Result of operations and financial position January - June 2007 (compared with
same period in 2006):
Total revenue increased significantly to EUR 107.5 (53.3) million. The increase
was mainly due to the acquisition of Kapiteeli in December 2006.
Net operating income was EUR 76.8 (40.6) million.
The operating profit was EUR 146.5 (46.3) million, including a positive change
in the value of the investment properties of EUR 56.4 million and profit on the
disposal of properties of EUR 27.9 million.
The profit after taxes increased to EUR 79.7 (23.6) million.
Earnings per share was EUR 0.76 (0.30).
The cash flow from operations per share rose to EUR 0.45 (0.27).
The fair value of investment properties was EUR 2 305.4 (1 339.5) million.
Net assets per shares were EUR 7.94 (7.12).
Result of operations and financial position April - June 2007 (compared with
April - June in 2006):
Total revenue was EUR 48.4 (26.5) million. The second quarter figures do not
include the EUR 401 million property portfolio sold to Whitehall/Niam.
Net operating income increased to EUR 36.4 (20.1) million.
The operating profit was EUR 43.1 (23.1) million, including a positive change in
the value of the investment properties of EUR 9.4 million and profit on the
disposal of properties of EUR 5.2 million.
The profit after taxes was EUR 22.2 (11.1) million.
Earnings per share was EUR 0.20 (0.14).
The cash flow from operations per share was EUR 0.17 (0.13).
Key figures
--------------------------------------------------------------------------------
| | 4-6/07 | 4-6/06 | 1-6/07 | 1-6/06 | 1-12/06 |
--------------------------------------------------------------------------------
| Economic occupancy rate, % | | | 89.8 | 88.0* | 88.8* |
--------------------------------------------------------------------------------
| Total revenue, Me | 48.4 | 26.5 | 107.5 | 53.3 | 117.4 |
--------------------------------------------------------------------------------
| Net operating income, Me | 36.4 | 20.1 | 76.8 | 40.6 | 87.6 |
--------------------------------------------------------------------------------
| Operating profit, Me | 43.1 | 23.1 | 146.5 | 46.3 | 103.9 |
--------------------------------------------------------------------------------
| Earnings per share, e | 0.20 | 0.14 | 0.76 | 0.30 | 0.61 |
--------------------------------------------------------------------------------
| Cash flow from operations | 0.17 | 0.13 | 0.45 | 0.27 | 0.56 |
| per share, e | | | | | |
--------------------------------------------------------------------------------
| Net assets per share, e | | | 7.94 | 7.12 | 7.45 |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 35 | 41 | 20 |
--------------------------------------------------------------------------------
| Gearing, % | | | 159 | 120 | 334 |
--------------------------------------------------------------------------------
* The figure is based on Sponda's property portfolio before the Kapiteeli
acquisition.
** Cash flow from operations per share includes sales profits and losses.
Kari Inkinen, President and CEO
“I am happy with the development of Sponda's leasing operations during 2007. The
economic occupancy rate of Sponda's properties improved to 89.8 % (31 December
2006: 88.8 %). The biggest improvement was in office properties in the centre of
Helsinki and in logistics properties in the Helsinki metropolitan area. The
value of the property portfolio rose by EUR 9.4 million in the second quarter,
which was due mainly to an increase in rent levels and a decline in property
maintenance costs. Sponda financed the Kapiteeli acquisition with a short-term
loan and set a target to raise the equity ratio to at least 33 % until the end
of 2007. This target was reached already at the beginning of 2007 due to sale of
properties and refinancing the short-term loan.
Construction started according to plans on three major property development
projects during the second quarter: Vuosaari Harbour, Porkkalankatu 22, and
Vanhanlinnantie (Itäkeskus district in Helsinki). The estimated completion date
for all three projects is towards the end of 2008.”
Prospects
Sponda forecasts that the earnings per share will improve significantly in 2007
from the previous year. The economic occupancy rate of its properties and the
cash flow from operations per share, including profit and losses from the sale
of properties, are also expected to improve in 2007. The forecasts are based on
the positive development of the Finnish property market, the value increase of
the property portfolio and on the profits received from sales of properties.
Business conditions
The volume of Finland's real estate investment market in the first half of 2007
is estimated at about EUR 2.7 billion (according to KTI Kiinteistötalouden
instituutti ry), which is about one billion euros more than in January-June
2006. International investors accounted for 70 % of the transactions.
Demand in the leasing market in the Helsinki Metropolitan Area remained strong
in all sectors, and rent levels for offices and retail premises are expected to
continue to rise thanks to the strong performance of the country's economy.
Sponda's operations in January - June 2007
Sponda owns, leases and develops business properties in Finland, mainly in the
Helsinki Metropolitan Area and in the largest cities, and in Russia. As from the
beginning of 2007 Sponda reorganized its operations into five business units:
Office and Retail Property, Logistics Property, Property Development, Real
Estate Funds, and Russia & the Baltic States.
Net operating income from Sponda's property assets totalled EUR 76.8 (40.6)
million at the end of June. Office and retail premises accounted for 77 % of
this, logistics premises for 14 %, the Real Estate Funds unit for 4 % and the
Russia & the Baltic States unit for 1 %. Other net operating income, including
income from subsidiary Ovenia, accounted for 4 %. The economic occupancy rate
improved in the second quarter (compared to the first quarter) and was as
follows (the 2006 figures are for Sponda's property portfolio before the
Kapiteeli acquisition):
--------------------------------------------------------------------------------
| By type of property | 30.6.2007 | 31.3.2007 | 31.12.2006 |
--------------------------------------------------------------------------------
| Offices and retail, % | 89.7 | 89.3 | 88.8 |
--------------------------------------------------------------------------------
| Logistics, % | 89.5 | 89.0 | 88.6 |
--------------------------------------------------------------------------------
| Russia & Baltic Countries | 100.0 | 100.0 | 100.0 |
--------------------------------------------------------------------------------
| Total property portfolio, % | 89.8 | 89.3 | 88.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| By geographical area | 30.6.2007 | 31.3.2007 | 31.12.2006 |
--------------------------------------------------------------------------------
| Helsinki Business District, % | 88.3 | 86.7 | 89.7 |
--------------------------------------------------------------------------------
| Helsinki Metropolitan Area, % | 89.3 | 89.1 | 87.5 |
--------------------------------------------------------------------------------
| HMA logistics, % | 88.2 | 87.7 | 87.1 |
--------------------------------------------------------------------------------
| Other areas, % | 96.7 | 98.0 | 93.4 |
--------------------------------------------------------------------------------
| Total property portfolio, % | 89.8 | 89.3 | 88.8 |
--------------------------------------------------------------------------------
Total cash flow derived from leasing agreements on 30 June 2007 was EUR 755
million (30 June 2006: EUR 428 million) and the average length of the agreements
was 4.3 (4.1) years. The average length of leasing agreements for office and
retail properties was 4.7 years and for logistics premises it was 2.6 years.
