PIONEER PROPERTY GROUP ASA ANNUAL REPORT
2022
Pioneer Property Group ASA
Contents
3 | Board of directors' report | 15 | Notes to the consolidated statements |
9 | Consolidated statement of Comprehensive Income | 42 | Alternative Performance Measures (APMs) |
11 | Consolidated statement of Financial Position - Assets | 43 | Annual report Pioneer Property Group ASA (parent) |
12 | Consolidated statement of Financial Position - Equity | 55 | Auditors report |
and Liabilities |
- Consolidated statement of Change in Equity
- Consolidated statement of Cash Flow
The board of directors' report for Pioneer Property Group ASA
(PPG) 2022
Highlights of the report
Total revenue for 2022 was MNOK 77.2 compared to MNOK 45.5 in 2021.
Pre-tax profit for 2022 was MNOK 76.6 compared to MNOK 300.7 for 2021.
PPG acquired four development properties, two preschools, and one office property over the period and sold all of the shares in Odin Bidco AS to existing shareholders in Odin Bidco.
The building of two retail properties were completed, increasing the retail property count to six.
PPG paid four quarterly dividends to the holders of preference shares in total NOK 9.75 per preference share and additional dividends of 5.939 per share held by Eidissen Consult AS and Grafo AS, and 5.164 per share held by Klevenstern AS and Mecca AS.
Operations and strategy
Pioneer Property Group ASA (PPG) is an investment company, mainly within real estate. PPG is a public limited company, the Company's registered office is Rådhusgata 23, 0158 Oslo. PPG has since the beginning of 2020 expanded its real estate activities into new areas and the current portfolio contain different segments than only preschool, therefore, PPG now reports based on the characteristics of the properties and hence report on the following segments:
- Preschools
- Hotel Properties
- Retail Properties
- Property Development
- Office Properties
PPG acquired its first office property in March 2022, Office Properties is a new segment for the 2022-reporting period.
The focus area for PPG will be to continue to invest in real estate within these segments and seek to enter into long-term triple- net leases with leading operators. PPG's real estate portfolio per year-end 2022 consisted of three properties in the Preschools segment, six properties in Retail properties segment, six properties in the Hotel properties segment, one office property in addition to four properties in the Property development segment.
Key material events during 2022
COVID-19 represented an extraordinary situation in the beginning of 2022, and all restrictions are now lifted. The pandemic has impacted PPG directly in the two first months of 2022, as lease income from hotel properties were lower as lease payments are made based on a percentage of the hotels turnover. Hotel revenue and lease income recovered from march and by year end 2022, lease income normalized. Lease agreements on other segments are triple-net and not linked to operational utilisation of any kind.
During 2022, PPG has declared quarterly dividends to the holders of preference shares in total NOK 9.75 per preference share. As per the articles of association §5, the annual preferred dividend to the holders of preference share increased by NOK 1 per preference share from 01. July 2022 to 2.500 per quarter. Furthermore PPG paid additional dividends of NOK 5.939 per share held by Eidissen Consult AS and Grafo AS, and NOK 5.164 per share held by Klevenstern AS and Mecca AS.
In 2022, PPG has increased the real estate portfolio and its investment activity, especially within the development property segment.
The largest single transaction was carried out in May 2022, when PPG sold its 8.2 % stake in Odin Bidco AS, which owns a real estate portfolio of ~256 preschools at mainly long-termtriple-net contracts primarily in the Nordics. Pioneer Property Group ASA entered into an agreement regarding the sale of all the shares owned by PPG in Odin Bidco AS to the existing shareholders in Odin Bidco AS. Closing of the transaction took place on June 6th. The agreed purchase price for the Shares was MNOK 372.1 generating a profit of MNOK 25.7.
The second largest transaction was the purchase of properties and shares from Hospitality Invest AS' direct and indirect subsidiaries.
- Gaustadskogen Eiendom AS (77%),
- Tjuvholmen Eiendom AS (100%)
- Norab Eiendom Vest AS (100%),
All companies are single purpose companies with tenants owned by Norlandia Health & Care Group AS. In addition, the transaction also included 23.6% of the shares in Norlandia Holding AS which owns certain hotels operated by Norlandia Hotel Group AS,
3 PIONEER PROPERTY GROUP ASA
The total consideration payable by PPG was approximately MNOK 153.
