Annual / Quarterly Financial Statement • Feb 7, 2019
Annual / Quarterly Financial Statement
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FINANCIAL STATEMENTS RELEASE JANUARY—DECEMBER
| KEY FIGURES | Comparable | Comparable | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Q4/2018 | Q4/2017 | % 1) | change% 3) | 2018 | 2017 | % 1) | change% 3) | ||
| Net rental income | MEUR | 53.7 | 53.9 | -0.3% | 0.6% | 214.9 | 228.5 | -6.0% | -4.0% |
| Direct Operating profit 2) | MEUR | 44.1 | 45.9 | -4.0% | -3.0% | 187.6 | 200.5 | -6.4% | -4.4% |
| Earnings per share (basic) | EUR | 0.01 | 0.03 | -76.3% | -75.5% | 0.02 | 0.10 | -81.0% | -80.1% |
| Fair value of investment properties | MEUR | 4,131.3 | 4,183.4 | -1.2% | - | 4,131.3 | 4,183.4 | -1.2% | - |
| Loan to Value (LTV) 2) | % | 48.7 | 46.7 | 4.1% | - | 48.7 | 46.7 | 4.1% | - |
| EPRA based key figures 2) | |||||||||
| EPRA Earnings | MEUR | 34.2 | 33.8 | 1.2% | 2.5% | 143.5 | 152.3 | -5.8% | -4.4% |
| EPRA Earnings per share (basic) | EUR | 0.038 | 0.038 | 1.2% | 2.5% | 0.161 | 0.171 | -5.8% | -4.4% |
| EPRA NAV per share | EUR | 2.59 | 2.71 | -4.5% | - | 2.59 | 2.71 | -4.5% | - |
1) Change from previous year. Change-% is calculated from exact figures.
2) Citycon presents alternative performance measures according to the European Securities and Markets Authority (ESMA) new guidelines. More information is presented in Basis of Preparation and Accounting Policies in the notes to the accounts.
3) Change from previous year (comparable exchange rates). Change-% is calculated from exact figures.
Citycon forecasts the 2019 EPRA Earnings per share (basic) to be EUR 0.155-0.175. Furthermore, the Direct operating profit is expected to be in the range of EUR 188-206 million and EPRA Earnings in the range of EUR 138-156 million.
These estimates are based on the existing property portfolio and on the prevailing level of inflation, the EUR–SEK and EUR–NOK exchange rates, and current interest rates. Premises taken offline for planned or ongoing (re)development projects reduce net rental income during the year.
My appointment as Citycon's new CEO as of January 1, 2019 was announced in November. During the past several weeks, I have had the opportunity to visit almost all of our assets and offices. I have been truly impressed by the quality of the real estate and by the talent of our people. I believe we have a strong asset base and excellent team with which we can take Citycon to the next level.
Looking at the operational performance in 2018, our business developed in line with expectations. This past year, our net rental income amounted to EUR 214.9 million and the proforma like-for-like net rental income grew by 1.0 % driven by the development in Iso Omena in particular. Our EPRA earnings were impacted by the planned disposals carried out in 2017-2018, currency impact and one-time management change expenses resulting in EPRA earnings of EUR 143.5 million. Citycon continued its strict cost management measures and administrative expenses declined by 11.8% excluding the one-time management change expenses. Looking at our financial guidance for 2019, we expect our EPRA EPS to be in the range of EUR 0.155-0.175 in 2019.
During the year we continued to improve the average quality of our portfolio with the divestment of five secondary assets. The total proceeds of EUR 96 million were used to fund our development pipeline, including Mölndal Galleria and Lippulaiva. We will continue to recycle capital going forward as our vision is to focus on multi-functional shopping centres that are connected to public transportation in growing urban areas. Thanks to our capital recycling actions, we are pleased that already now 40% of our asset value is concentrated in our five largest assets. Strengthening the balance sheet remains a key priority for the company.
Our industry is changing rapidly and a noticeable divergence between the best-in-class and secondary assets is clear. In this current environment, we must intensify our focus on maximizing value at each of our assets. We are taking steps to ensure that our operating team has the necessary resources in place in order to spend more time in our assets. We have identified asset management improvement actions and changes within the organization and have already begun to implement these changes. These improvements will provide consistency across the portfolio, allow us to grow specific segments of our business and enable us to take advantage of our Pan-Nordic scale. In addition, we continue to focus on capital allocation and ensuring we remain good stewards of capital going forward.
My first weeks as Citycon's CEO have been a tremendously positive experience and the team is energized to take the company forward.
Like-for-like NRI Development (at comparable exchange rates)
NRI Development (at historical exchange rates)
Pro forma Like-for-like NRI Development (at comparable exchange rates)
1) Including comparable periods for Iso Omena and Buskerud 4–12/2018
| Gross rental income |
||||||
|---|---|---|---|---|---|---|
| MEUR | Finland & Estonia |
Norway | Sweden & Denmark |
Other | Total | Total |
| 2017 | 106.9 | 79.6 | 41.3 | 0.7 | 228.5 | 257.4 |
| Acquisitions | - | - | 3.5 | - | 3.5 | 3.6 |
| (Re)development projects | 4.3 | -0.7 | 1.4 | - | 4.9 | 4.9 |
| Divestments | -12.1 | -3.1 | -1.2 | - | -16.4 | -18.8 |
| Like-for-like properties 1) | -2.0 | 0.7 | 0.7 | - | -0.7 | 0.4 |
| Other (incl. exchange rate differences) 2) | -0.2 | -2.2 | -2.0 | -0.5 | -4.9 | -10.5 |
| 2018 | 96.9 | 74.3 | 43.5 | 0.2 | 214.9 | 237.0 |
1) Like-for-like properties are properties held by Citycon throughout two full preceding periods.
Like-for-like properties exclude properties under (re)development or extension.
2) IFRS 15 adjustment was booked in 2018 decreasing gross rental income as part of gross rental income is moved to service charges (5.0M€). IFRS15 does not impact NRI. More information about IFRS 15 is availabe in Citycon's notes for financial statement in the section "Basis preparation and accounting policies".
The net rental income decreased to EUR 214.9 million (228.5). The decrease was mainly due to planned divestments conducted in 2017 and during 2018. On the other hand, (re)development projects (mainly Iso Omena, Mölndal, Buskerud and Arabia) coming online and the acquisition of shopping centre Straedet in Denmark increased the net rental income.
Like-for-like gross rental and service charge income increased by EUR 0.7 million. On the other hand, like-for-like property operating expenses and other expenses from leasing operations increased from the corresponding period by EUR 1.3 million. As a result, like-for-like net rental income decreased by EUR 0.7 million or 0.5%.
Net rental income from the Finnish & Estonian operations decreased by 9.4% compared to Q1-Q4/2017 mainly due to planned divestments of non-core assets in late 2017 and in 2018. This was partly offset by the completed (re)development project of Iso Omena, which increased net rental income. Net rental income from the like-for-like portfolio decreased by 4.2% due to the competitive market environment outside Helsinki metropolitan area which put pressure on rents and increased vacancy. The Finnish like-for-like portfolio accounted for 48% out of the total Finnish & Estonian portfolio measured by net rental income.
Net rental income from Norwegian operations decreased by 6.7% compared to Q1-Q4/2017 due to planned disposals of noncore assets in late 2017 and in 2018. Also, a weaker NOK compared to previous year impacted the net rental income development. The net rental income for the like-for-like portfolio grew by 1.1% mainly due to higher parking income, rent indexations and lower repair expenses.
Net rental income from Swedish & Danish operations increased by 5.4% due to acquisition of shopping centre Straedet in Denmark, (re)development project in Mölndal coming online and stable like-for-like growth. Like-for-like portfolio grew by 1.7% as result of renegotiated lease agreements in several centres, rent indexations and higher service charge levels.
As of H1/2018 Citycon started commenting a pro forma like-for-like net rental income figure, which includes the impact of shopping centres Iso Omena and Buskerud for the April-December period. The pro forma like-for-like net rental income grew by 1.0% during January-December 2018 driven by Iso Omena.
The economic occupancy rate improved by 0.4 percentage points during the period. This was due to Finland & Estonia, where several new leases were signed in shopping centres Kristiine and IsoKristiina. Additionally, the disposals of shopping centre Sampokeskus and a retail property in Kuopio decreased the number of vacant premises. The average rent per sq.m. remained stable at EUR 23.2 (23.2). With comparable rates, the average rent per sq.m. increased by EUR 0.6. The year-to-date leasing spread of renewals and re-lettings was -0.3% due to continued intense competition in the smaller cities in Finland and in Tallinn, Estonia.
During the period, total sales in Citycon's shopping centres increased by 4% and footfall 7% compared to the corresponding period of the previous year.
1) Including Kista Galleria 50%.
Like-for-like sales
Total sales (including Kista Galleria 50%)
1) Sales figures include estimates. Sales figures exclude VAT and the change has been calculated using comparable exchange rates.
Like-for-like footfall
Total footfall (including Kista Galleria 50%)
1) Footfall figures include estimates.
| 31 December 2018 | 31 December 2017 | ||
|---|---|---|---|
| Number of leases | pcs | 4,454 | 4,581 |
| Average rent | EUR/sq.m. | 23.2 | 23.2 |
| Finland & Estonia | EUR/sq.m. | 25.6 | 25.0 |
| Norway | EUR/sq.m. | 21.8 | 21.8 |
| Sweden & Denmark | EUR/sq.m. | 21.8 | 22.4 |
| Average remaining length of lease portfolio | years | 3.4 | 3.5 |
| Occupancy cost ratio 2) | % | 9.1 | 9.0 |
| Leasing spread, renewals and re-lettings | % | -0.3 | -4.0 |
1) Including Kista Galleria 50%.
