Sponda Plc
Financial Statements Bulletin
5 February 2010 at 8.30 am
Sponda Plc Financial Statements January - December 2009
Sponda Plc's total revenue increased to the record level of EUR 243.0 million
(31 December 2008: EUR 224.3 million). Net operating income after property
maintenance costs and direct costs for funds was EUR 181.6 (166.8) million. The
company's operating profit was EUR -13.3 (117.3) million. This includes a change
in the fair value of the property portfolio of altogether EUR -175.1 (-44.9)
million.
Result of operations and financial position January - December 2009 (compared
with figures for January - December 2008)
Total revenue increased some 8 % from the previous year to EUR 243.0 (224.3)
million.
Net operating income rose about 9 % to EUR 181.6 (166.8) million.
Operating profit was EUR -13.3 (117.3) million.
The result after tax was EUR -81.6 (29.2) million.
Earnings per share were EUR -0.35 (0.16).
Cash flow from operations per share was EUR 0.45 (0.78).
The fair value of the investment properties amounted to EUR 2,767.5 (2,915.5)
million.
Net assets per share totalled EUR 3.54 (4.93).
EPRA net assets per share were EUR 4.18 (6.04).
The economic occupancy rate was 86.6 (88.5) %.
The Board of Directors proposes to the AGM that a dividend of EUR 0.12 per share
be paid for the 2009 financial year.
Result of operations and financial position October - December 2009 (compared
with same period in 2008)
Total revenue rose to EUR 59.8 (58.2) million.
Net operating income was EUR 44.6 (41.7) million.
Operating profit was EUR 23.5 (30.2) million, which includes a change in the
value of properties of EUR -14.4 (-17.5) million.
Profit after tax was EUR 6.3 (4.8) million.
Earnings per share were EUR 0.02 (0.03).
Cash flow from operations per share was EUR 0.04 (0.30).
Key figures
--------------------------------------------------------------------------------
| | 10-12/09 | 10-12/08 | 1-12/09 | 1-12/08 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Economic occupancy rate, % | | | 86.6 | 88.5 |
--------------------------------------------------------------------------------
| Total revenue, Me | 59.8 | 58.2 | 243.0 | 224.3 |
--------------------------------------------------------------------------------
| Net operating income, Me | 44.6 | 41.7 | 181.6 | 166.8 |
--------------------------------------------------------------------------------
| Operating profit, Me | 23.5 | 30.2 | -13.3 | 117.3 |
--------------------------------------------------------------------------------
| Earnings per share, e | 0.02 | 0.03 | -0.35 | 0.16* |
--------------------------------------------------------------------------------
| Cash flow from operations | 0.07** | 0.29 | 0.45*** | 0.78 |
| per share, e | | | | |
--------------------------------------------------------------------------------
| Net assets per share, e | | | 3.54 | 4.93* |
--------------------------------------------------------------------------------
| EPRA net assets per share, e | | | 4.18 | 6.04* |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 37 | 32 |
--------------------------------------------------------------------------------
| Gearing, % | | | 141 | 180 |
--------------------------------------------------------------------------------
*) In consequence of the share issue during the second quarter, per share
figures have been adjusted in accordance with IAS 33.
**) Per share figure has been calculated using 277 575 462 shares. The 2008
comparison figure has not been adjusted according to the IAS 33.
***) Per share figure has been calculated using 195 874 005 shares. The 2008
comparison figure has not been adjusted according to the IAS 33.
CEO Kari Inkinen
Sponda recorded an excellent result from rental operations in 2009 despite the
challenging market conditions. Total revenue increased 8 % and was the largest
in the history of the company, even though the company purchased no new
properties and sold property for EUR 40 million. Financing costs were at low
level.
Another positive feature was the increase in property development activity
towards the end of the year. We began construction of the office building in the
City-Center complex in the central business district of Helsinki, and we also
invested in property refurbishment, in particular by raising the energy
efficiency of our properties.
Real estate investment is a late cycle business by nature, and the impact of
developments in the economy is felt in the financial results of property
companies after a delay of about one year. Despite this, I forecast that rents
for business properties in the Helsinki metropolitan area will maintain their
level better than is generally expected. I also forecast that the first half of
2010 will be a challenging period for Sponda's leasing activities, that vacancy
rates will rise early in the year, but that there will be a positive turn in the
second half of the year.
During 2010, in addition to maintaining occupancy rates we will also be focusing
our efforts on environmental responsibility. In 2009 we launched the Spondan 10+
scheme, in which we work with clients to improve energy usage in properties. Our
goal is, together with the users of properties, to identify areas where energy
savings can be made. Ten buildings of different ages and types, are
participating in the pilot project, and one of these is Sponda's own office
building.
Prospects
Sponda forecasts that the economic occupancy rate of the company's business
properties will continue to decline in the first part of 2010. The occupancy
rate is expected, however, to start to pick up during. Forecast is based on
terminating lease agreements and on estimated GDP growth in 2010.
The net operating income in 2010 is estimated to be lower than that in 2009. The
reasons for this decline are the planned property sales and the fall in the
occupancy rates that began in 2009 and is continuing in the first half of 2010.
Confirmed losses of Sponda Kiinteistöt Oy
On 1 November 2007 in conjunction with the interim report, Sponda Plc announced
that the tax authorities had decided to deviate from Sponda Kiinteistöt Oy's
(formerly Kapiteeli Oy) tax return for the tax year 2006 and deemed the
Company's taxable income to be EUR 192 million. The matter relates to Sponda
Kiinteistöt Oy's confirmed losses, which totalled approximately EUR 558 million
for tax years 1996-1999.
In accordance with law, the Company's losses shall not be deducted if over half
of its shares change hands during the year when the losses occur or thereafter.
However, the tax office performing the taxation may, for special reasons, grant
the right to deduct losses regardless of the change in ownership. Kapiteeli Oy
was granted exemptions for deducting losses on 29 September 2006 and 13 December
2006. Sponda Plc acquired all the shares in Kapiteeli Oy through a purchase
completed on 14 December 2006.
However, when processing Sponda Kiinteistöt Oy's 2006 tax return, the tax
authorities deemed that the granted exemptions were not valid, since according
to the tax authorities, Sponda Kiinteistöt Oy's operations cannot be deemed to
have continued as described in the exemption decision after the Company's
personnel transferred to the service of the parent company, Sponda Plc. In the
Company's view, the tax authorities' position is erroneous, since the question
is only of a transfer of salary payment to the group's parent company, while the
Company's business operations continue unchanged.
Upon Sponda Kiinteistöt Oy's claim for adjustment, the Uusimaa Tax Assessment
Adjustment Board unanimously amended the tax authorities' decision and approved
the deductibility of the confirmed losses. On 14 September 2009, the Helsinki
Administrative Court, by a vote of 2-1, approved the appeal of the decision of
the Tax Assessment Adjustment Board lodged by the state official representing
the interests of tax recipients. The Company has appealed the Administrative
Court's decision to the Supreme Administrative Court. In accordance with the
appeal directions given by the Administrative Court, the appeal to the Supreme
Administrative Court requires a leave to appeal. According to the experts
consulted by the Company, no leave for appeal is required, and in any case,
there are grounds for granting leave to appeal in the matter. The experts
consulted by the Company estimate that the Supreme Administrative Court's
decision in the principal matter will be given by the summer of 2010.
The Uusimaa corporate tax office has amended the debiting of tax in 2006 for
Sponda Kiinteistöt Oy by altogether EUR 53.8 million and the Tax Office for
Major Corporations has adjusted the 2007 tax assessment of Sponda Kiinteistöt Oy
by altogether EUR 59.7 million and the 2008 tax assessment by altogether EUR
26.4 million. The tax adjustments for 2006 - 2008 total EUR 131 million and
corporate interest is EUR 8.9 million, altogether EUR 139.9 million. Penalty
interest is calculated on the adjusted amounts and this is 7 % from 1 January
2010. Penalty interest is calculated for the 2006 tax as from 15 December 2009
and for 2007 and 2008 as from 21 January 2010.
However, because of the suspension order imposed by the Supreme Administrative
Court and the decision on the ban on enforcing the tax taken by the Tax Office
for Major Corporations, the company does not need to pay the taxes before a
decision has been taken on the appeal against the ruling of the Administrative
Court. Since the company does not need to pay taxes based on the decision of the
Administrative Court, Sponda Kiinteistöt Oy is not recognizing a tax expense
while the matter is unresolved but is stating the tax issue in the notes to the
financial statements.
In the event the Supreme Administrative Court would not amend the Administrative
Court's decision, the Company would incur a tax cost of approximately EUR 49.9
million for 2006, approximately EUR 55.8 million for 2007 and approximately EUR
25.3 million for 2008, i.e. a total of approximately EUR 131.0 million for
2006-2008, which amount the Company would have to pay. Sponda Kiinteistöt Oy's
unused confirmed losses, which expire in 2009, amount to EUR 54.4 million, with
a related tax receivable of approximately EUR 14.1 million. In addition the
company would have to pay corporate interest of some EUR 8.9 million and penalty
interest for the 2006 tax as from 15 December 2009 and for 2007 and 2008 as from
21 January 2010 until the payment date. The company has calculated that the
corporate interest would amount to EUR 12.8 million.
Based on the statements of the experts it has consulted, Sponda Plc considers
the Administrative Court's decision to be erroneous and that it is more likely
that the Supreme Administrative Court will approve Sponda Kiinteistöt Oy's
appeal than that the appeal would be rejected. In the event the Company would
have to pay taxes based on the Administrative Court's decision, Sponda
Kiinteistöt Oy will enter the tax expense and interest under expenses in the
Group's interim report or financial statements immediately following the payment
decision. If the tax expense of EUR 131.0 million and interest of EUR 8.9
million as well as 2009 tax of EUR 14.1 million had been paid in the January -
December 2009 financial period, the consolidated profit for the period would
have been EUR - 235.5 million and shareholders' equity EUR 959.6 million. If
these expenses had been recognized, the corresponding figures for net assets per
share would have been EUR 2.99, earnings per share EUR -1.02, cash flow from
operations per share EUR -0.33 and equity ratio 32 %.
