Sponda Plc FINANCIAL STATEMENTS Bulletin January-December 2008
Julkaisupäivä:6.2.2009luokka:
Sponda Plc Financial Statements Bulletin 6 February 2009, at 8:30 am Sponda Plc Financial Statements Bulletin January-December 2008 Sponda Group's total revenue increased to EUR 224.3 million (31 December 2007: 210.9 million) and net operating income after property maintenance costs and direct costs for funds rose to EUR 166.8 (152.8) million. Operating profit was EUR 126.2 (256.7) million. The figure includes a change in value of the property portfolio of EUR -36.0 (92.9) million, which in 2008 comprised mainly a decline in the values of investment properties. The economic occupancy rate of Sponda's properties was 88.5 % (91.2) %. Result of operations and financial position January - December 2008 (compared with figures for January - December 2007) Total revenue increased to EUR 224.3 (210.9) million. Net operating income rose to EUR 166.8 (152.8) million. Operating profit was EUR 126.2 (256.7) million. The change in value of properties in 2008 was EUR -36.0 (92.9) million which includes change in yield requirements of EUR -93.1 million and development gains on property development projects of EUR 43.3 million. Profit after tax in 2008 was EUR 26.6 (136.6) million. Earnings per share (EPS) were EUR 0.24 (1.27). Cash flow from operations per share was EUR 0.78 (0.81). The fair value of the investment properties amounted to EUR 2,907.5 (2,534.9) million. Net assets per share totalled EUR 7.86 (8.40). EPRA net assets per share were EUR 9.64 (10.04). The economic occupancy rate was 31 January 2008 88.5 (91.2) %. The Board of Directors proposes to the AGM that no dividend be paid for the 2008 financial year. Result of operations and financial position October - December 2008 (compared with same period in 2007) Total revenue rose to EUR 58.2 (53.6) million. Net operating income rose to EUR 41.7 (39.1) million. Operating profit was EUR 37.8 (41.5) million. During the final quarter the change in value of investment properties was EUR -9.9 (0.5) million. Profit after tax was EUR 7.7 (18.0) million. Earnings per share were EUR 0.07 (0.16). Cash flow from operations per share was EUR 0.29 (0.22). Key figures -------------------------------------------------------------------------------- | | 10-12/08 | 10-12/07 | 1-12/08 | 1-12/07 | -------------------------------------------------------------------------------- | Economic occupancy rate, % | | | 88,5 | 91,2 | -------------------------------------------------------------------------------- | Total revenue, MEUR | 58.2 | 53.6 | 224.3 | 210.9 | -------------------------------------------------------------------------------- | Net operating income, MEUR | 41.7 | 39.1 | 166.8 | 152.8 | -------------------------------------------------------------------------------- | Operating profit, MEUR | 37.8 | 41.5 | 126.2 | 256.7 | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.07 | 0.16 | 0.24 | 1.27 | -------------------------------------------------------------------------------- | Cash flow from operations per | 0.29 | 0.22 | 0.78 | 0.81 | | share, EUR | | | | | -------------------------------------------------------------------------------- | Net assets per share, EUR | | | 7.86 | 8.40 | -------------------------------------------------------------------------------- | EPRA net assets per share, | | | 9.64 | 10.04 | | EUR | | | | | -------------------------------------------------------------------------------- | Equity ratio, % | | | 32 | 32 | -------------------------------------------------------------------------------- | Gearing, % | | | 181 | 175 | -------------------------------------------------------------------------------- | Dividend per share, EUR | | | 0.00* | 0.50 | -------------------------------------------------------------------------------- * Board proposal President and CEO Kari Inkinen For Sponda, 2008 was a good year for its operational point of view, despite the financial crisis, and the company's net operating income improved from 2007 by some 9 %. The economic occupancy rate for the whole Group fell below that at the end of 2007 to 88.5 %. The economic occupancy rate improved in the Office and Retail Properties unit and declined in the Logistics Properties and Russia Baltic Countries units. The decline was mainly due to the completion of the logistics and office buildings in Vuosaari Harbour in November 2008. I am particularly satisfied that Sponda's property development business achieved its target for 2008. All the development projects were completed on schedule and on budget. A rise in fair value of more than EUR 40 million was recorded for the properties, which exceeds the target of a profit of a 15 % return on development investments. All the completed properties are fully leased apart from those in Vuosaari. We succeeded in an extremely difficult financial market in refinancing a EUR 150 million loan in October 2008. In my opinion this clearly demonstrates the confidence that banks have in Sponda. The company is not committed to any major investments in 2009, and the largest planned development investments have been postponed. Since transaction activity slowed down in the property market, Sponda has sold properties for altogether EUR 123 million. Even though the market is expecting property values to fall still further, we succeeded in selling properties either at their current market value or slightly above it. Prospects Even though both rental levels and occupancy rates are expected to fall in the property market in 2009, Sponda forecasts that the company's net operating income will be higher than in 2008. The reasons for this are that during 2008 rent levels rose and several fully leased office and retail properties were completed and added to Sponda's investment property portfolio. Because the major uncertainties relating to the financial and property markets in 2009 may have an impact on Sponda's result for the year, Sponda's prospects differ from those for 2008. In the past the company has given a forecast for net operating income, economic occupancy rate, cash flow from operations per share and earnings per share. Due to the state of the market, the company has decided that at the present it can give only the prospects for the company's net operating income. Business conditions - Finland The office, retail and logistics premises market is a late cycle sector, so the effects of the global recession were not very visible in Finland's property market in 2008. Rent levels continued to develop favourably, in part because of higher inflation. Occupancy rates also improved positively. After summer 2008 the transaction market in the property investment sector slowed down, mainly because financing was not available. The Institute for Real Estate Economics (KTI) estimated that the total volume of property transactions in Finland was just under EUR 4 billion in 2008, compared with some EUR 6 billion in 2007. International investors accounted for about 46 per cent of the volume of the Finnish property market last year. Business cycle forecasts indicate that 2009 will be a challenging year for the real estate investment sector. The cost cutting measures being carried out during 2009 at customer companies will reduce demand for premises, which will have a direct impact on vacancy rates. If inflation also remains low, rents are not expected to rise in 2009. Changes in demand for premises and in rent levels are expected to be more moderate in prime locations, such as the central business district and Ruoholahti in Helsinki, than elsewhere in the Helsinki metropolitan area and in Finland. Business conditions - Russia Economic growth in Russia slowed down significantly towards the end of 2008. According to Nordea, the 8 % growth early in the year slowed down to 6 % in the third quarter. The slowdown in growth was due to the fall in the price of oil and the global financial crisis. The indicators for retail trade and industrial production predict that growth also slowed down in the final quarter. In addition to these reasons, investments by businesses declined, and growth is expected to slow down to about one percent in 2009 despite the programmes of state support. Russia's Central Bank has widened the rouble's currency band, which has resulted in a 30 % devaluation in the value of the rouble against the euro in the past six months. The global financial crisis has altered the Russia property market. Development projects have been put on hold due to financing problems in the second half of 2008, and the buying and selling of completed properties has also slowed down. In the first half of 2008 demand was greater than supply in the Moscow and St Petersburg leasing markets. After the summer, demand focused on smaller, high quality premises, and leasing market activity is expected to be quieter in 2009 than in the previous year. Vacancy rates for high quality offices were low in the Moscow and St Petersburg regions. Rent levels for prime office premises rose in Russia last year, but it is expected that there will be pressure to bring down the rents for office and retail premises in 2009. Business operations: 1.1.-31.12.2008 Sponda owns, leases and develops business properties in the Helsinki Metropolitan Area and the largest cities in Finland, and in Russia. Sponda's operations were organized in 2008 in five business units: Office and Retail Properties, Logistics Properties, Property Development, Real Estate Funds, and Russia the Baltic Countries. Net operating income from Sponda's property assets totalled EUR 166.8 million at the end of the year (31 December 2007: 152.8 million). Office and retail premises accounted for 69 % of this, logistics premises for 17 %, Real Estate Funds for 7 %, and Russia the Baltic Countries for 7 %. Like-for-like rental growth during the past two years for the property portfolio that Sponda has owned for two years was 6.7 % for office and retail property and -0.6 % for logistics property. A logistics property in Vantaa was vacated in the summer and this contributed to the fall in rental income. Rental growth is calculated in accordance with EPRA recommendations. The economic occupancy rates by type of property and geographical area were as follows: -------------------------------------------------------------------------------- | Type of property | 31.12.0 | 30.9.08 | 30.6.08 | 31.3.08 | 31.12.07 | | | 8 | | | | | -------------------------------------------------------------------------------- | Office and Retail, % | 92.3 | 91.5 | 91.5 | 91.2 | 91.0 | -------------------------------------------------------------------------------- | Logistics, % | 77.4 | 88.3 | 87.5 | 92.8 | 91.9 | -------------------------------------------------------------------------------- | Russia Baltic | 86.3 | 100.0 | 100.0 | 100.0 | 100.0 | | Countries, % | | | | | | -------------------------------------------------------------------------------- | Total property | 88.5 | 91.7 | 91.1 | 92.0 | 91.2 | | portfolio, % | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Geographical area | 31.12.0 | 30.9.08 | 30.6.08 | 31.3.08 | 31.12.07 | | | 8 | | | | | -------------------------------------------------------------------------------- | Helsinki Business | 90.4 | 90.3 | 91.9 | 90.9 | 90.6 | | District, % | | | | | | -------------------------------------------------------------------------------- | Helsinki Metropolitan | 92.5 | 91.2 | 90.6 | 90.3 | 90.2 | | Area, % | | | | | | -------------------------------------------------------------------------------- | HMA logistics, % | 75.0 | 86.8 | 85.8 | 91.8 | 90.6 | -------------------------------------------------------------------------------- | Rest of Finland, % | 91.9 | 98.2 | 96.9 | 97.8 | 96.9 | -------------------------------------------------------------------------------- | Total property | 88.5 | 91.7 | 91.1 | 92.0 | 91.2 | | portfolio, % | | | | | | -------------------------------------------------------------------------------- Total cash flow derived from leasing agreements on 31 December 