Kojamo plc: Kojamo plc's interim report 1 January-31 March 2018:Lumo business is increasing Kojamo's value and total revenue
Kojamo plc, Stock exchange release, 3 May 2018 at 12:30 EET
Kojamo plc's interim report 1 January-31 March 2018
Lumo business is increasing Kojamo's value and total revenue
This is a summary of the Kojamo's January-March 2018 interim report, which is in its entirety attached to this release and can be downloaded from the company's website at www.kojamo.fi
SUMMARY OF JANUARY-MARCH 2018
(comparison period 1 January-31 March 2017)
- Total revenue totalled EUR 88.2 (83.6) million. Total revenue is generated entirely by rental income. The increase in total revenue was mainly due to the completion of rental apartments in 2017 and early 2018, as well as the acquisition of rental apartments in early 2018.
- Net rental income was EUR 55.5 (52.6) million, representing 62.9 (62.9) per cent of total revenue. The increase in net rental income was mainly due to the completion of rental apartments in 2017 and early 2018, as well as the acquisition of rental apartments in early 2018.
- Profit before taxes amounted to EUR 56.3 (58.3) million. The profit includes EUR 20.7 (23.5) million in net valuation gain on the fair value assessment of investment properties, as well as EUR 0.6 (0.7) million in gains and losses on sales of investment properties. The change in the value of investment properties included in the profit is EUR 2.8 million lower than in the comparison period. Financial income and expenses were EUR 2.2 million higher than in the comparison period due to the significant increase in the amount of interest-bearing liabilities.
- Equity per share was EUR 275.61 (251.71), and return on equity was 8.8 (10.1) per cent. Return on investment was 6.0 (7.0) per cent.
- Gross investments during the period totalled EUR 203.7 (65.0) million. Gross investments were 230.9 (77.8) per cent of total revenue. The increase in gross investments was the result of a major purchase of rental apartments during the period.
- EPRA NAV per share (net asset value) was EUR 344.42 (318.85).
- The financial occupancy rate remained high, standing at 96.3 (96.8) per cent during the period under review.
- The fair value of investment properties was EUR 4.9 (4.3) billion, including EUR 96.4 (3.9) million of investment property held for sale.
- At the end of the review period, there were 1,251 (1,747) Lumo apartments under construction.
- Kojamo owned 35,697 (33,843) rental apartments at the end of the period. Since March 2017, 981 apartments have been acquired, 1,291 have been completed, 345 have been sold and 73 have been demolished or altered
- Kojamo will change its dividend policy and the disclosure of the company's outlook. In future, the company will provide the outlook for total revenue (previously net rental income), funds from operations (FFO) (previously operative result) and gross investments.
The quarterly figures of this interim report have not been audited. The figures for 2017 are based on Kojamo plc's audited financial statements for 2017. The bracketed figures refer to the corresponding period in 2017, and the comparison period is the corresponding period the year before, unless otherwise stated.
CEO JANI NIEMINEN:
Lumo business is increasing Kojamo's value and total revenue
In the first quarter of the year, we have grown our Lumo business in Finnish growth centres with both newly constructed properties and purchases of existing apartments. During the review period, we also agreed on a strategic divestment that was carried out at the end of April.
Our strategy is to provide the best customer experience and to grow the value and number of our investment properties in Finnish growth centres. The financial occupancy rate was at a good level, however the increased number of new apartments completed in the market has temporarily increased the supply of rental apartments and created a balance between supply and demand. We estimate that urbanisation will create long-term demand for new rental apartments in Finnish growth centres and in the Helsinki region in particular. Brisk construction is needed to create a balance between rental housing supply and demand in Finnish growth centres in the long run.
Home seekers are increasingly interested in Lumo homes, and the number of customers in our web store rose to an all-time high during the review period. I am happy to say that in early April, we exceeded the threshold of 5,000 tenancy agreements signed via the web store.
In the first quarter, we continued to actively develop our property portfolio. We aim to increase both the value of our investment properties and the attractiveness of our rental housing among customers who value better urban living. In early March, we completed the acquisition of 981 apartments from OP Financial Group's funds. At the end of the month, we signed an agreement for the sale of 1,594 apartments to real estate fund managed by the Morgan Stanley Real Estate Investing. The transaction was completed at the end of April.
Urbanisation and the growing number of small households are key factors that are driving the demand for rental housing. Positive economic development and high consumer confidence support our aim of turning rental housing into services and create demand for better urban housing. We are investing in growth in the seven largest urban regions in Finland and in the customer experience in Lumo homes. A total of 483 new Lumo rental apartments were completed in the first quarter, especially in the Helsinki Metropolitan Area.