On 31 December 2009 Sponda had unused credit limits of altogether EUR 450
million.
Business conditions - Finland
According to preliminary estimates by the Institute for Real Estate Economics
(KTI), property transactions with a total value of about EUR 1.5 billion were
made in Finland in 2009, where in 2008 the figure for the same period was about
EUR 4 billion. The current state of the market makes property a competitive
investment, and the transaction market is expected to recover during 2010.
Rent levels fell slightly in the second half of 2009. The fall was more moderate
in the central business and Ruoholahti districts of Helsinki than elsewhere.
Vacancy rates for business premises are thought to have risen towards the end of
2009. Economic recovery is forecast to begin during 2010. Since virtually no new
properties came on the market in 2009, current vacancy rates are expected to go
down as demand rises after 2010.
Business conditions - Russia
The global recession had a bigger impact on Russia in 2009 than on Finland. This
was also reflected in the Russian property market, where hardly any property
transactions took place and rents fell considerably. Vacancy rates rose up to 30
% in some areas and hardly any development projects were started because of
tight financing situation.
According to expert assessments, the Russian economy has reached its lowest
point, the volume of vacant premises is no longer increasing and demand is
growing. Forecasts for the economy in 2010 are cautiously optimistic, and Russia
is expected to recover more quickly than Western Europe thanks to the rising
price of crude oil.
Sponda's operations in January - December 2009
Sponda owns, leases and develops business properties in the Helsinki
metropolitan area and the largest cities in Finland, and in Russia. Sponda's
operations are organized in four business units: Investment Properties, Property
Development, Russia, and Real Estate Funds. The Investment Properties unit is
divided into three segments: Office and Retail Properties, Shopping Centres and
Logistics Properties. The other segments are Property Development, Real Estate
Funds and Russia.
Net operating income from all of Sponda's property assets totalled EUR 181.6
(166.8) million during the year. Office and retail premises accounted for 53 %
of this, shopping centres for 17 %, logistics premises for 15 %, the Real Estate
Funds unit for 6 % and Russia for 9 %. Like-for-like rental growth during the
past two years for the property portfolio that Sponda has owned for two years
was 1.40 % for office and retail properties, 4.66 % for shopping centres and
-3.83 % for logistics properties. Rental growth is calculated in accordance with
EPRA recommendations. All of Sponda's leasing agreements are tied to the cost of
living index.
The economic occupancy rates by type of property and geographical area were as
follows:
--------------------------------------------------------------------------------
| Type of property | 31.12. | 30.9. | 30.6. | 31.3. | 31.12. |
| | 2009 | 2009 | 2009 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Office and Retail, % | 87.9 | 87.9 | 90.3 | 90.5 | 91.1 |
--------------------------------------------------------------------------------
| Shopping centres | 96.4 | 97.3 | 97.1 | 97.8 | 96.7 |
--------------------------------------------------------------------------------
| Logistics, % | 74.5 | 75.0 | 76.1 | 78.8 | 77.4 |
--------------------------------------------------------------------------------
| Russia, % | 88.2 | 87.5 | 89.1 | 88.5 | 86.3 |
--------------------------------------------------------------------------------
| Total property | 86.6 | 86.8 | 88.4 | 88.8 | 88.5 |
| portfolio, % | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Geographical area * | 31.12. | 30.9. | 30.6. | 31.3. | 31.12. |
| | 2009 | 2009 | 2009 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Helsinki Business | 86.2 | 85.5 | 91.3 | 91.1 | 90.4 |
| District, % | | | | | |
--------------------------------------------------------------------------------
| Helsinki Metropolitan | 84.8 | 85.6 | 85.7 | 86.8 | 86.6 |
| Area, % | | | | | |
--------------------------------------------------------------------------------
| Turku, Tampere, Oulu, % | 95.7 | 95.4 | 96.0 | 96.1 | 97.4 |
--------------------------------------------------------------------------------
| Russia | 88.2 | 87.5 | 89.1 | 88.5 | 86.3 |
--------------------------------------------------------------------------------
| Total property | 86.6 | 86.8 | 88.4 | 88.8 | 88.5 |
| portfolio, % | | | | | |
--------------------------------------------------------------------------------
*) Geographical areas changed from earlier reports.
Total cash flow from leasing agreements on 31 December 2009 was EUR 1,030
(1,060) million. Sponda had 1,996 clients and altogether 3,178 leasing
agreements. The company's biggest tenants were the Public Sector (10.2 % of
rental income), Kesko Group (6.2 % of rental income), Sampo Bank Plc (3.9 % of
rental income) and HOK-Elanto (3.8 % of rental income). Sponda's 10 largest
tenants generate about 32 % of the company's total rental income. Sponda's
tenants by sector were as follows:
--------------------------------------------------------------------------------
| Sector | % of net rental |
--------------------------------------------------------------------------------
| Professional, scientific and technical activities | 7.8 % |
--------------------------------------------------------------------------------
| Energy | 0.5 % |
--------------------------------------------------------------------------------
| Public sector | 10.2 % |
--------------------------------------------------------------------------------
| Wholesale/retail | 27.2 % |
--------------------------------------------------------------------------------
| Education | 0.9 % |
--------------------------------------------------------------------------------
| Logistics/Transport | 6.7 % |
--------------------------------------------------------------------------------
| Media /Publishing | 1.7 % |
--------------------------------------------------------------------------------
| Hotel and catering business | 3.9 % |
--------------------------------------------------------------------------------
| Other services | 8.1 % |
--------------------------------------------------------------------------------
| Banking/Investment | 10.4 % |
--------------------------------------------------------------------------------
| Construction | 2.2 % |
--------------------------------------------------------------------------------
| Industry/manufacturing | 6.8 % |
--------------------------------------------------------------------------------
| Healthcare | 4.0 % |
--------------------------------------------------------------------------------
| Telecommunications | 6.1 % |
--------------------------------------------------------------------------------
| Others | 3.3 % |
--------------------------------------------------------------------------------
The average length of all the leasing agreements was 4.4 (4.6) years. The
average length of leasing agreements was 4.9 years for office and retail
properties, 5.1 years for shopping centres and 2.9 years for logistics
properties. A total of 120 new leases (26,500 m²) came into effect in October -
December 2009, and 126 leases (55,400 m²) expired during this period. The lease
agreements for Sponda's property portfolio expire as follows:
--------------------------------------------------------------------------------
| Expiry within | % of rental income |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 year | 14.0 |
--------------------------------------------------------------------------------
| 2 years | 10.0 |
--------------------------------------------------------------------------------
| 3 years | 12.6 |
--------------------------------------------------------------------------------
| 4 years | 7.9 |
--------------------------------------------------------------------------------
| 5 years | 9.7 |
--------------------------------------------------------------------------------
| 6 years | 5.2 |
--------------------------------------------------------------------------------
| More than 6 years | 26.5 |
--------------------------------------------------------------------------------
| Open ended | 14.1 |
--------------------------------------------------------------------------------
Property portfolio
On 31 December 2009 Sponda had a total of 198 properties, with an aggregate
leasable area of about 1.5 million m². Of this some 52 % is office and retail
premises, 9 % shopping centres and 36 % logistics premises. Some 3 % of the
leasable area of the properties is located in Russia.
At the end of 2009 an external evaluator assessed the value of Sponda's
investment properties. The change in fair value in October - December was EUR
-14.4 million (31 December 2008: EUR -17.5 million) and for the whole year EUR
-175.1 (-44.9) million. In the final quarter of the year, the main factors
affecting the fair value were the fall in market rents for properties and the
increase in vacancy rates. The assessments were made by Catella Property Group
in Finland and CB Richard Ellis in Russia, and their statements can be seen on
the company's Internet site. The fair values of undeveloped land areas were
assessed by Newsec. For the real estate funds, Jones Lang LaSalle and
Kiinteistötaito Peltola & Co assessed the fair values of the properties owned by
Sponda Fund I and Sponda Fund II at the end of 2009.