Sponda signed a total of 147 new agreements (60 000 m²) during April - June and
during this period 97 agreements (60 000 m²) expired. Sponda's leasing contracts
expire as follows:
--------------------------------------------------------------------------------
| Expiry within | % of rental income |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1 year | 12.8 |
--------------------------------------------------------------------------------
| 2 years | 14.2 |
--------------------------------------------------------------------------------
| 3 years | 11.4 |
--------------------------------------------------------------------------------
| 4 years | 16.3 |
--------------------------------------------------------------------------------
| 5 years | 4.8 |
--------------------------------------------------------------------------------
| 6 years | 3.4 |
--------------------------------------------------------------------------------
| more than 6 years | 22.4 |
--------------------------------------------------------------------------------
| Open ended | 14.6 |
--------------------------------------------------------------------------------
Property portfolio
On 30 June 2007 Sponda Group had a total of 195 investment properties with an
aggregate leasable area of about 1.3 million m². Of this 69 % are office and
retail premises and 31 % logistics premises.
During the January - June period the fair value of Sponda's investment
properties rose by EUR 56.4 million, on 30 June 2007 standing at EUR 2 305.4
million (30 June 2006: EUR 1 339.5 million). Capital expenditure during the
period allocated to property maintenance and improvements in quality levels was
EUR 11.7 million.
During the April - June period the fair value of Sponda's investment properties
rose by EUR 9.4 million. Capital expenditure during this period allocated to
property maintenance and improvements in quality levels was EUR 4.9 million.
Factors contributing to the rise in the fair value of the investment properties
were the increase in rental levels in the signed lease contract, decrease in the
maintenance expenses and the increase in value as the result of capital
expenditure required by tenants. Yield requirements for properties remained
mainly unchanged. External valuer has not valued Sponda's properties during the
second quarter of 2007.
--------------------------------------------------------------------------------
| Sponda's investment | Total | Office | Logis- | Property | Russia |
| properties | | and retail | tics | develop- | & |
| 1 Jan.-30 | | | | ment | Baltic |
| June 2007, Me | | | | | |
--------------------------------------------------------------------------------
| Operating income | 97.3 | 80.9 | 14.9 | 0.8 | 0.7 |
--------------------------------------------------------------------------------
| Maintenance costs | -27.0 | -22.2 | -4.1 | -0.7 | -0.1 |
--------------------------------------------------------------------------------
| Net operating income | 70.3 | 58.8 | 10.8 | 0.2 | 0.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fair value of | 2 455.1 | 2 023.9 | 245.6 | 174.9 | 10.7 |
| investment properties | | | | | |
| at 1 Jan. 2007 | | | | | |
--------------------------------------------------------------------------------
| Acquisitions in 2007 | 18.8 | 9.7 | 4.6 | 0.3 | 4.3 |
--------------------------------------------------------------------------------
| Investments | 48.0 | 10.1 | 5.1 | 17.5 | 15.3 |
--------------------------------------------------------------------------------
| Other transfers | 3.8 | -1.5 | 12.5 | -7.2 | 0.0 |
| between segments | | | | | |
--------------------------------------------------------------------------------
| Sales in 2007 | -276.7 | -263.4 | -1.8 | -11.5 | 0.0 |
--------------------------------------------------------------------------------
| Fair values adjustment | 56.4 | 41.7 | 14.8 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Fair value of | 2 305.4 | 1 820.4 | 280.8 | 174.0 | 30.3 |
| investment properties | | | | | |
| at 30 June 2007 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in fair value % | 2.3 % | 2.1 % | 6.0 % | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Annual net operating | 6.4 % | 6.1 % | 8.2 % | | 10,5 % |
| income/ | | | | | |
| fair value at | | | | | |
| 30 June 2007 excluding | | | | | |
| property development | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Yield requirement used | | 5.4-8 % | 7.5-8.2 | | |
| in calculating fair | | | 5 | | |
| value -% | | | | | |
--------------------------------------------------------------------------------
Investments and divestments
During the January - June 2007 period Sponda acquired investment properties for
altogether EUR 18.8 million, and of this it acquired property for EUR 15.9
million during the second quarter. During January - June Sponda sold property
for EUR 276.7 million, with the second quarter accounting for EUR 1.7 million of
this.
Capital expenditure allocated to property maintenance and improvements in
quality levels in the second quarter amounted to EUR 4.9 million. Sponda
invested EUR 5.2 million in property development. This was spent on renovating
the City-Center complex in the centre of Helsinki and developing the logistics
centre at Vuosaari Harbour.
Office and retail properties
The economic occupancy rate for the Office and Retail Property unit continued to
improve, to 89.7 % (31 December 2006: 88.8 %). The property had a fair value on
30 June 2007 of EUR 1 820.4 million. The change in the fair value since the
beginning of 2007 was EUR 41.7 million. The property portfolio had a leasable
area of about 860 000 m², with office premises accounting for an estimated 75 %
of this and retail premises for 25 %. The unit's total revenue, net operating
income and operating profit were as follows:
--------------------------------------------------------------------------------
| Office and retail, | 4-6/2007 | 4-6/2006 | 1-6/2007 | 1-6/2006 | 1-12/2006 |
| Me | | | | | |
--------------------------------------------------------------------------------
| Total revenue | 36.5 | 18.5 | 80.9 | 37.6 | 84.7 |
--------------------------------------------------------------------------------
| Net operating | 27.8 | 13.9 | 58.8 | 28.1 | 63.1 |
| income | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 34.3 | 9.4 | 115.6 | 34.8 | 78.0 |
--------------------------------------------------------------------------------
During the second quarter of 2007 Sponda purchased office and retail property
for EUR 6.8 million. No property was sold during the second quarter. Capital
expenditure on property maintenance totalled EUR 10.1 million by the end of
June, with the second quarter accounting for EUR 3.9 million of this.
Logistics properties
The economic occupancy rate for the Logistics Properties unit improved to 89.5 %
at the end of June (31 December 2006: 88.6 %). The property had a fair value of
EUR 280.8 million, and the change in the fair value since the beginning of 2007
was EUR 14.8 million. The property portfolio had a leasable area of about
400 000 m². The unit's total revenue, net operating income and operating profit
were as follows:
--------------------------------------------------------------------------------
| Logistics, Me | 4-6/2007 | 4-6/2006 | 1-6/2007 | 1-6/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Total revenue | 7.1 | 7.4 | 14.9 | 15.1 | 28.6 |
--------------------------------------------------------------------------------
| Net operating | 5.1 | 5.9 | 10.8 | 12.0 | 22.2 |
| income | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 8.1 | 5.9 | 25.9 | 11.2 | 42.9 |
--------------------------------------------------------------------------------
During the second quarter Sponda purchased logistics property for EUR 4.6
million and sold property for EUR 1.8 million.
Capital expenditure on property maintenance totalled EUR 1.6 million at the end
of June, and of this EUR 1.0 million was spent during the second quarter.
Property development
The book value of Sponda's investment property development portfolio was EUR 174
million at the end of June 2007. During January - June EUR 17.8 million was
spent on developing properties and acquisitions, and EUR 5.2 million of this was
spent in April - June.
The renovation work on the City-Center complex continues as planned and the
underground basement facilities were completed in May 2007. The second phase,
which includes the Kaivokatu street-level premises and station tunnel premises,
has begun. This should be completed in the spring of 2008. The whole project is
estimated to be completed by 2011 and have a total investment value of
approximately EUR 110 million.
Construction of the logistics area and gatehouse building at Vuosaari Harbour
began in spring 2007 and the project is progressing according to plan. The
actual construction of the parking building and passenger terminal will start at
the beginning of 2008 and groundworks are currently underway on the site. The
project will have a total investment value of roughly EUR 140 million. The
harbour will start operations in November 2008. Sponda is responsible for
developing, leasing and managing all the buildings.
