Kojamo Plc Stock Exchange Release, 23 August 2019 at 8:00 a.m. EEST
Kojamo plc’s Half-Year Financial Report 1 January – 30 June 2019
Profitable growth in line with strategy during the first half of the year
This is a summary of the Half-Year Financial Report January–June 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 Half-Year Financial Report have not been audited.
Summary of April–June 2019
– Total revenue increased by 3.7 per cent to EUR 93.1 (89.8) million
– Net rental income increased by 8.8 per cent, totalling EUR 66.8 (61.4) million. Net rental income represented 71.8 (68.4) per cent of revenue
– Profit before taxes amounted to EUR 85.9 (91.5) million. The profit includes EUR 42.2 (53.4) million in net gain on the valuation of investment properties at fair value and EUR 0.0 (0.4) million in profit from the sale of investment properties. Earnings per share was EUR 0.27 (0.31)
– Funds From Operations (FFO) increased by 127.5 per cent and amounted to EUR 40.1 (17.6) million
– Gross investments totalled EUR 58.6 (39.5) million, representing 62.9 (44.0) per cent of total revenue
Summary of January–June 2019
– Total revenue increased by 3.7 per cent to EUR 184.6 (178.0) million
– Net rental income increased by 7.4 per cent, totalling EUR 117.7 (109.5) million. Net rental income represented 63.8 (61.5) per cent of revenue
– Profit before taxes amounted to EUR 124.8 (140.5) million. The profit includes EUR 52.6 (74.1) million in net gain on the valuation of investment properties at fair value and EUR 0.0 (1.0) million in profit from the sale of investment properties. Earnings per share was EUR 0.40 (0.48)
– Funds From Operations (FFO) increased by 68.1 per cent and amounted to EUR 66.4 (39.5) million
– The fair value of investment properties was EUR 5.3 (4.9) billion at the end of the review period, including EUR 23.7 (0.0) million in investment properties held for sale
– The financial occupancy rate improved, standing at 96.9 (96.5) per cent during the review period
– Gross investments totalled EUR 96.6 (243.2) million, representing 52.3 (136.6) per cent of total revenue
– Equity per share was EUR 9.55 (9.11) and return on equity was 8.5 (10.4) per cent. Return on investment was 6.2 (7.3) per cent
– EPRA NAV per share (net asset value) was EUR 11.88 (11.17)
– There were 1,329 (1,214) apartments under construction at the end of the review period
– Kojamo specifies its outlook for 2019
Kojamo owned 35,194 (34,172) rental apartments at the end of the review period. Since June of the previous year, 167 (981) apartments have been acquired, 952 (1,360) have been completed, 100 (1,956) have been sold and 3 (90) have been demolished or altered.
Key figures
| 4–6/2019 | 4–6/2018 | Change % | 1–6/2019 | 1–6/2018 | Change % | 2018 | |
| Total revenue, M€ | 93.1 | 89.8 | 3.7 | 184.6 | 178.0 | 3.7 | 358.8 |
| Net rental income, M€ *) | 66.8 | 61.4 | 8.8 | 117.7 | 109.5 | 7.4 | 234.0 |
| Net rental income margin, % *) | 71.8 | 68.4 | 63.8 | 61.5 | 65.2 | ||
| Profit before taxes, M€ *) | 85.9 | 91.5 | -6.1 | 124.8 | 140.5 | -11.1 | 277.3 |
| EBITDA, M€ *) | 99.2 | 104.4 | -5.0 | 151.5 | 165.0 | -8.2 | 325.1 |
| EBITDA margin, % *) | 106.5 | 116.3 | 82.1 | 92.7 | 90.6 | ||
| Adjusted EBITDA, M€ *) | 56.9 | 50.7 | 12.2 | 98.8 | 90.0 | 9.9 | 196.5 |
| Adjusted EBITDA margin, % *) | 61.1 | 56.4 | 53.6 | 50.6 | 54.8 | ||
| Funds From Operations (FFO), M€ *) | 40.1 | 17.6 | 127.5 | 66.4 | 39.5 | 68.1 | 116.4 |
| FFO margin, % *) | 43.1 | 19.6 | 36.0 | 22.2 | 32.4 | ||
| FFO excluding one-off items, M€ *) | 40.1 | 18.5 | 116.7 | 66.4 | 40.4 | 64.5 | 117.3 |
| Investment properties, M€ 1) | 5,303.2 | 4,923.3 | 7.7 | 5,093.2 | |||
| Financial occupancy rate, % | 96.9 | 96.5 | 97.0 | ||||
| Interest-bearing liabilities, M€ 2) *) | 2,616.1 | 2,540.3 | 3.0 | 2,485.5 | |||
| Return on equity, % (ROE) *) | 8.5 | 10.4 | 10.1 | ||||
| Return on investment, % (ROI) *) | 6.2 | 7.3 | 7.2 | ||||
| Equity ratio, % *) | 41.9 | 41.6 | 43.0 | ||||
| Loan to Value (LTV), % 2) 3) *) | 46.9 | 46.7 | 45.9 | ||||
| EPRA NAV, M€ | 2,936.0 | 2,760.3 | 6.4 | 2,889.1 | |||
| Gross investments, M€ *) | 58.6 | 39.5 | 48.4 | 96.6 | 243.2 | -60.3 | 365.2 |
| Number of personnel, end of period | 329 | 347 | 298 | ||||
| Key figures per share, € 4) | 4–6/2019 | 4–6/2018 | Change % | 1–6/2019 | 1–6/2018 | Change % | 2018 |
| FFO per share *) | 0.16 | 0.08 | 100.0 | 0.27 | 0.17 | 58.8 | 0.49 |
| Earnings per share | 0.27 | 0.31 | -12.9 | 0.40 | 0.48 | -16.7 | 0.93 |