2) The rolling twelve month occupancy cost ratio for like-for-like shopping centres.
| 2018 | 2017 | ||
|---|---|---|---|
| Total area of leases started | sq.m. | 186,576 | 259,053 |
| Average rent of leases started | EUR/sq.m. | 22.5 | 22.9 |
| Total area of leases ended | sq.m. | 220,202 | 347,330 |
| Average rent of leases ended | EUR/sq.m. | 22.1 | 23.1 |
1) Including Kista Galleria 50%. Leases started and ended do not necessarily refer to the same premises.
Administrative expenses declined to EUR 28.0 million (29.1) despite including one-off expenses related to management changes (EUR 2.4 million). Excluding the one-off expenses, administrative expenses decreased 11.8% mainly driven by lower personnel, office, IT and marketing expenses. At the end of the reporting period, Citycon Group employed a total of 254 (247) full-time employees (FTEs), of whom 45 worked in Finland & Estonia, 111 in Norway, 55 in Sweden, and 43 in Group functions.
Operating profit declined to EUR 104.7 million (150.9) due to divestments and fair value losses of EUR 72.5 million (-42.9).
Net financial expenses year-to-date increased by EUR 14.1 million to EUR 70.5 million (56.4) despite lower average cost of debt, lower average debt level and weaker currencies. The increase was due to clearly higher indirect other financial expenses, which were mainly related to the bond tender offer.
Share of loss of joint ventures totalled EUR -12.5 million (-0.7). The decrease came mainly from fair value losses in Kista Galleria and in associated companies in Norway.
Profit for the period decreased to EUR 16.6 million (87.9) mainly due to lower net rental income, fair value losses and higher net financial expenses.
The fair value of investment properties decreased by EUR 52.1 million to EUR 4,131.3 million (31 December 2017: 4,183.4). Property disposals and transfers from investment properties to investment properties held for sale decreased the fair value by EUR 144.4 million while the acquisitions and investments increased the fair value by EUR 210.6 million. In addition, changes in exchange rates decreased the fair value by EUR 45.9 million and fair value losses by EUR 72.5 million.
| No. of | Gross leasable | Properties held | |||
|---|---|---|---|---|---|
| 31 December 2018 | properties | area Fair value, MEUR | for sale, MEUR | Portfolio, % | |
| Shopping centres, Finland & Estonia | 14 | 429,450 | 1,835.4 | 78.1 | 45% |
| Other properties, Finland & Estonia | 1 | 2,240 | 2.3 | - | 0% |
| Finland & Estonia, total | 15 | 431,690 | 1,837.7 | 78.1 | 46% |
| Shopping centres, Norway | 15 | 387,000 | 1,328.6 | - | 32% |
| Rented shopping centres, Norway 1) | 2 | 18,200 | - | - | - |
| Norway, total | 17 | 405,200 | 1,328.6 | - | 32% |
| Shopping centres, Sweden & Denmark | 10 | 269,600 | 964.9 | - | 23% |
| Sweden & Denmark, total | 10 | 269,600 | 964.9 | - | 23% |
| Shopping centres, total | 41 | 1,104,250 | 4,129.0 | 78.1 | 100% |
| Other properties, total | 1 | 2,240 | 2.3 | - | 0% |
| Investment properties, total | 42 | 1,106,490 | 4,131.3 | 78.1 | 100% |
| Kista Galleria (50%) | 1 | 46,300 | 291.1 | - | - |
| Investment properties and Kista Galleria | |||||
| (50%), total | 43 | 1,152,790 | 4,422.4 | 78.1 | - |
1) Value of rented properties is recognised within intangible rights based on IFRS rules.
The fair value change of investment properties amounted to EUR -72.5 million (-42.9). The company recorded a total value increase of EUR 39.2 million (113.0) and a total value decrease of EUR 111.7 million (155.9).
| MEUR | Q4/2018 | Q4/2017 | 2018 | 2017 |
|---|---|---|---|---|
| Finland & Estonia | -11.0 | -10.5 | -58.8 | -51.3 |
| Norway | -1.6 | -10.7 | -22.2 | -22.2 |
| Sweden & Denmark | -5.7 | 10.5 | 8.5 | 30.6 |
| Investment properties, total | -18.2 | -10.6 | -72.5 | -42.9 |
| Kista Galleria (50%) | -3.2 | -1.1 | -8.6 | -0.6 |
| Investment properties and Kista Galleria (50%), total | -21.5 | -11.7 | -81.1 | -43.5 |
Citycon measures the fair values of the properties internally in the first and third quarter. External appraiser, CBRE, measures the fair values for the half-yearly report and financial statements.
CBRE's Valuation Statement for the period-end is available on Citycon's website below Investors.
Citycon continued to implement its divestment strategy and divested one shopping centre for approximately EUR 16 million during Q4/2018. During 2018, Citycon divested 5 non-core assets in Finland, Sweden and Norway for a total value of approximately EUR 96 million.
Since the strategy update in 2011, Citycon has divested 67 non-core properties and five residential portfolios for a total value of approximately EUR 776 million. Strengthening the balance sheet remains a key priority and the company will continue its capital recycling actions going forward.
| Gross leasable | |||||
|---|---|---|---|---|---|
| Location | Date | area, sq.m. | Price, MEUR | ||
| Acquisitions | |||||
| Straedet, Part 3 | Shopping centre | Køge, Denmark | 3 July | 3,600 | 9.0 |
| Mölndal Galleria 50%1) | Shopping centre | Mölndal, Sweden | 27 September | 13,000 | 58.0 |
| Acquisitions, total | 16,600 | 67.0 | |||
| Divestments | |||||
| Åkermyntan Centrum | Shopping centre | Stockholm, Sweden | 31 March | 10,300 | 30.0 |
| Kuopion Kauppakatu 41 | Retail property | Kuopio, Finland | 30 April | 10,300 | 22.0 |
| Heiane Storsenter | Shopping centre | Stord, Norway | 30 May | 23,900 | 24.0 |
| Glasshuspassasjen | Shopping centre | Bodø, Norway | 5 July | 2,300 | 4.0 |
| Sampokeskus | Shopping centre | Rovaniemi, Finland | 30 November | 14,500 | 16.0 |
| Divestments, total | 61,300 | 96.0 |
1) Citycon acquired NCC's 50% stake at completion.
At the end of the reporting period, Citycon had one major (re)development project underway: the Lippulaiva project in the Helsinki Metropolitan area.
The completely new shopping centre Mölndal Galleria was successfully opened on 27 September 2018, with approximately 26,000 sq.m. of gross leasable area and more than 65 different shops, cafés and restaurants as well as services. The economic occupancy rate was approximately 93% at the end of 2018 and the centre is certified with the international standard of BREEAM Very Good.
Further information on Citycon's completed, ongoing and planned (re)developments can be found in the company's Financial Review 2018.
| Actual gross investment | |||||
|---|---|---|---|---|---|
| Location | Area before/ after, sq.m. |
Expected gross investment, MEUR |
by 31 December 2018, MEUR |
Completion target | |
| Mölndal Galleria | Gothenburg, Sweden | - /24,000 | 114.6 1) | 114.6 | Completed 09/2018 |
| Helsinki metropolitan area, | |||||
| Lippulaiva | Finland | 19,200/44,300 | TBC 2) | 81.2 | 2021 |
1) Original expected gross investment was EUR 120 million.
2) Negotiations regarding construction of main part of shopping centre on-going with several construction companies at the moment as negotiations with previous construction company were terminated. Impact on expected investment to be confirmed once negotiations finalized.
Equity per share decreased to EUR 2.35 (31 December 2017: 2.48), mainly due to dividends and equity return of EUR 115.7 million and a translation loss of EUR 22.7 million. On the other hand, profit for the period of EUR 16.6 million attributable to parent company shareholders increased equity per share.
At period-end, shareholders' equity attributable to parent company's shareholders was EUR 2,088.9 million (2,208.1). This figure decreased by EUR 119.2 million from the end of 2017 due to the above-mentioned reasons.
| 31 December 2018 | 31 December 2017 | ||
|---|---|---|---|
| Interest bearing debt, fair value | MEUR | 2,154.6 | 2,097.2 |
| Available liquidity | MEUR | 556.4 | 559.4 |
| Average loan maturity | years | 5.0 | 5.1 |
| Loan to Value (LTV) | % | 48.7 | 46.7 |
| Equity ratio (financial covenant > 32.5) | % | 45.4 | 47.4 |
| Interest cover ratio (financial covenant > 1.8) | x | 3.8 | 3.8 |
| Solvency ratio (financial covenant < 0.65 ) | x | 0.48 | 0.46 |
| Secured solvency ratio (financial covenant < 0.25) x | 0.02 | 0.02 | |
| Average interest-rate fixing period | years | 5.0 | 5.1 |
| Interest rate hedging ratio | % | 91.7 | 94.1 |
In March Citycon purchased from the open markets and cancelled NOK 100 million of the NOK 1,400 million bond carrying a fixed coupon of 3.9%.
In June 2018, Moody's downgraded Citycon's credit rating from Baa1 to Baa2.
In August 2018, Citycon Group successfully placed a EUR 300 million Eurobond. The bond has a tenor of approx. 8.4 years with a fixed annual interest of 2.375 per cent and the bond has been rated in line with Citycon's corporate credit rating. The proceeds were mainly used to refinance Citycon Group's existing indebtedness by repurchasing EUR 281 million of a EUR 500 million Euro denominated bond carrying a fixed coupon of 3.75 per cent, due 2020. In addition, Citycon has renegotiated cross-currency swaps to extend their maturity and reduce the interest rate. These financing arrangements clearly strengthened Citycon's credit position by lengthening the average debt maturity, decreasing the average cost of debt and reducing the 2020 refinancing risk.
