Annual report 2023

Compliance

Selvaag Bolig ASA is a Norwegian public limited liability company listed on the Oslo Stock Exchange. The company is subject to section 3, sub-section 3b of the Norwegian Accounting Act, which requires it to provide an annual statement of its principles and practice for corporate governance. This rule specifies the minimum information which the presentation must provide.

The Norwegian Corporate Governance Board (NCGB) has established the Norwegian code of practice for corporate governance (the code). Listed companies are required by the Oslo Stock Exchange to provide an annual overall presentation of their principles for corporate governance in line with the prevailing code. The current obligations for listed companies are available at www.euronext.com, and the NCGB code can be found at www.nues.no.

Selvaag Bolig observes the applicable code, published on 17 October 2018, and updated 14 October 2021, in accordance with the “comply or explain” principle. This means that the individual points in the code are observed, but possible variances are explained. The company provides an annual overall presentation of its principles for corporate governance in its annual report, and this information is available at www.selvaagboligasa.no.

The business purpose of Selvaag Bolig ASA is to “acquire and develop residential housing projects for the purpose of sale, purchase and sale of property, as well as other affiliated business, hereunder commercial property. The company may participate in other companies at home and abroad in relation to residential housing development.” This appears in article 3 of the company’s articles of association, which are available at www.selvaagboligasa.no. Selvaag Bolig’s goals and principal strategies are described in this annual report and at www.selvaagboligasa.no. The board sets clear goals for the business with the aim of creating value for the shareholders and the rest of society. Through annual strategy processes, the board considers whether the goals and guidelines derived from the strategies are unambiguous, adequate, well operationalised and communicated to employees, customers and other stakeholders.

Selvaag Bolig has formulated guidelines for corporate social responsibility (CSR) and other policy documents in accordance with the company’s values base. CSR is described in more detail in the ESG chapter of this annual report. Selvaag’s core values are “care and creativity”, and these are well entrenched throughout the business.

The guidelines contain general principles for business practice and personal behaviour, and are intended to serve as a starting point for the attitudes and basic views which will characterise the corporate culture and day-to-day work in Selvaag Bolig.

Selvaag Bolig had an equity of NOK 2 307 million at 31 December 2023, including non-controlling interests. The board regards the equity as acceptable, and financing of the company is tailored to its business purpose, strategy and risk profile.

The board has a clearly communicated dividend policy tailored to the company’s goals, strategy and risk profile. Selvaag Bolig’s ambition is to pay high and stable dividends to its owners. The goal is that the dividend should be a minimum of 60 per cent of net profit and paid twice a year. However, the size of the dividend must be balanced against the company’s liquidity forecasts and capital adequacy.

NOK 1.00 per share was paid in August 2023 as dividend for the first half of the year and amounted to NOK 93.7 million. The board has proposed a dividend of NOK 1.00 per share for the second half of 2023, amounting to NOK 93.7 million. That will make the total dividend for 2023 NOK 2.00 per share, which corresponds to NOK 187.4 million. This corresponds to 76 per cent of net profit.

The board has received a mandate from the general meeting which allows it to determine dividend payments continuously throughout the year, should the financial basis for these be present. Such a decision must formally be taken on the basis of the approved annual financial statements for 2023, and would in that event supplement the regular dividend approved by the general meeting. A mandate of this kind must be adopted by the general meeting and will apply until the next AGM but no later than 30 June in the following year.

It is appropriate that the board has a mandate to purchase the company’s own shares, partly to implement the group’s share savings programme and remuneration arrangements for employees, and partly to use shares as a means of settlement in connection with the possible acquisition of enterprises. The board was mandated by the AGM of 26 April 2023 to acquire the company’s own shares up to a total nominal value of NOK 18 753 137, corresponding to 10 per cent of the share capital. This mandate can be used for a possible later reduction in the share capital with the consent of the general meeting, for remuneration of the directors, for incentive programmes or as settlement for the possible acquisition of businesses, and for the purchase of shares where this is financially advantageous. The mandate can be exercised several times, and remains valid until the AGM in 2024 and in any event no longer than to 30 June 2024. The board will propose to the AGM that it be extended by one year. Selvaag Bolig owned 125 276 of its own shares at 31 December 2023.

The company has a share savings programme for employees working more than half-time. This is because co-ownership by the workforce is expected to promote value creation through increased commitment and greater loyalty. The share savings programme shall encourage broad and long-term ownership and gives employees the opportunity to acquire a direct stake in the company’s value creation.

Employees can purchase shares for up to a value of NOK 200 000 per year. The price per share is the stock market price (volume-weighted average price for the final 10 days of stock exchange trading before the programme opens) less a discount of 20 per cent, conditional on a two-year lock-up period. For the same incentive and reason, the company also has a share purchase programme for its executive management. The ceiling for annual investment in the executive share purchase programme is the individual’s annual pay. The price per share is the stock market price (volume-weighted average price for the final 10 days of stock exchange trading before the programme opens), less a discount of 30 per cent as compensation is provided for the employee’s tax disadvantage, conditional on a three-year lock-up period.

The 2023 programme was conducted from 27 November to 1 December, and the trades were done 1 December. 36 employees took advantage of the offer, and 835 602 shares were purchased at NOK 27.88 per share before the discount. Since the share programmes will continue in 2024, the board will propose to the AGM that the mandate to purchase the company’s own shares, as described in the previous section, be extended by one year.

The same AGM on 26 April 2023 mandated the board to increase the company’s share capital by up to NOK 18 753 137. This mandate can be exercised several times, and remains valid until the AGM in 2024 and in any event no longer than to 30 June 2024. It replaces earlier mandates for similar purposes, and embraces capital increases in exchange for non-monetary considerations or the right to involve the company in special obligations. The mandate has not been utilised, and the board will propose to this year’s AGM that it be extended by one year.

Deviation from the code: The NCGB believes that grounds should be given for such mandates and that they should be restricted to defined purposes. However, the board believes that some flexibility is needed. As long as the mandates are clearly limited in time and scope, the ability to take such decisions should form part of the board’s administrative authority rather than requiring the holding of an extraordinary general meeting.

Selvaag Bolig has one class of share, and all shares have equal voting rights. Emphasis is placed on the work of the board and the executive management to treat all shareholders equally and to give them the same opportunities to exercise influence. The company’s articles of association impose no restrictions on voting rights.

The company’s transactions in its own shares are conducted via the stock exchange or in other ways at the stock market price. In the event of an increase in share capital, existing shareholders will have a pre-emptive right to subscribe unless special considerations justify waiving this right. Any such waivers will be justified and published in a stock exchange announcement in connection with the increase in share capital.

Selvaag Bolig is committed to transparency and caution in connection with investments on terms which could be perceived as an undesirably close transaction or relationship between the company and a large shareholder, a board member, a senior executive or related parties of these. This is outlined in the company’s ethical guidelines and instructions for the board.

Where transactions take place with related parties, they must be conducted at arm’s length and on market terms. In the event of not immaterial transactions between the company and related parties, the board will commission an independent valuation. Transactions with related parties are described in note 23 in the company's annual report, as well as in the quarterly reports.

