Quarterly Report • May 10, 2022
Quarterly Report
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Self Storage Group ASA
| Highlights | 2 |
|---|---|
| Key Figures |
2 |
| Financial development |
3 |
| Strategy | 9 |
| Corporate developments |
12 |
| Risks and uncertainty factors |
13 |
| Outlook | 14 |
| Financials | 15 |
| Alternative performance measures (APMs) |
27 |
1
The first quarter continued the strong and positive development for the company with solid organic revenueand EBITDA-growth, development of new facilities and acquisition of new properties. Q1 2022's highlights include the acquisition of six properties, and the opening of 4 400 m2 current lettable area (CLA). Demand is strong and occupancy for mature facilities is close to target level, despite the expected slower winter-season. The Group's freehold investment property value reached NOK 2.5 billion at the end of the quarter, giving a loan to value ratio for the Group of 38%. The company has a strong pipeline and a solid foundation for further profitable growth and expansion in the Nordics.
Q1 2022
| Q1 | Q1 | Full year | |
|---|---|---|---|
| (Amounts in NOK million) | 2022 | 2021 | 2021 |
| Revenue | 92.0 | 76.7 | 346.1 |
| Lease expenses | - 3.8 | - 2.2 | - 13.3 |
| Total other operating expenses | - 37.2 | - 30.5 | - 129.9 |
| Total adjustments | - | 1.2 | 3.4 |
| Adjusted EBITDA | 51.0 | 45.1 | 206.3 |
| Adjusted EBIT | 46.2 | 41.9 | 189.5 |
| Change in fair value of freehold investment property | 6.1 | 16.3 | 320.0 |
| Change in fair value of leasehold investment property | - 12.4 | - 9.5 | - 46.4 |
| Net finance | 16.2 | 5.5 | - 19.1 |
| Adjusted Profit before tax | 56.2 | 54.1 | 444.0 |
| Adjusted Net Profit | 46.7 | 44.7 | 351.3 |
| Current lettable area (in thousands m2 ) |
176.2 | 149.4 | 171.8 |
| Lettable area under development (in thousands m2 ) |
38.1 | 34.4 | 34.9 |
| Number of facilities | 129 | 116 | 128 |
1Non-GAAP measures are defined on page 27
Self Storage Group experiences strong demand, and occupancy has been close to SSG's target level of 90% in the first quarter of 2022, despite the expected slower winter-season. Current lettable area (CLA) at the end of March 2022 was 176 200 m2 , of which 162 900 m2 had been in operation for more than 12 months. The CLA increased by 4 400 m2 during the first quarter and by 26 800 m2 the last 12 months, including 9 400 m2 related to the acquisition of Dit Pulterkammer (DPK) in April 2021. Due to the growth in lettable area and SSG's expansion plans, filling up capacity has been prioritized over increasing prices. Prices were CPI adjusted in Q1 2022, and is expected to have full effect from Q2 2022.
Six properties were acquired in the first quarter 2022 contributing to the development pipeline of 38 100 m2 CLA. The value of the freehold portfolio increased by NOK 59.2 million during the first quarter of 2022 to a total of NOK 2 482 million. The increase from acquisitions and expansions amounts to NOK 58.3 million, and the increase from change in fair value amounts to NOK 6.1 million. All freehold investments properties were appraised in the fourth quarter following the annual CPI adjustment of internal leases 2021, and there was no indication of change as of March 2022.
SSG has had a strong growth since the IPO in 2017. The Group has a leading position in the Norwegian market and is one of the leading self-storage providers in Scandinavia. With the increasing size of the Group and freehold investment portfolio the Group has focus on planned maintenance, branding and organizational development to level up the scalable platform for future growth.
Revenue for Q1 2022 was NOK 92.0 million, an increase of NOK 15.3 million from Q1 2021.
Rental income from self-storage services was NOK 85.4 million in Q1 2022, an increase of NOK 13.8 million from Q1 2021. NOK 8.8 million of the increase is related to growth in lettable area through opening of new facilities and expansions, and growth in occupancy across both concepts and all three countries. The remaining part of the increase (NOK 5.0 million) is related to self-storage revenue from DPK, which is consolidated with SSG from 14 April 2021. DPK is reported as part of the CSS-segment. Increased self-storage revenue from the CSS-segment amounts to NOK 10.6 million while increased self-storage revenue from the OKM-segment amounts to NOK 3.2 million compared to Q1 2021. Income from rental of containers amounts to approximately 9.0% of the Group's self-storage revenue. Average occupancy in Q1 2022 for sites with more than 12 months of operating history was 88.8% (85.6%) with an average rent per m2 of NOK 2 322 per year (NOK 2 277).
Other revenue was NOK 6.6 million in Q1 2022, an increase of NOK 1.5 million compared with Q1 2021. NOK 0.6 million of the increase in other revenue is related to DPK. Other revenue consists of revenue from distribution of insurance, ancillary services, rental income from segments other than self-storage and other income. The income from office tenants fluctuates due to contracts expiring and office-space being converted to self-storage.
The Danish and Swedish Krone have weakened against NOK during Q1 2021, and there is a negative foreign exchange effect attributable to the revenue in SEK and DKK of NOK 0.7 million when comparing Q1 2022 and Q1 2021.
According to IFRS 16 long-term leasehold agreements are treated as financial leases. Lease expenses thus only consist of leasehold-contracts classified as short-term. Lease expenses were NOK 3.8 million in Q1 2022, up from NOK 2.2 million in Q1 2021. The increase is mainly related to two long-term lease contracts now classified as short-term. Lease expenses are impacted if long-term contracts expire and are renegotiated to short-term contracts, if new short-term contracts are signed, or if short-term contracts are renegotiated to long-term contracts. Average remaining lease period for leased facilities in the CSS-segment, including options, is 7.6 years. For OK Minilager, which has a number of short revolving contracts, the average remaining term is 1.9 years.
At the end of March 2022, 54% of the current lettable area in SSG is held freehold, compared to 46% at the end of March 2021. 45% of current lettable area in the City Self-Storage segment is freehold, while 68% 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. All maintenance is recorded as operational cost and is not capitalized.
Property-related expenses in Q1 2022 were NOK 14.6 million, an increase of NOK 3.5 million compared to Q1 2021. NOK 1.0 million is related to costs related to DPK, while the remainder mainly is related to increased costs to electricity and heating, following extreme price-development in the power market, in addition to operating costs to the increased number of facilities in the portfolio.
The Group has focus on energy management on all levels and is continuously focusing on reducing the energy consumption in the portfolio. SSGs buildings are equipped with few technical installations, and reducing the energy consumption is mainly done by keeping the temperature in climate-controlled environments at a low level, installing heat pumps and upgrading existing facilities to LED-lightning with movement sensors. LED-lightning uses less energy, has a long lifetime, and has a movement sensor in each lamp. All new facilities are equipped with LED-lightning.
