Linstow: Annual Report 2014

Annual Report 2014

Ăœlemiste Shopping Centre (Tallinn, Estonia)

CONTENTS

LIST OF PROPERTIES

03

THE BOARD OF DIRECTORS’ ANNUAL REPORT

04

INCOME STATEMENT 1 JAN–31 DEC

09

BALANCE SHEET AT 31 DEC

10

CASH FLOW STATEMENT

11

ACCOUNTING PRINCIPLES AND NOTES

12

AUDITOR’S REPORT

30

PAGE 2

LIST OF PROPERTIES In Operation

LIST OF PROPERTIES (Square meters) Norway

Offices Romerike Helsebygg, Lillestrøm Brubakkveien 16, Oslo Oslo S. Utvikling AS (33,3 %) Koksa Eiendom AS (12,5 %) Bergen Lufthavn Utvikling AS (50 %) Tollbugata 32, Oslo Depotgata 22, Lillestrøm

31 500 4 000 11 608 15 944

Under Construction

18 308

100 000

14 792 17 220

TOTAL NORWAY

109 576 No. of Rooms 571 390 291 228 173 95 245 206 84 84

Shopping Ülemiste, Tallinn Origo, Riga Galerija Centrs, Riga Alfa Home Center, Riga Riga Retail Park

43 905 30 854 25 792 13 782 8 200 7 892 9 888 13 018 2 919 2 595

720 1 463 9 000 159 192

12 000 15 000

40 000 60 000 150 000

8 600 2 000

Residential Bisumuizas Nami, Riga TOTAL THE BALTICS/ RUSSIA

TOTAL LINSTOW GROUP

18 308

94 122 33 596 33 863

Parking Jekaba Arcade, Riga Tornimä Garage, Tallinn (25 %)

Portugal

31 500 4 000 77 925 15 944 100 000

14 792 17 220

Residential Gustav Vigelands vei 24, Oslo (50 %) Storetvedt, Bergen Citadellet, Nesodden

Hotels Radisson Blu Hotel Latvija, Riga Radisson Blu Hotel Olümpia, Tallinn Radisson Blu Hotel Lietuva, Vilnius Radisson Blu Elizabete Hotel, Riga Radisson Sonya Hotel, St. Petersburg Radisson Blu Ridzene Hotel, Riga Park Inn by Radisson Central Tallinn Park Inn by Radisson Kaunas Park Inn by Radisson Klaipeda Hotel Park Inn by Radisson Vilnius North

48 009

Total

6 006 8 506

Parking Galleriet Parkering, Oslo Grønland Parkering, Oslo

The Baltics / Russia

Development Possibilities

Resort Dunas Douradas 2 367

720 1 463 9 000 272 564

43 905 42 854 40 792 13 782 8 200 7 892 9 888 13 018 2 919 2 595

94 122 73 596 33 863 60 000 150 000

8 600 2 000

331 026

100 000 377 000

100 000 708 026

1 941

14 630

16 571

550 822

997 160

442 542

18 308

PAGE 3

THE BOARD OF DIRECTORS’ ANNUAL REPORT 2014

Linstow AS is one of Norway’s leading property companies.

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

Linstow AS and its subsidiaries (hereinafter called: Linstow AS or the Group) have a key ownership role in Norway in several major development projects, and owns and manages office and car-parking properties. Most of the Group’s activities are in the Baltic region, primarily in the hotel and shopping centre markets.

The company owns a total of nine hotels and three shopping centres, centrally located in the biggest cities in the Baltic States.

In addition, the Company owns a holiday complex in Portugal and a hotel in St. Petersburg. Linstow AS’ head office is located at Tjuvholmen in Oslo, Norway.

Market developments

The Baltics Estonia, Latvia and Lithuania have shown strong economic growth during our ownership period, but did experience a significant declines from the second half of 2008 and in the subsequent downturn.

Starting in 2011, the Baltic States underwent rapid growth again and were among the fastest growing economies in Europe in 2014.

Latvia introduced the Euro as a means of payment starting on 1 January 2014, and Lithuania did so on 1 January 2015.

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

Hotels Linstow AS owns 10 hotels with a total of 2 367 rooms in Tallinn, Riga, Vilnius, Kaunas, Klaipeda and St. Petersburg. The hotel occupancy rate was 63 % in 2014 (2013: 65 %), and income in local currency was reduced by - 1 % (2013: + 9 %) compared with the previous year.

The hotels are operated by the listed company, Rezidor Hotel Group, under the brand names Radisson Blu and Park Inn by Radisson.

PAGE 4

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

Through its stake in OSU, Linstow AS is a key player in the development of Barcode (near Oslo’s new opera house). In addition to the residential dwellings in Barcode, OSU shall develop over 1 200 residential dwellings in the Bjørvika neighbourhood.

As per mid-February 2015, 334 out of 385 flats in Barcode had been sold.

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

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

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

The cost price of the building and site amounts to NOK 190 million.

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

THE BOARD OF DIRECTORS’ ANNUAL REPORT 2014

Hotel Radisson Blu Lietuva, Vilnius

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

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

Health, safety and the environment

Linstow AS had 26 employees at year-end 2014, and 27 FTEs were performed in 2014. At year-end 2014, the Group had 1 189 employees (2013: 1 155) in approximately 1 005 FTEs (2013: 1 008 FTEs). In 2014, the absence due to illness at Linstow AS was 2.5 % (2013: 1.5 %). The Company has a good working environment.

Twelve minor injuries to the Group’s employees were reported in 2014 in connection with our hotel operations. One minor workplace accidents was registered at our construction sites in 2014.

Linstow AS is working to promote sustainable social development.

In all of our activities, we promote long-term quality assurance and environmental efforts. We do this by: • Working determined and systematically to reduce our environmental impact.

• Erecting buildings with good environmental solutions.

• Linstow AS is a major player in and contributor to the development of high profile buildings, e.g. through the urban

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

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

Linstow AS’ activities affect the external environment through the handling of waste in connection with the demolition of old properties, as well as the construction and operation of new properties.

