New orders. Operational revenues. Operational EBITDA margin. Operating revenue per business area NOK million ANNUAL REPORT 2013.

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1 ANNUAL REPORT 2013 New orders NOK million Operational revenues NOK million Operational EBITDA margin Per cent 11.7 Operating revenue per business area NOK million Kärnhem 210 Block Watne BWG Homes AB 1 319

2 Key figures 2013 (NOK MILLION) NOTE New orders Order backlog Operating revenue EBITDA EBIT EBIT before write-down EBT Net profit for the year EBITDA margin % 11.9% 10.4% 9.5% 9.1% EBIT margin % 11.6% 9.7% 8.9% 8.2% Number of employees at Cash flow from operating activities Dividend paid Net change cash & cash equivalents Total assets Net interest-bearing debt Book value equity Capital employed Equity ratio % 41.2% 37.3% 39.8% 38.3% Return on equity % -8.5% 8.3% 10.1% 4.4% Return on capital employed % 10.2% 8.3% 7.5% 6.0% Number of shares at Average number of shares Earnings per share (NOK) Dividend per share for financial year (NOK) ,90 Share price at (NOK) DEFINITIONS / NOTES: 1 New orders registrated less cancelled orders received the same year 2 Rest income of new orders registrated 3 EBITDA/operating revenue 4 EBIT/operating revenue 5 Interest-bearing debt excl. cash & cash equivalents and interest-bearing receivables 6 Total assets excl. non interest-bearing debt 7 Book value equity/total assets 8 Profit after tax/average book equity 9 EBIT/average capital employed CONTENTS This is BWG Homes 04 Letter from the CEO 06 Report from the Board of Directors 08 Annual accounts and notes 22 Corporate governance 72

3 Key figures and Important events 03 Important events 2013 Group Strengthens the financial position and flexibility. Issue of new bond NOK 350 million. Largest shareholder OBOS acquires 18.4 million shares from Lars Nilsen. Acquires Swedish project developer Kärnhem AB. Ole Feet appointed CEO Operating revenue NOK million 2400 Block Watne Geir Skoglund appointed CEO. Historically strong order intake. Reducing cost level and production capacity. Co-developing of residential projects with OBOS in Hamar and Fredrikstad BWG Homes AB Largest small house developer in Sweden. Strong growth in order intake. Six housing co-operative projects launched for sale; well received in the market. Module-based Start Living houses in production. Change in management. New CEO Joakim Henriksson takes up position in May EBITDA NOK million Kärnhem Positive development in results and strong order intake. Housing co-operative project Mjödners Höjd, Växjö (30 units) sold and under construction. Several new projects released for sale during the year, 127 units sold. Window factory Sävsjö Snickerifabrik sold to Sunnerbo Fönster Number of employees More information at BWGHOMES.NO/EN/ANNUAL REPORT 2013

4 04 ANNUAL REPORT 2013 / BWG Homes / This is BWG Homes This BWG Homes The brands owned by the Group are Block Watne and Hetlandhus in Norway and Kärnhem, Myresjöhus and SmålandsVillan in Sweden. These are well known and ranked as leading residential house builders in their markets with products and expertise developed over many years of experience. Our core business is to build affordable, quality homes by developing attractive residential projects and products. BWG Homes produces annually about 2000 homes within the product range comprising detached and row houses and apartment buildings. Affordable homes for most people Block Watne wants to be a long-term player, creating safety for customers and investors. Standardized production methods secure attractive and costefficient homes for the future. GOOD LAYOUTS ARE CRITICAL. OUR AMBITION IS TO CREATE HOMES AND RESIDENTIAL ENVIRONMENTS THAT ARE GOOD TO LIVE IN. Geir Skoglund, CEO in Block Watne Improving production efficiency with LEAN More information at: BWGHOMES.NO/EN/AFFORDABLE HOMES FOR MOST PEOPLE During the past few years, BWG Homes AB have dedicated much work and resources to increasing production efficiency and to improving the quality of deliveries. The improvement programme has addressed the entire business. THROUGH THE USE OF STANDARDIZED MATERIALS AND CONSTRUCTION DETAILS, IN COMBINATION WITH WELL- PROVEN BUILDING METHODS AND PROCEDURES, WE ENSURE PROGRESS, QUALITY AND PROFITABILITY IN OUR RESIDENTIAL PROJECTS. PRO DUC TION COM PLAI NTS Sverre Kirkevold, Technical manager in Block Watne More information at: BWGHOMES.NO/EN/IMPROVING PRODUCTION EFFICIENCY WITH LEAN

5 This is BWG Homes 05 NEW PRODUCTS FOR A LARGER MARKET In the past, single-family homes accounted for about half of the home building in Sweden. This share keeps declining. The market now needs far more and different types of homes. In addition to single family homes, development of own residential projects and housing co-operatives are prioritized in our Swedish business. More information at: BWGHOMES.NO/EN/NEW PRODUCTS FOR A LARGER MARKET Meet Kärnhem The Swedish project developer Kärnhem was acquired in April Kärnhem is principally based in growth areas from Stockholm and southwards, and has experienced higher activity in 2013 than planned at the time of acquisition. More information at: BWGHOMES.NO/EN/MEET KARNHEM WE ARE VERY PLEASED TO HAVE BEEN ACQUIRED BY AN OWNER THIS COM- PETENT AND FINANCIALLY S T R O N G. Johan Karlsson, CEO in Kärnhem WE HAVE USED THE CYCLICAL DOWNTURN WELL. EVERYTHING WE HAVE DONE HAS BEEN IN PREPARATION FOR THE CYCLICAL UPTURN THAT MUST COME. THERE IS GREAT POTENTIAL FOR GROWTH IN THE RESIDENTIAL MARKET, AND WE ARE WELL-EQUIPPED TO MEET THE BETTER DAYS. Hans Östberg, Production manager in Myresjöhus and SmålandsVillan More information on our brands: BWGHOMES.NO/EN/OUR BRANDS The value chain ACQUISITION OF LAND: Properties with right location and price are the foundation for development of future residential areas. The Group s landbank has capacity for approx housing units in Norway and approx in Sweden. PROJECTS AND PRODUCTS: The projects are designed for good utilization of the area and localization of homes in terms of sunlight, infrastructure and the surroundings. House types are developed with emphasize on quality of living, energy and layouts. SALES: The homes are sold by own sales staff and agents. The customers are being followed up from the signing of contract to the delivery of their new home. Customer satisfaction and quality are regularly surveyed. PRODUCTION IN FACTORY: House modules for Hetlandhus,SmålandsVillan and Start Living are produced in own factories. Structural elements for Kärnhem and Myresjöhus are pre-fabricated for further construction at the building site. PRODUCTION ON SITE: All Block Watne production is carried out at the building site by our employed carpenters. The homes are produced by standard construction methods regardless house type and geographical region. More information at: BWGHOMES.NO/EN/VALUE CHAIN

6 06 ANNUAL REPORT 2013 / BWG Homes / Letter from the CEO STRATEGIC DIRECTION BWG Homes will create good profitability with moderate risk by owning and devel op ing leading residential builders. The Group s com panies will be leaders and represent strong brands in their markets. The Group will strive to achieve controlled organic growth by maintaining good profit margins. By giving priority to its own housingprojects outside large urban centres, BWG Homes seeks to achieve a more stable earnings trend than general market fluctuations might indicate. Systematic training, development opportunities, good profitability and market alignment mean that BWG Homes is able to offer attractive and stable workplaces. BWG Homes considers possible consolidation processes in the Nordic market. Dividends to the company s shareholders will be an area of particular focus. Dividend is proposed if in the Board s view it will not have an adverse effect on BWG Homes future growth ambitions or capital structure. BWG Homes prioritises profitability and quality ahead of short-term top-line growth.

7 Letter from the CEO 07 Adapting the business to the market DEAR SHAREHOLDER IN BWG HOMES, BWG was able to demonstrate growth in revenues and strong results in But the year turned out somewhat different in Norway as in Sweden. We state a turning point for our businesses in Sweden. Following several challenging years for the Swedish market and poor sales, the tide has finally turned. The housing market is again showing growth. In Norway, the rise in prices and high sales that we have seen during several years, levelled off. It is our belief that sales will be at a decent level in A CONTINUED NEED FOR NEW HOMES Many years of low production have resulted in a great housing deficit in Sweden. Restrictive lending policies from the banks, and the repercussions of the financial crisis in terms of unemployment and financial turmoil have been contributing factors. There has also been a scarcity of land for development in growth areas. Population growth, centralisation and renovation of outdated homes will force increased building of new homes. In Norway, the housing market has returned to more normal levels after several years of strong growth and rising prices. Customers waited to make housing investments, also driven by negative articles in the media and the banks restricting bridge financing. The need for increased production of new homes is still present, especially in the areas around larger cities and densely populated areas. With fewer housing starts than needed, we may again see prices rise in growth areas. A GREATER SHARE OF THE SWEDISH HOUSING MARKET With its brands Myresjöhus and Smålands- Villan, BWG Homes AB has held the position of one of the largest producers of singlefamily houses for many years. This is a position we intend to keep. It is also our goal to be a greater player in the total housing market. Good work has been done to increase production efficiency, and to develop the product portfolio further with new space-efficient and affordable home types. We are investing in land in growth areas for own residential projects. Competence has been built in order to realize projects for housing co-operatives. Six housing cooperative projects were launched in 2013, with more to come in This will lead to a higher volume of standardized products in the factories, resulting in higher sales and profitability. We are looking forward to new management developing the business further. Housing co-operatives are an area of growth for the Group s operations in Sweden. This form of ownership is good for home buyers because it requires less equity than when financing owner-occupied homes. The acquisition of the Kärnhem project organisation in April 2013 is part of this commitment. The company has developed in a positive direction so far, and better than expected on the acquisition date. We have received housing co-operative expertise and a project portfolio that strengthens our commitment to the Swedish housing market. In other words, we are well positioned to increase market shares and grow in profit ability in 2014 and in the years to come. LOWER SALES IN NORWAY Adapting capacity and cost levels to the existing state of the market is business as usual. An important part of our leadership is to develop robust and adaptable organisations. It is a matter of identifying the opportunities and having the strength to take the necessary steps, both during growth phases and when we need to adjust downward. Block Watne has for many years delivered strong results. Following several years of growth in production capacity and investment in new land, driven by high demand for new homes, the business in Norway must be adapted to a lower order intake. This work began in late autumn We have reduced both the production and the administrative workforce. Block Watne has built a long-term land bank for future housing projects over a period of many years. Better exploitation of the land bank has been a high-priority task. We sell plots that are unsuited to Block Watne s production, and large projects are carried out together with partners. This reduces capital tie-up, increases our ability to execute and lets us spread risk sensibly. Block Watne s core activity is to produce energy-smart, affordable homes with thoughtfully planned layouts for most people. And we will continue to do so. We will place greater emphasis on projects that require less investment in infrastructure and housing types for Norwegian Housing Bank financing, so that we can offer homes to a wider section of the market. STRENGTHENED FINANCIAL POSITION In 2013 we issued another bond, and the Group is now fully refinanced. Our main tasks, going forward, will be to develop attractive and profitable housing projects with limited capital tie-up. Surplus liquidity will be used to repay debt and secure a positive cash flow. It is the ambition for both the board and manage ment, over time, to establish BWG as a stable dividend share. IT IS A MATTER OF IDENTIFYING THE OPPOR- TUNITIES AND HAVING THE STRENGTH TO TAKE THE NECESSARY STEPS. OLE FEET CEO

8 08 ANNUAL REPORT 2013 / BWG Homes / Report from the Board of Directors Levelling off from high levels in Norway, positive trend in Sweden BWG Homes reports an increase in turnover in The Group s operating results are in line with The housing market in Norway was good during the first part of 2013, but showed lower sales towards the end of the year. The situation in the market in Sweden improved during the year MAIN FEATURES OF THE YEAR Continued population growth, low interest rates and unemployment at low levels have guaranteed good framework conditions for the Group s activities in Norway. Block Watne showed a good trend during the first nine months of the year, with volume growth and satisfactory margins. Efficient operation and market-adapted project development, with good sales, contributed to this. Development of existing projects and better exploitation of the land bank was prioritized. The market became more challenging in the second half of the year, with a levelling off of sales and unit prices. A certain tightening of the banks home mortgage policies has also contribut ed to customers being more cautious, and it taking longer to realize sales. A staffing reduction began in November to adapt Block Watne s production capacity to lower sales. The financial situation in Sweden improved during the year. This had a positive impact on the housing market, and customers are returning. There is a great shortage of homes in Sweden as a result of population growth and several years with low production of new homes. BWG Homes AB has executed a number of improvement programmes during the past few years. The development of new marketadapted and production-efficient homes has continued. This has led to increased efficiency, improved quality of deliverables and rising profitability. Increased own residential production in growth areas and ventures in the housing co-operative segment have been areas of priority. Swedish project developer Kärnhem was acquired in April The Group has thus New orders NOK million strengthened its focus on own residential projects and competence in the housing co-operative segment in Sweden. Kärnhem showed a good trend in 2013, and higher activity than planned upon acquisition. The consolidated financial statements (IFRS) show an operating result (EBITDA) of NOK 471 million, which is an increase of NOK 57 million (13.7 per cent) compared with The result before tax was NOK 421 million, and the result for the year was NOK 311 million. This corresponds to NOK 2.28 per share. In 2012 the result before tax was negative at NOK 114 million, and the result for the year was negative at NOK 174 million. This corre sponded to negative NOK 1.36 per share. Operational EBITDA in 2013 was NOK 458 million which is in line with The Group s book value of inventories increased by NOK 490 million during the year. The inventory of unsold homes at the end of 2013 was 120 units against 85 units at the end of Payments related to land acquisition amounted to NOK 313 million in 2013, down by NOK 140 million compared with Block Watne s share of land acquisition in 2013 was NOK 238 million. After paying interest and tax, the cash flow from operations was minus NOK 279 million in This was mainly financed by increased use of the Group s drawing facilities. Despite this, the Group s liquidity was adequate throughout the year. The long-term interest-bearing debt was refinanced in A new NOK 350 million bond issue was placed in November Part of the proceeds from the bond issue has been used to repay project financing. For further information, see page 9 and Note 27 in the consolidated financial statements. A number of organisational changes were accomplished in Lars Nilsen stepped down as CEO in May, and Ole Feet was appointed on the same date. Geir Skoglund became new CEO of Block Watne in April. Mikael Olsson who was CEO of BWG Homes AB, left the company in December. His successor, Joakim Henriksson, takes up position in May new CEO of BWG Homes AB. He comes from the position of head of commercial project development at Skanska Sverige. He has been employed at Skanska since 1987, and has extensive experience from different executive positions in project development and production of homes and commercial properties. Henriksson will take up the position in the beginning of May FINANCIAL FACTORS Framework The accounts for the year are presented in accordance with IFRS (International Financial Reporting Standards). Pursuant to section 3 3 of the Accounting Act, the board confirms that the accounts have been prepared on a going concern basis. The board s report is based on the opera t- ing reports (operating result figures) from segment Block Watne AS (previously referred to as segment Norway), segment BWG Homes AB (previously referred to as segment Sweden) and segment Kärnhem AB (as of May 2013). The operating reports differ somewhat from the consolidated income statements (IFRS). The operating reports focus on the production during the period and its profitability. Pursuant to IFRS, the consolidated financial statements recognize revenue for Block Watne AS on the basis of delivery of completed homes, regardless of the actual value production during the period. See Note 2 in the consolidated financial statements for accounting principles and Note 5, which shows segment information reconciled with the figures in the consolidated financial statements (IFRS). The consolidated results in 2013 The Group had high revenues and a strong order intake in The operational revenues for the year were NOK million. This is an increase of NOK 443 million (12.7 per cent) compared with Block Watne increased its operational revenues by 2.9 per cent, while the operational revenues of BWG Homes AB rose by 14.5 per cent. Kärnhem s accounting figures were consolidated in May. Kärnhem s pro forma operational revenues for 2013 rose by 38 per cent compared with EVENTS AFTER THE REPORTING DATE New CEO of BWG Homes AB Joakim Henriksson has been appointed as The result before depreciation and finance (operational EBITDA) was NOK 458 million, which is in line with The year s opera-

9 Report from the Board of Directors 09 Order backlog NOK million Operational revenue and EBITDA margin NOK million % % % % % Q Q Q Q Q Q Q Q tional EBITDA margin was 11.7 per cent, against 13.1 per cent in The order intake rose by NOK 566 million (16.8 per cent) from 2012 to 2013, and was NOK million. Block Watne had strong sales during the first nine months of the year, and a clear improvement in the Swedish housing market, especially during the second half of the year, resulted in rising sales at both BWG Homes AB and Kärnhem. The Group s order backlog at the end of the year was NOK million, which is an increase of NOK 221 million (15.2 per cent) compared with the end of This was mainly due to a higher order backlog at BWG Homes AB and a consolidated order backlog for Kärnhem. Results under IFRS The consolidated financial statements include income from homes transferred to clients during the accounting period, irrespective of the actual production during the period. The consolidated financial statements show operating revenues of NOK million, against NOK million in 2012; an increase of NOK 540 million (15.6 per cent). The result before depreciation and finance (EBITDA) was NOK 471 million, against NOK 414 million in 2012; an increase of NOK 57 million (13.7 per cent). The year s EBITDA margin was 11.7 per cent, against 11.9 per cent in The operating result before interest and taxes (EBIT) was NOK 454 million, against NOK 403 million in The year s EBIT margin before write-downs was 11.3 per cent, against 11.6 per cent in The profit for the year was NOK 311 million in 2013, and corresponds to NOK 2.28 per share. In 2012, the result was a deficit of NOK 174 million. In 2012, goodwill associated with BWG Homes AB was written down by NOK 404 million. The growth in sales and the result in 2013 are due to increased delivery volume at Block Watne, a significant improvement at BWG Homes AB, and the figures from Kärnhem being included in May. Financing In November 2013, a new unsecured bond of NOK 350 million was issued, with a five-year maturity. The net proceeds from the new bond issue are used to refinance debt. Following this issue, BWG Homes ASA has three bonds outstanding, with a total volume of NOK 1 billion. The bonds were well received in the market, and all of the bonds are listed on Oslo Børs. Block Watne s ceiling for project financing from Nordea and Danske Bank was raised by a total of NOK 600 million in The total overdraft facility is unchanged compared with The presence in the bond market means that the Group has access to a good alternative to the banking market when required. Cash flow and liquidity After paying interest and tax, the Group s cash flow from operations in 2013 was a deficit of NOK 279 million compared with a deficit of NOK 281 million in The operating profit before interest and taxes in 2013 was NOK 471 million. The deviation from the accounting result is mainly due to NOK 161 million in tied-up working capital, land acquisitions worth NOK 313 million, and interest and tax paid amounting to NOK 238 million. In 2013, the Group invested NOK 24 million in tangible fixed assets, including purchase of shares in affiliated companies. The acquisition of Kärnhem entailed a cash outlay of NOK 21 million. The Group s net cash flow from financing in 2013 was NOK 414 million. This includes the proceeds from the NOK 350 million bond that was issued in November. Part of the proceeds has been used to repay project financing. At the end of 2013, the Group had NOK 184 million in liquid assets. The Group also has access to liquidity through project financing. This will depend on the status of the projects, and will vary throughout the year. On whole, the Group has had satisfactory liquidity, taking consideration of ongoing access to project financing from banks. In addition to financing needs associated with its land bank and homes under construction, the Group also has a considerable need for provision of guarantees. These are mainly guarantees in favour of customers. The Group has a good level of cooperation with several banks and insurance companies, and the ceilings established for credit and guarantees are seen as adequate. Liabilities Net interest-bearing liabilities, i.e. total interest-bearing liabilities reduced by liquid assets and interest-bearing receivables, amounted to NOK million at the end of 2013 against NOK million at the end of Increased debt is mainly due to acquisition of land and increased inventory related to the production in Block Watne. Project financing (loans for land and construction) and drawing on operating credit amounted to NOK 917 million. At the end of 2013, the long-term debt covered a loan from Nordea to Block Watne of NOK 100 million, due in The loan has annual instalments of NOK 50 million. The other long-term debt consists of bond debt of NOK 300 million due in 2015, NOK 350 million due in 2016, and NOK 350 million due in Equity The Group s equity at the end of 2013 was NOK million. This gives an equity ratio of 41.4 per cent. The corresponding figures at the end of 2012 were NOK million and 41.2 per cent, respectively. Dividends for 2013 The Group seeks to pay its shareholders annual dividends as long as this does not have a negative impact on BWG Homes future ambitions regarding growth or capital structure. The board has previously communicated a dividend level of a minimum 50 per cent of the ordinary profit before tax. The board has decided a moderate dividend level for 2013 to prioritize repaying debt. The board proposes a dividend of NOK 0.25 per share for the 2013 financial year; amounting to NOK 34 million. FURTHER INFORMATION REGARDING THE SEGMENTS Block Watne Block Watne s core activity is development of own residential housing projects on the edges of big cities and city centres. Block Watne has a large land bank for future housing projects.

10 10 ANNUAL REPORT 2013 / BWG Homes / Report from the Board of Directors Equity development Per cent The operations are conducted out of 20 regional offices from Trøndelag in Central Norway towards the south. The company s employees work on development of properties, product development, project planning, sales and construction. The homes are built at the building site following standardized construction methods, and without the use of prefabrication. The Norwegian housing market performed well during the first part of the year, with high demand for new homes. After several years of inflation and high sales, especially in over-populated areas, sales and the rise in house prices levelled off. The second half of the year saw a certain tightening of the banks home mortgage policies. It has also been noted that the cost level for home production has risen, among other factors, as a result of technical regulations. Early project planning and zoning of sites has become more resource-intensive. According to Prognosesenteret, the total housing production in 2013 was about 6 per cent lower than in Block Watne experienced a rise in sales and historically high order intake in However, poorer sales in the fourth quarter, combined with increased production costs, led to weaker profitability than in homes were sold in 2013, and 759 homes were delivered, against 692 sold and 751 delivered homes in At the end of the year, Block Watne had 915 homes in production, against in The operating revenues for 2013 amounted to NOK million; an increase of NOK 67 million (2.9 per cent), against The operating result (operational EBITDA) was NOK 367 million, which was a decline of NOK 53 Shareholder structure Per cent 22% Foreign 78% Norwegian million (12.5 per cent). The operational EBITDA margin was 15.5 per cent, against 18.2 per cent in The order backlog at the end of 2013 was NOK 504 million, against NOK 609 million at the end of The 17.3 per cent decline in the order backlog is a direct effect of homes being sold at a later stage of the construction period, and thus spending less time in the order backlog. The business also had holdings of 99 completed and unsold units at the end of 2013 (including show houses), against 58 units at the end of Homes that are almost finished or ready for delivery are normally more attractive for customers. The production capacity has increased over a period of several years, with high and rising demand. As a result of weak sales in the fourth quarter, a staffing reduction of about 100 man-labour years was initiated in November. At the end of 2013, staffing had been decreased by 68 man-labour years (10.4 per cent), mainly in production. The need for further reductions in production capacity will be assessed on an ongoing basis in relation to the situation in the market and initiation of new projects. At the same time, improvement programmes have been initiated to further standardize products and work processes, and work began to reduce the land bank and associated tied-up capital. A new national piecework scale for carpentry (time system) entered into force on 9 January The time system will provide grounds for correct remuneration of carpenters and good production management. During the year a great deal of work went into adapting and checking estimates and material requisitions to the new time system. Work rules and terms have been reviewed and adjusted in collaboration with employee representatives. Several of the district offices initiated new projects during the year in addition to continuing to develop sites and projects. The company is constantly developing new standard houses for own residential projects. Homes have also been built that meet the passive house standard. In 2013, a passive house was completed in Nittedal, outside Oslo. Passive houses have been built in Rogaland in the past. Market initiatives, property viewings and customer follow-up have been conducted, with emphasis on local activities. BWG Homes AB BWG Homes AB, with Myresjöhus and SmålandsVillan, is one of the largest players in the single-family house market in Sweden. The core business of Myresjöhus is the devel opment and production of standard houses for customers with their own plots of land, or as own residential projects, either independently or in collaboration with devel opment partners. The homes structural elements are produced in own factory. Assembly and completion is done at the building site. SmålandsVillan develops and produces prefabricated standard houses, mainly for customers with their own plots. The house modules are produced in own factories. The modules are shipped to the building site, where the houses are completed. After several challenging years of falling sales and low home production, the market showed clear signs of improvement in Home buyers are returning to the market, and sales rose throughout the year. The Stockholm area saw the greatest growth in sales and production. According to Prognosesenteret, some homes were initiated in This is 40 per cent more than in 2012, and is the highest annual initiation rate since The underlying need for new homes is still driven by high population growth and several years of low housing production saw an increase in sales and the delivery volume at BWG Homes AB. This resulted in a rise in sales and profits, and the margins improved. 871 homes were sold in 2013 and 793 homes were delivered to customers, against 664 sold and 738 delivered homes in At the end of the year, there were 222 homes in production, against 205 in The operating revenues for 2013 amounted to NOK million; an increase of NOK 167 million (14.5 per cent) compared with The operating result (operational EBITDA) was NOK 96 million; an increase of NOK 36 million (60.8 per cent). The operational EBITDA margin was 7.3 per cent, against 5.2 per cent in The Group ended 2013 with an order backlog of NOK million, against NOK 845 million at the end of 2012, which represents an increase of 24.4 per cent. Moreover, the business had holdings of 21 completed and unsold homes at the end of 2013, compared with 27 homes at the end of The production capacity was developed during the year to handle the increased demand and volume growth. At the end of 2013, staffing was increased by 40 man-labour years (11.3 per cent), mainly in production. In addition, it had 23 contracted workers at the end of the year. As part of the ordinary improvement work, several projects are being conducted to improve quality and efficiency, drawing on the LEAN philosophy. In 2013, significant work was done to coordinate production between factories. The improvement work continued with a focus on internal logistics, more efficient complaints handling and further reduction of complaints costs and the number of production hours per house. Direct costs associated with complaints have dropped significantly during the past few years.

