Kojamo plc: Kojamo plc’s Interim Report 1 January – 30 September 2019
Kojamo Plc Stock Exchange Release, 6 November 2019 at 8:00 a.m. EET
Kojamo plc’s Interim Report 1 January – 30 September 2019
Profitable growth continues
This is a summary of the Interim Report January–September 2019, which is in its entirety attached to this release and can be downloaded from the company’s website at www.kojamo.fi/investors. Unless otherwise stated, the comparison figures in brackets refer to the corresponding period of the previous year. The figures in this Interim Report have not been audited.
Summary of July–September 2019
– Total revenue increased by 6.7 per cent to EUR 95.7 (89.7) million
– Net rental income increased by 7.8 per cent, totalling EUR 69.5 (64.5) million. Net rental income represented 72.6 (71.9) per cent of revenue
– Profit before taxes amounted to EUR 66.6 (59.1) million. The profit includes EUR 18.4 (13.4) million in net gain on the valuation of investment properties at fair value and EUR 0.3 (-0.1) million in profits and losses from the sale of investment properties. Earnings per share was EUR 0.22 (0.19)
– Funds From Operations (FFO) decreased by 6.1 per cent and amounted to EUR 39.7 (42.3) million
– Gross investments totalled EUR 79.0 (62.6) million, representing 82.5 (69.8) per cent of total revenue
Summary of January–September 2019
– Total revenue increased by 4.7 per cent to EUR 280.3 (267.7) million
– Net rental income increased by 7.6 per cent, totalling EUR 187.2 (174.0) million. Net rental income represented 66.8 (65.0) per cent of revenue
– Profit before taxes amounted to EUR 191.4 (199.5) million. The profit includes EUR 71.0 (87.5) million in net gain on the valuation of investment properties at fair value and EUR 0.2 (0.9) million in profits and losses from the sale of investment properties. Earnings per share was EUR 0.62 (0.67)
– Funds From Operations (FFO) increased by 29.8 per cent and amounted to EUR 106.1 (81.8) million
– The fair value of investment properties was EUR 5.4 (5.0) billion at the end of the review period
– The financial occupancy rate improved, standing at 97.1 (96.8) per cent during the period under review
– Gross investments totalled EUR 175.6 (305.8) million, representing 62.6 (114.2) per cent of total revenue
– Equity per share was EUR 9.72 (9.32) and return on equity was 8.6 (9.8) per cent. Return on investment was 6.3 (6.9) per cent
– EPRA NAV per share (net asset value) was EUR 12.11 (11.39)
– There were 1,211 (1,008) apartments under construction at the end of the review period
– Kojamo specifies its outlook for 2019
Kojamo owned 35,061 (34,416) rental apartments at the end of the review period. Since September of the previous year, 117 (1,049) apartments have been acquired, 1,073 (1,319) have been completed, 548 (1,929) have been sold and 3 (69) have been demolished or altered.
