Sponda Plc’s INTERIM REPORT January – June 2010
Sponda Plc
Interim Report
5 August 2010 at 8.30 am
Sponda Plc's interim report January - June 2010
Sponda Plc's total revenue in the January - June 2010 period was EUR 115.9
million (January - June 2009: EUR 119.8 million). The decline in revenue was due
to properties sold and due to the increase in vacancy rates from the previous
year. Net operating income after property maintenance costs and direct costs for
funds amounted to EUR 83.4 (87.2) million. Operating profit was EUR 93.0 (-49.9)
million.
The company's share of real estate fund profits in the income statement are
presented on the change in fair value line instead of under total revenue which
has altered the company's total revenue. The share of the profit in January -
June was EUR 2.9 million and in April - June EUR 1.4 million. The figures for
comparison have been adjusted accordingly.
Result of operations and financial position January - June 2010 (compared with
same period in 2009)
Total revenue was EUR 115.9 (119.8) million. The decline in revenue was due to
properties sold and due to the increase in vacancy rates from the previous year.
Net operating income was EUR 83.4 (87.2) million.
Operating profit totalled EUR 93.0 (-49.9) million, which includes a change in
fair value of EUR 10.0 (-126.7) million.
The result after tax was EUR 46.8 (-81.8) million.
Earnings per share were EUR 0.15 (-0.48), which includes the impact of the
interest on the hybrid bond.
Cash flow from operations per share was EUR 0.19 (0.37).
The fair value of the investment properties amounted to EUR 2 798.0 (2 786.2)
million.
Net assets per share were EUR 3.55 (3.54).
Economic occupancy rate was 87.3 % (88.4 %).
Result of operations and financial position April - June 2010 (compared with
same period in 2009)
Total revenue was EUR 58.3 (60.6) million.
Net operating profit was EUR 43.0 (43.6) million.
Operating profit totalled EUR 56.7 (27.9) million, which includes a change in
fair value of EUR 10.1 (-10.8) million.
The result after tax was EUR 32.4 (10.1) million.
Earnings per share were EUR 0.11 (0.04), which includes the impact of the
interest on the hybrid bond.
Cash flow from operations per share was EUR 0.11 (0.19).
Key figures
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| | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
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| Economic occupancy rate, | | | 87.3 | 88.4 | 86.6 |
| % | | | | | |
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| Total revenue, M | 58.3 | 60.6 | 115.9 | 119.8 | 237.2 |
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| Net operating income, M | 43.0 | 43.6 | 83.4 | 87.2 | 175.8 |
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| Operating profit, M | 56.7 | 27.9 | 93.0 | -49.9 | -13.3 |
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| Earnings per share, * | 0.11 | 0.04 | 0.15 | -0.48 | -0.40 |
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| Cash flow from | 0.11 | 0.19 | 0.19 | 0.37 | 0.45 |
| operations | | | | | |
| per share, | | | | | |
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| Net assets per share, | | | 3.55 | 3.54 | 3.54 |
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| EPRA, Net assets per | | | 4.19 | 4.20 | 4.18 |
| share, | | | | | |
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| Equity ratio, % | | | 37 | 37 | 37 |
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| Interest cover ratio | | | 2.9 | 2.4 | 2.7 |
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*) The figure includes the impact of the interest on the hybrid bond
CEO Kari Inkinen
Sponda's economic occupancy rate rose from the first quarter of the year by 0.5
percentage points as predicted. Positive developments occurred in almost all
business units. Despite this, the company's total revenue and net operating
income declined from the corresponding period in 2009 due to the sale of
properties and due to the decline in occupancy rates that took place over a 12
month period and. Despite the challenging state of the market, there was no
decline in rent levels in the leases signed for Sponda's premises during the
period.
Sponda completed the building of an energy-efficient S-market store and ABC
service station at the beginning of May. The total investment was just under EUR
5 million. The main objective for the design of the building was to reduce
energy consumption during the operative life of the building by energy-efficient
heating systems, building service systems and increasing the thermal insulation.
Construction work on the two active property development sites, City-Center
office building and the production plant and office premises in Hakkila in
Vantaa, are progressing according to plan and both will be completed during
2011.
The positive ruling for Sponda in the tax issue will provide good possibilities
to develop business further.
Prospects
Sponda estimates that the positive development in occupancy rates, which started
in Q2 2010, will continue for the second half of 2010. This assessment is based
on the lease agreements that the company knows are expiring and on the forecast
growth in Finland's economy in 2010.
The net operating income in 2010 is estimated to be lower than that in 2009. The
reasons for this decline are the strategic sales of property and the fall in
occupancy rates that began in 2009 and continued in the first quarter of 2010.
Confirmed losses of Sponda Kiinteistöt Oy
The Supreme Administrative Court ruled in favour of Sponda on the deductibility
of the confirmed losses of Sponda Kiinteistöt Oy in July 2010. There is no right
of appeal against the ruling. The ruling will not have an impact on the result
for 2010.
Sponda Plc announced in November 2007 that the Uusimaa corporate tax office had
decided to deviate from the 2006 tax returns made by Sponda Kiinteistöt Oy
(formerly Kapiteeli Oy) and considered that the company's taxable earnings were
EUR 192 million. The matter relates to the confirmed losses of Sponda
Kiinteistöt Oy, which for the tax years 1996 - 1999 totalled some EUR 558
million. The confirmed losses were connected with the acquisition of Kapiteeli
by Sponda in 2006. A more detailed account of the tax issue is given in the
company's financial statements of 31 December 2009 and in the interim report for
January - March 2010, which was published on 5 May 2010. The company also issued
a statement on the ruling of the Supreme Administrative Court on 6 July 2010.
Business conditions - Finland
According to the Institute for Real Estate Economics (KTI), property
transactions with a total value of some EUR 0.5 billion took place in Finland in
the first half of 2010. In the opinion of Catella Property Group, the shortage
of prime sites in the Helsinki central business district and demand for these
have slightly reduced the yield requirements for these sites.
According to Catella Property Oy, market vacancy rates will continue to rise for
office and logistics premises but will start to fall for retail premises during
2010. There is still very little new construction, and no significant amounts of
new business premises are coming on the market.
Rent levels for office properties are expected to level off especially in the
Helsinki metropolitan area. Catella reports that rent levels for new, high
quality properties seem to have stopped falling, but prices are still flexible
in places on the outskirts of the area.
Business conditions - Russia
The consensus forecast for growth in Russia'a gross national product in 2010 is
about 3 %. There was growth in demand for Russia's main exports, oil and other
raw materials but domestic demand remains weak, which is slowing down the
recovery in the national economy.
During the first quarter of 2010, it is estimated that the volume of new
premises that came on the Moscow property market was the same as that which was
taken in to use. The new premises that became available were mainly from the
completion of projects that had earlier been put on hold. Rental levels remained
stable and market vacancy rates rose slightly. According to expert assessments,
vacancy rates in Moscow and St Petersburg are still high, at 20-25 %, but the
leasing market is expected to recover in the second half of 2010.
Sponda's operations in January - June 2010
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 and management fees from all of Sponda's property assets
totalled EUR 83.4 (87.2) million in the six month period. Office and retail
premises accounted for 52 % of this, shopping centres for 19 %, logistics
premises for 15 %, Russia for 10 % and the Real Estate Funds unit for 4 %.
Like-for-like rental growth during the past two years for the property portfolio
that Sponda has owned for two years was -4.21 % for office and retail
properties, 0.18 % for shopping centres, -4.66 % for logistics properties and
-4.67 % for properties in Russia. The like-for-like rents in Russia are
calculated from roubles without any changes in exchange rates. All of Sponda's
leasing agreements in Finland are tied to the cost of living index.
