Annual report
2021
KMC Properties ASA
Hammarvikringen 64: Property
located at Frøya, an island west of
Trondheim. BEWI, KMC Properties’
largest tenant, is a supplier of
packaging, components, and
insulation solutions.
Contents
About KMC Properties ................................................... 3
Letter from the CEO ......................................................10
Executive management .................................................12
Board of directors .........................................................14
ESG report .....................................................................16
Corporate governance ...................................................22
Board of directors’ report ..............................................31
Financial statements ......................................................42
Consolidated financial statements ................................................44
Notes to the consolidated financial statements ........................... 48
Statement of comprehensive income – KMC Properties ASA ......74
Notes to the financial statements – KMC Properties ASA ............78
Independent auditor’s report .........................................87
Appendix ...................................................................... 94
Annual report 2021
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KMC Properties
2
About KMC Properties
e preferred partner for
logistics and industrial
properties
■ Real estate company focusing on owning industrial and logistics
properties
■ Portfolio of 44 industrial properties in the Nordics and the
Netherlands, in addition to an office building in Moscow, Russia
■ Properties have long-term lease agreements with solid
counterparties, with strategic locations for the tenants
■ Largest tenant is listed packing and insulation company BEWI
ASA, majority-owned by the Bekken family
■ Second-largest tenant is Insula AS, a leading Nordic seafood
company owned by Kverva Industrier AS, owned by the Witzøe
family
■ Building mass covering ~377 000 sqm as of 31 December 2021
Net operating
income (NOK)
1
271.0
million
Porfolio value
(NOK)
2
4.0
billion
Wault
10.4
years
Group net
LTV
50.3
per cent
1) Annual run-rate based on final agreements as of 23 February 2022, including a total of 47 properties, i.e., two
additional properties since year-end 2021.
2) Valuation from Cushman & Wakefield, not including estimated opening cash balance.
KMC Properties
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Annual report 2021
3
About KMC Properties
History and important events in the development of the group
20 January
■ KMC Properties AS incorporated, but did not have operational activities until 26 May 2020
26 May to 30
September
■ Between 26 May 2020 and 30 September 2020, KMC AS acquired several subsidiaries which in
turn owned properties
16 November
■ KMC Properties AS enters into a conditional agreement to purchase all the shares in Pesca
Property AS
17 November
■ KMC Properties AS enters into a conditional agreement to form a combined entity with Storm Real
Estate ASA (later KMC Properties ASA)
27 November
■ Storm Real Estate ASA (later KMC Properties ASA) completed the placement of a NOK 1 850
million senior secured bond with 3 years tenor
14 December
■ Storm Real Estate ASA (later KMC Properties ASA) successfully completed the NOK 300 million
private placement at NOK 7 per share
18 December
■ Extraordinary general meeting adopted resolutions in connection to the transaction between
Storm Real Estate and KMC Properties
20 December
■ Swedbank’s loan to Storm Real Estate ASA (later KMC Properties ASA) purchased by the ten
largest shareholders in the company.
■ Completion of the agreement to combine Storm Real Estate ASA (later KMC Properties ASA) and
KMC Properties AS into one entity. This completion fulfilled the final condition for the purchase of
all the shares in Pesca Properties AS, see item above
22 December
■ Commencement of mandatory offer from EBE Eiendom AS and Kverva Industrier AS, who
triggered a mandatory offer when acquiring more than 40% of the shares in Storm Real Estate
ASA (later KMC Properties ASA).
■ Liv Malvik appointed new CEO of Storm Real Estate ASA (later KMC Properties ASA)
23 December
■ The NOK 1 850 million senior secured bond was released from escrow account. Same day, Storm
Real Estate ASA (later KMC Properties ASA) received NOK 300 million from the private placement.
Use of proceeds were refinancing of the previous debt in KMC Properties AS and Pesca Property
AS, purchase of four properties in the Netherlands from BEWI ASA, and purchase of Grøntvedt
Næringseiendom AS
30 December
■ Storm Real Estate ASA changed its name to KMC Properties ASA and its municipality from Oslo
to Trondheim
19 January
■ End of offer period in the mandatory offer, see item above
19 February
■ Completion of subsequent offering related to the NOK 300 million private placement
3 March
■ Letter of intent with BEWI for development of packaging hub at Hitra
13 April
■ Acquisition of industrial property in Denmark
27 May
■ Acquisition of industrial property outside Molde in Norway
27 May
■ Appointment of Kristoffer Holmen as CFO
2 July
■ Agreement with Oppdal Spekemat for construction of new production facility
8 July
■ Long-term lease agreement with BEWI for new packaging hub at Jøsnøya, Hitra
12 July
■ Acquisition of industrial property with long-term lease at Mongstad for NOK 285 million
23 August
■ Letter of Intent with Slakteriet Holding AS to build NOK 620 million salmon slaughterhouse facility
16 September
■ Private placement of NOK 300 million successfully completed
28 October
■ Subsequent offering completed
25 November
■ Acquisition of modern industrial property at Ågotnes for NOK 128 million
21 January
■ Acquisition of herring production facility in Sweden from Klädesholmen Seafood for SEK 94 million
2 February
■ Acquisition of meat processing facility near Narvik for NOK 100 million
9 February
■ Entering of process agreement for construction of NOK 620 salmon slaughterhouse facility with
Slakteriet, following LOI on 23 August 2021
2020
2021
2022
Annual report 2021
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KMC Properties
4
About KMC Properties
KMC Properties ASA is a real estate company whose business strategy is to invest in
industrial and logistical properties, primarily in the light industry and warehouse segment.
The company`s existing portfolio is mainly located in the Nor-
dics and the Netherlands. In addition, the company owns an
office building in Moscow, Russia. The company focuses on
entering long lease agreements with solid counterparties, min-
imising financing costs, minimising the negative impacts on all
three pillars of ESG; Environmental, Social and Governance,
investing in properties strategically important to the tenants,
and being the preferable financing source when existing ten-
ants are expanding their facilities.
Business model
KMC Properties’ business model aims at creating accretive
and durable values, with a clear focus on profitability. The
company has an overall long-term objective to generate a
maximum risk-adjusted return on invested capital. KMC Prop-
erties is focusing on the following pillars of value creation:
■ Cash-flow in the company operations
■ Long-term sustainable return
■ Minimising the negative impacts of ESG
■ Growth through investments in current portfolio and
proactive property management
■ Growth through strategical new acquisitions
■ Growth through building new facilities for new and
existing clients
Business concept
Ramshallsvägen 2: Property located in Norrköping, south
east of Sweden. Tenant BEWI insulation supply a wide
range of products and solutions for insulation in housing
construction and civil engineering.
KMC Properties
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Annual report 2021
5
About KMC Properties
KMCP/tenant
inititative/
request
Supporting activities
Primary activities
Property
upgrade
ADMINISTRATION AND FINANCE
MARGIN
MARGIN
Greenfield
Property
acquisition
Predesign
process
Agreements Construction
Property
management
Initial investment
process and
tenant agreement
Purchace of
land plot
Predesign
process
Construction
agreements
Initial acquisition
process and conditional
agreement
Due
dilligence
Unconditional
agreement and
acquisition
Property
management
Construction
Property
management
Investment strategy
KMC Properties invests primarily in industrial and warehouse
properties due to the segment’s high returns, long lease
agreements and stable occupancy rates.
The company will invest in new properties with existing and
new tenants, as well as in upgrading of existing properties.
KMC Properties aims to collaborate closely with its tenants
to be their preferred partner.
The investments increase the company’s cash flow and con-
tributes to diversifying the company’s property portfolio,
hence reducing the company’s operational and financial risks.
All investments are made with a focus on creating long-term
value for investors and tenants, while at the same time mini-
mising the negative impacts on ESG.
Financing strategy
Currently, KMC Properties finances its operations through
common equity, a senior secured bond loan, bank loans, a
revolving credit facility and retained cash from operations. The
company plans to be a recurring issuer in the bond market.
Going forward, the company will focus on minimising the
financing cost while still creating growth and basis for div-
idend and minimising the negative impact on ESG.
Strategy for tenants
KMC Properties endeavours to attract a solid and creditwor-
thy base of market leading companies with satisfactory track
records and history, and with a significant focus on ESG.
The company mainly enters triple net bare house contracts
whereby maintenance, insurance and property tax are cov-
ered by the tenant. The contracts have a long-term lease, and
the properties are considered strategically important for the
tenant’s business.
The company seeks to achieve a good and long-term rela-
tionship with the tenants, with clear business benefits for both
parties.
Strategy for the rental market
KMC Properties invests primarily in properties which is busi-
ness critical for the tenants. The risk of a decline in the occu-
pancy rate and rent levels due to a weaker rental market is
regarded as relatively low due to the solidity of the tenants,
the long-term rental contracts, and the strategically impor-
tance of the location of the properties.
Annual report 2021
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KMC Properties
6
About KMC Properties
Contract extensions and
investments in current
portfolio
KMC Properties is continuously
working with its tenants on con-
tract renewals and/or exten-
sions, as well as in discussions
on potential development invest-
ments in its current portfolio.
KMC Properties maintains a close
relationship with its clients to iden-
tify and actively engage in business
development activities. The com-
pany has several ongoing projects
and expects the high activity level to
continue in the coming years.
Project- and real estate develop-
ment makes it possible to meet the
changing needs of customers as
well as to further develop and refine
the property portfolio.
Greenfield development
projects
Through its continuous dialogue
with both existing and potential
new tenants, KMC Properties
seeks to identify opportunities
to expand its portfolio through
investments in new facilities for
new and existing clients.
The company seeks to utilise availa-
ble land plots in the existing portfo-
lio for development of new facilities
in collaboration with potential ten-
ants, focusing on business-critical
locations for the tenants.
KMC Properties will also acquire
and develop land plots based on
long‐term contract commitments
from new and existing tenants.
In 2021 KMC Properties completed
the construction of a fish box facil-
ity at Senja, Norway, with BEWI ASA
as tenant. At year-end 2021, the
company had three additional on-
going greenfield projects, including
the construction of a new produc-
tion facility at Oppdal, Norway, with
Oppdal Spekemat AS as tenant, the
construction of a packaging hub at
Jøsnøya, Norway, with BEWI ASA
as tenant, and the construction of
a salmon slaughterhouse at Florø,
Norway with Slakteriet AS as tenant.
Acquisitions
During 2021, KMC Properties
has acquired five properties.
The company expects to continue
pursuing strategic growth
opportunities.
KMC Properties targets high yield
properties, preferably with long-
term bare house contracts, with
strategic locations for its tenants,
and that are ‘built to suit‐, with
substantial relocation costs.
The group seeks to secure
diversification across industries,
tenants, locations, and property
types.
KMC Properties
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Annual report 2021
7
About KMC Properties
Stockholm
Netherlands
Trondheim
Copenhagen
Oslo
* Not including office building in Moscow, Russia
Annual report 2021
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KMC Properties
8
About KMC Properties
KMC Properties primarily invest in properties in the light industry and logistics segment.
The company focuses on having long lease agreements with solid counterparties. Most
of the properties are at strategically important locations to the tenants.
As of 31 December 2021, KMC Properties’ portfolio con-
sisted of 45 properties, of which 44 industrial- and logistics
properties in the Nordics and the Netherlands and one office
building in Russia. The largest tenant is the listed packaging
and insulation company BEWI ASA, leasing 20 properties
and accounting for 37 per cent of the company’s operating
income. In addition, KMC Properties currently cooperates
with BEWI at one development project at Jøsnøya, Norway,
where KMC is building a new packaging hub which will be
leased to BEWI upon completion.
The Nordic seafood group Insula AS is the second largest ten-
ant, leasing nine properties and accounting for 22 per cent1
of KMC’s operating income. Insula is vertically integrated from
fish stations through processing to strong consumer brands.
KMC Properties has an ambitious growth strategy and expects
to grow through both expansion projects for existing clients,
new facilities for new and existing clients and acquisition of
properties and/ or property portfolios.
The numbers in the illustration below are based on existing
contracts as of 31 December 2021, excluding the Russian
property.
Our properties
Long lease agreements with solid tenants across strategic locations
37% 22%
13% 10% 17%
100%
BEWI Insula PSW Grøntvedt Other Total
Share of operating
income
Share of operating
income
Share of operating
income
Share of operating
income
Share of operating
income
Share of operating
income
Operating income
by country
Operating income
by country
Operating income
by country
Operating income
by country
Operating income
by country
Operating income
by country
Wault
10.3 years
Wault
10.4 years
Wault
9.5 years
Wault
13.9 years
Wault
8.8 years
Wault
10.4 years
36%
16%
20%
29%
55%
25%
11%
9%
100% 100% 100%
66%
12%
10%
11%
2%
KMC Properties
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Annual report 2021
9
About KMC Properties
2021 was the year KMC Properties truly got underway with the execution of our
growth strategy. We started with a portfolio comprised of 40 properties mainly in the
Nordics and the Netherlands, valued at NOK 3.1 billion. Following a series of value-
accretive acquisitions and new development projects, we closed the year with 45
properties, valuing our portfolio at NOK 4.0 billion.
Along the way, we’ve built a robust organisation and devel-
oped a solid financial position through a successful private
placement and significantly increased rental income, pro-
viding us with a good foundation to further pursue profit-
able growth opportunities.
Solid financial position
KMC Properties delivered solid financial results in 2021,
driven by a total of five acquisitions and three well-executed
new developments over the course of the year. Our current
portfolio delivers a gross yield of 6.8 per cent.
The company posted an income of NOK 226.1 million in
2021, with a net income from property management of
NOK 66.1 million. Since the company was established in
December 2020, the numbers for 2020 is not comparable.
We further strengthened our financial position through a
NOK 300 million private placement in September, which
was well received by both existing shareholders and new
institutional investors. The net proceeds from the private
placement is used to redeem amounts drawn under KMC
Properties’ revolving credit facility in connection with
acquisitions and greenfield projects, and to fund the tan-
gible and actionable pipeline of new growth opportunities
we see ahead of us.
We will continue to focus on optimising our capital struc-
ture and increasing our financial flexibility to support both
our short-term and long-term business plans.
Delivering on our growth ambitions
KMC Properties invested NOK 537 million in attractive pro-
duction facilities in the Nordic region in 2021, at a yield-
on-cost of 7.5 per cent. In parallel to this, we progressed
on our development projects according to schedule and
budget. Our investments in greenfield projects amounted
to approximately NOK 100 million in 2021, also at a yield-
on-cost of 7.5 per cent. At year-end 2021, our committed
pipeline stood at approximately NOK 1.1 billion.
The most significant transaction announced last year was
the agreement signed with Slakteriet to build a new salmon
slaughterhouse facility at Florø, on the Norwegian west-
ern coast, estimated at NOK 620 million kroner. Slakteriet
is one of Norway’s biggest fish slaughter companies, and
thus another solid counterparty to us. This was one of sev-
eral agreements signed with new tenants in 2021, enabling
us to further diversify our customer portfolio in line with
our strategy. We also agreed to acquire an industrial prop-
erty at Mongstad, Norway, for NOK 285 million and another
industrial property at Ågotnes near Bergen for a consider-
ation of NOK 128 million. Both properties are on long lease
agreements with PSW Technology, which is part of PSW
Group, an international provider of products, systems, and
services to the energy industry.
We were also very pleased to enter a new rental agreement
with First Seafood for a production facility in Kongsvinger,
bringing our portfolio occupancy rate up to 99 per cent as
per 1 January 2022. First Seafood is 90 per cent owned by
Insula, our second-largest tenant.
Our development projects continued to show good progress
in 2021. We completed the pre-project phase for BEWI’s
new packaging facility on Jøsnøya, and the construction
of a new production facility for Oppdal Spekemat is pro-
gressing as planned, with expected completion in the sec-
ond half of 2022.
All our new projects benefit from having strategic loca-
tions, modern facilities, long lease agreements and attrac-
tive counterparties, in line with our investment strategy.
Letter from the CEO
Annual report 2021
|
KMC Properties
10
Letter from the CEO
– We will continue to
focus on optimising our
capital structure and
increasing ournancial
exibility to support both
our short-term and long-
term business plans.
Outlook
For 2022, we have a total committed pipeline of NOK 460
million, equally divided between greenfield and capex pro-
jects, and new acquisitions. Our M&A pipeline of NOK 230
million has a weighted average gross yield of 7.7 per cent.
For 2023 and 2024, we have a committed pipeline that
amounts to NOK 365 million and NOK 260 million respec-
tively. KMC Properties’ growth target remains to increase
our gross asset value (GAV) by NOK 1 billion per year,
reaching NOK 8 billion in GAV by the end of 2025.
The humanitarian crisis caused by Russia’s devastating
invasion of Ukraine has affected us all. We share a deep
concern for the Ukrainian population, and our thoughts are
with all those impacted by this senseless war. KMC Prop-
erties owns an office building in Moscow, whose value is
likely to be impacted by the sanctions imposed on Rus-
sia. We expect to book an impairment on the property in
the first quarter of 2022. The building was booked at NOK
142.6 million as per 31 December 2021, corresponding to
3.6 per cent of KMC Properties’ total portfolio value, while
the net operating income from the property amounted to
NOK 9.1 million in 2021.
Our strategy going forward for new investments is to con-
tinue to focus on the type of properties and property port-
folios in Northern Europe that we know well, i.e., foodstuff
facilities and light industry, in collaboration with current and
new tenants, as well as third parties. Should opportunities
present themselves to follow our tenants to new European
locations, we will seize them. Our two main tenants, BEWI
and the leading Nordic seafood company Insula, which com-
bined represent 57 per cent of our net operating income,
both have ambitious plans for their portfolio development.
We will pursue our growth trajectory while stepping up
our sustainability efforts. To this end, we have initiated
climate accounting according to the Greenhouse Gas
(GHG) Protocol, and we have produced our first sustaina-
bility report, with reference to the Global Reporting Initia-
tive (GRI) Standards and Euronext’s ESG guidelines. Our
sustainability report, which is integrated into the annual
report, describes our approach and performance on our
most material environmental, social and governance issues
for the 2021 financial year, based on a materiality assess-
ment conducted with input from our key stakeholders. We
believe these initiatives will contribute to KMC Properties
having a comprehensive and long-term approach to cre-
ating value for our shareholders, tenants, employees, and
society at large,
We are proud of what we accomplished over the course
of KMC Properties’ first year. We enter 2022 with a strong
organisation, a solid financial platform, an increasingly
diversified property portfolio, committed and long-term
industrial owners and an attractive pipeline of opportuni-
ties, enabling us to keep firing on all cylinders and deliver
on our growth ambitions.
Liv Malvik
Chief executive officer, KMC Properties ASA
KMC Properties
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Annual report 2021
11
Letter from the CEO
Executive management
Liv Malvik
Chief executive officer
(CEO)
Liv Malvik has more than
10 years’ experience as
CEO for various real estate
companies, including
Heimdal Eiendomsmegling
AS and Grilstad Marina AS.
In addition, she was CEO for
Inter Revisjon Norge AS for
three years, and has close
to 20 years’ experience
from banking, including
management positions in
Sparebank1 SMN and Fokus
Bank AS. Malvik has a MSc
in Business Administration
from the Norwegian School
of Economics.
At 1 April 2022, Malvik held
179 285 shares in KMC
Properties.
Kristoffer Holmen
Chief financial officer
(CFO)
Kristoffer Holmen previously
held the position as
CFO of Storm Capital
Management, and from
2018 to 2020 as CEO/
CFO of Storm Real Estate
ASA. Holmen is a state
certified public accountant
and prior to joining Storm
Capital Management, he
worked for PwC. He holds
a BSc in Business and
Administration and MSc in
Auditing and Accounting
from the Norwegian School
of Economics. In addition, he
has three years of law school
at the University of Oslo.
Holmen took on the position
as CFO of KMC Properties
from 1 June 2021.
At 1 April 2022, Holmen
held 125 000 shares in KMC
Properties.
Audun Aasen
Chief operating officer
(COO)
Audun Aasen has more than
15 years’ experience from
the construction and real
estate sector, including as
a property manager and
real estate developer. He
also has construction work
experience.
Aasen has a University
Degree as real estate
appraiser and technical
construction controller, in
addition to a Carpentry
Master’s Degree.
At 1 April 2022, Aasen held
577 000 shares in KMC
Properties.
Ove Rød Henriksen
Chief accounting officer
(CAO)
Ove Rød Henriksen
previously held the position
as CFO of Siva - Selskapet
for industrivekst SF (The
Industrial Development
Corporation of Norway).
Henriksen is a state
authorised public accountant
and prior to joining Siva, he
worked as a Manager for
Deloitte. He holds a MSc
in Finance from Norwegian
University of Science and
Technology and a MSc in
Accounting and Auditing
from the Norwegian School
of Economics.
At 1 April 2022, Henriksen
held 9 630 shares in KMC
Properties.
Annual report 2021
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KMC Properties
12
Executive management
Kristoffer Formo
Head of M&A
Kristoffer Formo has more
than 20 years’ experience
from several positions in
the finance and real estate
business, whereas the last
five years as an independent
real estate investor. Formo’s
previous experience includes
DNB Næringsmegling, Real
Forvaltning, Sparebank 1
Midt Norge, Orkla Finans
and M&A advisor at Nordic
Corporate Management.
Formo has a bachelor’s in
finance from the Norwegian
business school BI.
At 1 April 2022, Formo held
3 705 957 shares in KMC
Properties.
Storemyra 200: Property located in Mongstad,
west in Norway. The tenant PSW Technology AS is a
significant supplier in the offshore sector, and offer
engineer services, maintenance, modifications and
repair to drilling companies and rig owners.
KMC Properties
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Annual report 2021
13
Executive management
Board of directors
Anders Dyrseth
Chair
Mr Dyrseth is an attorney
and partner at Arntzen
de Besche. He has wide
experience from work
within real estate law,
including M&A work in
transactions related to
real estate companies and
organisations. Mr Dyrseth
has worked extensively
within legal areas such as
servitude, tenancy relations,
building law etc. He also has
broad experience with issues
pertaining to real estate
contracting and development
processes. Mr Dyrseth also
acts as legal advisor for
several companies within
the aquaculture industry. He
also serves as a member
of the board for several
companies, foundations and
organisations.
Mr Dyrseth holds a qualifying
law degree (cand.jur) from
the University of Oslo.
Mr Dyrseth is an
independent board member.
Nini Høegh Nergaard
Director
Ms Nergaard was a financial
analyst at Handelsbanken
Capital Markets, Oslo
from 1998 to 2005. She
has held various board
positions in public and
private companies, including
Opak AS, Mamut ASA and
Norwegian Car Carriers ASA.
Ms Nergaard has a law
degree from Oslo University,
where she studied between
1992 and 1998. She is a
Norwegian citizen.
Ms Nergaard is an
independent board member.
Stig Wærnes
Director
Mr Wærnes is a partner in
BEWI Invest, the largest
shareholder of KMC
Properties. Prior to his
current position he was the
regional manager partner
and deputy chairman in
BDO AS. He has as a long
experience from auditing,
advisory, whereas his areas
of expertise were auditing
and accounting, finance,
business consultancy,
M&A and strategy. Mr
Wærnes has an extensive
experience with clients in
different sectors, such as
manufacturing, seafood,
construction development
and retail. He also serves as
a member of the board for
several companies, including
BEWi ASA, which is a listed
company and a material
business contact.
Mr Wærnes holds a degree
in auditing and accounting
from NTNU (business
school) and has also
completed various courses
in the field of auditing,
accounting, leadership
development.
Thorbjørn Pedersen
Director
Thorbjørn Pedersen is
currently the CIO of Swiss
Life Asset Management
Nordic AS. Swiss Life
Asset Managers acquired
the real estate business
of Ness, Risan & Partners
AS (NRP) in 2021. He was
previously a partner of
NRP, an independent and
privately owned investment
firm. Pedersen has been with
NRP since 2004 and with
the predecessors to the NRP
since 1996. Since the 1980s
he has acquired experience
in shipping, capital markets
and real estate at, among
others, Fearnley, Poseidon,
Ambra and Carnegie.
Pedersen holds a Master
of Science degree from
the Norwegian School of
Economics (NHH).
Annual report 2021
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KMC Properties
14
Board of directors
Morten Eivindssøn
Astrup
Director
Mr Astrup is the owner of
Surfside Holding AS, one
of the largest shareholders
of KMC Properties, and
Storm Norge AS (currently
asset manager of Storm
Real Estate) and has 20
years of asset management
experience. He is a
specialist within alternative
investments, private equity,
and real estate. He has held
board positions in several
international companies
and been an advisor to both
private and institutional
investors in Europe.
Mr Astrup holds a master’s
degree in Business and
Economics from BI
Norwegian Business School/
City University London. He
is a Norwegian citizen and
resides in Switzerland.
Anna Musiej Aanensen
Director
Anna Musiej Aanensen is
partner and head of Finance at
Vesseladmin AS, a Norwegian
technology company focusing
on ocean mobility. She is also
interim CFO of Startuplab
AS, a Norwegian incubator,
accelerator and investor
for start-ups, and CEO of
VA Finance AS, which is
regulated by the Financial
Supervisory Authority of
Norway. From 2017 till 2019
she worked at Coface, a
global credit insurance
company, heading its activities
in Norway. From 2010 till 2017
she worked for Export Credit
Norway being responsible for
financing the projects within
oil & gas industries. Between
1998 and 2010 she worked
for Handelsbanken where she
kept various positions.
Mrs Aanensen has a Master of
Science from Warsaw School
of Economics and Executive
MBA in Maritime Offshore
from Norwegian Business
School in Oslo. She is a
Norwegian citizen.
Ms Aanensen is an
independent board member.
Marianne Bekken
Director
Ms Bekken is a co-owner
of BEWI Invest, the largest
shareholder of KMC
Properties and takes part
in strategic decisions in the
family company. Marianne
Bekken has actively worked
in the organisation since
2013, as former CEO of
KMC Properties and BEWI
Insulation Norway.
Marianne Bekken holds
a bachelor’s degree in
Bussiness and Marketing at
BI University.
KMC Properties
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Annual report 2021
15
Board of directors
ESG in KMC Properties
Managing KMC Properties’ impacts on the environment and society is a central pillar in
the company’s efforts to build a sustainable business.
About this report
This is KMC Properties’ inaugural ESG report. The
report is prepared with reference to the Global
Reporting Initiative (GRI) Standards (2021) and cov-
ers the 2021 calendar year. Feedback on this report
is appreciated and can be directed to andreas.
grimsbu@kmcp.no.
Governance
Managing environmental, social and governance (ESG) issues
is central for KMC Properties to succeed in generating a max-
imum risk-adjusted return on invested capital. ESG concerns
such as climate change, labour conditions and ethical business
conduct are increasingly being regulated, and business part-
ners request more detailed information and expect transparency.
The board of directors holds overall responsibility for ensuring
KMC Properties’ responsible governance of ESG issues and
has approved this report. The CEO, together with key func-
tions, manages ESG issues on a day-to-day basis. The board
is continuously informed about ESG issues and decisions.
The reporting lines from properties to the top management
are made by selected employees who obtain the necessary
information, which is sent to the management.
Identifying what is important
As a real estate company, KMC Properties’ main impacts are
through its tenants’ activities and through the development of
properties. Establishing a system for managing ESG related
risks and opportunities in KMC Properties’ value chain has
been prioritised. This includes ensuring that the company’s
tenants manage ESG issues and are transparent about their
impacts on the environment, society and the economy in
their operations.
Materiality assessment and
stakeholder engagement
KMC Properties has engaged an independent specialist to
carry out a materiality assessment using the GRI-3 Mate-
riality Standard. Stakeholders, including banks, investors,
employees, and tenants where interviewed. In these inter-
views, potential and actual impacts to the environment, soci-
ety and economy caused by KMC Properties’ activities were
assessed according to their significance. Additionally, finan-
cially material topics were discussed and incorporated into the
list of material topics. The assessment forms the foundation
for this report and will inform strategy and the development
of governing documents going forward.
The following ESG topics have been determined to be mate-
rial for KMC Properties:
■ Circular economy
■ Impact on climate change
■ Negative environmental impacts on properties
and their surroundings
■ Working conditions on properties
■ Violation of indigenous people’s rights
■ Diversity and equality
■ Corruption
The materiality assessment will form the foundation for devel-
oping strategy, governing documents and management sys-
tem going forward.