The board has also established guidelines which require executive management to report to the board if they have a material interest, directly or indirectly, in a contract entered into by the company.

Selvaag AS is the principal shareholder in Selvaag Bolig ASA with 53.5 per cent of the shares as at 31 December 2023.

No restrictions are placed by the articles of association on the ability to own, sell or vote for shares in Selvaag.

Shareholders exercise the highest authority in Selvaag Bolig ASA through the general meeting. The board makes provision to ensure that the general meeting is an effective forum for shareholders. The company facilitates the appointing of proxies and for voting outside the physical meeting.

The AGM is scheduled to take place from 10.00 on 25 April 2024 in the company’s premises at Silurveien 2 in Oslo.

Before the meeting, shareholders have good opportunities to contact the company, either to clarify issues or to obtain help in bringing issues to the general meeting. Detailed supporting documentation is posted to the company’s website 21 days before the general meeting at the latest. See article 9 in the articles of association. Shareholders who have not asked to receive the supporting documentation for the general meeting electronically will have this sent to them by post, as specified in the company’s articles of association. The supporting documentation must contain all the details required for the shareholders to form a view of every item on the agenda.

All shareholders registered in the Norwegian Central Securities Depository (VPS) will receive the notice, and have the right to submit motions and to vote directly or by proxy. A financial calendar, which includes the date of the AGM, is available on the company’s website.

Registration must be made in writing, by post, VPS account or e-mail. The board wishes to facilitate attendance by the largest possible number of shareholders at the general meeting. Shareholders who cannot attend in person are encouraged to appoint a proxy. Provision is made for the shareholder to specify separate voting instructions to their proxy for every item on the agenda. All information on the appointment of a proxy and the appropriate forms can be found on the company’s website.

The general meeting elects its own chair. The meeting is opened by the chair of the board, who also arranges for the election of a chair for the meeting. The AGM’s duties include adopting the annual financial statements and directors’ report and considering the board’s guidance and report about remuneration to leading employees.

Members of the nomination committee and its chair are elected by the general meeting. In addition, the general meeting considers such other matters as are assigned to it by legislation or the articles of association. The minutes of the general meeting are published via a stock exchange announcement and are made available on the company’s website at www.selvaagboligasa.no after the meeting.

The AGM in 2023 took place on 26 April, and 61.61 per cent of the total issued shares and votes were represented.

According to the NCGB code, provision should be made to vote for individual candidates for the board and the nomination committee.

Deviation from the code: The nomination committee believes that the board’s overall composition is important for the way it functions. For that reason, the company invites the general meeting to vote for the nomination committee’s collective recommendations for the election of the board and nomination committee.

According to the code, the board and chair of the nomination committee should attend.

Deviation from the code: The chairs of the board and the nomination committee, as well as the CEO, are always present to answer possible questions. The whole board will attend if this is considered necessary in view of items on the agenda.

Pursuant to the articles of association, the nomination committee will have three members elected for a one-year term. The majority of these members must be independent of the company’s board and executive management, and the committee must act in the interests of shareholders in general. The chair of the nomination committee is elected by the general meeting, which also determines the remuneration of the committee’s members. The nomination committee itself recommends members of the committee.

All members of the nomination committee are up for election in 2024. The nomination committee currently comprises:

• Gunnar Bøyum (chair)
• Helene Langlo Volle
• Leiv Askvig

The duties of the nomination committee are to propose candidates for election as directors and to recommend fees for the directors, members of board sub-committees and members of the nomination committee. The report of the board’s annual self-assessment is considered by the committee.

The committee will account for its work and present its recommendations, with justifications, to the general meeting. The recommendations must encompass relevant information about the candidates and an assessment of their independence from the company’s executive management and board. The committee is in contact with shareholders, directors and the chief executive during its work on proposing candidates for the board, and anchors its recommendations with the company’s largest shareholders. The committee’s recommendations, with justifications, are made available 21 days at the latest before the general meeting takes place. Recommendations from the committee must meet the requirements for the composition of the board which derive at any given time from applicable legislation and statutory regulations.

Article 7 of the articles of association specifies that the company will have a nomination committee. Guidelines have been established on this committee’s duties and composition, and on the eligibility of candidates for election. These guidelines were adopted by the general meeting held on 30 August 2011.

Pursuant to article 5 of the company’s articles of association, the board of Selvaag Bolig will comprise three to nine members. The chair and the shareholder-elected directors are elected by the general meeting, based on recommendations from the nomination committee.

The board currently comprises seven directors, of whom three are women, and is composed in such a way that it meets the company’s need for expertise, capacity and diversity. Weight is given to the whole board being in possession of a broad business and management background as well as in-depth understanding of the housing industry and property development. An overview of each director’s expertise, background and shareholding in the company is available on the company’s website at www.selvaagboligasa.no.

Employees of the business are represented on the board, and the number of these worker directors is specified in the applicable agreement on pay and conditions. At present, two directors – one male and one female – are elected by the employees. None of the shareholder-elected directors are employed by or have carried out work for Selvaag Bolig other than work related to their board positions.

Shareholder-elected directors are elected for one-year terms. Employee-elected directors are elected for two-year terms. All shareholder-elected directors are up for election in 2024. Directors’ fees are determined by the general meeting based on a recommendation from the nomination committee.

The composition of the board ensures that it can act independently of special interests, and it must also function effectively as a collective body to the benefit of the shareholders in general.

No shareholder-elected director is involved in the executive management. Chair Olav Hindahl Selvaag and director Tore Myrvold are a director and CEO of Selvaag AS, respectively. Selvaag AS is the company’s principal shareholder and, through subsidiaries and other investments, may have business relations with Selvaag Bolig.

The other shareholder-elected directors are independent of Selvaag Bolig’s executive management and significant business relations.

See the remuneration report for 2023 published on the company’s home page selvaagboligasa.no. on the shareholdings of directors in Selvaag Bolig at 31 December 2023. By virtue of their position, each director is subject to the regulations on primary insiders, with clear rules related to such issues as the duty to investigate and report in the event of trading in the company’s shares.

The board of directors bears the ultimate responsibility for management of the group and for supervising the chief executive and the group’s operations.

That makes the board responsible for ensuring an acceptable organisation of the business and determining strategies, plans and budgets. The board participates in important strategic discussions throughout the year and undertakes an annual audit of the company’s strategy. Furthermore, the board is responsible for establishing control systems and for ensuring that the group is operated in compliance with the established values base, the ethical guidelines and the expectations of the owners for socially responsible operation. The board has a duty to ensure that the financial statements and asset management are subject to satisfactory controls. Matters of significant strategic or financial importance are dealt with by the board. The board is responsible for appointing the chief executive, establishing the chief executive’s instructions, authorities and terms of employment, and determining the chief executive’s remuneration. In addition, the board will protect the interests of the shareholders while also having a responsibility for the company’s other interests.

Each director is duty-bound to consider at all times whether conditions exist which, viewed objectively, might weaken general confidence in their impartiality or which might lay the basis for conflicts of interest. The company also follows up the various offices and so forth held by the directors to provide an information base for the company’s management in avoiding unintentional conflicts of interest.

