SBB, Interim Report January – September 2019: Cash flow increased by 99 percent

SAMHÄLLSBYGGNADSBOLAGET I NORDEN AB (PUBL): Interim Report January – September 2019 in brief:

  • Rental income increased to SEK 1,400m (1,227).
  • The operating surplus increased to SEK 903m (797).
  • Cash flow from operating activities before changes of working capital increased by 99 percent to SEK 507m (255).
  •  Profit before tax was increased to SEK 1,526m (1,204), of which:  
    • Income from property management is included with SEK 508m (294). The income from property management includes costs for the early redemption of loans and other non-recurring financing costs of SEK-130m (-80).
    • Unrealized changes in the value of properties are included with SEK 1,444m (890), of which unrealized changes in value as a result of building rights are included with SEK 65m (134). Realized changes in value relating to properties are included with SEK -308m (14) which is an effect of applied accounting principles.
  • Profit for the period was SEK 1,337m (999) after the deduction for deferred tax of SEK -137m (-188) and current tax of SEK-52m (-17), corresponding to earnings per ordinary share of class A and B of SEK 1.41 (1.24) before dilution.
  • The value of the property portfolio increased by SEK 5.6bn during the quarter to SEK 30.8bn (25.2).
  • Long-term net asset value (EPRA NAV) increased to SEK 9,914bn (8,736), corresponding to SEK 13.11 (11.55) per share.
  • Adjusted EPRA NAV was 17,257bn (11,941), corresponding to SEK 22.83 (15.79) per share.
  • SBB’s average interest rate on a 12-month rolling basis has decreased from 2.49 percent to 1.75 percent.

THE THIRD QUARTER IN BRIEF

  • Rental income increased to SEK 507m (427).
  • Net operating income increased to SEK 343m (293).
  • Operating profit increased to SEK 254m (113).
  • Cash flow from operations before changes in working capital amounted to SEK 263m (99).
  • Net income after tax for the period amounted to SEK 404m (482), corresponding to earnings per share of SEK 0.40 (0.61) before dilution.

The cash flow machine, Samhällsbyggnadsbolaget i Norden AB (publ) (“SBB”), continues to deliver. The third quarter of 2019 became SBB's best quarter ever in terms of profit from property management which doubled compared to the same period last year. Cash flow from operating activities before changes in working capital increased by 99 percent to SEK 507m (255). Adjusted for non-recurring costs for, among other things, the repayment of expensive loans, cash flow for the nine-month period lands at SEK 657m (335). On top of delivering the strong cash flow and strong earnings capacity from the property management, we continue to deliver profit from three value-creating areas - renovations/investments in our properties, development of building rights and transactions.

Our renovation rate is now at the levels that we have strived for and will continue to yield strong earnings and growth in EPRA NAV. In the first nine months, we began renovating 476 apartments and for another 232 apartments, the leases of which are cancelled, agreements have been signed for renovations to commence in the fourth quarter. In the first nine months, transactions totalled approximately SEK 16 billion. Transactions continue to provide a strong return. Property development also continues to provide a strong return. At 30 September, SBB had development projects in various detailed development planning phases totalling approximately 1,020,000 sq.m. GFA.

We are focussing on achieving a BBB+ rating in the next 12 months, which is a prerequisite for strong growth. Our strong financial position looks even stronger when we can show that our average interest rate decreased in the past 12 months from 2.49 percent to 1.75 percent. Our adjusted earnings capacity ends up at SEK 1,141 million, corresponding to an increase of 48 percent from SEK 770 million since the end of 2018.

SBB’s secure cash flows are only marginally affected by the economy and external factors and as the Nordic region’s leading actor with a focus on social infrastructure  we are active in a market where the need for investments in social infrastructure in the next 10-year period is the highest ever. We deliver a strong earning capacity from property management and see good conditions to continue delivering further earnings from our three value-creating areas – renovations/investments in the existing portfolio, the development of building rights and transactions. For 2019-2021, my assessment is that we will be able to deliver the highest annual increase in EPRA NAV among all Swedish listed property companies. SBB’s strong journey of growth is supported by the fact that SBB’s B- and D-shares have been traded on Nasdaq Stockholm’s Large cap list since 20 September 2019 and the potential to growth may be even stronger with the inclusion of SBB’s B-shares in the FTSE EPRA Nareit Global Real Estate Index, that I expect may already happen in connection with the next quarterly Index review that will be published on 5 December 2019.

Ilija Batljan
CEO and Founder

Attachment: Interim Report January – September 2019 

The interim report can also be found in the following link: sbbnorden.se/en/investor-relations-main/reports/.

For further information, please contact:

Ilija Batljan, CEO and Founder of Samhällsbyggnadsbolaget i Norden AB, +46 70 518 39 67, ilija@sbbnorden.se

This information is information that Samhällsbyggnadsbolaget i Norden 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 above on October 29, 2019, at 08:00 CET.

About Samhällsbyggnadsbolaget i Norden AB (publ)

The company’s strategy is to own, manage and develop community service properties throughout the Nordic region and rental apartments in growth regions in Sweden. Through the company's commitment and engagement in community participation and social responsibility, municipalities and other stakeholders find the company an attractive long-term partner. At the beginning of 2018, SBB was named the winner of the Real Estate Company of the Year Award for 2017. The company’s series B shares (short name SBB B) and D shares (short name SBB D) are listed on Nasdaq Stockholm, Large Cap. The company’s preference shares (SBB PREF) are listed on Nasdaq First North Premier Growth Market. Certified Adviser is Erik Penser Bank (contact: certifiedadviser@penser.se / +46 84638300). More information about the company is available at www.sbbnorden.se.

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