A year of growth and expansion
Financial statements bulletin January–December 2019 (unaudited)
Summary January-December | change, % | ||
Total revenue (EUR thousand) | 23 273 | 17 182 | 35.4 % |
Profit for the period (EUR thousand) | 28 244 | 37 003 | -23.7 % |
EPRA Earnings (EUR thousand) | 8 856 | 7 663 | 15.6 % |
Earnings per share, undiluted (EUR) | 1.11 | 1.46 | -24.0 % |
Earnings per share, diluted (EUR) | 1.11 | 1.45 | -23.4 % |
EPRA Earnings Per Share (EUR) | 0.35 | 0.30 | 15.5 % |
Value of investment properties (EUR thousand) | 490 791 | 348 899 | 40.7 % |
NAV per share (EUR) | 8.54 | 7.28 | 17.1 % |
Value of the lease portfolio (without index increases, EUR thousand) | 584 139 | 426 953 | 36.8 % |
Economic occupancy rate (%) | 100 | 100 | - |
Average maturity of the lease portfolio (years) | 15.8 | 14.9 | - |
Summary July-December | 7-12/2019 | 7-12/2018 | change, % |
Total revenue (EUR thousand) | 12 380 | 9 121 | 35.7 % |
Profit for the period (EUR thousand) | 15 947 | 21 047 | -24.2 % |
EPRA Earnings (EUR thousand) | 3 962 | 4 510 | -12.1 % |
Earnings per share, undiluted (EUR) | 0.63 | 0.82 | -23.2 % |
Earnings per share, diluted (EUR) | 0.63 | 0.82 | -23.2 % |
EPRA Earnings Per Share (EUR) | 0.16 | 0.18 | -11.1 % |
The impact of IFRS 16, adopted on
Significant events
The Belgian Aedifica SA /NV becomes the principal owner of Hoivatilat- Significant new projects in school sector. Most recently announced a school in Espoo for 500 students with 25-year lease agreement
- A record high number of 19 new tenants during the year. Especially the number of public and third sector tenants grew.
Outlook for 2020
Hoivatilat estimates that its revenue will increase at least 20 per cent in 2020 compared with 2019. EPRA Earnings are expected to be around 40 per cent of revenue. The fair value of investment properties at the end of 2020 is estimated to be around
Jussi Karjula, CEO:
For Hoivatilat, 2019 was a year of growth and expansion. Our organisation grew and strengthened, and we expanded our offering and established a large number of customer relationships. At the same time, our key indicators improved considerably. In terms of balance sheet and sales indicators, Hoivatilat broke earlier records.
The most significant growth was achieved in the value of investment properties and the value of the agreement portfolio, both of which increased by around 40 per cent. Value of investment properties increased by
With the completion of new properties, the company’s revenue continued to grow strongly, by 35.4 per cent during the year. Net asset value (NAV) per share, a key indicator in real estate business, increased by 17.1 per cent to
Hoivatilat expanded its business operations on many fronts during the year. In
The customer base has expanded in the municipal sector in particular, but also in the third sector and among corporate customers. Last year, Hoivatilat won seven municipal projects through public tendering and two public tendering processes in the third sector. Four of these projects were schools.
During the year, the company implemented not only school, day-care centre and nursing home projects, but also shelters and children’s homes, as well as hybrid and service community buildings that combine various services. Hoivatilat has a diverse range of projects underway that combine housing with services. A service community including a day-care centre, a nursing home, apartments for senior citizens, a restaurant and a dog day-care facility will be completed for the Housing Fair 2020 event in Tuusula next summer.
On
Material events during the review period
The company regained holding of 23,134 of its own shares in accordance with the terms and conditions of the 2015 share incentive scheme. The shares were returned on
The first projects in
On
The change of name, decided at the Annual General Meeting of
On
On
On
On
On
On
On
Operating environment
Urbanisation continues in
Over the past two decades, the population of the Helsinki-Uusimaa region has increased by almost 500,000 people. Approximately 70 per cent of Finland’s population is already living in and around the 14 largest towns and cities.
Hoivatilat estimates that the following trends will increase its opportunities for growth and operations:
• Ageing population and the weakening dependency ratio
• Urbanisation and the concentration of the population
• Increased debt in the public sector
• Condition of properties in education and the social and health sectors
• Change in municipal procurement practices (lease model)
• Increasing use of service vouchers in early education and care services
Hoivatilat is preparing to the possible Finnish social and healthcare reform by monitoring closely the status of the process and by preparing to create a well-functioning collaboration with the organizers of the possible new social and healthcare system.
Even properties age
The municipal portfolio of education, culture, social services and healthcare properties include a large number of old buildings nearing the end of their life cycle, as well as properties with indoor air problems and a maintenance backlog that require renovation. On
Hoivatilat has paid special attention to making premises safe and minimising indoor air issues. The company applies its Terve Rakennus (
The planning and implementation of our facility projects are based on life cycle ownership and responsible contracting. This means safe, healthy and modifiable facilities. In construction, we favour low-carbon buildings, renewable material and energy solutions, and intelligent property control and lighting solutions.
