technopolis 1st quarter 2016 results
TRANSCRIPT
1st Quarter 2016 ResultsMay 10, 2016
10.5.2016 2
A Steady Start to the Year
Net sales up 1.4%, EBITDA up 0.5% on a constant currency basis
Occupancy 92.5% (93.8%) due to a drop of 7.3% in Oulu
EBITDA margin 53.3% (53.9%)
Cash flow from operations/ share EUR 0.19 (0.13)
Direct result / share (EPRA) EUR 0.12 (0.12)
Service revenue grew by 14.5%, penetration at 12.6%
Loan-to-value 56.7% (59.1%)
10.5.2016 3
Unit Occupancy
91,2% 89,7%
96,2% 97,2%
91,8%95,9%
99,6% 100,0% 99,6%
81,3%
92,5%
82,4%
95,8% 96,5%
92,7%
96,4%98,5%
99,5% 99,7%
83,5%
70%
75%
80%
85%
90%
95%
100%
Q1-2015 Q1-2016
Group Q1/1692.5%
10.5.2016 4
Oulu Situation
Total rentable area in Oulu is 193,900 m2
Financial occupancy in March 2016: 82.4%
24,000 m2 in new agreements done in 2015
In Q1 2016 almost 10,000 m2 in new deals signed
Another 22,500 m2 needed to reach 95% occupancy
Another 13,200 m2 needed to reach 90% occupancy
Long-term plan is to divest 50,000 m2 in Oulu
Since 2014, we have divested 24,000 m2
Will take a couple of years to reach equilibrium
10.5.2016 5
Service Business
70,3 80,7 93 111,1 144,8 150,3 35,8
11,212,1
14,2
15,2
16,9 20,3
5,2
13,7%
13,0%
13,2%12,0%
10,4%
11,9%
12,6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
50
100
150
200
Service revenues
Rental revenues
Share of net sales
EUR MILLION
10.5.2016 6
Fair Value Changes in Q1/2016
EUR million MarketYield Related
OccupancyAssumption
Modernization Other Changes
Projects in Progress
Total
Finland 3.4 -0.6 -4.5 -0.8 0.8 -1.7
Baltic Rim 2.0 -1.0 1.9 -1.0 0.9 2.8
Scandinavia 2.5 0.0 -0.6 -2.5 0.0 -0.6
Total 7.9 -1.6 -3.2 -4.3* 1.7 0.5
* Mainly contract changes
10.5.2016 7
Financing
Q1/2016 2015 2014
Interest bearing debt, EUR million 851.6 864.8 841.9
Fixed rate, % 72.7 71.3 60.0
Average interest rate, % * 2.55 2.60 2.43
Capital weighted loan maturity, years
5.8 5.9 6.1
Interest cover ratio, % 4.6 4.3 4.8
Loan to value, % 56.7 58.8 59.7
Equity ratio, % 38.0 39.3 38.5
Cash and equivalents, EUR million 23.1 39.4 28.3* Excluding the hybrid loan
10.5.2016 8
Area Name m² EUR million
Stabilized yield, % *
Financial OCR/ Pre -OCR, %
Completion
Tallinn Löötsa 5 9,200 17.0 8.8 100 1/2016
Tampere Yliopist. 3&4 11,900 40.5 7.2 62.8 7/2016
Vilnius Delta 21,600 35.4 9.8 52.7 12/2016
Organic Growth Projects
Projects in progress total EUR 75.9 million
Projects in grey are not completed as per March 31, 2016 i.e. financial occupancy is pre-let rate.* Stabilized yield = estimated net operating income / cost
910.5.2016
New Concept: UMA
UMA workspace is Technopolis’ open office network with 15 coworking spaces mainly on Technopolis campuses.
Each UMA member has an access to Open Offices at all campuses.
Newest addition is the flagship UMA Esplanadi in Helsinki CBD
First open office outside of our campus network
100 workstations
Different working zones from open to more private
Meeting rooms with video connection
10.5.2016 10
Growth Strategy
Acquisition focus on Scandinavia
Despite the hot transaction market, there are opportunities that offer excellent strategic fit and good risk-adjusted returns
We will not stray from our investment criteria
Organic growth opportunities in Ruoholahti, Vantaa, Tallinn, Kuopio etc.
Divestitures in Finland to continue
10.5.2016 11
Guidance for 2016
Technopolis expects its net sales and EBITDA in 2016 to remain at the same level (+/- 5%) as in 2015.
