Sponda Plc Interim report 6 August 2009 at 8:30 am
Sponda Plc's interim report January - June 2009
Sponda Group's total revenue and net operating income continued to develop
positively in the second quarter of 2009. Total revenue increased some 8 % from
the corresponding period in the previous year to EUR 61.8 million (30 June 2008:
EUR 57.3 million). Net operating income rose 6 % to EUR 44.8 (42.3) million. The
economic occupancy rate was 88.4 % (91.9 %).
The change in the value of property was EUR -129.3 (9.3) million at the end of
June, and the second quarter accounted for EUR -12.0 (-3.3) million of this. The
valuation of investment properties was carried out internally at Sponda and of
the property in the real estate funds by an external evaluator. The negative
change in the value of investment properties was due mainly to a moderate
decline in market rents and for real estate fund properties the change arose
from the rise in yield requirements.
Sponda's result after tax for the first half of 2009 was EUR -81.8 (34.3)
million. The result for the second quarter was positive, EUR 10.1 (13.8)
million.
Result of operations and financial position January - June 2009 (compared with
same period in 2008):
Total revenue grew 12 % from the previous year to EUR 122.4 (109.2) million.
Net operating income also rose about 12 %, to EUR 89.8 (80.5) million.
Operating result was EUR -49.9 (81.3) million.
The result after tax was EUR -81.8 (34.3) million.
Earnings per share were EUR -0.45 (0.19).
Cash flow from operations per share improved to EUR 0.37 (0.29).
The fair value of investment properties amounted to EUR 2,786.2 (2,761.5)
million.
Net assets per share totalled EUR 3.54 (5.21).
EPRA net assets per share were EUR 4.20 (6.26).
Economic occupancy rate was 88.4 % (91.1 %).
Like-for-like rental growth during the past two years for the property portfolio
that Sponda has owned for two years was 5.32 % for office and retail
properties, 6.85 % for shopping centres and -4.18 % for logistics properties.
Result of operations and financial position April - June 2009 (compared with
same period in 2008):
Total revenue increased 8 % from the previous year to EUR 61.8 (57.3) million.
Net operating income was EUR 44.8 (42.3) million, growth of 6 % year-on-year.
Operating profit was EUR 27.9 (34.9) million, which includes a change in the
value of properties of EUR -12.0 (-3.3) million.
Profit after tax was EUR 10.1 (13.8) million.
Earnings per share were EUR 0.05 (0.08).
Cash flow from operations per share was EUR 0.19 (0.15).
Key figures
--------------------------------------------------------------------------------
| | 4-6/09 | 4-6/08 | 1-6/09 | 1-6/08 | 1-12/08 |
--------------------------------------------------------------------------------
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| Economic occupancy | | | 88.4 | 91.1 | 88.5 |
| rate, % | | | | | |
--------------------------------------------------------------------------------
| Total revenue, M€ | 61.8 | 57.3 | 122.4 | 109.2 | 224.3 |
--------------------------------------------------------------------------------
| Net operating income, | 44.8 | 42.3 | 89.8 | 80.5 | 166.8 |
| M€ | | | | | |
--------------------------------------------------------------------------------
| Operating result, M€ | 27.9 | 34.9 | -49.9 | 81.3 | 117.3 |
--------------------------------------------------------------------------------
| Earnings per share, € | 0.05 | 0.08 | -0.45 | 0.19* | 0.16* |
--------------------------------------------------------------------------------
| Cash flow from | 0.19 | 0.15 | 0.37 | 0.29 | 0.78 |
| operations | | | | | |
| per share, € | | | | | |
--------------------------------------------------------------------------------
| Net assets per share, € | | | 3.54 | 5.21* | 4.93* |
--------------------------------------------------------------------------------
| EPRA net assets per | | | 4.20 | 6.26* | 6.04* |
| share, € | | | | | |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 37 | 34 | 32 |
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| Gearing, % | | | 144 | 160 | 180 |
--------------------------------------------------------------------------------
* As the result of the rights offering in the second quarter, per share figures
have been adjusted, in accordance with IAS 33.
CEO Kari Inkinen:
”The uncertainty in the real estate market remains. This can be seen, for
example, in the very low volume of property transactions compared to last year.
This makes it difficult to determine the value of properties, and is also
reflected in developments in property values. There is going to be pressure to
reduce property rent levels, and this in turn will affect the valuation of
properties.
Sponda strengthened its capital structure against possible reductions in the
values of properties by organising a rights offering with pre-emptive
subscription rights for existing shareholders. The share offering, which raised
some EUR 200 million, was successful and was oversubscribed. The funds raised
were used to repay debts, strengthening the company's balance sheet. I would
like to thank shareholders for participating in the rights offering and for
their confidence in Sponda.
Despite the pressure to reduce property rents, we have succeeded in keeping the
fall in the occupancy rate very moderate. One very positive feature has been
that new leasing agreements have on average been signed with higher rents than
the leases that have expired.”
Prospects
Sponda forecasts that the company's net operating income will be higher than in
2008. The reasons for this are that during 2008 rent levels rose and several
fully leased office and retail properties were completed and added to Sponda's
investment property portfolio.
The company also estimates that its economic occupancy rate will decline only
slightly in 2009 from the figure at the end of 2008, even though the property
market expects the number of vacant business premises to increase in 2009
significantly. The forecast for the occupancy rate is based on the company's
assessment of the lease agreements that are starting or expiring by the end of
2009.
When making the forecasts for 2009, the company has assumed that,
despite the uncertain market conditions, no significant losses of income will
occur in 2009 due to the insolvency of tenants.
Business conditions - Finland
The volume of real estate transactions remained at a low level. The Institute
for Real Estate Economics (KTI) estimated that property transactions with a
total value of about EUR 680 million had been made in Finland by the end of
June. The most active buyers were Finnish institutional investors.
Finnish business cycle forecasts estimate that the gross national product will
decline 5-6 % in 2009. Unemployment has risen to about 9 %, and is forecast to
continue to rise in 2010. As the national economy shrinks, forecasts for the
property market indicate that vacancy rates will rise, as new properties have
been completed and businesses require less space. It is also expected that there
will be pressure to reduce rental levels.
Business conditions - Russia
The consensus estimate for growth in Russia's gross national product in 2009 is
some -7 %. For 2010 positive growth is forecast, mainly due to the rise in the
price of oil, the strengthening of the rouble and increasing industrial output.
Hardly any real estate transactions have taken place in Russia in 2009, which
makes it extremely challenging to define the market prices of properties.
According to some real estate agents, yield requirements for properties vary
between 11.5 and 13 % in Moscow and in St Petersburg.
Vacancy rates for high quality offices in the Moscow and St Petersburg regions
rose during the first half of 2009. Vacancy rates in both cities are around 15 -
25 %, depending on the geographical location. Rental levels fell considerably
from the very high levels of 2008 for both office and retail premises.
Sponda's operations in January - June 2009
Sponda owns, leases and develops business properties in the Helsinki
Metropolitan Area and the largest cities in Finland, and in Russia. Sponda's
operations are organized in four business units: Investment Properties, Property
Development, Real Estate Funds, and Russia. The Investment Properties unit is
divided into three segments: Office and Retail Properties, Shopping Centres and
Logistics Properties. The other segments are Real Estate Funds, Property
Development and Russia.
Net operating income from all of Sponda's property assets totalled EUR 89.8
(80.5) million in the six month period. Office and retail premises accounted for
53 % of this, shopping centres for 16 %, logistics properties for 16 %, the Real
Estate Funds unit for 6 % and Russia for 10 %. Like-for-like rental growth
during the past two years for the property portfolio that Sponda has owned for
two years was 5.32 % for office and retail properties, 6.85 % for shopping
centres and -4.18 % for logistics properties. Rental growth is calculated in
accordance with EPRA recommendations.
The economic occupancy rates by type of property and geographical area were as
follows:
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| Type of property | 30.6.09 | 30.6.08 | 31.12.08 |
--------------------------------------------------------------------------------
| Office and Retail, % | 90.3 | 90.5 | 91.1 |
--------------------------------------------------------------------------------
| Shopping centres | 97.1 | 95.7 | 96.7 |
--------------------------------------------------------------------------------
| Logistics, % | 76.1 | 87.5 | 77.4 |
--------------------------------------------------------------------------------
| Russia and Baltic, % | 89.1 | 100.0 | 86.3 |
--------------------------------------------------------------------------------
| Total property portfolio, % | 88.4 | 91.1 | 88.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Geographical area | 30.6.09 | 30.6.08 | 31.12.08 |
--------------------------------------------------------------------------------
| Helsinki Business District, % | 91.3 | 91.9 | 90.4 |
--------------------------------------------------------------------------------
| Helsinki Metropolitan Area, % | 91.2 | 90.6 | 92.5 |
--------------------------------------------------------------------------------
| HMA logistics, % | 74.5 | 85.8 | 75.0 |
--------------------------------------------------------------------------------
| Other areas, % | 92.8 | 96.9 | 91.9 |
--------------------------------------------------------------------------------
| Total property portfolio, % | 88.4 | 91.1 | 88.5 |
--------------------------------------------------------------------------------
Total cash flow derived from leasing agreements on 30 June 2009 was EUR 1,108
million (30 June 2008: EUR 862 million). Sponda had 2,018 clients and altogether
3,150 leasing agreements. The company's biggest tenants were the Finnish State
(8.4 % of rental income), Kesko Group (6.5 % of rental income), Sampo Bank Plc
(6.1 % of rental income) and HOK-Elanto (4.1 % of rental income). Sponda's 10
largest tenants generate about 33 % of the company's total rental income.
