TECHNOPOLIS PLC STOCK EXCHANGE RELEASE April 25, 2018 at 2.00 p.m. EEST
Solid Start to the Year, Comparable Sales and EBITDA Up by Over 5%
Q1/2018
IFRS
- Net sales were EUR 42.9 (44.3) million, down 3.1% y-o-y
- Earnings per share were EUR 0.14 (0.10), up 40.3% y-o-y
- Equity per share was EUR 3.98 (3.76), up 6.1% y-o-y
Alternative Performance Measures
- EBITDA was EUR 23.1 (23.6) million, down 2.2% y-o-y
- Financial occupancy rate rose to 95.8% (93.5%)
- EPRA earnings EUR 14.4 (14.1) million, up 1.5% y-o-y
- EPRA earnings per share were EUR 0.09 (0.09)
- EPRA NAV per share EUR 4.51 (4.26), up 5.9% y-o-y
- Fair value of investment properties at the end of the period was EUR 1,558.3 million (1,644.0 and 1,537.9 million on Dec 31, 2017)
The numbers in brackets refer to a value in the corresponding period a year earlier unless otherwise stated.
Technopolis amended its accounting policy regarding deferred taxes in the fourth quarter of 2017 and restated its financials for 2017. The restated numbers are presented as comparison figures.
Key Indicators
| Q1/ 2018 | Q1/ 2017 | Change % | 2017 | ||
| IFRS | |||||
| Net sales | EURm | 42.9 | 44.3 | -3.1 | 179.7 |
| Equity ratio | % | 39.6 | 40.9 | - | 44.8 |
| Alternative Performance Measures | |||||
| EBITDA | EURm | 23.1 | 23.6 | -2.2 | 97.1 |
| EPRA earnings | EURm | 14.4 | 14.1 | 1.5 | 60.6 |
| Loan-to-value (LTV) | % | 54.6 | 53.4 | - | 50.1 |
| EPRA return on equity (rolling 12m) | % | 9.7 | 9.3 | - | 9.1 |
| EPRA earnings / share | EUR | 0.09 | 0.09 | - | 0.39 |
| EPRA NAV / share | EUR | 4.51 | 4.26 | 5.9 | 4.58 |
| EPRA NNNAV / share | EUR | 3.95 | 3.73 | 5.9 | 4.05 |
| Financial occupancy rate | % | 95.8 | 93.5 | - | 96.1 |
| EPRA net rental yield | % | 7.1 | 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
“This year has started off well. The divestiture of our Jyväskylä assets in November 2017, meant that net sales and EBITDA were slightly lower than last year, but when you eliminate the effect of the divestiture, you can see healthy growth. Occupancy rates continued to rise, which supported both net sales development and relative profitability.
Group net sales in the first quarter decreased by 3.1% from the previous year, but excluding the Jyväskylä divestiture, net sales grew by 5.3%. The main operational drivers behind this were service income growth and rising occupancy. Rental growth also had a positive effect on Group net sales. Our financial occupancy rate at the end of March reached 95.8% (93.5%), with the greatest improvement in Oulu, Finland.
We have five organic growth projects in progress. These investments total nearly EUR 140 million. There are also ten additional projects under design. Most of these extensions of our campuses are being driven by the growth of our existing customers. While we expect the pipeline to be growing, we are looking at each case rigorously and will launch when market conditions allow and our strict investment criteria are met.
Services form an increasingly important share of our business, and they continue to grow steadily. Service income reached EUR 6.3 million (5.1% y-o-y growth) in Q1 2018. However, comparable service income growth was 14.8% year-on-year. Services represented 14.7% of the Group net sales. Furthermore, for the first time, our quarterly service EBITDA reached EUR 1 million. The EBITDA margin for services was 16.0% (11.7%). Our target at the end of the strategy period in 2020 is 20%.
Group EBITDA in January–March was half a million euros lower than in the corresponding period a year earlier at EUR 23.1 (23.6) million. The EBITDA margin was 53.7% (53.2%). Excluding the Jyväskylä divestiture, our EBITDA grew 5.2% from the previous year. Yield compression was the primary driver behind positive fair value changes, which brought EUR 9.7 (6.0) million in the first quarter and were a significant contributor at the Operating profit level.
In March, we signed a five-year EUR 518 million refinancing agreement. The package consists of four secured facilities: a EUR 150 million term loan facility for refinancing existing debt, EUR 200 million of back-up facilities and a guarantee facility for our long-term European Investment Bank loans. These facilities replaced the majority the bilateral secured bank loans the company had in place earlier in Finland, and in addition to improving our maturity profile, the agreement increased Technopolis’ unencumbered asset ratio to 25.6% from 13.8% at the year-end 2017.
One of the cornerstones of our strategy is the expansion of our UMA Coworking Network. A new flagship UMA coworking space in Stockholm, Sweden was just opened earlier this week, in April, and another one is set to open in Copenhagen in September. We will continue to expand our UMA footprint in the other major cities and hubs of the Nordic-Baltic Sea area. An UMA-membership gives our customers access to the full Technopolis shared workspace concept in superb CBD locations while enabling Technopolis to grow rapidly and cost-efficiently, but less capital-intensively throughout the Nordic-Baltic Sea region.
Our first quarter results lay a good foundation for the rest of the year and gives us a solid platform from which to continue the step-by-step implementation of the Group’s strategy.”
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 April 25, 2018 at 3:00 p.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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