2008 was EUR 1060 (31 December 2007: 797) million. The company's biggest tenants were the Finnish State (8.9 % of rental income), Sampo Bank Plc (6.5 % of rental income), Kesko Group (6.4 % of rental income) and Nordea Group (2.3 % of rental income). Sponda's 10 largest tenants generate just over 30 % of the company's total rental income. The average length of all the leasing agreements was 4.6 (4.4) years. The average length of leasing agreements for office and retail properties was 5.0 years and for logistics premises it was 3.4 years. A total of 153 new leases (92,000 m²) came into force in October-December 2008. About half of these were for new office and logistics properties completed at the end of the year. During the October-December period 106 leases (28,000 m²) expired. The lease agreements for Sponda's property portfolio expire as follows: -------------------------------------------------------------------------------- | Expiry within | % of rental income | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1 year | 16.2 | -------------------------------------------------------------------------------- | 2 years | 13.1 | -------------------------------------------------------------------------------- | 3 years | 11.4 | -------------------------------------------------------------------------------- | 4 years | 6.8 | -------------------------------------------------------------------------------- | 5 years | 7.0 | -------------------------------------------------------------------------------- | 6 years | 6.8 | -------------------------------------------------------------------------------- | More than 6 years | 26.1 | -------------------------------------------------------------------------------- | Open-ended | 12.6 | -------------------------------------------------------------------------------- Property portfolio On 31 December 2008 Sponda had a total of 209 properties, with an aggregate leasable area of about 1.5 million m². Of this, some 62 % is office and retail premises and 38 % logistics premises. At the end of 2008 Sponda's property portfolio was evalued by Catella Property Group. Their official evaluation statement, including the principles used for calculating the values, can be read on Sponda's Internet site. In 2008 the change in the fair value of Sponda's investment properties was EUR -43.7 (31 December 2007: 92.9) million. At the end of the period the entire property portfolio had a fair value of EUR 2,907.5 (2,534.9) million. In October - December the valuation losses/gains on assessing Sponda's investment property at fair value were EUR -8.2 (31 December 2007: 0.5) million. The main factor in this change was the rise in the yield requirements for properties. Valuation gains/losses on assessing Sponda's investment properties at fair value -------------------------------------------------------------------------------- | M | -------------------------------------------------------------------------------- | | 10-12/2008 | 1-12/2008 | -------------------------------------------------------------------------------- | Changes in yield requirements (Finland) | -43.2 | -88.8 | -------------------------------------------------------------------------------- | Changes in yield requirements (Russia) | -4.3 | -4.3 | -------------------------------------------------------------------------------- | Development gains on property development | 42.3 | 43.3 | | projects | | | -------------------------------------------------------------------------------- | Modernization investments | -5.7 | -26.6 | -------------------------------------------------------------------------------- | Change in market rents and maintenance costs | 45.4 | 34.4 | | (Finland) | | | -------------------------------------------------------------------------------- | Change in market rents and maintenance costs | -1.7 | -1.7 | | (Russia) | | | -------------------------------------------------------------------------------- | Investment properties, total | -8.2 | -43.7 | -------------------------------------------------------------------------------- | Real estate funds | -1.7 | 7.7 | -------------------------------------------------------------------------------- | Group, total | -9.9 | -36.0 | -------------------------------------------------------------------------------- The changes in Sponda's investment property assets since the beginning of 2008 by business unit were as follows: -------------------------------------------------------------------------------- | Sponda's investment | Group, | Office | Logistic | Property | Russia | | properties | total | Retail | s | Develop- | | | | | | | ment | Baltic | -------------------------------------------------------------------------------- | Operating income | 211.1 | 155.0 | 37.9 | 2.0 | 16.2 | -------------------------------------------------------------------------------- | Maintenance costs | -55.6 | -39.9 | -9.4 | -2.2 | -4.1 | -------------------------------------------------------------------------------- | Net operating income | 155.5 | 115.1 | 28.5 | -0.1 | 12.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fair value of investment | 2 534.9 | 1 883.9 | 327.6 | 246.2 | 77.2 | | properties at 1 Jan 2008 | | | | | | -------------------------------------------------------------------------------- | Acquisitions in 2008 | 210.6 | 8.3 | 18.6 | 0.0 | 183.7 | -------------------------------------------------------------------------------- | Investments | 275.0 | 61.1 | 5.2 | 205.2 | 3.4 | -------------------------------------------------------------------------------- | Other transfers | 13.5 | 188.6 | 134.9 | -310.0 | 0.0 | -------------------------------------------------------------------------------- | Sales in 2008 | -82.8 | -82.2 | 0.0 | -0.6 | 0.0 | -------------------------------------------------------------------------------- | Valuation gains/losses | -43.7 | -57.4 | -23.6 | 43.4 | -6.0 | -------------------------------------------------------------------------------- | Fair value of investment | 2 907.5 | 2 002.2 | 462.8 | 184.2 | 258.3 | | properties at 31 | | | | | | | December 2008 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in fair value % | -1.7 | -3.0 | -7.2 | 17.6 | 0.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Annual net operating | 6.8 % | 6.3 % | 8.5 % | | 10.1 % | | income / fair value at | | | | | | | 31 December 2008 *) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Yield requirement used | | 5.2-10.0 | 6.5-8.7 | | 9.5-10 | | in calculating fair | | | | | .25 | | value -% | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Weighted average yield | 6.7 | | | | | | requirement -% for | | | | | | | entire portfolio | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | *) Excluding property | | | | | | | development | | | | | | -------------------------------------------------------------------------------- Investments and divestments Sponda purchased investment properties for altogether EUR 210.6 million in 2008. It did not purchase any properties during the final quarter. During 2008 Sponda sold investment properties for a total value of EUR 122.9 million, with EUR 70.1 million of these being in the fourth quarter. Capital expenditure on property maintenance amounted to EUR 26.6 million during the year, with EUR 5.7 million of this in the fourth quarter. Altogether EUR 248.4 million was invested in property development during the year, with the final quarter accounting for EUR 59.0 million. This was spent on the property development projects completed at the end of 2008, ie. the logistics complex in Vuosaari Harbour, office buildings in Ruoholahti and Sörnäinen in Helsinki, a retail property in Itäkeskus, Helsinki, and the renovation of the City-Center complex in the centre of Helsinki. Office and Retail Properties The economic occupancy rate for the Office and Retail Properties unit improved by more than one percentage point from the 2007 figure to 92.3 % (31 December 2007: 91.0 %). The occupancy rate rose significantly especially in the Helsinki metropolitan area outside the business centre. Contributing factors included the property development projects completed in Ruoholahti, Itäkeskus and Sörnäinen in Helsinki. The property portfolio had a fair value at the end of the year of EUR 2,002.2 (1,883.9) million, and valuation losses/gains from assessing at fair value amounted to EUR -57.4 (72.7) million. Office and retail property had a total leasable area of about 890,000 m². The unit's total revenue, net operating income and operating profit were as follows: -------------------------------------------------------------------------------- | Office and retail, M | 10-12/08 | 10-12/07 | 1-12/08 | 1-12/07 | -------------------------------------------------------------------------------- | Total revenue | 39.1 | 37.4 | 155.0 | 154.4 | -------------------------------------------------------------------------------- | Net operating income | 27.9 | 28.3 | 115.1 | 113.8 | -------------------------------------------------------------------------------- | Operating profit | 0.0 | 26.5 | 65.0 | 197.4 | -------------------------------------------------------------------------------- During 2008 Sponda purchased office and retail property for EUR 8.3 million. No properties were purchased in the final quarter. Sponda sold property for EUR 104.8 million, of which EUR 52.5 million in the fourth quarter. Capital expenditure on property maintenance amounted to EUR 22.1 million in 2008, of which EUR 4.0 million fell in the fourth quarter. On 21 October 2008 Sponda sold real estate company Kiinteistöosakeyhtiö Tapiolan Toimitalo, located in the centre of Tapiola in Espoo, to the Tapiola KR III Ky real estate equity fund for EUR 28.3 million. The property contains 5,000 square metres of retail premises and 2,300 square metres of offices. Sponda recorded a capital gain of EUR 9 million on the sale. Sponda sold an office property in the Etu-Töölö district of Helsinki to Nordea Henkivakuutus Suomi Oy on 1 December 2008. The debt-free price for the transaction was EUR 9.1 million. The office property, with a leasable area of 2,700 square metres, is located at Museokatu street 8. The transaction did not have an impact on the financial result. Logistics Properties The economic occupancy rate for the Logistics Properties unit was 77.4 % (31 December 2007: 91.9 %). The decline was due to the completion of the properties in Vuosaari Harbour at the end of November 2008, when the properties were transferred from property development to the property portfolio of the Logistics Properties unit. The occupancy rate for the harbour properties is approximately 40 %. The properties had a fair value of EUR 462.8 (327.6) million at the end of 2008, and valuation losses/gains amounted to EUR -23.6 (23.5) million. The aggregate leasable area of the property portfolio was 570 000 m². The net sales, net operating income and operating profit of the Logistics Property unit were as follows: -------------------------------------------------------------------------------- | Logistics, M | 10-12/08 | 10-12/07 | 1-12/08 | 1-12/07 | -------------------------------------------------------------------------------- | Total revenue | 9.6 | 9.2 | 37.9 | 32.0 | -------------------------------------------------------------------------------- | Net operating income | 7.1 | 7.3 | 28.5 | 24.2 | -------------------------------------------------------------------------------- | Operating profit | -3.2 | 6.5 | 2.8 | 47.0 | -------------------------------------------------------------------------------- In 2008 Sponda purchased logistics premises for EUR 18.6 million. No logistics property was sold during the year. Capital expenditure on property maintenance totalled EUR 4.1 million during the year, of which EUR 1.2 million fell in the fourth quarter. On 19 December 2008 Sponda sold three logistics properties for altogether EUR 16.3 million to the Sponda Fund II real estate fund. The properties sold are located in Kuusankoski, Mikkeli and Oulu, so they lie outside the areas