Interim Report 1 January – 31 March 2019
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Q1 Interim Report 1 January – 31 March 2019 INTERIM REPORT Q1 2019 Interim report Q1 2019 1 JANUARY - 31 MARCH 2019 • Rental income increased to SEK 477 million (386) • Net operating income increased to SEK 218 million (166) • Income from property management amounted to SEK 69 million (1) • Unrealized changes in the value of investment properties of SEK 659 million (222) • Changes in the value of financial instruments of SEK -7 million (-49) • Profit before tax increased to SEK 746 million (190) • Profit after tax increased to SEK 576 million (156) • Earnings per share amounted to SEK 6.26 (1.98) before dilution and amounted to 6.23 (1.96) after dilution KEY FIGURES* 2019 2018 2018 Amounts in SEK million Jan – Mar Jan – Mar Jan – Dec Rental income, SEK m 477.0 386.3 1,786.6 Net operating income, SEK m 217.6 166.0 931.0 Gross margin, % 45.6 43.0 52.1 Income from property management, SEK m 69.5 1.5 301.8 Profit after tax, SEK m 576.1 156.3 3,307.6 Earnings per share SEK, basic 6.26 1.98 37.31 Earnings per share SEK, diluted 6.23 1.96 37.23 Equity per share, SEK 142.57 102.38 136.31 Equity EPRA NAV per share, SEK 175.29 125.35 167.09 Equity EPRA NNNAV per share, SEK 162.70 114.37 152.58 Fair value properties, SEK m 32,115.5 21,952.7 31,091.2 Equity ratio, % 37.7 33.9 37.5 Equity ratio EPRA NAV, % 46.3 41.5 46.0 * Definitions – see page 19 HEMBLA 2 INTERIM REPORT Q1 2019 Statement from the CEO Organizational change with the tenant in focus Collaboration is our strategy The first quarter of 2019 has been marked by the organizational Our vision is to create dynamic districts where the needs of our ten- change currently taking place in the company. The regional structure ants are the focus. A dynamic district is one that is socially sustainable. of the Management business area is being converted into an organi- This is why a key part of our business model involves contributing to sational setup divided by function. In practice, this means service and socially sustainable development in our districts. Collaboration is a key management issues will be handled by centralized units serving the word within our strategy, and has also underpinned our work during company as a whole. Our direction and destination are clear: we are the first quarter. We support a range of initiatives aimed at giving building an organization that will be even better equipped to focus on children and young people the opportunity to enjoy meaningful rec- our tenants. The new organisation will deliver greater accessibility and reation. For example, during the quarter we started a partnership with a higher level of service, while also enabling us to harness the compe- Djurgården IF Ice Hockey Club on their Ishockey för Alla (Ice Hockey tence of our employees and create new, professional development for All) project in Alby/Hallunda/Tumba and Husby/Kista/Akalla, and opportunities. We’re now well under way. surrounding areas. The project aims to provide meaningful activities for children, young people and families in the form of grass hockey, ice Fundamental to any organizational change is to approach the process hockey and ice skating. itself with diligence. The support and commitment of employees are vital. This creates a sense of shared ownership and responsibility for Associations of property owners are another form of collaboration the process which I’m convinced will lead to a better final result. So which are important for our work. Working alongside the police force during the first quarter, every employee in the management organi- and municipality, the association of property owners in Gottsunda/ zation has actively participated in the creation of new processes and Valsätra of which we are a member, and hold the position of chair, working methods. We operate within a clear framework with a defined carried out a civil dialogue during an evening which generated almost objective, and as an organization, we’re taking these steps together. 1,000 responses from residents. This culminated in a so-called pledge to citizens during the first quarter. Alongside fellow members of the An organizational change of this scale represents a big investment. association and other participants, we collaborate on a number It requires time, and, not least, personnel and monetary resources. of activities in order to enhance the district. These include security As a result, the return on investment must be clear. For us, improved surveys and joint efforts in the outdoor environment to improve peace tenant satisfaction is the most important factor that will ultimately of mind and well-being. tell us whether we have succeeded. During February, we completed our annual tenants survey, which