Quarterly Report • Apr 24, 2018
Quarterly Report
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INTERIM REPORT JANUARY – MARCH 2018
RENTAL INCOME INCREASED BY 11 PER CENT AND WAS SEK 445 MILLION (400)
PROPERTY MANAGEMENT INCOME WAS SEK 187 MILLION (179)
UNREALISED CHANGES IN VALUE OF PROPERTIES WERE SEK 109 MILLION (210) AND UNREALISED CHANGES IN VALUE OF DERIVATIVES WERE SEK 6 MILLION (9)
THE PROFIT AFTER TAX WAS SEK 229 MILLION (326)
EARNINGS PER SHARE WERE SEK 1.70 (2.60)1
RENTAL GROWTH LIKE-FOR-LIKE 3.9%
NET PROFIT FOR THE PERIOD, SEKm 2018 3 months Jan-Mar 2,017 3 months Jan-Mar 2,017 12 mths Jan-Dec Rental income 445 400 1,700 Operating surplus 250 241 1,080 Property management income 187 179 822 Profit before tax 299 398 1,261 Profit after tax 229 326 1,029 Surplus ratio, % 56 60 64 Occupancy rate, % 92 90 91 Equity/assets ratio, % 35.3 33.5 34.9 Property loan-to-value ratio, % 56.7 59.1 57.1 Equity per share, SEK 52.9 48.0 51.2 EPRA NAV per share, SEK 61.6 56.0 59.7
For definitions of key ratios, see page 27.
1The result for 2017 was effected by a one-off effect of a discount on deferred tax.
Rental income continues to increase, the occupancy rate is improving and our financial position is becoming stronger. The loan-to-value ratio is down to 56.7 per cent and the equity/assets ratio has increased to 35.3 per cent.
Property management income has increased by 5 per cent compared to last year and the occupancy rate is now at 92 per cent. Rental growth for comparable properties amounts to 3.9 per cent. During the quarter, we reached the full effect of the acquisition of 32 properties in Luleå, Umeå and Sundsvall, which has had a positive impact on earnings. However, there was a negative impact on earnings from winter-related costs, which are approximately SEK 22 million higher than during the same period last year.
The foundation for profitable business deals is good relationships. You should be able to replicate a good business deal many times over. We are focusing more and more on how we can help our tenants become more profitable. By creating the right mix of tenants, we can increase the flow at the site. We provide the premises, but our tenants are the ones who create the atmosphere and make it attractive. When our tenants succeed, we succeed too.
We are continuing to pursue our strategy of concentrating our portfolio to the ten growth cities that we have identified. During the first quarter, we sold our entire holding in Ljusdal and we took possession of the two acquired properties in downtown Skellefteå.
Growth in our priority cities continues to be strong. According to the latest population statistics, all of these cities are growing. We have noticed very little of the concerns voiced by property developers in metropolitan regions. The economic trend in Umeå is strongest of all, which is one of the primary reasons for increasing our presence there via several acquisitions that were made last year. Rent trends remains positive and over the last three years, they increased by just over 100 per cent for modern, centrally located office facilities. Higher rents and higher demand makes new construction attractive and we have many interesting projects underway. Examples are the expansion of the Saga property in
downtown Umeå and new residential property at Vasaplan, which will increase both the density and attractiveness of the city.
The proposed changes in interest deduction limitations and the corporate tax rate that were presented by the Ministry of Finance will, in their current form, have an initial positive impact on our earnings. A revaluation of deferred tax liability with have a one-off positive impact and the lower corporate tax rate will impact the amount of tax that we pay. With interest rates still low and a strong cash flow, the interest deduction limitations will not affect us at this time. However, over time, the proposal could result in lower investments and less construction in the market overall.
Our financial KPIs continue to improve. The loan-to-value ratio is now 56.7 per cent and the equity/assets ratio is 35.3 per cent. Access to capital from both banks and the capital market is good. During the quarter, we increased our certificate programme by SEK 200 million, with even better terms than before.
Our strong performance continues. Market conditions are favourable and our organisation delivers. In our priority cities, we strive to be the first choice for tenants by really making a difference. Providing more than just space is becoming increasingly important. We add value by listening to and understanding our tenants and the needs in our cities, along with creating vacancy chains and attractive venues. Sustainable urban development creates growth for us and, ultimately for our shareholders as well.
Diös aims to be the market-leading property company in northern Sweden. We own, manage and develop properties in the centre of ten growth cities.
Our strategy is urban development. By developing our properties with attractive meeting places, shops, offices and homes, we enable our tenants, our cities and ourselves to grow. Deals and relationships are the key to continued success. We will meet the needs of tenants through local presence, a high degree of competency and long-term sustainable development.
NO. OF PROPERTIES
PROPERTY VALUE, SEK BN
LEASABLE AREA,
THOUSAND SQ.M
Our employees know that long-term business is all about uncomplicated meetings, availability and decisiveness. We have in-depth knowledge of local areas and are courageous. It means that we can and do make a difference. Our business area managers lead the local teams with the goal of creating sustainable urban development.
E-trade developments, new logistics opportunities and types of office environments, and the need for attractive venues in city centres are creating new conditions and opportunities for us to develop our priority cities. In society, fundamental behavioural changes are occurring in how we shop, work, entertain ourselves and socialize. The company's strong cash flow makes it possible to invest in and develop attractive venues at city centres, where the flow and activity level of people is high. We're convinced that the challenge lies in making city centres more attractive, by changing the offering and perhaps above all, creating more inspiring environments.
Long-term relationships are built on trust. We strive to have a reputation of honesty, expertise and professionalism in everything we do. We run our business on a foundation of high business ethics and zero tolerance to corruption. Our code of conduct is based on the ten principles of the UN Global Compact.
VISION To be the most active and sought-after landlord in our market.
To own and develop commercial and residential properties in priority growth cities from local offices. We create long-term values with a focus on the tenant by operating in a responsible and sustainable manner.
DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2018 5
Our promise is that everything is possible. We strive to be perceived as simple, close and active. Simple by being open and honest. Close by having a local presence, being available and taking an interest. Active by developing, growing and taking advantage of opportunities.
| INCOME STATEMENT | 2018 3 mths Jan-Mar |
2017 3 mths Jan-Mar |
2017 12 mths Jan-Dec |
|---|---|---|---|
| Rental income | 445 | 400 | 1,700 |
| Other property management income | 5 | 5 | 19 |
| Property costs | -200 | -164 | -639 |
| Operating surplus | 250 | 241 | 1,080 |
| Central administration | -17 | -21 | -73 |
| Net financial items | -46 | -41 | -185 |
| Property management income | 187 | 179 | 822 |
| Change in value, properties | 106 | 210 | 412 |
| Change in value, interest rate derivatives | 6 | 9 | 27 |
| Profit before tax | 299 | 398 | 1,261 |
| Current tax | -17 | -8 | -43 |
| Deferred tax | -53 | -64 | -189 |
| Profit after tax | 229 | 326 | 1,029 |
| Profit attributable to shareholders of the parent company | 229 | 325 | 1,027 |
| Profit attributable to non-controlling interests | 0 | 1 | 2 |
| Total | 229 | 326 | 1,029 |
| STATEMENT OF COMPREHENSIVE INCOME | |||
| Profit after tax | 229 | 326 | 1,029 |
| Comprehensive income for the period | 229 | 326 | 1,029 |
| Comprehensive income attributable to shareholders of the parent company | 229 | 325 | 1,027 |
| Comprehensive income attributable to non-controlling interests | 0 | 1 | 2 |
| Total | 229 | 326 | 1,029 |
| Earnings per share, SEK | 1.70 | 2.60 | 7.78 |
| Number of shares at end of period ('000) | 134,512 | 134,512 | 134,512 |
| Average number of shares ('000) | 134,512 | 124,489 | 132,041 |
| Number of treasury shares at end of period | 0 | 0 | 0 |
| Average number of treasury shares | 0 | 0 | 0 |
Historical data for the number of shares has been restated to factor in 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. There is no dilutive effect, as no potential shares (such as convertibles) exist.