specified in Sponda Group's strategy. The properties, with a combined leasable area of 16,000 square metres, are fully leased. The transaction had no impact on the financial result and was closed on 9 January 2009. Property development The balance sheet value of Sponda's property development portfolio at the end of 2008 was EUR 184.2 million. Undeveloped land sites accounted for EUR 81.9 million of this, and the remainder, EUR 102.3 million, was tied up in property development projects in progress. Altogther EUR 204.6 million was spent on developing properties and new purchases during 2008, and EUR 54.2 million of this was in the final quarter. Sponda assesses development projects at fair value after the projects are completed, and the company aims to obtain development gains of 15 % on the investment costs of projects. All of Sponda's property development projects, except for the City-Center complex, were completed by the end of 2008. The company achieved the target mentioned above, recognizing total gains of EUR 43.3 million on the properties in the income statement. On 22 December 2008 Sponda sold two plots of land designated for housing production in Jokiniemi, Vantaa to VVO-yhtymä Oyj for EUR 15 million. The plots, located on Tikkurilantie road, have residential building rights of 40,000 square metres. Sponda recorded a capital gain of some EUR 12 million on the sale. The development projects in progress throughout the year in Helsinki in Ruoholahti, Lautatarhankatu, Itäkeskus and Vuosaari Harbour were completed on schedule and on budget by the end of 2008. All the properties, apart from the buildings in Vuosaari Harbour, were fully leased. The current phase of the City-Center project, construction of the underground service facilities for the city centre service tunnel, progressed on schedule. The next phase involves construction of the office building, the retail premises on the third floor, and the light shaft into the shopping centre. Sponda and the tenant have taken the joint decision to postpone this work so that it will start at the earliest towards the end of 2009. For this reason, it is now estimated that the renovation of the City-Center complex will be completed in 2012 and the total investment will be some EUR 110 million. Sponda is continuing with the underground work in 2009. Sponda announced on 20 December 2007 that it had purchased the Elovainio shopping centre under construction in Ylöjärvi for EUR 62 million. The property has financing for the construction period, which Sponda has re-organized. Sponda will pay for the property after the building is completed, in April 2009, when the final price for the property will be determined. The shopping centre has retail premises with a leasable area of 24,500 square metres and parking for 850 vehicles. The property will be purchased fully leased and the main tenant will be K-citymarket. Sponda is developing the Ratina shopping centre in Tampere and carrying out development projects in adjacent areas. A 55,000 m² shopping centre is planned for the area, for which the total investment cost is estimated at EUR 200 million. Planning of the project is underway, and the final decision about the investment has not been made. Real Estate Funds Sponda is a minority holder in three real estate funds, First Top LuxCo, Sponda Real Estate Fund I Ky and Sponda Real Estate Fund II Ky. Sponda is responsible for managing the funds and their properties, and receives management fees. The property portfolios of all the funds were valued by external evaluators at the end of the year. The change in value for the whole year was EUR 7.7 million, and in the final quarter EUR -1.7 million. The unit's total revenue, net operating income and operating profit were as follows: -------------------------------------------------------------------------------- | Real Estate Funds, M | 10-12/08 | 10-12/07 | 1-12/08 | 1-12/07 | -------------------------------------------------------------------------------- | Total revenue | 2.5 | 6.8 | 13.2 | 14.5 | -------------------------------------------------------------------------------- | Net operating income | 2.0 | 5.2 | 11.3 | 10.0 | -------------------------------------------------------------------------------- | Operating profit | -1.1 | 4.5 | 14.3 | 6.8 | -------------------------------------------------------------------------------- First Top LuxCo (Sponda's holding 20 %) invests in office and retail properties outside Finland's largest cities. At the end of 2008 the fund's property investments had a fair value of EUR 107 million. Sponda Real Estate Fund I Ky (Sponda's holding 46 %) invests in logistics sites outside the Helsinki metropolitan area. At the end of December 2008 the properties it owned had a fair value of EUR 199 million. Sponda Real Estate Fund II Ky (Sponda's holding 44 %) mainly invests in logistics properties in medium sized towns in Finland. The fund has a target size for its real estate investment of about EUR 200 million and the fair value of its property portfolio at the end of 2008 was EUR 82 million. After the end of the year, three logistics properties were purchased for the fund, with a value of some EUR 16 million, from Sponda Plc. In addition to those mentioned above, Sponda is also responsible for managing the properties in the property portfolio, with a value of just under EUR 300 million, sold in March 2007 to Whitehall Street Real Estate Limited and Niam Nordic Investment Fund III. Russia and Baltic Countries At the end of 2008, the economic occupancy rate for the Russia and Baltic countries unit was 86.3 % (31 December 2007: 100 %). The decline in the occupancy rate was because Sponda obtained final ownership rights to the ZAO Ancor office property in Moscow at the end of 2008, and was only able to begin active leasing of the premises then. The first lease agreements for the property have already been signed. The property portfolio had a fair value at the end of the year of EUR 258.3 million, and the change in fair values was EUR -6.0 million. In most cases the currency used in property transactions in Russia is the US dollar, so the devaluation of the rouble has not had a direct impact on property fair values. The change in value was due mainly to the rise in yield requirements. Because of the major uncertainties in the valuation methods, the investment properties were valued with an internal valuation by Sponda except for ZAO Ancor and Ducat II, which the company has only owned for a short time and which are valued at the acquisition price. The two properties account for roughly half the value of the Russian portfolio. Capital expenditure in 2008 on property development and new purchases totalled EUR 187.1 million. The investments in Russia are financed in euros through the parent company's balance sheet. The unit's total revenue, net operating income and operating profit were as follows: -------------------------------------------------------------------------------- | Russia Baltic, M | 10-12/2008 | 10-12/2007 | 1-12/2008 | 1-12/2007 | -------------------------------------------------------------------------------- | Total revenue | 6.3 | 0.6 | 16.2 | 1.9 | -------------------------------------------------------------------------------- | Net operating income | 4.5 | 0.5 | 12.0 | 1.5 | -------------------------------------------------------------------------------- | Operating profit | -3.1 | 0.0 | 1.3 | -0.4 | -------------------------------------------------------------------------------- The typical length of a lease in Russia is 11 months. Sponda's leasing agreements in Russia also conform to this practice, apart from the Western Realty (Ducat II) and OOO Adastra properties in Moscow and St Petersburg where the leases are for longer periods than average. The average length of leasing agreements in Russia on 31 December 2008 was 3.9 years, and the leasing agreements expire as follows: -------------------------------------------------------------------------------- | Expiry in | % rental income | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1 year | 28.3 | -------------------------------------------------------------------------------- | 2 years | 4.5 | -------------------------------------------------------------------------------- | 3 years | 9.1 | -------------------------------------------------------------------------------- | 4 years | 9.6 | -------------------------------------------------------------------------------- | 5 years | 1.9 | -------------------------------------------------------------------------------- | 6 years | 27.9 | -------------------------------------------------------------------------------- | More than 6 years | 18.7 | -------------------------------------------------------------------------------- | Open-ended | N/A | -------------------------------------------------------------------------------- Sponda receives about half of its rental income in Russia in US dollars. About half is in roubles, and a large part of this is tied to the dollar's or euro's exchange rate. The company's rouble risk is reduced because a major part of the unit's expenses are denominated in roubles. It is Sponda's policy to hedge 6 months cash flow in Russia. The name of the Russia Baltic Countries unit was changed to the Russia unit as from 1 January 2009. Sponda investigated the property markets in the Baltic Countries and the company's Board of Directors decided that the Baltic markets will not be a strategic investment area for Sponda. Cash flow and financing Sponda's net cash flow from operations on 31 December 2008 totalled EUR 140.7 million (31 December 2007: 211.5 million). Net cash flow from investing activities was EUR -389.8 (-19.0) million and after financing activities was EUR 238.0 (-188.7) million. Financial income and expenses during the review period totalled EUR -87.5 (-72.3) million. Factor contributing to this growth was mainly the increase in the amount of loans. Capitalization of the interest expenses for new property development projects will start at the beginning of 2009 in accordance with IFRS 23. Sponda's equity ratio on 31 December 2008 was 32 % (31 December 2007: 32 %) and gearing was 181 % (175 %). The change in the fair value of interest rate derivatives, was EUR -40.6 (9.6) million before tax. Interest-bearing debt amounted to EUR 1,828.3 (1,662.7) million, the average maturity of Sponda's loans was 3.0 (2.6) years, and the average interest rate 4.6 % (4.6 %). Fixed-rate and interest-hedged loans accounted for 58 % of the loan portfolio. The average interest-bearing period of the whole debt portfolio was 1.7 (2.6) years. The interest cover ratio, which describes the company's solvency, was 2.1 (2.0). Sponda applies hedge accounting, according to which changes in the fair value of interest rate swaps and interest rate options that meet the criteria for hedge accounting are recognized in equity in the balance sheet. Sponda Group's debt portfolio on 31 December 2008 comprised EUR 800 million in syndicated loans, EUR 259 million in bonds, EUR 136 million in issued commercial papers, and EUR 636 million in loans from financial institutions. Sponda had EUR 115 million in unused credit limits. The credit limits are a back-stop facility for the commercial papers. Sponda Group has mortgaged loans of EUR 50.3 million or 1.6 % of the company's balance sheet. On 22 October 2008 signed an agreement for a three-year EUR 150 million syndicated loan. The loan is unsecured and it was used to refinance long-term loans that were maturing and the bonds issued in November 2003. The margin on the syndicated loan is slightly higher than that on the bonds it is replacing, but the change will not have a significant impact on Sponda's annual interest costs. Personnel and administration During 2008 Sponda Group had on average 137 employees (2007: 217), of whom 125 (126) worked for the parent company Sponda Plc. On 31 December 2008 Sponda Group had altogether 141 (216) employees, of whom 125 (124) were employed in the parent company Sponda Plc. Sponda has