INTERIM FINANCIAL STATEMENT Q1 2019 Helgi S. Gunnarsson 11 th April - - PowerPoint PPT Presentation

INTERIM FINANCIAL STATEMENT Q1 2019

Helgi S. Gunnarsson 11th April 2019

OPERATIONAL INCOME

2,397 m.ISK.

LEASING INCOME

2,251 m.ISK.

⇧ 30%

OPERATIONAL RESULTS BEFORE ASSESSMENT CHANGE

1,607 m.ISK.

⇧ 37%

OPERATIONAL RESULTS BEFORE ASSESSMENT CHANGE / LEASING INCOME

71%

PROFIT AFTER TAX 1,055 m.ISK.

⇩ 28%

REAL RETURN ON EQUITY

10,4%

OPERATIONS AND RESULTS - 1Q 2019

YIELD OF INVESTMENT PROPERTIES 1Q 2019

5,1%

900.000 1.100.000 1.300.000 1.500.000 1.700.000 1.900.000 2.100.000 2.300.000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Amounts in th. ISK.

Leasing income Operational results before assessment change

2016 2017 2018 2019

OPERATIONS AND RESULTS - 1Q 2019 Cont.

• INVESTMENT PROPERTIES OWNED BY THE GROUP were valued at 130,948

m.ISK. at the end of the period but additional leasing properties (leasing rights) amounting to 2,583 m.ISK. due to implementation of IFRS 16.

• INVESTMENT PROPERTIES at the end of the period were therefore 133,531

m.ISK. and the equity ratio was 32%.

• Calculated ASSESSMENT CHANGES of investment properties for the period

were 871 m.ISK.

• INTEREST BEARING DEBTS were 80,138 m.ISK. at the end of the period

compared to 80,488 m.ISK. at end of the year 2018. Leverage as a percentage of investment properties is 61%.

• INTEREST EXPENCES in the period were 781 m.ISK. compared to 541

m.ISK. in the year 2018. Of calculated expenses 39 m.ISK. are due leasing

• bligations.

Total financial expenses were 1,160 m.ISK. compared to 857 m.ISK. in the year 2018.

• NET CASH from operations amounted to 1,457 m.ISK. in the period. Net

Cash at the end of the period was 1,974 m.ISK.

OBJECTIVES:

PROPERTY OPERATING COSTS

20%

ADMINISTRATIVE EXPENSES

4,5%

DEVELOPEMENT OF OPERATIONAL COSTS

OPERATING COSTS OF INVESTMENT PROPERTIES Costs are in line with plans. Good progress in expense management. Sharp rise in public property valuation in recent years, which directly increases property taxation. Lease contract provisions due to property taxation put in force at the turn of the year. So far no problems have been encountered. ADMINISTRATIVE EXPENSES Administrative costs are fully in line with the company's plans, expense objectives lowered from 5 % to 4.5% for the year 2019. Increased weight on administrative costs in the first quarter due to statement preparations and the Stock Exchange.

18,0% 19,0% 20,0% 21,0% 22,0% 23,0% 24,0% 25,0%

• 490.000
• 450.000
• 410.000
• 370.000
• 330.000
• 290.000
• 250.000
• 210.000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Percentage of lease revenues Amounths in th. ISK. Operating cost of investment properties Ratio of leasing income 2016 2017 2018 2019 3,00% 4,00% 5,00% 6,00% 7,00% 8,00% 9,00% 10,00%

• 120.000
• 110.000
• 100.000
• 90.000
• 80.000
• 70.000
• 60.000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Percentage of leasing revenues Amounths in th. ISK. Administrative expenses Ratio of leasing income 2016 2017 2018 2019

OPERATIONS AND PROSPECTS

Quarterly Overwiev 1Q 2019 4Q 2018

Leasing revenues 2,251 2,306 Revenues, Operations in properties 146 138 Total revenues 2,397 2,444 Operational costs of investtment properties

• 484
• 466

Operational costs in properties

• 193
• 235

Administrative expenses

• 113
• 99

Gross profit before assessment changes 1,607 1,644 Assessment changes of investem. properties 871 978

Results from operations 2,478 2,622

• The leasing revenues for the period are in line with plans
• Revenues from Smáralind have grown 10% from 1Q/18 to 1Q/19. Operational expenses in Smáralind

are at an equilibrium and about 8% lower than for the same period last year. The last new retail spaces (Weekday and Monk) were handed over to the lessees in April and will open this spring, the restructuring phase is therefore over.

• Revenue growth in Egilshöll from 1Q/18 to 1Q/19 is over 14%.

Operational expenses are at an equilibrium and at pair with last year.

• Commercial properties in general:

Excluding new property portfolios incorporated into the group last year, the revenues growth is broadly 5% between the years, i.e. 1Q/18 to 1Q/19. Operational expenses for this portfolio have, by and large, followed the price index excluding property taxation that has risen 9% between the years.

• Management and operations of supporting functions “Operations in properties” is excellent and

remarkable results have been achieved.