Valuation gains/losses on assessing Sponda's investment properties at fair value
--------------------------------------------------------------------------------
| M | 10-12/2009 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Changes in yield requirements (Finland) | -4.6 | -54.7 | -88.8 |
--------------------------------------------------------------------------------
| Changes in yield requirements (Russia) | | -49.4 | -4.3 |
--------------------------------------------------------------------------------
| Development gains on property | -1.2 | -1.2 | 34.4 |
| development projects | | | |
--------------------------------------------------------------------------------
| Modernization investments | -7.1 | -21.3 | -26.6 |
--------------------------------------------------------------------------------
| Change in market rents and maintenance | 0.1 | -8.4 | 34.4 |
| costs (Finland) | | | |
--------------------------------------------------------------------------------
| Change in market rents and maintenance | 1.5 | -26.9(** | -1.7 |
| costs (Russia) | | | |
--------------------------------------------------------------------------------
| Change in currency exchange rates | -0.6 | -5.0 (* | |
--------------------------------------------------------------------------------
| Investment properties, total | -11.7 | -166.8 | -52.6 |
--------------------------------------------------------------------------------
| Real estate funds | -2.7 | -8.3 | 7.7 |
--------------------------------------------------------------------------------
| Group, total | -14.4 | -175.1 | -44.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *) change in value due to changes in | | | |
| exchange rates 6-12/2009 | | | |
--------------------------------------------------------------------------------
| **) includes changes in value due to | | | |
| changes in exchange rates 1-6/2009 | | | |
--------------------------------------------------------------------------------
The changes in Sponda's investment property assets in 2009 were as follows:
--------------------------------------------------------------------------------
| Sponda's | Total | Office | Shoppin | Logis- | Proper- | Russia |
| investment | | & | g | tics | ty | |
| properties, M | | Retail | centres | | develop | |
| | | | | | ment | |
--------------------------------------------------------------------------------
| Operating income | 225.2 | 126.6 | 39.3 | 37.3 | 0.2 | 21.8 |
--------------------------------------------------------------------------------
| Maintenance costs | -56.8 | -31.3 | -8.0 | -10.8 | -1.2 | -5.5 |
--------------------------------------------------------------------------------
| Net operating | 168.4 | 95.3 | 31.4 | 26.6 | -1.0 | 16.4 |
| income | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investment | 2 915.5 | 1 460.6 | 541.6 | 462.8 | 189.1 | 261.3 |
| properties on 1 | | | | | | |
| Jan. 2009, | | | | | | |
| includ. cum. | | | | | | |
| capitalized | | | | | | |
| interest | | | | | | |
--------------------------------------------------------------------------------
| Capitalized | 3.7 | 0.0 | 0.0 | 0.0 | 3.0 | 0.7 |
| interest 2009 | | | | | | |
--------------------------------------------------------------------------------
| Acquisitions in | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| 2009 | | | | | | |
--------------------------------------------------------------------------------
| Investments | 53.4 | 14.4 | 13.2 | 0.8 | 23.5 | 1.4 |
--------------------------------------------------------------------------------
| Other transfers | 2.0 | 1.2 | -0.1 | -1.2 | 2.0 | 0.0 |
--------------------------------------------------------------------------------
| Sales in 2009 | -40.3 | -4.2 | 0.0 | -35.3 | -0.8 | 0.0 |
--------------------------------------------------------------------------------
| Valuation | -166.8 | -46.2 | -11.3 | -30.9 | 3.6 | -81.9 |
| gains/losses | | | | | | |
--------------------------------------------------------------------------------
| Fair value of | 2 767.5 | 1 425.8 | 543.6 | 396.1 | 220.6 | 181.4 |
| investment | | | | | | |
| properties at 31 | | | | | | |
| December 2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in fair | -5.7 | -3.2 | -2.1 | -6.7 | 1.9 | -31.3 |
| value % | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Annual net | 6.9 % | 6.7 % | 6.6 % | 6.7 % | | 10.1 % |
| operating income | | | | | | |
| / fair value at | | | | | | |
| 31 December 2009 | | | | | | |
| *) | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Weighted average | 7.19 | 6.67 | 6.12 | 8.11 | | 11.48 |
| yield requirement | | | | | | |
| -% for entire | | | | | | |
| portfolio | | | | | | |
--------------------------------------------------------------------------------
| Weighted average | 6.87 | | | | | |
| yield requirement | | | | | | |
| -% for portfolio | | | | | | |
| - Finland | | | | | | |
--------------------------------------------------------------------------------
| *) Excluding | | | | | | |
| property | | | | | | |
| development | | | | | | |
--------------------------------------------------------------------------------
Investments and divestments
Sponda sold investment properties during 2009 for a total value of EUR 40.3
million, with EUR 3.7 million of these being in the fourth quarter. No
properties were purchased during the year.
Investments in property maintenance totalled EUR 21.3 million in 2009, with EUR
7.2 million of this in the fourth quarter. Altogether EUR 32.0 million was
invested in property development during the year, with the final quarter
accounting for EUR 5.9 million. This was mainly spent on the renovation of the
City-Center complex in the centre of Helsinki and on the purchase of land for
the Ratina shopping centre.
Office and Retail Properties
The economic occupancy rate for Office and Retail Properties was 87.9 % (31
December 2008: 91.1%). The property portfolio had a fair value on 31 December
2009 of EUR 1425.8 million, and the change in fair value from the beginning of
2009 was EUR -46.2 million. The leasable area of office and retail properties
was some 770,000 m², and an estimated 80 % of this was office premises and 20 %
retail premises. The unit's total revenue, net operating income and operating
profit in the period were as follows:
--------------------------------------------------------------------------------
| M | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
| Total revenue | 31.9 | 31.5 | 129.0 | 125.7 |
--------------------------------------------------------------------------------
| Net operating income | 23.6 | 22.3 | 96.3 | 92.9 |
--------------------------------------------------------------------------------
| Operating profit | 14.2 | -0.5 | 46.5 | 47.7 |
--------------------------------------------------------------------------------
During 2009 Sponda sold office and retail property for EUR 4.2 million. No
properties were bought during the year. Capital expenditure on property
maintenance amounted to EUR 15.5 million by the end of the year.
Sponda signed a binding agreement on 23 December 2009 to sell Koy Vanhajämerä to
CapMan Hotels RE Ky for EUR 10 million. The 5,185 square metre property, which
is currently in use as offices, is located in the Kamppi districy of Helsinki,
at Albertinkatu street 36 and Lönnrotinkatu street 27. Sponda will record
capital gains of EUR 1.2 million on the sale for the first quarter 2010.
Shopping Centres
The Shopping Centres had an economic occupancy rate of 96.4 % (96.7 %). The
properties had a fair value of EUR 543.6 million, including a change in fair
value of EUR -11.3 million in 2009. The shopping centres had a combined leasable
area of about 140,000 m². The unit's total revenue, net operating income and
operating profit in the period were as follows:
--------------------------------------------------------------------------------
| M | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
| Total revenue | 10.3 | 7.6 | 39.3 | 29.3 |
--------------------------------------------------------------------------------
| Net operating income | 8.7 | 5.6 | 31.4 | 22.2 |
--------------------------------------------------------------------------------
| Operating profit | 8.4 | 1.7 | 18.7 | 17.3 |
--------------------------------------------------------------------------------
In 2009 investments by the segment totalled EUR 13.2 million. Apart from
expenditure of EUR 0.7 million on maintenance, this was allocated to the Elo
shopping centre, which opened on 1 April in Ylöjärvi.
Logistics Properties
The Logistics Properties had an economic occupancy rate of 74.5 % (77.4 %). The
properties had a fair value at the end of 2009 of EUR 396.1 million, including a
change in fair value of EUR -30.9 million. The logistics properties had a total
leasable area of 530,000 m². The unit's total revenue, net operating income and
operating profit in the period were as follows:
--------------------------------------------------------------------------------
| M | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
| Total revenue | 8.7 | 9.6 | 38.6 | 37.9 |
--------------------------------------------------------------------------------
| Net operating income | 5.6 | 7.1 | 27.4 | 28.5 |
--------------------------------------------------------------------------------
| Operating profit | 0.6 | -3.1 | -4.5 | 2.8 |
--------------------------------------------------------------------------------
In 2009 Sponda sold logistics property for EUR 35.3 million.
No new properties were purchased in the period. Capital expenditure on property
maintenance since the beginning of the year totalled EUR 0.8 million.
On 27 October 2009 Sponda and Metso Automation signed an agreement for
production premises to be built in Hakkila, Vantaa. The new building, with a
floor area of about 22,000 square metres, will be erected beside the Honkatalo
logistics centre in Vantaa owned by Sponda at Vanha Porvoontie 229, Vantaa. The
new building will be leased in its entirety to the Metso Automation business
line with a long-term, 15 year lease. Sponda is also leasing to Metso some
12,000 square metres of office and warehouse premises in the adjacent Honkatalo
office building. Almost the entire office building will be occupied by Metso.
Sponda's total investment is estimated at about EUR 40 million.
Property Development
The balance sheet value of Sponda's property development portfolio at the end of
2009 was EUR 220.6 million. Of this, some EUR 90.4 million was in undeveloped
land sites and the remaining EUR 130.2 million was tied up in property
development projects in progress. Investments in property development and
acquisitions during the year totalled EUR 23.5 million, and most of this was for
the City-Center project and for the purchase of a land area relating to the
Ratina shopping centre.
Sponda aims to obtain development gains of 15 % on the investment costs for
projects. The property development business will activate during 2010. Sponda's
product development business comprises new build projects and refurbishment of
existing properties.
The City-Center project is moving on to the above ground floors. The next phase
involves the construction of the office building starting in the inner court of
the complex, and new retail premises will be built on the first and second
floors of the retail complex and in place of the parking deck on the third
floor. It is estimated that the City-Center renovation will be completed in 2012
and that the total investment will be some EUR 125 million.
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.
Russia
At the end of the review period, the economic occupancy rate for the Russia unit
was 88.2 % (86.3 %). The property portfolio had a fair value at the end of the
year of EUR 181.4 million, and the change in the fair value from the beginning
of 2009 was EUR -81.9 million. The fair value of the properties in Russia was
assessed by CB Richard Ellis at the end of 2009.
Capital expenditure on property development and maintenance in 2009 totalled EUR
0.4 million.
The unit's total revenue, net operating income and operating profit in the
period were as follows:
--------------------------------------------------------------------------------
| M | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
| Total revenue | 4.9 | 6.3 | 21.8 | 16.2 |
--------------------------------------------------------------------------------
| Net operating | 3.5 | 4.5 | 16.4 | 12.0 |
| income | | | | |
--------------------------------------------------------------------------------
| Operating profit | 1.8 | -3.1 | -70.4 | 1.3 |
--------------------------------------------------------------------------------
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 2009 was 3.0 years, and the leasing
agreements expire as follows:
--------------------------------------------------------------------------------
| Expiry in | % rental income |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 year | 40.3 |
--------------------------------------------------------------------------------
| 2 years | 2.8 |
--------------------------------------------------------------------------------
| 3 years | 17.2 |
--------------------------------------------------------------------------------
| 4 years | 2.5 |
--------------------------------------------------------------------------------
| 5 years | 14.9 |
--------------------------------------------------------------------------------
| 6 years | 2.3 |
--------------------------------------------------------------------------------
| More than 6 years | 20.0 |
--------------------------------------------------------------------------------
Sponda receives about half of its rental income in Russia in US dollars. About
half is in roubles, and much of this is tied to an agreed exchange rate for the
dollar or the euro. 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.
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 the funds, apart from First Top LuxCo, were valued by
Jones Lang LaSallen and Kiinteistötaito Peltola & Co at the end of 2009.
