2017-11-02 07:30:00 CET
2017-11-02 07:30:46 CET
REGULATED INFORMATION
Sponda - Interim report (Q1 and Q3)
Sponda Plc's INTERIM REPORT JANUARY-SEPTEMBER 2017
Sponda Plc Stock Exchange Release
November 2, 2017 at 08:30 a.m.
Sponda Plc's INTERIM REPORT JANUARY-SEPTEMBER 2017:
JANUARY-SEPTEMBER 2017 IN BRIEF (compared with 1 January-30 September 2016)
* Total revenue increased to EUR 197.1 (193.2) million.
* Net operating income totalled EUR 145.5 (143.8) million.
* Operating profit was EUR 106.3 (132.8) million. This includes a fair value
change of EUR -19.4 (-7.0) million.
* Cash flow from operations per share was EUR 0.25 (0.31).
* The fair value of the investment properties amounted to EUR 3,857.3
(3,692.7) million.
* Net assets (NAV) per share totalled EUR 5.19 (5.05).
* The economic occupancy rate was 88.5 (89.3)%.
JULY-SEPTEMBER 2017 IN BRIEF (compared with 1 July-30 September 2016)
* Total revenue was EUR 64.1 (66.3) million.
* Net operating income totalled EUR 48.9 (51.5) million.
* Operating profit was EUR 34.5 (37.2) million. This includes a fair value
change of EUR 1.3 (-10.0) million.
* Cash flow from operations per share was EUR 0.06 (0.10).
KEY FIGURES
-------------------------------------------------------------------------------
7-9/2017 7-9/2016 1-9/2017 1-9/2016 1-12/2016
-------------------------------------------------------------------------------
Total revenue, M€ 64.1 66.3 197.1 193.2 259.0
-------------------------------------------------------------------------------
Net operating income, M€ 48.9 51.5 145.5 143.8 190.9
-------------------------------------------------------------------------------
Operating profit, M€ 34.5 37.2 106.3 132.8 206.7
-------------------------------------------------------------------------------
Earnings per share, € 0.05 0.05 0.19 0.23 0.41
-------------------------------------------------------------------------------
Cash flow from operations per
share, € 0.06 0.10 0.25 0.31 0.40
-------------------------------------------------------------------------------
Equity per share, € 5.19 5.05 5.16
-------------------------------------------------------------------------------
Equity ratio, % 46.8 47.2 47.4
-------------------------------------------------------------------------------
KEY FIGURES ACCORDING TO EPRA BEST PRACTICES RECOMMENDATIONS
-------------------------------------------------------------------------------
7-9/2017 7-9/2016 1-9/2017 1-9/2016 1-12/2016
-------------------------------------------------------------------------------
EPRA Earnings, M€ 21.0 31.0 79.1 84.9 113.1
-------------------------------------------------------------------------------
EPRA Earnings per share, € 0.06 0.09 0.23 0.26 0.35
-------------------------------------------------------------------------------
Company adjusted EPRA Earnings,
M€ 21.3 32.2 81.1 87.1 113.7
-------------------------------------------------------------------------------
Company adjusted EPRA Earnings
per share, € 0.06 0.09 0.24 0.27 0.35
-------------------------------------------------------------------------------
EPRA NAV/share, € 5.49 5.38 5.49
-------------------------------------------------------------------------------
EPRA NNNAV/share, € 5.14 4.97 5.07
-------------------------------------------------------------------------------
EPRA Net Initial Yield (NIY), % 5.23 5.53 5.29
-------------------------------------------------------------------------------
EPRA "topped-up" NIY, % 5.25 5.55 5.31
-------------------------------------------------------------------------------
EPRA Vacancy rate, % 11.49 10.73 10.38
-------------------------------------------------------------------------------
EPRA Cost Ratio (including
direct vacancy costs), % 16.36
-------------------------------------------------------------------------------
EPRA Cost Ratio (excluding
direct vacancy costs), % 12.40
-------------------------------------------------------------------------------
PRESIDENT AND CEO KARI INKINEN
On 5 June 2017, Polar Bidco S.à r.l. (a corporation owned by funds advised by
affiliates of The Blackstone Group L.P.) announced a tender offer to purchase
all shares in Sponda. The initially announced offer price was EUR 5.19 per
share, representing a premium of approximately 20% on the share price at the
time. Sponda's Board of Directors unanimously recommended that the shareholders
accept the tender offer and decided, on the basis of the authorisation
previously granted to it, to distribute a dividend of EUR 0.12 per share, which
was deducted from the price offered for each share. On 8 August 2017, Polar
Bidco S.à r.l. announced that it has acquired 98.80% of Sponda's shares. For the
remainder of the shares, a redemption procedure has commenced and, subsequently,
Sponda has applied for delisting of its shares.
