Quarterly Report • May 12, 2020
Quarterly Report
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Self Storage Group ASA
| Highlights | 2 |
|---|---|
| Key Figures |
2 |
| Subsequent events |
2 |
| Financial development |
3 |
| Strategy | 8 |
| Corporate developments |
11 |
| Risks and uncertainty factors |
11 |
| Outlook | 12 |
| Financials | 13 |
| Alternative performance measures (APMs) |
22 |
The company experienced limited business impact from the COVID-19 situation in the first quarter of 2020 and has a solid platform for further profitable growth and expansion.
| Q1 | Q1 | Full year | |
|---|---|---|---|
| (Amounts in NOK million) | 2020 | 2019 | 2019 |
| Revenue | 70.8 | 61.6 | 266.5 |
| Lease expenses | 3.0 | 3.1 | 11.8 |
| Total other operating expenses | 27.8 | 24.6 | 103.3 |
| Total adjustments | 1.5 | 0.5 | 4.7 |
| Adjusted EBITDA | 41.5 | 34.4 | 156.0 |
| Adjusted EBIT | 38.4 | 32.0 | 67.9 |
| Change in fair value of freehold investment property | 5.7 | 0.4 | 38.2 |
| Change in fair value of leasehold investment property | - 15.4 | - 13.2 | - |
| Adjusted Profit before tax | 19.2 | 13.3 | 80.3 |
| Adjusted Net Profit | 15.7 | 11.0 | 61.0 |
| Current lettable area (in thousands m2) | 140.3 | 117.5 | 137.5 |
| Lettable area under development (in thousands m2) | 23.3 | 13.5 | 21.3 |
■ On 11 May 2020 proceeds from borrowings of a new loan facility amounting to NOK 100 million was received
1Non-GAAP measures are defined on page 23
Due to the COVID-19 pandemic, Norway went into a partial lockdown from 12 March 2020. Self Storage Group has implemented measures to safeguard customers and employees following the novel corona-virus (COVID-19). The Group is continuously monitoring the latest developments and evaluates the implemented measures on a day to day basis. As of Q1 2020 the Group experiences limited business impact, and the financial development shows stable growth. All self-storage facilities are expected to continue to be open as usual for both existing and new customers. Our self-serviced and digitalised offering is by nature a safe and flexible solution for our customers.
Revenue for Q1 2020 was NOK 70.8 million, an increase of NOK 9.2 million from Q1 2019. The increase in revenue is related to the acquisition of Eurobox, which was consolidated from 1 July 2019, growth in lettable area through opening of new facilities and expansions, growth in occupancy for facilities opened the last years, and increased revenue from mature sites with higher average rent per m2 . Increased self-storage revenue from the CSS-segment amounts to NOK 8.3 million, of which NOK 5.9 million is related to revenue from Eurobox. The currency-effect in Q1 2020 compared to Q1 2019 is NOK 1.3 million. Increased self-storage revenue from the OKM-segment amounts to NOK 1.8 million. Other revenue was NOK 5.4 million in Q1 2020 and decreased with NOK 0.9 million compared with Q1 2019. Other revenue consists of revenue from insurance, ancillary services, rent income from other segments than self-storage and other income. The income from office tenants fluctuates due to when contracts expire and office-space is converted to self-storage.
Lease expenses were NOK 3.0 million for Q1 2020, down from NOK 3.1 million in Q1 2019. According to IFRS 16 long-term leasehold agreements are treated as financial leases. Lease expenses thus only consist leasehold-contracts classified as short-term.
At the end of March 2020, 37% of the current lettable area in SSG is freehold, compared to 30% at the end of March 2019. 20% of current lettable area in the City Self-Storage segment is freehold, while 60% of current lettable area in OK Minilager is freehold. The share of freehold property is increasing in both segments.
Property-related expenses consist of maintenance, electricity, cleaning, security, insurance, property tax and other operating costs related to the facilities.
Property-related expenses in Q1 2020 were NOK 8.1 million, an increase of NOK 1.1 million compared to Q1 2019. The increase is related to Eurobox and the properties acquired in 2019. Lettable area in SSG has increased with 22 800 m2 (19%) since March 2019, and the number of facilities has increased by eleven to 113 facilities as of end March 2020. There are also property-related expenses incurred by the new large properties that are in the process of being converted to self-storage, but do not generate income yet.
Salary and other employee benefits in Q1 2020 were NOK 11.0 million, an increase of NOK 1.3 million from Q1 2019. NOK 0.5 million of the increase is related to severance packages due to a restructuring of the organisation and is classified as non-recurring. The increase in salary and other employee benefits adjusted for severance packages is NOK 0.8 million, and is related to new employees following the Eurobox-acquisition, annual wage increase and some new roles at the HQ given the growth of the Group.
