ANNUAL REPORT 2021
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2021
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2021
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2021
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2021
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2021
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2021
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NORLANDIA HEALTH & CARE GROUP AS
COMPANY
(“NHC”) is a leading
. The parent company is
headquartered in
,
.
OPERATIONS
Preschools
The Preschools segment includes the
preschool activities within Norlandia
Preschools AS and Kidsa Barnehager AS.
Per year-end 2021, Norlandia Preschools
and Kidsa Barnehager operates 393
preschool units in Norway, Sweden,
Finland, Netherlands, Poland and
Germany, an increase of 28 units year-
on-year. 32 of the units are owned 50%
and operated by Wekita (Germany), and
not consolidated in the NHC accounts.
Care
Norlandia Care provides services within
institutional elderly care, patient hotels
and home care services in Norway,
Sweden and Finland. As of year-end
2021, 45 elderly care homes were
operated by Norlandia, of which 42 were
in Sweden, 2 were in Norway and 1 was
in Finland. 9 of the homes were own-
management projects, including a
Generation Concept (preschool and
elderly care). Norlandia also operates 2
patient hotels in Norway, and 1 in
Finland. Additionally, we have home care
services in Finland, Norway, and Sweden.
Integration Services
The integrations services are offered
through Hero Group AS. The company
was established in 1987 and has grown to
become one of the largest private
providers of care services related to
forced migrants, refugees and asylum
seekers in Norway. In addition, Hero
operates 5 reception centers in Germany.
The group has extensive competence and
experience acquired through 30 years of
operations. The service offering includes
reception centers for asylum seekers and
interpretation services.
Individual & Family
The services within the Individual &
Family segment are provided by Aberia
AS – a Nordic provider of health-,
welfare- and care services for children
and young as well as people with physical
and mental disabilities. The group was
established in 2010 and has grown to
become a significant player in the Nordic
market. The services are divided in three
main areas: services related to childcare
institutions and foster homes; care
services for people within all age groups
with physical and mental disabilities; and
respite care and personal assistance.
Most of the contracts in the group are
with the government, municipalities or
city district authorities.
Real Estate
Care Properties AS is a real estate
developer for Norlandia Health & Care
Group (NHC). As part of NHC’s business
model, Care Properties develops or
acquires care related real estate, for NHC
operations. Normally, the various
properties will subsequently be divested
based on a long-term lease contract with
NHC.
COMMENTS TO THE CONSOLIDATED
FINANCIAL STATEMENTS
The Group’s revenues increased from
NOK 5,313.8 million in 2020 to NOK
5,933.7 million in 2021 primarily
explained by growth within Preschools.
Profit from operations came in at NOK
238.5 million in 2021, down from NOK
268.8 million in 2020. Net finance
amounted to NOK -190.2 million for the
year, influenced by net unrealized
currency gains of NOK 45.6 million.
Consequently, net profit increased from
NOK -15.5 million in 2020 to NOK 43.7
million in 2021.
IFRS-16 was adopted on 1st January
2019, and had a net effect on profit
before tax, of NOK -99.7 million in 2021.
This is explained by increased
depreciation charges of NOK 449.4
million, finance charges of NOK 121.1
million and a reduction of real estate
gains of NOK 65.0 million, partially offset
by reduced leasing expenses of NOK
535.8 million.
The Group generated cash flow from
operating activities of NOK 607.4 million
in 2021 down from NOK 818.3 million in
2020, negatively affected by a movement
in working capital of NOK -137.8 million
in 2021. Net cash flow from investing
activities amounted to NOK 42.6 million,
down from NOK 215.3 million in 2020,
explained by higher investments in
shares in subsidiaries and lower book
value on divested properties. Financing
cash flows amounted to NOK -631.1
million, up from NOK -909.5 million in
2020, the difference mainly explained by
repayment of debt in 2020.
As of 31.12.2021, the Group had a cash
balance of NOK 301.2 million, up from
NOK 285.4 million one year prior. In
addition, the Group has a revolving credit
facility of NOK 350 million with DNB. As
of 31
st
million was drawn.
The Group had total assets of NOK
8,317.6 million per year-end 2021,
compared to NOK 7,462.8 million in
2020. Total non-current liabilities
amounted to 6,427.3 million, significantly
up from 2020, with the large increase
reflecting the new senior secured
sustainability-linked bond of NOK 1,700
million placed in May 2021. The former
bond loan was classified as current
liabilities per year-end 2020 as the
maturity of these bonds, at that time,
were less than 12 months away. The
remaining long-term loans of NOK 493.1
million mainly related to property debt
on Norwegian preschool properties.
The increased debt compared to year-
end 2020 reflected property debt
assumed through the acquisition of Gnist
Barnehager in October 2021. Current
liabilities amounted to NOK 1,418.3
million in 2021, down from NOK 3,195.8
million in 2020, explained by the
inclusion of the former bond loans in the
2020 current liabilities figures.
Per 31
st
total equity amounted to NOK 472.0
The board of directors’ report 2021
ANNUAL REPORT 2021
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million, up from NOK 291.0 million in
2020.
The Group’s financial position is sound
and adequate to settle short-term
obligations with the Group’s liquid assets.
The consolidated financial statements
have been prepared in accordance with
International Financial Reporting
Standards (IFRSs) as adopted by EU.
COMMENTS TO THE PARENT COMPANY
FINANCIAL STATEMENTS
Operating profit for the parent company
amounted to NOK -9.3 million in 2021,
down from NOK -5.0 million in 2020. Net
financials increased from NOK -4.6
million in 2020, to NOK 185.8 million in
2021, reflecting the unrealized currency
gain and received group contributions.
Net income amounted to NOK 155.3
million in 2021, up from NOK -6.0 million
in 2020.
Total assets per 31.12.2021 were NOK
2,638.5 million, mainly consisting of
shares in subsidiaries.
Total liabilities per 31.12.2021 were NOK
2,638.5 million, which consisted of the
listed NOK and SEK bond issues (adjusted
for issuing costs). In addition, the parent
company had short-term liabilities to
group companies of NOK 145 million.
Total equity amounted to NOK 703.6
million, up from NOK 368.5 million in
2020.
Use of Alternative Performance
Measures
Alternative Performance Measures (APM)
is understood as a financial measure of
historical or future financial performance,
financial position, or cash flows, other
than a financial measure defined or
specified in the applicable financial
reporting framework.
Norlandia Health & Care Group reports
certain alternative performance
measures in its financial reports as a
supplement to the financial statements
reported in accordance with IFRS.
The APMs are used consistently over
time and accompanied by comparatives
for the corresponding previous periods.
Definitions: EBITDA: Earnings Before
Interest, Tax, Depreciation and
Amortization EBIT: Earnings Before
Interest and Tax, Total Net Debt: As used
in the incurrence test; total interest
bearing debt less cash and cash
equivalents.
The Group also use adjusted EBITDA to
exclude the effects from IFRS 16, as these
figures are relevant for monitoring capital
and reporting to stakeholders.
Going concern
In accordance with the Norwegian Ac-
counting Act §3-3a, we confirm that the
financial statements have been prepared
under the assumption of a going concern.
This assumption is based on profit
forecasts for 2022 and the Group’s long-
term strategic forecasts. The Group’s
economic and financial position is sound.
Future challenges and market outlook
The war in Ukraine is clearly a tragic
humanitarian crisis, and along with the
rest of the world, we at NHC are shocked
by the developments that are unfolding .
Hero, as Norway’s largest operator of
immigration and refugee centers, is
consequently very much affected and
central in the Government’s ambition to
establish accommodation for at least 30
000 Ukrainian refugees. This work is
continuing with intense focus.
While Covid-19 is receiving less public
attention, it remains an uncertainty and
risk going forward. The pandemic had a
negative financial impact in 2021 and all
our markets and operations were
affected. While we hope that the worst
now is behind us, the pandemic is still
affecting our operations, primarily
through continued low occupancy within
Elderly Care, and fatigue among
personnel. We continue to plan and
prepare for negative developments
through our contingency procedures.
Additionally, the regulatory framework
has a significant influence on the Group
and our ability to deliver services with
high quality. Political risk is therefore
present as major shifts may have a
significant impact in the way we deliver
our services. Currently, these risks are
clearly most evident in Norway, where
the new Government has stated that a
public inquiry will be appointed, to
investigate non-profit operating models
within private welfare.
Within Preschools; To limit our exposure
to unfavorable political and market shifts,
we continue to diversify our operations.
We have added more than 180 new units
since 2016, which has contributed with
well above NOK 1 billion in revenues, but
also depressed margins as new unit
openings generate losses during a start-
up period.
As we reduced our growth pace in late
2019, we have seen the anticipated
margin expansion. Preschools delivered a
solid year in 2021, in line with 2020,
despite being negatively affected by
materially increased electricity costs and
high sick leave. We believe we have an
attractive portfolio of preschools and
strong positions in the markets in which
we operate.
Following the bond refinancing in May
2021, NH Europe is now owned 100% by
NHC and thus fully consolidated in our
accounts. The company was established
in 2019 as an acquisition vehicle owned
49% by NHC and 51% by owner
Hospitality Invest, and has grown to 36
units in the Netherlands, Finland, and
Sweden. Although being materially
affected by Covid-19, we expect NH
Europe to contribute with more than
NOK 200 million in annual revenues and
above-group margins going forward.
In October 2021, we completed the
acquisition of a Norwegian preschool
chain, Gnist Barnehager, consisting of 17
large operational units and 5 owned new
and modern properties. The preschools
are mainly located in North Western
Norway, Bergen and Trondheim, and
represents a good geographical fit with
Norlandia and Kidsa. We expect to realize
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NORLANDIA HEALTH & CARE GROUP AS
material synergy effects after integrating
Gnist into our NHC operations.
Integration project is ongoing and stable.
Although profit margins in Norway have
been under pressure in recent years, they
have due to proactive growth and cost
initiatives remained at decent levels
during 2020 and 2021. In November
2021, the new Norwegian government
proposed further regulatory changes for
private preschools, by reducing the
pension cost component of the
municipality grants from 13% to 10%. The
proposition has been implemented and
will, according to our estimates,
negatively impact revenues by NOK 40
million per year. On the other hand, we
expect recent acquisitions as well as
other efficiency measures, to positively
contribute.
Our international operations continue to
perform well. The Netherlands, Finland
and Sweden are all showing solid growth
in revenues and profitability, and we
continue to pursue attractive
opportunities in these markets. The
ramp-up phase in Poland has been
prolonged by the pandemic, but
occupancy is showing steady growth and
the operations are nearing break-even
levels. Overall, the Preschools segment is
progressing well and we will continue to
target effective and sticky growth in all
our international markets.
Wekita, consisting of 32 units in
Germany, is owned 50% by NHC and are
currently not consolidated in the NHC
financial accounts.
The Care segment was heavily affected
by Covid-19 in 2021, and occupancy
levels in Sweden, by far our biggest
market, are still below pre -Covid levels.
In addition, we saw increased costs
related to personnel and procurement,
while governmental support packages
were materially reduced, resulting in a
significantly weakened profitability in
2021. Although the second half of 2021
showed improved occupancy levels in
Sweden, we do not anticipate a
normalized level until we are well into
2022.
Our operations in Norway have seen
negative effects of Covid-19, specially
within home care. A material part of
these effects are offset by Government
support packages such as increased sick
leave compensation and the award of
compensation for Covid-related costs.
In Finland, our operations have been
negatively affected by Covid-19 as there
has been little Government support, but
we saw clear improvements in the
second half of 2021 on the back of solid
operations and improved occupancy
levels.
Adjusted for the temporary effects from
Covid-19, the long-term fundamentals for
Care remain strong, although the short-
term outlook is challenging. While
Finland is progressing well, Norway is
politically challenging, with limited
growth potential through tender awards.
We strongly believe that both the
capacity and quality innovations provided
by the private welfare companies will be
required, in order to meet the growing
demand for elderly care services, also
with respect to quality. We believe this
represents an upside to the Norwegian
operations, although in the current
political climate, we do not expect any
short-term improvement. In the
meantime, we remain focused on
providing quality services, as well as new
innovations and expanding our service
offerings.
In Sweden, competition is intense and
profit margins are thin. Although efficient
operations and normalized occupancy
will enable positive profitability, a shift
towards own management operations is
required and ongoing in order to see a
meaningful improvement of profit
margins. 3 new own management units
were opened during 2020, while one unit
opened during 2021. Normally, these
units will be loss-making during a 12 – 18
month ramp-up period, while once
normalized, the profit margins for these
operations should be considerably higher
than within tender operations. During
2022, we plan to open three new own
management units in Finland and one in
Sweden.
Lead times within the Care segment are
long and the Covid-19 situation could
pro-long these further. However, we
remain positive on the long-term merits
of the care segment with strong
expectations for future growth and
profitability through own-management
contracts and new service offerings and
concepts.
Integration Services has been challenging
in recent years with a dramatically
reduced demand for our services, causing
revenues to decline to around 15% of the
2016 level. After the recent years’ losses,
we are encouraged by the turn-around of
Hero, and the corresponding strong
performances in 2020 and 2021.
