Bli medlem
Bli medlem

Du är här

2016-10-20

SATO Oyj: SATO Corporation's interim report 1 January 2016 - 30 September 2016

SATO Corporation, Interim Report, 20th October 2016 at 3:10 pm

Customer-driven approach to the core of SATO's strategy

Summary of 1 January - 30 September 2016 (1 January - 30 September 2015)

* Net sales stood at EUR 230.8 (244.8) million, of which rental income
accounted for EUR 194.8 (187.8) million.
* Profit before taxes stood at EUR 172.9 (102.5) million. The improvement was
based on the change in the fair value of rental flats, which was EUR 101.5
(26.4) million.
* Earnings per share were EUR 2.57 (1.60).
* Equity was EUR 1,206.5 (948.0) million, or EUR 21.31 (18.65) per share.
* Return on equity was 16.7 (11.8) percent.
* Equity ratio was 34.1 (31.2) percent.
* Investments in rental flats stood at EUR 508.8 (195.0) million.
* A total of 3,061 (960) rental flats were acquired or completed.
* A total of 1,428 (1,122) rental apartments were under construction.
* The occupancy rate in Finland was 95.3 (96.6) percent.

Summary of 1 July - 30 September 2016 (1 July - 30 September 2015)

* Net sales stood at EUR 72.5 (69.3) million, of which rental income
accounted for EUR 68.3 (62.8) million.
* Profit before taxes stood at EUR 64.0 (9.4) million. The change in the fair
value of rental flats included in the result was EUR 38.5 (-18.3) million.
* Earnings per share were EUR 0.90 (0.15).
* Investments in rental flats stood at EUR 64.0 (98.9) million.
* The occupancy rate in Finland was 96.0 (96.7) percent.

Operating environment

Growth is expected in the Eurozone, but it is shadowed by several risks.
Global crises related to economy, politics and security, together with
Brexit, create uncertainty globally and, in particular, in Europe.

The picture of the Finnish economy is mixed. Positive signals can be seen in
confidence indicators regarding construction, services and consumers, as
these are at the long-term average level or higher. Then again, the outlook
is pushed down by exports, and the general recovery has not started,
regardless some positive news in certain industrial segments.

The uncertainty is expected to keep the market interest rates close to zero
for a long time.

There was brisk demand for rental flats during the summer and early autumn.
The increased supply has stabilised the relationship between supply and
demand in many areas, which has increased tenant turnover with regard to the
entire rental housing base.

In Russia, the purchasing power is expected to decrease further, and
households are expected to use their assets to repay their loans. Even though
GNP was only a little lower at the beginning of the year compared with the
year before, Bank of Finland estimates that future growth is sustainable only
after investments are started in Russia.

Saku Sipola, President and CEO:
- High demand in July-September and our actions to improve the occupancy rate
were clearly visible. The occupancy rate continued to increase from the
previous quarter's 95.1 percent to 96.0 percent during the third quarter.
This increase in the occupancy rate resulting from our productive work with
our customers is an important step in our more customer-driven operations.
- Urbanisation presents an enormous change, and it largely defines the future
success of Finland. Finland is currently making good progress in terms of the
housing construction required by urbanisation, and we need to be able to
maintain this progress. Keeping pace requires the engagement of a large set
of operators. According to our strategy, SATO aspires to increase its range
of rental flats in the Helsinki region, Tampere and Turku - areas showing the
highest demand for new homes.
- An increase in the number of apartments alone is not enough because the
values of people are changing and becoming more individual alongside urban
growth - this is why housing solutions must also become more diverse. SATO,
together with its partnership network, will revolutionise the field of
housing - to offer diverse housing solutions and services that make living
easier - more than just walls.

REVIEW PERIOD 1 January - 30 September 2016 (1 January - 30 September 2015)

Strategy

The SATO Board of Directors has adopted the company's updated strategy,
strategic objectives and dividend policy.

Globalisation, digitalisation and sustainable development are accelerating the
rate of urbanisation and influencing people's values and actions. Therefore,
housing will also need to change. According to our vision, thriving urban
environments will be home to people enjoying a high level of wellbeing. Our
task is to revolutionise housing - provide our customers with more than just
walls.

We will create a well-functioning cooperation network to offer diverse housing
and services for different needs and to the benefit of our customers. We will
target our growth investments at the Helsinki Metropolitan Area, Tampere and
Turku where the demand for homes is the highest.

The role of financing is emphasised in the creation of the capacities for
growth, and we have included a strengthening investment grade rating
(currently Moody's Baa3) in our strategic objectives. Our return on equity
target for the strategic period will remain unchanged at 12 percent. In
addition, our strategic objective is a constantly improving tenant's Net
Promoter Score (NPS).
According to the new dividend policy, annual dividends paid will, depending on
the investment level, market situation, and the development of solvency
ratio, be a maximum of 40 percent of the cash earnings.

