Quarterly Report • Apr 23, 2019
Quarterly Report
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DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019
Q1 INTERIM REPORT JANUARY-MARCH 2019
RENTAL INCOME increased by 2 per cent to SEK 457 million (450)
PROPERTY MANAGEMENT INCOME increased by 13 per cent to SEK 212 million (187)
UNREALISED CHANGES IN VALUE of properties were SEK 60 million (109) and unrealised changes in value of derivatives were SEK 0 million (6)
THE PROFIT AFTER TAX was SEK 230 million (229)
EARNINGS PER SHARE were SEK 1.71 (1.70)
equity ratio interest coverage ratio loan-to-value ratio
| 457 450 268 250 214 187 277 299 230 229 60 56 91 92 36.9 35.3 52.8 56.7 52.9 61.6 |
NET PROFIT FOR THE PERIOD, SEKm |
2019 3 months Jan-Mar |
2018 3 months Jan-Mar |
2018 12 mths Jan-Dec |
|---|---|---|---|---|
| Income | 1,810 | |||
| Operating surplus | 1,140 | |||
| Property management income | 894 | |||
| Profi t before tax | 1,597 | |||
| Profi t after tax | 1,341 | |||
| Surplus ratio, % | 64 | |||
| Occupancy rate, % | 91 | |||
| Equity ratio, % | 37.2 | |||
| Property loan-to-value ratio, % | 53.4 | |||
| Equity per share, SEK | 58.3 | |||
| EPRA NAV per share, SEK | 67.6 |
SIGNIFICANT EVENTS Q1
For defi nitions of key ratios, see 27.
We continue to deliver. Revenue is up and both operating and financial costs are under control. With our strong cash flow, we are investing for continued growth in our cities.
Property management income increased by 13 per cent. Rental income per square metre has increased by 7 per cent in one year as a result of a refined property portfolio, rising rental levels and a reduced proportion of industrial properties in favour of centrally located office and social-use properties. The costs for the first quarter are lower and more normal compared to the same quarter last year.
We are seeing an ever clearer polarisation emerge, which means that our property managers and letting agents really need to be active. Strong demand for the right locations is driving rents and the right mix of tenants is absolutely crucial. Thanks to our unique position, we have exactly what it takes to create growth, for our tenants and for the city. The let of our head office to Webhelp, a fast expanding company, is a prime example. We enable a business to establish a presence that will create new jobs while investing in a new office for ourselves in vacant premises. The end result is increased flows of people and increased growth – compleatly in line with our urban development strategy.
We have a clearer profile as a company and our position in our cities is becoming ever stronger. During the period, we acquired four properties in the most central locations, in four cities. We see a big potential to develop these premises in a way that will further increase the attractiveness of the city centre.
The SEK 316 million investment volume is a new record for an individual quarter. That testifies to a high level of activity and shows that demand for adaptations from our tenants remains good. During the period, we also initiated one of our major new build projects, the hotel in Sundsvall. The first sod was turned on 1 March and the building is expected to take about two years to complete. A total of SEK 385 million will be invested.
The development of Gustav III´s square in central Östersund has taken a step forward after the local authority decided to grant us sole negotiating rights in respect of a 25,000 sq.m plot. That is a big responsibility but it is also a huge and unique opportunity. It involves creating a place, in a responsible and long-term manner, that will encourage an increased flow of people and increased quality. The square is there for everyone and needs to enable growth and make the city more attractive.
The loans which matured at the end of March have been refinanced at maturities of 2–4 years with continued good terms. We also took advantage of the strong demand to issue new commercial paper during the period. Access to capital remains good and pricing has remained stable since last year. Stronger key financial ratios have attracted increased interest from banks and the capital market.
Business is done between people, and it is my conviction that better relations lead to increased and profitable business. A genuine interest in our tenants' businesses and success is a mantra that I repeat every day to our staff.
Our urban development strategy is about growth. We want to make life in the city better for everyone. To succeed, we need to know what is being demanded across the whole range of stakeholders, from residents to visitors to the city. We have the will to push things forward together with our tenants, the local authority, other property owners and other stakeholders. Growth drives profitability and value – for our tenants, our shareholders and ourselves.
Knut Rost, CEO
Diös is one of Sweden's leading property companies. We own, manage and develop centrally located properties in ten growth cities.
OUR STRATEGY IS URBAN DEVELOPMENT. Through strong relationships, a local presence and a responsible approach, we develop commercial and residential properties in our cities. That enables us to create Sweden's most attractive places and build long-term value for our tenants, our owners and ourselves.
property value, SEKbn
leasable area, '000 sq.m 330 21 residential .5 1,473
Through GOOD RELATIONSHIPS , we build a profitable long-term business. With satisfied employees, we build good relationships. Our success is in the hands of OUR EMPLOYEES. That's why we have a strong focus on building a company where people are happy, can grow and develop, and show commitment.
Our core values SIMPLE, CLOSE AND ACTIVE are the basis for everything we do. Everyone at Diös is different, but equal in terms of our core values. In a world that is changing faster than ever, it is essential to be dynamic.
We are convinced that EVERYTHING IS POSSIBLE! That is the starting-point for all our business dealings and all our relations.
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.
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.
For Diös, responsible business is about taking a comprehensive approach to economic, social and environmental aspects. We want to help fight climate change and create safer cities while also creating new opportunities for businesses and new meeting places for people.
We want to create Sweden's most inspiring cities.
DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019 5
| INCOME STATEMENT | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Rental income | 341 | 325 | 1,436 |
| Service income | 116 | 125 | 374 |
| Total income | 457 | 450 | 1,810 |
| Property costs | -189 | -200 | -670 |
| Operating surplus | 268 | 250 | 1,140 |
| Central administration | -17 | -17 | -71 |
| Net fi nancial items | -39 | -46 | -175 |
| Property management income | 212 | 187 | 894 |
| Change in value, properties | 65 | 106 | 687 |
| Change in value, interest rate derivatives | 0 | 6 | 16 |
| Profi t before tax | 277 | 299 | 1,597 |
| Current tax | -23 | -17 | -90 |
| Deferred tax | -24 | -53 | -166 |
| Profi t after tax | 230 | 229 | 1,341 |
| Profi t attributable to shareholders of the parent company | 229 | 229 | 1,338 |
| Profi t attributable to non-controlling interests | 1 | 0 | 3 |
| Total | 230 | 229 | 1,341 |
| STATEMENT OF COMPREHENSIVE INCOME | |||
| Profi t after tax | 230 | 229 | 1,341 |
| Comprehensive income for the period | 230 | 229 | 1,341 |
| Comprehensive income attributable to shareholders of the parent company | 229 | 229 | 1,338 |
| Comprehensive income attributable to non-controlling interests | 1 | 0 | 3 |
| Total | 230 | 229 | 1,341 |
| Earnings per share, SEK | 1.71 | 1.70 | 9.94 |
| Number of shares at end of period ('000) | 134,512 | 134,512 | 134,512 |
| Average number of shares ('000) | 134,512 | 134,512 | 134,512 |
| Number of treasury shares at end of period | 0 | 0 | 0 |
| Average number of treasury shares | 0 | 0 | 0 |
6 DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019
There is no dilutive eff ect, 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 212 million (187). This is an increase of 13 per cent compared with the previous year. For comparable properties, our property management income increased by 13 per cent year on year.
