TECHNOPOLIS PLC STOCK EXCHANGE RELEASE 20.7.2006 at 11.30 a.m.
TECHNOPOLIS GROUP INTERIM REPORT 1.1. - 30.6.2006
The main figures for January-June 2006 compared with the
corresponding period in 2005:
- The Group’s net sales rose to EUR 18.7 million, an increase of 22.3
- The Group’s EBITDA (Earnings before interest, taxes, depreciation
and amortization) rose to EUR 10.0 million, an increase of 13.6 %.
- Profit before taxes was EUR 18.1 million, an increase of 133 %.
- The effect on profit of the change in the fair value of investment
property was EUR 10.5 million (EUR 1.1 million), and was mainly due
to a reduction in the return requirements of the market.
The Group’s net sales for the review period were EUR 18.7 million
(EUR 15.3 million in January-June 2005), representing growth of 22.3
%. EBITDA (Earnings before interest, taxes, depreciation and
amortization) for the review period was EUR 10.0 million (EUR 8.8
million), an increase of 13.6 %. Operating profit for the review
period was EUR 20.3 million (EUR 9.7 million). Profit before taxes
for the review period was EUR 18.1 million (EUR 7.8 million).
The balance sheet total was EUR 368.9 million (EUR 232.2 million), an
increase of 58.9 %. The company's equity-to-assets ratio at the end
of the review period was 39.4 % (50.1 %).
The fair value of the Group’s investment property at the end of the
review period was EUR 326.8 million (EUR 218.3 million). The change
in the fair value of investment property was due to the effect of the
fair value of property bought and completed, a reduction in the
return requirements of the market, changes in future returns and
modernization costs, the revaluation of property owned throughout the
review period, and increases in acquisition cost recognized in
separate companies during the review period. The effect on profit of
the change in the fair value of investment property was EUR 10.5
million (EUR 1.1 million).
The Group's total rentable surface area was 287,913 floor square
meters at the end of the review period (205,359 floor square meters
at June 30, 2005). The Group's average financial occupancy ratio at
the end of the period was 94.1 % (95.2 %). The financial occupancy
ratio describes the rental revenue from the properties as a
percentage of the combined total of the rent for the leased space and
the estimated market rent for the vacant space. The Group’s leases at
the end of the review period amounted to EUR 104.7 million (EUR 59.3
Investments and development projects
The two stages of the Technopolis Oulu City Center to be completed
this August comprise 12,509 floor square meters. The cost estimate is
approx. EUR 22.5 million, which includes the investment costs of the
building’s approx. 120 parking spaces for public parking to be owned
The fourth stage of the Helsinki-Vantaa technology center to be
completed in September is 2,789 floor square meters in size, and the
investment will amount to about EUR 5.5 million.
The marketing of the Ruoholahti technology center was commenced in
February. An area containing the building rights to 24,900 square
meters has been reserved for Technopolis, and the reservation is
valid until August 31, 2006. The zoning plan for the area was
approved and became legally valid in 2005.
In a transaction completed in May, Innopoli Ltd purchased from
Kapiteeli Plc a 2.2 hectare plot it had rented in the City of Espoo.
The transaction price was EUR 5.4 million. Innopoli Ltd had built a
technology center of 26,200 floor square meters on the purchased plot
Technopolis Plc agreed in June on the acquisition of a majority
holding in Technopolis JSP Ltd (previously Jyväskylä Science Park)
from the City of Jyväskylä and from those of the company's minority
shareholders that had accepted the offer made by Technopolis. The
transaction price paid for the Technopolis JSP shares was EUR 16.9
million. Half of the price was paid in cash, and half in Technopolis
Plc shares. Technopolis owns 92.82 % of Technopolis JSP Ltd shares.
Jyväskylä Science Park hosts 120 companies that employ 1,800 persons.
The net sales of the Technopolis JSP companies, comprising
Technopolis JSP Ltd and its subsidiary, Technopolis JSP Facilities
Oy, totaled EUR 12.4 million in 2005, and the profit before taxes
(Finnish Accounting Standards) was EUR 1.0 million. The total surface
area of the premises leased and managed by the company is 45,521
floor square meters.
