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2020-07-31

K-Fast Holding AB: Interim report January-June 2020

Financial ratios for the period 1 January-30 June 2020

+----------------+---------+---------+---------+---------+---------+
|  Financial |    2020 |    2019 |   2020 |    2019 |   2019 |
|ratios | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec |
+----------------+---------+---------+---------+---------+---------+
|  Rental income,|  49.0 |  38.6 |  96.8 |  71.6 |  156.8 |
|SEK million | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Profit from |  19.5 |  16.7 |  35.0 |  27.8 |  52.9 |
|property | | | | | |
|management, SEK | | | | | |
|million | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Comprehensive |  111.3 |  90.0 |  203.6 |  133.4 |  365.3 |
|income for the | | | | | |
|period, SEK | | | | | |
|million | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Net |  575.6 |  430.9 | 1,084.7 |  568.3 | 1,061.1 |
|investments in | | | | | |
|investment | | | | | |
|properties, SEK | | | | | |
|million | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Investment | 5,751.5 | 3,704.8 | 5,751.5 | 3,704.8 | 4,396.7 |
|properties, SEK | | | | | |
|million | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Long-term net | 2,818.0 | 1,394.1 | 2,818.0 | 1,394.1 | 2,540.2 |
|asset value | | | | | |
|(NAV), SEK | | | | | |
|million | | | | | |
+----------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Number of |  1,865 |  1,418 |  1,865 |  1,418 |  1,711 |
|apartments under| | | | | |
|management | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Number of |  1,249 |  565 |  1,249 |  565 |  700 |
|apartments under| | | | | |
|construction | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Number of |  2,888 |  1,172 |  2,888 |  1,172 |  1,340 |
|apartments under| | | | | |
|project | | | | | |
|development | | | | | |
+----------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Interest |  2.7 |  3.0 |  2.6 |  2.8 |  2.6 |
|coverage ratio, | | | | | |
|multiple | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Equity/assets |  39.1% |  28.5% |  39.1% |  28.5% |  41.8% |
|ratio, % | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Loan-to-value |  53.4% |  61.0% |  53.4% |  61.0% |  40.2% |
|ratio, % | | | | | |
+----------------+---------+---------+---------+---------+---------+
| | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Profit from |  0.58 |  0.67 |  1.03 |  1.11 |  2.05 |
|property | | | | | |
|management, SEK | | | | | |
|per share | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Growth in |  -13.8% |  89.1% |  -7.0% |  52.7% |  24.6% |
|profit from | | | | | |
|property | | | | | |
|management per | | | | | |
|share, % | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Long-term net |  83.15 |  55.76 |  83.15 |  55.76 |  74.96 |
|asset value | | | | | |
|(NAV), SEK per | | | | | |
|share | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Growth in long|  5.6% |  9.3% |  10.9% |  14.9% |  54.4% |
|-term net asset | | | | | |
|value (NAV), per| | | | | |
|share, % | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Earnings per |  3.28 |  3.60 |  6.01 |  5.34 |   14.14 |
|share, SEK | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Number of |  33,889 |  25,000 |  33,889 |  25,000 |  33,889 |
|shares | | | | | |
|outstanding at | | | | | |
|the end of the | | | | | |
|period, | | | | | |
|thousands | | | | | |
+----------------+---------+---------+---------+---------+---------+
|  Average number|  33,889 |  25,000 |  33,889 |  25,000 |  33,889 |
|of shares | | | | | |
|outstanding | | | | | |
|during the | | | | | |
|period, | | | | | |
|thousands | | | | | |
+----------------+---------+---------+---------+---------+---------+
 

A Message from the CEO

We find ourselves in a dramatic new reality where people's lives and health are at risk from the spread of Covid-19, at the same time as the world's economies are facing an unprecedented slowdown. It's in this context that we're presenting our strongest quarterly profit on record, while building a platform for continued growth through acquisitions of attractive building rights - our most important raw material.

At national level, sales of new-build tenant-owner apartments slowed down in the second quarter of 2020. For example, Sweden's leading property portal, Hemnet, reported that sales decreased by 29 percent. We are noticing this in our project development operations, with significantly fewer competitors active on the transaction market for building rights compared to the same period last year. These factors favor growth in our project portfolio, reflected in the numerous transactions K-Fastigheter completed in the first half of the year.

In construction, we are also finding that suppliers of construction-related products and services are more willing to negotiate price. We have secured delivery of critical components for the remainder of the year, and built up an inventory of products that we expect will be hard to access in the event of further factory stoppages as a result of a second wave of Covid-19. Our counter-cyclical business model has been put to the test and has handled the effects of the pandemic very well to date. Given the current situation, we need to do all we can to minimize the risks to our employees, tenants and other stakeholders.

K-Fastigheter offers attractive HOMES on the Swedish and Danish housing market and benefits from operating in a less severely affected sector. We are active in countries with social welfare systems that assist affected parties with financial support. The absolute majority of our tenants have good payment ability, and in connection with new lettings we establish the tenant's payment ability by requiring annual income from full time employment or equivalent remuneration corresponding to at least three times the annual rent.

To summarize, Covid-19 still implies considerable uncertainty for the economy. In this environment, K-Fastigheter continues to work towards our operational and financial goals which feel realistic, and I am very confident about our business model and our ability to reach these targets.

The first six months of the year were intense and rewarding, with accelerating production and development of our proprietary conceptual HOMES. I summarized the first quarter as "record-breaking" and the same phrase works well to present the first half-year. I am proud to see what our incredible employees have achieved, and how well prepared we are ahead of our continued growth journey. This is a conservative sector, and concept building solutions have gone from being something no one wanted to work with to becoming part of the solution to the housing shortage.

In the first half of 2020, we completed 68 apartments and started construction of 619, which means that the number of apartments in production has increased from 700 apartments at the beginning of the year to 1,249 at the end of the first six months, an increase of 78 percent. In the second quarter of 2020, K-Fastigheter presented its strongest quarterly profit on record. New construction of HOMES in the first half of 2020 corresponded to 102 percent of all new construction starts for the full year 2019. This would not have been possible without our efficient concept buildings, and the cost-efficient construction and management the concept implies.

In addition, our project portfolio of properties where construction has not yet started increased by 116 percent, from 1,340 to 2,888 apartments in the first six months. This growth constitutes good advance planning and also ensures K-Fastigheter's future growth.

Our total holding of HOMES under management, in production, in the project portfolio and completed acquisitions where we have not yet taken possession totaled 6,151 apartments as of 30 June 2020. On the basis of rental values as of 30 June 2020, and adding projected rental values for HOMES in production and project development, and completed acquisitions where K-Fastigheter has not yet taken possession, we have ensured growth in rental values of some 240 percent from the current level.

Our ongoing production of 1,249 HOMES indicates a total acquisition cost for proprietary production of 73 percent of the anticipated market value, which implies a profit margin in the form of...

Författare K-Fast Holding AB

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