14 board meetings were held in 2023, nine as physical gatherings.

The board has adopted instructions which specify the rules and guidelines for its work and administrative procedures. These are reviewed annually or as required. The instructions for the board define the duties and obligations associated with its work, and its relationship with the chief executive. The chair is responsible for ensuring that the work of the board is conducted in a correct and efficient manner. The board works on the basis of an annual plan, with specified topics and issues for board meetings. The board evaluates its work and competence on an annual basis. This is done through a self-assessment which is summarised for the nomination committee. At least once a year, the board reviews the most important areas of risk as well as internal control in the company.

The CEO of Selvaag Bolig ASA is responsible for the executive management of the Selvaag Bolig group. The chief executive must also ensure that the financial statements comply with legislation and other relevant provisions, and that the group’s assets are managed in an acceptable manner. The CEO is appointed by the board of directors and reports to it. The CEO is duty-bound to keep the board continuously informed on the group’s financial position, operations and asset management. The board has also approved an authority structure for the company which clarifies the authority of the CEO and the executive management in terms of which issues must be considered by the board.

The board receives periodic reports with comments on the company’s financial status. Where interim reporting is concerned, the company observes the deadlines specified by the Oslo Stock Exchange.

The board has found it appropriate to establish sub-committees to serve as preparatory and advisory bodies for the board.

The audit committee is a preparatory and advisory body for the board. It is elected by and from among the directors, and must comprise at least two directors. At least one of these should have experience from the exercise of accounting or financial management, or of auditing. Members are appointed by the board, and changes to its composition are made when the board might wish to do so or when the members cease to be directors of the company. The audit committee currently comprises the following members:

• Gisele Marchand (chair)
• Tore Myrvold

The company’s auditor also attends all the meetings.

The board has adopted separate instructions for the audit committee, which will, among others:

1. review the company's quarterly, annual and related reports, including ESG reporting, and prepare the board's follow-up of the financial reporting process.
2. maintain ongoing contact with the company's elected auditor concerning the audit of the annual financial statements.
3. assess and monitor the independence and objectivity of the auditor and particularly to what degree services other than audit are provided by the auditor.
4. assess the quality of the external audit, be responsible for preparing the company's choice of auditor and make its recommendation.
5. ensure that the company has established sufficient and suitable processes for internal control and risk management to ensure that laws and regulations closely tied to financial and non-financial reporting are followed.

The audit committee met seven times in 2023.

The remuneration committee serves as a preparatory and advisory body for the board, comprising up to three directors who are independent of the company’s executive management. The members of the remuneration committee are appointed by the board for two-year terms or until they cease to be directors of the company. The remuneration committee currently comprises:

• Olav Hindahl Selvaag (chair)
• Gisele Marchand
• Øystein Thorup

The board has adopted separate instructions for the remuneration committee. It must, among other things:

1. prepare issues for consideration by the board concerning salary and terms of the chief executive.
2. prepare the board's processing of scorecards/KPIs as a basis for the bonus assessment for senior executives.
3. prepare the board's consideration of issues of principle related to salary levels, bonus systems, pension terms, employment agreements and the like for the company's senior executives.
4. address special issues related to compensation for employees in the group to the extent that the committee finds that these affect matters of particular importance to the group's competitive position, profile, recruitment ability, reputation, etc.

The committee has held four meetings in 2023.

Risk management and internal control in Selvaag Bolig are intended to help ensure that the company takes a coherent approach to its operations, financial reporting and compliance with applicable legislation and regulations. The board regularly reviews Selvaag Bolig’s risk management and internal control, as well as its guidelines and the like on how the company integrates concern for the world at large with value creation. Internal control also embraces the company’s values base, CSR and ethical guidelines, which apply to all company employees.

An annual strategy meeting is held by Selvaag Bolig to lay the basis for the board’s consideration and decisions during the year.

A survey of the company’s risk factors and risk management is conducted regularly. This exercise plays a key role for the board’s annual strategy meeting, and defines the direction of further work on the company’s risk management. An overarching management model has been established for continuous follow-up, based on the group’s strategy, values base and ethical guidelines. In addition, principles have been drawn up for reporting in the key areas, as well as guidelines for central processes and activities. An authority matrix has also been established for delegating responsibilities to defined roles in the organisation. All employees have clear guidelines on the scope of their own authority and on the next level up for decisions or approvals.

Selvaag Bolig has established a set of internal procedures and systems which are intended to secure uniform and reliable financial reporting and operations. A quality assurance system has also been established to safeguard quality when executing the group’s projects. One component of this system is a review, conducted at least once a quarter, of risk in the projects and other parts of the business. This review identifies the financial development of the company’s projects and makes it possible to implement possible risk-reducing measures. Planning, management, execution and financial follow-up of construction and production processes and projects are integrated in the Selvaag Bolig group’s commercial operation. Construction projects report systematically to the group management.

Selvaag Bolig’s consolidated financial statements are prepared in accordance with the applicable IFRS standards. The board receives periodic reports on the group’s financial results as well as a description of the status of the most important individual projects. The auditor attends meetings of the audit committee and board meetings related to the presentation of the preliminary annual financial statements. The company’s key risk factors are described in the directors’ report.

The general meeting determines directors’ fees annually on the basis of a recommendation from the nomination committee.

A total of NOK 2 576 000 was paid in directors’ fees for 2023. Shareholder-elected directors are given compensation of NOK 50 000 in addition to ordinary board remuneration, where the net proceeds after tax are assumed to be used for the purchase of shares in the company. Remuneration to the individual directors in 2023 is stated in the executive remuneration report published at www.selvaagboligasa.no. Directors’ fees are not linked to the group’s performance. No options are awarded to directors, and shareholder-elected directors have no agreement on a pension plan or on payment after their period of service has ended. None of the shareholder-elected directors do work for the company in addition to their directorship.

Directors observe general insider regulations for trading in the company's shares. See the aforementioned executive remuneration report for an overview of shares owned by directors.

As mentioned in section 9, a remuneration committee comprising up to three directors has been established. The committee shall support the board’s work on the strategy for and main principles of remuneration for the company’s senior executives, including the determination of scorecards and the conditions of employment for the chief executive.

The individual components in a remuneration package must be assessed collectively, with fixed basic pay, possible variable pay and other benefits such as pension and termination payments viewed as a whole. Variable pay in the form of bonus payments will be based primarily on objective, definable and measurable criteria. Such variable pay (bonuses) cannot exceed 100 per cent of basic pay for the executive personnel. No options have been awarded to employees or elected officers of the company.

The guidelines and report about remuneration of executive personnel are presented annually to the general meeting in connection with its consideration of the financial statements.

Selvaag Bolig endeavours to ensure that all reporting of financial and other information is timely and correct, and based on openness and equal treatment of players in the securities market. The company observes the recommendations of the Oslo Stock Exchange on reporting investor information, which came into force on 1 January 2012. Information from Selvaag Bolig is published in the form of annual and interim reports, press releases, stock exchange announcements and investor presentations. All information regarded as significant for the valuation of the company is distributed and published via Modular Finance and Oslo Stock Exchange’s messaging system www.newsweb.no and at www.selvaagboligasa.no.