ESG regulations
ESG issues are increasingly being included in international
and national legislation. KMC Properties is currently focused
on the following legislation entering into force in 2022:
The Norwegian Transparency Act
The Norwegian Transparency Act comes into force in July
2022. The Act requires companies (with revenue above NOK
70 million) within its scope to carry out three main activities:
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ESG report
■ Undertake Human Rights Due Diligence
■ Report on Human Rights Due Diligence
■ Respond to requests for information.
The EU taxonomy regulation
The European Green Deal and the EU Sustainable Finance
Action Plan standardises how financial market participants
and companies shall consider and disclose sustainability data.
The EU Taxonomy provides a classification system which
defines sustainable economic activities. The EU Taxonomy
was approved by the Norwegian Government in December
2021, but it has yet to be incorporated into the EEA agree-
ment (expected in June 2022). KMC Properties will follow the
EU regulations and their implementation in Norwegian law
closely, and act accordingly.
KMC Properties’ ESG management priorities for 2022
Focus areas in 2022 Measures for 2022
ESG Governance
■
Develop a ESG strategy
■
Develop a code of conduct
■
Digitalise ESG data collection
■
Establish a whistle-blower channel
■
Enhance stakeholder engagement on ESG issues
■
Assess climate-related risks according to the TCFD framework
■
Prepare for the Norwegian Transparency Act (see textbox)
■
Prepare for reporting alignment with the EU taxonomy in 2022
Managing environmental impacts
■
Develop an environmental policy
■
Develop a carbon emission reduction strategy
■
Develop an environmental risk assessment plan for existing properties
■
Further develop acquisition procedures to include environmental issues
Safeguarding human rights
■
Develop a human rights policy including statements on indigenous peoples’ rights, gender
equality and working conditions
■
Develop social screening criteria for tenants
■
Establish contact with identified indigenous groups
■
Set gender diversity targets
Ensuring ethical business conduct
■
Develop an anti-corruption policy and procedures for own operations and supply chain
ENVIRONMENT
The real estate and construction sector has a substantial envi-
ronmental footprint. It accounts for up to 30 per cent of GHG
emissions globally, is a major consumer of natural resources
and impacts biodiversity.
Governance of environmental impacts
KMC Properties aims to minimise its environmental impact
and considers itself an actor in making the industry more
environmentally responsible. Through cooperation with its
tenants, KMC Properties is focused on building and rehabili-
tating energy efficient buildings. These include tailored infra-
structure solutions that contribute to a circular economy for
the industry and its tenants.
The chief operating officer in KMC properties manages the
environmental aspects in the company’s operation. This is
done by looking at opportunities for environmentally friendly
material use on new buildings, and on the expansion of exist-
ing properties in collaboration with KMC's tenants. Further-
more, work is being done on using recycled building materials,
choosing constructions that provide a reduced climate foot-
print and facilitating future fossil-free construction sites where
it is practically possible. All construction sites have a waste
plan with source sorting and requirements for sorting grade.
The projects are optimised with local masses and materials
for plot filling to reduce the climate impact. KMC Proper-
ties will invest in solar cells and battery solutions, travel as
environmentally friendly as possible and attend trade fairs /
courses to stay updated.
The materiality assessment identified KMC Properties’ largest
environmental impacts and hence its strategic focus areas:
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■ Limiting GHG emissions and managing climate risks
■ Contributing to the circular economy
■ Reducing the environmental impact of newbuilds and
the current portfolio.
The company is working to incorporate these considerations
into its current management system, develop an environmen-
tal policy and an emission reduction strategy in 2022.
Limiting emissions and managing climate risks
The real estate sector uses more energy than any other sec-
tor and is a growing contributor to GHG emissions. As prop-
erty owner and property developer, KMC Properties aims
to reduce the energy consumption and the emissions of its
operations.
Climate accounting
In 2021, KMC Properties produced its first climate account,
representing a starting point for the company’s work to reduce
emissions across its value chain. The climate account has
been prepared in accordance with the GHG protocol, using
the operational control approach.
KMC Properties has no direct GHG emissions (Scope 1) from
sources controlled or owned by the organisation. The com-
pany’s most significant emissions occur indirectly (Scope 3).
In the 2021 baseline, Scope 3 emissions include tenant gas
and electricity consumption and business travel (air travel
and hotel stays). In 2021, KMC Properties emitted a total of
43 670 metric tonnes CO
2
e (Scope 1,2 and 3).
Energy efficiency
Enhancing energy efficiency is a central element to reduce
emissions. The total reported energy consumption for KMC
Properties’ portfolio was 278 921 MWh in 2021. The largest
source of energy consumption is related to electricity, and
the annual energy consumption per square metre was 972
kWh/m
2
/year.
In 2021, KMC Properties initiated a pilot project at the prop-
erty in Fredrikstad, to test the use of solar panels and battery
containers in collaboration with its tenant, in order to increase
the usage of local produced renewable energy and optimise
the tenants’ and the energy distributors’ capacity. If the trial
project is successful, the goal is to instal solar panels and bat-
tery solutions on all properties where this is relevant. Three of
KMC Properties' tenants have already installed solar panels.
Energy and emission performance of KMC Properties:
Energy consumption
1
Russia 4 768
Norway 86 417
Denmark 57 642
Sweden 31 574
The Netherlands 98 521
Total energy consumption - portfolio (MWh) 278 921
Energy intensity (kWh/m
2
) 972
GHG emissions (metric tonnes CO
2
)
Scope 2 emissions
2
Location-based 1
Market-based 31
Scope 3 emissions
3
Downstream leased assets 43 659
Business travel (air + hotel) 10
Total Scope 2 and 3 (location-based scope 2) 43 670
1) Includes data for 32 properties, which makes up 74% of the portfolio
(80% of leased area) and offices.
2) Scope 2 – Electricity, district heating and district cooling. Based on
DEFRA emission factors.
3) Scope 3 – Only including downstream leased asset category (collected
data for electricity use at 32 properties and gas use at 17 properties)
and business air travel. Calculated based on DEFRA emission factors.
Hotel stays based on a 4-star hotel for Norway through https://www.
hotelfootprints.org/footprinting (as recommended by DEFRA).
Climate risks
As a property owner and developer KMC Properties is
exposed to both physical and transitional climate risk. In
2022, the company plans to conduct a climate risk assess-
ment in accordance with the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD). The
company will assess their investment strategy on a regular
basis, taking into consideration how the company may be
impacted by stricter regulations, market demand and phys-
ical climate risks.
KMC Properties aims to broaden its GHG reporting by includ-
ing additional sources of emissions in its climate accounting
for 2022. As a result, future ESG reports will include more
data on energy consumption and emissions. KMC Proper-
ties will work to establish a structured approach to data col-
lection that aims to simplify the process and reduce the risk
of errors, as well as develop an emission reduction strategy.
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Contributing to a circular economy
The global real estate sector is one of the largest consumers
of raw materials and one of the largest producers of waste.
Circular economy is defined as an environmental objective in
the EU taxonomy, and KMC Properties acknowledges that it
needs a more consistent approach to both choice of materi-
als and waste management going forward.
For this report, the company has gathered data on waste
generation related to one construction and renovation pro-
ject finalised in 2021. A total of 70 tonnes of waste were gen-
erated with a recycling rate of 58.6 per cent.
The results of this year’s report provide valuable input for
KMC Properties’ work to define its role in the circular econ-
omy going forward.
Waste generated Tonnes
Wood 28.28
Paper 0
Glass 0
Iron and metals 11.42
Gypsum-based materials 0
Plastic 0
Concrete and brick 0
Contaminated concrete and brick 0
Electronic waste 0
Mixed industrial waste 29.03
Incinerated waste 1.36
Chemicals (paint, glue, vanish) 0
Reducing environmental impact of properties
When constructing and operating industrial properties, KMC
Properties impacts local ecosystems and biodiversity. Pollu-
tion from the properties or construction activities, and habitat
disturbance and conversion, are identified risks associated
with the company’s business. Several of the company’s prop-
erties are located along the Norwegian coastline, in or close
to vulnerable ecosystems.
4
The company takes necessary precautions to limit potential
negative impacts on the surrounding environment. KMC Prop-
erties operates in accordance with all laws and regulations
related to the environment and conducts environmental due
diligence (EDD) as required. There was no non-compliance
with environmental laws and regulations in 2021.
Several of KMC Properties' tenants operates in accordance
with special cleaning and emission requirements, hence, sup-
porting KMC Properties in its efforts. KMC Properties uses a
4) https://artsdatabanken.no/lister/rodlisteforarter/2021
standardise checklist to collect data from tenants on pollution
and the use of renewable materials and measures.
In 2022, KMC Properties will work to increase environmental
awareness and responsibility amongst its employees, ten-
ants, and suppliers. Furthermore, the company will actively
work to identify and implement measures to reduce nega-
tive environmental impact caused by its properties and con-
struction activities.
SOCIETY
KMC Properties considers its business’ potential impact on
people to be significant. Safeguarding human rights in its
operations is a key priority.
Governance of social issues in KMC Properties
KMC Properties aims to be a responsible employer, prop-
erty owner and real estate developer. KMC Properties' most
important priority is to take care of its own employees, ten-
ants' and suppliers' health and safety.
The materiality assessment identified KMC Properties’
impacts on society and informed its strategic focus areas.
These are:
■ Working conditions on properties
■ Violation of the rights of indigenous people
■ Diversity and equality
Ensuring safe working conditions
KMC Properties seeks to ensure safe and reasonable work-
ing conditions for people working at its properties, includ-
ing tenants and entrepreneurs. The overall responsibility of
health, safety and working environment (HSE) in construc-
tion and rehabilitation projects lies with KMC Properties,
and the COO manages these issues on a daily basis and
reports directly to the CEO. Projects must at all times fol-
low applicable laws and regulations, including the right to
Norwegian minimum wage rates and injury insurance. KMC
Properties carries out inspections regularly to safeguard
good working condition.
The company manages a portfolio of light industrial facilities,
which is associated with risks such as: flammable material,
hazardous waste, slippery floors, high altitudes, loose objects.
The tenants are responsibility for their employees’ working
conditions and projects when operating on the property. In
preparation for this report, KMC Properties has requested
information on work related injuries from its tenants.
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KMC Properties has obtained HSE data from 28 tenants. In
2021, the number of recordable work-related injuries at the
company’s properties where 66. These were primarily related
to minor injuries such as cuts, fall and crush.
The executive management team is seeking to cooperate with
tenants to reduce work-related risks and ensure that workers
have safe and decent working conditions. This will be a cen-
tral pillar in the development of KMC Properties’ sustainability
strategy and governing documents going forward.
Total reported incidents in 2021:
Type of injury
Fatalities 0
High-consequence work-related injury (excluding fatalities) 5
Recordable work-related injuries 66
Safeguarding the rights of indigenous people
KMC Properties has operations in Northern Norway in areas
where indigenous people are located and is conscious of
their rights as stipulated in United Nations Declaration on
the Rights of Indigenous Peoples. Establishing stakeholder
dialogue with indigenous peoples in the areas of which KMC
Properties operates is of key importance to safeguard their
rights. KMC Properties will develop policies and procedures
to safeguard the rights of indigenous people in 2022. KMC
Properties has not identified any incidents of violations of the
rights of indigenous people in 2021.
Providing equal opportunities for employees
KMC properties aim to ensure equal opportunities for all its
employees. KMC Properties values diversity and prohibits dis-
crimination against any employee or any other person based
on sex, colour, age, religion, national origin, political opinion,
sexual orientation, disability, or any other basis. The company
aims to promote diversity and equal opportunities and works
to include this in the company’s human resources guidelines.
In 2021, KMC Properties had no reported incidents related
to discrimination.
At the end of 2021, KMC Properties had 15 employees, of
which 9 in Norway and 6 in Russia. Females accounted for
44 per cent. o employees at KMC Properties are employed
on a part-time or temporary basis.
GOVERNANCE
KMC Properties values transparency. Anti-corruption has
been identified as a material topic, linked to property regu-
lation, operations in Russia and its supply chain. There were
no reported incidents of corruption in KMC Properties’ oper-
ations in 2021.
Governance of ethical business conduct in KMC
Properties
KMC Properties recognises that its business conduct has an
impact on the economy through transactions and negotia-
tions. KMC Properties aims to be a transparent market player,
and as listed on the Oslo Stock Exchange, it is obliged to dis-
close detailed information on corporate governance (see sep-
arate section on Corporate Governance in the annual report).
The materiality assessment identified KMC Properties’ most
important focus areas:
Female:
3
Male:
4
50+:
3
30-50:
12
Female:
8
Male:
7
Gender balance
Board of directors
Age distribution
KMC Properties’ employees
Gender balance
KMC Properties’ employees
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■ Corruption in own operations
■ Corruption in supply chain
An important task ahead is to develop an anti-corruption pol-
icy and procedures.
Ethics when investing in properties
The process of acquiring a property has several decision
gates requiring approval from external bodies. This poses a
corruption risk to KMC Properties. The company has estab-
lished processes to mitigate these risks, including juridical
and financial due diligence procedures. The M&A and oper-
ation departments lead the procurement processes, where
they request a company for legal due diligence and financial
due diligence.
KMC Properties carried out five acquisitions in 2021, com-
pleted one greenfield project and initiated three additional
projects, and completed three and initiated seven additional
construction projects related to existing properties. All oper-
ations were assessed for the risks mentioned above.
Russia
KMC Properties owns an office building in Moscow with
approximately 75 tenants. The Russian property company,
LLC Martex, has six employees. The Russian Federation is
a country with a considerable higher risk of corruption than
the other countries in which KMC Properties operates
5
, and
KMC Properties has measures in place to manage the risks
associated with this.
KMC Properties’ CEO and CFO reviews detailed reports on
the tenants, potential tenants, operational expenses and cash
flows from its Russian subsidiary weekly. PwC Norway, with
assistance from PwC Russia, is engaged to perform specific
controls on the cash deposits and cash flows, salaries, and
operational expense. A second third party performs annual
sanctions control of the tenants in Russia. These measures
reduce the risk of corruption significantly.
The Russian tax, currency and customs legislation is subject
to varying interpretations, and changes, which can occur fre-
quently. Management’s interpretation of such legislation as
applied to the transactions and activity of the group may be
challenged by the relevant regional and federal authorities.
In Russia it is common to settle disputes in the official court.
Martex LLC has won all three legal disputes that have been
brought before the court in 2021. Two of the disputes were
against former tenants to retrieve receivables towards them.
The last court case was a dispute with the real estate register
in Moscow, to correct an error in the register.
5) https://www.transparency.org/en/cpi/2020/index/rus
Supply chain management and minimum social
safeguards
KMC Properties is a substantial procurer of steel structures,
sandwich elements, roof insulation from Eastern Europe, as
well as some pipes and concrete stairs. The remaining mate-
rials are mainly from Norway. In July 2022, the Norwegian
Transparency Act enters into force. Combined with the Min-
imum Social Safeguard requirements in the EU Taxonomy,
it will be mandatory to disclose information about compa-
nies’ impacts in the supply chain, with a particular focus on
human rights and decent working conditions, and its man
-
agement of these.
In 2022, KMC Properties will prepare to meet these require-
ments, and establish due diligence and reporting procedures
in line with the OECD Guidelines for Multinational Enterprises.
Comment on situation with Russia and
Ukraine. Sanctions.
Sanctions imposed on Russia due to its invasion
of Ukraine, has significantly increased the risks
related to KMC Properties’ operations in Russia.
KMC Properties is in a process of selling its only
property in Russia, so the focus is on operating in
compliance with all relevant laws and regulations
and take care of the company’s six employees in
Russia until the sale is completed. Since the inva-
sion started at the end of February 2022, KMC Prop-
erties has, with assistance from Baker McKenzie in
Russia, performed a sanction control on its cur-
rent tenants in Russia without any significant find-
ings. In addition, KMC Properties is monitoring the
ever-changing regulatory requirements with assis-
tance from legal and financial consultants in Nor-
way and Russia.
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KMC Properties aims to maintain a high standard of corporate governance. Good
corporate governance strengthens the confidence in the company and contributes to
long-term value creation by regulating the division of roles and responsibilities between
shareholders, the board of directors and executive management.
Corporate governance at KMC Properties shall be based on
the following main principles:
■ All shareholders shall be treated equally
■ KMC Properties shall maintain open, relevant, and
reliable communication with its stakeholders, including
its shareholders, governmental bodies, and the public
about the company’s activities
■ KMC Properties’ board of directors shall be autonomous
and independent of the company’s management
■ The majority of the members of the board shall be
independent of major shareholders
■ KMC Properties’ shall have a clear division of roles and
responsibilities between shareholders, the board and
management
1. Implementation and reporting on corporate
governance
Compliance and regulations
The board of directors (the board) of KMC Properties (the
company) has the overall responsibility for ensuring that
the company has a high standard of corporate governance.
The board has adopted a corporate governance policy doc-
ument addressing the framework of guidelines and princi-
ples regulating the interaction between the shareholders,
the board, and the Chief Executive Officer (the CEO). The
policy is based on the Norwegian Code of Practice (the
Code) for Corporate Governance issued by the Norwegian
Corporate Governance Board. The objective of the Code
is that companies listed on regulated markets in Norway
will practice corporate governance that regulates the divi-
sion of roles between shareholders, the board of directors
and executive management more comprehensively than is
required by legislation. The board and executive manage
-
ment perform an annual assessment of its principles for
corporate governance.
KMC Properties ASA is a Norwegian public limited company
organised and existing under the laws of Norway pursuant to
the Norwegian Public Limited Companies Act and listed on
the Oslo Børs (Oslo Stock Exchange). The company is sub-
ject to section 3-3b of the Norwegian Accounting Act, which
requires the company to disclose certain corporate govern-
ance related information annually. In addition, the Issuers
Rules of Oslo Børs, covered by the Oslo Rulebook II chapter
4.5 requires listed companies to publish an annual statement
of its principles and practices with respect to corporate gov-
ernance, covering every section of the latest version of the
Code. The Continuing Obligations also sets out an overview
of information required to be included in the statement. The
Norwegian Accounting Act is available at www.lovdata.no (in
Norwegian), while the Continuing Obligations is available at
www.oslobors.no.
KMC Properties seeks to comply with the current code of
practice, issued on 14 October 2021. The Code is available
at www.nues.no.
Application of the Code is based on the ‘comply or explain’
principle, which means that the company must provide an
explanation if it has chosen an alternative approach to spe-
cific recommendations.
KMC Properties provides an annual statement of its adher-
ence to corporate governance in its annual report, and this
information is also available at www.kmcp.no. This state-
ment describes how KMC Properties has conducted itself
with respect to the Code in 2021.
Deviations from the Code: None
Corporate Governance
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22
Corporate governance
2. Business activity
KMC Properties is a real estate company focused on owning
industrial and logistics properties. The company’s business
purpose is set out in its Articles of Association as:
"The company's business shall comprise of trading, investment
in real estate property and security instruments and other
business operations in this relation, including participation in
other companies with corresponding business through equity,
loan or issuance of guarantees."
The company’s main goals, strategies and risk profiles are pre-
sented in the annual report. It is the board’s opinion that these
objectives, strategies, and risk profiles are within the scope of
the business purpose clause. The objectives for the business
are set with the intention of creating value for shareholders.
The board has defined clear and long-term objectives for the
company, to ensure value creation for the shareholders in a
sustainable manner.
Long-term objectives, strategies and the risk profile are eval-
uated once a year in connection with the work on strategy,
or as necessary in connection with major events or struc-
tural changes.
Deviations from the Code: None
3. Equity and dividends
The board is committed to maintaining a satisfactory cap-
ital structure for the company according to the company's
goals, strategy, and risk profile, thereby ensuring that there
is an appropriate balance between equity and other sources
of financing. The board will continuously assess the compa-
ny’s capital requirements related to the company’s strategy
and risk profile.
Equity
As of 31 December 2021, the company’s equity totalled NOK
1,836 million, which corresponds to an equity ratio of 42 per
cent. The board considers KMC Properties’ capital struc-
ture to be appropriate to the company’s objectives, strategy,
and risk profile.
Dividends
The company’s dividend policy is based on the principle of fair
distribution of profit among all its shareholders pro rata their
respective holdings of shares, considering a rational correla-
tion of the amount paid in dividends and the funds needed to
carry out the strategic plans of the company’s development.
Dividend rights arise on the date they are approved by the
general meeting. There are no restrictions involved for non‐
resident holders.
The company is focusing on pursuing growth through both
organic and in‐organic initiatives and anticipates paying div-
idends according to a dividend pay‐out ratio in the 30‐50 per
cent range of the company’s net income in the coming years.
KMC Properties did not distribute dividends in 2021 and the
board has, as of 5 April 2022, not proposed dividend distri-
bution in 2022 based on the financial year of 2021.
Board authorisations
Authorisations to the board to increase the share capital or to
buy own shares will normally not be given for periods longer
than until the next annual general meeting (AGM) of the com-
pany.
The annual general meeting of KMC Properties, held on 2 June
2021, granted the board authorisations as follows:
1. Authorisation to increase the share capital by up to
NOK 9,500,000 in connection with capital raisings
for the financing of the company's business and in
connection with acquisitions and mergers.
2. Authorisation to increase the share capital by up to
NOK 500,000 in connection with issuance of shares to
the group’s employees or board members in relation
with option and incentive programs.
3. Authorisation to acquire shares in the company and
take security in treasury shares on behalf of the
company with an aggregate nominal value of up to
NOK 4,834,930.
The authorisations are valid until the annual general meeting
in 2022, however no longer than until 0 June 2022.
Deviations from the Code: None
4. Equal treatment of shareholders and
transactions with close associates
In the event of capital increases based on authorisations
issued by the general meeting, where the existing share-
holders’ rights will be waived, the reason for this will be pro-
vided in a public announcement in connection with the capital
increase.
Any transactions, agreements or arrangements between the
company and its shareholders, members of the board, mem-
bers of the executive management team or close associates
of any such parties may only be entered into as part of the
ordinary course of business and on arm’s length market terms.
All such transactions shall comply with the procedures set
out in the Norwegian Public Limited Liability Companies Act.
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Corporate governance
Any transactions the company carries out in its own shares
will be carried out either through the stock exchange or at
prevailing stock exchange prices. If there is limited liquidity
in the company’s shares, KMC Properties will consider other
ways to ensure equal treatment of its shareholders.
The board shall arrange for a valuation to be obtained from
an independent third party unless the transaction, agreement
or arrangement in question is considered immaterial. Board
members and members of the executive management team
shall immediately notify the board if they have any material
direct or indirect interest in any transaction entered by the
company.
As per 31 December 2021, KMC Properties did not own any
own shares.
KMC Properties’ financial statements provide further infor-
mation about transactions with related parties.
Deviations from the Code: None
5. Shares and negotiability
KMC Properties has only one class of shares, and all shares
have equal rights, including the right to dividend and voting
rights. Each share has a face value of NOK 0.20 and carries
one vote.
The company emphasises equal treatment of its sharehold-
ers and the shares are freely transferable.
Deviations from the Code: None
6. General meetings
The General Meeting is the highest authority of KMC Prop-
erties. All shareholders of the company are entitled to attend
and vote at General Meetings of the company and to table
draft resolutions for items to be included on the agenda for
a General Meeting.
Pursuant to article 7 of the company’s articles of associations,
the general meeting shall resolve:
1. The appointment of the chairman of the board of
directors
2. The approval of the annual accounts and annual report,
including the distribution of dividends
3. The appointment of the members and the chairman of
the nomination committee
4. Other matters that the general meeting is required by
law to resolve
The general meeting shall also resolve the board of director's
declaration for remuneration of the executive management
team in accordance with the Norwegian Public Limited Lia-
bilities Act paragraph 6-16a.
The notice for the general meeting shall be sent to the share-
holders no later than 21 days prior to the date of the general
meeting. The general meeting may, with a majority vote as
for amendments to the articles of association, and with effect
for the next annual general meeting, decide that the notice
for extraordinary general meetings shall be sent to the share-
holders no later than two weeks prior to the extraordinary
general meeting is held. The annual general meeting (AGM)
is held each year no later than six months after expiry of the
preceding financial year.
The Annual General Meeting for 2022 will be held on 1 June
2022. The board and the company’s auditor shall be present
at general meetings.
Deviations from the Code: None
7. Nomination committee
Article 7 of the company’s articles of association stipulates
that the nomination committee shall consist of three mem-
bers. The members shall be elected for a period of two years
unless the general meeting decides a shorter period.
The nomination committee shall prepare proposals to the gen-
eral meeting in relation to the following:
1. The appointment of the members of the board of
directors and the chairman of the board of directors
2. The appointment of the members of the nomination
committee and the chairman of the nomination
committee
3. The remuneration of the board of directors and the
nomination committee.
4. Any changes in the mandate of the nomination
committee or in the articles of association
The Norwegian Public Limited Liabilities Act paragraphs 6-7
and 6-8 shall apply correspondingly for the members of the
nomination committee.
At KMC Properties’ annual general meeting on 2 June 2021,
the following were elected to the nomination committee:
■ Finn Haugan, chair
■ Ingrid Kristin Viken
■ Gunnar Syvertsen
Deviations from the Code: None
Annual report 2021
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KMC Properties
24
Corporate governance
8. Board of directors: composition and
independence
According to article 5 of KMC Properties’ articles of associ-
ations, the board of directors of the company shall consist
of minimum three members. The chairperson of the board
of directors alone, or two members of the board of directors
jointly, shall have authority to sign on behalf of the company.
The board of directors may designate procurators.
As of 31 December 2021, KMC Properties’ board comprise
seven members. Of these, six members were elected for a
period of two years at the company’s extraordinary general
meeting on 18 December 2020, while Thorbjørn Pedersen
was elected at the company’s annual general meeting on 2
June 2021.
Three of the members are women. The Public Limited Com-
panies Act states that there should be at least three of each
gender on the board of directors when the board has between
six and eight members.
When appointing members to the board, it is emphasised
that the board shall have the requisite competency to inde-
pendently evaluate the cases presented by the executive man-
agement team as well as the company's operation. It is also
considered important that the board can function well as a
body of colleagues.
Board members shall be elected for periods not exceeding
two years at a time, with the possibility of re-election. Board
members shall be encouraged to own shares in the company.
An overview of the board members’ competence and back-
ground is available from the company’s website https://www.
kmcp.no/en/management+and+board .
Independence of the board
All the board members of KMC Properties are deemed to be
independent of senior executives. The majority of the mem-
bers are independent of the company’s material business
contacts, while five of the members are independent of the
company’s main shareholders.
Deviations from the Code: None.
9. The work of the board of directors
The overall management of the company is vested in the board
and the company’s management. In accordance with Norwegian
law, the board shall ensure that the company has proper man-
agement with clear internal distribution of responsibilities and
duties. A clear division of work has been established between
the board and the executive management team. The CEO is
responsible for the executive management of the company.
Instructions to the board of directors and the CEO were last
revised and approved by the board on 27 April 2022.
The board has the overall responsibility for the management of
the group and the supervision of its day-to-day management
and business activities. The board shall prepare an annual
plan for its work with special emphasis on goals, strategy, and
implementation. The board’s primary responsibility shall be (i)
participating in the development and approval of the compa-
ny’s strategy, (ii) performing necessary monitoring functions
and (iii) acting as an advisory body for the executive manage-
ment team. The chairperson of the board is responsible for
ensuring that the board’s work is performed in an effective
and correct manner.
The members of the board receive information about the com-
pany’s operational and financial development on a quarterly
basis. The company’s strategies shall regularly be subject to
review and evaluation by the board.
The regulations governing the board’s working practices
include guidelines for how individual directors and the CEO
should conduct themselves with respect to matters in which
they may have a personal interest. Among them is the stipu-
lation that each director must make a conscious assessment
of his/her own impartiality and inform the board of any pos-
sible conflict of interest.