In terms of other financial investments, PPG increased its bond holdings in Hospitality Invest bonds (HOIN02, Hospitality Invest AS 17/22) in first half of 2022. These bonds were later sold as payment in kind for the transaction mentioned above. PPG holds per 31.12.22 bonds in Hospitality Invest AS (HOIN02 22/25) with a par value of MNOK 62, and high yield funds with a market value of MNOK 56.
In total, PPG has acquired investment property with a total property value of MNOK 331.
Preschools
Preschool (NOKt) | 2022 | 2021 |
Total Income | 1 912 | 371 |
Fair value adjustment on investment properties | 797 | 0 |
Operating profit/loss (EBIT) | 2 308 | 268 |
Investment properties | 116 000 | 11 500 |
Cash and cash equivalents | 7 414 | 251 |
The Preschool segment consists of three preschool properties owned by PPG as of 31.12.2022. Total lease income for the Preschool segment amounted to MNOK 1.9 in 2022 and MNOK
- 2021, with a fair property value based on third party valuation of the properties owned by PPG per 31.12.22 of MNOK
Retail Properties
Retail Properties (NOKt) | 2022 | 2021 |
Total Income | 29 414 | 17 725 |
Fair value adjustment on investment properties | -30 064 | 117 437 |
Operating profit/loss (EBIT) | -7 405 | 130 209 |
Investment properties | 461 000 | 428 070 |
Cash and cash equivalents | 19 037 | 21 892 |
Pioneer Retail Properties AS was established to procure and build facilities for retail business, mainly for the Ferda group all over Norway. The Retail Properties segment consists of 6 retailproperties owned by PPG.The building of premises for Ferda in Rana and Balsfjord, recognised as Project in Progress for the 2021 Financial Statement, was completed in February 2022 and October 2022 respectively, with a fair value upon completion of MNOK 63.
Total lease income for 2022 for the retail properties segment amounted to MNOK 29.2 with a fair property value based on third party valuations per 31.12.22 of MNOK 461.
Hotel Properties
Hotel Properties (NOKt) | 2022 | 2021 |
Total Income | 42 582 | 26 960 |
Fair value adjustment on investment properties | -11 701 | 105 068 |
Operating profit/loss (EBIT) | 13 546 | 129 863 |
Investment properties | 924 029 | 915 971 |
Cash and cash equivalents | 48 580 | 45 414 |
Pioneer Hotel Properties AS was established to acquire hotel properties through the downturn following the Covid-19 pandemic across the Nordics and Europe. The Hotel Properties segment consists of six hotel properties owned by PPG. Total lease income for 2021 for the Hotel Properties segment amounted to MNOK 51 (two hotels under refurbishment) with a fair property value based on third party valuations per 31.12.22 of MNOK 924.
Office Properties
Office Properties (NOKt) | 2022 | 2021 |
Total Income | 1 616 | 0 |
Fair value adjustment on investment properties | 26 468 | 0 |
Operating profit/loss (EBIT) | 26 908 | 0 |
0 | ||
Investment properties | 70 000 | 0 |
Cash and cash equivalents | 142 | 0 |
The first office property was acquired in march 2022, a seven stories tall building in Bodø,. PPG acquired Terminalveien 10 in Bodø based on a property value of MNOK 45 together with local investors. PPG has an ownership of 52 % in the property, controlling the acquired subsidiary that owns the property. The transaction was completed March 8, 2022. The property consideration has been paid in cash and the Group has incurred in a loan of MNOK 33. The expected annual lease income of 2023 is approx. MNOK 4.
Property Development
Property Development (NOKt) | 2022 | 2021 |
Total Income | 31 230 | -2 043 |
Fair value adjustment on investment properties | ||
Operating profit/loss (EBIT) | 30 028 | -4 494 |
Investment properties | 227 681 | 37 500 |
Cash and cash equivalents | 65 366 | 1 994 |
Through Pioneer Property Development AS, PPG develop properties within general commercial real estate and housing. The segment consists of 6 development projects and the lease income income for the segment is related to parking and tenants in residentals that can be developed long term. The main asset is Evenes Holding AS, which holds two properties in Evenes in close proximity to Evenes Airport. In addition, PPG currently holds two plots together with local partners, treated as associate company in the accounts. One is located at Ramstadsletta in Bærum, the other is located in Mo i Rana with a potential of 400 residential units.