11 Report from the Board of Directors 11 Residential housing starts in Norway Residential housing starts in Sweden e 15e 16e e 15e 16e Total Multi unit houses Detatched houses Small houses Source: Prognosesenteret AS In addition to continuing the production of detached houses, the development of own residential projects and housing co-operatives were given priority in Such housing projects will contribute to a higher share of standardized products and production, and thus better efficiency at factories and other parts of the business. The modular Start Living concept was developed in 2012, and continued in early These are spaceefficient and affordable homes that are suitable for a great section of the housing market, including housing co-operative projects. The modules can be put together as detached houses, semi-detached houses, terraced houses and multi-occupied houses. The first Start Living projects will be delivered in the first quarter of During the year, BWG Homes AB launched six housing co-operative projects for sale. Over 80 units within these projects have already been reserved by customers. A growing number of projects will be launched in In 2012, 34 home owners in the Skåne region of Sweden presented claims for compensation against Myresjöhus for damp and mould damage in houses with rendered façades. In January 2013, the Göta Court of Appeal ruled that Myresjöhus was not liable for the damage, as the houses were produced in accordance with the professional standards in effect at the time of construction. The counter-party has submitted an appeal to the Swedish Supreme Court, which has decided to hear the case. It has been indicated that the case will be heard in Kärnhem The acquisition of Kärnhem AB was completed on 25 April The accounting figures were consolidated in May The core activity of Kärnhem is development of housing projects based on its own portfolio of land and the products it has developed. Kärnhem also has a small house factory. Windows are manufactured at the same facility. The company has a land bank with a capacity of approx dwellings, mainly in the housing co-operative segment. The portfolio of land is principally based in growth areas from Stockholm and southwards. More than 80 per cent of the housing projects are construction of housing co-operatives. The houses are built by external contractors who buy wall panels and windows from Kärnhem s own production. Kärnhem also has a portfolio of 14 affordable single-family houses that are produced in the company s factory. The houses are delivered as construction sets to the end-customer (private customers or professional actors), who is responsible for completion. In December, an agreement was entered into with Sunnerbo Fönster AB regarding sale of Kärnhem s window factory Sävsjö Snickerifabrik. Sunnerbo Fönster AB will take over the business, with equipment and 17 employees, effective January 2014, and will hire the premises for four years. The sale was made at recorded value. Turnover and profitability at Kärnhem show ed a positive trend in The pro forma sales for 2013 rose by NOK 74 million (38 per cent), and the pro forma operative EBITDA rose from minus NOK 1 million in 2012 to NOK 25 million in The pro forma EBITDA margin of the year was 9.2 per cent. Kärnhem realized seven housing co-operative projects, with a total of 147 homes for sale in 2013, and had 10 projects under construction at the end of the year. 127 homes were sold in 2013, and 65 homes were delivered to customers, against 82 sold and 79 delivered homes in At the end of the year, there were 129 homes in production, against 60 in At the end of 2013, Kärnhem had 51 employees. 17 of them left the company in January 2014, as a result of the sale of the window factory. Hetlandhus Hetlandhus AS reports its figures under Other units. See Note 5, Segment information, in the consolidated accounts. Hetlandhus has been established as a sales channel in Norway for homes produced at the Group s factories in Sweden. The homes are delivered to construction sites in modules and comply with the requirements in Norwegian regulations. The homes are sold through affiliated agents in central parts of Eastern Norway and the Trøndelag region in Central Norway. 29 homes were sold in 2013, and 40 homes were delivered to customers. The operating revenue for 2013 was NOK 73 million and the operating result (operational EBITDA) was minus NOK 7 million. The negative result is mainly due to high transport and assembly costs, and the SEK/NOK exchange rate. RISK FACTORS Risk at the BWG Homes Group may be divided into operational risk, financial risk and other risk. There are a number of different risk elements within these main categories; some more important than others. In the organisation of the business, emphasis is placed on good control systems. Internal control will ensure that the Group has an overview of the collective risk exposure, and that adequate routines have been established to ensure that the company as a whole has an acceptable risk profile. Operational risk Operational risk is the risk of a negative development or impact on profits as a result of flaws, faults or defects in the company s operations. The homes that the Group supply are complex products with a substantial development and production time. The products also have a long life. There are extensive statutory requirements regarding quality, documentation, dimensioning, energy efficiency, etc. The company has guarantee liability for products delivered that runs for several years after delivery. The statutory requirements are different in each country. The production processes at the factories in Sweden make demands on production management and coordination at the factories. Production at building sites in Norway raises logistical issues and exposure to unforeseeable weather conditions. Preparing sites and infrastructure (roads, water, sewage) for housing projects, as well as some of the work at the homes, like electrical installation, is generally performed by sub-contractors. ISO certification has been established as part of the work with quality assurance and control of the company s operations. To limit the

12 12 ANNUAL REPORT 2013 / BWG Homes / Report from the Board of Directors financial consequences of errors and defects in the operations, the Group has taken out different insurance policies from insurance brokers. Housing projects are normally initiated before every unit in the project is sold, partly because this makes it easier to sell homes that are close to completion. The sale process then takes place at the same time as the construction. The construction and execution of a project are driven with a view to what is best for production, which requires tying up capital. Project financing is normally sought for units that have been sold, but such financing is not available for unsold units. If sales related to ongoing projects come to a halt, the holdings of completed and unsold units may increase, with associated tying up of capital. This can pose a challenge in terms of available frames for financing. Following a period with an increased share of unsold units in production at Block Watne, the business seeks to reduce this figure. In 2013, the Group began selling homes in housing co-operatives in Sweden, and the main part of the business in Kärnhem also consists of co-operative projects. Such projects carry a different type of risk than other project work, including through the Group undertaking a repurchase obligation for any unsold units in the project, and by establish ing specific legi slation linked to initiating and executing housing co-operative projects. Housing cooperative projects do not start construction until full financing of the entire project has been established, and at least 50 per cent has been sold. The repurchase obligation may nevertheless entail tying up significant capital should sales come to a halt. It is further an important assumption for our business that our customers have access to home financing. In Norway, such financing is provided by banks, but also to a significant extent by the Norwegian State Housing Bank. Limitations on capital or restrictions on lending normally have a great impact on home sales, and thus on our ability to execute projects and generate profitability. Internal control The most important internal control measures in relation to operational risk are the organisation of operations, internal training, established procedures and ongoing project follow-up. Central project planning departments have been established at both Block Watne and BWG Homes AB (Myresjöhus and Smålands- Villan) to produce drawings and projects for all homes and development projects. The employees are primarily engineers and architects. They ensure compliance with all product-specific requirements in legislation. Central planning is also an important element in achieving good, consistent quality of production that is performed in several places, as well as the best utilization of sites, materials, purchased services and our own production resources. Central procurement functions have been established at Block Watne and BWG Homes AB. Long-term contracts are normally entered into with selected sub-contractors. Co-operation with suppliers is important in order to secure the quality, price and efficiency of deliverables, as well as contributing to product development.

13 Report from the Board of Directors 13 1 ROAR ENGELAND (born 1960) CHAIRMAN OF THE BOARD. Position: Self-employed. Prior positions: CEO Orkla Financial Investments and Executive Vice President at Orkla ASA , member of executive management of Orkla ASA , Director Orkla Konsernutvikling , consultant McKinsey , management positions in the Norwegian Army Education: Norwegian Military Academy (Hærens Krigsskole), 1986, MBA at INSEAD, Fontainebleau, France, 1991, Master of Philosophy, University of Oslo, Board positions BWG: Chairman of the board from May 2013, chairman of the Compensation Committee from February Other board positions: Chairman of the board of Alfa Nord AS, serves in the boards of privately owned companies. Participation in BWG board meetings in : 6 of 6. Shares in BWG: 0. 2 DANIEL KJØRBERG SIRAJ (born 1975) VICE CHAIRMAN. Position: Managing director OBOS Nye Hjem AS, Executive Vice President in OBOS Housing and project development, Managing dir ector Fornebu Utvikling. Prior positions: Employed in OBOS since 2004 (Director strategy and business development, , Company secretary, , Business devel oper, , Lawyer, , Associate, ), Political advisor, Oslo City Council, Education: Degree in law (cand. jur.), University of Oslo, AFF Young Leadership Program, Board positions in BWG: Director of the board from May 2012, vice chairman and member of the Audit Committee from May Other board positions: Board positions in companies owned by OBOS: Chairman of the boards of Nidaros Nye Hjem AS, OBOS Eiendomsmeglere AS and OBOS Prosjekt AS, director of the board of OBOS Forretningsbygg AS. Participation in BWG board meetings in 2013: 9 of 10. Shares in BWG: 0. 3 CHARLOTTE AXELSSON (born 1948) DIRECTOR OF THE BOARD. Position: Independent consultant. Prior positions: Managing director of HSB Stockholm, , Managing director of Svenska Bostäder, Stock holm, , Managing director of Familjebostäder, Stockholm, , Chief administrator subsequently Managing director of SEB Arsenalen, , ass. finance secretary in City of Stockholm, , different administrative positions in Svenska Bostäder, and in City of Stockholm, Education: School of social studies, 1971, Local government administration. Board positions in BWG: Director of the board from May 2013, member of the Compensation Committee from February Other board positions: Chairman of the boards of Aff Forum för förvaltning och service and Vasallen AB. Participation in BWG board meetings in : 5 of 6. Shares in BWG: HEGE BØMARK (born 1963) DIRECTOR OF THE BOARD. Position: Independent consultant. Prior positions: Financial analyst in Orkla Finans (Fondsmegling) AS and in Fearnley Finans (Fondsmegling) AS, project manager in AS Eiendoms utvikling. Education: MBA degree from Norges Handelshøyskole, Bergen, Board positions BWG: Vice chairman , director of the Board since Chairman of the Audit Committee since Other board positions: Director of the boards of AF Gruppen ASA, Union Eiendoms invest Norge ASA and Stiftelsen Institutt for spisefor styrrelser. Parti ci pation in BWG board meetings in 2013: 9 of 10. Shares in BWG: 0. 5 LARS NILSEN (born 1968) STYREMEDLEM. Position: CEO of LANI-Group. Education: BSBA Finance and Real Estate, University of Denver, Prior positions: CEO of BWG Homes ASA from 2005 until May CEO of Block Watne AS Chairman of the board of Block Watne AS Board positions BWG: Director of the board from May Other board positions: Chairman of the board of G. S. Bulktransport AS, director of the boards of Peisselskabet AS and Pob Gruppen AS. Serves as chairman or director of the boards of a number of privately owned companies. Participation in BWG board meetings in : 5 of 6. Shares in BWG: TORE MORTEN RANDEN (born 1965) EMPLOYEE ELECTED DIRECTOR OF THE BOARD. Position: Carpenter in Block Watne since Education: Technical college (Craft certificate carpentry). Board positions BWG: Director of the board of BWG Homes since Director of the board of Block Watne since Senior trade union representative for the carpenters in Block Watne. Other board positions: Member of the Boards of Målervirksomhetens Fellesutvalgsfond AS and Fellesforbundet avd. 766 Snekker- og Tømmermennenes forening. Par ti cipation in BWG board meetings in 2013: 9 of 10. Shares in BWG: LARS ØRJAN REINHOLDSSON (born 1963) EMPLOYEE ELECTED DIRECTOR OF THE BOARD. Position: Carpenter in Block Watne since Education: Agricultural college graduate and technical college (Craft certificate carpentry). Board positions BWG: Director of the boards of BWG Homes and Block Watne since Partici pation in BWG board meetings in 2013: 10 of 10. Shares in BWG: 0. 8 MAGNE STAALSTRØM (born 1951) EMPLOYEE ELECTED DIRECTOR OF THE BOARD. Position: Project manager in Block Watne since Education: Constructional engineer, Sørlandets tekniske skole, Board positions BWG: Director of the boards of BWG Homes and Block Watne since Participation in BWG board meetings in 2013: 10 of 10. Shares in BWG: ) New Board member as from Annual General Meeting 24 May 2013 More information at: BWGHOMES.NO/ABOUT BWG Decision-making processes have been forma lized and implemented for site acqui sition, initiating sales and initiating construction. Financial analyses and risk assessment are integrated into the decision-making processes. The Group has a standardized and detailed production process, to ensure effective production, with adequate security and control in the production environment. Internally, there is a strong focus on training, information sharing and compliance with described production methods and processes. The training is developed on an ongoing basis in accordance with changes to legislation and products. Guidelines for ethics and corporate social responsibility have also been established that apply to all employees. The ISO-certified (ISO 9001) quality systems play a central role in this regard. These systems document processes and procedures for the entire business, including procedures for noncompliance, complaints and improvements. Myresjöhus and SmålandsVillan are also environmentally-certified according to ISO The Group has established an extensive regime for financial follow-up of projects. Controllers in the central staff functions review projects on an ongoing basis. Periodic stock assessments are made of ongoing projects that also involve checking progress, cost developments etc. Accounting information at the project level is reported to the operative management of the businesses. Development projects are also being conducted at both the Norwegian and Swedish businesses to update systems for reporting and control. Kärnhem has significant competence on execution of housing co-operative projects. In 2013, the other business in Sweden implemented major training measures and development work to secure good control of projects and the changed risk associated with housing co-operative projects. Financial risk The Group s financial policy sets the framework for the financial risk management. The financial policy is established by the board. The CEO and CFO follow up the compliance in the operations. Financial risk can be divided into financial market risk, which includes interest rate risk and currency risk, and credit risk and liquidity risk. The financial risk is described in detail in Note 20 to the consolidated financial statements. Financial market risk Market risk is the risk of loss or a negative financial trend as a result of fluctuations in financial market prices. For BWG Homes, changes in interest rates and exchange rates are major risk factors. The Group has established a financial policy that regulates how the Group can expose itself to such risk, and how the Group will limit the financial market risk. Interest rate risk: Changes in interest rate levels are of significance both through their effect on demand for homes and on the Group s borrowing costs. Changes in interest rate levels may also affect the valuation of the company s assets, including goodwill and the value of brands. The Group s borrowing and working capital loans have float-

14 14 ANNUAL REPORT 2013 / BWG Homes / Report from the Board of Directors ing interest rates. The financial turmoil that characterizes much of the global economy suggests that interest rates in Norway and Sweden will remain at relatively low levels in the coming years. In December 2012, a fixed interest rate agreement worth NOK 250 million of the Group s long-term debt was entered into with a fouryear maturity. Currency risk: The Group has extensive operations in Sweden and the Group s results are therefore affected by fluctuations in the SEK/ NOK exchange rate. There have been no major fluctuations in the relationship between SEK and NOK. In 2013, the Group decided to currency hedge a share of the Group s net SEK exposure. Current trading agreements worth NOK 300 million were entered into in August 2013 that expose NOK debt to SEK currency. The hedging covers some 30 per cent of the Group s net exposure. The Group otherwise has little exposure to direct currency risk. Only a small part of the Group s purchases come directly from abroad. These purchases are hedged by means of forward exchange contracts in NOK. Credit risk Credit risk is the risk of loss associated with giving credit. The Group normally does not grant credit to private customers. Production of sold homes normally does not begin until the customer has presented proof of financing, and homes are not handed over until full payment has been received. Various forms of payment are agreed with major and professional actors. If credit is granted, a credit check is performed on such customers, and security must be provided. Consequently, bad debts are insignificant. Liquidity risk Liquidity risk is the risk that the Group cannot meet ongoing obligations. The Group s total loans with Nordea were renegotiated in the extension of the bond issues in All long-term debt to Nordea was then settled and replaced by bond debt of NOK 300 million due in 2015, bond debt of NOK 350 million due in 2016, and a new NOK 200 million bank loan to Block Watne due in In November 2013, a new unsecured bond of NOK 350 million was issued, due in The maturity structure and the Group s results and solidity indicate that the refinancing risk on the long-term debt is acceptable. The Group has good profitability, but Block Watne s business is relatively capital-intensive as it grows. Correspondingly, increased activities in the Swedish operations also result in increased capital need. In practice, the liquidity risk is mainly linked to tied-up capital in projects and the risk of limitation on access to project financing. It is important to have agreements for credit facilities that allow growth and that safeguard adequate financing of the whole production cycle. The total overdraft facility for Block Watne is NOK 150 million; NOK 100 million of which is an overdraft facility from Nordea, and NOK 50 million is an overdraft facility from Danske Bank. At the end of 2013, the Group had unused facilities for project financing in addition to undrawn overdraft facilities that amounted to NOK 263 million in total at the end of the year. Other risk This includes the risk of negative market development for the Group s products, as well as reputation risk. Market trends: Both the supply and demand for homes in Norway and Sweden will change over time. Factors affecting demand include access to mortgages, interest rate levels, employment and changes in settlement patterns. There is population growth in both Norway and Sweden, as well as migration to densely-populated areas, at the same time that interest rates for home financing are still good. However, increased equity requirements for home buyers in Sweden have reduced purchasing capacity. The supply side is characterized by under-production, partly as a result of the 2008/2009 financial crisis, and too few plots having been zoned for residential purposes in areas with significant migration. This has resulted in a shortfall in homes being built in both Norway and Sweden to meet the demand. The development in the market will always have a direct impact on housing prices. Low house production over a period of several years entails higher house prices, especially in densely-populated areas as long as the economic climate is good and home buyers manage to procure financing. House prices in Norway and Sweden have risen during the past few years. There is uncertainty associated with the development of price levels. The Group primarily limits its market risk by concentrating its operations on areas outside urban centres and by limiting the size of the projects. In this way, the Group avoids the most volatile sector of the housing market. Production-efficient and reasonably-priced family homes are also prioritized. Such products represent the greater part of sales. As a major industry actor, the Group closely monitors market trends and the factors that most directly affect operations. Active product development is conducted, with a focus on good use of space and energy economy for homes to be attractive to customers also in the future. The housing sector is subject to considerable legislative regulation and is of great importance to the national economy and development. There is therefore also a political risk. This means that there is a risk that legislators and regulatory authorities will introduce requirements and regulations that may have a negative effect on demand for housing and cost levels. Reputation: The Group owns five recognised and well-established brands. There is a deliberate focus on long-term brand-building, professional customer handling and communication with the outside world. Over the course of time, through its brands, the Group has built up a large customer group and wide-ranging contacts with suppliers and with the media, the authorities, industry organisations, financial centres, etc. As a listed company and a major home builder in both Norway and Sweden, the company will often be used as an example for illustrating trends, challenges and problems in the building industry. A professional and proactive approach to this by the company is seen as important in order to maintain confidence in the company, our brands and our products. If confidence in the brands and the company were to deteriorate, it may involve risks regarding sales, project development, access to capital, land acquisition, recruitment, etc. The ongoing work on quality plays a key role THE BWG HOMES SHARE bwg Share price as at (NOK) Highest closing price (NOK) Lowest closing price (NOK) Number of shares traded (million shares) Number of outstanding shares as at Foreign ownership stake as at % 19.1% 12.7% 14.7% 17.2%

15 Report from the Board of Directors 15 to limit such risks. Procedures and routines have also been established for information processing in both the operating units and the parent company. CORPORATE GOVERNANCE BWG Homes corporate governance guidelines follow the Norwegian Code of Practice for Corporate Governance of 23 October The guidelines, compliance with the Nor wegian Code of Practice, and any deviations are discussed in a separate section on Corporate Governance on page 72 of the annual report. DISTRIBUTION OF HOLDINGS AS AT number of shares number of shareholders holdings ownership stake % % % % % % Total In accordance with the Norwegian Code of Practice, instructions have been drawn up for the board, the audit committee, the CEO, the board s relationship with the auditor, the nomination committee, investor relations work, and guidelines for ethics and corporate social responsibility. Guidelines have also been drawn up for the board s handling of any takeover bids for the company. SHAREHOLDERS Shareholder structure The largest shareholder is Oslo Bolig og Sparelag (OBOS), which at the end of 2013 had a holding of per cent. The former CEO, current board member, Lars Nilsen, sold 18.4 million shares to OBOS on 12 April After the sale, he had a 2.34 per cent holding through his companies Lani Industrier AS and Lagulise AS. The company has both private and institutional shareholders. As at 31 December 2013, the company had 1,569 shareholders; 130 of whom were foreign, with a holding of 19.3 per cent. A list of the 20 largest shareholders at 31 December 2013, and the board and management shareholdings can be found in Note 26 to the consolidated financial statements. The list of the 20 largest shareholders is updated every Monday on the company s Web site. Trade in BWG shares Listed shares are divided into segments according to share liquidity. BWG Homes is part of the OB Match segment, which includes shares with a minimum of 10 transactions per day, except for the 25 most traded shares on Oslo Børs which form the OBX segment million shares were traded in 2013 and the shares were traded on all trading days. The closing price on the Oslo Børs on the reporting date was NOK BOARD OF DIRECTORS AND GROUP MANAGEMENT Composition of the board The board of BWG Homes has eight members; five of whom are elected by the general meeting, and three by and from the Group s business in Norway. The shareholder-elected members have broad experience from the hous ing industries in Norway and Sweden, property development, finance and law, in addition to experience from board work in other companies. The employee-elected board members represent both production and administration. The five shareholder-elected members were elected at the general meeting on 24 May 2013 for a term of two years until the general meeting of The three employee-elected board members were elected in October 2012 for a two-year term. The CVs of the board members are discussed on page 13 of the annual report. A summary of their shareholdings is included in Note 26 to the consolidated financial statements. The board members CVs and information on shareholdings can also be found on the company s Web site. Group management The Group s management as at 31 Dece mber 2013 consists of CEO Ole Feet, CFO Arnt Eriksen and Communications Director Elisabet Landsend. The operative management of the Group also includes the CEOs of subsidiaries Block Watne AS, BWG Homes AB and Kärnhem AB. Remuneration policy for executive employees Remuneration for executive employees shall be competitive in relation to remuneration of management at comparable companies. The remuneration shall reflect responsibilities and performance. The remuneration system for executive employees consists of a basic salary, bonus scheme, pension scheme, severance pay scheme and benefits like company car, newspapers, telephone, etc. The basic salary is subject to annual adjustment. The CEO s remuneration is set by the board. Salary conditions for the CFO and Communications Director are set by the CEO. Remuneration for the CEO of Block Watne AS, the CEO of BWG Homes AB, the general manager of Hetlandhus AS, and the CEO of Kärnhem AB are set by the boards of the respective subsidiaries, following a recommendation by the CEO. Bonus schemes The board determines the bonus scheme for the CEO. The CEO s bonus for 2013 may at maximum amount to 6 months salary. The bonus criteria are mainly resulted to achievement of results. The CEO sets the bonus criteria for other executive employees. They have individual bonus schemes where the maximum bonus is agreed individually, based on the company s result and each person s performance. The bonus schemes are limited to up to 12 months pay. The bonus criteria are primarily linked to achievement of results in each person s area of responsibility. Executive employees do not have any sharebased remuneration or option schemes. BWG Homes is under no obligation to grant executive employees, the board or other employee profit-sharing, share-based remuneration or share option schemes. Severance pay Executive employees have individual agreements that on certain terms ensure them severance pay after the normal notice period. The severance pay scheme has a ceiling, and the longest severance pay period is for 12 months salary. There are no agreements for the executive employees to receive special compensation upon termination of employment or change of position. Pension schemes for executive employees The Group has various pension schemes in the different businesses. The CEO and other employees of the parent company are covered by its pension scheme. This is a defined-benefit scheme that provides pension of up to 12 times the Norwegian National Insurance Basic Amount (12G). The CEO of Block Watne AS is covered by the defined-contribution scheme that has been established at the company, in which contributions to the pension scheme are a defined percentage of the employee s pay. The CEO of BWG Homes AB is covered by the Swedish collective wage agreement, and thus the contribution scheme established at the company. The scheme provides a pension for income of up to 30 times the Swedish National Insurance Basic Amount. The CEO of Kärnhem AB is covered by the

16 16 ANNUAL REPORT 2013 / BWG Homes / Report from the Board of Directors Swedish collective wage agreement, and thus the contribution scheme established at the company. The scheme provides a pension for income of up to 30 times the Swedish National Insurance Basic Amount. He also has an individual pension agreement with an annual allocation of SEK See otherwise Note 8 to the consolidated accounts for a specification of all elements of benefits to the CEO and other executive employees. For pensions and pension obligations, see Note 7 to the consolidated accounts. SOCIAL RESPONSIBILITY BWG Homes wants to be a responsible social actor by virtue of its role as a leading home builder in its markets, by setting new standards in the industry and as an employer. Corporate social responsibility affects our activities and those parts of the value chain in which the Group has significant influence, and that on whole affect people, society and the environment. Exercising corporate social responsibility is also important to the Group s reputation, in relation to shareholders and the financial market, customers, employees, the authorities and other interested parties. The board has drawn up guidelines for the Group s corporate social responsibility, and the board annually follows up compliance with the guidelines. BWG Homes will constantly assess the social consequences of its activities and implement improvements and measures where necessary. BWG Homes bases its guidelines on the basic principles of the UN s Global Compact; the purpose of which is to guarantee human rights, standards in working life, the environment and anti-corruption. The guidelines are available at bwghomes.no. Settings new standards for industry development BWG Homes is a prime mover in the development of the industry, and works towards a functioning housing policy. The Group s knowledge and experience are brought into play in different trade fora, in collaboration with research environments on the development of new housing solutions, and in different central consultation committees. The Group s long-term profitability is an important prerequisite for exercising corporate social responsibility through good, safe workplaces, contracts for suppliers, reducing the environmental impact by developing environmentally-smart, energy-efficient homes and home production, and by paying tax to the countries in which we operate. Our businesses have extensive contact with central and local authorities, landowners, suppliers and other stakeholders in the local communities in which we are considering building projects or have projects under construction. Local contractors and skilled workers are used for foundation and finishing work. This contributes to local jobs and value creation. Human rights BWG Homes only operates in Norway and Sweden, and respect for human rights is strong in both countries. The operative businesses have long-term agreements with the suppliers of building materials and products used in housing production. When new agreements are established with suppliers, they incorporate the Group s corporate social responsibility guidelines. Beyond this, no other specific targets or measures are established. Working life standards Lately there has been a focus on labour market crime in the construction industry. Organised crime with international ties has become a growing problem. This is particularly seen among subcontractors with several levels in the contract chain. A number of cases of social dumping, money laundering, and tax evasion have come to light. As the responsible developer, our businesses must ensure that the suppliers and subcontractors we use comply with applicable legislation. This is followed up through procedures that are part of the quality system and in contract documents. The Group will consider taking further steps in 2014 to ensure subcontractor compliance with our working life standards. The Group is represented on both the employer and employee side in the central wage negotiations between the Confederation of Norwegian Enterprise NHO (the Federation of Norwegian Construction Industries BNL) and the Confederation of Trade Unions LO (the Norwegian United Federation of Trade Unions) in Norway. Systematic training and development opportunities for the Group s employees are one of the points in the Group s strategic main direction, and are also set out in the Group s ethical guidelines. In 2013, on average NOK was spent per employee on training activities at Block Watne; NOK at BWG Homes AB and NOK at Kärnhem. In 2012, on average NOK 4,600 was spent at both Block Watne and BWG Homes AB. Training activities in 2014 are expected to be at the same level as in 2013, measured in NOK per employee. Block Watne has for many years had apprentices in carpentry to contribute to recruitment in this field. Number of apprentices will vary from year to year, and in the last five years accounted for between 8 and 12 percent of the total carpentry level in the company. Apprentices are protected as far as possible with regards to downsizing. At the end of 2013, Block Watne had 43 apprentices (12.3 per cent) compared with 39 apprentices in 2012 (9.3 percent). Block Watne s goal is to continue the apprenticeship scheme in 2014 at the same level as in At the end of 2013, the Group had a total of 14 per cent female employees compared with 13 per cent at the end of When recruiting employees, the Group makes a focused effort to increase the percentage of women, although this is made more difficult by a marked recruitment bias in the building sector. The share of female employees is expected to be at the same level in 2014 as in Organisational and personnel matters are further discussed on page 17. Anti-corruption work BWG Homes has a zero tolerance policy on corruption. This is set out in the Group s ethical guidelines, and incorporated in the rules regarding work at the operative businesses. An upper limit has been set for the value of gifts that may be received. Rules regarding employee purchases of homes and building materials for own use are set out in the rules regarding work at the respective operative businesses. The discount terms for employees follow the authorities recommended limit for tax-free personnel discounts. Goods and services for housing production are procured in accordance with established agreements with selected suppliers. The board has drawn up authorisation matrices for the operative businesses and for the CEO where it is clear how far the authority of each one stretches, the next decision-making level, and which cases must be reviewed by the board. Beyond this, no other specific targets or measures are established. Energy and environment It is the stated goal of BWG Homes to be a pioneer in the development of the housing structures of the future. Energy efficiency and quality of living are key factors in the development and production of the homes of the future. Energy and space-efficient homes with good layouts are necessary in order to reduce energy consumption. When new housing projects are planned, emphasis is placed on infrastructure, proximity to public transport and the best localization of homes in terms of sunlight and encroaching on nature. Work is constantly being done to minimize unwanted environmental impact in terms of use of hazardous substances in production, waste management, and energy consumption in factories and at building sites. The homes are manufactured in accordance with national building regulations both in terms of energy consumption, layouts and materials. Both Block Watne and BWG Homes AB has developed and manufactured homes according to the passive house standard. Passive house concepts will be further developed in Waste generated in the production in factories and at building sites, is handled according to specific waste management

