q2 results announcement - technopolis · 2017. 8. 29. · metso telatehdas 2010 3.7 positive...

Technopolis PlcHalf-Year Financial Results 2017: Strong Numbers Across the Board

August 29, 2017Keith Silverang, CEO

Key Messages on January-June 2o17

• Very solid first half

– Financial occupancy rate rose by 1%-point to 94.4%

– Net sales up 6.9% y-o-y, like-for-like growth 4.9%

– EBITDA up 8.2% y-o-y, like-for-like growth 6.0%

• Services are rapidly becoming a material contributor to our numbers

– Service income growth +16.7% y-o-y to EUR 12.8 million

– EBITDA growth +81.0% y-o-y to EUR 1.6 million

• Macroeconomic tail-wind for the first time in a long time

• Revised strategy now in the implementation phase, progressing as planned

• Guidance unchanged

August 29, 2017 Half-Year Financial Result 2017 | Keith Silverang, CEO2

Key Financials

Group net sales developmentEURm

Very Solid First Half 2017

• FX changes increased net sales by EUR 1.1 (-1.6)

• On a constant currency basis net sales were up 5.5%

0

50

100

150

200

2014 2015 2016 H1/16 H1/17

Rental income Service income

161.7 170.6 172.1

84.390.1

Group EBITDA and EBITDA-marginEURm, %

• FX changes increased EBITDA by EUR 0.8 (-1.1) million

• On a constant currency basis, EBITDA grew 6.5%, and EBITDA margin was 54.3%.


87.293.0 93.1

45.449.1

54.5%

50%

51%

52%

53%

54%

55%

0

20

40

60

80

100

2014 2015 2016 H1/16 H1/17

EBITDA Margin-%

+6.9% +8.2%

FOCR by Business Unit%

Financial Occupancy Rate Hit 94.4%

• Group average in January-June 2017 was 94.4 (93.4)%.

• Group 10-year average FOCR is 94.3%

93.3 92.5 94.890.0

97.2 100.092.9

100.0 97.3 97.9

0

20

40

60

80

100

120

HMA Jyväskylä Kuopio Oulu Tampere Gothenburg Oslo St. Petersburg Tallinn Vilnius

Q2/16 Q2/17


Finland average: 93.2 (91.7)%Scandinavia average:

94.9 (95.6)% Baltic Rim average: 98.3 (99.3)%

n/a

Service IncomeEURm

Services on the Rise

• Service income grew in all campuses.

16.9

20.322.4

11.012.8

0

5

10

15

20

25

2014 2015 2016 H1/2016 H1/2017

Service EBITDA and EBITDA-marginEURm, %

• Margin improvement through scale benefits i.e. higher service income and growth in more profitable services.

Service Penetration H1/17*

%

• Service penetration in Q2 was 14.9%.

Service income as % of Group net

sales14.2%


* Service Income’s share of Group net sales.

+16.7%

0.90.8

2.1

0.9

1.6

12.6%

0%

2%

4%

6%

8%

10%

12%

14%

0.0

0.5

1.0

1.5

2.0

2.5

2014 2015 2016 H1/16 H1/17

EBITDA Margin-%

+81.0%

Fair Value of Investment PropertiesEURm


Yield Compression Increased Fair Values the Most

Division of Fair Value by Segment%

Finland61%

Baltic Rim19%

Scandinavia20%

1 378.4

1 426.0

1 624.21 631.5

1 200

1 300

1 400

1 500

1 600

1 700

1 800

12/14 12/15 12/16 6/17

EUR +9.6 m

Strong Balance Sheet Supports Strategy Implementation

M€ 30 Jun '17 30 Jun '16 Change, % 31 Dec '16 Change, %

Balance sheet total, EURm 1,746.5 1,602.8 9.0 1,825.1 -4.3

Interest-bearing debt, EURm 887.4 905.0 -1.9 959.9 -7.5

Cash and equivalents, EURm 31.0 26.1 18.5 128.0 -75.8

Average loan maturity, yrs 4.8 5.5 -12.7 5.1 -5.9

Loan-to-value (LTV), % 53.2 59.4 - 58.2 -

Equity Ratio, % 43.9 36.5 - 41.5 -

Interest coverage, multiple 5.1 4.8 6.3 4.6 36.3


Strategy Implementation

Our long-term financial targets are:

• EPS growth of 8–10% per annum on an EPRA Earnings basis

• ROE over 8% per annum on an EPRA Earnings basis

• EPRA NAV / share growth of at least 5% per annum

• Equity ratio over 35%

We are targeting to increase the like-for-like share of services above 20% on all campuses. We will also increasingly focus on the profitability of the service business … targeting a margin of at least 20% by 2020.

