Quarterly Report • Mar 11, 2016
Quarterly Report
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December 2015
Pioneer Property Group ASA (PPG) is a real estate company focusing on providing high-quality properties for government-backed care-services. The company's current portfolio consists of 112 Norwegian kindergartens centrally located in the largest cities and which house a total of over eleven thousand children. The properties are leased out on long-term triple-net contracts to large kindergarten operators, including Norlandia Care Group and Espira. The Company's headquarter is in Oslo, Norway.
In accordance with the Accounting Act § 3-3, we confirm that the financial statements have been prepared under the assumption of going concern.
The financial statements have been drawn up in accordance with International Standards for Financial Reporting (IFRS). The consolidated accounts for the third quarter were compiled in accordance with IAS 34 -Interim Financial Reporting. The financial statements of the fourth quarter is an update on the last report which is the third quarter, and are therefore intended to be read in conjunction with the report of the third quarter.
The annual report gives an accurate overview of the Group's financial development throughout the year. There have been no events after the end of the fiscal year 2015, which have had any material impact on the financial status of the Company.
The group is not involved in any $R & D$ activities.
There are no employees in Pioneer Property Group ASA. The Board of Directors consists of 2 woman and 3 men.
The Company's operations do not result in pollution or spillage harmful to the external environment.
The Company is exposed towards various financial risks, but the Board of Directors view the total exposure to be at a controllable level. Some of the most important risk factors are:
The Board of Directors and management performs ongoing assessments of the most important financial risk factors, and also evaluates the necessity of implementing specific measures, such as fixing interest rates. Specific measures are considered in light of the Company's total financial risk exposure.
The Board of Directors propose the following allocation of the net income of 36 163 MNOK:
| Transfer to other reserves: | 36 163 TNOK |
|---|---|
| Total: | 36 163 TNOK |
We confirm, to the best of our knowledge, that the set of financial statements for the financial year ending 31 December 2015 has been prepared in accordance with IFRS, and gives a true and fair view of the Group's assets, liabilities, financial position and profit or loss as a whole.
We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the financial year and their impact on the set of financial statements, a description of the underlying principal risks and uncertainties, and major related parties' transactions.
Oslo, 10 March 2016 Board of Directors and Chief Executive Officer of Pioneer Property Group AS
Roger Adolfsen Leader Board of Directors
Even Carlsen Board member
Sandra Henriette Riise Board member
Nina Higrdis Torp Høisæter Board memeber
Geir Hjort Board member
Runar Rønningen CEO
| NOK thousand | Note | YTD 15 |
|---|---|---|
| Income from rent | 2 | 129 319 |
| Other income | $\overline{2}$ | $-223$ |
| Total Income | 129 097 | |
| Payroll expenses | 15 | 314 |
| Expenses related to property | 7 | |
| Other operating expenses | 7 | 31 943 |
| Total Expenses | 96 840 | |
| Fair value adjustment on investment properties | 11 | 96 840 |
| Operating profit (EBIT) | ||
| Finance income | 12 | 7 1 2 2 |
| Finance expenses | 12 | 62 189 |
| Net Finance | -55 067 | |
| Profit/(loss) before tax | 41773 | |
| Income taxes | 9 | 5610 |
| Profit/(loss) for the period | 36 163 | |
| Proposed dividends | ||
| Total distributed | 36 163 | |
| Consolidated Statement of Comprehensive Income: | ||
| NOK thousand | Note | YTD 15 |
| Profit/(loss) for the period | 36 163 | |
| Total other comprehensive income, net of tax | ||
| Comprehensive income for the period | 36 163 | |
| Profit or loss for the period attributable to | ||
| Owners of Pioneer Property Group ASA | 36 163 | |
| Comprehensive income for the period attributable to | ||
| Ordinary shareholders og Pioneer Property Group ASA | 6 178 | |
| Earnings per share (NOK) | ||
| Basic earnings per preference share | 5 | 4.61 |
| Basic earnings per ordinary share | ||
| 5 | 0.70 | |
| Dividend per preference share | 5 | 4.61 |
| NOK thousands | Note | 31.12.2015 |
|---|---|---|
| Assets | ||
| Investment property | 11 | 3413174 |
| Deferred tax assets | 10 | |
| Fixed assets | ||
| Total non-current assets | 3413174 | |
| Trade and other receivables | 10 607 | |
| Cash and cash equivalents | 6 | 195 329 |
| Total current assets | 205 936 | |
| Total assets | 3619111 | |
| Equity and liabilities | 16 314 | |
| Share capital | 18 18 |
|
| Share premium | 1585148 | |
| Retained earnings | 36 163 | |
| Total equity | 1637625 | |
| Borrowings | 8 | 1698 190 |
| Deferred tax | 9 | 15844 |
| Other non-current liabilities | 139 508 | |
| Total non-current liabilites | 1853542 | |
