2012-10-26 07:00:01 CEST
2012-10-26 07:00:10 CEST
REGULATED INFORMATION
Technopolis - Interim report (Q1 and Q3)
Technopolis Group Interim Report January 1 - September 30, 2012
TECHNOPOLIS PLC INTERIM REPORT October 26, 2012 at 8:00 a.m.
Technopolis Group Interim Report January 1 - September 30, 2012
Highlights for 1-9/2012 compared to the corresponding period in 2011:
- Net sales rose to EUR 78.7 (68.0) million, up 15.7%
- EBITDA rose to EUR 40.3 (34.7) million, up 16.2%
- Change in the fair value of investment properties was EUR -6.0 (25.7)
million, decreasing the operating profit, profit before taxes, and profit
attributable to the shareholders of the parent
- Operating profit decreased to EUR 32.9 (59.0) million
- Profit before taxes decreased to EUR 23.3 (49.6) million
- Profit attributable to the shareholders of the parent totaled EUR 17.1 (35.7)
million
- The equity ratio was 36.9% (36.2)
- The financial occupancy rate was 94.8% (95.7)
- Net rental revenue from investment properties amounted to 7.8% (7.7)
- Earnings per share (undiluted) were EUR 0.25 (0.54) and diluted EUR 0.25
(0.54)
- Cash flow from operations per share was EUR 0.34 (0.33)
- Net assets value per share amounted to EUR 5.52 (5.51)
- Guidance on net sales and EBITDA growth upgraded to 14-16%
The increase in net sales and EBITDA was mainly due to an increase of 7.2% in
total rentable space and an increase of 3.4% in like-for-like rental income. A
change of EUR -6.0 (25.7) million in the fair value of investment properties
had a negative impact on the figures. Without the change in fair value and
related tax effects, the operating profit amounted to EUR 38.8 (33.3) million,
profit before taxes was EUR 29.3 (23.9) million, and profit attributable to the
shareholders of the parent company increased to EUR 21.2 (16.7) million.
Excluding the change in fair value, the profit figures improved slightly
relative to net sales.
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
Key indicators 2012 2011 2012 2011 2011
-----------------------------------------------------------------------------
Net sales, EUR million 26.6 23.0 78.7 68.0 92.8
EBITDA, EUR million 14.4 12.3 40.3 34.7 47.5
Operating profit, EUR million 14.1 22.0 32,9 59.0 72.0
Net result for the period, EUR million 8.9 11.2 17.1 35.7 46.7
Earnings/share, EUR (undiluted) 0.13 0.17 0.25 0.54 0.70
Earnings/share, EUR (diluted) 0.13 0.17 0.25 0.54 0.70
Cash flow from operating activities/share, EUR 0.14 0.10 0.34 0.33 0.46
Equity ratio, % 36.9 36.2 36.9 36.2 35.8
Equity/share, EUR 5.37 4.79 5.37 4.79 4.96
Last year's share-related figures have been adjusted for the share issue.
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EPRA-based key indicators 2012 2011 2012 2011 2011
-----------------------------------------------------------------
Direct result, EUR million 8.7 3.1 21.0 14.8 24.6
Direct result/share, EUR (diluted) 0.13 0.05 0.31 0.22 0.37
Net asset value/share, EUR 5.52 5.51 5.52 5.51 5.65
Net rental revenue, % 7.8 7.7 7.8 7.7 7.8
Financial occupancy rate, % 94.8 95.7 94.8 95.7 95.1
The EPRA-based (European Real Estate Association) direct result increased by
41.9% year-on-year to EUR 21.0 (14.8) million. The increase was due to an
increase in rentable space and rents. Furthermore, the strengthening of the
Russian ruble contributed to the direct result and comprehensive income,
resulting in the recognition of EUR 1.2 (-2.2) million in financial income.
Keith Silverang, CEO:
Despite continuous macroeconomic uncertainty, the company's situation has
remained stable. Technopolis continues to aim for profitable growth. At the
core of the company's growth strategy is the expansion of our existing campuses
and the acquisition of new ones.
The closing of the Tohloppi deal after the third quarter will strengthen our
position in Tampere and add the multimedia and the creative fields to our
portfolio. The project can be replicated elsewhere, and it will also bring us a
stable and long-term anchor customer, Yle (Finland's national public
broadcasting company) with whom we signed a twenty-year lease that will boost
the Group's average lease length and stock.
We have also strengthened our organic growth outside the domestic market. Our
campuses in St. Petersburg and Tallinn will grow significantly as the result of
ongoing construction projects. We have also actively continued to investigate
opportunities for acquisitions. In the Baltic countries, property valuation
levels are low, while St. Petersburg offers a favorable growth outlook. The
Nordic countries offer stable market conditions.
More stringent solvency requirements, as well as general economic conditions
have spurred banks to increase their margins. Despite this the Group's average
interest rate dropped from the previous quarter, falling to 2.12%. The company
is also preparing for a possible increase in interest rates and prevailing low
market rates provide good opportunities to increase our hedging ratio.
The outlook for the remainder of 2012 is clear, and therefore the company
raised its guidance for the full year. We will focus on the management of risks
and particularly on customers, in addition to preparing for possible changes in
business conditions.
Business Environment and Segments
Uncertainty in the global economy has continued despite the recent measures by
the European and U.S. central banks. Europe is in recession, but the U.S.
growth outlook has improved recently. Forecasts predict slight growth in Europe
next year, but there are major uncertainties associated with forecasts under
prevailing conditions.
Despite challenging economic conditions, the demand for Technopolis office
space remained satisfactory. The Group's financial occupancy rates are as
follows:
September 30, June 30, March 31, December 31, September 30,
2012 2012 2012 2011 2011
--------------------------------------------------------------------------------
Group 94.8 94.1 94.3 95.1 95.7
--------------------------------------------------------------------------------
Finland 94.7 93.9 94.4 95.1 95.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Oulu 93.3 91.8 92.2 91.8 94.7
HMA 92.0 88.4 95.5 95.3 95.3
Tampere 98.1 98.7 98.6 98.5 98.0
Kuopio 94.3 96.4 96.1 98.2 97.4
Jyväskylä 98.4 98.2 91.4 96.8 96.9
Lappeenran 93.5 92.3 94.7 92.6 95.6
ta
Estonia 92.5 92.9 90.2 90.7 94.4
--------------------------------------------------------------------------------
Russia 100.0 99.4 97.1 100.0 95.3
--------------------------------------------------------------------------------
Finland
The Finnish office rental market was affected by general economic uncertainty
caused by the debt crisis in the Eurozone. Companies are preparing for the
economic downturn with personnel cuts, which has on the other hand encouraged
new entrepreneurship. Startups need flexible and adaptable space, which offers
Technopolis new business opportunities.