The number of full time equivalents (FTE) has increased from 64 FTE in March 2019 to 66 FTE in March 2020.
Depreciation in Q1 2020 was NOK 3.1 million, an increase of NOK 0.6 million from Q1 2020. The depreciation is mainly related to fitout and other equipment for new facilities and expansions. Maintenance is posted as property-related expenses.
Other operating expenses consist of IT and related costs, sales and advertising, and other administrative expenses. In Q1 2020 other operating expenses were NOK 8.8 million, an increase of NOK 0.9 million from Q1 2019. There were NOK 0.9 million classified as non-recurring costs in Q1 2020. The non-recurring costs were related to acquisition of investment properties. Adjustments for non-recurring costs in Q1 2019 were NOK 0.5 million. Adjusted for non-recurring costs, other operating expenses have increased by NOK 0.4 million compared with Q1 2019. The increase is mainly related to increased costs to sales and marketing given the growth in revenue. Sales- and marketing costs constitute 3,5% of the revenue.
| (NOK 1 000) | Q1 | Q1 | Full year |
|---|---|---|---|
| Adjustments | 2020 | 2019 | 2019 |
| Acquisition costs | 923 | 500 | 4 653 |
| Severance packages | 538 | - | - |
| Total adjustments | 1 461 | 500 | 4 653 |
The fair value of freehold investment property is based on independent valuations, with internal lease contracts between the 100% owned company OK Property and the operating companies at market terms as basic principle. Annual CPI-adjustment of the leases and changes in area with lease-agreements will impact the fair value.
In Q1 2020 the change in fair value of freehold investment property recognised in P&L was NOK 5.7 million. The change is related to a higher external valuation than allocated value to the assets and liabilities at the date of the purchase of two properties acquired in Q1 2020. This is an increase of NOK 5.3 million compared to Q1 2019, where the change in fair value of freehold investment property recognised in P&L was NOK 0.4 million. The diagram below shows the change in fair value recognised in P&L from Q1 2017 to Q1 2020.
Change in fair value of leasehold investment property recognised in P&L in Q1 2020 was NOK -15.4 million, compared to NOK 13.2 million recognised in P&L in Q1 2019. Change in fair value of leasehold investment property is related to IFRS 16 and value adjustment due to passage of time of recognised leases.
Fair value of freehold investment property was NOK 1 184 million and fair value of leasehold investment property was NOK 497.1 million at 31 March 2020. Fair value of freehold investment property at 31 December 2019 was NOK 1 075 million, while fair value of leasehold investment property was NOK 489.1 million.
EBITDA in Q1 2020 was NOK 40.0 million, an increase of NOK 6.1 million since Q1 2019. EBITDA adjusted for non-recurring costs was NOK 41.5 million, which is an increase of NOK 7.0 million from Q1 2019. There is a positive currency-effect in Q1 2020 compared to Q1 2019 for revenue, but for EBITDA the currency- effect is not significant.
The financial development in Q1 2020 was solid with an adjusted EBITDA-growth of 20% compared with Q1 2019. The adjusted EBITDA-margin of the growth is 77%.
Adjusted EBITDA for Q1 2019 vs Q1 2020 is visualised below.
Profit before tax in Q1 2020 was NOK 17.8 million, an increase of NOK 5.0 million from Q1 2019. Adjusted profit before tax in Q1 2020 was NOK 19.2 million, an increase of NOK 5.9 million.
Total assets were NOK 2 164 million as of 31 March 2020, compared to NOK 2 004 million at 31 December 2019, an increase of NOK 159.7 million. Freehold investment property has increased with NOK 109.2 million from 31 December 2019 to NOK 1 184 million as of 31 March 2020, mainly due to the acquisition of two properties during the first quarter. Leasehold investment property was NOK 497.1 million at 31 March 2020, an increase of NOK 8.1 million from 31 December 2019. The increase is related to translation differences on leasehold investment property in Denmark and Sweden, partly offset by change in fair value of leasehold investment property in the first quarter of 2020. The COVID-19 pandemic gives higher uncertainty than normal related to the valuation of investment properties as of 31 March 2020. The Groups independent external party performing valuation of investment properties, has however not seen transactions in the market after the pandemic that indicates a drop in the market or changed prices, and retained their valuation.
Cash and bank deposits have increased with NOK 32.9 million to NOK 121.0 million at the end of March 2020 from December 2019. The change is mainly attributable to new borrowings drawn up under the existing loan facility amounted to NOK 80 million, and net outflow on acquisition of subsidiaries and freehold investment property.
