Quarterly Report • Aug 23, 2019
Quarterly Report
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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.
All statements made in this report regarding the company or its business are based on the views of the management, and the sections addressing the general macro-economic or industry situation are based on third-party information.
If there are differences between different language versions of the Half-Year Financial Report, the Finnish version is the official one.
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
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.
Kojamo estimates that in 2019, the Group's total revenue will increase by 3–5 per cent year-onyear (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.
| 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
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 transactionbased 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 tenants. 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
As Kojamo operates in the residential real estate sector, the company is affected particularly by urbanisation as well as the situation in the residential property market and development in Finnish growth centres. The company is also affected by macroeconomic factors, such as economic growth, employment, disposable income, inflation and population growth.
| Operating environment key figures | 2020e | 2019e |
|---|---|---|
| GDP growth forecast, % | 1.2 | 1.6 |
| Unemployment, % | 6.3 | 6.6 |
| Inflation, % | 1.5 | 1.2 |
| Source: Ministry of Finance, Economic survey 6/2019 |
According to the Ministry of Finance's forecast, economic growth in the coming years will be more moderate than in recent years. Global economic growth will slow substantially this year compared to last year, and the economic outlook has weakened in Finland's key export markets. Private investments are estimated to turn to a decrease in 2019 as the number of residential start-ups begins to follow the declining trend of new building permits.
Private consumption growth is supported this year by higher income levels and improved employment (Source: Ministry of Finance, Economic survey 6/2019).
| Industry key figures | 2019e | 2018 |
|---|---|---|
| Residential start-ups, units | 39,000 | 46,200 |
| Building permits granted, annual, units 1) | 38,651 | 48,602 |
| Construction costs, % | 2.0 | 2.5 |
| Prices of old dwellings in the whole country, change, % | 1.2 | 1.2 |
| Prices of old dwellings in the capital region, change, % | 2.2–3.5 | 2.5–3.2 |
| Rents of non-subsidised dwellings in the whole country, change, % | 1.8 | 1.6 |
| Rents of non-subsidised dwellings in the capital region, change, % | 2.0–2.8 | 2.3–2.6 |
1) Rolling 12 months, May 2019 and 2018
Sources: Confederation of Finnish Construction Industries RT, business survey, April 2019; Statistics Finland, Building and dwelling production 2019, May; Pellervo Economic Research PTT, Housing market 2019 forecast
According to the Confederation of Finnish Construction Industries' (CFCI) business survey, the volume of housing production is returning to normal after the record levels seen in recent years. As the numbers of building permits and new residential projects are declining, the rate of housing production is expected to slow down. Nevertheless, the supply in 2019 will remain at the high level seen in the previous year, with the decline not being reflected in the housing supply until the latter part of 2020. According to the most recent forecasts by the Ministry of Finance, the number of residential start-ups may even be lower than the CFCI forecast. New construction is still supported by the growth of the Finnish economy, consumer confidence, low interest rates and the potential yield of residential investments compared to other investments. In the longer term, residential construction will be maintained by the accelerating trend of urbanisation and the expansion of commuting areas due to new transport projects. According to CFCI's survey of housing production, growth centres are representing an increasing share of housing production.
The development of prices in the housing market will continue to diverge between growth centres and other areas according to Pellervo Economic Research (PTT). Accelerated urbanisation increases the demand for apartments, which puts upward pressure on prices in growth centres. An increasing number of people also choose rental housing of their own accord. Due to rising apartment prices and stricter loan terms, it is becoming increasingly difficult to buy an apartment especially in the inner city areas of large cities. This often leaves renting as the only option for finding an apartment in a specific area for many households.
| Population growth forecast |
household-dwelling | Share of rental units |
|
|---|---|---|---|
| Region | 2017–2030 | 2010 | 2017 |
| Helsinki | 14.8% | 47.1% | 49.2% |
| Capital region 1) | 16.0% | 41.9% | 44.5% |
| Helsinki region 2) | 13.7% | 37.7% | 40.1% |
| Jyväskylä | 5.0% | 40.2% | 42.9% |
| Kuopio | 2.7% | 36.5% | 38.9% |
| Lahti | -2.7% | 37.3% | 39.9% |
| Oulu | 5.9% | 36.7% | 40.0% |
| Tampere | 7.3% | 42.2% | 47.2% |
| Turku | 7.3% | 43.0% | 47.5% |
| Other areas | -7.1% | 23.8% | 25.0% |
1) Helsinki, Espoo, Kauniainen, Vantaa
2) Capital region, Hyvinkää, Järvenpää, Kerava, Kirkkonummi, Mäntsälä, Nurmijärvi, Pornainen, Sipoo, Tuusula, Vihti Sources: Statistics Finland, Dwellings and Housing Conditions 2017; MDI, population forecast 2040
According to a population forecast by Consultancy for Regional Development MDI, the trend of regional divergence will accelerate in 2019–2040 and the significance of the 10 largest urban areas will increase. Population growth will take place particularly in Helsinki, Tampere and Turku regions.
The popularity of rental housing will increase along with urbanisation. According to Pellervo Economic Research (PTT), the changing living preferences of Finnish people are closely linked to major trends such as urbanisation, the ageing of the population and digitalisation. Urbanisation increases the demand for rental housing. Those who move to growth centres increasingly see rental housing as an easier, safer and more flexible choice. Many people moving to cities want to live centrally to feel the pulse of the city and enjoy close proximity to services, hobbies and leisure time activities. The growing demand for services is also reflected in living preferences. Living-related needs can be increasingly satisfied by services instead of owning.
Kojamo is the largest private residential real estate company in Finland measured by the fair value of investment properties1 . Kojamo offers rental apartments and housing services for tenants primarily in Finnish growth centres2 . At the end of the review period, Kojamo's property portfolio comprised 35,194 (34,172) rental apartments. The fair value of Kojamo's investment properties
1 KTI Property Information Ltd: The Finnish property market 2019. Investment properties include apartments, ongoing projects, plots owned by the company and ownership of certain assets through shares, such as parking spaces. Fair value represents the fair value of investment properties and includes investment properties classified as non-current assets held for sale.
Measured at fair value on 30 June 2019, 98.3 per cent of Kojamo's rental apartments were located in the seven largest Finnish growth centres, 67.9 per cent in the Helsinki region and 83.5 per cent in the Helsinki, Tampere and Turku regions.
Kojamo's total revenue in April–June 2019 increased to EUR 93.1 (89.8) million. Total revenue is generated entirely by income from rental operations.
The increase in total revenue was mainly due to the completion of rental apartments in 2018 and during the review period as well as the like-for-like (LfL) growth of rental income.
The Group's net rental income totalled EUR 66.8 (61.4) million, representing 71.8 (68.4) per cent of total revenue. The increase in net rental income was mainly due to the completion of rental apartments in 2018 and during the review period, the like-for-like (LfL) growth of rental income and maintenance and repair expenses being lower than in the comparison period.
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. Profit before taxes and excluding the net valuation gain on the fair value assessment of investment properties increased by EUR 5.5 million. The comparison period included EUR 0.9 million in non-recurring costs arising from arrangements related to the Group's listing on the stock exchange and the issuing of shares.
Financial income and expenses were EUR -13.0 (-12.7) million. Financial income and expenses include EUR -0.9 (-0.3) million in unrealised changes in the fair value of derivatives.
Funds From Operations (FFO) amounted to EUR 40.1 (17.6) million. The increase in FFO during the review period was attributable to the improved net rental income and the fact that FFO in the comparison period was burdened by taxes arising from portfolio sales.
Kojamo's total revenue in January–June 2019 increased to EUR 184.6 (178.0) million. Total revenue is generated entirely by income from rental operations.
The increase in total revenue was mainly due to the completion of rental apartments in 2018 and during the review period as well as the like-for-like (LfL) growth of rental income.
The Group's net rental income totalled EUR 117.7 (109.5) million, representing 63.8 (61.5) per cent of total revenue. The increase in net rental income was mainly due to the completion of rental apartments in 2018 and during the review period, the like-for-like (LfL) growth of rental income and repair expenses being lower than in the comparison period.
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. Profit before taxes and excluding the net valuation gain on the fair value assessment of investment properties increased by EUR 5.9 million. The comparison period included EUR 0.9 million in non-recurring costs arising from arrangements related to the Group's listing on the stock exchange and the issuing of shares.
Financial income and expenses totalled EUR -26.1 (-24.1) million. Financial income and expenses include EUR -2.5 (-0.9) million in unrealised changes in the fair value of derivatives.
Kojamo adopted IFRS 16 on 1 January 2019. The new standard affected net rental income by EUR 1.8 million, operating profit by EUR 1.2 million and financial income and expenses by EUR -1.2 million. The effect on the profit for the review period was EUR 0.0 million.
Funds From Operations (FFO) amounted to EUR 66.4 (39.5) million. The increase in FFO during the review period was attributable to the improved net rental income and the fact that FFO in the comparison period was burdened by taxes arising from portfolio sales.
| 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 | |
|---|---|---|---|
| Balance sheet total, M€ | 5,638.9 | 5,421.5 | 5,485.4 |
| Equity, M€ | 2,360.1 | 2,252.4 | 2,358.1 |
| Equity per share, € | 9.55 | 9.11 | 9.54 |
| Equity ratio, % | 41.9 | 41.6 | 43.0 |
| Return on equity, % (ROE) | 8.5 | 10.4 | 10.1 |
| Return on investment, % (ROI) | 6.2 | 7.3 | 7.2 |
| Interest-bearing liabilities, M€ | 2,616.1 | 2,540.3 | 2,485.5 |
| Loan to Value (LTV), % *) | 46.9 | 46.7 | 45.9 |
| Average interest rate of loan portfolio, % **) | 1.8 | 1.8 | 1.8 |
| Average loan maturity, years | 5.1 | 5.9 | 5.5 |
| Cash and cash equivalents, M€ | 139.1 | 242.9 | 150.1 |
*) The IFRS 16 standard had an effect of 0.6 percentage points on this key figure during the review period.
**) Includes interest rate derivatives.
The Group's liquidity was excellent during the review period. On 30 June 2019, the Group's cash and cash equivalents stood at EUR 139.1 (242.9) million and liquid financial assets at EUR 127.4 (180.6) million. EUR 50.0 (49.9) million of the EUR 250 million commercial paper programme was in use at the end of the review period. In addition, the Group has committed credit facilities of EUR 300 million and an uncommitted credit facility of EUR 5 million that remained unused at the end of the period.
In June, Kojamo plc and OP Corporate Bank plc signed an agreement on an unsecured loan of EUR 100 million. The 7-year loan will be used for the Group's general financing purposes. At the end of the review period, the loan was still unwithdrawn.
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Fair value of investment properties on 1 Jan | 5,093.2 | 4,710.2 | 4,710.2 |
| Acquisition of investment properties | 84.2 | 233.0 | 338.9 |
| Modernisation investments | 11.5 | 8.8 | 23.7 |
| Disposals of investment properties | -0.6 | -104.2 | -109.6 |
| Capitalised borrowing costs | 0.9 | 1.4 | 2.6 |
| Transfer to own use | 0.0 | 0.0 | 0.0 |
| Right-of-use assets *) | 61.5 | ||
| Valuation gains/losses on fair value measurement | 52.6 | 74.1 | 127.5 |
| Fair value of investment properties at the end of the period | 5,303.2 | 4,923.3 | 5,093.2 |
*) IFRS 16 Leases includes EUR 0.3 million in leases held for sale.