Further, the regulations include guidelines for how the board of
directors and executive management shall deal with approval
of agreements, which are considered material, between the
company and its shareholders and other close associates,
including that the board shall arrange for an independent
third-party valuation. This will, however, not apply for trans-
actions that are subject to the approval of the general meet-
ing pursuant to the Norwegian Companies Act. Agreements
with related parties will be included in the notes to the finan-
cial statements in the annual reports.
The board meets as often as necessary to perform its duties.
Most of the current board was elected at the extraordinary
general meeting on 18 December 2020, related to the comple-
tion of the transformative agreement combining KMC Prop-
erties ASA (former name Storm Real Estate ASA) and KMC
Properties AS. The board shall prepare an annual evaluation
of its work.
Sub-committees of the board
Audit committee
Pursuant to the Norwegian Public Limited Liability Compa-
nies Act and the listing rules of the Oslo Stock Exchange, the
company shall have an audit committee. The audit committee
is appointed by the board.
KMC Properties
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Annual report 2021
25
Corporate governance
The committee’s main tasks are to prepare the board’s fol-
low-up of the financial reporting process, monitor the group’s
internal control and risk management systems, and maintain
an ongoing dialogue with the auditor.
KMC Properties’ audit committee comprise the following:
■ Stig Wærnes, Chairperson
■ Anna Musiej Aanensen
The board approved instructions to the audit committee at
the board meeting on 4 February 2021.
Remuneration committee
The board has appointed a remuneration committee. The
committee evaluates and proposes the compensation of KMC
Properties’ CEO and other members of the executive man-
agement team and provide general compensation related
advice to the board.
KMC Properties’ remuneration committee comprise the fol-
lowing:
■ Stig Wærnes, Chairperson
■ Anna Musiej Aanensen
■ Morten Eivindssøn Astrup
Deviations from the Code: None
10. Risk management and internal control
The board shall ensure that KMC Properties has sound
internal control and systems for risk management that are
appropriate in relation to the extent and nature of the com-
pany’s activities. The internal control and the systems shall
also encompass the company’s corporate values and ethi-
cal guidelines.
The objective of the risk management and internal control is
to manage exposure to risks to ensure successful conduct
of the company’s business and to support the quality of its
financial reporting.
The board shall carry out an annual review of the company’s
most important areas of exposure to risk and its internal con-
trol arrangements.
The board shall provide an account in the annual report of
the main features of the company’s internal control and risk
management systems as they relate to the company’s finan-
cial reporting.
Internal control of financial reporting is conducted through
day-to-day follow-up by management, and supervision by
the company’s audit committee.
Deviations from the Code: None
11. Board remuneration
The general meeting shall determine the board’s remunera-
tion annually. Remuneration of board members shall be rea-
sonable and based on the board's responsibilities, work, time
invested and the complexity of the enterprise. The remunera-
tion of the board members shall not be performance-related
nor include share option elements.
The board shall be informed if individual board members per-
form tasks for the company other than exercising their role
as board members. Work in sub-committees may be com-
pensated in addition to the remuneration received for board
membership.
The board’s remuneration was approved at the company’s
annual general meeting on 2 June 2021, following a proposal
from the nomination committee.
Deviations from the Code: None
12. Remuneration of executive management
Pursuant to Section 6-16a of the Norwegian Public Limited
Companies Act (NPLCA), the board prepares guidelines for
determination of salaries and other benefits payable to sen-
ior executives.
The guidelines will, in line with the said statutory provision, as
well as Section 5-6 (3) of the same Act be approved by the
general meeting. If the guidelines are materially altered, the
new guidelines will be laid before, and approved by the gen-
eral meeting. The guidelines will be approved by the general
meeting at least every four years.
In addition to the guidelines, the board prepares a remunera-
tion report pursuant to Section 6-16b of NPLCA. Such report
will be considered by the company's general meeting and
shall be subject to an advisory vote by the general meeting in
accordance with NPLCA Section 5-6 (4). The guidelines and
report are included in the company’s annual report.
The company’s senior executive remuneration policy is based
primarily on the principle that executive pay should be com-
petitive and motivating, to attract and retain key personnel
with the necessary competence.
Annual report 2021
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KMC Properties
26
Corporate governance
The statement refers to the fact that the board of directors
shall determine the salary and other benefits payable to the
CEO. The salary and benefits payable to other senior exec-
utives are determined by the CEO in accordance with the
guidelines laid down in the statement. The CEO will normally
propose the remuneration to senior executives in consultation
with members of the remuneration committee.
The board’s statement is included in the 2021 annual report
and further details relating to the salary and benefits payable
to the CEO and other senior executives is available in notes
to the financial statements.
Deviations from the Code: None
13. Information and communication
Investor relations
Communication with shareholders, investors and analysts is
a high priority for KMC Properties. The objective is to ensure
that the financial markets and shareholders receive correct
and timely information, thus providing a sound foundation
for a valuation of the company. All market players shall have
access to the same information, and all information is pub-
lished in English.
All notices sent to the stock exchange are made available on
the company’s website and at www.newsweb.no.
Financial information
The company normally holds investor presentations in asso-
ciation with the publication of its quarterly results. These
presentations are open to all and provide an overview of the
group’s operational and financial performance in the previous
quarter, as well as an overview of the general market outlook
and company’s own future prospects. These presentations
are also made available on the company’s website.
Restricted trading periods
Persons discharging managerial responsibilities (PDMR) are
not allowed to acquire or sell shares in the company or related
financial instruments during the period from 30 days prior to
the publication of the company’s half-yearly and annual report,
following the regulations of MAR. As the company publishes
an interim report for the fourth quarter, including preliminary
full year results, the fourth quarter report is, in this respect,
considered to be the annual report.
KMC Properties publishes a financial calendar on Oslo Børs’s
website, setting out the expected dates of publication for its
reports. The dates are also available at the company’s website.
Deviations from the Code: None
14. Take-over situations
In a take-over process, should it occur, the board and the
executive management team each have an individual respon-
sibility to ensure that the company’s shareholders are treated
equally and that there are no unnecessary interruptions to
the company’s business activities. The board has a particu-
lar responsibility in ensuring that the shareholders have suf-
ficient information and time to assess the offer.
In the event of a take-over process, the board shall ensure that:
a) the board will not seek to hinder or obstruct any takeo-
ver bid for the company’s operations or shares unless
there are particular reasons for doing so;
b) the board shall not undertake any actions intended to
give shareholders or others an unreasonable advantage
at the expense of other shareholders or the company;
c) the board shall not institute measures with the inten-
tion of protecting the personal interests of its members
at the expense of the interests of the shareholders; and
the board shall be aware of the particular duty it has for
ensuring that the values and interests of the sharehold-
ers are protected.
In the event of a take-over bid, the board will, in addition to
complying with relevant legislation and regulations, seek to
comply with the recommendations in the Code. This could
include obtaining a valuation and fairness opinion from an
independent expert. On this basis, the board shall draw up a
statement containing a well-grounded evaluation of the bid
and make a recommendation as to whether the shareholders
should accept the bid. The evaluation shall specify how, for
example, a take-over would affect long-term value creation
of KMC Properties.
Deviations from the Code: None
15. Auditor
The auditor is appointed by the annual general meeting and
is independent of KMC Properties. Each year the board shall
receive written confirmation from the auditor that the require-
ments with respect to independence and objectivity have
been met.
Each year, the auditor shall draw up a plan for the execution
of their auditing activities, and the plan shall be made known
to the board of directors and the audit committee. The board
should specifically consider if the auditor to a satisfactory
degree also carries out a control function and the auditor
shall meet with the audit committee annually to review and
evaluate the company’s internal control activities.
KMC Properties
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Annual report 2021
27
Corporate governance
The auditor shall be present at board meetings where the
annual accounts are on the agenda. Whenever necessary, the
board shall meet with the auditor to review the auditor’s view
on the company's accounting principles, risk areas, internal
control routines, etc.
The auditor may only be used as a financial advisor to the
company provided that such use of the auditor does not have
the ability to affect or question the auditors’ independence
and objectiveness as auditor for the company. Only the com-
pany’s CEO and/or CFO shall have the authority to enter into
agreements in respect of such counselling assignments.
At the annual general meeting the board shall present a
review of the auditor’s compensation as paid for auditory
work required by law and remuneration associated with other
specific assignments. The board shall arrange for the auditor
to attend all general meetings.
Deviations from the Code: None
Angholmsvegen 14: Property located in Klädesholmen, north
of Gothenburg in Sweden. The tenant Klädesholmen Seafood AB
produces herring and fish spreads.
Annual report 2021
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KMC Properties
28
Corporate governance
KMC Properties
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Annual report 2021
29
Corporate governance
Bleivassvegen 7: Property located at Ågotnes, in the western
part of Norway. The tenant PSW Group is a provider of products,
systems and services to the oil and energy industry.
Annual report 2021
|
KMC Properties
30
Board of directors’ report
Board of directors’ report 2021
2021 was a successful year for KMC Properties ASA. The company was established
through a transformative transaction in December 2020, where KMC Properties AS and
KMC Properties ASA (then named Storm Real Estate ASA) were combined into a listed
real estate group focusing on logistics- and industrial properties.
During the year, KMC Properties has focused on building a
strong organisation, establishing a clear growth strategy, and
delivering on the strategy through a series of value-accretive
acquisitions and new development projects. At the same time,
the group has strengthened its financial position through a
successful private placement, providing a solid foundation to
further pursue profitable growth opportunities.
The group delivered an income of NOK 226.1 million for 2021,
with a net operating income (NOI) of NOK 214.6 million and
net income from property management of NOK 66.1 million.
A total of five acquisitions and three new development pro-
jects were announced during 2021, contributing to growing
the portfolio value from NOK 3.1 billion at year-end 2020 to
NOK 4.0 billion at the end of 2021.
Overview of the business
The board of directors’ report for KMC Properties (“KMC
Properties” or “the group”) comprises KMC Properties ASA
and all subsidiaries. The parent company, KMC Properties
ASA, is a Norwegian public limited liability company.
Business and location
KMC Properties is a real estate company focused on acquir-
ing and managing industrial- and logistics properties. Cur-
rently, the group owns a diversified portfolio of 45 properties
in the Nordics and the Netherlands. The properties have
long lease agreements with solid counterparties, strategi-
cally located for the tenants. In addition to the industrial prop-
erties, the group owns an office building in Moscow, Russia.
KMC Properties is headquartered in Trondheim, Norway.
History
In December 2020, KMC Properties ASA (formerly Storm Real
Estate ASA) completed the acquisition of KMC Properties AS.
The transaction was accounted for as a reversed takeover with
KMC Properties AS being identified as the accounting acquirer.
KMC Properties ASA (formerly Storm Real Estate ASA) was
established in 2007 and has had multiple investments across
several countries, including direct ownership of real estate as
well as indirect exposure through shares in other real estate
companies. Prior to the transaction with KMC Properties AS,
the company was a single asset company, owning only an
office building in Moscow, Russia (the Gasfield building).
KMC Properties AS was prior to the transaction a private-
ly-owned real estate company established in January 2020.
At this time, the company was owned 20 per cent by Kverva
Industrier AS, and 80 per cent by EBE Eiendom AS.
For a full overview of the history and important events in the
development of the group, see the overview on page 5.
Strategy and objectives
KMC Properties’ growth strategy consists of the following
main elements:
■ Investments in current portfolio and contract extensions
■ Investments in development projects (greenfield projects)
■ Acquisitions of new properties
KMC Properties invests primarily in logistics – and indus-
trial properties due to the segment’s high returns, long lease
agreements and stable occupancy rates.
The investments increase the company’s cash flow and
contributes to diversifying the company’s property portfo-
lio, hence reducing the company’s operational and financial
risks. All investments are made with a focus on creating long-
term value for investors and tenants, while at the same time
minimising the negative impacts on all three pillars of ESG:
Environmental, Social and Governance.
The investment strategy is characterised by investments in
properties with strategic locations - in industrial and logisti-
KMC Properties
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Annual report 2021
31
Board of directors’ report
cal hubs, or properties with proximity to key customers and/
or natural resources which are business critical for the ten-
ants. The group is focused on having a solid customer base
of market leading companies with long heritage and good
track records, as well as entering long-term triple net con-
tracts with very low contract extension risk.
At year-end 2021 KMC Properties had a NOK 1,083 million
pipeline of accretive growth opportunities, of which all invest-
ments are expected to be completed by the end of 2024.
The group’s ambition is to further develop its position as the
most attractive industrial real estate partner for existing and
new tenants.
Operations
As of 31 December 2021, KMC Properties owned 44 proper-
ties in the Nordics and the Netherlands and one office building
in Russia. The group’s operations include investments in prop-
erties, including greenfield/development projects, upgrades
and expansion of existing properties and acquisition of new
properties, as well as management of the properties owned
by the group.
The office building in Russia is managed through the com-
pany’s own organisation in Russia, and the local manage-
ment seeks to maintain a close relationship with its tenants.
The other properties owned by the group are managed from
Norway.
Most of the group’s lease contracts are bare-house contracts,
whereby maintenance, insurance and property tax are cov-
ered by the tenant. Most of the contracts are 100 per cent
CPI adjusted.
Property portfolio
Of the total 45 properties owned at the end of 2021, 44 of
the properties are logistics- and industrial properties in the
Nordics and the Netherlands, including 23 in Norway, 8 in
Denmark, 8 in Sweden, 4 in the Netherlands and one in Fin-
land. In addition, the group owns an office building in Russia,
comprising offices, parking places, a restaurant, and a fitness
centre. The group has a local team in Russia to manage the
operation of the building.
The portfolios consist of approximately 370 000 gross square
meters rentable area.
Largest tenants
KMC Properties’ four largest tenants are BEWI ASA, Insula
AS, PSW Group, and Grøntvedt group.
BEWI ASA was founded in 1980 by the Bekken family, who
since inception has developed the company into becoming
one of the leading packaging, components, and insulation
providers in Europe. The company is a frontrunner in inno-
vation and sustainability. BEWI is strategically integrated
throughout the value chain, with revenue diversified across
four operating segments, including one upstream segment
for raw material production, two downstream segments and
one for recycling. The company has 41 production facilities
located across Europe and approximately 2 100 employees.
BEWI is listed on Oslo Børs.
Insula AS is a Nordic seafood group focused on product
development, value-added processing, and sales of fish‐ and
seafood products to the retail and Hotel/Restaurant/Café
(HoReCa) markets. The company has approximately 1 100
employees in Norway, Sweden, Denmark, Finland, and Ice-
land and is owned by Kverva Industrier (95.8 per cent own-
ership). The company has a strategy to consolidate steadfast
and traditional companies into one proficient supplier to the
Nordic market.
PSW Group is a provider of products, systems, and services
to the oil & energy industry. The group was established in
2007 and is currently owned by the private equity firm Her-
kules Capital. The tenant, PSW Technology, is one of a total
of four business areas of the PSW Group.
The Grøntvedt Group is a leading platform within industrial
processing of pelagic fish, and the world’s largest producer
of marinated herring. The company is headquartered at Ørlan
-
det, approximately 50 minutes outside of Trondheim by boat.
The location is strategic given the rich resources of pelagic
fish in the North Sea. Grøntvedt exports more than 80 per
cent of its production.
Important events in 2021
Financing and issuance of new shares
Mandatory offer
The completion of the transaction combining KMC Properties
AS and KMC Properties ASA (previously Storm Real Estate
ASA) resulted in a mandatory offer obligation for both EBE
Eiendom AS and Kverva Industrier AS (the two previous major-
ity owners of KMC Properties AS).
The offer to acquire the shares in KMC Properties ASA made
by EBE Eiendom AS and Kverva Industrier AS at an offer price
of NOK 7 commenced on 22 December 2020 and was com-
pleted on 19 January 2021. EBE Eiendom and Kverva Indus-
trier received acceptances for a total of 149 369 shares and
votes in KMC Properties, corresponding to 0.062 per cent of
the share capital and voting rights in KMC.
Subsequent offering February
On 11 February 2021, KMC Properties launched a NOK 30
million subsequent offering with expiration on 18 February
Annual report 2021
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KMC Properties
32
Board of directors’ report
2021. The offering was completed on 19 February 2021, by
approval of the board of directors.
Private placement, subsequent offering and employee
offering
On 16 September 2021, KMC Properties announced the suc-
cessful completion of a private placement of NOK 300 mil-
lion through allocation of 37 500 000 new shares at NOK 8.00
per share. Net proceeds from the private placement are used
to redeem amounts drawn under the company’s revolving
credit facility in connection with acquisitions and greenfield
projects, and to fund the company’s pipeline of new growth
opportunities.
Further, following the completion of the private placement,
KMC Properties launched a subsequent offering on 12 Octo-
ber 2021, directed towards the company’s shareholders on
16 September. The subsequent offering was completed on
28 October and resulted in issuance of 1 875 000 new shares
at NOK 8.00 per share and consequently gross proceeds of
NOK 15 million.
On 18 October 2021, the board of directors of KMC Properties
resolved to issue 750 000 shares in connection with a limited
share offering to employees of the company, as announced in
relation to the private placement on 16 September 2021. The
subscription price per share was NOK 6.40, equal to the share
price in the private placement less a discount of 20 per cent.
The new shares were subject to a three-year lock-up period.
Development projects
Development of greenfield project at Senja
In August 2020, KMC Properties commenced a development
project relating to the construction of a fully automated fish
box production facility at Klubben Næringsomrade in Senja,
Norway. The facility is located next to SalMar ASAs new fish
slaughterhouse InnovaNor. The tenant of the fish box facil-
ity, BEWI ASA, has a long-term agreement with SalMar for
delivery of fish boxes.
The construction was completed in the third quarter of 2021,
upon which KMC Properties entered a bare-house agreement
with BEWI ASA for a period of 15 years including an option for
15 more years, at a yield-on-cost of 7.5 per cent.
Guleskär: Property located in Kungshamn, at the central
west coast of Sweden. The tenant is Insula / Marenor AB, a
manufacturer of end-consumer products of white fish and caviar.
KMC Properties
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Annual report 2021
33
Board of directors’ report
Letter of intent with BEWI for development of packaging
hub at Hitra, Norway
On 3 March 2021, KMC Properties announced that it had
entered a letter of intent with BEWI for development of a new
packaging facility on Jøsnøya, Hitra, on the west coast of
Central Norway. The new facility will be BEWI's most modern
and efficient facility for production of fish boxes, and in addi-
tion have facilities to serve an increasing volume of reusable
boxes and reusable pallets.
Further, on 8 July 2021, the company announced that it had
entered a conditional long-term lease agreement for the prop
-
erty with BEWI and entered an agreement for the pre-project
phase. The new facility will be built and owned by KMC Prop-
erties and once completed, leased to BEWI on a 15 years
lease agreement, with an option for BEWI to extend the lease
term two times by five year each. The construction cost is
estimated to be above NOK 100 million, and the yield-on-cost
is set on 7.5 per cent.
Agreement with Oppdal Spekemat for construction of a
new production facility
On 2 July 2021, KMC Properties entered an agreement with
Oppdal Spekemat AS for the construction of a new produc-
tion facility at Oppdal, in Trøndelag county in central Norway.
When completed, the facility will be leased to Oppdal Speke-
mat on a triple-net bare-house agreement, with an initial lease
term of 15 years, with the option of an extension. The initial
lease term is irrevocable.
The construction cost is estimated to be approximately NOK
80 million, and the yield-on-cost is set on 7.5 per cent.
Oppdal Spekemat is a Norwegian producer and seller of tra-
ditional cured meats and related products established in 2009.
The company has a solid market position in central Norway.
The company is owned 60 per cent by Fatland, a Norwegian
slaughter- and meat expert with a turnover of close to NOK
5 billion in 2020.
LOI with Slakteriet Holding AS to build NOK 620 million
salmon slaughterhouse facility
On 23 August 2021, KMC Properties announced the signing
of a Letter of Intent (LOI) with Slakteriet Holding AS to build
a new salmon slaughterhouse facility at Florø, in the Vestland
county on the Norwegian western coast. The investment was
estimated at NOK 620 million, with a yield-on-cost estimated
between 6.75–7.1 per cent.
Early February 2022, the company announced that it had
entered a conditional process agreement, confirming the ini-
tial plans. For further details see subsequent events.
Acquisitions
Acquisition of industrial property in Denmark
On 13 April 2021, KMC Properties announced that the com-
pany had acquired an industrial property in Denmark from
the Danish paper packaging company Honeycomb Cellpack
A/S, a provider of paper-based protective packaging solu-
tions. On the same day, KMC Properties’ largest tenant BEWI
ASA announced its acquisition of 51 per cent of Honeycomb.
The industrial property included a total of six buildings, com-
prising a total gross floor area of 5 858 square meters and a
plot area of 53 235 square meters. A triple-net bare house
lease agreement was entered with Honeycomb with an ini-
tial lease term of 12 years, with an option to extend the lease
term two times by five year each.
Acquisition of property outside Molde in Norway
On 27 May 2021, KMC Properties ASA acquired an indus-
trial property in Hustadvika, outside the city Molde on the
west coast of Norway from Perfect Temperature Group AS
(PTG) for a total consideration of NOK 44 million. The prop-
erty included a triple-net bare-house agreement with PTG
Frionordica AS, with a lease term of 17 years at a yield of 7.1
per cent of the total investment cost.
Acquisition of an industrial property with long-term lease
at Mongstad for NOK 285 million
On 12 July, KMC Properties ASA announced its acquisition of
an industrial property at Mongstad, Norway, for a total con-
sideration of approximately NOK 285 million, with a gross
yield of 7.7 per cent.
The property came with a triple-net bare-house agreement
with the tenant, PSW Technology AS, with an initial lease term
of 12 years, and an option of a ten-year extension.
PSW Technology is part of the PSW Group AS, an interna-
tional provider of products, systems, and services to the
energy industry, 98 per cent-owned by Hercules Private
Equity Fund IV.
The property, located at Storemyra, is composed of a 10
734 m
2
BTA industrial plant constructed in 2019, and 62 091 m
2
BTA of land, strategically located at the Mongstad industrial
site, on the west coast of Norway. With its 1 200 solar panels
over 3 500 m
2
on its roof, PSW’s facility at Mongstad is the
tenth largest solar cell plant in Norway, making PSW Group
self-supplied with solar energy and able to export electricity
back to the grid in the event of over-production.
Acquisition of industrial property at Ågotnes
On 25 November 2021, KMC Properties announced its acqui-
sition of a modern industrial property, located at Ågotnes near
Bergen for a consideration of approximately NOK 128 million.
Annual report 2021
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KMC Properties
34
Board of directors’ report
The Ågotnes property is composed of a 5 781 m
2
BTA power
and automation systems plant that was in large part con-
structed in 2019-2020, with further development potential.
The property is strategically located close to the Coast Center
Base, a leading service and supply base to the North Sea
oil and gas fields, and the planned new eco-friendly, state-
of-the-art goods cargo port at Ågotnes, scheduled to open
by 2030.
The property came with a lease agreement of which there
was 8.4 years left of the initial lease term with the tenant PSW
Technology AS, and a gross yield of 7 per cent on the total
investment cost.
PSW Power & Automation provides complete power systems
within the offshore, marine, and land-based industries, focus-
ing on sustainable solutions and custom-made products and
turnkey solutions. The property’s two main buildings are close
to 30 per cent energy self-sufficient, with 744 solar panels
installed on their roofs that have an estimated potential of
generating 165 000 kWh per year. The two main buildings
have a B energy rating.
Acquisition of production facility in Fredrikstad
In December 2021, KMC Properties acquired the real estate
company Kampenveien 5A AS, in Fredrikstad, Norway, for
a consideration of NOK 52 million, with a gross yield of 7.5
per cent.
The seller of the property was BE Form Holding AS, owner
of the plastics company Biobe AS. The property came with
a triple-net bare house agreement with Biobe and an initial
lease of 12 years.
New rental agreement with First Seafood in Kongsvinger
In December 2021, KMC Properties entered a rental agree-
ment with First Seafood AS for its production facility in Kongs-
vinger, Norway.
The agreement was a triple-net bare house agreement, with
an initial lease of ten years, and an option for two times exten-
sion of five years. The annual CPI adjusted lease rate is NOK
2.8 million from 1 January 2022.
First Seafood is owned by Insula, KMC Properties’ second
largest tenant.
Financial review
As mentioned above, the owners of KMC Properties AS and
KMC Properties ASA (previously Storm Real Estate ASA),
completed a transformative agreement on 20 December
2020, combining the two companies. The transaction was
accounted for as a reverse takeover with KMC Properties
AS being identified as the accounting acquirer. Thus, con
-
solidated financial statements have been prepared as if KMC
Properties ASA is a continuation of KMC Properties AS.
As a result of KMC Properties AS being the accounting
acquirer, the reported numbers in the consolidated statement
of comprehensive income for the full year 2020, includes only
the numbers for KMC Properties AS from 26 May 2020 which
is the date from when the company had operational activi-
ties, i.e., not Grøntvedt Næringsbygg AS, Pesca Property AS,
former Storm Real Estate ASA and the four properties in the
Netherlands, which was included into the consolidated figures
for the group from 1 January 2021. This means that financials
for 2020 are not comparable to those of 2021.
The following financial review is based on the consolidated
financial statements of KMC Properties ASA and its subsidi-
aries. The statements have been prepared in accordance with
International Financial Reporting Standards (IFRS).
Profit and loss
KMC Properties had a total rental income of NOK 226.1 mil-
lion for 2021, up from NOK 51.8 million for 2020. Since most
of the group’s lease agreements are triple net bare house
agreements, direct property costs are relatively low. Hence
net operating income amounted to NOK 214.6 million for the
full year of 2021, up from NOK 49.0 million for 2020.
Employee benefit and salary expenses amounted to NOK
22.5 million for 2021, compared to NOK 1.9 million for 2020.
The company significantly strengthened its organisation dur-
ing 2021.
Other operating expenses were NOK 44.2 million for 2021,
compared to NOK 16.7 million for the previous year. The oper-
ating expenses mainly include legal and other advisory fees
related to investment and financing activities.
KMC Properties recorded an operating profit before invest-
ment property fair value adjustments of NOK 147.8 million for
2021, up from NOK 30.4 million for 2020.
Change in fair value adjustments on investment property was
NOK 310.1 million for 2021 compared to NOK 404.6 million
for the previous year.
Net financial expenses including fair value change of financial
instruments and net currency exchange differences amounted
to NOK 75.7 million compared to NOK 28.0 million for the
previous year.
Tax expense for 2021 was NOK 77.4 million, of which NOK
2.9 million is tax payable and the remaining NOK 74.5 million
is change in deferred tax. For 2020, the tax expense was
NOK 94.3 million.
KMC Properties
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Annual report 2021
35
Board of directors’ report
Net profit was NOK 304.8 million for 2021 and NOK 312.6 mil-
lion for 2020, while total comprehensive income came in at
NOK 281.0 million for 2021 and NOK 302.6 million for 2020.
Cash flow
Operating activities generated a cash inflow of NOK 75.7 mil-
lion for 2021 and NOK 25.0 million for 2020.
Investing activities, including investments in expansion pro-
jects and new facilities, as well as acquisitions of new prop-
erties, generated a cash outflow of NOK 660.1 million for 2021
and NOK 1 052.0 million for 2020.
Financing activities led to a cash inflow of NOK 664.7 million
for 2021 due to increase in interest bearing debt and equity
issues. For 2020, financing activities led to a cash inflow of
NOK 1 151.9 million, mainly related to the bond issue.
Financial position
KMC Properties’ assets amounted to a total of NOK 4 333.2
million on 31 December 2021, up from NOK 3 294.6 million
on 31 December 2020.
KMC Properties’ investment properties were valued at NOK
4 001.6 billion at year-end 2021, up from NOK 3 089.8 mil-
lion at the end of 2020. The portfolio is valued by Cushman
& Wakefield quarterly. Of the change in value for the year of
NOK 911.8 million, expansion projects, investments in new
facilities, and acquisitions amounted to a total of NOK 660.1
million. In addition, fair value adjustments amounted to NOK
310.1 million, while translation adjustments contributed to a
negative NOK 58.5 million.
On 31 December 2021, other assets consisted primarily of
interest rate and currency rate swap agreements of NOK
67.7 million, trade receivables at NOK 24.5 million, prepaid
expenses, VAT receivables, tax receivables, and other cur-
rent receivables at NOK 26.9 million, as well as NOK 207.5
million in cash.
