Quarterly Report • Oct 20, 2016
Quarterly Report
Open in ViewerOpens in native device viewer
| Q3/2016 | Q3/2015 | %1) | Q1–Q3/2016 | Q1–Q3/2015 | %1) | 2015 | ||
|---|---|---|---|---|---|---|---|---|
| Net rental income | MEUR | 56.8 | 59.7 | -5.0 | 169.0 | 142.1 | 18.9 | 199.6 |
| Direct Operating profit 2) | MEUR | 50.2 | 54.7 | -8.2 | 148.6 | 127.2 | 16.9 | 175.4 |
| Earnings per share (basic) | EUR | 0.04 | 0.03 | 14.5 | 0.14 | 0.12 | 19.7 | 0.14 |
| Fair value of investment properties MEUR | 4,354.8 | 4,036.1 | 7.9 | 4,354.8 | 4,036.1 | 7.9 | 4,091.6 | |
| Loan to Value (LTV) 2) | % | 46.2 | 45.2 | 2.3 | 46.2 | 45.2 | 2.3 | 45.7 |
| EPRA based key figures 2) | ||||||||
| EPRA Earnings | MEUR | 38.6 | 38.9 | -0.9 | 113.2 | 96.4 | 17.5 | 130.8 |
| EPRA Earnings per share (basic) | EUR | 0.043 | 0.046 | -4.9 | 0.127 | 0.136 | -6.3 | 0.173 |
| EPRA NAV per share | EUR | 2.83 | 2.70 | 4.8 | 2.83 | 2.70 | 4.8 | 2.74 |
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 notes to the accounts.
The first three quarters of 2016 were a period of continued stable performance. Like-for-like net rental income growth including pro forma Norway and Kista Galleria was 0.6%, and the occupancy rate decreased slightly to 96.0% mainly due to operations in Finland. After more than one full year of operations, the acquisition in Norway has demonstrated it is a strong contributor to Citycon's result with like-for-like net rental income growth of 3.4% for this year. This indicates the quality of the portfolio and the successful integration of the Norwegian operations. The subdued economic environment and the bankruptcy of the Anttila department store chain in Q3 means we are still facing some challenges in the Finnish operations. However, we see some early positive signs and expect gradual improvement in sentiment, especially in the Helsinki area.
A clear highlight of the quarter was the opening of the first part of the Iso Omena extension in Espoo. Since the opening, footfall has increased by 30%, even though the new metro line is yet to start running. With the second phase to be completed in April 2017, Iso Omena will be the true benchmark for a modern way of shopping, with four strong groceries, global fashion brands, municipal services and a diverse offering of quality food and beverage.
Iso Omena is the largest development in Citycon's history and serves as a concrete example of how we utilise our urban locations to generate earnings growth. Citycon continuously evaluates (re)development and extension potential in its existing portfolio, and aims to invest EUR 150–200 million p.a. in developments. These investments will be financed in principle through recycling of capital.
In August, Citycon issued a 10-year Eurobond at a record low fixed 1.25% coupon. The successful placement demonstrates Citycon's good credit quality and will reduce Citycon's average cost of debt going forward as well as increase the average maturity to close to six years.
Citycon's net rental income increased by 18.9% and was EUR 169.0 million (142.1). The increase was mainly attributable to the acquisition of Norwegian operations, which contributed to Citycon's net rental income growth by EUR 36.6 million. The acquisition more than offset the impact of divestments, as divestments lowered net rental income by EUR 11.2 million. On the contrary, ongoing and completed (re)development projects increased net rental income by a total of EUR 1.4 million.
The like-for-like net rental income growth including the like-for-like performance for the Norwegian operations and Kista Galleria (100%) was 0.6%. Citycon's standard like-for-like portfolio definition, based on EPRA's recommendations, does not include Norway and Kista Galleria and represents only 36.1% of the total portfolio at period end. For the standard like-forlike portfolio, gross rental income decreased by EUR 1.9 million, or 2.4%, and net rental income decreased respectively by EUR 1.2 million, or 1.7%. Like-for-like property operating expenses were 2.2% lower than the previous year, the decrease deriving from strict cost management.
Citycon's net rental income from Finnish operations decreased by 10.8% compared to the previous year and totalled EUR 65.8 million (73.8). This was mainly a result of divestments of non-core assets in 2015 and 2016, which lowered net rental income by EUR 7.8 million. In addition, net rental income for the like-for-like portfolio decreased by EUR 2.5 million, or 6.6%, mainly due to the challenging retail environment in Finland. On the contrary, ongoing and completed (re)development projects (e.g. IsoKristiina and Iso Omena) increased net rental income by EUR 1.8 million.
Citycon's Norwegian operations contributed to the result in Q1–Q3/2016 by a gross rental income of EUR 63.0 million and net rental income of EUR 54.8 million, in line with our expectations. All the Norwegian properties are included in the acquisition portfolio until held by Citycon throughout the two full preceding reporting periods.
The company's net rental income from Swedish operations decreased by 3.7% to EUR 29.2 million (30.3) mainly due to divestments executed in 2015. For the like-for-like portfolio, net rental income increased by EUR 1.0 million, or 4.3%, mainly due to new and renegotiated lease agreements especially in Liljeholmstorget Galleria.
Net rental income from the Baltics and Denmark operations decreased by 4.8% compared to the previous year and came to EUR 18.8 million (19.8). This was mainly due to the start of a refurbishment project in shopping centre Kristiine and the divestment of shopping centre Magistral, which decreased net rental income by EUR 1.7 million in total. Like-for-like properties increased net rental income by EUR 0.3 million, or 2.8%, which mainly resulted from the better rental levels and lower credit losses in Rocca al Mare.
| Net rental income | Gross rental | ||||||
|---|---|---|---|---|---|---|---|
| MEUR | Finland | Norway | Sweden | Baltics and Denmark |
Other | Total | income, total |
| Q1–Q3/2015 | 73.8 | 18.1 | 30.3 | 19.8 | - | 142.1 | 158.6 |
| Acquisitions | 0.4 | 37.7 | - | 0.5 | - | 38.6 | 43.7 |
| (Re)development projects | 1.8 | - | 0.3 | -0.7 | - | 1.4 | 1.3 |
| Divestments | -7.8 | - | -2.4 | -1.0 | - | -11.2 | -13.1 |
| Like-for-like properties 1) | -2.5 | - | 1.0 | 0.3 | - | -1.2 | -1.9 |
| Other (incl. exchange rate differences) | 0.1 | -1.1 | 0.0 | 0.0 | 0.4 | -0.7 | -1.3 |
| Q1–Q3/2016 | 65.8 | 54.8 | 29.2 | 18.8 | 0.4 | 169.0 | 187.3 |
1) Like-for-like properties are properties held by Citycon throughout two full preceding periods. Therefore, the Norwegian properties are not included in the like-for-like figures. Like-for-like properties exclude also properties under (re)development or extension and undeveloped lots.
The width of each column refers to the weight of the business unit in the like-for-like portfolio.
1) Citycon's ownership in Kista Galleria is 50%, but management follows it as if it was fully consolidated. The adjusted total including Kista Galleria 50% would be 0.4%.
The economic occupancy rate for Citycon's property portfolio decreased by 50 bps during the third quarter of 2016 due to the increased vacancies in the Finnish and Norwegian shopping centre properties. Occupancy rate figures do not take into account that Anttila premises will be vacated in the beginning of the fourth quarter due to the bankruptcy of the Anttila department store chain.
Total sales in Citycon's shopping centres increased by 2% and footfall by 1% compared to the corresponding period of the previous year. The increase in sales was mostly due to completed (re)development projects. Total sales in Norway increased by 2% while footfall decreased by 3%, mostly due to a closed grocery store in a certain property which will be refurbished.
The width of each column is weighted by the sales or footfall of the business unit. 1) Sales and footfall figures include estimates. Sales figures exclude VAT.
At period-end, Citycon had a total of 4,147 (4,214) leases, of which the average remaining length was 3.4 (3.3) years.
The average rent per sq.m. for the Citycon portfolio increased during the first three quarters of the year to EUR 22.7 (22.2). The challenging retail environment in Finland and increased competition in Estonia resulted in decreased year-todate leasing spread of -6.2% for renewals and re-lettings. Including Kista Galleria (100%), the leasing spread for renewals and re-lettings was -4.7%.
| 30 September 2016 | 30 September 2015 | 31 December 2015 | ||
|---|---|---|---|---|
| Number of leases | pcs | 4,147 | 4,204 | 4,214 |
| Average rent 1) | EUR/sq.m. | 22.7 | 22.3 | 22.2 |
| Finland | EUR/sq.m. | 25.7 | 24.5 | 24.1 |
| Norway | EUR/sq.m. | 21.4 | 22.2 | 21.5 |
| Sweden 1) | EUR/sq.m. | 20.9 | 19.8 | 21.0 |
| Baltics and Denmark | EUR/sq.m. | 20.6 | 20.5 | 20.4 |
| Average remaining length of lease portfolio | years | 3.4 | 3.3 | 3.3 |
| Occupancy cost ratio 2) | % | 8.5 | 9.1 | 8.9 |
1) Comparison figures harmonised in Sweden.