was jointly distributed by all of the And in Sollentuna Municipality, we’ve taken part in the launch of a BID company’s employees at the end of the previous quarter. Despite not (Business Improvement District) project along with a number of other yet evaluating the results of the organizational change, the survey un- real estate owners, the municipality, the police force and the Church derlined that the changes we’ve already implemented have enabled of Sweden. Within the scope of the BID project, we’ll be helping to im- us to take a big step closer to meeting the needs of our tenants. prove the financial and social conditions in the district. We have good previous experience of this type of collaboration, and can see that this Customer service unit delivers excellent results model will continue to form an important part of our work. One of the questions in the annual tenants’ survey asked respondents how they would prefer to get in touch with our service organization. An overwhelming majority of our tenants expressed a preference for an Stockholm April 26, 2019 easily accessible, central customer service facility where people can get assistance in their own language. The centralised customer ser- Svein Erik Lilleland vice unit we rolled out on a small scale in December 2018 was the first CEO, Hembla part of the organisational change. And the results were really pleasing. During the first quarter, the unit recorded over 1,000 tenant interac- tions on average per week, mainly by telephone and via social media. This takes place in more than eight languages. The customer service unit will be reinforced by additional resources in order to become the main channel for our service provision. Results During the first quarter of 2019, continued growth has remained We are building an strong in rental income and net operating income. This has been driven by acquisitions in combination with Hembla’s proven business organization that will be model to invest and develop both our apartments and their com- even better equipped to mon areas as well as exteriors. For a comparable portfolio, the total property expenses have increased, mainly due to maintenance, focus on our tenants. which is reflected in Hemblas’ continually more proactive approach to maintenance spend. We are convinced that this approach allows us to keep focus on our tenants and that it will increase the value of our assets in the long run. HEMBLA 3 INTERIM REPORT Q1 2019 Consolidated statement of comprehensive income 2019 2018 2018 Amounts in SEK million Jan – Mar Jan – Mar Jan – Dec Rental income 477 386 1,787 Operating expenses -223 -186 -676 Maintenance expenses -27 -23 -132 Property tax -9 -8 -33 Site leasehold rent - -4 -15 Total property costs -259 -220 -856 Net operating income 218 166 931 Central administration -43 -35 -185 Net finance items -101 -81 -395 Leasehold fee -4 Breakage fees refinancing - -49 -49 Income from property management 69 1 302 Dividend income from investments 24 - 5 Realized value changes of investment property - 15 19 Changes in value of investment property 659 222 3,737 Realized value changes financial derivatives, refinancing - -44 -9 Unrealized changes in value of financial instruments -7 -5 -12 Impairment of goodwill - -1 -41 Profit before tax 746 190 4,001 Tax -170 -34 -694 Net profit for the period 576 156 3,308 Other comprehensive income - - - Total comprehensive income for the period - - - Total comprehensive income for the period 576 156 3,308 Profit attributable to: Owners of the parent company 576 156 3,308 Non-controlling interests - - - Total comprehensive income for the period 576 156 3,308 Profit after tax per share SEK, before dilution 6.26 1.98 37.31 Profit after tax per share SEK, after dilution 6.23 1.96 37.23 HEMBLA 4 INTERIM REPORT Q1 2019 The period January – March 2019 Income statement items are compared with the corresponding period COMPARABLE PORTFOLIO of the previous year. Balance sheet items pertain to the position at the end of the period and are compared with the previous year-end. 2019 2018 Amounts in SEK million 31 Mar 31 Mar The quarter and period refer to January-March and the year refers to * January-December. Number of apartments 18,039 18,031 Market value properties, SEK m 26,723 21,952 Rental income and net operating income Refurbished apartments, # 5,399 3,966 Income for the period increased to SEK 477 million (386). The strong Refurbished apartments, % 29.9% 22.0% increase in income is largely a consequence of an increased property portfolio of 18% and the continued high pace of apartment renovations, 2019 2018 which has driven rents. For a comparable portfolio the rental income Amounts in SEK million Jan-Mar Jan-Mar Change % increased by SEK 19 million corresponding to a 4.9 percent increase.