- We are currently at 14.9% penetration in Q2 and at margin of 13.4%.

Service IncomeEURm

Services on the Rise

• Service income grew in all campuses.

16.9

20.322.4

11.012.8

0

5

10

15

20

25

2014 2015 2016 H1/2016 H1/2017

Service EBITDA and EBITDA-marginEURm, %

• Margin improvement through scale benefits i.e. higher service income and growth in more profitable services.

Service Penetration H1/17*

%

• Service penetration in Q2 was 14.9%.

Service income as % of Group net

sales14.2%


* Service Income’s share of Group net sales.

+16.7%

0.90.8

2.1

0.9

1.6

12.6%

0%

2%

4%

6%

8%

10%

12%

14%

0.0

0.5

1.0

1.5

2.0

2.5

2014 2015 2016 H1/16 H1/17

EBITDA Margin-%

+81.0%

The plan is to allocate approximately EUR 30 million to development of UMA coworkingnetwork during the next five years.

- We are currently scouting for new locations.

We expect to spend EUR 200‒250 million on organic development projects by 2020, including 10–15 new projects.

- We are currently at around EUR 130 million and 5 projects.

EUR 93.9 million Worth Organic Projects in Progress

Area Name Pre-let rate,% Rentable area, m²Total investment,

EURmStabilized yield, % 1) Completion

Helsinki Ruoholahti 3 41.2 10,300 33.2 7.0 7/2018

Tallinn Lõõtsa 12 23.1 9,700 13.6 9.0 7/2018

Vilnius2) Penta 46.4 13,800 32.02) 8.4 10/2017

Vantaa Aviapolis Bldg H 0.0 5,100 15.1 8.0 11/2018

TOTAL 38,900 93.9


1) Stabilized yield = estimated net operating income / cost2) Total investment including also the neighboring land plot with an expansion potential of at least 20,000 m2 for which a purchase agreement has been signed.

• Building H on the Aviapolis campus was launched in Q2/17.

AviapolisBuilding H• Building H was launched in

Q2/17.

• The extension will grow the campus to around 30,000 m².

• After this project, we can still expand the campus by another 25,000 m².

August 29, 201716

Finland64%Baltic

Rim23%

Scandinavia13%

There Is Potential

August 29, 201717

Finland50%

Baltic Rim40%

Scandinavia10%

Rentable Area by SegmentTotal: 758,200 m2

Existing Building RightsTotal: approx. 450,000 m2

We currently foresee EUR 100-200 million spend on acquisitions during 2017-2020, but will only act if a compelling value creation opportunity presents itself.

We Still Miss Spots on the Map

August 29, 201719

• We will do selective acquisitions in theNordic – Baltic Sea Area

• We have a clear set of criteria

• The focus will be more on assets withdevelopment potential rather than fullystanding assets

.

Technopolis will also evaluate divestiture opportunities … based on the competitiveness, future prospects and value creation potential of individual campuses and sites.

It’s Nothing New, We’ve Done This in the Past

Divestituresfrom 2000-

Time of Divestiture

Sales Price, EUR million vs Fair Value

TampereHepolamminkatu

2007 2.3 N/A

OuluHanhitie 13

2010 2.2 positive

TampereMetso telatehdas

2010 3.7 positive

TampereInion

2010 0.5slightly

negative

OuluPKC house, Technocenter

2011 0.8 neutral

OuluOthers in total

2011-2016 12.5 neutral

LappeenrantaVapaudenaukio

2013 5.1 negative

Kuopio minority 40% 2015 126.2 positive

Tampere & LappeenrantaFinnmedi & Skinnarila

2016 60.6 positive

OutlookAt the moment everything looks good! Guidance unchanged.

