SSM Holding AB (publ) intends to focus on developing rental units and selected cooperative apartment projects going forward. The company will also prioritize positive cash flow to create stability and reduce SSM’s net debt. The changes are the result of a comprehensive review conducted by the company.
The review confirms SSM’s strong core, but it has also resulted in the revaluation of certain balance sheet items for a number of project properties and joint venture assets, leading to write-downs of -312.7 MSEK. The revaluations do not affect the company’s cash flow. Adjusted for revaluations and other non-recurring items, the preliminary result for the third quarter 2019 was -17.7 MSEK. Including these items, the result for the quarter was -377.7 MSEK. The cash flow from operating activities was -31.1 MSEK.

SSM will present the review, the company’s strong core, the direction foward and the preliminary income statement and balance sheet for the third quarter 2019 today at a Capital Markets Day that will be held in Stockholm between 11:30 and 14:00 CET.

SSM’s new President & CEO Mattias Lundgren comments on the review:  

– SSM has what in the Stockholm housing market is a unique portfolio of building rights that can be developed into either rental units or cooperative apartments. During today’s Capital Markets Day, I will present how SSM intends to further capitalize on the company’s strong core and prioritize cash flow going forward to reduce net debt, says Mattias Lundgren, President & CEO of SSM.

Insights from the review and SSM’s direction forward are summarized below:

The review stems from the company’s financial performance and need for financial stability
Because of the changes in the housing market in the past two years, SSM conducted a comprehensive review of the situation and the company’s operations with a view to optimize both its business model and business plan. The review considered market demand, SSM’s offering, the assets in SSM’s project portfolio, the capabilities of the company and SSM’s financial situation and profitability.

The review confirms SSM’s strong core 
The conclusion is that SSM has a strong core in the form of its target group, housing concept, home market and location of building rights near rail-bound public transport. The company will build on this core to develop gradually in the coming years.

SSM’s optimized business model has led to revaluations in the following areas:

1. New definition of production start, equity financing until production start and new sales strategy

Transaction volumes and price levels in the Stockholm housing market have stabilized. However, the credit market remains challenging, both for individuals who need financing to purchase homes and for developers who require project financing.

To improve profitability and increase the proportion of variable costs, SSM divested its contracting operations during the quarter and initiated a strategic cooperation with design-build contractor Mecon Bygg.

The above-mentioned changes in external conditions and the divestment of the company’s contracting operations have led SSM to change its definition of projects where production has started to include only projects where construction has started. The company’s sales strategy was also adjusted at the same time such that pre-purchase agreements will not be signed until production has started in the project. These changes will require accounting-related revaluations of -42.9 MSEK in previously capitalized project expenses. The adjustments do not affect the company’s cash flow.

2. Focus on cash flow-generating business to strengthen balance sheet

To strengthen SSM’s balance sheet, in the near future, the company will focus on business that generates a positive cash flow. In practice, this means prioritizing rental projects via forward funding. This will result in a change of direction in certain projects, leading to accounting-related revaluations of -40.7 MSEK in previously capitalized expenses in SSM’s own projects and joint venture companies. These adjustments do not affect the company’s cash flow.

In addition, seven projects were identified for further evaluation in the review and consequently  removed from the portfolio of projects under development until further notice. For five of these,  a more comprehensive evaluation of recognized project values was carried out based on the changed direction in the projects. These projects include Akalla City, Bromma Tracks II, East Side Spånga, Täby Market and Örjan and the estimated revaluation amounts to -94.9 MSEK. These adjustments do not affect the company’s cash flow.

3. Tellus Towers – due to formalities, the likelihood of an earnout cannot be estimated

In the third quarter 2017, SSM sold the Tellus Towers project to a joint venture company with global financial player Partners Group and today, SSM holds 50 percent of the joint venture company. The joint venture company has decided to update the project’s business plan due to long lead times. As a result, formal reasons prevent the assessment of the likelihood that a receivable of -134.2 MSEK for a future earnout will be paid. This receivable, which had previously been recognized on the balance sheet, has therefore been set at zero for now. Neither the development nor progress of Tellus Towers has changed or been impacted by the above-mentioned revaluation. This adjustment does not affect the company’s cash flow.

These revaluations do not affect cash flow, but will impact results for Q3 2019

Adjusted for revaluations of -312.7 MSEK and non-recurring items and including negative results mainly for Bromma Boardwalk and provisions totaling -47.3 MSEK, the preliminary result for the third quarter 2019 was -17.7 MSEK. Including these items, the result for the quarter was -377.7 MSEK. The cash flow from operating activities was -31.1 MSEK.

During the quarter, the percentage of completion method was initiated in the Täby Turf rental project that is due to be completed in 2021.

At the end of September, apartment owners began to move into the joint venture project West Side Solna, with 13 owners taking possession. Most of the owners in the West Side Solna Project, which comprises 252 cooperative apartments, will take possession in the fourth quarter 2019 and first quarter 2020. The Metronomen project, which offers 188 cooperative apartments, will be completed between the first and fourth quarters 2020. The owners will begin moving in at the end of March 2020, which will have a positive effect on cash flow and the participation from the joint venture alike.

The West Side Solna project has been subject to disputes since the fall 2017, with a number of customers seeking to terminate their pre-purchase agreements. At present, some 80 percent of pre-purchase agreements have been signed in the project. The housing association, Brf West Side Solna, has started selling the disputed homes again at prices at par with the original prices.

Several alternatives under evaluation to achieve stable long-term financing

SSM’s 369.0 MSEK bond is due in May 2020, and the company is currently evaluating several alternatives to create the best possible conditions for stable long-term financing, with increasing equity or refinancing loans under discussion. Negotiations with a group of larger bondholders regarding changing the terms and conditions for today’s bond are part of this. The company is of the view that a refinancing solution will be achieved in time to redeem the loans that are due in 2020.

SSM’s direction forward is supported by a stabilized market and attractive projects

Given the stabilized housing market, the solid market for rental projects and the optimized business model with more balanced financial risk-taking, SSM sees a positive future for the company.

As a result of SSM’s increased focus on rental projects combined with the change in accounting principles for housing development implemented earlier, the company’s financial targets may be adjusted.

SSM’s portfolio of building rights as at September 30, 2019

Preliminary income statement, balance sheet and cash flow statement for Q3 2019



The review together with SSM’s direction forward and the preliminary income statement and balance sheet for the third quarter 2019 will be presented today at a Capital Markets Day that will be held between 11:30 and 14:00 CET. A webcast from the event will be available on the company’s website at from about 17:00 CET on November 12, 2019.

The full interim report for the third quarter 2019 will be published on November 19, 2019 at 07:30 CET.

This information is such that 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 07:00 CET on November 12, 2019.

For more information, please contact: 

Ann-Charlotte Johansson

EVP Communications, IR & Sales                           

Phone: +46 761 65 17 71

Email: [email protected]

Twitter: @anncharlotteSSM


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. SSM is the leading property developer in its niche within the Greater Stockholm area and at end of September 2019, the company has approximately 4,500 building permits under development in its portfolio. SSM has been listed on Nasdaq Stockholm main list since April 6, 2017.