Kojamo plc: Kojamo plc’s Interim Report 1 January – 31 March 2020
Kojamo Plc Stock Exchange Release, 7 May 2020 at 8:00 a.m. EEST
Kojamo plc’s Interim Report 1 January – 31 March 2020
Growth in the first quarter and 1,651 Lumo apartments under construction
This is a summary of the Interim Report January–March 2020, 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 January–March 2020
- Total revenue increased by 4.6 per cent to EUR 95.7 (91.5) million.
- Net rental income increased by 10.2 per cent, totalling EUR 56.0 (50.8) million. Net rental income represented 58.6 (55.6) per cent of revenue.
- Profit before taxes was EUR 51.7 (38.9) million. The profit includes EUR 22.0 (10.4) million in net gain on the valuation of investment properties at fair value and EUR -0.1 (0.0) million in profits and losses from the sale of investment properties. Earnings per share was EUR 0.17 (0.13).
- Funds From Operations (FFO) increased by 11.8 per cent and amounted to EUR 29.4 (26.3) million.
- The fair value of investment properties was EUR 6.3 (5.2) billion at the end of the review period.
- The financial occupancy rate was on a par with the comparison period at 96.9 (96.9) per cent.
- Gross investments totalled EUR 62.1 (38.0) million, representing 64.8 (41.5) per cent of total revenue.
- EPRA NAV per share (net asset value) grew by 32.9 per cent and amounted to EUR 15.35 (11.55).
- Equity per share was EUR 12.30 (9.32) and return on equity was 5.4 (5.5) per cent. Return on investment was 4.8 (4.3) per cent.
- At the end of the review period, there were 1,651 (1,280) Lumo apartments under construction.
- Kojamo specifies its outlook for 2020.
Kojamo owned 35,392 (34,792) rental apartments at the end of the review period. Since March of the previous year, 244 (84) apartments have been acquired, 874 (836) have been completed, 522 (1,786) have been sold and 4 (39) have been demolished or altered.
Key figures
| 1–3/2020 | 1–3/2019 | Change % | 2019 | |
| Total revenue, M€ | 95.7 | 91.5 | 4.6 | 375.3 |
| Net rental income, M€ *) | 56.0 | 50.8 | 10.2 | 247.3 |
| Net rental income margin, % *) | 58.6 | 55.6 | 65.9 | |
| Profit before taxes, M€ *) | 51.7 | 38.9 | 32.8 | 1,031.3 |
| EBITDA, M€ *) | 68.3 | 52.3 | 30.6 | 1,083.1 |
| EBITDA margin, % *) | 71.4 | 57.2 | 288.6 | |
| Adjusted EBITDA, M€ *) | 46.4 | 42.0 | 10.5 | 210.3 |
| Adjusted EBITDA margin, % *) | 48.5 | 45.9 | 56.0 | |
| Funds From Operations (FFO), M€ *) | 29.4 | 26.3 | 11.8 | 140.7 |
| FFO margin, % *) | 30.7 | 28.8 | 37.5 | |
| FFO excluding non-recurring costs, M€ *) | 29.4 | 26.3 | 11.8 | 140.7 |
| Investment properties, M€ | 6,344.2 | 5,201.8 | 22.0 | 6,260.8 |
| Financial occupancy rate, % | 96.9 | 96.9 | 97.2 | |
| Interest-bearing liabilities, M€ *) | 2,745.6 | 2,634.7 | 4.2 | 2,674.2 |
| Return on equity, % (ROE) *) | 5.4 | 5.5 | 30.3 | |
| Return on investment, % (ROI) *) | 4.8 | 4.3 | 20.5 | |
| Equity ratio, % *) | 45.3 | 40.7 | 46.9 | |
| Loan to Value (LTV), % *) | 39.5 | 46.7 | 40.5 | |
| EPRA NAV, M€ | 3,794.0 | 2,854.8 | 32.9 | 3,828.0 |
| Gross investments, M€ *) | 62.1 | 38.0 | 63.4 | 259.9 |
| Number of personnel, end of period | 300 | 299 | 296 | |
| Key figures per share, € | 1–3/2020 | 1–3/2019 | Change % | 2019 |
| FFO per share *) | 0.12 | 0.11 | 9.1 | 0.57 |
| Earnings per share | 0.17 | 0.13 | 30.8 | 3.34 |
| EPRA NAV per share | 15.35 | 11.55 | 32.9 | 15.49 |
| Equity per share | 12.30 | 9.32 | 32.0 | 12.51 |
| *) 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 section Key figures, the formulas used in their calculation, and reconciliation calculations in accordance with the ESMA guidelines of the Interim Report. |
Outlook for Kojamo in 2020 (specified)
Kojamo estimates that in 2020, the Group’s total revenue will increase by 2–6 per cent year-on-year. In addition, the company estimates that the Group’s FFO for 2020 will amount to between EUR 146–158 million, excluding non-recurring costs (previously EUR 142–156 million).