• The company has established objectives to strengthen environmental awareness considerably in all
• perational functions. This includes financial and marketing opportunities.
• Demand for commercial space is excellent . The extensive emphasis on leasing to public entities and

strong lessees has proven reasonably beneficial.

• The leasing ratio of the portfolio is now 97%.
• Defaulting is minimal. WOW leased 1,800 m2 at Höfðatorg on a limited lease contract, losses due to

this contract are minor.

Effect of using IFRS 16 for the financial statement

• Accounting Standard IFRS 16 has been implemented. Please refer to item 8 in the

quarterly statement for explanation regarding the impact. The main elements are the following:

• The entries LEASING PROPERTIES and LEASING DEBTS are due to contracts the

group leases from third parties, such as lots for the group’s buildings and buildings for forward leasing. The leasing properties 01.01.2019 is the same as leasing debts, or 2,575 m.ISK. Implementation of IFRS does therefore not affect the equity of the group as of 01.01.2019.

• LEASING PROPERTIES in the group books due to these lease agreements, are

booked as INVESTMENT PROPERIES and evaluated at market valued.

• LEASING DEBTS are evaluated as present worth of leasing income series at the

beginning, unpaid at starting date. Present worth of leasing income is calculated based on interest rate the group pays on new loans.

• By implementing IFRS 16 the total assets of the company increase at the beginning
• f the period, i.e. 01.01.2019 by 2,575 m.ISK.

The group’s EQUITY RATIO drops from 31,6% to 31,0%. But is now at the end of the period 32%.

• By applying IFRS 16 the leasing payments, the amount of 59 m.ISK. is booked as

assessment change and interest expenses instead of operational costs of investment

• properties. This raises the operational revenues before assessment change (EBITDA) as a

percentage of leasing revenues by 2,6 percentage points, compared to if the standard had not been employed.

Lots for grpoup’s buildings building Total

Leasing properties Status 1.1.2019 ........................................................................................................... 1,988 587 2,575 Changes due to revaluation of leasing debts.............................................................. 28 28 Assessmernt changes............................................................................................ ( 20) ( 20) Status 31.3.2019 ......................................................................................................... 1,988 595 2,583 Leasing properties Status 1.1.2019 ........................................................................................................... 1,988 587 2.575 Revaluation due to indexation of lease payments..................................................... 28 28 Leasing debts payments............................................................................................... ( 20) ( 20) Next years payments of leasing debts Booked among other short term debts .................................................................. ( 85) ( 85) Status 31.3.2019 ......................................................................................................... 1,988 510 2,498 Amounts in Income Statement Assessment change..................................................................................................... ( 20) ( 20) Leasing debts interests..................................................................................... ( 33) ( 6) ( 39) Amounts in Income Statement, total........................................................................ ( 33) ( 26) ( 59) Amounts in Cash Flow Paied interests of leasing debts............................................................................. ( 33) ( 6) ( 39) Paymnent of leasing debts........................................................................................... ( 20) ( 20) Amounts in Cash Flow, total................................................................................. ( 33) ( 26) ( 59)

29% 25% 14% 9% 3% 16% 4% Retail and service Office Office - public ent. Sport, education and entertainment - public Sport, education and entertainment Industrial and storage Hotel

REGINN’S PROPERTY PORTFOLIO 2019

NUMBER OF PROPERTIES

120

REGINN’S PROPERTY PORTFOLIO

377,703 m2

380

th.m2

89

th.m2 Public entities

PUBLIC ENTIITES

The book value of the property portfolio is 130,948 m.ISK. at end of 1Q 2019. The company has invested for just over 1,200 m.ISK. in investment properties from the beginning of the year. Main investments are interior finishing at Hlíðasmári 11 for the SOCIAL INSURANCE ADMINISTRATION, investments at Hafnartorg and leasing spaces, to be opened this spring in Smáralind. The company is now taking over the major part it purchased at Hafnartorg. This will add about 8,600 m2 to the company’s property portfolio.

REGINN PLC. - 10 YEARS 19. MAY 2019

2009

Reginn established by the Landsbanki and announced May 19tth 2009. Reginn takes over Smáralind Property Company. Reginn takes over Egilshölli and establishes Knatthölliin Ltd. and Kvikmyndahöllin Ltd..

2011

Integration of the companiy’s functions. Reginn moves it’s office to Smáralind.

2012

Reginn listed on the Stock Exchange, Nasdaq OMX Iceland. Three bond issues following registration at the Stock Exchange, financial status secured.

2013

Reginn purchases the company Summit Ltd. Total of 15,500 m2. Reginn purchses 4 property companies housing properties of Verkfræðistofan Verkís. Total of 8,500 m2. Reginn purchases the property Ofanleiti 2. Reginn purchases the property Austurstræti 16.

2014

Reginn purchases Klasi properties Ltd. Total of 28,500 m2. Reginn purchases Hótel Óðinsvé.

2015

Reginn buys properties of Fastengi, daughter comapy of Íslandsbanki. Total of 80 properties and 62,000 m2.