At the end of September, Sponda's net operating income grew as anticipated and
maintenance expenses increased mainly due to an increase in property taxes. The
economic occupancy rate fell slightly, being 88.5% at the end of September. The
most significant negative changes were seen in Sponda's non-strategic properties
and office properties outside Helsinki's central business district.
Property development projects progressed as planned and on schedule. The
building and letting of Ratina is progressing as planned. The pre-let rate
currently stands at 74% for the shopping centre and 61% for the project as a
whole, including two office properties in the area. The construction of an
office and retail complex in the Tikkurila district of Vantaa is also
progressing on schedule. The pre-let rate is 65%.
BUSINESS CONDITIONS
Economic growth in Finland exceeded forecasts and it is expected to remain
strong throughout the remainder of the year. Growth forecasts have been adjusted
upwards and, according to the Ministry of Finance's new forecast, the Finnish
GDP will grow by 2.9% in 2017. Economic growth has a firmer foundation now that
the positive development of private consumption and investments is complemented
by stronger export growth. The rapid improvement of the economy also has a
positive impact on employment. According to Statistics Finland, the unemployment
rate was 7.5% at the end of August.
According to the Consumer Survey published by Statistics Finland, confidence
among consumers in their own economic situation and the Finnish economy remains
high. Consumer prices have risen during the first half of the year but,
according to the Ministry of Finance, the increase in prices is slower than
usual. According to Statistics Finland, inflation was 0.8 per cent at the end of
September.
GROUP RESULT IN JANUARY-SEPTEMBER 2017
Sponda Group's result for January-September was EUR 68.8 (77.3) million, while
the result before taxes was EUR 69.2 (94.7) million and operating profit was EUR
106.3 (132.8) million.
Net operating profit increased by 1.2% to EUR 145.5 (143.8) million. The year-
on-year increase was due to the Forum property acquisition, the effect of which
is included in the comparison figures starting from March 2016. Items that had a
negative effect on the development of net operating income included property
sales, particularly in Russia, and the negative development of the net operating
income of a like-for-like portfolio, totalling EUR -1.2 million. Marketing and
administration expenses and other operating income and expenses totalled EUR
26.9 (16.0) million. Marketing and administration expenses totalled EUR 19.7
(16.4) million. The increase is mainly due to the termination of the company's
share-based incentive schemes. Other operating income and expenses include
approximately EUR 7 million of external consultancy fees relating to the public
tender offer for all shares in Sponda.
During the period, the Group recognised profit on sales of EUR 10.9 (14.3)
million from the sales of investment and trading properties. The change in fair
value of the investment properties was negative, EUR -19.4 (-7.0) million,
mainly due to the effect of increased property tax on the values. The Group's
result was weighed down by amortisation of goodwill amounting to EUR 3.7 (2.1)
million. The item is related to the Ratina project and will be written off once
the project is completed.
Financial income and expenses for the period totalled EUR -37.1 (-38.1) million.
The net amount of financial income and expenses was positively affected by the
prices of the funding sources used as well as capitalised interest expenses,
while the amount of interest-bearing liabilities had a negative effect on the
net amount.
In accordance with IFRIC 21, the company recognises a liability in the balance
sheet when the obligating event occurs. The company periodises real estate taxes
in the profit and loss statement on the basis of the passage of time.
PROPERTY ASSETS 1 JANUARY-30 SEPTEMBER 2017
At the end of September 2017, Sponda had a total of 165 leasable properties,
with an aggregate leasable area of approximately 1.2 million m². Of this total,
approximately 70% is office premises, 17% shopping centres and 11% logistics
premises. Approximately 1% of the leasable area is located in Russia.
The fair values of Sponda's investment properties are confirmed as a result of
the company's own cash flow-based yield value calculations. The assessment
method complies with International Valuation Standards (IVS). The data used in
the calculations of fair value is audited at least twice a year by external
experts to ensure that the parameters and values used in the calculations are
based on market observations.