Total non-current liabilities amounted to NOK 2 436.3 million at
the end of the year, up from NOK 1 909.0 million at the end of
2020. The liabilities consist mainly of interest-bearing debt of
NOK 2 275.0 million, deferred tax liabilities of NOK 132.0 mil-
lion, and land lease liabilities of NOK 19.1 million. Total current
liabilities amounted to NOK 60.9 million and consisted of trade
payables of NOK 23.6 million, current tax liabilities of NOK
2.9 million and other income tax payable NOK 34.4 million.
Total equity was NOK 1 836.0 million on 31 December 2021,
Klubben næringspark: Property is located in Senja, northern part of Norway. The tenant BEWI
produces fish boxes made from EPS to the new fish farming facility of Salmar, InnovaNor. The building
was completed in 2021 and is one of KMC Properties' most recent development projects.
Annual report 2021
|
KMC Properties
36
Board of directors’ report
representing an equity ratio of 42.4 per cent, compared to NOK
1 243.1 million at the end of 2020, an equity ratio of 37.7 per cent.
Research and development
KMC Properties does not have any activities classified as
research and development.
Going concern
The annual financial statements for 2021 have been prepared
on the assumption that KMC Properties is a going concern
pursuant to section 3-3a of the Norwegian Accounting Act.
With reference to the group’s results and financial position, as
well as forecasts for the years ahead, the conditions required
for continuation as a going concern are hereby confirmed
to exist. In the opinion of the board of directors, the group’s
financial position is good.
Parent company results and allocation of net
profit
The parent company had a profit before taxes of NOK 10.3
million for 2021, and a change in deferred tax assets of NOK
0.1 million, recording a net profit of NOK 10.2 million. As a
comparison, the parent company had a profit before taxes
of NOK 67.5 million for 2020, and a change in deferred tax
assets of NOK 45.2 million, thus recording a net profit of NOK
112.7 million for 2020.
The board proposes the following allocation of the net profit
of NOK 10.2 million for the parent company:
Transferred to other equity NOK 10.2 million.
Risk factors and risk management
KMC Properties is subject to several risks, including mar-
ket, operational and financial risks. The management and the
board are working to expand the structure of the group’s risk
management process.
Market risk
The group is exposed to the economic cycle and macroeco-
nomic fluctuations, and changes in the general global economic
situation, such was the level of inflation and the rate of economic
growth, could materially affect the value of the group’s assets,
including the value of the property portfolio. An economic down-
turn may decrease the market value of some or all the group’s
properties. In addition, any changes in the commercial prop-
erty industry in which the group operates could have a nega-
tive effect on the property value, including, among other things:
■ Reduction in the demand for commercial properties;
■ Reduced availability and increased cost of financing for
commercial properties; and
■ Slowdown in the market for the sale of commercial
properties.
Any significant reduction in property value would have a nega-
tive impact on the group’s future earnings and financial position.
Operational risk
The group owns several properties. On 31 December 2021, the
average remaining lease term of the contracts for the proper-
ties was 10.4 years. In the event the group is unable to let its
properties upon expiry of lease agreements or if lease agree-
ments are terminated, the group will suffer a rental shortfall,
and may also be obliged to cover the common costs for the
vacant areas until the property is re‐let. Expenditures related
to a property, such as renovation and maintenance costs, are
generally not reduced in proportion to any decline in rental
income from that property. Consequently, should the group
be unable to re‐let its properties upon the expiry or termina-
tion of lease agreements, this could have a material adverse
effect on the group’s financial condition, results of operations
and cash flows.
Further, the failure by tenants of the group to meet their obli-
gations could also result in significant loss of rental income
for the group and could lead to a decrease in the value of the
group’s properties which in turn would negatively affect the
group’s financial condition.
Financial risks
Failure to comply with covenants in financing arrangements
may have a material adverse effect on the company. If the
company breaches covenants under the loan agreement
for the senior secured callable bonds of NOK 1 850 million
issued by the company, this loan may be subject to an imme-
diate re‐payment obligation. There can be no assurances that
the group will be able to meet its obligations under current
or future financing arrangements. Any breach of existing or
future debt covenants and undertakings with a subsequent
claim for repayment in full or in a part of the outstanding debt
will have a material adverse effect on the group’s financial
position, operations, and prospects.
Risks related to the valuation of the property portfolio
The group’s investment properties are measured at their
fair value by the independent external valuer Cushman &
Wakefield Debenham Tie Leung Limited. The valuations are
based on the individual property’s assumed future cash flows,
and property values are arrived at by discounting cash flows
with an individual risk-adjusted required rate of return. Cush-
man & Wakefield has performed its valuations based on the
information it has received from the group, including lease
contracts, estimated development costs, and expected let-
table area, estimated future market rents, yields, inflation and
other relevant parameters, and has not undertaken any tech-
nical inspection of the properties nor made any assessment
of legal concerns related to the properties. Because of the
uncertainty surrounding the input Cushman & Wakefield has
KMC Properties
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Annual report 2021
37
Board of directors’ report
received, in particular with respect to expected market rents,
discount rates and inflation, estimates of sellable or lettable
areas and estimated development costs for projects still in
development, there can be no assurance that the fair values
assigned to the group’s properties accurately reflect the pro-
ceeds that the group will be able to generate from any sale of
such properties in the future. Moreover, valuation methods
that are currently generally accepted and that have been used
for the purpose of developing the fair value of the group’s
properties could subsequently be determined to have been
unsuitable. Revised valuation techniques, erroneous valua-
tions in connection with acquisition of property portfolios and
other unforeseeable events could result in the group being
unable to achieve its projected yields and could have signif-
icant adverse effects on the group’s business, financial con-
dition, results of operations and cash flows.
Foreign exchange
The group is exposed to foreign currency exchange rate fluc-
tuations. The group operates internationally, and a significant
part of its business is conducted in countries with other cur-
rencies than NOK, which is the group’s functional currency,
with rental income from the group’s properties being received
in DKK, SEK, EUR, and RUB (in addition to NOK). Conse-
quently, fluctuations in DKK, SEK, EUR, and RUB against
NOK could adversely affect the financial results of the group.
Liquidity risk
Prudent liquidity risk management implies maintaining suf-
ficient cash and marketable securities and the availability of
funding to meet obligations when due and to close out mar-
ket positions. The group's strategy for managing liquidity risk
is to have sufficient liquidity at all times to meet its financial
liabilities at maturity, both under normal and exceptional cir-
cumstances, without risking unacceptable losses or at the
expense of the group's reputation.
For a full overview of the potential risks and uncertainties
relating to the group’s business and the industry in which it
operates, please refer to the notes to the financial statements.
Sustainability
KMC Properties sets high ethical standards, and communi-
cation with the outside world is to be open, clear, and hon-
est. The group is responsible for ensuring safe and good
workplaces in the local communities where it is present.
KMC Properties seeks to create value for society, custom-
ers, employees, and shareholders.
KMC Properties does not pollute the external environment to
any material extent and does not have operations that require
special discharge permits or cleaning measures. Waste is
sorted according to the requirements applicable at the var-
ious locations.
KMC Properties is subject to corporate responsibility report-
ing requirements under section 3-3c of the Norwegian
Accounting Act. A separate sustainability report is included
in this annual report, which has been prepared with reference
to the Global Reporting Initiative (GRI) Standards (2021). The
report covers material environmental, social, and economic
impacts and the management approach of KMC Properties
for the calendar year 2021. The report aligns with the com-
pany’s financial reporting period.
KMC Properties has operations in Russia, where corruption is
a greater challenge than in Norway. The company is aware of
this and has introduced procedures and routines to its daily
operations to reduce the risk of corruption. The company
is conscious of its role in society related to combating cor-
ruption and operates with a high level of transparency. The
board is not aware of any cases of corruption related to the
group’s operation and will continue to focus closely on this
in the future.
Employees and organisation
The competence of its employees represents a major asset
and competitive advantage for KMC Properties.
At the end of 2021, the group employed a total of 15 people,
up from seven at the end of 2020. The group had an average
of 12 FTEs in 2021 (no comparable number for 2020 as the
group was established in December 2020).
Nine of the employees were based in Norway, including eight
in Trondheim and one in Oslo, and six employees were based
in Russia.
There were no serious work-related accidents in 2021 or 2020.
Sick leave in KMC Properties was 3.5 per cent in 2021, com-
pared to 1.1 per cent in 2020.
Strengthened organisation
During 2021, KMC Properties significantly strengthened key
functions in the group, including accounting, financing, and
property management to secure good internal control and
operational follow up of existing properties.
Kristoffer Holmen was appointed chief financial officer (CFO)
of the company, effective from 1 June 2021. Holmen previ-
ously held the position as CFO of Storm Capital Management,
and from 2018 to 2020 as CEO/CFO of Storm Real Estate
ASA. Further, Kristoffer Formo was appointed Head of M&A.
Formo has more than 20 years’ experience from the finance
and real estate business.
Early 2022, Ove Rød Henriksen was appointed chief account-
ing officer (CAO) of the group. Henriksen has previously held
the position as CFO of Siva, the Industrial Development Cor-
Annual report 2021
|
KMC Properties
38
Board of directors’ report
poration of Norway, and as Manager with Deloitte. He is
a state authorised public accountant and holds a MSc in
Finance from Norwegian University of Science and Technol-
ogy and a MSc in Accounting and Auditing from the Norwe-
gian School of Economics.
Equal opportunities
KMC Properties is committed to ensuring that people with dif-
ferent backgrounds, irrespective of ethnicity, gender, religion,
sexual orientation, or age, should all have the same oppor-
tunities for work and career development at KMC Properties.
KMC Properties takes its social responsibility seriously. In
addition to ensuring that the work is carried out safely this
involves respecting the freedom of association and not
accepting any form of forced labour, child labour or work-re-
lated discrimination.
The corporate management team has four male and one
female member, who is the chief executive officer (CEO). The
board of directors has four male and three female members.
Corporate governance
Good corporate governance provides the foundation for long-
term value creation, to the benefit of shareholders, employ-
ees, and other stakeholders. The board of directors of KMC
Properties has established a set of governance principles to
ensure a clear division of roles between the board of direc-
tors, the executive management, and the shareholders. The
principles are based on the Norwegian Code of Practice for
Corporate Governance.
KMC Properties is subject to annual corporate governance
reporting requirements under section 3-3b of the Norwegian
Accounting Act and the Norwegian Code of Practice for Cor-
porate Governance, cf. section 4.4 of the Oslo Rule Book II,
rules for issuers listed at the Oslo Børs. The Accounting Act
may be found (in Norwegian) at www.lovdata.no. The Nor-
wegian Code of Practice for Corporate Governance, which
was last revised on 14 October 2021, may be found at www.
nues.no.
KMC Properties has taken out directors’ liability insurance
for the Group and subsidiaries. The insurance covers the
Board’s legal personal liability for financial damage caused
by the performance of their duties.
The annual statement on corporate governance for 2021 has
been approved by the board and can be found in a separate
section of this annual report.
Share and shareholders
KMC Properties ASA is listed on the Oslo Børs (Oslo Stock
Exchange) under the symbol KMCP.
The company had a total of 284 643 649 issued and outstand-
ing shares as of 7 April 2022, each with a nominal value of
NOK 0.20.
KMC Properties has one share class, and all shares have
equal rights. The shares are registered in the Norwegian Cen-
tral Securities Depository (VPS). The company's registrar is
DNB Markets. The shares carry the securities number ISIN
NO 001 0360175.
On 7 April, the 20 largest shareholders of KMC Properties
ASA held 93.86 per cent, of which the largest shareholders
are BEWI Invest AS, owned 70 per cent by the Bekken family,
holding a total of 45.87 per cent, and Kverva Industrier AS,
holding 24.11 per cent.
The shares held by Kverva was on 1 April 2022 announced
sold to BEWI Invest on a forward contract, with delivery 1
October 2022. Further, BEWI Invest has entered a condi-
tional share sales agreement with HAAS AS, for sales of
67 250 000 shares in connection with delivery of the shares
from Kverva.
Dividends
KMC Properties' dividend policy is based on the principle
of fair distribution of profit among all its shareholders, con-
sidering a rational correla tion of the amount paid in divi-
dends and the funds needed to carry out the company's
growth strategy.
The company anticipates paying div idends according to
a pay‐out ratio of 30 to 50 per cent of the company’s net
income in the coming years. The board has not proposed
dividend distribution in 2022 based on the financial year of
2021, due to the company's M&A opportunities for 2022.
General meeting
On 2 June 2021, KMC Properties held its annual general meet-
ing. All resolutions proposed by the board were approved,
including the recommendations made by the nomination com-
mittee. Thorbjørn Pedersen was elected as new board mem-
ber, replacing Børge Klungerbo.
KMC Properties’ annual general meeting for 2022 is planned
to be held on 1 June 2022.
Subsequent events
Acquisition of herring production facility in Sweden
from Klädesholmen Seafood for SEK 90 million
On 21 January 2022, KMC Properties announced the acqui-
sition of a herring production and cold storage facility in
Rönnäng, in the Swedish country of Västra Götaland, from
Klädesholmen Seafood AB for approximately SEK 93.6 mil-
lion (approximately NOK 90 million).
KMC Properties
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Annual report 2021
39
Board of directors’ report
The property includes 19.873 sqm BTA of land and 11.670 sqm
BTA of buildings, and a triple-net bare house agreement with
Klädesholmen Seafood with an initial lease term of 15 years
and a gross yield of 7.5 per cent.
Klädesholmen Seafood, which is owned by Grøntvedt Pelagic
AS, KMC Properties’ fourth-largest tenant, is a modern her-
ring production company. NOK 30 million of the consideration
was settled by issuance of new shares in KMC Properties to
the seller at a subscription price equal to the volume weighted
average share price for trades in the company’s shares on
the Oslo Stock Exchange the last 30 days prior to the date of
completion of the transaction. The remainder, approximately
NOK 64 million was settled in cash.
Acquisition of meat processing facility near Narvik in
Northern Norway for NOK 100 million
On 2 February 2022, KMC Properties announced that it had
acquired a modern meat processing facility, strategically
located at Fagernes near Narvik in Norway, from Kubera AS.
The property is composed of 10 303 m
2
BTA of land and 6 093
m
2
BTA of building that was erected in 1998 and substantially
upgraded in 2001 and 2003. The meat processing facility is
strategically located south of Narvik city center, near the E6
motorway, the railway and port terminal.
The property came with a bare house agreement with the ten-
ant, Kuraas AS, which is on a 6.5-year lease with the option to
extend. Kuraas is a Norwegian producer and seller of meats,
headquartered in Narvik. The company has approximately 110
employees and reported NOK 212 million in revenues in 2020.
The total consideration for the property was approximately
NOK 100 million, with a gross yield of 7.8 per cent. The acqui-
sition was completed on 10 February 2022 and financed
through a combination of bank loan and equity.
Progress to new conditional agreement with
Slakteriet for development of NOK 620 million salmon
slaughterhouse facility
On 9 February 2022, with reference to stock exchange
announcement of 23 August 2021, regarding the company’s
LOI with Slakteriet Holding AS to build a new salmon slaugh-
terhouse facility at Florø (see above section), KMC Properties
announced the signing of a process agreement, confirming the
initial plans for expected completion during the first half of 2024.
Through the process agreement the parties have agreed upon
a triple-net bare house agreement which shall be entered into
if and when the parties reach a final decision to complete the
project. The lease agreement shall have an initial lease term
of 20 years, with the option of a 4x5-year extension. Following
the LOI in August 2021, a legal and technical due diligence
have been successfully performed. The investment is esti-
mated at approximately NOK 620 million, with a yield-on-cost
of approximately 6.75 per cent.
Russian invasion of Ukraine
Russia’s invasion of Ukraine, and the sanctions imposed on
Russia following the invasion, has significantly increased the
risk related to KMC Properties’ property in Moscow, Russia,
including the book value of the property and the rental income.
On 15 March 2022, KMC Properties announced that the com-
pany expects an impairment related to the property value to
be booked in the first quarter of 2022. As of 31 December
2022, the building was booked at NOK 143 million, represent-
ing 3.6 per cent of the total portfolio value. The net operating
income from the property was NOK 9.1 million in 2021.
Outlook
In 2021, KMC Properties delivered on its ambitious growth
strategy. The company announced a total of five acquisitions
and three development projects, significantly increasing its
annual rental income, and reaching its announced ambition
of a portfolio value of approximately NOK 4 billion at the end
of the year.
Going into 2022, KMC Properties has a strong organisation,
a solid financial platform, an increasingly diversified prop-
erty portfolio, and an attractive pipeline of opportunities. The
opportunities and investment projects include greenfield and
expansion projects together with existing customers, and a
series of M&A opportunities in line with its strategic priorities.
The board believes the company will continue to deliver on its
growth ambitions, with the strategic target of having a NOK 8
billion real estate portfolio by the end of 2025 well within reach.
The board wishes to express its gratitude to KMC Properties’
employees, including the executive management, for their
dedicated efforts, contributing to KMC Properties’ strong
growth and successful development.
Trondheim, Norway, 27 April 2022
The board of directors and CEO
KMC Properties ASA
Anders Dyrseth Morten Eivindssøn Astrup Nini Høegh Nergaard Anna Musiej Aanensen
Chair Director Director Director
Stig Wærnes Marianne Bekken Thorbjørn Fjærtoft Pedersen Liv Malvik
Director Director Director Chief executive officer
Annual report 2021
|
KMC Properties
40
Board of directors’ report
Responsibility statement by the
board of directors and CEO
We confirm, to the best of our knowledge, that
■ The group financial statements for the period from
1 January to 31 December 2021 have been prepared
in accordance with IFRS, as adopted by the EU
■ The financial statements of KMC Properties ASA for
the period from 1 January to 31 December 2021 have
been prepared in accordance with IFRS, as adopted
by the EU, and accounting standards and practices
generally accepted in Norway
■ The financial statements give a true and fair view of
the group and the company’s consolidated assets,
liabilities, financial position, and results of operations
■ The report of the board of directors provides a true
and fair view of the development and performance
of the business and the position of the group and
the company, together with a description of the key
risks and uncertainty factors that the group and the
company is facing
Trondheim, Norway, 27 April 2022
The board of directors and CEO
KMC Properties ASA
Anders Dyrseth Morten Eivindssøn Astrup Nini Høegh Nergaard Anna Musiej Aanensen
Chair Director Director Director
Stig Wærnes Marianne Bekken Thorbjørn Fjærtoft Pedersen Liv Malvik
Director Director Director Chief executive officer
KMC Properties
|
Annual report 2021
41
Board of directors’ report
Annual report 2021
|
KMC Properties
42
Financial statements
KMC Properties group
Consolidated statement of comprehensive income ...... 44
Consolidated statement of nancial position ................. 45
Consolidated statement of cash ows ............................. 46
Consolidated statement of changes in equity ................ 47
Notes to the consolidated nancial statements ............. 48
Note 01 Company information ...............................................48
Note 02 Basis of preparation and accounting principles ......48
Note 03 Summaryofsignicantaccountingpolicies ............49
Note 04 Signicanteventsandtransactions .........................52
Note 05 Financial risk management .......................................54
Note 06 Critical accounting estimates and judgements ........57
Note 07 Tenancy agreements ................................................. 57
Note 08 Other operating expenses ........................................58
Note 09 Personnel costs.........................................................59
Note 10 Finance income and costs ........................................ 60
Note 11 Investmentproperty ................................................. 61
Note 12 Otherreceivablesandnancialderivatives .............62
Note 13 Cash and Bank depositis .......................................... 62
Note 14 Shareholder capital and shareholders .....................63
Note 15 Tax .............................................................................64
Note 16 Loans from credit institutions ...................................66
Note 17 Otherlong-termliabilities .........................................68
Note 18 Othercurrentliabilities .............................................. 68
Note 19 Changesinliabilitiesarisingfrom
nancingactivities ....................................................69
Note 20 Subsidiaries ...............................................................70
Note 21 Related party transactions .......................................71
Note 22 Earnings per share ....................................................72
Note 23 Subsequentevents ..................................................72
Alternative Performance Measures .....................................72
Definitions ...............................................................................73
KMC Properties ASA
Statement of comprehensive income ............................. 74
Statement of nancial position ......................................... 75
Statement of cash ows .................................................... 76
Statement of changes in equity ........................................ 77
Notes to the nancial statements .................................... 78
Note 01 Accounting principles ...............................................78
Note 02 Investmentinsubsidiaries ........................................78
Note 03 Borrowings ................................................................78
Note 04 Financial instruments ................................................80
Note 05 Finance income and costs ........................................ 81
Note 06 Other operating expenses ........................................82
Note 07 Personnel costs.........................................................82
Note 08 Othercurrentliabilities .............................................. 83
Note 09 Income tax .................................................................83
Note 10 Deferred tax...............................................................84
Note 11 Share capital and shareholdes .................................84
Note 12 Related party transactions .......................................84
Independent Auditor’s report ............................................ 87
Financialstatements 2021
KMC Properties
|
Annual report 2021
43
Financial statements
Consolidated statement of comprehensive income
Amounts in NOK thousand Note 2021 2020
Rental income 7 226 145 51 797
Total income 226 145 51 797
Property related expenses 7 11 527 2 821
Salary expenses 9 22 536 1 871
Other operating expenses 8 44 240 16 663
Total operating expenses 78 303 21 355
Operating profit (loss) before investment property fair value adjustments 147 843 30 442
Change in fair value adjustments on investment property 6, 11 310 147 404 572
Total operating profit (loss) 457 989 435 014
Fair value change of financial instruments 10 63 812 -
Net currency exchange differences (47 027) (5 960)
Financial income 10 6 929 275
Financial expenses 10 99 433 22 388
Net financial income (expense) (75 719) (28 073)
Earning before tax (EBT) 382 271 406 941
Tax expense 15 77 423 94 310
Profit for the period/year (Net income) 304 847 312 631
Other Comprehensive Income:
Items that may be reclassified to profit or loss:
Other comprehensive income (translation reserves) 4 (23 818) (10 059)
Tax on comprehensive income - -
Other comprehensive income for the period, net of tax (23 818) (10 059)
Total comprehensive income for the period 281 029 302 572
Profit attributable to:
Equity holders of the company 304 847 312 631
Non-controlling interest - -
Total comprehensive income attributable to:
Equity holders of the company 281 029 302 572
Non-controlling interest - -
Earnings per share
Continuing operations
Basic = Diluted (NOK) 22 1.2 4.1
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Consolidated statement of nancial position
Amounts in NOK thousand Note 31.12 .2021 31.12.2020
ASSETS
Non-current assets
Investment properties 6, 11 4 001 593 3 089 750
Financial derivatives 5, 12 67 721 8 175
Other long term assets 12 5 042 207
Total non-current assets 4 074 355 3 098 132
Current assets
Trade receivables 12 24 458 36 418
Other receivables, prepaid expenses, and tax 12 26 869 34 910
Cash and cash equivalents 13 207 512 125 116
Total current assets 258 839 196 444
Total assets 4 333 194 3 294 576
Equity
Share capital 14 56 374 48 153
Share premium 1 196 023 892 397
Total paid-in equity 1 252 398 940 550
Retained earnings and translation reserves
Translation reserves (33 877) (10 059)
Retained earnings 617 479 312 631
Total retained earnings and translation reserves 583 601 302 572
Total equity 1 835 999 1 243 122
LIABILITIES
Non-current liabilities
Deferred tax liabilities 15 132 002 49 965
Interest bearing debt 16 2 275 035 1 832 345
Other long-term liabilities 17 29 279 26 643
Total non-current liabilities 2 436 317 1 908 953
Current liabilities
Trade payables 18 23 608 36 404
Income tax payable 15, 18 2 906 5 232
Other current liabilities 18 34 364 100 865
Total current liabilities 60 878 142 501
Total liabilities 2 497 195 2 051 454
Total equity and liabilities 4 333 194 3 294 576
Trondheim, Norway, 27 April 2022, the board of directors and CEO, KMC Properties ASA
Anders Dyrseth Morten Eivindssøn Astrup Nini Høegh Nergaard Anna Musiej Aanensen
Chair Director Director Director
Stig Wærnes Marianne Bekken Thorbjørn Fjærtoft Pedersen Liv Malvik
Director Director Director CEO
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Consolidated statement of cash ows
Amounts in NOK thousand Note 2021 2020
Cash flows from operating activities
Earnings before tax 382 271 406 941
Depreciation of tangible assets 308 18
Fair value adjustment of investment properties 4 (310 147) (404 572)
Financial items 75 719 22 013
Change in working capital:
- change in trade and other receivables 20 001 (63 540)
- change in trade and other payables, excl. corporate tax (88 145) 64 186
Taxes paid (2 326) -
Net cash flow from operating activities 77 681 25 046
Acquisition of businesses, net of cash acquired - (1 051 956)
Purchase of investment properties (520 082) -
Capital expenditure on investment properties (140 064) -
Net cash flow from investment activities (660 146) (1 051 956)
Cash flows from financing activities
Capital increase from issue of shares 5 326 394 259 993
Proceeds interest bearing debt 5 439 480 1 850 000
Repayment of interest-bearing debt (2 790) (923 345)
Change in other long term debt 2 636 -
Transaction fees paid and other financial costs 5 (14 547) (17 655)
Interest paid (86 504) (17 103)
Net cash flow from financing activities 664 669 1 151 890
Effects of exchange rate changes on cash and cash equivalents 191 135
Net change in cash and cash equivalents 82 396 125 116
Cash and cash equivalents at beginning of period 16 125 116 -
Cash and cash equivalents at end of period 207 512 125 116
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Consolidated statement of changes in equity
Amounts in NOK thousand Note
Share
capital
Share
premium
Translation
reserves
Retained
earnings
Total
equity
Issue of shares 14 30 (9) - - 21
Issue of shares - liquidation 14 (30) - - - (30)
Issue of shares 14 1 000 199 000 - - 200 000
Issue of shares 14 294 244 200 - - 244 494
Reverse takeover 14 29 441 (129 961) - - (100 520)
Reverse takeover 14 1 767 14 785 - - 16 552
Reverse takeover 14 5 365 227 693 - - 233 058
Issue of shares 14 8 571 291 429 - - 300 000
Issue of shares 14 1 714 58 286 - - 60 000
Transaction cost issue of shares - (13 026) - - (13 026)
Profit /(loss) for the period - - - 312 631 312 631
Other comprehensive income (translation reserves) - - (10 059) - (10 059)
Total equity at 31. December 2020 48 153 892 397 (10 059) 312 631 1 243 122
Issue of Shares 14 196 6 398 - - 6 594
Issue of Shares 14 7 500 292 500 - - 300 000
Issue of Shares 14 525 19 275 - - 19 800
Transaction cost issue of shares - (14 547) - - (14 547)
Profit /(loss) for the period - - - 304 847 304 847
Other comprehensive income (translation reserves) - - (23 818) - (23 818)
Total equity at 31. December 2021 56 374 1 196 023 (33 877) 617 478 1 835 999
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Notes to the consolidated nancial statements
Note 01 Company information
The KMC Properties ASA real estate Group conducts business in
Europe. The group’s business idea is primarily to acquire and man-
age commercial industry and logistics properties. The property
portfolio is mainly comprising industrial and logistics properties,
in addition to a smaller proportion office property. The holding
company, KMC Properties ASA, is a public limited liability com-
pany with headquarter in Trondheim, Norway.
In December 2020 KMC Properties ASA (formerly Storm Real
Estate ASA) completed the acquisition of all the issued and
outstanding shares in KMC Properties AS. The transaction is
accounted for as a reversed takeover with KMC Properties AS
being identified as the accounting acquirer. Thus, these consoli-
dated financial statements have been prepared as if KMC Prop-
erties ASA is a continuation of KMC Properties AS.
The company's shares are listed on the Oslo Stock Exchange
under the ticker “KMCP”.
The consolidated financial statements were adopted by the com-
pany’s board on 27 April 2022 for final approval by the general
meeting on 1 June 2022.
