2010-10-22 09:56:00 CEST
2010-10-22 09:56:03 CEST
REGULATED INFORMATION
Technopolis - Interim report (Q1 and Q3)
TECHNOPOLIS GROUP INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2010
TECHNOPOLIS PLC INTERIM REPORT OCTOBER 22, 2010 at 10:55 TECHNOPOLIS GROUP INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2010 Highlights for period 1-9/2010 compared with 2009 - Net sales rose to EUR 58.4 million (EUR 56.7 million) - EBITDA rose to EUR 31.1 million (EUR 30.0 million) - Net sales and EBITDA improved by EUR 0.8 million early capital lease repayment for the period 4-6/2010 - Operating profit rose to EUR 28.6 million (EUR -1.5 million) including a change of EUR -1.8 million (EUR -31.1 million) in the fair value of investment properties - Profit before taxes totaled EUR 21.3 million (EUR -10.8 million) - The financial occupancy rate was 93.7 % (94.3 %) - The Group's equity ratio was 38.8 % (38.0 %) - Earnings per share (undiluted) were EUR 0.24 (EUR -0.14) and diluted EUR 0.24 (EUR -0.14) Keith Silverang, CEO: “The business environment in Finland is stable, but there is still intense competition. On the other hand, the market is clearly recovering in several communities where we operate. This is also evident in the financial occupancy rate, which increased by nearly one percent during the quarter to 93.7 % at the end of the period under review. Organic growth continues in Finland, and approximately 31,000 gross square meters are under construction in the Helsinki Metropolitan Area, Kuopio and Tampere. The commissioning of Pulkovo in St. Petersburg took place in September. The rental market is gradually recovering in St. Petersburg, which improves the potential for signing leases at a sufficiently profitable level. After the end of the reporting period, the establishment of a joint venture in Tallinn was completed on October 7, 2010. The Group's direct result and cost-effectiveness were satisfactory. The market yields affecting the fair value of investment properties continued to slightly decrease. The Group continues to benefit from low market interest rates, but we are preparing for a rate increase. Business Conditions in Finland and St. Petersburg The Finnish economy has seen favorable growth during the second quarter. Employment began to improve in July, and exports have increased even more rapidly than the exports of the Eurozone's main driver, Germany. It is possible that the GDP growth estimates for 2010 will be adjusted in the fall. (Source: The Research Institute of the Finnish Economy, October 8, 2010.) In the first half of 2010 office space vacancy in the Helsinki metropolitan area has continued to rise, climbing to 12.8 %. The situation in the office rental market in growth centers varies by city. (Catella, Market Review, fall 2010.) Office vacancies rose in nearly all Finnish growth centers in spring 2010, but remained below 8 % (Catella, Market Review, spring 2010). In general, the vacancy rate of class A properties in the St. Petersburg office market is expected to increase towards the end of the year as a result of increased supply. According to Jones Lang LaSalle, the supply and demand will gradually balance by the end of 2012. The rents for office premises have remained stable during the first half of the year. Rents are not expected to rise significantly during 2011. (Jones Lang LaSalle, St. Petersburg office market, Q3/2010.) Operations On September 30, 2010, Technopolis had two geographic operational segments : Finland and Russia. The segmentation is based on the Group's existing internal reporting procedures and the organization of the Group's operations. Technopolis Ülemiste, a joint venture established in Tallinn on October 7, 2010, will be reported as a separate operational unit in the financial statements for 2010. Despite difficult economic conditions, the demand for innovation environments in Technopolis' areas of operation has remained satisfactory, and the Group's financial occupancy rate has remained on a satisfactory level, 93.7 % at the end of the third quarter of 2010 (92.8 % on June 30, 2010, and 94.3 % on September 30, 2009). Competition remained intense in the communities where Technopolis operates in Finland during the period under review. However, the company's occupancy rates are above average in nearly all domestic growth centers. The Group's net sales for the period under review were EUR 58.4 million (EUR 56.7 million in 2009), an increase of 2.9 %, including compensation of EUR 0.8 million for premature lease termination in the period 4—6/2010. Rental revenues accounted for 86.2 % (85.4 %) and service revenues for 13.8 % (14.6 %) of sales excluding the capital lease repayment. Like for like rental growth, that is, the rental revenue from comparable properties declined 2.5 %, primarily due to decreasing occupancy rates. Like for like is calculated by comparing the rental revenues for January through September 2010 to the same period in 2009. To ensure comparability, the rental revenues from properties commissioned or acquired during the year are excluded. The Group's EBITDA was EUR 31.1 million (EUR 30.0 million), an increase of 3.6 %. EBITDA improved partly through compensation of EUR 0.8 million for a capital lease repayment. The Group's profit before taxes totaled EUR 21.3 million. The Group's operating profit totaled EUR 28.6 million (EUR -1.5 million). The increase in operating profit mainly resulted from a change of only -1.8 million (EUR -31.1 million) in the fair market value of investment properties due to stabilized market yields. 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 7.2 million (EUR 9.3 million). The Group's profit before taxes totaled EUR 21.3 million (EUR -10.8 million). The Group started to extend the interest rate fixing period of its loans by carrying out interest rate swaps with a nominal value of EUR 45.0 million during the spring of 2010. The company has presented its direct result as of January 1, 2009, which provides a more precise illustration of the company's operational financial performance. The Group's direct result was EUR 17.0 million (EUR 15.6 million), an increase of 8.5 %. The direct result shows the company's performance for the financial period, excluding changes in the fair value of investment properties and financial instruments during the period, as well as any non-recurring items and tax effects relating to these items. Total assets were EUR 747.9 million (EUR 691.7 million), an increase of 8.1 %. The Group's equity ratio at the end of the period was 38.8 % (38.0 %). The fair market value of the Group's investment properties at the end of the period was EUR 651.3 million (EUR 596.4 million) and the fair market value of investment properties under construction was EUR 49.8 million (EUR 40.0 million). The earnings impact of the change in the fair market value of investment properties was EUR -1.8 million (EUR -31.1 million in January through September 2009) during the period under review. The change in the fair market value includes an increase in the value due to a slight decline in market yields and a change in the value of investment properties and investment properties under construction. Uncertainties concerning the development of the Russian market have been taken into account in the fair market value of properties under construction in Russia. Net market yields 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 September 30, 2010, the average net yield for Group properties was 7.97 % (8.02 % on September 30, 2009). The average ten-year occupancy rate used in the fair value calculation was 95.3 %. The Group has set a higher target for the financial occupancy rate than this. Over the period 2000-2009 the Group's average occupancy rate was 97.1 %. The Group's total rentable space at the end of the period was 460,290 square meters (456,738 square meters on September 30, 2009). The Group's average financial occupancy rate at the end of the period was 93.7 % (94.3 %). 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 110.5 million (EUR 122.5 million) at the end of the reporting period. The figure does not include the lease stock of buildings under construction. Technopolis is 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, which combines premises with services. Major Investments and Development Projects Projects under construction on September 30, 2010: -------------------------------------------------------------------------------- | | Area | Gross | EUR | Occupancy | Due for | | | | sqm | million | rate Sept | completion | | | | | | 30, 2010 | | -------------------------------------------------------------------------------- | Pulkovo Phase 1 | St. | 24,100 | 52.3 | 40.2 | 9/2010 | | (2) | Petersburg | | | | | -------------------------------------------------------------------------------- | Finn-Medi | Tampere | 14,900 | 29.6 | 90.9 | 11/2011 | | campus (3) | | | | | | -------------------------------------------------------------------------------- | Viestikatu | Kuopio | 18,500 | 11.8 | 88.0 | 10/2010 | | Phase 2 (4) | | | | | | -------------------------------------------------------------------------------- | Helsinki-Vantaa | HMA | 2,830 | 6.0 | 18.5 | 5/2011 | | Phase 5, Part 2 | | | | | | -------------------------------------------------------------------------------- (2) Including plot. Completion indicates commissioning. (3) 43 parking spaces in the building (4) 420 parking spaces in a garage The first phase of Technopolis Pulkovo in St. Petersburg was commissioned by St. Petersburg's governmental building control agency in September. The commissioning permit will make it possible to sign the final official leases with customers once the building is registered. The building is not yet finished, and it has not been handed over by the contractor. The building will be gradually taken-up for rental activity during December 2010 and the spring of 2011, after which the project will have an impact on the Group's financial occupancy rate. The occupancy of the first phase with preliminary lease agreements now stands at 40.2 %. As of the end of the period under review, a total of EUR 47.6 million had been committed to the operations in St. Petersburg. The market situation in St. Petersburg remains challenging. Negotiations are underway with several potential customers for a significant amount of space. Now that the first phase of Technopolis Pulkovo has been commissioned and the office market is gradually picking up, the potential for signing leases at a sufficiently profitable level is improving. Technopolis will build a campus for well-being services and life sciences in the Finn-Medi area in Tampere. The location will include the Eye Center of the Pirkanmaa Hospital District, a Patient Hotel for Norlandia Care Oy and a multi-user office facility for other customers. Approximately 84 % of the premises have been leased long term to the Eye Center and the Patient Hotel. The occupancy rate of the campus, which is under construction, is 90.9 %. Technopolis also has premises under construction in Helsinki-Vantaa and Kuopio. Both projects are expansions of existing centers. Technopolis is planning to divest properties that do not suit the innovation center operations, or are not part of the core business. Financing Technopolis is able to finance all of the investments approved by the Board using its current credit facilities. At the end of the reporting period, funds available consisted of EUR 188.2 million in untapped credit facilities, and cash amounting to EUR 4.8 million. Use of available credit limit facilities, excluding commercial paper, requires collateral arrangements. Of the long-term unused credit facilities, EUR 60.0 million is credit that has been extended by the European Investment Bank to Technopolis for future expansion projects in Finland, and EUR 31.6 million has been extended by the European Bank for Reconstruction and Development to Technopolis for Technopolis Pulkovo in Russia. Technopolis has a EUR 90 million domestic commercial-paper program for managing its short-term liquidity, which allows the company to issue commercial papers with maturities of less than one year. The value of commercial paper issued by Technopolis after the end of the reporting period totals EUR 19.1 million. Furthermore, Technopolis has a EUR 15.0 million revolving credit account with an overdraft facility, of which EUR 1.7 million was in use at the end of the period. Technopolis carried out a directed share issue for a limited number of Finnish and international institutional investors after mid-May. All 5,700,000 shares offered were subscribed 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 because its purpose is 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 7.2 million (EUR 9.3 million). The Group's interest coverage ratio was 5.3 (3.6). The interest coverage ratio indicates the relation between EBITDA and accrual-based interest expenses. The Group's total assets were EUR 747.9 million (EUR 691.7 million), of which liabilities totaled EUR 459.4 million (EUR 430.7 million). The Group's equity ratio was 38.8 % (38.0 %). The Group's net gearing was 136.9 % (143.3 %) at the end of the period. The Group's equity per share was EUR 4.79 (EUR 4.55). At the end of the period, the Group's interest-bearing liabilities amounted to EUR 399.7 million (EUR 376.2 million). The average interest rate on interest-bearing liabilities was 2.18 % (2.72 %) on September 30, 2010. Of interest-bearing liabilities, 75.0 % (70.8 %) were floating rate loans and 25.0 % (29.2 %) were fixed rate loans at the end of the period. The average capital-weighted loan period was 9.4 years (10.3 years). During the spring of 2010, the Group has extended the interest rate fixing period of its loans by carrying out interest rate swaps with a nominal value of EUR 45.0 million. 