Accounting policies are presented on page 21.
Property management income for the period, i.e. income excluding changes in value and tax, was SEK 187 million (179). For comparable properties, property management income was 7 per cent lower compared with the previous year, which is primarily attributable to the cold winter, with much snow.
The rental income for the reporting period was SEK 445 million (400), representing a 92 per cent (90) economic occupancy rate. For comparable properties rental income increased by 3.9 per cent year on year. Other property management income totalled SEK 5 million (5) and consisted mainly of costs for work in leased premises that are passed on to tenants.
Total property costs were SEK 200 million (164). Winter-related costs increased by SEK 22 million compared to the same period last year and are attributable to the cold winter, with much snow. Of total property costs, SEK 3 million (2) refers to work in leased premises for which the costs are passed on to tenants.
The operating surplus was SEK 250 million (241), representing a surplus ratio of 56 per cent (60). The lower surplus ratio is mainly due to increased property costs. For comparable properties, our operating surplus increased by 4.5 per cent compared with the previous year.
The central administration expense was SEK 17 million (21). Central administration for 2017 includes a non-recurring item of SEK 4 million, which refers to restructuring costs incurred in connection with acquisitions. Central administration includes costs for Group-wide functions such as senior management, IT, annual reports, auditors' fees, legal advice and so on.
Net financial items for the period were SEK -46 million (-41). The interest costs for the period, including costs for interest rate derivatives and loan commitments, represent borrowings at an average annual interest rate of 1.5 per cent (1.7).
The average valuation yield at the end of the period was 6.04 per cent (6.13), which at portfolio level is a decrease of 0.04 percentage points during the period. The positive value change of SEK 109 million (210) is attributable to a higher net operating income and lower required rates of return. Last year's unrealised value changes were impacted by a one-off effect of a discount on deferred tax in connection with property transactions. The change in value represented 0.6 per cent (1.1) of market value. At 31 March the market value was SEK 19,739 million (18,811).
During the period 4 properties (0) were sold, resulting in a realised change in value of SEK -3 million (0). 2 properties (33) were acquired during the period.
DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2018 7
OPERATING SURPLUS AND SURPLUS RATIO1
1 The figures for property management income, operating surplus and surplus ratio in Q1 2018 are on a rolling 12-month basis.
The portfolio of interest rate derivatives has been measured 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 an accounting nature and does not affect cash flow.
During the period unrealised changes in value on derivatives totalled SEK 6 million (9), which have been fully recognised in the income statement. The change in the market values of derivatives is primarily attributable to the time effect.
The profit before tax was SEK 299 million (398). The change in profit primarily results from lower unrealised value changes for properties and higher winter-related costs.
The profit after tax was SEK 229 million (326). Current tax totalled SEK -17 million (-8). This is mainly attributable to tax in subsidiaries which do not have the right to offset losses against Group contributions. The deferred tax was SEK -53 million (-64).
The nominal corporate tax rate in Sweden is 22 per cent. Thanks 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 losses are estimated at SEK 15 million (172). The Group also has untaxed reserves of SEK 148 million (116). The fair value of the properties exceeds their tax base by SEK 5,495 million (4,936). The tax on the net balance of these items at the full nominal tax rate of 22 per cent less the deferred tax attributable to asset purchases has been recognised as a deferred tax liability.
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. In addition, tax regulations are complex and hard to interpret. The application of the regulations may also change over time. Diös has no ongoing tax disputes.
| SEKm | Basis for current tax |
Basis for deferred tax |
|---|---|---|
| Property management income | 187 | |
| Tax-deductible | ||
| depreciation and amortisation | -56 | 56 |
| conversion projects | -19 | 19 |
| Other tax adjustments | -32 | 70 |
| Taxable property management income | 80 | 145 |
| Income tax at 22% if tax losses are not used | 17 | |
| Sale of properties | 2 | -21 |
| Change in value, properties | 0 | 109 |
| Taxable profit before tax losses | 81 | 233 |
| Tax losses, opening balance | -21 | 21 |
| Tax losses, closing balance | 15 | -15 |
| Taxable profit | 75 | 239 |
| Tax for the period as per income statement | 17 | 53 |
8 DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2018
The Ministry of Finance's proposal on interest deduction limitations, which is expected to enter into force on 1 January 2019, will change taxation in the property sector. Diös has conducted an analysis of the effects that could result from this proposal. For Diös, a lowering of the tax rate to 20.6 per cent, in combination with the interest deduction limitations, with initially have a positive effect due to the current low rates of interest. However, rising interest rates will increase the negative impact (given an otherwise unchanged cash flow). An income tax reduction will result in a revaluation of deferred lax liability, which would lead to a positive one-off impact for Diös.