Lettable area in SSG has increased by 26 800 m2 (18%) since March 2021, and the number of facilities increased by 13 to 129 facilities as of the end of March 2021.
Salary and other employee benefits in Q1 2022 were NOK 12.8 million, an increase of NOK 2.0 million from Q1 2021. NOK 0.9 million of the increase is related to new costs from DPK acquired in April 2021, while the remainder of NOK 1.1 million is related to new central positions due to the growth of the company and annual wage increases. The management team was strengthened with two new positions as CTO and CMO during 2021 to level up the scalable platform for future growth.
The number of full-time equivalents (FTE) at the end of March 2022 was 67.0 FTE, an increase of 11.4 FTEs since the end of March 2021, including 4.5 FTEs following the acquisition of DPK.
Depreciation in Q1 2022 was NOK 4.8 million, an increase of NOK 1.5 million from Q1 2021. Depreciation related to DPK constitutes NOK 0.9 million of the increase. 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, sales and advertising, and other administrative expenses.
In Q1 2022 other operating expenses amounted to NOK 9.7 million, an increase of NOK 1.2 million from Q1 2021. There were no costs defined as non-recurring costs in Q1 2022, but there was NOK 1.2 million in non-recurring costs in Q1 2021. NOK 0.8 million of the increase are new costs from DPK.
Since the summer of 2021, several branding projects for the Group's two brands have been launched. Marketing spend on facilities with occupancy above target level has been optimized, with sales and marketing costs constituting 3.4% (4.0%) of the revenue in Q1 2022.
The level of other operating expenses has been stable over many years despite the growth of the company, and is expected to remain quite stable going forward when adjusting for costs related to acquisitions. Sales and advertising will, however, increase as revenue increases, since sales costs are related to online advertising and there are some costs related to being a listed company that will increase in order to be compliant and to ensure a sustainable growth.
Identified items not likely to occur in the normal course of business in Self Storage Group are defined as non-recurring revenue or non-recurring costs. The exclusion of non-recurring items is useful to Self Storage Group as it provides a measure for assessing underlying operating performance.
| (NOK 1 000) | Q1 | Q1 | Full year |
|---|---|---|---|
| Adjustments | 2022 | 2021 | 2021 |
| Revenue: release of historical liability | - | - | 507 |
| Other operating expenses: acquisition costs | - | -1 157 | -3 923 |
| Total adjustments | - | -1 157 | -3 416 |
The fair value of freehold investment property is based on independent valuations by an external appraiser, with intra group lease contracts at market terms as a basic principle. Annual CPI adjustment of the leases, changes in areas with lease agreements and changes in yield impact the fair value.
In Q1 2022 the change in fair value of freehold investment property recognised in P&L was NOK 6.1 million, compared to the change in fair value in Q1 2022 of NOK 16.3 million. The change in fair value compared to Q1 2022 is related to new properties acquired in the quarter. In Q1 2021 the previous leasehold facility Adamstuen was acquired.
All freehold investments properties were appraised in the fourth quarter 2021, and there was no indication of change as of March 2022 . The total average yield in the Group was 4.9% as of 31 December 2021.
The diagram below shows the change in fair value recognised in P&L since Q1 2021.
Change in fair value of leasehold investment property relates mainly to passage of time of recognised leases under IFRS 16. Change in fair value of leasehold investment property recognised in the P&L in Q1 2022 was NOK -12.4 million, compared to NOK -9.5 million in Q1 2021. The increase relates mainly to the derecognition of the earlier leasehold investment property asset for Adamstuen in Q1 2021, partly offset by the changes in the length of some lease contracts that affect the classification of lease as short-term or long-term. Change in fair value of leasehold investment property recognised in the P&L will change if long-term contracts expire and are renegotiated to short-term contracts, or if short-term contracts are renegotiated to long-term contracts.
Fair value of freehold investment property was NOK 2 482 million and the fair value of leasehold investment property was NOK 454.0 million at 31 March 2022. Fair value of freehold investment property at 31 December 2021 was NOK 2 422 million, while the fair value of leasehold investment property was NOK 444.3 million.
EBITDA in Q1 2022 was NOK 51.0 million, an increase of NOK 5.9 million since Q1 2021. NOK 1.9 million of the increase in EBITDA is attributable to new net revenue and cost from DPK. There were no costs defined as non-recurring costs in Q1 2022 (Q1 2021 NOK 1.2 million). There is a negative foreign exchange effect attributable to rental income in SEK and DKK of NOK 0.7 million when comparing Q1 2022 and Q1 2021, partly offset by a positive foreign exchange effect on expenses of NOK 0.6 million. The financial development in Q1 2022 had an adjusted EBITDA-growth of 13% compared with Q1 2021. EBITDA for Q1 2022 vs Q1 2021 is visualized below.
Net finance amounted to NOK 16.2 million in Q1 2022, compared to NOK 5.5 million in Q1 2021. The change consists of increased financial income of NOK 15.7 million, and increased financial costs of NOK 5.0 million. The increase in financial income in Q1 2022 compared to Q1 2021 is mainly related to a positive change in fair value of interest rate swaps. The increase in financial expenses in Q1 2022 compared to Q1 2021 is mainly related to unrealised loss in foreign currency and increased interest expense on borrowings. Detailed development on net finance is disclosed in note 9.
Profit before tax in Q1 2022 was NOK 56.2 million, an increase of NOK 3.2 million from Q1 2021.
Total assets were NOK 3 529 million as of 31 March 2022, compared to NOK 3 491 million at 31 December 2021, an increase of NOK 37.7 million. Freehold investment property increased with NOK 59.2 million from 31 December 2021 to NOK 2 482 million as of 31 March 2022. The increase is related to the acquisition of six properties in Norway, investments in several development and conversion projects and exchange differences. Leasehold investment property was NOK 454.0 million at 31 March 2022, an increase of NOK 9.8 million from 31 December 2021. The increase is related to one option assessed reasonably certain to exercise, partly offset by the change in fair value of leasehold investment property due to passage of time and currency differences on leasehold investment property in Denmark and Sweden in Q1 2022.
Cash and bank deposits decreased by NOK 60.8 million to NOK 154.0 million at the end of March 2022 from December 2021. The main changes in cash and bank deposits in Q1 2022 relates net cash outflow on acquisitions and additions to freehold investment property.
Interest-bearing debt 1 amounts to NOK 931.5 million at the end of March 2022, a decrease of NOK 12.7 million from December 2021. Loan to value 1 of freehold investment property is 38% as of end March 2022, compared to 39% at the end of December 2021. The loan facility has several covenants 2 . As of 31 March 2022, the Group is not in breach of any of the covenants, and does not expect any breaches in the next 12 months.
