Quarterly Report • May 8, 2018
Quarterly Report
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Self Storage Group
Summary adjusted financial and operating result
| KEY FIGURES (Unaudited figures in NOK million) |
First quarter 2018 |
First quarter 2017 |
Full year 2017 |
|---|---|---|---|
| Revenue | 58,3 | 49,8 | 212,1 |
| Total operating costs 1 | 42,7 | 40,0 | 158,0 |
| Adjusted EBITDA | 15,6 | 9,8 | 54,2 |
| Adjusted EBIT | 13,2 | 9,5 | 46,9 |
| Change in fair value of investment properties | 0,5 | 11,9 | 29,8 |
| Adjusted Profit before tax | 12,9 | 20,3 | 73,5 |
| Adjusted Net profit | 9,9 | 15,4 | 59,7 |
| Current lettable area (in thousands m 2 ) |
110,0 | 90,9 | 103,7 |
| Lettable area under development (in thousand m 2 ) |
16,2 | N/A | 12,3 |
1 Adjusted for non-recurring items of NOK 0,9 million in Q1 2018 and NOK 11.3 million in 2017
Alternative performance measures (APMs) are described in the corresponding section in the back of the report Minilageret AS was acquired 30 June 2017. Minilager Norge group is consolidated from 1 January 2018.
■ The Group has at the date of this report a total lettable area of 126 200 m2 , including 15 500 m2 lettable area under development.
Revenue for Q1 2018 was NOK 58.3 million, which is NOK 8.5 million up from Q1 2017. Revenue from acquisitions contributed with NOK 4.5 million. NOK 5.3 million of the revenue in Q1 2018 is attributable to income from ancillary services and rent income from industries other than self-storage
Property related expenses consists of lease expenses, maintenance and other operating costs. The City Self-Storage segment has mainly leasehold properties (94% leasehold), while OK Minilager has a mix of freehold and leasehold properties (49% freehold). The three new City Self-Storage sites opened during Q3 2017 and Q1 2018 are all freehold. As of end March 2018 24% of current lettable area in SSG is freehold.
Property related expenses in Q1 2018 were NOK 25.3 million, an increase of NOK 0.5 million from Q1 2017. Property related expenses from the companies acquired after Q1 2017 (Minilageret AS and Minilager Norge group) constitute NOK 0.7 million. Property related expenses from operations in CSS and OK Minilager show a decrease of NOK 0.2 million.
Salary and other employee benefits in Q1 2018 were NOK 9.4 million, an increase of NOK 0.7 million from Q1 2017. NOK 0.4 million relates to costs from the acquired companies Minilageret AS and Minilager Norge group. Salary and other employee benefits have been reduced during the year in the CSS-segment, but some new management and administrative roles have been added, given the growth of the company, constituting a net effect of an increase of NOK 0.3 million compared with Q1 2017.
The depreciation in Q1 2018 was NOK 2.4 million, an increase of NOK 2.0 million from Q1 2017. The increase is mainly explained by a positive one-time effect related to change in depreciation method in Q1 2017. The depreciation is mainly related to fitout and other equipment for new facilities and expansions.
Other operating expenses consists of IT and related costs, sales and advertising, and other operating expenses. Other operating expenses in Q1 2018 was NOK 8.9 million, an increase of NOK 2.4 million from Q1 2017.
The operating earnings in Q1 2018 was impacted by transaction costs related to the acquisition of Minilager Norge group and non-recurring costs related to restructuring of the legal structure in SSG and first-time valuation of the portfolio of investment-properties compared with an annual valuation. In total, non-recurring costs amounted to NOK 0.9 million in the quarter.