Throughout the organisation, Linstow AS has a strong focus on complying with all government requirements and recommendations relating to the environment. Our projects have clear goals for energy consumption, pollution, use and reuse of materials, indoor climate, development, and use of space. Linstow AS requires that all contractors follow a comprehensive programme for sorting demolition waste for recycling.

All of Linstow AS’ hotels are members of “GREEN KEY”, an international organisation that provides certification for environment-friendly hotels. This requires that the hotels adhere to specific guidelines on energy consumption, waste segregation and staff training. Linstow AS has been operating its own energy monitoring programme for the hotels since 2006. In 2014, energy consumption was reduced by 0.2 GWh relative to 2013, a reduction of 0.4 %.

During the period 2011-2014, a savings in energy consumption of 27.8 GWh was achieved relative to the reference year of 2010 (adjusted for room occupancy rate). That is equivalent to a 12 % reduction in the energy consumption.

PAGE 5

THE BOARD OF DIRECTORS’ ANNUAL REPORT 2014

Bergen Business Park, Flesland

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

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

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

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

PAGE 6

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

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

Net financial items amount to NOK -124 million (+133 million).

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

The Group’s profit before tax was NOK 56 million (295 million).

After tax and minority interests, the profit for the year was NOK 75 million (265 million).

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

Appropriations

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

THE BOARD OF DIRECTORS’ ANNUAL REPORT 2014

Bergen Business Park, Flesland

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

Investment

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

Equity and cash flow

The Group’s recognised equity is NOK 1 145 million (1 286 million).

The net cash flow from operations is NOK 178 million (485 million).

At year-end 2014, total bank deposits and cash equivalents amounted to NOK 445 million (1 118 million).

Financing and liquidity

At year-end 2014, the Group had long-term liabilities of NOK 4 333 million (3 722 million). The Group has a strong balance sheet.

The equity ratio was 18 % (23 %) at year-end 2014. The Group’s property portfolio is valuated annually by two independent appraisers.

The valuations indicate that the market value of the Group’s property portfolio is significantly higher than its carrying amount.

Risk

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

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

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

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

Other risk The financial results of our hotel business are largely dependent on the occupancy rate and the room prices that can be obtained in the market.

The risk in our shopping centre business is related to the economic development in the countries in which the centres are located, the attractiveness of individual shopping centres, their popularity with tenants, the tenants’ ability to pay, vacancy rates and the market rents that can be charged.

Property portfolio

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

PAGE 7

THE BOARD OF DIRECTORS’ ANNUAL REPORT 2014

Depotgata 22, Lillestrøm

whereas the operations in Norway amounted to 110 000 m2.

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

Outlook

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

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

The growth in the Norwegian economy is expected to diminish in 2015. The level of interest rates is low, and there are good financing opportunities. In Norway, the construction of a hotel at Bergen Airport Flesland is planned to be initiated during 2015.

Through the purchases of Tollbugaten 32 in Oslo and Depotgata 22 in Lillestrøm in 2014, Linstow AS has laid the foundation for further growth in rental income in the period ahead.

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

PAGE 8

Sigurd E. Thorvildsen Chairman

Knut I. Nossen Board Member

Henrik Fougner Board Member

Per Tore Mortensen CEO

INCOME STATEMENT 1 JAN – 31 DEC.

LINSTOW AS 2014 2013

355

429

18 392 18 747

15 525 15 953

-58 631 -13 509

-57 822 -14 304

-431

-608

34 117 -1 057 -39 511

110 911 -237 37 940

-20 764

53 894

452 771 118 389 -184 875 386 285

562 346 181 005 -281 955 461 396

365 522

515 290

37 851

68 203

403 372

(NOK 000) OPERATING INCOME Rental income, properties Profit from sale of fixed assets Project income Hotel revenues and other operating income Total operating income OPERATING EXPENSES Wages, salaries, employer’s contributions and pension costs Other administrative expenses Cost of materials Operating costs for properties and bad debts Project expenses Losses on sale of fixed assets Impairment/(reversal) of fixed assets Depreciation Total operating expenses

Notes

1 2

3 2

1 1,5 5

Operating profit

FINANCIAL ITEMS Profit/loss from group companies and associates Finance income Finance expense Net financial items

4 6 6

Profit before tax

LINSTOW GROUP 2014 2013

240 983 706 40 673 644 463 926 825

227 094 610 598 219 825 922

-228 226 -254 646 -49 468 -40 417 -36 100 -2 -6 269 -132 075 -747 203

-217 021 -240 917 -48 243 -27 874 -3 729 -22 -4 273 -122 302 -664 381

179 623

161 541

-1 790 93 380 -215 396 -123 806

116 827 180 222 -163 581 133 468

55 816

295 009

Tax

7

19 077

-30 469

583 493

Profit for the year

8

74 893

264 539

403 372

583 493

Minority interests Profit for the year after minority interest

164 75 057

264 539

-211 672 -710 000 518 300 -403 372

-283 493 -300 000 -583 493

APPROPRIATIONS Transferred to other equity Accrued dividend Received group contributions after tax Total appropriations

8

PAGE 9

BALANCE SHEET AT 31 DEC.

LINSTOW AS 2014 2013

99 129 14 387 3 026 4 230

12 686 2 960 1 761

2 537 141 376 924 314 234 47 562 131 077

1 979 925 443 336 314 234 37 610 131 077

3 428 582

3 022 718

11 842 1 017 988

1 012

191 947 1 221 777 4 650 359

866 504 867 517 3 890 235

817 808 405 333 772 166

817 808 405 333 560 493

1 995 307

1 783 635

932 57 704

51 303

938 526 180 730 706 384 1 884 276

1 220 216 178 128 322 889 1 772 536

770 776 770 776 4 650 359

334 064 334 064 3 890 235

(NOK 000)

