Technopolis Interim Report Q1 2014 Presentation

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In the first quarter of 2014 EPRA-based (European Public Real Estate Association) the direct result rose by 56.0% from 8.0 million euros to 12.8 million euros compared to 2013. The direct result per share rose from 0.10 euros to 0.12 euros. Net sales rose 33.5% from 29.7 million euros to 39.7 million euros and EBITDA by 47% from 14.0 million euros to 20.6 million euros.

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Technopolis Interim Report Q1 2014 Presentation

  1. 1. Interim Report Q1/2014 May 7, 2014
  2. 2. Q1 Highlights • Net sales grew 33.5% and EBITDA 47.2% • EPRA Operating result rose 56% • Occupancy solid at 94% • Scale advantages as revenue growth outstripping costs: − Real estate maintenance costs up 28.2% − Admin costs up 27.6% • Solid balance sheet: Equity ratio 40.1% and LTV 58.5% • St. Pete: 4.5% of net sales, 2.9% of EBITDA, 5% of fair values • Focus on consolidation and costs
  3. 3. Key Figures Financials Q1/2014 Q1/2013 Δ, % 2013 Net sales, EUR million 39.7 29.7 33.5 126,3 EBITDA, EUR million 20.6 14.0 47.2 64,1 Unrealized foreign exchange losses, EUR million -3.2 0.4 - -5.7 Direct result (EPRA), EUR million 12.8 8.0 56.0 40.5 Operating profit, EUR million 20.7 16.7 24.3 43,9 Real Estate Operations Financial occupancy rate, % 94.0 92.2 +1.8 93.6 Net rental yield, % 7.2 7.2 - 7.3 Rentable space, 1 000 m² 738,000 601,300 22.7 746,800
  4. 4. Financial Occupancy 75% 80% 85% 90% 95% 100% Q1-2004 Q2-2004 Q3-2004 Q4-2004 Q1-2005 Q2-2005 Q3-2005 Q4-2005 Q1-2006 Q2-2006 Q3-2006 Q4-2006 Q1-2007 Q2-2007 Q3-2007 Q4-2007 Q1-2008 Q2-2008 Q3-2008 Q4-2008 Q1-2009 Q2-2009 Q3-2009 Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 Q2-2011 Q3-2011 Q4-2011 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Quarterly Financial Occupancy, % and 10 Year Average 10 Yr. Avg. 95.1%
  5. 5. Market Segments by Fair Value 35% 22% 12% 11% 11% 4% 5% 18% 19% 13%8% 8% 2% 6% 7% 4% 15% Oulu HMA Tampere Kuopio Jyväskylä Lappeenranta St. Petersburg Tallinn Vilnius Oslo March 31, 2010 March 31, 2014
  6. 6. Market Segments by Net Sales March 31, 2010 March 31, 2014 22% 16% 14%10% 9% 3% 4% 6% 5% 11% Oulu HMA Tampere Kuopio Jyväskylä Lappeenranta St. Petersburg Tallinn Vilnius Oslo 37% 23% 8% 12% 12% 6% 2%
  7. 7. Customer Segments March 31, 2010 March 31, 2014 18% 24% 5% 25% 15% 13% Electronics ICT Life science Other Services Public Sector 14% 21% 3%7% 7% 3% 6% 8% 10% 21% Professional Services ICT Public Sector Real Estate Education Food Services Financial Services Manufacturing Wholesale and Retail Other
  8. 8. Equity and Debt - Ratios • Solid balance sheet with equity ratio of 40.1% • Average interest rate 2.52% (2.12%) 1,95 2,07 2,08 2,46 2,52 5 5,5 5,6 5,3 4,6 4 5 6 1,5 2,0 2,5 3,0 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Average interest rate Interest cover ratio 40,1 39,3 39,4 40,2 40,1 57,5 57,8 57,2 59,5 58,5 56 57 58 59 60 61 62 63 64 35 37 39 41 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Equity ratio Loan to value Loan to Value and Equity Ratio Interest Rate and Interest Coverage Ratio
  9. 9. Focus on Hedging 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Floating-rate loans (0-12 months) Fixed-rate loans (> 12 months) Hedging ratio