The economic occupancy rates by type of property and geographical area were as
follows:
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| Type of property | 30.6.10 | 31.3.10 | 31.12.09 | 30.9.09 | 30.6.09 |
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| Office and Retail, % | 87.7 | 86.5 | 87.9 | 87.9 | 90.3 |
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| Shopping centres | 96.7 | 96.5 | 96.4 | 97.3 | 97.1 |
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| Logistics, % | 75.9 | 76.0 | 74.5 | 75.0 | 76.1 |
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| Russia, % | 91.5 | 87.4 | 88.2 | 87.5 | 89.1 |
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| Total property | 87.3 | 86.2 | 86.6 | 86.8 | 88.4 |
| portfolio, % | | | | | |
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--------------------------------------------------------------------------------
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| Geographical area | 30.6.10 | 31.3.10 | 31.12.09 | 30.9.09 | 30.6.09 |
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| Helsinki Business | 88.6 | 86.5 | 86.2 | 85.5 | 91.3 |
| District, % | | | | | |
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| Helsinki Metropolitan | 84.2 | 84.0 | 84.8 | 85.6 | 85.7 |
| Area, % | | | | | |
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| Turku, Tampere, Oulu, | 96.7 | 95.5 | 95.7 | 95.4 | 96.0 |
| % | | | | | |
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| Russia | 91.5 | 87.4 | 88.2 | 87.5 | 89.1 |
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| Total property | 87.3 | 86.2 | 86.6 | 86.8 | 88.4 |
| portfolio, % | | | | | |
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Total cash flow derived from leasing agreements on 30 June 2010 was EUR 1 114 (1
108) million. Sponda had 1 983 clients and altogether 3 109 leasing agreements.
The company's biggest tenants were the public sector (11.2 % of rental income),
Kesko Group (5.1 % of rental income), Sampo Bank Plc (3.9 % of rental income)
andä 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:
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| Sector | % net rental |
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| Professional, scientific and technical activities | 8.1 % |
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| Energy | 0.6 % |
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| Public sector | 11.2 % |
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| Wholesale/retail | 26.6 % |
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| Education | 1.0 % |
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| Logistics/Transport | 6.8 % |
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| Media /Publishing | 1.7 % |
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| Hotel and catering business | 3.7 % |
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| Other services | 9.7 % |
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| Banking/Investment | 8.4 % |
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| Construction | 2.0 % |
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| Industry/manufacturing | 6.8 % |
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| Healthcare | 3.9 % |
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| Telecommunications | 5.7 % |
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| Others | 3.8 % |
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The average length of all the leasing agreements was 4.7 (4.7) years. The
average length of leasing agreements was 5.3 years for office and retail
properties, 5.1 years for shopping centres and 3.6 years for logistics premises.
A total of 82 new leases (27,600 m²) came into force in April - June 2010, and
132 leases (21,700 m²) expired during this period. The lease agreements for
Sponda's property portfolio expire as follows:
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| Expiry within | % of rental income | % of rental income |
| | 30.6.2010 | 30.6.2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 year | 15.3 | 13.1 |
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| 2 years | 10.9 | 11.7 |
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| 3 years | 11.1 | 11.5 |
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| 4 years | 9.5 | 6.6 |
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| 5 years | 5.9 | 10.3 |
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| 6 years | 4.7 | 5.0 |
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| More than 6 years | 29.2 | 27.9 |
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| Open ended | 13.4 | 13.9 |
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Property portfolio
On 30 June 2010 Sponda had a total of 196 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.
The fair values of Sponda's investment properties are confirmed through the
company's own cash flow based yield assessment calculation. The valuation method
complies with international valuation standards (IVS). The entire material used
in calculating the fair values of properties is examined at least twice a year
by an external expert, to ensure that the parameters and values used in the
calculation are based on market observations.
At the end of the second quarter of 2010, Catella Property Oy assessed the value
of Sponda's investment properties in Finland. The properties in Russia were
assessed by CB Richard Ellis and properties in the real estate funds Sponda Fund
I and Sponda Fund II were assessed by Jones Lang LaSalle and Kiinteistötaito
Peltola & Co Oy. The change in the fair value of the investment properties was
EUR 8.5 (-123.7) million in the January - June period and EUR 9.7 (-6.4) million
in April - June. The change in value of the properties owned by the real estate
funds was EUR -1.4 (-5.6) million in the first half of the year, with the change
in the second quarter being EUR -1.0 (-5.6) million. The main factors
contributing to the change in the fair value were the changes in market rents
for properties and the decline in vacancy rates. The realized gains by real
estate funds were EUR 1.4 million during April-June and EUR 2.9 million during
January-June 2010.
Valuation gains/losses on assessing Sponda's investment properties at fair value
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| M | | 4-6/10 | 1-6/10 | 1-12/09 |
--------------------------------------------------------------------------------
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| Changes in yield requirements | | 2.2 | 2.2 | -54.7 |
| (Finland) | | | | |
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| Changes in yield requirements | | 0 | 0 | -49.4 |
| (Russia) | | | | |
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| Development gains on property | | 0.1 | 1.0 | -1.2 |
| development projects | | | | |
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| Modernization investments | | -6.4 | -12.0 | -21.3 |
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| Change in market rents and | | 6.4 | 3.6 | -8.4 |
| maintenance costs (Finland) | | | | |
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| Change in market rents and | | 2.6 | 2.6 | -26.9(** |
| maintenance costs (Russia) | | | | |
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| Change in currency exchange rates | | 4.9 | 11.2 | -5.0 (* |
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| Investment properties, total | | 9.7 | 8.5 | -166.8 |
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| Real estate funds | | -1.0 | -1.4 | -8.3 |
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| Realized gains/losses by real | | 1.4 | 2.9 | 5.8 |
| estate funds | | | | |
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| Group, total | | 10.1 | 10.0 | -169.3 |
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*) change in value due to changes in exchange rates 6-12/2009
**) include changes in value due to changes in exchange rates 1-2009
|
| The changes in Sponda's investment property assets in the January - June |
| 2010 period were as follows: |
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| M | Total | Office | Shopping | Logistic | Property | Russia |
| | | & | centres | s | develop- | |
| | | Retail | | | ment | |
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| Operating | 108.9 | 59.9 | 19.6 | 17.9 | 0.1 | 11.4 |
| income | | | | | | |
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| Maintenance | -30.4 | -16.5 | -4.0 | -6.1 | -0.8 | -3.0 |
| costs | | | | | | |
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| Net operating | 78.5 | 43.4 | 15.6 | 11.8 | -0.6 | 8.4 |
| income | | | | | | |
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| Investment | 2 | 1 425.8 | 543.6 | 396.1 | 220.6 | 181.4 |
| properties on | 767.5 | | | | | |
| 1 Jan. 2010, | | | | | | |
| includ. cum. | | | | | | |
| capitalized | | | | | | |
| interest | | | | | | |
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| Capitalized | 2.3 | 0.0 | 0.0 | 0.0 | 1.9 | 0.4 |
| interest 2010 | | | | | | |
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| Acquisitions | 0.5 | 0.0 | 0.5 | 0.0 | 0.0 | 0.0 |
| in 2010 | | | | | | |
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| Investments | 30.0 | 11.0 | 0.1 | 3.6 | 14.7 | 0.7 |
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| Other | 0.0 | 5.8 | 0.0 | 0.0 | -5.8 | 0.0 |
| transfers | | | | | | |
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| Sales in 2010 | -10.7 | -9.0 | 0.0 | -0.3 | -1.4 | 0.0 |
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| Valuation | 8.5 | -0.1 | -4.0 | -1.2 | 0.2 | 13.6 |
| gains/losses | | | | | | |
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| Fair value of | 2 | 1 433.5 | 540.2 | 398.2 | 230.2 | 196.0 |
| investment | 798.0 | | | | | |
| properties at | | | | | | |
| 30 June 2010 | | | | | | |
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| Change in fair | 0.3 | 0.0 | -0.7 | -0.3 | 0.1 | 7.5 |
| value % | | | | | | |
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| Annual net | 6.4 % | 6.1 % | 6.5 % | 5.9 % | | 9.6 % |
| operating | | | | | | |
| income/ | | | | | | |
| fair | | | | | | |
| value at 30 | | | | | | |
| June 2010 (* | | | | | | |
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| Weighted | 7.2 | 6.6 | 6.1 | 8.1 | | 11.5 |
| average yield | | | | | | |
| requirement -% | | | | | | |
| for entire | | | | | | |
| portfolio | | | | | | |
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| Weighted | 6.8 | | | | | |
| average yield | | | | | | |
| requirement -% | | | | | | |
| for portfolio | | | | | | |
| - Finland | | | | | | |
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| *) Excluding property development | | |
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Investments and divestments
Sponda sold investment properties during the January - June 2010 period for a
total value of EUR 10.7 million, with April - June accounting for EUR 1.4
million of this. Sponda purchased property in the January - June period for EUR
0.5 million.
