RomReal Limited
Investor presentation Q4 2016 results
Arne Reinemo - Director DnB Markets Event
17 February 2016
This Presentation of the Q4 2016 results of RomReal Ltd (the "Company") has been prepared for discussion purposes only and should be read in conjunction with the Q4 2016 Report which is filed on Oslo Axess through www.newsweb.no, and which can be viewed on the Company's website www.romreal.com
Q4 2016 results – Highlights
Net Asset Value (NAV)
• Net Asset value was EUR 0.44 (NOK 3.97) per share, up 4.0% compared to the end of Q3 2016. The plot valuation is up 9.3% on a comparable plot basis. If the values from the two conditional sales had been applied to the sold properties, NAV was EUR 0.5 (NOK 4.59)
Operational highlights
- On 2nd January, the Company entered into two significant, conditional sales transactions representing 51% of its investment portfolio. The transactions include the Mamaia North plots and the Morii Lake plot in Bucharest with an estimated value of EUR 17.75 – 18.25 million
- The Company has exercised its option to extend the Alpha Bank loan
Financial Results
• Net Result for the quarter was EUR 14,000 compared to an EUR 1,880,000 loss in 4Q 2015. Operating cash flow for the quarter was a minus EUR 115,000 compared to minus EUR 64,000 in the same period last year
Macro and real estate market highlights
- Romania grew 4.8% in 4Q 2016 and IMF expects Romania to be the fastest growing EU member for 2016 in total.
- The real estate market sets new records with higher completed buildings, increasing real estate prices and higher transaction volume.
- Housing prices are up almost 20% from the bottom, but they are still less than 50% of the top level in 2008! There is still significant potential left
NAV movement in Q4 2016
| Asset base |
Q4 2016 |
|
|
Q3 2016 |
|
|
|
EUR '000 |
EUR/share |
NOK/share |
EUR '000 |
EUR/share |
NOK/share |
Investment
property |
16,904 |
0.41 |
3.72 |
26,192 |
0.63 |
5.89 |
Assets held for
sale |
11,720 |
0.28 |
2.58 |
- |
- |
- |
| Inventories |
2,536 |
0.06 |
0.56 |
2,278 |
0.06 |
0.51 |
| Cash |
707 |
0.02 |
0.16 |
289 |
0.01 |
0.06 |
Other
assets/(liabilities) |
(13,830) |
(0.33) |
(3.04) |
(11,415) |
(0.28) |
(2.57) |
| Net asset value |
18,036 |
|
|
17,343 |
|
|
| NAV/Share |
|
0.44 |
3.97 |
|
0.42 |
3.90 |
| Change in NAV |
4.0% |
|
|
-1.4% |
|
|
NAV is based on the Knight Frank year end valuation. If the conditional transaction prices were applied, the NAV was EUR 0.5 (NOK 4.59)
The total issued number of shares issued at end Q4 2016 was 41,367,783 and unchanged from Q3; EUR/NOK exchange rate at 31/12/2016 was 9.0889
Financial highlights - IFRS
| EUR '000 |
Q4 2016 |
Q4 2015 |
YTD 2016 |
YTD 2015 |
| Operating Revenue |
58 |
89 |
508 |
1,488 |
| Operating Expenses |
131 |
(110) |
(515) |
(775) |
| Other operating income/ |
|
|
|
|
| (expense), net |
2,962 |
(408) |
2,282 |
(1,951) |
| Net financial income/(cost) |
(1,361) |
(1,472) |
(632) |
(909) |
| Pre-tax result |
1,790 |
(1,900) |
1,644 |
(2,181) |
| Result for the period |
14 |
(1,881) |
(214) |
(2,169) |
|
|
|
|
|
| Total assets |
32,205 |
29,965 |
31,124 |
29,965 |
| Total liabilities |
14,168 |
11,876 |
14,168 |
11,876 |
| Total equity |
18,036 |
18,089 |
17,956 |
18,089 |
| Equity % |
56.0% |
60.4% |
55.9% |
60.4% |
| NAV per share (EUR) |
0.44 |
0.44 |
0.43 |
0.44 |
| Cash position |
707 |
541 |
707 |
541 |
Operational highlights
- At January 2, 2017, RomReal announced the conditional sale of Mamaia North and Morii Lake for EUR 17.75 – 18.25 million. These sales were on average ca. 20% above 2015 IFRS book value
- The transactions are scheduled to close by the end of the first quarter
- The two transactions will leave RomReal debt-free and with liquidity
- The real estate market develops favorably. Transaction volume increases and prices move higher. The Company expects to sell additional properties during 2017 at prices at or above book values
- To facilitate such sales, RomReal continues to work on improving the regulatory status of its properties and parcel out properties to adequate sizes. In November 2016, it received a PUZ for Mamaia North. RomReal has decided to split Oasis and Lakeside into smaller plots to attract new buyer segments
Romanian Macro development
- Romania was the EU member with highest GDP growth in 2Q 2016. IMF expects Romania to also register the highest growth in Europe for 2016 as a whole with 5% growth. Fourth quarter growth came in preliminary at 4.8%. Analysts expects overall growth to continue on a strong note. For 2017, they expect around 4% growth.