Over the last five years, we have invested EUR 1.7 billion in the Lumo segment in Finnish growth centres. Our financing structure is strong, enabling the development of the property portfolio in line with our strategy. On 7 March 2018, we issued an unsecured EUR 500 million bond that was listed on the Irish Stock Exchange to diversify our financing structure.
The examination into the possibility of listing the company on the stock exchange, launched by Kojamo's Board of Directors, is progressing well. As part of the process, the company is also holding preliminary meetings with potential new investors.
We will continue to develop innovative services that make daily lives easier, while also making significant investments in the Lumo segment and boldly renewing urban housing.
|Total revenue, M€||88.2||83.6||337.0|
|Net rental income, M€||55.5||52.6||216.0|
|Funds From Operations (FFO), M€ *)||29.2||21.0||107.8|
|Earnings per share, €||6.03||6.33||28.77|
|EPRA Earnings, M€||29.1||29.3||117.0|
|EPRA NAV per Share, €||344.42||318.85||344.31|
|Investment properties, M€ 1)||4,930.8||4,318.3||4,710.2|
*) 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 section of the interim report
1) Includes non-current assets held for sale
OUTLOOK FOR KOJAMO IN 2018
Kojamo will change the disclosure of the company's outlook. In future, the company will provide the outlook for total revenue (previously net rental income), funds from operations (FFO) (previously operative result) and gross investments. The main difference between FFO and operative result concerns the treatment of the taxes to be paid. The reconciliation to operative result is presented in the key figures section. The company's assessment is that this new method will clarify the disclosure of the company's outlook.
Kojamo estimates that in 2018, the Group's total revenue will grow by 3 to 9 per cent year-on-year. In addition, the company estimates that the Group's FFO for 2018 will amount to between EUR 103 and EUR 116 million, excluding one-off items. Investments in new development and housing stock acquisitions are forecast to exceed EUR 300 million.
The outlook takes into account the effects of the housing divestments and acquisitions completed in 2018, 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.
ANNUAL GENERAL MEETING
At the Annual General Meeting of Kojamo plc held on 15 March 2018, Riku Aalto, Matti Harjuniemi, Olli Luukkainen, Jorma Malinen, Mikko Mursula, Reima Rytsölä, Jan-Erik Saarinen and Ann Selin were re-elected as members of the Board of Directors for the term that ends with the Annual General Meeting of 2019. Riku Aalto was elected as Chairman of the Board of Directors.
Jarkko Eloranta, Ville-Veikko Laukkanen, Pasi Pesonen and Esko Torsti were elected as members of the Nomination Board.
It was decided that the following annual fees will be paid to the members of the Board of Directors elected at the Annual General Meeting: EUR 26,000 for the Chairman of the Board of Directors, EUR 15,000 for the Deputy Chairman and EUR 9,000 for each of the members. In addition, it was decided that the attendance allowance for Board meetings will be EUR 600 per meeting.
KPMG Oy Ab, with Esa Kailiala, APA, as its principal auditor, was elected the auditor for the company for the term lasting until the next Annual General Meeting.
The Annual General Meeting decided in accordance with the proposal of the Board of Directors that the company will pay a dividend of EUR 6.80 for every Series A share, for a total of EUR 50,337,408.00, and EUR 132,103,905.59 will be carried over in unrestricted shareholders' equity for the financial year 2018.
The Annual General Meeting authorised the Board of Directors to decide on one or more share issues and the issuance of special rights entitling to shares, as referred to in chapter 10, section 1 of the Limited Liability Companies Act. Share issues and the issuance of special rights entitling to shares can be used to issue a maximum of 1,480,512 new Series A shares in the company, or transfer a maximum of 600,978 Series A shares currently held by the company. The authorisation is valid until the next Annual General Meeting.
At its Organising Meeting following the Annual General Meeting, the Board of Directors elected Mikko Mursula Vice Chairman of the Board of Directors.
The following persons were elected to the Audit Committee: Mikko Mursula as Chair and Matti Harjuniemi, Jorma Malinen and Jan-Erik Saarinen as members.
The following persons were elected to the Remuneration Committee: Riku Aalto as Chair and Olli Luukkainen, Reima Rytsölä and Ann Selin as members.
FOR MORE INFORMATION, PLEASE CONTACT:
Jani Nieminen, CEO, tel. +358 20 508 3201
Erik Hjelt, CFO, tel. +358 20 508 3225
Irish Stock Exchange
Creating better urban housing Kojamo is the frontrunner in rental housing and real estate investments. It has undergone major renewals in recent years. The renewed Kojamo is able to provide better urban housing in a rapidly changing world. Kojamo is transforming Finnish society together with its customers, other companies and operators, and cities.