Income for the reporting period was SEK 457 million (450), representing a 91 per cent (92) economic occupancy rate. For comparable properties, contracted rental income increased by 2.3 per cent year on year. Other property management income totalled SEK 7 million (5) and consisted mainly of costs for work in leased premises that are passed on to tenants.
| 2019 Jan-Mar |
2018 Jan-Mar |
Change % | |
|---|---|---|---|
| Comparable properties | 438 | 428 | 2.3 |
| Acquired properties | 12 | 1 | |
| Sold properties | 1 | 17 | |
| Contracted rental income | 451 | 446 | |
| Other property management income | 6 | 4 | |
| Income | 457 | 450 |
Total property costs were SEK 189 million (200). Winterrelated costs decreased compared with the same period last year, which is due to a milder winter. Of total property costs, SEK 4 million (3) refers to work in leased premises for which the costs are passed on to tenants.
The operating surplus was SEK 268 million (250), representing a surplus ratio of 60 per cent (56). For comparable properties, our operating surplus increased by 7.4 per cent compared with the previous year.
The central administration expense was SEK 17 million (17). 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 -39 million (-46). The interest costs for the period, including costs for interest rate derivatives and loan commitments, represent borrowings at an average annual interest rate of 1.3 per cent (1.5).
The average valuation yield at the end of the period was 5.92 per cent (6.04). At portfolio level, this represents a change of -0.05 percentage points since year-end. The positive value change of SEK 60 million (109) is mainly attributable to a higher net operating income. The change in value represented 0.3 per cent (0.6) of market value. At 31 March, the market value was SEK 21,479 million (19,739).
During the period, 5 properties (4) were sold, resulting in a realised change in value of SEK 5 million (-3), and 5 properties (2) were acquired.
1The figures for property management income, operating surplus and surplus ratio in Q1 2019 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 0 million (6), which have been fully recognised in the income statement.
The profit before tax was SEK 277 million (299). The improvement in earnings is mainly due to higher property values and increased revenue.
The profit after tax was SEK 230 million (229). The current tax expense is SEK -23 million (-17) and is mainly attributable to tax in subsidiaries which are not permitted to offset losses against Group profits, and to tax arising from property transactions in trading partnerships and limited partnerships. Deferred tax was SEK -24 million (-53) after a positive effect from restatement of deferred tax after the corporate tax rate was changed from 22 per cent to 20.6 per cent.
AVERAGE INTEREST RATE
The nominal corporate tax rate in Sweden is 21,4 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 loss carry-forwards, tax paid was low.
The remaining tax loss carry-forwards are estimated at SEK 0 million (15). The Group also has untaxed reserves of SEK 245 million (148). The fair value of the properties exceeds their tax base by SEK 6,438 million (5,495), less SEK 3,760 million (3,502). The tax liability has been calculated based on the tax rate applying at the time when the tax consequence is expected to arise.
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 | Effective tax |
|---|---|
| Property management income | 212 |
| Tax adjustments | 37 |
| Taxable property management income | 249 |
| Sale of properties | -47 |
| Change in value, properties | 60 |
| Taxable profit | 262 |
| Tax for the period | 55 |
|---|---|
| Restatement of deferred tax1 | -8 |
| Tax for the period as per income statement | 47 |
1 The deferred tax liability has been restated as follows: Deferred tax liability on untaxed reserves has been calculated using a tax rate of 20.6 per cent.
On 14 June 2018, the Swedish parliament adopted a new law on limitation of interest deductibility for businesses, which became effective on 1 January 2019. The law means that the possibility of deducting interest expense declines, and the income tax will gradually be reduced. With our strong cash flow combined with historically low interest rates will have small effects on paid tax under the new law, provided that an effective group equalization of net interest income can occur. If interest rates were to rise it would have a negative impact (assuming cash flow remains unchanged).
Our tenant base is well diversifi ed geographically and in terms of industry. Th e number of commercial leases was 2,973 (3,044). Th e number of residential leases was 1,704 (1,632). Th e ten largest tenants represent 15.8 per cent (15.6) of Diös' total contracted rental income. At 31 March, 26 per cent of contracted rental income came from tenants engaged in activities on behalf of the central government, county councils or local authorities.
Net leasing for the period was SEK 6 million (-1). Net leasing increased during the period as a result of a number of major lets. Noteworthy lets during the period included those to the Swedish Transport Administration, Östermalm 6:16, Luleå, Webhelp AB, Kommunalmannen 4, Östersund and Falun Local Authority, Holmen 8, Falun.
| TENANTS AT 31 MARCH 2019 |
No. of contracts |
Annual contract value, SEK '000 |
Average lease term, years |
|---|---|---|---|
| Swedish Transport Administration | 27 | 62,163 | 1.6 |
| Östersund Local Authority | 119 | 36,995 | 2.7 |
| Swedish Public Employment Service | 31 | 29,349 | 2.2 |
| Swedish Police Authority | 31 | 23,942 | 4.8 |
| Swedish Social Insurance Agency | 24 | 23,064 | 3.1 |
| Swedbank | 11 | 22,921 | 3.4 |
| Swedish Migration Board | 12 | 22,375 | 2.3 |
| Åhléns AB | 5 | 22,123 | 5.3 |
| Folksam ömsesidig sakförsäkring | 46 | 21,899 | 5.3 |
| Telia Sverige AB | 24 | 21,024 | 9.8 |
| Total, largest tenants | 330 | 285,855 | 3.6 |
Th e average lease term for commercial premises at 31 March was 3.3 years (3.1).
Vacancies remained unchanged during the period, with economic vacancies standing at 9 per cent (8) and physical vacancies at 14 per cent (14) at 31 March. Economic vacancies are highest in offi ce and retail premises while physical vacancies are highest in offi ce and industrial premises. Th e economic vacancy rate for the period, excluding discounts, was 10 per cent (8).