Related to the acquisition of a majority holding in Technopolis JSP
Ltd, the latter transferred its non-profit seeking center of
excellence operations, through a contract of sale of business signed
on June 22, 2006, to Jyväskylä Innovation Oy, owned 24 % by
Technopolis Plc and 76 % by the City of Jyväskylä, and its non-profit
seeking company incubator and other business development operations
to Technopolis Ventures JSP Ltd, fully owned by Technopolis Ventures
Negotiations regarding cooperation with Tehnopol, a Tallinn-based
technology center organization, have ended. Technopolis is continuing
to determine the possibilities of establishing technology centers in
line with its concept elsewhere in the Baltic countries.
Technopolis has negotiated with the City of St. Petersburg and the
SEZ bureau of the Russian Federation regarding the Neudorf special
economic zone. In addition, in the first half of the year Technopolis
negotiated about several other land areas suitable for the company’s
technology center operations in St. Petersburg. The negotiations held
so far have not yet resulted in any agreements, and their final
outcomes and timetables are difficult to predict.
The Technopolis Group includes the parent company, Technopolis Plc,
which has operations in Oulu and Vantaa, and its subsidiaries
Innopoli Ltd in Espoo (100 % owned), Technopolis JSP Ltd in Jyväskylä
(92.82 %) with its subsidiary Technopolis JSP Facilities Oy (100 %
owned), Technopolis Kareltek Oy in Lappeenranta (99.8 % owned),
Medipolis Ltd in Oulu (55.7 % owned) and other subsidiaries. The
parent company also has a minority holding in the affiliated
companies Technocenter Kempele Oy (48.5 %), Iin Micropolis Ltd (25.7
%), Jyväskylä Innovation Ltd (24 %) and Lappeenranta Innovation Ltd
(20 %). The ownership in Oulu Innovation Ltd fell to 13 % following a
share issue in June.
The Group also includes Innopoli Ltd’s wholly-owned subsidiary,
Technopolis Ventures Oy, in Espoo. Technopolis Ventures Oy has a
wholly-owned subsidiary, Technopolis Ventures Kareltek Oy. Following
a transaction executed in March, Oulutech Oy became Technopolis
Ventures Oy's 70 % owned subsidiary. In June, Technopolis Ventures Oy
established a subsidiary, Technopolis Ventures JSP Ltd. Technopolis
Ventures Oy also has a 25 % holding in Otaniemi Development Ltd.
Technopolis has established two Russian companies, Technopolis
Neudorf and Technopolis St. Petersburg, in St. Petersburg.
Technopolis is the sole owner of both companies, and the companies
have been registered.
Events related to the Technopolis share
During the review period, Technopolis’s share capital was increased
on three occasions. In November and December 2005, a total of 26,133
Technopolis shares were subscribed with year 2001 options, and the
resulting increase in share capital of EUR 44,164.77 was entered in
the Trade Register at February 15, 2006. In March, a total of 660,008
Technopolis shares were subscribed with year 2001 options, and the
resulting increase in share capital of EUR 1,115,413.52 was entered
in the Trade Register at March 9, 2006.
The Technopolis Board of Directors decided on June 21, 2006, pursuant
to an authorization by the Annual General Meeting on March 24, 2006,
to increase the company’s share capital by a maximum of EUR 3,380,000
by issuing a maximum of 2,000,000 new shares of the company to
Technopolis JSP Ltd shareholders. The total number of shares issued
corresponds to a maximum of approx. 5.2 % of the Technopolis share
capital and votes after the share capital increase. A total of
1,500,177 shares were subscribed in the directed share issue, raising
the share capital to EUR 2,535,299.13. The shares carry the same
rights as the Technopolis shares already being traded, as of the
share registration date. The share capital increase was entered in
the Trade Register on July 6, 2006. Technopolis applied for the new
shares to be accepted for trading on the main list of the Helsinki
Stock Exchange, along with the company’s other shares, from July 7,
After the above-mentioned three share capital increases, Technopolis'
share capital is EUR 64,284,835.16 divided into 38,038,364 shares
each with a counter book value of EUR 1.69.
No convertible bonds were launched. The company has not acquired its
The Group's net financial expenses were EUR 2.2 million (EUR 1.9
million). The Group's balance sheet total was EUR 368.9 million (EUR
232.2 million), of which liabilities accounted for EUR 224.3 million
(EUR 116.4 million). The Group's equity to assets ratio was 39.4 %
(50.1 %). The Group's equity per share was EUR 3.81 (EUR 3.18).
The Group's long-term liabilities at the end of the review period
amounted to EUR 162.3 million (EUR 92.7 million). The average
interest rate for loans at June 30, 2006 was 3.55 % (3.36 %).