LINSTOW GROUP 2014 2013

Notes

ASSETS Non-current assets Intangible assets Intangible assets Deferred tax assets Fixed assets Real property Projects in progress Machinery, fixtures/fittings and vehicles Financial assets Shares in subsidiaries Receivables from Group companies Shares in associates Receivables from associates Other shares Other long-term receivables Total non-current assets Current assets Current receivables Receivables from group companies Projects for sale Bank deposits, Group account Total current assets Total assets EQUITY AND LIABILITIES Equity Share capital (1 264 600 shares – par value NOK 647) Other paid-in capital Retained earnings Minority interests Total equity Long-term liabilities Provisions for liabilities Deferred tax Other commitments Other non-current liabilities Liabilities to group companies Debt instrument loans and credit facilities Secured debt Total long-term liabilities Current liabilities Other current liabilities Total current liabilities Total equity and liabilities

5 7 5 5 5

43 124 121 3 890 221 64 155 90 116

3 180 017 81 833 68 287

541 772 47 562 131 081 30 227 4 795 134

589 223 37 610 131 245 32 211 4 244 591

79 761 1 017 988 113 350 444 645 1 655 744 6 450 878

59 569 113 477 1 118 293 1 291 339 5 535 929

8

817 808 405 333 -79 929 1 438 1 144 650

817 808 405 333 61 471 1 241 1 285 853

7 10

171 250 123 244

148 474 63 211

10 10

180 730 3 857 622 4 332 847

178 128 3 332 017 3 721 829

11

973 381 973 381 6 450 878

528 247 528 247 5 535 929

4 4 4 9 9 5 12

Oslo, 17 March 2015

PAGE 10

Sigurd E. Thorvildsen Chairman

Knut I. Nossen Board Member

Henrik Fougner Board Member

Per Tore Mortensen CEO

CASH FLOW STATEMENT

(NOK 000)

LINSTOW AS 2014 2013

Profit before tax - Tax payable - Profit from sale of fixed assets +/- Net loss/profit from sale of projects - Profit/loss from associates + Loss on sale of fixed assets + Depreciation + Impairment/reversal of fixed assets +/- Change in accounts receivable +/- Change in accounts payable +/- Change in interest +/- Change in other accruals NET CASH FLOW FROM OPERATING ACTIVITIES (A) + Sale of tangible assets and projects - Investment in tangible assets and projects + Payments in from investments in shares - Investment in shares +/- Changes in other receivables/intra-group balances NET CASH FLOW FROM INVESTING ACTIVITIES (B) +/- Change in external long-term liabilities +- Exchange rate differences - Equity transactions and loans to parent company + Change in minority through acquisitions, payments and incorporation .

NET CASH FLOW FROM FINANCING ACTIVITIES (C)

-215 490

19 827

-7 969 -644 417 575 085 -174 516 -607 988 289 -207 130

NET CHANGE IN CASH &CASH EQUIVALENTS DURING YEAR (A+B+C)

-674 558

478 161

-673 647

462 032

866 504 191 947

388 343 866 504

1 118 293 444 646

656 261 1 118 293

Cash & cash equivalents 1 Jan (*) Cash & cash equivalents 31 Dec (*)

365 522

515 290

-355

-429

1 057 -34 117 -782 1 056 389 -5 802 326 967 180 -3 643 72 080 -286 740 -567 912 -786 035 392 498

237 -110 911 1 538 -111 308 9 138 415 060

LINSTOW GROUP 2014 2013

-1 106 78 357 -4 923 -29 054 43 274 19 827

-607 988

55 816 -16 090 -706 -4 573 1 790 2 132 075 6 269 -7 560 7 297 -623 4 203 177 900 42 949 -729 623 50 225

295 009 -7 100 -610 3 729 63 840 22 122 302 4 273 17 446 13 083 -656 -26 249 485 088 5 480 -79 735 -595 102 188 27 338 252 126 -303 316 796 -50 394

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

PAGE 11

ACCOUNTING PRINCIPLES

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

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

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

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

PAGE 12

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

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

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

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

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

Current/fixed assets Current/long-term liabilities Items are classified as fixed assets/long-term liabilities if they are intended for long-term ownership or use or their settlement date is after the end of the next accounting period. The first year’s instalments for long-term liabilities are accounted for as long-term liabilities. Other items are classified as current assets/current liabilities.

Current assets are recognised in the balance sheet at the lower of cost and fair value. See separate note on the valuation of fixed assets.

The group account arrangement is classified as a bank deposit.

Projects for sale Projects defined as for sale are treated in accordance with Norwegian accounting standard NRS 2, construction contracts. Linstow

ACCOUNTING PRINCIPLES

AS utilises current revenue recognition based on expected revenue.

In proportion to the stage of completion of the contract and sale.

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

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

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

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

Pensions Pension costs are accounted for in compliance with Norwegian accounting standards. Gross earned pension liabilities, less pension funds, are booked as a liability at the start of the year based on actuarial calculations. Changes in the underlying economic and actuarial assumptions are systematically distributed over the remaining service period. Linstow AS also has unfunded pension liabilities, and their present value is entered on the balance sheet in the same way. The pension cost for the year is included in wages, salaries, etc. in the income statement, and comprises the current service cost, plus interest on pension liabilities less the return on pension funds.

For unfunded pension liabilities under settlement, the pension cost for the year is mainly interest on the accrued liabilities. Estimate discrepancies are accrued. When non-amortised estimate variances exceed 10 % of the higher of obligations including employer’s national insurance contributions and pension fund assets, the excess amount is amortised over the average remaining earning period.

Deferred tax Deferred tax is calculated on the basis of the temporary differences that exist at the end of the financial year between accounting and taxable values. Temporary differences which reverse or may reverse in the same period are offset. Deferred tax is generally recognised at nominal value using the enacted tax rate on the balance sheet date.

Deferred tax on value added arising from acquisitions is valued at the present value, due to the long reversal time. Deferred tax liabilities and assets abroad are not offset against deferred tax benefits in Norway. In accordance with the exemption model, tax on temporary differences in share values is not recorded. Deferred tax assets/liabilities are classified respectively as fixed assets and provision for liabilities. Change in deferred tax for the year is entered as a tax expense in the income statement.

