Implantica AG

Good morning everyone and a warm welcome to our first quarter earnings presentation. It has been an eventful morning and Leif Syndes, myself, Helena Lindahl and Daniel Telberg is ready to present the first quarter result. So I will give the floor to Leif and he will run the results and the strategy update.

Thank you, Helena.

If you look on the period, I think the underlying business in SPB is continuing to perform well. You see an increase in the revenues from a -for-like standpoint by .7% and the -for-like growth in net operating income is a little bit more than 4%. So stable and positive development for SPB. We continue to develop the income from our properties. And since the starting of 2026, the -for-like growth from our properties have been 26%. That is very good. We see almost flat valuation on the properties. We see also that we continue to do good steps with our strategy. And our strategy and the core holding strategy that we have is going quite well at the moment. And during the first quarter, we set new financial targets. And one of them is that we would like to grow the net asset value by a minimum of 12% per year. And one way to do that is to increase the -for-like revenue streams. And we need to increase the net operating income by at least 1% above the inflation. And the next target is a long-term goal to go back to investment grade for SPB Group. And the first step is to make sure that our core holdings or large subsidiaries receive investment grade funding. And we have Nordicus doing that. And we also have PPI doing that. And also we believe that Sveafastetor is in a good position to also issue bonds with an investment grade rating. So that is quite good. And also one idea, which is nothing new for you guys, is that we intend to build efficient and leading companies in all business areas.

As

I mentioned, we have good progress with our subsidiaries and associated companies. And in Nordicus we did an additional raise of US private placement. So now we have in total 17 billion SEK with a 13-year duration. So it's quite good and stable funding, which complements the long-term assets we have in Nordicus. And Sveafastetor received an indication from Fitch that they have a good chance to issue bonds with an investment grade rating. And all our three main companies continue to see good opportunities in the market. And at the moment they are able to catch some of the opportunities. And I'll come back to that at the later in the call. And we intend to optimize the property management in the community segment. And one way to do that is to split the holdings into two companies. One is called SBB Samhälle and one is called SBB Utveckling. And Utveckling is in English Development. And we add specialist workforce for each segment in order to continue to perform above the market. And we know that we have had some high administrative costs in the last years due to various issues that we have had. One is the legal issues with the bondholders. One is that we try to structure the group in a better way. And now it's time to start lowering the administrative costs. And we see a positive trend at the moment and that positive trend we need to continue. In short, the long term goal is of course to have a transparent group with a lot of funding options for the holdings that we manage. And we have then split the assets into four different segments. One is community, one is residential and one is education. And now we split it into one subsegment more and that is development. And we will have more specialist workforce that work with those properties. And the people there will turn potential into long term value. And in development, it's a property value of 4.9 billion SEK. And we limit the properties to 10% of the company's balance sheet. So we don't think at the moment to increase the volume of properties here. It's just to maintain and develop the assets we have and turn them into cash cows. That's the goal. And we believe that this business have ability to generate even higher return on equity than the cash flows, the cash cows that we have. So we have a 15% minimum return on equity in this segment. And as I said earlier, the property relations was flat during the quarter. And you see it here on the yield as well. The yield is rather flat at the moment. So .8% we are receiving from the properties at the moment. And also the required yield on the properties is about $1.5 billion. And the total property is almost similar as in the end of 2024. And also the economic occupancy is rather stable for SBB. And one part of that is that we hold a lot of properties with long leases. And we also hold a lot of properties in the residential segment in Sweden, which is a quite stable business.

Thank

you Leif.

All in all Q1 has been a solid quarter and our assets continue to perform. On a like for like basis, net operating income increased by 4.3%, driven by both rental increase of .7% as well as cost control. As Leif said, admin cost remains a priority area for SBB. And despite $26 million in one of Q1, admin costs are slightly below per year. Total changes in value amounts to minus $131 million, impacted by some building rights being disposed. In total, unrealized changes in value amounted to minus $36 million. Other financial items amounted to $1.8 million, driven by FX gains of $1.9 billion. In total, we are happy to see a bottom line of $1.6 billion for the quarter.