2016

Reginn purchases propertiy portfolios of Ósvör Ltd. and CFV-1

• Ltd. Total of 42,000 m2.

2018 2017 2019

Reginn establishes a framework for all its bonds issuance and sells the first bonds under the framwork. H&M shop open its first store in Iceland at Smáralind. Reginn purchases FM-hús LTD. that owns and operates 4 school buildings in Hafnarfijörður and Garðabær. Reginn credit rating AA2 Reginn purchases daugther companies FAST-1 slhf. Total of 5 properties and 44,000 m2.

• The company set clear OBJECTIVES from the beginning regarding scope and core functions.
• The company planned for substantial GROWTH and that it would be active on the market by buying and selling properties and property

portfolios.

• Main objective for new investments was to strengthen returns and financial standing of the company.
• Among the company’s objectives was to increase income form PUBLIC ENTITIES.

25.000 35.000 45.000 55.000 65.000 75.000 85.000 95.000 105.000 115.000 125.000 135.000 Q2 - 2012 Q3 Q4 Q1 - 2013 Q2 Q3 Q4 Q1 - 2014 Q2 Q3 Q4 Q1 - 2015 Q2 Q3 Q4 Q1 - 2016 Q2 Q3 Q4 Q1 - 2017 Q2 Q3 Q4 Q1 - 2018 Q2 Q3 Q4 Q1 - 2019

Investments properties in m.ISK.

REGINN’S INNVESTMENT PROPERTIES

Fastengis-portfolio Centra-portfolio

FM-hús

FAST-1 Purchase Smáralind & Hafnartorg Klasi Properties

REGINN’S INVESTMENTS FROM REGISTRATION

From Reginn’s registration on the stock market the properties book value has FIVE FOLDED. Criteria for growth is good access to financial resources, structuring of the company and ability to issue new stock. Reginn’s public registration has created extensive

• pportunities. Both by more economical loan

financing and trustworthy stock in REGINN PLC.

HAFNARTORG - STATUS AND EXPECTATIONS

FORTH COMMING STORE OPENINGS. In he coming months a number of new stores and companies will commence operations in the area. These entities will strongly mark the Reykjavík centre functions this coming spring. – Collections – Ladies and men fashion; Polo Ralph Lauren, Hugo Boss, Emporio Armani, Sand. – GK Reykjavík - Ladies and men fashion; Filippa K, Tiger of Sweden, Paul Smith, J. Lindeberg. – COS – One of the most popular international fashion brands opens store on two levels. The first COS store in Iceland. – Michelsen – Watches and jewellery store; Rolex, Tag Heuer, Longines. – Optical Studio – Optical inspections and glasses; Ray Ban, Cartier, Lindberg, Gucci, Prada. – Joe and the Juice – Healthy and fresh refreshments – juice, coffee, sandwiches etc. INVESTMENT AND REVENUES – Though delivery to the company have been delayed, the investments cost plans have basically been sustained. It is the opinion of the company that the projects are very economical and well under market price in regard to quality, location and revenue prospects. – Planned revenue model for the project is cautious with an ample scope for lessees and the lessor to build up the concept in ample time, i.e. 3 to 4 years. – The cautious business model indicates that revenues will grow from 250 m.ISK. this year to 650 m.ISK. in four years, Revenues will therefore be higher and support the initial costs.

20 LARGEST STOCKHOLDERS 5th APRIL 2019

Nr. Nafn Hlutir % 1 The Pension Fund of Commerce 243,105,301 13.31% 2 Gildi - pesion fund 158,201,461 8.66% 3 The pension fund for state employees, A - dep. 119,158,425 6.52% 4 Sigla ehf. (an investment company) 100,000,000 5.48% 5 Birta pension fund 88,076,062 4.82% 6 Stapi pension fund 76,135,266 4.17% 7 Brimgarðar ehf. (an investment company) 60,733,333 3.33% 8 Frjálsi lífeyrissjóðurinn (pension fund) 56,187,004 3.08% 9 Lífsverk lífeyrissjóður (pension fund) 50,904,808 2.79% 10 Söfnunarsjóður lífeyrisréttind (pension fund) 49,094,122 2.69% 11 Global Macro Absolute Return A 46,771,138 2.56% 12 The pension fund for state employees, B - dep. 41,703,066 2.28% 13 Festa - (pension fund) 39,061,245 2.14% 14 Stefnir - ÍS 15 35,096,595 1.92% 15 Sjóvá-Almennar tryggingar hf. (an insurance company) 33,437,221 1.91% 16 Stefnir - ÍS 5 (investment fund) 34.,251432 1.88% 17 Íslandsbanki hf. 29,899,760 1.64% 18 Landsbankinn hf. 29,638,885 1.62% 19 IS Hlutabréfasjóðurinn 25,485,747 1.40% 20 FM eignir 1 ehf 25,205,819 1.38% Samtals 20 stærstu hluthafar 1,343,646,690 73.57%

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