| TENANTS AT 31 MARCH 2018 | No. of contracts |
Annual contract value, SEK '000 |
Average contract term, years |
|---|---|---|---|
| Swedish Transport Administration | 26 | 64,502 | 2.3 |
| Municipality of Östersund | 111 | 37,525 | 2.7 |
| Swedish Public Employment Service | 38 | 32,113 | 2.9 |
| Åhléns AB | 5 | 22,786 | 5.3 |
| Swedbank AB | 9 | 21,835 | 3.2 |
| Telia Sverige AB | 26 | 20,697 | 10.5 |
| Swedish Police Authority | 34 | 20,014 | 3.5 |
| Folksam Ömsesidig Sakförsäkring | 43 | 19,320 | 5.3 |
| Swedish Social Insurance Agency | 21 | 18,437 | 3.3 |
| Municipality of Falun | 6 | 17,920 | 2.2 |
| Total, largest tenants | 319 | 275,149 | 3.7 |
| ASSETS | 2018 March 31 | 2017 March 31 | 2017 Dec 31 |
|---|---|---|---|
| Investment properties | 19,739 | 18,811 | 19,457 |
| Other non-current assets | 60 | 47 | 46 |
| Current receivables | 266 | 238 | 173 |
| Cash and cash equivalents | 123 | 164 | 32 |
| TOTAL ASSETS | 20,188 | 19,260 | 19,708 |
| EQUITY AND LIABILITIES | |||
| Equity | 7,116 | 6,452 | 6,887 |
| Deferred tax liability | 1,238 | 1,073 | 1,197 |
| Provisions | 9 | 9 | 9 |
| Interest-bearing liabilities | 11,186 | 11,117 | 11,104 |
| Current liabilities | 639 | 609 | 511 |
| TOTAL EQUITY AND LIABILITIES | 20,188 | 19,260 | 19,708 |
| Equity | Attributable to shareholders of the parent |
Attributable to minority interests |
|
|---|---|---|---|
| Equity, 31 Dec 2016 | 4,313 | 4,270 | 43 |
| Profit for the period after tax | 326 | 325 | 1 |
| Comprehensive income for the period | 326 | 325 | 1 |
| Issue of new shares | 1,853 | 1,853 | - |
| Issue costs | -51 | -51 | - |
| Tax effect of issue costs | 11 | 11 | - |
| Equity at 31 March 2017 | 6,452 | 6,408 | 44 |
| Profit for the period after tax | 703 | 702 | 1 |
| Comprehensive income for the period | 703 | 702 | 1 |
| Dividend | -269 | -269 | - |
| Equity, 31 Dec 2017 | 6,887 | 6,841 | 45 |
| Profit for the period after tax | 229 | 229 | 0 |
| Comprehensive income for the period | 229 | 229 | 0 |
| Equity at 31 March 2018 | 7,116 | 7,070 | 45 |
Our portfolio is well diversified, comprising residential, office, retail and industrial premises. A broad choice of large and small premises in central locations enables us to offer flexible solutions and build longterm relationships. At the end of the period the portfolio comprised 93 per cent (93) commercial properties and 7 per cent (7) residential properties based on rental value by type of premises.
Our investments in our existing portfolio comprise conversions and extensions as well as energy-saving measures. The investments must result in a higher occupancy rate, increased customer satisfaction, lower costs and a reduced impact on the environment. During the period SEK 164 million (155) was invested in 476 projects (438). At the end of the period 17 major1 development projects were ongoing, with a remaining investment volume of SEK 260 million and a total investment volume of SEK 888 million. During the period 73 new project investments were approved. The return on completed investments for the period was 12.1 per cent on the invested amount while the return on our ongoing projects was 6.2 per cent. 1 Initial investment volume > SEK 4 million.
Our existing and potential development rights cover a gross area of around 150,000 square metres, of which around 50 per cent refers to development rights for residential properties and 50 per cent refers to development rights for commercial properties. Among these, Diös has identified various types of projects with a total potential future investment volume of around SEK 4,000 million.
Diös made limited use of its own development rights during the period. The Falan 20 residential property project in Falun got underway during the second quarter and the Riverside hotel project in Sundsvall is expected to be initiated in 2018.
At each closing date all properties are measured at fair value. 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. Diös' property portfolio is divided into a
main portfolio and a subsidiary portfolio. The main portfolio comprises around 75 per cent of the property value, or SEK 14,924 million, and 120 properties. The valuation method requires that an external valuation of the entire main portfolio be made each year. The external valuation is made by valuation consultants Savills, who assess 25 per cent of the main portfolio each quarter. All properties in the main portfolio are also physically inspected by Savills within a three-year period. In addition to the regular inspections, physical visits are also made after major changes. Properties in the secondary portfolio are valued with the help of Savills. All property valuations are based on a number of assumptions about the future and the market. Savills' calculations thus have an uncertainty range of +/-7.5 per cent. For Diös, this translates into a value range of SEK 18,259-21,219 million. No changes in terms of valuation methodology or approach were made during the period. The valuations were made in accordance with IFRS 13 level 3.
| CHANGE IN PROPERTY VALUE | 31 Mar 2018 | 31 Mar 2017 |
|---|---|---|
| Property portfolio, 1 January | 19,457 | 13,683 |
| Acquisitions | 68 | 4,763 |
| Investments in new builds, extensions and conversions | 164 | 155 |
| Sales | -69 | - |
| Unrealised changes in value | 109 | 210 |
| Reclassifications | 10 | - |
| Value of property holding 31 March | 19,739 | 18,811 |
Our strategy is to continuously strive to concentrate our property portfolio to central locations in our priority localities.
The properties called Polaris 39 and Idun 10 in Skellefteå were taken over during the first quarter. Four properties were in Ljusdal were sold, which comprise Diös' entire holding there.
New builds, conversions and extensions added SEK 164 million (155) to the value of Diös' property portfolio for the period. We are continually adjusting our portfolio in order to create improvements and efficiencies for our tenants.
| 31 Mar 2018 |
31 Mar 2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 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 value 1 , % |
7.0-5.6 | 6.7-5.9 | 5.3-4.7 | 7.9-7.0 | 7.0-6.5 | 7.0-5.7 | 6.9-6.0 | 5.5-4.8 | 8.2-7.3 | 7.0-6.5 |
| Cost of capital for discounting to present value, % | 8.1 | 8.2 | 7.3 | 9.8 | 8.3 | 8.1 | 8.2 | 7.4 | 9.9 | 8.8 |
| Long-term vacancy, % | 5.1 | 3.7 | 1.8 | 11.9 | 4.8 | 5.1 | 3.4 | 1.8 | 12.0 | 6.0 |
| Inflation, % | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
1 From lower to upper quartiles in the portfolio.
Unrealised changes in value for the period totalled SEK 109 million (210) and were due to higher net operating income and lower required rates of return.
| 31 Mar 2018 | |||
|---|---|---|---|
| SEKm | % | ||
| Change in net operating income | 51 | 47 | |
| Change in required rate of return | 49 | 45 | |
| Capex | 9 | 8 | |
| Total | 109 | 100 |
| Number contract |
Contract value SEKm |
Share of value, % |
|
|---|---|---|---|
| Commercial, maturity | |||
| 2018 | 546 | 103 | 6 |
| 2019 | 888 | 342 | 19 |
| 2020 | 727 | 344 | 19 |
| 2021 | 597 | 344 | 20 |
| 2022+ | 286 | 440 | 25 |
| Total | 3,044 | 1,574 | 89 |
| Residential | 1,632 | 124 | 7 |
| Other leases1 | 4,179 | 62 | 4 |
| TOTAL | 8,855 | 1,760 | 100 |
1Other leases includes garages and parking lots.
Net leasing for the period was SEK -1 million (18). Noteworthy lets during the quarter included: Pöyry Sweden AB at Gösen 7, Luleå, Inpuls Träning i Luleå AB at Strutsen 14, Luleå and Swedbank AB at Stranden 19:6, Mora. The average contract term for commercial premises at 31 March was 3.4 years (3.7).