Construction has started of the retail property in the Itäkeskus district in
Helsinki. The total investment value for the building will be about EUR 56
million and it will have a leasable area of 21 500 m². The property has been
leased to a single tenant and will be completed by November 2008.
Construction has begun of the office building at Porkkalankatu 22 in the
Ruoholahti district of Helsinki. The investment value of the project will be
about EUR 29 million and it will have a leasable area of 13 500 m². At the
moment just over 70 % of the building has been leased, and the estimated
completion date is autumn 2008. The main tenants will be Altia Corporation and
Diacor Terveyspalvelut Oy.
Sponda is starting construction of an office building at Lautatarhankatu 2 in
the Sörnäinen district of Helsinki. Some 51 % of the building has been leased
and its main tenant will be Tradeka Oy, which will move its head office into the
new premises. The project will have a total investment cost of about EUR 22
million and the property will have a leasable area of 9 200 m². Sponda is
applying for a building permit during the summer of 2007 and construction should
begin in autumn 2007. The estimated completion date is towards the end of 2008.
Sponda is starting construction of a logistics property at Itäinen
Valkoisenlähteentie 18 in the Akseli district of Vantaa. The project will have a
total investment cost of about EUR 5 million and 50 % of the property has been
leased. The total leasable area will be 5 000 m² and construction is expected to
start towards the end of 2007. The property should be completed by the end of
2008.
Real estate funds
Sponda is a minority holder in two real estate funds, First Top LuxCo and Sponda
Real Estate Fund I Ky.
First Top LuxCo (Sponda's holding 20 %)invests in office and retail properties
outside Finland's largest cities. At the end of June 2007 the fund's property
investments had a fair value of EUR 103.9 million. The fund has a target size of
EUR 150-400 million.
Sponda Real Estate Fund I Ky (Sponda's holding 47 %) invests in logistics sites
outside the Helsinki Metropolitan Area. At the end of the review period the
fund's property investments had a fair value of EUR 121.2 million, while the
fund has a target size of EUR 200 million. Sponda is responsible for managing
the funds and their properties, and receives management fees.
In addition to those mentioned above, Sponda is also responsible for managing
the properties in the property portfolio, with a value of about EUR 401 million,
sold in March 2007 to Whitehall Street Real Estate Limited and Niam Nordic
Investment Fund III.
Russia and the Baltic Countries
Sponda is actively looking for properties for investment and development in the
Russian and Baltic markets. In April 2007 Sponda purchased a 46 hectare piece of
land in Leningrad province for about EUR 9.5 million. Sponda develops the site
in stages eventually into a 160 000 m² logistics facility stages. The project is
currently being considered by the authorities.
In May Sponda purchased a 20 hectare site in Moscow province for about EUR 6
million. The site has approved zoning for industrial use, and Sponda plans to
develop an A-class logistics facility of 75 000 m² in stages. Planning of the
project and obtaining approval for the plans are underway. The construction is
estimated to start in 2008.
Sponda purchased an office property in St Petersburg for EUR 4 million in May
2007. The property is located close to the centre of St Petersburg and it has a
combined leasable area of 2 690 m². The property is fully leased.
Cash flow and financing
Sponda's net cash flow from operations on 30 June 2007 totalled EUR 227.1
million (30 June 2006: EUR 20.6 million). Net cash flow from investing
activities was EUR 169.9 (-46.5) million and after financing activities was EUR
-413.7 (26.3) million.
Financial income and expenses during the period totalled EUR -38.7 (-14.4)
million. Sponda's equity ratio on 30 June 2007 was 35 % (30 June 2006: 41 %) and
gearing was 159 % (120 %). Interest-bearing debt amounted to EUR 1 409.6 (681.2)
million, the average maturity of Sponda's loans was 3.1 (3.3) years and the
average interest rate 4.5 % (4.3 %). Fixed-rate and interest-hedged loans
accounted for 87 % of the loan portfolio. The average interest-bearing period of
the whole debt portfolio was 3.5 (2.4) years. The interest margin, which
describes the company's solvency, was 2.0 (2.7).
At the end of June Sponda Group's debt portfolio comprised of EUR 650 million in
syndicated loans, EUR 405.6 million in bonds, EUR 289 million in issued
commercial papers, and EUR 65 million in loans from financial institutions.
Sponda has EUR 300 million in unused credit limits. Sponda Group has no
mortgaged loans.
In April Sponda issued a EUR 150 million Private Placement bond to domestic
institutional investors. The bond has a maturity of 4 years and is
floating-rate, and its coupon has been confirmed as three-month Euribor plus
0.40 percentage points. Sponda did not apply for stock exchange listing for the
bond. The bond was part of the refinancing of the short-term credit facility
raised for the acquisition of Kapiteeli.
In June 2007 Sponda signed a five year syndicated credit agreement for a total
of EUR 350 million, which was used to refinance the outstanding short-term loan
raised in December 2006 to finance the acquisition of Kapiteeli. The loan
carries a margin at the beginning of the loan period of Euribor plus 0.375-0.425
%.
Personnel and administration costs
During the January-June period Sponda Group had on average 220 employees (56 in
the corresponding period of 2006), of whom 133 (56) worked for the parent
company Sponda Plc and 89 for the subsidiary Ovenia Oy. On 30 June 2007 Sponda
Group had 222 (57) employees, of whom 133 (57) were employed in the parent
company and 89 for the subsidiary Ovenia. Sponda has personnel in Finland and
Russia.
In January-June Sponda's administration costs totalled EUR 14.5 million (30 June
2006: EUR 4.2 million), of which EUR 12.1 million were for the parent company
Sponda and EUR 2.4 million for the subsidiary Ovenia. The increase was mainly
due to the growth of personnel in connection with the acquisition of Kapiteeli.
All Sponda employees are included in the company's incentive bonus scheme, under
which bonuses are indexed to the company's targets. The company also operates a
long-term share-based incentive scheme for its senior executives that was
launched on 1 January 2006. Bonuses under this scheme are based on cash flow
from operations per share and return on equity, and Sponda shares are bought
with these bonuses. These shares also 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 Sponda Kiinteistöt Oy's 50.9 per cent owned
subsidiary Ovenia Oy, as well as the Group's mutually owned property companies,
which are either wholly or majority owned by Sponda Plc or Sponda Kiinteistöt
Oy. Sponda Group also includes Sponda Russia Ltd and Sponda Asset Management Oy.
The Sponda share
In July 2007 Sponda was upgraded from the mid cap to the large cap companies in
the classification of the OMX Nordic Exchange. The upgrade was based on the
company's market capitalization.
The weighted average price of the Sponda share in the January-June 2007 period
was EUR 11.76. The highest quotation on the Helsinki Stock Exchange was EUR
13.29 and the lowest EUR 9.82. Turnover during January-June totalled 24.1
million shares or EUR 282.9 million. The closing price of the share on 29 June
2007 was EUR 10.77, and the market capitalization of the company's share capital
was EUR 1.2 billion.
The Annual General Meeting on 4 April 2007 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 2007
period:
17 April 2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 4.985 % of the total number of shares and votes in Sponda Plc.
18 June 2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 5.007 % of the total number of shares and votes in Sponda Plc.
21 June 2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 4.985 % of the total number of shares and votes in Sponda Plc.
28 June 2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 5.004 % of the total number of shares and votes in Sponda Plc.