The company presents its interim annual results by the end of February. Full financial statements, together with the directors’ report and the rest of the annual report, are made available to shareholders every year at least three weeks before the AGM, and by the end of April at the latest. Interim figures are reported within 60 days of the end of the quarter, in accordance with the rules of the Oslo Stock Exchange.

The financial calendar is available on www.selvaagboligasa.no and www.newsweb.no. The primary purpose of information from the company will be to clarify the company’s long-term goals and potential, including its strategy, value drivers and important risk factors. The company’s guidelines for investor relations provide more detailed specifications of the way information is handled in the group, including defining who will act as the company’s spokesperson on various matters. The CEO and CFO of Selvaag Bolig will be the primary spokespersons to the financial market on behalf of the company.

The company’s articles of association place no restrictions on the purchase of shares in the company. In the event of a possible takeover bid, the board will help to ensure that the company’s shareholders are treated equally and that the group’s day-to-day operations are not disrupted unnecessarily. The board will seek to help ensure that the shareholders have sufficient information and adequate time to form an opinion on a takeover bid.

The instructions for the board of Selvaag Bolig ASA specify how the company will respond should an offer be made for the company’s shares. In such cases, the board will issue a statement which contains an assessment of the offer and a recommendation to the shareholders on whether they should accept it. In this assessment, the board should take account of such considerations as the way a possible takeover would affect long-term value creation in the company. A justification of the recommendation must be provided.

The group’s auditor is elected by the general meeting. Selvaag Bolig’s auditor when presenting the accounts for 2023 is PricewaterhouseCoopers.

The auditor gives the board an account of its work and provides an assessment of the company’s financial reporting and internal control in connection with the annual financial statements. At this meeting, the board is briefed on which services in addition to auditing have been provided during the year. The auditor meets the board at least once a year without the executive management being present. The auditor has the right to attend Selvaag Bolig’s general meeting. Written confirmation must be provided once a year by the auditor to the board that the specified requirements for the independence of the auditor have been met.

The auditor attends the meetings of the audit committee. Once a year, the auditor must present the committee with the main features of the plan for conducting the audit work. The auditor will review possible significant changes in Selvaag Bolig’s accounting principles, assessments of significant accounting estimates and all significant conditions where disagreement has occurred between the auditor and the executive management. At least once a year, the auditor must review Selvaag Bolig’s internal control system with the audit committee – including identifiable weaknesses and proposals for improvement. The board briefs the general meeting on the auditor’s fee, broken down between audit work and other services in addition to auditing.

The board proposes a dividend of NOK 1.00 per share for the second half of 2023, giving a total ordinary dividend of NOK 2.00 per share for 2023.

Selvaag Bolig is one of Norway’s leading housing developers. It buys and develops new housing land, and manages the whole value chain from acquisition of land to completion and sale of homes. The group concentrates on the areas in and around Greater Oslo, Bergen, Stavanger and Trondheim as well as Stockholm. The development business embraces wholly owned projects as well as projects pursued as joint ventures with external investors. Selvaag Bolig manages all the projects, with the exception of one joint venture with AF Gruppen in Ski. The Selvaag Pluss Service AS subsidiary offers services related to Selvaag Bolig’s Pluss homes.

Selvaag Bolig does not build itself, but awards construction contracts on a project-by-project basis. That gives it the opportunity to select the best and most competitive contractor for each project. Subjecting construction contracts to competitive tendering increases flexibility and reduces market risk, while helping to tie up less capital and cut execution risk during the construction phase.

The group possesses a high level of expertise on project development. With a modern and industrial approach to housebuilding, this helps to ensure lower construction costs, competitive prices for buyers and high profitability for the company and its owners.

Selvaag Bolig continues Selvaag’s historical social commitment, where value creation is combined with socially useful measures. The company builds large projects with a broad array of housing types, and works to develop homes which as many people as possible can afford to buy. Furthermore, Selvaag Bolig seeks to be a driver in the public debate in order to secure operating parameters which make it possible to achieve this objective while simultaneously ensuring good and sustainable housing and urban development. By building good and durable projects, which take into account social and aesthetic properties, in established urban and residential areas and near public transport hubs, the company contributes to more people being able to live a more environment-friendly daily life in walking and cycling distance of shops and services, and close to public transport. Selvaag Bolig also supports culture, mass-participation sports and educational institutions, particularly in the neighbourhoods where the company has projects.

In January 2020, large parts of Selvaag Bolig’s available land portfolio was sold to Urban Property. These two companies intend to pursue a long-term strategic collaboration which offers them both a number of advantages. Where Selvaag Bolig is concerned, the collaboration’s benefits include increased competitiveness in land purchases and a reduction in tied-up capital. See Description of the business elsewhere in this report for further information.

(Figures for 2022 are presented in brackets)

Selvaag Bolig had operating revenues of NOK 3 254,7 million (NOK 2 896.4 million) in 2023. Revenues from units delivered accounted for NOK 3 065.8 million (NOK 2 791.9 million) of the total. In addition, land plots and a commercial property in Rogaland were sold by the group for a total of NOK 62.9 million and a lot in Bærum was sold for NOK 57.5 to financing partner Urban Property. During the year, a total of 655 units (585) were delivered, including 612 (513) from consolidated project companies and 43 (72) from joint ventures.

Operating costs totalled NOK 2 940.4 million (NOK 2 559.7 million), of which project costs for the year totalled NOK 2 677.2 million (NOK 2 313.7 million). Project costs are primarily construction costs for units delivered. Payroll costs accounted for NOK 145.3 million (NOK 139.0 million) of the operating costs.

Other operating costs came to NOK 108.7 million (NOK 97.2 million), including NOK 38.5 million (NOK 29.2 million) for sales and marketing.

The share of profit from associates and joint ventures came to NOK -13.4 million (NOK 85.7 million in profit).

Consolidated operating profit for the year came to NOK 300.9 million (NOK 422.4 million).

Net financial income amounted to NOK 18.6 million (NOK 2.7 million in income).

Pre-tax profit for the year was NOK 319.5 million (NOK 425.1 million). Net tax expense was NOK 74.8 million (NOK 86.3 million). Consolidated tax expense does not include tax liability for tax objects which are not part of the Selvaag Bolig group. Tax on non-controlling shareholders’ share of profit for the period is included in the non-controlling share of profit and equity.

Comprehensive income for 2023 came to NOK 244.7 million (NOK 338.9 million). NOK 244.7 million of the profit was attributable to the shareholders of Selvaag Bolig ASA (NOK 338.9 million), and NOK 0.0 million to non-controlling shareholders (NOK 0.0 million).

Consolidated cash flow from operational activities was NOK 1 196.6 million (NOK 63.4 million). The increase from last year primarily reflected more delivered units and a positive impact from the net change in inventory.

Cash flow from investing activities was negative at NOK 45.3 million (positive at NOK 239.8 million). The change from 2022 primarily reflected dividends received from joint ventures and settlement of seller credits in 2022.