- Several factors have supported the prior years strong overall growth. Falling interest rate, rapidly growing consumer credit, and falling unemployment have all contributed to a strong economy. As an illustration of the strong growth, car registrations has increased more than 50% the last two years.
Romania Real Estate Update
- 2016 was a new, positive year in the real estate market turnaround. Transaction volumes and prices increase across segments, and completed buildings rise. For the industrial segment, completed buildings were 380,000 sqm., the largest number ever.
- In the residential market, the activity is increasing further. Completed buildings increased 23.4% in first half of 2016 – fueled by rising housing prices. Since the bottom, housing prices in Romania has increased almost 20% but are still far lower than the 2008 highs. Building permits for residential buildings fell in 2016 which may put further pressure on new homes prices.
- In November, a cabinet member indicated that the Prima Casa program will be extended and increased into 2017. The cabinet considers to reduce down payment requirements to allow younger families to access the program
Apartment Price Development (January)
- Apartment prices in Romania have seen an increase of 9.6% to EUR 1,064 per m2 compared with the same period last year
-
Since the bottom in Dec. 2014, the average price has increased 19.4%
-
Apartment prices in Constanta have seen an increase of 8.1% to EUR 989 per m2, compared with the same period of 2015
- Since the bottom in Dec. 2013, the average price has increased 17.9%
RomReal Limited – Fourth quarter 2016
RomReal shareholders as at 10/02/2017
| SHAREHOLDER |
HOLDING |
% |
SIX
SIS
AG
25PCT
ACCOUNT |
10,336,254 |
24.99 |
THORKILDSEN
DØDSBO
KAY
TØNNES |
5,415,756 |
13.09 |
GRØNSKAG
KJETIL |
4,138,179 |
10.00 |
SAGA
EIENDOM
AS |
2,528,669 |
6.11 |
AUSTBØ
EDVIN |
1,758,500 |
4.25 |
E.
LARRE
HOLDING
AS |
1,614,444 |
3.90 |
ENERGI
INVEST
A/S |
1,390,000 |
3.36 |
ORAKEL
AS |
1,101,000 |
2.66 |
SPAR
KAPITAL
INVESTO |
940,236 |
2.27 |
Carnegie
Investment |
931,458 |
2.25 |
THORKILDSEN
INVEST
A |
829,478 |
2.01 |
PERSSON
ARILD |
718,000 |
1.74 |
HOEN
ANDERS
MYSSEN |
689,557 |
1.67 |
Skandinaviska
Enskil |
628,832 |
1.52 |
SILJAN
INDUSTRIER
AS |
611,100 |
1.48 |
JONAS
BJERG
PENSION
NTS
TRUSTEES
LTD |
558,306 |
1.35 |
Nordea
Bank
AB
NORDEA
BA.
SWE.
AB |
504,784 |
1.22 |
Danske
Bank
A/S
3887
OPERATIONS
SEC. |
445,998 |
1.08 |
CLEARSTREAM
BANKING |
438,383 |
1.06 |
BNP
Paribas
Securiti
S/A
SPEARPOINT
LTD |
406,856 |
0.98 |
TOTAL
TOP
20 |
35,736,060 |
86 |
(1) This is the Top 20 Shareholder list as per 18 November 2016.
(2) The total issued number of shares issued at end Q3 2016 was 41,367,783.
(3) Chairman Kjetil Grønskag owns directly and indirectly 4,138,179 shares corresponding to 10.0%.
(4) Thorkildsen Invest AS is a Company controlled by RomReal Kay Thorkildsen family.
(5) RomReal Director Arne Reinemo controls directly or indirectly SILJAN INDUSTRIER AS.
(6) The above list is the 20 largest shareholders according to the VPS print out; please note that shareholders might use different accounts and account names, adding to their total holding.
Main focus areas going forward
- RomReal's immediate focus is to close the two transactions involving Mamaia North and Lake Morii. After the two transactions are closed, RomReal will emerge as a debt-free company with available liquidity and several attractively located properties with good development potential.
- RomReal expects the real estate market to develop positively in 2017. For the market to catch up with the level from 2008 – there is still significant room for price appreciation. Therefore, the Company expects to sell more properties in 2017 at prices at or above book values.
- Consequently, RomReal expects that the Company's Net Asset Value will increase in the year to come