Note 02 Basis of preparation and accounting principles
2.1 Basis of Preparation
The financial statements are prepared in accordance with appli-
cable IFRS standards and interpretations, as adopted by the EU,
as well as additional Norwegian reporting requirements pursu-
ant to the Norwegian Accounting Act. The financial statements
of the subsidiaries are prepared for the same reporting period as
the parent company.
The financial statements include KMC Properties ASA and subsid-
iaries. Acquired properties are included in the financial statements
from the date of acquisition. Management makes estimates and
assumptions concerning the future. The accounting estimates will
by definition seldom be fully in accordance with the final outcome.
Estimates and assumptions which have a significant risk of caus-
ing a material adjustment to the carrying amounts of assets and
liabilities relate primarily to the valuation of investment property.
All notes are in NOK thousands, unless otherwise is indicated.
The consolidated financial statements have been presented on
the assumption of the business being a going concern.
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 December 2021 reporting periods and have not
been early adopted by the group. These standards, amendments
or interpretations are not expected to have a material impact on
the entity in the current or future reporting periods and on fore-
seeable future transactions.
2.2 Accounting principles
The consolidated financial statements are based on historical
cost, except for the following:
■
Financial instruments at fair value through profit or loss.
■
Investment properties which are measured at fair value.
The consolidated financial statements have been prepared on the
basis of uniform accounting principles for similar transactions and
events under otherwise similar circumstances.
2.3 Basis of consolidation and business combinations
Subsidiaries are all entities over which the group has control. Con-
trol exists when the group is exposed to, or has rights to, variable
returns as a result of involvement with the company, and the group
is able to impact returns through its power over the company.
Control is normally achieved when the group owns – directly or
indirectly – more than 50 per cent of the voting shares in the
company. The effect of any existing voting rights resulting from
exercisable options is included in the assessment of control. The
group also assesses whether control exists where fewer than 50
per cent of the voting rights are held, but the group is neverthe-
less in a position to control the relevant activities.
Such companies are included in the consolidated financial state-
ments from the date on which the group obtains control over the
company. In the same way, the company is deconsolidated when
control over the company ceases.
The acquisition method is applied to business combinations. The
consideration transferred is measured at the fair value of assets
transferred, liabilities incurred, and equity instruments issued.
The consideration also includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Costs related to business combinations are expensed as incurred.
Identifiable assets and liabilities are recognised at fair value at
the acquisition date. Non-controlling interests in the acquiree are
measured on a case-by-case basis either at fair value or at their
share of the acquiree’s net assets.
For accounting purposes, acquisitions of subsidiaries that do not
constitute a business as defined in IFRS 3, such as acquisitions
where substantially all of the fair value of the gross assets acquired
is concentrated in a single property or group of similar properties,
are treated as asset acquisitions. The cost of acquisition is then
attributed to the individual identifiable assets and liabilities based
on their relative fair values on the acquisition date. Expenses asso-
ciated with the transaction are capitalised under the investment
property. In such cases, deferred tax liabilities or assets are not
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recognised, except for deferred taxes related to losses carried
forward, in accordance with the exceptions in IAS 12.
In the case of a step acquisition, equity interests from previ-
ous acquisitions are remeasured at the control date to fair value
through profit and loss. Any contingent consideration is recog-
nised at fair value at the acquisition date. In accordance with IFRS
9, subsequent changes to the fair value of the contingent consid-
eration are recognised in the income statement or as a change to
other comprehensive income if the contingent consideration is
classified as an asset or liability. Contingent considerations clas-
sified as equity are not remeasured, and subsequent settlement
is entered against equity.
Intra-company transactions, balances, and unrealised gains and
losses on transactions between group companies are eliminated.
The financial statements of subsidiaries are restated where neces-
sary to achieve consistency with the group's accounting policies.
2.4 Functional currency and presentation currency
The group’s presentation currency is NOK. Each entity in the
group determines its own functional currency, and items included
in the income statement of each entity are measured using that
functional currency. The functional currency is the currency within
the primary economic environment in which the entity operates.
Transactions in foreign currencies are initially recorded in the
functional currency at the rate on the transaction date. Monetary
items denominated in foreign currencies are translated using the
functional currency spot rates of exchange on the reporting date.
Non-monetary items that are measured at historical cost in a for-
eign currency are translated using the exchange rate at the date
of the initial transaction. Non-monetary items measured at fair
value in a foreign currency are translated using the rate on the
reporting date. All currency translation differences are recognised
in the income statement.
The assets and liabilities of foreign entities are translated into the
presentation currency at the rate on the reporting date, and related
income statement items are translated at average exchange rates
per quarter. Currency translation differences arising on the trans-
lation are recognised as other comprehensive income. In the con-
solidated financial statements, currency translation differences
linked to net investments in foreign operations are included in
other comprehensive income until disposal of the net investment,
at which point they are recognised in the income statement.
2.5 Segment information
KMC Properties ASA is a real estate company focused on owning
industrial- and logistics properties. There are no material differ-
ences in risks and returns in the economic environments in which
the company operates. Consequently, the company is only pres-
ent in one business segment. KMC Properties ASA is present in
following geographic markets per 31 December 2021:
Amounts in
NOK million
Norway Sweden Denmark Netherland Finland Russia Total
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Rental income 122 29 28 12 24 11 27 - 5 - 21 1 226 52
Investment property 2 643 1 761 362 382 383 351 415 388 57 61 143 146 4 002 3 090
According to IFRS 8, disclosure must be made if revenue from a
single customer exceeds 10%. KMC Properties ASA has rental
income from 4 customers that exceeds 10% of total rental income
in 2021:
Amounts in
NOK million
BEWI Insula Grøntvedt PSW Other Total
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Rental income 93.9 34.6 47.5 - 24.2 - 10.8 - 49.7 17. 2 226 52
Investment property 42% 67% 21% 0% 11% 0% 5% 0% 22% 33% 100% 100%
Note 03 Summary of significant accounting policies
3.1 Investment property
Investment property comprises completed property held to gener-
ate rental income or for capital appreciation or both. Property held
under a lease is classified as investment property when the definition
of an investment property is met. Investment proper ty is recognised
initially at cost including transaction costs. Transaction costs include
transfer taxes, professional fees for legal services and initial leasing
commissions to bring the property to the condition necessary for it
to be capable of operating. The carrying amount also includes the
cost of replacing part of an existing investment property at the time
that cost is incurred if the recognition criteria are met.
Subsequent to initial recognition, investment property is carried
at fair value. Gains or losses arising from changes in fair value are
included in the income statement in the year in which they arise.
Investment property is derecognised when it has been disposed
of or permanently withdrawn from use and no future economic
benefit is expected from its disposal. Any gains or losses on the
withdrawal or disposal of investment property are recognised in
the income statement in the year of disposal. Gains or losses on
the disposal of investment property are determined as the dif-
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KMC Properties group
ference between net selling price and the carrying amount of the
asset at the time of sale.
3.3 Leases
(a) Where a group company is the lessee
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
■
Leases of low value assets; and
■
Leases with a duration of 12 months or less
Lease liabilities are measured at the present value of the con-
tractual payments due to the lessor over the lease term, with the
discount rate determined by reference to the rate inherent in the
lease unless (as is typically the case) this is not readily determi-
nable, in which case the group’s incremental borrowing rate on
commencement of the lease is used. Variable lease payments
are only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measure-
ment of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease pay-
ments are expensed in the period to which they relate.
(b) Where a group company is the lessor
Properties leased under operating leases are included in invest-
ment property in the company's statement of financial posi-
tion. Rental income is recognised over the term of the lease on
a straight-line basis.
At the start of a lease agreement tenants pay a security deposit.
This is treated as an advance payment from the tenants. The ten-
ants then continue to pay in advance for the term of their lease,
such that the level of the security deposit is maintained.
Some of the investment properties are on leased land, this land is
subleased together with the building on that land. The subleases
of the land is accounted for as operating lease agreements simi-
lar to the lease of the related investment properties and the lease
asset is included in the fair value of the investment property.
3.3 Financial assets
3.3.1 Classification, recognition and measurement
Financial assets within the scope of IFRS 9 are classified, at initial
recognition, and subsequently measured at amortised cost, fair
value through other comprehensive income (OCI), and fair value
through profit or loss.
The classification of financial assets at initial recognition depends
on the financial asset’s contractual cash flow characteristics and
the group’s business model for managing them. With the excep-
tion of trade receivables that do not contain a significant financ-
ing component or for which the group has applied the practical
expedient, the group initially measures a financial asset at its fair
value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost or fair value through other comprehensive income
(OCI), it needs to give rise to cash flows that are ‘solely payments
of principal and interest (SPPI)’ on the principal amount outstand-
ing. This assessment is referred to as the SPPI test and is per-
formed at an instrument level. Financial assets with cash flows
that are not SPPI are classified and measured at fair value through
profit or loss, irrespective of the business model.
The group’s business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the finan-
cial assets, or both. Financial assets classified and measured
at amortised cost are held within a business model with the
objective to hold financial assets in order to collect contrac-
tual cash flows.
The group measures financial assets at amortised cost if both of
the following conditions are met:
1) The financial asset is held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows, and
2) The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to impair-
ment. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified, or impaired.
Since the group’s financial assets (trade (rent) and other receiva-
bles, cash, and short-term deposits) meet these conditions, they
are subsequently measured at amortised cost. The group has
entered a cross currency interest rate swap, this derivative is car-
ried at fair value through profit or loss.
All the group’s currency-, interest-rate swaps and forward
exchange contracts are used as economic hedges. Hedge
accounting is not applied. Derivatives are initially recognised at
fair value at the date the derivative contract is entered into and are
subsequently recognised continuously at their fair value. Changes
in the fair value of derivatives are recognised in the income state-
ment under change financial income/expenses (see Note 10 & 12).
The realised payable part of the interest-rate swap agreements is
presented under financial cost.
3.3.2 Derecognition
A financial asset (or, where applicable, a part of a financial asset
or part of a group of similar financial assets) is primarily derec-
ognised (i.e., removed from the group’s consolidated statement
of financial position) when:
1)
The rights to receive cash flows from the asset have expired, or
2)
The group has transferred its rights to receive cash flows from
the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under
a ‘pass-through’ arrangement; and either (a) the group has
transferred substantially all the risks and rewards of the
asset, or (b) the group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has
transferred control of the asset
When the group has transferred its rights to receive cash flows
from an asset or has entered into a passthrough arrangement,
it evaluates if, and to what extent, it has retained the risks and
rewards of ownership. When it has neither transferred nor
retained substantially all of the risks and rewards of the asset,
nor transferred control of the asset, the group continues to
recognise the transferred asset to the extent of its continuing
involvement. In that case, the group also recognises an associ-
ated liability. The transferred asset and the associated liability
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are measured on a basis that reflects the rights and obligations
that the group has retained.
3.3.3 Impairment of trade (rent) receivables
For trade (rent) receivables the group applies a simplified
approach in calculating expected credit losses (ECLs). ECLs are
based on the difference between the contractual cash flows due
in accordance with the contract and all the cash flows that the
group expects to receive, discounted at an approximation of the
original effective interest rate. Therefore, the group does not track
changes in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date. The group has
established a provision matrix that is based on its historical credit
loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment. ECL at 31 December
2021 is immaterial, so no provisions have been made.
3.4 Financial liabilities
3.4.1 Classification, recognition and measurement
Financial liabilities are classified at initial recognition, and sub-
sequently measured at amortised cost, with some exemptions.
All financial liabilities are recognised initially at fair value and, in
the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The group’s financial liabilities include trade and other payables
and loans and borrowings including bank overdrafts.
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in profit or loss when the lia-
bilities are derecognised as well as through the EIR amortisa-
tion process.
Amortised cost is calculated by considering any discount or pre-
mium on acquisition and fees or costs that are an integral part of
the EIR. The EIR amortisation is included as finance expenses in
the statement of profit or loss.
3.4.2 Derecognition
A financial liability is derecognised when the obligation under the
liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is
treated as the derecognition of the original liability and the recog-
nition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
3.5 Trade (rent) receivables
Rent receivables are recognised at their original invoiced value
except where the time value of money is material, in which case
rent receivables are recognised at fair value and subsequently
measured at amortised cost. Refer to accounting policies on finan-
cial assets in note 3.4.
3.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits
held with banks. See note 16 for additional information regarding
the bond disposal account.
3.7 Share capital and treasury shares
Ordinary shares are classified as equity. Costs directly attributa-
ble to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. Own equity instruments
which are bought back (treasury shares) are recognised at cost
and deducted from equity. No gain or loss is recognised in the
income statement on the purchase, sale, issue, or cancellation of
the group’s own equity instruments. Any difference between the
carrying amount and the consideration, if reissued, is recognised
in other equity/ other contributed equity. Voting rights related to
treasury shares are cancelled and no provision is made for pay-
ment of dividends on treasury shares.
3.8 Related-party transactions
A person or a company (or other legal entities) is considered as
a related party if he, she or it, directly or indirectly, has the pos-
sibility to exercise control or influence over another party in con-
nection with financial and operational decisions. Parties are also
considered related if they are under control or significant influence.
Loans to certain subsidiaries are considered as part of the group’s
net investment. Exchange rate changes related to monetary items
(receivables and liabilities) which are a part of the company’s net
investment in foreign entities are treated as currency translation
differences, and thus entered against equity.
3.9 Taxes payable and deferred tax
The tax expense for the period comprises taxes payable and
change in deferred tax. However, deferred tax is not recorded if it
arises on initial recognition of an asset or liability in a transaction,
other than a business combination, that affects neither account-
ing nor taxable profit or loss on the transaction date.
Deferred tax assets are recognised only to the extent that it is
probable that there will be future taxable income against which the
temporary differences can be utilised. Deferred tax is provided on
temporary differences arising on investments in subsidiaries and
associates, except where the timing of the reversal of the tempo-
rary difference is controlled by the group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the reporting date and
are expected to apply when the related tax asset is realised, or
the deferred tax liability is settled. The provision for deferred tax
is based on the expected manner of realisation or settlement of
the carrying amounts of assets and liabilities.
Pursuant to the exception in IAS 12, deferred tax is not recog-
nised when buying a company which is not a business. A provi-
sion for deferred tax is made after subsequent increases in the
value beyond initial cost, while a fall in value below initial cost will
only reverse previous provisions for deferred tax. Furthermore,
an increase in temporary differences related to tax depreciation
will give grounds for a recognition of deferred tax.
Tax effects on other comprehensive income are separated and
presented via other comprehensive income. These include
exchange differences on net investments in foreign entities.
3.10 Revenue recognition
The group earns revenue from acting as a lessor in operat-
ing leases which do not transfer substantially all of the risks
and rewards incidental to ownership of an investment prop-
erty. Rental income arising from operating leases on investment
property is accounted for on a straight-line basis over the lease
term and is included in revenue in the statement of profit or loss
due to its operating nature, except for contingent rental income
which is recognised when it arises.
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Initial direct costs incurred in negotiating and arranging an oper-
ating lease are recognised as an expense over the lease term
on the same basis as the lease income. Lease incentives are
recognised as a reduction of rental revenue on a straight-line
basis over the lease term.
3.11 Interest income
Interest income is recognised in income as it is earned using
the effective interest method. When a receivable is impaired, the
group reduces the carrying amount to its recoverable amount,
which is the estimated future cash flow discounted at the orig-
inal effective interest rate of the instrument. Interest income on
impaired loans is recognised using the effective interest rate.
3.12 Classification of assets and liabilities
The group presents assets and liabilities in the statement of finan-
cial position based on current/non-current classification. An asset
is current when it is expected to be realised or intended to sold or
consumed in the normal operating cycle, held primarily for the pur-
pose of trading, expected to be realised within twelve months after
the reporting period, or cash or cash equivalent unless restricted
from being exchanged or used to settle a liability for at least twelve
months after the reporting period. All other assets are classified
as non-current.
A liability is current when it is expected to be settled in the normal
operating cycle, it is held primarily for the purpose of trading, it is
due to be settled within twelve months after the reporting period, or
there is no unconditional right to defer the settlement of the liabil-
ity for at least twelve months after the reporting period. The group
classifies all other liabilities as non-current. Deferred tax assets
and liabilities are classified as noncurrent assets and liabilities.
3.14 Financial instruments
Derivatives are financial instruments at fair value through profit
and loss unless the derivative is designated as a hedge account-
ing instrument.
Note 04 Significant events and transactions
Before 28 December 2020, the company’s legal and commercial
name was Storm Real Estate ASA (Storm). As further described
below, a transformative agreement was completed on 20 Decem-
ber 2020, combining Storm and KMC Properties AS, and trans-
forming the company (Storm) from a single asset company to a
strong real estate group.
Establishment of KMC Properties AS
KMC Properties AS was incorporated in January 2020. This rep-
resents the starting point for the financial reporting of the KMC
Properties reporting entity.
KMC Properties AS acquisitions prior to 30 September 2020
(Asset acquisitions)
Prior to 30. September 2020 KMC acquired a 100% share in
the following companies/properties for a total consideration of
approximately NOK 592 million.
All these acquisitions were treated at asset acquisitions as the
only activity of all these companies (or subsidiaries of these com-
panies) owning one or more investment properties.
Reverse acquisition (The Transaction) of Storm Real Estate
ASA (Now KMC Properties ASA)
In November 2020 KMC and Storm Real Estate ASA (KMC Prop-
erties ASA) entered into an agreement with the aim to combine the
two entities. The transaction was completed in December 2020.
Based on the legal structure of the transaction Storm Real Estate
ASA acquired 100% of the shares in KMC, for a consideration of
153 678 158 shares at NOK 7 per share in Storm Real Estate ASA.
In December 2020, following the Transaction with KMC Properties
AS, the management of KMC Properties AS became the manage-
ment of KMC Properties ASA as well.
Management has performed an assessment of the transaction
between KMC and Storm Real Estate and has determined that,
with reference to relevant accounting considerations, this transac-
tion will constitute a reverse acquisition in accordance with IFRS
3. As such, , KMC Properties AS will comprise the acquirer for
accounting purposes and KMC Properties ASA (previously named
Storm Real Estate ASA) will comprise the acquiree for account-
ing purposes, and resulting in the continuation of the Account-
ing acquirer (where the assets and liabilities of the Accounting
acquirer are stated at their pre-combination carrying amounts
while the assets and liabilities of the Accounting acquiree are
stated in accordance with IFRS) and except for its capital struc-
ture where the share capital is representing the share capital of the
Accounting acquiree and other reserves are representing those
of the Accounting acquirer.
The Pesca transaction
Prior to the Combination, KMC Properties AS acquired all of the
shares of Pesca Property from Kverva Industrier, Invest Neptun
AS and Zebrafish AS. As a part of the Pesca Transaction, 10
properties were acquired. The valuation of the properties was
performed by Cushman & Wakefield. The rental income related
to these properties is approximately NOK 52 million on a yearly
basis in total, which constitutes approximately 26% of the total
rental income of the KMC Properties.
Acquisition of 4 properties in Netherlands
As a part of the Transaction, the group entered into an agreement
with Synbra B.V (a subsidiary of KMC Properties AS) to acquire
the 4 subsidiaries of Holland Industrial Properties B.V, Wijchen
Investment properties B.V., Oldenzaa1 Investment properties B.V.,
Someren Investment properties B.V., and Zwartsluis Investment
properties B.V. As partial settlement of this acquisition, the seller,
Synbra B.V., issued a seller's credit of NOK 60 million, which in
connection with the completion of the acquisition on 23 Decem-
ber 2020, was transferred to the company, and subsequently con-
verted to share capital through issuance of new shares in the
company to Synbra B.V.
Acquisition of Grøntvedt property
Furthermore, the group acquired Grøntvedt Næringsbygg AS
("Grøntvedt"), for a total consideration of NOK 220 million, which
was settled in cash at the closing of the acquisition, on 23 Decem-
ber 2020, with the net proceeds from the Bond Issue. The pri
-
vate placement
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KMC Properties group
In connection with the Transaction, the company implemented
a NOK 300 million private placement of 42 857 142 new shares,
directed towards certain shareholders of the company and new
investors, at an offer price of NOK 7.00 per share (the "Private
Placement"). The Private Placement was resolved by the board of
the company on 22 December 2020, pursuant to a board author-
isation for issuance of new shares, granted by the extraordinary
general meeting held on 18 December 2020. The purpose of the
Private Placement was to strengthen liquidity in the company's
shares, and along with the Bond Issue the use of proceeds was
to refinance existing bank debt and part of shareholder loans in
KMC Properties AS, purchase of new properties (the 4 proper-
ties in Netherlands and the Grøntvedt property) in line with the
company's strategy and, as well as general corporate purposes.
The Conversion of the Swedbank Loan
Furthermore, Aconcagua Management Ltd (a company wholly
owned by Morten E. Astrup) and certain other shareholders of
the company, as a part of the Transaction, acquired the compa-
ny's outstanding debt towards Swedbank AB in accordance with
the refinancing agreement dated 27 May 2020 and conditions set
by the board. Following the purchase, the outstanding debt was
thereafter converted to 26 824 020 new shares in the company at
the same price as in the Private Placement and the Transaction.
The bond issue
In connection with the Transaction, the company issued senior
secured callable bonds of NOK 1 850 million through a private
placement. The proceeds from the Bond Issue were used to refi-
nance shareholder loans, existing bank debt and for general cor-
porate purposes including acquisitions of the combined company.
Following completion of the Transaction and the Private Place-
ment, the funds from the Bond Issue were released from escrow
on 23 December 2020.
The Bonds were listed on Oslo Stock Exchange 9 December 2021.
As part of the Bond Issue, KMC Properties, certain other group
companies and the property-owning subsidiaries of the company
in Norway, Sweden, Denmark, Finland, and the Netherlands have
granted guarantees and security over the shares in each of the
property ownings companies, bank accounts, properties, inter-
company receivables, floating charges over trade receivables,
and property insurances to secure the Bonds.
Acquisition of subsidiaries by the group
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the group. The acquisition cost is
measured as the fair value of assets used as consideration, equity
instruments issued, and liabilities incurred at the transfer of con-
trol. Direct costs related to the acquisition are expensed in the
income statement at the date of acquisition. Identifiable assets
acquired and liabilities and contingent liabilities are recognised
at fair value at the date of acquisition, irrespective of any minor-
ity interest. The excess cost of acquisition over the fair value of
identifiable net assets acquired is recorded as goodwill. If the
cost of acquisition is less than the fair value of the net assets of
the subsidiary acquired, the difference is recognised directly in
the income statement at the date of acquisition.
Purchases of single-purpose entities owning only property, with
no employees, management or recorded procedure descriptions
are not considered as the acquisition of business (IFRS 3 Busi-
ness Combinations is not applicable). The cost of such purchases
is capitalised as part of the acquisition price.
With the exception of the reverse acquisition of Storm Real Estate
ASA, all acquisitions in 2020 and 2021 is treated as assets acqui-
sitions (not business combinations), thus no goodwill is recorded
in connection with these acquisitions.
Additional disclosures on business combinations (Storm
Real Estate ASA)
The consideration in the reversed acquisition of Storm Real Estate
ASA was valued at NOK 62 million, consisting of the 8 834 563
shares at NOK 7 per share in Storm Real Estate ASA (shares in
the listed entity before the Transaction).
Major class of assets and liabilities assumed were as follows (as
of 30 June 2020):
Amounts in NOK million
Investment property 210
Other assets 14
Non-current liabilities 118
Current liabilities 8
Revenue from Storm Real Estate ASA included in the consoli-
dated financial statement amounts to NOK 0 million, profit/loss
included amounts to NOK 0 million. If the transaction took place
at the beginning of the year revenue would be included with NOK
21 million and profit/loss would be included with NOK 40 million.
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Note 05 Financial risk management
The group is exposed through its operations to the following finan-
cial risks:
■
Credit risk
■
Interest rate risk
■
Foreign exchange risk
■
Other market price risk, and
■
Liquidity risk
In common with all other businesses, the group is exposed to risks
that arise from its use of financial instruments. This note describes
the group's objectives, policies and processes for managing those
risks and the methods used to measure them. Further quantita-
tive information in respect of these risks is presented throughout
these financial statements.
Principal financial instruments
The principal financial instruments used by the group, from which
financial instrument risk arises, are as follows:
■
Trade receivables
■
Cash and cash equivalents
■
Trade and other payables
■
Bank overdrafts
■
Floating-rate bank loans
■
Fixed rate bank loans
■
Interest rate swaps, and
■
Forward currency contracts
FINANCIAL INSTRUMENTS BY CATEGORY:
Financial assets
Amounts in NOK thousand
Amortised
cost
31.12.2021
Fair value
through
profit or loss
31.12.2021 Total
Amortised
cost
31.12.2020
Fair value
through
profit or loss
31.12.2020 Total
Cash and cash equivalents 207 512 - 207 512 125 116 - 125 116
Currency and interestswaps - 67 721 67 721 - 8 175 8 175
Trade receivables (non-interest bearing) 24 458 - 24 458 36 418 - 36 418
Other receivables 26 869 - 26 869 34 910 - 34 910
Total financial assets 258 839 67 721 326 560 196 444 8 175 204 619
Financial liabilities
Amounts in NOK thousand
Amortised
cost
31.12.2021
Fair value
through
profit or loss
31.12.2021 Total
Amortised
cost
31.12.2020
Fair value
through
profit or loss
31.12.2020 Total
Interest-bearing loans and borrowings (bond) 2 275 035 - 2 275 035 1 832 345 - 1 832 345
Land plot lease agreements (financial liability) 19 126 - 19 126 16 911 - 16 911
Other financial liabilities 9 923 - 9 923 9 732 - 9 732
Trade payables (non-interest bearing) 23 608 - 23 608 36 404 - 36 404
Other current liabilities (non-interest bearing) 29 049 - 29 049 76 259 - 76 259
Total financial liabilities 2 356 741 - 2 356 741 1 971 649 - 1 971 649
Net financial assets and liabilities (2 097 902) 67 721 (2 030 181) (1 775 205) 8 175 (1 767 030)
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash
and cash equivalents, trade and other receivables, trade and
other payables, and loans and borrowings. Due to their short-
term nature, the carrying value of cash and cash equivalents,
trade and other receivables, and trade and other payables approx-
imates their fair value.
Financial instruments measured at fair value
The table below shows an analysis of fair values of financial instru-
ments in the Statement of Financial Position, grouped by level in
the fair value hierarchy:
Level 1 - Quoted prices in active markets that the entity can
access at the measurement date.
Level 2 – Use of a model with inputs other than level 1 that are
directly or indirectly observable market data.
Level 3 - Use of a model with inputs that are not based on observ-
able market data.
All financial derivates are currency and interest swap agreements
booked at fair value according to level 2.
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54
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Financial assets measured at fair value 2021
Amounts in NOK thousand Level 1 Level 2 Level 3 Total
Currency and interest swaps - 67 721 - 67 721
Sum financial assets measured at fair value - 67 721 - 67 721
Financial assets measured at fair value 2020
Amounts in NOK thousand Level 1 Level 2 Level 3 Total
Currency and interest swaps - 8 021 - 8 021
Sum financial assets measured at fair value - 8 021 - 8 021
There were no transfers between levels during the period.
Derivatives
The fair value of financial derivatives, including currency for-
ward exchange contracts/swaps and interest-rate swaps, is
determined by the net present value of future cash flows, cal-
culated using quoted interest-rate curves and exchange rates at
the balance-sheet date. The technical calculations are generally
performed by the group’s banks. The group has checked these
valuations and tested them for reasonableness.
The group uses derivatives to manage its interest rate risk. Deriv-
atives are initially recognised at fair value on the date on which
the contract was signed, and subsequently at fair value. Gains
or losses on remeasurement at fair value are recognised in the
income statement. Changes in the value of the derivatives are pre-
sented under “Changes in value of financial instruments”.
The fair value of interest rate swaps is the estimated amount the
group would receive or pay to redeem the contracts on the bal-
ance sheet date. This amount will depend on interest rates and
the contracts’ remaining term to maturity. The derivatives are clas-
sified on the balance sheet as current or non-current, depending
on whether they are expected to be redeemed under or over 12
months from the balance sheet date.