| Borrowings | 8 | 86793 |
| Current tax payable | 9 | 7 3 6 3 |
| Other current liabilities | 33787 | |
| Total current liabilities | 127 944 | |
| Total liabilities | 1981485 |
Oslo, 10 March 2016 Board of Directors and Chief Executive Officer of Pioneer Property Group ASA Monde Kin
ä
Roger Adolfsen
Leader/Board of Directors
Even Carlsen Board member Sandra Henriette Riise
Board member
Nina Hjørdis Torp Høisæter Board memeber
Runar Rønningen $CEO$
Geir Hjort
Board member
3619111
| Attributable to owners of the parent | |||||
|---|---|---|---|---|---|
| NOK thousands | Share capital | Share premium |
Retained earnings |
Total Equity | |
| Balance at 5 January 2015 | 30 | 0 | 30 | ||
| Profit/(loss) for the period Proposed dividends |
36 163 0 |
36 163 0 |
|||
| Other comprehensive income for the period | 0 | ||||
| Total comprehensive income for the period | 0 | 0 | 36 163 | 36 163 | |
| Reduction of share capital | $-30$ | -30 | |||
| Proceeds from shares issues debt conversion | 15 3 84 | 1 523 063 | 1538447 | ||
| Proceeds from shares issued, contribution in kind | 30 | 2970 | 3000 | ||
| Proceeds from shares issued | 900 | 89 100 | 90 000 | ||
| Repayment premiums | $-29995$ | $-299965$ | |||
| Transactions with owners | 16 284 | 1585 148 | 0 | 1601432 | |
| Balance at 31 December 2015 | 16 314 | 1585148 | 36 163 | 1 637 625 |
| NOK thousands | Note | YTD 15 |
|---|---|---|
| Cash flows from operating activities: | ||
| Profit before income tax | 41 773 | |
| Adjustments for: | ||
| Fair value adjustments on investment property | 12 | |
| Interest expense - net | 13 | |
| Borrowing cost | 9 | |
| Net (gain)/loss on sale of shares | ||
| Changes in working capital: | ||
| Trade receivables | 17 | $-807$ |
| Trade payables | 18 | |
| Other accruals | 128 377 | |
| Cash generated from operations | 169 343 | |
| Interest paid | ||
| Income tax paid | 8 | |
| Net cash generated from operating activities | 169 343 | |
| Cash flows from investing activities: | ||
| Purchase of property | 11 | -3 413 174 |
| Purchase of net other assets | 11 | |
| Other long term receivables | ||
| Proceeds from sale of shares and bonds | 9, 19 | |
| Net cash used in investing activities | $-3413174$ | |
| Cash flows from financing activities: | ||
| Proceeds from debt to financial institutions | 8 | 1837698 |
| Proceeds from other borrowings | 8 | |
| Repayments of debt to financial institutions | 9 | |
| Proceeds from shares issued | 18 | 1631477 |
| Repayment of shares issued | 18 | $-30015$ |
| Dividends paid to owners of the parent | 15 | |
| Dividends paid to non-controlling interests | 15 | |
| Net cash from financing activities | 3 439 161 | |
| Net change in cash and cash equivalents | 195 329 | |
| Cash and cash equivalents at beginning of period | 6 | |
| Exchange gains/(losses) on cash and cash equivalents | ||
| Cash and cash equivalents at period end | 6 | 195 329 |
| Consistency check: | |
|---|---|
| Cash and cash equivalents in Balance Sheet | 195 329 |
Pioneer Property Group ASA (the 'Company') and its subsidiaries (together, the 'Group') invests in kindergarden and preschool properties and rent the properties out on long term leases. The Group holds investment properties in Norway.
Pioneer Property Group ASA is a public limited company incorporated and domiciled in Norway. The adress of the Company's registered office is Rådhusgata 23, 0158 Oslo.
The Company was incorporated 5 January 2015. The Group was formed 12 May 2015 after the acquistions of Pioneer Public Properties I AS, Pioneer Public Properties II AS, Pioneer Public Properties III AS and Pioneer Public Properties IV AS. See note $11.$
The consolidated interim financial statements covers the period from 1 April 2015 to 31 December 2015 (Q2-Q4 column) and 5 January 2015 - 31 December 2015 (YTD column).
The interim consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The interim consolidated financial statments have been prepared under the historical cost convention, as modified by fair value adjustments to investment properties.
The interim consolidated financial statements are the Group's first financial statements and in accordance with IFRS 1. For illustrative figures representing the Group as if it was established in 2015 refer to the combined IFRS statement presented in the Group's prospectus.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estiamtes are significant to the consolidated financial statements are disclosed in note 4.
The consolidated financial statements have been prepared on a going concern basis.
All financial numbers are presented in thousand NOK, unless otherwise stated.
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred
Acquisition related costs are expensed as incurred.
Acquisition of subsidiaries or other entities not viewed as a business combination
An acquisition of entities not comprising any business activities is viewed as a purchase of assets. The acquisition cost is allocated to the acquired assets and no deferred tax is calculated for temporary differences that arise at their initial recognition
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.