Vacancies fell during the quarter and at 31 March the economic vacancy rate was 8 per cent (10) and vacant area was 14 per cent (16). Economic vacancies are highest in office and retail premises while physical vacancies are highest in office and industrial premises. The economic vacancy rate for the period, excluding discounts, was 8 per cent (10).
| Heating1 | kWh/sq.m | 37.6 | 37.5 |
|---|---|---|---|
| District cooling2 | kWh/sq.m | 5.0 | 5.6 |
| Electricity3 | kWh/sq.m | 15.8 | 15.9 |
| Carbon dioxide, total4 | Kg CO2/kWh | 1.4 | 1.4 |
| Water | m3 /sq.m |
0.1 | 0.1 |
1Heating has been adjusted to a normal year.
2 District cooling does not include self-produced cooling.
3Electricity from energy use and tenants where electricity is included in the lease.
4 Carbon dioxide from electricity and heating.
All values have been provided by the suppliers. Floor area refers to tempered area. The comparative figures have been updated for the current portfolio and thus show changes for comparable properties. Water consumption is a prognosis since it is not measured at several of our properties.
Total energy use was unchanged compared with the same period last year. For the full-year 2018, our aim is to achieve a decrease in energy use of 3 per cent, which will be possible by increasing our energy optimisation efforts and further developing our technology strategies. Use of district cooling is increasing as we replace cooling machine solutions with district cooling solutions, and thus cut electricity and refrigerant use. In addition, more properties are installing district cooling. To lower the environmental impact, we only purchase origin-labelled electricity and we can now see that 98 per cent of our energy use comes from renewable sources.
At 31 March 2018, 35 per cent (33) of Diös' total assets of SEK 20,188 million was funded through equity, 55 per cent (58) through debt securities and 10 per cent (9) through other capital. Interest-bearing liabilities comprise bank financing, covered bonds and commercial paper.
At 31 March 2018, equity was SEK 7,116 million (6,452). The equity/assets ratio was 35.3 per cent (33.5), which exceeds the target of 30 per cent.
Interest-bearing liabilities in the Group were SEK 11,186 million (11,117) at 31 March 2018. Of total interest-bearing liabilities, SEK 9,180 million (10,102) refers to bank financing, SEK 1,206 million (1 015) to covered bonds and SEK 800 million (0) to commercial paper. The bonds are issued through the covered MTN programme of a jointly controlled company, Svensk FastighetsFinansiering AB (SFF). The loan-to-value ratio in the Group was 56.7 per cent (59.1) at the end of the period. The average annual interest rate at 31 March 2018, including the cost of derivatives and loan commitments, was 1.5 per cent (1.6) and the interest coverage ratio 4.9 times (5.2).
Out of the Group's total interest-bearing liabilities, SEK 4,600 million (600) has been hedged through derivatives. At 31 March 2018 Diös' derivatives portfolio excluding interest rate caps had a market value of SEK -10 million (-35). Interest rate caps had a market value of SEK
1 million (0). The financial instruments limit the impact of changes in interest rates on our average borrowing cost. The value of derivatives is always zero at maturity. All financial instruments are measured at fair value and are classified in Level 2 in accordance with IFRS 13, which means that the measurement is based on observable market data (see Note 21 in the Annual Report 2017). Changes in value are recognised through profit or loss.
If market interest rates increase by 1 percentage point
| AT 31 MARCH 2018 | Change in average annual interest rate, % |
Change in average annual interest cost, SEKm |
Change in market value, SEKm |
|---|---|---|---|
| Loan portfolio excl. derivatives | 0.3 | +31 | |
| Derivatives portfolio | -1.0 | -6 | +3 |
| Loan portfolio incl. derivatives | 0.2 | +25 | +3 |
The average fixed-rate term, including derivatives, was 2.2 years (1.9) and the average loan maturity 2.2 years (2.4). Of the Group's outstanding loans, SEK 8,163 million (7,197) is subject to fixed interest rates.
Consolidated cash and cash equivalents at the end of the period were SEK 123 million (164) and drawn overdraft facilities were SEK 0 million (0). The agreed limit on the overdraft facility was SEK 600 million (600).
| Loan maturity | ||||
|---|---|---|---|---|
| Loan amount, SEKm | Average annual interest rate1 , % |
Credit agreements, SEKm | Drawn, SEKm | |
| 3,290 | 0.8 | 1,793 | 1,793 | |
| 2,610 | 1.2 | 2,438 | 2,438 | |
| 5,287 | 1.4 | 5,987 | 5,487 | |
| - | - | 502 | 0 | |
| - | - | 1,750 | 771 | |
| - | - | 1,000 | 697 | |
| 11,186 | 1.2 | 13,470 | 11,186 | |
| 2,284 | 0.1 | |||
| 4,600 | 0.2 | |||
| 1.5 | ||||
| Interest rate and margin expiration |
1 Average annual interest rate refers to the average interest rate based on interest rate terms and the outstanding liability as at 31 March 2018..
2 The cost of unused credit facilities affects the average annual interest rate by 0.07 percentage points.
| OPERATING ACTIVITIES | 2018 3 mths Jan-Mar |
2017 3 mths Jan-Mar |
2017 12 mths Jan-Dec |
|---|---|---|---|
| Operating surplus | 250 | 241 | 1,080 |
| Central administration | -17 | -21 | -73 |
| Reversal of depreciation, amortisation and impairment | 0 | 0 | 2 |
| Interest received | 1 | 1 | 4 |
| Interest paid | -29 | -67 | -219 |
| Tax paid | -17 | -8 | -43 |
| Operating cash flow before changes in working capital | 188 | 146 | 751 |
| Changes in working capital | |||
| Decrease (+)/increase (-) in receivables | -101 | -6 | 82 |
| Decrease (-)/increase (+) in current liabilities | 59 | -68 | -142 |
| Total changes in working capital | -42 | -74 | -60 |
| Operating cash flow | 146 | 72 | 691 |
| INVESTING ACTIVITIES | |||
| Investments in new builds, conversions and extensions | -125 | -148 | -502 |
| Acquisition of properties | -42 | -2,316 | -2,581 |
| Sale of properties | 55 | - | 240 |
| Other property, plant and equipment | - | -1 | - |
| Other financial assets | - | -1 | - |
| Cash flow from investing activities | -112 | -2,466 | -2,843 |
| FINANCING ACTIVITIES | |||
| Dividends paid | - | - | -269 |
| Issue of new shares | - | 1,802 | 1,802 |
| New borrowing, interest-bearing liabilities | 175 | 3,124 | 3,168 |
| Repayment and redemption of interest-bearing liabilities | -118 | -2,353 | -2,502 |
| Change in overdraft facility | - | -15 | -15 |
| Cash flow from financing activities | 57 | 2,558 | 2,184 |
| Cash flow for the period | 91 | 164 | 32 |
| Cash and cash equivalents at beginning of period | 32 | 0 | 0 |
| Cash and cash equivalents at end of period | 123 | 164 | 32 |
Diös owned 337 properties in ten locations, from Borlänge in the south to Luleå in the north. The total leasable area was 1,533,883 square metres. The economic occupancy rate, based on signed leases at 31 March was 92 per cent. During the period Diös invested SEK 164 million in new builds, extensions and conversions. In terms of value, the largest share of the portfolio is located in Skellefteå/Umeå, Luleå and Åre/Östersund. The total market value of the properties was SEK 19,739 million. For more information on segments, please visit www.dios.se.
