2011-01-28 10:15:00 CET
2011-01-28 10:15:05 CET
REGULATED INFORMATION
Technopolis - Financial Statement Release
Technopolis Plc: Technopolis Group Financial Statements Release for 2010
TECHNOPOLIS PLC FINANCIAL STATEMENTS RELEASE January 28, 2011 at 11:15
Technopolis Plc: Technopolis Group Financial Statements Release for 2010
Highlights of 2010 compared to 2009:
- Net sales rose to EUR 81.2 million (EUR 76.4 million)
- EBITDA rose to EUR 41.4 million (EUR 40.0 million)
- Operating profit rose to EUR 43.0 million (EUR 2.3 million) including a
change of EUR 2.7 million (EUR - 37.1 million) in the fair value of investment
properties
- Profit before taxes totaled EUR 33.6 million (EUR -9.4 million)
- The financial occupancy rate was 94.4% (94.4%)
- The Group's equity ratio was 37.4% (37.3%)
- Earnings per share (undiluted) were EUR 0.38 (EUR -0.13) and diluted EUR 0.38
(EUR -0.13)
- The Board of Directors proposes a dividend of EUR 0.17 per share (EUR 0.15
per share)
Keith Silverang, CEO:
In 2010, the business environment recovered which could be seen in the
company's strengthening financial performance in the second half of the year.
Our investments in customer service, efficiency and scalability generated
profitable growth during the year and laid a good foundation for continued
growth in 2011.
In the second half of the year, our occupancies rose 1.6 % and the to 94.4%
(94.4%) at the end of the year. We sought profitable growth through both green
field investments and acquisitions. During the year, approximately 60,000
square meters of office space was under construction in the Helsinki
Metropolitan Area, Kuopio and Tampere in Finland. Technopolis Yliopistonrinne 1
in Tampere and Technopolis Viestikatu in Kuopio were completed.
Technopolis Pulkovo in St. Petersburg has opened and will be commissioned
gradually. The occupancy rate at the year end was 65%.
The establishment of Technopolis Ülemiste in Tallinn was completed on October
7, 2010, and the operations have started smoothly. The financial occupancy rate
in Estonia was 93.5% at the end of the review period, and the operations were
profitable.
After the year end in January, the company launched the construction of Innova
2 in Jyväskylä, with an area of 9,200 m2 and total investment of EUR 19.8
million. Today, the Board of Directors approved the launch of phase 2 of
Yliopistonrinne in downtown Tampere. The investment including a parking
facility will be approximately EUR 22.5 million and the building will have
approximately 7,900 m2 of office space.
In 2010, we completed essential internal development programs aimed at creating
a platform which can be copied and pasted for the Group's international growth.
We are actively seeking new targets for investment.
Business Environment in Finland, St. Petersburg and Tallinn
The Finnish economy was in recovery throughout 2010, with the exception of the
first quarter of the year. Forecasts for the 2010 economic growth vary between
2.1% and 3.7%. By the end of October, exports had increased by 16% compared to
the corresponding period in the previous year (Catella December 31, 2010).
Sampo Bank estimates that total production in Finland has grown by 3.3% in 2010
and will grow 2.8% in the current year (Sampo Bank, Suhdanteet ja
rahoitusmarkkinat Q4, December 14, 2010).
The upward turn in the economy has halted the decline in the office rental
market, which can be seen in the launch of as many as fifteen new office
building projects in the Helsinki Metropolitan Area, with 100,000 square meters
of office space under construction (Catella December 31, 2010). The situation
in domestic growth centers regarding leased office space varies by city. The
most favorable outlook in the leasing market is in the office space market in
Jyväskylä and the retail space market in Oulu (Pohjola, Kiinteistösijoitus
January 13, 2011).
In 2010, the vacancy rate in the St. Petersburg office market declined to the
level of approximately 19.7% (Jones Lang LaSalle, St. Petersburg City Profile
10/2010). Supply and demand are expected to balance gradually by the end of
2012. The rents of office buildings remained stable throughout 2010. The rents
are not expected to increase significantly in 2011. (Jones Lang LaSalle, St.
Petersburg, Office market, Q3/2010.)
The yield requirements of high-quality properties with high occupancy rates,
located in good areas and with good transportation connections are expected to
decline in the Pulkovo area from the current level of 12.0%-12.5% to
10.0%-10.5% by the beginning of 2012 (Jones Lang LaSalle Q4-2010).
The Estonian economy is a positive exception among the other Baltic countries,
and after the country joined the euro, the interest of foreign investors in the
Estonian market increased. According to the reliability indicator on the
Tallinn real estate market, the situation has remained favorable but the
expectations in the market vary. Nearly half of the companies in the industry
believe that within the next three months they will be able to increase sales
and, at the same time, only one in eight companies are forecasting a decline in
demand. The average vacancy rate in terms of class A offices decreased and the
rent level slightly increased in 2010. There is in particular demand for office
space of under one hundred square meters (Colliers, December 2010).
Operations
The Technopolis Group has three operating segments based on geographic units:
Finland, Russia and Estonia. The segmentation presented is based on the Group's
existing internal reporting procedures and the organization of the Group's
operations.
During the second half of the year, demand recovered in the areas in which
Technopolis operates and the Group's financial occupancy rate increased to a
favorable level of 94.4% at the end of 2010 (June 30, 2010 92.8%, September 30,
2010 93.7% and December 31, 2009 94.4%). The Group's financial occupancy rate
on December 31, 2010 also includes the lease stock of the Estonian subsidiary
for the first time.
The competitive situation in Finnish growth centers stabilized in the second
half of 2010. The company's occupancy rates are still above the average in all
domestic growth centers. In St. Petersburg, the occupancy rate of the
Technopolis Pulkovo technology center has increased, and the first tenants have
moved in.
The unit in Tallinn was launched on October 7, 2010, and its operations have
started according to plan.
The Group's financial occupancy rates, December 31, 2010:
Financial Occupancy Rate,% Q4-2010 Q4-2009
--------------------------------------------
Group 94.4% 94.4%
--------------------------------------------
Finland 94.5% 94.4%
--------------------------------------------
Oulu 91.7% 93.5%
HMA 98.0% 95.7%
Jyväskylä 94.6% 91.0%
Kuopio 96.3% 96.6%
Lappeenranta 94.4% 93.4%
Tampere 96.1% 96.8%
Estonia 93.5% --
--------------------------------------------
The commissioning of Technopolis Pulkovo (St. Petersburg) will be carried out
in phases during the first half of 2011, after which the property will begin to
influence the Group's financial occupancy rate.
The Group's net sales for the period under review were EUR 81.2 million (EUR
76.4 million in 2009), showing an increase of 6.3%. Net sales include EUR 2.0
million of non-recurring items. Rental revenues accounted for 85.8% (84.9%) and
service revenues for 14.2% (15.1%) of net sales excluding non-recurring items.
Like-for-like rental growth (i.e., the rental revenue from comparable
properties) declined 1.8%, primarily due to lower than average occupancy rates
compared to the previous year. The development of rental revenue from
comparable properties has been calculated by comparing the 2010 and 2009 rental
revenue. To ensure comparability, the rental revenues from properties
commissioned or acquired during 2010 are excluded.