Economic operating environment
In its economic forecast on
According to Euro and the Economy, a report published by the
The loosening of monetary policy continued during the autumn in other respects as well. At its September meeting, the
Financial review
Financial development
The Group’s revenue was EUR 23.3 (17.2) million, representing an increase of 35.4 per cent year-on-year. The revenue consisted entirely of rental income. The increase in revenue was mostly due to considerable growth over the past 12 months in the number of properties that the company has leased. The income from measuring properties at fair value was EUR 24.2 (35.6) million in the review period. In the category of investment properties, the change in fair values on the income statement includes
The net rental income for the review period was EUR 22.4 (15.9) million, representing an increase of 41.2 per cent. At the end of the review period, the company had 150 (120) completed properties generating rental cash flow. Their net return was 6.03 per cent (6.15 per cent). The decrease in the net return rate was mostly due to a decrease in the required market rates of return used in measuring the value of investment properties.
Property maintenance expenses totalled
Expenses arising from employment benefits were EUR -3.2 (-2.5) million, representing an increase of 30.3 per cent. In addition to recruitment during the review period, personnel expenses increased because of an expense of
Administrative expenses were EUR -4.5 (-1.9) million, representing an increase of 138.7 per cent year-on-year. The increase in administrative expenses is mainly explained by
The operating profit was EUR 38.7 (48.5) million, representing a decrease of 20.1 per cent. The decrease in the operating profit was mainly due to a smaller change in the return requirements for properties year-on-year and the non-recurring expenses arising from the implementation of the public tender offer by
Net financial income and expenses were
The net profit for the review period was EUR 28.2 (37.0) million, showing a decrease of 23.7 per cent year-on-year. Undiluted earnings per share were
EPRA Earnings for the review period were EUR 8.9 (7.7) million, representing an increase of 15.6 per cent. EPRA Earnings represented 38.1 per cent (44.6 per cent) of net sales. EPRA Earnings for the review period are not comparable to the previous year because of changes caused by the adoption of IFRS 16 (as of
Investments
The consolidated balance sheet total at the end of the review period was EUR 511.9 (364.3) million, showing an increase of 40.5 per cent year-on-year. During the review period, investments with a total acquisition cost of
Funding
The company’s interest-bearing liabilities stood at
On
According to the company’s interest rate hedging policy, 30–50 per cent of the Group’s loan portfolio is hedged by interest rate swaps so that the average interest rate maturity is two years, plus or minus six months. The hedging coverage ratio of the company’s loan portfolio was 29.5 per cent (35.8 per cent) on
Properties and agreements
On
Properties 31.12. | Completed | In progress and not started* | Total | |||
Number of properties | 150 | 120 | 44 | 39 | 194 | 159 |
Leasable area, thousand floor m² | 129.5 | 105.2 | 70.2 | 45.8 | 199.7 | 151.0 |
Annual rents, EUR million | 26.4 | 21.5 | 13.4 | 8.4 | 39.8 | 29.9 |
Investment (acquisition cost), EUR million | 300.1 | 237.8 | 198.4 | 122.1 | 498.5 | 359.9 |
* = Properties in progress and not started also include properties for which binding leases or preliminary agreements have been signed, but construction has not yet begun. |
On
Of the lease portfolio, 65 per cent (65 per cent) consisted of rental income from properties located in the
Area | |||
28 % | 21 % | ||
Lahti region | 5 % | 7 % | |
6 % | 7 % | ||
7 % | 10 % | ||
Oulu region | 9 % | 8 % | |
Kuopio region | 6 % | 8 % | |
Jyväskylä region | 4 % | 5 % | |
4 % | 0 % | ||
Other municipalities with more than 30,000 residents | 20 % | 20 % | |
Other locations | 11 % | 15 % | |
Total | 100 % | 100 % |
Shares and shareholders
On
Flagging notifications
On
Group structure
At the end of the financial period on
Assessment of operational risks and uncertainties
Financial and strategic risks
The uncertainty in the global economy and the financial markets may affect the company. If the Finnish economy develops unfavourably in the future and regional differences grow, this may have an adverse effect on the company’s operations, result, financial position and/or future outlook.
Strategic risks include the competitive situation in the market and dependence on a limited number of customers. Interest in the sector as an investment has grown considerably, which has resulted in new operators entering the market. The company’s future growth depends on the successful implementation of the company’s business strategy.
The property projects owned by Hoivatilat have been designed and developed to be used as nursing homes and day-care centres and for service communities combining these services. However, the company ensures as early as the design stage of property projects that the premises can be modified and thus also used for purposes other than nursing homes and day-care centres. Nevertheless, it is not certain that the use of the properties for other purposes, such as residential or office use, would necessarily be possible if there were no longer a need according to the original purpose. If materialised, this risk may have a material adverse effect on the company’s business operations, result, financial position and/or future outlook. Considerable changes in legislation and official regulations may also affect the company’s business operations and, subsequently, the demand for properties.
The company’s strategic goal is to grow faster than the market. According to the estimate of the management of Hoivatilat, the company may pursue result improvement primarily through the implementation of new property projects and an increase in revenue. According to the management’s estimate, the implementation of new property projects and an increase in revenue in accordance with the objective requires finding new property projects, developing and expanding existing customer relationships, obtaining new customers and expanding the operations geographically. There is no guarantee that the company succeeds in finding new property projects or acquiring new customers.