Sponda's tenants by sector were as follows:
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| Sector | % of net rental |
--------------------------------------------------------------------------------
| Professional, scientific and technical activities | 5.5 % |
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| Energy | 0.5 % |
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| Public sector | 10.3 % |
--------------------------------------------------------------------------------
| Wholesale/retail | 27.2 % |
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| Education | 0.9 % |
--------------------------------------------------------------------------------
| Media /Publishing | 2.0 % |
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| Logistics/Transport | 8.4 % |
--------------------------------------------------------------------------------
| Hotel and catering business | 4.6 % |
--------------------------------------------------------------------------------
| Other services | 7.9 % |
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| Banking/Investment | 11.7 % |
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| Construction | 2.8 % |
--------------------------------------------------------------------------------
| Industry/manufacturing | 6.0 % |
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| Healthcare | 4.0 % |
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| Telecommunications | 7.2 % |
--------------------------------------------------------------------------------
| Others | 1.2 % |
--------------------------------------------------------------------------------
The average length of all the leasing agreements was 4.7 (4.3) years. The
average length of leasing agreements was 5.0 years for office and retail
properties, 5.3 years for shopping centres and 3.3 years for logistics
properties. A total of 176 new leases (42,000 m²) came into force in January -
June 2009. The figure includes the lease agreements for the Elo shopping centre.
During the January - June period 86 leases (30,000 m²) expired. The lease
agreements for Sponda's property portfolio expire as follows:
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| Expiry within | % of rental income |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 year | 13.1 |
--------------------------------------------------------------------------------
| 2 years | 11.7 |
--------------------------------------------------------------------------------
| 3 years | 11.5 |
--------------------------------------------------------------------------------
| 4 years | 6.6 |
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| 5 years | 10.3 |
--------------------------------------------------------------------------------
| 6 years | 5.0 |
--------------------------------------------------------------------------------
| More than 6 years | 27.9 |
--------------------------------------------------------------------------------
| Open ended | 13.9 |
--------------------------------------------------------------------------------
Property portfolio
On 30 June 2009 Sponda had a total of 203 properties, with an aggregate leasable
area of about 1.5 million m². Of this, some 52 % is office and retail premises,
9 % shopping centres and 36 % logistics premises. Some 3 % of the leasable area
of the properties is located in Russia.
At the end of June 2009 Sponda's investment properties were assessed internally.
The change in fair value in April - June was EUR -12.0 million (30 June 2008:
EUR -3.3 million) and in January - June EUR -129.3 (9.3) million. In the second
quarter, factors in this change were modernization investments and changes in
market rents for properties. For the real estate funds, in which Sponda is a
minority shareholder, the assessment of the fair value of the property portfolio
was carried out by an external evaluator. The change in fair value had an impact
on Sponda's result of EUR -5.6 million.
Valuation gains/losses on assessing Sponda's investment properties at fair value
--------------------------------------------------------------------------------
| M€ |
--------------------------------------------------------------------------------
| | 4-6/2009 | 1-6/2009 |
--------------------------------------------------------------------------------
| Changes in yield requirements (Finland) | - | -50.7 |
--------------------------------------------------------------------------------
| Changes in yield requirements (Russia) | - | -49.4 |
--------------------------------------------------------------------------------
| Development gains on property development | - | - |
| projects | | |
--------------------------------------------------------------------------------
| Modernization investments | -5.3 | -10.2 |
--------------------------------------------------------------------------------
| Change in market rents and maintenance costs | -3.1 | -1.8 |
| (Finland) | | |
--------------------------------------------------------------------------------
| Change in market rents and maintenance costs | 2.0* | -11.5 |
| (Russia) | | |
--------------------------------------------------------------------------------
| Investment properties, total | -6.4 | -123.7 |
--------------------------------------------------------------------------------
| Real estate funds | -5.6 | -5.6 |
--------------------------------------------------------------------------------
| Group, total | -12.0 | -129.3 |
--------------------------------------------------------------------------------
* Change was mainly due to changes in exchange rates
The changes in Sponda's investment property assets since the beginning of 2009
were as follows:
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| Sponda's investment | Total | Office | Shoppi | Logist | Propert | Russia |
| properties, M€ | | & | ng | ics | y | |
| | | Retail | centre | | develop | |
| | | | s | | ment | |
--------------------------------------------------------------------------------
| Operating income | 114.1 | 64.0 | 18.6 | 20.0 | 0.1 | 11.4 |
--------------------------------------------------------------------------------
| Maintenance costs | -29.7 | -16.5 | -4.1 | -5.9 | -0.5 | -2.7 |
--------------------------------------------------------------------------------
| Net operating | 84.4 | 47.5 | 14.5 | 14.1 | -0.5 | 8.6 |
| income | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investment | 2 915.5 | 1 460.6 | 541.6 | 462.8 | 189.1 | 261.3 |
| properties on 1 | | | | | | |
| Jan. 2009, includ. | | | | | | |
| cum. capitalized | | | | | | |
| interest | | | | | | |
--------------------------------------------------------------------------------
| Capitalized | 1.8 | 0.0 | 0.0 | 0.0 | 1.5 | 0.3 |
| interest 2009 | | | | | | |
--------------------------------------------------------------------------------
| Acquisitions in | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| 2009 | | | | | | |
--------------------------------------------------------------------------------
| Investments | 29.2 | 6.6 | 12.6 | 0.5 | 8.7 | 0.8 |
--------------------------------------------------------------------------------
| Other transfers | 0.0 | 1.5 | -0.1 | -1.2 | -0.3 | 0.0 |
--------------------------------------------------------------------------------
| Sales in 2009 | -36.6 | -0.4 | 0.0 | -35.3 | -0.8 | 0.0 |
--------------------------------------------------------------------------------
| Valuation | -123.7 | -33.8 | -9.6 | -17.2 | -1.7 | -61.3 |
| gains/losses | | | | | | |
--------------------------------------------------------------------------------
| Fair value of | 2 786.2 | 1 434.4 | 544.6 | 409.6 | 196.5 | 201.0 |
| investment | | | | | | |
| properties at 30 | | | | | | |
| June 2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in fair | -4.2 | -2.3 | -1.8 | -3.7 | -0.9 | -23.5 |
| value % | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Annual net | 6.8 % | 6.6 % | 6.0 % | 6.9 % | | 9.4 % |
| operating | | | | | | |
| income/ | | | | | | |
| fair value | | | | | | |
| at 30 June 2009 (* | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Weighted average | 6.84 | 6.62 | 6.11 | 8.03 | | 11.48 |
| yield requirement % | | | | | | |
| for entire | | | | | | |
| portfolio | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *) excluding | | | | | | |
| property | | | | | | |
| development | | | | | | |
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Investments and divestments
Sponda sold investment properties during the January - June period for a total
value of EUR 36.6 million, with April - June accounting for EUR 19.8 million of
this. No properties were bought during the first six months of the year.
Investments in property maintenance totalled EUR 10.2 million in the January -
June period, with EUR 5.5 million of this being spent in the second quarter.
Altogether EUR 19.3 million had been invested in property development by the end
of June, with the second quarter accounting for EUR 3.4 million. The property
development investments were mainly allocated to the renovation of the
City-Center complex in Helsinki city centre.
Office and Retail Properties
The economic occupancy rate for Office and Retail Properties was 90.3 % (30 June
2008: 90.5 %). The property portfolio had a fair value on 30 June 2009 of EUR
1,434.4 million, and the change in fair value compared to the beginning of 2009
was EUR -33.8 million. The leasable area of office and retail properties was
some 780,000 m², and an estimated 80 % of this was office premises and 20 %
retail premises. The unit's total revenue, net operating income and operating
profit in the period were as follows:
--------------------------------------------------------------------------------
| Office and Retail, | 4-6/2009 | 4-6/2008 | 1-6/2009 | 1-6/2008 | 1-12/2008 |
| M€ | | | | | |
--------------------------------------------------------------------------------
| Total revenue | 32.4 | 32.1 | 65.2 | 62.6 | 125.7 |
--------------------------------------------------------------------------------
| Net operating | 23.9 | 23.7 | 48.0 | 46.2 | 92.9 |
| income | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 19.9 | 20.9 | 11.3 | 45.1 | 47.7 |
--------------------------------------------------------------------------------
In January - June 2009 Sponda sold office and retail properties for EUR 0.9
million. No properties were acquired in the period. Capital expenditure on
property maintenance amounted to EUR 7.5 million by the end of June.
Shopping centres
The Shopping Centres unit had an economic occupancy rate of 97.1 % (96.1 %). The
properties had a fair value of EUR 544.6 million, including a change in fair
value of EUR -9.6 million. The shopping centres had a combined leasable area of
about 140,000 m². The unit's total revenue, net operating income and operating
profit in the period were as follows:
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| Shopping centres, | 4-6/2009 | 4-6/2008 | 1-6/2009 | 1-6/2008 | 1-12/2008 |
| M€ | | | | | |
--------------------------------------------------------------------------------
| Total revenue | 10.3 | 7.4 | 18.6 | 14.2 | 29.3 |
--------------------------------------------------------------------------------
| Net operating | 8.2 | 5.7 | 14.5 | 10.8 | 22.2 |
| income | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 5.8 | 5.0 | 4.3 | 10.6 | 17.3 |
--------------------------------------------------------------------------------
In January - June 2009 investments by the segment totalled EUR 12.5 million.