17 Report from the Board of Directors 17 plans. It is established targets to reduce waste even further. Energy and the environment are further discussed on page 18. HSE The management has a permanent focus on health, safety and the environment. Injuries and sick leave are followed up by management, and measures are introduced to prevent situations that may lead to injuries and leave. Training, procedures and facilitation in the workplace are keys to these activities. As all Block Watne homes in its entirety are built at the building site, the company has a particular focus on reducing the frequency and severity of sickness absence due to strain injuries, accidents and incidents at the building sites. The target figures of sick leave and injury rate (LTI) are set as criteria for bonuses to management. Results of unannounced inspections at building sites are also linked to the HSE bonus programme for regional offices. HSE is further discussed on page 17. ORGANISATION, WORK AND THE ENVIRONMENT Organisation At the end of 2013, the Group had 1,039 employees, which is an increase of 25 employees (2.5 per cent) compared with the end of Block Watne reduced its staff by 68 employees (10.4 per cent), mainly carpenters. BWG Homes AB increased its staff by 40 employees (11.3 per cent), and also had 23 contracted production workers at the end of the year. Kärnhem had 51 employees at the end of the year. The employees are made up of 436 administrative employees; some 300 of whom are affiliated with production-directed activities, and 603 carpenters and production workers. There are 593 employees in Norway and 446 employees in Sweden. Ole Feet, who has been CEO of Block Watne since June 2006, was appointed CEO of BWG Homes ASA in May Lars Nilsen, who had been CEO since establishment of the Group in 2006, stepped down on the same date. He is now board member of BWG Homes ASA. Block Watne: Geir Skoglund was hired as CEO, and took up the position in April The Gjøvik regional office was shut down in the spring of The Hamar regional office handles the Gjøvik office s customer relationships and its obligations towards suppliers and partners. An annual employee satisfaction survey has been established as part of the organisational development and continuation of the work to establish support for the company s Employees per category Per cent 58% Carpenters/production 19% Management/staff/ adm. production 5% Sales/sales support 9% Project managers/ development 9% Building managers basic values. The survey results are reviewed by management, and followed up at office meetings and in action plans. The employee satisfaction survey was completed in May, with a 73 per cent participation rate. Good project management is critical to quality and the profitability of housing projects. A comprehensive programme for project management and operative manage - ment was carried out in 2013 for approx. 100 executives. The Digital Hverdag portal was launched in the autumn of The portal consists of an intranet and project portal with a digitized drawings archive and process support for the housing projects. In November a staff reduction of some 100 people was implemented to adapt the production capacity and costs to lower sales. Information meetings and discussion meetings were held prior to the staffing reduction, as required in the Working Environment Act. The full effect of the reduction in staffing will be felt in the first quarter of BWG Homes AB: A number of improvement programmes for more efficient production and better delivery quality have been conducted during the past two years. The programmes are based on LEAN principles, with great involvement of employees in order to constantly identify proposed improvements. This in itself was a factor to motivate a willingness to change that yielded positive results. Both executives and employees have gained knowledge and experience on the LEAN method. The LEAN work is continuing throughout the entire value chain, with focus on constant improvement processes. The regional organisation consists of seven regional offices with local management responsible for site acquisition, development of own residential projects, sales and customer follow-up. Own residential projects and housing co-operative projects in growth areas are areas of priority, and there has been a focus on competence development on housing co-operatives and project development. The first housing co-operative projects were launched in the second half of the year, and were well-received by the market. The venture will continue at full force in Employees at 31 December Per cent 57% Norway 43% Sweden Mikael Olsson, who had been CEO of the business since 2003, left in December His successor, Joakim Henriksson, was hired in March 2014, and will take up the position in the beginning of May Arnt Eriksen, CFO of BWG Homes ASA, has served as CEO in the intervening period. Kärnhem: The company s core competence is development of projects for housing cooperatives. Further competence development in the field of housing co-operatives is an area of priority. Kärnhem has its own project developers and project managers who buy sites, develop housing projects and establish the co-operative structure. External property agents handle the sales. Quality of deliverables and customer satisfaction are measured upon takeover, and three months after occupation. This has yielded positive results during the year, with more satisfied customers and better quality of deliverables. The main office is in Växjö, Småland, Sweden. In 2014, the ambition is to establish an office and staff in the Stockholm area. The portfolio of land will be further developed in growth areas. The working environment and HSE A safe and good working environment is crucial to the Group s capacity for long-term value creation. The administration and representatives of the trade unions have met regularly throughout the year. The board considers the Group s working environment to be satisfactory. The board wishes to give credit to both employees and management for their willingness and ability to reorganize in order to achieve better results and productivity. In 2013, 44 accidents and injuries at the Group s operative businesses led to sick leave, compar ed with 34 in The incidents that led to leave, particularly apply to Block Watne. Block Watne: The total sick leave in 2013 was hours, and was 6.2 per cent of the total working hours. The corresponding figure for 2012 was hours and 5.9 per cent. For employees with reduced functional abilities, the work situation and tasks are

18 18 ANNUAL REPORT 2013 / BWG Homes / Report from the Board of Directors adapted in consultation with the individual and, if needed, with a doctor or the company health service. 36 injuries and incidents at Block Watne building sites led to sick leave, against 23 injuries and incidents in Typical injuries are falls from low heights, cuts and wounds. In January 2013, a building manager suffered major burns due to the explosion of a gas oven that had been used to thaw snow and ice. The police and the Norwegian Labour Inspection Authority were routinely notified. The chain of events and causal factors were carefully examined, and measures have been implemented. None of the other incidents in 2013 resulted in serious or permanent injury. Block Watne conducts regular statutory training programmes and other in-house training in the area of HSE. There are safety deputies at all 20 regional offices and at the main office. The main safety deputy is the head of the working environment committee. There are unannounced inspections of building sites, with subsequent internal non-compliance processes and follow-up, both locally at the regional offices, and at the central level. The inspections are conducted by third parties according to the same procedures practised by the Norwegian Labour Inspection Authority. 114 in spections were carried out in 2013, with an average of 0.46 non-conformance per inspection. In 2012, the average was 0.64 non-conformance per inspection. The management s follow-up of injuries and sick leave intensified throughout the year in collaboration with the working environment committee. Constant work was done on correct use of tools and the best possible adaptation of building sites to prevent repetitive strain injuries and unwanted incidents. The target figures for sick leave and injury rate (LTI) are criteria for bonuses to management. BWG Homes AB: The total sick leave in 2013 was hours, and represented 2.7 per cent of the total working hours. The corresponding figures for 2012 were hours and 3.4 per cent. 8 injuries and incidents at the factories led to sick leave in 2013, against 11 in Typical injuries are cuts and wounds. In February 2014, a factory employee suffered serious fractures when he was hit by cargo from a fork lift. The police and the Swedish Labour Inspection Authority were routinely notified. The chain of events and causal factors are being carefully examined, and measures will be implemented. The LEAN philosophy is at the heart of HSE work and work to prevent injuries. The factories have established procedures for safe performance of the various work processes and the use of tools. There is a continuous focus on organising workplaces so as to avoid strain injuries and undesirable incidents. The business has 13 safety deputies. There are regular safety inspections, risk assessments and training measures to ensure a good physical working environment and to prevent injuries. Each factory has its own safety committee to discuss and follow up on non-compliance situations and injuries. Four safety inspections were conducted in 2013, as well as four fire safety inspections at all three factories. Noise is also measured at the factories in order to implement measures to improve the working conditions. The Green Cross reporting system is used as part of the systematic improvement work for daily reporting of incidents and accidents. Kärnhem: The total sick leave in 2013 was hours, and was 3.3 per cent of the total working hours. The corresponding figures for 2012 were hours and 3.8 per cent. No accidents and incidents were recorded at the factory that led to sick leave. Hetlandhus: Hetlandhus did not have any accidents or injuries at building sites that led to sick leave in ISO certification Block Watne, Myresjöhus and Smålands- Villan are certified in accordance with ISO 9001:2008. The certificate covers product development, project development, sales and construction of homes. The Swedish business is also environmentally certified in accordance with ISO 14001:1996. Regular quality audits are carried out by external auditors in addition to internal audits. Feedback, non-compliance and proposals for improvements are handled by management. Two ISO audits were conducted at Block Watne in 2013, in addition to internal audits. Block Watne holds a so-called Central approval of company for the right to accept responsibility from the National Office of Building Technology and Administration. BWG Homes AB changed its audit company for ISO audits in An extensive ISO audit was conducted, in addition to eight internal audits, and the business has been recertified. The Myresjöhus building system is SITACapproved. Equal opportunities When recruiting employees, the Group makes a focused effort to increase the percentage of women, although this is made more difficult by a marked recruitment bias in the building sector. Working conditions have been organised to suit both women and men. Two of the five shareholder-elected board members are women. The Group has a total of 14 per cent female employees. Three of the ten members of the Block Watne management team are women. 11 per cent of employees at Block Watne are women and 1 per cent of carpenters and apprentices are women. There are no women in the BWG Homes AB management team. 19 per cent of employees at BWG Homes AB are women. 11 per cent of production workers are women. Two of the six members of the Kärnhem management team are women. 7 per cent of production workers are women. Discrimination The board has laid down ethical guidelines that apply to the Group and subsidiaries. The ethical guidelines are available on the company s Web site. The ethical guidelines state, among others, that: BWG expects employees to act fairly, correctly, and with professional and personal integrity towards employers and colleagues, and towards customers, suppliers, shareholders, competitors and others who are affected by BWG s activities. BWG shall be known as a professional, positive and enhancing workplace with an inclusive working environment. BWG shall meet all of the requirements in relevant legislation and shall seek out working methods that foster a good and safe working environment. Employees shall contribute to creating a working environment where no person is discriminated against because of their ethnicity, nationality, religion, age, gender, disability or sexual orientation. In accordance with the Working Environment Act, Block Watne has established procedures for notification of censurable conditions, including harassment, discrimination, faults or defects that could endanger life or health, and breaches of laws, regulations and adopted guidelines. People who report must be protected from negative consequences. The not ifi cation procedure is available on the company s intranet. Such a notification procedure is not statutory for Swedish companies. When recruiting employees for building sites and production facilities, priority must be given to those who are proficient in Norwegian or Swedish, respectively, for safety and practical reasons, as the processes at building sites and in production facilities shall follow established procedures, methods and routines for safety and quality. At the end of 2013, about 60 (10 per cent) of the 603 carpenters and production workers had an ethnic origin other than Norwegian or Swedish. Energy and the environment BWG Homes aims to be a leader in the development of the space and energy-efficient homes of the future. The Group s products meet current regulatory energy consumption requirements. Energy and environmental issues are taken into consideration when selecting building methods, materials and solutions from sub-contractors. The Group primarily builds timber-frame homes. Wood is in itself an eco-friendly building material and wood products have negative CO 2 emissions during their life cycle.

19 Report from the Board of Directors 19 Block Watne: An environmental and life cycle report is produced for each home produced. The report contains environmental and energy consumption data for the dwelling. All sub-contractors who supply products to a Block Watne house submit their own environmental reports. Annual energy consumption appears as specific heat loss and energy calculations that form part of the collected documentation for each home. Block Watne provides an energy certificate (certificate of energy labelling) for each home on handover to the customer. The average annual energy consumption for a Block Watne home is below kwh, and satisfies the requirements of the building regulations. 40 per cent of homes produced meet the requirements for a basic loan from the Norwegian State Housing Bank. This entails stricter requirements on window insulation, better recycling of ventilation air, and homes that are sealed more tightly than the requirements in the Building Regulations. In addition, the homes must meet the standard for universal design, which includes step-free access and the home s main functions being dimensioned for wheelchair users. Block Watne has developed house types that meet the Norwegian Standard for passive houses (NS 3700:2010). The total energy consumption of passive houses must be down to 75kWh per square metre of utility floor space. Two passive house projects were completed in 2012 and These projects have established building details and experiences, so that Block Watne is well prepared to comply with future regulatory requirements. There is a great need for research in this area. Block Watne participates in a national evaluation project that will recommend new products, standards and instruments. Most of the building materials used by Block Watne are made of wood. The insulation materials are produced from recycled glass, and the company uses interior cladding which does not emit gases. Waste generated in the production phase is dealt with in accordance with specified waste management plans. These plans in - clude separation at source, which is hand led by companies specialising in sorting and recycling. Excess materials from building work are returned to the supplier. Waste volumes from building sites: type kg/sq.m bra (the home s total tonnes of waste total usable space) Asbestos Hazardous waste Concrete and brick Plaster Glass Mineral wool/expanded polystyrene Metals Paper, cardboard, plastic Timber Waste of unknown content BWG Homes AB: Environmental work is part of the companies standard quality programme. The aim is for all products to be recyclable or reusable. Annual environment goals have been established for energy consumption in the house portfolio, reduction of environmentally-hazardous chemicals at the production facilities and waste going to landfill. The business s three production facilities have the same technical solutions for production. The production solutions and products meet the energy requirements for homes of both the Swedish and Norwegian authorities. Building materials and solutions from sub-contractors are checked to ensure they follow quality and environmental specifications. The building regulations (BBR 20) issued by the Swedish National Board of Housing, Building and Planning (Boverket) require detached and semi-detached homes to be designed to not exceed a maximum specific energy consumption. Compliance with the regulations is checked partly by calculating the homes expected specific energy consumption and heat throughput during the project phase, and partly by measuring the specific energy consumption in the completed home. A list of expected energy needs in normal use has been produced for all standard houses in the portfolio. Average R-value for the home types: r-value home type storey Myresjöhus ½-storey Myresjöhus storey Myresjöhus 0.26 SmålandsVillan 0.24 The average R-value (measurement of heat insulation performance) in 2013 was 0.25, against 0.24 in The goal for 2014 is The average energy consumption and R-value meet the requirements of the Swedish National Board of Housing, Building and Planning. The Swedish National Board of Housing, Building and Planning will introduce new construction rules on 1 July One of the largest changes is that the division into climactic zones will follow municipal boundaries. It has warned of a further strengthening of energy requirements. In accordance with the EU Directive on the Energy Performance of Buildings, by 2020 it will be a regulatory requirement that new buildings be nearly zero-energy buildings. This will affect the next major changes in the building systems for Myresjöhus and SmålandsVillan. The work to reduce energy consumption even further and change climate screening (windows, outer walls, roofs and floors) and heating systems will continue. The first passive house was built in 2012 to test technical solutions and choice of mate rials. Further development and production of passive houses for both brands is planned for Energy consumption is measured continuously at the production facilities. The Myresjö and Sundsvall production facilities use district heating fuelled by renewable energy (wood chippings). The Vrigstad production facility is heated by its own wood chip-fired system. There were no significant changes in energy consumption in 2013, compared with previous years. The chemicals used in house production are checked against the Swedish Chemicals Agency PRIO List, and registered in the Sunda Hus Miljödata environmental database. The goal is to constantly reduce environmentally-hazardous substances in production and in products in homes. Chemicals used in production and by sub-contractors at building sites must be approved in advance, in accordance with internal procedures. The amount of chemicals was reduced by per cent in A new database for chemicals management and risk analyses has been adopted to meet the legislative requirements that will enter into force in Waste from the production facilities and offices is sorted at source. Waste at building sites is sorted in accordance with local authority requirements. Share of waste from production facilities to landfills: goal results goal results 2.7% 6.3% 3.0% 2.9% The share of waste from production facilities to landfills rose in This is due to a major rebuilding of the Vrigstad factory, to prepare for production of Start Living modules. The goal for 2014 has been set at 2.5 per cent. Kärnhem: The average energy consumption of the standard houses is kwh per sq.m., which meets the requirements of the Swedish National Board of Housing, Building and Planning. A new ventilation system has been installed at the factory. Waste from the production facility is sorted. Waste at building sites is sorted in accordance with local authority requirements. Hetlandhus: The houses are produced as modules in SmålandsVillan s factory and assembled at the building site. The house constructions meet Norwegian regulatory requirements. These house types have an energy calculation (total energy consumption for heating, hot water and power for electrical equipment) and an energy label (supplied energy and eco-friendliness of energy).

20 20 ANNUAL REPORT 2013 / BWG Homes / Report from the Board of Directors PARENT COMPANY ACCOUNTS Framework The annual financial statements for BWG Homes ASA have been prepared in accordance with the provisions in the Norwegian Accounting Act and Norwegian GAAP as at 31 December Result The parent company had ongoing operating expenses of NOK 28.2 million in 2013; an increase of NOK 10 million against After interest costs of NOK 53.6 million, interest income on intra-group lending of NOK 33.4 million and write-down of the value of the shares in Hetlandhus AS of NOK 32.3 million, the result before tax was NOK million in In 2012, the result before tax was minus NOK million, as a result of write-down of the value of the shares in BWG Homes AB of NOK 404 million. After tax costs of NOK 44.2 million, the income statement for the parent company showed a profit for the year of NOK 81.3 million. In 2012, the result was a deficit of NOK million. In 2013, the parent company received group contributions of NOK 133 million from Block Watne AS. The proceeds from the bond issue of 2013 were mainly loaned to the Group s subsidiaries. The parent company thus had a net increase of NOK 351 million in its longterm debt. NOK 5.3 million was paid in fees associated with the bond issue. Allocation of profits The board proposes that the profit be allocated as follows: nok million Provisions for dividends 34.0 Other equity 47.2 Total allocated 81.3 At the end of 2013, the parent company had an equity ratio of 64.5 per cent. PROSPECTS FOR 2014 There were housing starts in Norway in 2013, according to Prognosesenteret. Housing starts in 2014 are expected to be at with the situation improving somewhat in 2015 to housing starts. The underlying need is presumed to be new homes per year. Housing prices levelled off in the second half of The market outlook for the Group s activities in Norway is nevertheless considered stable, with continued population growth, low unemployment and good real wage growth. A key factor will be access to home mortgages. To achieve a sensible balance between supply and demand, it is important that the home buyers have access to financing and that banks do not increase their equity requirement further. An important factor is also that the Norwegian State Housing Bank has adequate funds to finance homes. The total home production in Sweden has been low for several years. The annual underlying need is presumed to be 40,000 new homes. The market developed in a positive direction in 2013, and housing starts increased to some 30,000 homes. The growth is particularly noticeable in the apartment block segment. It is in this part of the housing market that the business will take a greater position in the future. Prognosesenteret estimates new housing starts in 2014 and to in Somewhat weaker growth in 2015 is explained by capacity challenges in the housing industry. As a result of banks restrictive credit policies, particularly first-time home buyers still have difficulty entering the housing market. The market outlook for the Group s activities in Sweden has improved significantly. There will be a great need for homes and affordable, space-efficient homes are demanded. Housing co-operatives as a form of ownership are attractive to large groups of customers, partly because the requirement of equity financing is lower. Block Watne will have a particular focus on reducing tied-up capital and debt to achieve a positive cash flow, and to further development of own residential projects. A greater part of the housing production is to be directed towards simpler homes with lower unit prices, and homes that meet the requirements for Housing Bank financing. At BWG Homes AB, the production of single homes will continue to be a large part of the business. An increased focus on own residential projects and housing co-operative projects to gain a greater stake in the general housing market in Sweden, will also have a positive effect on volumes and profitability. Kärnhem will continue the plans that were laid down at the time of acquisition in 2013, with further growth in the housing co-operative segment. The Group s financial soundness is satisfactory. The Group has a solid foundation for continued good performance in OSLO, 3 APRIL 2014 The Board and the CEO for BWG Homes ASA ROAR ENGELAND Chairman DANIEL K. SIRAJ Deputy chairman CHARLOTTE AXELSSON Board member HEGE BØMARK Board member LARS NILSEN Board member TORE MORTEN RANDEN Employee representative LARS ØRJAN REINHOLDSSON Employee representative MAGNE STAALSTRØM Employee representative OLE FEET CEO

21 21

22 22 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes Contents annual accounts BWG HOMES GROUP PAGE Consolidated statement of comprehensive income 23 Consolidated statement of financial position 24 Consolidated statement of changes in equity 26 Consolidated cash flow statement 27 NOTES 01. General information Accounting policies Estimates Group structure Segment information Payroll and personell expenses, numbers of employees Pensions Remuneration executive management and board Auditor s fees Interest expenses Other finance expenses Tax Earnings per share Transactions with related parties Intangible assets Property, plant and equipment Associated companies Derivates Financial instruments by classes Financial risk and capital management Specification of other receivables Land and projects in progress Inventories Trade receivables Cash and cash equivalents Numbers of shares and shareholders Non-current interest-bearing debt Net interest-bearing debt Current interest-bearing debt Product warrenty provisions Land obligations Tax deduction and public duties payable Other current liabilities Pledged assets and guarantee commitments Leases Changes in other accruals in cash flow Contingent liabilities Events after the balance sheet date Acquisition of Kärnhem AB 56 BWG HOMES ASA PAGE Income statement 57 Statement of financial position 58 Cash flow statement 59 NOTES 01. General information Accounting policies Payroll and personell expenses Pensions Remuneration of executive management and board Auditor s fees Income from investment in subsidiaries Interest income Interest expenses Currency effects Investments in subsidiaries Loan to group companies Taxes Transactions with related parties Fixed assets Current receivables from group companies Bank deposits and cash Equity Number of shares and shareholders Long-term interest-bearing debt Current interest-bearing debt Forward rate agreements and financial risk Tax for employees and public duties Other current liabilities Assets pledged and guarantee commitments 68 Statements by the Board and CEO 69 Auditor s report 70

23 Annual accounts and notes 23 BWG HOMES GROUP Consolidated statement of comprehensive income 1 January 31 December (NOK 1 000) NOTE INCOME STATEMENT Total income 5, Costs of goods sold Payroll and personnel expenses 6, 7, Other operating expenses 9, Total operating expenses Earnings before finance and depreciations (EBITDA) Income from associated companies Depreciation 15, Write-down of goodwill Earnings before financial items (EBIT) Interest and other finance income Changes in value of financial instruments Exchange gains/losses 19, Interest expenses 10, Other finance expenses Net financial items Earnings before tax (EBT) Tax expenses Net earnings for the period OTHER INCOME AND EXPENSES RECOGNISED Cash flow hedge (will be reclassified to the income statement in subsequent periods) Deferred tax related to cash flow hedge (will be reclassified to the income statement in subsequent periods) Actuarial gains/losses on pensions (will not be reclassified to the income statement in subsequent periods) Deferred taxes attributable to actuarial gains/losses on pensions (will not be reclassified to the income statement in subsequent periods) Other changes (will not be reclassified to the income statement in subsequent periods) 20 0 Foreign exchange fluctuations charged to equity (will be reclassified to the income statement in subsequent periods) Total other income and expenses recognised Total comprehensive income EARNINGS PER SHARE Earnings per share (NOK) Diluted earnings per share (NOK)

24 24 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes BWG HOMES GROUP Consolidated statement of financial position at 31 December (NOK 1 000) NOTE ASSETS Trademarks Goodwill Other intangible assets Total intangible assets Land, buildings and other real estate 16, Machinery 16, Fixtures/fittings and equipment 16, Total fixtures/fittings and equipment Investments in associated companies Investments in other companies 13 0 Loans to associated companies Other receivables Total financial assets Total non-current assets Projects, construction in progress 22, 31, Inventories Land 22, 31, Total inventories Trade receivables Other receivables Total receivables Bank deposits and cash Total current assets Total assets

25 Annual accounts and notes 25 (NOK 1 000) NOTE EQUITY AND LIABILITIES Share capital Share premium reserve Other paid-in capital Total paid-in capital Total retained earnings Total equity Pension obligations Deferred tax Provison for guarantee Other non-current obligations Total non-current provisions Non-current interest-bearing debt 20, 27, Total non-current provisions and interest-bearing debt Current interest-bearing debt 20, 31, Trade payables Income tax payable Public duties and dues payable Derivatives 18, Current land-related liabilities 22, Prepayments from customers Other current liabilities Total current non interest-bearing liabilities Total current interest-bearing and non interest-bearing debt Total liabilities Total equity and liabilities OSLO, 3 APRIL 2014 Board of directors and CEO, BWG Homes ASA ROAR ENGELAND Chairman DANIEL K. SIRAJ Deputy chairman CHARLOTTE AXELSSON Board member HEGE BØMARK Board member LARS NILSEN Board member TORE MORTEN RANDEN Employee representative LARS ØRJAN REINHOLDSSON Employee representative MAGNE STAALSTRØM Employee representative OLE FEET CEO

26 26 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes BWG HOMES GROUP Consolidated statement of changes in equity at 31 December SHARE- SHARE PREM- OTHER PAID-IN HEDGING TRANSLATION RETAINED TOTAL (NOK 1 000) CAPITAL IUM RESRVE CAPITAL RESERVE DIFFERENCES EARNING EQUITY Balance 31 December Private placement Repair issue Share issue expenses Translation gains/losses on consolidation Other items in comprehensive income Total results Balance 31 December Translation gains/losses on consolidation Other items in comprehensive income Total results Balance 31 December

27 Annual accounts and notes 27 BWG HOMES GROUP Consolidated cash flow statement 1 January 31 December (NOK 1 000) NOTE Earnings before tax for the period ADJUSTMENTS: Depreciations 15, Profit from associated companies Net financial items Cash flow from operating activities before changes in working capital Changes in inventories Changes in trade receivables Changes in trade payables Land acquisitions Changes in other accruals Net change in working capital Interest paid Taxes paid Net cash flow from operating activities Purchase of property, plant and equipment and intangible assets 15, Purchase of shares Sale of property, plant and equipment Cash effect of aquisition of Kärnhem AB Net cash from associated companies Interest received Net cash flow from financing activities Increase/decrease (-) current debt Payments related to refinancing of non-current debt Repayment of non-current debt New non-current debt Payment of new equity Net cash flow from financing activities Net change in bank deposits and cash during year Bank deposits and cash, 1 January Bank deposits and cash, 31 December Undrawn bank overdrafts, 31 December

28 28 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes BWG HOMES GROUP Notes to the accounts NOTE 01 GENERAL INFORMATION BWG Homes ASA is domiciled in Norway with its registered office at Munkedamsveien 45D, Oslo. The company was listed on Oslo Stock Ex change in March 2006 with the ticker code BWG. The Group s business consists of house production and development of residential projects in Norway and in Sweden. The houses are built both on land owned by the company and on land owned by private or professional customers. Block Watne in Norway are building the houses on site only, while in the Swedish BWG Homes AB operations substantial parts of the houses are prefabricated in factories as modules or elements. The Swedish Kärnhem operation produces standard homes in their own factory. Other house types for Kärnhem projects are produced by subcontractors. The operations deliver a variety of house models such as ordinary detached houses, attached houses of various types as well as apartment buildings. The consolidated financial statements include BWG Homes ASA and its subsidiaries. The major subsidiaries are Block Watne AS in Norway, and Myresjöhus AB, SmålandsVillan AB and Kärnhem AB in Sweden. Details of the subsidiaries are given in Note 4. The financial statements for 2013 are presented in Norwegian kroner (NOK) and figures are presented in NOK unless otherwise specified. Comparable figures for one year are presented. The financial statements were authorised for issue by the Board and concluded to be presented to the annual general meeting by decision made in the Board meeting held on 3 April NOTE 02 ACCOUNTING POLICIES BASIS OF PRESENTATION IFRS The consolidated financial statements have been presented in accordance with International Financial Reporting Standards (IFRS), as endorsed by the EU, interpretations of the International Accounting Standards Board (IASB) and Norwegian disclosure requirements under the Norwegian Accounting Act at 31 December The statements have been prepared under the historical cost convention with the exception of financial derivatives, which are recognized in the balance sheet at their fair value. Consistency These accounting policies are applied consistently by all the companies in the Group. Comparative figures have been stated in accordance with the current accounting policies and restated where necessary. The accounting policies have been applied consistently for all the periods presented in the consolidated accounts. Accounting estimates Preparation of financial statements under IFRS requires management to make use of accounting estimates and assumptions which affect the application of the accounting policies and the reported amounts of assets and liabilities, revenues and expenses. Estimates and assump tions are based on historical experience and other factors regarded as reasonable in the circumstances. These assumptions form the basis for measuring the carrying amounts of assets and liabilities when these values are not apparent from other sources. The actual outcome may differ from these estimates. Further description of the use of estimates is given in note 3. Estimates and associated assumptions are measured regularly. Changes to accounting estimates are recognized in the period in which the changes occur. CHANGES TO ACCOUNTING PRINCIPLES FROM PRIOR YEARS A number of changes have come in IFRS standards during Amongst these are changes to IAS 1, IFRS 13, IAS 19 and IAS 27. The changes in these standards mainly relates to note disclosures and specific guidance on accounting practice, and therefore the changes has not lead to any changes in reported figures. The exemption from this is the change in IAS 19, that require changes in estimates to no longer be reported in the income statement, but in the Other Comprehensive Income statement (OCI). This has been applied in the accounts for BASIS OF CONSOLIDATION Consolidation The consolidated financial statements show the Group s financial position, earnings and cash flows for its total operations as one entity. Subsidiaries Subsidiaries are companies over which BWG Homes ASA has control. Control exists when the company has a controlling influence, directly or indirectly, over an entity s financial and operational management, and thereby benefits from its operations. Such control is normally achieved by ownership of 50 per cent or more. Figures of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. For subsidiaries that do not use IFRS to prepare their financial statements, restatement of figures and adjustments are made to ensure the Group s reporting is in line with IFRS. Associated companies Associated companies are entities where the Group exercises significant influence, but not control, over financial and operational management. Such controlling influence is normally achieved by ownership of 20 to 50 per cent. The Group uses the equity accounting method to report investments in associated companies. On initial recognition, these investments are measured at cost, which also includes transaction costs. On subsequent recognition, profit/loss from associated companies is reported in total comprehensive income, based on the associate s results restated in line with the Group s accounting policies. Recognized profit/loss is reported on a separate line in the income statement. When the Group s share of losses exceeds its investment in an associated company, the carrying amount of its investment is reduced to zero. Further losses are not recognized unless the Group has undertaken a legal or constructive obligation or has made payments on behalf of an associated company. The consolidated financial statements include the Group s share of the total recognized gains or losses of associated companies from the date on which significant influence commences until the date on which it ceases.

