Refined operations, increased focus on near-term profitability and growth in rental business

From Q4 2018 and according to Nasdaq’s recommendation, SSM has applied the completed contract method, with retroactive application, for reporting housing cooperative projects. 

Summary of April – June 2019

•  Change of CEO, Mattias Lundgren, former CFO at NCC AB with many years’ experience in the housing and real estate industry appointed interim CEO on June 10, 2019.   
•  Repurchase of outstanding SSM bonds for a nominal value of 31.0 MSEK, volume-based average price at 70.4 percent. 
•  Net sales for projects run entirely by SSM totaled 20.4 MSEK (321.5).  
•  Operating loss was -26.3 MSEK (51.1), impacted by non-recurring items of -6.3 MSEK related to the change of CEO.   
•  Cash flow from operating activities amounted to -34.3 MSEK (131.7).  
•  6 (33) pre-purchase agreements signed. The lower number of pre-purchase agreements is due to the high number of unsold cooperative apartments in projects where production has started. 

Summary of January – June 2019 

•  Net sales for projects run entirely by SSM totaled 35.8 MSEK (546.9).   
•  Operating loss was -38.8 MSEK (85.8), impacted by non-recurring items of -6.3 MSEK related to the change of CEO.   
•  Cash flow from operating activities amounted to -66.3 MSEK (43.1).  
•  33 (39) pre-purchase agreements signed.  
•  119 redesigned cooperative apartments with a maximum price of 2.0 MSEK relaunched at beginning of year.  
•  The Stockholm City Planning Committee decided to continue planning for Tellus Towers. Consultations are planned in Q4 2019.  
•  A cost-efficiency program was introduced to reduce overhead costs by 50.0 percent, or 25.0 MSEK, in 2019. 
•  Change of CEO on June 10 to Mattias Lundgren, former CFO at NCC AB with many years’ experience in the housing and real estate industry.  

Significant events after the balance sheet date
SSM decided to focus its core business on project development and divesting its contracting operations. At the same time the company entered into a strategic partnership with design-build contractor Mecon Bygg. The change is intended to reduce SSM’s fixed costs and strengthen the company’s long-term competitiveness and profitability. The changes will have a marginal effect on profits in 2019. 

Mattias Lundgren, Interim President & CEO, comments on the second quarter 2019:
“SSM’s Interim Report for the second quarter 2019 is my first report since taking over as Interim CEO on June 10. My view is that SSM’s focus on urbanites together with offering a sustainable product – smaller and affordable housing near rail-bound public transport – gives us a competitive position in the Stockholm market for cooperative/rental apartments and condominiums.

Since the fourth quarter 2018, SSM has been recognizing revenue in its cooperative housing projects at the time customers take possession of their homes. One consequence of this is greater quarterly variations. Between Q4 2019 and Q4 2020, SSM expects to complete 440 apartments within the West Side Solna and Metronomen projects. Measures to reduce the company’s central costs are ongoing and the recent strategic agreement with design-build contractor Mecon Bygg is expected to further reduce fixed labor costs.

During the quarter, the number of transactions in the housing market increased and we’re starting to see that the market in Stockholm has stabilized. In my opinion, SSM has what it takes to create value and profitability in the short and long term and we’ve started executing our plan to realize the potential that exists in SSM’s portfolio of building rights so as to gradually increase profitability. Our top priority now is to create conditions for long-term stable financing. Along with this, we intend to optimize our business model and plan which also includes evaluating and managing a number of items in terms of operating and accounting mainly related to customer relations and capitalized costs in projects and project-related receivables.”

The information in this press release is such, which SSM Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07:30 CEST on August 28, 2019.

About SSM Holding AB (publ) 
SSM produces functionally smart and affordable homes with attractive common areas, close to public transport and the city center for the company’s target group – the urbanites of tomorrow. The company envisions a housing market that is accessible to as many people as possible and aspires to produce 50 percent cooperative apartments and 50 percent rental units. SSM is the leading property developer in its niche within the Greater Stockholm area and at end of June 2019, the company has approximately 6,200 building permits in its portfolio. SSM has been listed on Nasdaq Stockholm’s mainlist since April 6, 2017. www.ssmlivinggroup.com