At the end of March 2022 interest-bearing debt less cash was NOK -777.5 million. The interest-bearing debt is used for investments in freehold facilities, expansion of lettable area and development of the Group.
SSG invoices the customers in advance, which reduces credit risk and provides stable working capital. Other current liabilities consist mainly of prepaid income.
Total equity at the end of March 2022 was NOK 1 840 million, an increase of NOK 36.3 million from December 2021. The increase is attributable to the profit during the period. Lease liabilities at the end of March 2022 was NOK 479.3 million, an increase of NOK 10.7 million compared to the end of December 2021. The increase is related to one option assessed reasonably certain to exercise, partly offset by lease payments due to passage of time and currency differences on lease liabilities in Denmark and Sweden. The equity ratio was 52% at the end of March 2022, the same as at the end of December 2021.
SSG has strong cash flow as customers are invoiced in advance and costs are predictable and stable. Net cash flow from operating activities during Q1 2022 was NOK 35.0 million, compared to NOK 29.7 million in Q1 2021. The net cash flow from operating activities adjusted for non-cash items increased for the first quarter of 2022 compared to the first quarter of 2021 due to increase in operational profit. The net cash flow from operating activities is also affected by timing differences for payments that give a higher net cash flow from operating activities in Q1 2022 compared to Q1 2021.
Net cash flow from investing activities during Q1 2022 was NOK -60.8 million compared to NOK -305.5 million during Q1 2021. Payments for investment property includes acquisition of new properties, development of properties and additions to existing properties. Payments for property, plant and equipment consists mainly of new fit-out. Net cash outflow for acquisition of subsidiaries includes acquisitions accounted for as an 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 -34.3 million at the end of Q1 2022, compared to NOK 291.6 million at the end of Q1 2021. Net cash flow from financial activities was affected by repayment of loan amounting to NOK 12.3 million and net payment of lease liabilities and payments of lease classified as interests amounted to NOK -15.5 million in the first quarter of 2022.
SSG's cash balance at the end of March 2022 was NOK 154.0 million.
1Non-GAAP measures are defined on page 27 2See note 7 for the Group's covenants
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 objective, the Group is continuously working to increase the level of automation in all parts of the value chain.
The Group operates under two separate brands: OK Minilager and City Self-Storage. These two brands focus on different market segments and provide a strong platform for serving customers with different preferences and needs. The Group's vision is to enable people to take care of their belongings and organize their lives by being the leading Scandinavian self-storage provider with safe, smart and accessible solutions. SSG 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.
SSG aims to develop a business model that is sustainable with a low carbon footprint, and the Group believes it to be important that it engages in how to make a difference for customers as well as for the employees. SSG is determined to include sustainability as an integrated part of the business. Even though the industry in general has a low carbon footprint, SSG still has potential related to sustainability, and plans to continue the journey to achieve its potential.
The strategy is to develop the Group further and to expand the total lettable area by investing in new freehold facilities. The Group seeks to strengthen its nationwide presence in Norway while at the same time optimising existing facilities in the portfolio. The Group is also looking at growing its portfolio in the Swedish and Danish markets, both through development of new facilities and acquisition of established self-storage providers. 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 held in the 100% owned company OK Property AS, and leased to the operating companies in the Group.
The Group operates under both the OK Minilager and City Self-Storage brands 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.
9
is SSG's "urban concept", targeting the population in the major cities, currently serving Oslo, Stavanger, Trondheim, Stockholm, Copenhagen and the Jutland-area in Denmark. The strategy is to strengthen the market-leading position in the major cities in Norway by establishing more facilities at attractive locations. The group is also targeting growth within existing and new facilities in the Danish market, where City Self-Storage has a nationwide footprint following the acquisition of Dit Pulterkammer in April 2021. City Self-Storage will be opportunistic about potential mergers and acquisitions in the Nordics, 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 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 amongst the leading self-storage providers in Scandinavia with a particularly strong position in the Norwegian market. 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 markets through the acquisition of City Self-Storage in 2016. With the acquisition of Eurobox in 2019 the leading position in the Norwegian market was solidified. 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 market leading position in Norway and a national footprint in Denmark. SSG is also a regional operator in the Stockholm area.
The combination of a countrywide presence in the "early stage" Norwegian market and a strong position in the more developed markets in Sweden and Denmark 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.
The Group's strong balance sheet, coupled with additional borrowing capacity, gives SSG additional investment capacity in 2022 and beyond.
Self-storage is increasingly becoming an online industry where the majority of the enquiries are channeled through websites and mobile apps. As more and more facilities are becoming self-serviced, customer service is becoming an even more important aspect of the customer journey. SSG considers it a significant competitive advantage to provide a seamless and well-integrated user experience by combining easy to use online booking systems with around-the-clock accessible customer service on multiple platforms. Self Storage Group was a pioneer in this area and has constantly innovated in order to improve the user
experience. The company offers user-friendly online booking solutions and personal customer service across several formats such as phone, mail, chat and social media. This has been a contributing factor to why both OK Minilager and City Self-Storage have established themselves amongst the leading self-storage providers in Scandinavia.
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. SSG has succeeded in attracting investors and raising capital, and is well positioned to execute its strategy.
On 24 March 2022, Centerbridge Partners Europe LLP, the Company's largest shareholder and closely related to chairman of the board Steven J Skaar, bought 2 000 000 shares. Following this transaction, Centerbridge Partners Europe LLP owns 27 206 078 shares in Self Storage Group ASA, representing approximately 28.73% of the issued shares in the Company
On 24 March 2022, Fabian Søbak (Founder and CEO) sold 1 000 000 shares through Fabian Holding AS, a company controlled by Fabian Søbak. Following this transaction, Fabian Holding AS owns 8 565 000 shares in Self Storage Group ASA, representing approximately 9.05% of the issued shares in the Company. On the same date, Gustav Søbak (Founder and Board member) sold 1 000 000 shares through GSS Invest AS, a company controlled by Gustav Søbak. Following this transaction, GGS Invest AS owns 5 565 000 shares in Self Storage Group ASA, representing approximately 5.88% of the issued shares in the Company. The proceeds from the transactions are planned to be used to pay wealth taxes for the coming years, as required by Norwegian tax rules.