The Group's EBITDA was EUR 41.4 million (EUR 40.0 million), an increase of
3.6%. The EBITDA includes EUR 2.0 million of non-recurring items. The relative
decline in EBITDA was due primarily to the lower average occupancy rate
relative to the previous year, as well as investments in international
operations and internal development programs.The EBITDA margins for rental
operations exceed 55% and for service operations 10%. Service operations are a
key factor in maintaining higher occupancy than competitors' and tying
customers to Technopolis . The service concept will also be deployed in
Estonia.
The Group's operating profit totaled EUR 43.0 million (EUR 2.3 million). The
increase in operating profit is due to the change in the fair market value of
investment properties, which was EUR 2.7 million (EUR -37.1 million). The
change in the fair market value of investment properties has no impact on the
Group's net sales, EBITDA or cash flow.
The Group's net financial expenses totaled EUR 9.4 million (EUR 11.8 million).
The Group has extended the interest rate fixing period of its loans with
interest rate swaps. The Group's result before taxes totaled EUR 33.6 million
(EUR -9.4 million).
The Group's direct result was EUR 20.9 million (EUR 21.7 million), a decrease
of 3.3%. The direct result shows the company's result for the financial period,
excluding changes in the fair market value of investment properties and
financial instruments during the period, as well as any non-recurring items and
tax effects related to these items. The proportionate weakening of the direct
result is due primarily to the lower average financial occupancy rate compared
to the previous year and to investments in international operations and
internal development programs.
Total assets were EUR 827.6 million (EUR 706.1 million), an increase of 17.2%.
The Group's equity ratio at the end of the period was 37.4% (37.3%).
The fair market value of the Group's investment properties at the end of the
period was EUR 727.7 million (EUR 596.7 million) and the fair market value of
investment properties under construction was EUR 54.1 million (EUR 51.1
million). The change in the fair market value of investment properties during
the period under review had a EUR 2.7 million (in 2009, EUR -37.1 million)
impact on earnings. The change in the fair market value includes an increase in
values due to a slight decline in market yields. Uncertainties concerning the
development of the Russian market have been taken into account in the fair
market value of the property under construction in Russia.
Net market yields on investment properties and properties under construction
are calculated by taking the average of the upper and lower ranges of net
market yield, as reported by two independent appraisal agencies for each
individual region. On December 31, 2010, the average net yield for Group
properties was 7.99% (8.07 on December 31, 2009). The average ten-year
occupancy rate used in the fair value calculation was 95.7%. The Group has set
a higher target for the financial occupancy rate than this. Over the period of
2001-2010, the Group's average occupancy rate was 96.7%.
The Group's total rentable space was 527,800 square meters at the end of the
period (453,600 square meters on December 31, 2009) and 66,300 square meters
were under construction. The Group's financial occupancy rate at the end of the
year was 94.4% (94.4%). The Group's average financial occupancy rate in 2010
was 93.7% and in 2009, 94.6%. The financial occupancy rate depicts rental
revenues from the properties as a percentage of the aggregate of the rents for
occupied premises and the estimated market rent for vacant space. The lease
stock held by the Group totaled EUR 135.3 million (EUR 118.3 million) at the
end of the reporting period.
Geographically, the Group's property portfolio is diversified between the Oulu
region, the Helsinki Metropolitan Area, Jyväskylä, Kuopio, Lappeenranta,
Tampere, St. Petersburg in Russia, and Tallinn in Estonia. No single customer
accounts for more than 6.0% of the Group's net sales. The Group has a total of
approximately 1,300 customers across a wide range of sectors.
Investment properties December 31, 2010:
Fair market value EUR Net yield m2
million requirement,%
--------------------------------------------------------------------------------
Finland 658.4 8.00% 448,300
Oulu 236.4 8.40% 192,900
HMA 161.6 6.90% 74,700
Jyväskylä 70.4 8.30% 47,100
Kuopio 78.2 8.30% 53,900
Lappeenranta 29.4 8.90% 27,300
Tampere 82.4 7.50% 52,400
Russia, St. Petersburg (land 7.1
plot)
Estonia, Tallinn (share of 62.2 8.80% 70,000
ownership 51%)
--------------------------------------------------------------------------------
Group's investment properties 727.7 8.00% 518,300
total
--------------------------------------------------------------------------------
Investment properties under 54.1 several 66,300
construction*
--------------------------------------------------------------------------------
Other properties (holdings) 9,500
--------------------------------------------------------------------------------
* Investment properties under construction have been valued at fair value and
recognized based on their rate of completion in the balance sheet date.
Technopolis has been continuously analyzing potential international investment
targets in Europe for future growth. The key criteria are the growth potential
of the innovation environment, sufficient initial scale, achieving rapid
positive cash flow from operations, potential for post-acquisition growth, as
well as the suitability of the targeted properties and customer base for the
Technopolis concept.
Major Investments and Development Projects
Projects completed during 2010:
Area m2 EUR million Net yield Completed
-------------------------------------------------------------------------------
Yliopistonrinne Phase 1 (1) Tampere 12,000 32.3 6.95 5/2010
Viestikatu Phase 2 Kuopio 5,850 8.9 8.30 10/2010
-------------------------------------------------------------------------------
(1) 130 parking spaces in the building
Projects under construction on December 31, 2010:
Area m2 EUR Occupancy rate Net Due for
million Dec 31, 2010 yield completion
--------------------------------------------------------------------------------
Pulkovo Phase 1 St. 24,100 52.3 65.0 11.75 Q2/2011
(2) Petersb
.
Finn-Medi campus Tampere 12,900 29.6 90.9 7.35 11/2011
(3)
Ruoholahti 2 (4) Helsink 9,900 27.7 14.4 6.65 5/2012
i
Hermia 15 B (5) Tampere 4,850 10.8 54.0 7.40 1/2012
Helsinki-Vantaa HMA 2,700 6.0 75.0 7.00 5/2011
Phase 5, Part 2
--------------------------------------------------------------------------------
(2) Including plot. Completion indicates commissioning.
(3) 43 parking spaces in the building
(4) and (5) including parking
Phase 1 of Technopolis Pulkovo in St. Petersburg was issued a commissioning
permit by the St. Petersburg governmental building control agency in September.
A commissioning permit makes it possible to sign final official leases with the
customers. The property is not yet finished and has not been handed over by the
contractor. Technopolis Pulkovo (St. Petersburg) will be gradually brought on
line during the first half of 2011, after which the property will begin
impacting the Group's financial occupancy rate. The occupancy of Phase 1 with
pre-leases now stands at 65%. In terms of the development of the lease stock,
Pulkovo has succeeded well among the class A office properties in St.
Petersburg. By the end of the period under review, a total of EUR 47.9 million
had been committed to the operations in St. Petersburg.