personnel in Finland and in Russia. Sponda's sales and administration costs in 2008 totalled EUR 24.2 million (2007: EUR 25.9 million). The 2007 figures for comparison include the personnel of Ovenia Oy. Sponda's organization and the composition of its Executive Board changed as from 1 January 2009. The Logistics Property unit was combined with the Office and Retail Properties unit to form the new unit Investment Properties. Head of the new unit is Senior Vice President Ossi Hynynen, who was head of the Office and Retail Properties unit. The name of the Russia Baltic Countries unit changed into Russia unit. At the same time efficiency was raised in Sponda's operations, and the number of company personnel was reduced by 8 persons. This caused a one-time cost of EUR 0.3 million in 2008, but the annual savings are estimated at EUR 0.6 million. Sponda's employees belong to an incentive bonus scheme, under which bonuses are indexed to the company's targets. The company operates a long-term share-based incentive scheme for its senior executives that was launched on 1 January 2006. Those in the scheme were the members of the company's Executive Board in the years 2006-2008. Bonuses under this scheme are based on cash flow from operations per share and on return on equity, and Sponda shares are bought with these bonuses. These shares carry a restriction forbidding their disposal within two years of their issue. The bonus is paid annually. Sponda's Board of Directors decided to continue the long-term share-based incentive scheme for its senior executives in 2009-2011. The terms of the scheme are unchanged. Group structure Sponda Group comprises the parent company, the subsidiary Sponda Kiinteistöt Oy (formerly Kapiteeli Oy), and the Group's mutually owned property companies, which are either wholly or majority owned by Sponda Plc or Sponda Kiinteistöt Oy. Sponda Group also includes Sponda Russia Ltd and Sponda Asset Management Oy. The Sponda share The weighted average price of the Sponda share in 2008 period was EUR 5.41. The highest quotation on the Helsinki Stock Exchange was EUR 8.75, and the lowest EUR 2.32. Turnover during the year totalled 108.9 million shares or EUR 580 million. The closing price of the share on 31 December 2008 was EUR 3.10, and the market capitalization of the company's share capital was EUR 344 million. The Annual General Meeting on 19 March 2008 authorized the Board of Directors to purchase the company's own shares. The authorization was not exercised during the review period. Sponda issued the following flagging announcements in the October-December 2008 period: 10 November 2008: Julius Tallberg-Kiinteistöt Oyj announced that its holding of shares represented 5.143 % of the total number of shares and votes in Sponda Plc. 12 December 2008: The Finnish State and Solidium Oy announced an arrangement that resulted in the holding of the Finnish State falling below and the holding of Solidium Oy exceeding the thresholds set out in Section 9 of Chapter 2 of the Finnish Securities Markets Act. On 11 December 2008 the Finnish State transferred the state-owned shares of Sponda Plc to fully state-owned Solidium Oy as a capital contribution as set out in the Finnish Company Act. Following the transfer, the Finnish State no long held any Sponda Plc shares. The shares transferred to Solidium Oy, 38,065,498 shares, represent 34.28 % of the total shares and votes in Sponda Plc. 12.12.2008: Julius Tallberg-Kiinteistöt Oyj announced that its holding of shares represented 10.02 % of the total number of shares and votes in Sponda Plc. At the close of the financial year on 31 December 2008 Sponda's ownership structure was as follows: -------------------------------------------------------------------------------- | | Number of | Holding, % | | | shares | | -------------------------------------------------------------------------------- | Public entities | 2 189 090 | 2.0 | -------------------------------------------------------------------------------- | Nominee registered | 41 914 586 | 37.8 | -------------------------------------------------------------------------------- | Households | 11 659 311 | 10.5 | -------------------------------------------------------------------------------- | Non-profit organizations, total | 1 516 405 | 1.4 | -------------------------------------------------------------------------------- | Private corporations, total | 52 430 088 | 47.2 | -------------------------------------------------------------------------------- | Financial and insurance institutions, total | 1 128 022 | 1.0 | -------------------------------------------------------------------------------- | Foreign owners, total | 192 683 | 0.2 | -------------------------------------------------------------------------------- | Total number of shares | 111 030 185 | 100.0 | -------------------------------------------------------------------------------- Board of Directors and auditors The number of the members of the Board of Directors was confirmed as six. The following were re-elected: Tuula Entelä, Timo Korvenpää, Lauri Ratia, and Arja Talma; and Klaus Cawén and Erkki Virtanen were elected as new members, to serve on the Board of Directors until the close of the following AGM. All had given their consent to election. At its constitutive meeting, the Board of Directors elected Mr Lauri Ratia as its chairman and Mr Timo Korvenpää as its deputy chairman. Sponda's Board of Directors established two permanent committees: the Audit Committee and the Structure and Remuneration Committee. The members of the audit committee are: Arja Talma (chairman) and Timo Korvenpää and Erkki Virtanen (ordinary members). The members of the Structure and Remuneration Committee are: Lauri Ratia (chairman) and Tuula Entelä and Klaus Cawén (ordinary members). APA Raija-Leena Hankonen and authorized public accountants KPMG Oy Ab, with APA Kai Salli as principal auditor and APA Riitta Pyykkö as deputy auditor, were appointed as the company's auditors to serve until the close of the next AGM. Management Sponda Plc's president and chief executive officer is Kari Inkinen. The Executive Board comprises the president and CEO, the CFO, the SVP Legal Affairs and Treasury, and the heads of the business units, in total seven persons. Nomination Committee of the Shareholders The Nomination Committee of the Shareholders of Sponda Plc has prepared a proposal for candidate members of the Board of Directors and their compensation. The members represented the three principal shareholders, who on 1 November 2008 were: The Finnish State, 34.3 % of the shares and votes, represented by Pekka Timonen, Julius Tallberg-Kiinteistöt Oy, 3.9 % of the shares and votes, represented by Susanna Renlund, and Ilmarinen Mutual Pension Insurance Company, 0.7 % of the shares and votes, represented by Timo Ritakallio. The Nomination Committee will propose to the Annual General Meeting on 25 March 2009 that the number of members of the Board of Directors be confirmed as seven and that of the existing members Klaus Cawén, Tuula Entelä, Timo Korvenpää, Lauri Ratia, Arja Talma and Erkki Virtanen be re-elected and that Martin Tallberg be elected as a new member. The Annual General Meeting confirms the fees paid to the Board members for one year at a time. The Nomination Committee of Shareholders has decided to propose that the fees paid to the Board members be unchanged and confirmed as follows (figures in brackets are fees paid in 2008): - to the chairman a monthly fee of EUR 5,000 (5,000) - to the deputy chairman a monthly fee of EUR 3,000 (3,000) - to the ordinary members a monthly fee of EUR 2,600 (2,600) - a separate fee of EUR 600 (600) to each member for attendance at Board meetings. Tax authority decision Sponda stated in its interim report on 1 November 2007 that the Uusimaa corporate tax office had decided to deviate from the company's 2006 tax returns with respect to the deductible losses allowable against the company's profit. The tax assessment adjustment board amended the Uusimaa corporate tax office's decision regarding the deductibility of Sponda Kiinteistöt Oy's (formerly Kapiteeli Oyj) confirmed losses for previous years in favour of Sponda in December 2007. The company issued a statement about this on 19 December 2007. The state official representing the interests of tax recipients has appealed the decision of the adjustment board. Events after the close of the financial year Sponda announced on 19 December 2008 that it had signed an agreement to sell three logistics properties for altogether EUR 16.3 million to the Sponda Fund II real estate fund. The transaction was closed on 9 January 2009. The properties sold are located in Kuusankoski, Mikkeli and Oulu. In a ruling issued on 19 January 2009, the Helsinki Court of Appeal has ordered Sponda Plc to pay interest, totalling EUR 7.6 million, and penal interest and court costs to Sampo Bank Plc based on a credit agreement. The decision is final unless appeal has been made by 20 March 2009. The amount of Sampo Bank's suit for payment, EUR 7.6 million, was recognized as an expense under provisions in the 2006 financial statements, so the ruling has no impact on Sponda's result. EUR 0.6 million was recognized as an interest expense under provisions in 2007 and EUR 0.1 million in 2008, so the total provision is EUR 8.3 million on 31 December 2008. Prospects Even though both rental levels and occupancy rates are expected to fall in the property market in 2009, Sponda forecasts that the company's net operating income will be higher than in 2008. The reasons for this are that during 2008 rent levels rose and fully leased office and retail properties were completed and added to Sponda's investment property portfolio. The financial and property markets in 2009 are exposed to major uncertainties affecting Sponda's result for the year, and for this reason Sponda's prospects differ from those for 2008. In the past the company has given a forecast for net operating income, economic occupancy rate, cash flow from operations per share and earnings per share. Due to the state of the market, the company has decided that at the present it can give only the prospects for developments in the company's net operating income. Risks and uncertainty factors in the near future Sponda estimates that the key risks and uncertainty factors in the current financial period, due to the recession and financial crisis, relate to refinancing, changes in the fair value of properties, developments in economic occupancy rates, and a decline in rental income resulting from the insolvency of tenants. The values of properties follow the business cycle, and in the current state of the market it is possible that the value of Sponda's properties will continue to fall in 2009. This may weaken the company's equity ratio and its profit. The uncertainty in the finance market may mean that in 2009 the price of the capital will rise and that it will be less readily available. In 2009 the uncertainty in the financial markets may cause the price of capital to rise and weaken its availability. In 2009 Sponda's refinancing risk arises from the credit limits that form a back-stop facility for the commercial papers and mature in the summer. If the risk is realized, this may have a harmful impact on Sponda's financial results and ability to pay a dividend. Sponda reduces the refinancing risk by using credit agreements of varying durations, employing a number of funding sources and maintaining the company's reputation as a trustworthy debtor. The interest rate risk from floating rate financing is reduced with interest rate derivatives. The general economic situation in Finland and Russia may cause the solvency of Sponda's customers to weaken in 2009, which in turn may reduce Sponda's rental income and increase the vacancy rates in the properties owned by the company. The expanding operations in Russia increase Sponda's foreign exchange risk. The company hedges the cash flow risk in Russia for the coming 6 months. Annual General Meeting and dividend The Board of