Within Accommodation Services, all our
reception centers in Norway are
generating decent profitability, and after
the balance sheet date, we won two new
10-year contracts in Rogaland and
Steinkjer. There are clear indications that
Hero will play a significant role as
operator of acute refugee centers, as the
humanitarian crisis in Ukraine continues
to unfold. We are working closely with
UDI, the immigration authorities, to best
address the current crisis we are all
witnessing, and we expect a significant
increase in activity in 2022.
In Germany, we operate 5 reception
centers. Although we now have the
necessary volume to deliver break-even
operations in Germany, still more scale is
needed in order to generate a
meaningful contribution. However, we
are actively pursuing various tender
opportunities, and remain comfortable in
our position and the potential upside in a
large and attractive market.
The Interpretation segment has gone
through a comprehensive re-organization
the recent years. The operations are now
solid, both in terms of growth and
ANNUAL REPORT 2021
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profitability, despite being negatively
affected by Covid-19.
After some very demanding years, Hero is
again a profitable division of NHC. This is
an important milestone in the work to
downsize and reorganize after the
market peak in 2016. Still, our Norwegian
reception centers are ready and able to
rapidly respond market shocks, like the
one we are currently witnessing. We
have retained system values throughout
the reorganization and have more than
30% market share. In all our markets we
will continue to be proactive and adapt
to continuous changes.
Aberia has been through an extensive
restructuring in order to stream -line
operations and focus its portfolio. Loss-
making and non-core operations have
been terminated or divested, while the
core operations are strong on quality and
reputation, profitable and growing. The
segment as a whole is clearly moving in
the right direction and should be
generating healthy profitability going
forward.
Aberia Sweden consists of Personal
Assistance operations, through the two
entities Marcus Assistans AB and
Østgøteland Assistans AB. Profitability in
these companies was reduced in 2021
following an internal re-organization that
is still on-going, but we expect recovery
to 2020 level to be evident towards late
2022. Aberia currently has a shareholding
in these companies of 75%.
Child Care and Respite Care services,
along with Family Homes and Personal
Assistance, represent the core operations
in Norway. Combined, these operations
are generating healthy profitability and
material improvements compared to
prior year.
In Norway, the political landscape is
challenging and hampers top line growth
as non-profit organizations are preferred
in tenders. Our child care operation in
Northern Norway, Aurora Omsorg, was
established in late 2019 and delivered
material improvements in 2021
compared to 2020.
We expect Aurora to continue the
positive development going forward. Our
other ramp-up initiative, Family Homes,
generated losses in 2021, but continues
to build volume and is expected to reach
break-even during 2022.
2021 was another solid year for the Real
Estate segment, although being down on
2020, which was very strong. NHC will
continue to gain property positions, and
several new property development
initiatives have been committed during
the recent quarters. We believe we are
well positioned to maintain the
profitability level seen in the recent years
and expect to complete several property
divestments during 1H’22.
Besides cash flow and profitability, most
importantly, we expect these and future
transactions to support NHC’s operating
companies through access to good
properties and solid long-term
operations.
There are no other known events
expected to have significant effect on the
Group’s performance in 2021.
FINANCIAL RISK
Overall view on objectives and strategy
The Group is exposed to financial risk in
different areas, including exchange rate
risk, market risk, credit risk and liquidity
risk. The Group is continuously assessing
these risks.
Market risk
The regulatory framework has a
significant influence for the Group and
our ability to deliver services with high
quality. Political risk is therefore present
as major shifts may have a significant
impact on the way we deliver our
services.
To
limit our exposure to
unfavorable political and market shifts,
we continue to diversify our operations.
In early 2020, the Covid-19 pandemic
materialized, causing unprecedented
shocks to all societies globally. The
pandemic impacts all our operations
significantly, although the financial
effects differ across the various operating
segments and countries.
During 2021, the Care segment,
particularly in Sweden, was heavily
negatively affected by the pandemic, due
to lower occupancy and higher costs
related to staffing and procurement.
These risks are still present. Additionally,
although we have seen limited effects so
far, we acknowledge the risks related to
preschool occupancy, should
unemployment continue to rise over
longer periods of time. While we operate
in defensive sectors with strong
counterparties, the pandemic continues
to pose a substantial risk in 2022.
Exchange rate risk
The Group has operations in Norway,
Sweden, Finland, the Netherlands,
Germany and Poland. Currency
fluctuations may have a negative effect
on the Group’s financial conditions and
results of operations. The Group is
predominantly exposed to the SEK/NOK
exchange rate as the financial statements
are presented in NOK and around 40% of
revenues are generated in SEK. However,
the Group has a corresponding share of
costs in SEK and about 45% of its bond
debt is denominated in SEK, both
representing natural hedges to the
operations.
The Group has a growing exposure to the
EUR/NOK exchange rate as operations in
the Netherlands, Finland and Germany
are growing. The Group is monitoring the
exposure and may consider hedging this
exposure in the future.
The Group is further exposed to changes
in interest rates as most long-term debt
in the Group is subject to floating interest
rates. The Group has not established any
interest rate hedging mechanisms.
Credit risk
The risk of losses on receivables is
considered very low in the Group as a
considerable part of revenues is towards
governmental entities and municipalities.
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NORLANDIA HEALTH & CARE GROUP AS
The Group has not yet experienced
significant losses on receivables.
Liquidity risk
The Group’s liquidity is sound, enabling
each Group company to handle short-
term obligations. The Group will continue
to experience large movements in
working capital, which will affect the cash
position on any given month.
CORPORATE GOVERNANCE
NHC is a limited liability company
organized under Norwegian law with a
governance structure based on
Norwegian corporate law. The
Company’s corporate governance model
is structured to provide a foundation for
long-term value creation through an
efficient organization with solid
management. A manual covering
standards and routines for relevant
corporate governance matters has been
prepared by the administration and
approved by the Board of Directors.
The Company has a one-tier board with
three directors, including the two largest
shareholders and one independent
director. The governance structure is
further based on the Norwegian Code of
Practice for Corporate Governance and
the Company is continuously seeking to
adopt a larger part of the
recommendations.
NHC publishes four interim financial
statements in addition to the ordinary
annual financial statements.
The financial statements shall satisfy legal
and regulatory requirements and be
prepared in accordance with the adopted
accounting policies and be published
according to the schedule adopted by the
Board. The Group’s Audit Committee
consists of two board members.
Closing of accounts, financial reporting
and key risk analysis are provided
monthly to the Group Management.
These monthly reports also include
financials per segment, which are
analyzed and addressed against set
budgets.
In connection with closing of accounts for
the various segments, business review
meetings are held to identify risk factors
and measures linked to important
accounting items or other factors. The
management also has separate meetings
with the external auditor to review such
risk factors and measures.
The Group has risk management
processes in place within each subsidiary,
which are adapted to fit the size,
complexity and risk profile of each entity.
The routines focus on managing risks as
well as identifying opportunities.
THE WORKING ENVIRONMENT AND
THE EMPLOYEES
The number of employees in the Group
amounted to ~11,000 in 2021. The
working environment is considered to be
good and efforts for improvements are
made on an ongoing basis. The Group
aims to be a workplace with equal
opportunities and seeks to prevent
gender discrimination in all aspects of our
operations.
Leave of absence is an important
performance indicator and is measured
throughout the Group’s operational
entities, but not on a consolidated basis.
During 2021 leave of absence due to
illness has varied due to the impact of
Covid-19 and thus difficult to bench-mark
towards a normal year. Quarantined staff
have been logged as absence in line with
government guidelines in relevant
countries. Even with Covid-19 we have
been able to manage within acceptable
levels.
We will encourage and empower our
staff to be proactive on sustainable
development matters both at work and
in the community. We will strive to
achieve a high degree of diversity in our
working environment in all areas of NHC
operations.
In relation to gender equality, NHC
operates in segments which traditionally
have been dominated by female
employees. With that in mind, we seek a
balanced representation of genders both
in first line, middle manager, and senior
leadership positions. Currently our
gender balance at the senior level is as
follows: Line CEOs (n=6): 50% women;
country managers (n=12): 58% women;
extended management group (n=42):
40% women. In sum, we are doing quite
well and will keep up our attention on
this important matter.
ENVIRONMENTAL REPORT
The Group’s operations are not harmful
to the environment and are not regulated
by any special licenses related to waste
handling. NHC Group will meet or exceed
all legal requirements and be a good
steward of all resources that falls under
our company’s influence, and ensure that
all potential adverse impacts of our
operations on the environment are
identified and appropriately managed.
As of 2021 our divisions – Preschools,
Care and Hero Tolk (a part of Hero group)
– are certified on ISO 14001:2015.
Preschools, Care and Hero Group are also
ISO 9001:2015 certified. See also our
biennial CSR-report where we document
our deep and wide range of
environmental and sustainability actions
and programs, together with ever
evolving new initiatives. What is good for
the environment, is good for NHC – we
strive to do our share.
ALLOCATION OF INCOME IN THE
PARENT COMPANY
Norlandia Health & Care Group AS’ result
for 2021 ended at NOK 155.3 million. The
Board of Directors has proposed the net
profit of Norlandia Health & Care Group
AS to be allocated as follows: NOK 155.3
million to other equity.
INSURANCE FOR BOARD MEMBERS AND
GENERAL MANAGER
The Group has insurance for members of
the Board of Directors, CEO and
managers for subsidiaries for liability
incurred from the Group or any third
party related to responsible actions or
neglect in their role as board members or
executive management of the Group. The
coverage is limited to NOK 100 million.
ANNUAL REPORT 2021
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Oslo, 26 April 2022
Board of Directors of Norlandia Health & Care Group AS
Kristian A. Adolfsen
Chairman of the Board
Roger Adolfsen
Member of the Board
Ingvild Myhre
Member of the Board
Yngvar Tov Herbjørnssønn
CEO
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NORLANDIA HEALTH & CARE GROUP AS
Norlandia Health & Care Group AS’
consolidated financial statements have
been prepared and presented in
accordance with IFRSs and IFRICs as
adopted by the EU and additional
disclosure requirements in the
Norwegian Accounting Act, that should
be used as of 31.12.2021.
The separate financial statements for
Norlandia Health & Care Group AS have
been prepared in accordance with the
Norwegian Accounting Act and
Norwegian accounting standards as of
31.12.2021. The Board of Directors
report for the group and the parent
company is in accordance with the
requirements of the Norwegian
Accounting Act and Norwegian
accounting standard, as of 31.12.2021.
To the best of our knowledge:
●
The consolidated and separate annual
financial statements for 2021 have
been prepared in accordance with
applicable accounting standards.
●
The consolidated and separate annual
financial statements give a true and
fair view of the assets, liabilities,
financial position, and result of
operations as a whole as of
31.12.2021, for the Group and the
Parent company.
The Board of Directors’ report for the
Group and the Parent company include a
true and fair review of:
●
The development and performance of
the business and the position of the
Group and the Parent company.
●
The principal risks and uncertainties
the Group and the Parent company
face.
