Helsinki, Finland, 2015-04-24 08:15 CEST (GLOBE NEWSWIRE) -- Norvestia Oyj Stock exchange release 24 April 2015 at 9:15
INTERIM REPORT OF NORVESTIA FOR JANUARY–MARCH 2015
In January–March 2015, the result of the Group amounted to EUR 12.5 million (EUR 1.6 million in the same period previous year). Earnings per share were EUR 0.81 (0.10). Trading gains were EUR 15.6 million (2.2). Net Asset Value (dividend-adjusted) increased during the period by 8.4% (1.0%). Amended Net Asset Value (dividend-adjusted) increased during the period by 8.3% (1.0%). The AGM decided that EUR 0.30 per share be distributed as dividend (0.35).
CAPITAL MARKETS
Stock markets, particularly in Europe, rose markedly during the first quarter of 2015. The yield of the Helsinki CAP Yield Index was 18.4% during the quarter. This is fairly exceptional. The last time the index yielded as much in one quarter was in the fall of 2009.
Behind this strong rally are the same factors that have buoyed share prices for some years now; exceptionally low interest rates and the support activities of the European Central Bank (ECB). Low interest rates have continually funneled assets into stock markets, and boosted share prices and valuation levels.
In January 2015, the ECB launched its most powerful weapon so far. It decided to initiate a bond-purchase program of up to EUR 60 billion a month. European government bonds may also be bought within the limits of this program. The purpose of the operation is to stave off the threat of deflation and to support the struggling European economy. The sum of money spent by the ECB is huge. The market value of the entire Helsinki stock exchange, which is approximately EUR 190 billion, offers some kind of perspective to it; the sum of money consumed by the ECB could buy all the companies on the Helsinki stock exchange every third month.
Other economic news has been somewhat overshadowed by the ECB’s support activities. The euro exchange rate against the dollar has weakened by nearly 25% from last summer. This is mostly good news for Finnish listed companies. The price of crude oil has also fallen from its June 2014 high by approximately 50%, which significantly reduces energy costs for Finnish companies and hence improves their profitability.
In recent weeks, economic forecasts for the Eurozone have been revised slightly upward. Currently, the economy of the area is forecast to grow by 1.4% during 2015, while the previous forecast was 1.1%. Finland’s economic growth is forecast to stagnate further, with growth near 0%.
Index yields on various exchanges for the first three months of 2015 were as follows:
| Finland/OMX Helsinki Index | 16.2% |
| Finland/OMX Helsinki CAP Yield Index | 18.4% |
| Sweden/OMX Stockholm Index | 14.6% |
| Norway/OBX Index | 7.1% |
| Denmark/OMX Copenhagen Index | 23.8% |
| USA/Nasdaq Composite Index | 3.5% |
| USA/S&P 500 Index | 0.4% |
| Bloomberg European 500 Index | 15.5% |
| MSCI World Index | 1.8% |
| Japan/Nikkei 225 Index | 10.1% |
| Norvestia’s share price (dividend-adjusted) | 5.8% |
| Norvestia’s Net Asset Value (dividend-adjusted) | 8.4% |
| Norvestia’s Amended Net Asset Value (dividend-adjusted) | 8.3% |
NORVESTIA’S INVESTMENTS
Norvestia’s investments excluding cash and other liquid assets were 92% (89%) of total assets at the end of March. The market value breakdown of the investments was as follows:
| 31/3/2015 | 31/3/2014 | |||
| MEUR | % | MEUR | % | |
| Listed shares and share funds* | 97.1 | 59.2 | 71.8 | 49.6 |
| Industrial investments | 14.2 | 8.6 | 12.8 | 8.8 |
| Hedge funds | 18.5 | 11.3 | 23.5 | 16.2 |
| Bonds and bond funds | 21.0 | 12.8 | 20.6 | 14.2 |
| Cash and other liquid assets | 13.3 | 8.1 | 16.3 | 11.2 |
| In total | 164.1 | 100.0 | 145.0 | 100.0 |
* of which share funds EUR 15.0 million (13.9).
79% of the Group’s assets were in euros, 14% in Swedish krona, 6% in US dollars and 1% in other currencies.
During the first quarter of the year Norvestia traded shares actively. These share trades were intended to take advantage of rising share prices. The timing of the trades was successful. During the period under review, shares with strong dividend yields in particular were added to the portfolio.
Norvestia’s Net Asset Value fluctuated less month on month than the stock market in general. The company hedged its investments from time to time by selling Euro Stoxx Index futures and by buying put options. Approximately half of the Swedish krona currency risk was hedged with a currency future.
FUTURE PROSPECTS
Exceptionally low interest rates and the ECB’s support activities are likely to continue throughout the year, which will continue to support the capital market going forward. At the moment, investors have hardly any investment alternatives with positive return expectations other than shares.
If the ECB’s support measures work as planned, the economies of the euro countries should take a clear turn upward later this year. This would improve the difficult employment situation and gradually balance the euro countries’ budget deficits. At some point, this would also result in a decrease in European government debts. All this would be positive for the whole of Europe.
There are, however, risks involved in the ECB’s measures. In a bad scenario, the ECB’s support euros will just pour into the capital markets and increase the prices of various asset classes without initiating economic growth. At some point, this kind of development would, in all probability, lead to bubbles on the capital markets. In the long term, company valuations have to follow the basic fundaments of the economy. According to some estimates, shares are already overvalued.
In this sensitive investment environment, Norvestia aims to take into account various possible scenarios in the economy and on the stock market, based on the latest economic figures. Investment ratios of shares, funds and interest-yielding investments will be assessed according to the prevailing situation.
KEY FIGURES
| 1/1-31/3/ | 1/1-31/3/ | 1/1-31./12/ | |
| 2015 | 2014 | 2014 | |
| Earnings per share, EUR | 0.81 | 0.10 | 0.35 |
| 31/3/2015 | 31/3/2014 | 31/12/2014 | |
| Equity ratio, % | 94.7 | 94.3 | 99.0 |
| Shareholders’ equity per share, EUR | 10.40 | 9.32 | 9.59 |
| Net Asset Value per share, EUR | 10.40 | 9.32 | 9.59 |
| Amended Net Asset Value per share, EUR | 10.54 | 9.42 | 9.73 |
| Net Asset Value, EUR million | 159.3 | 142.8 | 146.9 |
| Amended Net Asset Value, EUR million | 161.4 | 144.3 | 149.0 |
| Share price, B share, EUR | 7.83 | 6.68 | 7.40 |
| Number of shares | 15,316,560 | 15,316,560 | 15,316,560 |
DISCLOSURE PROCEDURE
This stock exchange release is a summary of Norvestia's January-March 2015 interim report. The full interim report including tables is available as an attachment to this release and on Norvestia’s web pages at www.norvestia.fi/en/investors.
The interim financial information has been reviewed by Norvestia’s auditor.
Helsinki 24 April 2015
NORVESTIA OYJ
Board of Directors
On behalf Juha Kasanen Managing Director Tel. +358-9-6226 380
DISTRIBUTION Nasdaq Helsinki
Main media www.norvestia.fi
