of depreciation and impairment 24 217 -523 732 -12 579 -136 -512 230Accumulated depreciation and impairment, 31 Dec -312 267 -2 209 438 -426 718 -30 850 -2 979 273Carrying amount, 31 Dec 90 116 3 178 107 712 113 64 154 4 044 491

Interest on capital expenditure in 2014 recognised in balance sheet 2 253Depreciation rates 20-30 % 1-8 %

Projects for sale Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Cost, 1 Jan 113 477 127 722Impairment 8 230 -31 755Transferred from fixed assets 14 458 Exchange differences 9 479 17 461Additions 6 205 3 772Disposals -38 499 -3 724Carrying amount, 31 Dec 0 0 113 350 113 477

NOTE 6 FINANCIAL ITEMS

Finance income Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Finance income from group companies 22 754 18 134 7 988 Finance income from group account arrangement 3 330 6 812 3 926 7 449 Finance income from associates 2 452 1 918 2 452 1 918 Currency gains 46 625 37 490 27 336 32 171 Adjustment to value of financial instruments 7 212 20 955 Other finance income 43 229 116 651 44 466 117 728 Total 118 389 181 005 93 380 180 222

In other finance income, the dividend from Koksa Eiendom AS amounted of NOK 43,2 million in 2014 and NOK 107,3 million in 2013.

NOTES

Finance expense Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Finance costs - Group companies -44 118 -63 942Currency losses -114 923 -204 331 -58 119 -47 440Adjustment to value of financial instruments -5 224 -41 289 -1 444Other finance expense -20 609 -13 682 -115 988 -114 697Total -184 875 -281 955 -215 396 -163 581

NOTE 7 TAX EXPENSE

Tax expense for the year consists of: Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Income tax payable -14 352 -14 014Change in deferred tax 37 851 68 203 33 429 -16 455Total tax expense 37 851 68 203 19 077 -30 469

Tax impact of temporary differences: Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Current assets -7 178 -3 991 -5 422Tangible fixed assets -1 904 -2 780 110 250 -18 732Profit and loss account 20 439 25 549 23 807 29 759Pensions -9 522 -8 098 -9 522 -8 098Other temporary items -8 081 61 942 69 532Tax loss carry-forwards -106 622 -59 639 -170 716Tax loss carry-forwards with limitation of interest rate deductions -121Differences not offset 48 523 128 029Deferred tax/tax benefit 932 -99 129 171 250 24 353

Of which Norwegian business, classified as a deferred tax benefit 932 -99 129 2 447 -124 121Of which foreign business, classified as liabilities 168 803 148 474

Change in deferred taxChange in deferred tax -100 061 68 203 -146 898 12 005Acquired through acquisitions 6 886Group contributions, currency gains/losses and other 137 911 173 440 -28 460Change in deferred tax in income statement 37 851 68 203 33 429 -16 455

NOTES

Explanation of the Group’s tax expense Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Profit before tax 365 522 515 290 55 816 295 00927 % tax (28 % in 2013) -98 691 -144 281 -15 070 -82 602Tax effect of: Permanent differences 136 542 216 156 13 066 20 669Difference in tax and calculation rates -3 671 21 081 31 464

Calculated tax expense 37 851 68 203 19 077 -30 469

Effective tax rate for the Group -10 % -13 % -34 % 10 %

NOTE 8 CHANGES IN EQUITY

Changes in equity – Linstow AS Paid-in capital

(NOK 000) Share capital

Other paid-in capital

Retained equity

Total equity

Balance, 1 Jan 817 808 405 333 560 493 1 783 635Accrued dividend -710 000 -710 000Received group contributions after tax 518 300 518 300Profit for the year 403 372 403 372Balance sheet as at 31 Dec 817 808 405 333 772 166 1 995 307

Changes in equity – Linstow Group(NOK 000) Share

capitalOther paid-in

capitalRetained

equityMinority interests

Total equity

Balance, 1 Jan 817 808 405 333 61 471 1 241 1 285 853Acquired through acquisitions 289 289Accrued dividend -710 000 -710 000Received group contributions after tax 518 300 518 300Exchange differences recognised directly in equity (*) -24 757 71 -24 686Profit for the year 75 057 -164 74 893Balance sheet as at 31 Dec 817 808 405 333 -79 929 1 438 1 144 650

(*) Accumulated exchange differences included in retained earnings -6 295 71 -6 224

NOTE 9 OTHER RECEIVABLES

Current receivables Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Accounts receivable 782 36 232 28 673Inventories 7 492 7 839Accruals and other receivables 11 059 1 012 36 036 23 058Total 11 842 1 012 79 761 59 569

Accounts receivable are measured at their nominal value, less provisions for expected losses.

