ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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NORLANDIA HEALTH & CARE GROUP AS
ANNUAL REPORT 2023
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The board of directors’ report 2023
COMPANY
(“NHC”) is a leading
. The parent company is
headquartered in
,
.
OPERATIONS
Preschools
The Preschools segment includes the
preschool activities within Norlandia and
Kidsa. Per year-end 2023, Norlandia
Preschools and Kidsa Barnehager
operates 435 preschool units in Norway,
Sweden, Finland, Netherlands, Poland
and Germany, an increase of 14 units
year-on-year. 32 of the units are owned
50% and operated by Wekita (Germany)
and consolidated as an associated
company. The demographic development
in population varies within each country,
Our operations are mainly centrally
located within urban areas.
Care
Norlandia Care provides services within
institutional elderly care, patient hotels
and home care services in Norway,
Sweden and Finland. As of year-end
2023, 63 elderly care homes were
operated by Norlandia, of which 43 were
in Sweden, 2 were in Norway and 6 was
in Finland. 18 of the homes were own-
management projects, including a
Generation Concept (preschool and
elderly care). Norlandia also operates 1
patient hotels in Norway, and 1 in
Finland. Additionally, Norlandia has 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 several reception centers in
Germany. The group has extensive
competence and experience acquired
through near 40 years of operations. The
service offering includes reception
centers for asylum seekers and
interpretation services.
With the tragedy of the war in Ukraine,
Hero has been central in the
Government’s effort to provide
accommodation for Ukrainian refugees.
With the long-term experience and
resources across segments, Hero has
succeed to offer security for many of the
victims in this tragedy. There is high
activity within Hero as acute
accommodation is scaling down and
replaced by an increasingly number of
long-term contracts.
Individual & Family
The services within the Individual &
Family segment are provided by Aberia
and as from February Frösunda Omsorg
and Frösunda Personlig Assistans. The
division is a leading 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
NHC Property is a real estate developer
for Norlandia Health & Care Group (NHC).
As part of NHC’s business model, NHC
Property 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 7,934.1 million in 2022 to NOK
10,696.4 million in 2023 primarily
explained by Frösunda entering the
group.
Profit from operations came in at NOK
434.2 million in 2023, down from NOK
476.6million in 2022. Net finance
amounted to NOK -482.2 million for the
year, influenced by net unrealized
currency loss of NOK 7.0 million.
Consequently, net profit decreased from
NOK 169.5 million in 2022 to NOK -25.8
million in 2023.
IFRS-16 was adopted on 1st January
2019, and had a net effect on profit
before tax, of NOK -98.8 million in 2023.
This is explained by increased
depreciation charges of NOK 798.1
million, finance charges of NOK 209.5
million and a reduction of real estate
gains of NOK 24.8 million, partially offset
by reduced leasing expenses of NOK
933.5 million.
The Group generated cash flow from
operating activities of NOK 1,258.3
million in 2023 up from NOK 956.2
million in 2022, positively affected by
change in working capital. Net cash flow
from investing activities amounted to
NOK -43.6 million, up from NOK -98.8
million in 2022, explained by lower
proceeds from sale of assets and cash
balance from acquired business.
Financing cash flows amounted to NOK -
1,154.7 million, down from NOK -882.9
million in 2022, the difference mainly
explained by repayment of debt and
increased lease in 2023.
As of 31.12.2023, the Group had a cash
balance of NOK 346.0 million, up from
NOK 271.7million 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
13,133.4 million per year-end 2023,
compared to NOK 9,766.5 million in
2022. Total non-current liabilities
amounted to 9,277.3 million, significantly
up from 2022, with the increase
reflecting lease liabilities and tap-issue
from bond.
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NORLANDIA HEALTH & CARE GROUP AS
Per 31
st
total equity amounted to NOK 952.1
million, up from NOK 601.2 million in
2022.
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 -15.0 million in 2023,
down from NOK -7.8 million in 2022. Net
financial items decreased from NOK
161.2 million in 2022, to NOK 76.3 million
in 2023, reflecting interest paid on the
bond offset by received group
contributions. Net income amounted to
NOK 47.3 million in 2023, down from
NOK 122.0 million in 2022.
Total assets per 31.12.2023 were NOK
3,966.5 million mainly consisting of
shares in subsidiaries which were an
increase from NOK 2,732.3 million as of
31.12.2022.
Total liabilities per 31.12.2023 were NOK
2,715.0 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 48.7 million.
Total equity per 31.12.2023 amounted to
NOK 1,251.4 million, up from NOK 805.7
million in 2022.
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 2024 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 Ukrainian
refugees. The number of refugees are still
at a high level and the Government
expect 35.000 arrivals in 2024. The work
is continuing with intense focus and Hero
aim to adapt to meet the current need.
While Covid-19 is receiving less public
attention, it remains an uncertainty and
risk going forward. The pandemic had a
negative financial impact and all our
markets and operations were affected in
some degrees. For 2023 primarily the
Elderly Care is affected through slow
growth in occupancy, as the number of
death among seniors have been high
during the last years. This affect
negatively as NHC has added new
openings the last years and unites have
not yet matured.
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. In
December 2022, Norlandia filed a lawsuit
in cooperation with other participants in
the market to challenge the level of
previous subsidies, and the regulation
which governs these subsidies to be
declared void. The lawsuit is based on a
claim of disparate treatment of public
and private preschools and aims at
strengthening the preschools in order to
treat children equally, independent of
ownership, going forward.
In September, the Norwegian municipal
election was held, and we regard the
results highly positive, both in terms of
certain local outcomes yielding a
favorable climate for private providers
and especially acknowledging the
majority of the population’s provable
positiveness towards freedom of choice
within welfare services. In an article
published in Q4 2023, the important
labor union
Kommunal in Sweden acknowledges the
crisis within Swedish welfare and
addressed the need for private and public
cooperation to ensure quality, discarding
the previously stated ambition of zero
profits within welfare. This is necessary
to establish sustainable and predictable
conditions for serious service providers
and most importantly ensuring an
attractive workplace with competitive
salary
levels for employees. Regardless of these
positive events in the two most
important markets for the Group, we
continue to actively take steps to limit
our exposure to unfavorable political-
and market shifts through diversification
across services, countries, and
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municipalities. In our view the political
risk is at a low point in terms of financial
impact for the Group. We see favorable
opportunities and expect high organic
growth in the years to come.
High inflation in all the countries where
we operate and increasing interest rates
impact the Group’s profitability.
Increased salaries, electricity prices and
general costs have a negative effect on
this year’s results, as the current price
level in most of our agreements does not
take the currently increased cost level
into account. We do, however, regard the
weakened profitability in some segments
as temporary, considering that most of
the cost increases experienced in 2022
and 2023 over time will be reflected in
future agreements through
renegotiations or index clauses. In
addition, we experience challenges
related to staff shortages, in line with the
overall market, and address this by new
recruiting and retention practices.
Within Preschools; 2023 has been
challenging due to the rapid inflation
which is yet not fully compensated in the
prices and shortage of staff. In 2022 NHC
completed the acquisition of a Swedish
preschool chain, Kunnskapsförskolan,
consisting of 9 large operational units
and 18 units under construction. With
larger units we experience a longer
period for the unit to mature. While this
growth will have negative impact on our
short-term financial performance, it
strengthens both the long-term growth
and diversification of our operations.
Our other international operations
continue to perform well, with solid
growth in revenues and profitability,
despite inflation and tight labor market.
The ramp-up phase in Poland is ongoing
and occupancy is showing steady growth.
We expect Poland to be a profitable
operation going forward. 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
consolidated as an associated company.
The Care segment continued to be
heavily affected by Covid-19 in 2023, and
occupancy levels in Sweden, by far our
biggest market, are still below pre -Covid
levels. In addition, the lack of personnel
and high inflation have an unfavorable
impact on financial performance. Over
time, we expect that most of these cost
increases will be reflected in future
agreements through index clauses and
our intensified discussions with
municipalities regarding renegotiations of
prices.
The long-term fundamentals for Care
remain strong, although the short-term
outlook is challenging. An official report
from the Government on personnel
within care clearly states a dramatically
increase in number of elderly people,
with no increase in personnel. The future
cere services need to adopt these trends
and need innovations.
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.
Our operation in Norway is limited due to
the low number of tender contracts. With
the political change in several of the main
Municipalities, we do except an
increasing number of tenders for the
coming years. E.g. Oslo Municipality has
already announced several contracts to
be tendered during 2024. In Oslo the
tender for Home care services was won,
and we expect positive financial
development with the new contract.
In Finland, our operations have steady
growth with several new openings during
2023. We will have some start-up cost for
the new openings, but remain confident
that these unites will contribute
positively, once matured.
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. Sweden is highly influenced by
the rapid inflation and the lack of
personnel. Mitigating these effects is the
top priority for the division in the short
term. As we strongly believe in the long-
term fundamentals, we currently retain
some strategical positions even with
some short-term losses.
Integration Services has been challenging
since 2016 and up util 2021. We have
retained our position as we believe there
is a high strategical value in the position
Hero has created over decades. With the
outbreak of the war in Ukraine, this
strategical position has had a crucial role
in Norway´s ability to provide safety to
refugees.
Accommodation Services in Norway
opened more than 40 acute refugee
centers with capacity to house over
10,000 refugees. A considerable share of
these centers opened less than a week
after UDI (The Norwegian Directorate of
Immigration) first signaled the need for
emergency preparedness. Through a
collective effort from the whole NHC
organization, Hero demonstrated an
impressive ability to rapidly provide much
needed support in a highly emergent
situation, and we saw the full effect from
this major upscaling from Q2 22 and
onwards. Although the majority of the
acute reception centers opened in 2022
have been closed and replaced by long-
term ordinary reception centers, we
expect continued high activity in the
short term. Hero currently operates
several ordinary reception centers in
Norway and is the only company with
frame-agreements in all regions. Further,
there are multiple ongoing and planned
tenders by UDI to prepare for a
continued high number of refugees
expected to arrive in Norway in 2024,
both from Ukraine and other countries.
UDI estimates a total number of 35,000
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NORLANDIA HEALTH & CARE GROUP AS
refugees in 2024, which is in line with the
2023 figures.
Germany have experienced a significant
inflow of refugees during 2022 and 2023,
and not only related to the war in
Ukraine. We are operating a growing
number of reception centers and have a
meaningful profitability. 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
growing and hit record high levels in
numbers of assignments and solid
profitability.
Through proactivity in all our markets
and backed by the current performances
and outlook, Hero is positioned to deliver
solid revenues and healthy profitability
also when the Ukrainian crisis ends. As
everyone else, Hero intensely wishes for
the Russian aggression and brutalities in
Ukraine to end. For as long as it takes,
Hero will remain a mobilized tool for
immigration authorities to host asylum
seekers and migrants in a respectful and
dignified way.
In Norway, Aberia and Aurora omsorg
continue the strong development, both in
terms of revenue and profitability. The
majority of the growth has been achieved
organically through tender wins within
our core operations. Further, the
segment has been through a major
restructuring to stream-line operations
and focus its portfolio, implying that
lossmaking
operations have been terminated or
divested. The core operations are strong
on quality and reputation, profitable and
growing, and the segment is clearly
moving in the right direction and should
be generating healthy profitability going
forward.
Following the acquisition of Frösunda in
Sweden, our Individual & Family segment
significantly increasing the segment’s
turnover and providing more stability in
terms of profitability and diversification.
We regard the consolidation as a perfect
fit combining highly complementary
competencies across the organizations in
Norway and Sweden, with unrealized
synergy potential, and have great
expectations for the segment going
forward.
2023 was another solid year for the Real
Estate segment. During 2023 we have
continued to develop our portfolio of
properties and successfully secured
financing for further growth and
successfully closed transactions to secure
further growth. Besides cash flow and
profitability, most importantly, we expect
the segment to support NHC’s operating
companies through access to good
properties and solid long-term
operations.