During the year, proceeds from non-core property divestments were used to repay commercial papers, and the acquisition of Mölndal Galleria in September was financed by issuing new commercial paper.
The fair value of interest-bearing debt increased year-on-year by EUR 57.4 million to EUR 2,154.6 million, mainly due to the acquisition of the remaining 50% share in Mölndal Galleria. The weighted average loan maturity was 5.0 years and was lengthened as EUR 281 million of the Eurobond maturing in 2020 was refinanced with the issuance of a new EUR 300 million Eurobond maturing in 2027.
The LTV increased to 48.7% (46.7%) as net debt increased and property fair values decreased.
| Financial expenses MEUR -79.1 |
-63.2 |
|---|---|
| Financial income MEUR 8.7 |
6.9 |
| Net financial expenses (IFRS) MEUR -70.5 |
-56.4 |
| Direct net financial expenses (EPRA) MEUR -50.1 |
-54.4 |
| Weighted average interest rate 1) % 2.35 |
2.78 |
| Weighted average interest rate excluding | |
| derivatives % 2.36 |
2.57 |
| Year-to-date weighted average interest rate 1) % 2.69 |
2.70 |
1) Including interest rate swaps and cross-currency swaps
The direct net financial expenses (EPRA) were lower in 2018 due to a lower average cost of debt rate, lower average debt level and weaker currencies. Net financial expenses year-to-date (IFRS) increased by EUR 14.1 million to EUR 70.5 million (56.4) mainly due to clearly higher other financial expenses, which included in total net EUR 20.3 million of indirect costs. Of these, EUR 20.8 million of costs was incurred when EUR 281 million of the 500 million Eurobond was repurchased and cancelled, and EUR 0.6 million of costs was incurred when NOK 100 million of the NOK 1,400 million bond was repurchased and cancelled. The rest mainly related to indirect costs and gains realized when cross-currency swaps were renegotiated or unwound and fair value changes of cross-currency swaps not under hedge accounting, in total a net gain of EUR 1.1 million. The financial income mainly consisted of interest income on loans to Kista Galleria and Mölndal Galleria joint venture companies, and partly of interest differences from forward agreements. The foreign exchange differences are netted in financial expenses in the table above.
The average cost of debt decreased clearly following financing transactions in Q3 and was 2.35% at year-end (2.78%) as EUR 281 million of the Eurobond maturing in 2020 with a coupon of 3.75% was refinanced with the issuance of a new Eurobond with a coupon of 2.375%. The larger amount of outstanding commercial paper and the renegotiation and unwinding of all cross-currency swaps also contributed to the lower average cost of debt.
Citycon uses interest rate swaps to hedge the floating interest rate risk exposure. According to the company's treasury policy, the currency net transaction risk exposure with profit and loss impact is fully hedged through currency forwards and cross-currency swaps that convert EUR debt into SEK and NOK.
| 31.12.2018 | 31.12.2017 | ||
|---|---|---|---|
| Average interest-rate fixing period | years | 5.0 | 5.1 |
| Interest rate hedging ratio | % | 91.7 | 94.1 |
| Finland | Norway | Sweden | Denmark | Estonia | Euro area | |
|---|---|---|---|---|---|---|
| GDP growth forecast 2018 | 2.9% | 1.6% | 2.4% | 1.2% | 3.5% | 2.1% |
| Unemployment 2018 | 7.8% | 4.0% | 6.3% | 5.2% | 5.7% | 8.4% |
| Inflation 2018 | 1.2% | 3.5% | 2.1% | 0.8% | 3.5% | 1.8% |
| Retail sales growth 2018 | 2.9% | 1.5% | 2.6% | 1.0% | 5.0% | 1.8% |
Sources: SEB Nordic Outlook, European Commission, Eurostat, Statistics Finland/Norway/Sweden/Estonia/Denmark
In Finland, retail sales continued to grow during the reporting period. Retail rents remained relatively stable during Q1- Q4/2018 in the better-quality centres, while rents continued to be under pressure in secondary centres and in areas suffering from strong competition, particularly outside the Helsinki Metropolitan Area. The full year retail property transaction volume was significantly lower in 2018 compared to previous year, but remained at a high level. However, the Finnish transaction market was clearly more active compared to other Nordic countries. The prime shopping centre yield in the Helsinki Metropolitan Area remained relatively stable at approximately 4.5%.
In Norway, retail sales continued to grow during 2018. According to a report by Kvarud Analyse overall shopping centre footfall in Norway decreased slightly but the average shopping basket size increased by slightly compared to the same period of 2017. Overall shopping centre rents remained relatively stable in 2018, but they have come under pressure over the last twelve months in certain locations. The full year transaction volume increased compared to the previous year driven by one large transaction. Yields in prime shopping centres remained at 4.25%, while there continues to be some pressure on secondary yields.
In Sweden, retail sales grew during the reporting period, while retail market rents remained rather stable during 2018. The prime shopping centre yields remained unchanged at 4.25%, although the gap between prime and secondary assets has widened. For the full year, the retail share was 12% of the preliminary transaction volume.
In Denmark, retail sales grew during the reporting. There were no major changes in rental levels and the prime shopping centre yields were at approximately 4.0% and good secondary yield stands at 5.50%.
In Estonia, retail sales grew in many segments, especially in cosmetic stores and pharmacies. In Tallinn, prime shopping centre rents remained stable. The prime shopping centre yield in Estonia declined to 6.25%. The market was impacted by new capacity coming to the market during 2018.
(Sources: SEB Nordic Outlook, European Commission, CBRE, Statistics Finland/Norway/Sweden/Estonia/Denmark, Eurostat)
On 2 November 2018, Citycon announced that the Board of Directors have appointed F. Scott Ball as Citycon's new CEO. Ball joined Citycon on November 15, 2018 and assumed the full responsibility as CEO on January 1, 2019. Ball replaced Marcel Kokkeel, who served as CEO since 2011. Kokkeel stepped down based on mutual agreement on January 1, 2019 and will stay as an advisor to the company until May 1, 2019.
At the same time, Henrica Ginström was appointed Citycon's new Chief Operating Officer as of January 1, 2019. Jurn Hoeksema stepped down from his COO position based on a mutual agreement, effective January 1, 2019.
Citycon's strategy is to be a forerunner in sustainable shopping centre management. Citycon´s sustainability strategy was updated in 2017 and Citycon has set ambitious targets that extend to 2030.
Citycon uses BREEAM In-Use to assess and develop the sustainable management of its shopping centres. 83% of Citycon's shopping centres, measured by fair value, had acquired the certification at period-end. Citycon now boasts the largest shopping centre portfolio with BREEAM In-Use certification in the Nordic countries.
Citycon's sustainability strategy, targets and measures are described in detail in the upcoming Sustainability Accounts 2018.
The most significant near-term risks and uncertainties in Citycon's business operations are associated with the general development of the economy and consumer confidence in the Nordic countries and Estonia as well as how this affects the fair values, occupancy rates and rental levels of the shopping centres and thereby Citycon's financial result. Increased competition locally or from e-commerce might affect demand for retail premises, which could lead to lower rental levels or increased vacancy, especially outside capital city regions.
The main risks that can materially affect Citycon's business and financial results, along with the main risk management actions, are presented in detail on pages 37-38 in the Financial Statements 2018, in Note 3.5 A) as well as on Citycon's website in the Corporate Governance section.
Citycon's Annual General Meeting (AGM) 2018 was held in Helsinki on 20 March 2018.
The AGM adopted the company's Financial Statements and discharged the members of the Board of Directors and the Chief Executive Officer from liability for the financial year 2017. The General Meeting decided that no dividend is distributed by a resolution of the AGM and authorised the Board of Directors to decide in its discretion on the distribution of dividend and assets from the invested unrestricted equity fund. Based on the authorisation the maximum amount of dividend to be distributed shall not exceed EUR 0.01 per share and the maximum amount of equity repayment distributed from the invested unrestricted equity fund shall not exceed EUR 0.12 per share. The authorisation is valid until the opening of the next AGM.
The AGM decisions are reported on the company's website at citycon.com/agm2018, where meeting minutes of the AGM are also available.
Citycon has published Citycon Group's Corporate Governance Statement 2018 as a separate report, distinct from the Report by the Board of Directors. The statement is prepared in accordance with the recommendations of the Finnish Corporate Governance Code 2015 and is available on the company's website at citycon.com/corporate-governance.
The company has a single series of shares, with each share entitling to one vote at a General Meeting of shareholders. At the end of December 2018, the total number of shares outstanding in the company was 889,992,628. The shares have no nominal value. During 2018, there were no changes in the company's share capital.