  10. 10. Looking Ahead • 2014 growth guidance y/y unchanged: − Net sales 27%-32% − EBITDA 35%-40% • International investments in 2013 will bring international revenues close to our strategic target • Focus on integration and business basics • Occupancy challenges in a couple of campuses • The company’s solvency and liquidity are solid
  11. 11. Appendices: Additional Data
  12. 12. Foreign Exchange Impact Impact in EUR millions FX change against euro, % Income Statement Translation difference Total effect on equity RUB +10 5,4 4,5 9,9 RUB -10 -4,4 -3,7 -8,1 NOK +10 - 4,4 4,4 NOK -10 - -3,6 -3,6 The rate of Lithuanian litas is currently fixed against the euro
  13. 13. Strategic Financial Targets 2014 - 2016 • Net sales and EBITDA growth 15% on average per annum • Net sales outside Finland over EUR 50 million by 2016 • At least 6% return on capital employed* per annum • Equity ratio over 35% over the cycle * Excluding fair value changes (formula specified)
  14. 14. Technopolis Markets Source: Federation of Finnish Financial Services, Bloomberg and Baltic countries Nordea Finland 2014E GDP growth 0.8% Unemployment 8.4% Credit rating AAA Sweden 2014E GDP growth (%) 2.5% Unemployment 8.0% Credit rating AAA Denmark 2014E GDP growth (%) 1.3% Unemployment 5.7% Credit rating AAA Estonia 2014E GDP growth (%) 2.8% Unemployment 8.4% Credit rating AA- Russia 2014E GDP growth (%) 1.1% Unemployment 5.7% Credit rating BBB- Latvia 2014E GDP growth (%) 5.0% Unemployment 9.5% Credit rating BBB+ Lithuania 2014E GDP growth (%) 3.2% Unemployment 9.8% Credit rating BBB Norway 2014E GDP growth (%) 2.2% Unemployment 3.7% Credit rating AAA
  15. 15. Finland Q1/2014 Q1/2013 Δ, % 2013 Rentable space, m² 547,900 533,500 2,7 555,900 Rent, €/m²/mo avg. 16.49 15.88 3.8 16.21 Financial occupancy rate, % 93.0 91.5 1.5 92.9 Net rental revenue, EUR million 25.6 23.2 10.4 94.9 Net sales, EUR million 29.2 26.8 9.1 109.4 EBITDA, EUR million 15,0 13,1 14,7 56,1 Market yield requirement, % 7.9 7.9 - 7.9 Fair value of investment properties, EUR million 978.9 888.0 10.2 981.0 • Growth through acquisitions and organic investments • Portfolio change drove higher rents
  16. 16. Baltic Rim • Growth through Vilnius acquisitions and organic investments • Sanctions towards Russia might have an effect in 2014 • Yields came down in Tallinn Q1/2014 Q1/2013 Δ, % 2013 Rentable space, m² 127,400 67,800 87.9 119,500 Rent, €/m²/mo avg. 14.57 13.90 4.8 15.04 Financial occupancy rate, % 97.7 97.7 - 99.1 Net rental revenue, EUR million 5.7 2.8 103.4 15.3 Net sales, EUR million 5.9 2.9 101.5 15.9 EBITDA, EUR million 3.0 1.1 183.5 7.6 Market yield requirement, % 8.9 9.4 -0.5 9.0 Fair value of investment properties, EUR million 230.2 122.2 88.4 212.4
  17. 17. Scandinavia • Rentable space down due to space under renovation and unallocated space • Consolidation is well on track Q1/2014 Q1/2013 Δ, % 2013 *) Rentable space, m² 62,700 - - 71,400 Rent, €/m²/mo avg. 24.43 - - 21.16 Financial occupancy rate, % 95.8 - - 89.5 Net rental revenue, EUR million 4.4 - - 0.9 Net sales, EUR million 4.6 - - 1.0 EBITDA, EUR million 3.0 - - 0.6 Market yield requirement, % 6.5 - - 6.5 Fair value of investment properties, EUR million 218.6 - - 217.0 *) December 11-31, 2013