These financial statements are the first accounts submitted by the Group. The financial statements and accompanying notes are in accordance with standards currently effective under IFRS as adopted by the EU.
A number of new standards and amendments to standards and interpretations are effective for periods beginning after 31 December 2015, and have not been applied in preparing these interim consolidated financial statement. None of the new Standards are expected to have a significant effect on the consolidated financial statements of the Group. The following new standards have not been implemented in the preparation of these financial statements:
Property held with the purpose of achieving rental income. increase in value or both are classified as investment property. Investment property also include property under development for future use as investment property. Investment property is initially recognised at cost included transaction costs.
Upon purchase of property management assess whether the purchase constitute purchase of a business or purchase of an asset in accordance with IFRS 3.
Transaction costs include stamp duty, lawyer's fees and commission to bring the property to the condition that is necessary to put the property into operation. Recognised value also include replacement cost for parts of the existing investment property at the time when the cost is incurred and the terms for recognition has been met.
After initial recognition the investment property is then recognised at fair value. Profit or loss from changes in fair value are presented in the income statement when they arise.
Subsequent costs relating to investment property are included in the carrying amount if it is probable that they will result in future economic benefits for the investment property and the costs can be measured reliably. Expenses relating to operations and
income statement during the financial period in which they are incurred.
Investment properties are derecognised when they are sold or are permanently out of operations and no future economic benefit is expected if disposed of. All gains or losses relating to sales or disposal are presented in the income statement the same year as disposal. Gains or losses from disposal of investment property is the difference between net selling price and the carrying amount of the asset in the previous year's financial statements
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, the right to use an asset for an agreed period of time.
All the Group's properties are leased out under operating leases. The properties are incuded in the balance sheet as Investment Property.
Revenue comprise of rental income from the properties. Lease income on operating leases is recognized over the term of the lease on a straight line basis.
Costs directly related to the operations of existing properties are recognized as real estate related costs, other costs are included as administrative costs. Costs are recognised as they are accrued.
The group classifies its financial assets in the following category: Loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Currently the Group only holds financial assets in the category loans and receivables.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the balance sheet
Regular purchases and sales of financial assets are recognised on the trade-date - the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.
Trade receivables are amounts due from customers for rental of premises. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as noncurrent assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Cash and cash equivalents includes bank deposits.
The Company has two classes of shares, ordinary shares and preference shares. Both classes are classified as equity.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.
Tax on income in the interim periods are accrued using the tax rate that would be applicable to expected annual profit.
The tax expense for the period comprises current and deferred 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 this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in Norway. Management periodically evaluates positions taken in tax calculations with respect to situations in which applicable tax regulation is subject to interpretation. Management establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit. Deferred income tax is
determined using tax rates (and laws) that have been enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
The Company has two classes of shares, ordinary shares and preference shares. The preference shares are entitled to annual dividend payments amounting to NOK 7,50 per preference share, if the General Assembly approves payment of dividends. If payable, the dividend payments will be made quarterly with NOK 1,875 per preference share.
The quarterly dividend distribution to the preference shares is recognised as equity in the Group's financial statements in the period in which the dividends are approved by the General Assembly.
Divdend distribution to Ordinary shares is recognised as a liability in the Group's financial statement in the period in which the dividend is approved by the Company's shareholders in the General Assembly to payment.
The Group's only business is to own and rent out preschool properties. All properties are in the same business segment. All properties are in Norway.
The statement of cash flow has been prepared using the indirect method, and in accordance with IAS 34 a condensed statement is presented.
The Group's activities expose it to a variety of financial risks: market risk (including fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Risk management is carried out by management under guidance by the Board of Directors, Management identifies, evaluates and act upon financial risks.
Market risk is the risk that future cash flows in the form of interest payments change as a result of changes in market interest rates. Management and the Board of Directors agree on an acceptable level of interest rate exposures, which are monitored continously by management. The level of interes rate exposure is determined based on an assesment of existing cash flows, general assesment of financial condition and available liquidity.
The Group holds interest bearing assets in terms for cash deposits. Fluctuations in interest would yield a higher or lower interest income. At the current level of cash deposits a change in interest rate of +/-1 % would not be material for the financial statements
The Group's interest rate risk arises from long-term borrowings. The Group holds several types of borrowings, refer to note 9 for details. Borrowings at fixed rates expose the Group to fair value interest rate risk.
Exposure to cash flow interest rate risk is assessed continuously. The need for a fixed rate is under constant review in relation to the Group to withstand adverse fluctuations in profit due to higher interest rates. Management's assessment is that the Group's current financial position does not indicate a further need for fixed interes rates.
If the interest rate had been +/- 1 % in 2015 the result after tax would be +/- MNOK 19,2 million, all other conditions unchanged and assuming a floating interest rate on 100% of the Company's borrowings.
The average effective interest rate of the Group's borrowings was at period end 2015: 3,3 %
Credit risk is the risk of loss when a party is unable to redeem their obligations to the Group.