At the end of September 2017, the fair value of Sponda's investment properties
was assessed internally for both Finland and Russia. The fair value of the
investment properties totalled EUR 3.9 billion at the end of September 2017. The
change in the fair value of the investment properties in the third quarter was
EUR 1.3 (-10.0) million. No changes were made to the yield requirements. The
value of Sponda's properties in Finland developed favourably, primarily due to
an increase in market rents and the property development margin. The negative
change in the fair value was mainly attributable to exchange rate changes in
Russia.
Valuation gains/losses on fair value assessment
-------------------------------------------------------------------------------
M€ 7-9/2017 7-9/2016 1-9/2017 1-9/2016 1-12/2016
-------------------------------------------------------------------------------
Changes in yield requirements
(Finland) 0.0 0.0 15.2 17.1 60.1
-------------------------------------------------------------------------------
Changes in yield requirements
(Russia) 0.0 0.0 0.0 -4.1 -4.1
-------------------------------------------------------------------------------
Development gains on property
development projects 5.1 1.5 10.5 5.4 7.4
-------------------------------------------------------------------------------
Modernisation investments -9.2 -7.4 -27.7 -19.9 -31.0
-------------------------------------------------------------------------------
Change in market rents and
maintenance costs (Finland) 7.6 -3.6 -2.0 10.0 12.6
-------------------------------------------------------------------------------
Change in market rents and
maintenance costs (Russia) 0.3 -0.4 -12.7 -11.1 -14.1
-------------------------------------------------------------------------------
Change in currency exchange
rates -2.5 -0.1 -2.8 -2.5 -2.1
-------------------------------------------------------------------------------
Investment properties, total 1.3 -10.0 -19.4 -5.0 28.7
-------------------------------------------------------------------------------
Real estate funds 0.0 0.0 0.0 -2.0 -2.0
-------------------------------------------------------------------------------
Realised share of fund profits 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
Group, total 1.3 -10.0 -19.4 -7.0 26.7
-------------------------------------------------------------------------------
RENTAL OPERATIONS
Sponda calculates the growth in net rental income for its properties during the
review period 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. For January-September, like-for-like net
rental growth was 0.1% (0.6%) for office properties and -4.5% (4.7%) for
shopping centres. Like-for-like net rental incomes were reduced by higher
maintenance expenses due to an increase in property taxes.
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:
-------------------------------------------------------------------------------
% 30.9.2017 30.6.2017 31.3.2017 31.12.2016 30.9.2016
-------------------------------------------------------------------------------
Office Properties 88.2 89.0 89.0 89.2 88.8
-------------------------------------------------------------------------------
Helsinki business 92.8
district 92.1 92.6 91.8 91.5
-------------------------------------------------------------------------------
Ruoholahti 82.2 82.6 82.7 85.0 85.0
-------------------------------------------------------------------------------
Rest of the metropolitan 87.3
area 85.8 87.2 87.5 86.1
-------------------------------------------------------------------------------
Tampere 91.5 91.9 93.3 93.4 95.9
-------------------------------------------------------------------------------
Rest of Finland 74.2 76.4 78.0 78.2 78.0
-------------------------------------------------------------------------------
Shopping Centres 93.9 93.5 92.6 93.5 93.2
-------------------------------------------------------------------------------
Helsinki business 93.1
district 93.7 91.9 92.4 92.4
-------------------------------------------------------------------------------
Other 94.1 94.1 93.8 95.4 94.5
-------------------------------------------------------------------------------
Non-Strategic Holdings 69.8 72.6 77.0 79.9 79.8
-------------------------------------------------------------------------------
Logistics properties 68.3 71.3 74.2 74.0 72.8
-------------------------------------------------------------------------------
Russia 71.3 73.9 79.5 84.8 85.3
-------------------------------------------------------------------------------
Total property portfolio 88.5 89.1 89.1 89.6 89.3
-------------------------------------------------------------------------------
DIVESTMENTS AND INVESTMENTS
Sponda is continuing to actively manage its property portfolio and sell non-
strategic properties. Investment properties were sold for EUR 10.7 million in
January-September. Office properties were sold for EUR 2.2 million, and
logistics properties under the Non-Strategic Holdings segment were sold for EUR
8.3 million. In addition, trading properties were sold for EUR 8.9 million.
Property development investments were mainly directed to the construction of the
Ratina shopping centre and an office and retail complex in Vantaa's Tikkurila
district.