The value of investment properties on 30 June 2019 includes EUR 23.7 million in investment properties held for sale.
Kojamo owned a total of 35,194 (34,172) rental apartments at the end of the review period. Measured at fair value at the end of the period, 98.3 per cent of Kojamo's rental apartments were located in the seven largest Finnish growth centres. The company aims to divest its apartments outside the seven major growth centres in Finland.
The fair value of Kojamo's investment properties is determined quarterly on the basis of the company's own evaluation. An external expert gives a statement on the valuation of Kojamo's investment properties. The latest valuation statement was issued on 30 June 2019. The key criteria for determining fair value are presented in the Notes to the Half-Year Financial Report.
Kojamo has decided to shift from a transaction-based valuation technique to a yield-based valuation technique in the valuation of investment properties from 31 December 2019 onwards. This represents a change in accounting estimates and its potential effects will be recognised starting from the accounting period in which the change occurs. The change will not be applied retrospectively.
| Lumo brand | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Number of apartments | 33,539 | 32,035 | 33,058 |
| Average rent, €/sq.m./month | 16.04 | 15.68 | 15.69 |
| Average rent, €/sq.m./month, yearly average | 15.92 | 15.45 | 15.53 |
| VVO brand | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
| Number of apartments | 1,655 | 2,137 | 1,655 |
| Average rent, €/sq.m./month | 14.06 | 13.70 | 13.81 |
Kojamo responds to the trends of urbanisation, digitalisation and communality in accordance with its strategy, providing its customers with apartments with good locations and services that make daily life easier, increase the attractiveness of housing and improve the sense of community. Our aim is to develop a networked service platform that will enable agile innovation implementation in cooperation with other operators. Kojamo's properties serve as a platform to which the new services can easily be connected.
The number of tenancy agreements signed via the Lumo webstore continued to increase sharply during the review period. By the end of June, more than 12,000 tenancy agreements had been signed on the webstore. All Lumo rental apartments that become vacant are available for rent on the Lumo webstore, where customers can choose their preferred apartment.
As of 15 November 2017, Kojamo has adopted the practice of a separate water charge in its tenancy agreements. Previously, the water charge was included in the rent. The new practice will be implemented in all new tenancy agreements. Water fees during the review period amounted to EUR 2.8 (1.0) million.
| Rental housing key figures | 1–6/2019 | 1–6/2018 | 1–12/2018 |
|---|---|---|---|
| Financial occupancy rate, % | 96.9 | 96.5 | 97.0 |
| Tenant turnover rate, excluding internal turnover, % | 15.1 | 14.7 | 28.8 |
| Like-for-like rental income growth, % *) | 2.8 | 1.9 | 2.4 |
| Rent receivables in proportion to revenue, % | 1.4 | 1.5 | 1.4 |
*) Change of rental income for properties owned for two consecutive years in the past 12 months compared to the previous 12-month period.
The financial occupancy rate increased year-on-year. The increase in the occupancy rate was supported by the successful development of rental processes and the growth of the Lumo webstore. At the end of the review period, 103 (91) apartments were vacant due to renovations.
| Number of apart |
|||||
|---|---|---|---|---|---|
| Region | ments, units |
Fair value, M€ |
Fair value, K€ / unit |
Fair value, € / sq.m. |
Financial occupancy rate, % |
| Helsinki region | 20,283 | 3,374 | 166 | 2,961 | 97.8% |
| Tampere region | 4,848 | 547 | 113 | 2,208 | 96.2% |
| Turku region | 1,848 | 226 | 123 | 2,153 | 96.8% |
| Oulu | 2,220 | 195 | 88 | 1,667 | 95.4% |
| Jyväskylä | 1,727 | 205 | 119 | 2,245 | 91.9% |
| Kuopio region | 1,674 | 176 | 105 | 1,996 | 93.6% |
| Lahti region | 1,477 | 159 | 107 | 1,920 | 95.3% |
| Others | 1,117 | 421 | 77 | 1,419 | 95.1% |
| Total | 35,194 | 5,303 *) | 141 | 2,572 | 96.9% |
*) Includes EUR 336 million in fair value related to ongoing projects, plots owned by the company and ownership of certain assets through shares and IFRS 16 right-of-use assets.
| Investments, M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Acquired investment properties | 84.2 | 233.0 | 338.9 |
| Modernisation investments | 11.5 | 8.8 | 23.7 |
| Capitalised borrowing costs | 0.9 | 1.4 | 2.6 |
| Total | 96.6 | 243.2 | 365.2 |
| Repair expenses, M€ | 15.2 | 17.5 | 35.4 |
| Number of apartments | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Apartments at the start of the review period | 34,713 | 34,383 | 34,383 |
| Divestments | -4 | -1,812 | -1,908 |
| Acquisitions | 99 | 981 | 1,049 |
| Completed | 383 | 689 | 1,258 |
| Demolished or altered | 3 | -69 | -69 |
| Apartments at the end of the review period | 35,194 | 34,172 | 34,713 |
| Started during the review period | |||
| 648 | 378 | 797 | |
| Under construction at the end of the period | 1,329 | 1,214 | 1,064 |
| Preliminary agreements for new construction | 580 | 652 | 380 |
A total of 99 apartments were acquired during the review period. Kojamo signed an agreement on 30 April regarding the acquisition of the entire share capital of Kiinteistö Oy Helsingin Somerontie 14. Consisting of 83 apartments and one unit of business premises, the building is located in Helsinki's Vallila district in close proximity to excellent transportation connections and services.
After the end of the review period, on 12 July 2019, Kojamo Group companies signed an agreement on the sale of 478 rental apartments in 12 locations across Finland to Olo Asunnot. The transaction will be completed in August. The assets involved in the transaction have been transferred to non-current assets and liabilities held for sale, which are itemised in Note 10. In addition, Kojamo's goal is to divest the remaining individual non-strategic properties during 2019.
Of the apartments under construction, 1,127 (977) are located in the Helsinki region and 202 (274) in other Finnish growth centres. A total of 728 apartments are expected to be completed in 2019 (completed in 2018: 1,258 apartments).
Modernisation investments during the review period amounted to EUR 11.5 (8.8) million and repair costs totalled EUR 15.2 (17.5) million.
| Binding acquisition agreements for new development, M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Actual costs incurred from new construction in progress | 115.5 | 140.2 | 90.3 |
| Cost of completing new construction in progress | 145.1 | 89.9 | 77.8 |
| Total | 260.6 | 230.1 | 168.1 |
| Plots and real estate development sites owned by the company |
30 Jun 2019 1,000 |
30 Jun 2018 1,000 |
31 Dec 2018 1,000 |
|||
|---|---|---|---|---|---|---|
| M€ | fl.sq.m. | M€ | fl.sq.m. | M€ | fl.sq.m. | |
| Plots | 43.2 | 70 | 60.2 | 90 | 60.1 | 83 |
| Plots and existing residential building | 28.8 | 44 | 28.4 | 41 | 30.0 | 43 |
| Conversions | 92.5 | 81 | 88.3 | 81 | 95.3 | 85 |
| Total 1) | 164.5 | 195 | 168.8 | 212 | 185.4 | 211 |
| Binding preliminary agreements and provisions for plots and real estate de velopment |
M€ | 30 Jun 2019 1,000 fl.sq.m. |
M€ | 30 Jun 2018 1,000 fl.sq.m. |
M€ | 31 Dec 2018 1,000 fl.sq.m. |
| Preliminary agreements for new construc tion (including plots of land) |
121.8 | 111.4 | 60.3 | |||
| Estimate of the share of plots of prelimi nary agreements for new development 1) |
17.5 | 27 | 25.9 | 35 | 18.1 | 23 |
1) The management's estimate of the fair value and building rights of the plots
| 30 Jun 2019 | Goal 2021 | |
|---|---|---|
| Fair value of investment properties, EUR billion | 5.3 | 6.0 |
| Number of apartments | 35,194 | ~38,000 |
| Equity ratio, % | 41.9 | >40 |
| Loan to Value (LTV), % | 46.9 | <50 |
| FFO as percentage of total revenue | 36.0 | >32 |
| Net promoter score | 32 | 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.
Kojamo's share capital on 30 June 2019 was EUR 58,025,136 and the number of shares at the end of the review period totalled 247,144,399.
Kojamo has a single series of shares, and each share entitles its holder to one vote in the general meeting of shareholders of the company. There are no voting restrictions related to the shares. The shares have no nominal value. The company shares belong to the book-entry system.
The trading code of the shares is KOJAMO and the ISIN code is FI4000312251.
Trading in Kojamo's shares commenced on the pre-list of Nasdaq Helsinki on 15 June 2018 and on the official list of Nasdaq Helsinki on 19 June 2018.
| 1 January– 30 June |
15 June– 30 June |
15 June– 31 December |
|
|---|---|---|---|
| Share price and trading*) | 2019 | 2018 | 2018 |
| Lowest price, € | 8.00 | 8.50 | 8.11 |
| Highest price, € | 13.52 | 9.75 | 9.75 |
| Average price, € | 10.48 | 8.56 | 8.65 |
| Closing price, € | 13.12 | 9.15 | 8.11 |
| Market value of share capital, M€, end of period | 3,242.5 | 2,261.4 | 2,003.1 |
| Share trading, million units | 15.3 | 57.8 | 68.1 |
| Share trading of total share stock, % | 6.2 | 23.4 | 27.6 |
| Share trading, M€ | 160.1 | 494.6 | 589.8 |
| *) Including the sale of shares related to the listing. |
In addition to the Nasdaq Helsinki stock exchange, Kojamo shares were traded on other marketplaces, such as Cboe CXE, Cboe BXE and Cboe Periodic. From 1 January to 30 June 2019, approximately 12 million Kojamo shares were traded on alternative marketplaces, corresponding to approximately 44 per cent of the total trading volume. (Source: Fidessa, 29 July 2019)
Kojamo did not hold any of its own shares during or at the end of the review period.
In accordance with the Board of Directors' proposal, the Annual General Meeting on 14 March 2019 decided that a dividend of EUR 0.29 per share, or EUR 71,671,875.71 in total, be paid for the financial year 2018 and that EUR 325,310,236.78 be retained in unrestricted equity. The dividend payment date was 2 April 2019.
At the end of the review period, the number of registered shareholders was 3,875, including nominee-registered shareholders. The proportion of nominee-registered and direct foreign shareholders was 26.2 per cent of the company's shares at the end of the period. The 10 largest shareholders owned in aggregate 66.6 per cent of Kojamo's shares at the end of the review period.
The list of Kojamo's shareholders is based on information provided by Euroclear Finland Ltd (formerly the Finnish Central Securities Depository).