Technopolis is building a campus for well-being services and life sciences in
the Finn-Medi area in Tampere. The location includes the Eye Center of the
Pirkanmaa Hospital District, a Patient Hotel for Norlandia Care Oy and a
multi-user office facility for other parties. Approximately 84% of the
facilities have been leased to the Eye Center and the Patient Hotel with
long-term leases. The occupancy rate of the campus under construction is 90.9%.
At the end of the reporting period, Technopolis had office space under
construction also in Helsinki-Vantaa and Ruoholahti in the Helsinki
Metropolitan Area and in Hermia in Tampere. The projects are expansions of
existing innovation centers.
Technopolis will divest properties that do not suit innovation center
operations, or are not part of the core business.
Planned projects:
Status Area Gross sqm Estimated launch
---------------------------------------------------------------------------
Pulkovo 2 Planning St. Petersb. 22,400 2011-2012
Technopolis Ülemiste 1 Planning Tallinn 7,500 2011
Viestikatu 2B Planning Kuopio 3,600 2011
---------------------------------------------------------------------------
Strategy
In accordance with its strategy, Technopolis aims to operate in the best
knowledge-intensive cities in Finland, Russia, Estonia and two or three other
countries by 2015. The Group aims to increase net sales by an annual average of
10%. The goal is that 25% of the net sales will be generated outside of Finland
by 2015 With growth generated through both organic expansion and acquisitions.
The Group's equity ratio target is a minimum of 35%.
Financing
Technopolis can finance all Board approved investments with existing credit
facilities,. At the end of the reporting period Technopolis' available funds
consisted of EUR 219.0 million in untapped credit facilities, and cash
amounting to EUR 4.5 million. These contained a EUR 108.0 million of
commercial paper program, a EUR 100.8 million credit line and a EUR 10.2
million revolving credit facility. Use of the available credit limit facilities
requires collateral arrangements. At the end of the reporting period, the value
of commercial paper issued by Technopolis totaled EUR 12.0 million.
Technopolis carried out a directed share issue for a limited number of Finnish
and international institutional investors after the mid-May. All 5,700,000
shares offered were subscribed for in the issue. The subscription price was EUR
3.40 per share, and the issue raised capital totaling approximately EUR 19.4
million.
There were significant financial reasons for executing the issue as its aim was
to strengthen the company's capital structure, finance investments according to
the company's investment plan, and support the company's growth.
The Group's net financial expenses totaled EUR 9.4 million (EUR 11.8 million).
The Group's interest coverage ratio was 4.9 (3.8). The interest coverage ratio
indicates the relation between EBITDA and accrual-based interest expenses.
The Group's total assets were EUR 827.6 million (EUR 706.1 million), of which
liabilities totaled EUR 520.0 million (EUR 444.2 million). The Group's equity
ratio was 37.4% (37.3%). At the end of the period, the Group's net gearing was
147.4% (146.7%). The Group's equity per share was EUR 4.69 (EUR 4.57).
At the end of the period, the Group's interest-bearing liabilities amounted to
EUR 457.9 million (EUR 388.7 million). The average interest rate on
interest-bearing liabilities was 2.42% on December 31, 2010 (2.47%). Of
interest-bearing liabilities, 67.5% (75.4%) were floating rate loans and 32.5%
(24.6%) were fixed rate loans at the end of the period. The average
capital-weighted loan period was 8.8 years (10.3 years).
Technopolis has prepared for a potential increase in interest rates by
increasing the number of interest swaps and by decreasing the 12-month market
rate dependency. A one percentage point change in market rates would cause a
EUR 2.3 million change in the interest costs per annum.
The Group's loan-to-value ratio, i.e., the ratio of interest-bearing
liabilities to the fair value of investment properties and properties under
construction, was 58.0% (59.1%).
The Group has interest-bearing liabilities from credit institutions worth EUR
457.9 million, of which EUR 185.5 million include covenants related to equity
ratio, debt service ratio or loan-to-value.
The covenant relating to debt service ratio and loan-to-value rate is included
in the EUR 41.4 million borrowing of Technopolis Ülemiste (share of ownership
51%). In terms of the aforementioned loan amount, the subsidiary's debt service
ratio must be at a minimum 1.1 and its loan-to-value rate 70% at a maximum. If
the covenants are breached, the lender may terminate the loan.
Loans amounting to EUR 144.1 million include covenants relating to the equity
ratio. A decline in the equity ratio may lead to higher interest rate margins
or premature repayment in these loans. The margins of some loans and bank
guarantees may rise as the equity ratio falls. Potential changes in the margins
take effect in accordance with the contractual provisions of each loan.
If the Group's equity ratio would be 35% and the covenant equity ratio covenant
would take effect immediately, the impact on the Group's interest rate expenses
would be EUR 0.1 million. Correspondingly, if the equity ratio would be 33% or
less, the impact on the Group's interest rate expenses would be EUR 0.4
million.
Bank guarantees in the amount of EUR 86.0 million have been given as security
for the EUR 83.7 million in loans granted by the European Investment Bank. EUR
21.0 million of these bank guarantees will expire by the end of 2013, and the
plan is to extend them. The extension of these bank guarantees may result in
increased loan guarantee margins.
During the 12-month period following the period under review, EUR 48.0 million
in existing interest-bearing loans will mature.
The financing of Technopolis Pulkovo, Phase 1, has been arranged through the
parent company's investments in shareholders' equity and with an EBRD loan of
EUR 31.6 million. At the end of the period under review, EUR 15.8 million of
the EBRD loan had been drawn down.
Organization and Personnel
The CEO of Technopolis is Keith Silverang, MBA. Mr. Silverang has dual U.S. and
Finnish citizenship. He has an undergraduate degree from Boston University and
an MBA from the Helsinki School of Economics. Mr. Reijo Tauriainen is the
company's Deputy CEO.
A decision was made in August to restructure the Technopolis organization. The
organizational changes became effective in October 2010. The Group Management
Team comprises Keith Silverang, CEO; Reijo Tauriainen, CFO; Satu Eskelinen,
Marko Järvinen, Kari Kokkonen and Jukka Rauhala. In December, Sami Juutinen,
Master of Laws, was appointed Technopolis' Director of International Operations
and member of the Group Management Team as of February 14, 2011. He joins
Technopolis from Kone where he has held various positions in past ten years,
most recently as Director of Service Business and Business Development for
Kone's Middle Eastern operations.
The Technopolis line organization consists of three units: Finland, Russia, and
Estonia. The Group organization also has matrix support functions for the
Group's property development, business services, business development and
support services.
During the financial period, the Group employed an average of 135 (152) people.
Facilities operations employed 66 (61) people, Business Services 35 (34) people
and Development Services 34 (57) people. At the end of the period under review,
the Group's personnel totaled 134 (151).
Technopolis Plc adheres to the Finnish Corporate Governance Code for listed
companies of the Securities Market Association, effective as of October 1,
2010. The Corporate Governance Statement is included as an Appendix to this
release.
Group Structure
The Technopolis Group comprises the parent company Technopolis Plc, which has
operations in Espoo, Helsinki, Jyväskylä, Kuopio, Lappeenranta, Oulu, Tampere
and Vantaa, and its subsidiaries, Innopoli Ltd and Kiinteistö Oy Innopoli II,
both wholly owned and located in Espoo, as well as other subsidiaries.