Net cash flow from financing activities was negative at NOK 1 497.5 million (negative at NOK 218.0 million). The change from 2022 primarily reflected lower drawdowns and increased net repayment of construction loans in 2023.

The group’s holding of cash and cash equivalents at 31 December totalled NOK 266.5 million (NOK 612.7 million), a reduction of NOK 346.1 million from a year earlier.

Assets in Selvaag Bolig at 31 December 2023 totalled NOK 4 754.4 million (NOK 5 949.6 million). The carrying amount of consolidated inventories (land, housing under construction and completed homes) at 31 December was NOK 3 199.5 million (NOK 4 273.2 million).

Equity at 31 December was NOK 2 307.0 million (NOK 2 345.9 million), corresponding to an equity ratio of 48.5 per cent (39.4 per cent). The board proposes that a dividend of NOK 1.00 per share, corresponding to NOK 93.7 million, be paid to shareholders in Selvaag Bolig ASA for the second half of 2023. NOK 1.00 per share, corresponding to NOK 93.7 million (minus own shares), was paid in August 2023 based on profit for the first half-year. The total dividend for 2022 will be NOK 2.00 per share, corresponding to NOK 187.4 million. That represents 76 per cent of consolidated net profit for 2023.

The group held cash and cash equivalents of NOK 266.5 million (NOK 612.7 million) at 31 December. Selvaag Bolig ASA, the parent company, held cash and cash equivalents of NOK 50.6 million (NOK 352.6 million) at 31 December.

At 31 December, consolidated interest-bearing debt amounted to NOK 1 410.2 million (NOK 2 485.8 million), of which NOK 681.8 million (NOK 1 400.4 million) was non-current and NOK 728.4 million (NOK 1 085.4 million) was current. NOK 404.6 million of the current liabilities related to buyback agreements and seller credits to Urban Property (NOK 582.3 million). See Note 26 for more information.

Other current non-interest-bearing debt amounted to NOK 356.3 million (NOK 541.9 million) at 31 December, of which advance payments by customers accounted for NOK 21.1 million (NOK 152.1 million).

Consolidated interest-bearing debt can largely be divided into four categories: 1) top-up loans from parent company Selvaag Bolig ASA, 2) land loans, 3) buyback agreements with Urban Property and 4) construction loans. At 31 December 2023, the group had no top-up loans, land loans of NOK 95 million, buyback agreements with Urban Property of NOK 405 million and total construction loans of NOK 910 million.

Selvaag Bolig has a credit facility of NOK 300 million with DNB, maturing in December 2025. The facility has financial covenants, see note 29. In addition, the company also has an overdraft facility of NOK 150 million in the same bank which is renewed annually. At 31 December, no drawings had been made against either of these facilities.

Each project in Selvaag Bolig is organised as a single purpose vehicle (SPV). In addition to financing in the parent company, this means that each company seeks its own external capital financing for the development of a project. Land loans are converted to construction loans as the projects start up. Building costs are wholly financed by loans, and increased activity in the companies will accordingly mean that construction loans rise in line with progress. In Sweden, Selvaag Bolig guarantees the implementation of the projects through a self-debtor surety.

Pursuant to section 3-3a of the Norwegian Accounting Act, the board confirms that the going concern assumption is realistic and that the financial statements for 2023 have been prepared on that assumption. This view rests on the group’s good capital adequacy and financial position.

There have been no events after the balance sheet significantly affecting the group's financial position.

Operating revenues for Selvaag Bolig ASA, the parent company, came to NOK 79.3 million (NOK 79.6 million), and the operating loss for the year was NOK 132.5 million (loss of NOK 115.5 million). Ordinary net profit for the year was NOK 273.6 million (NOK 391.0 million). Profit for 2023 included NOK 452.9 million (NOK 356.3 million) in group contributions received from subsidiaries. These internal items are eliminated in the consolidated financial statements.

The parent company, Selvaag Bolig ASA, made a net profit of NOK 273.6 million (NOK 391.0 million). The parent company’s equity amounted to NOK 2 014.2 million (NOK 1 932.2 million) at 31 December.

The board participates in important strategic discussions during the year and conducts an annual audit of the company’s operational and financial strategy together with the executive management.

Selvaag Bolig worked actively in 2023 to manage the business in accordance with the approved strategy and to ensure that the company capitalises on the competitive advantages that this provides.

To ensure that Selvaag Bolig is a driving force in forward-looking housing and urban development, the annual audit of its strategy includes detailed analyses of changes and trends in such areas as urban development, housing concepts, ESG, the residential environment, housing preferences, demographics, the sharing economy and digitalisation.

For more information on the group’s strategy, see the Description of the business in this report.

As a housing developer, the group is exposed to risk related to land development, sales and the execution of housing and urban development projects. These factors can affect the group’s business activities and financial position. The board of Selvaag Bolig accordingly gives a high priority to dealing with and managing risk, and has established routines and control systems to limit overall risk exposure to an acceptable level.

Regular risk surveys contribute to raising awareness of the most significant risk conditions which could affect the business goals defined in the company’s strategy and how to deal with them.

The primary risk factors can be categorised as market, operational, financial and climate risk.

The board and senior executives are covered by the company's ongoing board liability insurance. Within the framework of the insurance terms, this insurance covers the personal liability for damages that one can incur as a board member or senior employee in accordance with current law.

Housing demand is influenced by a large number of factors at both a micro and macro level. It may be affected by substantial fluctuations in the general level of interest rates and/or significant changes in other financial variables to which potential housebuyers might be exposed. Changes in housing demand could furthermore affect Selvaag Bolig’s opportunities to sell homes at budgeted prices within the planned time frames. Were the pace of sales to be lower than expected because of changes in market conditions, planned developments could be postponed. The company accordingly has internal requirements related to advance sales, where the general rule is that construction does not begin until homes corresponding to 60 per cent of the value of each building stage in the respective projects, or of the overall project, have been sold.

Selvaag Bolig draws on external construction companies and service providers in connection with developing and building new projects. As a result, it is exposed to the risk of loss and additional project cost if a contractor/supplier finds itself in financial difficulties. To reduce this risk, the company mainly enters into construction contracts with large, well-established players who have a solid financial position and experience, and who can document quality work. In addition, standardised and detailed construction plans developed by Selvaag Bolig are used to reduce the risk of errors, misunderstandings and delays by the contractor.

Furthermore, Selvaag Bolig is exposed to increases in the level of prices for construction contracts. For projects built on site, the company mainly enters into turnkey contracts. In this way, costs are fixed before sales and construction begin. In the event of high building costs, the company also has the expertise required to implement projects on the basis of subcontracts managed by the construction client. Capacity and risk nevertheless mean that this is not the preferred approach on a large scale.

Changes to operational parameters or planning decisions by the relevant public authorities could affect both the progress and the viability of Selvaag Bolig’s various projects, and might thereby limit opportunities to continue developing its properties. That could lead to delays and increased costs. In order to reduce this risk, the company performs a thorough analysis before buying land, and works systematically to keep in touch with regulators during the whole life of the project.