General objectives, policies and processes
The board has overall responsibility for the determination of the
group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
group's finance function. The board receives monthly reports from
the group financial controller through which it reviews the effec-
tiveness of the processes put in place and the appropriateness
of the objectives and policies it sets. The group's internal audi-
tors also review the risk management policies and processes and
report their findings to the Audit Committee. The overall objec-
tive of the board is to set policies that seek to reduce risk as
far as possible without unduly affecting the group's competitive-
ness and flexibility. Further details regarding these policies are
set out below:
The group is exposed to market risk (including interest rate risk),
credit risk and liquidity risk. The risk policies are continuously
being assessed by the board of directors and the appropriate
policies and procedures to identify, measure and manage the
financial risks has been implemented. The group’s overall risk
management programme seeks to minimise potential adverse
effects on the group’s financial performance.
5.1 Market risk
Market risk is the risk that the fair value of future cash flows of
a financial instrument will fluctuate because of changes in mar-
ket prices. The group has all its operations in Norway, and all
lease agreements, financing and expenses are in NOK, and the
exchange rate risk is at a minimum.
(i) Currency risk
Foreign exchange risk arises when individual group entities enter
into transactions denominated in a currency other than their func-
tional currency. The group's policy is, where possible, to allow
group entities to settle liabilities denominated in their functional
currency) with the cash generated from their own operations in
that currency. Where group entities have liabilities denominated
in a currency other than their functional currency (and have insuf-
ficient reserves of that currency to settle them), cash already
denominated in that currency will, where possible, be transferred
from elsewhere within the group.
The group is predominantly exposed to currency risk on lease
contracts in EURO, SEK and DKK, and the risk is hedged using
currency swaps.
Apart from these particular cash-flows the group aims to fund
expenses and investments in the respective currency and to man-
age foreign exchange risk at a local level by matching the cur-
rency in which revenue is generated and expenses are incurred.
At 31 December the group's net exposure to foreign exchange
risk was as follows:
KMC Properties
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Annual report 2021
55
Financial statments
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KMC Properties group
Net foreign currency financial assets / liabilities 2021
Currency
Amounts in NOK thousand
SEK DKK EUR Total
Net exposure NOK (92 249) (152 295) (312 045) (556 589)
Net foreign currency financial assets / liabilities 2020
Currency
Amounts in NOK thousand
SEK DKK EUR Total
Net exposure NOK (89 366) (190 127) (394 137) (673 630)
(ii) Interest rate risk on cash flows and fair value
The group is exposed to cash flow interest rate risk from long-term
borrowings at variable rate, and the risk is hedged using interest
rate swaps, see details in note 12 and 16.
During both 2020 and 2021, the group's borrowings at variable
rate were denominated in NOK.
Calculated on the existing funding terms for the group’s inter-
est-bearing liabilities on 31 December 2021, a rise in market
interest rates of 1 percentage point would have increased KMC
Properties annualised interest expenses by NOK 10.5 million.
5.2 Liquidity risk
Liquidity risk is the risk that The group will not be able to meet its
obligations at maturity, and the risk that The group will not be able
to meet its obligations without a significant increase in cost. The
group’s objective is to maintain a reasonable balance between
debt and equity and to have sufficient available cash to fulfil obli-
gations from The group’s activity.
The table below illustrates the maturity structure of liabilities.
Maturity structure
Amounts in NOK thousand
Booked
amount Year 1 Year 2 Year 3-5 After year 5
Financial liability as of 31 December 2021
Loans from credit institutions 2 275 035 - 1 838 345 436 690 -
Payment of interest and interest swap - 107 267 107 267 53 019 -
Other long-term liabilities 1) 10 153 3 903 - - 6 250
Trade payables 23 608 23 608 - - -
Other current payables 34 364 34 364 - - -
Total 2 343 160 169 142 1 945 612 543 957 6 250
1) Booked amount also includes NOK 19 125 thousands in lease liability related to right of use assets. Reference is made to note 17 Other long term
liabilities for maturity structure of lease liability.
Maturity structure
Amounts in NOK thousand
Booked
amount Year 1 Year 2 Year 3-5 After year 5
Financial liability as of 31 December 2020
Loans from credit institutions 1 832 345 - - 1 832 345 -
Payment of interest and interest swap - 80 700 80 700 80 700 -
Other long-term liabilities
1)
9 732 3 482 - - 6 250
Trade payables 36 404 36 404 - - -
Other current payables 76 549 76 549 - - -
Total 1 955 030 197 135 80 700 1 913 045 6 250
1) Booked amount also includes NOK 16 911 thousands in lease liability related to right of use assets. Reference is made to note 17 Other long term
liabilities for maturity structure of lease liability.
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56
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KMC Properties group
5.3 Capital risk management
The main purpose of the group’s capital management is to main-
tain a reasonable balance between debt and equity. The group’s
goal is to have an LTV ratio of 50-65 per cent. The target is set
with consideration to value development in the group and the
opportunity to obtain the necessary financing. The LTV ratio at
31 December 2021 is 50.3%.
There are covenants on existing financing related to; loan to value,
interest cover ratio and liquidity. Reference is made to note 16 for
description of the covenants. Both during 2020, and at 31 Decem-
ber 2021, the group was in compliance with all financial cove-
nants, and the group expects to be in compliance going forward.
Note 06 Critical accounting estimates and judgements
Estimates and judgments are continually evaluated and are based
on historical experience and other factors, including expectations
about future events which are believed to be reasonable under
current circumstances. Corporate management makes estimates
and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the actual figures. The
estimates and assumptions which have a significant risk of caus-
ing a material adjustment to the carrying amounts of assets and
liabilities in the next financial year are outlined below.
6.1 Fair value of investment properties
Investment property is valued at its fair value based on a quar-
terly valuation update based on external valuations. The valuations
on 31 December 2021 were obtained by Cushman & Wakefield.
The valuations are mainly based on the discounted cash flow
method, which involves discounting future cash flows over a spec-
ified period using an estimated discount rate and then adding a
residual value at the end of the period. Future cash flows are cal-
culated on the basis of cash flows from signed leases, as well as
future cash flows based on an expected market rent at the end
of the lease terms. Both contractual and expected cash flows are
included in the calculations. Fair-value assessment of investment
properties, therefore, depends largely on assumptions related to
market rents, discount rates, and inflation. Market rents are based
on individual assessments of each property and the segmentation
of different areas within the properties if relevant. To the extent
that specific development potential is associated with a property,
an assessment is made of whether this support or influences fair
value. Updated macroeconomic assumptions for interest-rate lev-
els, inflation expectations, and so forth are applied in the calcu-
lations. Based on an assessment of the properties, tenants, and
macroeconomic conditions at the balance sheet date, cash flows
are discounted using discount rates based on individual assess-
ments of each property.
The external valuer performs their valuations on the basis of the
information they have received, and estimate future market rents,
yields, inflation, and other relevant parameters. Each individual
property is assessed in terms of its market position, rental income
(contractual rents versus market rents) and ownership costs, with
estimates being made for anticipated vacancy levels and the need
for alterations and upgrades where applicable. The remaining
term of the leases is also assessed for risk, along with any spe-
cial clauses in the contracts. Each property is also compared with
recently sold properties in the same segment (location, type of
property, mix of tenants, etc).
The sensitivity of the fair-value assessment of investment prop-
erties depends to a considerable extent on assumptions related
to yield, interest rates, market rents and operating costs for the
properties. Reference is made to note 11 Investment property.
6.2 Accounting treatment of the Storm Real Estate ASA ( Now
KMC Properties ASA) and KMC Properties AS transaction
The assessment of how to account for this transaction involve
significant judgement, see details in note 4.
Note 07 Tenancy agreements
The group mainly enters into long-term lease agreements with
solid counterparties, strategically located for tenants. Lease pay-
ments of the contracts include CPI increases.
The group's future accumulated rent from operational lease contracts at 31.12.
Amounts in NOK thousand 2021 2020
≤ 1 year 231 945 213 076
Between 1 and 2 years 251 687 202 499
Between 2 and 3 years 231 743 198 413
Between 3 and 4 years 231 743 193 056
Between 4 and 5 years 231 743 194 419
≥ 5 years 1 451 041 1 232 408
Total 2 629 902 2 233 871
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57
Financial statments
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KMC Properties group
The group's lease contracts at 31 December 2021 have the following maturity structure measured in annual rent
1)
Amounts in NOK thousand No of contracts
2)
Contract rent Contract rent, %
≤ 1 year 105 16 425 7%
Between 1 and 5 years 21 4 202 2%
Between 5 and 10 years 22 93 544 37%
≤ 10 years 23 138 199 55%
Total 171 252 370 100%
1) The rent is stated as the annualised undicounted contractual rent, and is therefore not reconsiable with the rental income for the year for
accounting purposes.
2) Gasfield is included with 105 contracts with maturity under 1 year, and 20 of 21 contracts with maturity between 1 and 5 years.
The group's lease contracts at 31 December 2020 have the following maturity structure measured in annual rent
1)
Amounts in NOK thousand No of contracts
1)
Contract rent Contract rent, %
≤ 1 year 111 17 442 8%
Between 1 and 5 years 17 19 593 9%
Between 5 and 10 years 19 72 935 33%
≤ 10 years 17 109 970 50%
Total 164 219 940 100%
1) Gasfield is included with 110 og 111 contracts with maturity under 1 year, and 15 of 17 contracts with maturity between 1 and 5 years.
The table above shows the remaining non-terminable rent for cur-
rent leases without taking into account theimpact of any options.
Note 08 Other operating expenses
Other operating expenses
Amounts in NOK thousand 2021 2020
Legal, agency and consultancy fees 34 043 10 508
Accounting 2 209 2 217
Auditors 4 112 548
Other operating expenses 3 876 3 390
Total other operating expenses 44 240 16 663
Auditor fees full year basis
Amounts in NOK thousand 2021 2020
Statutory audit 3 912 246
Tax advice 175 -
Other services not related to auditing - -
Other assrurance services 25 302
Total auditor expenses (excl. VAT) 4 112 548
Annual report 2021
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58
Financial statments
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KMC Properties group
Note 09 Personnel costs
Amounts in NOK thousand 2021 2020
Personnel costs
Salaries, performance-related pay and other taxable benefits 14 828 1 737
Employers` Natural Insurance contributions 1 637 -
Pension expenses 491 98
Other personnel costs 3 655 36
Board fees 1 925 -
Total personnel costs 22 536 1 871
Number of employees 15 7
Average full-time equivalent employees 12 7
Employee's may purchase shares in the company at a 20% dis-
count for an amount limited upwards to NOK 1 million, on condi-
tion that the employee is obliged to hold the shares for a three-year
period (lock-up period). The board decides how the transaction
shall be arranged within the authorisations granted by the gen-
eral meeting.
Renumeration to senior executives
The total remuneration of the CEO and other Senior Executives
consists of a fixed package of salary and benefits supplemented
by cashbased short-term incentive(STI), share purchase scheme
(on the same terms as all other employees), pension and insur-
ance arrangements.
Overview of total renumeration to senior executives 2020
Amounts in NOK thousand Salary
Variable cash
salary (STI)
1)
Pension
costs
Benefits
in kind
Total
remu neration
2020
Liv Malvik, CEO
2)
963 500 58 3 1 524
Audun Aasen, COO
3)
886 500 28 117 1 531
Total 1 849 1 000 86 120 3 055
1) Reflects the provision based on targets met in 2020, which was paid out in 2021.
2) Liv Malvik was employed in KMC Properties AS 1.6.2020.
3) Renumeration information for Audun Aasen includes renumeration also from before 26 May 2020 which is the date from when the company had
operational activities.
Overview of total renumeration to senior executives 2021
Amounts in NOK thousand Salary
Variable cash
salary (STI)
1)
Pension
costs
Benefits
in kind
Total
remu neration
2021
Liv Malvik, CEO 2 000 1 500 116 25 3 641
Kristoffer Holmen, CFO
2)
1 000 1 125 79 10 2 214
Audun Aasen, COO 1 200 600 67 177 2 044
Kristoffer Formo, Head of M&A
3)
1 098 600 89 18 1 805
Total 5 298 3 825 350 230 9 703
1) Includes the provision based on targets met in 2021, which will be paid out in 2022. 50% of the variable compensation shall be paid out two years
from grant, on condition that the employee is employed with the company at the end of the two-year period and has not given notice to terminate
his or her employment. The deferred share of the variable compensation shall be indexed against the share price of KMC Properties ASA (KMC),
starting at market price at grant.
2) Kristoffer Holmen was employed in KMC Properties ASA 1.5.2020. Berfore this CFO was hired and expenses included under Other operating
expenses.
3) Kristoffer Formo was employed in KMC Properties ASA 15.3.2021.
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Annual report 2021
59
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KMC Properties group
Overview of total renumeration to senior executives
Amounts in NOK thousand Board fees
Committee
fees
Total
remuneration
2021
1)
Total
remuneration
2020
1)
Anders Dyrseth 400 - 400 -
Morten Eivindssøn Astrup 225 25 250 -
Nini Høegh Nergaard 225 - 225 -
Anna Musiej Aanensen 225 75 300 -
Stig Wærnes 225 75 300 -
Marianne Bekken 225 - 225 -
Thorbjørn Fjærtoft Pedersen (from 2 June 2021) 113 - 113 -
Børge Klungerbo (until 2 June 2021) 113 - 113 -
Total 1 750 175 1 925 -
1) The overview of the remuneration of the board of directors shows remuneration earned in the financial year.
Statement on the determination of salaries and other
remuneration of senior executives
Salaries and other remuneration to the CEO are determined by
the board, while remuneration to any other senior executives
determined by the CEO, in consultation with the chairman of
the board.
Efforts are made to create the conditions for recruiting and
retaining members of the management who possess the qual-
ities required to run the company, and not least promote value
creation. The individual employee's remuneration must be com-
petitive and reflective the person's area of responsibility and
execution of the work. The remuneration of 2020 consist of a
combination of fixed ongoing benefit and other remuneration,
including:
■
Benefits in kind that appear in employment contracts
(for example telephone / IT solutions, company car and
insurance schemes).
■
Pension schemes.
The remuneration shall not include schemes as mentioned in
the Public Limited Liability Companies Act § 6-16 a, without
this having been approved in advance by the company's gen-
eral meeting. The board will not otherwise determine any mon-
etary or other conditions for remuneration in addition to basic
salary.
Note 10 Finance income and costs
Amounts in NOK thousand 2021 2020
Fair value change of financial instruments 63 812 -
Total fair value change of financial instruments 63 812 -
Foreign exchange gains and losses 2021 2020
Foreign exchange gains 5 291 -
Foreign exchange losses (52 318) (5 960)
Total foreign exchange gains and losses (47 027) (5 960)
Finance income
Interest income 6 806 275
Other finance income 123 -
Total finance income 6 929 275
Finance costs
Interest costs from loans measured at amortised cost (96 335) (22 340)
Other finance costs (3 098) (48)
Total finance costs (99 433) (22 388)
Net finance gains (losses) (75 719) (28 073)
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60
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KMC Properties group
Note 11 Investment property
The valuation of the properties at 31 December 2021 has been per-
formed by an independent expert valuer, Cushman & Wakefield.
The variables used for valuation are both company specific and
marked derived. Company specific variables include contractual
rental income and expenses. Market derived variables include,
inter alia, market rent rates, market discount rates and market
capitalisation rates. The carrying value of the properties in the
balance sheet reflects the values given a long-term perspective.
Also see note 6 for critical accounting estimates and assumptions.
Amounts in NOK thousand 2021 2020
Opening balance 3 089 750 -
Purchase of investment properties 520 082 2 695 237
Capital expenditure on investment properties 140 064
Fair value adjustments in period 310 147 404 572
Translation adjustment (58 450) (10 059)
Value at period end 4 001 593 3 089 750
The valuations are mainly based on the discounted cash flow
method, which involves discounting future cash flows over a spec-
ified period using an estimated discount rate and then adding a
residual value at the end of the period. Future cash flows are cal-
culated on the basis of cash flows from signed leases, as well as
future cash flows based on an expected market rent at the end
of the lease terms. Both contractual and expected cash flows are
included in the calculations. Fair-value assessment of investment
properties, therefore, depends largely on assumptions related to
market rents, discount rates, and rental growth. Market rents are
based on individual assessments of each property and the seg-
mentation of different areas within the properties if relevant. To
the extent that specific development potential is associated with
a property, an assessment is made of whether this support or
influences fair value. Updated macroeconomic assumptions for
interest-rate levels, inflation expectations, and so forth are applied
in the calculations. Based on an assessment of the properties,
tenants, and macroeconomic conditions at the balance sheet
date, cash flows are discounted using discount rates based on
individual assessments of each property.
The external valuer performs their valuations on the basis of the
information they have received, and estimate future market rents,
yields, inflation, and other relevant parameters. Each individual
property is assessed in terms of its market position, rental income
(contractual rents versus market rents) and operating costs, with
estimates being made for anticipated vacancy levels and the need
for alterations and upgrades where applicable. The remaining
term of the leases is also assessed for risk, along with any spe-
cial clauses in the contracts. Each property is also compared with
recently sold properties in the same segment (location, type of
property, mix of tenants, etc).
The sensitivity of the fair-value assessment of investment prop-
erties depends to a considerable extent on assumptions related
to yield, interest rates, market rents and operating costs for the
properties. The table below presents examples of how changes
related to each of these variables influenced property values, at
31 December 2021, assuming all other variables remained con-
stant (amounts in NOK million). However, there are interrelation-
ships between these variables, and it is expected that a change
in one variable may influence one or more of the other variables.
Variables Change of variables Value change (+) Value change (-)
Exit yield +/- 0,25 per cent points (53) 58
Discount rate +/- 0,25 per cent points (86) 88
Operating costs +/- 10 per cent (10) 10
Market rent +/- 10 per cent 178 (178)
Average rental growth +/- 0,5 percentages points next 10 years 132 (129)
The calculations have been performed by Cushman & Wakefield in connection the valuations at 31 December 2021.
Input for valuations – overview
Investment property
Valuation method, reference is made to note 5 Level 3
Valuation model DCF DCF
WAULT 10.4
Net yield (interval) 4.76% – 8,45%
Contract rent at 31 December 2021, measured in annual rent (NOK thousands) 253 131
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Annual report 2021
61
Financial statments
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KMC Properties group
Note 12 Other receivables and financial derivatives
Amounts in NOK thousand 2021 2020
Other receivables
Trade receivables (non-interest bearing) 24 458 36 418
Pre-paid income tax - 439
Other receivables 26 869 34 471
Total other receivables 51 327 71 328
Financial derivatives 67 380 8 021
The age analysis of trade receivables
Amounts in NOK thousand 2021 2020
Not overdue 11 353 18 446
0-30 days 8 580 11 858
31-60 days 2 708 1 422
61-90 days 1 334 2 297
91 days + 484 2 396
Total trade receivables 24 458 36 418
The group has cross currency and interest rate swaps to hedge risk against exchange rate and interest rate flucturations.
Swap agreement
Currency
amount
(millions)
Market value
(Millions)
31.12.2020
Market value
(Millions)
31.12.2021
Start
date
Maturity
date
Fixed
currency
rate
Fixed
interest
Interest & currency NOK 335 5 23 23.12.2020 11.12.2023
EUR/NOK
= 10.630
EURIBOR
= -0.51%
Interest & currency NOK 240 1 20 23.12.2020 11.12.2023
SEK/NOK
= 1.050
STIBOR
= 0.017%
Interest & currency NOK 165 2 11 23.12.2020 11.12.2023
DKK/NOK
= 1.428
DANISH IBOR
= -0.505%
Interest NOK 500 N/A 12 13.07. 2021 31.12.2030
Not
applicable
NIBOR
= 1.5175%
Interest EUR 32 N/A 3 11.12.2023
1)
13.12.2027
Not
applicable
EURIBOR
= -0.03%
Interest SEK 120 N/A 1 11.12.2023
1)
13.12.2027
Not
applicable
STIBOR
= 0,686%
Interest DKK 120 N/A 1 11.12.2023
1)
13.12.2027
Not
applicable
DANISH IBOR
= 0.215%
Total 8 71
1) The swap agreement is a forward starting interest rate swap.
Note 13 Cash and Bank depositis
Amounts in NOK thousand 2021 2020
Bank deposits 166 247 124 765
Disposal account
1)
40 770 -
Restricted bank deposits
2)
495 351
Total bank deposits 207 512 125 116
1) Rereference is made to note 16
2) Restricted bank deposits relate to the withholding tax account
Annual report 2021
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KMC Properties
62
Financial statments
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KMC Properties group
Note 14 Shareholder capital and shareholders
Share capital and nominal value
31.12 .2021
Shares issued 281 871 544
Nominal amount in NOK 0.2
Share capital in NOK 56 374 309
Changes in number of shares during the year (reflecting the reverse takeover)
Number of shares in
accounting aquicerer
Conversion
rate Total
Shares at incorporation 300 11874 3 562 312
Repurchase of shares 11.06.2020 (300) 11874 (3 562 312)
Issue of shares 11.06.2020 10 000 11874 118 743 747
Issue of shares 30.11.2020 2 942 11874 34 934 411
Reverse takeover 20.12.2020 original shares in SRE ASA - 2 364 563
Reverse takeover 20.12.2020 Issue of shares link to the debt conversion and transaction
- - 33 294 020
Issue of shares privat placement 22.12.2020 - - 42 857 142
Issue of shares 23.12.2020 in conncetion with the Dutch transaction - - 8 571 428
No of shares as of 31 December 2020 - - 240 765 311
Issue of shares subsequent offering 19.02.2021 - - 981 233
Issue of shares privat placement 16.09.2021 - - 37 500 000
Issue of shares employee offering 18.10.2021 - - 750 000
Issue of shares subsequent offering 27.10.2021 - - 1 875 000
No of shares as of 31 December 2021 - - 281 871 544
All shares are fully paid. There is only one share class. All shares have
equal rights. KMC Properties ASA is listed on the Oslo Børs (Oslo
Stock Exchange) under the symbol KMCP. The shareholder list
shows the shareholder register from VPS as at 31 December 2021
Any trades via brokers before the closing date which is regis-
tered after the closing date is not reflected in the shareholder list.
Shareholder % holding Country Type Shares
EBE Eiendom AS 41.3% Norway Ordinary 116 466 891
Kverva Industrier AS 29.3% Norway Ordinary 82 716 209
Nordea Bank ABP 4.8% Sweden Nominee 13 607 804
Surfside Holding AS 3.5% Norway Ordinary 10 000 000
Caceis Bank 2.3% Luxembourg Nominee 6 500 000
Carnegie Investment Bank AB 2.0% Sweden Nominee 5 625 000
Formo AS 1.3% Norway Ordinary 3 705 957
Skandinaviska Enskilda Banken AB 1.2% Sweden Nominee 3 506 921
The Bank of New York Mellon 1.1% United States Nominee 2 999 242
SEB Cmu/Secfin Pooled Account 1.0% Sweden Ordinary 2 946 293
Total 10 largest shareholders 88% 248 074 317
Other shareholders 12% 33 797 227
Total 100% 281 871 544
* Nominee = Nominee Accounts; foreign institutions holding shares on behalf of clients.
KMC Properties
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Annual report 2021
63
Financial statments
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KMC Properties group
Shares controlled by directors Via
Total number of
shares 2021
Total number of
shares 2020
Anders Dyrseth Andyrs AS 250 000 -
Morten Eivindssøn Astrup Surfside Holding AS 10 000 000 25 649 124
Nini Høegh Nergaard - -
Anna Musiej Aanensen - -
Stig Wærnes Snewær AS 278 540 142 857
Marianne Bekken
1)
- -
Thorbjørn Fjærtoft Pedersen - -
Total shares controlled by directors 10 528 540 25 791 981
1) Owns indirectly through Marbek Invest AS. Marbek Invest AS owns 13.33% of the shares in Bekken Invest AS, which in turn owns 50% of the
shares in EBE Eiendom AS. EBE Eiendom AS owns 41.3% in KMC Properties ASA. Marianne Bekken owns 100% of Marbek Invest AS.
Shares controlled by senior executives Via
Shares
through
employee
stock
purchase
plan 2021
Total
number
of shares
2021
Shares
through
employee
stock
purchase
plan 2020
Total
number
of shares
2020
Liv Malvik, CEO 125 000 179 285 - 14 286
Kristoffer Holmen, CFO Mejdell Holmen Holding AS 125 000 125 000 - -
Audun Aasen, COO Tripla Invest AS 125 000 577 000 - -
Kristoffer Formo, Head of M&A Formo AS 125 000 3 705 957 - -
Total shares controlled by senior executives 500 000 4 587 242 - 14 286
Note 15 Tax
Income tax expense
Amounts in NOK thousand 2021 2020
Tax payable, current year 2 906 1 674
Change in deferred tax 74 517 92 636
Income tax expense 77 423 94 310
Income tax payable is calculated as follows
Profit before tax 382 271 406 941
Other permanent differences 6 264 4 487
Changes in temporary differences (375 325) (387 646)
Profit for tax purposes 13 210 23 782
Tax payable on the balance sheet 2 906 5 232
Reconciliation of income tax expense
Amounts in NOK thousand 2021 2020
Profit before tax 382 271 406 941
Estimated tax based on 22% 84 100 89 527
Tax effects of:
Deferred tax assets that are not recognised in the balance sheet (3 892) (2 788)
Change in temporary differences due to different tax regimes (4 163) (2 982)
Permanent differences 1 378 987
Income tax expense 77 423 84 744
Effective tax rate 20.3% 20.8%
Annual report 2021
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KMC Properties
64
Financial statments
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KMC Properties group
Deferred income tax
The group has offset deferred tax assets and deferred tax liabil-
ities on the balance sheet as the group has a legally enforceable
right to set off current tax assets against current tax liabilities,
and the deferred tax assets and the deferred tax liabilities relate
to income taxes levied by the same taxation authority.
The following net value was recognised:
Amounts in NOK thousand 2021 2020
Deferred tax liability 191 158 112 183
Deferred tax assets 59 156 62 218
Net deferred tax 132 002 49 965
CHANGE IN DEFERRED TAX (+)/DEFERRED TAX ASSETS (-)
Movment in temporary differences
Amounts in NOK thousand
Investment
property
Financial
instruments
Current
assets
Loss carried
forward Other Total
01.01.2020 - - - - - -
Recognised in profit and loss 497 034 - - (26 142) (49 819) 421 073
Acquisition of subsidiaries - - 15 149 (206 850) (191 701)
31 December 2020 497 034 - 15 149 (232 992) (49 819) 229 372
Recognised in profit and loss 298 407 67 380 (4 406) (66 168) 16 563 311 776
Acquisition of subsidiaries - - - (2 986) - (2 986)
31 December 2021 795 441 67 380 10 743 (302 146) (33 256) 538 162
Change in temporary differences based on nominal tax rate 308 790
Change in deffered tax based on nominal tax rate 67 934
Differences due to different tax regimes and currency effects 4 163
Other differences 2 420
Change in deferred tax 74 517
Russian tax risk
The Russian tax, currency and customs legislation is subject to
varying interpretations, and changes, which can occur frequently.
Management’s interpretation of such legislation as applied to the
transactions and activity of the group may be challenged by the
relevant regional and federal authorities.
Recent events within Russia suggest that the tax authorities are
taking a more assertive position in its interpretation of the legis-
lation and assessments and, as a result, it is possible that trans-
actions and activities that have not been challenged in the past
may be challenged. As such, additional taxes, penalties and inter-
est may be assessed.
Separately, new deoffshorisation rules, which came into force
starting 1 January 2015, may have influence on tax effecting the
group and should be mentioned. In accordance with these rules
the Russian tax authorities have the right to challenge applica-
tion of the double tax treaty benefits (beneficial ownership con-
cept). These amendments as well as the concept of taxation of
capital gains from indirect sale of property-rich companies, may
impact the group.
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Annual report 2021
65
Financial statments
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KMC Properties group
Note 16 Loans from credit institutions
Bond loan:
Amounts in NOK thousand 2021 2020
Interest-bearing debt at 1 January 1 832 345 -
Amount borrowed - 1 850 000
Principal payments -
Interest-bearing debt at 31 December 1 832 345 1 850 000
Capitalised borrowing cost 6 000 (17 655)
Carrying amount interest-bearing debt 1 838 345 1 832 345
Fair value of interest-bearing debt, excess value/(reduced value) for the group in relation to book value*
43 000 6 000
*The fair value presented above is the excess value at 31 December 2021, given by Nordic Bond Pricing AS.