| By segment | Dalarna | Gävle | Sundsvall | Åre/ Östersund |
Skellefteå/ Umeå |
LULEÅ | The Diös Group |
|---|---|---|---|---|---|---|---|
| Rental income | 70 | 50 | 70 | 82 | 95 | 77 | 445 |
| Other income | 1 | 0 | 1 | 1 | 0 | 1 | 5 |
| Repair and maintenance | -3 | -1 | -2 | -2 | -5 | -2 | -15 |
| Tariff-based costs | -12 | -8 | -11 | -16 | -14 | -10 | -72 |
| Property tax | -3 | -3 | -4 | -4 | -5 | -4 | -22 |
| Other property costs | -9 | -8 | -14 | -14 | -12 | -14 | -70 |
| Property management | -3 | -2 | -4 | -4 | -4 | -3 | -20 |
| Operating surplus | 41 | 28 | 36 | 44 | 57 | 45 | 250 |
| Undistributed items | |||||||
| Central administration | - | - | - | - | - | - | -17 |
| Net financial items | - | - | - | - | - | - | -46 |
| Property management income | - | - | - | - | - | - | 187 |
| Changes in value | |||||||
| Property, realised | - | -3 | - | - | - | - | -3 |
| Property, unrealised | -9 | 9 | - | 24 | 77 | 8 | 109 |
| Interest rate derivatives | - | - | - | - | - | - | 6 |
| Profit before tax | - | - | - | - | - | - | 299 |
| Current tax | - | - | - | - | - | - | -17 |
| Deferred tax | - | - | - | - | - | - | -53 |
| Non-controlling interests | - | - | - | - | - | - | 0 |
| Profit for period attributable to shareholders of the parent |
- | - | - | - | - | - | 229 |
| Leasable area, sq.m | 266,682 | 216,692 | 233,490 | 304,511 | 307,068 | 205,440 | 1,533,883 |
| Rental value | 76 | 56 | 80 | 90 | 103 | 82 | 486 |
| Economic occupancy rate, % | 92 | 90 | 88 | 91 | 92 | 95 | 92 |
| Surplus ratio, % | 58 | 57 | 51 | 54 | 60 | 58 | 56 |
| Change in the value of the property portfolio | |||||||
| Property portfolio, 1 January 2018 | 2,649 | 2,045 | 3,234 | 3,257 | 4,494 | 3,778 | 19,457 |
| Acquisitions | - | - | - | - | 68 | - | 68 |
| Investments in new builds, extensions and conversions | 38 | 14 | 33 | 33 | 7 | 39 | 164 |
| Sales | - | -69 | - | - | - | - | -69 |
| Reclassifications | 2 | 0 | 3 | 1 | 2 | 1 | 10 |
| Unrealised changes in value | -9 | 9 | 0 | 24 | 77 | 8 | 109 |
| Property portfolio, 31 March 2018 | 2,680 | 1,999 | 3,270 | 3,315 | 4,648 | 3,826 | 19,739 |
Columns/rows may not add up due to rounding.
Diös owned 348 properties in ten locations, from Borlänge in the south to Luleå in the north. The total leasable area was 1,579,567 square metres. The economic occupancy rate, based on signed leases at 31 March was 90 per cent. During the period Diös invested SEK 155 million in new builds, extensions and conversions. In terms of value, the largest share of the portfolio is located in Skellefteå/Umeå, Luleå and Sundsvall. The total market value of the properties was SEK 18,811 million.
| By segment | Dalarna | Gävle | Sundsvall | Åre/ Östersund |
Skellefteå/ Umeå |
LULEÅ | The Diös Group |
|---|---|---|---|---|---|---|---|
| Rental income | 67 | 50 | 61 | 78 | 78 | 66 | 400 |
| Other income | 2 | 0 | 0 | 1 | 0 | 1 | 5 |
| Repair and maintenance | -2 | -2 | -2 | -2 | -3 | -2 | -13 |
| Tariff-based costs | -12 | -8 | -10 | -15 | -13 | -7 | -64 |
| Property tax | -3 | -3 | -3 | -4 | -4 | -4 | -21 |
| Other property costs | -7 | -6 | -8 | -9 | -9 | -8 | -47 |
| Property management | -3 | -2 | -4 | -4 | -3 | -3 | -19 |
| Operating surplus | 42 | 29 | 35 | 45 | 46 | 43 | 241 |
| Undistributed items | |||||||
| Central administration | - | - | - | - | - | - | -21 |
| Net financial items | - | - | - | - | - | - | -41 |
| Property management income | - | - | - | - | - | - | 179 |
| Changes in value | |||||||
| Property, realised | - | - | - | 0 | |||
| Property, unrealised | 6 | 39 | 34 | 21 | 76 | 34 | 210 |
| Interest rate derivatives | - | - | - | - | - | - | 9 |
| Profit before tax | - | - | - | - | - | - | 398 |
| Current tax | - | - | - | - | - | - | -8 |
| Deferred tax | - | - | - | - | - | - | -64 |
| Non-controlling interests | - | - | - | - | - | - | -1 |
| Profit for period attributable to shareholders of the parent |
- | - | - | - | - | - | 325 |
| Leasable area, sq.m | 266,682 | 250,733 | 238,402 | 304,511 | 313,798 | 205,440 | 1,579,567 |
| Rental value | 74 | 57 | 72 | 86 | 87 | 71 | 446 |
| Economic occupancy rate, % | 90 | 88 | 86 | 91 | 90 | 93 | 90 |
| Surplus ratio, % | 62 | 58 | 56 | 58 | 59 | 65 | 60 |
| Change in the value of the property portfolio | |||||||
| Property portfolio, 1 January 2017 | 2,576 | 1,978 | 2,033 | 3,025 | 2,219 | 1,852 | 13,683 |
| Acquisitions | - | - | 1,016 | - | 1,942 | 1,805 | 4,763 |
| Investments in new builds, extensions and conversions | 28 | 12 | 33 | 34 | 35 | 14 | 155 |
| Sales | - | - | - | - | - | - | - |
| Reclassifications | - | - | - | - | - | - | - |
| Unrealised changes in value | 6 | 39 | 34 | 21 | 76 | 34 | 210 |
| Property portfolio, 31 March 2017 | 2,610 | 2,029 | 3,116 | 3,080 | 4,272 | 3,705 | 18,811 |
Columns/rows may not add up due to rounding.
16 DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2018 The tenant Volt in the Smedjan shopping centre, Luleå. Åsa Johansson, Centre Manager Diös, with Amanda Olin, Regional Manager Volt.
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 27. Figures refer to SEK million unless otherwise indicated.
| 2018 3 mths Jan-Mar |
2017 3 mths Jan-Mar |
2017 12 mths Jan-Dec |
|
|---|---|---|---|
| Number of shares at end of period, thousands (balance sheet KPIs)1 | 134,512 | 134,512 | 134,512 |
| Average number of shares, thousands (income statement-related key ratios)1 | 134,512 | 124,489 | 132,041 |
1 Historical data for the number of shares has been restated to factor in 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.
