TECHNOPOLIS PLC STOCK EXCHANGE RELEASE 20.10.2006 at 10.45 a.m.
TECHNOPOLIS GROUP INTERIM REPORT, January 1 - September 30, 2006
Highlights of 1-9/2006 compared with corresponding period of 2005:
- Group’s net sales rose to EUR 30.6 million, an increase of 33.6 %.
- Group’s EBITDA (Earnings before interest, taxes, depreciation and
amortization) rose to EUR 16.2 million, an increase of 20.6 %.
- Profit before taxes was EUR 24.1 million, an increase of 91.7 %.
- Effect on profit before taxes of the change in the fair value of
investment property was EUR 11.9 million (EUR 2.0 million), which was
mainly due to a reduction in the return requirements of the market.
The Group’s net sales for the review period were EUR 30.6 million
(EUR 22.9 million in 1-9/2005), an increase of 33.6 %. EBITDA
(Earnings before interest, taxes, depreciation and amortization) for
the review period was EUR 16.2 million (EUR 13.4 million), an
increase of 20.6 %. Operating profit for the review period was EUR
27.8 million (EUR 15.2 million). Profit before taxes for the review
period was EUR 24.1 million (EUR 12.6 million).
The balance sheet total was EUR 377.1 million (EUR 235.5 million), an
increase of 60.1 %. The company's equity-to-assets ratio at the end
of the review period was 39.5 % (51.1 %).
The fair value of the Group's investment property at the end of the
review period was EUR 355.1 million (EUR 219.4 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 11.9
million (EUR 2.0 million).
The Group's total rentable surface area was 303,171 floor square
meters at the end of the review period (205,359 square meters at
September 30, 2005). The Group's average financial occupancy ratio at
the end of the period was 93.7 % (95.3 %). The financial occupancy
ratio is expected to rise above 94 % by the end of the year. 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 101.5
million (EUR 56.4 million).
Investments and development projects
The two stages of the Oulu city center Technopolis, which are almost
fully leased, comprise 12,509 floor square meters. The costs are
approx. EUR 23.4 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, which was
completed in September and is mostly leased, is about 2,789 floor
square meters in size, and the investment amounted to about EUR 5.3
By a decision of the City of Helsinki, an area containing the
building rights to a total of 27,200 floor square meters has been
reserved for Technopolis in the Ruoholahti area. If Technopolis
concludes a long-term land lease agreement for a plot containing the
building rights to 6,600 floor square meters by March 31, 2007, the
remaining reservation will continue until May 31, 2008. If
Technopolis concludes a long-term land lease agreement for a plot
containing the building rights to 9,000 floor square meters by March
31, 2008, the remaining reservation for the building rights to 11,600
floor square meters will continue until July 31, 2009.
In a transaction completed in May, Technopolis's wholly owned
subsidiary, 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 in 1991.
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 97.54 % of Technopolis JSP Ltd's shares.
Related to the acquisition of a majority holding in Technopolis JSP
Ltd, Technopolis 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, wholly owned by Technopolis Ventures
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 months of the year,
Technopolis negotiated about an ICT technology center based in the
St. Petersburg state university of electronic communications.
Events after September 30, 2006
Technopolis Plc has today signed a contract with the City of Tampere
on the purchase of a majority holding in Tampere Science Parks Ltd.
The transaction concerns 95.83 % of Tampere Science Parks Ltd's
shares. The transaction price will be 95.83 % of EUR 20.85 million,
i.e. approximately EUR 20.0 million, based on Tampere Science Parks'
net debt position at August 31, 2006. If the net debt position has
changed, the price will be adjusted correspondingly. The final
transaction price will become clear at or about October 24, 2006.
About half of the price will be paid in Technopolis shares and half
in cash. Acting under the authorization granted by the Annual General
Meeting at March 24, 2006, and in order to pay the share
consideration, the Technopolis Board of Directors decided at
September 27, 2006 to offer a maximum of 1,727,135 new Technopolis
shares to the shareholders of Tampere Science Parks.
Technopolis St. Petersburg LLC, a fully-owned subsidiary of
Technopolis Plc, signed an agreement at October 6, 2006 on the
purchase of a 4.6-hectare plot near the Pulkovo Airport in St.
Petersburg for the purpose of establishing a technology park. The
land area is located next to Pulkovskoe shosse about two kilometers
and five-ten minutes' drive from the airport. The plot will be
suitable for building a technology park of an estimated maximum
80,000 square meters. The acquisition price for the plot of land is
EUR 7.4 million. The price is estimated to be paid by the end of
November, after a zoning amendment is made to the area.