At the end of the review period on 30 June 2007 Sponda's ownership structure was
as follows:
--------------------------------------------------------------------------------
| | Number of | % of total |
| | shares | |
--------------------------------------------------------------------------------
| The Finnish State | 38 065 498 | 34.3 |
--------------------------------------------------------------------------------
| Other public entities | 1 574 098 | 1.4 |
--------------------------------------------------------------------------------
| Nominee registered | 61 804 211 | 55.7 |
--------------------------------------------------------------------------------
| Households | 6 184 795 | 5.5 |
--------------------------------------------------------------------------------
| Non-profit organizations, total | 1 533 590 | 1.4 |
--------------------------------------------------------------------------------
| Private corporations, total | 883 454 | 0.8 |
--------------------------------------------------------------------------------
| Financial and insurance institutions, total | 768 399 | 0.7 |
--------------------------------------------------------------------------------
| Foreign owners, total | 216 140 | 0.2 |
--------------------------------------------------------------------------------
| Total number of shares | 111 030 185 | 100.0 |
--------------------------------------------------------------------------------
Annual General Meeting
The Annual General Meeting of Sponda Plc was held in Helsinki on 4 April 2007.
The meeting adopted the consolidated financial statements and the parent
company's financial statements for the financial year of 2006 and discharged the
Board of Directors and the CEO from liability. The AGM approved the Board's
proposal to pay a dividend of 0.40 euros per share. The dividend was paid on 18
April 2007. The rest of the distributable assets, EUR 203,868,737.72, were
retained in the distributable free equity.
The AGM authorized the Board of Directors to decide on the acquisition of own
shares using the company's free equity pursuant to the proposal of the Board of
Directors. A maximum of 5,551,509 shares can be acquired in one or more
tranches, however so that the total number of own shares in the possession of
the company or its subsidiaries or shares pledged by the company may not exceed
five per cent of the total number of shares of the company. The proposed maximum
number corresponds to approximately five per cent of all shares of the company.
The authorization is valid until 30 June 2008.
Furthermore, the AGM authorized the Board of Directors to decide on the
assignment of own shares in the possession of the company pursuant to the
proposal of the Board. The authorization is for a maximum of 5,551,509 shares.
The proposed maximum amount corresponds to approximately five per cent of all
the existing shares of the company. The authorization is valid until 30 June
2008. This authorization replaces the authorization on share issue given by the
Extraordinary General Meeting on 5 January 2007.
The AGM approved the proposal of the Board of Directors on the amendments to the
Articles of Association. The Articles of Association can be seen on Sponda's
internet site at www.sponda.fi.
The AGM decided to establish a Nomination Committee according to the proposal of
the State of Finland as shareholder. The role of the Nomination Committee is to
prepare proposals for the next Annual General Meeting relating to the company's
Board members and their remuneration. The Nomination Committee comprises
representatives of the three (3) largest shareholders and the Chairman of the
Board who acts as an expert member of the Committee. The shareholders who hold
the majority of all voting rights on the 1 November immediately preceding the
next Annual General Meeting are entitled to appoint the members representing the
shareholders. The Nomination Committee is summoned by the Chairman of the Board
and the Committee elects a chairman from its members. The Nomination Committee
shall submit its proposals to the company's Board of Directors at the latest on
the 1 February immediately preceding the Annual General Meeting.
Board of Directors and auditors
Sponda's Annual General Meeting confirmed that
the Board of Directors would have six members. The following persons were
re-elected as Board members: Ms Tuula Entelä, Mr Timo Korvenpää, Mr Harri Pynnä
and Mr Jarmo Väisänen, and Mr Lauri Ratia and Ms Arja Talma were elected as new
members, all to serve for a term ending at the close of the next Annual General
Meeting. All had given their consent to election. At its constitutive meeting
after the AGM, the Board of Directors elected Lauri Ratia as its chairman and
Jarmo Väisänen as deputy chairman. All Board Members are independent of the
company, and five of the six are independent of major shareholders in the
company.
The AGM confirmed that the chairman of the Board of Directors is paid a monthly
remuneration of EUR 5,000, the Deputy Chairman of the Board a monthly
remuneration of EUR 3,000 and other ordinary members a monthly remuneration of
EUR 2,600. In addition the AGM confirmed that an attendance allowance of EUR 500
is paid to all members for each meeting. Travel expenses are refunded according
to the company's current travel policy.
Mr Sixten Nyman, CPA auditor, and KPMG Oy Ab, CPA audit firm, with Ms
Raija-Leena Hankonen, CPA auditor, as principal auditor were elected as auditors
of the company, and Ms Riitta Pyykkö, CPA auditor, was elected as deputy
auditor.
Committees of the Board of Directors
On 4 April 2007 the Board of Directors
established two permanent committees to assist the Board by preparing matters
for which the Board is responsible. The permanent committees are the Audit
Committee and the Structure and Remuneration Committee.
The Audit Committee comprises chairman Arja Talma and ordinary members Tuula
Entelä and Timo Korvenpää. The Structure and Remuneration Committee comprises
chairman Lauri Ratia and ordinary members Jarmo Väisänen and Harri Pynnä.
Management
Sponda Plc's president and chief executive officer is Kari Inkinen. The
Executive Board comprises the president and CEO, the CFO, the SVP Legal Affairs
and Treasury, and the heads of the business units, in total eight persons.
Suit for payment
In a ruling issued on 11 January 2007, the Helsinki city court ordered Sponda
Plc to pay interest, penal interest and court costs totalling EUR 7.6 million to
Sampo Bank Plc based on a credit agreement. Sponda appealed the decision to the
Helsinki court of appeal on 9 February 2007. The amount of Sampo Bank's suit for
payment, EUR 7.6 million, was recognized as an expense under provisions in the
2006 financial statements.
Subsequent events
No significant events occurred after the close of period.
Prospects
During 2007 Sponda expects its earnings per share to improve significantly from
the previous year. Likewise the economic occupancy rate and the cash flow from
operations per share, including profits and losses on property sales, are
expected to improve during 2007. The forecasts are based on the positive
development of the Finnish property market, the value increase of the property
portfolio and on the profits received from sales of properties.
Risks and uncertainty factors in the near future
Recognized risks in the property investment sector include the risks associated
with the property market and the risks relating to property investments and
capital expenditure. If they materialize these could have a weakening effect on
Sponda's financial result. Rising construction costs and delays in project
schedules may increase the costs of property development. In Russia there are
also risks relating to permit procedures that may have an impact on the
schedules of property development projects.
Financing involves refinancing risks and loan agreements have an interest rate
risk. Sponda reduces the refinancing risk by using credit agreements of varying
durations, employing a number of funding sources and maintaining the company's
reputation as a trustworthy debtor.
Sponda's operational risks are risks resulting from inadequate or defective
internal processes or systems. They also include risks associated with the legal
operating environment. Operational risks relate for example to the functionality
of the company's information systems and to the permanence of its skilled
employees.
2 August 2007
Sponda Plc
Board of Directors
Further information: Kari Inkinen, President and CEO, tel. +358 20-431 3311 or
+358 400-402 653 and
Robert Öhman, CFO, tel. +358 20-431 3320 or +358 40-540 0741.
Distribution:
Helsinki Exchanges
Media
www.sponda.fi
This interim report is unaudited. It has been prepared applying IAS 34 (Interim
Reports). The same accounting and measurement principles have been applied in
this interim report as in the previous annual financial statements bulletin.
