2007-04-19 10:33:00 CEST
2007-04-19 10:33:00 CEST
REGULATED INFORMATION
Technopolis - Quarterly report
Technopolis Group Interim Report, January 1 - March 31, 2007
Highlights of 1-3/2007 compared with corresponding period of 2006:
- The Group's net sales rose to EUR 13.6 million (EUR 9.2 million),
an increase of 47.2 %.
- The Group's EBITDA (Earnings before interest, taxes, depreciation
and amortization) rose to EUR 6.4 million (EUR 4.9 million), an
increase of 28.7 %.
- Profit before taxes totaled EUR 6.5 million (EUR 17.4 million), a
decrease of 62.9 %.
- The effect on profit before taxes of the change in the fair value
of investment property was EUR 2.2 million (EUR 13.5 million).
Business
The Group's net sales for the review period were EUR 13.6 million
(EUR 9.2 million in 1-3/2006), representing growth of 47.2 %. EBITDA
(Earnings before interest, taxes, depreciation and amortization) for
the review period was EUR 6.4 million (EUR 4.9 million), an increase
of 28.7 %. EBITDA increased more slowly than net sales due to the
growth in net sales of business development services and regional
development programs, as well as the repair, personnel administration
and expert expenses incurred during the review period. Operating
profit for the review period was EUR 8.4 million (EUR 18.4 million).
Profit before taxes for the review period was EUR 6.5 million (EUR
17.4 million).
The balance sheet total was EUR 435.5 million (EUR 287.3 million), an
increase of 51.6 %. The company's equity to assets ratio at the end
of the review period was 38.2 % (47.0 %).
The fair value of the Group's investment property at the end of the
review period was EUR 394.8 million (EUR 262.9 million). The change
in the fair value of investment property was due to the effect of the
fair values of properties bought and constructed, a reduction in the
return requirements of the market, changes in future returns and
modernization costs, the revaluation of properties owned throughout
the review period, and increases in acquisition cost recognized for
separate companies during the review period. The effect on profit of
the change in the fair value of investment property was EUR 2.2
million (EUR 13.5 million).
The Group's total rentable surface area was 348,415 floor square
meters at the end of review period (241,000 floor square meters at
March 31, 2006). The Group's average financial occupancy ratio at the
end of the period was 94.5 % (96.5 +%). The financial occupancy ratio
describes the rental revenue from the properties as a percentage of
the combined total of the rent for leased premises and the estimated
market rent for vacant premises. The Group's leases at the end of the
review period totaled EUR 119.6 million (EUR 67.8 million).
Group structure
The Technopolis Group includes the parent company, Technopolis Plc,
which has operations in Oulu and Vantaa, and its subsidiaries
Innopoli Oy in Espoo (100 % owned), Technopolis JSP Ltd in Jyväskylä
(100 % owned) with its subsidiary Technopolis JSPF Ltd (100 % owned),
Technopolis Kareltek Ltd in Lappeenranta (100 % owned), Technopolis
TSP Oy in Tampere (100 % owned), Medipolis Oy in Oulu (100 % owned)
and other subsidiaries.
The Group has commenced the merger of the following Group
subsidiaries with their respective parent companies: Technopolis JSP
Ltd and Technopolis JSPF Ltd, Technopolis TSP Oy and Kiinteistö Oy
Hermia Kymppi, Kiinteistö- ja Sijoitusyhtiö Joreco Oy and
Kiinteistöosakeyhtiö Teknologiantie 11, Technopolis Kareltek Ltd,
Kiinteistö Oy Oulun Teknologiatalot, Kiinteistö Oy Oulun Moderava and
Kiinteistö Oy Oulun Mediaani. The purpose of the mergers is to
increase the cost efficiency of the companies' operations and to
simplify and reduce the Group administration.
The parent company also has a minority holding in the associates
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 Ltd.
The Group also includes Innopoli Oy's wholly-owned subsidiary,
Technopolis Ventures Oy, in Espoo. Technopolis Ventures Oy owns the
following subsidiaries, Technopolis Ventures Kareltek Oy (100 %),
Technopolis Ventures JSP Ltd and Technopolis Ventures Oy (70 %).
Technopolis Ventures Oy also has a 25 % holding in Otaniemen kehitys
Oy.