2)The rolling twelve month occupancy cost ratio for like-for-like shopping centres.
| Q1–Q3/2016 | Q1–Q3/2015 | 2015 | ||
|---|---|---|---|---|
| Number of leases started during the period | pcs | 833 | 591 | 895 |
| Total area of leases started 1) | sq.m. | 203,953 | 121,238 | 173,301 |
| Average rent of leases started 1) | EUR/sq.m. | 22.7 | 22.8 | 23.2 |
| Number of leases ended during the period | pcs | 876 | 819 | 1,114 |
| Total area of leases ended 1) | sq.m. | 249,830 | 203,883 | 278,984 |
| Average rent of leases ended 1) | EUR/sq.m. | 21.1 | 19.7 | 20.1 |
| Leasing spread, renewals and re-lettings | % | -6.2 | - | - |
1) Leases started and ended do not necessarily refer to the same premises.
| MEUR | 30 September 2016 | 30 September 2015 | 31 December 2015 |
|---|---|---|---|
| Finland | 137.9 | 138.4 | 136.3 |
| Norway 2) | 113.1 | 102.7 | 101.9 |
| Sweden 2) | 56.8 | 60.2 | 57.3 |
| Baltics and Denmark | 29.5 | 32.3 | 31.9 |
| Total | 337.3 | 333.5 | 327.4 |
1) Includes annualised base rent and maintenance charge based on valid rent roll at the end of the period, market rent of vacant premises and rental income from turnover based contracts (estimate) and possible other rental income.
2) Comparison figures harmonised.
| % | 30 September 2016 | 30 September 2015 | 31 December 2015 |
|---|---|---|---|
| Finland | 5.4 | 6.0 | 5.8 |
| Norway 2) | 5.3 | 1.3 | 2.7 |
| Sweden | 5.3 | 5.6 | 5.6 |
| Baltics and Denmark | 7.5 | 7.7 | 7.6 |
| Average | 5.5 | 6.0 | 5.9 |
1) Based on the net rental income from 12 months period divided by the fair value of investment properties. Includes the value of unused building rights.
2) Net rental yield 1.3% at the end of September 2015 is based on the net rental income from 3 months period and net rental yield 2.7% at the end of the year 2015 is based on the net rental income from 6 months period divided by the fair value of investment properties.
Administrative expenses totalled EUR 21.9 million (24.1). The decrease of EUR 2.1 million was mainly driven by the transaction costs during the comparable period arising from the acquisition of the Norwegian operations. At the end of September, Citycon Group employed a total of 286 (304) full-time employees (FTEs), of whom 82 worked in Finland, 140 in Norway, 52 in Sweden, 8 in Estonia, 3 in the Netherlands and 1 in Denmark. Cost savings programme decreased the headcount during the third quarter.
Operating profit came to EUR 191.3 million (115.2), being higher than in the previous year due to the higher fair value gains, gains on sale and the acquisition of the Norwegian operations.
Net financial expenses year-to-date increased by EUR 3.7 million compared to the corresponding period last year to EUR 44.7 million (40.9) despite a lower average interest rate, due to the acquisition of the Norwegian operations and the resulting higher debt level.
Share of profit of joint ventures totalled EUR 4.7 million (13.0). The decrease came mainly from lower fair value gain in Kista.
Profit for the period came to EUR 127.0 million (85.2). The increase was mainly a result of higher fair value gains.
The fair value of investment properties increased by EUR 263.3 million to EUR 4,354.8 million (31 December 2015: 4,091.6). Acquisitions (joint venture partner NCC's buy-out in Iso Omena shopping centre extension project) and investments increased the value of properties by EUR 281.3 million, while the divestments of shopping centre Magistral and Finnish property portfolio decreased the fair value by EUR 94.2 million. A property in Norway, a total of EUR 20.4 million, was moved to investment properties held for sale. Changes in exchange rates increased value of properties by EUR 58.2 million, and fair value gains were EUR 38.4 million.
| 30 September 2016 | No. of properties |
Gross leasable area |
Fair value, MEUR |
Portfolio, % | Weighted average yield requirement |
Weighted average market rents |
|---|---|---|---|---|---|---|
| Shopping centres, Finland | 20 | 418,540 | 1,736.4 | 40 | - | - |
| Other retail properties, Finland | 4 | 27,150 | 71.0 | 2 | - | - |
| Finland, total | 24 | 445,690 | 1,807.4 | 42 | 5.7 | 30.1 |
| Shopping centres, Norway | 20 | 409,100 | 1,456.9 | 33 | - | - |
| Rented shopping centres, Norway 1) | 2 | 18,200 | - | - | - | - |
| Norway, total | 22 | 427,300 | 1,456.9 | 33 | 5.2 | 23.2 |
| Shopping centres, Sweden 2) | 8 | 215,000 | 729.3 | 17 | - | - |
| Other retail properties, Sweden | 1 | 11,600 | 22.5 | 1 | - | - |
| Sweden, total | 9 | 226,600 | 751.7 | 17 | 5.2 | 25.5 |
| Shopping centres, Baltics and Denmark | 3 | 119,600 | 338.8 | 8 | - | - |
| Baltics and Denmark, total | 3 | 119,600 | 338.8 | 8 | 6.7 | 20.1 |
| Shopping centres, total | 53 | 1,180,440 | 4,261.4 | 98 | - | - |
| Other retail properties, total | 5 | 38,750 | 93.5 | 2 | - | - |
| Total | 58 | 1,219,190 | 4,354.8 | 100 | 5.5 | 26.2 |
1) Value of rented properties is recognised within intangible rights based on IFRS rules. 2)Excludes Kista Galleria.
The fair value change of investment properties amounted to EUR 38.4 million (7.1). The company recorded a total value increase of EUR 88.9 million (47.9) and a total value decrease of EUR 50.5 million (40.8).
| MEUR | Q3/2016 | Q3/2015 | Q1–Q3/2016 | Q1–Q3/2015 | 2015 |
|---|---|---|---|---|---|
| Finland | 0.3 | -8.4 | -14.9 | -25.4 | -37.1 |
| Norway | 0.5 | - | 24.8 | - | 0.2 |
| Sweden | 7.4 | 8.9 | 29.2 | 27.0 | 39.6 |
| Baltics and Denmark | -0.9 | 3.6 | -0.7 | 5.5 | 4.7 |
| Total | 7.4 | 4.1 | 38.4 | 7.1 | 7.3 |
Jones Lang LaSalle's (JLL) Valuation Statement for the period-end is available on Citycon's website.
In August, Citycon purchased NCC Property Development's 50% stake in the Iso Omena extension's first phase for EUR 81.5 million. Following the acquisition, Citycon is the sole owner of the shopping centre.
During this year, Citycon has continued implementing its divestment strategy. There were no new divestments during the third quarter. Since the publication of its strategy update in July 2011, the company has divested 49 non-core properties and four residential portfolios for a total value of EUR 350 million. Citycon aims to divest an additional EUR 200–250 million of non-core assets, mainly in Finland, within the coming 1–2 years.
| Gross leasable | Price, | ||||
|---|---|---|---|---|---|
| Location | Date | area, sq.m. | MEUR | ||
| Acquisitions | |||||
| Iso Omena, extension | 50% stake of the extension (phase 1) | Helsinki area, Finland | 11 August | - | 81.5 |
| Acquisitions, total | 81.5 | ||||
| Divestments | |||||
| Magistral | Shopping centre | Tallinn, Estonia | 29 February | 11.800 | 24.0 |
| Portfolio transaction 1) | Retail properties | Finland | 29 April | 46.800 | 74.0 |
| Divestments, total | 58.600 | 98.0 |
1) Including five supermarket and shop properties in Finland: Sinikalliontie 1 KOy (Espoo), Kontulan Asemakeskus KOy (Helsinki), Lentolan Perusyhtiö Oy (Kangasala), Lillinkulma KOy (Kaarina), Länsi-Keskus KOy (Espoo)
At the end of the reporting period, the company had two major (re)development projects underway: the extension and (re)development of Iso Omena in the Helsinki area and the Mölndal Galleria project in Gothenburg.
The first phase of Iso Omena's extension was opened on 11 August. The Western metro line, which will be fully integrated to Iso Omena, was delayed from its planned opening in August. The financial impact of the metro delay is not material for Citycon for the ongoing financial year. The recently opened extension of Iso Omena contains 27,000 square metres of additional gross leasable area. The opening of the second phase, comprising an additional 13,000 square metres of GLA, will be in April 2017.
The leasing rate for the whole Iso Omena, including the unfinished second phase of the extension, was 90% at the end of the reporting period. The estimated investment for the Iso Omena extension project, including partial (re)development of the existing shopping centre, totals EUR 270 million. The increase in the investment amount is related to the JV share acquired from NCC Property Development as well as some concept improvements and higher tenant investments.
The tenant demand for the new Mölndal Galleria shopping centre has been strong and pre-leasing was 65% at the end of the period. Citycon will purchase joint venture partner NCC's 50% share after the project is completed.
In addition to the (re)development projects listed below, Citycon has several ongoing refurbishments in e.g. Myyrmanni, Kristiine, Stovner Senter, Kongssenteret, Buskerud Storsenter and Down Town.
Further information on the company's completed, ongoing and planned (re)developments can be found in the Annual and Sustainability Report 2015.
| Location | Area before and after project completion, sq.m. |
Expected gross investment, MEUR 1) |
Actual gross investments by 30 September 2016, MEUR |
Completion | |
|---|---|---|---|---|---|
| Iso Omena | Helsinki area, Finland | 63,300/101,000 | 270.0 | 221.4 | Q3/2016 and Q2/2017 |
| Mölndal Galleria | Gothenburg, Sweden | -/24,000 | 60.0 (120.0) | 21.7 | Q3/2018 |
| Porin Asema-aukio 2) Pori, Finland | 18,800/23,000 | 40.0 | 31.3 | Q2/2017 | |
| Stenungstorg Centrum |
Gothenburg area, Sweden | 36,400/41,400 | 18.0 | 17.7 | Completed Q2/2016 |
1) The number in brackets reflects Citycon's total investment in the project including agreed buyouts of JV shares.