NOTES

Long-term receivables Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Advance payments, etc. the Baltics 30 227 32 211Land purchase optionTotal 30 227 32 211

NOTE 10 MORTGAGES

Carrying amounts of assets provided as collateral for mortgage liabilities are: Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Mortgage liabilities 706 384 322 889 3 857 622 3 332 017

Carrying amounts of assets pledged as collateral for liabilities:Shares (*) 758 436 345 429Real property and projects in progress 3 797 871 3 020 022Fixtures and fittings 70 214 58 426Other 76 241 47 043Total 758 436 345 429 3 944 326 3 125 490

(*) Linstow AS has two loans secured by property owned by subsidiaries. The shares have not been pledged.

Guarantees for parent companiesLinstow AS is wholly owned by Møllegaarden AS. Møllegaarden AS is wholly owned by AS Investa, and the latter is wholly owned by AWilhelmsen AS. Møllegaarden AS has provided 1st priority collateral on all its shares in Linstow AS as security for a syndicated loan raised by AWilhelmsen AS. The guarantee has an upper limit of NOK 3,19 billion.

Credit facilitiesLinstow’s total credit facilities amounted to NOK 100 million as of 31 December 2014. The Company had NOK 100 million in undrawn credit facilities as of 31 December 2014.

Repayment schedule for secured debt and credit facilities

Long-term liabilities due within: Linstow AS Linstow Group

2014 2013 2014 20131 year 179 092 31 434 300 070 139 0922 years 40 352 312 411 954 305 418 2083 years 44 912 10 478 213 812 866 4934 years 253 881 10 478 986 931 407 5875 years 268 777 136 216 1 098 000 632 9546 years + 100 100 485 233 1 045 812Total 887 114 501 017 4 038 352 3 510 145

Other liabilities / Other long-term liabilities Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Plan liabilities (see note 3) 35 266 29 993 36 979 31 688Other liabilities and provisions 22 438 21 310 86 266 31 522Total 57 704 51 303 123 245 63 210

Other liabilities were primarily losses on swap contracts.

NOTES

NOTE 11 CURRENT INTEREST-FREE LIABILITIES

Linstow AS Linstow Group(NOK 000) 2014 2013 2014 2013Trade payables 1 286 230 57 959 50 662Accrued interest 1 195 806 10 781 11 404Income tax payable 23 364 29 254 7 629Dividends and Group contributions (*) 710 000 300 000 710 000 300 000Advances from tenants and customers 68 481 53 687Public duties payable, holiday pay etc. 6 017 5 299 15 056 20 118Other accruals 28 913 27 730 81 850 84 748Total 770 776 334 064 973 381 528 247

(*) Received group contributions and accrued dividend are presented as gross figures in the financial statements.

NOTE 12 BANK DEPOSITS, GROUP ACCOUNT Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Cash and bank deposits 3 086 2 910 207 777 214 078Group account 188 861 863 594 236 868 904 197Total 191 947 866 504 444 645 1 118 275

Linstow AS and some of its subsidiaries form a Group banking system with the AWilhelmsen Group. The balance in the Group banking system thus represents a receivable from the parent company of the Group. Only an insignificant amount of bank deposits in the Group are related to restricted employee taxes withheld.

NOTE 13 GUARANTEE LIABILITIES AND OTHER COMMITMENTS Linstow AS Linstow Group

(NOK 000) 2014 2013 2014 2013Guarantee commitments 308 596 200 135 225 913 200 135

The entire guarantee commitments for the parent company relate to foreign subsidiaries. In addition to the above, Linstow AS has provided the following guarantees:

Linstow AS has guaranteed for the payment of interest and amortisation of mortgage loans taken by the subsidiary UAB Baltijos Parkai. Total guarantee as of 31 December 2013 was EUR 0,6 million. As a return service for the guarantee, certain financial covenants in the loan agreement have been waived for one year.

Linstow AS has given guarantees that the companies UAB Baltijos Parkai and Linstow Baltic SIA will be provided with sufficient means to remain going concerns for the period of 12 months.

The shares in Linstow Center Development AS have been mortgaged in favour of a syndicate of lenders who have given loans to subsidiaries of Linstow Center Development AS.

.

NOTES

NOTE 14 SHAREHOLDER INFORMATION

Shareholders at 31 December 2014 Number of share Nominal value Shareholding %

Møllegaarden AS 1 264 000 647 100,0 %

All the company’s shares carry one vote.

