TECHNOPOLIS PLC FINANCIAL STATEMENT RELEASE January 29, 2010 at 13:15
TECHNOPOLIS GROUP FINANCIAL STATEMENTS FOR 2009
Highlights of 2009 compared to 2008:
- Net sales rose 5.3% to EUR 76.4 million (EUR 72.6 million)
- EBITDA rose 8.1% to EUR 40.0 million (EUR 37.0 million)
- Direct result rose 43.2 % to EUR 21.7 million (EUR 15.1 million), and direct
result per share was EUR 0.38 per share (EUR 0.29)
- Operating profit fell to EUR 2.3 million (EUR 35.3 million)
including a write-down of EUR -37.1 million (EUR -0.7 million) in the fair value
of investment properties
- Result before taxes fell 144.2% to EUR -9.4 million (EUR 21.4 million)
- The financial occupancy rate was 94.4% (96.5%)
- The Group's equity ratio was 37.3% (40.5%)
- Diluted earnings per share were EUR -0.13 (EUR 0.31)
- The Board of Directors proposes a dividend of EUR 0.15 per share (EUR 0.12 per
share)
Keith Silverang,CEO:
”Despite the challenging business environment, Technopolis' operations developed
favorably during the period under review. Cost-cutting measures helped safeguard
the company's profitability, which is reflected in the improvement of the direct
result and EBITDA compared to the previous year. The financial occupancy rate
remained high, and the Group's net sales and EBITDA increased compared to the
previous year. Significant new growth projects were completed, most with high
occupancy rates. Also, new and profitable growth projects were launched.
The increase in market yield requirements slowed during the second half of the
year. The fair value of investment properties and properties under construction
continued to decline during the fourth quarter, but more moderately than before.
The increase in yield requirements was the primary reason for a decline of EUR
37.1 million in fair values and thus a decrease in the operating profit by the
same amount.
Technopolis has come through the financial markets crisis satisfactorily. At the
end of the period under review, the average interest rate of the Group's loan
portfolio was 2.47%. With its current credit facilities of EUR 188.6 million,
the Group is able to meet the funding needs of all of its Board approved
investments. Despite the increase in interest rate margins, the Group's interest
expenditure fell below the expected level because of the general decline in
interest rates, which played a part in contributing to the Group's
profitability.
In 2009, we continued our internal development programs with the goal of
standardizing and integrating our core processes. The programs also focus on
personnel competence development and the exploitation of new technologies. These
measures will enable us to improve the Group's cost-effectiveness and
operational quality while laying the foundation for a scalable growth platform
to support the company's internationalization”.
Business Conditions in Finland and St. Petersburg
Global market conditions showed signs of stabilization in the summer of 2009.
The decline of global trade and industrial production stopped. In the third
quarter of 2009, production started to grow in many developed countries as well.
According to the Bank of Finland's forecast, the second quarter of 2009 will
remain the low point of the recession in Finland. On an annual level, the amount
of GDP declined 7.2% in 2009. (Bank of Finland, Economic Outlook 2.2009,
September 25, 2009.)
Financial market conditions improved significantly in the spring of 2009. Risk
premiums decreased to their earlier levels of the summer of 2008 before the
bankruptcy of the Lehman Brothers investment bank. Rising stock prices are also
a sign of positive expectations. Recession in the labor market will still
continue in 2010. (Bank of Finland, Economic outlook 2.2009, September 25,
2009.)
In the real estate market, notable changes in 2009 were the collapse of trading
volumes and the changes in foreign investors' behavior in the market. According
to Catella's forecast, the trading volume remained at approximately EUR 1.6
billion in 2009. (Catella, December 31, 2009.)
Yield requirements increased 0.2-1.5 percentage points during the fall of 2008
and in 2009, depending on the region. Towards the end of 2009, the real estate
market became slightly more active, and generally it is expected that the
steepest increase in yield requirements is over. (Newsec-Maakanta Oy, December
23, 2009.)
According to Catella (December 31,2009), the vacancy rate for office premises in
the Helsinki Metropolitan Area was 10.4% in June 2009, equivalent to 870,000
square meters of vacant space. Regional differences between municipalities in
the Helsinki Metropolitan Area and across different office areas are
significant. The rents of older office premises started to decline in the
Helsinki Metropolitan Area.
In Oulu, the supply of office premises increased and according to preliminary
information, the amount of vacant space was less than 35,500 square meters. The
vacancy rate increased from approximately 4.6% to about 7.5%. In Tampere and
Kuopio, the demand for modern office space remained favorable. The market rents
were unchanged. (Catella, December 31, 2009.)
In Jyväskylä, the supply of office premises grew significantly due to a vacant
19,000 square meter building, leading to price competition. In Lappeenranta, the
demand for office premises has picked up as a result of the city's strengthening
its position as a regional hub. (Catella, December 31, 2009.)
In the office market in St. Petersburg, the demand picked up during the fourth
quarter, compared to the previous quarter (Amplion, January 11, 2010). The
supply of prime office space in the St. Petersburg office market increased to
approximately 1.54 million square meters in September 2009, compared to about
1.38 million square meters at the end of 2008. Construction volumes decreased,
and real estate developers suspended construction projects due to a lack of
funding. Financing difficulties delayed the completion of construction projects
by 6 to 12 months. In the third quarter of 2009, more office premises were
absorbed than completed.
Prelets are rare in Russia, and such leases are generally signed by parties
needing large, high-quality space at the final stages of construction in order
to obtain facilities that meet their needs. The vacancy rate for A and B
category office premises rose to 25% and office rents decreased by approximately
40%. (Jones Lang LaSalle Q3/2009.)
Operations
The Technopolis Group has two operational segments based on geographical units:
Finland and Russia. The segmentation is based on the Group's existing internal
reporting procedures and organization of the Group's operations.
Despite the deterioration of the global economy, demand for knowledge-intensive
business environments in the areas in which Technopolis operates remained
satisfactory, and the Group's financial occupancy rate remained a solid 94.4% at
the end of 2009.
The Group's net sales for the period under review were EUR 76.4 million (EUR
72.6 million in 2008), showing growth of 5.3%. Of the net sales, rental revenue
accounted for 84.9% (81.4%) and service revenue for 15.1% (18.6%). Decline in
the relative proportion of service revenue is primarily due to the
discontinuation of the consulting unit in the fall of 2008. Like for like rental
growth i.e. the rental revenue from comparable properties declined 0.4%. The
development of rental revenue from comparable properties has been calculated by
comparing the 2009 rental revenue to that of 2008. In order for the figures to
be comparable, they do not include properties commissioned or acquired in 2009.
The Group's EBITDA was EUR 40.0 million (EUR 37.0 million), an increase of 8.1%.
The Group's operating profit was EUR 2.3 million (EUR 35.3 million), a decrease
of 93.4%. The primary reason for the decline in the operating profit was the
decline in the fair value of investment properties, resulting from an increase
in market yield requirements. This does not affect the Group's net sales, EBITDA
or cash flow. The decline in the operating profit does reduce the Group's equity
ratio.
The Group's net financial expenses totaled EUR 11.8 million (EUR 13.9 million).
The Group's profit before taxes totaled EUR -9.4 million (EUR 21.4 million).
Since the beginning of 2009, the company has been presenting its direct result,
which provides a more precise illustration of the company's operational
financial performance. The Group's direct result rose to EUR 21.7 million (EUR
15.1 million), an increase of 43.2%. The direct result shows the company's
result 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 related to these items.