During the financial period a mutual real estate company, Finnmedi 6-7 (100%),
was established in Tampere. The mutual real estate company Hermia 1 became a
subsidiary (63,9%) after Technopolis increased its holdings in the company.
Technopolis has established two Russian companies in St. Petersburg,
Technopolis Neudorf LLC and Technopolis St. Petersburg LLC, both wholly owned.
In Estonia, Technopolis has Technopolis Baltic Holding AS (wholly owned), which
manages the holdings in Technopolis Ülemiste AS (51%).
The parent company has non-controlling interests in the affiliated companies
Technocenter Kempele Oy (48.5%), Kiinteistö Oy Bioteknia (28.5%), Iin
Micropolis Oy (25.7%), Jyväskylä Innovation Ltd (24%), Kuopio Innovation Ltd
(24%), and Lappeenranta Innovation Ltd (20%). Technopolis Plc has a 13% holding
in Oulu Innovation Ltd. The Technopolis Group owns 35% of Otaniemi Marketing
Ltd.
The Group also includes Technopolis Ventures Ltd, wholly owned by Innopoli Ltd,
in Espoo. The Group plans to merge Innopoli Ltd. and Technopolis Ventures Ltd.
into the parent company Technopolis Ltd by the end of May 2011. The mergers
will not affect the personnel.
Annual General Meeting
On March 26, 2010, the Annual General Meeting of Shareholders (AGM) of
Technopolis Plc adopted the Group and parent company's financial statements for
fiscal 2009 and released the company management and Board from liability for
the period. The AGM approved a dividend of EUR 0.15 as proposed by the Board.
The dividend payment date was April 9, 2010.
The AGM decided to amend a section in the Articles of Association that concerns
the terms of Board members by specifying that the term of a member of the Board
ends when the next Annual General Meeting following the election has concluded.
The AGM also decided to amend the section concerning the notice of the AGM so
that it should be distributed no later than three weeks before the AGM but no
later than nine days before the record date of the AGM. Furthermore, the notice
of the AGM may be alternatively delivered by publishing it on the company's
website.
The number of members on the Board of Directors was confirmed at six. Teija
Andersen, Pertti Huuskonen, Pekka Korhonen, Matti Pennanen, Timo Ritakallio and
Erkki Veikkolainen were elected members of the Board for a term that ends at
the close of the next Annual General Meeting. Pertti Huuskonen was elected the
full-time Chairman of the Board and Matti Pennanen the Vice Chairman of the
Board.
The AGM decided that, for a period beginning at the close of the 2010 AGM and
ending at the close of the following AGM, Pertti Huuskonen will be paid
remuneration in accordance with the decision made by the March 26, 2009 AGM and
the agreement made regarding the extension of the remuneration agreement with
Pertti Huuskonen. Pertti Huuskonen's monetary compensation is EUR 339,000 per
year.
The other members of the Board are paid annual remuneration as follows: EUR
30,000 to the Vice Chairman of the Board and EUR 25,000 to each member of the
Board. An additional EUR 600 per meeting is paid as compensation for attending
Board meetings or the meetings of the Board committees. Travel expenses are
reimbursed in accordance with the company's travel policy.
Fifty percent of the annual remuneration is paid in Technopolis Ltd shares to
be purchased in the market. The shares were purchased in May 2010. A Board
member may not dispose of the shares received in annual remuneration before the
expiry of his or her term.
KPMG Oy Ab was re-elected the auditor, and it announced that Tapio Raappana,
APA, will continue as the Auditor-in-Charge. A decision was made to pay the
auditor's fee in accordance with a reasonable invoice submitted by the auditor.
Other decisions by the AGM are covered in the company's previous Interim
Report, published on April 29, 2010, and a release published on March 26, 2010,
concerning the decisions of the AGM.
Board Authorizations
The agenda of the AGM of 2010 did not contain any share related authorizations.
The AGM of 2009 authorized the Board of Directors to decide on a share issue
and on granting options and other special rights entitling to shares as
referred to in Chapter 10, Section 1 of the Limited Liability Companies Act as
follows: Pursuant to this authorization, the maximum number of shares to be
issued will be 11,400,000, equaling approximately 19.88% of the company's
shares. The issuance of shares and of special rights entitling to shares may be
carried out in deviation from the shareholders' pre-emptive rights (directed
issue). The authorization supersedes the authorizations granted by the General
Meeting of November 29, 2007 and the Annual General Meeting of March 27, 2008
regarding a share issue and granting of special rights entitling to shares. The
authorization expires on March 26, 2012, and as of the situation on September
30, 2010, the maximum number of shares yet to be issued pursuant to the
authorization is 5,700,000, equaling approximately 9.0% of the company's
shares.
The AGM of 2009 decided to adopt a performance share incentive plan for key
personnel in the Technopolis Group. Based on the plan, a maximum of 390,000
shares may be given as remuneration.
The share incentive plan has been implemented, and in 2011, the company key
personnel have the opportunity to earn a maximum of 150,000 shares. If the
total of 150,000 shares are earned, the nominal dilution effect will be 0.2%.
Stock-Related Events
Technopolis carried out a directed share issue for a limited number of Finnish
and international institutional investors after mid- May 2010. The share issue
was implemented on the basis a Board authorization given at the Annual General
Meeting of March 26, 2009. All 5,700,000 shares offered were subscribed in the
share issue, which accounts for approximately 9.9% of all the Company's shares
and voting rights immediately prior to the share issue. The subscription price
was EUR 3.40 per share, and the issue gathered capital totaling approximately
EUR 19.4 million.
Trading in the shares together with the other shares in the Company has taken
place on the Official List of NASDAQ OMX Helsinki Ltd as of May 24, 2010.
On June 2, 2010, Technopolis issued 339,703 new shares pursuant to the
subscriptions of 2005A option rights. The subscription price when subscribed
pursuant to the option was EUR 3.266 per share. Trading in these shares
together with the other shares in the Company has taken place on the Official
List of NASDAQ OMX Helsinki Ltd as of June 3, 2010.
The new shares issued pursuant to the share issue and the subscriptions of
2005A option rights have been registered in the trade register and the company
shareholders' register. They entitle the holder to a dividend for fiscal 2010
and to other shareholder rights.
The number of the company's shares after subscription is 63,385,044 shares.
Share capital remained unchanged, totaling EUR 96,913,626.29, because the
subscription price of the new shares has been registered in the company's
unrestricted equity reserve. The shares are in a single series, and each share
entitles the holder to one vote at the Annual General Meeting.
Technopolis 2007A Stock Options were listed on the trading list of the OMX
Nordic Exchange on May 3, 2010. The subscription price of 2007A stock options
is EUR 7.119 per share. The subscription period begins on May 1, 2010 and ends
on April 30, 2012. The total number of 2007A stock options is 500,000. The
maximum number of new shares that can be subscribed using the options is
521,500 with a nominal dilution effect of 0.8%. The details of the 2007A stock
options were provided in a stock exchange release published on April 30, 2010.