Operational risks
Operational risks include dependence on key employees’ competence and possible changes in the demand for the properties produced by the Group. The materialisation of any risk related to the company’s nature as a growth company may have a material adverse effect on the company’s business operations, result, financial position and/or future outlook.
The three largest customers of Hoivatilat represent around 39 per cent of its lease portfolio. There is no guarantee that the company’s largest customers will remain solvent. Changes in key customers’ operating environments, strategies or behaviour, or the loss of rental income from one or more key customer, may have material adverse effects on the company’s business operations, business result, financial position and/or future outlook.
Accident risks
Accident frequency in the construction industry is higher than in many other sectors. Construction sites are by nature dangerous work environments, where serious injuries or even fatal accidents can happen. Any and all accidents have an adverse effect on the company’s business operations and personnel wellbeing. Accident investigations carried out in cooperation with the authorities involve costs and delay construction. The company’s insurance premiums increase if the accident frequency becomes higher. In addition, accidents may result in civil and criminal liabilities, based on applicable laws, for the company and its management and employees. Accidents may also harm the company’s reputation. The materialisation of any risk related to employees’ health and safety may have a material adverse effect on the company’s business operations, result, financial position and/or future outlook.
The company’s properties are built by reliable and experienced construction companies that are typically responsible for the entire project. Risks related to construction and property maintenance can be considered to include any moisture damage and indoor air impurities, which may cause interruptions in the operations of Hoivatilat and have an adverse effect on its reputation. The company has prepared for such risks through clauses in agreements and by taking into account that the contractor’s guarantee for built facilities is two years and their responsibility spans ten years in accordance with the general terms and conditions concerning turnkey projects.
The company estimates that it carries insurance cover typical of the industry and sufficient insurance cover in case of common accidents. The company has insured its properties with full-value insurance. The company’s management and Board of Directors have valid liability insurance.
Financial risks
Expanding the scope or geographical area of the operations requires sufficient working capital and the availability of both equity and external capital. A potential uncertain situation prevailing in the financial market, potential general weakening in available funding and increased financial expenses may have an adverse effect on the company’s opportunities to obtain additional funding in the future or may weaken the liquidity of properties, which could result in difficulties selling the properties.
Changes in the interest rate level have a considerable impact on the real estate business. Changes in the market rates and interest rate margins may impact the company’s financial expenses and income. Changes in the interest rate level affect the interest rate expenses of the company’s variable-rate loans, which will increase as the market rates increase. The company carefully monitors the development of the interest rate level and actively hedges against the impact of changes in the interest rates. The company primarily uses interest rate swaps to manage the interest rate risk. The fair value of the interest rate swaps and the payable and receivable cash flow in accordance with the agreement depend on changes in the interest rate level. Profit or loss generated by the agreements to the company has not been limited, and thus a considerable decrease in the interest rate level, for example, may result in interest rate swaps having a material adverse effect on the company’s cash flow, financial position and/or future outlook. Although the company believes that it can manage its interest rate risks, it is not certain that the company’s hedging measures are effective or that the interest rate fluctuations do not have a material adverse effect on the company’s cash flow, financial position and/or future outlook.
The company’s rental receivables are associated with a risk of customers not being able to repay their loans when the loans fall due. As a rule, the company’s leases include a security deposit equal to 3–6 months of rent, which from the company’s perspective reduces the risks and loss of income caused by clients’ potential financial difficulties. The occupancy rate of the properties and the financial situation of the tenants are monitored by means of regular meetings and financial monitoring.
Responsibility and environmental considerations
In 2018, Hoivatilat began to determine its sustainability focuses. An internal materiality analysis was carried out to assess and define the most essential sustainability focuses for the company’s operations. Four focus areas were defined: customer-oriented offering and operating methods, people’s well-being, environmental responsibility and social responsibility. A Sustainability Committee was established in 2019 to support sustainability work.
Customer orientation
The company’s vision is to create a superior customer experience as a developer of properties for education, culture, social services and healthcare. In terms of its customer-oriented offering and operating methods, the company focuses on a superior customer experience and the continuous development of the user experience.
Customer satisfaction is measured through an annual customer satisfaction survey. In the 2019 customer satisfaction survey, the company received good feedback on its construction projects staying on schedule and on its understanding of the special regulations related to construction in its sector.
In addition to providing a superior customer experience and a continuous service offering, Hoivatilat works to be a reliable contractual partner with responsible operating methods and a good reputation.
Through digitalisation, the company has been able to further develop systems that support enterprise resource planning and life cycle ownership year after year.
Participatory design in property projects is one of the ways in which the company has further developed customer-oriented operating method. For example, Hoivatilat organised a participatory workshop for a new site in Oulu in
People’s well-being
Concerning people’s well-being, Hoivatilat works to provide its employees with interesting and meaningful jobs while also providing an inspiring and continuously developing working environment. The employee experience is measured annually. In
Environmental responsibility
In the properties Hoivatilat builds and owns, it seeks optimal solutions that benefit the residents and users of the properties, as well as the environment. In terms of environmental responsibility, Hoivatilat aims to promote low-carbon construction, energy efficiency and the use of renewable energy forms.