Total assets in the balance sheet were EUR 706.1 million (EUR 683.6 million), an
increase of 3.3%. The Group's equity ratio at the end of the period was 37.3%
(40.5%).
The fair value of the Group's investment properties was EUR 596.7 million (EUR
594.0 million) at the end of the period under review. During the financial
period, the company also complied with the amended IAS 40 standard, under which
investment properties under construction recognized in tangible assets must also
be measured at fair value, provided that the fair value can be reliably
determined. The fair value of investment properties under construction was EUR
51.1 million at the end of the financial period. The change in the fair value of
investment properties during the period under review was EUR -37.1 million (in
2008, EUR -0.7 million). The net change in the fair value includes gains in the
value of completed properties and losses due to rising market yield
requirements. The projected long-term inflation rate used in the fair value
calculation was 2.0%.
Yield requirements are calculated by means of analyses done by two independent
appraisal agencies for each individual region. In the fair value calculations,
the yields are calculated by taking the average of the upper and lower ranges
reported by these organizations. On December 31, 2009, the average net yield
requirement for Group properties was 8.07% (7.68% on December 31, 2008). The
average ten-year occupancy rate used in the fair value calculation was 95.5%.
The Group's targets concerning the actual occupancy rates are higher than this.
Over the period of 2000-2009, the Group's average occupancy rate was 97.1%.
The Group's total rentable space was 453,567 square meters at the end of the
period (438,337 square meters on December 31, 2008). The Group's average
financial occupancy rate at the end of the period was 94.4% (96.5%). 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. At the end of the period, the lease portfolio held
by the Group totaled EUR 119.3 million (EUR 122.5 million).
In 2009, Technopolis analyzed 14 European countries potentially targeted for the
company's international growth in the future. Country analyses aim to assess the
growth potential of knowledge-intensive business in the target countries and, on
the other hand, to evaluate Technopolis' opportunities to launch operations in
accordance with its concept in the countries in question.
On the basis of these studies, four countries were selected for further analysis
and investigation of the potential for business and property acquisitions. The
key criteria were rapid positive cash flow, potential for growth after the
acquisition, as well as the suitability of targeted properties for the
Technopolis service concept.
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 established two Russian companies in St. Petersburg, Technopolis
Neudorf LLC and Technopolis St. Petersburg LLC, both wholly owned.
The parent company has a non-controlling interest in the affiliated companies
Kiinteistö Oy Hermia (49.3%), Technocenter Kempele Ltd (48.5%), Kiinteistö Oy
Bioteknia (28.5%), Iin Micropolis Ltd (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, wholly owned by Innopoli Ltd,
in Espoo. Technopolis Ventures Ltd owns the subsidiaries Technopolis Ventures
Lappeenranta Ltd (100%), Technopolis Ventures Jyväskylä Ltd (100%), Technopolis
Ventures Oulu Ltd (100%), Technopolis Ventures Professia Ltd in Tampere (100%)
and Technopolis Ventures Kuopio Ltd (100%). The Technopolis Group owns 35% of
Otaniemi Marketing Ltd.
Major Investments and Development Projects
--------------------------------------------------------------------------------
| | Region | Gross m2 | EUR | Occupancy | Completed |
| | | | million | rate | |
| | | | | 13/31/2009 | |
--------------------------------------------------------------------------------
| Kontinkangas | Oulu | 4,350 | 7.2 | 94 | 6/2009 |
| , Phase 5 | | | | | |
--------------------------------------------------------------------------------
| Ohjelmakaari | Jyväskylä | 4,790 | 7.7 | 74 | 6/2009 |
| , Phase 2 | | | | | |
--------------------------------------------------------------------------------
| Hermia 15, | Tampere | 11,790 | 14.5 | 100 | 8/2009 |
| Phase 1 (1) | | | | | |
--------------------------------------------------------------------------------
| Microkatu, | Kuopio | 857 | 2.3 | 100 | 12/2009 |
| Phase 5 | | | | | |
--------------------------------------------------------------------------------
(1) 328 parking spaces in the building
Projects under construction on December 31, 2009:
--------------------------------------------------------------------------------
| | Region | Gross m2 | EUR | Occupancy | To be |
| | | | million | rate | completed |
| | | | | 13/31/2009 | |
--------------------------------------------------------------------------------
| Yliopistonrinn | Tampere | 19,200 | 33.3 | 92.6 | 4/2010 |
| e, Phase 1 (2) | | | | | |
--------------------------------------------------------------------------------
| Pulkovo, | St. | 24,100 | 52.2 | 11 | 6/2010 |
| Phase 1 (3) | Petersbur | | | | |
| | g | | | | |
--------------------------------------------------------------------------------
| Viestikatu, | Kuopio | 13,400 | 9.6 | 74 | 9/2010 |
| Phase 2 (4) | | | | | |
--------------------------------------------------------------------------------
(2) 130 parking spaces in the building
(3) Including land plot
(4) 236 parking spaces in a parking garage
The construction of Phase 1 of Technopolis' Pulkovo technology center in St.
Petersburg is progressing according to plan. By the end of the period under
review, a total of EUR 38.4 million had been committed to the operations in St.
Petersburg.
The market situation in St. Petersburg is extremely challenging, but demand is
at a reasonable level. Negotiations are underway with several potential
customers on significant amounts of space. Nevertheless, it is difficult to
forecast when new leases will be signed. In Russia, the normal market practice
is to sign leases only upon completion of the projects. So far, 11% of the
premises of Phase one have been let, and the project is estimated to be
completed in the summer of 2010.
Planned projects approved by the Board of Directors:
--------------------------------------------------------------------------------
| | Region | Gross m2 | EUR | Occupancy |
| | | | million | rate |
| | | | | 13/31/2009 |
--------------------------------------------------------------------------------
| Finn-Medi eye center (5) | Tampere | 5,350 | 14.2 | 100 |
--------------------------------------------------------------------------------
| Finn-Medi patient hotel | Tampere | 6,400 | 14.2 | 100 |
| (6) | | | | |
--------------------------------------------------------------------------------
| Finn-Medi office facility | Tampere | 4,400 | 14.2 | 0 |
| (7) | | | | |
--------------------------------------------------------------------------------
(5) 50 parking spaces in the building
(6) 57 parking spaces in the building
(7) 44 parking spaces in the building
Technopolis will build an Eye Center for the Joint Municipal Authority of the
Pirkanmaa Hospital District (PSHP) in the Finn-Medi district in Tampere. The
final decision to launch the construction project will be made in the spring of
2010 when the decision by the Board of Directors of PSHP to sign the lease will
become effective.
Technopolis is planning a patient hotel for Norlandia Care Ltd and an office
facility intended for multiple users in the Finn-Medi district in Tampere. The
facilities being planned will be constructed in the same complex as the Eye
Center.
Technopolis Plc and Norlandia Care Ltd have concluded a binding agreement on the
construction and design of the patient hotel and a preliminary agreement on
leasing. The patient hotel area will be approximately 6,400 gross square meters,
including, for example, a restaurant and 136 patient rooms. The area of the
office section will be approximately 4,400 gross square meters. The final
decision on the construction of the patient hotel and office facility will be
made in the spring of 2010.
As part of a program to improve the efficiency of operations, Technopolis has
launched the development of a new Enterprise Resource Planning system. The new
system is to be deployed in April 2010. The external costs of the development
project will amount to EUR 1.1 million.