In the Helsinki metropolitan area, the increase in office vacancies seems to
have stopped, and the occupancy rate of office space stood at 89.2% at the end
of the period. Occupancy rates may however decrease in the near future as the
result of the soft economic cycle and increase in capacity. Approximately
160,000 square meters of new office space is under construction in the Helsinki
metropolitan area. In Oulu, office occupancy rates were 93.7%, and demand is
focused on the downtown area. The office occupancy rate in Tampere was 93.6%.
Tampere occupancy rates are estimated to decrease slightly due to space being
vacated by Nokia and its subcontractors. Office occupancy rates in Jyväskylä
were 93.8%, the same level as in the beginning of the year.
In the previous quarter Technopolis Helsinki metropolitan area occupancies
declined due to the commissioning of Ruoholahti Phase 2. In the third quarter
the Ruoholahti situation improved and occupancies rebounded. In Oulu, occupancy
rate rose to 93.3%. In Kuopio, occupancy rates decreased by 2.1%, primarily due
to alteration works needed to accommodate the expansion of a customer. In other
locations, there were no major changes during the quarter.
The net sales and EBITDA of Finnish operations developed favorably. Net sales
were EUR 71.3 (62.7) million and EBITDA was EUR 37.5 (32.7) million. Net sales
increased by 13.7% and EBITDA by 14.9% compared to the corresponding period in
2011. In particular, investments in the healthcare and educational sectors
generated growth.
Russia
The Russian economy, which is dependent on raw material exports, has remained
relative stable, and it is expected to grow at a rate of almost 4% in real
terms this year. The St. Petersburg region is expected to exceed this rate of
growth.
The Technopolis unit in Russia is in the Pulkovo area, close to the St.
Petersburg international airport. During the third quarter, demand in St.
Petersburg focused on Class A office properties, whose occupancy rates and
rents have increased. Occupancy rates for the St. Petersburg area were 91.0%
(88.0). Technopolis Pulkovo's financial occupancy returned to the 100% level it
was at in the end of the previous year (95.3).
In St. Petersburg, the net sales of Technopolis Pulkovo totaled EUR 3.7 (1.7)
million and EBITDA was EUR 1.2 (-0.5) million. Rents have increased markedly as
the result of lease renegotiations held early in 2012.
Estonia
Estonia's gross domestic product is expected to increase by approximately 2% in
real terms in 2012. The Estonian economy is in good shape and the country is
nearly debt free.
In Tallinn, where the Technopolis Ülemiste subsidiary operates, office
occupancy rates have stabilized at approximately 93%. The occupancy rate of the
company's airport campus was 92.5% (94.4%). Demand is strong in downtown areas,
with the occupancy rates of high-quality office premises at 95-97%.
Net sales and EBITDA of the Technopolis Ülemiste airport campus remained at a
good level. Net sales were EUR 3.6 (3.5) million and EBITDA was EUR 2.3 (2.5)
million.
Financial Performance
The Group's net sales for the period under review were EUR 78.7 million (EUR
68.0 million), an increase of 15.7%. Rental revenue accounted for 87.0% (86.7%)
and service revenue for 13.0% (13.3%) of net sales. Like-for-like rental growth
was 3.4%, primarily due to index increases.
Breakdown of net sales and EBITDA by business type, excluding eliminations:
7-9/2012 7-9/2011 1-9/2012 1-9/2011 1-12/2011
------------------------------------------------------------
Space
Net sales 23.2 20.2 68.4 59.3 80.7
EBITDA 15.9 13.6 45.3 38.7 52.9
EBITDA % 68.4 67.4 66.2 65.3 65.6
------------------------------------------------------------
Services
Net sales 3.3 2.7 10.2 8.6 12.1
EBITDA 0.3 0.3 0.9 1.4 2.0
EBITDA % 8.6 10.8 9.1 16.2 16.4
------------------------------------------------------------
The EBITDA for the office rental business for the first three quarters
increased by 0.9 percentage points. The EBITDA margin decreased to 9.1% (16.2%)
in the service business. This was mainly due to a change in the allocation of
operating expenses in internal accounting. The Group's EBITDA was EUR 40.3
(34.7) million, an increase of 16.2%.
The Group's operating profit totaled EUR 32.9 (59.0) million. The decrease in
operating profit is mainly due to a decline in the fair value of investment
properties. Changes in fair value amounted to EUR -6.0 (25.7) million for the
period. Without the change in fair value, operating profit was EUR 38.8 (33.3)
million.
The Group's net financial expenses totaled EUR 9.6 (9.5) million. In 2011, EUR
1.7 million of unrealized interest swap income was recognized in the
comprehensive statement of income before the Group changed to the IAS 39 hedge
accounting as of 1 May 2011. Financial income of EUR 1.2 (-2.2) million was
recognized from the strengthening of the Russian ruble.
The Group's result before taxes totaled EUR 23.3 (49.6) million. Without the
change in fair value, the result before taxes was EUR 29.3 (23.9) million.
The Group's EPRA-based direct result increased by 41.9% to EUR 21.0 (14.8)
million. The increase in the direct result and net sales was due to an increase
of 7.2% in the property portfolio and like-for-like rental growth of 3.4%. The
strengthening of the Russian ruble by EUR 1.2 (-2.2) million contributed
positively to the net financial items. The direct result per share was EUR 0.31
(0.22).
Customers and Lease Stock
The Group has a total of approximately 1,400 customers across a wide range of
sectors. Service companies make up the company's largest customer segment,
accounting for approximately 23% of the company's rentable space. The twenty
largest customers lease approximately 33% of the company's rentable space.
Lease stock June March Decembe September 30,
30, 31, r 2011
2012 2012 31,
2011
------------------------------------------
Notice period in September 30,
months 2012
--------------------------------------
--------------------------------------------------------------------------------
0-3 17.3 16.1 16.7 13.1 15.8
3-6 28.1 30.5 29.4 28.7 28.1
6-9 7.4 4.9 5.8 6.2 7,6
9-12 7.6 7.7 5.6 5.7 6.5> 12 months, total 39.6 40.8 42.5 46.3 42.0
--------------------------------------------------------------------------------
Average lease term in 25 27 26 26 21
months
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Lease stock, EUR 238.2 239.7 215.6 215.4 149.3
million
The increase in the share of 0-3 month leases is mainly attributable to the
expiry of certain long fixed-term leases by the year-end 2012. In other
respects, the proportions are on the same level as 2011, which reflects the
normal lease stock for the Group. The average lease period and lease stock have
increased considerably year-on-year. Long fixed-term leases signed by the
company with the public sector since the fourth quarter of last year have
contributed to this development.