| EPRA NAV per share | 11.88 | 11.17 | 6.4 | 11.69 | |||
| Equity per share | 9.55 | 9.11 | 4.8 | 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 Half-Year Financial Report | |
| 1) Including items held for sale 2) Excluding items held for sale 3) The transition to IFRS 16 had an effect of 0.6 percentage points on this key figure during the review period 4) 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 |
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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 (previously 2–7 per cent). In addition, the company estimates that the Group’s FFO for 2019 will amount to between EUR 134–144 million, excluding one-off items (previously EUR 130–143 million). Investments in new development and housing stock acquisitions are forecast to amount to approximately, or exceed, EUR 300 million (previously to exceed EUR 300 million). Achieving the level of EUR 300 million would require acquisitions of residential properties during the second half of the year.
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
The implementation of our strategy progressed in line with expectations during the first half of the year. Total revenue, net rental income and Funds From Operations (FFO) increased year-on-year. The fair value of properties rose to EUR 5.3 billion. Supported by the development of the renting process and our webstore, the financial occupancy rate increased to 96.9 per cent in spite of increased supply in the market. The growth of like-for-like revenue was also strong at 2.8 per cent.
In June, we announced that, from 31 December 2019 onwards, we will shift from a transaction-based valuation technique to a yield-based valuation technique in the valuation of our investment properties. The purpose of the change is to make the company more comparable with its peer group. The potential impacts of the change are currently being evaluated and they will be announced separately if necessary.
We made good progress during the review period towards our target of increasing the value of our investment properties to EUR 6 billion by the end of 2021. We started construction on 648 new apartments during the review period. Currently there are 1,329 apartments under construction, with 85 per cent of these located in the Helsinki region.
In addition to portfolio acquisitions and residential start-ups, we are also well positioned to identify individual acquisition targets in the market in order to grow our investment portfolio. During the first half of the year, we acquired individual properties in central Helsinki.
After the end of the review period, we also announced an agreement on the sale of 478 apartments. The transaction will be completed in August and it is part of our strategy of focusing our operations on Finland’s seven largest growth centres. The target assets for the transaction are located mainly outside these growth centres.
Electronic services have become increasingly well-established as part of our offering for Lumo ten-ants. The number of apartments rented via our webstore has already exceeded 12,000, and the My Lumo online application launched in the spring for use by our tenants has been well received by its user base. Service development in collaboration with our partners and customers will continue as part of our normal business operations.
Jani Nieminen
CEO
News conference and webcast
Kojamo will hold a news conference for institutional investors, analysts and media on 23 August 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 press conference can be streamed online at https://kojamo.videosync.fi/2019-q2-results
You can also participate in the news conference by calling:
FI: +358 9 8171 0310
SE: +46 8566 42651
UK: +44 3333 000 804
US: +1 6319 131 422
The participants joining the news conference will be asked to provide the following PIN code: 14812625#
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 rental housing business. Our mission is to create better urban housing. We operate in Finland’s most significant growth centres and our Lumo brand provides rental housing and new services for urban housing with 50 years of experience. We actively develop the value and number 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/
Attachments
Kojamo Half-Year Financial Report January–June 2019 (Kojamo Half-Year Financial Report 2019.pdf)
Kojamo Half-Year Financial Report Janury–June 2019 presentation (Kojamo Half-Year Financial Report 2019 presentation.pdf)