With a growing need for services within
welfare, we observe a strong demand for
social infrastructure that we provide
within our Real Estate division. The
number of elderly people is increasing,
and the current capacity is significantly
lower than the future requirements.
Existing infrastructure especially within
Care and Preschools in the mature
markets is aging and needs to be
replaced by new modern
buildings suited to provide high quality
welfare services. With the future lack of
personnel, new innovations are needed,
to provide better and more efficient
infrastructure and social meeting points.
NHC Property has a well-diversified
pipeline with both long- and short-term
projects, including existing concepts and
innovative property projects. The overall
market for commercial real estate has
been heavily challenged throughout 2023
with significant yield increases across real
estate segments. Increasing interest rates
and unstable economic conditions
globally have dried up both the
transaction and development markets in
general. Although we have seen a slight
softening in yields in our sales processes,
we note that we outperform the overall
markets significantly in terms of yield
increase. NHC is regarded as a solid lease
counterpart with a healthy portfolio and
good diversification. Furthermore, we
still experience high demand for our
properties and healthy returns on
investments. We believe this is a result of
our companies being perceived as solid
long-term tenants, strong company
history, rational investment strategy and
long-term collaborations.
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 Group's business, results of
operations and financial conditions
depend principally upon conditions
prevailing for childcare, individual and
family (i.e. private foster homes, assisted
living, user controlled personal assistance
and rehabilitation) and elderly care
services in the Nordic region. The
individual and family segment is highly
dependent on single orders made by the
municipalities, and to some extent the
North-European region, in particular,
public policies and the political climate.
Furthermore, the demand for the
Group's services is dependent on inter
alia the birth rates and the longevity in
the regions where the Group operates.
Integration services will in addition to
political decisions be affected by
geopolitical situations which may lead to
reduced number of immigrants and
asylum seekers. Demand for private care
services may decrease depending on a
number of demographic and economic
factors, including (but not limited to)
birth rates, immigration, need for elderly
care etc.
Up until the Ukrainian war, the intake of
immigrants and asylum seekers was very
limited in all countries in which the
Group operates. If these countries
implement politics which directly or
indirectly limits the intake of immigrants
and asylum seekers even further, this
ANNUAL REPORT 2023
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could have a material adverse effect on
the Group. However, it should be noted
that the current geopolitical situation
with the war in Ukraine has a material
impact on the demand for the Group’s
facilities and the Group’s profits.
Currently there is a high demand for the
Group’s services, especially within the
Integration Services segment, leading to
a profitable business. It can be expected
that the demand for the Group’s facilities
and the profits will normalize when the
war in Ukraine ceases. A different
demographic development than
previously seen, can have a material
adverse effect on the future market
which may negatively affect the Group's
profitability and financial situation.
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 more than 40%
of revenues are generated in SEK.
However, the Group has a corresponding
share of costs in SEK and about 50% 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.
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 ~19,000 in 2023. 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.
In 2023, there is still a high level of leave
of absence, as reflected in the overall
market.
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=9): 30% women;
country managers (n=15): 58% women;
extended management group (n=56):
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NORLANDIA HEALTH & CARE GROUP AS
46% women. In sum, we are doing quite
well and will keep up our attention on
this important matter.
NORWEGIAN TRANSPARENCY ACT
In July 2022, the Norwegian Transparency
Act (Nw.
Åpenhetsloven
) came into force.
The Act requires enterprises to conduct
due diligence assessments, i.e. they must
look at both their own business, their
supply chain and their business partners
to find out where the major risks are. The
assessment must be carried out in
accordance with the OECD Guidelines for
Multinational Enterprises and must
publish an account of these due diligence
assessments at an annual basis.
AS the NHC Group is a provider of health
and care services, the group is exposed to
a low level of human rights risks and
decent working conditions in its own
workforce. Risk is many related to third
party contractors through
products/services it purchases.
The formal Transparency Act statement,
with results from the risk assessments
and gap analysis, were made available on
www.nhcgroup.org
. The statement for
2023 will be published on
NHC’s website
before 30 June 2024 and can then be
downloaded from
www.nhcgroup.org
.
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 2023 our divisions – Preschools,
Care and Hero Tolk (a part of Hero group)
– are partly or fully certified on ISO
14001:2015. Preschools, Care and Hero
Group are also ISO 9001:2015 certified.
See also our ESG-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.
The Group's ESG initiatives signify our
unwavering commitment to
sustainability. Transitioning from CSR to
ESG reporting, we've established a
dedicated task force and conducted
comprehensive materiality analysis. Our
renewed vision as a welfare innovator
and reference point for society guides
our actions. We prioritize stakeholder
expectations, evidenced by our green
financing model and ISO-14001
certification. Our commitments focus on
reducing value chain emissions,
enhancing diversity and inclusion,
ensuring workforce protection, designing
sustainable solutions, and fostering
economic value creation. We invite
stakeholders
engage with us as we
continue to strive for excellence in
sustainability.
ALLOCATION OF INCOME IN THE
PARENT COMPANY
Norlandia Health & Care Group AS’ result
for 2023 ended at NOK 47.3 million. The
Board of Directors has proposed the net
profit of Norlandia Health & Care Group
AS to be allocated as follows: NOK 47.3
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.
Oslo, 29 April 2024
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 2023
25
Statement from the Board of Directors
Norlandia Health & Care Group AS’
consolidated financial statements have
been prepared in accordance with IFRS®
Accounting Standards as issued by the
International Accounting Standards
Board (IASB®) and endorsed by the
European Union (EU),
and the additional
Norwegian disclosure requirements
following the Norwegian Accounting Act
as of 31.12.2023. 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 31.12.2023.
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
31.12.2023.
To the best of our knowledge:
●
The consolidated and separate annual
financial statements for 2023 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 31.12.2023, 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, 29 April 2024
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
26
NORLANDIA HEALTH & CARE GROUP AS
Consolidated Statement of Comprehensive Income
Norlandia Health & Care Group - for the year ended 31 December 2023
(NOK 1 000)
Note
2023
2022
Operating revenues
4
Other income
4
Total operating revenues and other income
Cost of goods and services sold
(351 190 )
(353 244 )
Personnel expenses
5, 21
(7 639 998 )
(4 985 897 )
Depreciation, amortisation and impairment losses
8, 9, 12
(932 055 )
(634 712 )
Other operating expenses
24
(1 414 750 )
(1 515 888 )
Operating profit/(loss)
Finance income
6
Finance expense
6, 12
(486 349 )
(301 200 )
Net foreign exchange gains/(losses)
6
(6 974 )
Net financial items
(482 022 )
(273 104 )
Share of net income from associated companies
11, 12
Profit/(loss) before taxes
(47 043 )
Income taxes
7
(35 266 )
Net income
(34 543 )
Other comprehensive income
Net income
(34 543 )
Items that may be subsequently reclassified to profit or loss
Currency translation differences
(5 163 )
Items that will not be subsequently reclassified to profit or loss
Remeasurements of defined benefit pension plans
19
(10 042 )
Income taxes related to defined benefit pension plans
16
(3 016 )
Total other comprehensive income, net of taxes
(12 996 )
Total comprehensive income
Net income attributable to:
Equity holders of the parent company
(39 047 )
Non-controlling interests
Total comprehensive income attributable to:
Equity holders of the parent company
Non-controlling interests
(1 792 )
(1 447 )
ANNUAL REPORT 2023
27
Consolidated Statement of Financial Position
Norlandia Health & Care Group - for the year ended 31 December 2023
ASSETS
(NOK 1 000)
Note
2023
2022
Non-current assets
Property, plant and equipment
8
Right-of-use assets
12
Goodwill
9
Intangible assets
9
Deferred tax asset
16
Investment in associated companies
11
Other investments
3
Other non-current receivables
13, 21, 19
Total non-current assets
Current assets
Inventories
Trade receivables
13
Other current receivables
13
Cash and cash equivalents
22
Total current assets
Total assets
28
NORLANDIA HEALTH & CARE GROUP AS
Consolidated Statement of Financial Position
Norlandia Health & Care Group - for the year ended 31 December 2023
EQUITY AND LIABILITIES
(NOK 1 000)
Note
2023
2022
Equity
Share capital
14
Other equity
Total equity attributable to owners of the parent
Non-controlling interest
(1 160 )
Total equity
Liabilities
Pension liabilities
19
Borrowings
15, 23
Lease liabilities
12
Deferred tax liabilities
16
Other non-current liabilities
20, 21
Total non-current liabilities
Trade payables
17
Borrowings
15, 23
Lease liabilities
12
Taxes payable
16
Other current liabilities
17
Total current liabilities
Total liabilities
Total equity and liabilities
Oslo, 29 April 2024
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
ANNUAL REPORT 2023
29
Consolidated Statement of Changes in Equity
Norlandia Health & Care Group - for the year ended 31 December 2023
Attributable to equity holders of the parent
(NOK 1 000)
Share
capital
Share
premium
Other paid
in equity
Retained
earnings
Translation
differences
Total equity
to holders of
the parent
Non-
controlling
interests
Total equity
Equity as of 1 January 2022
(35 170 )
Net income
Other comprehensive income
(7 832 )
(3 576 )
(11 408 )
(1 587 )
(12 996 )
Total comprehensive income
(3 576 )
(1 447 )
Contributions by and distributions
to owners
Group contribution to owner
(20 000 )
(20 000 )
(20 000 )
Distribution to non-controlling
interests
(214 )
(214 )
Transactions with non-controlling
interests
(9 106 )
(7 130 )
Equity 31 December 2022
Equity 1 January 2023
Net income
(39 047 )
(39 047 )
(34 543 )
Other comprehensive Income
(6 296 )
Total comprehensive Income
(31 421 )
(1 792 )
Contributions by and distributions
to owners
Capital increase
Group contribution from owner
Effect of business combination
under common control
(74 214 )
(74 214 )
(74 214 )
Distribution to non-controlling
interests
(144 )
(144 )
Transactions with non-controlling
interests
Equity 31 December 2023
(1 160 )
30
NORLANDIA HEALTH & CARE GROUP AS
Consolidated Statement of Cash Flow
Norlandia Health & Care Group - for the year ended 31 December 2023
(NOK 1 000)
Note
2023
2022
Cash flows from operating activities
Profit/(loss) before taxes
(47 043 )
Adjustments for:
Depreciation and amortisation
8, 9, 12
Share of net income from associated companies
11
(806 )
(1 266 )
Gain/(loss) on sale of real estate and business
(74 709 )
(32 276 )
Net financial items
Changes in working capital
Increase/(decrease) in trade and other receivables
(212 170 )
(201 993 )
Increase/(decrease) in inventories
(2 190 )
Increase/(decrease) in trade and other payables
Increase((decrease) in provisions and employee benefits
Cash generated from operations
Income taxes paid
(33 169 )
(27 342 )
Net cash flows from operating activities
Investing activities
Proceeds from sale of assets
Purchases of property, plant and equipment
8
(244 341 )
(196 509 )
Net investment in shares in associates and other investments
11, 20
(8 011 )
(17 171 )
Net investment in shares in subsidiaries
20
(69 166 )
Net changes in financial receivables
(102 )
Interest received
Net cash used in investing activities
(98 449 )
(98 781 )
Financing activities
Repayments of non-current borrowings to finance institutions
15, 23, 18
(144 855 )
(69 281 )
Repayments of current borrowings to finance institutions
15, 18
(27 180 )
Proceeds of current borrowings to finance institutions
15, 18
Proceeds from non-current borrowings from finance institutions
15, 18
Repayment of current bond
15, 18
(657 043 )
Proceeds from non-current bonds
15, 18
Interest paid
6
(462 408 )
(285 260 )
Repayment of lease liabilities
(724 033 )
(491 307 )
Payment to non-controlling interests
(7 130 )
Distribution to non-controlling interests
(213 )
Group contribution to owners
(20 000 )
Net cash (used in)/from financing activities
(1 154 665 )
(882 852 )
Net increase in cash and cash equivalents
(25 384 )
Cash and cash equivalents at beginning of year
22
Exchange (losses)/gains on cash and cash equivalents
(4 082 )
Cash and cash equivalents at end of year
ANNUAL REPORT 2023
31
Notes to the consolidated statements
1. CORPORATE INFORMATION AND ACCOUNTING POLICIES
1.1 Corporate information
The consolidated financial statements of Norlandia Health & Care Group (the Group) consist of Norlandia Health & Care Group
its subsidiaries. Norlandia Health & Care Group AS is a multinational company headquartered in Oslo, Norway. The Group operates in
fields such as health care, preschools, integration services, individual and family services and real estate . The Group aspires to be the
welfare innovator and driver of positive change, and as such improve people’s lives through pioneering of new ideas and methods.