29 Annual accounts and notes 29 Transactions eliminated on consolidation Intra-group transactions and balances, including internal earnings and unrealized profit or loss, are eliminated. Exchange gains or losses on intra-group balances are not eliminated. Foreign currency transactions Foreign currency transactions are translated at the exchange rate prevailing at the transaction date. Assets and liabilities in foreign currencies are translated to Norwegian kroner at the exchange rate prevailing on the balance sheet date. Exchange gains/losses arising on translation of foreign currency transactions are recognized in profit or loss and classified as financial items. Translation of foreign companies On consolidation of foreign operations, assets and liabilities in the foreign company and goodwill and other excess value on the acquisition are translated from local currency to Norwegian kroner at the exchange rate prevailing on the balance sheet date. Income and expense in foreign companies is translated to NOK using the cumulative average rate for the accounting period. Translation differences arising on consolidation are not recognized in the income statement, but recognized in total comprehensive income and reported as translation differences in equity. OPERATING INCOME The Group s operations encompass house construction on its own land (residential projects under the Group s own control), which involves developing the site and selling individual housing units, and house construction on land owned by other parties (external projects). Projects on own land In Norway, the majority of the Group s sales are finished houses with land (approx. 97 per cent of sales in Block Watne in 2013). These are residential projects for which the Group controls the entire value chain from purchase of land, through regulation of land to infrastructure development, sales and house construction. The land and house are taken over by the customer when legal deeds are completed, after the completion of building process. The buyers have few options in terms of the design of the house and its land, but can normally choose from a set of standard elements. Revenue from projects on own land is recognised in the income statement when the title deed has been completed and risk has been transferred to the buyer. Accumulated costs during construction are capitalized in the balance sheet as Projects and construction in progress. Advances received from customers are presented as a liability in the balance sheet. In BWG Homes AB a smaller part of the operations relate to the sale of finished homes on own land (residential projects). Here the land is sold separately, and revenue is recognized when the land is transferred/ title deeds completed. Construction on third-party land A small portion of the operations in Norway (approx. 3 per cent), relates to sales of houses where the customer owns the land, and is responsible for the ground work. Customers can be private individuals building on a single plot or professional customers developing large sites. The Group then enters into an enterprise agreement with the customer to construct the house(s). The Group provides services and materials to be incorporated at the customer s site and it cannot request these to be returned. The Group therefore transfers control and significant risks and rewards of ownership to the customer when delivery is made. Revenue is recognized in proportion to the stage of completion of the contract. For identified onerous contracts, a provision is made for the entire expected loss. A continuous provision for warranty costs is made during the project. Revenue is only recognized where a binding sales agreement has been entered. In BWG Homes AB, a significant part of the business relates to delivery of construction materials supplied from own factories. Revenue from these deliveries is recognized on delivery of materials to customers, i.e. when the risks and rewards of ownership are transferred. A small part of the activity involves the delivery of construction services (project management, etc.) at the customer site. Revenue is recogniz ed as the work is invoiced, as invoicing is based on services provided. After the acquisition of Kärnhem AB in 2013 the Group also has a substantial operation within housing co-operative projects. In such projects we establish the co-operative when more than 50 per cent of the rights owners have been contracted. Thereafter the cooperative enters into a contract to buy the complete project as designed for the co-operative. The co-operative finances their acquisition partly by bank financing, and partly by payments received from the rights owners. Revenue on such projects (including the sale of the land to the co-operative) is recognized as the work is progressing (percentage of completion). Revenue is recognized only for the part of the total project that has been contracted with rights owners. Onerous contracts A provision for onerous contracts is recognized when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits expected to be received under it. Advances from customers Sales of houses to customers normally involve an agreement on a payment plan, where the customer pays in advance during the construction period. Prepayments from customers relating to the Group s projects where revenue is recognized based on legal transfer of deeds, appear on a separate line in the balance sheet and are classified as current liabilities. Prepayment related to projects where revenues are recognised based on percentage of completion is reducing the book value of work in progress. Prepayments are non-interest bearing. FINANCE INCOME AND EXPENSES Finance income comprises interest income on financial assets. Interest income is recognized as interest accrues. Interest expense consists of interest paid and calculated on the Group s loans. Interest expense is recognized as incurred. Exchange gains and losses are recognized in profit or loss as they arise and are presented on a separate line in the income statement. The currency exchange effects of intra-group liabilities are also included here. Unrealized changes in the value of financial instruments are recognized as they arise and presented on a separate line in the income statement. Other financial expenses comprise various fees associated with the Group s project financing, as well as fees paid in advance for guarantees on construction contracts. These are recognized as incurred. TAX Tax expense comprises current tax expense and changes in deferred tax. In addition, the difference between previously calculated tax and actual tax is included in tax expense in the income statement. The tax effect of items recognized directly in equity is also recognized directly in equity. Tax payable is the tax estimated as payable on the period s taxable profit at the enacted tax rates. Deferred tax is normally recognized for all temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax is calculated at nominal value and is designated as a non-current liability in the balance sheet. Goodwill does not give rise to deferred tax. The amount of deferred tax provided for is based on the expected manner of realization or settlement of the carrying amount assets and liabilities, using tax rates enacted at the balance sheet date. The period s change in deferred tax is recognized in the income statement under Tax expense. EARNINGS PER SHARE Earnings per share are calculated by dividing

30 30 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes profit for the period from the income statement by the weighted average number of outstanding shares in the period. The Group has not had any potential shares, and diluted earnings per share are the same as earnings per share. FINANCIAL ASSETS The Group s financial assets consist of trade and other receivables, minor share investments and cash & cash equivalents. The Group recognizes a financial asset when it becomes a party to the contractual provisions of the instrument, i.e. has the right to receive cash flows from it. When the right to receive cash flows has expired, the asset is derecognized. Trade and other receivables Other receivables include loans to associates and non-current receivables associated with the settlement of share sales. Receivables are financial assets that have an agreed repayment structure and are not normally traded in a functioning market. These assets are measured at fair value plus transaction costs directly attributable to the acquisition of the financial asset. After initial recognition, the Group measures non-current receivables at amortized cost and current receivables at their fair values. Accounts receivables are recognized when an invoice has been produced and such invoice is the basis for revenue recognition (percentage of completion). If the invoice is not linked to revenue recognition the invoice is not recognized in the accounts, but payments from customers of such invoices is recognized as a prepayment from customers. A provision for losses on trade receivables is recognized when there is objective evidence that the Group will not be able to recover outstanding amounts. Indications of losses include major financial problems on the part of the debtor, the likelihood of the debtor being declared bankrupt and reduced payments from the debtor. Cash & cash equivalents Cash & cash equivalents consist of deposits in bank accounts and cash. They also include restricted deposits in bank accounts. DERIVATIVES The Group has entered into one interest rate swap agreement that effectively ensure it has a fixed rate for part of its loan portfolio. This agreement is qualifying as a hedge, and hedge accounting is applied. Initial recognition was made at fair value. Subsequent changes in fair value is recognised in comprehensive income, but not included in the profit and loss. The fair value of the interest swap agreement is the estimated amount the Group would receive or be required to pay in order to settle the swap at the balance sheet date, after taking into consideration current interest rates and the creditworthiness of the swap counterparty. In 2013 the Group has entered into two currency exchange contracts (NOK/SEK) with future settlement. These contracts have been entered to hedge part of the Groups net investments in Sweden in Swedish kroner. The contracts qualify for hedge accounting, and thus the change in fair value on the contracts is recognised in Other Comprehensive Income, and not in the income statement. OPERATING ASSETS Physical operating assets are carried at cost less accumulated depreciation and accumulated impairment losses. Gains or losses on the sale of assets are defined as the difference between the sales total and the carrying amount of the unit and are recognised (net) as other income. The Group has a large stock of property including land, finished houses and projects in progress which are classified as current assets in the balance sheet. Depreciation Depreciation of physical assets is calculated on a straight-line basis over the estimated useful life of each item of property, plant & equipment and is presented on a separate line in the income statement. Land is not subject to depreciation. Estimated useful lives are: Buildings Machinery and equipment Fixtures & fittings years 5 7 years 3 7 years LEASING Lease contracts in which the owner has the material part of risk and control is classified as operational leases. The Group has entered into substantial leases, where the majority of the liability is related to the factories in BWG Homes AB. Under IFRS, these are classified as operating leases and are recognized as an expense in the income statement over the lease term on a straight-line basis. The Group s operating leases relate to offices, warehouses and production facilities. The leases are not based on contingent rents. The Group also has operating leases relating to cars and fixtures & fittings. The Group does not have any financial leases. INTANGIBLE ASSETS Goodwill All business combinations are accounted for using the acquisition method. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individual identified and separately recognised. In practise the goodwill is the difference between the cost on the acquisition date (e.g. the fair value of the consideration transferred) and the value of the net identified assets acquired. The value of the identified assets is typically the fair value, if not required to be measured by other particular standards. Deferred taxes in a business acquired are not measured at fair value, but at nominal value. Goodwill is recognized in the balance sheet at cost less any accumulated impairment. Goodwill is not amortized; instead, it is tested for impairment annually (see below). Trademarks When subsidiaries are acquired, the trademarks taken over are identified and measured at the time of the transfer. Trademarks are recognized at fair value when acquired less any accumulated impairment losses. Trademarks are not amortized; instead, they are tested for impairment annually (see below). Other intangible assets Other intangible assets consist primarily of software licenses. Other intangible assets are carried at fair value at the date of purchase and amortized on a straight-line basis over the asset s estimated useful life. If there is any indication of impairment, they are written down to fair value. IMPAIRMENT TESTING The carrying amounts of the Group s intangible assets, including goodwill and trademarks, are regularly reviewed in order to determine whether there is any indication of impairment. If such an indication exists, estimation is made of the asset s recoverable amount. Regardless of whether there is any indication of impairment, the recoverable amounts of goodwill and assets with an indefinite useful life are estimated annually on the balance sheet date. The recoverable amount is the higher of the fair value less cost to sell and the value in use. There is no strong evidenced of the fair value less cost to sell for the Groups intangible assets. Value in use therefore considered the best indication of recoverable amount, and is calculated by discounting expected future cash flows. In measuring value in use, the discount rate used is the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the cash generating unit. The value of intangible assets, including goodwill and trademarks, is measured in relation to cash generating units. A cash generating unit is the smallest group of assets that generates cash inflows which are largely independent of the cash inflows from other assets or groups of assets. The recoverable amounts is measured for each cash generating unit, and the carrying amounts of all assets in the cash generating unit are compared with

31 Annual accounts and notes 31 their combined estimated recoverable amount. The operations in Block Watne, BWG Homes AB and Kärnhem AB are independent cash generating units. Impairment An impairment loss is recognized in profit and loss when the carrying amounts of assets in a cash generating unit exceed their recoverable amounts. Impairment losses are allocated in such a way that the carrying amount of any goodwill allocated to the cash generating unit is reduced first. The carrying amount of the other assets in the unit is then reduced on a pro rata basis. Impairment of goodwill is not reversed in subsequent periods. PROJECTS AND CONSTRUCTION IN PROGRESS Projects and construction in progress include all projects for which sales have begun and expenses have been incurred. The value of projects and construction in progress includes land costs and infrastructure. It also includes the buildings produced in the project. Projects and construction in progress on own land is recognized at the lower of cost and estimated net realizable value. Cost includes expenditure directly related to the projects and a share of fixed and variable indirect costs incurred in the company s administration. Allocation of indirect costs is based on normal capacity utilization. Projects and construction in progress on customers land, including cooperative projects, are recognised at cost plus estimated margin (percentage of completion). LAND Land is a component of the Group s production/operating cycle and as such is classified as a current asset. Binding land purchase agreements are reported as land under Current assets and the associated liability is reported as a land obligation under Current liabilities. The carrying amount of land comprises the cost of acquisition. Cost is determined as the fair value of the consideration on the contract date. The fair value of the consideration on the contract date is measured by estimating future cash flows, using discounting if settlement is due after one year. Option premiums paid for land of which the option has not yet been exercised, are also included in the carrying amount of land. In the period until the land is ready for development or sale, a proportion of the Group s finance costs is capitalized as part of the cost. If infrastructure is built on the site before it is transferred to projects and work in progress, the cost of such infrastructure will be included in the cost of land and therefore the carrying amount of land. Land is recognized in the income statement at the lower cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and selling expenses. When a sale has been decided and work has commenced at site, the land value and associated infrastructure for that site is moved to construction in progress. OTHER INVENTORIES Other inventories are mainly building materials. Inventories are measured at the lower of cost and net realizable value. Cost of acquisition of inventories is based on the first-in, first-out principle and includes expenditure and costs relating to the acquisition, production, processing and bringing the materials and goods to their present location and condition. Net realizable 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. SHARE CAPITAL Share capital consists of one class of shares and is classified as equity. The shares are ordinary shares with full shareholder rights. Expenses which are directly attributable to the issue of shares are recognized as a net reduction in equity (share premium reserve) after tax. FINANCIAL LIABILITIES The Group s financial liabilities consist of loans, trade payables, land obligations and other non-current liabilities. The Group recognizes financial liabilities from the date on which it has a contractual obligation to make settlement. For loans and bank overdrafts, this is when cash is received from the lender, while for trade payables it is when the goods or services have been delivered and the risks and rewards of ownership have been transferred. A financial liability is removed from the balance sheet when the obligation is discharged, cancelled or expires. Loans Loans are recognized initially at fair value plus direct transaction costs. After initial recognition, they are measured at amortized cost using the effective interest method. Trade payables Trade payables are recognized initially at fair value. There are not normally any associated transaction costs. Changes in the fair value of trade payables are not normally recognized in the period up to settlement. Land obligations When the Group enters into a binding land purchase agreement, a concurrent payment obligation arises, which is reported as a land obligation under Current liabilities. Initial recognition is at fair value, which is determined by calculating the present value of future cash flows associated with the liability. After initial recognition, the land obligation is measured at amortized cost using the effective interest method. If changes in the purchase agreement are made and these changes affect the value of the land obligation, this is accounted for when it occur. If the land has been reclassified as work in progress, e.g. the project on the land has started, the change in value is accounted for as a gain or loss in cost of goods sold in the profit and loss, but if the land has not been reclassified, the carrying value of land in the balance sheet is adjusted when the change in land obligation is adjusted. Other current liabilities Other current liabilities include shortterm obligations relating to taxes and contributions, remuneration and similar. Other current liabilities are recognized at fair value and there are not normally any changes in value before settlement. A provision is recognized if a present obligation (legal or constructive) has arisen as a result of a past event (on or before the reporting date), it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. PROVISION FOR WARRANTIES Provisions for warranties related to houses are recognized when delivery has occurred. Warranty obligations are valued based on historical data on warranty costs for delivered houses. A separate assessment is made to ascertain whether there is a need for provisions relating to larger claims. PENSION PLANS The Group has defined contribution and defined benefit pension plans, as well as a pension agreement that involves direct payment of pension to a retired person. Defined contribution pension plans A defined contribution pension plan is

32 32 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes a plan whereby fixed contributions are paid to a fund or a pension fund and the company does not have a legal or constructive obligation to make further contributions. Compulsory contributions are recognized as personnel costs as they arise. Prepayments, i.e. payments into a premium fund in addition to compulsory payments, are recognized as an asset to the extent that the funds paid can be paid back or future payments to the plan can be reduced. Defined benefit pension plans A defined benefit plan is a plan which is not based on contributions. The net obligation relating to defined benefit pension plans is calculated separately for each plan by estimat - ing the size of future benefits earned by em - ployees through their service in the present and previous periods. These future benefits are discounted in order to calculate their present value, and the fair value of pension fund assets is deducted in order to establish the net obliga - tion. The discount rate is based on national recommendations, normally long-term interest rates adjusted to reflect the duration of the pension obligation. Pension calculations are based on the projected unit credit method. The calculation of the retirement benefit obligation and the fair value of plan assets are undertaken by an external actuary. Calculations of the value of the defined benefit pension plans are updated at least annually. Changes in legislation, the number of employees and a large number of other factors will change the value of the estimated benefit obligation. These gains and losses are recognized in profit or loss when they arise. Other pension plans The Group also has an unfunded pension plan whereby the pension is paid directly from the Group. The retirement benefit obligation is recognized in the income state ment in accord ance with the projected unit credit method. Pension payments reduce the recognized benefit obligation. Contractual early retirement pension agreement (AFP) in Norway In 2010, changes were made to the legislation regarding contractual early retirement pension in Norway (AFP), which meant that the accounting handling of the AFP obligation at Block Watne was changed. The AFP scheme that existed in 2010 was shut down, and the profit resulting from the shutting down was recorded in the accounts. It later turned out that there was undercoverage in the scheme that was shut down, and the member companies of the AFP scheme would have to cover the undercoverage through further payments until The company s share of the undercoverage has been estimated, and provisions have been made in the 2013 accounts. A new scheme has been established as compensation for the old AFP scheme. The new AFP scheme is a multi-enterprise scheme that provides a lifelong supplement to the ordinary pension. Employees can decide to withdraw contractual early retirement pension in different ways. The scheme is benefit -based, and is financed through pre miums set as a percentage of salary. At present, there is no reliable measurement and allocation of obligations and means in the scheme. From an accounting perspective, the scheme was therefore treated as a contribution-based scheme where premium payments are recognized as expenses on an ongoing basis. CASH FLOW STATEMENT The cash flow statement has been prepared using the indirect method. The cash flows show the Group s total cash flow from operations, cash flow from investments and cash flow from financing. Interest and taxes paid are reported under cash flow from operating activities. Interest received is reported under cash flow from investing activities. Purchases of legal entities, which in reality are land purchases, are reported under cash flow from operating activities. Paid-in capital is reported net of transaction costs. Recognition of land with a corresponding entry under land obligations is eliminated in the cash flow statement. Payment of land obligations is included in cash flow from operating activities. Changes in use of bank overdrafts are included net under changes in current liabilities. Available undrawn credit facilities are reported on a separate line in the cash flow statement. SEGMENT REPORTING An operating segment is a component of the Group that engages in business activities from which it earns revenues and incurs expenses, and which are subject to regular review by management as separate entities. Segment reporting is required for operating segments that represent more than 10 per cent of total operations. In accordance with this requirement, the operations in Block Watne AS, BWG Homes AB and Kärnhem AB are identified as segments in the Group s reporting. Segment reporting is based on the structure used by Group management for monitoring and control of operations. The accounting policies used for segment reporting are described in more detail in note 5 Segment information. Operations in Block Watne are measured internally, primarily using the percentage of completion method, as this provides a basis for measuring results and value creation, regardless of whether the projects are completed and taken over by the customer at the reporting date. In all other respects, segment reporting is based on applicable IFRS. NEW STANDARDS AND INTERPRETATIONS IFRS regulations are regularly amended and revised. There are a number of amendments to existing standards and interpretations which have not yet come into effect. The table shows an overview of these standards and interpretations updated per March Changes that are clearly not relevant to the Group or are many years ahead are not included.

33 Annual accounts and notes 33 NEW IFRS STANDARDS AND INTERPRETATIONS IASB EU APPROVED STANDARD/INTERPRETATION BRIEF DESCRIPTION OF THE CHANGES EFFECTIVE DATE AT IAS 28 Investments in associates Consequences for note disclosure related to the Yes, from 2014 equity method, no consequences for accounting IAS 36 Impairment of assets Extended note disclosure related to write-down 2013 Yes, from 2014 IFRS 10 Consolidated financial Valuation of whether entities should be 2013 Yes, from 2014 statements consolidated or not IFRS 12 Disclosure of interests in New note disclosures are introduced 2013 Yes, from 2014 other entities The Group expects to implement the amended standards in the first accounting year following effective date indicated in the table. To the extent that the changes will affect the Group, these will be linked to changes in information details in the notes. NOTE 03 ESTIMATES Accounting principles often require management to use accounting estimates and assumptions for important items in the financial statements. There follows a description of the main items for which accounting estimates and assumptions are used and play a key role in defining carrying amounts. Changes to the accounting estimates and assumptions may therefore have a material effect on the financial statements. For the Group accounts the most important estimates are related to projects, as well as impairment testing. REVENUE AND PROJECTS (CONSTRUCTION IN PROGRESS) Revenue is recognised as it is earned. The Group s operations consist of house construction on its own land (own control) and on land owned by other parties (external projects). The carrying amount of inventories, including projects and sites, are regularly measured to ascertain whether the fair value is lower than cost. For identified onerous contracts, a provision is made for the entire expected loss on a best estimate basis. These measurements are accounting estimates that have a material effect on the reported results. Segment reporting is based on internal operating reports and referred to as operational results. For segment Block Watne AS, operational results are largely based on percentage of completion in accordance with IAS 11. This means revenue is recognised by reference to the stage of completion and expected coverage ratio, and inventory values include estimated earned profits. Changes to assumptions relating to the stage of completion or coverage ratio may have a material effect on the segment s results for the reporting period. INTANGIBLE ASSETS AND IMPAIRMENT In the case of an acquisition, an analysis of added value is carried out. This involves defining fair values of purchased assets and liabilities. Goodwill is recognised as the difference between the fair value of considerations made and the fair value of the net identified assets acquired. BWG Homes ASA acquired its Norwegian operations (Block Watne) in 2005, its Swedish operations Prevesta AB (Myresjöhus and SmålandsVillan) in 2007 and Kärnhem AB in At acquisition, the trademarks were allocated a relatively significant value. In addition, considerable goodwill arose from the acquisitions. The valuation of physical assets, trademarks and goodwill were based on different valuation methods using different assumptions. These assumptions included projected cash flows, required rate of return and so on. IAS 36 Impairment of Assets requires goodwill and intangible assets to undergo impairment testing at least once a year. Goodwill impairment testing requires the fair value of cash generating units to be estimated and compared with the carrying amount. If the carrying amount exceeds the estimated fair value, an impairment loss is recognised. This type of testing requires estimates and assumptions about uncertain factors such as future cash flows, required rates of return and macroeconomic variables (interest, unemployment, inflation etc.). Any significant change to these assumptions may have a material effect on the consolidated financial statements. Impairment writedowns on goodwill related to BWG Homes AB operations were recognised in the accounts in 2008 and in FINANCE COSTS AND VALUE OF FINANCIAL AGREEMENTS Changes in the market value of forward rate agreements are recognised when they arise. The market value is estimated based on the net present value of the company s future floating interest less fixed interest. The valuation is conducted by a bank. Changes in the estimates of future interest rates will therefore have an effect on the Group s financial items. TAX IN THE INCOME STATEMENT AND IN THE STATEMENT OF FINANCIAL POSITION BWG Homes ASA reports income statement tax on the basis of reported figures from the Group s subsidiaries. Deferred tax is calculated on the basis of the difference between the carrying amounts of assets and liabilities and their tax bases. Calculation of tax expense for the period and its categorisation as tax payable or deferred tax for the period requires use of judgement with regard to the sometimes complex tax rules in Norway and Sweden. PENSION COSTS AND RETIREMENT BENEFIT OBLIGATION The Group has defined benefit and defined contribution pension plans. Measurement of pension costs and obligations requires the use of estimates and assumptions regarding factors such as salary increases and discount rates. Material changes to estimates and assumptions may affect the pension costs and obligations in the financial statements.