Operating costs in Q1 2018 adjusted for non-recurring costs increased by NOK 1.5 million compared with Q1 2017. NOK 0.5 million of the increase relates to the acquired companies Minilageret AS and Minilager Norge
group. There are increased costs given the growth of the group during 2017 of NOK 0.6 million from operations in addition to NOK 0.4 million related to headquarter functions.
| TNOK | First quarter | First quarter | Full year |
|---|---|---|---|
| Non-recurring items | 2018 | 2017 | 2017 |
| Costs related to IPO | - | - | 6 947 |
| Acquisition costs | 569 | - | 2 503 |
| Option to employee | - | - | 1 803 |
| Restructuring of legal structure | 152 | - | - |
| First time value-assessment of freehold portfolio | 199 | - | - |
| Total non-recurring items | 920 | - | 11 253 |
The fair value of investment property is based on external valuations in combination with management estimates and judgments. The portfolio of freehold facilities was valuated 31.12.2017 by the external real estate appraiser Newsec, and there are no indications in the market that implies changes in fair value. The value increase during Q1 2018 was NOK 0.5 million to NOK 429.5 million. Change in fair value in Q1 2017 was NOK 11.9 million.
Adjusted profit before tax in Q1 was NOK 12.9 million, a decrease of NOK 7.4 million from Q1 2017. The decrease is related to change in fair value in Q1 2017 of NOK 11.9 million.
Total assets were NOK 748.0 million at the end of Q1 2018, compared to NOK 685.0 million at the end of Q4 2017, following the acquisition of Minilager Norge group, investment properties and balance sheet consolidation.
Investment property has increased by NOK 90.9 million to NOK 429.5 million. Cash and bank deposits have decreased by NOK 64.9 million to NOK 130.4 million due to the cash consideration in the acquisition of Minilager Norge group and purchase of 5 investment properties.
SSG invoices the customers in advance, which reduces credit risks and provides stable working capital. Current liabilities consist of prepaid income in addition to the remaining part of the purchase price to the owner of Minilageret AS (NOK 5.2 million).
Total equity was NOK 549.2 million. Thus, the equity ratio was 73%. Net interest-bearing debt was positive with NOK 23.5 million.
SSG has a strong cash flow. Net cash flow from operating activities at the end of Q1 2018 was NOK 7.2 million, compared to NOK 6.5 million at the end of Q1 2017. Net cash flow from investing activities was NOK -70.1 million compared to NOK -19.8 million at the end of Q1 2017, primarily related to the cash consideration in connection with the acquisition of Minlager Norge group, investment properties and establishment of new facilities, which is in line with the Groups strategy. Net cash flow from financing activities was NOK -1.7 million at the end of Q1 2018, compared to NOK 58.0 million at the end of Q1 2017. SSG's cash balance at the end of Q1 was NOK 130.4 million.
SSG engages in the business of renting out self-storage units to both private individuals and businesses. The Group is a leading provider of self-storage services with facilities in Norway, Sweden and Denmark. The business model of the Group is to operate self-storage facilities in Scandinavia with a strong focus on cost effective operations, competitive rent levels and industry leading customer service. In order to achieve this, the Group is constantly working hard in order to increase the level of automation in all parts of the value chain. The Group's vision is to be a leading and preferred self-storage provider to individuals and businesses.
Following the acquisition of City Self-Storage in September 2016, the Group is operating under two separate brands: OK Minilager and City Self-Storage. These two brands focus on different market segments and provide a strong platform serving customers with different preferences and needs.
The Group offers self-storage solutions in all Scandinavian countries, with a primary focus on the capital cities Oslo, Stockholm and Copenhagen through City Self-Storage, and a nationwide presence in Norway through OK Minilager. All City Self-Storage facilities are climate controlled, while OK Minilager offers both climate controlled and container based storage facilities.
The strategy is to develop the Group further and to expand the total lettable area by investing in new and preferably owned facilities. The Group seeks to strengthen its nationwide presence in Norway while at the same time optimising current sites in Denmark and Sweden and search for profitable expansion opportunities. Going forward, new facilities will primarily be established as owned properties to ensure long-term access to attractive locations at a lower running cost. In identifying such properties the Group will focus on factors such as location, capex and conversion time. Investment properties are gathered in the 100% owned company OK Property AS, and leased to the operating companies in the Group.