SSG has a loan facility for purchase of freehold investment property with Handelsbanken up to 60% of the freehold investment property value. Interest-bearing debt 1 amounts to NOK 416.6 million at the end of 1Non-GAAP measures are defined on page 23
March 2020, an increase of NOK 74.3 million from December 2019. Loan to value of freehold investment property is 35% as of end March 2020, compared to 32% at the end of December 2019. The loan facility has several covenants. As of 31 March 2020, the Group is not in breach of any of the covenants.
At the end of March 2020 cash minus interest-bearing debt was negative with NOK 295.6 million.
SSG invoices the customers in advance, which reduces credit risks and provides stable working capital. Current liabilities consist mainly of prepaid income.
Total equity at the end of March 2020 was NOK 1 070 million, an increase of NOK 64.7 million from December 2019. The increase is mainly attributable to the issuance of consideration shares in connection with the closing of the transaction to acquire Ulven P28 AS in February 2020. Obligations under financial lease at the end of March 2020 was NOK 516.9 million, an increase of NOK 14.1 million compared to end of December 2019. The increase is related to translation differences on lease liabilities in Denmark and Sweden, partly offset by lease payments in first quarter 2020. The equity ratio decreased to 49% at the end of March 2020 from 50% at the end of December 2019.
SSG has a strong cash flow with invoicing of customers in advance and predictable and stable costs. Net cash flow from operating activities during Q1 2020 was NOK 36.6 million, compared to NOK 39.2 million during Q1 2019. Income tax paid was NOK 3.7 million in Q1 2020, an increase of NOK 3.0 million from Q1 2019 when taxable losses utilised in 2018 affected the calculated prepaid tax. The remaining decrease in net cash flow from operating activities for the first quarter of 2020 is mainly related to increase in prepaid expenses and timing differences for payments.
Net cash flow from investing activities during Q1 2020 was NOK -61.5 million compared to NOK -12.4 million at the end of Q1 2019. Payments for investment property includes additions to existing properties and acquisition of new properties. Payments for property, plant and equipment consists mainly of new fit-out. Net cash outflow for acquisition of subsidiaries includes business acquisition and acquisition accounted for as asset acquisition if completed in the quarter. These investing activities are in line with the Group's strategy.
Net cash flow from financing activities was NOK 55.9 million at the end of Q1 2020, compared to NOK -19.0 million at the end of Q1 2019. Net cash flow from financial activities was affected by new borrowings drawn up under the existing loan facility amounted to NOK 80 million and repayment of loan amounted to NOK 5.8 million in Q1 2020. Net payment of lease liabilities and payments of lease classified as interests amounted to NOK -15.5 million in Q1 2020 compared to -15.2 million in Q1 2019.
SSG's cash balance at the end of March 2020 was NOK 121.0 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.
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 major cities 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 freehold facilities. The Group seeks to strengthen its nationwide presence in Norway while at the same time optimising current facilities in Denmark and Sweden and search for profitable expansion opportunities. Going forward, new facilities will primarily be established as freehold 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. Freehold 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 freehold 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 the major cities, currently serving Oslo, Stavanger, Stockholm and Copenhagen. The strategy is to strengthen the market position in the major cities in Norway by establishing more facilities at attractive locations, while at the same time continuing the ongoing cost reduction initiatives and optimising the organisation. City Self-Storage is planning to open two facilities in Trondheim in 2020/2021. Eurobox, which was acquired in July 2019, will be rebranded to CSS during 2020.
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 freehold 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 country wide 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. With the acquisition of Eurobox in 2019 the leading position in the Norwegian market was solidified. SSG entered the Swedish and the Danish market through the acquisition of City Self-Storage. Self Storage Group is the largest self-storage provider in Scandinavia and one of the largest operators in Europe measured by the total number of facilities. The group has a particularly strong position in Norway as the largest provider of self-storage and holds a solid platform for growth as the fourth largest provider in Stockholm and Copenhagen.
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 jeopardising profitability. SSG has succeeded in attracting investors and raising capital, and is in a good position for executing the strategy.
On 14 January 2020 the operating company Eurobox Minilager AS was merged with City Self-Storage Norge AS. The real-estate companies of the Eurobox acquisition were merged with OK Property 6 February 2020, as the last step in the integration of the companies.
On 17 January 2020 FEOK AS and Ferncliff TIH AS, companies controlled by Øystein Stray Spetalen, sold all their shares, corresponding to 22.24% in Self Storage Group ASA. The shares were acquired by Zeon Lux S.à r.l., an entity managed by affiliates of Centerbridge Partners, L.P. Martin Nes resigned as chairman with immediate effect as a consequence of the sales.
On 23 January 2020 the Board elected board member Runar Vatne as new chairman.
On 31 January 2020 the Board decided to commence a strategic review to explore all available options to maximise shareholder value and ensure equal treatment of shareholders.