Oslo, 26 April 2022
Board of Directors of Norlandia Health & Care Group AS
Kristian A. Adolfsen
Chairman of the Board
Roger Adolfsen
Member of the Board
Ingvild Myhre
Member of the Board
Yngvar Tov Herbjørnssønn
CEO
Statement from the Board of Directors
ANNUAL REPORT 2021
21
Consolidated Statement of Comprehensive Income
Norlandia Health & Care Group - for the year ended 31 December 2021
(Amounts in NOK thousand)
Note
2021
2020
Revenue
4
Other income
4,12,21
Total revenue and income
Raw materials and consumables used
Staff costs
5
Depreciation and amortisation expense
8,9,12
Other operating expenses
5,12
Total operating expenses
Profit from operations
Finance income
6
Finance expense
6,12
-258 248
-345 285
Share of post-tax profits of associates
11,12
-1 216
Net finance
-190 232
-317 582
Profit/loss (-) before tax
-48 828
Tax expense
7
-4 531
Profit/loss (-)
-15 530
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of post employment benefit obligations
19
-20 778
Deferred tax on remeasurement of post employment benefit obligation
16
-1 276
Items that may be subsequently reclassified to profit or loss
Currency translation differences
-27 139
Total other comprehensive income
-22 614
Total comprehensive income
Profit/loss owners of the company
-9 316
Profit/loss non-controlling interests
-3 326
-6 214
Profit/loss (-)
-15 530
Total comprehensive income owners of the company
Total comprehensive income non-controlling interests
-4 473
-667
Total comprehensive income
22
NORLANDIA HEALTH & CARE GROUP AS
Consolidated Statement of Financial Position
Norlandia Health & Care Group - for the year ended 31 December 2021
(Amounts in NOK thousand)
ASSETS
Note
2021
2020
Non-current assets
Property, plant and equipment
8
Right-of-use assets
12
Deferred tax asset
16
Goodwill
9
Intangible assets
9
Investment in associated companies
11
Other investments
3
Other receivables
13, 21
Total non-current assets
Current assets
Inventories
Trade and other receivables
13, 21
Cash and cash equivalents
22
Total current assets
Total assets
ANNUAL REPORT 2021
23
Consolidated Statement of Financial Position
Norlandia Health & Care Group - for the year ended 31 December 2021
(Amounts in NOK thousand)
EQUITY AND LIABILITIES
Note
2021
2020
Equity attributable to owners of the parent
Share capital
14
Other equity
-26 662
Total equity attributable to owners of the parent
Non-controlling interest
Total equity
Non-current liabilities
Pension liabilities
19
Loans and borrowings
15, 23
Lease liability
12
Deferred tax liability
16
Provisions
Total non-current liabilities
Current liabilities
Trade and other payables
16, 17
Loans and borrowings
15, 23
Lease liability
12
Taxes payable
16
Total current liabilities
Total liabilities
Total equity and liabilities
Oslo, 26 April 2022
Board of Directors of
Kristian A. Adolfsen
Chairman of the Board
Roger Adolfsen
Member of the Board
Ingvild Myhre
Member of the Board
Yngvar Tov Herbjørnssønn
CEO
24
NORLANDIA HEALTH & CARE GROUP AS
Consolidated Statement of Changes in Equity
Norlandia Health & Care Group - for the year ended 31 December 2021
(Amounts in NOK thousand)
Share capital
Share
premium
Retained
earnings
Translation
differences
Non-
controlling
interests
Total equity
31-Dec-19
-47 457
Comprehensive Income for the year
Profit
-9 316
-6 214
-15 530
Other comprehensive Income
-12 240
Total comprehensive Income for the year
-21 556
-667
Contributions by and distributions to owners
Distribution to non-controlling interests
-15 484
-15 484
Distribution to owners
Acquisition of shares from non-controlling interest
(note 11)
-15 797
-15 797
Total contributions by and distributions to owners
-31 281
-31 281
31-Dec-20
-69 013
Comprehensive Income for the year
Profit
-3 326
Other comprehensive Income
-25 992
-1 147
-22 614
Total comprehensive Income for the year
-25 992
-4 473
Contributions by and distributions to owners
Capital increase (note 15 and 20)
-17 699
Distribution to non-controlling interests
-2 224
-2 224
Group distribution to parent company
-
-
-
-
-
-
Acquisition of shares from non-controlling interest
(note 11)
Total contributions by and distributions to
owners
-17 699
-2 224
31-Dec-21
-35 170
ANNUAL REPORT 2021
25
Consolidated Statement of Cash Flow
Norlandia Health & Care Group - for the year ended 31 December 2021
(Amounts in NOK thousand)
Note
2021
2020
Cash flows from operating activities
Profit for the year
-15 530
Adjustments for:
-
-
Depreciation of property, plant and equipment
8
Amortisation of intangible fixed assets
9
Share of post-tax profits of associates
11
-5 935
Gain/loss on sale of real estate and business
-33 994
-73 173
Interest income/interest expense and financial items
Income tax expense
7
-33 298
Changes in working capital
Changes in accounts receivable and payables
-53 181
-29 869
Increase in inventories
-2 987
Increase in trade and other payables
-33 793
Increase in provisions and employee benefits
-47 812
Cash generated from operations
Income taxes paid
-13 524
-4 113
Net cash flows from operating activities
Investing activities
Proceeds from sale of assets
Purchases of property, plant and equipment
8
-136 527
-145 122
Net investment in shares in associates and others
11, 20
-6 077
Net investment in shares in subsidiaries
20
-126 130
-53 531
Net changes in financial receivables
6
-5 294
Interest received
Net cash used in investing activities
Financing activities
Changes of long-term loan to finance institutions
15, 23
-102 282
Changes in short-term loan to finance institutions
15
-7 763
-179 612
Interest paid
6
-225 911
-229 674
Lease lialibility - amortisation
-414 701
-366 614
Payment to non-controlling interest
-2 189
-31 281
Distribution to owners
11
Net cash (used in)/from financing activities
-631 116
-909 464
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
22
Exchange (losses)/gains on cash and cash equivalents
-3 006
-7 800
Cash and cash equivalents at end of year
26
NORLANDIA HEALTH & CARE GROUP AS
Notes to the consolidated statements
1. ACCOUNTING POLICIES
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated. The consolidated financial statements have been prepared
under the historical cost convention, as modified by valuing financial derivative instruments at fair value through profit or loss.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as
adopted by the European Union (“adopted IFRSs”).
Norlandia Health & Care Group AS was established in December 2016. This was done by transferring the shares in Norlandia Care
Group AS, Hero Group AS, Aberia Healthcare AS and Kidsa Barnehager AS, from Hospitality Invest to a newly incorporated and 100%
owned subsidiary.
The transfer to the newly incorporated subsidiary is considered to be a common control transaction outside the scope of IFRS 3
Business Combinations. IFRS 3 Business Combinations does not provide specific guidance on how to account for common control
transactions. Norlandia Health & Care Group has established policies to account for these transactions in order to present historical
figures as if the Group had prepared separate financial statements in the past. Book values have been used to account for all
restructuring transactions as if the reorganisation occurred at the beginning of the first period presented.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It
also requires Group management to exercise judgment in applying the Group’s accounting policies. The areas where significant
judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.
New standards, interpretations and amendments
There are no changes in, or new accounting standards that have had a material effect for the Group´s financial statements for 2021.
Applied principles
Revenue recognition
The Group’s revenue from contracts with customers mainly comprise of services delivered. The Group also has some sales of goods,
primarily food in preschools and in cantinas, which are immaterial to the total revenues and recognised as the food is served and is
not disaggregated. The group has assessed the following performance obligations to exist for the contract with customers:
Preschools
This is the operation of kindergartens and accounts for almost half of the revenue. The operation is based on municipal approval of
the individual kindergarten where the company's revenue consists of payment from the municipalities and payment from parents .
Most of the payments are from the municipalities. Both are based on regulations where rates are updated annually. The transaction
price is based on an amount per child within different age groups and is based on periodically counts of the actual number of children
attending the respective kindergarten. The parents apply and choose kindergarten. Parents may change kindergarten at short notice,
in which way parental payments stop. Payments from municipalities can be changed in the event of major changes in activity during
the year.
What is promised to the customer is a kindergarten offer in accordance with applicable laws and regulations and adopted
frameworks. The customer receives and consumes the benefits of the services as the kindergarten fulfils the performance obligation.
The performance obligation is the promise to transfer to the customer a series of distinct services that are substantially the same and
that have the same pattern of tra nsfer to the customer. The revenue is recognised per day the kindergarten is open. Any adjustment
in the number of children is a variable consideration that is allocated to the month in question. For the Norwegian operations, the
payments are mainly received in advance in the beginning of the quarter four times each year, which also implies that there are no
contract balances of significance at year -end. For the other countries payments is received every month. Parental payments take
place every month.
ANNUAL REPORT 2021
27
Care
This is the operation of nursing homes and patient hotels, as well as the provision of home care services and other practical
assistance. The contracts related to the operation of nursing homes and patient hotel have a duration of 5-7 years. For the home care
services, the contract duration is 3-5 years.
For the operation of nursing homes in Norway , fixed monthly payments are given based on the number of places for which the
nursing home is dimensioned, regardless of whether the places are in use or not. In Sweden the revenue varies per month due to the
occupancy and number of days in the actual month. There are different types of places; short-term and dementia. For patient hotels,
consideration is received based on actual occupancy, while for home care the consideration is determined based on the actual
number of hours delivered. There is no minimum purchase beyond the agreed fixed monthly operating subsidy for nursing homes.
The performance obligation to the customer is to provide the respective services within the framework and guidelines set by the
municipality as the client and central health authorities. The agreement is met through the 24/7 operation of nursing homes and
patient hotels, as well as through delivery of the number of hours actually requested by users within the framework agreements
related to the home care services. The customer receives and consumes the benefits of the services as the company satisfies the
performance obligations.
For nursing homes, the company stands ready every day to deliver according to the agreed capacity. Although the actual number of
seats used may vary slightly from day to day, a place does not stand empty for long, and it is considered that the legal requirement is
met for each day that passes and revenue is recognised straight-line over the year.
For patient hotels and home care, there is no minimum purchase and no firm consideration. Everything is variable and the
consideration can be attributed to the actual booking and the number of hours, which is also when the performance obligations are
satisfied and revenue is recognised. In practice, for patient hotels and home care, revenue is recognised at an amount equal to the
transaction price we are entitled to invoice (IFRS 15.B16). Invoicing takes place in arrears for the current month, which means that
there are no contract balances of significance at year-end.
Integration services
This is the operation of asylum reception, performance of interpreting services and language teaching. The duration of the contracts
related to the operation of asylum reception is mainly 3 years. Interpreting services are mainly performed based on orders for
individual assignments. For language teaching, access per course/course group is granted. Each course normally has a duration of one
year.
For the operation of asylum reception, regular annual payment are given, and a variable part is paid based on the actual number of
residents. The consideration for interpreting service is based on either fixed hourly rate or price per word when translating
document. For language teaching, a fee per course is received. What is promised to the customer is to operate the asylum centres in
accordance with the current guidelines of the public authorities, the provision of interpreting services, as well as the implementation
of training activities. The performance obligations are satisfied through the 24-hour operation of asylum reception, through the
provision of interpretive services based on actual demand and implementation of the course activities stipulated in the respective
tenders.
The customer receives and consumes the benefits of the services as the company satisfies the performance obligations.
For asylum centres, the company stands ready to deliver 24 hours of services each day, against fixed consideration. We are in a serial
assessment where every day is distinct and the fixed consideration is recognised each day on a straight line basis. In addition, there is
variable consideration related to actual use. The variable consideration is allocated to the actual use.
For the interpreting service there are small orders delivered over a short period. The interpreting service is recognised according to
the hours performed or the number of words executed. In practice, revenue is recognised by an amount equal to the transaction
price we are entitled to invoice (IFRS 15.B16). Consideration for courses is recognised as the courses are held. Courses make up an
insignificant part of revenue, and in practice the courses are assumed to be held evenly over the agreed period and are recognized
accordingly. For the operation of the asylum centres, invoicing is mainly for the current month. For interpreting service, the billing
takes place within 30 days after delivery. As a general rule, when it comes to language teaching, 80% of the consideration is received
at the start of the course. However, as it accounts for a small share of the Group's total activities, this does not provide any contract
balances of significance at year-end.
28
NORLANDIA HEALTH & CARE GROUP AS
Individual & Family
This is mainly the operation of child care and child welfare services, including services associated with user-led personal assistance
(BPA). Framework agreements for these services may run over several years. The user may choose a care place and have the option
to change the selection after a period, a maximum of one year. There are framework agreements where the customer makes call-
offs, and payment takes place according to actual use. There are minimum purchases in some agreements, mainly in child protection.
For the operation of care, the price is agreed per day/weekend/day for the number of places that are actually used. For child welfare
services, it is agreed on a minimum purchase and a number of additional places to be available without purchase obligation. The
price is agreed per place per day and varies depending on whether the space is within the minimum purchase or not and whether
this space is actually used or not. For BPA, the framework agreement is entered into based on the number of hours granted by the
municipality, where the consideration consists in price per hour actually delivered.
What is promised to the customer is to operate the service offering in accordance with applicable law and regulations. The
performance obligation is satisfied through the 24-hour operation of care, as well as child welfare institutions. For BPA, the promise
is satisfied through the delivery of actual requested hours. The customer receives and consumes the benefits as the company
satisfies the performance obligation. For all services within the segment, the company stands ready to provide requested places or
services every day, against variable consideration. We are in a serial assessment where every day is distinct and the variable
consideration is allocated to the actual use. Where there is a minimum purchase, a consideration for the relevant 24/7 will be
received at the relevant rates for the used and not used seats, and these are directly related to standing ready to deliver the relevant
24/7. In practice, the revenue is recognised by an amount equal to the amount we are entitled to invoice (IFRS 15.B16). Billing takes
place both in advance and in arrears for the current month depending on the type of service, which implies that there are no contract
balances of significance at year-end.
Basis of consolidation
Where the company controls another entity it is classified as a subsidiary. The consol idated financial statements present the results
of the company and its subsidiaries (“the Group”) as if they formed a single entity. Intercompany transactions and balances between
group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the state-
ment of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive
income from the date on which control is obtained. They are deconsolidated from the date control ceases.
Non-controlling interests
The Group initially recognise any non-controlling interest in the acquiree at fair value.
Goodwill
Goodwill represents the excess of the cost of a business combination over, the Group’s interest in the fair value of identifiable assets,
liabilities and contingent liabilities acquired and, the total acquisition date fair value of the identifiable assets, liabilities and
contingent liabilities acquired.
The cost of a business combination comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus
the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of
the existing equity interest in the acquiree.
Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as
a financial liability, remeasured subsequently through profit or loss. Direct costs of acquisition are recognised immediately as an
expense.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of
comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of
consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.
ANNUAL REPORT 2021
29
Impairment of non-financial assets (excluding inventories and deferred tax assets)
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the
financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate
that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the
higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest
Group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units (‘CGUs’). Goodwill
is allocated on initial recognition to each of the Group’s CGUs that are expected to benefit from the synergies of the combination
giving rise to the goodwill.
Impairment charges are included in profit or loss. An impairment loss recognised for goodwill is not reversed.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which
they operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. The functional currency of
the parent company is NOK. Foreign curren cy monetary assets and liabilities are translated at the rates ruling at the reporting date.
Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or
loss.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was
acquired. The Group has not designated any of its financial assets as hedging instruments or held to maturity.