Macro Economic Tailwind

% Finland Norway Sweden Estonia Lithuania Russia

GDP growth forecast

y-o-y change '16-17 +2.0 +1.3 +2.7 +3.5 +3.1 +1.4

y-o-y change '17-18 +1.5 +1.5 +2.3 +3.3 +2.9 +1.6

CPI growth forecast

y-o-y change '16-17 +1.2 +1.9 +1.6 +3.2 +3.3 +4.2

y-o-y change '17-18 +1.5 +1.8 +1.8 +2.8 +2.7 +4.0


Source: OECD, June 2017

Prime Office Yield Development in Technopolis Markets%


Yields are on the decline

Source: JLL (8/17), for Tallinn: Seven Real Estate Advisors (8/17)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

12/06 12/07 12/08 12/09 12/10 12/11 12/12 12/13 12/14 12/15 12/16 6/17

Helsinki Oslo Gothenburg St Petersburg Tallinn

Financial Occupancy Rate, Group%


Our Business Is Doing Fine

90

92

94

96

98

100

2008 2009 2010 2011 2012 2013 2014 2015 2016 6/17

Group 10-yr average

Guidance 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.

Capital Markets Dayon Nov 22, 2017 in Helsinki

Save-the-date invitations will be sent out shortly.

If you wish to participate, please send an e-mail with your contactdetails at [email protected]

https://www.linkedin.com/company/technopolis-plc


https://twitter.com/technopolisplc


https://www.youtube.com/user/technopolisoyj


https://www.facebook.com/TechnopolisPlc/


https://www.instagram.com/technopolisplc/


ThankYou!Time for questions.

www.tehcnopolis.fi











APPENDICESDetailed Financial Information

Segment information: Finland

30

FinlandQ2/

2017Q2/

2016Change,

%H1/

2017H1/

2016Change,

%2016

Net sales, EURm 30.4 31.4 -3.1 59.1 61.0 -3.1 120.5

Rental income, EURm 24.9 26.7 -6.8 48.8 51.9 -6.0 102.0

Service income, EURm 5.5 4.7 17.7 10.3 9.1 13.4 18.6

EBITDA, EURm 16.4 17.7 -7.1 31.2 33.5 -6.8 64.3

EBITDA-% 54.0 56.3 - 52.7 54.8 - 53.4

Fair value of investment properties, EURm*- - - 999.1 998.2 0.1 997.6

Number of campuses* - - - 16 16 0.0 15

Rentable area, m2 * - - - 485,700 527,140 -7.9 486,500

Average rent, EUR/m2/month * - - - 17.4 17.2 1.5 17.0

Financial occupancy rate, %* - - - 93.2 91.7 - 90.7

Market yield requirement, average, %* - - - 7.5 7.8 - 7.6

* At the end of the period. Note: 6/17: 10,100 m2 under renovation, 6/16: 10,500 m2 under renovation.

Segment information: Baltic Rim

31

Baltic RimQ2/

2017Q2/

2016Change,

%H1/

2017H1/

2016Change,

%2016

Net sales, EURm 8.9 7.4 20.4 17.8 14.4 24.0 29.5

Rental income, EURm 8.0 6.6 21.8 16.1 13.0 23.7 26.7


EBITDA, EURm 5.3 3.5 50.0 10.6 7.5 41.1 16.6

EBITDA-% 59.8 48.0 - 59.3 52.1 - 56.1

Fair value of investment properties, EURm*- - - 307.9 260.1 18.4 292.3


Rentable area, m2 * - - - 170,400 148,650 14.6 161,200



Market yield requirement, average, %* - - - 8.3 8.7 - 8.7

* At the end of the period.

Segment information: Scandinavia

32

ScandinaviaQ2/

2017Q2/

2016Change

%H1/

2017H1/

2016Change

%2016

Net sales, EURm 6.5 4.4 46.2 13.1 8.9 47.7 22.0

Rental income, EURm 6.1 4.1 47.9 12.4 8.3 49.5 20.7


EBITDA, EURm 3.8 2.3 67.9 7.4 4.4 66.6 12.2

EBITDA-% 58.9 51.3 56.1 49.7 - 55.4Fair value of investment properties, EURm* - - - 324.5 199.6 62.6 334.3


Rentable area, m2 * - - - 102,100 64,500 58.3 98,700



Market yield requirement, average, %* - - - 5.5 6.1 - 5.5* At the end of the period.Note: 6/17: 0 m2 under renovation, 6/16: 3,000 m2 under renovation.