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 56.2 % (58.4 %). The Group has interest-bearing liabilities totaling EUR 399.7 million, of which EUR 112.2 million include equity ratio related covenants. A decline in the equity ratio may lead to higher interest rate margins or premature repayment of these loans. The margins of some loans and bank guarantees may rise as the equity ratio falls, as shown in the table below. Potential changes in the margins take effect in accordance with the contractual provisions of each loan. -------------------------------------------------------------------------------- | Loan (L) or | Margin % | Equity | Equity | Equity | Equity | Other | | bank | on | ratio | ratio | ratio | ratio | | | guarantee | Septembe | under | under | under | under 30 | | | (BG) | r 30, | 38 % | 35 % | 33 % | % | | | principal, | 2010 | | | | | | | EUR million | | | | | | | -------------------------------------------------------------------------------- | 10.0(L) | 0.71 | 0.82 | | 0.97 | 1.22 | | -------------------------------------------------------------------------------- | 3.67(L) | 0.65 | | | 0.70 | 1.00 | | -------------------------------------------------------------------------------- | 37.5(L) | 1.50 | | | 1.75 | 2.00 | Margin may | | | | | | | | be changed | | | | | | | | or loan | | | | | | | | terminated | | | | | | | | if equity | | | | | | | | ratio is | | | | | | | | under 30 % | -------------------------------------------------------------------------------- | 1.0(L) | 0.45 | | | | | Margin may | | | | | | | | be changed | | | | | | | | or loan | | | | | | | | terminated | | | | | | | | if equity | | | | | | | | ratio is | | | | | | | | under 28 % | -------------------------------------------------------------------------------- | 10.0 (BG) | 0.85 | 0.85 | 1.00 | 1.50 | | | -------------------------------------------------------------------------------- | 10.0 (BG) | 0.365 | | | 0.40 | 0.60 | | -------------------------------------------------------------------------------- | 20.0 (BG) | 0.26 | 0.35*) | | | 0.65 | *)Covenant | | | | | | | | becomes | | | | | | | | effective | | | | | | | | 12/8/2013 | -------------------------------------------------------------------------------- | 20.00 (BG) | 0.9 | 0.9 | 1.0 | 1.5 | | | -------------------------------------------------------------------------------- Bank guarantees totaling EUR 86.0 million have been given as security for the EUR 84.3 million in loans granted by the European Investment Bank. EUR 31.0 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 guarantee margins. During the 12-month period following the period under review, EUR 53.0 million of the existing interest-bearing loans will mature. The financing of Technopolis Pulkovo, phase 1, is arranged through the parent company's investments in shareholders' equity and with an EBRD loan of EUR 31.6 million. Organization and Personnel The CEO of Technopolis is Keith Silverang, MBA. Mr. Silverang has dual U.S. and Finnish citizenship. He has completed a Bachelor of Arts degree at Boston University and an MBA at the Helsinki School of Economics. Reijo Tauriainen acts as Deputy CEO of the company. A decision was made to change the Technopolis Plc organization, and the organizational changes took effect after the end of the period under review. As of October 1, 2010, the Group Management Team will comprise Keith Silverang (CEO), Reijo Tauriainen (CFO), Satu Eskelinen, Marko Järvinen, Kari Kokkonen, and Jukka Rauhala. The Technopolis line organization consists of three units: Finland, Russia, and New Markets. The Group organization also has matrix support functions for the Group's real estate development, business services, business development and support services. The New Markets unit did not generate net sales or operating profit during the period under review, and its expenses are included in the expenses of Group administration. Technopolis Ülemiste, a joint venture established after the end of the period under review in Tallinn on October 7, 2010, will be reported as a separate operational unit in the financial statements for 2010. During the reporting period, the Group employed an average of 134 (152) people. Facilities operations employed 65 (61) people, Business Services 35 (34) people and Development Services 34 (57) people. At the end of the reporting period, the Group's personnel totaled 136 (149). Technopolis Plc adheres to the Finnish Corporate Governance Code for listed companies, issued by the Securities Market Association and effective as of October 1, 2010. The Corporate Governance Statement dated January 29, 2010, is publicly available on the company's website at http://www.technopolis.fi/for_investors/corporate_governance. 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. Technopolis has two companies in St. Petersburg, Russia: Technopolis Neudorf LLC and Technopolis St. Petersburg LLC, both wholly owned by Technopolis. After the end of the reporting period, Technopolis established an Estonian subsidiary, Technopolis Baltic Holding AS (wholly owned by Technopolis), which controls the holding 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 Group also includes Technopolis Ventures Ltd in Espoo, wholly owned by Innopoli Ltd. Technopolis Group has a 35 % holding n Otaniemi Development Ltd. 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 dividends were paid on 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. 