The Group’s accounting policy for each category of financial assets is as follows:
a)
Fair value through profit or loss
This category comprises only in-the-money derivatives (see “Financial liabilities” section for out-of-money derivatives). They are
carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of
comprehensive income in the finance income or expense line.
b)
Financial assets at amortised cost
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They
arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of
contractual monetary asset. They are initially recognised at fair value and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for all Financial assets at amortised cost. For trade receivables, which are reported net, such provisions are recorded in a separate
allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive
income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against
the associated provision.
The Group’s Financial assets at amortised comprise trade and other receivables and cash and cash equivalents in the consolidated
statement of financial position.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with
original maturities of three months or less. Bank overdrafts are shown within loans and borrowings in current liabilities on the
consolidated statement of financial position.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.
None of the Group’s financial liabilities are designated as hedging instruments.
30
NORLANDIA HEALTH & CARE GROUP AS
Other than financial liabilities in a qualifying hedging relationship (see below), the Group’s accounting policy for each category is as
follows:
a)
Fair value through profit or loss
This category comprises derivatives. They are carried in the consolidated statement of financial position at fair value with changes in
fair value recognised in the consolidated statement of comprehensive income. The Group does not hold or issue derivative
instruments for speculative purposes, but may from time to time hold such position for hedging purposes. Other than these
derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any financial liabilities
as being at fair value through profit or loss.
b)
Amortised cost
Borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such
interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that
any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated
statement of financial position. Interest expense in this context includes initial transaction costs and premium payable on
redemption, as well as any interest or coupon payable while the liability is outstanding.
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
IFRS 13 fair value measurement hierarchy
IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value
using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement. The fair value
hierarchy has the following levels:
●
quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
●
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices) (Level 2); and
●
inputs for the asset or liability that are not based on observable market data (unobservable inputs)(Level 3).
The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of
the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their
entirety into only one of the three levels.
Share capital
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial
liability or financial asset.
The Group’s ordinary shares are classified as equity instruments.
Borrowing costs
Interest incurred on bank loan used to fund the assets under construction with a construction period exceeding 12 months is being
capitalised as part of its cost, net of interest received on cash drawn down yet to be expended. The Group does not incur any other
interest costs that qualify for capitalisation.
Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the
year to which they relate.
Retirement benefits: Defined benefit schemes
Defined benefit scheme surpluses and deficits are measured at: “the fair value of plan assets at the reporting date; less plan liabilities
calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate
bonds that have maturity dates approximating to the terms of the liabilities.
Actuarial gains and losses are recognized in other comprehensive income as they arise.
ANNUAL REPORT 2021
31
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their
useful lives.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see
section related to critical estimates and judgements below).
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be demonstrated that:
●
it is technically feasible to develop the product for it to be sold;
●
adequate resources are available to complete the development;
●
there is an intention to complete and sell the product;
●
the Group is able to sell the product;
●
sale of the product will generate future economic benefits; and
●
expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed. The
amortisation expense is included within the depreciation and amortisation expense line in the consolidated statement of
comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised
in the statement of comprehensive income as incurred.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of
financial position differs from its tax base, except for differences arising on:
●
the initial recognition of goodwill;
●
the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the trans-
action affects neither accounting or taxable profit; and
●
investments in subsidiaries and jointly controlled entities where the Group is able to control the timing” of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against
which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting
date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities
and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
●
the same taxable group company; or
●
different group entities which intend either to settle current tax assets and liabilities on a net basis, or” to realise the assets and
settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Dividends
Dividends are recognised when they become legally payable.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly
attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The cor-
responding liability is recognised within provisions.
32
NORLANDIA HEALTH & CARE GROUP AS
Freehold land is not depreciated. Depreciation on assets under construction does not commence until they are complete and
available for use. Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value
over their expected useful economic lives. Expected useful economic is as follows:
Land and buildings 10-40 years
Furniture, fixtures and equipment 3-30 years
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Weighted
average cost is used to determine the cost of ordinarily interchangeable items.
Provisions
The Group has recognised provisions for liabilities of uncertain timing or amount including those for warranty claims, leasehold
dilapidations and legal disputes. The provision is measured at the best estimate of the expenditure required to settle the obligation
at the reporting date, discounted at a pre-tax rate, value of money and risks specific to the liability. In the case of leasehold
dilapidations, the provision takes into account the potential that the properties in question may be sublet for some or all of the
remaining lease term.
Cash flow statement
The cash flow statement is derived using the indirect method. Cash flows from investing and financing activities are presented
separately. Interest income and interest expenses are presented as part of investing and financial activities. Cash and cash
equivalents comprise of bank deposits.
ANNUAL REPORT 2021
33
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated
based on historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
Judgements and estimates
(a)
Impairment of goodwill
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of
a discount rate in order to calculate the present value of the cash flows. More information including carrying values is included in
note 10. Any significant modification of market conditions could translate into an inability to recover the carrying amounts of non-
financial assets; and result in an impairment charge in the income statement
(b)
Useful lives of property, plant and equipment and intangible assets
Measurement of property, plant and equipment and intangible assets with finite useful lives requires estimates for determining the
asset’s expected useful lives and residual values. Management judgement is required to determine the components and the
depreciation.
(c)
Right-of-use-assets(ROU) and lease liability
Recognition of both ROU and lease liability require judgement and estimation for the length of the lease term, discount rate and the
expected useful life.
(d)
Deferred tax
Deferred tax assets are recognized when it is considered probable that deductible temporary differences will be recovered in the
foreseeable future. To the extent that future taxable income and the application of existing tax laws in each jurisdiction differ
significantly from the Group’s estimate, the ability of the Group to realize the deferred tax assets could be impacted.
Such judgements and estimates are based on the facts and information available to the management of the Group. Changes in facts
and circumstances may require the revision of previous estimates, and actual results could differ from these estimates.
34
NORLANDIA HEALTH & CARE GROUP AS
3. FINANCIAL INSTRUMENTS - RISK MANAGEMENT
The Group is exposed through its operations to the following financial risks:
●
Credit risk
●
Fair value or cash flow interest rate risk
●
Foreign exchange risk
●
Other market price risk
●
Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note de-
scribes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented througho ut these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes
for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note .
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
●
Trade receivables
●
Cash and cash equivalents
●
Trade and other payables
●
Bank overdrafts
●
Floating-rate bank loans
●
Interest rate swaps
●
Cross currency interest rate swaps
ANNUAL REPORT 2021
35
A summary of the financial instruments held by category is provided below:
Financial assets
Financial assets at fair value
through profit or loss
Financial assets at
amortised cost
2021
2020
2021
2020
Cash and cash equivalents
-
-
301 186
285 360
Trade and other receivables
-
-
483 024
427 491
Other long term receivables/investments
-
-
53 810
59 487
Total financial assets
-
-
838 021
772 338
Financial liabilities
Financial liabilities at fair value
through profit or loss
Financial liabilities
at amortised cost
2021
2020
2021
2020
Trade and other payables
-
-
930 057
902 146
Loans and borrowings
-
-
2 175 437
2 010 309
Financial lease liabilities
-
-
4 466 806
3 977 129
Derivatives
-
-
-
-
Total financial liabilities
-
-
7 572 300
6 889 584
Financial instruments measured at fair value
Fair value measurements at 31 December using
Level 1
Level 2
2021
2020
2021
2020
Financial assets
Derivative financial assets - FVTPL
-
-
-
-
Total financial assets
-
-
-
-
Financial liabilities
Derivative financial liabilities - FVTPL
-
-
-
-
Total financial liabilities
-
-
-
-
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group’s finance function.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s
competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit
risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices.
Most of the Group’s revenues are from (public) authorities. Credit risk related to these customers are minimal.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial
institutions, only independently rated parties with minimum rating “A” are accepted.
Further disclosures regarding trade and other receivables are provided in note 13.
Market risk
The regulatory framework has a significant influence for the Group and our ability to deliver services with high quality. Political risk is
therefore present as major shifts may have a significant impact on the way we deliver our services.
36
NORLANDIA HEALTH & CARE GROUP AS
Fair value and cash flow interest rate risk
The Group is exposed to cash flow interest rate risk from long-term borrowings at variable rate. The Group has currently no Group
policy restricting the level of interest risk exposure. The level of interest risk is monitored centrally. Local operations are not
permitted to borrow long-term from external sources. Although the board accepts that this policy neither protects the Group entirely
from the risk of paying rates in excess of current market rates nor eliminates fully cash flow risk associated with variability in interest
payments, it considers that it achieves an appropriate balance of exposure to these risks.
During 2021 and 2020, the Group’s borrowings at variable interest rate were denominated in NOK and SEK.
Based on the various scenarios the Group has the possibility to manage its cash-flow interest rate risk by using floating-to-fixed
interest rate swaps . The Group has not pursued an active strategy in order to mitigate any interest rate risk. Normally the Group has
raised long-term borrowings at floating rates and only to a minor extent swapped them into fixed.
The ratio of floating interest bearing debt and interest rate swaps was as follows:
2021
2020
Floating interest bearing borrowings
2 175 437
2 010 309
Face value interest rate swaps
-
-
Ratio
0,0 %
0,0 %
Net exposure interest rate risk
2 175 437
2 010 309
Sensitivity
A change in the interest rate curve will result in a changed interest cost for the net exposure will have a significant impact on the
Group financial statements. The effect on interest payments for a 0.5% change is presented below.
Interest
expense
Effect on
P&L
Effect on Equity
Effect of a 0.5% increase
10 877
8 484
8 484
Effect of a 0.5% decrease
-10 877
-8 484
-8 484
Foreign exchange risk
The Group has operations in Norway, Sweden, Finland, Netherland and Poland. Currency fluctuations may have a negative effect on
the Group’s financial conditions and results of operations. The Group is predominantly exposed to the SEK/NOK exchange rate as
around 37% of revenues are generated in SEK. However, the Group has a corresponding share of costs in SEK and about 44% of its
bond is denominated in SEK, both representing natural hedges to the operations. The Group has a small but growing exposure to the
EUR/NOK exchange rate as operations in the Netherlands and Finland are growing (note 4), however this represent a natural hedge
to the growing investments. The Group is monitoring the exposure and will consider hedging this exposure in the future. The effect
from the bond issued if the NOK/SEK currency change is presented below.
Currency effect
Effect on
P&L
Effect on Equity
Effect of SEK weakens of 1.0% toward NOK
7 500
5 850
5 850
Effect of SEK strenghten of 1.0% toward NOK
-7 500
-5 850
-5 850
Other market price risk
There are no other significant marked risk exposure on financial instruments.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt
instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The
Board receives rolling 12-month cash flow projections on a monthly basis as well as information regarding cash balances. At the end
of the financial year, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations.
ANNUAL REPORT 2021
37
The liquidity risk of each Group entity is managed centrally by the Group treasury function. A major focus for the treasury function is
to ensure that there is sufficient liquidity for downpayment on non current borrowings when they are due. The Group treasury
assesses the terms for borrowings on a ongoing basis, when needed the necessary adjustments are put into place.
The following table sets out the contractual maturities of financial liabilities:
Between 1 and
12 months
Between 1 and
2 years
Between 2 and
3 years
Between 3 and
5 years
Over 5 years
At 31 December 2020
Trade and other payables
902 146
-
-
-
-
Loans and borrowings
1 895 757
29 856
3 533
4 267
76 895
Lease liabilities
498 511
451 060
410 055
779 104
2 589 309
Total
3 296 414
480 916
413 588
783 371
2 666 204
Between 1 and
12 months
Between 1 and
2 years
Between 2 and
3 years
Between 3 and
5 years
Over 5 years
At 31 December 2021
Trade and other payables
930 057
-
-
-
-
Loans and borrowings
175 972
136 573
136 573
2 079 021
147 298
Lease liabilities
543 256
468 496
468 496
936 991
2 924 561
Total
1 649 285
605 069
605 069
3 016 012
3 071 859
38
NORLANDIA HEALTH & CARE GROUP AS
Capital Disclosures
The Group monitors “adjusted capital” which comprises all components of equity (i.e. share capital, share premium,
non-controlling interest, retained earnings) and net interest bearing debt. Adjusted EBITDA and adjusted capital is excluding the
effects from IFRS 16.
The Group’s objectives when maintaining capital are:
“to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and
benefits for other stakeholders, and to provide an adequate return to shareholders by pricing products and services commensurately
with the level of risk.”
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the debt to capital ratio and debt to adjusted-
EBITDA. Net debt is calculated as total debt (as shown in the consolidated statement of financial position) less cash and cash
equivalents. Adjusted EBITDA is the reported EBITDA adjusted for the effects from IFRS 16.