| No. of contracts |
Contract value SEKm |
Share of value, % |
|
|---|---|---|---|
| Leases for premises, maturity year | |||
| 2019 | 553 | 122 | 7 |
| 2020 | 910 | 360 | 20 |
| 2021 | 675 | 361 | 20 |
| 2022 | 529 | 284 | 16 |
| 2023+ | 306 | 482 | 27 |
| Total | 2,973 | 1,609 | 89 |
| Residential | 1,704 | 132 | 8 |
| Other leases1 | 4,215 | 63 | 3 |
| TOTAL | 8,892 | 1,804 | 100 |
1 Other leases refer mainly to garage and parking spaces.
| ASSETS | 2019 31 Mar |
2018 31 Mar |
2018 31 Dec |
|---|---|---|---|
| Investment properties | 21,479 | 19,739 | 20,802 |
| Other non-current assets | 32 | 60 | 54 |
| Finance right-of-use asset | 43 | - | - |
| Current portion of fi nance right-of-use asset | 4 | - | - |
| Current receivables | 300 | 266 | 201 |
| Cash and cash equivalents | - | 123 | - |
| TOTAL ASSETS | 21,858 | 20,188 | 21,057 |
| EQUITY AND LIABILITIES | |||
| Equity | 8,069 | 7,116 | 7,839 |
| Deferred tax liability | 1,377 | 1,238 | 1,353 |
| Provisions | 9 | 9 | 9 |
| Interest-bearing liabilities | 11,349 | 11,186 | 11,099 |
| Overdraft facilities | 336 | - | 198 |
| Non-current lease liability | 43 | - | - |
| Current lease liability | 4 | - | - |
| Current liabilities | 671 | 639 | 559 |
| TOTAL EQUITY AND LIABILITIES | 21,858 | 20,188 | 21,057 |
| Equity | Attributable to shareholders of the parent company |
Attributable to non controlling interests |
|
|---|---|---|---|
| Equity, 31 Dec 2017 | 6,887 | 6,841 | 45 |
| Profi t 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 |
| Profi t for the period after tax | 1,112 | 1,109 | 3 |
| Comprehensive income for the period | 1,112 | 1,109 | 3 |
| Dividend | -390 | -390 | - |
| Equity, 31 Dec 2018 | 7,839 | 7,790 | 49 |
| Profi t for the period after tax | 230 | 229 | 1 |
| Comprehensive income for the period | 230 | 229 | 1 |
| Equity, 31 Mar 2019 | 8,069 | 8,019 | 50 |
10 DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019
The property portfolio is concentrated to central locations in ten priority cities in northern Sweden. The portfolio is well diversified, consisting mainly of residential, office and retail properties. 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.
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 a structured 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 15,745 million, and 115 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. The remaining portion is valued internally. 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 internally with assistance from 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 19,868-23,090 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.
| 31 Mar 2019 | 31 Mar 2018 | ||||
|---|---|---|---|---|---|
| SEKm | Number | SEKm | Number | ||
| Property portfolio, 1 January | 20,802 | 330 | 19,457 | 339 | |
| Acquisitions | 421 | 5 | 68 | 2 | |
| Investments in new builds, extensions and conversions |
316 | 164 | |||
| Sales | -120 | -5 | -69 | -4 | |
| Unrealised changes in value | 60 | 109 | |||
| Reclassifications | - | 10 | |||
| Value of property portfolio 31 March | 21,479 | 330 | 19,739 | 337 |
Unrealised changes in value for the period totalled SEK 60 million (109) and were due to mainly higher net operating income.
| UNREALISED CHANGES IN VALUE | 31 Mar 2019 | |
|---|---|---|
| SEKm | % | |
| Change in net operating income, etc. | 33 | 55 |
| Change in required rate of return | 27 | 45 |
| Total | 60 | 100 |
One part of our strategy is to continuously strive to concentrate our property portfolio to central locations in our priority cities. In the first quarter, Diös completed on the sale of five properties and on the acquisition of five properties.
| Property | Quarter | City Area, sq.m | Price1, SEKm | |
|---|---|---|---|---|
| Nedre Gruvriset 33:156 | 1 | Falun | 5,325 | 80 |
| Portfolio of 4 properties | 1 | Östersund | 15,410 | 49 |
| Total | 20,735 | 129 |
| Property | Quarter | City Area, sq.m | Price1, SEKm | ||
|---|---|---|---|---|---|
| Norr 37:4 | 1 | Gävle | 7,633 | 134 | |
| Tyr 23 | 1 | Borlänge | 9,194 | 109 | |
| Stranden 18:4 | 1 | Mora | 3,914 | 40 | |
| Staben 10 | 1 | Östersund | 2,375 | 28 | |
| Näringen 18:11 | 1 | Gävle | 6,448 | 114 | |
| Total | 29,564 | 424 |
1 Underlying property values
| 31 Mar 2019 | 31 Mar 2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Office | Retail Residential | Industrial/ warehouse |
Other | Office | Retail Residential | Industrial/ warehouse |
Other | |||
| Yield for assessing residual value 1 ,% |
6.8-5.5 | 6.7-5.8 | 5.3-4.7 | 9.1-6.9 | 7.0-6.2 | 7.0-5.6 | 6.7-5.9 | 5.3-4.7 | 7.9-7.0 | 7.0-6.5 |
| Cost of capital for discounting to present value, % | 8.1 | 8.2 | 7.2 | 10.7 | 8.8 | 8.1 | 8.2 | 7.3 | 9.8 | 8.3 |
| Long-term vacancy, % | 4.9 | 3.8 | 1.8 | 14.4 | 6.1 | 5.1 | 3.7 | 1.8 | 11.9 | 4.8 |
1 From lower to upper quartiles in the portfolio.
The valuation model is based on a five-year analysis period and a long-term inflation rate of 2 per cent.
Barbro Wårell, Luleå Science Park service centre, with the tenant Gunilla Enquist, Aulis Konsult & Utveckling, Project Manager, Porsön 1:423, Luleå.
We are continuously investing in our portfolio to improve, adapt and improve the efficiency of our premises for our tenants. Our investments added SEK 316 million (164) to the value of the property portfolio in the first quarter.
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 316 million (164) was invested in 550 projects (476). At the end of the period, 43 major1 improvement projects were ongoing, with a remaining investment volume of SEK 370 million and a total investment volume of SEK 754 million. In the quarter, decisions were taken on 74 new investments. The return on completed investments for the period was 8.9 per cent on the invested amount while the return on our ongoing projects was 8.3 per cent. 1 Initial investment volume > SEK 4 million.
Our existing and potential development rights cover a gross area of over 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 estimated investment volume of around SEK 4,000 million.
The Falan 20 residential property project is ongoing and is expected to be completed in spring 2019. The Riverside hotel project in Sundsvall has been initiated, with preparatory work underway on the underground car park on which the hotel will stand. Construction is scheduled to begin in March 2019. Construction of the hotel project on the Magne 4 property in Umeå commenced in the first quarter of 2019.
| Unit | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
|
|---|---|---|---|
| Heating1 | kWh/sq.m | 38.0 | 40.0 |
| District cooling2 | kWh/sq.m | 6.0 | 2.7 |
| Electricity3 | kWh/sq.m | 14.5 | 15.5 |
| Carbon dioxide, total4 | g CO2/kWh | 23.6 | 31.4 |
| Water | m3 /sq.m |
0.1 | 0.1 |
1 Heating 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.
The target for 2019 is to reduce energy consumption by 3 per cent. The optimisation efforts that were stepped up in the second quarter of 2018, with a clearer focus and technology strategies, have continued to yield fruit. Overall energy use in the first quarter was down by 5 per cent.
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.
Eight BREEAM In-Use certification processes were initiated during the period. Our target for the year is to certify 16 properties under the BREEAM In-Use environmental certification standard. The goal for 2019 is to obtain environmental certification for 17 per cent of the portfolio by surface area. We now have 23 properties certified under the Miljöbyggnad, BREEAM In-Use and GreenBuilding standards, which represents 11 per cent of the total area of the property portfolio.