The Group is operating under both the OK Minilager and City Self-Storage brand and will continue to do so as the two concepts target different market segments.
is a nationwide self-storage concept offered in the Norwegian market and the strategy is to continue to increase its presence in all major regions and communities in Norway. The planned expansion will mainly be composed of owned properties, including a combination of purpose-built facilities and conversion of existing buildings. At the same time OK Minilager will have a strong focus on retaining its position as the most cost-effective player in the Norwegian market by continuously looking for innovative solutions to increase the customer experience and to increase operating efficiency.
is SSG's "urban concept", targeting the population in Oslo, Stockholm and Copenhagen. The strategy is to strengthen the market position in Oslo by establishing more sites at attractive locations in the Greater Oslo area, while at the same time continuing the ongoing cost reduction initiatives and optimising the organisation. In the other Scandinavian countries, the goal is to improve operating efficiency at existing facilities through cost reductions, upgrades and increased visibility and market awareness. City Self-Storage will however act opportunistically about potential mergers and acquisitions, both with regards to single facilities and other self-storage providers with a complementary portfolio of facilities. As with OK Minilager, the goal for City Self-Storage going forward is to increase the share of owned facilities.
The Group is confident that it has multiple competitive strengths that separates SSG from other self-storage providers. These strengths have enabled the Group to achieve high historical growth and to establish a strong market position in all markets in which it operates. Through leveraging on these competitive strengths, SSG expects to continue to grow and to confirm its position as one of Scandinavia's leading self-storage providers.
The Group is one of the leading self-storage providers in Scandinavia with a particularly strong position in the Norwegian market. SSG has a high market share, both in the Greater Oslo area and on a countrywide basis.
City Self-Storage and OK Minilager are on a stand-alone basis the two largest self-storage providers in the Norwegian market. This position has been built through careful planning and a dedicated focus on selecting the right type of facilities. SSG entered the Swedish and the Danish market through the acquisition of City Self-Storage and is today the 3. largest self-storage provider in Copenhagen and 4. largest self-storage provider in Stockholm measured by the total number of facilities.
The combination of a countrywide presence in the "early stage" Norwegian market and a strong position in the more developed markets in Stockholm and Copenhagen provides a strong foundation for future expansion and growth. The Group can act opportunistically with regards to setting up new facilities while leveraging its strong brand recognition, customer base and knowledge in the respective markets.
Both OK Minilager and City Self-Storage have displayed solid financial track records with increasing revenues and continuously improving EBITDA margins. The Group has an ambitious growth plan and the management team has demonstrated the ability to handle rapid growth without jeopardizing profitability. Since being established in 2009, OK Minilager has been able to improve the EBITDA margin from 18.8% in 2009 to 48% in 2017.
The goal is to develop the Group further and to expand the total lettable area by investing in new and preferably owned facilities. The Group seeks to strengthen its nationwide presence in Norway while at the same time optimising current sites in Denmark and Sweden and search for profitable expansion opportunities. SSG has succeeded in attracting investors and raising capital, and is in a good position for executing the strategy.
1 567 398 new shares were issued 13 February 2018 to the selling shareholder of Minilager Norge group, as part settlement of the remaining part of the purchase price.
100 000 new shares were issued 23 March 2018 to one employee, pursuant to an exercise of pre-existing share options.
SSG is exposed to risk and uncertainty factors, which may affect some or all of the company's activities. SSG has financial risk, market risk as well as operational risk and risk related to the current and future products. There are no significant changes in the risks and uncertainty factors compared to the descriptions in the Annual Report for 2017.
There is a large untapped potential for self storage in Scandinavia as urbanization and smaller living spaces cause increasing need for external storage solutions. To enhance these opportunities, SSG has established a solid platform for future growth with prime locations in all Scandinavian capitals as well as cities across Norway. The Group has a proven track-record to develop and operate this attractive portfolio of self storage facilities, leveraging on a lean and operationally focused organisation to increase margins and targeting additional growth, mainly through owned properties.
The Group has built up and acquired new storage capacity and is continuously phasing the new capacity into the market. SSG is experiencing a satisfactory demand for its solutions, and is filling up new storage facilities while at the same time achieving attractive rent levels. SSG has also identified additional opportunities through already acquired development projects and low-cost expansion within existing facilities.