The Group’s strategy is to preserve a strong cash base and achieve an equity to total capital ratio of approximately 10% and maintain
net interest-bearing debt below 5x adjusted EBITDA. As per end of 2021 the net interest-bearing debt ratio is above target due to
acquisitions during 2021 and increased property portfolio. The objective of this strategy is to secure access to financing at reasonable
cost by maintaining a high credit rating. The ratios for at 31 December 2021 and at 31 December 2020 were as follows:
2021
2020
Loans and borrowings
2 175 437
2 010 309
Less: cash and cash equivalents
301 186
285 360
Net interest bearing debt
1 874 251
1 724 949
Total equity
471 974
291 036
EBITDA (adjusted)
321 866
360 380
Total capital (excluding IFRS 16 leasing)
3 850 799
3 485 705
Debt to equity ratio
4,0
5,9
Equity ratio (%)
12,3 %
8,3 %
Net interest bearing debt/EBITDA
5,8
4,8
ANNUAL REPORT 2021
39
4. SEGMENT INFORMATION, REVENUE AND OTHER OPERATING INCOME
The Group has five reportable segments in accordance with the reporting requirements in IFRS 8. The segments are managed
separately and reflects the internal reporting. In addition there are owner cost at group level which are not allocated. The reportable
segments are:
●
Preschools - operates preschools with children in Norway, Sweden, Finland, the Netherlands and Poland and represent the largest
segment within the Group. Long history within the Nordic markets with Norway representing more than half of the revenue.
●
Care – provides individually focused elderly care and has grown to become a leading private operator of nursing homes, home
care and patient hotels in the Nordics. In addition, the Group has in the recent years entered the home care market and also run a
medical clinic. One of the largest private operators with Sweden representing more than half of the revenue.
●
Integration services – provides care services related to immigrants and asylum seekers in the world and being one of the leading
private operators. Main services are Reception centres, Education and Interpretation services. Norway is the largest operation
representing more than half of revenue.
●
Individual & family - provides health-, welfare - and care services for children and people with physical and mental disabilities in
the Nordics. Services included are Child care institutions and foster homes, assisted living and user controlled personal assistance
(BPA). Has become a significant player in the Nordics with Norway being the largest market.
●
Real Estate - strategic part of the care business and the development of property is considered a separate segment as it invests,
develops and divests properties to support the operations and growth of the Group.
The Group evaluates segmental performance on the basis of profit or loss from operations in accordance with IFRS adjusted for IFRS
16. Note 12 specify the IFRS 16 adjustment per category and included in the table below. Inter segment sales are reported as other
operating expense per segment and eliminated against staff cost. All items above are presented in the table below as
Other/eliminations. For 2021 and 2022 there is no reporting on balance per segments and as a consequence only profit or loss being
included in the figures below.
2021
Preschools
Care
Integration
services
Individual &
Family
Real Estate
Other /
Eliminations
Total
Revenues
3 127 787
1 714 067
233 772
864 628
2 486
-8 977
5 933 763
Other income
-2 611
664
3 696
29
102 874
-62 865
41 788
Total revenue and income
3 125 176
1 714 731
237 469
864 657
105 360
-71 842
5 975 550
Raw materials and consumables used
86 037
20 303
33 751
34 134
640
236
175 101
Staff costs
2 057 661
1 355 994
114 651
681 237
5 347
88 256
4 303 147
Depreciation and amortisation expense
62 610
20 495
5 827
7 995
897
456 389
554 212
Other operating expense
761 044
352 108
71 278
123 568
14 373
-617 734
704 637
Total operating expenses
2 967 353
1 748 900
225 507
846 934
21 257
-72 853
5 737 097
Profit from operations
157 823
-34 169
11 962
17 722
84 103
1 011
238 453
-
Finance income
-19 334
17 551
63
11 472
1 454
-36 478
21 769
Finance expense
-48 830
-10 619
-4 386
-10 918
-5 986
-83 005
-210 785
Share of post-tax profits from associates
-
-
-
-
-
-1 216
-1 216
Net finance
-68 164
6 932
-4 323
555
-4 532
-120 699
-190 232
Profit before tax
89 659
-27 237
7 638
18 277
79 572
-119 688
48 221
40
NORLANDIA HEALTH & CARE GROUP AS
2020
Preschools
Care
Integration
services
Individual &
Family
Real Estate
Other /
Eliminations
Total
Revenues
2 721 329
1 566 695
230 189
794 956
5 368
-4 708
5 313 829
Other income
251
818
72
21 366
113 129
-59 956
75 680
Total revenue and income
2 721 580
1 567 513
230 261
816 322
118 496
-64 664
5 389 509
Raw materials and consumables used
66 959
17 115
15 712
30 289
429
936
131 440
Staff costs
1 775 006
1 211 165
132 251
647 141
5 124
78 411
3 849 098
Depreciation and amortisation expense
53 091
24 043
5 468
6 779
1 027
410 899
501 308
Other operating expense
655 849
321 547
74 009
120 459
15 524
-548 478
638 910
Total operating expenses
2 550 906
1 573 870
227 439
804 668
22 103
-58 231
5 120 755
Profit from operations
170 674
-6 357
2 822
11 654
96 393
-6 433
268 754
Finance income
-18 422
-3 356
18 288
26 178
7 009
45 094
48 089
Finance expense
-38 235
1 374
-7 863
-7 216
-5 793
-340 575
-371 605
Share of post-tax profits from associates
-
-
-
-
-
5 935
5 935
Net finance
-56 657
-1 982
10 425
18 963
1 216
-289 547
-317 582
Profit before tax
114 017
-8 338
13 247
30 617
97 609
-295 980
-48 828
Revenues by major customers
Most of the revenues stems from public authorities.
Revenues by geography
2021
2020
Norway
2 780 844
2 758 912
Sweden
2 180 609
1 760 829
International
978 800
785 384
Real Estate/Other/Elimination
-6 491
8 704
Total revenues by geography
5 933 763
5 313 829
2021
Preschools
Care
Integration
services
Individual &
Family
Other /
Eliminations
Norway
48%
21%
79%
85%
0%
Sweden
25%
74%
6%
15%
0%
International
28%
4%
15%
0%
0%
Real Estate/Other/Elimination
0%
0%
0%
0%
100%
Total revenues by geography
100%
100%
100%
100%
100%
2020
Preschools
Care
Integration
services
Individual &
Family
Other /
Eliminations
Norway
49%
23%
80%
78%
0%
Sweden
25%
73%
7%
22%
0%
International
26%
4%
13%
0%
0%
Real Estate/Other/Elimination
0%
0%
0%
0%
100%
Total revenues by geography
100%
100%
100%
100%
100%
Other income
2021
2020
Gain on sale of assets
102 874
113 129
Deferred gain from sale leaseback and booked as reduced ROU
-64 982
-59 956
Gain on sale of business
3 641
20 145
Other
254
2 362
Total other income
41 788
75 680
Sale leaseback transactions
Gain on sale of assets in 2021 and 2020 relates to sale and leaseback transactions of property acquired or developed. The assets
subject to the transactions were buildings used in the Preschool and Individual & Family operation. In connection with the
transactions a lease contract was entered into. The lease term is 15 years, with an option for extension of 10 more years.
ANNUAL REPORT 2021
41
5. STAFF COSTS
2021
2020
Staff costs (including directors) comprise:
Wages and salaries
3 302 868
3 005 820
Defined contribution pension cost
252 501
179 440
Defined benefit pension cost (note 19)
37 707
36 251
Other benefits
50 235
36 073
Social security contributions and similar taxes
659 235
590 913
Remuneration to Board of Directors
600
600
Total payroll and related costs
4 303 147
3 849 098
Number of employees (FTE)
7 275
6 522
Name
2021
2020
Yngvar Tov Herbjørnssønn (CEO)
4 491
3 360
Total compensation
4 491
3 360
The group was established in December 2016 and no key management group has been identified for years 2021 and 2020. There
are no agreements for any severance pay to the CEO or members of the Board.
Audit fees
The following amounts have been recognised as audit fees and related services during the period
2021
2020
Audit
8 141
7 850
Tax services
304
101
Attestation services
1 318
77
Other services
1 879
461
Total
11 642
8 489
42
NORLANDIA HEALTH & CARE GROUP AS
6. FINANCE INCOME AND EXPENSE
Recognised in profit or loss
2021
2020
Finance income
Interest received on bank deposits and receivables
1 877
682
Other finance income
30
34
Gain on derivatives classified as held for trading
-
-
Foreign exchange gain
67 325
21 052
Total finance income
69 233
21 769
Finance expense
Loss on derivatives
-
-
Interest expense on financial liabilities measured at amortised cost
106 708
104 477
Interest expense on lease liability
121 080
102 997
Other financial expenses
8 773
8 524
Foreign exchange loss
21 687
129 288
Total finance expense
258 248
345 285
Share of post tax profits of associates
-1 216
5 935
Net finance income recognised in profit or loss
-190 232
-317 582
ANNUAL REPORT 2021
43
7. TAX EXPENSE
2021
2020
Current tax expense
Current tax on profits for the year
21 893
14 697
Adjustment for under provision in prior periods
-
-
Total current tax expense
21 893
14 697
Deferred tax expense
Origination and reversal of temporary differences (Note 16)
-17 362
-47 995
Changes not recognised in profit and loss
-
-
Unrecognised deferred tax assets
-
-
Total deferred tax expense
-17 362
-47 995
Income tax expense
4 531
-33 298
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax
in Norway applied to profits for the year are as follows:
2021
2020
Profit for the year
43 690
-15 530
Income tax expense
4 531
-33 298
Profit before income taxes
48 221
-48 828
Expected tax charge based on the standard rate of Norwegian corporation tax at the
domestic rate of 22 %
10 609
-10 742
Gains not taxable/ Equity accounted associated companies
-9 193
-16 650
Change in tax rate for deferred tax
-
-
Expenses not deductible for tax purposes
244
-1 163
Effect of unrecognised deferred tax assets
2 872
-4 743
Total tax expense
4 531
-33 298
44
NORLANDIA HEALTH & CARE GROUP AS
8. PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
Work in
progress
Furniture,
fixtures and
equipment
Total
At 1 January 2020
Cost
510 684
108 271
359 915
978 870
Accumulated depreciation
-161 636
-
-268 077
-429 713
Net book amount
349 048
108 271
91 838
549 157
Year ended 31 December 2020
Opening book amount
349 048
108 271
91 838
549 157
Additions
82 979
21 740
40 663
145 382
Acquisition of subsidiary
115 485
-
7 960
123 445
Disposals
-295 372
-
-5 406
-300 778
Depreciation
-10 740
-
-42 455
-53 195
Impairment loss
-
-
-
-
Reclassification
-69 434
-17 222
86 657
-
Exchange differences
336
-671
-383
-718
Closing net book amount
172 302
112 118
178 874
463 293
At 31 December 2020
Cost
344 678
112 117
489 406
946 201
Accumulated depreciation
-172 376
-
-310 532
-482 908
Net book amount
172 302
112 117
178 874
463 293
Year ended 31 December 2021
Opening book amount
172 302
112 117
178 874
463 293
Additions
85 139
-
51 388
136 527
Acquisition of subsidiary
319 984
-
9 542
329 526
Disposals
-205 029
-
-
-205 029
Depreciation
-15 578
-
-44 162
-59 740
Impairment loss
-
-
-
-
Reclassification
56 099
-75 774
19 675
-
Exchange differences
-2 464
-1 169
2 451
-1 182
Closing net book amount
410 453
35 174
217 767
663 394
At 31 December 2021
Cost
576 494
35 174
583 080
1 194 748
Accumulated depreciation
-166 041
-
-365 313
-531 354
Net book amount
410 453
35 174
217 767
663 394
Property, plant and equipment pledged as security for liabilities.
2021
2020
Land and buildings, including work in progress
445 627
284 419
ANNUAL REPORT 2021
45
9. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Other
intangible
assets
Total
At 1 January 2020
Cost or fair value
1 582 842
821 927
2 404 769
Accumulated amortisation
-
-194 497
-194 497
Net book amount
1 582 842
627 430
2 210 272
Year ended 31 December 2020
Opening book amount
1 582 842
627 430
2 210 272
Additions
-
4 474
4 474
Acquisition of subsidiary
40 920
485
41 405
Disposals
-13 070
0
-13 070
Amortisation
-
-41 588
-41 588
Impairment loss
-2 000
-
-2 000
Exchange differences
43 664
8 377
52 041
Closing net book amount
1 652 356
599 178
2 251 534
At 31 December 2020
Cost or fair value
1 652 356
835 264
2 487 620
Accumulated amortisation
-
-236 086
-236 086
Net book amount
1 652 356
599 178
2 251 534
Year ended 31 December 2021
Opening book amount
1 652 356
599 178
2 251 534
Additions
2 969
1 258
4 227
Acquisition of subsidiary
269 606
28 324
297 930
Disposals
-
-
-
Amortisation
-
-42 625
-42 625
Impairment loss
-
-1 657
-1 657
Exchange differences
-18 748
-20 954
-39 703
Closing net book amount
1 906 183
563 524
2 469 707
At 31 December 2021
Cost or fair value
1 906 183
842 235
2 748 417
Accumulated amortisation
-
-278 710
-278 710
Net book amount
1 906 183
563 524
2 469 707
The Group has no contractual commitments for development costs.
Current estimates of useful economic life of intangible assets are as follows:
Goodwill
Indefinite
Other intangible assets (mainly trade mark and customer contracts)
0 -20 years
10. GOODWILL AND IMPAIRMENT
Goodwill and other intangible assets result from business combinations and mainly relates to strategic investments in order to
strengthen the platform for the provided services within the Group. Such investments provide synergies both between segments and
countries as it enables developing new services and to seek business opportunities between countries. The managing directors within
a segment operate across countries and businesses within a segment which is considered to be integrated. Goodwill and other
intangible assets are allocated to the identified cash-generating units (CGU).