Projects refer to the creation of new spaces, property development refers to investments in existing properties in the form of conversions and extensions as well as energy-saving measures.
| Type | City | Property | Property type | Leasable area, sq.m |
Occupancy rate, % |
Planned investment, SEKm |
Start of construction |
Estimated completion |
Environmental certification |
|---|---|---|---|---|---|---|---|---|---|
| New build | Sundsvall | Noten | Hotel | 14,350 | 100 | 385 | Q1 2019 | Q2 2021 | BREEAM SE Very good |
| New build | Umeå | Magne 4 | Hotel | 14,500 | 100 | 400 | Q1 2019 | Q3 2022 | BREEAM SE Very good |
Projects with an initial investment volume >SEK 150 million.
At 31 March 2019, 37 per cent (35) of Diös' total assets of SEK 21,858 million was funded through equity, 53 per cent (55) through debt securities and 10 per cent (10) through other capital.
At 31 March, equity was SEK 8,069 million (7,116). Th e equity ratio was 36.9 per cent (35.3), which exceeds the target of 35 per cent.
Interest-bearing liabilities in the Group were SEK 11,349 million (11,186). Of total interest-bearing liabilities, SEK 8,859 million (9,180) refers to bank fi nancing, SEK 1,240 million (1,206) to covered bonds and SEK 1,250 million (800) to commercial paper. Th e loanto-value ratio in the Group was 52.8 per cent (56.7) at the end of the period. Th e average annual interest rate at 31 March, including the cost of derivatives and loan commitments, was 1.3 per cent (1.5) and the interest coverage ratio 6.2 times (4.9).
Out of the Group's total interest-bearing liabilities, SEK 4,000 million (4,600) has been hedged through derivatives. At 31 March 2019, the market value of the derivative portfolio was SEK 0 million (-10). Th e fi nancial instruments limit the impact of changes in interest rates on our average borrowing cost. Th e value of derivatives is always zero at maturity. All fi nancial instruments are measured at fair value and are classifi ed 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 2018). Changes in value are recognised through profi t or loss.
| SENSITIVITY ANALYSIS | If market interest rates increase by 1 percentage point |
||||
|---|---|---|---|---|---|
| AT 31 MARCH 2019 | Change in average annual interest rate, % |
Change in average annual interest rate, SEKm |
Change in market value, SEKm |
||
| Loan portfolio excl. derivatives | 0.4 | +48 | |||
| Derivatives portfolio | 0.0 | 0 | +1 | ||
| Loan portfolio incl. derivatives | 0.4 | +48 | +1 |
Th e average fi xed-rate term, including derivatives, was 1.1 years (2.2) and the average loan maturity 2.3 years (2.2). Of the Group's outstanding loans, SEK 6,510 million (8,163) is subject to fi xed interest rates.
Consolidated cash and cash equivalents at the end of the period were SEK 0 million (123) and drawn overdraft facilities were SEK 336 million (0). Th e agreed limit on the overdraft facility was SEK 600 million (600).
| Interest rate and margin expiration | Loan maturity | ||||
|---|---|---|---|---|---|
| Maturity year | Loan amount, SEKm | Average annual interest rate1 | , % Credit agreements, SEKm | Drawn, SEKm | |
| 2019 | 1,834 | 0.5 | 584 | 584 | |
| 2020 | 7,685 | 1.3 | 6,167 | 5,667 | |
| 2021 | 1,831 | 1.2 | 1,111 | 1,111 | |
| 2022 | - | - | 3,222 | 2,171 | |
| 2023 | - | - | 1,120 | 1,120 | |
| 2027 | - | - | 697 | 697 | |
| Drawn credit facilities | 11,349 | 1.2 | 13,301 | 11,349 | |
| Undrawn credit facilities2 | 1,952 | 0.1 | |||
| Financial instruments | 4,000 | 0.0 | |||
| TOTAL | 1.3 |
1 Average annual interest rate refers to the average interest rate based on interest rate terms and the outstanding liability as at 31 March 2019.
2 The cost of unused credit facilities aff ects the average annual interest rate by 0.06 percentage points.
| OPERATING ACTIVITIES | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Operating surplus | 268 | 250 | 1,140 |
| Central administration | -17 | -17 | -71 |
| Reversal of depreciation, amortisation and impairment | 0 | 0 | 2 |
| Interest received | 1 | 1 | 8 |
| Interest paid | -31 | -29 | -185 |
| Tax paid | -23 | -17 | -90 |
| Cash fl ow from operating activities before changes in working capital | 198 | 188 | 804 |
| Changes in working capital | |||
| Decrease (+)/increase (-) in receivables | -105 | -101 | -35 |
| Decrease (-)/increase (+) in current liabilities | 9 | 59 | 31 |
| Total changes in working capital | -95 | -42 | -4 |
| Cash fl ow from operating activities | 102 | 146 | 800 |
| INVESTING ACTIVITIES | |||
| Investments in new builds, conversions and extensions | -209 | -125 | -557 |
| Acquisition of properties | -312 | -42 | -371 |
| Sale of properties | 146 | 55 | 443 |
| Other non-current fi nancial assets | - | - | -10 |
| Cash fl ow from investing activities | -375 | -112 | -495 |
| FINANCING ACTIVITIES | |||
| Dividends paid | - | - | -390 |
| New borrowing, interest-bearing liabilities | 222 | 175 | 312 |
| Repayment and redemption of interest-bearing liabilities | -87 | -118 | -457 |
| Change in overdraft facility | 138 | - | 198 |
| Cash fl ow from fi nancing activities | 273 | 57 | -337 |
| Cash fl ow for the period | 0 | 91 | -32 |
| Cash and cash equivalents at beginning of period | 0 | 32 | 32 |
| Cash and cash equivalents at end of period | 0 | 123 | 0 |
| By business unit | Dalarna | Gävle | Sundsvall Åre/Östersund | Skellefteå | Umeå | Luleå | Group | |
|---|---|---|---|---|---|---|---|---|
| Rental income | 52 | 35 | 54 | 59 | 28 | 49 | 64 | 341 |
| Service income | ||||||||
| Tariff-based services | 14 | 6 | 12 | 17 | 6 | 10 | 11 | 75 |
| Care and upkeep | 6 | 3 | 8 | 9 | 1 | 6 | 7 | 41 |
| Repair and maintenance | -2 | -1 | -2 | -3 | -2 | -3 | -2 | -16 |
| Tariff-based costs | -13 | -6 | -11 | -16 | -6 | -9 | -11 | -72 |
| Property tax | -3 | -2 | -4 | -4 | -1 | -4 | -5 | -22 |
| Other property costs | -8 | -5 | -11 | -11 | -3 | -8 | -12 | -58 |
| Property management | -3 | -2 | -3 | -4 | -1 | -3 | -3 | -20 |
| Operating surplus | 43 | 27 | 42 | 46 | 22 | 38 | 50 | 268 |
| Central administration/net financial items | - | - | - | - | - | - | - | -56 |
| Property management income | - | - | - | - | - | - | - | 212 |
| Property, realised | 0 | - | - | 5 | - | - | - | 5 |
| Property, unrealised | 3 | 3 | 21 | 14 | 1 | 1 | 17 | 60 |
| Interest rate derivatives | - | - | - | - | - | - | - | 0 |
| Profit before tax | - | - | - | - | - | - | - | 277 |
| Leasable area, sq.m | 271,684 | 160,604 | 233,490 | 291,478 | 109,126 | 200,829 | 205,440 | 1,472,651 |
| Rental value | 79 | 50 | 83 | 91 | 36 | 72 | 85 | 496 |
| Economic occupancy rate, % | 90 | 86 | 88 | 92 | 97 | 89 | 95 | 91 |
| Surplus ratio, % | 60 | 64 | 58 | 56 | 63 | 59 | 61 | 60 |
| Property portfolio, 1 January | 2,805 | 1,971 | 3,424 | 3,556 | 1,430 | 3,562 | 4,054 | 20,802 |
| Acquisitions | 149 | 245 | - | 28 | - | - | - | 421 |
| Investments in new builds, extensions and conversions |
72 | 62 | 29 | 33 | 28 | 58 | 34 | 316 |
| Sales | -49 | - | - | -71 | - | - | - | -120 |
| Reclassifications | - | - | - | - | - | - | - | - |
| Unrealised changes in value | 3 | 3 | 20 | 14 | 1 | 1 | 17 | 60 |
| Property portfolio 31 March | 2,979 | 2,281 | 3,475 | 3,560 | 1,457 | 3,622 | 4,105 | 21,479 |
Columns/rows may not add up due to rounding.