Investment Properties
The fair value of the Group's investment properties totaled EUR 963.2 (863.3)
million at the end of the period, of which completed investment properties
accounted for EUR 902.5 (793.7) million and properties under construction for
EUR 60.7 (69.6) million. 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 yields, as reported by two independent appraisal
agencies for each individual region. At the end of the period, the average net
yield for Group properties was 8.0% (8.0%). The average ten-year occupancy rate
used in fair value calculations was 94.9% (95.7%). The Group's average
occupancy rate was 96.2% (96.7%) over the period 2002-2011.
The Group's total rentable space at the end of the period was 604,100 (564,000)
square meters, up 7.2%, with 75,100 (47,200) square meters under construction.
The Group's financial occupancy rate at the end of the period was 94.8%
(95.7%). 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.
Geographically, the Group's property portfolio is diversified between the Oulu
region, the Helsinki metropolitan area, Tampere, Kuopio, Jyväskylä,
Lappeenranta, Tallinn, and St. Petersburg. Technopolis facilities are located
next to good transport connections in the vicinity of universities, airports
and downtown areas.
Investment properties September 30, Fair value, Net yield m2
2012 EUR million requirement,%
--------------------------------------------------------------------------------
Finland 784.7 7.9 491,300
Oulu 224.2 8.5 192,900
HMA 206.5 7.0 86,600
Tampere 134.1 7.3 70,300
Kuopio 93.6 8.4 57,500
Jyväskylä 97.1 7.9 56,700
Lappeenrant 29.1 8.9 27,300
a
Estonia Tallinn 64.4 8.4 79,200
Russia St. 53.5 10.6 24,100
Petersburg
--------------------------------------------------------------------------------
Completed investment Total 902.5 8.0 594,600
properties
--------------------------------------------------------------------------------
Investment properties Total 8 60.7 6.9-10.1 75,100
under construction 1) properties
--------------------------------------------------------------------------------
Investment properties completed and 963.2 669,700
under construction, total
--------------------------------------------------------------------------------
Other properties (holdings and rented) 9,500
--------------------------------------------------------------------------------
Fair value on the basis of their rate of completion as of the balance sheet day.
Investments
At the end of the period under review, Technopolis had office space under
construction in Tampere, Kuopio, and Jyväskylä in Finland as well as in
Tallinn, Estonia and St. Petersburg, Russia. The projects are expansions of
existing campuses.
Investments completed during the last 12 months and projects under construction
during the period are as follows:
Area Name Occupanc m2 EUR Initial Completio
y million yield % n
rate, %
--------------------------------------------------------------------------------
Completed
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tampere Finnmedi 99.9 12,900 27.9 7.1 11/2011
Kuopio Viestikatu 2 99.3 3,400 5.0 7.9 01/2012
B
Tampere Hermia 15 B 99.5 4,800 10.9 7.2 01/2012
Jyväskylä Innova 2 100.0 9,600 20.5 7.7 03/2012
HMA Ruoholahti 2 87.8 9,000 27.3 5.9 06/2012
Under construction
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tampere 1) Yliopistonrin 55.4 7,900 22.5 6.2 10/2012
ne 2
Kuopio Viestikatu 7B 80.0 4,800 8.5 7.4 01/2013
Kuopio Viestikatu 7C 50.6 4,800 8.2 8.3 01/2013
Tallinn Löötsa 8C 96.0 8,200 8.3 8.6 01/2013
St. Pulkovo 2 0.0 22,700 42.0 10.6 10/2013
Petersburg
Tallinn Löötsa 8A & B 52.6 17,800 24.3 8.1 10/2013
Jyväskylä Innova 4 24.6 8,900 23.4 7.7 10/2013
--------------------------------------------------------------------------------
Occupancy rate 85.4% in October.
Financing
The Group's balance sheet totaled EUR 1,038.8 (917.9) million, of which
liabilities totaled EUR 657.5 (587.1) million. The Group's equity ratio was
36.9% (36.2%). The increase was mainly due to a rights issue with a net intake
of EUR 31.8 million during the second quarter. At the end of the period, the
Group's net gearing was 147.4% (154.7%). The Group's equity per share was EUR
5.37 (EUR 4.79).
At the end of the period, the Group's interest-bearing liabilities amounted to
EUR 580.3 million (EUR 517.6 million), and the average capital-weighted loan
period was 9.0 years (8.6 years). The average interest rate on interest-bearing
liabilities was 2.12% (2.85 %). Of interest-bearing liabilities, 67.7% (60.4%)
were floating rate loans and 32.3% (39.6%) were fixed rate loans at the end of
the period. The relative proportion of fixed interest rates fell due to the low
probability of rising interest rates. The company aims to keep the minimum
share of fixed interest rate in interest-bearing liabilities at the level of
the end of the period.
At the end of the reporting period, Technopolis had EUR 110.3 (74.9) million in
untapped credit facilities and cash amounting to EUR 18.3 (5.6) million. The
credit facilities contained a EUR 89.6 (60.0) million credit line and a EUR
20.7 (14.9) million revolving credit facility. In addition, the company has a
EUR 120.0 (120.0) million commercial paper program, of which EUR 34.0 (25.0)
million was issued at the end of the reporting period.
During the 12-month period following the period under review, EUR 94.9 (73.5)
million in existing interest-bearing loans will mature.
The company's five largest creditors at the end of the period under review were
the European Investment Bank, Nordea, Sampo, OP-Pohjola Group, and
Handelsbanken. Their total lending to the company amounted to EUR 437.3
million.
The Group's interest fixing period was 1.5 (1.5) years at the end of the
period. A one percentage point change in market rates would cause a EUR 2.8
(2.2) million change in interest costs per annum. At the end of the reporting
period, there were interest rate swaps covering EUR 156.7 million (EUR 177.9
million) of principal.
The Group's interest coverage ratio was 4.0 (3.8). The interest coverage ratio
indicates the relation between EBITDA and accrual-based interest expenses. The
Group's loan-to-value ratio was 63.4% (59.2%).
The Group had interest-bearing liabilities with covenants worth EUR 390.9
(230.4) million. Loans amounting to EUR 351.0 (190.1) million include covenants
relating to the equity ratio. A decline in the equity ratio may lead to higher
interest rate margins or premature repayment of these loans. Potential changes
in the margins take effect in accordance with the contractual provisions of
each loan. Of these loans, EUR 167.2 (40.6) million include a repayment
covenant. The repayment covenant is breached if the equity ratio falls below
30%. The equity ratio decreasing to 33%-35% would increase interest rate
expenses by EUR 0.1 (0.1) million per annum. If the equity ratio falls below
33%, the additional impact on interest expenses would be EUR 0.5 (0.4) million
per annum.
A covenant related to interest coverage and loan-to-value is included in the
EUR 39.9 (40.3) million borrowings of Technopolis Ülemiste (Group holding 51%).