ANNUAL REPORT 2022 | 4 |
Subsequent events since the end of 2022
PPG acquired the development rights related to the property in Evenes Airport in January 2023, through Evenes Holding, a company owned together with local partners. The purchase price of MNOK 45 was settled partially with cash and partially with sellers credit.
Overview of the financial accounts for 2022
Total revenues were MNOK 76.2 in 2022 compared to MNOK
45.1 in 2021. Revenues consisted mostly of rental revenues from investment properties in Norway.
Operating profit (EBIT) for 2022 amounted to MNOK 69.8, compared to MNOK 251.5 in 2021. The difference can primarily be explained by a larger positive fair value revision of MNOK
220.5 in 2021, when the transaction market was really strong, versus MNOK 16.7 in 2022 as interest rates increased, affecting the yields on the properties.
In 2022, a loss off MNOK 1.6 from associated companies was recognised. In 2021, a loss off MNOK 4.1 from associated companies was recognised from Ramstadsletta and Kongsparken.
Net financial income for the year was MNOK 6.8 compared to MNOK 49.2 in 2021, with the majority of the gain recognized from the sale of Odin Bidco. The sale generated at net gain of MNOK 25.7. Income taxes decreased from MNOK 72.4 to 11.8.
There have not been any discontinued operations in 2022 or 2021.
This year's net profit for the group was MNOK 64.8, compared to MNOK 228.3 in 2021.
The Group had total assets of MNOK 2,459.6 (2,186.6 in 2021). where MNOK 1,905.8 (1,407.9 in 2021) were related to investment property and shares in associated companies. The additions in investment property and associated company has increased non-current borrowings in PPG. Further PPG had a cash balance of MNOK 226.2 (119.4 in 2021) and MNOK 118.9 (154.2 in 2021) in other short-term investments related to bonds and high yield funds held by PPG.
Total equity amounted to MNOK 1,360.6 (1,377.4) with the majority of the difference being explained by the profit for 2022, and the dividends on the ordinary and preference shares paid during the year.
The annual report gives an accurate overview of the Group's financial development throughout the year. There have been no
events after the end of the fiscal year 2022 which have had any material impact on the financial status of the Group.
Research and Development
The group is not involved in any R&D activities.
Work Environment, Equal opportunities and Discrimination
There was at year end 4 employees in Pioneer Property Group ASA. There are no employees in any other Group-companies. The Board of Directors consists of two women and three men.
Managers' remuneration
The board of directors has prepared a declaration on salary and other remuneration for the Company's executive management pursuant to Section 6-16a of the Norwegian Public Limited Liability Companies Act. The declaration includes the policies which the Company will use for the determination of salary and other remuneration to its executive management in the calendar year 2022. The declaration is made available at the Group's webpage www.pioneerproperty.no
External Environment
The Group's operation consists of investing in and providing high-quality properties and is considered to have limited environmental impact. The company focuses on making investment and operational decisions that are in line with sustainable environmental practices.
Climate risk
Climate related risks are becoming more relevant and will be monitored closely for our properties. In general, many areas could be affected: from impairment testing, to provisions to fair value measurement. Storms and floods are long-term risks, with potential to physically damage to property values could be severe. Damage to third party equipment and installations may lead to increased insurance cost and/or reduced customer satisfaction.
Corporate Governance
Pioneer Property Group AS has prepared a report on Corporate Governance in accordance with the Norwegian Accounting Act Section 3-3b and the Norwegian Code of Practice for Corporate Governance dated 17 October 2018, and a report on Corporate Social Responsibility in accordance with the Norwegian Accounting Act Section 3-3c, both of which are made available at the Group's webpage www.pioneerproperty.no.
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Pioneer Property Group ASA published this content on 03 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 April 2023 12:23:07 UTC.