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

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

Year 1 year 2 years 3 years 4 years 5 years 6 years + Total

Average Subtotal interest rate 1 355 596 2,5 % 896 717 2,2 % 870 917 2,3 % 784 003 2,0 % 13 644 1,9 % 117 475 1,3 % 4 038 352 2,26 %

Percentage Accumulated of portfolio percentage 34 % 34 % 22 % 56 % 22 % 77 % 19 % 97 % 0 % 97 % 3 % 100 % 100 %

PAGE 13

ACCOUNTING PRINCIPLES

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

Year

1 year 2 years 3 years 4 years 5 years 6 years + Total

Amount (NOK 000)

Fixed interest rate (average)

433 752

1,1 %

31 %

30 000 370 497 260 548 290 000 1 384 796

2,5 % 1,0 % 1,5 % 4,2 % 1,8 %

2 % 27 % 19 % 21 % 100 %

Percentage Accumulated of total percentage

31 % 31 % 33 % 60 % 79 % 100 %

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

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

PAGE 14

Exchange rates used at 31 Dec. were:

I USD = NOK 1 LTL = NOK 1 EUR = NOK 1 SEK = NOK 1 RUB = NOK

2014 7.4332 2.6172 9.0365 0.9597 0.1284

2013 6.0800 2.4278 8.3825 0.9472 0.1850

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

NOTES

NOTE 1 PROFIT AND LOSS ON SALE OF FIXED ASSETS, IMPAIRMENT AND REVERSALS Profit from sale of fixed assets (NOK 000) Profit from sale of properties Profit from sale of fixtures, fittings and vehicles Total

Linstow AS 2014 2013 226 429 130 355 429

Linstow Group 2014 2013 226 429 480 181 706 610

Linstow AS 2014 2013

Linstow Group 2014 2013 -2 -22 -2 -22

Loss on sale of fixed assets (NOK 000) Loss on disposal of fixtures, fittings and vehicles Total

0

0

Impairment of fixed assets and reversals (NOK 000) Impairment projects Impairment/reversal of shares Impairment/reversal of fixed assets Impairment/reversal of properties Total

Linstow AS 2014 2013 30 073 2 343 1 701 34 117

116 370 -5 032 -428 110 911

Linstow Group 2014 2013 -68 600 248 -6 517 -6 269

-21 116 85 444 -4 273

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

NOTE 2 HOTEL REVENUES AND OTHER OPERATING INCOME – OTHER ADMINISTRATIVE EXPENSES Hotel revenues and other operating income This includes income from the Group’s international hotel operations, with the main items being restaurant and room revenues. The Group also receives fees for the management of properties in Portugal and Norway. See also the distribution of group income by segment.

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

PAGE 15

NOTES

NOTE 3 WAGES, SALARIES, EMPLOYER’S NATIONAL INSURANCE CONTRIBUTIONS AND PENSION COSTS Wages, salaries and employer’s national insurance contributions

-57 822

Linstow Group 2014 2013 -190 017 -175 699 -39 641 -41 001 1 431 -321 -228 226 -217 021

Net pension expense Current service cost Cost of interest on pension liabilities Return on plan assets Accrued employer national insurance contributions Administration Recognised changes in plan Recognised actuarial gains/losses Net pension expense

Linstow AS 2 014 2 013 -5 823 -4 172 -3 174 -2 347 1 762 1 394 -1 020 -723 -525 -464 -77 -2 414 -1 495 323 -10 353 -8 403

Linstow Group 2 014 2 013 -6 222 -4 406 -3 174 -2 347 1 762 1 394 -1 020 -723 -525 -464 -77 -2 414 -1 495 323 -10 752 -8 637

Pension liabilities – funded pension plans Calculated pension liabilities Plan assets Employer’s national insurance contributions Unrecognised changes in plan Net pension liabilities

74 157 -40 733 4 713 -24 894 13 243

62 688 -38 933 3 349 -15 149 11 954

74 157 -40 733 4 713 -24 894 13 243

62 688 -38 933 3 349 -15 149 11 954

Pension liabilities – unfunded pension plans Calculated pension liabilities Employer’s national insurance contributions Unrecognised actuarial gains/losses Net pension liabilities

22 581 3 161 -3 719 22 023

17 389 2 428 -1 778 18 039

24 294 3 161 -3 719 23 736

19 084 2 428 -1 778 19 734

Composition of pension fund assets Shares Bonds Money market Property

12,3 % 53,4 % 25,1 % 9,2 %

11 % 52 % 26 % 12 %

12,3 % 53,4 % 25,1 % 9,2 %

11,4 % 51,7 % 25,5 % 11,5 %

(NOK 000) Wages/salaries and pensions Public duties payable Other Total

Linstow AS 2014 2013 -51 454 -50 725 -7 176 -7 096 -58 631

Pension expense

Figures for 2014 are as of 30 September 2014.

PAGE 16

NOTES

Financial assumptions:

Discount rate Annual wage increases Annual pension increases Annual increase in NI base rate Expected return on plan assets Mortality table

Linstow AS 2014 2013 2,30 % 4,00 % 2,75 % 3,75 % 1,73 % 2,75 % 2,50 % 3,50 % 3,20 % 4,40 % K2013 K2013

Linstow Group 2014 2013 2,30 % 4,00 % 2,75 % 3,75 % 1,73 % 2,75 % 2,50 % 3,50 % 3,20 % 4,40 % K2013 K2013

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

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

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

Remuneration of key management personnel – auditor’s fees Auditors fees (NOK 000) Auditor's fees (incl. VAT) Attestations and other fees - audit (incl. VAT) Total Remuneration of key management personnel and/or the Board of Directors (NOK 000) Board fees Salary CEO Bonus scheme paid to CEO Bonus scheme accrued to CEO Pension CEO Total

Linstow AS 2014 -623 -162 -786

Linstow Group 2013 -500 -65 -565

2014 -2 749 -637 -3 387

2013 -2 650 -553 -3 204

Linstow AS 2014 2013 -150 -150 -3 716 -3 681 -2 269 -1 563 -257 -3 176 -1 107 -673 -7 499 -9 242

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

There is a bonus scheme for the Company’s CEO and other key management personnel based on the underlying value development of Linstow AS. Payment of the accrued bonus scheme is dependent on future value development for the Group. Payment is based on valueadjusted equity at 31.12.2009 and on future growth in this exceeding the return on 5-year government bonds. As of 31.12.2012 and for subsequent years payment is made of 20 % of the increase in value and corresponding new shares are also awarded. It is a condition for payment and award of shares that the employee remains in the position. In total, NOK 8 254 000 net including employer’s national insurance contributions was expensed for the scheme in 2014, compared with NOK 14 754 000 the previous year. The bonus scheme has been valued in accordance with NRS 15A. PAGE 17

NOTES

NOTE 4 RESULTS AND INVESTMENTS IN ASSOCIATES - INVESTMENTS IN GROUP COMPANIES Profit/loss from associated companies is presented below under shares in associated companies.

