a solid start to the year - technopolis · 2018. 4. 25. · a solid start to the year q1/2018...

A Solid Start to the YearQ1/2018 Results

Technopolis Plc

April 25, 2018Keith Silverang, CEO

Key Messages on Q1/2o18

• Comparable net sales and EBITDA up over 5%, year-on-year

• Occupancy rates continued to rise

• Service business continues on a growth path

• Rental growth also had a positive effect on Group net sales

– ~90% of rental agreements tied to CPI development

• Refinancing agreement extended maturity profile and freed assetsfrom pledges

• New UMA opened in Stockholm earlier this week, another one set to open in Copenhagen in September

April 25, 2018 Q1/2018 Results | Keith Silverang, CEO2

* Comparable = excluding Jyväskylä divestiture in 2017.

Key Financials

Group net sales developmentEUR m

Healthy Comparable Growth y-o-y

• FX changes decreased net sales by EUR 0.7 (+0.8) million

• On a constant currency basis net sales were down 1.5%

0

50

100

150

200

2015 2016 2017 Q1'17 Q1'18

Property income Service income

170.6 172.1179.7

44.3 42.9

Group EBITDA and EBITDA marginEUR m, %

• FX changes decreased EBITDA by EUR 0.5 (+0.6) million

• On a constant currency basis, EBITDA declined by 0.3%, and EBITDA margin was 53.9%.


93.0 93.1 97.1

23.6 23.1

40%

45%

50%

55%

60%

0

25

50

75

100

125

2015 2016 2017 Q1'17 Q1'18

EBITDA Margin-%

53.7%

-3.3% -2.2%

Comparable*

+5.3%

Comparable*

+5.2%


Financial Occupancy Rate, Group%


Financial Occupancy Was 95.8%

90

92

94

96

98

100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1/2018

Group 10-yr average

94.2%

95.8%

FOCR by Business Unit%

Occupancy Up by 2.3 Percentage Points y-o-y

• Group average at the period end was 95.8 (93.5)%.

• Decline in Gothenburg was due to expiry of rental guarantee

93.5

97.3

92.5

98.6

95.293.5

100.0 99.7 99.6

75

80

85

90

95

100

105

HMA Kuopio Oulu Tampere Gothenburg Oslo St. Petersburg Tallinn Vilnius

March '17 March '18


Finland Average: 95.0 (91.3)%Scandinavia Average:

93.9 (95.48)% Baltic Rim Average: 99.7 (99.3)%

0.8

2.1

2.7

0.7

1.0

0%

5%

10%

15%

20%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2015 2016 2017 Q1'17 Q1'18

EBITDA Margin-%

Service IncomeEUR m

Service Growth Continues

• Service income grew or stayed at the previous year’s level in all business units

20.322.4

25.4

6.0 6.3

0

5

10

15

20

25

30

2015 2016 2017 Q1'17 Q1'18

Service EBITDA and EBITDA MarginEUR m, %

• Margin improvement through scale benefits i.e. higher service income and growth in more profitable services, as well as price increases of some services

• Service EBITDA included ramp-up costs of EUR 0.1 million of UMA Kungsbron

Service Penetration in Q1/18*

%

• Service penetration in Q1’18 was 14.7%

• Best-performing units show service penetration figures above 20%

Service income as % of Group net

sales14.7%


* Service Income’s share in Group net sales.

+5.1%

+43.6%

Comparable*

+14.8%

16.0%


Quarterly Service Income and EBITDA MarginEUR m, %


Quarterly View on Business

5.25.8

4.9

6.56.0

6.8

5.6

7.06.3

0%

5%

10%

15%

20%

25%

0

2

4

6

8

10

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18Service Income EBITDA margin-%

Quarterly Property Income and EBITDA marginEUR m, %

35.9 37.4 38.1 38.3 38.3 39.0 38.5 38.636.6

0%

20%

40%

60%

80%

100%

0

10

20

30

40

50

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18Property Income EBITDA margin-%

1,537.9

1,558.3

8.0

0.3 -1.42.1 0.8

10.7

1,500

1,520

1,540

1,560

1,580

Fair Value of Investment PropertiesEUR m


Fair Values Up: Mainly from Yield Compression

• Yield compression increased fair values the most

• Fair value of investment properties in balance sheet positively affected by completions of properties in Baltic Rim -area

Breakdown of Fair Value by Segment%

• Finland’s share declined from 61% to 57% from previous year

Finland57%

Baltic Rim22%

Scandinavia21%

EUR +9.7 million

Balance Sheet & FundingSami Laine, CFO

Strong Balance Sheet Supports Strategy Implementation

31 Mar '18 31 Mar '17 Change, % 31 Dec '17 Change, %

Balance sheet total EURm 1 731.5 1 776.5 -2.5 1 719.8 0.7

Interest-bearing debt EURm 885.1 889.5 -0.5 805.0 10.0

Cash and equivalents EURm 60.8 62.5 -2.6 71.8 -15.2

Average loan maturity yrs 4.5 5.1 -12.4 4.5 -1.3

Loan-to-value (LTV) % 54.6 53.4 - 50.1 -

Equity ratio % 39.6 40.9 - 44.8 -

Solvency ratio % 47.6 46.3 - 42.6 -

Secured solvency ratio % 37.7 38.3 - 35.3 -

Unencumbered asset ratio % 25.6 12.3 - 13.8 -

Interest coverage multiple 5.2 3.8 36.8 4.3 20.9


• The EUR 75.0 million hybrid loan redeemed on March 26

• Dividend payment & equity repayment totaling EUR 26.7 million booked in March, pay out on April 4