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 to the Board. The AGM of 2009 authorized the Board to decide on the acquisition of its own shares. The authorization expired on September 26, 2010. The AGM of 2009 also 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 30.09.2010, 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. For issuing a number of shares exceeding the above, the company would require a new authorization from the AGM. The AGM of 2009 decided to adopt a performance share incentive plan for key personnel in the Technopolis Group. The total reward payable in the system corresponds to a maximum value of approximately 800,000 Technopolis Plc's shares (including the portion payable in cash). The nominal dilution effect of these shares is 1.3 %. Stock-related Events On May 6, 2010, the Finnish Financial Supervisory Authority approved Technopolis Plc's registration document, which complies with the Finnish Securities Market Act and contains information on the company, its business operations and its financial condition. The registration document is valid for 12 months following its publication. Technopolis carried out a directed share issue for a limited number of Finnish and international institutional investors after the middle of May. The share issue was implemented by virtue of a Board authorization of 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 gross capital totaling approximately EUR 19.4 million. Trading in the shares together with the other shares in the Company started 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 made by 2005A options. The subscription price when subscribed for pursuant to option right was EUR 3.266 per share. Trading in the shares together with the other shares in the Company started 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 made by 2005A options 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 will end on April 30, 2012. The total number of 2007A stock options is 500,000. The maximum number of new shares to be subscribed by the options is 521,500, with a nominal dilution effect of 0.8 %. The details of the 2007A stock options are 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 announced on February 17, 2010, that its direct holding in Technopolis' share capital and its number of votes has 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 its number of votes was 6,856,980 shares and 11.96 %. Post-fiscal events Technopolis Plc's subsidiary Technopolis Baltic Holding As and the Tallinn-based Smart City Group As and its subsidiary Ülemiste City As created a joint venture and carried out a share purchase on October 7, 2010. Technopolis' investment in the new company, Technopolis Ülemiste, was EUR 9.43 million. In addition, an earn-out payment totaling EUR 0.5 million will be paid if the joint venture achieves certain targets over the next two years. Technopolis Group has a 51 % holding in Technopolis Ülemiste, while the remaining 49 % interest is held by Smart City Group subsidiary Ülemiste City As. Technopolis Ülemiste has a property portfolio comprising approximately 70,000 square meters, with approximately 46,000 square meters of modern office buildings. The company also owns building rights totaling approximately 150,000 square meters of office space. The enterprise value of Technopolis Ülemiste is EUR 63.5 million with loans totaling approximately EUR 43 million. Technopolis Ülemiste's pro forma full-year net sales are expected to total EUR 4.5 million and EBITDA EUR 3.6 million. The pro forma figures are calculated based on the lease stock transferred to the company. The establishment of Technopolis Ülemiste has been previously covered in stock exchange releases published on March 26, 2010, and July 17, 2010, in connection with the company's Interim Report for January through June 2010. Evaluation of Operational Risks and Uncertainties Technopolis' most significant risks are primarily those associated with financing and customers, as well as international operations and 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 September 30, 2010, 15.7 % of interest-bearing liabilities were pegged to the under 3-month Euribor rate and 59.3 % were pegged to the 3-12 month Euribor rate. Of the interest-bearing liabilities, 25.0 % were fixed-rate loans with maturities of 13 to 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 9.4 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. Extended 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 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 % of the fair value of the Group's entire investment property portfolio. The subsidiary established on October 7, 2010, in Estonia is also included in the fair market value of investment properties. Fluctuations in the exchange rates between the Russian ruble and the euro may have an effect on the company's financial standing 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 depending on the nature of the transaction. Fluctuations 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 from the public sector. As part of client risk management, Technopolis leases include rental security arrangements. Geographically, the Group's property portfolio is diversified between the Oulu region, the Helsinki Metropolitan Area, Jyväskylä, Kuopio, Lappeenranta, Tampere, and St. Petersburg in Russia. No single customer accounts for more than 8.5 % of the Group's net sales. The Group has a total of approximately 1,190 customers across a wide range of sectors. 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 195,512 (183,052 on September 30, 2009) square meters of allocated space, equaling 47.2 % (44.7 % on September 30, 2009) of the weighted area in the entire property portfolio. The termination notice for these agreements is broken down as shown in the table below. -------------------------------------------------------------------------------- | | September 30, 2010 | September 30, 2009 | -------------------------------------------------------------------------------- | Notice period | Allocated | % of lease | Allocated | % of lease | | months | sq m | stock | sq m | stock | -------------------------------------------------------------------------------- | 0 - 3 | 14,566 | 3.5 | 9,047 | 2.2 | -------------------------------------------------------------------------------- | 3 - 6 | 44,829 | 10.8 | 49,175 | 12.0 | -------------------------------------------------------------------------------- | 6 - 9 | 100,119 | 24.2 | 96,155 | 23.5 | -------------------------------------------------------------------------------- | 9 - 12 | 35,998 | 8.7 | 28,675 | 7.0 | -------------------------------------------------------------------------------- | Total | 195,512 | 47.2 | 183,052 | 44.7 | -------------------------------------------------------------------------------- The average lease term was 19 (23) months at the end of the period. The figure does not include the lease stock of properties under construction. Declining financial occupancy rates may decrease rental and service revenue and earnings, 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 decreases. 