| By business unit | Dalarna | Gävle | Sundsvall Åre/Östersund | Skellefteå | Umeå | Luleå | Group | |
|---|---|---|---|---|---|---|---|---|
| Rental income | 50 | 37 | 48 | 55 | 25 | 48 | 57 | 320 |
| Service income | ||||||||
| Tariff-based services | 13 | 8 | 12 | 16 | 5 | 9 | 11 | 74 |
| Care and upkeep | 7 | 5 | 11 | 11 | 2 | 6 | 9 | 51 |
| Repair and maintenance | -3 | -1 | -2 | -2 | -2 | -3 | -2 | -15 |
| Tariff-based costs | -12 | -8 | -11 | -16 | -5 | -9 | -10 | -72 |
| Property tax | -3 | -3 | -4 | -4 | -2 | -4 | -4 | -22 |
| Other property costs | -9 | -8 | -14 | -14 | -3 | -8 | -14 | -70 |
| Property management | -3 | -2 | -4 | -4 | -1 | -2 | -3 | -20 |
| Operating surplus | 41 | 28 | 36 | 44 | 19 | 37 | 45 | 250 |
| Central administration/Net financial items | - | - | - | - | - | - | - | -63 |
| Property management income | - | - | - | - | - | - | - | 187 |
| Property, realised | - | -3 | - | - | - | - | - | -3 |
| Property, unrealised | -9 | 9 | - | 24 | 17 | 60 | 8 | 109 |
| Interest rate derivatives | - | - | - | - | - | - | - | 6 |
| Profit before tax | - | - | - | - | - | - | - | 299 |
| Leasable area, sq.m | 266,682 | 216,692 | 233,490 | 304,511 | 109,126 | 197,942 | 205,440 | 1,533,883 |
| Rental value | 76 | 56 | 80 | 90 | 33 | 70 | 82 | 486 |
| Economic occupancy rate, % | 92 | 90 | 88 | 91 | 97 | 90 | 95 | 92 |
| Surplus ratio, % | 58 | 57 | 51 | 54 | 60 | 59 | 58 | 56 |
| Property portfolio, 1 January | 2,649 | 2,045 | 3,234 | 3,257 | 1,222 | 3,272 | 3,778 | 19,457 |
| Acquisitions | - | - | - | - | 68 | - | - | 68 |
| Investments in new builds, extensions and conversions |
38 | 14 | 33 | 33 | 4 | 3 | 39 | 164 |
| Sales | - | -69 | - | - | - | - | - | -69 |
| Reclassifications | 2 | 0 | 3 | 1 | 2 | 1 | 10 | |
| Unrealised changes in value | -9 | 9 | 0 | 24 | 17 | 60 | 8 | 109 |
| Property portfolio 31 March | 2,680 | 1,999 | 3,270 | 3,315 | 1,311 | 3,337 | 3,826 | 19,739 |
Columns/rows may not add up due to rounding.
DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019 17 Diös tenant Stadium, Micke Jonsson Store Manager, with Emelie Kjellner, City Centre Manager, Katten 14, Luleå.
The interim report presents non-IFRS performance measures. We consider 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 provided on page 34 and in the descriptions of the purpose of the various measures in the annual report for 2018. The financial targets for 2019 adopted by the Board are presented on page 23 of this report.
Figures refer to SEK million unless otherwise indicated.
| 2019 | 2018 | 2018 | |
|---|---|---|---|
| 3 mths Jan-Mar |
3 mths Jan-Mar |
12 mths Jan–Dec |
|
| Number of shares at end of period, thousands (balance sheet KPIs) | 134,512 | 134,512 | 134,512 |
| Average number of shares, thousands (income statement KPIs) | 134,512 | 134,512 | 134,512 |
There is no dilutive effect, as no potential shares (such as convertibles) exist.
| Property management income | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Profit before tax | 277 | 299 | 1,597 |
| Reversal | |||
| Change in value, properties | -65 | -106 | -687 |
| Change in value, derivatives | 0 | -6 | -16 |
| Property management income | 212 | 187 | 894 |
| EPRA earnings (property management income after tax) | |||
| Property management income | 212 | 187 | 894 |
| Reversal, current tax property management income | -23 | -17 | -77 |
| Minority share of earnings | -1 | 0 | -3 |
| EPRA earnings | 188 | 170 | 814 |
| EPRA earnings per share, SEK | 1.40 | 1.26 | 6.05 |
| Loan-to-value ratio | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Interest-bearing liabilities | 11,349 | 11,186 | 11,099 |
| Investment properties | 21,479 | 19,739 | 20,802 |
| Loan-to-value ratio, % | 52.8 | 56.7 | 53.4 |
| Equity ratio | |||
| Equity | 8,069 | 7,116 | 7,839 |
| Total assets | 21,858 | 20,188 | 21,057 |
| Equity ratio, % | 36.9 | 35.3 | 37.2 |
| Interest coverage ratio | |||
| Property management income | 212 | 187 | 894 |
| Reversal | |||
| Financial costs | 40 | 48 | 183 |
| Total | 252 | 235 | 1,077 |
| Financial costs | 40 | 48 | 183 |
| Interest coverage ratio, times | 6.2 | 4.9 | 5.9 |
| Net debt to EBITDA | |||
| Interest-bearing liabilities as per balance sheet | 11,349 | 11,186 | 11,099 |
| Cash and cash equivalents | 0 | -123 | 0 |
| Overdraft facilities | 336 | 0 | 198 |
| Net debt | 11,685 | 11,063 | 11,297 |
| Operating surplus as per income statement | 1,158 | 1,089 | 1,140 |
| Central administration as per income statement | -71 | -67 | -71 |
| Reversal | |||
| Depreciation and amortisation | 2 | 2 | 2 |
| EBITDA | 1,089 | 1,024 | 1,071 |
| Net debt to EBITDA | 10.7 | 10.8 | 10.5 |
| Net asset value | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Equity as per balance sheet | 8,069 | 7,116 | 7,839 |
| Minority share of equity | -50 | -45 | -49 |
| Reversal as per balance sheet | |||
| Fair value of financial instruments | -1 | 10 | -1 |
| Deferred tax on temporary differences | 1,326 | 1,209 | 1,299 |
| EPRA NAV (long-term net asset value) | 9,343 | 8,290 | 9,088 |
| EPRA NAV (long-term net asset value) per share, SEK | 69.5 | 61.6 | 67.6 |
| Deductions |
| Fair value of financial instruments | 1 | -10 | 1 |
|---|---|---|---|
| Estimated actual deferred tax on temporary differences, approx. 4%1 | -247 | -215 | -242 |
| EPRA NNNAV (short-term net asset value) | 9,097 | 8,065 | 8,847 |
| EPRA NNNAV (short-term net asset value) per share, SEK | 67.6 | 59.9 | 65.8 |
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 20.6 per cent, and the remaining 90 per cent being sold indirectly through companies subject to a nominal tax rate of 6 per cent.