2) New campus for the Satakunta University of Applied Sciences. Citycon has signed an agreement to sell the property at completion of the project.
Citycon's gross capital expenditure (including acquisitions) for the period totalled EUR 239.6 million (1,494.7).
| MEUR | Q1–Q3 2016 | Q1–Q3 2015 |
|---|---|---|
| Acquisitions of properties | 81.5 | 1,343.5 |
| Acquisitions of and investments in joint ventures | 29.0 | 57.6 |
| Property development | 127.7 | 92.0 |
| Goodwill and other investments | 1.3 | 1.6 |
| Total capital expenditure incl. acquisitions | 239.6 | 1,494.7 |
| Capital expenditure by segment | ||
|---|---|---|
| Finland | 176.6 | 72.1 |
| Norway | 31.6 | 1,381.3 |
| Sweden | 29.7 | 32.1 |
| Baltics and Denmark | 1.1 | 8.0 |
| Group administration | 0.6 | 1.2 |
| Total capital expenditure incl. acquisitions | 239.6 | 1,494.7 |
| Divestments 1) | 94.5 | 97.8 |
1) Excluding transfers into 'Investment properties held for sale' -category
Equity per share increased to EUR 2.60 (31 December 2015: 2.52), mainly due to profit for the period and a translation gain of EUR 37.8 million. On the other hand, dividends and equity return of EUR 100.1 million decreased equity per share.
At period-end, shareholders' equity attributable to parent company's shareholders was EUR 2,315.4 million (2,218.2). This figure increased from the end of 2015 (2,245.5) by EUR 69.9 million due to the above-mentioned reasons.
On 30 August, Citycon issued a EUR 350 million 10-year senior unsecured Eurobond with a fixed coupon of 1.25%, payable annually on 8 September. The issue was more than 6 times oversubscribed. The bond is rated BBB by Standard & Poor's and Baa1 by Moody's, in line with Citycon's corporate credit ratings. The net proceeds of the bond have mainly been used to fully repay loans drawn under the revolving credit facility and partially repay outstanding commercial paper, thereby clearly improving the available liquidity and extending the average loan maturity.
In the largest joint venture company Kista Galleria, the bank term loan facility was refinanced in June. The new loan facility was signed with three lending banks for five years and at a lower interest rate than the old facility. As the debt of Kista Galleria is not consolidated on Group level, it does not affect any of the reported debt-related key ratios.
| 30 September 2016 | 30 September 2015 | 31 December 2015 | ||
|---|---|---|---|---|
| Interest bearing debt, fair value | MEUR | 2,156.4 | 2,022.6 | 2,037.1 |
| Available liquidity | MEUR | 583.3 | 379.0 | 377.1 |
| Average loan maturity | years | 5.8 | 5.5 | 5.5 |
| Loan to Value (LTV) 1) | % | 46.2 | 45.2 | 45.7 |
| Equity ratio (financial covenant > 32.5) | % | 47.7 | 47.7 | 48.3 |
| Interest cover ratio (financial covenant > 1.8) | x | 3.9 | 3.7 | 3.8 |
| Solvency ratio (financial covenant < 0.65 ) | x | 0.45 | 0.44 | 0.45 |
| Secured solvency ratio (financial covenant < 0.25) | x | 0.02 | 0.03 | 0.03 |
1) LTV formula: (Interest-bearing liabilities - cash and cash equivalents / Fair value of investment properties + properties held for sale + investments in joint ventures ) x 100
The fair value of interest-bearing debt increased year-on-year by EUR 133.8 million to EUR 2,156.4 million, partly as a result of the buy-out of NCC in the Iso Omena extension in August. The weighted average loan maturity increased to 5.8 years, mainly due to the issuance of the 10-year 350 million Eurobond in August and refinancing of shorter-term debt.
The year-to-date net financial expenses increased by EUR 3.7 million compared to the corresponding period last year to EUR 44.7 million (40.9) despite a lower average interest rate, mainly due to the acquisition of the Norwegian operations and the resulting higher debt level. The financial expenses include EUR 5.9 million of indirect financial expenses, which is lower than in the comparison period (EUR 8.9 million). A large part, EUR 4.6 million, related to closing out and renegotiation of interest rate and cross-currency swaps, following the 350 million Eurobond issuance and repayment of existing loans. EUR 2.8 million of the indirect expenses is also booked as a corresponding gain in other comprehensive income due to hedge accounting. The financial income mainly consists of the interest income on the loan to Kista Galleria.
The period-end weighted average interest rate decreased year-on-year as a result of debt refinancing transactions at lower margins, unwinding of interest rate swaps and also due to even lower market interest rates.
| Q1–Q3/2016 | Q1–Q3/2015 | 2015 | ||
|---|---|---|---|---|
| Financial expenses | MEUR | -51.3 | -46.8 | -60.6 |
| Financial income | MEUR | 6.7 | 5.8 | 8.3 |
| Net financial expenses | MEUR | -44.7 | -40.9 | -52.3 |
| Weighted average interest rate, incl. interest rate swaps | % | 2.90 | 3.39 | 3.04 |
| Year-to-date weighted average interest rate, incl. interest rate swaps | % | 3.01 | 3.39 | 3.37 |
Citycon uses interest rate swaps to hedge the floating interest rate risk exposure. According to the treasury policy, the currency transaction risk exposure with profit and loss impact is fully hedged through currency forwards and crosscurrency swaps that convert EUR debt into SEK and NOK debt. In September, some new cross-currency swaps were entered into in connection with the Eurobond issue.
| Q3/2016 | Q3/2015 | Q4/2015 | ||
|---|---|---|---|---|
| Average interest-rate fixing period | years | 5.8 | 4.3 | 5.0 |
| Interest rate hedging ratio | % | 94.8 | 88.2 | 84.8 |
There were no major changes in Citycon's macroeconomic environment during the third quarter of 2016. Citycon's operating countries are still on diverging courses: the business environment in Norway, Sweden, Estonia and Denmark remains strong or relatively strong, while the Finnish economy is still showing weaker growth. However, the growth pace in Nordic economies is expected to gradually converge.
In 2016, the European Commission forecasts Euro area GDP growth to reach 1.6%. Sweden and Estonia are showing stronger growth figures than the Euro area average while Norway and Denmark are predicted to grow slightly below the Euro area forecast. The GDP growth for Finland is still expected to remain modest, although the trend is positive also in Finland. Finland's GDP growth is dependent on domestic demand, structural reforms and recovery of the country's stagnating export markets.
| % | Finland | Norway | Sweden | Estonia | Denmark | Euro area |
|---|---|---|---|---|---|---|
| GDP growth forecast for 2016 | 0.7 | 1.2 | 3.4 | 1.9 | 1.2 | 1.6 |
| Unemployment, August 2016 | 8.8 | 5.0 | 7.2 | 6.8 | 6.2 | 10.1 |
| Retail sales growth, Jan–August 2016 | 0.4 | 2.9 | 3.9 | 5.0 | -0.3 | 0.6 |
Sources: European Commission, Eurostat, Statistics Finland/Norway/Sweden/Estonia/Denmark
The unemployment rates in all of Citycon's operating countries remain below the Euro area average (10.1%). During the first nine months of 2016, consumer confidence levels have remained positive in Finland, Sweden and Denmark, while the consumer confidence in Norway, Estonia and on average in the Euro area is still slightly negative. Especially in Finland, Sweden and Estonia, the trend in consumer confidence is positive. (Source: Eurostat) During January-September, consumer prices have remained relatively unchanged compared to the previous year in all of Citycon's operating countries with the exception of Norway (3.6%), where prices have increased. (Source: Statistics Finland/Norway/ Sweden/Estonia/Denmark)
Retail sales growth for the first eight months of 2016 has been strong in Estonia, Sweden and Norway, positive in Finland, but mildly negative in Denmark. (Source: Statistics Finland/Norway/Sweden/Estonia/Denmark)
In Finland, prime shopping centre rents have decreased compared to the previous year and are forecast to remain stable in 2017. In Norway, prime rents are forecast to remain unchanged. In Sweden, prime shopping centre rents are forecast to increase during the year while in Estonia rents have decreased and downward pressure on rents is expected to continue due to intensifying competition. (Source: JLL)
In Finland, the demand for prime properties remains strong and the demand for secondary properties has also been evident. In Norway, the investment market is expected to remain strong. In Sweden, the prime shopping centre yields have moved in and stabilised during the last year. In Estonia, prime yields are expected to continue decreasing. (Source: JLL)
Citycon's strategy is to be among the forerunners in sustainable shopping centre management. Citycon's sustainability strategy was updated in 2014 and Citycon has set ambitious targets that extend to 2020.
Citycon has launched an extensive project to introduce BREEAM In-Use certificates for its shopping centres. 72% 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.
EPRA has acclaimed Citycon's Annual and Sustainability Report as one of the best in the industry for five years in a row. Citycon was also honoured with the Green Star status in the GRESB (Global Real Estate Sustainability Benchmark) in September 2016. Citycon is globally among the top five per cent of all reviewed companies. Citycon's sustainability strategy, targets and measures are described in detail in the Annual and Sustainability Report 2015.
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 and how this affects the fair values, occupancy rates and rental levels of the shopping centres and thereby Citycon's financial result. Especially a weaker economic recovery in Finland could hamper the achievement of the set financial objectives.
The main risks that can materially affect Citycon's business and financial results, along with its main risk management actions, are presented in detail on pages 60–61 in the Annual and Sustainability Report 2015, in the Financial Statements 2015 and on Citycon's website in the Corporate Governance section. No material changes are estimated to have taken place during the year in the risks described.