The acquisition of one property in Trondheim with a total potential lettable area of 2 100 m2 was successfully completed on 15 January 2020. On 4 February 2020 the company entered into an agreement to acquire one property in Oslo with a total potential lettable area of 2 500 m2 by acquire 100% of the shares in Ulven P28 AS to an enterprise value of NOK 47 million. 1 711 358 consideration shares were issued 12 February 2020 to the selling shareholder of Ulven P28 AS, as settlement of the acquisition.
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.
The effects of the COVID-19 pandemic and the changes in the oil price seen in the end of the first quarter of 2020 are not included in the risk factors in the Annual Report of 2019. Potential impacts related to the corona-virus on the Group's financial resultants are as follows;
The Group is exposed to interest rate risk, and in Q1 2020 SSG has entered into a five year agreement to secure NOK 150 million of the interest-bearing debt with a fixed rate of 1.08%. Subsequently in April, a agreement to secure additionally NOK 150 million of the interest-bearing debt at a fixed rate of 0.79% was entered. These agreements will reduce the risk of high volatility in future interest payments.
Since end of 2019 there has been a weakness of NOK. In Denmark and Sweden both revenue and costs are in local currency, and purchases in EUR and GBP are mostly related to fit-out activated in the balance sheet. The table in note 5 the Annual Report for 2019 showing currency effects on the Groups profit if the exchange rate fluctuate is still valid.
With the exception of the above mentioned changes there are no significant changes in the risks and uncertainty factors compared to the descriptions in the Annual Report for 2019.
11
Self Storage Group is a leading self-storage provider in Scandinavia with two strong brands and concepts; OK Minilager and City Self-Storage. As of 31 March 2020, the Group operates 113 facilities across Scandinavia with a total lettable area of 165 500 m2 and current lettable area of 140 300 m2 .
There is a large untapped potential for self-storage in Scandinavia as urbanisation and smaller living spaces cause increasing need for external storage solutions. To enhance these opportunities, Self Storage Group has established a solid platform for future growth with prime locations in all Scandinavian capitals as well as in cities across Norway. The platform for future growth is further strengthened through the acquisition of Eurobox.
The Company 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 freehold properties.
The Group has built up and acquired new storage capacity and is continuously phasing the new capacity into the market. Self Storage Group 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.
In 2020 we have seen the advent of the novel coronavirus (COVID-19), which is currently affecting the whole society and economy. The impact of COVID-19 remains uncertain and is dependent on future developments that cannot be predicted at time being. The Group record investment property at fair value, and changes in the economic environment including long-term assumptions could potentially have impact on the financial results. The last weeks we have seen that the partial lockdown slowly are on return and that funding from the Nordic Governments are paid out to support the Nordic economics. SSG is entering the second quarter in 2020 with a solid balance sheet, and is well positioned to endure the challenges ahead, and also to seize opportunities which will arise. This sets the foundation for a great future for the Group.
Oslo, 11 May 2020 Board of Directors, Self Storage Group ASA
| (Amounts in NOK 1 000) | Unaudited | Unaudited | Audited | |
|---|---|---|---|---|
| Note | For the three months ended 31 March 2020 |
For the three months ended 31 March 2019 |
For the twelve months ended 31 December 2019 |
|
| Revenue | 3 | 70 817 | 61 637 | 266 453 |
| Lease expenses | 2,3 | 2 954 | 3 108 | 11 813 |
| Property-related expenses | 3 | 8 083 | 6 974 | 28 975 |
| Salary and other employee benefits | 3 | 11 007 | 9 750 | 39 566 |
| Depreciation | 3 059 | 2 467 | 12 108 | |
| Other operating expenses | 3 | 8 757 | 7 857 | 34 730 |
| Operating profit before fair value adjustments | 36 957 | 31 481 | 139 261 | |
| Change in fair value of freehold investment property | 5 | 5 705 | 406 | 17 523 |