Impairment testing for cash-generating units (CGU) containing goodwill
The material amount of goodwill and other intangibles is allocated as follows between four CGU's:
46
NORLANDIA HEALTH & CARE GROUP AS
2021
2020
Preschools
1 031 793
760 886
Care
581 408
593 197
Integration services
127 883
129 927
Individual & family
165 099
168 346
Total goodwill
1 906 183
1 652 356
IMPAIRMENT TEST FOR THE PRESCHOOL CGU
Cash flow projections and assumptions
For the Preschool CGU the model was based on a five-year forecast of discounted cash flow plus a terminal value (calculated by
Gordon’s model). The net discounted cash flows were calculated after tax. The NPV-model included the following assumptions:
The estimated cash flows included in the impairment test include a five-year projection based on the long term business plan.
Estimated cash flow projections beyond the period covered by the most recent long term business plan are derived by extrapolating
the projections based on the forecasts using a growth rate of 2.0 % for subsequent years.
Discount rate assumptions
The required rate of return was calculated by use of the WACC methodology. The input data of the WACC was chosen by individual
assessment of each parameter. Information from representative sources, peer groups etc. was used to determine the best estimate.
The WACC was calculated to 6.0 % after tax.
Sensitivity analysis
The following sensitivity analysis were carried out to test whether changes in key assumptions would result in impairment:
1.
Changes in cash flows:
The analysis showed that a decline in free cash flow in excess of 55% % was necessary to change the conclusion. The result indicated
that there had to be a significant decline in the market situation to trigger impairment.
2.
Changes in discount rates:
The analysis showed that an increase in discount rate of 4.9 % was needed to change the conclusion. The result indicated that the
test was robust in terms of the level of discount rate.
Impairment - test result and conclusion
Value in use for the CGU’s exceeds carrying amount. The impairment test indicated no requirement to write down.
IMPAIRMENT TEST FOR THE CARE CGU
Cash flow projections and assumptions
For the Care CGU the model was based on a five-year forecast of discounted cash flow plus a terminal value (calculated by Gordon’s
model). The net discounted cash flows were calculated after tax. The NPV-model included the following assumptions:
The estimated cash flows included in the impairment test include a five-year projection based on the long term business plan.
Estimated cash flow projections beyond the period covered by the most recent long term business plan are derived by extrapolating
the projections based on the forecasts using a growth rate of 2.0 % for subsequent years.
Discount rate assumptions
The required rate of return was calculated by use of the WACC methodology. The input data of the WACC was chosen by individual
assessment of each parameter. Information from representative sources, peer groups etc. was used to determine the best estimate.
The WACC was calculated to 6.0 % after tax.
Sensitivity analysis
The following sensitivity analysis were carried out to test whether changes in key assumptions would result in impairment:
1.
Changes in cash flows:
ANNUAL REPORT 2021
47
The analysis showed that a decline in free cash flow in excess of 38 % was necessary to change the conclusion. The result indicated
that there had to be a moderate decline in the market situation to trigger impairment.
2.
Changes in discount rates:
The analysis showed that an increase in discount rate of 0.8 % was needed to change the conclusion. The result indicated that a
significant change in the level of discount rate would trigger impairment.
Impairment - test result and conclusion
Value in use for the CGU’s exceeds carrying amount. The impairment test indicated no requirement to write down. As the conclusion
is somewhat sensitive for changes in the parameters the company will monitor closely the development each quarter the following
year. At the same the Board is comfortable with the level of recognized goodwill and the expected development for the Care
business going forward.
IMPAIRMENT TEST FOR THE INTEGRATION SERVICES CGU
Cash flow projections and assumptions
For the Integration Services CGU the model was based on a five-year forecast of discounted cash flow plus a terminal value
(calculated by Gordon’s model). The net discounted cash flows were calculated after tax. The NPV-model included the following
assumptions:
The estimated cash flows included in the impairment test include a five-year projection based on the long term business plan.
Estimated cash flow projections beyond the period covered by the most recent long term business plan are derived by extrapolating
the projections based on the forecasts using a growth rate of 2.0 % for subsequent years.
Discount rate assumptions
The required rate of return was calculated by use of the WACC methodology. The input data of the WACC was chosen by individual
assessment of each parameter. Information from representative sources, peer groups etc. was used to determine the best estimate.
The WACC was calculated to 6.0 % after tax.
Sensitivity analysis
The following sensitivity analysis were carried out to test whether changes in key assumptions would result in impairment:
1.
Changes in cash flows:
The analysis showed that a decline in free cash flow in excess of 50% was necessary to change the conclusion. The result indicated
that there had to be a significant decline in the market situation to trigger impairment.
2.
Changes in discount rates:
The analysis showed that an increase in discount rate of 3.8% was needed to change the conclusion. The result indicated that the test
was robust in terms of the level of discount rate.
Impairment - test result and conclusion
Value in use for the CGU’s exceeds carrying amount. The impairment test indicated no requirement to write down.
IMPAIRMENT TEST FOR THE INDIVIDUAL & FAMILY CGU
Cash flow projections and assumptions
For the Individual & Family CGU the model was based on a five-year forecast of discounted cash flow plus a terminal value (calculated
by Gordon’s model). The net discounted cash flows were calculated after tax. The NPV-model included the following assumptions:
The estimated cash flows included in the impairment test include a five-year projection based on the long term business plan.
Estimated cash flow projections beyond the period covered by the most recent long term business plan are derived by extrapolating
the projections based on the forecasts using a growth rate of 2.0 % for subsequent years.
48
NORLANDIA HEALTH & CARE GROUP AS
Discount rate assumptions
The required rate of return was calculated by use of the WACC methodology. The input data of the WACC was chosen by individual
assessment of each parameter. Information from representative sources, peer groups etc. was used to determine the best estimate.
The WACC was calculated to 6.0 % after tax.
Sensitivity analysis
The following sensitivity analysis were carried out to test whether changes in key assumptions would result in impairment:
1.
Changes in cash flows:
The analysis showed that a decline in free cash flow in excess of 72% was necessary to change the conclusion. The result indicated
that there had to be a significantly decline in the market situation to trigger impairment.
2.
Changes in discount rates:
The analysis showed that an increase in discount rate of 9.9% was needed to change the conclusion. The result indicated that the test
was robust in terms of the level of discount rate.
Impairment - test result and conclusion
Value in use for the CGU’s exceeds carrying amount. The impairment test indicated no requirement to write down.
ANNUAL REPORT 2021
49
11. SUBSIDIARIES AND ASSOCIATES
List of subsidiaries
Norlandia Health & Care Group AS was established in December 2016. This was done by transferring the shares in Norlandia Care
Group AS, Hero Group AS, Aberia Healthcare AS and Kidsa AS, from Hospitality Invest to a newly incorporated 100% owned subsidiary
(Norlandia Health & Care Group AS).
The material subsidiaries of Norlandia Health & Care Group AS, all of which have been included in these consolidated financial
statements are as follows:
Country of
incorporation
Place of
office
Ownership interest
Name
2021
2020
Norlandia Care Group AS
Norway
Bodø
100%
100%
Kidsa Drift AS
Norway
Bergen
100%
100%
Hero Group AS
Norway
Stavanger
100%
100%
Aberia AS
Norway
Oslo
100%
100%
NHC Eiendom AS
Norway
Oslo
100%
100%
Care Properties AS
Norway
Oslo
100%
100%
NHC Services AS
Norway
Moss
100%
100%
NH Europe Holding AS
Norway
Oslo
100%
49%
Material operating companies
Norlandia Barnehagene AS
Norway
Oslo
100%
100%
Norlandia Barnehagene II AS
Norway
Oslo
100%
100%
Kidsa Barnehager AS
Norway
Bergen
100%
100%
Norlandia Förskolor AB
Sweden
Stockholm
100%
100%
Kids2Home AB
Sweden
Stockholm
100%
100%
Norlandia Päiväkodit Oy
Finland
Helsinki
100%
100%
Norlandia Kinderopvang BV
Netherlands
Utrecht
100%
100%
Norlandia Kinderopvang Rotterdam B.V.
Netherlands
Utrecht
100%
100%
Norlandia Care Norge AS
Norway
Oslo
100%
100%
Norlandia Hjemmeomsorg AS
Norway
Oslo
100%
100%
Norlandia Care OY
Finland
Tampere
100%
100%
Norlandia Care AB
Sweden
Stockholm
100%
100%
Kosmo AB
Sweden
Stockholm
100%
100%
Hero Norge AS
Norway
Stavanger
100%
100%
Aberia Ung AS
Norway
Moss
100%
100%
Aberia Omsorg AS
Norway
Moss
100%
100%
Marcus Assistans AB
Sweden
Örebro
76%
76%
Investment in associated companies
2021
2020
Investment in associates as of 01.01
54 306
41 596
Share of post-tax profits of associates
-1 216
5 935
Gain on transfers to subsidiaries
-
-
New investment in associates
7 486
6 776
Transfer to subsidiaries
-29 500
-
Other changes
-
-
Disposal of investment associates
-
-
Investment in associates as of 31.12
31 076
54 306
50
NORLANDIA HEALTH & CARE GROUP AS
12. LEASES
Lease contracts
The Group leases the majority of its offices, hotels, preschools, nursing homes and houses. Lease agreements typically run for 10+
years within preschools and less for the other segments. Preschools represent more than 60% of the total ROU, while Care represent
more than 25%. Contracts normally include an option to prolong the lease The Group has not included any such prolonging due to
the uncertainty related to the long remaining lease. Interest rate is estimated per country and vary between 2.5-3.6%. Contracts with
less than 12 month obligation or payments related to revenue is not capitalized. Lease payments are subject to annual KPI
adjustment.
2021
2020
Right of use asset
Balance at 1 January
3 799 355
3 326 194
Additions
564 182
749 518
Acquisition of subsidiary
396 619
-
Disposals
-
-
Depreciation
-449 440
-404 525
Exchange differences
-124 248
128 167
Year ended 31 December
4 186 467
3 799 355
Maturity analysis - undiscounted cash
Less than one year
543 252
498 511
One to five years
1 873 986
1 640 218
More than five years
2 924 561
2 589 309
Total undiscounted lease liabilities 31
5 341 799
4 728 039
Lease liabilities incl. in the statement of financial position 31 December
4 466 806
3 977 129
Current
416 784
388 728
Non-current
4 050 022
3 588 402
The table below illustrate the effects for profit and loss as if right of use assets and lease liabilities had not been capitalized in
accordance with IFRS 16 and no gain on sale and lease-back had been eliminated, and instead all lease payments had been expensed.
2021
IFRS 16
effects
2021
Adjusted
2020
IFRS 16
effects
2020
Adjusted
Revenue
5 933 763
5 933 763
5 313 829
5 313 829
Other income
41 788
64 982
106 770
75 680
59 956
135 636
Total revenue and income
5 975 550
64 982
6 040 532
5 389 509
59 956
5 449 465
Raw materials and consumables used
175 101
175 101
131 440
131 440
Staff costs
4 303 147
4 303 147
3 849 098
3 849 098
Depreciation and amortisation expense
554 212
-449 440
104 772
501 308
-404 525
96 783
Other operating expenses
704 637
535 781
1 240 417
638 910
469 637
1 108 547
Total operating expenses
5 737 097
86 341
5 823 438
5 120 755
65 112
5 185 867
Profit from operations
238 453
-21 359
217 094
268 754
-5 156
263 598
Finance income
69 233
69 233
21 769
21 769
Finance expense
-258 248
121 080
-137 168
-345 285
102 995
-242 290
Share of post-tax profits of associates
-1 216
-1 216
5 935
5 935
Net finance
-190 232
121 080
-69 152
-317 582
102 995
-214 587
Profit before tax
48 221
99 721
147 942
-48 828
97 839
49 011
ANNUAL REPORT 2021
51
13. TRADE AND OTHER RECEIVABLES
Note
2021
2020
Trade receivables
297 446
210 842
Less: provision for impairment of trade receivables
-13 025
-11 185
Trade receivables - net
284 421
199 658
Other receivables
240 203
268 692
Total financial receivables classified as loans and receivables
524 624
468 350
Less: non-current portion - Loan to related parties
21
3 525
587
Less: non-current portion - other receivables
38 075
40 272
Current portion
483 024
427 491
The fair values of trade and other receivables classified as loans and receivables are not materially different to their
The Group does not hold any collateral as security.
Movements on the Group provision for impairment of trade receivables are as follows:
2021
2020
At 1 January
11 185
8 455
Provided during the year
1 840
2 730
Receivable written off during the year as uncollectible
-
-
At 31 December
13 025
11 185
The movement on the provision for impaired receivables has been included in the other operating expenses line in the
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
Aging analysis on trade receivables
Total
Not due
(less than
30 days)
30-60 days
60-90 days
More than
90 days
2021
297 446
281 281
2 063
398
13 704
2020
210 842
188 625
7 919
498
13 801
52
NORLANDIA HEALTH & CARE GROUP AS
14. SHARE CAPITAL, SHAREHOLDERS, DIVIDENDS AND RESERVES
Share capital
(Amounts in NOK)
2021
2021
2020
2020
Number
NOK
Number
NOK
Ordinary shares of NOK 10.4 each
30 000 000
312 000 000
30 000 000
300 000 000
Total
30 000 000
312 000 000
30 000 000
300 000 000
Shareholders
Each share gives the shareholder one voting right.