Citycon's Annual General Meeting (AGM) was held in Helsinki on 16 March 2016. The AGM adopted the company's Financial Statements for the financial year 2015 and discharged the members of the Board of Directors and the Chief Executive Officer from liability. The AGM decided that a dividend of EUR 0.01 per share be distributed for the financial year 2015 and that the shareholders be paid an equity repayment of EUR 0.0275 per share from the invested unrestricted equity fund. The Board of Directors was also authorised to decide in its discretion on the distribution of assets from the invested unrestricted equity fund to a maximum of EUR 0.1125 per share. The authorisation is valid until the opening of the next AGM.
All General Meeting decisions are reported on the company's website at www.citycon.com/agm2016, where meeting minutes of the General Meeting are also available.
Citycon's dividend paid in 2016 for the financial year 2015 and equity repayments in 2016:
| Dividends and equity repayments paid on 30 September 2016 | ||
|---|---|---|
| Dividend (record date 18 March 2016, payment date 29 March 2016) 1) | EUR/share | 0.01 |
| Equity repayment Q1 (record date 18 March 2016, payment date 29 March 2016) 1) | EUR/share | 0.0275 |
| Equity repayment Q2 (record date 22 June 2016, payment date 30 June 2016) 2) | EUR/share | 0.0375 |
| Equity repayment Q3 (record date 23 September 2016, payment date 30 September 2016) 2) EUR/share | 0.0375 | |
| Remaining Board's authorisation for equity repayment 3) | ||
| Equity repayment Q4 maximum (possible payment date 30 December 2016) | EUR/share | 0.0375 |
1) AGM 2016 decision
2) Board decision based on the authorisation issued by the AGM 2016
3) Unless the Board of Directors decides otherwise for a justified reason, the authorisation granted by AGM 2016 can be used to distribute equity repayment three times. Following equity repayments of 30 June 2016 and 30 September 2016, the payment date of the possible further equity repayment in 2016 will be 30 December 2016. The equity repayment will be paid to a shareholder registered in the company's shareholders' register maintained by Euroclear Finland Ltd on the record date for the equity repayment. The Board of Directors will decide on the record date in connection with each equity repayment decision. Citycon shall make separate announcements of such Board resolutions.
The company has a single series of shares, with each share entitling to one vote at a General Meeting of shareholders. The shares have no nominal value.
| Q1–Q3/2016 | Q1–Q3/2015 | % | 2015 | ||
|---|---|---|---|---|---|
| Share capital at period-start | MEUR | 259.6 | 259.6 | - | 259.6 |
| Share capital at period-end | MEUR | 259.6 | 259.6 | - | 259.6 |
| Number of shares at period-start | 889,992,628 | 593,328,419 | 50.0 | 593,328,419 | |
| Number of shares at period-end | 889,992,628 | 889,992,628 | - | 889,992,628 |
| Q1–Q3/2016 | Q1–Q3/2015 | % | 2015 | ||
|---|---|---|---|---|---|
| Low | EUR | 1.98 | 2.13 | -7.0 | 2.13 |
| High | EUR | 2.39 | 3.02 | -20.9 | 3.24 |
| Average | EUR | 2.20 | 2.56 | -14.1 | 2.53 |
| Latest | EUR | 2.27 | 2.20 | 3.2 | 2.40 |
| Market capitalisation at period-end | MEUR | 2,020.3 | 1,958.0 | 3.2 | 2,136.0 |
| Number of shares traded | million | 101.4 | 122.4 | -17.2 | 158.3 |
| Value of shares traded | MEUR | 221.3 | 306.9 | -27.9 | 400.2 |
During January–September 2016, there were no changes in the company's share capital.
At the end of September 2016, Citycon had a total of 10,932 (8,083) registered shareholders, of which nine were account managers of nominee-registered shares.
Details of the most significant registered shareholders of the company and of the distribution of ownership as of 31 December 2015 can be found on page FS71 of the Financial Statements 2015.
In addition to the asset distribution authorisation of the Board of Directors as explained in section 14 above and in Note 11, the Board of Directors of the company had two valid authorisations at the period-end granted by the AGM held on 16 March 2016:
During January–September 2016, Citycon did neither used its authorisations to issue shares or special rights entitling to shares nor repurchased its own shares.
During the reporting period, the company or its subsidiaries held no shares in the company.
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 www.citycon.com/ shareholder-agreements.
The company has no knowledge of any other shareholder agreements.
On 10 February 2015, the Board of Directors of Citycon decided on two long-term share-based incentive plans for the Group key employees: a performance share plan 2015 and a restricted share plan 2015.
As a consequence of the rights issue carried out in June-July 2015 and to allow inclusion of new key employees into the plan in February 2016, the Board of Directors of the company adjusted the amount of the maximum reward under the performance share plan 2015 in accordance with the terms and conditions of the plan. Based on these adjustments, the maximum total number of shares that can be granted under the performance share plan 2015 is 4,300,000 shares at the period-end.
The rewards to be paid on the basis of the restricted share plan 2015 correspond to the value of an approximate maximum total of 500,000 shares.
Further information and the terms and conditions of both incentive plans are available on the company's website at www.citycon.com/remuneration.
Citycon's Board of Directors decided on 3 May 2011 to issue stock options to the key personnel of the company and its subsidiaries. Stock Option Plan 2011 information such as share subscription prices, ratios and distributed stock options have remained unchanged compared to the information presented in the company's Financial Statements 2015.
The terms and conditions of the 2011 stock options in their entirety are available on the company's website at www.citycon.com/options.
No material events after the reporting period.
The company specifies its outlook. Citycon forecasts the 2016 Direct Operating profit to change by EUR 16 to 23 million (previously 17–26) and EPRA Earnings to change by EUR 13 to 20 million (previously 11–20) from the previous year. Additionally, the company expects EPRA EPS (basic) to be EUR 0.16–0.17 (previously 0.1575–0.1725).
These estimates are also 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 will release its full-year financial report as well as financial statements and the report by the Board of Directors for the period 1 January–31 December 2016 on Thursday, 9 February 2017 at about 9:00 a.m.
Citycon Oyj's Annual General Meeting 2017 will be held in Helsinki, Finland, on Wednesday, 22 March 2017 starting at 12:00 noon.
Citycon will issue three interim reports during the financial year 2017 in accordance with the following schedule:
January–March 2017 on Thursday, 20 April 2017 at about 9:00 a.m. January–June 2017 on Thursday, 13 July 2017 at about 9:00 a.m. January–September 2017 on Thursday, 19 October 2017 at about 9:00 a.m.
Helsinki, 19 October 2016 Citycon Oyj Board of Directors
Eero Sihvonen, Executive VP and CFO Tel. +358 50 557 9137 [email protected]
Henrica Ginström, VP, IR and Communications Tel. +358 50 554 4296 [email protected]
Citycon is an owner, developer and manager of urban grocery-anchored shopping centres in the Nordic and Baltic region, managing assets that total almost EUR 5 billion and with market capitalisation of over EUR 2 billion. Citycon is the No. 1 shopping centre owner in Finland and Estonia and among the market leaders in Norway and Sweden. Citycon has also established a foothold in Denmark.
Citycon has investment-grade credit ratings from Moody's (Baa1) and Standard & Poor's (BBB). Citycon Oyj's share is listed in Nasdaq Helsinki.
www.citycon.com
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 2015 in section "EPRA performance measures".
| Q3/2016 | Q3/2015 | % Q1–Q3/2016 | Q1–Q3/2015 | % | 2015 | |||
|---|---|---|---|---|---|---|---|---|
| EPRA Earnings | MEUR | 38.6 | 38.9 | -0.9 | 113.2 | 96.4 | 17.5 | 130.8 |
| EPRA Earnings per share (basic) | EUR | 0.043 | 0.046 | -4.9 | 0.127 | 0.136 | -6.3 | 0.173 |
| EPRA NAV per share | EUR | 2.83 | 2.70 | 4.8 | 2.83 | 2.70 | 4.8 | 2.74 |
| EPRA NNNAV per share | EUR | 2.42 | 2.44 | -0.8 | 2.42 | 2.44 | -0.8 | 2.46 |
The following tables present how EPRA Performance Measures are calculated.
| MEUR | Q3/2016 | Q3/2015 | % Q1–Q3/2016 | Q1–Q3/2015 | % | 2015 | |
|---|---|---|---|---|---|---|---|
| Earnings in IFRS Consolidated Statement of Comprehensive Income |
31.6 | 22.0 | 43.5 | 126.2 | 84.1 | 50.0 | 108.8 |
| -/+ Net fair value gains/losses on investment property |
-7.4 | -4.1 | 81.8 | -38.4 | -7.1 | - | -7.3 |
| +/- Net gains/losses on sale of investment property |
-0.8 | 12.0 | - | -4.3 | 12.4 | - | 17.1 |
| + Transaction costs related to business combinations and investment property disposals |
0.0 | 6.7 | - | 0.0 | 6.7 | - | 7.5 |
| + Indirect other operating expenses | - | - | - | - | - | - | 9.2 |
| +/- Fair value losses/gains of financial instruments |
5.1 | 3.9 | 28.6 | 5.9 | 4.4 | 35.1 | 1.7 |
| + Early close-out costs of debt and financial instruments |
- | 4.5 | - | - | 4.5 | - | 4.4 |
| +/- Fair value losses/gains and other indirect items of joint ventures and associated companies |
0.7 | -4.3 | - | -1.4 | -10.4 | -86.9 | -16.9 |
| +/- Change in deferred taxes arising from the items above |
9.3 | -2.3 | - | 24.3 | 1.7 | - | 5.8 |
| +/- Non-controlling interest arising from the items above |
0.1 | 0.4 | 81.5 | 0.7 | 0.1 | - | 0.5 |
| EPRA Earnings | 38.6 | 38.9 | -0.9 | 113.2 | 96.4 | 17.5 | 130.8 |
| Issue-adjusted average number of shares |
million 890.0 |
854.2 | 4.2 | 890.0 | 710.2 | 25.3 | 755.5 |
| EPRA Earnings per share (basic) EUR |
0.043 | 0.046 | -4.9 | 0.127 | 0.136 | -6.3 | 0.173 |
The table below presents an alternative calculation of EPRA Earnings from the statement of comprehensive income from top to bottom.