Investments in property maintenance totalled EUR 12.0 million in the January -
June period, with EUR 6.4 million of this being spent in the second quarter.
Altogether EUR 18.0 million had been invested in property development by the end
of June, with the second quarter accounting for EUR 13.6 million. The property
development investments were mainly allocated to the renovation of the
City-Center complex in Helsinki city centre and the production plant being built
in Hakkila in Vantaa.
Office and Retail Properties
The economic occupancy rate for Office and Retail Properties was 87.7 % (30 June
2009: 90.3 %). The property portfolio had a fair value on 30 June 2010 of EUR 1
433.5 million, and the change in fair value compared to the beginning of 2010
was EUR -0.1 million. The leasable area of office and retail properties was some
760,000 m², and an estimated 73 % of this was office premises and 27 % retail
premises. The segment's total revenue, net operating income and operating profit
in the period were as follows:
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| M | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
| Total revenue | 30.7 | 32.4 | 61.0 | 65.2 | 129.0 |
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| Net operating income | 22.6 | 23.9 | 43.9 | 48.0 | 96.3 |
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| Operating profit | 26.3 | 19.9 | 41.9 | 11.3 | 46.5 |
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In January - June 2010 Sponda sold office and retail properties for EUR 9.0
million. No properties were purchased during the period. Capital expenditure on
property maintenance amounted to EUR 10.9 million by the end of June, with EUR
5.5 million of this spent in the April - June period.
Shopping centres
The Shopping Centres unit had an economic occupancy rate of 96.7 % (97.1 %). The
properties had a fair value of EUR 540.2 million, and the change in fair value
from the beginning of 2010 was EUR -4.0 million. The shopping centres had a
combined leasable area of about 140,000 m². The segment's total revenue, net
operating income and operating profit in the period were as follows:
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| M | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
| Total revenue | 9.6 | 10.3 | 19.6 | 18.6 | 39.3 |
--------------------------------------------------------------------------------
| Net operating income | 7.9 | 8.2 | 15.6 | 14.5 | 31.4 |
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| Operating profit | 5.0 | 5.8 | 11.0 | 4.3 | 18.7 |
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During January - June 2010 the segment made no major investments in property
maintenance or in purchasing new property.
Logistics Properties
The Logistics Properties unit had an economic occupancy rate of 75.9 % (76.1 %).
The properties had a fair value at the end of June 2010 of EUR 398.2 million,
including a change in fair value from the beginning of 2010 of EUR -1.2 million.
The logistics properties had a total leasable area of 530,000 m². The segment's
total revenue, net operating income and operating profit in the period were as
follows:
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| M | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
| Total revenue | 9.1 | 10.2 | 18.5 | 20.6 | 38.6 |
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| Net operating income | 6.4 | 7.3 | 12.1 | 14.5 | 27.4 |
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| Operating profit | 5.6 | 5.0 | 10.4 | -3.0 | -4.5 |
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In the January - June period Sponda sold logistics property for EUR 0.3 million.
No new properties were purchased. Capital expenditure on property maintenance
since the beginning of the year totalled EUR 0.6 million and on property
development EUR 3.0 million. The expenditure on property development was for the
production plant being built for Metso Automation in Hakkila in Vantaa.
Property Development
The balance sheet value of Sponda's property development portfolio at the end of
June 2010 was EUR 230.2 million. Of this some EUR 88.1 million was in
undeveloped land sites and the remaining EUR 142.1 million was tied up in
property development projects in progress. Investments in property development
and acquisitions during January - June 2010 totalled EUR 14.7 million, and most
of this was for the City-Center project and for building the production plant in
Hakkila, Vantaa.
Sponda aims to obtain development gains of 15 % on the investment costs for
projects. Sponda's property development business comprises new build projects
and refurbishment of existing properties.
In the City-Center project, progress was made on schedule in the construction of
the office building in the inner court of the complex. It is estimated that the
new office building and the new retail premises being built in the second phase
of the shopping centre will be completed in summer 2011. The entire City-Center
renovation project is expected to be completed in 2012 and the total investment
will be some EUR 125 million.
Sponda is building some 22,000 m² of production premises in Hakkila, Vantaa,
that is being leased in its entirety to Metso Automation. Sponda is also leasing
to Metso some 12,000 square metres of office and warehouse premises in the
adjacent Honkatalo office building, and these will be completely refurbished.
Sponda's total investment is estimated at about EUR 40 million and the premises
should be ready at the beginning of 2011.
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. The final decision about the investment has not been made.
In June 2010 Sponda sold a two hectare land area in the Hakuninmaa district of
Helsinki to Skanska Talonrakennus Oy for some EUR 6.5 million. The piece of land
at Hakuninmaantie Road 3 is part of the planned Kuninkaantammi residential area.
Sponda recorded capital gains of about EUR 5.4 million on the sale.
Sponda also sold Skanska Talonrakennus Oy a land area that is planned for
housing
production in the centre of Kauniainen for EUR 3 million. Sponda recorded
capital gains of EUR 2.9 million on this transaction.
Russia
At the end of June 2010, the economic occupancy rate for the Russia unit was
91.5 % (89.1 %). The property portfolio had a fair value of EUR 196.0 million,
and the change in the fair value from the beginning of 2010 was EUR 13.6
million, which was mostly due to changes in exchange rates. The fair value of
the properties in Russia was assessed by CB Richard Ellis.
Capital expenditure on property development and maintenance totalled EUR 0.3
million.
The segment's total revenue, net operating income and operating profit in the
period were as follows:
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| M | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
| Total revenue | 5.8 | 5.7 | 11.4 | 11.4 | 21.8 |
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| Net operating income | 4.3 | 4.2 | 8.4 | 8.6 | 16.4 |
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| Operating profit | 10.9 | 5.4 | 20.4 | -54.4 | -70.4 |
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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 Sponda's
leasing agreements in Russia on 30 June 2010 was 3.2 years, and the leasing
agreements expire as follows:
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| Expiry in | % of rental income | % of rental income |
| | 30.6.2010 | 30.6.2009 |
--------------------------------------------------------------------------------
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| 1 year | 32.6 | 22.8 |
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| 2 years | 3.8 | 6.0 |
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| 3 years | 19.1 | 9.7 |
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| 4 years | 11.3 | 12.1 |
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| 5 years | 6.2 | 14.2 |
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| 6 years | 8.0 | 13.7 |
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| More than 6 years | 19.0 | 21.5 |
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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 foreign currency denominated 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 Sponda Real Estate Fund I Ky and Sponda Real Estate Fund
II Ky were valued at the end of June 2010 by Jones Lang LaSalle and
Kiinteistötaito Peltola & Co Oy.
As from the second quarter of 2010, Sponda's share of fund profits is presented
in the consolidated income statement in the change in fair value item, instead
of under total revenue. The share of profits in the January - June period was
EUR 2.9 (2.6) million and in April - June EUR 1.4 (1.2) million. The figures for
comparison have been adjusted accordingly. The Real Estate Fund segment's total
revenue, net operating income and operating profit in the period were as
follows:
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| M | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
| Total revenue | 1.9 | 1.8 | 3.7 | 3.5 | 6.9 |
--------------------------------------------------------------------------------
| Net operating income | 1.5 | 1.3 | 3.0 | 2.5 | 5.1 |
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| Operating profit | 0.6 | -4.8 | 1.8 | -3.7 | -3.6 |
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First Top LuxCo (Sponda's holding 20 %) invests in office and retail properties
outside Finland's largest cities. On 30 June 2010 the fund's property
investments had a fair value of EUR 104.1 million.
Sponda Real Estate Fund I Ky (Sponda's holding 46 %) invests in logistics sites
outside the Helsinki metropolitan area. At the end of June 2010 the properties
it owned had a fair value of EUR 185.5 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 on 30 June 2010 was EUR 95.6 million.
