TECHNOPOLIS PLC STOCK EXCHANGE RELEASE 15.7.2005 at 10.30 a.m.
TECHNOPOLIS GROUP INTERIM REPORT, January 1 - June 30, 2005
Highlights of January-June 2005 compared with the corresponding
period in 2004:
- Net sales EUR 15.3 million, up by 7.1 %
- Gross margin EUR 8.7 million, up by 10.5 %
- Net profit EUR 3.1 million, a decline of 17.4 %
The comparable net profit increased to EUR 3.1 million from the
previous year’s EUR 2.7 million (increase of 11.7 %), since the
income item from the consolidation difference improved the net
profit of the comparison period in 2004 by EUR 0.97 million.
The profit of EUR 4.1 million for January-June 2005 was burdened by
nonrecurring share issue expenses of EUR 0.5 million.
The equity-to-assets ratio increased to 46.0 % (38.2 %) as a result
of the share issue implemented in May.
Technopolis' net sales for the period totaled EUR 15.3 million (EUR
14.2 million in 1-6/2004). Operating profit for the period was EUR
6.4 million (EUR 6.7 million including an income item of EUR 0.97
million from the consolidation difference), a decline of 4.3 %.
Profit before extraordinary items for the period was EUR 4.1 million
(EUR 4.7 million including an income item of EUR 0.97 million from
the consolidation difference), a decline of 13.7 %.
Rent income accounted for EUR 12.7 million (EUR 12.0 million) of net
sales, while service income accounted for EUR 2.6 million (EUR 2.2
million). Depreciation according to plan totaled EUR 2.4 million
(EUR 2.2 million). The balance sheet total was EUR 199.0 million
(EUR 179.4 million), up by 10.9 %.
At June 30, 2005, the Group's property for leasing comprised 45 (41)
properties with a total rentable area of 205,359 floor square meters
(192,000 floor square meters at June 30, 2004). The Group's average
occupancy ratio at June 30, 2005 was 97.2 % (97.2 %).
Investments and business development projects
In January, Technopolis decided to commence the implementation of
the second stage of Technopolis Kontinkangas in close proximity to
the Oulu city center. The building’s size is 2,436 floor square
meters and the cost estimate is EUR 3.8 million. The building will
be brought into use in November 2005. The entire building has been
leased to Hantro Products Oy and Vega Technologies Oy.
In April, the Board of Directors decided to commence the
implementation of the first stage of the Oulu city center
Technopolis. The size of the stage is 6,995 floor square meters and
the cost estimate is EUR 14.5 million, which includes the investment
costs for around 120 parking spaces for public parking to be owned
by Technopolis. The project is expected to be completed in May 2006.
According to a previously signed binding preliminary agreement, the
Finnish Broadcasting Company YLE has leased 1,900 square meters of
premises in the building.
The third stage of Technopolis Helsinki-Vantaa, 3,383 floor square
meters, was brought into use in February. The investment was EUR 6.2
million. The fourth stage of Technopolis Helsinki-Vantaa, 2,792
floor square meters, is in the planning and marketing phase.
Implementation of the fourth stage is expected to commence at the
end of 2005.
By a decision of the Real Estate Committee of the City of Helsinki,
an area containing the building rights to 24,900 square meters has
been reserved for Technopolis until the end of 2005 for the planning
of the technology center. The zoning plan for the area will be
processed by the Helsinki City Board and the Helsinki City Council
during the summer.
Since February of last year, Technopolis has been making
preparations with the City of Espoo to build a new technology center
in the Suurpelto area of Espoo. The land reservation is valid until
June 30, 2006. In addition to high tech companies, the center will
also house units of educational institutes. The zoning of the area
is expected to be completed in the early fall of this year.
In December 2004, Technopolis signed a co-operation agreement with
Tehnopol, a technology center organization in Tallinn, Estonia. The
two parties have started to work together on the technology center
concept, the acquisition of customer companies and joint
investments. As a result of the agreement, the Tallinn technology
center will be developed into an operating environment for Finnish
and international companies.
In April 2005, Technopolis began to investigate the potential for
commencing technology center activities in St. Petersburg, Russia.
The investigations have begun well and have been accelerated in
cooperation with the Technology Center Kareltek Oy from
The Group's long-term liabilities at the end of the review period
amounted to EUR 84.5 million (EUR 86.8 million at June 30, 2004).
The average interest rate for loans at June 30, 2005 was 3.36 %
(3.56 %). Due to the interest rate risk related to the loans, a
policy of interest rate diversification has been followed. At June
30, 2005, 46.4 % of the loan portfolio was bound to either the 3-12
month Euribor rate or to the Bank of Finland's rate. 53.6 % of the
loans were fixed-interest loans of 13-60 months. The average capital-
weighted outstanding loan period was 9.4 years.
