Self Storage Group

Quarterly Report • Feb 14, 2019

Self Storage Group ASA Fourth quarter 2018

14 February 2019

GROUP HIGHLIGHTS – FOURTH QUARTER 2018

• Revenues in Q4 2018 of NOK 60.8 million, up from NOK 55.3 million in Q4 2017
• Adjusted EBITDA in Q4 2018 of 19.7 million1) , up from NOK 15.1 million in Q4 2017
• Change in fair value of investment property in Q4 2018 of NOK 35.7 million
• Four new facilities opened and expansions increasing current lettable area to 117 000 m²
• Acquisition of four properties with a total potential lettable area of 3 400 m²
• Signed agreement to acquire landmark development property at Alnabru, Oslo
• Cash position of NOK122.2 million at the end of Q4 2018
• The Group's current loan to value on investment property is 25%

GROUP HIGHLIGHTS – FULL YEAR 2018

• Revenues for full year 2018 of NOK 238.4 million, up from NOK 212.1 million in 2017
• Adjusted EBITDA for full year 2018 of NOK 75.7 million, up from NOK 54.2 million in 2017
• Change in fair value of investment property in 2018 of NOK 38.2 million
• Total property-value end 2018 of NOK 524.5 million
• Pre-tax profit for full year 2018 of NOK 98.3 million, up from NOK 62.2 million in 2017
• Total number of facilities end 2018 of 101, up from 84 facilities in 2017
• Current lettable area end 2018 of 117 000 m² , up from 103 700 m²in 2017
• 19 900 storage units

KEY PERFORMANCE INDICATORS – FOURTH QUARTER 2018

KEY FIGURES – FOURTH QUARTER 2018

(NOK million)

KEY FIGURES

ADJUSTED EBITDA Q4 2017-Q4 2018

REVENUE-GROWTH WITH 82% EBITDA-MARGIN

BRIDGE FULL YEAR 2017-FULL YEAR 2018

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• Revenue increased by NOK 26.3 million from 2017 while total operating costs¹ only increased by NOK 4.6 million
• Revenue-growth in 2018 with 82% EBITDA-margin

1) EBITDA is adjusted for non-recurring costs of NOK 1.9 million in 2018 and NOK 11.3 million in 2017

2) Total operating costs consist of lease-expenses, property-related expenses, other operating expenses and salary and other employee benfits

KEY FIGURES1) – FOURTH QUARTER 2018

(NOK million)

P&L	Q4 18	Q4 17	FY 18	FY 17
Revenue	60.8	55.3	238.4	212.1
costs2) Total operating	41.0	40.2	162.6	158.0
Adjusted EBITDA	19.7	15.1	75.7	54.2
Adjusted EBIT	17.2	12.7	65.2	46.9
Change in fair value of investment properties	35.7	15.9	38.2	29.8
Adjusted Pre-tax profit	52.7	28.2	100.3	73.5
Adjusted Net profit	43.3	25.4	81.1	59.3
Current lettable area (thousands m2)	117.0	103.7	117.0	103.7
Lettable area under development (thousands m2)	13.4	12.3	13.4	12.3

Cash flows
	Q4 18	Q4 17	31.12.18	31.12.17
Net cash flows from operating activities	19.9	10.8	63.7	42.3
Net cash flows from investing activities	-45.2	-21.6	-157.5	-123.4
Net cash flows from financing activities	38.8	158.5	20.9	241.6
Cash and cash equivalents at beginning of the period	108.1	47.0	195.2	34.1
Cash and cash equivalents at end of the period	122.2	195.2	122.2	195.2

Balance sheet	31.12.18	31.12.17
ASSETS
Investment property	524.5	338.6
Property, plant and equipment	71.8	52.6
Goodwill	94.6	72.3
Total non-current assets	690.9	463.5
Other current assets	37.3	26.3
Cash and bank deposits	122.2	195.2
Total current assets	159.5	221.5
TOTAL ASSETS	850.4	685.0
EQUITY AND LIABILITIES
Total equity	625.1	514.0
Long-term interest-bearing debt	118.0	89.7
Deferred tax liabilities	34.9	22.3
Other non-current liabilities	1.0	1.1
Total current liabilities	71.4	58.9

Total liabilities 225.4 171.1

TOTAL EQUITY AND LIABILITIES 850.4 685.0

1) Unaudited figures for 2018

2) Adjusted for non-recurring costs of NOK 0.0 million in Q4 2018, NOK 5.7 million in Q4 2017, NOK 1.9 million in FY 2018, and NOK 11.3 million in FY 2017