At the end of December 2018, Citycon had a total of 17,269 (15,368) registered shareholders, of which ten were account managers of nominee-registered shares. Holders of the nominee-registered shares held approximately 709.6 million (727.9) shares, or 79.7% (81.8%) of shares and voting rights in the company. The most significant registered shareholders at year-end can be found on company's website citycon.com/major-shareholders.
| 2018 | 2017 | ||
|---|---|---|---|
| Share capital at period-start | MEUR | 259.6 | 259.6 |
| Share capital at period-end | MEUR | 259.6 | 259.6 |
| Number of shares at period-start | 889,992,628 | 889,992,628 | |
| Number of shares at period-end | 889,992,628 | 889,992,628 |
| 2018 | 2017 | 2016 | 2015 | 2014 | ||
|---|---|---|---|---|---|---|
| Number of shares traded | *1,000 | 246,263 | 177,286 | 147,684 | 158,343 | 88,784 |
| Stock turnover | % | 27.7 | 19.9 | 16.6 | 17.8 | 15.0 |
| Share price, high | EUR | 2.25 | 2.50 | 2.39 | 3.24 | 2.92 |
| Share price, low | EUR | 1.60 | 2.08 | 1.98 | 2.13 | 2.29 |
| Share price, average | EUR | 1.86 | 2.23 | 2.18 | 2.53 | 2.65 |
| Share price, closing | EUR | 1.62 | 2.16 | 2.34 | 2.40 | 2.58 |
| Market capitalisation, period-end | MEUR | 1,437.34 | 1,920.60 | 2,080.80 | 2,136.00 | 1,530.80 |
| Number of shares, period-end | *1,000 | 889,993 | 889,993 | 889,993 | 889,993 | 593,328 |
Citycon's dividend for the financial year 2018 and equity repayments paid in 2018:
| Record date | Payment date | EUR / share | |
|---|---|---|---|
| Dividend for 2017 | 22 March 2018 | 29 March 2018 | 0.0100 |
| Equity repayment Q1 | 22 March 2018 | 29 March 2018 | 0.0225 |
| Equity repayment Q2 | 21 June 2018 | 29 June 2018 | 0.0325 |
| Equity repayment Q3 | 20 September 2018 | 28 September 2018 | 0.0325 |
| Equity repayment Q4 | 14 December 2018 | 28 December 2018 | 0.0325 |
1) Board decision based on the authorisation issued by the AGM 2018
In addition to the above explained asset distribution authorisation of the Board of Directors, the Board of Directors of the company had two valid authorisations at the period-end granted by the AGM held on 20 March 2018:
In 2018, the Board of Directors used five times its authorisation to repurchase its own shares and issue them by conveying repurchased shares. The repurchases and conveyances were made for payment of rewards earned under the company's share plans in accordance with the terms and conditions of the plans:
– On 13 February 2018, the company repurchased a total of 24,767 of its own shares and conveyed them on 1 March 2018 to 19 key persons of the company.
During the reporting period, the company held a total of 149,767 company's own shares (representing 0.017 % of the shares outstanding) which the company conveyed for payment of rewards earned under the share plans before the period end as explained in the section Board authorisations above. At the end of the period, the company or its subsidiaries held no shares in the company.
The company did not receive any notifications of changes in shareholding during the year 2018.
Gazit-Globe Ltd. and Canada Pension Plan Investment Board European Holdings S.à r.l (CPPIBEH) have signed an agreement regarding certain governance matters relating to Citycon on 12 May 2014.
Further information on the agreement between Gazit-Globe Ltd. and CPPIBEH is available on the company's website at citycon.com/shareholder-agreements.
The company has no knowledge of any other shareholder agreements.
Citycon has five long-term share-based incentive plans for the Group key employees:
In February 2018 the Board of Directors approved two new share-based incentive plans for the Group's key employees, a Matching Share Plan 2018–2020 and a Restricted Share Plan 2018–2020. The Matching Share Plan 2018–2020 is directed to the CEO and other members of the Corporate Management Committee. The Restricted Share Plan 2018–2020 is directed to selected key employees of the company and its subsidiaries.
Stock Option Plan 2011 expired on 31 March 2018. No shares were subscribed with the stock-options.
In December 2018 the Board of Directors approved a new Restricted Share Plan 2018–2021 for Citycon´s new CEO, F. Scott Ball.
The full terms and conditions of share-based incentive plans are available on the company's website at citycon.com/remuneration.
Citycon forecasts the 2019 EPRA Earnings per share (basic) to be EUR 0.155-0.175. Furthermore, the Direct operating profit is expected to be in the range of EUR 188-206 million and EPRA Earnings in the range of EUR 138-156 million.
These estimates are based on the existing property portfolio as well as on the prevailing level of inflation, the EUR–SEK and EUR–NOK exchange rates, and current interest rates. Premises taken offline for planned or ongoing (re)development projects reduce net rental income during the year.
Citycon Oyj's schedule of the financial reporting in 2019 is the following:
Year 2018 full-year Financial Report, Financial Statements and the Report by the Board of Directors on Thursday 7 February 2019 at about 9:00 a.m. Year 2019 three-month Interim Report on Wednesday 17 April 2019 at about 9:00 a.m. Year 2019 six-month Half-Yearly Report on Thursday 11 July 2019 at about 9:00 a.m. Year 2019 nine-month Interim Report on Thursday 24 October 2019 at about 9:00 a.m.
Citycon Oyj's Annual General Meeting (AGM) 2019 will be held on Wednesday, 13 March 2019 starting at 12:00p.m.
For more investor information, please visit the company's website at www.citycon.com.
Helsinki, 6 February 2019 Citycon Oyj Board of Directors
Eero Sihvonen Executive VP and CFO Tel. +358 50 557 9137 [email protected]
Mikko Pohjala IR and Communications Director Tel. +358 40 838 0709 [email protected]
Citycon is a leading owner, manager and developer of urban, grocery-anchored shopping centres in the Nordic region, managing assets that total almost EUR 4.5 billion. Citycon is No. 1 shopping centre owner in Finland and among the market leaders in Norway, Sweden and Estonia. Citycon has also established a foothold in Denmark.
Citycon has investment-grade credit ratings from Moody's (Baa2) and Standard & Poor's (BBB). Citycon Oyj's share is listed in Nasdaq Helsinki.
Citycon applies to the best practices policy recommendations of EPRA (European Public Real Estate Association) for financial reporting. More information about EPRA's performance measures is available in Citycon's Financial Statements 2018 in section "EPRA performance measures".
| Q4/2018 | Q4/2017 | % | 2018 | 2017 | % | ||
|---|---|---|---|---|---|---|---|
| EPRA Earnings | MEUR | 34.2 | 33.8 | 1.2% | 143.5 | 152.3 | -5.8% |
| EPRA Earnings per share (basic) | EUR | 0.038 | 0.038 | 1.2% | 0.161 | 0.171 | -5.8% |
| EPRA NAV per share | EUR | 2.59 | 2.71 | -4.5% | 2.59 | 2.71 | -4.5% |
| EPRA NNNAV per share | EUR | 2.38 | 2.37 | 0.5% | 2.38 | 2.37 | 0.5% |
The following tables present how EPRA Performance Measures are calculated.
| MEUR | Q4/2018 | Q4/2017 | % | 2018 | 2017 | % |
|---|---|---|---|---|---|---|
| Earnings in IFRS Consolidated Statement of Comprehensive Income | 5.5 | 23.2 | -76.3% | 16.6 | 87.4 | -81.0% |
| +/- Net fair value losses/gains on investment property | 18.2 | 10.6 | 71.9% | 72.5 | 42.9 | 69.0% |
| +/- Net losses/gains on sale of investment property | 1.1 | 3.7 | -71.2% | 0.2 | -6.0 | - |
| + Indirect other operating expenses | 3.7 | 7.2 | -49.4% | 10.3 | 12.8 | -19.1% |
| +/- Early close-out costs of debt and financial instruments | - | - | - | 21.4 | - | - |
| -/+ Fair value gains/losses of financial instruments | -1.2 | 0.2 | - | -1.1 | 2.0 | - |
| -/+ Indirect losses/gains of joint ventures and associated companies | 8.8 | 0.7 | - | 17.9 | 6.9 | - |
| +/- Change in deferred taxes arising from the items above | -1.9 | -12.0 | -84.1% | 5.7 | 5.8 | -1.7% |
| + Non-controlling interest arising from the items above | 0.0 | 0.0 | - | - | 0.5 | - |
| EPRA Earnings | 34.2 | 33.8 | 1.2% | 143.5 | 152.3 | -5.8% |
| Issue-adjusted average number of shares, million | 890.0 | 890.0 | - | 890.0 | 890.0 | - |
| EPRA Earnings per share (basic), EUR | 0.038 | 0.038 | 1.2% | 0.161 | 0.171 | -5.8% |
The table below presents an alternative calculation of EPRA Earnings from the statement of comprehensive income from top to bottom.
| MEUR | Q4/2018 | Q4/2017 | % | 2018 | 2017 | % |
|---|---|---|---|---|---|---|
| Net rental income | 53.7 | 53.9 | -0.3% | 214.9 | 228.5 | -6.0% |
| Direct administrative expenses | -10.1 | -8.2 | 23.2% | -28.0 | -29.1 | -3.5% |
| Direct other operating income and expenses | 0.5 | 0.2 | - | 0.8 | 1.1 | -27.7% |
| Direct operating profit | 44.1 | 45.9 | -4.0% | 187.6 | 200.5 | -6.4% |
| Direct net financial income and expenses | -11.4 | -13.3 | -14.5% | -50.1 | -54.4 | -7.7% |
| Direct share of profit/loss of joint ventures and associated companies | 1.1 | 1.4 | -22.9% | 5.3 | 6.2 | -14.2% |
| Direct current taxes | 0.2 | -0.4 | - | -0.2 | -0.8 | -71.3% |
| Direct deferred taxes | 0.3 | 0.2 | 43.2% | 0.9 | 0.7 | 28.7% |
| Direct non-controlling interest | 0.0 | 0.0 | - | 0.0 | 0.0 | -48.9% |
| EPRA Earnings | 34.2 | 33.8 | 1.2% | 143.5 | 152.3 | -5.8% |
| EPRA Earnings per share (basic), EUR | 0.038 | 0.038 | 1.2% | 0.161 | 0.171 | -5.8% |
| 31 December 2018 | 31 December 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| MEUR | Number of shares on the balance sheet date (1,000) |
per share, EUR |
MEUR | Number of shares on the balance sheet date (1,000) |
per share, EUR |
|||
| Equity attributable to parent company | ||||||||
| shareholders | 2,088.9 | 889,993 | 2.35 | 2,208.1 | 889,993 | 2.48 | ||
| Deferred taxes from the difference of fair value and | ||||||||
| fiscal value of investment properties | 302.6 | 889,993 | 0.34 | 297.6 | 889,993 | 0.33 | ||
| Goodwill as a result of deferred taxes | -85.1 | 889,993 | -0.10 | -91.8 | 889,993 | -0.10 | ||
| Fair value of financial instruments | -1.1 | 889,993 | 0.00 | 0.8 | 889,993 | 0.00 | ||
| Net asset value (EPRA NAV) | 2,305.3 | 889,993 | 2.59 | 2,414.7 | 889,993 | 2.71 | ||
| Deferred taxes from the difference of fair value and | ||||||||
| fiscal value of investment properties | -302.6 | 889,993 | -0.34 | -297.6 | 889,993 | -0.33 | ||
| Goodwill as a result of deferred taxes | 85.1 | 889,993 | 0.10 | 91.8 | 889,993 | 0.10 | ||
| The difference between the secondary market | ||||||||
| price and fair value of bonds 1) | 29.3 | 889,993 | 0.03 | -100.2 | 889,993 | -0.11 | ||
| Fair value of financial instruments | 1.1 | 889,993 | 0.00 | -0.8 | 889,993 | 0.00 | ||
| EPRA NNNAV | 2,118.2 | 889,993 | 2.38 | 2,107.9 | 889,993 | 2.37 |
1) When calculating the EPRA NNNAV in accordance with EPRA's recommendations, the shareholders' equity is adjusted using EPRA's guidelines so that bonds are valued based on secondary market prices. In accordance with Citycon's accounting policies, the carrying amount and fair value of bonds are different from this secondary market price. The difference between the secondary market price and the carrying value of the bonds was EUR 20.9 million (-100.2) as of 30 Dec 2018.