There is no dilutive effect, as no potential shares (such as convertibles) exist.
The company governs its operations based partly on the objective of generating capital growth by increasing the surplus ratio and thereby the cash flow from operating activities, i.e. increased income from property management. The target for the year is a surplus ratio in excess of 64 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 reports 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.
| 2018 3 mths |
2017 3 mths |
2017 12 mths | |
|---|---|---|---|
| Property management income | Jan-Mar | Jan-Mar | Jan-Dec |
| Profit before tax | 299 | 398 | 1,261 |
| Reversal | |||
| Change in value, properties | -106 | -210 | -412 |
| Change in value, derivatives | -6 | -9 | -27 |
| Property management income | 187 | 179 | 822 |
| EPRA earnings (property management income after tax) | |||
| Property management income | 187 | 179 | 822 |
| Reversal, current tax property management income | -17 | -20 | -88 |
| Minority share of earnings | 0 | -1 | -2 |
| EPRA earnings / EPRA EPS | 170 | 158 | 732 |
| EPRA earnings / EPRA EPS per share | 1.26 | 1.27 | 5.54 |
| SURPLUS RATIO | |||
| Operating surplus as per income statement | 250 | 241 | 1,080 |
| Rental income as per income statement | 445 | 400 | 1,700 |
| Surplus ratio, % | 56 | 60 | 64 |
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 near-term 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 according to 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 the company's equity in case of a liquidation in the short and long term. These performance indicators can be compared with the company's share price to obtain a picture of how the shares are valued in relation to equity.
| 2018 3 mths |
2017 3 mths |
2017 12 mths | |
|---|---|---|---|
| Net asset value | Jan-Mar | Jan-Dec | |
| Equity as per balance sheet | 7,116 | 6,452 | 6,887 |
| Minority share of equity | -45 | -44 | -45 |
| Reversal as per balance sheet | |||
| Fair value of financial instruments | 10 | 35 | 16 |
| Deferred tax on temporary differences | 1,209 | 1,085 | 1,175 |
| EPRA NAV (long-term net asset value) | 8,290 | 7,528 | 8,033 |
| EPRA NAV (long-term net asset value) per share, SEK | 61.6 | 56.0 | 59.7 |
| Deductions | |||
|---|---|---|---|
| Fair value of financial instruments | -10 | -35 | -16 |
| Estimated actual deferred tax on temporary differences, approx. 4%1 | -215 | -727 | -209 |
| EPRA NNNAV (short-term net asset value) | 8,065 | 7,066 | 7,808 |
| EPRA NNNAV (short-term net asset value) per share, SEK | 59.9 | 52,5 | 58.0 |
1 Estimated actual deferred tax has been calculated at approx. 4 per cent based on a discount rate of 3 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. It is expected that it will be possible to use the tax losses during the year.
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 | 2018 3 mths Jan-Mar |
2017 3 mths Jan-Mar |
2017 12 mths Jan-Dec |
|---|---|---|---|
| Interest-bearing liabilities | 11,186 | 11,117 | 11,104 |
| Investment properties | 19,739 | 18,811 | 19,457 |
| Loan-to-value ratio, % | 56.7 | 59.1 | 57.1 |
| Equity/assets ratio | |||
| Equity | 7,116 | 6,452 | 6,887 |
| Total assets | 20,188 | 19,260 | 19,708 |
| Equity/assets ratio, % | 35.3 | 33.5 | 34.9 |
| Interest coverage ratio | |||
| Property management income | 187 | 179 | 822 |
| Reversal | |||
| Financial costs | 48 | 41 | 191 |
| Total | 235 | 220 | 1,013 |
| Financial costs | 48 | 43 | 191 |
| Interest coverage ratio, times | 4.9 | 5.2 | 5.3 |
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 performance indicators show the company's results and profitability, equity on a per share basis, and the company's ability to fulfil its obligations and pay dividends to the shareholders. These alternative performance indicators supplement the picture given of Diös' financial performance and enable investors and analysts to gain a better understanding of the company's return and results. Yield is a measure of the results generated by the properties in relation to their market value. It shows the profitability of the properties and is considered to provide supplementary information for investors and analysts concerning the risk in the portfolio. The debt/equity ratio is presented in order to supplement the picture of Diös' financial situation. It shows the ratio of interest-bearing liabilities to equity. The measure is considered to enhance investors' and analysts' ability to assess the company's financial stability.
| 2018 3 mths |
2017 3 mths |
2017 12 mths | |
|---|---|---|---|
| Return on equity, % | Jan-Mar 3.3 |
Jan-Mar 6.0 |
Jan-Dec 18.3 |
| Equity per share, SEK | 52.9 | 48.0 | 51.2 |
| Rental income, SEKm | 445 | 400 | 1,700 |
| Cash flow per share, SEK | |||
| Profit before tax | 299 | 398 | 1,261 |
| Reversal | |||
| Unrealised change in value, properties | -109 | -210 | -402 |
| Unrealised change in value, derivatives | -6 | -9 | -27 |
| Depreciation and amortisation | 1 | 0 | 2 |
| Current tax | -17 | -8 | -43 |
| Total | 168 | 171 | 791 |
| Average number of shares ('000) | 134,512 | 124,489 | 132,041 |
| Cash flow per share, SEK | 1.25 | 1.37 | 6.00 |
| Earnings per share, SEK | 1.70 | 2.60 | 7.78 |
| Debt/equity ratio, times | 1.6 | 1.7 | 1.6 |
Diös also reports data for economic occupancy and vacancy rate, as these performance indicators provide a more in-depth picture of the company's financial performance with regard to revenues in the properties and thus also in the company. These performance indicators are widely used in the industry, and enable investors and analysts to make comparisons between different property companies.
| 2018 3 mths Jan-Mar |
2017 3 mths Jan-Mar |
2017 12 mths Jan-Dec |
|
|---|---|---|---|
| Economic occupancy rate, % | 92 | 90 | 91 |
| EPRA vacancy rate | |||
| Estimated market rent for vacant space | 154 | 139 | 153 |
| Annualised rental value for the whole portfolio | 1,904 | 1,458 | 1,875 |
| EPRA vacancy rate, % | 8.1 | 9.6 | 8.2 |
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 41 million (46) and the profit after tax was SEK 1 million (4). Net sales refer chiefly to services sold to the Group's subsidiaries. Cash and cash equivalents were SEK 120 million (150) at 31 March 2018 and drawn overdraft facilities were SEK 0 million (0). External interest-bearing liabilities, excluding overdraft facilities, totalled SEK 2,509 million (3,533). Outstanding commercial paper totalled SEK 800 million (0). The average annual interest rate based on the situation at 31 March 2018 amounted to 1.0 per cent (1.2). The parent company prepares its financial reports in compliance with RFR 2 Financial Reporting for Legal Entities.