Technopolis has supplemented its funding with a EUR 60 million
domestic commercial paper program which allows the company to issue
commercial papers with a maturity of less than a year. At June 30,
2006, the issued commercial papers totaled EUR 36.9 million.
Organization and personnel
Technopolis renewed the structure of its Executive Board to promote
the near-term growth and development of its business in Finland and
the neighboring regions. The Company established an Executive Board,
an Extended Executive Board and two Development Teams, one to promote
the Russian business and the other to promote the development
services provided by the company.
The company’s Executive Board comprises the following: Pertti
Huuskonen, President and CEO, Mervi Käki, Director, Seppo Selmgren,
Director, Reijo Tauriainen, CFO, Jukka Akselin, CEO, Technopolis JSP
Ltd, and Marjut Hannelin, CEO, Technopolis Kareltek Ltd. Heikki
Kallio, Chief Development Officer, left the company in June.
The Extended Executive Board comprises the following members, in
addition to the above: Satu Barsk, Director, Martti Launonen,
Director, Marko Lind, Director, Leena Marmila, Assistant to the CEO,
Kari Mikkonen, Director, and Keith Silverang, CEO, Technopolis
Peter Coachman has been General Director of the Russian company,
Technopolis St. Petersburg, since June.
The Group employed an average of 95 (68) people during the review
period. 28 (24) persons were employed in jobs related to premises
activities, 23 (16) persons in business services and 44 (28) persons
in development services. The number of staff increased by six people
through the acquisition of Oulutech Oy into the Group, and by 14
people through the Technopolis JSP Ltd transaction.
Decisions of the Annual General Meeting
The Annual General Meeting held on March 24, 2006 confirmed the
consolidated and parent company income statements and balance sheets
for the 2005 financial year, released those responsible for the
accounts from further liability and decided on the distribution of a
dividend of EUR 0.13 per share for the financial year that ended on
December 31, 2005. The Annual General Meeting also authorized the
Board of Directors to decide on a rights offering and issue of
The Board of Directors elected by the Annual General Meeting
comprises Pertti Voutilainen, Chairman, Matti Pennanen, Vice
Chairman, and Juhani Paajanen, Timo Parmasuo and Erkki Veikkolainen.
Pertti Huuskonen is the President and CEO of Technopolis. KPMG Oy Ab,
Authorized Public Accountants, is the company’s auditor with Tapio
Raappana, APA, as the responsible auditor.
Evaluation of operational risks and uncertainty factors
The most significant risks related to Technopolis’s business
operations are mainly financial risks and customer risks.
Technopolis’s main financial risk is the interest rate risk related
to the loan portfolio. The objective of interest rate risk management
is to reduce or remove the negative impact of market interest rate
fluctuations on the company’s result, balance sheet and cash flow.
The company’s financing policy aims to diversify the interest rate
risk of loan contracts over various maturities on the basis of the
market situation prevailing at any particular time and the interest
rate prognosis created in the company. If necessary, the company
employs forward rate agreements, interest rate swaps and interest
In order to manage financial risk, Technopolis uses a wide range of
finance providers and maintains a high equity to assets level.
Technopolis uses derivative instruments only to reduce or eliminate
financial risks in the balance sheet.
The structure of Technopolis’ loan portfolio at the end of the review
period is shown by the fact that a one percentage unit rise in money
market rates would increase annual interest rate costs by EUR 0.7
Due to the interest rate risk related to credits, a policy of
interest rate diversification has been followed. At June 30, 2006,
66.1 % of the loan portfolio was bound to either the 3-12 month
Euribor rate or to the Bank of Finland's rate. 33.9 % of the loans
were fixed-interest loans of 13-60 months. The loan period, weighted
by the remaining capital of the loans, was 11.7 years. Technopolis
supplements its funding with a EUR 60.0 million domestic commercial
paper program which allows the company to issue commercial papers
with a maturity of less than a year. At June 30, 2006, the issued
commercial papers totaled EUR 36.9 million.
Customer risk management aims to minimize the negative impact of any
changes in customers’ financial position on the business and the
company’s profit. In customer risk management, emphasis is on
familiarity with the customer’s business and active monitoring of
customer information. As part of customer risk management,
Technopolis’s leases include rent collateral arrangements. Properties
are insured with full value insurance.
The Group's property portfolio is divided geographically between the
Helsinki metropolitan area, Jyväskylä, Lappeenranta and the Oulu
region. The Group’s strategic goal is that no single customer will
account for more than 20 % of the Group’s net sales. The Group has
arranged the leases of its biggest customers to end at different
times. The Group has over 800 customers that operate in many
The Group is protected against fluctuations in the business cycle by
fixed-term leases which totaled EUR 104.7 million at June 30, 2006.