Directors of Sponda Plc proposes that the Annual General Meeting be held on 25 March 2009 and proposes to the AGM that no dividend be paid for the 2008 financial year. The reasons for the proposal are the uncertain state of the financial markets and developments in Sponda's equity ratio. The uncertainty in the financial markets may make it more difficult to arrange new loans and refinancing in the future. The fair values of properties are expected to continue to fall in 2009, which can have a negative impact on Sponda's equity ratio. To enable the company to secure its financial position in an uncertain market, it is proposed that no dividend be paid. 6 February 2009 Sponda Plc Board of Directors Further information: Kari Inkinen, President and CEO, tel. +358 20-431 3311 or +358 400-402 653 and Robert Öhman, CFO, tel. +358 20-431 3320 or +358 40-540 0741. Distribution: NASDAQ OMX Helsinki Media www.sponda.fi This interim report is unaudited. It has been prepared applying IAS 34 (Interim Reports). Sponda Plc Consolidated income statement (IFRS) M -------------------------------------------------------------------------------- | | | 10-12/08 | 10-12/07 | 1-12/08 | 1-12/07 | -------------------------------------------------------------------------------- | Total revenue | | | | | -------------------------------------------------------------------------------- | | Rental income and | 55.7 | 47.4 | 210.8 | 193.4 | | | recoverables | | | | | -------------------------------------------------------------------------------- | | Interest income from | 0.1 | 0.1 | 0.3 | 0.3 | | | finance leasing | | | | | | | agreements | | | | | -------------------------------------------------------------------------------- | | Service income | - | 1.8 | - | 6.1 | -------------------------------------------------------------------------------- | | Fund management fees | 2.3 | 4.3 | 13.1 | 11.1 | | | and share of fund | | | | | | | profit | | | | | -------------------------------------------------------------------------------- | | | 58.2 | 53.6 | 224.3 | 210.9 | -------------------------------------------------------------------------------- | Expenses | | | | | -------------------------------------------------------------------------------- | | Maintenance expenses | -16.0 | -13.6 | -55.5 | -55.2 | -------------------------------------------------------------------------------- | | Service expenses | - | -0.4 | - | -1.4 | -------------------------------------------------------------------------------- | | Direct fund expenses | -0.5 | -0.5 | -2.0 | -1.5 | -------------------------------------------------------------------------------- | | | -16.5 | -14.5 | -57.5 | -58.1 | -------------------------------------------------------------------------------- | Net operating income | 41.7 | 39.1 | 166.8 | 152.8 | -------------------------------------------------------------------------------- | Profit/loss on sales of | 9.7 | 0.0 | 12.1 | 1.2 | | investment properties | | | | | -------------------------------------------------------------------------------- | Valuation gains/losses | -9.9 | 0.5 | -36.0 | 92.9 | -------------------------------------------------------------------------------- | Release of goodwill | -13.0 | - | -13.0 | - | -------------------------------------------------------------------------------- | Profit/loss on sales of | 15.7 | 8.7 | 21.5 | 35.6 | | trading properties | | | | | -------------------------------------------------------------------------------- | Sales and marketing | -0.4 | -0.6 | -2.1 | -2.0 | | expenses | | | | | -------------------------------------------------------------------------------- | Administrative expenses | -5.3 | -6.1 | -22.1 | -23.9 | -------------------------------------------------------------------------------- | Share of results in | -0.2 | - | -0.4 | - | | associated companies | | | | | -------------------------------------------------------------------------------- | Other operating income | -0.1 | 0.0 | 0.8 | 0.5 | -------------------------------------------------------------------------------- | Other operating expenses | -0.4 | -0.1 | -1.3 | -0.4 | -------------------------------------------------------------------------------- | Operating profit | 37.8 | 41.5 | 126.2 | 256.7 | -------------------------------------------------------------------------------- | Financial income | -0.1 | 1.2 | 1.7 | 4.4 | -------------------------------------------------------------------------------- | Financial expenses | -23.6 | -17.9 | -89.1 | -76.1 | -------------------------------------------------------------------------------- | Provision for interest | 0.0 | -0.1 | -0.1 | -0.6 | | expenses | | | | | -------------------------------------------------------------------------------- | Financial income and | -23.7 | -16.8 | -87.5 | -72.3 | | expenses, net | | | | | -------------------------------------------------------------------------------- | Profit before taxes | 14.2 | 24.6 | 38.7 | 184.4 | -------------------------------------------------------------------------------- | Income taxes for current | -1.1 | -0.3 | -1.3 | -0.4 | | and previous fiscal years | | | | | -------------------------------------------------------------------------------- | Deferred taxes | -5.4 | -6.4 | -10.8 | -47.4 | -------------------------------------------------------------------------------- | Income taxes, total | -6.5 | -6.7 | -12.1 | -47.8 | -------------------------------------------------------------------------------- | Profit for period | 7.7 | 18.0 | 26.6 | 136.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to: | | | | | -------------------------------------------------------------------------------- | Equity holders of the | 7.7 | 18.0 | 26.7 | 136.5 | | parent company | | | | | -------------------------------------------------------------------------------- | Minority interest | -0.1 | 0.0 | -0.1 | 0.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit for period | 7.7 | 18.0 | 26.6 | 136.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share based on | | | | | | profit attributable to | | | | | | equity holders of the | | | | | | parent company: | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic and diluted, | | | 0,24 | 1,27 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average number of shares, | | | | | | million | | | | | -------------------------------------------------------------------------------- | Basic and diluted | | | 111,0 | 107,8 | -------------------------------------------------------------------------------- Consolidated balance sheet (IFRS) M -------------------------------------------------------------------------------- | | 31.12.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | ASSETS | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current assets | 2 907.5 | 2 534.9 | -------------------------------------------------------------------------------- | Investment properties | 60.6 | 35.0 | -------------------------------------------------------------------------------- | Investments in real estate funds | 14.5 | 15.7 | -------------------------------------------------------------------------------- | Property, plant and equipment | 14.5 | 27.5 | -------------------------------------------------------------------------------- | Goodwill | 0.0 | 4.1 | -------------------------------------------------------------------------------- | Other intangible assets | 2.7 | 2.7 | -------------------------------------------------------------------------------- | Investments in associated companies | 3.3 | - | -------------------------------------------------------------------------------- | Long-term receivables | 4.7 | 26.4 | -------------------------------------------------------------------------------- | Deferred tax assets | 56.6 | 56.9 | -------------------------------------------------------------------------------- | Total non-current assets | 3 064.5 | 2 703.2 | -------------------------------------------------------------------------------- | Current assets | | | -------------------------------------------------------------------------------- | Trading properties | 29.5 | 37.2 | -------------------------------------------------------------------------------- | Trade and other receivables | 56.7 | 130.7 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 16.0 | 27.4 | -------------------------------------------------------------------------------- | Total current assets | 102.3 | 195.3 | -------------------------------------------------------------------------------- | Total assets | 3 166.8 | 2 898.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND LIABILITIES | | | -------------------------------------------------------------------------------- | Equity attributable to equity | | | -------------------------------------------------------------------------------- | holders of parent company | | | -------------------------------------------------------------------------------- | Share capital | 111.0 | 111.0 | -------------------------------------------------------------------------------- | Share premium fund | 159.5 | 159.5 | -------------------------------------------------------------------------------- | Translation differences | -1.4 | 0.7 | -------------------------------------------------------------------------------- | Fair value fund | -19.7 | 9.8 | -------------------------------------------------------------------------------- | Revaluation fund | 0.6 | 0.6 | -------------------------------------------------------------------------------- | Reserve for invested unrestricted equity | 209.7 | 209.7 | -------------------------------------------------------------------------------- | Other equity fund | 129.0 | - | -------------------------------------------------------------------------------- | Retained earnings | 412.5 | 441.3 | -------------------------------------------------------------------------------- | | 1 001.2 | 932.6 | -------------------------------------------------------------------------------- | Minority interest | 1.8 | 2.2 | -------------------------------------------------------------------------------- | Total shareholders' equity | 1 003.0 | 934.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | -------------------------------------------------------------------------------- | Interest-bearing loans and borrowings | 1 543.8 | 1 056.4 | -------------------------------------------------------------------------------- | Provisions | 8.7 | 15.0 | -------------------------------------------------------------------------------- | Other liabilities | 26.3 | - | -------------------------------------------------------------------------------- | Deferred tax liabilities | 214.6 | 212.6 | -------------------------------------------------------------------------------- | Total non-current liabilities | 1 793.4 | 1 284.0 | -------------------------------------------------------------------------------- | Current liabilities | | | -------------------------------------------------------------------------------- | Current interest-bearing loans and | 284.5 | 606.3 | | borrowings | | | -------------------------------------------------------------------------------- | Trade and other payables | 85.9 | 73.4 | -------------------------------------------------------------------------------- | Total current liabilities | 370.4 | 679.7 | -------------------------------------------------------------------------------- | Total liabilities | 2 163.8 | 1 963.7 | -------------------------------------------------------------------------------- | Total shareholders' equity and liabilities | 3 166.8 | 2 898.