Technopolis - Interim report (Q1 and Q3)

Technopolis Group Interim Report January–September 2017

TECHNOPOLIS PLC            INTERIM REPORT               October 31, 2017 at 9:00 a.m.

Technopolis Group Interim Report January–September 2017

GROWTH CONTINUES INTO THE SECOND HALF

January–September 2017

- Net sales up 5.4% y-o-y to EUR 134.2 (127.3) million
- EBITDA up 5.4% y-o-y to EUR 74.5 (70.7) million
- Financial occupancy rate rose to 94.4% (92.7%)
- EPRA earnings up 16.4% y-o-y to EUR 46.4 (39.9) million
- EPRA earnings per share were EUR 0.30 (0.33) ^*
- EPRA NAV per share was EUR 4.44 (4.12)
- Fair value of investment properties at the end of the period was EUR 1,635.9 (12/16: 1,624.2) million

Q3/2017

- Net sales up 2.5% y-o-y to EUR 44.1 (43.0) million
- EBITDA was EUR 25.4 (25.3) million
- EPRA earnings up 18.9% y-o-y to EUR 16.3 (13.7) million
- EPRA earnings per share were EUR 0.10 (0.11) ^*

The numbers in brackets refer to a value in the corresponding period a year earlier unless otherwise stated.

^* Rights issue in the comparison period.

Key Indicators

	Q3/ 2017	Q3/ 2016	Change %	Jan–Sep, 2017	Jan–Sep, 2016	Change %	2016
FINANCIAL (IFRS)
Net sales, EURm	44.1	43.0	2.5	134.2	127.3	5.4	172.1
EBITDA, EURm	25.4	25.3	0.2	74.5	70.7	5.4	93.1
Equity ratio, %	-	-	-	44.4	39.5	-	41.5
Loan-to-value (LTV), %	-	-	-	52.4	58.7	-	58.2
FINANCIAL (EPRA)
EPRA earnings, EURm	16.3	13.7	18.9	46.4	39.9	16.4	52.6
EPRA earnings / share, EUR	0.10	0.11	-7.2	0.30	0.33	-10.3	0.40
Return on equity, %*	-	-	-	8.7	9.2	-	8.6
Financial occupancy rate, %	-	-	-	94.4	92.7	-	93.4
Net rental yield, %	-	-	-	7.2	7.4	-	7.4
EPRA NAV / share, EUR	-	-	-	4.44	4.12	7.8	4.24
* Rolling 12 months. Based on EPRA earnings.
Note: Share related indicators have been adjusted for the rights issue in September 2016.

EPRA (European Public Real Estate Association) Earnings do 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 IFRS.

Near-Term Outlook Unchanged

Technopolis is keeping its near-term outlook unchanged. The company expects its net sales and EBITDA to improve from 2016 based on its 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.

From the CEO

“The strong growth we experienced in the first half, has continued into the second half, but at a more moderate pace. In January–September our net sales and EBITDA grew hand-in-hand, 5.4% year-on-year. The two main drivers behind this positive development were the growth in service income and rising occupancy. Our financial occupancy rate increased 1.7 percentage points year-on-year to 94.4% at the end of the review period. The biggest improvement was in Finland, especially Oulu.

Service income for January–September grew nearly 16% year-on-year and reached EUR 18.4 (15.9) million. The share of service income in Group net sales (service penetration) was 13.7% (12.5%). Service EBITDA reached EUR 2.1 (1.2) million (+72.8% y-o-y growth), which translates into an EBITDA margin of 11.4% (7.6%). All of our campuses showed a year-on-year improvement, both in terms of service income and service penetration for the first nine months.

However, both the service EBITDA margin and the penetration were slightly down from the end of June (12.6% EBITDA margin and 14.2% penetration in January–June) due to seasonal fluctuations. The majority of this quarter-on-quarter decline resulted from reduced conference service demand during the summer vacation period.

In purely operational terms, the company generated a robust performance. Like-for-like growth for the first nine months was 4.8% and 4.1% year-on-year for the Group net sales and EBITDA, respectively. It is worth mentioning that this was achieved in an environment where rental growth has been fairly modest, especially in Finland.

Yield compression is the primary driver behind fair value changes, which increased EUR 16.4 (0.7) million in January–September and were a significant contributor at the operating profit level.

I am pleased to end by saying that we have now signed the first agreement on a new stand-alone UMA coworking space in Stockholm, Sweden. Our aim is to open it in April 2018, and our intention is to expand our footprint both in Stockholm and in the other major cities in the Nordic-Baltic Sea area.“



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



Webcast for investors, analysts and media

The webcast briefing in English for investors, analysts and media will be held today on October 31 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.


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.
  

Attachments:

Interim Report Q3_2017.pdf