| INCOME, SEKM | |||
|---|---|---|---|
| 2018 | 2,017 | 2,017 | |
| INCOME STATEMENT | 3 months Jan-Mar |
3 months Jan-Mar |
12 mths Jan-Dec |
| Net revenue | 41 | 46 | 170 |
| Gross profit | 41 | 46 | 170 |
| Central administration | -49 | -60 | -214 |
| Operating profit | -8 | -14 | -44 |
| Income from interests in Group companies | 0 | 0 | 454 |
| Financial income | 58 | 59 | 218 |
| Financial costs | -49 | -41 | -192 |
| Profit after financial items | 1 | 4 | 436 |
| Current tax | 0 | - | - |
| Profit after tax | 1 | 4 | 436 |
| STATEMENT OF COMPREHENSIVE INCOME | |||
| Profit after tax | 1 | 4 | 436 |
| Comprehensive income for the year | 1 | 4 | 436 |
| Condensed parent company balance sheet, SEKm ASSETS |
2018 31 Mar |
2,017 31 Mar |
2,017 31 Dec |
|---|---|---|---|
| Investments in Group companies | 2,124 | 2,124 | 2,124 |
| Receivables from Group companies | 11,581 | 10,570 | 11,439 |
| Other assets | 28 | 23 | 26 |
| Cash and cash equivalents | 120 | 150 | 29 |
| TOTAL ASSETS | 13,853 | 12,867 | 13,618 |
| EQUITY AND LIABILITIES | |||
| Equity | 3,096 | 2,934 | 3,095 |
| Interest-bearing liabilities | 3,309 | 3,533 | 3,208 |
| Liabilities to Group companies | 7,417 | 6,367 | 7,277 |
| Other liabilities | 31 | 33 | 38 |
| TOTAL EQUITY AND LIABILITIES | 13,853 | 12,867 | 13,618 |
The number of employees on 31 March 2018 was 157 (146), of whom 63 were women (61). The majority of Diös' employees, 105 people (97), work in our local business units. We have invested in training for our operations staff and now all are certified building maintenance technicians.
Diös Fastigheters' principal risks and uncertainties are described on pages 59-62 of the 2017 annual report. 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 13 February the Riksbank decided to keep its repo rate unchanged at -0.5 per cent. Only in the second half of 2018 does the executive board deem that it will be appropriate to start raising interest rates at a modest pace. The Riksbank's net purchase of government bonds amounts to just over SEK 310 billion (nominal amount), with maturity and coupon payments currently being reinvested in the bond portfolio. According to information published by KI in March 2018, the Swedish economy is getting even stronger and the economic upswing in the rest of the world is fuelling Swedish exports. The rate of investments in industry is rapidly increasing, even though investments in housing are levelling off. Inflation is not expected to reach 2 per cent until sometime in 2020, which means that the Riksbank will hold back on raising interest rates too early. Unemployment is expected to decline even further in 2018, levelling off at 6.2 per cent in 2019.
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 real estate 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. In aggregate, these 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 Financial Reporting for Legal Entities and the Swedish Annual Accounts Act. Disclosures under IAS 34 are provided elsewhere in the interim report than in a note. The accounting principles applied in the interim report are, with the exception of name changes to segments, consistent with the accounting principles applied in preparing the consolidated financial statements and Annual Report for 20171 , Note 1.
New or amended IFRS standards and new interpretations which have not yet become effective:
IFRS 16 Leases applies for financial years beginning on 1 January 2019. The accounting treatment for lessors will remain essentially unchanged. For lessees, the standard will have the effect that most leases will be recognised in the balance sheet. For Diös, the main impact will be on the recognition of leasehold contracts and car leases, which will be recognised in the balance sheet and will thus have an impact on total assets. The leasing cost will be recognised as amortisation of the usufruct and as an interest expense, and will thus no longer be included in net operating income. As Diös has a limited number of contracts, the impact on the financial statements is expected to be limited.
Other changed and new IFRS standards entering into force during the coming periods are not assessed as having any significant impact on the Group's financial reporting.
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 2017 is available at www.dios.se
| 31 Mar 2018 Q1 |
31 Dec 2017 Q4 |
30 Sep 2017 Q3 |
30 Jun 2017 Q2 |
31 Mar 2017 Q1 |
31 Dec 2016 Q4 |
30 Sep 2016 Q3 |
30 Jun 2016 Q2 |
|
|---|---|---|---|---|---|---|---|---|
| Revenue, SEKm | 450 | 443 | 436 | 435 | 405 | 337 | 335 | 334 |
| Operating surplus, SEKm | 250 | 266 | 287 | 286 | 241 | 195 | 212 | 212 |
| Property management income, SEKm | 187 | 197 | 222 | 224 | 179 | 132 | 147 | 140 |
| Profit for the period, SEKm | 229 | 256 | 192 | 255 | 326 | 266 | 229 | 194 |
| Surplus ratio, % | 56 | 61 | 67 | 66 | 60 | 59 | 64 | 64 |
| Economic occupancy rate, % | 92 | 91 | 91 | 91 | 90 | 90 | 90 | 90 |
| Return on equity, % | 3.3 | 3.8 | 2.9 | 3.9 | 6.0 | 6.4 | 5.8 | 5.0 |
| Equity/assets ratio, % | 35.3 | 34.9 | 33.9 | 33.3 | 33.5 | 31.0 | 29.8 | 28.5 |
| Property loan-to-value ratio, % | 56.7 | 57.1 | 57.8 | 58.3 | 59.1 | 58.6 | 59.6 | 60.6 |
| Average interest rate at end of period, %¹ | 1.5 | 1.5 | 1.6 | 1.6 | 1.6 | 2.0 | 1.9 | 2.6 |
| Interest coverage ratio, times | 4.9 | 4.8 | 5.5 | 5.8 | 5.2 | 3.9 | 3.8 | 3.5 |
| Property management income per share, SEK | 1.38 | 1.46 | 1.65 | 1.67 | 1.44 | 1.39 | 1.54 | 1.47 |
| Earnings per share after tax, SEK | 1.70 | 1.91 | 1.43 | 1.88 | 2.60 | 2.79 | 2.39 | 1.99 |
| Equity per share, SEK | 52.9 | 51.2 | 49.3 | 47.9 | 48.0 | 45.3 | 42.5 | 40.1 |
| Market price per share, SEK | 56.4 | 55.8 | 52.0 | 46.6 | 44.0 | 47.1 | 50.8 | 47.1 |
1 Includes expenses relating to commitment fees and derivatives.
| Targets 2018 OPERATIONAL TARGETS |
Outcome Q1 2018 |
|---|---|
| Economic occupancy rate, % 92 |
92 |
| 64 Surplus ratio, % |
56 |
| -3 Energy use, % |
0.8 |
| Carbon dioxide emissions,% -2 |
0 |
| Employee satisfaction index 76 |
- |
| 70 Customer satisfaction index |
- |
| FINANCIAL TARGETS | Targets 2018 | Outcome Q1 2018 |
|---|---|---|
| Return on equity1, % | >12 | 13.2 |
| Distribution of profit for the year2,% | ~50 | - |
| Loan-to-value ratio, % | < 60 | 56.7 |
| Equity/assets ratio, % | > 30 | 35.3 |
1 Return on equity has been annualised.
2 Profit after tax, excluding unrealised changes in value and deferred tax.
Diös' share price at the end of the period was SEK 56.4 (44.0), which represents a market capitalisation of SEK 7,580 million (5,919), and the return for the past 12 months was 28.1 per cent (-6.1). If the adopted dividend of SEK 2.00 per share is included, the total return on the shares for the period was 33.9 per cent (-1.5). The diagram shows share prices for the past 12 months for both Diös and the indexes. The return on the OMX Stockholm 30 Index was -3.3 per cent (16.3) and the return on the OMX Stockholm Real Estate PI index 5.7 per cent (7.4).
