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Kojamo plc Half-Year Financial Report 1 January–30 June 2021

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Kojamo plc Stock Exchange Release, 19 August 2021 at 8:00 a.m. EEST

Kojamo plc’s Half-Year Financial Report 1 January–30 June 2021

The growth in fair value of the property portfolio continued

This is a summary of the January–June Half-Year Financial Report, which is in its entirety attached to this release and can be downloaded from the company’s website at www.kojamo.fi/investors.

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period of the previous year. The figures in this Half-Year Financial Report have not been audited.

Summary of April-June 2021

  • Total revenue increased by 2.0 per cent to EUR 96.7 (94.8) million

  • Net rental income increased by 0.2 per cent totalling EUR 69.1 (68.9) million. Net rental income represented 71.4 (72.7) per cent of revenue

  • Profit before taxes was EUR 369.6 (73.5) million. The profit includes EUR 322.7 (26.2) million in net gain on the valuation of investment properties at fair value and EUR 0.0 (-0.6) million in profits and losses from the sale of investment properties. Earnings per share was EUR 1.20 (0.24)

  • Funds From Operations (FFO) decreased by -1.5 per cent and amounted to EUR 41.4 (42.1) million

  • Gross investments totalled EUR 108.5 (116.9) million, representing 112.1 (123.3) per cent of total revenue

Summary of January–June 2021

  • Total revenue increased by 1.8 per cent to EUR 194.0 (190.5) million

  • Net rental income decreased by -0.3 per cent to EUR 124.5 (124.9) million. Net rental income was 64.2 (65.6) per cent of total revenue

  • Profit before taxes was EUR 546.7 (125.2) million. The profit includes EUR 466.2 (48.2) million in net gain on the valuation of investment properties at fair value and EUR 0.3 (-0.7) million in profits and losses from the sale of investment properties. Earnings per share was EUR 1.77 (0.40)

  • Funds From Operations (FFO) decreased by -3.4 per cent to EUR 69.0 (71.5) million

  • The fair value of investment properties was EUR 7.5 (6.5) billion at the end of the review period, including EUR 1.1 (2.4) million in Investment properties held for sale

  • The financial occupancy rate was 94.3 (96.3) per cent for the review period

  • Gross investments amounted to EUR 176.5 (179.0) million, or 91.0 (94.0) per cent of total revenue

  • Equity per share was EUR 14.84 (12.53) and return on equity was 25.1 (6.5) per cent. Return on investment was 17.2 (5.1) per cent

  • EPRA NRV (Net Reinstatement Value) per share grew by 18.1 per cent to EUR 19.07 (16.15)

  • There were 2,793 (2,380) Lumo apartments under construction at the end of the review period

  • Kojamo specifies its outlook for 2021

Kojamo owned 36,165 (35,474) rental apartments at the end of the review period. Since June of last year, Kojamo has acquired 26 (206) apartments, completed 772 (634) apartments, sold 0 (534) apartments and demolished or otherwise altered -107 (-26) apartments.

Key figures

4–6/2021

4–6/2020

Change %

1–6/2021

1–6/2020

Change %

2020

Total revenue, M€

96.7

94.8

2.0

194.0

190.5

1.8

383.9

Net rental income, M€ *

69.1

68.9

0.2

124.5

124.9

-0.3

257.6

Net rental income margin, % *

71.4

72.7

64.2

65.6

67.1

Profit before taxes, M€ *

369.6

73.5

402.9

546.7

125.2

336.5

391.2

EBITDA, M€ *

382.9

85.2

349.2

573.1

153.6

273.2

447.6

EBITDA margin, % *

395.9

89.9

295.5

80.6

116.6

Adjusted EBITDA, M€ *

59.9

59.6

0.4

106.3

106.1

0.2

222.6

Adjusted EBITDA margin, % *

61.9

62.9

54.8

55.7

58.0

Funds From Operations (FFO), M€ *

41.4

42.1

-1.5

69.0

71.5

-3.4

151.5

FFO margin, % *

42.8

44.4

35.6

37.5

39.5

FFO excluding non-recurring costs, M€ *

41.4

42.1

-1.5

69.0

71.5

-3.4

151.5

Investment properties, M€ ¹⁾

7,507.2

6,486.4

15.7

6,863.1

Financial occupancy rate, %

94.3

96.3

96.4

Interest-bearing liabilities, M€ *

3,371.0

3,212.8

4.9

3,053.3

Return on equity (ROE), % *

25.1

6.5

9.8

Return on investment (ROI), % *

17.2

5.1

7.4

Equity ratio, % *

45.8

43.3

45.6

Loan to Value (LTV), % * ²⁾

41.0

42.6

41.4

EPRA Reinstatement value (NRV), M€

4,712.2

3,991.0

18.1

4,254.6

Gross investments, M€ *

108.5

116.9

-7.2

176.5

179.0

-1.4

371.2

Number of personnel, end of the period

335

340

317

Key figures per share, €

4–6/2021

4–6/2020

Change %

1–6/2021

1–6/2020

Change %

2020

FFO per share *

0.17

0.17

0.0

0.28

0.29

-3.4

0.61

Earnings per share

1.20

0.24

400.0

1.77

0.40

342.5

1.27

EPRA NRV per share

19.07

16.15

18.1

17.21

Equity per share

14.84

12.53

18.4

13.39

* In accordance with the guidelines issued by the European Securities and Markets Authority (ESMA), Kojamo provides an account of the Alternative Performance Measures used by the Group in the Key figures, the formulas used in their calculation, and reconciliation calculations in accordance with ESMA guidelines section of the Half-Year Financial Report

¹⁾ Including Non-current assets held for sale

²⁾ Excluding Non-current assets held for sale

Outlook for Kojamo in 2021 (specified)

Kojamo estimates that in 2021, the Group’s total revenue will increase by 2–4 per cent (previously 3–5 per cent) year-on-year. In addition, Kojamo estimates that the Group’s FFO for 2021 will amount to between EUR 150–158 million, excluding non-recurring costs (previously EUR 150–163 million).

