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2015-10-27 08:45:00 CET 2015-10-27 08:45:03 CET REGULATED INFORMATION Norvestia - Interim report (Q1 and Q3)INTERIM REPORT OF NORVESTIA FOR JANUARY–SEPTEMBER 2015Helsinki, Finland, 2015-10-27 08:45 CET (GLOBE NEWSWIRE) -- Norvestia Oyj Interim Report 27 October 2015 at 9:45 INTERIM REPORT OF NORVESTIA FOR JANUARY-SEPTEMBER 2015 In January-September 2015, the result of the Group amounted to EUR 6.5 million (EUR 4.9 million in the same period previous year). Earnings per share were EUR 0.42 (0.32). Trading gains were EUR 8.1 million (5.6). Net Asset Value (dividend-adjusted) increased during the period by 5.0% (3.5%). Amended Net Asset Value (dividend-adjusted) increased during the period by 4.5% (3.4%). In April 2015 EUR 0.30 per share was distributed as dividend (0.35). NEW INVESTMENT STRATEGY FOR NORVESTIA As a result of the Group's strategy process Norvestia Oyj's Board of Directors has 26 October 2015 approved a new investment strategy for the company. The company has also updated its financial targets. Norvestia will publish a separate stock exchange release concerning the Board's strategic decisions. CAPITAL MARKETS So far 2015 has been fairly contradictory on the European capital markets. Share prices rose strongly during the first quarter of the year, before heading south in April and continuing to fall ever since. The decline in share prices was particularly strong in August-September. The value of the OMX Helsinki CAP Yield Index decreased by 7.9% during the third quarter of the year. At the end of the third quarter, the yield of the index was 3.1% up from the beginning of the year when it was over 20% at its April high. There have been several factors behind the decline in share prices. At the end of the spring Greece's debt negotiations and financial situation pushed share prices down. In the summer and early fall concern over the growth outlook of the world economy and in particular the slowdown in China's growth raised general uncertainty on the capital markets. Negative sentiment increased when the US Federal Reserve System (FED) did not, against expectations, raise its key interest rate at its 17 September meeting. This decision was interpreted as the FED expecting weaker US growth than had been previously forecast. The latest statistics support this view. Several forecasting institutions have lowered their forecasts for global economic growth since the summer. Yet at the beginning of the year the global economy was forecast to grow by 3.6% during 2015. That number has now been revised downwards to a lowly 3.0%, with 2016 global economic growth forecast to be 3.5%. China's annual economic growth is forecast to be over 6% for the next few years. In addition, some separate news shook the stock market in the third quarter. In September the world's biggest car manufacturer Volkswagen was caught illegally manipulating the exhaust emissions of its diesel cars in the US. As a result, the company lost nearly 40% of its market capitalization in just two days, which corresponded to approximately EUR 30 billion. This scandal, the biggest in the European economy for a long time, further weakened the uncertain sentiment on the stock market and also negatively impacted the share prices of other car manufacturers. The extent of the decline in share prices during the third quarter is well illustrated by the fact that over half of the shares on the OMX Helsinki 25 Index fell during the quarter by more than 10%. The biggest decline was witnessed by Outokumpu shares which lost 54% of their value. Tieto shares saw the biggest upside as their value increased by 8%. The fundamentals of the interest market remained unchanged during the third quarter of the year. Interest rates remain at record lows and even the interest level of debt securities considered risk-free declined somewhat. For example, the interest rate of German government bonds is currently negative all the way to a five-year maturity. This decrease in interest levels results from the fact that investors protecting themselves from the turbulence of the stock markets look for safe havens for their investments and are even ready to accept a negative interest rate rather than a stock risk. Index yields on various exchanges for the first nine months of 2015 were as follows: Finland/OMX Helsinki Index -1.0% Finland/OMX Helsinki CAP Yield Index 3.1% Sweden/OMX Stockholm Index 0.4% Norway/OBX Index -1.1% Denmark/OMX Copenhagen Index 18.6% USA/Nasdaq Composite Index -2.4% USA/S&P 500 Index -6.7% Bloomberg European 500 Index 0.5% MSCI World Index -7.5% Japan/Nikkei 225 Index -0.4% Norvestia's share price (dividend-adjusted) 3.0% Norvestia's Net Asset Value (dividend-adjusted) 5.0% Norvestia's Amended Net Asset Value (dividend-adjusted) 4.5% GROWTH EQUITY The new investment strategy approved by Norvestia's Board of Directors 26 October 2015 will have a significant effect on the role of growth equity investment activities (previously industrial investments) in the Group as their share of total investments will be increased from the current 10% to approximately 50% during 2016-2018. Investments in unlisted or