29 100 000
97,00%
Stork Industries AS
450 000
1,50%
Cowry EV AS
450 000
1,50%
Total
30 000 000
100,00%
Kristian A. Adolfsen holds, directly and indirectly, 45.94 % of the shares in Hospitality Invest AS
Roger Adolfsen holds, directly and indirectly, 45.94% of the shares in Hospitality Invest AS
Yngvar Tov Herbjørnssønn holds, directly and indirectly, 100% of the shares in Cowry EV AS
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of nominal value.
Retained earnings All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
ANNUAL REPORT 2021
53
15. LOANS AND BORROWINGS
The book value and fair value of loans and borrowings are as follows:
Book
Fair
Book
Fair
value
value
value
value
2021
2021
2020
2020
Non-Current
Interest bearings loans
2 124 400
2 124 400
118 016
118 016
Total non current
2 124 400
2 124 400
118 016
118 016
Current
Interest bearings loans
51 037
51 037
1 892 293
1 892 293
Total non current
51 037
51 037
1 892 293
1 892 293
The currency profile of the Group's loans and borrowings is as follows:
(Currency in NOK)
2021
2020
NOK
1 434 521
862 459
SEK
740 916
1 147 850
Total
2 175 437
2 010 309
Borrowings as of 31.12.2021
Interest
Amount
Due date
Debt to Husbanken
0.897%-2.438%
214 098
2050
Bond issued 2021
NIBOR +5.75%
1 682 299
2025
Other debt/property debt
279 039
2 175 437
Borrowings as of 31.12.2020
Interest
Amount
Due date
Debt to Husbanken
1.510%-2.869%
22 342
2050
Bond issued 2016
NIBOR +4.5%
1 892 184
2021
Other debt/property debt
95 783
2 010 309
In May 2021 the Group successfully refinanced its bond and secured long term financing until 2025. The settlement and new bond
was in a single transaction and several investors rolled over their investment into the new bond. From a cashflow perspective the
Group did only incur directly related transaction costs included as part of the financing activities. As part of the refinancing the
Hospitality Invest AS converted an equal of NOK 150 million in obligations debt to equity, lowering the external financing. The new
bond is a senior secured sustainability-linked bond due in May 2025. The bond consists of a 950 million NOK tranche and a 750
million SEK tranche. As per December 2021 MNOK 21.7 of unamortised borrowing costs. Subsidiaries are pledged as collateral
together with a majority of material operating companies. See note 3, 18 and 23 for further information regarding the bond.
On top of the bond financing the Group is allowed to have a total of NOK 350 million in credit facilities, of which NOK 218 was
undrawn as per December 2021.
54
NORLANDIA HEALTH & CARE GROUP AS
16. DEFERRED TAX
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 22 %.
The movement on the deferred tax account is as shown below:
2021
2020
At 1 January
-33 079
-85 645
Recognised in profit and loss
-
-
Tax expense
17 362
47 995
Recognition of previously unrecognised deferred tax assets
-
-
Recognised in other comprehensive income
-1 276
4 571
-16 993
-33 079
Arising on business combination
-10 725
-
At 31 December
-27 718
-33 079
Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to
deferred tax assets where the directors believe it is probable that these assets will be recovered.
The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction
as permitted by IAS 12) during the period are shown below.
ANNUAL REPORT 2021
55
Details of the deferred tax liability, amounts recognised in profit or loss and amounts recognised in other comprehensive
income are as follows:
(Charged)/
(Charged)/
credited
credited to
to profit
equity or
Asset
Liability
Net
or loss
2021
2021
2021
2021
2021
Fixed assets
70 279
-139 627
-69 348
36 275
-10 725
Accounts receivable
2 056
-
2 056
146
-
Pensions
23 742
-4 647
19 096
-4 479
-1 276
Profit and loss account
-
-2 317
-2 317
335
-
Provisions
50 395
-1 918
48 477
-6 262
-
Tax loss carried forward
13 336
-
13 336
4 424
-
Tax asset/(liabilities)
159 809
-148 508
11 301
30 440
-12 001
Set off of tax
-
-
-
-
-
Unrecognised deferred tax asset
-39 019
-
-39 019
-13 078
-
Net tax assets/(liabilities)
120 790
-148 508
-27 718
17 362
-12 001
2020
2020
2020
2020
2020
Fixed assets
42 391
-137 289
-94 898
36 041
-
Accounts receivable
1 910
-
1 910
854
-
Pensions
27 782
-2 931
24 851
1 272
4 571
Profit and loss account
-
-2 652
-2 652
1 034
-
Provisions
61 792
-7 053
54 739
40 531
-
Tax loss carried forward
8 912
-
8 912
-5 797
-
Tax asset/(liabilities)
142 787
-149 925
-7 138
73 935
4 571
Set off of tax
-
-
-
-
-
Unrecognised deferred tax asset
-25 941
-
-25 941
-25 941
-
Net tax assets/(liabilities)
116 846
-149 925
-33 079
47 994
4 571
The unused tax losses and deductible temporary differences can be carried forward indefinitely. Deferred tax assets are recognized
as an asset as the Group expect to utilize these with expected profit in the coming years. For 2020 and onward the Group has
decided not to recognize a tax asset related to the deferred interest charges as these may only be carried forward for 10 years and it
is uncertain that these may be utilized.
2021
2020
Taxes payable in consolidated Statement of Comprehensive
20 428
12 623
Prepaid tax
18 927
17 292
Taxes payable in Statement of Financial Position
1 501
-4 669
56
NORLANDIA HEALTH & CARE GROUP AS
17. TRADE AND OTHER PAYABLES
2021
2020
Trade payables
129 528
125 111
Tax and social security payments
255 344
292 528
Other short term debt
545 186
484 507
Total financial liabilities, excluding loans and borrowings,
Classified as financial liabilities measured at amortised cost
930 057
902 146
Book values approximate to fair value at 31 December 2021 and 2020.
18. SUPPORTING STATEMENT OF CASH FLOWS
Non-current
loans and
borrowings
Current loans
and borrowings
Lease liabilities
Total
At 1 January 2020
1 904 405
204 842
3 405 907
2 109 247
Cash flows
-102 282
-179 612
-366 642
-281 894
Net amounts from purchase and sale of companies
98 847
-
-
98 847
Effects of foreign exchange
109 230
-
128 167
109 230
Interests accrued in period
-
-25 121
-
-25 121
Addition
-
-
809 474
809 474
Change in fair value
-
-
-
-
Reclassified
-1 892 184
1 892 184
-
-
At 31 December 2020
118 016
1 892 293
3 976 906
5 987 215
Cash flows
19 448
-7 763
-414 701
-403 016
Net amounts from purchase and sale of companies
177 729
14 478
412 519
604 726
Effects of foreign exchange
-19 125
-
-137 082
-156 207
Interests accrued in period
-
2 029
-
2 029
Addition
-
-
629 164
629 164
Capital increase (converted debt to equity)
150 000
-
-
150 000
Re-financed bond
1 678 332
-1 850 000
-
-171 668
At 31 December 2021
2 124 400
51 037
4 466 806
6 642 243
19. RETIREMENT BENEFITS
At 31.12.2021, a total of 11,370 employees in the Group are included in a defined contribution plan. The plan is in accordance with
the laws and regulations concerning obligatory pension plans. The costs in connection with the plan are recognized in accordance
with premiums paid. The Group’s defined benefit plan through 2021 includes 563 employees. The plan involves lifelong pension from
67 years. The pension plans are accounted for in accordance with IAS 19 Employee benefits. Defined benefit plans give rise to defined
future payments. These are mainly dependent on number of years of service, salary level at retirement and the level of payments
received from Social Security. The obligations are covered through an insurance company.
ANNUAL REPORT 2021
57
2021
2020
Pension costs for defined contribution schemes
252 501
179 440
Details of the Group's defined benefit schemes are as follows:
2021
2020
Fair value of plan assets
379 160
345 579
Present value of funded obligations
469 125
458 480
Change in net obligation as a result of business combination
10 220
-35
Net pension obligations
100 185
112 866
Reconciliation of plan assets
2021
2020
At 1 January
345 459
313 179
Expected return
5 043
5 977
Contributions by Group
47 148
29 844
Benefits paid
-1 691
-1 650
Actuarial gain/(loss)
-16 474
104
Settlements
-
-
Administration fees
-326
-299
Change as a result of business combination
43 450
-1 695
At 31 December
422 610
345 459
Reconciliation of plan liabilities
2021
2020
At 1 January
458 325
413 138
Interest cost
7 874
9 524
Current service cost
32 521
31 488
Benefits paid
-1 691
-1 650
Actuarial (gain)/loss
-22 276
20 446
Social security tax
-5 629
-13 119
Settlements
-
-
Change as a result of business combination
53 670
-1 502
At 31 December
522 795
458 325
2021
2020
Actuarial gains and losses recognised in OCI
5 802
-20 778
Pension cost (defined benefit plan)
2021
2020
Current service cost
29 827
27 843
Net interest cost
2 237
2 800
Administration costs
1 135
1 382
Accrued social security tax
4 508
4 226
Net pension cost
37 707
36 251
Principal actuarial assumptions
31.12.2021
31.12.2020
Discount rate on plan liabilities
1,9 %
1,7 %
Expected increase in pensionable salary
2,8 %
2,3 %
Future G-increase
2,5 %
2,0 %
Future pension increase
0,0 %
0,0 %
Turnover
8,7 %
8,7 %
Social security tax
14,1 %
14,1 %
58
NORLANDIA HEALTH & CARE GROUP AS
20. ACQUISITIONS DURING THE PERIOD AND COMPLETED PRIOR PERIODS
Acquisitions during 2021
Acquisitions during 2021 have been made primarily in the preschool segment and total consideration was MNOK 126, which has
been paid during 2021. Gnist Barnehager AS has been consolidated from 1.10.2021. In addition, the Group’s owner (Hospitality Invest
AS) transferred 51% of the shares in NH Europe Holding AS to the Group, which now owns 100% of the outstanding shares. The
transfer of the shares in NH Europe Holding AS has been booked as a capital injection, using book values in the consolidated
statements of Hospitality Invest AS and considered as outside the scope of IFRS 3. The total book value of the 51% shares were
MNOK 29.8 and no cash were transferred. The net effect of this common control transaction at book values was a reduction in equity
of MNOK -17.7. A significant part of the reduction was IFRS 16 liabilities being higher than ROU, due to prior sale leaseback
transactions. The transaction was finalized in connection with the refinancing of the bond loan in May 2021, and NH Europe Holding
AS has been consolidated from this point in time. Comparative figures have not been restated due to immateriality.
All business combinations during 2021, including NH Europe Holding AS resulting in an addition to goodwill of MNOK 270 million,
intangible assets of MNOK 28, Right-of-use assets of MNOK 397, Lease liability of MNOK 424, fixed assets of MNOK 330, Deferred tax
liabilities of MNOK 11 and interest bearing debt of MNOK 278. Cash in acquired companies has primarily been prepayments from
municipalities, where corresponding unsatisfied performance obligations were recognised as liabilities. No amount of goodwill is
expected to be deductible for tax purposes. No transactions costs have been booked as part of these transactions.
Acquisitions during 2020
Acquisitions during 2020 have been made primarily in the preschool segment within Norway, Sweden and Finland, with
Sprelloppbarnehagene being the largest. All business combinations during 2020 resulting in an addition to intangible assets of total
MNOK 41.4.
21. TRANSACTIONS WITH RELAT ED PARTIES
In addition to the transactions described in note 11, the financial statements include the following transactions with relate d parties.
Related party
Relation to the Group
Kristian Adolfsen
Shareholder in Hospitality Invest AS, board member in the Group
Roger Adolfsen
Shareholder in Hospitality Invest AS, board member in the Group
Hospitality Invest AS
Major shareholder 97%
Pioneer Property Group ASA
Significant ownership interest from the same shareholders
Pioneer Preschools AS
Significant ownership interest from the same shareholders
Älvbäck Fastighets AB
Significant ownership interest from the same shareholders
Transaction with related parties
(Amounts in NOK)
2021
2020
Receivables from related parties
Pioneer Property Group ASA
Älvbäck Fastighets AB
3 452
Total receivable related parties
3 452
-
Liabilities to related parties
Hospitality Invest AS
24 680
24 314
Total liability related parties
24 680
24 314
Interest received
Pioneer Property Group AS
-
-
Interest received from related parties
-
-
Sale of assets to related parties
2021
2020
Sale of property to Pioneer Preschools AS
14 610
-
Total sale off assets to related parties
14 610
-
ANNUAL REPORT 2021
59
Rent of properties from related parties
Rent of properties from Pioneer Property Group ASA
1 350
12 008
22. CASH AND CASH EQUIVALENTS
2021
2020
Cash related to payroll tax witholdings
10 774
2 738
Unrestricted cash
290 412
282 622
Total cash and cash equivalents
301 186
285 360
23. DESCRIPTION OF INCURRENCE COVENANT AND FINANCIAL COVENANT
The senior secured bond issued in December 2021 includes an incurrence covenant and a financial covenant. Certain actions and
transactions, inter alia issuance of new debt and payment of dividends, is subject to the satisfaction of an incurrence test. The
incurrence test considered satisfied provided that:
Total Net Debt / EBITDA = not greater than 3.75 (3.25 for payment of dividends)
The financial covenant requires the Group to at all time satisfy a minimum liquidity of NOK 100.000.000, including not utilized
overdraft credit facilities.