In terms of the aforementioned loan amount, the subsidiary's interest cover
must be at a minimum of 1.1 and its loan-to-value must not exceed 70%. If the
covenants are breached, the lender may call in the loan. At the end of the
reporting period, Technopolis Ülemiste's interest cover was 1.9 (1.4) and
loan-to-value was 49.6% (54.0%).
Organization and Personnel
The CEO of Technopolis Plc is Keith Silverang. Reijo Tauriainen, CFO, is the
company's Deputy CEO.
The Group Management Team comprises Keith Silverang, Reijo Tauriainen, Marko
Järvinen, Satu Eskelinen, Sami Juutinen, Kari Kokkonen, and Jukka Rauhala. The
Technopolis operational organization consists of three geographic units:
Finland, Russia, and Estonia. The Group organization also has matrix functions
for the Group's real estate development, services, and support functions.
During the period, the Group employed an average of 177 (154) people. Rental
operations employed 98 (89) people and the service business 79 (56) people. At
the end of the period under review, the Group's personnel totaled 178 (165).
The increase in the number of personnel is mainly due to strengthening the
central corporate functions and services.
Environment
Key objectives of the company's environmental strategy for 2011-2015 include
reducing comparable energy consumption by 10%, water consumption by 8%, and
carbon dioxide emissions by 20% compared to 2010.
In October 2012, the Finnish WWF granted all Technopolis offices in Finland the
right to use the Green Office label and the Innova 2 building in Jyväskylä
received LEED Platinum certificate. Technopolis Ülemiste in Estonia is applying
for the right to use the Green Office label. It is expected to be granted early
next year. The company will apply for LEED environmental certificates for all
new investments. At the end of the period under review, the company had two
LEED-certified properties, and the aim is to increase the figure to four by the
end of 2012.
Quarterly comparison of Finnish units:
7-9/201 7-9/201 1-9/201 1-9/201 %
2 1 2 1 change
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Energy consumption, kWh/gross m2 38.2 41.1 163.3 165.8 -1.3
Water consumption, m3/person 1.25 1.28 1.42 1.46 -2.6
Carbon dioxide emissions, CO2e 1.9 14.2 16.5 51.4 -67.8
kg/gross m2
--------------------------------------------------------------------------------
The property portfolio included in the comparison has been specified further,
and comparability has been improved over the previous quarter. The comparison
only includes properties owned by the company throughout the year. The
significant decrease in carbon dioxide emissions is primarily due to the
company adopting so-called “green electricity,” such as wind power and
hydroelectric power, as of January 1, 2012.
Strategy and Financial Targets
In September 2011, the company's Board of Directors approved the company's
financial targets for the period 2012-2016 as follows:
- net sales and EBITDA growth average of 15% per annum
- over EUR 50 million net sales outside Finland
- at least 6% return on capital employed per annum
- equity ratio over 35% over the cycle
- 40%-50% dividend distribution on net profit excluding changes in fair value
and their tax effects
The company is strengthening the share of the health and education sectors in
its customer portfolio by investing in these segments and the services employed
by them. Technopolis is working to diversify its customer portfolio
geographically and by sector.
As part of its international growth targets, Technopolis has been analyzing
potential international investment targets in the Baltic Sea and Nordic
regions. The key criteria for potential acquisitions are the sufficient size
and growth potential, excellent locations in growth centers, a high-quality and
flexible property portfolio, and positive cash flow. In addition, the
acquisition must have a positive impact on earnings per share, and the customer
base of the property should be a good match with the Technopolis business
concept. The company is also investigating opportunities to divest properties
that are not optimal for its concept.
Evaluation of Operational Risks and Uncertainties
Technopolis' most significant business risks relate primarily to general
economic conditions associated with financing and customers as well as
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.
A one percentage point change in the money market rates would change interest
rate costs by EUR 2.8 million per annum. Because of the interest rate risk
associated with loans, a policy of diversifying interest bases has been
pursued. Some 5.1% of interest-bearing liabilities were pegged to the under
3-month Euribor rate and 62.6% were pegged to the 3-12 month Euribor rate. Of
the interest-bearing liabilities, 32.3% 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
9.0 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, refinancing, and loan margins in the future.
The differences between Russian, Estonian, and Finnish legislation and
administrative procedures may create risks.
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 on the
transaction date. Any translation differences are entered in the comprehensive
income statement under other operating expenses or financial income and
expenses according to the type of transaction involved.
Customer risk management aims to minimize the negative impact of potential
changes of customers' financial position on the company's business and
financial performance. The company estimates that the risk related to the
restructuring of the electronics industry to its business currently represents
a maximum of 3% of the space leased to customers. 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 sectors 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 customer operates.
Declining financial occupancy rates may reduce rental and service revenue 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 had solid, long-term experience
with 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 life cycle. 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 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 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 reduce the
company's equity ratio and, as a result of this, covenant terms of loans may be
affected. In that case, the change in value can have an impact on the cash flow
and result for the period.
Group Structure
Technopolis Group comprises the parent company Technopolis Plc, whose
subsidiaries have operations in Finland, Russia, and Estonia. The parent
company has several subsidiaries and associates in Finland. The parent company
has two subsidiaries in Russia, Technopolis Neudorf LLC and Technopolis St.
Petersburg LLC, both wholly owned. The Estonian subsidiary Technopolis Baltic
Holding OÜ (wholly owned) manages the holdings in Technopolis Ülemiste AS
(51%). A more detailed Group structure is presented in the company's annual
report on page 84.
The mutual real estate companies Innova 4, Technopolis Tohloppi, Technopolis
Innopoli 3 and Technopolis Viestikatu 7 were established during the financial
period.
Annual General Meeting 2012
The Annual General Meeting of Shareholders (AGM) of Technopolis was held in
Espoo on March 27, 2012.
Resolutions of the Annual General Meeting
The AGM 2012 adopted the Group and parent company's financial statements for
the financial year 2011 and discharged the company's Board of Directors and CEO
from liability. The AGM decided, in accordance with the proposal of the Board
of Directors, to distribute a dividend of EUR 0.20 per share. The dividend was
paid to shareholders who were registered in the company shareholders register
kept by Euroclear Finland Ltd on the record date of March 30, 2012. The
dividend payment date was April 11, 2012.
Board of Directors and remuneration of the members of the Board of Directors
The number of members on the Board of Directors was confirmed at six.
Carl-Johan Granvik, Matti Pennanen, Teija Andersen, Pertti Huuskonen, Pekka
Korhonen, and Timo Ritakallio were elected members of the Board for a term of
office expiring at the end of the next Annual General Meeting. Carl-Johan
Granvik was elected Chairman of the Board of Directors and Matti Pennanen was
elected Vice Chairman.