Kojamo's Annual General Meeting on 14 March 2019 authorised the Board of Directors to decide on the repurchase and/or acceptance as pledge of an aggregate maximum of 24,714,439 of the company's own shares according to the proposal of the Board of Directors. The proposed amount of shares corresponds to approximately 10 per cent of all the shares of the company. The authorisation will remain in force until the closing of the next Annual General Meeting, however no longer than until 30 June 2020.
The Board of Directors was also authorised to decide on the issuance of shares and the issuance of special rights entitling to shares as referred to in Chapter 10, Section 1 of the Companies Act according to the proposal of the Board of Directors. The number of shares to be issued on the basis of the authorisation shall not exceed an aggregate maximum of 24,714,439 shares, which
corresponds to approximately 10 per cent of all the shares of the company. The authorisation applies to both the issuance of new shares and the conveyance of own shares held by the company. The authorisation will remain in force until the closing of the next Annual General Meeting, however no longer than until 30 June 2020.
On 25 April 2019, Kojamo received a notification pursuant to the Securities Markets Act from Service Union United PAM. The holding of Service Union United PAM in Kojamo's shares fell below 5 per cent on 24 April 2019. Following the transaction, Service Union United PAM's holding in Kojamo plc amounted to 11,920,660 shares, corresponding to 4.82 per cent of Kojamo plc's shares and votes.
Managers' transactions at Kojamo in 2019 have been published as stock exchange releases and they are available on the Kojamo website at https://kojamo.fi/en/news.
Kojamo's Annual General Meeting on 14 March 2019 adopted the financial statements and discharged the members of the Board of Directors and the CEO from liability for the financial year 2018. The AGM also elected the members of the Board of Directors and decided on their remuneration. The AGM authorised the Board of Directors to resolve on one or more share issues or the issuance of special rights entitling to shares, as referred to in Chapter 10, Section 1 of the Companies Act. The minutes of the AGM are available at https://kojamo.fi/en/investors/corporategovernance/annual-general-meeting/.
The members of Kojamo's Board of Directors are Mikael Aro (Chairman), Mikko Mursula (Vice-Chairman), Matti Harjuniemi, Anne Leskelä, Minna Metsälä, Heli Puura and Reima Rytsölä. The company's auditor is KPMG Oy Ab, with Authorised Public Accountant Esa Kailiala as the auditor with principal responsibility.
Kojamo's Board of Directors has established two permanent committees, an Audit Committee and a Remuneration Committee. Anne Leskelä (Chairman), Matti Harjuniemi, Mikko Mursula and Heli Puura serve in the Audit Committee. Mikael Aro (Chairman), Minna Metsälä and Reima Rytsölä serve in the Remuneration Committee.
A stock exchange release was issued on 11 September 2018 announcing the composition of Kojamo plc's Nomination Board. Kojamo's three largest shareholders nominated the following members to the Shareholders' Nomination Board: Jouko Pölönen, CEO, Ilmarinen Mutual Pension Insurance Company; Risto Murto, CEO, Varma Mutual Pension Insurance Company; and Timo Korpijärvi, Investment Manager, Finnish Industrial Union.
The Shareholders' Nomination Board is a body established by the Annual General Meeting consisting of shareholders, with the task of annually preparing and presenting proposals for the General Meeting concerning the number, composition and Chairman of the Board of Directors, remuneration of the Board of Directors and remuneration of the members of the Board Committees.
Jani Nieminen, M.Sc. (Tech.), MBA was CEO during the review period. The CEO's deputy was CFO Erik Hjelt, Licentiate in Laws, EMBA.
Chief Customer Officer Tiina Kuusisto and Chief Investment Officer Ville Raitio joined Kojamo's Management Team on 7 January 2019. At the end of the review period, the members of the Management Team were Jani Nieminen, CEO; Erik Hjelt, CFO; Irene Kantor, Marketing and Communications Director; Tiina Kuusisto, Chief Customer Officer; Ville Raitio, Chief Investment Officer; and Teemu Suila, Chief Development Officer.
At the end of the review period, Kojamo had a total of 329 (347) employees. The average number of personnel during the review period was 311 (325). Kojamo employed nearly 50 summer workers in summer 2019.
The salaries and fees paid during the review period totalled EUR 8.6 (9.0) million.
Kojamo's employees are included in an annual performance bonus system which is based on the achievement of the company's general targets as well as personal targets.
Kojamo also has a long-term share-based incentive plan for the Group's key personnel. The reward is based on reaching the targets set for Kojamo's key business criteria in relation to the Group's strategic goals. Three performance periods are currently ongoing: 2017–2019, 2018–2020 and 2019–2021.
On 14 February 2019, Kojamo's Board of Directors resolved on the long-term incentive plan's performance period of 2019–2021. The possible rewards for the performance period are based on the Group's revenue, return on equity (%) and Funds From Operations (FFO) per share. The rewards to be paid on the basis of the performance period of 2019–2021 correspond to the value of a maximum total of 116,752 shares including the proportion to be paid in cash. If the three ongoing earning periods were accrued in full, the maximum bonus would be a sum corresponding to 340,148 Kojamo shares, of which 50 per cent would be paid in Kojamo shares and 50 per cent in cash. More information on the long-term incentive plan is provided in Kojamo's remuneration statement for 2018.
SUSTAINABILITY
Pursuing corporate responsibility is integral to Kojamo's operations and corporate culture. Kojamo focuses especially on responsibility towards its customers, its obligations as a contractor as well as clear communication to its shareholders about the company's corporate and social responsibility processes. Kojamo acts transparently and in an ethical manner and also requires responsible operations from its partners.
Kojamo is committed to developing new and modern construction solutions, housing services and ecological innovations related to energy-efficient housing solutions. All of Kojamo's new construction projects utilising the company's own plot reserves will be nearly zero-energy buildings in accordance with FInZEB concepts and guidelines. In addition, Kojamo will focus on managing the energy consumption of the buildings in its portfolio. Leanheat Oy's AI-based IoT solution already controls the indoor temperature of 29,000 Kojamo-owned apartments.
Kojamo is involved in several corporate responsibility programmes. After reaching the targets of the Rental Property Action Plan (VAETS) under the Property and Building Sector Energy Efficiency Agreement that ended in 2016, Kojamo joined the agreement's continuation period, VAETS II. Kojamo's energy saving target relating to the Rental Property Action Plan for the period 2017–2025 is to decrease energy consumption by 7.5 per cent from the 2015 level. Kojamo is also the only Finnish real estate company in the Climate Leadership Coalition.
The anti-grey economy models used by Kojamo exceed legislative requirements in many respects. The company continuously monitors the fulfilment of contractor obligations for all companies in its supplier network through the Reliable Partner service on the tilaajavastuu.fi website. The taxes and tax-like charges paid by Kojamo totalled approximately EUR 106 million in 2018 and approximately EUR 104 million in 2017.
The residents of Lumo homes have the opportunity to enjoy eco-friendly motoring. Anyone living in a Lumo home can reserve a shared car. Starting from summer 2019, all of these shared cars are self-charging full hybrid vehicles.
Kojamo also works to promote its corporate culture and the well-being of its personnel. In February 2019, Kojamo was recognised by Corporate Spirit in the "Finland's most inspiring workplaces" survey.
Kojamo's sponsorship and grant programme provides financial support for young talents. The programme covers not only individual sports but also team sports. Personal grants are awarded to athletes aged 12–20 to encourage them in their sporting careers. Those living in Lumo and VVO homes are given priority. In 2019, the sponsored athletes are Anna Haataja (orienteering, longdistance running), Joona Kangas (ski slopestyle), Henry Manni (wheelchair racing), Oskari Mörö (athletics), Emmi Parkkisenniemi (snowboarding) and Nooralotta Neziri (athletics). A total of 360 grants have been awarded since 2012.
There were no significant changes in Kojamo's near-term risks and uncertainties during the review period.
Kojamo estimates that the risks and uncertainties in the current review period are related, first and foremost, to the development of the Finnish economy. Economic development is reflected in both
the housing and financial markets. These factors may have an impact on Kojamo's profit and cash flow.
Finland's economic development may bring on fluctuations in housing prices, which could have an impact on the fair value of the Group's real estate property.
The supply of rental apartments may increase locally in the main areas in which Kojamo operates, and the changes in supply and demand could have an impact on the turnover of Kojamo's tenants or the financial occupancy rate and, thereby, rental income.
A more detailed description of the risks and uncertainties is presented in the 2018 financial statements.
