Healthy Operational Performance - Technopolis · 2018. 8. 23. · FOCR by Business Unit % Rising...
Transcript of Healthy Operational Performance - Technopolis · 2018. 8. 23. · FOCR by Business Unit % Rising...
Healthy Operational PerformanceHalf-Year Financial Report 2018
Technopolis Plc
August 23, 2018Keith Silverang, CEO
Key Messages on First Half 2o18
• Like-for-like net sales and EBITDA up 3.4% and 4.4%, respectively
• Occupancy rates continued to rise year-on-year
• Service business remains on growth path
• First half profitability affected by:
– UMA ramp-up costs
– Non-recurring items related to terminated acquisition case
– Change in real estate tax accounting - no full-year effect
• Fair values up by EUR 19.7 million in first half
• Strategy implementation progressing
– three new UMAs to be opened this year
– two new organic growth projects announced today
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO2
Key Financials
Group net sales developmentEUR m
Healthy Like-for-Like Growth
• FX changes decreased net sales by EUR 1.3 (+1.1) million
• On a constant currency basis net sales were down 1.7%
0
50
100
150
200
2015 2016 2017 1-6/17 1-6/18
Property income Service income
170.6 172.1179.7
90.1 87.2
Group EBITDA and EBITDA marginEUR m, %
• FX changes decreased EBITDA by EUR 0.9 (+0.8) million
• On a constant currency basis, EBITDA declined by 3.6% and EBITDA margin was 53.5%.
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO4
93.0 93.1 97.1
49.1 46.5
40%
45%
50%
55%
60%
0
25
50
75
100
125
2015 2016 2017 1-6/17 1-6/18
EBITDA Margin-%
53.7%
-3.2% -5.3%
LFL+3.4%
LFL +4.4%
Financial Occupancy Rate, Group%
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO5
Financial Occupancy Was 95.9%
90
92
94
96
98
100
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun/2018
Group 10-yr average
94.2%
95.9%
FOCR by Business Unit%
Rising Domestic Occupancy Is the Driver
• Group average at the period end was 95.9 (94.4)%.
• Decline in Gothenburg was due to expiry of rental guarantee
92.4
98.1
93.1
98.0
95.2 95.3
100.0
97.599.7
80
85
90
95
100
105
HMA Kuopio Oulu Tampere Gothenburg Oslo St. Petersburg Tallinn Vilnius
June '17 June '18
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO6
Finland Average: 94.9 (93.2)%Scandinavia Average:
95.2 (94.9)% Baltic Rim Average: 98.9 (98.3)%
0.8
2.1
2.7
1.61.7
0%
5%
10%
15%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2015 2016 2017 1-6'17 1-6'18
EBITDA Margin-%
Service IncomeEUR m
Service Growth Continues, UMA Ramp-Up Burdens Profitability
• Service income grew in all but one business unit
20.322.4
25.4
12.813.8
0
5
10
15
20
25
30
2015 2016 2017 1-6/17 1-6/18
Service EBITDA and EBITDA MarginEUR m, %
• The decline in EBITDA-margin was due to approximately EUR 1 million of ramp-up cost related to UMA coworking sites in January–June
• Excluding UMA, the service EBITDA margin was 18.8%.
Service Penetration in 1-6/18*
%
• Service penetration in Q2’18 was 17.0%
• Best-performing units show service penetration above 20%
Service income as % of Group net
sales15.9%
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO7
* Service Income’s share in Group net sales.
+8.0%
+5.6%
12.3%
Excl. UMA 18.8%
Quarterly Service Income and EBITDA MarginEUR m, %
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO8
Seasonal Fluctuations in Services
5.25.8
4.9
6.56.0
6.8
5.6
7.06.3
7.5
0%
5%
10%
15%
20%
25%
0
2
4
6
8
10
Q1'16Q2'16Q3'16Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18Service 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 36.8
0%
20%
40%
60%
80%
100%
0
10
20
30
40
50
Q1'16Q2'16Q3'16Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18Property Income EBITDA margin-%
EBITDA-margin excl. UMA
1,537.9
1,570.7
18.9
0.5-5.8 2.0 4.1 13.1
1,500
1,520
1,540
1,560
1,580
1,600
Fair Value of Investment PropertiesEUR m
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO9
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 56% from the previous year
Finland56%
Baltic Rim23%
Scandinavia21%
EUR +19.7 million
Strong Balance Sheet
30 Jun'18 30 Jun'17 Change, % 31 Dec'17 Change, %
Balance sheet total EURm 1,724.9 1,745.3 -1.2 1,719.8 0.3
Interest-bearing debt EURm 892.3 887.4 0.5 805.0 10.8
Cash and equivalents EURm 30.7 31.0 -1.1 71.8 -57.3
Average loan maturity yrs 4.2 4.8 - 4.5 -
Loan-to-value (LTV) % 54.2 53.2 - 50.1 -
Equity ratio % 40.6 42.2 - 44.8 -
Solvency ratio % 50.0 49.1 - 42.6 -
Secured solvency ratio % 37.2 37.8 - 35.3 -
Unencumbered asset ratio % 23.9 10.6 - 13.8 -
Interest coverage multiple 4.5 4.1 8.5 4.3 4.5
10
• 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
Strategy Implementation
EUR 133 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
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
Oulu City Center II 0.0 8,400 25.0 8.4 3/2020
TOTAL in progress 46,700 132.9
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO12
1) Stabilized yield = estimated net operating income / cost
• On top of the above, nine more projects under design
• Most of these extensions of our existing campuses are being driven by growth of our existing customers
• Of the EUR 200–250 million to be allocated to organic growth projects during the strategy period, projects worth EUR 164.9 million were either in progress or completed at the end of June, 2018.