Key figures
| 7–9/2019 | 7–9/2018 | Change % | 1–9/2019 | 1–9/2018 | Change % | 2018 | |
| Total revenue, M€ | 95.7 | 89.7 | 6.7 | 280.3 | 267.7 | 4.7 | 358.8 |
| Net rental income, M€ *) | 69.5 | 64.5 | 7.8 | 187.2 | 174.0 | 7.6 | 234.0 |
| Net rental income margin, % *) | 72.6 | 71.9 | 66.8 | 65.0 | 65.2 | ||
| Profit before taxes, M€ *) | 66.6 | 59.1 | 12.7 | 191.4 | 199.5 | -4.1 | 277.3 |
| EBITDA, M€ *) | 80.1 | 70.1 | 14.3 | 231.6 | 235.1 | -1.5 | 325.1 |
| EBITDA margin, % *) | 83.7 | 78.2 | 82.6 | 87.9 | 90.6 | ||
| Adjusted EBITDA, M€ *) | 61.4 | 56.8 | 8.2 | 160.3 | 146.8 | 9.2 | 196.5 |
| Adjusted EBITDA margin, % *) | 64.2 | 63.3 | 57.2 | 54.8 | 54.8 | ||
| Funds From Operations (FFO), M€ *) | 39.7 | 42.3 | -6.1 | 106.1 | 81.8 | 29.8 | 116.4 |
| FFO margin, % *) | 41.5 | 47.1 | 37.9 | 30.5 | 32.4 | ||
| FFO excluding one-off items, M€ *) | 39.7 | 42.2 | -6.0 | 106.1 | 82.6 | 28.5 | 117.3 |
| Investment properties, M€ | 5,376.4 | 4,997.9 | 7.6 | 5,093.2 | |||
| Financial occupancy rate, % | 97.1 | 96.8 | 97.0 | ||||
| Interest-bearing liabilities, M€ *) | 2,640.7 | 2,537.7 | 4.1 | 2,485.5 | |||
| Return on equity, % (ROE) *) | 8.6 | 9.8 | 10.1 | ||||
| Return on investment, % (ROI) *) | 6.3 | 6.9 | 7.2 | ||||
| Equity ratio, % *) | 42.0 | 42.2 | 43.0 | ||||
| Loan to Value (LTV), % 1) *) | 46.7 | 46.2 | 45.9 | ||||
| EPRA NAV, M€ | 2,993.3 | 2,814.6 | 6.3 | 2,889.1 | |||
| Gross investments, M€ *) | 79.0 | 62.6 | 26.3 | 175.6 | 305.8 | -42.6 | 365.2 |
| Number of personnel, end of period | 293 | 304 | 298 | ||||
| Key figures per share, € 2) | 7–9/2019 | 7–9/2018 | Change % | 1–9/2019 | 1–9/2018 | Change % | 2018 |
| FFO per share *) | 0.16 | 0.17 | -5.9 | 0.43 | 0.35 | 22.9 | 0.49 |
| Earnings per share | 0.22 | 0.19 | 15.8 | 0.62 | 0.67 | -7.5 | 0.93 |
| EPRA NAV per share | 12.11 | 11.39 | 6.3 | 11.69 | |||
| Equity per share | 9.72 | 9.32 | 4.3 | 9.54 |
| *) In accordance with the guidelines issued by the European Securities and Markets Authority (ESMA), Kojamo provides an account of the Alternative Performance Measures used by the Group in the Key Figures section of the interim report. | |
| 1) The transition to IFRS 16 had an effect of 0.6 percentage points on this key figure during the review period. 2) Key figures per share have been adjusted to reflect the impact of the decision by the Extraordinary General Meeting of Shareholders on 25 May 2018 regarding the share split. In the share split the shareholders received 30 new shares per each existing share. | |
Outlook for Kojamo in 2019 (specified)
Kojamo estimates that in 2019, the Group’s total revenue will increase by 3–5 per cent year-on-year. In addition, the company estimates that the Group’s FFO for 2019 will amount to between EUR 137–145 million, excluding one-off items (previously EUR 134–144 million). Investments in new development and housing stock acquisitions are forecast to amount to approximately EUR 190–210 million, as no significant acquisitions of residential properties are expected to take place during the second half of the year (previously: amount to approximately, or exceed, EUR 300 million. Achieving the level of EUR 300 million would have required acquisitions of residential properties during the second half of the year). The change in the investment amount will not have a material impact on the result for 2019.
The outlook takes into account the effects of the completed housing divestments and acquisitions, the estimated occupancy rate and rises in rents, as well as the number of apartments to be completed. The outlook is based on the management’s assessment of total revenue, net rental income, administrative expenses, financial expenses, taxes to be paid and new development to be completed, as well as the management’s view on future developments in the operating environment.