| OTHER KEY RATIOS | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Return on equity, % | 2.9 | 3.3 | 18.2 |
| Equity per share, SEK | 60.0 | 52.9 | 58.3 |
| Cash flow per share, SEK | |||
| Profit before tax | 277 | 299 | 1,597 |
| Reversal | |||
| Unrealised change in value, properties | -60 | -109 | -678 |
| Unrealised change in value, derivatives | 0 | -6 | -16 |
| Depreciation and amortisation | 1 | 1 | 2 |
| Current tax | -23 | -17 | -90 |
| Total | 195 | 168 | 815 |
| Average number of shares ('000) | 134,512 | 134,512 | 134,512 |
| Cash flow per share, SEK | 1.45 | 1.25 | 6.05 |
| Earnings per share, SEK | 1.71 | 1.70 | 9.94 |
| Debt/equity ratio, times | 1.4 | 1.6 | 1.4 |
| OTHER INFORMATION | 2019 3 mths Jan-Mar |
2018 3 mths Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Contracted rental income, SEKm | 450 | 445 | 1,771 |
| Economic occupancy rate, % | 91 | 92 | 91 |
| Surplus ratio, % | 60 | 56 | 64 |
| Estimated market rent for vacant space | 178 | 154 | 154 |
|---|---|---|---|
| Annualised rental value for the whole portfolio | 1,975 | 1,904 | 1,904 |
| EPRA vacancy rate, % | 9.0 | 8.1 | 8.1 |
The activities of the parent company consist of central Group functions as well as the ownership and operation of the Group's subsidiaries. Income totalled SEK 41 million (41) and the profit after tax was SEK 9 million (1). Net sales referred chiefly to services sold to the Group's subsidiaries. Cash and cash equivalents were SEK 0 million (120) at 31 March 2019 and drawn overdraft facilities were SEK 327 million (0). External interest-bearing liabilities, excluding overdraft facilities,
CONDENSED PARENT COMPANY INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME, SEKM
| INCOME STATEMENT | 2019 3 months Jan-Mar |
2018 3 months Jan-Mar |
2018 12 mths Jan–Dec |
|---|---|---|---|
| Income | 41 | 41 | 164 |
| Gross profit | 41 | 41 | 164 |
| Central administration | -49 | -49 | -204 |
| Operating profit | -8 | -8 | -40 |
| Income from investments in Group companies |
0 | 0 | 611 |
| Financial income | 74 | 58 | 253 |
| Financial costs | -57 | -49 | -222 |
| Profit after financial items | 9 | 1 | 602 |
| Current tax | - | 0 | - |
| Profit after tax | 9 | 1 | 602 |
| STATEMENT OF COMPREHENSIVE INCOME |
|||
| Profit after tax | 9 | 1 | 602 |
| Comprehensive income for the year | 9 | 1 | 602 |
totalled SEK 2,209 million (3,309), of which SEK 1,250 million (800) referred to outstanding commercial paper. The average annual interest rate based on the situation at 31 March 2019 amounted to 0.9 per cent (1.0). The parent company prepares its financial reports in compliance with RFR 2 Financial Reporting for Legal Entities.
| ASSETS | 2019 31 Mar |
2018 31 Mar |
2018 31 Dec |
|---|---|---|---|
| Investments in Group companies | 2,124 | 2,124 | 2,124 |
| Receivables from Group companies | 12,798 | 11,581 | 11,214 |
| Other assets | 22 | 28 | 21 |
| Cash and cash equivalents | - | 120 | - |
| TOTAL ASSETS | 14,944 | 13,853 | 13,359 |
| EQUITY AND LIABILITIES | |||
| Equity | 3,315 | 3,096 | 3,307 |
| Interest-bearing liabilities | 2,209 | 3,309 | 2,238 |
| Liabilities to Group companies | 9,068 | 7,417 | 7,579 |
| Overdraft facilities | 327 | - | 201 |
| Other liabilities | 25 | 31 | 34 |
| TOTAL EQUITY AND LIABILITIES | 14,944 | 13,853 | 13,359 |
The number of employees on 31 March 2019 was 157 (157), of whom 63 were women (63). The majority of our employees, 105 people (105), work in our business units and the rest at our head office in Östersund. As of January 2019, Skellefteå has been a separate business unit, which means that Diös now has seven business units.
Material risks and uncertainties affecting the business include market and business intelligence, the business model, the properties, cash flow, financing and sustainability.
Demand and prices in the Swedish property are influenced by the level of economic activity globally and in Sweden as well as by interest rates.
Our properties are measured at fair value on an ongoing basis, and changes in value are recognised in the income statement. The effects of changes in value affect the income statement and balance sheet and thus also the related performance measures. Any significant negative impact is managed through a diversified portfolio of centrally located properties in growth cities.
| PROPERTY VALUE SENSITIVITY ANALYSIS | Change in property value, % | |||
|---|---|---|---|---|
| -7.5 | 0.0 | +7.5 | ||
| Property value, SEKm | 19,868 | 21,479 | 23,090 | |
| Equity ratio, % | 31.9 | 36.9 | 41.2 | |
| Loan-to-value ratio, % | 57.1 | 52.8 | 49.2 |
Cash flow consists of income and expenses and is primarily attributable to rent levels, property costs, occupancy rates and interest rates. A change in these items affects cash flow and thus also earnings. Any significant negative impact is managed through a diversified tenant structure, good cost control and active interest rate risk management.
| CASH FLOW SENSITIVITY ANALYSIS | Change | Impact on earnings, SEKm1 |
|---|---|---|
| Contracted rental income | +/- 1% | +/- 18 |
| Economic occupancy rate | +/- 1 percentage point | +/- 20 |
| Property costs | -/+ 1% | +/- 7 |
| Interest rate on interest-bearing liabilities | -/+ 1 percentage point | +/- 48 |
1 Annualised.
Access to financing is the biggest financial risk and is essential to running a property business. The risk is limited through good relations with banks, access to the capital market, and strong finances and KPIs.