Sponda Plc
Consolidated income statement (IFRS)
Me
--------------------------------------------------------------------------------
| | 4-6/ | 4-6/ | 1-6/ | 1-6/ | 1-12/ |
| | 2007 | 2006 | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Revenue | | | | | |
--------------------------------------------------------------------------------
| | Rental income and | 44.0 | 26.0 | 101.0 | 52.7 | 115.4 |
| | recoverables | | | | | |
--------------------------------------------------------------------------------
| | Interest income from | 0.1 | - | 0.2 | - | - |
| | finance leasing | | | | | |
| | agreements | | | | | |
--------------------------------------------------------------------------------
| | Service income, fund | | | | | |
| | management fees | | | | | |
--------------------------------------------------------------------------------
| | and share of fund | 4.3 | 0.5 | 6.3 | 0.6 | 2.0 |
| | profit | | | | | |
--------------------------------------------------------------------------------
| | | 48.4 | 26.5 | 107.5 | 53.3 | 117.4 |
--------------------------------------------------------------------------------
| Expenses | | | | | |
--------------------------------------------------------------------------------
| | Maintenance expenses | -11.2 | -6.3 | -29.5 | -12.6 | -29.4 |
--------------------------------------------------------------------------------
| | Service expenses and | | | | | |
--------------------------------------------------------------------------------
| | direct fund expenses | -0.8 | -0.1 | -1.2 | -0.1 | -0.4 |
--------------------------------------------------------------------------------
| | | -12.0 | -6.4 | -30.7 | -12.7 | -29.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net operating income | 36.4 | 20.1 | 76.8 | 40.6 | 87.6 |
--------------------------------------------------------------------------------
| Profit/loss on sales of | -0.2 | - | 1.1 | - | - |
| investment properties | | | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | 9.4 | 5.0 | 56.4 | 10.2 | 26.2 |
--------------------------------------------------------------------------------
| Proceeds from sale of | 16.9 | - | 209.2 | - | 11.6 |
| trading properties | | | | | |
--------------------------------------------------------------------------------
| Carrying amount of | -11.7 | - | -182.4 | - | -10.0 |
| trading properties sold | | | | | |
--------------------------------------------------------------------------------
| Profit/loss on sales of | 5.2 | - | 26.8 | - | 1.6 |
| trading properties | | | | | |
--------------------------------------------------------------------------------
| Sales and marketing | -0.4 | -0.3 | -0.9 | -0.6 | -1.1 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Administrative expenses | -7.7 | -2.0 | -14.5 | -4.2 | -10.8 |
--------------------------------------------------------------------------------
| Other operating income | 0.5 | 0.3 | 1.0 | 0.3 | 0.9 |
--------------------------------------------------------------------------------
| Other operating expenses | -0.1 | - | -0.2 | - | -0.5 |
--------------------------------------------------------------------------------
| Operating profit | 43.1 | 23.1 | 146.5 | 46.3 | 103.9 |
--------------------------------------------------------------------------------
| Financial income | 1.5 | 0.3 | 3.3 | 0.3 | 3.7 |
--------------------------------------------------------------------------------
| Financial expenses | -14.9 | -8.0 | -42.0 | -14.7 | -34.7 |
--------------------------------------------------------------------------------
| Provision for interest | - | - | - | - | -7.5 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Financial income and | -13.4 | -7.7 | -38.7 | -14.4 | -38.5 |
| expenses, net | | | | | |
--------------------------------------------------------------------------------
| Profit before taxes | 29.7 | 15.4 | 107.8 | 31.9 | 65.4 |
--------------------------------------------------------------------------------
| Income taxes for current | - | -0.4 | - | -0.4 | -0.4 |
| and previous fiscal years | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | -7.7 | -3.9 | -28.1 | -7.9 | -16.7 |
--------------------------------------------------------------------------------
| Income taxes, total | -7.7 | -4.3 | -28.1 | -8.3 | -17.1 |
--------------------------------------------------------------------------------
| Profit for the period | 22.0 | 11.1 | 79.7 | 23.6 | 48.3 |
--------------------------------------------------------------------------------
| Attributable to: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 21.8 | 11.1 | 79.6 | 23.6 | 48.4 |
| parent company | | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.2 | - | 0.1 | - | -0.1 |
--------------------------------------------------------------------------------
| Profit for the period | 22.0 | 11.1 | 79.7 | 23.6 | 48.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Earnings per share | | | | | |
| | based on profit | | | | | |
| | attributable to equity | | | | | |
| | holders of the parent | | | | | |
| | company: | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Earnings per share, | | | 0.76 | 0.30 | 0.61 |
| | basic, € | | | | | |
--------------------------------------------------------------------------------
| | Earnings per share, | | | 0.76 | 0.30 | 0.61 |
| | diluted, € | | | | | |
--------------------------------------------------------------------------------
| | Average number of | | | | | |
| | shares, million | | | | | |
--------------------------------------------------------------------------------
| | Basic | | | 104.7 | 79.2 | 79.3 |
--------------------------------------------------------------------------------
| | Diluted | | | 104.7 | 79.2 | 79.3 |
--------------------------------------------------------------------------------
Consolidated balance sheet (IFRS)
Me
--------------------------------------------------------------------------------
| | 30.6.2007 | 31.12.2006 | 30.6.2006 |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Investment properties | 2 305.4 | 2 455.1 | 1 339.5 |
--------------------------------------------------------------------------------
| Investments in real estate funds | 26.2 | 19.4 | 2.5 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 15.8 | 19.5 | 8.9 |
--------------------------------------------------------------------------------
| Goodwill | 27.5 | 27.5 | - |
--------------------------------------------------------------------------------
| Other intangible assets | 4.6 | 5.2 | 0.4 |
--------------------------------------------------------------------------------
| Finance lease receivables | 2.7 | 2.7 | - |
--------------------------------------------------------------------------------
| Non-current receivables | 33.1 | 5.2 | 3.4 |
--------------------------------------------------------------------------------
| Deferred tax assts | 60.3 | 110.5 | 0.2 |
--------------------------------------------------------------------------------
| Total non-current assets | 2 475.6 | 2 645.1 | 1 354.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Trading properties | 48.4 | 231.1 | - |
--------------------------------------------------------------------------------
| Trade and other receivables | 24.3 | 39.6 | 4.7 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 6.9 | 23.6 | 1.2 |
--------------------------------------------------------------------------------
| Total current assets | 79.6 | 294.3 | 5.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 2 555.2 | 2 939.4 | 1 360.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY AND | | | |
| LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to equity | | | |
| holders | | | |
--------------------------------------------------------------------------------
| of the parent company | | | |
--------------------------------------------------------------------------------
| Share capital | 111.0 | 79.3 | 79.3 |
--------------------------------------------------------------------------------
| Share premium reserve | 159.5 | 159.5 | 159.1 |
--------------------------------------------------------------------------------
| Fair value reserve | 16.0 | 2.3 | 1.4 |
--------------------------------------------------------------------------------
| Revaluation reserve | 0.6 | 0.6 | - |
--------------------------------------------------------------------------------
| Invested non-restricted equity | 209.7 | - | - |
| reserve | | | |
--------------------------------------------------------------------------------
| Retained earnings | 384.3 | 349.3 | 324.5 |
--------------------------------------------------------------------------------
| | 881.1 | 591.0 | 564.3 |
--------------------------------------------------------------------------------
| Minority interest | 1.6 | 1.8 | - |
--------------------------------------------------------------------------------