The unit's total revenue (including management fees and share of fund profits),
net operating income and operating profit in the period were as follows:
--------------------------------------------------------------------------------
| M | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
| Total revenue | 3,4 | 2,5 | 12,7 | 13,2 |
--------------------------------------------------------------------------------
| Net operating | 2,9 | 2,0 | 10,9 | 11,3 |
| income | | | | |
--------------------------------------------------------------------------------
| Operating profit | -1,4 | -1,1 | -3,6 | 14,3 |
--------------------------------------------------------------------------------
The management fees and share of profits for the funds were as follows:
--------------------------------------------------------------------------------
| | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
| Management fees | 1.7 | 2.3 | 6.6 | 8.5 |
--------------------------------------------------------------------------------
| Share of profit | 1.6 | 0.0 | 5.8 | 4.7 |
--------------------------------------------------------------------------------
| | 3.3 | 2.3 | 12.4 | 13.1 |
--------------------------------------------------------------------------------
First Top LuxCo (Sponda's holding 20 %) invests in office and retail properties
outside Finland's largest cities. At the end of 2009 the fund's property
investments had a fair value of EUR 105.9 million.
Sponda Real Estate Fund I Ky (Sponda's holding 46 %) invests in logistics sites
outside the Helsinki metropolitan area. At the end of 2009 the properties it
owned had a fair value of EUR 186.4 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 2009 was EUR 95.8 million.
In addition to those mentioned above, Sponda is also responsible for managing
the property portfolio, with a value of about EUR 280 million, sold in March
2007 to Whitehall Street Real Estate Limited and Niam Nordic Investment Fund
III.
Cash flow and financing
Sponda's net cash flow from operations on in 2009 totalled EUR 96.0 million (31
December 2008: EUR 140.7 million). Net cash flow from investing activities was
EUR -40.8 (-389.8) million and the net cash flow from financing activities was
EUR -41.7 (238.0) million. Net financing costs in the period totalled EUR -65.0
(-75.1) million. Interest expenses of EUR 3.7 (12.4) million were capitalized.
Sponda's equity ratio on 31 December 2009 was 37 % (31 December 2008: 32 %) and
gearing was 141 % (180 %). Interest-bearing debt amounted to EUR 1,597.8
(1,828.3) million and the average maturity of Sponda's loans was 2.4 (3.0)
years. The the average interest rate was 3.7 % (4.6 %) including interest
derivatives. Fixed-rate and interest-hedged loans accounted for 65 % of the loan
portfolio. The average interest-bearing period of the whole debt portfolio was
1.8 (1.7) years. The interest margin, which describes the company's solvency,
was 2.7 (2,1).
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 2009 comprised syndicated loans
with a nominal value of EUR 670 million, EUR 250 million in bonds, EUR 153
million in issued commercial papers, and EUR 527 million in loans from financial
institutions. Sponda had EUR 450 million in unused credit limits. Sponda Group
had mortgaged loans of EUR 141.3 million or 4.7 % of the consolidated balance
sheet.
In December 2009 Sponda signed an agreement for a EUR 150 million unsecured
5-year loan with Nordea Bank Finland Plc. The margin on the loan corresponds to
today's market rates and the terms and conditions of the loans are the same as
with Sponda's other loans. The loan is being used in its entirety to repay
existing debts and replaces short term credit facilities for the same amount
that mature in March 2010.
Personnel and administration
During the review period Sponda Group had on average 135 employees (31 December
2008: 137), of whom 121 (125) worked for parent company Sponda Plc. On 31
December 2009 Sponda Group had altogether 134 (141) employees, of whom 120 (125)
were employed in parent company Sponda Plc. Sponda has personnel in Finland and
in Russia. Sponda's sales and administration costs in the period totalled EUR
22.0 million (31 December 2008: EUR 24.2 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.
Sponda's Board of Directors decided to continue the long-term share-based
incentive scheme for its senior executives in 2009-2011. Those in the scheme are
members of the company's Executive Board. Any 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.
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,
as well as their subsidiaries.
The Sponda share and shareholders
The weighted average price of the Sponda share in 2009 was EUR 2.57. The highest
quotation on NASDAQ OMX Helsinki Oy was EUR 3.93 and the lowest EUR 1.87.
Turnover during the year totalled 233.1 million shares or EUR 599.2 million. The
closing price of the share on 31 December 2009 was EUR 2.73, and the market
capitalization of the company's share capital was EUR 758 million.
The Annual General Meeting on 25 March 2009 authorized the Board of Directors to
purchase the company's own shares. The authorization was not exercised during
the review period.
Sponda issued no flagging announcements in the October-December 2009 period.
On 31 December 2009 the company had altogether 9905 shareholders and its
ownership structure was as follows:
--------------------------------------------------------------------------------
| | Number of | Holding, % |
| | shares | |
--------------------------------------------------------------------------------
| Public entities | 18 281 780 | 6.6 |
--------------------------------------------------------------------------------
| Nominee registered | 115 571 346 | 41.6 |
--------------------------------------------------------------------------------
| Financial and insurance institutions, total | 9 663 461 | 3.5 |
--------------------------------------------------------------------------------
| Households | 26 998 859 | 9.7 |
--------------------------------------------------------------------------------
| Private corporations, total | 101 550 110 | 36.6 |
--------------------------------------------------------------------------------
| Non-profit organizations, total | 3 934 727 | 1.4 |
--------------------------------------------------------------------------------
| Foreign owners, total | 1 575 179 | 0.6 |
--------------------------------------------------------------------------------
| Total number of shares | 277 575 462 | 100.0 |
--------------------------------------------------------------------------------
Board of Directors and auditors
Sponda's Board of Directors has six members: Klaus Cawén, Tuula Entelä, Timo
Korvenpää, Lauri Ratia, Arja Talma and Erkki Virtanen. At its constitutive
meeting after the AGM on 25 March 2009 the Board elected Lauri Ratia as its
chairman and Timo Korvenpää as vice chairman.
The Board of Directors assessed that of its members Klaus Cawén, Tuula Entelä,
Timo Korvenpää, Lauri Ratia and Arja Talma are independent of the company and of
major shareholders and Erkki Virtanen is independent of the company.
Sponda Plc's auditors are APA Raija-Leena Hankonen and authorized public
accountants KPMG Oy Ab, and APA Riitta Pyykkkö is deputy auditor.
Martin Tallberg resigned from the Board of Directors of Sponda Plc as of 25
August 2009.
Committees of the Board of Directors
The following were elected members of the Audit Committee after the AGM on 25
March 2009: Arja Talma, chairman, Timo Korvenpää, vice chairman and Erkki
Virtanen, ordinary member.
The following were elected to the Structure and Remuneration Committee after the
AGM on 25 March 2009: Lauri Ratia, chairman, Klaus Cawén, vice chairman, and
Tuuls Entelä and Martin Tallberg as ordinary members.
Management
Sponda Plc's president and chief executive officer is Kari Inkinen. The
Executive Board comprises the president and CEO, the CFO, the SVP Corporate
Communications and IR, and the heads of the business units, in total seven
persons.
Shareholders' Nomination Committee
Sponda Plc's Shareholders' Nomination Committee decided to propose to the Annual
General Meeting on 17 March 2010 that the number of members of the Board of
Directors be confirmed as six and that the current members Klaus Cawén, Tuula
Entelä, Timo Korvenpää, Lauri Ratia, Arja Talma and Erkki Virtanen be
re-elected.
The Nomination Committee proposes to the AGM that for the term of office ending
at the 2011 Annual General Meeting the members elected to the Board of Directors
at the AGM be paid an annual fee that is the same amount as the fee paid for the
term of office ending at the 2010 AGM: to the chairman a fee of EUR 60,000, to
the deputy chairman a fee of EUR 36,000 and to the ordinary members a fee of EUR
31,200. In addition, the Nomination Committee proposes that each Board member is
paid an attendance fee of EUR 600 per meeting, including the meetings of the
Board committees. The Nomination Committee proposes that 40 % of the annual fee
is paid in Sponda Plc shares to be acquired on the market. The shares will be
acquired within two weeks of when the January - March 2010 interim report has
been published.
Sponda's Board of Directors will include the proposals in the invitation to the
AGM to be published at a later date.
The members of the Nomination Committee were the three largest shareholders on 2
November 2009:
Solidium Oy, Kari Järvinen
Ilmarinen Mutual Pension Insurance Company, Timo Ritakallio and
OP-Delta investment fund, Harri Nummela.
Environmental responsibility
The real estate sector plays a key role in fighting climate change and promoting
the wellbeing of the environment, for it generates about one third of Finland's
greenhouse gas emissions. Construction, repairs, and property maintenance and
use all have an impact on the environment. The decision taken by Finland's
government in October 2009 to reduce greenhouse gas emissions by 80 per cent by
2050 sets challenges for the property sector, and Sponda aims to respond to
these.
Sponda made environmental responsibility a strategic priority in autumn 2009.
Sponda is developing a wide range of solutions and procedures to raise the
energy efficiency of properties and make them more environmentally friendly.
Working with clients Sponda strives to find the best user-friendly means that
also support clients in achieving their own environmental goals.
As a responsible property owner, it is important for Sponda to address the
environmental impacts of its properties both during the project stage and when
the property is in use. Sponda takes into account both the needs of its clients
and environmental aspects when designing and constructing buildings and business
premises. In 2009 Sponda launched the 10+ -scheme in which Sponda and its
customers identify areas in a property where energy can be saved. In the pilot
scheme there are 10 different types of properties of different age and Sponda's
head office is one of them.
Events after end of period
In January 2010 Sponda Plc signed an extension agreement with Sampo Bank Plc for
a 3-year loan of EUR 57.6 million. The agreement extends the short-term project
loan that was originally taken for the Elo shopping centre. The margin on the
loan corresponds to today's market rates and the terms and conditions of the
loan are unchanged.
Prospects
Sponda forecasts that the economic occupancy rate of the company's business
properties will continue to decline in the first part of 2010. The occupancy
rate is expected, however, to start to pick up during. Forecast is based on
terminating lease agreements and on estimated GDP growth in 2010.
The net operating income in 2010 is estimated to be lower than that in 2009. The
reasons for this decline are the planned property sales and the fall in the
occupancy rates that began in 2009 and is continuing in the first half of 2010.