It was resolved to pay the members of the Board of Directors annual
remuneration as follows: EUR 50,000 to the Chairman of the Board, EUR 30,000 to
the Vice Chairman of the Board and EUR 25,000 to each of the other members of
the Board. In addition, it was decided that for participation in meetings of
the Board of Directors each member of the Board of Directors shall, in addition
to the annual remuneration, be paid a fee of EUR 600 and the Chairman of the
Board of Directors a fee of EUR 1,200 for each Board meeting and the chairmen
of the committees a fee of EUR 800 and each member of the committees a fee of
EUR 600 for each meeting of the committees, and that the travel expenses of the
members of the Board of Directors and the members of the committees shall be
compensated in accordance with the company's travel policy.
The AGM decided that the annual remuneration is paid on the condition that the
Board member commits to using 50% of his or her annual remuneration to acquire
Technopolis Plc shares on the market at the price determined in public trading.
The shares are to be acquired within three weeks of the publication of the
Interim Report for the period January 1 - March 31, 2012. If the remuneration
cannot be paid as shares in the company, it will be paid fully in cash. Board
members are not allowed to transfer the shares obtained as annual remuneration
before their membership in the Board has ended.
In the first organizational meeting of the Board of Directors following the
AGM, the Board appointed an audit committee and a remuneration committee from
among its number. The Audit Committee consists of Carl-Johan Granvik, chair,
and Pertti Huuskonen and Pekka Korhonen. The remuneration committee consists of
Timo Ritakallio, chair, and Teija Andersen and Matti Pennanen. The Board of
Director's opinion is that all of the Board members, apart from Pertti
Huuskonen, are independent of the company, and excluding Timo Ritakallio, of
its major shareholders.
Auditor
KPMG Oy Ab, authorized public accountants, was elected as auditor of the
company, with Mr. Ari Eskelinen, APA, as the Auditor-in-Charge.
Shareholders' Nominating Committee
The Annual General Meeting decided to form a shareholders' nominating committee
to prepare proposals for the next Annual General Meeting on the composition and
remuneration of the Board of Directors. The Nominating Committee is composed of
three members representing the three largest shareholders, who may not be
members of the Board of Directors of the company, and the Chairman of the Board
of Directors as an expert member and secretary to the committee. The member
appointed by the largest shareholder acts as Chairman of the Committee. The
term of office of the Nominating Committee will continue until a new nomination
committee is appointed, unless the general meeting resolves otherwise. The
Nominating Committee prepares the above-mentioned proposals also for
extraordinary general meetings, if needed. A person who could not, according to
the applicable Finnish Corporate Governance Code, be appointed to a nominations
committee of the Board of Directors, cannot be appointed to the nominating
committee. The shareholders' nominating committee will also fulfill the
requirements of independence in relation to the company as set out in the Code.
Based on shareholdings on October 1, 2011, the members of the Nominating
Committee are Risto Murto, Vice President of Varma Mutual Pension Insurance
Company as the chairman, Harri Sailas, President and CEO of Ilmarinen Mutual
Pension Insurance Company and Timo Kenakkala, Deputy Mayor of City of Oulu. In
addition, Carl-Johan Granvik, Chairman of the Board of Directors of Technopolis
Plc, will act as the Nominating Committee's expert member and secretary. The
new Nominating Committee was established after the reporting period on October
1, 2012, on the basis of shareholdings. There were no changes in the
composition of the Nominating Committee.
Board Authorizations
The AGM authorized the Board of Directors to decide on the repurchase and/or on
the acceptance as pledges of the company's own shares as follows:
The amount of treasury shares to be repurchased and/or accepted as pledges
shall not exceed 6,338,500 shares, which corresponds to approximately 10 per
cent of all the shares in the company. Under the authorization, the company's
own shares may only be purchased using unrestricted equity. The company's own
shares may be purchased at a price set in public trading on the date of
purchase or at a price otherwise determined on the market. The Board of
Directors decides how treasury shares will be repurchased and/or accepted as
pledges. Treasury shares can be repurchased using, inter alia, derivatives.
The company's own shares can be repurchased otherwise than in proportion to the
shareholdings of the shareholders (directed repurchase). The authorization is
effective until the end of the next Annual General Meeting; however, no later
than June 30, 2013.
The Annual General Meeting authorized the Board of Directors to decide on the
issuance of shares and other special rights entitling holders to shares
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 12,677,000, equal to approximately 20% of the company's shares. The Board of
Directors decides on all the terms and conditions of the issuance of shares and
of special rights entitling holders to shares. The issuance of shares and of
special rights entitling holders to shares may be carried out in deviation from
the shareholders' pre-emptive rights (directed issue). The Board of Director's
may decide on the company's share-based incentive schemes. However, no more
than 350,000 shares may be issued on the basis of the authorization for the
purpose of implementing incentive schemes decided upon by the General Meeting
or the Board of Directors. The authorization is effective until the end of the
next Annual General Meeting, however, no later than June 30, 2013, and it
cancels the authorization given to the Board of Directors by the General
Meeting on March 30, 2011 to decide on the issuance of shares as well as the
issuance of other special rights entitling holders to shares.
Stock-Related Events and Disclosures of Changes in Holdings
The company currently has 75,555,227 shares outstanding. The shares are in a
single series, and each share entitles the holder to one vote at the Annual
General Meeting. The company's share capital is EUR 96,913,626.29. The number
of shares in the company was 63,385,044 shares on March 31, 2012. The number of
shares increased by 81,347 shares as the result of the directed share issue
without consideration to key employees covered by the company's share incentive
program executed on April 26, 2012, and the number of shares increased by a
further 12,088,836 new shares with the rights issue that ended on June 18,
2012. The dilution effect of these share issues totaled 19.2%. The share issues
were implemented by virtue of a Board authorization of the Annual General
Meeting of March 27, 2012.
On February 2, 2012, Ilmarinen Mutual Pension Insurance Company announced that
its direct holding of Technopolis Plc's share capital and votes had increased
above two twentieths (10%) as a result of a transaction carried out on February
2, 2012. After the transaction, the proportion of Technopolis Plc's share
capital and votes controlled directly by Ilmarinen Mutual Pension Insurance
Company was 6,372,725 shares and 10.05%, respectively.
According to information received on March 13, 2012 from BNP Paribas Investment
Partners, the proportion of Technopolis Plc's shares and votes held by its
funds had decreased below one-tenth (10%) on October 20, 2010 and below
one-twentieth (5%) on January 17, 2012. The proportion of Technopolis Plc's
shares and votes directly and indirectly controlled on March 9, 2012 by BNP
Paribas Investment Partners and its funds was 2,653,086 shares and 4.19%,
respectively. Indirect holdings were 70,717 shares, which represents 0.11% of
shares and votes.