Stock-related Events
The company's share capital stands at EUR 96,913,626.29 and the number of shares
is 57,345,341. The shares are in a single series, and each share entitles the
holder to one vote at the Annual General Meeting. A total of 19,820 shares have
not been transferred to the book-entry securities system and lay on joint
account of Euroclear Finland ltd. Technopolis Plc's shares are listed on the
NASDAQ OMX Helsinki. At the end of the financial period, the company did not own
its own shares. Board authorizations granted by the Annual General Meeting are
presented in the section “Annual General Meeting” of the Annual Report.
The company did not receive any notices of changes in holdings during the period
under review.
Shareholding by sector on December 31, 2009
--------------------------------------------------------------------------------
| Sector | No. of shares | % of shares |
--------------------------------------------------------------------------------
| Private companies | 3,178,062 | 5.5 |
--------------------------------------------------------------------------------
| Financial and insurance institutions | 2,592,232 | 4.5 |
--------------------------------------------------------------------------------
| Public sector organizations | 16,972,054 | 29.6 |
--------------------------------------------------------------------------------
| Non-profit organizations | 2,856,209 | 5.0 |
--------------------------------------------------------------------------------
| Private households | 7,500,436 | 13.1 |
--------------------------------------------------------------------------------
| Foreign and nominee-registered | 24,227,068 | 42.2 |
--------------------------------------------------------------------------------
| Joint account | 19,280 | 0.0 |
--------------------------------------------------------------------------------
| Total | 57,345,341 | 100.0 |
--------------------------------------------------------------------------------
Shareholding breakdown on December 31, 2009
--------------------------------------------------------------------------------
| Number of shares | Number of | % of | Number of | % of |
| | shareholders | shareholders | shares | shares |
--------------------------------------------------------------------------------
| 1 - 100 | 256 | 7.0 | 14,376 | 0.0 |
--------------------------------------------------------------------------------
| 101 - 500 | 978 | 26.9 | 290,131 | 0.5 |
--------------------------------------------------------------------------------
| 501 - 1000 | 729 | 20.0 | 538,535 | 0.9 |
--------------------------------------------------------------------------------
| 1001 - 5000 | 1,295 | 35.6 | 2,874,861 | 5.0 |
--------------------------------------------------------------------------------
| 5001 - 10000 | 193 | 5.3 | 1,320,392 | 2.3 |
--------------------------------------------------------------------------------
| 10001 - 50000 | 136 | 3.7 | 2,519,291 | 4.4 |
--------------------------------------------------------------------------------
| 50001 - 100000 | 13 | 0.4 | 866,558 | 1.5 |
--------------------------------------------------------------------------------
| 100001 - 500000 | 17 | 0.5 | 3,483,139 | 6.1 |
--------------------------------------------------------------------------------
| 500001 - | 19 | 0.5 | 45,418,778 | 79.2 |
--------------------------------------------------------------------------------
| Joint account | 0 | 0.0 | 19,280 | 0.0 |
--------------------------------------------------------------------------------
| Total | 3,636 | 100.0 | 57,345,341 | 100.0 |
--------------------------------------------------------------------------------
Shareholders on December 31, 2009
--------------------------------------------------------------------------------
| Registered shareholders | Number of | % of shares |
| | shares | |
--------------------------------------------------------------------------------
| Varma Mutual Pension Insurance Company | 5,374,740 | 9.4 |
--------------------------------------------------------------------------------
| Ilmarinen Mutual Pension Insurance Company | 3,737,725 | 6.5 |
--------------------------------------------------------------------------------
| City of Oulu | 3,062,925 | 5.3 |
--------------------------------------------------------------------------------
| City of Tampere | 1,956,649 | 3.4 |
--------------------------------------------------------------------------------
| OP Life Assurance Company Ltd | 1,222,884 | 2.1 |
--------------------------------------------------------------------------------
| OP Bank Group Pension Fund | 885,938 | 1.5 |
--------------------------------------------------------------------------------
| OP Bank Group Pension Foundation | 757,380 | 1.3 |
--------------------------------------------------------------------------------
| Jyrki Hallikainen | 750,000 | 1.3 |
--------------------------------------------------------------------------------
| Finnish Cultural Foundation | 712,693 | 1.2 |
--------------------------------------------------------------------------------
| ODIN Finland | 693,093 | 1.2 |
--------------------------------------------------------------------------------
| Other registered, total | 15,061,843 | 26.3 |
--------------------------------------------------------------------------------
| Nominee-registered, total | 23,129,471 | 40.3 |
--------------------------------------------------------------------------------
| Total | 57,345,341 | 100.0 |
--------------------------------------------------------------------------------
Management Holdings, December 31, 2009
On December 31, 2009, the holdings of the Technopolis Plc Board of Directors,
CEO and Deputy CEO in the company's shares, pursuant to the Finnish Securities
Market Act Chapter 1 Section 5, totaled 179,897 shares, equaling 0.3% of the
share capital and votes of the company. The Chairman of the Board of Directors,
CEO and Deputy CEO held 1,300,000 options, equaling 2.2% of the company's share
capital and votes, provided that all issued option rights will be converted into
shares in the future. The total quantity of holdings and options was 1,479,897,
equaling 2.5% of the company's share capital and votes, provided that all issued
options will be converted into shares in the future.
Financing
With its current credit facilities, Technopolis is able to finance all Board
approved investments. At the end of the period, Technopolis' available funds
consisted of EUR 188.6 million in untapped credit facilities, and cash amounting
to EUR 4.5 million. Of the long-term unused credit facilities, EUR 60.0 million
is credit extended by the European Investment Bank to Technopolis for future
expansion projects in Finland. 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. At the
end of the period, there were no outstanding commercial papers. Technopolis also
has a EUR 15 million checking account overdraft facility of which EUR 6.4
million was in use at the end of the period.
The Group's net financial expenses totaled EUR 11.8 million (EUR 13.9 million).
The Group's interest coverage ratio was 3.8 (2.2). The interest coverage ratio
indicates the relation between EBITDA and accrual-based interest expenses.
The Group's total assets were EUR 706.1 million (EUR 683.6 million), of which
liabilities totaled EUR 444.2 million (EUR 407.9 million). The Group's equity
ratio was 37.3% (40.5%) At the end of the period the Group's net gearing was
146.7% (124.5%). The Group's equity per share was EUR 4.57 (EUR 4.80).
At the end of the period, the Group's interest-bearing liabilities amounted to
EUR 388.7 million (EUR 350.3 million). On December 31, 2009, the average
interest rate on interest-bearing loans was 2.47% (4.76%). At the end of the
period, 75.4% (74.3%) of interest-bearing liabilities were variable rate loans
and 24.6% (25.7%) were fixed rate loans. The average capital-weighted loan
period was 10.3 years (10.8 years).
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 59.1% (55.6%).
The Group has interest-bearing liabilities from credit institutions worth EUR
350.6 million, of which EUR 85.3 million include equity ratio related covenants.
With these loans, a decline in the equity ratio may lead to higher interest rate
margins or premature repayment. In some loans and bank guarantees, the margins
may rise as the equity ratio decreases, as shown in the table below. Potential
changes to margins will become effective in accordance with the terms and
conditions of each loan.