| Change in fair value of leasehold investment property | 2,5 | -15 443 | -13 181 | -55 204 |
| Operating profit after fair value adjustments | 27 219 | 18 706 | 101 580 | |
| Finance income | 129 | 158 | 1 283 | |
| Finance expense | 2 | 9 577 | 6 059 | 27 260 |
| Profit before tax | 17 771 | 12 805 | 75 603 | |
| Income tax expense | 3 247 | 2 213 | 13 870 | |
| Profit for the period | 14 524 | 10 592 | 61 733 | |
| Total comprehensive income for the year attributable to parent company shareholders Total comprehensive income for the year attributable to non-controlling interests |
14 524 - |
10 592 - |
61 733 - |
|
| Earnings per share | ||||
| Basic (NOK) | 4 | 0.17 | 0.16 | 0.83 |
| Diluted (NOK) | 4 | 0.17 | 0.16 | 0.83 |
| Other comprehensive income, net of income tax | ||||
| Items that may be reclassified subsequently to profit or loss | ||||
| - currency translation difference | 3 815 | - 650 | - 383 | |
| Other comprehensive income for the period, net of income tax |
3 815 | - 650 | - 383 | |
| Total comprehensive income for the period | 18 339 | 9 942 | 61 350 | |
| Total comprehensive income for the year attributable to parent company shareholders |
18 339 | 9 942 | 61 350 | |
| - | - | - |
| (Amounts in NOK 1 000) | Unaudited | Audited | |
|---|---|---|---|
| 31 March | 31 December | ||
| ASSETS | 2020 | 2019 | |
| Non-current assets | Note | ||
| Freehold investment property | 5 | 1 183 639 | 1 074 457 |
| Leasehold investment property | 2,5 | 497 133 | 489 062 |
| Property, plant and equipment | 116 429 | 112 595 | |
| Goodwill Financial instruments |
184 478 24 750 |
184 828 24 750 |
|
| Other intangible assets | 1 835 | 1 839 | |
| Total non-current assets | 2 008 264 | 1 887 531 | |
| Current assets | |||
| Inventories | 1 672 | 1 617 | |
| Trade and other receivables | 16 478 | 15 928 | |
| Other current assets | 16 912 | 11 410 | |
| Cash and bank deposits | 120 999 | 88 117 | |
| Total current assets | 156 061 | 117 072 | |
| TOTAL ASSETS | 2 164 325 | 2 004 603 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Issued share capital | 6 | 8 432 | 8 261 |
| Share premium | 791 594 | 744 853 | |
| Other reserves | 3 210 | - 93 | |
| Retained earnings | 266 556 | 252 032 | |
| Total equity | 1 069 792 | 1 005 053 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Long-term interest-bearing debt | 7 | 310 562 | 239 057 |
| Long-term obligations under finance leases | 2,7 | 462 455 | 450 642 |
| Other financial liabilities | 708 | 454 | |
| Deferred tax liabilities | 90 713 | 91 053 | |
| Total non-current liabilities | 864 438 | 781 206 | |
| Current liabilities | |||
| Short-term interest-bearing debt | 7 | 105 993 | 103 223 |
| Short-term obligations under finance leases | 2,7 | 54 460 | 52 190 |
| Trade and other payables | 13 363 | 7 115 | |
| Income tax payable | 7 792 | 9 309 | |
| Other taxes and withholdings | 5 079 | 5 276 | |
| Other current liabilities | 43 408 | 41 231 | |
| Total current liabilities | 230 095 | 218 344 | |
| Total liabilities | 1 094 533 | 999 550 | |
| TOTAL EQUITY AND LIABILITIES | 2 164 325 | 2 004 603 |
14
| (Amounts in NOK 1 000) | Issued Share capital |
Share premium |
Currency translation reserve |
Retained earnings |
Total equity |
|---|---|---|---|---|---|
| Balance at 1 January 2019 | 6 573 | 427 889 | 290 | 190 299 | 625 051 |
| Profit (loss) for the period | - | - | - | 10 592 | 10 592 |
| Other comprehensive income (loss) for the period net of income tax |
- | - | - 650 | - | - 650 |
| Total comprehensive income for the period | - | - | - 650 | 10 592 | 9 942 |
| Issue of ordinary shares, net of transaction costs | - | - | - | - | - |
| Balance at 31 March 2019 | 6 573 | 427 889 | - 360 | 200 891 | 634 993 |
| Balance at 1 January 2020 | 8 261 | 744 853 | - 93 | 252 032 | 1 005 053 |
|---|---|---|---|---|---|
| Profit (loss) for the period | - | - | - | 14 524 | 14 524 |
| Other comprehensive income (loss) for the period | |||||
| net of income tax | - | - | 3 303 | - | 3 303 |
| Total comprehensive income for the period | - | - | 3 303 | 14 524 | 17 827 |
| Issue of ordinary shares, net of transaction costs | 171 | 46 741 | - | - | 46 912 |
| Balance at 31 March 2020 (Unaudited) | 8 432 | 791 594 | 3 210 | 266 556 | 1 069 792 |
| Unaudited | Unaudited Audited | |||
|---|---|---|---|---|
| (Amounts in NOK 1 000) | Note | For the three months ended 31 March 2020 |