This was allocated to the Elo shopping centre, which opened on 1 April in
Ylöjärvi.
Logistics Properties
The Logistics Properties unit had an economic occupancy rate of 76.1 % (30 June
2008: 77.4 %). The low occupancy rate for the Vuosaari logistics complex lowers
the overall occupancy rate. The properties had a fair value at the end of June
2009 of EUR 409.6 million, including a change in fair value of EUR -17.2
million. The logistics properties had a total leasable area of 530,000 m². The
unit's total revenue, net operating income and operating profit in the period
were as follows:
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| Logistics, M€ | 4-6/2009 | 4-6/2008 | 1-6/2009 | 1-6/2008 | 1-12/2008 |
--------------------------------------------------------------------------------
| Total revenue | 10.2 | 9.1 | 20.6 | 18.9 | 37.9 |
--------------------------------------------------------------------------------
| Net operating | 7.3 | 6.7 | 14.5 | 14.0 | 28.5 |
| income | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 5.0 | 4.1 | -3.0 | 10.1 | 2.8 |
--------------------------------------------------------------------------------
In the January - June period Sponda sold logistics property for EUR 35.3
million, with the April - June period accounting for EUR 19.7 million of this.
The properties sold are in Vantaa and they were purchased by Mandatum Life
Insurance Company and Kaleva Mutual Insurance Company. The properties were fully
leased and the sale had no impact on Sponda's result.
No new properties were acquired. Capital expenditure on property maintenance
since the beginning of the year totalled EUR 0.5 million.
Property development
The balance sheet value of Sponda's property development portfolio at the end of
June 2009 was EUR 196.5 million. Of this, some EUR 81.5 million was in
undeveloped land sites and the remaining EUR 115.0 million was tied up in
property development projects in progress. Investments in property development
and acquisitions during January - June 2009 totalled EUR 7.9 million. Most of
this was for the City-Center project.
Sponda aims to obtain development gains of 15 % on the investment costs for
projects. At present the company's only property development project is the
City-Center shopping complex in the centre of Helsinki.
In the City-Center project, construction work is continuing on the underground
service facilities and the shafts for technical services. The next phase
involves construction of the office building, the retail premises on the third
floor, and the light shaft into the shopping centre and will begin at the
earliest towards the end of 2009. It is estimated that the renovation of the
City-Center complex will be completed in 2012 and the total investment will be
some EUR 110 million.
Sponda is carrying out development projects for the Ratina shopping centre and
adjacent areas in Tampere. A 55,000 m² shopping centre is planned for the area,
for which the total investment cost is estimated at EUR 200 million. Planning of
the project is underway, and the final decision about the investment has not
been made.
Real Estate Funds
Sponda is a minority holder in three real estate funds, First Top LuxCo, Sponda
Real Estate Fund I Ky and Sponda Real Estate Fund II Ky. Sponda is responsible
for managing the funds and their properties, and receives management fees. The
properties of the funds were valued by external evaluators, Jones Lang LaSalle
and Kiinteistötaito Peltola & Co, at the end of June 2009.
The unit's total revenue, net operating income and operating profit in the
period were as follows:
--------------------------------------------------------------------------------
| Real Estate Funds, | 4-6/2009 | 4-6/2008 | 1-6/2009 | 1-6/2008 | 1-12/2008 |
| M€ | | | | | |
--------------------------------------------------------------------------------
| Total revenue | 3.0 | 5.2 | 6.1 | 8.2 | 13.2 |
--------------------------------------------------------------------------------
| Net operating | 2.5 | 4.1 | 5.1 | 6.6 | 11.3 |
| income | | | | | |
--------------------------------------------------------------------------------
| Operating profit | -4.8 | 3.3 | -3.7 | 14.5 | 14.3 |
--------------------------------------------------------------------------------
First Top LuxCo (Sponda's holding 20 %) invests in office and retail properties
outside Finland's largest cities. At the end of June 2009 the fund's property
investments had a fair value of EUR 105.9 million.
Sponda Real Estate Fund I Ky (Sponda's holding 46 %) invests in logistics sites
outside the Helsinki metropolitan area. At the end of the second quarter of 2009
the properties it owned had a fair value of EUR 190.1 million.
Sponda Real Estate Fund II Ky (Sponda's holding 44 %) mainly invests in
logistics properties in medium sized towns in Finland. The fund has a target
size for its real estate investment of about EUR 200 million and the fair value
of its property portfolio at the end of June 2009 was EUR 96.6 million.
In addition to those mentioned above, Sponda is also responsible for managing
the property portfolio, with a value of about EUR 300 million, sold in March
2007 to Whitehall Street Real Estate Limited and Niam Nordic Investment Fund
III.
Russia
At the end of the review period, the economic occupancy rate for the Russia unit
was 89.1 % (30 June 2008: 100 %). The property portfolio had a fair value at the
end of June of EUR 201.0 million, and the change in the fair value was EUR -61.3
million. During the second quarter the value of the properties changed by EUR
2.0 million, which was due mainly to the impact of the change in exchange rates.
The assessment of the fair value of the properties in Russia was carried out
internally at Sponda in the second quarter.
Capital expenditure on property development and new purchases in January - June
2009 totalled EUR 0.4 million.
The unit's total revenue, net operating income and operating profit in the
period were as follows:
--------------------------------------------------------------------------------
| Russia, M€ | 4-6/2009 | 4-6/2008 | 1-6/2009 | 1-6/2008 | 1-12/2008 |
--------------------------------------------------------------------------------
| Total revenue | 5.7 | 2.8 | 11.4 | 4.3 | 16.2 |
--------------------------------------------------------------------------------
| Net operating | 4.2 | 2.1 | 8.6 | 3.2 | 12.0 |
| income | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 5.4 | 0.8 | -54.4 | 1.3 | 1.3 |
--------------------------------------------------------------------------------
The typical length of a lease in Russia is 11 months. Sponda's leasing
agreements in Russia also conform to this practice, apart from the Western
Realty (Ducat II) and OOO Adastra properties in Moscow and St Petersburg where
the leases are for longer periods than average. The average length of leasing
agreements in Russia on 30 June 2009 was 3.8 years, and the leasing agreements
expire as follows:
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| Expiry in | % rental income |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 year | 22.8 |
--------------------------------------------------------------------------------
| 2 years | 6.0 |
--------------------------------------------------------------------------------
| 3 years | 9.7 |
--------------------------------------------------------------------------------
| 4 years | 12.1 |
--------------------------------------------------------------------------------
| 5 years | 14.2 |
--------------------------------------------------------------------------------
| 6 years | 13.7 |
--------------------------------------------------------------------------------
| More than 6 years | 21.5 |
--------------------------------------------------------------------------------
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 the exchange rate for the dollar
or the euro. The company's rouble risk is reduced because a major part of the
unit's expenses are denominated in roubles. It is Sponda's policy to hedge 6
months cash flow in Russia.
Cash flow and financing
Sponda's net cash flow from operations on 30 June 2009 totalled EUR 42.4 million
(30 June 2008: EUR 105.1 million). Net cash flow from investing activities was
EUR -22.6 (-234.4) million, and after financing activities was EUR -6.2 (114.5)
million. Net financial income and expenses during the quarter totalled EUR -33.2
(-36.1) million. Interest expenses of EUR 1.8 (5.2) million were capitalized.
Sponda's equity ratio on 30 June 2009 was 37 % (30 June 2008: 34 %) and gearing
was 144 % (160 %). Interest-bearing debt amounted to EUR 1,633.1 (1,705.5)
million, the average maturity of Sponda's loans was 2.8 (2.9) years, and the
average interest rate 3.8 % (4.7 %). Fixed-rate and interest-hedged loans
accounted for 63 % of the loan portfolio. The average interest-bearing period of
the whole debt portfolio was 1.7 (2.4) years. The interest margin, which
describes the company's solvency, was 2.4 (2.2).
Sponda applies hedge accounting, according to which changes in the fair value of
interest rate swaps and interest rate options that meet the criteria for hedge
accounting are recognized in equity in the balance sheet.
Sponda Group's debt portfolio on 30 June 2009 comprised syndicated loans with a
nominal value of EUR 685 million, EUR 259 million in bonds, EUR 140 million in
issued commercial papers, and EUR 552 million in loans from financial
institutions. Sponda had EUR 400 million in unused credit limits and EUR 10
million in unused account limits. Sponda Group has mortgaged loans of EUR 141.4
million, or 4.7 % of the company's balance sheet.
In April 2009 Sponda extended the credit limits that function as back-up
financing for its commercial papers for a further 12 and 24 months. The
agreements were extended with the current lenders such that EUR 150 million will
mature in 12 months time and EUR 100 million in 24 months.
In addition, Sponda
signed an agreement for a EUR 82 million secured credit facility with Helaba
(Landesbank Hessen-Thűringen Girozentralen). The credit facility is for 5 years
and it ensures that Sponda can refinance the bonds that mature in 2010. The
margin on the credit facilities corresponds to today's market rates. The loan
arrangements will not have a significant impact on Sponda's financial expenses.