OWNED PROPERTY -PROPERTY VALUE INCREASED BY 55% FROM Q4 2017

• SSG owns 49¹ properties with a total gross area of 69 500 m² and a potential lettable area of 48 500 m²
• 35 100 m² in operation
• 13 400 m²under development (4 900 m² is leased to other industries than self-storage)
• The greenfield project at Tiller, Trondheim, has an estimated lettable area of 3 600 m²(5 400 m²gross area)
• The landmark development property at Alnabru, Oslo, has an estimated gross area1) of 7 000 m²
• Internal lease agreements at commercial terms are signed between OK Property and the operating companies in the Group
• External valuations are performed by Newsec conservative yields

STEADY GROWTH IN SHARE OF OWNED PORTFOLIO

DEVELOPMENT IN SHARE OF FREEHOLD FACILITIES SHARE OF FREEHOLD FACILITIES PER CONCEPT

• SSG's strategy is to expand within owned facilities
• 30% of current lettable area in operation at the end of December 2018 was freehold
• 81 900 m²leased
• 35 100 m²owned
• Freehold m² increased with 110% during 2017 and additional 62% during 2018

• 45 of a total of 101 facilities in operation (45%) were freehold as of December 2018

CURRENT LETTABLE AREA INCREASED BY 13 300 M² DURING 2018 – 13 400 M² IN PIPELINE¹

1) In addition there is a potential gross area of 5 400 m² from the greenfield project in Trondheim and 7000 m² from the greenfield project in Oslo that is not included in the KPIs of Q4 2018

DEVELOPMENT IN CAPACITY, OCCUPANCY AND RENT

• Occupancy in CSS Norway has decreased due to merger with Minilager Norge. Positive trend in CSS Sweden and CSS Denmark.
• Occupancy in OKM has decreased due to expansions of lettable area during the year. Rent pr m² is stable.

AVERAGE OCCUPANCY¹ AND RENT¹ CURRENT LETTABLE AREA

REVENUE DYNAMICS Q4 2018

1) Average occupancy and rent pr m² for sites with more than 12 months of operation in NOK

STRONG LINK BETWEEN REVENUE GROWTH AND ABSOLUTE GROWTH IN PRE TAX FREE CASH FLOW

Strong link between further growth in revenue and EBITDA

IFRS 16 – EFFECTS OF IMPLEMENTATION

(NOK million)

• Modified retrospective approach for transition to IFRS 16
• Lease obligations in SSG are mainly long term
• Estimated implementation effects for 2019:
• Reduced lease expenses of NOK 58- 65 million increase EBITDA similarly
• Increased depreciation of NOK 50- 55 million makes estimated increase on EBIT NOK 8-10 million
• Increase in financial expenses of NOK 16- 18 million makes estimated decrease in the income statement of NOK 7-12 million
• Increase in investment property and financial liabilities of approximately NOK 445 million on opening balance as of January 1, 2019
• Change in accounting policy does not effect covenants, LTV and total cashflow

P&L	Q4-18	Full year 2018
Revenue	60 751	238 361
Lease expenses	17 657	71 451
Other property-related expenses	6 559	25 425
Salary and other employee benefits	9 710	37 403
Depreciation	2 573	10 527
Other operating expenses	7 095	30 311
Operating profit before fair value adjustments	17 156	63 244
Change in fair value of investment properties	35 723	38 223
Operating profit after fair value adjustments	52 880	101 467
Finance income	725	1 511
Finance expenses	952	4 632
Profit before tax	52 653	98 346
Balance sheet		31.12.18
Investment property		524.5
Financial liabilities		0.9

THE MARKET

THE SCANDINAVIAN SELF STORAGE MARKET AT A GLANCE

Source:Company information, proff.no, proff.se

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THE NORWEGAIN MARKET IS UNDERDEVELOPED -AN INCREASING NEED FOR STORAGE GOING FORWARD

Growth in population

% of population living in cities

Growth in population in 5 largest cities1)

Growth in types of households 2013-2017

BNP-level in Norway is 50% higher than European average

1) Oslo, Bergen, Stavanger/Sandnes, Trondheim, Drammen

Source: SSB (Statistics Norway)

THE COMPANY

SSG CONSISTS OF TWO DISTINCT BUSINESS CONCEPTS

City Self-Storage OK Minilager

High-end brand providing self-storage rental and ancillary products and services in Scandinavia's larger cities

• 311) temperate storage facilities across Scandinavia
• One of the leading self-storage providers in the Scandinavian market
• Located in Oslo, Stockholm and Copenhagen, due to open in Trondheim and Stavanger
• 64 000 m² CLA (5 300 m²is freehold)

Countrywide, discount-priced offering of self-serviced storage facilities in Norway