Divestments
-------------------------------------------------------------------------------
M€ 1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9.2017 30.9.2016 30.9.2017 30.9.2016 31.12.2016
-------------------------------------------------------------------------------
Disposals of investment
properties
-------------------------------------------------------------------------------
Selling price 1.0 19.3 10.7 27.6 36.7
-------------------------------------------------------------------------------
Profit/loss on sale *) 0.4 0.9 3.4 0.9 0.8
-------------------------------------------------------------------------------
Balance sheet value 0.6 18.4 7.4 26.7 35.9
-------------------------------------------------------------------------------
*) Includes sales costs
Investments
-------------------------------------------------------------------------------
M€ 1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9.2017 30.9.2016 30.9.2017 30.9.2016 31.12.2016
-------------------------------------------------------------------------------
Properties acquired -12.5 - -12.5 -589.5 -590.5
-------------------------------------------------------------------------------
Modernisation investments -9.2 -7.4 -27.7 -19.9 -31.0
-------------------------------------------------------------------------------
Property development -60.9
investments -25.7 -16.8 -71.4 -41.1
-------------------------------------------------------------------------------
Investments, total -47.5 -24.2 -111.7 -650.5 -682.4
-------------------------------------------------------------------------------
SPONDA'S SHARE AND SHAREHOLDERS
Issued shares and share capital
At the end of September 2017, Sponda Plc's share capital amounted to EUR
111,030,185 and the number of issued shares was 339,690,554.
Trading in Sponda's shares
The weighted average price of the Sponda share in the third quarter was EUR
5.07. The highest quotation was EUR 5.32 and the lowest EUR 4.96. Turnover
during the period totalled some 288 million shares, or approximately EUR 1,460
million. The closing price of the share on 29 September 2017 was EUR 5.06 and
the market capitalisation of the company's share capital was EUR 1,726 million.
Board authorisations
The Annual General Meeting on 20 March 2017 authorised the Board of Directors to
purchase the company's own shares. The authorisation is valid until the next
Annual General Meeting. The authorisation was not exercised during the review
period.
The Annual General Meeting also authorised the Board of Directors to decide on a
share issue and on the issuance of special rights conferring entitlement to the
shares referred to in Chapter 10, Section 1 of the Finnish Companies Act in
accordance with the proposal of the Board of Directors. The authorisation is
valid until the next Annual General Meeting. The authorisation was not exercised
during the review period.
The Annual General Meeting authorised the Board of Directors to decide, at its
discretion, on the payment of dividend in no more than two tranches based on the
annual accounts adopted for the financial year 2016. The maximum amount of
dividend to be distributed on the basis of the authorisation is EUR 0.12 per
share. The authorisation is valid until the next Annual General Meeting. The
authorisation was exercised in full during the review period.
Treasury shares
Sponda did not own any treasury shares during the review period.
Polar Bidco S.à r.l. tender offer for all shares in Sponda
On 5 June 2017, Polar Bidco S.à r.l., a corporation owned by funds advised by
affiliates of The Blackstone Group L.P., and Sponda Plc signed a combination
agreement. In accordance with the agreement, Polar Bidco made a voluntary public
tender offer, recommended by Sponda's Board of Directors, to purchase all issued
and outstanding shares in Sponda. Following the subsequent tender offer period,
Polar Bidco S.à r.l. announced on 8 August 2017 that it has acquired 98.80% of
all shares in Sponda. Polar Bidco S.à r.l. has commenced redemption proceedings
in respect of minority shares in Sponda by initiating arbitration proceedings in
accordance with the Finnish Companies Act in order to obtain ownership of all
the shares in Sponda.
Dividend
On 5 June 2017, the Board of Directors of Sponda Plc decided, on the basis of
the authorisation granted to it by the Annual General Meeting held on 20 March
2017, on the payment of a dividend amounting to the maximum amount in accordance
with the authorisation. A dividend of EUR 0.12 per share was paid to
shareholders entered in the company's shareholder register maintained by
Euroclear Finland Ltd on the dividend record date, 7 June 2017. The dividend
payment date was 14 June 2017.
In accordance with the terms and conditions of the tender offer for all the
issued and outstanding shares in Sponda as announced by Polar Bidco S.à r.l.,
the payment of dividend reduced the offer price payable for each share.