Weighted average number of shares during the period2014 2013

Weighted average number of shares during the period 1 264 000 1 264 000Number of shares at end of year 1 264 000 1 264 000

Related partiesLinstow AS manages several properties and companies owned by the AWilhelmsen Group and its shareholders. Linstow AS also contributes to the management of wholly and partly owned companies in Norway and abroad. Loans and interest have been given to and received from wholly and partly owned companies. Fees are paid at market prices.

Linstow AS’ transactions with related parties can be grouped as follows:

2014 (NOK 000) ShareholdersGroup

Companies Associated Companies Total

Fee income 9 581 3 842 3 820 17 243 Administrative costs -1 159 -1 159 Finance income 7 988 14 766 2 452 25 205 Finance income Group banking system 3 330 3 330 Finance expense -44 118 -44 118 Intragroup contributions 518 300 19 135 537 435 Dividends -710 000 373 635 60 000 -276 365 Total -174 131 369 431 66 272 261 571

Lending 1 017 988 376 924 47 562 1 442 475 Borrowing 710 000 938 526 1 648 526 Group account 188 861 188 861

2013 (NOK 000) ShareholdersGroup

Companies Associated Companies Total

Fee income 6 813 3 884 3 438 14 135 Administrative costs -1 118 -1 118 Finance income 18 134 1 918 20 052 Finance income Group banking system 6 812 6 812 Finance expense -63 942 -63 942 Intragroup contributionsDividends -300 000 381 679 180 667 262 346 Total -293 187 345 448 186 023 238 285

Lending 443 336 37 610 480 945 Borrowing 1 220 216 1 220 216 Group account 863 594 863 594

NOTES

PAGE 26

SEGMENT INFORMATION LINSTOW AS GROUP

Income statement 1 Jan – 31 Dec Hotels Baltic/Eastern

Europe Shopping centres,

Baltic Offices (Baltic),

not allocated

Portugal and Sweden

Offices etc, Norway

Total(NOK 000) 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013OPERATING INCOMERental income, properties 158 947 153 557 4 804 4 411 1 564 1 483 75 668 67 642 240 983 227 094 Profit from sale of fixed assets 178 108 7 74 166 -1 355 429 706 610 Project income 40 673 40 673 Hotel revenues and other operating income 545 503 512 422 34 010 26 050 -3 361 -2 547 51 665 48 541 16 644 13 752 644 462 598 218 Total operating income 545 681 512 531 192 965 179 681 1 443 1 864 94 068 50 023 92 668 81 823 926 825 825 922

OPERATING EXPENSESWages, salaries, employer's contributions and pension costs -120 080 -111 769 -23 771 -23 573 -4 738 -4 394 -20 545 -18 975 -59 093 -58 311 -228 226 -217 021 Other administrative expenses -191 009 -183 393 -19 681 -18 697 7 629 6 540 -37 994 -31 293 -13 591 -14 073 -254 645 -240 917 Cost of materials -45 337 -44 255 -4 130 -3 988 -49 468 -48 243 Operating costs for properties and bad debts -266 -9 -20 179 -10 523 -1 737 -1 538 -4 427 -2 162 -13 807 -13 642 -40 417 -27 874 Project expenses -36 100 -3 729 -36 100 -3 729 Loss on sale of fixed assets -16 -2 - -6 -2 -22 Impairment of fixed assets 7 751 65 705 -24 199 -11 332 -14 424 8 230 -43 793 1 949 -428 -6 268 -4 273 Depreciation -76 361 -74 616 -29 746 -26 718 -896 -845 -2 122 -3 127 -22 951 -16 996 -132 075 -122 303 Total operating expenses -425 302 -348 353 -117 577 -90 843 258 -14 661 -97 088 -107 074 -107 492 -103 451 -747 202 -664 382

Operating profit 120 379 164 178 75 388 88 838 1 701 -12 797 -3 020 -57 050 -14 825 -21 628 179 623 161 540

FINANCIAL ITEMSProfit/loss from group companies and associates 6 700 7 723 -8 491 109 104 -1 790 116 827 Finance income 243 250 706 732 80 75 83 9 57 718 126 029 58 831 127 095 Finance expense -34 296 -41 156 -38 334 -32 405 -1 700 -2 112 601 -1 247 -42 258 -37 776 -115 988 -114 696 Net financial instruments 4 420 12 533 -8 363 1 975 -30 134 5 004 -34 077 19 511 Net currency gains/losses -279 -417 -126 555 -1 -15 -4 -30 376 -15 389 -30 783 -15 269 Net financial items -29 912 -28 790 -46 117 -29 144 5 079 5 671 683 -1 242 -53 540 186 972 -123 807 133 468