| MEUR | Q3/2016 | Q3/2015 | % Q1–Q3/2016 | Q1–Q3/2015 | % | 2015 | |
|---|---|---|---|---|---|---|---|
| Net rental income | 56.8 | 59.7 | -5.0 | 169.0 | 142.1 | 18.9 | 199.6 |
| Direct administrative expenses 1) | -7.1 | -6.2 | 15.6 | -21.9 | -17.3 | 26.4 | -27.0 |
| Direct other operating income and expenses 1) |
0.6 | 1.1 | -47.9 | 1.5 | 2.4 | -36.7 | 2.7 |
| Direct operating profit | 50.2 | 54.7 | -8.2 | 148.6 | 127.2 | 16.9 | 175.4 |
| Direct net financial income and expenses |
-13.1 | -16.2 | -19.1 | -38.7 | -32.1 | 20.8 | -46.2 |
| Direct share of profit/loss of joint ventures and associated companies |
1.6 | 1.4 | 15.7 | 3.3 | 2.5 | 31.3 | 2.6 |
| Direct current taxes | -0.2 | -0.5 | -60.2 | -0.4 | -0.6 | -33.7 | -0.4 |
| Direct deferred taxes | 0.1 | 0.2 | -42.0 | 0.5 | 0.3 | 51.8 | 0.6 |
| Direct non-controlling interest | -0.1 | -0.7 | -90.7 | -0.1 | -1.0 | -88.0 | -1.1 |
| EPRA Earnings | 38.6 | 38.9 | -0.9 | 113.2 | 96.4 | 17.5 | 130.8 |
| EPRA Earnings per share (basic) EUR |
0.043 | 0.046 | -4.9 | 0.127 | 0.136 | -6.3 | 0.173 |
1) In the first quarter of 2016, managed center related administrative costs and rented center contract value amortization have been reclassified from administrative expenses to other operating income and expenses (EUR 1.1 million in Q3/2016 (EUR 1.0 million in Q3/2015), EUR 3.2 million in Q1–Q3/2016, and EUR 2.3 million in 2015.)
| 30 September 2016 | 30 September 2015 | 31 December 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Number of shares on the balance sheet per share, MEUR date (1,000) EUR |
MEUR | Number of shares on the balance sheet per share, date (1,000) EUR |
Number of shares on the balance sheet per share, MEUR date (1,000) |
|||||||
| Equity attributable to parent company shareholders |
2,315.4 | 889,993 | 2.60 | 2,218.2 | 889,993 | 2.49 | 2,245.5 | 889,993 | 2.52 | |
| Deferred taxes from the difference of fair value and fiscal value of investment properties |
314.7 | 889,993 | 0.35 | 292.4 | 889,993 | 0.33 | 288.3 | 889,993 | 0.32 | |
| Goodwill as a result of deferred taxes 1) |
-114.5 | 889,993 | -0.13 | -116.5 | 889,993 | -0.13 | -106.6 | 889,993 | -0.12 | |
| Fair value of financial instruments | 2.1 | 889,993 | 0.00 | 9.3 | 889,993 | 0.01 | 7.9 | 889,993 | 0.01 | |
| Net asset value (EPRA NAV) | 2,517.8 | 889,993 | 2.83 | 2,403.5 | 889,993 | 2.70 | 2,435.1 | 889,993 | 2.74 | |
| Deferred taxes from the difference of fair value and fiscal value of investment properties |
-314.7 | 889,993 | -0.35 | -292.4 | 889,993 | -0.33 | -288.3 | 889,993 | -0.32 | |
| Goodwill as a result of deferred taxes |
114.5 | 889,993 | 0.13 | 116.5 | 889,993 | 0.13 | 106.6 | 889,993 | 0.12 | |
| The difference between the secondary market price and fair value of bonds 2) |
-160.5 | 889,993 | -0.18 | -45.6 | 889,993 | -0.05 | -59.8 | 889,993 | -0.07 | |
| Fair value of financial instruments | -2.1 | 889,993 | 0.00 | -9.3 | 889,993 | -0.01 | -7.9 | 889,993 | -0.01 | |
| EPRA NNNAV | 2,154.9 | 889,993 | 2.42 | 2,172.6 | 889,993 | 2.44 | 2,185.8 | 889,993 | 2.46 |
1) Citycon has redefined net asset value calculations retrospectively for the period 30 September 2015 and presents net asset value after adjusting the goodwill, which has resulted from deferred taxes.
2) 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 fair value of the bonds was EUR 160.5 million (45.6) as of 30 Sep 2016.
| MEUR | Note Q3/2016 | Q3/2015 | % | Q1–Q3/ 2016 |
Q1–Q3/ 2015 |
% | 2015 | |
|---|---|---|---|---|---|---|---|---|
| Gross rental income 1) | 4 | 61.9 | 65.9 | -6.1 | 187.3 | 158.6 | 18.2 | 223.9 |
| Service charge income 1) | 19.2 | 20.0 | -4.1 | 59.4 | 47.7 | 24.7 | 71.7 | |
| Property operating expenses | -23.8 | -25.7 | -7.5 | -76.7 | -63.1 | 21.5 | -94.6 | |
| Other expenses from leasing operations | -0.6 | -0.5 | 8.3 | -1.1 | -1.1 | 4.8 | -1.4 | |
| Net rental income | 4 | 56.8 | 59.7 | -5.0 | 169.0 | 142.1 | 18.9 | 199.6 |
| Administrative expenses 2) | -7.2 | -12.9 | -44.4 | -21.9 | -24.1 | -8.8 | -34.5 | |
| Other operating income and expenses 2) | 0.6 | 1.1 | -47.9 | 1.5 | 2.4 | -36.7 | -6.4 | |
| Net fair value gains on investment property | 4 | 7.4 | 4.1 | 81.8 | 38.4 | 7.1 | - | 7.3 |
| Net gains on sale of investment property | 0.8 | -12.0 | - | 4.3 | -12.4 | - | -17.1 | |
| Operating profit | 4 | 58.4 | 40.0 | 45.9 | 191.3 | 115.2 | 66.1 | 148.9 |
| Net financial income and expenses | -18.2 | -24.6 | -26.2 | -44.7 | -40.9 | 9.1 | -52.3 | |
| Share of profit of joint ventures and associated companies | 0.9 | 5.7 | -83.7 | 4.7 | 13.0 | -63.8 | 19.4 | |
| Profit/loss before taxes | 41.1 | 21.1 | 95.2 | 151.3 | 87.2 | 73.6 | 116.0 | |
| Current taxes | -0.2 | -0.5 | -60.2 | -0.4 | -0.6 | -33.7 | -0.4 | |
| Deferred taxes | -9.1 | 2.5 | - | -23.8 | -1.4 | - | -5.1 | |
| Profit for the period | 31.8 | 23.1 | 37.5 | 127.0 | 85.2 | 49.1 | 110.4 | |
| Profit attributable to | ||||||||
| Parent company shareholders | 31.6 | 22.0 | 43.5 | 126.2 | 84.1 | 50.0 | 108.8 | |
| Non-controlling interest | 0.1 | 1.1 | -87.3 | 0.8 | 1.1 | -21.9 | 1.6 | |
| Earnings per share attributable to parent company shareholders | ||||||||
| Earnings per share (basic) | EUR 5 |
0.04 | 0.03 | 14.5 | 0.14 | 0.12 | 19.7 | 0.14 |
| Earnings per share (diluted) | EUR 5 |
0.04 | 0.03 | 14.1 | 0.14 | 0.12 | 19.3 | 0.14 |
| Other comprehensive income | ||||||||
| Items that may be reclassified subsequently to profit or loss | ||||||||
| Net gains/losses on cash flow hedges | 7.4 | -2.1 | - | 4.5 | -1.8 | - | -0.3 | |
| Income taxes relating to cash flow hedges | -1.5 | 0.5 | - | -0.9 | 0.4 | - | 0.1 | |
| Share of other comprehensive income of joint ventures and associated companies |
0.3 | -0.8 | - | 2.0 | -0.8 | - | -0.5 | |
| Exchange gains/losses on translating foreign operations | 21.5 | -34.4 | - | 37.8 | -29.2 | - | -28.1 | |
| Net other comprehensive income to be reclassified to profit or loss in subsequent periods |
27.7 | -36.9 | - | 43.4 | -31.4 | - | -28.9 | |
| Other comprehensive income for the period, | ||||||||
| after taxes | 27.7 | -36.9 | - | 43.4 | -31.4 | - | -28.9 | |
| Total comprehensive profit/loss for the period | 59.4 | -13.8 | - | 170.5 | 53.8 | 216.8 | 81.5 | |
| Total comprehensive profit/loss attributable to | ||||||||
| Parent company shareholders | 59.3 | -14.8 | - | 169.6 | 52.8 | 221.1 | 79.9 | |
| Non-controlling interest | 0.1 | 1.0 | -86.1 | 0.8 | 1.0 | -15.7 | 1.6 |
1)Citycon changed its income statement format to exclude turnover row and to reclassify maintenance rents (EUR 13.1 million in the third quarter of 2015, EUR 36.6 million in Q1–Q3/2015 and EUR 53.4 million in 2015) from the gross rental income to service charges during the last quarter of financial year 2015.
