Solon Eiendom : 2016 Annual Report

2016

Annual Report

Highlights

• Strong development in residential real estate market

• 259 units under construction (140) at year end

   146 units sold (125) in 2016

• 113 units completed and delivered (109/111) in 2016

(Numbers in parentheses are for the equivalent period last year) Units - Units refers to the number of apartments or houses

(figures in NOK thousand unless otherwise stated)	2016	2015
Revenue	691 497	727 200
EBITDA	74 093	127 558
Profit/(loss) before tax	37 118	100 636
Equity ratio	28 %	12 %
Segment reporting Operating revenues	787 167	804 847
EBITDA	129 609	117 010
EBITDA margin	16,47 %	14,54 %
Key figures Number of units sold	146	125
Number of construction starts	232	66
Number of units delivered	113	111
Number of units completed	113	109

Corporate governance in Solon Eiendom ASA

INTRODUCTION

The governance processes of Solon Eiendom ASA ("Company") are intended to contribute to a long term value creation and profitability.

The corporate governance of Solon Eiendom ASA shall be of a high standard. The Company has implemented the "Norwegian recommendations for Corporate governance" applicable at any time. This document will provide a statement on how Solon Eiendom ASA complies with the items set out in the recommendation.

1. Statement regarding corporate governance

   To establish a good corporate governance Solon Eiendom ASA has adopted governance principles and guidelines that will create trust, contribute to value creation and profitability over time. This includes ethical guidelines and other policy documents prepared in accordance with applicable laws, regulations and guidelines, together with the value base of the Company. It is established a clear distribution of responsibility between the owners, the board of directors and the executive management of the Company. It is the board of directors who holds the ultimate responsibility for the corporate governance of the Company.

2. Activities

   The activities of Solon Eiendom ASA are defined and described in the Company's articles of association. The articles of associations are available at www.soloneiendom.no. The objects clause of the Company reads:

   The company's purpose is to invest in and develop property and/or rights within the biotechnology and pharmaceutical area, invest in other companies and participate in other related activities.

   The board of directors decides on the Company's main strategy and objectives within the limits of the articles of association. Such decisions will be published in the Company's annual report.

3. Company capital and dividends

   "Over time, the dividend should reflect the earnings trend in operating activities. The aim is to manage the group's resources in such a way that shareholders

   achieve a return in the form of dividend and share price appreciation which is competitive with comparable investments. The average dividend over a business cycle should correspond to 50 percent of consolidated profit after tax."

   On December 14 2016 the shareholders granted a general authorisation to the board to issue new shares equalling 10% of the issued share capital. The authorisation is valid two years from issuance. The authorisation does not comply with the recommendation. In the view of the Company it is desirable to grant the board such authorisation to ensure sufficient flexibility.

4. Equal treatment of shareholders and transactions with related parties

Equal treatment of shareholders

The Company has one share class, in which all shares have equal voting rights. The articles of association of Solon Eiendom ASA do not limit the voting rights of the shares. It should be emphasized that all shareholders are treated equally, are given the same information and have the same right to influence and preferential right of participation in any capital increases.

Any exceptions from the principle of equal treatment or the preferential right of participation in any capital increases shall be based on sound reasons, published and only occur in special circumstances and be in the joint best interest of the Company and the shareholders as a group.

Transactions with related parties

Solon Eiendom ASA considers it important to demonstrate openness and caution in relation to investments, agreements and transactions that might be considered unfortunate between the Company, a shareholder, a member of the board of directors, a leading employee, or a related party to such parties. To ensure a good reputation and a sound handling of any such issues, the Company has established guidelines for interaction between the mentioned parties, which is described in the instructions to the board of directors, instructions to the management, instructions on risk management and internal control as well as in the ethical guidelines.