--------------------------------------------------------------------------------
| Loan(L)or | Margin % | Equity | Equity | Equity | Equity | Other |
| bank | 12/31/200 | ratio | ratio | ratio | ratio | |
| guarantee | 9 | under | under | under | under | |
| (BG) | | 38 % | 35 % | 33 % | 30 % | |
| principal | | | | | | |
| , EUR | | | | | | |
| million | | | | | | |
--------------------------------------------------------------------------------
| 10.0(L) | 0.65 | | | | 0.85 | |
--------------------------------------------------------------------------------
| 4.1 (L) | 0.65 | | | 0.70 | 1.00 | |
--------------------------------------------------------------------------------
| 20.0 (L) | 1.50 | | | 1.75 | 2.00 | Margin may be |
| | | | | | | changed or loan |
| | | | | | | terminated if |
| | | | | | | equity ratio is |
| | | | | | | under 30% |
--------------------------------------------------------------------------------
| 1.2 (L) | 0.45 | | | | | Margin may be |
| | | | | | | changed or loan |
| | | | | | | terminated if |
| | | | | | | equity ratio is |
| | | | | | | under 28 % |
--------------------------------------------------------------------------------
| 10.0 (BG) | 0.365 | | | 0.40 | 0.60 | |
--------------------------------------------------------------------------------
| 20.0 (BG) | 0.26 | 0.35*) | | | 0.65 | *)Covenant |
| | | | | | | becomes |
| | | | | | | effective |
| | | | | | | 12/8/2013 |
--------------------------------------------------------------------------------
| 10.00 | 0.8 | 0.9 | 1.0 | 1.5 | | |
| (BG) | | | | | | |
--------------------------------------------------------------------------------
| 10.00 | 0.8 | 0.9 | 1.0 | 1.5 | | |
| (BG) | | | | | | |
--------------------------------------------------------------------------------
Bank guarantees in the amount of 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. Upon possible extension of the bank guarantees,
significant margin increases are possible.
During the 12-month period following the period under review, EUR 28.0 million
of the existing interest-bearing loans will mature.
Financing for the duration of the construction project in Russia has been
arranged through funding by the parent company and is converted into long-term
loans and shareholders' equity in compliance with the thin-capitalization
regulations in effect in Russia.
Organization and Personnel
The CEO of Technopolis is Keith Silverang, MBA. Mr. Silverang has dual U.S. and
Finnish citizenship. He has an undergraduate degree from Boston University and
an MBA from the Helsinki School of Economics. Mr. Reijo Tauriainen is the
company's Deputy CEO.
The company's Management Team comprises Mr. Keith Silverang, CEO; Mr. Reijo
Tauriainen, CFO and Country Manager, Finland; Ms. Satu Eskelinen, Vice President
in charge of the Tampere operations and Business Services; Mr. Jukka Akselin,
Chief Development Officer; Mr. Seppo Selmgren, Chief Sales Officer; and Mr. Will
Cardwell, Development Services Director.
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 does not yet generate net sales or
operating profit, and its expenses are included in the expenses of the Group
administration.
Technopolis Plc adheres to the Finnish Corporate Governance Code for listed
companies, issued by the Securities Market Association on October 20, 2008 and
effective as of January 1, 2009. The Corporate Governance Statement is included
as an Appendix to the financial report stock exchange release.
During the financial period, the Group employed an average of 152 (165) people.
Facilities operations employed 61 (59) people, Business Services 34 (38) people
and Development Services 57 (68) people. At the end of the period under review,
the Group's personnel totaled 151 (158).
Technopolis' Development Services were reorganized in the last quarter of the
period under review, resulting in mandatory labor negotiations pursuant to the
Finnish Act on Cooperation within Undertakings in the companies providing
development services. As a result of the negotiations, the number of employees
in the Development Services unit fell to 23. Four employees were transferred
within the company, 16 people were transferred to public and private partners
and seven employees resigned, were dismissed or are on leave. The negotiations
concerning the transfer of the Technopolis Ventures operations in Jyväskylä are
still in progress and are expected to be finalized at the end of January 2010.
The negotiations will affect the employment of two employees. Taking into
account the changes in the staffing at the end of the year, the Group's
personnel totaled 130 at the beginning of 2010.
The restructuring plan calls for the merger of the local Technopolis Ventures
subsidiaries into the parent company Technopolis Ventures Ltd by the end of
February 2010. Modern video conferencing systems and web-based technologies will
enable the development and production of development services as well as
centralization of service delivery. The sales of development services will be
organized through Technopolis' local business units. A majority of the publicly
funded non-profit programs were transferred to local public and private partners
at the end of 2009.
Annual General Meeting
The Annual General Meeting of Technopolis Plc was held on March 26, 2009. The
meeting adopted the consolidated and parent company financial statements for
fiscal 2008 and released the company management from liability.
The shareholders at the Annual General Meeting decided to pay a dividend of EUR
0.12 per share, as proposed by the Board of Directors. 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 31, 2009. The dividend payment
date was April 7, 2009.
The shareholders at the Annual General Meeting decided to amend the company's
Articles of Association Section 8 by specifying that the notice of the General
Meeting should be served no later than three weeks before the General Meeting.
The number of members on the Board of Directors was confirmed at six. Ms. Teija
Andersen, Mr. Jussi Kuutsa, Mr. Matti Pennanen, Mr. Timo Ritakallio and Mr.
Erkki Veikkolainen were elected members of the Board for a term that ends at the
close of the next Annual General Meeting. In addition to the aforementioned
persons, the Board includes Mr. Pertti Huuskonen, full-time Chairman of the
Board, who was elected the full-time Chairman of the Board at the Annual General
Meeting of March 27, 2008 for a term that began on September 15, 2008 and will
end at the close of the Annual General Meeting to be held in fiscal 2010. Mr.
Matti Pennanen was elected Deputy Chairman of the Board.
The shareholders at the Annual General Meeting decided that Mr. Huuskonen is to
be paid compensation of EUR 288,150 for a period of time starting from the 2009
Annual General Meeting and ending at the Annual General Meeting the following
year. The compensation is based on a decision made by the shareholders at the
Annual General Meeting of March 27, 2008 and on the basis of a compensation
agreement made with Mr. Huuskonen, including a 15% reduction in the compensation
for said period of time, in accordance with Mr. Huuskonen's voluntary savings
initiative.
The other members of the Board will be paid annual compensation as follows: EUR
30,000 to the Deputy Chairman of the Board and EUR 25,000 to each member of the
Board. An additional EUR 600 per meeting will be paid as compensation for
attending Board meetings. Travel expenses will be reimbursed in accordance with
the company's travel regulations.
The shareholders at the Annual General Meeting further decided to authorize the
Board of Directors to extend the compensation agreement with Pertti Huuskonen by
one year under the original terms and conditions so that it would terminate at
the close of the 2011 Annual General Meeting. In accordance with the original
terms and conditions, the annual compensation for the Chairman of the Board is
EUR 339,000.
KPMG Oy Ab were appointed auditors for the Group, with Mr. Tapio Raappana, APA,
as the Auditor-in-charge. A decision was made to pay the auditor's fee in
accordance with a reasonable invoice submitted by the auditor.
The shareholders at the Annual General Meeting authorized the company's Board of
Directors to decide on purchasing the company's own shares as follows: The
maximum number of shares to be acquired is 5,700,000, equal to approximately
9.94% of the company's shares. 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 will make the decision on how the shares will be
acquired. Derivatives, among other things, may be used for this purpose. The
company's own shares can be acquired using other methods than in proportion to
the current holdings of the existing shareholders (directed acquisition).
This authorization supersedes the authorization on purchasing company shares
granted by the Annual General Meeting of March 27, 2008. The authorization
expires on September 26, 2010.
The Annual General Meeting resolved to authorize 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 Board of Directors was authorized to decide all terms and conditions of the
share issue and of the granting of special rights entitling holders to shares.
The authorization applies to both the issuance of new shares and the
surrendering of the company's own shares. The share issue and granting of
special rights entitling to shares may be carried out in a manner that deviates
from the pre-emptive rights of shareholders (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.