Disclosures of Changes in Holdings
On June 6, 2010, BNP Paribas Investment Partners announced that the proportion
of Technopolis Plc's share capital and votes held by the mutual funds managed
by BNP Paribas Investment Partners exceeded one-tenth (10%) as a result of a
share transaction carried out on June 1, 2010. The proportion of Technopolis
Plc's share capital and votes indirectly controlled by BNP Paribas Investment
Partners was 6,597,296 and 10.41% respectively.
On May 26, 2010, OP-Pohjola Group Central Cooperative announced that the
proportion of Technopolis Plc's share capital and votes held by OP-Pohjola
Group and its related parties as well as OP-Pohjola Group affiliates and the
mutual funds managed by them, had exceeded one-twentieth (5%) as a result of a
share transaction carried out on May 19, 2010. The proportion of Technopolis
Plc's share capital and votes indirectly controlled by OP-Pohjola Group was
3,912,443 shares and 6.206% respectively.
On May 20, 2010, Henderson Global Investors Limited notified that its indirect
holding in Technopolis shares and votes had gone below one twentieth (5%) as a
result of a transaction completed on September 25, 2010. The indirect holding
of Henderson Global Investors Limited in Technopolis share capital and votes
was 2,800,049 and 4.88% respectively.
On May 20, 2010, the City of Oulu notified that its direct holding in
Technopolis' share capital and votes would go below one twentieth (5%) as a
result of the share issue. As of May 21, 2010, the direct holding of the City
of Oulu in Technopolis' share capital and votes was 3,062,925 and 4.86%
respectively.
Varma Mutual Pension Insurance Company notified on February 17, 2010, that its
direct holding in Technopolis' share capital and its number of votes had
exceeded one tenth (10%) as a result of a purchase of shares that was completed
on February 16, 2010. Following this transaction, the direct holding of Varma
in Technopolis' share capital and votes was 6,856,980 shares and 11.96%
respectively.
Shareholders on December 31, 2010
Registered shareholders Number of shares % of shares
-------------------------------------------------------------------------
Varma Mutual Pension Insurance Company 7,979,371 12.6
Ilmarinen Mutual Pension Insurance Company 5,272,725 8.3
City of Oulu 3,062,925 4.8
City of Tampere 1,956,649 3.1
OP Life Assurance Company Ltd 1,222,884 1.9
OP-Suomi Pienyhtiöt Fund 998,589 1.6
OP Bank Group Pension Fund 885,938 1.4
OP-Suomi Arvo Fund 815,197 1.3
OP Bank Group Pension Foundation 757,380 1.2
Jyrki Hallikainen 750,000 1.2
-------------------------------------------------------------------------
Other registered, total 19,581,783 30.9
Nominee-registered, total 20,101,603 31.7
-------------------------------------------------------------------------
Total 63,385,044 100.0
After the year end Varma Mutual Pension Insurance Company and OP-Pohjola
co-operative flagged changes in holdings. The specific information of these
changes can be found from paragraph “Post-Fiscal Events”.
Shareholding breakdown on December 31, 2010
Number of shares Shareholders % of shareholders Number of shares % of shares
--------------------------------------------------------------------------------
1 - 100 307 7.3 17,770 0.0
101 - 500 1,204 28.8 361,115 0.6
501 - 1000 851 20.4 651,885 1.0
1001 - 5000 1,419 33.9 3,167,811 5.0
5001 - 10000 207 5.0 1,449,882 2.3
10001 - 50000 134 3.2 2,508,268 4.0
50001 - 100000 15 0.4 968,982 1.5
100001 - 500000 21 0.5 4,559,975 7.2
500001 -- 23 0.6 49,680,076 78.4
--------------------------------------------------------------------------------
Joint account 0 0.0 19,280 0.0
--------------------------------------------------------------------------------
Total 4,181 100.0 63,385,044 100.0
Shareholding by sector on December 31, 2010
Sector Number of shares % of shares
-------------------------------------------------------------------
Private companies 3,581,271 5.7
Financial and insurance institutions 5,618,050 8.9
Public sector organizations 21,014,686 33.1
Non-profit organizations 3,109,037 4.9
Private households 8,620,942 13.6
Foreign and nominee-registered 21,421,778 33.8
Joint account 19,280 0.0
-------------------------------------------------------------------
Total 63,385,044 100.0
Management Holdings, December 31, 2010
On December 31, 2010, the holdings of the Technopolis Plc Board of Directors,
CEO and Deputy CEO in the company's shares, pursuant to the Finnish Securities
Market Act Chapter 1 Section 5, totaled 179,897 shares, equaling 0.3% of the
share capital and votes of the company. The Chairman of the Board of Directors,
CEO and Deputy CEO held 1,300,000 options, equaling 2.2% of the company's share
capital and votes, provided that all issued options are converted into shares
in the future. The total quantity of holdings and options was 1,479,897,
equaling 2.5% of the company's share capital and votes, provided that all
issued options are converted into shares in the future.
Technopolis has executed a a share incentive plan for key personnelbased on
the the authorization of the AGM and by the decision by the Board of
Directors.These key persons have an opportunity to earn a total of 150,000
shares in 2011. The earning criteria forthe performance shares are weighted and
consist of the growth of the company's earnings per share (60% weight) and the
increase in the like-for-like rental income (40% weight).
Evaluation of Operational Risks and Uncertainties
Technopolis' most significant risks are primarily those associated with
financing and customers, as well as operational and international business
risks.
The objective of interest rate risk management is to mitigate the negative
impact of market rate fluctuations on the Group's earnings, financial position
and cash flow. If necessary, the company uses forwards, interest rate swaps and
interest rate options to hedge interest rate risks. The company's policy
concerning interest rate risks also aims to diversify the interest rate risk of
loan contracts over different loan periods based on the prevailing market
situation and the interest rate forecast created by the company.
Indicative of the structure of Technopolis' loan portfolio at the end of the
period is the equation that a one percentage point change in the money market
rates would change interest rate costs by EUR 2.3 million per annum.
Because of the interest rate risk associated with loans, a policy of
diversifying interest bases is pursued. On December 31, 2010, 12.0% of
interest-bearing liabilities were pegged to the under 3-month Euribor rate and
55.5% were pegged to the 3-12 month Euribor rate. Of the interest-bearing
liabilities, 32.5% were fixed-rate loans with maturities of 13-60 months.
The objective of refinancing risk management is to ensure that the Group's loan
portfolio is sufficiently diversified with regard to repayment schedules and
financing instruments. The average capital-weighted outstanding loan period was
6.9 years. In order to manage financing risk, Technopolis draws upon the
resources of a wide range of financers and a variety of financing instruments,
and maintains a sufficient degree of solvency.
Uncertainty in the financial markets may adversely affect the availability of
growth financing and refinancing and their margins in the future.
The differences between Russian, Estonian and Finnish legislation and
administrative procedures may create risks. If the Pulkovo premises cannot be
leased as planned, the Pulkovo technology center will pose a financial risk for
the Group. Once completed, the Pulkovo technology center will account for
approximately 5.1% of the fair value of the Group's entire investment property
portfolio.