Changes in Fair Values, January-June 2017EURm


Changes in Fair Values

EURmYield

requirementOccupancy

assumptionModerniz-

ationOther

changesProjects in

progress Total

Finland 10.3 -6.2 -4.3 0.4 0.5 0.7

Baltic Rim 6.3 0.6 -1.2 -2.9 5.7 8.5

Scandinavia 2.6 0.0 -1.3 -0.9 0.0 0.4

TOTAL 19.2 -5.6 -6.8 -3.4 6.2 9.6

* Other changes include changes in market rents, operative expenses, exchange rates as well as inflation assumptions.


Lease Stock and Customer Base

• A total of approximately 1,700 customers

• 10 largest customers let approximately 21.9% of rented space and the single largest customer 4.1%

• In January–June, 10 largest customers accounted for 20.8% of rental income and the single largest customer 4.6%

Lease stock, % of spaceMaturity, years Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016

< 1 21 21 19 18 17

1 – 3 19 20 21 22 22

3 – 5 18 18 17 17 15

> 5 16 15 16 15 18

Open-ended leases 26 25 27 28 28

Average lease term in months 34 34 35 35 36

Lease stock, EUR million 397.6 389.1 392.7 430.0 424.8

Interest-Bearing Liabilities, June 30, 2017Total EUR 887.4 (905.0) million

Division of IB Debt

In addition, the Group has an outstanding hybrid loan of EUR 75 million, which is not included in the interest-bearing liabilities.

The average interest rate on interest-bearing liabilities (excluding the hybrid loan) was 2.47%.

635.3

150.0

34.9

32.235.0

Bank Loans

Unsecured Senior Bond

Commercial Papers

Financial Leases

Other*


Maturity Profile of IB Debt*, EUR million

Maturity Profile of IB Debt

• The EUR 75.0 million hybrid loan has a redemption option in March 2018.

• EUR 150 million unsecured bond (maturity in 2020), callable in May 2018 at 101.88.

85.2

190.7

86.3

235.1

124.2

165.8

0

50

100

150

200

250

300

2017 2018 2019 2020 2021 2022-


* Not including EUR 75 million hybrid loan.

Share Information: Trading


Share tradingQ2/

2017Q2/

2016Change

%H1/

2017H1/

2016Change

%2016

Lowest price, EUR 2.99 2.92 2.4 2.96 2.89 2.4 2.89

Highest price, EUR 3.75 3.33 12.6 3.75 3.43 9.3 3.48

Closing price (end of period), EUR - - - 3.69 3.09 19.4 3.13

Volume weighted average price, EUR - - - 3.21 3.13 2.6 3.16

Share turnover, million shares 16.0 9.7 64.9 28.7 17.0 68.8 49.70

Share turnover, EURm 52.9 30.3 74.6 92.1 53.1 73.4 157.10

Market capitalization (end of period), EURm

- - - 585.95 329.12 78.0 497.02

Share Information: Largest Shareholders* on June 30, 2017

38

# of shares % of shares

Varma Mutual Pension Insurance Comp. 38,172,288 24.0

Ilmarinen Mutual Pension Insurance Comp. 16,634,470 10.5

City of Oulu 3,917,926 2.5

Laakkonen Mikko 2,139,276 1.4

Technopolis Plc 1,903,373 1.2

The Finnish Cultural Foundation 1,782,063 1.1

Jenny and Antti Wihuri’s Foundation 1,107,597 0.7

Jyrki Hallikainen and company 1,000,000 0.6

Etola Erkki 865,500 0.6

National Broadcasting Company’s Pension F. 828,744 0.5

10 largest shareholders, total 68,351,237 43.1

Foreign and nominee registered, total 55,220,234 34.8

Others, total 35,222,191 22.2

Total amount of shares 158,793,662 100.0

* Not including nominee-registered shareholders

q2 results announcement - technopolis · 2017. 8. 29. · metso telatehdas 2010 3.7 positive...

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