At 31 March Diös Fastigheter AB had 14,648 shareholders (14,174). The share of foreign-owned shares was 21.3 per cent (20.0) while the total number of shares during the period remained unchanged at 134,512,438 (134,512,438). The single largest shareholder was AB Persson Invest, with 15.4 per cent (15.4) of the shares. The ten largest shareholders accounted for 57.5 per cent (55.9) of the total number of shares and votes.
The Annual General Meeting 2017 resolved to authorise the company to buy back ten per cent of the total number of 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 NASDAQ OMX Nordic Exchange Stockholm, Mid Cap list. The ticker symbol is DIOS and the ISIN code SE0001634262.
Our goal is to generate a return on equity in excess of the risk-free rate plus 12 per cent. On an annualised basis, the return for the period was 13 per cent (24).
Equity at the end of the first quarter was SEK 7,116 million (6,452) and the long-term net asset value, EPRA NAV, was SEK 8,289 million (7,528). On a per share basis, EPRA NAV was SEK 61.6 (56.0), which means that the share price at 31 March represented 92 per cent (79) of long-term NAV. The net asset value per share for the period, expressed as EPRA NNNAV, was SEK 59.9 (52.5).
Earnings per share for the period were SEK 1.70 (2.60) while longterm earnings per share, expressed as EPRA EPS, were SEK 1.26 (1.27). EPRA EPS, which is designed to show an entity's long-term earnings per share, is calculated as property management income after deducting 22 per cent corporation tax attributable to property management income less minority share of earnings.
OF DIÖS FASTIGHETER AB AT 31 MARCH 2018
| 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 |
| Avanza Pension | 5,206,899 | 3.9 |
| Handelsbankens Fonder | 5,000,000 | 3.7 |
| SEB Fonder | 4,556,714 | 3.4 |
| Fourth Swedish National Pension Fund (AP4) | 2,329,327 | 1.7 |
| Staffan Rasjö | 2,000,000 | 1.5 |
| Transamerica Asset Management, Inc. | 1,933,774 | 1.4 |
| Total, largest shareholders | 77,493,086 | 57.5 |
| Other shareholders | 57,019,352 | 42.5 |
| TOTAL | 134,512,438 | 100.0 |
| 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 Jun 2005 | Share split | 990,000 | - | 1,000,000 | 100,000 | 0.10 |
| 21 Jun 2005 | Issue of new shares | 1,489,903 | 148,990 | 2,489,903 | 248,990 | 0.10 |
| 14 Sep 2005 | Non-cash issue | 1,503,760 | 150,376 | 3,993,663 | 399,366 | 0.10 |
| 2 Jan 2006 | Bonus issue | - | 39,537,264 | 3,993,663 | 39,936,630 | 10.00 |
| 2 Jan 2006 | Share split | 15,974,652 | - | 19,968,315 | 39,936,630 | 2.00 |
| 18 May 2006 | Issue of new shares | 8,333,400 | 16,666,800 | 28,301,715 | 56,603,430 | 2.00 |
| 11 Jul 2006 | Non-cash issue | 5,000,000 | 10,000,000 | 33,301,715 | 66,603,430 | 2.00 |
| 19 Apr 2007 | Non-cash issue | 666,250 | 1,332,500 | 33,967,965 | 67,935,930 | 2.00 |
| 29 Oct 2010 | Non-cash issue | 99,729 | 199,458 | 34,067,694 | 68,135,388 | 2.00 |
| 14 Dec 2010 | Issue of new shares | 3,285,466 | 6,570,332 | 37,353,160 | 74,705,720 | 2.00 |
| 17 Dec 2010 | Issue of new shares | 11,407 | 22,814 | 37,364,567 | 74,728,534 | 2.00 |
| 5 Dec 2011 | Issue of new shares | 22,854,136 | 45,708,272 | 60,218,703 | 120,436,806 | 2.00 |
| 14 Dec 2011 | Issue of new shares | 14,510,431 | 29,020,862 | 74,729,134 | 149,457,668 | 2.00 |
| 27 Jan 2017 | Issue of new shares | 59,629,748 | 119,259,496 | 134,358,882 | 268,717,164 | 2.00 |
| 31 Jan 2017 | Issue of new shares | 153,556 | 307,112 | 134,512,438 | 269,024,276 | 2.00 |
A comprehensive and diversified property portfolio ensures risk distribution between different markets, tenants and industries. The profit equalises over time. Our wide offering also provides us with great opportunities to offer our tenants new premises whenever their needs or business change.
Since 2013, the yield has amounted to 4.8 per cent on average, which is among the highest in the industry. According to the dividend policy, approx. 50 per cent of the profit for the year after tax, excluding unrealised changes in value and deferred tax, should be passed onto the shareholders as a dividend.
DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2018 25
Since 2013, the cash flow per share has increased by 67 per cent. This is the result of effective management, energy-saving measures, profitable investments and a tenant-focused organisation.
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, 24 April 2018
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
FINANCIAL CALENDAR
On 12 April 2018, Mia Forsgren joined the Group management team as Head of Communications.
Actual number of shares outstanding at the end of the period.
Profit for the period divided by average equity. Average equity is defined 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 of the properties 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.
Rental income for the period divided by rental value at the end of the period.
Estimated market rent for unused premises divided by 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 redevelopments.
Equity at the end of the period after reversal of interest rate derivatives and deferred tax attributable to temporary differences in properties and minority 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.
Estimated market rent for vacant space divided by the annual rental value of the whole property portfolio.
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 repurchased during the period weighted by the number of days that the shares were outstanding, in relation to the total number of days in the period.
Rents invoiced for the period less rent losses and rent discounts.
Rent at the end of the period plus a supplement for the estimated market rent for unoccupied floor space.
Profit before tax, adjusted for unrealised changes in value plus depreciation/amortisation 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.
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]
This constitutes information which Diös Fastigheter AB is required to publish under the EU's Market Abuse Regulation. The information was submitted for publication through the above contact person on 24 April 2018, 12:00 PM CET.
DIÖS FASTIGHETER AB (PUBL) FRITZHEMSGATAN 1A, BOX 188, 831 22 ÖSTERSUND, TEL: +46 (0)770-33 22 00 CRN: 556501-1771. REGISTERED OFFICE ÖSTERSUND. WWW.DIOS.SE
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