Changes in the exchange rates between the Russian ruble and the euro may have
an effect on the company's financial performance and operations.
Ruble-denominated transactions are recorded at the exchange rate of the
transaction date. Any translation differences are entered in the income
statement under other operating expenses or finance income and expenses
according to the type of transaction involved.
Changes in the general economic environment may have an adverse effect on the
company's clients and hence on the Group's business operations.
Customer risk management aims to minimize the negative impact of potential
changes in the customers' financial position on the company's business and
financial performance. Customer risk management focuses on having a profound
understanding of the customer's business and active monitoring of customer
information. Customer risks are diversified by acquiring customers from all
technology sectors, knowledge-intensive operations, and the public sector. As
part of client risk management, Technopolis leases include rental security
arrangements.
The company's leases fall into two categories: fixed-term and open-ended. The
company aims to apply both lease types depending on the market situation, the
property in question and the sector in which the internal customer operates.
At the end of the period under review, open-ended leases in the lease portfolio
that could be terminated and renegotiated within the next 12 months covered
approximately 206,800 (188,200 on December 31, 2009) square meters of allocated
space, equaling 43.3% (46.1% on December 31, 2009) of the weighted area in the
entire property portfolio. The term of notice for these agreements is broken
down as shown in the table below.
Dec 31, 2010 Dec 31, 2010 Dec 31, 2009 Dec 31, 2009
Notice period Allocated % of lease Allocated % of lease
months space m2 stock space m2 stock
--------------------------------------------------------------------------------
0 - 3 12,400 2.6 13,000 3.2
--------------------------------------------------------------------------------
3 - 6 44,300 9.3 54,100 13.3
6 - 9 110,600 23.2 84,000 20.6
9 - 12 39,500 8.27 37,100 9.1
--------------------------------------------------------------------------------
Total 206,800 43.3 188,200 46.1
--------------------------------------------------------------------------------
At the end of the period, the average lease period was 23 (21) months. The
figure does not include the lease stock of properties under construction.
Declining financial occupancy rates may decrease rental and service revenues
and profit, and reduce the fair value of investment properties and, thus, the
equity ratio. The current lease structure allows customers to flexibly adjust
the space they need as their business needs change. Although the flexibility of
the lease structure may pose a risk to the Group, it is an essential element of
Technopolis' service concept. The company has solid and long-term experience in
this business model over a wide variety of economic cycles.
In new construction projects, Technopolis focuses on quality and the management
of the property's entire lifecycle. In the design phase, consideration is given
to the property's maintenance and repair requirements in order to implement
environmentally sustainable solutions for energy consumption, adaptability of
premises and recycling potential. When purchasing properties, Technopolis
carries out standard property and environmental audits before committing to the
transaction. All properties are covered by full value insurance.
Changes in the market yields may have a significant impact on the company's
financial performance through the fair value of investment properties. As the
yields increase, the fair value of properties decrease. Conversely, as the
yields decrease, the fair value of properties increases. Such changes either
decrease or increase the Group's operating profit. Changes in the market yields
do not have any direct impact on the company's net sales, EBITDA, or cash flow,
but a negative change in the value of investment properties may decrease the
company's equity ratio and, as a result of this, covenants of the leases may be
triggered. In that case, the change in value will have an impact on the cash
flow and result for the period.
Post-Fiscal Events
After the end of the reporting period in January 2011, the construction of
Phase 2 of Innova was launched in the vicinity of the city center in Jyväskylä.
The area of the office space in Phase 2 is approximately 9,200 square meters
and the investment, including parking facility, is approximately EUR 19.8
million. Thirty percent of the facilities in Phase 2 have been leased.
On January 28, 2011, the Technopolis Board of Directors in its meeting approved
an investment proposal in Tampere to launch construction of Phase 2 of the
Yliopistonrinne center in downtown Tampere. The investment is approximately EUR
22.5 million, including a parking garage, and the rentable area of the office
facilities is approximately 7,900 square meters.
On January 19, 2011, Varma Mutual Pension Insurance Company announced that its
direct holding of Technopolis Ltd's share capital and votes had exceeded
three-twentieths (15%) as a result of a purchase of shares that was completed
on January 18, 2011. Following this transaction, the direct holdings of Varma
in Technopolis' share capital and votes was 10,279,371 shares and 16.22%
respectivey.
On January 19, 2011, OP-Pohjola Cooperative notified that the proportion of
Technopolis Plc's share capital and votes held by OP-Pohjola Group and its
related parties as well as OP-Pohjola Group affiliates and the mutual funds
managed by them, had fallen below one-twentieth (5%) as a result of a share
transaction carried out on January 18, 2010. The proportion of Technopolis
Plc's share capital and votes indirectly controlled by OP-Pohjola Cooperative
was 2,649,543 shares and 4.180% respectively.
Board of Directors' Proposal for Distribution of Profit
Distributable funds of the parent company Technopolis Plc, totaling EUR
13,827,652, will be available at the Annual General Meeting. The Board of
Directors proposes that a dividend of EUR 0.17 per share be paid, totaling EUR
10,775,457. The Board proposes that the remainder be left in the retained
earnings account. The proposed dividend is 49% of the earnings per share
excluding changes in the fair value of investment properties.
There have been no significant changes to the company's financial status after
the end of the financial period. The company's liquidity is good and, according
to the opinion of the Board of Directors, the proposed distribution of profit
will not negatively influence the company's solvency.
Future Outlook
The Group's Management estimates that both the net sales and EBITDA will grow
9-11% in 2011.
The Group's financial performance depends of the development of the overall
business environment, customer operations, as well as the yield requirements
from the financial markets and properties. Developments in these areas and
resulting changes in the occupancy rate, use of services, financing costs, the
fair value of properties and facilities rents may have an impact on the Group's
sales and earnings.
Oulu, January 28, 2011
TECHNOPOLIS PLC
Board of Directors
Keith Silverang
CEO
tel. +358 40 566 7785
APPENDICES:
Charts of financial information
Corporate Governance Statement January 28,.2010
A presentation of the Financial Statements Release in pdf format is available
on the company's website at www.technopolis.fi/for_investors/presentaations.
The Financial Statements Release is available in PDF format on the company's
website at www.technopolis.fi. To request a hardcopy of the document, please
call +358 46 712 000 /Technopolis info.
Technopolis offers a service for receiving reports and releases at the
company's website at www.technopolis.fi/for_investors/presentations.
Individuals who sign up with the service will receive the company's reports and
releases electronically.
The company's Annual Report will be published on week 9 on the company's
website.
A shareholder who wishes to include a certain matter on the agenda of the
Annual General Meeting should submit such request in writing to the address
Technopolis Oyj/Board of Directors, Hiilikatu 3, 00180 Helsinki, by February
15, 2011.
The accounting policies applied in the Financial Statements Release and the
formulas for calculating key indicators are the same as in the 2009 Financial
Statements. The Interim Report has been prepared in accordance with the IFRS
recognition and valuation principles; the IAS 34 requirements have also been
complied with.
