Technopls Ventures Ltd. — Earnings Release 2018

Aug 23, 2018

Healthy Operational Performance, Like-for-Like Sales and EBITDA Up by 3.4% and 4.4%, Respectively

Healthy Operational Performance, Like-for-Like Sales and EBITDA Up by 3.4% and 4.4%, Respectively

TECHNOPOLIS PLC         STOCK EXCHANGE RELEASE          August 23, 2018 at 9.00 a.m. EEST**Healthy Operational Performance, Like-for-Like Sales and EBITDA Up by 3.4% and 4.4%, Respectively

*January*–June 2018

**IFRS

• Net sales down 3.2% y-o-y to EUR 87.2 (90.1) million
• Earnings per share were EUR 0.26 (0.21), up 22.3% y-o-y
• Equity per share was EUR 4.08 (3.82), up 6.9% y-o-y

Alternative Performance Measures

• EPRA NAV per share EUR 4.65 (4.32), up 7.6% y-o-y
• Financial occupancy rate rose to 95.9% (94.4%)
• EBITDA was EUR 46.5 (49.1) million, down 5.3% y-o-y
• EPRA earnings EUR 27.4 (30.1) million, down 9.1% y-o-y
• EPRA earnings per share were EUR 0.17 (0.19)
• Fair value of investment properties at the end of the period was EUR 1,570.7 million (1,631.5 and 1,537.9 million on Dec 31, 2017)

Q2/2018

IFRS

• Net sales down 3.2% y-o-y to EUR 44.3 (45.8) million

Alternative Performance Measures

• EBITDA was EUR 23.5 (25.5) million, down 8.2% y-o-y
• EPRA earnings EUR 13.0 (16.0) million, down 18.5% y-o-y
• EPRA earnings per share were EUR 0.08 (0.10)

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

**Key Indicators

**

		Q2/ 2018	Q2/ 2017	Change %	Jan-Jun/ 2018	Jan-Jun/ 2017	Change %	2017
IFRS
Net sales	EURm	44.3	45.8	-3.2	87.2	90.1	-3.2	179.7
Equity ratio	%	-	-	-	40.6	42.2	-	44.8
Alternative Performance Measures
EBITDA	EURm	23.5	25.5	-8.2	46.5	49.1	-5.3	97.1
EPRA earnings	EURm	13.0	16.0	-18.5	27.4	30.1	-9.1	60.6
Loan-to-value (LTV)	%	-	-	-	54.2	53.2	-	50.1
EPRA Return on equity (rolling 12 months)	%	-	-	-	9.1	9.5	-	9.1
EPRA earnings / share	EUR	0.08	0.10	-18.5	0.17	0.19	-9.2	0.39
EPRA NAV / share	EUR	-	-	-	4.65	4.32	7.6	4.58
EPRA NNNAV / share	EUR	-	-	-	4.05	3.80	6.5	4.05
Financial occupancy rate	%	-	-	-	95.9	94.4	-	96.1
EPRA net rental yield	%	-	-	-	7.2	7.0	-	7.2

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 estimates that the Group net sales in 2018 will be at the same level as it was in 2017. The company expects the Group EBITDA to remain at the same level as in 2017, or slightly below.

The estimates take into account the divestiture of operations in Jyväskylä, Finland in late 2017. The negative effects of the Jyväskylä divestitures on Group Net sales and EBITDA, on an annual level, are approximately EUR 14.5 million and EUR 7.2 million, respectively.

Furthermore, the estimate takes into account the company’s view on the planned completion of organic growth projects in progress, as well as its view on economic developments in each Technopolis market, and the development of the company’s occupancy and rental rates.

**From the CEO

**“I am pleased with how our business developed in the first half of the year. Our net sales and EBITDA were slightly lower than the year before, but if you remove the effect of the Jyväskylä divestiture in November 2017, you can see healthy operational growth. Occupancy rates rose year-on-year, which boosted net sales and improved relative profitability.

Group net sales in the first half decreased by 3.2% from the previous year, but our like-for-like sales rose 3.4%. The main drivers behind the positive development were the rising occupancy and service growth. Rental growth also had a positive effect on Group net sales. Our financial occupancy rate at the end of June reached 95.9% (94.4%), with the greatest improvement in Kuopio and Oulu, Finland.

At the end of June, we had five organic growth projects in progress. The value of these projects, together with the already completed ones, amount to EUR 165 million, against our target of EUR 200–250 million for the 2017–2020 strategy period. We are particularly pleased with the pace of organic growth projects because they are strongly accretive, they support internal campus growth, and they bring efficiencies. Strong macroeconomic performance in our markets is enabling this organic expansion, but we are looking at each case rigorously.

Services form an increasingly important share of our business, and they continue to grow steadily. In January–June, service income reached EUR 13.8 million (8.0% y-o-y growth), and represented 15.9% of the Group net sales. In the second quarter, the share was 17.0%. The EBITDA margin for services was 12.3% (12.6 %) in the first half, and it was below 10% in the second quarter. This is due to UMA network ramp-up costs. The UMA related costs in the first half of the year were approximately EUR 1 million. Excluding those, the service EBITDA margin was over 18%.

Group EBITDA in the first six months was 5.3% lower than in the corresponding period a year earlier, at EUR 46.5 (49.1) million, due to the Jyväskylä divestiture, non-recurring items, a change in real estate tax accounting, and UMA network ramp-up costs. The non-recurring items related to an acquisition case that we ultimately decided to terminate. Like-for-like EBITDA growth was 4.4%.

Yield compression was the primary driver behind positive fair value changes, which brought EUR 19.7 (9.6) million in the first half and were a significant contributor at the 0perating profit level.

We now have two flagship UMA coworking spaces in operation, one in Helsinki and one in Stockholm. Three more are set to open this year. We will continue to expand our UMA footprint in the other major cities and hubs of 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 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 is a shared workspace expert. We provide efficient and flexible offices, coworking spaces and everything that goes with them. Our services run from designing the workspace to reception, meeting solutions, restaurants and cleaning. We are obsessed with customer satisfaction and value creation. Our 17 campuses host 1,600 companies with 50,000 employees in six countries within the Nordic and Baltic Sea region. Technopolis Plc (TPS1V) is listed on Nasdaq Helsinki. 

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