The parent company’s profit represents group contributions received and dividends from subsidiaries.

Shares in subsidiaries Company Viesnica Latvija SIA Linstow Center Development AS Romerike Helsebygg AS Olümpia Holding Nederland B.V. Tollbugaten 32 AS Elizabetes Centrs SIA Grønland Torg Parkering AS Galleriet parking AS Depotgata 22 AS Onistus Ltd (*) Central Holding Nederland B.V. Viesbutis "Lietuva" UAB Saliena Retail SIA Linstow Fastigheter AB Attistibas Agentura SIA Ülemiste Holding Nederland B.V. Wilhreal SIA Hotel Neris UAB Brubakkveien 16 AS Baltijos Parkai UAB Saliena Retail II SIA Linstow Airport Bratislava s.r.o.

A/S Storetvedt Utbyggingsselskap Dunas Holding AS Viesnica Ridzene SIA Riga Retail Park Holdings SIA Linstow Center Management SIA Linstow Eiendom AS Prastico Ltd Linstow Drift AS Linstow Eiendomsmegling AS Reval Hotel Management OÜ Linstow Baltic SIA Total

Reg’d office Riga Oslo Oslo Amsterdam Oslo Riga Oslo Oslo Oslo Nicosia Amsterdam Vilnius Riga Malmön Riga Amsterdam Riga Kaunas Oslo Vilnius Riga Bratislava Oslo Oslo Riga Riga Riga Oslo Nicosia Oslo Oslo Tallinn Riga

Linstow AS number of shares 12 800 000 100 157 874 40 100 1 000 139 213 30 751 25 658 100 000 99 999 40 100 845 612 1 223 823 3 000 11 573 586 40 100 661 172 1 000 000 10 000 1 600 000 308 998 1 24 990 300 000 768 1 799 701 40 850 1 000 1 500 500 1 4 986 200

Linstow AS shares/votes % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 %

Linstow AS Carrying amount (NOK 000) 333 461 285 320 269 072 248 522 158 166 133 403 130 517 124 744 124 113 122 186 103 515 96 848 59 895 50 641 41 425 38 935 34 373 31 600 28 548 25 518 15 691 13 738 12 544 12 520 11 978 11 908 9 783 3 306 2 598 1 757 500 19 2 537 141

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

Shares and interests in associated companies Company Baltic Park AS Bergen Lufthavn Utvikling AS Oslo S. Utvikling AS Total PAGE 18

Reg’d office Oslo Oslo Oslo

Linstow Group number of shares 1 375 1 200 3 000

Linstow Group shares/votes % 50,0 % 50,0 % 33,3 %

Linstow AS Carrying amount (NOK 000) 9 500 9 401 295 333 314 234

NOTES

Company Baltic Park AS Bergen Lufthavn Utvikling AS (*) AS “Infrastruktūras FINCO” Oslo S. Utvikling AS Total

Linstow Group Carrying amount 2013 (NOK 000) 20 409

568 815 589 223

Linstow Group Linstow Group Profit/Loss Acquisitions and other (NOK 000) (NOK 000) 6 700 -8 995 -13 157 177 4 666 -50 000 -1 790 -58 818

Linstow Group Carrying amount 2014 (NOK 000) 18 114 177 523 481 541 771

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

Other shares Company Koksa Eiendom AS Norefjell Golfbane AS Total Linstow AS

Reg’d office Oslo Krødsherad

Linstow AS number of shares 16 146 670 61

Linstow AS shares/votes % 12,5 % 6,1 %

Linstow Group Carrying amount (NOK 000) 131 077 131 077

Other Total Linstow Group

4 131 081

NOTE 5 INTANGIBLE ASSETS AND FIXED ASSETS Intangible assets Linstow AS 2014 2013

(NOK 000) Cost, 1 Jan Disposals Total

0

0

Properties

Land 14 387

0

14 387 -1 701

Linstow Group 2014 2013 43 43 -43 0 43

Fixed assets – Linstow AS (NOK 000) Cost, 1 Jan Additions Disposals Cost, 31 Dec Accumulated amortisation and impairment, 1 Jan Depreciation for the year Impairment losses for the year Disposal of depreciation and impairment Accumulated depreciation and impairment, 31 Dec Carrying amount, 31 Dec

Machinery, fixtures and vehicles 5 548 3 577 -755 8 370 -3 787 -1 057

Projects in progress 2 960 66 3 026

1 701 705 -4 140

0

4 230

0

Interest on capital expenditure in 2014 recognised in balance sheet Depreciation rates 20-30 %

14 387

3 026

0%

0%

Total 22 895 3 643 -755 25 783 -5 488 -1 057 1 701 705 -4 140 21 643

PAGE 19

NOTES

Fixed assets – Linstow Group (NOK 000) Cost, 1 Jan Transferred from/to projects in progress Exchange differences Additions Disposals Cost, 31 Dec Accumulated Depreciation and impairment, 1 Jan Depreciation for the year Impairment/reversal for the year Exchange differences Disposal of depreciation and impairment Accumulated depreciation and impairment, 31 Dec Carrying amount, 31 Dec

Machinery, fixtures and vehicles 363 276 11 953 23 455 28 441 -24 743 402 383 -294 989 -20 674 -20 822 24 217 -312 267 90 116