Risks and uncertainty factors in the near future
Sponda believes that the key risks and uncertainty factors in the current
financial period arise from a delay in the expected recovery in the economy, and
relate to a decline in economic occupancy rates, a reduction in market rents and
a decline in rental income resulting from the insolvency of tenants.
The general economic situation in Finland and Russia may cause the solvency of
Sponda's customers to weaken in 2010, which in turn may reduce Sponda's rental
income and increase the vacancy rates in the properties owned by the company.
The differences between Russian and Finnish legislation and the way the
authorities operate in the two countries may cause extra risks for Sponda. The
operations in Russia increase Sponda's foreign exchange risk. Changes in
exchange rates may cause exchange rate losses which have a negative impact on
the company's financial result. The company hedges the currency denominated cash
flow from Russia for the coming 6 months
Sponda may have to pay and record taxes relating to the confirmed losses of
Sponda Kiinteistöt Oy during the current financial year. This would weaken the
company's result and equity ratio.
A rapid and sharp rise in market interest rates in 2010 would increase Sponda's
financial expenses, and would have a negative impact on the company's result.
Annual General Meeting and dividend
The Board of Directors of Sponda Plc proposes that the Annual General Meeting be
held on 17 March 2010 and proposes to the Annual General Meeting that a dividend
of EUR 0.12 per share be paid.
5 February 2010
Sponda Plc
Board of Directors
Further information:
Kari Inkinen, President and CEO, tel. +358 20-431 3311 or +358 400-402 653,
CFO Erik Hjelt, tel. +358 20-431 3318 or +358 400-472 313 and
Pia Arrhenius, SVP, Corporate Communications and IR, tel. +358 20-431 3454 or
+358 40-527 4462.
Distribution:
NASDAQ OMX Helsinki
Media
www.sponda.fi
Sponda Plc
Consolidated income statement (IFRS)
Me
--------------------------------------------------------------------------------
| | | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | | | | |
--------------------------------------------------------------------------------
| | Rental income and | 56.4 | 55.8 | 230.3 | 210,8 |
| | recoverables | | | | |
--------------------------------------------------------------------------------
| | Interest income from | 0.1 | 0.1 | 0.3 | 0,3 |
| | finance leasing | | | | |
| | agreements | | | | |
--------------------------------------------------------------------------------
| | Fund management fees | 3.3 | 2.3 | 12.4 | 13,1 |
| | and share of fund | | | | |
| | profit | | | | |
--------------------------------------------------------------------------------
| | | 59.8 | 58.2 | 243.0 | 224,3 |
--------------------------------------------------------------------------------
| Expenses | | | | |
--------------------------------------------------------------------------------
| | Maintenance expenses | -14.7 | -16.0 | -59.5 | -55,5 |
--------------------------------------------------------------------------------
| | Direct fund expenses | -0.5 | -0.5 | -1.9 | -2,0 |
--------------------------------------------------------------------------------
| | | -15.2 | -16.5 | -61.4 | -57,5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net operating income | 44.6 | 41.7 | 181.6 | 166.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/loss on sales of | -0.2 | 9.7 | 0.3 | 12.1 |
| investment properties | | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | -14.4 | -17.5 | -175.1 | -44.9 |
--------------------------------------------------------------------------------
| Amortization of goodwill | 0.0 | -13.0 | 0.0 | -13.0 |
--------------------------------------------------------------------------------
| Profit/loss on sales of | 1.3 | 15.7 | 4.0 | 21.5 |
| trading properties | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales and marketing | -0.5 | -0.4 | -1.5 | -2.1 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Administrative expenses | -5.4 | -5.3 | -20.5 | -22.1 |
--------------------------------------------------------------------------------
| Share of result of | -0.1 | -0.2 | 0.0 | -0.4 |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Other operating income | 0.1 | -0.1 | 0.8 | 0.8 |
--------------------------------------------------------------------------------
| Other operating expenses | -2.0 | -0.4 | -2.9 | -1.3 |
--------------------------------------------------------------------------------
| Operating result | 23.5 | 30.2 | -13.3 | 117.3 |
--------------------------------------------------------------------------------
| Financial income | 0.7 | -0.1 | 2.1 | 1.7 |
--------------------------------------------------------------------------------
| Financial expenses | -16.1 | -19.9 | -67.2 | -76.7 |
--------------------------------------------------------------------------------
| Provision for interest | - | - | - | -0.1 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Financial income and | -15.4 | -20.0 | -65.0 | -75.1 |
| expenses, net | | | | |
--------------------------------------------------------------------------------
| Result before taxes | 8.1 | 10.3 | -78.3 | 42.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes for current | -1.3 | -1.1 | -3.2 | -1.3 |
| and previous fiscal years | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | -0.5 | -4.4 | -0.1 | -11.8 |
--------------------------------------------------------------------------------
| Income taxes, total | -1.7 | -5.5 | -3.3 | -13.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/loss for period | 6.3 | 4.8 | -81.6 | 29.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 6.4 | 4.8 | -81.5 | 29.3 |
| parent company | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | -0.1 | -0.1 | -0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share based | | | | |
| on profit attributable to | | | | |
| equity holders of the | | | | |
| parent company: | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic and diluted, | 0.02 | 0.03 | -0.35 | 0.16 |
--------------------------------------------------------------------------------
| Basic and diluted, | 0.01 | 0.01 | -0.40 | 0.13 |
| attributable to equity | | | | |
| holders, | | | | |
--------------------------------------------------------------------------------
| Basic and diluted, | 0.01 | 0.02 | 0.05 | 0.03 |
| attributable to holders of | | | | |
| hybrid loan, | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of shares, | | | | |
| million | | | | |
--------------------------------------------------------------------------------
| Basic and diluted, million | 277.6 | 178.0 | 230.6 | 178.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Direct result | 17.4 | 6.1 | 67.4 | 38.9 |
--------------------------------------------------------------------------------
| Indirect result | -11.1 | -1.2 | -148.9 | -9.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Statement of comprehensive | | | | |
| income (IFRS) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/loss for period | 6.3 | 4.8 | -81.6 | 29.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive income | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net loss/profit from | 5.4 | -37.2 | -10.4 | -39.9 |
| hedging cash flow | | | | |
--------------------------------------------------------------------------------
| Translation difference | 1.0 | -3.2 | 0.7 | -2.0 |
--------------------------------------------------------------------------------
| Other items | - | 0.1 | - | 0.1 |
--------------------------------------------------------------------------------
| Taxes on comprehensive | -1.7 | 9.9 | 2.4 | 10.4 |
| income | | | | |
--------------------------------------------------------------------------------
| Other comprehensive income | 4.6 | -30.4 | -7.3 | -31.5 |
| for period after taxes | | | | |
--------------------------------------------------------------------------------
| Comprehensive profit/loss | 11.0 | -25.6 | -88.9 | -2.3 |
| for period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Allocation of | | | | |
| comprehensive profit/loss | | | | |
| for period: | | | | |
--------------------------------------------------------------------------------
| Equity holders of parent | 11.0 | -25.6 | -88.8 | -2.2 |
| company | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | -0.1 | -0.1 | -0.1 |
--------------------------------------------------------------------------------
Consolidated balance sheet (IFRS)
Me
--------------------------------------------------------------------------------
| | 31.12.2009 | 31.12.2008 | 1.1.2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Investment properties | 2 767.5 | 2 915.5 | 2 539.4 |
--------------------------------------------------------------------------------
| Investments in real estate | 56.2 | 60.6 | 35.0 |
| funds | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 14.3 | 14.5 | 15.7 |
--------------------------------------------------------------------------------
| Goodwill | 14.5 | 14.5 | 27.5 |
--------------------------------------------------------------------------------
| Other intangible assets | 0.0 | 0.0 | 4.1 |
--------------------------------------------------------------------------------
| Finance lease receivables | 2.7 | 2.7 | 2.7 |
--------------------------------------------------------------------------------
| Investments in associated | 2.8 | 3.3 | 0.0 |
| companies | | | |
--------------------------------------------------------------------------------
| Long-term receivables | 7.4 | 4.7 | 26.4 |
--------------------------------------------------------------------------------
| Deferred tax assets | 41.1 | 56.6 | 56.9 |
--------------------------------------------------------------------------------
| Total non-current assets | 2 906.6 | 3 072.5 | 2 707.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Trading properties | 22.8 | 29.5 | 37.2 |
--------------------------------------------------------------------------------
| Trade and other receivables | 31.6 | 56.7 | 130.7 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 29.1 | 16.0 | 27.4 |
--------------------------------------------------------------------------------
| Total current assets | 83.6 | 102.3 | 195.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 2 990.2 | 3 174.7 | 2 903.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY AND | | | |
| LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to equity | | | |
--------------------------------------------------------------------------------
| holders of parent company | | | |
--------------------------------------------------------------------------------
| Share capital | 111.0 | 111.0 | 111.0 |
--------------------------------------------------------------------------------
| Share premium fund | 159.5 | 159.5 | 159.5 |
--------------------------------------------------------------------------------
| Translation differences | -0.9 | -1.4 | 0.7 |
--------------------------------------------------------------------------------
| Fair value fund | -27.4 | -19.7 | 9.8 |
--------------------------------------------------------------------------------
| Revaluation fund | 0.6 | 0.6 | 0.6 |
--------------------------------------------------------------------------------
| Reserve for invested | 412.0 | 209.7 | 209.7 |
| unrestricted equity | | | |
--------------------------------------------------------------------------------
| Other equity fund | 129.0 | 129.0 | - |
--------------------------------------------------------------------------------
| Retained earnings | 328.0 | 418.4 | 444.6 |
--------------------------------------------------------------------------------
| | 1 111.7 | 1 007.1 | 935.9 |
--------------------------------------------------------------------------------
| Minority interest | 1.8 | 1.8 | 2.2 |
--------------------------------------------------------------------------------
| Total shareholders' equity | 1 113.6 | 1 008.9 | 938.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and | 1 287.2 | 1 543.8 | 1 056.4 |
| borrowings | | | |
--------------------------------------------------------------------------------