Technopolis has established two wholly-owned Russian companies,
Technopolis Neudorf LLC and Technopolis St. Petersburg LLC, in St.
Petersburg.
Investments and development projects
In February, Technopolis decided to commence development of the
Hermia 12 property in Tampere. The project's cost estimate is EUR 9
million and the gross area is 8,600 square meters, which includes a
parking facility for 115 vehicles. The size of the building is
approx. 5,000 floor square meters, and the project is scheduled for
completion by the end of February 2008.
In February, Technopolis reached a result in negotiations with the
City of Oulu and the Northern Ostrobothnia Hospital District
concerning the purchase of a total of 19,250 shares in Medipolis Oy.
Following transactions with the said parties and minority
shareholders, Technopolis is the sole owner of Medipolis Oy.
The land lease concerning the first stage of the Ruoholahti
technology center in Helsinki is estimated to be decided by the
company in April. Planning for the technology centers to be built in
Lappeenranta city center and in the Pulkovo area of St. Petersburg is
advancing as expected.
Events related to the Technopolis share
At its meeting on January 4, 2007, the company's Board of Directors
resolved, in accordance with the authorization granted by the Annual
General Meeting of March 24, 2006, to increase the company's share
capital by a maximum of EUR 1,162,652.40, equivalent to a total of
687,960 shares, by approving share subscriptions made by
institutional investors. The purpose of the share offering was to
finance the investments included in the company's investment plan, to
secure the company's growth and to maintain the company's equity to
assets ratio.
The shares were offered, in deviation from the pre-emptive rights of
shareholders, for subscription by Finnish and international
institutional investors. The share offering was implemented through a
"book building" process, in which institutional investors would
subscribe for the shares to be issued by the company, in accordance
with their subscription commitments made during the reception period
for such commitments, January 3-4, 2007. The demand was about 3.5
times larger than the number of shares offered. The subscription
price per share was set at EUR 7.70. The increase in share capital
was entered in the Trade Register on January 8, 2007, and trading in
the new shares began on January 9, 2007.
In December 2006, a total of 26,131 Technopolis shares were
subscribed with year 2001 options. The resulting increase in share
capital of EUR 44,161.39 was entered in the Trade Register on
February 13, 2007, and trading in the shares began on February 14,
2007.
After the above increases, the company's share capital is EUR
68,525,567.37 and the number of shares is 40,547,673.
Financing
The Group's net financial expenses were EUR 1.9 million (EUR 0.9
million). The Group's balance sheet total was EUR 435.5 million (EUR
287.3 million), of which liabilities accounted for EUR 270.0 million
(EUR 152.7 million). The Group's equity to assets ratio was 38.2 %
(47.0 %). The Group's equity per share was EUR 4.08 (EUR 3.58).
The Group's long-term liabilities at the end of the review period
amounted to EUR 209.6 million (EUR 119.8 million). The average
interest rate for loans on March 31, 2007 was 4.19 % (3.37 %).
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. On March 31,
2007, the issued commercial papers totaled EUR 30.8 million.
Organization and personnel
The company's Executive Board comprises the following directors:
Pertti Huuskonen, President and CEO, Jukka Akselin, Satu Eskelinen,
Marjut Hannelin, Martti Launonen, Seppo Selmgren, Keith Silverang,
Reijo Tauriainen and Jarkko Ojala, who will commence as CFO on August
1, 2007.
The Group employed an average of 141 (89) people during the financial
year. 51 (29) persons were employed in jobs related to premises
activities, 32 (19) persons in business services and 58 (41) persons
in development services.
Decisions of the Annual General Meeting
The Annual General Meeting held on March 29, 2007 confirmed the
consolidated and parent company income statements and balance sheets
for the 2006 financial year, released those responsible for the
accounts from further liability and decided on the distribution of a
dividend of EUR 0.14 per share for the financial year that ended on
December 31, 2006.
The Board of Directors elected by the Annual General Meeting
comprises Timo Parmasuo, Chairman, Matti Pennanen, Vice Chairman,
Pekka Korhonen, Erkki Veikkolainen and Juha Yli-Rajala. 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 principally responsible auditor.
The Annual General Meeting decided to amend the company's Articles of
Association. The amendments derive mainly from the new Finnish
Companies Act, effective from September 1, 2006, and are mainly
technical in nature. In addition, the Annual General Meeting decided
to authorize the Board of Directors to decide on acquiring the
company's own shares, share issues, the issuing of options and other
special rights giving entitlement to shares, the issuing of year 2007
options to the Group's key personnel and cancellation of the year
2005C options.
