Kojamo Plc Stock Exchange Release, 13 February 2020 at 8:00 a.m. EET
Kojamo plc’s Financial Statements Release 1 January – 31 December 2019
Successful year 2019, strategy has been updated
This is a summary of the 2019 Financial Statements Release, 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 information in the financial statements release is based on the Kojamo Plc’s audited financial statements for the year 2019. The quarterly figures are unaudited.
Summary of October–December 2019
- Total revenue increased by 4.3 per cent to EUR 95.1 (91,2) million
- Net rental income increased by 0.2 per cent, totalling EUR 60.1 (60.0) million. Net rental income represented 63.3 (65.8) per cent of revenue
- Profit before taxes was EUR 839.9 (77.7) million. The profit includes EUR 801.4 (40.0) million in net gain on valuation of investment properties at fair value and EUR -0.1 (0.1) million in profits and losses from the sale of investment properties. Earnings per share was EUR 2.72 (0.25).
- Funds From Operations (FFO) decreased by 0.1 per cent and amounted to EUR 34.6 (34.7) million
- Gross investments totalled EUR 84.3 (59.4) million, representing 88.7 (65.1) per cent of total revenue
Summary of January–December 2019
- Total revenue increased by 4.6 per cent to EUR 375.3 (358.8) million.
- Net rental income increased by 5.7 per cent, totalling EUR 247.3 (234.0) million. Net rental income was 65.9 (65.2) per cent of revenue.
- Profit before taxes was EUR 1,031.3 (277.3) million. The profit includes EUR 872.4 (127.5) million in net gain on the valuation of investment properties at fair value and EUR 0.1 (1.0) million in profits and losses from the sale of investment properties. Earnings per share was EUR 3.34 (0.93).
- Funds From Operations (FFO) increased by 20.9 per cent and amounted to EUR 140.7 (116.4) million.
- The fair value of investment properties was EUR 6.3 (5.1) billion at the end of the financial year. Kojamo shifted from a transaction-based valuation technique to a yield-based valuation technique in the valuation of investment properties from 31 December 2019 onwards.
- The financial occupancy rate improved and stood at 97.2 (97.0) per cent during the financial year.
- Gross investments totalled EUR 259.9 (365.2) million, representing 69.2 (101.8) per cent of total revenue.
- Equity per share was EUR 12.51 (9.54) and return on equity was 30.3 (10.1) per cent. Return on investment was 20.5 (7.2) per cent.
- EPRA NAV per share (net asset value) grew by 32.5 per cent and amounted to EUR 15.49 (11.69).
- At the end of the financial year, there were 1,316 (1,064) Lumo apartments under construction.
- The Board of Directors’ dividend proposal is EUR 0.34 per share.
Kojamo owned 35,272 (34,713) rental apartments at the end of the financial year. In 2019, Kojamo acquired 260 (1,049) apartments, completed 816 (1,258) apartments, sold 520 (1,908) apartments and demolished or otherwise altered 3 (-69) apartments.
Kojamo’s updated strategy 2020–2023
The Board of Directors has gone through a strategy process in 2019 and following that, updated Kojamo’s strategy. No major changes were made to the strategy. The strategy period was extended until the end of 2023 and adjustments were made to the strategic focal points and targets. Previously, the strategy period lasted until the end of 2021.
Our mission is to create better urban housing and our vision is to be the property market frontrunner and the number one choice for our customers. We seek for strong growth by even more profitable business. This is supported by optimised financing structure. We have the capability to pursue growth via different channels and quickly react to opportunities. We strongly invest in servitisation and utilize digital solutions in our operations.
The updated strategic focal points are
- delivering the best customer experience
- strong growth
- operational excellence
- responsibility and sustainable development
- the most competent personnel and a dynamic place to work
- renewal through digital solutions
The previous focal points were delivering the best customer experience, generating long-term shareholder value, leading on sustainable development and dynamic and professional place to work.
The updated strategic targets 2020–2023 are the following
|Strategic targets 2020–2023||Target|
|Annual growth of total revenue, %||4–5%|
|Annual investments, M€||200–400 M€ /year|
|FFO/total revenue, %||> 36|
|Loan to Value (LTV), %||< 50|
|Equity ratio, %||> 40|
|Net Promoter Score (NPS)||40|
The previous targets were fair value of investment properties EUR 6 billion, number of apartments approximately 38,000, equity ratio over 40 per cent, Loan to Value (LTV) below 50 per cent, Funds from Operations (FFO) as percentage of total revenue over 32 per cent and Net Promoter Score 40.
Kojamo’s objective is to be a stable dividend payer whose annual dividend payment will be at least 60 per cent of FFO, provided that the Group’s equity ratio is 40 per cent or more and taking account of the company’s financial position.
More information about the updated stategy is available at section Strategic targets and achievements.