Helsinki, 23 August 2019
Kojamo plc Board of Directors
Maija Hongas, Manager, Investor Relations, Kojamo plc, tel. +358 20 508 3004 Erik Hjelt, CFO, Kojamo plc, tel. +358 20 508 3225
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/financialreports/
The press conference can be streamed online at https://kojamo.videosync.fi/2019-q2-results You can also participate in the press conference by calling: FI: +358 9 8171 0310 SE: +46 8566 42651 UK: +44 3333 000 804 US: +1 6319 131 422
Please use the following PIN code to participate in the press conference by telephone: 14812625#
| 4–6/2019 | 4–6/2018 | 1–6/2019 | 1–6/2018 | 2018 | |
|---|---|---|---|---|---|
| EPRA Earnings, M€ | 40.1 | 31.7 | 66.7 | 53.5 | 130.3 |
| EPRA Earnings per share (EPS), € | 0.16 | 0.14 | 0.27 | 0.23 | 0.54 |
| EPRA NAV, M€ | 2,936.0 | 2,760.3 | 2,889.1 | ||
| EPRA NAV per share, € | 11.88 | 11.17 | 11.69 | ||
| EPRA Triple Net Asset Value (NNNAV), M€ | 2,306.9 | 2,224.7 | 2,375.2 | ||
| EPRA NNNAV per share, € | 9.33 | 9.00 | 9.61 | ||
| EPRA Net Initial Yield (NIY), % | 4.9 | 5.0 | 5.0 | ||
| EPRA 'topped-up' NIY, % | 4.9 | 5.0 | 5.0 | ||
| EPRA Vacancy Rate, % | 3.2 | 3.5 | 3.0 | ||
| EPRA Cost Ratio (including direct vacancy costs), % | 15.1 | 16.9 | 16.3 | 17.2 | 15.2 |
| EPRA Cost Ratio (excluding direct vacancy costs), % | 13.9 | 15.4 | 14.5 | 15.0 | 13.6 |
| M€ | 4–6/2019 | 4–6/2018 | 1–6/2019 | 1–6/2018 | 2018 |
|---|---|---|---|---|---|
| Earnings per IFRS income statement | 67.8 | 72.5 | 100.0 | 111.2 | 221.8 |
| (i) Change in value of investment properties, develop ment properties held for investment and other interests (ii) Profits or losses on disposal of investment proper ties,development properties held for investment and |
-42.2 | -53.4 | -52.6 | -74.1 | -127.5 |
| other interest | 0.0 | -0.4 | 0.1 | -1.0 | -1.0 |
| (iii) Profits or losses on sales of trading properties in cluding impairment charges in respect of trading |
|||||
| properties | -0.1 | 0.0 | -0.1 | 0.0 | -0.1 |
| (iv) Tax on profits or losses on disposals (vi) Changes in fair value of financial instruments and |
0.0 | 14.4 | 0.0 | 14.9 | 15.4 |
| associated close-out costs | 0.9 | 0.3 | 2.5 | 0.9 | 0.4 |
| (viii) Deferred tax in respect of EPRA adjustments | 13.7 | -1.7 | 16.9 | 1.4 | 21.4 |
| EPRA Earnings | 40.1 | 31.7 | 66.7 | 53.5 | 130.3 |
| EPRA Earnings per share (EPS), € | 0.16 | 0.14 | 0.27 | 0.23 | 0.54 |
| 1–6/2019 | 1–6/2018 | 2018 |
|---|---|---|
| 2,360.1 | 2,252.4 | 2,358.1 |
| 76.4 | 38.1 | 42.5 |
| 499.4 | 469.8 | 488.4 |
| 2,936.0 | 2,760.3 | 2,889.1 |
| 11.88 | 11.17 | 11.69 |
| M€ | 1–6/2019 | 1–6/2018 | 2018 |
|---|---|---|---|
| EPRA NAV | 2,936.0 | 2,760.3 | 2,889.1 |
| (i) Fair value of financial instruments | -76.4 | -38.1 | -42.5 |
| (ii) Fair value of debt 1) | -53.3 | -27.7 | 17.0 |
| (iii) Deferred tax | -499.4 | -469.8 | -488.4 |
| EPRA Triple Net Asset Value (NNNAV) 1) Difference between interest-bearing loans and borrowings included in balance sheet at amortised cost, and the fair value of interest-bearing loans and borrowings. |
2,306.9 | 2,224.7 | 2,375.2 |
| EPRA NNNAV per share, € | 9.33 | 9.00 | 9.61 |
| M€ | 1–6/2019 | 1–6/2018 | 2018 | |||
|---|---|---|---|---|---|---|
| Investment property | 5,303.2 | 4,923.3 | 5,093.2 | |||
| Trading property | 0.3 | 0.4 | 0.4 | |||
| Developments | -246.5 | -296.7 | -248.6 | |||
| Completed property portfolio | 5,056.9 | 4,627.0 | 4,845.0 | |||
| Allowance for estimated purchasers' costs | 101.1 | 92.5 | 96.9 | |||
| Gross up completed property portfolio valuation | B | 5,158.1 | 4,719.5 | 4,941.9 | ||
| Annualised cash passing rental income | 378.2 | 364.8 | 375.6 | |||
| Property outgoings | -127.1 | -129.0 | -127.4 | |||
| Annualised net rents Notional rent expiration of rent free periods or other lease incentives |
A | 251.1 - |
235.8 - |
248.2 - |
||
| Topped-up net annualised rent | C | 251.1 | 235.8 | 248.2 | ||
| EPRA Net Initial Yield (NIY), % | A/B | 4.9 | 5.0 | 5.0 | ||
| EPRA 'topped-up' NIY, % | C/B | 4.9 | 5.0 | 5.0 | ||
| M€ | 1–6/2019 | 1–6/2018 | 2018 | |||
| Estimated rental value of vacant space 1) | A | 5.7 | 6.2 | 10.6 | ||
| Estimated rental value of the | ||||||
| whole portfolio 1) | B | 181.2 | 175.9 | 352.3 | ||
| EPRA Vacancy Rate, % 1) Including rental value of apartments only. |
A/B | 3.2 | 3.5 | 3.0 | ||
| M€ | 4–6/2019 | 4–6/2018 | 1–6/2019 | 1–6/2018 | 2018 | |
| Include: (i) Administrative expense line per IFRS income state ment (i) Maintenance expense line per IFRS income state |
10.5 | 11.2 | 19.8 | 20.2 | 38.6 | |
| ment | ||||||
| 17.8 | 18.4 | 51.7 | 50.9 | 89.5 | ||
| (i) Repair expense line per IFRS income statement | 8.5 | 9.9 | 15.2 | 17.5 | 35.4 | |
| (ii) Net service charge costs/fees (iii) Management fees less actual/ estimated profit ele |
-1.6 | -0.8 | -3.1 | -1.4 | -3.8 | |
| ment (iv) Other operating income/recharges intended to |
0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| cover overhead expenses less any related profits | -0.1 | -0.1 | -0.1 | -0.1 | -0.2 | |
| Exclude: (vii) Ground rent costs |
0.0 | -0.8 | 0.1 | -1.6 | -3.4 | |
| (viii) Service charge costs recovered through rents but not separately invoiced |
-25.0 | -27.6 | -64.4 | -67.1 | -120.9 | |
| EPRA Costs (including direct vacancy costs) | A | 10.1 | 10.2 | 19.0 | 18.6 | 35.1 |
| (ix) Direct vacancy costs | -0.8 | -0.9 | -2.1 | -2.4 | -3.8 | |
| EPRA Costs (excluding direct vacancy costs) | B | 9.2 | 9.3 | 16.9 | 16.2 | 31.4 |
| (x) Gross Rental Income less ground rent costs - per IFRS |
91.4 | 88.1 | 181.3 | 174.9 | 351.5 | |
| (xi) Service fee and service charge costs components | ||||||
| of Gross Rental Income | -25.0 | -27.6 | -64.4 | -67.1 | -120.9 | |
| Gross Rental Income | C | 66.4 | 60.5 | 116.9 | 107.8 | 230.5 |
| EPRA Cost Ratio (including direct vacancy costs), % EPRA Cost Ratio |
A/C | 15.1 | 16.9 | 16.3 | 17.2 | 15.2 |
| M€ | Note | 4–6/2019 | 4–6/2018 | 1–6/2019 | 1–6/2018 | 1–12/2018 |
|---|---|---|---|---|---|---|
| Total revenue | 93.1 | 89.8 | 184.6 | 178.0 | 358.8 | |
| Maintenance expenses | -17.8 | -18.4 | -51.7 | -50.9 | -89.5 | |
| Repair expenses | -8.5 | -9.9 | -15.2 | -17.5 | -35.4 | |
| Net rental income | 66.8 | 61.4 | 117.7 | 109.5 | 234.0 | |
| Administrative expenses | -10.5 | -11.2 | -19.8 | -20.2 | -38.6 | |
| Other operating income | 0.5 | 0.5 | 1.0 | 1.0 | 2.1 | |
| Other operating expenses | 0.0 | -0.1 | -0.1 | -0.3 | -1.0 | |
| Profit/loss on sales of investment properties | 0.0 | 0.4 | 0.0 | 1.0 | 1.0 | |
| Profit/loss on sales of trading properties | 0.1 | 0.0 | 0.1 | 0.0 | 0.1 | |
| Profit/loss on fair value of investment | ||||||
| properties | 3 | 42.2 | 53.4 | 52.6 | 74.1 | 127.5 |
| Depreciation, amortisation and impairment losses | -0.3 | -0.2 | -0.6 | -0.4 | -0.8 | |
| Operating profit | 98.9 | 104.2 | 150.9 | 164.6 | 324.2 | |
| Financial income | 0.7 | 1.0 | 1.6 | 1.9 | 3.2 | |
| Financial expenses | -13.7 | -13.7 | -27.7 | -26.1 | -50.3 | |
| Total amount of financial income and expenses | -13.0 | -12.7 | -26.1 | -24.1 | -47.1 | |
| Share of result from associated companies | 0.0 | 0.2 | ||||
| Profit before taxes | 85.9 | 91.5 | 124.8 | 140.5 | 277.3 | |
| Current tax expense | -4.4 | -20.7 | -8.0 | -27.8 | -34.1 | |
| Change in deferred taxes | -13.7 | 1.7 | -16.9 | -1.4 | -21.4 | |
| Profit for the period | 67.8 | 72.5 | 100.0 | 111.2 | 221.8 | |
| Profit for the financial period attributable to | ||||||
| Shareholders of the parent company | 67.8 | 72.5 | 100.0 | 111.2 | 221.8 | |
| Earnings per share based on profit attributable | ||||||
| to shareholders of the parent company | ||||||
| Basic, € | 0.27 | 0.31 | 0.40 | 0.48 | 0.93 | |
| Diluted, € | 0.27 | 0.31 | 0.40 | 0.48 | 0.93 | |
| Average number of shares, million | 8 | 247.1 | 232.6 | 247.1 | 231.0 | 239.2 |
| Other comprehensive income | ||||||
| Items that may be reclassified subsequently | ||||||
| to profit or loss | ||||||
| Cash flow hedges | -15.2 | -3.5 | -31.9 | 6.1 | 0.5 | |
| Deferred taxes | 3.0 | 0.7 | 6.4 | -1.2 | -0.1 | |
| Items that may be reclassified subsequently | ||||||
| to profit or loss | -12.1 | -2.8 | -25.5 | 4.8 | 0.4 | |
| Total comprehensive income for the period | 55.7 | 69.7 | 74.4 | 116.1 | 222.2 | |
| Total comprehensive income attributable to | ||||||
| Shareholders of the parent company | 55.7 | 69.7 | 74.4 | 116.1 | 222.2 |
| M€ | Note | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 0.2 | 0.3 | 0.2 | |
| Investment properties | 3 | 5,279.5 | 4,923.3 | 5,093.2 |
| Property, plant and equipment | 4 | 31.2 | 30.7 | 30.5 |
| Investments in associated companies | 2.2 | 2.6 | 2.2 | |
| Financial assets | 7 | 0.6 | 0.5 | 0.6 |
| Non-current receivables | 5.1 | 5.5 | 5.3 | |
| Derivatives | 6, 7 | 0.4 | 3.0 | 1.5 |
| Deferred tax assets | 17.7 | 11.1 | 10.8 | |
| Non-current assets total | 5,336.9 | 4,977.0 | 5,144.3 | |
| Non-current assets held for sale | 10 | 23.8 | ||
| Current assets | ||||
| Trading properties | 0.3 | 0.4 | 0.4 | |
| Derivatives | 6, 7 | 0.3 | 0.5 | 0.7 |
| Current tax assets | 2.4 | 9.0 | 9.3 | |
| Trade and other receivables | 8.8 | 11.0 | 8.3 | |
| Financial assets | 7 | 127.4 | 180.6 | 172.3 |
| Cash and cash equivalents | 139.1 | 242.9 | 150.1 | |
| Current assets total | 278.2 | 444.5 | 341.1 | |
| ASSETS TOTAL | 5,638.9 | 5,421.5 | 5,485.4 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES Equity attributable to shareholders of the parent com pany |
||||
| Share capital | 58.0 | 58.0 | 58.0 | |
| Share issue premium | 35.8 | 35.8 | 35.8 | |
| Fair value reserve | -49.4 | -19.4 | -23.9 | |
| Invested non-restricted equity reserve | 164.4 | 164.6 | 164.4 | |
| Retained earnings | 2,151.3 | 2,013.4 | 2,123.7 | |