This foundation, a strong macro picture in all Scandinavian countries, combined with a strategy to grow the freehold portfolio in selected markets, gives SSG a solid platform for future growth and value creation.
| (Amounts in NOK 1 000) | Unaudited | Unaudited | Audited | |
|---|---|---|---|---|
| Note | For the three months ended 31 March 2018 |
For the three months ended 31 March 2017 |
For the twelve months ended 31 December 2017 |
|
| Revenue | 3 | 58 285 | 49 809 | 212 143 |
| Property-related expenses | 3 | 25 344 | 24 842 | 94 994 |
| Salary and other employee benefits | 3 | 9 367 | 8 677 | 36 747 |
| Depreciation | 2 386 | 339 | 7 261 | |
| Other operating expenses | 3 | 8 853 | 6 449 | 37 464 |
| Operating profit before fair value adjustments | 12 331 | 9 502 | 35 677 | |
| Change in fair value of investment properties | 490 | 11 898 | 29 831 | |
| Operating profit after fair value adjustments | 12 821 | 21 400 | 65 508 | |
| Finance income | 552 | 113 | 1 333 | |
| Finance expense | 1 373 | 1 175 | 4 626 | |
| Profit before tax | 12 001 | 20 338 | 62 215 | |
| Income tax expense | 2 811 | 4 957 | 11 996 | |
| Profit for the period | 9 190 | 15 381 | 50 219 | |
| Total comprehensive income for the year attributable to | ||||
| parent company shareholders | 9 190 | 15 381 | 50 219 | |
| Total comprehensive income for the year attributable to | ||||
| non-controlling interests | - | - | - | |
| Earnings per share | ||||
| Basic (NOK) | 4 | 0,14 | 0,39 | 0,99 |
| Diluted (NOK) | 4 | 0,14 | 0,39 | 0,98 |
| Other comprehensive income, net of income tax | ||||
| Items that may be reclassified subsequently to profit or loss | ||||
| - currency translation difference | −484 | 487 | 477 | |
| Other comprehensive income for the period, net of income tax | −484 | 487 | 477 | |
| Total comprehensive income for the period | 8 706 | 15 868 | 50 696 | |
| Total comprehensive income for the year attributable to | ||||
| parent company shareholders | 8 706 | 15 868 | 50 696 | |
| Total comprehensive income for the year attributable to | ||||
| non-controlling interests | - | - | - |
| (Amounts in NOK 1 000) | Unaudited | Audited | |
|---|---|---|---|
| 31 March | 31 December | ||
| ASSETS | 2018 | 2017 | |
| Non-current assets | Note | ||
| Investment property | 6 | 429 530 | 338 631 |
| Property, plant and equipment | 63 020 | 52 125 | |
| Goodwill | 93 771 | 72 272 | |
| Other intangible assets | 588 | 493 | |
| Total non-current assets | 586 909 | 463 521 | |
| Current assets Inventories |
1 389 | 1 434 | |
| Trade and other receivables | 11 334 | 11 455 | |
| Other current assets | 18 685 | 13 397 | |
| Cash and bank deposits | 130 374 | 195 224 | |
| Total current assets | 161 782 | 221 510 | |
| TOTAL ASSETS | 748 691 | 685 031 | |
| EQUITY AND LIABILITIES | |||
| Equity Issued share capital |
7 | 6 536 | 6 369 |
| Share premium | 422 768 | 396 416 | |
| Other reserves | -121 | 363 | |
| Retained earnings | 119 999 | 110 809 | |
| Total equity | 549 182 | 513 957 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Long-term interest-bearing debt | 8 | 101 388 | 89 690 |
| Other financial liabilities | 1 086 | - | |
| Deferred tax liabilities | 30 646 | 22 289 | |
| Obligations under finance leases | 172 | 214 | |
| Total non-current liabilities | 133 292 | 112 193 | |
| Current liabilities | |||
| Short-term interest-bearing debt | 8 | 5 528 | 4 750 |
| Trade and other payables | 11 056 | 10 282 | |
| Income tax payable | 1 627 | 1 699 | |
| Other taxes and withholdings | 4 821 | 4 789 | |
| Obligations under finance leases | 265 | 312 | |