After these arrangements Sponda has no other long-term loans that mature before
spring 2011.
Personnel and administration
During the review period Sponda Group had on average 135 employees (30 June
2008: 135), of whom 120 (124) worked for the parent company Sponda Plc. On 30
June 2009 Sponda Group had altogether 133 (135) employees, of whom 119 (126)
were employed in the parent company Sponda Plc. Sponda has personnel in Finland
and in Russia. Sponda's sales and administration costs on 30 June 2009 totalled
EUR 11.2 million (30 June 2008: EUR 12.3 million).
Sponda's employees belong to an incentive bonus scheme, under which bonuses are
indexed to the company's targets. The company operates a long-term share-based
incentive scheme for its senior executives that was launched on 1 January 2006.
Sponda's Board of Directors decided to continue the long-term share-based
incentive scheme for its senior executives in 2009-2011. Those in the scheme are
members of the company's Executive Board. Bonuses under this scheme are based on
cash flow from operations per share and on return on equity, and Sponda shares
are bought with these bonuses. These shares carry a restriction forbidding their
disposal within two years of their issue. The bonus is paid annually.
Group structure
Sponda Group comprises the parent company, the subsidiary Sponda Kiinteistöt Oy
(formerly Kapiteeli Oy), and the Group's mutually owned property companies,
which are either wholly or majority owned by Sponda Plc or Sponda Kiinteistöt
Oy. Sponda Group also includes Sponda Russia Ltd and Sponda Asset Management Oy
and their subsidiaries.
The Sponda share and shareholders
The weighted average price of the Sponda share in January - June 2009 was EUR
2.55. The highest quotation on NASDAQ OMX Helsinki Oy was EUR 3.93 and the
lowest EUR 1.87. Turnover during the January - June period totalled 104.1
million shares or EUR 267.9 million. The closing price of the share on 30 June
2009 was EUR 2.03, and the market capitalization of the company's share capital
was EUR 563 million.
The Annual General Meeting on 25 March 2009 authorized the Board of Directors to
purchase the company's own shares. The authorization was not exercised during
the review period.
Sponda issued the following flagging announcements in the April-June 2009
period:
11 May 2009: Julius Tallberg-Kiinteistöt Oyj announced that the shares it owns
represent 7.32 % of the share capital and voting rights of Sponda Plc.
25 June 2009: Julius Tallberg-Kiinteistöt Oyj announced that the shares it owns
represent 4.82 % of the share capital and voting rights of Sponda Plc.
On 30 June 2009 the company had altogether 9 831 shareholders and its ownership
structure was as follows:
--------------------------------------------------------------------------------
| | Number of | Holding, % |
| | shares | |
--------------------------------------------------------------------------------
| Public entities | 18 118 544 | 6.5 |
--------------------------------------------------------------------------------
| Nominee registered | 93 166 191 | 33.7 |
--------------------------------------------------------------------------------
| Financial and insurance institutions, total | 13 965 134 | 5.0 |
--------------------------------------------------------------------------------
| Households | 29 947 163 | 10.8 |
--------------------------------------------------------------------------------
| Private corporations, total | 117 518 335 | 42.5 |
--------------------------------------------------------------------------------
| Non-profit organizations, total | 3 793 217 | 1.4 |
--------------------------------------------------------------------------------
| Foreign owners, total | 307 249 | 0.1 |
--------------------------------------------------------------------------------
| Special accounts | 759 629 | 0.3 |
--------------------------------------------------------------------------------
| Total number of shares | 277 575 462 | 100.0 |
--------------------------------------------------------------------------------
Extraordinary General Meeting
An Extraordinary General Meeting of Sponda Plc was held on 25 May 2009. The
general meeting approved the proposal by Sponda's Board of Directors to
authorize the Board of Directors to decide on a rights offering and its terms.
The authorization also included the right to decide on a secondary offering of
any unsubscribed shares as determined by the Board of Directors.
Rights offering
Sponda Plc announced on 7 May 2009 that it was planning a rights offering of
approximately EUR 200 million. Sponda's Board of Directors decided on 25 May
2009, under the authorization given by the extraordinary general meeting on 25
May 2009, on a EUR 208.2 million rights offering. The Board resolved to issue a
maximum of 166,545,277 new shares such that Sponda shareholders would have the
pre-emptive right to subscribe the new shares in proportion to their existing
shareholding in Sponda.
The subscription price for the offer shares was EUR 1.25 per offer share. The
subscription period began on 2 June 2009 and ended at 5.00 pm on 22 June. The
final result of the rights offering shows that 164,889,918 shares were
subscribed with the subscription rights, or 99.0 % of all the shares offered.
The remaining 1,655,359 shares (1.0 % of all the shares offered), which were
subscribed without subscription rights, were allocated, in accordance with the
terms and conditions of the rights offering, to subscribers who had also
subscribed shares pursuant to subscription rights.
Trading in the interim shares, representing the shares subscribed pursuant to
subscription rights in the share offering, commenced on the Helsinki Stock
Exchange on 23 June 2009. The shares subscribed in the offering were registered
with the
Finnish Trade Register and the interim shares were combined with Sponda's
existing shares on 30 June 2009.
On 25 June 2009, Sponda's Board of Directors approved all subscriptions pursuant
to subscription rights and the subscriptions made without subscription rights in
accordance with the terms and conditions of the right offering. As a result of
the rights offering, the number of Sponda shares increased by 166,545,277 to
277,575,462.
Sponda's largest shareholder, Solidium Oy, subscribed 57,098,247 shares in the
offer, Julius Tallberg-Kiinteistöt Oyj subscribed 7,815,679 shares and Ilmarinen
Mutual Pension Insurance Company 7,231,638 shares. Danske Markets and UBS
Investment Bank acted as joint global coordinators and joint bookrunners for the
rights offering.
Board of Directors and auditors
Sponda's Board of Directors has seven members: Klaus Cawén, Tuula Entelä, Timo
Korvenpää, Lauri Ratia, Martin Tallberg, Arja Talma and Erkki Virtanen. At its
constitutive meeting after the AGM on 25 March 2009 the Board elected Lauri
Ratia as its chairman and Timo Korvenpää as vice chairman.
The Board of Directors assessed that of its members Klaus Cawén, Tuula Entelä,
Timo Korvenpää, Lauri Ratia and Arja Talma are independent of the company and of
major shareholders and Martin Tallberg and Erkki Virtanen are independent of the
company.
Sponda Plc's auditors are APA Raija-Leena Hankonen and authorized public
accountants KPMG Oy Ab, and APA Riitta Pyykkkö is deputy auditor.
Committees of the Board of Directors
The following were elected members of the
Audit Committee after the AGM on 25 March 2009: Arja Talma, chairman, Timo
Korvenpää, vice chairman and Erkki Virtanen, ordinary member.
The following were elected to the Structure and Remuneration Committee after the
AGM on 25 March 2009: Lauri Ratia, chairman, Klaus Cawén, vice chairman, and
Tuuls Entelä and Martin Tallberg, ordinary members.
Management
Sponda Plc's president and chief executive officer is Kari Inkinen. The
Executive Board comprises the president and CEO, the CFO, the SVP Corporate
Communications and IR, and the heads of the business units, in total seven
persons.
Tax authority decision
Sponda stated in its interim report on 1 November 2007 that the Uusimaa
corporate tax office had decided to deviate from the company's 2006 tax returns
with respect to the deductible losses allowable against the company's profit.
The tax assessment adjustment board amended the Uusimaa corporate tax office's
decision regarding the deductibility of Sponda Kiinteistöt Oy's (formerly
Kapiteeli Oyj) confirmed losses for previous years in favour of Sponda in
December 2007. The company issued a statement about this on 19 December
2007.
The state official representing the interests of tax recipients has
appealed the decision of the adjustment board.
Environmental responsibility
The real estate sector plays a major role in fighting climate change and
promoting the wellbeing of the environment. Sponda takes environmental aspects
into account in the design and use of properties. Sponda improves energy
efficiency at properties by upgrading and replacing the technical systems and
equipment on the properties. Heat recovery equipment, for example, can give
significant energy savings.
In the design and construction of the Prisma retail property in Itäkeskus,
Helsinki, which was completed at the end of 2008, particular attention was paid
to energy efficiency, and this has been increased through the use of technical
building systems. For example, the condensation heat from refrigeration
equipment is used to heat the parking facilities, and ventilation in the parking
facilities is governed by the level of exhaust fumes in the air. Powerful air
curtain heaters in the main entrances give further energy savings.
During 2009 Sponda is introducing the ”Sponda 10+” scheme. Ten properties have
been chosen for the pilot project in the scheme, in which Sponda and the users
of the property aim to identify areas where energy can be saved. The costs saved
in this way will be re-invested in the property, so the clients will also
benefit financially from the scheme. Sponda's head office is one of the
properties in the pilot scheme.
One goal for 2009 is to further develop the main guidelines for new projects.
This will utilize the feedback received about completed projects and will
examine how implementing the guidelines has affected the environmental impact of
buildings during their use.
Prospects
Sponda forecasts that the company's net operating income will be higher than in
2008. The reasons for this are that during 2008 rent levels rose, and fully
leased office and retail properties were completed and added to Sponda's
investment property portfolio.