Yliopistonrinne CD building under construction in Tampere
www.technopolis.fi Find us on: facebook.com/TechnopolisPlc
twitter.com/TechnopolisPlc
Thank you
Appendices: Additional Data
10.5.2016 14
Group
Q1/2016 Q1/2015 2015
Rentable space, m² * 742,950 744,600 740,400
Rent, €/m²/mo. avg. 16.80 16.90 16.99
Financial occupancy rate, % 92.5 93.8 94.6
Net rental income, EUR million 35.8 36.6 150.3
Net sales, EUR million 41.1 41.2 170.6
EBITDA, EUR million 21.9 22.2 93.0
Market yield requirement, avg., % 7.57 7.71 7.73
Fair value of investment properties, EUR million
1,447.2 1,410.9 1,426.0
* Under renovation Q1/2016: 15,250 m², Q1/2015: 2,400 m², 12/2015: 16,700 m²
10.5.2016 15
FinlandQ1/2016 Q1/2015 2015
Rentable space, m² * 530,650 542,000 526,900
Rent, €/m²/mo. avg. 17.23 17.08 17.02
Financial occupancy rate, % 90.5 92.2 92.9
Net rental income, EUR million 25.2 26.3 107.4
Net sales, EUR million 29.6 30.4 125.0
EBITDA, EUR million 15.8 16.0 69.0
Market yield requirement, avg., % 7.8 7.9 7.8
Fair value of investment properties, EUR million
994.1 958.8 984.8
* Under renovation Q1/2016: 11,800 m², 12/2015: 16 700 m²
10.5.2016 16
Baltic Rim
Q1/2016 Q1/2015 2015
Rentable space, m² 148,100 139,100 147,000
Rent, €/m²/mo. avg. 14.18 14.26 15.15
Financial occupancy rate, % 99.1 99.7 99.5
Net rental income, EUR million 6.4 6.0 25.1
Net sales, EUR million 7.0 6.3 26.8
EBITDA, EUR million 3.9 3.3 14.2
Market yield requirement, avg., % 8.6 8.9 8.7
Fair value of investment properties, EUR million
254.8 242.3 246.7
10.5.2016 17
Scandinavia
Q1/2016 Q1/2015 2015
Rentable space, m² * 64,200 63,500 66,500
Rent, €/m²/mo. avg. 20.13 22.61 21.50
Financial occupancy rate, % 95.8 96.2 97.1
Net rental income, EUR million
4.2 4.4 17.8
Net sales, EUR million 4.5 4.5 18.8
EBITDA, EUR million 2.2 2.3 9.9
Market yield requirement, avg., %
6.1 6.3 6.1
Fair value of investment properties, EUR million
198.3 209.9 194.4
* Under renovation Q1/2016: 3,440 m², 12/2015: -
10.5.2016 18
Cash Flow from OperationsImproved by 46%
Cash flow from operations / share EUR 0.19 (0.13)
The improvement was due to
Decreased working capital EUR 0.035
Decrease in paid interests and fees EUR 0.038
10.5.2016 19
Group Financial Occupancy
80%
85%
90%
95%
100%10 Yr. Avg.
94.5% Q1/1692.5%
10.5.2016 20
Leases
Lease stock, % of space Maturity in years
March 31, 2016
2015 2014
<1 21 22 17
1-3 22 20 23
3-5 14 15 12
>5 17 19 22
Open-end leases 25 24 26
Av. lease term in months 35 36 39
Lease stock, EUR million 407.7 429.7 455.9
The ten largest customers let approximately 18.7 % of rented space and accounted for 16.3% of rental income. The single largest customer accounted for 4.0% of rented space and 2.2% of rental income.
2110.5.2016
Investment Criteria
Sufficient scale
Good quality assets
Flexibility & adaptability
Location & connections
Service infrastructure potential
Customer mix potential
Competitive valuation with attractive risk-adjusted return
10.5.2016 22
2015-2020 Strategic Financial Targets
Average net sales and EBITDA growth 10% p.a.
Service penetration 15% by 2020 for like-for-like real estate
5.5% return on capital employed p.a.
Equity ratio above 35% over the cycle
10.5.2016 23
April 30, 2016 # of shares % of shares
Varma Mutual Pension Insurance Comp. 25,448,192 23.9
Ilmarinen Mutual Pension Insurance Comp. 11,089,647 10.4
City of Oulu 3,511,211 3.3
Technopolis Plc 1,947,571 1.8
Odin Finland 1,418,856 1.3
Laakkonen Mikko 1,226,184 1.2
OP-Pohjola Group 1,215,084 1.1
Odin Eiendom 1,188,660 1.1
The Finnish Cultural Foundation 1,188,042 1.1
Jyrki Hallikainen and company 895,236 0.8
10 largest shareholders, total 49,128,683 46.1
Foreign and nominee registered, total 34,967,460 32.8
Others, total 22,415,489 21.0
Total amount of shares 106,511,632 100
Shareholders