2) In the first quarter of 2016, managed center related administrative costs and rented center contract value amortization have been reclassified from administrative expenses to other operating income and expenses (EUR 1.1 million in Q3/2016 (EUR 1.0 million in Q3/2015), EUR 3.2 million in Q1–Q3/2016, and EUR 2.3 million in 2015.)
| MEUR | Note | 30 September 2016 |
30 September 2015 |
31 December 2015 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Investment properties | 6 | 4,354.8 | 4,036.1 | 4,091.6 |
| Goodwill | 179.3 | 182.8 | 171.5 | |
| Investments in joint ventures and associated companies | 202.6 | 254.0 | 269.0 | |
| Intangible and tangible assets, and other non-current assets | 30.8 | 37.0 | 31.3 | |
| Deferred tax assets | 3.5 | 16.7 | 10.3 | |
| Total non-current assets | 4,771.0 | 4,526.5 | 4,573.6 | |
| Investment properties held for sale | 7 | 22.1 | 57.8 | 1.7 |
| Current assets | ||||
| Derivative financial instruments | 9, 10 | 3.0 | 7.7 | 7.7 |
| Trade and other current assets | 46.5 | 56.1 | 53.4 | |
| Cash and cash equivalents | 8 | 23.8 | 44.4 | 27.9 |
| Total current assets | 73.3 | 108.1 | 89.1 | |
| Total assets | 4 | 4,866.3 | 4,692.4 | 4,664.4 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Equity attributable to parent company shareholders | ||||
| Share capital | 259.6 | 259.6 | 259.6 | |
| Share premium fund | 131.1 | 131.1 | 131.1 | |
| Fair value reserve | -2.1 | -9.3 | -7.9 | |
| Invested unrestricted equity fund | 11 | 1,263.7 | 1,355.6 | 1,354.9 |
| Retained earnings | 11 | 663.1 | 481.2 | 507.8 |
| Total equity attributable to parent company shareholders | 2,315.4 | 2,218.2 | 2,245.5 | |
| Non-controlling interest | 0.8 | 33.3 | 0.0 | |
| Total shareholders' equity | 2,316.2 | 2,251.6 | 2,245.5 | |
| Long-term liabilities | ||||
| Loans | 1,891.1 | 1,872.7 | 1,855.3 | |
| Derivative financial instruments and other non-interest bearing liabilities | 9, 10 | 6.6 | 27.0 | 8.6 |
| Deferred tax liabilities | 318.1 | 296.5 | 292.1 | |
| Total long-term liabilities | 2,215.8 | 2,196.1 | 2,155.9 | |
| Short-term liabilities | ||||
| Loans | 250.1 | 136.5 | 167.9 | |
| Derivative financial instruments | 9, 10 | 4.1 | 0.8 | 5.4 |
| Trade and other payables | 80.1 | 107.4 | 89.6 | |
| Total short-term liabilities | 334.4 | 244.7 | 262.9 | |
| Total liabilities | 4 | 2,550.1 | 2,440.8 | 2,418.8 |
| Total liabilities and shareholders' equity | 4,866.3 | 4,692.4 | 4,664.4 |
| MEUR | Note | Q1–Q3/2016 | Q1–Q3/2015 | 2015 |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| Profit before taxes | 151.3 | 87.2 | 116.0 | |
| Adjustments to profit before taxes | 0.4 | 35.1 | 54.7 | |
| Cash flow before change in working capital | 151.7 | 122.3 | 170.7 | |
| Change in working capital | -3.4 | 18.2 | -10.4 | |
| Cash generated from operations | 148.2 | 140.4 | 160.3 | |
| Paid interest and other financial charges 1) | -57.2 | -38.2 | -49.4 | |
| Interest income and other financial income received | 1.5 | 0.9 | 1.1 | |
| Current taxes paid | -0.8 | -0.1 | -0.2 | |
| Net cash from operating activities | 91.7 | 103.0 | 111.8 | |
| Cash flow from investing activities | ||||
| Acquisition of subsidiaries, less cash acquired | 6.7 | -81.5 | -567.8 | -526.0 |
| Capital expenditure on investment properties, investments in joint ventures, intangible assets and tangible assets 1) |
6.7 | -156.0 | -123.8 | -196.2 |
| Sale of investment properties | 6.7 | 108.6 | 83.7 | 126.8 |
| Net cash used in investing activities | -128.9 | -607.9 | -595.4 | |
| Cash flow from financing activities | ||||
| Proceeds from rights and share issue | - | 603.3 | 602.7 | |
| Proceeds from short-term loans | 866.2 | 886.3 | 1,156.2 | |
| Repayments of short-term loans | -917.7 | -830.0 | -1,000.4 | |
| Proceeds from long-term loans and receivables | 400.7 | 540.0 | 508.1 | |
| Repayments of long-term loans | -232.0 | -608.9 | -660.2 | |
| Acquisition of non-controlling interests | - | - | -34.9 | |
| Dividends and return from the invested unrestricted equity fund | 11 | -98.0 | -89.1 | -89.2 |
| Realized exchange rate profit/losses | 14.3 | 15.7 | -9.7 | |
| Net cash used in financing activities | 33.5 | 517.3 | 472.8 | |
| Net change in cash and cash equivalents | -3.7 | 12.4 | -10.9 | |
| Cash and cash equivalents at period-start | 8 | 27.9 | 34.4 | 34.4 |
| Effects of exchange rate changes | -0.4 | -2.4 | 4.3 | |
| Cash and cash equivalents at period-end | 8 | 23.8 | 44.4 | 27.9 |
1) During the last quarter in 2015, Citycon reclassified the capitalised interest paid from operating activities to investing activities (EUR 2.5 million in Q1–Q3/2015 and EUR 3.4 million in 2015).
| Equity attributable to parent company shareholders | Share | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| MEUR | Share capital |
Share premium fund |
Fair value reserve |
Invested unrestricted equity fund |
Translation reserve |
Retained earnings |
attributable to parent company shareholders |
Non controlling interest |
holders' equity, total |
| Balance at 1 January 2015 | 259.6 | 131.1 | -7.1 | 841.2 | -19.7 | 445.7 | 1,650.7 | 1.8 | 1,652.5 |
| Total comprehensive profit/loss for the period |
-2.2 | -29.1 | 84.1 | 52.8 | 1.0 | 53.8 | |||
| Rights issue | 608.2 | 608.2 | 608.2 | ||||||
| Arrangement fee for rights issue | -4.8 | -4.8 | -4.8 | ||||||
| Equity return (Note 11) | -89.0 | -89.0 | -89.0 | ||||||
| Share-based payments | 0.3 | 0.3 | 0.3 | ||||||
| Acquisition of non-controlling interests |
- | 30.5 | 30.5 | ||||||
| Balance at 30 September 2015 | 259.6 | 131.1 | -9.3 | 1,355.6 | -48.8 | 530.1 | 2,218.2 | 33.3 | 2,251.6 |
| Balance at 1 January 2016 | 259.6 | 131.1 | -7.9 | 1,354.9 | -47.9 | 555.7 | 2,245.5 | 0.0 | 2,245.5 |
| Total comprehensive profit/loss for the period |
5.7 | 37.7 | 126.2 | 169.6 | 0.8 | 170.5 | |||
| Dividends paid and equity return (Note 11) |
-91.2 | -8.9 | -100.1 | -100.1 | |||||
| Share-based payments | 0.3 | 0.3 | 0.3 | ||||||
| Balance at 30 September 2016 | 259.6 | 131.1 | -2.1 | 1,263.7 | -10.2 | 673.3 | 2,315.4 | 0.8 | 2,316.2 |
Citycon is a real estate company specialised in retail premises. Citycon operates in the business units Finland, Norway, Sweden and Baltics and 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 interim financial statements on 19th of October 2016.
Citycon prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). The interim financial statements for the nine month period ended on 30 September 2016 have been prepared in accordance with the same accounting policies and methods as in previous annual financial statements and in accordance with IAS 34 Interim Financial Reporting standard. The figures are unaudited.
Additional information on the accounting policies are available in Citycon's previous annual financial statements in the accounting policies notes.
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.
Citycon did not acquire any businesses during the reporting period.
Citycon acquired 100% of shares in Sektor Gruppen AS, Norway's second largest shopping centre owner and manager in July 2015. Norwegian operations were consolidated into consolidated financial statements as of 1 July 2015. Norwegian operations acquisition generated a goodwill of EUR 192.6 million (based on the exchange rates on 1 July 2015 and after purchase price adjustments). Goodwill was not impaired during 2015, but impacted by the decrease in Norwegian income tax percent and FX-change. Hence, goodwill per 31 December 2015 was EUR 171.5 million. On reporting date 30 September 2016 goodwill was EUR 179.3 million and it was impacted by FX-change. There was no need for goodwill to be impaired on the reporting date.
Information on performance of Norwegian operations is presented in the segment information section.
More detailed information on business combination and goodwill is presented in the annual financial statements 2015.
| Assets acquired and liabilities assumed, purchase consideration and net cash flow from acquisition | 1 July 2015 |
|---|---|
| The fair values of the identifiable assets and liabilities of Sektor Gruppen as at the date of acquisition with the acquisition date exchange rate were: |
Fair value of assets and liabilities recognised on acquisition |
| Total assets | 1,555.2 |
| Total liabilities | -1,143.0 |
| Total identifiable net assets at fair value | 412.2 |
| Non-controlling interest | -33.3 |
| FX-change from the fixed NOK/EUR-rate | 52.2 |
| Goodwill arising from acquisition | 140.4 |
| Purchase consideration transferred | 571.5 |
| Cash flow on acquisition: | |
| Net cash acquired (included in the cash flows from investing activities) | 35.1 |
| Cash paid | -571.5 |
Net cash flow on acquisition -536.3
Citycon's business consists of the regional business units Finland, Norway, Sweden and Baltics and Denmark.