| 1 Acquired properties |
Area | Transaction quarter |
Total potensial lettable area (m2 ) |
Transaction value (NOK |
Closing quarter |
Estimated opening |
|---|---|---|---|---|---|---|
| million) | quarter | |||||
| Property in Porsgrunn | Porsgrunn, Norway | Q2 2022 | 1 500 | 17.8 | Q4 2022 | Q1 2023 |
| Property in Skien2 | Skien, Norway | Q1 2022 | - | 8.5 | Q2 2022 | Q2 2023 |
| Property in Stange Næringspark | Stange, Norway | Q1 2022 | 600 | 5.3 | Q4 2022 | Q1 2023 |
| Nesseveien 2B | Harstad, Norway | Q1 2022 | 680 | 8.4 | Q1 2022 | Q3 2022 |
| Property in Storebotn Næringspark |
Askøy, Norway | Q4 2021 | 1 050 | 12.0 | Q2 2022 | Q4 2022 |
| Molandsveien 339 | Arendal, Norway | Q4 2021 | 850 | 7.1 | Q3 2022 | Q4 2022 |
| Kartheia 5 | Kristiansand | Q4 2021 | 550 | 4.3 | Q1 2022 | Q3 2022 |
| Nordslettvegen 4 BC | Trondheim | Q4 2021 | 1 550 | 17.0 | Q1 2022 | Q3 2022 |
| Sørliveien 84, neighboring section property |
Halden, Norway | Q4 2021 | 1 400 | 8.0 | Q1 2022 | TBD |
| Deliveien 21 | Vestby, Norway | Q4 2021 | 1 500 | 15.6 | Q4 2022 | Q1 2023 |
| Property in Kampenesmosen2 | Sarpsborg, Norway | Q4 2021 | - | 4.6 | Q1 2022 | Q2 2023 |
| Lundeveien 10 | Vennesla, Norway | Q4 2021 | 800 | 6.2 | Q1 2022 | Q3 2022 |
| Gardermovegen | Nannestad, Norway | Q4 2021 | 1 050 | 11.5 | Q3 2022 | Q3 2022 |
| Knarvik2 | Alver, Norway | Q3 2021 | - | 4.0 | Q1 2023 | H1 2023 |
| Total | 11 530 | 130.3 |
1Properties with closing quarter in 2022 or later 2Acquisition of plot
SSG is exposed to risk and uncertainty factors, which may affect some or all of the Group's activities. SSG has financial risk, market risk, operational risk and risk related to the current and future products.
The Group has attractive financial terms on its loan, but is exposed to interest rate risk. SSG has entered into several five-year interest rate swaps. In total the Group has interest rate swaps amounting to NOK 750 million. These agreements will reduce the risk of high volatility in future interest payments.
Since the end of 2021 there has been a strengthening in the exchange rate 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 capitalized in the balance sheet. The table in note 5 the Annual Report for 2021 showing currency effects on the Groups profit if the exchange rate fluctuates is still valid.
Russia went to war against Ukraine 24 February 2022. SSG has no direct exposure to Russia and Ukraine, and the war has a limited effect on the Group. However, the unstable global situation, especially related to energy and supply chain affects SSG in 2022, but the extent of the impact and the consequences are still unclear.
SSG has a strong pipeline with 38 100 m2 of freehold lettable area under development, and is focused on growing its freehold footprint, both by developing high-quality freehold facilities and opportunistically acquiring freehold properties where SSG has an existing leasehold interest. SSG is affected by the unstable global situation and increased cost related to steel and supply chain. Steel is the main component in the fit-out installation on new facilities, and expansions on existing facilities. During the past 12 months, fit-out material cost has increased 30-40%, but the fit-out cost has only a small impact on new project costs (i.e. 10-15% of total project budget). With the increased fit-out material cost, SSG is focusing even more on negotiating terms with the Group's suppliers and utilizing its purchasing power in the negotiations. SSG is working with several European suppliers, and can therefore benchmark the cost of fit-out material on an ongoing basis. Production and delivery time have also increased since the start of the pandemic. To compensate for supply chain delays, SSG starts the planning of the fit-out installations earlier in the projects. So far, few projects have been delayed due to increased delivery time of the fit-out material.
In Q4 2021 and Q1 2022 SSG has signed agreements to acquire several new sectioned buildings. These contracts are signed on a fixed price basis. The recent cost increases on steel and other materials will hence not affect the cost of these buildings for SSG. Fit-out installations are separate from these contracts, which will result in some cost increases on these projects as a whole. SSG is expecting cost increases on new greenfield development projects which are not signed yet. SSG currently has two greenfield development plots in the pipeline.
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 2021.
Self Storage Group (SSG or the "Company" or "The Group") has a leading position in the Norwegian market and is one of the leading self-storage providers in Scandinavia. SSG has two strong brands and concepts; City Self-Storage and OK Minilager. As of 31 March 2021, the Group operates 129 facilities across Scandinavia with a total lettable area of 214 300 m2 and current lettable area of 176 200 m2 .
There is a large untapped potential for SSG's services in Scandinavia as urbanization and smaller living spaces lead to an increased need for external storage solutions. SSG is experiencing robust demand for its facilities, increasing occupancy and is adding new capacity while at the same time achieving attractive rent levels. SSG is focused on occupancy growth and lease-up of new facilities. The Group also sees a potential to increase rent levels in the portfolio.
SSG has established a solid and scalable platform and is well positioned for future growth in a growing market. The Group has a strong pipeline with 38 100 m2 of freehold lettable area under development.
The Group is focused on growing its freehold footprint, both by developing high-quality freehold facilities and opportunistically acquiring freehold properties where we have an existing leasehold interest. SSG has additional avenues for growth through already-acquired development opportunities and low-cost expansions of existing facilities. During 2021 14 200 m2 was developed, and the Group is aiming to accelerate development growth in 2022 with a projected addition of 15 000 m2 + lettable area. The strong balance sheet enables the Company to continue investing for the future, both organic and through M&A.
SSG is well positioned in an inflationary environment. With a high margin business model cost inflation is less material than the benefit to the top line. The Group has seen some construction cost sensitivity on new developments. Fit-out materials have seen the largest effects from inflation, but the fit-out cost has only a small impact on new project costs (i.e. 10-15% of total project budget). SSG has implemented several cost saving measures on projects to offset increased cost of fit-out. New developments, while still a significant growth driver, are only a fraction of overall business given the large install base
SSG has a proven track-record of developing and operating a portfolio of self-storage facilities, leveraging on a lean and operationally-focused organization to achieve industry-leading margins. With the increasing number of freehold properties, SSG has recently added additional resources to manage operations and maintenance of the properties, as well as new recruitments in our property development team. During 2021, SSG also strengthened its IT and marketing efforts with new key recruitments. SSG will continue to make investments in its digital platforms to increase automation and customer satisfaction. The roll out of a new identity and communication strategy for both brands was initiated in Q4 2021 and will continue in 2022. By focussing on branding and organizational development, SSG continues to enhance its scalable platform for future growth.
SSG has built a unique and endurable market share position over the past three decades. With a solid financial position, a strong organization, and attractive assets, SSG is well positioned to leverage its scalable platform for a great future.