Of the leases, 2 % will expire in 2006, 26 % will expire in 2007-
2009, 22 % in 2010-2012, 11 % in 2013-2015, and 39 % in 2016 or
In new building projects, Technopolis focuses on quality definition
and the manageability of the property’s entire lifecycle. In the
design phase, all the building’s maintenance and service requirements
are taken into account, with the aim of implementing environmentally
friendly solutions in terms of energy consumption, the adaptability
of office facilities, and recycling possibilities. In connection with
property purchases, Technopolis carries out the normal property and
environmental assessments before committing to the transaction.
Changes in the return requirements of the market may have a
significant effect on profit performance.
The management of the Technopolis Group estimates that in 2006 the
demand for high tech operating environments will be at a satisfactory
level, and that the occupancy ratio of the Group's leasing facilities
and the demand for the Group's services will both remain good. The
Group estimates that net sales will increase by 30-35 % and EBITDA by
24-29 % on the previous year.
As part of its strategy for growth to 2009, Technopolis has decided
to study the potential for expansion both within its present
operating locations and in other growth centers in Finland. There are
estimated to be 1-3 potential areas. Technopolis will continue its
work to launch technology center operations in line with its concept
in Russia and the Baltic countries. Technopolis seeks to grow
organically as well as through acquisitions.
The Group’s financial performance is dependent on trends in the
general operating environment, in customer business and in the
financial markets. Factors in these areas may affect the Group’s
result through changes in occupancy ratios, the use of services,
financing costs and office rent levels.
The figures are unaudited.
Oulu, July 20, 2006
Board of Directors
President and CEO
For further information, please contact:
Pertti Huuskonen, tel. +358 400 680 816 or +358 8 551 3213
A PDF version of this interim report can be found at
www.technopolis.fi. Requests for a printed version can be made to
Teija Koskela, tel. +358 8 511 3242.
Technopolis Plc has an information bulletin service, which can be
ordered on the Internet. Those ordering the service will receive the
company's information bulletins by email.
This interim report complies with the recognition and measurement
principles of the IFRS.
INCOME STATEMENT 1.1.2006- 1.1.2005- 1.1.2005-
EUR million 30.6.2006 30.6.2005 31.12.2005
Net sales 18.66 15.26 31.73
Other operating income 1) 1.39 1.50 2.42
Operating expenses -10.09 -7.99 -16.66
Revaluation of investment property 10.51 1.11 1.22
Depreciation according to plan -0.19 -0.20 -0.45
Recognition of consolidation difference 0.28
Operating profit 20.28 9.68 18.53
Financial income and expenses -2.21 -1.92 -3.42
Profit before taxes 18.07 7.75 15.11
Income taxes -4.40 -1.49 -2.28
Net profit for the year 13.67 6.26 12.83
Distribution of profit for the year
To parent company shareholders 13.26 6.11 12.68
To minority shareholders 0.41 0.15 0.15
BALANCE SHEET, ASSETS
Intangible assets 2.71 0.17 0.22
Tangible assets 22.45 5.61 8.61
Investment property 326.83 218.34 249.32
Investments 2.06 1.30 1.43
Deferred tax assets 2.37 2.59 3.66
Total non-current assets 356.42 228.02 263.25
Current assets 12.48 4.15 6.91
Total assets 368.91 232.17 270.16
BALANCE SHEET, SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital 61.75 59.73 60.59
Share issue 2.54
Premium fund 18.28 11.32 12.73
Other funds 0.01 0.02 0.02
Retained earnings 43.51 35.28 35.40
Distributable profit for review period 13.26 6.11 12.68
Parent's shareholders’ interest 139.35 112.46 121.42
Minority interest 5.21 3.32 3.39
Total shareholders’ equity 144.57 115.78 124.81
Interest-bearing liabilities 143.10 80.52 107.02
Non-interest-bearing liabilities 1.55 0.94 0.94
Deferred tax liabilities 17.70 11.24 11.62
Interest-bearing liabilities 49.06 16.61 18.15
Non-interest-bearing liabilities 12.93 7.08 7.62
Total liabilities 224.34 116.39 145.35