| Equity attributable to shareholders of the parent com | ||||
| pany | 2,360.1 | 2,252.4 | 2,358.1 | |
| Total equity | 2,360.1 | 2,252.4 | 2,358.1 | |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Loans and borrowings | 5, 7 | 2,386.9 | 2,434.8 | 2,391.7 |
| Deferred tax liabilities | 516.4 | 480.2 | 499.0 | |
| Derivatives | 6, 7 | 77.0 | 41.1 | 44.6 |
| Provisions | 0.6 | 0.7 | 0.6 | |
| Other non-current liabilities | 14.0 | 14.0 | 14.0 | |
| Non-current liabilities total | 2,994.8 | 2,970.8 | 2,949.9 | |
| Liabilities related to non-current assets | ||||
| held for sale | 10 | 0.2 | ||
| Current liabilities | ||||
| Loans and borrowings | 5, 7 | 229.2 | 105.4 | 93.9 |
| Derivatives | 6, 7 | 0.1 | 0.4 | 0.1 |
| Current tax liabilities | 0.7 | 24.1 | 13.5 | |
| Trade and other payables | 53.6 | 68.3 | 69.9 | |
| Current liabilities total | 283.7 | 198.3 | 177.3 | |
| Total liabilities | 3,278.7 | 3,169.1 | 3,127.2 | |
| TOTAL EQUITY AND LIABILITIES | 5,638.9 | 5,421.5 | 5,485.4 |
| M€ | 1–6/2019 | 1–6/2018 | 1–12/2018 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit for the period | 100.0 | 111.2 | 221.8 |
| Adjustments | -1.8 | -21.8 | -22.8 |
| Change in net working capital | |||
| Change in trade and other receivables | -0.4 | -1.5 | -1.6 |
| Change in trading properties | 0.1 | 0.1 | 0.2 |
| Change in trade and other payables | 8.0 | 8.5 | -1.6 |
| Interest paid | -32.0 | -26.4 | -40.5 |
| Interest received | 0.4 | 0.3 | 0.8 |
| Other financial items | -0.4 | -5.7 | -5.3 |
| Income taxes paid | -13.9 | -21.3 | -38.5 |
| Net cash flow from operating activities | 59.9 | 43.5 | 112.4 |
| Cash flow from investing activities | |||
| Acquisition of investment properties | -111.8 | -251.1 | -366.6 |
| Acquisition of associated companies | -0.3 | -0.3 | |
| Acquisition of property, plant and equipment and intangible assets | -0.1 | -0.1 | -0.2 |
| Proceeds from sale of investment properties | 0.5 | 105.3 | 110.9 |
| Proceeds from sale of property, plant and equipment and intangible assets | 0.0 | 0.0 | 0.0 |
| Purchases of financial assets | -38.1 | -250.0 | -304.0 |
| Proceeds from sale of financial assets | 84.0 | 118.5 | 180.5 |
| Non-current loans, granted | -0.1 | -0.2 | |
| Repayments of non-current loan receivables | 0.1 | 0.1 | 0.2 |
| Interest and dividends received on investments | 0.1 | 0.1 | 0.2 |
| Net cash flow from investing activities | -65.3 | -277.6 | -379.4 |
| Cash flow from financing activities | |||
| Share issue | 150.0 | 150.0 | |
| Items related to the share issue recorded in equity | -2.9 | -4.3 | |
| Non-current loans and borrowings, raised | 105.8 | 500.0 | 500.0 |
| Non-current loans and borrowings, repayments | -38.2 | -234.6 | -292.9 |
| Current loans and borrowings, raised | 69.9 | 270.1 | 338.8 |
| Current loans and borrowings, repayments | -70.0 | -273.2 | -342.0 |
| Repayments of lease liabilities | -1.5 | ||
| Dividends paid | -71.7 | -50.3 | -50.3 |
| Net cash flow from financing activities | -5.7 | 359.1 | 299.3 |
| Change in cash and cash equivalents | -11.0 | 125.1 | 32.3 |
| Cash and cash equivalents at the beginning of the period | 150.1 | 117.8 | 117.8 |
| Cash and cash equivalents at the end of the period | 139.1 | 242.9 | 150.1 |
| M€ | Share capital |
Share issue premium |
Fair value reserve |
Invested non restricted equity reserve |
Retained earnings |
Equity attributable to shareholders of the parent company |
Total equity |
|---|---|---|---|---|---|---|---|
| Equity at 1 Jan 2019 | 58.0 | 35.8 | -23.9 | 164.4 | 2,123.7 | 2,358.1 | 2,358.1 |
| Comprehensive income | |||||||
| Cash flow hedging | -25.5 | -25.5 | -25.5 | ||||
| Profit for the period | 100.0 | 100.0 | 100.0 | ||||
| Total comprehensive income for the period | -25.5 | 100.0 | 74.4 | 74.4 | |||
| Transactions with shareholders | |||||||
| Share-based incentive scheme | -0.7 | -0.7 | -0.7 | ||||
| Dividend payment | -71.7 | -71.7 | -71.7 | ||||
| Total transactions with shareholders | -72.4 | -72.4 | -72.4 | ||||
| Total change in equity | -25.5 | 27.6 | 2.0 | 2.0 | |||
| Equity at 30 Jun 2019 | 58.0 | 35.8 | -49.4 | 164.4 | 2,151.3 | 2,360.1 | 2,360.1 |
| Invested | Equity | ||||||
|---|---|---|---|---|---|---|---|
| non | attributable to | ||||||
| Share | Fair | restricted | shareholders | ||||
| Share | issue | value | equity | Retained | of the parent | ||
| M€ | capital | premium | reserve | reserve | earnings | company | Total equity |
| Equity at 1 Jan 2018 | 58.0 | 35.8 | -23.7 | 17.9 | 1,950.6 | 2,038.6 | 2,038.6 |
| Change in accounting policy | -0.5 | 0.3 | -0.2 | -0.2 | |||
| Restated equity at 1 Jan 2018 | 58.0 | 35.8 | -24.3 | 17.9 | 1,950.9 | 2,038.3 | 2,038.3 |
| Comprehensive income | |||||||
| Cash flow hedging | 4.8 | 4.8 | 4.8 | ||||
| Profit for the period | 111.2 | 111.2 | 111.2 | ||||
| Total comprehensive income for the period | 4.8 | 111.2 | 116.1 | 116.1 | |||
| Transactions with shareholders | |||||||
| Share issue | 150.0 | 150.0 | 150.0 | ||||
| Expenses related to the share issue | -4.1 | -4.1 | -4.1 | ||||
| Tax impact of share issue | 0.8 | 0.8 | 0.8 | ||||
| Discount related to the share issue for | |||||||
| personnel | 0.2 | 0.2 | 0.2 | ||||
| Share-based incentive scheme | 1.4 | 1.4 | 1.4 | ||||
| Dividend payment | -50.3 | -50.3 | -50.3 | ||||
| Total transactions with shareholders | 146.7 | -48.8 | 98.0 | 98.0 | |||
| Total change in equity | 4.3 | 146.7 | 62.7 | 213.8 | 213.8 | ||
| Equity at 30 Jun 2018 | 58.0 | 35.8 | -19.4 | 164.6 | 2,013.4 | 2,252.4 | 2,252.4 |
| Invested | Equity | ||||||
|---|---|---|---|---|---|---|---|
| non | attributable to | ||||||
| Share | Fair | restricted | shareholders | ||||
| Share | issue | value | equity | Retained | of the parent | ||
| M€ | capital | premium | reserve | reserve | earnings | company | Total equity |
| Equity at 1 Jan 2018 | 58.0 | 35.8 | -23.7 | 17.9 | 1,950.6 | 2,038.6 | 2,038.6 |
| Change in accounting policy | -0.5 | 0.3 | -0.2 | -0.2 | |||
| Restated equity at 1 Jan 2018 | 58.0 | 35.8 | -24.3 | 17.9 | 1,950.9 | 2,038.3 | 2,038.3 |
| Comprehensive income | |||||||
| Cash flow hedging | 0.4 | 0.4 | 0.4 | ||||
| Profit for the period | 221.8 | 221.8 | 221.8 | ||||
| Total comprehensive income for the period | 0.4 | 221.8 | 222.2 | 222.2 | |||
| Transactions with shareholders | |||||||
| Share issue | 150.0 | 150.0 | 150.0 | ||||
| Expenses related to the share issue | -4.3 | -4.3 | -4.3 | ||||
| Tax impact of share issue | 0.9 | 0.9 | 0.9 | ||||
| Discount related to the share issue for | |||||||
| personnel | 0.2 | 0.2 | 0.2 | ||||
| Share-based incentive scheme | 1.2 | 1.2 | 1.2 | ||||
| Dividend payment | -50.3 | -50.3 | -50.3 | ||||
| Total transactions with shareholders | 146.6 | -49.0 | 97.6 | 97.6 | |||
| Total change in equity | -0.1 | 146.6 | 173.1 | 319.6 | 319.6 | ||
| Equity at 31 Dec 2018 | 58.0 | 35.8 | -23.9 | 164.4 | 2,123.7 | 2,358.1 | 2,358.1 |
Kojamo plc is Finland's largest market-based, private housing investment company that offers rental apartments and housing services in Finnish growth centres. Its range of apartments is extensive. On 30 June 2019, Kojamo owned a total of 35,194 rental apartments across Finland.
The Group's parent company, Kojamo plc, is a Finnish company domiciled in Helsinki. Its registered address is Mannerheimintie 168, 00300 Helsinki, Finland.
Trading in Kojamo's shares commenced on the pre-list of Nasdaq Helsinki on 15 June 2018 and on the official list of Nasdaq Helsinki on 19 June 2018. In addition, a bond issued by Kojamo in 2016 is listed on the official list of Nasdaq Helsinki Ltd. Two other bonds issued by the company have been listed on the official list of the Irish Stock Exchange. The Group has chosen Finland as its home state for the disclosure of periodic information pursuant to Chapter 7, Section 3 of the Finnish Securities Market Act.
Kojamo plc's Board of Directors approved this Half-Year Financial Report for publication at its meeting on 23 August 2019.
This Half-Year Financial Report was prepared in accordance with IAS 34 Interim Financial Reporting as well as by applying the same accounting policies as in the previous annual financial statements, excluding the exceptions described below. The figures of the Half-Year Financial Report have not been audited.
Kojamo's business operations were previously divided into two segments: Lumo and VVO. Kojamo discontinued the division of operations between two segments effective from the beginning of 2019.
The figures for 2018 are based on Kojamo plc's audited financial statements for 2018. The figures in brackets refer to the corresponding period in 2018, and the comparison period is the corresponding period the year before, unless otherwise stated.
The preparation of the Half-Year Financial Report in accordance with IFRS requires application of judgement by Kojamo's management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the balance sheet date and the reported amounts of income and expenses for the period. Management must also make judgements when applying the Group's accounting policies. Actual results may differ from the estimates and assumptions used. The most significant items of this Half-Year Financial Report where judgement has been applied by management, as well as the assumptions about the future and other key uncertainty factors in estimates at the end of the reporting period that create a significant risk of change in the carrying amounts of Kojamo's assets and liabilities within the next financial year, are the same as those presented in the consolidated financial statements for the 2018 financial year. Of these, the most important are the determination of the fair values of investment properties and financial instruments.