The group’s credit risk relates largely to the settlement of its accounts receivable, which primarily involve private customers as housebuyers. Buyers are primarily required to pay a 10 per cent deposit in advance when a sale is agreed, and to document satisfactory financing for the property. Credit risk is regarded as low because payment must be made to the client account at the settlement agent before transfer of the residence.

The vast majority of the group's activities are based in Norway. The company also has operations in Sweden where project development is financed with capital from the Norwegian operations, and profit repatriation entails a capital transfer from Sweden to Norway. No currency hedging arrangements have been established yet. The company considers the exposure to currency risk to be limited as the Swedish operations make up a low proportion of the total project portfolio and the company has therefore not yet formed a foreign exchange policy.

Changes in interest rates affect the group’s borrowing costs and could affect the valuation of its assets. The company has opted not to enter into any forms of hedging contracts. Furthermore, interest rate levels affect the company’s return on free liquidity.

Selvaag Bolig depends on access to capital in order to acquire sites and realise projects. In order to finance construction, the company maintains good and close relations with its principal banks, which are well-capitalised Nordic institutions. Competition between the banks is perceived to be satisfactory, and the company has thereby been able to secure the financing required for its projects. Financing of land purchases is primarily channelled through the collaboration with Urban Property AS. In Sweden, land plots are financed with equity and bank financing. Land purchase models are described in Description of the business in this report.

Conservative liquidity management means having sufficient liquid assets and available financing through lines of credit to meet the group’s obligations. Selvaag Bolig administers liquidity actively and pays special attention to maintaining adequate liquidity at all times. The company continuously monitors forecasted and actual cash flows.

The board takes the view that the group had a well-balanced exposure to financial and liquidity risk at 31 December. Cash and cash equivalents in the Selvaag Bolig group amounted at 31 December to NOK 266.5 million (NOK 612.7 million) for the group and NOK 50.6 million (NOK 352.6 million) for the parent company. Liquid assets consisted primarily of cash and bank deposits. Selvaag Bolig has a credit facility of NOK 300 million with DNB, maturing in December 2025. The facility has financial covenants, see note 29. The company also has a credit facility of NOK 150 million in the same bank which is renewed annually. At 31 December, no drawings had been made against either of these facilities. Further reference is made to the comments on financing above and to note 16 in the consolidated financial statements for an overview of loans, maturities and loan terms.

Climate risk consists of physical climate risk and transition risk. Physical risk is associated with increased extreme weather and ecosystem changes. Transition risk is associated with changes in regulations, technology and the market situation in connection with the transition to a low-emission society.

The company has a relatively low exposure to physical climate risk. In this area, there are strict legal and regulatory requirements, and Selvaag Bolig's housing also has its own management systems that reduce risk. Selvaag Bolig, on the other hand, is exposed to transition risk. As the real estate sector has significant greenhouse gas emissions, there are increased demands for transparency, non-financial reporting and emission cuts, especially from financial stakeholders and authorities. Selvaag Bolig has therefore implemented a number of risk-reducing measures and will continue this work in 2024. These are discussed in the ESG in Selvaag Bolig report.

Selvaag Bolig ASA was established in 2008. It is the parent company for the underlying group subsidiaries, which are responsible for operations. At 31 December 2023, the Selvaag Bolig group had 84 employees. 61.6 full-time equivalents were in the parent company and 22.4 in the subsidiaries. The company is led by CEO Sverre Molvik and chief operating officer (COO) Øystein Klungland.

Selvaag Bolig will create value for society by building good homes, and by working actively to ensure sustainable housing and urban development. This means in part that the company gives priority to urban areas experiencing expansion pressures, develops site-efficient homes with the greatest volume in lower price categories, seeks to be cost-effective and works to ensure positive official policies through a clear presence in the public debate. Ethical, social and environmental considerations are integrated in its day-to-day operations. The company’s goal is to be a good and secure workplace, and requires that it and its suppliers pursue their operations in compliance with applicable legislation and regulations. Furthermore, Selvaag Bolig will be a responsible social player and minimise emissions/discharges and damage to the natural environment. The company has ethical guidelines and a supplier declaration which are described at www.selvaagboligasa.no. Continuous efforts are made to ensure that employees are familiar with and observe all the company’s guidelines related to CSR and ESG. The statement on due diligence assessments is published in a separate report available at www.selvaagboligasa.no for further information. The statement on Equality and diversity is published in this report.

In 2023, the company has, among other things, started the work on the double materiality analysis (DMA) according to ESRS, updated its third climate statement, further defined KPIs and targets, improved systems for data collection and started preparations to meet the demands of CSRD and ESRS. The work will continue in 2024 and the company is preparing for further non-financial reporting in connection with new legal requirements and expectations from various stakeholder groups.

See the separate section on ESG in this annual report.

The company was listed on the Oslo Stock Exchange on 14 June 2012. It had 6 466 shareholders (5 784) at 31 December 2023, of whom 177 were foreign (205). See Note 13 to the consolidated financial statements for Selvaag Bolig ASA for detailed shareholder information.

Urban Property (UP) is a related party with the company according to accounting rules, which means that payments of option premiums and repurchasing land plots are considered related transactions. During 2023, a land plot was sold by the group to UP for NOK 57.5 million. No land plots were repurchased from UP in 2023. In 2023, the company entered an option agreement with UP for a property in Ås municipality outside Oslo.

Further, Selvaag Bolig delivered a residential building with 46 flats to Selvaag Utleiebolig AS, a wholly owned subsidiary of Selvaag AS. The sale generated revenue of NOK 191.7 million.

Refer to Note 23 for further information about the company’s transactions with related parties.

Selvaag Bolig ASA is committed to maintaining a high standard of corporate governance. A healthy corporate culture is essential for safeguarding confidence in the company, securing access to capital and ensuing good value creation over time. All shareholders will be treated equally, and a clear division of labour will exist between the board and the company’s executive management. Selvaag Bolig complies with the Norwegian code of practice for corporate governance.

A detailed statement on the way Selvaag Bolig implements the sections of the code can be found on the company’s website at www.selvaagboligasa.no and in this annual report.

Pay and other remuneration of senior executives in the group are presented in Note 22 to the consolidated financial statements. This note also outlines the principles on which executive remuneration is based. Selvaag Bolig introduced a share savings programme for all employees and a share purchase programme for the executive management in 2015. These programmes are described in the chapter on Corporate governance in this report.

The AGM will take place on 25 April 2024.

Selvaag Bolig is well-positioned with large projects centrally located in and near Greater Oslo, Stavanger, Bergen, Trondheim and Stockholm. According to Statistics Norway, urbanisation and population growth create a large and long-term need for new homes in Selvaag Bolig’s core areas. Nevertheless, during the last 18 months, demand has been negatively affected by home loan interest rate increases and reduced household purchasing power. In addition, high construction costs have resulted in postponed sales and construction starts for many actors. Selvaag Bolig had a number of successful sales and construction starts in 2023 and has planned many sales starts in 2024. However, going forward, there is greater uncertainty than usual associated with the starting date for construction of new projects.