Oslo, 9 May 2022 Board of Directors, Self Storage Group ASA
| (Amounts in NOK 1 000) | Unaudited | Unaudited | Audited | |
|---|---|---|---|---|
| Note | For the three | For the three | ||
| months ended 31 March 2022 |
months ended 31 March 2021 |
For the year ended 31 December 2021 |
||
| Revenue | 3 | 91 952 | 76 674 | 346 075 |
| Lease expenses | 3,8 | -3 754 | -2 243 | -13 250 |
| Property-related expenses | 3 | -14 633 | -11 139 | -44 414 |
| Salary and other employee benefits | 3 | -12 824 | -10 794 | -44 115 |
| Depreciation | -4 754 | -3 249 | -16 863 | |
| Other operating expenses | 3 | -9 739 | -8 535 | -41 373 |
| Operating profit before fair value adjustments | 46 248 | 40 714 | 186 060 | |
| Change in fair value of freehold investment property | 5 | 6 148 | 16 310 | 319 996 |
| Change in fair value of leasehold investment property | 5,8 | -12 404 | -9 534 | -46 356 |
| Operating profit after fair value adjustments | 39 992 | 47 490 | 459 700 | |
| Finance income | 9 | 32 575 | 16 848 | 36 273 |
| Finance expense | 7,8,9 | -16 381 | -11 368 | -55 357 |
| Profit before tax | 56 186 | 52 970 | 440 616 | |
| Income tax expense | -9 485 | -9 185 | -92 015 | |
| Profit for the period | 46 701 | 43 785 | 348 601 | |
| Profit/loss attributable to owners of the parent | 46 701 | 43 785 | 348 601 | |
| Profit/loss attributable to non-controlling interests | - | - | - | |
| Earnings per share | ||||
| Basic (NOK) | 4 | 0.49 | 0.52 | 3.96 |
| Diluted (NOK) | 4 | 0.49 | 0.52 | 3.96 |
| Other comprehensive income, net of income tax |
||||
| Items that may be reclassified subsequently to profit or loss |
||||
| - currency translation difference | -10 398 | -12 484 | -14 650 | |
| Other comprehensive income for the period, net of income tax |
-10 398 | -12 484 | -14 650 | |
| Total comprehensive income for the period | 36 303 | 31 301 | 333 951 | |
| Total comprehensive income for the year attributable | ||||
| to owners of the parent | 36 303 | 31 301 | 333 951 | |
| Total comprehensive income for the year attributable to non-controlling interests |
- | - | - |
| (Amounts in NOK 1 000) | Unaudited | Audited | |
|---|---|---|---|
| ASSETS | 31 March 2022 | 31 December 2021 | |
| Non-current assets | Note | ||
| Freehold investment property | 5 | 2 481 532 | 2 422 368 |
| Leasehold investment property | 5,8 | 454 011 | 444 253 |
| Property, plant and equipment | 8 | 171 877 | 162 615 |
| Goodwill | 187 372 | 187 330 | |
| Financial instruments | 36 506 | 14 160 | |
| Other intangible assets | 872 | 1 220 | |
| Deferred tax assets | 89 | 91 | |
| Total non-current assets | 3 332 259 | 3 232 037 | |
| Current assets | |||
| Inventories | 1 661 | 1 857 | |
| Trade and other receivables | 16 382 | 17 140 | |
| Other current assets | 24 870 | 25 668 | |
| Cash and bank deposits | 153 985 | 214 746 | |
| Total current assets | 196 898 | 259 411 | |
| TOTAL ASSETS | 3 529 157 | 3 491 448 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Issued share capital | 6 | 9 467 | 9 467 |
| Share premium | 1 082 657 | 1 082 657 | |
| Currency translation reserve | -12 209 | -1 811 | |
| Retained earnings | 760 302 | 713 601 | |
| Total equity | 1 840 217 | 1 803 914 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Non-current interest-bearing debt | 7 | 879 776 | 892 626 |
| Non-current lease liabilities | 7,8 | 434 357 | 422 479 |
| Other financial liabilities | 394 | 320 | |
| Deferred tax liabilities | 203 676 | 196 745 | |
| Total non-current liabilities | 1 518 203 | 1 512 170 | |
| Current liabilities | |||
| Current interest-bearing debt | 7 | 51 745 | 51 644 |
| Current lease liabilities | 7,8 | 44 977 | 46 192 |
| Trade and other payables | 16 462 | 12 804 | |
| Income tax payable | 3 152 | 10 478 | |
| Other taxes and withholdings | 7 114 | 6 713 | |
| Other current liabilities | 47 287 | 47 533 | |
| Total current liabilities | 170 737 | 175 364 | |
| Total liabilities | 1 688 940 | 1 687 534 | |
| TOTAL EQUITY AND LIABILITIES | 3 529 157 | 3 491 448 |
16
| (Amounts in NOK 1 000) | Issued Share capital |
Share premium |
Currency translation reserve |
Retained earnings |
Total equity |
|---|---|---|---|---|---|
| Balance at 1 January 2021 | 8 432 | 791 594 | 12 839 | 365 000 | 1 177 865 |
| Profit (loss) for the period | - | - | - | 43 785 | 43 785 |
| Other comprehensive income (loss) for the period | |||||
| net of income tax | - | - | - 12 484 | - | - 12 484 |
| Total comprehensive income for the period | - | - | - 12 484 | 43 785 | 31 301 |
| Balance at 31 March 2021 (Unaudited) | 8 432 | 791 594 | 355 | 408 785 | 1 209 166 |
| Balance at 1 January 2022 | 9 467 | 1 082 657 | - 1 811 | 713 601 | 1 803 914 |
|---|---|---|---|---|---|
| Profit (loss) for the period | - | - | - | 46 701 | 46 701 |
| Other comprehensive income (loss) for the period | |||||
| net of income tax | - | - | - 10 398 | - | - 10 398 |
| Total comprehensive income for the period | - | - | - 10 398 | 46 701 | 36 303 |
| Balance at 31 March 2022 (Unaudited) | 9 467 | 1 082 657 | - 12 209 | 760 302 | 1 840 217 |
| Unaudited | Unaudited | Audited | ||
|---|---|---|---|---|
| (Amounts in NOK 1 000) | Note | For the three | For the three | For the year |
| months ended | months ended | ended 31 | ||
| 31 March 2022 | 31 March 2021 | December 2021 | ||
| Cash flow from operating activities | ||||
| Profit before tax | 56 186 | 52 970 | 440 616 | |
| Income tax paid | - 9 316 | - 2 921 | - 14 330 | |
| Net expensed interest and fees on borrowings and leases | 5 709 | 3 642 | 37 468 | |
| Depreciation | 4 754 | 3 249 | 16 863 | |
| Gain/loss on disposal of property, plant and equipment | - | - 42 | - 177 | |
| Unrealised gain/loss in foreign currency | 9 | - 5 318 | - 9 919 | -9745 |
| Change in fair value of financial instruments | 9 | - 22 346 | - 4 937 | - 16 178 |
| Change in fair value of freehold investment property | 5 | - 6 148 | - 16 310 | - 319 996 |
| Change in fair value of leasehold investment property | 5,8 | 12 404 | 9 534 | 46 356 |
| Change in trade and other receivables | 1 062 | 1 090 | - 1 418 | |
| Change in trade and other payables | 3 579 | 1 533 | - 3 974 | |
| Change in other current assets | - 6 318 | - 7 917 | - 3 614 | |
| Change in other current liabilities | 793 | - 252 | 2 438 | |
| Net cash flow from operating activities | 35 041 | 29 720 | 174 309 | |
| Cash flow from investing activities | ||||
| Payments for freehold investment property | - 22 183 | - 29 253 | - 174 836 | |
