2016-02-04 07:30:02 CET
2016-02-04 07:30:02 CET
REGULATED INFORMATION
Sponda - Financial Statement Release
Sponda Plc Financial Statements Bulletin 1 January – 31 December 2015
Sponda Plc Financial Statements Bulletin 4 February 2016 at 8:30
Sponda Plc Financial Statements Bulletin 1 January – 31 December 2015
JANUARY–DECEMBER 2015 IN BRIEF (compared with 1 January – 31 December 2014)
-- Total revenue was EUR 230.5 (246.7) million. The decline was mainly due to
properties sold in 2014.
-- Net operating income was EUR 165.7 (176.0) million.
-- Operating profit was EUR 178.1 (151.7) million. This includes a fair value
change of EUR 23.2 (-0.2) million.
-- Cash flow from operations per share was EUR 0.36 (0.37).
-- The fair value of the investment properties amounted to EUR 3,101.7
(3,142.1) million.
-- Net assets per share totalled EUR 5.26 (4.65).
-- The economic occupancy rate was 87.7% (87.0%).
-- The Board proposes to the Annual General Meeting that a dividend of EUR
0.19 per share be paid.
-- After the reporting period, Sponda announced the acquisition of six
properties from the Helsinki CBD.
OCTOBER–DECEMBER 2015 IN BRIEF (compared with 1 October – 31 December 2014)
-- Total revenue was EUR 57.2 (57.3) million.
-- Net operating income was EUR 41.3 (40.4) million.
-- Operating profit was EUR 47.8 (32.9) million. This includes a fair value
change of EUR 10.3 (1.6) million.
-- Cash flow from operations per share was EUR 0.07 (0.09).
KEY FIGURES
10-12/2015 10-12/201 1-12/2015 1-12/2014
4
Total revenue, M€ 57.2 57.3 230.5 246.7
Net operating income, M€ 41.3 40.4 165.7 176.0
Operating profit, M€ 47.8 32.9 178.1 151.7
Earnings per share, € 0.55 0.04 0.78 0.24
Cash flow from operations per 0.07 0.09 0.36 0.37
share, €
Equity per share, € 5.26 4.65
Equity ratio, % 46.2 41.0
Interest cover ratio 3.5 3.3
KEY FIGURES ACCORDING TO EPRA BEST PRACTICES RECOMMENDATIONS
10-12/201 10-12/201 1-12/201 1-12/201
5 4 5 4
EPRA Earnings, M€ 153.3 23.2 232.0 101.6
EPRA Earnings per share, € 0.54 0.08 0.82 0.36
Company adjusted EPRA Earnings, M€ 16.1 26.6 98.6 108.7
Company adjusted EPRA Earnings per 0.06 0.09 0.35 0.38
share, €
EPRA NAV/share, € 5.60 5.45
EPRA NNNAV/share, € 5.15 4.49
EPRA Net Initial Yield (NIY), % 5.62 5.18
EPRA “topped-up” NIY, % 5.63 5.19
EPRA Vacancy rate, % 12.26 12.96
EPRA Cost Ratio (including direct 17.68 17.26
vacancy costs), %
EPRA Cost Ratio (excluding direct 12.90 11.96
vacancy costs), %
PRESIDENT AND CEO KARI INKINEN
The rental market in Finland was challenging in 2015, with the market occupancy
rate of office premises, in particular, declining. Sponda’s core business in
the Office Properties and Shopping Centres segments, however, remained stable
and outperformed the market. The result and economic occupancy rate of the core
business were significantly better than those of the other segments.
We made progress in strategic divestments and investments in line with our
targets, which substantially lowered the risk profile of Sponda’s property
portfolio. In Russia, we sold two properties in summer 2015 at their fair
value, EUR 39 million, in spite of the market’s instability.
In Finland, we continued to implement our strategy by selling Sponda’s
approximately 38% holding in Certeum Oy and our properties located in Vuosaari
harbour, for a total of approximately EUR 290 million. Both transactions were
completed in late 2015 and they represent a significant step in the
implementation of our strategy. Also positive was the fact that the
transactions were made either at fair value or at a profit.
Sponda’s property development projects progressed on schedule. We completed our
office property project in Ilmala in late 2015. The tenant moved in in December
2015 and the property is fully leased. Sponda’s development margin on the
project was significantly above its target level, which is 15% of the invested
amount. Sponda currently has one active property development project underway,
namely the Ratina shopping centre in Tampere. The project is progressing
according to plan, as is the pre-letting of the property. The property will be
completed in spring 2018.
Sponda will continue to implement its strategy in 2016 by selling properties
and reinvesting the proceeds from the sales. Investments will be directed to
property development projects and property acquisitions in Sponda’s key
strategic areas in Helsinki and Tampere. After the reporting period Sponda
announced that it has signed an agreement to acquire six properties from the
Helsinki CBD. These properties fit perfectly to our strategy and to our
property portfolio.
