VVO GROUP PLC
STOCK EXCHANGE RELEASE
3 November, 2016 at 13.00 EET
VVO Group plc’s Interim Report 1.1– 30.9.2016
SUMMARY OF JANUARY–SEPTEMBER 2016
- The Group’s gross investments during the period totalled EUR 609.4 (159.2) million. Gross investments were 228.4 (57.6) per cent of turnover.
- The fair value of investment properties was EUR 4.1 (3.9) billion. Return on investment was 7.0 (7.7) per cent.
- The Group’s turnover totalled EUR 266.8 (276.3) million. Turnover is entirely generated by rental income.
- Profit before taxes amounted to EUR 154.4 (167.3) million. The profit includes EUR 68.6 (52.5) million in net valuation gain on the fair value assessment of investment properties and EUR -20.3 (1.4) million in capital gains and losses on investment properties. The capital losses will be reduced as a result of a decision made by the Housing Finance and Development Centre of Finland ARA after the end of the review period. Net income and capital losses resulting from the delay of the divestment of 8,571 apartments were approximately EUR 14.7 million higher than expected. Nevertheless, the delay of the transaction does not have a substantial effect on the Group’s operating profit. The Group’s favourable profit performance is based on changes in the fair value, low financial costs, a good financial occupancy rate and the successful management of maintenance costs.
- Net rental income was EUR 172.4 (170.5) million, representing 64.6 (61.7) per cent of turnover. Net rental income was increased by completed new development, acquisitions, increased rental income and the successful management of maintenance and repair costs. Divestments decreased net rental income.
- The financial occupancy rate remained high, standing at 97.2 (97.5) per cent during the review period.
- There were 1,415 (1,199) rental apartments under construction at the end of the review period.
- The Group owned 34,926 (40,899) rental apartments on 30 September 2016.
- The company specifies its outlook with regard to investments.
SUMMARY JULY–SEPTEMBER 2016
- Turnover totalled EUR 84.6 (93.1) million. Turnover decreased due to rental housing stock divestments.
- Profit before taxes amounted to EUR 49.0 (42.9) million. The profit includes EUR 12.4 (5.3) million in net valuation gain on the fair value assessment.
- Net rental income was EUR 55.9 (57.3) million, representing 66.1 (61.5) per cent of turnover. Net rental income was decreased by rental housing stock divestments.
- The financial occupancy rate remained high, standing at 97.8 (97.8) per cent during the review period.
- The Group’s gross investments during the period totalled EUR 519.5 (44.2) million.
CEO JANI NIEMINEN
In approximately five years’ time, the company has invested nearly EUR 1.5 billion in market-based rental housing. In 2016, our investments in Finnish rental housing will be approximately EUR 650 million, and at the end of the review period, there were 1,415 new rental apartments under construction, of which 1,233 were in the Helsinki region. We want to respond to the demand for rental housing, particularly in the Helsinki region, making it easier for people to move around in pursuit of employment in urbanising Finland. We are actively fighting the grey economy well beyond the legislative requirements. VVO Group’s share of the entire rental housing market is approximately 4.4 per cent.
VVO Group plc issued a new EUR 200 million secured bond after the review period on 17 October 2016. The transaction attracted a wide audience from investors in Fin-land, other Nordic countries and Europe and it was clearly oversubscribed, with subscriptions from over 40 investors. The bond was listed on the Nasdaq Helsinki Ltd stock exchange on 21 October 2016. The company’s goal is to diversify its funding sources in order to finance growth.
As a housing investment company, our annual investment target is 1,000 rental apartments. This target can be reached, but it would be significantly easier to increase the number of rental apartments if there was a sufficient supply of plots suitable for immediate construction in growth centres. It is possible to influence the housing situation in the Helsinki Metropolitan Area and the market price of rents by increasing the amount of plots suitable for construction and by enhancing the supply.
This year, we have divested our ARA properties that are subject to long-term restrictions and focused on market-based operations, where we can develop our operations extensively and carry out service design. Our goal is to create more offering and new service solutions in rental housing in order to make it easier to acquire rental apartments and to live in them. In rental operations, we apply overall rent without any separate additional charges – a convenient approach for our customers! Nearly all of our rents include water and broadband Internet, for example. The Lumo homenow.fi online service channel, now up and running for approximately a year, revolutionised the rental housing sector and has convinced customers of its merits: more than 760 tenancy agreements have been signed through the apartment rental service.
KEY INDICATORS
| VVO group | 7-9/2016 | 7-9/2015 | 1-9/2016 | 1-9/2015 | 1-12/2015 |
| Revenue, M€ | 84.6 | 93.1 | 266.8 | 276.3 | 370.9 |
| Net rental income, M€ | 55.9 | 57.3 | 172.4 | 170.5 | 227.4 |
| % revenue | 66.1 | 61.5 | 64.6 | 61.7 | 61.3 |
| Profit before taxes, M€ | 49.0 | 42.9 | 154.4 | 167.3 | 224.7 |
| Earnings per share, € | 5.27 | 4.86 | 16.80 | 18.09 | 24.23 |
| Equity per share, € | 233.93 | 228.57 | 234.85 | ||
| Return on equity, % (ROE) | 9.6 | 10.9 | 10.8 | ||
| Return on investments, % (ROI) | 7.0 | 7.7 | 7.6 | ||
| Loan to Value, % | 47.7 | 47.9 | 42.8 | ||
| Equity ratio, % | 39.5 | 41.2 | 41.1 | ||
| Financial Occupancy rate, % | 97.8 | 97.8 | 97.2 | 97.5 | 97.6 |
| Gross investments, M€ | 519.5 | 44.2 | 609.4 | 159.2 | 235.0 |
| Investment properties, M€ | 4,127.5 | 3,907.9 | 3,999.2 | ||
| Interest bearing liabilities, M€ | 1,984.8 | 1,888.4 | 1,494.6 | ||
| Number of personnel, end of period | 290 | 363 | 356 |
OUTLOOK FOR VVO GROUP
VVO Group specifies its outlook for 2016 with regard to investments.
VVO Group estimates that net rental income will remain at the 2015 level. Investments are forecast to be approximately EUR 650 million (previous estimate: over EUR 600 million). The outlook takes into account the effects of the divestment of 8,571 apartments and the acquisition of 2,274 apartments, the estimated occupancy rate for the remainder of the year and the number of apartments under construction. VVO Group’s financial occupancy rate is expected to remain at the current level throughout 2016, due to continuing stable demand for rental housing. The estimate is based on currently valid tenancy agreements and the stable demand in growth centres.
Further information:
VVO Group plc
Jani Nieminen, CEO, tel. 020 508 3201
Erik Hjelt, CFO, tel. 020 508 3225
VVO Group plc offers rental apartments and housing services in Finnish growth centres. The vision of the housing investment company is to be a pioneer in housing and the customer’s number-one choice.