Kojamo applies the new IFRS 16 Leases standard effective from 1 January 2019. Land lease contracts, which were previously treated as other leases in accordance with IAS 17, and other leases specified in the standard are included in the consolidated balance sheet under IFRS 16. Kojamo applies the simplified approach in the adoption of the standard, which means that the comparison figures have not been adjusted.
These changes in accounting policies are described in more detail in Note 11.
Kojamo has applied the interpretation IFRIC 21 Levies in accounting for property taxes for the review period. According to the interpretation, property taxes are recognised as expenses on the income statement when they are determined, and they are not accrued over the different quarters of the year. The comparison figures have been restated to reflect the current practice.
Kojamo plc's incentive plans were converted into share-based plans in connection with the listing of the company on the stock exchange in 2018. The performance criteria remained unchanged. If the three ongoing earning periods were accrued in full, the maximum bonus would be a sum corresponding to 340,148 Kojamo shares, of which 50 per cent would be paid in Kojamo shares and 50 per cent in cash.
The Annual General Meeting on 14 March 2019 decided to change the remuneration practice of the members of the Board of Directors. Under the new practice, the annual fees of the members of the Board of Directors are paid as the company's shares and cash, with approximately 40 per cent of the annual fee paid as Kojamo plc shares and the rest paid in cash.
| M€ | 1–6/2019 | 1–6/2018 | 1–12/2018 |
|---|---|---|---|
| Rental income | 181.3 | 176.5 | 354.8 |
| Water fees | 2.8 | 1.0 | 3.1 |
| Sauna fees | 0.3 | 0.4 | 0.7 |
| Total | 184.4 | 177.8 | 358.6 |
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Fair value of investment properties on 1 Jan | 5,093.2 | 4,710.2 | 4,710.2 |
| Acquisition of investment properties *) | 84.2 | 233.0 | 338.9 |
| Modernisation investments | 11.5 | 8.8 | 23.7 |
| Disposals of investment properties | -0.6 | -104.2 | -109.6 |
| Capitalised borrowing costs | 0.9 | 1.4 | 2.6 |
| Right-of-use assets **) | 61.5 | ||
| Transfer to own use | 0.0 | 0.0 | 0.0 |
| Valuation gains/losses on fair value measurement | 52.6 | 74.1 | 127.5 |
| Fair value of investment properties at the end of the pe | |||
| riod ***) | 5,303.2 | 4,923.3 | 5,093.2 |
*) Includes the acquisition costs of completed housing stock and new properties under construction.
**) IFRS 16 Leases includes EUR 0.3 million in investment properties classified as non-current assets held for sale.
***) Includes EUR 23.7 million in investment properties classified as non-current assets held for sale as of 30 June 2019.
The change in the fair value of investment properties results from investments, the sale of investment properties, changes in market prices and parameters used in valuation as well as from expiry of restrictions on some properties.
Some of the investment properties are subject to legislative divestment and usage restrictions. Usage and divestment restrictions are mainly related to balance sheet value properties and usage restrictions to yield value properties. The so-called non-profit restrictions apply to the owning company, and the so-called property-specific restrictions apply to the investment owned. The non-profit restrictions include, among other things, permanent restrictions on the company's operations, distribution of profit, lending and provision of collateral, and the divestment of investments. The property-specific restrictions include fixed-term restrictions on the use of apartments, the selection of residents, the determination of rent and the divestment of apartments.
Investment property is measured initially at its acquisition cost, including related transaction costs. Subsequently it is measured at fair value, and the resulting changes in fair values are recognised in profit or loss as they arise. Fair value refers to the price that would be received from selling an asset, or paid for transferring a liability, in an ordinary transaction between market participants on the measurement date.
The fair value of investment property determined by Kojamo is based on transaction value, income value and acquisition cost. In addition, Kojamo has right-of-use assets measured in accordance with IFRS 16.
Properties in which apartments can be sold by Kojamo without restrictions are measured using transaction value. The value as of the measurement date is based on actual sales prices of comparable apartments for the two preceding years. The source of market data applied is the price tracking service provided by the Central Federation of Finnish Real Estate Agencies (KVKL), including pricing information on sales of individual apartments in Finland provided by real estate agents. If necessary, the resulting transaction value is individually adjusted on the basis of the condition, location and other characteristics of the property.
Kojamo has decided to shift from a transaction-based valuation technique to a yield-based valuation technique in the valuation of investment properties from 31 December 2019 onwards. This represents a change in accounting estimates and its potential effects will be recognised starting from the accounting period in which the change occurs. The change will not be applied retrospectively.
| Rental house reduction | -5% |
|---|---|
| Reduction based on the company structure of the property | -4% |
| Variables based on the location and condition of the building | -30% - +25% |
| Variables based on the condition of the apartment | -20% - +10% |
| Reduction based on the method of sale (outside growth centres) | -30% - 0% |
| Facade and HVAC repairs (planned -%; recently completed +%) | -15% - +8% |
Yield value is applied when a property is required to be kept in rental use based on state-subsidised loans (so-called ARAVA loans) or interest subsidy loans, and it can be sold only as a whole property and to a restricted group of buyers. In the yield value method, the fair value is determined by capitalising net rental income, using a property-specific required rate of net rental income. The method also considers the impact of future renovations and the present value of any interest subsidies.
Kojamo estimates that the acquisition cost of properties under construction, interest subsidised (long-term) rental properties and state-subsidised rental properties (so-called ARAVA properties) approximate their fair values. State-subsidised and interest subsidised (long-term) rental properties
are carried at original acquisition cost, deducted by the depreciation accumulated up to the IFRS transition date and any impairment losses.
The fair value of land lease contracts is the present value of the lease payments for the remaining lease term discounted by the incremental borrowing rate.
Fair value of investment properties by valuation class
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 | ||
|---|---|---|---|---|---|
| Properties measured at transaction value | 4,562.0 | 4,126.7 | 4,384.7 | ||
| Properties measured at yield value | 263.2 | 332.2 | 293.4 | ||
| Properties measured at balance sheet value | 417.1 | 464.4 | 415.1 | ||
| Right-of-use assets | 60.9 | ||||
| Total | 5,303.2 | 4,923.3 | 5,093.2 | ||
| Fair value of investment properties by valuation class | |||||
| Number of apartments | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 | ||
| Properties measured at transaction value | 29,220 | 27,122 | 28,169 | ||
| Properties measured at yield value | 2,598 | 3,212 | 2,857 | ||
| Properties measured at balance sheet value | 3,376 | 3,838 | 3,687 | ||
| Total | 35,194 | 34,172 | 34,713 | ||
| Sensitivity analysis of investment properties | 30 Jun 2019 | ||||
| Change % | -10% | -5% | 0% | 5% | 10% |
| Properties measured at transaction value, M€ | |||||
| Change in market prices | -456.2 | -228.1 | 228.1 | 456.2 | |
| Properties measured at yield value, M€ | |||||
| Yield requirement | 28.8 | 13.7 | -12.4 | -23.6 | |
| Rental income | -44.8 | -22.4 | 22.4 | 44.8 | |
| Maintenance costs | 17.0 | 8.5 | -8.5 | -17.0 | |
| Financial occupancy rate for properties measured at yield value | |||||
| (change in percentage points) | -2% | -1% | 0% | 1% | 2% |
| Rental income, M€ | -0.8 | -0.4 | 0.4 | 0.8 | |
| Sensitivity analysis of investment properties | 30 Jun 2018 | ||||
| Change % | -10% | -5% | 0% | 5% | 10% |
| Properties measured at transaction value, M€ | |||||
| Change in market prices | -412.7 | -206.3 | 206.3 | 412.7 | |
| Properties measured at yield value, M€ | |||||
| Yield requirement | 36.6 | 17.3 | -15.7 | -30.0 | |
| Rental income | -56.4 | -28.2 | 28.2 | 56.4 | |
| Maintenance costs | 21.1 | 10.6 | -10.6 | -21.1 | |
| Financial occupancy rate for properties measured at yield value | |||||
| (change in percentage points) | -2% | -1% | 0% | 1% | 2% |
| Rental income, M€ | -0.8 | -0.4 | 0.4 | 0.8 |
| Sensitivity analysis of investment properties | 31 Dec 2018 | ||||
|---|---|---|---|---|---|
| Change % | -10% | -5% | 0% | 5% | 10% |
| Properties measured at transaction value, M€ | |||||
| Change in market prices | -438.5 | -219.2 | 219.2 | 438.5 | |
| Properties measured at yield value, M€ | |||||
| Yield requirement | 32.0 | 15.2 | -13.7 | -26.2 | |
| Rental income | -49.8 | -24.9 | 24.9 | 49.8 | |
| Maintenance costs | 19.0 | 9.5 | -9.5 | -19.0 | |
| Financial occupancy rate for properties measured at yield value | |||||
| (change in percentage points) | -2% | -1% | 0% | 1% | 2% |
| Rental income, M€ | -0.8 | -0.4 | 0.4 | 0.8 |
All of Kojamo's investment properties are classified in the fair value hierarchy level 3 in accordance with IFRS 13. Hierarchy level 3 includes assets, the fair value of which is measured using input data concerning the asset that are not based on observable market data.
The weighted average for the return requirement is 6.2 (6.1) per cent for the 2,598 (3,312) rental homes included within the scope of the yield value method in 2019, and 9.3 (9.3) per cent for the 415 (415) business premises.
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Carrying value, beginning of period | 30.5 | 31.0 | 31.0 |
| Increases | 0.0 | 0.1 | 0.2 |
| Right-of-use asset | 1.2 | ||
| Decreases | -0.1 | 0.0 | |
| Depreciation for the period | -0.3 | -0.3 | -0.7 |
| Carrying value, end of period | 31.2 | 30.7 | 30.5 |
Property, plant and equipment consist of assets held and used by the company, mainly buildings and land areas, as well as machinery and equipment. The right-of-use asset includes car leasing agreements in accordance with IFRS 16 Leases. These agreements are itemised below:
| M€ | Leasing agreements |
|---|---|
| Carrying value on 1 Jan 2019 | 1.0 |
| Increases | 0.2 |
| Depreciation for the period | -0.2 |
| Carrying value on 30 Jun 2019 | 1.0 |
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Bonds | 1,190.7 | 1,288.6 | 1,289.7 |
| Loans from financial institutions | 1,062.3 | 1,008.6 | 995.2 |
| Interest subsidy loans | 70.6 | 134.8 | 104.0 |
| Lease liability | 60.8 | ||
| Other loans | 2.4 | 2.8 | 2.8 |
| Total | 2,386.9 | 2,434.8 | 2,391.7 |
| Current liabilities | |||
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
| Bonds | 100.0 | ||
| Loans from financial institutions | 35.7 | 25.7 | 25.1 |
| Interest subsidy loans | 36.0 | 22.9 | 12.1 |
| Lease liability | 1.1 | ||
| Commercial papers | 50.0 | 49.9 | 50.0 |
| Other loans | 6.5 | 6.9 | 6.7 |
| Total | 229.2 | 105.4 | 93.9 |
| Total interest-bearing liabilities | 2,616.1 | 2,540.3 | 2,485.5 |
As a result of Kojamo's adoption of IFRS 16 Leases on 1 January 2019, land lease contracts previously treated as operating leases have been recognised as an increase in the value of the Group's investment properties and interest-bearing liabilities. The comparison figures have not been adjusted.