A sustainable business model and sustainable behaviour are essential to creating long-term value. Through good internal control and procedures, we take responsibility for building a sustainable long-term business.
No material changes in the assessment of risks have been made after the publication of the annual report for 2018. For more information on risks and risk management, see Diös' annual report for 2018, pages 60–64.
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.
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.
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. All property-related transactions have been recognised based on calculations of the preliminary consideration. The calculation of the final consideration will be completed in the second quarter of 2019. The accounting policies applied in preparing the interim report are consistent with the accounting policies applied in preparing the consolidated financial statements and annual accounts for 20181 , Note 1.
New or amended IFRS standards and new interpretations which have not yet become effective:
IFRS 16 has been applied for the financial year that began on 1 January 2019. Diös does not apply the standard retrospectively. The accounting treatment for lessors is essentially unchanged. For lessees, the standard has the effect that most leases will be recognised in the balance sheet. For Diös, the main impact is in respect of the recognition of leasehold contracts and car leases, which from 1 January 2019 will be recognised in the balance sheet and will thus have an impact on total assets. The lease payment is accounted for as depreciation of the right-of-use asset and finance charge, and is no longer included in net operating income. The recognised right-of-use assets have been assigned the same value as the lease liability recognised at 1 January 2019. As Diös has a limited number of contracts, the impact on the financial statements is limited. In preparation for the change, Diös reviewed and assessed the Group's leases in its capacity as lessee, identifying leasehold contracts and car leases as being the most material. In addition to these, only minor leases have been identified, such as leases for office equipment and similar items. As at 1 January 2019, the Group recognised a lease liability of SEK 35 million for leasehold contracts along with a corresponding right-of-use asset. After that date, Diös has recognised the right-of-use asset at fair value, as it
is considered to be an investment property. As a result of the transition to IFRS 16, all ground rent costs have been treated as financial cost, which differs from the previous principle, under which these costs were treated as an operating expense that reduced the operating surplus. Property management income remains unchanged, however. The recognised expense for ground rent in 2018 was SEK 3 million. As at 1 January 2019, the Group recognised a lease liability of SEK 14 million for car leases along with a corresponding right-of-use asset. These are recognised at the value of the right-of-use asset at the beginning of the period less depreciation and a finance charge, which differs from the previous principle, under which this was treated as an operating expense that reduced the operating surplus. The recognised expense for leased vehicles in 2018 was SEK 4 million. As Diös has a limited number of contracts, the impact on the financial statements is limited. A table showing the change and the impact on key ratios as at 1 January 2019 is presented below.
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.
The Annual Report 2018 is available at www.dios.se.
1
| Balance sheet items at 1 January 2019 |
Restatement under IFRS 16 |
Restated balance sheet items 1 January 2019 |
|
|---|---|---|---|
| Assets | |||
| Investment properties | 20,802 | 20,802 | |
| Finance right-of-use asset | - | 441 | 44 |
| Other non-current assets | 54 | 54 | |
| Current receivables | 201 | 201 | |
| Current portion of finance right-of-use asset | - | 51 | 5 |
| Cash and cash equivalents | 0 | 0 | |
| Total assets | 21,057 | 49 | 21,106 |
| Equity | 7,839 | 7,839 | |
| Retained earnings | 0 | 0 | 0 |
| Deferred tax liability | 1,353 | 1,353 | |
| Provisions | 9 | 9 | |
| Interest-bearing liabilities | 11,099 | 11,099 | |
| Non-current lease liability | - | 442 | 44 |
| Overdraft facilities | 198 | 198 | |
| Current liabilities | 559 | 559 | |
| Current lease liability | - | 52 | 5 |
| Total equity and liabilities | 21,057 | 49 | 21,106 |
| 1 Refers to the recognition of ground rent of SEK 35 million and car lease liabilities of SEK 14 million. 2 Refers to the recognition of ground rent of SEK 35 million, all of which is classified as long-term liability, and to car-related liabilities, of which the current portion refers to the estimated portion maturing within 1 year. |
|||
| Impact on key ratios | |||
| Property management income, SEKm | 1,597 | 1,597 | |
| Loan-to-value ratio, % | 53.4 | 53.5 | |
| Equity ratio, % | 37.2 | 37.1 | |
| Interest coverage ratio, % | 5.9 | 5.8 | |
| Surplus ratio, % | 64.0 | 64.8 | |
| TRANSITION FROM OPERATING LEASES IAS 17 TO IFRS 16 LEASES AS AT 1 JANUARY 2019 | |||
| Operating lease commitments at 31 Dec 2018 | 49 | ||
| Finance lease liabilities at 31 December 2018 | 0 | ||
| Short-term leases | 0 | ||
| Low-value leases | 0 | ||
| Impact of reclassification to finance leases under IFRS 16: | |||
| Ground rent | 35 | ||
| Leased cars | 14 |
Recognised lease liability opening balance sheet 1 January 2019 49
In the opening balance sheet as at 1 January 2019, Diös has used a weighted average marginal borrowing rate of 5.9 per cent in determining the lease liability for grounds rents and a rate of 7.9 per cent in determining the lease liability for cars.
| 31 Mar 2019 |
31 Dec 2018 |
30 Sep 2018 |
30 Jun 2018 |
31 Mar 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Jun 2017 |
|
|---|---|---|---|---|---|---|---|---|
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| Income, SEKm | 457 | 447 | 467 | 446 | 450 | 443 | 436 | 435 |
| Operating surplus, SEKm | 268 | 283 | 312 | 295 | 250 | 266 | 287 | 286 |
| Property management income, SEKm | 212 | 225 | 248 | 234 | 187 | 197 | 222 | 224 |
| Profi t for the period, SEKm | 229 | 451 | 303 | 358 | 229 | 256 | 192 | 255 |
| Surplus ratio, % | 60 | 64 | 70 | 67 | 61 | 61 | 67 | 66 |
| Economic occupancy rate, % | 91 | 91 | 91 | 91 | 92 | 91 | 91 | 91 |
| Return on equity, % | 2.9 | 5.9 | 4.2 | 5.0 | 3.3 | 3.8 | 2.9 | 3.9 |
| Equity ratio, % | 36.9 | 37.2 | 36.1 | 34.8 | 35.3 | 34.9 | 33.9 | 33.3 |
| Property loan-to-value ratio, % | 52.8 | 53.4 | 54.6 | 55.8 | 56.7 | 57.1 | 57.8 | 58.3 |
| Average interest rate at end of period, %¹ | 1.3 | 1.2 | 1.3 | 1.5 | 1.5 | 1.5 | 1.6 | 1.6 |
| Interest coverage ratio, times | 6.2 | 6.3 | 6.0 | 6.3 | 4.9 | 4.8 | 5.5 | 5.8 |
| Property management income per share, SEK | 1.57 | 1.67 | 1.84 | 1.74 | 1.38 | 1.46 | 1.65 | 1.67 |
| Earnings per share after tax, SEK | 1.71 | 3.35 | 2.25 | 2.64 | 1.70 | 1.91 | 1.43 | 1.88 |
| Equity per share, SEK | 60.0 | 58.3 | 54.9 | 52.7 | 52.9 | 51.2 | 49.3 | 47.9 |
| Market price per share, SEK | 76.3 | 56.4 | 56.9 | 53.8 | 56.4 | 55.8 | 52.0 | 46.6 |