Net sales and profit

The Group's net sales decreased in January-September by 5.7 percent
year-on-year and totalled EUR 230.8 (244.8) million. The decrease in net
sales was caused by a reduction in the sales of owner-occupied apartments in
accordance with the strategy. Of net sales, rental income accounted for EUR
194.8 (187.8) million. Rental income increased by 3.7 percent.

Operating profit increased by 59.3 percent to EUR 208.0 (130.5) million.
Operating profit without the change in fair value was EUR 106.4 (104.1)
million. The change in fair value of EUR 101.5 (26.4) million during the
first half of the year was mainly affected by ending restrictions on certain
properties, adjusted yield demands set for specific properties on the basis
of the guidance issued by an external valuation agency and higher sales
prices of flats in our operating area. The agency's guidance on the adjusted
yield demands are based on the attractiveness of housing investments
producing steady returns, which increases the value of apartments.

Profit before taxes increased by 68.7 percent to EUR 172.9 (102.5) million.
The improvement was mainly based on the positive change in the value of
rental apartments. Cash flow from operations (free cash flow after taxes
excluding change in fair value) in January-September amounted to EUR 57.6
(54.9) million.

Financial position and financing

The consolidated balance sheet totalled EUR 3,540.6 (3,034.4) million at the
end of September. Equity was EUR 1,206.5 (948.1) million. Equity per share
was EUR 21.31 (18.65). Through its two share issues in June, SATO Corporation
strengthened its shareholders' equity by a total of EUR 112.9 million.

The Group's equity ratio was 34.1 (31.2) percent at the end of September. The
minimum target is an equity ratio of 30 percent.

The Group's annual return on equity was 16.7 (11.8) percent. The return on
investment was 9.5 (6.7) percent.

Interest-bearing liabilities at the end of September totalled EUR 1,971.6
(1,777.9) million, of which loans subject to market terms accounted for EUR
1,469.5 (1,450.3) million. The average interest rate was 2.6 (2.4) percent.
Net financing costs totalled EUR 35.1 (28.1) million.

In March, SATO issued a EUR 300 million unsecured bond offered to European
investors. The loan received the Baa3 credit rating from Moody's. The bond
has a maturity of five years, and it has a fixed coupon rate of 2.375
percent. The loan-to-value (LTV) ratio was 55 (57) percent at the end of the
review period.

The calculated impact of changes in the market value of interest hedging was
EUR -12.4 (3.6) million on equity and EUR 0.0 (0.4) million on profit before
taxes.

Housing assets and fair value

The development of the value of rental apartments is a key factor for SATO.
Its housing assets are focused on apartment sizes and on areas where the
demand for homes will increase in the long term. The allocation of building
repairs is based on life-cycle plans and repair-need specifications.

On 30 September 2016, SATO owned a total of 25,681 (23,992) flats. A total of
3,061 rental apartments were acquired or completed. The total number of
divested rental apartments and shared ownership apartments redeemed by the
owner occupants was 810.

The fair value of rental apartments was EUR 3,335.7 (2,697.1) million at the
end of September. The change in the fair value, including the rental flats
acquired and divested during the period, was EUR 582.8 (169.1) million.

Of the value of apartments, the Helsinki region accounted for some 80 percent,
Tampere and Turku made up roughly 12 percent, Oulu and Jyväskylä roughly 4
percent. St. Petersburg covered roughly 4 percent at the end of June.

Investments and divestments

Investment activities prepare the ground for growth. Since 2000, SATO has
invested a total of EUR 2.5 billion in rental flats.
SATO acquires and builds entire rental buildings and single rental flats.

SATO's investment activities will focus on the Helsinki region, Tampere and
Turku in the future. During the review period, investments in rental
apartments stood at EUR 508.8 (195.0) million. Investments in the Helsinki
region represented 66 percent and investments in new apartments represented
21 percent of all investments in the review period.

At the end of September, binding purchase agreements in Finland totalled EUR
125.7 (115.9) million.

During the review period, 662 (1,078) flats with a total value of EUR 31.4
(52.3) million were divested in Finland.

Rental activities

Effective rental activities provide homeseekers with quick access to a home.
Rental services are mainly offered by SATO's rental offices. In addition,
SATO's electronic channels make finding a home easy for customers.

Rental income increased by 3.7 percent to EUR 194.8 (187.8) million. The
economic occupancy rate of apartments in Finland was 95.3 (96.6) percent on
average, and the rental tenant turnover rate was 41.9 (40.5) percent. The
large number of rental apartments completed over the past 12 months and the
intensifying competition contributed to the increase in tenant turnover and
the decrease in the occupancy rate. The rental market is currently in a state
of balance in many plac...

Författare Hugin

Tala om vad ni tycker

Tala om vad ni tycker

Ni är just nu inne på en betaversion av nya aktiespararna. Lämna gärna feedback på vad ni tycker i formuläret nedan.