Credit risk is managed on Group basis. Credit risk arises from cash and cash equivalents, and credit exposures customers, including outstanding receivables and committed transactions. Managment assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on ratings. The utilisation of credit limits is monitored regularly.
No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties.
| Exposure to credit risk at the end of the period: | 31.12.2015 |
|---|---|
| Accounts receivable | 807 |
| Other Short term receivable | 9801 |
| Cash balance | 195 329 |
| Total exposure | 205936 |
The credit risk related to outstanding to related parties and banks is considered to be low.
Liquidity risk is the risk that the Group will not be able to meet its obliagtions at maturity without incurring a significant increase in finance cost or not being able to meet its obliagtions at all. The risk also includes that the Group must forfeit investment oportunities. Cash flow forecasting is performed at Group level. Group management monitors the Group's liquidity requirements to ensure that it has sufficient cash to meet operational needs while maintaining suffiecient headroom to avoid breaches in convenants on relevant borrowing facilities (refer to note 9), as well as capability to pay out quarterly dividends to holders of preference shares. The monitoring takes into account the Group's debt financing plans and covenant compliance.
The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:
. . . . . . .
| 31.12.2015 | ||||||
|---|---|---|---|---|---|---|
| $<$ 3mnths | $3m-1v$ | $1v-2v$ | $2v-5v$ | >5v | ||
| Borrowings (bank) | 9901 | 29 942 | 190 450 | 340 854 | 645 719 | |
| Interest on borrowings (bank) | 11 366 | 33727 | 38 050 | 107 761 | 194 518 | |
| Bond loans | ÷ | 46 500 | 59 900 | 478 150 | 56 | |
| Interest on bond loans | 9 2 3 5 | 27 705 | 36 940 | 39 235 | $\overline{\mathcal{D}}$ | |
| Other liabilities | 33787 | У. | 139 508 | $\sim$ | 14 |
The group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal c
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders holding ordinary
shares, retum capital to shareholders, issue new shares or sell assets to reduce debt gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 'current and
non-current borrowings' as shown in the consolidated balance sheet) less cash as shown in the consolidated balance sheet plus net debt.
| Gearing ratio at the end of the period | 31.12.2015 |
|---|---|
| Total borrowings | 1923099 |
| Less: Cash and cash equivalents | 195 329 |
| Net debt | 1727770 |
| Total equity | 1637625 |
| Total capital | 3 365 396 |
| Gearing ratio | 51% |
The Group's business is to own and manage investment properties in Norway and rent them out to operators of pre-schools. There is
no material difference in risk and margins in the different investment properties. The Group business area and in one geographical area. Further segment information is therefore not prepared.
The Group have three customers: Norlandia Barnehagene, Kidsa Barnehager and Espira all of which contribute with more than 10 % of operating revenue.
The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of items in the statement of financial position within the next financial year are addressed below.
a) Fair value of Investment Properties.
The fair value of investment properties is assessed quarterly by management. The Investements Properties are on a regular basis subject to on-site inspections and technical evaluations.
The properties are valued using a combination of discounted cash flow models and market based property yield. The Investment Properties are measures at level 3. All significant inputs are disclosed in note 12. All cash flows used in the calculations are based on long term contracts. Management assess the cash flows to be stable without material uncertainty. The critical accounting estimates in the calculation, based on management's judgement is the yield.
The yield is calculated per investment property. The prime yield for pre-school properties is 5,50 %. Factor such as the property's location in relation to a major city, net-population change, size of the property/per child, year of build and whether or not the property is on a leased land(Norwegian: festetomt).
The average gross yield for the investement property portfolio is 6,0 %. Refer to note 12 for sensitivities.
$\bar{\nu}$
The Group has no contingent liabilities nor commitments as at 31 December 2015.
a) Basic
The Group's preference shares are entitled to a fixed dividend of NOK 7.50 per annum, if the General Assembly approves payment of dividends. To calculate the earnings per share the entitled dividend to the preference shares is deducted from
comprehensive income for the period. The earnings per ordinary share is the remaining comprehensive the preference share dividend divided by the weighted average number of shares in issue during the period.
| Calculation of earnings per share for the period | Q2 | Q3 | Q4 | YTD |
|---|---|---|---|---|
| Comprehensive income for the period | -4 293 789 | 13 349 000 | 27 107 828 | 36 163 039 |
| Less: Dividend to preference shares | $-5609565$ | $-12$ 187 500 | $-12$ 187 500 | -29 984 565 |
| Total | $-9903354$ | 1 161 500 | 14 920 328 | 6 178 474 |
| Weighted average number of ordinary shares in issue | 5 145 220 | 9 8 14 4 70 | 9 8 14 4 70 | 8 832 524.67 |
| ESP to ors shares | $-1.92$ | 0.12 | 1.52 | 0.70 |
b) Diluted
As per 31 December 2015 no rights are issued which cause diluted earnings per share to be different to basic earnings per share.
