2016-07-15 14:45:01 CEST
2016-07-15 14:45:01 CEST
REGULATED INFORMATION
Norvestia - Interim report (Q1 and Q3)
INTERIM REPORT OF NORVESTIA FOR JANUARY–JUNE 2016
Helsinki, Finland, 2016-07-15 14:45 CEST (GLOBE NEWSWIRE) --
Norvestia Oyj Interim Report 15 July 2016 at 15:45
INTERIM REPORT OF NORVESTIA FOR JANUARY–JUNE 2016
In January–June 2016, the result of the Group amounted to EUR 6.4 million (EUR
13.1 million in the same period previous year).
Earnings per share was EUR 0.41 (0.86).
Investment income was EUR 8.4 million (16.2).
Net Asset Value (dividend-adjusted) increased during the period by 3.8% (8.9%).
Dividend of EUR 0.79 per share was paid for 2015 (0.30).
CAPITAL MARKETS
The most influential factor on the capital markets during the second quarter
was speculation about Great Britain’s possible exit from the EU. The country
held a consultative referendum on the subject 23 June. During the weeks
preceding the referendum share prices fluctuated strongly in line with opinion
polls. Only a day before voting stock markets rallied as it appeared that
Britain would remain a member of the European Union. The result of the
referendum was, however, a surprise for both the pollsters and the capital
markets; Britons voted to leave the EU.
This came as a shock to the stock market. Share prices took a dive as soon as
the market opened 24 June. The Euro Stoxx Index for example, fell by nearly 9%
during the day, the greatest daily fall in its history. Now that the first
shock has eased share prices have started to recover. At the end of June, five
working days after the referendum, the Euro Stoxx Index was around 7% below its
pre referendum level. The Helsinki stock exchange was fortunately closed for
Midsummer on the day following the referendum, and share price reactions were
somewhat less severe in Helsinki. At the end of June, the OMX Helsinki CAP
Yield Index was only about 2% lower than before the referendum.
The result of the referendum caused a political crisis in Britain and will
complicate the affairs of the EU. Many believe that Brexit, when realized, will
lead to a sharp slowdown in economic growth in Europe in the near future. Thus
far it is unclear how Brexit would technically be realized and what it might
involve, as negotiations are only just beginning. Britain’s new prime minister
Theresa May has a very difficult task ahead of her.
However, the reactions of the capital markets to the EU crisis seem rather
moderate. For example, despite all political turbulence the OMX Helsinki CAP
Yield Index increased by 2.4% during the second quarter of the year, and by the
end of June it had decreased by only 1.0% from the beginning of the year. This
is surprising amidst all bad Brexit news.
Economic figures published before the British referendum forecast that economic
development in Europe would otherwise have been taking a gradual turn for the
better. Figures published at the end of the summer will give the earliest
indications of how big an effect the Brits’ decision will ultimately have on
consumer sentiment and hence on the growth of the European economy.
Index yields on various exchanges for the first six months of 2016 were as
follows:
Finland/OMX Helsinki Index -8.1%
Finland/OMX Helsinki CAP Yield Index -1.0%
Sweden/OMX Stockholm Index -6.8%
Norway/OBX Index 0.4%
Denmark/OMX Copenhagen Index -5.4%
USA/Nasdaq Composite Index -3.3%
USA/S&P 500 Index 2.7%
Bloomberg European 500 Index -10.4%
MSCI World Index -0.6%
Japan/Nikkei 225 Index -18.2%
Norvestia’s share price (dividend-adjusted) 9.0%
Norvestia’s Net Asset Value (dividend-adjusted) 3.8%
NORVESTIA’S INVESTMENTS
Norvestia’s twofold investment strategy consists of market investments and
Growth Equity. Market investments are made primarily in Nordic listed shares,
funds and bonds. Growth Equity investments are made in unlisted companies,
growth-oriented listed companies and private equity funds.
Norvestia’s investments excluding cash and other liquid assets were 86% (83%)
of total assets at the end of June. The fair value breakdown of the investments
was as follows:
30/6/2016 30/6/2015
MEUR % MEUR %
Listed shares and share funds* 86.1 48.1 80.4 50.0
Growth Equity 35.5 19.8 19.3 12.0
Bonds and bond funds 17.6 9.8 16.0 9.9
Hedge funds 14.2 7.9 18.7 11.6
Cash and other liquid assets 25.7 14.4 26.5 16.5
Total 179.1 100.0 160.9 100.0
* of which share funds EUR 13.8 million (14.7).
83% of the Group’s assets were in euros, 11% in Swedish krona, 5% in US dollars
and 1% in other currencies.
During the second quarter Norvestia traded shares actively and aimed to
capitalize on large share price movements. Trading was focused on shares
offering strong dividend yields.