The subscription period for 2007C stock options decided upon by the Annual
General Meeting of Technopolis Plc on March 22, 2005 commenced in accordance
with the option program's terms and conditions on May 1, 2012 and Technopolis
applied for entry of the 2007C stock options on the trading list of the NASDAQ
OMX Helsinki exchange. The trading of 2007C stock options on the NASDAQ OMX
Helsinki exchange commenced on May 2, 2012.
On April 26, 2012, the company's Board of Directors approved a directed share
issue of 81,347 new shares in the company without consideration to the key
employees fulfilling the Performance Share Plan target criteria. A total of 18
people belonging to the management and personnel of the company received
rewards in the share issue. The shares were registered with the Trade Register
on April 30, 2012 and listed on the trading list of NASDAQ OMX Helsinki on May
2, 2012.
On May 15, 2012, the company's Board of Directors decided on a rights issue
based on the authorization granted by the Annual General Meeting on March 27,
2012, and to issue a maximum of 12,088,836 new shares, representing
approximately 19.05% of all shares in the company. The final result of the
rights issue was published on June 18, 2012.
All 12,088,836 new shares offered were subscribed for in the share issue.
11,874,720 shares were subscribed for in the primary subscription, which is
approximately 98.2% of the shares offered. 8,470,366 shares were subscribed
for in the secondary subscription, of which the subscription of 214,116 shares
was approved. Thus, 168.3% of the shares offered were subscribed for.
The subscription price was EUR 2.70 per share, and the company raised
approximately EUR 31.8 million with the share issue after expenses and fees.
The shares were registered on June 19, 2012. They were listed on the trading
list of Nasdaq OMX Helsinki on June 20, 2012.
Untapped Board Authorizations
The Board of Directors has been authorized by the Annual General Meeting of
2012 to decide on the issuance of shares as well as the issuance of special
rights entitling holders to shares referred to in the Limited Liability
Companies Act as well as on the repurchase and/or on the acceptance as pledge
of the company's own shares.
Following the share issues realized during the reporting period, the Board may
decide on the issuance of a further 506,817 new shares, conveyance of treasury
shares held by the company or issuance of option and other special rights. The
company's Board of Directors has not exercised the authorization to repurchase
and/or accept as pledges the company's own shares, and the company did not hold
any treasury shares at the end of the reporting period.
Post-Fiscal Events
The company announced the composition of the Shareholders' Nominating Committee
established by the Annual General Meeting on October 8, 2012. Members of the
Nominating Committee are Risto Murto, Executive Vice President of Varma Mutual
Pension Insurance Company, Harri Sailas, President and CEO of Ilmarinen Mutual
Pension Insurance Company, Timo Kenakkala, Deputy Mayor of City of Oulu, and
Carl-Johan Granvik, Chairman of Technopolis Plc's Board of Directors, acting as
an expert member and secretary of the Committee. Risto Murto acts as Chairman
of the Nominating Committee.
Technopolis signed on October 17, 2012, a contract with Yle (Finland's national
public broadcasting company) to acquire Yle's Tohloppi complex in Tampere. The
total investment amounts to approximately EUR 23.3 million, including a
transfer tax of 4%. The deal is expected to increase Technopolis' net sales for
2012 by approximately EUR 0.9 million, EBITDA by approximately EUR 0.5 million,
and the operating profit by about EUR 0.3 million. Yle and the Tampere
University of Applied Sciences (TAMK) will remain in the property as tenants
under 20-year leases.
Future Outlook
The Group's management upgraded its guidance for the company's net sales and
EBITDA growth compared to 2011. The forecast has been raised because of the
Tohloppi acquisition in October. Group's management now expects net sales and
EBITDA to grow 14-16% over 2011 compared with its earlier estimate of 13-15%.
The Group's financial performance depends on the development of the overall
business environment, customer operations, and market yield requirements.
Espoo, Finland, October 26, 2012
TECHNOPOLIS PLC
Board of Directors
Additional information:
Keith Silverang
CEO
tel. +358 40 566 7785
APPENDICES:
A presentation of the Interim Report is available 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 http://www.technopolis.fi. Individuals who sign up with
the service will receive the company's bulletins electronically.
Tables
The accounting policies applied in the interim report are same as in the 2011
annual report. The formulas for calculating key indicators are available on the
company website. The share-related figures for the comparison year have been
adjusted for share issue due to the share issue carried out during the
financial period.
Technopolis Group employs derivative instruments (mainly interest rate swaps)
for hedging risks relating to market rate fluctuations. As of May 1, 2011, the
Group implemented hedge accounting in accordance with IAS 39. Consequently,
changes in the fair value of derivative instruments designated as effective
hedges are recognized directly as comprehensive income in the consolidated
financial statements. Changes in the fair value of ineffective hedges are
recognized immediately in the income statement. Most of the Group's current
interest rate swaps meet the criteria for hedge accounting.
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 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
Currency unit: EUR million 2012 2011 2012 2011 2011
--------------------------------------------------------------------------------
Net sales 26.56 22.99 78.67 67.97 92.83
Other operating income 1) 0.32 0.13 1.02 0.66 1.22
Other operating expenses -12.46 -10.86 -39.38 -33.93 -46.52
Change in fair value of investment 0.20 10.22 -5.98 25.69 26.28
properties
Depreciation -0.53 -0.47 -1.48 -1.35 -1.83
--------------------------------------------------------------------------------
Operating profit/loss 14.09 22.01 32.86 59.03 71.99
Finance income and expenses -2.39 -5.64 -9.58 -9.47 -11.98
--------------------------------------------------------------------------------
Result before taxes 11.70 16.37 23.28 49.56 60.01
Current taxes -2.44 -4.29 -4.82 -12.41 -11.22
--------------------------------------------------------------------------------
Net result for the period 9.26 12.08 18.46 37.16 48.80
Other comprehensive income items
Translation difference 0.69 -0.87 0.84 -0.62 0.06
Available-for-sale financial assets 0.01 0.00 0.04 0.05 0.05
Derivatives -1.42 -2.86 -3.88 -3.79 -4.39
Taxes related to other comprehensive 0.34 0.74 0.94 0.97 1.13
income items
--------------------------------------------------------------------------------
Other comprehensive income items after -0.37 -2.99 -2.05 -3.38 -3.15
taxes for the period
Comprehensive income for the period, 8.89 9.09 16.41 33.77 45.64
total
Distribution of profit for the period:
To parent company shareholders 8.94 11.16 17.09 35.74 46.70
To non-controlling shareholders 0.32 0.92 1.37 1.41 2.10
--------------------------------------------------------------------------------
9.26 12.08 18.46 37.16 48.80
Distribution of comprehensive income for
the period:
To parent company shareholders 8.57 8.17 15.04 32.36 43.55
To non-controlling shareholders 0.32 0.92 1.37 1.41 2.10
--------------------------------------------------------------------------------
8.89 9.09 16.41 33.77 45.64
Earnings per share based on result of
flowing to parent company shareholders:
Earnings/share, basic (EUR) 0.13 0.17 0.25 0.54 0.70
Earnings/share, adjusted for dilutive 0.13 0.17 0.25 0.54 0.70
effect (EUR)
1) Other operating income consists of operating subsidies received for
development services; an equal amount is recorded under operating expenses for
development services.