The energy efficiency of buildings can be monitored and controlled through digitalisation and automation. Nearly all properties are monitored remotely. This enables the centralised management of heating and ventilation in properties, as well as making it possible to affect property life cycles, adjust heating according to the conditions and ensure optimal ventilation.
The pilot projects started in previous years to monitor indoor air quality and improve energy efficiency continued in 2019, and the company also started a number of new experiments. Experiments to monitor energy efficiency and the indoor climate took were organised in five properties in 2019.
In 2019, Hoivatilat decided to have its carbon footprints and handprints calculated for each new property project. Hoivatilat also looked into the certification of property projects in 2019. The RTS environmental classification system was found to be the most suitable option for Hoivatilat. The company is planning to pilot its introduction in property projects during 2020 and 2021.
Personnel
Hoivatilat provides solutions for growth. The company grows with its customers and partner network. All operations focus on the customers, and the employees seek to offer a superior customer experience in providing properties for culture, education, social services and healthcare.
Hoivatilat’s operating method is based on networks. A small, highly efficient team is responsible for the coordination and development of networks. This team focuses on key project tasks, such as customer relationship management, administration, project development, construction and property management. With the help of an extensive and competent partner network, Hoivatilat can carry out a large number of new property projects each year, as well as managing its current property portfolio.
At the end of 2019, Hoivatilat had a CEO and 24 employees. The company had 16 employees in Oulu, 7 in Espoo and 2 in
Board of Directors and company management
Until the extraordinary general meeting of
Until
Until
The Group’s management team consists of Jussi Karjula, CEO;
Decisions of the Annual General Meeting
The Annual General Meeting of Hoivatilat was held in
Events after the end of the financial year
On
On
Hoivatilat Plc’s extraordinary general meeting was held in
Board of Directors’ proposal for the distribution of profit
The parent company’s distributable funds stood at
The 2020 Annual General Meeting will be held in
Financial calendar for 2020
The 2019 annual report will be published during the week beginning
Oulu
Board of Directors
Further information:
Jussi Karjula, CEO, tel. +358 40 773 4054
Hoivatilat in brief:
EPRA key figures
1. EPRA Earnings and EPRA EPS, BASIC | ||||
EUR thousand | 2019 | 2018 | ||
Result for the period (IFRS) from the consolidated income statement | 28 244 | 37 003 | ||
(i) Profit/loss from measuring investment properties at fair value | -24 235 | -35 627 | ||
(ii) Gains and losses on disposal of investment properties and other non-current assets | 0 | -1 049 | ||
(iv) Taxes based on the result for the financial year, generated by the gains and losses on disposals | 0 | 210 | ||
(viii) Deferred tax for EPRA adjustments | 4 847 | 7 125 | ||
EPRA Earnings | 8 856 | 7 663 | ||
EPR Earnings per Share, EUR | 0.35 | 0.30 | ||
2. EPRA NAV per share and EPRA NNNAV per share | ||||
EUR thousand | 2019 | 2018 | ||
Equity belonging to the parent company’s shareholders | 185 249 | 161 937 | ||
(iv) Fair value of financial instruments | 1 687 | 951 | ||
(v.a) Deferred tax | 30 539 | 23 367 | ||
EPRA NAV | 217 475 | 186 255 | ||
EPRA NAV per share, EUR | 8,54 | 7,32 | ||
EUR thousand | 2019 | 2018 | ||
EPRA NAV | 217 475 | 186 255 | ||
(i) Fair value of financial instruments | -1 687 | -951 | ||
(iii) Deferred tax | -30 539 | -23 367 | ||
EPRA NNAV | 185 249 | 161 937 | ||
EPRA NNNAV per share, EUR | 7.27 | 6.37 | ||
3. EPRA vacancy rate, % | ||||
EUR thousand | 2019 | 2018 | ||
Annualised computational lease value for vacant premises | A | 0 | 0 | |
Annualised computational lease value for the entire property portfolio | B | 26 179 | 21 079 | |
EPRA vacancy rate, % | A/B | 0.0 % | 0.0 % | |
4. EPRA Net Initial Yield and EPRA “topped-up” NIY | ||||
EUR Thousand | 2019 | 2018 | ||
Investment property – wholly owned | 462 147 | 348 899 | ||
Less: developments | -49 057 | -19 899 | ||
Completed property portfolio | 413 090 | 329 000 | ||
Allowance for estimated purchasers’ costs | 8 262 | 6 580 | ||
Gross up completed property portfolio valuation (B) | B | 421 352 | 335 580 | |
Annualised cash passing rental income | 26 179 | 21 079 | ||
Property outgoings | -1 362 | -1 237 | ||
Annualised net rents (A) | A | 24 817 | 19 842 | |