At the Annual General Meeting, the Board made the decision to amend its proposal
referred to in the notice of the meeting so that the number of shares to be
issued pursuant to the authorization may not exceed 11,400,000, which is
equivalent to approximately 19.88% of the company's shares.
The shareholders at the Annual General Meeting approved a performance
share-based incentive system for key personnel in the Technopolis Group.
The system aims to align the objectives of the owners and key personnel in order
to increase the company's value and commitment of key personnel to the company
by providing them with a competitive bonus system based on ownership of the
company's shares.
The system contains three earnings periods, the calendar years 2010, 2011 and
2012. The company's Board of Directors decides the earnings criteria and targets
for each period in December of the previous year. Potential bonuses for the
earning periods of 2010, 2011 and 2012 will be paid in 2011, 2012 and 2013,
respectively, partly in company shares and partly in cash. The shares may not be
disposed of during a commitment period of two and a half years.
The total bonus amounts payable in the system correspond to a maximum value of
approximately 800,000 Technopolis Plc's shares (including the portion payable in
cash). The calculatory dilution effect of these shares is 1,4 %.
Evaluation of Operational Risks and Uncertainties
Technopolis' most significant risks are primarily those associated with
financing and customers, as well as operational and business risks in Russia.
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 will use 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
fiscal period is the equation that a one percentage point change in the money
market rates would change interest rate costs by EUR 2.3 million per annum.
Because of the interest rate risk associated with loans, a policy of
diversifying interest bases is pursued. On December 31, 2009, 18.3% of
interest-bearing liabilities were pegged to the under 3-month Euribor rate and
57.1% were pegged to the 3-12 month Euribor rate. Of the interest-bearing
liabilities, 24.6% were fixed-rate loans with maturities of 13 to 60 months.
The objective of managing refinancing risks is to ensure that the Group's loan
portfolio is sufficiently diversified in terms of repayment schedules and
financing instruments. The average principle-weighted outstanding loan period
for interest-bearing liabilities was 10.3 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 relatively high degree of
solvency.
Extended uncertainty in the financing market may affect the availability of
growth financing and refinancing, as well as on their margins in the future.
The differences between Russian and Finnish legislation and administrative
procedures may give rise to risks. If the Pulkovo premises let as planned, the
technology center will create a financial risk for the Group. Once completed,
the Pulkovo technology center will account for approximately 7% of the fair
value of the Group's entire investment property portfolio.
Fluctuations in the exchange rate between the Russian ruble and the euro may
have an effect on the company's financial position 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 financial income and expenses
depending on the nature of the transaction.
The deterioration of general economic conditions, if prolonged, may have an
unfavorable effect on the company's customers and, thus, on the Group's
operations.
Customer risk management aims to minimize the negative impact of potential
changes in the customers' financial position on the company's business and
financial performance. Customer risk management focuses on having a profound
understanding of the customer's business and active monitoring of customer
information. Customer risks are diversified by acquiring customers from all
technology sectors, knowledge-intensive operations, and the public sector. As
part of customer risk management, Technopolis' leases include lease deposit
arrangements. All properties are covered by full value insurance.
Geographically, the Group's property portfolio is diversified between the
Helsinki Metropolitan Area, Jyväskylä, Kuopio, Lappeenranta, Tampere, the Oulu
region and St. Petersburg. No single customer accounts for more than 9% 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 188,190 (227,467 on December 31,2008) square meters of allocated
space, equaling 46% (57%) of the weighted area in the entire property
portfolio. The term of notice for these agreements is broken down as shown in
the table below.
--------------------------------------------------------------------------------
| | 2009 | 2008 |
--------------------------------------------------------------------------------
| Notice period, months | Allocated | % of lease | Allocated | % of lease |
| | square | stock | square | stock |
| | meters | | meters | |
--------------------------------------------------------------------------------
| 0 - 3 | 13,035 | 7 | 54,592 | 24 |
--------------------------------------------------------------------------------
| 3 - 6 | 54,134 | 28 | 118,283 | 52 |
--------------------------------------------------------------------------------
| 6 - 9 | 83,971 | 45 | 36,395 | 16 |
--------------------------------------------------------------------------------
| 9 - 12 | 37,048 | 20 | 18,197 | 8 |
--------------------------------------------------------------------------------
| Total | 188,188 | 100 | 227,467 | 100 |
--------------------------------------------------------------------------------
At the end of the period, the average lease period was 21 (24) months.
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 specifications 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 office facilities and recycling potential. When purchasing
properties, Technopolis carries out standard property and environmental audits
before committing to the transaction.
Changes in the market yield requirements may have a significant impact on the
company's financial performance. As the yield requirements increase, the fair
value of properties decrease. Conversely, as the yield requirements decrease,
the fair value of properties increase. While the changes either decrease or
increase the company's operating profit, they do not have an impact on the
company's direct result, but do affect the equity ratio.
Board of Directors' Proposal for Distribution of Profit
The distributable funds of the parent company Technopolis Plc at the disposal of
the Annual General Meeting amount to EUR 11,531,267. The Board proposes a
dividend of EUR 0.15 per share to be paid out, totaling EUR 8,601,802. The rest
is to remain in the retained earnings account. The proposed dividend is 43.0% of
the earnings per share excluding changes in the fair value of investment
properties.
There have not been essential changes to the company's financial status after
the end of the financial period. The company's liquidity is good and according
to the Board of Directors' opinion, the proposed distribution of profit will not
endanger the company's solvency.
Future Outlook
The Technopolis Management view is that the recession hit bottom in the last
quarter of 2009 and that a recovery has begun. Despite this recovery, there are
still uncertainties concerning 2010, which could have an impact on the
development of the company's net sales and EBITDA.
The Management estimates that a prolonged general decline of the economy could
make it difficult for the Group to achieve its growth targets. The company will
continue measures aimed at safeguarding its profitability also under difficult
economic conditions. The Group's Management estimates that in 2010 net sales
will grow 0-2% and that EBITDA in 2010 will remain at the 2009 level.
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 2014. 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 2014.
The aim is to generate this growth through both organic growth and acquisitions.
The Group's long-term equity ratio target is 35%.
Technopolis estimates that in 2010, it will be possible to carry out one
acquisition in a new country, in accordance with the company's strategy and
financial objectives. Nevertheless, this estimate includes a significant
schedule risk, and there are no guarantees that the set time table will be met
as planned.
The Group's financial performance depends of the development of the overall
business environment, customer operations, as well as the yield requirements
from the financial markets and properties. Developments in these areas and
resulting changes in the occupancy rate, use of services, financing costs, the
fair value of properties and facilities rents can have an impact on the Group's
sales and earnings.
Oulu, January 29, 2010
TECHNOPOLIS PLC
Board of Directors
Keith Silverang
CEO
For further information, please contact:
Keith Silverang, tel. +358 (0)40 566 7785
The Financial Report Stock Exchange Release is available in PDF format on the
company's website at www.technopolis.fi. To request a paper copy of the
document, please call +358 46 712 0000/Technopolis info.
Technopolis provides an online bulletin service that you can join by visiting
the company's website. Individuals who sign up with the service will receive the
company's bulletins electronically.
The company's Annual Report will be published on the week of March 15 (week 11)
on the company's website.
The accounting policies applied in the financial statement release and the
formulas for calculating key indicators are basically the same as in the 2008
annual report. Since January 1, 2009, the company has applied the revised IAS 1
and IAS 40 standards as well as the IFRS 8 regulations. 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 Technopolis Group has two operating segments based on two geographic units:
Finland and Russia. The segmentation 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 presents the information on the operating
segments complete with comparative data since the beginning of 2009.