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 Group is owned by Hospitality Invest AS, Stork Industries AS and Cowry EV AS with Hospitality Invest AS being the
majority owner as well as the ultimate parent company registered and domiciled in Oslo, Norway.
The consolidated financial statements of Norlandia Health & Care Group AS were authorised for issue in accordance with the Board of
Directors’ resolution on 29 April 2024 and can be downloaded from Norlandia Health & Care Groups’ website
www.nhcgroup.org
.
1.2 Significant accounting policies
Basis of preparation
The consolidated financial statements of Norlandia Health & Care Group AS and its subsidiaries have been prepared in accordance with
IFRS® Accounting Standards as issued by the International Accounting Standards Board (IASB®) and endorsed by the European Union
(EU),
and the additional Norwegian disclosure requirements following the Norwegian Accounting Act.
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.
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.
The Group has prepared the financial statements on the basis that it will continue to operate as a going concern.
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 2023.
Applied principles for the Group
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns. The consolidated 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.
Business Combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement
of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at
the acquisition date. Any goodwill that arises is tested annually for impairment.
32
NORLANDIA HEALTH & CARE GROUP AS
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.
Business combinations under common control
There is currently no specific guidance on accounting for common control transactions that involve the transfer of control over one
or more businesses under IFRS Standards, as IFRS 3 Business Combinations does not address the appropriate accounting for business
combinations under common control. In the absence of specific guidance, the Group has developed and selected an appropriate
accounting policy using the hierarchy described in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors as used in
earlier years as well when this was relevant.
Considering relevant facts and circumstances for common control transactions, the principles used and assessed by the management
is broadly described as predecessor accounting. The principles of predecessor accounting are that assets and liabilities of the
acquired entity are stated at predecessor carrying values, and fair value measurement is not required. No new goodwill arises in
predecessor accounting. Any difference between the consideration given and the aggregate carrying value of the assets and liabilities
of the acquired entity at the date of the transaction is included in equity in retained earnings.
A prospective presentation method is applied, where the acquired entity’s results and balance sheet are incorporated prospectively
from the date on which the business combination between entities under common control occurred.
Non-controlling interests
Non-controlling interests are measured initially at their proportionate share of the acquiree’s identifiable nets assets at the date of
acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Investment in associates
NHC Group has investments in associates, which are entities in which the Group has significant influence but no control or joint control.
This is generally the case where the Group holds between 20% and 50% of the voting rights. Investment in associated are accounted
for using the equity method of accounting, after initially being recognised at cost.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short term highly liquid investments with
original maturities of three months or less. The Group’s cash pool system is offset, with cash and overdrafts within the same cash pool
system presented net.
Revenue recognition
Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount
which reflects the consideration which the Group expects to be entitled to in exchange for those goods or services.
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. As described below, the Group has multiple revenue streams in accordance with the segment it operates in, and 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 transfer 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
ANNUAL REPORT 2023
33
balances of significance at year-end. For the other countries payments is received every month. Parental payments take place every
month.
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 hotels 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 received 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 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 performanc e 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 is received, 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 centers 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 centers, 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
are variable considerations 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 centers, invoicing is mainly for the current month. For interpreting service, the billing takes place within
30 days after delivery. Generally, 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.
34
NORLANDIA HEALTH & CARE GROUP AS
Individual & Family
This is mainly the operation of childcare 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 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 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 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.
Dividend
Dividend income is recognized in the income statement on the date that the Group’s right to receive payment is established.
Intangible assets and goodwill
A significant part of the intangible assets in the Group relates to goodwill. Intangible assets also include customer contracts and
trademarks in addition to other intangible assets.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets in the
acquired subsidiary at the date of acquisition. Goodwill is classified as an intangible asset. 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 and trademarks are not amortized. At the acquisition date, goodwill and trademarks are allocated to each group of cash
generating units expected to benefit from the synergies. Impairment is determined by assessing the recoverable amounts of the group
of cash generating unit’s which the goodwill and trademarks relates. Please refer to note 10 for further information about impairment.
Intangible assets with definitive lifetime acquired individually are measured initially at cost and recognised as an intangible asset when
the Group has control over the asset, future economic benefits are expected to flow to the Group and the cost can be measured
reliably. The cost to be capitalised as part of the assets includes direct and incremental costs. The cost of intangible assets required in
a business combination is the fair value at the date of acquisition. Following that initial recognition, intangible assets are carried at cost
less accumulated amortisation and any impairment losses. The straight-line amortisation method is used for the intangible assets with
definitive lifetime as this best reflects the consumption of the assets. The useful lives and amortisation methods are reviewed at least
annually.
Segment reporting
The Group has five strategic divisions, which are its reportable segments: Preschools, Care, Integration Services, Individual & Family
and Real Estate. Activities that do not fall naturally within these segments are bundled in Other/Eliminations.
The segment reporting is consistent with the financial information which is regularly reviewed by the Group management and the
Board of Directors. The ultimate decision maker is the Board of Directors, including the CEO. The Board and the CEO is responsible for
allocating resources to each segment as well as monitor the performance within each segment.
ANNUAL REPORT 2023
35
Foreign currency
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”).
The consolidated financial statements are presented in NOK, which is also the functional currency of the parent company.
All values are rounded to the nearest thousands, except where otherwise indicated. Applied currency rate for translation into
Norwegian Kroner in the financial statements are retrieved from Norges Bank. The income statement is translated by average currency
rates for the year based on weighted daily rates, while the statement of financial position is translated at the exchange rate at the
reporting date.
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency rate at the date of the transaction. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rate of monetary
assets and liabilities denominated in foreign currencies are recognised as financial items in the income statement.
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 include 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.
Other than financial liabilities in a qualifying hedging relationship (see below), the Group’s accounting policy for each category is as
follows:
36
NORLANDIA HEALTH & CARE GROUP AS
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.
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.
Current and deferred income taxes
Income tax expense comprises income taxes payable and deferred income tax. Tax is recognised in the income statement, except to
the extent that it relates to items recognised in other comprehensive income or directly in equity. In such case, the tax is also recognised
in other comprehensive income or directly in equity respectively. Current tax is calculated in accordance with the tax laws and
regulations enacted or substantively enacted at the balance sheet date in the countries in which the Group’s subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax laws are subject to interpretation. Based on management’s assessment, a provision is made for expected tax
payments when necessary.
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 and group contributions
Proposed dividend and group contributions are not recognised as a liability until the Group has an irrevocable obligation to pay the
dividend, which is normally after approval by the annual general assembly
.
ANNUAL REPORT 2023
37
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 corresponding liability
is recognised within provisions.
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 20 - 30 years
Furniture, fixtures and equipment 3 - 20 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, potential earn-outs, 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.
Leases
The Group as a lessee
The Group leases most of its preschools, offices, nursing homes, houses, and hotels, which represent future obligations for the Group.
Alle material lease agreements are recognised in the statement of financial position as an interest -bearing debt. This also requires
recognition of the corresponding asset as a right-of-use asset.
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease of the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
At the lease commencement date, the Group recognises a lease liability and corresponding right-of-use asset for all lease agreements
in which it is the lessee, except for the following exemptions applied:
●
Short-term leases (defined as 12 months or less)
●
Low value assets
For these leases, the Group recognises the lease payments as other operating expenses in the income statement when they incur.
The Group implemented IFRS 16 using the modified retrospective approach without restating comparative information. Hence, at initial
application 1 January 2019, the Group recognised a significant lease liability and corresponding right-of-use asset, while the equity
remained unchanged.
Lease liabilities
The lease liability is recognised at the commencement date of the lease. The Group measures the lease liability at the present value of
the lease payments for the right to use the underlying asset during the lease term that are not paid at the commencement date. The
lease term represents the non-cancellable period of the lease, together with periods covered by an option either to extend or to
terminate the lease when the Group is reasonably certain to exercise this option. Many of the Group’s lease contracts includes an
option to prolong the lease. The Group has not included any such prolonging due to the uncertainty related to the long remaining lease.
The Group presents its lease liabilities as separate line items in the statement of financial position.
Right-of-use assets
The Group measures the right-of use asset at cost, less any accumulated depreciation and impairment losses, adjusted for any
remeasurement of lease liabilities.
38
NORLANDIA HEALTH & CARE GROUP AS
Sale and leaseback transactions
The Group regularly transfer properties to third parties and lease it back. The Group has for all such transactions so far determined
that the transfers shall be accounted for as sales according to the requirements in IFRS 15. The Group consequently measures the right-
of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use
retained by the Group. Accordingly, the Group recognises only the amount of any gain or loss that relates to the rights transferred to
the buyer-lessor.
See note 4 for further information.
Transactions with related parties
Transactions with related parties are carried out with terms and conditions that are no more favourable than those available, or which
might reasonably be expected to be available, in similar transactions between independent parties. Related parties are identified to be
the key management personnel for the Group, shareholders, and associates
.
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 financing activities, respectively.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes certain estimates and assumptions regarding the future. Estimates and assumptions 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.
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.
Key sources of estimation uncertainty – critical accounting estimates
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimates are revised. The estimates considered to be most significant for the Group are set out below:
(a)
Goodwill and trademarks
Carrying values of goodwill and trademarks with indefinite useful lives are reviewed for impairment annually or more frequently if
there are indicators of a decrease in value below carrying amounts. 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.
Regarding the Care segment where the estimate shows most uncertainty, we have visibility on improved profitability from 2024 and
onwards through multiple factors :
i.
Occupancy within our own management units in Sweden and Finland, that combined represents a material part of Care’s
turnover, steadily increased throughout 2023 and we expect the trend to continue based on growing demand backed by
demographics. At normalized occupancy levels these units should generate higher profits than ordinary tender contracts and
in 2023 they were loss making, hence representing a great upside potential.
ii.
We have discontinued certain loss-making operations and have exit options on other areas that are currently loss making but
for now kept on the premise of need for immediate improvement.
iii.
The historically high-cost inflation recent years will to a greater extent be accounted for in the 2024 and future price levels,
resulting in improved profitability when inflation rates go down.
iv.
And along with these effects we have through an internally established program initiated multiple measures to improve our
operational efficiency and reducing sick leave.
ANNUAL REPORT 2023
39
(b)
Useful lives of property, plant and equipment and intangible assets
Depreciation expenses are based on management’s estimates of depreciation method, useful life and residual value. Estimates may
change due to competition, changes in market conditions, geopolitical developments, climate change and other factors. Property, plant
and equipment are depreciated to residual value over the asset’s expected useful life on a straight-line basis. Useful life period for fixed
assets is between 3 – 30 years. The Group amortizes intangible assets with a limited useful life using the straight-line method over the
periods 3 – 20 years. More information is included in note 8 and note 9.