In addition to those mentioned above, Sponda is also responsible for managing
the property portfolio, with a value of about EUR 270 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 in January - June 2010 totalled EUR 50.2
million (30 June 2009: EUR 42.4 million). Net cash flow from investing
activities was EUR -19.3 (-22.6) million and the net cash flow from financing
activities was EUR -43.5 (-6.2) million. Net financing costs in the period
totalled EUR -31.3 (-33.2) million. Interest expenses of EUR 2.3 (1.8) million
were capitalized.
Sponda's equity ratio on 30 June 2010 was 37 % (30 June 2009: 37 %) and gearing
was 142 % (144 %). Interest-bearing debt amounted to EUR 1 597.7 (1 633.1)
million and the average maturity of Sponda's loans was 2.6 (2.8) years. The
average interest rate was 3.9 % (3.8 %) including interest derivatives.
Fixed-rate and interest-hedged loans accounted for 70 % (63 %) of the loan
portfolio. The average interest-bearing period of the whole debt portfolio was
1.9 (1.7) years. The interest cover ratio, which describes the company's
solvency, was 2.9 (2.4).
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. Changes in the fair
value of other interest rate derivatives and currency options are recognized in
the income statement.
Sponda Group's debt portfolio on 30 June 2010 comprised syndicated loans with a
nominal value of EUR 635 million, EUR 250 million in bonds, EUR 79 million in
issued commercial papers, and EUR 637 million in loans from financial
institutions. Sponda had EUR 375 million in unused credit limits. Sponda Group
had mortgaged loans of EUR 141.2 million, or 4.7 % of the consolidated balance
sheet.
In May 2010 Sponda issued a EUR 100 million domestic bond. The five-year bond
carries an annual fixed rate coupon of 4.375 %. Nordea Bank and Sampo Bank were
joint lead managers for the bond.
Personnel
During the review period Sponda Group had on average 125 (135) employees, of
whom 112 (120) worked for parent company Sponda Plc. On 30 June 2010 Sponda
Group had altogether 121 (133) employees, of whom 109 (120) 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 10.1 (11.2)
million.
Bonus and incentive schemes
Sponda has a bonus incentive scheme to which all employees belong, and which is
based on common targets for the company and on personal targets set for each
employee. Key factors affecting the bonus are profitability and how business
operations develop.
Sponda also has a long-term incentive scheme which comprises two one-year
earnings periods, which are the calendar years 2010 and 2011, and two three-year
earnings periods, which are the calendar years 20102012 and 20112013. The
earnings criteria for the scheme are linked to the cash flow per share and the
return on investment.
Any bonus is paid partly in company shares and partly in cash. The portion paid
in cash is meant to cover the taxes and similar costs incurred by the key
employee from the bonus. The employee may not dispose of the shares during the
commitment periods following the earnings periods, which for the one year
earnings periods is two years and for the three year earnings periods is three
years. Even after this the key employee must continue to own shares while
continuing in Sponda's employment, and the goal is that the company shares owned
by the key employee will grow through this scheme to equal their gross annual
salary.
The maximum annual bonus paid in the incentive scheme shall be the gross annual
salary of the key employee on the date of payment. The gross annual salary
refers to the fixed basic salary excluding any annual performance bonus and
income from the long-term bonus scheme.
At present those in the scheme are the members of the company's Executive Board,
in total seven people. More details of the incentive scheme are given in the
company stock exchange release dated 17 March 2010.
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 the January - June 2010 period
was EUR 2.82. The highest quotation on NASDAQ OMX Helsinki Oy was EUR 3.19 and
the lowest EUR 2.45. Turnover during the period totalled 63.4 million shares or
EUR 178.9 million. The closing price of the share on 30 June 2010 was EUR 2.48,
and the market capitalization of the company's share capital was EUR 688.4
million.
The Annual General Meeting on 17 March 2010 authorized the Board of Directors to
purchase the company's own shares, and the authorization is in force until the
next AGM. The authorization was not exercised during the review period.
Sponda issued no flagging announcements in the January - June 2010 period.
On 30 June 2010 the company had altogether 9 659 shareholders, and its ownership
structure was as follows:
--------------------------------------------------------------------------------
| | Number of | Holding, % |
| | shares | |
--------------------------------------------------------------------------------
| Public entities | 17 658 332 | 6.4 |
--------------------------------------------------------------------------------
| Nominee registered | 121 887 960 | 43.9 |
| | | |
--------------------------------------------------------------------------------
| Financial and insurance institutions, total | 5 868 463 | 2.1 |
--------------------------------------------------------------------------------
| Households | 25 920 406 | 9.3 |
--------------------------------------------------------------------------------
| Private corporations, total | 101 278 394 | 36.5 |
--------------------------------------------------------------------------------
| Non-profit organizations, total | 3 826 648 | 1.4 |
--------------------------------------------------------------------------------
| Foreign owners, total | 1 135 259 | 0.4 |
--------------------------------------------------------------------------------
| 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. Lauri Ratia is its
chairman and Timo Korvenpää is 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, with APA Kai Salli as principal auditor and APA Riitta
Pyykkkö as deputy auditor.
Committees of the Board of Directors
The following were members of the Audit Committee: Arja Talma, chairman, Timo
Korvenpää, vice chairman and Erkki Virtanen, ordinary member.
The following were members of the Structure and Remuneration Committee: Lauri
Ratia, chairman, Klaus Cawén, vice chairman, and Tuuls Entelä, ordinary member.
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.
Environmental responsibility
The real estate sector plays a key role in fighting climate change and ensuring
the wellbeing of the environment. Sponda made environmental expertise a
strategic priority in its corporate responsibility in 2009.
Sponda has set targets for 2010 that at a company level are related to reducing
energy consumption in the properties owned by Sponda, taking into account the
demands of environmentally responsible operations in all construction and in the
maintenance of properties, cutting environmental load, and creating a healthy,
attractive work environment for its clients.
Subsequent events
In July 2010 the Supreme Administrative Court ruled in favour of Sponda on the
deductibility of the confirmed losses of Sponda Kiinteistöt Oy. There is no
right of appeal against the ruling. The ruling will not have an impact on the
result for 2010.
Prospects
Sponda estimates that the positive development in occupancy rates, which started
in Q2 2010, will continue for the second half of 2010. This assessment is based
on the lease agreements that the company knows are expiring and on the forecast
growth in Finland's economy in 2010.
The net operating income in 2010 is estimated to be lower than that in 2009. The
reasons for this decline are the strategic sales of property and the fall in
occupancy rates that began in 2009 and continued in the first quarter 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 and a decline in rental income
resulting from the insolvency of tenants.
The general economic situation may cause the solvency of Sponda's customers to
weaken in Finland and Russia in 2010, which in turn may reduce Sponda's rental
income and increase the vacancy rates in the properties owned by the company.
Differences in legislation and official procedures in Russia compared to Finland
may cause additional 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.
A rapid, 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.