I will talk a little bit about the financing. For the eighth consecutive quarter presentation, we reiterate the message that our main focus is to reduce the group's debt level and also to widen the funding sources. We have articulated this aim in the update of the financial targets that we strive to maintain or to gain the investment grade rating of at least BBB- and we have also expressed it in the new financial targets. For this quarter, there is a slight decrease in the loan to value with 1% down to 60%. And the secure loan to value is running at 22%. We still benefit from the very attractive long-term funding which the company set up back in 2020 through to 2022. So the bulk of our maturities are between 27 and 29. The next large maturity we have is in August of 2026. The management feels very confident that we have a lot of time to execute on the sale of the non-core assets. Sorry about that, I lost my line a bit. We have an average interest rate maturity of 2.9 years still and the average interest rate is very favorable and low at 2.5%. The interest coverage ratio for the quarter is 1.8. And also to go back for all of these quarters, we have a substantial debt reduction and we will continue to reduce that. And we will do so by not giving any dividend until the group can report an investment grade rating as stated in the financial targets. So hence we will mainly repay maturing debt and we will do so by sourcing direct sales of real estate. And also in Q1 we communicated and identified the 10 billion of non-core assets. And should that not be enough, we have liquid holdings and also are able to raise equity in subsidiaries to address the coming maturities. Back to you, Leif, to summarize the quarter.

Thank you, Helena. To summarize, SBB has a decentralized group structure with four business areas. And at the moment I think that some of the companies we invest in is performing very well and also are able to grasp the opportunities they see in the market. Nordicus is acquiring assets and they are growing their portfolio. And have access to excellent funding. Svea Fastetor is developing residential properties and see a good profitability in that. And we also have PPI that grows and see a lot of opportunities in the market. And then one transaction that we have mentioned to the market this morning is that we intend to continue to support PPI with new equity. And one way to do that is to that we ourselves issue equity. So this morning we have issued or we have said that we intend to issue shares. And those shares will be held by Aker Property Group in the end. And the amount is approximately 700 million. And we will use those proceeds in order to buy more shares in PPI. And support the growth of PPI, which we think is a very profitable and good company with a bright future. And all of this and we continue to grow our companies within the SBB Group. And with the ability to for the whole group to go back to financial stability. And at the end go back to investment grade. And then we can combine very long term assets with very long term funding. And then provide safe return to our investors. Thank you.

And from our side we are ready to have the Q&A session. So I will stick back to the operator please.

Please dial pound key 6 on your telephone keypad.

The next question comes from Tarun from Infi. Please go ahead. Hello, is this my line? Yes, we can hear you.

Hi, so I have two questions. First of all, can you give us any details on any progress on sale of non-core assets? And then secondly, you talked about raising some money from like sale of an equity stake in the community service properties. How much cash could we expect from there? Can you give some color on like for example when you did the IPO for SwassFostegger. I believe like around 40% stake was sold and the cash generated was only about like 3 billion SEC. So just some understanding around that would be helpful.

Yes, we have ongoing discussions with the divesting mainly residential buildings which are outside Sveafast heter. And the aim is to reduce it to zero in the next coming years. It's no like urgent but we intend to sell properties in the next coming years. We are not in a hurry to sell properties here and there and concentrate the holdings or residential holdings only to Sveafast heter. That is going well and we have time on our side at the moment. The next large redemption of debt is in the autumn of 26. So we're not in a hurry to sell properties. We are taking our time and we would like to sell at high prices as possible. And the second part of the question, if I just give you like the round numbers, not the exact numbers. But the assets in the community sector for us is around 40 billion SEC. And if you assume 50% leverage, that means 20 billion of equity. And then at the moment we are just preparing the company to be a stable company. And if needed or we deem it good for us, we could raise equity in that entity. So it's like we're creating an opportunity and it's not sure that we will pursue the opportunity. We have other opportunities as well in SBB Group and that is just one alternative that we have. But let's say we sell out 50% of the equity that would be up to 10 billion in SEC that we receive.