(c)
Right-of-use-assets (ROU) and lease liability
Recognition of both ROU and lease liability require the choice of a discount rate in order to calculate the present value of the cash
flows. More information on how the interest rate is estimated is included in note 12.
(d)
Deferred tax assets
Deferred tax assets related to tax losses carried forward are recognised to the extent that expected future income for the respective
company will be sufficient over the medium term to utilize those losses. This requires an estimate to be made of the expected future
income of the company concerned. Estimates of future income tax may change over time, and this could result in changes to the
carrying value of deferred tax assets. Further details of the recognised deferred tax assets are given in note 16.
Critical judgements in applying the Group’s accounting policies
(a)
Right-of-use-assets (ROU) and lease liability: lease term
Determining the lease term can involve significant judgement for lease contracts with extension or termination options, as an
assessment of whether or not it is reasonably certain that the lease period will be extended is required. The broader economics of the
contract and not only contractual termination payments are basis for such assessment. The Group leases most of its offices, hotels,
preschools, nursing homes and houses. Lease agreements typically run for 10+ years within preschools and Care and less for the other
segments. Preschools represent more than 56% of the total right-of-use assets in the Group, while Care represents around 29%.
Contracts normally include an option to prolong the lease. The Group does not include extension options in the length of the lease
term due to the uncertainty related to the long remaining lease. Further details are given in note 12.
40
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 describes
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 throughout 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
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
Non-financial assets
(NOK 1 000)
2023
2022
2023
2022
2023
2022
Cash and cash equivalents
-
-
345 984
271 721
-
-
Trade receivables
-
-
746 772
417 364
-
-
Other current receivables (note 13)
-
-
303 865
229 127
226 568
153 544
Other non-current receivables
-
-
17 687
40 482
-
-
Other investments
21 346
25 403
-
-
-
-
Total financial assets
21 346
25 403
1 414 307
958 694
226 568
153 544
Financial liabilities
Financial liabilities at fair value
through profit or loss
Financial liabilities
at amortised cost
Non-financial liabilities
(NOK 1 000)
2023
2022
2023
2022
2023
2022
Trade and other current payables
-
-
1 755 033
1 254 160
-
-
Borrowings
-
-
2 999 347
2 185 931
-
-
Lease liabilities
-
-
7 061 914
5 527 482
-
-
Total financial liabilities
-
-
11 816 294
8 967 573
-
-
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 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.
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:
ANNUAL REPORT 2023
41
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
Market risk can be defined as the risk that the Group’s income and expenses, future cash flows or fair value of financial instruments
will fluctuate because of changes in market prices of financial instruments.
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 2023 and 2022, 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.
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.
(NOK 1 000)
Interest
expense
Effect on
P&L
Effect on Equity
Effect of a 0.5% increase
14 997
11 697
11 697
Effect of a 0.5% decrease
(14 997)
(11 697)
(11 697)
Foreign exchange risk
The Group has operations in Norway, Sweden, Finland, Netherland and Poland, and is therefore exposed to fluctuations of foreign
currency rates.
With regards to translational exposure, NHC Group faces risk arising from the translation of subsidiaries whose functional currency
differs from the presentation currency of the Group. Translational exposure does not give rise to an immediate cash effect, however
as it may impact the Group’s financials, it is closely monitored. The Group seeks to mitigate balance sheet exposure by funding assets
with borrowing denominated in the same currency. The exposure related to equity of foreign subsidiaries is generally not hedged.
The Group is predominantly exposed to the SEK/NOK exchange rate as around 43% of revenues are generated in SEK. However, the
Group has a corresponding share of costs in SEK and about 49% 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 represents a natural hedge to the growing investments. The Group is monitoring the
exposure and currency protections measures may be allowed to prevent situations of financial distress, in those cases where the
exposure cannot be effectively reduced by use of operational hedges.
The effect from the bond issued if the NOK/SEK currency change is presented below.
42
NORLANDIA HEALTH & CARE GROUP AS
(NOK 1 000)
Currency effect
Effect on
P&L
Effect on Equity
Effect of SEK weakens of 1.0% toward
NOK
11 020
8 596
8 596
Effect of SEK strengthen of 1.0%
toward NOK
(11 020)
(8 596)
(8 596)
The Group is further exposed to the risk that medium/long-term trend shifts in exchange rates might affect its competitive position.
This strategic currency exposure is regularly monitored, but as the exposure is currently relatively limited it is not actively hedged.
Other market price risk
There is 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.
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:
(NOK 1 000)
Between 1 and
12 months
Between 1 and
2 years
Between 2 and
3 years
Between 3 and
5 years
Over 5 years
Total
At 31 December 2023
Trade and other current payables
1 755 033
-
-
-
-
1 755 033
Borrowings
292 997
2 367 877
31 228
62 559
402 756
3 157 418
Lease liabilities
971 264
801 545
801 545
1 603 090
4 200 262
8 377 707
Total
3 019 294
3 169 422
832 773
1 665 649
4 603 019
13 290 157
(NOK 1 000)
Between 1 and
12 months
Between 1 and
2 years
Between 2 and
3 years
Between 3 and
5 years
Over 5 years
Total
At 31 December 2022
Trade and other current payables
1 254 160
-
-
-
-
1 254 160
Borrowings
170 584
154 545
1 857 040
218 433
287 008
2 687 610
Lease liabilities
687 528
589 177
589 177
1 178 355
3 526 325
6 570 563
Total
2 112 272
743 723
2 446 217
1 396 788
3 813 333
10 512 333
ANNUAL REPORT 2023
43
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 borrowings (excluding lease liabilities) 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 ratio of approximately 10% and maintain net interest-
bearing debt below 4x adjusted EBITDA. As per end of 2023 and 2022 the equity ratio was above the target. The net interest -bearing
debt ratio was above target due to acquisitions during 2023 and increased property portfolio. The objective of this strategy is to secure
access to financing at reasonable cost by maintaining a high credit rating. As per end of 2022 the ratio was below target. The ratios on
31 December 2023 and on 31 December 2022 were as follows:
(NOK 1 000)
2023
2022
Borrowings, including real estate debt
2 999 347
2 185 931
Less: cash and cash equivalents
345 984
271 721
Net interest-bearing debt excl lease liabilities
2 653 363
1 914 210
Total equity
943 519
601 172
EBITDA (adjusted) *
457 463
500 628
Total capital (excluding IFRS 16 leasing)
6 071 524
4 239 013
Equity ratio (%)
15,5 %
14,2 %
Net interest bearing debt/EBITDA
5,8
3,8
EBITDA (adjusted) is defined as EBITDA adjusted for IFRS 16 effects. A reconciliation is shown in note 4.
Total capital is defined as total equity and liabilities, adjusted for leasing liabilities. A reconciliation is presented below:
(NOK 1 000)
2023
2022
Total equity and liabilities
13 133 439
9 766 495
Non-current leasing liabilities
6 297 807
4 996 237
Current lease liabilities
764 107
531 245
Total capital (excluding IFRS 16 effects)
6 071 524
4 239 013
44
NORLANDIA HEALTH & CARE GROUP AS
4. SEGMENT INFORMATION, REVENUE AND OTHER OPERATING INCOME
The Group has five strategic divisions, which are its reportable and operating segments. 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. The Group has long history within the Nordic markets with Norway and Sweden 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 recent years entered the home care market. After the acquisition of
Brado Group in January 2023, the Swedish operations is now 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).
The segments has become a significant player in the Nordics.
●
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 segments result is defined as operating result adjusted for IFRS 16. The chief operating decision maker is the Board of Directors,
including the CEO. The Board and the CEO is responsible for allocating resources to each segment as well as monitor the performance
within each segment. Other activities/eliminations consist of activities in the holding companies, group eliminations and IFRS 16 effects,
presented in separate table below. A measure of total assets and liabilities for each reportable segment is not regularly provided to
the chief operating decision maker and as a consequence only the statement of income are included in the figures below.
2023
Preschools
Care
Integration
services
Individual &
Family
Real Estate
Other /
Eliminations
Total
Operating revenues
4 440 035
2 122 042
1 164 690
3 066 781
23 975
(121 098)
10 696 424
Other income
647
13
10
1 007
98 813
(24 748)
75 742
Total
4 440 681
2 122 055
1 164 700
3 067 788
122 788
(145 846)
10 772 166
Cost of goods and services sold
(132 952)
(26 418)
(122 238)
(58 368)
(212)
(11 002)
(351 190)
Personnel expenses
(3 007 377)
(1 689 662)
(376 779)
(2 430 548)
(12 882)
(122 749)
(7 639 998)
Depreciation and amortisation
(74 943)
(22 214)
(10 462)
(18 249)
(6 732)
(799 455)
(932 055)
Other operating expenses
(1 095 789)
(489 262)
(483 138)
(455 766)
(46 195)
1 155 400
(1 414 750)
Operating profit/(loss)
129 620
(105 502)
172 083
104 856
56 767
76 348
434 173
-
Net financial items
(16 818)
34 973
(9 354)
(92 083)
(13 804)
(384 937)
(482 022)
Share of net income from associated
companies
806
-
-
-
-
-
806
Profit/(loss) before taxes
113 608
(70 529)
162 729
12 773
42 963
(308 589)
(47 043)
ANNUAL REPORT 2023
45
Specification of Other / Eliminations
2023
Other
IFRS 16
Eliminations
Total
Operating revenues
188 024
-
(309 122)
(121 098)
Other income
7
(24 755)
-
(24 748)
Total
188 031
(24 755)
(309 122)
(145 846)
Cost of goods and services sold
(10 950)
-
(52)
(11 002)
Personnel expenses
(126 443)
-
3 693
(122 749)
Depreciation and amortisation
3 854
(798 095)
(5 215)
(799 455)
Other operating expenses
(83 427)
933 520
305 307
1 155 400
Operating profit/(loss)
(28 934)
110 671
(5 388)
76 348
Net financial items
70 048
(209 487)
(245 498)
(384 937)
Share of net income from associated
companies
-
-
-
-
Profit/(loss) before taxes
41 114
(98 816)
(250 886)
(308 589)
2022
Preschools
Care
Integration
services
Individual &
Family
Real Estate
Other /
Eliminations
Total
Operating revenues
3 664 656
1 763 918
1 471 353
1 031 491
58 685
(55 997)
7 934 106
Other income
(186)
-
378
73
62 591
(30 580)
32 276
Total
3 664 471
1 763 918
1 471 731
1 031 564
121 275
(86 577)
7 966 382
Direct cost of goods and services
(111 805)
(25 797)
(172 410)
(41 784)
(152)
(1 296)
(353 244)
Personell expenses
(2 412 659)
(1 400 782)
(248 963)
(816 969)
(7 123)
(99 401)
(4 985 897)
Depreciation and amortisation
(74 598)
(11 352)
(4 752)
(13 158)
(3 078)
(527 773)
(634 712)
Other operating expenses
(884 010)
(366 050)
(864 509)
(142 767)
(41 452)
782 901
(1 515 888)
Operating profit/(loss)
181 398
(40 063)
181 097
16 886
69 469
67 853
476 641
Net financial items
(58 109)
26 011
(8 264)
(1 949)
(6 996)
(223 797)
(273 104)
Share of net income from associated
companies
1 266
-
-
-
-
-
1 266
Profit/(loss) before taxes
124 555
(14 052)
172 834
14 937
62 474
(155 943)
204 803
Specification of Other / Eliminations
2022
Other
IFRS 16
Eliminations
Total
Operating revenues
158 494
-
(214 491)
(55 997)
Other income
-
(30 604)
24
(30 580)
Total
158 494
(30 604)
(214 467)
(86 577)
Direct cost of goods and services
(1 483)
-
186
(1 296)
Personell expenses
(102 351)
-
2 950
(99 401)
Depreciation and amortisation
3 786
(526 505)
(5 054)
(527 773)
Other operating expenses
(69 698)
641 329
211 270
782 901
Operating profit/(loss)
(11 252)
84 220
(5 115)
67 853
Net financial items
167 890
(152 492)
(239 194)
(223 797)
Share of net income from associated
companies
-
-
-
-
Profit/(loss) before taxes
156 638
(68 272)
(244 309)
(155 943)
46
NORLANDIA HEALTH & CARE GROUP AS
Operating revenues by geography
2023
2022
Norway
4 682 762
4 577 704
Sweden
4 567 198
2 244 460
International
1 543 588
1 109 255
Real Estate/Other/Elimination
(97 124)
2 688
Total revenues by geography
10 696 424
7 934 106
2023
Preschools
Care
Integration
services
Individual &
Family
Other /
Eliminations
Norway
48%
14%
89%
39%
0%
Sweden
24%
76%
1%
61%
0%
International
28%
9%
10%
0%
0%
Real Estate/Other/Elimination
0%
0%
0%
0%
100%
Total revenues by geography
100%
100%
100%
100%
100%
2022
Preschools
Care
Integration
services
Individual &
Family
Other /
Eliminations
Norway
50%
23%
97%
88%
0%
Sweden
23%
72%
1%
12%
0%
International
27%
5%
3%
0%
0%
Real Estate/Other/Elimination
0%
0%
0%
0%
100%
Total revenues by geography
100%
100%
100%
100%
100%
Other income
2023
2022
Gain on sale of assets
98 813
62 591
Deferred gain from sale leaseback and booked as reduced ROU
(24 755)
(30 604)
Gain on sale of business
-
-
Other
1 684
289
Total other income
75 742
32 276
Sale leaseback transactions
Gain on sale of assets in 2023 and 2022 relates to sale and leaseback transactions of property acquired or developed. The assets subject
to the transactions were buildings used in the Preschool reporting segment. In connection with the transactions a lease contract was
entered into. The lease term was 10 years, with an option for an extension of 10 more years.