• Unencumbered asset ratio improved following the refinancing agreement

Refinancing Agreement Signed in March

• A five-year EUR 518 million refinancing agreement

• An extension option of up to two years

• The package consists of four secured facilities:

– a EUR 150 million term loan facility for refinancing existing debt,

– a EUR 100 million committed capex facility,

– a EUR 100 million committed revolving credit facility and

– a EUR 168 million guarantee facility.

• The agreement includes customary financial covenants that are based on:

– equity ratio above 30%,

– an LTV below 65% and

– an interest coverage ratio above 2.25.


Maturity Profile of IB Debt, EUR million

Maturities Extended Through New Refinancing Agreement

• EUR 150 million unsecured bond (maturity in 2020), callable in May 2018

197.9

71.1

204.0

124.8

19.7

267.6

0

50

100

150

200

250

300

2018 2019 2020 2021 2022 2023-


Interest-Bearing Liabilities, March 31, 2018Total EUR 885.1 (889.5) million

Loan Portfolio Well Covered for Interest Rate Risk

The average interest rate on interest-bearing liabilities was 2.43%.

The average interest interest fixing period was 4.7 (4.8) years.

Hedge ratio 56.3 (67.8)%.

648.0

150.0

49.9

7.7 29.9

Bank Loans

Unsecured Senior Bond

Commercial Papers

Financial Leases

Other


Strategy Implementation

Nearly EUR 140 Million in Organic Projects in Progress

Area Name Pre-let rate,% Rentable area, m²Total investment,

EUR mStabilized yield, % 1) Completion

Helsinki Ruoholahti 3 47.3 10,300 33.2 7.0 7/2018

Tallinn Lõõtsa 12 81.3 9,700 13.6 9.0 7/2018

Vilnius2) Penta 93.0 13,800 32.02) 8.4 10/2017

Vantaa Aviapolis Bldg H 4.9 5,100 15.1 8.0 11/2018

Tampere City Center 41.7 13,200 46.0 7.5 10/2019

TOTAL in progress 52,100 139.9


1) Stabilized yield = estimated net operating income / cost2) Total investment including also the neighboring land plot with an expansion potential of at least 20,000 m2

• On top of the above, 10 more projects under design

• Most of these extensions of our existing campuses are being driven by growth of our existing customers

• While we expect the pipeline to be growing, we are looking at each case rigorously and will launch when market conditions allow and our strict investment criteria are met.

We Are Expanding UMA Network

October 31, 2017 Q3 Interim Report, 2017 | Keith Silverang, CEO17

• New flagship UMA in Stockholm was opened earlier this week • Another new one is set to open in Copenhagen in September - It will be located in the very center of the city next to Strøget, the main shopping

street and the City Hall• The space will be named UMA Vestergade

UMA Vestergade

Outlook

Macro Economic Tailwind Expected to Continue

% Finland Norway Sweden Estonia Lithuania Russia

GDP growth forecast

Y-o-y change '17-18 +2.5 +1.9 +2.8 +3.3 +3.0 +1.9

Y-o-y change '18-19 +2.0 +1.8 +2.3 +3.0 +2.8 +1.5

CPI growth forecast

Y-o-y change '17-18 +1.7 +1.6 +2.1 +3.3 +2.9 +3.8

Y-o-y change '18-19 +2.0 +1.9 +2.3 +2.8 +3.0 +4.0


Source: OECD, November 2017

Guidance unchanged:

Technopolis estimates that the Group Net sales in 2018 will be at the same level as it was in 2017. The company expects the Group EBITDA to remain at the same level as in 2017, or slightly below.

The estimates take into account the divestiture of the operations in Jyväskylä, Finland in late 2017. The negative effect of the Jyväskylä divestitures on Group Net sales and EBITDA, on an annual level, are approximately EUR 14.5 million and EUR 7.2 million, respectively.

Furthermore, the estimate takes into account the company’s view on the planned completion of organic growth projects in progress, as well as its view on economic developments in each Technopolis market, and the development of the company’s occupancy and rental rates.