Investment properties are valued in accordance with the fair value model. The
company has complied with the amended IAS 40 standard, under which investment
properties under construction must be measured at fair value, provided that fair
value can be reliably determined. The company has applied the amended standard
since the beginning of 2009.
The figures are unaudited.
Technopolis Group:
--------------------------------------------------------------------------------
| STATEMENT | 10-12/ | 10-12/ | 1-12/ | 1-12/ | |
| OF | | | | | |
| COMPREHENSI | | | | | |
| VE INCOME | | | | | |
--------------------------------------------------------------------------------
| Currency unit: | 2009 | 2008 | 2009 | 2008 | |
| EUR million | | | | | |
--------------------------------------------------------------------------------
| Net sales | 19.66 | 19.54 | 76.40 | 72.57 | |
--------------------------------------------------------------------------------
| Other operating | 0.92 | 1.11 | 2.43 | 5.48 | |
| income (8) | | | | | |
--------------------------------------------------------------------------------
| Other operating | -10.65 | -11.79 | -38.86 | -41.07 | |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Change in fair | -5.98 | 0.63 | -37.13 | -0.69 | |
| value of | | | | | |
| investment | | | | | |
| properties | | | | | |
--------------------------------------------------------------------------------
| Depreciation (9) | -0.13 | -0.16 | -0.52 | -0.98 | |
--------------------------------------------------------------------------------
| Operating | 3.82 | 9.32 | 2.31 | 35.31 | |
| profit/loss | | | | | |
--------------------------------------------------------------------------------
| Financial income | -2.48 | -3.92 | -11.76 | -13.93 | |
| and expenses | | | | | |
--------------------------------------------------------------------------------
| Profit before | 1.34 | 5.39 | -9.45 | 21.38 | |
| taxes | | | | | |
--------------------------------------------------------------------------------
| Income taxes | -0.61 | -1.22 | 1.95 | -5.53 | |
--------------------------------------------------------------------------------
| Net profit for | 0.73 | 4.17 | -7.50 | 15.85 | |
| the period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other | | | | | |
| comprehensive | | | | | |
| income items | | | | | |
--------------------------------------------------------------------------------
| Available-for-sal | 0.01 | -0.02 | 0.08 | -0.04 | |
| e financial | | | | | |
| assets | | | | | |
--------------------------------------------------------------------------------
| Taxes related to | 0.00 | 0.01 | -0.02 | 0.01 | |
| other | | | | | |
| comprehensive | | | | | |
| income items | | | | | |
--------------------------------------------------------------------------------
| Other | 0.01 | -0.01 | 0.06 | -0.03 | |
| comprehensive | | | | | |
| income items | | | | | |
| after taxes for | | | | | |
| the period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comprehensive | 0.74 | 4.16 | -7.44 | 15.82 | |
| income for the | | | | | |
| period, total | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution of | | | | | |
| earnings for the | | | | | |
| period: | | | | | |
--------------------------------------------------------------------------------
| To parent company | 0.74 | 4.15 | -7.44 | 15.99 | |
| shareholders | | | | | |
--------------------------------------------------------------------------------
| To | -0.01 | 0.02 | -0.05 | -0.14 | |
| non-controlling | | | | | |
| shareholders | | | | | |
--------------------------------------------------------------------------------
| | 0.73 | 4.17 | -7.50 | 15.85 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distribution of | | | | | |
| comprehensive | | | | | |
| earnings for the | | | | | |
| period: | | | | | |
--------------------------------------------------------------------------------
| To parent company | 0.75 | 4.14 | -7.38 | 15.96 | |
| shareholders | | | | | |
--------------------------------------------------------------------------------
| To | -0.01 | 0.02 | -0.05 | -0.14 | |
| non-controlling | | | | | |
| shareholders | | | | | |
--------------------------------------------------------------------------------
| | 0.74 | 4.16 | -7.44 | 15.82 | |
--------------------------------------------------------------------------------
| Earnings per share based on result of flows to the parent company |
| shareholders: |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings/share | 0.01 | 0.08 | -0.13 | 0.31 | |
| , basic (EUR) | | | | | |
--------------------------------------------------------------------------------
| Earnings/share | 0.01 | 0.08 | -0.13 | 0.31 | |
| , adjusted for | | | | | |
| dilutive | | | | | |
| effect (EUR) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| BALANCE SHEET, ASSETS | | | |
--------------------------------------------------------------------------------
| Currency unit: EUR million | 12/31/2009 | 12/31/2008 |
--------------------------------------------------------------------------------
| Non-current assets | | |
--------------------------------------------------------------------------------
| Intangible assets | 2.81 | 2.02 |
--------------------------------------------------------------------------------
| Tangible assets | 62.79 | 37.94 |
--------------------------------------------------------------------------------
| Investment property | 596.73 | 594.02 |
--------------------------------------------------------------------------------
| Investments | 25.61 | 26.70 |
--------------------------------------------------------------------------------
| Deferred tax assets | 2.81 | 1.89 |
--------------------------------------------------------------------------------
| Non-current assets | 690.75 | 662.57 |
--------------------------------------------------------------------------------
| Current assets | 15.34 | 20.99 |
--------------------------------------------------------------------------------
| Assets, total | 706.09 | 683.56 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| BALANCE SHEET, SHAREHOLDERS' EQUITY | | |
| AND LIABILITIES | | |
--------------------------------------------------------------------------------
| Currency unit: EUR million | | |
--------------------------------------------------------------------------------
| Shareholders' equity | | |
--------------------------------------------------------------------------------
| Share capital | 96.91 | 96.91 |
--------------------------------------------------------------------------------
| Premium fund | 18.55 | 18.55 |
--------------------------------------------------------------------------------
| Other funds | 63.94 | 63.82 |
--------------------------------------------------------------------------------
| Other shareholders' equity | 0.65 | 0.55 |
--------------------------------------------------------------------------------
| Retained earnings | 89.21 | 79.62 |
--------------------------------------------------------------------------------
| Net profit for the period | -7.44 | 15.99 |
--------------------------------------------------------------------------------
| Parent company's shareholders' | 261.83 | 275.44 |
| interests | | |
--------------------------------------------------------------------------------
| Non-controlling interests | 0.01 | 0.26 |
--------------------------------------------------------------------------------
| Shareholders' equity, total | 261.84 | 275.70 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | |
--------------------------------------------------------------------------------
| Non-current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 360.67 | 329.84 |
--------------------------------------------------------------------------------
| Non-interest-bearing liabilities | 1.25 | 1.38 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 32.62 | 38.11 |
--------------------------------------------------------------------------------
| Non-current liabilities, total | 394.55 | 369.33 |
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 28.03 | 20.43 |
--------------------------------------------------------------------------------
| Non-interest-bearing liabilities | 21.67 | 18.10 |
--------------------------------------------------------------------------------
| Current liabilities, total | 49.70 | 38.53 |
--------------------------------------------------------------------------------
| Liabilities, total | 444.25 | 407.86 |
--------------------------------------------------------------------------------
| Shareholders' equity and liabilities, | 706.09 | 683.56 |
| total | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOW STATEMENT | 1-12/ | 1-12/ |