The company also estimates that its economic occupancy rate will only decline
slightly in 2009 from the figure at the end of 2008, even though the property
market expects the number of vacant business premises to increase in 2009
significantly. The forecast for the occupancy rate is based on the company's
assessment of the lease agreements that are starting or expiring by the end of
2009.
When making the forecasts for 2009, the company has assumed that,
despite the uncertain market conditions, no significant losses of income will
occur in 2009 due to the insolvency of tenants.
Risks and uncertainty factors in the near future
Sponda believes that the key risks and uncertainty factors in the current
financial period, due to the recession, relate to changes in the fair value of
properties, a decline in economic occupancy rates, a reduction in market rents
and a decline in rental income resulting from the insolvency of tenants.
The values of properties follow the business cycle, and in the current state of
the market it is possible that the value of Sponda's properties will continue to
fall in 2009 in Finland and in Russia. This may weaken the company's equity
ratio and its profit.
The general economic situation in Finland and Russia may cause the solvency of
Sponda's customers to weaken in 2009, which in turn may reduce Sponda's rental
income and increase the vacancy rates in the properties owned by the company.
The operations in Russia increase Sponda's foreign exchange risk. The company
hedges the cash flow risk in Russia for the coming 6 months.
6 August 2009
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
This interim report has been prepared applying IAS 34 (Interim Reports). The
report is unaudited.
Sponda Plc
Consolidated income statement (IFRS)
M€
--------------------------------------------------------------------------------
| | | 4-6/09 | 4-6/08 | 1-6/09 | 1-6/08 | 1-12/08 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | | | | | |
--------------------------------------------------------------------------------
| | Rental income and | 58.9 | 51.7 | 116.4 | 100.5 | 210,8 |
| | recoverables | | | | | |
--------------------------------------------------------------------------------
| | Interest income from | 0.1 | 0.1 | 0.2 | 0.2 | 0,3 |
| | finance leasing | | | | | |
| | agreements | | | | | |
--------------------------------------------------------------------------------
| | Service income | - | - | - | - | - |
--------------------------------------------------------------------------------
| | Fund management fees | 2.8 | 5.5 | 5.9 | 8.5 | 13,1 |
| | and share of fund | | | | | |
| | profit | | | | | |
--------------------------------------------------------------------------------
| | | 61.8 | 57.3 | 122.4 | 109.2 | 224,3 |
--------------------------------------------------------------------------------
| Expenses | | | | | |
--------------------------------------------------------------------------------
| | Maintenance expenses | -16.5 | -14.2 | -31.7 | -27.3 | -55,5 |
--------------------------------------------------------------------------------
| | Service expenses | - | - | - | - | - |
--------------------------------------------------------------------------------
| | Direct fund expenses | -0.5 | -0.8 | -0.9 | -1.4 | -2,0 |
--------------------------------------------------------------------------------
| | | -17.0 | -15.0 | -32.6 | -28.7 | -57,5 |
--------------------------------------------------------------------------------
| Net operating income | 44.8 | 42.3 | 89.8 | 80.5 | 166.8 |
--------------------------------------------------------------------------------
| Profit/loss on sales of | 0.3 | 0.9 | 0.5 | 1.3 | 12.1 |
| investment properties | | | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | -12.0 | -3.3 | -129.3 | 9.3 | -44.9 |
--------------------------------------------------------------------------------
| Allocation of goodwill | - | - | - | - | -13.0 |
--------------------------------------------------------------------------------
| Profit/loss on sales of | 0.4 | 1.7 | 0.2 | 2.2 | 21.5 |
| trading properties | | | | | |
--------------------------------------------------------------------------------
| Sales and marketing | -0.4 | -0.6 | -0.7 | -1.1 | -2.1 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Administrative expenses | -5.4 | -6.0 | -10.5 | -11.2 | -22.1 |
--------------------------------------------------------------------------------
| Share of result of | 0.0 | -0.1 | 0.0 | -0.1 | -0.4 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 0.2 | 0.1 | 0.4 | 0.8 | 0.8 |
--------------------------------------------------------------------------------
| Other operating expenses | 0.0 | -0.2 | -0.3 | -0.4 | -1.3 |
--------------------------------------------------------------------------------
| Operating result | 27.9 | 34.9 | -49.9 | 81.3 | 117.3 |
--------------------------------------------------------------------------------
| Financial income | 0.9 | 0.7 | 1.3 | 1.3 | 1.7 |
--------------------------------------------------------------------------------
| Financial expenses | -15.1 | -18.4 | -34.5 | -37.3 | -76.7 |
--------------------------------------------------------------------------------
| Provision for interest | - | - | - | -0.1 | -0.1 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Financial income and | -14.2 | -17.7 | -33.2 | -36.1 | -75.1 |
| expenses, net | | | | | |
--------------------------------------------------------------------------------
| Profit before taxes | 13.7 | 17.1 | -83.0 | 45.2 | 42.2 |
--------------------------------------------------------------------------------
| Income taxes for current | -0.8 | -0.2 | -1.2 | -0.1 | -1.3 |
| and previous fiscal years | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | -2.8 | -3.1 | 2.4 | -10.8 | -11.8 |
--------------------------------------------------------------------------------
| Income taxes, total | -3.6 | -3.3 | 1.2 | -10.9 | -13.1 |
--------------------------------------------------------------------------------
| Profit for period | 10.1 | 13.8 | -81.8 | 34.3 | 29.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 10.1 | 13.9 | -81.8 | 34.4 | 29.3 |
| parent company | | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | -0.1 | -0.1 | -0.1 | -0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share based | | | | | |
| on profit attributable to | | | | | |
| equity holders of the | | | | | |
| parent company: | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic and diluted,€ | 0.05 | 0.08 | -0.45 | 0.19 | 0.16 |
--------------------------------------------------------------------------------
| Basic and diluted, | 0.04 | 0.08 | -0.48 | 0.19 | 0.13 |
| attributable to equity | | | | | |
| holders, € | | | | | |
--------------------------------------------------------------------------------
| Basic and diluted, | 0.01 | 0.00 | 0.03 | 0.00 | 0.03 |
| attributable to holders of | | | | | |
| hybrid loan, € | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of shares, | | | | | |
| million | | | | | |
--------------------------------------------------------------------------------
| Basic and diluted, million | 187.8 | 178.0 | 182.9 | 178.0 | 178.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Statement of comprehensive | | | | | |
| income (IFRS) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/loss for period | 10.1 | 13.8 | -81.8 | 34.3 | 29.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive income | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net loss/profit from | 3.8 | 30.0 | -13.8 | 17.7 | -39.9 |
| hedging cash flow | | | | | |
--------------------------------------------------------------------------------
| Translation difference | -0.2 | 1.8 | 3.6 | -0.5 | -2.0 |
--------------------------------------------------------------------------------
| Other items | - | - | - | - | 0.1 |
--------------------------------------------------------------------------------
| Taxes on comprehensive | -0.7 | -8.1 | 2.1 | -4.5 | 10.4 |
| income | | | | | |
--------------------------------------------------------------------------------
| Other comprehensive income | 2.9 | 23.7 | -8.1 | 12.7 | -31.5 |
| for period after taxes | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comprehensive profit/loss | 13.0 | 37.5 | -89.9 | 47.0 | -2.3 |
| for period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Allocation of | | | | | |
| comprehensive profit/loss | | | | | |
| for period: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of parent | 13.0 | 37.6 | -89.8 | 47.1 | -2.2 |
| company | | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | -0.1 | -0.1 | -0.1 | -0.1 |
--------------------------------------------------------------------------------
Consolidated balance sheet (IFRS)
M€
--------------------------------------------------------------------------------
| | 30.6.2009 | 31.12.2008 | 30.6.2008 | 1.1.2008 |
--------------------------------------------------------------------------------
| ASSETS | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Investment properties | 2 786.2 | 2 915.5 | 2 761.5 | 2 539.4 |
--------------------------------------------------------------------------------
| Investments in real estate | 57.8 | 60.6 | 57.2 | 35.0 |
| funds | | | | |
--------------------------------------------------------------------------------
| Property, plant and | 14.6 | 14.5 | 14.4 | 15.7 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Goodwill | 14.5 | 14.5 | 27.5 | 27.5 |
--------------------------------------------------------------------------------
| Other intangible assets | 0.0 | 0.0 | 0.1 | 4.1 |
--------------------------------------------------------------------------------
| Finance lease receivables | 2.7 | 2.7 | 2.7 | 2.7 |
--------------------------------------------------------------------------------
| Investments in associated | 2.8 | 3.3 | 3.0 | 0.0 |
| companies | | | | |
--------------------------------------------------------------------------------
| Long-term receivables | 4.2 | 4.7 | 43.9 | 26.4 |
--------------------------------------------------------------------------------
| Deferred tax assets | 53.2 | 56.6 | 53.1 | 56.9 |
--------------------------------------------------------------------------------
| Total non-current assets | 2 936.2 | 3 072.5 | 2 963.4 | 2 707.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Trading properties | 27.6 | 29.5 | 36.5 | 37.2 |
--------------------------------------------------------------------------------
| Trade and other | 43.6 | 56.7 | 60.8 | 130.7 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 28.9 | 16.0 | 12.5 | 27.4 |
--------------------------------------------------------------------------------
| Total current assets | 100.1 | 102.3 | 109.9 | 195.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 3 036.3 | 3 174.7 | 3 073.3 | 2 903.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY AND | | | | |
| LIABILITIES | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to | | | | |
| equity | | | | |
--------------------------------------------------------------------------------
| holders of parent company | | | | |