Since Selvaag Bolig has completed more housing units than it has started construction on in 2023, the number of units under construction has fallen over the past year. The reason for this is rising home loan interest rates, high construction costs and general macroeconomic uncertainty. Selvaag Bolig sees, however, signs that construction costs are in the process of stabilising at financially acceptable levels and the new home market is showing signs of improvement in line with Norges Bank’s interest rate trajectory indicating cuts at the end of 2024 and the two following years. Uncertainty about the development of new home sales could influence the start of new projects and thereby also the number of homes under construction for the company going forward.

As a pure housing developer, the company puts all construction out to competitive tender and accordingly has a sensible staffing level which can easily be adjusted to the level of activity in the market. In the board’s view, this has given and will continue to give Selvaag Bolig competitive advantages. Its strategic collaboration with Urban Property, as well as its successful establishment and strengthened land bank in Sweden could provide substantial benefits for the company over time.

Selvaag Bolig is well equipped organisationally, operationally and financially to support and strengthen its market position going forward. The company still has a good order backlog, a solid land bank in the company's focus areas as well as available capital through the agreement with UP to acquire new land plots.

Notes to the consolidated financial statements for the year ended 31 December 2023.

Selvaag Bolig ASA (the company) and its subsidiaries (together the group) is a housing development group involved in the construction of residential property for sale in the ordinary course of business.

Selvaag Bolig ASA is listed on the Oslo Stock Exchange. The company’s ultimate controlling party is Selvaag AS.

The registered office of the company is Silurveien 2, NO-0380 Oslo.

The principal accounting policies are set out below, and have been consistently applied to all accounting periods presented unless otherwise stated.

The group’s consolidated financial statements have been prepared in accordance with the IFRS® Accounting Standards and interpretations issued by the International Accounting Standards Board (IASB), as adopted by the EU.

These consolidated financial statements were authorised for issue by the board of directors on 21 March 2024.

The consolidated financial statements have been prepared on a going concern and historical cost basis, except for derivatives which are recognised at fair value through profit or loss.

The consolidated financial statements are presented in NOK, which also is the parent company’s functional currency.

The consolidated financial statements include the financial statements of the company and entities (including special purpose entities) controlled by the company (its subsidiaries).

A negative comprehensive income in the subsidiaries is attributed to the owners of the parent company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Operating segments are reported in a manner consistent with the internal reporting provided to the CEO and management group. This group is responsible for allocating resources and assessing the performance of the operating segments.

For the purposes of internal reporting, the group utilises the percentage of completion method for revenues and cost of goods sold, where the degree of completion is estimated on the basis of expenses incurred relative to total estimated cost multiplied by the sales rate. Operating profit (loss) under the percentage of completion method also includes an estimated profit element. The segment results are reconciled to the operating results for the group in the note.

An associate is an entity over which the group has significant influence, and which is neither a subsidiary nor a joint venture.

Associates are incorporated in these financial statements using the equity method of accounting.

When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Indicators of a possible impairment could be a fall in land plot prices or housing prices. If there is a loan to an associated company, and the loan is considered to be part of the net investment, any accumulated negative share of the results which exceed the acquisition cost is recognised as a reduction of the carrying amount of the receivable.

Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group.

Share of income (loss) from associated companies is included in operating profit (loss) since the investments are considered to be an integral part of the group’s operations.

The group does not have any interests in joint arrangements classified as joint operations.

The group reports its interests in joint ventures using the equity method, as described in note 2.6 Investments in associates above, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. See 2.10 Revenue recognition below.

Share of income (loss) from joint ventures is included in operating profit (loss), since this is considered integral to the group’s operations.

Where property is acquired through the acquisition of entities, management considers the substance of the assets and activities acquired. When acquiring a group of assets or net assets which do not constitute a business, the cost price is allocated between the individual identifiable assets and liabilities acquired on the basis of their relative fair values at the acquisition date.

Business combinations are accounted for using the acquisition method. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed.

Goodwill

Goodwill arising on an acquisition of a business is recognised in the balance sheet at the date of acquisition of the business (see 2.8 Business combinations above). Goodwill is not amortised but is tested for impairment annually. For the purposes of impairment testing, goodwill is allocated to each of the group's cash-generating units (or collections of cash-generating units) expected to benefit from synergies of the business combination.

The group’s main activity is to develop residential properties, and revenue is derived primarily from the sale of residential properties. Properties are usually sold to private customers, but there are some professional customers as well.

The group also has some lease revenue and revenue from other services.

Revenue from the sale of residential property (including any sale of projects under development and undeveloped land) is recognised when the control is transferred to the customer. Control is considered transferred at the time of delivery of the property to the customer.

Customer contracts related to sale of residential properties are in accordance with the Norwegian standard, and will normally include a condition that a minimum percentage of sales in the project is reached. Before commencing the construction phase of a project, the general rule is that the group requires 60 per cent of a project to be sold.

According to Norwegian regulations, the customer is entitled to withdraw from the contract until the property is transferred to them. In such a case, however, the customer is responsible for covering any loss incurred by the group as consequence of their withdrawal. This includes covering the price difference if a lower price is achieved, plus transaction costs.

The customer normally pays 10 per cent of the selling price when signing the contract. This prepayment is paid into an escrow account held by the estate agent. The group does not have a right to the advance payment until it provides financial security in accordance with the Housing Construction Act. Once such security is provided, the advance payment is released from the escrow account and recognised as received cash and other short-term debt (advance payment).

The remaining part of the selling price is paid into the escrow account prior to delivery. The amount is not released from the escrow account until security is provided or all formalities related to the transfer of the property to the customer are finalised. In the period between physical transfer of the property and finalising the formalities by the estate agent, the consideration (reduced by advance payments) is recognised as a trade receivable. Once the right of ownership has been publicly notarised, the remaining consideration is released from the escrow account.

Rental income from leasing property (operating leases in which the group is a lessor) is recognised on a straight-line basis over the term of the relevant lease and included in other revenues.

Control over services is considered to be transferred to the customer as the service is delivered. Revenue from sale of services is recognised when the service is performed. Estate agent services directly associated with the sale of property are included in sales revenue. Other services are included in other revenue.

The group has property which is land and buildings intended for sale in the ordinary course of business or which is in the process of construction or development for such sale. Inventories thus comprise land, property held for resale, property under development and construction and unsold finished units which are not sold. Inventories are measured at the lower of cost and net realisable value.

The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present condition. The cost of conversion includes costs directly related to the construction of the property (such as amounts paid to sub-contractors for construction), and an allocation of fixed and variable overheads incurred during development and construction. Borrowing costs directly attributable to the acquisition, construction or production of property are added to the cost of those assets until the assets are substantially ready for their intended use or sale. That usually occurs when the project is completed and ready for delivery to the customers.

Capitalisation of borrowing costs commences when the plot acquires planning permission. Capitalisation of other directly attributable costs commences when it is more likely than not that the project will be realised. Other costs are included in the cost of inventories only to the extent that they are directly attributable to bringing the inventories to their present location and condition, including planning and design costs, for example. The option premium in plot option contracts with Urban Property is recognised at acquisition cost in inventory as they are incurred when it is probable that the project will be realised.

