A Strong Year for Technopolis

TECHNOPOLIS PLC        STOCK EXCHANGE RELEASE           February 15, 2018 at 9.00 a.m. EET

A Strong Year for Technopolis

Full Year 2017

• Net sales up 4.4% y-o-y to EUR 179.7 (172.1) million
• EBITDA up 4.3% y-o-y to EUR 97.1 (93.1) million
• Financial occupancy rate rose to 96.1% (93.4%)
• EPRA earnings up 15.2% y-o-y to EUR 60.6 (52.6) million
• EPRA earnings per share were EUR 0.39 (0.40) ^*
• EPRA NAV per share up 8.0% y-o-y to EUR 4.58 (4.24)
• Fair value of investment properties at the end of the period was EUR 1,537.9 (1,624.2) million
• Board’s proposal for dividend distribution is EUR 0.09 (0.12) and for equity repayment EUR 0.08 (-) per share, totaling EUR 0.17 (0.12) per share

Q4/2017

• Net sales up 1.7% y-o-y to EUR 45.5 (44.8) million
• EBITDA was EUR 22.7 (22.4) million
• EPRA earnings up 12.0% y-o-y to EUR 14.5 (12.9) million
• EPRA earnings per share were EUR 0.09 (0.10) ^*

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

On January 23, 2018, Technopolis announced it has amended its accounting policy regarding deferred taxes in the fourth quarter of 2017. The deferred taxes presented in this report related to comparison period 2016, are EUR 5.5 million lower than presented in the Stock Exchange release dated January 23, 2018. The change is due to detailed calculations prepared in connection with the 2017 financial statements.

^* Rights issue in the comparison period.

Key Indicators

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.

Key Indicators for the past five years are presented in the Financial Statements for 2017.


Board of directors’ proposal for dividend distribution and equity repayment

At the end of the period, the parent company’s distributable funds totaled EUR 38.9 million and the funds in the parent company’s invested unrestricted equity fund amounted to EUR 339.6 million.

The Board proposes a dividend payment of EUR 0.09 (0.12) per share to be paid from the distributable funds and an equity repayment of EUR 0.08 (-) per share to be paid from the invested unrestricted equity fund. The dividend payment and equity repayment total EUR 0.17 (0.12) per share, approximately EUR 26.7 (18.8) million euros.

The proposed dividend payment and equity repayment, in total, represent approximately 44.0% (35.8%) of EPRA Earnings.


Near-Term Outlook

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

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

“The year 2017 was a strong one for Technopolis. We had robust growth throughout the year. A macroeconomic tail-wind gave the economy and the office market a welcome boost. Finland, in particular, showed a robust economic performance. This was visible in rising occupancy rates supported by higher demand and a decline in market yields. All of this had a positive impact on our financial performance.

Group net sales in 2017 increased by 4.4% from the previous year. Like-for-like growth was 6.4%. This was achieved in an environment where rental growth has been fairly modest, especially in Finland. 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 the year reached 96.1% (93.4%), with the greatest improvement in Oulu, Finland.At the year-end we had five organic growth projects in progress. These investments totaled nearly EUR 140 million. There are also a number of additional projects under design. These forthcoming campus extensions will enable us continue to provide customers with the flexibility they expect from the Technopolis concept.

Services are playing an increasingly important role in our business, and they continue to grow steadily, with service income reaching EUR 25.4 million (+13.2% y-o-y growth) in 2017 and EBITDA of EUR 2.7 million (+25.7% y-o-y growth). Services now represent 14.1% of the Group’s net sales, reaching 15.3% in the last quarter. Our best-performing units show service penetration figures above 20%. The EBITDA margin for services was 10.5% (9.4%).

Group EBITDA in 2017 increased by 4.3% from the previous year and reached EUR 97.1 (93.1) million, a margin of 54.0%. EBITDA grew in line with sales, and the margin was unchanged compared to 2016. Like-for-like EBITDA growth was 4.9% in 2017. Yield compression was the primary driver behind positive fair value changes, which brought EUR 28.3 (0.2) million in 2017 and were a significant contributor on the operating profit level.

One of the highlights of the year was the finalization of our strategy review process in summer 2017. One of the cornerstones of the revised strategy is the expansion of our UMA Coworking Network. A new flagship UMA coworking space in Stockholm, Sweden is set to open in April 2018. UMAs will provide Technopolis with a less capital intensive way to expand its operations with less risk, especially in low-yielding markets. Our intention is to expand the UMA footprint in the other major cities and hubs in the Nordic-Baltic Sea area.

On many fronts 2017 was a turning point for Technopolis. We launched our revised strategy and began executing it immediately and with passion. The entire company feels energized, which lays a strong foundation for the coming year.”


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 February 15, 2018 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.