| Provisions | 0.0 | 8.7 | 15.0 |
--------------------------------------------------------------------------------
| Other liabilities | 30.5 | 26.3 | 0.0 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 193.8 | 216.7 | 213.7 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 1 511.4 | 1 795.5 | 1 285.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Current interest-bearing loans | 310.6 | 284.5 | 606.3 |
| and borrowings | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 54.5 | 85.9 | 73.4 |
--------------------------------------------------------------------------------
| Total current liabilities | 365.2 | 370.4 | 679.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 1 876.6 | 2 165.8 | 1 964.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders' equity and | 2 990.2 | 3 174.7 | 2 903.0 |
| liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 1 597.8 | 1 828.3 | 1 662.7 |
--------------------------------------------------------------------------------
Consolidated statement of cash flows (IFRS)
Me
--------------------------------------------------------------------------------
| | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operating activities | | |
--------------------------------------------------------------------------------
| Net profit/loss for the period | -81.6 | 29.2 |
--------------------------------------------------------------------------------
| Adjustments | 243.4 | 134.6 |
--------------------------------------------------------------------------------
| Change in net working capital | 19.1 | 49.8 |
--------------------------------------------------------------------------------
| Interest received | 1.2 | 1.3 |
--------------------------------------------------------------------------------
| Interest paid | -78.4 | -70.3 |
--------------------------------------------------------------------------------
| Other financial items | -5.1 | -2.2 |
--------------------------------------------------------------------------------
| Dividends received | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Dividends received from associated | 0.5 | - |
| companies | | |
--------------------------------------------------------------------------------
| Taxes received/paid | -3.0 | -1.8 |
--------------------------------------------------------------------------------
| Net cash from operating activities | 96.0 | 140.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing activities | | |
--------------------------------------------------------------------------------
| Investments in investment properties | -77.2 | -466.7 |
--------------------------------------------------------------------------------
| Investments in real estate funds | -3.9 | -16.3 |
--------------------------------------------------------------------------------
| Investments in tangible and intangible | -0.3 | -0.8 |
| assets | | |
--------------------------------------------------------------------------------
| Proceeds from sale of investment | 40.6 | 93.9 |
| properties | | |
--------------------------------------------------------------------------------
| Proceeds from sale of intangible and | 0.0 | 0.0 |
| tangible assets | | |
--------------------------------------------------------------------------------
| Repayment of loan receivables | 0.0 | - |
--------------------------------------------------------------------------------
| Net cash from investing activities | -40.8 | -389.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing activities | | |
--------------------------------------------------------------------------------
| Proceeds from share issue | 200.2 | - |
--------------------------------------------------------------------------------
| Proceeds from equity bond | - | 128.6 |
--------------------------------------------------------------------------------
| Non-current loans, raised | 91.2 | 540.7 |
--------------------------------------------------------------------------------
| Non-current loans, repayments | -248.0 | -140.4 |
--------------------------------------------------------------------------------
| Current loans, raised / repayments | -73.7 | -235.4 |
--------------------------------------------------------------------------------
| Interest paid on equity bond | -11.4 | - |
--------------------------------------------------------------------------------
| Dividends paid | - | -55.5 |
--------------------------------------------------------------------------------
| Net cash from financing activities | -41.7 | 238.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash equivalents | 13.6 | -11.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents, start of | 16.0 | 27.4 |
| period | | |
--------------------------------------------------------------------------------
| Impact of changes in exchange rates | -0.5 | -0.3 |
--------------------------------------------------------------------------------
| Cash and cash equivalents, end of period | 29.1 | 16.0 |
--------------------------------------------------------------------------------
Changes in Group shareholders' equity
Me
--------------------------------------------------------------------------------
| | | Share | Share | Transla- | Fair | Revalua- | Invested |
| | | capit | premiu | tion | value | tion | non-rest |
| | | al | m | differ-e | reserv | reserve | ricted |
| | | | reserv | nces | e | | equity |
| | | | e | | | | reserve |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 31 Dec. | 111.0 | 159.5 | 0.7 | 9.8 | 0.6 | 209.7 |
| 2007 | | | | | | |
--------------------------------------------------------------------------------
| Impact of | | | | | | |
| adopting IAS 23 | | | | | | |
--------------------------------------------------------------------------------
| Adjusted equity 1 | 111.0 | 159.5 | 0.7 | 9.8 | 0.6 | 209.7 |
| Jan. 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | -2.0 | -29.5 | | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | | |
--------------------------------------------------------------------------------
| Dividend payment | | | | | | |
--------------------------------------------------------------------------------
| Options implemented and | | | | | |
| paid as shares | | | | | |
--------------------------------------------------------------------------------
| Equity at 31 | 111.0 | 159.5 | -1.4 | -19.7 | 0.6 | 209.7 |
| December 2008 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Other | Retain | Total | Minori | Total | |
| | | equit | ed | | ty | share-ho | |
| | | y | earnin | | holdin | lders' | |
| | | reser | gs | | g | equity | |
| | | ve | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. | - | 441.3 | 932.6 | 2.2 | 934.8 | |
| 2007 | | | | | | |
--------------------------------------------------------------------------------
| Impact of | | 3.3 | 3.3 | | 3.3 | |
| adopting IAS 23 | | | | | | |
--------------------------------------------------------------------------------
| Adjusted equity 1 | - | 444.6 | 935.9 | 2.2 | 938.1 | |
| Jan. 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | 29.3 | -2.2 | -0.1 | -2.3 | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Change | 129.0 | | 129.0 | -0.3 | 128.7 | |
--------------------------------------------------------------------------------
| Dividend payment | | -55.5 | -55.5 | | -55.5 | |
--------------------------------------------------------------------------------
| Options implemented and | | | | 0.0 | |
| paid as shares | | | | | |
--------------------------------------------------------------------------------
| Equity at 31 | 129.0 | 418.4 | 1 007.1 | 1.8 | 1 008.9 | |
| December 2008 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Share | Share | Transla- | Fair | Revalua- | Invested |
| | | capit | premiu | tion | value | tion | non-rest |
| | | al | m | differen | reserv | reserve | ric-ted |
| | | | reserv | ces | e | | equity |
| | | | e | | | | reserve |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. | 111.0 | 159.5 | -1.4 | -19.7 | 0.6 | 209.7 |
| 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | 0.4 | -7.7 | | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | | 202.3 |
--------------------------------------------------------------------------------
| Equity 31 | 111.0 | 159.5 | -0.9 | -27.4 | 0.6 | 412.0 |
| December 2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Other | Retain | Total | Minori | Total | |
| | | equit | ed | | ty | share-ho | |
| | | y | earnin | | holdin | lders' | |
| | | reser | gs | | g | equity | |
| | | ve | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. | 129.0 | 418.4 | 1 007.1 | 1.8 | 1 008.9 | |
| 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | -81.5 | -88.8 | -0.1 | -88.9 | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Interest paid on | | -8.4 | -8.4 | | -8.4 | |
| equity bond | | | | | | |
--------------------------------------------------------------------------------
| Change | | -0.5 | 201.8 | 0.2 | 202.0 | |
--------------------------------------------------------------------------------
| Equity 31 | 129.0 | 328.0 | 1 111.7 | 1.8 | 1 113.6 | |
| December 2009 | | | | | | |
--------------------------------------------------------------------------------
Notes to the consolidated financial statements
Accounting principles
This financial statements bulletin has been prepared in accordance with IAS 34,
Interim Financial Reporting, applying those IFRS-standards and -intepretations
that are valid 31 December 2009. More detailed information on the accounting
principles can be found from Sponda Plc's financial statements for the year
2009. All the figures have been rounded, so the total of the individual figures
may differ from the total amounts given. The figures in the financial statements
bulletin have not been audited.
Assessment of impact of new standards and interpretations
The following revised standards that came into force at the beginning of 2009
have had an impact on Sponda's consolidated reporting:
IAS 23 Borrowing costs: The revised standard requires the borrowing costs
arising from purchasing, building or manufacturing a qualifying asset to be
immediately included in the acquisition cost of the asset. For Sponda, this
mainly affects the construction projects of its property development activities.
The company adopted the standard retroactively, as from 1 January 2006.
Previously, borrowing costs have been recognized in the financial period in
which they were incurred. The change in the accounting principles affects
borrowing costs and the change in the fair value of property development
projects in the income statement. The figures in the 2008 interim reports and
financial statements have been adjusted accordingly. The impact on the retained
earnings at 1 January 2008 is EUR 3.3 million, on the net profit for 2008 EUR
2.6 million, and on the 2008 earnings per share EUR 0.01.
IAS 1 Presentation of Financial Statements: In accordance with the revised
standard, as from the beginning of 2009 Sponda is presenting two separate
statements, an income statement and a statement of comprehensive income. The
revision also affects the presentation of the calculation of shareholders
equity.
IAS 40 Investment Properties: As a result of the amendment to the standard,
Sponda is presenting investment properties that are under construction at fair
value. One condition for this, however, is that the fair value can be reliably
measured. The fair value has not been measured for the development investments
for the City-Center project in the centre of Helsinki. The amendment is not
applied retroactively.
IFRS 8 Operating segments: The standard states that segment information shall be
based on regular internal reporting to management. After adopting the standard,
Sponda has added Shopping Centres to segment reporting.
Deferred tax assets have not been recognized for the difference between the
acquisition cost of a property and a lower fair value, if the property has been
recognized as an asset item in accordance with IAS 12.15b and a tax liability
was not originally recognized at the time of purchase for the difference between
the acquisition cost and the taxable value of the property.