The figures are unaudited.
Technopolis Group:
STATEMENT OF COMPREHENSIVE INCOME 10-12/ 10-12 1-12/ 1-12/
/
Currency unit: EUR million 2010 2009 2010 2009
--------------------------------------------------------------------------------
Net sales 22.82 19.66 81.18 76.40
Other operating income 0.73 0.92 1.57 2.43
Other operating expenses -13.25 -10.6 -41.34 -38.86
5
Change in fair value of investment properties 4.53 -5.98 2.74 -37.13
Depreciation -0.39 -0.13 -1.13 -0.52
--------------------------------------------------------------------------------
Operating profit/loss 14.44 3.82 43.01 2.31
--------------------------------------------------------------------------------
Finance income and expenses -2.18 -2.48 -9.43 -11.76
Result before taxes 12.26 1.34 33.59 -9.45
Income taxes -3.33 -0.61 -10.13 1.95
--------------------------------------------------------------------------------
Net result for the period 8.92 0.73 23.46 -7.50
--------------------------------------------------------------------------------
Other comprehensive income items
Available-for-sale financial assets -0.01 0.01 0.02 0.08
Taxes related to other comprehensive income 0.00 0.00 -0.01 -0.02
items
--------------------------------------------------------------------------------
Other comprehensive income items after taxes 0.00 0.01 0.02 0.06
for the period
Comprehensive income for the period, total 8.92 0.74 23.48 -7.44
Distribution of profit for the period:
To parent company shareholders 8.72 0.74 23.25 -7.44
To non-controlling shareholders 0.21 -0.01 0.21 -0.05
8.92 0.73 23.46 -7.50
--------------------------------------------------------------------------------
Distribution of comprehensive income for the
period:
To parent company shareholders 8.71 0.75 23.27 -7.38
To non-controlling shareholders 0.21 -0.01 0.21 -0.05
8.92 0.74 23.48 -7.44
--------------------------------------------------------------------------------
Earnings per share based on result of flowing to parent company
shareholders:
Earnings/share, basic (EUR) 0.14 0.01 0.38 -0.13
Earnings/share, adjusted for dilutive effect 0.14 0.01 0.38 -0.13
(EUR)
Currency unit: EUR million 12/31/2010 12/31/2009
Non-current assets
Intangible assets 4.05 2.81
Tangible assets 65.17 62.79
Investment property 727.67 596.73
Investments 13.05 25.61
Deferred tax assets 4.41 2.81
-------------------------------------------------------------------
Non-current assets 814.36 690.75
-------------------------------------------------------------------
Current assets 13.25 15.34
-------------------------------------------------------------------
Assets, total 827.61 706.09
-------------------------------------------------------------------
Currency unit: EUR million 12/31/2010 12/31/2009
Shareholders' equity
Share capital 96.91 96.91
Premium fund 18.55 18.55
Other funds 84.22 63.94
Other shareholders' equity 0.60 0.65
Retained earnings 73.81 89.21
Net result for the period 23.25 -7.44
-------------------------------------------------------------------
Parent company's shareholders' interests 297.35 261.83
Non-controlling interests 10.25 0.01
-------------------------------------------------------------------
Shareholders' equity, total 307.60 261.84
Liabilities
Non-current liabilities
Interest-bearing liabilities 409.92 360.67
Non-interest-bearing liabilities 1.30 1.25
Deferred tax liabilities 41.44 32.62
-------------------------------------------------------------------
Non-current liabilities, total 452.65 394.55
Current liabilities
Interest-bearing liabilities 47.95 28.03
Non-interest-bearing liabilities 19.41 21.67
-------------------------------------------------------------------
Current liabilities, total 67.36 49.70
Liabilities, total 520.01 444.25
-------------------------------------------------------------------
Shareholders' equity and liabilities, total 827.61 706.09
-------------------------------------------------------------------
STATEMENT OF CASH FLOWS 1-12/ 1-12/
Currency unit: EUR million 2010 2009
--------------------------------------------------------------------
Cash flows from operating activities
Net result for the period 23.46 -7.50
Adjustments:
Change in fair value of investment properties -2.74 37.13
Depreciation 1.13 0.52
Share in affiliate profits 0.03 -0.01
Gains from disposals -2.01
Other adjustments for non-cash transactions 0.70 0.67
Financial income and expenses 9.40 11.77
Taxes 10.13 -1.95
Increase / decrease in working capital 1.65 1.85
Interests received 0.40 0.57
Dividends received 0.01 0.01
Interests paid and fees -7.16 -10.54
Other financial items in operating activities -3.09 -1.74
Taxes paid -6.84 -1.79
--------------------------------------------------------------------
Net cash provided by operating activities 25.05 28.99
Cash flows from investing activities
Investments in other securities -0.47 -0.02
Investments in investment properties -54.17 -62.96
Investments in tangible and intangible assets -2.41 -1.05
Repayments of loan receivables 4.07 1.06
Proceeds from sale of investments 1.52 0.01
Proceeds from sale of tangible and intangible assets 2.21
Acquisition of subsidiaries -11.88 -0.21
--------------------------------------------------------------------
Net cash used in investing activities -61.13 -63.17
Cash flows from financing activities
Increase in long-term loans 43.74 58.41
Decrease in long-term loans -31.56 -15.98
Dividends paid -8.60 -6.88
Paid share issue 20.49
Change in short-term loans 11.98 -4.00
--------------------------------------------------------------------
Net cash provided by financing activities 36.05 31.55
Net increase/decrease in cash assets -0.03 -2.63
Cash and cash equivalents at period-start 4.52 7.15
Cash and cash equivalents at period-end 4.49 4.52
STATEMENT OF CHANGES IN
EQUITY
Currency unit: Share Premiu Other Retained Non-controlli Share-holde
EUR million capital m fund funds earnings ng rs' equity
share-holders
EQUITY Dec 31, 96.91 18.55 63.82 96.16 0.26 275.70
2008
Dividend -6.88 -6.88
distribution
Comprehensive 0.06 -7.44 -0.05 -7.44
income for the
period
Other changes 0.06 0.59 -0.20 0.46
EQUITY December, 96.91 18.55 63.94 82.42 0.01 261.84
31, 2009
EQUITY Dec 31, 96.91 18.55 63.94 82.42 0.01 261.84
2009
New shares to 20.19 20.19
issue in
deviation
Dividend -8.60 -8.60
distribution
Business 10.03 10.03
combinations
Comprehensive 0.02 23.25 0.21 23.48
income for the
period
Other changes 0.06 0.59 0.66
EQUITY December, 96.91 18.55 84.22 97.67 10.25 307.60
31, 2010
Financial Information by Segment
On December 31, 2010, Technopolis Group has three operating segments based on
geographical units: Finland, Russia and Estonia. Estonia became the third
segment due the establishment of the new subsidiary in Tallinn in October
2010.The segment division presented in this interim report is based on the
Group's existing internal reporting procedures and the organization of the
Group's operations.