• 701) facilities located across Norway
• 40 temperate storage facilities and 30 drive-in storage facilities
• 2 nd largest player in Norway, behind CSS
• Self service, open 24 hr/day and 7 days a week
• 53 000m² CLA ( 29 800 m² is freehold)

HIGH BUSINESS DEVELOPMENT ACTIVITY IN 2017 AND 2018

ACQUISITIONS IN THE QUARTER

Acquisition of 4 new properties with a CLA potential of 3 400 m²

ACQUISITION OF LANDMARK PROPERTY IN OSLO Acqusition of Breivollveien 25 B/C

• Acquisition of a landmark development property centrally located by the busiest highway in Oslo, Norway
• SSG plan to develop a 7 000¹ m² (gross) purpose-built flagship facility
• Estimated to open in 2021
• The facility will be operated under the CSS brand
• 200,000 residents within a 4 km² radius
• Unique visibility with daily traffic count of 100,000+ cars
• The investment is in line with the Group´s strategy to grow with freehold properties in selected urban markets

SSG HAS A STRONG PLATFORM FOR FUTURE GROWTH

Country-wide offering with presence in Oslo, Bergen, Trondheim, Stavanger and 32 other cities and towns in Norway

PARTICULAR GROWTH POTENTIAL IN THE UNDERDEVELOPED NORWEGIAN MARKET

Focus on organic growth in Greater Oslo. Strengthening the position of both the CSS and OK Minilager brands in the region

Focus on the larger urban areas in Norway, with automated sites operated under the OK Minilager brand

Potential to enter 30+ smaller markets with population of 10.000<

Growth potential within existing smaller markets

Opportunity for M&A in selected markets

Illustration showing markets with immediate growth potential

13 400 M² IN POTENTIAL LETTABLE AREA1)

• The potential m²is in freehold facilities in Norway
• Rent income from expiring lease contracts from 4 900 m²of the 13 400 m²not yet built into self-storage units
• 10 000+ m² are planned to open during 2019

Lettable area under development

1) In addition there is a potential gross area of 5 400 m²from the greenfield project in Trondheim and 7000 m² from the greenfield project in Oslo that is not included in the KPIs of Q4 2018

Appendix

FOURTH QUARTER AND FULL YEAR 2018 COMPREHENSIVE INCOME

Profit and loss statement Comments

(Amounts in NOK 1 000)		Unaudited For the three months ended 31 December	Unaudited For the three months ended 31 December	Unaudited For the twelve months ended 31 December	Audited For the twelve months ended 31 December
	Note	2018	2017	2018	2017
Revenue	3	60 751	55 309	238 361	212 143
Lease expenses	3	17657	18 004	71 451	72 842
Property-related expenses	3	6 5 5 9	5459	25 4 25	22 152
Salary and other employee benefits	3	9710	11 300	37 403	36 747
Depreciation		2 5 7 3	2482	10 527	7 2 6 1
Other operating expenses	3	7095	11 154	30 311	37 4 64
Operating profit before fair value adjustments		17157	6910	63 244	35 677
Change in fair value of investment properties	6	35723	15 903	38 223	29 831
Operating profit after fair value adjustments		52 880	22 813	101467	65 508
Finance income		725	948	1511	1 3 3 3
Finance expense		952	1318	4632	4626
Profit before tax		52 653	22443	98 34 6	62 215
Income tax expense		9319	2 2 3 9	18856	11 996
Profit for the period		43 3 3 4	20 204	79490	50 219
Total non-recurring costs			5741	1942	11 253

• Financial development affected by the acquisition of Minilageret AS 30 June 2017 and the consolidation of Minilager Norge group from 1 January 2018
• Revenue for Q4 2018 was NOK 60.8 million, up NOK 5.4 million from Q4 2017. The increase is due to income from Minilageret and Minilager Norge group, in addition to growth in rentals
• Operating profit in Q4 2018 was NOK 17.2 million, up NOK 10.2 million from Q4 2017. No nonrecurring items adjusted for in Q4 2018.
• The fair value of investment property is based on external valuations

FULL YEAR 2018– FINANCIAL POSITION

Financial position Comments

(Amounts in NOK 1 000)		Unaudited	Audited
		31 December 31 December
ASSETS		2018	2017
Non-current assets	Note
Investment property	6	524 505	338 631
Property, plant and equipment		70 405	52 125
Goodwill		94 639	72 272
Other intangible assets		1 376	493
Deferred tax assets
Total non-current assets		690 925	463 521
Current assets
Inventories		1 270	1434
Trade and other receivables		13 4 21	11 455
Other current assets		22 5 98	13 3 9 7
Cash and bank deposits		122 228	195 224
Total current assets		159 517	221 510
TOTAL ASSETS		850 442	685 031