Net realisable value is the estimated selling price in the ordinary course of business, based on market prices at the reporting date and discounted for the time value of money (if material), less the estimated costs of completion and the estimated costs necessary to make the sale.

When properties are sold, the carrying amount is recognised as a project expense in the income statement in the period in which the related revenue is recognised.

The group has entered into agreements to purchase land in the future (forwards and purchase options) for use in the ordinary course of business. The land is first capitalised when the cost is incurred or the control is transferred from the seller. For more information regarding the land portfolio included in the collaboration with Urban Property, see note 26. If a contract to purchase land in the future is a loss contract, a provision is made for the estimated loss.

Property, plant and equipment are recognised at acquisition cost less accumulated depreciation and impairment losses. Depreciation is calculated on a straight-line basis, generally over three to 10 years.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognised in the income statement as Other gain/(loss) net.

Trade receivables are amounts due from customers in the group’s ordinary housing development business and related services. Where the trade receivables do not include a significant financing component, they are recognised initially at the amount of the consideration. Impairment is recognised if there is evidence that the estimated future cash flow has been impacted. The risk of impairment is low owing to the practice of requiring advance payments into escrow accounts.

Loans and other receivables are held in the group’s normal business model where the objective is to collect payment and interest when due, and measured at amortised cost using the effective interest method, less any impairment. The receivables are classified as current unless they are due more than 12 months from balance sheet date.

Financial liabilities are recognised initially at fair value and subsequently measured at amortised cost.

Borrowings are recognised initially at the received amount, net of transaction expenditures incurred, and subsequently measured at amortised cost. Any difference between the proceeds (net of transaction expenditures) and the nominal value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the group at the balance sheet date has an unconditional right to defer settlement of the liability for at least 12 months.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest-method. If the interest element is insignificant, trade payables are carried at the original invoice amount.

The cash flow statement is prepared using the indirect method. Interest payments are classified as operational cash flows.

Repurchase of the company's own equity instruments is recognised and deducted directly in equity.

Income tax expense represents current tax expense and changes in deferred tax expense.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because of items of income or expense which are taxable or deductible in other years and items which are never taxable or deductible.

With the purchase of property through incorporated companies, deferred tax is not recognised.

Deferred tax is recognised for temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The group recognises deferred tax for associated companies and jointly controlled entities subject to partnership taxation.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered in the foreseeable future.

Provisions in the group are mainly linked to building parking spaces, see note 20.

In accordance with IFRS 16 Leases, leases are recognised as a right-of-use asset and a lease obligation from the time the right-of-use assets is available for use by the lessee (the commencement date).

Right-of-use assets are measured at acquisition cost, which comprises the amount of the initial measurement of the lease liability, adjusted for any lease payments made before the commencement date, less any lease incentives received and any costs necessary to restore the asset to the condition required by the lease.

Liabilities arising from a lease are initially measured on a present value basis using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used.

When adjustments to lease payments based on an index or rate take effect, or the management makes changes in the evaluation of options to extend or terminate the lease, the lease liability is reassessed and recognised as an adjustment to the right-of-use asset.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the statement of comprehensive income.

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Obligations related to early retirement pensions (AFP) are part of a multi-employer defined benefit plan. However, the company’s share of the liability cannot be reliably measured, and the plan is therefore accounted for as if it were a defined contribution plan.

New accounting standards and amendments

The group implemented no new standards, changes to standards or interpretations with a significant impact for the group in 2023.

The amendments to IAS 1 that require companies to disclose their material accounting policy information rather than their significant accounting policies became effective for the Group on 1 January 2024. It has been made clearer which principles are significant enough to be disclosed in the financial statements. The accounting policy information should focus to a greater extent on the company’s specific choice and assessment, rather than a general copy of standards and other generic text. The amendments to IAS 1 did not have significant effects for the Group, however the Group has revised its description of certain accounting policies following these amendments.

No forthcoming changes are expected to have a significant impact for the group.

The preparation of financial statements in accordance with the 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 following are the key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Housing development projects are classified as inventory in accordance with IAS 2. Inventories comprise undeveloped land, work in progress and finished units, and are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. In determining the net realisable value, management assesses important factors relevant for the valuation, including macroeconomic factors such as expected housing prices and rental levels as well as expected yields, approvals from the authorities, construction costs and project progression. When considered appropriate, management uses reports from external valuation experts to estimate property values or to corroborate the company’s own estimates. Changes in circumstances and in management’s assessments and assumptions will result in changes in the estimated net realisable value. See also note 5.

Management has determined the operating segments based on reports reviewed by the CEO and management group, and which are used to make strategic decisions. The figures below were reported to the CEO and the management group at the end of the reporting period. The main segment is defined as property development ("Boligutvikling"). The income in the other segment comes mainly from services and project management, see also note 25. The costs in the other segment mainly relate to salary costs for administration and management which cannot be directly attributed to the projects and thus are not allocated to the housing development segment, see also note 6.

The group utilises the percentage of completion method in its internal reporting, where the degree of completion is estimated on the basis of expenses incurred relative to total estimated costs and the sales rate. Operating revenues under the percentage of completion method also include an estimated profit element for sold units. The consolidated income statement is based on the completed contract method, in which revenue is recognised at the time of transfer of risk and control, being the point of delivery of the property. A reconciliation of this effect (from percentage of completion to completed contract) can be found in the segment reporting under "Reconciliation EBITDA to operating profit (loss)". In addition, the operating profit from IFRS contains items from IFRS 16 Leases, which are not included in the segment reporting. Effects are specified in the table below.

Group management considers segment results based on the percentage of completion method for determining EBITDA. The measurement method is defined as operating profit (loss) before “Depreciation and amortisation”, “Other gain (loss), net”, and “Share of income (losses) from associated companies”. Financial income and expenses are not allocated to operating segments since this type of activity is managed by a central finance function focused on managing the group’s liquidity.

Operating revenues from outside Norway in 2023 are from the sale of flats in Spain.

Capitalisation rates utilised to determine the amount of borrowing costs eligible for capitalisation were between 5.8 per cent and 7.8 per cent during 2023. Corresponding rates were between 3.6 per cent and 5.9 per cent during 2022.

Land loans are normally converted to construction loans in line with the progress of the respective construction projects. They are capitalised against the site from the day the project secures planning permission and recognised in profit and loss as part of the cost of sales when the units are delivered. Interest charges of NOK 26.6 million related to land loans were capitalised in 2023, compared with NOK 19.7 million in 2022. Interest charges on construction loans are capitalised during the construction period and recognised under cost of sales in the same way. Capitalised interest on construction loans is included in additions to capitalised project expenses in the table above. Interest charges of NOK 118.3 million related to construction loans were capitalised in 2023, compared with NOK 87.0 million in 2022.

Other operating expenses include expenses related to operation of the group headquarters, in addition to NOK 4.6 million (2022: NOK 2.1 million) in services purchased from Selvaag AS and group companies. See also note 23 on related-party transactions for further specification.

The carrying amounts of trade and other receivables are denominated in NOK.

Losses on receivables have historically been minimal. There is no provision for losses on receivables as the expected credit loss is insignificant.