| MEUR | Note | Q4/2018 | Q4/2017 | % | 2018 | 2017 | % |
|---|---|---|---|---|---|---|---|
| Gross rental income | 3 | 59.1 | 62.1 | -4.7% | 237.0 | 257.4 | -7.9% |
| Service charge income | 3 | 21.4 | 21.9 | -2.3% | 79.2 | 80.8 | -2.0% |
| Property operating expenses | -26.2 | -29.5 | -11.2% | -98.9 | -107.8 | -8.3% | |
| Other expenses from leasing operations | -0.7 | -0.6 | 7.7% | -2.4 | -1.9 | 26.4% | |
| Net rental income | 3 | 53.7 | 53.9 | -0.3% | 214.9 | 228.5 | -6.0% |
| Administrative expenses | -10.1 | -8.2 | 23.2% | -28.0 | -29.1 | -3.5% | |
| Other operating income and expenses | -3.2 | -7.0 | -54.6% | -9.5 | -11.6 | -18.3% | |
| Net fair value losses/gains on investment property | 3 | -18.2 | -10.6 | 71.9% | -72.5 | -42.9 | 69.0% |
| Net losses/gains on sale of investment property | -1.1 | -3.7 | - | -0.2 | 6.0 | - | |
| Operating profit | 3 | 21.1 | 24.3 | -13.2% | 104.7 | 150.9 | -30.6% |
| Net financial income and expenses | -10.2 | -13.5 | -24.7% | -70.5 | -56.4 | 25.0% | |
| Share of loss/profit of joint ventures and associated companies | -7.7 | 0.7 | - | -12.5 | -0.7 | - | |
| Profit before taxes | 3.2 | 11.4 | -72.4% | 21.7 | 93.8 | -76.9% | |
| Current taxes | 0.2 | -0.4 | - | -0.2 | -0.8 | -71.3% | |
| Deferred taxes | 2.2 | 12.2 | -82.1% | -4.8 | -5.1 | -5.9% | |
| Profit/loss for the period | 5.5 | 23.2 | -76.2% | 16.6 | 87.9 | -81.1% | |
| Profit/loss attributable to | |||||||
| Parent company shareholders | 5.5 | 23.2 | -76.3% | 16.6 | 87.4 | -81.0% | |
| Non-controlling interest | 0.0 | 0.0 | -90.3% | 0.0 | 0.5 | -99.1% | |
| Earnings per share attributable to parent company shareholders | |||||||
| Earnings per share (basic), EUR | 4 | 0.01 | 0.03 | -76.3% | 0.02 | 0.10 | -81.0% |
| Earnings per share (diluted), EUR | 4 | 0.01 | 0.03 | -76.1% | 0.02 | 0.10 | -80.9% |
| Other comprehensive income | |||||||
| Items that may be reclassified subsequently to profit or loss | |||||||
| Net losses/gains on cash flow hedges | -0.7 | 0.2 | - | 2.0 | -3.1 | - | |
| Income taxes relating to cash flow hedges | 0.1 | 0.0 | - | -0.4 | 0.6 | - | |
| Share of other comprehensive income of joint ventures and associated | |||||||
| companies | 0.0 | 2.4 | -98.2% | 0.3 | 1.9 | -84.5% | |
| Exchange gains/losses on translating foreign operations | -40.2 | -43.0 | -6.4% | -22.7 | -76.3 | -70.2% | |
| Net other comprehensive income to be reclassified to profit or loss in | |||||||
| subsequent periods | -40.8 | -40.4 | 0.9% | -20.9 | -76.8 | -72.8% | |
| Other comprehensive income for the period, after taxes | -40.8 | -40.4 | 0.9% | -20.9 | -76.8 | -72.8% | |
| Total comprehensive loss/profit for the period | -35.3 | -17.2 | 104.9% | -4.2 | 11.1 | - | |
| Total comprehensive loss/profit attributable to | |||||||
| Parent company shareholders | -35.3 | -17.2 | 105.8% | -4.2 | 10.6 | - | |
| Non-controlling interest | 0.0 | -0.1 | - | 0.0 | 0.5 | - |
| MEUR | Note | 31 December 2018 | 31 December 2017 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Investment properties | 5 | 4,131.3 | 4,183.4 |
| Goodwill | 145.7 | 153.3 | |
| Investments in joint ventures and associated companies | 164.8 | 228.0 | |
| Intangible and tangible assets, and other non-current assets | 37.6 | 39.8 | |
| Deferred tax assets | 9.0 | 4.3 | |
| Total non-current assets | 4,488.4 | 4,608.9 | |
| Investment properties held for sale | 7 | 78.1 | 25.4 |
| Current assets | |||
| Derivative financial instruments | 9, 10 | 1.5 | 1.8 |
| Trade and other current assets | 43.3 | 31.8 | |
| Cash and cash equivalents | 8 | 11.4 | 10.1 |
| Total current assets | 56.2 | 43.7 | |
| Total assets | 3 | 4,622.7 | 4,678.0 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Equity attributable to parent company shareholders | |||
| Share capital | 259.6 | 259.6 | |
| Share premium fund | 131.1 | 131.1 | |
| Fair value reserve | 1.1 | -0.8 | |
| Invested unrestricted equity fund | 11 | 1,016.7 | 1,123.5 |
| Retained earnings | 11 | 680.4 | 694.7 |
| Total equity attributable to parent company shareholders | 2,088.9 | 2,208.1 | |
| Non-controlling interest | 0.1 | 1.2 | |
| Total shareholders' equity | 2,089.0 | 2,209.4 | |
| Long-term liabilities | |||
| Loans | 1,961.4 | 1,959.2 | |
| Derivative financial instruments and other non-interest | |||
| bearing liabilities | 9, 10 | 9.3 | 4.7 |
| Deferred tax liabilities | 304.4 | 301.1 | |
| Total long-term liabilities | 2,275.1 | 2,265.0 | |
| Short-term liabilities | |||
| Loans | 178.6 | 124.7 | |
| Derivative financial instruments | 9, 10 | 0.9 | 0.2 |
| Trade and other payables | 79.1 | 78.8 | |
| Total short-term liabilities | 258.6 | 203.6 | |
| Total liabilities | 3 | 2,533.7 | 2,468.6 |
| Total liabilities and shareholders' equity | 4,622.7 | 4,678.0 |
| MEUR | Note | 2018 | 2017 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before taxes | 21.7 | 93.8 | |
| Adjustments to profit before taxes | 169.9 | 110.5 | |
| Cash flow before change in working capital | 191.6 | 204.3 | |
| Change in working capital | 1.5 | 7.6 | |
| Cash generated from operations | 193.1 | 212.0 | |
| Paid interest and other financial charges | -101.5 | -66.8 | |
| Interest income and other financial income received | 4.1 | 3.8 | |
| Current taxes paid | -0.2 | -0.1 | |
| Net cash from operating activities | 95.5 | 148.9 | |
| Cash flow from investing activities | |||
| Acquisition of subsidiaries, less cash acquired | 5,6,7 | -68.4 | -144.4 |
| Capital expenditure on investment properties, investments in joint ventures, intangible assets and tangible assets |
5,6,7 | -98.4 | -154.0 |
| Sale of investment properties | 5,6,7 | 87.7 | 315.9 |
| Net cash used in investing activities | -79.0 | 17.5 | |
| Cash flow from financing activities | |||
| Proceeds from short-term loans | 1,131.8 | 2,078.7 | |
| Repayments of short-term loans | -1,029.9 | -2,099.0 | |
| Proceeds from long-term loans and receivables | 297.3 | 107.6 | |
| Repayments of long-term loans | -292.4 | -139.3 | |
| Acquisition of non-controlling interests | -1.4 | 0.0 | |
| Dividends and return from the invested unrestricted equity fund | 11 | -115.7 | -116.2 |
| Realized exchange rate losses | -4.0 | -2.7 | |
| Net cash used in financing activities | -14.3 | -171.0 | |
| Net change in cash and cash equivalents | 2.2 | -4.7 | |
| Cash and cash equivalents at period-start | 8 | 10.1 | 15.9 |
| Effects of exchange rate changes | -0.9 | -1.1 | |
| Cash and cash equivalents at period-end | 8 | 11.4 | 10.1 |
| Equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| attributable to parent |
|||||||||
| Share | Share premium |
Fair value | Invested unrestricted |
Translation | Retained | company share |
Non controlling |
Shareholders' | |
| MEUR | capital | fund | reserve | equity fund | reserve | earnings | holders | interest | equity, total |
| Balance at 1 January 2017 | 259.6 | 131.1 | -0.3 | 1,230.3 | -16.8 | 707.6 | 2,311.4 | 0.8 | 2,312.3 |
| Total comprehensive loss/ profit for the period |
-0.5 | -76.3 | 87.4 | 10.6 | 0.5 | 11.1 | |||
| Dividends paid and equity return (Note 11) |
-106.8 | -8.9 | -115.7 | -115.7 | |||||
| Share-based payments | 0.8 | 0.8 | 0.8 | ||||||
| Acquisition of non-controlling interests |
0.1 | 0.1 | -0.1 | 0.0 | |||||
| Balance at 31 December 2017 | 259.6 | 131.1 | -0.8 | 1,123.5 | -93.2 | 787.1 | 2,207.3 | 1.2 | 2,208.5 |
| Changes in accounting policies (IFRS2 & IFRS 9) |
0.8 | 0.8 | 0.8 | ||||||
| Balance at 1 January 2018 | 259.6 | 131.1 | -0.8 | 1,123.5 | -93.2 | 787.9 | 2,208.1 | 1.2 | 2,209.4 |
| Total comprehensive profit/ loss for the period |
1.9 | -22.7 | 16.6 | -4.2 | 0.0 | -4.2 | |||
| Dividends paid and equity return (Note 11) |
-106.8 | -8.9 | -115.7 | -115.7 | |||||
| Share-based payments | 1.0 | 1.0 | 1.0 | ||||||
| Acquisition of non controlling interests |
-0.3 | -0.3 | -1.1 | -1.4 | |||||
| Balance at 31 December 2018 | 259.6 | 131.1 | 1.1 | 1,016.7 | -115.9 | 796.3 | 2,088.9 | 0.1 | 2,089.0 |
Citycon is a real estate company specialised in retail premises. Citycon operates in the business units Finland & Estonia, Norway and Sweden & Denmark. Citycon is a Finnish public limited liability company established under the Finnish law and domiciled in Helsinki. The Board of Directors has approved the annual financial statements on 6th of February 2019.