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
(97.54 % owned) with its subsidiary Technopolis JSP Facilities Oy
(100 % owned), Technopolis Kareltek Oy in Lappeenranta (100 % 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 %). Technopolis Plc has a 13 % holding in Oulu Innovation
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 LLC and Technopolis St. Petersburg LLC, 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 four 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 by 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,
The share capital was increased on August 21, 2006, in accordance
with the decision concerning the said directed share issue by EUR
122,356.00, corresponding to 72,400 new shares. The shares were
entered in the Trade Register on August 21, 2006 and were accepted
for trading on August 22, 2006.
After the above-mentioned four share capital increases, Technopolis’s
share capital is EUR 64,407,191.16, divided into 38,110,764 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 3.7 million (EUR 2.6
million). The Group's balance sheet total was EUR 377.1 million (EUR
235.5 million), of which liabilities accounted for EUR 228.8 million
(EUR 115.6 million). The Group's equity to assets ratio was 39.5 %
(51.1 %). The Group's equity per share was EUR 3.78 (EUR 3.30).
The Group's long-term liabilities at the end of the review period
amounted to EUR 175.5 million (EUR 91.1 million). The average
interest rate for loans at September 30, 2006 was 3.74 % (3.26 %).
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 September
30, 2006, the issued commercial papers totaled EUR 30 million.
Organization and personnel
The Company’s Executive Board comprises the following: Pertti
Huuskonen, President and CEO, Jukka Akselin, CEO, Technopolis JSP
Ltd, Marjut Hannelin, CEO, Technopolis Kareltek Ltd, Seppo Selmgren,
Director, Keith Silverang, Director, and Reijo Tauriainen, CFO.
The Extended Executive Board comprises the following members, in
addition to the above: Satu Barsk, Director, Marko Järvinen, Director
of Business Development, Martti Launonen, Director, Marko Lind,
Director, Leena Marmila, Assistant to the CEO, and Kari Mikkonen,
Peter Coachman has been General Director of the Russian company,
Technopolis St. Petersburg, since June. Marko Järvinen began as
Director of Business Development in Helsinki on October 1, 2006.
Heikki Kallio, Chief Development Officer, left the company in June.
The Group employed an average of 93 (69) people during the review
period. 29 (25) persons were employed in jobs related to premises
activities, 20 (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’s 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
Due to the interest rate risk related to credits, a policy of
interest rate diversification has been followed. At September 30,
2006, 70 % of the loan portfolio was bound to either the 3-12 month
Euribor rate or to the Bank of Finland’s rate. 30 % of the loans were
fixed-interest loans of 13-60 months. The loan period, weighted by
the remaining capital of the loans, was 12.3 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 September 30, 2006, the
issued commercial papers totaled EUR 30 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. No single customer accounts 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 about 800 customers that
operate in many different sectors.
The Group is protected against fluctuations in the business cycle by
fixed-term leases which totaled EUR 101.5 million at September 30,
2006. Of the leases, 1 % are in force indefinitely or will expire in
October-December 2006, 27 % will expire in 2007-2009, 22 % in 2010-
2012, 11 % in 2013-2015, and 39 % in 2016 or later.
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 31-36 % and EBITDA by
25-30 % on the previous year.