5 August 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)
M
--------------------------------------------------------------------------------
| | | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | | | | | |
--------------------------------------------------------------------------------
| | Rental income and | 56.3 | 58.9 | 112.2 | 116.4 | 230.3 |
| | recoverables | | | | | |
--------------------------------------------------------------------------------
| | Interest income from | 0.1 | 0.1 | 0.2 | 0.2 | 0.3 |
| | finance leasing | | | | | |
| | agreements | | | | | |
--------------------------------------------------------------------------------
| | Fund management fees | 1.9 | 1.6 | 3.5 | 3.3 | 6.6 |
--------------------------------------------------------------------------------
| | | 58.3 | 60.6 | 115.9 | 119.8 | 237.2 |
--------------------------------------------------------------------------------
| Expenses | | | | | |
--------------------------------------------------------------------------------
| | Maintenance expenses | -14.9 | -16.5 | -31.8 | -31.7 | -59.5 |
--------------------------------------------------------------------------------
| | Direct fund expenses | -0.4 | -0.5 | -0.7 | -0.9 | -1.9 |
--------------------------------------------------------------------------------
| | | -15.2 | -17.0 | -32.4 | -32.6 | -61.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net operating income | 43.0 | 43.6 | 83.4 | 87.2 | 175.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/loss on sales of | 0.9 | 0.3 | 2.1 | 0.5 | 0.3 |
| investment properties | | | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | 10.1 | -10.8 | 10.0 | -126.7 | -169.3 |
--------------------------------------------------------------------------------
| Amortization of goodwill | - | - | - | - | - |
--------------------------------------------------------------------------------
| Profit/loss on sales of | 8.5 | 0.4 | 8.8 | 0.2 | 4.0 |
| trading properties | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales and marketing | -0.3 | -0.4 | -0.7 | -0.7 | -1.5 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Administrative expenses | -4.8 | -5.4 | -9.4 | -10.5 | -20.5 |
--------------------------------------------------------------------------------
| Share of result of | 0.0 | 0.0 | -0.1 | 0.0 | 0.0 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 0.1 | 0.2 | 0.1 | 0.4 | 0.8 |
--------------------------------------------------------------------------------
| Other operating expenses | -0.7 | 0.0 | -1.3 | -0.3 | -2.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | 56.7 | 27.9 | 93.0 | -49.9 | -13.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income | 0.3 | 0.9 | 0.6 | 1.3 | 2.1 |
--------------------------------------------------------------------------------
| Financial expenses | -14.9 | -15.1 | -31.9 | -34.5 | -67.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income and | -14.7 | -14.2 | -31.3 | -33.2 | -65.0 |
| expenses, net | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result before taxes | 42.1 | 13.7 | 61.7 | -83.0 | -78.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes for current | -0.9 | -0.8 | -1.9 | -1.2 | -3.2 |
| and previous fiscal years | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | -8.8 | -2.8 | -13.0 | 2.4 | -0.1 |
--------------------------------------------------------------------------------
| Income taxes, total | -9.7 | -3.6 | -14.9 | 1.2 | -3.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/loss for period | 32.4 | 10.1 | 46.8 | -81.8 | -81.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 32.5 | 10.1 | 47.0 | -81.8 | -81.5 |
| parent company | | | | | |
--------------------------------------------------------------------------------
| Minority interest | -0.1 | 0.0 | -0.2 | -0.1 | -0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share based | | | | | |
| on profit attributable to | | | | | |
| equity holders of the | | | | | |
| parent company: | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic and diluted, | 0.11 | 0.04 | 0.15 | -0.48 | -0.40 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of shares, | | | | | |
| million | | | | | |
--------------------------------------------------------------------------------
| Basic and diluted, million | 277.6 | 187.8 | 277.6 | 182.9 | 230.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Direct result | 17.8 | 17.4 | 32.4 | 27.2 | 61.6 |
--------------------------------------------------------------------------------
| Indirect result | 14.7 | -7.2 | 14.6 | -108.9 | -143.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Statement of comprehensive | | | | | |
| income (IFRS) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/loss for period | 32.4 | 10.1 | 46.8 | -81.8 | -81.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive income | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net loss/profit from | -1.3 | 3.8 | -6.8 | -13.8 | -10.4 |
| hedging cash flow | | | | | |
--------------------------------------------------------------------------------
| Translation difference | 0.8 | -0.2 | 2.0 | 3.6 | 0.7 |
--------------------------------------------------------------------------------
| Taxes on comprehensive | 0.5 | -0.7 | 2.1 | 2.1 | 2.4 |
| income | | | | | |
--------------------------------------------------------------------------------
| Other comprehensive income | -0.1 | 2.9 | -2.6 | -8.1 | -7.3 |
| for period after taxes | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comprehensive profit/loss | 32.3 | 13.0 | 44.2 | -89.9 | -88.9 |
| for period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Allocation of | | | | | |
| comprehensive profit/loss | | | | | |
| for period: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of parent | 32.4 | 13.0 | 44.3 | -89.8 | -88.8 |
| company | | | | | |
--------------------------------------------------------------------------------
| Minority interest | -0.1 | 0.0 | -0.2 | -0.1 | -0.1 |
--------------------------------------------------------------------------------
Consolidated balance sheet (IFRS)
M
--------------------------------------------------------------------------------
| | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Investment properties | 2 798.0 | 2 786.2 | 2 767.5 |
--------------------------------------------------------------------------------
| Investments in real estate funds | 55.3 | 57.8 | 56.2 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 13.9 | 14.6 | 14.3 |
--------------------------------------------------------------------------------
| Goodwill | 14.5 | 14.5 | 14.5 |
--------------------------------------------------------------------------------
| Other intangible assets | 0.2 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Finance lease receivables | 2.7 | 2.7 | 2.7 |
--------------------------------------------------------------------------------
| Investments in associated | 1.9 | 2.8 | 2.8 |
| companies | | | |
--------------------------------------------------------------------------------
| Long-term receivables | 2.5 | 4.2 | 7.4 |
--------------------------------------------------------------------------------
| Deferred tax assets | 33.6 | 53.2 | 41.1 |
--------------------------------------------------------------------------------
| Total non-current assets | 2 922.7 | 2 936.2 | 2 906.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Trading properties | 21.6 | 27.6 | 22.8 |
--------------------------------------------------------------------------------
| Trade and other receivables | 30.7 | 43.6 | 31.6 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 18.2 | 28.9 | 29.1 |
--------------------------------------------------------------------------------
| Total current assets | 70.5 | 100.1 | 83.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 2 993.2 | 3 036.3 | 2 990.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 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 | 1.4 | 0.8 | -0.9 |
--------------------------------------------------------------------------------
| Fair value fund | -32.4 | -29.9 | -27.4 |
--------------------------------------------------------------------------------
| Revaluation fund | 0.6 | 0.6 | 0.6 |
--------------------------------------------------------------------------------
| Reserve for invested unrestricted | 412.0 | 411.9 | 412.0 |
| equity | | | |
--------------------------------------------------------------------------------
| Other equity fund | 129.0 | 129.0 | 129.0 |
--------------------------------------------------------------------------------
| Retained earnings | 333.3 | 327.6 | 328.0 |
--------------------------------------------------------------------------------
| | 1 114.4 | 1 110.4 | 1 111.7 |
--------------------------------------------------------------------------------
| Minority interest | 1.7 | 1.7 | 1.8 |
--------------------------------------------------------------------------------