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 spread 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 formed in the company. If necessary, the company employs
interest rate forward agreements, interest rate swaps and interest
rate options. In order to manage the 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
1.0 million.
Due to the interest rate risk related to credits, a policy of
interest rate diversification has been followed. On March 31, 2007,
71.4 % of the loan portfolio was bound to either the 3-12 month
Euribor rate or to the Bank of Finland's rate. 28.6 % of the loans
were fixed-interest loans of 13-60 months. The loan period, weighted
by the remaining capital of the loans, was 12.1 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 March 31, 2007, the issued
commercial papers totaled EUR 30.8 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, the 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, Tampere 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 930
customers that operate in many different sectors.
The Group is protected against fluctuations in the business cycle by
fixed-term leases which totaled EUR 119.6 million on March 31, 2007.
Of the lease agreements, 8 % will expire in 2007, 18 % will expire in
2008-2010, 31 % will expire in 2011-2013, 5 % will expire in 2014-
2016, and 38 % will expire in 2017 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 market's return requirements may have a significant
effect on profit performance. As return requirements increase, the
fair values of properties decline, and correspondingly, as return
requirements decrease, the fair values of properties rise. These
changes affect the company's operating profit either negatively or
positively.
Future outlook
The management of the Technopolis Group estimates that in 2007 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 EBITDA will increase in 2007 by 18-
22 % on the previous year.
As part of its strategy for growth, Technopolis aims to operate in
the top high technology cities in Finland, as well as in 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 acquisitions.
The Group's financial performance is dependent on trends in the
general operating environment, in customer business, in the financial
markets and in the return requirements for properties. Factors in
these areas may affect the Group's result through changes in
occupancy ratios, the use of services, financing costs, the fair
values of properties and office rent levels.
The figures are unaudited.
Oulu, April 19, 2007
TECHNOPOLIS PLC
Board of Directors
Pertti Huuskonen
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 8 551 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.
INCOME STATEMENT 1.1.2007- 1.1.2006- 1.1.2006-
EUR million 31.3.2007 31.3.2006 31.12.2006
Net sales 13.59 9.23 44.84
Other operating income 1) 1.23 0.55 3.86
Operating expenses -8.45 -4.83 -26.00
Revaluation of investment property 2.15 13.53 16.07
Depreciation according to plan -0.15 -0.09 -0.56
Operating profit 8.36 18.38 38.21
Financial income and expenses -1.90 -0.93 -5.17
Profit before taxes 6.47 17.44 33.05
Income taxes -1.59 -4.21 -8.46
Net profit for the year 4.88 13.23 24.59
Distribution of profit for the year
To parent company shareholders 4.87 12.87 23.74
To minority shareholders 0.01 0.36 0.85
BALANCE SHEET, ASSETS
EUR million
Non-current assets
Intangible assets 2.60 0.21 2.63
Tangible assets 5.60 13.53 2.44
Investment property 394.76 262.85 392.16
Investments 20.95 1.28 21.82
Deferred tax assets 2.12 2.34 1.77
Total non-current assets 426.03 280.21 420.83
Current assets 9.45 7.12 10.57
Total assets 435.48 287.34 431.39
BALANCE SHEET, SHAREHOLDERS' EQUITY AND LIABILITIES
EUR million
Shareholders' equity
Share capital 68.53 61.75 67.32
Premium fund 18.49 12.70 18.55
Other funds 11.51 0.02 7.37
Other shareholders' equity 0.32
Retained earnings 61.94 43.47 43.40
Distributable profit for review period 4.87 12.87 23.74
Parent's shareholders' interests 165.33 130.81 160.70