Citycon prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). Additional information on the accounting policies are available in Citycon's annual financial statements 2018.
New ESMA (European Securities and Markets Authority) guidelines on alternative performance measures are effective for the financial year 2016. Citycon also presents alternative performance measures, such as EPRA performance measures and loan to value, to reflect the underlying business performance and to enhance comparability between financial periods. Alternative performance measures presented in this report should not be considered as a substitute for measures of performance in accordance with the IFRS.
Using a five-step model, the IFRS 15 Revenue from Contracts with Customers standard, which replaced the IAS 11 and IAS 18 standards in the 2018 financial period, provides guidance specifically on the amount and timing of revenue recognition. With regard to timing, the key defining factor is the settlement of the entity's performance obligations – the time at which goods or services fall under the customer's control.
As Citycon Group's sales revenues primarily comprise the rental income from business premises in the shopping centres owned by the Group, which during the 2018 financial period are subject to the IAS 17 Leases standard (from 1 January 2019 onwards, IFRS 16 Leases), the effect of the standard on Citycon Group is limited to service charges as well as the shopping centres' management fees, with regard to which the Group's accounting treatment conformed to the requirements in accordance with the IFRS 15 standard already in the 2017 financial year. The most significant effect of the standard's application on Citycon Group's reporting from the 2018 financial period onwards consisted of the change in the disclosure of sales revenues with regard to lease agreements for which the service charge income has in previous financial periods been included in the 'Gross rental income' item of the profit and loss account due to the nature of the agreements. As a result, in the 2018 financial period EUR 5.0 million of the gross rental income has been allocated to service charges. The change did not have an effect on the Group's net rental income.
More information regarding Citycon Group's applicable sales revenues subject to the standard can be found in the Note 1.3 of the financial statements.
| MEUR | Q1-Q4/2018 (IFRS 15) | Q1-Q4/2018 (IAS 18) |
|---|---|---|
| Gross rental income | 237.0 | 242.0 |
| Service charge income | 79.2 | 74.2 |
| Total | 316.2 | 316.2 |
Due to the changed guidance regarding presentation and disclosure of financial instruments, the application of the standard will offer Citycon more possibilities regarding hedge accounting, but did not require mandatory changes to Citycon's present accounting treatment nor disclosure of financial instruments. However, the standard has brought changes to recording impairments of financial assets , which requires the assessment of expected credit losses also regarding rent and trade receivables of Citycon Group. Due to the application of the standard, Citycon restated the Group's credit loss provision at 1 January 2018. The impact from the restatement to Citycon's retained earnings was EUR 0,0 million.
More information regarding the recognition of expected credit losses can be found in the Note 4.4 of the financial statements.
The amendments clarifies the accounting treatment of share-based payments with net settlement features for withholding tax obligations. According to the previous application of IFRS 2, the share-based transactions with net settlement features have been treated separately as an equity-settled and a cash-settled transaction. Due to the amendments, the approach used to account for vesting conditions when measuring equity-settled share-based payments also applies to cash-settled share-based payments from 1 January 2018 onwards. The effect from restatement of the liability arised from the cash-settled share-based payments to retained earnings of 1 January 2018 was EUR 0.9 million.
The IFRS 16 Leases standard will replace the IAS 17 standard at the beginning of the 2019 financial period. The application of the standard will not result in any changes to the accounting treatment of leases where Citycon Group acts as the lessor. Nonetheless, with regard to the majority of the Group's leases where Citycon acts as the lessee, in the 2019 financial period Citycon will recognise assets and liabilities to the Group's balance sheet pertaining to these leases.
More detailed information regarding the impact of IFRS 16 to Citycon's reporting has been presented in the Note 5.4 of the financial statements.
Additional information on the otherwise unchanged accounting policies is available in Citycon's annual financial statements 2018.
Citycon's business consists of the regional business units Finland & Estonia, Norway and Sweden & Denmark.
Citycon changed the presentation of segments during the third quarter of 2018 to better meet the segment information presented to the Board of Directors by combining the monitoring of Estonian operations as a part of the new Finland & Estonia-segment. As the company has changed the composition of its reported segments during financial year 2018, has the segment information concerning both financial year 2018 and 2017 been presented on both, the old basis and the new basis of segmentation.
In Citycon's reporting, Kista Galleria is treated as a joint venture and the shopping centre's result or fair value will not impact on the gross rental income, net rental income or fair value of investment properties of the group. Kista Galleria is consolidated in Citycon's financial statements based on the equity method, meaning that Citycon's share of Kista Galleria's profit for the period is recognised in the line 'Share of result in joint ventures' and associated companies in the statement of comprehensive income and Citycon's share of Kista Galleria's total assets is recognised in the line 'Investments in joint ventures and associated companies' in the statement of financial position. In addition, the management fee received by Citycon is reported in the line 'other operating income and expenses' and the interest income on the shareholder loan is reported in 'net financial income and expenses'. Kista Galleria contributed to the IFRS based profit for the period by approximately EUR -1.9 million.
The Board of Directors follows IFRS segment result and in addition Kista Galleria's financial performance separately, and therefore, segment information includes both IFRS segment results and Kista Galleria result.