Technopolis supplements its finance with a EUR 30 million domestic
commercial paper program by which the company issues commercial
papers with a maturity of less than a year. At June 30, 2005, the
issued commercial papers totaled EUR 7.0 million.
At June 30, 2005, the Group’s equity-to-assets ratio was 46.0 %
Adoption of International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS)
The Technopolis Group will publish the first financial statements
that comply with IAS and IFRS for the 2005 financial year. The first
interim report to comply with the said standards will be the report
for January 1 - March 31, 2006.
The adoption of IFRS will have the most significant impact on the
book value of the Group’s property portfolio, which will rise
materially when the fair value model of IAS 40 Investment Property
is applied instead of the acquisition cost model applied in earlier
financial statements. According to preliminary IFRS calculations,
the consolidated balance sheet total will also be increased by the
deferred taxes determined in accordance with IAS 12. According to
preliminary calculations, other IFRS are not expected to have a
material impact on the overall value of the consolidated balance
According to preliminary IFRS calculations, the shareholders’ equity
in the consolidated balance sheet will increase by around one-third
compared with the beginning and ending equity for 2004 calculated
according to the Finnish Accounting Act. More accurate figures will
become available during 2005 in the later stages of the transition
According to preliminary IFRS calculations, the major impacts on
income will apply to the income statement items of depreciation,
write-down and income taxes. Income taxes will be affected by an
increase in deferred taxes as a result of IAS 12.
In measuring the fair value of investment property, the consolidated
financial statements will no longer include depreciation of the
investment property. In 2004, the planned depreciation of buildings
amounted to EUR 4.2 million in the consolidated financial statements
compiled in accordance with the Finnish Accounting Act. On the other
hand, as a result of IAS 40, changes in the fair value of investment
property are recognized through profit or loss in the income
statement, which is likely to increase the fluctuation of Group
profits compared with the accounting practice followed earlier.
Changes in the fair value of investment property do not affect the
Group’s cash flow.
The Group has decided to adopt the fair value model for its
investment property under IAS. In the opening IFRS balance sheet,
the fair value of the Group’s investment property at January 1, 2004
was EUR 192 million, which exceeded the book value of EUR 162
million recorded at the same date for this property by EUR 30
million. The fair value of the Group’s investment property at
December 31, 2004 was EUR 203 million, which exceeded the book value
of EUR 174 million recorded at the same date for this property by
EUR 29 million.
In the consolidated financial statements for 2004 compiled in
accordance with the Finnish Accounting Act, the result was improved
by a decrease in consolidation difference of EUR 2.0 million. Of
this consolidation difference, EUR 1.8 million is recognized under
IFRS 1 in the opening IFRS balance sheet at January 1, 2004, which
reduces the operating profit for 2004 calculated under IFRS,
compared with the Group’s operating profit calculated under the
Finnish Accounting Act.
Increases in share capital
During the review period, Technopolis’ share capital was increased
on three occasions. In December 2004, 15,999 Technopolis shares were
subscribed with 2001 A/B options, and the resulting increase in
share capital of EUR 27,038.31 was entered in the Trade Register at
January 31, 2005. In February, 455,205 shares were subscribed with
2001 A/B/C options, and the resulting increase in share capital of
EUR 769,296.45 was entered in the Trade Register at March 9, 2005.
The company’s Board of Directors decided at April 21 on the
marketing of a directed share issue, to start at April 26, 2005 and
end at May 6, 2005. A total of 5,400,000 new shares were offered for
subscription. At the same time, the City of Oulu offered for sale a
maximum of 2,500,000 shares. In the share issue and sale, 6,700,000
shares were offered to international and domestic investors in an
institutional issue and sale, while 1,200,000 shares were offered to
Finnish retail investors in a retail issue and sale.
The whole share issue and sale was over-subscribed approximately 1.6
times and the institutional issue and sale approximately 1.8 times.
The company’s Board of Directors decided on an allocation of shares
to investors by which 5,099,600 shares were allocated to
international investors and 2,546,000 shares to domestic investors
and on a share subscription and sales price of EUR 3.69 per share. A
total of 5,400,000 new shares were subscribed in the directed share
issue, as a result of which a share capital increase of EUR
9,126,000 was entered in the Trade Register at May 11, 2005.