| Total shareholders' equity | 882.7 | 592.8 | 564.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and | 1 100.6 | 658.2 | 479.1 |
| borrowings | | | |
--------------------------------------------------------------------------------
| Provisions | 14.5 | 22.7 | 0.8 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 199.2 | 218.7 | 71.2 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 1 314.3 | 899.6 | 551.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Current interest-bearing loans and | 309.0 | 1 347.4 | 202.1 |
| borrowings | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 49.2 | 99.6 | 43.3 |
--------------------------------------------------------------------------------
| Total current liabilities | 358.2 | 1 447.0 | 245.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 1 672.5 | 2 346.6 | 796.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders' equity and | 2 555.2 | 2 939.4 | 1 360.8 |
| liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-bearing loans and | 1 409.6 | 2 005.6 | 681.2 |
| borrowings | | | |
--------------------------------------------------------------------------------
Consolidated statement of cash flows (IFRS)
Me
--------------------------------------------------------------------------------
| | | 1-6/2007 | 1-12/2006 | 1-6/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operating | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 79.7 | 48.3 | 23.6 |
--------------------------------------------------------------------------------
| Adjustments | | 1.7 | 29.6 | 12.1 |
--------------------------------------------------------------------------------
| Change in net working capital | 1) | 189.2 | 8.6 | 4.4 |
--------------------------------------------------------------------------------
| Interest received | | 2.6 | 0.8 | 0.1 |
--------------------------------------------------------------------------------
| Interest paid | | -45.8 | -34.3 | -18.5 |
--------------------------------------------------------------------------------
| Other financial items | | -1.0 | -6.7 | -0.5 |
--------------------------------------------------------------------------------
| Taxes received/paid | | 0.7 | -0.9 | -0.6 |
--------------------------------------------------------------------------------
| Net cash from operating | | 227.1 | 45.4 | 20.6 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Acquisition of Kapiteeli | | -15.1 | -929.1 | - |
--------------------------------------------------------------------------------
| Acquisition of investment | | -85.6 | -110.0 | -43.1 |
| properties | | | | |
--------------------------------------------------------------------------------
| Capital expenditure on real | | -6.8 | -19.4 | -2.5 |
| estate funds | | | | |
--------------------------------------------------------------------------------
| Acquisition of tangible and | | | | |
--------------------------------------------------------------------------------
| intangible assets | | -0.9 | -0.6 | -0.5 |
--------------------------------------------------------------------------------
| Proceeds from sale of | | 277.7 | 37.8 | 0.2 |
| investment properties | | | | |
--------------------------------------------------------------------------------
| Loans granted | | - | -0.9 | -0.6 |
--------------------------------------------------------------------------------
| Repayments of loan receivables | | 0.6 | 1.3 | - |
--------------------------------------------------------------------------------
| Net cash from investment | | 169.9 | -1 020.9 | -46.5 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Proceeds from the issue of | | 239.5 | 0.7 | 0.4 |
| shares | | | | |
--------------------------------------------------------------------------------
| Non-current loans, raised | | 680.5 | 300.0 | 280.0 |
--------------------------------------------------------------------------------
| Non-current loans, | | | | |
--------------------------------------------------------------------------------
| repayments | | -337.4 | -250.0 | -250.0 |
--------------------------------------------------------------------------------
| Current loans, | | | | |
--------------------------------------------------------------------------------
| raised/repayments | | -951.7 | 987.2 | 35.5 |
--------------------------------------------------------------------------------
| Dividends paid | | -44.6 | -39.6 | -39.6 |
--------------------------------------------------------------------------------
| Net cash from financing | | -413.7 | 998.3 | 26.3 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash | | -16.7 | 22.8 | 0.4 |
| equivalents | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents, | | 23.6 | 0.8 | 0.8 |
| beginning of period | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents, end | | 6.9 | 23.6 | 1.2 |
| of period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Includes deductions for | | 182.4 | 10.0 | - |
| trading | | | | |
--------------------------------------------------------------------------------
| properties | | | | |
--------------------------------------------------------------------------------
Changes in Group shareholders' equity
Me
--------------------------------------------------------------------------------
| | | Share | Share | Trans- | Fair | Re- |
| | | capital | premium | lation | value | valua |
| | | | reserve | differ- | reserve | tion |
| | | | | rences | | reserve |
--------------------------------------------------------------------------------
| Equity at 31 Dec. 2005 | 79.2 | 158.8 | - | -4.2 | - |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| | Amount taken to | | | | 7.5 | |
| | equity | | | | | |
--------------------------------------------------------------------------------
| | Amount recognized in | | | | 0.1 | |
| | income statement | | | | | |
--------------------------------------------------------------------------------
| Taxes on items | | | | -2.0 | |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | | 5.6 | |
| expenses recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | | 5.6 | |
| expenses for the period | | | | | |
--------------------------------------------------------------------------------
| Dividends | | | | | |
--------------------------------------------------------------------------------
| Share issue | 0.1 | 0.3 | | | |
--------------------------------------------------------------------------------
| Equity at 30 June 2006 | 79.3 | 159.1 | - | 1.4 | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Investe | Retained | Total | Minorit | Total |
| | | d | earnings | | y | share- |
| | | non-res | | | interes | ho |
| | | tricted | | | t | lders' |
| | | equity | | | | equity |
| | | reserve | | | | |
--------------------------------------------------------------------------------
| Equity at 31 Dec. 2005 | - | 340.5 | 574.3 | - | 574.3 |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| | Amount taken to | | | 7.5 | | 7,5 |
| | equity | | | | | |
--------------------------------------------------------------------------------
| | Amount recognized in | | | 0.1 | | 0,1 |
| | income statement | | | | | |
--------------------------------------------------------------------------------
| Taxes on items | | | -2.0 | | -2.0 |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | 5.6 | | 5.6 |
| expense recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 23.6 | 23.6 | | 23.6 |
--------------------------------------------------------------------------------
| Total income and | | 23.6 | 29.2 | | 29.2 |
| expense for the period | | | | | |
--------------------------------------------------------------------------------
| Dividends | | -39.6 | -39.6 | | -39.6 |
--------------------------------------------------------------------------------
| Share issue | | | 0.4 | | 0.4 |
--------------------------------------------------------------------------------
| Equity at 30 June 2006 | - | 324.5 | 564.3 | - | 564.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Changes in Group | | | | | |
| shareholders' equity | | | | | |
--------------------------------------------------------------------------------
| | | Share | Share | Trans- | Fair | Re- |
| | | capital | premium | lation | value | valua |
| | | | reserve | differ- | reserve | tion |
| | | | | rences | | reserve |
--------------------------------------------------------------------------------
| Equity at 31 Dec. 2006 | 79.3 | 159.5 | - | 2.3 | 0.6 |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| | Amount taken to | | | | 17.9 | |
| | equity | | | | | |
--------------------------------------------------------------------------------
| | Amount recognized in | | | | 0.3 | |
| | income statement | | | | | |
--------------------------------------------------------------------------------