IFRS 16 adjustments
The segments result is defined as operating result adjusted for IFRS 16. The table below specify the IFRS 16 adjustment per accounting
line and illustrates 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.
(NOK 1 000)
2023
IFRS 16
effects
2023
Adjusted
2022
IFRS 16
effects
2022
Adjusted
Operating revenues
10 696 424
-
10 696 424
7 934 106
-
7 934 106
Other income
75 742
24 755
100 497
32 276
30 604
62 880
Total
10 772 166
24 755
10 796 921
7 966 382
30 604
7 996 986
Direct cost of goods and services
(351 190)
-
(351 190)
(353 244)
(353 244)
Personell expenses
(7 639 998)
-
(7 639 998)
(4 985 897)
(4 985 897)
Depreciation and amortisation
(932 055)
798 095
(133 961)
(634 712)
526 505
(108 207)
Other operating expenses
(1 414 750)
(933 520)
(2 348 270)
(1 515 888)
(641 329)
(2 157 218)
Operating profit/(loss)
434 173
(110 671)
323 502
476 641
(84 220)
392 421
Net financial items
(482 022)
209 487
(272 535)
(273 104)
152 492
(120 611)
Share of net income from associated comp
806
-
806
1 266
-
1 266
Profit/(loss) before taxes
(47 043)
98 816
51 773
204 803
68 272
273 075
ANNUAL REPORT 2023
47
5. PERSONNEL EXPENSES
(NOK 1 000)
Note
2023
2022
Personnel expenses (including directors) comprise:
Wages and salaries
(5 944 027)
(3 926 875)
Defined contribution pension cost
(395 461)
(336 259)
Defined benefit pension income/(cost)
19
(7 156)
63 634
Other benefits
(96 102)
(70 632)
Social security contributions and similar taxes
(1 196 651)
(715 165)
Remuneration to Board of Directors
(600)
(600)
Total personnel expenses
(7 639 998)
(4 985 897)
Number of employees (FTE)
12 024
8 502
Name
2023
2022
Yngvar Tov Herbjørnssønn (CEO)
4 943
4 508
Total compensation
4 943
4 508
The group was established in December 2016 and no key management group has been identified for the years 2023 and 2022.
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
2023
2022
Audit
(16 145)
(9 904)
Tax services
(288)
(214)
Attestation services
(1 990)
(1 391)
Other services
(1 119)
(1 155)
Total
(19 543)
(12 664)
6. NET FINANCIAL ITEMS
(NOK 1 000)
2023
2022
Interest received on bank deposits and receivables
11 618
2 470
Other finance income
(317)
798
Total finance income
11 301
3 268
Interest expense on financial liabilities measured at amortised cost
(273 535)
(142 926)
Interest expense on lease liability
(209 487)
(152 492)
Other financial expenses
(3 327)
(5 781)
Total finance expense
(486 349)
(301 200)
Net foreign exchange gains/(losses)
(6 974)
24 828
Net financial items
(482 022)
(273 104)
48
NORLANDIA HEALTH & CARE GROUP AS
7. TAX EXPENSE
(NOK 1 000)
Note
2023
2022
Current tax expense
Current tax on profits for the year
30 221
32 790
Adjustment of prior year's income taxes
1 077
-
Total current tax
31 298
32 790
Deferred tax expense
Changes in temporary differences
16
(43 799)
2 476
Total deferred tax
(43 799)
2 476
Income tax
(12 500)
35 266
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:
2023
2022
Profit for the year
(34 543)
169 537
Income tax expense
(12 500)
35 266
Profit before income taxes
(47 043)
204 803
Expected tax charge based on the standard rate of Norwegian corporation tax at the
domestic rate of 22 %
(10 350)
45 057
Tax rates outside of Norway different from 22%
3 570
-
Permanent differences
(3 045)
(8 517)
Effect of unrecognised deferred tax assets
(2 676)
(1 273)
Total tax expense
(12 500)
35 266
ANNUAL REPORT 2023
49
8. PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
Work in
progress
Furniture,
fixtures and
equipment
(NOK 1 000)
Total
Historical cost
Historical cost at 1 January 2022
566 632
35 174
579 901
1 181 708
Acquisitions through business combinations
122 714
4 048
6 203
132 965
Additions
95 308
24 618
76 582
196 509
Disposals
(106 618)
(17 840)
(15 333)
(139 792)
Reclassification/transfer
-
-
(12)
(12)
Effect of movement in exchange rates
4 092
27
1 082
5 202
Balance at 31 December 2022
682 129
46 027
648 424
1 376 581
Accumulated depreciation and impairment losses
Acc. depreciation and impairment at 1 January 2022
(156 179)
-
(362 134)
(518 314)
Depreciation
(19 035)
-
(50 180)
(69 215)
Impairment loss / reversal of impairment loss
-
-
10
10
Disposals
(4 226)
-
10 855
6 628
Disposal - Intercompany +/-
-
-
460
460
Reclassification/transfer
-
-
128
128
Effect of movement in exchange rates
(3 383)
-
(908)
(4 291)
Balance at 31 December 2022
(182 824)
-
(401 769)
(584 593)
Closing balance at 1 January 2022
410 453
35 174
217 767
663 394
Closing balance at 31 December 2022
499 306
46 027
246 655
791 988
Historical cost
Historical cost at 1 January 2023
682 129
46 027
648 424
1 376 581
Acquisitions through business combinations
273 213
-
10 910
284 123
Additions
94 370
36 115
113 856
244 341
Disposals
(253 870)
(18 131)
(1 944)
(273 945)
Reclassification/transfer
(27 524)
2 779
24 745
-
Effect of movement in exchange rates
11 251
84
11 111
22 446
Balance at 31 December 2023
779 571
66 874
807 102
1 653 546
Accumulated depreciation and impairment losses
Acc. depreciation and impairment at 1 January 2023
(182 824)
-
(401 769)
(584 593)
Depreciation
(22 708)
-
(69 852)
(92 560)
Impairment loss / reversal of impairment loss
-
-
(31)
(31)
Disposals
4 062
(8 383)
930
(3 390)
Reclassification/transfer
18 043
(15 344)
(2 700)
-
Effect of movement in exchange rates
(5 442)
(239)
(9 423)
(15 104)
Balance at 31 December 2023
(188 869)
(23 965)
(482 844)
(695 679)
Closing balance at 1 January 2023
499 306
46 027
246 655
791 988
Closing balance at 31 December 2023
590 702
42 909
324 257
957 868
Property, plant and equipment pledged as security for liabilities.
2023
2022
Land and buildings, including work in progress
633 610
545 333
Current estimates of useful economic life of fixed assets are as follows:
Land
Indefinite
Building
20 - 30 years
Work in progress
Not applicable
Furniture, fixtures and equipment
3 -20 years
50
NORLANDIA HEALTH & CARE GROUP AS
9. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Other
intangible
assets
(NOK 1 000)
Customer
contracts
Trademarks
Total
Historical cost
Historical cost at 1 January 2022
1 858 921
534 205
173 196
64 058
2 630 380
Acquisitions through business combinations
70 023
1 150
-
-
71 172
Additions
15 661
-
-
3 342
19 003
Disposals
(156)
-
-
(2 060)
(2 217)
Effect of movement in exchange rates
4 911
(2 729)
-
(438)
1 745
Balance at 31 December 2022
1 949 359
532 625
173 196
64 902
2 720 083
Accumulated amortisation and impairment losses
Acc. amortisation and impairment at 1 January 2022
47 262
(187 053)
-
(20 881)
(160 673)
Amortisation
-
(24 615)
-
(11 337)
(35 952)
Impairment loss / reversal of impairment loss
(3 040)
-
-
-
(3 040)
Disposals
-
-
-
583
583
Effect of movement in exchange rates
1 017
2 466
-
(169)
3 315
Balance at 31 December 2022
45 239
(209 202)
-
(31 805)
(195 767)
Closing balance at 1 January 2022
1 906 183
347 151
173 196
43 176
2 469 707
Closing balance at 31 December 2022
1 994 598
323 424
173 196
33 098
2 524 316
Historical cost
Historical cost at 1 January 2023
1 949 359
532 625
173 196
64 902
2 720 083
Acquisitions through business combinations
1 110 840
-
-
6 390
1 117 230
Additions
5 365
-
-
17 702
23 067
Disposals
-
-
-
(3 579)
(3 579)
Effect of movement in exchange rates
73 429
6 327
-
3 733
83 489
Balance at 31 December 2023
3 138 994
538 953
173 196
89 148
3 940 290
Accumulated amortisation and impairment losses
Acc. amortisation and impairment at 1 January 2023
45 239
(209 202)
-
(31 805)
(195 767)
Amortisation
(0)
(24 092)
-
(8 119)
(32 211)
Impairment loss / reversal of impairment loss
(9 185)
-
-
-
(9 185)
Disposals
-
-
-
2 022
2 022
Effect of movement in exchange rates
177
(5 953)
-
(1 406)
(7 182)
Balance at 31 December 2023
36 231
(239 247)
-
(39 307)
(242 324)
Closing balance at 1 January 2023
1 994 598
323 424
173 196
33 098
2 524 316
Closing balance at 31 December 2023
3 175 224
299 705
173 196
49 841
3 697 966
The Group has no contractual commitments for development costs.
Impairment losses in 2022 and 2023 relates to dissolved companies, where the booked goodwill was taken as an impairment loss
following the dissolvement.
Current estimates of useful economic life of intangible assets are as follows:
Goodwill
Indefinite
Customer contracts
3 -20 years
Trademarks
Indefinite
Other intangible assets
3 -7 years
ANNUAL REPORT 2023
51
10. IMPAIRMENT TESTING OF GOODWILL AND TRADEMARKS
At acquisition, goodwill and trademarks are allocated to the operating segments they belong to, as specified below. The operating
segments are the same as the reporting segments, as described in note 4. The managing directors within a segment operate across
countries to provide synergies and provide business opportunities between countries. Hence, the Group performs the impairment
testing on a group of cash generating units that comprise the operating segments below.