Income statement by business areas
Me
--------------------------------------------------------------------------------
| Income | Office | Shoppi | Logi | Prope | Russi | Funds | Other | Group |
| statement | & | ng | sti | rty | a | | | total |
| 1-12/2009 | Retail | centre | cs | devel | | | | |
| | | s | | opme | | | | |
| | | | | nt | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 129.0 | 39.3 | 38.6 | 1.4 | 21.8 | 12.7 | 0.0 | 243.0 |
| revenue | | | | | | | | |
--------------------------------------------------------------------------------
| Maintenance | -32.7 | -8.0 | -11. | -2.2 | -5.5 | -1.9 | 0.0 | -61.4 |
| expenses | | | 2 | | | | | |
| and direct | | | | | | | | |
| fund | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 96.3 | 31.4 | 27.4 | -0.8 | 16.4 | 10.9 | 0.0 | 181.6 |
| operating | | | | | | | | |
| income | | | | | | | | |
--------------------------------------------------------------------------------
| Profit on | 0.3 | 0.0 | 1.4 | 0.0 | 0.0 | 0.0 | 0.0 | 1.6 |
| sale of | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Loss on | -0.3 | 0.0 | -1.1 | 0.0 | 0.0 | 0.0 | 0.0 | -1.3 |
| sale of | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Profit/loss | 3.0 | 0.0 | 0.0 | 1.1 | 0.0 | 0.0 | 0.0 | 4.0 |
| on sale of | | | | | | | | |
| trading | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | -46.2 | -11.3 | -30. | 3.6 | -81.9 | -8.3 | 0.0 | -175. |
| gains and | | | 9 | | | | | 1 |
| losses | | | | | | | | |
--------------------------------------------------------------------------------
| Allocation | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| of goodwill | | | | | | | | |
--------------------------------------------------------------------------------
| Administrat | -6.6 | -1.3 | -1.3 | -3.3 | -3.4 | -6.1 | 0.0 | -22.0 |
| ion and | | | | | | | | |
| marketing | | | | | | | | |
--------------------------------------------------------------------------------
| Other | 0.1 | -0.1 | 0.0 | -0.6 | -1.5 | 0.0 | 0.0 | -2.1 |
| operating | | | | | | | | |
| income and | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 46.5 | 18.7 | -4.5 | 0.0 | -70.4 | -3.6 | 0.0 | -13.3 |
| profit/loss | | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | | -65.0 | -65.0 |
| income and | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Profit/loss | | | | | | | -65.0 | -78.3 |
| before | | | | | | | | |
| taxes | | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | | -3.3 | -3.3 |
--------------------------------------------------------------------------------
| Profit for | | | | | | | -68.3 | -81.6 |
| the period | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | 14.4 | 13.2 | 0.8 | 23.5 | 1.4 | 3.9 | 0.4 | 57.6 |
| expenditure | | | | | | | | |
--------------------------------------------------------------------------------
| Segment | 1 | 543.6 | 396. | 235.1 | 181.4 | 56.2 | 149.3 | 2 |
| assets | 428.5 | | 1 | | | | | 990.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income | Office | Shoppi | Logi | Prope | Russi | Funds | Other | Group |
| statement | & | ng | sti | rty | a | | | total |
| 1-12/2008 | Retail | centre | cs | devel | | | | |
| | | s | | opme | | | | |
| | | | | nt | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 125.7 | 29.3 | 37.9 | 2.0 | 16.2 | 13.2 | 0.0 | 224.3 |
| revenue | | | | | | | | |
--------------------------------------------------------------------------------
| Maintenance | -32.8 | -7.1 | -9.4 | -2.2 | -4.1 | -1.8 | 0.0 | -57.5 |
| expenses | | | | | | | | |
| and direct | | | | | | | | |
| fund | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 92.9 | 22.2 | 28.5 | -0.1 | 12.0 | 11.3 | 0.0 | 166.8 |
| operating | | | | | | | | |
| income | | | | | | | | |
--------------------------------------------------------------------------------
| Profit on | 11.5 | 0.0 | 0.0 | 0.8 | 0.0 | 0.0 | 0.0 | 12.3 |
| sale of | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Loss on | -0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -0.2 |
| sale of | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Profit/loss | 4.7 | 0.0 | 0.0 | 15.3 | 0.0 | 1.6 | 0.0 | 21.5 |
| on sale of | | | | | | | | |
| trading | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | -53.8 | -3.6 | -23. | 34.5 | -6.0 | 7.7 | 0.0 | -44.9 |
| gains and | | | 6 | | | | | |
| losses | | | | | | | | |
--------------------------------------------------------------------------------
| Allocation | 0.0 | 0.0 | 0.0 | -13.0 | 0.0 | 0.0 | 0.0 | -13.0 |
| of goodwill | | | | | | | | |
--------------------------------------------------------------------------------
| Administrat | -6.4 | -1.3 | -2.1 | -3.4 | -4.7 | -6.3 | 0.0 | -24.2 |
| ion and | | | | | | | | |
| marketing | | | | | | | | |
--------------------------------------------------------------------------------
| Other | -0.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -0.9 |
| operating | | | | | | | | |
| income and | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 47.7 | 17.3 | 2.8 | 34.0 | 1.3 | 14.3 | 0.0 | 117.3 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | | -75.1 | -75.1 |
| income and | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | | | | | | | -75.1 | 42.2 |
| before | | | | | | | | |
| taxes | | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | | -13.1 | -13.1 |
--------------------------------------------------------------------------------
| Profit for | | | | | | | -88.2 | 29.2 |
| the period | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | 29.7 | 39.7 | 23.8 | 205.2 | 187.1 | 16.3 | 0.8 | 502.6 |
| expenditure | | | | | | | | |
--------------------------------------------------------------------------------
| Segment | 1 | 541.6 | 462. | 203.7 | 261.3 | 60.6 | 181.4 | 3 |
| assets | 463.3 | | 8 | | | | | 174.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Geographica | | | | | | | | |
| l areas | | | | | | | | |
--------------------------------------------------------------------------------
| 31 December | Income | Assets | | | | | | |
| 2009 | | | | | | | | |
--------------------------------------------------------------------------------
| Finland | 221.2 | 2 | | | | | | |
| | | 808.8 | | | | | | |
--------------------------------------------------------------------------------
| Russia | 21.8 | 181.4 | | | | | | |
--------------------------------------------------------------------------------
| Total | 243.0 | 2 | | | | | | |
| | | 990.2 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31 December | Income | Assets | | | | | | |
| 2008 | | | | | | | | |
--------------------------------------------------------------------------------
| Finland | 208.1 | 2 | | | | | | |
| | | 913.4 | | | | | | |
--------------------------------------------------------------------------------
| Russia | 16.2 | 261.3 | | | | | | |
--------------------------------------------------------------------------------
| Total | 224.3 | 3 | | | | | | |
| | | 174.7 | | | | | | |
--------------------------------------------------------------------------------
Direct and indirect result
Direct result represents the result from the Group's core business. Direct
result is calculated by adjusting the Consolidated Income Statement with, for
example, changes in fair value of properties and financing instruments,
profit/loss on sales of properties, amortization of goodwill and other income
and expenses which the Company sees as non-direct items.
Me
--------------------------------------------------------------------------------
| | | 10-12/2009 | 10-12/2008 | 1-12/2009 | 1-12/2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Direct result | | | | |
--------------------------------------------------------------------------------
| | Net operating income | 44.6 | 41.7 | 181.6 | 166,8 |
--------------------------------------------------------------------------------
| | Marketing and | -5.8 | -5.7 | -22.0 | -24,2 |
| | administration | | | | |
--------------------------------------------------------------------------------
| | Other income and | -1.7 | -0.5 | -1.1 | 0,0 |
| | expenses for business | | | | |
| | operations | | | | |
--------------------------------------------------------------------------------
| | Financial income and | -16.9 | -23.5 | -68.7 | -87,3 |
| | expenses | | | | |
--------------------------------------------------------------------------------
| | Taxes based on direct | -1.3 | -1.1 | -3.2 | -1,3 |
| | result | | | | |
--------------------------------------------------------------------------------
| | Deferred taxes based | -1.5 | -4.9 | -19.1 | -15,2 |
| | on direct result | | | | |
--------------------------------------------------------------------------------
| | Minority holding | 0.0 | | 0.0 | 0,0 |
| | share of direct | | | | |
| | result | | | | |
--------------------------------------------------------------------------------
| Total | 17.4 | 6.1 | 67.4 | 38.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Indirect result | | | | |
--------------------------------------------------------------------------------
| | Profit/loss on sale | -0.2 | 9.7 | 0.3 | 12,1 |
| | of investment | | | | |
| | properties | | | | |
--------------------------------------------------------------------------------
| | Valuation gains and | -14.4 | -17.5 | -175.1 | -44,9 |
| | losses | | | | |
--------------------------------------------------------------------------------
| | Amortization of | 0.0 | -13.0 | 0.0 | -13,0 |
| | goodwill | | | | |
--------------------------------------------------------------------------------
| | Profit/loss on sale | 1.3 | 15.7 | 4.0 | 21,5 |
| | of trading properties | | | | |
--------------------------------------------------------------------------------
| | Administration and | 0.0 | 0.0 | 0.0 | 0,0 |
| | marketing | | | | |
--------------------------------------------------------------------------------
| | Other income and | -0.3 | -0.3 | -1.0 | -1,0 |
| | expenses for business | | | | |
| | operations | | | | |
--------------------------------------------------------------------------------
| | Financial income and | 1.5 | 3.5 | 3.7 | 12,2 |
| | expenses | | | | |
--------------------------------------------------------------------------------
| | Taxes based on | 0.0 | 0.0 | 0.0 | 0,0 |
| | indirect result | | | | |
--------------------------------------------------------------------------------
| | Deferred taxes based | 1.0 | 0.5 | 19.0 | 3,4 |
| | on indirect result | | | | |
--------------------------------------------------------------------------------
| | Minority holding | 0.0 | 0.1 | 0.1 | 0,1 |
| | share of indirect | | | | |
| | result | | | | |
--------------------------------------------------------------------------------
| Total | -11.1 | -1.2 | -148.9 | -9.6 |
--------------------------------------------------------------------------------
Investment properties
Me
--------------------------------------------------------------------------------
| | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Fair value of investment properties, start of | 2 915.5 | 2 534.9 |
| period | | |
--------------------------------------------------------------------------------
| Impact of adopting IAS 23 on balance at start | | 4.5 |
| of period | | |
--------------------------------------------------------------------------------
| Purchase of investment properties | 0.0 | 210.6 |
--------------------------------------------------------------------------------
| Other capital expenditure on investment | 53.4 | 275.0 |
| properties | | |
--------------------------------------------------------------------------------
| Disposal of investment properties | -40.3 | -82.8 |
--------------------------------------------------------------------------------
| Transfers to/from property, plant and | 0.0 | 1.3 |
| equipment | | |
--------------------------------------------------------------------------------
| Transfers from trading properties | 2.0 | 14.7 |
--------------------------------------------------------------------------------
| Other transfers | 0.0 | -2.5 |
--------------------------------------------------------------------------------
| Capitalized equity expenses, increase in | 3.7 | 12.4 |
| period | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | -166.8 | -52.6 |
--------------------------------------------------------------------------------
| Fair value of investment properties, end of | 2 767.5 | 2 915.5 |
| period | | |
--------------------------------------------------------------------------------
On 31 December 2009 Sponda had a total of 198 properties, with an aggregate
leasable area of about 1.5 million m². Of this, some 52 % is office and retail
premises, 9 % shopping centres and 36 % logistics premises. Some 3 % of the
leasable area of the properties is located in Russia.