Shareholders
On 30 September 2017, Sponda had altogether 1,125 shareholders (30 June
2017: 8,866). The five largest shareholders are
---------------------------------------------------------------------
Shareholder Number of shares % of shares
---------------------------------------------------------------------
1 Polar Bidco S.à r.l. 275,684,247 81.16
---------------------------------------------------------------------
2 Euroclear Bank Sa/Nv 61,440,375 18.09
---------------------------------------------------------------------
3 I.A. von Julins STB 595,000 0.18
---------------------------------------------------------------------
4 Skandinaviska Enskilda Banken AB 374,123 0.11
---------------------------------------------------------------------
5 Nordea Bank Ab (Publ), Finnish Branch 285,893 0.08
---------------------------------------------------------------------
Total 338,379,638 99.62
---------------------------------------------------------------------
Flagging notices
The following flagging notices were issued during the review period:
* Stock Exchange Release 6 July 2017: The holding of Polar Bidco S.à r.l. in
Sponda Plc's shares is 15.18% (51,570,566 shares).
* Stock Exchange Release 20 July 2017: The holding of Mercator Invest Ab in
Sponda Plc's shares is 0% (0 shares).
* Stock Exchange Release 20 July 2017: The holding of Polar Bidco S.à r.l. in
Sponda Plc's shares is 96.78% (328,748,635 shares).
* Stock Exchange Release 21 July 2017: The holding of Hartwall Capital Oy Ab
in Sponda Plc's shares is 0% (0 shares).
* Stock Exchange Release 21 July 2017: The holding of Varma Mutual Pension
Insurance Company in Sponda Plc's shares is 0% (0 shares).
EXTRAORDINARY GENERAL MEETING
The Extraordinary General Meeting of Sponda Plc was held on 4 September 2017.
The Extraordinary General Meeting decided to confirm the number of the members
of the company's Board of Directors as seven ordinary members. In addition, it
was decided that Outi Henriksson continues as a member of the Board of
Directors. Leif Andersson, Jean-Francois Bossy, Andrew Lax, Svein Erik
Lilleland, James Seppälä and Michael Swank were elected as members of the Board
of Directors. The Extraordinary General Meeting decided that the remuneration
payable to Outi Henriksson and Svein Erik Lilleland be EUR 2,750 per month each
for the term that expires at the closing of the Annual General Meeting in 2018,
and that no remuneration be paid to the other Board members for the term that
expires at the closing of the Annual General Meeting in 2018.
The Extraordinary General Meeting decided to disband the Shareholders'
Nomination Board of the company.
RISKS AND UNCERTAINTY FACTORS IN THE NEAR FUTURE
Sponda estimates that the risks and uncertainty factors for 2017 are mainly
related to the following areas:
Change in demand for space, caused by reasons such as technological development,
may have a negative impact on the development of occupancy rate and net
operating income.
Statutory requirements related to the strengthening of banks' solvency may lead
to reduced availability of bank financing. Uncertainty about the development of
the world economy and interest rates may limit the availability of other debt
financing.
In Russia, the risks are mainly related to the development of the Russian
economy and its impact on the sale of Sponda's properties in Russia in 2017.
PROSPECTS FOR 2017
Sponda provides prospects for 2017 with regard to the development of the
company's net operating income and adjusted EPRA Earnings.
Net operating income
Sponda estimates that the net operating income for 2017 will amount to EUR
182-192 million. This estimate is based on property sales in 2016 and estimated
sales in 2017. The development of net operating income will also be affected by
the increase in property taxes in 2017 as well as one large property being
vacated for renovation.
Adjusted EPRA Earnings
Sponda estimates that company adjusted EPRA Earnings in 2017 will amount to EUR
106-116 million. This estimate is based on property sales in 2016 and estimated
sales in 2017. The development of net operating income will also be affected by
the increase in property taxes in 2017 as well as one large property being
vacated for renovation.
EVENTS AFTER THE PERIOD
On 28 October, Sponda announced that it will restructure the group's financing.
Sponda's group companies signed senior secured facilities agreements for
approximately EUR 1.6 billion in total. More details on the refinancing can be
found from the company's website www.sponda.fi -> newsroom -> stock exchange
releases.
2 November 2017
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 3480 or +358 40 754 5961
Distribution:
NASDAQ OMX Helsinki
Media
www.sponda.fi
[]
© 2024 Nasdaq, Inc. All Rights Reserved |