Refer to note 17 for information related to the classes of shares.
| Cash and cash equivalents | 31.12.2015 |
|---|---|
| Bank deposits | 195 329 |
| Total | 195 329 |
There are no restricted funds at the end of the period.
For the full year 2015, the Company incurres additional expenses, particulary due to the listing of the preference shares on Oslo Axess. See the tabel below for a spedification.
| Specification of other operating expenses | 30.06.2015 | 30.09.2015 | 31.12.2015 | YTD 2015 |
|---|---|---|---|---|
| Expenses related to initial public offering | 14 4 16 | $-892$ | $\sim$ | 13 5 25 |
| Other operating expenses including management fee | 5 277 | 6994 | 6 148 | 18418 |
| Total other operating expenses | 19693 | 6 102 | 6 148 | 31 943 |
Interest-bearing liabilities and available cash and cash equivalents constitute the capital of the Group. The Group's main source of financing are bank loans, bond loans in the Norwegian bond market and shareholder loans.
Summary of external bank- and bond loans by tranche as of 31 Descember 2015:
| NOK thousand | 31.12.2015 | |
|---|---|---|
| Non-current | ||
| Commercial bank loans | 404 086 | |
| Husbank loans (state bank) | 772937 | |
| Bonds in Pioneer Public Properties II AS | 174 425 | |
| Bonds in Pioneer Public Properties III AS | 346742 | |
| Total | 1698 190 | |
| NOK thousand | 31.12.2015 | |
| Current | ||
| Commercial bank loans | 19 151 | |
| Husbank Ioans (state bank) | 20692 | |
| Bonds in Pioneer Public Properties II AS | 20 000 | |
| Bonds in Pioneer Public Properties III AS | 26950 | |
| Total | 86793 | |
| NOK thousand | 31.12.2015 | |
| Total non-current and current | ||
| Commercial bank loans | 423 237 | |
| Husbank loans (state bank) | 793 629 | |
| Bonds in Pioneer Public Properties II AS | 194 425 | |
| Bonds in Pioneer Public Properties III AS | 373 692 | |
| Total | 1784983 |
The Group's bankloans are with Husbanken, Pareto Bank and Handelsbanken. The bank borrowings mature until 2035. Of the total bank borrowings per 31 December 2015 NOK 603 million are on a fixed rate. The remaining NOK 613 million are on floating rates.
Pioneer Public Property II (PPP01 PRO) at Oslo ABM amounting to NOK 200 million with maturity April 2018 and Pioneer Public Property III (PIII01) at Oslo Børs amounting to NOK 385 million with maturity June 2019. The bonds are a senior secured callable bonds with voluntary redemption at specified premiums up until maturity.
Summary of bond loans:
| Book value | Marked value | Coupon | Term | |
|---|---|---|---|---|
| Bonds | 31.12.2015 | 31.12.2015 | ||
| PPP01 PRO | 200 000 | 202 000 | $NIBOR + 5\%$ | 2013/2018 |
| PIII01 | 385 000 | 386 694 | NIBOR + 4.5 $%$ | 2014/2019 |
| Transaction costs | $-24896$ | |||
| Amortization | 8013 | |||
| Total bond | 568 117 | 588 694 | ||
| Whereof current | 46 950 | 47 269 |
In both bond agreements entered into there are limitations on the borrower (PPPII and PPPIII) in regard to additional financial indebtness, distributions and renegotions on borrowing. Also, the two bond loans are subject to the following main financial covenants.
| Bonds | l TV* | Minimum cash |
|---|---|---|
| PPP01 PRO | 120 % | MNOK 5 |
| 6 month interest | ||
| PIII01 | 120 % | payment on the bond |
*LTV: the aggregate of fair value of properties, the amount standing to credit of the issues at the escrow account and Earnings Account, must at all times exceed the covenant requirement of the total financial indebtnes of the Group
The recognised value of assets pledged as security for bank borrowings as per 31 December 2015
| 31.12.2015 | |
|---|---|
| Investment property | 3413174 |
| Total pledged assets | 3413174 |
Debt to shareholders at 31 December is MNOK 2,5 with intrest at 5%.