| Other current liabilities | 42 920 | 37 049 | |
| Total current liabilities | 66 217 | 58 881 | |
| Total liabilities | 199 509 | 171 074 | |
| TOTAL EQUITY AND LIABILITIES | 748 691 | 685 031 | |
| (Amounts in NOK 1 000) | Issued Share capital |
Share premium |
Currency translation reserve |
Retained earnings |
Total equity |
|---|---|---|---|---|---|
| Balance at 1 January 2017 | 395 | 89 863 | -114 | 64 903 | 155 047 |
| Profit (loss) for the period | 15 381 | 15 381 | |||
| Other comprehensive income (loss) for the period net of income tax |
196 | 196 | |||
| Total comprehensive income for the period | 196 | 15 381 | 15 577 | ||
| Issue of ordinary shares, net of transaction costs | 84 | 95 781 | 95 865 | ||
| Balance at 31 March 2017 (Unaudited) | 479 | 185 644 | 82 | 80 284 | - 266 489 |
| Balance at 1 January 2018 | 6 369 | 396 416 | 363 | 110 809 | 513 957 |
|---|---|---|---|---|---|
| Profit (loss) for the period | 9 190 | 9 190 | |||
| Other comprehensive income (loss) for the period net of income tax |
-484 | -484 | |||
| Total comprehensive income for the period | -484 | 9 190 | 8 706 | ||
| Issue of ordinary shares, net of transaction costs | 167 | 26 352 | 26 519 | ||
| Balance at 31 March 2018 (Unaudited) | 6 536 | 422 768 | -121 | 119 999 | 549 182 |
| Unaudited | Unaudited | Audited | ||
|---|---|---|---|---|
| (Amounts in NOK 1 000) | Note | For the three months ended 31 March 2018 |
For the three months ended 31 March 2017 |
For the year ended 31 December 2017 |
| Cash flow from operating activities | ||||
| Profit before tax | 12 001 | 20 338 | 62 215 | |
| Income tax paid | - | - | −8 170 | |
| Adjustment for net Interests paid | -594 | - | 242 | |
| Depreciation | 2 386 | 339 | 7 261 | |
| Gain/loss on disposal of property, plant and equipment | - | - | 148 | |
| Change in fair value of investment property | 6 | -490 | -11 898 | −29 831 |
| Change in trade and other receivables | 219 | -1 064 | −733 | |
| Change in trade and other payables | 443 | -2 987 | 1 466 | |
| Change in other current assets | -5 205 | 1 358 | 5 047 | |
| Change in other current liabilities | -1 531 | 476 | 4 623 | |
| Net cash flow from operating activities | 7 229 | 6 562 | 42 268 | |
| Cash flow from investing activities | ||||
| Payments for investment property | -26 559 | -9 827 | −42 163 | |
| Payments for property, plant and equipment | -4 855 | -1 522 | −11 471 | |
| Net cash outflow on acquisition of subsidiaries | -38 648 | -8 467 | −69 760 | |
| Net cash flow from investing activities | -70 062 | -19 816 | -123 394 | |
| Cash flow from financing activities | ||||
| Net proceeds from issue of equity instruments of the Company | - | 95 865 | 287 416 | |
| Proceeds from borrowing | - | - | 95 000 | |
| Repayment of borrowings | -1 717 | -37 809 | −140 840 | |
| Net cash flow from financing activities | -1 717 | 58 056 | 241 576 | |
| Net change in cash and cash equivalents | -64 550 | 44 802 | 160 450 | |
| Cash and cash equivalents at beginning of the period | 195 224 | 34 115 | 34 115 | |
| Effect of foreign currency rate changes on cash and cash equivalents | -300 | 103 | 659 | |
| Cash and equivalents at end of the period | 130 374 | 79 020 | 195 224 |
These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. The condensed consolidated financial statements have been prepared on the historical cost basis except for investment property, which is measured at fair value with gains and losses recognised in profit or loss.The interim financial statements were approved by the Board of Directors on 7 May 2018.