At the end of 2009 Sponda's investment properties were assessed by external
evaluators. The change in fair value in October-December was EUR -14.4 million
(31 December 2008: EUR -17.5 million) and for the whole year EUR -175.1 (-44.9)
million. In the final quarter of the year, the main factors affecting the fair
value were the fall in market rents for properties and the increase in vacancy
rates. The assessments were made by Catella Property Group in Finland and CB
Richard Ellis in Russia, and their statements can be seen on the company's
Internet site. The fair values of undeveloped land areas were assessed by
Newsec. For the real estate funds, Jones Lang LaSalle and Kiinteistötaito
Peltola & Co assessed the fair values of the property portfolios of Sponda Fund
I and Sponda Fund II at the end of 2009.
The Group's most significant investment commitments
The City-Center project is moving on to the above ground floors. The next phase
involves the construction of the office building starting in the inner court of
the complex, and new retail premises will be built on the first and second
floors of the retail complex and in place of the parking deck on the third
floor. It is estimated that the City-Center renovation will be completed in 2012
and that the total investment will be some EUR 125 million.
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.
On 27 October 2009 Sponda and Metso Automation signed an agreement for
production premises to be built in Hakkila, Vantaa. The new building, with a
floor area of about 22,000 square metres, will be erected beside the Honkatalo
logistics centre in Vantaa owned by Sponda at Vanha Porvoontie 229, Vantaa. The
new building will be leased in its entirety to the Metso Automation business
line with a long-term, 15 year lease. Sponda is also leasing to Metso some
12,000 square metres of office and warehouse premises in the adjacent Honkatalo
office building. Almost the entire office building will be occupied by Metso.
Sponda's total investment is estimated at about EUR 40 million.
Property, plant and equipment
Me
--------------------------------------------------------------------------------
| | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 14.5 | 15.7 |
--------------------------------------------------------------------------------
| Additions | 0.3 | 0.8 |
--------------------------------------------------------------------------------
| Disposals | - | 0.0 |
--------------------------------------------------------------------------------
| Reclassifications to/from investment | - | -1.3 |
| properties | | |
--------------------------------------------------------------------------------
| Other transfers | 1.9 | -0.1 |
--------------------------------------------------------------------------------
| Depreciation for the period | -0.5 | -0.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount, end of period | 14.3 | 14.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Trading properties | | |
--------------------------------------------------------------------------------
| Me | | |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 29.5 | 37.2 |
--------------------------------------------------------------------------------
| Disposals and other changes | -6.7 | -4.5 |
--------------------------------------------------------------------------------
| Increases | | |
--------------------------------------------------------------------------------
| Reclassifications to investment properties | 0.0 | -3.1 |
--------------------------------------------------------------------------------
| Carrying amount, end of period | 22.8 | 29.5 |
--------------------------------------------------------------------------------
Contingent liabilities
Collateral and commitments given by the Group
Me
--------------------------------------------------------------------------------
| | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Loans from financial institutions, covered by | 141.3 | 50.3 |
| collateral | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Mortgages | 269.2 | 109.2 |
--------------------------------------------------------------------------------
| Book value of pledged shares | 17.5 | 17.0 |
--------------------------------------------------------------------------------
| Guarantees | 0.0 | 57.6 |
--------------------------------------------------------------------------------
| Total collateral | 286.7 | 183.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Lease and other liabilities | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Me | | |
--------------------------------------------------------------------------------
| Lease liabilities | 103.3 | 44.6 |
--------------------------------------------------------------------------------
| Mortgages | 3.0 | 3.0 |
--------------------------------------------------------------------------------
| Guarantees | 16.2 | 7.3 |
--------------------------------------------------------------------------------
| Investment commitments to property funds | 18.3 | 18.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest derivatives | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Me | | |
--------------------------------------------------------------------------------
| Swap contracts, notional value | 1027.8 | 915.0 |
--------------------------------------------------------------------------------
| Swap contracts, fair value | -37.0 | -27.0 |
--------------------------------------------------------------------------------
| Cap options purchased, notional value | 512.5 | 187.5 |
--------------------------------------------------------------------------------
| Cap options purchased, fair value | 3.6 | 1.0 |
--------------------------------------------------------------------------------
| Forward rate agreements, notional value | - | - |
--------------------------------------------------------------------------------
| Forward rate agreements, fair value | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency derivatives | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Me | | |
--------------------------------------------------------------------------------
| Currency forward, notional value | - | 5.1 |
--------------------------------------------------------------------------------
| Currency forward, fair value | - | 0.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency options, bought, notional value | 4.9 | - |
--------------------------------------------------------------------------------
| Currency options, put, notional value | 4.9 | - |
--------------------------------------------------------------------------------
| Net fair value of currency options | -0.1 | - |
--------------------------------------------------------------------------------
Key figures
--------------------------------------------------------------------------------
| | 10-12/09 | 10-12/08 | 1-12/09 | 1-12/08 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, | 0.02 | 0.03 | -0.35 | 0.16 |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 37 | 32 |
--------------------------------------------------------------------------------
| Gearing, % | | | 141 | 180 |
--------------------------------------------------------------------------------
| Equity per share, | | | 3.54 | 4.93 |
--------------------------------------------------------------------------------
| Cash flow from operations per | 0.07 | 0.29 | 0.45 | 0.78 |
| share, | | | | |
--------------------------------------------------------------------------------
| EPRA, NAV, net assets per share, | | | 4.18 | 6.04 |
| | | | | |
--------------------------------------------------------------------------------
Calculation of financial ratios
--------------------------------------------------------------------------------
| Earnings/share, | = | | Share of earnings for the period |
| | | | attributable to equity holders of the |
| | | | parent company |
--------------------------------------------------------------------------------
| | | | Adjusted average number of shares |
| | | | during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earning/share, | = | | Share of earnings for the period |
| attributable to equity | | | attributable to equity holders of the |
| holders, | | | parent company |
| | | | - interest of the hybrid bond |
--------------------------------------------------------------------------------
| | | | Adjusted average number of shares |
| | | | during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earning/share, | = | | Interest of the hybrid bond |
| attributable to hybrid | | | |
| bond holders, | | | |
--------------------------------------------------------------------------------
| | | | 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/share, | = | | Equity attributable to equity holders |
| | | | of parent company |
--------------------------------------------------------------------------------
| | | | - Other equity reserve |
--------------------------------------------------------------------------------
| | | | Basic number of shares on the last day |
| | | | of the reporting period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | = | | Operating profit |
| operations/share, | | | |
--------------------------------------------------------------------------------
| | | | -/+ Valuation gains/losses |
--------------------------------------------------------------------------------
| | | | + Allocation of goodwill |
--------------------------------------------------------------------------------
| | | | + Depreciation in administration |
--------------------------------------------------------------------------------
| | | | +/- Changes in provisions |
--------------------------------------------------------------------------------
| | | | +/- Defined benefit pension expenses |
--------------------------------------------------------------------------------
| | | | - Financial income & expenses |
| | | | affecting cash flow |
--------------------------------------------------------------------------------
| | | | - Taxes affecting cash flow |
--------------------------------------------------------------------------------
| | | | +/- Other items |
--------------------------------------------------------------------------------
| | | | Average weighted number of shares |
| | | | during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EPRA NAV, net assets | = | | Equity attributable to equity holders |
| per share, | | | of parent company |
--------------------------------------------------------------------------------
| | | | - Other equity reserve |
--------------------------------------------------------------------------------
| | | | + Deferred tax relating to the fair |
| | | | valuation of property and to property |
| | | | depreciation allowances |
--------------------------------------------------------------------------------
| | | | - Goodwill relating to deferred tax |
| | | | liability |
--------------------------------------------------------------------------------
| | | | Basid number of shares on the last day |
| | | | of the reporting period |
--------------------------------------------------------------------------------
Related party transactions
The following transactions took place with related parties:
Rental income from state institutions and companies totalled EUR 22.3 million in
2009 (1-12/2008: EUR 23.9 million).
--------------------------------------------------------------------------------
| Management employee benefits | 31.12.2009 | 31.12.2008 |
--------------------------------------------------------------------------------
| Salaries and other short-term employee benefits | 2.2 | 2.3 |
--------------------------------------------------------------------------------
| Share-based payments | 0.4 | 0.3 |
--------------------------------------------------------------------------------
| Total | 2.6 | 2.6 |
--------------------------------------------------------------------------------
Events after end of period
In January 2010 Sponda Plc signed an extension agreement with Sampo Bank Plc for
a 3-year loan of EUR 57.6 million. The agreement extends the short-term project
loan that was originally taken for the Elo shopping centre. The margin on the
loan corresponds to today's market rates and the terms and conditions of the
loan are unchanged.
