Technopolis - Interim report (Q1 and Q3)

Technopolis Group Interim Report January 1 - March 31, 2017

TECHNOPOLIS PLC           INTERIM REPORT             May 4, 2017  at 9:00 a.m.

Technopolis Group Interim Report January 1 - March 31, 2017

Strong increase in net sales and earnings

- Net sales EUR 44.3 (41.1) million, up 7.8%
- EBITDA EUR 23.6 (21.9) million, up 7.7%
- Constant currency net sales were up 5.8% and EBITDA was up 5.2%
- Financial occupancy rate 93.5% (92.5%)
- Earnings per share EUR 0.10 (0.09)
- Direct result (EPRA) EUR 14.1 (12.3) million, up 15.0%
- Direct result per share, diluted (EPRA) EUR 0.09 (0.10)
- Net asset value per share (EPRA) EUR 4.25 (4.05)

Technopolis has initiated a comprehensive review of the company´s strategy as
well as strategic and financial targets, which it expects to complete in June. 

                                           1–3/       1–3/  1–12/
Key Indicators                             2017       2016   2016
Net sales, EUR million                     44.3       41.1  172.1
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EBITDA, EUR million                        23.6       21.9   93.1
EBITDA %, Rental operations                64.8       64.8   66.1
EBITDA %, Services                         11.7        7.9    9.4
Operating profit, EUR million              28.5       21.4   89.3
Net result for the period, EUR million     18.4       13.8   52.4
Earnings/share, EUR                        0.10       0.09   0.33
Cash flow from operations/share, EUR       0.11       0.17   0.46
Equity ratio, %                            42.8       38.0   41.5
Equity/share, EUR                          3.95       3.67   3.95
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                                           1–3/   1–3/      1–12/
EPRA-based Key Indicators                  2017   2016       2016
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Direct result, EUR million                 14.1   12.3       52.6
Direct result/share, diluted, EUR          0.09   0.10       0.40
Net asset value/share, EUR                 4.25   4.05       4.24
Net rental yield, %                         7.0    7.7        7.4
Financial occupancy rate, %               93.5*  92.5*      93.4*
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* 3/2017: 16,000 m² under renovation. 3/2016: 15,250 m² under renovation.

The EPRA-based (European Public Real Estate Association) direct result does not
include unrealized exchange rate gains and losses, fair value changes or any
non-recurring items, such as gains and losses on disposals. 

The guidelines of the European Securities and Markets Authority (ESMA)
regarding Alternative Performance Measures (APMs, performance measures not
based on financial statements standards) entered into force in July, 2016.
Technopolis reports APMs, such as EPRA performance measures, to reflect the
underlying business performance and to enhance comparability between financial
periods. APMs may not be considered as a substitute for measures of performance
in accordance with the IFRS. 

Share related indicators have been adjusted for the rights issue in fall 2016.

Future Outlook Unchanged

Technopolis expects its net sales and EBITDA to improve from 2016 based on the
company’s current investment property portfolio and foreign exchange rates. 

The Group’s financial performance depends on the development of the overall
business environment, customer operations, financial markets, market yields,
and exchange rates. Furthermore, any changes in the property portfolio may have
an impact on the guidance. 

Keith Silverang, CEO:

“Our first quarter 2017 operational performance was strong. Net sales grew by
5.8% year-on-year, on a constant currency basis, mainly thanks to higher
occupancy rates and increased rentable space following the acquisition of our
Swedish campus in Gothenburg last year and the successful completion of organic
growth projects. Financial occupancy at the end of March was solid at 93.5%
(92.5%). We also made progress in most of our business units, including Oulu,
where we recently signed new long-term agreements. 

We also saw a clear profitability improvement with EBITDA growth of 5.2%, on a
constant currency basis. The improvement was mainly due to higher occupancy
rates as well as lower operational expenses. 

In April, we acquired an office property under construction in Vilnius
neighboring our own campus and signed an agreement to acquire a neighboring
land plot. This investment will enable us to better serve our customers,
providing them with expansion space almost immediately. In addition to this,
the Delta building in Vilnius was fully completed in the first quarter with an
occupancy rate of over 90% and was granted a Gold-level LEED Certificate. Both
investments in Vilnius are a good strategic fit with our Baltic campus network
and offer a healthy return on investment. Our other organic expansion projects
are progressing on schedule in Helsinki and in Tallinn, and there is organic
expansion potential in many other campuses, including the Helsinki Metropolitan
Area and CBD Oulu. 

Our service business has played an increasingly important role, and it
continues to grow steadily. Its share of total net sales has now reached 13.5%
(12.6%), and service sales were up 15.9% (14.5%) year-on-year. Service earnings
are also showing improvement, with the EBITDA margin for services reaching
11.7% from 7.9% in the corresponding quarter last year. Our best performing
units are generating an EBITDA margin of over 22% and penetration of close to
20%, which is the direction we want for the whole Group. For the rental
operations, the EBITDA margin remained stable at 64.8% (64.8%). 

Organic growth projects and service growth are both driven by demand for more
efficiency, flexibility and solutions that support workplace productivity.
Coworking is one part of this overall megatrend that is pointing the way for
our concept development. Technopolis’ coworking spaces have proven successful
enough to expand our UMA Workspace in downtown Helsinki in May, only one year
after its opening. 

Our financial position remains solid. Thanks to strong operational cash flow
and liquidity, we paid down maturing debt according to schedule, as indicated
in previous reports. The equity ratio rose to 42.8% (38.0%) and loan-to-value
dropped to 53.4% (56.7%). Organic growth projects and rising service earnings
are boosting cash flow less capital-intensively than through property
acquisitions.” 

Full version of Technopolis Plc’s Interim report 1-3/2017 is attached.

Webcast on May 4 at 10:00 a.m.

The webcast briefing in English for investors, analysts and media will be held
on May 4 at 10:00 a.m. Finnish time. The link to the webcast is
www.technopolis.fi/webcast. The other details regarding conference call and
webcast can be found on the publication release. 


Additional information:
Keith Silverang
CEO
tel. +358 40 566 7785


Technopolis provides the best addresses for success in six countries in the
Nordic-Baltic region. The company develops, owns and operates a chain of 20
smart business parks that combine services with flexible and modern office
space. The company’s core value is to continuously exceed customer expectations
by providing outstanding solutions to 1,700 companies and their 50,000
employees in Finland, Sweden, Norway, Estonia, Russia and Lithuania. The
Technopolis Plc share (TPS1V) is listed on Nasdaq Helsinki.

Viðhengi:

Technopolis Interim Report Q12017_.pdf