After the above-mentioned three share capital increases,
Technopolis' share capital at June 30, 2005 is EUR 59,725,757.25
divided into 35,340,685 shares each with a counter book value of EUR
International and nominee-registered shareholders held 37.5 % of the
company’s shares on June 30, 2005 (1.7 % on June 30, 2004). The
company’s market capitalization was EUR 143.1 million on June 30,
2005 (EUR 66.9 million on June 30, 2004). The company’s market
capitalization has risen by 113.9 % in one year due, among others,
to the share issue implemented in May.
Distribution of stock options
In June 2005 the Board of Directors decided to distribute a total of
336,000 2005A stock options to key personnel. The 436,000 2005B
stock options and the 436,000 2005C stock options will be granted
for distribution later to the Group’s current and future key
Decisions of the Annual General Meeting
The Annual General Meeting held on March 22, 2005 adopted the
consolidated and parent company income statements and balance sheets
for the 2004 financial year, discharged those responsible for the
accounts from further liability and decided to distribute a dividend
of EUR 0.12 per share for the financial year that ended at December
31, 2004. The Annual General Meeting also decided to amend the
Articles of Association with respect to the share capital, grant the
Board of Directors an authorization concerning a rights offering and
convertible bonds issue, and issue stock options to key personnel.
The Board of Directors elected by the Annual General Meeting
includes Pertti Voutilainen, Chairman, and Matti Pennanen, Vice
Chairman. The other members of the Board are Juhani Paajanen, Timo
Parmasuo and Erkki Veikkolainen. The firm of Ernst & Young Oy,
Authorized Public Accountants, will act as the company’s auditor
with Rauno Sipilä, APA, as the principally responsible auditor.
Administration, organization and personnel
The Group employed an average of 68 (96) people. 24 (24) persons
were employed in jobs related to premises activities, 16 (22)
persons in business services and 28 (50) persons in project
services. The number of people working in project services decreased
as a result of the establishment of a new company that started
operating at January 1, 2005, in which connection 14 persons were
transferred from the employment of the Group to Oulu Innovation Ltd.
In March, Medipolis Ltd. sold 75 % of its holding in Medipolis GMP
Ltd., and as a result of the transaction, the number of employees in
the Group fell by 15.
The Technopolis Group includes Technopolis Plc (the parent company),
which has operations in Oulu and Vantaa, and its subsidiaries
Medipolis Ltd. in Oulu (55.7 % owned by Technopolis), Innopoli Ltd.
in Espoo (whose ownership rose from 97.5 % to 100 % in February),
Kiinteistö Oy Oulun Teknologiatalot in Oulu (100 %) and other
smaller subsidiaries. The Group also includes Technopolis Ventures
Ltd. in Espoo (fully owned by Innopoli Ltd). The parent company also
has a minority holding in the affiliated companies Technocenter
Kempele Oy (48.5 %), Iin Micropolis Ltd. (25.7 %), Oulutech Ltd. (30
%) and Oulu Innovation Ltd. (24 %). Medipolis Ltd. surrendered its
75 % holding in Medipolis GMP Ltd. in a transaction concluded in
The management of the Technopolis Group estimates that in 2005 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 and gross margin
will increase by 4-7 % on the previous year.
The Group’s property portfolio is divided geographically between the
Oulu region and the Helsinki metropolitan area. The Group’s
strategic goal is that no single customer will account for more than
20 % of net sales. The Group has arranged the leases of its biggest
customers to end at different times. The Group has altogether about
600 customers operating in many different sectors.
The company’s business is protected against business cycle
fluctuations by the Group’s fixed-term lease portfolio which totaled
EUR 59.3 million at June 30, 2005. Of the leases, 3 % are valid
until further notice or will expire in 2005, 45 % will expire in
2006-2008, 19 % will expire in 2009-2011, 19 % will expire in 2012-
2014, and 14 % will expire in 2015 or later.
As part of its growth strategy until 2008, 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. In addition, the company
will examine the conditions for launching its business concept in
the Baltic region and Russia. Technopolis seeks to grow organically
as well as through acquisitions.
The company’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 company’s
result through changes in occupancy ratios, the use of services,
financing costs and office rent levels.
The figures in this interim report are unaudited.
Oulu, July 15, 2005
Board of Directors
President and CEO
For further information, please contact:
Pertti Huuskonen, tel. +358 8 551 3213 or +358 400 680 816
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 8 551 3242.
Technopolis 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.
CONSOLIDATED INCOME STATEMENT 1.1.2005- 1.1.2004- 1.1.2004-
30.6.2005 30.6.2004 31.12.2004
EUR mill. EUR mill. EUR mill.