Goodwill and trademarks are allocated as follows between four operating and reporting segments:
Specification of goodwill
(NOK 1 000)
2023
2022
Preschools
1 187 427
1 128 006
Care
579 270
576 532
Integration services
128 653
127 300
Individual & family
1 279 875
162 761
Total goodwill
3 175 224
1 994 598
Specification of trademarks
(NOK 1 000)
2023
2022
Preschools
118 463
118 463
Care
29 616
29 616
Integration services
-
-
Individual & family
25 117
25 117
Total trademarks
173 196
173 196
Impairment testing for reporting and operating segments containing goodwill and trademarks
Cash flow projections and assumptions
Group management reviews the carrying value of the cash generating units annually or more frequent if there is an indication that an
asset may be impaired. A value in use approach is used to determine recoverable amount. Reviews are based on comparing the net
present value (NPV) of projected future cash flows with the carrying value of the assets considering circumstances which could affect
the asset value. The NPV is calculated by discounting estimated cash flows for the next five years based on the companies’ updated
forecast/budget for the coming year and the management’s projection for the next four years based on economic prognoses. Expected
future cash flows are based on forecasted EBITDA deducted for capital expenditures, tax effects on operating profit and changes in net
working capital. Subsequently the terminal value is used, calculated by Gordon’s model.
The total required rate of return used to discount cash flows is calculated as a weighted average return on equity and the required rate
of return of interest-bearing debt. The input data of the discount rate was chosen by individual assessment of each parameter.
Information from representative sources, peer groups etc. was used to determine the best estimate. This calculation utilises an
estimate of the risk-free interest rate, risk premium, beta and the liquidity premium.
The majority of the Groups revenues are tightly linked with development in the general cost inflation and wage settlements in the
countries we operate, although with a lag effect as prices normally are adjusted 1-2 years after the cost increases occur.
Consequentially, EBITDA can fluctuate in periods with unstable inflation, but over time we regard these effects to be neutralized to a
great extent. Further, most of our operations have price models depending on occupancy, and based on thorough demographical
analysis in all areas, we see an overall great demand for our services. Personnel costs account for the majority of the Groups cost base,
and usually contractually fixed with our counterparties. Through frequent reviews, we monitor that both staffing ratios and salary
levels are in accordance with contractual requirements to deliver high quality and sustainable profitability. Maintenance related capital
expenditure is constantly monitored and through systematically follow -up, we have a strong understanding on future needs in terms
of capital expenditure related to our lease contracts.
For the fiscal years 2023 and 2022 the value in use for the cash generating units are based on the following key assumptions:
52
NORLANDIA HEALTH & CARE GROUP AS
2023
Preschools
Care
Integration
Services
Individual &
Family
Growth rate
2,0 %
2,0 %
2,0 %
2,0 %
Discount rate after tax
6,8 %
6,8 %
6,8 %
6,8 %
2022
Preschools
Care
Integration
Services
Individual &
Family
Growth rate
2,0 %
2,0 %
2,0 %
2,0 %
Discount rate after tax
6,9 %
6,9 %
6,9 %
6,9 %
The Group has in the calculations applied estimated cash flows after tax and corresponding discount rate after tax. The recoverable
amounts would not change significantly if pre-tax cash flows and pre-tax discount rate had rather been applied.
Sensitivities
The Group has carried out sensitivity analysis by considering changes in EBITDA and discount rates to test whether changes in key
assumptions would result in impairment. These are considered the most important assumptions for the long-term expectations. The
management’s present plans and forecasts as well as the market’s expectations have also been taken into consideration.
The long-term assumptions are assessed on an ongoing basis and the assumptions applied in future impairment tests may vary from
those applied for the fiscal year 2023. The Group has a continuously review process, which includes sensitivity analysis and analysis of
actual results achieved compared to long-term assumptions, to assess whether the long-term base case assumptions continue to
correctly reflect expectations.
The following sensitivity analysis were carried out to test whether changes in key assumptions would result in an impairment (decline
in cash flows, increase in discount rate):
2023
Preschools
Care
Integration
Services
Individual &
Family
Changes in cash flows
56,9 %
25,7 %
83,3 %
99,9 %
Changes in discount rates
6,6 %
1,5 %
32,7 %
3,5 %
2022
Preschools
Care
Integration
Services
Individual &
Family
Changes in cash flows
50,0 %
13,0 %
80,0 %
66,0 %
Changes in discount rates
5,1 %
0,7 %
22,1 %
10,1 %
The sensitivity analysis shows that the reporting segment Care is somewhat sensitive for changes in the parameters, and the Group
will monitor closely the development each quarter the following year. At the same time the Board of Directors are comfortable with
the level of recognized goodwill and the expected development for the Care business going forward. The carrying value of goodwill for
the reporting segment Care was NOK 579.3 million on 31 December 2023 (NOK 576.5 million 31 December 2022).
Based the impairment testing, management believes that there is no need for impairment of the carrying value of goodwill and
trademarks as of 31 December 2023.
ANNUAL REPORT 2023
53
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
2023
2022
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%
100%
Brado AB
Sweden
Tanumshede
100%
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 Barnehagedrift AS
Norway
Oslo
100%
100%
Norlandia Förskolor AB
Sweden
Stockholm
100%
100%
Kids2Home Förskolor AB (former: Kids2Home AB)
Sweden
Stockholm
100%
100%
Norlandia Päiväkodit Oy
Finland
Helsinki
100%
100%
Preschools Netherlands Holdings B.V.
Netherlands
Utrecht
100%
100%
Norlandia Nederland 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%
Norlandia Care Kosmo AB (former: 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%
Aurora Omsorg AS
Norway
Moss
100%
100%
Aberia Personlig Assistans SB (former: Marcus Assistans AB)
Sweden
Örebro
100%
100%
Frösunda Omsorg AB
Sweden
Stockholm
100%
Frösunda Personlig Assistans AB
Sweden
Malmö
100%
Frösunda Äldreomsorg AB
Sweden
Göteborg
100%
The table below shows the material associated companies held by the Group, which is accounted for using the equity method. As of
31 December 2023, Norlandia Preschools AS holds a 50% ownership in Wekita GmbH, which is a German company operating in the
Preschool segment.
54
NORLANDIA HEALTH & CARE GROUP AS
(NOK 1 000)
2023
2022
Investment in associates as of 01.01
25 613
31 076
Share of net income from associated companies
806
1 266
New investment in associates
8 052
-
Disposal of investment associates
-
(6 729)
Investment in associates as of 31.12
34 471
25 613
12. LEASES
Lease contracts
The Group leases most 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 56% of the total right-of-use assets in the Group, while
Care represents around 29%. 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. To determine the discount rate, the Group have considered
three key components: reference rate, financing spread adjustment and lease specific adjustment. The interest rate is estimated per
country and varies between 2.5-6.9%, depending on duration in years . The interest rate is updated on an annual basis, and in most
instances the updated rate is mainly used for new contracts entered into the applicable year. Contracts with less than a 12-month
obligation or payments related to revenue are not capitalized. Lease payments are subject to annual KPI adjustment.
(NOK 1 000)
2023
2022
Right of use asset
Balance at 1 January
5 171 842
4 186 467
New contracts
770 506
825 061
Acquired through business combinations
830 199
319 096
Remeasurement or amendments
315 364
334 895
Depreciation
(798 095)
(526 505)
Exchange differences
258 389
32 828
Year ended 31 December
6 548 205
5 171 842
Maturity analysis lease liabilities - undiscounted cash flows
Less than one year
971 264
687 528
One to five years
3 206 180
2 356 709
More than five years
4 200 262
3 526 325
Total undiscounted lease liabilities 31 December
8 377 707
6 570 563
Classification of lease liabilities in the statement of financial position
Non-current
6 297 807
4 996 237
Current
764 107
531 245
Total lease liabilities
7 061 914
5 527 482
Lease expenses not included in lease liabilities
Short-term lease expenses
(256 260)
(639 907)
Acquisition of subsidiary in 2023 relates to the acquisition of Frösunda. The majority of these contracts concern rents for nursing homes
for the elderly and for people with disabilities. The lease agreements typically run for 10-15 years.
Payments for short term leases are mainly related to the rental of refugee centers for the operating segment Integration Services. In
2022 the Group opened more than 40 acute refugee centers following the war outbreak in Ukraine. All these acute centers were based
on short-term contracts, most of them operating on a 3-month basis. The majority of these have been replaced by long-term ordinary
centers during the first half of 2023. By the end of 2023, only a few centers are based on short-term contracts. Variable lease expenses
and lease expenses related to leases of low value assets are not significant for the Group.
ANNUAL REPORT 2023
55
13. TRADE AND OTHER RECEIVABLES
(NOK 1 000)
Note
2023
2022
Trade receivables
766 491
428 120
Less: provision for impairment of trade receivables
(19 719)
(10 756)
Trade receivables - net
746 772
417 364
Prepaid expenses
210 915
149 878
Prepaid public duties
15 653
3 667
Group contribution receivable from owner
-
102 673
Other current receivables
303 865
126 455
Total other current receivables
530 433
382 672
Other non-current receivables
17 687
40 482
Total receivables classified as loans and receivables
1 294 892
840 518
The fair values of trade and other receivables classified as loans and receivables are not materially different to their carrying
values.
The Group does not hold any collateral as security.
Movements on the Group provision for impairment of trade receivables are as follows:
(NOK 1 000)
2023
2022
At 1 January
(10 756)
(13 025)
Provided during the year
(12 723)
(3 261)
Reversal of provisions prior years
3 759
5 529
At 31 December
(19 719)
(10 756)
The movement on the provision for impaired receivables has been included in the other operating expenses line in the
consolidated statement of comprehensive income.
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
(NOK 1 000)
Aging analysis on trade receivables
Total
Not due
(less than
30 days)
30-60 days
60-90 days
More than
90 days
2023
766 491
676 692
47 695
3 535
38 569
2022
428 120
395 616
14 320
2 439
15 744
14. SHARE CAPITAL, SHAREHOLDERS, DIVIDENDS AND RESERVES
Share capital
2023
2023
2022
2022
(Amounts in NOK)
Number
NOK
Number
NOK
Ordinary shares of NOK 10.4 each
47 697 448
496 053 459
30 000 000
312 000 000
Total
47 697 448
496 053 459
30 000 000
312 000 000
Shareholders
Each share gives the shareholder one voting right.
46 266 525
97,00%
Stork Industries AS
715 462
1,50%
Cowry EV AS
715 462
1,50%
Total
47 697 448
100,00%
Kristian A. Adolfsen holds, directly and indirectly, 46.64 % of the shares in Hospitality Invest AS
56
NORLANDIA HEALTH & CARE GROUP AS
Roger Adolfsen holds, directly and indirectly, 46.63% 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 2023
57
15. BORROWINGS
The book value and fair value of loans and borrowings are as follows:
Book
Fair
Book
Fair
value
value
value
value
(NOK 1 000)
2023
2023
2022
2022
Non-Current
Interest-bearing debt
2 617 746
2 617 746
2 115 610
2 115 610
Total non-current interest-bearing debt
2 617 746
2 617 746
2 115 610
2 115 610
Current
Interest-bearing debt
381 600
381 600
71 388
71 388
Total current interest-bearing debt
381 600
381 600
71 388
71 388
The currency profile of the Group's loans and borrowings is as follows:
(Currency in 1 000 NOK)
2023
2022
NOK
1 891 344
1 442 754
SEK
1 108 003
744 245
Total
2 999 347
2 186 998
Borrowings as of 31.12.2023
Interest
Amount
Due date
Bond loans
NIBOR/STIBOR +5.75%
2 271 536
2025
Current overdraft facilities
NOWA + margin
289 687
Property debt outside ringfence structure
2.42%-5.76%
394 288
2023-2050
Other debt/property debt
43 836
2 999 347
Borrowings as of 31.12.2022
Interest
Amount
Due date
Bond issued 2021
NIBOR/STIBOR +5.75%
1 674 233
2025
Revolving credit facility
NIBOR + margin
106 245
Property debt outside ringfence structure
0.897%-2.438%
394 070
2023-2050
Other debt/property debt
12 449
2 186 998
58
NORLANDIA HEALTH & CARE GROUP AS
Bond
In January 2023 the Group successfully placed a senior secured bond issue of equivalent to NOK 522 million under the Group's
existing senior secured bond framework with ISINs NO001099792 (the "NOK-tranche" and NO0010997943 (the "SEK tranche"). The
subsequent bond issue, split between a subsequent issue of NOK 180 million in the NOK-tranche, and a subsequent issue of SEK 352
million in the SEK-tranche of the bond.