(Amounts in NOK 1 000)		Unaudited	Audited
			31 December 31 December
EQUITY AND LIABILITIES		2018	2017
Equity
Issued share capital	7	6573	6369
Share premium		427889	396 416
Other reserves		290	363
Retained earnings		190 299	110 809
Total equity		625 051	513 957
LIABILITIES
Non-current liabilities
Long-term interest-bearing debt	8	118 023	89 690
Other financial liabilities		873
Deferred tax liabilities		34 911	22 289
Provisions
Obligations under finance leases		143	214
Other non-current liabilities
Total non-current liabilities		153 950	112 193
Current liabilities
Short-term interest-bearing debt	8	11 750	4750
Trade and other payables		11 404	10 28 2
Income tax payable		11 647	1 6 9 9
Other taxes and withholdings		5 2 9 1	4789
Provisions
Obligations under finance leases		74	312
Other current liabilities		31 275	37 049
Total current liabilities		71 441	58881
Total liabilities		225 391	171 074
TOTAL EQUITY AND LIABILITIES		850 442	685 031

• Total assets of NOK 850 million
• Investment property increased by NOK 185.9 million since 31 December 2017
• Cash and bank deposits reduced due to acquisition of Minilager Norge group, purchase of investment properties (100% cash), and down payment of loan in Minilager Norge to DNB. Payments from borrowing on new loan facility with Handelsbanken in October 2018.
• Increased equity through issue of ordinary shares and result for the period
• Negative net interest-bearing debt was NOK 7.6 million
• Equity ratio was 73%
• Negative working capital due to invoicing of customers in advance and stable cost

FULL YEAR 2018 – CASH FLOW

Condensed consolidated statement of cash flows Comments

		Unaudited For the three	Unaudited For the three	Unaudited	Audited
		months ended		months ended For the year ended For the year ended
(Amounts in NOK 1 000)	Note	31 December 2018	31 December 2017	31 December 2018	31 December 2017
Cash flow from operating activities
Profit before tax		52 653	22 443	98 346	62 215
Income tax paid		$-544$	$-469$	$-2244$	$-8170$
Adjustment for net interests paid		243	$-47$	$-493$	242
Depreciation Gain/loss on disposal of property, plant and equipment		2573 - 47	2 4 8 2 4	10 527 - 47	7 2 6 1 148
Change in fair value of investment property	6	$-35723$	$-15903$	$-38223$	$-29831$
Change in trade and other receivables		$-398$	$-2004$	$-1946$	$-733$
Change in trade and other payables		131	$-345$	791	1 466
Change in other current assets		930	- 5	$-2414$	5 0 4 7
Change in other current liabilities		80	4672	$-582$	4 6 2 3
Net cash flow from operating activities		19898	10828	63715	42 268
Cash flow from investing activities
Payments for investment property		$-11460$	$-9273$	$-62902$	$-42163$
Payments for property, plant and equipment		$-6280$	$-4842$	$-21648$	$-11471$
Net cash outflow on acquisition of subsidiaries		$-27503$	$-7495$	$-72957$	$-69760$
Net cash outflow from disposal of subsidiaries
Net cash flow from investing activities		$-45243$	$-21610$	$-157507$	$-123394$
Cash flow from financing activities
Net proceeds from issue of equity instruments of the Company			191 551		287 416
Proceeds from borrowing		40 000		40 000	95 000
Repayment of borrowings		$-1188$	$-33050$	$-19066$	$-140.840$
Net cash flow from financing activities		38812	158 501	20 9 34	241 576
Net change in cash and cash equivalents		13 4 67	147719	$-72858$	160 450
Cash and cash equivalents at beginning of the period		108 141	47 053	195 224	34 115
Effect of foreign currency rate changes on cash and cash equivalents		620	452	$-138$	659
Cash and equivalents at end of the period		122 228	195 224	122 228	195 224

Operating activities

• Strong cash flow
• Invoicing of customers in advance predictable and stable costs

Investing activities

• Acquisition of Minilager Norge group
• Acquisition of 7 investment properties and 4 company assets aqusitions (cash) in 2018
• Establishment and fit out new facilities and expanisons
• Maintenance is posted as property cost

Financing activities

• Private placements in January and October 2017 and repayments to shareholders
• Loan facility with Handelsbanken in July 2017 and October 2018
• Down payment of loan in Minilager Norge group to DNB in Q2 2018

SSG's cash position at the end of December 2018 was NOK 122 million

EBITDA-DEVELOPMENT

(NOK million)

BRIDGE Q4 2017-Q4 2018

OUR HISTORY