--------------------------------------------------------------------------------
| Currency unit: EUR million | 2009 | 2008 |
--------------------------------------------------------------------------------
| Cash flow from operating activities | | |
--------------------------------------------------------------------------------
| Net profit for the period | -7.50 | 15.85 |
--------------------------------------------------------------------------------
| Adjustments: | | |
--------------------------------------------------------------------------------
| Change in fair value of | 37.13 | 0.69 |
| investment properties | | |
--------------------------------------------------------------------------------
| Depreciation | 0.52 | 0.98 |
--------------------------------------------------------------------------------
| Other adjustments for non-cash | -0.01 | -0.02 |
| transactions | | |
--------------------------------------------------------------------------------
| Interest and other financial | 0.67 | 0.14 |
| expenses | | |
--------------------------------------------------------------------------------
| Interest income | 11.77 | 13.95 |
--------------------------------------------------------------------------------
| Dividend yield | -1.95 | 5.53 |
--------------------------------------------------------------------------------
| Taxes | 1.85 | 0.24 |
--------------------------------------------------------------------------------
| Increase/decrease in working capital | 0.57 | 1.24 |
--------------------------------------------------------------------------------
| Interest received | 0.01 | 0.01 |
--------------------------------------------------------------------------------
| Dividends received | -10.54 | -16.41 |
--------------------------------------------------------------------------------
| Interest paid and fees | -1.74 | 0.46 |
--------------------------------------------------------------------------------
| Taxes paid | -1.79 | -2.47 |
--------------------------------------------------------------------------------
| Net cash from operations | 28.99 | 20.19 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing activities | | |
--------------------------------------------------------------------------------
| Investments in other securities | -0.02 | -1.11 |
--------------------------------------------------------------------------------
| Investments in investment properties | -62.96 | -70.21 |
--------------------------------------------------------------------------------
| Investments in tangible and intangible | -1.05 | -0.27 |
| assets | | |
--------------------------------------------------------------------------------
| Repayments of loan receivables | 1.06 | 0.96 |
--------------------------------------------------------------------------------
| Gains from disposals of other | 0.01 | 2.33 |
| investments | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries | -0.21 | -22.21 |
--------------------------------------------------------------------------------
| Net cash used in investing activities | -63.17 | -90.51 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing activities | | |
--------------------------------------------------------------------------------
| Increase in long-term loans | 58.41 | 70.21 |
--------------------------------------------------------------------------------
| Decrease in long-term loans | -15.98 | -14.46 |
--------------------------------------------------------------------------------
| Dividends paid | -6.88 | -6.60 |
--------------------------------------------------------------------------------
| Paid share issue | | 58.48 |
--------------------------------------------------------------------------------
| Repayments of capital leasing | -4.00 | -31.24 |
| receivables | | |
--------------------------------------------------------------------------------
| Change in short-term loans | 31.55 | 76.39 |
--------------------------------------------------------------------------------
| Net cash from financing activities | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net increase/decrease in cash assets | -2.63 | 6.07 |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 7.15 | 1.08 |
| period-start | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at period-end | 4.52 | 7.15 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| STATEMENT OF CHANGES IN | | | | | |
| EQUITY | | | | | |
--------------------------------------------------------------------------------
| Currency unit: | Share | Premiu | Other | Retained | Non-con | Share-ho |
| EUR million | capita | m fund | funds | earnings | trollin | lders' |
| | l | | | | g | equity |
| | | | | | shareho | |
| | | | | | lders | |
--------------------------------------------------------------------------------
| EQUITY | 74.54 | 18.55 | 27.38 | 86.29 | 0.40 | 207.17 |
| 12/31/2007 | | | | | | |
--------------------------------------------------------------------------------
| Share capital | 0.01 | | 0.01 | | | 0.02 |
| increase | | | | | | |
--------------------------------------------------------------------------------
| Directed share | 22.36 | | 36.38 | | | 58.75 |
| issue | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | -6.62 | | -6.62 |
| distribution | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | -0.03 | 15.99 | -0.14 | 15.82 |
| income for the | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Other changes | | | 0.08 | 0.49 | | 0.57 |
--------------------------------------------------------------------------------
| EQUITY | 96.91 | 18.55 | 63.82 | 96.16 | 0.26 | 275.70 |
| 12/31/2008 | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | -6.88 | | -6.88 |
| distribution | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | 0.06 | -7.44 | -0.05 | -7.44 |
| income for the | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Other changes | | | 0.06 | 0.59 | -0.20 | 0.46 |
--------------------------------------------------------------------------------
| EQUITY | 96.91 | 18.55 | 63.94 | 82.42 | 0.01 | 261.84 |
| 12/31/2009 | | | | | | |
--------------------------------------------------------------------------------
Financial Information by Segment
The Group's net sales or EBITDA do not include inter-segment items. Items after
EBITDA, such as depreciation, financial items and taxes, are not presented in
the segment information because they are not allocated to segments.
--------------------------------------------------------------------------------
| SEGMENT INFORMATION | 10-12/ | 10-12/ | 1-12/ | 1-12/ |
--------------------------------------------------------------------------------
| Currency unit: EUR million | 2009 | 2008 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Net sales | | | | |
--------------------------------------------------------------------------------
| Finland | 19.58 | 19.53 | 76.13 | 72.43 |
--------------------------------------------------------------------------------
| Russia | 0.10 | 0.07 | 0.34 | 0.27 |
--------------------------------------------------------------------------------
| Unallocated | -0.02 | -0.07 | -0.06 | -0.13 |
--------------------------------------------------------------------------------
| Total | 19.66 | 19.54 | 76.40 | 72.57 |
--------------------------------------------------------------------------------
| EBITDA | | | | |
--------------------------------------------------------------------------------
| Finland | 10.54 | 10.55 | 43.81 | 42.32 |
--------------------------------------------------------------------------------
| Russia | -0.08 | -0.14 | -0.43 | -0.54 |
--------------------------------------------------------------------------------
| Unallocated | -0.53 | -1.48 | -3.41 | -4.80 |
--------------------------------------------------------------------------------
| Total | 9.93 | 8.93 | 39.97 | 36.98 |
--------------------------------------------------------------------------------
| Assets | | | | |
--------------------------------------------------------------------------------
| Finland | | | 691.46 | 675.22 |
--------------------------------------------------------------------------------
| Russia | | | 38.41 | 19.14 |
--------------------------------------------------------------------------------
| Eliminations | | | -23.78 | -10.80 |
--------------------------------------------------------------------------------
| Total | | | 706.09 | 683.56 |
--------------------------------------------------------------------------------
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, this is the
first year when the company presents its direct result, which better reflects
its actual performance.
