TECHNOPOLIS PLC INTERIM REPORT October 28, 2016 at 9:00 a.m.
Technopolis Group Interim Report January 1 – September 30, 2016
Positive Earnings Trend
- Net sales EUR 127.3 (128.9) million, down 1.2% mainly due to 2015 termination fees
- EBITDA EUR 70.7 (72.9) million, down 3.0% mainly due to 2015 termination fees
- On a constant currency basis, net sales were up 0.1% and EBITDA was down 1.4%
- Financial occupancy rate 92.7% (94.5%)
- Earnings per share EUR 0.27 (0.21)
- Direct result (EPRA) EUR 39.9 (38.8) million, up 3.0%
- Direct result per share, diluted (EPRA) EUR 0.33 (0.32)
- Net asset value per share (EPRA) EUR 4.12 (3.98)
| 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ | ||||||||||
| Key Indicators | 2016 | 2015 | 2016 | 2015 | 2015 | |||||||||
| Net sales, EUR million | 43.0 | 39.8 | 127.3 | 128.9 | 170.6 | |||||||||
| EBITDA, EUR million | 25.3 | 22.7 | 70.7 | 72.9 | 93.0 | |||||||||
| Operating profit, EUR million | 26.6 | 24.4 | 68.5 | 63.1 | 88.9 | |||||||||
| Net result for the period, EUR million | 16.5 | 11.9 | 40.5 | 32.8 | 50.0 | |||||||||
| Earnings/share, EUR | 0.11 | 0.06 | 0.27 | 0.21 | 0.33 | |||||||||
| Cash flow from operations/share, EUR | 0.43 | 0.39 | 0.52 | |||||||||||
| Equity ratio, % | 39.5 | 38.2 | 39.3 | |||||||||||
| Equity/share, EUR | 3.75 | 3.70 | 3.79 | |||||||||||
| EPRA-based Key Indicators |
7-9/ 2016 |
7-9/ 2015 |
1-9/ 2016 |
1-9/ 2015 |
1-12/ 2015 |
|||||||||
| Direct result, EUR million | 13.7 | 11.4 | 39.9 | 38.8 | 55.0 | |||||||||
| Direct result/share, diluted, EUR | 0.11 | 0.09 | 0.33 | 0.32 | 0.45 | |||||||||
| Net asset value/share, EUR | 4.12 | 3.98 | 4.09 | |||||||||||
| Net rental yield, % | 7.4 | 7.7 | 7.7 | |||||||||||
| Financial occupancy rate, % | 92.7* | 94.5 | 94.6* | |||||||||||
* 9/2016: 10,000 m² under renovation. 12/2015: 16,700 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 new 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 on July 3, 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.
Future Outlook
Technopolis expects its net sales and EBITDA in 2016 to remain on the same level (+/- 5%) as in 2015.
The Group’s financial performance depends on the development of the overall business environment, customers’ 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:
“The main event of the third quarter was our rights issue. The issue was successfully completed in September and was 66% oversubscribed. The net proceeds raised through the offering were approximately EUR 124 million. This strengthens our balance sheet after the investments executed in the summer and provides firepower for upcoming organic growth projects, as well as new acquisitions. The equity ratio has already improved to 39.5% and will continue to improve together with LTV as existing debt is paid down. We expect it to take until Q1 next year until the full impact of the proceeds is visible in our solvency indicators.
We got immediately to work with new growth projects, first launching the expansion of our Helsinki Ruoholahti campus, and shortly thereafter our next Tallinn campus expansion project, Löötsa 12. The Ruoholahti project got a boost thanks to falling vacancy in the Ruoholahti district, as well as a sizable anchor agreement. In Tallinn we were encouraged by the rapid take-up of our previous Löötsa project and the continuing robust demand for high-efficiency space and services. We’re also looking at opportunities to continue organic expansion in Vilnius, as well as the Greater Helsinki area.
The search for new campuses continues. The deal flow is improving as we work with the pipeline. Our search area covers the entire Nordic-Baltic region and we are concentrating on campuses that provide the optimal strategic fit, the best upside potential and a healthy risk-adjusted yield.
In the field, conditions in the third quarter were relatively stable. Despite the expected drop in occupancy, on a constant currency basis and excluding the contract termination fees earnings were up 3.5%. We expect occupancy overall to rise in the fourth quarter. The main drivers behind the company’s rising earnings trend are the high-occupancy completion of our Tampere CBD campus, as well as the July acquisition of the Gårda campus in Gothenburg, Sweden.
Services also continue to play an increasingly important role, with year-on-year service growth now at 10% and the share of services in total revenue at 12.5%. Our service earnings are gradually improving, with the EBITDA margin for services up to 7.6% from 4.8% in Jan-Sept 2015. Our goal is to significantly increase the service margin as the scale of our operations grows.
Improving conditions on the domestic transaction market are also lending support for the execution of our divestiture strategy. Investor sentiment regarding Finland appears to be taking a turn for the better. This, in combination with growing domestic transaction volumes, is driving yield compression also in secondary markets. This is good news for our domestic divestiture portfolio, which ultimately will provide additional resources for the execution of our growth strategy.”
Full version of Technopolis Plc’s Interim Report January 1 –September 30, 2016 attached.
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 21 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 49,000 employees in Finland, Sweden, Norway, Estonia, Russia and Lithuania. The Technopolis Plc share (TPS1V) is listed on Nasdaq Helsinki.