DEFERRED TAX LIABILITIES
As a consequence of dissolving an unnecessary sub-group, originating from a
portfolio transaction in 2006, and from changes in the acquisition cost of
shares, the amount of deferred taxes changed significantly. The reduction in
deferred taxes, caused by dissolving the sub-group and recognised in the
financial statements, for the year 2015 was approximately EUR 129 million. The
change was discussed in the interim report published on 3 November 2015.
BUSINESS CONDITIONS – FINLAND
A forecast by the Finnish Ministry of Finance in December 2015 predicted that
Finland’s GDP would grow by 0.2% in 2015. The most significant factor
contributing to the growth of the domestic economy is the favourable
development of private and public consumption. The GDP growth forecast for 2016
is 1.2%, attributable to consumption growth as well as private investments.
According to KTI Property Information, the property transaction volume for the
final quarter of 2015 was EUR 1.33 billion, and the full-year volume was EUR
5.46 billion. This means that the transaction volume in 2015 was the
second-highest ever in Finland. The annual transaction volume of property
transactions was higher only in 2007. International investment demand remained
strong in 2015, with international investors accounting for 34% of the
transaction volume.
The construction of new office properties has picked up slightly compared to
2014, but remains at a fairly low level. According to Catella, some 86,000 m2
of new office space was completed in the office premises market in the Helsinki
metropolitan area by the end of 2015, which is more than 50% higher than in
2014.
The vacancy rate of office premises in the Helsinki metropolitan area declined
slightly in the second half of the year in spite of the weak economic climate.
According to Catella, the average vacancy rate stood at 13.3% at the end of the
year.
OPERATIONS AND PROPERTY ASSETS 1 JANUARY – 31 DECEMBER 2015
At the end of 2015, an external consultant assessed the values of Sponda’s
investment properties in Finland (Catella Property Oy) and in Russia (CB
Richard Ellis). The change in fair value of the investment properties in 2015
was EUR 23.2 (-3.9) million for the full year and EUR 10.3 (1.5) million for
October–December. The value of Sponda’s properties in Finland developed
favourably primarily due to a decrease in yield requirements, especially with
regard to central business district properties. Another factor contributing to
the increase in fair value was the development margin of property development
after the Ilmala office project was completed. The negative change in the fair
value of properties in Russia was attributable to changes in market rents.
Valuation gains/losses on fair value assessment
M€
10-12/1 10-12/1 1-12/1 1-12/1
5 4 5 4
Changes in yield requirements (Finland) 7.0 12.4 39.2 15.7
Changes in yield requirements (Russia) 0.0 -10.0 -7.4 -10.0
Development gains on property development 15.7 3.5 25.4 5.5
projects
Modernisation investments -10.2 -14.3 -37.8 -42.0
Change in market rents and maintenance costs 9.8 13.8 30.2 40.3
(Finland)
Change in market rents and maintenance costs -12.5 -4.2 -26.8 -19.3
(Russia)
Change in currency exchange rates 0.5 0.2 0.3 5.9
Investment properties, total 10.3 1.5 23.2 -3.9
Real estate funds 0.0 0.1 0.0 -1.8
Realised share of real estate fund profits 0.0 0.0 0.0 5.5
Group, total 10.3 1.6 23.2 -0.2
Sponda defined the fair values of its investment properties at the end of 2015
in accordance with the company’s established accounting principles. At the end
of 2015, Catella Property Oy assessed the fair values of Sponda’s investment
properties in Finland and CB Richard Ellis in Russia. A higher than usual level
of uncertainty is related to the valuation due to the economic situation in
Russia, sanctions and strong fluctuations in the rate of the rouble. Especially
the lack of comparable sales, changes to lease agreements agreed upon with
tenants and the rouble becoming increasingly common as the contract currency
have increased uncertainty.
RENTAL OPERATIONS
Sponda calculates the growth in net rental yield for its properties according
to EPRA Best Practices Recommendations by using a like-for-like net rental
growth formula based on a comparable property portfolio owned by the company
for two years. Like-for-like net rental growth was 3.3% (-3.0%) for office
premises, 1.3% (3.2%) for shopping centres, 27.8% (-11.3%) for logistics
premises and -4.3% (-10.7%) for properties in Russia. All of Sponda’s lease
agreements in Finland are tied to the cost of living index.