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest-bearing liabilities | 1 828.3 | 1 662.7 | -------------------------------------------------------------------------------- Consolidated statement of cash flows M -------------------------------------------------------------------------------- | | 1-12/2008 | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operating activities | | | -------------------------------------------------------------------------------- | Net profit for the period | 26.6 | 136.6 | -------------------------------------------------------------------------------- | Adjustments | 137.2 | 26.9 | -------------------------------------------------------------------------------- | Change in net working capital | 49.8 | 135.1 | -------------------------------------------------------------------------------- | Interest received | 1.3 | 4.5 | -------------------------------------------------------------------------------- | Interest paid | -70.3 | -78.4 | -------------------------------------------------------------------------------- | Other financial items | -2.2 | -13.7 | -------------------------------------------------------------------------------- | Dividends received | 0.0 | - | -------------------------------------------------------------------------------- | Taxes received/paid | -1.8 | 0.5 | -------------------------------------------------------------------------------- | Net cash from operating activities | 140.7 | 211.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from investing activities | | | -------------------------------------------------------------------------------- | Investments in investment properties | -466.7 | -280.3 | -------------------------------------------------------------------------------- | Investments in real estate funds | -16.3 | -15.6 | -------------------------------------------------------------------------------- | Investments in tangible and intangible | -0.8 | -1.7 | | assets | | | -------------------------------------------------------------------------------- | Proceeds from sale of investment | 93.9 | 277.9 | | properties | | | -------------------------------------------------------------------------------- | Proceeds from sale of intangible and | 0.0 | - | | tangible assets | | | -------------------------------------------------------------------------------- | Repayment of loan receivables | - | 0.7 | -------------------------------------------------------------------------------- | Net cash from investing activities | -389.8 | -19.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from financing activities | | | -------------------------------------------------------------------------------- | Proceeds from share issue | - | 239.5 | -------------------------------------------------------------------------------- | Proceeds from equity bond | 128.6 | - | -------------------------------------------------------------------------------- | Non-current loans, raised | 540.7 | 810.5 | -------------------------------------------------------------------------------- | Non-current loans, repayments | -140.4 | -371.9 | -------------------------------------------------------------------------------- | Current loans, raised / repayments | -235.4 | -822.1 | -------------------------------------------------------------------------------- | Dividends paid | -55.5 | -44.7 | -------------------------------------------------------------------------------- | Net cash from financing activities | 238.0 | -188.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in cash and cash equivalents | -11.1 | 3.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents, start of | 27.4 | 23.6 | | period | | | -------------------------------------------------------------------------------- | Impact of changes in exchange rates | -0.3 | | -------------------------------------------------------------------------------- | Cash and cash equivalents, end of period | 16.0 | 27.4 | -------------------------------------------------------------------------------- Changes in Group shareholders' equity M -------------------------------------------------------------------------------- | | Share | Share | Transla | Fair | Revalua | Invested | | | capit | premiu | tion | value | -tion | non-rest | | | al | m | differe | reserve | reserve | ricted | | | | reserv | nces | | | equity | | | | e | | | | reserve | -------------------------------------------------------------------------------- | Equity at 31 Dec. | 79.3 | 159.5 | - | 2.3 | 0.6 | - | | 2006 | | | | | | | -------------------------------------------------------------------------------- | Cash flow hedges: | | | | | | | -------------------------------------------------------------------------------- | Amount | | | | | 9.6 | | | | taken to | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Amount | | | | | 0.1 | | | | recognized | | | | | | | | | in income | | | | | | | | | statement | | | | | | | | -------------------------------------------------------------------------------- | Reversed | | | | | 0.4 | | | | hedging | | | | | | | | | instruments | | | | | | | | -------------------------------------------------------------------------------- | Translation | | | 0.7 | | | | | difference | | | | | | | -------------------------------------------------------------------------------- | Taxes on items | | | | -2.6 | | | | recognized in | | | | | | | | equity or | | | | | | | | transferred from | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Total income and | | | 0.7 | 7.5 | | | | expenses | | | | | | | | recognized | | | | | | | | directly in equity | | | | | | | -------------------------------------------------------------------------------- | Profit for period | | | | | | | -------------------------------------------------------------------------------- | Total income and | | | 0.7 | 7.5 | | | | expenses for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Decrease | | | | | | | -------------------------------------------------------------------------------- | Dividend payment | | | | | | | -------------------------------------------------------------------------------- | Share issue | 31.7 | | | | | 209.7 | -------------------------------------------------------------------------------- | Equity 31 December | 111.0 | 159.5 | 0.7 | 9.8 | 0.6 | 209.7 | | 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | Other | Retain | Total | Minorit | Total | | | | | equit | ed | | y | share-h | | | | | y | earnin | | interes | olders' | | | | | reser | gs | | t | equity | | | | | ve | | | | | | -------------------------------------------------------------------------------- | Equity at 31 Dec. | - | 349.3 | 591.0 | 1.8 | 592.8 | | | 2006 | | | | | | | -------------------------------------------------------------------------------- | Cash flow hedges: | | | | | | | -------------------------------------------------------------------------------- | | Amount taken | | | 9.6 | | 9,6 | | | | to equity | | | | | | | -------------------------------------------------------------------------------- | | Amount | | | 0.1 | | 0,1 | | | | recognized | | | | | | | | | in income | | | | | | | | | statement | | | | | | | -------------------------------------------------------------------------------- | | Reversed | | | 0.4 | | 0,4 | | | | hedging | | | | | | | | | instruments | | | | | | | -------------------------------------------------------------------------------- | Translation | | | 0.7 | | 0.7 | | | difference | | | | | | | -------------------------------------------------------------------------------- | Taxes on items | | | -2.6 | | -2.6 | | | recognized in | | | | | | | | equity or | | | | | | | | transferred from | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Total income and | | | 8.2 | | 8.2 | | | expenses | | | | | | | | recognized | | | | | | | | directly in equity | | | | | | | -------------------------------------------------------------------------------- | Profit for period | | 136.5 | 136.5 | 0.1 | 136.5 | | -------------------------------------------------------------------------------- | Total income and | | 136.5 | 144.7 | 0.1 | 144.7 | | | expenses for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Increase | | | | 0.5 | 0.0 | | -------------------------------------------------------------------------------- | Dividend payment | | -44.7 | -44.7 | -0.2 | -44.7 | | -------------------------------------------------------------------------------- | Share issue | | | 241.4 | | 241.4 | | -------------------------------------------------------------------------------- | Options implemented and | 0.2 | 0.2 | | 0.2 | | | paid as shares | | | | | | -------------------------------------------------------------------------------- | Equity at 31 | - | 441.3 | 932.6 | 2.2 | 934.8 | | | December 2007 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Changes in Group | Share | Share | Transla | Fair | Revalua | Invested | | shareholders' | capit | premiu | tion | value | tion | non-rest | | equity | al | m | differe | reserve | reserve | ricted | | | | reserv | nces | | | equity | | | | e | | | | reserve | -------------------------------------------------------------------------------- | M | | | | | | | -------------------------------------------------------------------------------- | Equity 31 Dec. | 111.0 | 159.5 | 0.7 | 9.8 | 0.6 | 209.7 | | 2007 | | | | | | | -------------------------------------------------------------------------------- | Cash flow hedges: | | | | | | | -------------------------------------------------------------------------------- | | Amount taken | | | | -40.6 | | | | | to equity | | | | | | | -------------------------------------------------------------------------------- | | Amount | | | | 0.7 | | | | | recognized | | | | | | | | | in income | | | | | | | | | statement | | | | | | | -------------------------------------------------------------------------------- | | Reversed | | | | | | | | | hedging | | | | | | | | | instruments | | | | | | | -------------------------------------------------------------------------------- | Translation | | | -2.0 | | | | | difference | | | | | | | -------------------------------------------------------------------------------- | Taxes on items | | | | 10.4 | | | | recognized in | | | | | | | | equity or | | | | | | | | transferred from | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Total income and | | | -2.0 | -29.5 | | | | expenses | | | | | | | | recognized | | | | | | | | directly in equity | | | | | | | -------------------------------------------------------------------------------- | Profit for period | | | | | | | -------------------------------------------------------------------------------- | Total income and | | | -2.0 | -29.5 | | | | expenses for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Increase | | | | | | | -------------------------------------------------------------------------------- | Decrease | | | | | | | -------------------------------------------------------------------------------- | Dividend payment | | | | | | | -------------------------------------------------------------------------------- | Equity bond | | | | | | -------------------------------------------------------------------------------- | Options | | | | | | | | implemented and | | | | | | | | paid as shares | | | | | | | -------------------------------------------------------------------------------- | Equity 31 December | 111.0 | 159.5 | -1.4 | -19.7 | 0.6 | 209.7 | | 2008 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | Other | Retain | Total | Minorit | Total | | | | | equit | ed | | y | share-h | | | | | y | earnin | | interes | olders' | | | | | reser | gs | | t | equity | | | | | ve | | | | | | -------------------------------------------------------------------------------- | Equity 31 Dec. | - | 441.3 | 932.6 | 2.2 | 934.8 | | | 2007 | | | | | | | -------------------------------------------------------------------------------- | Cash flow hedges: | | | | | | | -------------------------------------------------------------------------------- | | Amount taken | | | -40.6 | | | | | | to equity | | | | | | | -------------------------------------------------------------------------------- | | Amount | | | 0.7 | | | | | | recognized | | | | | | | | | in income | | | | | | | | | statement | | | | | | | -------------------------------------------------------------------------------- | | Reversed | | | | | | | | | hedging | | | | | | | | | instruments | | | | | | | -------------------------------------------------------------------------------- | Translation | | | -2.0 | | | | | difference | | | | | | | -------------------------------------------------------------------------------- | Other changes | | 0.1 | 0.1 | | | | -------------------------------------------------------------------------------- | Taxes on items | | | 10.4 | | | | | recognized in | | | | | | | | equity or | | | | | | | | transferred from | | | | | | | | equity | | | | | | | -------------------------------------------------------------------------------- | Total income and | | 0.1 | -31.5 | | | | | expenses | | | | | | | | recognized | | | | | | | | directly in equity | | | | | | | -------------------------------------------------------------------------------- | Profit for period | | 26.7 | 26.7 | -0.1 | | | -------------------------------------------------------------------------------- | Total income and | | 26.8 | -4.8 | -0.1 | -4.9 | | | expenses for the | | | | | | | | period | | | | | | | -------------------------------------------------------------------------------- | Decrease | | | | -0.3 | -0.3 | | -------------------------------------------------------------------------------- | Dividend payment | | -55.5 | -55.5 | | -55.5 | | -------------------------------------------------------------------------------- | Equity bond | 129.0 | | 129.0 | | 129.0 | | -------------------------------------------------------------------------------- | Options | | 0.0 | | | 0.0 | | | implemented and | | | | | | | | paid as shares | | | | | | | -------------------------------------------------------------------------------- | Equity 31 December | 129.0 | 412.5 | 1 001.2 | 1.8 | 1 003.0 | | | 2008 | | | | | | | -------------------------------------------------------------------------------- Notes to the consolidated financial statements Accounting principles This Financial Statements Bulletin has been prepared applying IAS 34 (Interim Reports). The accounting principles for the financial statements are the same as those used for the financial statements at 31 December 2007. Income statement by business area M -------------------------------------------------------------------------------- | Income | Office | Logis | Property | Russia/ | Funds | Othe | Group, | | statement | | -tics | develop- | Baltic | | r | total | | 1-12/2008 | retail | | ment | | | | | -------------------------------------------------------------------------------- | Total revenue | 155.0 | 37.9 | 2.0 | 16.2 | 13.2 | 0.0 | 224.3 | -------------------------------------------------------------------------------- | Maintenance | -39.9 | -9.4 | -2.2 | -4.1 | -1.8 | 0.0 | -57.5 | | expenses and | | | | | | | | | direct fund | | | | | | | | | expenses | | | | | | | | -------------------------------------------------------------------------------- | Net operating | 115.1 | 28.5 | -0.1 | 12.0 | 11.3 | 0.0 | 166.8 | | income | | | | | | | | -------------------------------------------------------------------------------- | Profit/loss | 11.3 | 0.0 | 0.8 | 0.0 | 0.0 | 0.0 | 12.1 | | on sale of | | | | | | | | | investment | | | | | | | | | properties | | | | | | | | -------------------------------------------------------------------------------- | Profit/loss | 4.7 | 0.0 | 15.3 | 0.0 | 1.6 | 0.0 | 21.5 | | on sale of | | | | | | | | | trading | | | | | | | | | properties | | | | | | | | -------------------------------------------------------------------------------- | Valuation | -57.4 | -23.6 | 43.4 | -6.0 | 7.7 | 0.0 | -36.0 | | gains and | | | | | | | | | losses | | | | | | | | -------------------------------------------------------------------------------- | Release of | 0.0 | 0.0 | -13.0 | 0.0 | 0.0 | 0.0 | -13.0 | | goodwill | | | | | | | | -------------------------------------------------------------------------------- | Administratio | -7.7 | -2.1 | -3.4 | -4.7 | -6.3 | 0.0 | -24.2 | | n and | | | | | | | | | marketing | | | | | | | | -------------------------------------------------------------------------------- | Other | -0.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -0.9 | | operating | | | | | | | | | income and | | | | | | | | | expenses | | | | | | | | -------------------------------------------------------------------------------- | Operating | 65.0 | 2.8 | 42.9 | 1.3 | 14.3 | 0.0 | 126.2 | | profit | | | | | | | | -------------------------------------------------------------------------------- | Financial | | | | | | -87. | -87.5 | | income and | | | | | | 5 | | | expenses | | | | | | | | -------------------------------------------------------------------------------- | Profit before | | | | | | -87. | 38.7 | | taxes | | | | | | 5 | | -------------------------------------------------------------------------------- | Income tax | | | | | | -12. | -12.1 | | | | | | | | 1 | | -------------------------------------------------------------------------------- | Profit for | | | | | | -99. | 26.6 | | the period | | | | | | 6 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | 69.5 | 23.8 | 205.2 | 187.1 | 16.3 | 0.7 | 502.6 | | expenditure | | | | | | | | -------------------------------------------------------------------------------- | Depreciation | | | | | | -0.5 | -0.5 | -------------------------------------------------------------------------------- | Segment | 2 | 462.8 | 198.7 | 258.3 | 60.6 | 181. | 3 166.8 | | assets | 004.9 | | | | | 5 | | -------------------------------------------------------------------------------- | Segment debts | 18.7 | 13.5 | 2.2 | 7.3 | 0.6 | 43.6 | 85.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income | Office | Logis | Property | Russia/ | Funds | Othe | Group, | | statement | | -tics | devel-op | Baltic | | r | total | | 1-12/2007 | retail | | ment | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total revenue | 154.4 | 32.0 | 2.2 | 1.9 | 14.5 | 5.9 | 210.9 | -------------------------------------------------------------------------------- | Maintenance | -40.6 | -7.8 | -2.2 | -0.4 | -4.5 | -2.6 | -58.1 | | expenses and | | | | | | | | | direct fund | | | | | | | | | expenses | | | | | | | | -------------------------------------------------------------------------------- | Net operating | 113.8 | 24.2 | 0.0 | 1.5 | 10.0 | 3.3 | 152.8 | | income | | | | | | | | -------------------------------------------------------------------------------- | Profit/loss | -0.5 | 1.7 | 0.0 | 0.0 | 0.0 | 0.0 | 1.2 | | on sale of | | | | | | | | | investment | | | | | | | | | properties | | | | | | | | -------------------------------------------------------------------------------- | Profit/loss | 20.7 | 0.0 | 15.4 | 0.0 | -0.5 | 0.0 | 35.6 | | on sale of | | | | | | | | | trading | | | | | | | | | properties | | | | | | | | -------------------------------------------------------------------------------- | Valuation | 72.5 | 23.7 | -3.3 | 0.0 | 0.0 | 0.0 | 92.9 | | gains and | | | | | | | | | losses | | | | | | | | -------------------------------------------------------------------------------- | Administratio | -9.1 | -2.6 | -3.2 | -1.9 | -2.7 | -6.4 | -25.9 | | n and | | | | | | | | | marketing | | | | | | | | -------------------------------------------------------------------------------- | Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | | operating | | | | | | | | | income and | | | | | | | | | expenses | | | | | | | | -------------------------------------------------------------------------------- | Operating | 197.4 | 47.0 | 8.9 | -0.4 | 6.8 | -3.0 | 256.7 | | profit | | | | | | | | -------------------------------------------------------------------------------- | Financial | | | | | | -72. | -72.3 | | income and | | | | | | 3 | | | expenses | | | | | | | | -------------------------------------------------------------------------------- | Profit before | | | | | | -75. | 184.4 | | taxes | | | | | | 3 | | -------------------------------------------------------------------------------- | Income tax | | | | | | -47, | -47,8 | | | | | | | | 8 | | -------------------------------------------------------------------------------- | Profit for | | | | | | -123 | 136.6 | | the period | | | | | | .1 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | 44.8 | 48.0 | 94.7 | 66.5 | 0.6 | 0.0 | 254.6 | | expenditure | | | | | | | | -------------------------------------------------------------------------------- | Depreciation | | | | | | -0.7 | -0.7 | -------------------------------------------------------------------------------- | Segment | 1 | 337.1 | 278.1 | 77.2 | 35.1 | 260. | 2 898.5 | | assets | 910.9 | | | | | 1 | | -------------------------------------------------------------------------------- | Segment debts | 5.2 | 1.0 | 9.0 | 0.0 | 2.8 | 70.5 | 88.5 | -------------------------------------------------------------------------------- Income statement, by geographical location M -------------------------------------------------------------------------------- | | 1-12/2008 | 1-12/2007 | -------------------------------------------------------------------------------- | Helsinki Metropolitan Area | | | -------------------------------------------------------------------------------- | Total revenue | 170.0 | 158.3 | -------------------------------------------------------------------------------- | Capital expenditure | 234.9 | 175.7 | -------------------------------------------------------------------------------- | Assets | 2 343.1 | 2 301.3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Rest of Finland | | | -------------------------------------------------------------------------------- | Total revenue | 38.1 | 37.8 | -------------------------------------------------------------------------------- | Capital expenditure | 80.6 | 11.8 | -------------------------------------------------------------------------------- | Assets | 321.8 | 224.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other area | | | -------------------------------------------------------------------------------- | Total revenue | 16.2 | 14.8 | -------------------------------------------------------------------------------- | Capital expenditure | 187.1 | 67.1 | -------------------------------------------------------------------------------- | Assets | 501.9 | 372.4 | -------------------------------------------------------------------------------- Investment properties M -------------------------------------------------------------------------------- | | 1-12/2008 | 1-12/2007 | -------------------------------------------------------------------------------- | Fair value of investment properties, start | 2 534.9 | 2 455.1 | | of period | | | -------------------------------------------------------------------------------- | Purchase of investment properties | 210.6 | 115.1 | -------------------------------------------------------------------------------- | Other capital expenditure on investment | 275.0 | 138.9 | | properties | | | -------------------------------------------------------------------------------- | Disposal of investment properties | -82.8 | -277.0 | -------------------------------------------------------------------------------- | Transfers to/from property, plant and | 1.3 | 4.2 | | equipment | | | -------------------------------------------------------------------------------- | Transfers from trading properties | 14.7 | 7.6 | -------------------------------------------------------------------------------- | Other transfers | -2.5 | -1.9 | -------------------------------------------------------------------------------- | Valuation gains/losses | -43.7 | 92.9 | -------------------------------------------------------------------------------- | Fair value of investment properties, end of | 2 907.5 | 2 534.9 | | period | | | -------------------------------------------------------------------------------- The Group's most significant investment commitments The current phase of the City-Center project, construction of the underground service facilities for the city centre service tunnel, progressed on schedule. The next phase involves construction of the office building, the