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 has an impact on the cash flow and result for the period. Future Outlook The Group's Management estimates that the net sales and EBITDA will grow by 2-4 % in 2010. The management estimates that the financial occupancy rates in Finland at the end of the year will be at least on the same level as in September 2010. In accordance with its strategy, Technopolis aims to operate in the best knowledge-intensive cities in Finland, Russia 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. The aim is to generate this growth through both organic growth and acquisitions. The Group's minimum equity ratio target is 35 %. The Group's financial performance depends of the development of the overall business environment, customer operations, as well as the market yields from the financial and real estate markets. Developments in these areas and resulting changes in the occupancy rate, use of services, financing costs, the fair value of properties and the rent levels of premises can have an impact on the Group's sales and earnings. October 22, 2010 TECHNOPOLIS PLC Board of Directors Keith Silverang CEO For further information, please contact: Keith Silverang, tel. +358 40 566 7785 A pdf-presentation of the interim report is available at the company's website at www.technopolis.fi/for_investors/presentations. Technopolis provides an online bulletin service that you can join by visiting the company's website at http://www.technopolis.fi/for_investors/releases_service. Individuals who sign up with the service will receive the company's bulletins electronically. The accounting policies applied in the interim report and the formulas for calculating key indicators are the same as in the 2009 annual report. The interim report has been prepared in accordance with the IFRS recognition and valuation principles; the IAS 34 requirements have also been complied with. On September 30, 2010, Technopolis had two operational segments based on geographical units: Finland and Russia. 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 figures are unaudited. Technopolis Group: -------------------------------------------------------------------------------- | STATEMENT OF | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ | | COMPREHENSIVE INCOME | | | | | | -------------------------------------------------------------------------------- | Currency unit: EUR | 2010 | 2009 | 2010 | 2009 | 2009 | | million | | | | | | -------------------------------------------------------------------------------- | Net sales | 19.16 | 18.58 | 58.36 | 56.74 | 76.40 | -------------------------------------------------------------------------------- | Other operating income | 0.25 | 0.45 | 0.84 | 1.51 | 2.43 | -------------------------------------------------------------------------------- | Other operating expenses | -8.91 | -8.73 | -28.09 | -28.21 | -38.86 | -------------------------------------------------------------------------------- | Change in fair value of | -2.48 | -2.56 | -1.79 | -31.15 | -37.13 | | investment properties | | | | | | -------------------------------------------------------------------------------- | Depreciation | -0.31 | -0.13 | -0.74 | -0.39 | -0.52 | -------------------------------------------------------------------------------- | Operating profit/loss | 7.71 | 7.62 | 28.58 | -1.50 | 2.31 | -------------------------------------------------------------------------------- | Finance income and | -2.23 | -3.04 | -7.25 | -9.28 | -11.76 | | expenses | | | | | | -------------------------------------------------------------------------------- | Result before taxes | 5.48 | 4.57 | 21.33 | -10.78 | -9.45 | -------------------------------------------------------------------------------- | Income taxes | -1.13 | -1.42 | -6.79 | 2.56 | 1.95 | -------------------------------------------------------------------------------- | Net result for the | 4.35 | 3.15 | 14.54 | -8.23 | -7.50 | | period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other comprehensive | | | | | | | income items | | | | | | -------------------------------------------------------------------------------- | Available-for-sale | 0.02 | 0.03 | 0.03 | 0.06 | 0.08 | | financial assets | | | | | | -------------------------------------------------------------------------------- | Taxes related to other | -0.01 | -0.01 | -0.01 | -0.02 | -0.02 | | comprehensive income | | | | | | | items | | | | | | -------------------------------------------------------------------------------- | Other comprehensive | 0.02 | 0.02 | 0.02 | 0.05 | 0.06 | | income items after taxes | | | | | | | for the period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comprehensive income for | 4.37 | 3.18 | 14.56 | -8.18 | -7.44 | | the period, total | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Distribution of profit | | | | | | | for the period: | | | | | | -------------------------------------------------------------------------------- | To parent company | 4.35 | 3.17 | 14.54 | -8.18 | -7.44 | | shareholders | | | | | | -------------------------------------------------------------------------------- | To non-controlling | 0.00 | -0.02 | 0.00 | -0.05 | -0.05 | | shareholders | | | | | | -------------------------------------------------------------------------------- | | 4.35 | 3.15 | 14.54 | -8.23 | -7.50 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Distribution of | | | | | | | comprehensive income for | | | | | | | the period: | | | | | | -------------------------------------------------------------------------------- | To parent company | 4.37 | 3.17 | 14.56 | -8.16 | -7.38 | | shareholders | | | | | | -------------------------------------------------------------------------------- | To non-controlling | 0.00 | 0.01 | 0.00 | -0.02 | -0.05 | | shareholders | | | | | | -------------------------------------------------------------------------------- | | 4.37 | 3.18 | 14.56 | -8.18 | -7.44 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share based on result of flowing to parent company | | shareholders: | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings/share, basic (EUR) | 0.07 | 0.06 | 0.24 | -0.14 | -0.13 | -------------------------------------------------------------------------------- | Earnings/share, adjusted for | 0.07 | 0.06 | 0.24 | -0.14 | -0.13 | | dilutive effect (EUR) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | STATEMENT OF FINANCIAL POSITION, ASSETS | -------------------------------------------------------------------------------- | Currency unit: EUR million | 9/30/2010 | 9/30/2009 | 12/31/2009 | -------------------------------------------------------------------------------- | Non-current assets | | | | -------------------------------------------------------------------------------- | Intangible assets | 4.07 | 2.03 | 2.81 | -------------------------------------------------------------------------------- | Tangible assets | 62.94 | 50.28 | 62.79 | -------------------------------------------------------------------------------- | Investment property | 651.32 | 596.40 | 596.73 | -------------------------------------------------------------------------------- | Investments | 11.72 | 25.90 | 25.61 | -------------------------------------------------------------------------------- | Deferred tax assets | 3.79 | 2.46 | 2.81 | -------------------------------------------------------------------------------- | Non-current