| | Instruments of | | | | 0.3 | |
| | reversed hedge | | | | | |
| | accounting | | | | | |
--------------------------------------------------------------------------------
| Taxes on items | | | | -4.8 | |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | | 13.7 | |
| expense recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | | 13.7 | |
| expense for the period | | | | | |
--------------------------------------------------------------------------------
| Dividends | | | | | |
--------------------------------------------------------------------------------
| Share issue | 31.7 | | | | |
--------------------------------------------------------------------------------
| Equity 30 June 2007 | 111.0 | 159.5 | - | 16.0 | 0.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Investe | Retained | Total | Minorit | Total |
| | | d | earnings | | y | share- |
| | | non-res | | | interes | ho |
| | | tricted | | | t | lders' |
| | | equity | | | | equity |
| | | reserve | | | | |
--------------------------------------------------------------------------------
| Equity 31 Dec. 2006 | - | 349.3 | 591.0 | 1.8 | 592.8 |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| | Amount taken to | | | 17.9 | | 17.9 |
| | equity | | | | | |
--------------------------------------------------------------------------------
| | Amount recognized in | | | 0.3 | | 0.3 |
| | income statement | | | | | |
--------------------------------------------------------------------------------
| | Instruments of | | | 0.3 | | 0.3 |
| | reversed hedge | | | | | |
| | accounting | | | | | |
--------------------------------------------------------------------------------
| Taxes on items | | | -4.8 | | -4.8 |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | 13.7 | | 13.7 |
| expense recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 79.6 | 79.6 | 0.1 | 79.7 |
--------------------------------------------------------------------------------
| Total income and | | 79.6 | 93.3 | 0.1 | 93.4 |
| expense for the period | | | | | |
--------------------------------------------------------------------------------
| Dividends | | -44.6 | -44.6 | -0.3 | -44.9 |
--------------------------------------------------------------------------------
| Share issue | 209.7 | | 241.4 | | 241.4 |
--------------------------------------------------------------------------------
| Equity 30 June 2007 | 209.7 | 384.3 | 881.1 | 1.6 | 882.7 |
--------------------------------------------------------------------------------
Notes to the Group's interim report
Accounting principles
The Group has adopted on 1 January 2007 the IFRS 7 standard: ‘Financial
instruments: disclosures in financial statements' and the amendment to the IAS 1
standard concerning presentation of equity. The adoption of both standards will
mainly affect the information to be presented in the notes to the Group's
financial statements. In other respects the accounting principles for the
financial statements are the same as those used for the financial statements of
31 December 2006.
Income statement by business area, Me
--------------------------------------------------------------------------------
| Income | Office | Logis | Proper | Russia | Funds | Other | Group, |
| statement | & | -tics | ty | / | | | total |
| 1-6/ | retail | | devel- | Balt | | | |
| 2007 | | | opment | ic | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | 80.9 | 14.9 | 0.8 | 0.7 | 5.1 | 5.1 | 107.5 |
--------------------------------------------------------------------------------
| Maintenance | -22.2 | -4.1 | -0.7 | -0.1 | -2.4 | -1.4 | -30.8 |
| expenses and | | | | | | | |
| direct fund | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Net operating | 58.8 | 10.8 | 0.2 | 0.6 | 2.7 | 3.7 | 76.8 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Profit on sale | -0.7 | 1.8 | 0.0 | 0.0 | 0.0 | 0.0 | 1.1 |
| of investment | | | | | | | |
| properties | | | | | | | |
--------------------------------------------------------------------------------
| Profit/loss on | 20.7 | 0.0 | 6.6 | 0.0 | -0.5 | 0.0 | 26.8 |
| sale of | | | | | | | |
| trading | | | | | | | |
| properties | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | 41.7 | 14.8 | 0.0 | 0.0 | 0.0 | 0.0 | 56.4 |
| gains and | | | | | | | |
| losses | | | | | | | |
--------------------------------------------------------------------------------
| Administration | -4.9 | -1.4 | -1.7 | -1.0 | -1.3 | -5.1 | -15.4 |
| and marketing | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Other income | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.8 | 0.8 |
| and expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 115.6 | 25.9 | 5.0 | -0.4 | 0.9 | -0.6 | 146.5 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income | Office | Logis | Proper | Russia | Funds | Other | Group, |
| statement | & | -tics | ty | / | | | total |
| 1-6/2006 | retail | | devel- | Balt | | | |
| | | | opment | ic | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | 37.6 | 15.1 | 0.0 | 0.0 | 0.0 | 0.0 | 52.7 |
--------------------------------------------------------------------------------
| Maintenance | -9.5 | -3.1 | 0.0 | 0.0 | 0.0 | 0.0 | -12.6 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Net operating | 28.1 | 12.0 | 0.0 | 0.0 | 0.0 | 0.0 | 40.1 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | 9.9 | 0.3 | 0.0 | 0.0 | 0.0 | 0.0 | 10.2 |
| gains and | | | | | | | |
| losses | | | | | | | |
--------------------------------------------------------------------------------
| Administration | -3.2 | -1.1 | -0.6 | 0.0 | -0.7 | 0.7 | -4.9 |
| and marketing | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Other income | 0.0 | 0.0 | 0.0 | 0.0 | 0.6 | 0.3 | 0.9 |
| and expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 34.8 | 11.2 | -0.6 | 0.0 | -0.1 | 1.0 | 46.3 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
Investment properties
--------------------------------------------------------------------------------
| | 1-6/2007 | 1-12/2006 | 1-6/2006 |
--------------------------------------------------------------------------------
| Fair value of investment | 2 455.1 | 1 259.7 | 1 259.7 |
| properties, start of period | | | |
--------------------------------------------------------------------------------
| Kapiteeli acquisition | - | 1 070.0 | - |
--------------------------------------------------------------------------------
| Purchase of investment properties | 18.8 | 94.3 | 30.9 |
--------------------------------------------------------------------------------
| Other capital expenditure on | 48.0 | 43.3 | 38.9 |
| investment properties | | | |
--------------------------------------------------------------------------------
| Disposal of investment properties | -276.7 | -37.7 | -0.2 |
--------------------------------------------------------------------------------
| Transfers to/from property, plant | 3.2 | -1.5 | - |
| and equipment | | | |
--------------------------------------------------------------------------------
| Transfers from trading properties | 0.3 | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fair value adjustment for property | 0.3 | 0.8 | - |
| in own use | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | 56.4 | 26.2 | 10.2 |
--------------------------------------------------------------------------------
| Fair value of investment | 2 305.4 | 2 455.1 | 1 339.5 |
| properties, end of period | | | |
--------------------------------------------------------------------------------
Investment properties are properties held by the company for the purpose of
earning rental revenue or for capital appreciation. Sponda has chosen the fair
value method to measure its investment properties, recognizing changes in their
fair value in the income statement.
The fair value of Sponda's investment properties is confirmed using the
company's own calculations in which Sponda applies the yield method based on
cash flow analysis. The method is in compliance with the International Valuation
Standard (IVS). All the figures used in calculating the fair value of properties
are examined at least once a year by an external expert, to ensure that the
parameters and values used in the calculations are based on market observations.
The Group's most significant investment commitments are in the following
projects:
Renovation work on the City-Center complex, which continues as planned. The
underground basement facilities were completed in spring 2007. The first phase
in the renovation of the retail premises was be completed in May and the second
phase has begun. This phase should be completed at the beginning of 2008.
Construction of the logistics area, gatehouse building, parking building and
passenger terminal at Vuosaari Harbour has begun as planned. The project has a
total investment value of roughly EUR 140 million. The harbour will be taken
into operation in November 2008.