c) Subordinated shareholder loans
Originating from the formation of the PPG's acquisition of its four subsidiary companies PPPI-IV, and the formation of the PPG Group, the Company has some remaining subordinated shareholder loans in addition to miscellaneous other long term debt. Total other long-term debt as of 31 December was MNOK 263. A portion of this debt has with accumulating, but not payable, annual interest of 5%. The interest is accrued and recorded under non-current liabilities, which for the fourth quarter totalled MNOK 1.8
Income tax expense is recognised based on management's estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to date 31 Decemb
| Tax expense | Q 2 15 | Q 3 15 | Q4 15 | YTD 15 |
|---|---|---|---|---|
| Profit before tax | $-5.318$ | 18 2 20 | 28 871 | 41 773 |
| Adjustments for: | ||||
| - temporary differences | 1524 | $-178$ | $-8359$ | $-7014$ |
| - Permanent differences | $-12320$ | |||
| Taxable result for the period | $-3794$ | 18 042 | 20 511 | 22 439 |
| Income tax expense for the period | $-1024$ | 4871 | 1763 | 5610 |
| Estimated effective tax rate for the period | 19 % | 27% | 13% |
| Change in deferred tax/deferred tax asset YTD | Properties | Deferred loss | Other | Total |
|---|---|---|---|---|
| As per 5 January 2015 | ||||
| Recognized upon acquisition of assets | 17 597 | 17 597 | ||
| Change in the period | $-1753$ | $-1753$ | ||
| As per 31 December 2015 | 15844 | 15844 |
| Investment | loss carried | |||
|---|---|---|---|---|
| Change in deferred tax/deferred tax asset Q3 | properties | forward | Other items | Total |
| As per 1 April 2015 | ||||
| Recognized upon acquisition of assets | 17 597 | 17 597 | ||
| Change in the period | $-1753$ | $-1753$ | ||
| As per 31 December 2015 | 15844 | 15844 |
The Company was incorporated 5 January 2015. The Group was formed after the aqcusition of Pioneer Public Properties I AS, (PPP I), Pioneer Public Properties II AS (PPP II), Pioneer Public Properties III AS (PPP III) and Pioneer Public Properties IV AS (PPP IV) on 12 May 2015.
The acquisitions of PPP I, PPP II AS, PPP III and PPP IV included investment properties, liabilities and rent agreements. No employee or managemnet contract was included in the acquisition. Based on the underlying facts and circumstances, managemenet has evaluated that the purchases were not in scope of IFRS 3, but a purchase of a group of assets. Therefore no goodwill was recognized and the initial recognition excemption for recognising deferred tax was applied.
The following table summarises the consideration paid for PPP, PPP II, PPP III and PPP IV, the fair value of assets acquired, liabilities assumed at the acquisition date.
| Equity instruments | 891 447 | ||
|---|---|---|---|
| Equity instruments preference shares | 650 000 | ||
| Total consideration transferred | 1541447 | ||
| Investment property | 3 400 7 26 | ||
| Net current assets and liabilities | 43 327 | ||
| Borrowings | -1 746 088 | ||
| Shareholder loans | $-156518$ | ||
| Total identifiable assets | 1541447 |
The Group consists of the following subsidiaries per 31 December 2015:
| Company Name |
Location | Percent of stock |
|---|---|---|
| Pioneer Public Properties AS | Oslo | 100% |
| Pioneer Public Properties I AS | Oslo | 100% |
| Bodø Eiendomsselskap AS | Oslo | 100% |
| Vestlandske Eiendomsselskap AS | Oslo | 100% |
| Tromsø Eiendomsselskap AS | Oslo | 100% |
| Pioneer Public Properties II AS | Oslo | 100% |
| Idunsvei 8 Eiendom DA | Oslo | 100% |
| Oslo Barnehager Eiendom AS | Oslo | 100% |
| Vifo Romeriket Eiendom AS | Oslo | 100 % |
| Bergen Barnehager Eiendom AS | Oslo | 100 % |
| Pioneer Public Properties III AS | Oslo | 100% |
| Service Property AS | Oslo | 100% |
| Bjørgene Barnehage AS | Oslo | 100% |
| Brådalsfjellet Barnehage AS | Oslo | 100 % |
| Dragerskogen Barnehage AS | Oslo | 100% |
| Dvergsnestangen Barnehage AS | Oslo | 100% |
| Furuholmen Barnehage AS | Oslo | 100% |
| Garhaug Barnehage AS | Oslo | 100% |
| Gullhella Barnehage AS | Oslo | 100% |
| Gåserud Barnehage AS | Oslo | 100% |
| Halsnøy Kloster Barnehage AS | Oslo | 100% |
| Helldalsåsen Barnehage AS | Oslo | 100% |
| Høytorp Fort Barnehage AS | Oslo | 100% |
| Kløverenga Barnehage AS | Oslo | 100% |
| Kniveåsen Barnehage AS | Oslo | 100% |
| Krystallveien Barnehage AS | Oslo | 100 % |
| Kuventræ Barnehage AS | Oslo | 100% |
| Litlasund Barnehage AS | Oslo | 100% |
| Løvestad Barnehage AS | Oslo | 100 % |
| Marthahaugen Barnehage AS | Oslo | 100% |
| Myraskogen Barnehage AS | Oslo | 100 % |
| Nordmo Barnehage AS | Oslo | 100% |
| Opaker Barnehage AS | Oslo | 100 % |
| Opsahl Barnehage AS | Oslo | 100% |
| Ormadalen Barnehage AS | Oslo | 100% |
| Rambjøra Barnehage AS | Oslo | 100% |
| Ree Barnehage AS | Oslo | 100% |
| Romholt Barnehage AS | Oslo | 100% |
| Rubbestadneset Barnehage AS | Oslo | 100% |
| Rå Barnehage AS | Oslo | 100% |
| Salamonskogen Barnehage AS | Oslo | 100% |
| Skolegata Barnehage AS | Oslo | 100 % |
| Skåredalen Barnehage AS | Oslo | 100 % |
| Snurrefjellet Barnehage AS | Oslo | 100% |
| Solknatten Barnehage AS | Oslo | 100% |
| Stongafjellet Barnehage AS | Oslo | 100 % |