34 34 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 04 GROUP STRUCTURE The Group consists of the following units: REGISTRED NUMBER OF VOTING RIGHTS/ COMPANY NAME REG. NO. ADDRESS SHARES OWNERSHIP PARENT COMPANY BWG Homes ASA Oslo, Norway SUBSIDIARIES Block Watne AS Oslo, Norway % Pepperstad Skog felt D AS Oslo, Norway % Ulset Utvikling AS Oslo, Norway % Nipa Utvikling AS Oslo, Norway % Høvåg Sentrumsområde AS Oslo, Norway % Trøåsen Utbyggingsselskap AS Oslo, Norway % Skarpaneset Utvikling AS Oslo, Norway % Lafteråsen Utbygging AS Kongsberg, Norway % Hetlandhus AS Oslo, Norway % Boligbygg Prosjekt AS Oslo, Norway % BWG Homes AB Vetlanda, Sweden % Myresjöhus AB Vetlanda, Sweden % SmålandsVillan AB Vetlanda, Sweden % Myresjö Mark AB Vetlanda, Sweden % Nordiska Trähus AB 1) Vetlanda, Sweden % Käglinge Bytomt AB Vetlanda, Sweden % Husensjö 1 AB Vetlanda, Sweden % Husensjö 2 AB Vetlanda, Sweden % Myresjö Mark Rydbäck AB Vetlanda, Sweden % Långeberga 3 AB Vetlanda, Sweden % Myresjö Bostadsutveckling AB Vetlanda, Sweden % Baletten Mark 1 AB Vetlanda, Sweden % Balkongen Mark 1 AB Vetlanda, Sweden % Balkongen Mark 2 AB Vetlanda, Sweden % Balkongen Mark 3 AB Vetlanda, Sweden % Fastighets AB Hagen Vetlanda, Sweden % Kärnhem AB Växjö, Sweden % Kärnhem Svenska AB Växjö, Sweden % Kärnhem Utveckling AB Växjö, Sweden % Hovhus AB 1) Växjö, Sweden % Sävsjö Snickerifabrik AB Växjö, Sweden % Svenska Snickarhus AB Växjö, Sweden % Make I-node AB Växjö, Sweden % 1) Dormant at present. NOTE 05 SEGMENT INFORMATION +/-DIFFERENT (NOK 1 000) ACC. PRINCIPLE IN TOTAL SEGMENT AND IN TOTAL IN 2013 BLOCK WATNE AS BWG HOMES AB KÄRNHEM AB OTHER UNITS ELIMINATIONS SEGMENTS CONSOLIDATION CONSOLIDATION FINANCIAL POSITION Carrying amount, assets Carrying amount, liabilities Net carrying amount/equity EARNINGS Income Income from other segments incl. in income above Operating costs, excl. restructuring Earnings before finance and depr. (EBITDA)

35 Annual accounts and notes 35 +/-DIFFERENT ACC. PRINCIPLE IN TOTAL SEGMENT AND IN TOTAL IN 2013 BLOCK WATNE AS BWG HOMES AB KÄRNHEM AB OTHER UNITS ELIMINATIONS SEGMENTS CONSOLIDATION CONSOLIDATION Depreciations Income from associated companies Net financial items Earnings before tax (EBT) OTHER INFORMATION Purchase of assets Order intake (value of contracts) Order backlog at end of year Number of employees /-DIFFERENT ACC. PRINCIPLE IN TOTAL SEGMENT AND IN TOTAL IN 2012 BLOCK WATNE AS BWG HOMES AB OTHER UNITS ELIMINATIONS SEGMENTS CONSOLIDATION CONSOLIDATION FINANCIAL POSITION Carrying amount, assets Carrying amount, liabilities Net carrying amount/equity EARNINGS Income Income from other segments incl. in income above Operating costs, excl. restructuring Earnings before finance and depr. (EBITDA) Depreciations Goodwill impairment Income from associated companies Net financial items Earnings before tax (EBT) OTHER INFORMATION Purchase of assets Order intake (value of contracts) Order backlog at end of year Number of employees DEFINITION OF SEGMENTS The Norwegian and Swedish operations are organised and run as independent entities with full accounting responsibility for the entities management. In accounting terms, the entities are monitored by means of regular reporting of the business areas to Group management and the Group s Board. The markets in Norway and Sweden have the same underlying drivers, such as supply of houses, interest rates, unemployment and migrations patterns. However, there are still considerable differences between the countries, which means the business areas are subject to different market trends and risk. The production methods are also different. SEGMENT BLOCK WATNE AS Block Watne develops, sells and builds houses in the Norwegian market. The company develops larger and smaller sites for residential purposes, and then builds on these sites. The company landbank has a capacity for units. The company also sells houses to customers with their own plot of land. Operations are conducted from 20 regional offices from Trøndelag in the north down to the south of Norway. All construction activity is carried out at the building site, and Block Watne normally is responsible for the entire construction process. Subcontractors are responsible for the foundations, infrastructure, plumbing and electricity. SEGMENT BWG HOMES AB The segment encompasses operations under the Myresjöhus and SmålandsVillan brands. Although the two brands are organised with joint management and administration, they have separate factories for house production. Myresjöhus manufactures house components/load-bearing structures at the factory, and assembly is carried out at the construction site by independent contractors. Typical customers are private individuals with their own plot of land, other construction companies wanting houses for their own projects or customers purchasing houses on sites which Myresjöhus has developed. SmålandsVillan manufactures house modules at the factory where the majority of the building is completed. The majority of SmålandsVillan customers have their own plot of land. SEGMENT KÄRNHEM AB The core activity is development of residential projects based on its own land portfolio and products the company has developed. The company landbank has a capacity of approx units, primarily in growth areas from Stockholm and southwards. Over 80 per cent of the residential projects relate to housing co-operatives. When construction begins, both the land and building activity are sold to the housing co-operative. The houses are built by external contractors who buy wall panels and windows from Kärnhem s own production.

36 36 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes OTHER UNITS The Other units column refers to the parent company and Hetlandhus AS. Hetlandhus AS sells houses in the Norwegian market based on products manufactured by SmålandsVillan in Sweden, but has since its establishment in 2008 not been of a size to warrant separate segment reporting. The listed company BWG Homes ASA is the parent company, and does not have any operations over and above owning the subsidiaries and carrying out Group administration. ACCOUNTING PRINCIPLES USED IN SEGMENT REPORTING The businesses in Norway and Sweden prepare financial statements in accordance with national accounting principles. BWG Homes AB are restated in line with the Group s accounting principles (IFRS) for consolidation, and these figures are also the basis for segment reporting. For Block Watne AS and Kärnhem AB there is a deviation between operational management reporting and IFRS rules in relation to recognition of project revenues. It is important for management to monitor the earnings performance in ongoing projects. In operational reporting this is measured by using the percentage of completion principle (production contracts). This means the estimated accrued project revenue is recognised by reference to the stage of completion. Revenue is only recognised for houses for which binding sales contracts have been signed. The stage of completion corresponds to contract costs incurred for work performed to date as a percentage of the estimated total costs. Degree of sale is defined as the number sold as a percentage of total expected sales. Recognised revenue is the estimated total revenue x degree of sale x stage of completion. The reported outcome is estimated final outcome x degree of sale x stage of completion. For Block Watne, accrual accounting includes the whole project, while for Kärnhem, the sale of land housing cooperatives is accounted for separately. Consequently, Kärnhem only uses accrual accounting for the actual house delivery. Both under the IFRS accounting principles and when using the percentage-of-completion principle for segment reporting, revenue is only recognised for units where a legally binding sales contract has been made. Principle discrepancies between segment reporting and the Group s consolidated figures are shown in a separate column in the table above. The discrepancies shown in the columns are related to revenue recognition principles for Block Watne and Kärnhem. When applying the percentage-of-completion method the recognition in the balance sheet for Block Watne will also differ from the regular IFRS principles. When using the percentage-of-completion method any billing made for payments related to houses not yet surrendered to the customer, will reduce the book value of inventory/work in progress. When applying IFRS principles advance billing for houses not surrendered to the customer is not recognised, although advance payments from customers are recognised as a liability in the balance sheet. Costs related to Group administration is not allocated to the segments, and the Group does not have other central costs being split on the segments. The segments will have some financial income from deposits in bank accounts during the year. However, as measurement of financial items focuses on net financial items, these also appear in segment reporting. The Swedish operations have, to some extent, exchange gains and losses on internal loans, which also come under net financial items. NOTE 06 PAYROLL AND PERSONNEL EXPENSES, NUMBER OF EMPLOYEES COSTS RECOGNISED AS PAYROLL EXPENSES Salaries and holiday pay Social security tax Pension costs Other payroll expenses Total NUMBER OF EMPLOYEES Average number of full-time equivalents during the year Number of employees at end of year NOTE 07 PENSIONS The Group has pension schemes for employees in Norway and in Sweden. BWG Homes ASA and the Norwegian subsidiaries are legally obliged to maintain a mandatory occupational pension plan, and their pension schemes meets the requirements of the Norwegian mandatory occupational pension act. Block Watne has a collective pension scheme which is a defined contribution plan covering all employees. In addition there is an early retirement pension agreement (AFP). During the year four employees (eight in 2012) have taken out early retirement pension (AFP), while three persons receive pension payments directly from the company (four in 2012).

37 Annual accounts and notes 37 In the Swedish operations there are different pension schemes funded through payments to pension institutions or managed funds. These are both defined contribution plans and defined benefit plans. BWG Homes ASA has established a collective pension scheme for all employees, a scheme that is a defined benefit plan. In total a number employees (1 016 at the end of 2012) are included in the collective pension schemes of the Group. Book value of pension liabilities in the balance sheet is distributed as follows: Liabilities in Block Watne AS Liabilities in BWG Homes ASA Total pension liabilities recognised PENSION SCHEMES IN NORWAY When calculating the pension liabilities in Norway (early retirement plan - AFP in Block Watne AS, and the pension scheme in the parent company) the following assumptions have been applied: Discount rate 4.20% 3.80% Expected return on pension funds 4.10% 3.60% Salary adjustment 3.75% 3.25% Pension increases 2.50% 3.25% NI base rate 3.25% 3.25% Turnover 12.50% 12.50% K2013 has been used for assumptions on mortality rating. Pension expenses recognised in income statement in the year consist of: DEF. BENEFIT EARLY RET. PLAN PLAN (AFP) OTHER (NOK 1 000) BWG HOMES ASA BLOCK WATNE PENSION COSTS TOTAL TOTAL Net present value of pensions earned during the year Interest expenses on the pension obligation Expected return on pension funds Administrative expenses Deviation in pension estimates Changes in pension plans Pension costs previous early retirement plan (AFP) Pension costs recognised during the year in Norway Pension costs recognised during the year in Sweden Social security tax on pensions Total pension costs recognised Deviation in pension estimates recorded in other comprehensive income Number of people included in the pension schemes Recognised pension liabilities consist of the following: DEF. EARLY RET. UNSECURED DEF. EARLY RET. UNSECURED BENEFIT PLAN PLAN (AFP) PENSION BENEFIT PLAN PLAN (AFP) PENSION (NOK 1 000) BWG HOMES ASA BLOCK WATNE SCHEME TOTAL BBWG HOMES ASA BLOCK WATNE SCHEME TOTAL Net present value of pension obligation as of 31 December Value of pension funds as of 31 December Under coverage old early retirement plan (AFP) Net pension liability at 31 December Liability of social security tax Recognised net pension liabilities at 31 December FURTHER ABOUT THE PENSION SCHEMES IN SWEDEN In the Swedish operations, BWG Homes AB and Kärnhem AB, there are different pension schemes funded through payments to pension institutions or managed funds. These are both defined contribution plans and defined benefit plans. A total of 466 persons are included in the pension schemes in Sweden. Costs associated with defined contribution plans are recognized in the income statement when incurred. The defined contribution schemes in Sweden are insured with Alecta. According to the statement issued by the Emerging Issues Task Force of the Swedish Accounting Advisory Council (URA 42), this is classified as a defined benefit plan. However, the company does not have access to the

38 38 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes necessary information to present this plan as a defined benefit plan. This is because Alecta is unable to provide an overview of the necessary information in sufficient time. The pension plan is therefore accounted for as a defined contribution plan. The total return in Alectas overall portfolio for 2013 was 10.2 per cent (11.4 per cent in 2012). Pension expenses in Sweden totalled NOK thousand in 2013, and NOK thousand in NOTE 08 REMUNERATION OF EXECUTIVE MANAGEMENT AND BOARD Remuneration of executive management: (NOK 1 000) PAID OUT OTHER BENEFITS 2) PAID OUT OTHER BENEFITS SALARY SALARY INCL. HOLI- BONUS PENSION BENEFITS INCL. HOLI- BONUS PENSION BENEFITS NAME POSITION DAY PAY PAID 1) PREMIUM CAR ETC. DAY PAY PAID PREMIUM CAR ETC. Ole Feet CEO, BWG Homes ASA from May 24, ) Lars Nilsen CEO, BWG Homes ASA until May 24, ) Arnt Eriksen CFO, BWG Homes ASA Elisabet Landsend Director of Communications, BWG Homes ASA Geir Skoglund CEO, Block Watne AS from April 18, Ole Feet Retired CEO, Block Watne AS Mikael Olsson CEO, BWG Homes AB, retired December 16, Jonas Karlsson CFO, BWG Homes AB ) Paid-out bonuses in the table above are bonuses earned in 2012, and paid the year after. 2) Benefits, cars etc includes taxable benefits such as company car, newspapers, free internet and phones, insurances etc. 3) Ole Feet has an extended pension scheme agreement corresponding to 20 per cent of yearly salary above 12 times the Norwegian National Insurance Basic Amount (12G) in addition to the collective pension scheme established for BWG Homes ASA. The final organization of the extended agreement will be concluded in ) Lars Nilsen has received NOK 5 million as a final settlement related to his position as CEO. Members of executive management have individual bonus schemes based on Group financial performance and the performance of the individual. The bonus are not the same for each position, but the bonus schemes have an upper limit of 12 months salary. Members of executive management have individual agreements that, on certain terms, ensure post-payment of salary with an upper limit of 12 months beyond the standard 6 months notice period. The Group does not have any other obligations to grant employees profit-sharing, stock options or similar benefits. Remuneration of Board members: BOARD SALARIES, OTHER BOARD SALARIES, OTHER NAME POSITION FEES BONUS ETC. BENEFITS FEES BONUS ETC. BENEFITS Roar Engeland Chairman of the Board (new May 2013) Daniel K. Siraj Deputy Chairman (new May 2013, before May 2013 member of the Board) Charlotte Axelsson Member of the Board Hege Bømark Member of the Board Lars Nilsen Member of the Board (new May 2013) Tore Morten Randen Employee representative 2) Lars Ørjan Reinholdsson Employee representative 2) Magne Staalstrøm Employee representative 2) Arve Zahl Employee representative deputy 2) RETIRED FROM THE BOARD IN 2013 Eva Eriksson Chairman of the Board (retired May 2013) Harald Walther Deputy Chairman (retired May 2013) ) ) Espen Wiik Member of the Board (retired May 2013) Bjørn Kristian Ask Employee representative deputy (retired July 2013) 2) Total Board fees

39 Annual accounts and notes 39 BOARD SALARIES, OTHER BOARD SALARIES, OTHER NAME POSITION FEES BONUS ETC. BENEFITS FEES BONUS ETC. BENEFITS NOMINATION COMMITTEE Mimi K. Berdal Chairman Erik Gjellestad Member Carl Henrik Eriksen Member Andreas Mellbye Retired chairman Stine Rolstad Brenna Retired member Simen Mørdre Retired member Total fees Nomination committee ) Other fees are invoiced from his company. These fees have been approved by the Board. NOK 6 thousand has been paid by Block Watne AS in 2013, NOK 52 thousand in ) Employee representatives and their deputies are employees of Block Watne AS. NOTE 09 AUDITOR S FEES (NOK 1 000) The following auditor s fees were expensed in the accounts: Ordinary audit fee Tax advisory 45 0 Additional audit work, services and assistance Total auditor s fees It is proportional deduction for value added tax. NOTE 10 INTEREST EXPENSES SPECIFICATION OF INTEREST EXPENSES Interest expenses during the year Amortisation of borrowing expenses Total interest expenses NOTE 11 OTHER FINANCE EXPENSES SPECIFICATION OF OTHER FINANCE EXPENSES Guarantee commission Establishment commission Other expenses Total other finance expenses NOTE 12 TAX TAX EXPENSES RECOGNISED IN INCOME STATEMENT Tax on profit for the year Change in deferred tax Total tax expenses recognised in income statement

40 40 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes (NOK 1 000) TAX RATE AMOUNT TAX RATE AMOUNT EFFECTIVE TAX RATE RECONCILIATION Profit before tax Tax based on nominal tax rate in Norway 28.0% % Different tax rate in Sweden (22% vs. 28%) 0.7% % -37 Effect of non-deductible expenses -0.9% % Effect of unutilised tax losses 0.0% % 0 Effect of tax free revenue 0.8% % 26 Other adjustments 1.1% % 0 Changed tax rate in Sweden 0.0% % Total tax expenses recognised in income statement -26.3% % The effect of 98.7 per cent in tax rate in 2012 is due to write-down of goodwill of NOK million. BASIS OF DEFERRED TAX IN BALANCE SHEET Temporary differences between carrying amounts and taxable amount are associated with: Projects Trade receivables Profit and loss account Net pension obligation Inventories Non-current assets Other provisions Derivatives measured at market value Tax losses carried forward Trademarks Basis of deferred tax DEFERRED TAX LIABILITY IN BALANCE SHEET Norway Sweden Total deferred tax in balance sheet Difference between deferred tax booked in the balance sheet and booked in the income statement is related to hedging reserve of NOK thousand (2012: NOK thousand), new subsidiaries of NOK thousand (2012: NOK thousand) and other changes inclusive currency effects of NOK thousand (2012: NOK thousand). INCOME TAX PAYABLES IN BALANCE SHEET Norway Sweden Total income tax payable in balance sheet TAX RATES Nominal tax rate in Norway (tax rate is 27% from ) 28.0% 28.0% Nominal tax rate in Sweden 22.0% 22.0% The tax rate in Norway has changed from 28 per cent to 27 per cent with effect from 1 January The change means that deferred tax in the balance sheet at 31 December 2013 is calculated based on the new tax rate. The change resulted in a tax saving of NOK 3.2 million, which is recognised in the accounts for 2013.

41 Annual accounts and notes 41 NOTE 13 EARNINGS PER SHARE CALCULATION OF EARNINGS PER SHARE (EPS) Earnings for the period NUMBER OF SHARES Number of shares at 1 January Weighted number shares issued in March The total number of shares issued was Weighted number shares repair issue in April The total number of shares issued was Average number of shares at 31 December Earnings per share (NOK) DILUTED EARNINGS PER SHARE (DEPS) Number of potential shares 0 0 Diluted earnings per share (NOK) NOTE 14 TRANSACTIONS WITH RELATED PARTIES Waterguard International AS, a company selling water guard systems, has sold such systems also to Block Watne AS and Hetlandhus AS. These are sold through wholesalers and the sales are based on market prices. Block Watne AS and Hetlandhus AS have bought water guard systems for NOK thousand in 2013 (2012: NOK thousand). In addition, expenses of NOK 53 thousand were recognised for purchase of accounting services from Waterguard International AS in 2013 (2012: NOK 54 thousand). The transactions were conducted at market prices. Purchase of accounting services were terminated by the end of Waterguard International AS is a company under the control of Lars Nilsen, present board member and previous CEO of BWG Homes ASA. Lani Development AS, a company 100 per cent under the control of Lars Nilsen, entered into a contract for buying two houses from Hetlandhus AS in December The deliveries were completed in 2013 and the final settlement has been made. The total purchase price was NOK thousand. The terms of the contract were based on regular market terms. Block Watne AS received rental income of NOK 218 thousand in 2013 from companies controlled by Lars Nilsen (2012: NOK 154 thousand). The transactions are conducted at market prices. Harald Walther, deputy chairman of the board of BWG Homes ASA until May 2013, invoiced lawyer services of NOK 26 thousand in 2013 (2012: NOK 130 thousand), of which NOK 6 thousand were to the subsidiary Block Watne AS (2012: NOK 52 thousand). See also Note 8. Martin Kr. Feet, the brother of the CEO in BWG Homes ASA, invoiced lawyer services of NOK thousand to Block Watne AS and Hetlandhus AS in 2013 (2012: NOK thousand). The transactions are conducted at market prices. In 2013, Block Watne AS confirmed an option agreement for the purchase of a site for property development from CEO Ole Feet. The agreement was confirmed by the Board of BWG Homes ASA. The purchase price agreed was at a minimum of NOK 17.5 million, and the payment schedule is linked to the actual development of the site. The final purchase price will be determined on the basis of the actual area on which property is built. The agreement was based on regular market terms. The option was exercised and the purchase concluded in February Block Watne owns property companies in Hamar and Fredrikstad together with OBOS Nye Hjem. Daniel Kjørberg Siraj, member of the board of BWG Homes ASA, is managing director of OBOS Nye Hjem AS. NOTE 15 INTANGIBLE ASSETS Goodwill and trademarks were recognised in the balance sheet when the parent company acquired all the shares in Block Watne AS and Hetlandhus AS in 2005, Prevesta AB in 2007 and Kärnhem AB in Goodwill and trademarks are not amortised; instead they are tested annually for impairment. If there is any indication of impairment, the recoverable amount is calculated, and if this is lower than the carrying amount, an impairment loss is recognised. The Group s Norwegian trademarks Block Watne and Hetlandhus have existed for more than 80 years. The Swedish company s Myresjöhus trademark has existed for more than 80 years, while SmålandsVillan has existed for more than 10 years. Kärnhem has existed in the Swedish market since 2003.

42 42 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes OTHER OTHER TRADE- INTANGIBLE TRADE- INTANGIBLE (NOK 1 000) GOODWILL MARKS ASSETS TOTAL GOODWILL MARKS ASSETS TOTAL SPECIFICATION CARRYING AMOUNT Cost of acquisition, opening balance Acquisition of company during year Purchases during the year Exchange gains/losses Cost of acquisition, closing balance Accumulated amortisation and impairment, opening balance Accumulated depreciation and impairment for acquisition of company during year Amortisation in the year Impairment for the year Exchange gains/losses Acc. amortisation and impairment, closing balance Carrying amount, opening balance Carrying amount, closing balance GOODWILL AND TRADEMARKS ARE DISTRIBUTED AS FOLLOWS Block Watne AS Hetlandhus AS BWG Homes AB Kärnhem AB Total Other intangible assets are amortised over 2 5 years. GOODWILL IMPAIRMENT TESTING FOR CASH-GENERATING UNITS The Group has defined three cash-generating units: segment Block Watne AS, segment BWG Homes AB and segment Kärnhem AB. The impairment testing has been performed on the basis of the cash-generating units complying with the going concern assumption. Based on this, the Group has performed impairment testing of the assets, with focus on goodwill and other intangible assets, pursuant to IAS 36. In practice, the impairment testing is relevant to goodwill associated with segment BWG Homes AB, as this business segment has had weaker results for some years. The key conditions in the analysis of the Swedish enterprise have been sales figures/sales, margins and discount rate. Estimates regarding future sales figures and margins are based on a combination of market forecasts, internal estimates and historical figures. The discount rate has been kept unchanged from the testing in 2012, and at that time it was calculated by external experts. Hence the analysis is based on both external and internal information. The basis for the testing was a calculation of discounted cash flow (value in use) based on projected cash flows for the next five years and the terminal value. The 2014 budget has been applied to the cash flows for Forecasts have been applied for 2015 to BWG Homes AB has generated profits in 2013 that well exceed the assumptions made for the impairment testing in In general the market outlook has also clearly improved. In the impairment testing of 2013 the main assumptions applied in the impairment testing in 2012 has been carried forward. The calculation is based on sales in Sweden increasing to SEK 2 billion in the period. In the calculation the applied EBITDA margin is below 10 per cent for all years. Future growth in cash flows after year 5 is set at 2.5 per cent, as in previous calculations. The required rate of return is defined in accordance with the WAAC model, and has been calculated at 9.8 per cent before tax. In 2012 a write-down of goodwill of SEK 470 million was recognised. There are no need for further write-downs of goodwill. Historically, the Norwegian operation has had, and is expected to achieve future results, meaning that the need for impairment does not arise. Kärnhem AB has performed according to the plans established when acquired, and the profits has exceeded expected levels. Three are no need for any write-down of goodwill or other assets related to this segment.

43 Annual accounts and notes 43 NOTE 16 PROPERTY, PLANT AND EQUIPMENT LAND, FIXTURE/ LAND, FIXTURE/ BUILDINGS FITTINGS BUILDINGS FITTINGS AND OTHER AND AND OTHERT AND (NOK 1 000) REAL ESTATE MACHINERY EQUIPMENT TOTAL REAL ESTATE MACHINERY EQUIPMENT TOTAL SPECIFICATION CARRYING AMOUNT Cost of acquisition, opening balance Acquisition of company during year Purchases during the year Disposals Reclassification Exchange gains/losses Cost of acquisition, closing balance Accumulated depreciation and impairment, opening balance Accumulated depreciation and impairment for acquisition of company during year Accumulated depreciation, sold assets Depreciation in the year Reclassification Exchange gains/losses Acc. depreciation and impairment, closing balance Carrying amount, opening balance Carrying amount, closing balance The Group s depreciation periods are year 5 7 year 3 7 year year 5 7 year 3 7 year Straight-depreciation is applied over the asset expected useful lives. In real estate is included a forest with a carrying amount of SEK thousand. This forest is owned by BWG Homes AB. NOTE 17 ASSOCIATED COMPANIES Associated companies are companies in which the Group has significant, but not decisive control. Associated companies are accounted for by using the equity method and the Group s share of their profit or loss is included in the consolidated accounts. Recognised value of investments in associated companies reflects the acquisition cost of the investment (including financial contributions to the associate from the Group) and recognised share of result from associated companies in the ownership period, reduced with any dividend from the associate to the Group in the same period. Investments in associated companies are normally related to development of land in cooperation with other developers and the participants have significant influence. (NOK 1 000) CARRYING CARRYING HOLDING/ ACQUISITION AMOUNT SHARE OF AMOUNT NAME OF ASSOCIATED COMPANY REGISTERED OFFICE VOTING SHARE COST PROFIT 2013 DIVIDEND OTHER Jåsund Utviklingsselskap AS Sola, Norway 17.8% Eivindsholen Utbygging AS Sandnes, Norway 30.0% Sørbø Hove AS Sandnes, Norway 16.0% Brattebø Gård AS Sandnes, Norway 30.0% Buggeland AS Stavanger, Norway 33.3% Eidet AS Kristiansand, Norway 40.0% Nord-Jæren Utvikling Sandnes AS Sandnes, Norway 12.6% Kolnes Utvikling AS Vindafjord, Norway 24.5% Skeiseid Utviklingsselskap AS Vindafjord, Norway 24.5% Stavsberg Utvikling AS Oslo, Norway 50.0% Haugstenåsen Utvikling AS Oslo, Norway 50.0% Skåredalen Eiendom AS Oslo, Norway 50.0% Total associated companies

44 44 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes Summary of financial information for associates 100 per cent: (NOK 1 000) BOOK VALUE BOOK VALUE BOOK VALUE RECOGNISED NET EARNINGS NAME OF ASSOCIATED COMPANY REGISTERED OFFICE ASSETS OF EQUITY OF LIABILITIES INCOME IN THE YEAR Jåsund Utviklingsselskap AS 1) Sola, Norway Eivindsholen Utbygging AS 1) Sandnes, Norway Sørbø Hove AS 1) Sandnes, Norway Brattebø Gård AS 1) Sandnes, Norway Buggeland AS 1) Stavanger, Norway Eidet AS 1) Kristiansand, Norway Nord-Jæren Utvikling Sandnes AS 1) Sandnes, Norway Kolnes Utvikling AS 1) Vindafjord, Norway Skeiseid Utviklingsselskap AS 1) Vindafjord, Norway Stavsberg Utvikling AS 1) Oslo, Norway ) Figures for 2012 NOTE 18 DERIVATIVES MARKET MARKET INTEREST VALUE VALUE PRODUCT TRANSACTION DATE CAPITAL SUM START DATE MATURITY DATE RATE/MARGIN Interest swap TSEK % Interest swap TNOK % Cap 1) TNOK % 0 0 Total market value 31 December ) In 2008 The Group entered into a forward rate agreement of NOK thousand (Cap) with a ceiling of 6.5 per cent linked to 1 month NIBOR. At the time Block Watne AS did wish to offer some of its customers an interest guarantee under corresponding conditions. INTEREST MARKET VALUE PRODUCT TRANSACTION DATE CAPITAL SUM START DATE MATURITY DATE RATE/MARGIN Currency hedge Nordea TSEK Currency hedge Danske Bank TSEK Total market value 31 December The market value has been confirmed by the financial institution which was the agreement counterparty. The table below shows a hierarchy of valuation techniques for determining the fair value for financial instruments. The different levels have been defined as follows: Level 1: Quoted market prices in an active market are used to measure the financial instruments. No adjustment is made for these prices. Level 2: Fair value is determined by using observable market input other than Level 1 inputs, either direct (prices) or indirect (derived from prices). Level 3: Fair value is measured by using inputs that are not based on observable market data (non-observable inputs). 31 DECEMBER 2013 LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Derivate financial liabilities DECEMBER 2012 LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Derivate financial liabilities RECOGNISED IN THE EQUITY Cash flow hedge and currency hedge recognised in the equity through the year: FAIR VALUE OF CASH FLOW HEDGE AND CURRENCY HEDGE Fair value of cash flow hedge and currency hedge January Change in value recognised in other income and expenses Fair value of cash flow hedge and currency hedge December Deferred tax related to fair value of cash flow hedge and currency hedge

45 Annual accounts and notes 45 NOTE 19 FINANCIAL INSTRUMENTS BY CLASSES IFRS defines Financial instruments as contracts that establish a financial assets for one party, such as a receivables, other rights to receive payments etc, and at the same time the contract establish a financial liability or an equity instrument for the other party. Examples of such liabilities can be an obligation to transfer funds to the other party, or transfer other financial assets, or to issue new equity instruments. The measurement and recognition rules for financial assets and liabilities varies for different classes of assets and liabilities. The Group s financial assets and liabilities are classified in the financial position as follows: (NOK 1 000) FINANCIAL ASSETS CLASSIFIED AS LOANS AND RECEIVABLES Loans to associated companies Other non-current receivables Trade receivables and other receivables Bank deposits and cash Total financial assets by class FINANCIAL LIABILITIES CLASSIFIED AS AMORTISED COST Non-current interest-bearing debt Current interest-bearing debt Trade payables Current land-related liabilities Other current liabilities CLASSIFIED AS FAIR VALUE THROUGH P/L Derivatives ) ) Total financial liabilities by class ) Fair value is recognised in the income statement. The book value in the balance sheet is NOK thousand in 2013 and NOK thousand in Recognised income and expenses split by class of assets and liabilities in the income statement as follows: FINANCIAL ASSETS LOANS AND RECEIVABLES Interest and other finance income FINANCIAL LIABILITIES FAIR VALUE THROUGH P/L Changes in value of derivatives AMORTISED COST Exchange gains Interest expenses NOTE 20 FINANCIAL RISK AND CAPITAL MANAGEMENT CREDIT RISK Credit risk is the risk the company runs of incurring a loss associated with granting credit. The Group normally does not grant credit when selling homes to private customers. Production of sold homes does not normally commence until the customer has presented proof of financing, and homes are not delivered until full payment has been received. Different forms of payment are agreed with professional customers. If credit is granted to such customers, a credit check is performed, and security must be provided. Historically, the Group s losses on receivables/credit have been insignificant. The credit risk is considered to be the same in all of the Group s segments. The value of outstanding receivables shown on the balance sheet represents the maximum credit risk on the reporting date. The book value of the outstanding receivables was NOK thousand as at 31 December 2013 and NOK thousand as at 31 December INTEREST RATE RISK Interest rate risk is the risk that changes in the level of interest rates will lead to fluctuations in the company s future cash flows. Changes in interest rate levels will affect the company s markets by influencing the demand for homes, as the mortgage rate is possibly the most important factor that affects home buyers willingness and ability to invest. Experience has shown that expectations of interest rate changes or actual changes in mortgage rates cause demand to slow, while a clearer picture of interest rates helps to increase the demand for homes.