Bank loan:
Amounts in NOK thousand 2021 2020
Interest-bearing debt at 1 January - -
Amount borrowed 439 480 -
Principal payments (2 790) -
Interest-bearing debt at 31 December 436 690 -
Capitalised borrowing cost - -
Carrying amount interest-bearing debt 436 690 -
Interest-bearing debt at 31.12.21
NOK
million*
Weighted
average
current
interest
Weighted
average interest
terms
Weighted
average
amortisation
plan bank loans
(years)
Weighted
average years to
final maturity
In compliance
with covenants?
Bond loan 1 850 4.76% 3 months
NIBOR
+ 4.25%
None 1.9 Yes
Bank Loan 437 3.60% 3 months
NIBOR
+ 2.50%
20.5 7.5 Yes
Revolving credit facility - 3.10% 3 months
NIBOR
+ 2.25%
N/A N/A Yes
Total
2 287 4.54% N/A 20.5 3.0 Yes
Interest-bearing debt at 31.12.20
NOK
million*
Weighted
average
current
interest
Weighted
average interest
terms
Weighted
average
amortisation
plan bank loans
(years)
Weighted
average years to
final maturity
In compliance
with covenants?
Bond loan 1 850 4.60% 3 months
NIBOR
+ 4.25%
None 2.9 Yes
Annual report 2021
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KMC Properties
66
Financial statments
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KMC Properties group
Key terms:
NOK 1 850 000 000 senior secured bond. Guarantees and secu-
rity is shared with certain hedging providers and one or more
revolving credit facilities and, under the terms of an intercreditor
agreement, the bond issue ranks behind the relevant hedging pro-
viders and the revolving credit facilities in the payment waterfall.
Call option: Voluntary redemption of bond (i) prior to 11 June 2023
in done with a "make whole" compensation to bondholders and (ii)
after 11 June 2023 until (but not including) Final Maturity is done
at 101% of the nominal amount of redeemed bond.
Put option: Upon a change of control, failure to list the bond or
a de-listing of the Issuer's share from Oslo Børs, exercisable at
101% of the nominal amount of the redeemed bond.
Guarantors and Security: KMC Properties AS and substantially
all of its direct and indirect subsidiaries (i) are guarantors for the
bond issue and (ii) substantially all of their assets (and the shares
in KMC Properties AS) are granted as security for the bond issue.
General undertakings (covenants): Customary general undertak-
ings applicable to the Issuer and all its direct and indirect sub-
sidiaries, including maintaining authorisations, compliance with
laws, continuation of business, pari passu ranking, limitations on
investments, limitations on distributions, certain financial support
restrictions, restrictions on limiting subsidiaries' right to make
distributions.
Additional undertakings (covenants) for KMC Properties AS: In
additional to the general undertakings set out above, there are
certain covenants that only apply to KMC Properties AS and its
direct and indirect subsidiaries and which, to a certain extent,
"ring-fences" this part of the group. These covenants include
restrictions on mergers and de-mergers, additional limitations
on investments, limitations on disposals of assets and require-
ments for re-investing disposal proceeds, additional restrictions
on incurring financial indebtedness, negative pledge, require-
ments as to insurances, requirements for maintenance and man-
agements of properties and limitations on alteration of property
lease agreements.
Financial covenants: The Issuer must ensure compliance with the
following financial covenants (maintenance covenants), measure
on the group as a whole:
■
Interest cover ratio (ICR) of not less than 1.5x
■
Net-loan-to-value ratio below (NLTV) 75%
■
Liquidity not less than an amount equal to net interest costs
for the next 6 months
In addition (incurrence covenants):
■
any distribution from the Issuer is subject to an NLTV of not
less than 65% and a liquidity that is 1.5x higher than the
liquidity requirement above; and
■
the incurrence of certain otherwise permissible new financial
indebtedness is subject to a loan-to-value ratio of 60%.
■
The group was in compliance with all covenants related to
its liabilities at 31 December 2021.
Security bond loan:
Amounts in NOK million 2021
Pledged property portfolio 2 943.3
Disposal account -
Opening balance security
1)
2 943.3
Investments in pledged property portfolio 110.9
Sale of assets in pledged property portfolio (133.3)
Inflow disposal account 133,3
Outflow dispoal account (92.6)
Fair value and translation adjustments pledged property portfolio
2)
78.9
Value security end of period 3 040.5
1) The bond is secured by, in addition to mortgages over the properties, share charges over the shares of the guarantors, pledges over bank accounts,
Norwegian floating charges over trade receivables, and certain other floating charges / enterprise mortgages in Finland, Denmark and Sweden.
2) In accordance with valuation from Cushman & Wakefield at 31 December 2021.
During 2021 the Group has entered into agreements with tenants
concerning development of properties pledged in favour of the
bond holders. In total NOK 110.9 million have been invested in
the pledged property portfolio, with an average yield-on-cost of
approximately 7.5%, contributing to the large fair value adjust-
ment in the period. The investments have been financed with
excess liquidity.
The bond terms governing the bond issue, require that all funds
received from sale of pledged properties shall be paid into a bank
account blocked and pledged in favour of the bond holders (the
“Disposal Account”). Funds from the Disposal Account may be
used to finance development, repair or re-building of the proper-
ties in the bond security package.
Hence, in accordance with the bond terms, KMC Properties ASA
sold Havnegata 16 AS from KMC Properties AS to KMC Proper-
ties II Norway AS for NOK 133.3 million, on 2 July 2021. The pur-
chase was done using standard terms, and the price was based
on Cushman and Wakefield’s valuation of the property at 15 June
2021. The acquisition was partly financed through a bank loan
of NOK 86 million. The purchase price was paid to the Disposal
Account. Since then, Nordic Trustee has released NOK 92.6 mil-
lion from the Disposal Account to finance the investments in the
pledged property portfolio.
KMC Properties
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Annual report 2021
67
Financial statments
|
KMC Properties group
Note 17 Other long-term liabilities
Other longterm liabilities
Amounts in NOK thousand 2021 2020
Lease liability related to right of use assets 19 126 16 911
Other longterm liabilities 10 153 9 732
Total other current liabilities 29 279 26 643
Lease liability related to right of use assets
The group's leases relates to lease of land relating to the invest-
ment properties.
The right of use asset from the leases is included in the carrying
amount of the investment properties on that land.
Undiscounted lease payments and year of payment
Amounts in NOK thousand Principal Interest 2021 Principal Interest 2020
Less than 1 year 329 711 1 039 196 644 840
1-2 years 343 696 1 039 206 635 841
2-3 years 9 887 681 10 568 216 625 841
3-4 years 368 376 744 9 786 447 10 233
4-5 years 384 359 744 237 313 550
More than 5 years 8 145 3 445 11 590 6 466 2 229 8 695
Total undiscounted lease payments 19 455 6 269 25 724 17 107 4 894 22 001
Changes in lease liabilities
Amounts in NOK thousand 2021 2020
At 1 January 2021 17 107 -
Additions 3 324 17 107
Adjustments (852) -
Cash payments for the principal portion of the lease liability (124) -
Cash payments for the interest portion of the lease liability (643) -
Interest expense on lease liabilities 643 -
At 31 December 2021 19 455 17 107
Total lease liability is presented as part of other long-term and other short-term liabilities with the following amounts:
Amounts in NOK thousand 2021 2020
Current lease liabilities 329 196
Non-current lease liabilities 19 126 16 911
The lease contracts do not include any restrictions with regards
to the group's dividend policy or financing opportunities.
Note 18 Other current liabilities
Other current liabilities
Amounts in NOK thousand 2021 2020
Trade payables (non-interest bearing) 23 608 36 404
Taxes payable 2 906 5 232
Annual report 2021
|
KMC Properties
68
Financial statments
|
KMC Properties group
Value added taxes payable 5 315 24 605
Other current liabilities (non-interest bearing) 29 049 76 259
Total other current liabilities 60 878 142 501
Note 19 Changes in liabilities arising from financing activities
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions below.
Amounts in NOK thousand
Interest
bearing long-
term debt
Other
long-term
liabilities
Lease
liabilities (in
other long-
term liabilities)
Current items
from financing
activities (in other
current liabilities) Total
At 1 January 2021 1 832 345 9 732 16 621 5 396 1 864 094
Cash flows - - - -
- bond issue/new loans 407 800 2 680 - - 410 480
- settlment of debt (2 790) (3 954) - - (6 744)
- amounts recognised on acquisition of companies 31 680 - 3 324 - 35 004
- accrued interest 2 - - - 2
- paid transaction fees - - - - -
- capitalised borrowing cost 6 000 - - - 6 000
- other movements - 1 695 (686) - 1 009
- reclassified to current (2) - (133) 134 -
At December 2021 2 275 035 10 153 19 126 5 530 2 309 844
Amounts in NOK thousand
Interest
bearing long-
term debt
Other
long-term
liabilities
Lease
liabilities (in
other long-
term liabilities)
Current items
from financing
activities (in other
current liabilities) Total
At 1 January 2020 - - - - -
Cash flows - - - - -
- bond issue/new loans 1 850 000 5 494 - - 1 855 494
- settlment of debt (928 704) - - - (928 704)
- amounts recognised on acquisition of companies
928 704 4 238 17 107 - 950 049
- accrued interest 4 910 - - - 4 910
- paid transaction fees (17 655) - - - (17 655)
- reclassified to current (4 910) - (486) 5 396 -
At December 2020 1 832 345 9 732 16 621 5 396 1 864 094
KMC Properties
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Annual report 2021
69
Financial statments
|
KMC Properties group
Note 20 Subsidiaries
The group comprises the following legal entities at 31 December 2021.
All entities are directly or indirectly owned 100%.
Subsidiaries
incorporated in
Norway
Subsidiaries
incorporated in
Sweden
Subsidiaries
incorporated in
Denmark
Subsidiaries
incorporated in
Holland
Subsidiaries
incorporated in
other countries
KMC Properties AS KMC Eiendom Sverige AB
KMC Industrial Properties Denmark ApS
Holland Industrial Properties B.V Pesca Property Finland Oy (Finland)
KMC Senja AS Genevad Vårgårda Holding AB Pesca Property Denmark A/S Oldenzaal Investment properties B.V Pesca Property Kuopio Oy (Finland)
KMC Havnegata 16 AS Värgärda Genevad Fastighet AB Pesca Property Fredrikshavn A/S Someren Investment properties B.V LLC Martex (Russia)
Hofstadvegen 15 AS KMC Urshult AB Pesca Property Hvide Sande A/S Wijchen Investment properties B.V Gasor Consulting Ltd (Cyprus)
KMC Properties Sverige Danmark AS KMC Fårtickan AB KMC Skjelvej ApS Zwartsluis Investment properties B.V Tiberton Yard Holding 2 Ltd (Cyprus)
Østre Rosten 102 AS KMC Norrköping AB
Østre Rosten 102 B AS Pesca Property Sweden AB
Rantex Eiendom AS Pesca Property Kungshamn AB
Botngaard Eiendom AS Pesca Property Varberg AB
Industrieiendom Nord AS
Balsfjord Eiendom AS
Hamarvik Eiendom AS
Hitra Eiendom AS
Kvenild Sin AS
Levanger Eiendom AS
Skattørvegen 78 AS
Stjørdal Eiendom AS
Grøntvedt Næringsbygg AS
Pesca Property AS
Pesca Property Invest AS
Pesca Property Norway AS
Pesca Property Båtsfjord AS
Pesca Property Gjerdsvika AS
Pesca Property Havøysund AS
Pesca Property Kongsvinger AS
Pesca Property Leknes AS
KMC Properties Nederland AS
KMC Properties II AS
KMC Properties II Norway AS
FNH Eiendom AS
KMC Properties II Denmark AS
KMC Properties II Sweden AS
KMC Properties III AS
KMC Properties III Norway AS
KMC Oppdal AS
Storemyra 200 AS
Kampenveien 5 AS
Maritime Group Eiendom AS
Annual report 2021
|
KMC Properties
70
Financial statments
|
KMC Properties group
Note 21 Related party transactions
The table below sets out KMC Properties AS (including its sub-
sidiaries) material investments and acquisitions with related par-
ties in 2020.
Date Target/property Purchase price
27.05.2020 KMC Properties Sverige Danmark AS including subsidiaries NOK 79 817 233
27.05.2020 Hoftsadvegen 15 AS NOK 12 970 767
Industrieiendom Nord AS including subsidiaries NOK 66 844 177
27.05.2020 Botngård Eiendom AS NOK 4 670 339
27.05.2020 Rantex Eiendom AS NOK 9 415 722
27.05.2020 Østre Rosten 102b AS NOK 98 479 132
27.05.2020 Østre Rosten 102 AS NOK 46 321 498
28.08.2020 KMC Industrial Properties Denmark ApS aquired Maribo property EUR 2 840 000
(approximately NOK 29.7 million)
28.08.2020 KMC Industrial Properties Denmark ApS acquired Tvilho property EUR 7 400 000
(approximately NOK 77.5 million)
23.12.2020 Pesca Property AS NOK 419 439 784
23.12.2020 Wijchen Investment properties B.V., Oldenzaa Investment properties B.V.,
Someren Investment properties B.V., and Zwartsluis Investment properties B.V.
EUR 34 980 000
(approximately NOK 367 million)
On this date, KMC Properties AS was 100% owned by EBE Eien-
dom AS, which at this date was owned 50% by Bekken Invest
AS, and 50% by Kastor Invest AS. Bewi Holding AS was 100%
owned by Bekken Invest AS. The purchase prices for all of these
companies acquired by KMC Properties AS were based on val-
uations by external valuators.
The table below sets out KMC Properties AS (including its sub-
sidiaries) material investments and acquisitions with related par-
ties in 2021.
Date Target/Property Purchase price
20.12.2021 Kampenveien 5 AS NOK 44 824 891
On this date, KMC Properties ASA was 41,3% owned by EBE Eien-
dom AS, which at this date was owned 100% by BEWI Invest AS.
BEWI Invest AS owned 100% of Kampenveien 5 AS through the
100% owned subsidiary Frøya Invest AS. The purchase prices
were based on valuations by external valuators.
The tenants BEWI and Insula are regarded as related parties by
their ownership in KMC Properties ASA through EBE Eiendom AS
and Kverva Industrier AS. Reference is made to note 2.5 Segment
information for detailed information.
KMC Properties ASA has in 2021 purchased services for NOK 3
million from BEWI related companies, mainly cost of interim hir-
ing of employees and office rent.
KMC Properties
|
Annual report 2021
71
Financial statments
|
KMC Properties group
Note 22 Earnings per share
Basic earnings per share is calcuated by dividing the net profit
attributable to shareholders by the weighted average number of
ordinary shares outstanding during the year.
KMC Properties has not issued options or other financial instru-
ments which have a dilutive effect on outstanding shares.
Basic earnings per share
2021 2020
Net profit attributable to ordinary equity holders of parent company (NOK thousand) 304 847 312 631
Weighted average number of shares 261 082 733 76 725 563
Net profit per share attrutable to ordinary equity holders (NOK) 1.2 4.1
Reference is made to note 14 Shareholder capital and shareholders for detailed information on changess in number of shares.
Note 23 Subsequent events
The invasion of Ukraine
KMC Properties owns an office building in Moscow, Russia. The
building was booked at NOK 143 million in the financial accounts
on 31 December 2021, 3.6 per cent of the total portfolio value,
and the net operating income from the property was NOK 9.1
million in 2021.
Sanctions imposed on Russia due to its invasion of Ukraine, sig-
nificantly increases the risks related to the value of the property,
as well as the rental income, and thus KMC Properties expects
an impairment related to the property value in the first quarter
of 2022.
The board has decided that the investment in Russia is to be pre-
sented as an asset held for sale and as a discontinued operations
in accordance with IFRS 5 as of 31 March 2022.
Acquisitions
On 21 January 2022, KMC Properties announced the acquisition
of a herring production and cold storage facility in Rönnäng, in
the Swedish country of Västra Götaland, from Klädesholmen Sea-
food AB for approximately SEK 93.6 million (approximately NOK
90 million). The property includes 19.873 sqm BTA of land and
11.670 sqm BTA of buildings, and a triple-net bare house agree-
ment with Klädesholmen Seafood with an initial lease term of 15
years and a yield-on-cost estimated at 7.5 per cent.
On 2 February 2022, KMC Properties announced that it had
acquired a modern meat processing facility, strategically located
at Fagernes near Narvik in Norway, from Kubera AS for a consider-
ation of approximately NOK 100 million. The property is composed
of 10 303 m
2
BTA of land and 6 093 m
2
BTA of building that was
erected in 1998 and substantially upgraded in 2001 and 2003. The
meat processing facility is strategically located south of Narvik
city center, near the E6 motorway, the railway and port terminal.
The property came with a bare house agreement with the tenant,
Kuraas AS, which is on a 6.5-year lease with the option to extend.
The total consideration for the property was approximately NOK
100 million, with a yield of 7.8 per cent based on the rent for 2022.
Other matters
No other events have taken place after the balance sheet date
that would have had a material effect on the financial statements
or any assessments carried out.
Alternative Performance Measures
KMC Properties ASA’s financial information is prepared in accord-
ance with the international financial reporting standards (IFRS). In
addition, the company reports alternative performance measures
(APMs) that are regularly reviewed by management to enhance
the understanding of the company’s performance as a supple
-
ment, but not as a substitute, to the financial statements pre-
pared in accordance with IFRS. Financial APMs are intended to
enhance comparability of the results and cash flows from period
to period. The financial APMs reported by KMC Properties ASA
are the APMs that, in management’s view, provide relevant sup-
plemental information of the company’s financial position and
performance. Operational measures such as, but not limited to,
occupancy and WAULT are not defined as financial APMs accord-
ing to ESMA’s guidelines.
Annual report 2021
|
KMC Properties
72
Financial statments
|
KMC Properties group
Net Asset Value adjusted (NAV adjusted)
Amounts in NOK million 31.12 .2021 31.12.2020
Total equity 1 836 1 243
Deferred tax liabilities 132 50
Net asset value (NAV) 1 968 1 293
Debt ratio – group net LTV
Amounts in NOK million 31.12 .2021 31.12.2020
Interest bearing debt (bond, nominal value) 1 850 1 850
Bank loan 437 -
Loans from credit institutions (RCF) - -
Cash and cash equivalents (208) (125)
Mark-to-market hedge adjustment (67) (8)
Net interest-bearing debt 2 012 1 717
Investment property (market value) 4 002 3 090
Group net LTV 50.3% 55.6%
Net income from property management
Amounts in NOK million 2021 2020
Operating profit (loss) before investment property fair value adjustments
1)
148.2 30.4
Net realised financials (82 .1) (22.1)
Net income from property management 66.1 8.3
1) Exclusive depreciation included in other operating expenses.
Definitions
Bonds, or the Bond Issue
NOK 1 850 million senior secured bond with 3 years tenor issued on 11 December 2020
Covid-19
The outbreak of the coronavirus SARS-CoV-2
Cushman & Wakefield
Cushman & Wakefield Realkapital, Kronprinsesse Märthas plass 1, 0125 Oslo, Norway,
Gross Rental Income (GRI)
Equals Total Income
Independent valuer
Cushman & Wakefield
Loan-to-Value (LTV)
Total net nominal value of interest-bearing debt divided by the total market value of the
property portfolio.
Market value of portfolio
The market value of all properties owned by the parent company and subsidiaries.
Net Asset Value, adjusted (NAV)
NAV from an ordinary long-term operational perspective of the business. Based on total
equity in the balance sheet, adjustments are made for the carrying amount of deferred tax
NOK
The Norwegian Krone, the official currency of Norway
Occupancy rate (%)
Leased Lettable area (sqm) / Total Lettable area (sqm)
OPEX
Operating expense, measured by total operating expenses – Salary expenses
SG&A
Selling, General & Administrative Expenses, calculated as Salary expenses
Property related expenses
Property-related expenses include administrative costs related to the management of the
properties as well as operating and maintenance costs.
SWAP
A swap is an agreement between two parties to exchange sequences of cash flows for a
set period of time
WAULT
Weighted Average Unexpired Lease Term measured as the remaining contractual rent
amounts of the current lease contracts of the investment properties of the group, including
areas that have been re-let and signed new contracts, adjusted for termination rights and
excluding any renewal options, divided by Contractual rent, including renewed and signed
new contracts. The Gasfield property is excluded in the calculation.
KMC Properties
|
Annual report 2021
73
Financial statments
|
KMC Properties group
Statement of comprehensive income – KMC Properties ASA
For the period 1 January - 31 December
Amounts in NOK thousand Note 2021 2020
Other income 14 024 -
Total income 14 024 -
Personnel expenses 7 (19 296) (551)
Other operating expenses 6 (36 666) (15 633)
Total operating expenses (55 962) (16 183)
Operating profit (loss) before fair value adjustments (41 938) (16 183)
Finance revenues 5 170 198 118 536
Finance expenses 5 (98 607) (22 102)
Currency exchange gains (losses) 5 (19 321) (12 800)
Net financial gains (losses) 52 271 83 635
Earnings before tax (EBT) 10 334 67 452
Income tax expense 9.10 (119 ) 45 202
Profit (loss) for the period 10 215 112 654
Other comprehensive income:
Exchange differences on net investments in foreign operations - -
Tax effects on exchange differences on net investments - -
Translation differences from foreign operations - -
Other comprehensive income, net of tax - -
Total Comprehensive income for the period 10 215 112 654
Annual report 2021
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KMC Properties
74
Financial statments
|
KMC Properties ASA
Statement of nancial position – KMC Properties ASA
Per 31 December
Amounts in NOK thousand Note 31.12.2021 31.12.2020
ASSETS
Non-current assets
Investment in subsidiaries 2 1 372 217 1 197 147
Financial derivative assets 4 67 380 8 021
Loans to subsidiaries 12 2 161 575 2 185 701
Deferred tax asset 10 45 575 45 202
Total non-current assets 3 646 748 3 436 071
Current assets
Receivables from group companies 12 116 675 2 989
Other receivables 4 4 660 458
Other financial derivatives 340 154
Cash and cash equivalents 4 68 139 54 146
Total current assets 189 814 57 747
TOTAL ASSETS 3 836 562 3 493 818
EQUITY AND LIABILITIES
Paid-in equity
Ordinary shares 11 56 374 48 153
Share premium 2 053 889 1 735 716
Other paid-in equity 312 731 327 277
Total paid-in equity 2 422 994 2 111 146
Other equity
Other equity (493 632) (504 340)
Total other equity (493 632) (504 340)
Total equity 1 929 361 1 606 807
Liabilities
Non-current liabilities
Loans from credit institutions 3 1 838 345 1 832 345
Loans from group companies 12 50 117 -
Total non-current liabilities 1 888 462 1 832 345
Current liabilities
Trade liabilities 5 037 11 219
Loans from credit institutions 3 4 911 8 863
Payables to group companies 12 793 -
Other current liabilities 8 7 998 34 583
Total current liabilities 18 739 54 666
Total liabilties 1 907 201 1 887 012
TOTAL EQUITY AND LIABILITIES 3 836 562 3 493 818
Trondheim, Norway, 27 April 2022, the board of directors and CEO, KMC Properties ASA
Anders Dyrseth Morten Eivindssøn Astrup Nini Høegh Nergaard Anna Musiej Aanensen
Chair Director Director Director
Stig Wærnes Marianne Bekken Thorbjørn Fjærtoft Pedersen Liv Malvik
Director Director Director CEO
KMC Properties
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Annual report 2021
75
Financial statments
|
KMC Properties ASA
Statement of cash ows – KMC Properties ASA
Amounts in NOK thousand Note 2021 2020
Cash flow from operational activites
Earnings before tax 10 334 67 452
Adjusted for:
Financial Income 5 (170 198) (118 536)
Interest on loans to subsidiaries 12 116 618 2 178
Interest on loans from subsidisaries 12 (793) -
Financial expenses 5 98 607 22 102
Net currency gains 5 19 321 12 800
Cash flow before changes in working capital 73 887 (14 005)
Changes in working capital:
Trade receivables and other receivables 4 (117 888) (2 380)
Trade payables and other payables 4 18 142 41 817
Net cash flow from operating activities (99 746) 25 432
Cash flow from investment activities
Outflows from Investments in subsidiaries 2 (175 070) (1 075 747)
Outflows from lending to subsidiaries 12 - (2 160 038)
Inflows from repayment of loan 12 75 810 4 730
Interest received 12 3 333 3 960
Net cash flow from investment activities (95 927) (3 227 096)
Cash flow from financing activities
Share issue 11 314 968 1 610 489
Net borrowings 3 - 1 850 000
Repayments of loans 3 - (187 768)
Transactions fees paid and other financial costs (14 394) -
Interest paid 3 (91 092) (22 128)
Net cash flow from financing activities 209 481 3 250 593
Net Change in cash and cash equivalents 13 809 48 929
Carried forward cash and cash cquivalents 4 54 146 5 095
FX movements on bank deposits 184 122
Cash and cash equivalents on closing date 68 139 54 146
Restricted cash and cash equivalents not included above - 2 259
Annual report 2021
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KMC Properties
76
Financial statments
|
KMC Properties ASA
Statement of changes in equity – KMC Properties ASA
Paid-in equity Other equity
Amounts in NOK thousand Note
Share
capital
Share
premium
Other
paid-in
capital
Retained
earnings/
losses
Total
equity
1 January 2020 1 767 158 587 340 303 (527 745) (27 088)
Issue of shares - conversion of the
"Swedbank loan" 11 5 365 182 403 - - 187 768
Issue of shares - conversion of sellers credit
(KMC Properties AS) 11 30 736 1 045 011 - - 1 075 747
Issue of shares - private placement
(NOK 300 million) 11 8 571 291 429 - - 300 000
Issue of shares - conversion of sellers credit
(Dutch properties) 11 1 714 58 286 - - 60 000
Transaction cost issue of shares 11 - - (13 026) - (13 026)
Effect of loan conversion to equity 3 - - - (89 249) (89 249)
Profit /(loss) for the year total - - - 112 654 112 654
Total 46 386 1 577 129 (13 026) 23 405 1 633 894
31 December 2020 48 153 1 735 716 327 277 (504 340) 1 606 807
Paid-in equity Other equity
Amounts in NOK thousand Note
Share
capital
Share
premium
Other
paid-in
capital
Retained
earnings/
losses
Total
equity
1 January 2021 48 153 1 735 716 327 277 (504 340) 1 606 807
Issue of shares subsequent offering 19.02.2021 11 196 6 398 - - 6 594
Issue of shares privat placement 16.09.2021 11 7 500 292 500 - - 300 000
Issue of shares employee offering 18.10.2021 11 150 4 650 - - 4 800
Issue of shares subsequent offering 27.10.2021 11 375 14 625 - - 15 000
Transaction cost issue of shares 11 - - (14 546) - (14 546)
Profit /(loss) for the year total - - - 10 215 10 215
Other effects to equity - - - 492 492
Total 8 221 318 173 (14 546) 10 707 322 554
31 December 2021 56 374 2 053 889 312 731 (493 633) 1 929 361
Change in share capital and related transaction cost:
■
The shares subsequent of NOK 6 593 886, at NOK 7.00 per share, gave 981 233 new shares
■
The private placement of NOK 300 000 000, at NOK 8.00 per share, gave 37 500 000 new shares (transaction cost: NOK 10 979 514).
■
The employee offering of NOK 4 800 000 at NOK 6.40 per share, giving 750 000 new shares
■
The shares subsequent of NOK 15 000 000, at NOK 8.00 per share, gave 1 875 000 new shares (transaction cost: NOK 446 672).
KMC Properties
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Annual report 2021
77
Financial statments
|
KMC Properties ASA
Notes to the nancial statements – KMC Properties ASA
Note 01 Accounting principles
KMC Properties ASA (KMCP) is a public limited liability company
registered in Norway. Its head office is at
Dyre Halses gate 1 A, 7042 Trondheim.