Total shareholders’ equity and
liabilities 368.91 232.17 270.16
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities
Operating profit 20.28 9.68 18.53
Revaluation of investment properties -10.51 -1.11 -1.22
Depreciation 0.19 0.20 0.45
Recognition of consolidation difference -0.28
Other adjustments for
non-cash transactions 0.13 0.17 0.03
Increase/decrease in working capital 0.89 1.48 -0.17
Interests received 0.02 0.03 0.07
Interests paid and fees -2.29 -2.00 -3.62
Income from other investments of non-current assets 0.01
Taxes paid -0.89 -0.71 -1.64
Net cash provided by operating activities 7.81 7.74 12.18
Cash flows from investing activities
Investments in other instruments -0.01 -0.03 -0.05
Investments in investment properties -19.31 -11.98 -24.07
Investments in tangible and
intangible assets -0.06 -0.14 -0.47
Loans issued -0.04
Repayments of loan receivables 0.02
Sales income from other investments 0.08
Disposal of subsidiaries -0.05 -0.05
Acquisition of subsidiaries -4.84 -0.50 -8.38
Net cash used in investing activities -24.13 -12.75 -33.03
Cash flows from financing activities
Increase in long-term loans 20.57
Decrease in long-term loans -5.91 -5.42 -9.77
Dividends paid -4.66 -3.54 -3.54
Paid share issue 1.12 20.18 20.21
Change in short-term loans 29.71 -5.99 -5.88
Net cash provided by financing activities 20.25 5.23 21.59
Net increase/decrease in cash assets 3.94 0.23 0.74
Cash assets at beginning of period 2.40 1.66 1.66
Cash assets at end of period 6.34 1.89 2.40
STATEMENT OF CHANGES IN EQUITY
Share Share Fund Accum- Minor- Share-
capital premium ulated ity holders’
fund retain.inter. equity
Equity Dec. 31, 2004 49.80 0.90 0.02 38.81 3.58 93.11
Share issue 10.79 10.79
Issue premium 11.83 11.83
Dividend distribution -3.54 -3.54
Net profit for the period 12.68 0.15 12.83
Other changes 0.13 -0.34 -0.21
Equity Dec. 31, 2005 60.59 12.73 0.02 48.07 3.39 124.81
Increase of share capital 1.16 1.16
Directed share issue 5.58 5.58
Dividend distribution -4.66 -4.66
Net profit for the period 13.26 0.41 13.67
Other changes -0.03 0.00 0.10 1.41 1.48
Share issue 2) 2.54 2.54
June 30, 2006 64.28 18.28 0.01 56.77 5.21 144.57
KEY INDICATORS 1.1.2006- 1.1.2005- 1.1.2005-
30.6.2006 30.6.2005 31.12.2005
Change in net sales, % 22.3 7.1 10.0
Operating profit/net sales, % 108.7 63.4 58.4
Equity to assets ratio, % 39.4 50.1 46.4
Employees in Group companies 95 68 74
Gross investments in non-current
assets in balance sheet, EUR 1 000 24,210 12,693 35,262
Net rental income of
property portfolio, % 3) 7.9 8.4 8.6
Financial occupancy ratio, % 94.1 95.2 95.7
Earnings/share, EUR 4)
Undiluted, EUR 0.36 0.20 0.38
Diluted, EUR 0.36 0.19 0.38
Average (issue-adjusted) no.
Undiluted 36,485,162 31,265,963 33,358,468
Diluted 36,617,079 31,421,955 33,526,874
Pledges and guarantees on own debt
Mortgages 191.5 136.1 147.4
Land lease liabilities 0.6 0.5 0.5
Pledged investment properties 9.4 8.8 8.5
Nominal values of interest rate swaps 8.0 9.2 9.2
Fair values of interest rate swaps -0.2 -0.4 -0.2
Liability for return of VAT, which is realized if properties are sold
or their intended use is changed in the situations referred to in
section 33 of the VAT Act. 13.5 16.2 13.4
Project liabilities 2.0 0.1 2.0
Collateral given on behalf of
Guarantee 0.5 0.5 0.5
Leasing liabilities 0.4
1) Other operating income comprises operating subsidies received for
development services, for which the same amount of development
service expenses have been recorded as operating expenses.
2) A share issue not registered in the share capital on the review
date. Registered in the share capital on July 6, 2006.
3) The comparison figure at the 2005 balance sheet date does not take
into account the effect of Kareltek and the Kemira Research Centre
property, and the 2006 figure does not take into account the effect
of Technopolis JSP Oy.
4) The comparison figure at the 2005 balance sheet date includes the
effect of the recognition of consolidation difference arising in
connection with acquisition of the stock of Kareltek.
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