| Sundbyfoss Barnehage AS | Oslo | 100% |
| Tjøsvoll Barnehage AS | Oslo | 100 % |
| Torsbergskogen Barnehage AS | Oslo | 100% |
| Ulsetskogen Barnehage AS | Oslo | 100% |
| Vagletjørn Barnehage AS | Oslo | 100% |
| Vannverksdammen Barnehage AS | Oslo | 100% |
| Vanse Barnehage AS | Oslo | 100% |
| Veldetun Barnehage AS | Oslo | 100 % |
| Østrem Barnehage AS | Oslo | 100% |
| Åbol Barnehage AS | Oslo | 100 % |
| Århaug Barnehage AS | Oslo | 100% |
| Pioneer Public Properties IV AS | Oslo | 100 % |
| Kidsa Bygg AS | Oslo | 100 % |
| Kidsa Eiendom AS | Oslo | 100% |
| Kidsa AS | Oslo | 100 % |
| Kidsa Eiendom II AS | Oslo | 100 % |
| Norlandia Barnehagebygg AS | Oslo | 100 % |
| Arken Barnehage Eiendom AS | Oslo | 100 % |
The Group rent out the investment properties on long term triple net contracts, with an exception on the properties leased to Espira, one of the Group's three customers, refer to note 3. On average there are 17 years remaining on the lease agreements. All agreements are CPI adjusted annually. The Group does not have any future capital expenditure on properties as all maintenance is carried by the tentant.
The properties are located in the greater Oslo area, Bergen, Stavanger, Bodø and Tromsø. See the Company's web site for a full list and map of all the properties.
The investment properties are valued in accordance with the fair value method and all have been valued in accordance with valuation Level 3.
The yield level of the properties has been determined on the basis of their unique risk and transactions made at the respective location according to the location price method.
At the end of 2015, the Company has valued its portfoluo basedupon a gross average 6% yield - however an axternal cashflow valuation for all the individual properties, to support the Company's valuation approach, was also carried out by external company Newsec.
The Group uses yield valuation according to the cash flow method for external and internal valuations. The same valuation method has been used for all of the Group's properties. From the outcome in the cash flow model, the fair value of the property is calculated before deduction for selling expenses.
A property analysis is an estimate of the value that an investor is willing to pay for the property at a given time. The valuation is made on the basis of generally accepted models and certain assumptions on different parameters. The market value of the properties can only reliably established in a transaction between two independent parties. An uncertainty interval is stated in the property values and is between +/- 5 per cent in a normal market. A changed property value of +/-5 per cent affects the Groups's property value by +/- NOK 171 million.
| NOK thousands | Q 2 15 | Q3 15 | Q4 15 | YTD 15 |
|---|---|---|---|---|
| Interest income | 508 | 2 1 6 5 | 4 449 | 7 122 |
| Interest income from related parties | $\bullet$ | ÷ | ||
| Interest expense | 13342 | 28898 | 19 949 | 62 189 |
| . |
Net financial items
| Related party | Relation to the Group |
|---|---|
| Roger Adolfsen | Chairman of the Board and owner of Mecca Invest AS |
| Sandra Henriette Riise | Board member |
| Geir Hiort | Board member |
| Even Carlsen | Board member and owner of Grafo AS |
| Nina Hjørdis Torp Høisæter | Board member |
| Runar Rønningen | CEO Pioneer Capital Partners |
| Pioneer Capital Partners AS | Shareholder and Deliverer of managment services |
| Hospitality Invest AS | Substantial shareholder |
| Grafo AS | Substantial shareholder |
| Kevenstern AS | Substantial shareholder |
| Mecca Invest AS | Substantial shareholder |
| Norlandia Care Group AS | Controlled by substantial shareholders, refer to note 18 |
| Kidprop AS | Controlled by substantial shareholders, refer to note 18 |
| Kidsa Drift AS | Controlled by substantial shareholders, refer to note 18 |
| Acea Properties AS | Controlled by substantial shareholders, refer to note 18 |
| Ord. Shares | Pref. shares | |
|---|---|---|
| Roger Adolfsen | 2938912 | 538 126 |
| Even Carlsen | 1773386 | 384 094 |
| Runar Rønningen | 59 650 |
| Transactions with related parties | Q 2 15 | Q3 15 | Q4 15 | YTD 15 |
|---|---|---|---|---|
| Rent revenue from Norlandia Care Group AS including subsidiaries | 8 449 | 14 937 | 14 937 | 38 324 |
| Rent revenue from Kidsa Drift including subsidiaries | 4477 | 9539 | 9539 | 23 556 |
| Management fee to Pioneer Capital Partners AS including subsidiaries | 785 | 2800 | 2800 | 6 3 8 5 |
| Purchase of shares from related parties (refer to note 11) | 1 541 447 | 541 447 |
| Receivables from related parties | 31.12.2015 |
|---|---|
| Kidprop AS | 7658 |
| Hospitality Invest AS | 5874 |
| Liabilities to related parties | 31.12.2015 |
| Pioneer Capital Partners AS | 109 237 |
| Norlandia Care Group AS | 2554 |
| Kidsa Drift AS | 18 24 2 |
| Acea Properties AS | 15 1 20 |
The outstanding balances between the related parties are unsecured. The interest rate used to calculate interest are based on current market rates. There are no provisions for loss on receivables. Transactions made between the related parties are made on terms equivalent to those that prevail in the market at arms length.