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 7.2 million.
Citycon changed the presentation of segments during the first quarter of 2016 to better meet the segment information presented to the Board of Directors. In addition to IFRS segment results, the Board of Directors follow Kista Galleria's financial performance separately. Therefore segment information presents both IFRS segment results and Kista Galleria (100%) result separately.
| MEUR | Q3/2016 | Q3/2015 | % | Q1–Q3/2016 | Q1–Q3/2015 | % | 2015 |
|---|---|---|---|---|---|---|---|
| Gross rental income 1) | |||||||
| Finland | 22.7 | 26.2 | -13.2 | 70.4 | 80.4 | -12.5 | 105.3 |
| Norway | 21.3 | 21.2 | 0.9 | 63.0 | 21.2 | 197.8 | 43.0 |
| Sweden | 11.5 | 12.0 | -3.9 | 34.4 | 36.0 | -4.5 | 47.8 |
| Baltics and Denmark | 6.3 | 6.6 | -4.3 | 19.5 | 20.9 | -6.7 | 27.8 |
| Total Segments | 61.9 | 65.9 | -6.1 | 187.3 | 158.6 | 18.2 | 223.9 |
| Kista Galleria | 8.5 | 8.5 | -0.4 | 25.9 | 25.2 | 2.6 | 34.4 |
| Net rental income 1) | |||||||
| Finland | 21.8 | 25.2 | -13.3 | 65.8 | 73.8 | -10.8 | 96.9 |
| Norway | 18.4 | 18.1 | 1.3 | 54.8 | 18.1 | 202.1 | 36.8 |
| Sweden | 10.2 | 10.5 | -2.2 | 29.2 | 30.3 | -3.7 | 39.7 |
| Baltics and Denmark | 6.2 | 6.0 | 4.2 | 18.8 | 19.8 | -4.8 | 26.2 |
| Other | 0.1 | - | - | 0.4 | - | - | - |
| Total Segments | 56.8 | 59.7 | -5.0 | 169.0 | 142.1 | 18.9 | 199.6 |
| Kista Galleria | 7.6 | 7.5 | 1.0 | 23.0 | 22.4 | 3.1 | 30.1 |
| Direct operating profit | |||||||
| Finland | 21.0 | 25.4 | -17.6 | 63.4 | 72.9 | -13.0 | 95.2 |
| Norway | 17.5 | 16.4 | 7.0 | 51.6 | 16.4 | 215.1 | 32.4 |
| Sweden | 9.3 | 10.2 | -8.8 | 26.5 | 28.7 | -7.8 | 36.7 |
| Baltics and Denmark | 5.9 | 5.6 | 4.8 | 18.0 | 19.0 | -5.0 | 25.0 |
| Other | -3.5 | -2.9 | 17.9 | -10.8 | -9.7 | 11.2 | -14.0 |
| Total Segments | 50.2 | 54.7 | -8.2 | 148.6 | 127.2 | 16.9 | 175.4 |
| Kista Galleria | 7.4 | 6.9 | 6.8 | 22.0 | 21.0 | 5.0 | 28.4 |
| Net fair value gains/losses on investment property | |||||||
| Finland | 0.3 | -8.4 | - | -14.9 | -25.4 | -41.4 | -37.1 |
| Norway | 0.5 | - | - | 24.8 | - | - | 0.2 |
| Sweden | 7.4 | 8.9 | -16.7 | 29.2 | 27.0 | 8.1 | 39.6 |
| Baltics and Denmark | -0.9 | 3.6 | - | -0.7 | 5.5 | - | 4.7 |
| Total Segments | 7.4 | 4.1 | 81.8 | 38.4 | 7.1 | 440.8 | 7.3 |
| Kista Galleria | 0.3 | 14.4 | -98.2 | 4.2 | 32.0 | -86.8 | 38.7 |
| Operating profit/loss | |||||||
| Finland | 21.4 | 4.4 | 391.5 | 52.1 | 34.8 | 49.7 | 48.6 |
| Norway | 18.0 | 16.4 | 10.3 | 76.4 | 16.4 | 366.8 | 16.6 |
| Sweden | 17.3 | 19.0 | -9.0 | 56.5 | 55.2 | 2.3 | 68.0 |
| Baltics and Denmark | 5.0 | 9.2 | -45.4 | 17.2 | 24.5 | -29.9 | 29.7 |
| Other | -3.4 | -9.0 | -61.7 | -10.9 | -15.7 | -30.7 | -13.9 |
| Total Segments | 58.4 | 40.0 | 45.9 | 191.3 | 115.2 | 66.1 | 148.9 |
| Kista Galleria | 7.6 | 21.3 | -64.3 | 26.2 | 53.0 | -50.5 | 67.1 |
1) Citycon changed its income statement format to exclude turnover row and to reclassify maintenance rents (EUR 13.1 million in the third quarter of 2015, EUR 36.6 million in Q1–Q3/2015 and EUR 53.4 million in 2015) from the gross rental income to service charges during the last quarter of financial year 2015.
| MEUR | 30 September 2016 |
30 September 2015 |
% | 31 December 2015 |
|---|---|---|---|---|
| Assets | ||||
| Finland | 1,825.7 | 1,719.7 | 6.2 | 1,739.3 |
| Norway | 1,717.1 | 1,574.0 | 9.1 | 1,606.8 |
| Sweden | 930.6 | 951.2 | -2.2 | 939.6 |
| Baltics and Denmark | 339.5 | 363.2 | -6.5 | 362.3 |
| Other | 53.6 | 84.3 | -36.5 | 16.4 |
| Total Segments | 4,866.3 | 4,692.4 | 3.7 | 4,664.4 |
| Kista Galleria | 613.2 | 614.1 | -0.1 | 636.3 |
| Liabilities | ||||
| Finland | 13.5 | 19.4 | -30.2 | 11.9 |
| Norway | 20.8 | 22.2 | -6.1 | 12.6 |
| Sweden | 10.6 | 30.5 | -65.2 | 25.9 |
| Baltics and Denmark | 3.9 | 12.4 | -68.3 | 11.7 |
| Other | 2,501.2 | 2,356.3 | 6.1 | 2,356.7 |
| Total Segments | 2,550.1 | 2,440.8 | 4.5 | 2,418.8 |
| Kista Galleria | 4.1 | 18.2 | -77.5 | 16.2 |
The change in segment assets was due to the fair value changes in investment properties as well as investments and disposals.
| Q1–Q3/2016 | Q1–Q3/2015 | % | 2015 | ||
|---|---|---|---|---|---|
| Earnings per share, basic | |||||
| Profit attributable to parent company shareholders | MEUR | 126.2 | 84.1 | 50.0 | 108.8 |
| Issue-adjusted average number of shares | million | 890.0 | 710.2 | 25.3 | 755.5 |
| Earnings per share (basic) | EUR | 0.14 | 0.12 | 19.7 | 0.14 |
| Earnings per share, diluted | |||||
| Profit attributable to parent company shareholders | MEUR | 126.2 | 84.1 | 50.0 | 108.8 |
| Issue-adjusted average number of shares | million | 890.0 | 710.2 | 25.3 | 755.5 |
| Adjustment from share-based incentive plans | million | 6.4 | 2.4 | 167.9 | 3.3 |
| Average number of shares used in the calculation of diluted earnings per share |
million | 896.4 | 712.6 | 25.8 | 758.8 |
| Earnings per share (diluted) | EUR | 0.14 | 0.12 | 19.3 | 0.14 |
Citycon divides its investment properties into two categories: Investment Properties Under Construction (IPUC) and Operative Investment Properties. On reporting date, the first mentioned category included Porin Asema-aukio in Finland.
On 30 September 2015, the first mentioned category included IsoKristiina and Porin Asema-aukio in Finland as well as Stenungstorg Centrum in Sweden.
IPUC-category includes the fair value of the whole property even though only part of the property may be under construction.