--------------------------------------------------------------------------------
| Share capital | 111.0 | 111.0 | 111.0 | 111.0 |
--------------------------------------------------------------------------------
| Share premium fund | 159.5 | 159.5 | 159.5 | 159.5 |
--------------------------------------------------------------------------------
| Translation differences | 0.8 | -1.4 | 0.3 | 0.7 |
--------------------------------------------------------------------------------
| Fair value fund | -29.9 | -19.7 | 22.9 | 9.8 |
--------------------------------------------------------------------------------
| Revaluation fund | 0.6 | 0.6 | 0.6 | 0.6 |
--------------------------------------------------------------------------------
| Reserve for invested | 411.9 | 209.7 | 209.7 | 209.7 |
| unrestricted equity | | | | |
--------------------------------------------------------------------------------
| Other equity fund | 129.0 | 129.0 | 129.0 | - |
--------------------------------------------------------------------------------
| Retained earnings | 327.6 | 418.4 | 423.1 | 444.6 |
--------------------------------------------------------------------------------
| | 1 110.4 | 1 007.1 | 1 056.1 | 935.9 |
--------------------------------------------------------------------------------
| Minority interest | 1.7 | 1.8 | 1.5 | 2.2 |
--------------------------------------------------------------------------------
| Total shareholders' equity | 1 112.1 | 1 008.9 | 1 057.7 | 938.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and | 1 326.9 | 1 543.8 | 1 262.1 | 1 056.4 |
| borrowings | | | | |
--------------------------------------------------------------------------------
| Provisions | 0.3 | 8.7 | 13.7 | 15.0 |
--------------------------------------------------------------------------------
| Other liabilities | 38.3 | 26.3 | 0.1 | 0.0 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 199.9 | 216.7 | 224.8 | 213.7 |
--------------------------------------------------------------------------------
| Total non-current | 1 565.4 | 1 795.5 | 1 500.7 | 1 285.2 |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Current interest-bearing | 306.2 | 284.5 | 443.3 | 606.3 |
| loans and borrowings | | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 52.5 | 85.9 | 71.6 | 73.4 |
--------------------------------------------------------------------------------
| Total current liabilities | 358.8 | 370.4 | 514.9 | 679.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 1 924.2 | 2 165.8 | 2 015.6 | 1 964.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders' equity | 3 036.3 | 3 174.7 | 3 073.3 | 2 903.0 |
| and liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-bearing | 1 633.1 | 1 828.3 | 1 705.5 | 1 662.7 |
| liabilities | | | | |
--------------------------------------------------------------------------------
Consolidated statement of cash flows (IFRS)
M€
--------------------------------------------------------------------------------
| | 1-6/2009 | 1-12/2008 | 1-6/2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operating | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Net profit for the period | -81.8 | 29.2 | 34.3 |
--------------------------------------------------------------------------------
| Adjustments | 160.9 | 134.6 | 34.8 |
--------------------------------------------------------------------------------
| Change in net working capital | 12.5 | 49.8 | 73.0 |
--------------------------------------------------------------------------------
| Interest received | 0.7 | 1.3 | 1.1 |
--------------------------------------------------------------------------------
| Interest paid | -46.1 | -70.3 | -37.1 |
--------------------------------------------------------------------------------
| Other financial items | -3.2 | -2.2 | -0.9 |
--------------------------------------------------------------------------------
| Dividends received | 0.5 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Taxes received/paid | -0.9 | -1.8 | -0.1 |
--------------------------------------------------------------------------------
| Net cash from operating | 42.4 | 140.7 | 105.1 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Investments in investment | -46.5 | -466.7 | -231.1 |
| properties | | | |
--------------------------------------------------------------------------------
| Investments in real estate funds | -2.9 | -16.3 | -11.3 |
--------------------------------------------------------------------------------
| Investments in tangible and | -0.3 | -0.8 | -0.5 |
| intangible assets | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of investment | 27.0 | 93.9 | 8.5 |
| properties | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of intangible | - | 0.0 | - |
| and tangible assets | | | |
--------------------------------------------------------------------------------
| Repayment of loan receivables | 0.0 | - | - |
--------------------------------------------------------------------------------
| Net cash from investing | -22.6 | -389.8 | -234.4 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Proceeds from share issue | 200.0 | - | - |
--------------------------------------------------------------------------------
| Proceeds from equity bond | - | 128.6 | 128.7 |
--------------------------------------------------------------------------------
| Non-current loans, raised | 91.2 | 540.7 | 214.4 |
--------------------------------------------------------------------------------
| Non-current loans, repayments | -207.9 | -140.4 | -5.2 |
--------------------------------------------------------------------------------
| Current loans, raised / | -78.2 | -235.4 | -167.9 |
| repayments | | | |
--------------------------------------------------------------------------------
| Interest paid on equity bond | -11.4 | - | - |
--------------------------------------------------------------------------------
| Dividends paid | - | -55.5 | -55.5 |
--------------------------------------------------------------------------------
| Net cash from financing | -6.2 | 238.0 | 114.5 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash | 13.6 | -11.1 | -14.8 |
| equivalents | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents, start | 16.0 | 27.4 | 27.4 |
| of period | | | |
--------------------------------------------------------------------------------
| Impact of changes in exchange | -0.7 | -0.3 | -0.1 |
| rates | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents, end of | 28.9 | 16.0 | 12.5 |
| period | | | |
--------------------------------------------------------------------------------
Changes in Group shareholders' equity
M€
--------------------------------------------------------------------------------
| | Share | Share | Transl | Fair | Revaluat | Investe |
| | capita | premium | ation | value | ion | d |
| | l | reserve | differ | reserve | reserve | nonrest |
| | | | ences | | | ricted |
| | | | | | | equity |
| | | | | | | reserve |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 31 Dec. | 111.0 | 159.5 | 0.7 | 9.8 | 0.6 | 209.7 |
| 2007 | | | | | | |
--------------------------------------------------------------------------------
| Impact of | | | | | | |
| adopting IAS 23 | | | | | | |
--------------------------------------------------------------------------------
| Adjusted equity 1 | 111.0 | 159.5 | 0.7 | 9.8 | 0.6 | 209.7 |
| Jan. 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | -0.4 | 13.1 | | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | | |
--------------------------------------------------------------------------------
| Dividend payment | | | | | | |
--------------------------------------------------------------------------------
| Options | | | | | | |
| implemented and | | | | | | |
| paid as shares | | | | | | |
--------------------------------------------------------------------------------
| Equity at 30 June | 111.0 | 159.5 | 0.3 | 22.9 | 0.6 | 209.7 |
| 2008 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Other | Retaine | Total | Minorit | Total | |
| | equity | d | | y | sharehol | |
| | reserv | earning | | interes | ders' | |
| | e | s | | t | equity | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. | - | 441.3 | 932.6 | 2.2 | 934.8 | |
| 2007 | | | | | | |
--------------------------------------------------------------------------------
| Impact of | | 3.3 | 3.3 | | 3.3 | |
| adopting IAS 23 | | | | | | |
--------------------------------------------------------------------------------
| Adjusted equity 1 | - | 444.6 | 935.9 | 2.2 | 938.1 | |
| Jan. 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | 34.4 | 47.1 | -0.1 | 47.0 | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Change | 129.0 | | 129.0 | -0.6 | -0.6 | |
--------------------------------------------------------------------------------
| Dividend payment | | -55.5 | -55.5 | | -55.5 | |
--------------------------------------------------------------------------------
| Options | | -0.4 | -0.4 | | -0.4 | |
| implemented and | | | | | | |
| paid as shares | | | | | | |
--------------------------------------------------------------------------------
| Equity at 30 June | 129.0 | 423.1 | 1 | 1.5 | 1 057.7 | |
| 2008 | | | 056.1 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Share | Share | Transl | Fair | Revaluat | Investe |
| | capita | premium | ation | value | ion | d |
| | l | reserve | differ | reserve | reserve | nonrest |
| | | | ences | | | ricted |
| | | | | | | equity |
| | | | | | | reserve |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. | 111.0 | 159.5 | -1.4 | -19.7 | 0.6 | 209.7 |
| 2008 | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | | | 2.1 | -10.2 | | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | | 202.2 |
--------------------------------------------------------------------------------
| Equity 30 June | 111.0 | 159.5 | 0.8 | -29.9 | 0.6 | 411.9 |
| 2009 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Other | Retaine | Total | Minorit | Total | |
| | equity | d | | y | sharehol | |
| | reserv | earning | | interes | ders' | |
| | e | s | | t | equity | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. | 129.0 | 418.4 | 1 | 1.8 | 1 008.9 | |
| 2008 | | | 007.1 | | | |
--------------------------------------------------------------------------------
| Comprehensive | | -81.8 | -89.8 | -0.1 | -89.9 | |
| income in period | | | | | | |
--------------------------------------------------------------------------------
| Interest paid on equity | -8.4 | -8.4 | | -8.4 | |
| bond | | | | | |
--------------------------------------------------------------------------------
| Change | | -0.6 | 201.5 | 0.0 | 0.0 | |
--------------------------------------------------------------------------------
| Equity 30 June | 129.0 | 327.6 | 1 | 1.7 | 1 112.1 | |
| 2009 | | | 110.4 | | | |
--------------------------------------------------------------------------------
Notes to the Group's interim report
Accounting principles
This interim report bulletin has been prepared in accordance with IAS 34,
Interim Financial Reporting. The accounting principles applied in preparing the
interim report are the same as those used for the 2008 financial statements.