STATEMENT OF FINANCIAL POSITION, ASSETS
Currency unit: EUR million 09/30/20 09/30/20 12/31/20
12 11 11
--------------------------------------------------------------------------------
Non-current assets
Intangible assets 8.32 3.90 6.72
Tangible assets 16.55 15.12 12.02
Completed investment properties 902.50 793.65 843.78
Investment properties under construction 60.71 69.60 61.70
Investments 12.60 11.77 12.21
Deferred tax assets 2.57 2.36 2.57
--------------------------------------------------------------------------------
Non-current assets 1003.24 896.41 938.99
--------------------------------------------------------------------------------
Current assets 35.52 20.67 23.89
--------------------------------------------------------------------------------
Assets, total 0.86
--------------------------------------------------------------------------------
STATEMENT OF FINANCIAL POSITION, ASSETS 1038.77 917.93 962.88
--------------------------------------------------------------------------------
STATEMENT OF FINANCIAL POSITION, SHAREHOLDERS'
EQUITY AND LIABILITIES
Currency unit: EUR million 09/30/20 09/30/20 12/31/20
12 11 11
--------------------------------------------------------------------------------
Shareholders' equity
Share capital 96.91 96.91 96.91
Premium fund 18.55 18.55 18.55
Other funds 110.27 81.54 81.10
Translation difference 0.20 -1.61 -0.64
Other shareholders' equity 121.90 87.72 87.42
Retained earnings 17.09 35.74 46.70
--------------------------------------------------------------------------------
Parent company's shareholders' interests 364.93 318.85 330.04
Non-controlling interests 16.31 11.96 13.13
--------------------------------------------------------------------------------
Shareholders' equity, total 381.24 330.81 343.17
Liabilities
Non-current liabilities
Interest-bearing liabilities 485.39 444.06 468.84
Non-interest-bearing liabilities 0.85 1.09 1.04
Deferred tax liabilities 47.41 48.34 45.97
--------------------------------------------------------------------------------
Non-current liabilities, total 533.65 493.49 515.85
Current liabilities
Interest-bearing liabilities 94.91 73.50 78.87
Non-interest-bearing liabilities 28.97 20.13 24.99
--------------------------------------------------------------------------------
Current liabilities, total 123.88 93.63 103.86
Liabilities, total 657.53 587.12 619.71
--------------------------------------------------------------------------------
Shareholders' equity and liabilities, total 1038.77 917.93 962.88
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS 1-9/ 1-9/ 1-12/
Currency unit: EUR million 2012 2011 2011
-----------------------------------------------------------------------------
Cash flows from operating activities
Net result for the period 18.46 37.16 48.80
Adjustments:
Change in fair value of investment properties 5.98 -25.69 -26.28
Depreciation 1.48 1.35 1.83
Share of profits of associates -0.12 -0.03
Gains from disposals -0.10 0.03
Other adjustments for non-cash transactions 0.23 0.44 0.60
Financial income and expenses 9.58 9.59 12.01
Taxes 4.82 12.41 11.22
Increase / decrease in working capital -1.84 0.12 -0.90
Interests received 0.08 0.11 0.18
Dividends received 0.01 0.01 0.01
Interests paid and fees -8.29 -7.42 -10.24
Other financial items in operating activities -3.70 -1.84 -2.40
Taxes paid -3.27 -4.22 -4.35
-----------------------------------------------------------------------------
Net cash provided by operating activities 23.44 21.90 30.47
Cash flows from investing activities
Investments in other securities -0.01 -0.01
Investments in investment properties -63.16 -69.41 -98.13
Investments in tangible and intangible assets -5.63 -1.36 -4.36
Granted loans -0.03 -0.08
Repayments of loan receivables 0.02 0.12 0.13
Proceeds from sale of investments 0.04 0.40 0.41
Proceeds from sale of tangible and intangible assets 0.10 0.18 0.16
Acquisition of subsidiaries -0.66
Acquisition of associates -0.67 -0.02 -0.72
Proceeds from sales of associates 0.01 0.87
-----------------------------------------------------------------------------
Net cash used in investing activities -69.96 -70.11 -101.74
Cash flows from financing activities
Increase in long-term loans 70.63 77.20 113.32
Decrease in long-term loans -47.09 -29.83 -36.83
Dividends paid -12.67 -10.77 -10.77
Paid share issue 32.64
Capital investment by the minority 1.81 0.29 0.78
Change in short-term loans 7.15 12.78 12.87
-----------------------------------------------------------------------------
Net cash provided by financing activities 52.47 49.68 79.38
Net increase/decrease in cash assets 5.95 1.46 8.10
Effects of exchange rate fluctuations on cash held -0.13 -0.30 -0.08
Cash and cash equivalents at period-start 12.51 4.49 4.49
Cash and cash equivalents at period-end 18.33 5.64 12.51
STATEMENT
OF CHANGES
IN EQUITY
Currency Equity attributable to owners of the parent
unit: EUR
million
--------------------------------------------------------------------
Share Premiu Other Translati Retaine Share of Total
capita m fund reserv on d non-controll sharehold
l es differenc earning ing ers'
es s interests equity
Equity 96.91 18.55 84.22 0.00 97.67 10.25 307.60
January 1,
2011
--------------------------------------------------------------------------------
Comprehensi
ve income
Net profit 36.74 1.41 38.15
for the
period
Other comprehensive
income items
Translation -1.61 -1.61
difference
Available-for-sale 0.03 0.03
financial assets
--------------------------------------------------------------------------------
Comprehensive 0.03 -1.61 36.74 1.41 36.57
income for the
period
Related
party
transactio
ns
Dividend -10.78 -10.78
Other 0.09 -0.17 0.29 0.21
changes
--------------------------------------------------------------------------------
Related 0.09 -10.95 0.29 -10.57
party
transactio
ns
--------------------------------------------------------------------------------
Equity 96.91 18.55 84.34 -1.61 123.46 11.96 333.61
September
30, 2011
--------------------------------------------------------------------------------
Equity 96.91 18.55 81.10 -0.64 134.12 13.13 343.17
January 1,
2012
--------------------------------------------------------------------------------
Comprehensi
ve income
Net profit 17.09 1.37 18.46
for the
period
Other comprehensive
income items
Translation 0.84 0.84
difference
Derivatives -2.93 0.00 -2.93
Available-for-sale 0,04 0.00 0.04
financial assets
--------------------------------------------------------------------------------
Comprehensive -2,89 0.84 17.09 1.37 16.41
income for the
period
Related party
transactions
Dividend -12.68 -12.68
Share issue 32.07 32.07
Change in ownership 0.08 0.08
interests in subsidiaries
2)
Other 0.38 1.81 2.19
changes
--------------------------------------------------------------------------------
Related 32.07 -12.22 1.81 21.67
party
transactio
ns
--------------------------------------------------------------------------------
Equity 96.91 18.55 110.27 0.20 138.99 16.31 381.24
September
30, 2012
--------------------------------------------------------------------------------
2) Acquisition of non-controlling interests without change in control
Financial Information by Segment
Technopolis Group has three operating segments based on geographical units:
Finland, Russia and Estonia. 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.