| Fair values of derivative instruments | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 | ||
|---|---|---|---|---|---|
| M€ | Positive | Negative | Net | Net | Net |
| Interest rate derivatives | |||||
| Interest rate swaps, cash flow hedges | -67.1 | -67.1 | -30.7 | -35.7 | |
| Interest rate swaps, not in hedge accounting | -10.0 | -10.0 | -8.3 | -8.2 | |
| Interest rate options, not in hedge accounting | 0.0 | ||||
| Electricity derivatives | 0.7 | 0.0 | 0.6 | 0.9 | 1.3 |
| Total | 0.7 | -77.1 | -76.4 | -38.1 | -42.5 |
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Interest rate derivatives | |||
| Interest rate swaps, cash flow hedges | 976.7 | 790.8 | 948.3 |
| Interest rate swaps, not in hedge accounting | 42.8 | 49.2 | 48.9 |
| Interest rate options, not in hedge accounting | |||
| Total | 1,019.5 | 840.0 | 997.2 |
| Electricity derivatives, MWh | 141,779 | 172,291 | 162,167 |
During the review period, EUR -31.9 (6.1) million was recognised in the fair value reserve from interest rate derivatives classified into cash flow hedging. The interest rate derivatives are used to hedge the loan portfolio's interest cash flows against increases in market interest rates. The interest rate derivatives mature between 2020 and 2035. At the end of the review period, the average maturity of interest rate swaps was 6.1 (6.6) years. Electricity derivatives hedge against increases in electricity prices and mature between 2020 and 2022. Electricity derivatives are not included in hedge accounting. The unrealised gains and losses from the measurement of derivatives are presented on the balance sheet under current and non-current assets or under liabilities in the item Derivative instruments.
| 30 Jun 2019 | |||||
|---|---|---|---|---|---|
| M€ | Carrying value total |
LEVEL 1 | LEVEL 2 | LEVEL 3 | Fair value total |
| Financial assets | |||||
| Measured at fair value | |||||
| Electricity derivatives | 0.7 | 0.7 | 0.7 | ||
| Financial assets recognised at fair value | |||||
| through profit or loss | 128.0 | 116.4 | 11.0 | 0.6 | 128.0 |
| Measured at amortised cost | |||||
| Cash and cash equivalents | 139.1 | 139.1 | 139.1 | ||
| Trade receivables | 5.6 | 5.6 | |||
| Financial liabilities | |||||
| Measured at fair value | |||||
| Interest rate derivatives | 77.1 | 77.1 | 77.1 | ||
| Electricity derivatives | 0.0 | 0.0 | 0.0 | ||
| Measured at amortised cost | |||||
| Other interest-bearing liabilities | 1,325.4 | 1,327.1 | 1,327.1 | ||
| Bonds | 1,290.7 | 1,342.3 | 1,342.3 | ||
| Trade payables | 11.3 | 11.3 |
| 31 Dec 2018 | |||||
|---|---|---|---|---|---|
| Carrying | Fair value | ||||
| M€ | value total | LEVEL 1 | LEVEL 2 | LEVEL 3 | total |
| Financial assets | |||||
| Measured at fair value | |||||
| Interest rate derivatives | 0.8 | 0.8 | 0.8 | ||
| Electricity derivatives | 1.4 | 1.4 | 1.4 | ||
| Financial assets recognised at fair value | |||||
| through profit or loss | 173.0 | 165.3 | 7.0 | 0.6 | 173.0 |
| Measured at amortised cost | |||||
| Cash and cash equivalents | 150.1 | 150.1 | 150.1 | ||
| Trade receivables | 5.2 | 5.2 | |||
| Financial liabilities | |||||
| Measured at fair value | |||||
| Interest rate derivatives | 44.7 | 44.7 | 44.7 | ||
| Electricity derivatives | 0.0 | 0.0 | 0.0 | ||
| Measured at amortised cost | |||||
| Other interest-bearing liabilities | 1,195.9 | 1,192.2 | 1,192.2 | ||
| Bonds | 1,289.7 | 1,276.3 | 1,276.3 | ||
| Trade payables | 12.7 | 12.7 |
The fair value of floating-rate loans is the same as their nominal value, as the margins of the loans correspond to the margins of new loans. The fair value of bonds is based on market quotations and the fair value of other fixed-rate liabilities is based on discounted cash flows, in which market interest rates are used as input data. Lease liabilities pursuant to IFRS 16, amounting to EUR 61.9 million, are included in fixed-rate liabilities effective from 1 January 2019.
Financial assets and liabilities measured at fair value are classified into three fair value hierarchy levels in accordance with the reliability of the valuation technique:
The fair value is based on quoted prices for identical instruments in active markets.
A quoted market price exists in active markets for the instrument, but the price may be derived from directly or indirectly quoted market data. Fair values are measured using valuation techniques. Their inputs are based on quoted market prices, including e.g. market interest rates, credit margins and yield curves.
There is no active market for the instrument, the fair value cannot be reliably derived and input data used for the determination of fair value is not based on observable market data.
| M€ | 30 Jun 2019 | 31 Dec 2018 |
|---|---|---|
| Beginning of period | 0.6 | 0.5 |
| Change | 0.0 | 0.1 |
| End of period | 0.6 | 0.6 |
Investments measured at fair value through profit and loss on hierarchy level 3 are investments in unlisted securities and they are mainly measured at acquisition cost, as their fair value cannot be reliably measured in the absence of an active market. With regards to these items, it is evaluated that the acquisition cost is an appropriate estimate of fair value.
| 1–6/2019 | 1–6/2018 | 1–12/2018 | |
|---|---|---|---|
| Profit for the period attributable to shareholders of the parent company, M€ |
100.0 | 111.2 | 221.8 |
| Weighted average number of shares during the period (million) |
247.1 | 231.0 | 247.1 |
| Earnings per share | |||
| Basic, € | 0.40 | 0.48 | 0.93 |
| Diluted, € | 0.40 | 0.48 | 0.93 |
The company has no diluting instruments.
| 9. GUARANTEES, COMMITMENTS AND CONTINGENT LIABILITIES | |||||
|---|---|---|---|---|---|
| ------------------------------------------------------- | -- | -- | -- | -- | -- |
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Loans covered by pledges on property | |||
| and shares as collateral | 1,339.8 | 1,422.5 | 1,367.0 |
| Mortgages | 1,445.7 | 1,524.3 | 1,451.2 |
| Shares *) | 254.0 | 265.4 | 257.1 |
| Pledged collateral, total | 1,699.7 | 1,789.7 | 1,708.3 |
| Other collateral given | |||
| Mortgages and shares | 17.3 | 32.2 | 31.7 |
| Guarantees **) | 411.7 | 343.9 | 326.8 |
| Pledged deposits | 0.1 | 0.1 | |
| Other collateral total | 429.1 | 376.2 | 358.6 |
*) Pledged mortgages and shares relate in some cases to the same properties.
**) Guarantees given are mainly absolute guarantees granted as collateral for group companies loans for which property pledges have also been given as collateral.
Unrecognised acquisition agreements related to work in progress:
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Cost of completing new construction | 145.1 | 89.9 | 77.8 |
| Preliminary agreements for new construction | 121.8 | 111.4 | 60.3 |
| Modernisation investments and repairs | 28.8 | 8.3 | 21.2 |
| Total | 295.7 | 209.6 | 159.3 |
| M€ | 30 Jun 2019 | 30 Jun 2018 | 31 Dec 2018 |
|---|---|---|---|
| Investment properties | 23.7 | ||
| Receivables | 0.1 | ||
| Total assets | 23.8 | ||
| Trade and other payables | 0.2 | ||
| Total liabilities | 0.2 | ||
| Net carrying value | 23.6 |
Investment properties include EUR 0.3 million in right-of-use assets and interest-bearing liabilities include EUR 0.3 million in lease liabilities that have not been transferred to non-current assets held for sale.
After the end of the review period, on 12 July 2019, Kojamo Group companies signed an agreement on the sale of 478 rental apartments in 12 locations across Finland to Olo Asunnot. The transaction will be completed in August 2019 and the gain on the sale will amount to approximately
Kojamo applies the new IFRS 16 Leases standard effective from 1 January 2019. Land lease contracts, which were previously treated as other leases in accordance with IAS 17, are included in the consolidated balance sheet under IFRS 16. Kojamo applies the simplified approach in the adoption of the standard, which means that the comparison data has not been adjusted. The standard's entry into force did not give rise to changes in Kojamo's accounting treatment of leases in which Kojamo is the lessor.
Right-of-use assets have been recognised on the leases within the scope of the standard in the balance sheet items Investment properties and Property, plant and equipment. Right-of-use assets are measured at a value that corresponds to the value of the lease liability at the time of transition.
The right-of-use assets recognised in investment properties consist of land lease contracts measured at fair value. The fair value of land lease contracts is the present value of the lease payments for the remaining lease term discounted by the incremental borrowing rate. Kojamo's lease liability is measured by discounting the lease liabilities of the leases within the scope of the standard at their present value, using the management's estimate of the incremental borrowing rate in the year in which the lease began as the discount factor. From 1 January 2019 onwards, the incremental borrowing rate will be determined on the commencement date of the lease. On 30 June 2019, the lease liability amounted to EUR 60.9 million. The weighted average incremental borrowing rate of the lease liability was 3.5 per cent on 1 January 2019.
The right-of-use assets recognised in property, plant and equipment are car leasing agreements. Depreciation on the right-of-use asset is recognised as straight-line depreciation over the lease term. The balance sheet items do not include the service components of leases.
Expenses associated with right-of-use assets included in investment properties (leases for plots) are recognised in the income statement under Profit/loss on fair value of investment properties and the interest expenses allocated to the lease liability are recognised in financial expenses. The expenses associated with car leasing agreements are recognised in depreciation and financial expenses.
The adoption of the standard had the following effects on Kojamo's financial reporting for the review period:
Condensed consolidated income statement
| M€ | 1–6/2019 |
|---|---|
| Maintenance expenses | 1.8 |
| Net rental income | 1.8 |
| Administrative expenses | 0.3 |
| Profit/loss on fair value of investment properties | -0.5 |
| Depreciation, amortisation and impairment losses | -0.2 |
| Operating profit | 1.2 |
| Financial expenses | -1.2 |
| Profit before taxes | 0.0 |
| Change in deferred taxes | 0.0 |
| Profit for the period | 0.0 |
| M€ | 30 Jun 2019 |
|---|---|
| ASSETS | |
| Non-current assets | |
| Investment properties | 60.9 |
| Property, plant and equipment | 1.0 |
| Deferred tax assets | 0.0 |
| Non-current assets total | 61.9 |
| ASSETS | 61.9 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |
| Equity attributable to shareholders of the parent company | |
| Profit/loss for the period | 0.0 |
| LIABILITIES | |
| Non-current liabilities | |
| Loans and borrowings | 60.8 |
| Non-current liabilities total | 60.8 |
| Current liabilities | |
| Loans and borrowings | 1.1 |
| Current liabilities total | 1.1 |
| Total liabilities | 61.9 |
| TOTAL EQUITY AND LIABILITIES | 61.9 |
Lease liabilities presented on 31 December 2018 in accordance with IAS 17 amounted to EUR 137.9 million. At the time of the adoption of IFRS 16 on 1 January 2019, the discounted lease liability for these leases amounted to EUR 61.5 million.