All the figures have been rounded, so the total of the individual figures may
differ from the total amounts given. The figures in the interim report have not
been audited.
Assessment of impact of new standards and interpretations
The following revised standards that came into force at the beginning of 2009
have had an impact on Sponda's consolidated reporting:
IAS 23 Borrowing costs: The revised standard requires the borrowing costs
arising from purchasing, building or manufacturing a qualifying asset to be
immediately included in the acquisition cost of the asset. For Sponda, this
mainly affects the construction projects of its property development activities.
The company adopted the standard retroactively, as from 1 January 2006.
Previously, borrowing costs have been recognized in the financial period in
which they were incurred. The change in the accounting principles affects
borrowing costs and the change in the fair value of property development
projects in the income statement. The figures in the 2008 interim reports and
financial statements have been adjusted accordingly. The impact on the retained
earnings at 1 January 2008 is EUR 3.3 million and on the net profit for 2008 EUR
2.6 million. The impact on the net profit for Q2 2008 was EUR 2.1 million and
for the January-June 2008 period EUR 3.8 million.
IAS 1 Presentation of Financial Statements: In accordance with the revised
standard, as from the beginning of 2009 Sponda is presenting two separate
statements, an income statement and a statement of comprehensive income. The
revision also affects the presentation of the calculation of shareholders
equity.
IAS 40 Investment Properties: As a result of the amendment to the standard,
Sponda is presenting investment properties that are under construction at fair
value. One condition for this, however, is that the fair value can be reliably
measured. The fair value has not been measured for the development investments
for the City-Center project in the centre of Helsinki. The amendment is not
applied retroactively.
IFRS 8 Operating segments: The standard states that segment information shall be
based on regular internal reporting to management. After adopting the standard,
Sponda has added Shopping Centres to segment reporting.
Deferred tax assets have not been recognized for the difference between the
acquisition cost of a property and a lower fair value, if the property has been
recognized as an asset item in accordance with IAS 12.15b and a tax liability
was not originally recognized at the time of purchase for the difference between
the acquisition cost and the taxable value of the property.
Segment information, income statement
M€
--------------------------------------------------------------------------------
| Business | | | | | | | | |
| areas | | | | | | | | |
--------------------------------------------------------------------------------
| Income | Office | Shopp | Logi | Prope | Russi | Fund | Other | Group |
| statement | & | ing | stic | rty | a | s | | total |
| 1- | Retail | centr | s | devel | | | | |
| 6/2009 | | es | | opmen | | | | |
| | | | | t | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 65.2 | 18.6 | 20.6 | 0.6 | 11.4 | 6.1 | 0.0 | 122.4 |
| revenue | | | | | | | | |
--------------------------------------------------------------------------------
| Maintenance | -17.2 | -4.1 | -6.1 | -1.6 | -2.7 | -0.9 | 0.0 | -32.6 |
| expenses and | | | | | | | | |
| direct fund | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 48.0 | 14.5 | 14.5 | -1.0 | 8.6 | 5.1 | 0.0 | 89.8 |
| operating | | | | | | | | |
| 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. | -1.7 | -61.3 | -5.6 | 0.0 | -129.3 |
| gains and | | | 2 | | | | | |
| losses | | | | | | | | |
--------------------------------------------------------------------------------
| Allocation | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| of goodwill | | | | | | | | |
--------------------------------------------------------------------------------
| Administrati | -3.4 | -0.6 | -0.7 | -1.7 | -1.7 | -3.1 | 0.0 | -11.2 |
| on 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 | 544.6 | 409. | 211.1 | 201.0 | 57.8 | 175.1 | 3 |
| assets | 437.1 | | 6 | | | | | 036.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income | Office | Shopp | Logi | Prope | Russi | Fund | Other | Group |
| statement | & | ing | stic | rty | a | s | | total |
| 1- | Retail | centr | s | devel | | | | |
| 6/2008 | | es | | opmen | | | | |
| | | | | t | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 62.6 | 14.2 | 18.9 | 1.0 | 4.3 | 8.2 | 0.0 | 109.2 |
| revenue | | | | | | | | |
--------------------------------------------------------------------------------
| Maintenance | -16.4 | -3.4 | -4.9 | -1.3 | -1.1 | -1.6 | 0.0 | -28.7 |
| expenses and | | | | | | | | |
| direct fund | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 46.2 | 10.8 | 14.0 | -0.3 | 3.2 | 6.6 | 0.0 | 80.5 |
| operating | | | | | | | | |
| income | | | | | | | | |
--------------------------------------------------------------------------------
| Profit on | 0.5 | 0.0 | 0.0 | 0.8 | 0.0 | 0.0 | 0.0 | 1.3 |
| 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 | 0.9 | 0.0 | 0.0 | 0.1 | 0.0 | 1.2 | 0.0 | 2.2 |
| on sale of | | | | | | | | |
| trading | | | | | | | | |
| properties | | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | 1.2 | 0.5 | -2.7 | 0.9 | 0.0 | 9.4 | 0.0 | 9.3 |
| gains and | | | | | | | | |
| losses | | | | | | | | |
--------------------------------------------------------------------------------
| Administrati | -3.5 | -0.7 | -1.1 | -1.8 | -2.5 | -2.7 | 0.0 | -12.3 |
| on and | | | | | | | | |
| marketing | | | | | | | | |
--------------------------------------------------------------------------------
| Other | -0.2 | 0.0 | -0.1 | 0.0 | 0.6 | 0.0 | 0.0 | 0.3 |
| operating | | | | | | | | |
| income and | | | | | | | | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 45.1 | 10.6 | 10.1 | -0.3 | 1.3 | 14.5 | 0.0 | 81.3 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | 17.2 | 27.1 | 21.1 | 94.2 | 66.7 | 11.3 | 0.5 | 238.1 |
| expenditure | | | | | | | | |
--------------------------------------------------------------------------------
| Segment | 1 | 448.8 | 357. | 364.4 | 145.7 | 57.2 | 224.3 | 3 |
| assets | 475.4 | | 5 | | | | | 073.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Geographical | | | | | | | | |
| areas | | | | | | | | |
--------------------------------------------------------------------------------
| 30 June 2009 | Income | Asset | | | | | | |
| | | s | | | | | | |
--------------------------------------------------------------------------------
| Finland | 111.0 | 2 | | | | | | |
| | | 835.3 | | | | | | |
--------------------------------------------------------------------------------
| Russia | 11.4 | 201.0 | | | | | | |
--------------------------------------------------------------------------------
| Total | 122.4 | 3 | | | | | | |
| | | 036.3 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 30 June 2008 | Income | Asset | | | | | | |
| | | s | | | | | | |
--------------------------------------------------------------------------------
| Finland | 104.9 | 2 | | | | | | |
| | | 927.6 | | | | | | |
--------------------------------------------------------------------------------
| Russia | 4.3 | 145.7 | | | | | | |
--------------------------------------------------------------------------------
| Total | 109.2 | 3 | | | | | | |
| | | 073.3 | | | | | | |
--------------------------------------------------------------------------------
Investment properties
M€
--------------------------------------------------------------------------------
| | 30.6.2009 | 31.12.2008 | 30.6.2008 |
--------------------------------------------------------------------------------
| Fair value of investment properties, | 2 915.5 | 2 534.9 | 2 534.9 |
| start of period | | | |
--------------------------------------------------------------------------------
| Impact of adopting IAS 23 on balance | | 4.5 | 4.5 |
| at start of period | | | |
--------------------------------------------------------------------------------
| Purchase of investment properties | | 210.6 | 90.4 |
--------------------------------------------------------------------------------
| Other capital expenditure on | 29.2 | 275.0 | 135.9 |
| investment properties | | | |
--------------------------------------------------------------------------------
| Disposal of investment properties | -36.6 | -82.8 | -8.2 |
--------------------------------------------------------------------------------
| Transfers to/from property, plant and | | 1.3 | 1.3 |
| equipment | | | |
--------------------------------------------------------------------------------
| Transfers from trading properties | | 14.7 | - |
--------------------------------------------------------------------------------
| Other transfers | | -2.5 | -2.5 |
--------------------------------------------------------------------------------
| Capitalized equity expenses, increase | 1.8 | 12.4 | 5.2 |
| in period | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | -123.7 | -52.6 | - |
--------------------------------------------------------------------------------
| Fair value of investment properties, | 2 786.2 | 2 915.5 | 2 761.5 |
| end of period | | | |
--------------------------------------------------------------------------------
On 30 June 2009 Sponda had a total of 203 properties, with an aggregate leasable
area of about 1.5 million m². Of this, some 52 % is office and retail premises,
9 % shopping centres and 36 % logistics premises. Some 3 % of the leasable area
of the properties is located in Russia.
At the end of June 2009 Sponda's investment properties were assessed internally.