retail premises on the third floor, and the light shaft into the shopping centre. Sponda and the tenant took the joint decision to postpone this work so that it will start at the earliest towards the end of 2009. For this reason, it is now estimated that the renovation of the City-Center complex will be completed in 2012 and the total investment will be some EUR 110 million. Sponda is continuing with the underground work in 2009. Sponda announced on 20 December 2007 that it had purchased the Elovainio shopping centre under construction in Ylöjärvi for EUR 62 million. The property has financing for the construction period, which Sponda has re-organized. Sponda will pay for the property after the building is completed, in April 2009, when the final price for the property will be determined. The shopping centre has retail premises with a leasable area of 24,500 square metres and parking for 850 vehicles. The property will be purchased fully leased and the main tenant will be K-citymarket. Sponda is developing the Ratina shopping centre in Tampere and carrying out development projects in adjacent areas. A 55,000 m² shopping centre is planned for the area, for which the total investment cost is estimated at EUR 200 million. Planning of the project is underway, and the final decision about the investment has not been made. Property, plant and equipment M -------------------------------------------------------------------------------- | | 31.12.2008 | 31.12.2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Carrying amount, start of period | 15.7 | 19.5 | -------------------------------------------------------------------------------- | Additions | 0.8 | 2.6 | -------------------------------------------------------------------------------- | Disposals | 0.0 | -1.7 | -------------------------------------------------------------------------------- | Reclassifications to/from investment | | | | properties | | | -------------------------------------------------------------------------------- | Other transfers | -1.3 | -4.2 | -------------------------------------------------------------------------------- | Depreciation for the period | -0.1 | - | -------------------------------------------------------------------------------- | | -0.6 | -0.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Carrying amount, end of period | 14.5 | 15.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Trading properties M -------------------------------------------------------------------------------- | | 31.12.2008 | 31.12.2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Carrying amount, start of period | 37.2 | 231.1 | -------------------------------------------------------------------------------- | Disposals and other changes | -4.5 | -186.3 | -------------------------------------------------------------------------------- | Reclassifications to investment properties | -3.1 | -7.6 | -------------------------------------------------------------------------------- | Carrying amount, end of period | 29.5 | 37.2 | -------------------------------------------------------------------------------- Suit for payment In a ruling issued on 19 January 2009, the Helsinki Court of Appeal ordered Sponda Plc to pay interest totalling EUR 7.6 million and penal interest and court costs to Sampo Bank Plc based on a credit agreement. The decision is final unless appeal has been made by 20 March 2009. The amount of Sampo Bank's suit for payment, EUR 7.6 million, was recognized as an expense under provisions in the 2006 financial statements, so the ruling has no impact on Sponda's result. EUR 0.6 million was recognized as an interest expense under provisions in 2007 and EUR 0.1 million in 2008, so the total provision is EUR 8.3 million on 31 December 2008. Tax authority decision Sponda stated in its interim report on 1 November 2007 that the Uusimaa corporate tax office had decided to deviate from the company's 2006 tax returns with respect to the deductible losses allowable against the company's profit. The tax assessment adjustment board amended the Uusimaa corporate tax office's decision regarding the deductibility of Sponda Kiinteistöt Oy's (formerly Kapiteeli Oyj) confirmed losses for previous years in favour of Sponda in December 2007. The company issued a statement about this on 19 December 2007. The state official representing the interests of tax recipients has appealed the decision of the adjustment board. Contingent liabilities Collateral and commitments given by the Group M -------------------------------------------------------------------------------- | | 31.12.2008 | 31.12.2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Loans from financial institutions, covered | 50.3 | 12.1 | | by collateral | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Mortgages | 109.2 | 81.9 | -------------------------------------------------------------------------------- | Book value of pledged shares | 17.0 | 0.0 | -------------------------------------------------------------------------------- | Guarantees | 57.6 | 0.0 | -------------------------------------------------------------------------------- | Total collateral | 183.8 | 81.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Lease and other liabilities | 31.12.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | M | | | -------------------------------------------------------------------------------- | Lease liabilities | 44.6 | 28.1 | -------------------------------------------------------------------------------- | Mortgages | 3.0 | 2.2 | -------------------------------------------------------------------------------- | Guarantees | 7.3 | 7.5 | -------------------------------------------------------------------------------- | Other lease agreements | 0.9 | 1.2 | -------------------------------------------------------------------------------- | Total | 55.8 | 39.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest derivatives | 31.12.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | M | | | -------------------------------------------------------------------------------- | Swap contracts, notional value | 915.0 | 660.0 | -------------------------------------------------------------------------------- | Swap contracts, fair value | -27.0 | 10.0 | -------------------------------------------------------------------------------- | Cap options purchased, notional value | 187.5 | 557.0 | -------------------------------------------------------------------------------- | Cap options purchased, fair value | 1.0 | 14.7 | -------------------------------------------------------------------------------- | Forward rate agreements, notional value | - | 50.0 | -------------------------------------------------------------------------------- | Forward rate agreements, fair value | - | 0.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Currency derivatives | | | -------------------------------------------------------------------------------- | M | | | -------------------------------------------------------------------------------- | Currency options, notional value | 5.1 | 0.0 | -------------------------------------------------------------------------------- | Currency options, fair value | 0.0 | 0.0 | -------------------------------------------------------------------------------- Key figures -------------------------------------------------------------------------------- | | 10-12/08 | 10-12/07 | 1-12/08 | 1-12/07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share, | 0.07 | 0.16 | 0.24 | 1.27 | -------------------------------------------------------------------------------- | Equity ratio, % | | | 32 | 32 | -------------------------------------------------------------------------------- | Gearing, % | | | 181 | 175 | -------------------------------------------------------------------------------- | Equity per share, | | | 7.86 | 8.40 | -------------------------------------------------------------------------------- | Cash flow from operations per | 0.29 | 0.22 | 0.78 | 0.81 | | share, | | | | | -------------------------------------------------------------------------------- | EPRA NAV, net assets per share, | | | 9.64 | 10.04 | | | | | | | -------------------------------------------------------------------------------- Calculation of financial ratios -------------------------------------------------------------------------------- | Earnings per | = | Share of profit/loss for the period | | share, | | attributable to equity holders of the parent | | | | company________ | | | | Adjusted average number of shares during the | | | | period | -------------------------------------------------------------------------------- | Equity ratio, % | = 100 X | Shareholders' equity___________________ | | | | Balance sheet total - advances received | -------------------------------------------------------------------------------- | Gearing, % | = 100 X | Interest-bearing liabilities - cash and cash | | | | equivalents_________ | | | | Shareholders' equity | -------------------------------------------------------------------------------- | Equity per | = | Equity attributable to equity holders of parent | | share, | | company on 31 December - Other equity | | | | reserve__________________ | | | | Basic number of shares on 31 December | -------------------------------------------------------------------------------- | Cash flow from | = | Operating profit | | operations/shar | | -/+ Valuation gains and losses | | e | | + Depreciation in administration | | | | +/- Changes in provisions | | | | +/- Defined benefit pension expenses | | | | - Financial income expenses affecting cash | | | | flow | | | | - Taxes affecting cash flow | | | | +/- Other items_________________ | | | | Average adjusted number of shares during the | | | | period | -------------------------------------------------------------------------------- | EPRA NAV, net | = | Equity attributable to equity holders of parent | | assets per | | Company on 31 December | | share, | | - Other equity reserve | | | | + Deferred tax relating to the fair valuation | | | | of property and to property depreciation | | | | allowances | | | | - Goodwill relating to deferred tax liability | | | | Basic number of shares on 31 December | -------------------------------------------------------------------------------- Related party transactions The following transactions took place with related parties: Rental income from state institutions and companies totalled EUR 23.9 million in 2008 (2007: EUR 24.9 million). Management employee benefits -------------------------------------------------------------------------------- | | 31.12.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | Salaries and other short-term employee benefits | 2.3 | 2.3 | -------------------------------------------------------------------------------- | Share-based payments | 0.3 | 0.2 | -------------------------------------------------------------------------------- | Total | 2.5 | 2.5 | -------------------------------------------------------------------------------- Events after the close of the period Sponda announced on 19 December 2008 that it had signed an agreement to sell three logistics properties for altogether EUR 16.3 million to the Sponda Fund II real estate fund. The transaction was closed on 9 January 2009. The properties sold are located in Kuusankoski, Mikkeli and Oulu. In a ruling issued on 19 January 2009, the Helsinki Court of Appeal ordered Sponda Plc to pay interest totalling EUR 7.6 million and penal interest and court costs to Sampo Bank Plc based on a credit agreement. The decision is final unless appeal has been made by 20 March 2009. The amount of Sampo Bank's suit for payment, EUR 7.6 million, was recognized as an expense under provisions in the 2006 financial statements, so the ruling has no impact on Sponda's result. EUR 0.6 million was recognized as an interest expense under provisions in 2007 and EUR 0.1 million in 2008, so the total provision is EUR 8.3 million on 31 December 2008. Attachments: tilinpäätös 2008_tekstiversio_eng.pdf