assets | 733.83 | 677.07 | 690.75 | -------------------------------------------------------------------------------- | Current assets | 14.10 | 14.63 | 15.34 | -------------------------------------------------------------------------------- | Assets, total | 747.93 | 691.70 | 706.09 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Currency unit: EUR million | 9/30/2010 | 9/30/2009 | 12/31/2009 | -------------------------------------------------------------------------------- | Shareholders' equity | | | | -------------------------------------------------------------------------------- | Share capital | 96.91 | 96.91 | 96.91 | -------------------------------------------------------------------------------- | Premium fund | 18.55 | 18.55 | 18.55 | -------------------------------------------------------------------------------- | Other funds | 84.22 | 63.93 | 63.94 | -------------------------------------------------------------------------------- | Other shareholders' equity | 0.46 | 0.43 | 0.65 | -------------------------------------------------------------------------------- | Retained earnings | 73.81 | 89.21 | 89.21 | -------------------------------------------------------------------------------- | Net result for the period | 14.54 | -8.18 | -7.44 | -------------------------------------------------------------------------------- | Parent company's shareholders' | 288.50 | 260.86 | 261.83 | | interests | | | | -------------------------------------------------------------------------------- | Non-controlling interests | 0.01 | 0.12 | 0.01 | -------------------------------------------------------------------------------- | Shareholders' equity, total | 288.51 | 260.98 | 261.84 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities | | | | -------------------------------------------------------------------------------- | Non-current liabilities | | | | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 346.72 | 349.95 | 360.67 | -------------------------------------------------------------------------------- | Non-interest-bearing liabilities | 1.17 | 1.28 | 1.25 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 39.30 | 32.75 | 32.62 | -------------------------------------------------------------------------------- | Non-current liabilities, total | 387.20 | 383.98 | 394.55 | -------------------------------------------------------------------------------- | Current liabilities | | | | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 53.01 | 26.21 | 28.03 | -------------------------------------------------------------------------------- | Non-interest-bearing liabilities | 19.22 | 20.53 | 21.67 | -------------------------------------------------------------------------------- | Current liabilities, total | 72.22 | 46.74 | 49.70 | -------------------------------------------------------------------------------- | Liabilities, total | 459.42 | 430.72 | 444.25 | -------------------------------------------------------------------------------- | Shareholders' equity and | 747.93 | 691.70 | 706.09 | | liabilities, total | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | STATEMENT OF CASH FLOWS | 1-9/ | 1-9/ | 1-12/ | -------------------------------------------------------------------------------- | Currency unit: EUR million | 2010 | 2009 | 2009 | -------------------------------------------------------------------------------- | Cash flows from operating activities | | | | -------------------------------------------------------------------------------- | Net result for the period | 14.54 | -8.23 | -7.50 | -------------------------------------------------------------------------------- | Adjustments: | | | | -------------------------------------------------------------------------------- | Change in fair value of investment | 1.79 | 31.15 | 37.13 | | properties | | | | -------------------------------------------------------------------------------- | Depreciation | 0.74 | 0.39 | 0.52 | -------------------------------------------------------------------------------- | Share in affiliate profits | 0.01 | -0.01 | -0.01 | -------------------------------------------------------------------------------- | Other adjustments for non-cash | 0.55 | 0.44 | 0.67 | | transactions | | | | -------------------------------------------------------------------------------- | Financial income and expenses | 7.23 | 9.29 | 11.77 | -------------------------------------------------------------------------------- | Taxes | 6.79 | -2.56 | -1.95 | -------------------------------------------------------------------------------- | Increase / decrease in working capital | 2.34 | 2.89 | 1.85 | -------------------------------------------------------------------------------- | Interests received | 0.24 | 0.38 | 0.57 | -------------------------------------------------------------------------------- | Dividends received | 0.01 | 0.01 | 0.01 | -------------------------------------------------------------------------------- | Interests paid and fees | -5.30 | -8.79 | -10.54 | -------------------------------------------------------------------------------- | Other financial items in operating | -2.56 | -2.41 | -1.74 | | activities | | | | -------------------------------------------------------------------------------- | Taxes paid | -4.70 | -1.68 | -1.79 | -------------------------------------------------------------------------------- | Net cash provided by operating | 21.69 | 20.87 | 28.99 | | activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from investing activities | | | | -------------------------------------------------------------------------------- | Investments in other securities | -0.40 | -0.02 | -0.02 | -------------------------------------------------------------------------------- | Investments in investment properties | -40.03 | -44.93 | -62.96 | -------------------------------------------------------------------------------- | Investments in tangible and intangible | -2.85 | -0.22 | -1.05 | | assets | | | | -------------------------------------------------------------------------------- | Repayments of loan receivables | 3.14 | 0.49 | 1.06 | -------------------------------------------------------------------------------- | Gains from disposals of other | 0.01 | 0.00 | 0.01 | | investments | | | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries | -2.38 | -0.10 | -0.21 | -------------------------------------------------------------------------------- | Net cash used in investing activities | -42.51 | -44.78 | -63.17 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from financing activities | | | | -------------------------------------------------------------------------------- | Increase in long-term loans | 17.50 | 42.00 | 58.41 | -------------------------------------------------------------------------------- | Decrease in long-term loans | -27.44 | -12.12 | -15.98 | -------------------------------------------------------------------------------- | Dividends paid | -8.60 | -6.88 | -6.88 | -------------------------------------------------------------------------------- | Paid share issue | 20.49 | | | -------------------------------------------------------------------------------- | Change in short-term loans | 19.13 | -4.00 | -4.00 | -------------------------------------------------------------------------------- | Net cash provided by financing | 21.09 | 19.01 | 31.55 | | activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net increase/decrease in cash assets | 0.27 | -4.91 | -2.63 | -------------------------------------------------------------------------------- | Cash and cash equivalents at | 4.52 | 7.15 | 7.15 | | period-start | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at period-end | 4.79 | 2.24 | 4.52 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | STATEMENT OF CHANGES | | | | | | | IN EQUITY | | | | | | -------------------------------------------------------------------------------- | Currency | Share | Premium | Other | Retained | Non-contro | Sharehol | | unit: EUR | capital | fund | funds | earnings | lling | ders' | | million | | | | | shareholde | equity | | | | | | | rs | | -------------------------------------------------------------------------------- | EQUITY Dec | 96.91 | 18.55 | 63.82 | 96.16 | 0.26 | 275.70 | | 31, 2008 | | | | | | | -------------------------------------------------------------------------------- | Share | | | | | | | | capital | | | | | | | | increase | | | | | | | -------------------------------------------------------------------------------- | Directed | | | | | | | | share issue | | | | | | | -------------------------------------------------------------------------------- | Dividend | | | | -6.88 | | -6.88 | | distribution | | | | | | | -------------------------------------------------------------------------------- | Comprehensiv | | | 0.05 | -8.18 | -0.05 | -8.18 | | e income for | | | | | | | | the period | | | | | | | -------------------------------------------------------------------------------- | Other | | | 0.06 | 0.37 | -0.10 | 0.34 | | changes | | | | | | | -------------------------------------------------------------------------------- | EQUITY | 96.91 | 18.55 | 63.93 | 81.47 | 0.12 | 260.98 | | September, | | | | | | | | 30, 2009 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EQUITY Dec | 96.91 | 18.55 | 63.94 | 82.42 | 0.01 | 261.84 | | 31, 2009 | | | | | | | -------------------------------------------------------------------------------- | New shares | | | 20.19 | | | 20.19 | | to issue in | | | | | | | | deviation | | | | | | | -------------------------------------------------------------------------------- | Dividend | | | | -8.60 | | -8.60 | | distribution | | | | | | | -------------------------------------------------------------------------------- | Comprehensiv | | | 0.02 | 14.54 | 0.00 | 14.56 | | e income for | | | | | | | | the period | | | | | | | -------------------------------------------------------------------------------- | Other | | | 0.06 | 0.45 | | 0.52 | | changes | | | | | | | -------------------------------------------------------------------------------- | EQUITY | 96.91 | 18.55 | 84.22 | 88.81 | 0.01 | 288.51 | | September | | | | | | | | 30, 2010 | | | | | | | -------------------------------------------------------------------------------- Financial Information by Segment The Group's net sales or EBITDA do not include 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 | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ | -------------------------------------------------------------------------------- | Currency unit: EUR | 2010 | 2009 | 2010 | 2009 | 2009 | | million | | | | | | -------------------------------------------------------------------------------- | Net sales | | | | | | -------------------------------------------------------------------------------- | Finland | 19.23 | 18.50 | 58.11 | 56.54 | 76.13 | -------------------------------------------------------------------------------- | Russia | -0.05 | 0.10 | 0.29 | 0.24 | 0.34 | -------------------------------------------------------------------------------- | Unallocated and | -0.02 | -0.01 | -0.04 | -0.05 | -0.06 | | eliminations | | | | | | -------------------------------------------------------------------------------- | Total | 19.16 | 18.58 | 58.36 | 56.74 | 76.40 | -------------------------------------------------------------------------------- | EBITDA | | | | | | -------------------------------------------------------------------------------- | Finland | 10.95 | 11.26 | 31.67 | 33.27 | 43.81 | -------------------------------------------------------------------------------- | Russia | -0.23 | -0.07 | -0.70 | -0.35 | -0.43 | -------------------------------------------------------------------------------- | Unallocated and | -0.23 | -0.89 | 0.14 | -2.89 | -3.41 | | eliminations | | | | | | -------------------------------------------------------------------------------- | Total | 10.50 | 10.30 | 31.11 | 30.03 | 39.97 | -------------------------------------------------------------------------------- | Assets | | | | | | -------------------------------------------------------------------------------- | Finland | | | 742.35 | 684.22 | 691.46 | -------------------------------------------------------------------------------- | Russia | | | 47.56 | 32.85 | 38.41 | -------------------------------------------------------------------------------- | Eliminations | | | -41.98 | -25.37 | -23.78 | -------------------------------------------------------------------------------- | Total | | | 747.93 | 691.70 | 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 | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ | -------------------------------------------------------------------------------- | Currency unit: EUR | 2010 | 2009 | 2010 | 2009 | 2009 | | million | | | | | | -------------------------------------------------------------------------------- | Net sales | 19.16 | 18.58 | 57.52 | 56.74 | 76.40 | -------------------------------------------------------------------------------- | Other operating income | 0.24 | 0.37 | 0.75 | 1.41 | 2.24 | -------------------------------------------------------------------------------- | Other operating expenses | -8.91 | -8.73 | -28.09 | -28.21 | -38.86 | -------------------------------------------------------------------------------- | Depreciation | -0.31 | -0.13 | -0.74 | -0.39 | -0.52 | -------------------------------------------------------------------------------- | Operating profit/loss | 10.18 | 10.09 | 29.44 | 29.54 | 39.26 | -------------------------------------------------------------------------------- | Finance income and | -2.34 | -2.92 | -6.17 | -8.84 | -9.75 | | expenses, total | | | | | | -------------------------------------------------------------------------------- | Result before taxes | 7.85 | 7.17 | 23.27 | 20.70 | 29.51 | -------------------------------------------------------------------------------- | Taxes for direct result | -1.34 | -1.64 | -6.30 | -5.10 | -7.91 | | items | | | | | | -------------------------------------------------------------------------------- | Non-controlling | | 0.02 | 0.00 | 0.05 | 0.05 | | interests | | | | | | -------------------------------------------------------------------------------- | Direct result for the | 6.51 | 5.55 | 16.97 | 15.64 | 21.66 | | period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INDIRECT RESULT | | | | | | -------------------------------------------------------------------------------- | Non-recurring items | 0.01 | 0.08 | 0.93 | 0.10 | 0.18 | -------------------------------------------------------------------------------- | Change in fair value of | -2.48 | -2.56 | -1.79 | -31.15 | -37.13 | | investment properties | | | | | | -------------------------------------------------------------------------------- | Operating profit/loss | -2.47 | -2.47 | -0.86 | -31.05 | -36.95 | -------------------------------------------------------------------------------- | Change in fair value of | 0.11 | -0.12 | -1.08 | -0.44 | -2.01 | | financial instruments | | | | | | -------------------------------------------------------------------------------- | Result before taxes | -2.36 | -2.59 | -1.94 | -31.48 | -38.96 | -------------------------------------------------------------------------------- | Taxes for indirect | 0.21 | 0.22 | -0.49 | 7.66 | 9.86 | | result items | | | | | | -------------------------------------------------------------------------------- | Indirect result for the | -2.16 | -2.38 | -2.44 | -23.82 | -29.10 | | period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Result for the period to | 4.35 | 3.17 | 14.54 | -8.18 | -7.44 | | the parent company | | | | | | | shareholders, total | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share, | | | | | | | diluted *) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | From direct result | 0.11 | 0.10 | 0.28 | 0.27 | 0.38 | -------------------------------------------------------------------------------- | From indirect result | -0.04 | -0.04 | -0.04 | -0.42 | -0.51 | -------------------------------------------------------------------------------- | From net result for the | 0.07 | 0.06 | 0.24 | -0.14 | -0.13 | | period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | *) Earnings per share | | | | | | | calculated according to | | | | | | | EPRA's instructions. | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY INDICATORS | 1-9/ | 1-9/ | 1-12/ | -------------------------------------------------------------------------------- | | 2010 | 2009 | 2009 | -------------------------------------------------------------------------------- | Change in net sales, % | 2.9 | 7.0 | 5.3 | -------------------------------------------------------------------------------- | Operating profit/loss / net | 49.0 | -2.7 | 3.0 | | sales, % | | | | -------------------------------------------------------------------------------- | Interest coverage ratio | 5.3 | 3.6 | 3.8 | -------------------------------------------------------------------------------- | Equity ratio, % | 38.8 | 38.0 | 37.3 | -------------------------------------------------------------------------------- | Loan to value, % | 56.2 | 58.4 | 59.1 | -------------------------------------------------------------------------------- | Group company personnel during | 134 | 152 | 152 | | the period, average | | | | -------------------------------------------------------------------------------- | Gross expenditure on assets, | 58 248 | 45 839 | 66 029 | | EUR 1,000 | | | | -------------------------------------------------------------------------------- | Net rental revenue of investment | 7.7 | 7.9 | 7.6 | | properties, % 2) | | | | -------------------------------------------------------------------------------- | Financial occupancy rate, % | 93.7 | 94.3 | 94.4 | -------------------------------------------------------------------------------- | Earnings/share | | | | -------------------------------------------------------------------------------- | basic, EUR | 0.24 | -0.14 | -0.13 | -------------------------------------------------------------------------------- | diluted, EUR | 0.24 | -0.14 | -0.13 | -------------------------------------------------------------------------------- | Equity/share, EUR | 4.79 | 4.55 | 4.57 | -------------------------------------------------------------------------------- | Average issue-adjusted number of | | | | | shares | | | | -------------------------------------------------------------------------------- | basic | 60 250 705 | 57 345 341 | 57 345 341 | -------------------------------------------------------------------------------- | diluted | 60 383 248 | 57 345 341 | 57 345 341 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONTINGENT LIABILITIES | | | | -------------------------------------------------------------------------------- | Currency unit: EUR million | 9/30/2010 | 9/30/2009 | 12/31/2009 | -------------------------------------------------------------------------------- | Pledges and guarantees on own | | | | | debt | | | | -------------------------------------------------------------------------------- | Mortgages of properties | 352.70 | 345.3 | 353.90 | -------------------------------------------------------------------------------- | Book value of pledged | 157.90 | 161.3 | 162.10 | | securities | | | | -------------------------------------------------------------------------------- | Other guarantee liabilities | 12.90 | 12.9 | 12.70 | -------------------------------------------------------------------------------- | Collateral given on behalf of | 0.50 | 0.5 | 0.50 | | associates | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Leasing liabilities, machinery | 3.40 | 2.3 | 2.21 | | and equipment | | | | -------------------------------------------------------------------------------- | Project liabilities | 0.15 | 0.15 | 0.15 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest rate and currency | | | | | swaps | | | | -------------------------------------------------------------------------------- | Nominal values | 92.10 | 139.8 | 107.70 | -------------------------------------------------------------------------------- | Fair values | -1.66 | 0.39 | -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. 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