Net sales 15.26 14.25 28.84
Other operating income 1) 1.50 2.56 6.02
Depreciation and write-downs 2) -2.37 -2.22 -4.83
Decrease in consolidation difference 0.97 1.99
Operating expenses -7.99 -8.88 -18.93
Operating profit 6.40 6.69 13.09
Financial income and expenses -2.35 -2.00 -3.74
Profit before extraordinary items 4.05 4.69 9.35
Profit before appropriations
and taxes 4.05 4.69 9.35
Net profit for the period 3.06 3.71 7.64
CONSOLIDATED BALANCE SHEET
Intangible assets 0.65 0.73 0.62
Tangible assets 192.83 173.90 183.00
Holdings in Group companies
and affiliated companies 1.06 0.91 1.01
Other shareholdings 0.21 0.21 0.21
Total short-term receivables 2.30 2.56 3.26
Cash and bank 1.90 1.13 1.66
Total assets 198.95 179.44 189.76
Share capital 59.73 31.13 49.80
Other shareholders’ equity 27.17 31.54 16.84
Minority interests 4.16 4.62 4.53
Consolidation difference 1.02
Long-term liabilities 84.51 86.77 89.70
Short-term liabilities 23.39 24.37 28.89
Total liabilities 198.95 179.44 189.76
STATEMENT OF CASH FLOWS
Net cash provided by operating activities
Operating profit 6.40 6.69 13.09
Depreciation and decrease in
consolidation difference 2.37 1.25 2.84
Other adjustments to operating profit -0.15 -0.03 0.01
Change in working capital 1.50 1.70 1.59
Interest received 0.03 0.02 0.04
Interest paid and fees -2.43 -1.98 -4.00
Income from other investments of
non-current assets 0.01 0.11 0.01
Taxes paid -0.71 -0.62 -1.72
Net cash provided by operating
activities 7.03 6.93 11.86
Net cash used in investing activities
Investments in other securities -0.03 -0.03 -0.03
Investments in tangible and
intangible assets -11.87 -3.48 -7.09
Loans issued -0.07
Disposal of subsidiaries -0.05
Acquisition of subsidiaries -0.50 -7.94
Net cash used in investing activities-12.53 -3.50 -15.06
Net cash provided by financing activities
Increase in long-term loans 10.00 17.50
Decrease in long-term loans -5.42 -5.39 -9.66
Dividends paid -3.54 -4.16 -4.16
Paid share issue 20.72 6.54 6.54
Change in short-term loans -6.00 -10.90 -6.98
Net cash provided by financing
activities 5.76 3.91 3.24
Change in cash assets 0.25 -0.48 0.04
Cash assets at beginning of period 1.66 1.62 1.62
Cash assets at end of period 1.91 1.13 1.66
Change in net sales, % 7.1 -0.8 1.3
Operating profit/net sales, % 41.9 46.9 45.4
Equity-to-assets ratio, % 46.0 38.2 37.7
Personnel in Group companies 68 96 95
Earnings/share, EUR 3) 0.10 0.14 5) 0.27
Equity/share 3) 2.46 2.39 5) 2.26
no. of shares 31,265,963 26,660,127 28,075,286
Book value of property portfolio,
EUR 1,000 4) 176,636 165,298 171,923
Net investments in property portfolio,
EUR 1,000 6,969 7,897 16,963
Net investments in property portfolio,
incl. unfinished buildings and their
land areas, EUR 1,000 6,023 4,027 14,866
Net yield % of book value of property 10.5 10.4 10.4
Floor area occupancy ratio, % 97.2 97.2 97.5
Pledges and guarantees on own debt
Mortgages 136.1 127.2 135.9
Lease liabilities 0.5 0.5 0.5
Pledged rent income 0.8 0.8
Interest rate swaps in 2001 (fixed interest rate 5 years)
nominal value of underlying 4.0 4.0 4.0
Interest rate swaps in 2002 (fixed interest rate 5 years)
nominal value of underlying 4.0 4.0 4.0
Interest rate swaps in 2002 (fixed interest rate 3 years)
nominal value of underlying 4.0 4.0 4.0
Interest rate swaps in 2003 (fixed interest rate 3 years)
nominal value of underlying 1.2 1.3 1.3
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. 16.2 17.1 17.1
Rent payment liabilities 0.6 0.6
Project liabilities 0.1 6.7
Collateral given on behalf of affiliated
Guarantee 0.5 0.5 0.5
1) Other operating income comprises operating subsidies received for
project services, for which the same amount of project service
expenses have been recorded as operating expenses.
2) Depreciation and write-downs include EUR 2.3 million in planned
depreciation on buildings on June 30, 2005.
3) The indicator includes the impact of the consolidation difference
arising from the Innopoli arrangements in 2004.
4) Does not include unfinished buildings and their related land
5) Adjusted for the bonus issue on December 27, 2004.
Helsinki Stock Exchange
Main news media