Minority interest 0.14 3.83 4.58
Total shareholders' equity 165.48 134.64 165.28
Liabilities
Non-current liabilities
Interest-bearing liabilities 184.10 104.86 183.16
Non-interest-bearing liabilities 1.48 0.94 1.51
Deferred tax liabilities 24.06 14.00 22.68
Current liabilities
Interest-bearing liabilities 42.39 19.94 46.33
Non-interest-bearing liabilities 17.97 12.96 12.44
Total liabilities 270.00 152.70 266.12
Total shareholders'
equity and liabilities 435.48 287.34 431.39
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities
Operating profit 8.36 18.38 38.21
Revaluation of investment properties -2.15 -13.53 -16.07
Depreciation 0.15 0.09 0.56
Other adjustments for
non-cash transactions 0.15 0.06 0.32
Increase/decrease in working capital 2.27 0.67 0.46
Interests received 0.51 0.01 0.29
Interests paid and fees -2.49 -0.97 -5.50
Income from other investments of
non-current assets 0.02 0.01 0.01
Taxes paid -0.55 -0.51 -1.92
Net cash provided by
operating activities 6.27 4.20 16.35
Cash flows from investing activities
Investments in other instruments -0.02
Investments in investment properties -6.01 -4.94 -40.66
Investments in tangible and
intangible assets -0.14 -0.04 -0.44
Repayments of loan receivables 0.01 0.04
Sales income from other investments 0.25 0.15
Acquisition of subsidiaries -3.79 -0.24 -18.17
Net cash used in investing activities -9.67 -5.21 -59.10
Cash flows from financing activities
Increase in long-term loans 12.87 31.49
Decrease in long-term loans -11.83 -2.18 -12.39
Dividends paid -4.66
Paid share issue 5.30 1.12 1.12
Change in short-term loans -4.07 1.77 27.60
Net cash provided by
financing activities 2.28 0.71 43.16
Net increase/decrease in liquid assets -1.12 -0.30 0.40
Liquid assets at beginning of period 2.80 2.40 2.40
Liquid assets at end of period 1.68 2.10 2.80
STATEMENT OF CHANGES IN EQUITY
Share Share Other Accum- Minor- Share-
capital premium funds ulated ity holders'
fund retained int. equity
earnings
Equity Dec. 31, 2005 60.59 12.73 0.02 48.07 3.39 124.81
Increase of share capital 6.73 6.73
Directed share issue 5.85 7.32 13.17
Dividend distribution -4.66 -4.66
Net profit for the period 23.74 0.85 24.59
Other changes -0.03 0.03 0.31 0.33 0.64
Equity Dec. 31, 2006 67.32 18.55 7.37 67.46 4.58 165.28
Increase of share capital 0.05 0.05
Directed share issue 1.16 4.13 5.29
Dividend distribution -5.68 -5.68
Net profit for the period 4.87 0.01 4.88
Other changes -0.06 0.01 0.15 -4.45 -4.35
Shareholders' equity
March 31, 2007 68.53 18.49 11.51 66.80 0.14 165.48
KEY INDICATORS 1.1.2007- 1.1.2006- 1.1.2006-
31.3.2007 31.3.2006 31.12.2006
Change in net sales, % 47.2 21.7 41.3
Operating profit/net sales, % 61.6 199.1 85.2
Equity to assets ratio, % 38.2 47.0 38.5
Employees in Group companies 141 89 113
Gross investments in non-current
assets in balance sheet, EUR 1 000 9,939 5,220 59,286
Net rental income of
property portfolio, % 2) 7.7 7.9 7.7
Financial occupancy ratio, % 94.5 96.5 94.4
Earnings/share, EUR
Undiluted, EUR 0.12 0.36 0.63
Diluted, EUR 0.12 0.36 0.63
Number of shares (issue-adjusted),
average
Undiluted 40,473,746 36,026,157 37,472,329
Diluted 40,544,335 36,158,075 37,619 867
CONTINGENT LIABILITIES
Pledges and guarantees on own debt
Mortgages 195.50 147.39 195.50
Land lease liabilities 0.53 0.49 0.53
Other pledge liabilities 0.93 0.93 0.93
Pledged investment properties 46.19 9.21 35.21
Nominal values of interest rate swaps 4.00 8.00 4.00
Fair values of interest rate swaps -0.03 -0.19 -0.04
Liability for return of VAT 13.29 13.37 13.27
Project liabilities 0.01 2.03 0.01
Collateral given on behalf of
associates
Guarantee 0.50 0.50 0.50
Other guarantee liabilities 0.10 0.10 0.10
Leasing liabilities,
machinery and equipment 0.34 0.38
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 figure does not take into account the effect of properties
acquired and brought into use during the year.
Distribution:
Helsinki Stock Exchange
Main news media
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