Financial key metrics

A number of the financial metrics presented by Castellum are not defined in accordance with the IFRS accounting standards. However, the company believes that these metrics provide useful supplementary information to investors and Castellum’s management, as they facilitate evaluation of the company’s performance. It is to be noted that, since not all companies calculate financial measurements in the same manner, these are not always comparable to measurements used by other companies. These financial measurements should therefore not be seen as a substitute for metrics defined according to IFRS. Unless otherwise stated, the table below presents metrics, along with their reconciliation, which are not defined according to IFRS. Furthermore, definitions for these metrics also appear in Definitions.

 

 

Jan–Dec 2020

 

Jan–Dec 2019

Average number of shares, thousand (key metrics related to income statement)1)

 

273,628

 

273,201

Number of shares outstanding, thousand (key metrics related to balance sheet)1)

 

277,093

 

273,201

1.

The net estimated real deferred tax liability has been estimated at 4% based on a discount rate of 3%. Further, assessments have been made that tax loss carry forwards are realised with a nominal tax of 21.4%, and that the properties are realised in 50 years and where the entire portfolio is sold indirectly in corporate wrappers where the buyers’ tax discount is 7%.

Income from property management

Castellum’s operations are focused on cash flow growth from ongoing management operations (i.e. income growth from property management), the yearly target being a 10% increase in income from property management. Income from property management also forms the basis of the annual shareholder dividend: at least 50% of income from property management. Income from property management is calculated before tax paid, as well as after the theoretical tax that Castellum would have paid on income from property management had there been no loss carryforwards.

 

 

Jan–Dec 2020

 

Jan–Dec 2019

Income from prop. mgmt

 

MSEK

 

SEK/share

 

MSEK

 

SEK/share

Income before tax

 

7,028

 

25.68

 

6,765

 

24.76

Reversed:

 

 

 

 

 

 

 

 

Acquisition costs

 

25

 

0.09

 

9

 

0.03

Financing fees, etc. for acquisitions

 

70

 

0.26

 

 

Goodwill, impairment

 

 

 

179

 

0.66

Change in values on properties

 

–3,863

 

–14.12

 

–3,918

 

–14.34

Change in values on derivatives

 

120

 

0.44

 

111

 

0.41

= Income from property management

 

3,380

 

12.35

 

3,146

 

11.52

 

 

 

 

 

 

 

 

 

EPRA Earnings (Income from property management after tax)

 

 

 

 

 

 

 

 

Income from prop. mgmt

 

3,380

 

12.35

 

3,146

 

11.52

Reversed:

 

 

 

 

 

 

 

 

Current tax, income from prop. mgmt

 

–300

 

–1.10

 

–293

 

–1.08

EPRA Earnings/EPRA EPS

 

3,080

 

11.25

 

2,853

 

10.44

Net asset value

Net asset value describes the total equity that the company manages for its owners. Based on this equity, Castellum wants to create return and growth at a low level of risk. Net asset value can be calculated in different ways, where mainly time and turnover in the asset portfolio impact on the value. Long-term net reinstatement value (EPRA NRV) is based on the balance sheet, with adjustments for items that will not lead to any short-term payment. In Castellum’s case, these would include such items as goodwill, derivatives and deferred tax liability. Net tangible assets (EPRA NTA) is the same as long-term EPRA NRV, but with the difference that goodwill that is not attributed to deferred taxes is not seen as an asset. Furthermore, the deferred tax should be based on market value according to how the company has completed property transactions in recent years. Net disposal value (EPRA NDV) is equal to equity according to the balance sheet but with adjustment for goodwill.

 

 

Jan–Dec 2020

 

Jan–Dec 2019

Net asset value

 

MSEK

 

SEK/share

 

MSEK

 

SEK/share

Equity according to the balance sheet

 

48,243

 

174

 

43,777

 

160

Reversed:

 

 

 

 

 

 

 

 

Derivatives according to the balance sheet

 

1,132

 

4

 

715

 

3

Goodwill attributable to deferred tax

 

–1,480

 

–5

 

–1,480

 

–5

Deferred tax according to the balance sheet

 

11,376

 

41

 

10,153

 

37

Net reinstatement value (EPRA NRV)

 

59,271

 

214

 

53,165

 

195

Deduction

 

 

 

 

 

 

 

 

Goodwill due to acquisition of United Spaces

 

–193

 

–1

 

–211

 

–1

Estimated real deferred tax, 4%1)

 

–2,285

 

–8

 

–1,925

 

–7

Net tangible assets (EPRA NTA)

 

56,793

 

205

 

51,029

 

187

Reversed

 

 

 

 

 

 

 

 

Derivatives according to above

 

–1,132

 

–4

 

–715

 

–3

Deferred tax

 

–9,091

 

–33

 

–8,228

 

–30

Net disposal value (EPRA NDV)

 

46,570

 

168

 

42,086

 

154

1.

The net estimated real deferred tax liability has been estimated at 4% based on a discount rate of 3%. Further, assessments have been made that tax loss carry forwards are realised with a nominal tax of 21.4%, and that the properties are realised in 50 years and where the entire portfolio is sold indirectly in corporate wrappers where the buyers’ tax discount is 7%.

Financial risk

Castellum’s strategy is to own, develop and manage properties at low financial risk. This is expressed in a loan-to-value ratio not permanently exceeding 50% and an interest coverage ratio of at least 200%. Furthermore, net debt to EBITDA that expresses how many years it takes for a company to repay its interest-bearing debt, is an important financial risk metric.

Interest coverage ratio

 

Jan–Dec 2020

 

Jan–Dec 2019

Income from prop. mgmt

 

3,380

 

3,146

Reversed:

 

 

 

 

Net interest costs

 

786

 

782

Income from property management excl. net interest

 

4,166

 

3,928

Interest coverage ratio

 

530%

 

502%

 

 

 

 

 

Loan-to-value ratio

 

 

 

 

Interest-bearing liabilities

 

45,720

 

40,826

Cash and cash equivalents

 

–161

 

–173

Net interest-bearing liabilities

 

45,559

 

40,653

 

 

 

 

 

Investment properties

 

103,042

 

95,168

Acquired properties not taken into possession

 

 

–304

Divested properties still in Castellum’s possession

 

–220

 

3

Net investment properties

 

102,822

 

94,867

Loan-to-value ratio

 

44%

 

43%

 

 

 

 

 

Net debt to EBITDA

 

 

 

 

Interest-bearing liabilities

 

45,720

 

40,826

Cash and cash equivalents

 

–161

 

–173

Net interest-bearing liabilities

 

45,559

 

40,653

Net operating income

 

4,335

 

4,113

Central administration expenses

 

–149

 

–163

Operating income

 

4,186

 

3,950

Net debt to EBITDA

 

10.9

 

10.3

Investment

In order to achieve the overall target of 10% growth in income from property management per share, Castellum will make annual net investments of at least 5% of the property value.

Net investments

 

Jan–Dec 2020

 

Jan–Dec 2019

Acquisitions

 

2,646

 

3,350

New construction, extensions and reconstructions

 

2,512

 

2,762

Total investments

 

5,158

 

6,112

Net sales prices

 

–891

 

–4,138

Net investments

 

4,267

 

1,974

Proportion of the property value, %

 

4%

 

2%