Q1/2018 Report: Solid Start to the Year
“This year has started off well. The divestiture of our Jyväskylä assets in November 2017, meant that net sales and EBITDA were slightly lower than last year, but when you eliminate the effect of the divestiture, you can see healthy growth. Occupancy rates continued to rise, which supported both net sales development and relative profitability.
Group net sales in the first quarter decreased by 3.1% from the previous year, but excluding the Jyväskylä divestiture, net sales grew by 5.3%. The main operational drivers behind this were service income growth and rising occupancy. Rental growth also had a positive effect on Group net sales. Our financial occupancy rate at the end of March reached 95.8% (93.5%), with the greatest improvement in Oulu, Finland.
We have five organic growth projects in progress. These investments total nearly EUR 140 million. There are also ten additional projects under design. Most of these extensions of our campuses are being driven by the 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.
Services form an increasingly important share of our business, and they continue to grow steadily. Service income reached EUR 6.3 million (5.1% y-o-y growth) in Q1 2018. However, comparable service income growth was 14.8% year-on-year. Services represented 14.7% of the Group net sales. Furthermore, for the first time, our quarterly service EBITDA reached EUR 1 million. The EBITDA margin for services was 16.0% (11.7%). Our target at the end of the strategy period in 2020 is 20%.
Group EBITDA in January–March was half a million euros lower than in the corresponding period a year earlier at EUR 23.1 (23.6) million. The EBITDA margin was 53.7% (53.2%). Excluding the Jyväskylä divestiture, our EBITDA grew 5.2% from the previous year. Yield compression was the primary driver behind positive fair value changes, which brought EUR 9.7 (6.0) million in the first quarter and were a significant contributor at the Operating profit level.
In March, we signed a five-year EUR 518 million refinancing agreement. The package consists of four secured facilities: a EUR 150 million term loan facility for refinancing existing debt, EUR 200 million of back-up facilities and a guarantee facility for our long-term European Investment Bank loans. These facilities replaced the majority the bilateral secured bank loans the company had in place earlier in Finland, and in addition to improving our maturity profile, the agreement increased Technopolis’ unencumbered asset ratio to 25.6% from 13.8% at the year-end 2017.
One of the cornerstones of our strategy is the expansion of our UMA Coworking Network. A new flagship UMA coworking space in Stockholm, Sweden was just opened earlier this week, in April, and another one is set to open in Copenhagen in September. We will continue to expand our UMA footprint in the other major cities and hubs of the Nordic-Baltic Sea area. An UMA-membership gives our customers access to the full Technopolis shared workspace concept in superb CBD locations while enabling Technopolis to grow rapidly and cost-efficiently, but less capital-intensively throughout the Nordic-Baltic Sea region.
Our first quarter results lay a good foundation for the rest of the year and gives us a solid platform from which to continue the step-by-step implementation of the Group’s strategy .”
Last updated 3.7.2018