Properties 4 055 589 495 665 200 494 113 067 522 730 5 387 545 -1 475 236 -111 401 -20 668 -78 401 -523 732 -2 209 438 3 178 107

Interest on capital expenditure in 2014 recognised in balance sheet Depreciation rates 20-30 %

1-8 %

Land 1 022 584 -13 602 30 029 87 241 12 579 1 138 831 -422 921

Projects in progress 109 685 -508 475 997 494 669 -1 872 95 004 -27 852

8 782

-2 862

-12 579 -426 718 712 113

-136 -30 850 64 154

Total 5 551 134 -14 458 254 975 723 418 508 695 7 023 763 -2 220 998 -132 075 -14 747 -99 223 -512 230 -2 979 273 4 044 491 2 253

Projects for sale (NOK 000) Cost, 1 Jan Impairment Transferred from fixed assets Exchange differences Additions Disposals Carrying amount, 31 Dec

Linstow AS 2014 2013

0

0

Linstow Group 2014 2013 113 477 127 722 8 230 -31 755 14 458 9 479 17 461 6 205 3 772 -38 499 -3 724 113 350 113 477

NOTE 6 FINANCIAL ITEMS Finance income (NOK 000) Finance income from group companies Finance income from group account arrangement Finance income from associates Currency gains Adjustment to value of financial instruments Other finance income Total

Linstow AS 2014 2013 22 754 18 134 3 330 6 812 2 452 1 918 46 625 37 490 43 229 118 389

116 651 181 005

Linstow Group 2014 2013 7 988 3 926 7 449 2 452 1 918 27 336 32 171 7 212 20 955 44 466 117 728 93 380 180 222

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

PAGE 20

NOTES

Finance expense (NOK 000) Finance costs - Group companies Currency losses Adjustment to value of financial instruments Other finance expense Total

Linstow AS 2014 2013 -44 118 -63 942 -114 923 -204 331 -5 224 -20 609 -13 682 -184 875 -281 955

Linstow Group 2014 2013 -58 119 -41 289 -115 988 -215 396

-47 440 -1 444 -114 697 -163 581

NOTE 7 TAX EXPENSE Tax expense for the year consists of: (NOK 000) Income tax payable Change in deferred tax Total tax expense

Linstow AS 2014 2013 37 851 37 851

68 203 68 203

Linstow Group 2014 2013 -14 352 -14 014 33 429 -16 455 19 077 -30 469

Tax impact of temporary differences: (NOK 000) Current assets Tangible fixed assets Profit and loss account Pensions Other temporary items Tax loss carry-forwards Tax loss carry-forwards with limitation of interest rate deductions Differences not offset Deferred tax/tax benefit

Of which Norwegian business, classified as a deferred tax benefit Of which foreign business, classified as liabilities Change in deferred tax Change in deferred tax Acquired through acquisitions Group contributions, currency gains/losses and other Change in deferred tax in income statement

Linstow AS 2014 2013 -7 178 -1 904 -2 780 20 439 25 549 -9 522 -8 098 -8 081 -106 622

Linstow Group 2014 2013 -3 991 -5 422 110 250 -18 732 23 807 29 759 -9 522 -8 098 61 942 69 532 -59 639 -170 716 -121 48 523 128 029 171 250 24 353

932

-99 129

932

-99 129

2 447 168 803

-124 121 148 474

-100 061

68 203

12 005

137 911 37 851

68 203

-146 898 6 886 173 440 33 429

-28 460 -16 455

PAGE 21

NOTES

Explanation of the Group’s tax expense Linstow AS 2014 2013 365 522 515 290 -98 691 -144 281

(NOK 000) Profit before tax 27 % tax (28 % in 2013) Tax effect of: Permanent differences Difference in tax and calculation rates Calculated tax expense Effective tax rate for the Group

Linstow Group 2014 2013 55 816 295 009 -15 070 -82 602

136 542

216 156 -3 671

13 066 21 081

20 669 31 464

37 851

68 203

19 077

-30 469

-10 %

-13 %

-34 %

10 %

Retained equity 560 493 -710 000 518 300 403 372 772 166

Total equity 1 783 635 -710 000 518 300 403 372 1 995 307

Minority interests 1 241 289

NOTE 8 CHANGES IN EQUITY Changes in equity – Linstow AS Paid-in capital Share Other capital paid-in capital 817 808 405 333

(NOK 000) Balance, 1 Jan Accrued dividend Received group contributions after tax Profit for the year Balance sheet as at 31 Dec Changes in equity – Linstow Group (NOK 000) Balance, 1 Jan Acquired through acquisitions Accrued dividend Received group contributions after tax Exchange differences recognised directly in equity (*) Profit for the year Balance sheet as at 31 Dec

817 808

405 333

Share Other paid-in capital capital 817 808 405 333

Retained equity 61 471

817 808

-710 000 518 300 -24 757 75 057 -79 929

71 -164 1 438

Total equity 1 285 853 289 -710 000 518 300 -24 686 74 893 1 144 650

-6 295

71

-6 224

405 333

(*) Accumulated exchange differences included in retained earnings

NOTE 9 OTHER RECEIVABLES Current receivables (NOK 000) Accounts receivable Inventories Accruals and other receivables Total

Linstow AS 2014 2013 782 11 059 11 842

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

PAGE 22

1 012 1 012

Linstow Group 2014 2013 36 232 28 673 7 492 7 839 36 036 23 058 79 761 59 569

NOTES

Long-term receivables (NOK 000) Advance payments, etc. the Baltics Land purchase option Total

Linstow AS 2014 2013

Linstow Group 2014 2013 30 227 32 211 30 227

32 211

NOTE 10 MORTGAGES Carrying amounts of assets provided as collateral for mortgage liabilities are: (NOK 000) Mortgage liabilities Carrying amounts of assets pledged as collateral for liabilities: Shares (*) Real property and projects in progress Fixtures and fittings Other Total

Linstow AS 2014 2013 706 384 322 889

758 436

758 436

Linstow Group 2014 2013 3 857 622 3 332 017

345 429

345 429

3 797 871 70 214 76 241 3 944 326

3 020 022 58 426 47 043 3 125 490

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

Guarantees for parent companies Linstow AS is wholly owned by Møllegaarden AS. Møllegaarden AS is wholly owned by AS Investa, and the latter is wholly owned by AWilhelmsen AS. Møllegaarden AS has provided 1st priority collateral on all its shares in Linstow AS as security for a syndicated loan raised

by AWilhelmsen AS. The guarantee has an upper limit of NOK 3,19 billion.