46 46 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes As the Group has considerable interest-bearing liabilities, interest rate levels and associated changes will also directly affect the Group s profitability and results. The Group s borrowing and working capital loans have floating interest rates. In December 2012, the Group entered into a four-year fixed interest rate agreement (interest swap) for NOK 250 million of the Group s long-term debt. The Group ended 2013 with net interest-bearing liabilities of NOK thousand. If interest rates in Norway and Sweden increase by 1 percentage point after March 2014, the Group s interest expenses will increase by an annualised NOK thousand. A change in interest rate levels will normally also affect calculations of present value. Methods to calculate such present value include impairment testing (see note 15), calculation of pension obligations (see note 3), and calculation of the fair value of financial instruments. CURRENCY RISK Currency risk is the risk the company runs that the company s assets or cash flows will be affected by fluctuations in exchange rates. The Group does not have financial instruments in other currency than the companies functional currency, beyond internal group loans from the parent company to the Swedish subsidiary. The total loan at the end of 2013 was SEK thousand. The conversion of the internal group loans generates exchange gains/losses which are calculated on an ongoing basis in the group accounts. The calculated currency effects in 2013 were NOK thousand. A fluctuation of for example 10 per cent on the exchange rate would have a corresponding effect on the Group s result. In addition to the matters mentioned above, the Group has currency exposure (translation gains/losses) as a result of investments in Sweden. The currency exposure from investment in the Swedish subsidiaries has historically been limited, in that part of the Group s bank financing has been drawn in Swedish kronor. After the refinancing in 2012, all bank debt is in Norwegian kroner. In 2013, the Group entered into two currency trading agreements worth NOK 300 million that expose NOK debt to SEK currency. The hedging thus covers some 30 per cent of the net exposure. (SEK 1 000) CURRENCY RISK Totoal non-current assets Total current assets Total non-current debt and non-current provisions Total current debt Net balance of currency exposure (excluding hedge) A change of 10 per cent in the NOK/SEK exchange rate would mean a change in the Group s equity of NOK thousand. This exposure will not be recorded in the income statement, but will affect the Group s recorded equity (currency conversion differences). As the Group conducts substantial activities in Sweden in Swedish kronor, a fluctuation in the exchange rate of Swedish kronor will affect the Group s accounting result and reported cash flows. NOK thousand of the Group s sales in 2013 are in Swedish kronor, representing 37 per cent of total revenues (2012: NOK thousand, 33 per cent). NOK thousand (corresponding to 22 per cent of the Group s operating result before depreciation EBITDA) was generated in Swedish kronor (2012: NOK thousand, corresponding to 14 per cent). Only a minor part of the Group s procurements are in foreign currency. LIQUIDITY RISK Liquidity risk is the risk that the company will not be able to service its ongoing commitments because of a lack of liquid assets. Access to loan financing is a vital condition for the Group s ability to service its ongoing commitments. The Group s net interest-bearing liabilities amounted to NOK thousand at the end of 2013 (2012: NOK thousand), and any failure on the part of the Group or the lender to comply with the loan covenants will result in a lack of liquidity. The Group s total loans with Nordea were renegotiated in New loan conditions were established to cover all project financing and working capital loans, which meant easement of a number of operative requirements, and increased loan frames. At the end of 2012, the last part of the long-term loans at Nordea was redeemed by drawing on free liquidity (partly as a result of the issue earlier on in the year), and through establishment of a new four-year loan of NOK thousand from Nordea. Annual payments of NOK thousand are made on this loan. In November 2013, BWG Homes ASA issued an unsecured bond of NOK thousand with a five-year maturity. The interest margin of this bond loan was agreed at 380 basis points. Part of the proceeds was used to repay project financing. The Group subsequently has three outstanding bonds amounting to NOK 1 billion. The Group s ability to service its debts is decisively linked to ongoing earnings and sales. The Group s liquid reserves consist of liquid assets, available unused overdraft facilities and available undrawn reserves for project finance. At the end of 2013, the Group had liquid assets of NOK thousand and undrawn overdraft facilities of NOK thousand. The Group also had considerable undrawn reserves for project finance. Overall, the Group has satisfactory liquidity.

47 Annual accounts and notes 47 The Group constantly monitors liquidity needs and available liquidity. If there is a need for liquidity in part of the Group, internal allocations will be made, within available limits. The Group has established overdraft facilities for the operating units that provide flexibility throughout the year. The table below shows due dates for financial obligations (interest is included) in nominal figures: MATURITY MATURITY LIQUIDITY RISK < 1 YEARS 1 5 YEARS > 5 YEARS < 1 YEARS 1 5 YEARS > 5 YEARS Pension obligations Warranty provision Total provision Bond issue Debt to credit institutions 1) Interest payments Total other non-current debt Debt to credit institutions 4) Trade payables Public duties and VAT payables Market value of financial instruments 2) Other current liabilities, land and projects 3) Other current liabilities Total current liabilites ) See the maturity structure in Note 27. 2) See the maturity structure in Note 18. 3) There will be some uncertainty about which intervall this item will be in, as projects starts for development projects are constantly changing. 4) Mainly revolving project financing with annual renewal. The Group s forecasted cash flow and liquidity base will service the ongoing financial obligations for each of the intervals above. CAPITAL MANAGEMENT The main objective of the Group s capital management is to secure access to capital that contributes to satisfactory operations and maximising value for the owners. Access to loan capital is continuously monitored, and the Group maintains an ongoing dialogue with lenders. Emphasis is placed on a good dialogue with the various credit providers, also with a view to being able to secure competitive conditions on financing. In 2012 and 2013, the Group also established itself in the bond market through three bond issues, which were received very well in the market. This guarantees that the Group has access to a large capital market as an alternative to bank financing. The Group makes ongoing adaptations to maintain the greatest scope of action possible within the frames. The need for project financing is followed on an ongoing basis. The Group has established internal requirements in relation to the level of available liquidity, profitability and solidity which is monitored on an ongoing basis. The Group has also established guidelines for how much of the long-term debt that can be due within a 14 to 18 month period. With regard to short-term liquidity needs, it is particularly important to establish adequate financing for ongoing projects. Drawing on and reducing project financing is constantly adjusted, partly dependent on invoicing/payments received, and on projected liquidity trends. The board will propose to the general meeting to pay NOK 0.25 per share in dividends for the 2013 financial year. The dividends will thus amount to NOK 34 million. The board has decided to deviate from the previously communicated dividend level to prioritize repaying debt. The board has received authorisation to increase capital by up to 13.6 million shares. The authorisation is valid until the 2014 general meeting. The Group has covenants connected with the greater part of the loan liabilities. The covenant requirements were reviewed and adjusted in connection with the refinancing in 2012 and The covenant requirements for the long-term debt are now linked to the Group s equity shares, and there is also a requirement of a minimum interest cover ratio for the NOK thousand loan at Nordea. There are covenant requirements regarding the Group s equity share in relation to project financing at Block Watne, as well as minimum requirements regarding the interest cover ratio. Ongoing follow-up has been established to ensure internal control of compliance with covenants, or to be able to take action to remedy any problems with such compliance at an early stage.

48 48 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 21 SPECIFICATION OF OTHER RECEIVABLES OTHER RECEIVABLES CONSISTS OF Loans to associated companies OTHER NON-CURRENT RECEIVABLES Non-current loans to customers Loan to employees 47 0 Other interest-bearing receivables Total other non-current receivables OTHER CURRENT RECEIVABLES Prepaid expenses/accrued income Other receivables Total other current receivables Other receivables are measured at the lower of cost and fair value. A specific assessment of risk of bad debt losses has been made, particularly with regard to debtor s ability to pay. No risk of bad debt losses has been identified. NOTE 22 LAND AND PROJECTS IN PROGRESS CONSTRUCTION WORK IN PROGRESS Unsold units capitalised Sold units capitalised Total holding NET CONTRIBUTIONS RELATED TO HOUSES NOT DELIVERED Recognised revenue relating to houses not yet delivered Costs relating to houses not yet delivered Contributions relating to houses not yet delivered Remaining production relating to onerous contracts LAND Land at cost of acquisition Land options paid for, not executed Infrastructure Carrying amount of land and infrastructure before excess value Excess value of land in consolidated accounts Accumulated amortisation of excess value Net excess value, land Total carrying amount, land NOTE 23 INVENTORIES SPECIFICATION OF INVENTORIES Raw materials and consumables Work in progress Finished goods Total inventories No write-down is done related to inventories.

49 Annual accounts and notes 49 NOTE 24 TRADE RECEIVABLES SPECIFICATION OF CARRYING AMOUNT OF TRADE RECEIVABLES Trade receivables Provision for bad debts Total trade receivables SPECIFICATION OF PROVISION FOR BAD DEBTS Provision for bad debts 1 January Used during the year Reversed during the year Provision made during the year Translation effects Provision for bad debts 31 December (NOK 1 000) GROSS ESTIMATED LOSSES GROSS ESTIMATED LOSSES AGEING ANALYSIS OF TRADE RECEIVABLES Not due month months months More than 1 year Total NOTE 25 CASH AND CASH EQUIVALENTS Cash and bank deposits Of which restricted for withholding tax Of which other restricted liquidity The Group has undrawn bank overdrafts totalling NOK thousand at year-end 2013 (2012: NOK thousand). The Group also has project financing with a number of banks, where the credit facility is higher than utilisation. These are not included in the figures here.

50 50 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 26 NUMBER OF SHARES AND SHAREHOLDERS The 20 largest shareholders in BWG Homes ASA at 31 December SHAREHOLDER SHARES SHAREHOLDING SHAREHOLDER SHARES SHAREHOLDING Oslo Bolig og Sparelag % Oslo Bolig og Sparelag % Perestroika AS % Lani Industrier AS % Verdipapirfondet DnB SMB % Orkla ASA % Skandinaviska Enskilda Banken AB, A/C Finnish % Odin Norge % Fondsfinans Spar % Verdipapirfondet DnB SMB % Skandinaviska Enskilda Banken AB, Egenhandel % Odin Norden % Storebrand Verdi % Fondsfinans Spar % Lani Industrier AS % Storebrand Verdi % MP Pensjon PK % Skandinaviska Enskilda Banken % Solsten Investment Funds PLC % SHB Swedish Funds Leding % Verdipapirfondet Alfred Berg Gamba % MP Pensjon PK % JP Morgan Chase Bank, NA % UBS AG, London Branch % Clearstream Banking S.A % Perestroika AS % Verdipapirfondet Warrenwicklund NO % Solsten Investment Funds PLC % Verdipapirfondet Alfred Berg Norge % Nordea Bank Norge ASA % TR European Growth Trust PLC % DNB NOR Bank ASA % Verdipapirfondet DNB Norge (IV) % Verdipapirfondet Alfred Berg Gamba % KLP Aksje Norden VPF % KLP Aksje Norden VPF % Storebrand Norge I % Verdipapirfondet Alfred Berg Norge % Swedbank AB (PUBL) % KLP Aksje Norge VPF % Total 20 largest shareholders % Total 20 largest shareholders % Other shareholders % Other shareholders % Total number of shares % Total number of shares % Total number of shareholders Par value of shares NOK 1.00 NOK 1.00 Shares owned by executive management and board members: EXECUTIVE MANAGEMENT Ole Feet CEO, BWG Homes ASA (from May 2013) Arnt Eriksen CFO, BWG Homes ASA Elisabet Landsend Director of Communications, BWG Homes ASA BOARD MEMBERS Charlotte Axelsson Member of the Board (new May 2013) Lars Nilsen Member of the Board (new May 2013) ) ) Tore Morten Randen Employee representative Magne Staalstrøm Employee representative 400 1) 400 1) 1) Inclusive shares owned by related parties and/or companies. See note 38 for events after the balance sheet date.

51 Annual accounts and notes 51 NOTE 27 NON-CURRENT INTEREST-BEARING DEBT VALUE VALUE RATE OF LOCAL CARRYING RATE OF LOCAL CARRYING FACILITY CURRENCY INTEREST CURRENCY AMOUNT FACILITY CURRENCY INTEREST CURRENCY AMOUNT Bond issue, maturity 2015 NOK 6.31% Bond issue, maturity 2015 NOK 6.80% Bond issue, maturity 2016 NOK 6.06% Bond issue, maturity 2016 NOK 6.13% Bond issue, maturity 2018 NOK 5.45% Long-term debt with Nordea, Long-term debt with Nordea, maturity 2016 NOK 4.11% maturity 2016 NOK 4.22% Refinancing expenses NOK Other long-term debt NOK Non-current interest-bearing Refinancing expenses NOK debt Non-current interest-bearing debt UNSECURED BOND ISSUE, MATURING IN 2015 In February 2012, BWG Homes ASA launched an unsecured bond issue of NOK 300 million, maturing in March The interest rate on the loan is NIBOR plus 450 basis points. The entire net proceeds were used to repay part of the long-term debt with Nordea. UNSECURED BOND ISSUE, MATURING IN 2016 In December 2012, BWG Homes ASA launched a new unsecured bond issue of NOK 350 million with a maturity date of December The interest rate on the loan is NIBOR plus 425 basis points. The entire net proceeds were used to repay part of the long-term debt with Nordea. UNSECURED BOND ISSUE, MATURING IN 2018 In November 2013, BWG Homes ASA launched a new unsecured bond issue of NOK 350 million with a maturity date of November The interest rate on the loan is NIBOR plus 380 basis points. The net proceeds were used to refinance debt. LONG-TERM DEBT WITH NORDEA, MATURITY 2016 Following the bond issues, the Group renegotiated its debt financing with Nordea. A new four-year loan agreement for Block Watne AS totalling NOK 200 million, with annual repayments of NOK 50 million, was entered into. At the end of 2013 the outstanding loan amount is NOK 150 million, of which NOk 50 million is classified as current liabilities in the balance sheet. For the Block Watne AS loan, it has been agreed financial covenants with respect to the Group s consolidated equity ratio and interest cover ratio. Collateral for the loan takes the form of specified assets and projects, and BWG Homes ASA has provided a guarantee for the loan. Instalments are as follows: (NOK 1 000) TOTAL Annual instalment NOTE 28 NET INTEREST-BEARING DEBT SPECIFICATION OF NET INTEREST-BEARING DEBT Interest-bearing debt, long-term Interest-bearing debt, short-term Cash and bank deposits Net interest-bearing debt

52 52 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 29 CURRENT INTEREST-BEARING DEBT SPECIFICATION OF CURRENT INTEREST-BEARING DEBT Drawn on bank overdraft Other working capital loans Building and land loans First years instalment of long debt Total current interest-bearing debt Interest rate, Block Watne AS 31 December 4.19% 3.83% Interest rate, BWG Homes AB 31 December 2.50% 2.80% Interest rate, Kärnhem AB 31 December 3.00% 0.00% Building and land loans are secured with collateral in projects and land. More information can be found in Note 34, which shows the carrying amounts of collateral. SPECIFICATION OF BANK OVERDRAFT Total available bank overdraft Drawn on bank overdraft Undrawn bank overdrafts NOTE 30 PRODUCT WARRANTY PROVISIONS Since the Group performs contracting activities, the company in Norway provides guarantees in accordance with section 12 and 47 of the Construction of Homes Act (bustadoppføringslova). During the building period, guarantees are established for prepayments (section 47) that are bought from the banks or insurance agents. Guarantees in accordance with section 12, are valid until five years from transfer of ownership of the home. The Group also has guarantee liability in accordance with legislation in Sweden. SPECIFICATION OF WARRANTY PROVISION Product warranty provision, calculated Product warranty provision, special projects Total warranty provision Using reported warranty and claims costs over the last five years and their estimated distribution over five years (warranty period specified in the Norwegian act on construction of buildings) a fair calculation of the product warranty provision is made, based on the previous year s turnover. In addition, a specific assessment is made to ascertain whether there is a need for special provisions relating to larger claims. SPECIFICATION OF CHANGES IN WARRANTY PROVISION Warranty provision 1 January Warranty provision acquisiton of company during year Used during the year Reversed during the year Provision made during the year Translation effects Warranty provision 31 December NOTE 31 LAND OBLIGATIONS The Group enters into binding agreements with land owners on allocation, planning and development of land. When these agreements are drawn up, the company s future payments are defined. The contracts may contain both conditional and unconditional commitments CARRYING UNRECOGNISED CARRYING UNRECOGNISED (NOK 1 000) AMOUNT AMOUNT AMOUNT AMOUNT LAND OBLIGATIONS Block Watne AS BWG Homes AB Total land obligations

53 Annual accounts and notes 53 Future payments are not normally interest-bearing, although the agreements may in individual cases be adjusted to reflect the consumer price index. For agreements in which the land obligations are not conditional, the land is capitalised. Provision is made for associated payment obligations to the extent that payment has not been made in connection with establishing the agreement. If the payment is more than one year ahead the liability is discounted. Other contracts with conditions that must be met before obligations arise often concern land which has not been approved for residential development. At the end of 2013, conditional contracts (LNF) totalled NOK thousand (not recognised in the balance sheet). When these are approved for development, the Group s land values and land obligations will increase correspondingly. Conditional contracts at the end of 2012 amounted to NOK thousand. It is considered highly likely that the local authorities will approve development. NOTE 32 TAX DEDUCTION AND PUBLIC DUTIES PAYABLE ITEMISATION OF PUBLIC DUTIES PAYABLE Public duties payable Social security tax VAT Total public duties payable NOTE 33 OTHER CURRENT LIABILITIES SPECIFICATION OF OTHER CURRENT LIABILITIES Accrued salaries, holiday pay etc Accrued interest expenses Provision for accrued expenses Other current liabilities Total other current liabilities NOTE 34 PLEDGED ASSETS AND GUARANTEE COMMITMENTS CARRYING AMOUNT OF COMPANY S LIABILITIES SECURED BY PLEDGED ASSETS Building and land liabilities Bank overdraft Mortgage loan Total carrying amount of company s liabilities secured by pledged assets CARRYING AMOUNT OF PLEDGED ASSETS Trade receivables Land and buildings under construction 1) Inventories Property, plant & equipment Shares in associated companies and loans Total carrying amount of pledged assets ) Many small projects, in parts of or in the entire construction process, are not pledged as collateral for liabilities. In addition Nordea has security in the shares in Myresjöhus AB, Myresjö Mark AB and SmålandsVillan AB for the credit facility in BWG Homes AB of SEK 200 million plus a smaller credit facility for the same company. Several of the parent companies within the Group have provided parent company guarantees for the benefit of its subsidiaries. GUARANTEES ISSUED BY FINANCIAL INSTITUTIONS Guarantee for advance payments Contract guarantees for building projects Other guarantees Total guarantees issued by financial institutions

54 54 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 35 LEASES The Group has a number of operating leases relating to offices and warehouses. The leases have variable lease terms, although the average lease term is between 1 and 6 years, with a renewal option. The leases are all with fixed fees. The Group also has operating leases relating to cars and fixture & fittings. The Group does not have any lease agreements accounted for as financial leasing MATURITY MATURITY (NOK 1 000) < 1 YEARS 1 5 YEARS > 5 YEARS < 1 YEARS 1 5 YEARS > 5 YEARS ANNUAL LEASE PAYMENTS FOR OFF-BALANCE SHEET ASSETS Cars, fixture & fittings Factories 1) Rents Total ) Lease payments are factories in Myresjö, Vrigstad and Sundsvall. Lease payments are reported under operating expenses and is shown in the table below. RECOGNISED DURING THE YEAR Cars, fixture & fittings Factories Rents Other Total The rent agreements for the factories in Sweden end March 31, 2016 for one of the factories and December 15, 2020 for the two other factories. The agreements will automatically be extended by five years if the agreements is not terminated by any of the parts. NOTE 36 CHANGES IN OTHER ACCRUALS IN CASH FLOW CHANGES IN OTHER ACCRUALS, ITEMISED Changes in other receivables Changes in public duties payable Changes in pension liabilities Change in other liabilities Total changes in other accruals NOTE 37 CONTINGENT LIABILITIES LEGAL CASES (i) Myresjöhus AB was sued in a case where the plaintiffs claimed compensation for damages related to condensation in the house construction of houses built back in In December 2011, a District Court ruled partly in favour of the plaintiffs. The ruling was appealed by Myresjöhus AB. In January 2013, the Göta Court of Appeal ruled that Myresjöhus was not liable for the moisture and mould damage, as the houses were produced in accordance with professional standards in force at the time they were built. The plaintiffs were ordered to pay costs for Myresjöhus AB as well. The ruling has been appealed by the plaintiffs to the higher court in Sweden, and the court has accepted to take part of the case into new court proceedings. It is expected that the new court proceedings will be carried out during Provisions for legal fees has been recognised in the accounts. (ii) The Group is as a consequence of ordinary course business, involved in legal disputes. In view of the management the currently ongoing cases will not represent any material liabilities for the Group. CONTINGENT LAND OBLIGATIONS Block Watne has a number of agreements on land purchases, that have not been recognised in the accounts, as the agreements are conditional on various elements that have to be fulfilled before any transaction made. The topic is further described in Note 31. If the land obligations becomes unconditional the obligation will be recognised in the balance sheet and at the same time the land will be recognised.