In line with its strategy for growth, Technopolis aims to operate in
top high technology cities in Finland, Russia and 1-2 other countries
by 2010. The Group aims to increase its net sales by an average of 15
% annually. Technopolis seeks to grow organically as well as through
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, October 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 or e-mail
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 30.9.2006 30.9.2005 31.12.2005
Net sales 30.58 22.89 31.73
Other operating income 1) 2.17 1.89 2.42
Operating expenses -16.54 -11.33 -16.66
Revaluation of investment property 11.92 2.04 1.22
Depreciation according to plan -0.36 -0.30 -0.45
Recognition of consolidation difference 0.28
Operating profit 27.77 15.18 18.53
Financial income and expenses -3.69 -2.62 -3.42
Profit before taxes 24.08 12.56 15.11
Income taxes -6.21 -2.23 -2.28
Net profit for the year 17.88 10.33 12.83
Distribution of profit for the year
To parent company shareholders 17.37 10.11 12.68
To minority shareholders 0.51 0.22 0.15
BALANCE SHEET, ASSETS
Intangible assets 2.64 0.16 0.22
Tangible assets 3.40 7.94 8.61
Investment property 355.11 219.37 249.32
Investments 2.06 1.35 1.43
Deferred tax assets 1.79 2.64 3.66
Total non-current assets 365.00 231.47 263.25
Current assets 12.09 4.07 6.91
Total assets 377.09 235.54 270.16
BALANCE SHEET, SHAREHOLDERS’ EQUITY AND LIABILITIES
Share capital 64.41 59.73 60.59
Premium fund 18.55 11.31 12.73
Other funds 0.03 0.02 0.02
Retained earnings 43.57 35.34 35.40
Distributable profit for review period 17.37 10.11 12.68
Parent’s shareholders’ interests 143.92 116.50 121.42
Minority interest 4.41 3.40 3.39
Total shareholders' equity 148.33 119.90 124.81
Interest-bearing liabilities 155.53 78.66 107.02
Non-interest-bearing liabilities 1.53 0.94 0.94
Deferred tax liabilities 18.47 11.48 11.62
Interest-bearing liabilities 42.03 18.65 18.15
Non-interest-bearing liabilities 11.20 5.91 7.62
Total liabilities 228.76 115.63 145.35
equity and liabilities 377.09 235.54 270.16
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities
Operating profit 27.77 15.18 18.53
Revaluation of investment properties -11.92 -2.04 -1.22
Depreciation 0.36 0.30 0.45
Recognition of consolidation difference -0.28
Other adjustments for
non-cash transactions 0.19 0.26 0.03
Increase/decrease in working capital 1.35 -0.43 -0.17
Interests received 0.03 0.04 0.07
Interests paid and fees -3.81 -2.72 -3.62
Income from other investments of
non-current assets 0.01 0.01
Taxes paid -1.35 -1.26 -1.64
Net cash provided by
operating activities 12.62 9.36 12.18
Cash flows from investing activities
Investments in other instruments -0.04 -0.05
Investments in investment properties -26.30 -14.45 -24.07
Investments in tangible and intangible assets
-0.16 -0.19 -0.47
Loans issued -0.04
Repayments of loan receivables 0.03
Sales income from other investments 0.09
Disposal of subsidiaries -0.05 -0.05
Acquisition of subsidiaries -7.53 -0.52 -8.38
Net cash used in investing activities -33.88 -15.29 -33.03
Cash flows from financing activities
Increase in long-term loans 15.00 20.57
Decrease in long-term loans -8.91 -7.28 -9.77
Dividends paid -4.66 -3.54 -3.54
Paid share issue 1.12 20.19 20.21
Change in short-term loans 22.79 -3.96 -5.88
Net cash provided by
financing activities 25.33 5.42 21.59
Net increase/decrease in cash assets 4.08 -0.51 0.74
Cash assets at beginning of period 2.40 1.66 1.66
Cash assets at end of period 6.48 1.15 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 3.82 3.82
Directed share issue 5.85 5.85
Dividend distribution -4.66 -4.66
Net profit for the period 17.37 0.50 17.88
Other changes -0.03 0.16 0.52 0.65
Sep. 30, 2006 64.41 18.55 0.03 60.94 4.41 148.33
KEY INDICATORS 1.1.2006- 1.1.2005- 1.1.2005-
30.9.2006 30.9.2005 31.12.2005
Change in net sales, % 33.6 7.4 10.0
Operating profit/net sales, % 90.8 66.3 58.4
Equity to assets ratio, % 39.5 51.1 46.4
Employees in Group companies 93 69 74
Gross investments in non-current
assets in balance sheet, EUR 1 000 33,995 15,197 35,262
Net rental income of
property portfolio, % 2) 7.9 8.4 8.6
Financial occupancy ratio, % 93.7 95.3 95.7
Earnings/share, EUR 3)
Undiluted, EUR 0.47 0.31 0.38
Diluted, EUR 0.47 0.31 0.38
Number of shares (issue-adjusted),
Undiluted 36,858,338 32,654,055 33,358,468
Diluted 36,997,000 32,790,779 33,526,874
Pledges and guarantees on own debt
Mortgages 186.5 136.1 147.4
Land lease liabilities 0.6 0.5 0.5
Pledged investment properties 9.3 8.6 8.5
Nominal values of interest rate swaps 8.0 9.2 9.2
Fair values of interest rate swaps -0.1 -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. 17.8 16.2 13.4
Project liabilities 2.1 2.0
Collateral given on behalf of
Guarantee 0.5 0.5 0.5
Leasing liabilities 0.3
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) 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 properties acquired and taken into use during the year.
3) 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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