The existing senior secured bond was refinanced in 2021 due in May 2025. This bond consists of a 950 million NOK tranche and a
750 million SEK tranche.
As per December 2023 MNOK 14.1 were unamortised borrowing costs (31 December 2022 MNOK 15.5). 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.
Overdraft facilities
In March 2023, the long-term credit facility was repaid. In replacement, the Group secured a short-term overdraft facility of NOK
350 million by DnB. NOK 289.7 million was drawn as per 31 December 2023 (MNOK 106.2 as of 31 December 2022 under the old
revolving credit facility).
Property debt outside ringfence structure
The majority of the property debt outside the ringfence structure is financed through Husbanken. The ringfence structure relates to
the companies that are defined in the bond agreement, while some real estate companies outside this structure are allowed to
draw external debt. In addition to the loans in Husbanken, the Group has some financing through Sparebanken Møre, Sparebanken
1 Ringerike Hadeland and BN Bank. As of 31 December 2023, the amount totaled to MNOK 394.3 (NOK 395.3 as of 31 December
2022).
ANNUAL REPORT 2023
59
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:
(NOK 1 000)
2023
2022
At 1 January
(36 878)
(27 718)
Tax expense
43 799
2 476
Recognised in other comprehensive income
(3 016)
2 209
Sum
3 905
(23 032)
Arising on business combination
2 748
(13 845)
At 31 December
6 652
(36 878)
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.
The table below outlines the Group's net deferred tax liability, amounts recognised in profit or loss and amounts
recognised in other comprehensive income are as follows:
(Charged)/
(Charged)/
(Charged)/
(Charged)/
credited
credited to
credited
credited to
Net
to profit
equity or
Net
to profit
equity or
(NOK 1 000)
DTA/(DT)
or loss
DTA/(DT)
or loss
Tax effect of temporary differences
2023
2023
2023
2022
2022
2022
Fixed assets
59 062
107 226
2 748
(50 912)
32 281
(13 845)
Accounts receivable
450
(924)
-
1 374
(682)
-
Inventory
(136)
(136)
-
-
-
-
Pensions
(2 511)
(675)
(3 016)
1 179
(20 126)
2 209
Profit and loss account
(75 221)
(73 364)
-
(1 857)
460
-
Other differences
47 833
2 607
-
45 226
(3 251)
-
Tax loss carried forward
13 760
8 350
-
5 410
(7 926)
-
Tax asset/(liabilities)
43 237
43 084
(268)
420
756
(11 636)
Unrecognised deferred tax asset
(36 584)
715
-
(37 299)
1 720
-
Net tax assets/(liabilities)
6 652
43 799
(268)
(36 878)
2 476
(11 636)
(NOK 1 000)
Net deferred tax assets/(liabilities)
2023
2022
Deferred tax assets
224 964
109 543
Deferred tax liabilities
(218 311)
(146 421)
Net deferred tax assets/(liabilities)
6 652
(36 878)
The unused tax losses and deductible temporary differences can be carried forward indefinitely. Deferred tax assets are recognized
as an asset as the Group expects 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. Other differences in the table above is mainly related to interest carry forwards.
60
NORLANDIA HEALTH & CARE GROUP AS
17. TRADE AND OTHER CURRENT LIABILITIES
(NOK 1 000)
2023
2022
Trade payables
347 000
190 976
Tax and social security payments
505 053
279 264
Other current liabilities
902 979
783 920
Total trade and other current liabilities, excluding borrowings,
classified as financial liabilities measured at amortised cost
1 755 033
1 254 160
Book values approximate to fair value at 31 December 2023 and 2022.
18. SUPPORTING STATEMENT OF CASH FLOWS
Non-current
loans and
borrowings
Current loans
and borrowings
Lease liabilities
Total
At 1 January 2022
2 124 400
51 037
4 466 806
6 642 243
Cash flows
(51 762)
(27 180)
(491 307)
(570 249)
Net amounts from purchase and sale of companies
64 872
39 876
319 096
423 844
Effects of foreign exchange
(21 900)
-
33 145
11 245
Interests accrued in period
-
7 655
-
7 655
Addition/remeasurements
-
-
1 199 742
1 199 742
At 31 December 2022
2 115 610
71 388
5 527 482
7 714 480
Cash flows
390 652
(358 876)
(724 033)
(692 257)
Net amounts from purchase and sale of companies
27 404
648 487
895 001
1 570 892
Effects of foreign exchange
84 080
-
255 752
339 833
Interests accrued in period
-
20 601
-
20 602
Addition/remeasurements
-
-
1 107 712
1 107 712
At 31 December 2023
2 617 746
381 600
7 061 914
10 061 261
19. RETIREMENT BENEFITS
At 31.12.2023, a total of 12,441 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 at the end of 2023 includes 59 employees. In 2022 the defined benefit plans for the
Preschools in Norway were replaced by a defined contribution plan. The change had a positive effect in both Q1 and Q4, and
compensation is being paid as salary for those the qualify. The plan involves lifelong pension from 67 years. Defined benefit plans give
rise to defined future payments. These are mainly dependent on the number of years of service, salary level at retirement and the level
of payments received from Social Security. The obligations are covered by an insurance company.
ANNUAL REPORT 2023
61
(NOK 1 000)
2023
2022
Pension costs for defined contribution schemes
395 461
336 259
Details of the Group's defined benefit schemes are as follows:
2023
2022
Fair value of plan assets
33 120
57 210
Present value of funded obligations
21 797
63 488
Net pension obligations
(11 324)
6 279
Reconciliation of plan assets
2023
2022
At 1 January
57 210
422 610
Expected return
720
2 954
Contributions by Group
9 072
18 787
Benefits paid
(285)
(1 153)
Actuarial gain/(loss)
4 114
(12 464)
Settlements
(37 488)
(373 240)
Administration fees
(222)
(285)
At 31 December
33 120
57 210
Reconciliation of plan liabilities
2023
2022
At 1 January
63 488
522 795
Interest cost
832
3 837
Current service cost
5 938
31 087
Benefits paid
(285)
(1 153)
Actuarial (gain)/loss
(6 529)
(2 422)
Social security tax
(395)
(637)
Settlements
(41 252)
(490 019)
At 31 December
21 797
63 488
2023
2022
Actuarial gains and losses recognised in OCI
10 643
(10 042)
Pension cost (defined benefit plan)
2023
2022
Current service cost
5 938
(65 874)
Net interest cost
112
(158)
Administration costs
222
537
Accrued social security tax
885
1 861
Net pension cost/(income)
7 156
(63 634)
Principal actuarial assumptions
31.12.2023
31.12.2022
Discount rate on plan liabilities
3,7 %
3,2 %
Expected increase in pensionable salary
3,8 %
3,8 %
Future G-increase
3,5 %
3,5 %
Future pension increase
2,9 %
1,7 %
Turnover
8,7 %
8,7 %
Social security tax
14,1 %
14,1 %
62
NORLANDIA HEALTH & CARE GROUP AS
20. BUSINESS COMBINATIONS
Acquisitions under common control during 2023
In Q1 23 NHC Group acquired control over Frösunda Omsorg AB (“Frösunda”) including its parent company Brado AB (“Brado”), which
was defined as a business combination under common control as the ultimate owners of both NHC Group and Brado Group are the
same.
Frösunda was founded in 1994 and have become a leading supplier of private care services in Sweden. The Group is a diversified care
operator within Disability, Personal Assistance and Elderly Care, which significantly strengthens NHC’s operations within the Individual
and Family and Care segments.
In addition, the Group acquired control over the shares in Agito Norway, Agito Sverige AB and Agito Nordic AB as of late December
2023. This transaction was also defined as a business combination under common control and resulted in a net effect booked against
retained earnings of NOK 31.4 million. As this transaction was not material for the Group, the carrying values are not shown below.
The table below shows the carrying values of assets and liabilities from Brado Group included in NHC Group from the acquisiti on date:
Allocation of purchase value of Brado AB Group
(NOK million)
Book value
Goodwill
1 108,4
Other intangible assets
6,5
Deferred tax asset
16,1
Property plant and equipment
21,5
Right-of-use-assets
838,8
Total non-current assets
1 991,2
Receivables
294,2
Cash and cash equivalents
129,9
Total current assets
424,1
Deferred tax liability
5,0
Non-current lease liability
766,3
Other non-current liabilities
19,1
Total non-current liabilities
790,3
Current interest-bearing debt
688,1
Current lease liability
128,7
Other current liabilities
339,3
Total non-current liabilities
1 156,2
Total net assets purchased
468,8
Total consideration*
511,6
Effect of business combination under common control, equity
(42,8)
*Part of the consideration was settled as a way of a seller’s credit of NOK 388.5 million which were transported to the ultimate parent
company Hospitality Invest AS, and then converted to equity in NHC as shown in the statement of equity. In addition, an earn-out
element of NOK 102 524 680 was recognized as a non-current liability at the time of the acquisition. The future payment is dependent
on the future performance of the Brado Group up until 2025.
Other acquisitions during 2023
The Group acquired control over the shares in some small Norwegian companies during 2023, mainly preschools. None of these
acquisitions were material for the Group, hence the purchase price allocation is not presented for these.
Acquisitions during 2022
Acquisitions during 2022 have been primarily within the preschool segment within Sweden and Norway, with the purchase of the
Swedish Group Svenska Kunskapsförskolan Koncept AS being the largest. All business combinations during 2022 resulted in an
ANNUAL REPORT 2023
63
addition to intangible assets of total MNOK 86.8, right -of-use assets of MNOK 319.1 and property, plant and equipment of MNOK
133.0.
21. TRANSACTIONS WITH RELATED 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
Personalhuset Staffing Group AS Significant ownership interest from the same shareholders
Älvbäck Fastighets AB Significant ownership interest from the same shareholders
Abros Invest AB Significant ownership interest from the same shareholders
Otiga Group AS Significant ownership interest from the same shareholders
Otiga Group Management AS Significant ownership interest from the same shareholders
(NOK 1 000)
Transaction with related parties
2023
2022
Receivables from related parties
Älvbäck Fastighets AB
4 048
3 598
Otiga Group Management AS
5
-
Liabilities to related parties
Hospitality Invest AS
29 833
28 959
Abros Invest AB
102 525
-
Otiga Group AS
18 747
-
Personalhuset Staffing Group AS
14 787
-
Interest received
Älvbäck Fastighets AB
128
-
Rent of properties from related parties
Rent of properties from Pioneer Property Group ASA
7 517
2 333
Purchase of personnel services from related parties
Purchase of personnel services from Personalhuset Staffing Group AS
17 925
28 498
22. CASH AND CASH EQUIVALENTS
(NOK 1 000)
2023
2022
Cash related to payroll tax withholding
3 198
1 343
Unrestricted cash
342 786
270 378
Total cash and cash equivalents
345 984
271 721
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, for example issuance of new debt and payment of dividends, is subject to the satisfaction of an incurrence test. The
incurrence test is considered satisfied provided that:
64
NORLANDIA HEALTH & CARE GROUP AS
Total Net Debt / EBITDA (as defined in the Bond agreement) = not greater than 3.25 (3.00 for payment of dividends) for the group of
companies included in the ring fence as defined by the bond agreement, see also note 15.