1 Includes expenses relating to commitment fees and derivatives.
| OPERATIONAL AND FINANCIAL TARGETS | Outcome Jan-Mar 2019 | Target 2019 | |
|---|---|---|---|
| Growth in property management income per share, % | 81 | >5 | |
| Surplus ratio, % | 60 | 65 | |
| Energy use, % | -5 | -3 | |
| Environmentally certifi ed properties, % of total | 11 | 17 | |
| Employee satisfaction index | - | 76 | |
| Customer satisfaction index | - | 67 | |
| Return on equity, % | 17.51 | >12 | |
| Distribution of profi t for the year2,% | - | ~50 | |
| Loan-to-value ratio, % | 52.8 | <55 | |
| Equity ratio, % | 36.9 | >35 |
1 Rolling twelve months
2 Profi t after tax, excluding unrealised changes in value and deferred tax.
SHARE PRICE PERFORMANCE
A comprehensive and diversifi ed property portfolio ensures risk distribution between different markets, tenants and industries. The profi t equalises over time. Our portfolio 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 profi t for the year after tax, excluding unrealised changes in value and deferred tax, should be passed onto the shareholders as a dividend.
24 DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019
Since 2013, the cash fl ow per share has increased by 71 per cent. This is the result of effective management, energy-saving measures, profi table investments and a tenant-focused organisation.
Diös' share price at the end of the period was SEK 76.3 (56.4), which represents a market capitalisation of SEK 10,263 million (7,580), and the return for the past 12 months was 35.4 per cent (28.1). If the dividend is included, the total return on the shares for the period was 42.7 per cent (33.9). 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 -1.5 per cent (-3.3) and the return on the OMX Stockholm Real Estate PI index 26.8 per cent (5.7).
At 31 March, Diös Fastigheter AB had 13,975 shareholders (14,648). The share of foreign-owned shares was 24.6 per cent (21.3) 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 53.7 per cent (57.4) of the total number of shares and votes.
The Annual General Meeting 2018 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 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 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 12 per cent (13). Equity at the end of the year was SEK 8,069 million (7,116) and the long-term net asset value, EPRA NAV, was SEK 9,343 million (8,289). On a per share basis, EPRA NAV was SEK 69.5 (61.6), which means that the share price at 31 March represented 110 per cent (92) of long-term NAV. The net asset value per share for the period, expressed as EPRA NNNAV, was SEK 69.5 (59.9).
Earnings per share for the period were SEK 1.71 (1.70) while longterm earnings per share, expressed as EPRA EPS, were SEK 1.40 (1.26). EPRA EPS, which is designed to show an entity's long-term earnings per share, is calculated as property management income after deducting 21.4 per cent corporation tax attributable to property management income less minority share of earnings.
of Diös Fastigheter AB at 31 March 2019
| SHAREHOLDERS | No. of shares | Capital and voting rights, % |
|---|---|---|
| AB Persson Invest | 20,699,443 | 15.4 |
| Backahill Inter AB | 14,095,354 | 10.5 |
| Pensionskassan SHB Försäkringsförening | 8,096,827 | 6.0 |
| Nordstjernan AB | 6,787,374 | 5.0 |
| Bengtssons Tidnings AB | 6,787,374 | 5.0 |
| Handelsbankens Fonder | 5,150,000 | 3.8 |
| SEB Fonder | 3,433,978 | 2.6 |
| Avanza Pension | 3,330,040 | 2.5 |
| Thompson, Siegel & Walmsley LLC | 2,079,079 | 1.5 |
| Sten Dybeck, including company and family | 1,920,000 | 1.4 |
| Total, largest shareholders | 72,379,469 | 53.7 |
| Other shareholders | 62,132,969 | 46.3 |
| TOTAL | 134,512,438 | 100.0 |
Th e Board of Directors and the CEO declare that the fi nancial statement gives a true and fair view of the operations, fi nancial position and income of the company and the Group, and describes the principal risks and uncertainties faced by the company and the Group's companies. Th is fi nancial statement 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, 23 April 2019
Knut Rost Chief Executive O cer
Bob Persson Chairman
Ragnhild Backman Board member
Anders Bengtsson Board member
Eva Nygren Board member
Anders Nelson Board member
Tomas Mellberg Board member Employee representative
Q2 Interim Report January-June 2019 5 July 2019 Q3 Interim Report January–September 2019 25 October 2019
26 DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019
No events to report after the reporting date.
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 23 April 2019, at 12 p.m. CEST.
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.
Profi t before tax, adjusted for unrealised changes in value plus depreciation/amortisation less current tax, divided by the average number of shares.
Comparable properties refer to properties which have been owned throughout the period and the whole comparative period. The term is used to highlight growth in rental income, excluding one-off eff ects resulting from early vacating of properties, and property costs as well as acquired and sold properties.
Rents invoiced for the period less rent losses and rent discounts including service income.
Interest-bearing liabilities divided by shareholders' equity at the end of the period.
Profi t for the period after tax, attributable to shareholders, divided by the average number of shares.
Operating surplus less central administration after reversal of scheduled depreciation and amortisation. The calculation is made on 12-month rolling basis, unless otherwise stated.
Contracted 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 diff erences 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.
Equity at the end of the period divided by the number of shares outstanding at the end of the period.
Equity divided by total assets at the end of the period.
Income from property management after reversal of fi nancial costs, divided by fi nancial costs for the period.
Interest-bearing and other liabilities relating to properties, divided by the carrying amount of the properties at the end of the period.
Net debt is calculated as interest-bearing liabilities less cash and cash equivalents plus overdraft facilities. Net debt is then divided by EBITDA.
Net annual rent, excluding discounts and supplements, for newly signed, terminated and renegotiated contracts. The lease term is not taken into account.
Actual number of shares outstanding at the end of the period.
Refers to a property that is intended to be redeveloped or improved. Divided into the following sub-categories:
New builds – land and properties with ongoing new builds or that are undergoing complete redevelopment.
Improvement property – properties with ongoing or planned conversion or extension work that materially aff ects the property's operating surplus or standard or changes the use of the premises.
Tenant improvements – properties undergoing conversion or minor improvements to premises.
Revenue less property costs, costs for central administration and net fi nancial items.
Rent at the end of the period plus a supplement for the estimated market rent for unoccupied fl oor space.
Profi t for the period attributable to parent company shareholders divided by average equity attributable to parent company shareholders. Average equity is defi ned as the sum of the opening and closing balance divided by two.
Income from tariff -based services and income from care and upkeep.
Operating surplus for the period divided by contracted rental income for the period.
Operating surplus for the period divided by the properties' market value at the end of the period.
28 DIÖS FASTIGHETER AB INTERIM REPORT JANUARY–MARCH 2019 DIÖS KOMMUNIKATION 2019, PHOTOGRAPHS: TINA STAFRÉN 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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