New Launches Announced in Tampere and Kuopio, Finland
City Center, phase II Tampere, Finland
GLA: 7,300 m2
Pre-let rate: 0%
Microkatu, Phase 8 Kuopio, Finland
Target: LEED Gold certification
Construction: 9/2018–7/2020
Projected:
7.8StabilizedYield*,
%
27.2Investment,
EURm
10.4StabilizedYield *,
%
12.1Investment,
EURm
Projected:
GLA: 6,800 m2
Pre-let rate: 66.6%
Target: LEED Gold certification
Construction: 8/2018–8/2019
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO13
* Stabilized yield = estimated net operating income / cost
• Set to open in September 2018
• To be located in the very center of the city next to Strøget, the main shopping street
• Built into a leased 1,950 m2 space
• 33 private offices, 60 hot desks and 5 shared conference rooms
• Set to open in December 2018
• Situated in Helsinki’s trendy and urban Kalasatama region
• Around 1,700 m2
• 38 private offices, 60 hot desks, 4 shared conference rooms
• Set to open in December 2018
• Excellent location close to Central Station, Oslo City shopping mall, restaurants, cafeterias, retail, etc.
• Around 3,000 m2
• 42 private offices, over 100 hot desks and 4 shared conference rooms
UMA VestergadeCopenhagen
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO14
Three More UMAs Set to Open in 2018
UMA Vestergade
Copenhagen
UMA TeurastamoHelsinki
UMA Oslo CityOslo
• Two UMAs up and running: one in Helsinki and another one in Stockholm
• Three more set to open this year
Outlook
Macro Economic Tailwind Expected to Continue
% Finland Norway Sweden Estonia Lithuania Russia
GDP growth forecast
Y-o-y change '17-18 +2.9 +2.5 +2.8 +3.7 +3.3 +1.8
Y-o-y change '18-19 +2.5 +2.1 +2.2 +3.2 +2.9 +1.5
CPI growth forecast
Y-o-y change '17-18 +1.2 +1.9 +1.6 +2.8 +2.8 +2.9
Y-o-y change '18-19 +2.1 +1.9 +2.2 +2.5 +2.6 +4.0
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO16
Source: OECD, May 2018
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
APPENDICESDetailed Financial Information
Maturity Profile of IB Debt, EUR million
Maturities Extended Through Refinancing Agreement
• Majority of the loans maturing this year, is a NOK denominated secured bank loan – refinancing on-going
• EUR 150 million bond maturing in May 2020, callable since May 2018
187.2
90.3
209.0
127.0
16.4
262.4
0
50
100
150
200
250
300
2018 2019 2020 2021 2022 2023-
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO20
Interest-Bearing Liabilities, June 30, 2018Total EUR 892.3 (887.4) million
Loan Portfolio Well Covered for Interest Rate Risk
The average interest rate on interest-bearing liabilities was 2.39%.
The average interest interest fixing period was 4.2 (4.7) years.
Hedge ratio 52.0 (64.7)%.
651.9
150.0
55.9
7.1 27.3
Bank Loans
Unsecured Senior Bond
Commercial Papers
Financial Leases
Other
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO21
Segment information: Finland
22
FinlandQ2/
2018Q2/
2017Change
%Jan-Jun/
2018Jan-Jun/
2017Change
%2017
Net sales, EURm 27.9 30.4 -8.3 54.7 59.1 -7.5 117.7
Property income, EURm 22.1 24.9 -11.1 44.2 48.8 -9.4 97.5
Service income, EURm 5.8 5.5 3.7 10.5 10.3 1.7 20.2
EBITDA, EURm 14.2 16.4 -13.4 27.6 31.2 -11.3 61.5
EBITDA-% 51.0 54.0 - 50.5 52.7 - 52.3
Fair value of investment properties, EURm* - - - 885.0 999.1 -11.4 890.9
Number of campuses* - - - 12 16 - 12
Rentable area, m2 * - - - 413,900 485,700 -14.8 425,000
Average rent, EUR/m2/month * - - - 18.1 17.4 3.6 17.7
Financial occupancy rate, %* - - - 94.9 93.2 - 94.5
Market yield requirement, average, %* - - - 7.3 7.5 - 7.3
* At the end of the period. Note: 6/18: 8,000 m2 under renovation, 6/17: 10,100 m2 under renovation.
Segment information: Baltic Rim
23
Baltic RimQ2/
2018Q2/
2017Change
%Jan-Jun/
2018Jan-Jun/
2017Change
%2017
Net sales, EURm 10.0 8.9 12.8 19.7 17.8 10.6 36.0
Property income, EURm 8.7 8.0 8.4 17.3 16.1 7.5 32.5
Service income, EURm 1.3 0.9 53.3 2.4 1.8 39.0 3.6
EBITDA, EURm 6.1 5.3 15.3 12.2 10.6 15.2 21.5
EBITDA-% 61.1 59.8 - 61.8 59.3 - 59.6
Fair value of investment properties, EURm* - - - 351.7 307.9 14.2 325.2
Number of campuses* - - - 3 3 - 3
Rentable area, m2 * - - - 188,500 170,400 10.6 176,000
Average rent, EUR/m2/month * - - - 15.1 15.5 -2.2 15.7
Financial occupancy rate, %* - - - 98.9 98.3 - 99.7
Market yield requirement, average, %* - - - 7.9 8.3 - 8.1
* At the end of the period. Note: 6/18: 0 m2 under renovation, 6/17: 0 m2 under renovation.
Segment information: Scandinavia
24
ScandinaviaQ2/
2018Q2/
2017Change
%Jan-Jun/
2018Jan-Jun/
2017Change
%2017
Net sales, EURm 6.4 6.5 -1.2 12.8 13.1 -2.4 26.0
Property income, EURm 5.9 6.1 -2.9 11.9 12.4 -4.0 24.4
Service income, EURm 0.5 0.4 27.9 0.9 0.7 23.7 1.6
EBITDA, EURm 3.1 3.8 -18.6 6.7 7.4 -9.3 14.1
EBITDA-% 48.5 58.9 - 52.1 56.1 - 54.4
Fair value of investment properties, EURm* - - - 334.0 324.5 2.9 321.9
Number of campuses* - - - 2 2 - 2
Rentable area, m2 * - - - 100,800 102,100 -1.3 100,900
Average rent, EUR/m2/month * - - - 19.0 20.8 -8.9 19.5
Financial occupancy rate, %* - - - 95.2 94.9 - 97.5
Market yield requirement, average, %* - - - 5.2 5.5 - 5.3
* At the end of the period. Note: 6/18 540 m2 under renovation, 6/17: 0 m2 under renovation.
Changes in Fair Values, January-March 2018EURm
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO25
Changes in Fair Values
EURmYield
requirementOccupancy
assumptionModerniza-
tionOther
changesProjects in
progress Total
Finland 5.1 0.5 -3.1 -0.5 1.5 3.5
Baltic Rim 4.4 -0.1 -0.3 0.2 2.6 6.8
Scandinavia 9.4 0.1 -2.4 2.3 0.0 9.4
TOTAL 18.9 0.5 -5.8 2.0 4.1 19.7
* Other changes include changes in projected market rents, operating expenses, and exchange rates, as well as in inflation assumptions.
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO26
Lease Stock and Customer Base
• A total of approximately 1,600 customers and 3,100 lease agreements
• The ten largest customers let approximately 22.8% of rented space and the single largest customer 4.4%
• In January–June, the ten largest customers accounted for 20.9% of rental income and the single largest customer 5.3%
Lease stock, % of spaceMaturity, years
Jun 30, 2018 March 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017
< 1 15 18 15 16 16
1 – 3 30 29 28 21 21
3 – 5 10 13 12 19 19
> 5 18 17 17 16 16
Open-ended leases 27 24 26 29 29
Average lease term in months 34 34 34 34 34
Lease stock, EUR million 358.9 360.7 372.0 389.9 397.6
Share Information: Trading
Share tradingQ2/
2018Q2/
2017Change
%Jan–Jun,
2018Jan–Jun,
2017Change
% 2017
Lowest price, EUR 3.58 2.99 19.7 3.58 2.96 20.9 2.96
Highest price, EUR 4.05 3.75 8.0 4.29 3.75 14.4 4.20
Closing price (end of period), EUR - - - 3.86 3.69 4.6 4.18
Volume weighted average price, EUR 3.81 3.31 15.1 3.90 3.21 21.5 3.73
Share turnover, million shares 11.3 16.0 -29.4 26.4 28.7 -8.0 72.0
Share turnover, EURm 43.0 52.9 -18.7 103.0 92.1 11.8 268.2
Market capitalization (end of period), EURm
- - - 612.9 585.9 4.6 663.8
August 23, 2018 Half-Year Financial Report 2018 | Keith Silverang, CEO27
Share Information: Largest Shareholders* on June 30, 2018
28
# of shares % of shares
Varma Mutual Pension Insurance Company 30,232,288 19.0
Mercator Capital AB 24,574,470 15.5
City of Oulu 3,917,926 2.5
Laakkonen Mikko 2,139,276 1.4
Technopolis Plc 1,878,443 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
Tapiola Keskinäinen Henkivakuutusyhtiö 742,118 0.5
Jyrki Hallikainen 614,000 0.4
10 largest shareholders, total 67,853,681 42.7
Foreign and nominee registered, total 56,662,674 35.7
Others, total 34,277,307 21.6
Total amount of shares 158,793,662 100.0
* Not including nominee-registered shareholders