KMC Properties ASA uses a simplified version of IFRS as account-
ing principle. There are no material effects in comparison with
ordinary IFRS principles used in the group. Also see note 3 to
the consolidated accounts for further information on accounting
principles. Subsidiaries and investments in related companies are
recognised at cost unless the value is considered to be impaired.
A write-down to fair value will be done if the impairment is not
considered temporary and impairment is considered required by
IFRS. Write-downs will be reversed if the requirement for impair-
ment is no longer present.
Note 02 Investment in subsidiaries
KMCP investment in subsidiaries
Location
Formed/
acquired Ownership
Equity
31.12.2021
B o o k v a l u e
KMCP 2021
B o o k v a l u e
KMCP 2020
KMC Properties AS Norway 2020 100% 474 711 1 075 747 1 075 747
KMC Properties II AS Norway 2021 100% 175 030 175 040 -
KMC Properties III AS Norway 2021 100% 30 30 -
Gasor Consulting Ltd Cyprus 2015 99% 530 121 400 121 400
Tiberton Yard Holding 2 Ltd Cyprus 2015 100% (561) - -
Total 649 740 1 372 217 1 197 147
KMCP (99%) and Tiberton Yard Holding 2 Ltd (1%) owns the
shares in Gasor Consulting Ltd. Gasor Consulting Ltd owns 100%
of the shares in LLC Martex. LLC Martex owns and operates the
Gasfield building (the investment property).
Note 03 Borrowings
Bond loan:
Amounts in NOK thousand 2021 2020
Interest-bearing debt at 1 January 1 832 345 -
New debt - 1 850 000
Repayment/refinancing of debt - -
Interest-bearing debt at 31 December 1 832 345 1 850 000
Capitalised borrowing cost 6 000 (17 655)
Carrying amount interest-bearing debt* 1 838 345 1 832 345
Fair value of interest-bearing debt, excess value/(reduced value) for the group in relation to book value
43 000 6 000
* The fair value presented above is the excess value as at 31 December 2021, given by Nordic Bond Pricing AS.
Annual report 2021
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78
Financial statments
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KMC Properties ASA
Bond loan:
Amounts in NOK thousand 2021 2020
Interest-bearing debt at 1 January - 159 300
New debt - 28 468
Repayment/refinancing of debt - (187 768)
Interest-bearing debt at 31 December - -
Capitalised borrowing cost - -
Carrying amount interest-bearing debt* - -
Additional bank loan obtained before report date - -
Bank loan at reporting date - -
* The fair value presented above is the excess value as at 31 December 2021, given by Nordic Bond Pricing AS.
Bond
loan
NOK
million
Weighted average
current interest
Interest
terms
Final
maturity
In compliance
with covenants?
2020-2023 1 850 4.76% 3 months NIBOR + 4.25% 11 December 2023 Yes
NOK 1 850 million senior secured bond. Guarantees and security
is shared with certain hedging providers and one or more revolving
credit facilities and, under the terms of an intercreditor agreement,
the bond issue ranks behind the relevant hedging providers and
the revolving credit facilities in the payment waterfall.
Call option: Voluntary redemption of bond (i) prior to 11 June 2023
in done with a "make whole" compensation to bondholders and (ii)
after 11 June 2023 until (but not including) Final Maturity is done
at 101% of the nominal amount of redeemed bond.
Put option: Upon a change of control, failure to list the bond or
a de-listing of the Issuer's share from Oslo Børs, exercisable at
101% of the nominal amount of the redeemed bond.
Guarantors and Security: KMC Properties AS and substantially
all of its direct and indirect subsidiaries (i) are guarantors for the
bond issue and (ii) substantially all of their assets (and the shares
in KMC Properties AS) are granted as security for the bond issue.
General undertakings (covenants): Customary general undertak-
ings applicable to the Issuer and all its direct and indirect sub-
sidiaries, including maintaining authorisations, compliance with
laws, continuation of business, pari passu ranking, limitations on
investments, limitations on distributions, certain financial support
restrictions, restrictions on limiting subsidiaries' right to make
distributions.
Additional undertakings (covenants) for KMC Properties AS: In
additional to the general undertakings set out above, there are
certain covenants that only apply to KMC Properties AS and its
direct and indirect subsidiaries and which, to a certain extent,
"ring-fences" this part of the group. These covenants include
restrictions on mergers and de-mergers, additional limitations
on investments, limitations on disposals of assets and require-
ments for re-investing disposal proceeds, additional restrictions
on incurring financial indebtedness, negative pledge, require-
ments as to insurances, requirements for maintenance and man-
agements of properties and limitations on alteration of property
lease agreements.
Financial covenants: The Issuer must ensure compliance with the
following financial covenants (maintenance covenants), measure
on the group as a whole:
■
Interest cover ratio (ICR) of not less than 1.5x
■
Net-loan-to-value ratio below (NLTV) 75%
■
Liquidity not less than an amount equal to net interest costs
for the next 6 months
In addition (incurrence covenants):
■
any distribution from the Issuer is subject to an NLTV of not
less than 65% and a liquidity that is 1.5x higher than the
liquidity requirement above; and
■
the incurrence of certain otherwise permissible new financial
indebtedness is subject to a loan-to-value ratio of 60%.
■
The group was in compliance with all covenants related to
its liabilities at 31 December 2021.
KMC Properties
|
Annual report 2021
79
Financial statments
|
KMC Properties ASA
Note 04 Financial instruments
Financial assets represent contractual rights for the group to
receive cash or other financial assets in the future. Financial lia-
bilities correspondingly represent contractual obligations for
the group to make future payments. Financial instruments are
included in several accounting lines in the group’s balance sheet
and income statement and are classified in different categories
in accordance with their accounting treatment.
The carrying amount of financial instruments in the group’s bal-
ance sheet is considered to provide a reasonable expression of
their fair value, with the exception of interest-bearing debt. The
fair value of interest-bearing debt is described in note 3. A spec-
ification of the group’s financial instruments is presented below.
Financial assets
Amounts in NOK thousand
Amortised cost
31.12.2021
Fair value through profit
or loss 31.12.2021 Total
Cash and cash equivalents 68 139 - 68 139
Interest-bearing loans and borrowings to subsidiaries 2 161 575 - 2 161 575
Currency and interest swaps (long-term) - 67 380 67 380
Currency and interest swaps (short-term) - 340 340
Other current receivables 121 335 - 121 335
Total financial assets at 31 December 2021 2 351 049 67 720 2 418 769
Financial liabilities
Amounts in NOK thousand
Amortised cost
31.12.2021
Fair value through profit
or loss 31.12.2021 Total
Interest-bearing loans and borrowings (bond) 1 838 345 - 1 838 345
Interests on loans and borrowings 4 911 - 4 911
Trade payables (non interest bearing) 5 037 - 5 037
Current liabilities to subsidiaries 793 - 793
Other current liabilities (non interest bearing) 7 998 - 7 998
Total financial liabilities at 31 December 2021 1 857 084 - 1 857 084
Net financial assets and liabilities at 31 December 2021 493 965 - 561 685
Financial assets
Amounts in NOK thousand
Amortised cost
31.12.2020
Fair value through profit
or loss 31.12.2020 Total
Cash and cash equivalents 54 146 - 54 146
Currency and interest swaps (long-term) 2 185 701 - 2 185 701
Currency and interest swaps (short-term) - 8 021 8 021
Other current receivables 3 447 154 3 601
Total financial assets at 31 December 2020 2 243 294 8 175 2 251 469
Financial liabilities
Amounts in NOK thousand
Amortised cost
31.12.2020
Fair value through profit
or loss 31.12.2020 Total
Interest-bearing loans and borrowings (bond) 1 832 345 - 1 832 345
Interests on loans and borrowings 8 863 - 8 863
Trade payables (non interest bearing) 11 219 - 11 219
Other current liabilities (non interest bearing) 34 853 - 34 853
Total financial liabilities at 31 December 2020 1 887 280 - 1 878 417
Net financial assets and liabilities at 31 December 2020 356 014 8 175 373 052
Annual report 2021
|
KMC Properties
80
Financial statments
|
KMC Properties ASA
The below table shows an analysis of fair values of assets and
liabilities in the parent company, grouped by level in the fair value
hierarchy, which either are measured at fair value or where infor-
mation about the fair value is provided.
Level 1 - Quoted prices in active markets that the entity can
access at the measurement date.
Level 2 – Use of a model with inputs other than level 1 that are
directly or indirectly observable market data.
Level 3 - Use of a model with inputs that are not based on observ-
able market data.
Financial liabilities measured at fair value / where fair value must be presented
Amounts in NOK thousand Level 1 Level 2 Level 3 Total
Currency and interest swaps (long-term) - 67 380 - 67 380
Currency and interest swaps (short-term) - 340 - 340
Total - 67 720 - 67 720
Swap agreements
Swap
agreement
Currency amount
(million)
Start
date
Maturity
date
Fixed
currency rate
Fixed
interest
Interest & currency NOK 335 23.12.2020 11.12.2023
EUR/NOK
= 10.630
EURIBOR
= -0.51%
Interest & currency NOK 240 23.12.2020 11.12.2023
SEK/NOK
= 1.050
STIBOR
= 0.017%
Interest & currency NOK 165 23.12.2020 11.12.2023
DKK/NOK
= 1.428
DANISH IBOR
= -0.505%
Interest NOK 500 13.07. 2021 31.12.2030 Not applicable
NIBOR
= 1.5175%
Interest EUR 32 11.12.2023 13.12.2027 Not applicable
EURIBOR
= -0.03%
Interest SEK 120 11.12.2023 13.12.2027 Not applicable
STIBOR
= 0,686%
Interest DKK 120 11.12.2023 13.12.2027 Not applicable
DANISH IBOR
= 0.215%
Note 05 Finance income and costs
Finance income
Amounts in NOK thousand 2021 2020
Interest income 6 9
Fair value adjustment bank loan - 90 677
Interest gains from group companies 106 380 6 605
Changes in fair value, financial derivatives over profit and loss 63 812 8 175
Reversal of provision for loss on group companies - 13 071
Total finance income 170 198 118 536
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Annual report 2021
81
Financial statments
|
KMC Properties ASA
Finance costs
Amounts in NOK thousand 2021 2020
Interest costs from loans measured at amortised cost 94 755 21 662
Interest costs to group companies 883 -
Other finance costs 2 968 440
Total finance costs 98 607 22 102
Net foreign exchange gains and losses (19 321) (12 800)
Net finance gains (losses) 52 271 83 635
Note 06 Other operating expenses
Other operating expenses
Amounts in NOK thousand 2021 2020
Management fees 2 869 2 417
Legal, agency and consultancy fees 22 799 3 753
Accounting 330 130
Auditors 2 697 3 982
Other operating expenses 7 970 5 351
Total other operating expenses 36 666 15 633
Auditor fees (excl. vat)
Amounts in NOK thousand 2021 2020
Audit fees 2 497 3 651
Tax advice 175 -
Other services not related to auditing - -
Other services 25 330
Total auditor expenses 2 697 3 982
Note 07 Personnel costs
Personnel costs
Amounts in NOK thousand 2021 2020
Salaries, performance-related pay and other taxable benefits 12 128 -
Employers` Natural Insurance contributions 1 637 -
Pension expenses 491 -
Other personnel costs 3 115 51
Board fees 1 925 500
Total personnel costs 19 296 551
Renumeration to senior executives
The total remuneration of the CEO and other Senior Execu-
tives consists of a fixed package of salary and benefits supple-
mented by cashbased short-term incentive(STI) and long-term
incentive (LTI) variable remuneration plans, share purchase
scheme (on the same terms as all other employees), pension
and insurance arrangements.
Annual report 2021
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82
Financial statments
|
KMC Properties ASA
Overview of total renumeration to the board of directors (incl fees for board committees)
Amounts in NOK thousand 2021
1)
2020
Anders Dyrseth, chair of the board 400 -
Stein Aukner, (chair of the board 2020) - 250
Morten E. Astrup 250 -
Stig Wærnes 300 -
Nini H. Nergaard 225 125
Anna Musiej Aanensen 300 125
Marianne Bekken 225 -
Thorbjørn Fjærtoft Pedersen (from 2 June 2021) 113 -
Børge Klungerbo (until 2 June 2021) 113 -
Total board fees 1 925 500
1) The overview of the remuneration of the board of directors shows remuneration earned in the financial year.
Note 08 Other current liabilities
Amounts in NOK thousand 2021 2020
Accrued asset management fee 6 035 2 625
Accrued variable transaction based fee – Storm Norge AS - 4 000
Other accrued expenses 1 963 27 958
Total other current liabilities 7 998 34 583
Note 09 Income tax
Tax recognised over income statement
Amounts in NOK thousand 2021 2020
Current income tax - -
Movement in deferred tax (119 ) 45 202
Total income tax (119 ) 45 202
Basis for taxation, parent company
Amounts in NOK thousand 2021 2020
Earnings before tax 10 334 67 452
Income and expenses not subject to taxation (9 794) (114 536)
Movement in temporary differences (62 397) (68 586)
Adjustment interest not deductible current year - 32 712
Tax losses for current year not recognised - -
Basis for taxation (61 858) (82 958)
Change of losses carried forward 61 858 82 958
Tax payable - -
KMC Properties
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Annual report 2021
83
Financial statments
|
KMC Properties ASA
Note 10 Deferred tax
Temporary differences, parent company
Amounts in NOK thousand 31.12. 2021 31.12.2020 Change
Financial liabilities 1 489 2 506 (1 017)
Receivables (*) - - -
Capitalised borrowing cost (11 655) (17 655) -
Currency and interest swaps (67 380) - -
Tax losses carried forward 251 564 187 899 63 665
Adjustment interest deductible in the future 33 143 32 712 -
Total temporary differences 207 161 205 463 62 648
Tax rate 22% 22% 0%
Deferred tax asset (liability) 45 575 45 202 374
Deferred tax asset (liability) not recognised - - -
Recognised deferred tax asset (liability) 45 575 45 202 374
Deferred tax assets have been recognised in the balance sheet,
since there is a sufficient likelihood that the tax assets will be uti-
lised in the future.
Note 11 Share capital and shareholdes
Share capital and nominal value
Amounts in NOK thousand 31.12.2021 31.12.2020
Shares issued 281 871 545 240 765 311
Nominal amount 0.20 0.20
Share capital 56 374 309 48 153 062
All shares are fully paid. There is only one share class. All shares have equal rights.
Change in share capital and related transaction cost:
■
The shares subsequent of NOK 6 593 886, at NOK 7.00 per share, gave 981 233 new shares
■
The private placement of NOK 300 000 000, at NOK 8.00 per share, gave 37 500 000 new shares (transaction cost: NOK 10 979 514).
■
The employee offering of NOK 4 800 000 at NOK 6.40 per share, giving 750 000 new shares
■
The shares subsequent of NOK 15 000 000, at NOK 8.00 per share, gave 1 875 000 new shares (transaction cost: NOK 446 672).
Note 12 Related party transactions
The company has provided a loan to LLC Martex. The principal
amount is RUB 224 187 101 and all interests has been paid as
at 31 December 2021. The interest rate is 13.5%.
KMCP will not demand amortisation or interest payments
unless there is sufficient liquidity in LCC Martex.
In connection with the transaction with KMC Properties AS, the
company issued a bond loan of NOK 1 850 million to refinance
existing debt in KMC Properties AS and its subsidiaries.
The loan amount has been lended to subsidiaries, see detail
below. The interest rate is set equal to the interest rate on the
bond loan, see note 3 above.
Annual report 2021
|
KMC Properties
84
Financial statments
|
KMC Properties ASA
Current receivables (unpaid interests)
Amounts in NOK thousand 31.12 .2021 31.12.2020
Tiberton Yard Holding 2 Ltd 18 245
Gasor Consulting Ltd 38 566
Pesca Property AS 19 471 418
KMCP AS 38 731 884
KMC Oppdal AS 157 -
KMCP II AS 2 -
KMCP II Norway AS 2 888 -
KMCP III AS 1 -
KMCP III Norway AS 24 -
KMC Senja AS 1 625 21
Holland Industrial Properties B.V. 16 419 374
KMC Properties Sverige Danmark AS 9 697 209
KMC Skjelvej ApS 970 -
Hofstadvegen 15 AS 1 146 20
Industrieiendom Nord AS 3 570 77
Balsfjord Eiendom AS 1 362 29
Hamarvik Eiendom AS 2 072 45
Hitra Eiendom AS 575 12
Kvenild Sin AS 954 21
Skattørvegen 78 AS 666 14
Stjørdal Eiendom AS 2 266 49
Levanger Eiendom AS - 4
Accrued Management Service FEE 14 024 -
Total current receivables from related parties 116 675 2 989
Non-current receivables
Amounts in NOK thousand 31.12 .2021 31.12.2020
Tiberton 339 -
Gasor 665 -
LLC Martex 20 397 25 663
Pesca Property AS 420 413 414 995
KMCP AS 760 783 876 125
KMCP II AS 153 -
KMCP II Norway AS 3 000 -
KMCP III AS 30 -
KMCP III Norway AS 18 000 -
KMC Oppdal AS 39 000 -
KMC Senja AS 46 321 21 000
KMC Skjelvej ApS 28 314 -
"Holland Industrial Properties B.V." 292 418 311 189
"Holland Industrial Properties B.V." 60 000 60 000
"KMC Properties Sverige Danmark AS" 211 652 207 243
Hofstadvegen 15 AS 28 903 19 833
Industrieiendom Nord AS 65 000 76 753
Balsfjord Eiendom AS 31 235 29 005
Hamarvik Eiendom AS 40 000 44 624
Hitra Eiendom AS 14 761 12 048
Kvenild Sin AS 18 548 20 527
Skattørvegen 78 AS 14 294 14 280
Stjørdal Eiendom AS 47 348 48 400
Levanger Eiendom AS - 4 016
Total non-current receivables from related parties 2 161 575 2 185 701
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Current liabilities
Amounts in NOK thousand 31.12 .2021 31.12.2020
Unpaid interests
KMC Industrial Properites Denmark ApS 185 -
KMC Eiendom Sverige AB 13 -
KMCP Nederland AS 467 -
Grøntvedt Næringsbygg AS 129 -
Total current liabilities towards group companies 793 -
Non-current liabilities
Amounts in NOK thousand 31.12 .2021 31.12.2020
KMC Industrial Properites Denmark ApS 14 293 -
KMC Eiendom Sverige AB 2 955 -
KMCP Nederland AS 14 869 -
Grøntvedt Næringsbygg AS 18 000 -
Total current liabilities towards group companies 50 117 -
Net receivables (liabilities), group companies 2 227 341 2 188 690
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PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of KMC Properties ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of KMC Properties ASA, which comprise:
• The financial statements of the parent company KMC Properties ASA (the Company), which
comprise the statement of financial position as at 31 December 2021, the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and
• The consolidated financial statements of KMC Properties ASA and its subsidiaries (the
Group), which comprise the statement of financial position as at 31 December 2021, the
statement of comprehensive income, statement of changes in equity and statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including a
summary of significant accounting policies.
In our opinion:
• the financial statements comply with applicable statutory requirements,
• the financial statements give a true and fair view of the financial position of the Company as at
31 December 2021, and its financial performance and its cash flows for the year then ended in
accordance with simplified application of international accounting standards according to
section 3-9 of the Norwegian Accounting Act, and
• the financial statements give a true and fair view of the financial position of the Group as at 31
December 2021, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company and the
Group as required by laws and regulations and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International
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Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 2 years from the election by the general meeting of the
shareholders on 24 June 2020 for the accounting year 2020.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. Valuation of investment property has
approximately the same risks and characteristics as last year and continues to be a in our focus. The
prior year’s key audit matter related to the reverse takeover in 2020 is no longer of current interest.
Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of investment property
The majority of the Group’s assets consist
of investment property. Primarily these
are logistics properties. The book value is
NOK 4 001 593 thousand.
Investment properties are measured at
fair value. Fair value adjustments of
investment properties may affect the
Group's results significantly for the year
and consequently its equity.
The fair value is an estimate based on
property specific information and
assumptions, such as lease terms, future
expected cash flows and yield. The
making of estimates and determination of
underlying assumptions require
significant judgment by management.
The basis for management's estimate is
valuations performed by an independent
valuation firm. The valuation firm, that
were hired by management, carried out
their work based on the requirements in
IFRS 13 and recognized valuation
techniques.
We considered valuation of investment
property to be a key area of focus due to
We obtained an understanding of management’s
process related to valuation of investment property and
tested whether relevant internal control activities had
been implemented.
We obtained, read, and understood the valuation
reports and met with the valuation firm independently
of management. We assessed whether the valuation
reports were prepared in accordance with the relevant
framework and whether they were appropriate to
determine the fair value of the Group's investment
properties.
We assessed the qualifications, competence and
objectivity of the valuation firm. Further, we reviewed
their terms of engagement in order to determine
whether there were unusual terms that might have
affected their objectivity or impose scope limitations
upon their work. Based on this work, we were satisfied
that the valuation firm remained objective and
competent, and that the scope of their work was
appropriate.
In our meetings with the valuation firm, we discussed
and challenged assumptions used. Assumptions
regarding cash flows and yield were evaluated. Our
main area of attention was the properties with the
highest values. We compared the assumptions used by
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the material amounts involved and the
extent of management judgement needed.
For details of valuation methodology and
the investment properties, refer to note 3
(summary of accounting policies), note 6
(critical accounting estimates and
judgements) and note 11 (investment
properties) to the financial statements.
whether assumptions that were not readily observable
in a marketplace were reasonable.
For a sample of investment properties, we evaluated
whether the property-specific information provided by
management to the valuation firm, such as lease terms,
duration and vacant area was consistent with
underlying property information. Furthermore, we
agreed this underlying information to the received
valuation reports. We obtained the valuation reports
directly from the valuation firms and compared them to
the reports we received from management. We found
no indication that the information was used
inconsistently.
We noted no significant deviations during the course of
our audit procedures.
We assessed the adequacy of the disclosures in the
notes to the financial statements regarding valuation of
investment properties as reasonable and in accordance
with IFRS requirements.
Other Information
The Board of Directors (management) is responsible for the information in the Board of Directors’
report and the other information accompanying the financial statements. The other information
comprises information in the annual report, but does not include the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the information in the
Board of Directors’ report nor the other information accompanying the financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other information
accompanying the financial statements otherwise appears to be materially misstated. We are required
to report if there is a material misstatement in the Board of Directors’ report or the other information
accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
• is consistent with the financial statements and
• contains the information required by applicable legal requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.
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Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with simplified application of international accounting standards according to the
Norwegian Accounting Act section 3-9, and for the preparation and true and fair view of the
consolidated financial statements of the Group in accordance with International Financial Reporting
Standards as adopted by the EU, and for such internal control as management determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of
accounting, and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company and the
Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
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However, future events or conditions may cause the Company and the Group to cease to
continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with Regulation on European Single Electronic Format
(ESEF)
Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial
statements with file name kmcpasa-2021-12-31-en have been prepared in accordance with Section 5-5
of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation
on European Single Electronic Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance
with the requirements of ESEF.
Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the single
electronic reporting format required in ESEF. This responsibility comprises an adequate process and
the internal control procedures which management determines is necessary for the preparation,
tagging and publication of the financial statements.
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Auditor’s Responsibilities
For a description of the auditor’s responsibilities when performing an assurance engagement of the
ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
Oslo, 27 April 2022
PricewaterhouseCoopers AS
Øystein Sandvik
State Authorised Public Accountant
(This document is signed electronically)
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Signers:
Name
This document package contains:
- Closing page (this page)
- The original document(s)
- The electronic signatures. These are not visible in the
document, but are electronically integrated.
This le is sealed with a digital signature.
The seal is a guarantee for the authenticity
of the document.
Method
Date
Revisjonsberetning
Sandvik, Øystein Blåka
2022-04-27 22:58
BANKID_MOBILE
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APPENDIX 1: CLIMATE ACCOUNT
Quantity Unit
GHG emissions
t CO
2
e
Scope 2 Electricity and district cooling/heating
Purchased electricity location-based 77 780 kWh 0.622
District heating 84 664 kWh 0.45
District cooling 13 011 kWh 0.07
Sum Scope 2 Location-based 1.14
Purchased electricity market-based 77 780 kWh
Sum Scope 2 Market-based 31
Scope 3
6: Business travel 10
Hotel stays 26 Days 9.95
Air travel 42 448 Km 0.34
13: Downstream leased assets (portfolio electricity and gas consumption) 43 659
Russia 948
Electricity 2 151 MWh 721
District heating 2 616 MWh 228
Norway 8 735
Gas 45 327 MWh 8 407
Electricity 40 630 MWh 325
District heating 460 MWh 2
The Netherlands 21 602
Gas 18 636 MWh 14 632
Electricity 79 884 MWh 6 970
Denmark 10 265
Gas 49 122 MWh 9 068
Electricity 8 520 MWh 1 175
District cooling 305 MWh 22
Sweden 2 109
Gas 9 437 MWh 1 976
Electricity 22 137 MWh 133
Scope 3 total 43 669
Appendix
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APPENDIX 2: GRI CONTENT INDEX
Statement of use
KMC Properties ASA has reported the information cited in this GRI content index for the
period 01.01.2021 to 31.12.2021 with reference to the GRI Standards.
GRI 1 used
GRI 1: Foundation 2021
GRI STANDARD DISCLOSURE LOCATION
GRI 2: General Disclosures 2021 2-1 Organisational details p. 8-9, 22, 31, 48, 78
2-2 Entities included in the organisation’s sustainability
reporting
p. 70
2-3 Reporting period, frequency and contact point p. 16
2-4 Restatements of information N/A - This is KMC Properties first
sustainability report.
2-5 External assurance p. 27-28, 87-93
2-6 Activities, value chain and other business relationships p. 2, 5-6, 9, 31-32
2-7 Employees p. 20, 38
2-9 Governance structure and composition p. 12-16, 22
2-10 Nomination and selection of the highest governance body p. 24, 39
2-11 Chair of the highest governance body p. 14
2-12 Role of the highest governance body in overseeing the
management of impacts
p. 16
2-13 Delegation of responsibility for managing impacts p. 16
2-14 Role of the highest governance body in sustainability
reporting
p. 16
2-15 Conflicts of interest p. 25
2-16 Communication of critical concerns p. 17
2-19 Remuneration policies p. 26-28, 59-60, 82-83
2-20 Process to determine remuneration p. 24, 26-28
2-22 Statement on sustainable development strategy p. 10-11
2-23 Policy commitments p. 17, 21
2-26 Mechanisms for seeking advice and
raising concerns
p. 17
2-27 Compliance with laws and regulations There were no incidents of non-compliance
in the reporting period.
2-28 Membership associations Until date, KMC Properties do not
participate in any associations or advocacy
organisations.
2-29 Approach to stakeholder engagement p. 16-17
GRI 3: Material Topics 2021 3-1 Process to determine material topics p. 16
3-2 List of material topics p. 16
3-3 Management of material topics p. 17-21
GRI 205: Anti-corruption 2016 205-1 Operations assessed for risks related to corruption p. 21
205-3 Confirmed incidents of corruption and
actions taken
p. 20
GRI 302: Energy 2016 302-1 Energy consumption within the organisation p. 18
302-3 Energy intensity p. 18
GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions p. 18
305-2 Energy indirect (Scope 2) GHG emissions p. 18, 93
305-3 Other indirect (Scope 3) GHG emissions p. 18, 93
GRI 306: Waste 2020 306-3 Waste generated p. 19
Additional Recycling rate - Percentage of waste that is diverted from
disposal for recycling or reuse
p. 19
GRI 403: Occupational Health
and Safety 2018
403-9 Work-related injuries p. 20
GRI 405: Diversity and Equal
Opportunity 2016
405-1 Diversity of governance bodies and employees p. 20
GRI 406: Non-discrimination
2016
406-1 Incidents of discrimination and corrective actions taken p. 20
GRI 411: Rights of Indigenous
Peoples 2016
411-1 Incidents of violations involving rights of indigenous peoples p. 20
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Dyre Halses gate 1a
NO-7042 Trondheim
post@kmcp.com
+47 480 03 175
kmcp.no
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