55 Annual accounts and notes 55 NOTE 38 EVENTS AFTER THE BALANCE SHEET DATE NEW CEO OF BWG HOMES AB Joakim Henriksson has been appointed as new CEO of BWG Homes AB. He comes from the position as head of commercial project development at Skanska Sverige. He has been employed at Skanska since 1987, and has extensive experience from different executive positions in project development and production of homes and commercial properties. Henriksson will take up the position in the beginning of May CHANGES IN SHAREHOLDER STRUCTURE The 20 largest shareholders in BWG Homes ASA at 3 April 2014: SHAREHOLDER SHARES SHAREHOLDING Oslo Bolig og Sparelag % Perestroika AS % Verdipapirfondet DNB SMB % Skandinaviska Enskilda Banken AB, A/C Finnish % Skandinaviska Enskilda Banken AB, Egenhandel % Fondsfinans Spar % Skandinaviska Enskilda Banken AB, A/C Clients % Storebrand Verdi % Lani Industrier AS % MP Pensjon PK % Verdipapirfondet DNB Norden (III) % Solsten Investment Funds PLC % TR European Growth Trust PLC % JP Morgan Chase Bank, NA % Verdipapirfondet Eika Norge % Clearstream Banking S.A % Verdipapirfondet Alfred Berg Norge % Verdipapirfondet Alfred Berg Gamba % Storebrand Norge I % BNP Paribas Sec Services Paris % Total 20 largest shareholders % Other shareholders % Total numbers for shares % Total number of shareholders: Nominal value of shares: NOK 1.00

56 56 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 39 ACQUISITON OF KÄRNHEM AB ACQUISITION OF THE SHARES IN KÄRNHEM AB The acquisition of 100 per cent of the shares in Kärnhem AB was completed on 25 April 2013, and the purchase price was SEK 60 million. An additional earn-out payment was also agreed, based on earnings over the next three years. The sellers are entitled to 50 per cent of the company s earnings before interest and taxes (EBIT) for the years The sellers are providing SEK 20 million of the purchase consideration for the shares as a loan to Kärnhem AB for three years from commencement. Kärnhem AB is a limited company with its head office in Växjö in Sweden. Kärnhem AB is a dedicated project development organisation. The company landbank has a capacity of approx. 1, 500 residential units, primarily in the housing co-operative segment. Kärnhem has contributed NOK 183, 804 thousand to the Group s operating revenue and NOK -3, 067 thousand to the Group s ordinary profit before tax in the period from the acquisition to the end of Goodwill arising on the acquisition of Kärnhem AB is allocated as follows: (SEK 1 000) 2013 FAIR VALUES RECOGNISED ON ACQUISITON Assets Brands Other intangible assets Other non-current assets Projects and work in progress Other current assets Liabilities Provisions Long-term interes-bearing debt Other short-term liabilities Fair value of net identifiable assets Purchase consideration Earn-out Total cost Goodwill on acquisition Cash payment Cash in acquired company Net cash flow on acquisiton

57 Annual accounts and notes 57 BWG HOMES ASA Income statement 1 Janauary - 31 December (NOK 1 000) NOTE INCOME STATEMENT Total income 2 0 Payroll and personnel expenses 3, Other operating expenses Total operating expenses Earnings before depreciations and financial items (EBITDA) Depreciation Earnings before financial items (EBIT) Income from investment in subsidiaries Write-down of shares in subsidiaries Interest income Interest expenses Currency effects Other financial expenses Net financial items Earnings before tax (EBT) Tax expenses Net earnings for the period ALLOCATION OF PROFIT Dividend to be paid out Transferred to/from other equity Total allocated

58 58 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes BWG HOMES ASA Statement of financial position at 31 December (NOK 1 000) NOTE ASSETS Deferred tax assets Total intangible assets Fixture/fittings, equipment and similar Investments in subsidiaries Loan to group companies Total financial assets Total non-current assets Current receivables from group companies Bank deposits and cash Total current assets Total assets EQUITY AND LIABILITIES Share capital Share premium reserve Other paid-in capital Total paid-in capital Retained earnings Total equity Pension obligations Provison for guarantee and other obligations Pension obligations Non-current interest-bearing debt Current interest-bearing debt 21, Trade payables Trade payables with group companies Public duties payable Tax payable Dividend Other current liabilities Total other current liabilities Total liabilities Total equity and liabilities OSLO, 3 APRIL 2014 Board of directors and CEO, BWG Homes ASA ROAR ENGELAND Chairman DANIEL K. SIRAJ Deputy chairman CHARLOTTE AXELSSON Board member HEGE BØMARK Board member LARS NILSEN Board member TORE MORTEN RANDEN Employee representative LARS ØRJAN REINHOLDSSON Employee representative MAGNE STAALSTRØM Employee representative OLE FEET CEO

59 Annual accounts and notes 59 BWG HOMES ASA Cash flow statement 1 January 31 December (NOK 1 000) NOTE Earnings before tax ADJUSTMENTS Depreciations Net financial items 7, 10, Change in other accruals Cash flow from operating activities before tax and interest Interest paid Tax paid Net cash flow from operating activities Sale of property, plant & equipment Payment for acquistion of Kärnhem AB Interest received Change in short-term balances with subsidiaries Net cash flow from investing activities New non-current debt Payments related to refinancing of non-current debt Repayment of current debt Increase/decrease current debt Payment of new equity Change in long-term loans to subsidiaries Net cash flow from financing activities Net change in bank deposits and cash Bank deposits and cash, 1 January Bank deposits and cash at end of period, 31 December Undrawn bank overdrafts, 31 December

60 60 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes BWG HOMES ASA Notes to the accounts NOTE 01 GENERAL INFORMATION BWG Homes ASA was incorporated on 20 September The company is the parent company in a Group with operations both in Norway and Sweden. The company s head office is at Munkedamsveien 45, 0250 Oslo. The company was listed on Oslo Stock Exchange in March 2006 with the ticker code BWG. All figures in the tables and notes are in NOK thousands, rounded to the nearest thousand, unless otherwise specified. The annual financial statements consist of the income statement, balance sheet, cash flow statement and the notes to the accounts. The annual financial statements have been prepared in accordance with the Norwegian Accounting Act and Norwegian generally accepted accounting practices as at 31 December NOTE 02 ACCOUNTING POLICIES BASIS OF MEASUREMENT AND CLASSIFICATION, ETC. The annual financial statements are based on the historical cost convention, comparability, the going concern principle, the matching principle and the precautionary principle. Transactions are recognised at the value of the consideration on the transaction date. Revenue is recognised as it is earned and expenses are matched with earned revenue. Assets/liabilities which relate to the company s operating cycle and items due for payment within one year after the balance sheet date are classified as current assets/l iabilities. Current assets/liabilities are measured at the lower/higher of cost and fair value. Fair value is defined as the estimated net realisable value less costs to sell. Other assets and liabilities are classified as non-current assets/liabilities. Non-current assets which have a finite useful life are depreciated. In the event of a reduction in value below the book value of the asset, an impairment loss is recognised for the asset if the reduction in value is not considered to be temporary. ACCOUNTING POLICIES FOR SIGNIFICANT ACCOUNTING ITEMS Revenue recognition Revenue is recognised as it is earned. Expenses - recognition and matching Expenses are matched to revenues and recognised at the same time as the revenues to which they relate. Expenses which cannot be directly attributed to revenues are recognised as incurred. Operating revenue Revenue arising from the sale of goods and services is recognised when the risks and rewards of ownership and effective control over the goods or services have transferred to the buyer. Property, plant & equipment Items of property, plant and equipment are carried at cost, less accumulated depreciation and impairment. If an asset s fair value is lower than its carrying amount, and this is due to circumstances which are not expected to be temporary, the asset is written down to its fair value. Expenses associated with major replacements or renovations which extend the life of the asset are capitalised. Depreciation/amortisation Regular depreciation is applied on a straightline basis over the asset s estimated useful life, based on its historical cost. Depreciation is reported on a separate line in the income statement. Financial assets A subsidiary is a company over which BWG Homes ASA has control, i.e. owns 50 percent or more of the shares. Shares in subsidiaries are recognised at the lower of cost and fair value. On initial recognition, loans and receivables are measured at fair value and at amortised cost thereafter. Cash & cash equivalents Cash & cash equivalents consist of bank deposits and cash. They also include restricted deposits in bank accounts. Retirement benefit obligation and pension costs The company has a collective pension scheme which entitles employees to defined future pension benefits (defined benefit plan). The company is legally obliged to maintain a man datory occupational pension plan, and its pension plan meets the requirements of the Nor wegian mandatory occupational pension act. The net benefit obligation is calculated by actuaries and involves an estimation of the size of future pension payments. Estimates are determined on the basis of a number of assumptions about salary growth, age on retirement, changes in public pension plans etc. The estimated cash flows are discounted at the recommended discount rates. The plan assets are measured at fair value. The net benefit obligation consists of the estimated value of the benefit obligation less the estimated value of funds already paid in. Changes in the estimated value of the net benefit obligation are recognised when they occur. The annual change consists largely of the estimated pension earned during the year less the estimated return on plan assets, although changed assumptions on pension development, salary increases etc. can result in changes in value. Pension costs are classified as ordinary ope ra ting expenses in the income statement, and are presented with salaries and other benefits. Forward rate agreements The company has entered into forward rate agreements for parts of its debt. The agreements are valued at estimated fair value. The valuations of the agreements are made by the financial institutions that are the counterparty of the agreements. The agreements are not carried in the balance sheet, but receipts and payments associated with them are reported as interest items in the income statement. Foreign exchange Foreign currency transactions are translated at the exchange rate prevailing at the transaction date. Assets and liabilities in foreign currencies are translated to Norwegian kroner at the exchange rate prevailing on the balance sheet date. Purchases of goods and services in foreign currencies are insignificant. The company has issued substandial loans

61 Annual accounts and notes 61 to its subsidiary in Sweden in SEK. Change in value of the loan in SEK is recognised in profit or loss as a financial item. Deferred tax and tax expenses Tax expense for the year consists of taxes on the taxable income for the year and changes in deferred tax. It also includes any adjustments in tax calculations for previous years. Deferred tax liabilities/assets are calculated on the basis of temporary differences between the carrying amount of an asset or liability and its tax base at the end of the financial year. The calculation is based on the nominal rate of tax. Positive and negative differences are offset. Deferred tax assets arise if there are temporary differences which may lead to tax deductions in the future. Cash flow The cash flow statement is prepared using the indirect method and shows cash flow from operations, cash flow from investing activities and cash flow from financing activities. Group contributions from subsidiaries to the parent company and from the parent company to subsidiaries during the period are reported under cash flow from investing activities. Long-term loans from subsidiaries to the parent company are reported under cash flow from financing activities. Shortterm intra-group balances with subsidiaries (loans and receivables) are reported under cash flow from investing activities. NOTE 3 PAYROLL AND PERSONNEL EXPENSES EXPENSES RELATED TO PERSONNEL Salaries and holiday pay Social security tax Pension expenses Other payroll expenses Total NUMBER OF EMPLOYEES Average number of full-time equivalents Number of employees at end of year NOTE 4 PENSIONS PENSIONS AND PENSION LIABILITY The company has a pension plan that meets the requirements of the mandatory pension act. The pension obligation is a collective pension plan (funded). The pension plan has five members at year-end 2013 (2012: four). ASSUMPTIONS USED FOR CALCULATION OF PENSION LIABILITY Discount rate 4.10% 2.20% Salary adjustment 3.75% 3.25% Anticipated pension increases 0.90% 0.10% NI base rate 3.50% 3.00% Expected turnover 12.50% 12.50% Expected return on pension funds 4.10% 3.60% PENSION EXPENSES RECOGNISED IN INCOME STATEMENT IN THE YEAR Net present value of pensions earned during the year Interest expenses on the pension obligation Gross pension cost recognised Expected return on pension funds Administrative expenses Social security tax on pensions Deviation in pension estimates Net pension costs recognised SPECIFICATION OF NET RECOGNISED PENSION LIABILITY Net present value of pension obligation as of 31 December Value of pension funds as of 31 December Liability of social security tax Recognised net pension liability as of 31 December CHANGE IN RECOGNISED PENSION LIABILITY Net liability as of 1 January Annual payment of funds Expenses recognised in income statement incl. deviation in pension estimate Net pension liability as of 31 December

62 62 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 5 REMUNERATION OF EXECUTIVE MANAGEMENT AND BOARD Of the five employees in BWG Homes ASA, Ole Feet, Arnt Eriksen, and Elisabet Landsend are part of executive management. Lars Nilsen retired as CEO in BWG Homes ASA May 24, In Note 8 to the consolidated financial statements information is given on remuneration to executive management, including these three. All remuneration to these three have been paid from BWG Homes ASA. Remuneration of Board members: NAME POSITION BOARD FEES OTHER FEES BOARD FEES OTHER FEES Roar Engeland Chairman of the Board (new May 2013) Daniel K. Siraj Deputy Chairman (new May 2013, before May 2013 member of the Board) Charlotte Axelsson Member of the Board (new May 2013) Hege Bømark Member of the Board Lars Nilsen Member of the Board (new May 2013) ) 0 0 Tore Morten Randen Employee representative 3) Lars Ørjan Reinholdsson Employee representative 3) Magne Staalstrøm Employee representative 3) Arve Zahl Employee representative deputy 3) RETIRED FROM THE BOARD IN 2013: Eva Eriksson Chairman of the Board (retired May 2013) Harald Walther Deputy Chairman (retired May 2013) ) ) Espen Wiik Member of the Board (retired May 2013) Bjørn Kristian Ask Employee representative deputy (retired July 2013) 3) Total Board fees NOMINATION COMMITTEE Mimi K. Berdal Chairman Erik Gjellestad Member Carl Henrik Eriksen Member Andreas Mellbye Retired chairman Stine Rolstad Brenna Retired member Simen Mørdre Retired member Total fees Nomination committee ) The amount is for salary and other benefits. Information about transactions with related parties see Note 14 and Note 14 in the consolidated financial statements. 2) Other fees are invoiced from his company. These fees have been approved by the Board. 3) Employee representatives and their deputies are employees of Block Watne AS. NOTE 6 AUDITOR S FEES THE FOLLOWING AUDITOR S FEES WERE EXPENSED IN THE ACCOUNTS Ordinary audit fee Additional audit work Total auditor s fees It is proportional deduction for value added tax. NOTE 7 INCOME FROM INVESTMENT IN SUBSIDIARIES Group contribution from Block Watne AS with tax effect Tax effect on group contribution Net value of group contribution from Block Watne AS

63 Annual accounts and notes 63 NOTE 8 INTEREST INCOME INTEREST INCOME CONSISTS OF: Interest from subsidiary Block Watne AS Interest from subsidiary BWG Homes AB Interest from subsidiary Hetlandhus AS Interest from banks Total interest income NOTE 9 INTEREST EXPENSES INTEREST EXPENSES CONSIST OF: Interest expenses during the year Amortisation of borrowing expenses Interest to the subsidiary Block Watne AS 0 8 Interest to the subsidiary Hetlandhus AS 2 0 Total interest expenses NOTE 10 CURRENCY EFFECTS CURRENCY EFFECTS CONSIST OF: Recognised currency gain/loss on intercompany loans to BWG Homes AB Recognised currency gain/loss on external positions 17 2 Total currency effects NOTE 11 INVESTMENTS IN SUBSIDIARIES BUSINESS- SHARE OWNERSHIP/ PAR VALUE ACQUISITION NET EARINGS EQUITY BOOK VALUE BOOK VALUE SUBSIDIARY ADDRESS CAPITAL CONTROL OF SHARE COST Block Watne AS Oslo, Norway % NOK Hetlandhus AS Oslo, Norway % NOK Boligbygg Prosjekt AS Oslo, Norway % NOK BWG Homes AB Vetlanda, Sweden % SEK Kärnhem AB Växjö, Sweden % SEK Total Book value of the shares in Hetlandhus AS is written down with NOK 32.3 million in SEK 500 million of the intra-group loan from BWG Homes ASA to BWG Homes AB was converted to the equity of BWG Homes AB in The book value of shares in BWG Homes AB has been written down with NOK million in The write-down is made with same amount as the goodwill write-down made in the consolidated accounts. Further information is given in note 15 to the consolidated accounts.

64 64 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 12 LOAN TO GROUP COMPANIES LOAN TO GROUP COMPANIES CONSISTS OF: Loan to the subsidiary BWG Homes AB Total Interest on loans to subsidiaries is calculated based on interest charged on the Group s bank debt. No fixed instalment plan is established for these loans. The decrease in loan to BWG Homes AB compared with 2012 is mainly due to conversion of loan to equity in BWG Homes AB. NOTE 13 TAXES CALCULATION OF INCOME TAX Earnings before tax (incl. group contribution from Block Watne) Write-down of shares in subsidiaries Permanent differences between accounting and taxation 44 1 Change in temporary differences Basis for income tax Income tax for the year 28% TAX EXPENSE RECOGNISED Income tax for the year Change in deferred tax Too much (-) or to little tax provided for earlier years 4 0 Tax expense recognised in income statement BASIS FOR DEFERRED TAX IN THE BALANCE SHEET Temporary differences on pensions Temporary differences on fixed assets Basis for deferred tax asset Recognised deferred tax assets 27% / 28% RECOGNISED TAX PAYABLE Income tax for the year Reduction in tax due to group contribution given 1) Reduction in tax due to share issue expenses Recognised tax payable in the financial position (balance sheet) ) A group contribution to Hetlandhus AS of NOK thousand has been confirmed in 2013 (2012: NOK thousand) and to Boligbygg Prosjekt AS of NOK 247 thousand in 2013 (2012: TNOK 0)..

65 Annual accounts and notes 65 NOTE 14 TRANSACTIONS WITH RELATED PARTIES In 2013, expenses of NOK 53 thousand were recognised for purchase of accounting services from Waterguard International AS (2012: NOK 54 thousand). The transactions were conducted at market prices. Waterguard International AS is a company under the control of Lars Nilsen, board member and previous CEO in BWG Homes ASA. Harald Walther who retired as deputy chairman of the Board in May 2013, has invoiced lawyer services of NOK 20 thousand in 2013 (2012: NOK 78 thousand). NOTE 15 FIXED ASSETS SPECIFICATION OF BOOK VALUE Accumulated acquisition cost, opening balance Divestments made in the year Accumulated acquisition cost, closing balance Accumulated depreciation, opening balance Accumulated depreciation, divested in the year Depreciation in the year Accumulated depreciation, closing balance Net book value Fixed assets consist of cars being depreciated over five years. NOTE 16 CURRENT RECEIVABLES FROM GROUP COMPANIES SPECIFICATION: Receivable towards the subsidiary BWG Homes AB Receivable towards the subsidiary Block Watne AS 1) Receivable towards the subsidiary Hetlandhus AS 1) Receivable towards the subsidiary Boligbygg Prosjekt AS 1) Total current receivables from group companies ) Including group contribution in 2013 and 2012, see Note 7. NOTE 17 BANK DEPOSITS AND CASH Here is included tax withheld from employees with NOK 999 thousand in 2013 and NOK 502 thousand in In addition BWG Homes ASA has undrawn bank overdrafts with NOK thousand in 2013 and NOK thousand in 2012.

66 66 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 18 EQUITY OTHER SHARE SHARE PAID-IN OTHER (NOK 1 000) CAPITAL RESERVE CAPITAL EQUITY TOTAL Equity 31 December Private placement Repair issue Share issue expenses Profit for the year Equity 31 December Profit for the year after dividend Equity 31 December THE SHARE AND THE PAR VALUE OF THE SHARE At 31 December 2013, registered share capital consisted of ordinary shares. The par value of the share is NOK 1. Shareholders are entitled to receive the adopted dividend and have one vote per share at the general meeting. All shares carry equal rights for the shareholders. DIVIDEND The board will propose to the general meeting a dividend of NOK 0.25 per share to be paid for the financial year Assuming it is approved, the total dividend will amount to NOK 34 million. BOARD AUTHORISATION TO INCREASE THE SHARE CAPITAL The board is given a mandate to increase the Company s share capital by up to NOK 13.6 million by issuing up to new shares (correspon d ing to 10 per cent of the share capital) each with a nominal value of NOK 1,-. Within this framework the authorisation can be used several times. The mandate is valid until the general meeting in NUMBER OF SHARES AND SHAREHOLDERS For further information reference is made to Note 26 to the consolidated financial statements. NOTE 19 NUMBER OF SHARES AND SHAREHOLDERS An overview of the 20 largest shareholders, number of shares and ownership percentage is presented in Note 26 and Note 38 to the consolidated financial statements. NOTE 20 LONG-TERM INTEREST-BEARING DEBT SPECIFICATION Bond issue, due date Bond issue, due date Bond issue, due date Refinancing expenses Total book value of long-term debt UNSECURED BOND ISSUE, MATURING IN 2015 In February 2012, BWG Homes ASA launched an unsecured bond issue of NOK 300 million, maturing in March The interest rate on the loan is NIBOR plus 450 basis points. The entire net proceeds were used to repay part of the long-term debt with Nordea. UNSECURED BOND ISSUE, MATURING IN 2016 In December 2012, BWG Homes ASA launched a new unsecured bond issue of NOK 350 million with a maturity date of December The interest rate on the loan is NIBOR plus 425 basis points. The entire net proceeds were used to repay part of the long-term debt with Nordea. UNSECURED BOND ISSUE, MATURING IN 2018 In November 2013, BWG Homes ASA launched a new unsecured bond issue of NOK 350 million with a maturity date of November The interest rate on the loan is NIBOR plus 380 basis points. The net proceeds were used to refinance debt. COVENANTS As stated in the loan agreement for the bonds, it is required that the Group at any time shall have an equity ratio of minimum 30 per cent.

67 Annual accounts and notes 67 NOTE 21 CURRENT INTEREST-BEARING DEBT The total amount is related to drawn on bank overdraft. In 2013 this was NOK thousand and in 2012 this was NOK thousand. NOTE 22 FORWARD RATE AGREEMENTS AND FINANCIAL RISK TRANSACTION ACCRUED MARKET VALUE MARKET VALUE DERIVATIVE ENTERED INTO DATE CAPITAL START DATE MATURITY DATE INTEREST Interest swap TNOK % Cap 1) TNOK % 0 0 Total market value at December ) BWG Homes ASA has entered into a forward rate agreement totalling NOK thousand (Cap) with an interest rate ceiling of 6.5 per cent for 1 month NIBOR. The agreement was established for subsidary Block Watne to provide a fixed interest agreement to some of its customers. TRANSACTION EXCHANGE MARKET VALUE. DERIVATIVE ENTERED INTO DATE CAPITAL START DATE MATURITY DATE RATE Currency hedge Nordea TSEK Currency hedge Danske Bank TSEK Total market value at December The financial instruments specified above are not recognised in the balance sheet of the parent company. The market value of the derivatives has been calculated by the other party of the contracts (banks). FINANCIAL RISK In the report from the Board of directors and the CEO as well as in Note 20 to the consolidated financial statements the exposure to financial risk is explained. SPECIFICATION OF NET INTEREST-BEARING DEBT 1) : Interest-bearing long-term debt Interest-bearing short-term debt Bank deposits and cash Total net interest-bearing debt ) Further information is given in Note 20. NOTE 23 TAX FOR EMPLOYEES AND PUBLIC DUTIES SPECIFICATION Tax withheld from employees Social security tax VAT 73 0 Total public duties payable NOTE 24 OTHER CURRENT LIABILITIES SPECIFICATION Salaries, holiday pay etc Accrued expenses Other current liabilities Total other current liabilities

68 68 ANNUAL REPORT 2013 / BWG Homes / Annual accounts and notes NOTE 25 ASSETS PLEDGED AND GUARANTEE COMMITMENTS After refinancing completed in 2012 none of the companys assets are pledged as security. THE COMPANY HAS ISSUED THE FOLLOWING GUARANTEES Parent company guarantee to Nordea for the debt to Nordea held by Block Watne AS (TNOK at year-end 2013) Guarantees provided to insurance companies as security for guarantees given to Block Watne AS Other parent company guarantees given in relation to various leases and ongoing projects in Norway and Sweden BWG Homes ASA has confirmed to lenders providing housing co-operative project financing in Sweden, that it will secure that the subsidiares in Sweden are able to finance any forced buyback of finished units in such projects. Such buyback of finished units in the projects will occur only if the units are unsold after six months of completetion of the project.

69 Annual accounts and notes 69 Statement by the Board and CEO The Board of Directors and CEO have today reviewed and approved the annual financial statements for BWG Homes ASA, consolidated and parent company, for the calendar year 2013 and per 31 December 2013 (2013 Annual Report). The consolidated financial statements have been prepared in accordance with EU approved IFRS standards and associated statements of interpretation, as well as the further information requirements that follow from the Norwegian Accounting Act and that shall be applied per 31 December The annual financial statements for the parent company have been prepared in accordance with the Norwegian Accounting Act and good Norwegian GAAP as of 31 December To the best of our knowledge, the financial statements for 2013 for the Group and parent company have been prepared in accordance with prevailing accounting standards and the information disclosed in the financial statements provides a correct illustration of the Group and parent company s assets, liabilities, financial position and result as a whole as at 31 December We are also of the opinion that the Annual Report for the Group and parent company provides a true and fair overview of development, financial performance and position of the Group and parent company, including the main risk factors faced by the Group and parent company. OSLO, 3 APRIL 2014 Board of directors and CEO, BWG Homes ASA ROAR ENGELAND Chairman DANIEL K. SIRAJ Deputy chairman CHARLOTTE AXELSSON Board member HEGE BØMARK Board member LARS NILSEN Board member TORE MORTEN RANDEN Employee representative LARS ØRJAN REINHOLDSSON Employee representative MAGNE STAALSTRØM Employee representative OLE FEET CEO

70 70 ANNUAL REPORT 2013 / BWG Homes / Auditor s report

71 Auditor s report 71

72 72 ANNUAL REPORT 2013 / BWG Homes / Corporate Governance Corporate governance in BWG Homes ASA The main ethos of BWG Homes corporate governance is based on the following: BWG Homes will communicate with the external world in an open, reliable and relevant way about its operations and corporate governance. The board of BWG Homes will be autonomous and independent of the company s management. There will be a clear segregation of duties between BWG Homes board and management. All shareholders shall be treated equally. The board s account of management and control follows section 3 3b of the Accounting Act, Statement on corporate governance and Oslo Børs requirement of following or explaining deviations from the Norwegian Code of Practice for Corporate Governance. The recommendation can be found at nues.no. The board s statement is part of the annual report, and applies to the 2013 financial year. The statement is also available at bwghomes.no. 01 CORPORATE GOVERNANCE REPORT Compliance BWG Homes corporate governance guidelines follow the Norwegian Code of Practice for Corporate Governance of 23 October Compliance with the guidelines adopted will strengthen confidence in the company and help ensure value creation over time. Compliance and any deviations are mentioned for each point of the recommendation. The board s statement was initially reviewed by the audit committee, and then adopted at the board meeting of 3 April In accordance with the recommendation, instructions have been drawn up for the board, the audit committee, the CEO, the board s relationship with the auditor, the nomination committee, investor relations work, and guidelines for ethics and corporate social responsibility. Each year the board reviews the instructions and guidelines adopted and evaluates compliance with them. Values and ethical guidelines The purpose of BWG Homes ethical guidelines is to establish a healthy company culture in which employees comply with standards for good business practice and maintain a common responsibility for the company s reputation and corporate social responsibility. The guidelines shall ensure that the company conducts its business in an ethically-correct manner, and shall also serve as a tool for the exercise of value-based management and collaboration. The basic values are also laid down in the internal value processes of the subsidiaries. The ethical guidelines are available at bwghomes.no. Social responsibility BWG Homes bases its guidelines for corporate social responsibility on the basic principles of the UN s Global Compact; the purpose of which is to guarantee human rights, standards in working life, the environment and anticorrup tion. The guidelines for social responsibility are available at bwghomes.no. BWG Homes wants to be a responsible social actor by virtue of its role as a leading home builder in its markets, by setting new standards in the industry, and as an employer. Corporate social responsibility affects our own activities and those parts of the value chain where BWG Homes has a significant influence and which jointly affect people, society and the environment. Exercising corporate social responsibility is also important to BWG Homes reputation, in relation to shareholders and the financial market, customers, employees, the authorities and other interested parties. BWG Homes shall constantly assess the social consequences of its activities and implement improvements and measures where necessary. A further discussion of the company s exercise of corporate social responsibility can be found on page 15 of the annual report. The discussion follows section 3 3c of the Accounting Act. The working environment, HSE, gender equality, relevant equal treatment, energy and the external environment are also mentioned in further detail in the annual report. Deviations from the recommendation: None 02 OPERATIONS BWG Homes area of operations is defined in the company s articles of association. The object of the company is to engage in building activities and other associated operations, either on own account or through participation in other companies. The articles of association appear in their entirety on page 78, and are also available at bwghomes.no. The board draws up an annual strategy and quantified goals for BWG Homes business activities. BWG Homes core activity is building affordable, quality homes mainly by developing attractive housing projects on own account. We prioritize profitability and quality in the production and development of housing projects ahead of short-term top-line growth. The main points of the strategy are discussed in the annual report and at bwghomes.no. Deviations from the recommendation: None 03 EQUITY AND DIVIDENDS Equity BWG Homes must maintain a level of equity that is reasonable in relation to the company s object, strategy and risk profile. BWG Homes equity as at 31 December 2013 was NOK 2,560 million, corresponding to an equity ratio of 41.4 per cent. The board considers this to be satisfactory. Capital increases and board mandates The board will only propose capital increases that attend to the long-term interests of the community of shareholders. The board s mandates to execute capital increases will apply for the period up to the next ordinary general meeting. In general, such mandates are associated with defined purposes, and with preferential rights for existing shareholders. If the board approves a capital increase with waiver of the shareholders pre-emptive rights, the board shall provide the reason for the waiver of the shareholders pre-emptive rights in the stock exchange announcement about the capital increase. Capital increases were performed in 2006, 2007, 2009 and The company s share capital is NOK 136,121,433, divided into 136,121,433 shares. As at 31 December 2013, the board has one mandate, which is valid until the 2014 general meeting. At the general meeting on 24 May 2013, the board was authoried to increase the share capital of the company by up to NOK 13.6 million (corresponding to 10 per cent of the share capital). The mandate covers capital increase against monetary contributions and as compensation upon acquisition of shares in other companies, including in connection with mergers pursuant to section 13 5 of the Public Limited Liability Companies Act. The mandate authorizes the board to waive the shareholders pre-emptive rights. The mandate was not exercised in 2013.