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. OTHER OPERATING EXPENSES
(NOK 1 000)
2023
2022
Lease expense and cost related to premises
(664 654)
(907 077)
Rental of office machinery
(43 282)
(29 861)
Software and operating materials
(334 799)
(307 735)
Professional fees
(123 749)
(72 067)
Office cost and travelling expenses
(147 387)
(98 403)
Sales and administrative cost
(40 286)
(23 847)
Other expenses
(60 594)
(76 898)
Other operating expenses
(1 414 750)
(1 515 888)
25. EVENTS AFTER THE REPORTING DATE
No known material events have occurred after the balance sheet date which would have had any effect on the reported figures as of
31 December 2023.
ANNUAL REPORT 2023
65
Income statement
Norlandia Health & Care Group AS - for the year ended 31 December 2023
NOK 1 000
Note
2023
2022
Operating revenues
4 712
7 035
Personnel expenses
8
(2 578)
(2 340)
Other operating expenses
8
(17 150)
(12 447)
Operating profit/(loss)
(15 017)
(7 752)
Finance income
6, 10
335 320
261 794
Finance expense
10
(209 527)
(124 119)
Net foreign exchange gains/(losses)
10
(49 505)
23 527
Net financial items
76 289
161 202
Profit/(loss) before taxes
61 272
153 450
Income taxes
2
(13 991)
(31 405)
Net income/(loss)
47 281
122 045
Allocated to other equity
3
47 281
122 045
Total allocation of net income/(loss) for the period
47 281
122 045
66
NORLANDIA HEALTH & CARE GROUP AS
Statement of financial position
Norlandia Health & Care Group AS - for the year ended 31 December 2023
(NOK 1 000)
Note
31.12.2023
31.12.2022
ASSETS
Investment in subsidiaries
5
2 165 402
1 665 128
Loans to group companies
6
1 073 279
503 501
Total non-current assets
3 238 681
2 168 628
Current group receivables
6
689 975
522 008
Other current receivables
127
5 263
Cash and cash equivalents
9
37 667
36 419
Total current assets
727 768
563 691
Total assets
3 966 450
2 732 319
EQUITY AND LIABILITIES
Share capital
3, 4
496 053
312 000
Share premium reserve
3
372 190
167 784
Other paid-in capital
3
10 005
-
Total restricted equity
878 248
479 784
Retained earnings
3
373 159
325 878
Total equity
1 251 407
805 662
Bond loans
7
2 220 187
1 643 486
Non-current interest-bearing debt
7
-
106 245
Non-current non-interest-bearing debt
11
102 525
-
Total non-current liabilities
2 322 712
1 749 731
Trade payables
263
-
Current liabilities to group companies
6
48 679
142 751
Current overdraft facilities
7
289 687
0
Other current liabilities
53 702
34 175
Total current liabilities
392 331
176 926
Total liabilities
2 715 043
1 926 657
Total equity and liabilities
3 966 450
2 732 319
Oslo, 29 April 2024
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 2023
67
Cash flow statement
Norlandia Health & Care Group AS - for the year ended 31 December 2023
(NOK 1 000)
Note
2023
2022
Cash flow from operations
Profit/(loss) before taxes
61 272
153 450
Net financial items
7
(76 289)
(161 202)
Change in trade creditors
263
(946)
Change in other provisions
40 079
4 146
Net cash flow from operations
25 325
(4 552)
Net loans to subsidiaries
6
(569 778)
242 051
Net cash flow from investments
(569 778)
242 051
Cash flow from financing
Proceeds from current borrowings
289 687
-
Repayment of non-current borrowings
(106 245)
-
Proceeds from non-current bonds
501 371
-
Interest received
7
93 976
38 686
Interest paid
7
(206 678)
(123 497)
Payment of group contribution
3
-
(20 000)
Net group receivables
6
(26 410)
(141 989)
Net cash flow from financing
545 701
(246 800)
Net change in cash and cash equivalents
9
1 248
(9 301)
Cash and cash equivalents at the beginning of the period
9
36 419
45 720
Cash and cash equivalents at the end of the period
37 667
36 419
68
NORLANDIA HEALTH & CARE GROUP AS
Notes to the financial statements 2023
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 carry
forward losses for tax purposes 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 statement of financial position and depreciated 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 current
liabilities 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 is 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 2023
69
2. INCOME TAXES
(NOK 1 000)
2023
2022
This year's income taxes
Payable tax
(13 991)
(31 405)
Changes in deferred taxes
-
-
Income taxes
(13 991)
(31 405)
Taxable income:
Profit/(loss) before taxes
61 272
153 450
Permanent differences
429
600
Changes temporary differences
2 624
5 979
Cut interest deduction
-
-
Provided intra-group contribution to subsidiaries
(64 324)
(142 751)
Taxable income before losses carried forward
(0)
17 278
Utilised losses carried forward
-
(17 278)
Taxable income:
(0)
(0)
Payable tax in the balance:
Payable tax on this year's result
-
-
Total payable tax in the balance
-
-
Calculation of effective tax rate
Profit/(loss) before taxes
61 272
153 450
Calculated tax on profit/(loss) before taxes
(13 480)
(33 759)
Tax effect of permanent differences
94
(132)
Tax effect of not booked deferred tax asset
-
2 486
Tax on prior year's result
(606)
-
Total
(13 991)
(31 405)
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:
2023
2022
Other differences
12 266
14 889
Total
12 266
14 889
Accumulated loss to be brought forward
-
-
Interest cost carried forward
(180 950)
(180 950)
Unrecognized in deferred tax
168 684
166 060
Basis for calculation of deferred tax
0
(0)
Deferred tax asset, 22%
0
(0)
70
NORLANDIA HEALTH & CARE GROUP AS
3. EQUITY
Other paid-in
capital
Retained
earnings
(NOK 1 000)
Share capital
Share premium
Total equity
Equity as of 01.01.2023
312 000
167 784
-
325 878
805 662
Capital increase
184 053
204 406
-
-
388 459
Group contribution from ultimate parent
-
-
10 005
-
10 005
Net income/(loss)
-
-
-
47 281
47 281
Equity as of 31.12.2023
496 053
372 190
10 005
373 159
1 251 407
Other paid-in
capital
Retained
earnings
(NOK 1 000)
Share capital
Share premium
Total equity
Equity as of 01.01.2022
312 000
167 784
-
223 833
703 617
Group contribution to ultimate parent
-
-
-
(20 000)
(20 000)
Net income/(loss)
-
-
-
122 045
122 045
Equity as of 31.12.2022
312 000
167 784
-
325 878
805 662
4. SHARE CAPITAL AND SHAREHOLDERS
Share capital
2023
2023
2022
2022
(Amounts in NOK)
Number
NOK
Number
NOK
Ordinary shares of NOK 10.4 each
47 697 448
496 053 459
30 000 000
312 000 000
Shareholders
Each share gives the shareholder one voting right
Number
Ownership
Nominal Value
In balance
Hospitality Invest AS
46 266 524
97,00%
10,4
481 171 850
Stork Industries AS
715 462
1,50%
10,4
7 440 805
Cowry EV AS
715 462
1,50%
10,4
7 440 805
Total
47 697 448
100,00%
10,4
496 053 459
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 (through Hospitality Invest)
22 246 090
46,64%
Roger Adolfsen (through Hospitality Invest)
22 241 320
46,63%
Yngvar Tov Herbjørnssønn (through Cowry EV AS)
715 462
1,50%
ANNUAL REPORT 2023
71
5. INVESTMENT IN SUBSIDIARIES
Investments in subsidiaries are recognised according to the cost method.
(NOK 1 000)
Ownership/
voting right
Result (100%)
Balance
sheet value
Subsidiaries
Location
Norlandia Care Group AS
Bodø
100%
368 662
41 415
969 160
Kidsa Drift AS
Bergen
100%
208 034
7 339
220 446
Hero Group AS
Stavanger
100%
91 316
105 180
155 051
Aberia AS
Oslo
100%
102 985
48 495
193 952
Care Properties AS
Oslo
100%
27 547
(11 357)
61 508
NHC Eiendom AS
Oslo
100%
10 168
(6 386)
17 344
NHC Services AS
Moss
100%
3 022
695
3 968
NH Europe Holding AS
Oslo
100%
58 400
5 150
58 400
Brado AB
Tanumshede, Sweden
100%
185 354
1 951
485 574
Balance sheet value 31.12.
2 165 402
6. TRANSACTIONS WITH RELATED PARTIES
(NOK 1 000)
2023
2022
Receivables from related parties
Group contribution
241 345
327 121
Current group receivables
448 630
194 887
Non-current loans to group companies
1 073 279
503 501
Total receivable related parties
1 763 254
1 025 509
Payables to related parties and subsidiaries
Group contribution
18 847
142 751
Current group liabilities to ultimate parent
29 833
-
Total payables related parties
48 679
142 751
Income from subsidiaries
Group contribution
241 345
224 449
Interest income
93 976
37 345
Interest received from related parties
335 320
261 794
72
NORLANDIA HEALTH & CARE GROUP AS
7. INTEREST-BEARING DEBT
(NOK 1 000)
2023
2022
Non-current liabilities
Bond loans
2 234 253
1 658 975
Prepaid finance fee bond
(14 066)
(15 489)
Revolving credit facility
-
106 245
Total non-current liabilities
2 220 187
1 749 731
Current liabilities
Current overdraft facilities
289 687
0
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
2 165 402
1 665 128
Total
2 165 402
1 665 128
In addition to its own subsidiaries, several of subsidiaries of the subsidiaries are placed as security for bond obligation.
8. PERSONNEL EXPENSES
(NOK 1 000)
2023
2022
Personnel expenses (including directors) comprise:
Wages and salaries
(1 693)
(1 525)
Social security contributions and similar taxes
(285)
(215)
Remuneration to Board of Directors
(600)
(600)
Total personnel expenses
(2 578)
(2 340)
Number of employees (FTE)
-
-
The company had no employees during 2023 and 2022. 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
(NOK 1 000)
2023
2022
Audit
(868)
(490)
Attestation services
(87)
-
Other services
(597)
(591)
Total
(1 552)
(1 081)
9. CASH AND CASH EQUIVALENTS
(NOK 1 000)
2023
2022
Restricted cash
4 017
3 876
Unrestricted cash
33 650
32 543
Total cash and cash equivalents
37 667
36 419
ANNUAL REPORT 2023
73
10. NET FINANCIAL ITEMS
(NOK 1000)
2023
2022
Interest income
93 976
37 345
Income from investment
241 345
224 449
Total finance income
335 320
261 794
Interest expenses
(206 678)
(123 497)
Other financial expenses
(2 849)
(622)
Total finance expense
(209 527)
(124 119)
Net foreign exchange gains/(losses)
(49 505)
23 527
Net financial items
76 289
161 202
11. OTHER NON-CURRENT LIABILITIES
In Q1 23 the company acquired Brado Group. The purchase price consisted of an earn out element of NOK 102 524 680. The future
payment is dependent on the future performance of the Brado Group up until 2025.
12. EVENTS AFTER THE REPORTING DATE
No known material events have occurred after the balance sheet date which would have had any effect on the reported figures as of
31 December 2023.
Independent auditor’s report
APRIL 202
4
NHC Group