growth-oriented listed 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 longterm 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 September 2015, the growth equity portfolio consisted of four unlisted companies: Aste Holding which offers media production and consulting, Coronaria Hoitoketju which offers health care services (includes also the fast growing independent Touhula Group which offers early childhood and preschool education), Idean Enterprises which offers customer experience design services and Polystar Instruments which develops business intelligence software solutions for telecommunications. The total balance value of interests in these companies amounted to EUR 12.0 million. The development of growth equity investments continued strongly in 2015, with companies able to increase their revenues faster than the markets. Growth equity also includes investments in private equity funds. Norvestia has committed itself to investing EUR 2.0 million in Lifeline Ventures Fund I, of which EUR 1.4 million is now invested. In addition, Norvestia has committed itself to investing EUR 2.0 million in the Amanda V East private equity fund, of which EUR 1.1 million is now invested. Norvestia has also invested EUR 0.1 million in Lifeline Ventures Fund III. NORVESTIA'S INVESTMENTS Norvestia's investments excluding cash and other liquid assets were 83% (89%) of total assets at the end of September. The market value breakdown of the investments was as follows: 30/9/2015 30/9/2014 MEUR % MEUR % Listed shares and share funds* 75.3 49.6 73.3 50.7 Industrial investments 16.0 10.5 13.7 9.5 Hedge funds 18.1 11.9 20.2 14.0 Bonds and bond funds 16.6 10.9 21.2 14.6 Cash and other liquid assets 26.0 17.1 16.2 11.2 In total 152.0 100.0 144.6 100.0 * of which share funds EUR 13.1 million (13.3). 79% of the Group's assets were in euros, 14% in Swedish krona, 6% in US dollars and 1% in other currencies. The third quarter of the year constituted a difficult investment environment. The investment portfolio was hedged by selling shares and index futures, and by increasing the amount of cash. The values of listed shares, share funds and hedge funds declined. The values of bonds remained fairly unchanged and growth equity investments yielded positively. The biggest single returns were due to the increase in the value of Elisa's and Finnair's shares. Norvestia's Net Asset Value fluctuated less month on month than the stock market in general. Approximately half of the Swedish krona currency risk was hedged with a currency future. FUTURE PROSPECTS It is exceptionally difficult to forecast the development of the capital markets during the last quarter of the year. In the midst of uncertainty, the most certain thing is that the interest levels of risk-free loans will remain at record lows. The European Central Bank (ECB) announced at its 23 October meeting that it would further increase the amount of liquidity if growth in Europe remains sluggish. The low interest rate level and the ECB's support activities are clearly buoying the stock market. Downward pressure is being exerted on share prices, however, by the fact that company specific third quarter results have been weaker than expected and the prices of many shares have fallen following earnings announcements. The stock market is now indeed in a very contradictory situation. The company specific results make any rise in share prices unlikely, however prices may well still rise anyway, due to the support measures of the central bank. Concern over future growth of the global economy is stifling share prices, however. The economic figures published by China are being followed particularly closely at the moment. The markets would probably react positively if the FED raised its key interest rate this year. The key interest rate of the US central banking system has remained at its record low of 0.25% for almost seven years. Even a small rise in the interest rate would indicate the FED's belief in a stronger, recovering US economy in the coming years. 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. Investment levels between shares, funds and interest-yielding investments are assessed on the basis of the prevailing situation. KEY FIGURES 1/1-30/9/ 1/1-30/9/ 1/1-31/12/ 2015 2014 2014 Earnings per share, EUR 0.42 0.32 0.35 30/9/2015 30/9/2014 31/12/2014 Equity ratio, % 97.3 97.7 99.0 Shareholders' equity per share, EUR 9.78 9.55 9.59 Net Asset Value per share, EUR 9.78 9.55 9.59 Amended Net Asset Value per share, EUR 9.88 9.64 9.73 Net Asset Value, EUR million 149.8 146.2 146.9 Amended Net Asset Value, EUR million 151.4 147.7 149.0 Share price, EUR 7.32 7.32 7.40 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-September 2015 interim report. The full interim report including tables is attached to this release and available on Norvestia's web pages at www.norvestia.fi/en/investors. The interim financial information has been reviewed by Norvestia's auditor. Helsinki 27 October 2015 NORVESTIA OYJ Board of Directors On behalf Juha Kasanen Managing Director Tel. +358-9-6226 380 DISTRIBUTION Nasdaq Helsinki Main media www.norvestia.fi |
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