| Total shareholders' equity | 1 116.1 | 1 112.1 | 1 113.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and | 1 258.5 | 1 326.9 | 1 287.2 |
| borrowings | | | |
--------------------------------------------------------------------------------
| Provisions | 0.0 | 0.3 | 0.0 |
--------------------------------------------------------------------------------
| Other liabilities | 41.1 | 38.3 | 30.5 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 192.7 | 199.9 | 193.8 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 1 492.4 | 1 565.4 | 1 511.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Current interest-bearing loans | 339.2 | 306.2 | 310.6 |
| and borrowings | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 45.5 | 52.5 | 54.5 |
--------------------------------------------------------------------------------
| Total current liabilities | 384.7 | 358.8 | 365.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 1 877.0 | 1 924.2 | 1 876.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders' equity and | 2 993.2 | 3 036.3 | 2 990.2 |
| liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 1 597.7 | 1 633.1 | 1 597.8 |
--------------------------------------------------------------------------------
Consolidated statement of cash flows (IFRS)
M
--------------------------------------------------------------------------------
| | 1-6/2010 | 1-6/2009 | 1-12/2009 |
--------------------------------------------------------------------------------
| Cash flow from operating | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Net profit/loss for the period | 46.8 | -81.8 | -81.6 |
--------------------------------------------------------------------------------
| Adjustments | 37.2 | 160.9 | 243.4 |
--------------------------------------------------------------------------------
| Change in net working capital | 0.7 | 12.5 | 19.1 |
--------------------------------------------------------------------------------
| Interest received | 0.4 | 0.7 | 1.2 |
--------------------------------------------------------------------------------
| Interest paid | -29.2 | -46.1 | -78.4 |
--------------------------------------------------------------------------------
| Other financial items | -5.0 | -3.2 | -5.1 |
--------------------------------------------------------------------------------
| Dividends received | 0.0 | 0.5 | 0.0 |
--------------------------------------------------------------------------------
| Dividends received from | 0.9 | - | 0.5 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Taxes received/paid | -1.6 | -0.9 | -3.0 |
--------------------------------------------------------------------------------
| Net cash from operating | 50.2 | 42.4 | 96.0 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Investments in investment | -30.4 | -46.5 | -77.2 |
| properties | | | |
--------------------------------------------------------------------------------
| Investments in real estate funds | -0.5 | -2.9 | -3.9 |
--------------------------------------------------------------------------------
| Investments in tangible and | -0.2 | -0.3 | -0.3 |
| intangible assets | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of investment | 11.0 | 27.0 | 40.6 |
| properties | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of intangible | 0.0 | - | - |
| and tangible assets | | | |
--------------------------------------------------------------------------------
| Repayment of loan receivables | 0.8 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Net cash from investing | -19.3 | -22.6 | -40.8 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Proceeds from share issue | - | 200.0 | 200.2 |
--------------------------------------------------------------------------------
| Non-current loans, raised | 315.1 | 91.2 | 91.2 |
--------------------------------------------------------------------------------
| Non-current loans, repayments | -240.2 | -207.9 | -248.0 |
--------------------------------------------------------------------------------
| Current loans, raised / | -73.7 | -78.2 | -73.7 |
| repayments | | | |
--------------------------------------------------------------------------------
| Interest paid on equity bond | -11.4 | -11.4 | -11.4 |
--------------------------------------------------------------------------------
| Dividends paid | -33.3 | - | - |
--------------------------------------------------------------------------------
| Net cash from financing | -43.5 | -6.2 | -41.7 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash | -12.5 | 13.6 | 13.6 |
| equivalents | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents, start | 29.1 | 16.0 | 16.0 |
| of period | | | |
--------------------------------------------------------------------------------
| Impact of changes in exchange | 1.7 | -0.7 | -0.5 |
| rates | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents, end | 18.2 | 28.9 | 29.1 |
| of period | | | |
--------------------------------------------------------------------------------
Changes in Group shareholders' equity
M
--------------------------------------------------------------------------------
| | | Share | Share | Transla | Fair | Revalua | Investe |
| | | capita | premium | tion | value | tion | d |
| | | l | reserve | differ | reserve | reserve | non-res |
| | | | | ences | | | tricted |
| | | | | | | | equity |
| | | | | | | | reserve |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 31 | 111.0 | 159.5 | -1.4 | -19.7 | 0.6 | 209.7 |
| Dec. 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | 2.1 | -10.2 | | |
| income in | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | | 202.2 |
--------------------------------------------------------------------------------
| Equity at 30 | 111.0 | 159.5 | 0.8 | -29.9 | 0.6 | 411.9 |
| June 2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Other | Retained | Total | Minorit | Total | |
| | | equity | earnings | | y | shareho | |
| | | reserv | | | holding | lders' | |
| | | e | | | | equity | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 31 | 129.0 | 418.4 | 1 007.1 | 1.8 | 1 008.9 | |
| Dec. 2009 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | -81.8 | -89.8 | -0.1 | -89.9 | |
| income in | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Interest paid | | -8.4 | -8.4 | | -8.4 | |
| on equity bond | | | | | | |
--------------------------------------------------------------------------------
| Change | | -0.6 | 201.5 | 0.0 | 201.5 | |
--------------------------------------------------------------------------------
| Equity at 30 | 129.0 | 327.6 | 1 110.4 | 1.7 | 1 112.1 | |
| June 2010 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Share | Share | Transla | Fair | Revalua- | Investe |
| | | capita | premium | tion | value | tion | d |
| | | l | reserve | differe | reserve | reserve | non-res |
| | | | | nces | | | tricte |
| | | | | | | | d |
| | | | | | | | equity |
| | | | | | | | reserve |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 31 | 111.0 | 159.5 | -0.9 | -27.4 | 0.6 | 412.0 |
| Dec. 2009 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | 2.4 | -5.0 | | |
| income in | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Equity at 30 | 111.0 | 159.5 | 1.4 | -32.4 | 0.6 | 412.0 |
| June 2010 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Other | Retained | Total | Minorit | Total | |
| | | equity | earnings | | y | shareho | |
| | | reserv | | | holding | lders' | |
| | | e | | | | equity | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 31 | 129.0 | 328.0 | 1 111.7 | 1.8 | 1 113.6 | |
| Dec. 2009 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | 47.0 | 44.3 | -0.2 | 44.2 | |
| income in | | | | | | |
| period | | | | | | |
--------------------------------------------------------------------------------
| Interest paid | | -8.4 | -8.4 | | -8.4 | |
| on equity bond | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | -33.3 | -33.3 | | -33.3 | |
| payment | | | | | | |
--------------------------------------------------------------------------------
| Change | | 0.1 | 0.1 | 0.0 | 0.1 | |
--------------------------------------------------------------------------------
| Equity at 30 | 129.0 | 333.3 | 1 114.4 | 1.7 | 1 116.1 | |
| June 2010 | | | | | | |
--------------------------------------------------------------------------------
Notes to the consolidated financial statements
Accounting principles
This interim report has been prepared in accordance with IAS 34, Interim
Financial Reporting, applying the same accounting principles as those used for
the 2009 financial statements. Current IFRS standards and interpretations have
been applied when preparing the interim report.
The amended and revised standards and interpretations that came into effect at
the beginning of 2010 do not have a significant impact on the interim report or
the accounting principles.
The figures in the interim report are presented in millions of euros and have
been rounded to the nearest 0.1 million euro, so the total of the individual
figures may differ from the total amounts given.
The figures in the interim report have not been audited.