SEGMENT INFORMATION 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
Currency unit: EUR million 2012 2011 2012 2011 2011
-----------------------------------------------------------------
Net sales
Finland 24.04 21.04 71.31 62.73 85.19
Russia 1.29 0.77 3.73 1.71 2.93
Estonia 1.22 1.17 3.61 3.51 4.67
Unallocated 0.00 0.00 0.02 0.02 0.04
Total 26.56 22.99 78.67 67.97 92.83
-----------------------------------------------------------------
EBITDA
Finland 13.41 11.54 37.52 32.65 44.82
Russia 0.60 -0.14 1.20 -0.52 -0.23
Estonia 0.90 0.82 2.32 2.45 3.13
Unallocated -0.48 0.07 -0.72 0.11 -0.18
Total 14.42 12.29 40.31 34.69 47.54
-----------------------------------------------------------------
EBITDA
Finland 907.64 799.87 840.19
Russia 82.05 58.36 62.52
Estonia 87.64 76.38 79.04
Eliminations -38.56 -16.69 -18.87
Total 1038.77 917.93 962.88
-----------------------------------------------------------------
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 had interest rate and currency
swaps in 2011 that did 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 million 2012 2011 2012 2011 2011
--------------------------------------------------------------------------------
Net sales 26.56 22.99 78.67 67.97 92.83
Other operating income 0.20 0.10 0.79 0.61 1.12
Other operating expenses -12.46 -10.86 -39.38 -33.93 -46.49
Depreciation -0.53 -0.47 -1.48 -1.35 -1.83
--------------------------------------------------------------------------------
Operating profit/loss 13.77 11.76 38.61 33.29 45.64
Finance income and expenses, total -2.39 -5.64 -9.58 -11.18 -13.68
--------------------------------------------------------------------------------
Taxes for direct result items 11.37 6.12 29.03 22.11 31.95
Result before taxes -2.40 -2.05 -6.68 -5.92 -5.23
Non-controlling interests -0.32 -0.92 -1.37 -1.41 -2.10
--------------------------------------------------------------------------------
Direct result for the period 8.65 3.15 20.98 14.78 24.62
INDIRECT RESULT
Non-recurring items 0.12 0.02 0.23 0.05 0.07
Change in fair value of investment 0.20 10.22 -5.98 25.69 26.28
properties
--------------------------------------------------------------------------------
Operating profit/loss 0.33 10.25 -5.75 25.74 26.36
Change in fair value of financial 1.71 1.71
instruments
--------------------------------------------------------------------------------
Result before taxes 0.33 10.25 -5.75 27.45 28.06
Taxes for indirect result items -0.04 -2.23 1.86 -6.49 -5.99
--------------------------------------------------------------------------------
Indirect result for the period 0.29 8.01 -3.89 20.96 22.08
Result for the period to the parent 8.94 11.16 17.09 35.74 46.70
company shareholders, total
Earnings per share, diluted 3)
From direct result 0.13 0.05 0.31 0.22 0.37
From indirect result 0.00 0.12 -0.06 0.31 0.33
--------------------------------------------------------------------------------
From net result for the period 0.13 0.17 0.25 0.54 0.70
3) Earnings per share calculated according to EPRA's instructions.
CHANGE IN VALUE OF INVESTMENT 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
PROPERTIES
---------------------------------------------
2012 2011 2012 2011 2011
--------------------------------------------------------------------------
---------------------------------------------
Change in fair value, Finland -1.66 4.20 -11.76 15.03 15.45
Change in fair value, Russia 0.04 1.61 1.20 1.68 4.67
Change in fair value, Estonia -0.09 1.37 0.49 1.66 2.45
--------------------------------------------------------------------------------
---------------------------------------------
Change in fair value -1.71 7.19 -10.07 18.37 22.57
Changes in acquisition costs of investment -0.17 -0.26 -3.39 -1.29 -9.21
properties in financial year
Changes in fair value of projects in 2.08 3.30 7.48 8.62 12.93
progress
--------------------------------------------------------------------------------
---------------------------------------------
Effect on profit of change in value of 0.20 10.22 -5.98 25.69 26.28
investment properties
KEY INDICATORS 1-9/ 1-9/ 1-12/
2012 2011 2011
--------------------------------------------------------------------------------
Change in net sales, % 15.7 16.5 14.4
Operating profit/loss / net sales, % 41.8 86.9 77.5
Interest coverage ratio 4.0 3.8 3.7
Equity ratio, % 36.9 36.2 35.8
Loan to value, % 63.5 59.2 60.0
Group company personnel during the period, 177 154 158
average
Gross expenditure on assets, EUR million 69.5 107.5 150.0
Net rental revenue of investment properties, 7.8 7.7 7.8
% 4)
Financial occupancy rate, % 94.8 95.7 95.1
Earnings/share
basic, EUR 0.25 0.54 0.70
diluted, EUR 0.25 0.54 0.70
Cash flows from operating activities/share, 0.34 0.33 0.46
EUR
Equity/share, EUR 5.37 4.79 4.96
Average issue-adjusted number of shares
basic 68,018,931 66,586,727 66,586,727
diluted 68,251,700 66,774,413 66,767,124
4) The figure does not include properties commissioned and acquired during the
fiscal year.
CONTINGENT LIABILITIES
Currency unit: EUR million 09/30/2012 09/30/2011 12/31/2011
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Pledges and guarantees on own debt
Mortgages of properties 565.85 448.60 472.49
Book value of pledged securities 204.62 197.72 208.24
Other guarantee liabilities 55.11 61.13 60.87
Leasing liabilities, machinery and equipment 5.80 4.01 4.30
Project liabilities 0.18 0.33 0.18
Interest rate and currency swaps
Nominal values 156.70 177.87 169.96
Fair values -7.83 -3.20 -3.87
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