Additionally, the outlook is based on strong demand sustained by migration, which will increase like-for-like rental income. The management can influence total revenue and FFO through the company’s business operations. In contrast, the management has no influence over market trends, the regulatory environment or the competitive landscape.
CEO’s review
We are making strong progress with the implementation of our strategy, as evidenced by the positive development of our key figures. In January–September, we increased our total revenue, net rental income as well as Funds From Operations (FFO). The growth of like-for-like rental income also improved year-on-year and amounted to 2.8 per cent. Our balance sheet was strong at the end of the review period, which enables future growth.
We have successfully made investments in line with our strategy in spite of the competitive market. Last spring, we started a reverse tendering process in which we requested construction companies to prepare proposals on investment initiatives of approximately EUR 100 million. As a result, at the end of August, we announced new agreements with SRV and Hausia regarding the construction of more than 900 apartments in the Helsinki region. These agreements will support our growth in the coming years. The first apartments covered by the agreements were already completed in September.
At the end of the review period, we had 1,211 apartments under construction. This figure does not include the agreements with SRV and Hausia. At the beginning of September, we also signed an agreement with Hartela on the construction of nearly 100 apartments in Espoo. We have also been successful in buying individual properties on the market in key locations in Helsinki, which is proof of our ability to implement our growth strategy through various approaches. In July, we announced an agreement on the sale of 478 non-strategic apartments. The transaction was completed in August. In spite of the sale, the fair value of our investment properties continued to grow, reaching EUR 5.4 billion at the end of the period. We are making good progress towards our target of increasing the value of our investment properties to EUR 6 billion by the end of 2021.
We have also achieved good success in our customer relationships. Supported by the development of the renting process and the growth of our webstore, the financial occupancy rate rose to 97.1 per cent. The number of apartments rented via the webstore exceeded 13,000 at the end of September. A growing proportion of tenancy agreements are signed online, and their share is now approximately 60 per cent in the capital region. Going forward, we will focus even more strongly on the development of digital services. After the end of the review period, we announced the appointment of Katri Harra-Salonen as Kojamo’s Chief Digital Officer (CDO). Her extensive experience supports the implementation of Kojamo’s strategy.
In June, we announced that we will shift from a transaction-based valuation technique to a yield-based valuation technique in the valuation of our investment properties. The preparations for the change are currently under way and they have progressed far enough that we announced the impacts of the change on 1 November 2019. The new valuation technique will be adopted on 31 December 2019.
Jani Nieminen
CEO
News conference and webcast
Kojamo will hold a news conference for institutional investors, analysts and media on 6 November 2019 at 10:00 a.m. at the company’s head office at Mannerheimintie 168a, Helsinki. The event will be held in English. Members of the media will also have the opportunity to ask questions in Finnish after the event.
The event can also be streamed as a live webcast. A recording of the webcast will be available later on the company website at https://kojamo.fi/en/investors/releases-and-publications/financial-reports/
The news conference can be streamed online at https://kojamo.videosync.fi/2019-q3-results
You can also participate in the press conference by calling:
FI: +358 9 8171 0310
SE: +46 8566 42651
UK: +44 3333 000 804
US: +1 6319 131 422
Please use the following PIN code to participate in the press conference by telephone: 99864467#
For more information, please contact
Maija Hongas, Manager, Investor Relations, Kojamo Plc, tel. +358 20 508 3004
Erik Hjelt, CFO, Kojamo Plc, tel. +358 20 508 3225
Distribution
Nasdaq Helsinki, Irish Stock Exchange, key media
Kojamo is Finland’s largest private residential real estate company and a frontrunner in the housing business. Our mission is to create better urban housing. The Lumo brand provides environmental-friendly housing and services in Finland’s biggest growth centres. We actively develop the value of our investment properties by developing new properties and our existing property portfolio. We want to be the property market frontrunner and the number one choice for our customers. Kojamo’s shares are listed on the official list of Nasdaq Helsinki. For more information, please visit kojamo.fi/en/
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