| MEUR | Q4/2018 | Q4/2017 | % | 2018 | 2017 | % |
|---|---|---|---|---|---|---|
| Gross rental income | ||||||
| Finland & Estonia | 25.5 | 27.8 | -8.3% | 102.8 | 116.9 | -12.0% |
| Norway | 20.6 | 21.7 | -5.1% | 84.7 | 91.5 | -7.5% |
| Sweden & Denmark | 13.0 | 12.5 | 3.9% | 49.5 | 49.0 | 1.0% |
| Total Segments | 59.1 | 62.1 | -4.7% | 237.0 | 257.4 | -7.9% |
| Kista Galleria (50%) | 3.2 | 4.0 | -19.0% | 13.6 | 16.5 | -17.4% |
| Service charge income | ||||||
| Finland & Estonia | 8.7 | 9.1 | -4.2% | 35.2 | 38.0 | -7.4% |
| Norway | 8.8 | 9.8 | -9.7% | 29.4 | 30.0 | -2.1% |
| Sweden & Denmark | 3.9 | 3.1 | 26.7% | 14.5 | 12.7 | 14.3% |
| Total Segments | 21.4 | 21.9 | -2.3% | 79.2 | 80.8 | -2.0% |
| Kista Galleria (50%) | 1.0 | 0.8 | 20.6% | 3.8 | 3.4 | 11.8% |
| Net rental income | ||||||
| Finland & Estonia | 24.0 | 25.2 | -4.8% | 96.9 | 106.9 | -9.4% |
| Norway | 18.6 | 18.4 | 1.1% | 74.3 | 79.6 | -6.7% |
| Sweden & Denmark | 11.2 | 10.1 | 10.3% | 43.5 | 41.3 | 5.4% |
| Other | -0.1 | 0.2 | - | 0.2 | 0.7 | -69.7% |
| Total Segments | 53.7 | 53.9 | -0.3% | 214.9 | 228.5 | -6.0% |
| Kista Galleria (50%) | 2.5 | 3.2 | -21.4% | 11.7 | 14.4 | -18.8% |
| Direct operating profit | ||||||
| Finland & Estonia | 22.9 | 24.2 | -5.3% | 93.9 | 103.2 | -9.0% |
| Norway | 17.6 | 16.9 | 4.2% | 69.8 | 74.8 | -6.7% |
| Sweden & Denmark | 9.5 | 9.2 | 3.2% | 39.7 | 37.9 | 4.7% |
| Other | -6.0 | -4.5 | 34.5% | -15.8 | -15.4 | 2.4% |
| Total Segments | 44.1 | 45.9 | -4.0% | 187.6 | 200.5 | -6.4% |
| Kista Galleria (50%) | 2.4 | 3.1 | -22.0% | 11.1 | 13.8 | -19.7% |
| Net fair value losses/gains on investment property | ||||||
| Finland & Estonia | -11.0 | -10.5 | 4.8% | -58.8 | -51.3 | 14.8% |
| Norway | -1.6 | -10.7 | -85.2% | -22.2 | -22.2 | -0.2% |
| Sweden & Denmark | -5.7 | 10.5 | - | 8.5 | 30.6 | -72.2% |
| Total Segments | -18.2 | -10.6 | 71.9% | -72.5 | -42.9 | 69.0% |
| Kista Galleria (50%) | -3.2 | -1.1 | - | -8.6 | -0.6 | - |
| Operating profit/loss | ||||||
| Finland & Estonia | 10.5 | 10.2 | 2.8% | 31.4 | 48.0 | -34.6% |
| Norway | 12.8 | -0.1 | - | 39.8 | 40.8 | -2.3% |
| Sweden & Denmark | 3.8 | 18.6 | -79.9% | 49.3 | 77.6 | -36.5% |
| Other | -6.0 | -4.5 | 34.5% | -15.8 | -15.4 | 2.4% |
| Total Segments | 21.1 | 24.3 | -13.2% | 104.7 | 150.9 | -30.6% |
| Kista Galleria (50%) | -0.8 | 2.0 | - | 2.4 | 13.2 | -81.5% |
| MEUR | 31 December 2018 | 31 December 2017 | % |
|---|---|---|---|
| Assets | |||
| Finland & Estonia | 1,924.2 | 1,966.0 | -2.1% |
| Norway | 1,522.2 | 1,578.7 | -3.6% |
| Sweden & Denmark | 1,128.6 | 1,088.5 | 3.7% |
| Other | 47.7 | 44.9 | 6.1% |
| Total Segments | 4,622.7 | 4,678.0 | -1.2% |
| Kista Galleria (50%) | 300.7 | 314.8 | -4.5% |
| Liabilities | |||
| Finland & Estonia | 13.3 | 9.4 | 41.2% |
| Norway | 20.7 | 17.5 | 18.6% |
| Sweden & Denmark | 22.2 | 20.9 | 6.2% |
| Other | 2,477.5 | 2,420.9 | 2.3% |
| Total Segments | 2,533.7 | 2,468.6 | 2.6% |
| Kista Galleria (50%) | 246.2 | 249.7 | -1.4% |
The change in segment assets was due to the fair value changes in investment properties as well as investments and disposals.
Due to the changes in the presentation of segments during the third quarter of 2018, the segment reporting is presented on the old basis of segmentation in the schedules presented on pages 28-29.
| MEUR | Q4/2018 | Q4/2017 | % | 2018 | 2017 | % |
|---|---|---|---|---|---|---|
| Gross rental income | ||||||
| Finland | 19.9 | 22.3 | -10.7% | 80.8 | 94.2 | -14.2% |
| Norway | 20.6 | 21.7 | -5.1% | 84.7 | 91.5 | -7.5% |
| Sweden & Denmark | 13.0 | 12.5 | 3.9% | 49.5 | 49.0 | 1.0% |
| Estonia | 5.6 | 5.6 | 1.4% | 22.0 | 22.6 | -2.8% |
| Total Segments | 59.1 | 62.1 | -4.7% | 237.0 | 257.4 | -7.9% |
| Kista Galleria (50%) | 3.2 | 4.0 | -19.0% | 13.6 | 16.5 | -17.4% |
| Service charge income | ||||||
| Finland | 7.1 | 7.4 | -4.8% | 29.3 | 31.9 | -8.3% |
| Norway | 8.8 | 9.8 | -9.7% | 29.4 | 30.0 | -2.1% |
| Sweden & Denmark | 3.9 | 3.1 | 26.7% | 14.5 | 12.7 | 14.3% |
| Estonia | 1.6 | 1.6 | -1.4% | 6.0 | 6.1 | -2.2% |
| Total Segments | 21.4 | 21.9 | -2.3% | 79.2 | 80.8 | -2.0% |
| Kista Galleria (50%) | 1.0 | 0.8 | 20.6% | 3.8 | 3.4 | 11.8% |
| Net rental income | ||||||
| Finland | 18.4 | 19.7 | -7.0% | 75.0 | 84.7 | -11.4% |
| Norway | 18.6 | 18.4 | 1.1% | 74.3 | 79.6 | -6.7% |
| Sweden & Denmark | 11.2 | 10.1 | 10.3% | 43.5 | 41.3 | 5.4% |
| Estonia | 5.6 | 5.4 | 3.2% | 21.8 | 22.2 | -1.6% |
| Other | -0.1 | 0.2 | - | 0.2 | 0.7 | -69.7% |
| Total Segments | 53.7 | 53.9 | -0.3% | 214.9 | 228.5 | -6.0% |
| Kista Galleria (50%) | 2.5 | 3.2 | -21.4% | 11.7 | 14.4 | -18.8% |
| Direct operating profit | ||||||
| Finland | 17.5 | 19.1 | -8.0% | 72.5 | 81.6 | -11.2% |
| Norway | 17.6 | 16.9 | 4.2% | 69.8 | 74.8 | -6.7% |
| Sweden & Denmark | 9.5 | 9.2 | 3.2% | 39.7 | 37.9 | 4.7% |
| Estonia | 5.4 | 5.2 | 4.7% | 21.4 | 21.6 | -1.0% |
| Other | -6.0 | -4.5 | 34.5% | -15.8 | -15.4 | 2.4% |
| Total Segments | 44.1 | 45.9 | -4.0% | 187.6 | 200.5 | -6.4% |
| Kista Galleria (50%) | 2.4 | 3.1 | -22.0% | 11.1 | 13.8 | -19.7% |
| Net fair value losses/gains on investment property | ||||||
| Finland | -8.7 | -8.4 | 4.5% | -51.1 | -44.7 | 14.4% |
| Norway | -1.6 | -10.7 | -85.2% | -22.2 | -22.2 | -0.2% |
| Sweden & Denmark | -5.7 | 10.5 | - | 8.5 | 30.6 | -72.2% |
| Estonia | -2.2 | -2.1 | 6.1% | -7.7 | -6.5 | 17.3% |
| Total Segments | -18.2 | -10.6 | 71.9% | -72.5 | -42.9 | 69.0% |
| Kista Galleria (50%) | -3.2 | -1.1 | - | -8.6 | -0.6 | - |
| Operating profit/loss | ||||||
| Finland | 7.3 | 7.2 | 2.4% | 17.7 | 32.9 | -46.3% |
| Norway | 12.8 | -0.1 | - | 39.8 | 40.8 | -2.3% |
| Sweden & Denmark | 3.8 | 18.6 | -79.9% | 49.3 | 77.6 | -36.5% |
| Estonia | 3.2 | 3.1 | 3.7% | 13.7 | 15.0 | -9.0% |
| Other | -6.0 | -4.5 | 34.5% | -15.8 | -15.4 | 2.4% |
| Total Segments | 21.1 | 24.3 | -13.2% | 104.7 | 150.9 | -30.6% |
| Kista Galleria (50%) | -0.8 | 2.0 | - | 2.4 | 13.2 | -81.5% |
| MEUR | 31 December 2018 | 31 December 2017 | % |
|---|---|---|---|
| Assets | |||
| Finland | 1,615.0 | 1,658.6 | -2.6% |
| Norway | 1,522.2 | 1,578.7 | -3.6% |
| Sweden & Denmark | 1,128.6 | 1,088.5 | 3.7% |
| Estonia | 309.2 | 307.3 | 0.6% |
| Other | 47.7 | 44.9 | 6.1% |
| Total Segments | 4,622.7 | 4,678.0 | -1.2% |
| Kista Galleria (50%) | 300.7 | 314.8 | -4.5% |
| Liabilities | |||
| Finland | 10.7 | 8.2 | 30.2% |
| Norway | 20.7 | 17.5 | 18.6% |
| Sweden & Denmark | 22.2 | 20.9 | 6.2% |
| Estonia | 2.6 | 1.3 | 105.3% |
| Other | 2,477.5 | 2,420.9 | 2.3% |
| Total Segments | 2,533.7 | 2,468.6 | 2.6% |
| Kista Galleria (50%) | 246.2 | 249.7 | -1.4% |
The change in segment assets was due to the fair value changes in investment properties as well as investments and disposals.
| 2018 | 2017 | % | ||
|---|---|---|---|---|
| Earnings per share, basic | ||||
| Profit attributable to parent company shareholders | MEUR | 16.6 | 87.4 | -81.0% |
| Weighted average number of ordinary shares | million | 890.0 | 890.0 | 0.0% |
| Earnings per share (basic) | EUR | 0.02 | 0.10 | -81.0% |
| Earnings per share, diluted | ||||
| Profit attributable to parent company shareholders | MEUR | 16.6 | 87.4 | -81.0% |
| Weighted average number of ordinary shares | million | 890.0 | 890.0 | 0.0% |
| Adjustment from share-based incentive plans and options | million | 4.7 | 9.0 | -48.0% |
| Weighted average number of ordinary shares, diluted | million | 894.7 | 899.0 | -0.5% |
| Earnings per share (diluted) | EUR | 0.02 | 0.10 | -80.9% |
Citycon divides its investment properties into two categories: Investment Properties Under Construction (IPUC) and Operative Investment Properties. On reporting date and the comparable period 31 December 2017, the first mentioned category included Lippulaiva in Finland.
