An Eventful 2018
“The most significant event of 2018 was the announcement and subsequent completion of the acquisition of Technopolis by Kildare Nordic Acquisitions S.à.r.l. It’s been a long, intensive process. Both the Kildare and Technopolis teams have worked extremely hard, and as a result we came to a satisfactory conclusion for all parties concerned. The integration process itself has proceeded in accordance with plans thanks in part to the fact that the teams have grown accustomed to working together.
Operationally, I am satisfied with our 2018 performance. Our net sales and EBITDA were slightly lower than the year before, but if you remove the effect of the Jyväskylä divestiture in November 2017, we had healthy growth. Group net sales decreased by 1.3% year-on-year, but our like-for-like sales grew 3.1%. The main driver was strong occupancy and robust service growth. Our financial occupancy rate (FOCR) at the end of the year was 95.8% (96.1%). In the Helsinki Metropolitan Area, FOCR declined year-on-year, mainly due to the relatively low occupancy rate of the newly opened Ruoholahti 3 building in Helsinki. However, occupancy improved from the previous quarter. The biggest year-on-year improvements in occupancy were in Oulu and Kuopio in Finland.
At the year-end, we had eight organic growth projects in progress. In the fourth quarter, we initiated two large ones with an aggregate value of EUR 146 million: one in Espoo, Finland and one in Vilnius, Lithuania. The approval of these two projects demonstrates the willingness of our new owner to make robust investments in Technopolis’ future growth. The cumulative value of all projects in progress amounts to EUR 294 million. All of our organic growth projects are strongly accretive, support internal customer growth, and yield scale-based campus efficiencies.
Services are emerging as an increasingly important and steadily growing part of our business. In 2018, service income reached EUR 28.7 million (13.1% y-o-y growth), and represented 16.2% of the Group net sales. In the fourth quarter, the share was 17.7%. The profitability of services was significantly impacted by UMA network ramp-up costs, especially in the second half of the year. The EBITDA margin for services in 2018 was 7.2% (10.5%) for the full year. The costs related to UMA-ramp-up amounted to EUR 3.2 million. Excluding those, the service EBITDA margin was 16.7%, in 2018.
Group EBITDA for the year was 9.4% lower than a year earlier, at EUR 88.0 (97.1) million, mainly due to significant costs related to the public tender offer, the Jyväskylä divestiture and UMA network ramp-up costs. Like-for-like EBITDA growth was 3.6%.
Yield compression was the primary driver behind positive fair value changes, which brought EUR 21.4 (28.3) million for the year, and were a significant contributor at the operating profit level.
We now have five stand-alone UMA coworking spaces in operation, two in Helsinki, one in Stockholm, one in Copenhagen and one in Oslo. Five more are set to open in the Nordic and Baltic countries in 2019 and one in Espoo, Finland in early 2020. We are particularly excited about the opening in Warsaw, Poland this year, as it also represents entry into a new market for Technopolis.
Finally it is worth noting that Technopolis has initiated refinancing negotiations to replace its current funding. We believe those will lead to a positive outcome and funding will be secured.”
Last updated 28.2.2019