Add: notional rent expiration of rent-free periods or other lease incentives | 257 | 388 | ||
Topped-up net annualised rent (C) | C | 25 074 | 20 230 | |
EPRA Net Initial Yield (NIY), % | A/B | 5.89 % | 5.91 % | |
EPRA 'topped-up' NIY, % | C/B | 5.95 % | 6.03 % | |
5. EPRA cost ratios | ||||
EUR Thousand | 2019 | 2018 | ||
Include: | ||||
(i) Administrative expenses* | 4 461 | 1 869 | ||
(i) Property maintenance expenses | 1 748 | 1 307 | ||
Exclude: | ||||
(vii) Ground rent costs | -608 | -434 | ||
Cost (including direct vacancy costs) | A | 5 601 | 2 743 | |
(ix) Direct vacancy costs | 0 | |||
Cost (excluding direct vacancy costs) | B | 5 601 | 2 743 | |
(x) Gross Rental Income less ground rent costs - per IFRS | 22 665 | 16 749 | ||
(xi) Less: service fee and service charge costs components of Gross Rental Income | 0 | 0 | ||
Gross Rental Income | C | 22 665 | 16 749 | |
EPRA Cost Ratio (including direct vacancy costs) | A/C | 24.7 % | 16.4 % | |
EPRA Cost Ratio (excluding direct vacancy costs) | B/C | 24.7 % | 16.4 % | |
*Salaries capitalized in investment properties have been deducted from administrative expenses. In 2019 capitalized salaries totaled 0.4 MEUR and 0.5 MEUR in 2018. Administrative expenses 2019 include |
Tables
This financial statements’ bulletin has been prepared in accordance with the IAS 34 standard. The
company has prepared the financial statements’ bulletin in line with the same accounting principles
as its financial statements for 2018, with the exception of amendments to standards and interpretations of standards that came into effect in 2019.
Income Statement
EUR | 7-12/2019 | 7-12/2018 | 1-12/2019 | 1-12/2018 |
TOTAL REVENUE | 12 380 103 | 9 120 834 | 23 273 181 | 17 182 305 |
Transfers of investment properties and changes in fair value | 14 980 862 | 20 671 349 | 24 235 107 | 36 675 896 |
Other operating income | 0 | 227 335 | 0 | 282 735 |
Expenses of employee benefits | -2 098 341 | -1 395 255 | -3 193 101 | -2 450 190 |
Depreciation | -98 466 | -25 266 | -170 939 | -33 795 |
Other operating expenses | -3 502 474 | -1 168 226 | -5 413 795 | -3 176 505 |
OPERATING PROFIT (LOSS) | 21 661 684 | 27 203 437 | 38 730 453 | 48 480 446 |
Financial income | 6 104 | 578 | 7 718 | 867 |
Financial expenses | -1 778 836 | -1 035 669 | -3 318 684 | -2 057 609 |
PROFIT BEFORE TAXES | 19 888 952 | 26 168 345 | 35 419 487 | 46 423 703 |
Taxes for the review period and previous periods | -3 942 326 | -5 348 882 | -7 175 294 | -9 420 361 |
PROFIT FOR THE PERIOD | 15 946 625 | 20 819 463 | 28 244 193 | 37 003 342 |
Consolidated statement of comprehensive income IFRS | ||||
EUR | 7-12/2019 | 7-12/2018 | 1-12/2019 | 1-12/2018 |
PROFIT FOR THE PERIOD | 15 946 625 | 20 819 463 | 28 244 193 | 37 003 342 |
Other comprehensive income items | ||||
Items that may be reclassified to profit or loss later: | ||||
Translation differences | -4 638 | -1 747 | -707 | -1 747 |
Cash flow hedging | 460 268 | -427 177 | -919 620 | -992 077 |
Taxes associated with other comprehensive income items | -92 054 | 85 435 | 183 924 | 198 415 |
Other comprehensive income items for the period after taxes | 363 577 | -341 741 | -736 403 | -795 409 |
COMPREHENSIVE INCOME FOR THE PERIOD | 16 310 202 | 20 477 722 | 27 507 790 | 36 207 933 |
Distribution of profit for the period | ||||
To shareholders of the parent company | 15 946 625 | 20 819 463 | 28 244 193 | 37 003 342 |
To shareholders with non-controlling interests | 0 | 0 | 0 | 0 |
Distribution of comprehensive income for the period | ||||
To shareholders of the parent company | 16 310 202 | 20 477 722 | 27 507 790 | 36 207 933 |
To shareholders with non-controlling interests | 0 | 0 | 0 | 0 |
Earnings per share calculated on the profit belonging to the parent company’s shareholders | ||||
Undiluted earnings per share | 0.63 | 0.82 | 1.11 | 1.46 |
Earnings per share adjusted by the dilution effect | 0.63 | 0.82 | 1.11 | 1.45 |
Balance sheet
EUR | ||
ASSETS | ||
Non-current assets | ||
Intangible assets | 108 872 | 150 285 |
Investment properties | 490 790 779 | 348 899 080 |
Machinery and equipment | 156 474 | 36 216 |
Deferred tax assets | 590 509 | 363 778 |
Total non-current assets | 491 646 635 | 349 449 360 |
Current assets | ||
Trade receivables and other receivables | 4 047 242 | 3 455 775 |
Cash and cash equivalents | 16 223 048 | 11 382 638 |
Total current assets | 20 270 290 | 14 838 412 |
ASSETS TOTAL | 511 916 925 | 364 287 772 |
EQUITY AND LIABILITIES | ||
Equity belonging to the parent company’s shareholders | ||
Share capital | 80 000 | 80 000 |
Invested non-restricted equity reserve | 69 722 015 | 69 722 015 |
Fair value reserve | -1 686 635 | -950 940 |
Translation difference | -2 455 | -1 747 |