The same accounting policies, presentation and methods of computation have been followed in these condensed financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2017, and must be read in conjunction with these. The interim financial statements are unaudited. IFRS 9 Financial instruments and IFRS 15 Revenue from contracts with customers have no impact on the financial statement in 2018.
Management has determined the operating segments based on reports reviewed by the CEO and management team and Board of Directors, and which are used to make strategic and resource allocation decisions. During the fourth quarter of 2016, after the acquisition of the City Self-Storage companies, the Group decided to report management information based on the two concepts offered by the Group, City Self-Storage (CSS) and OK Minilager (OKM). OK Property AS (OKP) was established at the start of 2017 gathering the investments-properties in the Group. The Other/elimination column includes administration and management activities not attributable to the operating segments and eliminations of intercompany transactions and balances. Adjustments necessary to reconcile management information with the Group's accounting principles (IFRS) have been made on a total level, reconciling the total of the operating segments EBITDA to the Group's consolidated profit before tax under IFRS.
The total of Sales income and Other income in the segment reporting corresponds with the line item Revenue as recognised under IFRS.
| OK Minilager (OKM) | Nationwide presence in Norway offering climate controlled storage units and container based storage. |
|---|---|
| City Self-Storage (CSS) | Climate controlled facilities in all Scandinavian countries, with a primary focus on the capital cities of Oslo, Stockholm and Copenhagen. |
| Property | The ownership and development of property. Internal lease agreements with the operating companies in the group, in addition to external lease agreements. |
| Other/eliminations | Elimination and the remainder of the Group's activities, including administration and management activities not attributable to the operating segments described above. |
| For the three months ended 31 March 2018 | CSS | OKM | Property Other/eliminations | Total | |
|---|---|---|---|---|---|
| Sales income | 38 075 | 14 877 | - | - | 52 952 |
| Other income | 3 704 | 943 | 6 474 | −5 788 | 5 333 |
| Operating costs* | −33 798 | −12 414 | −859 | 3 503 | −43 568 |
| EBITDA | 7 981 | 3 406 | 5 615 | −2 285 | 14 717 |
| Reconciliation to profit before tax as reported under IFRS | |||||
| Depreciation | −2 386 | ||||
| Change in fair value of investment property | 490 | ||||
| Finance lease expense | - | ||||
| Finance income | 552 | ||||
| Finance expense | −1 372 | ||||
| Profit before tax | 12 001 |
| For the three months ended 31 March 2017 | CSS | OKM | Property Other/eliminations | Total | |
|---|---|---|---|---|---|
| Sales income | 35 080 | 9 962 | 0 | - | 45 042 |
| Other income | 4 170 | 4 | 933 | −340 | 4 767 |
| Operating costs | −33 527 | −6 225 | −146 | −70 | −39 968 |
| EBITDA | 5 723 | 3 741 | 787 | −410 | 9 841 |
| Reconciliation to profit before tax as reported under IFRS | |||||
| Depreciation | −339 | ||||
| Change in fair value of investment property | 11 898 | ||||
| Finance lease expense | - | ||||
| Finance income | 113 | ||||
| Finance expense | −1 175 | ||||
| Profit before tax | 20 338 |
| For the year ended 31 December 2017 | CSS | OKM | Property Other/eliminations | Total | |
|---|---|---|---|---|---|
| Sales income | 142 737 | 50 847 | - | - | 193 584 |
| Other income | 16 402 | 1 476 | 6 151 | −5 470 | 18 559 |
| Operating costs | −132 281 | −27 067 | −1 310 | −8 547 | −169 205 |
| EBITDA | 26 858 | 25 256 | 4 841 | −14 017 | 42 938 |
| Reconciliation to profit before tax as reported under IFRS | |||||
| Depreciation | −7 261 | ||||
| Change in fair value of investment property | 29 831 | ||||
| Finance lease expense | - | ||||
| Finance income | 1 333 | ||||
| Finance expense | −4 626 | ||||
| Profit before tax | 62 215 |
* From January 2018, the OKM companies have entered into an internal lease contract with OK Property AS. This partly explains increased operating costs in the OKM segment and the increased income in Property segment compared to Q1 2017.