|10-12/2019||10-12/2018||Change %||2019||2018||Change %|
|Total revenue, M€||95.1||91.2||4.3||375.3||358.8||4.6|
|Net rental income, M€ *)||60.1||60.0||0.2||247.3||234.0||5.7|
|Net rental income margin, % *)||63.3||65.8||65.9||65.2|
|Profit before taxes, M€ *)||839.9||77.7||980.5||1,031.3||277.3||271.9|
|EBITDA, M€ *)||851.5||89.9||847.1||1,083.1||325.1||233.2|
|EBITDA margin, % *)||895.7||98.6||288.6||90.6|
|Adjusted EBITDA, M€ *)||50.0||49.7||0.7||210.3||196.5||7.0|
|Adjusted EBITDA margin, % *)||52.6||54.5||56.0||54.8|
|Funds From Operations (FFO), M€ *)||34.6||34.7||-0.1||140.7||116.4||20.9|
|FFO margin, % *)||36.4||38.0||37.5||32.4|
|FFO excluding one-off items, M€ *)||34.6||34.7||-0.1||140.7||117.3||20.0|
|Investment properties, M€||6,260.8||5,093.2||22.9|
|Financial occupancy rate, %||97.2||97.0|
|Interest-bearing liabilities, M€ *)||2,674.2||2,485.5||7.6|
|Return on equity, % (ROE) *)||30.3||10.1|
|Return on investment, % (ROI) *)||20.5||7.2|
|Equity ratio, % *)||46.9||43.0|
|Loan to Value (LTV), % 1) *)||40.5||45.9|
|EPRA NAV, M€||3,828.0||2,889.1||32.5|
|Gross investments, M€ *)||84.3||59.4||41.9||259.9||365.2||-28.8|
|Number of personnel, end of period||296||298|
|Key figures per share, € 2)||10-12/2019||10-12/2018||Change %||2019||2018||Change %|
|FFO per share *)||0.14||0.14||0.0||0.57||0.49||16.3|
|Earnings per share||2.72||0.25||988.0||3.34||0.93||259.1|
|EPRA NAV per share||15.49||11.69||32.5|
|Equity per share||12.51||9.54||31.1|
|Dividend per share 3)||0.34||0.29||17.2|
|*) 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, the formulas used in their calculation, and reconciliation calculations in accordance with ESMA guidelines section of its financial statements.|
|1) The transition to IFRS 16 Leases had an effect of 0.6 percentage points on this key figure during the financial year. 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. 3) 2019: The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.34 per share be paid.|
Outlook for Kojamo in 2020
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 142–156 million, excluding one-off items.
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.
Our progress in the implementation of our strategy was in line with our plans in 2019. Total revenue grew by 4.6 per cent, net rental income by 5.7 per cent and Funds From Operations (FFO) by as much as 20.9 per cent. Our strong performance was supported by successful investments, higher Like-for-Like rental income and the success of our operating activities. At the end of the year, 98.8% of our apartments were located in the seven growth centres specified in our strategy. At the end of the year, we shifted from a transaction-based valuation technique to a yield-based valuation technique in the valuation of our investment properties. The change had a significant positive effect on the fair value of our investment properties and, subsequently, our result for the year.
Competition remained intense in the investment market during the year. Nevertheless, we were able to achieve multi-channel growth. The reverse tendering process we initiated in the spring produced new agreements with SRV and Hausia on the construction of more than 900 apartments in the Helsinki region. Some of the apartments were already completed in the autumn, while the rest will support our growth in the coming years. In December, we acquired 143 apartments in Helsinki and Vantaa from the Valio Pension Fund and Valio Mutual Pension Insurance Fund. We have also been successful in buying individual properties on the market in key locations in Helsinki. We start-ed construction on 1,066 rental apartments during the year. In addition, we sold a total of 520 non-strategic apartments.
Our financial occupancy rate rose to 97.2 per cent in 2019 in spite of a slight increase in tenant turnover. Our steady growth has been supported by the development of renting processes and the growth of our webstore. In 2019, half of all tenancy agreements were signed on the webstore. Our customer satisfaction is also at a high level. Our Net Promoter Score was 34 in 2019. At the beginning of the year, our customers were given access to the My Lumo mobile application. Among other things, the application can be used by Lumo residents to pay rent as well as submit fault reports and monitor their progress. A large proportion of our customers have started to use the service and we will continue to develop the platform with the aim of providing more services that make life easier for our customers.
Our strategy has proved to be effective and we will continue to implement it going forward. We have extended our strategy period to 2023 and further specified our strategic focus areas and targets. We are seeking strong growth through investments as well as services and new initiatives that create added value for our customers. We provide easy and effortless services for our customers. Our strategy is supported by our optimised financing structure. We want to create competitiveness and profitability through industry-leading operating models. The key source of our renewal is the use of digital solutions in our business and in enhancing our own operations. We invest in highly competent personnel as well as a dynamic and results-driven corporate culture.
Responsibility has always been at the heart of our operations and, during the year, we also took measures to develop environmentally friendly and sustainable solutions. Late in the year, we announced that Fortum’s carbon-neutral district heating has been introduced at some of our proper-ties, reducing the carbon footprint of maintenance by 10 per cent. We have also introduced hydro-power-certified property electricity at all of our properties, which also helps reduce our carbon footprint. More information on our responsibility-related efforts will be provided in our Annual Report, which will mark the first time that we apply the Global Reporting Initiative (GRI) framework and the European Public Real Estate Association’s Sustainability Best Practices Recommendations.
News conference and webcast
Kojamo will hold a news conference for institutional investors, analysts and media on 13 February 2020 at 10:00 a.m. at its headquarters at Mannerheimintie 168A, Helsinki, Finland. The event will be held in English. After the event, the media has a possibility to ask questions in Finnish as well.
The event can be followed as a live webcast. A recording of the webcast will be available later at the company’s website at https://kojamo.fi/en/investors/releases-and-publications/financial-reports/
The event will be accessible at https://kojamo.videosync.fi/2019-q4-results
You can also participate in the news conference by calling:
FI: +358 981 710 310
SE: +46 856 642 651
UK: +44 333 300 0804
US: +1 855 857 0686
The participants joining the news conference will be asked to provide the following PIN code: 76850107#
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
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/
Kojamo Financial Statements Release 2019 (Kojamo Financial Statements Release 2019.pdf)
Kojamo Financial Statements Release 2019 presentation (Kojamo Financial Statements Release 2019 presentation.pdf)