Credit facilities Linstow’s total credit facilities amounted to NOK 100 million as of 31 December 2014.

The Company had NOK 100 million in undrawn credit facilities as of 31 December 2014.

Repayment schedule for secured debt and credit facilities Long-term liabilities due within: 1 year 2 years 3 years 4 years 5 years 6 years + Total

Linstow AS 2014 2013 179 092 31 434 40 352 312 411 44 912 10 478 253 881 10 478 268 777 136 216 100 100 887 114 501 017

Linstow Group 2014 2013 300 070 139 092 954 305 418 208 213 812 866 493 986 931 407 587 1 098 000 632 954 485 233 1 045 812 4 038 352 3 510 145

Linstow AS 2014 2013 35 266 29 993 22 438 21 310 57 704 51 303

Linstow Group 2014 2013 36 979 31 688 86 266 31 522 123 245 63 210

Other liabilities / Other long-term liabilities (NOK 000) Plan liabilities (see note 3) Other liabilities and provisions Total Other liabilities were primarily losses on swap contracts.

PAGE 23

NOTES

NOTE 11 CURRENT INTEREST-FREE LIABILITIES

(NOK 000) Trade payables Accrued interest Income tax payable Dividends and Group contributions (*) Advances from tenants and customers Public duties payable, holiday pay etc.

Other accruals Total

Linstow AS 2014 2013 1 286 230 1 195 806 23 364 710 000 300 000 6 017 28 913 770 776

5 299 27 730 334 064

Linstow Group 2014 2013 57 959 50 662 10 781 11 404 29 254 7 629 710 000 300 000 68 481 53 687 15 056 20 118 81 850 84 748 973 381 528 247

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

NOTE 12 BANK DEPOSITS, GROUP ACCOUNT (NOK 000) Cash and bank deposits Group account Total

Linstow AS 2014 2013 3 086 2 910 188 861 863 594 191 947 866 504

Linstow Group 2014 2013 207 777 214 078 236 868 904 197 444 645 1 118 275

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

NOTE 13 GUARANTEE LIABILITIES AND OTHER COMMITMENTS (NOK 000) Guarantee commitments

Linstow AS 2014 2013 308 596 200 135

Linstow Group 2014 2013 225 913 200 135

The entire guarantee commitments for the parent company relate to foreign subsidiaries. In addition to the above, Linstow AS has provided the following guarantees: Linstow AS has guaranteed for the payment of interest and amortisation of mortgage loans taken by the subsidiary UAB Baltijos Parkai.

Total guarantee as of 31 December 2013 was EUR 0,6 million. As a return service for the guarantee, certain financial covenants in the loan agreement have been waived for one year.

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

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

.

PAGE 24

NOTES

NOTE 14 SHAREHOLDER INFORMATION Shareholders at 31 December 2014 Møllegaarden AS

Number of share 1 264 000

Nominal value 647

Shareholding % 100,0 %

2014 1 264 000 1 264 000

2013 1 264 000 1 264 000

All the company’s shares carry one vote.

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

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

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

2014 (NOK 000) Fee income Administrative costs Finance income Finance income Group banking system Finance expense Intragroup contributions Dividends Total Lending Borrowing Group account

2013 (NOK 000) Fee income Administrative costs Finance income Finance income Group banking system Finance expense Intragroup contributions Dividends Total Lending Borrowing Group account

Shareholders 9 581 7 988

518 300 -710 000 -174 131 1 017 988 710 000

Shareholders 6 813

-300 000 -293 187

Group Companies 3 842 -1 159 14 766 3 330 -44 118 19 135 373 635 369 431

Associated Companies 3 820

376 924 938 526 188 861

47 562

Group Companies 3 884 -1 118 18 134 6 812 -63 942

Associated Companies 3 438

381 679 345 448

180 667 186 023

262 346 238 285

443 336 1 220 216 863 594

37 610

480 945 1 220 216 863 594

2 452

60 000 66 272

1 918

Total 17 243 -1 159 25 205 3 330 -44 118 537 435 -276 365 261 571 1 442 475 1 648 526 188 861

Total 14 135 -1 118 20 052 6 812 -63 942

PAGE 25

NOTES

SEGMENT INFORMATION LINSTOW AS GROUP Income statement 1 Jan – 31 Dec (NOK 000) OPERATING INCOME Rental income, properties Profit from sale of fixed assets Project income Hotel revenues and other operating income Total operating income OPERATING EXPENSES Wages, salaries, employer's contributions and pension costs Other administrative expenses Cost of materials Operating costs for properties and bad debts Project expenses Loss on sale of fixed assets Impairment of fixed assets Depreciation Total operating expenses Operating profit FINANCIAL ITEMS Profit/loss from group companies and associates Finance income Finance expense Net financial instruments Net currency gains/losses Net financial items

Hotels Baltic/Eastern Europe 2014 2013

Shopping centres, Baltic 2014 2013

153 557 74

4 804

4 411

Portugal and Sweden 2014 2013

178

108

158 947 7

545 503 545 681

512 422 512 531

34 010 192 965

26 050 179 681

-3 361 1 443

-2 547 1 864

-120 080 -191 009 -45 337 -266

-111 769 -183 393 -44 255 -9

-23 771 -19 681

-23 573 -18 697

-4 738 7 629

-4 394 6 540

-20 179

-10 523

-1 737

-1 538

7 751 -76 361 -425 302

-16 65 705 -74 616 -348 353

-2 -24 199 -29 746 -117 577

-11 332 -26 718 -90 843

-896 258

-14 424 -845 -14 661

-20 545 -37 994 -4 130 -4 427 -36 100 8 230 -2 122 -97 088

120 379

164 178

75 388

88 838

1 701

-12 797

-3 020

6 700 80 -1 700

7 723 75 -2 112

-1 5 079

243 -34 296 4 420 -279 -29 912

250 -41 156 12 533 -417 -28 790

706 -38 334 -8 363 -126 -46 117

732 -32 405 1 975 555 -29 144

Profit before tax

90 468

135 388

29 271

59 694

Investments, exclusive of associates Sale of fixed assets and projects, exclusive of associates