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.
Effects of the COVID-19 pandemic on Kojamo’s outlook
In spite of the pandemic, Kojamo’s management expects the Group’s operating activities to continue undisrupted for the most part. The webstore enables the renting of apartments to continue almost as normal. The pandemic has not led to an increase in the Group’s rental receivables, and they are not expected to grow significantly in the near future. Kojamo follows the development of rental receivables and credit losses actively. Kojamo aims to prevent increases in rental receivables through active resident advisory services as well as payment plans and arrangements agreed on with customers.
Kojamo’s management estimates that the demand for rental apartments will remain strong going forward. The restrictions implemented in response to the pandemic may, in the short term, affect people’s willingness to relocate as well as prevent both migration within the country and work-related immigration. Economic uncertainty may influence people’s willingness to take housing loans, which may increase the popularity of rental housing.
Kojamo will continue to implement its growth strategy. All development projects have progressed as planned thus far. However, challenges potentially faced by construction companies may result in delays to Kojamo’s projects. In Kojamo’s construction contracts, the construction company takes on the overall responsibility for the entire construction project and payments are made in accordance with the degree of completion. Kojamo’s management estimates that potential delays in projects will not have a material impact on the Group’s total revenue and FFO for the year.
Kojamo’s financial position and liquidity are good. Thanks to the Group’s diverse financing structure, Kojamo has been able to carry out financing arrangements without disruptions. Kojamo’s management estimates that if the financial markets continue to be unstable, the cost of new financing may significantly increase.
CEO’s review
We had a strong start to 2020 at Kojamo. Our total revenue, net rental income and FFO increased year-on-year, driven by the growth of our housing stock and Like-for-Like rental income. The fair value of our investment properties was EUR 6.3 billion at the end of the period. Our financial occupancy rate remained on a par with the comparison period.
The coronavirus pandemic has quickly changed the world. Nevertheless, we have been able to adjust our operations to the current circumstances and successfully transferred all of our customer service and rental operations to home offices, for example. Thanks to our webstore, apartment rental operations have continued almost as normal, and customers can rent an apartment without physical contact. We offer flexibility to our residents with regard to rent payments and we have taken precautionary measures at our properties to prevent and limit the spread of the pandemic. For the time being, all of our construction sites remain operational and we are monitoring the situation continuously.
In spite of the pandemic, we expect the trend of urbanisation to continue, and we will continue to execute our growth strategy as planned. During the first months of the year, we further increased the number of property development projects. In March, we announced a cooperation agreement signed with SRV on the construction of 676 apartments in Helsinki and Espoo. One of the new development projects is a tower building to be constructed next to the Redi shopping centre, which will literally take rental housing to a new level. We also announced the start of construction projects in Espoo and Vantaa. We started construction on 454 new apartments during the first quarter and we currently have as many as 1,651 apartments under construction.
Our liquidity was at a good level at the end of the period. In March, we established a EUR 2.5 billion EMTN (Euro Medium Term Notes) programme, under which we can issue unsecured notes. The programme covers our financing needs for the current strategy period as well as the refinancing of bonds that will mature thereafter. We have also taken measures to strengthen our financial position in the current pandemic. The availability of financing has been supported by our diverse financing structure. We have increased our cash and cash equivalents on a precautionary basis by increasing the number of commercial papers issued by the Group.
We are moving ahead with our service development efforts, and our focus this year is particularly on developing Kojamo’s digital road map. During the first quarter, we further improved our webstore, which serves as the customer interface for all of our rental operations. The popularity of the webstore is growing continuously. In the first quarter, the number of tenancy agreements signed in the webstore was higher than the number of agreements signed following a traditional application.
Jani Nieminen
CEO
News conference audiocast
Due to the coronavirus pandemic, Kojamo will not arrange a news conference at the company’s head office. Instead, the news conference will be carried out as a live audiocast at 10:00 a.m. EEST on 7 May 2020. The event will be held in English.
A recording of the audiocast 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/2020-q1-results
You can also participate in the press conference by calling:
FI: +358 981 710 310
SE: +46 856 642 651
UK: +44 333 300 0804
US: +1 631 913 1422
Please use the following PIN code to participate in the press conference by telephone: 43662898#
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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