ThankYou!Time for questions.

www.tehcnopolis.fi

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APPENDICESDetailed Financial Information

Segment information: Finland

23

FinlandQ1/

2018Q1/

2017Change

%2017

Net sales EURm 26.8 28.7 -6.5 117.7

Property income EURm 22.1 23.9 -7.7 97.5

Service income EURm 4.7 4.8 -0.6 20.2

EBITDA EURm 13.4 14.7 -9.1 61.5

EBITDA margin %50.1 51.5 - 52.2

Fair value of investment properties* EURm 891.4 997.6 -10.6 890.9

Number of campuses* 12 15 - 12

Rentable area* m2 421 000 483 700 -13.0 425 000

Average rent* EUR/m2/month 17.5 17.3 1.2 17.7

Financial occupancy rate* % 95.0 91.3 - 94.5

Market yield requirement, average* % 7.3 7.6 - 7.3

* At the end of the period. Note: 3/18: 7,100 m2 under renovation, 3/17: 10,350 m2 under renovation.

Segment information: Baltic Rim

24

FinlandQ1/

2018Q1/

2017Change

%2017

Net sales EURm 9.7 8.9 8.3 36.0

Property income EURm 8.6 8.0 7.8 32.5

Service income EURm 1.1 1.0 12.2 3.6

EBITDA EURm 6.1 5.3 15.2 21.5

EBITDA margin %62.5 58.8 - 59.6

Fair value of investment properties* EURm 341.1 312.0 9.3 325.2


Rentable area* m2 176 300 168 550 4.6 176 000

Average rent* EUR/m2/month 15.8 15.6 1.0 15.7




m-files://show/5BCEDA46-CAEB-41B2-A7E9-4A176D91E611/0-207763?object=CA55CFB5-B966-4E17-AC35-4768C46750E0

Segment information: Scandinavia

25

FinlandQ1/

2018Q1/

2017Change

%2017

Net sales EURm 6.4 6.7 -3.6 26.0

Property income EURm 6.0 6.3 -5.0 24.4

Service income EURm 0.5 0.4 19.6 1.6

EBITDA EURm 3.6 3.6 0.7 14.1

EBITDA margin %55.7 53.3 - 54.4

Fair value of investment properties* EURm 325.9 333.1 -2.2 321.9


Rentable area* m2 102 100 99 300 2.8 100 900

Average rent* EUR/m2/month 19.3 20.9 -7.8 19.5




Changes in Fair Values, January-March 2018EURm


Changes in Fair Values

EURmYield

requirementOccupancy

assumptionModerniza-

tionOther

changesProjects in

progress Total

Finland 1.8 0.4 -0.9 1.1 0.3 2.7

Baltic Rim 2.7 -0.1 0.1 0.7 0.5 3.9

Scandinavia 3.5 0.0 -0.6 0.3 0.0 3.1

TOTAL 8.0 0.3 -1.4 2.1 0.8 9.7

* Other changes include changes in market rents, operating expenses, as well as other allocations.


Lease Stock and Customer Base

• A total of approximately 1,600 customers and 3,000 lease agreements

• The ten largest customers let approximately 22.9% of rented space and the single largest customer 4.4%

• In January–Mach, the ten largest customers accounted for 20.9% of rental income and the single largest customer 5.2%

Lease stock, % of spaceMaturity, years

March 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017

< 1 18 15 16 16 21

1 – 3 29 28 21 21 20

3 – 5 13 12 19 19 18

> 5 17 17 16 16 15

Open-ended leases 24 26 29 29 25

Average lease term in months 34 34 34 34 34

Lease stock, EUR million 360.7 372.0 389.9 397.6 389.1

Share Information: Trading


Share tradingQ1/

2018Q1/

2017Change

% 2017

Lowest price EUR 3.64 2.96 23.0 2.96

Highest price EUR 4.29 3.19 34.5 4.20

Closing price (end of period) EUR 3.67 3.03 21.1 4.18

Volume weighted average price EUR 3.98 3.08 29.2 3.73

Share turnover million shares 15.1 12.7 18.9 72.0

Share turnover EURm 60.1 39.2 53.3 268.2

Market capitalization (end of period) EURm 582.8 481.1 21.1 663.8

* Market capitalization is based on 158,793,662 shares. Source: Nasdaq Helsinki

Share Information: Largest Shareholders* on March 31, 2018

29

# of shares % of shares

Varma Mutual Pension Insurance Company 30,232,288 19.0

Mercator Capital AB (former Olofsgård Invest AB) 24,574,470 15.5

City of Oulu 3,917,926 2.5

Laakkonen Mikko 2,139,276 1.4

Technopolis Plc 1,903,373 1.2

The Finnish Cultural Foundation 1,782,063 1.1

Jenny and Antti Wihuri’s Foundation 1,107,597 0.7

Etola Erkki 865,500 0.6

Jyrki Hallikainen and company 752,000 0.5

City of Vantaa 600,000 0.4

10 largest shareholders, total 67,874,493 42.8

Foreign and nominee registered, total 57,339,942 36.1

Others, total 33,813,357 22.1

Total amount of shares 158,793,662 100.0

* Not including nominee-registered shareholders

a solid start to the year - technopolis · 2018. 4. 25. · a solid start to the year q1/2018...

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