For the three months ended 31 March 2019 |
For the year ended 31 December 2019 |
| Cash flow from operating activities | ||||
| Profit before tax | 17 771 | 12 805 | 75 603 | |
| Income tax paid | - 3 730 | - 723 | - 10 720 | |
| Interest expense | 2 | 8 296 | 5 238 | 24 602 |
| Depreciation | 3 059 | 2 467 | 12 108 | |
| Gain/loss on disposal of property, plant and equipment |
- | 41 | - | |
| Change in fair value of freehold investment property | 5 | - 5 705 | - 406 | - 17 523 |
| Change in fair value of leasehold investment property | 2,5 | 15 443 | 13 181 | 55 204 |
| Change in trade and other receivables | - 551 | - 603 | - 703 | |
| Change in trade and other payables | 3 723 | - 3 512 | - 5 497 | |
| Change in other current assets | - 3 097 | 809 | 6 332 | |
| Change in other current liabilities | 1 356 | 9 899 | 6 107 | |
| Net cash flow from operating activities | 36 565 | 39 196 | 145 513 | |
| Cash flow from investing activities | ||||
| Payments for freehold investment property | - 17 169 | - 6 107 | - 42 753 | |
| Payments for property, plant and equipment | - 5 640 | - 6 267 | - 28 497 | |
| Net cash outflow on acquisition of subsidiaries | - 38 693 | 21 | - 489 962 | |
| Net cash flow from investing activities | - 61 502 | - 12 353 | - 561 212 | |
| Cash flow from financing activities | ||||
| Net proceeds from issue of equity instruments of the Company |
6 | - | - | 241 862 |
| Proceeds from borrowing | 7 | 80 000 | - | 228 000 |
| Repayment of borrowings | 7 | - 5 788 | - 2 938 | - 15 950 |
| Payments of lease liabilities | 2,7 | - 10 322 | - 10 643 | - 47 442 |
| Payments of leases classified as interest | 2,7 | - 5 131 | - 4 561 | - 18 417 |
| Interest paid | 7 | - 2 849 | - 827 | - 6 148 |
| Net cash flow from financing activities | 55 910 | - 18 969 | 381 905 | |
| Net change in cash and cash equivalents | 30 973 | 7 874 | - 33 794 | |
| Cash and cash equivalents at beginning of the period | 88 117 | 122 228 | 122 228 | |
| Effect of foreign currency rate changes on cash and cash equivalents |
1 909 | - 580 | - 317 | |
| Cash and equivalents at end of the period | 120 999 | 129 522 | 88 117 |
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 11 May 2020.
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 2019. The Group has not early adopted any standard, interpretation or amendment with effective date after 1 January 2020. There are no new standards or amendments in short term perspective which have been issued, but are not yet effective, that are considered to have an impact on the Group. The Group intends to adopt these standards, if applicable, when they become effective. The interim financial statements are unaudited.
17
Management has determined the operating segments based on reports reviewed by the CEO and management team and Board of Directors, which are used to make strategic and resource allocation decisions. The Group reports management information based on the two concepts offered by the Group, City Self-Storage (CSS) and OK Minilager (OKM), in addition to the Group's property business in the Property segment and Self Storage Group ASA (SSG ASA) in separate segments. Other/elimination includes eliminations of intercompany transactions and the remainder of the Group's activities not attributable to the other operating segments. In the tables below, reconciliation from EBITDA to Profit before tax is presented on an aggregated level. The Group reports management information excluded IFRS 16 impacts.
The operating entity from the Eurobox acquisition is reported as part of the CSS segment and the three property entities are reported as part of the Property segment.
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. The internal income and expenses are eliminated on Group level. |
| SSG ASA | SSG ASA includes administration and management activities. |
| Other/eliminations | Elimination and the remainder of the Group's activities not attributable to the operating segments described above. |
| For the three months ended 31 March 2020 |
CSS | OKM | Property | SSG ASA |
Other/ eliminations |
IFRS 16 | Total |
|---|---|---|---|---|---|---|---|
| Rental income from self-storage services | 46 975 | 18 409 | - | - | - | - | 65 384 |
| Other income | 3 336 | 1 085 | 15 279 | - | - 14 267 | - | 5 433 |
| Lease expenses | - 24 957 | - 9 119 | - | - 240 | 13 309 | 18 053 | - 2 954 |