| Payments for property, plant and equipment | - 13 884 | - 11 752 | - 47 332 | |
| Proceeds from disposal of property, plant and equipment | - | 223 | 684 | |
| Net cash outflow on acquisition of subsidiaries | - 24 711 | - 264 735 | - 463 862 | |
| Net cash flow from investing activities | - 60 778 | - 305 517 | - 685 346 | |
| Cash flow from financing activities | ||||
| Net proceeds from issue of equity instruments | 6 | - | - | 291 999 |
| Proceeds from borrowings | 7 | - | 984 268 | 1 084 268 |
| Repayment of borrowings | 7 | - 12 300 | - 672 263 | - 809 162 |
| Interest paid | 7,9 | - 6 494 | - 3 873 | - 25 444 |
| Payments of lease liabilities | 7,8 | - 11 206 | - 10 517 | - 43 296 |
| Payments of interest on lease liabilities | 7,8,9 | - 4 251 | - 6 060 | - 18 527 |
| Net cash flow from financing activities | - 34 251 | 291 555 | 479 838 | |
| Net change in cash and cash equivalents | - 59 988 | 15 758 | - 31 199 | |
| Cash and cash equivalents at beginning of the period | 214 746 | 246 804 | 246 804 | |
| Effect of foreign currency rate changes on cash and cash equivalents |
- 773 | - 838 | - 859 | |
| Cash and equivalents at end of the period | 153 985 | 261 724 | 214 746 | |
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 9 May 2022.
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 2021. The Group has not early adopted any standard, interpretation or amendment with effective date after 1 January 2022. 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.
The Group assesses indicators of impairment of property, plant and equipment, right to use assets, intangible assets and financial investments continuously. As of 31 March 2022 no indicators of impairment are identified.
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 excluding IFRS 16 impacts.
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 | Other/ | ||||||
|---|---|---|---|---|---|---|---|
| 2022 | CSS | OKM Property SSG ASA | eliminations | IFRS 16 | Total | ||
| Rental income from self-storage services | 60 954 | 24 432 | - | - | - | - | 85 386 |
| Other income | 5 029 | 115 | 27 866 | - | - 26 444 | - | 6 566 |
| Lease expenses | - 33 859 | - 11 496 | - | - 352 | 26 444 | 15 509 | - 3 754 |
| Other operating costs | - 24 950 | - 6 542 | - 4 505 | - 1 219 | - | 20 | - 37 196 |
| EBITDA | 7 174 | 6 509 | 23 361 | - 1 571 | - | 15 529 | 51 002 |
| Reconciliation to profit before tax as reported under IFRS |
|||||||
| Depreciation | - 4 754 | ||||||
| Change in fair value of freehold investment property |
6 148 | ||||||
| Change in fair value of leasehold investment property |
- 12 404 | ||||||
| Finance income | 32 575 | ||||||
| Finance expense | - 16 381 | ||||||
| Profit before tax | 56 186 |
| For the three months ended 31 March | Other/ | ||||||
|---|---|---|---|---|---|---|---|
| 2021 | CSS | OKM Property SSG ASA | eliminations | IFRS 16 | Total | ||
| Rental income from self-storage services | 50 380 | 21 219 | - | - | - | - | 71 599 |
| Other income | 3 579 | 106 | 18 371 | - | - 16 981 | - | 5 075 |
| Lease expenses | - 27 081 | - 9 216 | - | - 330 | 16 981 | 17 403 | - 2 243 |
| Other operating costs | - 19 285 | - 5 434 | - 4 304 | - 1 506 | - | 61 | - 30 468 |
| EBITDA | 7 593 | 6 675 | 14 067 | - 1 836 | - | 17 464 | 43 963 |
| Reconciliation to profit before tax as reported under IFRS |
|||||||
| Depreciation | - 3 249 | ||||||
| Change in fair value of freehold investment property |
16 310 | ||||||
| Change in fair value of leasehold investment property |
- 9 534 | ||||||
| Finance income | 16 848 | ||||||
| Finance expense | - 11 368 | ||||||
| Profit before tax | 52 970 | ||||||
| Other/ | |||||||
| For the year ended 31 December 2021 | CSS | OKM | Property SSG ASA | eliminations | IFRS 16 | Total |
| For the year ended 31 December 2021 | CSS | OKM | Property SSG ASA | eliminations | IFRS 16 | Total | |
|---|---|---|---|---|---|---|---|
| Rental income from self-storage services | 229 326 | 90 918 | - | - | - | - | 320 244 |
| Other income | 19 326 | 1 079 | 85 671 | 507 | - 80 752 | - | 25 831 |
| Lease expenses | - 116 700 | - 39 555 | - | - 1 320 | 80 752 | 63 573 | - 13 250 |
| Operating costs | - 86 653 | - 22 262 | - 16 951 | - 4 279 | - | 243 | - 129 902 |
| EBITDA | 45 299 | 30 180 | 68 720 | - 5 092 | - | 63 816 | 202 923 |
| Reconciliation to profit before tax as reported under IFRS |
|||||||
| Depreciation | - 16 863 | ||||||
| Change in fair value of freehold investment property |
319 996 | ||||||
| Change in fair value of leasehold investment property |
- 46 356 | ||||||
| Finance income | 36 273 | ||||||
| Finance expense | - 55 357 | ||||||
| Profit before tax | 440 616 |
| (Amounts in NOK) | For the three months ended 31 March 2022 |
For the three months ended 31 March 2021 |
|---|---|---|
| Profit (loss) for the period | 46 701 000 | 43 785 000 |
| Weighted average number of outstanding shares during the period (basic) |
94 678 584 | 84 328 584 |
| Weighted average number of outstanding shares during the period (diluted) |
94 678 584 | 84 328 584 |
| Earnings (loss) per share - basic in NOK | 0.49 | 0.52 |
| Earnings (loss) per share - diluted in NOK | 0.49 | 0.52 |
See also note 7
21
During the three months period ended 31 March 2022, the following changes have occurred in the Group's portfolio of investment properties:
| Leasehold | Freehold | ||
|---|---|---|---|
| investment property |
investment property |
Total | |
| Balance as at 31 December 2021 | 444 253 | 2 422 368 | 2 866 621 |
| Value adjustment due to passage of time | - 12 404 | - | -12 404 |
| Additions and disposals leasehold investment property in the year | 27 294 | - | 27 294 |
| Asset acquisition in Property segment | - | 11 101 | 11 101 |
| Company acquired as asset acquisition | - | 36 091 | 36 091 |
| Additions to existing properties | - | 11 082 | 11 082 |
| Fair value adjustments recognised in profit or loss | - | 6 148 | 6 148 |
| Other/translation differences | - 5 132 | - 5 258 | -10 390 |
| Balance as at 31 March 2022 | 454 011 | 2 481 532 | 2 935 543 |
Investment property is measured at fair value. Gains and losses arising from a change in the fair value of investment property are included in profit or loss in the period in which they arise. The Company's valuation process is based on valuations performed by an independent external party, supplemented by internal analysis and assessments. The valuations are reviewed on a quarterly basis.