51 126 1 198

31 793 160

286 451 230

36 646 1 707

PAGE 26

Offices (Baltic), not allocated 2014 2013

Offices etc, Norway 2014 2013

1 564 166 40 673 51 665 94 068

1 483 -1

75 668 355

67 642 429

48 541 50 023

16 644 92 668

13 752 81 823

-18 975 -31 293 -3 988 -2 162 -3 729 -6 -43 793 -3 127 -107 074

-59 093 -13 591

-58 311 -14 073

-13 807

-13 642

1 949 -22 951 -107 492

-57 050

2014

Total

2013

240 983 706 40 673 644 462 926 825

227 094 610

-428 -16 996 -103 451

-228 226 -254 645 -49 468 -40 417 -36 100 -2 -6 268 -132 075 -747 202

-217 021 -240 917 -48 243 -27 874 -3 729 -22 -4 273 -122 303 -664 382

-14 825

-21 628

179 623

161 540

109 104 126 029 -37 776 5 004 -15 389 186 972

-1 790 58 831 -115 988 -34 077 -30 783 -123 807

116 827 127 095 -114 696 19 511 -15 269 133 468

598 218 825 922

83 601

9 -1 247

-15 5 671

683

-4 -1 242

-8 491 57 718 -42 258 -30 134 -30 376 -53 540

6 779

-7 126

-2 337

-58 292

-68 365

165 344

55 816

295 008

67

94

6 999 172

3 888 3 147

384 691 428

7 315 466

729 333 2 028

79 736 5 480

PAGE 27

NOTES

SEGMENT INFORMATION LINSTOW AS GROUP Balance sheet at 31 December (NOK 000) ASSETS Intangible assets Real property Projects in progress Machinery, fixtures/fittings and vehicles Other shares Receivables from group companies and associates Interests in associates Other long-term receivables Total fixed assets Current receivables Projects for sale Cash, bank deposits, group account Total current assets Total assets EQUITY AND LIABILITIES Share capital (1 264 600 shares – par value NOK 647) Other equity Minority interests Total equity Deferred tax Debt instruments and credit facilities Secured debt Other non-current liabilities Total long-term liabilities Current interest-free liabilities Total current liabilities Total equity and liabilities

Hotels Baltic/Eastern Europe 2014 2013

Shopping centres, Baltic 2014 2013

43 1 494 233 1 179 51 685

1 243 052 53 831 11 029

2 653 1 586 883

1 998 1 549 139

177 23 055 1 331 144

26 022 1 007 651

27 813

23 428

28 119

34 525

96 051 123 864

96 521 119 950

87 814 115 933

1 710 747

1 669 089

1 447 077

1 509 655 3 255 71 320

22 114

35 902

1 808 583

1 604 405

868 26 036 5 857 32 761

12 306 85 283 12 558 110 147

8 712 87 441 7 070 103 223

1 029 110

-7 964

101 912 136 437

401 28 067 8 163 36 631

240 060 1 269 169

1 144 088

83 040

80 254

132 262

139 125

22 799

103

94

18 114 4 518 46 409

906 932 898 968

59 569 113 477 1 118 293 1 291 339

3 077 752

2 503 373

6 450 878

5 535 929

817 808 355 197 1 173 005

817 808 325 404 1 438 1 144 650

817 808 466 805 1 241 1 285 854

178 128 750 764 60 264 989 156

171 250 180 730 3 857 622 123 243 4 332 846

148 474 178 128 3 332 017 63 211 3 721 830

341 213 341 213

973 381 973 381

528 247 528 247

2 503 374

6 450 876

5 535 930

-57 012

-55 171

106 574

118 588

884 751

79 574

77 011

7 762

7 862

1 123 244 2 906 1 203 161

131 119 43 138 925

126 538 40 134 440

99 042 99 042 1 447 077

92 703 92 703

1 127 1 127 83 040

985 985

1 144 088

80 254

2 446 180 730 1 123 759 106 826 1 413 761 25 688 25 688 132 262

20 538 20 538 139 126

2013

1 097 749 113 350 444 645 1 655 744

-145 624

1 401 790 12 294 1 493 658

Total

3 890 222 64 155 90 116 131 081 47 562 541 772 30 227 4 795 134

118 588

63 601

1 669 089

20 409 4 191 47 493

1 095 578 6 111 4 774 131 077 47 562 523 481

23 674

106 574

81 467

72 808 72 808

31 190 665 4 044 3

901 193 69 646 10 627 164

2014

124 164 3 180 017 81 833 68 287 131 245 37 610 589 223 32 211 4 244 591

-55 171

201 208

68 283 68 283 1 710 746

18 263 958 2 890 4

124 121 730 602 10 343 1 838 131 077 37 610 568 815

-57 012

-145 624

1 395 073

Offices etc, Norway 2014 2013

-153 018 1 241 -151 777

201 208

1 331 471

Portugal and Sweden 2014 2013

817 808 66 943

354 523 1 438 355 961

1 200 954 4 080 1 286 502

Offices (Baltic), not allocated 2014 2013

779 241 779 241 3 077 753

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

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AUDITOR’S REPORT 2014

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AUDITOR’S REPORT 2014

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signatur.no • 150036

Linstow AS, Tjuvholmen allé 3, PB. 1594 Vika, N-0118 Oslo, Norway PAGE T: +47 233211 96 00 F: +47 23 11 96 10 W: www.linstow.no