  18. 18. Smart Business Environment Technopolis’ business idea is to combine premises and services into a carefully thought-out offering that supports the growth and success of customers. Service Portfolio BUSINESSSPACE EMPLOYEES Cleaning Reception ICT Conference Matchmaking Visibility Events Resources Restaurants Car wash Gym Massage
  19. 19. Technopolis Investment Criteria 19 CUSTOMERS FINANCE • Location • Connections • Scale • Attractive • Growth potential • Good condition and quality • Flexibility REAL ESTATE • Knowledge incentive customer base • Growth companies, anchors and services • Different sectors, same challenges • Cluster effects • Local and international customers • EPS – positive • Good yield • Potential for profitable growth • Occupancy growth potential • Potential in service revenue • Excellent local team
  20. 20. Lease Portfolio • Open-ended increased by 11.4%-points since year end: − Unterminated fixed term contracts which ended at the year-end were automatically changed to open-ended leases − Lease stock was EUR 646.6 million % of lease stock Lease length in months 0 5 10 15 20 25 30 35 40 45 50 0% 5% 10% 15% 20% 25% 30% <1 yr 1-3 yrs 3-5 yrs >5 yrs Open-ended 31 Dec 2013 31 March 2014 Lease Length
  21. 21. Investments Area Name m² EUR million Stabilized yield, % *) Completion Acquired Oulu Peltola 37,600 31.7 11.2 02/2013 Vilnius Ozas 42,200 62.6 9.3 05/2013 HMA Falcon 26,300 77.5 7.8 11-12/2013 Oslo Fornebu 70,500 217.0 ***) 7.7 12/2013 Completed Kuopio Viestikatu 7B&C 9,300 18.2 9.2 02/2013 Tallinn Löötsa 8C 6,400 8.1 9.1 03/2013 Tallinn Löötsa 8B 8,500 13.0 9.1 03/2013 Jyväskylä Innova 4 8,900 23.7 8.1 10/2013 Under construction Prelet rate,% May 6,2014 Tallinn Löötsa 8A 84.8 7,500 11.8 9.1 09/2014 ****) St. Petersburg Pulkovo 2 51.0 18,700 42.0 12.6 10/2014 ****) Tallinn Löötsa 5 - 9,200 17.0 ***) 8.8 09/2015 HMA G-building 30 5,300 18,3 8,0 09/2015 Total 250,400 540.9 *) stabilized yield = estimated net operating income / acquisition cost **) Including three-year rental guarantee from sellers ***) Technopolis share 51% ****) Commissioning in phases
  22. 22. Breakdown of Debts and Covenants 21% 22% 21% 2% 34% Loans without Covenants or Bank Guarantees Loans with Covenants (equity ratio) Loans Requiring Bank Guarantees with Covenants Loans Requiring Bank Guarantees without Covenants Loans with Covenants 90,5% 3,9% 5,6% Bank Loan Leasing Debt Commercial Paper
  23. 23. Loan Maturities 0 20 40 60 80 100 120 140 160 180 200 220 < 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years over 5 years EUR million Repayments of interest bearing debt Maturity of credit facilities • Capital-weighted loan period on average was 6.8 years • Within 12 months EUR 166.4 million of loans are coming to due • EUR 112.1 million untapped credit facilities
  24. 24. Shareholders Major shareholders April 30, 2014 # of shares % of shares Varma Mutual Pension Insurance Company 25,448,192 23.9 Ilmarinen Mutual Pension Insurance Company 11,089,647 10.4 City of Oulu 3,511,211 3.3 OP-Pohjola Group 1,798,733 1.3 Laakkonen Mikko 1,226,184 1.2 The Finnish Cultural Foundation 1,188,042 1.1 City of Tampere 1,160,577 1.1 Odin Finland 1,119,944 1.1 Jyrki Hallikainen 998,236 0.9 Mutual Fund Evli Finnish Equity 932,294 0.9 10 largest shareholders, total 48,049,910 45.2 Foreign shareholders, total 35 037 449 32.9 Others, total 23,320,382 21.9 Total amount of shares 106,407,741 100
  25. 25. Thank you

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