The company does not have any employees. Refer to Note 14 for information regarding management fee to Pioneer
Management AS, a fully owned subsidiary of Pioneer Capital Partners AS.
At the end of the accounting year 2015 t
| 31.12.2015 | |
|---|---|
| Trade Receivables | 807 |
| Other Receivables | 9801 |
| Total Receivables | 10 607 |
No provisions have been made for loss in receivables
Ageing of receivables
| A MONEY OF LOODING AND O | between 30 | ||||
|---|---|---|---|---|---|
| up to 30 days | and 60 days more than 60 | ||||
| Total | Not due | over due | overdue days overdue | ||
| As per 31.12.2015 | 10 607 | 10 607 | Dec. |
| Share value in NOK | |||||
|---|---|---|---|---|---|
| Number of | Ordinary | Preference | Total | ||
| shares | shares | shares | Share premium | ||
| Proceeds from incorporation | 30 000 | 30 000 | |||
| Paid out capital | $-30000$ | $-30000$ | |||
| Proceeds from share issue, debt conversion | 15 384 470 | 8 8 8 4 7 0 | 6 500 000 | 1 523 062 530 | 1 538 447 000 |
| Proceeds from share issue, contribution in k | 30 000 | 30 000 | 2970000 | 3 000 000 | |
| Proceeds from share issue | 900 000 | 900 000 | 89 100 000 | 90 000 000 | |
| Payment premiums | -29 984 589 | -29 984 589 | |||
| At 30 September 2015 | 16 314 470 | 9814470 | 6 500 000 | 1585 147 941 | 1601462411 |
The Company have two classes of shares, ordinary shares and preference shares. The face value per share for both ordinary and preference shares classes is NOK 1. Share premium for all shares issued in the period is of NOK 99 per share.
The differences between the share classes are differing voting rights and differing rights to the Company's profit. Besides voting rights, the difference between the Company's share classes is that the preference shares entail a preferential right to the Company's profit through a preferential right over ordinary shares to dividends. The regulations on voting rights and dividends are decided upon by the Shareholders' Meeting and can be found in the Articles of Association.
The Company's ordinary share confers one vote unlike the preference shares that confer one-tenth of a vote.
The Company's preference shares confer a preferential right over ordinary shares to an annual dividend of NOK 7.50 per preference share. Dividend payments are made quarterly with NOK 1.875 per preference share, if approved by the General Assembly. The preference share does not otherwise confer a right to dividend. If the general meeting decided not to pay dividends or to pay dividends that fall below NOK 1.875 per preference share during a quarter, the difference between paid dividends and NOK 1.875 per preference share shall be accumulated and adjusted upwards with an annual interest rate of 5 per cent until full dividends have been distributed. No dividends may be distributed to the ordinary shareholders until the preference shareholders have received full dividends including the withheld amount. Any difference between NOK 1.875 per preference share and the dividend paid per preference share is accumulated for each quarter.
Detailed information regarding dividends, issues and redemption can be found in the Company's Articles of Association, available in the prospectus at the Company's website.
| Shareholder | Ord shares | Pref shars |
|---|---|---|
| Norlandia Care Group AS | 20,05 % | 9,37 % |
| Hospitality Invest AS | 19,82% | 0,00% |
| HI Capital AS | 2.34% | 2,79 % |
| Eidissen Consult AS | 14,45 % | 4,22 % |
| Grafo AS | 14,45 % | 4,22% |
| Klevenstern AS | 14,45 % | 2,39 % |
| Mecca Invest AS | 14,45 % | 2,39 % |
| PCP AS | 0,00% | 2,85 % |
| Other minority shareholders | 0,00% | 71,77 % |
| Total | 100 % | 100 % |
Properties are leased out on long term triple net contracts to solid pre-school operators (Espira, Norlandia Preschools and Kidsa
Drift, of which all have lease guarantees from Norlandia Care Group.
Future payments under non-cancellable operating leases are as follows in nominal amounts excluding CPI adjustments
| 31.12.2015 | |
|---|---|
| Within 1 year | 208 114 |
| Between 1 and 5 years | 836 423 |
| After 5 years | 2509269 |
No material subsequent events have occurres since the end of the year.
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