Retained earnings/losses | 88 891 609 | 56 084 397 |
Profit/loss for the period | 28 244 193 | 37 003 342 |
Equity belonging to the parent company’s shareholders, total | 185 248 727 | 161 937 067 |
Non-current liabilities | ||
Lease liabilities | 27 720 371 | |
Financial liabilities | 198 491 702 | 158 809 420 |
Deferred tax liabilities | 30 778 602 | 23 618 863 |
Total non-current liabilities | 257 990 675 | 182 428 283 |
Current liabilities | ||
Lease liabilities | 1 032 862 | |
Financial liabilities | 59 507 410 | 11 640 147 |
Trade payables and other liabilities | 9 137 251 | 8 282 274 |
Total current liabilities | 69 677 523 | 19 922 422 |
Total liabilities | 326 688 198 | 202 350 705 |
EQUITY AND LIABILITIES TOTAL | 511 916 925 | 364 287 772 |
Cash flow statement
EUR | 7-12/2019 | 7-12/2018 | 1-12/2019 | 1-12/2018 | ||
Cash flow from operations | ||||||
Profit for the financial year | 15 946 625 | 21 046 798 | 28 244 193 | 37 003 342 | ||
Adjustments | ||||||
Non-cash transactions and other adjustments | -14 471 101 | -21 018 166 | -23 345 326 | -37 435 762 | ||
Interest and other financial expenses | 1 778 836 | 1 035 669 | 3 318 684 | 2 057 609 | ||
Interest income | -6 104 | -578 | -7 718 | -867 | ||
Taxes | 3 942 326 | 5 616 782 | 7 175 294 | 9 420 361 | ||
Changes in working capital | ||||||
Change in trade receivables and other receivables | 161 333 | -1 624 046 | -592 174 | -2 726 708 | ||
Change in trade payables and other liabilities | 247 685 | 5 733 543 | -694 314 | 4 086 318 | ||
Interest paid | -1 954 280 | -1 048 502 | -3 436 324 | -2 062 160 | ||
Interest received | 6 104 | 578 | 7 718 | 867 | ||
Taxes paid | 1 508 909 | -1 534 806 | 1 367 295 | -1 611 666 | ||
Net cash flow from operations (A) | 7 160 335 | 8 207 272 | 12 037 328 | 8 731 334 | ||
Cash flow from investment activities | ||||||
Divestment of investment properties | 0 | 10 911 237 | 0 | 10 911 237 | ||
Acquisition of investment properties | 262 037 | 0 | -1 372 799 | -2 126 892 | ||
Investments in property, plant and equipment | -45 354 926 | -44 532 450 | -88 224 035 | -77 193 637 | ||
Investments in intangible assets | -41 452 | -92 178 | -21 469 | -136 269 | ||
Net cash flow from investment activities (B) | -46 134 340 | -33 713 391 | -89 618 302 | -68 545 562 | ||
Cash flow from financing activities | ||||||
Payments from the share issue | 0 | 0 | 0 | 1 504 | ||
Loan withdrawals | 54 569 812 | 36 823 088 | 98 732 685 | 73 413 983 | ||
Loan repayments | -6 055 335 | -4 450 492 | -11 990 564 | -8 756 467 | ||
Dividends paid | 0 | 0 | -4 320 736 | -3 307 100 | ||
Cash flow from financing activities (C) | 48 514 477 | 32 372 596 | 82 421 385 | 61 351 920 | ||
Change in cash and cash equivalents (A + B + C) | 9 540 472 | 6 866 477 | 4 840 411 | 1 537 693 | ||
Cash and cash equivalents at the beginning of the financial year | 6 682 577 | 4 516 160 | 11 382 638 | 9 844 945 | ||
Cash and cash equivalents at the end of the review period* | 16 223 048 | 11 382 638 | 16 223 048 | 11 382 638 |
Calculation of changes in equity
Equity belonging to the parent company’s shareholders | ||||||
EUR | Share capital | Invested non-restricted equity reserve | Fair value reserve | Translation difference | Retained earnings | Equity, total |
Equity on | 80 000 | 69 720 511 | -157 278 | 0 | 59 946 662 | 129 589 896 |
Comprehensive income | ||||||
Profit for the financial year | 37 003 342 | 37 003 342 | ||||
Other comprehensive income items* | ||||||
Translation difference | -1 747 | -1 747 | ||||
Cash flow hedging | -793 662 | -793 662 | ||||
Total comprehensive income for the review period | -793 662 | -1 747 | 37 003 342 | 36 207 933 | ||
Transactions with shareholders | ||||||
Distribution of dividends | -3 307 100 | -3 307 100 | ||||
Share issue | 1 504 | 1 504 | ||||
Incentive scheme | -555 165 | -555 165 | ||||
Transactions with shareholders, total | 0 | 1 504 | -3 862 265 | -3 860 761 | ||
Equity on | 80 000 | 69 722 015 | -950 940 | -1 747 | 93 087 739 | 161 937 067 |
Equity on | 80 000 | 69 722 015 | -950 940 | -1 747 | 93 087 739 | 161 937 067 |
Comprehensive income | ||||||
Profit for the financial year | 28 244 193 | 28 244 193 | ||||
Other comprehensive income items* | ||||||
Translation difference | -707 | -707 | ||||
Cash flow hedging | -735 696 | -735 696 | ||||
Total comprehensive income for the review period | -735 696 | -707 | 28 244 193 | 27 507 790 | ||
Transactions with shareholders | ||||||
Distribution of dividends | -4 320 736 | -4 320 736 | ||||
Incentive scheme | 124 606 | 124 606 | ||||
Transactions with shareholders, total | -4 196 130 | -4 196 130 | ||||
Equity on | 80 000 | 69 722 015 | -1 686 635 | -2 455 | 117 135 801 | 185 248 727 |