24. EVENTS AFTER THE REPORTING DATE
No material events has been identified after the reporting date which might have had a significant effect on the consolidated
financial Statements.
60
NORLANDIA HEALTH & CARE GROUP AS
Income statement
Norlandia Health & Care Group AS - for the year ended 31 December 2021
(Amounts in NOK thousand)
Note
2021
2020
Revenue
2 227
1 928
Operating Revenue
2 227
1 928
Staff costs
3 006
1 739
Other operating expenses
8 523
5 141
Operating expenses
11 529
6 880
Operating profit
-9 302
-4 952
Financial income and expenses
Other interest income
35 347
33 653
Other financial income
1
256 632
184 758
Other interest expenses
-98 384
-93 744
Other financial expenses
1
-7 755
-129 241
Net financial income and expenses
185 839
-4 574
Operating result before tax
176 537
-9 527
Tax on ordinary result
2
-21 202
3 523
Operating result after tax
155 335
-6 004
Annual net profit
155 335
-6 004
Brought forward
To other equity
155 335
-6 004
Net brought forward
155 335
-6 004
ANNUAL REPORT 2021
61
Balance sheet
Norlandia Health & Care Group - for the year ended 31 December 2021
(Amounts in NOK thousand)
ASSETS
Note
2021
2020
Fixed assets
Deferred tax asset
2
-
21 202
Total intangible assets
-
21 202
Financial fixed assets
Investments in subsidiaries
5
1 656 454
1 598 054
Investment in associated companies
5
-
28 616
Loans to group companies
6
745 552
689 381
Bonds and other receivables
7
-
-
Total financial fixed assets
2 402 006
2 316 051
Total fixed assets
2 402 006
2 337 253
Current assets
Debtors
Other receivables
6
190 783
185 051
Total debtors
190 783
185 051
Cash and bank deposits
9
45 720
68 096
Total current assets
236 503
253 146
Total assets
2 638 508
2 590 400
62
NORLANDIA HEALTH & CARE GROUP AS
Balance sheet
Norlandia Health & Care Group AS - for the year ended 31 December 2021
(Amounts in NOK thousand)
EQUITY AND LIABILITIES
Note
2021
2020
Equity
Restricted equity
Share capital
4
312 000
300 000
Share premium reserve
167 784
-
Total restricted equity
479 784
300 000
Other equity
223 833
68 498
Total equity
3
703 617
368 498
Liabilities
Other long-term liabilities
Group liabilities
6
-
-
Interest-bearing non-current liabilities
104 904
-
Bonds
7
1 659 207
-
Total of other long-term liabilities
1 764 110
-
Current liabilities
Trade creditors
946
374
Bonds
7
-
1 892 184
Other short term liabilities
6
169 835
329 343
Total short term liabilities
170 781
2 221 902
Total liabilities
1 934 891
2 221 902
Total equity and liabilities
2 638 508
2 590 400
Oslo, 26 April 2022
Board of Directors of Norlandia Health & Care Group AS
Kristian A. Adolfsen
Chairman of the Board
Roger Adolfsen
Member of the Board
Ingvild Myhre
Member of the Board
Yngvar Tov Herbjørnssønn
CEO
ANNUAL REPORT 2021
63
Cash flow statement
Norlandia Health & Care Group AS - for the year ended 31 December 2021
(Amounts in NOK thousand)
Note
2021
2020
Cash flow from operations
Profit before income taxes
176 537
-9 527
Taxes paid in the period
-
-
Gain/loss from sale of fixed assets
-
-
Depreciation
-
-
Impairment of fixed assets
-
-
Net financial items
-185 839
4 574
Change in trade debtors
-
-
Change in trade creditors
572
372
Differences in expensed pensions and payments in/out of the pension scheme
-
-
Effect of exchange fluctuations
-
-
Items classified as investments or financing
-
-
Change in other provisions
21 213
1 155
Net cash flow from operations
12 483
-3 425
Cash flow from investments
Capital increase in subsidiaries
-
-
Purchase of fixed assets
-
-
Proceeds from sale of shares and investments in other companies
-
-
Purchase of shares and investments in other companies
-
-3 920
Net loans to subsidiaries
-56 171
-23 653
Proceeds from sale of other investments
-
-
Net cash flow from investments
-56 171
-27 573
Cash flow from financing
Proceeds from long term loans
104 904
-
Refinancing of bond
-21 668
-
Net change in bank overdraft
27 190
-179 612
Net Interest paid
-63 037
-84 816
Payment of group contribution
-
-
Net group receivables
-26 077
360 371
Net cash flow from financing
21 312
95 943
Exchange gains / (losses) on cash and cash equivalents
Net change in cash and cash equivalents
-22 376
64 945
Cash and cash equivalents at the beginning of the period
68 096
3 151
Cash and cash equivalents at the end of the period
45 720
68 096
64
NORLANDIA HEALTH & CARE GROUP AS
Notes to the financial statements 2021
1. ACCOUNTING POLICIES
The annual accounts have been prepared in compliance with the Accounting Act and accounting principles generally accepted in
Norway.
Operating income
Revenues from sale of services are recognised in the income statement once the delivery has taken place.
Taxes
The tax charge in the income statement includes both payable taxes for the period and changes in deferred tax. Deferred tax is
calculated as 22 % of temporary differences which exist between accounting and tax values of assets and liabilities, and any
carryforward losses for tax purpos es at the year-end. Taxable and deductible temporary differences that reverse or may reverse in
the same period are offset and reported net. Deferred tax on the excess value associated with acquisitions of subsidiaries is not
settled.
Classification of balance sheet items
Assets intended for long term ownership or use have been classified as fixed assets. Fixed assets are valued at cost. They are
recorded in the balance sheet, and depreciate d over the estimated economic lifetime of the asset. Fixed assets are written down to
recoverable amount when decreases in value are expected to be permanent. The recoverable amount is the highest amount of net
realizable value and value in use. Value in use is the present value of future cash flows associated with the asset. Impairment losses
are reversed when the basis for impairment no longer exists. Other assets are classified as current assets.
Current assets and short term debt are normally considered to be due within one year from the balance sheet date, as well as those
connected to the trading cycle.
Current assets are valued at the lower of cost and fair value.
Debtors
Trade debtors and other debtors are recognised in the balance sheet at nominal value after provision for bad debts. The bad debts
provision is made on basis of an individual assessment of each debtor.
Investments in subsidiaries
Subsidiaries are companies in which the parent company has control, and thus the power to govern the financial and operating
policies, generally by owning more than half of the voting capital.
The cost method is applied as a principle for the investment in subsidiaries and associated companies in the company accounts. The
cost price is increased when funds are added through capital increases or when group contributions are made to subsidiaries.
Dividends received are initially taken to income. Dividends exceeding the portion of retained equity after the purchase are reflected
as a reduction in purchase cost.
Dividend/group contribution from subsidiaries are reflected in the same year as the subsidiary makes a provision for the amount.
Dividend from other companies are reflected as financial income when it has been approved.
Foreign Currencies
Conversion of foreign companies is done by translating the balance sheet to the closing rate, and the income statement to the
average exchange rate. Any significant transactions are translated at the transaction date.
Financial risk
For assessing the company's financial risks, see the discussion in the annual report.
Cash Flow statement
The cash flow statement has been prepared using the indirect method.
ANNUAL REPORT 2021
65
2. TAX
This year's tax expense
2021
2020
Entered tax on ordinary profit/loss:
Payable tax
-
-
Changes in deferred tax advantage
21 202
-3 523
Tax expense on ordinary profit/loss
21 202
-3 523
Taxable income:
Ordinary profit/loss before tax
176 538
-9 526
Permanent differences
-145 347
-125 000
Changes temporary differences
-98 205
74 435
Cut interest deduction
63 037
60 091
Taxable income before losses carried forward
-3 977
0
Utilised losses carried forward
Taxable income:
-3 977
-0
Payable tax in the balance:
Payable tax on this year's result
-
-0
Total payable tax in the balance
-
-0
Calculation of effective tax rate
Profit before tax
176 538
-9 526
Calculated tax on profit before tax
38 838
-2 096
Tax effect of permanent differences
-76
0
Total
38 762
-2 096
Effective tax rate
22%
22%
The tax effect of temporary differences and loss for to be carried forward that has formed the basis for deferred tax and
deferred tax and deferred tax advantages, specified on type of temporary differences:
2021
2020
Long-term receivables and liabilities in foreign currency
-
-88 740
Other differences
20 868
5 666
Total
20 868
-83 074
Accumulated loss to be brought forward
-17 278
-13 301
Interest cost carries forward
-180 950
-117 913
Unrecognized in deferred tax
177 359
117 914
Basis for calculation of deferred tax
-0
-96 374
Deferred tax
-0
-21 202
3. EQUITY
This year's tax expense
Share capital
Share premium
Retained earnings
Total equity
Pr 01.01.2021
300 000
0
68 498
368 498
Capital increase
12 000
167 784
0
179 784
Income for the year
0
0
155 335
155 335
Pr 31.12.2021
312 000
167 784
223 833
703 617
66
NORLANDIA HEALTH & CARE GROUP AS
4. SHARE CAPITAL AND SHAREHOLDERS
Share capital
Number
Nominal Value
In balance
Ordinary shares
30 000 000
10,4
312 000 000
Shareholders
Number
Ownership
Nominal Value
In balance
Hospitality Invest AS
29 100 000
97,00%
10,4
302 640 000
Stork Industries AS
450 000
1,50%
10,4
4 680 000
Cowry EV AS
450 000
1,50%
10,4
4 680 000
Total
30 000 000
100,00%
10,4
312 000 000
The company has one class of shares and all shares have equal voting rights.
The shares held by the board of directors / CEO, ref. The Norwegian accounting law § 7-26:
Number
Ownership
Kristian A. Adolfsen
13 782 000
45,94%
Roger Adolfsen
13 782 000
45,94%
Yngvar Tov Herbjørnssønn
450 000
1,50%
5. SUBSIDIARIES AND ASSOCIATES
Investments in subsidiaries, associated companies and joint ventures are booked according to the cost method.
Ownership/
voting right
Result (100%)
Balance
sheet value
Subsidiaries
Location
Norlandia Care Group AS
Bodø
100%
344 705
98 980
969 160
Kidsa Drift AS
Bergen
100%
282 247
155 583
217 000
Hero Group AS
Stavanger
100%
195 971
1 826
155 051
Aberia AS
Oslo
100%
107 925
32 804
193 952
Care Properties AS
Oslo
100%
16 081
-7 379
50 000
NHC Eiendom AS
Oslo
100%
8 627
-509
10 362
NHC Services AS
Moss
100%
143
-459
2 530
NH Europe Holding AS
Oslo
100%
58 299
-31
58 400
Balance sheet value 31.12.
1 656 454
6. TRANSACTIONS WITH RELATED PARTIES
Transaction with related parties
(Amounts in NOK)
2021
2020
Receivables from related parties
Short term receivables
190 683
184 758
Long term loans to group companies
745 552
689 381
Total receivable related parties
936 235
874 139
Payables to related parties
Group contribution
-
-
Liabilities
144 970
321 766
Total payables related parties
144 970
321 766
Income from subsidiaries
Group Contribution
190 683
184 758
Interest income
34 451
33 653
ANNUAL REPORT 2021
67
Interest received from related parties
225 134
218 411
7. DEBTORS AND LIABILITIES
2021
2020
Long term liabilities
Bonds
1 680 875
-
Accrued expense bond
-21 668
-
Total
1 659 207
-
Short term liabilities
Bonds
-
1 897 850
Accrued expense bond
-
-5 666
Total
-
1 892 184
The bond is subject to Interest NIBOR/STIBOR +5.75%.
The maturity date of the bond loan is May 2025.
Balance sheet value of assets placed as security:
Subsidiaries
1 656 454
1 598 250
Total
1 656 454
1 598 250
In addition to its own subsidiaries, several of subsidiaries of the subsidiaries are placed as security for bond obligation.
68
NORLANDIA HEALTH & CARE GROUP AS
8. STAFF COSTS
2021
2020
Staff costs (including directors) comprise:
Wages and salaries
2 109
976
Defined contribution pension cost
-
-
Other benefits
-
25
Social security contributions and similar taxes
297
139
Remuneration to Board of Directors
600
600
Total payroll and related costs
3 006
1 739
Number of employees (FTE)
-
-
The company had no employees during 2020 and 2021. Wages and salary paid is for Group CEO (part of total compensation as
presented in note 5 of consolidated accounts).
Audit fees
The following amounts have been recognised as audit fees and related services during the period
2021
2020
Audit
488
429
Tax services
-
-
Attestation services
41
-
Other services
399
-
Total
928
429
9. CASH AND CASH EQUIVALENTS
2021
2020
Restricted cash
3 819
-
Unrestricted cash
41 901
68 096
Total cash and cash equivalents
45 720
68 096
Independent auditor’s report
A
PRIL 20
22
NHC Group