Office building in the Ruoholahti district of Helsinki which has an investment
cost of roughly EUR 29 million and a leasable area of 13 500 m². The expected
completion date is autumn 2008.
Retail property in the Itäkeskus district of Helsinki with a leasable area of
about 21 500 m². The total investment value is roughly EUR 56 million. The
building will be completed by November 2008.
Office building in the Sörnäinen district of Helsinki, which has a total
investment cost of roughly EUR 22 million. The leasable area is about 9 200 m².
The estimated completion date is towards the end of 2008.
Property, plant and equipment
--------------------------------------------------------------------------------
| | 1-6/2007 | 1-12/2006 | 1-6/2006 |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 19.5 | 8.8 | 8.8 |
--------------------------------------------------------------------------------
| Kapiteeli acquisition | - | 5.2 | - |
--------------------------------------------------------------------------------
| Additions | 1.6 | 4.5 | 0.3 |
--------------------------------------------------------------------------------
| Disposals | -1.7 | - | - |
--------------------------------------------------------------------------------
| Reclassifications to/from | | | |
--------------------------------------------------------------------------------
| investment properties | -3.2 | 1.5 | - |
--------------------------------------------------------------------------------
| Depreciation for the period | -0.4 | -0.5 | -0.2 |
--------------------------------------------------------------------------------
| Carrying amount, end of period | 15.8 | 19.5 | 8.9 |
--------------------------------------------------------------------------------
Trading properties
--------------------------------------------------------------------------------
| | 1-6/2007 | 1-12/2006 | 1-6/2006 |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 231.1 | - | - |
--------------------------------------------------------------------------------
| Kapiteeli acquisition | - | 241.8 | |
--------------------------------------------------------------------------------
| Disposals and other changes | -182.7 | -10.7 | |
--------------------------------------------------------------------------------
| Carrying amount, end of period | 48.4 | 231.1 | - |
--------------------------------------------------------------------------------
Sampo Bank's suit for payment
In its ruling, the Helsinki city court ordered Sponda Plc to pay interest, penal
interest and court costs totalling EUR 7.6 million to Sampo Bank Plc based on a
credit agreement. Sponda appealed the decision to the Helsinki court of appeal
on 9 February 2007. The amount of Sampo Bank's suit for payment, EUR 7.6
million, was recognized as an expense under provisions in the 2006 financial
statements.
Contingent liabilities
Collateral and commitments given by Group
Me
--------------------------------------------------------------------------------
| | 30.6.2007 | 30.6.2006 | 31.12.2006 |
--------------------------------------------------------------------------------
| Loans from financial institutions, | 0 | 0.1 | 0.1 |
| covered by collateral | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Mortgages | 0.2 | 0.1 | 0.1 |
--------------------------------------------------------------------------------
| Book value of pledged shares | 0 | - | - |
--------------------------------------------------------------------------------
| Guarantees given | 25.8 | - | - |
--------------------------------------------------------------------------------
| Total collateral | 26.0 | 0.1 | 0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Lease and other liabilities | | | |
--------------------------------------------------------------------------------
| Lease liability | 20.2 | 21.3 | 23.0 |
--------------------------------------------------------------------------------
| Other liabilities | 0.1 | - | 0.1 |
--------------------------------------------------------------------------------
| Mortgages | 2.3 | 2.2 | 2.3 |
--------------------------------------------------------------------------------
| Guarantees given | 0.1 | - | 0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest derivatives | | | |
--------------------------------------------------------------------------------
| Swap contracts, notional value | 605.0 | 306.8 | 541.8 |
--------------------------------------------------------------------------------
| Swap contracts, fair value | 14.8 | 2.7 | 2.3 |
--------------------------------------------------------------------------------
| Interest rate cap options, bought, | 557.0 | | |
| notional value | | | |
--------------------------------------------------------------------------------
| Interest rate cap options, bought, fair | 17.6 | | |
| value | | | |
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Key indicators
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| | 4-6/2007 | 4-6/2006 | 1-6/2007 | 1-6/2006 | 1-12/2006 |
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| Earnings/share, e | 0.20 | 0.14 | 0.76 | 0.30 | 0.61 |
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| Equity ratio, % | | | 35 | 41 | 20 |
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| Gearing, % | | | 159 | 120 | 334 |
--------------------------------------------------------------------------------
| Net assets per | | | 7.94 | 7.12 | 7.45 |
| share, e | | | | | |
--------------------------------------------------------------------------------
| Cash flow from | 0.17 | 0.13 | 0.45 | 0.27 | 0.56 |
| operations/share, e | | | | | |
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Calculation of financial ratios
--------------------------------------------------------------------------------
| Earnings/share, € | Share of profit for the period |
| | attributable to equity holders of the |
| | parent company / adjusted average number |
| | of shares during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity ratio, % = 100 x | Shareholders' equity / (Balance sheet |
| | total - advances received) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gearing, % = 100 x | (Interest-bearing liabilities - cash |
| | and cash equivalents) / Shareholders' |
| | equity |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity per share,€ = | Equity attributable to equity holders of |
| | parent company on 30 June / Adjusted |
| | number of shares on 30 June |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | (Operating profit -/+ Valuation gains and |
| operations/ | losses +/- Changes in provisions +/- |
| share 1) = | Defined benefit pension expenses - |
| | Financial income and expenses affecting |
| | cash flow - Taxes affecting cash flow) / |
| | Average adjusted number of shares during |
| | the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 1) Profit on the sale of non-current assets |
| | has been deducted and losses from their |
| | sale have been added to the operating |
| | profit for the years 2004-2006. |
--------------------------------------------------------------------------------
Related party transactions
The following transactions took place with related parties:
Rental income from state institutions and companies totalled EUR 11.1 million in
the January-June 2007 period (1-12/2006: EUR 13.6 million).
Management employee benefits
--------------------------------------------------------------------------------
| | 1-6/2007 | 1-6/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Salaries and bonuses | 0.9 | 0.6 | 1.0 |
--------------------------------------------------------------------------------
| Incentive bonuses | 0.1 | 0.1 | 0.2 |
--------------------------------------------------------------------------------
| Share-based payments | 0.6 | - | 1.1 |
--------------------------------------------------------------------------------
| Total | 1.6 | 0.7 | 2.3 |
--------------------------------------------------------------------------------
There were no outstanding loans receivable from key management on 30 June 2007
or 31 December 2006.
Members of the Board of Directors held 2170 shares and members of the Executive
Board 31,368 shares on 30 June 2007 (31 Dec. 2006: 48,009 and 7682 shares).
The Finnish State held 34.3 % of Sponda's shares on 30 June 2007 (31 Dec. 2006:
34.3 %). Sponda sold three land areas for about EUR 65 million in accordance
with a purchase option agreed with the Finnish State in February 2007.
Major property transaction
In a transaction signed on 30 March 2007, Sponda sold shares in real estate
companies, business properties and land sites that were outside its strategic
focus to Whitehall Street Real Estate Limited and Niam Nordic Investment Fund
III for EUR 401.1 million. The sale comprised in total 564 real estate items, of
which 43 were investment properties. Sponda recorded a profit on the sale of EUR
18.5 million. A review of the selling price reduced the profit by EUR 1.3
million, and this had an impact on investment properties of EUR - 1.9
million.
Events after the close of the period
No significant events have occurred since the close of period.