That's assuming there's no discount on the equity value. Can you tell me what the discount was when the SWAS sticker equity was sold?

I don't have that in my head, but it's a different kind of assets. And you know that some properties are trading above NAV and some properties are companies are trading below NAV. And it depends on the assets type and residential is a little bit lower value than other kind of properties. And in the past we also sold before we sold shares in Swasthetet, we also sold shares in Nordicus. And if my memory is correct, that transaction was at NAV. So you should not assume that we will sell at discount. And also not sell at the discount at the current market value. So if we sell, let's say next year, it's a good probability that the property prices are higher than today.

Yeah, okay, clear. And if I just may ask one other question, can you explain this transaction with Acre? It's all in kind, right? There is no cash inflow for SBB. So what does SBB get out of this transaction?

Yes, we like to help to PPI to become a larger and even better company. It's already a good company, but it can be even better. And we like to support that journey by injecting equity into PPI. And one way for us to be able to do that is that we are in turn raise equity. And that now we have sent a message to the market that we intend to issue shares to that will end up with Acre property group in the end. And then we get more equity and one of our core holdings will also get more equity. And both SBB and PPI will be better companies in my, according to my understanding. And also SBB will benefit from a new strong owner in Acre, which will be helpful in the future for us. And if we look on like the numbers for us, it means that SBB will have a decrease in loan to value. And also that one of our holdings will generate more dividend up to SBB. Because PPI group will be a larger company and we will hold more shares. Meaning that the potential for dividend and the cash flow from PPI will be increased. And that will help SBB.

Okay, understood. Thank you.

Next question.

Yes,

hi. Good morning. Thanks for taking my question. Just a question on your discussion with the rating agencies. What do you think today? I mean, you are making some very good progress. Do you have a timeline in mind in terms of when the rating agency would react or anything like that? Interesting to know. Thank you.

I think that we have a

very, very, very good discussion with both of the rating agencies, Standard, Ports and Fitch. And I think it's, you know, regarding rating agencies, they won't give you a timeline of how quickly they can raise your, raise your rating. But I think that is, I hope it's apparent to everyone that we are working as hard as we can in order to, to find the financial stability and reduce the debt level in the firm. So I thought, I don't think it will be within the next quarter, but you have to be on the longer term horizon when looking when we can get back our investment grade rating. If you have sort of like realistic expectations, which we have. But I would like to reiterate that we have a very good discussion and a very constructive discussion with both of the rating agencies.

Also, I think if you read at least the S&P rating report, I think it's clear that once we raise liquidity, the rating will improve from the CCC area we are at the moment. So that can be rather fast. It's also, of course, up to the rating agencies to do the adjustment. But we have done at least two big steps now since year end. One is of course that the risk for with the bondholders have heavily decreased the financial risk by in SBB, meaning that discussions with all the legal, legal topic with the bondholders doesn't exist anymore. So that is very helpful in being able to raise liquidity and also the judgment by the rating agencies. And also now we show that we can attract equity. And that should also be read that we if we need to or if we want to, we can always issue more equity. So then have like the clear path to both debt and equity is very helpful when you do the judgment of the rating in a company.

OK,

thank you very

much.

Next question.

More questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you. Thank you for listening. I think we are in SBB very, very happy about the development in the ongoing business. The like for like revenues grows in a good pace and even higher pace is the net operating income growing due to a strict cost control in SBB at the moment. And also we think the financial market is improving for us. Gradually we get more access to capital, both debt and equity, which is helpful. And I think we're taking step by step in the right direction and we'll bring SBB back to financial stability. Thank you.