* Items that may be reclassified to profit or loss later. |
Key figures
Group | Group | |
Total revenue (EUR thousand) | 23 273 | 17 182 |
Operating profit (EUR thousand) | 38 730 | 48 480 |
Profit for the financial year (EUR thousand) | 28 244 | 37 003 |
EPRA Earnings (EUR thousand) | 8 856 | 7 663 |
Balance sheet total (EUR thousand) | 511 986 | 364 288 |
EPRA NAV (EUR thousand) | 217 258 | 186 255 |
EPRA NNAV (EUR thousand) | 185 249 | 161 937 |
Equity ratio (%) | 36.2 | 44.5 |
Loan-to-value (LTV) (%) | 52.3 | 45.6 |
Gearing ratio (%) | 146.0 | 98.2 |
Return on equity (%) | 16.3 | 25.4 |
Earnings per share, undiluted (EUR) | 1.11 | 1.46 |
Earnings per share, diluted (EUR) | 1.11 | 1.45 |
Dividend per share (EUR) | 0.00* | 0.17 |
EPRA Earnings Per Share, (EUR, EPRA EPS) | 0.35 | 0.30 |
EPRA NAV per share (EUR) | 8.54 | 7.28 |
EPRA NNNAV per share (EUR) | 7.27 | 6.37 |
Net return (imputed) (%) | 6.03 | 6.15 |
Value of the lease portfolio* (EUR thousand) | 584 139 | 426 953 |
Average maturity of the lease portfolio (years) | 15.8 | 14.9 |
Economic occupancy rate (%) | 100 | 100 |
EPRA vacancy rate (%) | 0 | 0 |
Number of shares adjusted for share issues at the end of the period | 25 479 495 | 25 439 229 |
Average number of shares adjusted for share issues during the period | 25 428 346 | 25 414 511 |
Average number of shares adjusted for share issues during the period, diluted | 25 428 346 | 25 491 042 |
Number of employees at the end of the period | 25 | 19 |
Average number of personnel during the period | 20 | 17 |
* Proposal of the Board of Directors | ||
** Future rental cash flow from the company’s leases and preliminary agreements without index increases |
Investment properties
The investment properties owned by the company are measured at fair value after their initial recognition. Properties with low completion rates are measured at acquisition cost. The fair value of properties has been determined by a third-party expert,
2019 | 2018 | |||||||||
Fair value of investment properties, 1 Jan | 348 899 080 | 247 066 462 | ||||||||
Investments in properties under construction and in the starting phase | 83 673 162 | 79 783 106 | ||||||||
Other investment property investments | 993 333 | 289 099 | ||||||||
Additions from purchased propeties | 3 791 849 | 1 379 446 | ||||||||
Deductions from divestments | 0 | -15 245 660 | ||||||||
Profits and losses from changes in fair value | 24 789 849 | 35 626 628 | ||||||||
Building plots recognized as right-of-use assets in accordance with IFRS 16 | 28 643 506 | 0 | ||||||||
Fair value of investment properties, 31 Dec | 490 790 779 | 348 899 080 | ||||||||
2019 | 2018 | |||||||||
Completed investment properties | 413 090 000 | 329 000 000 | ||||||||
Investment properties under construction | 47 974 832 | 18 360 223 | ||||||||
Investment properties in the starting phase (valued at acquisition cost) | 1 082 441 | 1 538 857 | ||||||||
Building plots recognized as right-of-use assets in accordance with IFRS 16 | 28 643 506 | 0 | ||||||||
Total | 490 790 779 | 348 899 080 | ||||||||
On
Contingent liabilities | |||
Property mortgages | |||
Loans from financial institutions | 241 752 346 | 170 449 567 | |
Mortgages provided | 281 224 413 | 228 364 213 | |
Mortgages total | 281 224 413 | 228 364 213 | |
Pledged property shares | |||
Pledged investment properties | 333 186 040 | 244 584 100 | |
Pledges total | 333 186 040 | 244 584 100 | |
Refund obligation related to value added tax on property investments | |||
VAT refund obligation | 3 483 224 | 2 636 750 | |
Interest rate swaps | |||
Nominal value | 76 000 000 | 61 000 000 | |
Fair value | -2 108 294 | -1 188 674 |
Business transactions with external related party companies
New and amended standards and other changes in accounting principles applied during the period
IFRS 16 Leases replaced IAS 17 from the beginning of the 2019 financial period. The standard provided reporting organisations with instructions concerning the method of treating leases in the lessee’s financial statements, changed the definition of leasing and determined the principles for recognising leases on the balance sheet both as a right-of-use asset and as a lease liability. The adoption of the standard did not cause any changes for Hoivatilat regarding the accounting treatment of leases where the Group acts as a lessor. Right-of-use assets have been recognised under the balance sheet items ‘Investment properties’ and ‘Machinery and equipment’ for the leases covered by the standard. The right-of-use assets recognised under ‘Investment properties’ consist of Hoivatilat Group’s leasehold land agreements. The right-of-use assets recognised under ‘Machinery and equipment’ were mainly recognised for lease agreements included in administrative expenses, such as office leases and leased vehicles. The Group’s lease liability was measured by discounting the lease liabilities covered by the standard to their present values using the company management’s view of the interest rate for additional credit at the time the leases started. The expenses for land area leases were recognised on the income statement as part of the change in the fair value of investment properties (comparable to straight-line depreciation) as financial expenses based on the interest rate factor determined for the lease liability. For the right-of-use assets presented under ‘Machinery and equipment’, the impact on income is presented in financial expenses and as an amortisation item. Regarding the adoption of IFRS 16 Leases, Hoivatilat has applied a simplified approach and has therefore not adjusted the details of the review period used for comparison. In addition, Hoivatilat has applied the practical reliefs permitted by the standard and has therefore not applied the standard to leases of less than one year or leases of minor value. These include leases of certain pieces of office equipment, for example.
Impact of the implementation of IFRS 16 on reporting
The standard had the following impacts on the Group’s reporting for the review period:
Income statement | 1-12/2019 |
Changes in the fair value of investment properties | -494 474 |
Depreciation | -100 941 |
Other operating expenses | 896 387 |
Operating profit | 300 972 |
Financial expenses | -399 172 |
Profit before taxes | -98 201 |
Deferred taxes | 19 640 |
Result for the period | -78 561 |
EPRA Earnings | 317 019 |
Balance sheet | Investment properties | Machinery and equipment | Total right-of-use assets | Lease liabilities |
26 191 178 | 129 124 | 26 320 303 | 26 320 303 | |
28 643 506 | 108 548 | 28 752 054 | 28 753 233 |
Changes to the calculation of key figures
In the calculation of the loan-to-value (LTV) ratio, right-of-use assets and lease liabilities related to these right-of-use assets that are presented as part of investment properties in accordance with IFRS 16 have not been considered. Therefore, IFRS 16 has no impact on LTV calculations compared with the corresponding period in the previous year. Updated formula:
Loan-to-value (LTV), % = | Financial liabilities − lease liabilities (IFRS 16) − cash and cash equivalents | × 100 |
Fair value of investment properties − right-of-use assets classified as investment properties (IFRS 16) |
Calculation formulas for key figures (other than EPRA key figures)
Earnings per share (EPS), undiluted, EUR = | Profit for the period belonging to the parent company’s shareholders | ||||
Weighted average of the number of shares in the review period | |||||
Earnings per share (EPS), diluted, EUR = | Profit for the period belonging to the parent company’s shareholders | ||||
Weighted average of the number of shares in the review period, adjusted for the dilution effect | |||||
Dividend per share, EUR = | Dividend paid for the financial year | ||||
Number of shares entitled to dividend | |||||
Calculation formulas for key figures (alternative key figures) | |||||
Equity ratio, % = | Equity | *100 | |||
Balance sheet total − advances received | |||||
Net gearing, % = | Interest-bearing liabilities − cash in hand and at banks | *100 | |||
Equity | |||||
Return on equity, % = | Profit/loss for the financial year | *100 | |||
Average equity during the financial year | |||||
Economic occupancy rate, % = | Gross rents for the review period / number of months | *100 | |||
Potential gross rents / number of months | |||||
Annualised rental income for the month of the financial statements − the forecast 12-month expenses of the properties in question | |||||
Net return (imputed), % = | *100 | ||||
Value of the investment properties generating rental cash flow for the month of the financial statements | |||||
Loan-to-value (LTV), % = | Financial liabilities − cash and cash equivalents | *100 | |||
Fair value of investment properties | |||||
Reconciliation calculations for certain key figures | |||||
Net return (imputed), % | |||||
EUR thousand | |||||
Annualised rental income for the month of the financial statements | 26 269 | 21 467 | |||
Predicted expenses for 12 months for properties generating rental income | -1 362 | -1 237 | |||
Net rental income | 24 907 | 20 230 | |||
Value of the investment properties generating rental cash flow for the month of the financial statements | 413 090 | 329 000 | |||
Net return (imputed), % | 6.03 % | 6.15 % |
Attachment
- Hoivatilat_Financial_statements_2019
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