There were no significant events after the review period.
| Formula | 4–6/2019 | 4–6/2018 | 1–6/2019 | 1–6/2018 | 2018 | |
|---|---|---|---|---|---|---|
| Total revenue, M€ | 93.1 | 89.8 | 184.6 | 178.0 | 358.8 | |
| Net rental income, M€ | 1 | 66.8 | 61.4 | 117.7 | 109.5 | 234.0 |
| Net rental income margin, % | 2 | 71.8 | 68.4 | 63.8 | 61.5 | 65.2 |
| Profit before taxes, M€ | 3 | 85.9 | 91.5 | 124.8 | 140.5 | 277.3 |
| EBITDA, M€ | 4 | 99.2 | 104.4 | 151.5 | 165.0 | 325.1 |
| EBITDA margin, % | 5 | 106.5 | 116.3 | 82.1 | 92.7 | 90.6 |
| Adjusted EBITDA, M€ | 6 | 56.9 | 50.7 | 98.8 | 90.0 | 196.5 |
| Adjusted EBITDA margin, % | 7 | 61.1 | 56.4 | 53.6 | 50.6 | 54.8 |
| Funds From Operations (FFO), M€ | 8 | 40.1 | 17.6 | 66.4 | 39.5 | 116.4 |
| FFO margin, % | 9 | 43.1 | 19.6 | 36.0 | 22.2 | 32.4 |
| FFO per share, € 1) | 10 | 0.16 | 0.08 | 0.27 | 0.17 | 0.49 |
| FFO excluding one-off items, M€ | 11 | 40.1 | 18.5 | 66.4 | 40.4 | 117.3 |
| Adjusted Funds From Operations (AFFO), M€ | 12 | 31.2 | 11.8 | 54.9 | 30.7 | 92.7 |
| Investment properties, M€ 2) | 5,303.2 | 4,923.3 | 5,093.2 | |||
| Financial occupancy rate, % | 19 | 96.9 | 96.5 | 97.0 | ||
| Interest-bearing liabilities, M€ 3) | 13 | 2,616.1 | 2,540.3 | 2,485.5 | ||
| Return on equity, % (ROE) | 14 | 8.5 | 10.4 | 10.1 | ||
| Return on investment, % (ROI) | 15 | 6.2 | 7.3 | 7.2 | ||
| Equity ratio, % | 16 | 41.9 | 41.6 | 43.0 | ||
| Loan to Value (LTV), % 3) 4) | 17 | 46.9 | 46.7 | 45.9 | ||
| Earnings per share, € 1) | 0.27 | 0.31 | 0.40 | 0.48 | 0.93 | |
| Equity per share, € 1) | 9.55 | 9.11 | 9.54 | |||
| Gross investments, M€ | 18 | 58.6 | 39.5 | 96.6 | 243.2 | 365.2 |
| Number of personnel, end of period | 329 | 347 | 298 |
1) 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. 2) Including items held for sale.
3) Excluding items held for sale.
4) The IFRS 16 standard had an effect of 0.6 percentage points on this key figure during the review period.
Kojamo presents Alternative Performance Measures to illustrate the financial development of its business operations and improve comparability between reporting periods. The Alternative Performance Measures, i.e. performance measures that are not based on financial reporting standards, provide significant additional information for the management, investors, analysts and other parties. The Alternative Performance Measures should not be considered substitutes for IFRS performance measures.
| 1) | Net rental income | = | Total revenue - Maintenance expenses - Repair expenses | |
|---|---|---|---|---|
| Net rental income measures the profitability of the Group's rental business after the deduction of maintenance and repair costs. |
||||
| Net rental income | Net rental income | |||
| 2) | margin, % | = | Total revenue | x 100 |
| This figure reflects the ratio between net rental income and total revenue. | ||||
| 3) | Profit before taxes | = | Net rental income - Administrative expenses + Other operating income - Other operating expenses +/- Profit/loss on sales of investment proper ties +/- Profit/loss on sales of trading properties +/- Profit/loss on fair value of investment properties - Depreciation, amortisation and impair ment losses +/- Financial income and expenses +/- Share of result from associated companies |
|
| Profit before taxes measures profitability after operative costs and financial ex penses. |
||||
| 4) | EBITDA | = | Profit for the period + Depreciation, amortisation and impairment losses - /+ Financial income and expenses -/+ Share of result from associated companies + Current tax expense + Change in deferred taxes |
|
| EBITDA measures operative profitability before financial expenses, taxes and de preciation. |
||||
| 5) | EBITDA | = | EBITDA | x 100 |
| margin, % | Total revenue | |||
| EBITDA margin discloses EBITDA in relation to net sales. | ||||
| 6) | Adjusted EBITDA | = | Profit for the period + Depreciation, amortisation and impairment losses - /+ Profit loss on sales of investment properties -/+ Profit/loss on sales trading properties -/+ Profit/loss on sales of other non-current assets -/+ Profit/loss on fair value of investment properties -/+ Financial income and expenses -/+ Share of result from associated companies + Current tax expense + Change in deferred taxes |
|
| Adjusted EBITDA measures the profitability of the Group's underlying rental oper ations excluding gains/losses on sale of properties and unrealised value changes of investment properties. |
| 7) | Adjusted EBITDA | = | Adjusted EBITDA | x 100 |
|---|---|---|---|---|
| margin, % | Total revenue | |||
| Adjusted EBITDA margin discloses adjusted EBITDA in relation to total revenue. | ||||
| 8) | Funds From Operations (FFO) |
= | Adjusted EBITDA - Adjusted net interest charges - Current tax expenses | |
| FFO measures cash flow before change in net working capital. The calculation of this APM takes into account financial expenses and current taxes but excludes items not directly connected to rental operations, such as unrealised value changes. |
||||
| FFO | ||||
| 9) | FFO margin, % | = | Total revenue | x 100 |
| FFO margin discloses FFO in relation to total revenue. | ||||
| 10) | FFO per share | = | FFO | |
| Weighted average number of shares outstanding during the financial period | ||||
| FFO per share illustrates FFO for an individual share. | ||||
| 11) | FFO excluding non-recur ring costs |
= | FFO + non-recurring costs | |
| FFO measures cash flow before change in net working capital. The calculation of this APM takes into account financial expenses and current taxes but excludes items not directly connected to rental operations, such as unrealised value changes and non-recurring costs. |
||||
| 12) | Adjusted Funds From Op erations (AFFO) |
= | FFO - Modernisation investments | |
AFFO measures cash flow before change in net working capital, adjusted for modernisation investments. The calculation of this APM takes into account modernisation investments, financial expenses and current taxes but excludes items not directly connected to rental operations, such as unrealised value changes.
| 13) | Interest-bearing liabilities | = | Non-current loans and borrowings + Current loans and borrowings | |
|---|---|---|---|---|
| Interest-bearing liabilities measures the Group's total debt. | ||||
| 14) | Return on equity (ROE), % | = | Profit for the period (annualised) | x 100 |
| Total equity, average of opening and closing balances | ||||
| ROE measures the financial result in relation to equity. This APM illustrates Kojamo's ability to generate a return for the shareholders. |
||||
| 15) | Return on investment (ROI), | = | (Profit before taxes + Interest and other financial expenses) (annual ised) |
x 100 |
| % | (Total assets - Non-interest-bearing liabilities), average of opening and closing balances |
|||
| ROI measures the financial result in relation to invested capital. This APM il lustrates Kojamo's ability to generate a return on the invested funds. |
||||
| 16) | Equity ratio, % | = | Total equity | x 100 |
| Balance sheet total - Advances received | ||||
| Equity to assets is an APM for balance sheet structure that discloses the ratio of equity to total capital. This APM illustrates the Group's financing structure. |
||||
| 17) | Loan to Value (LTV), % | = | Interest-bearing liabilities - Cash and cash equivalents | x 100 |
| Investment properties | ||||
| Loan to value discloses the ratio of net debt to investment properties. This APM illustrates the Group's indebtedness. |
||||
| 18) | Gross investments | = | Acquisition and development of investment properties + Modernisa tion investments + Capitalised borrowing costs |
|
| This APM illustrates total investments including acquisitions, development in vestments, modernisation investments and capitalised interest. |
||||
| Other performance measures |
||||
| 19) | Financial | = | Rental income | x 100 |
| occupancy rate, % | Potential rental income at full occupancy |
| M€ | 4–6/2019 | 4–6/2018 | 1–6/2019 | 1–6/2018 | 2018 |
|---|---|---|---|---|---|
| Profit for the period | 67.8 | 72.5 | 100.0 | 111.2 | 221.8 |
| Depreciation, amortisation and impairment losses | 0.3 | 0.2 | 0.6 | 0.4 | 0.8 |
| Profit/loss on sales of investment properties | 0.0 | -0.4 | 0.0 | -1.0 | -1.0 |
| Profit/loss on sales of trading properties | -0.1 | 0.0 | -0.1 | 0.0 | -0.1 |
| Profit/loss on sales of other non-current assets Profit/loss on fair value of investment |
0.0 | 0.0 | 0.0 | 0.0 | |
| properties | -42.2 | -53.4 | -52.6 | -74.1 | -127.5 |
| Financial income | -0.7 | -1.0 | -1.6 | -1.9 | -3.2 |
| Financial expenses | 13.7 | 13.7 | 27.7 | 26.1 | 50.3 |
| Share of result from associated companies | 0.0 | -0.2 | |||
| Current tax expense | 4.4 | 20.7 | 8.0 | 27.8 | 34.1 |
| Change in deferred taxes | 13.7 | -1.7 | 16.9 | 1.4 | 21.4 |
| Adjusted EBITDA | 56.9 | 50.7 | 98.8 | 90.0 | 196.5 |
| Financial income and expenses | -13.0 | -12.7 | -26.1 | -24.1 | -47.1 |
| Profit/loss on fair value of financial assets | 0.7 | 0.4 | 1.6 | 1.4 | 1.2 |
| Adjusted net interest charges | -12.3 | -12.3 | -24.4 | -22.7 | -46.0 |
| Current tax expense | -4.4 | -20.7 | -8.0 | -27.8 | -34.1 |
| FFO | 40.1 | 17.6 | 66.4 | 39.5 | 116.4 |
| One-off items | 0.9 | 0.9 | 0.8 | ||
| FFO excluding non-recurring costs | 40.1 | 18.5 | 66.4 | 40.4 | 117.3 |
| Total equity | 2,360.1 | 2,252.4 | 2,358.1 | ||
| Assets total | 5,638.9 | 5,421.5 | 5,485.4 | ||
| Advances received | -5.9 | -5.6 | -6.1 | ||
| Equity ratio, % | 41.9 | 41.6 | 43.0 |
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