| Other operating costs | - 17 346 | - 5 842 | - 3 766 | - 1 851 | 958 | - | - 27 847 |
| EBITDA | 8 008 | 4 533 | 11 513 | - 2 091 | - | 18 053 | 40 016 |
| Reconciliation to profit before tax as reported under IFRS |
|||||||
| Depreciation | - 3 059 | ||||||
| Change in fair value of freehold investment property |
5 705 | ||||||
| Change in fair value of leasehold investment property |
- 15 443 | ||||||
| Finance income | 129 | ||||||
| Finance expense | - 9 577 | ||||||
| Profit before tax | 17 771 |
| For the three months ended 31 March 2019 |
CSS | OKM | Property | SSG ASA |
Other/ eliminations |
IFRS 16 | Total |
|---|---|---|---|---|---|---|---|
| Rental income from self-storage services | 38 610 | 16 648 | - | - | - | - | 55 258 |
| Other income | 5 753 | 844 | 8 744 | - | - 8 962 | - | 6 379 |
| Lease expenses | - 17 710 | - 8 543 | - | - 195 | 8 179 | 15 161 | - 3 108 |
| Other operating costs | - 16 307 | - 6 408 | - 1 158 | - 1 491 | 783 | - | - 24 581 |
| EBITDA | 10 346 | 2 541 | 7 586 | - 1 686 | - | 15 161 | 33 948 |
| Reconciliation to profit before tax as reported under IFRS |
|||||||
| Depreciation | - 2 467 | ||||||
| Change in fair value of freehold investment property |
406 | ||||||
| Change in fair value of leasehold investment property |
- 13 181 | ||||||
| Finance income | 158 | ||||||
| Finance expense | - 6 059 | ||||||
| Profit before tax | 12 805 |
| SSG | Other/ | ||||||
|---|---|---|---|---|---|---|---|
| For the year ended 31 December 2019 | CSS | OKM | Property | ASA | eliminations | IFRS 16 | Total |
| Rental income from self-storage services | 172 676 | 71 957 | - | - | - | - | 244 633 |
| Other income | 15 864 | 4 079 | 43 796 | - | - 41 919 | - | 21 820 |
| Lease expenses | - 78 608 | - 33 650 | - | - 854 | 38 413 | 62 886 | - 11 813 |
| Operating costs | - 67 280 | - 25 295 | - 6 518 | - 7 684 | 3 506 | - | - 103 271 |
| EBITDA | 42 652 | 16 295 | 37 278 | - 8 538 | - | 62 886 | 151 369 |
| Reconciliation to profit before tax as reported under IFRS |
|||||||
| Depreciation | - 12 108 | ||||||
| Change in fair value of freehold investment property |
17 523 | ||||||
| Change in fair value of leasehold investment property |
- 55 204 | ||||||
| Finance income | 1 283 | ||||||
| Finance expense | - 27 260 | ||||||
| Profit before tax | 75 603 |
| (Amounts in NOK) | For the three months ended 31 March 2020 |
For the three months ended 31 March 2019 |
|---|---|---|
| Profit (loss) for the period | 14 524 000 | 10 592 000 |
| Weighted average number of outstanding shares during the period (basic) | 83 519 920 | 65 734 111 |
| Weighted average number of outstanding shares during the period (diluted) | 83 519 920 | 65 734 111 |
| Earnings (loss) per share - basic in NOK | 0.17 | 0.16 |
| Earnings (loss) per share - diluted in NOK | 0.17 | 0.16 |
See also note 6
During the three month period ended 31 March 2020, the following changes have occurred in the Group's portfolio of investment properties:
| Leasehold investment property |
Freehold investment property |
Total | |
|---|---|---|---|
| Balance as at 31 December 2019 | 489 062 | 1 074 457 | 1 563 519 |
| Value adjustment due to passage of time Additions and disposals leasehold investment property in the |
- 15 443 | - | -15 443 |
| year | 183 | - | 183 |
| Company acquired as asset acquisition | - | 86 308 | 86 308 |
| Additions to existing properties | - | 17 169 | 17 169 |
| Fair value adjustments recognised in profit or loss | - | 5 705 | 5 705 |
| Other/translation differences | 23 331 | - | 23 331 |
| Balance as at 31 March 2020 | 497 133 | 1 183 639 | 1 680 772 |
| Date | Number of shares issued |
Total number of shares |
Total share capital |
Value per share |
|
|---|---|---|---|---|---|
| Ordinary shares at 31 December 2019 | 82 617 226 | 8 261 723 | 0.10 | ||
| Issue of ordinary shares as settlement to the selling shareholder of Ulven P28 AS |
12 February 2020 | 1 711 358 | 84 328 584 | 8 432 858 | 0.10 |
| Ordinary shares at 31 March 2020 | 84 328 584 | 8 432 858 | 0.10 |
At the General Meeting in 2019 the Board of Directors was authorised to increase the share capital with up to NOK 3 286 705.50 through one or several share capital increases. The authorisation may be used to provide the Company with financial flexibility, including in connection with investments, merger and acquisitions. The Board's authorisation is valid until the annual General Meeting in 2020.