Properties are valued by discounting future cash flows. Both contractual and expected future cash flows are included in the calculations. Fair value assessments depend largely on assumptions related to market rent, discount rates and inflation. Market rent is based on individual assessments for each property.
(Amounts in NOK)
| Date | Number of shares issued |
Total number of shares |
Total share capital |
Value per share |
|
|---|---|---|---|---|---|
| Ordinary shares at 31 December 2021 | 94 678 584 | 9 467 858 | 0.10 | ||
| Ordinary shares at 31 March 2022 | 94 678 584 | 9 467 858 | 0.10 |
At the General Meeting in 2021 the Board of Directors was authorized to increase the share capital with up to NOK 4 216 429.20 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 2022. The remaining amount of the authorisation to increase the share capital is NOK 3 181 429.20 as of 31 March 2022.
| Shareholder | Country | Number of shares | Ownership % | |
|---|---|---|---|---|
| 1 | UBS Switzerland AG1 | Switzerland | 27 256 078 | 28.8% |
| 2 | FABIAN HOLDING AS2 | Norway | 8 565 000 | 9.0% |
| 3 | VERDIPAPIRFONDET ODIN EIENDOM3 | Norway | 6 066 370 | 6.4% |
| 4 | GSS INVEST AS | Norway | 5 565 000 | 5.9% |
| 5 | J.P. Morgan SE | Luxembourg | 4 172 309 | 4.4% |
| 6 | J.P. Morgan Securities LLC | United States | 4 170 214 | 4.4% |
| 7 | SKAGEN M2 VERDIPAPIRFOND | Norway | 3 668 743 | 3.9% |
| 8 | FIRST RISK CAPITAL AS4 | Norway | 2 600 000 | 2.7% |
| 9 | SOLE ACTIVE AS | Norway | 2 502 048 | 2.6% |
| 10 | HSBC Bank Plc | United Kingdom | 2 488 255 | 2.6% |
| 11 | BNP Paribas Securities Services | France | 2 425 686 | 2.6% |
| 12 | Danske Invest Norge Vekst | Norway | 1 843 253 | 1.9% |
| 13 | VERDIPAPIRFONDET HOLBERG NORGE | Norway | 1 700 000 | 1.8% |
| 14 | BNP Paribas Securities Services | France | 1 459 000 | 1.5% |
| 15 | The Bank of New York Mellon | United States | 1 386 183 | 1.5% |
| 16 | Citibank, N.A. | Ireland | 1 036 804 | 1.1% |
| 17 | Brown Brothers Harriman & Co. | United States | 1 016 072 | 1.1% |
| 18 | J.P. Morgan SE | Luxembourg | 972 894 | 1.0% |
| 19 | CACEIS Bank | France | 937 052 | 1.0% |
| 20 | MUSTAD INDUSTRIER AS | Norway | 900 000 | 1.0% |
| Other | 13 947 623 | 14.7% | ||
| Sum | 94 678 584 | 100.0% |
1UBS Switzerland AG is a nominee account for Alta Lux Holdco S.a.r.l/Centerbridge Partners
2Fabian Holding AS is owned by CEO Fabian Søbak
3GSS Invest AS is owned by board member Gustav Søbak
4First Risk Capital AS is controlled by board member Carl August Ameln
Duo Jag AS, which is partly owned by board member Ingrid Leisner, owns 10 390 shares in Self Storage Group ASA
CFO Cecilie Brænd Hekneby and close relatives own 688 843 shares in Self Storage Group ASA
COO Sveinung Høyer-Trollnes owns 17 123 shares in Self Storage Group ASA
CPMO Lars Moen owns 24 799 shares in Self Storage Group ASA
Interest bearing liabilities are carried at amortized cost. The carrying amounts approximate fair value as at 31 March 2022.
| Amounts due in | |||
|---|---|---|---|
| As at 31 March 2022 | less than 1 year | 1-5 years | Total |
| Debt to financial institutions (NOK, Handelsbanken) | 51 745 | 879 776 | 931 521 |
| Changes in liabilities arising from financing activities | Interest bearing borrowings |
Lease liabilities | Total financing activities |
|---|---|---|---|
| Balance as at 31 December 2021 | 944 270 | 468 671 | 1 412 941 |
| Additions and disposals of leasehold investment property in the year | - | 27 294 | 27 294 |
| Additions and disposals of other leases in the year | - | - | - |
| Repayments of borrowings/Payments of lease | -12 300 | -11 206 | -23 506 |
| Proceeds from borrowings | - | - | - |
| Interests expenses of borrowings | 6 045 | - | 6 045 |
| Interests paid of borrowings | -6 494 | - | -6 494 |
| Other/translation differences | -5 425 | -5 425 | |
| Balance as at 31 March 2021 | 931 521 | 479 334 | 1 410 855 |
SSG entered into a bank facility loan with Handelsbanken and Danske Bank in 2021. The agreement amounts to NOK 985 million in term loan and NOK 245 million in revolving credit facility, both with maturity 3+1+1 years, and interest rate is 3 months Nibor + 1.70%. The revolving credit facility is undrawn as of 31 March 2022.
All covenants for the bank facility loan are to be measured and reported on a quarterly basis. There are both financial and non-financial covenants. As of 31 March 2022, the Group is in compliance with all loan covenants, and also expects to comply with covenants throughout 2022.
The financial covenants for the bank facility loan are:
As of 31 March 2022 SSG has four five-year interest rate swaps. There are no margin calls related to the interest rate swaps.
| Fixed interest rate agreements | Amount | Maturity date | Interest rate (%) |
|---|---|---|---|
| Handelsbanken | 150 000 | Mar-25 | 1.080 |
| Handelsbanken | 150 000 | Apr-25 | 0.785 |
| Handelsbanken | 300 000 | Mar-26 | 1.345 |
| Handelsbanken | 150 000 | Mar-26 | 1.420 |
Interest rate swaps are recorded at fair value through profit and loss. A gain of NOK 22.3 million for Q1 2022 related to hedging of interests is included in finance.