The Group's net sales or EBITDA do not include significant inter-segment items.
Items after the EBITDA, such as depreciation, financing items and taxes, are
not presented in the segment information because they are not allocated to
segments.
SEGMENT INFORMATION 10-12/ 10-12/ 1-12/ 1-12/
Currency unit: EUR million 2010 2009 2010 2009
------------------------------------------------------------
Net sales
Finland 21.80 19.58 79.92 76.13
Russia -0.02 0.10 0.27 0.34
Estonia 1.04 1.04
Unallocated and eliminations -0.01 -0.02 -0.05 -0.06
Total 22.82 19.66 81.18 76.40
------------------------------------------------------------
EBITDA
Finland 10.55 10.54 42.22 43.81
Russia -1.26 -0.08 -1.97 -0.43
Estonia 0.78 0.78
Unallocated and eliminations 0.24 -0.53 0.37 -3.41
Total 10.30 9.93 41.40 39.97
------------------------------------------------------------
Assets
Finland 728.73 691.46
Russia 47.87 38.41
Estonia 73.64
Eliminations -22.63 -23.78
Total 827.61 706.09
------------------------------------------------------------
Direct and Indirect Result
Technopolis presents its official financial statements by applying the IFRS
standards. The statement of comprehensive income includes a number of items
unrelated to the company's actual business operations. Therefore, the company
presents its direct result, which better reflects its real result.
The direct result presents the company's financial result for the period
excluding the change in the fair value of investment properties, the change in
the fair value of financial instruments and any non-recurring items, such as
gains and losses on disposals. As the company has interest rate and currency
swaps that do not satisfy the IFRS criteria for hedge accounting, the changes
in the fair value of these financial instruments are recognized in the
statement of comprehensive income. Additionally, the statement of comprehensive
income showing the direct result presents the related taxes and deferred tax
assets and liabilities.
Items excluded from the direct result and their tax effects are presented in
the statement of income showing the indirect result. Earnings per share have
been calculated both from the direct and indirect results in accordance with
the instructions issued by the European Public Real Estate Association EPRA.
The direct and indirect result and the earnings per share calculated from them
are consistent with the company's financial result and earnings per share for
the period.
Technopolis Group
DIRECT RESULT 10-12/ 10-12/ 1-12/ 1-12/
Currency unit: EUR million 2010 2009 2010 2009
--------------------------------------------------------------------------------
Net sales 21.65 19.66 79.17 76.40
Other operating income (1) 0.78 0.84 1.53 2.24
Other operating expenses -13.25 -10.65 -41.34 -38.86
Depreciation -0.39 -0.13 -1.13 -0.52
--------------------------------------------------------------------------------
Operating profit/loss 8.78 9.72 38.22 39.26
Finance income and expenses, total -2.71 -0.91 -8.88 -9.75
--------------------------------------------------------------------------------
Result before taxes 6.07 8.81 29.34 29.51
Taxes for direct result items -1.90 -2.81 -8.20 -7.91
Non-controlling interests -0.21 0.01 -0.21 0.05
--------------------------------------------------------------------------------
Direct result for the period 3.97 6.01 20.94 21.66
INDIRECT RESULT
Non-recurring items 1.12 0.08 2.05 0.18
Change in fair value of investment properties 4.53 -5.98 2.74 -37.13
--------------------------------------------------------------------------------
Operating profit/loss 5.66 -5.90 4.79 -36.95
Change in fair value of financial instruments 0.53 -1.57 -0.55 -2.01
--------------------------------------------------------------------------------
Result before taxes 6.19 -7.48 4.24 -38.96
Taxes for indirect result items -1.44 2.20 -1.93 9.86
--------------------------------------------------------------------------------
Indirect result for the period 4.75 -5.27 2.31 -29.10
Result for the period to the parent company 8.72 0.74 23.25 -7.44
shareholders, total
Earnings per share, diluted *)
From direct result 0.06 0.10 0.34 0.38
From indirect result 0.08 -0.09 0.04 -0.51
--------------------------------------------------------------------------------
From net result for the period 0.14 0.01 0.38 -0.13
*) Earnings per share calculated according to
EPRA's instructions.
KEY INDICATORS 1-12/ 1-12/
2010 2009
Change in net sales, % 6.3 5.3
Operating profit/loss/net sales, % 53.0 3.0
Interest coverage ratio 4.9 3.8
Equity ratio, % 37.4 37.3
Loan to value, % 58.0 59.1
Group company personnel during the period, average 135 152
Gross expenditure on assets, MEUR 134.4 66.0
Net rental revenue of investment properties, % (2) 7.7 7.6
Financial occupancy rate, % 94.4 94.4
Earnings/share
basic, EUR 0.38 -0.13
diluted, EUR 0.38 -0.13
Equity/share, EUR 4.69 4.57
Average issue-adjusted number of shares
basic 61,040,730 57,345,341
diluted 61,186,677 57,345,341
Issue-adjusted number of shares at year-end 63,385,044 57,345,341
P/E ratio 10.71 -23.88
Dividend/share, EUR (3) 0.17 0.15
Dividend payout ratio, % 44.62 -115.57
Effective dividend yield 4.17 4.84
OTHER KEY INDICATORS
Market value of shares, EUR million, Dec 31 258.61 177.77
Share turnover, shares 22,547,191 18,870,550
Share turnover out of average number of shares, % 36.94 32.91
Share prices, EUR
Highest price 4.24 3.96
Lowest price 2.96 1.95
Average price 3.59 3.01
Price Dec 31 4.08 3.10
CONTINGENT LIABILITIES
Currency unit: EUR million 12/31/2010 12/31/2009
Pledges and guarantees on own debt
Mortgages of properties 351.90 353.90
Pledged securities and investment properties 171.52 162.10
Other guarantee liabilities 20.70 12.70
Collateral given on behalf of associates 0.50 0.50
Leasing liabilities, machinery and equipment 3.78 2.21
Project liabilities 0.15 0.15
Interest rate and currency swaps
Nominal values 136.89 107.74
Fair values -1.27 -0.99
1) Other operating income consists of operating subsidies received for
development services; an equal amount is recorded under operating expenses for
development services.
2) The figure does not include properties commissioned and acquired during the
fiscal year.
3) Proposal for distribution of 2010 dividends
Value added tax (VAT) adjustment liability on property
investments
5-year adjustment 10-year
period adjustment
period
Year 2007 2008 2009 2010 Total
property investment expense (net) 4.7 57.4 32.3 38.5 133.0
VAT on property investment 1.0 12.6 7.1 8.6 29.4
Annual share of VAT on investment 0.2 1.3 0.7 0.9 3.0
VAT deducted 1.0 12.6 7.1 8.5 29.2
Annual share of the VAT deducted 0.2 1.3 0.7 0.9 3.0
Number of years remaining in the 1 2 8 9
adjustment period
Refundable amount of deduction 0.2 8.8 5.7 7.7 22.3
12/31/2010
VAT adjustment liability 12/31/2010 22.3
VAT adjustment liability 12/31/2009 18.7
Change 3.6
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