| Investment properties | Operative | Investment | |
|---|---|---|---|
| MEUR | under construction (IPUC) |
investment properties |
properties, total |
| At period-start | 106.7 | 3,984.9 | 4,091.6 |
| Acquisitions | 81.5 | 81.5 | |
| Investments | 15.1 | 109.4 | 124.5 |
| Disposals | - | -24.2 | -24.2 |
| Capitalized interest | 0.6 | 2.7 | 3.3 |
| Fair value gains on investment property | 2.8 | 86.1 | 88.9 |
| Fair value losses on investment property | - | -50.5 | -50.5 |
| Exchange differences | - | 58.2 | 58.2 |
| Transfers between items (includes the transfer from investments in joint ventures and associated companies) |
-79.4 | 61.0 | -18.4 |
| At period-end | 45.8 | 4,309.0 | 4,354.8 |
| Investment properties | Operative | Investment | |
|---|---|---|---|
| MEUR | under construction (IPUC) |
investment properties |
properties, total |
| At period-start | 124.2 | 2,644.8 | 2,769.1 |
| Acquisitions | - | 1,322.8 | 1,322.8 |
| Investments | 23.9 | 65.6 | 89.5 |
| Disposals | - | -97.7 | -97.7 |
| Capitalized interest | 1.7 | 0.7 | 2.5 |
| Fair value gains on investment property | 4.3 | 43.6 | 47.9 |
| Fair value losses on investment property | -2.5 | -38.3 | -40.8 |
| Exchange differences | -0.1 | -1.1 | -1.2 |
| Transfers between items | 10.9 | -66.9 | -56.0 |
| At period-end | 162.4 | 3,873.6 | 4,036.1 |
| Investment properties | Operative | Investment | |
|---|---|---|---|
| under construction | investment | properties, | |
| MEUR | (IPUC) | properties | total |
| At period-start | 124.2 | 2,644.9 | 2,769.1 |
| Acquisitions | - | 1,316.1 | 1,316.1 |
| Investments | 20.9 | 114.6 | 135.5 |
| Disposals | - | -97.8 | -97.8 |
| Capitalized interest | 0.6 | 2.9 | 3.5 |
| Fair value gains on investment property | 4.0 | 73.6 | 77.7 |
| Fair value losses on investment property | - | -70.3 | -70.3 |
| Exchange differences | 1.5 | 14.1 | 15.6 |
| Transfers between items | -44.6 | -13.3 | -57.9 |
| At period-end | 106.7 | 3,984.9 | 4,091.6 |
| Weighted average yield requirement, % | Weighted average market rents, EUR/sq.m./mth | |||||
|---|---|---|---|---|---|---|
| 30 September 2016 |
30 September 2015 |
31 December 2015 |
30 September 2016 |
30 September 2015 |
31 December 2015 |
|
| Finland | 5.7 | 5.9 | 5.9 | 30.1 | 29.2 | 29.0 |
| Norway | 5.2 | - | 5.2 | 23.2 | - | 21.2 |
| Sweden | 5.2 | 5.5 | 5.4 | 25.5 | 25.4 | 26.1 |
| Baltics and Denmark | 6.7 | 7.0 | 6.9 | 20.1 | 20.5 | 20.4 |
| Average | 5.5 | 6.0 | 5.7 | 26.2 | 27.0 | 25.1 |
On 30 September 2016, the Investment Properties Held for Sale comprised of one property in Norway and one residential property in Finland. Property transaction is expected to be finalised during fourth quarter in 2016 while residential property transaction is expected to be finalised during the next 12 months. One property portfolio in Finland was disposed during Q2 2016. On 30 September 2015 the Investment Properties Held for Sale comprised of one property and one residential property in Finland and two properties in Sweden. On 31 December 2015 the Investment Properties Held for Sale comprised one residential property in Finland.
| MEUR | 30 September 2016 | 30 September 2015 | 2015 |
|---|---|---|---|
| At period-start | 1.7 | 7.2 | 7.2 |
| Disposals | -70.0 | -5.4 | -63.6 |
| Exchange differences | - | 0.0 | 0.1 |
| Transfers from investment properties | 90.4 | 56.0 | 57.9 |
| At period-end | 22.1 | 57.8 | 1.7 |
| MEUR | 30 September 2016 | 30 September 2015 | 31 December 2015 |
|---|---|---|---|
| Cash in hand and at bank | 23.3 | 44.0 | 23.4 |
| Other bank deposits | 0.5 | 0.4 | 4.5 |
| Total | 23.8 | 44.4 | 27.9 |
Cash and cash equivalents in the cash flow statement comprise the items presented above. Other bank deposits consists mainly of restricted cash.
| 30 September 2016 | 30 September 2015 | 31 December 2015 | ||||
|---|---|---|---|---|---|---|
| MEUR | Carrying amount |
Fair value | Carrying amount |
Fair value | Carrying amount |
Fair value |
| FINANCIAL ASSETS | ||||||
| I Financial assets at fair value through profit and loss | ||||||
| Derivative financial instruments | 7.6 | 7.6 | 11.5 | 11.5 | 7.7 | 7.7 |
| II Derivative contracts under hedge accounting | ||||||
| Derivative financial instruments | 0.5 | 0.5 | - | - | 4.4 | 4.4 |
| FINANCIAL LIABILITIES | ||||||
| I Financial liabilities amortised at cost | ||||||
| Loans from financial institutions | 222.6 | 223.1 | 455.9 | 455.9 | 472.2 | 472.7 |
| Bond 1/2012 | 138.3 | 138.4 | 138.2 | 138.4 | 138.2 | 138.4 |
| Bond 1/2013 | 497.0 | 500.0 | 496.2 | 500.0 | 496.4 | 500.0 |
| Bond 1/2014 | 344.8 | 350.0 | 344.2 | 350.0 | 344.4 | 350.0 |
| Bond 1/2015 | 138.3 | 139.1 | 130.3 | 131.2 | 129.3 | 130.2 |
| Bond 2/2015 | 154.9 | 155.8 | 146.1 | 147.0 | 144.8 | 145.8 |
| Bond 3/2015 | 298.0 | 300.0 | 298.2 | 300.0 | 297.8 | 300.0 |
| Bond 1/2016 | 347.3 | 350.0 | - | - | - | - |
| II Financial liabilities at fair value through profit and loss | ||||||
| Derivative financial instruments | 5.6 | 5.6 | 1.0 | 1.0 | 7.8 | 7.8 |
| III Derivative contracts under hedge accounting | ||||||
| Derivative financial instruments | 4.2 | 4.2 | 21.1 | 21.1 | 5.4 | 5.4 |
| 30 September 2016 | 30 September 2015 | 31 December 2015 | |||||
|---|---|---|---|---|---|---|---|
| Nominal | Nominal | Nominal | |||||
| MEUR | amount | Fair value | amount | Fair value | amount | Fair value | |
| INTEREST RATE DERIVATIVES | |||||||
| Interest rate swaps | |||||||
| Maturity: | |||||||
| less than 1 year | - | - | - | - | - | - | |
| 1−2 years | - | - | 128.6 | -4.6 | 59.9 | -4.1 | |
| 2−3 years | - | - | 187.1 | -11.8 | - | - | |
| 3−4 years | - | - | - | - | - | - | |
| 4−5 years | 250.4 | -1.4 | 36.7 | -2.8 | - | - | |
| over 5 years | - | - | - | - | 234.3 | 0.1 | |
| Subtotal | 250.4 | -1.4 | 352.4 | -19.2 | 294.2 | -3.9 | |
| Cross currency swaps | |||||||
| Maturity: | |||||||
| less than 3 years | - | - | - | - | - | - | |
| 3–4 years | - | - | - | - | - | - | |
| 4–5 years | 350.0 | 3.1 | 150.0 | 0.2 | 150.0 | -2.5 | |
| over 5 years | 107.9 | -2.3 | 107.9 | 1.5 | 107.9 | 2.9 | |
| Subtotal | 457.9 | 0.8 | 257.9 | 1.7 | 257.9 | 0.4 | |
| FOREIGN EXCHANGE DERIVATIVES | |||||||
| Forward agreements | |||||||
| Maturity: | |||||||
| less than 1 year | 258.5 | -1.1 | 557.2 | 6.9 | 291.8 | 2.4 | |
| Total | 966.8 | -1.8 | 1,167.5 | -10.6 | 843.9 | -1.1 |
Derivative financial instruments are used in hedging the interest rate and foreign currency risk.
Hedge accounting is applied for interest rate swaps which have nominal amount of EUR 250.4 million (352,4) and for a cross-currency swap converting EUR debt into NOK debt which have nominal amount of EUR 107.9 million. The change in fair values of these derivatives is recognised under other comprehensive income, taking the tax effect into account. In addition, EUR 2.0 million (-0.8) have been recognised in 'Share of other comprehensive income of joint ventures and associated companies' from interest rate swaps hedging loans of Kista Galleria and Sektor Portefølje II AS.
Citycon also has currency forwards and cross-currency swaps to convert EUR debt into SEK debt. 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'.
Citycon's annual general meeting (AGM) decided that a dividend of EUR 0.01 per share be distributed for the financial year 2015 and that the shareholders are paid an equity repayment of EUR 0.0275 per share from the invested unrestricted equity fund. Distributed dividends were EUR 8.9 million and equity return EUR 24.5 million.
Board of Directors decided on the basis of the authorisation explained in interim report sections 13. and 14. on 20 July 2016 and on 21 September 2016 to distribute a equity repayment of 0.0375 euros per share at each time, a total of EUR 66.7 million.
Following the equity repayments paid on 30 June and 30 September 2016, there remains an authorization to distribute EUR 0.0375 per share.
| MEUR | 30 September 2016 | 30 September 2015 | 31 December 2015 |
|---|---|---|---|
| Mortgages on land and buildings | 144.7 | 136.5 | 135.4 |
| Bank guarantees | 162.5 | 130.8 | 124.1 |
| Capital commitments | 285.2 | 277.1 | 219.2 |
At period-end, Citycon had capital commitments of EUR 285.2 million (277.1) 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 43.5% on 30 September 2016 (30 September 2015: 43.4%).
Over the period Citycon paid expenses of EUR 0.1 million to Gazit-Globe Ltd. and its subsidiaries (EUR 0.0 million Q1–Q3 2015) and invoiced EUR 0.1 million expenses forward to Gazit-Globe Ltd. and its subsidiaries (EUR 0.0 million Q1–Q3 2015).
We have reviewed the accompanying consolidated condensed statement of financial position of Citycon Oyj as of September 30, 2016 and the related condensed statement of comprehensive income, condensed statement of changes in shareholders' equity, condensed cash flow statement and explanatory notes for the nine-month period then ended. The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of interim financial information in accordance with International Accounting Standard 34 Interim Financial Reporting and in accordance with other laws and regulations governing the preparation of the interim financial information in Finland. Our responsibility is to express a conclusion on this interim financial information based on our review.
We conducted our review in accordance with International Standard on Review Engagements ISRE 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information has not been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and in accordance with other laws and regulations governing the preparation of the interim financial information in Finland.
Helsinki, October 19, 2016 Ernst & Young Oy Accountant Firm
Mikko Rytilahti Authorized Public Accountant
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.