IPUC-category includes the fair value of the whole property even though only part of the property may be under construction.
| MEUR | Investment properties under construction (IPUC) |
Operative investment properties |
Investment properties, total |
|---|---|---|---|
| At period-start | 121.0 | 4,062.4 | 4,183.4 |
| Acquisitions | 4.3 | 64.0 | 68.4 |
| Investments | 22.7 | 58.0 | 80.7 |
| Disposals | - | -24.5 | -24.5 |
| Capitalized interest | 1.8 | 1.2 | 3.0 |
| Fair value gains on investment property | - | 39.2 | 39.2 |
| Fair value losses on investment property | -0.2 | -111.5 | -111.7 |
| Exchange differences | - | -45.9 | -45.9 |
| Transfer between IPUC , operative investment properties, | |||
| joint venture properties and transfer into investment properties | |||
| held for sale | - | -61.3 | -61.3 |
| At period-end | 149.6 | 3,981.6 | 4,131.3 |
| MEUR | Investment properties under construction (IPUC) |
Operative investment properties |
Investment properties, total |
|---|---|---|---|
| At period-start | 723.9 | 3,613.7 | 4,337.6 |
| Acquisitions | - | 142.5 | 142.5 |
| Investments | 49.7 | 84.0 | 133.7 |
| Disposals | - | -59.8 | -59.8 |
| Capitalized interest | 1.1 | 2.2 | 3.2 |
| Fair value gains on investment property | - | 113.0 | 113.0 |
| Fair value losses on investment property | -2.4 | -153.5 | -155.9 |
| Exchange differences | - | -130.3 | -130.3 |
| Transfers between items | -651.3 | 450.7 | -200.6 |
| At period-end | 121.0 | 4,062.4 | 4,183.4 |
The fair value of Citycon's investment properties has been measured by CBRE for the financial statements 2018 and 2017.
The fair value is calculated by a net rental income based cash flow analysis. Market rents, the yield requirement, the occupancy rate and operating expenses form the key variables used in the cash flow analysis. The segments' yield requirements and market rents used in the cash flow analysis were as follows:
| Weighted average yield requirement, % |
Weighted average market rents, EUR/sq.m./mo |
|||
|---|---|---|---|---|
| 31 December 2018 | 31 December 2017 | 31 December 2018 | 31 December 2017 | |
| Finland & Estonia | 5.5 | 5.5 | 29.9 | 29.5 |
| Norway | 5.4 | 5.4 | 22.3 | 22.0 |
| Sweden & Denmark | 5.2 | 5.2 | 25.7 | 25.9 |
| Investment properties, | ||||
| average | 5.4 | 5.4 | 26.4 | 26.2 |
| Investment properties and Kista Galleria (50%), average |
5.3 | 5.3 | 26.9 | 26.9 |
| MEUR | 31 December 2018 | 31 December 2017 | |
|---|---|---|---|
| Acquisitions of properties 1) | 68.4 | 142.5 | |
| Acquisitions of and investments in joint ventures | 14.4 | 18.0 | |
| Property development | 83.7 | 137.0 | |
| Goodwill and other investments | 2.4 | 1.2 | |
| Total capital expenditure incl. acquisitions | 168.8 | 298.7 |
| Capital expenditure by segment | ||
|---|---|---|
| Finland & Estonia | 54.9 | 104.0 |
| Norway | 21.1 | 84.9 |
| Sweden & Denmark | 91.7 | 109.0 |
| Group administration | 1.2 | 0.8 |
| Total capital expenditure incl. acquisitions | 168.8 | 298.7 |
| Divestments 2) | 93.1 | 319.6 |
1) Capital expenditure takes into account deduction in the purchase price calculations and FX rate changes
2) Excluding transfers into 'Investment properties held for sale' -category
On 31 December 2018 the Investment Properties Held for Sale comprised of two properties in Finland. Properties transactions are expected to be finalized during the first three months of 2019. On 31 December 2017 the Investment Properties Held for Sale comprised of one property in Norway,which was disposed in June.
Citycon had no businesses held for sale (in accordance with IFRS 5) on 31 December 2018 or 31 December 2017.
| EUR million | 31 December 2018 | 31 December 2017 | |
|---|---|---|---|
| At period-start | 25.4 | 81.9 | |
| Disposals | -65.4 | -251.9 | |
| Changes in fair value | -2.6 | - | |
| Exchange differences | -0.3 | -5.0 | |
| Transfers from investment properties | 121.0 | 200.4 | |
| At period-end | 78.1 | 25.4 |
| MEUR | 31 December 2018 | 31 December 2017 | |
|---|---|---|---|
| Cash in hand and at bank | 4.2 | 3.7 | |
| Restricted cash | 7.2 | 6.4 | |
| Total | 11.4 | 10.1 |
Cash and cash equivalents in the cash flow statement comprise the items presented above. Restricted cash mainly relates to gift cards.
Classification of financial instruments and their carrying amounts and fair values
| 31 December 2018 | 31 December 2017 | |||
|---|---|---|---|---|
| MEUR | Carrying amount | Fair value | Carrying amount | Fair value |
| Financial assets | ||||
| I Financial assets at fair value through profit and loss |
||||
| Derivative financial instruments | 16.7 | 16.7 | 14.2 | 14.2 |
| II Derivative contracts under hedge accounting |
||||
| Derivative financial instruments | 1.4 | 1.4 | 7.0 | 7.0 |
| Financial liabilities | ||||
| I Financial liabilities amortised at cost | ||||
| Loans | ||||
| Loans from financial institutions | 278.7 | 279.1 | 225.9 | 226.3 |
| Bonds | 1,861.3 | 1,875.5 | 1,858.0 | 1,870.9 |
| II Financial liabilities at fair value through profit and loss |
||||
| Derivative financial instruments | 8.2 | 8.2 | 3.7 | 3.7 |
| III Derivative contracts under hedge | ||||
| accounting | ||||
| Derivative financial instruments | - | - | 0.7 | 0.7 |
| 31 December 2018 | 31 December 2017 | |||
|---|---|---|---|---|
| MEUR | Nominal amount | Fair value | Nominal amount | Fair value |
| Interest rate swaps | ||||
| Maturity: | ||||
| less than 1 year | - | - | - | - |
| 1-5 years | 226.2 | 1.4 | 228.7 | 0.2 |
| over 5 years | - | - | - | - |
| Subtotal | 226.2 | 1.4 | 228.7 | 0.2 |
| Cross-currency swaps | ||||
| Maturity: | ||||
| less than 1 year | - | - | - | - |
| 1-5 years | - | - | 457.9 | 15.0 |
| over 5 years | 316.8 | 8.0 | - | - |
| Subtotal | 316.8 | 8.0 | 457.9 | 15.0 |
| Foreign exchange forward agreements | ||||
| Maturity: | ||||
| less than 1 year | 269.6 | 0.5 | 84.6 | 1.6 |
| Total | 812.6 | 9.9 | 771.2 | 16.8 |
Derivative financial instruments are used in hedging the interest rate and foreign currency risk.
Hedge accounting is applied for interest swaps which have a nominal amount of EUR 226.2 million (228.7). The change in fair values of these derivatives is recognised under other comprehensive income, taking the tax effect into account. In addition, EUR 0.2 million (0.8) have been recognised in 'Share of other comprehensive income of joint ventures and associated companies' from interest rate swaps hedging the loan of Sektor Portefølje II AS.
Citycon also has cross-currency swaps to convert EUR debt into SEK debt and currency forwards. Changes in fair values of these are reported in the profit and loss statement as hedge accounting is not applied.
Furthermore, changes in fair values of interest rate caps hedging Kista Galleria's loans are recognised under 'Share of profit of joint ventures and associated companies'.
The Board of Directors proposes to the Annual General Meeting that the Board be authorised to decide on the distribution of dividend for the financial year 2018, and assets from the invested unrestricted equity fund. Based on the authorization the maximum amount of dividend to be distributed shall not exceed EUR 0.01 per share and the maximum amount of equity repayment distributed from the invested unrestricted equity fund shall not exceed EUR 0.12 per share. The dividend/equity repayment would be paid to shareholders in four instalments. Based on the authorization, the company could distribute a maximum of EUR 8,899,926.28 as dividends and EUR 106,799,115.36 as equity repayment.
| MEUR | 31 December 2018 | 31 December 2017 |
|---|---|---|
| Mortgages on land and buildings | 130.7 | 132.1 |
| Bank guarantees and parent company guarantees | 33.2 | 40.9 |
| Capital commitments | 23.7 | 337.9 |
At period-end, Citycon had capital commitments of EUR 23,7 million (337.9) relating mainly to on-going (re)development projects.
Citycon owns 50% of Kista Galleria joint venture. Shares in the joint venture have been pledged as security for the loans of the joint venture.
Citycon Group's related parties comprise the parent company Citycon Oyj and its subsidiaries, associated companies, joint ventures; Board members; CEO and other Corporate Management Committee members; and the company's largest shareholder Gazit-Globe Ltd. , whose shareholding in Citycon Oyj accounted for 48.5% on 31 December 2018 (31 December 2017: 44.6%).
Over the period, Citycon paid no expenses to Gazit-Globe Ltd and its subsidiaries (0.0), but invoiced EUR 0.0 million expenses forward to Gazit-Globe Ltd and its subsidiaries (0.1)
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