The change in fair value in April - June was EUR -12.0 million (30 June 2008:
EUR -3.3 million) and in January - June EUR -129.3 (9.3) million. In the second
quarter, factors in this change were modernization investments and changes in
market rents for properties. An assessment was made of the fair value of the
property portfolio owned by the real estate funds in which Sponda is a minority
shareholder. This had an impact on Sponda's result of EUR -5.6 million.
The Group's most significant investment commitments
In the City-Center project, construction work is continuing on the underground
service facilities and the shafts for technical services. The next phase
involves construction of the office building, the retail premises on the third
floor, and the light shaft into the shopping centre and will begin at the
earliest towards the end of 2009. It is estimated that the renovation of the
City-Center complex will be completed in 2012 and the total investment will be
some EUR 110 million.
Sponda is carrying out development projects for the Ratina shopping centre and
adjacent areas in Tampere. A 55,000 m² shopping centre is planned for the area,
for which the total investment cost is estimated at EUR 200 million. Planning of
the project is underway, and the final decision about the investment has not
been made.
--------------------------------------------------------------------------------
| Property, plant and equipment | 30.6.2009 | 31.12.2008 | 30.6.2008 |
| M€ | | | |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 14.5 | 15.7 | 15.7 |
--------------------------------------------------------------------------------
| Additions | 0.3 | 0.8 | 0.0 |
--------------------------------------------------------------------------------
| Disposals | - | 0.0 | - |
--------------------------------------------------------------------------------
| Reclassifications to/from investment | - | -1.3 | 0.0 |
| properties | | | |
--------------------------------------------------------------------------------
| Other transfers | - | -0.1 | 0.0 |
--------------------------------------------------------------------------------
| Depreciation for the period | -0.2 | -0.6 | 0.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount, end of period | 14.6 | 14.5 | 15.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Trading properties | 30.6.2009 | 31.12.2008 | 30.6.2008 |
--------------------------------------------------------------------------------
| M€ | | | |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 29.5 | 37.2 | 37.2 |
--------------------------------------------------------------------------------
| Disposals and other changes | -1.9 | -4.5 | -1.7 |
--------------------------------------------------------------------------------
| Increases | | | 1.0 |
--------------------------------------------------------------------------------
| Reclassifications to investment | | -3.1 | |
| properties | | | |
--------------------------------------------------------------------------------
| Carrying amount, end of period | 27.6 | 29.5 | 36.5 |
--------------------------------------------------------------------------------
Tax authority decision
Sponda stated in its interim report on 1 November 2007 that the Uusimaa
corporate tax office had decided to deviate from the company's 2006 tax returns
with respect to the deductible losses allowable against the company's profit.
The tax assessment adjustment board amended the Uusimaa corporate tax office's
decision regarding the deductibility of Sponda Kiinteistöt Oy's (formerly
Kapiteeli Oyj) confirmed losses for previous years in favour of Sponda in
December 2007. The company issued a statement about this on 19 December
2007.
The state official representing the interests of tax recipients has
appealed the decision of the adjustment board.
Contingent liabilities
Collateral and commitments given by the Group
M€
--------------------------------------------------------------------------------
| | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
| Loans from financial institutions, | 141.4 | 24.2 | 50.3 |
| covered by collateral | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Mortgages | 269.2 | 80.3 | 109.2 |
--------------------------------------------------------------------------------
| Book value of pledged shares | 17.2 | - | 17.0 |
--------------------------------------------------------------------------------
| Guarantees | - | - | 57.6 |
--------------------------------------------------------------------------------
| Total collateral | 286.4 | 80.3 | 183.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Lease and other liabilities | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
| M€ | | | |
--------------------------------------------------------------------------------
| Lease liabilities | 104.9 | 45.5 | 44.6 |
--------------------------------------------------------------------------------
| Other liabilities | - | 0.1 | |
--------------------------------------------------------------------------------
| Mortgages | 2.9 | 2.8 | 3.0 |
--------------------------------------------------------------------------------
| Guarantees | 13.4 | 7.9 | 7.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest derivatives | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
| M€ | | | |
--------------------------------------------------------------------------------
| Swap contracts, notional value | 997.8 | 735.0 | 915.0 |
--------------------------------------------------------------------------------
| Swap contracts, fair value | -40.6 | 21.0 | -27.0 |
--------------------------------------------------------------------------------
| Cap options purchased, notional value | 272.5 | 547.5 | 187.5 |
--------------------------------------------------------------------------------
| Cap options purchased, fair value | 0.6 | 20.2 | 1.0 |
--------------------------------------------------------------------------------
| Forward rate agreements, notional value | - | - | - |
--------------------------------------------------------------------------------
| Forward rate agreements, fair value | - | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency derivatives | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
| M€ | | | |
--------------------------------------------------------------------------------
| Currency forward, notional value | - | - | 5.1 |
--------------------------------------------------------------------------------
| Currency forward, fair value | - | - | 0.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency options, bought, notional | 4.7 | - | - |
| value | | | |
--------------------------------------------------------------------------------
| Currency options, put, notional value | 4.7 | - | - |
--------------------------------------------------------------------------------
| Net fair value of currency options | 0.1 | - | - |
--------------------------------------------------------------------------------
Key figures
--------------------------------------------------------------------------------
| | 4-6/09 | 4-6/8 | 1-6/09 | 1-12/08 | 1-6/08 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, € | 0.05 | 0.08 | -0.45 | 0.16 | 0.19 |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 37 | 32 | 34 |
--------------------------------------------------------------------------------
| Gearing, % | | | 144 | 180 | 160 |
--------------------------------------------------------------------------------
| Equity per share, € | | | 3.54 | 4.93 | 5.21 |
--------------------------------------------------------------------------------
| Cash flow from | 0.19 | 0.15 | 0.37 | 0.78 | 0.29 |
| operations per share, | | | | | |
| € | | | | | |
--------------------------------------------------------------------------------
| EPRA, NAV, net assets | | | 4.20 | 6.04 | 6.26 |
| per share, € | | | | | |
--------------------------------------------------------------------------------
Calculation of financial ratios
--------------------------------------------------------------------------------
| Earnings/share, € | = | | Share of earnings for the period |
| | | | attributable to equity holders of the |
| | | | parent company |
--------------------------------------------------------------------------------
| | | | Adjusted average number of shares |
| | | | during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earning/share, | = | | Share of earnings for the period |
| attributable to equity | | | attributable to equity holders of the |
| holders, € | | | parent company |
| | | | - interest of the hybrid bond |
--------------------------------------------------------------------------------
| | | | Adjusted average number of shares |
| | | | during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earning/share, | = | | Interest of the hybrid bond |
| attributable to hybrid | | | |
| bond holders, € | | | |
--------------------------------------------------------------------------------
| | | | Adjusted average number of shares |
| | | | during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity ratio, % | = | 100 x | Shareholders' equity |
--------------------------------------------------------------------------------
| | | | Balance sheet total - advances |
| | | | received |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gearing, % | = | 100 x | Interest-bearing liabilities |
| | | | - cash and cash equivalents |
--------------------------------------------------------------------------------
| | | | Shareholders' equity |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity/share, € | = | | Equity attributable to equity holders |
| | | | of parent company |
--------------------------------------------------------------------------------
| | | | - Other equity reserve |
--------------------------------------------------------------------------------
| | | | Basic number of shares on the last day |
| | | | of the reporting period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | = | | Operating profit |
| operations/share, € | | | |
--------------------------------------------------------------------------------
| | | | -/+ Valuation gains/losses |
--------------------------------------------------------------------------------
| | | | + Allocation of goodwill |
--------------------------------------------------------------------------------
| | | | + Depreciation in administration |
--------------------------------------------------------------------------------
| | | | +/- Changes in provisions |
--------------------------------------------------------------------------------
| | | | +/- Defined benefit pension expenses |
--------------------------------------------------------------------------------
| | | | - Financial income & expenses |
| | | | affecting cash flow |
--------------------------------------------------------------------------------
| | | | - Taxes affecting cash flow |
--------------------------------------------------------------------------------
| | | | +/- Other items |
--------------------------------------------------------------------------------
| | | | Average weighted number of shares |
| | | | during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EPRA NAV, net assets | = | | Equity attributable to equity holders |
| per share, € | | | of parent company |
--------------------------------------------------------------------------------
| | | | - Other equity reserve |
--------------------------------------------------------------------------------
| | | | + Deferred tax relating to the fair |
| | | | valuation of property and to property |
| | | | depreciation allowances |
--------------------------------------------------------------------------------
| | | | - Goodwill relating to deferred tax |
| | | | liability |
--------------------------------------------------------------------------------
| | | | Basid number of shares on the last day |
| | | | of the reporting period |
--------------------------------------------------------------------------------
Related party transactions
The following transactions took place with related parties:
Rental income from state institutions and companies totalled EUR 11.2 million in
January-June 2009 (1-12/2008: EUR 23.9 million).
--------------------------------------------------------------------------------
| Management employee benefits | 30.6.2009 | 30.6.2008 | 31.12.2008 |
--------------------------------------------------------------------------------
| Salaries and other short-term | 1.2 | 1.2 | 2.3 |
| employee benefits | | | |
--------------------------------------------------------------------------------
| Share-based payments | 0.2 | 0.1 | 0.3 |
--------------------------------------------------------------------------------
| Total | 1.4 | 1.3 | 2.6 |
--------------------------------------------------------------------------------