(Amounts in NOK)
| For the three months ended 31 March 2018 |
For the three months ended 31 March 2017 |
|
|---|---|---|
| Profit (loss) for the year | 9 189 533 | 15 381 000 |
| Weighted average number of outstanding shares during the period (basic) | 64 470 419 | 39 450 000 |
| Weighted average number of outstanding shares during the period (diluted) | 64 841 848 | 39 450 000 |
| Earnings (loss) per share - basic in NOK | 0,14 | 0,39 |
| Earnings (loss) per share - diluted in NOK | 0,14 | 0,39 |
| See also note 7 |
| 2018 | Main business activity |
Date of business combination |
Proportion of voting equity acquired |
Acquiring entity |
|---|---|---|---|---|
| Minilager Norge AS - operating company | Self-storage solutions | 1 January 2018 | 100 % | Self Storage Group |
| Minilager Norge AS | Self-storage solutions | 1 January 2018 | 100 % | Self Storage Group |
| Hatcher Norge AS | Self-storage solutions | 1 January 2018 | 100 % | Self Storage Group |
| Minilager Moss AS | Self-storage solutions | 1 January 2018 | 100 % | Self Storage Group |
The above companies have been acquired with the purpose of continuing expansion of the group's activities, which focus on the self-storage market in Norway. Minilager Norge group is consolidated from 1 January 2018 and is reported as part of the City Self-Storage (CSS) operating segment.
| (Amounts in NOK 1 000) | Minilager Norge group |
|---|---|
| Cash | 10 577 |
| Shares in Self Storage Group ASA | 25 000 |
| Contingent consideration | 6 000 |
| Total consideration | 41 577 |
The fair value of trade receivables in Minilager Norge group is TNOK 81 and includes an allowance for impairment of TNOK 117.
Assets and liabilities assumed in connection with the business combination of Minilager Norge group have been recognised at their estimated fair value on the date of the business combination. Fair value adjustments have been made to the investment properties owned by the group. No other adjustments to the carrying values of assets and liabilities have been identified. No not previously recognised intangible assets were identified. The estimates are provisional and may be subject to change during the measurement period, which is one year from the date of the acquisition.
| (Amounts in NOK 1 000) | Carrying amount 1 January 2018 | Fair value adjustments Fair value 1 January 2018 | |
|---|---|---|---|
| Investment property | 12 004 | 20 514 | 32 518 |
| Property, plant and equipment | 6 025 | 6 025 | |
| Trade receivables | 81 | 81 | |
| Other current assets | 30 | 30 | |
| Cash and cash equivalents | 1 030 | 1 030 | |
| Deferred tax liability | −380 | -4 923 | -5 303 |
| Interest-bearing liabilites | -14 219 | -14 219 | |
| Trade payables | −313 | −313 | |
| Other current liabilities | -1 232 | -1 232 | |
| Net assets | 3 026 | 15 591 | 18 617 |
| (Amounts in NOK 1000) | Minilager Norge group |
|---|---|
| Consideration | 41 577 |
| Fair value of identifiable net assets acquired | -18 617 |
| Goodwill | 22 960 |
Goodwill originating from the business combination is primarily related to anticipated synergies from on-going operations and the benefit of integrating the entire business into the group. No impairment has been recognised subsequent to the business combination. Goodwill that has arisen as part of the business acquisition is not tax deductible.
Effect on group results:
From 1 January 2018 through 31 March 2018, revenues of TNOK 1 810 and profit after tax of TNOK 677 were recognised for the acquired companies.
Transaction costs related to the acquisition amounts to TNOK 569
Minilager Norge group has a rental agreement with the company ML Halden AS related to Sørlifeltet. The agreement includes an option to (1) acquire Sørlifeltet or the shares in ML Halden (2) option to acquire the part of Sørlifeltet which is in use for self-storage operations.
During the three month period ended 31 March 2018, the following changes have occurred in the Group's portfolio of investment properties:
| Balance as at 31 December 2017 | 338 630 |
|---|---|
| Business combination (note 5) | 32 518 |
| Asset acquisition in OK Property AS | 25 678 |
| Company acquired as asset acquisition | 31 333 |
| Additions to existing properties | 881 |
| Fair value adjustments recognised in profit or loss | 490 |
| Balance as at 31 March 2018 | 429 530 |
On 29 September 2017, the company's shares were split in the ratio of 1:10, so that one share with nominal value of NOK 1 is replaced with 10 new shares, each with a nominal value of NOK 0.10. Earnings per share have been calculated as if the proportionate change in the number of shares outstanding had taken place at the start of the earliest period for which earnings per share is presented to ensure comparability.
On 13 February 2018, the company issued 1 567 472 new shares to the selling shareholder of Minilager Norge group, as part settlement of the remaining part of the purchase price. After registration of the new shares, the new share capital is TNOK 6 526 268 divided into 65 262 682 shares with par value NOK 0.10.
On 23 March 2018, the company issued 100 000 shares to one employee, pursuant to an exercise of pre-existing share options. After registration of the new shares, the share capital of the Company was increased to NOK 6 536 268 consisting of 65 362 682 shares each with NOK 0.10 in par value.
Interest bearing liabilities are carried at amortized cost. The carrying amounts approximate fair value as at 31 March 2018.
Following the acquisition of Minilager Norge group, the Group has increased its loan portfolio. See specification in the table below. Loans from DnB is related to Minilager Norge group.
| Amounts due in | |||||
|---|---|---|---|---|---|
| As at 31 March 2018 | less than 1 year | 1-5 years | 6-20 years | Total | |
| Debt to financial institutions | 5 528 | 92 433 | 8 955 | 106 916 | |
| Specification of loans | 2017 | Currency | |||
| Handelsbanken | 73 536 | NOK | |||
| Handelsbanken | 19 573 | NOK | |||
| DnB | 4 236 | NOK | |||
| DnB | 6 571 | NOK | |||
| DnB | 3 000 | NOK | |||
| Total bank borrowings at amortised cost | 106 916 |
■ The Group has at the date of this report a total lettable area of 126 200 m2 , including 15 500 m2 lettable area under development
17
Self Storage Group's financial information is prepared in accordance with international financial reporting standards (IFRS). In addition, management provides alternative performance measures that are regularly reviewed by management to enhance the understanding of the Group's performance in addition to the financial information prepared in accordance with IFRS. The alternative performance measures may be presented on a basis that is different from other companies.
Presenting operating profit before fair value adjustments is useful to Self Storage Group as it provides a measure of profit before taking into account the movement in fair value of investment property and is useful to the Group for assessing operating performance.
| (NOK 1 000) | First quarter 2018 | First quarter 2017 | Audited 2017 |
|---|---|---|---|
| Operating profit before fair value adjustments | 12 331 | 9 502 | 35 677 |
| EBIT | 12 331 | 9 502 | 35 677 |
| Nonrecurring items | 920 | - | 11 253 |
| Adjusted EBIT | 13 251 | 9 502 | 46 930 |
| Change in fair value of investment properties | 490 | 11 898 | 29 831 |
| Adjusted Profit before tax | 12 920 | 20 338 | 73 468 |
| Tax | 3 005 | 4 909 | 13 767 |
| Adjusted Net profit | 9 915 | 15 429 | 59 701 |
| Operating profit before fair value adjustments | 12 331 | 9 502 | 35 677 |
| Depreciation | 2 386 | 339 | 7 261 |
| EBITDA | 14 717 | 9 841 | 42 938 |
| Nonrecurring costs | 920 | - | 11 253 |
| Adjusted EBITDA | 15 637 | 9 841 | 54 191 |
| Nonrecurring costs | First quarter 2018 | First quarter 2017 | Audited 2017 |
|---|---|---|---|
| Costs related to IPO | - | - | 6 947 |
| Acquisition costs | 569 | - | 2 503 |
| Option | - | - | 1 803 |
| Restructuring of legal structure | 152 | - | - |
| First time value assesment of freehold portfolio | 199 | - | - |
| Sum nonrecurring costs | 920 | - | 11 253 |
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