The economic occupancy rates by type of property and geographical area were as
follows:
Type of property 31.12.2015 30.9.2015 30.6.2015 31.3.2015 31.12.2014
Office properties, % 88.2 88.0 88.1 87.9 88.5
Shopping Centres 91.3 90.6 89.8 90.3 91.2
Logistics, % 68.3 67.8 68.6 68.5 64.9
Russia, % 84.6 82.3 84.5 90.1 90.4
Total property 87.7 86.2 86.3 86.8 87.0
portfolio, %
Geographical area 31.12.2015 30.9.2015 30.6.2015 31.3.2015 31.12.2014
Helsinki business 90.1 89.3 88.3 88.2 89.3
district, %
Helsinki Metropolitan 85.7 83.5 83.7 83.6 83.1
Area, %
Turku, Tampere, Oulu, % 90.8 91.1 92.3 92.9 93.2
Russia, % 84.6 82.3 84.5 90.1 90.4
Total property 87.7 86.2 86.3 86.8 87.0
portfolio, %
DIVESTMENTS AND INVESTMENTS
Divestments M€
1.10.- 1.10.- 1.1.- 1.1.-
31.12.2015 31.12.2014 31.12.2015 31.12.2014
Properties sold
Selling price 101.2 5.1 157.6 237.2
Profit/loss on sale* -2.9 0.0 -4.3 0.6
Balance sheet value 104.1 5.1 161.9 236.6
*) Includes transaction costs
Investments M€
1.10.- 1.10.- 1.1.- 1.1.-
31.12.2015 31.12.2014 31.12.2015 31.12.2014
Properties acquired -4.7 0.0 -4.7 -65.0
Maintenance investments -10.2 -14.3 -37.8 -42.0
Property development investments -25.5 -9.1 -65.2 -22.0
RISKS AND UNCERTAINTY FACTORS IN THE NEAR FUTURE
Sponda estimates that the risks and uncertainty factors in the current
financial year are primarily related to the development of the Finnish and
Russian economies.
In Russia, these risks are related to the decline of tenants’ solvency and a
decrease in the economic occupancy rate. The depreciation of the Russian rouble
may cause tenant insolvency and a decrease in property values. The operations
in Russia present a foreign exchange risk to Sponda. Changes in exchange rates
may cause exchange rate losses that have a negative impact on the company’s
financial result. The uncertain situation in the Russian market may slow down
the sale of Sponda’s properties in Russia in 2016.
The weak development of the Finnish economy may cause a decline in net
operating income and tenant insolvency.
For Sponda’s property development projects, the key risk is related to the
degree of success in leasing premises.
PROSPECTS FOR 2016
Sponda provides prospects for 2016 with regard to the development of the
company’s net operating income and adjusted EPRA Earnings. The prospects do not
include the effect of the acquisition of six properties on Sponda’s result.
Net operating income
Sponda estimates that the net operating income for 2016 will amount to EUR
152-168 million. The estimate is based on the company’s view of property
acquisitions and divestments to be completed and the development of rental
operations during the year.
Adjusted EPRA Earnings
Sponda estimates that company adjusted EPRA Earnings in 2016 will amount to EUR
82-98 million. This outlook is based on the development of net operating income
and the company’s estimate of the development of financial expenses.
EVENTS AFTER THE PERIOD
In its meeting held on 25 January 2016, the Shareholders’ Nomination Board of
Sponda Plc has decided to give proposal to the Annual General Meeting to be
held on 21 March 2016 for the number of members of the Board of Directors, for
the members of the Board and the remuneration of the Board. The proposals of
the Nomination Board can be found from the Stock Exchange Release dated
25.1.2016.
In February 2016, Sponda signed a purchase agreement for acquiring Ab Mercator
Oy that holds six properties in the centre of Helsinki and Ab Forum Capita Oy,
that manages those properties from Forum Fastighets Kb and Föreningen
Konstsamfundet r.f. The properties are located in the Forum block in Helsinki
CBD. Total, debt-free purchase price is approximately EUR 576 million.
Estimated net operating income after the first year is approximately 4.9%.
Purchase price is subject to customary balance sheet and other adjustments.
Closing of the transaction is by 29th February 2016.
Sponda will finance the transaction with cash and with approximately EUR 300
million bridge loan. Sponda is planning to organize a rights issue in order to
maintain current capital structure and equity ratio level. More details on the
transaction can be found from the Stock Exchange Release dated 4.2.2016.
ANNUAL GENERAL MEETING AND DIVIDEND
The Board of Directors of Sponda Plc is convening the Annual General Meeting on
21 March 2016 and proposes to the Annual General Meeting that a dividend of EUR
0.19 per share be paid.
4 February 2016
Sponda Plc
Board of Directors
Additional information:
Kari Inkinen, President and CEO, tel. +358 20 431 3311 or +358 400 402 653,
Pia Arrhenius, SVP, Corporate Planning and IR, tel. +358 20 431 3454 or +358 40
527 4462,
Niklas Nylander, CFO, tel. +358 20 431 3318 or +358 40 754 5961.
Distribution:
NASDAQ OMX Helsinki
Media
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