The direct result presents the company's financial performance 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, 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 | | | | | |
--------------------------------------------------------------------------------
| Currency unit: EUR | 10-12/ | 10-12/ | 1-12/ | 1-12/ | |
| million | | | | | |
--------------------------------------------------------------------------------
| DIRECT RESULT | 2009 | 2008 | 2009 | 2008 | |
--------------------------------------------------------------------------------
| Net sales | 19.66 | 19.54 | 76.40 | 72.57 | |
--------------------------------------------------------------------------------
| Other operating | 0.84 | 1.06 | 2.24 | 4.45 | |
| income | | | | | |
--------------------------------------------------------------------------------
| Other operating | -10.65 | -11.79 | -38.86 | -41.07 | |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Depreciation | -0.13 | -0.16 | -0.52 | -0.56 | |
--------------------------------------------------------------------------------
| Operating profit/loss | 9.72 | 8.65 | 39.26 | 35.40 | |
--------------------------------------------------------------------------------
| Finance income and | -0.91 | -4.95 | -9.75 | -15.19 | |
| expenses. total | | | | | |
--------------------------------------------------------------------------------
| Result before taxes | 8.81 | 3.69 | 29.51 | 20.21 | |
--------------------------------------------------------------------------------
| Taxes for direct | -2.81 | -0.92 | -7.91 | -5.22 | |
| result items | | | | | |
--------------------------------------------------------------------------------
| Non-controlling | 0.01 | -0.02 | 0.05 | 0.14 | |
| interests | | | | | |
--------------------------------------------------------------------------------
| Direct result for the | 6.01 | 2.76 | 21.66 | 15.12 | |
| period | | | | | |
--------------------------------------------------------------------------------
| | | | | 0.00 | |
--------------------------------------------------------------------------------
| INDIRECT RESULT | | | | | |
--------------------------------------------------------------------------------
| Non-recurring items | 0.08 | 0.05 | 0.18 | 1.03 | |
--------------------------------------------------------------------------------
| Change in fair value | -5.98 | 0.63 | -37.13 | -0.69 | |
| of investment | | | | | |
| properties | | | | | |
--------------------------------------------------------------------------------
| Non-recurring | | | | -0.42 | |
| depreciation | | | | | |
--------------------------------------------------------------------------------
| Operating profit/loss | -5.90 | 0.68 | -36.95 | -0.08 | |
--------------------------------------------------------------------------------
| Change in fair value | -1.57 | 1.03 | -2.01 | 1.25 | |
| of financial | | | | | |
| instruments | | | | | |
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| Result before taxes | -7.48 | 1.71 | -38.96 | 1.17 | |
--------------------------------------------------------------------------------
| Taxes for indirect | 2.20 | -0.30 | 9.86 | -0.30 | |
| result items | | | | | |
--------------------------------------------------------------------------------
| Indirect result for | -5.27 | 1.40 | -29.10 | 0.87 | |
| the period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result for the period | 0.74 | 4.15 | -7.44 | 15.99 | |
| to the parent company | | | | | |
| shareholders, total | | | | | |
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--------------------------------------------------------------------------------
| Earnings per | | | | | |
| share, diluted *) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| From direct result | 0.10 | 0.06 | 0.38 | 0.29 | |
--------------------------------------------------------------------------------
| From indirect | -0.09 | 0.02 | -0.51 | 0.02 | |
| result | | | | | |
--------------------------------------------------------------------------------
| From net result | 0.01 | 0.08 | -0.13 | 0.31 | |
| for the period | | | | | |
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--------------------------------------------------------------------------------
| *) Earnings per share calculated according to EPRA's instructions. |
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| KEY INDICATORS | | 1-12/ | 1-12/ |
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| | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Change in net sales, % | | 5.3 | 27.5 |
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| Operating profit/loss / net | | 3.0 | 48.7 |
| sales, % | | | |
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| Interest coverage ratio | | 3.8 | 2.2 |
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| Equity ratio, % | | 37.3 | 40.5 |
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| Loan to value, % | | 59.1 | 55.6 |
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| Group company personnel | | 152 | 165 |
| during the period, average | | | |
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| Gross expenditure on assets, | | 66 029 | 143 273 |
| EUR 1,000 | | | |
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| Net rental revenue of | | 7.6 | 7.6 |
| investment properties, % (10) | | | |
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| Financial occupancy rate, % | | 94.4 | 96.5 |
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| Earnings/share | | | |
--------------------------------------------------------------------------------
| Basic, EUR | | -0.13 | 0.31 |
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| Diluted, EUR | | -0.13 | 0.31 |
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| Equity/share, EUR | | 4.57 | 4.80 |
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| Average issue-adjusted number | | | |
| of shares | | | |
--------------------------------------------------------------------------------
| basic | | 57 345 341 | 52 029 796 |
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| diluted | | 57 345 341 | 52 118 705 |
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| Issue-adjusted number of shares at | 57 345 341 | 57 345 341 |
| year-end | | |
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| P/E ratio | -23,88 | 9,40 |
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| Dividend/share, EUR (11) | 0,15 | 0,12 |
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| Dividend payout ratio, % | -115,6 | 39,1 |
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| Effective dividend yield | 4,84 | 4,20 |
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| OTHER KEY INDICATORS | | |
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| Market value of shares, EUR million, Dec | 177,77 | 165,15 |
| 31 | | |
--------------------------------------------------------------------------------
| Share turnover, shares | 18 870 550 | 33 013 701 |
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| Share turnover out of average number of | 32,91 | 63,50 |
| shares, % | | |
--------------------------------------------------------------------------------
| Share prices, EUR | | |
--------------------------------------------------------------------------------
| Highest price | 3,96 | 6,48 |
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| Lowest price | 1,95 | 2,26 |
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| Average price | 3,01 | 4,84 |
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| Price Dec 31 | 3,10 | 2,88 |
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| CONTINGENT LIABILITIES | | | |
--------------------------------------------------------------------------------
| Currency unit: EUR million | 12/31/2009 | 12/31/2008 | |
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| Pledges and guarantees on | | | |
| own debt | | | |
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| Mortgages of properties | 353.9 | 261.9 | |
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| Book value of pledged | 162.1 | 162.4 | |
| securities | | | |
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| Other guarantee liabilities | 12.7 | 13.24 | |
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| Collateral given on behalf | 0.50 | 0.50 | |
| of associates | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Leasing liabilities, | 2.21 | 0.94 | |
| machinery and equipment | | | |
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| Project liabilities | 0.15 | 0.21 | |
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| Interest rate and currency | | | |
| swaps | | | |
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| Nominal values | 107.7 | 112.00 | |
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| Fair values | -0.99 | 0.56 | |
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Value added tax (VAT) adjustment liability on property investments
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 5 -year | 10-year | | |
| | adjustment | adjustment | | |
| | period | period | | |
--------------------------------------------------------------------------------
| Year | 2006 | 2007 | 2008 | 2009 | Total | |
--------------------------------------------------------------------------------
| Property investment | 43.90 | 4.80 | 57.45 | 32.35 | 138.49 | |
| expense (net) | | | | | | |
--------------------------------------------------------------------------------
| VAT on property | 9.66 | 1.06 | 12.64 | 7.12 | 30.47 | |
| investment | | | | | | |
--------------------------------------------------------------------------------
| Annual share of VAT on | 1.93 | 0.21 | 1.26 | 0.71 | 4.12 | |
| investment | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| VAT deducted | 9.26 | 1.05 | 12.57 | 7.08 | 29.96 | |
--------------------------------------------------------------------------------
| Annual share of the VAT | 1.85 | 0.21 | 1.26 | 0.71 | 4.03 | |
| deducted | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of years | 1 | 2 | 8 | 9 | | |
| remaining in the | | | | | | |
| adjustment period | | | | | | |
--------------------------------------------------------------------------------
| Refundable amount of | 1.85 | 0.42 | 10.06 | 6.37 | 18.70 | |
| deduction 12/31/2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| VAT adjustment | | | | | 18.70 | |
| liability 12/31/2009 | | | | | | |
--------------------------------------------------------------------------------
| VAT adjustment | | | | | 16.36 | |
| liability 12/31/2008 | | | | | | |
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| Change | | | | | 2.34 | |
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(8) Other operating income consists of operating subsidies received for
development services; an equal amount is recorded under operating expenses for
development services. The 2009 figures include non-recurring items of EUR 0.2
million and the 2008 cumulative figures EUR 0.9 million.
(9) The 2008 cumulative figures include non-recurring depreciation of EUR 0.4
million.
(10) The figure does not include properties commissioned and acquired during the
fiscal year.
(11) Proposal for distribution of 2009 dividends
APPENDICES:
Corporate Governance Statement
Distribution:
Nasdaq OMX Helsinki
Major news media
www.technopolis.fi