Income statement by business areas
M
--------------------------------------------------------------------------------
| Income | Offic | Shop | Logis | Prope | Russi | Fund | Other | Group |
| statement | e & | ping | -tics | rty | a | s | | total |
| 1-6 | Retai | cent | | deve | | | | |
| /2010 | l | res | | lopm | | | | |
| | | | | ent | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | 61.0 | 19.6 | 18.5 | 1.6 | 11.4 | 3.7 | 0.0 | 115.9 |
--------------------------------------------------------------------------------
| Maintenance | -17.2 | -4.0 | -6.4 | -1.2 | -3.0 | -0.7 | 0.0 | -32.4 |
| expenses and | | | | | | | | |
| direct fund | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Net operating | 43.9 | 15.6 | 12.1 | 0.5 | 8.4 | 3.0 | 0.0 | 83.4 |
| income | | | | | | | | |
--------------------------------------------------------------------------------
| Profit on | 1.2 | 0.0 | 0.0 | 0.9 | 0.0 | 0.0 | 0.0 | 2.1 |
| sale of | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Loss on sale | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| of investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Profit/loss | 0.0 | 0.0 | 0.0 | 8.7 | 0.0 | 0.0 | 0.0 | 8.8 |
| on sale of | | | | | | | | |
| trading | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | -0.1 | -4.0 | -1.2 | 0.2 | 13.6 | 1.5 | 0.0 | 10.0 |
| gains and | | | | | | | | |
| losses | | | | | | | | |
--------------------------------------------------------------------------------
| Administratio | -3.2 | -0.6 | -0.5 | -1.6 | -1.4 | -2.7 | 0.0 | -10.1 |
| n and | | | | | | | | |
| marketing | | | | | | | | |
--------------------------------------------------------------------------------
| Other | 0.0 | 0.0 | 0.0 | -1.1 | -0.1 | 0.0 | 0.0 | -1.2 |
| operating | | | | | | | | |
| income and | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 41.9 | 11.0 | 10.4 | 7.5 | 20.4 | 1.8 | 0.0 | 93.0 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | 11.0 | 0.6 | 3.6 | 14.7 | 0.6 | 0.5 | 0.3 | 31.3 |
| expenditure | | | | | | | | |
--------------------------------------------------------------------------------
| Segment | 1 | 540. | 398.2 | 244.7 | 196.0 | 55.3 | 122.6 | 2 |
| assets | 436.2 | 2 | | | | | | 993.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income | Offic | Shop | Logis | Prope | Russi | Fund | Other | Group |
| statement | e & | ping | -tics | rty | a | s | | total |
| 1-6 | Retai | cent | | devel | | | | |
| /2009 | l | res | | op-me | | | | |
| | | | | nt | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | 65.2 | 18.6 | 20.6 | 0.6 | 11.4 | 3.5 | 0.0 | 119.8 |
--------------------------------------------------------------------------------
| Maintenance | -17.2 | -4.1 | -6.1 | -1.6 | -2.7 | -0.9 | 0.0 | -32.6 |
| expenses and | | | | | | | | |
| direct fund | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Net operating | 48.0 | 14.5 | 14.5 | -1.0 | 8.6 | 2.5 | 0.0 | 87.2 |
| income | | | | | | | | |
--------------------------------------------------------------------------------
| Profit on | 0.2 | 0.0 | 1.4 | 0.0 | 0.0 | 0.0 | 0.0 | 1.5 |
| sale of | | | | | | | | |
| investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Loss on sale | 0.0 | 0.0 | -1.1 | 0.0 | 0.0 | 0.0 | 0.0 | -1.1 |
| of investment | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Profit/loss | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 |
| on sale of | | | | | | | | |
| trading | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | -33.8 | -9.6 | -17.2 | -1.7 | -61.3 | -3.0 | 0.0 | -126.7 |
| gains and | | | | | | | | |
| losses | | | | | | | | |
--------------------------------------------------------------------------------
| Administratio | -3.4 | -0.6 | -0.7 | -1.7 | -1.7 | -3.1 | 0.0 | -11.2 |
| n and | | | | | | | | |
| marketing | | | | | | | | |
--------------------------------------------------------------------------------
| Other | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 |
| operating | | | | | | | | |
| income and | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 11.3 | 4.3 | -3.0 | -4.3 | -54.4 | -3.7 | 0.0 | -49.9 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | 6.6 | 12.6 | 0.5 | 8.7 | 1.0 | 2.9 | 0.1 | 32.4 |
| expenditure | | | | | | | | |
--------------------------------------------------------------------------------
| Segment | 1 | 544. | 409.6 | 211.1 | 201.0 | 57.8 | 175.1 | 3 |
| assets | 437.1 | 6 | | | | | | 036.3 |
--------------------------------------------------------------------------------
Direct and indirect result
The direct result represents the result from the Group's core business. The
direct result is calculated by adjusting the figures in the consolidated income
statement for changes in the fair value of properties and financial instruments,
profit/loss on the sale of properties, amortization of goodwill and other such
income and expenses that the Company considers are indirect items
--------------------------------------------------------------------------------
| M | | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Direct result | | | | | |
--------------------------------------------------------------------------------
| | Net operating income | 43.0 | 43.6 | 83.4 | 87.2 | 175.8 |
--------------------------------------------------------------------------------
| | Marketing and | -5.2 | -5.8 | -10.1 | -11.2 | -22.0 |
| | administration | | | | | |
--------------------------------------------------------------------------------
| | Other income and | -0.4 | 0.5 | -0.7 | 0.6 | -1.1 |
| | expenses for business | | | | | |
| | operations | | | | | |
--------------------------------------------------------------------------------
| | Financial income and | -15.1 | -15.1 | -30.4 | -35.0 | -68.7 |
| | expenses | | | | | |
--------------------------------------------------------------------------------
| | Taxes based on direct | 1.4 | -0.7 | -1.9 | -1.1 | -3.2 |
| | result | | | | | |
--------------------------------------------------------------------------------
| | Deferred taxes based on | -5.9 | -5.1 | -7.9 | -13.3 | -19.1 |
| | direct result | | | | | |
--------------------------------------------------------------------------------
| | Minority holding share | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| | of direct result | | | | | |
--------------------------------------------------------------------------------
| Total | 17.8 | 17.4 | 32.4 | 27.2 | 61.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Indirect result | | | | | |
--------------------------------------------------------------------------------
| | Profit/loss on sale of | 0.9 | 0.3 | 2.1 | 0.5 | 0.3 |
| | investment properties | | | | | |
--------------------------------------------------------------------------------
| | Valuation gains and | 10.1 | -10.8 | 10.0 | -126.7 | -169.3 |
| | losses | | | | | |
--------------------------------------------------------------------------------
| | Profit/loss on sale of | 8.5 | 0.4 | 8.8 | 0.2 | 4.0 |
| | trading properties | | | | | |
--------------------------------------------------------------------------------
| | Administration and | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| | marketing | | | | | |
--------------------------------------------------------------------------------
| | Other income and | -0.3 | -0.3 | -0.5 | -0.5 | -1.0 |
| | expenses for business | | | | | |
| | operations | | | | | |
--------------------------------------------------------------------------------
| | Financial income and | 0.4 | 0.9 | -0.9 | 1.8 | 3.7 |
| | expenses | | | | | |
--------------------------------------------------------------------------------
| | Taxes based on indirect | -2.2 | -0.1 | 0.0 | -0.1 | 0.0 |
| | result | | | | | |
--------------------------------------------------------------------------------
| | Deferred taxes based on | -2.9 | 2.3 | -5.1 | 15.7 | 19.0 |
| | indirect result | | | | | |
--------------------------------------------------------------------------------
| | Minority holding share | 0.1 | 0.0 | 0.2 | 0.1 | 0.1 |
| | of indirect result | | | | | |
--------------------------------------------------------------------------------
| Total | 14.7 | -7.2 | 14.6 | -108.9 | -143.1 |
--------------------------------------------------------------------------------
Quarterly key figures
--------------------------------------------------------------------------------
| | Q2/10 | Q1/10 | Q4/09 | Q3/09 | Q2/09 |
--------------------------------------------------------------------------------
| Total revenue | 58.3 | 57.6 | 58.3 | 59.1 | 60.6 |
--------------------------------------------------------------------------------
| Net operating income | 43.0 | 40.4 | 43.0 | 45.5 | 43.6 |
--------------------------------------------------------------------------------
| Valuation gains/losses | 10.1 | -0.1 | -12.9 | -29.7 | -10.8 |
--------------------------------------------------------------------------------
| Operating profit | 56.7 | 36.3 | 23.5 | 13.1 | 27.9 |
--------------------------------------------------------------------------------
| Financial income and | -14.7 | -16.6 | -15.4 | -16.4 | -14.2 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Profit/loss for period | 32.4 | 14.5 | 6.3 | -6.1 | 10.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investment properties | 2 798.0 | 2 768.1 | 2 767.5 | 2 768.8 | 2 786.2 |
--------------------------------------------------------------------------------
| Shareholders' equity | 1 116.1 | 1 092.0 | 1 113.6 | 1 102.5 | 1 112.1 |
--------------------------------------------------------------------------------
| Interest-bearing | 1 597.7 | 1 610.4 | 1 597.8 | 1 619.2 | 1 633.1 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, | 0.11 | 0.04 | 0.01 | -0.03 | 0.04 |
--------------------------------------------------------------------------------
| Cash flow from operations | 0.11 | 0.08 | 0.07 | 0.10 | 0.19 |
| per share | | | | | |
--------------------------------------------------------------------------------
| EPRA NAV | 4.19 | 4.10 | 4.18 | 4.14 | 4.20 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Economic occupancy rate, % | 87.3 | 86.2 | 86.6 | 86.8 | 88.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| * Figure includes impact of interest | | | | |
| on hybrid bond | | | | |
--------------------------------------------------------------------------------
Investment properties
M
--------------------------------------------------------------------------------
| | 30.6.2010 | 31.12.2009 |
--------------------------------------------------------------------------------
| Fair value of investment properties, start of | 2 767.5 | 2 915.5 |
| period | | |
--------------------------------------------------------------------------------
| Purchase of investment properties | 0.5 | 0.0 |
--------------------------------------------------------------------------------
| Other capital expenditure on investment | 30.0 | 53.4 |
| properties | | |
--------------------------------------------------------------------------------
| Disposal of investment properties | -10.7 | -40.3 |
--------------------------------------------------------------------------------
| Transfers to/from property, plant and | 0.0 | 0.0 |
| equipment | | |
--------------------------------------------------------------------------------
| Transfers from trading properties | 0.0 | 2.0 |
--------------------------------------------------------------------------------
| Other transfers | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Capitalized equity expenses, increase in | 2.3 | 3.7 |
| period | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | 8.5 | -166.8 |
--------------------------------------------------------------------------------
| Fair value of investment properties, end of | 2 798.0 | 2 767.5 |
| period | | |
--------------------------------------------------------------------------------
On 30 June 2010 Sponda had a total of 196 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.