The Group as a lessee leases certain leasehold properties that are classified as leasehold investment property. These leases have lease terms between 3 months and 20 years. The Group applies the short-term lease recognition exemptions for leases with lease terms below one year. All leased properties classified as leasehold investment property are used to provide self-storage services to customers throughout Norway, Sweden and Denmark.
The Group has one lease contract for use of office space, with a lease term of five years. The Group has the option to lease the asset for an additional term of three years. The lease is classified as property, plant and equipment. Property, plant and equipment also include leased trailers and containers with average lease terms of three years. The Group's lease liabilities are secured by the lessors' title to the leased assets.
(Amounts in NOK 1 000)
| Changes in recognised leases during the period: | Lease liabilities | Leased assets | |
|---|---|---|---|
| Leasehold investment property |
Other leases | ||
| Balance as at 31 December 2021 | 468 671 | 444 253 | 3 056 |
| Additions and disposals of leases for leasehold investment property in the year |
27 294 | 27 294 | - |
| Additions and disposals of other leases in the year | - | - | - |
| Payments of lease | -11 206 | - | - |
| Change in fair value of leasehold investment properties | - | -12 404 | - |
| Depreciation | - | - | - 289 |
| Other/translation differences | -5 425 | -5 132 | - |
| Balance as at 31 March 2022 | 479 334 | 454 011 | 2 767 |
| Amounts related to leases recognised in profit or loss: | For the three months ended 31 March 2022 |
For the three months ended 31 March 2021 |
For the full year 2021 |
|---|---|---|---|
| Expenses relating to short-term leases (included in lease | |||
| expenses) | -3 754 | -2 243 | -13 250 |
| Change in fair value of leasehold properties | -12 404 | -9 534 | -46 356 |
| Depreciation expense of leased assets classified as property, plant and equipment |
- 289 | - 308 | -1 231 |
| Interest expense on lease liabilities (included in finance | |||
| expenses) | - 4 251 | -6 060 | -18 527 |
| Total amount recognised in profit or loss | -20 698 | -18 145 | -79 364 |
Total cash outflows for leases was NOK 19.2 million in the first quarter of 2022.
The Group has certain lease contracts related to leasehold investment property that include extension options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group's business needs. Management exercises significant judgment in determining whether these extension options are reasonably certain to be exercised (see note 4 in the Annual Report for 2021). Options to extend reasonably certain to commit to, but not started, amounts to
NOK 185.6 million as of 31 March 2022, with periods ranging between one and ten years. Options to extend, not reasonably certain to commit to, amounts to NOK 13.8 million as of 31 March 2022, with periods ranging between one and ten years.
One option to extend reasonably certain to commit to, but not started, is included in the balance sheet in the first quarter of 2022 as it during 2022 is assessed reasonably certain to be exercised.
The Group has not committed to any additional future leases as of 31 March 2022.
(Amounts in NOK 1 000)
A breakdown of net financial items in the income statement is presented below:
| For the three months ended 31 March 2022 |
For the three months ended 31 March 2021 |
For the full year 2021 |
|
|---|---|---|---|
| Interest income and other financial income | 29 | 34 | 1 013 |
| Realised gain from transactions in foreign currency | 30 | 252 | 138 |
| Unrealised gain in foreign currency | 10 170 | 11 625 | 18 944 |
| Positive change in fair value of financial instruments* | 22 346 | 4 937 | 16 178 |
| Total financial income | 32 575 | 16 848 | 36 273 |
| Interest expense on borrowings | -6 045 | -2 681 | -21 480 |
| Interest expense on lease liabilities | -4 251 | -6 060 | -18 527 |
| Other interests, fees and charges | -1 072 | - 778 | -5 674 |
| Realised loss from transactions in foreign currency | - 161 | - 143 | - 477 |
| Unrealised loss in foreign currency | -4 852 | -1 706 | -9 199 |
| Negative change in fair value of financial instruments* | - | - | - |
| Total financial expenses | -16 381 | -11 368 | -55 357 |
| Net financial items | 16 194 | 5 480 | -19 084 |
* Change in fair value of interest rate swaps
Unrealised gain and loss in foreign currency is related to lease liabilities in SEK and DKK, and intercompany loans in SEK and DKK. 34% of the lease liabilities as of March 2022 are in SEK or DKK.
■ On 4 April 2022, an agreement to acquire a property under development in Porsgrunn, Norway, was entered into. The property has an estimated lettable area of 1 500 m2
Interim Report Q1 2022
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 amortization, 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.
| (Amounts in NOK 1 000) Interest-bearing debt |
31 March 2021 |
31 December 2021 |
|---|---|---|
| Non-current interest-bearing debt | 879 776 | 892 626 |
| Current interest-bearing debt | 51 745 | 51 644 |
| Total interest-bearing debt | 931 521 | 944 270 |
| (Amounts in NOK 1 000) | Q1 2022 | Q1 2021 | Full year 2021 |
|---|---|---|---|
| Property-related expenses | -14 633 | -11 139 | -44 414 |
| Salary and other employee benefits | -12 824 | -10 794 | -44 115 |
| Other operating expenses | -9 739 | -8 535 | -41 373 |
| Total other operating expenses | -37 196 | -30 468 | -129 902 |
| Operating profit before fair value adjustments | 46 248 | 40 714 | 186 060 |
| EBIT | 46 248 | 40 714 | 186 060 |
| Total adjustments | - | 1 157 | 3 416 |
| Adjusted EBIT | 46 248 | 41 871 | 189 476 |
| Change in fair value of freehold investment property | 6 148 | 16 310 | 319 996 |
| Change in fair value of leasehold investment property | -12 404 | -9 534 | -46 356 |
| Adjusted Profit before tax | 56 186 | 54 127 | 444 032 |
| Adjusted tax | -9 485 | -9 386 | -92 728 |
| Adjusted Net profit | 46 701 | 44 741 | 351 304 |
| Operating profit before fair value adjustments | 46 248 | 40 714 | 186 060 |
| Depreciation | -4 754 | -3 249 | -16 863 |
| EBITDA | 51 002 | 43 963 | 202 923 |
| Total adjustments | - | 1 157 | 3 416 |
| Adjusted EBITDA | 51 002 | 45 120 | 206 339 |
| Adjustments | |||
| Revenue: release of historical liability | - | - | 507 |
| Other operating expenses: acquisition costs | - | -1 157 | -3 923 |
| Total adjustments | - | -1 157 | -3 416 |
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