Norvestia was prepared for the British to vote to leave the EU. The market
portfolio was hedged during the days preceding the referendum by selling
approximately EUR 40 million of Euro Stoxx futures contracts. Similarly, a
victory for the remain camp was covered by buying call options. The hedge was
effective. The value of Norvestia’s market portfolio fell much less than the
market in general during the days following the referendum, and indeed, the
historically large stock exchange decline did not have a significant effect on
Norvestia’s Net Asset Value. The hedge ratio of the portfolio has been
gradually reduced since the referendum. During the second quarter,
approximately half of the Swedish krona currency risk was hedged with a
currency future.
GROWTH EQUITY
During the second quarter of the year, Coronaria Hoitoketju paid an
exceptionally large dividend due to the sale of Touhula Varhaiskasvatus.
Norvestia’s share of the dividend was nearly EUR 10 million.
Investments in unlisted companies belong to Norvestia’s Growth Equity
portfolio, which is administered by Norvestia’s subsidiary Norvestia Industries
Oy. The aim of Norvestia’s Growth Equity investment activities is to find
interesting companies with strong growth potential, the long-term and active
development of which can yield significant increases in value and thereby
return to Norvestia’s shareholders. In accordance with its investment strategy,
Norvestia aims to find target companies that operate in sufficiently large
markets and have the opportunity to take advantage of their service and
solution innovations both in Finland and internationally.
Norvestia invests in minority shares or can be in the majority together with
another investor. At the end of June 2016, the Growth Equity portfolio
consisted of six unlisted companies: Aste Helsinki which offers media
production and consulting, Coronaria Hoitoketju which offers health care
services, Fluido which offers cloud services consulting, Idean Enterprises
which offers customer experience design services, Polystar Instruments which
develops telecommunications business intelligence software solutions, and
Touhula Varhaiskasvatus which offers early childhood and preschool education.
The total fair value of the interests in these companies amounted to EUR 27.5
million.
Growth Equity also includes investments in private equity funds. Norvestia has
committed itself to investing EUR 2.0 million in the Amanda V East Ky private
equity fund, of which EUR 1.2 million is now invested; EUR 2.0 million in
Lifeline Ventures Fund I Ky, of which EUR 1.6 million is now invested; EUR 5.0
million in Lifeline Ventures Fund III Ky, of which EUR 0.2 million is now
invested; and EUR 3.0 million in Open Ocean Fund 2015 Ky, of which EUR 0.2
million is now invested. In addition, Norvestia has invested EUR 0.1 million in
Lifeline Ventures Fund III AB.
FUTURE PROSPECTS
Speculation around the Brexit will continue. According to the result of the
referendum, Britain should leave the EU. How this will happen in practice is,
however, completely unclear as negotiations are only just beginning. The
British referendum can signal the fact that things need to change for Europeans
to start better identifying with the EU. The coming years will show which
course EU development will take. Political uncertainty will be reflected in the
capital markets and it is likely that large share price movements will continue
during the coming months.
Almost all other economic news has been drowned out by the discussion around
Britain. However, no remarkable change in the market environment occurred
during the first half of the year. Interest rates are still low, which funnels
wealth into the stock market and other high-risk investments. This will
probably continue during the third quarter of the year. It is likely that in
the fall speculation on the US presidential election will shake the markets,
but will probably have a smaller effect than discussion about the Brexit.
Uncertain market sentiment often leads to excesses which can offer
opportunities for a fast moving, solid investor such as Norvestia. In addition,
we believe that the development of Growth Equity investments will remain
positive and that rapid price changes on the capital markets will not directly
affect their valuations.
In this sensitive investment environment, Norvestia aims to take into account
various possible scenarios in the economy and on the stock market, based on the
latest economic figures. According to the chosen strategy, the amount of Growth
Equity investments will be increased during 2016–2018. Otherwise investment
levels between shares, funds and interest-yielding investments will be assessed
on the basis of the prevailing situation.
KEY FIGURES
1/1-30/6/ 1/1-30/6/ 1/1-31/12/
2016 2015 2015
Earnings per share, EUR 0.41 0.86 1.63
30/6/2016 30/6/2015 31/12/2015
Equity ratio, % 90.7 97.0 96.6
Shareholders’ equity per share, EUR 10.66 10.26 11.04
Net Asset Value per share, EUR 10.66 10.26 11.04
Net Asset Value, EUR million 163.3 157.1 169.1
Share price, EUR 7.92 7.77 7.99
Number of shares 15,316,560 15,316,560 15,316,560
DISCLOSURE PROCEDURE
This stock exchange release is a summary of Norvestia's January-June 2016
Interim Report. The full Interim Report including tables is attached to this
release and available on Norvestia’s website at www.norvestia.fi/reports.
The interim financial information is unaudited.
Helsinki 15 July 2016
NORVESTIA OYJ
Board of Directors
On behalf Juha Kasanen
Managing Director
Tel. +358-9-6226 380
DISTRIBUTION
Nasdaq Helsinki
Main media
www.norvestia.fi
© 2024 Nasdaq, Inc. All Rights Reserved |