Interest bearing liabilities are carried at amortized cost. The carrying amounts approximate fair value as at 31 March 2020.
| Amounts due in | |||
|---|---|---|---|
| As at 31 March 2020 | less than 1 year* | 1-5 years | Total |
| Debt to financial institutions (NOK, Handelsbanken) | 105 993 | 310 562 | 416 555 |
| Interest bearing | Total financing | ||
| Changes in liabilities arising from financing activities | borrowings | Lease liabilities | activities |
| Balance as at 31 December 2019 | 342 280 | 502 832 | 845 112 |
| Additions and disposals of leasehold investment |
|||
| property in the year | - | 183 | 183 |
| Additions and disposals of other leases in the year | - | - 9 | - 9 |
| Repayments of borrowings/Payments of lease | -5 788 | -10 322 | -16 110 |
| Proceeds from borrowings | 80 000 | - | 80 000 |
| Interests expenses of borrowings | 2 912 | - | 2 912 |
| Interests paid of borrowings | -2 849 | - | -2 849 |
| Other/translation differences | - | 24 231 | 24 231 |
| Balance as at 31 March 2020 | 416 555 | 516 915 | 933 470 |
* Of the debt to financial institutions due in less than 1 year, NOK 83.6 million is planned refinanced in 2020
The new borrowings drawn up under the existing loan facility i Q1 2020 amounted to NOK 80 million and is with the same premisses as existing loans.
In Q1 2020 SSG has entered into a five year agreement to secure NOK 150 million of the interest-bearing debt with a fixed rate of 1.08%. Subsequently in April, a agreement to secure additionally NOK 150 million of the interest-bearing debt at a fixed rate of 0.79% was entered.
■ On 11 May 2020 proceeds from borrowings of a new loan facility amounting to NOK 100 million was received
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 permit for a more complete and comprehensive analysis of the Group's operating performance relative to other companies and across periods in addition to the financial information prepared in accordance with IFRS. Companies comparable to the Group vary with regards to, inter alia, capital structure and mix of leasehold and freehold properties. Non-IFRS financial measures, such as EBITDA, can assist the Company and investors in comparing performance on a more consistent basis without regard to factors such as depreciation and amortisation, which can vary significantly depending upon accounting methods, mix of freehold and leasehold properties or based on non-operating factors. Also, some of the non-IFRS financial measures presented herein adjust for one-time costs or costs that are not considered to be a part of regular operations.
The non-IFRS financial measures presented herein are not measurements of performance under IFRS or other generally accepted accounting principles and investors should not consider any such measures to be an alternative to: (a) operating revenues or operating profit (as determined in accordance with generally accepted accounting principles), as a measure of the Group's operating performance; or (b) any other measures of performance under generally accepted accounting principles. The non-IFRS financial measures presented herein may not be indicative of the Group's historical operating results, nor are such measures meant to be predictive of the Group's future results. The non-IFRS financial 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 freehold investment property and leasehold investment property and is useful to the Group for assessing operating performance.
Identified costs not likely to occur in the normal course of business in Self Storage Group are defined as non-recurring costs. Examples of non-recurring costs are acquisition costs, restructuring and severance packages. The exclusion of non-recurring costs is useful to Self Storage Group as it provides a measure for assessing underlying operating performance.
EBITDA: EBIT + depreciation, amortisation and impairments
Adjusted EBITDA: EBITDA +/- identified items to be excluded from adjusted EBITDA as described below
| (Amounts in NOK 1 000) | 31 March | 31 December | |
|---|---|---|---|
| Interest-bearing debt | 2020 | 2019 | |
| Long-term interest-bearing debt | 310 562 | 239 057 | |
| Short-term interest-bearing debt | 105 993 | 103 223 | |
| Total interest-bearing debt | 416 555 | 342 280 | |
| (Amounts in NOK 1 000) | Q1 2020 | Q1 2019 | Full year 2019 |
| Property-related expenses | 8 083 | 6 974 | 25 425 |
| Salary and other employee benefits | 11 007 | 9 750 | 37 403 |
| Other operating expenses | 8 757 | 7 857 | 30 311 |
| Total other operating expenses | 27 847 | 24 581 | 93 139 |
| Operating profit before fair value adjustments | 36 957 | 31 481 | 63 244 |
| EBIT | 36 957 | 31 481 | 63 244 |
| Total adjustments | 1 461 | 500 | 4 653 |
| Adjusted EBIT | 38 418 | 31 981 | 67 897 |
| Change in fair value of freehold investment property | 5 705 | 406 | 38 223 |
| Change in fair value of leasehold investment property | -15 443 | -13 181 | - |
| Adjusted Profit before tax | 19 232 | 13 305 | 80 256 |
| Tax | 3 514 | 2 299 | 19 228 |
| Adjusted Net profit | 15 718 | 11 006 | 61 028 |
| Operating profit before fair value adjustments | 36 957 | 31 481 | 63 244 |
| Depreciation | 3 059 | 2 467 | 12 108 |
| EBITDA | 40 016 | 33 948 | 75 352 |
| Total adjustments | 1 461 | 500 | 4 653 |
| Adjusted EBITDA | 41 477 | 34 448 | 80 005 |
| Adjustments | |||
| Acquisition costs | 923 | 500 | 4 653 |
| Severance packages | 538 | - | - |
| Total adjustments | 1 461 | 500 | 4 653 |
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