Profit before tax 90 468 135 388 29 271 59 694 6 779 -7 126 -2 337 -58 292 -68 365 165 344 55 816 295 008

Investments, exclusive of associates 51 126 31 793 286 451 36 646 67 94 6 999 3 888 384 691 7 315 729 333 79 736 Sale of fixed assets and projects, exclusive of associates 1 198 160 230 1 707 172 3 147 428 466 2 028 5 480

NOTES

PAGE 28

SEGMENT INFORMATION LINSTOW AS GROUP

Balance sheet at 31 December Hotels Baltic/Eastern

Europe Shopping centres,

Baltic Offices (Baltic),

not allocated

Portugal and Sweden

Offices etc, Norway

Total(NOK 000) 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013ASSETSIntangible assets 43 124 121 124 164 Real property 1 509 655 1 494 233 1 243 052 901 193 23 674 22 799 18 263 31 190 1 095 578 730 602 3 890 222 3 180 017 Projects in progress 3 255 1 179 53 831 69 646 958 665 6 111 10 343 64 155 81 833 Machinery, fixtures/fittings and vehicles 71 320 51 685 11 029 10 627 103 94 2 890 4 044 4 774 1 838 90 116 68 287 Other shares 164 4 3 131 077 131 077 131 081 131 245 Receivables from group companies and associates 47 562 37 610 47 562 37 610 Interests in associates 177 18 114 20 409 523 481 568 815 541 772 589 223 Other long-term receivables 2 653 1 998 23 055 26 022 4 518 4 191 30 227 32 211 Total fixed assets 1 586 883 1 549 139 1 331 144 1 007 651 46 409 47 493 22 114 35 902 1 808 583 1 604 405 4 795 134 4 244 591

Current receivables 27 813 23 428 28 119 34 525 401 868 12 306 8 712 1 029 110 -7 964 1 097 749 59 569 Projects for sale 28 067 26 036 85 283 87 441 113 350 113 477 Cash, bank deposits, group account 96 051 96 521 87 814 101 912 8 163 5 857 12 558 7 070 240 060 906 932 444 645 1 118 293 Total current assets 123 864 119 950 115 933 136 437 36 631 32 761 110 147 103 223 1 269 169 898 968 1 655 744 1 291 339

Total assets 1 710 747 1 669 089 1 447 077 1 144 088 83 040 80 254 132 262 139 125 3 077 752 2 503 373 6 450 878 5 535 929

EQUITY AND LIABILITIESShare capital (1 264 600 shares – par value NOK 647) 817 808 817 808 817 808 817 808 Other equity 354 523 201 208 -145 624 -153 018 -57 012 -55 171 106 574 118 588 66 943 355 197 325 404 466 805 Minority interests 1 438 1 241 1 438 1 241

Total equity 355 961 201 208 -145 624 -151 777 -57 012 -55 171 106 574 118 588 884 751 1 173 005 1 144 650 1 285 854

Deferred tax 81 467 63 601 79 574 77 011 7 762 7 862 2 446 171 250 148 474 Debt instruments and credit facilities 180 730 178 128 180 730 178 128 Secured debt 1 200 954 1 331 471 1 401 790 1 123 244 131 119 126 538 1 123 759 750 764 3 857 622 3 332 017 Other non-current liabilities 4 080 12 294 2 906 43 40 106 826 60 264 123 243 63 211 Total long-term liabilities 1 286 502 1 395 073 1 493 658 1 203 161 138 925 134 440 1 413 761 989 156 4 332 846 3 721 830

Current interest-free liabilities 68 283 72 808 99 042 92 703 1 127 985 25 688 20 538 779 241 341 213 973 381 528 247 Total current liabilities 68 283 72 808 99 042 92 703 1 127 985 25 688 20 538 779 241 341 213 973 381 528 247

- - - - - Total equity and liabilities 1 710 746 1 669 089 1 447 077 1 144 088 83 040 80 254 132 262 139 126 3 077 753 2 503 374 6 450 876 5 535 930

Segment information is subject to a higher degree of uncertainty than non-segmented data.

NOTES

AUDITOR’S REPORT 2014

sign

atur

.no

• 150

036

Linstow AS, Tjuvholmen allé 3, PB. 1594 Vika, N-0118 Oslo, NorwayT: +47 23 11 96 00 F: +47 23 11 96 10 W: www.linstow.no

linstow: annual report 2014

Documents