The outlook is based on the management’s assessment of total revenue, net rental income, administrative expenses, financial expenses, taxes to be paid and new development to be completed, as well as the management’s view on future developments in the operating environment.

The outlook takes into account the estimated occupancy rate and rises in rents as well as the number of apartments to be completed. The outlook does not take into account the impact of potential acquisitions on total revenue and FFO.

The outlook is also based on that migration will gradually recover to pre-pandemic levels after sufficient vaccination coverage has been achieved. The development of Like-for-Like rental income was moderate during the first half of the year as expected. During the summer, the authorities have risen their estimates of the level of sufficient vaccination coverage. Migration sustains strong demand, which will increase Like-for-Like rental income.

The management can influence total revenue and FFO through the company’s business operations. In contrast, the management has no influence over market trends, the regulatory environment or the competitive landscape.

CEO’s review

The first half of the year went as expected and our total reve-nue increased, supported by our strong housing stock. The fair value of our investment properties reached EUR 7.5 billion. The increase in fair value during the review period was particularly attributable to yield compression. In addition, 441 new apartments were completed in the capital region during the review period.

As expected, the first half of the year was characterised by the temporary impact of the COVID-19 pandemic and related restrictions on the market and migration. In addition, the supply of rental apartments has been at a high level. For these reasons, our financial occupancy rate decreased, tenant turnover increased and the growth of Like-for-Like rental income was moderate.

Achieving sufficient vaccination coverage remains a key factor in the reopening of society and the recovery of migration. There are, however, positive signs in this respect. COVID-19 vaccinations in Finland have progressed as expected, and it has been possible to lift certain restrictions related to the pandemic during the summer. One indication of the gradual reopening of society is that we signed a record-high number of new agreements in July. As expected, many of these leases involved students who are returning to contact instruction in the cities where universities are located.

In spite of the positive developments, it should be noted that the fourth wave of COVID-19 began in Finland during the summer. In particular, the more infectious Delta variant has increased its share of new infections. According to statements issued by the authorities, this may require a higher vaccination coverage than previously thought.

We are confident that apartments in growth centres, with good transport connections and proximity to services, will continue to attract customers. The new population forecast published by MDI in the summer also suggests that the capital region will continue to attract people in all three forecast scenarios. The supply of rental apartments has been at a high level, but we believe that the attributes and locations of our apartments and the customer experience we offer will continue to provide us with a competitive advantage and a unique housing experience in the future.

Our project pipeline is strong and we started construction of 610 new apartments during the period under review. After the review period, we also announced the construction of nearly 600 apartments in the capital region within the framework of our existing cooperation agreements. Our strong project pipeline has also protected us from the rise in construction costs seen in the market during the year. Our contracts have been drawn up at fixed prices and the net initial yields of our project portfolio are at a good level. Our investments are made according to carefully defined criteria with regard to location, condition, attributes and financial requirements.

In May, we issued our first green bond. The demand for this EUR 350 million bond issue was excellent. The proceeds from the bond issue will be used to finance or refinance investments that promote the energy efficiency of buildings in accordance with the Green Finance Framework we published in the spring. The green bond links Kojamo’s strategy, sustainability targets and financing. Our financial position is very strong and we will not have any significant refinancing needs in the near future.

Jani Nieminen
CEO

News conference as a webcast

Kojamo will hold a news conference for institutional investors, analysts and media on 19 August 2021 at 10.00 a.m. EEST as a webcast. The event will be held in English.

A recording of the webcast will be available later on the company website at https://kojamo.fi/en/investors/releases-and-publications/financial-reports/

The news conference can be followed online at https://kojamo.videosync.fi/2021-q2-results

You can also participate in the press conference by calling:
FI: +358 981 710 310
SE: +46 856 642 651
UK: +44 333 300 0804
US: +1 631 913 1422

Please use the following PIN code to participate in the press conference by telephone: 47486386#.

For more information, please contact

Maija Hongas, Manager, Investor Relations, Kojamo Plc, tel. +358 20 508 3004, maija.hongas@kojamo.fi

Erik Hjelt, CFO, Kojamo Plc, tel. +358 20 508 3225, erik.hjelt@kojamo.fi

Distribution:

Nasdaq Helsinki, Irish Stock Exchange, key media

Kojamo is Finland’s largest private residential real estate company and one of the biggest investors in Finland. Our mission is to create better urban housing. Lumo offers environmentally friendly housing and services for the city dweller who appreciates quality and effortlessness. We actively develop the value of our investment properties by developing new properties and our existing property portfolio. We want to be the property market frontrunner and the number one choice for our customers. Kojamo’s shares are listed on the official list of Nasdaq Helsinki. For more information, please visit kojamo.fi/en/

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