The fair values of Sponda's investment properties are confirmed through the
company's own cash flow based yield assessment calculation. The valuation method
complies with international valuation standards (IVS). The entire material used
in calculating the fair values of properties is examined at least twice a year
by an external expert, to ensure that the parameters and values used in the
calculation are based on market observations.
At the end of the second quarter of 2010, Catella Property Oy assessed the value
of Sponda's investment properties in Finland. The properties in Russia were
assessed by CB Richard Ellis. The change in the fair value of the investment
properties was EUR 8.5 (-123.7) million in the January - June period and EUR 9.7
(-6.4) million in April - June. The main factors contributing to the change in
the fair value were the changes in market rents for properties and the decline
in vacancy rates.
The Group's most significant investment commitments
In the City-Center project, progress was made on schedule in the construction of
the office building in the inner court of the complex. It is estimated that the
office building and the new retail premises being built in the second phase of
the shopping centre will be completed in summer 2011. The entire City-Center
renovation project is expected to be completed in 2012 and the total investment
will be some EUR 125 million.
Sponda is building some 22,000 m² of production premises in Hakkila, Vantaa,
that is being leased in its entirety to Metso Automation. Sponda is also leasing
to Metso some 12,000 square metres of office and warehouse premises in the
adjacent Honkatalo office building, and these will be completely refurbished.
Sponda's total investment is estimated at about EUR 40 million and the premises
should be ready at the beginning of 2011.
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. The final decision about the investment has not been made.
Property, plant and equipment
M
--------------------------------------------------------------------------------
| | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 14.3 | 14.5 | 14.5 |
--------------------------------------------------------------------------------
| Additions | 0.0 | 0.3 | 0.3 |
--------------------------------------------------------------------------------
| Disposals | 0.0 | - | - |
--------------------------------------------------------------------------------
| Reclassifications to/from | - | - | - |
| investment properties | | | |
--------------------------------------------------------------------------------
| Other transfers | - | - | - |
--------------------------------------------------------------------------------
| Depreciation for the period | -0.4 | -0.2 | -0.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount, end of period | 13.9 | 14.6 | 14.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Trading properties | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount, start of period | 22.8 | 29.5 | 29.5 |
--------------------------------------------------------------------------------
| Disposals and other changes | -1.3 | -1.9 | -4.7 |
--------------------------------------------------------------------------------
| Increases | - | - | - |
--------------------------------------------------------------------------------
| Reclassifications to investment | - | - | -2.0 |
| properties | | | |
--------------------------------------------------------------------------------
| Carrying amount, end of period | 21.6 | 27.6 | 22.8 |
--------------------------------------------------------------------------------
Contingent liabilities
Collateral and commitments given by the Group
--------------------------------------------------------------------------------
| | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| M | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Loans from financial institutions, | 141.2 | 141.4 | 141.3 |
| covered by collateral | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Mortgages | 269.2 | 269.2 | 269.2 |
--------------------------------------------------------------------------------
| Book value of pledged shares | 17.9 | 17.2 | 17.5 |
--------------------------------------------------------------------------------
| Guarantees | - | - | 0.0 |
--------------------------------------------------------------------------------
| Total collateral | 287.1 | 286.4 | 286.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Lease and other liabilities | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| M | | | |
--------------------------------------------------------------------------------
| Lease liabilities | 101.7 | 104.9 | 103.3 |
--------------------------------------------------------------------------------
| Other liabilities | | - | 3.0 |
--------------------------------------------------------------------------------
| Mortgages | 3.9 | 2.9 | 16.2 |
--------------------------------------------------------------------------------
| Guarantees | 15.9 | 13.4 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investment commitments to real estate | 17.8 | 18.3 | 18.3 |
| funds | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest derivatives | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| M | | | |
--------------------------------------------------------------------------------
| Swap contracts, notional value | 972.8 | 997.8 | 1027.8 |
--------------------------------------------------------------------------------
| Swap contracts, fair value | -43.8 | -40.6 | -37.0 |
--------------------------------------------------------------------------------
| Cap options purchased, notional value | 437.5 | 272.5 | 512.5 |
--------------------------------------------------------------------------------
| Cap options purchased, fair value | 1.1 | 6.0 | 3.6 |
--------------------------------------------------------------------------------
| Forward rate agreements, notional | - | - | - |
| value | | | |
--------------------------------------------------------------------------------
| Forward rate agreements, fair value | - | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency derivatives | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| M | | | |
--------------------------------------------------------------------------------
| Currency forwards, notional value | - | - | - |
--------------------------------------------------------------------------------
| Currency forwards, fair value | - | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency options, bought, notional | 5.6 | 4.7 | 4.9 |
| value | | | |
--------------------------------------------------------------------------------
| Currency options, put, notional value | 3.0 | 4.7 | 4.9 |
--------------------------------------------------------------------------------
| Net fair value of currency options | -0.2 | 0.1 | -0.1 |
--------------------------------------------------------------------------------
Key figures
--------------------------------------------------------------------------------
| | 4-6/10 | 4-6/09 | 1-6/10 | 1-6/09 | 1-12/09 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, | 0.11 | 0.04 | 0.15 | -0.48 | -0.40 |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 37 | 37 | 37 |
--------------------------------------------------------------------------------
| Gearing, % | | | 142 | 144 | 141 |
--------------------------------------------------------------------------------
| Equity per share, | | | 3.55 | 3.54 | 3.54 |
--------------------------------------------------------------------------------
| Cash flow from operations | 0.11 | 0.19 | 0.19 | 0.37 | 0.45 |
| per share, | | | | | |
--------------------------------------------------------------------------------
| EPRA, NAV, net assets per | | | 4.19 | 4.20 | 4.18 |
| share, | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *) The figure includes the impact of | | | | |
| the interest on the hybrid bond | | | | |
--------------------------------------------------------------------------------
Calculation of financial ratios
--------------------------------------------------------------------------------
| Earnings per | = | Share of profit/loss for the period |
| share, | | attributable to equity holders of the parent |
| | | company- interest for the hybrid loan |
| | | Adjusted average number of shares during the |
| | | period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity per | = | Equity attributable to equity holders of parent |
| share, | | company on 31 December - Other equity reserve |
| | | Basic number of shares on 31 December |
--------------------------------------------------------------------------------
| Cash flow from | = | Operating profit |
| operations/shar | | -/+ Valuation gains and losses |
| e | | + 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 adjusted number of shares during the |
| | | period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity ratio, % | = | Shareholders' equity | |
| | 10 | Balance sheet total - advances | |
| | 0 | received | |
| | X | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gearing, % | = | Interest-bearing liabilities - | |
| | 10 | cash and cash | |
| | 0 | equivalents | |
| | X | Shareholders' equity | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EPRA NAV, net | = | Equity attributable to equity | |
| assets per share, | | holders 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 | |
| | | Basic number of shares on 31 | |
| | | December | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Related party transactions
The following transactions took place with related parties:
Rental income from state institutions and companies totalled EUR 11.6 million in
January - June 2010 (2009: EUR 11.2 million).
--------------------------------------------------------------------------------
| Management employee benefits | | | |
--------------------------------------------------------------------------------
| | 30.6.2010 | 30.6.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| Salaries and other short-term employee | 1.1 | 1.2 | 2.2 |
| benefits | | | |
--------------------------------------------------------------------------------
| Share-based payments | 0.2 | 0.2 | 0.4 |
--------------------------------------------------------------------------------
| Total | 1.3 | 1.4 | 2.6 |
--------------------------------------------------------------------------------
Release attachment: