Quarterly Report • Jul 7, 2017
Quarterly Report
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INTERIM REPORT JANUARY – JUNE 2017
PROPERTY MANAGEMENT INCOME WAS SEK 403 MILLION (259)
UNREALISED CHANGES IN THE VALUE OF PROPERTIES TOTALLED SEK 302 MILLION (50) AND UNREALISED CHANGES IN THE VALUE OF DERIVATIVES WERE SEK 14 MILLION (47)
| NET PROFIT FOR THE PERIOD, SEKm | 2017 6 mths Jan-Jun |
2016 6 mths Jan-Jun |
2016 12 mths Jan-Dec |
|---|---|---|---|
| Rental income | 832 | 661 | 1,323 |
| Other income | 8 | 8 | 17 |
| Operating and central costs | -349 | -302 | -597 |
| Net financial items | -88 | -108 | -204 |
| Property management income | 403 | 259 | 539 |
| Changes in value of properties and derivatives | 318 | 87 | 418 |
| CURRENT TAX | -17 | 31 | 11 |
| DEFERRED TAX | -123 | -40 | -136 |
| Profit after tax | 581 | 337 | 832 |
| Surplus ratio, % | 63 | 60 | 61 |
| Occupancy rate, % | 90 | 89 | 90 |
| Equity/assets ratio, % | 33.3 | 28.5 | 31.0 |
| Property loan-to-value ratio, % | 58.3 | 60.6 | 58.6 |
| Equity per share, SEK | 47.9 | 40.1 | 45.3 |
| EPRA NAV per share, SEK | 56.1 | 50.3 | 56.0 |
For definitions of key ratios, see page 34.
Knut Rost, CEO, +46 (0)770-33 22 00, +46 (0)70-555 89 33, [email protected] Rolf Larsson, CFO, +46 (0)770-33 22 00, +46 (0)70-666 14 83, [email protected]
Nearly 100 years ago Anders Diös established the building firm that would eventually grow into one of Sweden's largest property owners. Thanks to his outstanding entrepreneurship and his faith in the future, the building firm had by the 1950s become one of the largest in Sweden. Inspired by Anders' drive, we formulated our current vision: to be the most active and sought-after landlord in our market.
We drive urban development to create growth for our tenants. By taking a simple and active approach, and by working closely with our stakeholders, we create meeting places where people can live, work and enjoy life. The company's property portfolio is concentrated to central locations in priority growth cities with an emphasis on office and retail properties.
Our business model centres on using the company's assets to create value for our stakeholders with sustainability as a central aspect. Through efficient management, risk-aware transactions and forwardlooking project development, we refine our assets. The value we create is evident in the fact that we are an attractive employer, manage our properties in a sustainable manner, conduct our business responsibly and focus on sustainable urban development.
VISION
We are the most active and sought-after landlord in our market.
To own and develop commercial and residential properties in priority growth cities from locally based offices. We create long-term values with a focus on the tenant by operating in a responsible and sustainable manner.
Our promise is that everything is possible. We strive to be seen as straightforward, responsive and active. Straightforward in that we are open and honest. Responsive in that we have a local presence, are approachable and show an interest. Active in that we develop property and ourselves as a company, and seize opportunities.
| 30/06/2017 | 31/03/2017 | 31/12/2016 | 30/09/2016 | 30/06/2016 | 31/03/2016 | 31/12/2015 | 30/09/2015 | |
|---|---|---|---|---|---|---|---|---|
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| Income, SEKm | 435 | 405 | 337 | 335 | 334 | 335 | 334 | 324 |
| Operating surplus, SEKm | 286 | 241 | 195 | 212 | 212 | 187 | 195 | 201 |
| Property management income, SEKm | 224 | 179 | 132 | 147 | 140 | 119 | 125 | 129 |
| Profit for the period, SEKm | 255 | 326 | 266 | 229 | 194 | 143 | 249 | -10 |
| Surplus ratio, % | 66 | 60 | 59 | 64 | 64 | 57 | 59 | 63 |
| Economic occupancy rate, % | 91 | 90 | 90 | 90 | 90 | 89 | 88 | 88 |
| Return on equity, % | 3.9 | 6.0 | 6.4 | 5.8 | 5.0 | 3.7 | 6.6 | -0.4 |
| Equity/assets ratio, % | 33.3 | 33.5 | 31.0 | 29.8 | 28.5 | 29.0 | 27.4 | 27.1 |
| Property loan-to-value ratio, % | 58.3 | 59.1 | 58.6 | 59.6 | 60.6 | 61.4 | 60.7 | 60.5 |
| Average interest rate at end of period, %¹ | 1.6 | 1.6 | 2.0 | 1.9 | 2.6 | 2.6 | 2.5 | 2.5 |
| Interest coverage ratio, times | 5.8 | 5.2 | 3.9 | 3.8 | 3.5 | 3.1 | 3.5 | 3.5 |
| Property management income per share, SEK | 1.67 | 1.44 | 1.39 | 1.54 | 1.47 | 1.25 | 1.31 | 1.35 |
| Earnings per share after tax, SEK | 1.88 | 2.60 | 2.79 | 2.39 | 1.99 | 1.48 | 2.49 | -0.15 |
| Equity per share, SEK | 47.9 | 48.0 | 45.3 | 42.5 | 40.1 | 40.3 | 38.8 | 36.2 |
| Market price per share, SEK | 46.6 | 44.0 | 47.1 | 50.8 | 47.1 | 46.9 | 48.0 | 43.5 |
1 Includes expenses relating to commitment commission and derivatives.
Earnings-wise, 2016 was the strongest year in our history, and it is now clear that the first half of 2017 has started on an even stronger note. A strong commercial focus, positive effects from a large of new and good lets as well as the acquisitions that we made in the spring have improved our property management income, paving the way for further growth.
The second quarter was a highly eventful period in terms of transactions as well as new lets. Our property management income increased by a massive 56 per cent year on year while our cash flow increased to SEK 389 million (281) thanks to new lets, more efficient property management and a larger portfolio. Net leasing remained strong, at SEK 32 million (9) for the six-month period.
There is a lot happening in our market, and our focus remains squarely on concluding new deals and strengthening our existing relationships. Thanks to our local presence in all our markets, we are able to respond quickly to any new business opportunities that arise. In the second quarter we concluded new leases with CSN and Osynlig in Sundsvall, Rituals in Luleå, and Prison Island and Bahnhof in Borlänge among others. New tenants and concepts are creating new experiences and meeting places as well as new jobs in the cities where we operate.
Our project management activity has been stepped up a gear and we have submitted a building permit application for new housing in the centre of Falun. We have also initiated the process of developing the Wasahuset property in Gävle with upgraded apartments. Several conversion and new build projects are underway. New builds form part of our urban development activities, which are aimed at creating new, attractive meeting places and properties while adding value to our property portfolio.
We have continued to concentrate our portfolio to centrally located properties in line with our strategy. This enables us to manage our properties more efficiently and broaden our offering to our tenants while also strengthening our ability to develop the city. In June we concluded three exchange deals in which we acquired centrally located properties in Sundsvall and Umeå while divesting properties in peripheral locations. A strong local offering, local expertise and a willingness to conclude new deals make us hard to beat on our home turf.
The portfolio of properties on which we completed in February has expanded our offering, as is very evident among our letting agents, who
now have a whole range of new options to present when engaging in dialogue with our tenants. It is also clear that rent levels in our existing portfolio have been positively affected by our projects and the properties we have acquired.
A common hallmark of the cities where we operate is a strong and growing market. A growing population, business innovation and new start-ups as well as urban development are driving growth while urbanisation and digitalisation are creating new needs and opportunities. We work closely with our tenants and keep our ears to the ground to ensure that we pick up on new trends. We are seeing increased demand for new-build offices in central locations, which is having a very positive impact on rents.
During the period we continued to reduce our financial risk. We have increased our average fixed-rate term to 2.7 years and our average loan maturity to 2.5 years. An average interest rate of 1.6 per cent and an interest coverage ratio of 5.5 times are among the best in the industry. Net asset value per share (EPRA NAV) was SEK 56.1, compared with a share price at 30 June of SEK 46.60.
I am very pleased with what our reorganisation has achieved and the growth that we are driving. Our results for the first half of 2017 are strong, with improvements in nearly every item. We want to enable our tenants and ourselves to grow by engaging in urban development. Diös has therefore taken the step to the next level. I am convinced that by focusing on growth and continuing to drive new deals we will continue to improve our profitability and generate higher returns for our shareholders.
Knut Rost, CEO
The property management income for the period, i.e. income excluding changes in value and tax, was SEK 403 million (259). On comparable holdings, property management income increased by 22 per cent compared to last year.
Income and expenses for the period were affected by the previously communicated acquisition of 32 properties. Completion was on 1 February 2017 and the properties will be consolidated in our results as of that date.
The rental income for the period was SEK 832 million (661), representing an 90 per cent (89) economic occupancy rate. For comparable holdings, rental income increased by 3.4 per cent compared with the previous year. Other property management income totalled SEK 8 million (8) and consisted partly of re-billing to tenants regarding work carried out in leased premises.
Total property costs were SEK 313 million (270). Of total property costs, SEK 4 million (3) refers to work in leased premises that is rebilled to tenants.
The operating surplus was SEK 527 million (399), representing a surplus ratio of 63 per cent (60). The increased surplus ratio is explained mainly by a stronger lettings performance and more efficient property management. For comparable holdings, the operating surplus increased by 6.1 per cent compared with the previous year.
The central administration expense was SEK 36 million (32). Central administration includes a non-recurring item of SEK 4 million, which refers to restructuring costs incurred in connection with acquisitions.
Net financial items for the period totalled SEK -88 million (-108). The interest expense for the period, including expenses for interest-rate derivatives and loan commitments, represents borrowings at an average annual interest rate of 1.8 per cent (2.6). The average annual interest rate on interest-bearing liabilities based on the applicable terms and market interest rates at 30 June was 1.6 per cent (1.1).
The property market is marked by a continued high activity, strong demand and continued limited supply, which is pushing prices higher. Prices are increasing mainly for centrally located office properties in growth cities. The upward trend is also reflected in the internal valuation in the form of a lower required rate of return, which, at the portfolio level, corresponds to 0.29 percentage points for the period. The average valuation yield at the end of the period was 6.11 per cent (6.55). The positive change in value of SEK 302 million (50) is primarily due to a one-off effect of a discount on deferred tax, lower required rates of return and increased cash flows. The change in value represented 1.6 per cent (0.4) of the market value. On 30 June, the market value was SEK 19,027 million (13,160).
During the period one property was sold with a realised change in value of SEK 2 million. In the same period in the previous year 42 properties were sold, resulting in a realised change in value of SEK -10 million before tax. 33 properties (4) were acquired during the period.
1 The figures for property management income, operating surplus and surplus ratio in Q2 2017 are on a rolling 12-month basis.
The derivatives portfolio has been valued at fair value. If the contracted interest rate deviates from the market rate, a theoretical fair value gain or loss arises on the interest rate derivatives. The change in value is of a reporting nature and does not affect the cash flow.
During the period, unrealised changes in value on derivatives totalled SEK 14 million (47), which have been fully recognised in profit or loss. The change in the market values of derivatives is primarily attributable to the time effect. The time to maturity decreased over the period, which, assuming that market interest rates remain largely unchanged, will push the market value towards 0. Accrued negative market values from derivatives will thus have an ongoing positive revaluation effect until maturity.
Profit before tax was SEK 721 million (346). The improved profit is chiefly due to a larger property portfolio and unrealised changes in the value of properties.
Profit after tax was SEK 581 million (337). Current tax totalled SEK -17 million (31). This is mainly attributable to tax in subsidiaries, which are not permitted to offset losses against Group contributions. The positive tax effect in the previous year is attributable to a partial reversal of tax provisions related to a tax case. The calculation of deferred tax has given rise to a deferred tax item of SEK -123 million (-40).
Property management income for the second quarter, i.e. income excluding changes in value and tax, was SEK 224 million (140). The operating surplus was SEK 286 million (212), representing a surplus ratio of 66 per cent (64).
Rental income for the second quarter was SEK 432 million (330), representing an economic occupancy rate of 91 per cent (90).
Total property costs were SEK 149 million (122).
Net financial items for the second quarter were SEK -47 million (-56). The profit before tax was SEK 323 million (207), with changes in the value of properties having a positive impact of SEK 94 million (39) and changes in the value of interest rate derivatives adding SEK 5 million (28). Earnings after tax were SEK 255 million (194), of which SEK -59
million (-48) refers to deferred tax and SEK -9 million (35) to current tax. In the second quarter one property (1) was sold, resulting in a net realised change in value of SEK 2 million (-1).
The nominal corporate tax rate in Sweden is 22 per cent. Due to the option of using tax depreciation allowances, recognising the full amount of expenses for certain types of conversion projects in the first year and using tax losses, tax paid was low. Tax paid arises from the fact that some subsidiaries are not able to avail themselves of the tax benefits of group contributions
The remaining tax loss carry-forward is calculated to be SEK 78 million (177). The Group also has untaxed reserves of SEK 118 million (89). The fair value of the properties exceeds their tax base by SEK 5,108 million (4,235). The tax on the net balance of these items at the full nominal tax rate of 22 per cent has been recognised as a deferred tax liability.
| SEKm | Current tax basis |
Deferred tax basis |
|---|---|---|
| Property management income | 403 | |
| Tax-deductible | ||
| depreciation | -113 | 113 |
| conversion projects | -35 | 35 |
| Other tax adjustments | -27 | -41 |
| Taxable property management income | 228 | 107 |
| Income tax at 22% if tax losses are not used | 50 | |
| Sale of properties | 1 | -1 |
| Change in value of properties | 0 | 302 |
| Issue costs | -51 | 51 |
| Taxable profit before tax loss carry-forwards | 178 | 459 |
| Opening balance, tax loss carry-forwards | -177 | 177 |
| Closing balance, tax loss carry-forwards | 78 | -78 |
| Taxable profit | 79 | 558 |
| Tax for the period as per income statement | 17 | 123 |
While the reporting of taxes complies with the applicable accounting rules it should be noted that the amount of tax paid over the period generally differs from the reported amount. Tax regulations are also complex and difficult to interpret. The application of the regulations may also change over time. Diös has no ongoing tax disputes.
The portfolio comprises a well balanced mix of residential, office, retail and industrial space with a range of small and large premises, creating wide scope to offer flexible solutions and establish long-term tenant relations. At the end of the period the portfolio comprised 93 per cent (92) commercial properties and 7 per cent (8) residential properties based on rental value by type of premises.
Our project investments are in the form of new builds, conversions and extensions, along with energy-saving measures. The goal is for such investments to increase occupancy, cut costs and reduce the impact on the environment. During the period SEK 290 million (220) was invested in 522 projects (412). At the end of the period 11 major1 development projects were ongoing, with a remaining investment volume of SEK 38 million and a total investment volume of SEK 96 million. During the period decisions were taken on 79 new project investments. 1 Initial investment volume > SEK 4 million.
At each closing, a fair value assessment is made of all properties, as of that date. The aim is to determine the properties' individual values in a sale executed through an orderly transaction between market players. Any portfolio effects are thus not taken into account. The valuation model includes an annual external valuation of the 100 largest properties in terms of value, of which 25 per cent are valued each quarter. The external valuation is performed by Savills. In addition to the largest properties in terms of value, an internal valuation is carried out, with the assistance of Savills, of properties where major changes have occurred. This pertains to, for example, properties where a lease has recently been signed or terminated, along with major new build or conversion projects. All property valuations are based on a number of assumptions about the future and the market. Savills' calculations are therefore based on an uncertainty range of +/-7.5 per cent, which is also applied to the entire portfolio. For Diös this corresponds to a value range of SEK 17,600–20,454 million.
During the quarter, there were no changes in valuation methodology or approach. The valuations are in accordance with IFRS 13 level 3.
Our strategy is to continuously strive to concentrate our property portfolio to priority locations in our target areas.
In the second quarter Diös sold the Näringen 22:3 land property in Gävle. The property was acquired by Gävle Local Authority.
The completion date for the Luleå Office Building was 10 January 2017. The acquisition was communicated in the second quarter of 2016. The completion date for the 32 properties in Umeå, Luleå and Sundsvall that Diös acquired from Castellum, as communicated in the fourth quarter of 2016, was 1 February 2017. The acquisitions increased the value of the property portfolio by SEK 4,753 million (170).
New builds, conversions and extensions added SEK 290 million (220) to the value of Diös' property portfolio over the period. We makes adjustments to the portfolio on an ongoing basis to create improvements and efficiencies for our tenants.
Unrealised changes in value for the period totalled SEK 302 million (50) and were mainly due to the one-off effect of a discount on deferred tax, lower required rates of return and increased cash flows.
Net leasing for the period was SEK 32 million (9). The largest new lets in the period were those to Umeå Datakonsulter Aktiebolag in the Sågen 5 property in Umeå, Trelleborg Sealing Solutions Kalmar AB in Näringen 5:15 in Gävle and CSN in Cupido 7 in Sundsvall. The average contract term commercial premises at 30 June was 3.6 years (3.3).
Vacancies fell during the quarter and at 30 June the economic vacancy rate was 9 per cent (10) and vacant area was 14 per cent (16). Economic vacancies are highest in office and retail premises while physical vacancy rates are highest in office and industrial premises. The economic vacancy rate for the period, excluding discounts, was 9 per cent (10).
| 30/06/2017 | 30/06/2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Office | Retail | Residen tial |
Industrial/ ware house |
Other | Office | Retail | Residen tial |
Industrial/ ware house |
Other | |
| Analysis period | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years |
| Yield for assessing residual value1, % | 7.0-5.7 | 6.9-6.0 | 5.5-4.7 | 8.0-7.3 | 7.0-6.2 | 7.4-6.4 | 7.3-6.3 | 5.7-4.8 | 8.3-7.4 | 7.1-6.6 |
| Cost of capital for discounting to present value, % |
8.1 | 8.2 | 7.4 | 9.8 | 8.8 | 8.7 | 8.6 | 7.5 | 10.0 | 9.0 |
| Long-term vacancy, % | 5.0 | 3.5 | 1.7 | 11.5 | 6.0 | 5.6 | 3.5 | 1.6 | 11.2 | 5.0 |
| Inflation, % | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
1 From lower to upper quartiles in the portfolio.
| Unit | 2017 6 mths Jan-Jun |
2016 6 mths Jan-Jun |
|
|---|---|---|---|
| Heating1 | kWh/sq.m | 51.0 | 50.9 |
| District cooling2 | kWh/sq.m | 7.8 | 8.0 |
| Electricity3 | kWh/sq.m | 29.1 | 30.0 |
| Carbon dioxide, total4 | g CO2/kWh | 25.4 | 25.3 |
| Water | m3 /sq.m |
0.2 | 0.2 |
1Heating has been adjusted to a normal year.
2 District cooling does not include self-produced cooling.
3 Electricity from energy use and tenants where electricity is included in the lease.
4 Carbon dioxide from electricity, heating and cooling.
All values have been provided by the suppliers. Floor area refers to tempered area.
Total energy and heat use decreased by 1.1 per cent compared with the same period the year before. Diös' ambition for the full year 2017 is to reduce energy use by 4 per cent, partly through a greater focus on geoenergy solutions and smart control systems in the energy projects and a stronger emphasis on optimisation. Use of district cooling is increasing
as we replace cooling machines with district cooling solutions and thus cut electricity and refrigerant use. To reduce our environmental impact, we only buy electricity from renewable sources and take an active role in dialogues with district heating suppliers, and we can now see that 99 per cent of our district heating also comes from non-fossil sources.
| Signed contracts | Rented area | Contracted rental income | Share, | ||
|---|---|---|---|---|---|
| Maturity year | no. | sq.m | SEKm | % | |
| Leases for premises | 2017 | 507 | 87,113 | 84 | 5 |
| 2018 | 853 | 270,491 | 324 | 19 | |
| 2019 | 673 | 267,590 | 315 | 18 | |
| 2020 | 638 | 248,974 | 316 | 18 | |
| 2021+ | 374 | 353,553 | 492 | 29 | |
| Total leases for premises | 3,045 | 1,227,721 | 1,531 | 89 | |
| Residential leases | 1,896 | 126,842 | 136 | 8 | |
| Other leases | 4,112 | - | 55 | 3 | |
| TOTAL | 9,053 | 1,354,563 | 1,722 | 100 |
| Annual contract value, Share of total contract Average contract term, |
|||||
|---|---|---|---|---|---|
| TENANT | No. of contracts | SEK '000 | value, % | years | |
| Swedish Transport Administration | 25 | 62,631 | 3.6 | 2.5 | |
| Municipality of Östersund | 110 | 36,784 | 2.1 | 3.2 | |
| Swedish Public Employment Service | 43 | 33,877 | 2.0 | 2.0 | |
| Åhléns AB | 5 | 22,443 | 1.3 | 5.4 | |
| Telia Sverige AB | 25 | 19,547 | 1.1 | 10.8 | |
| Swedish Police Authority | 34 | 19,517 | 1.1 | 3.4 | |
| Municipality of Falun | 9 | 19,195 | 1.1 | 2.8 | |
| Swedbank AB | 10 | 18,815 | 1.1 | 2.0 | |
| Swedish Social Insurance Agency | 21 | 18,805 | 1.1 | 3.3 | |
| Folksam Sak | 40 | 18,463 | 1.1 | 6.0 | |
| Total, largest tenants | 322 | 270,077 | 15.7 | 3.7 |
We are the market-leading public property company in our priority locations. Our portfolio is concentrated to central locations in growth cities, from Borlänge in the south to Luleå in the north. Our operations are divided into seven business areas, of which six are defined geographically. The seventh business area, Retail, was established in the first quarter of 2017 and is not geographically defined but consists of our shopping centre and retail properties. The business area organisation consists of property management staff and letting agents and one business area manager. All technical management services are purchased internally and performed by Diös staff at each location.
The Swedish economy remains strong and GDP is expected to grow by 2.5 per cent in 2017, according to the National Institute of Economic Research. Employment has grown rapidly over the past few years and there is still a strong need to recruit. Population growth was positive in all our locations in 2016, with a total increase of 7,000 people.
SCA has moved its head office back to Sundsvall and is investing nearly SEK 8 million in a new pulp factory in the region, which will benefit the local economy. Further north, Umeå has joined a regional gaming cluster that already includes Luleå, Piteå, Skellefteå and Boden. The idea is to work across municipal boundaries to create growth and continue the strong game creating tradition that has been established in the region.
Retail, 17% Other business areas, 83%
| No. of properties | 16 |
|---|---|
| Area, thousand sq.m | 169 |
| Property value, SEKm | 3,177 |
| Operating surplus, SEKm | 81 |
| Surplus ratio, % | 59 |
| RETAIL – LARGEST TENANTS TENANT |
No. contracts |
Annual contract value, SEK '000 |
Share of total contract value, %* |
Average contract term, years |
|---|---|---|---|---|
| Municipality of Falun | 4 | 16,946 | 5.9 | 2.7 |
| KappAhl Sverige AB | 5 | 12,342 | 4.3 | 1.6 |
| Hennes & Mauritz Sverige AB | 4 | 10,289 | 3.6 | 1.6 |
| Clas Ohlson AB | 5 | 9,149 | 3.2 | 4.7 |
| Nilson Group AB | 6 | 6,961 | 2.4 | 1.3 |
| Total, largest tenants | 24 | 55,687 | 19.3 | 2.4 |
Industrial/warehouse, 5% Retail, 17% Residential, 5%
| No. of properties | 42 |
|---|---|
| Area, thousand sq.m | 225 |
| Property value, SEKm | 2,046 |
| Operating surplus, SEKm | 69 |
| Surplus ratio, % | 66 |
| DALARNA – LARGEST TENANTS TENANT |
No. contracts |
Annual contract value, SEK '000 |
Share of total contract value, %* |
Average contract term, years |
|---|---|---|---|---|
| Swedish Transport Administration | 3 | 40,257 | 19.1 | 3.0 |
| Swedish Police Authority | 8 | 10,042 | 4.8 | 2.1 |
| Internationella Engelska Skolan AB | 1 | 9,270 | 4.4 | 18.5 |
| Pysslingen Förskolor och Skolor AB | 1 | 8,419 | 4.0 | 7.1 |
| County Administrative Board of Dalarna | 13 | 7,393 | 3.5 | 2.5 |
| Total, largest tenants | 26 | 75,381 | 35.8 | 5.2 |
*In relation to the annual contract value for each business area.
| No. of properties | 47 |
|---|---|
| Area, thousand sq.m | 236 |
| Property value, SEKm | 1,822 |
| Operating surplus, SEKm | 57 |
| Surplus ratio, % | 64 |
| GÄVLEBORG - LARGEST TENANTS TENANT |
No. contracts |
Annual contract value, SEK '000 |
Share of total contract value, %* |
Average contract term, years |
|---|---|---|---|---|
| Gävleborg County Council | 7 | 9,439 | 5.2 | 3.1 |
| Swedish Transport Administration | 3 | 7,143 | 3.9 | 1.3 |
| Swedish Public Employment Service | 7 | 6,474 | 3.6 | 2.9 |
| Internationella Engelska Skolan AB | 2 | 5,720 | 3.2 | 6.3 |
| Åhléns AB | 1 | 4,363 | 2.4 | 4.5 |
| Total, largest tenants | 20 | 33,139 | 18.3 | 3.4 |
| No. of properties | 51 |
|---|---|
| Area, thousand sq.m | 197 |
| Property value, SEKm | 2,509 |
| Operating surplus, SEKm | 61 |
| Surplus ratio, % | 62 |
| VÄSTERNORRLAND – LARGEST TENANTS | Annual contract |
Share of total |
Average contract |
|
|---|---|---|---|---|
| TENANT | No. contracts |
value, SEK '000 |
contract value, %* |
term, years |
| Livförsäkringsbolaget Skandia | 3 | 14,123 | 6.6 | 5.8 |
| Sweco Sverige AB | 9 | 8,522 | 4.0 | 5.4 |
| Municipality of Sundsvall | 19 | 8,374 | 3.9 | 1.8 |
| Folksam Sak | 7 | 7,985 | 3.7 | 9.1 |
| Norrlidens Kunskapscentrum AB | 2 | 7,085 | 3.3 | 8.4 |
| Total, largest tenants | 40 | 46,089 | 21.4 | 5.9 |
*In relation to the annual contract value for each business area.
| No. of properties | 113 |
|---|---|
| Area, thousand sq.m | 289 |
| Property value, SEKm | 2,905 |
| Operating surplus, SEKm | 88 |
| Surplus ratio, % | 62 |
| JÄMTLAND - LARGEST TENANTS TENANT |
No. contracts |
Annual contract value, SEK '000 |
Share of total contract value, %* |
Average contract term, years |
|---|---|---|---|---|
| Municipality of Östersund | 110 | 36,784 | 13.1 | 3.2 |
| Region Jämtland Härjedalen | 18 | 11,097 | 4.0 | 2.1 |
| Swedbank AB | 5 | 7,587 | 2.7 | 1.6 |
| Swedish Public Employment Service | 3 | 5,886 | 2.1 | 1.3 |
| Deloitte | 1 | 3,888 | 1.4 | 2.5 |
| Total, largest tenants | 137 | 65,242 | 23.3 | 2.6 |
Residential, 7%
| No. of properties | 53 |
|---|---|
| Area, thousand sq.m | 299 |
| Property value, SEKm | 3,855 |
| Operating surplus, SEKm | 97 |
| Surplus ratio, % | 64 |
| TENANT | No. contracts |
Annual contract value, SEK '000 |
Share of total contract value, %* |
Average contract term, years |
|---|---|---|---|---|
| Municipality of Skellefteå | 21 | 15,814 | 5.0 | 4.3 |
| Swedish Courts | 8 | 14,946 | 4.7 | 9.6 |
| County Administrative Board of Västerbotten | 3 | 10,865 | 3.4 | 4.3 |
| Swedish Tax Agency | 16 | 10,192 | 3.2 | 2.9 |
| Tieto Sweden AB | 2 | 9,804 | 3.1 | 1.5 |
| Total, largest tenants | 50 | 61,621 | 19.3 | 4.9 |
UMEÅ SKELLEFTEÅ UMEÅ
*In relation to the annual contract value for each business area.
Office, 71% Industrial/warehouse, 1%
PROPERTY HOLDINGS
| No. of properties | 25 |
|---|---|
| Area, thousand sq.m | 165 |
| Property value, SEKm | 2,713 |
| Operating surplus, SEKm | 73 |
| Surplus ratio, % | 69 |
| NORRBOTTEN - LARGEST TENANTS TENANT |
No. contracts |
Annual contract value, SEK '000 |
Share of total contract value, %* |
Average contract term, years |
|---|---|---|---|---|
| Telia Sverige AB | 8 | 14,365 | 6.6 | 13.6 |
| Municipality of Luleå | 14 | 13,110 | 6.1 | 3.6 |
| Swedish Transport Administration | 3 | 11,816 | 5.5 | 1.2 |
| Sweco Sverige AB | 4 | 8,406 | 3.9 | 5.7 |
| County Administrative Board of Norrbotten | 5 | 8,263 | 3.8 | 1.5 |
| Total, largest tenants | 34 | 55,960 | 25.9 | 5.7 |
At 30 June 2017, 33 per cent (29) of Diös' total assets of SEK 19,317 million was funded through equity, 57 per cent (60) through debt securities and 10 per cent (11) through other capital. The equity/assets ratio was 33.3 per cent, which is above Diös' target of 30 per cent. Interest-bearing liabilities comprise bank financing and covered bonds while other capital mainly consists of deferred tax liabilities.
The Castellum property acquisition, for which the completion date was 1 February, was part-financed through a rights issue of 59,783,304 shares. The issue raised around SEK 1,853 million in new equity. At 30 June equity was SEK 6,438 million (3,818).
The Group's interest-bearing liabilities were SEK 11,095 million (7,970). Out of total interest-bearing liabilities, SEK 10,080 million (7,029) refers to bank financing and SEK 1,015 million (941) to covered bonds. The covered bonds were issued through the joint-owned company Svensk FastighetsFinansiering AB (SFF). At the end of the period the loan-to-value ratio in the Group was 58.3 per cent (60.6). The average annual interest rate at 30 June, including the cost of derivatives and loan commitments, was 1.6 per cent (2.6) and the interest coverage ratio 5.8 times (3.5).
Out of the Group's total interest-bearing liabilities, SEK 3,600 million (4,200) has been hedged through derivatives. In the second quarter interest-bearing liabilities of SEK 3,000 were hedged using interest rate caps. At 30 June 2017, the market value of the derivative portfolio was SEK -29 million (-87). Financial instruments limit the impact of a change in interest rates on our average borrowing costs. The value of derivatives is always zero at maturity. All financial instruments are measured at fair value and classified at level 2 in accordance with IFRS 13, which means that valuation is based on observable market data (see Note 21 in the Annual Report 2016). Changes in value are recognised in profit or loss.
The average fixed-rate term was 1.7 years (0.3) and average maturity was 2.5 years (2.3). Taking account of the impact of the derivatives portfolio, the average fixed-rate term was 2.7 years (0.6). With a derivatives portfolio of SEK 3,600 million and loans of SEK 7,197 million, 97.3 per cent (59.0) of the Group's total outstanding loans are covered by interest rate hedges.
Consolidated cash and cash equivalents were SEK 0 million (0) at the end of the period and drawn overdraft facilities were SEK 48 million (159). The credit limit on the overdraft facility was SEK 600 million (450).
| If market rates rise by 1 per cent point | |||||||
|---|---|---|---|---|---|---|---|
| Fixed-rate term, years |
Maturity, years |
Average annual interest rate, % |
Market value, SEKm |
Change in average annual interest rate, % |
Change in average annual interest expense, SEKm |
Change in market value, SEKm |
|
| Loan portfolio, excl. derivatives | 1.7 | 2.5 | 1.31 | 11,095 | 0.4 | +39 | |
| Derivative portfolio | 3.0 | 0.2 | -29 | -1.0 | -6 | +7 | |
| Loan portfolio, incl. derivatives | 2.7 | 2.5 | 1.6 | 0.3 | +33 | +7 |
1The cost for undrawn credit facilities has been included
| Interest rate and margin expiration | Loan maturity | ||||
|---|---|---|---|---|---|
| Maturity year | Loan amount, SEKm | Average annual interest rate1 , % |
Credit agreements, SEKm | Drawn, SEKm | |
| 2017 | 1,888 | 1.2 | 1,158 | 1,020 | |
| 2018 | 2,887 | 1.0 | 2,167 | 2,167 | |
| 2019 | 993 | 1.3 | 1,861 | 1,861 | |
| 2020 | 5,326 | 1.4 | 5,326 | 5,326 | |
| 2021 | - | - | 1,065 | 23 | |
| 2027 | - | - | 697 | 697 | |
| Drawn credit facilities | 11,095 | 1.3 | 12,274 | 11,095 | |
| Undrawn credit facilities 2 | 1,179 | 0.1 | |||
| Financial instruments | 3,600 | 0.2 | |||
| TOTAL | 1.6 |
1 Average annual interest rate refers to the average interest rate based on interest rate terms and current liability at 30/06/2017.
2 The impact of costs related to undrawn credit facilities on the average annual interest rate is 0.05 percentage points.
The share price at the end of the period was SEK 46.6 per share (47.1), which equates to a market capitalisation of SEK 6,268 million (4,484) and a return of -1.0 per cent (9.1) for the past 12 months. If the approved dividend of SEK 2.0 per share is included, the total return on the shares for the period is 3.5 per cent (14.3). The graph shows share prices for the past 12 months for both Diös and the indexes. The return for OMX Stockholm 30 was 21.1 per cent (-16.0) and for OMX Stockholm Real Estate PI 13.7 per cent (22.1).
At 31 May Diös Fastigheter AB had 14,474 shareholders (11,621). The share of foreign-owned shares was 20.8 per cent (17.8) while the total number of shares during the period increased to 134,512,438 (74,729,134). The largest single shareholder was AB Persson Invest with a 15.4 per cent (15.4) shareholding. The ten largest shareholders accounted for 56.2 per cent (61.1) of the shares and votes.
The 2017 AGM authorised the company to buy back ten per cent of all outstanding shares of the company. No repurchases were made during the period.
No new changes of ownership were flagged during the period. The ten largest shareholders of Diös Fastigheter AB according to Euroclear Sweden AB are shown in the table above.
Diös Fastigheter AB is a publicly traded company listed on the NAS-DAQ OMX Nordic Exchange Stockholm, Mid Cap list. The ticker symbol is DIOS and the ISIN code SE0001634262.
Our target is to generate a return on equity in excess of the risk-free rate plus 6 per cent. The target return for the past 12 months was 5.8 per cent (6.0). The annualised return for the period was 22 per cent (18).
Equity at the end of the second quarter was SEK 6,438 million (3,818) and the long-term net asset value, EPRA NAV, was SEK 7,545 million (4,795). On a per share basis, EPRA NAV was SEK 56.1 (50.3), which means that the share price at 30 June represented 83 per cent (93) of long-term NAV. The current net asset value for the period, as expressed by EPRA NNNAV, was SEK 54.4 (47.6) per share.
Earnings per share for the period were SEK 4.46 (3.47) while longterm earnings per share, expressed as EPRA EPS, were SEK 2.70 (2.42). Designed to show a company's long-term earnings capacity per share, EPRA EPS is calculated as property management income less 22 per cent corporation tax attributable to property management income less minority's share of earnings.
Diös Fastigheter OMX Stockholm 30 Index OMX Stockholm Real Estate PI SHARE PRICE (SEK) VOLUME (THOUSANDS)
OF DIÖS FASTIGHETER AB AT 31 MAY 2017
| SHAREHOLDER | No. of shares | Capital and votes, % |
|---|---|---|
| AB Persson Invest | 20,699,443 | 15.4 |
| Backahill Inter AB | 14,095,354 | 10.5 |
| Bengtssons Tidnings Aktiebolag | 13,574,748 | 10.1 |
| Pensionskassan SHB Försäkringsförening | 8,096,827 | 6.0 |
| Försäkringsaktiebolaget, Avanza Pension | 5,034,037 | 3.7 |
| Handelsbankens Fonder | 3,405,380 | 2.5 |
| SEB Investment Management | 3,300,057 | 2.5 |
| Fourth AP Fund | 2,811,660 | 2.1 |
| Ssb Client Omnibus Ac Om07 (15 pct) | 2,559,060 | 1.9 |
| Staffan Rasjö | 2,000,000 | 1.5 |
| Total, largest shareholders | 75,576,566 | 56.2 |
| Other shareholders | 58,935,872 | 43.8 |
| TOTAL | 134,512,438 | 100.0 |
The number of employees on 30 June 2017 was 156 (152), of whom 64 were women (61). Most of the employees, 107 individuals (104), work in our seven business areas. A change in 2017 is that we have established a seventh business area, Retail, where we have brought together our shopping centre and retail properties. During the spring we have been in a recruitment phase, strengthening our business driving roles in lettings and property management as well as our operational organisation.
The activities of the parent company consist of central Group functions as well as the ownership and operation of the Group's subsidiaries. Sales totalled SEK 91 million (73) and post-tax profit was SEK 318 million (303).
Profit after tax includes dividends from Group companies in the amount of SEK 300 million (300). Net sales refer chiefly to services sold to the Group's subsidiaries. Cash and cash equivalents were SEK 0 million (0) at 30 June 2017 and drawn overdraft facilities were SEK 51 million (182). External interest-bearing liabilities, excluding overdraft facilities, amounted to SEK 3,530 million (2,037). The average annual interest rate based on the situation at 30 June 2017 was 1.2 per cent (0.8).
The parent company prepares its financial reports in compliance with RFR 2 Accounting for Legal Entities.
Diös Fastigheters' principal risks and uncertainties are described in the 2016 annual report on pages 52-54. Apart from what is stated in the following, there have been no material changes to Diös' risks and uncertainties.
At its monetary policy meeting on 3 July the Riksbank decided to keep its repo rate unchanged at -0.5 per cent. The Repo rate is not expected to be raised until after the second half of 2018, and if raised it will be slowly and gradually. The central bank has continued to purchase government bonds in accordance with its previous decision, with the aim of stabilising inflation at around 2 per cent.
According to the June 2017 edition of Swedish Economy published by the National Institute of Economic Research, the current strong economic activity in Sweden is set to strengthen further this year and peak in 2018. The main driver is the export industry, which is benefiting from strong global demand.
Thanks to Sweden's strong public finances, healthy banks and growing GDP, the prospects for growth in our markets are deemed to be good. As our property operations continue to generate strong cash flows, we are seeing a stabilisation of the yield levels in the market valuation of our properties and our property values. These combined factors should strengthen property as an asset class.
There were no significant related party transactions in the period. Those related party transactions which did occur are deemed to have been concluded on market terms.
Diös complies with EU-adopted IFRS standards and the interpretations of these (IFRIC). This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The report for the parent company is prepared in accordance with RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act. The accounting principles applied in preparing the interim report are consistent with the accounting principles applied in preparing the consolidated financial statements and annual report for 2016, Note 1. New and amended standards which entered into force on 1 January 2017 have not had any material impact on the Group's financial statements.
Costs for operations and maintenance are subject to seasonal variations. Cold weather and snow affect the costs for heating, snow clearance and roof snow removal. The costs are normally higher in the first and fourth quarters.
1 The Annual Report 2016 is available at www.dios.se.
| 2017 3 months |
2016 3 months |
2017 6 months |
2016 6 months |
2016 12 months |
|
|---|---|---|---|---|---|
| INCOME STATEMENT | April-June | April-June | Jan-June | Jan-June | Jan–Dec |
| Rental income | 432 | 330 | 832 | 661 | 1,323 |
| Other property management income | 3 | 4 | 8 | 8 | 17 |
| Property costs | -149 | -122 | -313 | -270 | -534 |
| Operating surplus | 286 | 212 | 527 | 399 | 806 |
| Central administration | -15 | -16 | -36 | -32 | -63 |
| Net financial items | -47 | -56 | -88 | -108 | -204 |
| Property management income | 224 | 140 | 403 | 259 | 539 |
| Change in value of properties | 94 | 39 | 304 | 40 | 327 |
| Change in value of interest rate derivatives | 5 | 28 | 14 | 47 | 91 |
| Profit before tax | 323 | 207 | 721 | 346 | 957 |
| CURRENT TAX | -9 | 351 | -17 | 311 | 111 |
| DEFERRED TAX | -59 | -48 | -123 | -40 | -136 |
| Profit after tax | 255 | 194 | 581 | 337 | 832 |
| Profit attributable to shareholders of the parent company | 253 | 190 | 578 | 331 | 825 |
| Profit attributable to non-controlling interests | 2 | 4 | 3 | 6 | 7 |
| Total | 255 | 194 | 581 | 337 | 832 |
| STATEMENT OF COMPREHENSIVE INCOME | |||||
| Profit after tax | 255 | 194 | 581 | 337 | 832 |
| Comprehensive income for the period | 255 | 194 | 581 | 337 | 832 |
| Comprehensive income attributable to shareholders of the parent company |
253 | 190 | 578 | 331 | 825 |
| Comprehensive income attributable to non-controlling interests |
2 | 4 | 3 | 6 | 7 |
| Total | 255 | 194 | 581 | 337 | 832 |
| Earnings per share, SEK | 1.88 | 1.99 | 4.46 | 3.47 | 8.66 |
| Number of shares at end of period, thousands | 134,512 | 95,290 | 134,512 | 95,290 | 95,290 |
| Average number of shares, thousands | 134,512 | 95,290 | 129,528 | 95,290 | 95,290 |
| Number of treasury shares at end of period | 0 | 0 | 0 | 0 | 0 |
| Average number of treasury shares | 0 | 0 | 0 | 0 | 0 |
1Current tax for 2016 includes a reversal of SEK 37 million related to a provision that was recognised in 2015.
| ASSETS | 2017 30 June |
2016 30 June |
2016 31 Dec |
|---|---|---|---|
| Non-current assets | |||
| Investment properties | 19,027 | 13,160 | 13,683 |
| Other property, plant and equipment | 4 | 4 | 3 |
| Intangible non-current assets | 2 | 3 | 2 |
| Non-current financial assets | 40 | 43 | 36 |
| Total non-current assets | 19,073 | 13,210 | 13,724 |
| Current assets | |||
| Current receivables | 244 | 183 | 196 |
| Cash and cash equivalents | - | - | - |
| Total current assets | 244 | 183 | 196 |
| TOTAL ASSETS | 19,317 | 13,393 | 13,920 |
| EQUITY AND LIABILITIES | |||
| Equity | 6,438 | 3,818 | 4,313 |
| Deferred tax liability | 1,133 | 912 | 1,009 |
| Provisions | 9 | 9 | 9 |
| Interest-bearing liabilities | 11,095 | 7,970 | 8,013 |
| Overdraft facilities | 48 | 159 | 15 |
| Current liabilities | 594 | 525 | 561 |
| TOTAL LIABILITIES AND EQUITY | 19,317 | 13,393 | 13,920 |
| Attributable to | ||||||
|---|---|---|---|---|---|---|
| Equity | shareholders of the parent |
Attributable to minority interests |
||||
| Equity at 31 Dec 2015 | 3,694 | 3,658 | 36 | |||
| Profit for the period after tax | 337 | 331 | 6 | |||
| Comprehensive income for the period | 337 | 331 | 6 | |||
| Cash dividend | -213 | -213 | - | |||
| Equity at 30/06/2016 | 3,818 | 3,776 | 42 | |||
| Profit for the period after tax | 495 | 494 | 1 | |||
| Comprehensive income for the period | 495 | 494 | 1 | |||
| Equity at 31/12/2016 | 4,313 | 4,270 | 43 | |||
| Profit for the period after tax | 581 | 578 | 3 | |||
| Comprehensive income for the period | 581 | 578 | 3 | |||
| New issue | 1,853 | 1,853 | - | |||
| Issue costs | -51 | -51 | - | |||
| Tax effect of issue costs | 11 | 11 | - | |||
| Dividend | -269 | -269 | - | |||
| Equity at 30/06/2017 | 6,438 | 6,392 | 46 |
| OPERATING ACTIVITIES | 2017 3 months April-June |
2016 3 months April-June |
2017 6 months Jan-June |
2016 6 months Jan-June |
2016 12 months Jan–Dec |
|---|---|---|---|---|---|
| Operating surplus | 286 | 212 | 527 | 399 | 806 |
| Central administration | -15 | -16 | -36 | -32 | -63 |
| Reversal of depreciation, amortisation and impairment | 0 | 0 | 0 | 0 | 5 |
| Interest received | 0 | 0 | 1 | 0 | 1 |
| Interest paid | -55 | -43 | -122 | -118 | -184 |
| Tax paid | -9 | -2 | -17 | -6 | -26 |
| Operating cash flows before change in working capital | 207 | 151 | 353 | 243 | 539 |
| Changes in working capital | |||||
| Decrease (+)/increase (-) in receivables | -6 | -8 | -12 | -79 | -92 |
| Decrease (-)/increase (+) in current liabilities | -30 | -15 | -98 | -12 | 35 |
| Total change in working capital | -36 | -23 | -110 | -91 | -57 |
| Operating cash flow | 171 | 128 | 243 | 152 | 482 |
| INVESTING ACTIVITIES | |||||
| Investments in new builds, conversions and extensions | -94 | -113 | -244 | -257 | -452 |
| Acquisition of properties | - | - | -2,316 | -79 | -136 |
| Sale of properties | 3 | 20 | 3 | 637 | 641 |
| Other property, plant and equipment | - | - | - | - | - |
| Other non-current financial assets | - | - | - | -30 | -26 |
| Cash flow from investing activities | -91 | -93 | -2,557 | 271 | 27 |
| FINANCING ACTIVITIES | |||||
| Dividends paid | -269 | -213 | -269 | -213 | -213 |
| New issue | - | - | 1,802 | - | - |
| New borrowing, interest-bearing liabilities | - | - | 3,124 | 263 | 370 |
| Repayment and redemption of interest-bearing liabilities | -23 | -8 | -2,376 | -405 | -454 |
| Change in overdraft facility | 48 | 159 | 33 | -68 | -212 |
| Cash flow from financing activities | -244 | -62 | 2,314 | -423 | -509 |
| Cash flow for the period | -164 | -27 | 0 | 0 | 0 |
| Cash and cash equivalents at beginning of period | 164 | 27 | 0 | 0 | 0 |
| Cash and cash equivalents at end of period | 0 | 0 | 0 | 0 | 0 |
DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–JUNE 2017 Stefan Jönsson, Technical Manager, Östersund. 25
Diös owned 347 properties in 10 locations from Borlänge in the south to Luleå in the north. The total leasable area was 1,579,567 square metres and the economic occupancy rate, based on concluded leases at 30 June, 91 per cent. Diös invested SEK 290 million in new builds, conversions and extensions over the period. In terms of value, the largest share of the portfolio is located in Västerbotton, Retail and Jämtland. The total market value of the properties was SEK 19,027 million.
| By business area | Retail | Dalarna | Gävleborg | Väster norrland |
Jämtland | Väster botten |
Norr botten |
Diös Group |
|---|---|---|---|---|---|---|---|---|
| Rental income | 138 | 105 | 89 | 99 | 142 | 152 | 106 | 832 |
| Other income | 1 | 3 | 1 | 1 | 1 | 1 | 2 | 8 |
| Repair and maintenance | -4 | -5 | -4 | -3 | -6 | -8 | -3 | -33 |
| Tariff-based costs | -16 | -15 | -11 | -14 | -23 | -20 | -10 | -109 |
| Property tax | -9 | -4 | -4 | -5 | -6 | -8 | -7 | -44 |
| Other property costs | -23 | -9 | -9 | -10 | -13 | -14 | -9 | -87 |
| Property management | -6 | -5 | -4 | -7 | -7 | -6 | -5 | -40 |
| Operating surplus | 81 | 69 | 57 | 61 | 88 | 97 | 73 | 527 |
| Undistributed items | ||||||||
| Central administration | - | - | - | - | - | - | - | -36 |
| Net financial items | - | - | - | - | - | - | - | -88 |
| Property management income | - | - | - | - | - | - | 403 | |
| CHANGES IN VALUE | ||||||||
| Property, realised | - | - | 2 | - | - | - | - | 2 |
| Property, unrealised | 24 | 4 | 52 | 57 | 77 | 74 | 14 | 302 |
| Interest rate derivatives | - | - | - | - | - | - | - | 14 |
| Profit before tax | - | - | - | - | - | - | 721 | |
| CURRENT TAX | - | - | - | - | - | - | - | -17 |
| DEFERRED TAX | - | - | - | - | - | - | - | -123 |
| Non-controlling interests | - | - | - | - | - | - | - | -3 |
| Profit for period attributable to shareholders of the parent |
- | - | - | - | - | - | - | 578 |
| Leasable area, sq.m | 169,240 | 224,594 | 235,862 | 196,991 | 289,336 | 298,753 | 164,790 | 1,579,567 |
| Rental value | 153 | 118 | 101 | 115 | 157 | 166 | 112 | 920 |
| Economic occupancy rate, % | 90 | 89 | 89 | 86 | 91 | 92 | 95 | 90 |
| Surplus ratio, % | 59 | 66 | 64 | 62 | 62 | 64 | 69 | 63 |
| Changes in property portfolio | ||||||||
| Property portfolio, 1 January 2017 | 2,042 | 2,003 | 1,756 | 1,397 | 2,776 | 2,219 | 1,490 | 13,683 |
| ACQUISITIONS | 1,066 | - | - | 1,004 | - | 1,506 | 1,177 | 4,753 |
| Investments in new builds, conversions and extensions |
45 | 39 | 16 | 51 | 52 | 56 | 32 | 290 |
| SALES | - | - | -2 | - | - | - | - | -2 |
| Unrealised changes in value | 24 | 4 | 52 | 57 | 77 | 74 | 14 | 302 |
| Property portfolio, 30 June 2017 | 3,177 | 2,046 | 1,822 | 2,509 | 2,905 | 3,855 | 2,713 | 19,027 |
Columns/rows may not add up due to rounding.
Diös owned 313 properties in 10 locations from Borlänge in the south to Luleå in the north. The total leasable area was 1,351,198 square metres and the economic occupancy rate, based on concluded leases at 30 June, 90 per cent. Diös invested SEK 220 million in new builds, conversions and extensions over the period. In terms of value, the largest share of the portfolio is located in Jämtland, Västerbotten and Retail. The total market value of the properties was SEK 13,160 million.
Figures refer to SEK million unless otherwise indicated.
| By business area | Retail | Dalarna | Gävleborg | Väster norrland |
Jämtland | Väster botten |
Norr botten |
Diös Group |
|---|---|---|---|---|---|---|---|---|
| Rental income | 101 | 104 | 85 | 69 | 130 | 106 | 65 | 661 |
| Other income | 2 | 1 | 1 | 2 | 1 | 0 | 1 | 8 |
| Repair and maintenance | -3 | -7 | -5 | -4 | -6 | -8 | -5 | -37 |
| Tariff-based costs | -12 | -16 | -11 | -11 | -23 | -16 | -6 | -95 |
| Property tax | -7 | -4 | -4 | -3 | -6 | -5 | -3 | -32 |
| Other property costs | -17 | -10 | -8 | -9 | -13 | -10 | -6 | -73 |
| Property management | -4 | -4 | -4 | -4 | -8 | -5 | -4 | -33 |
| Operating surplus | 59 | 65 | 55 | 39 | 76 | 63 | 42 | 399 |
| Undistributed items | ||||||||
| Central administration | - | - | - | - | - | - | - | -32 |
| Net financial items | - | - | - | - | - | - | - | -108 |
| Property management income | - | - | - | - | - | - | 259 | |
| CHANGES IN VALUE | ||||||||
| Property, realised | - | - | - | -3 | -3 | -4 | - | -10 |
| Property, unrealised | -28 | -7 | 12 | 9 | 20 | 20 | 24 | 50 |
| Interest rate derivatives | - | - | - | - | - | - | - | 47 |
| Profit before tax | - | - | - | - | - | - | 346 | |
| CURRENT TAX | - | - | - | - | - | - | - | 31 |
| DEFERRED TAX | - | - | - | - | - | - | - | -40 |
| Non-controlling interests | - | - | - | - | - | - | - | -6 |
| Profit for period attributable to shareholders of the parent |
- | - | - | - | - | - | - | 331 |
| Leasable area, sq.m | 123,260 | 224,594 | 235,862 | 143,993 | 287,010 | 226,119 | 110,360 | 1,351,198 |
| Rental value | 112 | 115 | 97 | 82 | 146 | 117 | 70 | 739 |
| Economic occupancy rate, % | 91 | 90 | 88 | 84 | 89 | 91 | 93 | 89 |
| Surplus ratio, % | 59 | 63 | 65 | 56 | 58 | 59 | 64 | 60 |
| Changes in property portfolio | ||||||||
| Property portfolio, 1 January 2016 | 2071 | 1,938 | 1,663 | 1,632 | 2,712 | 2,046 | 1,319 | 13,381 |
| ACQUISITIONS | - | - | - | - | 102 | 68 | - | 170 |
| Investments in new builds, conversions and extensions |
20 | 34 | 11 | 22 | 46 | 56 | 31 | 220 |
| SALES | - | - | - | -341 | -256 | -64 | - | -661 |
| Unrealised changes in value | -28 | -7 | 12 | 9 | 20 | 20 | 24 | 50 |
| Property portfolio, 30 June 2016 | 2,063 | 1,965 | 1,686 | 1,322 | 2,624 | 2,126 | 1,374 | 13,160 |
Columns/rows may not add up due to rounding.
The company presents certain financial measures in the interim report that have not been defined in accordance with IFRS. The company considers that these measures provide valuable additional information for investors, analysts and the company's management, as they enable the evaluation of relevant trends and the company's performance. As not all companies calculate financial measures in the same way, these are not always comparable with
the measures used by other companies. These financial measures should therefore not be viewed as substitutes for IFRS-defined measures. The following table presents non-IFRS measures unless otherwise stated. Definitions of these measures are found on page 34.
Figures refer to SEK million unless otherwise indicated.
| 2017 3 months April-June |
2016 3 months April-June |
2017 6 months Jan-June |
2016 6 months Jan-June |
2016 12 months Jan–Dec |
|---|---|---|---|---|
| Number of shares at end of period, thousands (balance sheet KPIs)1 134,512 |
95,290 | 134,512 | 95,290 | 95,290 |
| Average number of shares, thousands (income statement KPIs)1 134,512 |
95,290 | 129,528 | 95,290 | 95,290 |
1 Historical data for the number of shares has been restated to take account of the effect of bonus issues (i.e. the value of the subscription rights) in issues of new shares and has been used in all KPI calculations for SEK per share. The conversion factor is 1.28.
The company governs its operations based partly on the objective of generating capital growth by increasing the surplus ratio and thereby the operating cash flow, i.e. increased income from property management. The target for the year is a surplus ratio in excess of 63 per cent. The income from property management is also the basis for what is distributed annually to the shareholders – around 50 per cent of the profit for the year after tax, excluding unrealised changes in value and deferred tax. Diös also presents the alternative performance indicators property management income, EPRA earnings and surplus ratio, as these are deemed to be relevant for investors and analysts, and provide additional information on the company's operating results. The indicators provide a picture which excludes factors that are partly beyond the control of the company, such as changes in the value of properties and derivatives.
| Property management income | 2017 3 months April-June |
2016 3 months April-June |
2017 6 months Jan-June |
2016 6 months Jan-June |
2016 12 months Jan–Dec |
|---|---|---|---|---|---|
| Profit before tax | 323 | 207 | 721 | 346 | 957 |
| Reversal | |||||
| Change in value of property | -94 | -39 | -304 | -40 | -327 |
| Change in value of derivatives | -5 | -28 | -14 | -47 | -91 |
| Property management income | 224 | 140 | 403 | 259 | 539 |
| EPRA earnings (property management income after tax) | |||||
| Property management income | 224 | 140 | 403 | 259 | 539 |
| Reversal current tax, property management income | -30 | -17 | -50 | -22 | -42 |
| Non-controlling interests' share of earnings | -2 | -4 | -3 | -6 | -7 |
| EPRA earnings / EPRA EPS | 192 | 119 | 350 | 231 | 490 |
| EPRA earnings / EPRA EPS per share | 1.43 | 1.25 | 2.70 | 2.42 | 5.14 |
| SURPLUS RATIO | |||||
| Operating surplus as per income statement | 286 | 212 | 527 | 399 | 806 |
| Rental income as per income statement | 432 | 330 | 832 | 661 | 1,323 |
| Surplus ratio, % | 66 | 64 | 63 | 60 | 61 |
Net asset value is the total capital which the company manages on behalf of its owners. Based on this capital, Diös aims to generate returns and growth while maintaining a low risk. Net asset value can also be calculated on a long-term and short-term basis. Long-term NAV is based on the balance sheet after adjusting for items which involve no nearterm outgoing payments, which in Diös' case refers, for example, to the fair value of financial instruments (derivatives) and deferred tax on temporary differences. The current net asset value consists of equity as per the balance sheet after adjusting for the market value of the deferred tax liability. EPRA NAV and EPRA NNNAV are designed to show the size of equity in the company in the event of a liquidation in the short term and long term. These performance indicators can be assessed against the current share price to show how the company's shares are valued in relation to equity.
| Net asset value | 2017 6 months Jan-June |
2016 6 months Jan-June |
2016 12 months Jan–Dec |
|---|---|---|---|
| Equity as per balance sheet | 6,438 | 3,818 | 4,313 |
| Equity held by non-controlling interest | -46 | -42 | -43 |
| Reversal as per balance sheet | |||
| Fair value of financial instruments | 29 | 87 | 43 |
| Deferred tax on temporary differences | 1,124 | 932 | 1,023 |
| EPRA NAV (long-term net asset value) | 7,545 | 4,795 | 5,336 |
| EPRA NAV (long-term net asset value) per share, SEK | 56.1 | 50.3 | 56.0 |
| Deductions | |||
| Fair value of financial instruments | -29 | -87 | -43 |
| Estimated actual deferred tax on temporary differences, approx. 4%1 | -199 | -169 | -180 |
| EPRA NNNAV (short-term net asset value) | 7,317 | 4,539 | 5,113 |
| EPRA NNNAV (short-term net asset value) per share, SEK | 54.4 | 47.6 | 53.7 |
1 Estimated actual deferred tax has been calculated at approx. four per cent based on a discount rate of three per cent. The calculation is based on the assumption that the property portfolio will be realised over a period of 50 years, with 10 per cent of the portfolio being sold directly subject to a nominal tax rate of 22 per cent, and the remaining 90 per cent being sold indirectly through companies subject to a nominal tax rate of 6 per cent. The use of tax loss carry-forwards is taken into account for the first two years.
The company's strategy is to own, develop and manage properties in a value-creating sustainable manner that promotes development while maintaining a stable financial risk. This is expressed in the ambition to ensure that the loan-to-value ratio does not exceed 60 per cent over extended periods and to maintain an equity/assets ratio in excess of 30 per cent. The loan-to-value ratio and equity ratio show the company's financial stability while the interest coverage ratio shows the company's ability to pay interest. These key ratios are deemed to be relevant for investors and analysts from a financial risk perspective. They also constitute covenants from the company's lenders and the Board has defined targets for these key ratios, which are used to govern the company's activities.
| Loan-to-value ratio | 2017 3 months April-June |
2016 3 months April-June |
2017 6 months Jan-June |
2016 6 months Jan-June |
2016 12 months Jan–Dec |
|---|---|---|---|---|---|
| Interest-bearing liabilities | 11,095 | 7,970 | 8,013 | ||
| Investment properties | 19,027 | 13,160 | 13,683 | ||
| Loan-to-value ratio, % | 58.3 | 60.6 | 58.6 | ||
| Equity/assets ratio | |||||
| Equity | 6,438 | 3,818 | 4,313 | ||
| Total assets | 19,317 | 13,393 | 13,920 | ||
| Equity/assets ratio, % | 33.3 | 28.5 | 31.0 | ||
| Interest coverage ratio | |||||
| Property management income | 224 | 140 | 403 | 259 | 539 |
| Reversal | |||||
| Financial costs | 47 | 55 | 90 | 108 | 204 |
| Total | 271 | 195 | 493 | 367 | 743 |
| Financial costs | 47 | 55 | 90 | 108 | 206 |
| Interest coverage ratio, times | 5.8 | 3.5 | 5.5 | 3.3 | 3.6 |
Other key ratios refer to a number of measures of return which the company uses to describe various aspects of the statement of financial position and to give investors and analysts further information about the operations. The company reports return on equity, equity per share and cash flow per share, as these key ratios show the company's earnings and profitability, the distribution of equity per share and the company's ability to meet its obligations and pay dividends to the shareholders. These alternative key ratios supplement the picture of Diös' financial performance and give investors and analysts a better understanding of the company's return and results. The yield shows earnings from the properties in relation to their market value. It thus shows the profitability of the properties and is deemed to provide additional information to investors and analysts on the risk in the property portfolio. The debt/equity ratio, which shows the ratio of interest-bearing liabilities to equity, is presented to further illustrate Diös' financial situation. The measure gives investors and analysts a further basis on which to assess the company's financial stability.
| 2017 3 months April-June |
2016 3 months April-June |
2017 6 months Jan-June |
2016 6 months Jan-June |
2016 12 months Jan–Dec |
|
|---|---|---|---|---|---|
| Return on equity, % | 3.9 | 5.0 | 10.8 | 8.8 | 6.4 |
| Operating surplus, SEKm | 286 | 212 | 527 | 399 | 806 |
| Yield, % | 1.5 | 1.6 | 2.8 | 3.0 | 5.9 |
| Equity per share, SEK | 47.9 | 40.1 | 47.9 | 40.1 | 45.3 |
| Rental income, SEKm | 432 | 330 | 832 | 661 | 1,323 |
| Cash flow per share, SEK | |||||
| Profit before tax | 323 | 207 | 721 | 346 | 957 |
| Reversal unrealised change in value | |||||
| Properties | -93 | -40 | -302 | -50 | -337 |
| Derivatives | -5 | -29 | -14 | -47 | -91 |
| Depreciation | 1 | 1 | 1 | 1 | 2 |
| CURRENT TAX | -9 | 35 | -17 | 31 | -26 |
| Total | 217 | 174 | 389 | 281 | 504 |
| Average number of shares, thousands | 134,512 | 95,290 | 129,528 | 95,290 | 95,290 |
| Cash flow per share, SEK | 1.61 | 1.82 | 3.00 | 2.95 | 5.29 |
| Earnings per share, SEK | 1.88 | 1.99 | 4.46 | 3.47 | 8.66 |
| Debt/equity ratio, times | 1.7 | 2.1 | 1.9 |
Diös also reports figures for economic occupancy rate, rental value and net leasing, as these indicators provide a more in-depth picture of changes in income from the properties and thus also of revenue growth in the company as a whole. These performance indicators are widely used in the industry and enable investors and analysts to compare different property companies.
| 2017 3 months April-June |
2016 3 months April-June |
2017 6 months Jan-June |
2016 6 months Jan-June |
2016 12 months Jan–Dec |
|
|---|---|---|---|---|---|
| Rental value, SEKm | 474 | 368 | 920 | 739 | 1,478 |
| Economic occupancy rate, % | 91 | 90 | 90 | 89 | 90 |
| Number of properties at end of period | 347 | 313 | 314 | ||
| Leasable area at end of period, sq.m | 1,579,567 | 1,351,198 | 1,353,525 | ||
| Market value of properties, SEKm | 19,027 | 13,160 | 13,683 |
| OPERATIONAL TARGETS | Target 2017 | Outcome Q2 2017 |
|---|---|---|
| Economic occupancy rate, % | 92 | 90 |
| Surplus ratio, % | 63 | 63 |
| Energy use, % | -4 | -1 |
| Employee satisfaction index | 76 | - |
| Customer satisfaction index | 70 | - |
| FINANCIAL TARGETS | Target 2017 | Outcome Q2 2017 |
|---|---|---|
| Return on equity, % | Risk-free rate1 + 6% | 222 |
| Distribution of profit for the year3 | ~50 | - |
| Loan-to-value ratio, % | <60 | 58.3 |
| Equity/assets ratio, % | >30 | 33.3 |
1 Risk-free rate as represented by an average five-year government bond +6%.
2 Return on equity has been annualised.
3 Profit after tax, excluding unrealised changes in value and deferred tax.
| Date | Event | Increase in number of shares |
Increase in share capital, SEK |
Total number of shares |
Total share capital, SEK |
Face value, SEK |
|---|---|---|---|---|---|---|
| 1 Jan 2005 | At the start of the period | - | - | 10,000 | 100,000 | 10.00 |
| 21/06/2005 | Split | 990,000 | - | 1,000,000 | 100,000 | 0.10 |
| 21/06/2005 | New issue | 1,489,903 | 148,990 | 2,489,903 | 248,990 | 0.10 |
| 14/09/2005 | Non-cash issue | 1,503,760 | 150,376 | 3,993,663 | 399,366 | 0.10 |
| 02/01/2006 | Bonus issue | - | 39,537,264 | 3,993,663 | 39,936,630 | 10.00 |
| 02/01/2006 | Split | 15,974,652 | - | 19,968,315 | 39,936,630 | 2.00 |
| 18/05/2006 | New issue | 8,333,400 | 16,666,800 | 28,301,715 | 56,603,430 | 2.00 |
| 11/07/2006 | Non-cash issue | 5,000,000 | 10,000,000 | 33,301,715 | 66,603,430 | 2.00 |
| 19/04/2007 | Non-cash issue | 666,250 | 1,332,500 | 33,967,965 | 67,935,930 | 2.00 |
| 29/10/2010 | Non-cash issue | 99,729 | 199,458 | 34,067,694 | 68,135,388 | 2.00 |
| 14/12/2010 | New issue | 3,285,466 | 6,570,332 | 37,353,160 | 74,705,720 | 2.00 |
| 17/12/2010 | New issue | 11,407 | 22,814 | 37,364,567 | 74,728,534 | 2.00 |
| 05/12/2011 | New issue | 22,854,136 | 45,708,272 | 60,218,703 | 120,436,806 | 2.00 |
| 14/12/2011 | New issue | 14,510,431 | 29,020,862 | 74,729,134 | 149,457,668 | 2.00 |
| 27/01/2017 | New issue | 59,629,748 | 119,259,496 | 134,358,882 | 268,717,164 | 2.00 |
| 31/01/2017 | New issue | 153,556 | 307,112 | 134,512,438 | 269,024,276 | 2.00 |
| 2017 6 months |
2016 6 months |
2016 12 months |
|
|---|---|---|---|
| INCOME STATEMENT | Jan-June | Jan-June | Jan–Dec |
| Net sales | 91 | 73 | 137 |
| Gross profit | 91 | 73 | 137 |
| Central administration | -112 | -97 | -178 |
| Operating profit | -21 | -24 | -41 |
| Income from interests in Group companies | 300 | 300 | 300 |
| Financial income | 143 | 127 | 236 |
| Financial costs | -104 | -100 | -184 |
| Profit after financial items | 318 | 303 | 311 |
| CURRENT TAX | - | - | - |
| Profit after tax | 318 | 303 | 311 |
| STATEMENT OF COMPREHENSIVE INCOME | |||
| Profit after tax | 318 | 303 | 311 |
| Comprehensive income for the year | 318 | 303 | 311 |
| Condensed parent company balance sheet, SEKm ASSETS |
2017 30 June |
2016 30 June |
2016 31 Dec |
|---|---|---|---|
| Projects in progress | - | 1 | - |
| Intangible non-current assets | 2 | 3 | 3 |
| Machinery and equipment | 1 | 2 | 1 |
| Interests in Group companies | 2,124 | 270 | 270 |
| Non-current receivables from Group companies | 9,214 | 7,297 | 7,447 |
| Total non-current assets | 11,341 | 7,573 | 7,721 |
| Current receivables from Group companies | 1,802 | 1,293 | 1,272 |
| Other current receivables | 22 | 8 | 24 |
| Cash and cash equivalents | - | - | - |
| Total current assets | 1,824 | 1,301 | 1,296 |
| TOTAL ASSETS | 13,165 | 8,874 | 9,017 |
| EQUITY AND LIABILITIES | |||
| Equity | 2,978 | 1,119 | 1,127 |
| Non-current liabilities to credit institutions | 3,530 | 2,044 | 2,145 |
| Non-current liabilities to Group companies | 4,605 | 3,537 | 3,633 |
| Current liabilities to Group companies | 1,971 | 1,960 | 2,059 |
| Overdraft facilities | 51 | 182 | 17 |
| Trade payables | 2 | 1 | 2 |
| Other current liabilities | 28 | 31 | 34 |
| Total current liabilities | 2,052 | 2,174 | 2,112 |
| TOTAL LIABILITIES AND EQUITY | 13,165 | 8,874 | 9,017 |
Q3 Interim report January–September 2017 25 October 2017
There have been no significant events since the reporting date.
The Board of Directors and Chief Executive Officer declare that the interim report gives a true and fair view of the company's and Group's operations, financial position and income, and describes the principal risks and uncertainties faced by the company and the companies in the Group. This interim report has not been subject to review by the company's auditor.
Financial reports can be viewed in full on Diös' website www.dios.se
Östersund, 07 July 2017
Bob Persson Chairman
Ragnhild Backman Board member
Anders Bengtsson Board member
Maud Olofsson Board member
Anders Nelson Board member
Tomas Mellberg Board member Employee representative
Knut Rost Chief Executive Officer
Actual number of shares outstanding at the end of the period.
Profit for the period divided by average equity. Average equity is calculated as the sum of the opening and closing balance divided by two.
Interest-bearing and other liabilities relating to properties divided by the carrying amount at the end of the period.
Operating surplus for the period divided by the properties' market value at the end of the period.
Equity at the end of the period divided by the number of shares outstanding at the end of the period.
The rental income for the period divided by the rental value at the end of the period.
Estimated market rent for unoccupied premises divided by the total rental value.
Property management income less nominal tax attributable to property management income, divided by average number of shares. Taxable property management income refers to property management income less, inter alia, tax-deductible depreciation and amortisation and conversion projects.
Equity at the end of the period after reversal of interest rate derivatives and deferred tax attributable to temporary differences in properties and the minority's share of equity, divided by the number of outstanding shares at the end of the period.
Equity at the end of the period adjusted for actual deferred tax instead of nominal deferred tax and minority share of equity, divided by the number of shares outstanding at the end of the period.
Revenue less property costs, costs for central administration and net financial items.
Number of shares outstanding at the beginning of the period, adjusted by the number of shares issued or withdrawn during the period weighted by the number of days that the shares were outstanding, divided by the total number of days in the period.
Rents invoiced for the period minus rent losses and rent discounts.
Rent at the end of the period plus addition for estimated market rent for unoccupied floor space.
Profit before tax, adjusted for unrealised changes in value plus depreciation less current tax, divided by the average number of shares.
Net annual rent, excluding discounts and supplements, for newly signed, terminated and renegotiated contracts. The length of contracts is not taken into account.
Profit for the period after tax, attributable to shareholders, divided by the average number of shares.
Income from property management after reversal of financial costs, divided by financial costs for the period.
Interest-bearing liabilities divided by shareholders' equity at the end of the period.
Equity divided by total assets at the end of the period.
Operating surplus for the period divided by the rental income for the period.
DIÖS FASTIGHETER AB (PUBL) FRITZHEMSGATAN 1A, BOX 188, SE-831 22 ÖSTERSUND, SWEDEN TEL: +46 (0)770 - 33 22 00 CRN: 556501-1771. REGISTERED OFFICE IN ÖSTERSUND. WWW.DIOS.SE
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