73 Corporate Governance 73 Dividends The board has approved a dividend policy that forms the basis for the dividend proposals that are submitted to the general meeting. BWG Homes seeks to pay annual dividends to its shareholders. Dividends shall be proposed if the board finds that they will not have an adverse effect on BWG Homes future growth ambitions or capital structure. Dividends were paid for financial years 2006 (NOK 2.50 per share), 2007 (NOK 2.00 per share) and 2010 (NOK 0.90 per share). The group s dividend policy and dividends paid for previous financial years are also discussed at bwghomes.no. A dividend of NOK 0.25 per share is proposed for the 2013 financial year; amounting to NOK 34 million. The board s dividend proposal is discussed in further detail in the annual report. Deviations from the recommendation: None 04 EQUAL TREATMENT OF SHARE- HOLDERS AND TRANSACTIONS WITH CLOSE ASSOCIATES Equal treatment BWG Homes has one class of shares. The articles of association do not contain any restrictions with regard to voting rights. All shares consequently have equal status, also in relation to voting rights. All shareholders shall be treated equally. As a rule, existing shareholders will have pre-emptive rights in connection with capital increases, but these pre-emptive rights may be waived by the general meeting, in accordance with section 10 5 of the Public Limited Liability Companies Act. The board can propose that the general meeting waive the existing shareholders pre-emptive rights when special reasons dictate this. The board s proposal to waive the shareholders pre-emptive rights and the reasoning behind the proposal shall be presented in the supporting documents sent out with the notice of the general meeting. Transactions with close associates Board members and executive employees must notify the board of any direct or indirect interest they have in a transaction or agreement entered into by the company. In the event of transactions between the company and close associates (shareholders, the board and executive employees, as well as companies they control) with a value exceeding 1/20 of the share capital, the board shall obtain an independent valuation and present it to the shareholders. In 2013, Block Watne AS complet ed an option agreement with Ole Feet to buy a site for property development. The agreed purchase price is a minimum of NOK 17.5 million. Ole Feet has not participated in Block Watne s review of the matter. The agreement was entered into on market terms, and was reviewed by the board of BWG Homes ASA. Even though the agreement does not exceed 1/20 of the share capital, an independent valuation was procured. The option was exercised on 30 January No other transactions were carried out with close associates in 2013 that require an independent valuation. See Note 8 in the consolidated financial statements for a detailed overview of transactions carried out with close associates. Deviations from the recommendation: None 05 FREELY NEGOTIABLE SHARES In accordance with the articles of association, shares in BWG Homes are freely negotiable. BWG Homes ASA is listed on Oslo Børs. Active work is done to create interest among existing and potential investors, and to raise the company s profile. The BWG Homes management team holds regular meetings with Norwegian and international investors. Deviations from the recommendation: None 06 GENERAL MEETINGS The shareholders exercise the highest authority in BWG Homes ASA through the general meeting. The general meeting is open and available to all shareholders. The ordinary general meeting shall be held every year by 30 June. The 2014 AGM will be held on 22 May. Right to convene a general meeting The date of the general meeting will be published as a stock exchange announcement, as well as on the company s Web site (financial calendar). An extraordinary general meeting may be called by the board at any time. BWG Homes auditor or shareholders representing at least 5 per cent of the share capital may request the convening of an extraordinary general meeting. Notice of general meeting Notice of the general meeting must be made in writing to all shareholders with a known address no later than 21 days before the date of the meet ing. Notice of the meeting, supporting documents, resolution proposals, the audit committee s statement regarding the choice of auditor, the nomination committee s recommendations and reasoning, and registration and proxy forms shall be made available to the shareholders on the company s Web site at the latest 21 days before the general meeting. Shareholders may contact the company and request to have documents sent to them pertaining to business to be reviewed at the general meeting. This is stipulated in the company s articles of association. The supporting documents must contain all of the documentation necessary to enable the shareholders to form an opinion on the business to be reviewed. The notice shall indicate the procedure relating to proxies, use of the proxy form, and the proxy appointed by the company on behalf of the shareholders. The proxy form shall be designed in such a way that a shareholder can vote on each individual item of business to be decided and the individual candidates up for election. The notice shall also provide information on the shareholders right to submit resolution proposals on business to be reviewed by the general meeting, and the URL at which the notice and supporting documents are available. The deadline for registration is three days before the date of the meeting. Participation at the general meeting BWG Homes articles of association stipulate that the right to attend and vote at the general meeting can only be exercised if the acquisition of shares was registered in the VPS register of shareholders at latest five working days before the meeting. Registration for the general meeting must be submitted in writing by post or . Registration may also be performed electronically on the company s Web site or via VPS Investorservice. Shareholders who are unable to attend may vote by proxy. Proxies are linked to each item of business. BWG Homes articles of association stipulate that the board may decide to allow shareholders to submit advance votes in writing including by use of electronic communication on business that is to be discussed at the general meeting. The notice must state whether it will be possible to submit advance votes in writing before the general meeting, and what rules have been determined for such voting. The board, chairman of the nomination committee, auditor, CEO and CFO must all participate in the general meeting. Execution of the general meeting The board must take steps to ensure that the general meeting is an effective forum for the views of shareholders and the board. The chairman of the board will declare the general meeting open. The general meeting will elect a chairman of the meeting who is independent of the board and the management. The general meeting must approve the annual accounts and set the board members fees.

74 74 ANNUAL REPORT 2013 / BWG Homes / Corporate Governance The general meeting will elect the members of the nomination committee, and then the chairman of the committee in a separate election. The meeting will also elect the board s shareholder-elected members, and then the chairman of the board and the deputy chairman in a separate election. Each candidate will be voted on. The CEO shall report on the company s status. The general meeting shall also review business which it is required to consider by law or the company s articles of association. The minutes of the general meeting are published as a stock exchange announcement and on the company s Web site, normally within one day of the meeting. General meetings in 2013 The general meeting was held on 24 May. All resolutions were adopted in line with the recommendations of the board and the nomination committee. All of the five shareholder-elected board members were up for election, and the general meeting elected Charlotte Axelsson, Hege Bømark, Roar Engeland, Lars Nilsen and Daniel Kjørberg Siraj as board members to serve for a period of two years. The general assembly then elected Roar Engeland as chairman of the board and Daniel Kjørberg Siraj as deputy chairman, in line with the recommendations of the nomination committee. Deviations from the recommendation: None 07 NOMINATION COMMITTEE The nomination committee system is laid down in the company s articles of association, and separate guidelines have been drawn up for the duties, composition and criteria for eligibility of the committee. The guidelines have been approved by the general meeting and are available on the company s Web site. Composition of the nomination committee The majority of the nomination committee s members should be independent of the board and the company s executive employees, and the composition of the nomination committee should reflect the interests of the shareholders in general. The nomination committee consists of three members; all of whom are elected by the general meeting for a term of two years. The nomination committee recommends candidates for election to the nomination committee. The general meeting elects the nomination committee chairman and also decides on the committee members fees. The nomination committee elected at the general meeting of 24 May 2012 for a term of two years consists of Mimi K. Berdal (chair), Carl Henrik Eriksen and Erik Gjellestad. Berdal and Gjellestad are independent of the board and the company s executive employees. They do not hold shares in the company. Eriksen is an Executive Vice President of OBOS, the largest shareholder in BWG Homes ASA. The duties of the nomination committee The nomination committee s duties consist of proposing candidates for election as board members and making recommendations regarding board fees. The committee reviews the report from the board s annual evaluation of its own performance. The nomination committee is required to report on its work and submit a reasoned recommendation to the general meeting. The recommendations shall include relevant information about the candidates and an evaluation of their professional expertise and independence from the company s management and its major business associates. The nomination committee should also ensure that its recommendations are endorsed by the largest shareholders. The nomination committee s reasoned recommendations should be made available at the latest 21 days before the general meeting. Information on the nomination committee and its members is available on the company s Web site. The company gives notice of deadlines for nominating potential board and nomination committee members on the company s Web site. The nomination committee s work in 2013 Until the 2013 general meeting, the nomination committee s work consisted of recommending five new board members who on whole met the requirements regarding continuity, independence, professional expertise (including conditions for establishing an audit committee) and representation of both genders. The nomination committee had meetings with the largest shareholders in order to prepare its recommendation for candidates. The work of the nomination committee included proposing board fees for payment in 2013 and The chair of the nomination committee attended the general meeting on 24 May Deviations from the recommendation: None 08 CORPORATE ASSEMBLY AND BOARD: COMPOSITION AND INDEPENDENCE Following a resolution by Bedriftsdemokratinemnda (Corporate Democracy Committee) on 30 August 2006, BWG Homes does not have a corporate assembly. Three of the board members and their deputies are accordingly elected by and from the employees. Election of the board According to the articles of association, the board of BWG Homes shall consist of five to eight members. In accordance with the agreement approved by the Corporate Democracy Committee, three of the board members and their deputies are elected by and from the employees. The general meeting elects the shareholder-elected board members after considering the recommendations of the nomination committee. The chairman and deputy chairman are elected by the general meeting. Both the shareholder-elected board members and the members elected by the employees are elected for a term of two years. Remuneration of the board is decided by the general meeting following a recommendation from the nomination committee. Information on board members and candidates Complete information about candidates for election to the board and the nomination committee, in accordance with the nomination committee s reasoned recommendations, is included in the case documents for the general meeting, and is also available on the company s Web site. Composition of the board Board members shall be elected according to BWG Homes need for expertise, capacity and ability to make balanced decisions in the best interests of the shareholders in general. The board of BWG Homes consists of eight members five shareholder-elected members and three members elected by and from the employees. Two of the five shareholder-elected board members are women. The CEO of the company is not a board member. The three employee-elected board members were re-elected on 30 October 2012 for a two-year term. BWG Homes ASA and its subsidiary Block Watne AS have the same employee-elected board members. The board members CVs are published in the annual report, and their shareholdings are listed in Note 8 in the consolidated financial statements. Up-to-date CVs and information on share ownership can also be found on the company s Web site. Competence of the board The shareholder-elected members have extensive experience from the housing industries of Norway and Sweden, property development, finance and law in addition to experience from board work in other companies. The employee-elected board members represent both production and administration. In the autumn of 2013, the entire board attended the Stock exchange course for board members organised by Oslo Børs. The board thus meets Oslo Børs competence requirements for board members. The competence requirement that entered into force on 1 July 2013 means that

75 Corporate Governance 75 board members must have satisfactory competence on the rules that apply to companies listed on Oslo Børs / Oslo Axess. The board s independence The board shall operate independently of any special interests and function effectively as a collegiate body in the best interests of the shareholders in general. No members of BWG Homes day-today management are members of the board. None of the shareholder-elected board members have any association with BWG Homes day-to-day management. The deputy chairman of the board until the 2013 general meeting, Harald Walther, is a practising lawyer with his own law firm, which occasionally performs assignments for BWG Homes. The entire board has been informed of these assignments and the fees for the assignments have been approved by the board. See Note 8 in the consolidated financial statements for a break-down of fees paid in Harald Walther does not have any connection with BWG Homes important business associates. Daniel Kjørberg Siraj, the board s deputy chairman as of the 2013 general meeting is an Executive Vice President of OBOS, the largest shareholder in BWG Homes ASA. The other shareholder-elected board members do not have any association with BWG Homes key business contacts or principal shareholders. The deputy chair of the board chairs board meetings in cases where the chairman of the board cannot or should not chair the meeting due to conflicts of interest (impartiality). There were no such cases in Deviations from the recommendation: None 09 THE WORK OF THE BOARD The board shall promote the interests of the community of shareholders. Instructions for the board Instructions have been drawn up for the responsibilities, activities and administrative procedures of the board. The board has overall responsibility for the good organisation and administration of BWG Homes and implementation of the company s strategy. The board s tasks also include supervision of the company s management and operations, including systems for control and risk management, that the company s equity is at a reasonable level, and that the company complies with the Norwegian Code of Practice for Corporate Governance. The management of BWG Homes draws up proposals relating to strategy, long-term goals and budget. The overall strategy and budget are decided by the board. The board appoints the CEO, sets the CEO s salary, and establishes mandates and instructions. More detailed regulations relating to the board s areas of responsibility and administrative procedures are specified in the instructions for the board. The mandate structure and instructions for the board, the CEO, and the subsidiaries boards and management are revised annually. Chairman The chairman is responsible for ensuring that the board s work is performed efficiently and properly, in accordance with current legislation, the articles of association and adopted instructions. The board produces an annual plan for its work with specific topics and items for the board meetings. Board business is prepared by the CEO and the management in consultation with the chairman of the board. The deputy chairman of the board chairs board meetings in cases where the chairman of the board cannot or should not chair the meeting. The board members shall notify the chairman if the board is dealing with business where an individual member may have conflicting or financial interests. There were no such cases in Meeting structure Eight board meetings are normally held during the year. Extraordinary board meetings are held, if required, to deal with business that cannot wait until the next ordinary board meeting. BOARD MEETING ATTENDANCE 2013 number of number of shares board member meetings as at Roar Engeland 1 6 / 6 0 Daniel Kjørberg Siraj 9 / 10 0 Charlotte Axelsson 1 5 / Hege Bømark 9 / 10 0 Lars Nilsen 1 5 / Tore Morten Randen 9 / Lars Ørjan Reinholdsson 10 / 10 0 Magne Staalstrøm 10 / ) New board members as of the general meeting of 24 May 2013 The board s annual plan encompasses approval of strategy, interim accounts, annual accounts and the budget, a review of risk areas, internal control, values, guidelines for ethics and corporate social responsibility, organisation structure and corporate governance principles. The board annually evaluates the company s management and organisation structure. Board meetings in board meetings were held in 2013: 4 meetings before the general meeting in May and 6 meetings after the general meeting. One of the board meetings was held as a teleconference. Audit committee The audit committee is elected by and from the board members, for the same term as the shareholder-elected board members. Instructions have been drawn up for the audit committee s responsibilities and tasks. The purpose of the audit committee is to prepare business for the board and help ensure focus on good risk management, financial reporting and follow-up of control systems. The purpose of the audit committee is to monitor the independence of auditors. The audit committee shall be consulted in connection with election of the auditor, and the committee s statement shall be enclosed with the recommendation to the general meeting. The audit committee annually assesses its activities in terms of the mandate and tasks as set out in the instructions. As at 31 December 2013, the audit committee consists of Hege Bømark (chair) and Daniel Kjørberg Siraj (member). The members of the audit committee satisfy the criteria for independence and expertise laid down in the Public Limited Liability Companies Act. The audit committee held five meetings in 2013 in connection with quarterly reporting and the annual accounts. The auditor chosen by the company attends the meetings of the audit committee, and the company s CFO is the audit committee s secretary. The chair of the audit committee presents the audit committee s assessments and recommendations to the board. The minutes of the audit committee meetings are sent to the board. Remuneration committee In February 2014, the board established a remuneration committee elected by and from the members of the board. The remuneration committee consists of Roar Engeland (chairman) and Charlotte Axelsson (member). They are both independent of the business and day-to-day management. The remuneration committee will serve as an advisory body to the board in relation to guidelines regarding remuneration of executive employees. Instructions will be drawn up for the work of the remuneration committee. Financial reporting The board receives interim reports on the company s economic and financial status.

76 76 ANNUAL REPORT 2013 / BWG Homes / Corporate Governance The management submits and reports on the interim and annual financial statements. The company follows the deadlines of Oslo Børs for interim reporting. The board s evaluation of its own work The board evaluates its own activities, form of work and competence every year. A summary of the board s evaluation is sent to the nomination committee. The board also performs a similar evaluation of the CEO. The board evaluated its and the CEO s 2013 performance in January External assistance is used to obtain the evaluations and collate the results in order to guarantee the anonymity of the sender. The evaluation results will be reviewed by the board and will also be communicated to the nomination committee. Instructions for the CEO The CEO is appointed by and has a reporting obligation towards the board. The CEO s salary and other remuneration are fixed by the board. The CEO s authority and areas of responsibility are defined in separate instructions adopted by the board. The CEO is responsible for BWG Homes operative management, and must ensure that the board s decisions are implemented. The business must be run in accordance with current legislation, and with high ethical standards, and must follow the Norwegian Code of Practice for Corporate Governance. The CEO must also ensure that authorisation frames and control procedures have been established that contribute to satisfactory internal control of the operative business, and which ensure that allocations are not made that violate the group s obligations pursuant to current loan agreements. The CEO also ensures that the accounts of BWG Homes comply with legislation and other relevant regulations, and that the assets of BWG Homes are managed responsibly. The CEO is chairman of the board of the subsidiaries Block Watne AS, BWG Homes AB, Hetlandhus AS and Kärnhem AB. The CEO must not participate in the review or the settlement of business of great importance to himself or to any close associates. Procedures have been established for approval of costs linked to the CEO. Lars Nilsen stepped down as CEO in May 2013, and was elected to the board by the general meeting. Ole Feet took up the position of new CEO on the same date. Deviations from the recommendation: None 10 RISK MANAGEMENT AND INTERNAL CONTROL Responsibilities and objectives of the board The board is responsible for ensuring that the company has sound internal control and risk management systems. The board receives interim reports on operational status and the management s evaluation of significant risks and its own management of them. The board s annual plan includes a review of the company s risk areas, internal control systems, and values and guidelines for ethics and corporate social responsibility. Any violation of the guidelines for ethics and corporate social responsibility must be reported immediately to the managing director of the relevant subsidiary or, if applicable, to the chairman of the board of the subsidiary. All serious violations of the guidelines must also be reported to the board of BWG Homes ASA. Employees must also have an opportunity to notify a dedicated Notification Committee of censurable conditions in accordance with established procedures. The audit committee regularly reviews the company s risk areas and control systems. The auditor shall review BWG Homes internal control systems with the board at least once a year, including identifiable flaws and suggestions for improvement. Responsibilities of the CEO The CEO checks that risk management and internal control are exercised in accordance with established guidelines. The operative subsidiaries have formal routines for decision-making processes for site acquisition, initiating sales and building. Instructions on authorisation and attestation have been implemented, with ceilings for entry into agreements and approval of payment. All employees follow guidelines regarding the extent of their own authority and where the next level for decisions or approval lies. Operations in the subsidiaries are ISO certified, with quality systems that document processes and routines. The planning, management, implementation and financial monitoring of construction processes, production processes and projects are integrated into BWG Homes business operations. Construction project reports are systematically submitted to the subsidiaries operative management. The main components of the company s risk areas and internal control systems are discussed separately in the annual report. See also Note 20 Financial risk in the consolidated financial statements. Deviations from the recommendation: None 11 REMUNERATION OF THE BOARD Remuneration of board members is decided by the general meeting following a recommendation from the nomination committee. Remuneration of the board is not result-based, and no options are issued to board members. The shareholder-elected members are not included in the company s pension scheme and do not have severance pay agreements with the company. None of the shareholder-elected board members perform any work for the company other than their duties on the board. The general meeting held on 24 May 2013 set the fees for the board. The board members on the audit committee receive a dedicated fee for this work. For remuneration of each board member, see Note 8 of the consolidated group accounts for specification of fees for Deviations from the recommendation: None 12 REMUNERATION OF EXECUTIVE EMPLOYEES Guidelines In accordance with section 6-16a of the Public Limited Liability Companies Act, the board draws up a statement about the determination of executive employees salaries and other remuneration. The statement is presented to the general meeting and this is followed by a consultative vote on the statement. Remuneration system The remuneration system for executive employees includes a basic salary, bonus system, pension scheme, severance pay and benefits such as company car, newspaper subscription, telephone, etc. The CEO s pay terms are fixed by the board. Remuneration of other executive employees is decided by the CEO. Executive employees have individual agreements which, under certain conditions, give the right to severance pay after the normal period of notice. The severance pay scheme is limited to up to 12 months salary. No agreements have been entered into with executive employees granting them special compensation on termination of employment or change of position. The chief executive of the Swedish business, who for historical reasons had an agreement for 24 months severance pay, left at the end of the year. His termination did not trigger severance pay. Performance-related remuneration Executive employees have individual bonus schemes based on the company s results and individual performance. The bonus schemes vary for the different positions, but have an upper limit of 12 months salary. The board sets the bonus scheme for the CEO. The CEO decides the bonus criteria for the other executive employees. The bonus criteria are generally related to performance within the individuals area of responsibility. Executive employees do not have any equity compensation benefits or share option schemes. BWG Homes is under no obligation to grant executive employees, the

77 Corporate Governance 77 board or other employees profit-sharing, equity compensation benefits or share option schemes. Policy and reporting The company s executive employee remuneration policy is described in the annual report. For specification of all components of remuneration to the CEO and other executive employees, see Note 8 in the consolidated financial statements. Deviations from the recommendation: None 13 INFORMATION AND COMMUNICATION Guidelines on reporting financial and other information The company has pledged to provide the financial market with precise, relevant and consistent information about factors of importance in valuing the company s securities, when BWG Homes is the correct source of such information. BWG Homes information and communication is based on transparency and equal treatment of all shareholders. The company provides shareholders, potential investors, analysts and other interested parties with equal and simultaneous access to new and price-sensitive information. The company has defined guidelines for investor relations activities and financial information. The guidelines are available on bwghomes.no. The purpose of BWG Homes communication with the financial market is to create an accurate picture of the company s financial position, key value drivers, risk factors and other circumstances which may affect future wealth creation. Company spokespersons have been designated for different subjects. The company has a contingency plan for management of the media in response to events of a particular nature. The company has dedicated investor relations pages at bwghomes.no where shareholders can find information that is equal, simultaneous and relevant. The information on the Web site is in both Norwegian and English, and all price-sensitive information is published in both Norwegian and English. Stock exchange announcements, press releases, interim reports, presentation material and webcasts are available on the company Web site. BWG Homes follows the recommendations of Oslo Børs regarding the reporting of IR information. BWG Homes deviates from point 2.1 of the recommendations on interim reports in that the interim report for the second quarter is generally published over 45 days after the end of the quarter, but normally within 55 days. This is due to practical considerations related to holidays. See otherwise the guidelines for IR activities. Insider trading The company has rules for defining insiders. Insider trading of the BWG share must always be approved by the person in charge of trading clearance prior to the transaction, and Oslo Børs must be notified when the transaction is completed. Reports and announcements BWG Homes follows the Securities Trading Act in its interim reporting. Three of the four quarterly reports are published no more than 45 days after the end of the quarter. Open presentations are held in conjunction with publication of interim reports. Quarterly reports and presentations are made available on the company Web site when a stock exchange announcement is published. All interim presentations are also available as live webcasts concurrently with the presentations. The complete annual financial statements and annual report are available on the company s Web site no later than 21 days before the general meeting. The financial calendar is published annually and can be found on the Web site. Announcements are published and distributed to Oslo Børs and simultaneously to national and international news agencies, in accordance with section 5-12 of the Securities Trading Act and the Stock Exchange Act. Dialogue with shareholders and the financial market The CEO and CFO are the company s financial market spokespersons. Great importance is attached to being accessible to our shareholders, the financial market and other interested parties. Investor presentations are held, both nationally and internationally after the interim presentation. There is an up-to-date list of analysts who follow the company on the company s Web site. A summary of relevant rules regarding flagging, company takeovers and enforced redemption, as well as the exemption model and home country are available on the company s Web site. Deviations from the recommendation: BWG Homes has one deviation from Oslo Børs investor relations recommendation, as the interim report for the second quarter was published over 45 days after the end of the quarter. 14 TAKEOVER OF THE COMPANY Guidelines have been drawn up for the board s handling of any takeover bids for part of or all of the company. The guidelines set out the main principles for how the board and administration shall act in such a situation. Equal treatment and transparency In the event of a takeover bid for part or all of the company, the board must ensure that shareholders are treated equally and that BWG Homes business activities are not disrupted unnecessarily. The board must not work against bids for BWG Homes shares. Evaluation of offers If a bid is made for BWG Homes shares, the board must issue a statement evaluating the offer and making a recommendation as to whether the shareholders should accept the bid or not. In general, the board must procure an independent valuation and communicate this to the shareholders in its statement. If the board is unable to make such a recommendation, it must justify the decision. If the board s views are not unanimous, it must elaborate on this. The board s statement shall follow the guidelines of the Securities Trading Act in all other respects. Any agreement with the tenderer to limit the possibility of procuring other bids for BWG shares should only be entered into when this obviously can be justified in the common interest of BWG and the shareholders. Disposal of activities Disposal of significant parts or all of the company s activities is decided by the general meeting. Deviations from the recommendation: None 15 AUDITOR Election of the auditor The company s auditor is elected by the general meeting. The board s audit committee shall be consulted in connection with election of the auditor, and the audit committee s statement shall be enclosed with the recommendation to the general meeting. The board s relationship with the auditor The auditor s primary duty is to perform the auditing mandated by the law and professional standards with the accuracy, competence and integrity prescribed by the law and professional standards. Special instructions have been adopted for the board s dealings with the auditor, including guidelines for the company s right to use the auditor for services other than auditing. The auditor shall have at least one meeting with the board per year without the company s management being present. The audit committee shall monitor the auditor s independence, and the auditor shall annually provide the board with written confirmation that it meets the defined independence criteria. The auditor shall participate in the board meeting that reviews the annual report, at general meetings and the meetings of the audit committee. The auditor shall annually present the main features of the audit plan to the audit committee, and shall annually review the company s internal control systems. The auditor shall review any material changes to BWG

78 78 ANNUAL REPORT 2013 / BWG Homes / Corporate governance Homes accounting principles, evaluations of significant accounting estimates and any material matters where there may have been disagreement between the auditor and the company s management. The board will inform the general meeting about the auditor s fees broken down into auditing and other services at the general meeting. Meetings with the auditor in 2013 The company s chosen auditor EY AS, represented by partner Asbjørn Ler, attended the board meeting that, among other business, adopted the 2012 accounts. He also had a meeting with the board without the presence of the company s management. He attended the 2013 general meeting, and the five meetings of the audit committee in Deviations from the recommendation: None ARTICLES OF ASSOCIATION OF BWG HOMES ASA 1 The company s name is BWG Homes ASA, and it is a public limited liability company. 2 The object of the company is to engage i n building operations and other similar operations, either under its own direction or through participation in other companies. The company may grant loans and furnish security in this connection. 3 The company s registered business address is in Oslo. 4 The company s share capital is NOK 136,121,433 divided into 136,121,433 shares each with a nominal value of NOK 1. 5 The company shall have a Board of Directors consisting of five to eight Board Members, as determined by the General Meeting. The Board of Directors, including its Chairman and the Deputy Chairman, shall be elected by the General Meeting for a term of two years. The Company can be signed for by the Chairman of the Board or the Deputy Chairman individually, or by two Board members jointly or by whomsoever the Board otherwise delegates signatory rights. 6 The company shall have a Nomination Committee consisting of three members which are elected by the General Meeting for a term of two years. The Nomination Committee shall nominate candidates for the Board of Directors and the Corporate Assembly (if any) and the remuneration for the members of these bodies. The Board of Directors may lay down instructions for the Nomination Committee. 7 The Annual General Meeting of shareholders shall consider and decide on the following matters: a) Approval of the annual report and accounts, including the dividend to the shareholders. b) Any other matters that shall be dealt with by the General Meeting by law or pursuant to the Articles of Association. Documents concerning matters to be considered at the general meeting may be made available on the company s website. This also applies to documents that pursuant to law shall be enclosed in or attached to the notice of a general meeting. Provided that the documents are made available on the company s website, the legal requirements regarding physical distribution of the documents shall not apply. A shareholder may nonetheless request that documents concerning matters to be considered at the general meeting be sent to him or her. The right to participate in and vote at a general meeting can only be exercised if the acquisition of the shares has been recorded in the shareholder register (VPS) no later than the fifth business day prior to the general meeting. The Board may decide that shareholders shall be permitted to cast advance votes in matters that will be discussed and put to a vote at the Company s Annual General Meeting. Such votes may also be casted via electronic communication. The notice of the Annual General Meeting must state whether or not advance voting is allowed and any guidelines that have been stipulated for such advance voting. 8 In all other respects, the provisions of the Public Limited Companies Act shall apply.

79 Contact information BWG HOMES ASA P.O.Box 1817 Vika NO 0123 Oslo Tel: (+47) BLOCK WATNE AS P.O.Box 1817 Vika NO 0123 Oslo Tel: (+47) HETLANDHUS AS P.O.Box 1817 Vika NO 0123 Oslo Tel: (+47) BWG HOMES AB Myresjö SE Vetlanda Tel: (+46) Fax: (+46) KÄRNHEM AB P.O.Box 217 SE Växjö Tel: (+46) Myresjöhus AB Myresjö SE Vetlanda Tel: (+46) Fax: (+46) Smålandsvillan AB Myresjö SE Vetlanda Tel: (+46) Fax: (+46) DESIGN/LAYOUT: Creuna PHOTO: Bård Ek, BWG Homes PRINT: RK Grafisk

80 BWG HOMES ASA P.O.Box 1817 Vika NO 0123 OSLO bwghomes.no